Interim Results
John Wood Group PLC
Interim results for the six months to 30 June 2006
Strong EBITA growth and prospects
John Wood Group PLC ("Wood Group", the "Group") is a market leader in
engineering design, production enhancement and support, and industrial gas
turbine services for customers in the oil & gas and power generation
industries around the world. Wood Group businesses employ over 18,000 people
in 44 countries.
Financial Highlights 1
Revenues of $1,572.1m (2005: $1,327.0m) up 18%
EBITA 2 of $90.0m (2005: $69.2m) up 30%
Operating profit of $87.0m (2005: $67.2m) up 29%
Profit before tax of $75.6m (2005: $56.2m) up 35%
Adjusted diluted earnings per ordinary share 3 of 10.2 cents (2005: 7.8 cents)
up 31%. Basic earnings per share of 10.0 cents (2005: 7.6 cents) up 32%
Declared interim dividend of 1.5 cents (2005: 1.3 cents) up 15% 4
Operating Highlights
Group
Strong global oil & gas market
Significant financial and operating progress
record first half results
further margin improvement
good progress in new geographic markets
successfully developing our market-leading positions
Engineering & Production Facilities:
Engineering - good demand and progress in all areas
Production Facilities - maintaining market leading position in North Sea and
good progress in new regions
Well Support -good performance in all three businesses:
ESP - continuing growth in Russia, extension of presence in Chad
Pressure Control - maintaining strong position in US markets, achieving good
growth outside the US, notably in Arabian Gulf
Logging Services - strong performance in first half, benefiting from increased
drilling activity
Gas Turbine Services
Modest improvement in North American power market
Continuing to enhance our differentiation and build up long term contracts.
Commenting on the results, Sir Ian Wood, Chairman and Chief Executive, Wood
Group, said:
"Our oil & gas development related activities are growing strongly and we are
continuing to expand our production support activities to maximise the later
cycle opportunities. Business continues to strengthen, particularly in our
Engineering and Well Support activities, and we believe our result for the
year will be ahead of expectations. Looking into next year, our positions in
strong markets and our robust business development programme should ensure we
continue our good growth."
Information:
Wood Group
Alan Semple/ Nick Gilman/ Carolyn Smith
01224 851 000
Brunswick
Patrick Handley/ Nina Coad/ Nebat Sukker
020 7404 5959
Notes
1.All figures are prepared on the basis detailed in note 1 to the interim
accounts.
2.EBITA represents operating profit before the deduction of amortisation of
other intangible assets of $3.0m (2005: $2.0m) and is provided as it is a key
unit of measurement used by the Group in the management of its business. The
June 2005 EBITA includes $2.4m relating to the Production Technology business
prior to its disposal in December 2005.
3.Shares held by the Group's employee share ownership trusts are excluded from
the number of shares in calculating adjusted diluted earnings per ordinary
share. Adjusted diluted earnings per ordinary share is calculated on earnings
before amortisation, and the after tax impact of impairment and restructuring
charges and profit on disposal of subsidiaries. Adjusted diluted earnings per
ordinary share is based on the diluted number of shares, taking account of
share options where the effect of these is dilutive.
4.In accordance with International Financial Reporting Standards ("IFRS"), the
2006 interim dividend declared is not reflected in these accounts. The
dividend will be reflected in the accounts when paid.
5.Gearing represents net debt over shareholders' funds.
6.Interest cover is EBITA divided by net finance costs.
Interim Statement - six months to 30 June 2006
Introduction
I am pleased to report we are continuing our very good progress, successfully
developing our market leading positions and extending our range of services to
our global customers in the strong oil & gas market.
In the six months to June 2006, revenues increased 18.5% to $1,572.1m (2005:
$1,327.0m) and EBITA increased 30.1% to $90.0m (2005: $69.2m). This reflects
strong revenue growth in Engineering & Production Facilities and Well Support,
together with strengthening margins across all divisions.
The present strong oil & gas market has compelling long term fundamentals with
our customers' investment decisions still based on significantly lower oil
prices. We are continuing to expand our relationship with the major oil
companies, independents and national oil corporations across the world,
marketing our differentiation in high quality engineering solutions, long term
performance contracts, and technology and know-how. To achieve our longer term
growth, we are continuing to extend our international reach and broaden our
range of services, maintaining a balance between our currently stronger
development and later cycle production activities.
In the first half, capital expenditure and acquisition investment was $97.8m
(2005: $61.8m). This included increasing our capacity in Well Support and
making acquisitions to strengthen our presence in Algeria and to enhance our
position in the engineering downstream and process sectors.
We are maintaining our major focus on accessing the skills needed to meet our
clients' increasing requirements with a number of initiatives underway to
attract, develop and train our people around the world. Over the last 12
months our employee numbers have risen by approximately 2,000 to over 18,000.
Dividend
Reflecting confidence in our long term strategy and our ability to deliver
continuing growth, we have declared an increase of 15.4% in the interim
dividend to 1.5 cents which will be paid on the 12 October 2006 to
shareholders on the register on 22 September 2006.
Engineering & Production Facilities
Revenues increased 27.4% to $895.7m (2005: $703.0m), and EBITA rose 39.6% to
$57.1m (2005: $40.9m). We enjoyed strong revenue growth throughout the
division, with the faster growth in our higher margin Engineering activities
contributing to the increase in the EBITA margin from 5.8% to 6.4%.
We are seeing good demand for our extended range of high quality Engineering
services and have made good progress in all areas. In US upstream, we have a
range of onshore and offshore contracts including Mallet onshore and the
Perdido, Tahiti and Shenzi developments in the Gulf of Mexico. Internationally
, we are working on developments offshore Brazil, Tambua Landana offshore
Angola, East Area gas offshore Nigeria, and offshore Equatorial Guinea.
Additionally, we are carrying out the engineering, project and construction
management services on the Cairn Mangala development in India and the BP
Valhall development in Norway, along with other developments in the North Sea.
JP Kenny, our world leading pipeline and subsea engineering company, is
providing the subsea engineering for BP's developments in Angola, as well as
the technically significant subsea engineering and pipeline contract for
Gorgon and Janz offshore Australia. They are also working on tiebacks for the
BP Deepwater developments in the Gulf of Mexico and have just renewed their
significant BP contract in the North Sea.
Our diversification into midstream is making progress and we are now
installing our LNG (Liquefied Natural Gas) Smart ® Air Vaporization Process,
at Trunkline's LNG receiving terminal in Lake Charles, Louisiana.
In downstream we are seeing a high level of activity on a wide range of
de-bottlenecking, refinery upgrade and low sulphur diesel modification
projects. Our main customer focus is the independent refiners, and we have
recently entered into longer term contracts to provide downstream Engineering
support services across the US. The acquisition of Global Performance in
Greenville, South Carolina strengthens our construction management and process
capabilities and provides access to a talented pool of engineers.
We have continued to extend our international presence in Engineering, with
increasing activity in our London and Australia offices, together with opening
new offices in Norway and Abu Dhabi, and we are continuing to look at further
new locations to increase our global presence and provide satellite support to
our key Engineering hubs.
In Production Facilities, we are busy in the North Sea and the Gulf of Mexico
and are extending our international presence. In the North Sea, we are working
on an increasing number of platform integrity, upgrade and tieback projects.
We have also been awarded a second contract by Sevan Marine, this time to
operate and maintain their FPSO for Venture Production's Chestnut Field in the
North Sea, where we will be the Duty Holder. In Norway, we are beginning to
work on assignments to provide support services and engineering studies. In
the Gulf of Mexico, we are extending our pre operations and start up support
activities with significant contracts for BP Atlantis, BP Thunder Horse and
BHP Shenzi.
Internationally, in North Africa we have acquired a majority stake in Somias,
a maintenance and fabrication support provider in Algeria, and are
well-positioned to win further work. In West Africa, we are now working for
Marathon, Exxon Mobil and Amerada Hess in Equatorial Guinea, including the
recent award of a major four year contract to provide additional operations
support to Amerada Hess' Sendje Ceiba FPSO and Okume Complex. Elsewhere in the
world, we are beginning to win some engineering and production support
contracts in Russia, and in Kazakhstan we have begun work on a supply chain
management contract.
Well Support
Revenues increased 16.1% to $350.8m (2005: $302.1m), EBITA increased 28.5% to
$34.7m (2005: $27.0m) and the EBITA margin increased to 9.9% (2005: 8.9%). All
three of our Well Support businesses, Electric Submersible Pumps (ESP),
Pressure Control and Logging Services, are maintaining their significant US
positions and achieving good international growth.
ESP have a strong market share in the US with a wide range of clients.
Internationally we have made good progress in the significant Russian market,
extended our scope of work in Chad, increased our activity in the Middle East
and won a strategically important contract in Bohai Bay, China. To meet the
strong demand for our products and services we have invested in increased
manufacturing and support in the US, Oman and Yemen.
As well as their very strong US presence, Pressure Control are benefiting from
the high levels of drilling activity round the world and are increasingly
seeing good opportunities outside the US. In the first 6 months we secured
contract wins in Canada, Australia, the UK, Russia, Indonesia and the Middle
East. We are increasing our manufacturing capacity in the US and building up
our manufacturing, assembly and test capabilities in China to provide capacity
and cost benefits.
In Logging Services, our production focused slickline operations and
development focused cased hole electric wireline services had a strong six
months in the US. Our operations in Argentina, where we are the market leader,
also performed well. We are increasing our investment to deliver capacity and
cost benefits, while also looking to broaden our range of services,
particularly in production related areas of activity.
Gas Turbine Services
Revenues decreased 0.5% to $302.9m (2005: $304.4m), EBITA increased 6.7% to
$16.0m (2005: $15.0m) and the EBITA margin increased to 5.3% (2005: 4.9%). The
broadly flat revenues reflect our focus on achieving recovery and improving
margin, together with lower activity in our Power Solutions business. We
continue to see modest improvement in the North American power market and our
cost reduction and efficiency programmes are continuing.
In our oil & gas activities, the breadth and depth of our product and service
offering and the link to our production facilities capability provides key
differentiation, contributing to our success in winning more long term multi
engine contracts. There were some signs in the first six months of delays in
overhauls as customers sought to take advantage of the strong oil price but,
looking ahead, we expect the level of overhaul activity to increase in the
second half. Our Light Industrial Turbine (LIT) activities performed
satisfactorily in the first half and, with our current product development
programme, we expect to see good medium term growth.
The North American power market is showing modest improvement and there are
good opportunities for growth in the Rest of the World. Our Heavy Industrial
Turbine (HIT) activities in the US delivered an improved performance in the
first half and we expect to see continuing further improvement. Wood Group
Pratt & Whitney and TransCanada Turbines - serving customers in the oil & gas
and power markets - had a strong first half, particularly driven by demand
from their clients in the power markets.
Our focus on long term contracts is continuing with recent wins including the
significant long term power station operations & maintenance contract for LS
Power in the Western US and new maintenance contracts with Air Products and
Cinergy covering GE 7EA turbines.
Outlook
Our oil & gas development related activities are growing strongly and we are
continuing to expand our production support activities to maximise the later
cycle opportunities. Business continues to strengthen, particularly in our
Engineering and Well Support activities, and we believe our result for the
year will be ahead of expectations. Looking into next year, our positions in
strong markets and our robust business development programme should ensure we
continue our good growth.
Sir Ian Wood
Chairman and Chief Executive
4 September 2006
Interim Financial Review
The trading performance for the six months to 30 June 2006 is summarised
below:
Interim Interim Increase
June June
2006 2005
$m $m
Revenues 1,572.1 1,327.0 18.5%
EBITA 90.0 69.2 30.1%
Operating profit 87.0 67.2 29.5%
Profit before tax 75.6 56.2 34.5%
Profit for the period 49.8 36.4 36.8%
Diluted EPS (cents) 9.6 7.4 29.7%
Adjusted diluted EPS 10.2 7.8 30.8%
(cents)
Revenues increased by $245.1m, or 18.5%, for the six months to June 2006 with
strong growth in both Engineering & Production Facilities (27.4%) and Well
Support (16.1%). EBITA increased by $20.8m or 30.1% for the period, with
growth in all three divisions. Profit before tax increased by 34.5%. The tax
charge for the period of $25.8m (2005: $19.8m) is based on an anticipated tax
rate for the year of 34.1% (2005: 35.2%) of profit before tax.
The cash flow statement for the six months to 30 June 2006 is summarised
below:
Interim Interim Full Year
June June December
2006 2005 2005
$m $m $m
Opening net debt (245.8) (354.3) (354.3)
Cash generated from 118.8 92.5 194.8
operations before working
capital movements
Working capital outflows (72.8) (35.3) (33.5)
Capex and acquisitions (97.8) (61.8) (99.0)
Disposal of subsidiaries 7.3 - 22.8
Issue / sale of shares 1.3 0.9 92.5
Interest, tax, dividends (60.0) (25.5) (69.1)
and other
(Increase)/ decrease in net (103.2) (29.2) 108.5
debt
Closing net debt (349.0) (383.5) (245.8)
Cash generated from operations before movements in working capital increased
by $26.3m or 28.4% driven by the strong trading performance for the six months
to June 2006. Working capital outflows in the period of $72.8m compare to
outflows of $35.3m in the first half of 2005. The outflows include the impact
of increased activity in the first six months of the year, an increase in
inventory levels to support future growth and higher receivables. Capital
expenditure amounted to $44.5m (2005: $32.5m) and the increase included the
cost of increasing capacity in Well Support. The cost of acquisition of
subsidiaries net of cash acquired totalled $45.5m (2005: $17.3m) and includes
the acquisition of Global Performance Holdings Inc and Somias spa, as well as
the purchase of the remaining minority shareholding in Mustang Engineering.
Deferred consideration payments relating to acquisitions made in prior years
amounted to $4.2m (2005: $9.0m). Net debt increased by $103.2m from $245.8m at
December 2005 to $349.0m at June 2006. The Group's gearing ratio 5 increased
from 36.1% at December 2005 to 48.2% at June 2006.
Net debt of $349.0m is primarily US dollar denominated in line with the
currency of the bulk of the Group's net assets. Long-term borrowings amounted
to $423.5m (2005: $483.0m), of which $176.2m (2005: $125.0m), or 41.6% (2005:
25.9%), was at a weighted average fixed rate of interest of 4.9% (2005: 5.0%).
The Group seeks to hold approximately 50% of net borrowings at fixed interest
rates. Net interest costs were $11.4m, which is an increase of $0.4m compared
to the same period in 2005. Interest cover 6 was 7.9 times (June 2005: 6.3
times).
Adjusted diluted earnings per ordinary share for the period increased by 30.8%
to 10.2 cents (June 2005: 7.8 cents) and basic earnings per ordinary share
also increased by 31.6% to 10.0 cents (June 2005: 7.6 cents).
Alan G Semple
Group Finance Director
4 September 2006
Interim Financial Statements 2006
Group income statement for the six month period to 30 June 2006
Unaudited Interim Unaudited Audited
June Interim Full Year
2006 June December
2005 2005
Note US$m US$m US$m
Revenues 2 1,572.1 1,327.0 2,761.9
Cost of sales (1,258.8) (1,062.3) (2,209.7)
Gross profit 313.3 264.7 552.2
Administrative expenses:
Profit on disposal of subsidiaries 5 - - 9.7
Impairment and restructuring charges 6 - - (6.0)
Other administrative expenses (226.3) (197.5) (407.9)
Administrative expenses (226.3) (197.5) (404.2)
Operating profit 2 87.0 67.2 148.0
Finance income 2.2 1.0 2.5
Finance expense (13.6) (12.0) (25.8)
Profit before taxation 75.6 56.2 124.7
Taxation 7 (25.8) (19.8) (41.1)
Profit for the period 49.8 36.4 83.6
Attributable to:
Equity shareholders 49.2 35.3 80.5
Minority interest 0.6 1.1 3.1
49.8 36.4 83.6
Earnings per share (expressed in cents per share)
Basic 4 10.0 7.6 17.0
Diluted 4 9.6 7.4 16.4
All items dealt with in arriving at the profits stated above relate to
continuing operations.
Group statement of recognised income and expense for the six month period to
30 June 2006
Unaudited Unaudited AuditedFull
Year
Interim Interim
December
June June
2005
2006 2005
US$m US$m US$m
Profit for the period 49.8 36.4 83.6
Actuarial losses on retirement benefit - - (2.5)
liabilities
Movement in deferred tax relating to retirement - - 0.7
benefit liabilities
Cash flow hedges- fair value gains 2.8 0.4 2.4
- (losses)/gains reported in profit for the (0.3) 1.0 1.4
period
Exchange differences on retranslation of foreign 2.7 (10.6) (15.5)
currency net assets
Total recognised income for the period 55.0 27.2 70.1
Adoption of IAS 32 and IAS 39
- Retained earnings - - (0.9)
- Hedging reserve - - (2.4)
Total recognised income since last Annual Report 55.0 27.2 66.8
Total recognised income for the period is
attributable to:
Equity shareholders 54.4 26.1 67.0
Minority interest 0.6 1.1 3.1
55.0 27.2 70.1
Group balance sheet as at 30 June 2006
UnauditedInterim Unaudited Audited
June InterimJune Full Year
2006 2005 December
2005
Note US$m US$m US$m
Assets
Non-current assets
Goodwill and other intangible assets 375.0 328.5 328.6
Property plant and equipment 232.4 219.5 219.5
Long term receivables 9.1 17.6 13.5
Financial assets - derivative financial 4.4 - 1.3
instruments
Deferred tax assets 19.6 20.2 19.3
640.5 585.8 582.2
Current assets
Inventories 397.0 355.2 362.9
Trade and other receivables 757.0 617.4 610.7
Income tax receivable 10.4 4.2 5.4
Financial assets - derivative financial 1.6 - 1.7
instruments
Cash and cash equivalents 119.7 135.3 149.9
1,285.7 1,112.1 1,130.6
Liabilities
Current liabilities
Financial liabilities
- Borrowings 45.2 35.8 47.9
- Derivative financial instruments 0.4 0.2 0.6
Trade and other payables 616.2 520.2 526.7
Income tax liabilities 18.3 16.5 14.8
680.1 572.7 590.0
Net current assets 605.6 539.4 540.6
Non-current liabilities
Financial liabilities
- Borrowings 423.5 483.0 347.8
- Derivative financial instruments - 1.2 -
Deferred tax liabilities 6.1 8.5 7.0
Retirement benefit liabilities 9 35.9 31.7 33.3
Other non-current liabilities 31.7 23.0 18.7
Provisions 15.6 15.2 15.1
512.8 562.6 421.9
Net assets 733.3 562.6 700.9
Shareholders' equity
Share capital 25.5 23.9 25.4
Share premium 294.2 202.4 292.1
Retained earnings 324.0 244.9 288.1
Other reserves 80.9 78.2 75.7
Total shareholders' equity 724.6 549.4 681.3
Minority interest 8.7 13.2 19.6
Total equity 733.3 562.6 700.9
Group cash flow statement for the six month period to 30 June 2006
Unaudited Unaudited Audited
Interim Interim
Full Year
June 2006 June 2005
Dec 2005
Note US$m US$m US$m
Cash generated from operations 10 46.0 57.2 161.3
Tax paid (26.2) (11.4) (37.2)
Net cash from operating activities 19.8 45.8 124.1
Cash flows from investing activities
Acquisitions (net of cash acquired) (45.5) (17.3) (24.2)
Deferred consideration payments (4.2) (9.0) (9.2)
Disposal of subsidiaries (net of cash 7.3 - 22.8
disposed)
Purchase of property plant and equipment (44.5) (32.5) (56.4)
Disposal of property plant and equipment 3.0 2.8 4.2
Purchase of intangible assets (3.6) (3.0) (9.2)
Net cash used in investing activities (87.5) (59.0) (72.0)
Cash flows from financing activities
Issue of ordinary share capital 0.4 - 90.8
Proceeds from /(repayment of) bank loans 59.3 102.8 (18.6)
Sale of shares in employee share trusts 0.9 0.9 1.7
Interest received 2.2 1.0 2.5
Interest paid (13.9) (11.8) (25.3)
Dividends paid to shareholders 3 (13.4) (11.1) (17.5)
Dividends paid to minority interest (0.4) - (1.3)
Net cash from financing activities 35.1 81.8 32.3
Effect of exchange rate changes on cash and 2.4 (4.7) (5.9)
cash equivalents
Net (decrease)/increase in cash and cash (30.2) 63.9 78.5
equivalents
Opening cash and cash equivalents 149.9 71.4 71.4
Closing cash and cash equivalents 119.7 135.3 149.9
Notes to the interim accounts for the six month period to 30 June 2006
1.Basis of Preparation
The interim report and accounts have been prepared on the basis of the
accounting policies set out in the Group's 2005 Annual Report and Accounts.
The interim accounts were approved by the Board of Directors on 4 September
2006. The results for the six months to 30 June 2006 and the comparative
results for six months to 30 June 2005 are unaudited. The comparative figures
for the year ended 31 December 2005 do not constitute the statutory financial
statements for that year. Those financial statements have been delivered to
the Registrar of Companies and include the auditor's report which was
unqualified and did not contain a statement either under Section 237(2) or
Section 237(3) of the Companies Act 1985.
2.Segmental reporting
Business segments part 1
Revenues EBITDA (1)
Unaudited Unaudited Audited Unaudited Unaudited Audited
Interim Interim Full Interim Interim Full
30 June 30 June Year 30 June 2006 30 June Year
2006 2005 2005
2005 2005
US$m US$m US$m US$m US$m US$m
Engineering & Production Facilities 895.7 703.0 1,472.3 63.3 45.6 98.7
Well Support (2) 350.8 302.1 645.7 43.7 35.1 76.3
Gas Turbine Services 302.9 304.4 607.8 24.0 23.1 47.8
Central costs (5) - - - (17.4) (13.1) (28.8)
Total excluding discontinuing operations 1,549.4 1,309.5 2,725.8 113.6 90.7 194.0
Gas Turbine Services - discontinuing operations (3) 22.7 17.5 36.1 0.5 - (0.1)
Total 1,572.1 1,327.0 2,761.9 114.1 90.7 193.9
Business segments part 2
EBITA (1) Operating profit
Unaudited Unaudited Audited Unaudited Unaudited Audited
Interim Interim Full Interim Interim Full
30 June 30 June 2005 Year 30 June 30 June Year
2006 2006 2005
2005 2005
US$m US$m US$m US$m US$m US$m
Engineering & 57.1 40.9 88.2 55.6 39.9 86.0
Production
Facilities
Well Support 34.7 27.0 58.5 34.7 26.9 68.0
(2)
Gas Turbine 16.0 15.0 32.7 14.7 14.4 24.9
Services
Central costs (17.8) (13.3) (29.5) (17.9) (13.5) (29.8)
(5)
Total 90.0 69.6 149.9 87.1 67.7 149.1
excluding
discontinuing
operations
Gas Turbine - (0.4) (0.8) (0.1) (0.5) (1.1)
Services -
discontinuing
operations
(3)
Total 90.0 69.2 149.1 87.0 67.2 148.0
Finance 2.2 1.0 2.5
income
Finance (13.6) (12.0) (25.8)
expense
Profit before 75.6 56.2 124.7
taxation
Taxation (25.8) (19.8) (41.1)
Profit for 49.8 36.4 83.6
the period
Notes
(1)EBITDA represents operating profit before profit on disposal of subsidiaries,
impairment and restructuring charges, depreciation and amortisation. EBITA
represents EBITDA less depreciation. EBITA and EBITDA are provided as they are
units of measurement used by the Group in the management of its business.
(2)Well Support's interim and full year 2005 results include revenues and profits
earned by the Production Technology business prior to its disposal in December
2005. Production Technology revenues for the first six months of 2005 amounted
to US$18.0m (Full year 2005 : US$37.5m) and operating profit amounted to
US$2.4m (Full year 2005 : US$5.0m).
(3)The discontinuing operations relate to an Aero engine overhaul company which
the Group has decided to divest.
(4)Revenues arising from sales between segments are not material.
(5)Central costs include the costs of certain management personnel in both the UK
and the US, along with an element of Group infrastructure costs.
3.Dividends
Unaudited Unaudited Audited
Interim Interim Full Year
June 2006 June 2005 Dec 2005
US$m US$m US$m
Dividends on equity shares
Final paid 13.4 11.1 11.1
Interim paid - - 6.4
Total dividends 13.4 11.1 17.5
After the balance sheet date, the directors declared an interim dividend of
1.5 cents per share which will be paid on 12 October 2006. The interim
financial report does not reflect this dividend payable, which will be
recognised in shareholders' equity as an appropriation of retained earnings in
the year ended 31 December 2006.
4. Earnings per share
Unaudited Interim Unaudited Interim Audited Full Year
June 2006 June 2005 December 2005
Earnings Number Earnings Earnings Number Earnings Earnings Number Earnings
attribute- of per attrib- of per attri- of per
able shares share utable shares share butable shares
to to to share
equity equity equity
share- share- share-
holders holders holders
(US$m) (millions) (cents) (US$m) (millions) (cents) (US$m) (millions) (cents)
Basic 49.2 493.9 10.0 35.3 463.8 7.6 80.5 473.4 17.0
Effect of 18.3 (0.4) 14.5 (0.2) 17.8 (0.6)
Dilutive
Ordinary
shares
Diluted 49.2 512.2 9.6 35.3 478.3 7.4 80.5 491.2 16.4
Amortisation 3.0 0.6 2.0 0.4 4.8 1.0
Profit on - - (7.9) (1.6)
disposal
of subsidiaries,
net of
tax
Impairment - - 4.2 0.8
And
Restructuring
charges,
net of
tax
Adjusted 52.2 512.2 10.2 37.3 478.3 7.8 81.6 491.2 16.6
diluted
Adjusted 52.2 493.9 10.6 37.3 463.8 8.0 81.6 473.4 17.2
basic
The calculation of basic earnings per share is based on the earnings
attributable to equity shareholders divided by the weighted average number of
ordinary shares in issue during the period excluding shares held by the
Group's employee share ownership trusts. For the calculation of diluted EPS,
the weighted average number of ordinary shares in issue is adjusted to assume
conversion of all potentially dilutive ordinary shares. The Group has two
types of dilutive ordinary shares - share options granted to employees under
Employee Share Option Schemes and the Long Term Retention Plan; and shares
issuable under the Group's Long Term Incentive Scheme. Adjusted EPS is
disclosed to show the results excluding amortisation and the after tax impact
of impairment and restructuring charges and profit on disposal of
subsidiaries.
5. Profit on disposal of subsidiaries
The profit on disposal of subsidiaries relates to the sale of the Production
Technology business in December 2005. This business was part of the Well
Support division.
6. Impairment and restructuring charges
An impairment and restructuring charge of US$6.0m was booked in the year to
December 2005. This charge was in respect of rationalisation of businesses and
facilities, severance costs and impairment of property plant and equipment in
the Gas Turbine Services division.
7. Taxation
The taxation charge for the six months ended 30 June 2006 reflects an
anticipated rate of 34.1% on profit before taxation for the year ending 31
December 2006 (June 2005 : 35.2%).
8. Acquisitions
In March 2006, the Group acquired 100% of the share capital of Global
Performance Holdings Inc, a company based in Greenville, South Carolina that
provides project management, construction management and engineering and
design services to the chemical, process and industrial sectors.
In April 2006, the Group acquired the remaining 6.63% minority shareholding in
Mustang Engineering Holdings Inc.
In June 2006, the Group acquired 55% of SOMIAS Spa, an Algerian maintenance
and fabrication support provider serving the oil and gas and petrochemical
industries.
9. Retirement benefit liability
No interim revaluation of the pension liability has been carried out at 30
June 2006 and accordingly there is no actuarial gain/loss in the statement of
recognised income and expense. The figures for gains and losses for the full
year together with the surplus/deficit at the year end will be presented in
the 2006 Annual Report and Accounts.
10. Cash generated from operations
Unaudited Unaudited Audited
Interim Interim
Full Year
June 2006 June 2005
Dec 2005
US$m US$m US$m
Reconciliation of operating profit to cash
generated from operations:
Operating profit 87.0 67.2 148.0
Adjustments for:
Depreciation 24.1 21.5 44.8
(Gain)/loss on disposal of property plant (0.1) 0.3 0.5
and equipment
Amortisation of other intangible assets 3.0 2.0 4.8
Share based charges 4.1 3.9 7.9
Impairment and restructuring charges - - - 5.3
non-cash impact
Profit on disposal of subsidiaries - - (9.7)
Increase/(decrease) in provisions 0.3 (0.2) (0.2)
Changes in working capital (excluding effect
of acquisition and disposal of subsidiaries)
Increase in inventories (19.9) (29.1) (44.1)
Increase in receivables (107.4) (46.2) (35.5)
Increase in payables 54.5 40.0 46.1
Exchange differences 0.4 (2.2) (6.6)
Cash generated from operations 46.0 57.2 161.3
Analysis of net debt
At 1 At 30 June
January
Cash flow Exchange 2006
2006 movements
US$M US$M
US$M US$M
Cash and cash equivalents 149.9 (32.6) 2.4 119.7
Short term borrowings (47.9) 6.3 (3.6) (45.2)
Long term borrowings (347.8) (65.6) (10.1) (423.5)
Net debt (245.8) (91.9) (11.3) (349.0)
Independent review report to John Wood Group PLC for the six month period to
30 June 2006
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2006 which comprises the consolidated interim
balance sheet as at 30 June 2006 and the related consolidated interim
statements of income, cash flows and statement of recognised income and
expense for the six months then ended and related notes. We have read the
other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing
Rules of the Financial Services Authority require that the accounting policies
and presentation applied to the interim figures should be consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
This interim report has been prepared in accordance with the basis set out in
Note 1.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of management and applying
analytical procedures to the financial information and underlying financial
data and, based thereon, assessing whether the disclosed accounting policies
have been applied. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit and therefore provides a lower level
of assurance. Accordingly we do not express an audit opinion on the financial
information. This report, including the conclusion, has been prepared for and
only for the company for the purpose of the Listing Rules of the Financial
Services Authority and for no other purpose. We do not, in producing this
report, accept or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2006.
PricewaterhouseCoopers LLP
Chartered Accountants
Aberdeen
4 September 2006
Notes:
(a) The maintenance and integrity of the John Wood Group PLC web site is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept
no responsibility for any changes that may have occurred to the interim report
since it was initially presented on the web site.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other
jurisdictions.
Shareholder information
Payment of dividends
The Company declares its dividends in US dollars. As a result of the
shareholders being mainly UK based, dividends will be paid in sterling, but if
you would like to receive your dividend in dollars please contact the
Registrars at the address below. All shareholders will receive dividends in
sterling unless requested. If you are a UK based shareholder, the Company
encourages you to have your dividends paid through the BACS (Banker's
Automated Clearing Services) system. The benefit of the BACS payment method is
that the Registrars post the tax vouchers directly to the shareholders, whilst
the dividend is credited on the payment date to the shareholder's Bank or
Building Society account. Shareholders who have not yet arranged for their
dividends to be paid direct to their Bank or Building Society account and wish
to benefit from this service should contact the Registrars at the address
below. Sterling dividends will be translated at the closing mid-point spot
rate on 22 September 2006 as published in the Financial Times on 23 September
2006.
Officers and advisers
Secretary and Registered Office
I Johnson
John Wood Group PLC
John Wood House
Greenwell Road
ABERDEEN
AB12 3AX
Tel: 01224 851000
Registrars
Lloyds TSB Registrars Scotland
PO Box 28448
Finance House
Orchard Brae
EDINBURGH
EH4 1WQ
Tel: 0870 601 5366
Stockbrokers
JPMorgan Cazenove Limited
Credit Suisse
Auditors
PricewaterhouseCoopers LLP
Chartered Accountants
Financial calendar
6 months ended Year
ending31
30 June 2006 December
2006
Results announced 5 September Early March
2006 2007
Ex-dividend date 20 September May 2007
2006
Dividend record 22 September May 2007
date 2006
Dividend payment 12 October 2006 May 2007
date
Annual General - May 2007
Meeting
The Group's Investor Relations website can be accessed at www.woodgroup.com.
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