Final Results

John Wood Group PLC

Final results for the year to 31 December 2006

Strong revenue and EBITA growth

John Wood Group PLC ("Wood Group", the "Group") is a market leader in
engineering design, production support, well support and industrial gas
turbine services for customers in the oil & gas and power generation
industries around the world. Operating in 44 countries, Wood Group's
businesses employ 20,000 people.

Financial Highlights

Revenues (i) of $3,468.8m (2005: $2,761.9m) up 26%

EBITA (ii) of $215.1m (2005: $149.1m) up 44%

Profit before tax of $183.6m (2005: $124.7m) up 47%

ROCE(iii) at 21.5% (2005: 16.6%)

Adjusted diluted earnings per ordinary share (iv) of 24.5 cents (2005: 16.6
cents) up 48%

Proposed full year dividend of 5.0 cents (2005: 4.0 cents) up 25% reflecting
the group's confidence in continuing to deliver strong growth

Operating Highlights

Continued strengthening of market leading positions in strong oil & gas and
improving power markets

Strong EBITA growth in all three divisions and ongoing investment across the
businesses

Engineering & Production Facilities up 61%

Well Support up 26%

Gas Turbine Services up 16%

Significant focus on margin improvement - with EBITA margin(v) at 6.2%
(2005: 5.4%)

Increase in headcount by 4,000 during the period

Engineering & Production Facilities - strong revenue and EBITA growth with
strong performance from engineering services contributing to margin
improvement

Engineering - strong demand across a range of clients and projects; active on
projects in upstream around the world; now a recognised world leader in subsea
engineering; high demand for downstream services, in the US and Latin America

Production Facilities - market leading position in the North Sea, with high
levels of activity from tiebacks, integrity enhancement and upgrade projects;
growing international presence with activity in South America, Africa and Asia

Well Support - strong demand based on increased drilling activity and growing
demand for artificial lift using electric submersible pumps. All three
businesses performing well

Electric Submersible Pumps (ESP) - increasing international presence; growing
activity in Russia and Chad and new facilities in Canada, Oman and Yemen

Pressure Control - important contract win with Saudi Aramco; further
investment in manufacturing capabilities in Mexico and China

Logging Services - strong US activity; maintained leading position in
Argentina

Gas Turbine Services - strong oil & gas market, and recovery in power market,
leading to increasing demand for gas turbine maintenance.

Successfully growing business under long-term contracts

Increasing confidence in outlook

Sir Ian Wood, Chairman, Wood Group, said:

"We believe that the complex economic factors governing the supply and demand
for oil and gas will lead to sustained increases in exploration, development
and production spending and this, together with our world leading market
positions and differentiation, should enable us to continue our strong
growth."

ENQUIRIES:

01224 851000

Wood Group

Allister Langlands, Group Chief Executive

Alan Semple, Group Finance Director

Nick Gilman / Carolyn Smith

Brunswick

020 7404 5959

Patrick Handley/ Nina Coad

Chairman's Statement

Introduction

In strong oil & gas and improving power markets, Wood Group has strengthened
its market positions and delivered record results.

Revenues in 2006 grew 26% to $3,468.8m, EBITA grew 44% to $215.1m, and
adjusted diluted EPS grew 48% to 24.5 cents. Given the strength of our
performance, and confidence in our future prospects, we are proposing a final
dividend of 3.5 cents, taking the annual dividend to 5.0 cents, 25% up on last
year.

Markets

We anticipate continuing growth in demand for energy, driven by the growing
global economies, particularly in the Asia Pacific region. Oil companies are
focused on reserve replacement from new discoveries and on maximising recovery
from existing fields. Gas demand continues to increase, driven by its
perception as the most environmentally friendly fossil fuel, by the
increasingly global gas market due to the growing significance of LNG, and by
the efficiency of gas turbine generation. Risks of imbalances in regional gas
markets, such as the current concerns around gas storage in the US, may
continue until a global gas market is more fully established.

Our clients' investment decisions generally continue to be based on lower oil
& gas prices and this would appear to confirm the potential long term nature
of this oil & gas up cycle. We anticipate $50 - $60 oil as the likely scenario
for at least the next 3 or 4 years. This will lead to increasing exploration
and production spend in most regions throughout the world and a strong demand
for oil & gas services, particularly those, like ours, that add value and can
produce cost-effective developments and enhanced production.

On the power side, there is an increase in the demand for power in the North
American market and continuing growth in the installed base elsewhere in the
world, and we are seeing an increasing demand for our industrial gas turbine
services.

On the downside, there continues to be significant geo-political uncertainty
in some of the key oil & gas provinces. However, these produce opportunities
as well as threats, and tackling the range of challenges in some of the
difficult energy production areas round the world has become a core skill.
That is not to say we will not have problems to overcome, but we have the
ability to carefully assess risk and reward and to build in a range of
mitigating factors to try and ensure we can service our customers in these
difficult regions and at the same time achieve acceptable returns.

Strategy

Our strategy has four strands

to achieve a balance between field development and later cycle production
support to achieve sustainable growth;

to develop world leading activities based on differentiated know-how and
technology;

to achieve long term performance contracts in long term relationships which
add value to our clients' business;

to extend our services and broaden our international reach in areas where we
can successfully develop our market-leading positions.

We now have more than 20,000 people operating in 44 countries globally and
during the year we have developed our activities in North and West Africa, the
Middle East, the FSU and Asia Pacific.

People

I would like to express very grateful thanks on behalf of the Board to all of
our employees worldwide whose knowledge, skills, commitment and enthusiasm
drive our growth and success. Our intention is to be the employer of choice in
all parts of our business and to attract and retain the best talent available.
This will enable us to provide premier quality services to our customers and
superior growth for our shareholders.

Board Changes

In 2006, Ewan Brown retired from the Board and was replaced by Ian Marchant.
Ewan was a Director for 24 years during which time he provided exceptional
support to the Group and to me personally, and his unique style and
contribution are greatly missed. Ewan left with our very grateful thanks and
best wishes. Ian Marchant joins the Board with a broad business background and
valuable experience in the power sector through his role as Chief Executive of
Scottish and Southern Energy PLC. Ian is already making a contribution to our
Board discussions.

The other significant change on the Board relates to my own position.
Following 25 years as Chairman and Chief Executive, from 1st January 2007 I am
focussing on the Chairman's role, and Allister Langlands, who has served as
Deputy Chief Executive for 7 years has taken over as Chief Executive. Allister
has the ability, knowledge and experience to lead an excellent management team
to greater and better things. My role, as well as leading the Board, will be
to provide the necessary encouragement and support, and work with my
colleagues in developing our market presence and trade relationships around
the world.

Looking ahead

I believe that the complex economic factors governing the supply and demand
for oil and gas will lead to sustained increases in exploration, development
and production spending and this, together with our world leading market
positions and differentiation, should enable us to continue our strong growth.

Chief Executive's Statement

Introduction

I am delighted to be delivering my first Chief Executive's statement.

Key headline financials are:

                  2006 ($m)         2005 ($m)         Change
 
Revenues(i)       3,468.8           2,761.9           +26%
 
EBITA(ii)         215.1             149.1             +44%
 
EBITA margin(v)   6.2%              5.4%              +15%
 
Profit before tax 183.6             124.7             +47%
 
ROCE(iii)         21.5%             16.6%             +30%
 
Adjusted diluted  24.5c             16.6c             +48%
EPS(iv)
 
Total dividend    5.0 cents per     4.0 cents per     +25%
                  ordinary share    ordinary share
2006 was a year of strong growth across our three divisions. In Engineering &
Production Facilities, we have increased our presence around the world and
broadened our range of projects and services. We acquired Somias in Algeria
and purchased the remaining equity in our engineering company in India. We
have increased our capabilities in construction management and the process
industries, through the acquisition of Global Performance in South Carolina.
Our operations providing commissioning and start up support are performing
well, particularly in Equatorial Guinea. In Well Support, we have extended our
business in Chad and Russia and are increasing our manufacturing capabilities
around the world, including in China, Mexico and Saudi Arabia. In Gas Turbine
Services we have increased our activity in markets anticipated to see the
greatest future growth in the demand for power, including the Middle East,
South America and Asia Pacific. Additionally, our investment in extending our
range of turbine parts and our addressable range of turbine types is adding to
our increased confidence in the outlook.

During the year our oil & gas clients faced supply chain constraints and
significant cost inflation in certain areas. It is expected that these
pressures should ease over the next 2 - 3 years with significant industry
investment in the key high inflation sectors such as drilling rigs and marine
support vessels. To overcome resource constraints and reduce the inflationary
pressures, we are significantly building up our global people presence and
manufacturing capacity. This, along with our focus on differentiated and
higher margin activities has contributed to an improvement in the Group EBITA
margin to 6.2% (2005: 5.4%).

Divisional highlights

Engineering & Production Facilities

              2006 ($m)     2005 ($m)     Change
 
Revenues      1,972.7       1,472.3       +34%
 
EBITA         141.9         88.2          +61%
 
EBITA margin  7.2%          6.0%
Significant expenditure in new offshore and onshore developments, and
increasing expenditure on integrity and production enhancement of existing
producing assets led to excellent revenue growth in the year. The stronger
engineering performance contributed to the increased EBITA margin.

Engineering was engaged in supporting a broad spread of work across its
clients and activities. We have seen very strong demand for our services out
of Houston, serving clients in both international markets and the Gulf of
Mexico and have developed our engineering centres in London, Perth, Delhi,
Aberdeen, Glasgow, Abu Dhabi, Kuala Lumpur, Bogota and Caracas. We are very
active in upstream facilities, both offshore and onshore, and our global
pipeline and subsea engineering activities showed good growth. Downstream also
grew strongly and was particularly active in upgrading projects for the US and
Latin American refinery market. In midstream, our important LNG regasification
project is progressing well.

Production Facilities maintained its position as the North Sea market leader
in maintenance, modifications and operations support, supporting a wide range
of clients, from the large international operators to smaller independents.
International progress in the year was excellent, with good levels of activity
in South America and Brunei, and significant progress in Trinidad, Algeria and
Equatorial Guinea.

Well Support

              2006 ($m)     2005 ($m)     Change
 
Revenues      739.1         645.7         +14%
 
EBITA         73.6          58.5          +26%
 
EBITA margin  10.0%         9.1%
Increased drilling activity and growing demand for artificial lift using
electric submersible pumps led to higher demand for our Well Support services.
If we adjust for the disposal of Protech, our permanent downhole monitoring
business, in December 2005, Well Support delivered revenue and EBITA growth of
22% and 38% respectively.

In Electric Submersible Pumps (ESP) we increased our sales in international
markets, and extended our geographic footprint with new repair shops in Oman,
Yemen and Canada. In Pressure Control, we won an important contract with Saudi
Aramco that will lead to a new manufacturing facility in Saudi Arabia and
significantly increased levels of activity. We are also making further
investment in extending our manufacturing capabilities in the US, Mexico and
China. Logging Services delivered an excellent performance from the US and
maintained its market leading position in Argentina.

Gas Turbine Services

              2006 ($m)     2005 ($m)     Change
 
Revenues      713.7         607.8         +17%
 
EBITA         38.0          32.7          +16%
 
EBITA margin  5.3%          5.4%
The strong requirement for gas turbine maintenance, repair and overhaul in the
oil and gas industry, combined with a recovery in the power market led to an
increase in revenue, with the start of some large Power Solutions contracts in
the final quarter having a significant impact. The strong margin in our oil &
gas activities and recovery in our power aftermarket activities resulted in an
improving underlying EBITA margin. However, the reported margin has been held
back by a lower EBITA margin from Power Solutions, reflecting, in part, lower
margins being recognised in the early stages of projects.

Our Aero-Derivative activities delivered a strong financial performance, with
higher activity in our Pratt & Whitney joint venture. In Light Industrial
Turbines, we increased our overall market share and delivered an improved
performance. We also invested in extending our range of turbine parts and
broadening our turbine range which should contribute to the growth in 2007 and
beyond. Our power activities in Heavy Industrial Turbines benefited from the
improving power market and our success in increasing the portion of business
on long term contracts. Our power station operations and maintenance
activities made outstanding progress securing several new contracts in the
year and our Power Solutions business was awarded some large power station
contracts in the fourth quarter.

Continuing Growth

Our focus on becoming the employer of choice, adding value to the efficiency,
process and integrity of our customers' operations, and growing our margins
with higher added value services, have been key to our success in 2006. These,
as well as the strong oil & gas and improving power market, will contribute to
our ongoing progress in 2007.

Operating Review

Engineering & Production Facilities

Engineering & Production Facilities provides a broad range of services to oil
& gas companies worldwide. Our services range from concept selection for new
facilities, through to their engineering design, project and construction
management, and commissioning. We also provide facilities modifications, and
operations and maintenance support to existing facilities.

              2006 ($m)     2005 ($m)     Change
 
Revenues      1,972.7       1,472.3       +34%
 
EBITA         141.9         88.2          +61%
 
EBITA Margin  7.2%          6.0%
Significant expenditure in new offshore and onshore developments, and
increasing expenditure on integrity and production enhancement of existing
producing assets led to excellent revenue growth in the year. This was
strongest in our engineering activities, with their share of division revenues
returning to levels of around 40%. Production Facilities saw good growth from
international activities and in the North Sea.

The strong performance in our higher margin engineering activities contributed
to the increase in our EBITA margin. In Engineering, we saw a more favourable
pricing environment for our premium services and benefited from high
utilisation. The success in certain of Production Facilities relatively higher
margin international activities also favourably impacted its EBITA margin.

We have successfully maintained our focus on being the employer of choice
through training, career development and flexible hiring initiatives. We have
made further investments in satellite offices to support our main hubs which
provides us access to additional skilled resources. This year we increased our
presence in several locations, including Abu Dhabi, California, Delhi, Denver,
Glasgow and London. Internationally we have been able to deploy our
experienced international workforce on new market opportunities to meet
growing client demand.

Engineering

We offer a broad range of engineering, project and construction management
services in oil & gas production, transportation and processing facilities. We
have market leading positions in:

                  Services        Areas of Expertise
 
Upstream          Engineering,    Deepwater and lightweight
                  project         topsides, onshore processing
                  management,     facilities and subsea
                  construction    engineering
                  management
 
Midstream                         Offshore and onshore pipelines
                                  engineering, compression and LNG
                                  regasification and associated
                                  technologies
 
Downstream                        Clean fuel modifications,
                                  refinery upgrades
 
Process &                         Chemical, and other process and
Industrial                        industrial plants
 
Automation                        Automation services, including
                                  proprietary software
We have been working on a wide range of deepwater upstream projects in the
Gulf of Mexico, including the BP Deepwater programme, Blind Faith,
Independence Hub, Perdido, Shenzi and Tahiti. We have also been working on
developments offshore Equatorial Guinea, Nigeria, Norway, UK and Venezuela;
and onshore in India and the US.

We have significantly grown our business in subsea engineering developments
with major projects offshore in Angola, offshore Australia; tiebacks in the
Gulf of Mexico; and a range of other projects around the world. JP Kenny, our
leading subsea engineering company, was awarded the Subsea Company of the year
award by the industry body, Subsea UK. We have invested to increase our
geographic footprint, in Abu Dhabi and Norway, as well as purchasing the
remaining equity in our company in India.

In midstream engineering we are installing the first commercial scale
application of our highly energy efficient patented regasification process,
the LNG (Liquefied Natural Gas) Smart ® Air Vaporization Process, at
Trunkline's LNG receiving terminal in Lake Charles, Louisiana. The terminal
also includes a large Natural Gas Liquids (NGL) facility and is scheduled for
completion in 2008.

We have seen high demand for our downstream engineering services and have been
active on a wide range of refinery upgrade, de-bottlenecking and low sulphur
diesel modification projects. Our main focus is on the US and Latin American
refinery market, where we have recently entered into a long term contract to
provide downstream engineering support services to a major client's facilities
across the US. Our activities supporting the North American pipeline industry
saw increased revenues in the year, for a broad range of clients, and we
expect this sector to deliver strong growth over the next several years.

We have strengthened our construction management and process capabilities with
the acquisition of Global Performance in Greenville, South Carolina. We have
also increased our engineering project & construction management (EPCM)
activity, with contracts in the US and Norway, together with an EPCM contract
for automation services in Singapore.

Ionik, our specialist integrity and materials engineering consultancy, saw
strong growth and is well positioned to expand its operations as our clients
continue to focus on the integrity of their facilities.

Production Facilities

We offer a broad range of life of field production facilities support services
to our clients around the world.

We are the largest maintenance, modifications and operations contractor in the
North Sea, with a broad range of clients and are working on a number of
tieback, integrity & process enhancement, upgrade and long term support
projects. We are maintaining all our key contracts, with additions including
further work for Talisman and Hess. We have also extended our position as the
leading onshore oil & gas terminal service contractor and now work on nine
sites throughout the UK. We renewed our Shell Gas Plants contract and took on
the CATS (Central Area Transmission System) and Wytch Farm contracts for BP.
We have continued to focus on extending our service offering and won our first
UK Duty Holder role for the Chestnut development. In addition, we have been
successful in winning further pre operations and start up support projects.

In Colombia, Venezuela and Brazil, where we have been engaged in long-term
support contracts for several years, we undertook some major shut down
projects. In Brunei, we extended the scope of our long term service contract
and installed new facilities and subsea pipelines as part of a water injection
project. We are also focused on extending our range of services
internationally and, in the Gulf of Mexico we carried out pre operations and
start up support operations on Atlantis, Thunder Horse and Shenzi. We are also
supporting BP in the pre-operations phase of their LNG Project at Tangguh in
Indonesia.

The acquisition of Somias in Algeria, along with major contract wins on the In
Amenas and In Salah fields, has established a strong presence in the country.
In Trinidad, through a joint venture with local company Neal & Massy, we have
begun work on a five-year integrated maintenance contract. We have extended
our activities in Equatorial Guinea where we are now working for a number of
clients, including Amerada Hess, Exxon Mobil and Marathon. In Russia, we are
carrying out projects for TNK-BP and in Kazakhstan we are working on a supply
chain management contract.

Well Support

Well Support provides solutions, products and services to enhance production
rates and efficiency from oil & gas reservoirs.

              2006 ($m)     2005 ($m)     Change
 
Revenues      739.1         645.7         +14%
 
EBITA         73.6          58.5          +26%
 
EBITA margin  10.0%         9.1%
Increased drilling activity and growing demand for artificial lift using
electric submersible pumps led to higher demand for our Well Support services.
If we adjust for the disposal of Protech, our permanent downhole monitoring
business, in December 2005, Well Support delivered revenue and EBITA growth of
22% and 38% respectively.

We have successfully maintained our focus on training, career development and
flexible hiring initiatives. Important initiatives include management
development programmes, field engineer and service technician training, and
HSE training.

Electric Submersible Pumps

We are a market leader in the sale, operation and service of electric
submersible pumps (ESPs) used for production enhancement through artificial
lift. The increasing long term demand for this service as oilfields mature and
the reliability and efficiency of ESP's improves is increasing the demand for
our services and we are achieving good growth in both US domestic and
international business.

Our US operations performed well with sales in the South West and the Mid
Continent regions particularly strong. Our main manufacturing facility in
Oklahoma City is undergoing a major re-organisation to support the recent and
anticipated growth in product demand. Additional investments were also made in
enhancing our engineering research & development facilities to support
proprietary product developments aimed at heavy oil and extended run life
capability. We also extended our operations in Canada and opened a new ESP
servicing facility.

Internationally, our business in Chad performed well and we are optimistic
about further growth. We increased our Russian operations to support our
growing sales, repair and service business. In the Middle East we are
expanding our operations in Oman, Yemen and Egypt, and have set up in Libya.
In Latin America, we delivered good growth from Argentina, where the Pan
American contract, announced at the end of last year, provided increased
activity in the region. Our activity in Venezuela reduced somewhat but we
expanded our presence in other Latin American markets, especially Colombia,
Ecuador and Brazil. In the Asia Pacific region, a substantial contract award
was achieved for offshore ESP applications in the Bohai Bay.

Pressure Control

We are a market leader in the provision of surface wellheads and valves to
control reservoir pressure. In 2006, we delivered significant growth from both
our US and international business. We are seeing cost savings arising from our
improved supply chain and are making further investments in 2007 in our lower
cost manufacturing capacity.

In the US, we have a broad based capability and infrastructure in conventional
and unconventional production and we are well represented in the very active
Barnett Shale area. In the Gulf Coast region, we are supporting drilling
activity and have been carrying out decommissioning work for a number of
customers whose equipment was damaged during the 2005 hurricanes. We also
expanded and added new facilities in the Rocky Mountain area to support a
number of new customers. In addition, our Canadian operations are showing good
growth.

We opened a research & development and training facility in Houston which is
being used to provide training to both customers and employees, as well as
providing additional resources to identify improvements on our product
offerings. In Mexico, we have been increasing revenues over recent years, and
are now setting up a new facility in Monterrey where we will carry out
manufacturing to support the local market as well as our other North American
operations.

During the year, we won a significant, five year contract with Saudi Aramco,
which will involve setting up a joint venture company in the Kingdom of Saudi
Arabia and establishing a local manufacturing facility. Elsewhere in the
Middle East, we won new contracts in Egypt, Qatar, Abu Dhabi, Oman, and Yemen.

In Australia, we extended our contract with Santos. In the UK, we had a number
of successes in both product sales and field service operations.

Logging Services

We are a market leader in the provision of electric wireline and slickline
mechanical services in the Gulf of Mexico and Argentina, and, in 2006, Logging
Services performed well in these areas.

High commodity prices ensured strong activity in the US Gulf Coast region.
Both the electric wireline and the slickline mechanical services had a good
year and won a range of new contracts including several supporting deepwater
fields. Our electric wireline pipe recovery operations completed one of the
deepest stuck drill pipe recovery operations ever recorded in the Gulf of
Mexico at 30,650 feet. We were also awarded work with Anadarko on several
deepwater operations, with units now committed to ten drilling rigs.

Several locations were added to our US infrastructure including Alvarado in
Texas, Oklahoma City, and Shreveport, Louisiana. We also invested in new
equipment for our Production Testing business and now have a number of active
bases operating in Texas.

We introduced high temperature production logging instruments and memory
tubing/casing callipers. We also added a third deepwater 30/30 unit, which is
capable of working at well depths below 30,000 feet and includes downhole
tools that will operate at 30,000 psi bottom hole pressures.

We had a busy year in Venezuela, and were active on Lake Maracaibo, Anaco,
Punta De Mata and San Tome. Our operations in Argentina continue to perform
well and strengthen their position in the market.

Gas Turbine Services

Gas Turbine Services is the world-leading independent provider of integrated
maintenance solutions, and repair and overhaul services for industrial gas
turbines and related accessories, used for power generation, compression and
transmission in the oil & gas and power generation industries.

              2006 ($m)     2005 ($m)     Change
 
Revenues      713.7         607.8         +17%
 
EBITA         38.0          32.7          +16%
 
EBITA margin  5.3%          5.4%
The strong requirement for gas turbine maintenance, repair and overhaul in the
oil and gas industry, combined with a recovery in the power market, led to an
increase in revenue, with the start of some large Power Solutions contracts in
the final quarter having a significant impact. The strong margin in our oil &
gas activities and recovery in our power aftermarket activities resulted in an
improving underlying EBITA margin. However, the reported margin has been held
back by a lower EBITA margin from Power Solutions, reflecting, in part, lower
margins being recognised in the early stages of projects.

We expect to see further revenue growth in 2007, driven by the ongoing
recovery in the power market feeding through to aftermarket providers,
increased long-term contract activity, and the strong oil & gas market. The
EBITA margin should increase with the improvement in performance in our power
activities, including a growing contribution from our long-term maintenance
and power solutions contracts.

Our headcount has increased by 10% to about 3,500 on the back of a significant
increase in the scale of our power plant operations and maintenance business.

Our business is generally structured according to turbine type and size- with
the smaller turbines typically having a greater use in the oil & gas markets
and the larger turbines greater use in the power markets.

Light Industrial Turbines - generally less than 10 Mega Watts

Our LIT activities include the repair and overhaul of the Siemens and Solar
light industrial turbines and related rotating equipment such as pumps and
compressors, which are focused primarily on oil & gas applications. Our
business in Aberdeen and Maracaibo addresses the global Siemens aftermarket
and in the period strengthened its market position and profitability. Our
operations in Houston and Dubai have a greater focus on Solar turbines and in
the period we extended our range of turbine parts and our range of
capabilities which should provide opportunities for growth in 2007 and beyond.

Aero-derivative - generally 10 to 50 Mega Watts

Our three aero-derivative gas turbine business, which comprises three joint
ventures, delivered a strong financial performance.

Rolls Wood Group - our joint venture with Rolls-Royce, primarily serving
customers in the oil & gas market.

Wood Group Pratt & Whitney - our joint venture with Pratt & Whitney, serving
customers in the oil & gas and power markets.

TransCanada Turbines - our joint venture with TransCanada Pipelines, which is
both GE LM and Rolls-Royce approved, serving customers in the oil & gas and
power markets.

Rolls Wood Group benefited from the strong oil & gas market and will see
future benefits from the increase in the installed base of units. Wood Group
Pratt & Whitney, following its expansion of scope to include the provision of
turbine parts, and combined with the global improvements in the power market,
had a particularly strong year, with contract wins in Libya, South Africa, and
South America as well as the US market. TransCanada Turbines made good
progress in the larger LM6000 turbines focused on the power market,
particularly in the Middle East and the Americas.

Heavy Industrial Turbines (HIT) - generally more than 50 Mega Watts

The Group's HIT activities focus primarily on industrial gas turbines used in
power generation applications. Our HIT activities started to benefit from the
improving underlying power market, and were successful in increasing the
portion of business under long term contract. Important contract wins include
the 16 year maintenance contract with Suez Energy International for the
maintenance of 8 GE Frame 9E gas turbines, the major equipment at the 665MW
plant located at the former Al Rusail Power Company in the Sultanate of Oman.

The continuing focus on securing long-term contracts and enhancing efficiency
is expected to deliver further margin improvement going forward.

Support Services

Our broad range of ancillary services provide value-added solutions to our
clients as well as supporting our Aero-derivative, LIT and HIT offerings, and
enables us to provide an integrated service.

Our power plant operations & maintenance activities made excellent progress in
2006 securing several new contracts in the year, including major long term
contracts with LS Power in the Western US and Mitsui in Ontario, Canada
covering advanced technology turbine equipment. This business has almost
trebled its facilities under contract in the last two years and currently has
more than 20 long term contracts operating in excess of 8,000 MW of power
generation.

Our Power Solutions business had lower activity in the first half of the year
but entered into a number of contracts in the final quarter. These include
three contracts with a combined value of approximately $195m for American
Electric Power for peaking facilities providing 680MW of power.

Our accessories and components activities had a difficult year, with a lower
contribution from military customers somewhat offset by progress in oil & gas
and power markets. Our turbine control systems business grew its market share
significantly in North America and is starting to expand internationally

Financial Review

Trading Performance

                       2006 ($m) 2005 ($m) Change
 
Revenues               3,468.8   2,761.9   +26%
EBITA                  215.1     149.1     +44%
EBITA margin           6.2%      5.4%      +0.8 points
Amortisation           7.6       4.8
Operating profit       207.5     148.0     +40%
Net finance costs      23.9      23.3
Profit before tax      183.6     124.7     +47%
Taxation               62.4      41.1
Profit for the year    121.2     83.6      +45%
 
Diluted EPS (cents)    23.4      16.4      +43%
Adjusted diluted EPS   24.5      16.6      +48%
(cents)
Dividend per share     5.0       4.0       +25%
(cents)
The financial results for 2006 were very strong, with good revenues, profit
and margin improvement overall. Total revenue growth was 26%, with Engineering
& Production Facilities up 34%, Well Support up 14%, and GTS up 17%. Total
EBITA growth was 44% overall, with Engineering & Production Facilities up 61%,
Well Support up 26% and Gas Turbine Services up 16%. Excluding the impact of
the Protech business sold in 2005, Group EBITA increased by 49% and Well
Support EBITA increased by 38%. A detailed review of the trading performance,
including further analysis on revenues, EBITA, and EBITA margin movements is
contained within the Operating Review.

Amortisation increased to $7.6m from $4.8m in 2005. Included within the 2006
charge is the amortisation of software, development costs and licences along
with amortisation of other intangible assets arising on acquisitions.

Net finance costs for the Group were $23.9m (2005: $23.3m). This represents
interest cover(vi) of 9.0 times for 2006 compared to 6.4 times in 2005.

The tax charge for the year of $62.4m (2005: $41.1m) represents a tax rate of
34.0% (2005: 34.0%) when measured against profit before tax, impairment and
restructuring charges and profit on disposal of subsidiaries. The underlying
tax rate in the period increased to 36.4% (2005: 34.2%), with the increase
including the impact of a greater proportion of the Group's profits being
generated in higher tax jurisdictions, such as the US. Offsetting this
increase in the underlying tax rate are adjustments in respect of prior years,
the impact of losses and other attributes, and a number of other permanent
differences. Measured against profit before tax, the tax rate was 34.0% (2005:
33.0%).

Adjusted diluted earnings per ordinary share for the period increased by 48%
to 24.5 cents (2005: 16.6 cents) and diluted earnings per ordinary share
increased to 23.4 cents (2005: 16.4 cents). The final recommended dividend of
3.5 cents (2005: 2.7 cents) represents an increase of 30%, and results in an
increase of 25% in the total dividend for the year of 5.0 cents (2005: 4.0
cents). This increase reflects the Group's confidence in continuing strong
growth.

Cash Flow

                                     2006 ($m)   2005 ($m)
 
Opening net debt                     (245.8)     (354.3)
EBITA                                215.1       149.1
Depreciation and other non-cash      63.6        45.9
items
Cash generated from operations       278.7       195.0
before working capital movements
Working capital movements            (53.6)      (33.7)
Cash generated from operations       225.1       161.3
Acquisitions                         (50.4)      (33.4)
Capex and intangible assets          (86.3)      (65.6)
Disposal of subsidiaries             7.3         22.8
Issue/sale of shares                 1.8         92.5
Interest, tax, dividends and other   (109.6)     (69.1)
(Increase)/decrease in net debt      (12.1)      108.5
Closing net debt                     (257.9)     (245.8)
Cash flow generation has increased significantly over 2005, with cash
generated from operations before working capital increasing $83.7m or 43%. The
working capital outflows during the year reflect the strong sales growth in
the year and include an increase of $55.2m in inventories and an increase of
$125.6m in receivables, partly offset by an increase of $127.2m in payables.
Net working capital, the total of inventory, trade and other receivables, less
trade and other payables, as a percentage of annual revenues fell from 16.2%
in 2005 to 14.6% in 2006.

The Group continued to invest in future growth with expenditure of $136.7m
(2005: $99.0m) on acquisitions, capex and intangible assets. The investment in
acquisitions, including minority interests and deferred consideration
payments, was $50.4m (2005: $33.4m) and included the acquisition of Global
Performance and Somias, details of which can be found in the Operating Review.
These acquisitions contributed $59.2m to revenues and $3.9m to EBITA in 2006.
Capex amounted to $76.5m (2005: $56.4m) and investment in intangible assets
was $9.8m (2005: $9.2m). Disposal of subsidiaries in 2006 represents the final
receipt for the 2005 disposal of Protech.

Net Debt

                             2006($m) 2005 ($m)
Long term borrowings
- Fixed Rate                 203.9    180.0
- Floating Rate              152.8    167.8
Total long term borrowings   356.7    347.8
Short term borrowings        41.5     47.9
Total borrowings             398.2    395.7
Cash                         140.3    149.9
Net Debt                     257.9    245.8
Total Borrowing Facilities   840.1    825.1
Net debt at 31 December 2006 was $257.9m, an increase of $12.1m during the
year (2005: $245.8m). Whilst largely US dollar denominated, the Group also has
other foreign currency borrowings which are mainly used to hedge the Group's
net investments in non-US dollar entities. Long-term borrowings amounted to
$356.7m (2005: $347.8m) with interest payable at variable rates. Interest rate
swaps have been entered into in respect of $203.9m (2005: $180.0m), or 57%
(2005: 52%), of total long term borrowings and these have the effect of
converting the borrowings to fixed rates of interest with maturities ranging
from 2007 to 2012. The weighted average fixed rate of interest, including
margin, is 5.0% (2005: 4.8%). At 31 December 2006, the Group had unutilised
borrowing facilities of $441.9m (2005: $429.4m) representing 53% (2005: 52%)
of total borrowing facilities.

The Group's gearing ratio(vii) fell from 36% at December 2005 to 32% at
December 2006.

The Group's Return on Capital Employed(iii), which is calculated as EBITA
divided by average equity plus average net debt, increased from 16.6% in 2005
to 21.5% in 2006.

Pensions

The Group operates a number of defined contribution pension plans worldwide
and one defined benefit pension scheme in the UK. The Group's defined benefit
pension liability at December 2006 was $24.9m compared to $33.3m at December
2005. This figure is stated before taking into account the related deferred
tax asset of $7.5m (2005: $10.0m). The reduction in the liability, which is
sterling denominated, was due to an additional $3.7m (£2.0m) contribution made
by the Group in December 2006, a better than expected return on scheme assets
in the period, and an increase in bond yields which reduces the present value
of scheme liabilities.

5 March 2006

Notes

(i) Revenue in 2005 includes $37.5m in relation to the Protech business sold
in December 2005.

(ii) EBITA represents operating profit of $207.5m (2005: $148.0m) for 2006
including nil for businesses sold (2005: including $5.0m of EBITA in relation
to the Protech business sold in December 2005), before adjusting for
impairment and restructuring charges of nil (2005: $6.0m), profit on disposal
of subsidiaries of nil (2005: $9.7m) and amortisation of $7.6m (2005: $4.8m).
This financial term is provided as it is a key unit of measurement used by the
Group in the management of its business.

(iii) ROCE is Return on Capital Employed and is calculated as Group EBITA,
divided by average equity plus average net debt. ROCE excludes discontinuing
activities.

(iv) Shares held by the Group's employee share ownership trusts are excluded
from the number of shares in calculating earnings per ordinary share. Adjusted
diluted earnings per ordinary share is based on the diluted number of shares,
taking account of share options where the effect of these is dilutive.
Adjusted diluted earnings per ordinary share is calculated on earnings before
amortisation, impairment and restructuring charges and profit on disposal of
subsidiaries, net of tax.

(v) EBITA margin is EBITA divided by revenues

(vi)Interest cover is EBITA divided by net finance costs

(vii) Gearing is net debt divided by total shareholders' equity

JOHN WOOD GROUP PLC

GROUP FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER 2006

Company Registration Number 36219

Group income statement for the year to 31 December 2006

                                                                                Note      2006          2005
                                                                                          US$m          US$m
 
Revenues                                                                        1         3,468.8       2,761.9
Cost of sales                                                                             (2,768.0)     (2,209.7)
 
Gross profit                                                                              700.8         552.2
 
Administrative expenses:
Profit on disposal of subsidiaries                                              4         -             9.7
Impairment and restructuring charges                                            5         -             (6.0)
Other administrative expenses                                                             (493.3)       (407.9)
 
Administrative expenses                                                                   (493.3)       (404.2)
 
Operating profit                                                                1         207.5         148.0
 
Finance income                                                                  2         5.3           2.5
Finance expense                                                                 2         (29.2)        (25.8)
 
Profit before taxation                                                          3         183.6         124.7
 
Taxation                                                                        6         (62.4)        (41.1)
 
Profit for the year                                                                       121.2         83.6
 
Attributable to:
Equity shareholders                                                                       120.5         80.5
Minority interest                                                               26        0.7           3.1
 
                                                                                          121.2         83.6
 
Earnings per share (expressed in cents per share)
Basic                                                                           8         24.4          17.0
Diluted                                                                         8         23.4          16.4
All items dealt with in arriving at the profits stated above relate to
continuing operations.

Group statement of recognised income and expense for the year to 31 December
2006

                                                                                       Note      2006      2005
                                                                                                 US$m      US$m
 
Profit for the year                                                                              121.2     83.6
 
Actuarial gains/(losses) on retirement benefit liabilities                             30        8.5       (2.5)
Movement in deferred tax relating to retirement benefit liabilities                              (2.6)     0.7
Cash flow hedges - fair value gains                                                              1.8       2.4
- reported in income statement for the year                                                      (1.0)     1.4
Tax on foreign exchange losses offset in reserves                                                3.2       -
Exchange differences on retranslation of foreign currency net assets                             5.6       (15.5)
 
Total recognised income for the year                                                             136.7     70.1
 
Adoption of IAS 32 and IAS 39
- Retained earnings                                                                              -         (0.9)
- Hedging reserve                                                                                -         (2.4)
 
Total recognised income since last annual report                                                 136.7     66.8
 
Total recognised income for the year is attributable to:
Equity shareholders                                                                              136.0     67.0
Minority interest                                                                                0.7       3.1
 
                                                                                                 136.7     70.1
Group balance sheetas at 31 December 2006

                                                    Note
 
                                                          2006    2005
 
                                                          US$m    US$m
Assets
Non-current assets
Goodwill and other intangible assets                9     385.5   328.6
Property plant and equipment                        10    247.9   219.5
Long term receivables                                     5.2     13.5
Financial assets - derivative financial instruments 18    2.6     1.3
Deferred tax assets                                 20    36.6    19.3
 
                                                          677.8   582.2
 
Current assets
Inventories                                         12    424.1   362.9
Trade and other receivables                         13    792.5   610.7
Income tax receivable                                     8.7     5.4
Financial assets - derivative financial instruments 18    1.3     1.7
Cash and cash equivalents                           14    140.3   149.9
                                                          1,366.9 1,130.6
Liabilities
Current liabilities
Financial liabilities
- Borrowings                                        16    41.5    47.9
- Derivative financial instruments                  18    0.9     0.6
Trade and other payables                            15    710.8   526.7
Income tax liabilities                                    37.7    14.8
                                                          790.9   590.0
Net current assets                                        576.0   540.6
 
Non-current liabilities
Financial liabilities
- Borrowings                                        16    356.7   347.8
- Derivative financial instruments                  18    0.1     -
Deferred tax liabilities                            20    7.3     7.0
Retirement benefit liabilities                      30    24.9    33.3
Other non-current liabilities                       17    31.2    18.7
Provisions                                          19    23.6    15.1
                                                          443.8   421.9
Net assets                                                810.0   700.9
Shareholders' equity
Share capital                                       22    25.5    25.4
Share premium                                       23    294.1   292.1
Retained earnings                                   24    397.4   288.1
Other reserves                                      25    85.3    75.7
Total shareholders' equity                                802.3   681.3
 
Minority interest                                   26    7.7     19.6
Total equity                                              810.0   700.9
The financial statements on pages 2 to 45 were approved by the board of
directors on 5 March 2007.

Sir Ian Wood, Director

Allister G Langlands, Director

Group cash flow statement for the year to 31 December 2006

                                                       Note   2006    2005
                                                              US$m    US$m
 
Cash generated from operations                         27     225.1   161.3Tax paid                                                      (57.0)  (37.2)
 
Net cash from operating activities                            168.1   124.1
 
Cash flows from investing activities
Acquisition of subsidiaries (net of cash acquired)     28     (26.0)  (24.2)
Acquisition of minority interests                      28     (20.2)  -
Deferred consideration payments                        28     (4.2)   (9.2)
Disposal of subsidiaries (net of cash disposed)        4      7.3     22.8
Purchase of property plant and equipment                      (76.5)  (56.4)
Proceeds from sale of property plant and equipment            8.4     4.2
Purchase of intangible assets                                 (9.8)   (9.2)
 
Net cash used in investing activities                         (121.0) (72.0)
 
Cash flows from financing activities
Proceeds from issue of ordinary shares (net of                0.4     90.8
expenses)
Repayment of bank loans                                       (17.5)  (18.6)
Disposal of shares in employee share trusts                   1.4     1.7
Interest received                                             4.5     2.5
Interest paid                                                 (29.4)  (25.3)
Dividends paid to shareholders                         7      (20.8)  (17.5)
Dividends paid to minority interest                    26     (1.5)   (1.3)
 
Net cash (used in)/from financing activities                  (62.9)  32.3
 
Effect of exchange rate changes on cash and cash              6.2     (5.9)
equivalents
 
Net (decrease)/increase in cash and cash equivalents          (9.6)   78.5
 
Opening cash and cash equivalents                             149.9   71.4
 
Closing cash and cash equivalents                      14     140.3   149.9

Notes to the financial statements for the year to 31 December 2006

Accounting Policies

Preparation of accounts

Basis of preparation

These financial statements have been prepared in accordance with IFRS and
IFRIC interpretations adopted by the European Union (`EU') and with those
parts of the Companies Act, 1985 applicable to companies reporting under IFRS.
The Group financial statements have been prepared under the historical cost
convention as modified by the revaluation of financial assets and liabilities
held for trading.

The preparation of financial statements requires the use of estimates and
assumptions that affect the reported amount of assets and liabilities at the
date of the financial statements and the reported amount of income and
expenses during the year. These estimates and assumptions are continually
evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results ultimately may
differ from those estimates.

Significant accounting policies

The Group's significant accounting policies adopted in the preparation of
these financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.

Basis of consolidation

The Group financial statements are the result of the consolidation of the
financial statements of the Group's subsidiary undertakings from the date of
acquisition or up until the date of disposal as appropriate. Subsidiaries are
entities over which the Group has the power to govern the financial and
operating policies and generally accompanies a shareholding of more than one
half of the voting rights. The Group's interests in joint ventures are
accounted for using proportional consolidation. Under this method the Group
includes its share of each joint venture's income, expenses, assets,
liabilities and cash flows on a line by line basis in the consolidated
financial statements. All Group companies apply the Group's accounting
policies and prepare financial statements to 31 December.

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.

Foreign currencies

Income statements of entities whose functional currency is not the US dollar
are translated into US dollars at average rates of exchange for the period and
assets and liabilities are translated into US dollars at the rates of exchange
ruling at the balance sheet date. Exchange differences arising on translation
of net assets in such entities held at the beginning of the year, together
with those differences resulting from the restatement of profits and losses
from average to year end rates, are taken to the currency translation reserve.

In each individual entity, transactions in overseas currencies are translated
into the relevant functional currency at the exchange rates ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the exchange rates ruling at the balance sheet
date. Any exchange differences are taken to the income statement.

Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the exchange rate ruling at the balance sheet date.

The directors consider it appropriate to record sterling denominated equity
share capital in the accounts of John Wood Group PLC at the exchange rate
ruling on the date it was raised.

Revenue recognition

Revenue is measured at the fair value of the consideration received or
receivable. Revenue is recognised only when it is probable that the economic
benefits associated with a transaction will flow to the Group and the amount
of revenue can be measured reliably. Revenue from services is recognised as
the services are rendered, including where they are based on contractual rates
per man hour in respect of multi-year service contracts. Incentive performance
revenues are recognised upon completion of agreed objectives. Revenue from
product sales is recognised when the significant risks and rewards of
ownership have been transferred to the buyer, which is normally upon delivery
of products and customer acceptance, if any. Where revenue relates to a
multi-element contract, then each element of the contract is accounted for
separately. Revenues are stated net of sales taxes and discounts.

Revenue on lump-sum contracts for services, construction contracts and fixed
price long term service agreements, is recognised according to the stage of
completion reached in the contract by reference to the value of work done. An
estimate of the profit attributable to work completed is recognised once the
outcome of the contract can be estimated reliably. Expected losses are
recognised in full as soon as losses are probable. The net amount of costs
incurred to date plus recognised profits less the sum of recognised losses and
progress billings is disclosed as trade receivables/trade payables.

Goodwill

The Group uses the purchase method of accounting to account for acquisitions.
Goodwill represents the excess of the cost of an acquisition over the fair
value of the net assets acquired. Goodwill is carried at cost less accumulated
impairment losses.

Other intangible assets

Intangible assets are carried at cost less accumulated amortisation.
Intangible assets are recognised if it is probable that there will be future
economic benefits attributable to the asset, the cost of the asset can be
measured reliably, the asset is separately identifiable and there is control
over the use of the asset. Where the Group acquires a business, other
intangible assets such as customer contracts are identified and evaluated to
determine the carrying value on the acquisition balance sheet. Other
intangible assets are amortised on a straight line basis over their estimated
useful lives, as follows:

Computer software -3-5 years

Other intangible assets - 1-10 years

Property plant and equipment

Property plant and equipment (PP&E) is stated at cost less accumulated
depreciation and impairment. No depreciation is charged with respect to
freehold land and assets in the course of construction. Transfers from PP&E to
current assets are undertaken at the lower of cost and net realisable value.

Depreciation is calculated using the straight line method over the following
estimated useful lives of the assets:

Freehold and long leasehold buildings 25 - 50 years

Short leasehold buildings period of lease

Plant and equipment 3 - 10 years

When estimating the useful life of an asset group, the principal factors the
Group takes into account are the durability of the assets, the intensity at
which the assets are expected to be used and the expected rate of
technological developments.

Impairment

The Group performs impairment reviews in respect of PP&E and other intangible
assets whenever events or changes in circumstance indicate that the carrying
amount may not be recoverable. In addition, the Group carries out annual
impairment reviews in respect of goodwill. An impairment loss is recognised
when the recoverable amount of an asset, which is the higher of the asset's
fair value less costs to sell and its value in use, is less than its carrying
amount.

For the purposes of impairment testing, goodwill is allocated to the
appropriate cash generating unit ("CGU"). The CGU's are aligned to the
business unit and sub-business unit structure the Group uses to manage its
business. Cash flows are discounted in determining the value in use.

Inventories

Inventories, which include materials, work in progress and finished goods and
goods for resale, are stated at the lower of cost and net realisable value.
Product based companies determine cost by weighted average cost methods using
standard costing to gather material, labour and overhead costs. These costs
are adjusted, where appropriate, to correlate closely the standard costs to
the actual costs incurred based on variance analysis. Service based companies'
inventories consist of spare parts and other consumables. Serialised parts are
costed using the specific identification method and other materials are
generally costed using the first in, first out method.

Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and estimated selling
expenses. Allowance is made for obsolete and slow-moving items, based upon
annual usage.

Cash and cash equivalents

Cash and cash equivalents include cash in hand and other short-term bank
deposits with maturities of three months or less and bank overdrafts where
there is a right of set-off. Bank overdrafts are included within borrowings in
current liabilities where there is no right of set-off.

Trade receivables

Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less provision
for impairment. A provision for impairment of trade receivables is established
when there is objective evidence that the Group will not be able to collect
all amounts due according to the original terms of the receivables. The amount
of the provision is the difference between the asset's carrying amount and the
present value of estimated future cash flows, discounted at the effective
interest rate. The provision is determined by reference to previous experience
of recoverability for receivables in each market in which the Group operates.

Deferred consideration

Where it is probable that deferred consideration is payable on the acquisition
of a business based on an earn out arrangement, an estimate of the amount
payable is made at the date of acquisition and reviewed regularly thereafter,
with any change in the estimated liability being reflected in goodwill.

Taxation

The tax charge represents the sum of tax currently payable and deferred tax.
Tax currently payable is based on the taxable profit for the year. Taxable
profit differs from the profit reported in the income statement due to items
that are not taxable or deductible in any period and also due to items that
are taxable or deductible in a different period. The Group's liability for
current tax is calculated using tax rates enacted or substantively enacted at
the balance sheet date.

Deferred income tax is provided, using the full liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. The principal
temporary differences arise from depreciation on PP&E, tax losses carried
forward and, in relation to acquisitions, the difference between the fair
values of the net assets acquired and their tax base. Tax rates enacted, or
substantially enacted, by the balance sheet date are used to determine
deferred income tax.

Deferred tax assets are recognised to the extent that it is probable that
future taxable profits will be available against which the temporary
differences can be utilised.

Accounting for derivative financial instruments and hedging activities

Derivatives are initially recognised at fair value on the date the contract is
entered into and are subsequently remeasured at their fair value. The method
of recognising the resulting gain or loss depends on whether the derivative is
designated as a hedging instrument, and if so, the nature of the item being
hedged. The Group designates certain derivatives as either: (1) hedges of the
fair value of recognised assets or liabilities or a firm commitment (fair
value hedge); (2) hedges of highly probable forecast transactions (cash flow
hedge); or (3) hedges of net investments in foreign operations (net investment
hedge).

Where hedging is to be undertaken, the Group documents the relationship
between the hedging instrument and the hedged item at the inception of the
transaction, as well as its risk management objective and strategy for
undertaking the hedge transaction. The Group also documents its assessment,
both at hedge inception and on an ongoing basis, of whether the derivatives
that are used in hedging transactions are highly effective in offsetting
changes in fair values or cash flows of the hedged items. The Group performs
effectiveness testing on a quarterly basis.

Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as
fair value hedges are recorded in the income statement, together with any
changes in the fair value of the hedged asset or liability that are
attributable to the hedged risk.

Cash flow hedge

The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges is recognised in equity. The gain
or loss relating to the ineffective portion is recognised immediately in the
income statement.

Amounts accumulated in equity are recycled through the income statement in
periods when the hedged item affects profit or loss. However, when the
forecast transaction that is hedged results in the recognition of a
non-financial asset or liability, the cost of the asset or liability is
adjusted by the gains or losses previously held in equity.

When a hedging instrument expires or is sold, or when a hedge no longer meets
the criteria for hedge accounting, any cumulative gain or loss existing in
equity at that time remains in equity and is recognised when the forecast
transaction is ultimately recognised in the income statement. When a forecast
transaction is no longer expected to occur, the cumulative gain or loss that
was reported in equity is immediately transferred to the income statement.

Net investment hedge

Hedges of net investments in foreign operations are accounted for similarly to
cash flow hedges. Any gain or loss on the hedging instrument relating to the
effective portion of the hedge is recognised in equity; the gain or loss
relating to the ineffective portion is recognised immediately in the income
statement. Gains and losses accumulated in equity are included in the income
statement when the foreign operation is disposed of.

Derivatives that do not qualify for hedge accounting

Certain derivatives, whilst providing effective economic hedges under the
Group's treasury policy are not designated as hedges. Changes in the fair
value of any derivative instruments that are not designated for hedge
accounting are recognised immediately in the income statement.

Fair value estimation

The fair value of interest rate swaps is calculated as the present value of
their estimated future cash flows. The fair value of forward foreign exchange
contracts is determined using forward foreign exchange market rates at the
balance sheet date. The carrying values of trade receivables and payables
approximate to their fair values. The fair value of financial liabilities is
estimated by discounting the future contractual cash flows at the current
market interest rate that is available to the Group for similar financial
instruments.

Operating leases

As lessee

Payments made under operating leases are charged to the income statement on a
straight line basis over the period of the lease. Benefits received and
receivable as an incentive to enter into an operating lease are also spread on
a straight line basis over the period of lease.

As lessor

Operating lease rental income arising from leased assets is recognised in the
income statement on a straight line basis over the period of the lease.

Finance leases

As lessee

Assets held under finance leases are capitalised as PP&E and depreciated over
the shorter of the lease term and the asset's useful life. The capital element
of the future lease obligation is recorded as a liability, with the interest
element charged to the income statement over the period of the lease so as to
produce a constant rate of charge on the capital outstanding.

As lessor

Finance lease rental income arising from leased assets is recognised in the
income statement so as to produce a constant rate of return on the net cash
investment. Amounts receivable under finance leases represent the outstanding
amounts due under these agreements less amounts allocated to future periods.

Retirement benefit liabilities

The Group operates a defined benefit scheme and a number of defined
contribution schemes and these are accounted for under IAS 19 `Employee
Benefits'. The liability recognised in respect of the defined benefit scheme
represents the present value of the defined benefit obligations less the fair
value of the scheme assets. The assets of this scheme are held in separate
trustee administered funds. The defined benefit scheme's assets are measured
using market values. Pension scheme liabilities are measured annually by an
independent actuary using the projected unit method and discounted at the
current rate of return on a high quality corporate bond of equivalent term and
currency to the liability. The increase in the present value of the
liabilities of the Group's defined benefit pension scheme expected to arise
from employee service in the period is charged to operating profit. The
expected return on the scheme assets and the increase during the period in the
present value of the scheme's liabilities arising from the passage of time are
included in finance income/expense. Actuarial gains and losses are recognised
in the Group statement of recognised income and expense in full in the period
in which they occur.

The defined benefit scheme's surpluses, to the extent that they are considered
recoverable, or deficits are recognised in full and presented on the face of
the balance sheet.

The Group's contributions to defined contribution schemes are charged to the
income statement in the period to which the contributions relate.

Provisions

Provision is made for the estimated liability on all products and services
still under warranty, including claims already received, based on past
experience. Other provisions are recognised where the Group is deemed to have
a legal or constructive obligation, it is probable that a transfer of economic
benefits will be required to settle the obligation, and a reliable estimate of
the obligation can be made.

Share based charges relating to employee share schemes

The Group has a number of employee share schemes:-

Share options granted under Executive Share Option Schemes (`ESOS') are
granted at market value. A charge is booked to the income statement as an
employee benefit expense for the fair value of share options expected to be
exercised, accrued over the vesting period. The corresponding credit is taken
to retained earnings. The fair value is calculated using an option pricing
model.

Share options granted under the Long Term Retention Plan (`LTRP') are granted
at par value. The charge to the income statement for LTRP shares is also
calculated using an option pricing model and, as with ESOS grants, the fair
value of the share options expected to be exercised is accrued over the
vesting period. The corresponding credit is also taken to retained earnings.

The Group also has a Long Term Incentive Scheme (`LTIS') for directors and key
senior executives. Participants are awarded shares dependent on the
achievement of certain performance targets. The charge to the income statement
for shares expected to be awarded under the LTIS is based on the fair value of
those shares at the grant date, spread over the vesting period. The
corresponding credit is taken to retained earnings. For those awards that have
a market related performance measure, the fair value of the market related
element is calculated using a Monte Carlo simulation model.

Proceeds received on the exercise of share options are credited to share
capital and share premium.

Share capital

John Wood Group PLC has one class of ordinary shares and these are classified
as equity. Dividends on ordinary shares are not recognised as a liability or
charged to equity until they have been approved by shareholders.

The Group is deemed to have control of the assets, liabilities, income and
costs of its employee share ownership trusts (`ESOP trusts'). They have
therefore been consolidated in the financial statements of the Group. Shares
acquired by and disposed of by the ESOP trusts are recorded at cost. The cost
of shares held by the ESOP trusts is deducted from shareholders' equity.

Segmental reporting

The Group's primary reporting segments are its three operating divisions,
namely Engineering & Production Facilities, Well Support and Gas Turbine
Services.

Engineering & Production Facilities provides a broad range of life-of-field
engineering, modifications, maintenance and operations services to oil and gas
customers worldwide. Well Support supplies solutions, products and services to
increase production rates and recovery from oil and gas reservoirs. It is
among the market leaders worldwide in artificial lift using electric
submersible pumps, in the provision of surface wellheads and valves and, in
the Gulf of Mexico and in parts of South America, in the provision of electric
wireline and slickline services. Gas Turbine Services is a world leading
independent provider of maintenance, repair and overhaul services for
industrial gas turbines and related high speed rotating equipment used for
compression, transmission and power generation in the oil and gas and power
generation industries.

Disclosure of impact of new and future accounting standards

The following standards, amendments and interpretations to published standards
were mandatory for the year ended 31 December 2006. The application of these
standards did not have a material impact on the financial statements.

IAS 21 (Amendment) Net investment in a foreign operation

IAS 39 (Amendment) Cash flow hedge accounting of forecast intragroup
transactions

IAS 39 (Amendment) The fair value option

IAS 39 and IFRS 4 (Amendment) Financial guarantee contracts

IFRS 1 (Amendment) First time adoption of international financial reporting
standards

IFRIC 4 Determining whether an arrangement contains a lease

The Group has not yet adopted the following standards which are only effective
for periods commencing on or after 1 January 2007.

IFRS 7 `Financial Instruments: Disclosures'

This standard consolidates IAS 30 and the disclosure requirements of IAS 32
relating to financial instruments. We do not anticipate that this standard
will have any material impact on the Group's financial statements.

IFRS 8 `Operating Segments'

This standard replaces IAS 14 `Segment Reporting' and proposes that entities
adopt a `management approach' to reporting financial performance. We do not
anticipate that this standard will have any material impact on the Group's
financial statements.

1 Segmental reporting

Primary reporting format - business segments

                                        Revenues             EBITDA(1)         EBITA(1)             Operating profit
                                                                      Year
                                        Year                 Year     ended    Year                 Year
                                        ended    Year ended  ended             ended    Year ended  ended    Year ended
                                        31 Dec               31 Dec   31 Dec   31 Dec               31 Dec
                                        2006     31 Dec 2005 2006     2005     2006     31 Dec 2005 2006     31 Dec 2005
                                        US$m     US$m        US$m     US$m     US$m     US$m        US$m     US$m
 
Engineering & Production Facilities     1,972.7  1,472.3     155.3    98.7     141.9    88.2        138.0    86.0
Well Support (2)                        739.1    645.7       93.9     76.3     73.6     58.5        73.5     68.0
Gas Turbine Services                    713.7    607.8       54.1     47.8     38.0     32.7        34.7     24.9
Central costs (5)                       -        -           (37.7)   (28.8)   (38.4)   (29.5)      (38.5)   (29.8)
 
Total excluding discontinuing
operations                              3,425.5  2,725.8     265.6    194.0    215.1    149.9       207.7    149.1
 
Gas Turbine Services - discontinuing
operations (3)                          43.3     36.1        0.9      (0.1)    -        (0.8)       (0.2)    (1.1)
 
                                        3,468.8  2,761.9     266.5    193.9    215.1    149.1       207.5    148.0
 
Finance income                                                                                      5.3      2.5
Finance expense                                                                                     (29.2)   (25.8)
 
Profit before taxation                                                                              183.6    124.7
 
Taxation                                                                                            (62.4)   (41.1)
 
Profit for the year                                                                                 121.2    83.6
Notes

EBITDA represents operating profit of US$207.5m (2005 : US$148.0m) before
profit on disposal of subsidiaries of US$nil (2005 : US$9.7m), impairment and
restructuring charges of US$nil (2005 : US$6.0m), depreciation of US$51.4m
(2005 : US$44.8m) and amortisation of US$7.6m (2005 : US$4.8m). 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.

Well Support's results include revenues of US$nil (2005 : US$37.5m) and
operating profit of US$nil (2005 : US$5.0m) earned by the Production
Technology business prior to its disposal in December 2005.

The discontinuing operations relate to an Aero engine overhaul company which
the Group has decided to divest.

Revenues arising from sales between segments are not material.

5 Central costs include the costs of central management personnel in both the
UK and the US, along with an element of Group infrastructure costs.

Segment assets and liabilities

                                           Engineering               Gas
                                           & Production              Turbine  Discontinuing
At 31 December 2006                        Facilities   Well Support Services Operations    Unallocated Total
                                           US$m         US$m         US$m     US$m          US$m        US$m
 
Segment assets                             741.4        498.2        594.0    43.6          167.5       2,044.7
 
Segment liabilities                        403.3        160.3        175.3    7.5           488.3       1,234.7
 
At 31 December 2005
 
Segment assets                                  568.2    432.2     518.7    34.7      159.0    1,712.8
 
Segment liabilities                             264.5    132.8     145.2    7.8       461.6    1,011.9

Segment assets and liabilities are presented before the elimination of
inter-segment trading balances. Unallocated assets and liabilities includes
income tax, deferred tax and cash and borrowings where this relates to the
financing of the Group's operations.

Other segment items

                                            Engineering               Gas
                                            & Production              Turbine  Discontinuing
2006                                        Facilities   Well Support Services Operations    Unallocated Total
                                            US$m         US$m         US$m     US$m          US$m        US$m
Capital expenditure
- Property plant and equipment              15.0         36.0         23.1     2.3           0.1         76.5
- Intangible assets                         3.8          0.2          5.8      -             -           9.8
Non-cash expenses
- Depreciation                              13.4         20.3         16.1     0.9           0.7         51.4
- Amortisation of other intangible assets   3.9          0.1          3.3      0.2           0.1         7.6
- Other                                     1.6          8.0          2.7      -             -           12.3

 
2005
                                                 US $m    US $m    US $m    US $m     US $m    US $m
Capital expenditure
- Property plant and equipment                   10.2     28.1     15.2     2.5       0.5      56.5
- Intangible assets                              3.9      0.1      5.2      -         -        9.2
Non-cash expenses
- Depreciation                                   10.5     17.8     15.1     0.7       0.7      44.8
- Amortisation of other intangible assets        2.2      0.2      1.8      0.3       0.3      4.8
- Impairment - property plant and equipment      -        -        1.7      -         -        1.7
- Other                                          1.5      0.7      1.4      -         -        3.6

Secondary format - geographical segments

                                                 Revenues              Segment assets        Capital expenditure
                                                 2006       2005       2006       2005       2006       2005
                                                 US$m       US$m       US$m       US$m       US$m       US$m
 
Europe                                           1,031.3    885.4      486.0      391.7      18.1       16.1
North America                                    1,514.2    1,103.9    1,059.6    878.1      51.7       29.2
Rest of the World                                923.3      772.6      499.1      443.0      16.5       20.4
 
                                                 3,468.8    2,761.9    2,044.7    1,712.8    86.3       65.7


                                                2006    2005
                                                US$m    US$m
 
Revenues by category are as follows:
 
Sale of goods                                   550.5   485.0
Rendering of services                           2,918.3 2,276.9
 
                                                3,468.8 2,761.9
2 Finance expense/(income)

                                                2006  2005
                                                US$m  US$m
 
Interest payable on bank borrowings             29.2  25.7
Other interest payable (note 30)                -     0.1
 
Finance expense                                 29.2  25.8
 
Interest receivable on short term deposits      (4.5) (2.5)
Other interest income (note 30)                 (0.8) -
 
Finance income                                  (5.3) (2.5)
 
Finance expense - net                           23.9  23.3


3 Profit before taxation

                                                              2006    2005
                                                              US$m    US$m
 
The following items have been charged/(credited) in arriving
at profit before taxation:
 
Employee benefits expense (note 29)                           1,276.0 966.3
Cost of inventory recognised as an expense (included in cost  287.4   244.7
of sales)
Impairment of inventory                                       14.6    7.6
Depreciation of property plant and equipment                  51.4    44.8
Amortisation of other intangible assets                       7.6     4.8
(Gain)/loss on disposal of property plant and equipment       (1.4)   0.5
Other operating lease rentals payable:
- Plant and machinery                                         13.8    11.0
- Property                                                    41.4    29.6
Net exchange loss/(gain) on foreign currency borrowings less  13.8    (5.5)
deposits
Gain on fair value of unhedged derivative financial           (0.6)   (0.9)
instruments
Services provided by the Group's auditor and network firms

During the year the Group obtained the following services from its auditor at
costs as detailed below:

                                                              2006  2005
                                                              US$m  US$m
 
Audit services
- Fees payable for audit of parent company and consolidated   0.8   0.9
accounts
Non-audit services
Fees payable to the company's auditor and its associates for
other services:
- Audit of subsidiary companies pursuant to legislation       1.0   1.0
- Tax services                                                0.3   0.2
- Other services                                              0.1   0.1
 
                                                              2.2   2.2


4 Profit on disposal of subsidiaries

                                                2006  2005
                                                US$m  US$m
 
Profit on disposal of subsidiaries              -     9.7
 
In December 2005, the Group disposed of its Production Technology business
which was part of the Well Support division. US$22.8m of the proceeds were
received in December 2005 with the balance of US$7.3m being paid in February
2006.


5 Impairment and restructuring charges

                                                2006  2005
                                                US$m  US$m
 
Impairment and restructuring charges            -     6.0

The 2005 impairment and restructuring charge of US$6.0m was in respect of
rationalisation of businesses and facilities, severance costs and impairment
of property plant and equipment in the Gas Turbine Services division.


6 Taxation

                                                              2006   2005
                                                              US$m   US$m
Current tax
- Current year                                                85.7   46.5
- Adjustment in respect of prior years                        (4.9)  (5.1)
 
                                                              80.8   41.4
Deferred tax
Relating to origination and reversal of temporary differences (18.4) (0.3)
 
Total tax charge                                              62.4   41.1

 
Tax on items charged to equity                              2006  2005
                                                            US$m  US$m
 
Deferred tax movement on retirement benefit liabilities     2.6   (0.7)
Current tax credit on exchange movements offset in reserves (3.2) -
 
                                                            (0.6) (0.7)


Tax is calculated at the rates prevailing in the respective jurisdictions in
which the Group operates. The expected rate is the weighted average rate
taking into account the Group's profits in these jurisdictions. The expected
rate has increased in 2006 due to the change in profitability of the Group's
subsidiaries in their respective jurisdictions. The tax for the year is lower
(2005 : lower) than the rate of corporate tax expected due to the following
factors:

                                                          2006  2005
                                                          US$m  US$m
 
Profit before taxation                                    183.6 124.7
 
Profit before tax at expected rate of 36.4% (2005: 34.2%) 66.8  42.6
Effects of:
Adjustments in respect of prior years                     (4.9) (5.1)
Non-recognition of losses and other attributes            7.4   5.4
Other permanent differences                               (6.9) (1.8)
 
Total tax charge                                          62.4  41.1


7 Dividends

                                                              2006  2005
                                                              US$m  US$m
Dividends on equity shares
Final dividend paid - year ended 31 December 2005 : 2.7 cents 13.4  11.1
(2005: 2.4 cents) per share
Interim dividend paid - year ended 31 December 2006 : 1.5     7.4   6.4
cents (2005: 1.3 cents) per share
 
                                                              20.8  17.5

The directors are proposing a final dividend in respect of the financial year
ended 31 December 2006 of 3.5 cents per share which will absorb an estimated
US$17.4m of shareholders' funds. The final dividend will be paid on 24 May
2007 to shareholders who are on the register of members on 4 May 2007. The
financial statements do not reflect this dividend payable.


8 Earnings per share

                                           2006                                 2005
                                                                                Earnings
                                           Earnings                    Earnings attributable Number of  Earnings
                                           attributable to  Number of  per      to equity    shares     per
                                           equity           shares     share    shareholders            share
                                           shareholdersUS$m (millions) (cents)  US$m         (millions) (cents)
 
Basic                                      120.5            494.7      24.4     80.5         473.4      17.0
 
Effect of dilutive ordinary shares         -                19.4       (1.0)    -            17.8       (0.6)
 
Diluted                                    120.5            514.1      23.4     80.5         491.2      16.4
 
Amortisation, net of tax                   5.4              -          1.1      4.8          -          1.0
Profit on disposal of subsidiaries, net of -                -          -        (7.9)        -          (1.6)
tax
Impairment and restructuring charges, net  -                -          -        4.2          -          0.8
of tax
 
Adjusted diluted                           125.9            514.1      24.5     81.6         491.2      16.6
 
Adjusted basic                             125.9            494.7      25.4     81.6         473.4      17.2


The calculation of basic earnings per share for the year ended 31 December
2006 is based on the earnings attributable to equity shareholders divided by
the weighted average number of ordinary shares in issue during the year
excluding shares held by the Group's employee share ownership 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 Executive Share Option Schemes and the Long Term
Retention Plan; and shares issuable under the Group's Long Term Incentive
Scheme. Adjusted EPS is disclosed to show the results excluding the impact of
amortisation, impairment and restructuring charges and profit on disposal of
subsidiaries, net of tax.

9 Goodwill and other intangible assets


                                             Computer
                                             software
                                    Goodwill             Other   Total
                                    US$m     US$m        US$m    US$m
Cost
At 1 January 2006                   312.5    22.1        16.7    351.3
Exchange differences                4.8      1.9         0.7     7.4
Additions                           -        5.1         4.7     9.8
Acquisitions                        38.4     -           8.2     46.6
Reclassification from property,     -        -           0.9     0.9
plant and equipment
Reclassification from current       -        -           1.6     1.6
assets
At 31 December 2006                 355.7    29.1        32.8    417.6
 
Aggregate amortisation and          0.4      13.1        9.2     22.7
impairment
 
At 1 January 2006
Exchange differences                -        1.3         0.5     1.8
Charge for the year                 -        3.9         3.7     7.6
At 31 December 2006                 0.4      18.3        13.4    32.1
Net book value at 31 December 2006  355.3    10.8        19.4    385.5
 
Cost
At 1 January 2005                   297.5   16.9    13.8    328.2
Exchange differences                (3.7)   (1.5)   (0.5)   (5.7)
Additions                           -       6.7     2.5     9.2
Acquisitions                        18.7    -       0.9     19.6
At 31 December 2005                 312.5   22.1    16.7    351.3
 
Aggregate amortisation and          0.4     10.6    8.3     19.3
impairment
 
At 1 January 2005
Exchange differences                -       (1.0)   (0.4)   (1.4)
Charge for the year                 -       3.5     1.3     4.8
At 31 December 2005                 0.4     13.1    9.2     22.7
Net book value at 31 December 2005  312.1   9.0     7.5     328.6

In accordance with IAS 36 `Impairment of assets', goodwill was tested for
impairment during the year. The impairment tests were carried out on a Cash
Generating Unit (`CGU') basis using the budgeted cash flows for 2007/8. Cash
flows for 2009-11 are assumed to grow at a rate of 5% per annum. Subsequent
cash flows have been assumed to grow at 3% per annum. The cash flows have been
discounted using a pre-tax discount rate of 10%. No impairment of goodwill is
required in 2006.

The carrying amounts of goodwill by division are: Engineering & Production
Facilities US$234.4m (2005 : US$191.9m), Gas Turbine Services US$87.4m (2005 :
US$86.7m) and Well Support US$33.5m (2005 : US$33.5m).

Other includes development costs, licences and customer contracts. Development
costs with a net book value of US$8.7m (2005 : US$3.1m) are internally
generated intangible assets.


10 Property plant and equipment

                                 Land and  Land and
                                 buildings buildings -
                                 - Long    Short
                                 leasehold leasehold
                                 and                   Plant and
                                 freehold              equipment
                                                                   Total
                                 US$m      US$m        US$m        US$m
Cost
At 1 January 2006                52.1      15.9        372.2       440.2
Exchange differences             0.5       1.0         12.1        13.6
Additions                        1.4       1.5         73.6        76.5
Acquisitions                     -         -           3.2         3.2
Disposals                        (0.7)     (0.1)       (14.8)      (15.6)
Reclassification as other        -         -           (0.9)       (0.9)
intangible assets
Reclassification as current      -         -           (1.7)       (1.7)
assets
 
At 31 December 2006              53.3      18.3        443.7       515.3
 
Accumulated depreciation and
impairment
At 1 January 2006                   18.6    8.7     193.4   220.7
Exchange differences                0.1     0.5     7.6     8.2
Charge for the year                 2.8     1.5     47.1    51.4
Disposals                           (0.4)   (0.1)   (8.6)   (9.1)
Reclassification as current assets  -       -       (3.8)   (3.8)
 
At 31 December 2006                 21.1    10.6    235.7   267.4
 
Net book value at 31 December 2006  32.2    7.7     208.0   247.9
 
Cost
At 1 January 2005                  49.8    15.9    350.7   416.4
Exchange differences               (0.7)   (0.6)   (9.1)   (10.4)
Additions                          4.6     1.0     50.9    56.5
Acquisitions                       1.7     -       1.8     3.5
Disposals                          (3.3)   (0.4)   (13.2)  (16.9)
Company sold                       -       -       (2.1)   (2.1)
Reclassification as current assets -       -       (6.8)   (6.8)
 
At 31 December 2005                52.1    15.9    372.2   440.2
 
Accumulated depreciation and
impairment
At 1 January 2005                   16.8    7.9     175.5   200.2
Exchange differences                (0.8)   (0.2)   (5.5)   (6.5)
Charge for the year                 3.1     1.1     40.6    44.8
Acquisitions                        0.2     -       0.4     0.6
Impairment                          -       0.3     1.4     1.7
Disposals                           (0.7)   (0.4)   (10.1)  (11.2)
Company sold                        -       -       (1.1)   (1.1)
Reclassification as current assets  -       -       (7.8)   (7.8)
 
At 31 December 2005                 18.6    8.7     193.4   220.7
 
Net book value at 31 December 2005  33.5    7.2     178.8   219.5


Plant and equipment includes assets held for lease to customers under
operating leases of US$37.4m (2005: US$33.0m). Additions during the year
amounted to US$12.4m (2005 : US$12.0m) and depreciation totalled US$9.1m (2005
: US$7.0m). The gross cost of these assets at 31 December 2006 is US$52.3m
(2005 : US$41.9m) and aggregate depreciation is US$14.9m (2005 : US$8.9m).

Impairment is included in the `impairment and restructuring charges' line in
the income statement (see note 5).

Property plant and equipment includes assets in the course of construction of
US$11.6m (2005 : US$10.8m).


11 Joint ventures

In relation to the Group's interests in joint ventures, its share of assets,
liabilities, income and expenses is shown below.

                                                2006    2005
                                                US$m    US$m
 
Non-current assets                              55.4    56.2
Current assets                                  218.4   200.2
Non-current liabilities                         (8.8)   (15.6)
Current liabilities                             (162.7) (150.4)
 
Net assets                                      102.3   90.4
 
Income                                          397.5   315.8
Expenses                                        (366.8) (286.9)
 
Profit before tax                               30.7    28.9
Tax                                             (8.8)   (7.6)
 
Share of post tax results from joint ventures   21.9    21.3

The joint ventures have no significant contingent liabilities to which the
Group is exposed, nor has the Group any significant contingent liabilities in
relation to its interest in the joint ventures other than the bank guarantees
described in note 32.


12 Inventories

                                                2006  2005
                                                US$m  US$m
 
Materials                                       74.5  76.3
Work in progress                                69.1  58.9
Finished goods and goods for resale             280.5 227.7
 
                                                424.1 362.9

13 Trade and other receivables

                                                2006   2005
                                                US$m   US$m
 
Trade receivables                               691.2  514.7
Less: provision for impairment                  (23.6) (11.4)
 
Trade receivables - net                         667.6  503.3
Amounts recoverable on contracts                15.2   11.2
Amounts receivable under finance leases         7.8    9.9
Prepayments and accrued income                  54.8   36.7
Other receivables                               47.1   49.6
 
                                                792.5  610.7


Total amounts receivable under finance leases, including amounts allocated to
future periods of US$1.3m (2005 : US$3.9m) is US$11.4m (2005 : US$21.3m).
Rentals receivable during the year under finance leases amounted to US$12.4m
(2005 : US$13.6m). Amounts receivable under finance leases of US$3.6m (2005 :
US$11.4m) are included in long term receivables.


14 Cash and cash equivalents

                                                2006  2005
                                                US$m  US$m
 
Cash at bank and in hand                        85.8  75.7
Short-term bank deposits                        54.5  74.2
 
                                                140.3 149.9

The effective interest rate on short-term deposits was 5.3% (2005 : 4.3%) and
these deposits have an average maturity of 91 days (2005 : 32 days).


15 Trade and other payables

                                                 2006  2005
                                                 US$m  US$m
 
Trade payables                                   255.4 192.8
Other tax and social security payable            40.6  27.9
Accruals and deferred income                     384.7 277.1
Deferred consideration                           12.6  3.9
Other payables                                   17.5  25.0
 
                                                 710.8 526.7

16 Financial liabilities - borrowings

                                                           2006  2005
                                                           US$m  US$m
 
Bank loans and overdrafts due within one year or on demand
Unsecured                                                  41.5  47.9
 
Non-current bank loans
Unsecured                                                  356.7 347.8

 
Bank loans are denominated in a number of currencies and bear interest based
on LIBOR or foreign equivalents appropriate to the country in which the
borrowing is incurred.

The effective interest rates on the Group's borrowings at the balance sheet
date were as follows:

                                                 2006  2005
                                                 %     %
 
US Dollar                                        5.77  4.76
Sterling                                         5.74  5.17
Euro                                             4.14  2.75
Australian Dollar                                6.77  6.03
Canadian Dollar                                  4.93  4.02

The carrying amounts of the Group's borrowings are denominated in the
following currencies:

                                                  2006  2005
                                                  US$m  US$m
 
US Dollar                                         190.3 246.2
Sterling                                          117.8 61.3
Euro                                              22.6  17.1
Australian Dollar                                 4.5   7.3
Canadian Dollar                                   43.7  48.8
Other                                             19.3  15.0
 
                                                  398.2 395.7
17 Other non-current liabilities

                                                 2006  2005
                                                 US$m  US$m
 
Deferred consideration                           24.2  13.2
Other payables                                   7.0   5.5
 
                                                 31.2  18.7

Deferred consideration represents amounts payable on acquisitions made by the
Group and is expected to be paid over the next four years.

18 Financial instruments

The main risks arising from the Group's financial instruments are interest
rate risk, liquidity risk, foreign currency risk and credit risk. The Board
reviews and agrees policies for managing each of these risks and these are
summarised below.

Interest rate risk

The Group finances its operations through a mixture of retained profits and
bank borrowings. The Group borrows in the desired currencies at floating rates
of interest and then uses interest rate swaps as cash flow hedges to generate
the desired interest profile and to manage the Group's exposure to interest
rate fluctuations. The Group's long-term policy is to maintain approximately
50% of its borrowings at fixed rates of interest. At 31 December 2006,
approximately 51% (2005 : 45%) of the Group's borrowings were at fixed rates
after taking account of interest rate swaps.

Liquidity risk

As regards liquidity, the Group's policy has throughout the year been that, to
ensure continuity of funding, at least 90% of the Group borrowing facilities
(excluding joint ventures) should mature in more than one year. At 31 December
2006, 96% (2005 : 96%) of the Group borrowing facilities were due to mature in
more than one year.

Foreign currency risk

The Group is exposed to foreign exchange risk arising from various currencies.
The Group also has significant overseas subsidiaries whose revenues and
expenses are denominated in other currencies. In order to protect the Group's
balance sheet from movements in exchange rates, the Group finances its net
investment in non US dollar subsidiaries primarily by means of borrowings
denominated in the appropriate currency.

Some of the sales of the Group's businesses are to customers in overseas
locations. Where possible, the Group's policy is to eliminate all significant
currency exposures on sales at the time of the transaction through forward
currency contracts. Where the Group does not hedge account for these forward
contracts, changes in the forward contract fair values are booked through the
income statement.

The Group carefully monitors the economic and political situation in the
countries in which it operates to ensure appropriate action is taken to
minimise any foreign currency exposure.

Credit risk

The Group's credit risk primarily relates to its trade receivables. The
Group's major customers are typically large companies which have strong credit
ratings assigned by international credit rating agencies. The Group has a
broad customer base and management believe that no further credit risk
provision is required in excess of the provision for impairment of
receivables.

Price risk

The Group is not exposed to any significant price risk in relation to its
financial instruments.

Numerical financial instrument disclosures are set out below.

The book value and net fair value of the Group's derivative financial
instruments at the balance sheet date were as follows:

                                              2006   2005
                                              US$m   US$m
Contracts with positive fair values:
Interest rate swaps                           3.0    1.5
Forward foreign currency contracts            0.9    1.5
 
                                              3.9    3.0
Contracts with negative fair values:
Interest rate swaps                           (0.3)  (0.1)
Forward foreign currency contracts            (0.2)  (0.5)
Currency options                              (0.5)  -
 
                                              (1.0)  (0.6)

These amounts are disclosed in the financial statements as follows:

                                              2006   2005
                                              US$m   US$m
 
Non-current assets                            2.6    1.3
Current assets                                1.3    1.7
 
                                              3.9    3.0
 
Non-current liabilities                       0.1    -
Current liabilities                           0.9    0.6
 
                                              1.0    0.6
Interest rate swaps

The notional principal amount of the Group's outstanding interest rate swap
contracts at 31 December 2006 was US$203.9m (2005 : US$180.0m).

At 31 December 2006 the fixed interest rates varied from 2.7% to 5.2% (2005 :
2.7% to 5.0%) and the floating rate was 5.8% including margin (2005 : 5.0%).
The Group interest rate swaps are for periods of 5 years and they expire
between 2007 and 2010 with the exception of one US$25m swap which is a 10 year
swap expiring in 2012. The bank has a break option on the 10 year swap in
2007. The bank also has a break option on a US$25m 5 year swap. This option is
exercisable on a quarterly basis.

The fair value gains and losses relating to the interest rate swaps and which
are deferred in equity at 31 December will reverse in the income statement
over the term of the swaps.

Net investment in foreign entities

The Group has foreign currency borrowings which it has designated as a hedge
of subsidiary company net assets. The fair value of the borrowings at 31
December 2006 was US$137.5m (2005 : US$78.3m). The foreign exchange loss of
US$14.3m (2005 : gain US$2.1m) on translation of the borrowings into US
dollars has been recognised in the currency translation reserve.

Fair value of non-derivative financial assets and financial liabilities

Where market values are not available, fair values of non-derivative financial
assets and financial liabilities have been calculated by discounting expected
future cash flows at prevailing interest rates and by applying year end
exchange rates.

The fair value of short-term borrowings, trade and other payables, trade and
other receivables, short-term deposits and cash at bank and in hand
approximates to the carrying amount because of the short maturity of interest
rates in respect of these instruments. Long-term borrowings are generally
rolled over for periods of three months or less.

Fair value of long-term borrowings

                                     2006                  2005
                                     Book value Fair value Book value Fair value
                                     US$m       US$m       US$m       US$m
 
Long-term borrowings (note 16)       (356.7)    (356.7)    (347.8)    (347.8)
 
Fair value of other financial assets
and financial liabilities
 
Primary financial instruments held
or issued to finance the Group's
operations:
 
Trade and other receivables (note    792.5      792.5      610.7      610.7
13)
Cash at bank and in hand (note 14)   85.8       85.8       75.7       75.7
Short-term deposits (note 14)        54.5       54.5       74.2       74.2
Trade and other payables (note 15)   (710.8)    (710.8)    (526.7)    (526.7)
Short-term borrowings (note 16)      (41.5)     (41.5)     (47.9)     (47.9)
Other non-current liabilities (note  (31.2)     (31.2)     (18.7)     (18.7)
17)
Maturity of financial liabilities

The maturity profile of the carrying amount of the Group's non-current
liabilities at 31 December was as follows:

                                                                         2006                              2005
 
                                                  Borrowings   Other     Total      Borrowings   Other     Total
                                              US$m       US$m        US$m       US$m       US$m        US$m
In more than one year but not more than two
years                                                                           1.6        13.9
                                              -          20.4        20.4                              15.5
In more than two years but not more than
five years                                                                      346.2      4.8         351.0
                                              356.7      10.8        367.5
 
                                              356.7      31.2        387.9      347.8      18.7        366.5
 
Borrowing facilities

The Group has the following undrawn committed borrowing facilities available
at 31 December in respect of which all conditions precedent had been met at
that date:

                                                             2006   2005
                                                             US$m   US$m
Expiring within one year                                     23.6   8.3
Expiring between one and two years                           8.9    -
Expiring in more than two years but not more than five years 409.4  421.1
 
                                                             441.9  429.4

All undrawn borrowing facilities are floating rate facilities. The facilities
expiring within one year are annual facilities subject to review at various
dates during 2007. The facilities have been arranged to help finance the
Group's activities. All these facilities incur commitment fees at market
rates.

19 Provisions

                                      Warranty
                                      provisions
                                                  Other   Total
                                      US$m        US$m    US$m
 
At 1 January 2006                     11.5        3.6     15.1
Exchange differences                  0.4         -       0.4
Charge to income statement            7.2         6.8     14.0
Payments during the year              (5.6)       (0.3)   (5.9)
 
At 31 December 2006                   13.5        10.1    23.6
Warranty provisions

These provisions are recognised in respect of guarantees provided in the
normal course of business relating to contract performance. They are based on
previous claims history and it is expected that most of these costs will be
incurred over the next two years.

Other provisions

At 31 December 2006, other provisions of US$10.1m (2005 : US$3.6m) have been
recognised. This amount includes provisions for future losses on two overseas
onerous contracts and a provision for non-recoverable overseas indirect taxes.
It is expected that most of the costs in relation to these provisions will be
incurred over the next two years.

20 Deferred tax

Deferred tax is calculated in full on temporary differences under the
liability method using the tax rate applicable to the territory in which the
asset or liability has arisen.

The movement on the deferred tax account is shown below:

                                                              2006   2005
                                                              US$m   US$m
 
At 1 January                                                  (12.3) (12.3)
Exchange differences                                          (1.2)  1.0
Credit to income statement                                    (18.4) (0.3)
Deferred tax relating to retirement benefit liabilities       2.6    (0.7)
 
At 31 December                                                (29.3) (12.3)
 
The deferred tax account is presented in the financial
statements as follows:
 
Deferred tax assets                                           (36.6) (19.3)
Deferred tax liabilities                                      7.3    7.0
 
                                                              (29.3) (12.3)

No deferred tax is recognised on the unremitted earnings of overseas
subsidiaries and joint ventures. As these earnings are continually reinvested
by the Group, no tax is expected to be payable on them in the foreseeable
future. If the earnings were remitted, tax of US$20.1m (2005 : US$17.3m) would
be payable.

The Group has unrecognised tax losses of US$44.3m (2005 : US$39.3m) to carry
forward against future taxable income.

Deferred tax assets and liabilities are only offset where there is a legally
enforceable right of offset and there is an intention to settle the balances
net. The deferred tax balances are analysed below:-

                                    Accelerated
                                    tax
                                    depreciation
 
                                                 Other   Total
                                    US$m         US$m    US$m
 
Deferred tax assets                 10.0         (46.6)  (36.6)
Deferred tax liabilities            4.6          2.7     7.3
 
Net deferred tax (asset)/liability  14.6         (43.9)  (29.3)
21 Share based charges

The Group currently has three types of share based payment scheme, namely
Executive Share Option Schemes (`ESOS'), the Long Term Retention Plan (`LTRP')
and the Long Term Incentive Scheme (`LTIS'). Details of each of the schemes
are given in the Directors' Remuneration Report and in note 22.

The charge in the Group income statement for these schemes is US$9.7m (2005 :
US$7.9m)

The assumptions made in arriving at the charge for each scheme are given
below:

ESOS and LTRP

There are currently 490 employees participating in these schemes. For the
purposes of calculating the fair value of the options a Black-Scholes option
pricing model has been used. Based on past experience, it has been assumed
that options will be exercised, on average, six months after the earliest
exercise date, which is four years after grant date, and there will be a lapse
rate of 20%-25%. The share price volatility used of 35%-40% is based on the
actual volatility of the Group's shares since IPO as well as that of
comparable companies. The risk free rate of return of 4%-5% is based on the
implied yield available on zero coupon gilts with a term remaining equal to
the expected lifetime of the options at the date of grant. A dividend yield of
1.0% has been used in the calculation.

The fair value of options granted under the ESOS during the year was £0.87
(2005 : £0.45). The fair value of options granted under the LTRP during the
year ranged from £2.25 to £2.51 (2005 : £1.37 to £1.72). The weighted average
remaining contractual life of share options at 31 December 2006 is 6.0 years.

LTIS

The actual performance for 2006 on the two non-market related performance
targets has been assumed to continue for the remainder of the three year cycle
and the share based charge is calculated using a fair value of £1.40. The
charge for the market related performance target has been calculated using a
Monte Carlo simulation model using similar assumptions to the ESOS and LTRP
calculations.

22 Share capital

                                                 2006 2005
Authorised                                       US$m US$m
 
720,000,000 (2005: 720,000,000) ordinary shares  34.9 34.9
of 3 1/3 pence
                                              2006             2005
                                  shares      US$m shares      US$m
Issued and fully paid
 
Ordinary shares of 3 1/3pence
each
At 1 January                      515,237,930 25.4 483,531,380 23.5
Issue of new shares               375,000     -    24,356,550  1.5
Allocation of shares to employee  1,020,000   0.1  7,350,000   0.4
share trusts
 
At 31 December                    516,632,930 25.5 515,237,930 25.4
During the year 375,000 ordinary shares of 3 1/3pence were issued at prices
varying from 17 1/3 pence per share to 93 1/3pence per share, on the exercise
of options granted under the John Wood Group PLC 1994 Approved Executive Share
Option Scheme and the John Wood Group 1996 Unapproved Executive Share Option
Scheme.

Executive Share Option Schemes

The following options to subscribe for new or existing shares were outstanding
at 31 December:

                                                     Number of ordinary shares under   Exercise
                                                     option                            price
Year of
Grant                                                2006             2005             (per share)   Exercise period
 
1998                                                 46,290           121,290          15  2/3p        2003-2008
2000                                                 574,038          1,965,864        17  1/3p        2005-2010
2000                                                 -                90,000           18  1/3p        2005-2010
2001                                                 645,000          1,335,000        93  1/3p        2006-2011
2001                                                 4,987,200        5,164,500        83  1/3p        2006-2011
2002                                                 1,651,500        1,726,500        83  1/3p        2007-2012
2003                                                 500,000          500,000          161 1/4p         2007-2013
2003                                                 3,428,542        3,635,001        158    p          2007-2013
2004                                                 6,601,041        6,901,328        128   ½p         2008-2014
2004                                                 -                60,000           143   ½p         2008-2014
2005                                                 1,917,292        1,985,000        145    p          2009-2015
2006                                                 1,019,000        -                265   ¼p         2010-2016
                                                     21,369,903       23,484,483


Details of the Group's Executive Share Option Schemes are set out in the
Directors' Remuneration Report. Share options are granted at an exercise price
equal to the average mid-market price of the shares on the three days prior to
the date of grant.

6,252,528 options (2005 : 2,177,154) were exercisable at 31 December 2006.
1,062,500 options were granted during the year, 2,337,946 options were
exercised during the year and 839,134 options lapsed during the year. The
weighted average share price during the period for options exercised over the
year was £2.45 (2005 : £1.82).

22 Share capital (continued)

There are no performance criteria attached to the exercise of the options
granted prior to 2003. Options granted to directors under the share option
scheme adopted during 2002, and implemented in 2003, are subject to
performance criteria as set out in the Directors' Remuneration Report. There
are no performance criteria under this scheme for options granted to
employees.

Long Term Retention Plan

The following options granted under the Group's LTRP were outstanding at 31
December:

                                                    Number of ordinary shares under   Exercise price
Year of                                             option
Grant                                               2006             2005             (per share)    Exercise period
 
2003                                                1,688,056        1,793,489        3 1/3p          2007-2008
2004                                                100,000          120,000          3 1/3p          2008-2009
2005                                                138,003          138,003          3 1/3p          2009-2010
2006                                                1,299,733        -                3 1/3p          2010-2011
                                                    3,225,792        2,051,492
Options are granted under the Group's LTRP at par value (3 1/3 pence per
share). There are no performance criteria attached to the exercise of options
under the LTRP. However, no LTRP options are granted unless the Group achieves
a minimum level of EPS growth of RPI plus 3%. The level of grant varies
between RPI plus 3% and the maximum grant of RPI plus 10%. 1,313,354 LTRP
options were granted during the year, 28,453 LTRP options were exercised
during the year and 110,601 LTRP options lapsed during the year. Further
details of the LTRP are provided in the Directors' Remuneration Report.

Long Term Incentive Scheme

The Group introduced a Long Term Incentive Scheme (`LTIS') in 2005. Under this
Scheme, the executive directors (but not the Chairman) and other key senior
executives are awarded shares dependent upon the achievement of performance
targets established by the Remuneration Committee. The performance measures
for the first cycle are operating profit, return on capital employed and
growth in the company's share price. The share price performance measure
applies to the executive directors only. The awards are in the form of
restricted shares and are deferred for two years from the award date. On the
assumption that 2006 actual performance is repeated in 2007, 7,100,669 shares
are potentially issuable under the scheme. Further details of the LTIS are
provided in the Directors' Remuneration Report.

John Wood Group PLC is a public limited company, incorporated and domiciled in
Scotland.


23 Share premium

                                                 2006  2005
                                                 US$m  US$m
 
At 1 January                                     292.1 200.9
Arising on issue of new shares, net of expenses  0.4   89.3
Allocation of shares to employee share trusts    1.6   1.9
 
At 31 December                                   294.1 292.1
Expenses of share issue amounted to US$0.1m (2005 : $1.4m).

24 Retained earnings

                                                              2006   2005
                                                              US$m   US$m
 
At 1 January - before adoption of IAS 32 and IAS 39           288.1  215.7
 
Adoption of IAS 32 and IAS 39                                 -      (0.9)
 
At 1 January                                                  288.1  214.8
Profit for the year attributable to equity shareholders       120.5  80.5
Dividends paid                                                (20.8) (17.5)
Credit relating to share based charges                        9.7    7.9
Actuarial gain/(loss) on retirement benefit liabilities       8.5    (2.5)
Movement in deferred tax relating to retirement benefit       (2.6)  0.7
liabilities
Shares allocated to ESOP trusts                               (1.7)  (2.3)
Shares disposed of by ESOP trusts                             1.4    1.7
Exchange differences in respect of shares held by ESOP trusts (5.7)  4.8
 
At 31 December                                                397.4  288.1
Retained earnings are stated after deducting the investment in own shares held
by employee share trusts. Investment in own shares represents the cost of
21,059,981 (2005 : 22,031,380) of the company's ordinary shares totalling
US$46.4m (2005 : US$40.4m). Options have been granted over 46,290 (2005 :
121,290) shares held by the ESOP trusts.

Shares acquired by the trusts are purchased in the open market using funds
provided by John Wood Group PLC to meet obligations under the Employee Share
Option Schemes and the LTRP. During 2006, 1,020,000 shares at a value of
US$1.7m were allocated to the trust in order to satisfy the exercise of share
options. 1,991,399 shares were issued during the year to satisfy the exercise
of share options at a value of US$1.4m. Exchange adjustments of US$5.7m arose
during the year relating to the retranslation of the investment in own shares
from sterling to US dollars. The costs of funding and administering the
schemes are charged to the income statement in the period to which they
relate. The market value of the shares at 31 December 2006 was US$108.0m (2005
: US$77.2m) based on the closing share price of £2.62 (2005 : £2.04). The ESOP
trusts have waived their rights to receipt of dividends.

25 Other reserves

                                         Capital   Currency
                                         reduction translation Hedging    Total
                                         reserve   reserve     reserve
                                         US$m      US$m        US$m       US$m
 
At 1 January 2005 - before adoption of   88.1      1.7         -          89.8
IAS 32 and IAS 39
 
Adoption of IAS 32 and IAS 39            -         -           (2.4)      (2.4)
At 1 January 2005                        88.1      1.7         (2.4)      87.4
Exchange differences on retranslation of
foreign currency net assets
                                         -         (15.5)      -          (15.5)
Fair value gains                         -         -           3.8        3.8
 
At 31 December 2005                      88.1      (13.8)      1.4        75.7
 
Exchange differences on retranslation of
foreign currency net assets
                                         -         5.6         -          5.6
Tax on foreign exchange losses offset in -         3.2         -          3.2
reserves
Fair value gains                         -         -           0.8        0.8
 
At 31 December 2006                      88.1      (5.0)       2.2        85.3
A capital redemption reserve was created on the conversion of convertible
redeemable preference shares immediately prior to the IPO in June 2002. The
capital redemption reserve was converted to a capital reduction reserve in
December 2002 and is part of distributable reserves.

The currency translation reserve relates to the retranslation of foreign
currency net assets on consolidation. This was reset to zero on transition to
IFRS at 1 January 2004.

The hedging reserve relates to the accounting for derivative financial
instruments under IAS 39. Fair value gains and losses in respect of effective
cash flow hedges are recognised in the hedging reserve.

26 Minority interest

                                                                2006   2005
                                                                US$m   US$m
 
At 1 January                                                    19.6   12.0
Acquisition of minority interest                                (11.1) -
Share of profit for the year                                    0.7    3.1
Dividends paid                                                  (1.5)  (1.3)
Minority interest recognised on conversion of joint venture to  -      5.8
subsidiary
 
At 31 December                                                  7.7    19.6
27 Cash generated from operations


                                                             2006    2005
                                                             US$m    US$m
Reconciliation of operating profit to cash generated
from operations:
 
Operating profit                                             207.5   148.0
 
Adjustments for:
Depreciation                                                 51.4    44.8
(Gain)/loss on disposal of property plant and                (1.4)   0.5
equipment
Amortisation of other intangible assets                      7.6     4.8
Share based charges                                          9.7     7.9
Impairment and restructuring charges - non-cash impact       -       5.3
Profit on disposal of subsidiaries                           -       (9.7)
Increase/(decrease) in provisions                            8.1     (0.2)
 
Changes in working capital (excluding effect of
acquisition and disposal of subsidiaries)
Increase in inventories                                      (55.2)  (44.1)
Increase in receivables                                      (125.6) (35.5)
Increase in payables                                         127.2   46.1
 
Exchange differences                                         (4.2)   (6.6)
 
Cash generated from operations                               225.1   161.3

Analysis of net debt

                          At 1 January           Exchange    At 31
                                                 movements   December
                          2006         Cash flow
                                                             2006
                          US$m         US$m      US$m        US$m
 
Cash and cash equivalents 149.9        (15.8)    6.2         140.3
Short term borrowings     (47.9)       12.3      (5.9)       (41.5)
Long term borrowings      (347.8)      5.2       (14.1)      (356.7)
 
Net debt                  (245.8)      1.7       (13.8)      (257.9)
28 Acquisitions

The assets and liabilities acquired in respect of           Book value and
acquisitions during the year were as follows:
                                                            fair value
                                                                    US$m
 
Property plant and equipment                                        3.2
Other intangible assets                                             8.2
Inventories                                                         0.9
Trade and other receivables                                         25.4
Bank overdraft                                                      (8.4)
Trade and other payables                                            (17.6)
Minority interest                                                   (1.6)
 
Net assets acquired                                                 10.1
 
Goodwill                                                            25.4
 
Consideration                                                       35.5
 
Consideration satisfied by:
Cash                                                                17.6
Deferred consideration                                              17.9
 
                                                                    35.5

The Group has used acquisition accounting for all purchases and, in accordance
with the Group's accounting policies, the goodwill arising on consolidation of
US$25.4m has been capitalised. Acquisitions during the year include the
purchase of 100% of Global Performance Holdings Inc in March and the purchase
of 55% of Somias in May.

The acquisitions carried out during the year provide the Group with access to
new markets and strengthen the Group's capabilities in certain areas. The
acquired companies will be in a position to access the Group's wider client
base and use the Group's existing relationships to further grow and develop
their businesses. These factors contribute to the goodwill recognised by the
Group on the acquisitions during the year.

Deferred consideration payments of US$4.2m were made during the year in
respect of acquisitions made in prior periods. Payments during the year and
changes to previous estimates of deferred consideration have resulted in
additional goodwill of US$5.5m. US$20.2m was paid to acquire minority
interests, including the minority shareholdings of Mustang Engineering
Holdings Inc, resulting in additional goodwill of US$7.5m.

The outflow of cash and cash equivalents on the acquisitions made during the
year is analysed as follows:

                                                        US$m
 
Cash consideration                                      17.6
Bank overdraft acquired                                 8.4
                                                        26.0

The results of the Group, as if the above acquisitions had been made at the
beginning of period, would have been as follows:

                                                        US$m
 
Revenues                                                3,483.5
Profit for the year                                     121.7

The acquired businesses earned cumulative revenues of US$14.7m from the
beginning of the year to their respective acquisition dates. From the dates of
acquisition to 31 December 2006, the acquisitions contributed US$59.2m to
revenues and US$2.4m to profit for the year.


29 Employees and directors

Employee benefits expense                              2006    2005
                                                       US$m    US$m
 
Wages and salaries                                     1,155.8 869.0
Social security costs                                  89.4    73.2
Pension costs - defined benefit schemes (note 30)      7.1     7.0
Pension costs - defined contribution schemes (note 30) 23.7    17.1
                                                       1,276.0 966.3

Average monthly number of employees (including executive   2006   2005
directors)
                                                           No.    No.
By geographical area:
Europe                                                     4,544  3,952
North America                                              9,115  7,576
Rest of the World                                          5,855  5,059
 
                                                           19,514 16,587

Key management compensation                          2006   2005
                                                     US$m   US$m
 
Salaries and short-term employee benefits            15.7   13.7
Amounts receivable under long-term incentive schemes 8.8    4.5
Post employment benefits                             0.9    0.9
Share based charges                                  6.0    5.4
 
                                                     31.4   24.5

The key management figures given above include executive directors.

                                                           2006   2005
Directors                                                  US$m   US$m
 
Aggregate emoluments                                       5.6    4.4
Aggregate gains made on the exercise of share options      1.4    2.1
Aggregate amounts receivable under long-term incentive     1.5    1.2
schemes
Company contributions to defined contribution pension      0.1    0.1
schemes
                                                           8.6    7.8

 
One director (2005: one) has retirement benefits accruing under a defined
contribution pension scheme. Retirement benefits are accruing to six (2005:
five) directors under the company's defined benefit pension scheme. Further
details of directors emoluments are provided in the Directors' Remuneration
Report.


30 Retirement benefit liabilities

One of the Group's pension schemes in the UK, the John Wood Group PLC
Retirement Benefits Scheme, is a defined benefit scheme, which is contracted
out of the State Scheme and provides benefits based on final pensionable
salary. The assets of the scheme are held separately from those of the Group,
being invested with independent investment companies in trustee administered
funds.

The most recent actuarial valuation of the scheme was carried out at 5 April
2004 by a professionally qualified actuary. On 5 April 2007 there will be a
change to the benefits provided under the scheme. From that date benefits will
be based on Career Averaged Revalued Earnings ("CARE").

The principal assumptions made by the actuaries at the balance sheet date
were:

                                                           2006   2005
                                                           %      %
 
Rate of increase in pensionable salaries                   5.20   4.75
Rate of increase in pensions in payment and deferred       2.75   2.75
pensions
Discount rate                                              5.20   4.80
Expected return on scheme assets                           7.03   7.09

The expected return on scheme assets is based on market expectation at the
beginning of the period for returns over the entire life of the benefit
obligation.

The mortality assumptions used by the actuary take account of standard
actuarial tables compiled from UK wide statistics relating to occupational
pension schemes. These assumptions are regularly reviewed for their
appropriateness.

The exchange rates used to retranslate the pension disclosures into US$ are as
follows:

                                              2006   2005
 
Average rate £1 = US$                         1.8427 1.8170
Closing rate £1 = US$                         1.9572 1.7168

The amounts recognised in the balance sheet are determined as follows:

                                              2006    2005
                                              US$m    US$m
 
Present value of funded obligations           (165.3) (137.0)
Fair value of scheme assets                   140.4   103.7
 
Net liabilities                               (24.9)  (33.3)

The major categories of scheme assets as a percentage of total scheme assets
are as follows:

                                              2006   2005
                                              %      %
 
Equity securities                             81.3   84.7
Corporate bonds                               3.2    7.5
Gilts                                         9.7    7.7
Cash                                          5.8    0.1

The amounts recognised in the income statement are as follows:

                                                           2006   2005
                                                           US$m   US$m
 
                                                          
Current service cost included within employee benefits     7.1    7.0
expense
 
Interest cost                                              7.3    6.3
Expected return on scheme assets                           (8.1)  (6.2)
 
Total included within net finance (income)/expense         (0.8)  0.1

The employee benefits expense is included within administrative expenses.

Changes in the present value of the defined benefit liability are as follows:

                                              2006   2005
                                              US$m   US$m
 
Present value of obligation at 1 January      137.0  122.2
Current cost                                  7.1    7.0
Interest cost                                 7.3    6.3
Actuarial (gains)/losses                      (5.6)  14.8
Scheme participants contributions             3.5    3.2
Benefits paid                                 (3.7)  (2.1)
Exchange differences                          19.7   (14.4)

 
Present value of obligation at 31 December    165.3  137.0
Changes in the fair value of scheme assets are as follows:

                                              2006   2005
                                              US$m   US$m
 
Fair value of scheme assets at 1 January      103.7  88.3
Expected return on scheme assets              8.1    6.2
Contributions                                 13.6   9.7
Benefits paid                                 (3.7)  (2.1)
Actuarial gains                               2.9    12.3
Exchange differences                          15.8   (10.7)
 
                                                     
Fair value of scheme assets at 31 December    140.4  103.7

Analysis of the movement in the balance sheet liability:

                                                    2006   2005
                                                    US$m   US$m
 
At 1 January                                        33.3   33.9
Current service cost                                7.1    7.0
Finance (income)/expense                            (0.8)  0.1
Contributions                                       (10.1) (6.5)
Net actuarial (gains)/losses recognised in the year (8.5)  2.5
Exchange differences                                3.9    (3.7)
 
At 31 December                                      24.9   33.3

Contributions include a one-off payment of US$3.7m (£2.0m) made by the company
in December 2006 as part of the CARE transition arrangements.

Cumulative actuarial (gains) and losses recognised in equity:

                                                    2006   2005
                                                    US$m   US$m
 
                                                           33.0
At 1 January                                        35.5
Net actuarial (gains)/losses recognised in the year (8.5)  2.5
 
At 31 December                                      27.0   35.5
The actual return on scheme assets was US$11.0m (2005 : US$18.5m).

History of experience gains and losses:

                                        2006  2005   2004  2003  2002
 
Difference between the expected and
actual return on scheme assets :
Gain/(loss) (US$m)                      2.9   12.3   4.9   6.3   (11.6)
Percentage of scheme assets             2%    12%    6%    10%   26%
 
Experience gains/(losses) on scheme
liabilities:
Gain/(loss) (US$m)                      5.6   (14.8) (9.7) (7.5) (2.4)
Percentage of the present value of the  3%    11%    8%    8%    4%
scheme liabilities
 
Present value of scheme liabilities     165.3 137.0  122.2 93.0  67.1
(US$m)
Fair value of scheme assets (US$m)      140.4 103.7  88.3  65.5  43.8
Deficit (US$m)                          24.9  33.3   33.9  27.5  23.3

The contribution expected to be paid during the financial year ending 31
December 2007 amounts to US$5.9m (£3.0m). In addition, as part of the
transition of the scheme to a CARE basis, the Group will make an additional
contribution of US$3.9m (£2.0m) in April 2007.

Pension costs for defined contribution schemes are as follows:

                                            2006   2005
                                            US$m   US$m
 Defined contribution schemes                23.7   17.1

31 Operating lease commitments - minimum lease payments

                                                  2006               2005
                                                  Vehicles,          Vehicles,
                                                  plant and          plant and
                                                  equipment          equipment
 
                                         Property           Property
                                         US$m     US$m      US$m     US$m
 
Commitments under non-cancellable
operating leases expiring:
 
Within one year                          6.7      2.4       5.5      1.4
Later than one year and less than five   19.3     8.7       23.5     8.9
years
After five years                         18.5     0.6       11.0     0.4
 
                                         44.5     11.7      40.0     10.7

The Group leases various offices and warehouses under non-cancellable
operating lease agreements. The leases have various terms, escalation clauses
and renewal rights. The Group also leases plant and machinery under
non-cancellable operating lease agreements.

32 Contingent liabilities

At the balance sheet date the Group had cross guarantees without limit
extended to its principal bankers in respect of sums advanced to subsidiaries.
At 31 December 2006, the Group has outstanding guarantees of US$9.1m (2005 :
US$14.0m) in respect of joint venture banking arrangements.

33 Capital and other financial commitments

                                                            2006  2005
                                                            US$m  US$m
 
Contracts placed for future capital expenditure not         3.4   4.4
provided in the financial statements
The capital expenditure above relates to property plant and equipment. There
are no significant joint venture capital commitments included in the figures
above.

There are financial commitments relating to the purchase of shares from
certain subsidiary minority shareholders based on the profits of these
subsidiaries and the payments extend over a number of years.

34 Related party transactions

The following transactions were carried out with the Group's joint ventures.
These transactions comprise sales and purchases of goods and services in the
ordinary course of business.

                                                   2006   2005
                                                   US$m   US$m
 
Sale of goods and services to joint ventures       120.7  95.2
Purchase of goods and services from joint ventures 6.8    6.7
Receivables from joint ventures                    20.9   12.7
Payables to joint ventures                         3.2    5.8

In addition to the above, the Group charged JW Holdings Limited, a company in
which Sir Ian Wood holds a controlling interest, an amount of US$0.1m (2005 :
US$0.1m) for management services provided under normal commercial terms.

Key management compensation is disclosed in note 29.

35 Principal subsidiaries and joint ventures

The Group's principal subsidiaries and joint ventures are listed below.

                                Country of
                                incorporation
                                              Ownership
                                or
Name of subsidiary or joint     registration  interest % Principal activity
venture
 
Engineering & Production
Facilities:
 
Wood Group Engineering (North   UK            100        Engineering design,
Sea) Limited                                             operations maintenance
                                                         and management
SIGMA 3 (North Sea) Limited     UK            33.3*      Engineering design,
                                                         operations maintenance
                                                         and management
Mustang Engineering Holdings    USA           100        Engineering design
Inc.
Alliance Wood Group Engineering USA           100        Engineering design
L.P.
J P Kenny Engineering Limited   UK            100        Engineering design
SIMCO Consortium                Venezuela     49.5*      Operations maintenance
                                                         and management
Wood Group Production Services, USA           100        Operations maintenance
Inc.                                                     and management
Wood Group Colombia S.A.        Colombia      100        Operations maintenance
                                                         and management
Deepwater Specialists Inc       USA           100        Commissioning services
Wood Group Equatorial Guinea    Cyprus        100        Operations maintenance
Limited                                                  and management
Global Performance Holdings,    USA           100        Engineering, project
Inc                                                      and construction
                                                         management
 
Well Support:
 
Wood Group ESP, Inc.            USA           100        Electric submersible
                                                         pumps
Corporacion ESP de Venezuela CA Venezuela     100        Electric submersible
                                                         pumps
Wood Group Products & Services  Argentina     100        Electric submersible
SA                                                       pumps
Wood Group Pressure Control,    USA           100        Valves and wellhead
L.P.                                                     equipment
Wood Group Pressure Control     UK            100        Valves and wellhead
Limited                                                  equipment
Wood Group Logging Services     USA           100        Logging services
Inc.
 
Gas Turbine Services:
 
Wood Group Light Industrial     UK            100        Gas turbine repair and
Turbines Limited                                         overhaul
Wood Group Engineering Services Jersey        100        Gas turbine repair and
                                                         overhaul
(Middle East) Limited
Rolls Wood Group (Repair &      UK            50*        Gas turbine repair and
Overhauls)                                               overhaul
 
Limited
TransCanada Turbines Limited    Canada        50*        Gas turbine repair and
                                                         overhaul
Wood Group Advanced Parts       Switzerland   100        Provision of gas
Manufacture AG                                           turbine parts
Wood Group Gas Turbine Services UK            100        Gas turbine repair and
Limited                                                  overhaul
Wood Group Field Services, Inc. USA           100        Gas turbine repair and
                                                         overhaul
Wood Group Power Solutions,     USA           100        Provision of gas
Inc.                                                     turbine packages
Wood Group Pratt & Whitney      USA           49*        Gas turbine repair and
Industrial Turbine Services,                             overhaul
LLC
Wood Group Power Operations,    USA           100        Power plant operations
Inc                                                      and maintenance
The proportion of voting power held equates to the ownership interest, other
than for joint ventures (marked *) which are jointly controlled.

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 US 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. UK 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 4 May 2007 as published in the Financial Times on 5 May 2007.

Officers and advisers

Secretary and Registered Office

I Johnson

John Wood Group PLC

John Wood House

Greenwell Road

ABERDEEN

AB12 3AX

Tel: [phone]

Registrars

Lloyds TSB Registrars Scotland

PO Box 28448

Finance House

Orchard Brae

EDINBURGH

EH4 1WQ

Tel: [phone]

Stockbrokers

JPMorgan Cazenove Limited

Credit Suisse

Auditors

PricewaterhouseCoopers

Chartered Accountants LLP

Financial calendar

Results announced      6 March 2007
Ex-dividend date       2 May 2007
Dividend record date   4 May 2007
Annual General Meeting 17 May 2007
Dividend payment date  24 May 2007
The Group's Investor Relations website can be accessed at www.woodgroup.com.

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