21st Aug 2012 07:00
Half year results for the six months ended 30 June 2012
Sustained momentum across all divisions
John Wood Group PLC ("Wood Group" or the "Group") is an international energyservices company employing more than 41,000 people worldwide and operating in50 countries. The Group has three businesses - Engineering, Wood Group PSN andWood Group GTS - providing a range of engineering, production support,maintenance management and industrial gas turbine overhaul and repair servicesto the oil & gas, and power generation industries worldwide.
Financial Highlights
Revenue from continuing operations1 of $3,346.3m (2011: $2,465.9m) up 36%
EBITA from continuing operations1 of $205.1m (2011: $133.9m) up 53%
Profit from continuing operations before tax and exceptional items of $160.0m (2011: $102.7m) up 56%
Adjusted diluted EPS1 of 37.4 cents (2011: 25.2 cents) up 48%
Interim dividend of 5.7 cents (2011: 3.9 cents) up 46%
Divisional Highlights
Engineering
Revenue growth and margin improvement
Important contract wins including Ichthys and Mafumeira Sul
Strong order book and future prospects
Wood Group PSN
Strong performance in the North Sea and North America
Actively working to improve performance on our long term contract with PDO in Oman
Renewals and contract wins support future performance
Wood Group GTS
Continued growth in Maintenance revenue and EBITA
Power Solutions EBITA benefitting from advanced stage of completion on Dorad contract
Expect good growth in EBITA for the year, weighted to the second half
Sir Ian Wood, Chairman, and Allister Langlands, Chief Executive commented:
"In the first half the Group has delivered growth across all three divisions,and we are confident of achieving full year performance in line withexpectations. The Group is well placed with a balance of opex and capex relatedactivities across key geographical areas of industry growth and a robustbalance sheet. In July we announced a number of board changes and our strongmanagement team is well set to further develop our leading positions acrossengineering, production facilities support and gas turbine services."Enquiries:Wood GroupNick Gilman 01224 851 000Andrew RoseCarolyn SmithBrunswickPatrick Handley 020 7404 5959Rosheeka FieldThere will be an analyst and investor presentation at the Lincoln Centre, 18Lincoln's Inn Fields, WC2A 3ED at 09.00 (GMT). Early registration is advisedfrom 08.30 (GMT).
A live webcast of the presentation will be available from www.woodgroup.com/ investors. Replay facilities will be available later in the day.
1 See detailed footnotes.
Overview
In the first half the Group has delivered growth across all three divisions, and we are confident of achieving full year performance in line with expectations.
Engineering is benefitting from global demand for our services, particularly inour upstream and subsea & pipeline activities. Our Engineering order book andfuture prospects remain strong and we currently anticipate that full year EBITAwill be up over 30% on 2011.In Wood Group PSN, results reflect the contribution from the acquired PSNbusiness for the full six month period. We saw strong performance in the NorthSea and North America, particularly in the US shale regions. In internationalmarkets, we are active in Australia, Africa, the Caspian and the Arabian Gulfwhere we are actively working to improve performance on our long term contractwith PDO in Oman.In Wood Group GTS, conditions in power markets remain relatively challengingalthough we are seeing some signs of improvement in the US. Maintenance EBITAwas up around 10% and Power Solutions delivered increased EBITA due to the moreadvanced stage of completion on the Dorad contract. Overall, we expect goodgrowth in EBITA for the year, weighted to the second half.In July, we announced a number of board changes which will be effective on 1November. Sir Ian Wood will retire as Chairman and from the Board. AllisterLanglands, CEO, will become Chairman and Bob Keiller, Chief Executive of WoodGroup PSN, will become CEO. Alongside these moves, Robin Watson, the currentHead of Wood Group PSN in the UK, will succeed Bob Keiller as Chief Executiveof the Wood Group PSN division and will join the Board on 1 January 2013. MarkDobler, the new Chief Executive of the Wood Group GTS division will also jointhe Board on 1 January 2013, having been with the Group for over 10 years. Webelieve we are well placed to further develop our leading positions acrossengineering, production facilities support and gas turbine services.
Markets
Overall, conditions in energy markets remain favourable. Uncertainty about theglobal economic outlook and somewhat lower commodity prices has not had anydiscernible impact on activity levels or the current outlook. The Group is wellplaced with a balance of opex and capex related activities across keygeographical areas of industry growth. We have a robust balance sheet and arewell positioned to take advantage of strong longer term energy fundamentals,supported by demand from developing economies and increasingly complex fielddevelopment and production challenges.Trading Performance Interim Interim % June 2012 June 2011 Change $m $m
Revenue from continuing operations1 3,346.3 2,465.9 35.7%
EBITA from continuing operations1,2 205.1 133.9 53.2%
EBITA margin from continuing operations 6.1% 5.4% 0.7pts %
Profit from continuing operations 160.0 102.7 55.8% before tax and exceptional items
Basic EPS 33.9c 444.0c n/m Adjusted diluted EPS3 37.4c 25.2c 48.4% Note: Continuing operations revenue and EBITA figures include the results ofPSN since acquisition in April 2011, and exclude the results of Well Supportand the Wood Group GTS Aero engine overhaul business, disposed of in April 2011and April 2012 respectively.Revenue from continuing operations increased by 36% and EBITA from continuingoperations was up 53%. Continuing operations EBITA margin ("margins") increasedby 0.7 percentage points due to improved margins in all divisions. Adjusteddiluted EPS increased by 48% to 37.4c, due to growth in EBITA from continuingoperations and the reduction in the average number of fully diluted shares inthe period subsequent to the return of capital in 2011, offset by the impact ofthe disposal of Well Support.DividendReflecting our confidence in the longer term outlook for the Group, wecurrently intend to pay a total dividend of 17.0 cents per share for 2012 whichwill represent a 26% increase for the year. In order to rebalance more closelyin the ratio of one third interim to two thirds final, we have declared aninterim dividend of 5.7 cents which will be paid on 28 September.
Engineering
We provide a wide range of engineering services to the upstream, subsea &pipeline, downstream & industrial and clean energy sectors. These includeconceptual studies, engineering, project & construction management (EPCM) andcontrol system upgrades. Interim Interim Change June June 2012 2011 $m $m Revenue 872.2 688.5 26.7% EBITA 104.1 72.5 43.6% EBITA margin 11.9% 10.5% 1.4pts People4 10,100 8,000 26%
Engineering performed well, delivering 27% revenue growth and margin improvement from 10.5% to 11.9%, largely reflecting increased activity in upstream and subsea & pipelines. EBITA increased by 44%, reflecting higher volumes and some improvement in underlying pricing.
Headcount increased by 26% from 8,000 in June 2011 to 10,100, both organicallyand through the acquisition of ISI Solutions in the second half of 2011. Thiscompares to a headcount of 9,100 at December 2011.Our upstream business accounted for around 40% of Engineering revenue. In theGulf of Mexico, we are working on a number of offshore developments includingJack & St Malo, Tubular Bells, Hadrian and Lucius. In Canada, we have beenactive on a range of conventional and unconventional projects. We had a numberof important awards during the period, including the Ichthys and Mafumeira Sulprojects; both scheduled for completion in the second half of 2013.Our subsea & pipeline business also accounted for around 40% of revenue. Wewere particularly active in the North Sea and Australia, where we are workingon projects including Quad 204, Equus, Julimar and Gorgon. We also securedEnterprise Frame Agreements with Shell, under which we are executing a range ofwork including the Linnorm FEED study in Norway. Our onshore pipelines businessperformed well, benefitting from liquids focused activity in the US shaleregions.
Downstream, process & industrial activities accounted for around 20% of revenue. Performance was impacted by lower expenditure in the US refining market.
Outlook
Activity levels remain high and are supported by a strong order book and futureprospects. As a result, we anticipate that Engineering will deliver full yearEBITA up over 30% on 2011.Wood Group PSN
We provide life of field support to producing assets through brownfield engineering and modifications, production enhancement, operations and maintenance (including UK duty holder services), training, maintenance management and abandonment services.
Interim Interim Change June June 2012 2011 $m $m Revenue 1,774.1 1,296.9 36.8% EBITA 90.0 65.1 38.2% EBITA margin 5.1% 5.0% 0.1pts People4 28,000 24,000 17%
Revenue and EBITA include the results of PSN from the date of acquisition on 20 April 2011.
In Wood Group PSN, revenue and EBITA growth of 37% and 38% respectively,resulted primarily from the contribution of the acquired PSN business for thefull six months in 2012. On a pro forma basis, which includes PSN revenue andEBITA for the full first half of 2011, revenue increased by 7% and EBITAincreased by 3%. Pro forma EBITA growth was held back by continuing losses inOman.
Headcount increased by 17% from 24,000 in June 2011 to 28,000, including around 2,500 people in respect of the mobilisation of our contract in Oman with PDO.
We saw strong performance in the North Sea, which is our largest market andaccounted for around 40% of Wood Group PSN revenue. Customer spending oninfrastructure integrity management and production enhancement continues togive us confidence in the medium term market outlook. We are active onoperations & maintenance and brownfield engineering work scopes on longer termcontracts with customers including BP, Shell, Talisman and TAQA, together withour recently awarded contract with Premier Oil.The Americas accounted for around 30% of revenue. North America remains strong,with growth in the provision of onshore support services including to the USshale regions, where we see further opportunities and have recently completedthe acquisition of Duval in the Eagle Ford region of Texas. Our offshoreactivities in the Gulf of Mexico also performed well. In Latin America, weexpect to complete the outstanding work on our downstream project for Ecopetrolin Colombia in the second half of 2012 in line with the provisions made in2011.International markets, outside the North Sea and the Americas, represent around30% of revenue. In Oman, we have seen increased activity on our significantcontract with PDO. Losses in the first half were broadly in line with those ofthe second half of 2011 at just over $10m. We are active on a number of stepsto improve financial performance, including increasing operational efficiencyand resolving a number of commercial issues. We anticipate that losses willreduce in the second half leading to a full year loss in 2012 of around$15m-$20m. We expect to see to see ongoing improvement in 2013, and beyond thiscontinue to see the potential for long run profitability on the contract. InAustralia, we have around 2,000 people working for clients including ExxonMobil, QGC and GLNG. In Africa, we remain active in Chad, Equatorial Guinea,Nigeria and Angola, where we are providing maintenance support services to BPon Block 31 and see further opportunities. In the Caspian, we are providingfacilities engineering and commissioning services to customers in Kazakhstan.
Outlook
We anticipate an improved performance for Wood Group PSN in 2012 resulting fromthe full year benefit of the PSN acquisition, continued strength in the NorthSea, North America, Australia and Africa, together with the reduction ofoverall contract losses compared to 2011.
Wood Group GTS
We are a leading independent provider of rotating equipment services and solutions for clients in the power, oil & gas and clean energy markets. Our aftermarket Maintenance activities include facility operations & maintenance and repair & overhaul of gas, wind and steam turbines, pumps and other high-speed rotating equipment. Our Power Solutions business provides power plant engineering, procurement & construction and construction management services to the owners of power-generation facilities.
Interim Interim Change June 2012 June 2011 $m $m Revenue 700.0 480.5 45.7% EBITA 38.1 22.5 69.3% EBITA margin 5.4% 4.7% 0.7pts People4 3,700 3,400 9%
Revenue increased by 46% and EBITA increased by 69%. Maintenance EBITA was uparound 10% on 2011 and Power Solutions EBITA benefited from the more advancedstage of completion on the Dorad contract.
Headcount increased by 9% from 3,400 to 3,700, predominantly due to higher activity in Power Solutions and seasonal increases in our US field operations in Maintenance.
In Maintenance, revenue and EBITA growth of around 10% was led by continuedstrength in our oil and gas related activities and the contribution from somesmall acquisitions completed in 2011. We were also awarded a multi-yearmaintenance services contract for Shell's Brent assets in the North Sea. In ourpower related activities, we continue to add new long term service agreementsand have recently signed contracts with TAQA in Ghana and Sime Darby inThailand.
Power Solutions delivered improved EBITA due to the more advanced stage of completion on the Dorad contract. There has been some delay on our GWF contract, although we still anticipate a reasonable EBITA contribution and completion in the second half of 2012. The Dorad contract continues to be scheduled for completion in the second half of 2013. We are actively pursuing additional Power Solutions opportunities in areas including the US, the Caspian, the Middle East and Africa.
Outlook
In Wood Group GTS, we expect good growth in EBITA for the year, weighted to thesecond half. In Maintenance, we are seeing some signs of improvement in the USpower market. In Power Solutions, we have good visibility for 2012 and areactive on a number of future prospects although constraints in the projectfinancing market, together with some uncertainty around the outlook for globalGDP growth, is holding back contract awards.Financial ReviewFinancial performance Interim Interim Full Year June 2012 June 2011 Dec 2011 $m $m $m
Revenue from continuing operations 3,346.3 2,465.9 5,666.8
EBITA from continuing operations 205.1 133.9 341.6
EBITA margin from continuing 6.1% 5.4% 6.0% operations Amortisation (39.0) (26.9) (78.7)
Operating profit from continuing 166.1 107.0 262.9 operations before exceptional items
Net finance expense (6.1) (4.3) (8.8)
Profit from continuing operations 160.0 102.7 254.1 before tax and exceptional items
Taxation on continuing operations (46.4) (30.8) (75.0) before exceptional items
Profit for the period from continuing 113.6 71.9 179.1 operations before exceptional items
(Loss)/profit from discontinued (1.1) 37.0 36.1 operations, net of tax Profit for the period before 112.5 108.9 215.2 exceptional items Exceptional items, net of tax 10.2 2,154.0 2,087.6 Profit for the period 122.7 2,262.9 2,302.8 Basic EPS (cents) 33.9c 444.0c 530.7c Adjusted diluted EPS (cents) 37.4c 25.2c 60.2c
The review of our trading performance is contained within the Divisional commentary above.
The PSN acquisition was completed on 26 April 2011. On a pro forma basis, whichincludes PSN revenue and EBITA for the full first half of 2011, the performanceof the continuing Group would have been as set out below.Unaudited H1 H1 % 2012 2011 Change $m $m Engineering 872.2 688.5 27% Wood Group PSN 1,774.1 1,660.2 7% Wood Group GTS 700.0 480.5 46% Pro forma revenue from 3,346.3 2,829.2 18% continuing operations Engineering 104.1 72.5 44% Wood Group PSN 90.0 87.1 3% Wood Group GTS 38.1 22.5 69% Central (27.1) (26.2) 3%
Pro forma EBITA from continuing 205.1 155.9 32%
operations The pro forma result shows underlying growth in revenue of 18% and in EBITA of32%. All divisions are showing growth in revenue and EBITA, with growth in WoodGroup PSN held back by losses in Oman as noted in the Divisional commentaryabove.
Amortisation
The amortisation charge for the half year of $39.0m (2011: $26.9m) includes$27.4m (2011: $17.1m) of amortisation relating to intangible assets arisingfrom acquisitions, of which $23.1m (2011: $11.8m) is in relation to the PSNacquisition. We currently anticipate that the amortisation charge for the fullyear will be around $80m. We regard the amortisation charge relating tointangible assets arising from acquisitions to be a relatively subjectivemeasure, and as a result continue to believe that performance is best measuredexcluding this figure. This is one of the primary reasons for our key reportingmeasures for profit and earnings per share excluding the impact ofamortisation.
Net finance expense
Net finance expense from continuing operations is analysed further below:
Interim Interim Full year June 2012 June 2011 Dec 2011 $m $m $m Interest on debt 4.8 5.3 9.0 Non utilisation fees 0.8 1.5 2.3 Non-cash charges on pension and 0.7 0.3 1.3 deferred consideration Bank fees and charges 0.7 0.4 1.1 Total finance expense from 7.0 7.5 13.7 continuing operations Finance income (0.9) (3.2) (4.9) Net finance expense from 6.1 4.3 8.8 continuing operations
Interest cover5, based on EBITA from continuing operations, remains strong at 33.3 times (2011: 31.1 times).
Exceptional items
As at June 2012, the Group has recognised a net provision for doubtful debts of $9.3m which includes a net tax credit of $3.9m.
At 30 June 2012, the Group has provided $15.1m that relates to work carried outfor ATP Oil & Gas Corporation, who have filed a voluntary petition forreorganisation under Chapter 11 of the US Bankruptcy Code. We will continue tomake every effort to recover amounts due.At 31 December 2011, a provision of $13.0m was held in relation to overdueLibyan receivables as a result of the political disruption in Libya earlier in2011. In July 2012, the Group received a payment of $5.8m from its customer andaccordingly the provision has been reduced by this amount and a credit bookedto exceptional items in the income statement. A tax charge of $1.4m has beenrecognised on this gain.In the first half of 2012, the Group recorded a pre-tax net exceptional gain of$21.2m in relation to the disposal of the remaining Well Support Middle Easternbusiness which was completed in May 2012. A tax charge of $5.6m has beenrecognised on this gain.
Taxation
The effective tax rate on continuing operations before exceptional items was29.0% (2011: 30.0%). Interim Interim Full year June 2012 June 2011 Dec 2011 $m $m $m
Profit from continuing operations 160.0 102.7 254.1 before tax pre-exceptional items
Underlying tax charge 54.3 35.8 91.8
Credit in relation to deferred tax (7.9) (5.0) (16.8) on amortisation of intangibles
arising on acquisition
Tax charge per financial statements 46.4 30.8 75.0
Effective tax rate on continuing 29.0% 30.0% 29.5% operations
As noted in our December 2011 results, following the sale of Well Support andacquisition of PSN, we expect the typical effective tax rate going forward tobe no more than 29.0%, with the reduction due to the change in geographic mixof the Group, reduced rates in certain jurisdictions and management actionstaken.
Earnings per share
Adjusted diluted EPS for the six months to 30 June 2012 increased by 48% to37.4 cents per share, due to growth in EBITA from continuing operations and thereduction in the average number of fully diluted shares in the periodsubsequent to the return of capital in 2011, partially offset by the impact ofthe disposal of Well Support. The average number of fully diluted shares usedin the EPS calculation for the period was 371.4m (2011: 526.9m) and the closingbalance was 372.7m.Reconciliation of number of fully diluted Closing Weighted
shares Average 30 June 2012
(All figures are in million shares) 2012
Ordinary shares 371.3 371.3
Shares held by employee share trusts (10.6) (12.6) Basic shares for EPS purposes 360.7 358.7
Effect of dilutive shares 12.0 12.7
Fully diluted shares for EPS purposes 372.7 371.4
Dividend
Reflecting our confidence in the longer term outlook for the Group, wecurrently intend to pay a total dividend of 17.0 cents per share for 2012 whichwill represent a 26% increase for the year. In order to rebalance more closelyin the ratio of one third interim to two thirds final, we have declared aninterim dividend of 5.7 cents which will be paid on 28 September.Summary Balance Sheet June 2012 December 2011 $m $m Non-current assets 1,880.7 1,873.9 Current assets 2,101.5 2,007.1 Current liabilities (1,412.5) (1,505.2) Net current assets 689.0 501.9 Non-current liabilities (494.6) (401.3) Net assets 2,075.1 1,974.5 Equity attributable to owners of the 2,066.6 1,964.5 parent Non-controlling interests 8.5 10.0 Total equity 2,075.1 1,974.5 The increase in net current assets since December 2011 is due to higherreceivables and inventory, lower payables and income tax liabilities, partlyoffset by lower cash and the disposal of net assets held for sale at December2011.
The increase in non-current liabilities is primarily due to the increase in long term borrowings since December 2011.
Capital efficiency
The continuing Group's Return on Capital Employed ("ROCE")6 increased from17.7% at 30 June 2011 to 17.8%. This reflects an increase in ROCE in theEngineering and Wood Group GTS divisions following higher profitability in theperiod, partly offset by lower ROCE in Wood Group PSN which in 2012 has theimpact for the full 6 months of higher goodwill and intangibles arising fromacquisition.The continuing Group's ratio of Operating Capital Employed to Revenue ("OCER")7increased from 10.6% at 30 June 2011 to 11.8%. The increase was due principallyto the increase in working capital in the period.Cash flow and net debt Interim Interim Full year June 2012 June 2011 $m Dec 2011 $m $m Opening net debt (3.9) (15.1) (15.1) Cash generated from operations 226.7 217.8 471.6 pre working capital Working capital movements (172.9) (87.7) (109.5) (continuing operations) Working capital movements - (77.6) (77.6) (discontinued operations)
Cash generated from operations 53.8 52.5 284.5
Acquisitions, capex and (71.4) (978.2) (1,083.8) intangibles Disposals 38.4 2,745.9 2,793.6
Return of cash to shareholders (7.7) (681.0) (1,725.8)
Tax paid (84.9) (58.5) (118.7)
Interest, dividends and other (35.4) (48.9) (123.4)
Exchange movements on net debt 3.7 (31.6) (15.2)
(Increase)/decrease in net debt (103.5) 1,000.2 11.2
Closing (net debt)/cash (107.4) 985.1 (3.9) Throughout the period the Group has maintained a level of debt as set outbelow. Interim Interim Full Year June 2012 June 2011 Dec 2011 $m $m $m Average net debt 127.7 * * Average gross debt 323.9 282.9 295.5 Closing net debt/(cash) 107.4 (985.1) 3.9 Closing gross debt 287.5 201.7 230.5 *Average net debt figures for 2011 do not provide a meaningful comparison as aresult of the cash received from the Well Support disposal and the subsequentreturn of cash to shareholders and are not therefore provided.Cash generated from operations pre-working capital increased by $8.9m to$226.7m and post-working capital increased by $1.3m to $53.8m. The workingcapital outflow of $172.9m in the first half of 2012 was due to a combinationof the seasonality of working capital at December 2011, higher activity in thefirst half of 2012 compared to the second half of 2011, an increase in GTSinventory and an increase in closing receivable days. The increase inreceivables days was due in part to slower collection from certain customers inNorth America and the Middle East. We do not consider the first half outflow tobe indicative of any structural change in the Group's working capitalconsumption, and it is anticipated that the working capital position willimprove in the second half of 2012.
No cash was paid in relation to acquisitions made in the period (2011: $917.4m). In early July, the Group acquired Duval for an initial consideration of $21.4m. Duval is based in Texas and provides oilfield operations, maintenance and fabrication services to the Eagle Ford shale region.
Deferred consideration paid in respect of prior period acquisitions amounted to$26.0m (2011: $9.2m) and payments for capex and intangible assets decreased to$45.4m (2011: $50.8m).
Tax payments in the period totalled $84.9m (2011: $58.5m) and interest, dividends and other amounted to $35.4m (2011: $48.9m).
Foreign exchange and constant currency reporting
The Group's revenue and EBITA can be impacted by movements in foreign exchangerates, including the effect of retranslating the results of subsidiaries withvarious functional currencies into US dollars at different exchange rates.Given there was no significant movement in the average US dollar to other majorcurrencies in which we operate between the first half of 2011 and the firsthalf of 2012, our results in constant currency terms are materially the same asthose presented above.***********************Footnotes1 Continuing operations revenue and EBITA figures include the results of PSNsince acquisition in April 2011, and exclude the results of Well Support andthe Wood Group GTS Aero engine overhaul business, disposed of in April 2011 andApril 2012 respectively. The figures for June 2011 have been restated to showthe Wood Group GTS aero engine overhaul business as discontinued.2 EBITA from continuing operations represents operating profit from continuingoperations pre-exceptional items of $166.1m (2010: $107.0m), before thededuction of amortisation of $39.0m (2011: $26.9m) and is provided as it is akey unit of measurement used by the Group in the management of its business.3 Adjusted diluted earnings per share ("AEPS") is calculated by dividingearnings before exceptional items and amortisation, net of tax, by the weightedaverage number of ordinary shares in issue during the period, excluding sharesheld by the Group's employee share ownership trusts and adjusted to assumeconversion of all potentially dilutive ordinary shares.4 Number of people includes both employees and contractors at 30 June 2012.
5 Interest cover is EBITA from continuing operations divided by the net finance charge from continuing operations.
6 Return on Capital Employed ("ROCE") is EBITA divided by average capital employed.
7 Operating Capital Employed to Revenue ("OCER") is the average operating capital employed divided by revenue. Operating capital employed comprises property, plant and equipment, intangible assets (excluding intangibles recognised on acquisition), inventories and trade and other receivables, less trade and other payables.
John Wood Group PLC
Interim Financial Statements 2012
John Wood Group PLC
Group income statement
for the six month period to 30 June 2012
Unaudited Interim Unaudited
Interim Audited Full Year
June 2012 June 2011 December 2011 Pre- Except- Pre- Except- Pre- Except- except-ional ional Total except- ional Total except- ional Total Note items items $m ional items $m ional items $m $m (note items (note items (note 3) $m 3) $m 3) $m $m $m Revenue from 2 3,346.3 - 3,346.3 2,465.9 - 2,465.9 5,666.8 - 5,666.8continuing operations Cost of sales (2,777.4) - (2,777.4) (2,018.4) -
(2,018.4) (4,684.2) (29.7) (4,713.9)
Gross profit 568.9 - 568.9 447.5 - 447.5 982.6 (29.7) 952.9 Administrative (402.8) (9.3) (412.1) (340.5) (42.1) (382.6) (719.7) (125.7) (845.4)expenses Operating 2 166.1 (9.3) 156.8 107.0 (42.1) 64.9 262.9 (155.4) 107.5profit Finance income 0.9 - 0.9 3.2 - 3.2 4.9 - 4.9 Finance expense (7.0) - (7.0) (7.5) (3.8) (11.3) (13.7) (3.8) (17.5) Profit before taxation from 160.0 (9.3) 150.7 102.7 (45.9) 56.8 254.1 (159.2) 94.9continuing operations Taxation 8 (46.4) 3.9 (42.5) (30.8) 10.2 (20.6) (75.0) 26.7 (48.3) Profit for the 113.6 (5.4) 108.2 71.9 (35.7) 36.2 179.1 (132.5) 46.6period from continuing operations (Loss)/profit (1.1) 15.6 14.5 37.0 2,189.7 2,226.7 36.1 2,220.1 2,256.2from discontinued operations net of tax Profit for the 112.5 10.2 122.7 108.9 2,154.0 2,262.9 215.2 2,087.6 2,302.8period Profit attributable to: Owners of the 111.3 10.2 121.5 108.7 2,154.0 2,262.7 214.7 2,087.6 2,302.3parent Non-controlling 1.2 - 1.2 0.2 - 0.2 0.5 - 0.5interests 112.5 10.2 122.7 108.9 2,154.0 2,262.9 215.2 2,087.6 2,302.8 Earnings per share (expressed in cents per share) Basic 7 31.0 2.9 33.9 21.3 422.7 444.0 49.5 481.2 530.7 Diluted 7 30.0 2.7 32.7 20.6 408.8 429.4 47.8 465.2 513.0(Loss)/profit from discontinued operations net of tax represent the post-taxlosses of the Wood Group GTS aero engine overhaul business which was divestedin April 2012 and the post-tax profits of the Well Support business which wasdivested in April 2011, together with the post-tax gain on divestment.
John Wood Group PLC
Group statement of comprehensive income
for the six month period to 30 June 2012
Unaudited Unaudited Audited Interim Interim Full June June Year 2012 2011 December 2011 $m $m $m Profit for the period 122.7 2,262.9 2,302.8 Other comprehensive income
Actuarial losses on retirement benefit - - (22.6)liabilities Movement in deferred tax relating to - - 6.1retirement benefit liabilities Cash flow hedges 0.4 7.1 (1.6) Net exchange movements on retranslation of 2.1 12.5 (31.1)foreign currency net assets Net exchange movements on retranslation of - 0.2 (0.2)non-controlling interests Total comprehensive income for the period 125.2 2,282.7 2,253.4 Total comprehensive income for the period
is attributable to: Owners of the parent 124.0 2,282.3 2,253.1 Non-controlling interests 1.2 0.4 0.3 125.2 2,282.7 2,253.4John Wood Group PLCGroup balance sheetas at 30 June 2012 Audited Unaudited Unaudited Full Interim Interim Year June June December 2012 2011 2011 Note $m $m $m Assets Non-current assets
Goodwill and other intangible assets 1,606.0 1,694.0 1,621.3
Property plant and equipment 161.8 146.7 150.0 Long term receivables 48.5 45.9 42.0 Deferred tax assets 64.4 70.7 60.6 1,880.7 1,957.3 1,873.9 Current assets Inventories 435.9 416.2 404.5 Trade and other receivables 1,446.9 1,250.5 1,320.9 Income tax receivable 38.6 13.9 28.7 Cash and cash equivalents 12 180.1 1,186.8 226.6 Gross assets held for sale - - 26.4 2,101.5 2,867.4 2,007.1 Liabilities Current liabilities Borrowings 12 56.2 29.2 69.2 Trade and other payables 1,242.8 1,219.6 1,286.2 Income tax liabilities 113.5 130.1 139.2 Gross liabilities held for sale - - 10.6 1,412.5 1,378.9 1,505.2 Net current assets 689.0 1,488.5 501.9 Non-current liabilities Borrowings 12 231.3 172.5 161.3 Deferred tax liabilities 4.3 63.5 5.7 Retirement benefit liabilities 9 47.3 25.3 45.8 Other non-current liabilities 121.5 88.5 98.7 Provisions 90.2 29.3 89.8 494.6 379.1 401.3 Net assets 2,075.1 3,066.7 1,974.5 Equity attributable to owners of the parent Share capital 23.4 23.3 23.4 Share premium 8.1 321.8 7.7 Retained earnings 1,569.0 2,516.2 1,469.8 Other reserves 466.1 194.2 463.6 2,066.6 3,055.5 1,964.5 Non-controlling interests 8.5 11.2 10.0 Total equity 2,075.1 3,066.7 1,974.5 John Wood Group PLC
Group statement of changes in equity
for the six month period to 30 June 2012
Equity attributable Share Share Retained Other to owners Non- capital premium earnings reserves of the controlling Total parent interests equity Note $m $m $m $m $m $m $m At 1 January 26.3 315.8 1,007.6 56.6 1,406.3 10.9 1,417.22011 Profit for the - - 2,262.7 - 2,262.7 0.2 2,262.9period Other comprehensive income: Cash flow - - - 7.1 7.1 - 7.1hedges Net exchange - - - 12.5 12.5 0.2 12.7movements on retranslation of foreign currency net assets Total - - 2,262.7 19.6 2,282.3 0.4 2,282.7comprehensive income for the period Transactions with owners: Dividends paid 4 - - (39.3) - (39.3) (0.2) (39.5) Credit relating 13 - - 2.2 - 2.2 - 2.2to share based charges Shares disposed - - 9.9 - 9.9 - 9.9of by employee share trusts Exchange - - (1.9) - (1.9) - (1.9)movements in respect of shares held by employee share trusts Shares issued 0.6 - - 114.4 115.0 - 115.0in respect of the PSN acquisition Purchase of (3.6) - (675.7) 3.6 (675.7) - (675.7)shares under tender offer Expenses and - - (43.3) - (43.3) - (43.3)foreign exchange relating to return of cash to shareholders, net of tax Adjustment - 6.0 (6.0) - - - -relating to options exercised under share symmetry scheme Transactions - - - - - 0.1 0.1with non-controlling interests At 30 June 2011 23.3 321.8 2,516.2 194.2 3,055.5 11.2 3,066.7 At 1 January 23.4 7.7 1,469.8 463.6 1,964.5 10.0 1,974.52012 Profit for the - - 121.5 - 121.5 1.2 122.7period Other comprehensive income: Cash flow - - - 0.4 0.4 - 0.4hedges Net exchange - - - 2.1 2.1 - 2.1movements on retranslation of foreign currency net assets Total - - 121.5 2.5 124.0 1.2 125.2comprehensive income for the period Transactions with owners: Dividends paid 4 - - (34.6) - (34.6) (0.8) (35.4) Credit relating 13 - - 9.2 - 9.2 - 9.2to share based charges Shares disposed - - 4.5 - 4.5 - 4.5of by employee share trusts Exchange - - (1.0) - (1.0) - (1.0)movements in respect of shares held by employee share trusts Adjustment - 0.4 (0.4) - - - -relating to options exercised under share symmetry scheme Transactions - - - - - (1.9) (1.9)with non-controlling interests At 30 June 2012 23.4 8.1 1,569.0 466.1 2,066.6 8.5 2,075.1
The figures presented in the above tables are unaudited.
Other reserves include the capital redemption reserve, capital reduction reserve, merger reserve, currency translation reserve and the hedging reserve.
John Wood Group PLCGroup cash flow statement
for the six month period to 30 June 2012
Unaudited Unaudited Audited Interim Interim Full Year June June Dec 2012 2011 2011 Note $m $m $m Cash generated from operations 11 53.8 52.5 284.5 Tax paid (84.9) (58.5) (118.7) Net cash (used in)/from operating (31.1) (6.0) 165.8activities
Cash flows from investing activities Acquisition of subsidiaries (net of cash 5 (26.0) (926.6) (979.4)and borrowings acquired) Cash impact of exceptional items - (11.2)
(16.4)
Proceeds from divestment of subsidiaries 6 38.4 2,745.9 2,793.6 (net of cash and borrowings divested and
divestment costs)
Purchase of property plant and equipment (30.7) (38.0) (72.4)
Proceeds from sale of property plant and - 1.0 3.5equipment Purchase of intangible assets (14.7) (12.8)
(32.0)
Proceeds from disposal of intangible - 0.6 0.6assets Transactions with non-controlling - (0.8) 0.5interests Net cash (used in)/from investing (33.0) 1,758.1 1,698.0activities
Cash flows from financing activities Proceeds from/(repayment of) bank loans 57.9 (1.6)
39.9
Return of cash to shareholders (7.7) (675.7)
(1,725.8)
Expenses relating to return of cash to - (5.3) (14.9)shareholders Purchase of shares by employee share - - (42.5)trusts Disposal of shares by employee share 4.5 9.9 12.3trusts Interest received 0.9 2.5 4.6 Interest paid (5.4) (12.2) (17.4) Dividends paid to shareholders 4 (34.6) (39.3)
(53.4)
Dividends paid to non-controlling (0.8) (0.2) (0.3)interests Net cash from/(used in) financing 14.8 (721.9) (1,797.5)activities Net (decrease)/increase in cash and cash (49.3) 1,030.2 66.3equivalents Effect of exchange rate changes on cash 2.8 (23.5) (19.8)and cash equivalents Opening cash and cash equivalents 226.6 180.1
180.1
Closing cash and cash equivalents 180.1 1,186.8
226.6
John Wood Group PLC
Notes to the interim financial statements
for the six month period to 30 June 2012
1. Basis of preparation
The interim report and financial statements for the six months ended 30 June2012 have been prepared in accordance with the Disclosure and TransparencyRules of the Financial Services Authority and with IAS 34 `Interim financialreporting' as adopted by the European Union. The interim report and financialstatements should be read in conjunction with the Group's 2011 Annual Reportand Accounts which have been prepared in accordance with IFRSs as adopted bythe European Union.The interim report and financial statements have been prepared on the basis ofthe accounting policies set out in the Group's 2011 Annual Report and Accountsand those new standards discussed below which are applicable from 1 January2012. The interim report and financial statements do not comprise statutoryaccounts within the meaning of section 434 of the Companies Act 2006. Theinterim financial statements were approved by the Board of Directors on 20August 2012. The results for the six months to 30 June 2012 and the comparativeresults for six months to 30 June 2011 are unaudited. The comparative figuresfor the year ended 31 December 2011 do not constitute the statutory financialstatements for that year. Those financial statements have been delivered to theRegistrar of Companies and include the auditor's report which was unqualifiedand did not contain any statement under Section 498 of the Companies Act 2006.
After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.
The Group therefore continues to adopt the going concern basis in preparing the consolidated interim financial statements.
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 theseaccounts: June June 2012 2011 Average rate £1 = $ 1.5752 1.6150 Closing rate £1 = $ 1.5685 1.6055
Disclosure of impact of new and future accounting standards
(a) Amended standards and interpretations not relevant to the Group
The following revisions and amendments to standards and interpretations are mandatory as of 1 January 2012 but are currently not relevant to the Group and have no impact to the Group's interim financial statements:
Amendment to IFRS 7, Financial instruments: Transfers of financial assets
Amendment to IFRS 1 on hyperinflation and fixed dates
Amendment to IAS 12, 'Income taxes' on deferred tax
(b) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group
The following relevant standards and amendments and interpretations to existingstandards have been published and are mandatory for the Group'saccounting periods beginning on or after 1 January 2013 or later periods, butthe Group has not early adopted them:
IFRS 9, `Financial instruments'
IFRS 10, `Consolidated financial statements'
IFRS 11, `Joint arrangements'
IFRS 12, `Disclosures of interests in other entities'
IFRS 13, `Fair value measurement'
IAS 19 (revised 2011) `Employee benefits'
IAS 27 (revised 2011) `Separate financial statements'
IAS 28 (revised 2011) `Associates and joint ventures'
Amendment to IFRS 1, 'Presentation of financial statements' on OCI
Amendment to IFRS 7 on Financial instruments asset and liability offsetting
The Group currently accounts for its interests in joint ventures usingproportional consolidation. Under IFRS 11, proportional consolidation willnot be permitted and therefore from 1st January 2013 the Group will account forits interests in joint ventures using equity accounting. The use of equityaccounting will have no impact on Group profit for the year or earnings pershare, but will impact the presentation of the Group's interests in jointventures in the income statement and in the balance sheet.
The Group has yet to assess the full impact of the other new standards and amendments but does not expect them to have a material impact on the financial statements.
John Wood Group PLC
Notes to the interim financial statements
for the six month period to 30 June 2012
2. Segmental reporting
The segment information provided to the Chief Operating Decision Maker for the reportable operating segments for the period included the following:
Reportable operating segments
Revenue EBITDA (1) EBITA (1) Operating profit Un- Un- Un- Un- Audited Un- Un- Un- Un- audited audited Audited audited audited Full audited
audited Audited audited audited Audited
Interim Interim Full Interim Interim Year Interim
Interim Full Interim Interim Full
June June Year June June 2011 June June Year June June Year 2012 2011 2011 2012 2011 2012 2011 2011 2012 2011 2011 $m $m $m $m $m $m $m $m $m $m $m $m Engineering 872.2 688.5 1,458.6 109.0 76.7 170.6 104.1 72.5 162.0 87.4 42.1 128.3 Wood Group 1,774.1 1,296.9 3,012.7 96.0 70.5 165.8 90.0 65.1 153.2 63.8 30.0 42.0PSN (2) Wood Group 700.0 480.5 1,195.5 45.1 28.1 91.8 38.1 22.5 78.8 33.5 19.7 (8.9)GTS Central - - - (25.6) (24.8) (49.4) (27.1) (26.2) (52.4) (27.9) (26.9) (53.9)costs (3) Well Support - 347.0 347.8 - 70.0 69.5 - 58.4 57.6 - 58.4 57.6- divested (4) Wood Group GTS - 6.8 15.9 37.7 (1.7) (0.3) (0.5) (2.0) (0.3) (0.5) (2.0) (0.3) (12.5)divested (5) Total (6) 3,353.1 2,828.8 6,052.3 222.8 220.2 447.8 203.1 192.0 398.7 154.8 123.0 152.6 Remove (6.8) (362.9) (385.5) 1.7 (69.7) (69.0) 2.0 (58.1) (57.1) 2.0 (58.1) (45.1)divested operations Total 3,346.3 2,465.9 5,666.8 224.5 150.5 378.8 205.1 133.9 341.6 156.8 64.9 107.5continuing operations Finance 0.9 3.2 4.9income Finance (7.0) (11.3) (17.5)expense Profit 150.7 56.8 94.9before taxation from continuing operations Taxation (42.5) (20.6) (48.3) Profit for 108.2 36.2 46.6the period from continuing operations Profit from 14.5 2,226.7 2,256.2discontinued operations net of tax Profit for 122.7 2,262.9 2,302.8the period NotesTotal continuing EBITDA represents operating profit of $156.8m (2011: $64.9m)before adding back continuing depreciation of property, plant and equipment of$19.4m (2011: $16.6m), amortisation of $39.0m (2011: $26.9m) and continuingexceptional items of $9.3m (2011: $42.1m). EBITA represents EBITDA lessdepreciation. EBITA and EBITDA are provided as they are units of measurementused by the Group in the management of its business.
The 2011 results of Wood Group PSN include the trading activity of PSN from the date of acquisition, 20th April 2011.
Central costs include the costs of certain management personnel in both the UK and the US, along with an element of Group infrastructure costs.
The 2011 results of the Well Support division represent the trading activity of that division up to 26th April 2011, the date the division was divested.
The 2012 results of the Wood Group GTS engine overhaul business represents thetrading activity of that business up to 4th April 2012, the date the businesswas divested.
Figures on the total row are the sum of continuing activity and the activity of the divested businesses up to the date of disposal excluding the gains on divestment.
Revenue arising from sales between segments is not material.
John Wood Group PLC
Notes to the interim financial statements
for the six month period to 30 June 2012
2. Segmental reporting (continued)
Segment assets Unaudited Unaudited Audited Interim Interim Full Year June 2012 June 2011 December 2011 $m $m $m Engineering 829.9 735.3 724.9 Wood Group PSN 1,987.9 2,000.2 1,897.8 Wood Group GTS 996.3 883.4 1,059.3 Well Support - divested - 7.7 7.7 Wood Group GTS - divested - 28.3 18.7 Unallocated 168.1 1,169.8 172.6 3,982.2 4,824.7 3,881.0Unallocated segment assets includes cash, income tax and deferred tax balances.3. Exceptional items Unaudited Unaudited Audited Interim Interim Full Year June June December 2012 2011 2011 $m $m $m
Exceptional items included in continuing
operations Acquisition costs - 9.5 12.0
Integration and restructuring charges - 9.7
84.2
Provision for doubtful debts 9.3 22.9
13.0 Impairment of goodwill - - 46.2 9.3 42.1 155.4
Bank facility fees relating to PSN acquisition - 3.8
3.8 9.3 45.9 159.2 Taxation (3.9) (10.2) (26.7) Continuing operations exceptional items, net of 5.4 35.7 132.5tax
Exceptional items included in discontinued
operations Gain on divestment - Well Support (note 6) (21.2) (2,267.2)
(2,305.7)
Write down of assets of aero engine overhaul - -
12.0business (21.2) (2,267.2) (2,293.7) Taxation 5.6 77.5 73.6 Discontinued operations exceptional items, net of (15.6) (2,189.7) (2,220.1)tax Total exceptional items, net of tax (10.2) (2,154.0)
(2,087.6)
During the period, a net provision for doubtful debts of $9.3m was recorded.
At 30 June 2012, the Group has provided $15.1m that relates to work carried outfor ATP Oil and Gas Corporation, who have filed a voluntary petition forreorganisation under Chapter 11 of the US Bankruptcy Code. At 31 December 2011,the Group had provided $13.0m in respect of overdue Libyan receivables as aresult of the political disruption earlier in 2011. In July 2012, the Groupreceived $5.8m of these receivables and as a result this amount has beenreleased from the provision resulting in a credit to exceptional items in theperiod.
A tax credit of $3.9m has been recorded in relation to exceptional items in continuing operations in the period to June 2012.
The gain on divestment of subsidiaries of $21.2m relates to the disposal of theGroup's interest in a Well Support business in the Middle East and the disposalof the Wood Group GTS aero engine overhaul business. A tax charge of $5.6m hasbeen recorded in relation to the gain on divestment of subsidiaries. Furtherdetails of these divestments are provided in note 6.
For further details of the 2011 exceptional items please see the 2011 Annual Report and Accounts.
John Wood Group PLC
Notes to the interim financial statements
for the six month period to 30 June 2012
4. Dividends Unaudited Unaudited Audited Interim Interim Full Year June June December 2012 2011 2011 $m $m $m
Dividends on ordinary shares
Final paid 34.6 39.3 39.3 Interim paid - - 14.1 Total dividends 34.6 39.3 53.4
After the balance sheet date, the directors declared an interim dividend of 5.7cents per share which will be paid on 28 September 2012. The interim financialstatements do not reflect the interim dividend, which will be recognised inequity attributable to owners of the parent as an appropriation of retainedearnings in the financial statements for the year ended 31 December 2012.
5. Acquisitions
Contingent consideration payments amounting to $26.0m were made during the period in relation to acquisitions completed in previous years.
Fair value adjustments in respect of the PSN acquisition have now beenfinalised and resulted in increased goodwill of $3.7m in the period. The prioryear figures have not been restated for this adjustment as it is not consideredto be material.6. Divestments
In April 2012, the Group divested its aero engine overhaul business and in May2012, the Group completed the divestment of its interest in a Well Supportbusiness in the Middle East. Details of the assets and liabilities disposed ofand of cash received are as follows:
$m
Property plant and equipment
7.6
Goodwill and other intangible assets
1.4 Inventories 14.1 Trade and other receivables 10.6 Cash and cash equivalents 0.4 Borrowings (0.2) Trade and other payables (16.9) 17.0 Non-controlling interests (1.2) Net assets divested 15.8 Gross proceeds received 43.0 Gross gain on divestment 27.2 Disposal costs (6.0)
Net gain on divestment before tax
21.2 Tax (5.6)
Net gain on divestment after tax (see note 3)
15.6
The inflow of cash and cash equivalents in relation to the divestments isanalysed as follows: $m Gross proceeds receivable 43.0 Proceeds not yet received (2.7) Divestment costs paid (1.7) Cash divested (0.4) Borrowings divested 0.2
Net cash inflow from divestment 38.4
John Wood Group PLC
Notes to the interim financial statements
for the six month period to 30 June 2012
7. Earnings per share
Un- Un- Audited Full audited audited Year Interim Interim December 2011 June 2012 June 2011 Earnings Earnings Earnings attributable Earnings attributable Number Earnings attributable Earnings to equity Number of per to equity of
per to equity Number of per
shareholders shares share shareholders shares
share shareholders shares share
($m) (millions) (cents) ($m) (millions) (cents) ($m) (millions) (cents) Basic pre- 111.3 358.7 31.0 108.7 509.6 21.3 214.7 433.8 49.5exceptional Exceptional 10.2 358.7 2.9 2,154.0 509.6 422.7 2,087.6 433.8 481.2items, net of tax Basic 121.5 358.7 33.9 2,262.7 509.6 444.0 2,302.3 433.8 530.7 Effect of - 12.7 (1.2) - 17.3 (14.6) - 15.0 (17.7)dilutive ordinary shares Diluted 121.5 371.4 32.7 2,262.7 526.9
429.4 2,302.3 448.8 513.0
Exceptional (10.2) - (2.7) (2,154.0) - (408.8) (2,087.6) - (465.2)items, net of tax Diluted pre- 111.3 371.4 30.0 108.7 526.9 20.6 214.7 448.8 47.8exceptional items Amortisation, 27.7 - 7.4 23.9 -
4.6 55.5 - 12.4net of tax Adjusted 139.0 371.4 37.4 132.6 526.9 25.2 270.2 448.8 60.2diluted Adjusted 139.0 358.7 38.8 132.6 509.6 26.0 270.2 433.8 62.3basic The calculation of basic earnings per share (`EPS') is based on the earningsattributable to equity shareholders divided by the weighted average number ofordinary shares in issue during the period excluding shares held by the Group'semployee share trusts. For the calculation of diluted EPS, the weighted averagenumber of ordinary shares in issue is adjusted to assume conversion of allpotentially dilutive ordinary shares. The Group has two types of dilutiveordinary shares - share options granted to employees under Employee ShareOption Schemes and the Long Term Retention Plan; and shares issuable under theGroup's Long Term Incentive Plan. Adjusted basic and adjust diluted EPS isdisclosed to show the results excluding the impact of exceptional items andamortisation, net of tax.
8. Taxation
The taxation charge for the six months ended 30 June 2012 reflects an anticipated rate of 29.0% on continuing profit before taxation and exceptional items for the year ending 31 December 2012 (June 2011 : 30.0%).
Legislation to reduce the main rate of UK corporation tax from 26% to 25% from1 April 2012 was included in the Finance Act 2011. A resolution passed byParliament on 26 March 2012 has reduced the main rate of corporation tax by afurther 1% to 24% from 1 April 2012. Further reductions to the main rate areproposed to reduce the rate by 1% per annum to 22% by 1 April 2014. None ofthese expected rate reductions had been substantively enacted at the balancesheet date and, therefore, are not included in these financial statements.
9. Retirement benefit liability
No interim revaluation of the pension liability has been carried out at 30 June2012 and accordingly there is no actuarial gain/loss in the statement ofrecognised income and expense. The figures for gains and losses for the fullyear together with the surplus/deficit at the year end will be presented in the2012 Annual Report and Accounts.
10. Related party transactions
The following transactions were carried out with the Group's joint ventures inthe six months to 30 June. These transactions comprise sales and purchase ofgoods and services in the ordinary course of business. The receivables includeloans to certain joint venture companies. Unaudited Unaudited Audited Interim Interim Full Year June June December 2012 2011 2011 $m $m $m
Sales of goods and services to joint ventures 15.5 27.0 44.0
Purchase of goods and services from joint 9.5 8.0
24.6ventures
Receivables from joint ventures 58.5 26.5
36.8 Payables to joint ventures 11.7 4.2 5.5John Wood Group PLC
Notes to the interim financial statements
for the six month period to 30 June 2012
11. Cash generated from operations
Un- Un- Audited audited audited Full Interim Interim Year June June December 2012 2011 2011 $m $m $m Reconciliation of operating profit to cash generated from operations: Operating profit from continuing 166.1 107.0 262.9operations before exceptional items
Operating (loss)/profit from discontinued (2.0) 58.1 57.1 operations before exceptional items
Adjustments for: Depreciation 19.7 26.4 47.2 Loss/(profit) on disposal of property 0.1 0.8 (0.1)plant and equipment Amortisation of intangible assets 39.0 26.9 78.7 Share based charges 11.7 2.2 19.2 Decrease in provisions (2.7) (5.7) (3.1) Changes in working capital (excluding effect of acquisition and divestment of subsidiaries) Increase in inventories (31.2) (36.0) (51.4) Increase in receivables (133.4) (131.2) (232.1) (Decrease)/increase in payables (8.3) 1.9 96.4 Exchange movements (5.2) 2.1 9.7 Cash generated from operations 53.8 52.5 284.5
12. Reconciliation of cash flow to movement in net debt
At 1 At 30 January Cash Exchange June 2012 flow movements 2012 $m $m $m $m Cash and cash equivalents 226.6 (49.3) 2.8 180.1 Short term borrowings (69.2) 13.5 (0.5) (56.2) Long term borrowings (161.3) (71.4) 1.4 (231.3) Net debt (3.9) (107.2) 3.7 (107.4)13. Share based chargesShare based charges for the period of $11.7m (2011: $8.5m) relate to optionsgranted under the Group's executive share option schemes and awards under theLong Term Incentive Plan and the Long Term Cash Incentive Plan (`LTCIP'). Thecharge is included in administrative expenses in the income statement. Theliability of $2.5m in respect of the LTCIP is included in non-currentliabilities with the balance of the charge, $9.2m being credited to equity.
14. Capital commitments
At 30 June 2012 the Group had entered into contracts for future capital expenditure amounting to $11.4m. The capital expenditure relates to property plant and equipment and has not been provided in the financial statements.
15. Post balance sheet events
On 1 July 2012, the Group acquired Duval Lease Services and Freer Iron Works Inc (`Duval') for an initial consideration of $21.4m. Duval provides maintenance, installation and fabrication services in the Eagle Ford shale region of Texas.
16. Contingent liabilities
In February 2010, the Group, and several other parties, were notified of alegal claim from a customer in respect of work carried out in 2008. Managementbelieve that the Group is in a strong position to defend the claim. Inaddition, the Group is currently cooperating with an investigation in relationto a facility where it previously provided services. Management do not believethat it is probable that any material liability will arise from either of thesematters. There has been no material change to the position on these matterssince 31 December 2011.
Statement of directors' responsibilities
for the six month period to 30 June 2012
The directors confirm that the interim report and financial statements havebeen prepared in accordance with IAS 34 as adopted by the European Union andthat the interim report includes a fair review of the information required byDTR 4.2.7 and DTR 4.2.8, namely:â— an indication of important events that have occurred during the first sixmonths and their impact on the financial statements and a description of theprincipal risks and uncertainties for the remaining six months of the year; and
â— 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 2011 Annual Report and Accounts with the exception of the following changes in the period:
C Masters resigned on 10 May 2012, J Morgan resigned on 10 May 2012, L Thomas resigned on 29 June 2012, M Papworth resigned on 29 June 2012 and M Shafer-Malicki was appointed on 1 June 2012.
A G LanglandsChief ExecutiveA G SempleGroup Finance Director20 August 2012Independent review reportto John Wood Group PLC
for the six month period to 30 June 2012
Introduction
We have been engaged by the Company to review the condensed set of financialstatements in the interim financial report for the six months ended 30 June2012 which comprises the Group income statement, Group statement ofcomprehensive income, Group balance sheet, Group statement of changes inequity, Group cash flow statement and related notes. We have read the otherinformation contained in the interim report and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation in the condensed set of financial statements.
Directors' responsibilities
The interim financial report, is the responsibility of, and has been approvedby the directors. The directors are responsible for preparing the interimfinancial report in accordance with the Disclosure and Transparency Rules ofthe United Kingdom's Financial Services Authority.As disclosed in note 1, the annual financial statements of the Group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed financial statements included in this interim financial report havebeen prepared in accordance with International Accounting Standard 34, "InterimFinancial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the interim financial report based on ourreview. This report, including the conclusion, has been prepared for and onlyfor the Company for the purpose of the Disclosure and Transparency Rules of theFinancial Services Authority and for no other purpose. We do not, in producingthis report, accept or assume responsibility for any other purpose or to anyother person to whom this report is shown or into whose hands it may come savewhere expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, `Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity' issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly,we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us tobelieve that the condensed set of financial statements in the interim financialreport for the six months ended 30 June 2012 are not prepared, in all materialrespects, in accordance with International Accounting Standard 34 as adopted bythe European Union and the Disclosure and Transparency Rules of the UnitedKingdom's Financial Services Authority.PricewaterhouseCoopers LLPChartered AccountantsAberdeen20 August 2012John Wood Group PLCShareholder informationPayment of dividendsThe Company declares its dividends in US dollars. As a result of theshareholders being mainly UK based, dividends will be paid in sterling, but ifyou would like to receive your dividend in dollars please contact theRegistrars at the address below. All shareholders will receive dividends insterling unless requested. If you are a UK based shareholder, the Companyencourages you to have your dividends paid through the BACS (Banker's AutomatedClearing Services) system. The benefit of the BACS payment method is that theRegistrars post the tax vouchers directly to the shareholders, whilst thedividend is credited on the payment date to the shareholder's Bank or BuildingSociety account. Shareholders who have not yet arranged for their dividends tobe paid direct to their Bank or Building Society account and wish to benefitfrom this service should contact the Registrars at the address below. Sterlingdividends will be translated at the closing mid-point spot rate on 31 August2012 as published in the Financial Times on 1 September 2012.
Officers and advisers
Secretary and Registered Office
R M B BrownJohn Wood Group PLCJohn Wood HouseGreenwell RoadAberdeenAB12 3AXTel: 01224 851000RegistrarsEquinitiAspect HouseSpencer RoadLancingWest SussexBN99 6DATel: 0871 384 2649StockbrokersCredit SuisseJPMorgan CazenoveIndependent AuditorPricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Company solicitorsSlaughter and MayFinancial calendar Year 6 months ended ending 30 June 31 2012 December 2012 Results 21 August 2012 Early Marchannounced 2013
Ex-dividend date 29 August 2012 April 2013
Dividend record 31 August 2012 April 2013date Dividend payment 28 September May 2013date 2012 Annual General May 2013Meeting
The Group's Investor Relations website can be accessed at www.woodgroup.com.
PINXRelated Shares:
Wood Group (J)