Wood Group (WG.) announced half-year results including “operating profit of $65.6m (June 2019: $138.8m)…considers it prudent not to pay a 2020 interim dividend” but the shares look to be at a depressed valuation and the announcement also included “recent signs of stabilisation… expect good cash generation and a further reduction in net debt in the second half. Well placed for medium term growth as markets recover and the energy transition gathers pace”. That is with the group an engineering and consultancy provider to energy markets noting it is moving with those markets – the interims noting upstream and midstream oil & gas now representing c35% of activity (H1 2019: c40%), with chemicals & downstream (c25%), renewables and other energy (c25%) and the built environment (c15%).
Chief Executive Robin Watson has more than 35 years’ engineering and industry experience and joined in 2010 having worked for Petrofac and Mobil Oil in the UK and internationally. His remuneration in 2019 totalled £1.69 million (£0.75 million salary), with 351,436 shares held. Chief Financial Officer David Kemp joined in 2013 having had executive roles at Trap Oil Group, Technip, Simmons & Company International and Hess Corporation. His remuneration in 2019 totalled £1 million (£0.48 million salary) with 81,576 shares held. Chair Roy Franklin has more than 46 years experience as a senior executive in the oil & gas industry and he has extensive experience in chairing boards of listed companies. His remuneration in 2019 totalled £0.14 million, with 15,000 shares held. We rate this management team highly. In tough circumstances, it is doing all the right things.
After net finance expense, tax and non-controlling interests, there was a six months ended 30th June 2020 $14.9 million attributable loss on revenue -11.5% on a like-for-like basis at just over $4 billion. Excluding exceptionals, it was an $18.2 million profit and there was a net $59.5 million generated from operating activities and then $48.2 million of interest paid. The balance sheet showed cash of $661.9 million and the group emphasised “net debt excluding leases reduced significantly to $1.22bn at 30 June 2020 (30 June 2019: $1.77bn and 31 December 2019: $1.42bn), benefitting from disposal proceeds and steps taken to protect cashflow”. Total current assets were $2.88 billion (-$1.86 billion from six months previously), with current liabilities $3.11 billion (-$1.86 billion) and non-current liabilities $2.90 billion (-0.12 billion). The group notes “uncertainty arising from Covid-19 and oil price volatility” though also “>$200m of overhead cost reductions from actions completed in H1” and “undrawn facilities $1.627bn” and its diversifying markets exposure looks to also mitigate. There is also regulatory risk – for example, the results also including; “Discussions concerning possible resolutions of the investigations by the authorities in the US, Brazil and Scotland progressed to the point where the Group believes that it is likely to be able to settle the relevant matters with these authorities at an aggregate cost of approximately $46m. This amount continues to be reflected as a provision in the financial statements as described in note 11. The Group could also face further potential civil and criminal consequences in relation to the investigation by the SFO”.
The group also noted “order book at 30 June $7.0bn (down 16.4% on June 2019 on a like for like basis)”, but also “$3.1bn of order book due to be delivered in H2 2020, giving higher than typical visibility: c90% of forecast revenue delivered or secured at this point in 2019… Focused… to deliver full year EBITDA margins at the 2019 level of 8.6%”. The shares are down from end-2019 levels of around 400p to a current 213.5p offer price, capitalising the group at around £1.5 billion. With even around $300 million of adjusted EBITDA (bullsh*t earnings, but something the market tends to take note of) in the troubled first half, we look for gradual trading recovery to see the shares up towards 300p again.
This first appeared on the N50 website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website ahead of the next share tip from Tom & Steve and a new shorting piece this week click HERE
Filed under: Wood Group, Mark Horrocks, Chris Akers, Barratt Developments, Ariana, [email protected] Capital
RISK WARNING & DISCLAIMER - FiveFreeShareTips.com tips are provided by independent authors via a common carrier platform and do not represent the opinions of FiveFreeShareTips.com. FiveFreeShareTips.com does not accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at FiveFreeShareTips.com and via emails you receive from [email protected] are for your general information and use and are not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by the tipsters or FiveFreeShareTips.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Trading shares involves the risk of loss. The tipsters and FiveFreeShareTips.com shall not be liable for any losses or other damages incurred. The value of investments can go up or down and the past is not necessarily a guide of future performance.
Well actually it will be six. One every week day and one on Sunday, each landing with you at 11 AM sharp.
Unlike other services (which may always have a vested interest) we pride ourselves on our impartiality and cover all small caps including AIM. the Standard List, The Wider Main Market and NEX.
We cover small caps, penny shares, FTSE 350 stocks and blue chips. We look for red hot penny shares, Warren Buffett style value investments with yield and growth stocks. There is no technical analysis in our work just solid fundamental analysis from a team of experts with decades of stockmarket experience.
You will not agree with all we publish but if you are interested in small caps you cannot afford to ignore it either. Yo'll never be charged for the free share tips from Five Free Share Tips and given the star writers involved you know that they will move share prices.
There's no telephone number or postal address required and there is no charge, ever, for your Five Free Share Tips membership. Just free shares tips every day apart from Saturday And each day's share tip will not just be a few thoughts cobbled together but will be detailed analysis from experts.
Our experts do not just earn their living from writing. All own shares. If they own shares in a stock they cover they will declare it and will not sell until after advising a sell to our readers. And why not our tips are so good that why shouldn't our readers put their money where their mouth is?
Don't just take our word for it! Judge us on the calibre of our free share tips and join today to start receiving them from September 1 2017. If you don't like what you get delivered to your inbox unsubscribe and you will never hear from us again. So why not give it a go? Sign Up Now
We've put together a panel of top tipsters, including:
Tom Winnifrith, in his 27th year writing about shares, noted fraudbuster & dubbed "The maverick Tipster"
Chris Bailey, City whizz kid turned financial guru, rated as one of the top 50 commentators on shares on twitter, founder of Financial Orbit
Steve Moore, has worked with Tom Winnifrith for all bar 3 weeks of his working life - a noted commentator on value stocks
Malcolm Stacey, The Grandfather of Share Blogging, the founder of ShareCrazy & a best selling autthor of stockmarket books
Lucian Miers, the Bard of the Boleyn, one of the UK's best known short sellers
Gary Newman, writes about value investing on AIM, speciality is in share tips on oil and mining companies
Nigel Somerville, The Deputy Sheriff of AIM, an expert in forensic analysis a skill used to bust frauds but also to tip true value investments
The team from HotStockRockets, specialising in AIM and small cap shares which will fly on a three month view
Remember to book your place at the UK Investor Show 2018. The UK’s top investment show taking place on Saturday 21 April 2018 at the Queen Elizabeth II Conference Centre in Westminster, London. The show will feature a unique line-up of top speakers including Nigel Wray, tech queen Vin Murria, Dave Lenigas, Mark Slater, Tom Winnifrith, Adam Reynolds, Ed, Croft, Nick Leslau Luke Johnson and Dr Johnny Hon as well as 135 exhibiting small cap companies.
The hot share tips given here are of necessity, general. They cannot relate to the individual circumstances of investors. Anyone considering following the share tips contained here should seek independent advice from a Financial Conduct Authority authorised Stockbroker or Financial Adviser. We cannot be held liable if individuals suffer losses through following share tips contained on this site or emailed out as free share tips. The value of investments can go down as well as up. The past is not necessarily a guide to future performance. Investing in shares can lose you part or all of your capital although the potential returns are theoretically unlimited. The difference between the buy share price and the sell share price for smaller company shares (penny shares) can be significant. Profits from dealing in shares may be liable to tax - the level of tax and bases of relief from tax are subject to change. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Some of the shares recommended on this site will be smaller company shares. By their nature such investments can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares (or 'small caps'/'penny shares'). FiveFreeShareTips.com & its sister site ShareProphets.com defines a smaller company share as any stock traded on AIM or NEX or which has a market capitalisation of less than £300 million.