Half year results for six months to 30 June 2012
Half year results for the six months ended 30 June 2012
Sustained momentum across all divisions
John Wood Group PLC ("Wood Group" or the "Group") is an international energy
services company employing more than 41,000 people worldwide and operating in
50 countries. The Group has three businesses - Engineering, Wood Group PSN and
Wood Group GTS - providing a range of engineering, production support,
maintenance management and industrial gas turbine overhaul and repair services
to the oil & gas, and power generation industries worldwide.
Financial Highlights
Revenue from continuing operations1 of $3,346.3m (2011: $2,465.9m) up 36%
EBITA from continuing operations1 of $205.1m (2011: $133.9m) up 53%
Profit from continuing operations before tax and exceptional items of $160.0m
(2011: $102.7m) up 56%
Adjusted diluted EPS1 of 37.4 cents (2011: 25.2 cents) up 48%
Interim dividend of 5.7 cents (2011: 3.9 cents) up 46%
Divisional Highlights
Engineering
Revenue growth and margin improvement
Important contract wins including Ichthys and Mafumeira Sul
Strong order book and future prospects
Wood Group PSN
Strong performance in the North Sea and North America
Actively working to improve performance on our long term contract with PDO in
Oman
Renewals and contract wins support future performance
Wood Group GTS
Continued growth in Maintenance revenue and EBITA
Power Solutions EBITA benefitting from advanced stage of completion on Dorad
contract
Expect good growth in EBITA for the year, weighted to the second half
Sir Ian Wood, Chairman, and Allister Langlands, Chief Executive commented:
"In the first half the Group has delivered growth across all three divisions,
and we are confident of achieving full year performance in line with
expectations. The Group is well placed with a balance of opex and capex related
activities across key geographical areas of industry growth and a robust
balance sheet. In July we announced a number of board changes and our strong
management team is well set to further develop our leading positions across
engineering, production facilities support and gas turbine services."
Enquiries:
Wood Group
Nick Gilman 01224 851 000
Andrew Rose
Carolyn Smith
Brunswick
Patrick Handley 020 7404 5959
Rosheeka Field
There will be an analyst and investor presentation at the Lincoln Centre, 18
Lincoln's Inn Fields, WC2A 3ED at 09.00 (GMT). Early registration is advised
from 08.30 (GMT).
A live webcast of the presentation will be available from www.woodgroup.com/
investors. Replay facilities will be available later in the day.
1 See detailed footnotes.
Overview
In the first half the Group has delivered growth across all three divisions,
and we are confident of achieving full year performance in line with
expectations.
Engineering is benefitting from global demand for our services, particularly in
our upstream and subsea & pipeline activities. Our Engineering order book and
future prospects remain strong and we currently anticipate that full year EBITA
will be up over 30% on 2011.
In Wood Group PSN, results reflect the contribution from the acquired PSN
business for the full six month period. We saw strong performance in the North
Sea and North America, particularly in the US shale regions. In international
markets, we are active in Australia, Africa, the Caspian and the Arabian Gulf
where we are actively working to improve performance on our long term contract
with PDO in Oman.
In Wood Group GTS, conditions in power markets remain relatively challenging
although we are seeing some signs of improvement in the US. Maintenance EBITA
was up around 10% and Power Solutions delivered increased EBITA due to the more
advanced stage of completion on the Dorad contract. Overall, we expect good
growth in EBITA for the year, weighted to the second half.
In July, we announced a number of board changes which will be effective on 1
November. Sir Ian Wood will retire as Chairman and from the Board. Allister
Langlands, CEO, will become Chairman and Bob Keiller, Chief Executive of Wood
Group PSN, will become CEO. Alongside these moves, Robin Watson, the current
Head of Wood Group PSN in the UK, will succeed Bob Keiller as Chief Executive
of the Wood Group PSN division and will join the Board on 1 January 2013. Mark
Dobler, the new Chief Executive of the Wood Group GTS division will also join
the Board on 1 January 2013, having been with the Group for over 10 years. We
believe we are well placed to further develop our leading positions across
engineering, production facilities support and gas turbine services.
Markets
Overall, conditions in energy markets remain favourable. Uncertainty about the
global economic outlook and somewhat lower commodity prices has not had any
discernible impact on activity levels or the current outlook. The Group is well
placed with a balance of opex and capex related activities across key
geographical areas of industry growth. We have a robust balance sheet and are
well positioned to take advantage of strong longer term energy fundamentals,
supported by demand from developing economies and increasingly complex field
development and production challenges.
Trading Performance
Interim Interim %
June 2012 June 2011
Change
$m $m
Revenue from continuing operations1 3,346.3 2,465.9 35.7%
EBITA from continuing operations1,2 205.1 133.9 53.2%
EBITA margin from continuing operations 6.1% 5.4% 0.7pts
%
Profit from continuing operations 160.0 102.7 55.8%
before tax and exceptional items
Basic EPS 33.9c 444.0c n/m
Adjusted diluted EPS3 37.4c 25.2c 48.4%
Note: Continuing operations revenue and EBITA figures include the results of
PSN since acquisition in April 2011, and exclude the results of Well Support
and the Wood Group GTS Aero engine overhaul business, disposed of in April 2011
and April 2012 respectively.
Revenue from continuing operations increased by 36% and EBITA from continuing
operations was up 53%. Continuing operations EBITA margin ("margins") increased
by 0.7 percentage points due to improved margins in all divisions. Adjusted
diluted EPS increased by 48% to 37.4c, due to growth in EBITA from continuing
operations and the reduction in the average number of fully diluted shares in
the period subsequent to the return of capital in 2011, offset by the impact of
the disposal of Well Support.
Dividend
Reflecting our confidence in the longer term outlook for the Group, we
currently intend to pay a total dividend of 17.0 cents per share for 2012 which
will represent a 26% increase for the year. In order to rebalance more closely
in the ratio of one third interim to two thirds final, we have declared an
interim dividend of 5.7 cents which will be paid on 28 September.
Engineering
We provide a wide range of engineering services to the upstream, subsea &
pipeline, downstream & industrial and clean energy sectors. These include
conceptual studies, engineering, project & construction management (EPCM) and
control system upgrades.
Interim Interim Change
June June
2012 2011
$m $m
Revenue 872.2 688.5 26.7%
EBITA 104.1 72.5 43.6%
EBITA margin 11.9% 10.5% 1.4pts
People4 10,100 8,000 26%
Engineering performed well, delivering 27% revenue growth and margin
improvement from 10.5% to 11.9%, largely reflecting increased activity in
upstream and subsea & pipelines. EBITA increased by 44%, reflecting higher
volumes and some improvement in underlying pricing.
Headcount increased by 26% from 8,000 in June 2011 to 10,100, both organically
and through the acquisition of ISI Solutions in the second half of 2011. This
compares to a headcount of 9,100 at December 2011.
Our upstream business accounted for around 40% of Engineering revenue. In the
Gulf of Mexico, we are working on a number of offshore developments including
Jack & St Malo, Tubular Bells, Hadrian and Lucius. In Canada, we have been
active on a range of conventional and unconventional projects. We had a number
of important awards during the period, including the Ichthys and Mafumeira Sul
projects; both scheduled for completion in the second half of 2013.
Our subsea & pipeline business also accounted for around 40% of revenue. We
were particularly active in the North Sea and Australia, where we are working
on projects including Quad 204, Equus, Julimar and Gorgon. We also secured
Enterprise Frame Agreements with Shell, under which we are executing a range of
work including the Linnorm FEED study in Norway. Our onshore pipelines business
performed well, benefitting from liquids focused activity in the US shale
regions.
Downstream, process & industrial activities accounted for around 20% of
revenue. Performance was impacted by lower expenditure in the US refining
market.
Outlook
Activity levels remain high and are supported by a strong order book and future
prospects. As a result, we anticipate that Engineering will deliver full year
EBITA up over 30% on 2011.
Wood Group PSN
We provide life of field support to producing assets through brownfield
engineering and modifications, production enhancement, operations and
maintenance (including UK duty holder services), training, maintenance
management and abandonment services.
Interim Interim Change
June June
2012 2011
$m $m
Revenue 1,774.1 1,296.9 36.8%
EBITA 90.0 65.1 38.2%
EBITA margin 5.1% 5.0% 0.1pts
People4 28,000 24,000 17%
Revenue and EBITA include the results of PSN from the date of acquisition on 20
April 2011.
In Wood Group PSN, revenue and EBITA growth of 37% and 38% respectively,
resulted primarily from the contribution of the acquired PSN business for the
full six months in 2012. On a pro forma basis, which includes PSN revenue and
EBITA for the full first half of 2011, revenue increased by 7% and EBITA
increased by 3%. Pro forma EBITA growth was held back by continuing losses in
Oman.
Headcount increased by 17% from 24,000 in June 2011 to 28,000, including around
2,500 people in respect of the mobilisation of our contract in Oman with PDO.
We saw strong performance in the North Sea, which is our largest market and
accounted for around 40% of Wood Group PSN revenue. Customer spending on
infrastructure integrity management and production enhancement continues to
give us confidence in the medium term market outlook. We are active on
operations & maintenance and brownfield engineering work scopes on longer term
contracts with customers including BP, Shell, Talisman and TAQA, together with
our recently awarded contract with Premier Oil.
The Americas accounted for around 30% of revenue. North America remains strong,
with growth in the provision of onshore support services including to the US
shale regions, where we see further opportunities and have recently completed
the acquisition of Duval in the Eagle Ford region of Texas. Our offshore
activities in the Gulf of Mexico also performed well. In Latin America, we
expect to complete the outstanding work on our downstream project for Ecopetrol
in Colombia in the second half of 2012 in line with the provisions made in
2011.
International markets, outside the North Sea and the Americas, represent around
30% of revenue. In Oman, we have seen increased activity on our significant
contract with PDO. Losses in the first half were broadly in line with those of
the second half of 2011 at just over $10m. We are active on a number of steps
to improve financial performance, including increasing operational efficiency
and resolving a number of commercial issues. We anticipate that losses will
reduce in the second half leading to a full year loss in 2012 of around
$15m-$20m. We expect to see to see ongoing improvement in 2013, and beyond this
continue to see the potential for long run profitability on the contract. In
Australia, we have around 2,000 people working for clients including Exxon
Mobil, QGC and GLNG. In Africa, we remain active in Chad, Equatorial Guinea,
Nigeria and Angola, where we are providing maintenance support services to BP
on Block 31 and see further opportunities. In the Caspian, we are providing
facilities engineering and commissioning services to customers in Kazakhstan.
Outlook
We anticipate an improved performance for Wood Group PSN in 2012 resulting from
the full year benefit of the PSN acquisition, continued strength in the North
Sea, North America, Australia and Africa, together with the reduction of
overall contract losses compared to 2011.
Wood Group GTS
We are a leading independent provider of rotating equipment services and
solutions for clients in the power, oil & gas and clean energy markets. Our
aftermarket Maintenance activities include facility operations & maintenance
and repair & overhaul of gas, wind and steam turbines, pumps and other
high-speed rotating equipment. Our Power Solutions business provides power
plant engineering, procurement & construction and construction management
services to the owners of power-generation facilities.
Interim Interim Change
June 2012 June 2011
$m $m
Revenue 700.0 480.5 45.7%
EBITA 38.1 22.5 69.3%
EBITA margin 5.4% 4.7% 0.7pts
People4 3,700 3,400 9%
Revenue increased by 46% and EBITA increased by 69%. Maintenance EBITA was up
around 10% on 2011 and Power Solutions EBITA benefited from the more advanced
stage of completion on the Dorad contract.
Headcount increased by 9% from 3,400 to 3,700, predominantly due to higher
activity in Power Solutions and seasonal increases in our US field operations
in Maintenance.
In Maintenance, revenue and EBITA growth of around 10% was led by continued
strength in our oil and gas related activities and the contribution from some
small acquisitions completed in 2011. We were also awarded a multi-year
maintenance services contract for Shell's Brent assets in the North Sea. In our
power related activities, we continue to add new long term service agreements
and have recently signed contracts with TAQA in Ghana and Sime Darby in
Thailand.
Power Solutions delivered improved EBITA due to the more advanced stage of
completion on the Dorad contract. There has been some delay on our GWF
contract, although we still anticipate a reasonable EBITA contribution and
completion in the second half of 2012. The Dorad contract continues to be
scheduled for completion in the second half of 2013. We are actively pursuing
additional Power Solutions opportunities in areas including the US, the
Caspian, the Middle East and Africa.
Outlook
In Wood Group GTS, we expect good growth in EBITA for the year, weighted to the
second half. In Maintenance, we are seeing some signs of improvement in the US
power market. In Power Solutions, we have good visibility for 2012 and are
active on a number of future prospects although constraints in the project
financing market, together with some uncertainty around the outlook for global
GDP growth, is holding back contract awards.
Financial Review
Financial performance
Interim Interim Full
Year
June 2012 June 2011
Dec 2011
$m $m
$m
Revenue from continuing operations 3,346.3 2,465.9 5,666.8
EBITA from continuing operations 205.1 133.9 341.6
EBITA margin from continuing 6.1% 5.4% 6.0%
operations
Amortisation (39.0) (26.9) (78.7)
Operating profit from continuing 166.1 107.0 262.9
operations before exceptional items
Net finance expense (6.1) (4.3) (8.8)
Profit from continuing operations 160.0 102.7 254.1
before tax and exceptional items
Taxation on continuing operations (46.4) (30.8) (75.0)
before exceptional items
Profit for the period from continuing 113.6 71.9 179.1
operations before exceptional items
(Loss)/profit from discontinued (1.1) 37.0 36.1
operations, net of tax
Profit for the period before 112.5 108.9 215.2
exceptional items
Exceptional items, net of tax 10.2 2,154.0 2,087.6
Profit for the period 122.7 2,262.9 2,302.8
Basic EPS (cents) 33.9c 444.0c 530.7c
Adjusted diluted EPS (cents) 37.4c 25.2c 60.2c
The review of our trading performance is contained within the Divisional
commentary above.
The PSN acquisition was completed on 26 April 2011. On a pro forma basis, which
includes PSN revenue and EBITA for the full first half of 2011, the performance
of the continuing Group would have been as set out below.
Unaudited H1 H1 %
2012 2011 Change
$m $m
Engineering 872.2 688.5 27%
Wood Group PSN 1,774.1 1,660.2 7%
Wood Group GTS 700.0 480.5 46%
Pro forma revenue from 3,346.3 2,829.2 18%
continuing operations
Engineering 104.1 72.5 44%
Wood Group PSN 90.0 87.1 3%
Wood Group GTS 38.1 22.5 69%
Central (27.1) (26.2) 3%
Pro forma EBITA from continuing 205.1 155.9 32%
operations
The pro forma result shows underlying growth in revenue of 18% and in EBITA of
32%. All divisions are showing growth in revenue and EBITA, with growth in Wood
Group PSN held back by losses in Oman as noted in the Divisional commentary
above.
Amortisation
The amortisation charge for the half year of $39.0m (2011: $26.9m) includes
$27.4m (2011: $17.1m) of amortisation relating to intangible assets arising
from acquisitions, of which $23.1m (2011: $11.8m) is in relation to the PSN
acquisition. We currently anticipate that the amortisation charge for the full
year will be around $80m. We regard the amortisation charge relating to
intangible assets arising from acquisitions to be a relatively subjective
measure, and as a result continue to believe that performance is best measured
excluding this figure. This is one of the primary reasons for our key reporting
measures for profit and earnings per share excluding the impact of
amortisation.
Net finance expense
Net finance expense from continuing operations is analysed further below:
Interim Interim Full year
June 2012 June 2011 Dec 2011
$m $m
$m
Interest on debt 4.8 5.3 9.0
Non utilisation fees 0.8 1.5 2.3
Non-cash charges on pension and 0.7 0.3 1.3
deferred consideration
Bank fees and charges 0.7 0.4 1.1
Total finance expense from 7.0 7.5 13.7
continuing operations
Finance income (0.9) (3.2) (4.9)
Net finance expense from 6.1 4.3 8.8
continuing operations
Interest cover5, based on EBITA from continuing operations, remains strong at
33.3 times (2011: 31.1 times).
Exceptional items
As at June 2012, the Group has recognised a net provision for doubtful debts of
$9.3m which includes a net tax credit of $3.9m.
At 30 June 2012, the Group has provided $15.1m that relates to work carried out
for ATP Oil & Gas Corporation, who have filed a voluntary petition for
reorganisation under Chapter 11 of the US Bankruptcy Code. We will continue to
make every effort to recover amounts due.
At 31 December 2011, a provision of $13.0m was held in relation to overdue
Libyan receivables as a result of the political disruption in Libya earlier in
2011. In July 2012, the Group received a payment of $5.8m from its customer and
accordingly the provision has been reduced by this amount and a credit booked
to exceptional items in the income statement. A tax charge of $1.4m has been
recognised on this gain.
In the first half of 2012, the Group recorded a pre-tax net exceptional gain of
$21.2m in relation to the disposal of the remaining Well Support Middle Eastern
business which was completed in May 2012. A tax charge of $5.6m has been
recognised on this gain.
Taxation
The effective tax rate on continuing operations before exceptional items was
29.0% (2011: 30.0%).
Interim Interim Full year
June 2012 June 2011 Dec 2011
$m $m
$m
Profit from continuing operations 160.0 102.7 254.1
before tax pre-exceptional items
Underlying tax charge 54.3 35.8 91.8
Credit in relation to deferred tax (7.9) (5.0) (16.8)
on amortisation of intangibles
arising on acquisition
Tax charge per financial statements 46.4 30.8 75.0
Effective tax rate on continuing 29.0% 30.0% 29.5%
operations
As noted in our December 2011 results, following the sale of Well Support and
acquisition of PSN, we expect the typical effective tax rate going forward to
be no more than 29.0%, with the reduction due to the change in geographic mix
of the Group, reduced rates in certain jurisdictions and management actions
taken.
Earnings per share
Adjusted diluted EPS for the six months to 30 June 2012 increased by 48% to
37.4 cents per share, due to growth in EBITA from continuing operations and the
reduction in the average number of fully diluted shares in the period
subsequent to the return of capital in 2011, partially offset by the impact of
the disposal of Well Support. The average number of fully diluted shares used
in the EPS calculation for the period was 371.4m (2011: 526.9m) and the closing
balance was 372.7m.
Reconciliation of number of fully diluted Closing Weighted
shares Average
30 June 2012
(All figures are in million shares) 2012
Ordinary shares 371.3 371.3
Shares held by employee share trusts (10.6) (12.6)
Basic shares for EPS purposes 360.7 358.7
Effect of dilutive shares 12.0 12.7
Fully diluted shares for EPS purposes 372.7 371.4
Dividend
Reflecting our confidence in the longer term outlook for the Group, we
currently intend to pay a total dividend of 17.0 cents per share for 2012 which
will represent a 26% increase for the year. In order to rebalance more closely
in the ratio of one third interim to two thirds final, we have declared an
interim dividend of 5.7 cents which will be paid on 28 September.
Summary Balance Sheet
June 2012 December 2011
$m $m
Non-current assets 1,880.7 1,873.9
Current assets 2,101.5 2,007.1
Current liabilities (1,412.5) (1,505.2)
Net current assets 689.0 501.9
Non-current liabilities (494.6) (401.3)
Net assets 2,075.1 1,974.5
Equity attributable to owners of the 2,066.6 1,964.5
parent
Non-controlling interests 8.5 10.0
Total equity 2,075.1 1,974.5
The increase in net current assets since December 2011 is due to higher
receivables and inventory, lower payables and income tax liabilities, partly
offset by lower cash and the disposal of net assets held for sale at December
2011.
The increase in non-current liabilities is primarily due to the increase in
long term borrowings since December 2011.
Capital efficiency
The continuing Group's Return on Capital Employed ("ROCE")6 increased from
17.7% at 30 June 2011 to 17.8%. This reflects an increase in ROCE in the
Engineering and Wood Group GTS divisions following higher profitability in the
period, partly offset by lower ROCE in Wood Group PSN which in 2012 has the
impact for the full 6 months of higher goodwill and intangibles arising from
acquisition.
The continuing Group's ratio of Operating Capital Employed to Revenue ("OCER")7
increased from 10.6% at 30 June 2011 to 11.8%. The increase was due principally
to the increase in working capital in the period.
Cash flow and net debt
Interim Interim Full year
June 2012 June 2011 $m Dec 2011
$m $m
Opening net debt (3.9) (15.1) (15.1)
Cash generated from operations 226.7 217.8 471.6
pre working capital
Working capital movements (172.9) (87.7) (109.5)
(continuing operations)
Working capital movements - (77.6) (77.6)
(discontinued operations)
Cash generated from operations 53.8 52.5 284.5
Acquisitions, capex and (71.4) (978.2) (1,083.8)
intangibles
Disposals 38.4 2,745.9 2,793.6
Return of cash to shareholders (7.7) (681.0) (1,725.8)
Tax paid (84.9) (58.5) (118.7)
Interest, dividends and other (35.4) (48.9) (123.4)
Exchange movements on net debt 3.7 (31.6) (15.2)
(Increase)/decrease in net debt (103.5) 1,000.2 11.2
Closing (net debt)/cash (107.4) 985.1 (3.9)
Throughout the period the Group has maintained a level of debt as set out
below.
Interim Interim Full Year
June 2012 June 2011 Dec 2011
$m $m $m
Average net debt 127.7 * *
Average gross debt 323.9 282.9 295.5
Closing net debt/(cash) 107.4 (985.1) 3.9
Closing gross debt 287.5 201.7 230.5
*Average net debt figures for 2011 do not provide a meaningful comparison as a
result of the cash received from the Well Support disposal and the subsequent
return of cash to shareholders and are not therefore provided.
Cash generated from operations pre-working capital increased by $8.9m to
$226.7m and post-working capital increased by $1.3m to $53.8m. The working
capital outflow of $172.9m in the first half of 2012 was due to a combination
of the seasonality of working capital at December 2011, higher activity in the
first half of 2012 compared to the second half of 2011, an increase in GTS
inventory and an increase in closing receivable days. The increase in
receivables days was due in part to slower collection from certain customers in
North America and the Middle East. We do not consider the first half outflow to
be indicative of any structural change in the Group's working capital
consumption, and it is anticipated that the working capital position will
improve in the second half of 2012.
No cash was paid in relation to acquisitions made in the period (2011:
$917.4m). In early July, the Group acquired Duval for an initial consideration
of $21.4m. Duval is based in Texas and provides oilfield operations,
maintenance and fabrication services to the Eagle Ford shale region.
Deferred consideration paid in respect of prior period acquisitions amounted to
$26.0m (2011: $9.2m) and payments for capex and intangible assets decreased to
$45.4m (2011: $50.8m).
Tax payments in the period totalled $84.9m (2011: $58.5m) and interest,
dividends and other amounted to $35.4m (2011: $48.9m).
Foreign exchange and constant currency reporting
The Group's revenue and EBITA can be impacted by movements in foreign exchange
rates, including the effect of retranslating the results of subsidiaries with
various functional currencies into US dollars at different exchange rates.
Given there was no significant movement in the average US dollar to other major
currencies in which we operate between the first half of 2011 and the first
half of 2012, our results in constant currency terms are materially the same as
those presented above.
***********************
Footnotes
1 Continuing operations revenue and EBITA figures include the results of PSN
since acquisition in April 2011, and exclude the results of Well Support and
the Wood Group GTS Aero engine overhaul business, disposed of in April 2011 and
April 2012 respectively. The figures for June 2011 have been restated to show
the Wood Group GTS aero engine overhaul business as discontinued.
2 EBITA from continuing operations represents operating profit from continuing
operations pre-exceptional items of $166.1m (2010: $107.0m), before the
deduction of amortisation of $39.0m (2011: $26.9m) and is provided as it is a
key unit of measurement used by the Group in the management of its business.
3 Adjusted diluted earnings per share ("AEPS") is calculated by dividing
earnings before exceptional items and amortisation, net of tax, by the weighted
average number of ordinary shares in issue during the period, excluding shares
held by the Group's employee share ownership trusts and adjusted to assume
conversion of all potentially dilutive ordinary shares.
4 Number of people includes both employees and contractors at 30 June 2012.
5 Interest cover is EBITA from continuing operations divided by the net finance
charge from continuing operations.
6 Return on Capital Employed ("ROCE") is EBITA divided by average capital
employed.
7 Operating Capital Employed to Revenue ("OCER") is the average operating
capital employed divided by revenue. Operating capital employed comprises
property, plant and equipment, intangible assets (excluding intangibles
recognised on acquisition), inventories and trade and other receivables, less
trade and other payables.
John Wood Group PLC
Interim Financial Statements 2012
John Wood Group PLC
Group income statement
for the six month period to 30 June 2012
Unaudited Interim Unaudited Interim Audited Full Year
June 2012 June 2011 December 2011
Pre- Except- Pre- Except- Pre- Except-
except-ional ional Total except- ional Total except- ional Total
Note items items $m ional items $m ional items $m
$m (note items (note items (note
3) $m 3) $m 3)
$m $m $m
Revenue from 2 3,346.3 - 3,346.3 2,465.9 - 2,465.9 5,666.8 - 5,666.8
continuing
operations
Cost of sales (2,777.4) - (2,777.4) (2,018.4) - (2,018.4) (4,684.2) (29.7) (4,713.9)
Gross profit 568.9 - 568.9 447.5 - 447.5 982.6 (29.7) 952.9
Administrative (402.8) (9.3) (412.1) (340.5) (42.1) (382.6) (719.7) (125.7) (845.4)
expenses
Operating 2 166.1 (9.3) 156.8 107.0 (42.1) 64.9 262.9 (155.4) 107.5
profit
Finance income 0.9 - 0.9 3.2 - 3.2 4.9 - 4.9
Finance expense (7.0) - (7.0) (7.5) (3.8) (11.3) (13.7) (3.8) (17.5)
Profit before
taxation from 160.0 (9.3) 150.7 102.7 (45.9) 56.8 254.1 (159.2) 94.9
continuing
operations
Taxation 8 (46.4) 3.9 (42.5) (30.8) 10.2 (20.6) (75.0) 26.7 (48.3)
Profit for the 113.6 (5.4) 108.2 71.9 (35.7) 36.2 179.1 (132.5) 46.6
period from
continuing
operations
(Loss)/profit (1.1) 15.6 14.5 37.0 2,189.7 2,226.7 36.1 2,220.1 2,256.2
from
discontinued
operations net
of tax
Profit for the 112.5 10.2 122.7 108.9 2,154.0 2,262.9 215.2 2,087.6 2,302.8
period
Profit
attributable
to:
Owners of the 111.3 10.2 121.5 108.7 2,154.0 2,262.7 214.7 2,087.6 2,302.3
parent
Non-controlling 1.2 - 1.2 0.2 - 0.2 0.5 - 0.5
interests
112.5 10.2 122.7 108.9 2,154.0 2,262.9 215.2 2,087.6 2,302.8
Earnings per
share
(expressed in
cents
per share)
Basic 7 31.0 2.9 33.9 21.3 422.7 444.0 49.5 481.2 530.7
Diluted 7 30.0 2.7 32.7 20.6 408.8 429.4 47.8 465.2 513.0
(Loss)/profit from discontinued operations net of tax represent the post-tax
losses of the Wood Group GTS aero engine overhaul business which was divested
in April 2012 and the post-tax profits of the Well Support business which was
divested in April 2011, together with the post-tax gain on divestment.
John Wood Group PLC
Group statement of comprehensive income
for the six month period to 30 June 2012
Unaudited Unaudited Audited
Interim Interim Full
June June Year
2012 2011 December
2011
$m $m $m
Profit for the period 122.7 2,262.9 2,302.8
Other comprehensive income
Actuarial losses on retirement benefit - - (22.6)
liabilities
Movement in deferred tax relating to - - 6.1
retirement benefit liabilities
Cash flow hedges 0.4 7.1 (1.6)
Net exchange movements on retranslation of 2.1 12.5 (31.1)
foreign currency net assets
Net exchange movements on retranslation of - 0.2 (0.2)
non-controlling interests
Total comprehensive income for the period 125.2 2,282.7 2,253.4
Total comprehensive income for the period
is attributable to:
Owners of the parent 124.0 2,282.3 2,253.1
Non-controlling interests 1.2 0.4 0.3
125.2 2,282.7 2,253.4
John Wood Group PLC
Group balance sheet
as at 30 June 2012
Audited
Unaudited Unaudited Full
Interim Interim Year
June June December
2012 2011 2011
Note $m $m $m
Assets
Non-current assets
Goodwill and other intangible assets 1,606.0 1,694.0 1,621.3
Property plant and equipment 161.8 146.7 150.0
Long term receivables 48.5 45.9 42.0
Deferred tax assets 64.4 70.7 60.6
1,880.7 1,957.3 1,873.9
Current assets
Inventories 435.9 416.2 404.5
Trade and other receivables 1,446.9 1,250.5 1,320.9
Income tax receivable 38.6 13.9 28.7
Cash and cash equivalents 12 180.1 1,186.8 226.6
Gross assets held for sale - - 26.4
2,101.5 2,867.4 2,007.1
Liabilities
Current liabilities
Borrowings 12 56.2 29.2 69.2
Trade and other payables 1,242.8 1,219.6 1,286.2
Income tax liabilities 113.5 130.1 139.2
Gross liabilities held for sale - - 10.6
1,412.5 1,378.9 1,505.2
Net current assets 689.0 1,488.5 501.9
Non-current liabilities
Borrowings 12 231.3 172.5 161.3
Deferred tax liabilities 4.3 63.5 5.7
Retirement benefit liabilities 9 47.3 25.3 45.8
Other non-current liabilities 121.5 88.5 98.7
Provisions 90.2 29.3 89.8
494.6 379.1 401.3
Net assets 2,075.1 3,066.7 1,974.5
Equity attributable to owners
of the parent
Share capital 23.4 23.3 23.4
Share premium 8.1 321.8 7.7
Retained earnings 1,569.0 2,516.2 1,469.8
Other reserves 466.1 194.2 463.6
2,066.6 3,055.5 1,964.5
Non-controlling interests 8.5 11.2 10.0
Total equity 2,075.1 3,066.7 1,974.5
John Wood Group PLC
Group statement of changes in equity
for the six month period to 30 June 2012
Equity
attributable
Share Share Retained Other to owners Non-
capital premium earnings reserves of the controlling Total
parent interests equity
Note $m $m $m $m $m $m $m
At 1 January 26.3 315.8 1,007.6 56.6 1,406.3 10.9 1,417.2
2011
Profit for the - - 2,262.7 - 2,262.7 0.2 2,262.9
period
Other
comprehensive
income:
Cash flow - - - 7.1 7.1 - 7.1
hedges
Net exchange - - - 12.5 12.5 0.2 12.7
movements on
retranslation
of foreign
currency net
assets
Total - - 2,262.7 19.6 2,282.3 0.4 2,282.7
comprehensive
income for the
period
Transactions
with owners:
Dividends paid 4 - - (39.3) - (39.3) (0.2) (39.5)
Credit relating 13 - - 2.2 - 2.2 - 2.2
to share based
charges
Shares disposed - - 9.9 - 9.9 - 9.9
of by employee
share trusts
Exchange - - (1.9) - (1.9) - (1.9)
movements in
respect of
shares held by
employee share
trusts
Shares issued 0.6 - - 114.4 115.0 - 115.0
in respect of
the PSN
acquisition
Purchase of (3.6) - (675.7) 3.6 (675.7) - (675.7)
shares under
tender offer
Expenses and - - (43.3) - (43.3) - (43.3)
foreign
exchange
relating to
return of cash
to
shareholders,
net of tax
Adjustment - 6.0 (6.0) - - - -
relating to
options
exercised under
share symmetry
scheme
Transactions - - - - - 0.1 0.1
with
non-controlling
interests
At 30 June 2011 23.3 321.8 2,516.2 194.2 3,055.5 11.2 3,066.7
At 1 January 23.4 7.7 1,469.8 463.6 1,964.5 10.0 1,974.5
2012
Profit for the - - 121.5 - 121.5 1.2 122.7
period
Other
comprehensive
income:
Cash flow - - - 0.4 0.4 - 0.4
hedges
Net exchange - - - 2.1 2.1 - 2.1
movements on
retranslation
of foreign
currency net
assets
Total - - 121.5 2.5 124.0 1.2 125.2
comprehensive
income for the
period
Transactions
with owners:
Dividends paid 4 - - (34.6) - (34.6) (0.8) (35.4)
Credit relating 13 - - 9.2 - 9.2 - 9.2
to share based
charges
Shares disposed - - 4.5 - 4.5 - 4.5
of by employee
share trusts
Exchange - - (1.0) - (1.0) - (1.0)
movements in
respect of
shares held by
employee share
trusts
Adjustment - 0.4 (0.4) - - - -
relating to
options
exercised under
share symmetry
scheme
Transactions - - - - - (1.9) (1.9)
with
non-controlling
interests
At 30 June 2012 23.4 8.1 1,569.0 466.1 2,066.6 8.5 2,075.1
The figures presented in the above tables are unaudited.
Other reserves include the capital redemption reserve, capital reduction
reserve, merger reserve, currency translation reserve and the hedging reserve.
John Wood Group PLC
Group cash flow statement
for the six month period to 30 June 2012
Unaudited Unaudited Audited
Interim Interim Full Year
June June Dec
2012 2011 2011
Note $m $m $m
Cash generated from operations 11 53.8 52.5 284.5
Tax paid (84.9) (58.5) (118.7)
Net cash (used in)/from operating (31.1) (6.0) 165.8
activities
Cash flows from investing activities
Acquisition of subsidiaries (net of cash 5 (26.0) (926.6) (979.4)
and borrowings acquired)
Cash impact of exceptional items - (11.2) (16.4)
Proceeds from divestment of subsidiaries 6 38.4 2,745.9 2,793.6
(net of cash and borrowings divested and
divestment costs)
Purchase of property plant and equipment (30.7) (38.0) (72.4)
Proceeds from sale of property plant and - 1.0 3.5
equipment
Purchase of intangible assets (14.7) (12.8) (32.0)
Proceeds from disposal of intangible - 0.6 0.6
assets
Transactions with non-controlling - (0.8) 0.5
interests
Net cash (used in)/from investing (33.0) 1,758.1 1,698.0
activities
Cash flows from financing activities
Proceeds from/(repayment of) bank loans 57.9 (1.6) 39.9
Return of cash to shareholders (7.7) (675.7) (1,725.8)
Expenses relating to return of cash to - (5.3) (14.9)
shareholders
Purchase of shares by employee share - - (42.5)
trusts
Disposal of shares by employee share 4.5 9.9 12.3
trusts
Interest received 0.9 2.5 4.6
Interest paid (5.4) (12.2) (17.4)
Dividends paid to shareholders 4 (34.6) (39.3) (53.4)
Dividends paid to non-controlling (0.8) (0.2) (0.3)
interests
Net cash from/(used in) financing 14.8 (721.9) (1,797.5)
activities
Net (decrease)/increase in cash and cash (49.3) 1,030.2 66.3
equivalents
Effect of exchange rate changes on cash 2.8 (23.5) (19.8)
and cash equivalents
Opening cash and cash equivalents 226.6 180.1 180.1
Closing cash and cash equivalents 180.1 1,186.8 226.6
John Wood Group PLC
Notes to the interim financial statements
for the six month period to 30 June 2012
1. Basis of preparation
The interim report and financial statements for the six months ended 30 June
2012 have been prepared in accordance with the Disclosure and Transparency
Rules of the Financial Services Authority and with IAS 34 `Interim financial
reporting' as adopted by the European Union. The interim report and financial
statements should be read in conjunction with the Group's 2011 Annual Report
and Accounts which have been prepared in accordance with IFRSs as adopted by
the European Union.
The interim report and financial statements have been prepared on the basis of
the accounting policies set out in the Group's 2011 Annual Report and Accounts
and those new standards discussed below which are applicable from 1 January
2012. The interim report and financial statements do not comprise statutory
accounts within the meaning of section 434 of the Companies Act 2006. The
interim financial statements were approved by the Board of Directors on 20
August 2012. The results for the six months to 30 June 2012 and the comparative
results for six months to 30 June 2011 are unaudited. The comparative figures
for the year ended 31 December 2011 do not constitute the statutory financial
statements for that year. Those financial statements have been delivered to the
Registrar of Companies and include the auditor's report which was unqualified
and did not contain any statement under Section 498 of the Companies Act 2006.
After making enquiries, the directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future.
The Group therefore continues to adopt the going concern basis in preparing the
consolidated interim financial statements.
Functional currency
The Group's earnings stream is primarily US dollars and the principal
functional currency is the US dollar, being the most representative currency of
the Group. The Group's financial statements are therefore prepared in US
dollars.
The following exchange rates have been used in the preparation of these
accounts:
June June
2012 2011
Average rate £1 = $ 1.5752 1.6150
Closing rate £1 = $ 1.5685 1.6055
Disclosure of impact of new and future accounting standards
(a) Amended standards and interpretations not relevant to the Group
The following revisions and amendments to standards and interpretations are
mandatory as of 1 January 2012 but are currently not relevant to the
Group and have no impact to the Group's interim financial statements:
Amendment to IFRS 7, Financial instruments: Transfers of financial assets
Amendment to IFRS 1 on hyperinflation and fixed dates
Amendment to IAS 12, 'Income taxes' on deferred tax
(b) Standards, amendments and interpretations to existing standards that are
not yet effective and have not been early adopted by the Group
The following relevant standards and amendments and interpretations to existing
standards have been published and are mandatory for the Group's
accounting periods beginning on or after 1 January 2013 or later periods, but
the Group has not early adopted them:
IFRS 9, `Financial instruments'
IFRS 10, `Consolidated financial statements'
IFRS 11, `Joint arrangements'
IFRS 12, `Disclosures of interests in other entities'
IFRS 13, `Fair value measurement'
IAS 19 (revised 2011) `Employee benefits'
IAS 27 (revised 2011) `Separate financial statements'
IAS 28 (revised 2011) `Associates and joint ventures'
Amendment to IFRS 1, 'Presentation of financial statements' on OCI
Amendment to IFRS 7 on Financial instruments asset and liability offsetting
The Group currently accounts for its interests in joint ventures using
proportional consolidation. Under IFRS 11, proportional consolidation will
not be permitted and therefore from 1st January 2013 the Group will account for
its interests in joint ventures using equity accounting. The use of equity
accounting will have no impact on Group profit for the year or earnings per
share, but will impact the presentation of the Group's interests in joint
ventures in the income statement and in the balance sheet.
The Group has yet to assess the full impact of the other new standards and
amendments but does not expect them to have a material impact on the financial
statements.
John Wood Group PLC
Notes to the interim financial statements
for the six month period to 30 June 2012
2. Segmental reporting
The segment information provided to the Chief Operating Decision Maker for the
reportable operating segments for the period included the following:
Reportable operating segments
Revenue EBITDA (1) EBITA (1) Operating profit
Un- Un- Un- Un- Audited Un- Un- Un- Un-
audited audited Audited audited audited Full audited audited Audited audited audited Audited
Interim Interim Full Interim Interim Year Interim Interim Full Interim Interim Full
June June Year June June 2011 June June Year June June Year
2012 2011 2011 2012 2011 2012 2011 2011 2012 2011 2011
$m $m $m $m $m $m $m $m $m $m $m $m
Engineering 872.2 688.5 1,458.6 109.0 76.7 170.6 104.1 72.5 162.0 87.4 42.1 128.3
Wood Group 1,774.1 1,296.9 3,012.7 96.0 70.5 165.8 90.0 65.1 153.2 63.8 30.0 42.0
PSN (2)
Wood Group 700.0 480.5 1,195.5 45.1 28.1 91.8 38.1 22.5 78.8 33.5 19.7 (8.9)
GTS
Central - - - (25.6) (24.8) (49.4) (27.1) (26.2) (52.4) (27.9) (26.9) (53.9)
costs (3)
Well Support - 347.0 347.8 - 70.0 69.5 - 58.4 57.6 - 58.4 57.6
- divested
(4)
Wood Group
GTS - 6.8 15.9 37.7 (1.7) (0.3) (0.5) (2.0) (0.3) (0.5) (2.0) (0.3) (12.5)
divested (5)
Total (6) 3,353.1 2,828.8 6,052.3 222.8 220.2 447.8 203.1 192.0 398.7 154.8 123.0 152.6
Remove (6.8) (362.9) (385.5) 1.7 (69.7) (69.0) 2.0 (58.1) (57.1) 2.0 (58.1) (45.1)
divested
operations
Total 3,346.3 2,465.9 5,666.8 224.5 150.5 378.8 205.1 133.9 341.6 156.8 64.9 107.5
continuing
operations
Finance 0.9 3.2 4.9
income
Finance (7.0) (11.3) (17.5)
expense
Profit 150.7 56.8 94.9
before
taxation
from
continuing
operations
Taxation (42.5) (20.6) (48.3)
Profit for 108.2 36.2 46.6
the period
from
continuing
operations
Profit from 14.5 2,226.7 2,256.2
discontinued
operations
net of tax
Profit for 122.7 2,262.9 2,302.8
the period
Notes
Total continuing EBITDA represents operating profit of $156.8m (2011: $64.9m)
before adding back continuing depreciation of property, plant and equipment of
$19.4m (2011: $16.6m), amortisation of $39.0m (2011: $26.9m) and continuing
exceptional items of $9.3m (2011: $42.1m). EBITA represents EBITDA less
depreciation. EBITA and EBITDA are provided as they are units of measurement
used by the Group in the management of its business.
The 2011 results of Wood Group PSN include the trading activity of PSN from the
date of acquisition, 20th April 2011.
Central costs include the costs of certain management personnel in both the UK
and the US, along with an element of Group infrastructure costs.
The 2011 results of the Well Support division represent the trading activity of
that division up to 26th April 2011, the date the division was divested.
The 2012 results of the Wood Group GTS engine overhaul business represents the
trading activity of that business up to 4th April 2012, the date the business
was divested.
Figures on the total row are the sum of continuing activity and the activity of
the divested businesses up to the date of disposal excluding the gains on
divestment.
Revenue arising from sales between segments is not material.
John Wood Group PLC
Notes to the interim financial statements
for the six month period to 30 June 2012
2. Segmental reporting (continued)
Segment assets Unaudited Unaudited Audited
Interim Interim Full Year
June 2012 June 2011 December
2011
$m $m $m
Engineering 829.9 735.3 724.9
Wood Group PSN 1,987.9 2,000.2 1,897.8
Wood Group GTS 996.3 883.4 1,059.3
Well Support - divested - 7.7 7.7
Wood Group GTS - divested - 28.3 18.7
Unallocated 168.1 1,169.8 172.6
3,982.2 4,824.7 3,881.0
Unallocated segment assets includes cash, income tax and deferred tax balances.
3. Exceptional items
Unaudited Unaudited Audited
Interim Interim Full Year
June June December
2012 2011 2011
$m $m $m
Exceptional items included in continuing
operations
Acquisition costs - 9.5 12.0
Integration and restructuring charges - 9.7 84.2
Provision for doubtful debts 9.3 22.9 13.0
Impairment of goodwill - - 46.2
9.3 42.1 155.4
Bank facility fees relating to PSN acquisition - 3.8 3.8
9.3 45.9 159.2
Taxation (3.9) (10.2) (26.7)
Continuing operations exceptional items, net of 5.4 35.7 132.5
tax
Exceptional items included in discontinued
operations
Gain on divestment - Well Support (note 6) (21.2) (2,267.2) (2,305.7)
Write down of assets of aero engine overhaul - - 12.0
business
(21.2) (2,267.2) (2,293.7)
Taxation 5.6 77.5 73.6
Discontinued operations exceptional items, net of (15.6) (2,189.7) (2,220.1)
tax
Total exceptional items, net of tax (10.2) (2,154.0) (2,087.6)
During the period, a net provision for doubtful debts of $9.3m was recorded.
At 30 June 2012, the Group has provided $15.1m that relates to work carried out
for ATP Oil and Gas Corporation, who have filed a voluntary petition for
reorganisation under Chapter 11 of the US Bankruptcy Code. At 31 December 2011,
the Group had provided $13.0m in respect of overdue Libyan receivables as a
result of the political disruption earlier in 2011. In July 2012, the Group
received $5.8m of these receivables and as a result this amount has been
released from the provision resulting in a credit to exceptional items in the
period.
A tax credit of $3.9m has been recorded in relation to exceptional items in
continuing operations in the period to June 2012.
The gain on divestment of subsidiaries of $21.2m relates to the disposal of the
Group's interest in a Well Support business in the Middle East and the disposal
of the Wood Group GTS aero engine overhaul business. A tax charge of $5.6m has
been recorded in relation to the gain on divestment of subsidiaries. Further
details of these divestments are provided in note 6.
For further details of the 2011 exceptional items please see the 2011 Annual
Report and Accounts.
John Wood Group PLC
Notes to the interim financial statements
for the six month period to 30 June 2012
4. Dividends
Unaudited Unaudited Audited
Interim Interim Full Year
June June December
2012 2011 2011
$m $m $m
Dividends on ordinary shares
Final paid 34.6 39.3 39.3
Interim paid - - 14.1
Total dividends 34.6 39.3 53.4
After the balance sheet date, the directors declared an interim dividend of 5.7
cents per share which will be paid on 28 September 2012. The interim financial
statements do not reflect the interim dividend, which will be recognised in
equity attributable to owners of the parent as an appropriation of retained
earnings in the financial statements for the year ended 31 December 2012.
5. Acquisitions
Contingent consideration payments amounting to $26.0m were made during the
period in relation to acquisitions completed in previous years.
Fair value adjustments in respect of the PSN acquisition have now been
finalised and resulted in increased goodwill of $3.7m in the period. The prior
year figures have not been restated for this adjustment as it is not considered
to be material.
6. Divestments
In April 2012, the Group divested its aero engine overhaul business and in May
2012, the Group completed the divestment of its interest in a Well Support
business in the Middle East. Details of the assets and liabilities disposed of
and of cash received are as follows:
$m
Property plant and equipment 7.6
Goodwill and other intangible assets 1.4
Inventories 14.1
Trade and other receivables 10.6
Cash and cash equivalents 0.4
Borrowings (0.2)
Trade and other payables (16.9)
17.0
Non-controlling interests (1.2)
Net assets divested 15.8
Gross proceeds received 43.0
Gross gain on divestment 27.2
Disposal costs (6.0)
Net gain on divestment before tax 21.2
Tax (5.6)
Net gain on divestment after tax (see note 3) 15.6
The inflow of cash and cash equivalents in relation to the divestments is
analysed as follows:
$m
Gross proceeds receivable 43.0
Proceeds not yet received (2.7)
Divestment costs paid (1.7)
Cash divested (0.4)
Borrowings divested 0.2
Net cash inflow from divestment 38.4
John Wood Group PLC
Notes to the interim financial statements
for the six month period to 30 June 2012
7. Earnings per share
Un- Un- Audited Full
audited audited Year
Interim Interim December 2011
June 2012 June 2011
Earnings Earnings Earnings
attributable Earnings attributable Number Earnings attributable Earnings
to equity Number of per to equity of per to equity Number of per
shareholders shares share shareholders shares share shareholders shares share
($m) (millions) (cents) ($m) (millions) (cents) ($m) (millions) (cents)
Basic pre- 111.3 358.7 31.0 108.7 509.6 21.3 214.7 433.8 49.5
exceptional
Exceptional 10.2 358.7 2.9 2,154.0 509.6 422.7 2,087.6 433.8 481.2
items, net
of tax
Basic 121.5 358.7 33.9 2,262.7 509.6 444.0 2,302.3 433.8 530.7
Effect of - 12.7 (1.2) - 17.3 (14.6) - 15.0 (17.7)
dilutive
ordinary
shares
Diluted 121.5 371.4 32.7 2,262.7 526.9 429.4 2,302.3 448.8 513.0
Exceptional (10.2) - (2.7) (2,154.0) - (408.8) (2,087.6) - (465.2)
items, net
of tax
Diluted pre- 111.3 371.4 30.0 108.7 526.9 20.6 214.7 448.8 47.8
exceptional
items
Amortisation, 27.7 - 7.4 23.9 - 4.6 55.5 - 12.4
net of tax
Adjusted 139.0 371.4 37.4 132.6 526.9 25.2 270.2 448.8 60.2
diluted
Adjusted 139.0 358.7 38.8 132.6 509.6 26.0 270.2 433.8 62.3
basic
The calculation of basic earnings per share (`EPS') is based on the earnings
attributable to equity shareholders divided by the weighted average number of
ordinary shares in issue during the period excluding shares held by the Group's
employee share trusts. For the calculation of diluted EPS, the weighted average
number of ordinary shares in issue is adjusted to assume conversion of all
potentially dilutive ordinary shares. The Group has two types of dilutive
ordinary shares - share options granted to employees under Employee Share
Option Schemes and the Long Term Retention Plan; and shares issuable under the
Group's Long Term Incentive Plan. Adjusted basic and adjust diluted EPS is
disclosed to show the results excluding the impact of exceptional items and
amortisation, net of tax.
8. Taxation
The taxation charge for the six months ended 30 June 2012 reflects an
anticipated rate of 29.0% on continuing profit before taxation and exceptional
items for the year ending 31 December 2012 (June 2011 : 30.0%).
Legislation to reduce the main rate of UK corporation tax from 26% to 25% from
1 April 2012 was included in the Finance Act 2011. A resolution passed by
Parliament on 26 March 2012 has reduced the main rate of corporation tax by a
further 1% to 24% from 1 April 2012. Further reductions to the main rate are
proposed to reduce the rate by 1% per annum to 22% by 1 April 2014. None of
these expected rate reductions had been substantively enacted at the balance
sheet date and, therefore, are not included in these financial statements.
9. Retirement benefit liability
No interim revaluation of the pension liability has been carried out at 30 June
2012 and accordingly there is no actuarial gain/loss in the statement of
recognised income and expense. The figures for gains and losses for the full
year together with the surplus/deficit at the year end will be presented in the
2012 Annual Report and Accounts.
10. Related party transactions
The following transactions were carried out with the Group's joint ventures in
the six months to 30 June. These transactions comprise sales and purchase of
goods and services in the ordinary course of business. The receivables include
loans to certain joint venture companies.
Unaudited Unaudited Audited
Interim Interim Full Year
June June December
2012 2011 2011
$m $m $m
Sales of goods and services to joint ventures 15.5 27.0 44.0
Purchase of goods and services from joint 9.5 8.0 24.6
ventures
Receivables from joint ventures 58.5 26.5 36.8
Payables to joint ventures 11.7 4.2 5.5
John Wood Group PLC
Notes to the interim financial statements
for the six month period to 30 June 2012
11. Cash generated from operations
Un- Un- Audited
audited audited Full
Interim Interim Year
June June December
2012 2011 2011
$m $m $m
Reconciliation of operating profit to cash
generated from operations:
Operating profit from continuing 166.1 107.0 262.9
operations before exceptional items
Operating (loss)/profit from discontinued (2.0) 58.1 57.1
operations before exceptional items
Adjustments for:
Depreciation 19.7 26.4 47.2
Loss/(profit) on disposal of property 0.1 0.8 (0.1)
plant and equipment
Amortisation of intangible assets 39.0 26.9 78.7
Share based charges 11.7 2.2 19.2
Decrease in provisions (2.7) (5.7) (3.1)
Changes in working capital (excluding
effect of acquisition and divestment of
subsidiaries)
Increase in inventories (31.2) (36.0) (51.4)
Increase in receivables (133.4) (131.2) (232.1)
(Decrease)/increase in payables (8.3) 1.9 96.4
Exchange movements (5.2) 2.1 9.7
Cash generated from operations 53.8 52.5 284.5
12. Reconciliation of cash flow to movement in net debt
At 1 At 30
January Cash Exchange June
2012 flow movements 2012
$m $m $m $m
Cash and cash equivalents 226.6 (49.3) 2.8 180.1
Short term borrowings (69.2) 13.5 (0.5) (56.2)
Long term borrowings (161.3) (71.4) 1.4 (231.3)
Net debt (3.9) (107.2) 3.7 (107.4)
13. Share based charges
Share based charges for the period of $11.7m (2011: $8.5m) relate to options
granted under the Group's executive share option schemes and awards under the
Long Term Incentive Plan and the Long Term Cash Incentive Plan (`LTCIP'). The
charge is included in administrative expenses in the income statement. The
liability of $2.5m in respect of the LTCIP is included in non-current
liabilities with the balance of the charge, $9.2m being credited to equity.
14. Capital commitments
At 30 June 2012 the Group had entered into contracts for future capital
expenditure amounting to $11.4m. The capital expenditure relates to property
plant and equipment and has not been provided in the financial statements.
15. Post balance sheet events
On 1 July 2012, the Group acquired Duval Lease Services and Freer Iron Works
Inc (`Duval') for an initial consideration of $21.4m. Duval provides
maintenance, installation and fabrication services in the Eagle Ford shale
region of Texas.
16. Contingent liabilities
In February 2010, the Group, and several other parties, were notified of a
legal claim from a customer in respect of work carried out in 2008. Management
believe that the Group is in a strong position to defend the claim. In
addition, the Group is currently cooperating with an investigation in relation
to a facility where it previously provided services. Management do not believe
that it is probable that any material liability will arise from either of these
matters. There has been no material change to the position on these matters
since 31 December 2011.
Statement of directors' responsibilities
for the six month period to 30 June 2012
The directors confirm that the interim report and financial statements have
been prepared in accordance with IAS 34 as adopted by the European Union and
that the interim report includes a fair review of the information required by
DTR 4.2.7 and DTR 4.2.8, namely:
â— an indication of important events that have occurred during the first six
months and their impact on the financial statements and a description of the
principal risks and uncertainties for the remaining six months of the year; and
â— material related party transactions in the first six months and any material
changes in the related party transactions described in the last annual report.
The directors of John Wood Group PLC are listed in the Group's 2011 Annual
Report and Accounts with the exception of the following changes in the period:
C Masters resigned on 10 May 2012, J Morgan resigned on 10 May 2012, L Thomas
resigned on 29 June 2012, M Papworth resigned on 29 June 2012 and M
Shafer-Malicki was appointed on 1 June 2012.
A G Langlands
Chief Executive
A G Semple
Group Finance Director
20 August 2012
Independent review report
to John Wood Group PLC
for the six month period to 30 June 2012
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the interim financial report for the six months ended 30 June
2012 which comprises the Group income statement, Group statement of
comprehensive income, Group balance sheet, Group statement of changes in
equity, Group cash flow statement and related notes. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the financial
information in the condensed set of financial statements.
Directors' responsibilities
The interim financial report, is the responsibility of, and has been approved
by the directors. The directors are responsible for preparing the interim
financial report in accordance with the Disclosure and Transparency Rules of
the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed financial statements included in this interim financial report have
been prepared in accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the interim financial report based on our
review. This report, including the conclusion, has been prepared for and only
for the Company for the purpose of the Disclosure and Transparency Rules of the
Financial Services Authority and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, `Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the interim financial
report for the six months ended 30 June 2012 are not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
Aberdeen
20 August 2012
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
Registrars post 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 Registrars at the address below. Sterling
dividends will be translated at the closing mid-point spot rate on 31 August
2012 as published in the Financial Times on 1 September 2012.
Officers and advisers
Secretary and Registered Office
R M B Brown
John Wood Group PLC
John Wood House
Greenwell Road
Aberdeen
AB12 3AX
Tel: 01224 851000
Registrars
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Tel: 0871 384 2649
Stockbrokers
Credit Suisse
JPMorgan Cazenove
Independent Auditor
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Company solicitors
Slaughter and May
Financial calendar
Year
6 months ended ending
30 June 31
2012 December
2012
Results 21 August 2012 Early March
announced 2013
Ex-dividend date 29 August 2012 April 2013
Dividend record 31 August 2012 April 2013
date
Dividend payment 28 September May 2013
date 2012
Annual General May 2013
Meeting
The Group's Investor Relations website can be accessed at www.woodgroup.com.
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