Interim Results
Wood Group (John) PLC
07 September 2004
John Wood Group PLC
Interim results for the six months ended 30 June 2004
Major North Sea contract renewal
Equatorial Guinea engineering contract award
John Wood Group PLC ('Wood Group') is a market leader in the provision of
engineering design, production support and industrial gas turbine services to
customers in the oil & gas and power generation industries around the world.
Operating in 34 countries, Wood Group's businesses employ over 13,000 people.
Financial Highlights
• Revenues of $1,040.8m (2003: $947.0m) up 9.9%
• EBITA 1 pre exceptional charges of $53.6m (2003: $73.0m) down 26.6%
• Profit before tax of $11.7m ($58.0m) after exceptional items of $24.9m
(2003: Nil)
• Adjusted diluted earnings per ordinary share 2 of 6.0 cents (2003: 8.4
cents) down 28.6%
• Investment and capital spend of $83.8m (2003: $65.2m) up 28.5%
• Interim dividend of 1.2 cents (2003: 1.1 cents) up 9.1%
Operating Highlights
• Performance and outlook in line with July trading update
• Well Support performing strongly - maintained significant US position
and making good progress internationally
• Within Engineering & Production Facilities:
• Production Facilities performing well - maintained strong North Sea
position including the re-award of major BP contract (announced today, see
separate press release for further information), growing our activities in
West Africa and focusing on developments in Russia, Mexico and North Africa
• Engineering impacted by continuing low level of deepwater contract
awards in the market. Maintaining market share - Tahiti, Constitution, Atwater
Valley, plus important Equatorial Guinea Elon offshore development engineering
award from Amerada Hess (announced today, see separate press release for
further information). Focus on broadening service provision & extending
international reach
• Gas Turbine Services continuing to be impacted by difficulties in US
power:
• Management action to reduce costs and improve efficiency well under way
• Increased focus on re-engineering of heavy industrial turbine (HIT)
parts, higher technology HIT engines
• Developing Eastern Hemisphere markets.
Commenting on the results, Sir Ian Wood, Chairman & Chief Executive, Wood Group,
said:
'Decisive management action, our robust development plans and our positioning in
fundamentally strong markets, give the Board confidence that we will resume
acceptable growth in 2005.'
Information:
Wood Group
Sir Ian Wood Chairman and Chief Executive 01224 851 000
Allister Langlands Deputy Chief Executive
Alan Semple Finance Director
Nick Gilman Group IR Manager
Carolyn Smith Group Corporate Communications Manager
Brunswick
Patrick Handley/ Nina Coad 020 7404 5959
Interim Statement - six months ended 30 June 2004
Performance and outlook are in line with the Board's July trading update.
• Revenues of $1,040.8m (2003: $947.0m) up 9.9%
• EBITA 1 pre exceptional charges of $53.6m (2003: $73.0m) down 26.6%
• Profit before tax of $11.7m (2003: $58.0m) after exceptional items of
$24.9m (2003: Nil)
• Adjusted diluted earnings per ordinary share 2 of 6.0 cents (2003: 8.4
cents) down 28.6%
• Investment and capital spend of $83.8m (2003: $65.2m) up 28.5%
• Interim dividend of 1.2 cents (2003: 1.1 cents) up 9.1%
Well Support and Production Facilities have performed well in the period, but,
as previously indicated, the continuing low level of deepwater engineering
contract awards in the market and the continuing difficulties in the US power
market have impacted our overall performance. Decisive management action in both
areas is well under way and is outlined in this Statement.
In the six months to June 2004, revenues increased to $1,040.8m (2003: $947.0m),
and EBITA pre exceptional charges decreased to $53.6m (2003: $73.0m). During the
period we invested $83.8m (2003: $65.2m), including the acquisitions of
Deepwater Specialists (DSI) and Z.TEC, and the purchase of a further tranche of
the outstanding Mustang minority shareholding. We also made a $14.9m (2003:
$1.2m) investment in our own shares to hedge against the future exercise of
share options. Following this total investment, gearing 3 as at 30 June 2004 was
55%, compared to 42% as at 30 June 2003 and interest cover 4 was 6.0 times
(2003: 10.1 times).
Reflecting confidence in our long-term strategy, we have declared an increase in
the interim dividend to 1.2 cents per share (2003: 1.1 cents per share) which
will be payable to shareholders on the register on 24 September 2004 and will be
paid on 14 October 2004.
Engineering & Production Facilities
Revenues increased to $542.3m (2003: $523.0m), but EBITA fell to $33.5m (2003:
$47.8m) and the margin was 6.2% (2003: 9.1%). This reflects a fall in higher
margin engineering revenues, offset to some extent by growth in production
facilities.
In our engineering activities, the level of deepwater contract awards in the
market continued to be low. This has reduced our higher margin activity levels
and contributed to lower manpower utilisation levels, both of which have
impacted profitability. We have maintained our strong market share in offshore
developments with contract awards for Kerr McGee's Constitution, ChevronTexaco's
Tahiti, Gulfterra's Atwater Valley and Amerada Hess' Elon developments.
We are growing our presence in midstream engineering where we have developed
niche IPR 5 in the LNG 5 market, and in downstream engineering where we are
applying our clean fuel know-how and expertise. We also plan to open an
engineering office in London to assist in the growth of our strong engineering
franchise into Europe, Africa, the Middle East and Asia Pacific.
In July, we acquired Multiphase Solutions (MSI), a provider of engineering and
consulting services and software applications for use in the design, operation
and optimisation of oil & gas pipelines and production facilities. This will
considerably strengthen our subsea engineering and pipeline business.
Production Facilities continues to make good progress. Programmes to enhance the
integrity of offshore platforms to prolong asset life, together with the support
requirements of the growing number of newcomers, are contributing to a good
North Sea market. We were pleased to be re-awarded our engineering,
modifications and maintenance contract for BP's North Sea assets and we continue
to work with Shell, Talisman, Total, Apache and a number of other important
North Sea clients.
In April, we acquired Deepwater Specialists Inc (DSI), a provider of facilities
commissioning services and start-up support to the deepwater industry. DSI is an
excellent fit between our activities in the design and project management of
deepwater facilities and our operations & maintenance capabilities. DSI has
performed well since acquisition and made progress in expanding its business
with a recent contract win in West Africa.
Production Facilities in the Americas has made steady progress through the first
half and our contracts supporting Marathon in West Africa and Shell in Brunei
are progressing well.
We are continuing to invest in developing new international markets, with a
focus on the expanding markets in Russia, the Caspian, Mexico and North and West
Africa.
Well Support
Revenues increased to $238.5m (2003: $191.0m), EBITA increased to $19.8m (2003:
$13.4m) and margin increased to 8.3% (2003: 7.0%). Against a favourable market
backdrop, all three of our Well Support businesses - Electric Submersible Pumps
(ESP), Pressure Control and Logging Services - have achieved good profits growth
in the first half and laid the basis for continuing progress.
ESP maintained its strong North American position while stepping up its
international marketing efforts. Good progress is being made in the Russian
market which is the largest single market for electric submersible pumps in the
world. We are also making good progress in South America and the Middle East.
Pressure Control maintained its very high US market share and is making progress
in growing the business internationally, with contract wins in Russia and
Mexico. The new assembly and test centre in Tianjin in China has commenced
operation and should help drive further cost improvements.
Logging Services showed satisfactory revenue and EBITA improvement in the first
half with slickline services in the Gulf of Mexico, Protech downhole
instrumentation and electric line operations in Argentina all performing well.
Gas Turbine Services
Revenues increased to $244.9m (2003: $216.2m), EBITA decreased to $10.1m (2003:
$21.9m) and the margin was 4.1% (2003: 10.1%). Our oil & gas related activities,
which represent about 40% of Gas Turbine Services revenues, continue to make
progress, but the difficult US power market and the disruption from our
restructuring programme have adversely affected overall performance.
We are not relying on a short-term recovery in the US power market and have
implemented a programme of cost reduction and efficiency improvements, including
rationalisation of facilities and service lines, as well as the reduction of
personnel in certain areas. This has resulted in an exceptional charge of $21.9m
in the first half of 2004 which should begin to generate savings in the second
half and produce savings of around $8m in a full year.
We are also focusing more on the higher technology heavy industrial turbine
(HIT) activities - in the re-engineering of HIT parts and on component repair
for advanced F-tech heavy industrial turbines. We are also developing more in
the Eastern Hemisphere where there is continuing growth in the installed base of
turbines. Our Z.TEC acquisition, based in Germany, has performed well in the
first half and in Asia Pacific our successes include two long-term maintenance
contracts in Thailand with the GLOW Group, part of Tractebel Electricity & Gas
International, worth $90m. In addition, we were awarded a long-term contract to
provide maintenance service support to Dhofar Power in the Sultanate of Oman.
Outlook
In 2004, within our Engineering & Production Facilities division, our
engineering earnings will be lower because of the delays in the award of
deepwater contracts. This will only be partially offset by Production
Facilities' performance where we are building on our strong existing market
share by increasing our presence in target regions and with key customers. In
Well Support, we expect the good progress to continue. Gas Turbine Services
should benefit in the second half from the savings following the cost reduction
and efficiency improvement programme.
Looking forward, we believe our development plans are robust and we are well
positioned in fundamentally strong markets. In 2005, we are confident our
programme of cost reductions and efficiency improvements in Gas Turbine
Services, the diversification and anticipated pick-up in deepwater contract
awards in Engineering & Production Facilities, together with the continuing
growth in Well Support, should enable us to resume acceptable growth.
Financial review
Revenues increased by $93.8m, or 9.9%, to $1,040.8m for the six months to June
2004 (2003: $947.0m) reflecting growth in all three divisions. EBITA amounted to
$53.6m (2003: $73.0m) with increased margins in Well Support but lower margins
in both Engineering & Production Facilities and Gas Turbine Services.
Impairment and restructuring charges of $24.9m (2003: Nil) have been expensed as
an operating exceptional item: $21.9m of this relates to the Gas Turbine
Services division and represents the cost of rationalisation of businesses and
facilities, severance costs and fixed asset impairment and; the balance of $3.0m
represents severance costs and fixed asset impairment in the Well Support
division.
There was a cash inflow from operations before exceptional charges and movements
in working capital of $56.7m (2003: $76.5m). After a working capital outflow of
$46.5m (2003: $37.9m), the cash impact of the exceptional charges of $10.8m
(2003: Nil) and other cash out flows of $1.5m (2003: Nil), the cash outflows
from operating activities amounted to $2.1m in the six months to June 2004
(2003: cash inflows of $38.6m). The working capital outflows include an increase
in debtors of $50.1m (2003: $38.0m) and a build up in inventory, principally in
Well Support as a result of increased revenues, of $30.6m (2003: $9.2m). Net
debt increased by $102.8m from $175.0m at December 2003 to $277.8m at June 2004.
Capital expenditure amounted to $37.6m (2003: $48.7m) and proceeds from the
disposal of tangible fixed assets amounted to $11.7m (2003: $1.9m). During the
period an amount of $14.9m (2003: $1.2m) was invested by employee share trusts
in our own shares to hedge against the future exercise of share options. The
cost of acquisition of subsidiaries, net of cash acquired, totalled $17.3m
(2003: $16.5m) and included the acquisitions of Z.TEC in Germany and Deepwater
Specialists Inc in the US. The cost of acquiring minority shareholdings amounted
to $24.3m (2003: Nil) and included the cost of acquiring a further 6.63% share
of Mustang Engineering Holdings Inc. As a result of the net cash outflow and a
revised treatment of own shares held by the employee share trusts, as required
by UITF 38, the Group's gearing ratio increased from 34% at December 2003 to 55%
at June 2004.
Net debt of $277.8m is primarily US dollar denominated. Long-term borrowings
amounted to $322.5m (2003: $279.6m), of which $125.0m (2003: $125.0m), or 39% (
2003: 45%), was at a weighted average fixed rate of interest of 5.0% (2003:
5.0%). Net interest costs were $8.9m, which is an increase of $1.7m compared to
the same period in 2003. This was principally due to a higher level of sterling
borrowings, the cost of financing higher levels of working capital and increased
interest rates. Interest cover was 6.0 times (June 2003: 10.1 times).
The tax charge for the period is based on an anticipated effective tax rate for
the year of 33% (2003: 34%) on profit before tax, exceptional items and
amortisation. The effective tax rate for the year ended 31 December 2003 was
33%.
Adjusted diluted earnings per ordinary share were 6.0 cents compared to 8.4
cents and basic earnings per ordinary share were 0.8 cents compared to 7.1 cents
for the same period in 2003. The interim dividend of 1.2 cents per share (2003:
1.1 cents per share) will be payable to shareholders on the register on 24
September 2004 and will be paid on 14 October 2004.
1 EBITA is Earnings Before Interest Tax and Amortisation and represents
operating profit before exceptional items, amortisation and share of associates.
This financial term is provided as it is the key unit of measurement used by the
company in the management of its business (see note 2 of the interim accounts).
2 Shares held by the Group's employee share ownership trusts are excluded from
the number of shares in calculating adjusted diluted and basic earnings per
ordinary share. Adjusted diluted earnings per ordinary share are calculated on
earnings before amortisation and exceptional items, net of tax. Adjusted diluted
earnings per ordinary share is based on the diluted number of shares, taking
account of share options where the effect of these is dilutive.
3 Gearing represents net debt over shareholders' funds. In accordance with the
provisions of UITF 38, shareholders' funds are stated after deducting own shares
held by employee share trusts. December 2003 shareholders' funds have been
restated as if UITF 38 applied at that date.
4 Interest cover is EBITA divided by net interest payable, excluding share of
associates.
5 IPR - Intellectual Property Rights. LNG - Liquefied Natural Gas.
John Wood Group PLC
Group profit and loss account
for the six month period to 30 June 2004
Unaudited Unaudited Audited
Interim Interim Full Year
June 2004 June 2003 Dec 2003
US$m US$m US$m
------- ------- -------
Revenues (including share of joint ventures)
Continuing operations 1,029.3 944.4 1,980.1
Acquisitions 11.5 2.6 12.5
------- ------- -------
1,040.8 947.0 1,992.6
------- ------- -------
Revenues (including share of joint
ventures) 1,040.8 947.0 1,992.6
Less share of revenues of joint ventures (121.3) (128.4) (287.6)
------- ------- -------
Group revenues 919.5 818.6 1,705.0
Cost of sales (732.0) (621.1) (1,317.7)
------- ------- -------
Gross profit 187.5 197.5 387.3
------- ------- -------
Administrative expenses (148.5) (140.8) (286.3)
Exceptional items - impairment and
restructuring charges (24.9) - -
Goodwill amortisation (7.4) (6.8) (14.3)
------- ------- -------
Net operating expenses (180.8) (147.6) (300.6)
------- ------- -------
Operating profit of Group undertakings 6.7 49.9 86.7
Share of operating profit in joint ventures
(after US$ 0.7m (June 2003 : US$0.6m)
goodwill amortisation) 13.9 15.7 34.9
Share of operating profit in associates - 1.8 1.3
------- ------- -------
Total operating profit : Group and share of
joint ventures and associates 20.6 67.4 122.9
Total operating profit comprises:
------- ------- -------
Continuing operations 18.2 67.2 122.6
Acquisitions 2.4 0.2 0.3
------- ------- -------
20.6 67.4 122.9
------- ------- -------
Exceptional items
Loss on sale of fixed assets - - (3.5)
Loss on termination of discontinued
operations - - (2.7)
------- ------- -------
Profit on ordinary activities before
interest 20.6 67.4 116.7
Amounts written off investments - - (13.8)
Net interest payable - Group (7.7) (5.9) (12.6)
- Joint ventures (1.2) (1.3) (2.5)
- Associates - (2.2) (4.8)
------- ------- -------
Profit on ordinary activities before
taxation 11.7 58.0 83.0
Taxation on profit on ordinary activities (7.1) (22.2) (37.8)
------- ------- -------
Profit on ordinary activities after
taxation 4.6 35.8 45.2
Equity minority interests (1.0) (2.1) (3.9)
------- ------- -------
Profit for the financial period/year 3.6 33.7 41.3
Dividends (5.5) (5.3) (15.6)
------- ------- -------
Retained (loss)/profit for the financial
period/year (1.9) 28.4 25.7
------- ------- -------
Basic earnings per ordinary share (cents) 0.8 7.1 8.7
Diluted earnings per ordinary share (cents) 0.7 6.9 8.4
Adjusted diluted earnings per ordinary
share (cents) 6.0 8.4 15.4
------- ------- -------
John Wood Group PLC
Group balance sheet
as at 30 June 2004
Unaudited Unaudited Audited
Interim Interim Full Year
June 2004 June 2003 Dec 2003
US$m US$m US$m
-------- -------- --------
Fixed assets
Intangible assets 241.3 226.5 220.4
Tangible assets 158.0 234.8 174.2
Investments in joint ventures
-------- -------- --------
Share of gross assets 259.5 278.7 274.4
Share of gross liabilities (168.6) (198.2) (180.8)
Goodwill arising on acquisition 9.7 9.2 10.0
-------- -------- --------
100.6 89.7 103.6
Investments in associates - 8.5 -
-------- -------- --------
Total investments 100.6 98.2 103.6
-------- -------- --------
499.9 559.5 498.2
-------- -------- --------
Current assets
Stocks 213.9 168.7 180.5
Debtors 486.6 396.7 415.3
Cash at bank and in hand 61.7 65.7 69.8
-------- -------- --------
762.2 631.1 665.6
-------- -------- --------
Creditors: amounts falling due within one
year
Bank loans and overdrafts (17.0) (13.2) (13.9)
Other creditors (364.5) (300.0) (336.7)
-------- -------- --------
(381.5) (313.2) (350.6)
-------- -------- --------
Net current assets 380.7 317.9 315.0
-------- -------- --------
Total assets less current liabilities 880.6 877.4 813.2
Creditors: amounts falling due after one
year
Bank loans (322.5) (279.6) (230.9)
Other creditors (10.1) (15.7) (7.5)
-------- -------- --------
(332.6) (295.3) (238.4)
-------- -------- --------
Provisions for liabilities and charges (14.9) (12.3) (15.3)
-------- -------- --------
Net assets excluding pension liability 533.1 569.8 559.5
Pension liability (19.3) (16.3) (19.3)
-------- -------- --------
Net assets including pension liability 513.8 553.5 540.2
-------- -------- --------
Capital and reserves
Called up share capital 23.5 23.3 23.4
Share premium account 200.9 200.4 200.8
Capital reduction reserve 88.1 88.1 88.1
Profit and loss account 190.5 225.0 209.2
-------- -------- --------
Total equity shareholders' funds 503.0 536.8 521.5
Equity minority interests 10.8 16.7 18.7
-------- -------- --------
513.8 553.5 540.2
-------- -------- --------
John Wood Group PLC
Statement of Group total recognised gains and losses
for the six month period to 30 June 2004
Unaudited Unaudited Audited
Interim Interim Full Year
June 2004 June 2003 Dec 2003
US$m US$m US$m
------- ------- -------
Profit for the financial period/year 3.6 33.7 41.3
Actuarial loss recognised in the pension
scheme - - (1.2)
Movement in deferred tax relating to
pension liability - - 0.4
Exchange movement on retranslation of
foreign currency net assets (2.7) 2.8 7.3
------- ------- -------
Total gains recognised for period 0.9 36.5 47.8
------- ------- -------
Reconciliation of movement in Group shareholders' funds
for the six month period to 30 June 2004
Unaudited Unaudited Audited
Interim Interim Full Year
June 2004 June 2003 Dec 2003
US$m US$m US$m
------- ------- -------
Profit for the financial period/year 3.6 33.7 41.3
Dividends (5.5) (5.3) (15.6)
------- ------- -------
(1.9) 28.4 25.7
Issue of new shares 0.2 0.1 0.6
Actuarial loss recognised in the pension
scheme net of deferred tax - - (0.8)
Credit in respect of employee share awards 0.6 - 0.6
Consideration paid in respect of purchase
of own shares held in ESOP trusts (14.9) (1.2) (17.3)
Consideration received in respect of sale
of own shares held in ESOP trusts 0.2 - 0.4
Foreign exchange in respect of own shares
held in ESOP trusts - - (1.7)
Exchange movement on retranslation of
foreign currency net assets (2.7) 2.8 7.3
------- ------- -------
Net (decrease)/increase in shareholders'
funds (18.5) 30.1 14.8
Opening shareholders' funds (originally
US$541.3m before prior year adjustment of
US$(19.8)m) 521.5 506.7 506.7
------- ------- -------
Closing shareholders' funds 503.0 536.8 521.5
------- ------- -------
The prior year adjustment of US $19.8m represents the deduction of own shares
held in ESOP trusts under the provisions of UITF 38. The adoption of UITF 38 has
not resulted in an impact on the profit and loss account in either the current
or the prior periods.
John Wood Group PLC
Group cash flow statement
for the six month period to 30 June 2004
Unaudited Unaudited Audited
Interim Interim Full Year
June 2004 June 2003 Dec 2003
US$m US$m US$m
-------- -------- --------
Net cash (outflow)/inflow from operating
activities (2.1) 38.6 144.9
-------- -------- --------
Dividends from joint ventures 9.1 1.6 11.7
-------- -------- --------
Returns on investments and servicing of
finance
Interest received 0.9 2.2 2.6
Interest paid (8.7) (6.8) (13.9)
-------- -------- --------
(7.8) (4.6) (11.3)
-------- -------- --------
Taxation
UK corporation tax paid (5.9) (2.7) (6.0)
Overseas tax paid (5.8) (13.1) (32.6)
-------- -------- --------
(11.7) (15.8) (38.6)
-------- -------- --------
Capital expenditure and financial
investment
Purchase of tangible fixed assets (37.6) (48.7) (74.5)
Sale of tangible fixed assets 11.7 1.9 23.0
Repayment of loans from joint ventures 3.5 3.9 3.3
-------- -------- --------
(22.4) (42.9) (48.2)
-------- -------- --------
Acquisitions and disposals
Acquisition of minority interests (24.3) - (0.2)
Purchase of subsidiary undertakings, net of
cash acquired (17.3) (16.5) (18.5)
Disposal of subsidiary undertakings, net of
cash disposed - 5.7 7.3
Investment in joint ventures - - (2.8)
Purchase of intangible assets (0.1) (1.0) (3.2)
Deferred consideration (4.6) - (0.4)
Additional paid in capital from minority
shareholders - - 0.3
-------- -------- --------
(46.3) (11.8) (17.5)
-------- -------- --------
Equity dividends paid (10.3) (9.5) (14.7)
-------- -------- --------
-------- -------- --------
Net cash (outflow)/inflow before management
of liquid resources (91.5) (44.4) 26.3
and financing
-------- -------- --------
Management of liquid resources
(Increase)/decrease in cash placed on
deposit (9.3) 5.2 3.3
-------- -------- --------
Financing
Increase in bank loans 97.8 54.2 2.2
Issue of ordinary shares 0.2 0.1 0.6
Purchase of own shares held in ESOP trusts (14.9) (1.2) (17.3)
Disposal of own shares held in ESOP trusts 0.2 - 0.4
-------- -------- --------
Net cash inflow/(outflow) from financing 83.3 53.1 (14.1)
-------- -------- --------
(Decrease)/increase in cash (17.5) 13.9 15.5
-------- -------- --------
John Wood Group PLC
Notes to the interim accounts
for the six month period to 30 June 2004
1. Preparation of interim accounts
The interim report and accounts have been prepared on the basis of the
accounting policies set out in the group's 2003 Annual Report and Accounts with
the exception of the adoption of Urgent Issues Task Force No 38 'Accounting for
ESOP Trusts' (UITF 38) which is adopted with effect from 1 January 2004. This
abstract requires shares held for the purposes of ESOP's to be held at cost and
deducted from shareholders equity on the balance sheet. These shares were
previously classified as 'other investments'. The interim accounts were approved
by the Board of Directors on 6 September 2004. The results for the six months to
30 June 2004 and the comparative results for the six months to 30 June 2003 are
unaudited. The comparative figures for the year ended 31 December 2003 do not
constitute the statutory financial statements for that year. Those financial
statements have been delivered to the Registrar of Companies and include the
auditors' report which was unqualified and did not contain a statement either
under section 237 (2) or section 237 (3) of the Companies Act 1985.
2. Segmental reporting
Business segments
Revenues EBITDA EBITA Operating profit
Interim Interim Full Yr Interim Interim Full Yr Interim Interim Full Interim Interim Full Year
June June Dec June June Dec June June Year June June Dec
2004 2003 2003 2004 2003 2003 2004 2003 Dec 2004 2003 2003
US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Engineering &
Production
Facilities
Group 486.5 450.0 941.0 31.3 48.2 91.4 27.6 39.4 77.4 24.0 35.9 69.9
Joint ventures 55.8 73.0 154.2 7.4 9.9 21.4 5.9 8.4 18.4 5.6 8.2 17.9
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
542.3 523.0 1,095.2 38.7 58.1 112.8 33.5 47.8 95.8 29.6 44.1 87.8
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Well Support
Group 234.6 189.8 408.4 25.9 19.1 45.1 19.0 13.5 31.3 14.7 12.3 28.8
Joint ventures 3.9 1.2 4.2 0.8 - 0.2 0.8 (0.1) 0.1 0.8 (0.1) 0.1
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
238.5 191.0 412.6 26.7 19.1 45.3 19.8 13.4 31.4 15.5 12.2 28.9
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Gas Turbine
Services
Group 183.3 162.0 326.2 8.1 18.6 24.2 2.2 13.9 14.2 (22.2) 11.8 9.9
Joint ventures 61.6 54.2 129.2 9.4 9.1 20.1 7.9 8.0 17.7 7.5 7.6 16.9
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
244.9 216.2 455.4 17.5 27.7 44.3 10.1 21.9 31.9 (14.7) 19.4 26.8
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total
excluding
discontinuing
operations 1,025.7 930.2 1,963.2 82.9 104.9 202.4 63.4 83.1 159.1 30.4 75.7 143.5
Gas Turbine
Services -
discontinuing
operations 15.1 16.8 29.4 (0.7) (0.2) (1.8) (1.1) (0.9) (2.6) (1.1) (0.9) (2.6)
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total 1,040.8 947.0 1,992.6 82.2 104.7 200.6 62.3 82.2 156.5 29.3 74.8 140.9
Comprising
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
- Group 919.5 818.6 1,705.0 64.6 85.7 158.9 47.7 65.9 120.3 15.4 59.1 106.0
- Joint
ventures 121.3 128.4 287.6 17.6 19.0 41.7 14.6 16.3 36.2 13.9 15.7 34.9
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Central costs
(including
central
depreciation) (8.2) (8.8) (17.6) (8.7) (9.2) (19.3) (8.7) (9.2) (19.3)
Share of
operating
profit in
associates - 1.8 1.3
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total 1,040.8 947.0 1,992.6 74.0 95.9 183.0 53.6 73.0 137.2 20.6 67.4 122.9
===== ===== ===== ===== ===== ===== ===== ===== =====
Exceptional
items - - (20.0)
Net interest
payable (8.9) (9.4) (19.9)
----- ----- -----
Profit before
taxation 11.7 58.0 83.0
===== ===== =====
Notes
1. EBITDA represents operating profit (including the share of joint
ventures but excluding the share of associates) before deduction of exceptional
items, depreciation and goodwill amortisation. EBITA represents EBITDA less
depreciation (including joint venture depreciation). Operating profit of group
undertakings amounts to US$6.7m (2003 : US$49.9m) and operating profit of joint
ventures amounts to US$13.9m (2003 : US$15.7m), Depreciation comprises group
depreciation of US$17.4m (2003 : US$20.2m) and joint venture depreciation of
US$3.0m (2003 : US$2.7m). Goodwill amortisation comprises group amortisation of
US$7.4m (2003 : US$6.8m) and joint venture amortisation of US$0.7m (2003 :
US$0.6m). EBITA and EBITDA are provided as they are the key units of measurement
used by the Group in the management of its business. EBITA and EBITDA exclude
impairment and restructuring charges.
2. The discontinuing operations of the Gas Turbine Services business
relate to an Aero engine overhaul company which the Group has decided to divest.
3. Revenues arising from sales between segments are not significant and
have been eliminated in the above analysis.
4. The Group's associate was not part of any of the above business
segments. The Group ceased to account for the results of its associate with
effect from 15 December 2003.
5. The exceptional charges booked in the six month period to June 2004
were charged in arriving at operating profit and all relate to continuing
operations. Of the $24.9m exceptional charges, US$21.9m relates to the Gas
Turbine Services division and US$3.0m relates to the Well Support division. The
exceptional items in 2003 were charged after arriving at operating profit and
are split between continuing operations of US$3.5m, discontinued operations of
US$2.7m and amounts written off investments of US$13.8m.
John Wood Group PLC
Notes to the interim accounts (continued)
for the six month period to 30 June 2004
2. Segmental reporting (continued)
Unaudited Unaudited Audited
Interim Interim Full year
June 2004 June 2003 Dec 2003
Net operating assets US$m US$m US$m
------- ------- -------
Engineering & Production Facilities
- Group 254.7 274.5 189.5
- Joint ventures 46.6 41.6 47.2
------- ------- -------
301.3 316.1 236.7
------- ------- -------
Well Support
- Group 220.4 194.0 208.9
- Joint ventures 3.7 3.1 3.2
------- ------- -------
224.1 197.1 212.1
------- ------- -------
Gas Turbine Services
- Group 228.1 223.7 223.1
- Joint ventures 89.8 84.4 86.8
------- ------- -------
317.9 308.1 309.9
------- ------- -------
Total allocated excluding
discontinuing operations 843.3 821.3 758.7
Gas Turbine Services -
discontinuing operations 20.6 22.6 20.7
Unallocated (32.8) (24.0) (30.6)
------- ------- -------
Net operating assets 831.1 819.9 748.8
Net debt - Group (277.8) (227.1) (175.0)
Net debt - Joint ventures (39.5) (39.3) (33.6)
------- ------- -------
Net assets 513.8 553.5 540.2
------- ------- -------
3. Dividends
Unaudited Unaudited Full Year
Interim Interim Dec 2003
June 2004 June 2003
US$m US$m US$m
------- ------- -------
Dividends on equity shares
Interim proposed 5.5 5.3 -
Interim paid - - 5.2
Final proposed - - 10.4
------- ------- -------
Total dividends 5.5 5.3 15.6
------- ------- -------
The proposed interim dividend is 1.2 cents per share and will be paid on 14
October 2004.
John Wood Group PLC
Notes to the interim accounts (continued)
for the six month period to 30 June 2004
4. Earnings per share
Unaudited Unaudited Audited
Interim Interim Full Year
June 2004 June 2003 Dec 2003
US$m US$m US$m
------- ------- -------
Basic EPS
Earnings 3.6 33.7 41.3
Weighted average number of
shares 469.2 474.7 473.9
EPS (cents) 0.8 7.1 8.7
Diluted EPS
Earnings 3.6 33.7 41.3
Weighted average number of
shares 481.8 491.1 490.6
EPS (cents) 0.7 6.9 8.4
Adjusted diluted EPS
Earnings 29.1 41.1 75.6
Weighted average number of
shares 481.8 491.1 490.6
EPS (cents) 6.0 8.4 15.4
The calculation of basic earnings per share for the six months ended 30 June
2004 is based on the profit for the period, divided by 469,188,000 ordinary
shares being the weighted average number of ordinary shares in issue during the
period excluding shares held by the Group's employee share ownership trusts. The
diluted number of shares takes account of share options where the effect of
these is dilutive. Adjusted diluted EPS is disclosed to show the results
excluding the impact of goodwill amortisation and exceptional items, net of tax.
5. Exceptional items - impairment and restructuring charges
An impairment and restructuring charge of US$24.9m has been booked in the
period. US$21.9m of this charge was booked in the Gas Turbine Services division
in respect of rationalisation of businesses and facilities, severance costs and
fixed asset impairment. The balance of the charge, US$3.0m, was booked in the
Well Support division and covers severance costs and fixed asset impairment.
6. Taxation
The taxation charge for the six months ended 30 June 2004 reflects an
anticipated effective taxation rate of 33% on profit before taxation,
amortisation and exceptional items for the year ending 31 December 2004 (June
2003 : 34%). The tax credit in respect of the exceptional items is US$7.5m.
7. Acquisitions
In January 2004, the Group acquired Z.TEC GmbH Energy Service, a company based
in Moers, Germany, that provides services to heavy industrial gas turbine users
in Germany and other parts of Central Europe.
In April 2004, the Group acquired Deepwater Specialists Inc., a New Orleans, US
based company that provides facilities commissioning services to the deepwater
oil and gas industry.
In April 2004, the Group acquired a further 6.63% shareholding in Mustang
Engineering Holdings Inc.
In July 2004, the Group acquired Multiphase Solutions Inc., a Houston, US based
company that provides engineering and consulting services, and software
applications for use in the design, operation and optimisation of oil and gas
pipelines and production facilities.
John Wood Group PLC
Notes to the interim accounts (continued)
for the six month period to 30 June 2004
8. Net cash (outflow)/inflow from operating activities
Unaudited Unaudited Audited
Interim Interim Full Year
June 2004 June 2003 Dec 2003
US$m US$m US$m
------- ------- -------
Operating profit from group
undertakings 6.7 49.9 86.7
Depreciation of tangible
fixed assets 17.4 20.2 40.3
Loss/(gain) on sale of fixed
assets 0.3 (0.4) 0.1
Impairment and restructuring
charges - non cash impact 14.1 - -
Amortisation of goodwill 7.4 6.8 14.3
Increase in stocks (30.6) (9.2) (18.3)
Increase in debtors (50.1) (38.0) (20.4)
(Increase)/decrease in
amounts due from joint
ventures (6.6) (4.3) 15.0
Increase in creditors 40.8 13.6 24.3
(Decrease)/increase in
provisions (0.7) 0.9 3.4
Adjustment in respect of
employee share awards 0.6 - 0.6
Exchange adjustments (1.4) (0.9) (1.1)
------- ------- -------
(2.1) 38.6 144.9
------- ------- -------
9. Analysis of net debt
1 Jan 2004 Cash flow Exchange 30 June 2004
US$m US$m US$m US$m
------- ------- ------- -------
Cash 47.3 (17.5) 0.1 29.9
Deposits 22.5 9.3 - 31.8
Bank loans and overdrafts
due within one year (13.9) (3.3) 0.2 (17.0)
Bank loans due after one
year (230.9) (94.5) 2.9 (322.5)
------- ------- ------- -------
Net debt (175.0) (106.0) 3.2 (277.8)
------- ------- ------- -------
10. Pension commitments
The pension liability at 30 June 2004 is as calculated at 31 December 2003 as
adjusted for current service cost, interest cost and expected return on assets.
No interim revaluation has been carried out and accordingly there is no
actuarial gain/loss in the statement of total recognised gains and losses. The
figures for gains and losses for the full year together with the surplus/deficit
at the year end will be presented in the 2004 Annual Report.
John Wood Group PLC
Shareholder information
Payment of dividends
The Company declares its dividends in US dollars. As a result of the
shareholders being mainly UK based, dividends will be paid in sterling, but if
you would like to receive your dividend in dollars please contact the Registrars
at the address below. All shareholders will receive dividends in sterling unless
requested. If you are a UK based shareholder, the Company encourages you to have
your dividends paid through the BACS (Banker's Automated Clearing Services)
system. The benefit of the BACS payment method is that the Registrar posts the
tax vouchers directly to the shareholders, whilst the dividend is credited on
the payment date to the shareholder's Bank or Building Society account.
Shareholders who have not yet arranged for their dividends to be paid direct to
their Bank or Building Society account and wish to benefit from this service
should contact the Registrar at the address below. Sterling dividends will be
translated at the closing mid-point spot rate on 24 September 2004 as published
in the Financial Times on 25 September 2004.
Officers and advisers
Secretary and Registered Office Registrars
I Johnson Lloyds TSB Registrars Scotland
John Wood Group PLC PO Box 28448
John Wood House Finance House
Greenwell Road Orchard Brae
ABERDEEN EDINBURGH
AB12 3AX EH4 1WQ
Tel: 01224 851000 Tel: 0870 601 5366
Stockbrokers Auditors
Cazenove & Co. Ltd PricewaterhouseCoopers LLP
Credit Suisse First Boston Chartered Accountants
Financial calendar
6 months ended Year ending
30 June 2004 31 December 2004
Results announced 7 September 2004 Early March 2005
Ex-dividend date 22 September 2004 May 2005
Dividend record date 24 September 2004 May 2005
Annual General Meeting - May 2005
Dividend payment date 14 October 2004 May 2005
Wood Group have developed an Investor Relations website which can be accessed at
www.woodgroup.com
This information is provided by RNS
The company news service from the London Stock Exchange
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