Half Yearly Report - Part 2

RNS Number : 5104R

Wood Group (John) PLC

24 August 2010

 



PART 2 

John Wood Group PLC

Interim Financial Statements 2010

John Wood Group PLC

Group income statement

for the six month period to 30 June 2010

		Unaudited Interim June 2010	Unaudited Interim June 2009	Audited Full Year December 2009
	Note	$m	$m	$m
Revenue	2	2,409.7	2,411.4	4,927.1
Cost of sales		(1,893.9)	(1,878.9)	(3,870.1)
Gross profit		515.8	532.5	1,057.0
Administrative expenses		(376.5)	(356.1)	(722.7)
Exceptional items		-	-	(35.8)
Operating profit	2	139.3	176.4	298.5
Finance income		1.2	1.6	2.5
Finance expense		(17.9)	(17.2)	(36.2)
Profit before taxation		122.6	160.8	264.8
Taxation	6	(41.4)	(53.9)	(100.6)
Profit for the period		81.2	106.9	164.2
Attributable to:
Equity shareholders		81.1	106.8	163.2
Non-controlling interests		0.1	0.1	1.0
		81.2	106.9	164.2
Earnings per share (expressed in cents per share)
Basic	5	15.8	21.1	32.1
Diluted	5	15.3	20.5	31.2

All items dealt with in arriving at the profits stated above relate to continuing operations.

John Wood Group PLC

Group statement of comprehensive income

for the six month period to 30 June 2010

	Unaudited Interim June 2010	Unaudited Interim June 2009	Audited Full Year  December 2009
	$m	$m	$m
Profit for the period	81.2	106.9	164.2
Other comprehensive income
Actuarial losses on retirement benefit liabilities	-	-	(8.4)
Movement in deferred tax relating to retirement benefit liabilities	-	-	2.4
Cash flow hedges	1.1	1.1	2.4
Exchange movements on retranslation of foreign currency net assets	(13.5)	17.7	12.6
Total comprehensive income for the period	68.8	125.7	173.2
Total comprehensive income for the period is attributable to:
Equity shareholders	69.1	125.2	172.0
Non-controlling interests	(0.3)	0.5	1.2
	68.8	125.7	173.2

John Wood Group PLC

Group balance sheet

as at 30 June 2010

		Unaudited Interim June 2010	Unaudited Interim June 2009	Audited Full Year December 2009
	Note	$m	$m	$m
Assets
Non-current assets
Goodwill and other intangible assets		662.3	617.1	679.3
Property plant and equipment		247.5	271.5	254.2
Long term receivables		6.6	9.9	8.0
Derivative financial instruments		0.3	0.4	-
Deferred tax assets		61.9	54.0	62.3
		978.6	952.9	1,003.8
Current assets
Inventories		649.2	630.4	618.9
Trade and other receivables		1,034.5	950.3	987.4
Income tax receivable		36.0	25.2	29.8
Derivative financial instruments		2.3	15.3	6.0
Cash and cash equivalents	10	131.7	206.3	208.6
		1,853.7	1,827.5	1,850.7
Liabilities
Current liabilities
Borrowings	10	33.0	35.5	19.0
Derivative financial instruments		2.7	2.7	3.3
Trade and other payables		1,027.7	941.0	1,061.8
Income tax liabilities		50.2	64.8	53.0
		1,113.6	1,044.0	1,137.1
Net current assets		740.1	783.5	713.6
Non-current liabilities
Borrowings	10	278.8	356.5	277.5
Derivative financial instruments		2.9	6.8	3.3
Deferred tax liabilities		7.2	3.9	7.9
Retirement benefit liabilities	7	32.7	26.6	34.3
Other non-current liabilities		39.8	56.5	59.7
Provisions		50.1	45.8	53.7
		411.5	496.1	436.4
Net assets		1,307.2	1,240.3	1,281.0
Shareholders' equity
Share capital		26.3	26.2	26.3
Share premium		315.8	311.8	315.8
Retained earnings		917.2	833.4	877.6
Other reserves		38.5	54.1	50.5
Total shareholders' equity		1,297.8	1,225.5	1,270.2
Non-controlling interests		9.4	14.8	10.8
Total equity		1,307.2	1,240.3	1,281.0

John Wood Group PLC

Group statement of changes in equity

for the six month period to 30 June 2010

		Share Capital	Share Premium	Retained Earnings	Other Reserves	Total Shareholders' Equity	Non-controlling interests	Total Equity
	Note	$m	$m	$m	$m	$m	$m	$m
At 1 January 2009		26.2	311.8	760.2	35.7	1,133.9	13.1	1,147.0
Profit for the period		-	-	106.8	-	106.8	0.1	106.9
Other comprehensive income:
Cash flow hedges		-	-	-	1.1	1.1	-	1.1
Exchange movements on retranslation of foreign currency net assets		-	-	-	17.3	17.3	0.4	17.7
Total comprehensive income for the period		-	-	106.8	18.4	125.2	0.5	125.7
Transactions with owners:
Dividends paid	3	-	-	(34.4)	-	(34.4)	(0.2)	(34.6)
Credit relating to share based charges		-	-	7.2	-	7.2	-	7.2
Shares disposed of by employee share trusts		-	-	1.3	-	1.3	-	1.3
Exchange movements in respect of shares held by employee share trusts		-	-	(7.7)	-	(7.7)	-	(7.7)
Acquisition of non-controlling interests		-	-	-	-	-	1.4	1.4
At 30 June 2009		26.2	311.8	833.4	54.1	1,225.5	14.8	1,240.3
At 1 January 2010		26.3	315.8	877.6	50.5	1,270.2	10.8	1,281.0
Profit for the period		-	-	81.1	-	81.1	0.1	81.2
Other comprehensive income:
Cash flow hedges		-	-	-	1.1	1.1	-	1.1
Exchange movements on retranslation of foreign currency net assets		-	-	-	(13.1)	(13.1)	(0.4)	(13.5)
Total comprehensive income for the period		-	-	81.1	(12.0)	69.1	(0.3)	68.8
Transactions with owners:
Dividends paid	3	-	-	(35.7)	-	(35.7)	(1.1)	(36.8)
Credit relating to share based charges		-	-	7.8	-	7.8	-	7.8
Shares purchased by employee share trusts		-	-	(20.5)	-	(20.5)	-	(20.5)
Shares disposed of by employee share trusts		-	-	3.1	-	3.1	-	3.1
Exchange movements in respect of shares held by employee share trusts		-	-	3.8	-	3.8	-	3.8
At 30 June 2010		26.3	315.8	917.2	38.5	1,297.8	9.4	1,307.2

The figures presented in the above tables are unaudited.

John Wood Group PLC

Group cash flow statement

for the six month period to 30 June 2010

		Unaudited Interim June 2010	Unaudited Interim June 2009	Audited Full Year December 2009
	Note	$m	$m	$m
Cash generated from operations	9	101.2	228.2	545.5
Tax paid		(48.8)	(53.2)	(113.9)
Net cash from operating activities		52.4	175.0	431.6
Cash flows from investing activities
Acquisitions (net of cash and borrowings acquired)		(16.3)	(17.7)	(101.0)
Deferred consideration payments		(42.2)	(8.9)	(9.1)
Proceeds from disposal of businesses (net of cash and borrowings disposed)		-	11.6	10.7
Purchase of  property plant and equipment		(26.4)	(29.6)	(54.0)
Proceeds from sale of  property plant and equipment		2.7	1.0	6.6
Purchase of intangible assets		(6.4)	(5.9)	(14.4)
Proceeds from disposal of other intangible assets		-	-	0.6
Net cash used in investing activities		(88.6)	(49.5)	(160.6)
Cash flows from financing activities
Proceeds from/(repayment of) bank loans		30.1	(59.0)	(155.0)
Purchase of shares in employee share trusts		(21.8)	-	-
Disposal of shares in employee share trusts		3.1	1.3	4.3
Interest received		1.2	1.6	2.5
Interest paid		(13.5)	(16.0)	(32.7)
Dividends paid to shareholders	3	(35.7)	(34.4)	(50.3)
Dividends paid to non controlling interests		(1.1)	(0.2)	(0.4)
Net cash used in financing activities		(37.7)	(106.7)	(231.6)
Effect of exchange rate changes on cash and cash equivalents		(3.0)	11.4	(6.9)
Net (decrease)/increase in cash and cash equivalents		(76.9)	30.2	32.5
Opening cash and cash equivalents		208.6	176.1	176.1
Closing cash and cash equivalents		131.7	206.3	208.6

John Wood Group PLC

Notes to the interim accounts

for the six month period to 30 June 2010

1.   Basis of preparation

The interim report and accounts for the six months ended 30 June 2010 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 'Interim financial reporting' as adopted by the European Union.  The interim report and accounts should be read in conjunction with the Group's 2009 Annual Report and Accounts which have been prepared in accordance with IFRS's as adopted by the European Union.

The interim report and accounts have been prepared on the basis of the accounting policies set out in the Group's 2009 Annual Report and Accounts and those new standards discussed below which are applicable from 1 January 2010.  The interim report and accounts do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The interim accounts were approved by the Board of Directors on 23 August 2010.  The results for the six months to 30 June 2010 and the comparative results for six months to 30 June 2009 are unaudited.  The comparative figures for the year ended 31 December 2009 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 any statement under Section 498 of the Companies Act 2006.

Functional 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's financial statements are therefore prepared in US dollars.

The following exchange rates have been used in the preparation of these accounts:

	June 2010	June 2009
Average rate £1 = $	1.5243	1.5008
Closing rate £1 = $	1.5189	1.6469

Disclosure of impact of new accounting standards

The following standards, amendments and interpretations to published standards were mandatory for thefinancial year beginning 1 January 2010:

IFRS 3 (revised), 'Business Combinations' and consequential amendments to IAS 27 'Consolidated and separate financial statements', IAS 28, 'Investments in associates' and IAS 31, 'Interests in joint ventures'.

There has been no material impact on the Group's interim accounts on the application of these standards.

The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2010, but are not currently relevant for the Group or have no impact on the interim accounts:

IFRIC 17 'Distributions of non-cash assets to owners'

IFRIC 18 'Transfers of assets from customers'

'Additional exemptions for first-time adopters' (Amendment to IFRS 1)

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 January 2010 and have not been early adopted:

IFRS 9 'Financial instruments'

Revised IAS 24 'Related party disclosures'

Classification of rights issues (Amendment to IAS 32)

'Prepayments of a minimum funding requirement' (Amendments to IFRIC 14)

IFRIC 19 'Extinguishing financial liabilities with equity instruments'

Improvements to International Financial Reporting Standards 2010 were issued in May 2010. The effective dates vary by standard but most are effective from 1 January 2010.

John Wood Group PLC

Notes to the interim accounts

for the six month period to 30 June 2010

2. Segmental reporting

The segment information provided to the Chief Operating Decision Maker for the reportable operating segments for the period includes the following:

Business segments

	Revenue			EBITDA (1)			EBITA (1)			Operating profit
	Unaudited Interim June 2010	Unaudited Interim June 2009	Audited Full Year 2009	Unaudited Interim June 2010	Unaudited Interim June 2009	Audited Full Year 2009	Unaudited Interim June 2010	Unaudited Interim June 2009	Audited Full Year 2009	Unaudited Interim June 2010	Unaudited Interim June 2009	Audited Full Year 2009
	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m
Engineering & Production Facilities	1,571.5	1,580.0	3,241.9	116.3	149.6	280.3	107.1	143.1	266.0	96.3	134.0	229.7
Well Support	450.0	405.3	813.7	67.1	49.0	102.1	53.5	35.5	75.1	53.5	35.4	60.6
Gas Turbine Services	371.2	408.0	825.6	27.0	40.1	80.6	20.1	32.6	65.7	17.2	30.7	56.8
Central costs (2)	-	-	-	(24.7)	(21.0)	(45.5)	(26.0)	(22.3)	(48.0)	(26.3)	(22.4)	(48.2)
	2,392.7	2,393.3	4,881.2	185.7	217.7	417.5	154.7	188.9	358.8	140.7	177.7	298.9
Gas Turbine Services - to be disposed (3)	17.0	18.1	45.9	(1.2)	(0.8)	-	(1.4)	(1.2)	(0.4)	(1.4)	(1.3)	(0.4)
Total	2,409.7	2,411.4	4,927.1	184.5	216.9	417.5	153.3	187.7	358.4	139.3	176.4	298.5
Finance income										1.2	1.6	2.5
Finance expense										(17.9)	(17.2)	(36.2)
Profit before taxation										122.6	160.8	264.8
Taxation										(41.4)	(53.9)	(100.6)
Profit for the period										81.2	106.9	164.2

Notes

1.     EBITDA represents operating profit before 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.     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.     The Gas Turbine Services business to be disposed is an Aero engine overhaul company which the Group has decided to divest.

4.     Revenue arising from sales between segments is not material.

5.     There has been no material change in segment assets since 31 December 2009.

3. Dividends

	Unaudited Interim June 2010	Unaudited Interim June 2009	Audited Full Year December 2009
	$m	$m	$m
Dividends on equity shares
Final paid	-	34.4	34.4
Second interim paid	35.7	-	-
Interim paid	-	-	15.9
Total dividends	35.7	34.4	50.3

After the balance sheet date, the directors declared an interim dividend of 3.4 cents per share which will be paid on 23 September 2010.   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 2010.

4. Acquisitions and disposals

In April 2010, the Group completed the purchase of a majority shareholding in Al-Hejailan Consultants ('AHC') for an initial consideration of $16.0m. AHC has subsequently been rebranded as Mustang Al-Hejailan Engineering.   The company will provide engineering and project management services to Saudi Arabia's oil and gas and chemical industries.

The company acquired during the period has contributed $2.5m to revenue and $0.2m to operating profit in the six months to 30 June 2010. The acquisition provides the Group with access to new markets and strengthens the Group's capabilities in certain areas. The acquired company will be in a position to access the Group's wider client base and use the Group's existing relationships to further grow and develop its business. These factors contributed to the goodwill recognised by the Group on the acquisition.

During the period, the Group has revised the calculation of amounts payable under earn out arrangements for companies acquired in previous periods.  This has resulted in a reduction of $8.3m in goodwill and deferred consideration liabilities.

John Wood Group PLC

Notes to the interim accounts

for the six month period to 30 June 2010

5. Earnings per share

		Unaudited Interim June 2010			Unaudited Interim June 2009			Audited Full Year December 2009
		Earnings attributable to equity shareholders ($m)	Number of shares (millions)	Earnings per share (cents)	Earnings attributable to equity shareholders ($m)	Number of  shares (millions)	Earnings per share (cents)	Earnings attributable to equity shareholders ($m)	Number of shares (millions)	Earnings per share (cents)
Basic		81.1	512.4	15.8	106.8	507.0	21.1	163.2	508.0	32.1
Effect of dilutive ordinary shares		-	16.3	(0.5)	-	13.9	(0.6)	-	15.6	(0.9)
Diluted		81.1	528.7	15.3	106.8	520.9	20.5	163.2	523.6	31.2
Exceptional items, net of tax		-	-	-	-	-	-	35.8	-	6.8
Amortisation, net of tax		11.0	-	2.1	9.3	-	1.8	19.8	-	3.8
Adjusted diluted		92.1	528.7	17.4	116.1	520.9	22.3	218.8	523.6	41.8
Adjusted basic		92.1	512.4	18.0	116.1	507.0	22.9	218.8	508.0	43.1

The calculation of basic earnings per share ('EPS') 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 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 Plan.  Adjusted EPS is disclosed to show the results excluding exceptional items and amortisation, net of tax.

6. Taxation

The taxation charge for the six months ended 30 June 2010 reflects an anticipated rate of 32.4% on profit before taxation and amortisation of other intangibles for the year ending 31 December 2010 (June 2009 : 32.5%).

A number of changes to the UK Corporation tax system were announced in the June 2010 Budget Statement. The Finance Act 2010 includes legislation to reduce the main rate of corporation tax from 28% to 27% from 1 April 2011. Further reductions to the main rate are proposed to reduce the rate by 1% per annum to 24% by 1 April 2014. As these changes had not been substantively enacted at the balance sheet date there is no impact on these financial statements.

7. Retirement benefit liability

 

No interim revaluation of the pension liability has been carried out at 30 June 2010 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 2010 Annual Report and Accounts.

8. Related party transactions

The following transactions were carried out with the Group's joint ventures in the six months to 30 June.  These transactions comprise sales and purchase of goods and services in the ordinary course of business.

	Unaudited Interim June 2010	Unaudited Interim June 2009	Audited Full Year December 2009
	$m	$m	$m
Sales of goods and services to joint ventures	47.7	50.1	103.4
Purchase of goods and services from joint ventures	21.0	10.3	29.4
Receivables from joint ventures	37.8	41.9	40.7
Payables to joint ventures	14.1	19.2	7.7

John Wood Group PLC

Notes to the interim accounts

for the six month period to 30 June 2010

 

9. Cash generated from operations

		Unaudited Interim June 2010	Unaudited Interim June 2009	Audited Full Year December 2009
		$m	$m	$m
Reconciliation of operating profit to cash generated from operations:
Operating profit		139.3	176.4	298.5
Adjustments for:
Depreciation		31.2	29.2	59.1
Loss on disposal of property plant and equipment		0.2	0.5	2.5
Amortisation		14.0	11.3	24.1
Share based charges		7.8	7.2	11.2
Profit on disposal of businesses		-	(0.2)	-
(Decrease)/increase in provisions		(2.6)	-	5.7
Exceptional items - non cash impact		-	-	35.0
Changes in working capital (excluding effect of acquisition and disposal of subsidiaries)
(Increase)/decrease in inventories		(39.9)	(27.5)	9.2
(Increase)/decrease in receivables		(52.6)	146.9	154.9
Decrease/(increase in payables)		2.4	(112.9)	(45.8)
Exchange differences		1.4	(2.7)	(8.9)
Cash generated from operations		101.2	228.2	545.5

10. Reconciliation of cash flow to movement in net debt

	At 1 January 2010 $m	Cash flow $m	Exchange movements  $m	At 30 June 2010 $m
Cash and cash equivalents	208.6	(73.9)	(3.0)	131.7
Short term borrowings	(19.0)	(14.5)	0.5	(33.0)
Long term borrowings	(277.5)	(15.6)	14.3	(278.8)
Net debt	(87.9)	(104.0)	11.8	(180.1)

11. Capital commitments

At 30 June 2010 the Group had entered into contracts for future capital expenditure amounting to $6.2 million. The capital expenditure relates to property plant and equipment and has not been provided in the financial statements.

12. Post balance sheet events

In July 2010, the Group decided to scale back its component repair operations at its Gas Turbine Services facilities in Connecticut, USA.  At this stage, the Group is evaluating the costs of closure and therefore it is too early to provide an estimate of these costs.

13. Contingent liabilities

In February 2010, the Group, and several other parties, were notified of a legal claim from a customer in respect of certain work carried out in 2008. At this early stage it is not practicable to reliably estimate the financial impact. However, based on our preliminary discussions, we believe that we are in a strong position to defend the claim, and do not believe that it is probable that any material liability will arise as a result.

Statement of directors' responsibilities

for the six month period to 30 June 2010

The directors confirm that the interim report and accounts have been prepared in accordance with IAS 34 as adopted by the European Union and that the interim report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

             ●          an indication of impairment events that have occurred during the first six months and their impact on the accounts and a description of the principal risks and uncertainties for the remaining six months of the year; and

             ●          material related party transactions in the first six months and any material changes in the related party transactions described in the last annual report.

The directors of John Wood Group PLC are listed in the Group's 2009 Annual Report and Accounts.

A G Langlands

Chief Executive

A G Semple

Group Finance Director

23 August 2010

John Wood Group PLC

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 3 September 2010 as published in the Financial Times on 4 September 2010.

Officers and advisers

Secretary and Registered Office                                Registrars

I Johnson                                                                 Equiniti

John Wood Group PLC                                            Aspect House

John Wood House                                                    Spencer Road

Greenwell Road                                                        Lancing

ABERDEEN                                                            West Sussex

AB12 3AX                                                               BN99 6DA

Tel: [phone]                                                 Tel: [phone]                                

Stockbrokers                                                            Auditors

JPMorgan Cazenove Limited                                   PricewaterhouseCoopers LLP

Credit Suisse                                                             Chartered Accountants

Financial calendar

	6 months ended 30 June 2010	Year ending 31 December 2010
Results announced	24 August 2010	Early March 2011
Ex-dividend date	1 September 2010	April 2011
Dividend record date	3 September 2010	April 2011
Dividend payment date	23 September 2010	May 2011
Annual General Meeting		May 2011

The Group's Investor Relations website can be accessed at www.woodgroup.com.

 

END

 

 

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