Half year results for the six months ended 30 June 2017

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Half year results for the six months ended 30 June 2017

First half performance down on 2016. Full year outlook unchanged

"First half performance was down on 2016 reflecting the different market conditions across our business. Robust performance in ALCS West and growth in STS was offset by a weaker performance in ALCS East where the North Sea market is particularly challenging.  Our full year outlook is unchanged and we anticipate a stronger second half performance. In June shareholders overwhelmingly approved our offer for Amec Foster Wheeler which will accelerate our strategy to create a global leader in project, engineering and technical services across a broad range of industrial sectors, the largest of which will be oil and gas.  We remain on track to complete the transaction in the fourth quarter."

Robin Watson, Chief Executive

Financial Summary

Interim Jun
2017
$m

Interim Jun
2016
$m

%
Change

Total Revenue1

2,277

2,559

(11.0)%

Total EBITA1

127

166

(23.5)%

EBITA Margin

5.6%

6.5%

(0.9)%

Revenue from continuing operations on an equity accounting basis

1,944

2,161

(10.0)%

Operating Profit before exceptional items

72

106

(32.1)%

Profit for the period

6

45

(86.7)%

Basic EPS

1.1c

10.9c

(89.9)%

Adjusted diluted EPS1

22.9c

28.7c

(20.2)%

Interim Dividend

11.1c

10.8c

3.0%

  • Recovery in certain markets despite tough conditions in the oil and gas sector overall
  • Asset Life Cycle Solutions West – Robust performance including improved activity in offshore greenfield project engineering and commissioning and modest improvement in US onshore activity
  • Asset Life Cycle Solutions East -  weaker activity with significant reduction in projects & modifications work, particularly in the North Sea
  • Specialist Technical Solutions - Growth in automation and robust activity in technology related work, offset by weaker performance in subsea
  • Impact of tougher pricing environment largely offset by enduring sustainable structural cost reductions
  • Overhead costs down $44m from H1 2016
  • Profit for the period is stated after exceptional costs of $48m, including $25m in respect of the acquisition of Amec Foster Wheeler
  • Strong financial position. Net debt of $490m and Net debt : EBITDA of 1.2x
  • Interim dividend up 3% in line with our progressive policy
  • Amec Foster Wheeler to complete in Q4:
    • Accelerates Wood Group’s strategy
    • Will deliver significant cost synergies of at least $170m(2)
    • Competition & Markets Authority (“CMA”) approved UK remedy in principle with no upfront buyer requirement

Notes:

  1. See detailed footnotes following the Financial Review.  Total Revenue and Total EBITA are presented based on proportionally consolidated numbers, which is the basis used by management to run the business and includes the contribution from joint ventures. A reconciliation to statutory numbers is provided in note 2 to the interim financial statements
  2. As disclosed in the Wood Group prospectus dated 23 May 2017 estimated pre-tax cost synergies expected to arise from the Combination are at least £165m (in US$, approximately $200m) per annum, by the end of the third year following Completion.  The realisation of these cost synergies is estimated to give rise to one-off costs of approximately £190m (US$231m) incurred in the first three years post-Completion. Should the proposed UK remedy be accepted by the CMA and implemented, it is anticipated that approximately £25m ($30m) per annum of the pre-tax cost synergies would not be achieved.  Furthermore, approximately £25m ($30m) of the one-off costs to realise the cost synergies would not be incurred  
  3. Company compiled publicly available consensus 2017 EBITA on a proportionally consolidated basis is $319m and AEPS is 55.8c, last updated on 26 July 2017

(https://www.woodgroup.com/investors/investor-information/analyst-consensus)

Wood Group is an international energy services company with around $5bn sales and operating in more than 40 countries. The Group designs, modifies, constructs and operates industrial facilities mainly for the oil & gas sector across the asset life-cycle. We enhance this with a wide range of specialist technical solutions including our world leading subsea, automation and integrity solutions. Our real differentiators are our range of services, the quality of our delivery, the passion of our people, our culture and values. We are extending the scale and scope of our core services into adjacent industries. Visit Wood Group at www.woodgroup.com and connect with us on LinkedIn and Twitter.

For further information contact:

Wood Group

Andrew Rose – Group Head of Investor Relations 01224 532 716

Ellie Dixon – Investor Relations Manager 01224 851 369

Brunswick

Patrick Handley 020 7404 5959

Charles Pemberton

There will be an analyst and investor presentation at the Lincoln Centre, 18 Lincoln’s Inn Fields, WC2A 3ED at 09.00.  Early registration is advised from 08.30.

A live webcast of the presentation will be available from www.woodgroup.com/investors/financial-information/financial-events-calendar

Replay facilities will be available later in the day.

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