John Wood Group Plc. Management Report on Oil and Gas Accounting

This report examines the performance of John Wood Group Plc. over the last five years to bring out with a conclusion after identifying and evaluating various risks against its competitors in the energy services industry. The report analyses the growth rate, asset turnover ratio, business risk, financial risk, systematic risk, and the actions taken by management to manage the risk. It also evaluates the company’s value through various models of valuations and analyses the company’s dividend policy.

RUNNING HEAD: OIL AND GAS ACCOUNTING
John Wood Group Plc. management report

Oil and gas accounting 1
Contents
Executive Summary...................................................................................................................3
Introduction................................................................................................................................4
Risk Profile.................................................................................................................................4
Growth Rate (Sales)...............................................................................................................4
Asset Turnover Ratio.............................................................................................................6
Business Risk.........................................................................................................................7
Financial Risk.........................................................................................................................8
Systematic Risk....................................................................................................................10
Factors affecting systematic risk..........................................................................................10
Return on Assets..................................................................................................................11
Return on Equity..................................................................................................................12
Actions taken by Management to Manage the Risk.............................................................13
Analysis of company’s value...................................................................................................14
Cost of capital......................................................................................................................14
Net Asset Value Approach...................................................................................................16
The Dividend Valuation Approach......................................................................................16
Price-Earnings Ratio Approach............................................................................................17
Rappaport’s Shareholder Value Model................................................................................17
Projects and acquisitions..........................................................................................................18
Analysis of Company’s Dividend Policy.................................................................................19
References................................................................................................................................21
Bibliography.............................................................................................................................23
Appendices...............................................................................................................................26
Appendix 1...........................................................................................................................26
Appendix 2...........................................................................................................................26

Oil and gas accounting 2
Table of Figures
Figure 1: John Wood Revenues..............................................................................................4
Figure 2: John Wood growth rates.........................................................................................5
Figure 3: Asset Turnover.........................................................................................................5
Figure 4: Competitors' revenue..............................................................................................6
Figure 5: Operating Profit.......................................................................................................6
Figure 6: Net Profit..................................................................................................................7
Figure 7: Net Debt....................................................................................................................8
Figure 8: Rappaport Shareholder Value Model.................................................................14
Figure 9: Dividend Yield.......................................................................................................15
Table of Contents
Table 1: Sales by years.............................................................................................................5
Table 2: Financial Leverage....................................................................................................9
Table 3: Return on Assets......................................................................................................10
Table 4: Return on Equity.....................................................................................................10
Table 5: Cost of Equity..........................................................................................................12
Table 6: Cost of Debt.............................................................................................................12
Table 7: Weighted Average Cost of Capital........................................................................12
Table 8: Net Asset Value........................................................................................................13
Table 9: Dividends..................................................................................................................13

Oil and gas accounting 3
Executive Summary
John Wood Group Plc was established in the year 1961 (Yahoo Finance, 2016) and is
listed on FTSE 250 Index. This report examines the performance of the company over the last
five years to bring out with a conclusion after identifying and evaluating various risks against
its competitors. The various competitors compared in this report are (Energy Business
Review, 2018) are:
 Petrofac Ltd.
 Schlumberger Ltd.
 National Oilwell Varco
 Halliburton Co.
The growth rate and how sales have been affected by various factors of the company has
been analysed. In addition, the operating profit, degree of operating leverage (DOL) and
degree of financial leverage (DFL) are assessed to know the business and financial risk of the
company. Further, the report also emphasizes on the capital structure of John Wood Group
PLC and evaluates its cost of capital through Weighted Average Cost of Capital (WACC).
Moreover, the significant models of valuations are used to compute the company’s share
price in the market.

Oil and gas accounting 4
Introduction
John Wood Group is a multinational company and operates in the energy services
Industry. Primarily, the company is headquartered in the Aberdeen, United Kingdom, but the
operations are spread in various countries across the globe. The company make available a
range of activities to oil and gas and energy sectors worldwide like engineering, maintaining
management services, and supporting production. The company has grown year by year
significantly to function in more than 60 countries and employed more than 25000 employees
(John Wood Group PLC, 2018).
Risk Profile
Growth Rate (Sales)
Sales growth rate analyses the volume of average sales grown from year to year
(Henriques and Sadorsky, 2011).The growth rate of John Wood Group PLC has shown a
significant fluctuation over the past years. The reasons for this fluctuation were related to the
fluctuation in the industry as well. From the above table of sales growth rate, it is seen that in
the year 2012, the revenue of the company was nearly USD 6,828 million. Than in 2014, the
growth rate increased because there was an economic growth in the oil industry and
unemployment was also decreased. (Pettinger, 2017). In the year 2015, the sales decreased
and there was substantial decline in the growth rate from 8% to -23%. It was seen that this
was due to the impact of the prices of oil dropped leading to decline of short term
investments in the oil industry.

Oil and gas accounting 5
2012 2013 2014 2015 2016
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Revenue
Sales($m)
Years
$m
Figure 1: John Wood Revenues
Sales Growth Rate
Year
Sales
($m) Growth rate
2012 6,828
2013 7,064 3%
2014 7,616 8%
2015 5,852 -23%
2016 4,934 -16%
(Annual Report, 2016)
Table 1: Sales by years

Oil and gas accounting 6
2012 2013 2014 2015 2016
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
Sales Growth Rate
Growth Rate
Years
%
Figure 2: John Wood growth rates
Asset Turnover Ratio
The asset turnover ratio measures the capability of the company to generate revenue
by deploying its assets effectively and efficiently. From the below figure, it can be seen that
John wood Group Plc competitors had enough assets to sustain positive growth. However, the
company was not able to maintain assets.
2012 2013 2014 2015 2016
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Asset Turnover Ratio
John Wood Group PLC Petrofac Ltd. Schlumberger Ltd.
National Oilwell Varco Halliburton Co.
Years
Values
Figure 3: Asset Turnover

Oil and gas accounting 7
Business Risk
The possibility where a business can have lower profits than the expected ones is
generally called as business risk. It is directly affected by the operating profits of the
company. Operating profit margin is a profitability ratio which helps to measure the amount
of revenue left after deducting all operating cost and thus indicating the degree of business
risk. The decisions of creditors and investors are based upon this ratio as it gives a picture of
how profitable a company’s working are and creating value for shareholders (Knight, 2012).
However, business risk is also affected by the level of debt in the capital structure of the
company. Wood Group’s debt-to-equity ratio is 42.1% indicating not a strong performance of
the company. Therefore, in June 2017, John Wood Group PLC has an operating margin of
4.74% (Yahoo Finance, 2018). Apart from that, the joint ventures of the company made a
major contribution in the company’s total revenue and earnings before income and tax. A
high turnover indicates a healthier state of affairs of the company (Gibson, 2011).
2012 2013 2014 2015 2016
0
10000
20000
30000
40000
50000
60000
Revenue
John Wood Group PLC Petrofac Ltd. Schlumberger Ltd.
National Oilwell Varco Halliburton Co.
Years
$m
Figure 4: Competitors' revenue
From the above figure, it can be seen that after 2014, all the competitors of John Wood Group
except Petrofac Ltd, faced a decline in their turnover including the company itself.

Oil and gas accounting 8
2012 2013 2014 2015 2016
-8000
-6000
-4000
-2000
0
2000
4000
6000
8000
10000
12000
Operating Profit
John Wood Group PLC Petrofac Ltd. Schlumberger Ltd.
National Oilwell Varco Halliburton Co.
Years
$m
Figure 5: Operating Profit
The above figure shows that after 2014, operating profit of National Oilwell Vacro,
Halliburton Co. and Petrofac ltd. has become negative. Whereas, John Wood and
Schlumberger Ltd were able to keep their profits positive in that situation. Although in 2016,
John Wood’s profits reduces to a high extent but the figures remain positive.
Financial Risk
Financial risk arises from the loss faced by the company. It has a major impact on the
shareholders as they interested in getting higher returns from the funds they invest. A
combination of debt and equity is needed to increase the shareholder value of the company
when company make large profits. It is easy for a company to increases its shareholders’
value of it makes positive net profits.

Oil and gas accounting 9
2012 2013 2014 2015 2016
-8000
-6000
-4000
-2000
0
2000
4000
6000
8000
Net Profit
John Wood Group PLC Petrofac Ltd. Schlumberger Ltd.
National Oilwell Varco Halliburton Co.
Years
$m
Figure 6: Net Profit
From the above graph it is depicted that the net profits of John Wood Group PLC and
Schulmberger Ltd. were positive after 2014, while all the other competitive entities faces a
negative trend in their profits. Having positive net profits in the last five years means John
Wood is able to increase the value of its shareholders. Also the year which highlights
financial risk is 2014, because after that most of the companies made negative profits. Thus,
John Wood Group PLC faces less financial risk from its competitors. This also indicates that
it has high a financial leverage that means the use of debt funds is more by the company. This
creates an unfavourable financing position for the business.
As it is stated above, the financial risk is also affected by the capital structure of the
firm. John Wood as a debt ratio of 42.1% which means company’s operations are more
financed by debt rather than equity.
Net Debt helps the company to know its overall financial health by paying off all its
total debt if they become due immediately using its cash and liquid assets. It also helps the
shareholders and experts to know whether the company is over or under leveraged
(Lambrecht and Pawlina, 2012). However, the company has faced several difficulties from
the past years; in 2016 it is able to meet its expectations in terms of financial performance.

Oil and gas accounting 10
2012 2013 2014 2015 2016
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
Net Debt
John Wood Group PLC
Petrofac Ltd
Schlumberger Ltd.
National Oilwell Varco
Halliburton Co.
Years
$m
Figure 7: Net Debt
Systematic Risk
The systematic risk also known market risk or un-diversifiable risk is the risk which
affects the company’s stocks, assets and the industry. Systematic risk can be impacted by
various macro factors in the market such as recession, inflation, government policy and
others. Therefore, beta is used to measure the systematic risk. (Prasanna, 2013). The value of
beta is measured in terms of one. However, firm faces a higher systematic risk if beta is
greater than one and vice-versa. Therefore, John Wood Group PLC has a beta of 0.7514
(Ft.com). A positive beta indicates that it has a direct relation with the market. It means that
when the market shows rising trend, the price of the company’s stock also rises and vice
versa but the stock volatility differs from the market volatility.
Factors affecting systematic risk
Operating Leverage
Operating leverage analyses the total fixed cost of the firm. John Wood Group PLC
faces high operating leverage as it is engaged in heavy equipment’s. The fixed costs are all
the fixed expenditure like salary, rents and other administrative expenses. Hence, the
company has high DOL and volatile earnings in the past years.
Financial Leverage
Degree of financial leverage measure the amount of debt the company uses over the
equity. The company will have a high financial leverage if its uses more debt. Therefore, this

Oil and gas accounting 11
also increases the burden of repayment of debts along with their interest on the maturity date
affecting the company’s EPS.
Financial Leverage (%)
Year Financial Leverage
201
2 1.87
201
3 1.89
201
4 1.72
201
5 1.7
201
6 1.84
(Morningstar, 2018)
Table 2: Financial Leverage
The above table shows the financial leverage of John Wood Group PLC over the last
five years. In the year 2012, the company had a leverage of 1.87. In the year 2016, it
decreased to 1.84 thus, reducing the financial risk of the company.
Performance Visibility
Visibility of company’s performance is another factor that indicates its systematic risk. The
beta of the company is directly influenced by the level of transparency kept by the firm in its
financial reports, management process and performance. John Wood Group has make its
shareholders aware about its strategies and performance in the last five years. This increases
the reliability as well as kept the beta of the company lower than its competitors.

Oil and gas accounting 12
Return on Assets
Return on assets is a significant profitability ratio to measure the return earned by the
company from its investment in assets during a period. A high return on assets indicates a
favourable situation (Saleem and Rehman, 2011).John wood group PLC is a public company
so the return on assets is majorly dependent on the industry.
Return on Assets (%)
2012 2013 2014 2015 2016
John Wood Group PLC 6.39 6.8 7.21 1.87 0.69
Petrofac Ltd. 12.36 10.33 1.48 -3.99 0.01
Schlumberger Ltd. 9.4 10.47 8.12 3.07 -2.31
National Oilwell Varco 8.74 7.02 7.32 -2.55 -10.08
Halliburton Co.
10.32 7.5
11.3
9 -1.94 -18.03
Table 3: Return on Assets
The above table shows the Return on asset of John Wood Group PLC and its major
Competitors in the last five years. It is indicated that in the year 2012, the return on assets of
John Wood Group PLC was 6.39%. And in the subsequent years it increased to 6.80%. This
increase in the ratio was affected by the acquisition of Swaggart Brothers for providing
services like civil construction and fabrication to the company. After that in the 2016, there
was a substantial fall in the ratio to 0.69%. This fall was led due the decrease in the revenue
of the company gradually as the investment in the new assets does not provide returns in the
starting years of operation. The decision to acquire its biggest competitor Amec Foster
Wheeler also lowered the return on assets. In addition to that, the company was also
expanding its operations during this period which led to increase in its expenditure.
Return on Equity
Return on equity evaluates a company’s profitability and tells that how much amount
of profit is generated from the shareholders’ investment. From the point of shareholders, it is

Oil and gas accounting 13
important as they need a good return from their investments. High return on equity means
that the company is using its funds efficiently (Saleem and Rehman, 2011).
Return on Equity (%)
2012 2013 2014 2015 2016
John Wood Group
PLC 12.2
6 12.77 13 3.2 1.21
Petrofac Ltd. 47.5
2 36.74 6.23
-
22.58 0.09
Schlumberger Ltd. 16.6
3 18.14 14.07 5.64 -4.4
National Oilwell Varco 13.1
6 10.96 11.66 -4.15 -15.91
Halliburton Co. 18.2 14.48 23.45 -4.23 -46.34
Table 4: Return on Equity
From the above table in it shown that in the year 2012, the return on equity of John
Wood Group PLC was around 12.26%. In the subsequent years it increased to 13%. Since
then the return on equity is gradually declining and in 2016, it was recorded as low as 1.21.
This was due to the fact the in these years the revenue also decreased. The year 2014, also
saw a major change in board structure and several miscellaneous expenditure which led to the
decrease in return to equity ratio.
Actions taken by Management to Manage the Risk
John Wood Group PLC faced several types of risks in the past years. Operational risk
is a significant risk in the oil and gas industry. John Wood Group PLC faces operational risk
as it deals with various different heavy equipment’s. This heavy equipment’s used requires
proper safety measures so that the human resource working on these machineries are not
harmed and injured disrupting the work flow. To mitigate it, the company has taken the help
of Information technology, sensors and advanced analytics to detect equipment breakdown
(Roberta, 2013). The company in its goals also assures that the asset provided to human
resource is safe and secure (John Wood Group PLC, 2018). Customer audits are done for

Oil and gas accounting 14
several operations of the company. Various programs including insurance programs,
incentive plans, and training and development were implemented to reduce it. In addition to
that, to measure carbon footprint, the company has also launched a pilot program. Further to
protect the human and environment various safety measures and compliance policies are
taken up by the company. In the year 2014, the company employed Nina Schofield as the
head of health, safety, security and environment (HSSE) to develop and implement the
strategies of (John Wood Group PLC, 2018). However, this risk is not diversifiable i.e. it
cannot be removed completely (Cruz, 2002).
Another risk is the market risk which arises from the fluctuation in the market prices.
This risk cannot be eliminated completely by diversification but it can be hedged against.
John Wood Group PLC has operations in different countries, so the company faces this risk
as well but its degree differs from country to country. Trading around the globe with different
companies, a good management team is required to keep a record of all overseas investment
and hedge against the risk in these investments. To reduce the market risk, the company has
also developed good customer relations which have helped to lead the market in several
areas. A comprehensive analysis and due diligence is done prior to any acquisitions or
investment plans.
Therefore, to increase the sales growth rate, the company is planning various
approaches to retain and recruit the talent. However, the asset turnover ratio of the company
is decreasing and in order to increase it the company is focusing on to increase its inventory
management and efficiency. To improve this ratio the company is focusing to increase sales
and improve the collection of its account receivables. Also to increase its operating profit
John Wood Group PLC is facing the industry challenges effectively and efficiently along
with building strong business relationships.
In addition to this, the debt ratio and net debt of the company is also analysed to see
their impact on the capital structure and financial health of the company. It is seen that the
debt ratio has increased recently, providing more financial risk and more interest payment to
the company. To control this, the company is majorly focusing on the earnings and liquidity
as the debt is not as major issue to the company.
The beta measured from the above analysis comes out to be negative which means
that the company should insure its economic risk in advance. The return on assets and return

Oil and gas accounting 15
on equity is also decreasing. In 2016, despite all challenging situations John Wood Group
PLC managed to provide with good financial performance in an oil & gas market.
Analysis of company’s value
Cost of capital
The cost of capital of the company is evaluated using its Weighted Average Cost of Capital
(W.A.C.C.). The WACC helps to predict the average return from its investments. A company
is basically financed through a mix of debt and equity. The debt is calculated on its market
value and to calculate cost of equity, Capital Asset Price Model (CAPM) is used.
Cost of
Equity
Risk
Free
rate
1.4
3
%
Marke
t
Return
31.
83
%
Beta
0.7
5
CAP
M
24
%
Table 5: Cost of Equity
The formula of CAPM is – risk free return + beta (market return – risk free return)..
In simple words, it indicates the rational value of the investment. The cost of equity using
beta and risk free rate and market return comes out to be 24%.
cost of debt

Oil and gas accounting 16
Interest Payment 31
Debt 764
Cost of debt 4%
Tax Rate 25%
Cost of Debt (after tax) 2.84%
Table 6: Cost of Debt
Cost of debt tells the rate at which the company pay its current debt. The cost of debt
comes out to be 2.84%.
WACC Capital Amount Cost of capital % of portion WACC
Equity 2195 24% 0.74 18%
Debt 764 2.84% 0.26 1%
Total capital 2959 WACC 19%
Table 7: Weighted Average Cost of Capital
This model helps to know the expected return on the investments made by the stakeholders.
Therefore, the WACC of the company comes out to be 19%.
Net Asset Value Approach
Net asset value approach also known as the intrinsic method is the per Share value of
the company at a specified period (Damodaran, 2012). In this method the net assets are
divided by the number of shares to get price per share. Further, this approach emphasizes on
the difference between these two values. Therefore, the market value has a higher value than
accounting value. Thus, the formula is-
NAV = (assets - liabilities) / number of outstanding shares

Oil and gas accounting 17
Net Asset Value
Year
Total Assets
($m)
outside
liabilities($m)
Net
Worth
Shares
Outstanding
Net Asset
Value
2016 4030 1834 2196 667.7 3.29
Table 8: Net Asset Value
In context with John Wood Group PLC, the net asset value per share of the company
is overvalued. The current per share price of the company is 603.40. Thus from this analysis
it is concluded that the investors should sell their shares.
The Dividend Valuation Approach
The dividend valuation method computes the value per share by using the expected
dividend and then discounting it back to the present value with required rate of return (Hurley
and Johnson, 1994).Its formula is:-
DDM= Expected Dividend
Required rate – growth rate
It assumes that the growth rate of dividend is either constant or changes during the
period. Therefore, the constant dividend model evaluates the fair price of the stock by the
formula, Price = Dividend / (cost of capital – Growth rate).
Dividend Valuation Model
Expected Dividend 8.9
Growth Rate 4.32%
Required Rate of Return(Ke) 4%
Intrinsic value
-
11,363.19
Dividend growth rate
2016 8.179
2017 8.532 4.32%
Table 9: Dividends
In context with John Wood Group PLC, the expected dividend of the company will be
$8.9m with a growth rate and required rate of return of approximately of 4% and 10%

Oil and gas accounting 18
respectively. In the year 2017, the intrinsic value of shares comes out to be $-11,363.19
million. So, the shares are undervalued and the investors should buy their shares in the
market.
Price-Earnings Ratio Approach
The price earnings ratio values company’s current price of the share in relation to per
share earnings. Therefore, it analysis the situation of what market is ready to pay for the
earnings of the company. A bullish market is suggested with a higher PE ratio and a not so
bullish market is suggested with a low PE ratio. The ratio can be calculated as: - PE ratio =
Stock Price/Earnings per share (Anderson, 2012). In context with John Wood Group PLC the
current price earnings ratio is 157.55 excluding extraordinary items and -358.97 including
extraordinary items (Market Watch, 2018).
Rappaport’s Shareholder Value Model
In 1980’s, Rappaport along with other consultants developed the idea that businesses main
objective is to increase the shareholder’s value. This model helps the shareholders to analysis
the impact of their decisions on the Net Present Value (NPV) of cash of the company.
Therefore, the company should be able to earn more than its opportunity cost by undertaking
good investment opportunities. This valuation model is forward looking model giving a view
of long term impacts to the company (Rappaport, 1999).
Figure 8: Rappaport Shareholder Value Model

Oil and gas accounting 19
The standard corporate UK tax rate is been taken as 20%. Calculation is been done for the
incremental change in capital investment and working capital. The planning horizon for the
model is 5 years and WACC is taken as a required rate of return. The shareholder value is
1266 billion pounds and the market closes at 4297 billion. This means that the John Wood’s
market value is overvalued by 239.42% as suggested by the Rappaport’s model.
Projects and acquisitions
The major projects and acquisitions undertaken by john wood group PLC in
September 2000, was acquiring Mustang Engineering Inc., which has its operations in
engineering. Later in 2011, John Wood Group PLC acquired PSN for growing and
maintaining its operations offshore. On May 2013, John Wood Group PLC acquired Intetech
Limited (“Intetech”), for integrating and managing corrosion in the global oil and gas sector.
This acquisition strengthens the business software portfolio. Further, On October 2013, a
joint venture between John Wood Group PLC and Siemens AG (“Siemens”) took place. This
was done to provide aftermarket gas turbine, designing of generator, and repair services. The
board of John Wood Group PLC believed that this joint venture will help in the progress of
future gas turbine activities. It was also expected that this joint venture will provide $15m in
annual net synergies and increase the revenue to $1m to the company (John Wood Group
PLC, 2018).
In recent, the company acquire its rival company Amec Foster Wheeler at an
approximate value of £2.2 billion. This agreement will generate a collective value of about
euro 5 bn. From this acquisition John Wood Group PLC have expanded its product lines in
US and hopes a reduction in cost around euro 110m. The total revenue of John Wood Group
PLC went down to $2.28bn. In the first year of the acquisition the performance of the
company was not up to the expectation. But in the second half a stronger performance is
predicted. John Wood Group PLC considers that this acquisition will effect in major growth
opportunities and will increase cost synergies of at least $ 134 million. Apart from this, the
management expects that the acquisition will bring the core earnings to around $600 million
(Reuters, 2017).The benefit of this acquisition to John Wood Group PLC is that shareholders
of Amec Foster Wheeler will not be entitled to any dividend before the effective date. This
arrangement will generate the scope of services across engineering, construction,
maintenance, and operations market. The workforce will increase to 64,000 and John Wood
Group PLC will rank amongst the top 15 oil and gas companies across the globe. The

Oil and gas accounting 20
previous acquisition of the company has been successful so it is expected that this acquisition
will also increase shareholders value even in the recession (John Wood Group PLC, 2018).
Analysis of Company’s Dividend Policy
In the last five years, John Wood Group PLC has shown a fluctuation in the dividend
declaration and faces an adverse payout ratio indicating that it is making loss and using its
retained earnings for paying dividends (Carroll, 2018). Regardless of this, the amounts of per
share have increased. Even though the company has a yield of 3.37%, in the market of top
dividend payers it is still below (Morningstar, 2018). Considering all these factors, john wood
group is a complicated choice for investors. The dividend investors need to clearly
understand the company’s core business and then take the decision to invest or not (Simply
Wall st, 2018).
In the year 2012, the total dividend paid by the company was $0.17 with a dividend
yield of 1.70%. In the next year the dividend amount and dividend yield increased to $0.22
and 2.30% respectively. In the subsequent next two years there was an increment in the
amount of dividend and dividend yield both. So in 2014 and 2015, the dividend paid was
$0.28 and $.30 respectively. And in these years the dividend yield went up to 3.30% and
2012 2013 2014 2015 2016
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
Dividend Yield
Dividend Yield
Years
%
Figure 9: Dividend Yield

Oil and gas accounting 21
3.60% respectively. In the year 2016, the total dividend paid by the company was $0.33 with
a decrease in dividend yield of 2.70% (Hargreaves Lansdown, 2018). In this year, the
dividend cover ratio is 1.9 times 2.8 times in the previous year.
References
Carroll, A. (2018) Does John Wood Group PLC (LON:WG.) Have A Place In Your
Dividend Portfolio? [online]. Available at:
https://simplywall.st/stocks/gb/energy/lse-wg./john-wood-group-shares/news/does-john-
wood-group-plc-lonwg-have-a-place-in-your-dividend-portfolio/ [Accessed 2018, March 6].
Cruz, M.G. (2002) Modeming, Measuring and Hedging Operational Risk (pp. 19-2).
Chichester: John Wiley & Sons.
Damodaran, A. (2012) Investment valuation: Tools and Techniques for Determining the
Value of Any Asset (Vol. 666): John Wiley & Sons.
Gibson, C.H. (2011) Financial Reporting and Analysis. South-Western Cengage Learning.
Henriques, I. and Sadorsky, P.(2011) The Effect of Oil Price Volatility on Strategic
Investment. Energy Economics. 33(1). pp.79-87.
Hurley, W.J. and Johnson, L.D. (1994) A realistic dividend valuation model. Financial
Analysts Journal: 50(4), pp.50-54.
Knight, F.H. (2012) Risk, uncertainty and profit. Courier Corporation.

Oil and gas accounting 22
Morningstar, (2018) Wood Group (John) PLC [online]. Available at:
http://financials.morningstar.com/balance-sheet/bs.html?
t=WG.&region=gbr&culture=en-US[Accessed 2018, March 6].
Pettinger, T. (2017) ‘Economic Growth UK’, Economics Help [online]. Available
at:https://www.economicshelp.org/blog/5843/economics/economic-growth-stats-2/
[Accessed 2018, March 6].
Prasanna, G. (2013) Systemic Risk: The Dynamics of Modern Financial Systems. OUP
Oxford.
Rappaport, A. (1999) Creating Shareholder Value: A Guide for Managers and Investors.
Simon and Schuster.
Roberta, B. (2013) IDC Energy Insights ‘Reducing Risk in Oil and Gas Operations’ [online].
Available at: https://www.emc.com/collateral/analyst-reports/minimizing-operational-
risk-in-oil-gas-industry.pdf[Accessed 2018, March 6].
Saleem, Q. and Rehman, R.U. (2011) Impacts of Liquidity Ratios on
Profitability. Interdisciplinary Journal of Research in Business: 1(7), pp.95-98.
Wood group, (2015) John Wood Group PLC Annual Report and Accounts 2015 [online].
Available at: https://www.woodgroup.com/__data/assets/pdf_file/0011/2423/John-Wood-
Group-Plc-Annual-Report-and-Accounts-2015.pdf [Accessed 2018, March 6].
Wood group, (2016) John Wood Group PLC Annual Report and Accounts 2016 [online].
Available at:
https://www.woodgroup.com/__data/assets/pdf_file/0015/12129/John_Wood_Group_PLC_2
016_Annual_Report_and_Accounts.pdf [Accessed 2018, March 6].

Oil and gas accounting 23
Bibliography
Anderson, K. (2012) The Essential P/E: Understanding the Stockmarket Through the Price
Earnings Ratio. Harriman House Limited.
Arnold, G. (2008) Corporate Financial Management. Pearson Education.
Aven, T.(2016) Risk assessment and risk management: Review of recent advances on their
foundation. European Journal of Operational Research: 253(1), pp.1-13.
Beck, G. (2017) Is John Wood Group PLC (LSE:WG) In A Sound Financial Condition?
[online]. Available at: https://simplywall.st/news/is-john-wood-group-plc-lsewg-in-a-
sound-financial-condition/ [Accessed 2018, March 6].
Beck, G. (2018) How Financially Strong Is John Wood Group PLC (LON:WG.)? [online].
Available at:https://simplywall.st/stocks/gb/energy/lse-wg./john-wood-group-shares/
news/how-financially-strong-is-john-wood-group-plc-lonwg/[Accessed 2018, March 6].
Berk, J.B. and DeMarzo, P.M. (2007) Corporate Finance. Pearson Education.

Oil and gas accounting 24
Bloomberg, (2018) Company Overview of John Wood Group PLC [online]. Available at:
https://www.bloomberg.com/research/stocks/private/snapshot.asp?
privcapId=128711[Accessed 2018, March 6].
Bloomberg, (2018) United Kingdom Rates and Bonds [online]. Available at:
https://www.bloomberg.com/markets/rates-bonds/government-bonds/uk[Accessed 2018,
March 6].
Bragg, S.M. (2012). Business Ratios and Formulas: A Comprehensive Guide Volume 577 of
Wiley Corporate F&A. 3rd ed. John Wiley & Sons.
Brealey, R.A., Myers, S.C., Allen, F. and Mohanty, P.(2012) Principles of Corporate
Finance. Tata McGraw-Hill Education.
Chen, J., Sohal, A.S. and Prajogo, D.I.(2013) Supply chain operational risk mitigation: a
collaborative approach. International Journal of Production Research: 51(7), pp.2186-2199.
Christoffersen, P.F.(2012) Elements of financial risk management. Academic Press.
Cronin, K., Marion, N.E. (2016). Critical Infrastructure Protection, Risk Management, and
Resilience: A Policy Perspective. CRC Press.
CTI Reviews. (2016) Market Risk Analysis IV: Business, Finance: Cram101 Textbook
Reviews.
Daníelsson, J. (2011) Financial Risk Forecasting: The Theory and Practice of Forecasting
Market Risk with Implementation in R and Matlab. (Vol. 588): John Wiley & Sons.
De Jong, A., Verbeek, M. and Verwijmeren, P. (2011) Firms’ debt–equity decisions when the
static tradeoff theory and the pecking order theory disagree. Journal of Banking &
Finance: 35(5), pp.1303-1314.
Fan, J.P., Titman, S. and Twite, G. (2012) An International Comparison of Capital Structure
and Debt Maturity Choices. Journal of Financial and Quantitative Analysis: 47(1), pp.23-56.
Financial Time(2018) John Wood Group PLC About the Company[online]. Available at:
https://markets.ft.com/data/equities/tearsheet/profile?s=WG.:LSE[Accessed2018, March
6].

Oil and gas accounting 25
Gurufocus, (2017) Wood Group (John) PLC [online]. Available at:
https://www.gurufocus.com/term/ROA/OTCPK:WDGJF/ROA-/Wood-Group-John-
PLC%20 [Accessed 2018, March 6].
HargreavesLansdown, (2018) John Wood Group PLC[online].Available at:
http://www.hl.co.uk/shares/shares-search-results/w/wood-group-john-plc-ordinary-
4,27p/dividends[Accessed 2018, March 6].
Hull, J.C. (2014) The Evaluation of Risk in Business Investment: Elsevier.
Lambrecht, B.M. and Pawlina, G. (2012) A Theory of Net Debt and Transferable Human
Capital. Review of Finance: 17(1), pp.321-368.
Mancini, L., Ranaldo, A. and Wrampelmeyer, J. (2013) Liquidity in the foreign exchange
market: Measurement, commonality, and risk premiums. The Journal of Finance. 68(5).
pp.1805-1841.
Marketwatch, (2017) John Wood Group PLC [online]. Available at:
https://www.marketwatch.com/investing/stock/wg/profile?countrycode=uk [Accessed 2018,
March 6].
McNeil, A.J., Frey, R. and Embrechts, P.(2015) Quantitative Risk Management: Concepts,
Techniques and Tools: Princeton University Press.
Pearce, J. (2017) How Is John Wood Group PLC’s (LSE:WG) Financial Condition? [online].
Available at: https://simplywall.st/news/how-is-john-wood-group-plcs-lsewg-financial-
condition/ [Accessed 2018, March 6].
Reuters, (2017) UK's Wood Group sees 2017 core earnings of $590-$600 mln [online].
Available at:https://www.reuters.com/article/john-wood-outlook/uks-wood-group-sees-
2017-core-earnings-of-590-600-mln-idUSL3N1OD2P9[Accessed 2018, March 6].
Welch, I. (2011) Two Common Problems in Capital Structure Research: The Financial‐Debt‐
To‐Asset Ratio and Issuing Activity Versus Leverage Changes. International Review of
Finance: 11(1), pp.1-17.
WoodPlc, (2018) Who we are [online]. Available
at:https://www.woodplc.com/who-we-are/about-us[Accessed 2018, March 6].

Oil and gas accounting 26
Yoe, C. (2016) Principles of Risk Analysis: Decision Making Under Uncertainty Food
Science & Technology: CRC Press.
Appendices
Appendix 1
John Wood Group – Risk Profile

Oil and gas accounting 27
Appendix 2
WACC

Oil and gas accounting 28