Half-yearly Report

John Wood Group PLC Interim results for the six months to 30 June 2008 Continuing strong performance John Wood Group PLC ("Wood Group", the "Group") is a market leader in engineering design, production enhancement and support, and industrial gas turbine services for customers in the oil & gas and power generation industries around the world. Wood Group businesses employ approximately 27,000 people in 46 countries. Financial Highlights Revenue of $2,526.9m (2007: $2,117.3m) up 19% EBITA1 of $207.9m (2007: $144.6m) up 44% Group EBITA margin increased from 6.8% to 8.2% Profit before tax of $181.3m (2007: $124.0m) up 46% Basic earnings per share of 23.7 cents (2007: 16.3 cents) up 45% Adjusted diluted earnings per ordinary share2 of 24.7 cents (2007: 16.8 cents) up 47% Interim dividend of 2.8 cents (2007: 2.0 cents) up 40% Operating Highlights Group Significant financial and operating progress Strong revenue growth Margin improvement in all divisions Continuing to extend our range of services and international reach 10% increase in headcount to over 27,000 people since December 2007 Engineering & Production Facilities Engineering All major business areas showing good growth upstream very active strong demand for subsea engineering activities pipeline engineering busy across all locations high levels of refinery upgrade work Continuing our international expansion Production Facilities North Sea market remains strong; increasing market share with newer entrants Continued expansion of international activities, including Peru and Colombia Joint venture signed with CCC in the Middle East Expansion into the safety and emergency response training market through the acquisition of M&O Global Well Support Good performance in all areas ESP - artificial lift markets strong; enjoying high levels of activity in Latin America and Africa Pressure Control - US markets strengthening; good contract wins in Latin America; positioning for further growth in the Middle East; increasing lower cost manufacturing capacity Gas Turbine Services Oil & gas and power focused businesses active Continuing emphasis on longer term contracts Market for provision of fast track gas fired power solutions strong In their six month report, Sir Ian Wood, Chairman, and Allister Langlands, Chief Executive, of Wood Group, state: "The first half of 2008 has seen continued strong growth and we are pleased to report another excellent performance. Overall, our markets are robust and the demand for our services remains high. We expect the strong growth to continue and believe results for the year will be ahead of expectations." Information: Wood Group , 01224 851000 Alan Semple Nick Gilman Carolyn Smith Brunswick, 020 7404 5959 Patrick Handley Camilla Gore Introduction The first half of 2008 has seen continued strong growth and we are pleased to report another excellent performance. Overall, our markets are robust and the demand for our services remains high. We expect the strong growth to continue and believe results for the year will be ahead of expectations. Results Trading performance Interim Interim Change June 2008 June 2007 $m $m Revenue 2,526.9 2,117.3 +19% EBITA1 207.9 144.6 +44% EBITA margin % 8.2% 6.8% +1.4% points Profit before tax 181.3 124.0 +46% Profit for the period 120.6 82.5 +46% Basic EPS (cents) 23.7 16.3 +45% Adjusted diluted EPS2 24.7 16.8 +47% (cents) In the first half revenue increased by 19% to $2,526.9m and EBITA increased by 44% to $207.9m. The strongest revenue growth arose in Engineering & Production Facilities, particularly from our engineering activities. EBITA margins increased in all areas, notably in Engineering & Production Facilities and Gas Turbine Services, where they increased from 8.1% to 9.5%, and from 6.1% to 7.4% respectively. We believe there is potential for further margin improvement in all divisions. We maintained our focus on developing our market leading positions and extending our range of services, and invested $92.9m in acquisitions and capex (2007: $64.7m) Dividend Reflecting confidence in our long term outlook, we have declared an increase in the interim dividend to 2.8 cents (2007: 2.0 cents). The dividend will be paid on 25 September 2008 to shareholders on the register on 5 September 2008. Markets We expect to see continuing growth in the overall demand for energy with the ongoing increase in demand from the developing world offsetting the possible impact of slower economic growth in developed countries. Pressure to maintain and grow supply should continue to result in robust levels of investment by our clients, with decisions continuing to be based on oil price assumptions well below current levels. In power markets, demand for electricity is increasing globally, particularly in developing economies, which is leading to increased demand for gas turbine aftermarket services and providing new opportunities for fast track power solutions. Divisional highlights Engineering & Production Facilities We offer a wide range of engineering services to the upstream, midstream, downstream and industrial sectors. These include conceptual studies, engineering, project and construction management and control systems upgrades. We offer life of field support to producing assets, through brownfield engineering and modifications, production enhancement, operations management (including UK duty holder services), maintenance management and abandonment services. Interim Interim Change June 2008 June 2007 $m $m Revenue 1,560.8 1,208.0 +29% EBITA 148.8 97.4 +53% EBITA margin % 9.5% 8.1% +1.4% points People 18,500 15,300 +21% The growth in revenue of 29% in the period reflects the significant demand for our services. To satisfy the demand for our services, we have added around 2,000 people in the period since December 2007 and 3,200 since June 2007, increases of around 12% and 21% respectively. This growth in our engineering talent continues to be significant in our main Houston and Aberdeen hubs and we are also seeing strong growth in our newer London and Perth hubs. EBITA increased by 53% in the period, with the margin increasing from 8.1% to 9.5%. This is due to higher margins across the division, reflecting the positive margin effects of higher revenues, a range of margin improvement initiatives and a change in the mix towards higher margin engineering work. The Engineering content of Engineering & Production Facilities revenues is currently 48% compared to 44% at June 2007. Engineering We continue to be very active across all of our Engineering activities. High development spending by our clients is benefiting upstream; subsea, pipeline and midstream; and the upgrade, debottlenecking and legislative compliance programs in refineries and process plants are driving high demand for our downstream, process and industrial business. Our upstream activities represent around 40% of Engineering revenue. In upstream, we continue to have a market leading position in deepwater developments and are active on a broad range of projects. These projects included Anadarko K2 and Shell Perdido in the Gulf of Mexico, and ATP Cheviot and BP Valhall in the North Sea. IMV, which we acquired in November 2007, is a market leader in the provision of engineering, project and construction management services to the Canadian in-situ oil sands industry, and has positioned us well for long term growth in this market, including recent contract wins with the Korea National Oil Company ("KNOC") for front end engineering design ("FEED") work on the Blackgold SAG-D project and StatoilHydro for construction management services to their Northern Alberta thermal heavy oil plant. Our subsea, pipeline and midstream activities represent around 30% of Engineering revenue. The market for subsea and offshore pipeline engineering projects continues to be strong and we have been active across all of our locations. Significant projects include providing FEED and project management services to the Shtokman project in the Barents Sea and FEED and subsea engineering on the upstream facilities for the Gorgon joint venture in North West Australia. Activity levels in US pipeline infrastructure continue to be high as additions are made to link unconventional gas developments to end markets, and this contributed to a strong performance in the first half. Downstream, process and industrial represents around 30% of Engineering revenue. The demand for clean fuels and modifications to accommodate increasing amounts of heavy oil from Canada has led to high levels of refinery upgrade work for customers such as CCRL, Citgo, Valero and Sinclair. Our automation business has seen good growth in its traditional markets and expanded into Singapore and Kazakhstan. Process and industrial is also very active, including projects with Eastman, Invista and Flint Hills. Production Facilities Production Facilities provides a broad range of services, typically in support of clients' ongoing production. Activity levels have benefited from customers seeking to tie back incremental production to existing assets, as well as debottlenecking and extending the life of existing assets. The North Sea is our largest Production Facilities market, representing around two thirds of revenue. Activity on our contracts with BP, Shell, Talisman, Total and Apache remains high, and we have been able to extend or renew these contracts. Our knowledge and experience in the North Sea has meant that we have also been successful in winning work with newer entrants and in the period we were selected as duty holder by TAQA, Ithaca and Oilexco. Currently, around one third of Production Facilities' revenue comes from outside the North Sea, which we expect to increase over time as we continue to make good progress in expanding our international presence. In the US, we are developing our market position, and through the acquisition of Producers Assistance Corporation have extended our scope into the onshore market. In Latin America and the Caribbean activity included contracts supporting BP in Trinidad, Pluspetrol in Peru and Abocol in Colombia. In the Middle East we entered into a joint venture with Consolidated Contractors Company ("CCC"), an international engineering and construction company with a market leading position in the region. The Wood Group - CCC venture will provide operations and maintenance support to the oil & gas and petrochemical industries in the region, and we believe this represents an exciting opportunity for future growth. In Africa we have extended our business in Algeria and have extended our operations and maintenance services in Equatorial Guinea with Amerada Hess, Exxon Mobil, Marathon and EGLNG. We continue to focus on expanding the range of services offered and acquired M& O Global ("M&O"), an Australian based, globally recognised provider of safety and emergency response training to the oil & gas, natural resource and marine industries. M&O will help us to further support a broad range of international clients, especially National Oil Companies ("NOCs"), in training and developing their local workforces. Well Support We provide solutions, products and services to enhance production rates and efficiency from oil & gas reservoirs. Interim Interim Change June 2008 June 2007 $m $m Revenue 472.8 416.4 +14% EBITA 49.2 41.9 +17% EBITA margin % 10.4% 10.1% +0.3% points People 4,200 3,700 +14% Revenue is 14% higher than the previous period due to the strong North American market and increased international activity in Latin America. EBITA has increased by 17% in the period, driven largely by increased volumes and an incremental increase in margin to 10.4% from 10.1%. Electric Submersible Pumps ("ESP") Our clients continue to seek to maximise production from existing oilfields, which benefits ESP. Our North American business, which represents around one third of total ESP revenue was active in the period, with a particularly strong performance in Canada. We continue to make progress in a broad range of other markets, and in the period saw particular strength in Latin America. In the Middle East, which is a significant growth market for us, we were awarded two important long term contracts with key NOCs (KOC and PDO). We continue to broaden our ESP product range. Our surface pumping system revenue continues to grow, and in the period we introduced our Vector VII variable speed drive, which has been well received by clients. ESP represents around 45% of the division's revenue. Pressure Control Our surface valve and wellhead equipment is used to control high pressures, particularly on gas developments. During the period we benefited from increasing North American activity, particularly as the first half progressed, and from our growing presence elsewhere in the world. Pressure Control's growth outside North America continues to be encouraging with significant awards in Latin America from two NOCs (PDVSA and PEMEX), and with continuing progress anticipated in the Middle East. We continue to develop our manufacturing capability, with particular focus on lower cost production from China and Mexico. Pressure Control represents around 40% of the division's revenues. Logging Services We provide production focused slickline services and development focused cased hole electric wireline services, both of which performed well in the period. Our key markets have continued to strengthen through the first half. We are developing new customer relationships and expanding our position in deepwater Gulf of Mexico. Internationally, we continue to perform well in Argentina and Venezuela. Logging services represents around 15% of the division's revenues. Gas Turbine Services We are the world leading independent provider of integrated maintenance solutions, and repair and overhaul services for industrial gas turbines, used for power generation, compression and transmission in the oil & gas and power generation industries. Interim Interim Change June 2008 June 2007 $m $m Revenue 475.7 478.2 -1% EBITA 35.1 29.2 +20% EBITA margin % 7.4% 6.1% +1.3% points People 4,300 3,900 +10% Overall, Gas Turbine Service's revenue has remained broadly flat compared to 2007. Fast track power revenue was lower than the very high levels of last year and excluding this revenue was up 13%. EBITA increased 20% in the period, with margins increasing to 7.4% from 6.1%. This margin improvement has been driven by benefits from internal restructuring, increasing focus on longer term contracts and new product and service capabilities. We anticipate further margin improvement in the second half and remain on target to achieve a 10% EBITA margin by 2010. Oil & Gas Our oil & gas activities provide support to turbines used for power generation, gas compression and transmission, and represent around one third of the division's revenue. Demand for our services remains high as a result of strong industry fundamentals leading to increased equipment running hours and utilisation. We made good progress in a number of key international markets during the period, including Brazil, Kazakhstan and Russia. In the Middle East, we secured a multi year extension of an important turbine maintenance contract. Power & Industrial Our power & industrial activities provide support to turbines used for power generation, and industrial applications, and represent around two thirds of the division's revenue. Our aftermarket revenue was driven by strong activity on a number of longer term contracts, including with Alliant, Suez and the New York Power Authority ("NYPA"). Further growth in the proportion of our work which is on a longer term basis continues to be an important goal. This has led to the award of various new longer term operations and maintenance agreements including those with Starwood Energy and East Texas Electric Co-operative ("ETEC") in the US. We have also renewed several longer term maintenance contracts in Germany including with BASF, BMW and Frieburg covering both Heavy Industrial and Light Industrial Turbines. We are now supporting around 14,000 MW under longer term contracts. We continue to gain traction with new customers in several locations throughout Latin America, Europe, Asia and the Middle East. We have been active on projects for Petronas in Malaysia, Edison in Italy and the Saudi Electric Company in Saudi Arabia. We expect the growing global demand for energy to lead to increased gas fired power generation, particularly in regions of North America and in developing countries, which should be positive for our fast track power activities. We have been busy on projects for the Middle East and West Africa and in the US have been appointed by the El Paso Electric Company to construct and commission their Newman 5 Project in El Paso, Texas. We also secured a new turnkey project in Texas for ETEC. Cash generated from operations, and financial position Group cash flow Interim June Interim June Full year 2008 $m 2007 $m Dec 2007 $m Opening net debt (277.9) (257.9) (257.9) Cash generated from operations pre 249.1 187.7 394.3 working capital Working capital movements (161.2) (75.7) (55.3) Cash generated from operations 87.9 112.0 339.0 Acquisitions and capex (92.9) (64.7) (218.4) Tax paid (54.5) (53.4) (105.9) Interest, dividends and other (17.6) (29.9) (34.7) Increase in net debt (77.1) (36.0) (20.0) Closing net debt (355.0) (293.9) (277.9) Cash generated from operations pre working capital rose $61.4m to $249.1m due to increased profitability in the period. Amortisation was $11.1m (2007: $7.2m) and included the impact of the amortisation of the other intangible asset balance arising from the IMV acquisition. Working capital outflows were $161.2m (2007: $75.7m). Net working capital as a percentage of annualised revenue3 is 14.1%, consistent with June 2007. The working capital outflow in the period reflects the increased revenue and to some extent advance payments received from certain customers in December 2007. The Group's financial position remains strong. Net debt was $355.0m, compared to $277.9m at December 2007 and $293.9m at June 2007. The movement in net debt in the current period was driven by the increased profit, the working capital performance referred to above and our ongoing investment programme through acquisitions and capex. The Group's gearing ratio4 has increased from 29% at December 2007 to 33%, the ratio of closing net debt to annualised EBITDA (earnings before interest, tax, depreciation and amortisation) fell from 0.8 times to 0.7 times and interest cover5 increased from 10.8 times to 13.4 times. These improvements reflect the strong growth in the period. The ratio of Operating Capital Employed to Revenue6 ("OCER"), which has specific focus on the amount of operating capital required to support revenue, reduced from 21% to 20%. ROCE7 for the Group increased by 5% points to 32% (2007: 27%), driven primarily by the increase in Group EBITA margin and the improvement in OCER referred to above. Outlook Overall, our markets are robust and the demand for our services remains high. We expect the strong growth to continue and believe results for the year will be ahead of expectations. Sir Ian Wood, Chairman Allister G Langlands, Chief Executive 26 August 2008 Footnotes 1 EBITA represents operating profit of $196.8m (2007: $137.4m) before the deduction of amortisation of $11.1m (2007: $7.2m) and is provided as it is a key unit of measurement used by the Group in the management of its business. 2 Adjusted diluted earnings per share is calculated by dividing earnings before amortisation, impairment and restructuring charges, net of tax, by the weighted average number of ordinary shares in issue during the period, excluding shares held by the Group's employee share ownership trusts and adjusted to assume conversion of all potentially dilutive ordinary shares. 3 Net working capital as a percentage of annualised revenue represents the total of inventories, trade and other receivables, less trade and other payables divided by total revenue. Total revenue for the six month period is multiplied by two to provide an annualised equivalent. 4 Gearing is net debt divided by total shareholders' equity. 5 Interest cover is EBITA divided by net finance costs. 6 Operating Capital Employed to Revenue is Operating Capital Employed (property, plant and equipment, intangible assets (excluding goodwill and intangibles recognised on acquisition), inventories and trade and other receivables less trade and other payables) divided by Revenue. 7 Return on Capital Employed ("ROCE") is calculated as Group EBITA, divided by average equity plus average net debt, excluding discontinuing activities. 8 Unless stated otherwise, comparisons of financial performance are between the 6 month period to 30 June 2008 and the 6 month period to 30 June 2007. Group income statement for the six month period to 30 June 2008 Unaudited Unaudited Audited Interim Interim Full Year June June December 2008 2007 2007 Note $m $m $m Revenue 2 2,526.9 2,117.3 4,432.7 Cost of sales (1,972.6) (1,684.0) (3,506.4) Gross profit 554.3 433.3 926.3 Administrative expenses: Profit on disposal of interest in joint 5 - - 3.6 venture Impairment and restructuring charges 6 - - (26.2) Other administrative expenses (357.5) (295.9) (618.5) Administrative expenses (357.5) (295.9) (641.1) Operating profit 2 196.8 137.4 285.2 Finance income 3.0 2.8 7.4 Finance expense (18.5) (16.2) (32.7) Profit before taxation 181.3 124.0 259.9 Taxation 8 (60.7) (41.5) (91.0) Profit for the period 120.6 82.5 168.9 Attributable to: Equity shareholders 120.4 81.2 165.0 Minority interest 0.2 1.3 3.9 120.6 82.5 168.9 Earnings per share (expressed in cents per share) Basic 7 23.7 16.3 33.0 Diluted 7 22.9 15.7 31.7 All items dealt with in arriving at the profits stated above relate to continuing operations. Group statement of recognised income and expense for the six month period to 30 June 2008 Unaudited Unaudited Audited Interim Interim Full Year June June December 2008 2007 2007 $m $m $m Profit for the period 120.6 82.5 168.9 Actuarial gains on retirement benefit - - 2.6 liabilities Movement in deferred tax relating to - - (0.8) retirement benefit liabilities Cash flow hedges 1.3 1.7 (3.5) Tax on foreign exchange losses offset in - 0.3 0.3 reserves Exchange differences on retranslation of (0.7) 4.1 7.0 foreign currency net assets Total recognised income for the period 121.2 88.6 174.5 Total recognised income for the period is attributable to: Equity shareholders 121.0 87.3 170.6 Minority interest 0.2 1.3 3.9 121.2 88.6 174.5 Group balance sheet as at 30 June 2008 Unaudited Unaudited Audited Interim Interim Full Year June June December 2008 2007 2007 $m $m $m Assets Non-current assets Goodwill and other intangible assets 593.9 385.9 576.1 Property plant and equipment 276.9 260.5 272.3 Long term receivables 8.0 3.4 2.8 Derivative financial instruments 2.5 4.5 0.8 Deferred tax assets 51.0 35.8 51.1 932.3 690.1 903.1 Current assets Inventories 573.7 466.4 539.2 Trade and other receivables 1,069.4 972.6 894.9 Income tax receivable 13.3 17.4 15.5 Derivative financial instruments 0.5 1.3 0.7 Gross assets held for resale - 8.6 - Cash and cash equivalents 129.6 98.9 117.1 1,786.5 1,565.2 1,567.4 Liabilities Current liabilities Borrowings 33.0 41.3 45.1 Derivative financial instruments 1.2 0.9 1.5 Trade and other payables 932.0 841.7 891.6 Income tax liabilities 48.4 34.5 46.4 Gross liabilities held for resale - 5.2 - 1,014.6 923.6 984.6 Net current assets 771.9 641.6 582.8 Non-current liabilities Borrowings 451.6 351.5 349.9 Derivative financial instruments 1.6 - 1.2 Deferred tax liabilities 5.9 6.3 5.6 Retirement benefit liabilities 9 11.2 18.2 11.3 Other non-current liabilities 102.8 30.1 95.3 Provisions 38.6 31.8 36.7 611.7 437.9 500.0 Net assets 1,092.5 893.8 985.9 Shareholders' equity Share capital 26.2 25.8 26.0 Share premium 311.6 302.3 303.6 Retained earnings 654.2 465.2 555.9 Other reserves 89.7 91.4 89.1 Total shareholders' equity 1,081.7 884.7 974.6 Minority interest 10.8 9.1 11.3 Total equity 1,092.5 893.8 985.9 Group cash flow statement for the six month period to 30 June 2008 Unaudited Unaudited Audited Interim Interim Full June 2008 Year June 2007 Dec 2007 Note $m $m $m Cash generated from operations 11 87.9 112.0 339.0 Tax paid (54.5) (53.4) (105.9) Net cash from operating activities 33.4 58.6 233.1 Cash flows from investing activities Acquisitions (net of cash acquired) (12.2) - (112.0) Acquisition of minority interests - - (0.2) Deferred consideration payments (27.4) (11.9) (13.6) Proceeds from disposal of subsidiary (net of 10.7 - - cash disposed) Proceeds from disposal of interest in joint - - 9.0 venture (net of borrowings disposed) Purchase of property plant and equipment (44.6) (47.5) (80.8) Proceeds from sale of property plant and 3.0 1.4 4.2 equipment Purchase of intangible assets (8.7) (5.3) (11.8) Proceeds from disposal of other intangible - - 0.2 assets Investment by minority shareholders - - 1.4 Net cash used in investing activities (79.2) (63.3) (203.6) Cash flows from financing activities Proceeds from issue of ordinary shares (net - 0.3 0.2 of expenses) Proceeds from/(repayment of) bank loans 91.0 (15.8) (18.1) Purchase of shares in employee share trusts (5.0) - - Disposal of shares in employee share trusts 10.3 7.4 16.2 Interest received 2.1 2.8 5.8 Interest paid (15.9) (15.7) (32.0) Dividends paid to shareholders 3 (25.6) (17.6) (27.6) Dividends paid to minority shareholders (0.7) - (1.5) Net cash from/(used in) financing activities 56.2 (38.6) (57.0) Effect of exchange rate changes on cash and 2.1 1.9 4.3 cash equivalents Net increase /(decrease) in cash and cash 12.5 (41.4) (23.2) equivalents Opening cash and cash equivalents 117.1 140.3 140.3 Closing cash and cash equivalents 129.6 98.9 117.1 Notes to the interim accounts for the six month period to 30 June 2008 Basis of preparation The interim report and accounts for the six months ended 30 June 2008 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 `Interim financial reporting' as adopted by the European Union. The interim report and accounts should be read in conjunction with the Group's 2007 Annual Report and Accounts which have been prepared in accordance with IFRS's as adopted by the European Union. The interim report and accounts have been prepared on the basis of the accounting policies set out in the Group's 2007 Annual Report and Accounts. The interim report and accounts do not comprise statutory accounts within the meaning of section 240 of the Companies Act 1985. The interim accounts were approved by the Board of Directors on 25 August 2008. The results for the six months to 30 June 2008 and the comparative results for six months to 30 June 2007 are unaudited. The comparative figures for the year ended 31 December 2007 do not constitute the statutory financial statements for that year. Those financial statements have been delivered to the Registrar of Companies and include the auditor's report which was unqualified and did not contain a statement either under Section 237(2) or Section 237(3) of the Companies Act 1985. Disclosure of impact of new accounting standards The following standards, amendments and interpretations to published standards were mandatory for the period ended 30 June 2008. The application of these standards did not have a material impact on the financial statements. IFRIC 11 `IFRS 2 - Group and treasury share transactions' IFRIC 14 `IAS 19 - the limit on a defined benefit asset, minimum funding requirements and their interaction' 2. Segmental reporting Business segments Revenue EBITDA (1) Unaudited Unaudited Audited Unaudited Unaudited Audited Interim Interim Full Interim Interim Full June 2008 June Year June 2008 June Year 2007 2007 2007 2007 $m $m $m $m $m $m Engineering & 1,560.8 1,208.0 2,582.8 159.9 104.4 229.3 Production Facilities Well Support 472.8 416.4 862.1 62.4 54.0 113.0 Gas Turbine 475.7 478.2 955.7 43.9 37.9 82.5 Services Central costs (4) - - - (23.5) (21.8) (44.8) Total excluding 2,509.3 2,102.6 4,400.6 242.7 174.5 380.0 discontinuing operations Gas Turbine 17.6 14.7 32.1 (0.8) (1.4) (1.3) Services - discontinuing operations (2) Total 2,526.9 2,117.3 4.432.7 241.9 173.1 378.7 Finance income Finance expense Profit before taxation Taxation Profit for the period EBITA (1) Operating profit Unaudited Unaudited Audited Unaudited Unaudited Audited Interim Interim Full Interim Interim Full June June Year June June Year 2008 2007 2007 2008 2007 2007 $m $m $m $m $m $m Engineering & 148.8 97.4 214.5 140.6 92.2 209.1 Production Facilities Well Support 49.2 41.9 87.1 49.1 41.8 87.0 Gas Turbine 35.1 29.2 64.3 32.4 27.4 44.1 Services Central costs (4) (23.9) (22.1) (45.5) (23.9) (22.1) (45.5) Total excluding 209.2 146.4 320.4 198.2 139.3 294.7 discontinuing operations Gas Turbine (1.3) (1.8) (2.0) (1.4) (1.9) (9.5) Services - discontinuing operations (2) Total 207.9 144.6 318.4 196.8 137.4 285.2 Finance income 3.0 2.8 7.4 Finance expense (18.5) (16.2) (32.7) Profit before 181.3 124.0 259.9 taxation Taxation (60.7) (41.5) (91.0) Profit for the 120.6 82.5 168.9 period Notes EBITDA represents operating profit before depreciation and amortisation. EBITA represents EBITDA less depreciation. EBITA and EBITDA are provided as they are units of measurement used by the Group in the management of its business. The discontinuing operations relate to an Aero engine overhaul company which the Group has decided to divest. Revenue arising from sales between segments is not material. Central costs include the costs of certain management personnel in both the UK and the US, along with an element of Group infrastructure costs. 3. Dividends Unaudited Unaudited Audited Interim Interim Full Year June 2008 June 2007 Dec 2007 $m $m $m Dividends on equity shares Final paid 25.6 17.6 17.6 Interim paid - - 10.0 Total dividends 25.6 17.6 27.6 After the balance sheet date, the directors declared an interim dividend of 2.8 cents per share which will be paid on 25 September 2008. The interim financial report does not reflect this dividend payable, which will be recognised in shareholders' equity as an appropriation of retained earnings in the year ended 31 December 2008. 4. Acquisitions and disposals In January 2008, the Group acquired 100% of the share capital of Producers Assistance Corporation (`PAC') for an initial consideration of $11.0m. PAC provides technical operations and maintenance support services to the US onshore oil and gas industry. PAC's net assets at the date of acquisition were $1.4m. Contingent consideration is payable depending on the Company's performance in the period from date of acquisition until 2011. An amount of $7.8m has been provided for contingent consideration at the balance sheet date. Goodwill of $13.3m and other intangible assets of $4.1m have been recorded in the consolidated Group accounts. In April 2008, the Group disposed of 100% of the share capital of Korndorffer Contracting International BV (`KCI'). Proceeds received on disposal, net of cash disposed, amounted to $10.7m. A gain on sale of disposal of $0.7m is included in administrative expenses in the income statement. In May 2008, the Group acquired 100% of the share capital of Netlink Inspection Pty Limited (`Netlink') for a consideration of $1.8m. Netlink's net assets at the date of acquisition were $0.2m and goodwill of $1.6m has been recorded in the consolidated Group accounts. The companies acquired during the period have contributed $19.5m to revenue and $2.0m to operating profit in the six months to 30 June 2008. The acquisitions carried out during the period 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 business. These factors contributed to the goodwill recognised by the Group on the acquisitions during the period. 5. Profit on disposal of interest in joint venture The profit on disposal of interest in joint venture relates to the sale of the Group's shareholding in one of its joint ventures in the Engineering & Production Facilities division during 2007. 6. Impairment and restructuring charges The Group recorded impairment and restructuring charges amounting to $26.2m in the year ended 31 December 2007. $16.5m of charges related to the rationalisation of businesses and facilities, severance costs and impairment of property plant and equipment in the Gas Turbine Services division; $7.2m of charges were booked in the Gas Turbine Services division - discontinuing operations in respect of impairment of property plant and equipment and other intangible assets; and a $2.5m goodwill impairment charge was booked in the Engineering & Production Facilities division. 7. Earnings per share Unaudited Interim Unaudited Interim June 2008 June 2007 Earnings Number of Earnings Earnings Number of Earnings attributable shares attributable (millions) per shares per to equity share to equity share shareholders shareholders (millions) (cents) (cents) ($m) ($m) Basic 120.4 507.3 23.7 81.2 498.4 16.3 Effect of dilutive - 17.5 (0.8) - 18.9 (0.6) ordinary shares Diluted 120.4 524.8 22.9 81.2 517.3 15.7 Amortisation, net of tax 9.2 - 1.8 5.8 - 1.1 Profit on disposal of - - - - - - interest in joint venture, net of tax Impairment and - - - - - - restructuring charges, net of tax Adjusted diluted 129.6 524.8 24.7 87.0 517.3 16.8 Adjusted basic 129.6 507.3 25.5 87.0 498.4 17.5 Audited Full Year December 2007 Earnings Number of Earnings attributable shares (millions) per to equity share shareholders (cents) ($m) Basic 165.0 500.6 33.0 Effect of dilutive - 19.2 (1.3) ordinary shares Diluted 165.0 519.8 31.7 Amortisation, net 7.7 - 1.5 of tax Profit on disposal (2.5) - (0.5) of interest in joint venture, net of tax Impairment and 21.6 - 4.2 restructuring charges, net of tax Adjusted diluted 191.8 519.8 36.9 Adjusted basic 191.8 500.6 38.3 The calculation of basic earnings per share (`EPS') is based on the earnings attributable to equity shareholders divided by the weighted average number of ordinary shares in issue during the period excluding shares held by the Group's employee share 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 Employee Share Option Schemes and the Long Term Retention Plan; and shares issuable under the Group's Long Term Incentive Scheme and Long Term Incentive Plan. Adjusted EPS is disclosed to show the results excluding amortisation, impairment and restructuring charges and profit on disposal of interest in joint venture, net of tax. 8. Taxation The taxation charge for the six months ended 30 June 2008 reflects an anticipated rate of 32.5% on profit before taxation and amortisation of other intangibles for the year ending 31 December 2008 (June 2007 : 33.3%). 9. Retirement benefit liability No interim revaluation of the pension liability has been carried out at 30 June 2008 and accordingly there is no actuarial gain/loss in the statement of recognised income and expense. The figures for gains and losses for the full year together with the surplus/deficit at the year end will be presented in the 2008 Annual Report and Accounts. 10. Related party transactions The following transactions were carried out with the Group's joint ventures in the six months to 30 June. These transactions comprise sales and purchase of goods and services in the ordinary course of business. Unaudited Unaudited Audited Interim Interim Full Year June 2008 June 2007 Dec 2007 $m $m $m Sales of goods and services to joint ventures 74.5 68.5 143.5 Purchase of goods and services from joint 9.5 6.3 16.5 ventures Receivables from joint ventures 15.5 25.4 14.7 Payables to joint ventures 15.2 8.2 10.5 Notes to the interim accountsfor the six month period to 30 June 2008 11. Cash generated from operations Unaudited Unaudited Audited Interim Interim Full Year June 2008 June 2007 Dec 2007 $m $m $m Reconciliation of operating profit to cash generated from operations: Operating profit 196.8 137.4 285.2 Adjustments for: Depreciation 34.0 28.5 60.3 Loss / (gain) on disposal of property plant 0.3 - (1.2) and equipment Amortisation 11.1 7.2 10.6 Share based charges 6.5 6.2 13.7 Impairment and restructuring charges - - - 25.0 non-cash impact Profit on disposal of subsidiary (0.7) - - Profit on disposal of interest in joint - - (3.6) ventures Increase in provisions 1.9 8.0 12.8 Changes in working capital (excluding effect of acquisition and disposal of subsidiaries) Increase in inventories (33.7) (28.4) (112.7) Increase in receivables (173.7) (172.2) (74.4) Increase in payables 46.2 124.9 131.8 Exchange differences (0.8) 0.4 (8.5) Cash generated from operations 87.9 112.0 339.0 12. Reconciliation of cash flow to movement in net debt At 1 Cash flow Exchange At 30 January movements June $m 2008 $m 2008 $m $m Cash and cash equivalents 117.1 10.4 2.1 129.6 Short term borrowings (45.1) 12.5 (0.4) (33.0) Long term borrowings (349.9) (103.5) 1.8 (451.6) Net debt (277.9) (80.6) 3.5 (355.0) 13. Capital commitments At 30 June 2008 the Group had entered into contracts for future capital expenditure amounting to $3.0 million. The capital expenditure relates to property plant and equipment and has not been provided in the financial statements. 14. Post balance sheet events In July 2008, the Group announced the formation of Wood Group - CCC, a joint venture with Consolidated Contractors Company. In August 2008, the Group acquired M&O Global (`M&O') for an initial consideration of $14.0m. M&Os net assets at the date of acquisition were $4.8m. The purchase price allocation process was not finalised prior to the completion of the interim report and accounts. Statement of directors' responsibilities for the six month period to 30 June 2008 The directors confirm that the interim report and accounts have been prepared in accordance with IAS 34 as adopted by the European Union and that the interim report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely: an indication of impairment events that have occurred during the first six months and their impact on the accounts and a description of the principal risks and uncertainties for the remaining six months of the year; and material related party transactions in the first six months and any material changes in the related party transactions described in the last annual report. The directors of John Wood Group PLC are listed in the Group's 2007 Annual Report and Accounts. A G Langlands Chief Executive A G Semple Group Finance Director 25 August 2008 Independent review report to John Wood Group PLC for the six month period to 30 June 2008 Introduction We have been engaged by John Wood Group PLC (`the Company') to review the condensed set of financial statements in the half year report for the six months ended 30 June 2008 which comprises the Group income statement, balance sheet, cash flow statement and statement of recognised income and expense and related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information in the condensed set of financial statements. Directors' responsibilities The interim report, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, `Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. PricewaterhouseCoopers LLP Chartered Accountants Aberdeen 25 August 2008 Notes: (a) The maintenance and integrity of the John Wood Group PLC web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the web site. (b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions. Shareholder information Payment of dividends The Company declares its dividends in US dollars. As a result of the shareholders being mainly UK based, dividends will be paid in sterling, but if you would like to receive your dividend in dollars please contact the Registrars at the address below. All shareholders will receive dividends in sterling unless requested. If you are a UK based shareholder, the Company encourages you to have your dividends paid through the BACS (Banker's Automated Clearing Services) system. The benefit of the BACS payment method is that the Registrars post the tax vouchers directly to the shareholders, whilst the dividend is credited on the payment date to the shareholder's Bank or Building Society account. Shareholders who have not yet arranged for their dividends to be paid direct to their Bank or Building Society account and wish to benefit from this service should contact the Registrars at the address below. Sterling dividends will be translated at the closing mid-point spot rate on 5 September 2008 as published in the Financial Times on 6 September 2008. Officers and advisers Secretary and Registered Office I Johnson John Wood Group PLC John Wood House Greenwell Road ABERDEEN AB12 3AX Tel: 01224 851000 Registrars Equiniti Aspect House Spencer Road Lancing West Sussex BN99 6DA Stockbrokers JPMorgan Cazenove Limited Credit Suisse Auditors PricewaterhouseCoopers LLP Chartered Accountants Financial calendar 6 months ended Year ending 30 June 2008 31 December 2008 Results announced 26 August 2008 Early March 2009 Ex-dividend date 3 September May 2009 2008 Dividend record 5 September May 2009 date 2008 Dividend payment 25 September May 2009 date 2008 Annual General - May 2009 Meeting The Group's Investor Relations website can be accessed at www.woodgroup.com.

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