Full year results for the year ended 31 Dec 2014

17 February 2015 Full year results for the year ended 31 December 2014 Growth in 2014 led by performance in Wood Group PSN Production Services Financial Summary Performance in line with expectations and up on 2013 led by strong growth inWood Group PSN Production Services Total Revenue of $7,616.4m up 7.8% on 2013 ($7,064.2m) and Total EBITA of$549.6m up 3.1% on 2013 ($533.0m) Revenue from continuing operations on an equity accounting basis up 14.3% at$6,574.1m (2014: $5,753.2m) Profit from continuing operations on an equity accounting basis before tax andexceptional items (but after tax on JV profits) up 10.9% at $414.5m (2013:$373.7m) Adjusted diluted EPS of 99.6 cents (2013: 98.6 cents) Total dividend of 27.5 cents per share (2013: 22.0 cents) up 25%; intentionremains to increase US dollar dividend per share from 2015 onwards by doubledigit percentage Strong cash generation and robust balance sheet providing security andflexibility $217.3m invested in strategic M&A Internal SG&A cost reductions and deferrals of over $30m to be delivered Anticipate performance in 2015 to demonstrate relative resilience in achallenging market Segmental Headlines Wood Group Engineering Lower contribution from Upstream as anticipated Service offering enhanced through the acquisition of Agility Projects in Norway Well positioned to unlock value for clients and influence overall project coststhrough high quality engineering Wood Group PSN Production Services Strong EBITA growth of 30.4% driven by performance in US shale, includingElkhorn acquired in 2013, and growth in the North Sea High contract renewal success rate in UK North Sea providing good visibilityinto 2015 and beyond Expanded service offering through acquisitions including Swaggart in US Turbine Activities Reduction in EBITA reflecting a lack of EPC volumes; reached final settlementagreement on Dorad Ian Marchant, Chairman commented: "The Group performed well in 2014, delivering in line with expectations againsta backdrop of a steep decline in oil price towards the end of the year. We willcontinue to help customers increase productivity in their new projects andexisting operations. In line with our focus on customer efficiency, we are alsoimplementing internal cost and efficiency measures to ensure we remaincompetitive. We will remain a reimbursable, asset light business with a balanceof opex and capex activities, a broad range of longer term contracts andsignificant customer and geographic diversification. As we look to 2015, weexpect financial performance to demonstrate the quality of our people and therelative resilience of our business in a challenging market, and we will seethe full year benefit from completed acquisitions." Notes: Wood Group is an international energy services company with over $7bn sales.The Group is built on our Core Values and has two reporting segments - WoodGroup Engineering and Wood Group PSN - providing a range of engineering,production support and turbine services to the oil & gas, and power sectors. See detailed footnotes following the Financial Review. Total Revenue and TotalEBITA include the contribution from joint ventures and activities classified asdiscontinued, which includes the results of the businesses that transferred tothe EthosEnergy joint venture prior to its formation in May. Enquiries: Wood Group Andrew Rose - Group Head of Investor RelationsCarolyn Smith - External Affairs Manager 01224 851 000 BrunswickPatrick Handley 020 7404 5959Nina Coed There will be an analyst and investor presentation at the Lincoln Centre, 18Lincoln's Inn Fields, WC2A 3ED at 09.00. Early registration is advised from 08.30. A live webcast of the presentation will be available from www.woodgroup.com/investors.Replay facilities will be available later in the day. Chairman's Statement In May, following the retirement of Allister Langlands, I was delighted to beappointed non-executive Chairman of Wood Group; a business with tremendouspeople, a comprehensive range of value adding services, and operating in amarket with strong long term fundamentals, notwithstanding the current loweroil price environment. Markets In 2014, we saw the anticipated reduction in capex by many operators as theylooked to increase efficiency on capital projects although some areas, such asindependents in North America and NOCs, generally continued to increaseexpenditure. Towards the end of 2014 we witnessed a decline in the oil price.The impact of this and actions we are taking as a result areaddressed in this report. Dividend The Group performed well in 2014, delivering in line with expectations. InFebruary, we outlined our expectation of an increase in the 2014 dividend byaround 25%. The Board has recommended a final dividend of 18.6 cents per share,which makes a total distribution for the year of 27.5 cents, an increase of25%. Reflecting our confidence in longer term growth, our intention remains toincrease the US dollar dividend per share for 2015 onwards by a double digitpercentage. Board changes Allister Langlands retired as Chairman in May having held the role since 2012,being CEO prior to that from 2007 and deputy CEO from 1999. He was an excellentleader of Wood Group and the Board, and we are grateful for his extraordinarycontribution. In November, we announced that Alan Semple, our long serving Chief FinancialOfficer (CFO), will retire from the Board in May 2015. David Kemp will succeedAlan in the role of Group CFO. David joined the Group in 2013 as Wood Group PSNCFO and has demonstrated sound judgement, financial acumen and knowledge in hisrole. Also in November, we announced a new role of Chief Operating Officer(COO) in recognition of the increasing breadth of the Group's operations andlonger term growth potential. Robin Watson, currently CEO of Wood Group PSN,will take on this role during the first half of 2015. Mike Straughen, Group Director of Health, Safety, Security and Environment(HSSE), retired from the Board in June 2014. Mike served on the Board since2007, initially as Chief Executive of Wood Group Engineering. He oversawimpressive growth in the Group's Engineering business globally and made asignificant contribution in leading the Group HSSE function. At the AGM in May,Michel Contie will also step down from the Board having served for five yearsas a non-executive director. Outlook We will continue to be directed by our Core Values. We will focus on helpingcustomers increase productivity and efficiency in new projects and existingoperations and extend asset lives, while recognising safety as the number onepriority. In conjunction with our focus on customer efficiency, we are alsoimplementing internal cost and efficiency measures to ensure we remaincompetitive. We will remain a reimbursable, asset light business with a balance of opex andcapex activities, a broad range of longer term contracts and significantcustomer and geographic diversification. As we look to 2015, we expectfinancial performance to demonstrate the relative resilience of our underlyingbusiness in a challenging market and we will see the full year benefit fromcompleted acquisitions. CEO Review 2014 2013 % $m $m Change Total Revenue 7,616.4 7,064.2 7.8% Total EBITA1 549.6 533.0 3.1% EBITA Margin 7.2% 7.5% (0.3pts) Revenue from continuing operations on an equity 6,574.1 5,753.2 14.3%accounting basis Profit from continuing operations before tax and 414.5 373.7 10.9%exceptionals (after tax on JV profits) on an equityaccounting basis Basic EPS 87.9c 81.4c 8.0% Adjusted diluted EPS2 99.6c 98.6c 1.0% Total Dividend 27.5c 22.0c 25% ROCE 17.7% 19.4% (1.7pts) Note: The commentary on trading performance is presented based onproportionally consolidated numbers, which is the basis used by management torun the business. Total Revenue and Total EBITA include the contribution fromjoint ventures and activities classified as discontinued, which includes theresults of the businesses that transferred to the EthosEnergy joint ventureprior to its formation in May. Financial The Group performed well in 2014, delivering EBITA of $549.6m up 3.1% and AEPSof 99.6c up 1.0% in line with expectations, against a backdrop of increased focuson efficiency by operators and a decline in oil price in the 4th quarter. TheGroup's financial performance reflected the impact of completed strategicacquisitions and our diversified portfolio of geographic markets, customers andservices which positioned the Group well to benefit from areas of growth suchas the US onshore market. Overall, the results reflect strong growth in WoodGroup PSN Production Services more than offsetting the anticipated reduction inWood Group Engineering and weaker performance in Turbine Activities. Our strong balance sheet provides us with both security and flexibility. Inearly 2015 we extended our $950m bilateral borrowing facilities to 2020 andachieved a material improvement in pricing. Also in 2014, we issued $375m ofunsecured notes in the US private placement market, which further diversifiedour funding and extended the maturity profile. Average net debt during the yearwas $416.4m including JVs, and net debt at the year-end on a similar basis was$295.7m, around the lower end of our stated preferred range of 0.5x-1.5x netdebt to EBITDA. Operational In 2014, we continued to deliver our strategy underpinned by our focus onsafety, organic growth, collaboration, acquisitions and risk management. The safety of our people and those affected by what we do is our top priority.In 2014, across our workforce we had no fatalities and our total recordablecase frequency (TRCF) and our lost work case frequency (LWCF) measures bothshowed improvement in the year. In August, we appointed a new Group Head ofHSSE, Nina Schofield, to continue our focus on improvement and furtherdeveloping assurance across the Group. Organic growth has accounted for close to 70% of the Group's growth since IPOand remains a primary objective. As such we continued to enhance our approachand processes in 2014, identifying and securing opportunities across ourbusiness through over 2,000 individual contract awards. Our order book relativeto future sales is at the lower end of 6-9 months in our Engineering businessand over 12 months in Wood Group PSN Production Services. Collaboration has been an important focus area in the year. Working together asa Group developing the strong relationships we have with our customers hasincreased our pipeline of opportunities and we have secured several contractsincluding ExxonMobil in Malaysia, Tatweer in Saudi Arabia and Cabinda inAngola, which we do not believe would otherwise have been possible. In 2014, we have seen the full year benefit of the successful acquisitions ofElkhorn in the US and Pyeroy in the UK, both of which have delivered notablegrowth since acquisition in 2013. We invested a further $217.3m on M&A in theyear. We acquired Sunstone, a Calgary based pipeline consultancy; CapeSoftware, a Texas based training and process simulation company; Meesters, aspecialist fabrication business in the Bakken shale region; Agility ProjectsAS, an offshore greenfield and brownfield company in the Norwegian sector ofthe North Sea; and in December we acquired Swaggart, a provider of civilconstruction and fabrication services in in the US. We also entered into ajoint venture with Siemens, EthosEnergy, in May, to improve the longer termpositioning of our less differentiated Turbine Activities. Our risk profile remains key to how we manage the business and establish anappropriate balance of through-cycle resilience with upside potential. Westrive to maintain a diversified portfolio of geographic markets, customers andservices. We are an asset light people business with significant flexibility,and around 60% of our revenues are customer opex driven relating to existingproduction. We are also a primarily reimbursable business with around 95% ofGroup revenue on this basis. Reaction to a lower oil price environment We are taking a number of actions in the lower price environment. Firstly, weare increasing our business development focus, highlighting how we can help ourcustomers achieve their objective of reduced cost and increased efficiency. Thelower oil price brings challenges for our customers, and we are in activediscussions with them to assess how we can work together to improve performancefrom new and existing assets and reduce costs without affecting the safety orthe integrity of the assets they operate. We are implementing plans to maintainand increase our own efficiency to ensure our ongoing competitiveness. Thiswill continue to emphasise the importance of collaboration across Wood Group;management of our people utilisation levels; a range of short term and longerterm actions designed to manage and reduce cost; and increased focus on creditrisks. Our internal focus on efficiency is anticipated to lead to costreductions and deferrals over $30m in comparison to 2014. Alongside this,we will continue to look to make value adding acquisitions that areconsistent with our strategy but will apply tougher filters on theseacquisitions reflecting the macro environment. The resilience of our through cycle model is demonstrated in the historicearnings growth profile of the Group. I have confidence that my managementteam's significant experience and long record of success in cyclical oil andgas markets will ensure we take the steps necessary to maximise performance inthe new commodity price environment. Wood Group Engineering Through Wood Group Mustang and Wood Group Kenny, we provide a wide range ofmarket leading engineering services to the upstream, subsea & pipeline,downstream, chemical, process & industrial and clean energy sectors. Theseinclude conceptual studies, engineering, project and construction management(EPCM) and control system upgrades. 2014 2013 % $m $m Change Revenue 2,130.7 1,985.4 7.3% EBITA 232.0 246.0 (5.7%) EBITA margin 10.9% 12.4% (1.5pts) People3 11,200 10,600 5.7% In Wood Group Engineering, revenue increased by 7.3%, EBITA decreased by 5.7%and EBITA margin fell by 1.5pts to 10.9%, reflecting lower margins in Upstream.Subsea & Pipelines and Downstream continued to perform well, howeverperformance overall was impacted by the anticipated lower contribution fromUpstream, which saw growth in onshore activity but was impacted by a reductionin US offshore and in Canadian oil sands. Our Upstream business accounted for around 40% of Engineering revenue.Following the substantial completion of our scope on Mafumeira Sul and Ichthysin 2013 and the deferral of a number of projects as clients reassessed largerdevelopments, we saw a slower pace in the award of significant replacementdetailed offshore engineering contracts in 2014. Notwithstanding this, weremained active on detailed engineering for offshore work including DetNorske's Ivar Aasen, Anadarko Heidelberg and Hess Stampede which was awardedtowards the end of the year; benefitted from onshore work in the US; and saw agreater volume of early stage project work than in previous years. We believeour involvement in early stage project work can significantly improve overallcosts and is an encouraging indicator of customers turning to engineering toimprove capital efficiency. The acquisition of Agility Projects AS, with whom we had worked previously onthe Ivar Aasen contract, completed in September 2014. The acquisition ofAgility strengthens our offshore greenfield offering and adds a brownfieldplatform engineering capability in the Norwegian sector of the North Sea. Subsea & pipelines represented around 40% of Engineering revenue. Performance in oursubsea business has been led by good activity from our UK business, supportingprojects in Africa, the Middle East and the Caspian. This included activitywith BP on Shah Deniz and Tullow on the TEN project in Ghana where we have beenproviding services including engineering and project management support. InAustralia, we are seeing the anticipated move to a higher proportion ofbrownfield activity as current greenfield projects, such as Gorgon, arecompleted. Our onshore pipelines business benefitted from US shale relatedpipeline work. Downstream, process & industrial activities accounted for around 20% ofrevenue. We have seen some benefit of brownfield and greenfield work inrefining and chemicals markets, in part due to the continued benefit of lowergas prices in the US. Outlook We remain well positioned to unlock value for clients and influence overallproject costs through the delivery of high quality engineering. While thecurrent oil price poses challenges for customers, we are confident that theEngineering market will strengthen in the longer term, with the greater volumeof early stage projects in Upstream providing an encouraging indicator offuture activity. Wood Group PSN Production Services We are a market leader in production facilities support focused on optimisingproduction and extending asset life safely. We provide life of field servicesto producing assets through brownfield engineering and modifications,production enhancement, operations and maintenance, facility construction andmaintenance management, training and abandonment services. 2014 2013 % $m $m Change Revenue 4,636.0 3,996.0 16.0% EBITA 341.7 262.1 30.4% EBITA margin 7.4% 6.6% 0.8pts People 28,100 29,000 (3.1%) Wood Group PSN's Production Services activities delivered strong growth, withrevenue up 16.0% and EBITA up 30.4%. This increase is primarily attributable toperformance in the Americas, led by higher margin US shale related activity,including the benefit of Elkhorn acquired in December 2013, and growth in theNorth Sea business. In 2014, the Americas accounted for around 40% of Production Services revenue.Our US onshore activities, which are predominantly shale related, grewsignificantly, contributing over $1bn in revenue and were the largestcontributor to Production Services EBITA. Our shale activities include wellsite preparation, infrastructure development and production related operations& maintenance and around 55-60% are opex related. We strengthened our serviceoffering in 2014 with the addition of Meesters, a specialist fabricationbusiness in the Bakken region and the acquisition in December of Swaggart, acivil construction and fabrication services business. Our opex focused North Sea business accounted for 40% of revenue and remainedrobust, benefitting from growth in Pyeroy, acquired in 2013. We securedcontract renewals worth in excess of $1.5bn which help maintain our leadingposition and provide good visibility, including multi-year contracts withTalisman Sinopec, BP and Enquest for the provision of engineering, procurement,construction and maintenance services. We have seen a continued focus bycustomers on their costs in the North Sea and have responded by delivering anumber of solutions including implementing two cuts to contractor rates in Mayand December, which together reduce these costs to customers by around 20%. Wecontinue to work with our customers to safely deliver production optimisation,asset life extension and operating cost management programmes which arebecoming increasingly important in this mature basin. Internationally, we have secured and commenced work on a number of importantcontracts. These include EPCM services for Woodside in Australia and ExxonMobilin Malaysia, and brownfield engineering and procurement support work forExxonMobil in Papua New Guinea. In the Middle East we are seeing expansion inIraq with BP and Taqa. We anticipate fully exiting our contract with PDO inOman in mid-2015. Outlook Our focus on production related activity significantly weighted towardscustomer opex will provide relative resilience in a more challenging market in2015. We currently see opportunities for growth in a number of areas in 2015including the Middle East, Africa and Australasia, and we will benefit from therecent Swaggart acquisition in the US where we see a good longer term marketfor our shale activities. Turbine Activities Through three joint venture arrangements, we provide industrial gas turbine androtating equipment repair, maintenance, overhaul and power plant EPC servicesto the oil & gas and power sectors. 2014 2013 % $m $m Change Turbine JVs 818.6 896.9 (8.7%) Dorad/GWF 31.1 185.9 (83.3%) Total Revenue 849.7 1,082.8 (21.5%) Turbine JVs 44.7 72.3 (38.2%) Dorad/GWF (11.4) 8.5 n/m Total EBITA 33.3 80.8 (58.8%) Total EBITA Margin 3.9% 7.5% (3.6pts) Our Turbine Activities comprise: the two joint ventures with Siemens,EthosEnergy (Ethos) and RWG, and our joint venture with TransCanada,TransCanada Turbines (TCT) (together "Turbine JVs"). Turbine Activities alsoincluded the legacy Dorad EPC contract in 2014 and the Dorad and GWF contractsin 2013. In Turbine JVs, revenue fell 8.7% and EBITA fell 38.0% largely due toperformance in Ethos, which was adversely impacted by lower EPC project work,and in the other JVs' overall which were impacted by lower volumes in certainengine types. On the Dorad contract we have reached agreement with the customer over a finalsettlement position. The contract generated a profit overall, with a lossrecognised in 2014 of $11.4m. Outlook In 2015 we expect to see some recovery in performance in the Turbine JVs, ledby EthosEnergy where the focus will be on actions to improve performance,including the delivery of synergies. Following a review of lump sum & fixedprice contracts in 2013, we will not pursue fixed price EPC contracts ofequivalent size and complexity to Dorad. Financial Review Trading performance Trading performance is presented based on proportionally consolidated numbers,which is the basis used by management to run the business. Total Revenue andTotal EBITA include the contribution from joint ventures and activitiesclassified as discontinued, which includes the results of the businesses thattransferred to the EthosEnergy joint venture prior to its formation in May. Areconciliation to statutory measures of operating profit from Total EBITA ispresented below. A reconciliation to revenue and operating profit fromcontinuing operations excluding joint ventures is included in note 1 to theGroup financial statements. 2014 2013 $m $m Total Revenue 7,616.4 7,064.2 Total EBITA 549.6 533.0 EBITA margin % 7.2% 7.5% Amortisation - software and system (40.2) (44.5)development Amortisation - intangible assets from (61.0) (57.6)acquisitions EBIT 448.4 430.9 Net finance expense (24.2) (18.6) Profit before tax and exceptional items 424.2 412.3 Taxation before exceptional items (115.5) (113.4) Profit before exceptional items 308.7 298.9 Exceptional items, net of tax 27.6 1.6 Profit for the year 336.3 300.5 Basic EPS (cents) 87.9c 81.4c Adjusted diluted EPS (cents) 99.6c 98.6c The review of our trading performance is contained within the CEO Reviewabove. Reconciliation of Total EBITA to operating profit per accounts The table below sets out a reconciliation of EBITA to operating profit per thegroup income statement before exceptional items. Operating profit on a postexceptional basis by segment is included in note 1 to the financial statements. 2014 2013 $m $m EBITA 549.6 533.0 Amortisation (101.2) (102.1) EBIT 448.4 430.9 Tax and interest charges on joint (15.9) (11.6)ventures included within operatingprofit but not in EBITA Operating loss/(profit) from 4.3 (27.8)discontinued activities Operating profit before exceptional 436.8 391.5items per accounts "Like for like" trading performance The "like for like" pro forma performance of the Group, adjusting foracquisitions and on a constant currency basis, is shown below. The 2013 resultshave been restated to include the results of acquisitions made in 2013 (Elkhornand Pyeroy in Wood Group PSN Production Services and Intetech in Engineering)as if they had been acquired on 1 January 2013 and also to apply the averageexchange rates used to translate the 2014 results. The 2014 results have beenrestated to exclude the results of acquisitions made in 2014 (Meesters andSwaggart in PSN Production Services and Cape, Sunstone and Agility inEngineering). Unaudited 2014 2014 2013 2013 Revenue EBITA Revenue EBITA $m $m $m $m Wood Group Engineering 2,019.8 222.5 1,981.8 246.1 Wood Group PSN - Production 4,621.9 341.4 4,409.5 299.8Services Wood Group PSN - Turbine 849.7 33.3 1,086.5 81.7Activities Central costs - (57.4) - (56.9) Pro forma Revenue and EBITA 7,491.4 539.8 7,477.8 570.7 Acquisitions 125.0 9.8 (394.0) (38.5) Constant currency adjustment - - (19.6) 0.8 Total Revenue and EBITA as 7,616.4 549.6 7,064.2 533.0reported Amortisation The amortisation charge for 2014 including joint ventures on a proportionalbasis of $101.2m (2013: $102.1m) includes $61.0m (2013: $57.5m) of amortisationrelating to intangible assets arising from acquisitions. Of this amount $27.7m(2013: $38.5m) is in respect of the 2011 acquisition of PSN and $21.4m (2013:$8.5m) relates to the acquisitions of Elkhorn and Mitchells. Amortisation inrespect of software and development costs was $40.2m (2013: $44.5m) and thislargely relates to engineering software and ERP system development. Included in the amortisation charge for the year above is $2.3m (2013: $0.4m)in respect of joint ventures. Net finance expense Net finance expense, including joint ventures on a proportional basis, isanalysed further below. Full year Full year 2014 2013 $m $m Interest on debt 12.9 10.2 Bank fees and charges 8.0 9.5 Interest and fees on US 4.7 -private placement debt Total finance expense 25.6 19.7 Finance income (1.4) (1.1) Net finance expense 24.2 18.6 Interest cover4 was 22.7 times (2013: 28.7 times). In the second half of 2014,the Group issued $375m of unsecured senior notes in the US private placementmarket. The notes were issued at a mix of 7, 10 and 12 year maturities at anaverage fixed rate of 3.74%. In early 2015 we also extended our $950m bilateralborrowing facilities to 2020 and achieved a material improvement in pricing. Included in the above are net finance charges of $1.9m (2013: $0.7m) in respectof joint ventures. Exceptional (income)/expense Full year Full year 2014 2013 $m $m Venezuela settlement (58.4) - Integration and restructuring 7.5 15.9charges Lease termination income - (15.1) Onerous contract (9.7) 28.0 Bad debt recoveries - (6.0) Transaction related costs 23.0 11.1 Gain on divestment of Well Support - (34.4)division Total exceptional items pre-tax (37.6) (0.5) Tax on exceptional items 10.0 (1.1) Total exceptional items net of tax (27.6) (1.6) In January 2014, the Group finalised a settlement agreement in respect of acontract taken over by the Venezuelan national oil company, PDVSA, in 2009. Again of $58.4m has been recorded in the income statement. $5.5m of thesettlement relates to a minority shareholder. Further restructuring charges of $7.5m have been recorded in the year inrelation to the decision made in 2013 to exit certain markets in Wood GroupPSN's Americas business. In December 2013, the Group provided $28.0m in respect of Wood Group PSN'scontract in Oman. The provision has been reassessed at the end of 2014 with$9.7m of the provision being released and credited to exceptional items. Transaction related costs of $23.0m are in respect of EthosEnergy in 2014 andare discussed below. EthosEnergy Transaction On 6 May, 2014 we entered a joint venture with Siemens, EthosEnergy, to improvethe longer term positioning of our less differentiated Turbine Activities.Whilst Wood Group has a 51% shareholding in the new entity, all significantdecision making requires unanimous consent from both shareholders. Wood Groupdoes not have control and the business is therefore accounted for as a jointventure. The initial transaction was accounted for as follows: $m $m Book value of Wood Group net assets transferred to 541.8EthosEnergy Cash received and receivable (157.4) Wood Group net assets disposed 384.4 Value of Wood Group's investment in EthosEnergy (384.4) - Wood Group costs associated with the creation ofEthosEnergy Cumulative foreign exchange losses recycled through the 7.0income statement Transaction related costs 16.0 23.0 23.0 The value of the investment in EthosEnergy at 31st December 2014 reduced to $360.2m,reflecting the post-tax results of EthosEnergy for the 8 months and foreignexchange losses on the retranslation of the underlying net assets. In respect of cash received and receivable of $157.4m, under the joint ventureagreement Wood Group received a 51% ownership interest in EthosEnergy andEthosEnergy was required to pay Wood Group $70.0m, of which $21.0m was paid inMay 2014. In addition, $37.6m was paid by EthosEnergy in respect of post closeadjustments for working capital and indebtedness at the date of formation witha further $49.8m payable in future periods. Foreign exchange losses of $7.0m which were recorded in the currencytranslation reserve in prior periods in relation to the businesses transferredinto EthosEnergy have been recycled through the income statement as required byIAS 21. Transaction costs include legal fees and other costs associated with the setupof the joint venture, accelerated share based charges and a provision forliabilities which the Group has retained as part of the joint ventureagreement. An impairment review was carried out in December 2014 based on the latestbudgets and forecasts for EthosEnergy. The review was based on the budgeted andforecast cash flows for the business and showed headroom of $32m using a 15%pre-tax discount rate and a 3% terminal growth rate. A sensitivity analysis wasperformed on the basis that the expected long-term growth rate falls to 2% andthe pre tax discount rate increased by 1% in order to assess the impact ofreasonable possible changes to the assumptions used in the impairment review.The analysis showed that a 1% reduction in growth rate resulted in $1m ofheadroom and a 1% increase in the discount rate resulted in a $10m shortfall.Management view is that the investment in EthosEnergy is not impaired, in partrecognising that the management team of EthosEnergy have clear plans to improveperformance. The carrying value will continue to be monitored going forward. Taxation The effective tax rate on profit before tax and exceptional items includingjoint ventures and discontinued operations on a proportionally consolidatedbasis is set out below. Full year Full year 2014 2013 $m $m Profit before tax and exceptional 424.2 412.3items Tax before exceptional items 115.5 113.4 Effective tax rate on profit before 27.2% 27.5%tax and exceptional items The tax charge above includes $14.0m in relation to joint ventures (2013:$10.9m). Going forward we expect the medium term effective tax rate on a similar basisto remain around 27.5%. The effective tax charge under equity accounting is 23.8%. The pre-tax profitnumber used to compute this figure includes the post- tax contribution fromjoint ventures and as such we do not consider this to be a meaningful measure. Earnings per share Adjusted diluted EPS for the year was 99.6 cents per share (2013: 98.6 cents).The average number of fully diluted shares used in the EPS calculation for theperiod was 375.2m (2013: 373.5m). Adjusted diluted EPS adds back all amortisation. If only the amortisationrelated to intangible assets arising on acquisition is adjusted and noadjustment is made for that relating to software and development costs, thefigure for 2014 would be 91.8 cents per share (2013: 90.0 cents). Dividend In February 2014, we signalled our confidence in the longer term outlook forthe Group and expectation of increasing the dividend in 2014 by around 25%, andour intent to increase the US dollar value of dividend per share paid from 2015onwards by a double digit percentage. In line with our policy, the Board is recommending a final dividend of 18.6cents per share, an increase of 25%, which, when added to the interim dividendof 8.9 cents per share makes a total distribution for the year of 27.5 centsper share (2013: 22.0 cents), an increase of 25%. The dividend is covered 3.6times (2013: 4.5 times) by adjusted earnings per share. Since IPO the Group has increased the dividend by an equivalent of 20% perannum compound. Cash flow and net debt The cash flow and net debt position below has been prepared using equityaccounting for joint ventures, and as such does not proportionally consolidatethe cashflows, assets and liabilities of joint ventures. The gross and net debtfigures including joint ventures are below for information. Full year Full year 2014 2013 $m $m Opening net debt (excluding JV's) (325.3) (145.5) Cash generated from operations pre 650.9 573.8working capital (excluding JV's) Working capital movements (excluding (79.5) (65.2)JV's) Cash generated from operations 571.4 508.6 Acquisitions (262.9) (290.4) Capex and intangibles (110.2) (135.4) Tax paid (84.9) (123.7) Interest, dividends and other (114.7) (138.9) Increase in net debt (1.3) (179.8) Closing net debt (excluding JV's) (326.6) (325.3) JV net cash 30.9 15.8 Closing net debt (including JV's) (295.7) (309.5) Throughout the period the Group debt levels (including JV cash and debt) areset out below. Full Year Full Year 2014 2013 $m $m Average net debt 416.4 258.4 Average gross debt 643.4 436.0 Closing net debt 295.7 309.5 Closing gross debt 559.3 493.0 Cash generated from operations pre-working capital increased by $77.1m to$650.9m and post-working capital increased by $62.8m to $571.4m. The majority of the higher working capital outflow of $79.5m in 2014 was due toincreased receivables. This was caused in part by higher levels of activity andin part by an increase in average days sales outstanding in 2014 to 58 daysfrom 54 days in 2013. Expenditure on Acquisitions of $262.9m ($290.4m) includes $217.3m relating tothe acquisitions of Agility, Sunstone, Meesters, Cape and Swaggarts. $40.8mrelates to payments made in respect of companies acquired in prior periods and$4.8m relates to the acquisition of minority shareholdings. Payments for capex and intangible assets were $110.2m (2013: $135.4m) andincluded investment in plant and infrastructure related to our US shaleexpansion, the ongoing requirement for updated design software in relation tothe Engineering businesses, plus our continued development of our ERP systemsacross the Group. Tax paid is lower in 2014 due to the timing of instalment payments incertain jurisdictions. Payments for interest, dividend and other are lower in2014 as a result of the purchase of shares by the employee share trusts in2013, offset by higher dividend payments in 2014. Summary Balance Sheet The balance sheet below has been prepared using equity accounting for jointventures, and as such does not proportionally consolidate the joint venturesassets and liabilities. Dec Dec 2014 2013 $m $m Non-current assets 2,739.6 2,276.3 Current assets 1,647.3 2,052.7 Current liabilities (1,093.9) (1,267.4) Net current assets 553.4 785.3 Non-current liabilities (733.7) (645.3) Net assets 2,559.3 2,416.3 Equity attributable to owners of 2,546.2 2,407.4the parent Non-controlling interests 13.1 8.9 Total equity 2,559.3 2,416.3 The increase in non-current assets during the year is largely related to theinvestment in EthosEnergy, goodwill and other intangible assets added inrelation to acquisitions made, and expenditure on property, plant andequipment. The reduction in net current assets during the year is also largely related tothe investment in EthosEnergy, offset by higher receivables as noted in thecash flow commentary above. Capital efficiency Net debt (including our share of JV net debt) to Total EBITDA was 0.5 times(2013: 0.5 times). The Board would generally expect net debt to EBITDA to be ina range of around 0.5 to 1.5 times going forward and to be typically below 1.0times. There was no material change to the closing net debt to EBITDA figure ifadjusted for the pro forma impact of acquisitions. To the extent that the Grouphas financial capacity which is surplus to the anticipated needs foracquisitions and organic growth, and giving consideration to market conditions,the Group would look to return this to shareholders through share buy backs orspecial dividends. The Group's Return on Capital Employed ("ROCE")5 including Turbine JVs reducedfrom 19.4% to 17.7% due to higher average working capital, combined with highergoodwill and other intangible assets recognised on acquisition and the lowerEBITA margin achieved in 2014. The Group's ratio of average Operating Capital Employed to Revenue (OCER)6including JVs worsened from 15.6% to 16.2%, as average operating capital grewat a faster rate than revenue. This was primarily due to higher average workingcapital in Wood Group PSN and Wood Group Kenny, offset by a reduction in WoodGroup Mustang. Pensions The majority of the Group's pension arrangements are on a defined contributionbasis. The Group operates one UK defined benefit scheme which had 1,167deferred, pensionable deferred or pensionable members at 31 December 2014. Thescheme was closed to future accrual at 30 June 2014. A past service gain of$6.7m arose as a result of the closure of the scheme and this amount has beencredited to administrative expenses in the income statement. At 31 December 2014 the scheme had a deficit of $27.0m (2013: $41.2m) beforerecognition of a deferred tax asset of $5.4m (2013: $9.1m). In assessing thepotential liabilities, judgment is required to determine the assumptions aroundinflation, investment returns and member longevity. The reduction in thedeficit from 2013 was due to the closure of the scheme to future accrual andthe payment of additional contributions by the company during the year, offsetby actuarial losses. Full details of pension assets and liabilities are provided in note 29 to theGroup financial statements. Acquisitions During the year the Group completed the acquisitions of Meesters, a specialistfabrication business based in the Bakken shale region in North Dakota, CapeSoftware, a Texas based provider of simulation software and services forindustrial control systems used by the oil & gas and other process-basedindustries, Sunstone Projects, a pipeline consulting company providingengineering, procurement and construction management services to clients in theCanadian oil & gas industry, Agility Projects, a Norwegian engineering,procurement, construction management, installation and commissioning companyand Swaggart Brothers, an Oregon-based provider of civil construction andfabrication services to the US oil and gas and other sectors. The initial costof these acquisitions amounted to $217.3m, net of cash and borrowings acquired. Wood Group PSN Production Services performance in the year was impacted byprovisioning against receivables in its US business, which also benefited fromcredits resulting from a release of deferred consideration provisions relatingto prior period acquisitions. The release was in part related to provisionstaken, and the overall impact was not material. *********************** Footnotes 1 Total EBITA represents operating profit including JVs on a proportional basisof $486.0m (2013: $431.4m) before the deduction of amortisation of $101.2m(2013: $102.1m) and exceptional income of $37.6m (2013: $0.5m) and is providedas it is a key unit of measurement used by the Group in the management of itsbusiness. 2 Adjusted diluted earnings per share ("AEPS") is calculated by dividingearnings before exceptional items and amortisation, net of tax, by the weightedaverage number of ordinary shares in issue during the period, excluding sharesheld by the Group's employee share ownership trusts and adjusted to assumeconversion of all potentially dilutive ordinary shares. 3 Number of people includes both employees and contractors at 31 Decemberand includes our proportional share of joint ventures. 4 Interest cover is EBITA divided by the net finance expense. 5 Return of Capital Employed ("ROCE") is Total EBITA divided by average capitalemployed calculated using proportional consolidation. 6 Operating Capital Employed to Revenue (OCER) is the average operating capitalemployed (property, plant and equipment, intangible assets (excludingintangibles recognised on acquisition), inventories and trade and otherreceivables less trade and other payables) divided by total revenue. JOHN WOOD GROUP PLC GROUP FINANCIAL STATEMENTS FOR THE YEAR TO 31ST DECEMBER 2014 Company Registration Number SC 36219 Consolidated income statementfor the year to 31 December 2014 2014 2013 (restated) 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 operations 1 6,574.1 - 6,574.1 5,753.2 - 5,753.2 Cost of sales (5,564.7) - (5,564.7) (4,803.3) - (4,803.3) Gross profit 1,009.4 - 1,009.4 949.9 - 949.9 Administrative expenses (592.9) 50.9 (542.0) (588.3) 1.1 (587.2) Share of post-tax profit from 20.3 9.7 30.0 29.9 (28.0) 1.9joint ventures Operating profit 1 436.8 60.6 497.4 391.5 (26.9) 364.6 Finance income 2 1.4 - 1.4 1.1 - 1.1 Finance expense 2 (23.7) - (23.7) (18.9) - (18.9) Profit before taxation from 3 414.5 60.6 475.1 373.7 (26.9) 346.8continuing operations Taxation 5 (102.9) (10.0) (112.9) (83.1) 0.9 (82.2) Profit for the year from 311.6 50.6 362.2 290.6 (26.0) 264.6continuing operations Profit from discontinued 27 (2.9) (23.0) (25.9) 8.3 27.6 35.9operations, net of tax Profit for the year 308.7 27.6 336.3 298.9 1.6 300.5 Profit attributable to: Owners of the parent 299.9 22.1 322.0 294.3 1.6 295.9 Non-controlling interests 25 8.8 5.5 14.3 4.6 - 4.6 308.7 27.6 336.3 298.9 1.6 300.5 Earnings per share (expressed incents per share) Basic 7 81.9 6.0 87.9 81.0 0.4 81.4 Diluted 7 79.9 5.9 85.8 78.8 0.4 79.2 The income statement for the year ended 31 December 2013 has been restated toshow the results from joint ventures under equity accounting as required byIFRS 11 `Joint arrangements' (proportional consolidation was used previously).Profit from discontinued operations represents the profit from the Wood GroupGTS businesses transferred to EthosEnergy for the period from January to April2014. The notes on pages 23 to 74 are an integral part of these consolidatedfinancial statements. Consolidated statement of comprehensive incomefor the year to 31 December 2014 2014 2013 Note $m $m Profit for the year 336.3 300.5 Other comprehensive income/(expense) Items that will not be reclassified to profit or loss 29 (16.5) 16.5 Re-measurement (losses)/gains on retirement benefitobligations Movement in deferred tax relating to retirement 5 3.3 (3.8)benefit obligations Total items that will not be reclassified to profit or (13.2) 12.7loss Items that may be reclassified subsequently to profitor loss Cash flow hedges 24 (0.1) 0.2 Tax credit relating to share option schemes 5 1.8 3.2 Tax credit relating to foreign exchange on net 5 15.0 -investment in subsidiary Exchange movements on retranslation of foreign 24 (147.4) (37.6)currency net assets Exchange movements on retranslation of non-controlling 25 (0.3) (0.2)interests Total items that may be reclassified subsequently to (131.0) (34.4)profit or loss Other comprehensive expense for the year, net of tax (144.2) (21.7) Total comprehensive income for the year 192.1 278.8 Total comprehensive income for the year is 25 178.1 274.4attributable to: 14.0 4.4Owners of the parent Non-controlling interests 192.1 278.8 Total comprehensive income for the period isattributable to: Continuing operations 218.0 242.9 Discontinued operations 27 (25.9) 35.9 192.1 278.8 Exchange movements on the retranslation of net assets could be subsequentlyreclassified to profit or loss in the event of the disposal of a business. Total comprehensive income from discontinued operations in 2013 includes $10.1mshare of profit from joint ventures. The notes on pages 23 to 74 are an integral part of these consolidatedfinancial statements. Consolidated balance sheetas at 31 December 2014 2013 2014 (restated) Note $m $m Assets Non-current assets Goodwill and intangible assets 8 1,943.5 1,855.0 Property plant and equipment 9 194.6 187.3 Investment in joint ventures 10 460.0 137.8 Long term receivables 12 79.2 68.0 Deferred tax assets 19 62.3 28.2 2,739.6 2,276.3 Current assets Inventories 11 9.1 11.4 Trade and other receivables 12 1,443.6 1,242.8 Income tax receivable 11.5 19.1 Assets held for sale 27 - 634.4 Cash and cash equivalents 13 183.1 145.0 1,647.3 2,052.7 Liabilities Current liabilities Borrowings 15 14.7 74.1 Trade and other payables 14 969.1 951.1 Liabilities held for sale 27 - 183.0 Income tax liabilities 110.1 59.2 1,093.9 1,267.4 Net current assets 553.4 785.3 Non-current liabilities Borrowings 15 495.0 396.2 Deferred tax liabilities 19 3.9 - Retirement benefit obligations 29 27.0 41.2 Other non-current liabilities 16 129.7 141.7 Provisions 18 78.1 66.2 733.7 645.3 Net assets 2,559.3 2,416.3 Equity attributable to owners of the parent Share capital 21 23.7 23.6 Share premium 22 56.0 56.0 Retained earnings 23 2,142.8 1,856.6 Other reserves 24 323.7 471.2 2,546.2 2,407.4 Non-controlling interests 25 13.1 8.9 Total equity 2,559.3 2,416.3 The balance sheet as at 31 December 2013 has been restated to show the resultsfrom joint ventures under equity accounting as required by IFRS 11 `Jointarrangements' (proportional consolidation was used previously). The financial statements on pages 18 to 74 were approved by the board ofdirectors on 16 February 2015. Bob Keiller, Director Alan G Semple, Director The notes on pages 23 to 74 are an integral part of these consolidatedfinancial statements. Consolidated statement of changes in equityfor the year to 31 December 2014 Equity attributable to owners of Non- Share Share Retained Other the controlling Total capital premium earnings reserves parent interests equity Note $m $m $m $m $m $m $m At 1 January 23.5 54.3 1,640.7 508.6 2,227.1 8.2 2,235.32013 Profit for the - - 295.9 - 295.9 4.6 300.5year Othercomprehensiveincome/(expense): Re-measurement 29 - - 16.5 - 16.5 - 16.5gains onretirementbenefitliabilities Movement in 5 - - (3.8) - (3.8) - (3.8)deferred taxrelating toretirementbenefitliabilities Cash flow 24 - - - 0.2 0.2 - 0.2hedges Tax credit 5 - - 3.2 - 3.2 - 3.2relating toshare optionschemes Exchange 24/ - - - (37.6) (37.6) (0.2) (37.8)movements on 25retranslationof foreigncurrency netassets Total - - 311.8 (37.4) 274.4 4.4 278.8comprehensiveincome for theyear Transactionswith owners: Dividends paid 6/25 - - (67.4) - (67.4) (3.1) (70.5) Transactions - - (3.3) - (3.3) (0.6) (3.9)withnon-controllinginterests Credit relating 20 - - 21.0 - 21.0 - 21.0to share basedcharges Shares 23 0.1 1.7 (1.8) - - - -allocated toemployee sharetrusts Shares 23 - - (47.8) - (47.8) - (47.8)purchased byemployee sharetrusts Shares disposed 23 - - 7.9 - 7.9 - 7.9of by employeeshare trusts Exchange - - (4.5) - (4.5) - (4.5)movements inrespect ofshares held byemployee sharetrusts At 31 December 23.6 56.0 1,856.6 471.2 2,407.4 8.9 2,416.32013 Profit for the - - 322.0 - 322.0 14.3 336.3year Othercomprehensiveincome/(expense): Re-measurement 29 - - (16.5) - (16.5) - (16.5)losses onretirementbenefitliabilities Movement in 5 - - 3.3 - 3.3 - 3.3deferred taxrelating toretirementbenefitliabilities Cash flow 24 - - - (0.1) (0.1) - (0.1)hedges Tax credit 5 - - 1.8 - 1.8 - 1.8relating toshare optionschemes Tax credit 5 - - 15.0 - 15.0 - 15.0relating toforeignexchange on netinvestment insusbidiary Exchange 24/ - - - (147.4) (147.4) (0.3) (147.7)movements on 25retranslationof foreigncurrency netassets Total - - 325.6 (147.5) 178.1 14.0 192.1comprehensiveincome for theyear Transactionswith owners: Dividends paid 6/25 - - (87.2) - (87.2) (7.7) (94.9) Transactions 23/ - - 8.5 - 8.5 (2.1) 6.4with joint 25ventures andnon-controllinginterests Credit relating 20 - - 19.5 - 19.5 - 19.5to share basedcharges Shares 23 0.1 - (0.1) - - - -allocated toemployee sharetrusts Shares disposed 23 - - 11.2 - 11.2 - 11.2of by employeeshare trusts Exchange 23 - - 8.7 - 8.7 - 8.7movements inrespect ofshares held byemployee sharetrusts At 31 December 23.7 56.0 2,142.8 323.7 2,546.2 13.1 2,559.32014 The notes on pages 23 to 74 are an integral part of these consolidatedfinancial statements. Consolidated cash flow statementfor the year to 31 December 2014 2013 2014 (restated) Note $m $m Cash generated from operations 26 571.4 508.6 Tax paid (84.9) (123.7) 486.5 384.9Net cash generated from operating activities Cash flows from investing activities Acquisition of subsidiaries (net of cash and 27 (258.1) (287.3)borrowings acquired) Acquisition of non-controlling interests 27 (4.8) (3.1) Proceeds from divestment of subsidiaries (net of 27 1.7 0.3cash and borrowings disposed and divestment costs) Payments received in relation to EthosEnergy 27 58.6 -transaction Purchase of property plant and equipment 9 (59.0) (84.5) Proceeds from sale of property plant and equipment 2.9 2.3 Purchase of intangible assets 8 (51.2) (50.9) Interest received 1.4 1.1 Loans to joint ventures (78.0) (6.6) Investment in joint ventures - (1.3) Net cash used in investing activities (386.5) (430.0) Cash flows from financing activities (Repayment of)/proceeds from bank loans 26 (331.0) 166.7 Proceeds from senior loan notes 15 375.0 - Purchase of shares by employee share trusts 23 - (47.8) Proceeds from disposal of shares by employee share 23 11.2 7.9trusts Interest paid (13.2) (18.0) Dividends paid to shareholders 6 (87.2) (67.4) Dividends paid to non-controlling interests 25 (7.7) (3.1) Net cash (used in)/from financing activities (52.9) 38.3 Net increase/(decrease) in cash and cash 26 47.1 (6.8)equivalents Effect of exchange rate changes on cash and cash 26 (9.0) (5.4)equivalents Opening cash and cash equivalents 145.0 157.2 Closing cash and cash equivalents 13 183.1 145.0 The cash flow statement for the year ended 31 December 2013 has been restatedto show the results from joint ventures using equity accounting as required byIFRS 11 `Joint arrangements' (proportional consolidation was used previously). Cash flows from discontinued operations are disclosed in note 27. The notes on pages 23 to 74 are an integral part of these consolidatedfinancial statements. John Wood Group PLC Notes to the financial statementsfor the year to 31 December 2014 General information John Wood Group PLC, its subsidiaries and joint ventures, provide services tothe oil and gas and power generation industries worldwide. Details of theGroup's activities during the year are provided in the Strategic Report. JohnWood Group PLC is a public limited company, incorporated and domiciled inScotland and listed on the London Stock Exchange. Accounting Policies Basis of preparation These financial statements have been prepared in accordance with IFRS and IFRICinterpretations adopted by the European Union (`EU') and with those parts ofthe Companies Act 2006 applicable to companies reporting under IFRS. The Groupfinancial statements have been prepared on a going concern basis under thehistorical cost convention as modified by the revaluation of financial assetsand liabilities at fair value through the income statement. Significant accounting policies The Group's significant accounting policies adopted in the preparation of thesefinancial statements are set out below. These policies have been consistentlyapplied to all the years presented, unless otherwise stated. Basis of consolidation The Group financial statements are the result of the consolidation of thefinancial statements of the Group's subsidiary undertakings from the date ofacquisition or up until the date of divestment as appropriate. Subsidiaries areentities over which the Group has the power to govern the financial andoperating policies and generally accompanies a shareholding of more than onehalf of the voting rights. The Group's interests in joint ventures areaccounted for using equity accounting. Under this method the Group includes itsshare of joint venture profit on the line `Share of post-tax profit from jointventures' in the Group income statement and its share of joint venture netassets in the `investment in joint ventures' line in the Group balance sheet.All Group companies apply the Group's accounting policies and prepare financialstatements to 31 December. Critical accounting judgments and estimates The preparation of the financial statements requires the use of estimates andassumptions that affect the reported amounts of assets and liabilities at thedate of the financial statements and the reported amounts of revenue andexpenses during the year. These estimates are based on management's bestknowledge of the amount, event or actions and actual results ultimately maydiffer from those estimates. The estimates and assumptions that could result in a material adjustment to the carrying amounts of assets andliabilities are addressed below. (a) Impairment of goodwill The Group carries out impairment reviews whenever events or changes incircumstance indicate that the carrying value of goodwill may not berecoverable. In addition, the Group carries out an annual impairment review. Animpairment loss is recognised when the recoverable amount of goodwill is lessthan the carrying amount. The impairment tests are carried out by CGU (`CashGenerating Unit') and reflect the latest Group budgets. The budgets are basedon various assumptions relating to the Group's businesses including assumptionsrelating to market outlook, resource utilisation, foreign exchange rates,contract awards and contract margins. The outlook for the Group is discussed inthe CEO Review. Pre-tax discount rates of between 11% and 13% have been used todiscount the CGU cash flows and a sensitivity analysis has also been performed(see note 8). (b) EthosEnergy joint venture The Group's investment in the EthosEnergy joint venture is recorded at the bookvalue of the net assets transferred to the joint venture by the Group less cashreceived and receivable. An impairment review was carried out in December 2014based on the latest budgets and forecasts for EthosEnergy using a pre-taxdiscount rate of 15%. See note 10 for further details. (c) Revenue recognition Revenue on fixed price or lump sum contracts for services, constructioncontracts and fixed price long-term service agreements is recognised accordingto the stage of completion reached in the contract by measuring theproportion of costs incurred for work performed to total estimated costs.Estimating the costs to completion and therefore the total contract costs is akey judgment in respect of the revenue recognition on these contracts. (d) Income taxes The Group is subject to income taxes in numerous jurisdictions. Judgement isrequired in determining the worldwide provision for income taxes. The Group recognises liabilities foranticipated tax issues based on estimates of whether additional taxes will bedue. Where the final outcome of these matters is different from the amountsthat were initially recorded, such differences will impact the current anddeferred income tax assets and liabilities in the period in which suchdetermination is made. (e) Retirement benefit liabilities The value of the Group's retirement benefit liabilities is determined on anactuarial basis using a number of assumptions. Changes in these assumptionswill impact the carrying value of the liability. The Group determines theappropriate discount rate to be used in the actuarial valuation at the end ofeach financial year following consultation with the retirement benefit schemeactuary. In determining the rate used, consideration is given to the interestrates of high quality corporate bonds in the currency in which the benefitswill be paid and that have terms to maturity similar to those of the relatedretirement benefit obligation. The Group's retirement benefit scheme was closedto future accrual on 30 June 2014. See note 29 for further details. (f) Provisions The Group records provisions where it has a present obligation (legal orconstructive) as a result of a past event, it is probable that an outflow ofresources will be required to settle the obligation and a reliable estimate ofthe obligation can be made. Where the outcome is less than probable, but morethan remote, no provision is recorded but a contingent liability is disclosedin the financial statements, if material. The recording of provisions is anarea which requires the exercise of management judgement relating to thenature, timing and probability of the liability and typically the Group'sbalance sheet includes provisions for doubtful debts, inventory and warrantyprovisions, contract provisions (including onerous contracts) and pending legalissues. Functional currency The Group's earnings stream is primarily US dollars and the principalfunctional currency is the US dollar, being the most representative currency ofthe Group. The Group's financial statements are therefore prepared in USdollars. The following exchange rates have been used in the preparation of thesefinancial statements: 2014 2013 Average rate £1 = $ 1.6469 1.5673 Closing rate £1 = $ 1.5593 1.6563 Foreign currencies Income statements of entities whose functional currency is not the US dollarare translated into US dollars at average rates of exchange for the period andassets and liabilities are translated into US dollars at the rates of exchangeruling at the balance sheet date. Exchange differences arising on translationof net assets in such entities held at the beginning of the year, together withthose differences resulting from the restatement of profits and losses fromaverage to year end rates, are taken to the currency translation reserve. In each individual entity, transactions in overseas currencies are translatedinto the relevant functional currency at the exchange rates ruling at the dateof the transaction. Where more than one exchange rate is available, theappropriate rate at which assets can be readily realised and liabilities can beextinguished is used. Monetary assets and liabilities denominated in foreigncurrencies 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 foreignentity are treated as assets and liabilities of the foreign entity andtranslated at the exchange rate ruling at the balance sheet date. The directors consider it appropriate to record sterling denominated equityshare capital in the accounts of John Wood Group PLC at the exchange rateruling on the date it was raised. Revenue recognition Revenue comprises the fair value of the consideration received or receivablefor the sale of goods and services in the ordinary course of the Group'sactivities. Revenue is recognised only when it is probable that the economicbenefits associated with a transaction will flow to the Group and the amount ofrevenue can be measured reliably. Revenue from services is recognised as theservices are rendered, including where they are based on contractual rates perman hour in respect of multi-year service contracts. Incentive performancerevenue is recognised upon completion of agreed objectives. Revenue fromproduct sales is recognised when the significant risks and rewards of ownershiphave been transferred to the buyer, which is normally upon delivery of productsand customer acceptance, if any. Revenue is stated net of sales taxes (such asVAT) and discounts. Revenue on fixed price or lump sum contracts for services, constructioncontracts and fixed price long-term service agreements is recognised accordingto the stage of completion reached in the contract by measuring the proportionof costs incurred for work performed to total estimated costs. An estimate ofthe profit attributable to work completed is recognised, on a basis that thedirectors consider to be appropriate, once the outcome of the contract can beestimated 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 netamount of costs incurred to date plus recognised profits less the sum ofrecognised losses and progress billings is disclosed within trade and otherreceivables/trade and other payables. Exceptional items Exceptional items are those significant items which are separately disclosed byvirtue of their size or incidence to enable a full understanding of the Group's financial performance. Transactionswhich may give rise to exceptional items include gains and losses on divestmentof businesses, write downs or impairments of assets including goodwill,restructuring costs or provisions, litigation settlements, provisions foronerous contracts and acquisition and divestment costs. Finance expense/income Interest income and expense is recorded in the income statement in the periodto which it relates. Arrangement fees and expenses in respect of the Group'sdebt facilities are amortised over the period which the Group expects thefacility to be in place. Interest relating to the unwinding of the discount ondeferred and contingent consideration liabilities is included in financeexpense. Interest relating to the Group's retirement benefit scheme is alsoincluded in finance expense. Dividends Dividends to the Group's shareholders are recognised as a liability in theperiod in which the dividends are approved by shareholders. Interim dividendsare 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 fairvalue of the net assets acquired. Goodwill is carried at cost less accumulatedimpairment losses. Goodwill is not amortised. Acquisition costs are expensed inthe income statement. Intangible assets Intangible assets are carried at cost less accumulated amortisation. Intangibleassets are recognised if it is probable that there will be future economicbenefits attributable to the asset, the cost of the asset can be measured reliably, the asset is separately identifiable and there is controlover the use of the asset. Where the Group acquires a business, intangibleassets on acquisition such as customer contracts are identified and evaluatedto determine the carrying value on the acquisition balance sheet. Intangibleassets 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 accumulateddepreciation and impairment. No depreciation is charged with respect tofreehold land and assets in the course of construction. Depreciation is calculated using the straight line method over the followingestimated useful lives of the assets: Freehold and long leasehold buildings 25-50 years Short leasehold buildings period of lease Plant and equipment 3-10 years When estimating the useful life of an asset group, the principal factors theGroup takes into account are the durability of the assets, the intensity atwhich the assets are expected to be used and the expected rate of technologicaldevelopments. Asset lives and residual values are assessed at each balancesheet date. Impairment The Group performs impairment reviews in respect of PP&E, investment in jointventures and intangible assets whenever events or changes in circumstanceindicate that the carrying amount may not be recoverable. In addition, theGroup carries out annual impairment reviews in respect of goodwill. Animpairment loss is recognised when the recoverable amount of an asset, which isthe 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 theappropriate cash generating unit (`CGU'). The CGUs are aligned to the structurethe Group uses to manage its business. Cash flows are discounted in determiningthe value in use. Inventories Inventories, which include materials, work in progress and finished goods andgoods for resale, are stated at the lower of cost and net realisable value.Service based businesses' inventories consist of spare parts and otherconsumables. Serialised parts are costed using the specific identificationmethod and other materials are generally costed using the first in, first outmethod. Product based businesses determine cost by weighted average costmethods using standard costing to gather material, labour and overhead costs.These costs are adjusted, where appropriate, to correlate closely the standardcosts to the actual costs incurred based on variance analysis. Net realisable value is the estimated selling price in the ordinary course ofbusiness, less the estimated costs of completion and estimated sellingexpenses. Allowance is made for obsolete and slow-moving items, based uponannual usage. Cash and cash equivalents Cash and cash equivalents include cash in hand and other short-term bankdeposits with maturities of three months or less. Bank overdrafts are includedwithin borrowings in current liabilities. Where the Group uses poolingarrangements with a right of set-off, overdrafts and cash are netted andincluded in the appropriate category depending on the net position of the pool. Trade receivables Trade receivables are recognised initially at fair value and subsequentlymeasured at amortised cost using the effective interest method, less provisionfor impairment. A provision for impairment of trade receivables is establishedwhen there is objective evidence that the Group will not be able to collect allamounts due according to the original terms of the receivables. The provision is determined byreference to previous experience of recoverability for receivables in eachmarket in which the Group operates. Trade payables Trade payables are recognised initially at fair value and subsequently measuredat amortised cost. Borrowings Borrowings are recognised initially at fair value, net of transaction costsincurred. Borrowings are subsequently stated at amortised cost. Deferred and contingent consideration Where it is probable that deferred or contingent consideration is payable onthe acquisition of a business based on an earn out arrangement, an estimate ofthe amount payable is made at the date of acquisition and reviewed regularlythereafter, with any change in the estimated liability being reflected in theincome statement. Changes in the estimated liability in respect of acquisitionscompleted before 31 December 2009 are reflected in goodwill. Where deferredconsideration is payable after more than one year the estimated liability isdiscounted 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. Taxableprofit differs from the profit reported in the income statement due to itemsthat are not taxable or deductible in any period and also due to items that aretaxable or deductible in a different period. The Group's liability for currenttax is calculated using tax rates enacted or substantively enacted at thebalance sheet date. Deferred tax is provided, using the full liability method, on temporarydifferences arising between the tax bases of assets and liabilities and theircarrying amounts in the consolidated financial statements. The principaltemporary differences arise from depreciation on PP&E, tax losses carriedforward and, in relation to acquisitions, the difference between the fairvalues of the net assets acquired and their tax base. Tax rates enacted, orsubstantially enacted, at the balance sheet date are used to determine deferredtax. Deferred tax assets are recognised to the extent that it is probable thatfuture taxable profits will be available against which the temporarydifferences can be utilised. Accounting for derivative financial instruments and hedging activities Derivatives are initially recognised at fair value on the date the contract isentered into and are subsequently remeasured at their fair value. The method ofrecognising the resulting gain or loss depends on whether the derivative isdesignated as a hedging instrument, and if so, the nature of the item beinghedged. The Group designates certain derivatives as either: (1) hedges of thefair value of recognised assets or liabilities or a firm commitment (fair valuehedge); (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 betweenthe hedging instrument and the hedged item at the inception of the transaction,as well as its risk management objective and strategy for undertaking the hedgetransaction. The Group also documents its assessment, both at hedge inception andon an ongoing basis, of whether the derivatives that are used in hedging transactionsare highly effective in offsetting changes in fair values or cash flows of the hedgeditems. 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 asfair value hedges are recorded in administrative expenses in the incomestatement, together with any changes in the fair value of the hedged asset orliability that are attributable to the hedged risk. b. Cash flow hedge The effective portion of changes in the fair value of derivatives that aredesignated and qualify as cash flow hedges is recognised in the hedging reservein equity. The gain or loss relating to the ineffective portion is recognisedimmediately in administrative expenses (in the case of forward contracts) orfinance income/expense (in the case of interest rate swaps) in the incomestatement. Amounts accumulated in equity are recycled through the incomestatement in periods when the hedged item affects profit or loss. When a hedging instrument expires or is sold, or when a hedge no longer meetsthe criteria for hedge accounting, any cumulative gain or loss existing inequity at that time remains in equity and is recognised when the forecasttransaction is ultimately recognised in the income statement. When aforecast transaction is no longer expected to occur, the cumulative gain orloss that was reported in equity is immediately transferred to the incomestatement. c. Net investment hedge Hedges of net investments in foreign operations are accounted for similarly tocash flow hedges. Any gain or loss on the hedging instrument relating to theeffective portion of the hedge is recognised in the currency translationreserve in equity; the gain or loss relating to the ineffective portion isrecognised immediately in administrative expenses in the income statement.Gains and losses accumulated in equity are included in administrative expensesin 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 notdesignated as hedges. Changes in the fair value of any derivative instrumentsthat are not designated for hedge accounting are recognised immediately inadministrative expenses in the income statement. Fair value estimation The fair value of interest rate swaps is calculated as the present value oftheir estimated future cash flows. The fair value of forward foreign exchangecontracts is determined using forward foreign exchange market rates at thebalance sheet date. The fair values of all derivative financial instruments areobtained from valuations provided by financial institutions. The carrying values of trade receivables and payables approximate to their fairvalues. The fair value of financial liabilities is estimated by discounting the futurecontractual cash flows at the current market interest rate that is available tothe Group for similar financial instruments. Operating leases As lessee Payments made under operating leases are charged to the income statement on astraight line basis over the period of the lease. Benefits received andreceivable as an incentive to enter into an operating lease are also spread ona straight line basis over the period of lease. As lessor Operating lease rental income arising from leased assets is recognised in theincome 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 definedcontribution schemes. The liability recognised in respect of the definedbenefit scheme represents the present value of the defined benefit obligationsless the fair value of the scheme assets. The assets of this scheme are held inseparate trustee administered funds. The scheme was closed to future accrual on30 June 2014. The defined benefit scheme's assets are measured using fair values. Pensionscheme liabilities are measured annually by an independent actuary using theprojected unit method and discounted at the current rate of returnon a high quality corporate bond of equivalent term and currency to theliability. The increase in the present value of the liabilities of the Group'sdefined benefit scheme expected to arise from employee service in theperiod is charged to operating profit. The interest income on scheme assets andthe increase during the period in the present value of the scheme's liabilitiesarising from the passage of time are netted and included in finance expense.Re-measurement gains and losses are recognised in the statement ofcomprehensive income in full in the period in which they occur. The definedbenefit scheme's net assets or net liabilities are recognised in full andpresented on the face of the balance sheet. The Group's contributions to defined contribution schemes are charged to theincome statement in the period to which the contributions relate. Provisions Provision is made for the estimated liability on all products and servicesstill under warranty, including claims already received, based on pastexperience. Other provisions are recognised where the Group is deemed to have alegal or constructive obligation, it is probable that a transfer of economicbenefits will be required to settle the obligation, and a reliable estimate ofthe obligation can be made. Where amounts provided are payable after more thanone year the estimated liability is discounted using an appropriate rate ofinterest. 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's Long Term Incentive Plan (`LTIP') for executive directors and certain senior executives was in place from 2008 to 2012. Participants are awarded shares or share options 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's Long Term Cash Incentive Plan (`LTCIP') for senior management was in place in 2011 and 2012. 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 v. movements in the Group's share price. The charge is spread over the vesting period with the corresponding credit being recorded in liabilities. vi. During 2013, the Group introduced the Long Term Plan (`LTP') to replace the LTRP, LTIP and LTCIP. The LTP comprises two separate awards, an award of share options on a similar basis to the LTRP and an award of shares or share options on a broadly similar basis to the LTIP scheme. The charge to the income statement for the LTP is as outlined for the LTRP andLTIP above with the corresponding credit being recorded in retained earnings. Proceeds received on the exercise of share options are credited to sharecapital and share premium. Share capital John Wood Group PLC has one class of ordinary shares and these are classifiedas equity. Dividends on ordinary shares are not recognised as a liability orcharged to equity until they have been approved by shareholders. The Group is deemed to have control of the assets, liabilities, income andcosts of its employee share trusts, therefore they have been consolidated inthe financial statements of the Group. Shares acquired by and disposed of bythe employee share trusts are recorded at cost. The cost of shares held by theemployee share trusts is deducted from equity. Segmental reporting The Group has determined that its operating segments are based on managementreports reviewed by the Chief Operating Decision Maker (`CODM'), the Group'sChief Executive. The Group's reportable segments are Wood Group Engineering andWood Group PSN. Following the formation of the EthosEnergy joint venture in May2014, all of the Group's predominantly opex related turbine activities arecarried out through joint ventures and now managed and reported as part of WoodGroup PSN. In order to provide visibility over the performance of the turbineactivities, they are included on a separate line (Wood Group PSN - Turbineactivities) in the Group's management information. The Chief Executive measures the operating performance of these segments using`EBITA' (Earnings before interest, tax and amortisation). Operating segmentsare reported in a manner consistent with the internal management reportsprovided to the Chief Executive who is responsible for allocating resources andassessing performance of the operating segments. Wood Group Engineering offers a wide range of engineering services to theupstream, subsea and pipelines, downstream, chemical process and industrial and cleanenergy sectors. These include conceptual studies engineering, project andconstruction management (`EPCM') and control system upgrades. Wood GroupPSN-Production Services offers production facilities support focussed onoptimising production and extending asset life safely. Wood Group PSN-Production Services provides life of field services to producing assets throughbrownfield engineering and modifications, production enhancement, operationsand management, facility construction and maintenance management training andabandonment services. Wood Group PSN - Turbine activities provides industrialgas turbine and rotating equipment repair, maintenance, overhaul and powerplant EPC services to the oil and gas and power sectors. Disclosure of impact of new and future accounting standards (a) Amended standards and interpretations The following relevant standards and amendments and interpretations to existingstandards have been published and are mandatory for the Group's accountingperiods beginning on or after 1 January 2014: * IFRS 10 `Consolidated financial statements' * IFRS 11 `Joint arrangements' * IFRS 12 `Disclosure of interests in other entities' There has been no material impact on the financial statements on the adoptionof IFRS 10, nor IFRS 12. Until 31 December 2013, the Group accounted for its interests in joint venturesusing proportional consolidation. As IFRS 11 does not permit proportionalconsolidation, from 1 January 2014, for all periods presented, the Group hasaccounted for its interests in joint ventures using equity accounting. The useof equity accounting has no impact on Group profit for the year or earnings per share,but does impact the presentation of the Group's interests in joint ventures inthe income statement, the balance sheet and the cash flow statement.Comparative figures have been restated to reflect the change to equityaccounting. For further details see note 36 to the financial statements. (b) Standards, amendments and interpretations to existing standards that arenot yet effective and have not been early adopted by the Group The following relevant standards and amendments and interpretations to existingstandards have been published and are mandatory for the Group's accountingperiods beginning on or after 1 January 2015, but the Group has not earlyadopted them: * IFRS 15 `Revenue from contracts with customers' was published in May 2014 and is effective for accounting periods beginning on or after 1 January 2017. The Group is in the process of assessing the likely impact of this standard on the financial statements. 1 Segmental reporting The Group operates through two segments, Wood Group Engineering and Wood GroupPSN. Following the formation of the EthosEnergy joint venture in May 2014, allof the Group's predominantly opex related turbine activities are carried outthrough joint ventures and now managed and reported as part of Wood Group PSN.In order to provide visibility over the performance of the turbine activities,they are included on a separate line in the table below (Wood Group PSN -Turbine activities). This presentation is consistent with the Group's internalmanagement reporting. Under IFRS 11 `Joint arrangements', the Group is nowrequired to account for joint ventures using equity accounting, however formanagement reporting the Group continues to use proportional consolidation,hence the inclusion of the proportional presentation in this note. The segment information provided to the Group's Chief Executive for thereportable operating segments for the year ended 31 December 2014 includes thefollowing: Reportable Operating Segments (1) Revenue EBITDA(2) EBITA(2) Operating profit Year end Year ended Year end Year ended Year end Year ended Year end Year ended 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 2014 2013 2014 2013 2014 2013 2014 2013 $m $m $m $m $m $m $m $m Wood Group Engineering 2,130.7 1,985.4 248.1 260.3 232.0 246.0 203.9 228.0 Wood Group PSN - Production 4,636.0 3,996.0 368.0 281.5 341.7 262.1 336.1 161.9Services Wood Group PSN - Turbine 849.7 1,082.8 47.3 95.1 33.3 80.8 28.5 65.0activities Well Support - discontinued - - - - - - - 34.4 Central costs (3) - - (52.8) (52.0) (57.4) (55.9) (82.5) (57.9) Total 7,616.4 7,064.2 610.6 584.9 549.6 533.0 486.0 431.4 Remove discontinued (188.5) (652.5) (0.7) (45.8) 1.7 (36.4) 27.3 (55.2) Remove share of joint (853.8) (658.5) (53.2) (48.9) (38.5) (41.8) (45.9) (13.5)ventures Total continuing operations 6,574.1 5,753.2 556.7 490.2 512.8 454.8 467.4 362.7excluding joint ventures Share of post-tax profit 30.0 1.9from joint ventures Operating profit 497.4 364.6 Finance income 1.4 1.1 Finance expense (23.7) (18.9) Profit before taxation from 475.1 346.8continuing operations Taxation (112.9) (82.2) Profit for the year from 362.2 264.6continuing operations Profit from discontinued (25.9) 35.9operations, net of tax (4) Profit for the year 336.3 300.5 Notes * The Group's reportable segments are Wood Group Engineering and Wood Group PSN. Following the formation of the EthosEnergy joint venture in May 2014, all of the Group's predominantly opex related turbine activities are carried out through joint ventures and managed and reported as part of Wood Group PSN. In order to provide visibility over the performance of the turbine activities, they are included on a separate line (Wood Group PSN - Turbine activities) above. * Total EBITDA represents operating profit of $486.0m (2013 : $431.4m) before depreciation of property plant and equipment of $61.0m (2013 : $51.9m), amortisation of $101.2m (2013 : $102.1m) and net exceptional income of $37.6m (2013 : $0.5m). 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. * Central costs include the costs of certain management personnel in both the UK and the US, along with an element of Group infrastructure costs. Central operating profit in 2014 is stated after deducting $23.0m of exceptional costs relating to the formation of the EthosEnergy joint venture. * Profit from discontinued operations, net of tax, represents the profit from the Wood Group GTS businesses transferred to EthosEnergy in May 2014. The profit from discontinued operations for 2013 also includes additional profit relating to the Well Support business divested in 2011. See note 27 for further details. * Revenue arising from sales between segments is not material. Segment assets and liabilities Wood Group Wood Group PSN PSN Wood Group -Production -Turbine Engineering Services activities Unallocated Total At 31 December 2014 $m $m $m $m $m Segment assets 1,094.5 2,345.3 675.3 271.8 4,386.9 Segment liabilities 524.9 635.3 34.4 633.0 1,827.6 At 31 December 2013 Segment assets 880.0 2,342.9 967.8 138.3 4,329.0 Segment liabilities 407.4 685.4 174.4 645.5 1,912.7 Unallocated assets and liabilities includes income tax, deferred tax and cashand cash equivalents and borrowings where this relates to the financing of theGroup's operations. Other segment items 2014 Wood Group Wood Group PSN PSN Wood Group -Production -Turbine Engineering Services activities Unallocated Total $m $m $m $m $m Capital expenditure - Property plant 15.7 34.0 5.3 4.0 59.0and equipment - Intangible assets 31.9 16.0 2.8 0.5 51.2 Non-cash expense - Depreciation of 15.6 23.5 2.6 4.6 46.3property plant andequipment - Amortisation of 28.1 65.9 2.8 2.1 98.9intangible assets - Exceptional items - 7.5 16.0 - 23.5(non-cash element) 2013 $m $m $m $m $m Capital expenditure - Property plant 16.2 55.0 10.7 3.6 85.5and equipment - Intangible assets 29.8 10.7 9.3 1.7 51.5 Non-cash expense - Depreciation of 14.3 17.1 9.5 3.9 44.8property plant andequipment - Amortisation of 32.9 58.2 8.6 2.0 101.7intangible assets - Exceptional items 0.9 9.1 3.6 (37.0) (23.4)(non-cash element) The figures in the tables above are prepared on an equity accounting basis andtherefore exclude the share of joint ventures. Depreciation in respect of joint ventures was $14.7m (2013: $7.1m) and jointventure amortisation was $2.3m (2013: $0.4m). The non-cash exceptional items in Unallocated in 2013 relates to adjustmentsfollowing the disposal of the Well Support business in 2011. Geographical segments Segment assets Continuing revenue 2014 2013 2014 2013 $m $m $m $m UK 1,196.3 1,195.2 1,979.9 1,785.9 US 1,684.1 1,670.2 2,397.2 1,776.1 Rest of the world 1,506.5 1,463.6 2,197.0 2,191.2 4,386.9 4,329.0 6,574.1 5,753.2 Revenue by geographical segment is based on the location of the ultimateproject. 2014 2013 $m $m Revenue by category is as follows: Sale of goods - - Rendering of services 6,574.1 5,753.2 Revenue from continuing operations 6,574.1 5,753.2 2 Finance expense/(income) 2014 2013 $m $m Interest payable on borrowings including senior loan notes 15.7 9.4 Bank facility fees expensed 4.3 4.3 Interest relating to discounting of deferred and contingent 1.9 2.8consideration Interest expense - retirement benefit obligations (note 29) 1.8 2.4 Finance expense - continuing operations 23.7 18.9 Interest receivable on short-term deposits (1.4) (1.1) Finance income (1.4) (1.1) Finance expense - continuing operations - net 22.3 17.8 Interest expense of $1.9m (2013: $0.7m) has been deducted in arriving at theshare of post-tax profit from joint ventures. 3 Profit before taxation 3 Profit before taxation 2014 2013 $m $m The following items have been charged in arriving at profitbefore taxation (before exceptional items) : Employee benefits expense (note 28) 3,256.7 3,252.4 Cost of inventories recognised as an expense 30.6 73.2 Depreciation of property plant and equipment (note 9) 46.3 44.8 Amortisation of intangible assets (note 8) 98.9 101.7 Loss on disposal of property plant and equipment 6.2 1.6 Other operating lease rentals payable: - Plant and machinery 52.0 56.5 - Property 79.3 84.3 Foreign exchange losses 7.4 3.1 Depreciation of property plant and equipment is included in cost of sales oradministrative expenses in the income statement. Amortisation of intangibleassets is included in administrative expenses in the income statement. Theinformation in the above table includes both continuing and discontinuedoperations and is prepared on an equity accounting basis. Services provided by the Group's auditors and associate firms During the year the Group obtained the following services from its auditors andassociate firms at costs as detailed below: 2014 2013 $m $m Fees payable to the Group's auditors and its associate firms 1.0 0.9for - Audit of parent company and consolidated financial statements Audit of Group companies pursuant to legislation 1.9 1.9 Tax and other services 0.1 0.1 3.0 2.9 4 Exceptional items 2014 2013 $m $m Exceptional items included in continuing operations Venezuela settlement (58.4) - Restructuring charges 7.5 15.9 Lease termination income - (15.1) Onerous contract (9.7) 28.0 Other - (1.9) (60.6) 26.9 Taxation 10.0 (0.9) Continuing operations exceptional items, net of tax (50.6) 26.0 Exceptional items included in discontinued operations Gain on divestment - Well Support - (34.4) Costs relating to EthosEnergy transaction 23.0 7.0 23.0 (27.4) Taxation - (0.2) Discontinued operations exceptional items, net of tax 23.0 (27.6) Total exceptional credit, net of tax (27.6) (1.6) During the year, the Group finalised a settlement agreement in respect of acontract taken over by Petróleos de Venezuela S.A.(PDVSA) in 2009 and a gain of$58.4m has been recorded in the income statement. $5.5m of the settlement isattributable to a minority shareholder. Further restructuring charges of $7.5m have been recorded in the period inrelation to the decision made in 2013 to exit certain markets in Wood GroupPSN's Americas business. In December 2013, the Group provided $28.0m in respect of Wood Group PSN'scontract in Oman. The provision has been reassessed at the end of 2014 with$9.7m of the provision being released and credited to exceptional items. For details of the EthosEnergy transaction see note 27. A tax charge of $10.0m has been recorded in respect of continuing exceptionalitems. For further details of the 2013 exceptional items please refer to the 2013Annual Report and Accounts. 5 Taxation 2014 2013 $m $m Current tax - Current year 142.6 109.9 - Adjustment in respect of prior years 0.6 24.9 143.2 134.8 Deferred tax - Current year (15.0) (9.2) - Adjustment in respect of prior years (16.7) (24.2) (31.7) (33.4) Total tax charge 111.5 101.4 Comprising - Tax on continuing operations before exceptional items 102.9 83.1 Tax on exceptional items in continuing operations 10.0 (0.9) Total tax on continuing operations 112.9 82.2 Tax on discontinued operations before exceptional items (1.4) 19.4 Tax on exceptional items in discontinued operations - (0.2) Total tax on discontinued operations (1.4) 19.2 Total tax charge 111.5 101.4 2014 2013 Tax (credited)/charged to equity $m $m Deferred tax movement on retirement benefit liabilities (3.3) 3.8 Deferred tax relating to share option schemes 6.3 10.7 Current tax relating to share option schemes (8.1) (13.9) Deferred tax relating to foreign exchange on net investment in (11.1) -subsidiary Current tax relating to foreign exchange on net investment in (3.9) -subsidiary Total (credited)/charged to equity (20.1) 0.6 Tax is calculated at the rates prevailing in the respective jurisdictions inwhich the Group operates. The expected rate is the weighted average rate takinginto account the Group's profits in these jurisdictions. The expected rate hasdecreased in 2014 due to the change in mix of the tax jurisdictions in whichthe Group operates. The tax charge for the year is lower (2013: lower) than theexpected tax charge due to the following factors: 2014 2013 $m $m Profit before taxation from continuing operations (excluding 445.1 344.9profits from joint ventures) (Loss)/profit before taxation from discontinued operations (27.3) 55.1 Total profit before taxation 417.8 400.0 Profit before tax at expected rate of 27.69% (2013: 29.32%) 115.7 117.3 Effects of: Adjustments in respect of prior years (16.1) 0.7 Non-recognition/(recognition) of losses and other attributes 22.5 (7.6) Effect of foreign taxes (1.5) 6.6 Other permanent differences (9.1) (15.6) Total tax charge 111.5 101.4 The adjustment in respect of prior years relates mainly to timing differenceson expenses which are tax deductible when paid. Other permanent differences include adjustments for share based charges,research and development allowances, changes in unrecognised tax attributes andexpenditure which is not allowable as a deduction for tax purposes. 6 Dividends 2014 2013 $m $m Dividends on ordinary shares Final dividend paid - year ended 31 December 2013: 14.9 cents 54.5 41.4(2013: 11.3 cents) per share Interim dividend paid - year ended 31 December 2014: 8.9 32.7 26.0cents (2013: 7.1 cents) per share 87.2 67.4 The directors are proposing a final dividend in respect of the financial yearended 31 December 2014 of 18.6 cents per share. The final dividend will be paidon 19 May 2015 to shareholders who are on the register of members on 10 April2015. The financial statements do not reflect the final dividend, the paymentof which will result in an estimated $68.4m reduction in equity attributable toowners of the parent. 7 Earnings per share 2014 2013 Earnings Earnings attributable attributable to owners of Number of Earnings per to owners of Number of Earnings per the parent shares share the parent shares share $m (millions) (cents) $m (millions) (cents) Basic pre-exceptional 299.9 366.1 81.9 294.3 363.3 81.0 Exceptional items, net of 22.1 - 6.0 1.6 - 0.4tax and non-controllinginterests Basic 322.0 366.1 87.9 295.9 363.3 81.4 Effect of dilutive ordinary - 9.1 (2.1) - 10.2 (2.2)shares Diluted 322.0 375.2 85.8 295.9 373.5 79.2 Exceptional items, net of (22.1) - (5.9) (1.6) - (0.4)tax and non-controllinginterests Diluted pre-exceptional 299.9 375.2 79.9 294.3 373.5 78.8items Amortisation, net of tax 73.7 - 19.7 74.0 - 19.8 Adjusted diluted 373.6 375.2 99.6 368.3 373.5 98.6 Adjusted basic 373.6 366.1 102.0 368.3 363.3 101.4 Basic discontinued earnings per share for the year is (7.1) cents (2013: 9.9cents) and diluted discontinued earnings per share is (6.9) cents (2013: 9.6cents). The calculation of basic earnings per share is based on the earningsattributable to owners of the parent divided by the weighted average number ofordinary shares in issue during the year excluding shares held by the Group'semployee share trusts. For the calculation of diluted earnings per share, theweighted average number of ordinary shares in issue is adjusted to assumeconversion of all potentially dilutive ordinary shares. The Group's dilutiveordinary shares comprise share options granted to employees under ExecutiveShare Option Schemes and the Long Term Retention Plan and shares and shareoptions awarded under the Group's Long Term Incentive Plan and Long Term Plan.Adjusted basic and adjusted diluted earnings per share are disclosed to showthe results excluding the impact of exceptional items and amortisation, net oftax. 8 Goodwill and intangible assets Software Intangible and assets development arising on Goodwill costs acquisition Total $m $m $m $mCost At 1 January 2014 1,622.2 151.9 384.8 2,158.9 Exchange movements (86.4) (7.4) (32.0) (125.8) Additions - 51.2 - 51.2 Acquisitions (note 27) 200.0 7.0 27.6 234.6 Disposals (7.9) (23.1) - (31.0) Reclassification from property, - 4.9 - 4.9plant and equipment At 31 December 2014 1,727.9 184.5 380.4 2,292.8 Aggregate amortisation and 4.7 97.0 202.2 303.9impairment At 1 January 2014 Exchange movements (0.3) (3.6) (24.4) (28.3) Amortisation charge for the year - 37.9 61.0 98.9 Disposals (3.2) (22.0) - (25.2) At 31 December 2014 1.2 109.3 238.8 349.3 Net book value at 31 December 2014 1,726.7 75.2 141.6 1,943.5 Cost At 1 January 2013 1,638.5 176.9 315.4 2,130.8 Exchange movements (21.3) 0.9 (10.9) (31.3) Additions - 51.5 - 51.5 Acquisitions 138.9 - 82.5 221.4 Disposals - (6.2) - (6.2) Divestment of business (1.8) - - (1.8) Reclassification from current - 0.9 - 0.9assets Reclassification as assets held for (132.1) (72.1) (2.2) (206.4)sale At 31 December 2013 1,622.2 151.9 384.8 2,158.9 Aggregate amortisation and 56.2 105.4 154.2 315.8impairment At 1 January 2013 Exchange movements (0.6) 0.2 (7.7) (8.1) Amortisation charge for the year - 44.2 57.5 101.7 Disposals - (5.6) - (5.6) Divestment of business (1.8) - - (1.8) Reclassification as assets held for (49.1) (47.2) (1.8) (98.1)sale At 31 December 2013 4.7 97.0 202.2 303.9 Net book value at 31 December 2013 1,617.5 54.9 182.6 1,855.0 In accordance with IAS 36 `Impairment of assets', goodwill was tested forimpairment during the year. The impairment tests were carried out against theGroup's Cash Generating Units (`CGU'), being the key Strategic Business Units(`SBUs') within the operating divisions, which are aligned with how the Groupmanages and monitors performance. Value-in-use calculations have been prepared for each CGU using the cash flowprojections included in the financial budgets approved by management for 2015and 2016. Cash flows beyond this period are extrapolated using a growth rate of3% per annum for a further three year period. A terminal value is appliedthereafter in order to calculate long term estimated cash flows using the sameanticipated long term growth rate of 3% across all CGUs. The growth rate useddoes not exceed the long-term average growth rates for the regions in which theCGUs operate. The cash flows have been discounted using pre-tax discount ratesappropriate for each CGU. Division Cash Generating Unit Goodwill Average pre-tax carrying discount rate used value ($m) Wood Group Wood Group Mustang $461.0m 13% Engineering Wood Group Kenny $79.6m WG PSN International $148.6m (Australia and Asia Pacific) WG PSN International $117.3m (Africa) Wood Group PSN - WG PSN International (Middle $8.3m 13% East and ERC) Production Services WG PSN Americas $419.1m WG PSN UK $449.3m WG PSN Global Business $43.5m The pre-tax discount rates used range from 12-15% and the average for thebusinesses is 13%. Details of the key assumptions underlying the cash flows are included incritical accounting judgements and estimates in the Accounting Policies on page23. The value-in-use has been compared to the carrying value for each CGU. Nogoodwill has been written off during the current or prior year. A sensitivity analysis has been performed on the basis that the expectedlong-term growth rate falls to 2% and that the discount rates are 1% higherthan those above in order to assess the impact of reasonable possible changesto the assumptions used in the impairment review. This analysis did notidentify any impairment. Intangibles arising on acquisition include the valuation of customer contractsand customer relationships recognised on business combinations. 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 2014 54.4 19.8 224.9 299.1 Exchange movements (2.0) (0.7) (6.2) (8.9) Additions 7.1 3.6 48.3 59.0 Acquisitions (note 27) - - 12.9 12.9 Disposals (1.7) (1.8) (24.2) (27.7) Divestment of business - - (5.0) (5.0) Reclassification to intangible - - (4.9) (4.9)assets At 31 December 2014 57.8 20.9 245.8 324.5 Accumulated depreciation andimpairment At 1 January 2014 18.9 9.9 83.0 111.8 Exchange movements (0.7) (0.4) (5.0) (6.1) Charge for the year 3.5 3.2 39.6 46.3 Disposals (1.6) (0.9) (16.1) (18.6) Divestment of business - - (3.5) (3.5) At 31 December 2014 20.1 11.8 98.0 129.9 Net book value at 31 December 2014 37.7 9.1 147.8 194.6 Cost At 1 January 2013 63.0 26.3 271.1 360.4 Exchange movements (0.5) (0.6) (1.6) (2.7) Additions 2.4 2.1 81.0 85.5 Acquisitions - - 22.2 22.2 Disposals (1.1) (4.8) (19.6) (25.5) Divestment of businesses - - (3.7) (3.7) Reclassification as assets held (9.4) (3.2) (124.5) (137.1)for sale At 31 December 2013 54.4 19.8 224.9 299.1 Accumulated depreciation andimpairment At 1 January 2013 22.5 13.2 167.3 203.0 Exchange movements - (0.3) (1.6) (1.9) Charge for the year 2.4 2.9 39.5 44.8 Disposals (1.1) (3.3) (17.2) (21.6) Divestment of business - - (3.0) (3.0) Reclassification as assets held (4.9) (2.6) (102.0) (109.5)for sale At 31 December 2013 18.9 9.9 83.0 111.8 Net book value at 31 December 2013 35.5 9.9 141.9 187.3 There were no assets in the course of construction at 31 December 2014 (2013:nil). 10 Investment in joint ventures In relation to the Group's interests in joint ventures, its share of assets,liabilities, income and expenses is shown below. 2014 2013 $m $m Non-current assets 254.2 60.8 Current assets 667.3 324.4 Current liabilities (375.1) (203.2) Non-current liabilities (86.4) (44.2) Net assets 460.0 137.8 Revenue 853.8 658.5 Cost of sales (724.8) (566.4) Administrative expenses (92.8) (50.6) Exceptional income/(expense) 9.7 (28.0) Operating profit 45.9 13.5 Net finance expense (1.9) (0.7) Profit before tax 44.0 12.8 Tax (14.0) (10.9) Share of post-tax results from joint ventures 30.0 1.9 The profit before tax is net of the onerous contract exceptional item referredto in note 4. The assets and liabilities contributed by the Group to theEthosEnergy joint venture were categorised as `held for sale' at 31 December2013. The movement in investments in joint ventures is shown below. $m At 1 January 2014 137.8 Exchange movements on retranslation of net (30.5)assets Additions 384.4 Disposals (49.9) Share of profit after tax 30.0 Dividends (20.3) Other movements 8.5 At 31 December 2014 460.0 The Group's joint venture with Siemens, EthosEnergy Group Limited was formed inMay 2014. Wood Group contributed net assets of $541.8m to the joint venture.Cash received and receivable of $157.4m was netted against that amount and thenet investment in EthosEnergy at date of formation was $384.4m (see note 27).The value of the investment at 31st December 2014 was $360.2m, reflecting thepost-tax results of EthosEnergy for the 8 months and foreign exchange losses onthe retranslation of the underlying net assets. An impairment review was carried out in December 2014 based on the latestbudgets and forecasts for EthosEnergy, the results of which are shown in thefollowing table. Pre-tax discount rate 15% Terminal growth rate 3% Net present value of future post-tax cash flows $391.9m Book value of investment $360.2m Headroom $31.7m The impairment test was based on the budgeted and forecast cash flows for thebusiness. The calculation shows headroom of $31.7m using a 15% pre-tax discountrate and a 3% terminal growth rate. A sensitivity analysis was performed on the basis that the expected long-termgrowth rate falls to 2% and the discount rate is increased by 1% in order toassess the impact of reasonable possible changes to the assumptions used in theimpairment review. The results of the sensitivity analysis are shown in thefollowing table. Pre-tax discount rate 15% 16% Terminal growth rate 2% 3% Net present value of future post-tax cash flows $361.2m $350.1m Book value of investment $360.2m $360.2m Headroom $1.0m $(10.1)m The sensitivity analysis shows that a 1% reduction in growth rate results in$1.0m headroom and a 1% increase in the discount rate results in a $10.1mshortfall. EthosEnergy has only been in operation for eight months and the carrying value of the investment will continue to be monitored goingforward. The joint ventures have no significant contingent liabilities to which theGroup is exposed, nor has the Group any significant contingent liabilities inrelation to its interest in the joint ventures. The name and principalactivities of the most significant joint ventures is disclosed in note 35. 11 Inventories 2014 2013 $m $m Materials 4.6 3.5 Work in progress 0.6 5.0 Finished goods and goods for resale 3.9 2.9 9.1 11.4 12 Trade and other receivables 2014 2013 $m $m Trade receivables 1,122.5 999.3 Less: provision for impairment of trade receivables (47.5) (25.4) Trade receivables - net 1,075.0 973.9 Amounts recoverable on contracts 91.8 103.1 Prepayments and accrued income 60.1 50.4 Loans due from joint ventures 132.4 54.4 Other receivables 84.3 61.0 Trade and other receivables - current 1,443.6 1,242.8 Long term receivables 79.2 68.0 Total receivables 1,522.8 1,310.8 The Group's trade receivables balance is shown in the table below. Trade Provision Trade receivables for receivables Receivable - Gross impairment - Net days 31 December 2014 $m $m $m Wood Group Engineering 401.0 (23.2) 377.8 59 Wood Group PSN - Production 720.0 (24.3) 695.7 58Services Wood Group PSN - Turbine 1.5 - 1.5 n/aactivities Total Group 1,122.5 (47.5) 1,075.0 58 31 December 2013 Wood Group Engineering 373.9 (15.3) 358.6 64 Wood Group PSN - Production 625.4 (10.1) 615.3 52Services Wood Group PSN - Turbine - - - -activities Total Group 999.3 (25.4) 973.9 54 Receivable days are calculated by allocating the closing trade receivablesbalance to current and prior year revenue including sales taxes. A receivabledays calculation of 58 indicates that closing trade receivables represent themost recent 58 days of revenue. A provision for the impairment of tradereceivables is established when there is objective evidence that the Group will not be able tocollect all amounts due according to the terms of the original receivables. The ageing of the provision for impairment of trade receivables is as follows: 2014 2013 $m $m Up to 3 months 14.1 2.6 Over 3 months 33.4 22.8 47.5 25.4 The movement on the provision for impairment of trade receivables is asfollows: Wood Group Wood Group PSN PSN Wood Group -Production -Turbine Engineering Services activities Total $m $m $m $m 2014 At 1 January 15.3 10.1 - 25.4 Exchange movements (0.5) (0.1) - (0.6) Net movement in provision 8.4 14.3 - 22.7 At 31 December 23.2 24.3 - 47.5 2013 At 1 January 21.7 14.0 7.6 43.3 Exchange movements (0.4) - - (0.4) Net movement in provision (6.0) (3.9) (5.6) (15.5) Reclassification as held for - - (2.0) (2.0)sale At 31 December 15.3 10.1 - 25.4 Charges/credits to the income statement are included in administrativeexpenses. The other classes within trade and other receivables do not containimpaired assets. Included within gross trade receivables of $1,122.5m above (2013: $999.3m) arereceivables of $230.9m (2013: $162.5m) which were past due but not impaired.These relate to customers for whom there is no recent history or expectation ofdefault. The ageing analysis of these trade receivables, net of provisions, isas follows: 2014 2013 $m $m Up to 3 months overdue 163.1 129.1 Over 3 months overdue 67.8 33.4 230.9 162.5 Construction contracts Financial information in respect of material Engineering, Procurement andConstruction (`EPC') contracts carried out by Wood Group PSN-Turbine activitiesis as follows: 2014 2013 $m $m Contract costs incurred and recognised profit for projects to 1,082.7 1,051.3date Contract revenue recognised in the year 31.4 183.9 Receivables for work done under these contracts at the 92.1 79.2balance sheet date 13 Cash and cash equivalents 2014 2013 $m $m Cash at bank and in hand 146.6 115.6 Short-term bank deposits 36.5 29.4 183.1 145.0 The effective interest rate on short-term deposits was 0.2% (2013: 0.5%) andthese deposits have an average maturity of 21 days (2013: 44 days). At 31 December 2014 the Group held $10.0m of cash (2013: $10.0m) in itsinsurance captive subsidiary to comply with local regulatory requirements. At 31 December 2014, $26.5m of the cash balance was subject to an attachmentorder. 14 Trade and other payables 2014 2013 $m $m Trade payables 297.2 290.0 Other tax and social security payable 54.6 65.9 Accruals and deferred income 548.3 513.9 Deferred and contingent consideration 3.0 27.6 Other payables 66.0 53.7 969.1 951.1 15 Borrowings 2014 2013 $m $m Bank loans and overdrafts due within one year or on demand Unsecured 14.7 74.1 Non-current bank loans Unsecured 120.0 396.2 Senior loan notes Unsecured 375.0 - Total non-current borrowings 495.0 396.2 Bank loans are denominated in a number of currencies and bear interest based onLIBOR or foreign equivalents appropriate to the country in which the borrowingis incurred. During 2014, the Group issued US$375.0m of unsecured senior loan notes in theUS private placement market. The notes were issued at a mix of 7, 10 and 12year maturities at an average fixed rate of 3.74%. The effective interest rates on the Group's bank borrowings at the balancesheet date were as follows: 2014 2013 % % US Dollar 1.21 1.16 Sterling - 1.47 Euro - 1.24 Canadian Dollar - 2.21 Other 3.14 3.14 The carrying amounts of the Group's bank borrowings are denominated in thefollowing currencies: 2014 2013 $m $m US Dollar 124.5 255.6 Sterling - 91.1 Euro - 61.3 Canadian Dollar - 52.7 Other 10.2 9.6 134.7 470.3 The Group is required to issue trade finance instruments to certain customers.These include tender bonds, performance bonds, retention bonds, advance paymentbonds and standby letters of credit. At 31 December 2014 the Group's bankfacilities relating to the issue of bonds, guarantees and letters of creditamounted to $689.2m (2013: $700.6m). At 31 December 2014, these facilities were49% utilised (2013: 44%). Borrowing facilities The Group has the following undrawn borrowing facilities available at 31December: 2014 2013 $m $m Expiring within one year 108.8 72.1 Expiring between two and five years 830.0 553.8 938.8 625.9 All undrawn borrowing facilities are floating rate facilities. The facilitiesexpiring within one year are annual facilities subject to review at variousdates during 2015. The Group was in compliance with its bank covenantsthroughout the year. In January 2015, the Group extended its $950m bilateralbank facilities until January 2020. 16 Other non-current liabilities 2014 2013 $m $m Deferred and contingent consideration 40.6 57.6 Other payables 89.1 84.1 129.7 141.7 Deferred and contingent consideration represents amounts payable onacquisitions made by the Group and is expected to be paid over the next fiveyears. 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 riskand liquidity risk. The Group's overall risk management strategy is to hedgeexposures wherever practicable in order to minimise any potential adverseimpact on the Group's financial performance. Risk management is carried out by the Group Treasury department in line withthe Group's Treasury policies. Group Treasury, together with the Group'sbusiness units identify, evaluate and where appropriate, hedge financial risks.The Group's Treasury policies cover specific areas, such as foreign exchangerisk, interest rate risk, use of derivative financial instruments andinvestment of excess cash. Where the Board considers that a material element of the Group's profits andnet assets are exposed to a country in which there is significant geo-politicaluncertainty a strategy is agreed to ensure that the risk is minimised. (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 aredenominated in currencies other than the US dollar. Where possible, the Group'spolicy is to eliminate all significant currency exposures on revenues at thetime of the transaction by using financial instruments such as forward currencycontracts. Changes in the forward contract fair values are booked through theincome statement, except where hedge accounting is used in which case thechange in fair value is recorded in equity. The Group does not have any financial instruments in place to hedge foreigncurrency movements in its balance sheet. However, strategies such as payment ofintercompany dividends are used to minimise the amount of net assets exposed toforeign currency revaluation. The Group carefully monitors the economic and political situation in thecountries in which it operates to ensure appropriate action is taken tominimise any foreign currency exposure. The Group's largest foreign exchange risk relates to movements in the sterling/US dollar exchange rate. Movements in the sterling/US dollar rate impact thetranslation of sterling profit earned in the UK and the translation of sterlingdenominated net assets. The potential impact of changes in the sterling/USdollar exchange rate is summarised in the table below. As the Group reports inUS dollars a strengthening of the pound has a positive impact on translation ofits sterling companies' profits and net assets. 2014 2013 $m $m Impact of 10% change to average £/$ exchange rate on profit 12.3 15.1after tax Impact of 10% change to closing £/$ exchange rate on equity 72.9 59.4 10% has been used in these calculations as it represents a reasonable possiblechange in the sterling/US dollar exchange rate. The Group also has foreignexchange risk in relation a number of other currencies, in particular, theAustralian dollar, the Canadian dollar, the Euro and the Norwegian kroner. (ii) Interest rate risk The Group finances its operations through a mixture of retained profits anddebt. The Group borrows in the desired currencies at floating rates of interestand then uses interest rate swaps into fixed rates to generate the desiredinterest profile and to manage the Group's exposure to interest ratefluctuations. At 31 December 2014, 89% (2013: 24%) of the Group's bankborrowings were at fixed rates after taking account of interest rate swaps. Theincrease during the year is due to the repayment of most of the Group'sfloating rate debt following the issue of senior loan notes in the US privateplacement market. If the senior loan notes are taken into account thepercentage of debt at fixed rate increases to 97%. The Group is also exposed to interest rate risk on cash held on deposit. TheGroup's policy is to maximise the return on cash deposits whilst ensuring thatcash is deposited with a financial institution with a credit rating of `A' orbetter, where possible. If average interest rates had been 1% higher or lowerduring 2014 (2013: 1%), post-tax profit for the year would have been $2.7mlower or higher respectively (2013: $2.4m). 1% has been used in thiscalculation 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 itsfinancial instruments. (b) Credit risk The Group's credit risk primarily relates to its trade receivables. The Group'soperations comprise Wood Group Engineering and Wood Group PSN, each of which ismade up of a number of businesses. Responsibility for managing credit riskslies within the businesses with support being provided by Group and divisionalmanagement where appropriate. A customer evaluation is typically obtained from an appropriate credit ratingagency. Where required, appropriate trade finance instruments such as lettersof credit, bonds, guarantees and credit insurance will be used to manage creditrisk. The Group's major customers are typically large companies which have strongcredit ratings assigned by international credit rating agencies. Where acustomer does not have sufficiently strong credit ratings, alternative forms ofsecurity such as the trade finance instruments referred to above may beobtained. The Group has a broad customer base and management believe that nofurther credit risk provision is required in excess of the provision forimpairment of trade receivables. Management review trade receivables across the Group based on receivable dayscalculations to assess performance. There is significant management focus onreceivables that are overdue. A table showing trade receivables and receivabledays is provided in note 12. Receivable days calculations are not provided onnon-trade receivables as management do not believe that this information is arelevant metric. The Group also has credit risk in relation to cash held on deposit. The Group'spolicy is to deposit cash at institutions with a credit rating of `A' or betterwhere possible. 100% of cash held on deposit at 31 December 2014 (2013: 81%)was held with such institutions. (c) Liquidity risk With regard to liquidity, the Group's main priority is to ensure continuity offunding. At 31 December 2014, 89% (2013: 84%) of the Group's borrowingfacilities were due to mature in more than one year. Based on the currentoutlook the Group has sufficient funding in place to meet its futureobligations. During 2014, the Group issued US$375m of unsecured senior loannotes in the US private placement market. The notes were issued at a mix of 7,10 and 12 year maturities. In January 2015, the Group extended its bilateralfacilities of $950m to January 2020. (d) Capital risk The Group seeks to maintain an optimal capital structure. The Group monitorsits capital structure on the basis of its gearing ratio, interest cover andwhen applicable, the ratio of net debt to EBITDA. These ratios are calculatedusing the proportionally consolidated figures used for management reporting. Gearing is calculated by dividing net debt by equity attributable to owners ofthe parent. Gearing at 31 December 2014 was 11.6% (2013: 12.9%). Interest cover is calculated by dividing total EBITA by net finance expense.Interest cover for the year to 31 December 2014 was 22.7 times (2013: 28.7times). The ratio of net debt to total EBITDA at 31 December 2014 was 0.5 (2013: 0.5). Financial liabilities The table below analyses the Group's financial liabilities into relevantmaturity groupings based on the remaining period from the balance sheet date tothe contractual maturity date. The amounts disclosed in the table are thecontractual undiscounted cash flows. Drawdowns under the bilateral bankfacilities are for periods of three months or less and therefore loan interestpayable is excluded from the amounts below. At 31 December 2014 Less than 1 Between 1 Between 2 year and 2 years and 5 years Over 5 $m $m $m years $m Borrowings 28.7 14.0 162.1 447.5 Trade and other payables 914.5 - - - Other non-current liabilities - 37.8 94.2 - At 31 December 2013 Borrowings 74.1 - 396.2 - Trade and other payables 885.2 - - - Other non-current liabilities - 50.6 96.0 - Fair value of non-derivative financial assets and financial liabilities The fair value of short-term borrowings, trade and other payables, trade andother receivables, short-term deposits and cash at bank and in handapproximates to the carrying amount because of the short maturity of interestrates in respect of these instruments. Drawdowns under long-term bankfacilities are for periods of three months or less and as a result, book valueand fair value are considered to be the same. Details of derivative financial instruments are not disclosed in the financialstatements as they are not material. 18 Provisions Warranty Other provisions provisions Total $m $m $m At 1 January 2014 31.6 34.6 66.2 Exchange movements (2.0) (0.3) (2.3) Net movement in provision 4.1 10.1 14.2 At 31 December 2014 33.7 44.4 78.1 Warranty provisions These provisions are recognised in respect of guarantees provided in the normalcourse of business relating to contract performance. They are based on previousclaims history and it is expected that most of the costs in respect of theseprovisions will be incurred over the next two years. Other provisions At 31 December 2014, other provisions of $44.4m (2013: $34.6m) have beenrecognised. This amount includes provisions for non-recoverable indirect taxes,provisions for legal claims, and provisions relating to the divestment ofbusinesses. It is expected that any payment required in respect of theseprovisions would be made within the next two years. 19 Deferred tax Deferred tax is calculated in full on temporary differences under the liabilitymethod using the tax rate applicable to the territory in which the asset orliability has arisen. Deferred tax in relation to UK companies is provided at20% (2013: 22%). The movement on the deferred tax account is shown below: 2014 2013 $m $m At 1 January (28.2) (30.6) Exchange movements 2.4 1.3 Credit to income statement (note 5) (31.7) (33.4) Acquisitions (note 27) 5.9 4.1 Disposals 1.3 - Deferred tax relating to retirement benefit liabilities (3.3) 3.8 Deferred tax relating to share option schemes 6.3 10.7 Deferred tax relating to foreign exchange on net investment (11.1) -in subsidiary Reclassified as held for sale - 15.9 At 31 December (58.4) (28.2) Deferred tax is presented in the financial statements asfollows: Deferred tax assets (62.3) (28.2) Deferred tax liabilities 3.9 - (58.4) (28.2) No deferred tax is recognised on the unremitted earnings of overseassubsidiaries and joint ventures. As these earnings are continually reinvestedby the Group, no tax is expected to be payable on them in the foreseeablefuture. The Group has unrecognised tax losses of $93.7m (2013: $51.1m) to carry forwardagainst future taxable income. Deferred tax assets and liabilities are only offset where there is a legallyenforceable right of offset and there is an intention to settle the balancesnet. The deferred tax balances are analysed below:- Accelerated Share Short term tax based timing depreciation Pension charges differences Losses Total 2014 $m $m $m $m $m $m Deferred tax assets 44.5 (5.4) (10.7) (90.3) (0.4) (62.3) Deferred tax - - - 3.9 - 3.9liabilities Net deferred tax 44.5 (5.4) (10.7) (86.4) (0.4) (58.4)asset 2013 Deferred tax assets 66.3 (9.1) (19.2) (57.1) (9.1) (28.2) 20 Share based charges The Group currently has a number of share schemes that give rise to share basedcharges. These are the Executive Share Option Scheme (`ESOS'), the Long TermRetention Plan (`LTRP'), the Long Term Incentive Plan (`LTIP'), the Long TermCash Incentive Plan (`LTCIP') and the Long Term Plan (`LTP'). The LTP replacedthe LTRP, LTIP and LTCIP in 2013. The charge to operating profit in 2014 forthese schemes amounted to $17.4m (2013: $22.4m). $18.2m (2013: $21.0m) relatingto the charge has been credited to retained earnings and $0.8m (2013: $1.4mcharge) has been deducted from liabilities reflecting a credit to operatingprofit for the year in respect of 2013 true-ups to the LTCIP, which is a cashsettled scheme. In addition, accelerated charges of $4.8m have been booked to exceptional itemsin the period relating to employees who transferred to the EthosEnergy jointventure. $1.3m of this amount is credited to equity and $3.5m, representing thecash amount payable to former Group employees in compensation for loss of theoptions, is credited to non-current liabilities. The assumptions made in arriving at the charge for each scheme are detailedbelow. ESOS and LTRP For the purposes of calculating the fair value of the share options, aBlack-Scholes option pricing model has been used. Based on past experience, ithas been assumed that options will be exercised, on average, six months afterthe earliest exercise date, which is four years after grant date, and therewill be a lapse rate of between 20% for ESOS and 25% for LTRP. The share pricevolatility used in the calculation of 40% is based on the actual volatility ofthe Group's shares since IPO as well as that of comparable companies. The riskfree rate of return is based on the implied yield available on zero coupongilts with a term remaining equal to the expected lifetime of the options atthe date of grant. Long Term Incentive Plan The Group's Long Term Incentive Plan (`LTIP') was in place from 2008 to 2012.Under this Scheme, the executive directors and certain senior executives wereawarded shares or share options dependent upon the achievement of performancetargets established by the Remuneration Committee. The performance measures forthe LTIP were EBITA, OCER (ratio of operating capital employed to revenue),total shareholder return and adjusted diluted earnings per share. The LTIPawards are in the form of shares or share options and forfeitable restrictedshares or share options. 20% of any award earned over the three yearperformance cycle is deferred for a further two years in the form offorfeitable restricted shares or share options. Long Term Plan The Group's Long Term Plan (`LTP') was introduced during 2013 to replace theLTRP, LTIP and LTCIP. Two distinct awards will be made under LTP. Nil valueshare options will be awarded on the same basis as awards under the LTRP (seeabove). Awards to former LTIP and LTCIP participants will be made on a broadlysimilar basis to LTIP with the performance measures being EBITA, totalshareholder return and adjusted diluted earnings per share. Participants may begranted conditional share awards or nil cost options at the start of the cycle.Performance is measured over a three year period and up to 80% of an award mayvest based on the performance over that period. The vesting of at least 20% ofany award is normally deferred for a further period of at least two years. Performance based awards Details of the LTIP/LTP awards are set out in the table below. The charge formarket related performance targets has been calculated using a Monte Carlosimulation model taking account of share price volatility against peer groupcompanies, risk free rate of return, dividend yield and the expected lifetimeof the award. Further details of the LTIP/LTP are provided in the Directors'Remuneration Report. Cycle 3 Cycle 4 Cycle 5 Cycle 6 Cycle 7 (LTIP) (LTIP) (LTIP) (LTP) (LTP) Performance period 2010-12 2011-13 2012-14 2013-15 2014-16 Fair value of awards £3.01 £5.10 £6.18 £7.53 £7.26 Type of award Shares Shares/ Shares/ Options Options options options Outstanding at 31/12/14 370,947 491,657 - 1,912,928 2,241,930 Options issuable at 31/12/14 - - 616,202 - - The awards outstanding under cycles 3 and 4 represent 20% of the award atvesting which is deferred for two years. The options issuable under cycle 5 areestimated based on anticipated achievement against the set targets. Further details on the LTP are provided in the Directors' Remuneration Report. LTCIP The share based charge for the LTCIP for cycle 4 and 5 was calculated using afair value of £5.95 (2013: £6.62). The fair value is calculated using aBlack-Scholes option pricing model using similar assumptions to those used forESOS and LTRP above. Payments under the LTCIP are linked to movements in theGroup's share price. Share options A summary of the basis for the charge for ESOS, LTRP and LTP options is set outbelow together with the number of options granted, exercised and lapsed duringthe year. ESOS LTRP LTP 2014 2013 2014 2013 2014 2013 Number of 1,002 1,054 442 453 293 3participants Lapse rate 25% 20% 20% 15% 20% 15% Risk free rate of 1.55% 1.45% - - 1.55% 1.45%return on grantsduring year Share price 40% 40% 40% 40% 40% 40%volatility Dividend yield on 1.78% 1.47% - - 1.78% 1.47%grants during year Fair value of £2.27 £2.29 - - £7.03 £7.65options grantedduring year Weighted average 6.9 years 7.2 years 2.3 years 2.7 years 4.3 years 4.5remaining yearscontractual life Options outstanding 1 8,736,827 9,655,995 3,421,120 4,915,876 11,500 -January Options granted 1,166,552 1,954,000 - 913,680 973,000 11,500during the year Options exercised (1,872,405) (2,130,318) (1,139,828) (2,104,012) - -during the year Options lapsed during (1,162,480) (742,850) (435,734) (304,424) (22,104) -the year Options outstanding 6,868,494 8,736,827 1,845,558 3,421,120 962,396 11,50031 December No. of options 1,612,803 1,139,791 160,552 256,500 - -exercisable at 31December Weighted average £7.67 £8.54 £7.48 £8.45 - -share price ofoptions exercisedduring year Executive Share Option Schemes The following options to subscribe for new or existing shares were outstandingat 31 December: Year of Number of ordinary Exercise shares under option price Grant 2014 2013 (per share) Exercise period 2004 - 135,000 128½p 2008-2014 2005 - 10,000 145p 2009-2015 2006 35,000 38,500 265¼p 2010-2016 2007 44,000 61,000 268½p 2011-2017 2008 77,658 118,989 381¾p 2012-2018 2008 8,986 8,986 354⅓p 2012-2018 2009 499,621 732,316 222p 2013-2019 2009 25,000 35,000 283⅔p 2013-2019 2010 922,538 2,270,374 377½p 2014-2020 2011 1,309,192 1,730,681 529½p 2015-2021 2012 1,313,636 1,710,398 680½p 2016-2022 2012 5,000 5,000 802p 2016-2022 2013 1,482,019 1,876,583 845⅓p 2017-2023 2013 4,000 4,000 812p 2017-2023 2014 1,141,844 - 767⅔p 2018-2024 6,868,494 8,736,827 Details of the Group's Executive Share Option Schemes are set out in theDirectors' Remuneration Report. Share options are granted at an exercise priceequal to the average mid-market price of the shares on the three days prior tothe date of grant. Long Term Retention Plan The following options granted under the Group's LTRP were outstanding at 31December: Year of Number of ordinary Exercise shares under option price Grant 2014 2013 (per share) 2014 2009 - 256,500 3⅓p 2013-2014 2010 160,552 940,272 3⅓p 2014-2015 2011 71,563 67,917 3⅓p 2015-2016 2011 394,799 495,982 42/7p 2015-2016 2012 583,811 794,010 42/7p 2016-2017 2013 634,833 866,439 42/7p 2017-2018 1,845,558 3,421,120 Options are granted under the Group's LTRP at par value. The basis of thescheme is that an overall bonus pool is calculated annually based onperformance criteria that consider the growth in the Group's adjusted earningsper share in the prior year. There are no performance criteria attached to theexercise of options under the LTRP. Further details on the LTRP are provided inthe Directors' Remuneration Report. Nil value share options The following options granted under the Group's LTP were outstanding at 31December: Year of Number of ordinary Exercise shares under option price Grant 2014 2013 (per share) Exercise period 2013 11,500 11,500 0.00p 2017-2018 2014 950,896 - 0.00p 2018-2019 962,396 11,500 Options are granted under the Group's LTP at nil value. There are performancecriteria relating to the creation of the pool available but none relating tothe exercise of the options. Further details on the LTP are provided in theDirectors' Remuneration Report. 21 Share capital Ordinary shares of 42/7 pence each 2014 2013(2013: 42/7 pence) Issued and fully paid shares $m shares $m At 1 January 375,075,384 23.6 373,175,384 23.5 Allocation of new shares to employee 1,900,000 0.1 1,900,000 0.1share trusts At 31 December 376,975,384 23.7 375,075,384 23.6 22 Share premium 2014 2013 $m $m At 1 January 56.0 54.3 Allocation of new shares to employee share trusts - 1.7 At 31 December 56.0 56.0 23 Retained earnings 2014 2013 $m $m At 1 January 1,856.6 1,640.7 Profit for the year attributable to owners of the parent 322.0 295.9 Dividends paid (note 6) (87.2) (67.4) Credit relating to share based charges (note 20) 19.5 21.0 Re-measurement (loss)/gain on retirement benefit liabilities (16.5) 16.5(note 29) Movement in deferred tax relating to retirement benefit 3.3 (3.8)liabilities Shares allocated to employee share trusts (0.1) (1.8) Shares purchased by employee share trusts - (47.8) Shares disposed of by employee share trusts 11.2 7.9 Tax credit relating to share option schemes 1.8 3.2 Tax credit relating to foreign exchange on net investment in 15.0 -subsidiary Transactions relating to joint ventures and non-controlling 8.5 (3.3)interests Exchange movements in respect of shares held by employee 8.7 (4.5)share trusts At 31 December 2,142.8 1,856.6 Retained earnings are stated after deducting the investment in own shares heldby employee share trusts. No options have been granted over shares held by theemployee share trusts (2013: nil). Shares held by employee share trusts 2014 2013 Shares $m Shares $m Balance 1 January 11,640,553 158.9 11,599,912 112.7 New shares allocated 1,900,000 0.1 1,900,000 1.8 Shares purchased - - 3,934,000 47.8 Shares issued to satisfy (3,012,233) (11.2) (4,227,436) (7.9)option exercises Shares issued to satisfy (1,038,523) - (1,565,923) -awards under Long TermIncentive Plan Exchange movement - (8.7) - 4.5 Balance 31 December 9,489,797 139.1 11,640,553 158.9 Shares acquired by the employee share trusts are purchased in the open marketusing funds provided by John Wood Group PLC to meet obligations under theEmployee Share Option Schemes, LTRP, LTIP and LTP. Shares are allocated to theemployee share trusts in order to satisfy future option exercises at variousprices. The costs of funding and administering the trusts are charged to the incomestatement in the period to which they relate. The market value of the shares at31 December 2014 was $88.3m (2013: $132.3m) based on the closing share price of£5.96 (2013: £6.86). The employee share trusts have waived their rights toreceipt of dividends on ordinary shares. 24 Other reserves Capital Capital Currency reduction redemption translation Hedging reserve reserve reserve reserve Total $m $m $m $m $m At 1 January 2013 88.1 439.7 (18.2) (1.0) 508.6 Exchange movements on - - (37.6) - (37.6)retranslation of foreigncurrency net assets Cash flow hedges - - - 0.2 0.2 At 31 December 2013 88.1 439.7 (55.8) (0.8) 471.2 Exchange movements on - - (147.4) - (147.4)retranslation of foreigncurrency net assets Cash flow hedges - - - (0.1) (0.1) At 31 December 2014 88.1 439.7 (203.2) (0.9) 323.7 The currency translation reserve relates to the retranslation of foreigncurrency net assets on consolidation. This was reset to zero on transition toIFRS at 1 January 2004. The movement during the year relates to theretranslation of foreign currency net assets, including goodwill and intangibleassets recognised on acquisition. The hedging reserve relates to the accountingfor derivative financial instruments under IAS 39. Fair value gains and lossesin respect of effective cash flow hedges are recognised in the hedging reserve. 25 Non-controlling interests 2014 2013 $m $m At 1 January 8.9 8.2 Exchange movements (0.3) (0.2) Share of profit for the year 14.3 4.6 Dividends paid to non-controlling interests (7.7) (3.1) Other transactions with non-controlling interests (2.1) (0.6) At 31 December 13.1 8.9 26 Cash generated from operations 2014 2013 $m $m Reconciliation of operating profit to cash generatedfrom operations: Operating profit from continuing operations 497.4 364.6 Less share of post-tax profit from joint ventures (30.0) (1.9) 467.4 362.7 Operating (loss)/profit from discontinued operations (27.3) 55.2(note 27) 440.1 417.9 Adjustments for: Depreciation 46.3 44.8 Loss on disposal of property plant and equipment 6.2 1.6 Amortisation of intangible assets 98.9 101.7 Share based charges 22.2 22.4 Increase/(decrease) in provisions 7.5 (7.5) Dividends from joint ventures 20.3 24.7 Exceptional items- non cash impact 23.5 (23.4) Changes in working capital (excluding effect ofacquisition and divestment of subsidiaries) Increase in inventories (5.2) (9.7) Increase in receivables (73.5) (66.5) (Decrease)/increase in payables (0.8) 11.0 Exchange movements (14.1) (8.4) Cash generated from operations 571.4 508.6 Analysis of net debt At 1 January Exchange At 31 December 2014 Cash flow movements 2014 $m $m $m $m Cash and cash equivalents 145.0 47.1 (9.0) 183.1 Short-term borrowings (74.1) 59.3 0.1 (14.7) Long-term borrowings (396.2) (103.3) 4.5 (495.0) Net debt (325.3) 3.1 (4.4) (326.6) 27 Acquisitions and divestments Acquisitions The assets and liabilities acquired in respect of business combinations were asfollows: Agility Projects AS Other Total $m $m $m Property plant and equipment 2.9 10.0 12.9 Intangible assets recognised on acquisition 17.1 10.5 27.6 Other intangible assets 7.0 - 7.0 Trade and other receivables 66.6 20.8 87.4 Cash and cash equivalents 9.3 4.3 13.6 Borrowings - (8.7) (8.7) Trade and other payables (75.9) (7.8) (83.7) Income tax liabilities - (0.2) (0.2) Deferred tax (5.7) (0.2) (5.9) Total identifiable net assets acquired 21.3 28.7 50.0 Goodwill 140.9 59.1 200.0 Non-controlling interests - 2.1 2.1 Consideration 162.2 89.9 252.1 Consideration satisfied by: Cash 162.2 105.6 267.8 Deferred and contingent consideration - (15.7) (15.7) 162.2 89.9 252.1 The Group has used acquisition accounting for the purchases and, in accordancewith the Group's accounting policies, the goodwill arising on consolidation of$200.0m has been capitalised. The table reflects payments in respect ofdeferred and contingent consideration made in relation to acquisitions in priorperiods. During the year the Group acquired 100% of the share capital of AgilityProjects AS, 100% of the share capital of Cape Software Inc, 100% of the sharecapital of Sunstone Projects Ltd and 100% of the share capital of SwaggartBrothers Inc. The Group also acquired the assets of Meesters. Due to its size,the acquisition of Agility Projects AS is considered material and has beenpresented separately in the table above. The other acquisitions are notconsidered to be material on an individual basis and therefore have beenaggregated above. The acquired companies will be in a position to access the Group's wider clientbase and use the Group's resources to further grow and develop theirbusinesses. These factors contribute to the goodwill recognised on theacquisitions. Provisional fair value adjustments of $27.6m, representing the fair value ofcustomer contracts, have been recorded in relation to the acquisitions made inthe year. Other provisional fair value adjustments of $2.8m have also beenrecorded. Trade and other receivables acquired of $87.4m are expected to berecovered in full. The outflow of cash and cash equivalents in respect of acquisitions is analysedas follows: $m Cash consideration 267.8 Cash acquired (13.6) Borrowings acquired 8.7 Cash outflow 262.9 Included in the cash outflow above are payments of $40.8m made during the yearin respect of acquisitions made in prior periods and $4.8m in respect of theacquisition of non-controlling interests. 27 Acquisitions and divestments (continued) The results of the Group, as if the above acquisitions had been made at thebeginning of period, are presented in the table below. Note that total revenueand EBITA includes share of joint venture revenue and EBITA and is consistentwith the presentation in note 1. $m Total Revenue 7,820.0 Total EBITA 569.8 From the date of acquisition to 31 December 2014, the acquisitions contributed$125.0m to revenue and $9.9m to EBITA. Divestments In May 2014, the Group's joint venture with Siemens, EthosEnergy Group Limitedwas formed. Whilst the Group has a 51% shareholding in the new entity, allsignificant decision making requires unanimous consent from both parties andtherefore the Group does not have control and the new company is accounted foras a joint venture. The transaction was accounted for under IAS 28 `Investmentsin associates and joint ventures' as follows -: $m $m Book value of net assets transferred to 541.8EthosEnergy Cash received and receivable (157.4) Net assets disposed 384.4 Value of the Group's investment in EthosEnergy (384.4) - Disposal costs Cumulative foreign exchange losses recycled 7.0through the income statement Accelerated share based charges 4.8 Legal and other costs 11.2 23.0 Net impact of transaction included in 23.0exceptional items (see note 4) The value of the Group's investment in EthosEnergy represents the fair value ofthe net assets disposed. Under the joint venture agreement the Group received a 51% ownership interestin EthosEnergy and EthosEnergy was required to pay the Group $70.0m, of which$21.0m was paid during 2014. In addition, an estimated $87.4m is payable byEthosEnergy in respect of post close adjustments for items including workingcapital and indebtedness at the date of formation. $37.6m of this amount wasreceived during 2014. Foreign exchange losses of $7.0m which were recorded inthe currency translation reserve in prior years have been recycled through theincome statement as required by IAS 21 `The effects of changes in foreignexchange rates'. Further details of the accelerated share based charges areprovided in note 20. The results of the Wood Group businesses transferred to EthosEnergy are shownas profit from discontinued operations in the Group income statement. EBITAlosses for the four month period were $1.7m, operating losses (after deductingthe $23.0m disposal costs above) were $27.3m, and losses after tax were $25.9m.Cash outflows from discontinued operations amounted to $24.3m, comprising$12.7m operating cash outflows, $7.1m investing cash outflows and $4.5mfinancing cash outflows. At 31 December 2013 the assets and liabilities thatthe Group anticipated transferring to EthosEnergy were classified as held forsale. During the year, the Group disposed of one of its South American businesses fornet proceeds of $1.7m. No gain or loss was recorded on the transaction, the netassets having already been written down in 2013. 28 Employees and directors Employee benefits expense 2014 2013 $m $m Wages and salaries 2,905.6 2,927.7 Social security costs 240.6 202.0 Pension costs - defined benefit schemes (note 29) 3.5 7.5 Pension costs - defined contribution schemes (note 29) 89.6 92.8 Share based charges 17.4 22.4 3,256.7 3,252.4 Employee benefits expense includes both continuing and discontinued operations. Average monthly number of employees (including executive 2014 2013directors) No. No. By geographical area: UK 9,512 8,412 US 12,409 10,699 Rest of the World 10,019 10,759 31,940 29,870 The average number of employees excludes contractors and employees of jointventure companies. 2014 2013 Key management compensation $m $m Salaries and short-term employee benefits 8.4 8.5 Amounts receivable under long-term incentive schemes 1.6 2.0 Social security costs 1.1 1.1 Post-employment benefits 0.4 0.5 Share based charges 2.6 4.1 14.1 16.2 Key management compensation represents the charge to the income statement inrespect of the remuneration of the Group board and Group Excom members. 2014 2013 Directors $m $m Aggregate emoluments 5.0 5.9 Aggregate amounts receivable under long-term incentive 1.0 1.4schemes Aggregate gains made on the exercise of share options 1.4 0.9 Share based charges 1.7 3.1 9.1 11.3 At 31 December, three directors (2013: three) had retirement benefits accruingunder a defined contribution pension plan and no directors (2013: one) hadbenefits accruing under the Group's defined benefit pension scheme. Furtherdetails of directors' emoluments are provided in the Directors' RemunerationReport. 29 Retirement benefit obligations The Group operates a defined benefit pension scheme in the UK, the John WoodGroup PLC Retirement Benefits Scheme, which is contracted out of the StateScheme, and a number of defined contribution plans. The assets of the definedbenefits scheme are held separately from those of the Group, being investedwith independent investment companies in trustee administered funds. From April2007 members accrued benefits under the scheme on a `CARE' (Career AveragedRevalued Earnings) basis. On 30 June 2014, the scheme was closed to futureaccrual. A past service gain of £4.0m ($6.7m) arose as a result of the closureof the scheme and this amount has been credited to administrative expenses inthe income statement. The most recent actuarial valuation of the scheme was carried out at 5 April2013 by a professionally qualified actuary. On closure of the scheme to futureaccrual, £7.5m was paid by the Group to reduce the scheme deficit. The Grouphas also agreed to pay deficit reduction contributions of £1.7m per annum from2014 until 2021. At 31 December 2014, there were no active members (2013: 241),330 pensioners (2013: 286) and 837 deferred members (2013: 654) of the scheme. The principal assumptions made by the actuaries at the balance sheet date were: 2014 2013 % % Discount rate 3.6 4.5 Rate of increase in pensionable salaries N/A 5.4 Rate of increase in pensions in payment and deferred 3.1 3.4pensions Rate of retail price index inflation 3.1 3.4 Rate of consumer price index inflation 2.3 2.6 At 31 December 2014, the mortality assumption used to determine pensionliabilities is based on the most recent mortality tables which consider UK widemortality data relevant to the Group's pension scheme. The mortality rates arethen adjusted to allow for expected future improvements in mortality using upto date projections. The mortality assumption can be fully described as PXA00-CMI_2012 (1.25%). The amounts recognised in the balance sheet are determined as follows: 2014 2013 $m $m Present value of funded obligations (293.1) (267.1) Fair value of scheme assets 266.1 225.9 Net liabilities (27.0) (41.2) The major categories of scheme assets as a percentage of total scheme assetsare as follows: 2014 2014 2013 2013 $m % $m % Equity securities 201.4 75.7 196.8 87.1 Corporate bonds 18.4 6.9 17.8 7.9 Gilts 19.4 7.3 8.1 3.6 Annuity policies 7.2 2.7 - - Cash 19.7 7.4 3.2 1.4 266.1 100.0 225.9 100.0 The amounts recognised in the income statement are as follows: 2014 2013 $m $m Current service cost included within employee benefits 3.5 7.5expense Past service gain (6.7) - Interest cost 12.0 10.8 Interest income on scheme assets (10.2) (8.4) Total included within finance expense 1.8 2.4 The employee benefits expense and past service gain are included withinadministrative expenses in the income statement. Changes in the present value of the defined benefit liability are as follows: 2014 2013 $m $m Present value of funded obligations at 1 January 267.1 246.1 Current service cost 3.5 7.5 Past service gain (6.7) - Interest cost 12.0 10.8 Re-measurements: - actuarial losses arising from changes in financial 37.5 11.4assumptions - actuarial gains arising from changes in demographic - (9.2)assumptions - actuarial losses arising from changes in experience 7.0 0.1 Benefits paid (9.2) (5.1) Exchange movements (18.1) 5.5 Present value of funded obligations at 31 December 293.1 267.1 At 31 December 2014, the present value of funded obligations comprised $216.0mrelating to deferred members and $77.1m relating to pensioners. Changes in the fair value of scheme assets are as follows: 2014 2013 $m $m Fair value of scheme assets at 1 January 225.9 191.1 Interest income on scheme assets 10.2 8.4 Contributions 28.0 7.9 Benefits paid (9.2) (5.1) Expenses paid (0.5) (0.4) Re-measurement gain on scheme assets 28.0 18.8 Exchange movements (16.3) 5.2 Fair value of scheme assets at 31 December 266.1 225.9 Analysis of the movement in the balance sheet liability: 2014 2013 $m $m At 1 January 41.2 55.0 Current service cost 3.5 7.5 Past service gain (6.7) - Finance expense 1.8 2.4 Contributions (28.0) (7.9) Expenses paid 0.5 0.4 Re-measurement losses/(gains) recognised in the year 16.5 (16.5) Exchange movements (1.8) 0.3 At 31 December 27.0 41.2 The contributions expected to be paid during the financial year ending 31December 2015 amount to $2.7m (£1.7m). Scheme risks The retirement benefit scheme is exposed to a number of risks, the mostsignificant of which are - Volatility The defined benefit obligation is measured with reference to corporate bondyields and if scheme assets underperform relative to this yield, this willcreate a deficit, all other things being equal. The scheme investments are welldiversified such that the failure of a single investment would not have amaterial impact on the overall level of assets. Changes in bond yields A decrease in corporate bond yields will increase the defined benefitobligation. This would however be offset to some extent by a correspondingincrease in the value of the scheme's bond asset holdings. Inflation risk The majority of benefits in deferment and in payment are linked to priceinflation so higher actual inflation and higher assumed inflation will increasethe defined benefit obligation. Life expectancy The defined benefit obligation is generally made up of benefits payable forlife and so increases to members' life expectancies will increase the definedbenefit obligation, all other things being equal. Sensitivity of the retirement benefit obligation The impact of changes to the key assumptions on the retirement benefitobligation is shown below. The sensitivity is based on a change in anassumption whilst holding all other assumptions constant. In practice, this isunlikely to occur, and changes in some of the assumptions may be correlated.When calculating the sensitivity of the defined benefit obligation tosignificant actuarial assumptions the same method has been applied as whencalculating the pension obligation recognised in the Group balance sheet. Assumption Change Impact on obligation Discount rate 0.1% $5.8m Rate of retail prices index inflation 0.1% $3.3m Rate of consumer price index inflation 0.1% $1.2m Life expectancy 1 year $7.5m 29 Retirement benefit obligations (continued) Defined contribution plans Pension costs for defined contribution plans were as follows: 2014 2013 $m $m Defined contribution plans 89.6 92.8 There were no material contributions outstanding at 31 December 2014 in respectof defined contribution plans. 30 Operating lease commitments - minimum lease payments 2014 2013 Vehicles, Vehicles, plant and plant and Property equipment Property equipment $m $m $m $m Amounts payable under non-cancellableoperating leases due: Within one year 87.8 17.7 83.0 11.0 Later than one year and less than five 268.1 14.5 244.9 18.2years After five years 188.2 - 184.8 - 544.1 32.2 512.7 29.2 The Group leases various offices and facilities under non-cancellable operatinglease agreements. The leases have various terms, escalation clauses and renewalrights. The Group also leases vehicles, plant and equipment undernon-cancellable operating lease agreements. 31 Contingent liabilities At the balance sheet date the Group had cross guarantees without limit extendedto its principal bankers in respect of sums advanced to subsidiaries. The Group is aware of potential legal challenges which may affect historic andfuture employment costs and may have an impact on the Group. At this point itis not possible to make a reliable estimate of the liability, if any, that mayarise and therefore no provision has been made. From time to time and in the normal course of business the Group is notified oflegal claims in respect of work carried out. Management believe that the Groupis in a strong position to defend these claims. In addition, the Group iscurrently cooperating with investigations in relation to facilities where itprovides or previously provided services. Management do not believe that it isprobable that any material liability will arise from any of these matters. 32 Capital and other financial commitments 2014 2013 $m $m Contracts placed for future capital expenditure not provided 5.8 8.8in the financial statements The capital expenditure above relates to property plant and equipment. Inaddition, joint venture companies have commitments amounting to $2.0m. 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 andfunding provided in the ordinary course of business. The receivables includeloans to certain joint venture companies. 2014 2013 $m $m 57.5 25.1Sale of goods and services to joint ventures Purchase of goods and services from joint ventures 15.6 11.7 Receivables from joint ventures 181.0 87.0 Payables to joint ventures 27.6 9.8 Key management compensation is disclosed in note 28. 34 Subsequent events In January 2015, the Group extended its $950m bilateral bank facilities untilJanuary 2020. 35 Principal subsidiaries and joint ventures The Group's principal subsidiaries and joint ventures at 31 December 2014 arelisted below. These are the companies which have the most significant impact onthe Group's financial statements. The Group has taken advantage of section 410of the Companies Act 2006 and not disclosed a full list of subsidiaries as thiswould involve a statement of excessive length. A full list of subsidiaries willbe included in the Company's Annual Return. Country of incorporation OwnershipName of subsidiary or joint or registration interest % Principal activityventure Wood Group Engineering Wood Group Mustang Holdings, USA 100 Conceptual, FEED andInc detailed Wood Group Kenny Corporate UK 100 engineering, project andLimited construction Wood Group Mustang (Canada) Canada 100 management and controlInc system upgrades. Wood Group Mustang Norway AS Norway 100 Wood Group PSN - ProductionServices Wood Group Engineering (North UK 100 Brownfield engineeringSea) Limited and Wood Group PSN, Inc USA 100 modifications, production enhancement, Wood Group PAC, Inc USA 100 operations and management, facility Wood Group PSN Limited UK 100 construction and maintenance Production Services Network UK 100 management training and(UK) Limited abandonment Wood Group PSN Australia Pty Australia 100 services.Limited Production Services Network Russia 100Sakhalin LLC Production Services Network Canada 100Canada Inc Mitchells Oilfield Services USA 100Inc USA 100Elkhorn Holdings Inc Cyprus 50*Wood Group CCC Limited Wood Group PSN - Turbineactivities Rolls Wood Group (Repair & UK 50* Industrial gas turbineOverhauls) and rotating equipment repair, maintenance andLimited TransCanada Turbines Limited Canada 50* overhaul and power plant EPC services. EthosEnergy Group Limited UK 51* The proportion of voting power held equates to the ownership interest, otherthan for joint ventures (marked *) which are jointly controlled. 36 Reconciliation of primary financial statements as previously reported toadjust for change to equity accounting The financial statements for the year ended 31 December 2013 have been restatedas a result of the introduction of IFRS 11 `Joint Arrangements'. Previously,the Group used proportional consolidation to account for its interests in jointventures. Under IFRS 11, equity accounting must be used to account forinterests in joint ventures and therefore these periods have been restatedaccordingly. Group income statement for year ended 31 December 2013 Adjust for joint As ventures previously previously proportionally reported consolidated As restated $m $m $m Revenue from continuing 6,379.7 (626.5) 5,753.2operations Cost of sales (5,351.9) 548.6 (4,803.3) Gross profit 1,027.8 (77.9) 949.9 Administrative expenses (662.2) 75.0 (587.2) Share of post-tax profit from - 1.9 1.9joint ventures Operating profit 365.6 (1.0) 364.6 Finance income 1.1 - 1.1 Finance expense (19.6) 0.7 (18.9) Profit before tax from 347.1 (0.3) 346.8continuing operations Taxation (92.6) 10.4 (82.2) Profit for the period from 254.5 10.1 264.6continuing operations Profit from discontinued 46.0 (10.1) 35.9operations, net of tax Profit for the year 300.5 - 300.5 Group balance sheet as at 31 December 2013 Joint venture held for Equity As sale accounting As reported adjustment adjustment restated $m $m $m $m Non-current assets Goodwill and other intangible assets 1,875.5 3.8 (24.3) 1,855.0 Property plant and equipment 221.3 2.4 (36.4) 187.3 Investment in joint - - 137.8 137.8ventures Long term receivables 68.0 - - 68.0 Deferred tax assets 27.2 - 1.0 28.2 2,192.0 6.2 78.1 2,276.3 Current assets Inventories 101.1 35.1 (124.8) 11.4 Trade and other receivables 1,365.1 9.9 (132.2) 1,242.8 Income tax receivable 20.7 - (1.6) 19.1 Assets held for sale 685.6 (51.2) - 634.4 Cash and cash equivalents 183.5 - (38.5) 145.0 2,356.0 (6.2) (297.1) 2,052.7 Current liabilities Borrowings 96.8 - (22.7) 74.1 Trade and other payables 1,123.0 1.9 (173.8) 951.1 Liabilities held for sale 185.4 (2.4) - 183.0 Income tax liabilities 61.3 0.3 (2.4) 59.2 1,466.5 (0.2) (198.9) 1,267.4 Net current assets 889.5 (6.0) (98.2) 785.3 Non-current liabilities Borrowings 396.2 - - 396.2 Retirement benefit obligations 41.2 - - 41.2 Other non-current liabilities 141.0 - 0.7 141.7 Provisions 86.8 0.2 (20.8) 66.2 665.2 0.2 (20.1) 645.3 Net assets 2,416.3 - - 2,416.3 Equity attributable to owners of theparent Share capital 23.6 - - 23.6 Share premium 56.0 - - 56.0 Retained earnings 1,856.6 - - 1,856.6 Other reserves 471.2 - - 471.2 2,407.4 - - 2,407.4 Non-controlling interests 8.9 - - 8.9 Total equity 2,416.3 - - 2,416.3 Group cash flow statement for the year ended 31 December 2013 Equity As accounting reported adjustment As restated $m $m $m Cash generated from operations Operating profit from continuing operations 365.6 (2.9) 362.7 Operating profit from discontinued operations 65.8 (10.6) 55.2 Adjustments for: Depreciation 51.9 (7.1) 44.8 Loss on disposal of property plant and 1.6 - 1.6equipment Amortisation of intangible assets 102.1 (0.4) 101.7 Share based charges 22.4 - 22.4 Decrease in provisions (7.6) 0.1 (7.5) Dividends from joint ventures - 24.7 24.7 Exceptional items - non-cash impact 4.6 (28.0) (23.4) Changes in working capital Increase in inventories (17.9) 8.2 (9.7) Increase in receivables (66.8) 0.3 (66.5) Increase in payables 23.2 (12.2) 11.0 Exchange movements (8.5) 0.1 (8.4) Cash generated from operations 536.4 (27.8) 508.6 Tax paid (127.8) 4.1 (123.7) Net cash from operating activities 408.6 (23.7) 384.9 Cash flow from investing activities Acquisition of subsidiaries (net of cash and (287.3) - (287.3)borrowings acquired) Acquisition of non-controlling interests (3.1) - (3.1) Proceeds from disposal of subsidiaries (net of 0.3 - 0.3cash and borrowings disposed) Purchase of property, plant and equipment (90.4) 5.9 (84.5) Proceeds from sale of property, plant and 2.6 (0.3) 2.3equipment Purchase of intangible assets (51.6) 0.7 (50.9) Interest received 1.1 - 1.1 Loans to joint ventures - (6.6) (6.6) Investment in joint - (1.3) (1.3)ventures Net cash used in investing activities (428.4) (1.6) (430.0) Cash flows from financing activities Proceeds from bank loans 165.4 1.3 166.7 Purchase of shares by employee share trusts (47.8) - (47.8) Proceeds from disposal of shares by employee 7.9 - 7.9share trusts Interest paid (18.6) 0.6 (18.0) Dividends paid to shareholders (67.4) - (67.4) Dividends paid to non-controlling interests (3.1) - (3.1) Net cash from financing activities 36.4 1.9 38.3 Net increase/(decrease) in cash and cash 16.6 (23.4) (6.8)equivalents Effect of exchange rate changes on cash (5.4) - (5.4) Opening cash and cash equivalents 172.3 (15.1) 157.2 Closing cash and cash equivalents 183.5 (38.5) 145.0 Shareholder information Payment of dividends The Company declares its dividends in US dollars. As a result of theshareholders being mainly UK based, dividends will be paid in sterling, but ifyou would like to receive your dividend in US dollars please contact theRegistrars at the address below. All shareholders will receive dividends insterling unless requested. If you are a UK based shareholder, the Companyencourages you to have your dividends paid through the BACS (Banker's AutomatedClearing Services) system. The benefit of the BACS payment method is that theRegistrars post the tax vouchers directly to the shareholders, whilst thedividend is credited on the payment date to the shareholder's Bank or BuildingSociety account. UK shareholders who have not yet arranged for their dividendsto be paid direct to their Bank or Building Society account and wish to benefitfrom this service should contact the Registrars at the address below. Sterlingdividends will be translated at the closing mid-point spot rate on 10 April2015 as published in the Financial Times on 11 April 2015. Officers and advisers Secretary and Registered Office Registrars R M B Brown Equiniti LimitedJohn Wood Group PLC Aspect HouseJohn Wood House Spencer RoadGreenwell Road LancingAberdeen West SussexAB12 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 17 February 2015Ex-dividend date 9 April 2015Dividend record date 10 April 2015Annual General Meeting 13 May 2015Dividend payment date 19 May 2015

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