Final Results

Expro International Group PLC 31 May 2007 31 May 2007 EXPRO INTERNATIONAL GROUP PLC ("Expro" or "the Group") Preliminary results for the year ended 31 March 2007 Financial Highlights â€¢ Record set of results in line with expectations despite weaker US dollar â€¢ Significant organic and acquisitive growth â€¢ Successful acquisition of Power Well Services - performance has exceeded expectations â€¢ Record investment in technology development driven by AX-S(TM)rigless progress â€¢ Winner of Oil and Gas sector RoSPA award for second consecutive year â€¢ Record order book of over Â£600m on the back of Â£200m new contracts announced today â€¢ Strong outlook â€¢ Dividend increased Year ended Year ended Change 31 March 2007 31 March 2006 Revenue Â£518.8m Â£300.7m +73% Underlying operating profit (a) Â£72.5m Â£34.9m +108% Underlying operating margin 14.0% 11.6% +2.4pt Underlying EPS (*b) 37.8p 24.9p +52% Headline EPS (*c) 34.1p 24.2p +41% Statutory operating profit Â£66.8m Â£34.1m +96% Statutory operating margin 12.9% 11.3% +1.6pt Statutory continuing EPS (*) 34.1p 23.6p +44% Net cash from operating activities Â£67.9m Â£58.4m +16% Free cash flow (d) Â£18.6m Â£10.4m +80% Dividends per share 11.8p 10.9p +8% Net bank borrowings (e) Â£170.5m Â£17.1m * All references to earnings per share (EPS) are calculated using the basic number of shares a Underlying operating profit, as extracted from the income statement, is based on continuing and discontinued operations and is before exceptional items and intangible asset amortisation that arises on business combinations. Exceptional items are classified as those which management has identified and disclosed as material one-off or unusual items. In the prior year, exceptional items comprise gains on disposal of businesses b Underlying EPS is based on continuing and discontinued operations and is before exceptional items and intangible asset amortisation that arises on business combinations and is calculated under note 6 c Headline EPS is based on continuing and discontinued operations and is before exceptional items but includes amortisation arising on business combinations and is calculated under note 6 d As calculated in the financial review e Bank loans of Â£201.2m (2006: Â£62.7m) and overdrafts of Â£2.1m (2006: nil) less cash of Â£32.9m (2006: Â£45.6m), as extracted from the consolidated balance sheet Commenting on the results, Graeme Coutts, Chief Executive, said, "I am delighted to announce today a record set of results, which reflect a balance of acquisitive and organic growth, and which have been achieved despite the headwind of a weaker US dollar. The performance of Power Well Services and its subsequent successful integration has exceeded our original expectations, and the combined business now provides an enhanced platform to execute Expro's strategy. We continue to invest heavily in "sweet spot" technology opportunities, enhance our customer care activities, and develop centres of critical mass that maximise the benefit of the Group's operating leverage. The execution of this strategy has generated the record results we have announced today and fuelled the largest order book the Group has ever experienced. This, together with generally favourable market conditions, leads me to believe that the outlook for Expro in 2007/08 and beyond remains positive." - Ends - For further information please contact: Expro International Group PLC On 31 May 2007: 020 7067 0700 Graeme Coutts, Chief Executive Thereafter: 0118 959 1341 Michael Speakman, Finance Director Weber Shandwick Financial 020 7067 0700 Kirsty Raper / Rachel Taylor / Stephanie Badjonat An analyst meeting will be held at 09.30 this morning at the offices of Weber Shandwick Financial, Fox Court, 14 Gray's Inn Road, London, WC1X 8WS Financial calendar Annual General Meeting 5 July 2007 Ex dividend date 27 June 2007 Record date 29 June 2007 Final dividend payable 31 July 2007 Notes to Editors Expro's business is well flow management. Expro is a leading provider of products and services that measure, improve, control and process flow from high-value oil and gas wells. Key niche businesses must be able to command and sustain market share leadership through a combination of technological pre-eminence and/or operational economies of scale. They will have a high knowledge and service content and will be able to anticipate, meet and exceed customers' expectations. With its head office in the UK, Expro employs more than 4,000 highly-trained staff in 50 countries. For more information, please visit the Expro website www.exprogroup.com Expro International Group PLC ("Expro" or "the Group") Preliminary results for the year ended 31 March 2007 Chairman's and Chief Executive's Statement The Board is delighted to report a strong set of results for the financial year ended 31 March 2007, reflecting the successful execution of our strategy and continued growth across the expanded Expro business. These results include nine months of contribution from Power Well Services (PWS). This acquisition marked a "step change" in the development of Expro. However, importantly, this acquisitive performance has complemented robust organic growth from both the existing Expro and acquired PWS businesses. This combined growth has generated an underlying earnings per share (a) of 37.8 pence, a 52% increase on the same period last year. On a headline basis (b), earnings per share of 34.1p grew by 41% compared with the prior period. The Board is recommending an increase in the final dividend to 8.0p (2006: 7.1p) bringing the full year dividend to 11.8 pence. This increase in dividend balances the Board's confidence in the sustainability of the achievements to-date whilst recognising the continuing need to reinvest in the business. Expro has a focused strategy aimed at delivering a balance between short and long-term shareholder performance. The acquisition of PWS in July 2006 has strengthened Expro's position as a global top-tier supplier of oil and gas services in most of the key upstream markets of the world. Our portfolio now contains a blend of technology and market reach, ideally positioned for the high activity levels of the late cycle. Markets Market conditions for upstream services remained positive during the year. In addition, the market saw the beginning of a notable change in the strategic direction of our international customers. Their focus is increasingly turning to subsea, and particularly deepwater provinces, where they see greater future opportunity. This in turn has fuelled strong demand for high specification floating rigs, capable of meeting our customers' operating objectives out to and beyond 2012. The acute shortage of these high specification rigs has led to a dramatic increase in semi-submersible day rates and initiated an intensive new-build programme to increase capacity in this high value segment. In addition, national oil and gas companies have increased their domestic focus, and consequently their activity levels, as they strive to achieve enhanced oil and gas recovery from increasingly ageing assets. Expro has a well established position with international customers and the acquisition of PWS has given Expro greater exposure and a stronger presence in many of the national markets, particularly the Middle East, Brazil and Norway. Segmental review Regional Businesses Expro completed the operational and customer facing aspects of the PWS integration during the second half of the financial period. The majority of the PWS portfolio operates within Expro's Regional business segment. To best manage this business and serve our customers we implemented the Eastern and Western Hemisphere operating structure, further broken down into a total of seven global regions. Each is focused on their respective geographic market. Whilst the strategic rationale for the PWS acquisition was entirely driven by future growth which inevitably takes time to mature, the combination has yielded cost synergies, earlier and higher than planned. Achieving critical-mass in areas of operations is a vital part of Expro's business strategy. Under our strategy, the new geographic structures and PWS acquisition have significantly advanced this objective. Enhanced Expro contracts are in place in key markets such as Saudi Arabia, Brazil and Norway, giving clear evidence of customer acceptance and providing a basis for future progress. Western Hemisphere In the Western Hemisphere, managed from Houston, Expro has established significant presence in both South and North America. Our strategic focus for the Western Hemisphere is clearly on technically appreciative markets with the majority of our activities in Brazil, deepwater Gulf of Mexico and the unconventional gas plays of North America. Western Hemisphere total revenues were up 183% at Â£97.9 million. Highlights include a new four year Petrobras contract in Brazil. This contract is the first of its kind in Brazil for Expro and opens the way for continued progress in this highly active offshore market. In North America, our Power Chokes business had an excellent year. This business focuses on the high pressure and unconventional North American gas fracture market, which has been relatively resilient to fluctuations in domestic gas price. In the period we withdrew from the Canadian commodity market via the disposal of Expro Canada to Enseco Energy Services Corporation. This reflects our strategy to compete in markets where we can demonstrate differentiation through technology and quality. Eastern Hemisphere In the Eastern Hemisphere, the PWS combination has increased capability in three of our existing regions; Europe/FSU, West Africa and Asia, and allowed us to create a new management focus in the substantial markets of North Africa and the Middle East. PWS has given Expro excellent new positions in Saudi Arabia and Egypt, and the acquired activities in Algeria and Libya have been integrated with existing Expro operations, to create a strong regional presence for investment and continued growth. As a consequence, full year revenues for the Eastern Hemisphere increased by 66% to Â£224.0 million. Our position in Europe/FSU was also materially improved with the addition of a very strong Norwegian business. This market is very appreciative of technology, and Expro is already benefiting from closer links with Statoil, as they move into overseas locations. In addition, our position in Kazakhstan has also been enhanced. The UK North Sea continued to grow and to provide good opportunity for technology deployment as our customers strive to reduce operating cost and recover late cycle reserves from this ageing but politically secure province. Whilst still an important market for Expro, the Group's dependence upon the region has dramatically reduced in recent years. In Asia, where it is essential to establish areas of critical mass, the integration of PWS has provided a strong basis for growth. There are three main areas of focus for this region. In Australia, where Expro has been established for many years, progress in the period was very good. Malaysia made good progress driven by the commencement of the PWS initiated pan-Malaysian welltesting and subsea tools contract for Shell. In Indonesia we continued to make progress. The West Africa region is primarily focused on two large operating countries, Nigeria and Angola. Our Angolan business is entirely deepwater focused, where we have an excellent position providing technology essential to the exploration, development, commissioning and maintenance of deepwater fields. Our blue-chip, international customer base has been investing throughout the period and we expect this to continue for many years to come. In Nigeria we have a more diverse business portfolio, although these operations are experiencing similar conditions to the deepwater business. The addition of PWS has equipped Expro with a strong local workforce to service this growing demand. Highlights in the period include the establishment of a material operating capability in Angola, where Expro has successfully deployed welltesting facilities on seven deepwater semi-submersible rigs for Total and BP. This increase in capability has required recruitment and training of national employees. Throughout the region national staff content is increasingly essential to meet our operating requirements as well as government regulation. This is a common feature, not just in our West African business, but globally. The combination of Expro and PWS has given us access to skilled national personnel across all our operating regions. Global Businesses In the second half of the year Expro continued to make material progress in the three businesses which make up our Global businesses; TronicMatre, Subsea safety tools and Production Solutions. TronicMatre continued to benefit from the global growth in new subsea wells providing instrumentation and connectors, resulting in full year revenues of Â£46.5 million, an increase of 18% over the prior year. In the year Tronic performed many Front-end Engineering Design studies for customers with future requirement for seabed power applications. These studies relate to technical feasibility for future prospects and are usually a key lead indicator of new business some 24 months out. Our flagship Subsea safety tools business is now benefiting from of our previous investment in technology development. In the year the business grew 47% to Â£57.4 million. Included in this performance were many firsts for Expro and the industry. The build and delivery of the Tahiti high pressure, electro-hydraulic, ultra-deep tools for Chevron in the Gulf of Mexico was a significant milestone. Tahiti has pushed technological barriers within the industry and we continue to strive to assist our international customers develop increasingly difficult deepwater reserves. Likewise our specialised tools have also been extensively deployed in the West Africa deepwater developments by BP, Total and ExxonMobil. Production Solutions also had an exceptional year growing 84% to Â£73.1 million. The highlight was the outstanding performance for ExxonMobil on their Chayvo project on Sakhalin Island. This 14 month project was completed at the end of the calendar year when Exxon commissioned their full production plant. As a result our production facility became redundant and Exxon elected to exercise their right to purchase the system for future use. This project was exceptional in terms of complexity, performance and value to Expro. The period also saw the build delivery and commissioning of Chevron's Dibi production barge in Nigeria. This barge was custom built in country to produce up to 50,000 bbl of liquids from the Dibi field. Technology New technology development remains essential to our positioning and significant progress has been made in all areas of Expro's focused strategy. Record investment levels have been dedicated to develop and deliver the next generation of Expro technology. Our flagship AX-S(TM)rigless intervention concept continues to take shape. Good progress, both technical and commercial, has been made within the period. The detailed engineering phase was substantially completed and discussions over an initial commercial framework commenced to secure funding assistance and initial field trial applications. The market for subsea well intervention is developing very quickly. Our major international customers are looking for technically innovative, cost effective solutions to increase the recovery factors from their expensive subsea assets. The commercial progress of our Subsea tools business is directly linked to our efforts in technology development and activity throughout the period has kept us focussed on meeting the future customer needs. Technology development also features highly in our Regional business. Our investment in cased hole logging technology continues to make progress in delivering unique solutions to clients. In the UK North Sea, Expro installed the world's first cableless subsea well monitoring system for BP. The CaTSTM tool was deployed in an abandoned well to determine connectivity with the nearby Clair platform. Other world firsts were achieved using CaTS(TM)technology offshore Australia to monitor pressure and temperature behind casing in a producing well. Downhole video technology continued to gain client acceptance globally. We successfully introduced our new ViewMax(TM)product with a rotating horizontal camera into the Gulf of Mexico and Canada saving operators many hours of rig time by simplifying operations. In addition, new enhanced video technology was successfully integrated into traditional sensors with the introduction of the WIT(TM)(Water Investigation Tool) and the CalVid(TM)(Caliper/Video) tool. The WIT (TM)tool has already gained excellent client acceptance in Canada and CalVid(TM)is beginning to displace traditional caliper logging in the North Sea market. Outlook The integration of PWS has given Expro a broader international identity and an enhanced platform to progress our strategies, delivering a positive outlook for the coming period and beyond. Expro is now well positioned to grow with both national and international oil and gas customers. We have a technology portfolio suited to meet our customers' ongoing requirements and an outstanding talent pool of national staff to progress these relationships. In the flagship deepwater markets where operating costs are high, our customers are focused on technical innovation and service quality. These are the Expro strengths and form the foundation of our focused strategy. We continue to invest heavily in niche technology opportunities, enhance our customer care, develop critical mass in the areas we choose to operate in and maximise the Group's operating leverage. The successful execution of our strategy has helped fuel our performance and positioned us to benefit from what we believe to be positive market conditions for next year and beyond. Board and Management Colin Ainger retired as Corporate Development Director on 6 July 2006 having served the company for 24 years. Colin was originally appointed to the Board as Finance Director in 1992 and helped lead the Group through the Management Buy Out and subsequent flotation. John McAlister joined the Board as Group General Counsel on 12 June 2006. John has joined us from National Grid PLC where he was Deputy General Counsel. Mike Martindale retired as Chief Operating Officer on 31 December 2006. Mike served the company for 11 years, spending four years as Chief Operating Officer. Mike was succeeded by Gavin Prise, who was appointed Chief Operating Officer on 1 January 2007. Gavin has held several positions within Expro, most recently as Director of the Eastern Hemisphere operating region and brings extensive industry experience to the Board. Tim Eggar has decided not to seek re-election as a non executive director as he wishes to expand his other business interests. Tim will stand down at the AGM on 5 July 2007. Bob Bennett joined the board as a non-executive director on 30 May 2007. The Board would like to record its appreciation to Colin, Mike and Tim for their valuable service and welcome John, Gavin and Bob to the Board. Finally, we would like to thank all of Expro's dedicated employees around the world for their continuing enthusiasm and support. a Underlying EPS is based on continuing and discontinued operations and is before exceptional items and intangible asset amortisation that arises on business combinations and is calculated under note 6. Exceptional items are classified as those which management has identified and disclosed as material one-off or unusual items. In the prior year, exceptional items comprise gains on disposal of businesses b Headline EPS is based on continuing and discontinued operations and is before exceptional items but includes amortisation arising on business combinations and is calculated under note 6. Operations review Organisational Development Expro's businesses have grown substantially throughout the current year, both organically and through the acquisition of PWS. In order to deliver our ongoing business and also to support further sustained growth we have successfully re-shaped the Regional organisation. The new structure has been implemented without disruption to ongoing business and was designed to effectively harness the talents of legacy Expro and legacy PWS management and operational personnel. Expro's Regional operations are now delivered across the two Hemispheres - East and West. The Eastern Hemisphere comprises the Regional businesses of: â€¢ Europe/FSU â€¢ West Africa â€¢ North Africa/Middle East â€¢ Asia The Western Hemisphere comprises the Regional businesses of: â€¢ North America - Land â€¢ North America - Offshore â€¢ Latin America In addition to the Regional businesses, Expro has continued to deliver a number of Global businesses that rely on the Regional infrastructure for operations support. The prospects for these Global businesses have been further enhanced by the improved geographical coverage of the Regional infrastructure. During the last year we have also put significant effort into our safety, service quality and personal development programmes. Across our entire Expro business we are committed to "Excellence in Operations" and we now have over 4,000 employees with a significant presence in all key hydrocarbon producing regions. Across all regions, we can effectively deliver a wide range of services to the major international oil companies, the independents and to the increasingly important national oil companies. Regional Businesses Europe/FSU Europe/FSU remained our largest Region with the three main markets being the UK, Norway and the Former Soviet Union (FSU). Activity throughout the year has been at a sustained high level with strong margins. In the UK we continued to have strong market share in our core services. We supported our clients to complete an increased offshore development programme whilst also meeting an increase in operator spending on production enhancement. Key projects included Shell Corrib, Talisman Tweedsmuir, Maersk Dumbarton, Venture Ensign and Nexen Buzzard. In Norway we provided subsea safety tools on numerous subsea field developments and we have also taken the leading market position on welltest activities through the PWS acquisition. We now have direct welltest contracts with Statoil, Hydro and most of the international oil companies. In the FSU we further developed critical mass in both Kazakhstan and Russia. We provided services on the Karachaganak and Kashagan developments in Kazakhstan, both of which have demanding technical and operational requirements. We have also provided welltesting services to Gazprom on the giant Schtokman field in the Barents Sea and mobilised for Wintershall in Siberia. These major projects were complemented by a growing number of smaller operations which we are now able to support on a call-off basis. West Africa The newly formed West Africa region has comprehensively established Expro's position of strength in the rapidly growing West African offshore markets. In Nigeria we now provide a broad range of Expro services. From the Regional business perspective we have a strong, locally staffed, welltest business. However, the infrastructure has also been used effectively to deliver subsea and production projects. In Angola we delivered significant growth in welltest activity for BP on their Block 18 and 31 activities and for Total on their broad range of appraisal and development activities. At the same time we supported Chevron on their Cabinda operations. We also provided project specific services across a number of other West African countries including various services for Petro SA in South Africa, ExxonMobil in Equatorial Guinea and CNR in the Ivory Coast. The West African business, with its large deepwater, subsea developments, has tremendous growth characteristics for Expro and we have firm plans for further facilities and organisational growth in line with our clients' long-term committed development plans. North Africa/Middle East Our North Africa / Middle East region is now material and we have critical mass in Algeria, Libya, Egypt and Saudi Arabia. In Algeria we have continued to support the development programmes of First Calgary Petroleum, BP and Repsol. In Libya we now have a developed client base and deliver welltest and cased hole support to Waha, Woodside and Repsol. In Egypt the business progressed dramatically. A high level of call-off, welltesting services were delivered with notable successes with Bapetco, VE-gas, Shell and Rashpetco. In Saudi Arabia there has been an exceptional demand for well testing services. We extended our contract commitment with Aramco and we added additional equipment and personnel to meet the growing demand. Plans are now being progressed to develop a substantial, complimentary cased hole business. Asia During the year our regional business in Asia reached a defining moment. We now have a critical mass of business across the breadth of Asia which is delivering a material margin contribution independent of the Global businesses. Australasia has performed very well with improved profitability across existing business and we delivered new activity in New Zealand with Shell Todd and Origin Energy. In both Indonesia and Malaysia we have critical mass welltest businesses and we provided services to a wide range of clients including Shell, Petronas Carigali, Carigali Hess in Malaysia and to BP on their high profile Tangu project. Meanwhile in Thailand we continued to provide volume wireline services to Chevron. Throughout the year we have also provided welltest and subsea services in India to Cairn Rava and ONGC but we have yet to establish a strong long-term position in this developing market. North America We continued to provide a range of well perforating, wireline intervention and subsea services to the Gulf of Mexico shelf and deepwater markets. Meanwhile we have provided a range of premium well perforating and clean-up services to the North America land market. The offshore market has been sustained but is still down on rig activity compared to pre-Hurricane Katrina. The onshore perforating and clean-up business has been very strong due to the production decline-curve characteristics of the US frac / horizontal wells. Our service portfolio of premium well perforating, clean-up and cased hole evaluation (downhole video) is well suited to this market. Latin America We now have a strong welltest business across the breadth of South America. We have delivered welltest services in Argentina, Bolivia, Venezuela and Mexico, however, the majority of the activity has been in Brazil. We provide a significant part of Petrobras' welltest and clean-up services and during the last quarter we have agreed a new contract to extend the supply of these services for a four-year period. On the back of this contract we are reviewing options to increase our scope of supply and further infrastructure investment. Global Businesses Subsea safety tools Our subsea business had an outstanding year. We delivered high levels of activity with our hydraulically actuated 7" subsea landing strings in the North Sea and the Gulf of Mexico. This was complemented by a number of high-revenue subsea exploration welltest activities. We also completed the build of our next generation electro-hydraulic (EH) 7" subsea landing strings for Chevron's Tahiti deepwater Gulf of Mexico project and Chevron's Agbami deepwater West Africa project. These EH operated systems, required for safe deepwater applications, have a much greater degree of technical sophistication than the direct hydraulic controlled systems and will generate substantially greater revenue. Production Solutions Our Production Solutions business delivered record revenues across the year. We had nine months of production on the ExxonMobil Chayvo project in Sakhalin Island and completed an extended welltest for Shell on the BS-4 project in Brazil. In addition to which we completed a number of successful equipment sales and the construction of the barge-mounted production facility for Chevron's Dibi project in Nigeria. Because of its discrete project nature, revenues from our Production Solutions business can vary considerably from year to year. Contract commitment for next year is less than the record levels achieved during this year and hence we have re-shaped the Production Solutions team to further enhance sales effectiveness. Tronic / Matre Our connectors and instrumentation business delivered further significant growth. The connectors business progressed in line with the growth in subsea wells, delivering a number of major subsea power connector systems. The power projects included systems for BP King, Kvaerner Oilfield Products on Statoil's Tyrihans project and Framo on Oilexco's Brenda project. We also began to see an increase in package sales across our full range of connectors and instrumentation products such as to Vetco on the Ettrick project. Assembly and delivery output has been increased during the year. Recognising the rapid growth in subsea well installations projected for the next few years we have now developed plans for new assembly facilities to support continued growth over the next five-year period. Acknowledgement The directors would like to take this opportunity to acknowledge the commitment, professionalism and enthusiasm of the Expro teams across all parts of the business. The integration of PWS as well as ongoing operational and business success is a credit to a great team effort. Financial Review Overview The year represented a landmark for Expro. Revenue, EPS and investment have all reached their highest level in the Group's history and the acquisition and integration of PWS represents a significant step in the development of the Group from both a financial and operational performance standpoint. Measuring performance Within our annual report reference is made to our non-statutory measures of underlying operating profit and underlying EPS. The underlying measures exclude exceptional items which management has identified and disclosed as material one-off or unusual items together with intangible asset amortisation that arises on business combinations. This is consistent with the way that financial performance is measured by management and we believe assists in providing a meaningful analysis of the trading results of the Group. Trading performance Revenues of Â£518.8m were up by Â£218.1m, with the increase of 73% generated by a combination of strong organic growth across both the Regional and Global business segments and the inclusion of nine months trading from the acquisition of PWS. This significant level of growth was achieved despite the weaker dollar, with the rate in the year averaging at 1.88 versus a prior year comparison of 1.79. Underlying operating profit more than doubled to Â£72.5m, in part due to the acquisitive and organic growth and also through a continuing improvement in margin over the previous year from pricing and the Group's operating leverage. While Expro continues to benefit from the buoyant market for oil field services, these superior results are also due in part to our determination to provide our customers with services which are excellent, innovative and safe. Investment Research and development Expro continues to fund record levels of development, primarily against the on-going development of the AX-S(TM)rigless intervention system and next year we expect to further increase spend in this area as the technology develops. Capital expenditure Significant capital expenditure in the period includes the amounts incurred on the Tahiti landing string and the Dibi EPF, with both projects generating cash inflows in the following year. Taxation The tax charge of Â£20.8m represents an effective rate of 37.9% consistent with the previous year's rate. Expro's operations have a wide geographic coverage, resulting in differing taxation regimes depending on the location in which those activities take place. The effective rate reflects this broad geographic spread of profits, unrecoverable losses in certain territories, a variety of imputed and higher rate overseas tax regimes and non-deductible items. Tax continues to be a key priority for the Group, particularly the careful management of the long-term underlying tax rate. Closure of tax positions throughout the Group's operating territories also remains a priority. Earnings per share (EPS) Underlying EPS, which has been defined above, increased by 52% to 37.8p. Continuing EPS increased by 44% to 34.1p. In calculating these increases on the prior year, the previously published EPS measures have been restated as required under IAS 33, allowing for the impact of the discounted rights issue that took place on 26 July 2006. Further details of the rights issue are included below and the full calculation of EPS is included under note 6. Expro also publishes a headline EPS measure which includes the intangible asset amortisation that arises on business combinations, but excludes items which management identifies and discloses as material one-off or unusual items. Headline EPS increased from 24.2p to 34.1p, an increase of 41%, with the comparator again being adjusted for the discounted rights issue. Free cash flow Despite record levels of capital investment, Expro has again achieved its objective of delivering improved cash flow. 2007 2006 Â£m Â£m Net cash from operating activities 67.9 58.4 Interest received 1.9 0.6 Proceeds on disposal of property, plant and equipment 5.2 0.8 Purchases of property, plant and equipment (56.2) (49.3) Purchases of intangible assets (0.2) (0.1) Free cash flow 18.6 10.4 Dividends paid (9.4) (8.0) Dividend cover 199% 130% Dividends At the time of flotation, the Board established a dividend policy of covering the dividend at 2.5 times earnings, and an additional target was set in 2003, of free cash cover of 2 times dividend. The Board remain committed to this policy as a means of balancing both short and longer term shareholder interests. The Board is recommending an increase in the final dividend to 8.0p (2006: 7.1p) bringing the full year dividend to 11.8 pence. This increase in dividend balances the Board's confidence in the sustainability of the achievements to-date whilst recognising the continuing need to reinvest in the business. Acquisitions and disposals This year featured a number of acquisitions and disposals, reflecting Group strategy, the most significant of which was the acquisition of PWS for Â£366.0m ($674.5m) on a cash free debt free basis. The cash outflow included within the cash flow statement reflects the fact that the opening balance sheet of PWS included net debt of Â£131.1m ($237.7m), and that part of the consideration paid was via the issue of shares valued at Â£61.6m ($115.0m). The effective date of the acquisition was 3 July 2006 which represented the point at which Expro shareholders gave approval for the acquisition and Expro management gained control of the operations and finances of PWS. PWS offered services at locations which complemented Expro's existing business and this synergetic match greatly simplified the task of fully integrating PWS into the Group. The extent of the integration has meant that it has not been practicable to calculate the post-acquisition operating profit that arose from the acquisition with sufficient accuracy for inclusion in the financial statements. Goodwill of Â£175.5m ($321.5m) and identifiable intangible assets of Â£102.2m ($185.3m) arose on the acquisition, resulting in an annualised charge of $13.2m. The majority of the intangible assets relate to the values placed on customer contracts and relationships which must be valued in accordance with IFRS 3. Expro's pre-existing contracts and customer relationships are not valued and hence do not feature on the Group's balance sheet. The intangible amortisation charge arising on acquisition is therefore added back in order to arrive at underlying performance which management believes gives a more consistent and comparable profit and earnings measure. Further information on the acquisition is included under note 9. Towards the end of the year, with an effective date of 28 February 2007, Expro completed the disposal of its Canadian Wireline and TCP business to Enseco Energy Services Corporation. The disposal did not represent an accounting discontinued operation as Expro continues to offer more technologically enhanced products and services in Canada, (including its downhole tractor services, Excape completion services), and continues to provide Wireline and TCP in more operationally challenging market segments. The realised sale consideration was Â£3.7m (CAD$8.6m, which comprised cash received of Â£1.8m (CAD$4.2m), a deferred working capital element of Â£0.6m (CAD$1.4m) and an unsecured convertible debenture valued at Â£1.3m (CAD$3.0m). The nominal value of the transaction was CAD$14.0m comprising of CAD$4.2m cash and an unsecured convertible debenture with a nominal value of CAD$9.8m). Further information on the disposal is included under note 8. Share issue and debt refinancing In order to effect the acquisition of PWS, as well as enabling the Group to achieve a more balanced capital structure for the year ahead, Expro issued new share capital, in part via a rights issue, as well as re-financing its long-term borrowing facility. After net issue costs of Â£3m, the 5:14 rights issue on 26 July 2006 raised Â£127.6m and resulted in 26,170,121 shares being issued at Â£5 per share. The premium arising on this share issue was credited against the merger reserve and subsequently credited to retained earnings. The transfer to merger reserve rather than share premium account was made by taking advantage of merger relief under Section 131 of the Companies Act 1985. This relief was applicable as a result of the issue of new shares in the Group for shares in a so-called "cash box" subsidiary. In addition, on 31 July 2006 a further 9,155,961 ordinary shares of 10 pence each were issued to First Reserve as part consideration for the acquisition of PWS. These shares were issued at a price of Â£6.73 per share. The premium arising on this share issue was credited to other reserves. The re-financing exercise took the form of a new $550.0m borrowing facility repayable over 5 years. An initial amount of Â£271.5m was drawn which in part was used to settle existing bank loans of Â£60.9m as well as settling Â£135.1m of debt within the opening PWS balance sheet. Since the initial draw down, Expro has repaid Â£53.0m of debt, and after the effects of foreign exchange the total bank debt outstanding at the year-end is Â£203.3m. The interest payable on this facility is dependent on LIBOR plus a margin. At 31 March 2007 the total amount drawn under the Group's main facility was $397.0m giving significant headroom of $153.0m. Financial risk management Expro has significant overseas operations whose principal transactional and functional currencies are US dollars. The Group has US dollar denominated revenues of approximately 58% (2006: 47%), sterling denominated revenues of approximately 26% (2006: 38%) and other currency revenues of 16% (2006: 15%). Mitigating the Group's exposure to currency risk continues to be a key priority. In order to minimise this exposure, the Group has a policy of natural hedging and this partially mitigates the impact of currency movements in terms of profits, cash and net assets. In addition, the Group also has foreign currency loans, principally US Dollars, which mitigate its exposure to foreign currency denominated net assets. Pensions The Group's pension scheme deficit decreased from Â£19.3m to Â£17.5m with the defined benefit section closing to members on 1 October 1999. The last actuarial valuation to be carried out for funding purposes was on 6 April 2005, and the actuarial valuation deficit of Â£6.9m was some Â£17.0m lower than the equivalent IAS 19 valuation. CONSOLIDATED INCOME STATEMENT Year ended 31 March 2007 2007 2007 2007 2006 2006 2006 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Underlying Exceptional Total Underlying Exceptional Total performance items and performance items and amortisation (a) amortisation (a) Continuing operations Revenue 518,820 - 518,820 300,727 - 300,727 Cost of sales (427,798) (5,733) (433,531) (254,516) (735) (255,251) ________ ________ ________ ________ ________ ________ Gross profit 91,022 (5,733) 85,289 46,211 (735) 45,476 Administration expenses (18,480) - (18,480) (11,360) - (11,360) ________ ________ ________ ________ ________ ________ Operating profit 72,542 (5,733) 66,809 34,851 (735) 34,116 Post tax profit from associates Share of results of associates 102 - 102 - - - ________ ________ ________ ________ ________ ________ Operating profit including associates 72,644 (5,733) 66,911 34,851 (735) 34,116 Investment income 6,327 - 6,327 3,855 - 3,855 Finance costs (18,133) - (18,133) (8,409) - (8,409) ________ ________ ________ ________ ________ ________ Net finance costs (11,806) - (11,806) (4,554) - (4,554) Profit before tax 60,838 (5,733) 55,105 30,297 (735) 29,562 Tax (22,831) 1,985 (20,846) (11,430) 226 (11,204) ________ ________ ________ ________ ________ ________ Profit after tax 38,007 (3,748) 34,259 18,867 (509) 18,358 Discontinued operations Post tax profit from joint ventures - - - 441 - 441 Post tax gain from disposal of joint ventures - - - - 9,661 9,661 ________ ________ ________ ________ ________ ________ Profit for the year 38,007 (3,748) 34,259 19,308 9,152 28,460 ________ ________ ________ ________ ________ ________ Attributable to: Equity holders of the parent 37,875 (3,748) 34,127 19,259 9,152 28,411 Minority interest 132 - 132 49 - 49 ________ ________ ________ ________ ________ ________ 38,007 (3,748) 34,259 19,308 9,152 28,460 ________ ________ ________ ________ ________ ________ Earnings per share From continuing and discontinued operations Basic 37.8p 34.1p 24.9p 36.6p ________ ________ ________ ________ Diluted 37.3p 33.6p 24.5p 36.1p ________ ________ ________ ________ From continuing operations Basic 34.1p 23.6p ________ ________ Diluted 33.6p 23.3p ________ ________ a Underlying performance is based on continuing and discontinued operations and is before exceptional items and intangible asset amortisation that arises on business combinations. Exceptional items are classified as those which management has identified and disclosed as material one-off or unusual items. In the prior year, exceptional items comprise gains on disposal of businesses. CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Year ended 31 March 2007 2007 2006 Â£'000 Â£'000 Loss on cash flow hedges (3,563) (2,951) Exchange differences on translation of foreign operations (16,931) 5,672 Actuarial gains on defined benefit pension schemes 2,165 4,451 Tax on items taken directly to equity (732) 567 ________ ________ Net (expense) / income recognised directly in equity (19,061) 7,739 Transfers Transferred to profit and loss on disposal of joint venture foreign operations - (365) Transferred to profit and loss on disposal of subsidiaries (344) - Transferred to profit and loss on maturity of cash flow hedges 273 1,815 Profit for the year 34,259 28,460 ________ ________ Total recognised income and expense for the year 15,127 37,649 ________ ________ Attributable to: Equity holders of the parent 14,995 37,600 Minority interest 132 49 ________ ________ 15,127 37,649 ________ ________ CONSOLIDATED BALANCE SHEET At 31 March 2007 2007 2006 Â£'000 Â£'000 Non-current assets Goodwill 180,438 20,511 Intangible assets 99,458 9,221 Property, plant and equipment 194,307 95,423 Investments 1,297 - Interests in associates 278 - Deferred tax assets 7,536 6,365 ________ ________ 483,314 131,520 Current assets Inventories 31,685 19,237 Trade and other receivables 161,646 95,577 Cash 32,872 45,642 ________ ________ 226,203 160,456 ________ ________ Total assets 709,517 291,976 ________ ________ Current liabilities Bank overdraft (2,142) - Bank loan (294) - Trade and other payables (108,697) (73,159) Current tax liabilities (28,427) (12,549) Finance leases (1,607) (768) Derivative financial instruments - (295) Provisions (55) (188) ________ ________ (141,222) (86,959) Non-current liabilities Bank loans (200,911) (62,699) Retirement benefit obligation (17,490) (19,348) Deferred tax liabilities (31,573) (2,428) Finance leases (8,088) (7,972) Derivative financial instruments - (138) Provisions (848) (2,882) ________ ________ (258,910) (95,467) ________ ________ Total liabilities (400,132) (182,426) ________ ________ Net assets 309,385 109,550 ________ ________ Equity Share capital 10,958 7,328 Share premium account 3,796 570 Other reserve 60,677 - Hedging and translation reserve (17,494) 3,099 Own shares - (352) Equity reserve 1,544 1,032 Retained earnings 249,724 97,841 ________ ________ Equity attributable to equity holders of the parent 309,205 109,518 Minority interest 180 32 ________ ________ Total equity 309,385 109,550 ________ ________ The financial statements were approved by the Board of Directors and authorised for issue on 30 May 2007. CONSOLIDATED CASHFLOW STATEMENT Year ended 31 March 2007 2007 2006 Â£'000 Â£'000 Operating profit 66,809 34,116 Adjustments for: Depreciation of property, plant and equipment 39,545 30,445 (Gain)/loss on disposal of property, plant and equipment (2,398) 1,771 Amortisation of intangible assets 6,679 1,469 Impairments and write back of negative goodwill 1,216 718 Share-based payments 910 615 Retirement benefit (credit) / charge (471) 251 ________ ________ Operating cash flows before movements in working capital 112,290 69,385 Increase in inventories (2,587) (2,611) Increase in receivables (25,689) (21,263) Increase in payables 11,840 25,589 ________ ________ Cash generated by operations 95,854 71,100 Income taxes paid (15,580) (9,209) Interest paid (12,341) (3,534) ________ ________ Net cash from operating activities 67,933 58,357 ________ ________ Investing activities Interest received 1,916 614 Purchases of property, plant and equipment (56,222) (49,288) Proceeds on disposal of property, plant and equipment 5,198 846 Purchases of intangible assets (235) (100) Net cash outflow on acquisition of subsidiaries (175,000) (6,075) Investment in associates (185) - Proceeds on disposal of subsidiary 1,718 - Payments on disposal of joint ventures (996) - Proceeds on disposal of joint ventures - 15,319 Proceeds on disposal of joint ventures in prior year - 4,797 Payment of deferred consideration (115) (334) ________ ________ Net cash used in investing activities (223,921) (34,221) ________ ________ Financing activities Issue of share capital 130,915 25,555 Proceeds on the exercise of options over own shares 629 - Dividends paid (9,355) (7,956) Initial drawing of loans under new facility 271,539 - Repayment of loan under old facility (60,913) - Repayment of loan assumed on acquisition (135,140) - Repayment of loan under new facility (52,983) - Repayments of finance leases (1,980) (1,305) ________ ________ Net cash from financing activities 142,712 16,294 ________ ________ Net (decrease)/increase in cash (13,276) 40,430 Cash and cash equivalents at beginning of year 45,642 5,009 Effect of foreign exchange rate changes (1,636) 203 ________ ________ Cash and cash equivalents at end of year 30,730 45,642 ________ ________ Notes to the Consolidated Accounts Year ended 31 March 2007 1. General information Expro International Group PLC ("the Group") is a company incorporated in England and Wales under the Companies Act 1985 and is domiciled in the United Kingdom. These financial statements are presented in pounds sterling because that is the currency of the parent company which is domiciled in the United Kingdom. The financial information set out above does not constitute the Company's statutory accounts within the meaning of Section 240 of the Companies Act 1985. The statutory accounts of the Company for the year ended 31 March 2006 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statements under Section 237(2) or (3) of the Companies Act 1985. The auditors' report for the year ended 31 March 2007 is unqualified and does not contain any statements under Section 237(2) or (3) of the Companies Act 1985. These accounts have been prepared in accordance with the accounting policies set out below. The statutory accounts for the year ended 31 March 2007 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement, and will be delivered to the Registrar of Companies following the Company's annual general meeting. 2. Significant accounting policies Basis of preparation Whilst the preliminary announcement has been prepared in accordance with International Financial Reporting Standards (IFRS) and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The Group will publish full financial statements that comply with IFRS in May 2007. The financial statements have been prepared on the historic cost basis, except for the revaluation of certain financial instruments. The accounting policies applied are consistent with those adopted and disclosed in the Group's annual financial statements for the year ended 31 March 2006, with the exception of the following significant accounting policies that differ to those previously published. Investments in associates An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting except when classified as held for sale. Investments in associates are carried in the balance sheet at cost as adjusted by post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in the value of individual investments. Losses of the associates in excess of the Group's interest in those associates are not recognised. Any excess of the cost of acquisition over the Group's share of the fair values of the identifiable net assets of the associate at the date of acquisition is recognised as goodwill. Any deficiency of the cost of acquisition below the Group's share of the fair values of the identifiable net assets of the associate at the date of acquisition (i.e. discount on acquisition) is credited in profit or loss in the period of acquisition. Where a Group company transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group's interest in the relevant associate. Exceptional items and change of presentation In the current year, the Group amended the format of the income statement in order to improve the information provided to the users of the financial statements. As permitted by IAS 1, Presentation of Financial Statements, the Group has elected to classify certain items as exceptional and present them separately on the face of the Income Statement. Exceptional items are classified as those which management have identified and disclosed as material one-off or unusual items and which are not considered to be part of the core operations of the Group. In addition, the Group has separately disclosed intangible asset amortisation that arises on business combinations, which is added back to arrive at underlying performance. Management believes this gives a useful additional measure of profit and earnings and the Group focuses on underlying performance in order to compare performance year on year. 3. Business and geographical segments For management purposes, the Group is organised into two operating divisions - Regional businesses and Global businesses. These divisions are the basis on which the Group reports its primary segment information. Principal activities are as follows Regional businesses provide services which are primarily driven by customer operating expenditure. Customer requirements are often for a short period of time, and delivery is made through, and supported by, the Group's locally established infrastructure. Global businesses provide products and services which are primarily driven by customer capital expenditure. These products and services, which are often based upon bespoke engineering or technology based solutions, are delivered remotely over a longer term period of time and are typically for offshore projects. Segment information about these businesses is presented below: Regional Global Total Regional Global Total businesses businesses 2007 businesses businesses 2006 2007 2007 Â£'000 2006 2006 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Continuing operations Segment revenue External revenue 321,944 196,876 518,820 169,482 131,245 300,727 ________ ________ ________ ________ ________ ________ Segment result Underlying gross profit (a)48,983 42,039 91,022 19,631 26,580 46,211 Intangible asset amortisation - business combinations (5,129) (604) (5,733) (262) (473) (735) ________ ________ ________ ________ ________ ________ Segment gross profit 43,854 41,435 85,289 19,369 26,107 45,476 Unallocated corporate expenses (18,480) (11,360) ________ ________ Operating profit 66,809 34,116 ________ ________ In the prior year, joint ventures, which are accounted for under the equity method, are all attributable to the Global businesses segment. a Underlying gross profit is before exceptional items and intangible asset amortisation that arises on business combinations. Exceptional items are classified as those which management has identified and disclosed as material one-off or unusual items. In the prior year, exceptional items comprise gains on disposal of businesses. Regional Global Unallocated Total Regional Global Unallocated Total businesses businesses 2007 2007 businesses businesses 2006 2006 2007 2007 Â£'000 Â£'000 2006 2006 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Other information Non-current asset additions 323,599 107,924 5,572 437,095 20,032 35,497 2,655 58,184 Depreciation and amortisation 23,751 20,225 2,248 46,224 8,225 20,201 3,488 31,914 Impairment losses 498 - - 498 718 - - 718 Balance sheet Assets Segment asset 488,707 170,770 50,040 709,517 137,600 98,260 56,116 291,976 ________ ________ ________ ________ ________ ________ ________ ________ Total assets 488,707 170,770 50,040 709,517 137,600 98,260 56,116 291,976 ________ ________ ________ ________ ________ ________ ________ ________ Liabilities Segment liabilities (59,853) (31,052) (309,227) (400,132) (46,559) (31,613) (104,254) (182,426) ________ ________ ________ ________ ________ ________ ________ ________ Total net assets 428,854 139,718 (259,187) 309,385 91,041 66,647 (48,138) 109,550 ________ ________ ________ ________ ________ ________ ________ ________ Unallocated segment assets and liabilities primarily comprise the Group's cash, borrowing facilities, corporation tax liabilities and deferred tax assets and liabilities. Geographical segments The Group's operations are analysed between Europe and FSU (a), West Africa, North Africa Middle East, Asia (b), North America (Land), North America (GOM)(c) and Latin America. The following table provides an analysis of the Group's sales by geographical market: 2007 2006 Â£'000 Â£'000 Europe and FSU (a) 189,024 130,792 West Africa 80,629 45,064 North Africa and Middle East 46,593 17,206 Asia (b) 72,583 59,179 North America - Land 62,081 24,009 North America - GOM (c) 34,809 22,945 Latin America 33,101 1,532 ________ ________ 518,820 300,727 ________ ________ The following is an analysis of the carrying amount of segment assets, and additions to goodwill, property, plant and equipment, and intangible assets, analysed by the geographical area in which the assets are located: Carrying value of assets Non-current asset additions 2007 2006 2007 2006 Â£'000 Â£'000 Â£'000 Â£'000 Europe and FSU (a) 173,008 95,259 77,809 9,586 West Africa 98,741 40,267 62,816 13,630 North Africa and Middle East 62,414 15,369 56,234 5,202 Asia (b) 54,500 33,775 29,893 9,291 North America - Land 135,723 25,213 91,972 8,777 North America - GOM (c) 85,823 24,360 74,270 8,480 Latin America 49,268 1,617 42,180 563 Unallocated 50,040 56,116 1,921 2,655 ________ ________ ________ ________ 709,517 291,976 437,095 58,184 ________ ________ ________ ________ a Former Soviet Union. b Sakhalin Island is included within Asia for segmental reporting purposes c Gulf of Mexico 4. Tax 2007 2006 Â£'000 Â£'000 Current tax: UK corporation tax 2,463 1,638 Foreign tax 20,837 11,821 ________ ________ 23,300 13,459 ________ ________ Deferred tax: Current year (1,376) (1,739) Prior year (1,078) (516) ________ ________ (2,454) (2,255) ________ ________ 20,846 11,204 ________ ________ UK corporation tax is calculated at 30% (2006: 30%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The charge for the year can be reconciled to the profit per the income statement as follows: 2007 2006 Â£'000 Â£'000 Profit before tax 55,105 29,562 Less: Post tax profit from associates (102) - ________ ________ 55,003 29,562 Tax at the UK corporation tax rate of 30% (2006: 30%) 16,501 8,869 Tax effect of expenses that are not deductible in determining taxable profit 995 728 Tax effect of utilisation of tax losses not previously recognised - (1,677) Tax effect of non-utilisation of tax losses 3,201 2,274 Effect of different tax rates of subsidiaries operating in other jurisdictions 809 1,341 Adjustments to prior year provisions (1,018) (290) Other 358 (41) ________ ________ Tax expense for the year 20,846 11,204 ________ ________ 5. Dividends 2007 2006 Â£'000 Â£'000 Amounts recognised as distributions to equity holders in the year: Final dividend for the year ended 31 March 2006 of 7.1p per share (31 March 2005: 7.1p per share) 5,192 5,182 Interim dividend for the year ended 31 March 2007 of 3.8p per share (31 March 2006: 3.8p per share) 4,163 2,774 ________ ________ 9,355 7,956 ________ ________ Proposed final dividend for the year ended 31 March 2007 of 8.0p per share (31 March 2006: 7.1p per share) 8,766 5,203 ________ ________ The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. 6. Earnings per share The calculation of the basic and diluted earnings per share is based on the following data: 2007 2006 Â£'000 Â£'000 Earnings Profit for the year 34,259 28,460 Less minority interest (132) (49) ________ ________ Earnings attributable to equity holders of the parent - continuing and discontinued (a) 34,127 28,411 Less post tax gain from disposal of joint venture - (9,661) Less post tax profit from discontinued joint venture operations - (441) ________ ________ Earnings for the purpose of basic earnings per share - continuing (b) 34,127 18,309 Adjustments Post tax profit from discontinued joint venture operations - 441 ________ ________ Earnings for the purpose of headline earnings per share (c) 34,127 18,750 Amortisation of intangible assets arising from acquisitions 5,733 735 Less tax on the above (1,985) (226) ________ ________ Earnings for the purpose of underlying earning per share (d) 37,875 19,259 ________ ________ 2007 2006 Number Number Number of shares Weighted average number of ordinary shares for the purposes of basic earnings per share 100,226,082 77,480,885 Effect of dilutive potential ordinary shares: Share options 1,442,331 1,252,641 _________ _________ Weighted average number of ordinary shares for the purposes of diluted earnings per share 101,668,413 78,733,526 _________ _________ Earnings per share From continuing and discontinued operations (a) Basic 34.1p 36.6p ________ ________ Diluted 33.6p 36.1p ________ ________ From continuing operations (b) Basic 34.1p 23.6p ________ ________ Diluted 33.6p 23.3p ________ ________ From discontinued operations Basic - 13.0p ________ ________ Diluted - 12.8p ________ ________ Headline (c) Basic 34.1p 24.2p ________ ________ Diluted 33.6p 23.8p ________ ________ Underlying (d) Basic 37.8p 24.9p ________ ________ Diluted 37.3p 24.5p ________ ________ The denominator for the purposes of calculating both basic and diluted earnings per share has been adjusted to reflect the bonus element of the rights issue. Underlying earnings per share is based on continuing and discontinued operations and is before exceptional items and intangible asset amortisation that arises on business combinations. Exceptional items are classified as those which management has identified and disclosed as material one-off or unusual items. Headline earnings per share is based on continuing and discontinued operations and is before exceptional items only. Previously published headline earnings per share were on a continuing basis. 7. Statement of changes in equity Share Share Merger Other Hedging Translation Own Equity Retained Minority capital premium reserve Reserve reserve reserve shares reserve earnings interest Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 At 1 April 2005 6,646 929 - - - (1,963) (407) 417 47,535 33 53,190 Adoption of IAS 32 and 39 - - - - 826 - - - (279) - 547 Recognised income and expense - - - - (1,071) 5,307 - - 33,364 49 37,649 Dividends paid - - - - - - - - (7,956) - (7,956) Issue of share capital for cash 665 (947) 25,232 - - - - - - - 24,950 Issue of share capital on exercise of share options 17 588 - - - - - - - - 605 Share-based payments - - - - - - - 615 - - 615 Minority interest on acquisition - - - - - - - - - 33 33 Acquisition of minority interest - - - - - - - - - (83) (83) Transfers - - (25,232) - - - 55 - 25,177 - - _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ At 1 April 2006 7,328 570 - - (245) 3,344 (352) 1,032 97,841 32 109,550 Recognised income and expense - - - - (3,318) (17,275) - - 35,588 132 15,127 Dividend paid - - - - - - - - (9,355) - (9,355) Issue of share capital for cash 2,616 - 124,975 - - - - - - - 127,591 Issue of share capital on acquisition of subsidiary 916 - - 60,677 - - - - - - 61,593 Issue of share capital on exercise of share options 98 3,226 - - - - - - - - 3,324 Share-based payments - - - - - - - 910 629 - 1,539 Minority interest on acquisition - - - - - - - - - 16 16 Transfers - - (124,975) - - - 352 (398) 125,021 - - _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ At 31 March 2007 10,958 3,796 - 60,677 (3,563) (13,931) - 1,544 249,724 180 309,385 _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ 8. Disposal of subsidiary On 28 February 2007 the Group disposed of its interest in Expro Group Canada Inc to Enseco Energy Services Corporation. The net assets of Expro Group Canada Inc at the date of disposal were as follows: 28 February 2007 Â£'000 Intangible assets 197 Property, plant and equipment 1,057 Inventories 441 Trade and other receivables 1,134 Bank balances and cash 69 Current tax liability (29) Trade and other payables (348) Attributable goodwill 1,416 ________ 3,937 ________ Proceeds 3,711 Net assets on disposal (3,937) Recycled foreign exchange 344 Costs of disposal (118) ________ Gain/(loss) on disposal - ________ Satisfied by: Cash consideration 1,805 Deferred consideration 609 Unsecured convertible debenture 1,297 ________ 3,711 ________ Net cash inflow arising on disposal: Cash consideration 1,805 Cash and cash equivalents disposed of (69) Directly attributable costs (paid) (18) ________ 1,718 ________ The disposal of Expro's Canadian Wireline and TCP business did not represent a discontinued operation as Expro continues to operate within Canada, including its downhole tractor services and Excape completion services, as well as supplying Wireline and TCP services across the globe. The unsecured convertible debenture has been recorded at fair value. 9. Acquisition of subsidiary The Group acquired Power Well Services "PWS" on 3 July 2006. PWS is a leading supplier of well testing and other flow management products and services to the global oil and gas industry. The acquisition comprised a 100% interest in Power Well Services Inc (registered in the USA) and a 100% interest in Power Well Services Holding LP (registered in the Cayman Islands), and their respective subsidiaries. This transaction has been accounted for by the purchase method of accounting. All assets and liabilities were recognised at their respective fair values. The residual excess over net assets acquired is recognised as goodwill in the financial statements. Provisional Adjustment to Provisional fair value reflect Provisional book value adjustments US GAAP to IFRS fair value Â£'000 Â£'000 Â£'000 Intangible assets 15,875 86,142 2,407 104,424 Property, plant and equipment 100,547 (2,308) (2,407) 95,832 Inventories 13,858 (121) - 13,737 Trade and other receivables 54,964 (2,680) - 52,284 Cash 6,540 - - 6,540 Bank overdraft (2,703) - - (2,703) Trade and other payables (25,568) (831) - (26,399) Current tax liabilities (10,531) - - (10,531) Finance leases (381) - - (381) Bank loans (134,974) - - (134,974) Retirement benefit obligation (126) - (774) (900) Deferred tax liabilities (2,099) (30,148) 252 (31,995) Minority interest (17) - - (17) ________ ________ ________ ________ 15,385 50,054 (522) 64,917 Goodwill 175,513 ________ Total consideration 240,430 ________ Satisfied by: Cash 168,757 Shares 61,593 Directly attributable costs 10,080 ________ 240,430 ________ Net cash outflow arising on acquisition: Cash consideration 168,757 Directly attributable costs 10,080 Cash acquired less bank overdraft (3,837) ________ 175,000 ________ The values set out above are provisional pending finalisation of the fair values attributable, which will be completed by 2 July 2007. Shares issued were valued at market price at the date of acquisition. The goodwill arises through the strengthening of the Group's geographical footprint, product pull-through opportunities with new clients and the value of the acquired workforce. The revenue and operating profit of PWS for the year has not been disclosed as integration of the business has made this impracticable. If the acquisition had been completed on 1 April 2006, total Group revenue for the year would have been Â£561.8m, and operating profit for the year would have been Â£70.4m, after deducting intangible asset amortisation arising on consolidation of Â£6.9m. This information is provided by RNS The company news service from the London Stock Exchange

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