Final Results - Part 2
Wood Group (John) PLC
10 March 2003
PART 2
John Wood Group PLC
Group profit and loss account
for the year to 31 December 2002
Note 2002 2001
US$m US$m
Revenues (including share of joint ventures)
Continuing operations 1,689.6 1,445.8
Acquisitions 44.9 36.6
_________ _________
1,734.5 1,482.4
Discontinued operations 3.6 41.4
_________ _________
Revenues (including share of joint ventures) 1 1,738.1 1,523.8
Less: share of revenues of joint ventures (305.6) (243.9)
_________ _________
Group revenues 1,432.5 1,279.9
Cost of sales (1,091.6) (958.5)
_________ _________
Gross profit 340.9 321.4
Net operating expenses 2 (249.1) (248.2)
_________ _________
Operating profit of Group undertakings (after $10.8m (2001 : $9.2m) goodwill 91.8 73.2
amortisation)
Share of operating profit in joint ventures (after $1.8m (2001 : $1.4m) goodwill 31.5 24.0
amortisation)
Share of operating profit in associates 6.5 6.5
_________ _________
Total operating profit: Group and share of joint ventures and associates 2 129.8 103.7
Total operating profit comprises:
_________ _________
Continuing operations 129.4 101.3
Acquisitions 0.9 2.2
_________ _________
130.3 103.5
Discontinued operations (0.5) 0.2
_________ _________
Exceptional items
Loss on the termination of discontinued operations 5 - (13.6)
_________ _________
Profit on ordinary activities before interest 129.8 90.1
Net interest payable - Group 6 (8.3) (13.5)
- joint ventures 6 (2.7) (3.2)
- associates 6 (4.1) (3.8)
_________ _________
Profit on ordinary activities before taxation 114.7 69.6
Taxation on profit on ordinary activities 7 (44.4) (29.0)
_________ _________
Profit on ordinary activities after taxation 70.3 40.6
Equity minority interests 23 (6.0) (5.5)
_________ _________
Profit for the financial year 64.3 35.1
Dividends 8 (16.1) (10.6)
Appropriations 8 - (8.5)
_________ _________
Retained profit for the financial year 22 48.2 16.0
_________ _________
Basic earnings per ordinary share 9 15.7c 7.4c
Diluted earnings per ordinary share 9 13.8c 6.7c
Adjusted earnings per ordinary share before goodwill amortisation 9 16.5c 13.2c
John Wood Group PLC
Group Balance sheet
as at 31 December 2002
2002 2001
Note US$m US$m
Fixed assets
Intangible assets 10 227.3 156.2
Tangible assets 11 206.7 126.7
Investments in joint ventures 12
_________ __________
Share of gross assets 280.0 255.2
Share of gross liabilities (209.2) (194.0)
_________ __________
Goodwill arising on acquisition 9.4 9.1
80.2 70.3
Investments in associates 12 8.8 7.2
Other investments 12 1.2 1.2
_________ __________
Total investments 90.2 78.7
_________ __________
524.2 361.6
_________ __________
Current assets
Stocks 13 152.6 153.4
Debtors 14 349.2 306.0
Cash at bank and in hand 56.2 129.3
_________ __________
558.0 588.7
_________ __________
Creditors: amounts falling due within one year
Bank loans and overdrafts 15 (10.7) (3.3)
Other creditors 15 (281.6) (232.1)
_________ __________
(292.3) (235.4)
_________ __________
Net current assets 265.7 353.3
_________ __________
Total assets less current liabilities 789.9 714.9
Creditors: amounts falling due after one year
Bank loans 16 (222.7) (382.4)
Other creditors 16 (17.0) (2.9)
_________ __________
(239.7) (385.3)
_________ __________
Provisions for liabilities and charges 18 (11.4) (14.3)
_________ __________
Net assets excluding pension liability 538.8 315.3
Pension liability 25 (16.3) (5.3)
_________ __________
Net assets including pension liability 522.5 310.0
_________ __________
Capital and reserves
Called up share capital 19 23.3 105.6
Share premium account 20 200.3 -
Capital reduction reserve 21 88.1 -
Profit and loss account 22 196.2 190.4
_________ __________
Total shareholders' funds 507.9 296.0
Comprising
_________ __________
Equity shareholders' funds 507.9 197.0
Non-equity shareholders' funds - 99.0
_________ __________
Equity minority interests 23 14.6 14.0
_________ __________
522.5 310.0
_________ __________
John Wood Group PLC
Statement of total recognised gains and losses
for the year to 31 December 2002
2002 2001
Note US$m US$m
Profit for the financial year 64.3 35.1
Actuarial loss recognised in the pension scheme 25 (14.0) (10.1)
Movement in deferred tax relating to pension liability 25 4.2 3.1
Exchange movement on retranslation of foreign currency net assets (1.2) (8.5)
___________ ___________
Total recognised gains for year 53.3 19.6
Prior year adjustments - 29.3
___________ ___________
Total gains recognised since last annual report 53.3 48.9
___________ ___________
Included in the above are total recognised gains of US$17.0m (2001: US$12.2m)
in respect of joint ventures and gains of US$1.6m (2001 : US$1.5m) in respect of
associates.
There is no material difference between the profit on ordinary activities before
taxation, the retained profit for the year stated above and their historical
cost equivalents.
Reconciliation of movement in shareholders' funds
for the year to 31 December 2002
2002 2001
Note US$m US$m
Profit for the financial year 64.3 35.1
Dividends and other appropriations 8 (16.1) (19.1)
___________ _____________
48.2 16.0
Issue of new shares 216.2 0.1
Redemption of convertible redeemable preference shares (29.6) -
Expenses of share issue (11.9) -
Non-equity shares - appropriation adjustments 8 - 8.5
Actuarial loss recognised in the pension scheme net of deferred tax 25 (9.8) (7.0)
Exchange movement on retranslation of foreign currency net assets (1.2) (8.5)
Exchange movement on retranslation of share capital - (0.7)
___________ _____________
Net increase in shareholders' funds 211.9 8.4
Shareholders' funds at 1 January 296.0 287.6
___________ _____________
Shareholders' funds at 31 December 507.9 296.0
___________ _____________
John Wood Group PLC
Group cash flow statement
for the year to 31 December 2002
Note 2002 2001
US$m US$m
Operating activities
Net cash inflow from operating activities 30 127.9 90.1
Dividends from joint ventures 7.7 6.6
__________ __________
135.6 96.7
__________ __________
Returns on investments and servicing of finance
Interest received 7.5 8.6
Interest paid (15.5) (23.7)
Non-equity dividends paid (6.5) (6.6)
__________ __________
(14.5) (21.7)
__________ __________
Taxation
UK corporation tax paid (0.4) (5.5)
Overseas tax paid (22.6) (23.9)
__________ __________
(23.0) (29.4)
__________ __________
Capital expenditure and financial investment
Purchase of tangible fixed assets (105.9) (51.1)
Sale of tangible fixed assets 5.1 0.2
Disposal of investments 12 0.2 0.2
Repayment of loans from joint ventures 6.2 2.5
__________ __________
(94.4) (48.2)
__________ __________
Acquisitions and disposals
Acquisition of minority interests 23 (18.2) (5.4)
Purchase of subsidiary undertakings, net of cash acquired 24 (77.1) (27.0)
Investment in joint ventures 12 (0.6) (0.3)
Deferred consideration 24 (0.4) (2.8)
__________ __________
(96.3) (35.5)
__________ __________
Equity dividends paid (7.5) (1.5)
__________ __________
Net cash outflow before management of liquid resources
and financing (100.1) (39.6)
__________ __________
Management of liquid resources
(Increase)/decrease in cash placed on deposit 32 (0.9) 36.0
__________ __________
Financing
(Decrease)/increase in bank loans 32 (153.6) 23.8
Issue of ordinary shares 216.2 0.1
Redemption of convertible redeemable preference shares (29.6) -
Expenses of share issue (11.9) -
__________ __________
Net cash inflow from financing 21.1 23.9
__________ __________
(Decrease)/increase in cash 32 (79.9) 20.3
__________ __________
John Wood Group PLC
Accounting policies
for the year to 31 December 2002
The financial statements are prepared under the historical cost convention and
in accordance with applicable Accounting Standards in the United Kingdom. A
summary of the more important Group accounting policies which have been
consistently applied, is set out below.
Basis of consolidation
The Group financial statements are the result of the consolidation of the
financial statements of the Group's subsidiary undertakings from the date of
acquisition or up until the date of disposal as appropriate. All Group
companies prepare accounts to 31 December.
Reporting currency
The Group's earnings stream is primarily US dollars and the principal functional
currency is the US dollar, being the most representative currency of the Group.
The Group financial information is therefore prepared in US dollars.
The following sterling to US dollar exchange rates have been used in the
preparation of these accounts:-
Average rate Closing rate
________________________________________________________________________ __________________ ___________________
Year ended 31 December 2001 1.4419 1.4554
Year ended 31 December 2002 1.5037 1.6099
________________________________________________________________________ __________________ ___________________
Revenue recognition
Revenue is recognised only when it is probable that the economic benefits
associated with a transaction will flow to the Group and the amount of revenue
can be measured reliably. Revenue from product sales is recognised when the
significant risks and rewards of ownership have been transferred to the buyer,
which is normally upon delivery of products and customer acceptance, if any.
Revenue from services is recognised as the services are rendered, including
revenues based on contractual rates per man hour in respect of multi-year
service contracts. Incentive performance revenues are recognised upon completion
of agreed objectives. Revenues are stated net of sales taxes and discounts.
Joint ventures and associates
The Group's share of profits less losses of joint ventures and associates is
included in the Group profit and loss account and the Group's share of their net
assets is included in the Group balance sheet. In addition, the Group's share
of revenues, operating profit, interest and tax of joint ventures and operating
profit, interest and tax of associates is separately disclosed.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of an
acquisition over the fair value of the Group's share of the net assets of the
acquired subsidiary, joint venture, or associate at the date of acquisition.
Goodwill is amortised using the straight line method over its estimated life,
not to exceed 20 years. When estimating the life of goodwill for each
acquisition the principal factors that the Group takes into account are the
nature and foreseeable life of the acquired business, the stability and
foreseeable life of the industry to which the goodwill relates and the effects
of product obsolescence and changes in demand for the acquired business.
John Wood Group PLC
Accounting policies
for the year to 31 December 2002
Tangible fixed assets
Tangible fixed assets are stated at historical cost less aggregate depreciation.
No depreciation is charged with respect to freehold land and assets in course
of construction. Transfers from fixed assets to current assets are undertaken at
the lower of cost and net realisable value.
Depreciation is calculated on the straight line method over the estimated useful
life of the asset, as follows:
Freehold buildings 25-50 years
Long leasehold buildings 25-50 years
Short leasehold buildings period of lease
Plant and equipment 3-10 years
When estimating the useful life of an asset group, the principal factors the
Group takes into account are the durability of the assets, the intensity at
which the assets are expected to be used and the expected rate of technological
developments.
Impairment
The Group performs impairment reviews in respect of fixed assets and goodwill
whenever events or changes in circumstance indicate that the carrying amount may
not be recoverable. An impairment loss is recognised when the recoverable
amount of an asset, which is the higher of the asset's net realisable value and
its value in use, is less than its carrying amount.
Stocks
Stocks, which include raw materials, work in progress and finished goods, are
stated at the lower of cost and net realisable value. Product based companies
determine cost by weighted average methods using standard costing to gather raw
material, labour and overhead costs. These costs are adjusted, where
appropriate, to correlate closely the standard costs to the actual costs
incurred based on variance analysis. Service based companies' stocks consist of
spare parts and other consumables. Serialised parts are costed using the
specific identification method and other materials are generally costed using
the first in, first out method.
Net realisable value is the estimated selling price in the ordinary course of
business, less the costs of completion and selling expenses. Allowance is made
for obsolete and slow-moving items, based upon annual usage by part.
Long-term contracts
Revenue on long-term contracts is recognised according to the stage reached in
the contract by reference to the value of work done. A prudent estimate of the
profit attributable to work completed is recognised once the outcome of the
contract can be assessed with reasonable certainty. Provision is made for all
foreseeable losses. The amount by which the revenue exceeds payments on account
is shown under debtors as amounts recoverable on contracts. Any excess of
payments on account over revenue recorded on contracts are classified under
creditors due within one year.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more, or a right to pay less, tax in
the future have occurred at the balance sheet date, with the following
exceptions:-
• provision is made for gains on disposal of fixed assets that have been
rolled over into replacement assets only where, at the balance sheet
date, there is a commitment to dispose of the replacement assets.
• provision is made for the tax that would arise on remittance of the
retained earnings of overseas subsidiaries only to the extent that, at
the balance sheet date, dividends have been declared or there is a
binding commitment.
• on the basis of all available evidence deferred tax assets are
recognised only to the extent that the Directors consider that it is
more likely than not that there will be suitable taxable profits from
which the future reversal of the underlying timing differences can be
deducted.
Deferred tax is measured on a non-discounted basis at the rates that are
expected to apply in the periods in which timing differences reverse, based on
tax rates and laws enacted or substantively enacted at the balance sheet date.
John Wood Group PLC
Accounting policies
for the year to 31 December 2002
Foreign currencies
Profit and loss accounts of entities that prepare their results in a currency
other than the US dollar are translated into US dollars at average rates of
exchange for the year and assets and liabilities are translated into US dollars
at the rates of exchange ruling at 31 December. Exchange differences arising on
translation of net assets in such entities held at the beginning of the year,
together with those differences resulting from the restatement of profits and
losses from average to year end rates, are taken to reserves. Other exchange
differences are taken directly to profit and loss account.
Exchange differences arising on non US dollar currency borrowings raised to
finance equity investments denominated in a non US dollar currency, and which
are designated as and are hedges of such investments, are taken to reserves on
consolidation and offset against the exchange differences arising on these
assets.
In each individual entity, transactions in overseas currencies are translated at
the exchange rates ruling at the date of the transaction or, where forward
contracts have been arranged, at the contractual rates. Monetary assets and
liabilities denominated in foreign currencies are retranslated at the exchange
rates ruling at the balance sheet dates or at a contractual rate if applicable
and any exchange differences are taken to the profit and loss account.
In 2002, John Wood Group PLC (Company) changed its functional currency from
sterling to US dollars as the majority of the company's transactions are now US
dollar denominated. In 2001 the functional currency of the group changed from
sterling to US dollars, and the company's equity share capital which was
denominated in sterling was translated at the exchange rate ruling at the
balance sheet date, with exchange differences taken to reserves. In 2002, as a
result of the IPO, significant sterling denominated share capital was raised.
The directors now consider it is more appropriate to record the equity share
capital at the exchange rate ruling on the date it was raised in line with the
functional currency of the parent company. There has been no impact of this
change on the results for the period.
Financial instruments
The Group uses derivative financial instruments to hedge its exposures to
fluctuations in interest and foreign exchange rates. Instruments accounted for
as a hedge are designated as a hedge at the inception of contracts. Receipts and
payments on interest rate instruments are recognised as adjustments to interest
expense over the life of the instrument. Gains and losses on foreign currency
hedges are recognised on maturity of the underlying transaction.
Operating leases
As lessee
Payments made under operating leases are charged to the profit and loss account
on a straight line basis over the period of the lease.
As lessor
Operating lease rental income arising from leased assets is recognised in the
profit and loss account on a straight line basis over the period of the lease.
Pension costs
In 2001, the Group adopted early FRS 17 'Retirement Benefits'. The Group
operates a defined benefit scheme and a number of defined contribution schemes.
The assets of these schemes are held in separate trustee administered funds.
The defined benefit scheme's assets are measured using market values. Pension
scheme liabilities are measured by an actuary using the projected unit method
and discounted at the current rate of return on a high quality corporate bond of
equivalent term and currency to the liability. The increase in the present value
of the liabilities of the Group's defined benefit pension schemes expected to
arise from employee service in the period is charged to operating profit. The
expected return on the schemes' assets and the increase during the period in the
present value of the schemes' liabilities arising from the passage of time are
included in other finance income. Actuarial gains and losses are recognised in
the consolidated statement of total recognised gains and losses.
The pension scheme's surpluses to the extent that they are considered
recoverable, or deficits are recognised in full and presented on the face of the
balance sheet net of the related deferred tax.
The Group's contributions to defined contribution schemes are charged to the
profit and loss account in the period to which the contributions relate.
John Wood Group PLC
Accounting policies
for the year to 31 December 2002
Use of estimates
The preparation of these financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue during the
reporting period. Actual results could differ from those estimates.
Warranties
Provision is made for the estimated liability on all products and services still
under warranty, including claims already received, based on past experience.
Employee share schemes
The Group has a number of share option schemes. The Group grants options at the
current fair market value and as a result there is no charge arising on the
grant of options during the period.
Employers' National Insurance Contributions become payable on the exercise of
unapproved share options issued after 5 April 1999 on the difference between the
market value of the Company's ordinary shares at the date of exercise and the
exercise price of the underlying options. Provision for this liability is made
based upon the market value of options at the balance sheet date and spread over
the vesting period of the options.
The Group is deemed to have control of the assets, liabilities, income and costs
of its employee share ownership trust. It has therefore been included in the
financial statements of the Group.
Business segments
The Group provides services and products to the oil and gas and power industries
worldwide. The Group is organised into three business segments:
- Engineering & Production Facilities
- Well Support
- Gas Turbine Services
The Engineering and Production Facilities operations provide engineering
services and production facilities management and support services to major
integrated, independent and national oil companies. The Well Support operations
provide services and products for well completion and throughout the life of the
well to support continued production. The Gas Turbine Services operations offer
comprehensive gas and steam turbine aftermarket maintenance, repair and overhaul
services for oil and gas and pipeline customers, electric utilities, independent
and merchant power producers and consolidated energy companies.
John Wood Group PLC
Notes to the financial statements
for the year to 31 December2002
1. Segmental reporting
Business segments
Revenues EBITDA (1) EBITA (1) Operating profit
2002 2001 2002 2001 2002 2001 2002 2001
US$m US$m US$m US$m US$m US$m US$m US$m
Engineering &
Production
Facilities
Group 823.7 612.3 82.5 61.5 75.7 56.8 69.2 51.4
Joint 169.1 134.4 19.3 11.5 16.0 8.5 15.6 8.1
Ventures
_______ __________ ________ ________ _________ _________ _________ _________
992.8 746.7 101.8 73.0 91.7 65.3 84.8 59.5
_______ __________ ________ ________ _________ _________ _________ _________
Well Support
Group 354.8 405.3 32.7 39.5 22.5 30.5 20.4 28.2
Joint 5.2 6.8 (0.5) - (0.8) (0.3) (0.8) (0.3)
Ventures
_______ __________ ________ ________ _________ _________ _________ _________
360.0 412.1 32.2 39.5 21.7 30.2 19.6 27.9
_______ __________ ________ ________ _________ _________ _________ _________
Gas Turbine
Services
Group 220.7 198.0 32.3 26.9 25.0 20.6 22.8 19.1
Joint 131.3 102.7 20.5 18.7 18.1 17.2 16.7 16.2
Ventures
_______ __________ ________ ________ _________ _________ _________ _________
352.0 300.7 52.8 45.6 43.1 37.8 39.5 35.3
_______ __________ ________ ________ _________ _________ _________ _________
Total
excluding
discontinuing
operations 1,704.8 1,459.5 186.8 158.1 156.5 133.3 143.9 122.7
Gas Turbine 33.3 64.3 (2.3) (7.7) (3.5) (9.0) (3.5) (10.0)
Services -
discontinuing
operations
(2)
_______ __________ ________ ________ _________ _________ _________ _________
Total 1,738.1 1,523.8 184.5 150.4 153.0 124.3 140.4 112.7
Comprising
_______ __________ ________ ________ _________ _________ _________ _________
- Group 1,432.5 1,279.9 145.2 120.2 119.7 98.9 108.9 88.7
- Joint 305.6 243.9 39.3 30.2 33.3 25.4 31.5 24.0
Ventures
_______ __________ ________ ________ _________ _________ _________ _________
Central costs (16.5) (14.3) (17.1) (15.5) (17.1) (15.5)
Share of 6.5 6.5
operating
profit in
associates
(5)
_______ __________ ________ ________ _________ _________ _________ _________
Total 1,738.1 1,523.8 168.0 136.1 135.9 108.8 129.8 103.7
_______ __________ ________ ________ _________ _________
Exceptional - (13.6)
items (4)
Net interest (15.1) (20.5)
payable
Profit before 114.7 69.6
taxation
_________ _________
Note:
(1) EBITDA represents operating profit (including the share of joint ventures)
before deduction of depreciation, goodwill amortisation, and impairment
charges. EBITA represents EBITDA less depreciation (including the share of
joint venture depreciation).
(2) The discontinuing operations in the Gas Turbine Services business relate to
Aero engine overhaul companies. The discontinuing revenues and operating
losses above includes the discontinued revenues and operating losses
respectively, as shown on the face of the profit and loss account.
(3) Revenues arising from sales between segments are not significant and have
been eliminated in the above analysis.
(4) The exceptional items in 2001 relate to discontinued operations.
(5) The Group's associate is not part of any of the current business segments.
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
1. Segmental reporting (continued)
2002 2001
Net operating assets US$m US$m
Engineering & Production Facilities
- Group 226.2 147.4
- Joint Ventures 42.0 40.0
__________ ___________
268.2 187.4
__________ ___________
Well Support
- Group 179.9 205.1
- Joint Ventures 2.6 2.9
__________ ___________
182.5 208.0
__________ ___________
Gas Turbine Services
- Group 207.6 117.1
- Joint Ventures 73.7 76.9
__________ ___________
281.3 194.0
__________ ___________
Total allocated excluding discontinuing operations 732.0 589.4
Gas Turbine Services - discontinuing operations 22.1 29.1
Unallocated (16.3) (2.6)
__________ ___________
Net operating assets 737.8 615.9
Net debt - Group (177.2) (256.4)
Net debt - Joint Ventures (38.1) (49.5)
__________ ___________
Net assets 522.5 310.0
__________ ___________
The impact of acquisitions on Group revenues and operating profit in the year of
acquisition is as follows:-
2002 2001
US$m US$m
Revenues
Engineering & Production Facilities 27.3 19.5
Well Support - -
Gas Turbine Services 17.6 17.1
________ __________
Total revenues 44.9 36.6
________ __________
Operating profit
Engineering & Production Facilities (0.1) 1.2
Well Support - (0.1)
Gas Turbine Services 1.0 1.1
________ __________
Total operating profit 0.9 2.2
________ __________
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
1. Segmental reporting (continued)
Geographical segments
Europe North America Rest of World Total
2002 2001 2002 2001 2002 2001 2002 2001
US$m US$m US$m US$m US$m US$m US$m US$m
Revenues by destination
Group 467.0 414.3 720.7 615.5 244.8 250.1 1,432.5 1,279.9
Joint ventures 141.1 104.3 63.0 54.0 101.5 85.6 305.6 243.9
_____ ______ _____ ______ _____ ______ ______ _______
Total revenues 608.1 518.6 783.7 669.5 346.3 335.7 1,738.1 1,523.8
_____ ______ _____ ______ _____ ______ ______ _______
Revenues by origin
Group 494.5 428.4 777.1 687.9 160.9 163.6 1,432.5 1,279.9
Joint ventures 171.5 147.8 65.1 49.1 69.0 47.0 305.6 243.9
_____ ______ _____ ______ _____ ______ ______ _______
Total revenues 666.0 576.2 842.2 737.0 229.9 210.6 1,738.1 1,523.8
_____ ______ _____ ______ _____ ______ ______ _______
Operating profit
Group 21.6 10.3 51.6 45.0 18.6 17.9 91.8 73.2
Joint ventures 15.6 13.6 6.3 5.6 9.6 4.8 31.5 24.0
Associates 5.5 3.4 0.2 3.1 0.8 - 6.5 6.5
_____ ______ _____ ______ _____ ______ ______ _______
Total operating profit 42.7 27.3 58.1 53.7 29.0 22.7 129.8 103.7
_____ ______ _____ ______ _____ ______
Exceptional items - (13.6)
Net interest payable (15.1) (20.5)
______ _______
Profit before taxation 114.7 69.6
______ _______
2002 2001
US$m US$m
Net operating assets
Europe 120.0 106.9
North America 467.9 415.6
Rest of World 149.9 93.4
______ ______
Net operating assets 737.8 615.9
Net debt - Group (177.2) (256.4)
Net debt - Joint Ventures (38.1) (49.5)
______ _______
Net assets 522.5 310.0
______ _______
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
2. Total operating profit
Continuing operations Acquisitions Discontinued Total
operations
2002 2001 2002 2001 2002 2001 2002 2001
US$m US$m US$m US$m US$m US$m US$m US$m
Revenues 1,689.6 1,445.8 44.9 36.6 3.6 41.4 1,738.1 1,523.8
including
share of
joint
ventures
Less share (305.6) (243.2) - (0.7) - - (305.6) (243.9)
of revenues
of joint
ventures
_________ _________ _______ ________ _______ ________ ___________ ________
Group 1,384.0 1,202.6 44.9 35.9 3.6 41.4 1,432.5 1,279.9
revenues
Cost of (1,049.6) (901.4) (38.4) (27.5) (3.6) (29.6) (1,091.6) (958.5)
sales
_________ _________ _______ ________ _______ ________ ___________ ________
Gross profit 334.4 301.2 6.5 8.4 - 11.8 340.9 321.4
Net (243.0) (230.7) (5.6) (5.9) (0.5) (11.6) (249.1) (248.2)
operating
expenses
_________ _________ _______ ________ _______ ________ ___________ ________
Operating 91.4 70.5 0.9 2.5 (0.5) 0.2 91.8 73.2
profit of
Group
undertakings
Share of 31.5 24.3 - (0.3) - - 31.5 24.0
operating
profit in
joint
ventures
Share of 6.5 6.5 - - - - 6.5 6.5
operating
profit in
associates
_________ _________ _______ ________ _______ ________ ___________ ________
Total 129.4 101.3 0.9 2.2 (0.5) 0.2 129.8 103.7
operating
profit
_________ _________ _______ ________ _______ ________ ___________ ________
Total operating profit is stated after charging: 2002 2001
US$m US$m
Depreciation of tangible fixed assets
- Group 26.1 22.5
- joint ventures 6.0 4.8
Amortisation of intangible assets
- Group 10.8 9.2
- joint ventures 1.8 1.4
Hire and operating lease payments
Plant and equipment 4.9 4.8
Land and buildings 24.7 20.7
Auditors' remuneration - UK
Audit 0.9 0.8
IPO work 0.7 0.5
Other services - 0.9
Auditors' remuneration - overseas
Audit 0.2 0.2
Tax 0.4 0.1
Other services 0.1 0.1
Net operating expenses comprise:
Administrative expenses 238.3 238.0
Exceptional items - impairments - 1.0
Goodwill amortisation - Group 10.8 9.2
_________ ____________
249.1 248.2
_________ ____________
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
3. Employee numbers and staff costs
Number Number
2002 2001
The average monthly number of persons employed by the Group during the year
was as follows:
Europe 2,606 2,587
North America 4,979 4,185
Rest of the World 2,045 847
_________ ___________
9,630 7,619
_________ ___________
Direct production 7,878 5,952
Management and staff 1,752 1,667
_________ ___________
9,630 7,619
_________ ___________
US$m US$m
Total staff costs in respect of these persons amounted to:
Wages and salaries 539.7 409.8
Social security costs 50.7 39.4
Pension costs - defined benefit schemes (note 25) 3.7 3.4
Pension costs - defined contribution schemes (note 25) 14.5 9.6
_________ ___________
608.6 462.2
_________ ___________
The above figures exclude employees of joint ventures and associates and
contract staff. The average number of employees of the joint
ventures in 2002 was 2,292 (2001 : 2,097).
4. Directors' emoluments
2002 2001
US$'000 US$'000
Aggregate emoluments 2,176 1,869
Aggregate gains made on the exercise of share options 568 490
Amounts receivable under long term incentive schemes 239 307
Company contributions to defined contribution schemes 12 10
3 directors exercised share options in the year (2001 : 2).
Retirement benefits are accruing to 2 directors under a defined
contribution scheme (2001 : 2) and 3 directors under defined benefit
schemes (2001 : 3).
Aggregate emoluments exclude sums paid to third parties.
Full details of individual directors' remuneration are given in
the Directors' Remuneration Report.
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
5. Exceptional items
Operating exceptional items
Impairments
In 2001, the Group performed impairment reviews in respect of property, plant
and equipment and goodwill when subsidiaries experienced sustained losses as a
result of the deterioration of market conditions in the aero sector, resulting
in impairment charges of US$1.0m.
Non-operating exceptional items
Loss on sale/termination of discontinued operations
The Group closed its aero engine overhaul business in Connecticut in March 2002
and decided to divest of its other aero engine overhaul business. A charge of
US$13.6m was made in 2001 to reduce the carrying value of stocks and fixed
assets and to provide for closure costs in respect of the business in
Connecticut. A related tax credit of US $4.1m was provided against this charge.
6. Net interest payable
2002 2001
US$m US$m
Interest receivable on short term deposits 6.9 9.0
Interest payable on bank loans and overdrafts (15.5) (22.6)
Other finance income (note 25) 0.3 0.1
_________ ___________
Total Group (8.3) (13.5)
Joint ventures (2.7) (3.2)
Associates (4.1) (3.8)
_________ ___________
Net interest payable (15.1) (20.5)
_________ ___________
7. Taxation on profit on ordinary activities
2002 2001
US$m US$m
Current tax:
UK corporation tax at 30% (2001 : 30%) 5.8 4.0
Overseas tax 32.1 17.3
Joint ventures 7.5 7.0
Associates 1.0 1.3
Adjustments in respect of prior years (0.5) 1.3
_________ ___________
45.9 30.9
Deferred tax:
Origination and reversal of timing differences (1.3) 1.3
Joint ventures - 0.4
Adjustments in respect of prior years (0.2) (3.6)
_________ ___________
(1.5) (1.9)
_________ ___________
Total tax charge 44.4 29.0
_________ ___________
Included in 2001 overseas current tax above is a credit of US$4.1m
relating to non-operating exceptional items (see note 5).
John Wood Group PLC
Notes to the financal statements
for the year to 31 December 2002
7. Taxation on profit on ordinary activities (continued)
Tax on recognised gains and losses not included in the profit and loss
account comprise a US$4.2m (2001 : US$3.1m) deferred tax credit in respect
of the movement on the Group's net pension liability.
The current tax charge on profit on ordinary activities before exceptional
items and goodwill amortisation varied from the rate of corporate tax
expected on the basis of the locations of the Group's operations due to
the following factors:
2002 2001
US$m US$m
Corporate tax at expected rate 34.78% (2001 : 32.00%) 44.3 29.9
Deductible amortisation (1.3) (0.4)
Non-recognition of losses 0.9 0.6
Effect of exceptional items - (4.1)
Permanent differences 1.0 1.7
Effect of deferred tax 1.5 1.9
Adjustments to current tax charge for prior periods (0.5) 1.3
________ ___________
Current tax charge 45.9 30.9
________ ___________
8. Dividends and appropriations
2002 2001
US$m US$m
Dividends on non-equity shares
First convertible preference shares 0.2 1.4
Second convertible preference shares 0.4 1.8
First convertible redeemable preference shares 0.6 1.4
Second convertible redeemable preference shares 0.7 3.2
________ ___________
1.9 7.8
Dividends on equity shares
Ordinary shares:
Interim paid 1 cent per share 4.7 -
Final proposed 2 cents per share (2001 : 2 pence per share) 9.5 2.8
________ ___________
Total dividends 16.1 10.6
________ ___________
Appropriations
Redemption premium on convertible redeemable preference shares - 5.9
Amortisation of share issue expenses - 0.3
Exchange movement on convertible redeemable preference shares - 2.3
________ ___________
Total Appropriations - 8.5
________ ___________
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
9. Earnings per ordinary share
2002 2001
_________ ________ ________ ___________________ ________
Number of Per-share Number of Per-share
Shares Amount Shares Amount
Earnings Earnings
US$m Millions Cents US$m Millions Cents
Profit for the financial year 64.3 35.1
Less: Preference dividends and redemption
premium (1.9) (13.7)
________ _________ ________ ________ _________ ________
Basic EPS 62.4 396.2 15.7 21.4 288.1 7.4
________ ________
Effect of dilutive securities:
Options - 18.8 0.5 23.1
Convertible preference shares 1.9 50.4 3.2 65.0
________ _________ ________ ________ _________ ________
Diluted EPS 64.3 465.4 13.8 25.1 376.2 6.7
________ ________
Convertible redeemable preference shares - - 10.5 52.9
Goodwill amortisation 12.6 - 10.6 -
Effect of exceptional items net of tax and
minority interests:
Impairments - - 1.0 -
Loss on sale/termination of discontinued
operations net
of tax - - 9.5 -
________ _________ ________ ________ _________ ________
Adjusted EPS before goodwill amortisation 76.9 465.4 16.5 56.7 429.1 13.2
________ _________ ________ ________ _________ ________
The earnings per share calculations reflect the sub-division of
each ordinary share of 10 pence into 3 ordinary shares of 31/3
pence each, upon admission to the official list of the UK Listing
Authority on 5 June 2002.
Shares held by the Group's employee share ownership trusts are
excluded from the number of shares in calculating basic, diluted
and adjusted EPS. Adjusted EPS is disclosed to show the results
excluding the impact of exceptional items and goodwill
amortisation. The impact of the conversion of all preference
shares is taken into account for periods prior to IPO. The effect
of convertible redeemable preference shares was anti dilutive in
2001 and was not taken into account in the calculation of diluted
EPS for that period.
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
10. Intangible fixed assets - Goodwill
Joint ventures Subsidiaries
US$m US$m
Cost
At 1 January 2002 9.6 181.6
Exchange adjustments - 1.2
Additions 0.8 81.4
______________ ____________
At 31 December 2002 10.4 264.2
______________ ____________
Aggregate amortisation
At 1 January 2002 0.5 25.4
Exchange adjustments - 0.7
Charge for the year 0.5 10.8
______________ ____________
At 31 December 2002 1.0 36.9
______________ ____________
Net book value
At 31 December 2002 9.4 227.3
______________ ____________
At 31 December 2001 9.1 156.2
______________ ____________
All goodwill relates to the excess of cost of acquisition over the fair value of
the Group's share of the net assets acquired.
11. Tangible fixed assets
Land and buildings
Leasehold Plant and
Freehold Long Short equipment Total
US$m US$m US$m US$m US$m
_________ __________ _________ ____________ _________
Cost
At 1 January 2002 22.2 21.4 3.4 178.5 225.5
Exchange adjustments 0.4 0.8 - 1.1 2.3
Additions 3.1 1.9 1.8 99.1 105.9
Disposals (0.2) (3.5) - (10.5) (14.2)
Acquisitions 0.2 - - 5.6 5.8
Reclassification to stocks - - - (3.1) (3.1)
_________ __________ _________ ____________ _________
At 31 December 2002 25.7 20.6 5.2 270.7 322.2
_________ __________ _________ ____________ _________
Aggregate depreciation
At 1 January 2002 5.7 6.1 1.6 85.4 98.8
Exchange adjustment 0.4 - - 0.5 0.9
Charge for the year 0.7 2.3 0.3 22.8 26.1
Disposals (0.2) (1.4) - (6.9) (8.5)
Reclassification to stocks - - - (1.8) (1.8)
_________ __________ _________ ____________ _________
At 31 December 2002 6.6 7.0 1.9 100.0 115.5
_________ __________ _________ ____________ _________
Net book value
At 31 December 2002 19.1 13.6 3.3 170.7 206.7
_________ __________ _________ ____________ _________
At 31 December 2001 16.5 15.3 1.8 93.1 126.7
_________ __________ _________ ____________ _________
Plant and equipment include assets in progress of US$60.4m (2001 : US$9.6m).
Freehold land and buildings includes land at cost of US$3.2m (2001 : US$ 2.9m).
Plant and equipment includes assets held for lease to customers, under operating
leases, of US$25.1m (2001 : US$14.7m).
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
12. Investments
Joint Other
Ventures Associates Investments
US$m US$m US$m
______________ _____________ ______________
Cost
At 1 January 2002 72.1 7.2 1.2
Exchange adjustments (4.3) 0.2 0.2
Additions 0.6 - -
Share of profit retained 13.6 1.4 -
Disposals - - (0.2)
______________ _____________ ______________
At 31 December 2002 82.0 8.8 1.2
______________ _____________ ______________
Amounts provided
At 1 January 2002 1.8 - -
Movement in year - - -
______________ _____________ ______________
At 31 December 2002 1.8 - -
______________ _____________ ______________
Net book value
At 31 December 2002 80.2 8.8 1.2
______________ _____________ ______________
At 31 December 2001 70.3 7.2 1.2
______________ _____________ ______________
Net Book value represents cost less amounts provided, plus the
share of post-acquisition profits retained in joint ventures and
associates.
Set out below are additional disclosures required in respect of
the Group's share in its joint ventures and associates of the
following:
2002 2001
Joint Joint
Ventures Associates Ventures Associates
US$m US$m US$m US$m
Goodwill on acquisition (see note 10) 9.4 - 9.1 -
Share of:
Intangible fixed assets 10.0 23.0 11.0 23.2
Tangible fixed assets 53.0 30.2 55.7 27.6
Current assets 217.0 52.7 188.5 47.5
Liabilities due within one year (188.4) (59.2) (149.5) (50.0)
Liabilities due after one year (18.4) (35.5) (39.6) (39.6)
Provisions (2.4) (2.4) (4.9) (1.5)
_________ __________ ________ __________
Goodwill and share of net assets 80.2 8.8 70.3 7.2
_________ __________ ________ __________
The Group has a 30% interest in its associate ASCO plc, a company
incorporated in Great Britain. The Group's share of the revenues
of the associate for the year was US$236.2m (2001 : US$233.0m).
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
12. Investments (continued)
The parent company and the group have investments in the following subsidiary
undertakings and joint ventures which principally affect the profits or net
assets of the group. To avoid a list of excessive length investments which are
not considered significant have been omitted.
Country of
incorporation
or registration Ownership
Name of subsidiary or joint venture interest % Principal activity
Engineering & Production Facilities:
Wood Group Engineering (North Sea) Limited UK 100 Engineering design,
maintenance and management
SIGMA 3 (North Sea) Limited UK 33.3* Engineering design,
maintenance and management
Mustang Engineering Holdings Inc. USA 86.7 Engineering design
Alliance Wood Group Engineering L.P. USA 100 Engineering design
J P Kenny Engineering Limited UK 100 Engineering design
SIMCO Consortium Venezuela 49.5* Operations and maintenance
services
Wood Group Production Services, Inc. USA 100 Operations and maintenance
services
Operators and Consulting Services, Inc. USA 100 Operations and maintenance
services
Well Support:
Wood Group ESP, Inc. USA 100 Electric submersible pumps
Corporacion ESP de Venezuela CA Venezuela 100 Electric submersible pumps
Wood Group Pressure Control, L.P. USA 100 Valves and wellhead
equipment
Wood Group Logging Services Inc. USA 100 Logging services
Gas Turbine Services:
Wood Group Light Industrial Turbines UK 100 Gas turbine repair and
Limited overhaul
Wood Group Engineering Services Jersey 100 Gas turbine repair and
overhaul
(Middle East) Limited
Rolls Wood Group (Repair & Overhauls) UK 50* Gas turbine repair and
overhaul
Limited
Wood Group Heavy Industrial Turbines Ltd UK 100 Heavy industrial turbine
repair
TransCanada Turbines Limited Canada 50* Gas turbine repair and
overhaul
Thomason Mechanical Corporation USA 100 Heavy industrial turbine
repair
The proportion of voting power held equates to the ownership interest, other
than for joint ventures (marked *) which are jointly controlled.
Other Investments
Other investments comprise investments in own shares held by the
Group's employee share ownership trusts. Details are as follows:
Investment in own shares 2002 2001
US$m US$m
Cost
5,371,890 (2001: 6,834,630) own shares 1.2 1.2
_______ ___________
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
13. Stocks
2002 2001
US$m US$m
Raw materials 29.8 26.0
Work in progress 35.7 30.8
Finished goods and goods for resale 87.1 96.6
_______ ___________
152.6 153.4
_______ ___________
14. Debtors
2002 2001
US$m US$m
Due within one year:
Trade debtors 272.7 238.9
Amounts due by joint ventures 34.5 28.1
Other debtors 17.7 18.9
Prepayments and accrued income 19.4 14.5
_______ __________
344.3 300.4
Due after more than one year:
Amount due by associate 3.3 2.9
Other debtors 0.5 0.4
Deferred taxation (see note 18) 1.1 2.3
_______ __________
349.2 306.0
_______ __________
The amount due by associate is a sterling loan to ASCO plc. From 30 September
2001, US$5.7m of the loan was converted into non-equity shares in ASCO. No
interest was received on this loan up to 30 September 2001 but is receivable as
a special dividend at 5% above LIBOR on a sale of the shares in ASCO. From 30
September 2001 interest was charged on the outstanding loan at 2% above LIBOR.
15. Creditors: amounts falling due within one year
2002 2001
US$m US$m
Bank loans and overdrafts 10.7 3.3
______ ___________
Other creditors comprise:
Trade creditors 102.1 98.5
Amounts due to joint ventures 3.4 4.4
Corporation tax 21.4 10.6
Other taxation and social security 12.7 9.8
Other creditors 19.2 15.9
Accruals and deferred income 113.2 84.1
Dividends payable 9.5 7.4
Deferred consideration 0.1 1.4
______ ___________
281.6 232.1
______ ___________
292.3 235.4
______ ___________
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
16. Creditors: amounts falling due after one year
2002 2001
US$m US$m
Bank loans 222.7 382.4
Deferred consideration 12.5 -
Other creditors (payable between one and two years) 4.5 2.9
______ ___________
239.7 385.3
______ ___________
Bank loans comprise:
Repayable between one and two years - 382.4
Repayable between two and five years 222.7 -
______ ___________
222.7 382.4
______ ___________
The bank loans are unsecured and interest is charged at between
60 basis points and 75 basis points above LIBOR. At 31 December 2002 the margin
payable was 60 basis points based on the level of gearing and interest cover.
Deferred consideration of $6.7m is payable between one and two
years and $5.8m is payable between two and five years. Further detail of
deferred consideration is given in note 24.
17. Financial instruments
The Group's financial instruments, other than derivatives, comprise borrowings,
cash and liquid resources, and various items, such as trade debtors and trade
creditors that arise directly from its operations. The Group also enters into
derivative transactions (primarily interest rate swaps and forward foreign
currency contracts). The purpose of such transactions is to manage the interest
rate and currency risks arising from the Group's operations. It is, and has been
throughout the period under review, the Group's policy that no trading in
financial instruments is undertaken.
The main risks arising from the Group's financial instruments are interest rate
risk, liquidity risk and foreign currency risk. The Board reviews and agrees
policies for managing each of these risks and these are summarised below.
Interest rate risk
The Group finances its operations through a mixture of retained profits and bank
borrowings. The Group borrows in the desired currencies at floating rates of
interest and then uses interest rate swaps and caps to generate the desired
interest profile and to manage the Group's exposure to interest rate
fluctuations. The Group's current policy is to keep between 25% and 75% of its
borrowings at fixed rates of interest. At the year-end, approximately 56% of the
Group's borrowings were at fixed rates after taking account of interest rate
swaps.
Liquidity risk
As regards liquidity, the Group's policy has throughout the year been that, to
ensure continuity of funding, at least 90% of its borrowings should mature in
more than a year. At the year-end, 96% per cent of the Group's borrowings were
due to mature in more than four years. Short-term flexibility is achieved by
overdraft facilities and sterling cash balances.
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
17. Financial instruments (continued)
Foreign currency risk
The Group is exposed to foreign exchange risk arising from various currencies,
primarily US dollars and pounds sterling. The Group also has significant
overseas subsidiaries which operate in North America and South America and whose
revenues and expenses are denominated predominantly in US dollars. In order to
protect the Group's US dollar balance sheet from the movements in the exchange
rates, the Group finances its net investment in most overseas subsidiaries
primarily by means of borrowings denominated in their functional currency. The
Group has not hedged its investment in companies with a sterling functional
currency as these investments were made when the Group reported in sterling. The
Group is therefore exposed to exchange movements in reserves on the
retranslation of these companies at closing rate.
Some of the sales of the Group's businesses are to customers in foreign
locations. These sales are priced in local currency but invoiced in the
currencies of the customers involved. Where possible, the Group's policy is to
eliminate all significant currency exposures on sales at the time of sale
through forward currency contracts. The recently introduced exchange controls in
Venezuela will potentially result in increased foreign currency risk whilst they
are in place.
Short-term debtors and creditors
Short-term debtors and creditors have been excluded from all the following
disclosures, other than the currency risk disclosures.
Interest rate risk profile of financial liabilities
The interest rate risk profile of the Group's financial liabilities at 31
December, after taking account of the interest rate and currency swaps used to
manage the interest and currency profile, was as follows:
Financial
Floating rate liabilities
financial Fixed rate on which no
liabilities financial interest is
Total liabilities paid
US$m US$m US$m US$m
US Dollars - Financial liabilities 215.8 90.8 125.0 -
Canadian Dollars - financial liabilities 20.1 20.1 - -
Other currencies - financial liabilities 10.0 10.0 - -
__________ ____________ __________ ___________
At 31 December 2002 245.9 120.9 125.0 -
__________ ____________ __________ ___________
US Dollars
- Financial liabilities 362.4 252.4 110.0 -
- Convertible redeemable preference shares 88.1 60.0 28.1 -
Sterling
- Convertible preference shares 3.1 - - 3.1
Canadian Dollars - financial liabilities 19.4 19.4 - -
Other currencies - financial liabilities 3.9 3.9 - -
__________ ____________ __________ ___________
At 31 December 2001 476.9 335.7 138.1 3.1
__________ ____________ __________ ___________
All the Group's creditors falling due within one year (other than bank and other
borrowings) are excluded from the above tables either due to the exclusion of
short-term items or because they do not meet the definition of a financial
liability, for example tax balances.
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
17. Financial instruments (continued)
The Group has entered into US$125m of interest rate swaps from floating to fixed
rates as at 31 December 2002 (2001 : US$110m).
The weighted average interest rate excluding margin (currently 0.6%) for fixed
rate financial liabilities was 4.5% (2001 : 4.8%). This rate is fixed for
between 4 and 5 years (2001 : 5 years).
Floating rate financial liabilities bear interest at rates, based on relevant
national LIBOR equivalents, which are fixed in advance for periods of between
one month and three months.
Interest rate risk of financial assets
The Group has no significant financial assets, other than short term deposits,
cash at bank and short-term loans to associates and joint ventures.
2002 2001
Cash at Loans to Loans to
bank and Short-term associates Cash at Short-term associates
in hand deposits and joint bank and deposits and joint
ventures Total in hand ventures Total
________ ________ ___________ ______ ________ ________ ___________ ________
US$m US$m US$m US$m US$m US$m US$m US$m
Currency
Sterling 13.9 21.5 3.3 38.7 79.4 21.8 2.9 104.1
US Dollars 4.9 3.3 2.3 10.5 17.0 - 8.5 25.5
Other currencies 12.6 - 8.6 21.2 11.1 - 8.6 19.7
________ ________ ___________ ______ ________ ________ ___________ ________
At 31 December 31.4 24.8 14.2 70.4 107.5 21.8 20.0 149.3
________ ________ ___________ ______ ________ ________ ___________ ________
Floating rate 31.4 - 14.2 45.6 107.5 - 20.0 127.5
Fixed rate - 24.8 - 24.8 - 21.8 - 21.8
________ ________ ___________ ______ ________ ________ ___________ ________
At 31 December 31.4 24.8 14.2 70.4 107.5 21.8 20.0 149.3
________ ________ ___________ ______ ________ ________ ___________ ________
Fixed rate short-term deposits are placed with banks for periods of up to 12
months and have earned interest at between 4% and 7.1% in 2002 (5.8% to 7.4% in
2001). Floating rate cash earns interest at between UK base rate and UK base
rate less 10 basis points.
No interest was charged on the loan to associate up to 30 September 2001 but
interest is receivable as a special dividend at 5% above LIBOR on a sale of
shares in ASCO plc. From 30 September 2001, interest was charged at floating
market rates including an appropriate margin (see note 14).
Interest on loans to joint ventures is charged at floating market rates.
Maturity of financial liabilities
The maturity profile of the carrying amount of the group's financial liabilities
other than short-term trade creditors and accruals at 31 December was as
follows:
2002 2001
Convertible
redeemable
preference
shares
Deferred
consideration
Debt Total Debt Total
______________ _______ _______ _______ ____________ ______
US$m US$m US$m US$m US$m US$m
In one year or less, or on demand - 10.7 10.7 3.3 - 3.3
In more than one year but not more than two 6.7 - 6.7 382.4 - 382.4
years
In more than two years but not more than five 5.8 222.7 228.5 - 88.1 88.1
years
______________ _______ _______ _______ ____________ ______
12.5 233.4 245.9 385.7 88.1 473.8
______________ _______ _______ _______ ____________ ______
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
17. Financial instruments (continued)
Borrowing facilities
The group has undrawn committed borrowing facilities available at 31 December
2002 of US$369.2m (2001 : US$92.1m) in respect of which all conditions precedent
had been met at that date. These are floating rate facilities and were renewed
on 9 April 2002. These facilities expire on 9 April 2007.
Fair values of financial assets and financial liabilities
The following table provides a comparison by category of the carrying amounts
and the fair values of the Group's financial assets and financial liabilities at
31 December 2001 and 2002. Fair value is the amount at which a financial
instrument could be exchanged in an arm's length transaction between informed
and willing parties, other than a forced or liquidation sale and excludes
accrued interest. Where available, market values have been used to determine
fair values. Where market values are not available, fair values have been
calculated by discounting expected cash flows at prevailing interest and
exchange rates. Set out below the table is a summary of the methods and
assumptions used for each category of financial instrument.
2002 2001
Book value Fair value Book value Fair value
Primary financial instruments held or US$m US$m US$m US$m
issued to finance the group's operations:
Short-term borrowings (10.7) (10.7) (3.3) (3.3)
Long-term borrowings (222.7) (222.7) (382.4) (382.4)
Deferred consideration (12.5) (12.5) - -
Convertible preference shares - - (3.1) (78.8)
Convertible redeemable preference shares - - (88.1) (95.9)
Loans to joint ventures 10.9 10.9 17.1 17.1
Loans to associate 3.3 3.3 2.9 2.9
Short-term deposits 24.8 24.8 21.8 21.8
Cash at bank and in hand 31.4 31.4 107.5 107.5
____________ ____________ ____________ ____________
Derivative financial instruments held to
manage the interest rate and currency
profile:
Interest rate swaps - (6.1) - 1.4
Forward foreign currency contracts (1.3) (1.3) - -
____________ ____________ ____________ ____________
Under the Group's accounting policy, forward contracts that are entered into in
order to hedge foreign currency assets and liabilities are revalued to balance
sheet rates with net unrealised gains/losses being shown as part of the
underlying asset or liability being hedged. Changes in the value of the swap as
a result of changes in interest rates are not included in the book value of the
relevant asset or liability.
At 31 December 2002, the Group had entered into forward contracts to sell £31.0m
for US dollars at rates between £1 = $1.5656 and £1 = $1.5716. These contracts
were entered to hedge sterling assets in dollar functional companies.
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
17. Financial instruments (continued)
Summary of methods and assumptions
Interest rate swaps, currency swaps and Fair value is based on market price of comparable
forward foreign currency contracts instruments at the balance sheet date. Forward foreign
currency contracts have been valued at spot rate on the
balance sheet date as the contracts mature within one
year.
Short-term deposits, short and long-term The fair value of short-term deposits, short and
borrowings, deferred consideration and long-term loans and overdrafts, deferred consideration
loans to joint ventures and associates and loans to joint ventures and associates approximates
to the carrying amount because of the short maturity of
interest rates in respect of these instruments. The
long term loans are generally rolled over for periods of
three months or less.
Preference shares The fair value of the convertible preference shares at
31 December 2001 was based on the higher of fair market
value in respect of share options and the latest
transaction price. The dividend payable on the
convertible redeemable preference shares equated to the
market rate for long-term borrowings. The fair value
applied was therefore the par value plus the portion of
the 20% redemption premium payable accrued to that date.
Currency exposures
To mitigate the effect of the currency exposures arising from its net
investments overseas the Group either borrows in the local currencies of its
main operating units or swaps other borrowings, using currency swaps, into such
local currencies. Gains and losses arising on net investments overseas and the
financial instruments used to hedge the currency exposures are recognised in the
statement of total recognised gains and losses. The Group has typically not
hedged its net investments in sterling functional companies.
The tables below show the extent to which Group companies have monetary assets
and liabilities in currencies other than their local currency. Foreign exchange
differences on retranslation of these assets and liabilities are taken to the
profit and loss account of the Group companies and the Group.
Net foreign currency monetary assets/
(liabilities)
US Other
Sterling dollars currencies Total US$m
US$m US$m US$m
2002
Functional currency of group operation:
Sterling - 6.1 12.2 18.3
US Dollars 5.1 - (4.6) 0.5
Other currencies 0.3 5.5 0.1 5.9
________ __________ ___________ _________
Total 5.4 11.6 7.7 24.7
________ __________ ___________ _________
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
17. Financial instruments (continued)
Net foreign currency monetary assets/
(liabilities)
US Other
Sterling dollars currencies Total US$m
US$m US$m US$m
2001
Functional currency of group operation:
Sterling - 26.9 0.8 27.7
US Dollars (0.3) - (3.2) (3.5)
Other currencies 0.1 4.8 0.8 5.7
________ __________ __________ _________
Total (0.2) 31.7 (1.6) 29.9
________ __________ __________ _________
Hedges
Where possible, the Group enters into forward foreign currency contracts to
eliminate the currency exposures that arise on revenues denominated in foreign
currencies immediately those revenues are transacted. It also uses interest rate
swaps to manage its interest rate profile. Changes in the fair value of
instruments used as hedges are not recognised in the financial statements until
the hedged position matures.
18. Provisions for liabilities and charges
2002 2001
US$m US$m
Deferred taxation (note a) - -
Warranty provisions (note b) 5.2 5.2
Other provisions (note c) 6.2 9.1
__________ __________
11.4 14.3
__________ __________
The movement in the provisions comprises:
Deferred Warranty Other
Taxation Provisions Provisions
US$m US$m US$m
__________ ___________ ___________
At 1 January 2002 - 5.2 9.1
Acquisitions - 0.5 -
Exchange adjustments 0.3 - (0.1)
Charge/(credit) for the year (1.5) 2.5 0.2
Reclassification as joint venture tax 0.4 - -
Payments during the year - (3.0) (3.0)
Reclassification from creditors 1.9 - -
Reclassification to debtors (note 14) (1.1) - -
__________ ___________ ___________
At 31 December 2002 - 5.2 6.2
__________ ___________ ___________
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
18. Provisions for liabilities and charges (continued)
a. Deferred taxation
Deferred taxation included in these financial statements comprises net
corporation tax receivable deferred by:-
2002 2001
US$m US$m
Fixed asset timing differences 5.0 3.2
Short term timing differences (6.1) (5.5)
_______ ___________
(1.1) (2.3)
_______ ___________
Deferred income tax liabilities have not been established for the
withholding and other taxes that would be payable on the unremitted earnings of
certain subsidiaries and joint ventures, as such amounts are continually
reinvested. The Group has unrecognised tax losses of US$26.1m (2001 : US$34.9m)
to carry forward against future taxable income.
b. Warranty provisions
At 31 December 2002, a warranty provision of US$5.2m (2001 :
US$5.2m) was recognised in respect of guarantees provided in the normal course
of business relating to contract performance. The provision is estimated based
on past claims history and it is expected that most of these costs will be
incurred in the next financial year.
c. Other provisions
At December 2002, provisions of US$6.2m (2001 : US$9.1m) have
been recognised, mainly for expected claims or other costs arising from the
termination or disposal of operations. It is expected most of these costs will
be incurred within the next 1 to 2 years.
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
19. Share capital
2002 2001
US$m US$m
Authorised
720,000,000 ordinary shares of 3 1/3p each (2001 : nil) 34.9 -
Nil A ordinary shares of 10p each (2001 : 105,899,810) - 15.4
Nil ordinary shares of 10p each (2001 : 47,430,020) - 6.9
Nil first convertible preference shares of £1 each (2001 : 1,125,883) - 1.6
Nil second convertible preference shares of £1 each (2001 : 1,041,134) - 1.5
Nil first convertible redeemable preference shares of US$1 each (2001 : - 50.0
50,000,000)
Nil second convertible redeemable preference shares of US $1 each (2001 : - 75.0
75,000,000)
_________ __________
34.9 150.4
_________ __________
Allotted, called up and fully paid
479,893,340 ordinary shares of 3 1/3p each (2001 : nil) 23.3 -
Nil A ordinary shares of 10p each (2001 : 81,924,810) - 11.9
Nil ordinary shares of 10p each (2001 : 16,821,490) - 2.5
_________ __________
Equity share capital 23.3 14.4
_________ __________
Nil first convertible preference shares of £1 each (2001 : 1,125,833) - 1.6
Nil second convertible preference shares of £1 each (2001 : 1,041,134) - 1.5
Nil first convertible redeemable preference shares of US $1 each (2001 : - 28.1
28,140,000)
Nil second convertible redeemable preference shares of US $1 each (2001 : - 60.0
60,000,000)
_________ __________
Non equity share capital - 91.2
_________ __________
Called-up share capital 23.3 105.6
_________ __________
On 9 January 2002, 50,000 ordinary shares of 10 pence each were issued at a
price of 311/2 pence per share, on exercise of options granted under the John
Wood Group PLC 1994 Approved Executive Share Option Scheme. Also, on 9 January
2002, 33,090 ordinary shares of 10 pence each were issued at a price of 34 pence
per share, on exercise of options granted under the John Wood Group PLC 1996
Unapproved Executive Share Option Scheme.
On 5 April 2002, 25,000 ordinary shares of 10 pence each were issued at a price
of 34 pence per share, on exercise of options granted under the John Wood Group
PLC 1994 Approved Executive Share Option Scheme.
On 9 April 2002, 25,000 ordinary shares of 10 pence each were issued at a price
of 311/2 pence per share, on exercise of options granted under the John Wood
Group PLC 1994 Approved Executive Share Option Scheme. Also, on 9 April 2002,
594,650 ordinary shares of 10 pence each were issued at a price of 34 pence per
share, on exercise of options granted under the John Wood Group PLC 1994
Approved Executive Share Option Scheme, and 743,540 ordinary shares of 10 pence
each were issued at a price of 34 pence per share, on exercise of options
granted under the John Wood Group PLC 1996 Unapproved Executive Share Option
Scheme.
On 5 June 2002, the Company was listed on the London Stock Exchange. Upon
admission there were the following changes to the Company's share capital:-
i) Each ordinary share of 10 pence was subdivided into 3 ordinary
shares of 3 1/3 pence and the A ordinary shares were reclassified
as ordinary shares.
ii) The authorised share capital of the company was increased to
720,000,000 ordinary shares of 3 1/3 pence each.
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
19. Share capital (continued)
iii) 75,951,635 new ordinary shares of 3 1/3 pence each were
issued at a price of 195 pence each.
iv) 2,167,017 first and second convertible preference shares of £1
each were converted into 65,010,510 ordinary shares of 3 1/3 pence
each.
v) Of the 88,140,000 first and second convertible redeemable
preference shares of US$1 each, 24,667,577 shares were redeemed
at a price of $1.20 per share.
vi) The remaining 63,472,423 convertible redeemable preference shares
of $1 each were converted to 38,083,455 3 1/3 pence ordinary
shares.
On 16 August 2002, 75,000 ordinary shares of 3 1/3 pence each were issued
at a price of 11 1/3 pence per share, on exercise of options granted under
the John Wood Group PLC 1996 Unapproved Executive Share Option Scheme
On 23 December 2002, 120,000 ordinary shares of 3 1/3 pence each were
issued at a price of 12 1/3 pence per share, on exercise of options granted
under the John Wood Group 1994 Approved Executive Share Option Scheme.
Share options
The following options to subscribe for new ordinary shares were
outstanding at 31 December 2002:-
Number of ordinary Exercise
shares under option price
Year of Exercise period
Grant 2002 2001 (per share) From To
1995 210,000 435,000 10 1/2p 20.11.2000 20.11.2005
1996 - 249,270 11 1/3p 18.11.2001 18.11.2006
1997 678,960 4,693,530 11 1/3p 05.04.2002 05.04.2007
1997 300,000 300,000 12 2/3p 24.12.2002 24.12.2007
1998 2,224,080 2,294,280 15 2/3p 16.10.2003 16.10.2008
2000 7,710,000 8,250,000 17 1/3p 20.06.2005 20.06.2010
2000 210,000 210,000 18 1/3p 13.11.2005 13.11.2010
2001 1,545,000 1,575,000 93 1/3p 13.06.2006 13.06.2011
2001 6,180,000 6,406,500 83 1/3p 31.12.2006 31.12.2011
2002 46,500 - 83 1/3p 28.02.2007 28.02.2012
2002 255,000 - 83 1/3p 14.03.2007 14.03.2012
2002 1,545,000 - 83 1/3p 05.04.2007 05.04.2012
2002 105,000 - 83 1/3p 12.04.2007 12.04.2012
__________ ___________
21,009,540 24,413,580
__________ ___________
The number of shares granted under option has been increased
threefold and the exercise price reduced to one third of its previous level to
reflect the subdivision of ordinary shares. Details of the Group's Executive
Share Option Schemes are set out in the Directors' Remuneration Report.
In addition to the above options, employee share ownership trusts
exist which may buy existing ordinary shares which will then be available to be
provided under option to employees. Share options are granted at the current
market value of underlying shares at the grant date. At 31 December 2002,
additional options have been granted over 2,475,540 (2001 : 3,936,810) existing
ordinary shares held by the trusts at exercise prices ranging from 11 1/3p
to 15 2/3p (2001: 11 1/3p to 15 2/3p per share). There are no
performance criteria attached to the exercise of the options outstanding at 31
December 2002.
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
20. Share premium account
2002 2001
US$m US$m
At 1 January - -
Arising on shares issued 212.2 -
Share issue expenses written off (11.9) -
___________ ___________
At 31 December 200.3 -
___________ ___________
21. Capital reduction reserve
2002 2001
US$m US$m
Arising on conversion of convertible redeemable preference shares 88.1 -
___________ ___________
A Capital Redemption Reserve was created on the conversion of the convertible
redeemable preference shares immediately prior to the IPO. In December 2002, the
Court of Session confirmed the reduction of the Capital Redemption Reserve under
section 136 of the Companies Act 1985. The capital reduction reserve was not
part of distributable reserves at 31 December 2002.
22 Profit and loss account
Parent and
Subsidiary Joint
Undertakings Ventures Associates Group
US$m US$m US$m US$m
At 1 January 2002 162.7 27.4 0.3 190.4
Exchange movement on retranslation of
foreign
currency net assets 2.9 (4.3) 0.2 (1.2)
Redemption of convertible redeemable
preference shares
(29.6) - - (29.6)
Capitalisation of reserves in relation
to the
conversion of convertible redeemable
preference shares (1.8) - - (1.8)
Retained profit for the year 33.2 13.6 1.4 48.2
Actuarial loss recognised in the
pension scheme net of
deferred tax (9.8) - - (9.8)
________________ ____________ ____________ __________
At 31 December 2002 157.6 36.7 1.9 196.2
________________ ____________ ____________ __________
Exchange adjustments include US$3.4m (2001: US$(8.2)m) arising
from the re-translation of foreign currency loans that have been offset against
the re-translation of foreign currency net assets.
The profit and loss account reserve includes US$(16.3)m (2001 :
US$(5.3)m) stated after deferred taxation of US$7.0m (2001 : US$2.3m) in respect
of pension scheme liabilities of the Group's UK defined benefit scheme.
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
23. Equity minority interests
2002 2001
US$m US$m
At 1 January 14.0 10.3
Profit and loss account 6.0 5.5
Acquisition of minority interests (5.4) (1.8)
_________ __________
At 31 December 14.6 14.0
_________ __________
In May 2002, the Group acquired a further 6.63% shareholding in Mustang
Engineering Holdings Inc for cash of US$16.1m. Other minority interests were
acquired during the year for cash of US$2.1m. Minority interests acquired
resulted in additional goodwill of US$13.1m.
24. Acquisitions
The assets and liabilities acquired in respect of acquisitions
during the year are included below:
Thomason Other acquisitions Total
Book Fair value Provisional Book Fair value Provisional Book Fair value Provisional
value adjustments fair value value adjustments fair value value adjustments fair value
US$m US$m US$m US$m US$m US$m US$m US$m US$m
Fixed assets
Tangible 2.4 - 2.4 3.4 - 3.4 5.8 - 5.8
assets
Current assets
Stocks 0.6 (0.1) 0.5 3.3 - 3.3 3.9 (0.1) 3.8
Debtors 10.2 (0.4) 9.8 13.0 - 13.0 23.2 (0.4) 22.8
Liabilities
Bank (3.1) - (3.1) (7.0) - (7.0) (10.1) - (10.1)
overdraft
Creditors (4.0) (0.2) (4.2) (7.0) (0.2) (7.2) (11.0) (0.4) (11.4)
_____ __________ __________ ______ __________ _________ _____ _________ ________
Tangible net 6.1 (0.7) 5.4 5.7 (0.2) 5.5 11.8 (0.9) 10.9
assets
_____ __________ __________ _____ _________
Goodwill 37.9 30.4 68.3
__________ _________ _________
43.3 35.9 79.2
__________ _________ _________
Satisfied by
Cash 42.6 24.4 67.0
Deferred
consideration
0.7 11.5 12.2
__________ _________ _________
43.3 35.9 79.2
__________ _________ _________
The Group has used acquisition accounting for all purchases and,
in accordance with the Group's accounting policy, the goodwill arising on
consolidation of US$68.3m has been capitalised and will be amortised over
periods, not exceeding 20 years. The fair value adjustments relate to the write
down of stocks and debtors and to the provision for liabilities not fully
reflected in the balance sheets of the acquired entities at the date of
acquisition. The fair value adjustments contain some provisional amounts, which
will be finalised in the 2003 financial statements when the detailed acquisition
investigations have been completed.
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
24. Acquisitions (continued)
Thomason Mechanical Corporation and its sister company, Bender
Machine Inc were acquired on 3 October 2002. Thomason's profit after tax for the
year ended 30 September 2002 was $0.7m. Bender's profit after tax for the year
to 30 June 2002 amounted to $0.9m. In the period from 1 July 2002 to 3 October
2002 Bender incurred a loss of $0.1m.
Other companies acquired during 2002 included Operators and
Consulting Services Inc, acquired in June 2002, Industrial Repair Service
Inc, acquired in August 2002, Santos Barbosa, acquired in September 2002, and
Rotary Electrical acquired in October 2002. The financial impact of acquisitions
is shown on the face of the profit and loss account and in note 2.
Companies acquired during the year have contributed US$1.7m to
operating cash inflows.
Deferred consideration payments of US$0.4m were made during the
year in respect of acquisitions made in prior periods. Deferred consideration of
US$5.6m has been provided in respect of acquisitions made in 2002. Deferred
consideration of $6.6m has been provided in respect of acquisitions made in
prior periods. These provisions have been discounted where appropriate.
Analysis of the net outflow of cash in respect of acquisitions:
US$m
Cash consideration 67.0
Bank overdraft 10.1
_________
Net outflow of cash in respect of acquisitions 77.1
_________
25. Pension commitments
The Group has established a number of pension schemes around the
world covering many of its employees.
One of the Group's pension schemes in the UK is a defined benefit
scheme, which is contracted out of the state scheme, and provides benefits based
on final pensionable salary. The assets of the scheme are held separately from
those of the Group, being invested with independent investment companies in
trustee administered funds.
The most recent actuarial valuation of the main UK pension scheme
was at 5 April 2001. The valuation of the scheme used the projected unit method
and was carried out by a professionally qualified actuary. The principal
assumptions made by the actuary were:
2002 2001 2000
% % %
Rate of increase in pensionable salaries 4.35 4.50 5.50
Rate of increase of pensions in payment 2.35 2.50 2.50
Discount rate 5.60 6.00 6.00
Inflation assumption 2.35 2.50 2.50
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
25. Pension commitments (continued)
The assets of the scheme and the expected rate of return were:
Long-term Long-term Long-term
rate of rate of rate of
return return return
expected expected expected
31 December Value at 31 December Value at 31 December Value at
2002 31 December 2001 31 December 2000 31 December
2002 2001 2000
% US$m % US$m % US$m
Equities 7.50 36.7 8.00 36.1 8.40 40.6
Bonds 5.00 7.1 5.50 7.1 5.50 7.2
___________ ___________ __________ ___________ ___________ ____________
Total market value of 43.8 43.2 47.8
assets
Present value of scheme (67.1) (50.8) (45.1)
liabilities
___________ ____________ ____________
(Deficit)/surplus in the (23.3) (7.6) 2.7
scheme
Related deferred tax asset/
(liability) 7.0 2.3 (0.8)
___________ ____________ ____________
Net pension (liability)/ (16.3) (5.3) 1.9
asset
___________ ____________ ____________
Analysis of amount charged to operating profit in respect of
defined benefit schemes
2002 2001
US$m US$m
Current service 3.7 3.4
Past service cost - -
_________ _________
Total operating charge 3.7 3.4
_________ _________
Movement in (deficit)/surplus during the year
2002 2001
US$m US$m
(Deficit)/surplus in the scheme at the beginning of the year (7.6) 2.7
Movement:
Current service cost (3.7) (3.4)
Contributions 3.4 3.3
Exchange adjustments (1.7) (0.2)
Other finance income 0.3 0.1
Actuarial loss (14.0) (10.1)
_________ _________
Deficit in the scheme at the end of the year (23.3) (7.6)
_________ _________
Analysis of the amount credited to other finance income
2002 2001
US$m US$m
Expected return on pension scheme assets 3.6 3.0
Interest on pension scheme liabilities (3.3) (2.9)
_________ _________
Net return 0.3 0.1
_________ _________
Analysis of amount recognised in statement of total recognised
gains and losses
2002 2001
US$m US$m
Actual return less expected return on pension scheme assets (11.6) (8.0)
Experience gains and losses arising on the scheme liabilities 0.1 0.2
Changes in the assumptions underlying the present value of the scheme liabilities (2.5) (2.3)
_________ _________
Actuarial loss recognised in statement of total recognised gains and losses (14.0) (10.1)
_________ _________
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
25. Pension commitments (continued)
Analysis of movement in deferred tax asset/(liability)
2002 2001
US$m US$m
Asset/(liability) at beginning of the year 2.3 (0.8)
Movement in deferred tax relating to pension liability 4.2 3.1
Exchange adjustments 0.5 -
_________ ________
Asset at end of the year 7.0 2.3
_________ ________
History of experience gains and losses
2002 2001
Difference between the actual and expected return on scheme assets:
Amount (US$m) (11.6) (8.0)
Percentage of scheme assets (26%) (19%)
Changes in the assumptions underlying the present value of the scheme liabilities:
Amount (US$m) (2.5) (2.3)
Percentage of scheme assets (6%) (5%)
Experience gains and losses on scheme liabilities:
Amount (US$m) 0.1 0.2
Percentage of scheme assets 0% 0%
Total amount recognised in statement of total recognised gains and losses:
Amount (US$m) (14.0) (10.1)
Percentage of scheme assets (32%) (24%)
The valuation at 31 December 2002 showed an increase in the
deficit of US$7.6m to US$23.3m. Company contributions in 2002 were US$3.7m,
which represents 11.3% of pensionable pay and employee contributions were 6% of
pensionable pay.
The Group also has a defined contribution plan in the UK and certain US and
overseas subsidiaries operate their own defined contribution pension
arrangements. Contributions are charged to the profit and loss account as they
become payable in accordance with the rules of the schemes. The total pension
cost for the Group in respect of these schemes was US$14.5m (2001 : US$9.6m).
Contributions outstanding at 31 December 2002 in respect of these schemes
amounted to US$6.3m (2001 : US$4.2m).
26. Capital commitments
2002 2001
US$m US$m
At the balance sheet date the following capital commitments existed for tangible
fixed assets:
Contracted for but not provided 19.3 1.9
_______ __________
The Group's share of contracted capital commitments of joint
ventures is not significant. There are financial commitments relating to the
purchase of shares from certain subsidiary minority shareholders based on the
profits of these subsidiaries and the payments extend over a number years. The
remaining 13.3% of Mustang Engineering Holdings Inc. is due to be acquired over
the next three years.
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
27. Commitments under operating leases
Land and Plant and Land and Plant and
Buildings Equipment Buildings Equipment
__________ ___________ __________ ___________
2002 2002 2001 2001
US$m US$m US$m US$m
Payments falling due in respect of operating leases
which expire:
Within one year 1.7 1.4 1.8 0.4
Within two to five years 16.5 4.4 13.3 8.5
Later than five years 5.1 0.9 3.6 -
__________ ___________ __________ ___________
23.3 6.7 18.7 8.9
__________ ___________ __________ ___________
28. Contingent liabilities
At the balance sheet date the Group had cross guarantees without
limit extended to the Group's principal bankers in respect of sums advanced to
subsidiaries. At 31 December 2002 the Group has outstanding guarantees of
US$20.7m (2001 : US$21.6m) in respect of joint venture bank arrangements. The
Group has no guarantees in respect of its associate's banking arrangements.
29. Related party transactions
Included in the profit and loss account are sales, costs and
expenses which arise from transactions between the Group and its joint ventures
and associated undertakings. Such transactions mainly comprise sales and
purchases of goods in the ordinary course of business and in total amounted to:
2002 2001
US$m US$m
Sales to joint ventures 91.3 72.5
Sales to associated undertakings - -
Charges from joint ventures 7.7 6.6
Charges from associated undertakings - -
__________ __________
Details of balances due to and from joint ventures and associates
are provided in notes 14 and 15.
In addition, Sir Ian Wood holds a controlling interest in J W
Holdings Limited. During the year, the Group charged J W Holdings Limited
US$0.1m (2001 : US$0.2m) for management services provided under normal
commercial terms.
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
30. Net cash inflow from operating activities
2002 2001
US$m US$m
Operating profit of Group undertakings 91.8 73.2
Depreciation on tangible fixed assets 26.1 22.5
Loss on sale of fixed assets 0.6 -
Impairments - 1.0
Amortisation of goodwill 10.8 9.2
Decrease/(increase) in stocks 7.3 (13.6)
Increase in debtors (8.0) (26.7)
(Increase)/decrease in amounts due from joint ventures (13.5) 0.1
Increase in creditors 17.2 30.9
Decrease in other provisions (3.0) (0.9)
Exchange adjustments (1.4) (5.6)
___________ ___________
Net cash inflow from operating activities 127.9 90.1
___________ ___________
31. Reconciliation of net cash flow to movement in net debt
2002 2001
US$m US$m
(Decrease)/increase in cash in the period (79.9) 20.3
Cash flow from increase/(decrease) in liquid resources 0.9 (36.0)
Cash flow from decrease/(increase) in debt 153.6 (23.8)
___________ ___________
Change in net debt resulting from cash flows 74.6 (39.5)
Other non-cash items
Exchange adjustments 4.6 (1.2)
___________ ___________
Movement in net debt in period 79.2 (40.7)
Net debt at beginning of period (256.4) (215.7)
___________ ___________
Net debt at 31 December (177.2) (256.4)
___________ ___________
32. Analysis of net debt
At 31
At 1 January Cash Exchange December
2002 Flow Movement 2002
US$m US$m US$m US$m
Cash 107.5 (79.9) 3.8 31.4
Deposits treated as liquid resources 21.8 0.9 2.1 24.8
______________ __________ ____________ ____________
Cash in hand and at bank 129.3 (79.0) 5.9 56.2
Bank loans and overdrafts (3.3) (6.6) (0.8) (10.7)
Bank loans due after 1 year (382.4) 160.2 (0.5) (222.7)
______________ __________ ____________ ____________
Net debt (256.4) 74.6 4.6 (177.2)
______________ __________ ____________ ____________
John Wood Group PLC
Notes to the financial statements
for the year to 31 December 2002
Shareholder information
Low-cost share dealing service
Cazenove & Co Limited provide a low-cost share dealing service in Wood Group
shares which enables investors to buy or sell for a brokerage fee maximum of 1%
or 0.5% for transactions of more than £5,000 (plus 0.5% stamp duty on purchases)
with a minimum charge of £10. Details may be obtained by telephoning Cazenove on
020 7588 2828. Please note that this service is only available for dealing by
post.
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 dividends in dollars please request the company's
Registrar to send you an election form. All shareholders will receive dividends
in sterling unless requested in writing. 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 to shareholders of the BACS
payment method is that the Registrar posts the tax vouchers directly to them,
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 request the Company's Registrar to send them
a Dividend/Interest mandate form. Sterling dividends will be translated at the
closing mid-point spot rate on 9 May 2003 as published in the Financial Times on
10 May 2003.
Officers and advisers
Secretary and Registered Office Registrars
C E M Watson Lloyds TSB Registrars Scotland
John Wood Group PLC 117 Dundas Street
John Wood House EDINBURGH
Greenwell Road EH3 5ED
ABERDEEN Tel: 0870 601 5366
AB12 3AX
Tel: 01224 851000 F.A.O. Jon Wilson
Stockbrokers Auditors
Cazenove & Co Limited PricewaterhouseCoopers LLP
Credit Suisse First Boston Chartered Accountants
Financial calendar
Results announced 10 March 2003
Ex-dividend date 7 May 2003
Dividend record date 9 May 2003
Annual General Meeting 22 May 2003
Dividend payment date 29 May 2003
Wood Group has developed an Investor Relations website which can be accessed at
www.woodgroup.com
This information is provided by RNS
The company news service from the London Stock Exchange