logo
  Join        Login             Stock Quote

WOOD GROUP (JOHN) PLC - Full results for year ended 31 December 2012

Tuesday, March 5, 2013 2:00 AM


Full year results for the year ended 31 December 2012

Strong growth in 2012 led by Wood Group Engineering

John Wood Group PLC ("Wood Group" or the "Group") is an international energy
services company employing around 43,000 people worldwide and operating in 50
countries. The Group has three businesses - Wood Group Engineering, Wood Group
PSN and Wood Group GTS - providing a range of engineering, production support,
maintenance management and industrial gas turbine overhaul and repair services
to the oil & gas, and power generation industries worldwide.

Financial Summary

Revenue from continuing operations of $6,821.3m (2011: $5,666.8m) up 20%
EBITA from continuing operations1 of $461.1m (2011: $341.6m) up 35%
Profit from continuing operations before tax and exceptional items of $362.7m
(2011: $254.1m) up 43%
Adjusted diluted EPS of 85.2 cents (2011: 60.2 cents) up 42%
Total dividend of 17 cents per share (2011: 13.5 cents) up 26%

Group Highlights

Leadership changes position Wood Group for the next phase of growth Increasing contribution from oil-producing US shale regions Overall market conditions expected to remain favourable Anticipate progress in all divisions in 2013

Wood Group Engineering
Second consecutive year of 30%+ EBITA growth
Strength in upstream and subsea & pipelines
Revenue growth and margin improvement anticipated in 2013

Wood Group PSN Good performance in North Sea and strong growth in North America Progress in Oman; confident of a significant improvement in 2013 Well placed to deliver strong performance in 2013

Wood Group GTS
Increased revenues in Maintenance and EBITA up around 10%
Power Solutions EBITA slightly up on 2011
Anticipate improvement in Maintenance in 2013

Bob Keiller, CEO commented:

"Our 2012 financial results represent another year of strong growth with EBITA
up 35%, reflecting the focus and hard work of our people around the world. Wood
Group is a great company and I believe we can be even better if we harness our
collective strengths more effectively and operate in a more joined-up manner.

We are set to make progress in all divisions in 2013, and I look forward to leading our further development in good long term growth markets"

Enquiries:
Wood Group
Nick Gilman                    01224 851 000
Andrew Rose
Carolyn Smith
Brunswick
Patrick Handley                020 7404 5959
Rosheeka Field

There will be an analyst and investor presentation at the Lincoln Centre, 18
Lincoln's Inn Fields, WC2A 3ED at 09.00 (GMT). Early registration is advised
from 08.30 (GMT)

A live webcast of the presentation will be available from www.woodgroup.com/ investors. Replay facilities will be available later in the day.

1 See detailed footnotes.


Chairman's Statement
Introduction
The Group delivered strong growth in 2012 and we completed a number of changes
in the executive leadership team. In November, Sir Ian Wood retired as Chairman
and from the Board. Sir Ian has been an extraordinary leader, guiding Wood
Group from its roots in the North Sea to its position today as a major global
oil & gas services business. The Group and its shareholders owe a huge debt to
him.

On 1 November, I succeeded Sir Ian as Chairman and Bob Keiller became Group CEO. Bob has taken over a strong business in good long term growth markets and is supported by an excellent management team.

Markets

During the period we benefitted from an increase in global E&P spend, estimated
by commentators to have been around 9%. Looking forward, conditions in our end
markets are anticipated to remain favourable. We continue to see strong longer
term energy fundamentals, supported on the demand side by developing economies,
and on the supply side by increasingly complex field developments and the shale
led pickup in oil & gas and industrial activity in the US. The Group is well
positioned in end markets with a balance of opex and capex related activities
across key geographical areas of industry growth and we have a robust balance
sheet.
Financial Results

The Group's results reflected growth in all three divisions. Revenue from continuing operations increased by 20% and EBITA from continuing operations was up 35%. EBITA margin increased from 6.0% to 6.8%. Adjusted diluted EPS increased by 42% to 85.2 cents.

Dividends

Reflecting our confidence in the longer term outlook for the Group, we are declaring a final dividend of 11.3 cents which will bring the full year dividend to 17.0 cents, in line with our stated intention at the half year, and up 26% on 2011.

Board changes
In June, Les Thomas, Group Director of Health and Safety, and Mark Papworth,
Chief Executive of Wood Group GTS, stepped down from the board and depart with
our best wishes for the future. Robin Watson, Chief Executive of Wood Group PSN
and Mark Dobler, Chief Executive of Wood Group GTS were appointed to the Board
in January 2013. The Board will benefit from their significant operational
experience and leadership.
As announced last year, two of our longer serving non-executive directors, John
Morgan and Dr. Christopher Masters, retired at the 2012 AGM and we thank them
both for their considerable contribution. Mary Shafer-Malicki and Tom Botts
joined the Board as non-executive directors in May 2012 and January 2013
respectively.

Wood Group is well placed to further develop our leading positions across engineering, production facilities support and gas turbine services and I look forward to the Group's continued success under Bob's leadership and direction.

Allister Langlands
Chairman

2012 Group Performance and CEO Q&A

2012 Group performance                       2012    2011          %
                                             $m      $m            Change
                                                                               
Revenue from continuing operations           6,821.3 5,666.8       20.4%
EBITA from continuing operations1            461.1   341.6         35.0%
EBITA margin from continuing operations %    6.8%    6.0%          0.8pts
Profit from continuing operations before tax 362.7   254.1         42.7%   
and exceptional items
Basic EPS                                    71.4c   530.7c        n/m
Adjusted diluted EPS2                        85.2c   60.2c         41.5%
Total dividend                               17.0c   13.5c         25.9%
ROCE6                                  19.2%         18.4%         0.8pts
Note: Continuing operations revenue and EBITA figures include the results of
PSN since acquisition on 20 April 2011, and exclude the results of Well Support
in the period prior to its disposal on 26 April 2011 and those of the Wood
Group GTS Aero engine overhaul business disposed on 5 April 2012.

Bob Keiller discusses the Group's performance in 2012, his role as incoming CEO and thoughts on strategy for the future:

Q: It's been a year of good growth across the group. What are the highlights?

Our 2012 financial results represent another year of strong growth with EBITA
up 35%; a fitting tribute to Sir Ian and Allister's leadership and the focus
and hard work of our people around the world.
Wood Group Engineering delivered very strong growth. Revenue increased by 23%
and EBITA increased by 36%, principally reflecting increased activity in
upstream and subsea & pipelines. In Wood Group PSN, revenue and EBITA growth of
23% and 34% benefitted from good performance in the North Sea, strong growth in
North America, and the full 12 month contribution from the PSN business
acquired in April 2011. In GTS, revenue and EBITA increased by 12% reflecting
growth in both Maintenance and Power Solutions.

Q: What are your priorities as CEO?

Firstly, I am looking to build on what Sir Ian and Allister have created; a
Group which has achieved significant growth both organically and by acquisition
over many years, and I am pleased that Allister will be able to support me from
his new position as Chairman. Wood Group is a great company, one I have known
as a customer, a competitor, a divisional CEO and now as a leader. And, based
on what I've seen since joining the Group, I believe we can be even better.
I believe that the Group can be stronger if we harness our collective strengths
more effectively and operate in a more joined-up manner. There are further
opportunities for cross-selling and pull-through, making better use of the
depth of resources we have. The component parts of the Group have cultures that
foster pride and entrepreneurship and my task is to protect that while
increasing collaboration. We have significantly ramped up internal
communication across the Group. This includes regular messages from the
Executive Committee that now represents all key areas of the business.
I'm looking to continue to build the business based around our Core Values
which unite the Group. These Core Values - Safety & Assurance, Relationships,
Social Responsibility, People, Innovation, Financial Responsibility and
Integrity - define who we are, what we believe in, set out how we act and how
we expect to be treated, and provide a sound basis to make decisions.

I will be also be working with my teams to further develop the combined Group strategy. This will drive our tactical choices in terms of the range of services we provide and the markets and customers that we provide them to.

Q Strategically, what progress did the Group make this year?

We continued to pursue long term and sustainable growth, retaining a balance
across opex and capex driven markets in oil & gas and power. Looking at some of
the operational highlights, we made good progress in broadening our
international footprint in Wood Group Engineering in Saudi Arabia and the Far
East, and developing relationships with a number of customers including IOCs
and EPC contractors. In Wood Group PSN we have been focussing on expansion in
the oil rich shale regions both organically and through the acquisitions of
Mitchell's and Duval. In Wood Group GTS we maintained our focus on driving
improved margins in Maintenance and delivering returns in Power Solutions. I am
keen to ensure that all parts of the business contribute to the Group's longer
term growth ambitions and benefit from being part of the Group.

Q What about safety performance in 2012?

We don't want anyone suffering injury or ill health when they work for us or if
they are affected by the work we do. It could be tempting to cite improvements
we have made in many areas but the stark fact is that one of our team died in
2012 in a vehicle incident. We are not complacent and are working hard to
assure the safety of our people.
Safety & Assurance is our top priority and first Core Value. In our 2011 Annual
Report, we talked about lessons learned from incidents and actions taken to
improve risk management as a result. Our Safety Leadership Programme was
launched at the end of 2011 with the aim of raising leaders' awareness of the
role that they play in delivering and improving the safety performance of the
Group and encouraging them to demonstrate their commitment to safety in real
and tangible ways. The programme has been led by the Board and has been rolled
out to around 1,200 managers to date. We are continuing to develop the
programme further and to extend it deeper into the organisation.
We recognise that often "near misses" can provide extremely valuable lessons
even if no physical harm was suffered. In 2013, we will be trying even harder
to recognise events that have a high loss potential and to ensure that we learn
from them. Over many years we have reduced the recordable injury rates to our
people whilst growing our workforce significantly.

Q Any change in the Group's approach to and appetite for risk?

Taking account of our skills, our customer base and our markets, it is clear to me that we need to remain a lower risk, predominantly reimbursable business.

I do, however, want to tighten up our controls around contracts that contain
fixed-price elements, to ensure that we keep our overall risk profile well
within our comfort levels. Typically, these contracts together represent less
than 10% of revenues. I commissioned a team of senior operations and commercial
managers from across the Group to analyse, define and categorise different
types of contracts with fixed-price elements. We have defined five discrete
categories, some being relatively low risk where we have control over every
element of the contract delivery, and others such as EPC contracts that include
site works and third parties for instance, which represent a higher risk. We
are updating our review and control requirements and have defined contract-size
thresholds for each category.

Q What's the outlook for the Group?

Overall, we anticipate progress in all divisions in 2013.

In 2012, Wood Group Engineering delivered a second consecutive year of over 30%
EBITA growth as the division recovered from the trough in 2010. Looking ahead
to 2013, we anticipate revenue growth and margin improvement to lead to EBITA
growth of around 15%. This is supported by our current order book, prospects in
a number of key regions, including the Gulf of Mexico, the Middle East, the
Norwegian North Sea and Asia Pacific, and our view on the overall market which
should benefit from the forecast increase in E&P capex in 2013 of around 7%.
Wood Group PSN is well placed to deliver a strong performance in 2013. In 2012
we signed new contracts and renewals worth around $3.6bn in revenue, which
position us well for the future. Looking ahead, the North Sea should benefit
from spending on integrity management, operational assurance and production
initiatives. In North America we expect further growth from our US shale
activities, and in international markets we expect to see a significant
improvement from the progress we are making in Oman.
In GTS we anticipate continued improvement in Maintenance in 2013, principally
due to operational improvement initiatives. The European power related
Maintenance market is expected to remain soft but we believe that we will see
some improvement in the US. In Power Solutions, we remain on course to complete
the Dorad contract in 2013 together with the smaller contracts awarded in 2012.
We are pursuing a number of good near term Power Solutions opportunities in the
Americas and elsewhere, although these are smaller in scale. Having experienced
delays in project awards, we anticipate a lower contribution from Power
Solutions in 2013.
As I said earlier, Wood Group is a great company and I believe we can be even
better. We have a strong business set to make progress in all divisions in
2013, and I look forward to leading our further development in good long term
growth markets.
Bob Keiller
CEO

Operational Review
Wood Group Engineering

We provide a wide range of market-leading engineering services to the upstream, subsea & pipelines, downstream & industrial and clean energy sectors. These include conceptual studies, engineering, project & construction management (EPCM) and control system upgrades.

                          2012               2011               %
                          $m                 $m                 Change
Revenue                   1,787.3            1,458.6            22.5%
EBITA                     220.0              162.0              35.8%
EBITA margin              12.3%              11.1%              1.2pts
People3                   10,200             9,100              12%
Wood Group Engineering delivered very strong growth. Revenue increased by 23%
and EBITA increased by 36%, principally reflecting increased activity in
upstream and subsea & pipelines. EBITA margin increased from 11.1% to 12.3%,
largely as a result of higher volumes and improvement in pricing in some areas.

Headcount increased by 12% from 9,100 to 10,200. The increase was heavily weighted to the first half of the year, reflecting the timing of significant contract awards in upstream.

Our upstream business accounted for just under 40% of divisional revenue.
Detailed engineering work continues on the Ichthys and Mafumeira Sul projects
in Australia and Angola, which are scheduled to complete in the second half of
2013. Strength in the Gulf of Mexico was driven by FEED and detailed
engineering work on projects including Anadarko Lucius, Exxon Hadrian, Chevron
Jack & St Malo and Williams Partners Tubular Bells. We have visibility on
prospects including detailed engineering following from ongoing and executed
FEEDs, along with additional projects with existing customers. In Canada we
have seen good growth over the last two years, but experienced a slow down in
activity in the last quarter which is continuing in 2013.
Our subsea & pipeline business accounted for almost 45% of revenue. Our subsea
activities remained strong in the North Sea and Australia where we continue to
work on projects including BP Quad 204 and Chevron Gorgon. Elsewhere, we
continue to work on the next phase of ACG in the Caspian and on Block 18 in
Angola, and have recently been awarded the subsea FEED work on the Abadi FLNG
project in Indonesia for Inpex. Our onshore pipelines business has performed
well in the US, benefitting from the award of the Shell pipeline and terminals
EPCM contract and general activity levels in the shale regions.

Downstream, process & industrial activities accounted for just over 15% of revenue. Performance in the second half improved, although the market remains highly competitive.

Outlook
In 2012, Wood Group Engineering delivered a second consecutive year of over 30%
EBITA growth as the division recovered from the trough in 2010. Looking ahead
to 2013, we anticipate revenue growth and margin improvement to lead to EBITA
growth of around 15%. This is supported by our current order book, prospects in
a number of key regions, including the Gulf of Mexico, the Middle East, the
Norwegian North Sea and Asia Pacific, and our view on the overall market which
should benefit from the forecast increase in E&P capex in 2013 of around 7%.

Wood Group PSN

We provide life of field support to producing assets through brownfield engineering and modifications, production enhancement, operations and maintenance, training, maintenance management and abandonment services.

                          2012               2011               %
                          $m                 $m                 Change
Revenue                   3,690.7            3,012.7            22.5%
EBITA                     205.0              153.2              33.8%
EBITA margin              5.6%               5.1%               0.5pts
People3                   29,200             26,200             11%

In Wood Group PSN, revenue and EBITA growth of 23% and 34% respectively, includes a full 12 month contribution from the PSN business acquired in April 2011.

Headcount increased by 11% from 26,200 to 29,200 due to increases in Oman, the North Sea and the US, together with the impact of acquisitions.

We saw a good performance in the North Sea, which accounted for around 40% of
Wood Group PSN revenue. Activity on our operations & maintenance and brownfield
engineering scopes on longer term contracts, including with BP, Shell, Talisman
and TAQA, contributed to growth in 2012. During the year we negotiated contract
renewals and extensions worth over $800m. We were also awarded the operations &
maintenance contract for Premier Oil's Balmoral FPV, the brownfield engineering
work on Total's Franklin field and the hook-up and commissioning scope for
Nexen's Golden Eagle project.
The Americas accounted for around 30% of revenue. Growth in North America was
strong, particularly in the US shale regions where we saw good organic growth
and benefitted towards the end of the year from the Duval and Mitchell's
acquisitions in the oil-rich Eagle Ford and Bakken regions respectively. Our
offshore activities in the Gulf of Mexico also performed well.
International markets, outside the North Sea and the Americas, represent around
30% of revenue. In Oman, the loss for the year was around $20m. Despite this
poor performance, we made good progress on a number of matters and are
increasingly confident of seeing a significant improvement in 2013, and that
2014 will be profitable. Elsewhere in the Middle East we announced our first
contract award in Kurdistan with DNO for engineering and support services on
the Tawke field. In Australia, we were awarded significant new maintenance work
in Melbourne and continue to work for clients including Exxon Mobil and
Woodside. In Africa, we remain active in Chad, Equatorial Guinea, Nigeria and
Angola. In the Caspian, we are providing facilities engineering and
commissioning services to customers including Tengizchevroil and Agip KCO.

Outlook

Wood Group PSN is well placed to deliver a strong performance in 2013. In 2012
we signed new contracts and renewals worth around $3.6bn in revenue, which
positions us well for the future. Looking ahead, the North Sea should benefit
from spending on integrity management, operational assurance and production
initiatives. In North America we expect further growth from our US shale
activities, and in international markets we expect to see a significant
improvement from the progress we are making in Oman.

Wood Group GTS

We are a leading independent provider of rotating equipment services and
solutions for clients in the power and oil & gas markets. These services
include: power plant engineering, procurement and construction; facility
operations & maintenance; and repair, overhaul, optimisation and upgrades of
gas and steam turbines, pumps, compressors and other high-speed rotating
equipment.
                                    2012          2011          %
                                    $m            $m            Change
Revenue                             1,343.3       1,195.5       12.4%
EBITA                               88.6          78.8          12.4%
EBITA margin                        6.6%          6.6%          -
People3                             3,400         3,400         -

Revenue and EBITA increased by 12% reflecting growth in both Maintenance and Power Solutions. Headcount was in line with the position at December 2011.

Maintenance revenues were up on 2011 and EBITA increased by around 10%. Our
aero derivative joint ventures, which are predominantly oil & gas related, made
a strong contribution. EBITA margins improved, largely due to our increased
focus on operating efficiency initiatives across our Maintenance activities.
During the year, we were also awarded multi-year maintenance contracts covering
Sakhalin island for SEIC, the Brent assets in the North Sea for Shell and the
Sacramento Power Authority's industrial facility in California.
Power Solutions delivered EBITA slightly up on 2011. We have now completed our
GWF contract, recognising a profit on the contract overall. The Dorad contract
has progressed largely as anticipated and is due to complete in the fourth
quarter of 2013. Towards the end of 2012, we commenced work on our smaller
contracts with NRG and Pasadena Water and Power.

Outlook

In GTS we anticipate continued improvement in Maintenance in 2013, principally
due to operational improvement initiatives. The European power related
Maintenance market is expected to remain soft but we believe that we will see
some improvement in the US. In Power Solutions, we remain on course to complete
the Dorad contract in 2013 together with the smaller contracts awarded in 2012.
We are pursuing a number of good near term Power Solutions opportunities in the
Americas and elsewhere, although these are smaller in scale. Having experienced
delays in project awards, we anticipate a lower contribution from Power
Solutions in 2013.

Financial Review
Financial performance
                                                     2012        2011
                                                     $m          $m
                                                                               
Revenue from continuing operations                      6,821.3  5,666.8
EBITA from continuing operations                        461.1    341.6
EBITA margin from continuing operations                 6.8%     6.0%      
Amortisation                                            (85.5)   (78.7)
                                                                               
Operating profit from continuing operations before      375.6    262.9     
exceptional items
Net finance expense                                     (12.9)   (8.8)
                                                                               
Profit from continuing operations before tax and        362.7    254.1     
exceptional items
                                                                               
Taxation on continuing operations before exceptional    (103.9)  (75.0)    
items
                                                                               
Profit for the period from continuing operations before 258.8    179.1     
exceptional items
                                                                               
(Loss)/profit from discontinued operations, net of tax  (1.2)    36.1
Profit for the period before exceptional items          257.6    215.2     
Exceptional items, net of tax                           0.6      2,087.6
Profit for the period                                   258.2    2,302.8
Basic EPS (cents)                                       71.4c    530.7c
Adjusted diluted EPS (cents)                            85.2c    60.2c

A review of our trading performance is contained within the CEO's Q&A, along with the Operational Review.

The performance of the continuing Group on a pro forma basis is set out below.
The pro forma includes the pre acquisition results of PSN and other
acquisitions in 2011, and excludes the post acquisition results of Mitchell's
and Duval in 2012.
Unaudited                             2012           2011          %
                                      $m             $m            Change
Wood Group Engineering                1,787.3        1,462.4       22%
Wood Group PSN                        3,638.6        3,376.0       8%
Wood Group GTS                        1,343.3        1,225.0       10%
Pro forma revenue from                6,769.2        6,063.4       12%
continuing operations
Wood Group Engineering                220.0          162.7         35%
Wood Group PSN                        193.5          175.2         10%
Wood Group GTS                        88.6           80.1          10%
Central                               (52.5)         (52.4)
                                                                               
Pro forma EBITA from continuing       449.6          365.6         23%     
operations

The pro forma result shows underlying growth in revenue of 12% and in EBITA of 23%. On a pro forma basis, all divisions delivered growth in revenue and EBITA.

Amortisation

The amortisation charge for the year of $85.5m (2011: $78.7m) includes $57.1m
(2011: $56.8m) of amortisation relating to intangible assets arising from
acquisitions, of which $46.0m (2011: $47.4m) is in relation to the PSN
acquisition. The total amortisation charge for 2013 is expected to be around
$85m of which it is anticipated around $40m will relate to PSN.

Net finance expense

Net finance expense from continuing operations is analysed further below.

                                                 2012           2011
                                                 $m             $m
Interest on debt                                 9.8            9.0
Other fees and charges                           4.6            4.7
                                                                              
Total finance expense from continuing operations 14.4           13.7       
Finance income                                   (1.5)          (4.9)
                                                                              
Net finance expense from continuing operations   12.9           8.8        

Interest on debt is driven by the average gross debt balance for the year, as shown below. Interest cover4, based on EBITA from continuing operations, remains strong at 35.7 times (2011: 38.8 times).

Exceptional items
                                      2012           2011
                                      $m             $m
Businesses divested                   (27.2)         (2,293.7)
Integration and restructuring charge  14.6           84.2
Impairment of goodwill                1.9            46.2
Bad debt provision/write off          10.0           13.0
Acquisition costs                     -              15.8

Total exceptional items before tax (0.7) (2,134.5)

Tax on exceptional items              0.1            46.9

Total exceptional items after tax (0.6) (2,087.6)

As set out in the table above, a pre-tax exceptional gain of $0.7m was recognised in the period, $0.6m after tax.

In May 2012, the Group recorded a pre-tax net exceptional gain of $27.2m in relation the disposal of the Well Support Middle Eastern business.

The restructuring and integration charge of $14.6m and the goodwill impairment of $1.9m were mainly in respect of decisions to withdraw from certain markets.

The $10.0m bad debt provision/write off is made up of a charge of $16.8m in
relation to work done for ATP Oil & Gas Corporation, who filed a voluntary
petition for reorganisation under Chapter 11 of the US Bankruptcy Code in
August 2012, offset by recoveries of $6.8m in relation to receivables due from
a Libyan customer which were fully provided in 2011. We will continue to make
every effort to recover all amounts due.
A net tax charge of $0.1m has been recognised in respect of the exceptional
items in the period.
Taxation
                                                     2012         2011
                                                     $m           $m
                                                                              
Profit from continuing operations before tax and     362.7        254.1    
exceptional items
                                                                              
Tax charge per financial statements                  103.9        75.0
Effective tax rate on continuing operations          28.6%        29.5%

The effective tax rate on continuing operations in 2012 was 28.6% (2011:
29.5%). Going forward we expect the effective tax rate to be no more than 27.5%
for the foreseeable future, with the reduction including the net impact of a
number of factors such as reducing corporate tax rates in certain
jurisdictions, the impact of losses and the changing geographic mix of our
business.

Earnings per share

Adjusted diluted EPS for 2012 increased by 42% to 85.2 cents per share (2011:
60.2c), due to the increase in underlying profitability and a reduction in the
average number of fully diluted shares in the period subsequent to our return
of capital in 2011.
Dividend
Reflecting our confidence in the longer term outlook for the Group, the
directors have proposed a final dividend of 11.3 cents per share. This results
in a total dividend for 2012 of 17.0 cents per share, a 26% increase on 2011
and an annual compound growth in dividends since IPO in 2002 of 19%. Dividend
cover5 for 2012 is 5.0 times (2011: 4.5 times).
Reconciliation of number of fully diluted           Closing        Weighted
shares                                                             Average
                                                    2012                       
(All figures are in million shares)                                2012    
Ordinary shares                                     373.2          371.3
                                                                               
Shares held by employee trusts                      (11.6)         (11.3)
Basic shares for EPS purposes                       361.6          360.0   
Effect of dilutive shares                           11.5           12.6
                                                                               
Fully diluted shares for EPS purposes               373.1          372.6   
Summary Balance Sheet
                                              2012             2011
                                              $m               $m
Assets
Non-current assets                            2,131.8          1,873.9
Current assets                                2,029.3          2,007.1
Liabilities
Current liabilities                           (1,335.6)        (1,505.2)
Net current assets                            693.7            501.9
Non-current liabilities                       (590.2)          (401.3)
Net assets                                    2,235.3          1,974.5
                                                                               
Equity attributable to owners of the parent   2,227.1          1,964.5     
Non-controlling interests                     8.2              10.0
Total equity                                  2,235.3          1,974.5

Non-current assets are primarily made up of goodwill and intangible assets, and property, plant and equipment.

The increase in net current assets since December 2011 is primarily due to lower trade and other payables, higher trade receivables and inventory, partly offset by lower net cash.

The increase in non-current liabilities is primarily due to the increase in longer term borrowings since December 2011.

Capital efficiency

The continuing Group's pre tax Return on average Capital Employed6 ("ROCE")
increased from 18.4% to 19.3%. This reflects an increase in ROCE in Wood Group
Engineering following higher profitability in the period, offset to some extent
by lower ROCE in Wood Group PSN which in 2012 has had the full year impact of
higher goodwill and intangible assets arising on acquisition.
The continuing Group's ratio of average Operating Capital Employed to Revenue7
("OCER") worsened from 10.6% to 12.5%. The movement was due principally to a
general increase in average receivable days in Wood Group Engineering.
Cash flow and net debt
                                                       2012         2011
                                                       $m           $m
Opening net debt                                       (3.9)        (15.1)
                                                                               
Cash generated from operations pre                     520.6        471.6  
working capital
                                                                               
Working capital movements (continuing                  (192.9)      (109.5)
operations)
                                                                               
Working capital movements (discontinued                -            (77.6) 
operations)
                                                                               
Cash generated from operations                         327.7        284.5
Acquisitions, deferred consideration,                  (315.9)      (1,083.8)
capex and intangibles
Disposals                                              40.6         2,793.6
Return of cash to shareholders                         (7.7)        (1,725.8)
Tax paid                                               (134.7)      (118.7)
                                                                               
Interest, dividends and other                          (60.6)       (138.6)
(Increase)/decrease in net debt                        (150.6)      11.2   
Closing net debt                                       (154.5)      (3.9)

Throughout the period the Group has maintained a level of debt as set out
below.
                                                     2012          2011
                                                     $m            $m
Average net debt                                     140.7         *
Average gross debt                                   356.5         295.5
Closing net debt                                     154.5         3.9
Closing gross debt                                   326.8         230.5

*Average net debt figures for 2011 do not provide a meaningful comparison as a
result of the cash received from the Well Support disposal and the subsequent
return of cash to shareholders.
Cash generated from operations pre-working capital increased by $49.0m to
$520.6m and post-working capital increased by $43.2m to $327.7m. The working
capital outflow of $192.9m relates primarily to higher trade receivables as a
result of increased activity in the period, along with higher inventory in GTS
and the timing of payments and customer receipts on Power Solutions EPC
contracts.
Cash paid in relation to acquisitions totalled $158.3m (2011: $964.8m),
deferred consideration paid in respect of prior period acquisitions amounted to
$30.4m (2011: $14.6m) and payments for capex and intangible assets increased to
$127.2m (2011: $104.4m). We anticipate spend on capex and intangible assets to
be around $120m to $140m in 2013.

The increase in tax paid in the year was due to higher profitability in the period and tax payments arising from the Well Support disposal in 2011.

The reduction in interest, dividend and other largely relates to the 2011 purchase of shares for the employee benefits trust and 2011 expenses relating to the return of cash to shareholders.

In February 2013, the Group renewed and extended its bilateral borrowing facilities from $800m to $950m with the maturity date being extended to February 2018.

Foreign exchange and constant currency reporting

The Group's revenue and EBITA can be impacted by movements in foreign exchange
rates, including the effect of retranslating the results of subsidiaries with
various functional currencies into US dollars at different exchange rates.
Given there were no significant movements in the average US dollar to other
major currencies in which we operate between 2011 and 2012, our results in
constant currency terms are materially the same as those presented above.

Pensions

The majority of the Group's pension arrangements are on a defined contribution
basis. The Group operates one UK defined benefit scheme which had 258 active
members and 933 deferred, pensionable deferred or pensionable members at 31
December 2012. At 31 December 2012 the scheme had a deficit of $55.0m (2011:
$45.8m) before recognition of a deferred tax asset of $12.7m (2010: $11.5m). In
assessing the potential liabilities, judgment is required to determine the
assumptions around future salary and pension increases, inflation, investment
returns and member longevity. The increase in the deficit from 2011 was due
primarily to a reduction in the discount rate used, which is based on corporate
bond yields.

The scheme is closed to new members and future benefits under the scheme are provided on a Career Average Revalued Earnings "CARE" basis.

Full details of pension assets and liabilities are provided in note 29 to the Group financial statements.

Acquisitions
During the year the Group completed the acquisitions of Mitchell's and Duval
which are providers of maintenance, installation and fabrication services to
the Bakken and Eagle Ford shale regions respectively. The total initial
consideration for these acquisitions was $158.3m, net of cash and borrowings
acquired. Both these acquisitions will now form part of the Wood Group PSN
division and will significantly strengthen our position in those regions.

Footnotes

1 EBITA from continuing operations represents operating profit from continuing
operations pre-exceptional items of $375.6m (2011:$262.9m) before the deduction
of amortisation of $85.5m (2011: $78.7m) 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
exceptional items and amortisation, net of tax, by the weighted average number
of ordinary shares in issue during the period, excluding shares held by the
Group's employee ownership trusts and adjusted to assume conversion of all
potentially dilutive ordinary shares.

3 Number of people includes both employees and contractors at 31 December 2012.

4 Interest cover is EBITA from continuing operations divided by the net finance charge.

5 Dividend cover is AEPS divided by the total dividend per ordinary share for the period.

6 Return of Capital Employed (ROCE) is EBITA divided by average capital employed.

7 Operating Capital Employed to Revenue (OCER) is the average operating capital employed (property, plant and equipment, intangible assets (excluding intangibles recognised on acquisition), inventories and trade and other receivables less trade and other payables) divided by revenue.


                              JOHN WOOD GROUP PLC
                          GROUP FINANCIAL STATEMENTS
                      FOR THE YEAR TO 31ST DECEMBER 2012
                     Company Registration Number SC 36219

Consolidated income statement

for the year to 31 December 2012

                                                     2012                              2011

                                              Pre- Exceptional                  Pre- Exceptional
                                       Exceptional       Items           Exceptional       Items
                                             Items    (note 4)     Total       Items    (note 4)     Total
                                  Note          $m          $m        $m          $m          $m        $m

Revenue from continuing           1        6,821.3           -   6,821.3   
 5,666.8           -   5,666.8
operations
Cost of sales                            (5,619.6)           - (5,619.6)  

(4,684.2) (29.7) (4,713.9)

Gross profit                               1,201.7           -   1,201.7       982.6      (29.7)     952.9
Administrative expenses                    (826.1)      (26.5)   (852.6)   
 (719.7)     (125.7)   (845.4)
Operating profit                  1          375.6      (26.5)     349.1       262.9     (155.4)     107.5
Finance income                    2            1.5           -       1.5         4.9           -       4.9
Finance expense                   2         (14.4)           -    (14.4)      (13.7)       (3.8)    (17.5)
                                                                                                          
Profit before taxation from       3          362.7      (26.5)     336.2       254.1     (159.2)      94.9
continuing operations
Taxation                          5        (103.9)         4.1    (99.8)      (75.0)        26.7    (48.3)
Profit for the year from                     258.8      (22.4)     236.4       179.1     (132.5)      46.6
continuing operations
                                                                                                          
(Loss)/profit from discontinued   1          (1.2)        23.0      21.8        36.1     2,220.1   2,256.2
operations, net of tax
Profit for the year                          257.6         0.6     258.2       215.2     2,087.6   2,302.8
Profit attributable to:
Owners of the parent                         256.4         0.6     257.0       214.7     2,087.6   2,302.3
Non-controlling interests         25           1.2           -       1.2         0.5           -       0.5
                                             257.6         0.6     258.2       215.2     2,087.6   2,302.8
Earnings per share (expressed in                                           
cents per share)
Basic                             7           71.2         0.2      71.4        49.5       481.2     530.7
Diluted                           7           68.8         0.2      69.0        47.8       465.2     513.0

The notes on pages 7 to 55 are an integral part of these consolidated financial statements.

Consolidated statement of comprehensive income

for the year to 31 December 2012

                                                                  2012    2011
                                                        Note        $m      $m
Profit for the year                                              258.2 2,302.8
Other comprehensive income
                                                                              

Actuarial losses on retirement benefit liabilities 29 (8.5) (22.6)

Movement in deferred tax relating to retirement        5           2.1    
6.1
benefit liabilities
Cash flow hedges                                       24          3.7   (1.6)
Exchange movements on retranslation of foreign         24         41.3  (31.1)
currency net assets
Exchange movements on retranslation of non-controlling 25          0.1   (0.2)
interests
Total comprehensive income for the year                          296.9 

2,253.4

Total comprehensive income for the year is                                 
attributable to:
Owners of the parent                                             295.6 2,253.1
Non-controlling interests                              25          1.3     0.3
                                                                 296.9 2,253.4
The notes on pages 7 to 55 are an integral part of these consolidated financial
statements.
Consolidated balance sheet
as at 31 December 2012
                                                                  2012    2011
                                                        Note        $m      $m
Assets
Non-current assets
Goodwill and intangible assets                         8       1,839.1 1,621.3
Property plant and equipment                           9         198.6   150.0
Long term receivables                                  12         54.7    42.0
Deferred tax assets                                    19         39.4    60.6
                                                               2,131.8 1,873.9
Current assets
Inventories                                            11        439.5   404.5
Trade and other receivables                            12      1,392.5 1,320.9
Income tax receivable                                             25.0    28.7
Gross assets held for sale                             27            -    26.4
Cash and cash equivalents                              13        172.3   226.6
                                                               2,029.3 2,007.1
Liabilities
Current liabilities
Borrowings                                             15         45.3    69.2
Trade and other payables                               14      1,188.0 1,286.2
Gross liabilities held for sale                        27            -    10.6
Income tax liabilities                                           102.3   139.2
                                                               1,335.6 1,505.2
Net current assets                                               693.7   501.9
Non-current liabilities
Borrowings                                             15        281.5   161.3
Deferred tax liabilities                               19          9.4     5.7
Retirement benefit liabilities                         29         55.0    

45.8

Other non-current liabilities                          16        163.7    98.7
Provisions                                             18         80.6    89.8
                                                                 590.2   401.3
Net assets                                                     2,235.3 1,974.5
                                                                              
Equity attributable to owners of the parent                                
Share capital                                          21         23.5    23.4
Share premium                                          22         54.3     7.7
Retained earnings                                      23      1,640.7 1,469.8
Other reserves                                         24        508.6   463.6
                                                               2,227.1 1,964.5
Non-controlling interests                              25          8.2    10.0
Total equity                                                   2,235.3 1,974.5

The financial statements on pages 2 to 55 were approved by the board of directors on 4 March 2013.

Bob Keiller, Director Alan G Semple, Director

The notes on pages 7 to 55 are an integral part of these consolidated financial statements.

Consolidated statement of changes in equity

for the year to 31 December 2012

                                                             Equity
                                                       attributable        Non-
                       Share   Share Retained    Other to owners of controlling   Total
                     capital premium earnings reserves   the parent   interests  equity
                Note      $m      $m       $m       $m           $m          $m      $m
At 1 January            26.3   315.8  1,007.6     56.6      1,406.3        10.9 1,417.2
2011
Profit for the             -       -  2,302.3        -      2,302.3         0.5 2,302.8
year
Other
comprehensive
income:
Actuarial         29       -       -   (22.6)        -       (22.6)           -  (22.6)
losses on
retirement
benefit
liabilities
Movement in        5       -       -      6.1        -          6.1           -     6.1
deferred tax
relating to
retirement
benefit
liabilities
Cash flow         24       -       -        -    (1.6)        (1.6)           -   (1.6)
hedges
Exchange          24       -       -            (31.1)       (31.1)       (0.2)  (31.3)
movements on
retranslation
of foreign
currency net
assets
Total                      -       -  2,285.8   (32.7)      2,253.1         0.3 2,253.4
comprehensive
income for the
year
Transactions
with owners:
Dividends paid     6       -       -   (53.4)        -       (53.4)       (0.3)  (53.7)
Transactions      25       -       -        -        -            -       (0.9)   (0.9)
with
non-controlling
interests
Credit relating   20       -       -      9.7        -          9.7           -     9.7
to share based
charges
Tax credit         5       -       -     20.8        -         20.8           -    20.8
relating to
share option
schemes
Shares issued     21     0.6       -        -    114.4        115.0           -   115.0
in respect of
the PSN
acquisition
Proceeds from     22       -     6.0    (6.0)        -            -           -       -
Group companies
relating to
options
exercised under
share symmetry
scheme
Purchase of       21   (3.6)       -  (675.7)      3.6      (675.7)           - (675.7)
shares under
tender offer
Issue of `B'      21   436.1 (321.7)        -  (114.4)            -           -       -
shares
Redemption of     21 (436.1)       -  (436.1)    436.1      (436.1)           - (436.1)
`B' shares
Deferred share    23       -       -  (533.3)        -      (533.3)           - (533.3)
dividend
Purchase of `C'   23       -       -  (113.4)        -      (113.4)           - (113.4)
shares by
company
Expenses and      23       -       -   (24.7)        -       (24.7)           -  (24.7)
foreign
exchange
relating to
return of cash,
net of tax
Shares            23       -       -   (42.5)        -       (42.5)           -  (42.5)
purchased by
employee share
trusts
Shares            23     0.1     7.6    (7.7)        -            -           -       -
allocated to
employee share
trusts
Shares disposed   23       -       -     12.3        -         12.3           -    12.3
of by employee
share trusts
Cash received     23       -       -     25.0        -         25.0           -    25.0
by employee
share trusts
from the return
of cash to
shareholders
Exchange                   -       -      1.4        -          1.4           -     1.4
movements in
respect of
shares held by
employee share
trusts
At 31 December          23.4     7.7  1,469.8    463.6      1,964.5        10.0 1,974.5
2011

Profit for the             -       -    257.0        -        257.0         1.2   258.2
year
Other             29       -       -    (8.5)        -        (8.5)           -   (8.5)
comprehensive
income:
Actuarial
losses on
retirement
benefit
liabilities
Movement in        5       -       -      2.1        -          2.1           -     2.1
deferred tax
relating to
retirement
benefit
liabilities
Cash flow         24       -       -        -      3.7          3.7           -     3.7
hedges
Exchange          24       -       -        -     41.3         41.3         0.1    41.4
movements on
retranslation
of foreign
currency net
assets
Total                                   250.6     45.0        295.6         1.3   296.9
comprehensive
income for the
year

Transactions
with owners:
Dividends paid     6       -       -   (55.2)        -       (55.2)       (1.2)  (56.4)
Transactions      25       -       -        -        -            -       (1.9)   (1.9)
with
non-controlling
interests
Credit relating   20       -       -     19.6        -         19.6           -    19.6
to share based
charges
Tax credit         5       -       -      1.1        -          1.1           -     1.1
relating to
share option
schemes
Proceeds from     22       -    43.5   (43.5)        -            -           -       -
Group companies
relating to
options
exercised under
share symmetry
scheme
Shares            23     0.1     3.1    (3.2)        -            -           -       -
allocated to
employee share
trusts
Shares disposed   23       -       -      6.5        -          6.5           -     6.5
of by employee
share trusts
Exchange                   -       -    (5.0)        -        (5.0)           -   (5.0)
movements in
respect of
shares held by
employee share
trusts
At 31 December          23.5    54.3  1,640.7    508.6      2,227.1         8.2 2,235.3
2012

The notes on pages 7 to 55 are an integral part of these consolidated financial statements.

Consolidated cash flow statement

for the year to 31 December 2012

                                                                 2012      2011
                                                       Note        $m        $m
Cash generated from operations                        26        327.7     284.5
Tax paid                                                      (134.7)   (118.7)

Net cash generated from operating activities                    193.0     

165.8

Cash flows from investing activities
Acquisition of subsidiaries (net of cash and          27      (188.7)   (979.4)
borrowings acquired)
Cash impact of exceptional items                                (0.5)    

(16.4)

Proceeds from divestment of subsidiaries (net of cash                      

and borrowings disposed and divestment costs) 27 40.6 2,793.6

Purchase of property plant and equipment              9        (69.4)    

(72.4)

Proceeds from sale of property plant and equipment                0.4      

3.5

Purchase of intangible assets                         8        (57.8)    

(32.0)

Proceeds from disposal of intangible assets                         -      

0.6

Investment by non-controlling interests                             -      

0.5

Net cash (used in)/from investing activities                  (275.4)   

1,698.0

Cash flows from financing activities                                       
Proceeds from bank loans                              26         89.0      39.9
Return of cash to shareholders                                  (7.7) 

(1,725.8)

Expenses relating to return of cash to shareholders                 -    

(14.9)

Purchase of shares by employee share trusts                         -    

(42.5)

Disposal of shares by employee share trusts           23          6.5     
12.3
Interest received                                                 1.5       4.6
Interest paid                                                  (11.3)    (17.4)
Dividends paid to shareholders                        6        (55.2)    

(53.4)

Dividends paid to non-controlling interests           25        (1.2)     

(0.3)

Net cash from/(used in) financing activities                     21.6 

(1,797.5)

Net (decrease)/increase in cash and cash equivalents 26 (60.8) 66.3

Effect of exchange rate changes on cash and cash      26          6.5    (19.8)
equivalents
Opening cash and cash equivalents                               226.6     

180.1

Closing cash and cash equivalents                     13        172.3     

226.6

The notes on pages 7 to 55 are an integral part of these consolidated financial statements.

Notes to the financial statements

for the year to 31 December 2012

General information

John Wood Group PLC, its subsidiaries and joint ventures, provide services to
the oil and gas and power generation industries worldwide. Details of the
Group's activities during the year are detailed in the Operational Review. John
Wood Group PLC is a public limited company, incorporated and domiciled in
Scotland and listed on the London Stock Exchange.

Accounting Policies

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 2006 applicable to companies reporting under IFRS. The Group
financial statements have been prepared on a going concern basis under the
historical cost convention as modified by the revaluation of financial assets
and liabilities at fair value through the income statement.

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 divestment 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. Transactions between Group subsidiaries are eliminated
and transactions between the Group and its joint ventures are eliminated to the
extent of the Group's interest in the joint venture. All Group companies apply
the Group's accounting policies and prepare financial statements to 31
December.

Critical accounting judgments and estimates

The preparation of the financial statements requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses during the year. These estimates are based on management's best
knowledge of the amount, event or actions and actual results ultimately may
differ from those estimates. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities are addressed below.

(a) Impairment of goodwill

The Group carries out impairment reviews whenever events or changes in
circumstance indicate that the carrying value of goodwill may not be
recoverable. In addition, the Group carries out an annual impairment review. An
impairment loss is recognised when the recoverable amount of goodwill is less
than the carrying amount. The impairment tests are carried out by CGU ("Cash
Generating Unit") and reflect the latest Group budgets. The budgets are based
on various assumptions relating to the Group's businesses including assumptions
relating to oil prices, resource utilisation, foreign exchange rates, contract
awards and contract margins. The outlook for the Group is discussed in the
CEO's Q&A section of the Annual Report. Pre-tax discount rates of between 11%
and 13% have been used to discount the CGU cash flows and a sensitivity
analysis has also been performed (see note 8).

(b) Revenue recognition

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 measuring the proportion of costs
incurred for work performed to total estimated costs. Estimating the costs to
completion and therefore the total contract costs is a key judgment in respect
of the revenue recognition on these contracts.

Notes to the financial statements

for the year to 31 December 2012

Accounting Policies (continued)

(c) Income taxes

The Group is subject to income taxes in numerous jurisdictions. Judgement is required in determining the

worldwide provision for income taxes. The Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final outcome of these matters is different from the

amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

(d) Retirement benefit liabilities

The value of the Group's retirement benefit liabilities is determined on an
actuarial basis using a number of assumptions. Changes in these assumptions
will impact the carrying value of the liability. The Group determines the
appropriate discount rate to be used in the actuarial valuation at the end of
each financial year following consultation with the retirement benefit scheme
actuary. In determining the rate used, consideration is given to the interest
rates of high quality corporate bonds in the currency in which the benefits
will be paid and that have terms to maturity similar to those of the related
retirement benefit obligation. See note 29 for further details.

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.

The following exchange rates have been used in the preparation of these
accounts:
                                                      2012     2011
Average rate £1 = $                                 1.5845   1.6041
Closing rate £1 = $                                 1.6255   1.5541
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. Where more than one exchange rate is available, the
appropriate rate at which assets can be readily realised and liabilities can be
extinguished is used. 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 comprises the fair value of the consideration received or receivable
for the sale of goods and services in the ordinary course of the Group's
activities. 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
revenue is recognised upon completion of agreed objectives. Revenue from
product sales is recognised when the significant risks and

Notes to the financial statements

for the year to 31 December 2012

Accounting Policies (continued)

rewards of ownership have been transferred to the buyer, which is normally upon
delivery of products and customer acceptance, if any. Revenue is stated net of
sales taxes (such as VAT) 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 measuring the proportion of costs
incurred for work performed to total estimated costs. An estimate of the profit
attributable to work completed is
recognised, on a basis that the directors consider to be prudent, once the
outcome of the contract can be estimated reliably, which is when a contract is
not less than 20% complete. 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.

Exceptional items

Exceptional items are those significant items which are separately disclosed by virtue of their size or incidence to

enable a full understanding of the Group's financial performance. Transactions
which may give rise to exceptional items include gains and losses on divestment
of businesses, write downs or impairments of assets including goodwill,
restructuring costs or provisions, litigation settlements, acquisition costs
and one-off gains and losses arising from currency devaluations.

Finance expense/income

Interest income and expense is recorded in the income statement in the period
to which it relates. Arrangement fees in respect of the Group's borrowing
facilities are amortised over the period to which the facility relates.
Interest relating to the discounting of deferred and contingent consideration
liabilities is included in finance expense.

Dividends

Dividends to the Group's shareholders are recognised as a liability in the period in which the dividends are approved by shareholders. Interim dividends are recognised when paid.

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. Goodwill is not amortised. Acquisition costs are expensed in
the income statement.
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, intangible assets on
acquisition such as customer contracts are identified and evaluated to
determine the carrying value on the acquisition balance sheet. Intangible
assets are amortised over their estimated useful lives, as follows:

Software and development costs 3-5 years

Intangible assets on acquisition 3-10 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.

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

Notes to the financial statements

for the year to 31 December 2012

Accounting Policies (continued)

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. Asset lives and residual values are assessed at each balance
sheet date.

Impairment

The Group performs impairment reviews in respect of PP&E and 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 CGUs are aligned to the 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.
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. 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.

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. Bank overdrafts are included within borrowings in current liabilities. Where the Group uses pooling arrangements with a right of set-off, overdrafts and cash are netted and included in the appropriate category depending on the net position of the pool.

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.

Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost.

Notes to the financial statements

for the year to 31 December 2012

Accounting Policies (continued)

Deferred and contingent consideration

Where it is probable that deferred or contingent 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 the
income statement. Changes in the estimated liability in respect of acquisitions
completed before 31 December 2009 are reflected in goodwill. Where deferred
consideration is payable after more than one year the estimated liability is
discounted using an appropriate rate of interest.

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 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, at the balance sheet date are used to determine deferred
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.

a. Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in administrative expenses 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.

b. 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 the hedging reserve
in equity. The gain or loss relating to the ineffective portion is recognised
immediately in administrative expenses or finance income/expense in the income
statement. Amounts accumulated in equity are recycled through the income
statement in periods when the hedged item affects profit or loss.

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

Notes to the financial statements

for the year to 31 December 2012

Accounting Policies (continued)

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.

c. 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 the currency translation
reserve in equity; the gain or loss relating to the ineffective portion is
recognised immediately in administrative expenses in the income statement.
Gains and losses accumulated in equity are included in the income statement
when the foreign operation is disposed of.

d. Derivatives that are not designated as hedges

Certain derivatives, whilst providing effective economic hedges 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 administrative expenses 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 fair values of all derivative financial instruments are
obtained from valuations provided by financial institutions.

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.

Retirement benefit liabilities

The Group operates a defined benefit scheme and a number of defined
contribution schemes. 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 fair 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
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 statement of comprehensive income in full in the
period in which they occur. The defined benefit scheme's net assets or net
liabilities 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.

Notes to the financial statements

for the year to 31 December 2012

Accounting Policies (continued)

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. Where amounts provided are payable after more than
one year the estimated liability is discounted using an appropriate rate of
interest.

Share based charges relating to employee share schemes

The Group has a number of employee share schemes:-

i. 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.

ii. 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.

iii. The Group has a Long Term Incentive Plan (`LTIP') for executive directors

and certain senior executives. Participants are awarded shares dependent on

the achievement of performance targets. The charge to the income statement

for shares awarded under the LTIP 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.

iv. The Group has a Long Term Cash Incentive Plan (`LTCIP') for senior

management. Participants are paid a cash bonus dependent on the achievement

of performance targets. The charge to the income statement is based on the

fair value of the awards and is linked to movements in the Group's share

price. The charge is spread over the vesting period with the corresponding

credit being recorded in liabilities.

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 trusts, therefore they have been consolidated in
the financial statements of the Group. Shares acquired by and disposed of by
the employee share trusts are recorded at cost. The cost of shares held by the
employee share trusts is deducted from equity.

Segmental reporting

The Group has determined that its operating segments are based on management
reports reviewed by the Chief Operating Decision Maker (`CODM'), the Group's
Chief Executive. The Group's reportable segments are Wood Group Engineering,
Wood Group PSN and Wood Group GTS.

The CODM measures the operating performance of these segments using `EBITA' (Earnings before interest, tax and amortisation). Operating segments are reported in a manner consistent with the internal management reports

provided to the CODM who is responsible for allocating resources and assessing performance of the operating

segments.

Notes to the financial statements

for the year to 31 December 2012

Accounting Policies (continued)

Wood Group Engineering offers a wide range of engineering services to the
upstream, subsea and pipelines, downstream and industrial, and clean energy
sectors. These include conceptual studies, engineering, project and
construction management (`EPCM') and control system upgrades. Wood Group PSN
offers life of field support to producing assets through brownfield engineering
and modifications, production enhancement, operations and management, training,
maintenance management and abandonment services. Wood Group GTS is an
independent provider of rotating equipment services and solutions for clients
in the power and oil and gas markets. These services include power plant
engineering, procurement and construction; facility operations and maintenance;
and repair, overhaul, optimisation and upgrades of gas and steam turbines,
pumps, compressors and other high speed rotating equipment.

Disclosure of impact of new and future accounting standards

(a) Amended standards and interpretations not relevant to the Group The following revisions and amendments to standards and interpretations are mandatory as of 1 January 2012 but are currently not relevant to the Group and have no impact to the Group's financial statements:

* Amendment to IFRS 7, `Financial instruments: Transfers of financial assets'

  * Amendment to IFRS 1 on hyperinflation and fixed dates
  * Amendment to IAS 12, 'Income taxes' on deferred tax'
   

(b) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group

The following relevant standards and amendments and interpretations to existing
standards have been published and are mandatory for the Group's accounting
periods beginning on or after 1 January 2013 or later periods, but the Group
has not early adopted them:
  * IFRS 10, `Consolidated financial statements'
  * IFRS 11, `Joint arrangements'
  * IFRS 12, `Disclosures of interests in other entities'
  * IFRS 13, `Fair value measurement'
  * IAS 19 (revised 2011) `Employee benefits'
  * IAS 27 (revised 2011) `Separate financial statements'
  * IAS 28 (revised 2011) `Associates and joint ventures'
  * Amendment to IFRS 1, `Presentation of financial statements on Other
    Comprehensive Income'
   

* Amendment to IFRS 7 on Financial instruments asset and liability offsetting

The Group currently accounts for its interests in joint ventures using
proportional consolidation.    Under IFRS 11, proportional consolidation will
not be permitted and therefore from 1st January 2014 the Group will account for
its interests in joint ventures using equity accounting. The use of equity
accounting will have no impact on Group profit for the year or earnings per
share, but will impact the presentation of the Group's interests in joint
ventures in the income statement and in the balance sheet.

The revision to IAS 19 will not have a material impact on the financial statements although it is expected that the net finance cost in the income statement will increase in future periods (see note 29 for further details).

The Group has yet to assess the full impact of the other new standards and amendments but does not expect them to have a material impact on the financial statements.

1 Segmental reporting

The segment information provided to the CODM for the reportable operating segments for the year ended 31 December 2012 includes the following:

Reportable Operating Segments (1)

                           Revenue       EBITDA(2)     EBITA(2)      Operating
                                                                       profit
                          Year    Year   Year   Year   Year   Year   Year    Year
                         ended   ended  ended  ended  ended  ended  ended   ended
                        31 Dec  31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec  31 Dec
                          2012    2011   2012   2011   2012   2011   2012    2011
                            $m      $m     $m     $m     $m     $m     $m      $m
Wood Group Engineering 1,787.3 1,458.6  231.2  170.6  220.0  162.0  187.8   128.3
Wood Group PSN (see    3,690.7 3,012.7  219.9  165.8  205.0  153.2  146.1    42.0
note 3)
Wood Group GTS         1,343.3 1,195.5  102.4   91.8   88.6   78.8   69.5   (8.9)
Central costs (see           -       - (48.9) (49.4) (52.5) (52.4) (54.3)  (53.9)
note 4)
Well Support -               -   347.8      -   69.5      -   57.6   27.2    57.6
divested (see note 5)
Wood Group GTS -           6.8    37.7  (1.7)  (0.5)  (2.0)  (0.5)  (2.0)  (12.5)
divested (see note 6)
Total (7)              6,828.1 6,052.3  502.9  447.8  459.1  398.7  374.3   152.6
Remove divested          (6.8) (385.5)    1.7 (69.0)    2.0 (57.1) (25.2)  (45.1)
operations
Total continuing       6,821.3 5,666.8  504.6  378.8  461.1  341.6  349.1   107.5
operations
Finance income                                                        1.5     4.9
Finance expense                                                    (14.4)  (17.5)
Profit before taxation                                              336.2    94.9
from continuing
operations
Taxation                                                           (99.8)  (48.3)
Profit for the year                                                 236.4    46.6
from continuing
operations
Profit from                                                          21.8 2,256.2
discontinued
operations, net of tax
(8)
Profit for the year                                                 258.2 2,302.8

1 Segmental reporting (continued)

Notes

* The Group's reportable segments are Wood Group Engineering, Wood Group PSN

and Wood Group GTS.

* Total continuing EBITDA represents operating profit of $349.1m (2011 :

$107.5m) before continuing depreciation of property plant and equipment of

$43.5m (2011 : $37.2m), amortisation of $85.5m (2011 : $78.7m) and

continuing exceptional items of $26.5m (2011 : $155.4m). 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 2011 results of Wood Group PSN include the trading activity of PSN from

the date of acquisition, 20th April 2011, to 31st December 2011.

* Central costs include the costs of certain management personnel in both the

UK and the US, along with an element of Group infrastructure costs.

* The results of the Well Support division represent the trading activity of

that division from 1st January 2011 to 26th April 2011, the date the

division was divested.

* The Wood Group GTS business divested is an Aero engine overhaul business

which the Group sold in April 2012. The results of the Aero engine overhaul

    business represent the trading from 1 January 2012 to 4 April 2012.
  * The figures on the total row are the sum of continuing and discontinued
    activity.
  * Profit from discontinued operations, net of tax, comprises loss before
    exceptional items of $1.2m (2011: profit $36.1m) and profit from

exceptional items of $23.0m (2011 : $2,220.1m). The loss before exceptional

items is net of a tax credit of $0.8m. The profit from exceptional items is

net of a tax charge of $4.2m.

* Revenue arising from sales between segments is not material.

1 Segmental Reporting (continued)

Segment assets and liabilities

                       Wood Group    Wood    Wood     Well     Wood
                      Engineering   Group   Group  Support    Group Unallocated   Total
                                      PSN     GTS divested      GTS
                                                           divested
At 31 December 2012            $m      $m      $m       $m       $m          $m      $m
Segment assets              807.2 2,203.9 1,034.2        -        -       115.8 4,161.1
Segment liabilities         360.6   693.3   271.5        -        -       600.4 1,925.8
At 31 December 2011
Segment assets              724.9 1,897.8 1,059.3      7.7     18.7       172.6 3,881.0
Segment liabilities         328.9   615.4   373.6      1.0      9.6       578.0 1,906.5
The Well Support segment assets and liabilities at 31 December 2011 represent
the assets and liabilities of the Middle Eastern business, the sale of which
was completed in May 2012 (note 27). Unallocated assets and liabilities
includes income tax, deferred tax and cash and cash equivalents and borrowings
where this relates to the financing of the Group's operations.

1 Segmental Reporting (continued)

Other segment items

2012                    Wood Group  Wood  Wood     Well     Wood
                       Engineering Group Group  Support    Group Unallocated Total
                                     PSN   GTS divested      GTS
                                                        divested
                                $m    $m    $m       $m       $m          $m    $m
Capital expenditure
- Property plant and          25.7  17.9  18.2        -        -         7.6  69.4
equipment
- Intangible assets           43.1   6.2   7.3        -        -         1.2  57.8
Non-cash expense
- Depreciation of             11.2  14.9  13.8        -      0.3         3.6  43.8
property plant and
equipment
- Amortisation of             18.4  55.8   9.5        -        -         1.8  85.5
intangible assets
- Continuing                  13.3   3.1   9.6        -        -           -  26.0
exceptional items
(non-cash element)
2011                            $m    $m    $m       $m       $m          $m    $m
Capital expenditure
- Property plant and          16.1  18.0  18.9     15.0      0.8         2.7  71.5
equipment
- Intangible assets           10.2   2.5  12.8        -      1.3         5.2  32.0
Non-cash expense
- Depreciation of              8.6  12.6  13.0     10.0        -         3.0  47.2
property plant and
equipment
- Depreciation of                -     -     -      1.9        -           -   1.9
rental inventory
- Amortisation of             15.5  54.9   6.8        -        -         1.5  78.7
intangible assets
- Continuing                  17.9  41.7  79.4        -        -           - 139.0
exceptional items
(non-cash element)

1 Segmental Reporting (continued)

Geographical segments
                                   Segment assets     Continuing
                                                        revenue
                                    2012     2011    2012    2011
                                     $m       $m      $m      $m
UK                                1,066.1   1,017.1 1,823.2 1,586.3
US                                1,526.2   1,308.2 1,946.2 1,517.9
Rest of the World                 1,568.8   1,555.7 3,051.9 2,562.6
                                  4,161.1   3,881.0 6,821.3 5,666.8
Revenue by geographical segment is based on the geographical location of the
customer.
                                                                  2012     2011
                                                                    $m       $m
                                                                               
Revenue by category is as follows:                                         
Sale of goods                                                    108.2    100.2
Rendering of services                                          6,713.1  5,566.6
Revenue from continuing operations                             6,821.3  5,666.8
2 Finance expense/(income)
                                                                  2012     2011
                                                                    $m       $m
                                                                               
Interest payable on bank borrowings                               11.2    
11.3
Bank facility fees expensed                                        1.4      1.1
Interest relating to discounting of deferred and contingent        1.8      1.3
consideration
                                                                               
Finance expense pre-exceptional items                             14.4    

13.7

Bank facility fees relating to PSN acquisition                       -     

3.8

Finance expense - continuing operations                           14.4    

17.5

Interest receivable on short-term deposits                       (1.4)    

(4.4)

Other interest income - retirement benefit liabilities (note     (0.1)    (0.5)
29)
Finance income                                                   (1.5)    (4.9)
                                                                               
Finance expense - continuing operations - net                     12.9    
12.6
3 Profit before taxation
                                                                  2012     2011
                                                                    $m       $m
                                                                               
The following items have been charged/(credited) in arriving               
at profit before taxation:
Employee benefits expense (note 28)                            3,064.0  2,626.4
Impairment of inventories                                          3.1     14.2
                                                                               
Depreciation of property plant and equipment (note 9)             43.8    

47.2

Amortisation of intangible assets (note 8)                        85.5    

78.7

Loss/(gain) on disposal of property plant and equipment            1.3    

(0.1)

Other operating lease rentals payable:                                     
- Plant and machinery                                             27.2     21.6
- Property                                                        93.0     84.3
Foreign exchange losses                                            5.1      7.3
Impairment of inventories is included in cost of sales in the income statement.
Depreciation of property plant and equipment is included in cost of sales and
administrative expenses in the income statement. Amortisation of intangible
assets is included in administrative expenses in the income statement.

Services provided by the Group's auditors and associate firms

During the year the Group obtained the following services from its auditors and associate firms at costs as detailed below:

                                                                  2012     2011
                                                                    $m       $m
                                                                               

Fees payable to the Group's auditors and its associate firms 0.8 0.8 for the audit of parent company and consolidated financial

statements
                                                                               
Fees payable to the Group's auditors and its associate firms               
for other services
                                                                               
- Audit of Group companies pursuant to legislation                 1.7     
1.6
- Other services                                                     -      1.2
- Tax services                                                     0.2      0.2
                                                                   2.7      3.8
Other services in 2011 relates to due diligence and other transactional work in
respect of the PSN acquisition, the divestment of the Well Support division and
the return of cash to shareholders.
4 Exceptional items
                                                                 2012      2011
                                                                   $m        $m
                                                                               
Exceptional items included in continuing operations
Integration and restructuring charges                            14.6     

84.2

Impairment of goodwill (note 8)                                   1.9     
46.2
Bad debt write offs                                              10.0      13.0
Acquisition costs                                                   -      12.0
                                                                 26.5     155.4
                                                                               
Bank facility fees relating to PSN acquisition                      -      
3.8
                                                                 26.5     159.2
Taxation                                                        (4.1)    (26.7)
Continuing operations exceptional items, net of tax              22.4     

132.5

Exceptional items included in discontinued operations
Gain on divestment - Well Support (note 27)                    (27.2) 

(2,305.7)

Write down of assets in relation to aero engine overhaul            -     
12.0
business
                                                               (27.2) (2,293.7)
Taxation                                                          4.2      73.6
                                                                               

Discontinued operations exceptional items, net of tax (23.0) (2,220.1)

Total exceptional items, net of tax                             (0.6) 

(2,087.6)

Integration and restructuring charges of $14.6m, mainly relating to decisions
to withdraw from certain markets, were expensed during the year. Integration
and restructuring charges of $84.2m, relating mainly to the PSN integration and
the decision to exit from certain markets, were expensed in 2011.

Goodwill of $1.9m was impaired during the year as a result of the decision to exit from certain markets referred to above. Goodwill of $46.2m, mainly relating to a Wood Group GTS power related business was impaired in 2011.

A net bad debt write off of $10.0m was recorded in 2012. A charge of $16.8m was
recorded in respect of engineering work carried out for ATP Oil and Gas
Corporation (`ATP'). ATP filed a voluntary petition for reorganisation under
Chapter 11 of the US Bankruptcy Code in August 2012. This write off was partly
offset by a credit of $6.8m in respect of cash recovered against the overdue
Libyan receivables provision made in 2011 following political disruption in the
country.

Acquisition costs of $12.0m and bank facility fees of $3.8m, relating mainly to the purchase of PSN were expensed in 2011.

The gain on divestment of Well Support arose primarily from the disposal of the
Group's interest in a Middle Eastern business. There was no gain nor loss on
the divestment of the Group's aero engine overhaul business, the assets having
been written down in 2011.

In 2011 the gain on divestment of Well Support amounted to $2,305.7m, and a charge of $12.0m was made in relation to the write down of the assets of the Group's aero engine overhaul business.

A tax credit of $4.1m (2011: $26.7m) was recorded in 2012 in relation to
exceptional items on continuing operations. A tax charge of $4.2m (2011:
$73.6m) was recorded in relation to the net gain on discontinued exceptional
items.
5 Taxation
                                                                  2012     2011
                                                                    $m       $m
Current tax
- Current year                                                   107.5    117.9
- Adjustment in respect of prior years                             4.7    (4.8)
                                                                 112.2    113.1
Deferred tax
- Current year                                                  (15.7)   (33.0)
- Adjustment in respect of prior years                             7.4    

(5.1)

Tax charge - pre-exceptional items                               103.9    

75.0

Tax on continuing exceptional items (note 4)                     (4.1)   

(26.7)

Tax charge - continuing operations                                99.8    
48.3
                                                                  2012     2011
                                                                               
Tax (credited)/charged to equity                                    $m     

$m

Deferred tax movement on retirement benefit liabilities (2.1) (6.1)

Deferred tax relating to share option schemes                      8.6   

(13.9)

Current tax relating to share option schemes                     (9.7)    

(6.9)

Current tax relating to foreign exchange on return of cash to        -    (3.6)
shareholders
Total credited to equity                                         (3.2)   (30.5)
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
decreased in 2012 due to the change in mix of the tax jurisdictions in which
the Group operates. The tax charge for the year is higher (2011 : higher) than
the expected tax charge due to the following factors:
                                                                  2012     2011
                                                                    $m       $m
Profit before taxation from continuing operations                362.7    254.1
pre-exceptional items
Profit before tax at expected rate of 27.35 % (2011: 28.6%)       99.2     72.7
Effects of:
Adjustments in respect of prior years                             12.1    

(9.9)

Non-recognition of losses and other attributes                    12.0     

5.7

Effect of tax on dividends and other foreign taxes                 4.2     
5.6
Other permanent differences                                     (23.6)      0.9
                                                                               
Tax charge pre-exceptional items                                 103.9    

75.0

Other permanent differences include adjustments for share based charges,
research and development allowances and changes in unrecognised tax attributes.
6 Dividends
                                                                  2012     2011
                                                                    $m       $m
Dividends on ordinary shares
Final dividend paid - year ended 31 December 2011: 9.6 cents      34.6     39.3
(2011: 7.6 cents) per share
                                                                               

Interim dividend paid - year ended 31 December 2012: 5.7 20.6 14.1 cents (2011: 3.9 cents) per share

                                                                  55.2     53.4
The directors are proposing a final dividend in respect of the financial year
ended 31 December 2012 of 11.3 cents per share. The final dividend will be paid
on 22 May 2013 to shareholders who are on the register of members on 19 April
2013. The financial statements do not reflect the final dividend, the payment
of which will result in an estimated $40.9m reduction in equity attributable to
owners of the parent.
7 Earnings per share
                                        2012                             2011
                              Earnings                         Earnings
                          attributable            Earnings attributable            Earnings
                          to owners of     Number      per to owners of     Number      per
                            the parent  of shares    share   the parent  of shares    share
                                    $m (millions)  (cents)           $m (millions)  (cents)
Basic pre-exceptional            256.4      360.0     71.2        214.7      433.8     49.5
Exceptional items, net of          0.6      360.0      0.2      2,087.6      433.8    481.2
tax
Basic                            257.0      360.0     71.4      2,302.3      433.8    530.7
Effect of dilutive                   -       12.6    (2.4)            -       15.0   (17.7)
ordinary shares
Diluted                          257.0      372.6     69.0      2,302.3      448.8    513.0
Exceptional items, net of        (0.6)      372.6    (0.2)    (2,087.6)      448.8  (465.2)
tax
Diluted pre-exceptional          256.4      372.6     68.8        214.7      448.8     47.8
items
Amortisation, net of tax          61.0          -     16.4         55.5          -     12.4
Adjusted diluted                 317.4      372.6     85.2        270.2      448.8     60.2
Adjusted basic                   317.4      360.0     88.2        270.2      433.8     62.3
Basic discontinued earnings per share for the year is 6.1 cents (2011: 520.0
cents) and diluted discontinued earnings per share is 5.9 cents (2011: 502.7
cents).
The calculation of basic earnings per share is based on the earnings
attributable to owners of the parent divided by the weighted average number of
ordinary shares in issue during the year excluding shares held by the Group's
employee share trusts. For the calculation of diluted earnings per share, 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 Plan. Adjusted basic and
adjusted diluted earnings per share are disclosed to show the results excluding
the impact of exceptional items and amortisation, net of tax.

8 Goodwill and intangible assets

                                                  Software
                                                       and Intangibles
                                               development  arising on
                                      Goodwill       costs acquisition     Total
                                            $m          $m          $m        $m
Cost
At 1 January 2012                      1,465.0       140.0       252.2   1,857.2
Exchange movements                        28.6         3.6         5.6      37.8
Additions                                    -        57.8           -      57.8
Acquisitions (note 27)                   156.7           -        57.6     214.3
Disposals                                    -       (8.9)           -     (8.9)
At 31 December 2012                    1,650.3       192.5       315.4   2,158.2
Aggregate amortisation and                54.3        86.8        94.8     235.9
impairment
At 1 January 2012
Exchange movements                           -         2.1         2.3       4.4
                                                                                
Amortisation charge for the year             -        28.4        57.1     
85.5
Impairment                                 1.9           -           -       1.9
Disposals                                    -       (8.6)           -     (8.6)
At 31 December 2012                       56.2       108.7       154.2     319.1
Net book value at 31 December 2012     1,594.1        83.8       161.2   1,839.1
Cost
At 1 January 2011                        626.5       109.5        71.1     807.1
Exchange movements                      (23.3)       (2.6)      (13.4)    (39.3)
Additions                                    -        32.0           -      32.0
Acquisitions                             895.3        16.4       194.5   1,106.2
Disposals                                    -      (10.4)           -    (10.4)
Divestment of business                  (33.5)       (1.2)           -    (34.7)
                                                                                
Reclassification as assets held for          -       (3.7)           -    
(3.7)
sale
At 31 December 2011
                                       1,465.0       140.0       252.2   1,857.2
Aggregate amortisation and
impairment                                 9.7        79.6        40.3     129.6
At 1 January 2011
Exchange movements                         0.1       (1.5)       (2.3)     (3.7)
                                                                                
Amortisation charge for the year             -        21.9        56.8     
78.7
Impairment                                46.2           -           -      46.2
Disposals                                    -       (9.8)           -     (9.8)
Divestment of business                   (1.7)       (1.1)           -     (2.8)
                                                                                
Reclassification as assets held for          -       (2.3)           -    
(2.3)
sale
At 31 December 2011                       54.3        86.8        94.8     235.9
                                                                                

Net book value at 31 December 2011 1,410.7 53.2 157.4 1,621.3

In accordance with IAS 36 `Impairment of assets', goodwill was tested for
impairment during the year. The impairment tests were carried out against the
Group's Cash Generating Units (`CGU'), being the key Strategic Business Units
(`SBUs') within the three operating divisions, which are aligned with how the
Group manages and monitors performance.

8 Goodwill and intangible assets (continued)

Value-in-use calculations have been prepared for each CGU using the cash flow
projections included in the financial budgets approved by management for 2013/
2014. Cash flows beyond this period are extrapolated using a growth rate of 3%
per annum for a further three year period. A terminal value is applied
thereafter in order to calculate long term estimated cash flows using the same
anticipated long term growth rate of 3% across all CGUs. The growth rate used
does not exceed the long-term average growth rates for the regions in which the
CGUs operate. The cash flows have been discounted using pre-tax discount rates
appropriate for each CGU.
Division                 Cash Generating Unit             Goodwill   Average
                                                          carrying   pre-tax
                                                           value     discount
                                                            ($m)    rate used
                                 IMV                       128.4
Wood Group                Wood Group Mustang               219.8       13%
Engineering                Wood Group Kenny                 60.0
                   WG PSN International (Australia)        183.4
                    WG PSN International (Africa)          117.3
Wood Group           WG PSN International (Other)           13.7       11%
PSN                        WG PSN Americas                 295.1
                              WG PSN UK                    434.5
                           WG PSN Services                  45.1
                           Aero Derivative                  12.1
Wood Group        Oil & Gas and Industrial Services         18.0
GTS                      Power Plant Services               18.9       12%
                   Equipment and Project Solutions          38.2
                         Other Wood Group GTS               9.6

Details of the key assumptions underlying the cash flows are included in critical accounting judgements and estimates in the Accounting Policies on page 7.

The value-in-use has been compared to the carrying value for each CGU. $1.9m of
goodwill, which relates to a market from which the Group is exiting, has been
written off during the year. $46.2m of goodwill was impaired during 2011.

A sensitivity analysis has been performed on the basis that the expected long-term growth rate falls to 2% and that the discount rates are 1% higher than those above in order to assess the impact of reasonable possible changes to the assumptions used in the impairment review. This analysis did not identify any further impairment.

In 2011, the goodwill impairment test was performed using budgeted and extrapolated cash flows for a 20 year period. In addition, the 2011 impairment test utilised a single discount rate of 10% for all CGUs.

Intangibles arising on acquisition include the valuation of customer contracts and customer relationships recognised on business combinations.

Development costs with a net book value of $20.8m (2011: $22.9m) are internally generated intangible assets.

9 Property plant and equipment

Land and Buildings
                                          Long
                                     leasehold
                                           and      Short  Plant and
                                      freehold  leasehold  equipment      Total
                                            $m         $m         $m         $m
Cost
At 1 January 2012                         55.5       30.3      280.2      366.0
Exchange movements                         0.7        0.4        4.1        5.2
Additions                                  5.6        6.9       56.9       69.4
Acquisitions                               2.2        0.2       28.1       30.5
Disposals                                (0.1)      (3.9)     (14.7)     (18.7)
Divestment of business (note 27)         (4.8)          -      (7.9)     (12.7)
Reclassifications                         17.8      (4.4)     (13.4)          -
At 31 December 2012                       76.9       29.5      333.3      439.7
Accumulated depreciation and
impairment
At 1 January 2012                         19.3       18.3      178.4      216.0
Exchange movements                         0.3        0.3        4.2        4.8
Charge for the year                        3.5        3.1       37.2       43.8
Impairment                                   -          -        4.9        4.9
Disposals                                (0.1)      (3.8)     (13.1)     (17.0)
Divestment of business (note 27)         (4.2)          -      (7.2)     (11.4)
Reclassifications                          5.7      (3.1)      (2.6)          -
At 31 December 2012                       24.5       14.8      201.8      241.1
                                                                               

Net book value at 31 December 2012 52.4 14.7 131.5 198.6

The assets of businesses divested during the year were reclassified as gross
assets held for sale in the Group balance sheet at 31st December 2011.
Property, plant and equipment with a book value of $1.3m that was part of one
of those divestments was not reclassified as held for sale at that time as it
was anticipated that the Group would retain ownership of those assets. These
assets are shown on the divestment of business line in the above table.

9 Property plant and equipment (continued)

Land and Buildings
                                          Long
                                     leasehold
                                           and      Short  Plant and
                                      freehold  leasehold  equipment      Total
                                            $m         $m         $m         $m
Cost
At 1 January 2011                         68.4       29.4      482.5      580.3
Exchange movements                       (0.4)      (0.2)      (2.7)      (3.3)
Additions                                  8.2        5.8       57.5       71.5
Acquisitions                              16.4          -       13.0       29.4
Disposals                                (4.4)      (0.9)     (31.7)     (37.0)
Divestment of business                  (29.7)      (3.8)    (234.1)    (267.6)
Reclassification as assets held for      (3.0)          -      (3.8)      (6.8)
sale
Reclassification to current assets           -          -      (0.5)      (0.5)
At 31 December 2011                       55.5       30.3      280.2      366.0
Accumulated depreciation and
impairment
At 1 January 2011                         28.0       18.1      296.0      342.1
Exchange movements                       (0.3)      (0.2)      (2.2)      (2.7)
Charge for the year                        4.7        2.5       40.0       47.2
Impairment                                 1.7          -        3.6        5.3
Disposals                                (3.0)      (0.8)     (29.8)     (33.6)
Divestment of business                  (11.7)      (1.3)    (126.8)    (139.8)
Reclassification as assets held for      (0.1)          -      (0.3)      (0.4)
sale
Reclassification to current assets           -          -      (2.1)      (2.1)
At 31 December 2011                       19.3       18.3      178.4      216.0
                                                                               

Net book value at 31 December 2011 36.2 12.0 101.8 150.0

There were no assets in the course of construction at 31st December 2012 (2011: $17.3m).

10 Joint ventures

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

                                                                  2012     2011
                                                                    $m       $m
Non-current assets                                                65.2     58.7
Current assets                                                   312.8    268.4
Current liabilities                                            (192.9)  (175.8)
Non-current liabilities                                         (26.1)    (5.0)
Net assets                                                       159.0    146.3
Income                                                           532.3    445.4
Expenses                                                       (497.5)  (412.2)
Profit before tax                                                 34.8     33.2
Tax                                                             (12.2)   (11.2)
                                                                               
Share of post-tax results from joint ventures                     22.6    

22.0

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. The name and principal activities of the most significant joint ventures is disclosed in note 34.

11 Inventories
                                                                  2012     2011
                                                                    $m       $m
Materials                                                         53.6     46.9
Work in progress                                                 115.3    103.1
Finished goods and goods for resale                              270.6    254.5
                                                                 439.5    404.5

12 Trade and other receivables

                                                                  2012     2011
                                                                    $m       $m
Trade receivables                                              1,150.1  1,010.6
Less: provision for impairment of trade receivables             (43.3)   (50.9)
Trade receivables - net                                        1,106.8    959.7
Amounts recoverable on contracts                                 105.9    

171.2

Prepayments and accrued income                                    87.0    104.9
Other receivables                                                 92.8     85.1
Trade and other receivables - current                          1,392.5  1,320.9
Long term receivables                                             54.7     42.0
Total receivables                                              1,447.2  1,362.9

The Group's trade receivables balance is analysed by division below:-

                                        Trade  Provision       Trade
                                  receivables        for receivables Receivable
                                      - Gross impairment       - Net       days
31 December 2012                           $m         $m          $m
Wood Group Engineering                  299.7     (21.7)       278.0         56
Wood Group PSN                          651.5     (14.0)       637.5         53
Wood Group GTS                          198.9      (7.6)       191.3         33
Total Group                           1,150.1     (43.3)     1,106.8         51
31 December 2011
Wood Group Engineering                  276.3     (27.2)       249.1         59
Wood Group PSN                          546.7     (15.4)       531.3         56
Wood Group GTS                          187.6      (8.3)       179.3         29
Total Group                           1,010.6     (50.9)       959.7         50
Receivable days are calculated by allocating the closing trade receivables
balance to current and prior period revenue including sales taxes. A receivable
days calculation of 51 indicates that closing trade receivables represent the
most recent 51 days of revenue. A provision for the 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 terms of the original
receivables.
The ageing of the provision for impairment of trade receivables is as follows:
                                                                  2012     2011
                                                                    $m       $m
Up to 3 months                                                    10.4     14.0
Over 3 months                                                     32.9     36.9
                                                                  43.3     50.9

12 Trade and other receivables (continued)

The movement on the provision for impairment of trade receivables by division
is as follows:
                           Wood Group  Wood Group  Wood Group      Well    Total
                          Engineering         PSN         GTS   Support
2012                               $m          $m          $m        $m       $m
At 1 January                     27.2        15.4         8.3         -     50.9
Exchange movements                0.5         0.2           -         -      0.7
Credit to income                (6.0)       (1.8)       (0.7)         -    (8.5)
statement
Acquisitions                        -         0.2           -         -      0.2
At 31 December                   21.7        14.0         7.6         -     43.3
2011
At 1 January                     17.9         6.3         5.2      27.1     56.5
Exchange movements              (0.6)       (0.2)           -         -    (0.8)
Charge to income                  9.9         2.2         3.1       4.6     19.8
statement
Acquisitions                        -         7.1           -         -      7.1
Divestment of businesses                        -           -    (31.7)   (31.7)
At 31 December                   27.2        15.4         8.3         -     50.9

The charge/(credit) to the income statement is included in administrative expenses.

The other classes within trade and other receivables do not contain impaired assets.

Included within gross trade receivables of $1,150.1m above (2011: $1,010.6m)
are receivables of $214.3m (2011: 209.6m) which were past due but not impaired.
These relate to customers for whom there is no recent history or expectation of
default. The ageing analysis of these trade receivables is as follows:
                                                                  2012     2011
                                                                    $m       $m
Up to 3 months overdue                                           158.6    183.0
Over 3 months overdue                                             55.7     26.6
                                                                 214.3    209.6
Construction contracts

Financial information in respect of Engineering, Procurement and Construction (`EPC') contracts carried out by Wood Group GTS is presented below -

                                                                  2012     2011
                                                                    $m       $m
Contract costs incurred and recognised profit for projects to    867.4    409.3
date
Contract revenue recognised in the year                          458.1    

366.1

Receivables for work done under these contracts at the            90.3    145.4
balance sheet date
13 Cash and cash equivalents
                                                                  2012     2011
                                                                    $m       $m
Cash at bank and in hand                                         157.9    171.6
Short-term bank deposits                                          14.4     55.0
                                                                 172.3    226.6

The effective interest rate on short-term deposits was 1.6% (2011: 3.5%) and these deposits have an average maturity of 31 days (2011 : 8 days).

At 31 December 2012 the Group held $10.0m of cash (2011: $9.9m) in its insurance captive subsidiary to comply with local regulatory requirements.

14 Trade and other payables

                                                                   2012    2011
                                                                     $m      $m
Trade payables                                                    447.4   520.8
                                                                               
Other tax and social security payable                              83.3   

86.9

Accruals and deferred income                                      534.6   

576.4

Deferred and contingent consideration                              14.1   
27.0
Other payables                                                    108.6    75.1
                                                                1,188.0 1,286.2
15 Borrowings
                                                                   2012    2011
                                                                     $m      $m
                                                                               
Bank loans and overdrafts due within one year or on demand                 
Unsecured                                                          45.3    69.2
Non-current bank loans
Unsecured                                                         281.5   161.3

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:
                                                                   2012    2011
                                                                      %       %
US Dollar                                                          1.11    2.06
Sterling                                                           2.36    2.83
Euro                                                               1.45    2.28
Canadian Dollar                                                    2.40    2.30

The carrying amounts of the Group's borrowings are denominated in the following
currencies:
                                                                   2012    2011
                                                                     $m      $m
US Dollar                                                         131.1    36.5
Sterling                                                           68.4    68.1
Euro                                                               63.1    57.8
Canadian Dollar                                                    57.3    54.0
Other                                                               6.9    14.1
                                                                  326.8   230.5
The Group is required to issue trade finance instruments to certain customers.
These include tender bonds, performance bonds, retention bonds, advance payment
bonds and standby letters of credit. At 31 December 2012 the Group's bank
facilities relating to the issue of bonds, guarantees and letters of credit
amounted to $702.3m (2011: $797.1m). At 31 December 2012, these facilities
were
51% utilised (2011: 51%).
15 Borrowings (continued)
Borrowing facilities
The Group has the following undrawn borrowing facilities available at 31
December:
                                                                  2012     2011
                                                                    $m       $m
Expiring within one year                                         101.8    101.2
                                                                               
Expiring between one and two years                               518.5     

-

Expiring between two and five years                                  -    638.7
                                                                 620.3    739.9
All undrawn borrowing facilities are floating rate facilities. The facilities
expiring within one year are annual facilities subject to review at various
dates during 2013. In February 2013, the Group increased its bilateral
facilities from $800m to $950m, with the maturity date being extended to
February 2018. The Group was in compliance with its bank covenants throughout
the year.

16 Other non-current liabilities

                                                                  2012     2011
                                                                    $m       $m
                                                                               
Deferred and contingent consideration                             76.5    
37.9
Other payables                                                    87.2     60.8
                                                                 163.7     98.7

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

17 Financial instruments

The Group's activities give rise to a variety of financial risks: market risk
(including foreign exchange risk and cash flow interest rate risk), credit risk
and liquidity risk. The Group's overall risk management strategy is to hedge
exposures wherever practicable in order to minimise any potential adverse
impact on the Group's financial performance.
Risk management is carried out by the Group Treasury department in line with
the Group's Treasury policies. Group Treasury, together with the Group's
business units identify, evaluate and where appropriate, hedge financial risks.
The Group's Treasury policies cover specific areas, such as foreign exchange
risk, interest rate risk, use of derivative financial instruments and
investment of excess cash.
Where the Board considers that a material element of the Group's profits and
net assets are exposed to a country in which there is significant geo-political
uncertainty a strategy is agreed to ensure that the risk is minimised.

17 Financial instruments (continued)

(a) Market risk

(i) Foreign exchange risk

The Group is exposed to foreign exchange risk arising from various currencies.
The Group has a number of subsidiary companies whose revenue and expenses are
denominated in currencies other than the US dollar. Where practical, the Group
hedges part of its net investment in non-US dollar subsidiaries by using
foreign currency bank loans. Other strategies, including the payment of
dividends, are used to minimise the amount of net assets exposed to foreign
currency revaluation.
Some of the revenues 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 revenues at the time of the transaction by using
financial instruments such as forward currency contracts. Changes in the
forward contract fair values are booked through the income statement, except
where hedge accounting is used in which case the change in fair value is
recorded in equity.

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.

The Group's main foreign exchange risk relates to movements in the sterling/US
dollar exchange rate. Movements in the sterling/US dollar rate impact the
translation of sterling profit earned in the UK and the translation of sterling
denominated net assets.
If the average sterling/US dollar rate had been 10% higher or lower during 2012
(2011:10%), post-tax profit for the year would have been $10.6m higher or lower
(2011: $10.6m). If the closing sterling/US dollar rate was 10% higher or lower
at 31 December 2012 (2011:10%), exchange differences in equity would have been
$48.0m (2011: $28.8m) higher or lower respectively. 10% has been used in these
calculations as it represents a reasonable possible change in the sterling/US
dollar exchange rate.
(ii) 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 into fixed rates to generate the
desired interest profile and to manage the Group's exposure to interest rate
fluctuations. At 31 December 2012, 19% (2011 : 47%) of the Group's borrowings
were at fixed rates after taking account of interest rate swaps.
The Group is also exposed to interest rate risk on cash held on deposit. The
Group's policy is to maximise the return on cash deposits whilst ensuring that
cash is deposited with a financial institution with a credit rating of `A' or
better, where possible. If average interest rates had been 1% higher or lower
during 2012 (2011:1%), post-tax profit for the year would have been $1.9m
higher or lower respectively (2011: $1.3m). 1% has been used in this
calculation as it represents a reasonable possible change in interest rates.

(iii) Price risk

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

17 Financial instruments (continued)

(b) Credit risk

The Group's credit risk primarily relates to its trade receivables. The Group's
operations comprise three divisions, Wood Group Engineering, Wood Group PSN and
Wood Group GTS each made up of a number of businesses. Responsibility for
managing credit risks lies within the businesses with support being provided by
Group and divisional management where appropriate.
A customer evaluation is typically obtained from an appropriate credit rating
agency. Where required, appropriate trade finance instruments such as letters
of credit, bonds, guarantees and credit insurance will be used to manage credit
risk.
The Group's major customers are typically large companies which have strong
credit ratings assigned by international credit rating agencies. Where a
customer does not have sufficiently strong credit ratings, alternative forms of
security such as the trade finance instruments referred to above may be
obtained. 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 trade receivables.
Management review trade receivables across the Group based on receivable days
calculations to assess performance. There is significant management focus on
receivables that are overdue. A table showing trade receivables and receivable
days by division is provided in note 12. Receivable days calculations are not
provided on non-trade receivables as management do not believe that this
information is a relevant metric.
The Group also has credit risk in relation to cash held on deposit. The Group's
policy is to deposit cash at institutions with a credit rating of `A' or better
where possible. 100% of cash held on deposit at 31 December 2012 (2011 : 74%)
was held with such institutions.

(c) Liquidity risk

With regard to liquidity, the Group's main priority is to ensure continuity of
funding. At 31 December 2012, 96% (2011 : 91%) of the Group's borrowing
facilities (excluding joint ventures) were due to mature in more than one year.
Based on the current outlook the Group has sufficient funding in place to meet
its future obligations.

In February 2013, the Group increased its bilateral facilities from $800m to $950m, with the maturity date being extended to February 2018.

(d) Capital risk

The Group seeks to maintain an optimal capital structure. The Group monitors its capital structure on the basis of its gearing ratio, interest cover and when applicable, the ratio of net debt to EBITDA.

Gearing is calculated by dividing net debt by equity attributable to owners of the parent. Gearing at 31 December 2012 was 6.9% (2011: 0.2%).

Interest cover is calculated by dividing EBITA from continuing operations by net finance expense from continuing operations before exceptional items. Interest cover for the year to 31 December 2012 was 35.7 times (2011: 38.8 times).

The ratio of net debt to continuing EBITDA at 31 December 2012 was 0.31 (2011: 0.01).

17 Financial instruments (continued)

The table below analyses the Group's financial liabilities into relevant
maturity groupings based on the remaining period from the balance sheet date to
the contractual maturity date. The amounts disclosed in the table are the
contractual undiscounted cash flows. Drawdowns under long term bank facilities
are for periods of three months or less and are not therefore discounted and
loan interest payable is excluded from the amounts below.
At 31 December 2012                Less than  Between 1 Between 2    Over 5
                                      1 year      and 2     and 5     years
                                                  years  years $m
                                          $m                             $m
                                                     $m
Borrowings                              45.3      281.5         -         -
Trade and other payables             1,104.7          -         -         -
Other non-current liabilities              -       62.1     107.1         -
At 31 December 2011
Borrowings                               69.2         -     161.3         -
Trade and other payables              1,199.3         -         -         -
Other non-current liabilities               -      28.5      70.2         -

Fair value of non-derivative financial assets and financial liabilities

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. Drawdowns under long-term bank
facilities are for periods of three months or less and as a result, book value
and fair value are considered to be the same.

Details of derivative financial instruments are not disclosed in the financial statements as they are not material.

18 Provisions

                                                 Warranty      Other
                                               provisions provisions      Total
                                                       $m         $m         $m
At 1 January 2012                                    14.2       75.6       89.8
Exchange movements                                    0.3          -        0.3
Charge/(credit) to income statement                   4.8     (12.2)      (7.4)
Acquisitions                                            -        1.6        1.6
Payments during the year                            (3.7)          -      (3.7)

At 31 December 2012                                  15.6       65.0       80.6
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 the costs in respect of these
provisions will be incurred over the next two years.

Other provisions

At 31 December 2012, other provisions of $65.0m (2011: $75.6m) have been recognised. This amount includes provisions for future losses on onerous contracts, a provision for non-recoverable indirect taxes and provisions relating to the divestment of businesses. It is expected that any payment required in respect of these provisions would be made within the next two years.

19 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. Deferred tax in relation to UK companies is provided at
23% (2011: 25%).

The movement on the deferred tax account is shown below:

                                                                  2012     2011
                                                                    $m       $m
At 1 January                                                    (54.9)   (97.9)
Exchange movements                                               (4.3)      2.3
Credit to income statement                                       (8.3)   (33.9)
Acquisitions (note 27)                                            31.0     69.5
Divestment of business                                               -     25.1
                                                                               

Deferred tax relating to retirement benefit liabilities (2.1) (6.1)

Deferred tax relating to share option schemes                      8.6   (13.9)
At 31 December                                                  (30.0)   (54.9)
                                                                               
Deferred tax is presented in the financial statements as                   
follows:
Deferred tax assets                                             (39.4)   (60.6)
Deferred tax liabilities                                           9.4      5.7
                                                                (30.0)   (54.9)
19 Deferred tax (continued)

There is no deferred tax relating to discontinued activities included within the credit to the income statement shown in the above table (2011: credit $4.2m).

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.

The Group has unrecognised tax losses of $192.7m (2011: $147.6m) 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            Share  Short term
                               tax            based      timing
                      depreciation Pension  charges differences   Losses   Total
2012                            $m      $m       $m          $m       $m      $m
Deferred tax assets           71.5  (12.7)   (31.3)      (64.9)    (2.0)  (39.4)
Deferred tax                     -       -        -         9.4        -     9.4
liabilities
Net deferred tax              71.5  (12.7)   (31.3)      (55.5)    (2.0)  (30.0)
liability/(asset)
                       Accelerated            Share  Short term
                               tax            based      timing
                      depreciation Pension  charges differences   Losses   Total
2011                            $m      $m       $m          $m       $m      $m
Deferred tax assets           59.8  (11.5)   (33.4)      (71.5)    (4.0)  (60.6)
Deferred tax                     -       -        -         5.7        -     5.7
liabilities
Net deferred tax              59.8  (11.5)   (33.4)      (65.8)    (4.0)  (54.9)
liability/(asset)
20 Share based charges

The Group currently has four share schemes that give rise to share based charges. These are the Executive Share Option Scheme (`ESOS'), the Long Term Retention Plan (`LTRP'), the Long Term Incentive Plan (`LTIP') and the Long Term Cash Incentive Plan (`LTCIP'). Further details of these schemes is provided in the Directors' Remuneration Report.

The charge to operating profit in 2012 for these schemes amounted to $26.2m (2011 : $19.2m). $19.6m (2011: $16.0m) of the total charge is credited to retained earnings and $6.6m (2011: $3.2m), relating to the LTCIP, is included in other non-current liabilities as the LTCIP is a cash settled scheme.

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

ESOS and LTRP

Around 1,200 employees participate in these schemes. For the purposes of
calculating the fair value of the share 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 between
15% and 20%. The share price volatility used in the calculation 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 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. The rate used ranges
from 0.5% to 4.4%. A dividend yield of between 1.0% and 2.0% has been used in
the calculations.
The fair value of options granted under the ESOS during the year was £2.09
(2011 : £1.62). The fair value of options granted under the LTRP during the
year was £6.43 (2011 : £4.94 to £6.38). The weighted average remaining
contractual life of share options at 31 December 2012 is 5.6 years (2011: 5.7
years).
LTIP
The share based charge for the LTIP was calculated using a fair value of £4.12
for the first cycle, £1.81 for the second cycle, £3.01 for the third cycle, £
5.10 for the fourth cycle and £6.18 for the fifth cycle. The charge for market
related performance targets has been calculated using a Monte Carlo simulation
model taking account of share price volatility against peer group companies,
risk free rate of return, dividend yield and the expected lifetime of the
award.

LTCIP

The share based charge for the LTCIP was calculated using a fair value of £7.01
(2011: £6.18). The fair value is calculated using a Black-Scholes option
pricing model using similar assumptions to those used for ESOS and LTRP above.
Payments under the LTCIP are linked to movements in the Group's share price.

20 Share based charges (continued)

Executive Share Option Schemes

The following options to subscribe for new or existing shares were outstanding
at 31 December:
Year of                            Number of ordinary  Exercise
                                   shares under option   price
Grant                                2012      2011      (per      Exercise
                                                        share)      period
2003                                72,500    162,500    158p      2007-2013
2004                                160,000   455,584    128½p     2008-2014
2005                                20,000    30,000     145p      2009-2015
2006                                48,500    109,500    265¼p     2010-2016
2007                                102,290   231,660    268½p     2011-2017
2008                                254,346   937,111    381¾p     2012-2018
2008                                29,850    81,460     354⅓p     2012-2018
2009                               2,498,791 2,818,105   222p      2013-2019
2009                                50,000    55,836     283⅔p     2013-2019
2010                               2,556,687 2,805,667   377½p     2014-2020
2011                               1,938,166 2,031,500   529½p     2015-2021
2012                               1,919,865     -       680½p     2016-2022
2012                                 5,000       -       802p      2016-2022
                                   9,655,995 9,718,923
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.

687,486 options (2011 : 989,244) were exercisable at 31 December 2012. 1,964,000 options were granted during the year, 1,438,477 options were exercised during the year and 588,451 options lapsed during the year. The weighted average share price for ESOS options exercised during the year was £ 7.59 (2011 : £6.49).

Options granted to directors under the executive share option scheme are subject to performance criteria as set out in the Directors' Remuneration Report. No options have been granted to executive directors since 2009. 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:
Year of                            Number of ordinary  Exercise
                                   shares under option   price
Grant                                2012      2011      (per      Exercise
                                                        share)      period
2007                                   -      106,500     3⅓p      2011-2012
2008                                145,000  1,159,959    3⅓p      2012-2013
2009                               2,201,000 2,502,932    3⅓p      2013-2014
2010                               1,029,042 1,160,270    3⅓p      2014-2015
2011                                75,000    75,000      3⅓p      2015-2016
2011                                569,500   588,000    42/7p     2015-2016
2012                                896,334      -       42/7p     2016-2017
                                   4,915,876 5,592,661

20 Share based charges (continued)

Options are granted under the Group's LTRP at par value. The basis of the
scheme is that an overall bonus pool is calculated annually based on
performance criteria that consider the growth in the Group's adjusted earnings
per share in the prior year. There are no performance criteria attached to the
exercise of options under the LTRP. 145,000 options (2011 : 106,500) were
exercisable at 31 December 2012. 928,500 LTRP options were granted during the
year, 1,279,681 LTRP options were exercised during the year and 325,604 LTRP
options lapsed during the year. The weighted average share price for LTRP
options exercised during the year was £7.51 (2011 : £6.52). Further details on
the LTRP are provided in the Directors' Remuneration Report.

Long Term Incentive Plan

The Group's Long Term Incentive Plan (`LTIP') has been in place since 2008.
Under this Scheme, the executive directors and certain senior executives are
awarded shares dependent upon the achievement of performance targets
established by the Remuneration Committee. The performance measures for the
LTIP are EBITA, OCER (ratio of operating capital employed to revenue), total
shareholder return and adjusted diluted earnings per share. The LTIP awards are
in the form of shares and forfeitable restricted shares. 20% of any award
earned over the three year performance cycle are deferred for a further two
years in the form of forfeitable restricted shares. At 31 December 2012,
4,448,914 shares were potentially issuable under this scheme. Further details
of the LTIP are provided in the Directors' Remuneration Report.

21 Share capital

Ordinary shares of 42/7 pence each                 2012                    
2011
(2011: 42/7 pence)
Issued and fully paid                     shares     $m         shares        $m
At 1 January                         371,275,384   23.4   530,266,720       26.3
                                                                                
Shares issued to satisfy option                -      -        45,000      
   -
awards
Shares issued relating to PSN                  -      -    10,511,413        0.6
acquisition
                                                                                
Purchase of shares under tender                -      -  (65,911,929)     
(3.6)
offer
                                                                                
New shares issued in advance of                -      -             4      
   -
share reorganisation
Share reorganisation                           -      - (105,535,824)          -
                                                                                

Allocation of new shares to employee 1,900,000 0.1 1,900,000

 0.1
share trusts
At 31 December                       373,175,384   23.5   371,275,384       23.4

On 20 December 2012, 1,900,000 new shares of 42/7 pence were issued to the employee share trusts at prices ranging from 42/7 pence to 222 pence.

During 2011, the Company purchased 65,911,929 shares at a cost of $675.7m under
the tender offer that formed the first part of the return of cash to
shareholders. $3.6m, representing the par value of these shares was deducted
from share capital and a corresponding amount credited to a capital redemption
reserve (note 24). The total cost of $675.7m was deducted from retained
earnings (note 23). In addition, 4 new shares were issued prior to the
reorganisation of the Company's share capital. The reorganisation of the
Company's share capital resulted in seven 42/7 pence shares being issued for
each existing nine 3⅓ pence shares. During 2011, 1,900,000 new shares were
issued to the employee share trusts.
22 Share premium
                                                                  2012     2011
                                                                    $m       $m
At 1 January                                                       7.7    315.8
                                                                               

Proceeds from Group companies relating to options exercised 43.5 6.0 under share symmetry scheme

Issue of `B' shares                                                  -  (321.7)
                                                                               
Allocation of new shares to employee share trusts                  3.1     
7.6
At 31 December                                                    54.3      7.7
During the year, the company received $43.5m (2011: $6.0m) proceeds from Group
companies relating to the exercise of employee share options under the share
symmetry scheme. This amount was credited to share premium. Under the share
symmetry scheme, subsidiary companies remit share proceeds to the parent
company in respect of employee share options granted before the IPO in 2002

On 20 December 2012, 1,900,000 new shares of 42/7 pence were issued to the employee share trusts at prices ranging from 42/7 pence to 222 pence and $3.1m was credited to the share premium account.

During 2011, 191,250,234 `B' shares were issued at £1.40 each resulting in a
total of $436.1m being credited to the `B' share capital account. At the same
time, $321.7m was deducted from share premium and $114.4m was deducted from the
merger reserve (note 24). 1,900,000 new shares were issued to the employee
share trusts with $7.6m being credited to the share premium account.
23 Retained earnings
                                                                  2012     2011
                                                                    $m       $m
At 1 January                                                   1,469.8  1,007.6
Profit for the year attributable to owners of the parent         257.0  2,302.3
Dividends paid (note 6)                                         (55.2)   (53.4)
                                                                               
Credit relating to share based charges (note 20)                  19.6     

9.7

Actuarial loss on retirement benefit liabilities (note 29) (8.5) (22.6)

Movement in deferred tax relating to retirement benefit            2.1     
6.1
liabilities
Proceeds from Group companies relating to options exercised     (43.5)    (6.0)
under share symmetry scheme
Purchase of shares under tender offer                                -  (675.7)
Redemption of `B' shares                                             -  (436.1)
Deferred share dividend                                              -  (533.3)
Purchase of `C' shares by company                                    -  

(113.4)

Foreign exchange relating to return of cash to shareholders,         -    (9.8)
net of tax
Expenses relating to return of cash to shareholders                  -   

(14.9)

Shares allocated to employee share trusts                        (3.2)    

(7.7)

Shares purchased by employee share trusts                            -   

(42.5)

Shares disposed of by employee share trusts                        6.5    

12.3

Cash received by employee share trusts from the return of            -    
25.0
cash to shareholders
                                                                               
Tax credit relating to share option schemes                        1.1    

20.8

Exchange movements in respect of shares held by employee         (5.0)      1.4
share trusts
At 31 December                                                 1,640.7  1,469.8

23 Retained earnings (continued)

During 2012, the parent company received $43.5m (2011: $6.0m) of proceeds from
Group companies relating to the exercise of employee share options under the
share symmetry scheme. This amount was credited to share premium in the parent
company and an equivalent amount deducted from retained earnings on
consolidation.
In 2011, the return of cash to shareholders via the purchase and redemption of
shares and a deferred share dividend resulted in a deduction of $1,758.5m from
retained earnings. Full details are provided in the 2011 Annual Report and
Accounts.
Retained earnings are stated after deducting the investment in own shares held
by employee share trusts. Investment in own shares represents the cost of
11,599,912 (2011: 14,696,669) of the company's ordinary shares totalling
$112.7m (2011: $111.0m). No options have been granted over shares held by the
employee share trusts (2011: nil).
Shares acquired by the employee share trusts are purchased in the open market
using funds provided by John Wood Group PLC to meet obligations under the
Employee Share Option Schemes, the LTRP and the LTIP. During 2012, 1,900,000
new shares were allocated to the employee share trust at a value of $3.2m.
2,718,158 shares were issued during the year to satisfy the exercise of share
options at a value of $6.5m. 2,278,599 shares were issued during the year to
satisfy share awards under the Long Term Incentive Plan.
Exchange adjustments of $5.0m (2011: $1.4m) 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 trusts are charged to the income
statement in the period to which they relate. The market value of the shares at
31 December 2012 was $137.0m (2011: $146.4m) based on the closing share price
of £7.27 (2011: £6.41). The employee share trusts have waived their rights to
receipt of dividends on ordinary shares.

24 Other reserves

                       Capital    Capital            Currency
                     reduction redemption  Merger translation Hedging
                       reserve    reserve reserve     reserve reserve   Total
                            $m         $m      $m          $m      $m      $m
At 1 January 2011         88.1                         (28.4)   (3.1)    56.6
                                        -       -
Shares issued                -          -   114.4           -       -   114.4
relating to PSN
acquisition
Purchase of shares           -        3.6       -           -       -     3.6
under tender offer
Issue of `B' shares          -          - (114.4)                     (114.4)
Redemption of `B'            -      436.1       -           -       -   436.1
shares
Exchange movements           -          -       -      (31.1)       -  (31.1)
on retranslation of
foreign currency net
assets
Cash flow hedges             -          -       -           -   (1.6)   (1.6)
At 31 December 2011
                          88.1      439.7       -      (59.5)   (4.7)   463.6
Exchange movements
on retranslation of
foreign currency net         -          -       -        41.3       -    41.3
assets
Cash flow hedges             -          -       -           -     3.7     3.7
At 31 December 2012
                          88.1      439.7       -      (18.2)   (1.0)   508.6
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 movement during the year relates to the
retranslation of foreign currency net assets, including goodwill and intangible
assets recognised on acquisition. 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.
25 Non-controlling interests
                                                                   2012    2011
                                                                     $m      $m
At 1 January                                                       10.0    10.9
Exchange movements                                                  0.1   (0.2)
Share of profit for the year                                        1.2     0.5
Dividends paid to non-controlling interests                       (1.2)   

(0.3)

Non-controlling interests arising on business combinations (0.3) 0.4

Disposal of non-controlling interests                             (1.2)    

-

Other transactions with non-controlling interests                 (0.4)   (1.3)
At 31 December                                                      8.2    10.0

26 Cash generated from operations

                                                                  2012     2011
                                                                    $m       $m
                                                                               
Reconciliation of operating profit to cash generated                       
from operations:
Operating profit from continuing operations before               375.6    262.9
exceptional items
                                                                               
Operating (loss)/profit from discontinued operations             (2.0)    
57.1
before exceptional items
Adjustments for:
Depreciation                                                      43.8     47.2
Loss/(gain) on disposal of property plant and                      1.3    (0.1)
equipment
                                                                               
Amortisation of intangible assets                                 85.5    
78.7
Share based charges                                               26.2     19.2
Decrease in provisions                                           (8.1)    (3.1)
                                                                               
Changes in working capital (excluding effect of
acquisition and divestment of subsidiaries)                                
Increase in inventories                                         (43.7)   (51.4)
Increase in receivables                                         (50.1)  (232.1)
                                                                               
(Decrease)/increase in payables                                 (99.1)    
96.4
Exchange movements                                               (1.7)      9.7
Cash generated from operations                                   327.7    284.5
Analysis of net debt
                                       At 1               Exchange        At 31
                                    January   Cash flow  movements     December
                                       2012                                2012
                                         $m          $m         $m           $m
Cash and cash equivalents             226.6      (60.8)        6.5        172.3
Short-term borrowings                (69.2)        26.5      (2.6)       (45.3)
Long-term borrowings                (161.3)     (115.5)      (4.7)      (281.5)
Net debt                              (3.9)     (149.8)      (0.8)      (154.5)

27 Acquisitions and divestments

Acquisitions

The assets and liabilities acquired in respect of the business combinations during the year were as follows:

                                                                          Total
                                                                             $m
Property plant and equipment                                               30.5
                                                                               
Intangible assets recognised on acquisition                               

57.6

Trade and other receivables                                               
22.3
Cash                                                                        5.9
Bank borrowings                                                          (18.7)
Trade and other payables                                                 (21.0)
Income tax liabilities                                                    (0.5)
Deferred tax liabilities                                                 (31.0)
Provisions                                                                (1.6)
                                                                               
Total identifiable net assets acquired                                    
43.5
Goodwill                                                                  156.7
Non-controlling interests                                                   0.3

Consideration                                                             200.5
Consideration satisfied by:
Cash                                                                      175.9
                                                                               
Deferred and contingent consideration                                     
24.6

                                                                          200.5

The Group has used acquisition accounting for the purchases and, in accordance
with the Group's accounting policies, the goodwill arising on consolidation of
$156.7m has been capitalised.

During the year the Group acquired 100% of the share capital of Mitchell's Oilfield Services Inc (`Mitchell's') and 100% of the share capital of Duval. The acquisitions are not considered to be material to the Group on an individual basis and therefore have been aggregated in the table above.

The acquisitions of Mitchell's and Duval provide the Group with access to the
oil rich Eagle Ford and Bakken shale regions in the US, strengthening the
Group's capabilities in the US onshore market. The acquired companies will be
in a position to access the Group's wider client base and use the Group's
resources to further grow and develop their businesses. These factors
contribute to the goodwill recognised on the acquisitions.
Provisional fair value adjustments of $57.6m, representing the fair value of
customer contracts, have been recorded in relation to the acquisitions made in
the year.
Adjustments of $7.6m have been made in respect of the provisional fair value
adjustments recorded in 2011 and consequently goodwill has increased by this
amount. These adjustments made are not considered material to the financial
statements and the comparative balance sheet has therefore not been restated.

27 Acquisitions and disposals (continued)

The outflow of cash and cash equivalents on the acquisitions made during the
year is analysed as follows:
                                                                             $m
Cash consideration                                                        175.9
Cash acquired                                                             (5.9)
Borrowings acquired                                                        18.7
Cash outflow                                                              188.7

Included in the cash outflow above are deferred and contingent consideration payments of $30.4m made during the year in respect of acquisitions made in prior periods.

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

                                                                             $m
Continuing revenue                                                      6,921.2
Continuing EBITA                                                          483.0

From the date of acquisition to 31 December 2012, the acquisitions contributed $52.1m to revenue and $11.5m to EBITA.

27 Acquisitions and disposals (continued)

Divestments

On 4 April 2012, the Group divested its Aero Engine overhaul business and in
May 2012, the Group completed the disposal of a Well Support business in the
Middle East, the sale of which was agreed at the time of the Well Support
divestment in April 2011. In total, proceeds of $43.0m were received for these
two businesses.
The assets and liabilities disposed of were reclassified as gross assets and
liabilities held for sale in the Group balance sheet at 31st December 2011.
Property, plant and equipment with a book value of $1.3m that was part of one
of these divestments was not reclassified as held for sale at that time as it
was anticipated that the Group would retain ownership of those assets.

Details of the assets and liabilities divested were as follows:

                                                                             $m
Property plant and equipment                                                7.6
                                                                               
Goodwill and intangible assets                                             
1.4
Inventories                                                                14.1
Trade and other receivables                                                10.6
Cash and cash equivalents                                                   0.4
Borrowings                                                                (0.2)
Trade and other payables                                                 (16.9)
                                                                           17.0
Non-controlling interests                                                 (1.2)
Net assets divested                                                        15.8
Gross proceeds received                                                    43.0
                                                                               
Gain on divestment before tax                                             
27.2
Tax                                                                       (4.2)
                                                                               
Net gain on divestment after tax (see note 4)                             

23.0


The inflow of cash and cash equivalents in relation to the divestments is
analysed as follows:
                                                                             $m
Gross proceeds received                                                    43.0
Divestment costs paid                                                     (2.2)
Cash divested                                                             (0.4)
Borrowings divested                                                         0.2
                                                                               
Net cash inflow from divestment                                           

40.6

In 2011, the Group divested its Well Support division to GE. Proceeds less costs of disposal amounted to $2,781.5m and the net assets divested were $475.8m. The resulting gain on sale of $2,305.7m was shown as an exceptional item in the 2011 income statement.

28 Employees and directors
Employee benefits expense                                        2012      2011
                                                                   $m        $m
Wages and salaries                                            2,758.8   2,355.2
Social security costs                                           184.1     170.9
                                                                               
Pension costs - defined benefit schemes (note 29)                 7.4      

7.8

Pension costs - defined contribution schemes (note 29)           87.5     
73.3
Share based charges                                              26.2      19.2
                                                              3,064.0   2,626.4
Average monthly number of employees (including executive         2012      2011
directors)
                                                                  No.       No.
By geographical area:
UK                                                              7,791     6,909
US                                                              9,896     9,211
Rest of the World                                              15,792    11,728
                                                               33,479    27,848
Key management compensation                                      2012      2011
                                                                   $m        $m
                                                                               
Salaries and short-term employee benefits                        20.2     

25.8

Amounts receivable under long-term incentive schemes              4.8      
4.1
Social security costs                                             3.0       3.3
Post-employment benefits                                          1.1       1.2
Share based charges                                               9.4       7.5
                                                                 38.5      41.9
Key management compensation represents the charge to the income statement in
respect of the remuneration of the executive directors and certain senior
executives.
                                                                 2012      2011
Directors                                                          $m        $m
Aggregate emoluments                                              6.2      11.4
                                                                               
Aggregate amounts receivable under long-term incentive            1.6      
2.1
schemes
                                                                               
Aggregate gains made on the exercise of share options             4.1      
2.8
Share based charges                                               2.7       2.6
                                                                 14.6      18.9

Aggregate emoluments in 2011 included a special incentive payment to the Well Support executive director, J Renfroe, on completion of the disposal of the business in April 2011.

Two directors (2011: one) have retirement benefits accruing under a defined contribution pension scheme. Retirement benefits are accruing to two (2011: four) directors under the company's defined benefit pension scheme. Further details of director's emoluments are provided in the Directors' Remuneration Report.

29 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. 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 2010 by a professionally qualified actuary.

The principal assumptions made by the actuaries at the balance sheet date were:
                                                                 2012      2011
                                                                    %         %
                                                                               
Rate of increase in pensionable salaries                         5.00     

4.90

Rate of increase in pensions in payment and deferred             3.00     
2.90
pensions
Discount rate                                                    4.50      4.80
                                                                               
Expected return on scheme assets                                 6.27     

7.00

The expected return on scheme assets for 2012 is based on market expectation at
the beginning of the period for returns over the entire life of the benefit
obligation. From 1 January 2013, the expected return on scheme assets will be
set at a rate equivalent to the discount rate. The impact of this change will
be to reduce the expected return and thus increase the net finance cost in the
income statement in future periods. The impact in 2013 is estimated to be
$2.4m.
At 31 December 2012 the actuary has determined pension liabilities by reference
to a standard actuarial mortality table which considered UK wide mortality data
relevant to the Group's pension scheme. Those observed mortality rates have
been projected to improve at a specific rate into the future to allow for
established trends and expectations in line with normal actuarial practice.
Specifically, the actuarial table used was PXA00 and improvements were in line
with the long cohort approach with an annual underpin of 1% p.a.

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

                                                                 2012      2011
                                                                   $m        $m
Present value of funded obligations                           (246.1)   (206.7)
Fair value of scheme assets                                     191.1     160.9
Net liabilities                                                (55.0)    (45.8)
The major categories of scheme assets as a percentage of total scheme assets
are as follows:
                                                                 2012      2011
                                                                    %         %
Equity securities                                                82.9      83.4
Corporate bonds                                                   8.4       7.7
Gilts                                                             8.3       8.6
Cash                                                              0.4       0.3

29 Retirement benefit liabilities (continued)

The amounts recognised in the income statement are as follows:

                                                                 2012      2011
                                                                   $m        $m
                                                                               
Current service cost included within employee benefits            7.4      
7.8
expense
Interest cost                                                    10.4      10.8
Expected return on scheme assets                               (10.5)    

(11.3)

Total included within finance income                            (0.1)     

(0.5)

The employee benefits expense is included within administrative expenses in the income statement.

Changes in the present value of the defined benefit liability are as follows:
                                                                 2012      2011
                                                                   $m        $m
Present value of funded obligations at 1 January                206.7     188.3
Current service cost                                              7.4       7.8
Interest cost                                                    10.4      10.8
Actuarial losses                                                 17.0       7.7
Benefits paid                                                   (5.7)     (5.3)
Plan curtailment                                                    -     (0.5)
Exchange movements                                               10.3     (2.1)
Present value of funded obligations at 31 December              246.1     

206.7

Changes in the fair value of scheme assets are as follows:

                                                                 2012      2011
                                                                   $m        $m
Fair value of scheme assets at 1 January                        160.9     

155.0

Expected return on scheme assets                                 10.5     
11.3
Contributions                                                     8.9      16.1
Benefits paid                                                   (5.7)     (5.3)
Actuarial gains/(losses)                                          8.5    (14.9)
Exchange movements                                                8.0     (1.3)
Fair value of scheme assets at 31 December                      191.1     

160.9

Included in the 2011 contributions above was a one-off payment of £5.0m ($8.0m) made during the year to reduce the scheme deficit.

29 Retirement benefit liabilities (continued)

Analysis of the movement in the balance sheet liability:

                                                                 2012      2011
                                                                   $m        $m

At 1 January                                                     45.8      33.3
Current service cost                                              7.4       7.8
Finance income                                                  (0.1)     (0.5)
Contributions                                                   (8.9)    (16.1)
Plan curtailment                                                    -     (0.5)
                                                                               
Net actuarial losses recognised in the year                       8.5     
22.6
Exchange movements                                                2.3     (0.8)

At 31 December                                                   55.0      45.8

Cumulative actuarial losses recognised in equity:

                                                                 2012      2011
                                                                   $m        $m

At 1 January                                                     73.1      50.5
                                                                               
Net actuarial losses recognised in the year                       8.5     
22.6

At 31 December                                                   81.6      73.1

The actual return on scheme assets was $19.0m (2011 : $(3.6)m).

History of experience gains and losses:

                                          2012     2011    2010     2009    

2008

Difference between the expected and
actual return on scheme assets :                                           
Gain/(loss) ($m)                           8.5   (14.9)     7.5     15.6  (44.3)
Percentage of scheme assets                 4%       9%      5%      11%     44%
Experience losses on scheme
liabilities:
(Loss)/gain ($m)                        (17.0)    (7.7)   (6.5)   (24.0)    25.6
                                                                                

Percentage of the present value of 7% 4% 4% 14%

 21%
the scheme liabilities
Present value of scheme liabilities      246.1    206.7   188.3    174.4   124.7
($m)
Fair value of scheme assets ($m)         191.1    160.9   155.0    140.1   101.6
Deficit ($m)                              55.0     45.8    33.3     34.3    23.1

The contributions expected to be paid during the financial year ending 31 December 2013 amount to $8.3m.

Pension costs for defined contribution schemes are as follows:

                                                                   2012    2011
                                                                     $m      $m
Defined contribution schemes                                       87.5    73.3

There were no contributions outstanding at 31 December 2012 in respect of defined contribution schemes (2011 : $21.5m).

30 Operating lease commitments - minimum lease payments

                                                        2012                2011
                                                   Vehicles,           Vehicles,
                                                   plant and           plant and
                                          Property equipment  Property equipment
                                                $m        $m        $m        $m
                                                                                
Amounts payable under non-cancellable                                      
operating leases due:
Within one year                               85.4      20.4      72.6      10.3
Later than one year and less than five       248.0      21.4     190.3      20.3
years
After five years                             140.8       0.1      91.0       0.3
                                             474.2      41.9     353.9      30.9
The Group leases various offices and facilities under non-cancellable operating
lease agreements. The leases have various terms, escalation clauses and renewal
rights. The Group also leases vehicles, plant and equipment under
non-cancellable operating lease agreements.

31 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.

In February 2010, the Group and several other parties were notified of a legal
claim from a customer in respect of work carried out in 2008.   Management
believe that the Group is in a strong position to defend the claim.  In
addition, the Group is currently cooperating with an investigation in relation
to a facility where it previously provided services.   Management do not
believe that it is probable that a material liability will arise from either of
these matters. There has been no material change to the position on these
matters during the year.

32 Capital and other financial commitments

                                                                 2012      2011
                                                                   $m        $m
                                                                               

Contracts placed for future capital expenditure not provided 12.5 17.3 in the financial statements

The capital expenditure above relates to property plant and equipment. $1.7m of the above amount relates to commitments made by the Group's joint venture companies.

33 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 and funding provided in the ordinary course of business.

                                                                 2012      2011
                                                                   $m        $m
                                                                 35.5      44.0
Sale of goods and services to joint ventures
Purchase of goods and services from joint ventures               33.3     

24.6

Receivables from joint ventures                                  83.1     
36.8
Payables to joint ventures                                       20.8       5.5

In addition to the above, the Group charged JW Holdings Limited, a company in which Sir Ian Wood has an interest, an amount of $0.1m (2011 : $0.1m) for management services provided under normal commercial terms.

Key management compensation is disclosed in note 28.

34 Principal subsidiaries and joint ventures

The Group's principal subsidiaries and joint ventures at 31 December 2012 are
listed below.
                                Country of
                               incorporation Ownership                          
Name of subsidiary or joint         or       interest  Principal activity  
venture                        registration      %
Wood Group Engineering
                                                                                
Wood Group Mustang Holdings,        USA         100    Conceptual studies, 
Inc                                                    engineering, project
                                                                                
J P Kenny Engineering Limited       UK          100    and construction    
                                                       management and control
IMV Projects Inc                  Canada        100    system upgrades.
Wood Group PSN
Wood Group Engineering (North       UK          100    Brownfield engineering
Sea) Limited                                           and modifications,
Wood Group PSN, Inc                 USA         100    production enhancement,
                                                       operations and
Wood Group PAC, Inc                 USA         100    management, training,
                                                       maintenance
Wood Group PSN Limited              UK          100    management and
                                                       abandonment services.
                                                                                
Production Services Network         UK          100                        
(UK) Limited
                                                                                
Wood Group PSN Australia Pty     Australia      100                        
Limited
                                                                                
Production Services Network       Russia        100                        
Sakhalin LLC
                                                                                
Mitchells Oilfield Services         USA         100                        
Inc                               Cyprus        50*
Wood Group CCC Limited
Wood Group GTS
Rolls Wood Group (Repair &          UK          50*    Gas turbine repair and
Overhauls)                                             overhaul
Limited
                                                                                
TransCanada Turbines Limited      Canada        50*                        
Wood Group Pratt & Whitney          USA         49*                             
Industrial Turbine Services,                                               
LLC                                 UK          100
Wood Group Gas Turbine
Services Limited
Wood Group Power Solutions,         USA         100    Power plant engineering,
Inc                                                    procurement and
                                                       construction

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 19 April
2013 as published in the Financial Times on 20 April 2013.

Officers and advisers

Secretary and Registered Office Registrars

R M B Brown                          Equiniti Limited
John Wood Group PLC                  Aspect House
John Wood House                      Spencer Road
Greenwell Road                       Lancing
Aberdeen                             West Sussex
AB12 3AX                             BN99 6DA
Tel: 01224 851000                    Tel: 0871 384 2649

Stockbrokers                         Independent Auditors
JPMorgan Cazenove Limited            PricewaterhouseCoopers LLP
Credit Suisse                        Chartered Accountants and Statutory Auditors
                                     32 Albyn Place
                                     Aberdeen
                                     AB10 IYL
Company Solicitors
Slaughter and May

Financial calendar
Results announced                    5 March 2013
Ex-dividend date                     17 April 2013
Dividend record date                 19 April 2013
Annual General Meeting               15 May 2013
Dividend payment date                22 May 2013
     

The Group's Investor Relations website can be accessed at www.woodgroup.com.

(Source: PR Newswire )
(Source: Quotemedia)

Advertisement

Related Stories

  • No Stories Found

Advertisement



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.