Interim Results

John Wood Group PLC Interim results for the six months to 30 June 2006 Strong EBITA growth and prospects 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 over 18,000 people in 44 countries. Financial Highlights 1 Revenues of $1,572.1m (2005: $1,327.0m) up 18% EBITA 2 of $90.0m (2005: $69.2m) up 30% Operating profit of $87.0m (2005: $67.2m) up 29% Profit before tax of $75.6m (2005: $56.2m) up 35% Adjusted diluted earnings per ordinary share 3 of 10.2 cents (2005: 7.8 cents) up 31%. Basic earnings per share of 10.0 cents (2005: 7.6 cents) up 32% Declared interim dividend of 1.5 cents (2005: 1.3 cents) up 15% 4 Operating Highlights Group Strong global oil & gas market Significant financial and operating progress record first half results further margin improvement good progress in new geographic markets successfully developing our market-leading positions Engineering & Production Facilities: Engineering - good demand and progress in all areas Production Facilities - maintaining market leading position in North Sea and good progress in new regions Well Support -good performance in all three businesses: ESP - continuing growth in Russia, extension of presence in Chad Pressure Control - maintaining strong position in US markets, achieving good growth outside the US, notably in Arabian Gulf Logging Services - strong performance in first half, benefiting from increased drilling activity Gas Turbine Services Modest improvement in North American power market Continuing to enhance our differentiation and build up long term contracts. Commenting on the results, Sir Ian Wood, Chairman and Chief Executive, Wood Group, said: "Our oil & gas development related activities are growing strongly and we are continuing to expand our production support activities to maximise the later cycle opportunities. Business continues to strengthen, particularly in our Engineering and Well Support activities, and we believe our result for the year will be ahead of expectations. Looking into next year, our positions in strong markets and our robust business development programme should ensure we continue our good growth." Information: Wood Group Alan Semple/ Nick Gilman/ Carolyn Smith 01224 851 000 Brunswick Patrick Handley/ Nina Coad/ Nebat Sukker 020 7404 5959 Notes 1.All figures are prepared on the basis detailed in note 1 to the interim accounts. 2.EBITA represents operating profit before the deduction of amortisation of other intangible assets of $3.0m (2005: $2.0m) and is provided as it is a key unit of measurement used by the Group in the management of its business. The June 2005 EBITA includes $2.4m relating to the Production Technology business prior to its disposal in December 2005. 3.Shares held by the Group's employee share ownership trusts are excluded from the number of shares in calculating adjusted diluted earnings per ordinary share. Adjusted diluted earnings per ordinary share is calculated on earnings before amortisation, and the after tax impact of impairment and restructuring charges and profit on disposal of subsidiaries. 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. 4.In accordance with International Financial Reporting Standards ("IFRS"), the 2006 interim dividend declared is not reflected in these accounts. The dividend will be reflected in the accounts when paid. 5.Gearing represents net debt over shareholders' funds. 6.Interest cover is EBITA divided by net finance costs. Interim Statement - six months to 30 June 2006 Introduction I am pleased to report we are continuing our very good progress, successfully developing our market leading positions and extending our range of services to our global customers in the strong oil & gas market. In the six months to June 2006, revenues increased 18.5% to $1,572.1m (2005: $1,327.0m) and EBITA increased 30.1% to $90.0m (2005: $69.2m). This reflects strong revenue growth in Engineering & Production Facilities and Well Support, together with strengthening margins across all divisions. The present strong oil & gas market has compelling long term fundamentals with our customers' investment decisions still based on significantly lower oil prices. We are continuing to expand our relationship with the major oil companies, independents and national oil corporations across the world, marketing our differentiation in high quality engineering solutions, long term performance contracts, and technology and know-how. To achieve our longer term growth, we are continuing to extend our international reach and broaden our range of services, maintaining a balance between our currently stronger development and later cycle production activities. In the first half, capital expenditure and acquisition investment was $97.8m (2005: $61.8m). This included increasing our capacity in Well Support and making acquisitions to strengthen our presence in Algeria and to enhance our position in the engineering downstream and process sectors. We are maintaining our major focus on accessing the skills needed to meet our clients' increasing requirements with a number of initiatives underway to attract, develop and train our people around the world. Over the last 12 months our employee numbers have risen by approximately 2,000 to over 18,000. Dividend Reflecting confidence in our long term strategy and our ability to deliver continuing growth, we have declared an increase of 15.4% in the interim dividend to 1.5 cents which will be paid on the 12 October 2006 to shareholders on the register on 22 September 2006. Engineering & Production Facilities Revenues increased 27.4% to $895.7m (2005: $703.0m), and EBITA rose 39.6% to $57.1m (2005: $40.9m). We enjoyed strong revenue growth throughout the division, with the faster growth in our higher margin Engineering activities contributing to the increase in the EBITA margin from 5.8% to 6.4%. We are seeing good demand for our extended range of high quality Engineering services and have made good progress in all areas. In US upstream, we have a range of onshore and offshore contracts including Mallet onshore and the Perdido, Tahiti and Shenzi developments in the Gulf of Mexico. Internationally , we are working on developments offshore Brazil, Tambua Landana offshore Angola, East Area gas offshore Nigeria, and offshore Equatorial Guinea. Additionally, we are carrying out the engineering, project and construction management services on the Cairn Mangala development in India and the BP Valhall development in Norway, along with other developments in the North Sea. JP Kenny, our world leading pipeline and subsea engineering company, is providing the subsea engineering for BP's developments in Angola, as well as the technically significant subsea engineering and pipeline contract for Gorgon and Janz offshore Australia. They are also working on tiebacks for the BP Deepwater developments in the Gulf of Mexico and have just renewed their significant BP contract in the North Sea. Our diversification into midstream is making progress and we are now installing our LNG (Liquefied Natural Gas) Smart ® Air Vaporization Process, at Trunkline's LNG receiving terminal in Lake Charles, Louisiana. In downstream we are seeing a high level of activity on a wide range of de-bottlenecking, refinery upgrade and low sulphur diesel modification projects. Our main customer focus is the independent refiners, and we have recently entered into longer term contracts to provide downstream Engineering support services across the US. The acquisition of Global Performance in Greenville, South Carolina strengthens our construction management and process capabilities and provides access to a talented pool of engineers. We have continued to extend our international presence in Engineering, with increasing activity in our London and Australia offices, together with opening new offices in Norway and Abu Dhabi, and we are continuing to look at further new locations to increase our global presence and provide satellite support to our key Engineering hubs. In Production Facilities, we are busy in the North Sea and the Gulf of Mexico and are extending our international presence. In the North Sea, we are working on an increasing number of platform integrity, upgrade and tieback projects. We have also been awarded a second contract by Sevan Marine, this time to operate and maintain their FPSO for Venture Production's Chestnut Field in the North Sea, where we will be the Duty Holder. In Norway, we are beginning to work on assignments to provide support services and engineering studies. In the Gulf of Mexico, we are extending our pre operations and start up support activities with significant contracts for BP Atlantis, BP Thunder Horse and BHP Shenzi. Internationally, in North Africa we have acquired a majority stake in Somias, a maintenance and fabrication support provider in Algeria, and are well-positioned to win further work. In West Africa, we are now working for Marathon, Exxon Mobil and Amerada Hess in Equatorial Guinea, including the recent award of a major four year contract to provide additional operations support to Amerada Hess' Sendje Ceiba FPSO and Okume Complex. Elsewhere in the world, we are beginning to win some engineering and production support contracts in Russia, and in Kazakhstan we have begun work on a supply chain management contract. Well Support Revenues increased 16.1% to $350.8m (2005: $302.1m), EBITA increased 28.5% to $34.7m (2005: $27.0m) and the EBITA margin increased to 9.9% (2005: 8.9%). All three of our Well Support businesses, Electric Submersible Pumps (ESP), Pressure Control and Logging Services, are maintaining their significant US positions and achieving good international growth. ESP have a strong market share in the US with a wide range of clients. Internationally we have made good progress in the significant Russian market, extended our scope of work in Chad, increased our activity in the Middle East and won a strategically important contract in Bohai Bay, China. To meet the strong demand for our products and services we have invested in increased manufacturing and support in the US, Oman and Yemen. As well as their very strong US presence, Pressure Control are benefiting from the high levels of drilling activity round the world and are increasingly seeing good opportunities outside the US. In the first 6 months we secured contract wins in Canada, Australia, the UK, Russia, Indonesia and the Middle East. We are increasing our manufacturing capacity in the US and building up our manufacturing, assembly and test capabilities in China to provide capacity and cost benefits. In Logging Services, our production focused slickline operations and development focused cased hole electric wireline services had a strong six months in the US. Our operations in Argentina, where we are the market leader, also performed well. We are increasing our investment to deliver capacity and cost benefits, while also looking to broaden our range of services, particularly in production related areas of activity. Gas Turbine Services Revenues decreased 0.5% to $302.9m (2005: $304.4m), EBITA increased 6.7% to $16.0m (2005: $15.0m) and the EBITA margin increased to 5.3% (2005: 4.9%). The broadly flat revenues reflect our focus on achieving recovery and improving margin, together with lower activity in our Power Solutions business. We continue to see modest improvement in the North American power market and our cost reduction and efficiency programmes are continuing. In our oil & gas activities, the breadth and depth of our product and service offering and the link to our production facilities capability provides key differentiation, contributing to our success in winning more long term multi engine contracts. There were some signs in the first six months of delays in overhauls as customers sought to take advantage of the strong oil price but, looking ahead, we expect the level of overhaul activity to increase in the second half. Our Light Industrial Turbine (LIT) activities performed satisfactorily in the first half and, with our current product development programme, we expect to see good medium term growth. The North American power market is showing modest improvement and there are good opportunities for growth in the Rest of the World. Our Heavy Industrial Turbine (HIT) activities in the US delivered an improved performance in the first half and we expect to see continuing further improvement. Wood Group Pratt & Whitney and TransCanada Turbines - serving customers in the oil & gas and power markets - had a strong first half, particularly driven by demand from their clients in the power markets. Our focus on long term contracts is continuing with recent wins including the significant long term power station operations & maintenance contract for LS Power in the Western US and new maintenance contracts with Air Products and Cinergy covering GE 7EA turbines. Outlook Our oil & gas development related activities are growing strongly and we are continuing to expand our production support activities to maximise the later cycle opportunities. Business continues to strengthen, particularly in our Engineering and Well Support activities, and we believe our result for the year will be ahead of expectations. Looking into next year, our positions in strong markets and our robust business development programme should ensure we continue our good growth. Sir Ian Wood Chairman and Chief Executive 4 September 2006 Interim Financial Review The trading performance for the six months to 30 June 2006 is summarised below: Interim Interim Increase June June 2006 2005 $m $m Revenues 1,572.1 1,327.0 18.5% EBITA 90.0 69.2 30.1% Operating profit 87.0 67.2 29.5% Profit before tax 75.6 56.2 34.5% Profit for the period 49.8 36.4 36.8% Diluted EPS (cents) 9.6 7.4 29.7% Adjusted diluted EPS 10.2 7.8 30.8% (cents) Revenues increased by $245.1m, or 18.5%, for the six months to June 2006 with strong growth in both Engineering & Production Facilities (27.4%) and Well Support (16.1%). EBITA increased by $20.8m or 30.1% for the period, with growth in all three divisions. Profit before tax increased by 34.5%. The tax charge for the period of $25.8m (2005: $19.8m) is based on an anticipated tax rate for the year of 34.1% (2005: 35.2%) of profit before tax. The cash flow statement for the six months to 30 June 2006 is summarised below: Interim Interim Full Year June June December 2006 2005 2005 $m $m $m Opening net debt (245.8) (354.3) (354.3) Cash generated from 118.8 92.5 194.8 operations before working capital movements Working capital outflows (72.8) (35.3) (33.5) Capex and acquisitions (97.8) (61.8) (99.0) Disposal of subsidiaries 7.3 - 22.8 Issue / sale of shares 1.3 0.9 92.5 Interest, tax, dividends (60.0) (25.5) (69.1) and other (Increase)/ decrease in net (103.2) (29.2) 108.5 debt Closing net debt (349.0) (383.5) (245.8) Cash generated from operations before movements in working capital increased by $26.3m or 28.4% driven by the strong trading performance for the six months to June 2006. Working capital outflows in the period of $72.8m compare to outflows of $35.3m in the first half of 2005. The outflows include the impact of increased activity in the first six months of the year, an increase in inventory levels to support future growth and higher receivables. Capital expenditure amounted to $44.5m (2005: $32.5m) and the increase included the cost of increasing capacity in Well Support. The cost of acquisition of subsidiaries net of cash acquired totalled $45.5m (2005: $17.3m) and includes the acquisition of Global Performance Holdings Inc and Somias spa, as well as the purchase of the remaining minority shareholding in Mustang Engineering. Deferred consideration payments relating to acquisitions made in prior years amounted to $4.2m (2005: $9.0m). Net debt increased by $103.2m from $245.8m at December 2005 to $349.0m at June 2006. The Group's gearing ratio 5 increased from 36.1% at December 2005 to 48.2% at June 2006. Net debt of $349.0m is primarily US dollar denominated in line with the currency of the bulk of the Group's net assets. Long-term borrowings amounted to $423.5m (2005: $483.0m), of which $176.2m (2005: $125.0m), or 41.6% (2005: 25.9%), was at a weighted average fixed rate of interest of 4.9% (2005: 5.0%). The Group seeks to hold approximately 50% of net borrowings at fixed interest rates. Net interest costs were $11.4m, which is an increase of $0.4m compared to the same period in 2005. Interest cover 6 was 7.9 times (June 2005: 6.3 times). Adjusted diluted earnings per ordinary share for the period increased by 30.8% to 10.2 cents (June 2005: 7.8 cents) and basic earnings per ordinary share also increased by 31.6% to 10.0 cents (June 2005: 7.6 cents). Alan G Semple Group Finance Director 4 September 2006 Interim Financial Statements 2006 Group income statement for the six month period to 30 June 2006 Unaudited Interim Unaudited Audited June Interim Full Year 2006 June December 2005 2005 Note US$m US$m US$m Revenues 2 1,572.1 1,327.0 2,761.9 Cost of sales (1,258.8) (1,062.3) (2,209.7) Gross profit 313.3 264.7 552.2 Administrative expenses: Profit on disposal of subsidiaries 5 - - 9.7 Impairment and restructuring charges 6 - - (6.0) Other administrative expenses (226.3) (197.5) (407.9) Administrative expenses (226.3) (197.5) (404.2) Operating profit 2 87.0 67.2 148.0 Finance income 2.2 1.0 2.5 Finance expense (13.6) (12.0) (25.8) Profit before taxation 75.6 56.2 124.7 Taxation 7 (25.8) (19.8) (41.1) Profit for the period 49.8 36.4 83.6 Attributable to: Equity shareholders 49.2 35.3 80.5 Minority interest 0.6 1.1 3.1 49.8 36.4 83.6 Earnings per share (expressed in cents per share) Basic 4 10.0 7.6 17.0 Diluted 4 9.6 7.4 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 six month period to 30 June 2006 Unaudited Unaudited AuditedFull Year Interim Interim December June June 2005 2006 2005 US$m US$m US$m Profit for the period 49.8 36.4 83.6 Actuarial losses on retirement benefit - - (2.5) liabilities Movement in deferred tax relating to retirement - - 0.7 benefit liabilities Cash flow hedges- fair value gains 2.8 0.4 2.4 - (losses)/gains reported in profit for the (0.3) 1.0 1.4 period Exchange differences on retranslation of foreign 2.7 (10.6) (15.5) currency net assets Total recognised income for the period 55.0 27.2 70.1 Adoption of IAS 32 and IAS 39 - Retained earnings - - (0.9) - Hedging reserve - - (2.4) Total recognised income since last Annual Report 55.0 27.2 66.8 Total recognised income for the period is attributable to: Equity shareholders 54.4 26.1 67.0 Minority interest 0.6 1.1 3.1 55.0 27.2 70.1 Group balance sheet as at 30 June 2006 UnauditedInterim Unaudited Audited June InterimJune Full Year 2006 2005 December 2005 Note US$m US$m US$m Assets Non-current assets Goodwill and other intangible assets 375.0 328.5 328.6 Property plant and equipment 232.4 219.5 219.5 Long term receivables 9.1 17.6 13.5 Financial assets - derivative financial 4.4 - 1.3 instruments Deferred tax assets 19.6 20.2 19.3 640.5 585.8 582.2 Current assets Inventories 397.0 355.2 362.9 Trade and other receivables 757.0 617.4 610.7 Income tax receivable 10.4 4.2 5.4 Financial assets - derivative financial 1.6 - 1.7 instruments Cash and cash equivalents 119.7 135.3 149.9 1,285.7 1,112.1 1,130.6 Liabilities Current liabilities Financial liabilities - Borrowings 45.2 35.8 47.9 - Derivative financial instruments 0.4 0.2 0.6 Trade and other payables 616.2 520.2 526.7 Income tax liabilities 18.3 16.5 14.8 680.1 572.7 590.0 Net current assets 605.6 539.4 540.6 Non-current liabilities Financial liabilities - Borrowings 423.5 483.0 347.8 - Derivative financial instruments - 1.2 - Deferred tax liabilities 6.1 8.5 7.0 Retirement benefit liabilities 9 35.9 31.7 33.3 Other non-current liabilities 31.7 23.0 18.7 Provisions 15.6 15.2 15.1 512.8 562.6 421.9 Net assets 733.3 562.6 700.9 Shareholders' equity Share capital 25.5 23.9 25.4 Share premium 294.2 202.4 292.1 Retained earnings 324.0 244.9 288.1 Other reserves 80.9 78.2 75.7 Total shareholders' equity 724.6 549.4 681.3 Minority interest 8.7 13.2 19.6 Total equity 733.3 562.6 700.9 Group cash flow statement for the six month period to 30 June 2006 Unaudited Unaudited Audited Interim Interim Full Year June 2006 June 2005 Dec 2005 Note US$m US$m US$m Cash generated from operations 10 46.0 57.2 161.3 Tax paid (26.2) (11.4) (37.2) Net cash from operating activities 19.8 45.8 124.1 Cash flows from investing activities Acquisitions (net of cash acquired) (45.5) (17.3) (24.2) Deferred consideration payments (4.2) (9.0) (9.2) Disposal of subsidiaries (net of cash 7.3 - 22.8 disposed) Purchase of property plant and equipment (44.5) (32.5) (56.4) Disposal of property plant and equipment 3.0 2.8 4.2 Purchase of intangible assets (3.6) (3.0) (9.2) Net cash used in investing activities (87.5) (59.0) (72.0) Cash flows from financing activities Issue of ordinary share capital 0.4 - 90.8 Proceeds from /(repayment of) bank loans 59.3 102.8 (18.6) Sale of shares in employee share trusts 0.9 0.9 1.7 Interest received 2.2 1.0 2.5 Interest paid (13.9) (11.8) (25.3) Dividends paid to shareholders 3 (13.4) (11.1) (17.5) Dividends paid to minority interest (0.4) - (1.3) Net cash from financing activities 35.1 81.8 32.3 Effect of exchange rate changes on cash and 2.4 (4.7) (5.9) cash equivalents Net (decrease)/increase in cash and cash (30.2) 63.9 78.5 equivalents Opening cash and cash equivalents 149.9 71.4 71.4 Closing cash and cash equivalents 119.7 135.3 149.9 Notes to the interim accounts for the six month period to 30 June 2006 1.Basis of Preparation The interim report and accounts have been prepared on the basis of the accounting policies set out in the Group's 2005 Annual Report and Accounts. The interim accounts were approved by the Board of Directors on 4 September 2006. The results for the six months to 30 June 2006 and the comparative results for six months to 30 June 2005 are unaudited. The comparative figures for the year ended 31 December 2005 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. 2.Segmental reporting Business segments part 1 Revenues EBITDA (1) Unaudited Unaudited Audited Unaudited Unaudited Audited Interim Interim Full Interim Interim Full 30 June 30 June Year 30 June 2006 30 June Year 2006 2005 2005 2005 2005 US$m US$m US$m US$m US$m US$m Engineering & Production Facilities 895.7 703.0 1,472.3 63.3 45.6 98.7 Well Support (2) 350.8 302.1 645.7 43.7 35.1 76.3 Gas Turbine Services 302.9 304.4 607.8 24.0 23.1 47.8 Central costs (5) - - - (17.4) (13.1) (28.8) Total excluding discontinuing operations 1,549.4 1,309.5 2,725.8 113.6 90.7 194.0 Gas Turbine Services - discontinuing operations (3) 22.7 17.5 36.1 0.5 - (0.1) Total 1,572.1 1,327.0 2,761.9 114.1 90.7 193.9 Business segments part 2 EBITA (1) Operating profit Unaudited Unaudited Audited Unaudited Unaudited Audited Interim Interim Full Interim Interim Full 30 June 30 June 2005 Year 30 June 30 June Year 2006 2006 2005 2005 2005 US$m US$m US$m US$m US$m US$m Engineering & 57.1 40.9 88.2 55.6 39.9 86.0 Production Facilities Well Support 34.7 27.0 58.5 34.7 26.9 68.0 (2) Gas Turbine 16.0 15.0 32.7 14.7 14.4 24.9 Services Central costs (17.8) (13.3) (29.5) (17.9) (13.5) (29.8) (5) Total 90.0 69.6 149.9 87.1 67.7 149.1 excluding discontinuing operations Gas Turbine - (0.4) (0.8) (0.1) (0.5) (1.1) Services - discontinuing operations (3) Total 90.0 69.2 149.1 87.0 67.2 148.0 Finance 2.2 1.0 2.5 income Finance (13.6) (12.0) (25.8) expense Profit before 75.6 56.2 124.7 taxation Taxation (25.8) (19.8) (41.1) Profit for 49.8 36.4 83.6 the period Notes (1)EBITDA represents operating profit before profit on disposal of subsidiaries, impairment and restructuring charges, 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. (2)Well Support's interim and full year 2005 results include revenues and profits earned by the Production Technology business prior to its disposal in December 2005. Production Technology revenues for the first six months of 2005 amounted to US$18.0m (Full year 2005 : US$37.5m) and operating profit amounted to US$2.4m (Full year 2005 : US$5.0m). (3)The discontinuing operations relate to an Aero engine overhaul company which the Group has decided to divest. (4)Revenues arising from sales between segments are not material. (5)Central costs include the costs of certain management personnel in both the UK and the US, along with an element of Group infrastructure costs. 3.Dividends Unaudited Unaudited Audited Interim Interim Full Year June 2006 June 2005 Dec 2005 US$m US$m US$m Dividends on equity shares Final paid 13.4 11.1 11.1 Interim paid - - 6.4 Total dividends 13.4 11.1 17.5 After the balance sheet date, the directors declared an interim dividend of 1.5 cents per share which will be paid on 12 October 2006. 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 2006. 4. Earnings per share Unaudited Interim Unaudited Interim Audited Full Year June 2006 June 2005 December 2005 Earnings Number Earnings Earnings Number Earnings Earnings Number Earnings attribute- of per attrib- of per attri- of per able shares share utable shares share butable shares to to to share equity equity equity share- share- share- holders holders holders (US$m) (millions) (cents) (US$m) (millions) (cents) (US$m) (millions) (cents) Basic 49.2 493.9 10.0 35.3 463.8 7.6 80.5 473.4 17.0 Effect of 18.3 (0.4) 14.5 (0.2) 17.8 (0.6) Dilutive Ordinary shares Diluted 49.2 512.2 9.6 35.3 478.3 7.4 80.5 491.2 16.4 Amortisation 3.0 0.6 2.0 0.4 4.8 1.0 Profit on - - (7.9) (1.6) disposal of subsidiaries, net of tax Impairment - - 4.2 0.8 And Restructuring charges, net of tax Adjusted 52.2 512.2 10.2 37.3 478.3 7.8 81.6 491.2 16.6 diluted Adjusted 52.2 493.9 10.6 37.3 463.8 8.0 81.6 473.4 17.2 basic The calculation of basic earnings per share 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. Adjusted EPS is disclosed to show the results excluding amortisation and the after tax impact of impairment and restructuring charges and profit on disposal of subsidiaries. 5. Profit on disposal of subsidiaries The profit on disposal of subsidiaries relates to the sale of the Production Technology business in December 2005. This business was part of the Well Support division. 6. Impairment and restructuring charges An impairment and restructuring charge of US$6.0m was booked in the year to December 2005. This charge was in respect of rationalisation of businesses and facilities, severance costs and impairment of property plant and equipment in the Gas Turbine Services division. 7. Taxation The taxation charge for the six months ended 30 June 2006 reflects an anticipated rate of 34.1% on profit before taxation for the year ending 31 December 2006 (June 2005 : 35.2%). 8. Acquisitions In March 2006, the Group acquired 100% of the share capital of Global Performance Holdings Inc, a company based in Greenville, South Carolina that provides project management, construction management and engineering and design services to the chemical, process and industrial sectors. In April 2006, the Group acquired the remaining 6.63% minority shareholding in Mustang Engineering Holdings Inc. In June 2006, the Group acquired 55% of SOMIAS Spa, an Algerian maintenance and fabrication support provider serving the oil and gas and petrochemical industries. 9. Retirement benefit liability No interim revaluation of the pension liability has been carried out at 30 June 2006 and accordingly there is no actuarial gain/loss in the statement of recognised income and expense. The figures for gains and losses for the full year together with the surplus/deficit at the year end will be presented in the 2006 Annual Report and Accounts. 10. Cash generated from operations Unaudited Unaudited Audited Interim Interim Full Year June 2006 June 2005 Dec 2005 US$m US$m US$m Reconciliation of operating profit to cash generated from operations: Operating profit 87.0 67.2 148.0 Adjustments for: Depreciation 24.1 21.5 44.8 (Gain)/loss on disposal of property plant (0.1) 0.3 0.5 and equipment Amortisation of other intangible assets 3.0 2.0 4.8 Share based charges 4.1 3.9 7.9 Impairment and restructuring charges - - - 5.3 non-cash impact Profit on disposal of subsidiaries - - (9.7) Increase/(decrease) in provisions 0.3 (0.2) (0.2) Changes in working capital (excluding effect of acquisition and disposal of subsidiaries) Increase in inventories (19.9) (29.1) (44.1) Increase in receivables (107.4) (46.2) (35.5) Increase in payables 54.5 40.0 46.1 Exchange differences 0.4 (2.2) (6.6) Cash generated from operations 46.0 57.2 161.3 Analysis of net debt At 1 At 30 June January Cash flow Exchange 2006 2006 movements US$M US$M US$M US$M Cash and cash equivalents 149.9 (32.6) 2.4 119.7 Short term borrowings (47.9) 6.3 (3.6) (45.2) Long term borrowings (347.8) (65.6) (10.1) (423.5) Net debt (245.8) (91.9) (11.3) (349.0) Independent review report to John Wood Group PLC for the six month period to 30 June 2006 Introduction We have been instructed by the company to review the financial information for the six months ended 30 June 2006 which comprises the consolidated interim balance sheet as at 30 June 2006 and the related consolidated interim statements of income, cash flows and statement of recognised income and expense for the six months then ended 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. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The Listing Rules of the Financial Services Authority require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. This interim report has been prepared in accordance with the basis set out in Note 1. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the disclosed accounting policies have been applied. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance. Accordingly we do not express an audit opinion on the financial information. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Listing 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. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2006. PricewaterhouseCoopers LLP Chartered Accountants Aberdeen 4 September 2006 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 22 September 2006 as published in the Financial Times on 23 September 2006. 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 Lloyds TSB Registrars Scotland PO Box 28448 Finance House Orchard Brae EDINBURGH EH4 1WQ Tel: 0870 601 5366 Stockbrokers JPMorgan Cazenove Limited Credit Suisse Auditors PricewaterhouseCoopers LLP Chartered Accountants Financial calendar 6 months ended Year ending31 30 June 2006 December 2006 Results announced 5 September Early March 2006 2007 Ex-dividend date 20 September May 2007 2006 Dividend record 22 September May 2007 date 2006 Dividend payment 12 October 2006 May 2007 date Annual General - May 2007 Meeting The Group's Investor Relations website can be accessed at www.woodgroup.com.

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