5th Sep 2006 07:00
John Wood Group PLCInterim results for the six months to 30 June 2006Strong EBITA growth and prospectsJohn 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 generationindustries around the world. Wood Group businesses employ over 18,000 peoplein 44 countries.Financial Highlights 1Revenues of $1,572.1m (2005: $1,327.0m) up 18%EBITA 2 of $90.0m (2005: $69.2m) up 30%Operating profit of $87.0m (2005: $67.2m) up 29%Profit before tax of $75.6m (2005: $56.2m) up 35%Adjusted diluted earnings per ordinary share 3 of 10.2 cents (2005: 7.8 cents)up 31%. Basic earnings per share of 10.0 cents (2005: 7.6 cents) up 32%Declared interim dividend of 1.5 cents (2005: 1.3 cents) up 15% 4Operating HighlightsGroupStrong global oil & gas marketSignificant financial and operating progressrecord first half resultsfurther margin improvementgood progress in new geographic marketssuccessfully developing our market-leading positionsEngineering & Production Facilities:Engineering - good demand and progress in all areasProduction Facilities - maintaining market leading position in North Sea andgood progress in new regionsWell Support -good performance in all three businesses:ESP - continuing growth in Russia, extension of presence in ChadPressure Control - maintaining strong position in US markets, achieving goodgrowth outside the US, notably in Arabian GulfLogging Services - strong performance in first half, benefiting from increaseddrilling activityGas Turbine ServicesModest improvement in North American power marketContinuing to enhance our differentiation and build up long term contracts.Commenting on the results, Sir Ian Wood, Chairman and Chief Executive, WoodGroup, said:"Our oil & gas development related activities are growing strongly and we arecontinuing to expand our production support activities to maximise the latercycle opportunities. Business continues to strengthen, particularly in ourEngineering and Well Support activities, and we believe our result for theyear will be ahead of expectations. Looking into next year, our positions instrong markets and our robust business development programme should ensure wecontinue our good growth."Information:Wood GroupAlan Semple/ Nick Gilman/ Carolyn Smith01224 851 000BrunswickPatrick Handley/ Nina Coad/ Nebat Sukker020 7404 5959Notes1.All figures are prepared on the basis detailed in note 1 to the interimaccounts.2.EBITA represents operating profit before the deduction of amortisation ofother intangible assets of $3.0m (2005: $2.0m) and is provided as it is a keyunit of measurement used by the Group in the management of its business. TheJune 2005 EBITA includes $2.4m relating to the Production Technology businessprior to its disposal in December 2005.3.Shares held by the Group's employee share ownership trusts are excluded fromthe number of shares in calculating adjusted diluted earnings per ordinaryshare. Adjusted diluted earnings per ordinary share is calculated on earningsbefore amortisation, and the after tax impact of impairment and restructuringcharges and profit on disposal of subsidiaries. Adjusted diluted earnings perordinary share is based on the diluted number of shares, taking account ofshare options where the effect of these is dilutive.4.In accordance with International Financial Reporting Standards ("IFRS"), the2006 interim dividend declared is not reflected in these accounts. Thedividend will be reflected in the accounts when paid.5.Gearing represents net debt over shareholders' funds.6.Interest cover is EBITA divided by net finance costs.Interim Statement - six months to 30 June 2006IntroductionI am pleased to report we are continuing our very good progress, successfullydeveloping our market leading positions and extending our range of services toour global customers in the strong oil & gas market.In the six months to June 2006, revenues increased 18.5% to $1,572.1m (2005:$1,327.0m) and EBITA increased 30.1% to $90.0m (2005: $69.2m). This reflectsstrong revenue growth in Engineering & Production Facilities and Well Support,together with strengthening margins across all divisions.The present strong oil & gas market has compelling long term fundamentals withour customers' investment decisions still based on significantly lower oilprices. We are continuing to expand our relationship with the major oilcompanies, independents and national oil corporations across the world,marketing our differentiation in high quality engineering solutions, long termperformance contracts, and technology and know-how. To achieve our longer termgrowth, we are continuing to extend our international reach and broaden ourrange of services, maintaining a balance between our currently strongerdevelopment and later cycle production activities.In the first half, capital expenditure and acquisition investment was $97.8m(2005: $61.8m). This included increasing our capacity in Well Support andmaking acquisitions to strengthen our presence in Algeria and to enhance ourposition in the engineering downstream and process sectors.We are maintaining our major focus on accessing the skills needed to meet ourclients' increasing requirements with a number of initiatives underway toattract, develop and train our people around the world. Over the last 12months our employee numbers have risen by approximately 2,000 to over 18,000.DividendReflecting confidence in our long term strategy and our ability to delivercontinuing growth, we have declared an increase of 15.4% in the interimdividend to 1.5 cents which will be paid on the 12 October 2006 toshareholders on the register on 22 September 2006.Engineering & Production FacilitiesRevenues increased 27.4% to $895.7m (2005: $703.0m), and EBITA rose 39.6% to$57.1m (2005: $40.9m). We enjoyed strong revenue growth throughout thedivision, with the faster growth in our higher margin Engineering activitiescontributing to the increase in the EBITA margin from 5.8% to 6.4%.We are seeing good demand for our extended range of high quality Engineeringservices and have made good progress in all areas. In US upstream, we have arange of onshore and offshore contracts including Mallet onshore and thePerdido, Tahiti and Shenzi developments in the Gulf of Mexico. Internationally, we are working on developments offshore Brazil, Tambua Landana offshoreAngola, East Area gas offshore Nigeria, and offshore Equatorial Guinea.Additionally, we are carrying out the engineering, project and constructionmanagement services on the Cairn Mangala development in India and the BPValhall development in Norway, along with other developments in the North Sea.JP Kenny, our world leading pipeline and subsea engineering company, isproviding the subsea engineering for BP's developments in Angola, as well asthe technically significant subsea engineering and pipeline contract forGorgon and Janz offshore Australia. They are also working on tiebacks for theBP Deepwater developments in the Gulf of Mexico and have just renewed theirsignificant BP contract in the North Sea.Our diversification into midstream is making progress and we are nowinstalling our LNG (Liquefied Natural Gas) Smart ‚® Air Vaporization Process,at Trunkline's LNG receiving terminal in Lake Charles, Louisiana.In downstream we are seeing a high level of activity on a wide range ofde-bottlenecking, refinery upgrade and low sulphur diesel modificationprojects. Our main customer focus is the independent refiners, and we haverecently entered into longer term contracts to provide downstream Engineeringsupport services across the US. The acquisition of Global Performance inGreenville, South Carolina strengthens our construction management and processcapabilities and provides access to a talented pool of engineers.We have continued to extend our international presence in Engineering, withincreasing activity in our London and Australia offices, together with openingnew offices in Norway and Abu Dhabi, and we are continuing to look at furthernew locations to increase our global presence and provide satellite support toour key Engineering hubs.In Production Facilities, we are busy in the North Sea and the Gulf of Mexicoand are extending our international presence. In the North Sea, we are workingon an increasing number of platform integrity, upgrade and tieback projects.We have also been awarded a second contract by Sevan Marine, this time tooperate and maintain their FPSO for Venture Production's Chestnut Field in theNorth Sea, where we will be the Duty Holder. In Norway, we are beginning towork on assignments to provide support services and engineering studies. Inthe Gulf of Mexico, we are extending our pre operations and start up supportactivities with significant contracts for BP Atlantis, BP Thunder Horse andBHP Shenzi.Internationally, in North Africa we have acquired a majority stake in Somias,a maintenance and fabrication support provider in Algeria, and arewell-positioned to win further work. In West Africa, we are now working forMarathon, Exxon Mobil and Amerada Hess in Equatorial Guinea, including therecent award of a major four year contract to provide additional operationssupport to Amerada Hess' Sendje Ceiba FPSO and Okume Complex. Elsewhere in theworld, we are beginning to win some engineering and production supportcontracts in Russia, and in Kazakhstan we have begun work on a supply chainmanagement contract.Well SupportRevenues increased 16.1% to $350.8m (2005: $302.1m), EBITA increased 28.5% to$34.7m (2005: $27.0m) and the EBITA margin increased to 9.9% (2005: 8.9%). Allthree of our Well Support businesses, Electric Submersible Pumps (ESP),Pressure Control and Logging Services, are maintaining their significant USpositions and achieving good international growth.ESP have a strong market share in the US with a wide range of clients.Internationally we have made good progress in the significant Russian market,extended our scope of work in Chad, increased our activity in the Middle Eastand won a strategically important contract in Bohai Bay, China. To meet thestrong demand for our products and services we have invested in increasedmanufacturing and support in the US, Oman and Yemen.As well as their very strong US presence, Pressure Control are benefiting fromthe high levels of drilling activity round the world and are increasinglyseeing good opportunities outside the US. In the first 6 months we securedcontract wins in Canada, Australia, the UK, Russia, Indonesia and the MiddleEast. We are increasing our manufacturing capacity in the US and building upour manufacturing, assembly and test capabilities in China to provide capacityand cost benefits.In Logging Services, our production focused slickline operations anddevelopment focused cased hole electric wireline services had a strong sixmonths in the US. Our operations in Argentina, where we are the market leader,also performed well. We are increasing our investment to deliver capacity andcost benefits, while also looking to broaden our range of services,particularly in production related areas of activity.Gas Turbine ServicesRevenues decreased 0.5% to $302.9m (2005: $304.4m), EBITA increased 6.7% to$16.0m (2005: $15.0m) and the EBITA margin increased to 5.3% (2005: 4.9%). Thebroadly flat revenues reflect our focus on achieving recovery and improvingmargin, together with lower activity in our Power Solutions business. Wecontinue to see modest improvement in the North American power market and ourcost reduction and efficiency programmes are continuing.In our oil & gas activities, the breadth and depth of our product and serviceoffering and the link to our production facilities capability provides keydifferentiation, contributing to our success in winning more long term multiengine contracts. There were some signs in the first six months of delays inoverhauls as customers sought to take advantage of the strong oil price but,looking ahead, we expect the level of overhaul activity to increase in thesecond half. Our Light Industrial Turbine (LIT) activities performedsatisfactorily in the first half and, with our current product developmentprogramme, we expect to see good medium term growth.The North American power market is showing modest improvement and there aregood opportunities for growth in the Rest of the World. Our Heavy IndustrialTurbine (HIT) activities in the US delivered an improved performance in thefirst half and we expect to see continuing further improvement. Wood GroupPratt & Whitney and TransCanada Turbines - serving customers in the oil & gasand power markets - had a strong first half, particularly driven by demandfrom their clients in the power markets.Our focus on long term contracts is continuing with recent wins including thesignificant long term power station operations & maintenance contract for LSPower in the Western US and new maintenance contracts with Air Products andCinergy covering GE 7EA turbines.OutlookOur oil & gas development related activities are growing strongly and we arecontinuing to expand our production support activities to maximise the latercycle opportunities. Business continues to strengthen, particularly in ourEngineering and Well Support activities, and we believe our result for theyear will be ahead of expectations. Looking into next year, our positions instrong markets and our robust business development programme should ensure wecontinue our good growth.Sir Ian WoodChairman and Chief Executive4 September 2006Interim Financial ReviewThe trading performance for the six months to 30 June 2006 is summarisedbelow: Interim Interim Increase June June 2006 2005 $m $m Revenues 1,572.1 1,327.0 18.5%EBITA 90.0 69.2 30.1%Operating profit 87.0 67.2 29.5%Profit before tax 75.6 56.2 34.5%Profit for the period 49.8 36.4 36.8%Diluted EPS (cents) 9.6 7.4 29.7%Adjusted diluted EPS 10.2 7.8 30.8%(cents)Revenues increased by $245.1m, or 18.5%, for the six months to June 2006 withstrong growth in both Engineering & Production Facilities (27.4%) and WellSupport (16.1%). EBITA increased by $20.8m or 30.1% for the period, withgrowth in all three divisions. Profit before tax increased by 34.5%. The taxcharge for the period of $25.8m (2005: $19.8m) is based on an anticipated taxrate for the year of 34.1% (2005: 35.2%) of profit before tax.The cash flow statement for the six months to 30 June 2006 is summarisedbelow: Interim Interim Full Year June June December 2006 2005 2005 $m $m $m Opening net debt (245.8) (354.3) (354.3) Cash generated from 118.8 92.5 194.8operations before workingcapital movementsWorking capital outflows (72.8) (35.3) (33.5)Capex and acquisitions (97.8) (61.8) (99.0)Disposal of subsidiaries 7.3 - 22.8Issue / sale of shares 1.3 0.9 92.5Interest, tax, dividends (60.0) (25.5) (69.1)and other(Increase)/ decrease in net (103.2) (29.2) 108.5debtClosing net debt (349.0) (383.5) (245.8)Cash generated from operations before movements in working capital increasedby $26.3m or 28.4% driven by the strong trading performance for the six monthsto June 2006. Working capital outflows in the period of $72.8m compare tooutflows of $35.3m in the first half of 2005. The outflows include the impactof increased activity in the first six months of the year, an increase ininventory levels to support future growth and higher receivables. Capitalexpenditure amounted to $44.5m (2005: $32.5m) and the increase included thecost of increasing capacity in Well Support. The cost of acquisition ofsubsidiaries net of cash acquired totalled $45.5m (2005: $17.3m) and includesthe acquisition of Global Performance Holdings Inc and Somias spa, as well asthe purchase of the remaining minority shareholding in Mustang Engineering.Deferred consideration payments relating to acquisitions made in prior yearsamounted to $4.2m (2005: $9.0m). Net debt increased by $103.2m from $245.8m atDecember 2005 to $349.0m at June 2006. The Group's gearing ratio 5 increasedfrom 36.1% at December 2005 to 48.2% at June 2006.Net debt of $349.0m is primarily US dollar denominated in line with thecurrency of the bulk of the Group's net assets. Long-term borrowings amountedto $423.5m (2005: $483.0m), of which $176.2m (2005: $125.0m), or 41.6% (2005:25.9%), was at a weighted average fixed rate of interest of 4.9% (2005: 5.0%).The Group seeks to hold approximately 50% of net borrowings at fixed interestrates. Net interest costs were $11.4m, which is an increase of $0.4m comparedto the same period in 2005. Interest cover 6 was 7.9 times (June 2005: 6.3times).Adjusted diluted earnings per ordinary share for the period increased by 30.8%to 10.2 cents (June 2005: 7.8 cents) and basic earnings per ordinary sharealso increased by 31.6% to 10.0 cents (June 2005: 7.6 cents).Alan G SempleGroup Finance Director4 September 2006Interim Financial Statements 2006Group income statement for the six month period to 30 June 2006 Unaudited Interim Unaudited Audited June Interim Full Year 2006 June December 2005 2005 Note US$m US$m US$m Revenues 2 1,572.1 1,327.0 2,761.9Cost of sales (1,258.8) (1,062.3) (2,209.7)Gross profit 313.3 264.7 552.2 Administrative expenses:Profit on disposal of subsidiaries 5 - - 9.7Impairment and restructuring charges 6 - - (6.0)Other administrative expenses (226.3) (197.5) (407.9)Administrative expenses (226.3) (197.5) (404.2)Operating profit 2 87.0 67.2 148.0 Finance income 2.2 1.0 2.5Finance expense (13.6) (12.0) (25.8)Profit before taxation 75.6 56.2 124.7Taxation 7 (25.8) (19.8) (41.1)Profit for the period 49.8 36.4 83.6 Attributable to:Equity shareholders 49.2 35.3 80.5Minority interest 0.6 1.1 3.1 49.8 36.4 83.6Earnings per share (expressed in cents per share)Basic 4 10.0 7.6 17.0Diluted 4 9.6 7.4 16.4 All items dealt with in arriving at the profits stated above relate tocontinuing operations.Group statement of recognised income and expense for the six month period to30 June 2006 Unaudited Unaudited AuditedFull Year Interim Interim December June June 2005 2006 2005 US$m US$m US$m Profit for the period 49.8 36.4 83.6 Actuarial losses on retirement benefit - - (2.5)liabilitiesMovement in deferred tax relating to retirement - - 0.7benefit liabilitiesCash flow hedges- fair value gains 2.8 0.4 2.4- (losses)/gains reported in profit for the (0.3) 1.0 1.4periodExchange differences on retranslation of foreign 2.7 (10.6) (15.5)currency net assets Total recognised income for the period 55.0 27.2 70.1 Adoption of IAS 32 and IAS 39- Retained earnings - - (0.9)- Hedging reserve - - (2.4) Total recognised income since last Annual Report 55.0 27.2 66.8 Total recognised income for the period isattributable to:Equity shareholders 54.4 26.1 67.0Minority interest 0.6 1.1 3.1 55.0 27.2 70.1Group balance sheet as at 30 June 2006 UnauditedInterim Unaudited Audited June InterimJune Full Year 2006 2005 December 2005 Note US$m US$m US$mAssetsNon-current assetsGoodwill and other intangible assets 375.0 328.5 328.6Property plant and equipment 232.4 219.5 219.5Long term receivables 9.1 17.6 13.5Financial assets - derivative financial 4.4 - 1.3instrumentsDeferred tax assets 19.6 20.2 19.3 640.5 585.8 582.2Current assetsInventories 397.0 355.2 362.9Trade and other receivables 757.0 617.4 610.7Income tax receivable 10.4 4.2 5.4Financial assets - derivative financial 1.6 - 1.7instrumentsCash and cash equivalents 119.7 135.3 149.9 1,285.7 1,112.1 1,130.6LiabilitiesCurrent liabilitiesFinancial liabilities- Borrowings 45.2 35.8 47.9- Derivative financial instruments 0.4 0.2 0.6Trade and other payables 616.2 520.2 526.7Income tax liabilities 18.3 16.5 14.8 680.1 572.7 590.0Net current assets 605.6 539.4 540.6 Non-current liabilitiesFinancial liabilities- Borrowings 423.5 483.0 347.8- Derivative financial instruments - 1.2 -Deferred tax liabilities 6.1 8.5 7.0Retirement benefit liabilities 9 35.9 31.7 33.3Other non-current liabilities 31.7 23.0 18.7Provisions 15.6 15.2 15.1 512.8 562.6 421.9Net assets 733.3 562.6 700.9 Shareholders' equityShare capital 25.5 23.9 25.4Share premium 294.2 202.4 292.1Retained earnings 324.0 244.9 288.1Other reserves 80.9 78.2 75.7Total shareholders' equity 724.6 549.4 681.3 Minority interest 8.7 13.2 19.6Total equity 733.3 562.6 700.9Group cash flow statement for the six month period to 30 June 2006 Unaudited Unaudited Audited Interim Interim Full Year June 2006 June 2005 Dec 2005 Note US$m US$m US$mCash generated from operations 10 46.0 57.2 161.3Tax paid (26.2) (11.4) (37.2)Net cash from operating activities 19.8 45.8 124.1 Cash flows from investing activitiesAcquisitions (net of cash acquired) (45.5) (17.3) (24.2)Deferred consideration payments (4.2) (9.0) (9.2)Disposal of subsidiaries (net of cash 7.3 - 22.8disposed)Purchase of property plant and equipment (44.5) (32.5) (56.4)Disposal of property plant and equipment 3.0 2.8 4.2Purchase of intangible assets (3.6) (3.0) (9.2)Net cash used in investing activities (87.5) (59.0) (72.0) Cash flows from financing activitiesIssue of ordinary share capital 0.4 - 90.8Proceeds from /(repayment of) bank loans 59.3 102.8 (18.6)Sale of shares in employee share trusts 0.9 0.9 1.7Interest received 2.2 1.0 2.5Interest paid (13.9) (11.8) (25.3)Dividends paid to shareholders 3 (13.4) (11.1) (17.5)Dividends paid to minority interest (0.4) - (1.3)Net cash from financing activities 35.1 81.8 32.3Effect of exchange rate changes on cash and 2.4 (4.7) (5.9)cash equivalentsNet (decrease)/increase in cash and cash (30.2) 63.9 78.5equivalentsOpening cash and cash equivalents 149.9 71.4 71.4Closing cash and cash equivalents 119.7 135.3 149.9Notes to the interim accounts for the six month period to 30 June 20061.Basis of PreparationThe interim report and accounts have been prepared on the basis of theaccounting policies set out in the Group's 2005 Annual Report and Accounts.The interim accounts were approved by the Board of Directors on 4 September2006. The results for the six months to 30 June 2006 and the comparativeresults for six months to 30 June 2005 are unaudited. The comparative figuresfor the year ended 31 December 2005 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 reportingBusiness segments part 1 Revenues EBITDA (1) Unaudited Unaudited Audited Unaudited Unaudited Audited Interim Interim Full Interim Interim Full 30 June 30 June Year 30 June 2006 30 June Year 2006 2005 2005 2005 2005 US$m US$m US$m US$m US$m US$m Engineering & Production Facilities 895.7 703.0 1,472.3 63.3 45.6 98.7Well Support (2) 350.8 302.1 645.7 43.7 35.1 76.3Gas Turbine Services 302.9 304.4 607.8 24.0 23.1 47.8Central costs (5) - - - (17.4) (13.1) (28.8)Total excluding discontinuing operations 1,549.4 1,309.5 2,725.8 113.6 90.7 194.0Gas Turbine Services - discontinuing operations (3) 22.7 17.5 36.1 0.5 - (0.1)Total 1,572.1 1,327.0 2,761.9 114.1 90.7 193.9 Business segments part 2 EBITA (1) Operating profit Unaudited Unaudited Audited Unaudited Unaudited Audited Interim Interim Full Interim Interim Full 30 June 30 June 2005 Year 30 June 30 June Year 2006 2006 2005 2005 2005 US$m US$m US$m US$m US$m US$m Engineering & 57.1 40.9 88.2 55.6 39.9 86.0ProductionFacilitiesWell Support 34.7 27.0 58.5 34.7 26.9 68.0(2)Gas Turbine 16.0 15.0 32.7 14.7 14.4 24.9ServicesCentral costs (17.8) (13.3) (29.5) (17.9) (13.5) (29.8)(5)Total 90.0 69.6 149.9 87.1 67.7 149.1excludingdiscontinuingoperationsGas Turbine - (0.4) (0.8) (0.1) (0.5) (1.1)Services -discontinuingoperations(3)Total 90.0 69.2 149.1 87.0 67.2 148.0Finance 2.2 1.0 2.5incomeFinance (13.6) (12.0) (25.8)expenseProfit before 75.6 56.2 124.7taxationTaxation (25.8) (19.8) (41.1)Profit for 49.8 36.4 83.6the periodNotes(1)EBITDA represents operating profit before profit on disposal of subsidiaries,impairment and restructuring charges, 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.(2)Well Support's interim and full year 2005 results include revenues and profitsearned by the Production Technology business prior to its disposal in December2005. Production Technology revenues for the first six months of 2005 amountedto US$18.0m (Full year 2005 : US$37.5m) and operating profit amounted toUS$2.4m (Full year 2005 : US$5.0m).(3)The discontinuing operations relate to an Aero engine overhaul company whichthe Group has decided to divest.(4)Revenues arising from sales between segments are not material.(5)Central costs include the costs of certain management personnel in both the UKand the US, along with an element of Group infrastructure costs.3.Dividends Unaudited Unaudited Audited Interim Interim Full Year June 2006 June 2005 Dec 2005 US$m US$m US$mDividends on equity sharesFinal paid 13.4 11.1 11.1Interim paid - - 6.4Total dividends 13.4 11.1 17.5After the balance sheet date, the directors declared an interim dividend of1.5 cents per share which will be paid on 12 October 2006. 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 2006.4. Earnings per share Unaudited Interim Unaudited Interim Audited Full Year June 2006 June 2005 December 2005 Earnings Number Earnings Earnings Number Earnings Earnings Number Earnings attribute- of per attrib- of per attri- of per able shares share utable shares share butable shares to to to share equity equity equity share- share- share- holders holders holders (US$m) (millions) (cents) (US$m) (millions) (cents) (US$m) (millions) (cents) Basic 49.2 493.9 10.0 35.3 463.8 7.6 80.5 473.4 17.0Effect of 18.3 (0.4) 14.5 (0.2) 17.8 (0.6) Dilutive Ordinary shares Diluted 49.2 512.2 9.6 35.3 478.3 7.4 80.5 491.2 16.4Amortisation 3.0 0.6 2.0 0.4 4.8 1.0Profit on - - (7.9) (1.6) disposalof subsidiaries, net oftaxImpairment - - 4.2 0.8 And Restructuringcharges, net oftaxAdjusted 52.2 512.2 10.2 37.3 478.3 7.8 81.6 491.2 16.6 dilutedAdjusted 52.2 493.9 10.6 37.3 463.8 8.0 81.6 473.4 17.2 basicThe 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 theGroup's employee share ownership trusts. For the calculation of diluted EPS,the weighted 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 and the after tax impactof impairment and restructuring charges and profit on disposal ofsubsidiaries.5. Profit on disposal of subsidiariesThe profit on disposal of subsidiaries relates to the sale of the ProductionTechnology business in December 2005. This business was part of the WellSupport division.6. Impairment and restructuring chargesAn impairment and restructuring charge of US$6.0m was booked in the year toDecember 2005. This charge was in respect of rationalisation of businesses andfacilities, severance costs and impairment of property plant and equipment inthe Gas Turbine Services division.7. TaxationThe taxation charge for the six months ended 30 June 2006 reflects ananticipated rate of 34.1% on profit before taxation for the year ending 31December 2006 (June 2005 : 35.2%).8. AcquisitionsIn March 2006, the Group acquired 100% of the share capital of GlobalPerformance Holdings Inc, a company based in Greenville, South Carolina thatprovides project management, construction management and engineering anddesign services to the chemical, process and industrial sectors.In April 2006, the Group acquired the remaining 6.63% minority shareholding inMustang Engineering Holdings Inc.In June 2006, the Group acquired 55% of SOMIAS Spa, an Algerian maintenanceand fabrication support provider serving the oil and gas and petrochemicalindustries.9. Retirement benefit liabilityNo interim revaluation of the pension liability has been carried out at 30June 2006 and accordingly there is no actuarial gain/loss in the statement ofrecognised income and expense. The figures for gains and losses for the fullyear together with the surplus/deficit at the year end will be presented inthe 2006 Annual Report and Accounts.10. Cash generated from operations Unaudited Unaudited Audited Interim Interim Full Year June 2006 June 2005 Dec 2005 US$m US$m US$mReconciliation of operating profit to cashgenerated from operations: Operating profit 87.0 67.2 148.0 Adjustments for:Depreciation 24.1 21.5 44.8(Gain)/loss on disposal of property plant (0.1) 0.3 0.5and equipmentAmortisation of other intangible assets 3.0 2.0 4.8Share based charges 4.1 3.9 7.9Impairment and restructuring charges - - - 5.3non-cash impactProfit on disposal of subsidiaries - - (9.7)Increase/(decrease) in provisions 0.3 (0.2) (0.2) Changes in working capital (excluding effectof acquisition and disposal of subsidiaries)Increase in inventories (19.9) (29.1) (44.1)Increase in receivables (107.4) (46.2) (35.5)Increase in payables 54.5 40.0 46.1Exchange differences 0.4 (2.2) (6.6) Cash generated from operations 46.0 57.2 161.3Analysis of net debt At 1 At 30 June January Cash flow Exchange 2006 2006 movements US$M US$M US$M US$MCash and cash equivalents 149.9 (32.6) 2.4 119.7Short term borrowings (47.9) 6.3 (3.6) (45.2)Long term borrowings (347.8) (65.6) (10.1) (423.5)Net debt (245.8) (91.9) (11.3) (349.0)Independent review report to John Wood Group PLC for the six month period to30 June 2006IntroductionWe have been instructed by the company to review the financial information forthe six months ended 30 June 2006 which comprises the consolidated interimbalance sheet as at 30 June 2006 and the related consolidated interimstatements of income, cash flows and statement of recognised income andexpense for the six months then ended and related notes. We have read theother information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information.Directors' responsibilitiesThe 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 withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed.This interim report has been prepared in accordance with the basis set out inNote 1.Review work performedWe conducted our review in accordance with guidance contained in Bulletin1999/4 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 ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit and therefore provides a lower levelof assurance. Accordingly we do not express an audit opinion on the financialinformation. This report, including the conclusion, has been prepared for andonly for the company for the purpose of the Listing Rules of the FinancialServices Authority and for no other purpose. We do not, in producing thisreport, accept or assume responsibility for any other purpose or to any otherperson to whom this report is shown or into whose hands it may come save whereexpressly agreed by our prior consent in writing.Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006.PricewaterhouseCoopers LLPChartered AccountantsAberdeen4 September 2006Notes:(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 acceptno responsibility 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 anddissemination of financial information may differ from legislation in otherjurisdictions.Shareholder 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'sAutomated Clearing Services) system. The benefit of the BACS payment method isthat the Registrars post the tax vouchers directly to the shareholders, whilstthe dividend is credited on the payment date to the shareholder's Bank orBuilding Society account. Shareholders who have not yet arranged for theirdividends to be paid direct to their Bank or Building Society account and wishto benefit from this service should contact the Registrars at the addressbelow. Sterling dividends will be translated at the closing mid-point spotrate on 22 September 2006 as published in the Financial Times on 23 September2006.Officers and advisersSecretary and Registered OfficeI JohnsonJohn Wood Group PLCJohn Wood HouseGreenwell RoadABERDEENAB12 3AXTel: 01224 851000RegistrarsLloyds TSB Registrars ScotlandPO Box 28448Finance HouseOrchard BraeEDINBURGHEH4 1WQTel: 0870 601 5366StockbrokersJPMorgan Cazenove LimitedCredit SuisseAuditorsPricewaterhouseCoopers LLPChartered AccountantsFinancial calendar 6 months ended Year ending31 30 June 2006 December 2006 Results announced 5 September Early March 2006 2007Ex-dividend date 20 September May 2007 2006Dividend record 22 September May 2007date 2006Dividend payment 12 October 2006 May 2007dateAnnual General - May 2007MeetingThe Group's Investor Relations website can be accessed at www.woodgroup.com.ENDWOOD GROUP (JOHN) PLCRelated Shares:
Wood Group (J)