28th Aug 2007 07:00
John Wood Group PLC
Interim results for the six months to 30 June 2007
Continuing strong progress John Wood Group PLC ("Wood Group", the "Group") is a market leader inengineering design, production enhancement and support, and industrial gasturbine services for customers in the oil & gas and power generation industriesaround the world. Wood Group businesses employ approximately 22,000 people in46 countries. Financial Highlights i
Revenue of $2,117.3m (2006: $1,572.1m) up 35%
EBITA of $144.6m (2006: $90.0m) up 61%
Operating profit of $137.4m (2006: $87.0m) up 58%
Profit before tax of $124.0m (2006: $75.6m) up 64%
Adjusted diluted earnings per ordinary share of 16.8 cents (2006: 10.2 cents) up 65%
Diluted earnings per share of 15.7 cents (2006: 9.6 cents) up 64%
Declared interim dividend of 2.0 cents (2006: 1.5 cents) up 33%
Operating Highlights GroupStrong energy markets
Significant financial and operating progress
continuing strong revenue growth
margin improvement in all divisions
10% increase in people to approximately 22,000 worldwide
successfully developing market leading positions
Engineering & Production Facilities:
Engineering
all major business areas showing good growth
wide range of upstream developments
strong demand for subsea engineering activities
pipeline engineering busy, particularly in the US
refinery capacity constraints generating requirements for debottlenecking and upgrades
Production Facilities
high level of activity in the North Sea driven by subsea tiebacks, integrity enhancements
continue to expand international activities; good growth in our maintenance outsourcing contract in Trinidad and production support contracts in North & West Africa
Well Support
good performance in all three businesses:
ESP strong market share in the US, progress in a number of international markets, including Chad, Russia and Yemen
Pressure Control increasing manufacturing capacity around the world, maintaining strong position in US markets, achieving good growth outside the US, notably in Arabian Gulf and Australia
Gas Turbine Services
Continuing success in securing long term maintenance contracts; recent awards from Air Liquide in the Netherlands, BASF in China, and New York Power Authority
Winning power plant supply contracts in Ghana, Kuwait, Pakistan and the US
In their six month report, Sir Ian Wood, Chairman and Allister Langlands, Chief Executive, Wood Group, say:
"In the continuing strong oil & gas market, we are extending our range of products and services, and successfully extending our international presence. We are growing our market position in the improving power industry and are increasingly confident we will continue our performance improvement in this sector. Overall, we expect the strong growth to continue and believe our results for the year will be ahead of expectations."
Information: Wood Group, 01224 851 000Alan SempleNick GilmanCarolyn Smith Brunswick, 020 7404 5959Patrick HandleyNebat Sukker NotesFor footnotes see page 12. Interim Statement Introduction We are pleased to report continuing strong progress in 2007, following on fromour record 2006 performance. We are successfully developing our market leadingpositions and extending our range of services in strong energy markets and webelieve our result for the year will be ahead of expectations. Results In the six months to June 2007, revenue increased by 35% to $2,117.3m (2006:$1,572.1m) and EBITA increased by 61% to $144.6m (2006: $90.0m). This reflectsrevenue growth in all divisions, with particular strength from our Engineeringactivities within Engineering & Production Facilities and from Gas TurbineServices. EBITA margins ("margins") increased in all areas with notableincreases in Engineering & Production Facilities, where they increased from6.4% to 8.1%, and in Gas Turbine Services, where they increased from 5.3% to6.1%.
Additional financial commentary is given in the Interim Financial Review.
Dividend
Reflecting confidence in our long term strategy and our focus on delivering growth, we have declared an increase of 33% in the interim dividend to 2.0 cents (2006: 1.5 cents) which will be paid on 27th September 2007 to shareholders on the register on 14th September 2007.
Markets We anticipate continuing growth in demand for energy, driven by the expandingglobal economies, particularly in the Asia Pacific region. Our clients'investment decisions generally continue to be based on oil price assumptionswell below current levels and this would appear to confirm the potential longerterm nature of this upcycle, with continuing increases in exploration,development and production spending in most regions throughout the world. Onthe power side, there is an increase in the demand for power in North Americaand continuing growth in the installed base of gas turbines around the world. Significant geo-political uncertainty persists in some of the key oil & gasprovinces and we remain focused on carefully assessing risk and building in arange of mitigating factors to ensure we can continue to service our customersin these areas. Strategy
Our strategy has four strands:
to deliver sustainable growth by balancing our earlier cycle field developmentand later cycle production support activities. Whilst we are currentlyparticularly active in our development related Engineering activities, we areinvesting in extending our services in production support, where we have openednew offices in Qatar, Malaysia and Peruto grow market leading positions in differentiated know-how and technology
to achieve performance contracts in long term relationships which add value to our clients' operations
to extend our differentiated services and broaden our international presence in areas where we can develop market-leading positions.
People The attraction and retention of high quality people is critical to our growthand future success, and we continue to maintain our focus in this area. In thefirst six months we have increased our overall headcount by 10% toapproximately 22,000 people working in 46 countries around the world. Divisional highlights
Engineering & Production Facilities
Revenue increased by 35% to $1,208.0m (2006: $895.7m) and EBITA 71% to $97.4m(2006: $57.1m). There was strong revenue growth across the division, with thefastest growth in our higher margin Engineering activities, which now representapproximately 45% of the division's revenue, contributing to the increase inthe EBITA margin to 8.1% from 6.4%. In the period we have focused ondeveloping our hub and satellite model - with further progress in our hubs inHouston, Aberdeen, London and Perth - together with several new initiatives toexpand in satellite locations where we can access highly skilled resources, forexample in Glasgow, and support local client needs, for example in Abu Dhabiand Norway. Over the last 6 months we have increased our number of people
from12,700 to 14,000. Engineering We have been particularly active in Engineering in the period with all majorbusiness areas showing good growth. The focus of oil & gas companies ondeveloping new sources of production has driven demand for our upstreamengineering capabilities, and we are active on a number of engineering,procurement and construction management (EPCM) contracts. We are working on awide range of developments including Mallet, Shenzi, Mirage and Perdido in theUS; Valhall in the North Sea; Mangala in India; and Tombua-Landana and Nsikooffshore West Africa. New subsea developments, deepwater tiebacks and subseatrunklines have led to demand for our subsea engineering activities and we havebeen active on Gorgon offshore Australia, and Block 31 offshore Angola. Demandfor our onshore pipeline engineering activities in the US is primarily drivenby the need to transport gas from "unconventional" gas developments in newgeographic areas. The desire to find routes to monetise gas and establish aglobal gas market are leading to increased investment in midstreamdevelopments, and we are installing our first LNG (Liquefied Natural Gas) Smart‚® Air Vaporization Process, which has environmental and cost benefits, at theLNG receiving terminal in Lake Charles, Louisiana. In downstream, capacityconstraints are continuing to generate requirements for refinerydebottlenecking and upgrades in the Americas and we have been active onprojects with Citgo, CCRL and Valero. We are also active on a range ofautomation projects for clients, including a major refinery project inSingapore. Production Facilities
We continue to enjoy a high level of activity in the North Sea, driven by anumber of subsea tiebacks and our customers' ongoing focus on integrityenhancements. Our projects include Shell's major integrity upgrades acrosstheir North Sea assets, and Talisman's development plans for their recentlyacquired Greater Fulmar assets. We have continued to expand our internationalactivities, with particular growth in our maintenance outsourcing contract forBP in Trinidad and our engineering and construction support contracts for theSonatrach/BP/Statoil In Amenas and In Salah projects in Algeria. ProductionFacilities revenues are now approximately 65% North Sea and 35% international,with international content showing the fastest growth. We are alsosuccessfully expanding our added value specialist services, and our DSIsubsidiary, for example, has secured the commissioning contract for the Shelldeepwater Perdido development in the Gulf of Mexico. Well Support
Revenue increased by 19% to $416.4m (2006: $350.8m) and EBITA 21% to $41.9m(2006: $34.7m). There was strong revenue growth across all of the businesses,and our business outside the US now represents over 50% of the division'srevenue. The increase in the EBITA margin to 10.1% from 9.9% was driven by thepositive margin impact of increasing revenue, with the improvement partly heldback by the costs of adding new capacity to our operations. Over the last 6months we have increased our number of people from 3,500 to 3,700.
Electric Submersible Pumps (ESPs)
ESPs maximise oil recovery from existing fields, and this is driving globaldemand for our broad range of ESP equipment and service. Our ESP business hasa strong market share in the US with a wide range of clients. Internationallywe have made progress in a number of markets including Chad, Russia and Yemen. We are focused on building our technology and know-how and are involved indevelopments in the offshore market and in steam assisted gravity drainage(SAGD) pumps, primarily for the Canadian oil sands market. We are also makinggood progress in the surface pumping application market where our equipment isused for a variety of applications. Pressure Control
Our surface valve and wellhead equipment is used to control high pressures,primarily for gas developments. High levels of drilling activity around theworld are leading to increased demand and we are increasing manufacturingcapacity in China, Mexico, Saudi Arabia and the US. We have maintained ourstrong market share in the US, where we continue to extend our branch networkto maintain our high service levels, and we are making good progressinternationally. Logging Services Our production focused slickline operations and our development focused casedhole electric wireline services both performed well. In order to meet thedemand from this market, we have continued to increase our capacity and openedup bases in the Rockies and Barnett Shale. Gas Turbine Services
Revenue increased by 58% to $478.2m (2006: $302.9m) and EBITA 83% to $29.2m(2006: $16.0m). There was strong revenue growth across the division, with theincrease in the EBITA margin from 5.3% to 6.1% driven by our continuing focuson higher margin areas and the strengthening power market. Over the last 6months we have increased our number of people from 3,500 to 3,900. Support for turbines in the oil & gas sector, used for power generation, gascompression and transmission, represents around 35% of the division revenues. The breadth of our offering and the link to our Production Facilitiescapability are key areas of differentiation. We are investing to maintain andenhance our differentiation and, in the period, further increased the range ofturbines for which we provide aftermarket services. In the Power sector, global economic growth is driving increases in runninghours on installed equipment and there is a tightening of supply and demand forpower in certain markets. These factors are contributing to a clearimprovement in demand for our services, including the provision of fast trackpower generation capacity. Our focus on servicing higher technology turbines, our success in winning morelong term comprehensive maintenance contracts, and the growth of our activityin operating and maintaining the broader power plant, are all contributing toour improving performance. We have recently secured long term maintenancecontracts with Air Liquide in the Netherlands, BASF in China and New York PowerAuthority.
The increasing demand for power and extended lead times for new equipment,combined with our ability to deliver lower cost fast track solutions, isleading to opportunities for us to provide the complete power plant and, in theperiod, we have secured power plant supply contracts in Ghana, Kuwait, Pakistanand the US. Outlook
In the continuing strong oil & gas market, we are extending our range of products and services, and successfully extending our international presence. We are growing our market position in the improving power industry and are increasingly confident we will continue our performance improvement in this sector. Overall, we expect the strong growth to continue and believe our results for the year will be ahead of expectations.
Sir Ian Wood, Chairman
Allister G Langlands, Chief Executive
27 August 2007 Interim Financial Review Group income statement The Group income statement for the six months to 30 June 2007 is summarisedbelow. Interim Interim Increase June June 2007 2006 $m $m Revenue 2,117.3 1,572.1 35% EBITA 144.6 90.0 61% EBITA margin % 6.8% 5.7% 1.1% points Operating profit 137.4 87.0 58% Profit before tax 124.0 75.6 64% Profit for the period 82.5 49.8 66% Diluted EPS (cents) 15.7 9.6 64% Adjusted diluted EPS (cents) 16.8 10.2 65%
In the six months to June 2007 revenue increased by 35% to $2,117.3m (2006:$1,572.1m) and EBITA (1) increased by 61% to $144.6m (2006: $90.0m). Thisreflects revenue growth in all divisions, with particular strength from ourEngineering activities within Engineering & Production Facilities and from GasTurbine Services. Activity levels were high across Engineering. In GasTurbine Services the increase includes good growth in our oil & gas relatedactivities, in part because the first half 2006 revenues were impacted by thedeferral of some overhauls, and healthy demand for our activities providingpower plant packages. EBITA margins ("margins") overall increased from 5.7% at June 2006, to 6.8%with growth in all areas. In Engineering & Production Facilities marginsincreased from 6.4% at June 2006 to 8.1%, with underlying increases in bothEngineering and in Production Facilities, combined with the mix benefit offaster growth in the relatively higher margin Engineering activities. In WellSupport margins increased from 9.9% at June 2006 to 10.1% with the improvementbeing held back somewhat by a number of factors, including the revenue cost ofcapacity additions. In Gas Turbine Services margins increased from 5.3% atJune 2006 to 6.1% reflecting higher volumes generally and the contribution fromproviding power plant packages. The amortisation charge of $7.2m included $2.4m for the non recurringimpairment of a small investment. The increase in the finance expense to$13.4m (2006: $11.4m) was driven by an increase in the average interest rate inthe period along with a higher average debt balance. Interest cover (2) was 10.8times (2006: 7.9 times). Profit before tax increased by 64% reflecting thestrong operating profit growth of 58% and the increase in finance expense of18%. The tax charge for the period was $41.5m (2006: $25.8m) which representsa tax rate of 33.5% (2006: 34.1%) measured against profit before tax.Adjusted diluted earnings per ordinary share (3) for the period increased by 65%to 16.8 cents (2006: 10.2 cents) and diluted earnings per share by 64% to 15.7cents (2006: 9.6 cents). Group cash flow The Group cash flow statement for the six months to 30 June 2007 is summarisedbelow. Interim Interim Full Year June June December 2007 2006 2006 $m $m $m Opening net debt (257.9) (245.8) (245.8) EBITA 144.6 90.0 215.1
Depreciation and other non cash items 43.1 28.8 63.6 Cash generated from operations pre working 187.7 118.8 278.7
capital Working capital movements (75.7) (72.8) (53.6)
Cash generated from operations 112.0 46.0 225.1
Acquisitions (11.9) (49.7) (50.4) Capex and intangible assets (52.8) (48.1) (86.3) Disposal of subsidiaries - 7.3 7.3 Issue of shares/sale of trust shares 7.7 1.3 1.8 Tax (53.4) (26.2) (57.0) Interest, dividends and other (37.6) (33.8) (52.6) Increase in net debt (36.0) (103.2) (12.1) Closing net debt (293.9) (349.0) (257.9) Cash generated from operations before movements in working capital of $187.7mincreased by $68.9m or 58% driven by the 61% increase in EBITA for the sixmonths to June 2007. Working capital outflows of $75.7m compare to outflows of$72.8m in the first half of 2006, and were principally driven by the increasedactivity in the period. At June 2007, net working capital relative toannualised revenue (4) was 14.1% which compares to 17.1% at June 2006 and 14.6%at December 2006. This improved working capital ratio position reflectscontinuing management focus on capital efficiency and to some extent advancepayments from certain customers. Purchase of property plant and equipment ("capex") totalled $52.8m (2006:$48.1m) and included the cost of increasing capacity in Well Support. Therewere no acquisitions in the period but we are currently actively reviewing anumber of interesting opportunities. Deferred consideration payments related toearn-out payments on acquisitions from previous years, and amounted to $11.9m(2006:$4.2m). Net debt increased by $36.0m from $257.9m at December 2006 to $293.9m at June2007. The Group's gearing ratio (5) increased slightly from 32% at December 2006to 33% at June 2007.
Net debt of $293.9m is primarily US dollar denominated in line with the currency of the bulk of the Group's net assets. Long-term borrowings amounted to $351.5m (2006: $423.5m), of which $224.0m (2006: $176.2m), or 64% (2006: 42%), was at a weighted average fixed rate of interest of 4.9% (2006: 4.9%).
ROCE (6) for the Group increased by 9% points to 27% (2006: 18%). The principal driver of the improvement was the increase in Group EBITA margin.
Alan SempleGroup Finance Director27 August 2007 Footnotes 1 EBITA represents operating profit of $137.4m (2006: $87.0m) before thededuction of amortisation of other intangibles of $7.2m (2006: $3.0m) and isprovided as it is a key unit of measurement used by the Group in the managementof its business.
2 Interest cover is EBITA divided by net finance costs.
3 Adjusted diluted earnings per share is calculated by dividing earnings beforeamortisation (net of tax) by the weighted average number of ordinary shares inissue during the period, excluding shares held by the Group's employee shareownership trusts and adjusted to assume conversion of all potentially dilutiveordinary shares.
4 Net working capital to annualised revenue represents the total of inventories, trade and other receivables, less trade and other payables divided by total revenue. Where total revenue is for a six month period, it is multiplied by two to provide an annualised equivalent.
5 Gearing is net debt divided by total shareholders' equity.
6 Return on Capital Employed ("ROCE") is calculated as Group EBITA, divided by average equity plus average net debt, excluding discontinuing activities.
7 Unless stated otherwise, comparisons of financial performance are between the 6 month period to 30 June 2007 and the 6 month period to 30 June 2006.
Interim Financial Statements 2007
John Wood Group PLC
Group income statement for the six month period to 30 June 2007
Unaudited Unaudited Audited Full Interim June Interim June Year 2007 2006 December 2006 Note $m $m $m Revenue 2 2,117.3 1,572.1 3,468.8 Cost of sales (1,684.0) (1,258.8) (2,768.0) Gross profit 433.3 313.3 700.8 Administrative expenses (295.9) (226.3) (493.3) Operating profit 2 137.4 87.0 207.5 Finance income 2.8 2.2 5.3 Finance expense (16.2) (13.6) (29.2) Profit before taxation 124.0 75.6 183.6 Taxation 5 (41.5) (25.8) (62.4) Profit for the period 82.5 49.8 121.2 Attributable to: Equity shareholders 81.2 49.2 120.5 Minority interest 1.3 0.6 0.7 82.5 49.8 121.2 Earnings per share (expressed in cents per share) Basic 4 16.3 10.0 24.4 Diluted 4 15.7 9.6 23.4
All items dealt with in arriving at the profits stated above relate to continuing operations.
Group statement of recognised income and expense for the six month period to 30June 2007 Unaudited Unaudited Audited Interim Interim Full Year June June December 2007 2006 2006 $m $m $m Profit for the period 82.5 49.8 121.2
Actuarial gains on retirement benefit - - 8.5
liabilities
Movement in deferred tax relating to - - (2.6) retirement benefit liabilities Cash flow hedges fair value gains 2.6 2.8 1.8 reported in income statement for the (0.9) (0.3) (1.0)
period
Tax on foreign exchange losses offset 0.3 - 3.2
in reserves
Exchange differences on retranslation 4.1 2.7 5.6 of foreign currency net assets Total recognised income for the period 88.6 55.0 136.7
Total recognised income for the period
is attributable to: Equity shareholders 87.3 54.4 136.0 Minority interest 1.3 0.6 0.7 88.6 55.0 136.7
Group balance sheet as at 30 June 2007
Unaudited Unaudited Audited Full Interim Interim June Year December June 2007 2006 2006 Note $m $m $m Assets Non-current assets Goodwill and other 385.9 375.0 385.5 intangible assets
Property plant and equipment 260.5 232.4 247.9
Long term receivables 3.4 9.1 5.2 Financial assets - 4.5 4.4 2.6 derivative financial instruments Deferred tax assets 35.8 19.6 36.6 690.1 640.5 677.8 Current assets Inventories 466.4 397.0 424.1
Trade and other receivables 972.6 757.0 792.5
Income tax receivable 17.4 10.4 8.7 Financial assets - 1.3 1.6 1.3 derivative financial instruments
Gross assets held for resale 6 8.6 - -
Cash and cash equivalents 98.9 119.7 140.3 1,565.2 1,285.7 1,366.9 Liabilities Current liabilities Borrowings 41.3 45.2 41.5 Derivative financial 0.9 0.4 0.9 instruments Trade and other payables 841.7 616.2 710.8 Income tax liabilities 34.5 18.3 37.7 Gross liabilities held for 6 5.2 - - resale 923.6 680.1 790.9 Net current assets 641.6 605.6 576.0 Non-current liabilities Borrowings 351.5 423.5 356.7 Derivative financial - - 0.1 instruments Deferred tax liabilities 6.3 6.1 7.3 Retirement benefit 7 18.2 35.9 24.9 liabilities 9 Other non-current 30.1 31.7 31.2 liabilities Provisions 31.8 15.6 23.6 437.9 512.8 443.8 Net assets 893.8 733.3 810.0 Shareholders' equity Share capital 25.8 25.5 25.5 Share premium 302.3 294.2 294.1 Retained earnings 465.2 324.0 397.4 Other reserves 91.4 80.9 85.3 Total shareholders' equity 884.7 724.6 802.3 Minority interest 9.1 8.7 7.7 Total equity 893.8 733.3 810.0
Group cash flow statement for the six month period to 30 June 2007
Unaudited Unaudited Audited Interim Interim Full Year June 2007 June 2006 Dec 2006 Note $m $m $m
Cash generated from operations 8 112.0 46.0 225.1
Tax paid (53.4) (26.2) (57.0)
Net cash from operating activities 58.6 19.8 168.1
Cash flows from investing activities Acquisitions (net of cash acquired) - (25.4) (26.0) Acquisition of minority interests - (20.1) (20.2) Deferred consideration payments (11.9) (4.2) (4.2) Disposal of subsidiaries (net of cash - 7.3 7.3 disposed) Purchase of property plant and (47.5) (44.5) (76.5) equipment Proceeds from sale of property plant 1.4 3.0 8.4
and equipment Purchase of intangible assets (5.3) (3.6) (9.8)
Net cash used in investing activities (63.3) (87.5) (121.0)
Cash flows from financing activities Proceeds from issue of ordinary 0.3 0.4 0.4 shares (net of expenses) (Repayment of)/proceeds from bank (15.8) 59.3 (17.5) loans Disposal of shares in employee share 7.4 0.9 1.4
trusts Interest received 2.8 2.2 4.5 Interest paid (15.7) (13.9) (29.4)
Dividends paid to shareholders 3 (17.6) (13.4) (20.8) Dividends paid to minority interest - (0.4) (1.5) Net cash (used in)/from financing (38.6) 35.1 (62.9) activities Effect of exchange rate changes on 1.9 2.4 6.2
cash and cash equivalents Net decrease in cash and cash (41.4) (30.2) (9.6) equivalents
Opening cash and cash equivalents 140.3 149.9 149.9 Closing cash and cash equivalents 98.9 119.7 140.3
Notes to the interim accounts for the six month period to 30 June 2007
1.Basis of Preparation
The interim report and accounts have been prepared on the basis of the accounting policies set out in the Group's 2006 Annual Report and Accounts.
The interim accounts were approved by the Board of Directors on 27 August2007. The results for the six months to 30 June 2007 and the comparativeresults for six months to 30 June 2006 are unaudited. The comparative figuresfor the year ended 31 December 2006 do not constitute the statutory financialstatements for that year. Those financial statements have been delivered tothe Registrar of Companies and include the auditor's report which wasunqualified and did not contain a statement either under Section 237(2) orSection 237(3) of the Companies Act 1985. 2.Segmental reporting Business segments Revenue EBITDA (1) Unaudited Unaudited Audited Unaudited Unaudited Audited Interim Interim Full Interim Interim Full 30 June 30 June Year 30 June 30 June Year 2007 2006 2006 2007 2006 2006 $m $m $m $m $m $m
Engineering & Production Facilities 1,208.0 895.7 1,972.7 104.4
63.3 155.3 Well Support 416.4 350.8 739.1 54.0 43.7 93.9 Gas Turbine Services 478.2 302.9 713.7 37.9 24.0 54.1 Central costs (4) - - - (21.8) (17.4) (37.7)
Total excl discontinuing operations 2,102.6 1,549.4 3,425.5 174.5
113.6 265.6 Gas Turbine Services 14.7 22.7 43.3 (1.4) 0.5 0.9 discontinuing operations (2) Total 2,117.3 1,572.1 3,468.8 173.1 114.1 266.5 EBITA (1) Opertating profit Unaudited Unaudited Audited Unaudited Unaudited Audited Interim Interim Full Interim Interim Full 30 June 30 June Year 30 June 30 June Year 2007 2006 2006 2007 2006 2006 $m $m $m $m $m $m
Engineering & Production Facilities 97.4 57.1 141.9
92.2 55.6 138.0 Well Support 41.9 34.7 73.6 41.8 34.7 73.5 Gas Turbine Services 29.2 16.0 38.0 27.4 14.7 34.7 Central costs (4) (22.1) (17.8) (38.4) (22.1) (17.9) (38.5)
Total excluding discontinuing operations 146.4 90.0 215.1 139.3 87.1 207.7 Gas Turbine Services (1.8) - -
(1.9) (0.1) (0.2) Total 144.6 90.0 215.1 137.4 87.0 207.5 Finance income 2.8 2.2 5.3 Finance expense (16.2) (13.6) (29.2)
Profit before taxation 124.0 75.6 183.6 Taxation (41.5) (25.8) (62.4) Profit for the period
82.5 49.8 121.2 Notes EBITDA represents operating profit before depreciation and amortisation. EBITArepresents EBITDA less depreciation. EBITA and EBITDA are provided as they areunits of measurement used by the Group in the management of its business.
The discontinuing operations relate to an Aero engine overhaul company which the Group has decided to divest.
Revenue arising from sales between segments are not material.
Central costs include the costs of certain management personnel in both the UK and the US, along with an element of Group infrastructure costs.
3. Dividends Unaudited Unaudited Audited Interim June Interim June Full Year 2007 2006 Dec 2006 $m $m $m Dividends on equity shares Final paid 17.6 13.4 13.4 Interim paid - - 7.4 Total dividends 17.6 13.4 20.8
After the balance sheet date, the directors declared an interim dividend of 2.0cents per share which will be paid on 27 September 2007. The interimfinancial report does not reflect this dividend payable, which will berecognised in shareholders' equity as an appropriation of retained earnings inthe year ended 31 December 2007.
4. Earnings per share
Unaudited Interim Unaudited Interim Audited Full Year June 2007 June 2006 December 2006 Earnings(1) No.of EPS(2) Earnings No.of EPS Earnings No.of EPS ($m) shares (cents) ($m) shares (cents) ($m) shares (cents) millions millions millions Basic 81.2 498.4 16.3 49.2 493.9 10.0 120.5 494.7 24.4 Effect of dilutiveordinary shares - 18.9 (0.6) - 18.3 (0.4) - 19.4 (1.0) Diluted 81.2 517.3 15.7 49.2 512.2 9.6 120.5 514.1 23.4 Amortisation, net of tax 5.8 - 1.1 3.0 - 0.6 5.4 - 1.1 Adjusted diluted 87.0 517.3 16.8 52.2 512.2 10.2 125.9 514.1 24.5 Adjusted basic 87.0 498.4 17.5 52.2 493.9 10.6 125.9 494.7 25.4 The calculation of basic earnings per share 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 ownership trusts. For the calculation of diluted EPS, theweighted average number of ordinary shares in issue is adjusted to assumeconversion of all potentially dilutive ordinary shares. The Group has twotypes of dilutive ordinary shares - share options granted to employees underEmployee Share Option Schemes and the Long Term Retention Plan; and sharesissuable under the Group's Long Term Incentive Scheme. Adjusted EPS isdisclosed to show the results excluding amortisation, net of tax.(1) Earnings attributable to equity shareholders(2) Earnings per share
5. Taxation
The taxation charge for the six months ended 30 June 2007 reflects an anticipated rate of 33.5% on profit before taxation for the year ending 31 December 2007 (June 2006 : 34.1%).
6. Assets/liabilities held for resale
In July 2007, the Group disposed of its 55% share of Mustang Tampa Inc for aconsideration of $7.7m. This amount includes deferred consideration of $0.9m. The assets and liabilities of Mustang Tampa have been reclassified as grossassets and liabilities held for resale in the Group balance sheet at 30 June2007.
7. Retirement benefit liability
No interim revaluation of the pension liability has been carried out at 30 June2007 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 the2007 Annual Report and Accounts. From 5 April 2007 benefits provided under thescheme are based on Career Averaged Revalued Earnings ('CARE'). As part ofthe CARE transition arrangements the Group made a ‚£2.0m ($4.0m) contribution tothe scheme in April 2007. The move to CARE resulted in a reduction in schemeliabilities of ‚£1.65m ($3.3m).
8. Cash generated from operations
Unaudited Unaudited Audited Interim Interim Full June 2007 June 2006 Year Dec 2006 $m $m $m
Reconciliation of operating profit to cash
generated from operations: Operating profit 137.4 87.0 207.5 Adjustments for: Depreciation 28.5 24.1 51.4 Gain on disposal of property plant and - (0.1) (1.4)equipment Amortisation 7.2 3.0 7.6 Share based charges 6.2 4.1 9.7 Increase in provisions 8.0 0.3 8.1
Changes in working capital (excluding effect of acquisition and disposal of subsidiaries)
Increase in inventories (28.4) (19.9) (55.2) Increase in receivables (172.2) (107.4) (125.6) Increase in payables 124.9 54.5 127.2 Exchange differences 0.4 0.4 (4.2) Cash generated from operations 112.0 46.0 225.1 9. Analysis of net debt At 1 January Cash Exchange At 30 June 2007 2007 flow movements $m $m $m $m Cash and cash 140.3 (43.3) 1.9 98.9 equivalents Short term (41.5) 2.8 (2.6) (41.3) borrowings Long term borrowings (356.7) 13.0 (7.8) (351.5) Net debt (257.9) (27.5) (8.5) (293.9)
Independent review report to John Wood Group PLC for the six month period to 30 June 2007
Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2007 which comprises the Group interim balancesheet as at 30 June 2007 and the related Group interim statements of income,cash flows and statement of recognised income and expense for the six monthsthen ended and related notes. We have read the other information contained inthe interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. Directors' responsibilities
The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The ListingRules of the Financial Services Authority require that the accounting policiesand presentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes,and the reasons for them, are disclosed.
This interim report has been prepared in accordance with the basis set out in Note 1.
Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of management and applyinganalytical procedures to the financial information and underlying financialdata and, based thereon, assessing whether the disclosed accounting policieshave been applied. A review excludes audit procedures such as tests of controlsand verification of assets, liabilities and transactions. It is substantiallyless in scope than an audit and therefore provides a lower level of assurance.Accordingly we do not express an audit opinion on the financial information.This report, including the conclusion, has been prepared for and only for thecompany for the purpose of the Listing Rules of the Financial ServicesAuthority and for no other purpose. We do not, in producing this report, acceptor assume responsibility for any other purpose or to any other person to whomthis report is shown or into whose hands it may come save where expresslyagreed by our prior consent in writing. Review conclusion
On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2007.
PricewaterhouseCoopers LLPChartered AccountantsAberdeen27 August 2007 Notes: (a) The maintenance and integrity of the John Wood Group PLC web site is theresponsibility of the directors; the work carried out by the auditors does notinvolve consideration of these matters and, accordingly, the auditors accept noresponsibility for any changes that may have occurred to the interim reportsince it was initially presented on the web site.
(b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.
John Wood Group PLCShareholder information Payment of dividends The 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 14 September2007 as published in the Financial Times on 15 September 2007. Officers and advisers
Secretary and Registered Office
I JohnsonJohn Wood Group PLCJohn Wood HouseGreenwell RoadABERDEENAB12 3AX Tel: 01224 851000 Registrars
Lloyds TSB Registrars Scotland
PO Box 28448Finance HouseOrchard BraeEDINBURGHEH4 1WQTel: 0870 601 5366 StockbrokersJPMorgan Cazenove LimitedCredit Suisse AuditorsPricewaterhouseCoopers LLPChartered AccountantsFinancial calendar 6 months ended Year ending 30 June 2007 31 December 2007 Results announced 28 August 2007 Early March 2008 Ex-dividend date 12 September 2007 May 2008
Dividend record date 14 September 2007 May 2008
Dividend payment date 27 September 2007 May 2008
Annual General Meeting - May 2008
The Group's Investor Relations website can be accessed at www.woodgroup.com.
WOOD GROUP (JOHN) PLCRelated Shares:
Wood Group (J)