31st May 2007 07:03
Expro International Group PLC31 May 2007 31 May 2007 EXPRO INTERNATIONAL GROUP PLC ("Expro" or "the Group") Preliminary results for the year ended 31 March 2007 Financial Highlights • Record set of results in line with expectations despite weaker US dollar • Significant organic and acquisitive growth • Successful acquisition of Power Well Services - performance has exceeded expectations • Record investment in technology development driven by AX-S(TM)rigless progress • Winner of Oil and Gas sector RoSPA award for second consecutive year • Record order book of over £600m on the back of £200m new contracts announced today • Strong outlook • Dividend increased Year ended Year ended Change 31 March 2007 31 March 2006 Revenue £518.8m £300.7m +73%Underlying operating profit (a) £72.5m £34.9m +108%Underlying operating margin 14.0% 11.6% +2.4ptUnderlying EPS (*b) 37.8p 24.9p +52%Headline EPS (*c) 34.1p 24.2p +41%Statutory operating profit £66.8m £34.1m +96%Statutory operating margin 12.9% 11.3% +1.6ptStatutory continuing EPS (*) 34.1p 23.6p +44%Net cash from operating activities £67.9m £58.4m +16%Free cash flow (d) £18.6m £10.4m +80%Dividends per share 11.8p 10.9p +8%Net bank borrowings (e) £170.5m £17.1m * All references to earnings per share (EPS) are calculated using the basic number of shares a Underlying operating profit, as extracted from the income statement, is based on continuing and discontinued operations and is before exceptional items and intangible asset amortisation that arises on business combinations. Exceptional items are classified as those which management has identified and disclosed as material one-off or unusual items. In the prior year, exceptional items comprise gains on disposal of businessesb Underlying EPS is based on continuing and discontinued operations and is before exceptional items and intangible asset amortisation that arises on business combinations and is calculated under note 6c Headline EPS is based on continuing and discontinued operations and is before exceptional items but includes amortisation arising on business combinations and is calculated under note 6d As calculated in the financial reviewe Bank loans of £201.2m (2006: £62.7m) and overdrafts of £2.1m (2006: nil) less cash of £32.9m (2006: £45.6m), as extracted from the consolidated balance sheet Commenting on the results, Graeme Coutts, Chief Executive, said, "I am delightedto announce today a record set of results, which reflect a balance ofacquisitive and organic growth, and which have been achieved despite theheadwind of a weaker US dollar. The performance of Power Well Services and itssubsequent successful integration has exceeded our original expectations, andthe combined business now provides an enhanced platform to execute Expro'sstrategy. We continue to invest heavily in "sweet spot" technologyopportunities, enhance our customer care activities, and develop centres ofcritical mass that maximise the benefit of the Group's operating leverage. Theexecution of this strategy has generated the record results we have announcedtoday and fuelled the largest order book the Group has ever experienced. This,together with generally favourable market conditions, leads me to believe thatthe outlook for Expro in 2007/08 and beyond remains positive." - Ends - For further information please contact:Expro International Group PLC On 31 May 2007: 020 7067 0700Graeme Coutts, Chief Executive Thereafter: 0118 959 1341Michael Speakman, Finance Director Weber Shandwick Financial 020 7067 0700Kirsty Raper / Rachel Taylor / Stephanie Badjonat An analyst meeting will be held at 09.30 this morning at the offices of Weber Shandwick Financial, Fox Court, 14 Gray's Inn Road, London, WC1X 8WS Financial calendar Annual General Meeting 5 July 2007 Ex dividend date 27 June 2007 Record date 29 June 2007 Final dividend payable 31 July 2007 Notes to EditorsExpro's business is well flow management. Expro is a leading provider ofproducts and services that measure, improve, control and process flow fromhigh-value oil and gas wells. Key niche businesses must be able to command andsustain market share leadership through a combination of technologicalpre-eminence and/or operational economies of scale. They will have a highknowledge and service content and will be able to anticipate, meet and exceedcustomers' expectations. With its head office in the UK, Expro employs more than4,000 highly-trained staff in 50 countries. For more information, please visitthe Expro website www.exprogroup.com Expro International Group PLC ("Expro" or "the Group") Preliminary results for the year ended 31 March 2007 Chairman's and Chief Executive's Statement The Board is delighted to report a strong set of results for the financial yearended 31 March 2007, reflecting the successful execution of our strategy andcontinued growth across the expanded Expro business. These results include ninemonths of contribution from Power Well Services (PWS). This acquisition marked a"step change" in the development of Expro. However, importantly, thisacquisitive performance has complemented robust organic growth from both theexisting Expro and acquired PWS businesses. This combined growth has generatedan underlying earnings per share (a) of 37.8 pence, a 52% increase on the sameperiod last year. On a headline basis (b), earnings per share of 34.1p grew by 41% compared with the prior period. The Board is recommending an increase in thefinal dividend to 8.0p (2006: 7.1p) bringing the full year dividend to 11.8pence. This increase in dividend balances the Board's confidence in thesustainability of the achievements to-date whilst recognising the continuingneed to reinvest in the business. Expro has a focused strategy aimed at delivering a balance between short andlong-term shareholder performance. The acquisition of PWS in July 2006 hasstrengthened Expro's position as a global top-tier supplier of oil and gasservices in most of the key upstream markets of the world. Our portfolio nowcontains a blend of technology and market reach, ideally positioned for the highactivity levels of the late cycle. MarketsMarket conditions for upstream services remained positive during the year. Inaddition, the market saw the beginning of a notable change in the strategicdirection of our international customers. Their focus is increasingly turning tosubsea, and particularly deepwater provinces, where they see greater futureopportunity. This in turn has fuelled strong demand for high specificationfloating rigs, capable of meeting our customers' operating objectives out to andbeyond 2012. The acute shortage of these high specification rigs has led to adramatic increase in semi-submersible day rates and initiated an intensivenew-build programme to increase capacity in this high value segment. Inaddition, national oil and gas companies have increased their domestic focus,and consequently their activity levels, as they strive to achieve enhanced oiland gas recovery from increasingly ageing assets. Expro has a well establishedposition with international customers and the acquisition of PWS has given Exprogreater exposure and a stronger presence in many of the national markets,particularly the Middle East, Brazil and Norway. Segmental review Regional BusinessesExpro completed the operational and customer facing aspects of the PWSintegration during the second half of the financial period. The majority of thePWS portfolio operates within Expro's Regional business segment. To best managethis business and serve our customers we implemented the Eastern and WesternHemisphere operating structure, further broken down into a total of seven globalregions. Each is focused on their respective geographic market. Whilst thestrategic rationale for the PWS acquisition was entirely driven by future growthwhich inevitably takes time to mature, the combination has yielded costsynergies, earlier and higher than planned. Achieving critical-mass in areas ofoperations is a vital part of Expro's business strategy. Under our strategy, thenew geographic structures and PWS acquisition have significantly advanced thisobjective. Enhanced Expro contracts are in place in key markets such as SaudiArabia, Brazil and Norway, giving clear evidence of customer acceptance andproviding a basis for future progress. Western HemisphereIn the Western Hemisphere, managed from Houston, Expro has establishedsignificant presence in both South and North America. Our strategic focus forthe Western Hemisphere is clearly on technically appreciative markets with themajority of our activities in Brazil, deepwater Gulf of Mexico and theunconventional gas plays of North America. Western Hemisphere total revenues were up 183% at £97.9 million. Highlightsinclude a new four year Petrobras contract in Brazil. This contract is the firstof its kind in Brazil for Expro and opens the way for continued progress in thishighly active offshore market. In North America, our Power Chokes business hadan excellent year. This business focuses on the high pressure and unconventionalNorth American gas fracture market, which has been relatively resilient tofluctuations in domestic gas price. In the period we withdrew from the Canadian commodity market via the disposal ofExpro Canada to Enseco Energy Services Corporation. This reflects our strategyto compete in markets where we can demonstrate differentiation throughtechnology and quality. Eastern HemisphereIn the Eastern Hemisphere, the PWS combination has increased capability in threeof our existing regions; Europe/FSU, West Africa and Asia, and allowed us tocreate a new management focus in the substantial markets of North Africa and theMiddle East. PWS has given Expro excellent new positions in Saudi Arabia andEgypt, and the acquired activities in Algeria and Libya have been integratedwith existing Expro operations, to create a strong regional presence forinvestment and continued growth. As a consequence, full year revenues for theEastern Hemisphere increased by 66% to £224.0 million. Our position in Europe/FSU was also materially improved with the addition of avery strong Norwegian business. This market is very appreciative of technology,and Expro is already benefiting from closer links with Statoil, as they moveinto overseas locations. In addition, our position in Kazakhstan has also beenenhanced. The UK North Sea continued to grow and to provide good opportunity fortechnology deployment as our customers strive to reduce operating cost andrecover late cycle reserves from this ageing but politically secure province.Whilst still an important market for Expro, the Group's dependence upon theregion has dramatically reduced in recent years. In Asia, where it is essential to establish areas of critical mass, theintegration of PWS has provided a strong basis for growth. There are three mainareas of focus for this region. In Australia, where Expro has been establishedfor many years, progress in the period was very good. Malaysia made goodprogress driven by the commencement of the PWS initiated pan-Malaysianwelltesting and subsea tools contract for Shell. In Indonesia we continued tomake progress. The West Africa region is primarily focused on two large operating countries,Nigeria and Angola. Our Angolan business is entirely deepwater focused, where wehave an excellent position providing technology essential to the exploration,development, commissioning and maintenance of deepwater fields. Our blue-chip,international customer base has been investing throughout the period and weexpect this to continue for many years to come. In Nigeria we have a morediverse business portfolio, although these operations are experiencing similarconditions to the deepwater business. The addition of PWS has equipped Exprowith a strong local workforce to service this growing demand. Highlights in theperiod include the establishment of a material operating capability in Angola,where Expro has successfully deployed welltesting facilities on seven deepwatersemi-submersible rigs for Total and BP. This increase in capability has requiredrecruitment and training of national employees. Throughout the region nationalstaff content is increasingly essential to meet our operating requirements aswell as government regulation. This is a common feature, not just in our WestAfrican business, but globally. The combination of Expro and PWS has given usaccess to skilled national personnel across all our operating regions. Global BusinessesIn the second half of the year Expro continued to make material progress in thethree businesses which make up our Global businesses; TronicMatre, Subsea safetytools and Production Solutions. TronicMatre continued to benefit from the global growth in new subsea wellsproviding instrumentation and connectors, resulting in full year revenues of£46.5 million, an increase of 18% over the prior year. In the year Tronicperformed many Front-end Engineering Design studies for customers with futurerequirement for seabed power applications. These studies relate to technicalfeasibility for future prospects and are usually a key lead indicator of newbusiness some 24 months out. Our flagship Subsea safety tools business is now benefiting from of our previousinvestment in technology development. In the year the business grew 47% to £57.4million. Included in this performance were many firsts for Expro and theindustry. The build and delivery of the Tahiti high pressure, electro-hydraulic,ultra-deep tools for Chevron in the Gulf of Mexico was a significant milestone.Tahiti has pushed technological barriers within the industry and we continue tostrive to assist our international customers develop increasingly difficultdeepwater reserves. Likewise our specialised tools have also been extensivelydeployed in the West Africa deepwater developments by BP, Total and ExxonMobil. Production Solutions also had an exceptional year growing 84% to £73.1 million.The highlight was the outstanding performance for ExxonMobil on their Chayvoproject on Sakhalin Island. This 14 month project was completed at the end ofthe calendar year when Exxon commissioned their full production plant. As aresult our production facility became redundant and Exxon elected to exercisetheir right to purchase the system for future use. This project was exceptionalin terms of complexity, performance and value to Expro. The period also saw thebuild delivery and commissioning of Chevron's Dibi production barge in Nigeria.This barge was custom built in country to produce up to 50,000 bbl of liquidsfrom the Dibi field. TechnologyNew technology development remains essential to our positioning and significantprogress has been made in all areas of Expro's focused strategy. Recordinvestment levels have been dedicated to develop and deliver the next generationof Expro technology. Our flagship AX-S(TM)rigless intervention concept continuesto take shape. Good progress, both technical and commercial, has been madewithin the period. The detailed engineering phase was substantially completedand discussions over an initial commercial framework commenced to secure fundingassistance and initial field trial applications. The market for subsea wellintervention is developing very quickly. Our major international customers arelooking for technically innovative, cost effective solutions to increase therecovery factors from their expensive subsea assets. The commercial progress ofour Subsea tools business is directly linked to our efforts in technologydevelopment and activity throughout the period has kept us focussed on meetingthe future customer needs. Technology development also features highly in our Regional business. Ourinvestment in cased hole logging technology continues to make progress indelivering unique solutions to clients. In the UK North Sea, Expro installedthe world's first cableless subsea well monitoring system for BP. The CaTSTMtool was deployed in an abandoned well to determine connectivity with the nearbyClair platform. Other world firsts were achieved using CaTS(TM)technologyoffshore Australia to monitor pressure and temperature behind casing in aproducing well. Downhole video technology continued to gain client acceptance globally. Wesuccessfully introduced our new ViewMax(TM)product with a rotating horizontalcamera into the Gulf of Mexico and Canada saving operators many hours of rigtime by simplifying operations. In addition, new enhanced video technology wassuccessfully integrated into traditional sensors with the introduction of theWIT(TM)(Water Investigation Tool) and the CalVid(TM)(Caliper/Video) tool. The WIT (TM)tool has already gained excellent client acceptance in Canada and CalVid(TM)is beginning to displace traditional caliper logging in the North Sea market. OutlookThe integration of PWS has given Expro a broader international identity and anenhanced platform to progress our strategies, delivering a positive outlook forthe coming period and beyond. Expro is now well positioned to grow with bothnational and international oil and gas customers. We have a technology portfoliosuited to meet our customers' ongoing requirements and an outstanding talentpool of national staff to progress these relationships. In the flagshipdeepwater markets where operating costs are high, our customers are focused ontechnical innovation and service quality. These are the Expro strengths and formthe foundation of our focused strategy. We continue to invest heavily in nichetechnology opportunities, enhance our customer care, develop critical mass inthe areas we choose to operate in and maximise the Group's operating leverage.The successful execution of our strategy has helped fuel our performance andpositioned us to benefit from what we believe to be positive market conditionsfor next year and beyond. Board and ManagementColin Ainger retired as Corporate Development Director on 6 July 2006 havingserved the company for 24 years. Colin was originally appointed to the Board asFinance Director in 1992 and helped lead the Group through the Management BuyOut and subsequent flotation. John McAlister joined the Board as Group GeneralCounsel on 12 June 2006. John has joined us from National Grid PLC where he wasDeputy General Counsel. Mike Martindale retired as Chief Operating Officer on 31 December 2006. Mikeserved the company for 11 years, spending four years as Chief Operating Officer.Mike was succeeded by Gavin Prise, who was appointed Chief Operating Officer on1 January 2007. Gavin has held several positions within Expro, most recently asDirector of the Eastern Hemisphere operating region and brings extensiveindustry experience to the Board. Tim Eggar has decided not to seek re-election as a non executive director as hewishes to expand his other business interests. Tim will stand down at the AGM on5 July 2007. Bob Bennett joined the board as a non-executive director on 30 May2007. The Board would like to record its appreciation to Colin, Mike and Tim for theirvaluable service and welcome John, Gavin and Bob to the Board. Finally, we would like to thank all of Expro's dedicated employees around theworld for their continuing enthusiasm and support. a Underlying EPS is based on continuing and discontinued operations and is before exceptional items and intangible asset amortisation that arises on business combinations and is calculated under note 6. Exceptional items are classified as those which management has identified and disclosed as material one-off or unusual items. In the prior year, exceptional items comprise gains on disposal of businesses b Headline EPS is based on continuing and discontinued operations and is before exceptional items but includes amortisation arising on business combinations and is calculated under note 6. Operations review Organisational DevelopmentExpro's businesses have grown substantially throughout the current year, bothorganically and through the acquisition of PWS. In order to deliver our ongoingbusiness and also to support further sustained growth we have successfullyre-shaped the Regional organisation. The new structure has been implementedwithout disruption to ongoing business and was designed to effectively harnessthe talents of legacy Expro and legacy PWS management and operational personnel. Expro's Regional operations are now delivered across the two Hemispheres - Eastand West. The Eastern Hemisphere comprises the Regional businesses of: • Europe/FSU• West Africa• North Africa/Middle East• Asia The Western Hemisphere comprises the Regional businesses of:• North America - Land• North America - Offshore• Latin America In addition to the Regional businesses, Expro has continued to deliver a number of Global businesses that rely on the Regional infrastructure for operations support. The prospects for these Global businesses have been further enhanced by the improved geographical coverage of the Regional infrastructure. During the last year we have also put significant effort into our safety, service quality and personal development programmes. Across our entire Expro business we are committed to "Excellence in Operations" and we now have over 4,000 employees with a significant presence in all key hydrocarbon producing regions. Across all regions, we can effectively deliver a wide range of services to the major international oil companies, the independents and to the increasingly important national oil companies. Regional Businesses Europe/FSUEurope/FSU remained our largest Region with the three main markets being the UK,Norway and the Former Soviet Union (FSU). Activity throughout the year has beenat a sustained high level with strong margins. In the UK we continued to have strong market share in our core services. Wesupported our clients to complete an increased offshore development programmewhilst also meeting an increase in operator spending on production enhancement.Key projects included Shell Corrib, Talisman Tweedsmuir, Maersk Dumbarton,Venture Ensign and Nexen Buzzard. In Norway we provided subsea safety tools on numerous subsea field developmentsand we have also taken the leading market position on welltest activitiesthrough the PWS acquisition. We now have direct welltest contracts with Statoil,Hydro and most of the international oil companies. In the FSU we further developed critical mass in both Kazakhstan and Russia. Weprovided services on the Karachaganak and Kashagan developments in Kazakhstan,both of which have demanding technical and operational requirements. We havealso provided welltesting services to Gazprom on the giant Schtokman field inthe Barents Sea and mobilised for Wintershall in Siberia. These major projectswere complemented by a growing number of smaller operations which we are nowable to support on a call-off basis. West AfricaThe newly formed West Africa region has comprehensively established Expro'sposition of strength in the rapidly growing West African offshore markets. In Nigeria we now provide a broad range of Expro services. From the Regionalbusiness perspective we have a strong, locally staffed, welltest business.However, the infrastructure has also been used effectively to deliver subsea andproduction projects. In Angola we delivered significant growth in welltest activity for BP on theirBlock 18 and 31 activities and for Total on their broad range of appraisal anddevelopment activities. At the same time we supported Chevron on their Cabindaoperations. We also provided project specific services across a number of other West Africancountries including various services for Petro SA in South Africa, ExxonMobil inEquatorial Guinea and CNR in the Ivory Coast. The West African business, with its large deepwater, subsea developments, hastremendous growth characteristics for Expro and we have firm plans for furtherfacilities and organisational growth in line with our clients' long-termcommitted development plans. North Africa/Middle EastOur North Africa / Middle East region is now material and we have critical massin Algeria, Libya, Egypt and Saudi Arabia. In Algeria we have continued to support the development programmes of FirstCalgary Petroleum, BP and Repsol. In Libya we now have a developed client baseand deliver welltest and cased hole support to Waha, Woodside and Repsol. In Egypt the business progressed dramatically. A high level of call-off,welltesting services were delivered with notable successes with Bapetco, VE-gas,Shell and Rashpetco. In Saudi Arabia there has been an exceptional demand for well testing services.We extended our contract commitment with Aramco and we added additionalequipment and personnel to meet the growing demand. Plans are now beingprogressed to develop a substantial, complimentary cased hole business. AsiaDuring the year our regional business in Asia reached a defining moment. We nowhave a critical mass of business across the breadth of Asia which is deliveringa material margin contribution independent of the Global businesses. Australasia has performed very well with improved profitability across existingbusiness and we delivered new activity in New Zealand with Shell Todd and OriginEnergy. In both Indonesia and Malaysia we have critical mass welltest businesses and weprovided services to a wide range of clients including Shell, Petronas Carigali,Carigali Hess in Malaysia and to BP on their high profile Tangu project.Meanwhile in Thailand we continued to provide volume wireline services toChevron. Throughout the year we have also provided welltest and subsea services in Indiato Cairn Rava and ONGC but we have yet to establish a strong long-term positionin this developing market. North AmericaWe continued to provide a range of well perforating, wireline intervention andsubsea services to the Gulf of Mexico shelf and deepwater markets. Meanwhile wehave provided a range of premium well perforating and clean-up services to theNorth America land market. The offshore market has been sustained but is stilldown on rig activity compared to pre-Hurricane Katrina. The onshore perforatingand clean-up business has been very strong due to the production decline-curvecharacteristics of the US frac / horizontal wells. Our service portfolio ofpremium well perforating, clean-up and cased hole evaluation (downhole video) iswell suited to this market. Latin AmericaWe now have a strong welltest business across the breadth of South America. Wehave delivered welltest services in Argentina, Bolivia, Venezuela and Mexico,however, the majority of the activity has been in Brazil. We provide asignificant part of Petrobras' welltest and clean-up services and during thelast quarter we have agreed a new contract to extend the supply of theseservices for a four-year period. On the back of this contract we are reviewingoptions to increase our scope of supply and further infrastructure investment. Global Businesses Subsea safety toolsOur subsea business had an outstanding year. We delivered high levels ofactivity with our hydraulically actuated 7" subsea landing strings in the NorthSea and the Gulf of Mexico. This was complemented by a number of high-revenuesubsea exploration welltest activities. We also completed the build of our nextgeneration electro-hydraulic (EH) 7" subsea landing strings for Chevron's Tahitideepwater Gulf of Mexico project and Chevron's Agbami deepwater West Africaproject. These EH operated systems, required for safe deepwater applications,have a much greater degree of technical sophistication than the direct hydrauliccontrolled systems and will generate substantially greater revenue. Production SolutionsOur Production Solutions business delivered record revenues across the year. Wehad nine months of production on the ExxonMobil Chayvo project in SakhalinIsland and completed an extended welltest for Shell on the BS-4 project inBrazil. In addition to which we completed a number of successful equipment salesand the construction of the barge-mounted production facility for Chevron's Dibiproject in Nigeria. Because of its discrete project nature, revenues from ourProduction Solutions business can vary considerably from year to year. Contractcommitment for next year is less than the record levels achieved during thisyear and hence we have re-shaped the Production Solutions team to furtherenhance sales effectiveness. Tronic / MatreOur connectors and instrumentation business delivered further significantgrowth. The connectors business progressed in line with the growth in subseawells, delivering a number of major subsea power connector systems. The powerprojects included systems for BP King, Kvaerner Oilfield Products on Statoil'sTyrihans project and Framo on Oilexco's Brenda project. We also began to see anincrease in package sales across our full range of connectors andinstrumentation products such as to Vetco on the Ettrick project. Assembly anddelivery output has been increased during the year. Recognising the rapid growthin subsea well installations projected for the next few years we have nowdeveloped plans for new assembly facilities to support continued growth over thenext five-year period. AcknowledgementThe directors would like to take this opportunity to acknowledge the commitment,professionalism and enthusiasm of the Expro teams across all parts of thebusiness. The integration of PWS as well as ongoing operational and businesssuccess is a credit to a great team effort. Financial Review OverviewThe year represented a landmark for Expro. Revenue, EPS and investment have allreached their highest level in the Group's history and the acquisition andintegration of PWS represents a significant step in the development of the Groupfrom both a financial and operational performance standpoint. Measuring performanceWithin our annual report reference is made to our non-statutory measures ofunderlying operating profit and underlying EPS. The underlying measures excludeexceptional items which management has identified and disclosed as materialone-off or unusual items together with intangible asset amortisation that ariseson business combinations. This is consistent with the way that financialperformance is measured by management and we believe assists in providing ameaningful analysis of the trading results of the Group. Trading performanceRevenues of £518.8m were up by £218.1m, with the increase of 73% generated by acombination of strong organic growth across both the Regional and Globalbusiness segments and the inclusion of nine months trading from the acquisitionof PWS. This significant level of growth was achieved despite the weaker dollar,with the rate in the year averaging at 1.88 versus a prior year comparison of1.79. Underlying operating profit more than doubled to £72.5m, in part due to theacquisitive and organic growth and also through a continuing improvement inmargin over the previous year from pricing and the Group's operating leverage.While Expro continues to benefit from the buoyant market for oil field services,these superior results are also due in part to our determination to provide ourcustomers with services which are excellent, innovative and safe. Investment Research and developmentExpro continues to fund record levels of development, primarily against theon-going development of the AX-S(TM)rigless intervention system and next year weexpect to further increase spend in this area as the technology develops. Capital expenditureSignificant capital expenditure in the period includes the amounts incurred onthe Tahiti landing string and the Dibi EPF, with both projects generating cashinflows in the following year. TaxationThe tax charge of £20.8m represents an effective rate of 37.9% consistent withthe previous year's rate. Expro's operations have a wide geographic coverage,resulting in differing taxation regimes depending on the location in which thoseactivities take place. The effective rate reflects this broad geographic spreadof profits, unrecoverable losses in certain territories, a variety of imputedand higher rate overseas tax regimes and non-deductible items. Tax continues tobe a key priority for the Group, particularly the careful management of thelong-term underlying tax rate. Closure of tax positions throughout the Group'soperating territories also remains a priority. Earnings per share (EPS)Underlying EPS, which has been defined above, increased by 52% to 37.8p.Continuing EPS increased by 44% to 34.1p. In calculating these increases on theprior year, the previously published EPS measures have been restated as requiredunder IAS 33, allowing for the impact of the discounted rights issue that tookplace on 26 July 2006. Further details of the rights issue are included belowand the full calculation of EPS is included under note 6. Expro also publishes a headline EPS measure which includes the intangible assetamortisation that arises on business combinations, but excludes items whichmanagement identifies and discloses as material one-off or unusual items.Headline EPS increased from 24.2p to 34.1p, an increase of 41%, with thecomparator again being adjusted for the discounted rights issue. Free cash flowDespite record levels of capital investment, Expro has again achieved itsobjective of delivering improved cash flow. 2007 2006 £m £m Net cash from operating activities 67.9 58.4Interest received 1.9 0.6Proceeds on disposal of property, plant and equipment 5.2 0.8Purchases of property, plant and equipment (56.2) (49.3)Purchases of intangible assets (0.2) (0.1)Free cash flow 18.6 10.4 Dividends paid (9.4) (8.0) Dividend cover 199% 130% DividendsAt the time of flotation, the Board established a dividend policy of coveringthe dividend at 2.5 times earnings, and an additional target was set in 2003, offree cash cover of 2 times dividend. The Board remain committed to this policyas a means of balancing both short and longer term shareholder interests. The Board is recommending an increase in the final dividend to 8.0p (2006: 7.1p)bringing the full year dividend to 11.8 pence. This increase in dividendbalances the Board's confidence in the sustainability of the achievementsto-date whilst recognising the continuing need to reinvest in the business. Acquisitions and disposalsThis year featured a number of acquisitions and disposals, reflecting Groupstrategy, the most significant of which was the acquisition of PWS for £366.0m($674.5m) on a cash free debt free basis. The cash outflow included within thecash flow statement reflects the fact that the opening balance sheet of PWSincluded net debt of £131.1m ($237.7m), and that part of the consideration paidwas via the issue of shares valued at £61.6m ($115.0m). The effective date ofthe acquisition was 3 July 2006 which represented the point at which Exproshareholders gave approval for the acquisition and Expro management gainedcontrol of the operations and finances of PWS. PWS offered services at locations which complemented Expro's existing businessand this synergetic match greatly simplified the task of fully integrating PWSinto the Group. The extent of the integration has meant that it has not beenpracticable to calculate the post-acquisition operating profit that arose fromthe acquisition with sufficient accuracy for inclusion in the financialstatements. Goodwill of £175.5m ($321.5m) and identifiable intangible assets of£102.2m ($185.3m) arose on the acquisition, resulting in an annualised charge of$13.2m. The majority of the intangible assets relate to the values placed oncustomer contracts and relationships which must be valued in accordance withIFRS 3. Expro's pre-existing contracts and customer relationships are not valuedand hence do not feature on the Group's balance sheet. The intangibleamortisation charge arising on acquisition is therefore added back in order toarrive at underlying performance which management believes gives a moreconsistent and comparable profit and earnings measure. Further information onthe acquisition is included under note 9. Towards the end of the year, with an effective date of 28 February 2007, Exprocompleted the disposal of its Canadian Wireline and TCP business to EnsecoEnergy Services Corporation. The disposal did not represent an accountingdiscontinued operation as Expro continues to offer more technologically enhancedproducts and services in Canada, (including its downhole tractor services,Excape completion services), and continues to provide Wireline and TCP in moreoperationally challenging market segments. The realised sale consideration was£3.7m (CAD$8.6m, which comprised cash received of £1.8m (CAD$4.2m), a deferredworking capital element of £0.6m (CAD$1.4m) and an unsecured convertibledebenture valued at £1.3m (CAD$3.0m). The nominal value of the transaction wasCAD$14.0m comprising of CAD$4.2m cash and an unsecured convertible debenturewith a nominal value of CAD$9.8m). Further information on the disposal isincluded under note 8. Share issue and debt refinancingIn order to effect the acquisition of PWS, as well as enabling the Group toachieve a more balanced capital structure for the year ahead, Expro issued newshare capital, in part via a rights issue, as well as re-financing its long-termborrowing facility. After net issue costs of £3m, the 5:14 rights issue on 26 July 2006 raised£127.6m and resulted in 26,170,121 shares being issued at £5 per share. Thepremium arising on this share issue was credited against the merger reserve andsubsequently credited to retained earnings. The transfer to merger reserverather than share premium account was made by taking advantage of merger reliefunder Section 131 of the Companies Act 1985. This relief was applicable as aresult of the issue of new shares in the Group for shares in a so-called "cashbox" subsidiary. In addition, on 31 July 2006 a further 9,155,961 ordinaryshares of 10 pence each were issued to First Reserve as part consideration forthe acquisition of PWS. These shares were issued at a price of £6.73 per share.The premium arising on this share issue was credited to other reserves. The re-financing exercise took the form of a new $550.0m borrowing facilityrepayable over 5 years. An initial amount of £271.5m was drawn which in part wasused to settle existing bank loans of £60.9m as well as settling £135.1m of debtwithin the opening PWS balance sheet. Since the initial draw down, Expro hasrepaid £53.0m of debt, and after the effects of foreign exchange the total bankdebt outstanding at the year-end is £203.3m. The interest payable on thisfacility is dependent on LIBOR plus a margin. At 31 March 2007 the total amountdrawn under the Group's main facility was $397.0m giving significant headroom of$153.0m. Financial risk managementExpro has significant overseas operations whose principal transactional andfunctional currencies are US dollars. The Group has US dollar denominatedrevenues of approximately 58% (2006: 47%), sterling denominated revenues ofapproximately 26% (2006: 38%) and other currency revenues of 16% (2006: 15%).Mitigating the Group's exposure to currency risk continues to be a key priority.In order to minimise this exposure, the Group has a policy of natural hedgingand this partially mitigates the impact of currency movements in terms ofprofits, cash and net assets. In addition, the Group also has foreign currencyloans, principally US Dollars, which mitigate its exposure to foreign currencydenominated net assets. PensionsThe Group's pension scheme deficit decreased from £19.3m to £17.5m with thedefined benefit section closing to members on 1 October 1999. The last actuarialvaluation to be carried out for funding purposes was on 6 April 2005, and theactuarial valuation deficit of £6.9m was some £17.0m lower than the equivalentIAS 19 valuation. CONSOLIDATED INCOME STATEMENTYear ended 31 March 2007 2007 2007 2007 2006 2006 2006 £'000 £'000 £'000 £'000 £'000 £'000 Underlying Exceptional Total Underlying Exceptional Total performance items and performance items and amortisation (a) amortisation (a)Continuing operationsRevenue 518,820 - 518,820 300,727 - 300,727Cost of sales (427,798) (5,733) (433,531) (254,516) (735) (255,251) ________ ________ ________ ________ ________ ________Gross profit 91,022 (5,733) 85,289 46,211 (735) 45,476Administration expenses (18,480) - (18,480) (11,360) - (11,360) ________ ________ ________ ________ ________ ________Operating profit 72,542 (5,733) 66,809 34,851 (735) 34,116 Post tax profit from associatesShare of results of associates 102 - 102 - - - ________ ________ ________ ________ ________ ________Operating profit including associates 72,644 (5,733) 66,911 34,851 (735) 34,116 Investment income 6,327 - 6,327 3,855 - 3,855 Finance costs (18,133) - (18,133) (8,409) - (8,409) ________ ________ ________ ________ ________ ________Net finance costs (11,806) - (11,806) (4,554) - (4,554) Profit before tax 60,838 (5,733) 55,105 30,297 (735) 29,562 Tax (22,831) 1,985 (20,846) (11,430) 226 (11,204) ________ ________ ________ ________ ________ ________Profit after tax 38,007 (3,748) 34,259 18,867 (509) 18,358 Discontinued operations Post tax profit from joint ventures - - - 441 - 441 Post tax gain from disposal of joint ventures - - - - 9,661 9,661 ________ ________ ________ ________ ________ ________Profit for the year 38,007 (3,748) 34,259 19,308 9,152 28,460 ________ ________ ________ ________ ________ ________Attributable to:Equity holders of the parent 37,875 (3,748) 34,127 19,259 9,152 28,411Minority interest 132 - 132 49 - 49 ________ ________ ________ ________ ________ ________ 38,007 (3,748) 34,259 19,308 9,152 28,460 ________ ________ ________ ________ ________ ________ Earnings per shareFrom continuing and discontinued operationsBasic 37.8p 34.1p 24.9p 36.6p ________ ________ ________ ________Diluted 37.3p 33.6p 24.5p 36.1p ________ ________ ________ ________ From continuing operationsBasic 34.1p 23.6p ________ ________Diluted 33.6p 23.3p ________ ________ a Underlying performance is based on continuing and discontinued operations andis before exceptional items and intangible asset amortisation that arises onbusiness combinations. Exceptional items are classified as those whichmanagement has identified and disclosed as material one-off or unusual items. Inthe prior year, exceptional items comprise gains on disposal of businesses. CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEYear ended 31 March 2007 2007 2006 £'000 £'000 Loss on cash flow hedges (3,563) (2,951)Exchange differences on translation of foreign operations (16,931) 5,672Actuarial gains on defined benefit pension schemes 2,165 4,451Tax on items taken directly to equity (732) 567 ________ ________Net (expense) / income recognised directly in equity (19,061) 7,739TransfersTransferred to profit and loss on disposal of joint venture foreign operations - (365)Transferred to profit and loss on disposal of subsidiaries (344) -Transferred to profit and loss on maturity of cash flow hedges 273 1,815Profit for the year 34,259 28,460 ________ ________Total recognised income and expense for the year 15,127 37,649 ________ ________Attributable to:Equity holders of the parent 14,995 37,600Minority interest 132 49 ________ ________ 15,127 37,649 ________ ________ CONSOLIDATED BALANCE SHEET At 31 March 2007 2007 2006 £'000 £'000Non-current assetsGoodwill 180,438 20,511Intangible assets 99,458 9,221Property, plant and equipment 194,307 95,423Investments 1,297 -Interests in associates 278 -Deferred tax assets 7,536 6,365 ________ ________ 483,314 131,520Current assetsInventories 31,685 19,237Trade and other receivables 161,646 95,577Cash 32,872 45,642 ________ ________ 226,203 160,456 ________ ________Total assets 709,517 291,976 ________ ________ Current liabilitiesBank overdraft (2,142) -Bank loan (294) -Trade and other payables (108,697) (73,159)Current tax liabilities (28,427) (12,549)Finance leases (1,607) (768)Derivative financial instruments - (295)Provisions (55) (188) ________ ________ (141,222) (86,959)Non-current liabilitiesBank loans (200,911) (62,699)Retirement benefit obligation (17,490) (19,348)Deferred tax liabilities (31,573) (2,428)Finance leases (8,088) (7,972)Derivative financial instruments - (138)Provisions (848) (2,882) ________ ________ (258,910) (95,467) ________ ________Total liabilities (400,132) (182,426) ________ ________Net assets 309,385 109,550 ________ ________EquityShare capital 10,958 7,328Share premium account 3,796 570Other reserve 60,677 -Hedging and translation reserve (17,494) 3,099Own shares - (352)Equity reserve 1,544 1,032Retained earnings 249,724 97,841 ________ ________Equity attributable to equity holders of the parent 309,205 109,518Minority interest 180 32 ________ ________Total equity 309,385 109,550 ________ ________ The financial statements were approved by the Board of Directors and authorisedfor issue on 30 May 2007. CONSOLIDATED CASHFLOW STATEMENTYear ended 31 March 2007 2007 2006 £'000 £'000Operating profit 66,809 34,116 Adjustments for:Depreciation of property, plant and equipment 39,545 30,445(Gain)/loss on disposal of property, plant and equipment (2,398) 1,771Amortisation of intangible assets 6,679 1,469Impairments and write back of negative goodwill 1,216 718Share-based payments 910 615Retirement benefit (credit) / charge (471) 251 ________ ________Operating cash flows before movements in working capital 112,290 69,385 Increase in inventories (2,587) (2,611)Increase in receivables (25,689) (21,263)Increase in payables 11,840 25,589 ________ ________Cash generated by operations 95,854 71,100 Income taxes paid (15,580) (9,209)Interest paid (12,341) (3,534) ________ ________Net cash from operating activities 67,933 58,357 ________ ________Investing activities Interest received 1,916 614Purchases of property, plant and equipment (56,222) (49,288)Proceeds on disposal of property, plant and equipment 5,198 846Purchases of intangible assets (235) (100)Net cash outflow on acquisition of subsidiaries (175,000) (6,075)Investment in associates (185) -Proceeds on disposal of subsidiary 1,718 -Payments on disposal of joint ventures (996) -Proceeds on disposal of joint ventures - 15,319Proceeds on disposal of joint ventures in prior year - 4,797Payment of deferred consideration (115) (334) ________ ________Net cash used in investing activities (223,921) (34,221) ________ ________Financing activities Issue of share capital 130,915 25,555Proceeds on the exercise of options over own shares 629 -Dividends paid (9,355) (7,956)Initial drawing of loans under new facility 271,539 -Repayment of loan under old facility (60,913) -Repayment of loan assumed on acquisition (135,140) -Repayment of loan under new facility (52,983) -Repayments of finance leases (1,980) (1,305) ________ ________Net cash from financing activities 142,712 16,294 ________ ________Net (decrease)/increase in cash (13,276) 40,430 Cash and cash equivalents at beginning of year 45,642 5,009 Effect of foreign exchange rate changes (1,636) 203 ________ ________Cash and cash equivalents at end of year 30,730 45,642 ________ ________ Notes to the Consolidated AccountsYear ended 31 March 2007 1. General information Expro International Group PLC ("the Group") is a company incorporated in Englandand Wales under the Companies Act 1985 and is domiciled in the United Kingdom.These financial statements are presented in pounds sterling because that is thecurrency of the parent company which is domiciled in the United Kingdom. The financial information set out above does not constitute the Company'sstatutory accounts within the meaning of Section 240 of the Companies Act 1985.The statutory accounts of the Company for the year ended 31 March 2006 have beendelivered to the Registrar of Companies. The auditors' report on those accountswas unqualified and did not contain any statements under Section 237(2) or (3)of the Companies Act 1985. The auditors' report for the year ended 31 March 2007 is unqualified and doesnot contain any statements under Section 237(2) or (3) of the Companies Act1985. These accounts have been prepared in accordance with the accountingpolicies set out below. The statutory accounts for the year ended 31 March 2007will be finalised on the basis of the financial information presented by thedirectors in this preliminary announcement, and will be delivered to theRegistrar of Companies following the Company's annual general meeting. 2. Significant accounting policies Basis of preparationWhilst the preliminary announcement has been prepared in accordance withInternational Financial Reporting Standards (IFRS) and with those parts of theCompanies Act 1985 applicable to companies reporting under IFRS, thisannouncement does not itself contain sufficient information to comply with IFRS.The Group will publish full financial statements that comply with IFRS in May2007. The financial statements have been prepared on the historic cost basis, exceptfor the revaluation of certain financial instruments. The accounting policies applied are consistent with those adopted and disclosedin the Group's annual financial statements for the year ended 31 March 2006,with the exception of the following significant accounting policies that differto those previously published. Investments in associatesAn associate is an entity over which the Group is in a position to exercisesignificant influence, but not control or joint control, through participationin the financial and operating policy decisions of the investee. Significantinfluence is the power to participate in the financial and operating policydecisions of the investee but is not control or joint control over thosepolicies. The results and assets and liabilities of associates are incorporated in thesefinancial statements using the equity method of accounting except whenclassified as held for sale. Investments in associates are carried in thebalance sheet at cost as adjusted by post-acquisition changes in the Group'sshare of the net assets of the associate, less any impairment in the value ofindividual investments. Losses of the associates in excess of the Group'sinterest in those associates are not recognised. Any excess of the cost of acquisition over the Group's share of the fair valuesof the identifiable net assets of the associate at the date of acquisition isrecognised as goodwill. Any deficiency of the cost of acquisition below theGroup's share of the fair values of the identifiable net assets of the associateat the date of acquisition (i.e. discount on acquisition) is credited in profitor loss in the period of acquisition. Where a Group company transacts with an associate of the Group, profits andlosses are eliminated to the extent of the Group's interest in the relevantassociate. Exceptional items and change of presentationIn the current year, the Group amended the format of the income statement inorder to improve the information provided to the users of the financialstatements. As permitted by IAS 1, Presentation of Financial Statements, theGroup has elected to classify certain items as exceptional and present themseparately on the face of the Income Statement. Exceptional items are classifiedas those which management have identified and disclosed as material one-off orunusual items and which are not considered to be part of the core operations ofthe Group. In addition, the Group has separately disclosed intangible assetamortisation that arises on business combinations, which is added back to arriveat underlying performance. Management believes this gives a useful additionalmeasure of profit and earnings and the Group focuses on underlying performancein order to compare performance year on year. 3. Business and geographical segments For management purposes, the Group is organised into two operating divisions -Regional businesses and Global businesses. These divisions are the basis onwhich the Group reports its primary segment information. Principal activities are as follows Regional businesses provide services which are primarily driven by customeroperating expenditure. Customer requirements are often for a short period oftime, and delivery is made through, and supported by, the Group's locallyestablished infrastructure. Global businesses provide products and services which are primarily driven bycustomer capital expenditure. These products and services, which are often basedupon bespoke engineering or technology based solutions, are delivered remotelyover a longer term period of time and are typically for offshore projects. Segment information about these businesses is presented below: Regional Global Total Regional Global Total businesses businesses 2007 businesses businesses 2006 2007 2007 £'000 2006 2006 £'000 £'000 £'000 £'000 £'000Continuing operations Segment revenueExternal revenue 321,944 196,876 518,820 169,482 131,245 300,727 ________ ________ ________ ________ ________ ________Segment resultUnderlying gross profit (a)48,983 42,039 91,022 19,631 26,580 46,211 Intangible asset amortisation - business combinations (5,129) (604) (5,733) (262) (473) (735) ________ ________ ________ ________ ________ ________Segment gross profit 43,854 41,435 85,289 19,369 26,107 45,476 Unallocated corporate expenses (18,480) (11,360) ________ ________Operating profit 66,809 34,116 ________ ________ In the prior year, joint ventures, which are accounted for under the equitymethod, are all attributable to the Global businesses segment. a Underlying gross profit is before exceptional items and intangible asset amortisation that arises on business combinations. Exceptional items are classified as those which management has identified and disclosed as material one-off or unusual items. In the prior year, exceptional items comprise gains on disposal of businesses. Regional Global Unallocated Total Regional Global Unallocated Total businesses businesses 2007 2007 businesses businesses 2006 2006 2007 2007 £'000 £'000 2006 2006 £'000 £'000 £'000 £'000 £'000 £'000 Other informationNon-current asset additions 323,599 107,924 5,572 437,095 20,032 35,497 2,655 58,184Depreciation and amortisation 23,751 20,225 2,248 46,224 8,225 20,201 3,488 31,914Impairmentlosses 498 - - 498 718 - - 718 Balance sheet AssetsSegment asset 488,707 170,770 50,040 709,517 137,600 98,260 56,116 291,976 ________ ________ ________ ________ ________ ________ ________ ________Total assets 488,707 170,770 50,040 709,517 137,600 98,260 56,116 291,976 ________ ________ ________ ________ ________ ________ ________ ________Liabilities Segmentliabilities (59,853) (31,052) (309,227) (400,132) (46,559) (31,613) (104,254) (182,426) ________ ________ ________ ________ ________ ________ ________ ________Total net assets 428,854 139,718 (259,187) 309,385 91,041 66,647 (48,138) 109,550 ________ ________ ________ ________ ________ ________ ________ ________ Unallocated segment assets and liabilities primarily comprise the Group's cash,borrowing facilities, corporation tax liabilities and deferred tax assets andliabilities. Geographical segmentsThe Group's operations are analysed between Europe and FSU (a), West Africa,North Africa Middle East, Asia (b), North America (Land), North America (GOM)(c)and Latin America. The following table provides an analysis of the Group's salesby geographical market: 2007 2006 £'000 £'000 Europe and FSU (a) 189,024 130,792West Africa 80,629 45,064North Africa and Middle East 46,593 17,206Asia (b) 72,583 59,179North America - Land 62,081 24,009North America - GOM (c) 34,809 22,945Latin America 33,101 1,532 ________ ________ 518,820 300,727 ________ ________ The following is an analysis of the carrying amount of segment assets, andadditions to goodwill, property, plant and equipment, and intangible assets,analysed by the geographical area in which the assets are located: Carrying value of assets Non-current asset additions 2007 2006 2007 2006 £'000 £'000 £'000 £'000 Europe and FSU (a) 173,008 95,259 77,809 9,586West Africa 98,741 40,267 62,816 13,630North Africa and Middle East 62,414 15,369 56,234 5,202Asia (b) 54,500 33,775 29,893 9,291North America - Land 135,723 25,213 91,972 8,777North America - GOM (c) 85,823 24,360 74,270 8,480Latin America 49,268 1,617 42,180 563Unallocated 50,040 56,116 1,921 2,655 ________ ________ ________ ________ 709,517 291,976 437,095 58,184 ________ ________ ________ ________ a Former Soviet Union.b Sakhalin Island is included within Asia for segmental reporting purposesc Gulf of Mexico 4. Tax 2007 2006 £'000 £'000 Current tax: UK corporation tax 2,463 1,638 Foreign tax 20,837 11,821 ________ ________ 23,300 13,459 ________ ________ Deferred tax: Current year (1,376) (1,739) Prior year (1,078) (516) ________ ________ (2,454) (2,255) ________ ________ 20,846 11,204 ________ ________ UK corporation tax is calculated at 30% (2006: 30%) of the estimated assessableprofit for the year. Taxation for other jurisdictions is calculated at the ratesprevailing in the respective jurisdictions. The charge for the year can be reconciled to the profit per the income statementas follows: 2007 2006 £'000 £'000 Profit before tax 55,105 29,562Less: Post tax profit from associates (102) - ________ ________ 55,003 29,562 Tax at the UK corporation tax rate of 30% (2006: 30%) 16,501 8,869Tax effect of expenses that are not deductible in determining taxable profit 995 728Tax effect of utilisation of tax losses not previouslyrecognised - (1,677)Tax effect of non-utilisation of tax losses 3,201 2,274Effect of different tax rates of subsidiaries operating in other jurisdictions 809 1,341Adjustments to prior year provisions (1,018) (290)Other 358 (41) ________ ________Tax expense for the year 20,846 11,204 ________ ________ 5. Dividends 2007 2006 £'000 £'000 Amounts recognised as distributions to equity holders in the year: Final dividend for the year ended 31 March 2006 of 7.1p per share (31 March 2005: 7.1p per share) 5,192 5,182Interim dividend for the year ended 31 March 2007 of 3.8p per share (31 March 2006: 3.8p per share) 4,163 2,774 ________ ________ 9,355 7,956 ________ ________Proposed final dividend for the year ended 31 March 2007of 8.0p per share (31 March 2006: 7.1p per share) 8,766 5,203 ________ ________ The proposed final dividend is subject to approval by shareholders at the AnnualGeneral Meeting and has not been included as a liability in these financialstatements. 6. Earnings per share The calculation of the basic and diluted earnings per share is based on the following data: 2007 2006 £'000 £'000 EarningsProfit for the year 34,259 28,460Less minority interest (132) (49) ________ ________Earnings attributable to equity holders of the parent - continuing and discontinued (a) 34,127 28,411Less post tax gain from disposal of joint venture - (9,661)Less post tax profit from discontinued joint venture operations - (441) ________ ________ Earnings for the purpose of basic earnings per share - continuing (b) 34,127 18,309 AdjustmentsPost tax profit from discontinued joint venture operations - 441 ________ ________Earnings for the purpose of headline earnings per share (c) 34,127 18,750Amortisation of intangible assets arising from acquisitions 5,733 735Less tax on the above (1,985) (226) ________ ________Earnings for the purpose of underlying earning per share (d) 37,875 19,259 ________ ________ 2007 2006 Number NumberNumber of shares Weighted average number of ordinary shares for the purposes of basic earnings per share 100,226,082 77,480,885Effect of dilutive potential ordinary shares: Share options 1,442,331 1,252,641 _________ _________Weighted average number of ordinary shares for the purposes of diluted earnings per share 101,668,413 78,733,526 _________ _________ Earnings per shareFrom continuing and discontinued operations (a) Basic 34.1p 36.6p ________ ________ Diluted 33.6p 36.1p ________ ________From continuing operations (b) Basic 34.1p 23.6p ________ ________ Diluted 33.6p 23.3p ________ ________From discontinued operations Basic - 13.0p ________ ________ Diluted - 12.8p ________ ________Headline (c) Basic 34.1p 24.2p ________ ________ Diluted 33.6p 23.8p ________ ________Underlying (d) Basic 37.8p 24.9p ________ ________ Diluted 37.3p 24.5p ________ ________ The denominator for the purposes of calculating both basic and diluted earningsper share has been adjusted to reflect the bonus element of the rights issue.Underlying earnings per share is based on continuing and discontinued operationsand is before exceptional items and intangible asset amortisation that arises onbusiness combinations. Exceptional items are classified as those whichmanagement has identified and disclosed as material one-off or unusual items.Headline earnings per share is based on continuing and discontinued operationsand is before exceptional items only. Previously published headline earnings pershare were on a continuing basis. 7. Statement of changes in equity Share Share Merger Other Hedging Translation Own Equity Retained Minority capital premium reserve Reserve reserve reserve shares reserve earnings interest Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 April 2005 6,646 929 - - - (1,963) (407) 417 47,535 33 53,190 Adoption of IAS 32 and 39 - - - - 826 - - - (279) - 547 Recognised income and expense - - - - (1,071) 5,307 - - 33,364 49 37,649 Dividends paid - - - - - - - - (7,956) - (7,956) Issue of share capital for cash 665 (947) 25,232 - - - - - - - 24,950 Issue of share capital on exercise of share options 17 588 - - - - - - - - 605 Share-based payments - - - - - - - 615 - - 615 Minority interest on acquisition - - - - - - - - - 33 33 Acquisition of minority interest - - - - - - - - - (83) (83) Transfers - - (25,232) - - - 55 - 25,177 - - _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ At 1 April 2006 7,328 570 - - (245) 3,344 (352) 1,032 97,841 32 109,550 Recognised income and expense - - - - (3,318) (17,275) - - 35,588 132 15,127 Dividend paid - - - - - - - - (9,355) - (9,355) Issue of share capital for cash 2,616 - 124,975 - - - - - - - 127,591 Issue of share capital on acquisition of subsidiary 916 - - 60,677 - - - - - - 61,593 Issue of share capital on exercise of share options 98 3,226 - - - - - - - - 3,324 Share-based payments - - - - - - - 910 629 - 1,539 Minority interest on acquisition - - - - - - - - - 16 16 Transfers - - (124,975) - - - 352 (398) 125,021 - - _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ At 31 March 2007 10,958 3,796 - 60,677 (3,563) (13,931) - 1,544 249,724 180 309,385 _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ 8. Disposal of subsidiary On 28 February 2007 the Group disposed of its interest in Expro Group Canada Incto Enseco Energy Services Corporation. The net assets of Expro Group Canada Incat the date of disposal were as follows: 28 February 2007 £'000 Intangible assets 197Property, plant and equipment 1,057Inventories 441Trade and other receivables 1,134Bank balances and cash 69Current tax liability (29)Trade and other payables (348)Attributable goodwill 1,416 ________ 3,937 ________ Proceeds 3,711Net assets on disposal (3,937)Recycled foreign exchange 344Costs of disposal (118) ________Gain/(loss) on disposal - ________Satisfied by: Cash consideration 1,805Deferred consideration 609Unsecured convertible debenture 1,297 ________ 3,711 ________Net cash inflow arising on disposal: Cash consideration 1,805Cash and cash equivalents disposed of (69)Directly attributable costs (paid) (18) ________ 1,718 ________ The disposal of Expro's Canadian Wireline and TCP business did not represent adiscontinued operation as Expro continues to operate within Canada, includingits downhole tractor services and Excape completion services, as well assupplying Wireline and TCP services across the globe. The unsecured convertible debenture has been recorded at fair value. 9. Acquisition of subsidiary The Group acquired Power Well Services "PWS" on 3 July 2006. PWS is a leadingsupplier of well testing and other flow management products and services to theglobal oil and gas industry. The acquisition comprised a 100% interest in PowerWell Services Inc (registered in the USA) and a 100% interest in Power WellServices Holding LP (registered in the Cayman Islands), and their respectivesubsidiaries. This transaction has been accounted for by the purchase method ofaccounting. All assets and liabilities were recognised at their respective fair values. Theresidual excess over net assets acquired is recognised as goodwill in thefinancial statements. Provisional Adjustment to Provisional fair value reflect Provisional book value adjustments US GAAP to IFRS fair value £'000 £'000 £'000 Intangible assets 15,875 86,142 2,407 104,424Property, plant and equipment 100,547 (2,308) (2,407) 95,832Inventories 13,858 (121) - 13,737Trade and other receivables 54,964 (2,680) - 52,284Cash 6,540 - - 6,540Bank overdraft (2,703) - - (2,703)Trade and other payables (25,568) (831) - (26,399)Current tax liabilities (10,531) - - (10,531)Finance leases (381) - - (381)Bank loans (134,974) - - (134,974)Retirement benefit obligation (126) - (774) (900)Deferred tax liabilities (2,099) (30,148) 252 (31,995)Minority interest (17) - - (17) ________ ________ ________ ________ 15,385 50,054 (522) 64,917Goodwill 175,513 ________Total consideration 240,430 ________ Satisfied by: Cash 168,757Shares 61,593Directly attributable costs 10,080 ________ 240,430 ________ Net cash outflow arising on acquisition: Cash consideration 168,757Directly attributable costs 10,080Cash acquired less bank overdraft (3,837) ________ 175,000 ________ The values set out above are provisional pending finalisation of the fair valuesattributable, which will be completed by 2 July 2007. Shares issued were valuedat market price at the date of acquisition. The goodwill arises through the strengthening of the Group's geographicalfootprint, product pull-through opportunities with new clients and the value ofthe acquired workforce. The revenue and operating profit of PWS for the year has not been disclosed asintegration of the business has made this impracticable. If the acquisition had been completed on 1 April 2006, total Group revenue forthe year would have been £561.8m, and operating profit for the year would havebeen £70.4m, after deducting intangible asset amortisation arising onconsolidation of £6.9m. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Engage Xr