Robert Keiller - Chief Executive Officer David Kemp - Chief Financial Officer Robin Watson - Chief Operating Officer

Phil Lindsay - HSBC Rob Pulleyn - Morgan Stanley Alex Brooks - Canaccord Daniel Butcher - JPMorgan Mukhtar Garadaghi - Citi Seb Yoshida - Deutsche Bank David Farrell - Macquarie Securities Neill Morton - Investec

Morning, everyone. David and I would like to update you on performance for the first half of 2015, and as usual we'll take some questions at the end. And we've got Robin Watson with us today, Group COO, who is here to answer any questions as well. Now, as many of you know, I like to start each of these presentations with a short example of our core values in action. In January this year I set out to leaders across our business that there will be no dilution or de-emphasis of our core values, whatever the challenge is presented by low oil prices, because getting the teams to do the right things in tough times is for us very important. Unless leaders at every level in the business do the right things, it makes very difficult for David and Robin and I to make the changes we've had to make and respond to the conditions that we face. I received a note recently from one of my Managers in Greeley, Colorado, in the U.S., there's a chap called Brandon Stephens. Now, Brandon runs business for Wood Group PSN that provides operations, maintenance and construction services to clients that are mainly in the shale developments. Brandon, I think, puts it nicely, he says, in case you are wondering, we are doing great on the front lines. Attitude really are good and even though the market has been scary and our headcounts are down, we've never had a better group of employees than we do now. It's like we're left dealing with Spartan's 300 warriors, and it will take more than the Persian army and some oil speculation to slow these boys down. Now, to put in context, Brandon is -- how tall would you say, Robin? About 6 feet 4, 6 feet 6, and an ex-offensive lineman in the NFL. So when he's talking about fighting 300 Spartans, you want to be beside him. That for me encapsulates the spirit of our people core value in action. Let's move on now to some of the operational headlines. Conditions, as you all know, in the oil and gas market remain very challenging and we are witnessing what appears to be a sustained period of low oil prices. We are focused on what we can control and what we can manage. We're looking after our customers. We're delivering high quality services and working with them to reduce project costs, to increase operating efficiency and to safely improve performance. Of course, we also have a strict focus on our own utilization, and this has inevitably resulted in headcount reduction as activity has declined. Group headcount is down 13% from the position in December and 17% since June 2014. Now, I am uncomfortable just leaving that as a stark statistic, because what that implies is that thousands of people that previously worked for us and alongside us have lost their jobs. A huge impact on them and their families now represent the human cost of the current downturn. Now, as we lose people, we're careful however to ensure that we retain key talent and capability across the group. We've also focused on the control and management of overhead costs. Our business model is flexible, and this has allowed us to deliver $40 million of overhead cost savings in the first half of the year. That's from reducing headcount, property costs, discretionary spend, tighter controls in place and accelerating shared service programs to secure back office efficiencies. We continue to win new work across the Group, and I'll cover some more material and strategically important awards later in the presentation. M&A remains a key focus, and together with organic investment, remains our preferred use of cash. In June 2015 we completed the acquisition of BETA Machinery Analysis, which strengthens the Group's integrity management capabilities. We expect the environment for completing bolt-on M&A to improve in the second half of 2015. With no clear signs of short-term improvement and overall market conditions, we will continue to focus on what we can control, while remaining competitive and on protecting our capability. Now, later in the presentation, I'll talk more about some of the things we are doing for customers to address cost and efficiency. But for the meantime, I'll hand over for the bit that you're really waiting for, which is, David and the results. David?

Thank you, Bob, and good morning, everyone. Against a backdrop of reduced activity across the oil services sector, the Group delivered a total revenue down 19% at $3.1 billion, total EBITA down 7% at $226 million and adjusted earnings per share down 10% at $0.401. First half EBITA and margin performance demonstrates the flexibility of our through cycle asset-light model, together with our focus on utilization and overhead costs, which I will discuss in more detail shortly. Cash generation from operations significantly improved to $225 million, and the Group continues to have a strong balance sheet with net debt at the lower-end of our targeted range. We have declared an interim dividend of $0.098, an increase of 10% on 2014, which will be paid on September 24, 2015. Our intention remains to increase the dividend per share by double-digit percentage from 2015 onwards, reflecting our longer-term confidence in the Group. Performance in the first half was down as expected. Performance on a like-for-like basis is broadly similar, with the benefit of acquisitions being largely offset by foreign exchange headwinds. The usual like-for-like analysis is included in the appendix to this presentation. Our outlook for 2015 remains unchanged. Company-compiled consensus EBITA for 2015 is $465 million, and we anticipate full year performance in line with expectations. In the first half, we have focused on what we can control, management of utilization and overheads. This has been key to sustaining EBITA margin. Looking at direct cost. Maintaining utilization is one of the key tools for us to manage our business. Decline in the activity has inevitably resulted in reduction in headcount, which is down 13% compared to the position at the end of December 2014. In May 2014, we made the first 10% cut to U.K. contractor rates and we follow this by another 10% cut in December. We have also reduced rates in other countries of operation. As we work in a predominantly reimbursable basis, this is a direct saving for our customers. High-value engineering centers have been in place for a number of years at Wood Group. They enable us to tap into resource with our key hubs such as Aberdeen and Houston, and where market rates are lower. We now have high-value engineering centers in Glasgow, Runcorn, Hull, Ireland, Columbia, Malaysia and Delhi. These enable us to offer customers reduced rates for the same high-quality work. Turning to overhead costs. In the first half we have worked hard to deliver cost savings and reduced overhead cost by $40 million compared to the first half of 2014. This is significantly in excess of our full year target of $30 million, and reflects the flexibility of our model and our early focus on cost reduction. A large element of this has been headcount. We have resized our support functions to fit a lower revenue business and streamlined our management structures. We started our process in 2014, partly in reaction to the engineering downturn we forecast back in 2013, and partly as a focus in back office efficiency. For example, we started shared services initiatives in HR in the U.K and finance in Delhi and Houston, together with addressing our property and IT&S spend. These have been accelerated in 2015, and we have learned to do more with less. In addition to the strategic initiatives, we have had a strong focus on squeezing spend in discretionary areas such as travel. We anticipate that the full year benefit of overhead cost savings will be in access of $80 million and that the impact will endure in 2016. We will continue to manage our cost base as market conditions dictate. In PSN production services, revenue fell 22%, largely reflecting lower activity in the North Sea and Americas, where we saw strong growth in U.S. shale in 2014. EBITA margin increased by 0.3%, due to the benefit of significant overhead cost reductions, helping to offset pricing pressure from customers. PSN also benefited from the release of deferred consideration provisions relating to previously completed acquisitions. In the Americas, U.S. onshore activities account for around half of the revenues in the region. Following strong performance in 2014, we have seen significant pressure on volumes and pricing in the first half of 2015. The decline in rig count has led to reduced demand for construction services. OpEx focused maintenance work accounts for around 60% of our U.S. onshore activity. This has been less affected. We still see a long-term future for our shale business and are continuing to look at potential M&A opportunities. Elsewhere in the Americas, our Trinidad joint venture was awarded a five year $250 million contract with BP in May. The North Sea has seen reduced activity, as operators seek efficiencies and delay project and non-essential activities. In May we secured a new 10 year $250 million contract with Antin Infrastructure Partners for the operatorship of the CATS terminal and pipeline in the North Sea. In our international business, longer-term contracts secured in prior years in Australia and Asia-Pacific are progressing well. In Africa and the Middle East, we see near-term opportunities for growth, and Bob will discuss some of these later in the presentation. In turbine activities, overall performance reflects a combination of lower oil and gas related revenues, and the beneficial impact of capital efficiency and cost reduction initiatives in EthosEnergy. The Dorad EPC contract reached final agreement with the customer in early 2015. In engineering, revenue fell 11% and EBITA fell 6.5%. We entered 2015 with reasonable backlog, and so the benefit of good activity and improved margins in onshore pipeline and downstream, partly offsetting the impact of the deferral and cancellation of projects in upstream and subsea. Cost reduction initiatives, our continued focus on utilization and the contribution from Agility Projects acquired in September 2014, also positively impacted first half performance. In upstream, the market remains very subdued. However, we did enter 2015, working on detailed design of Det Norske's Ivar Aasen and Hess Stampede TLP. We are now in the follow-on support phase for Ivar Aasen, which we expect to continue into 2016. Hess Stampede will continue throughout 2015 with follow-on engineering work and support into 2016. In the second quarter we started FEED work on our six year Offshore Maintain Potential contract with Saudi Aramco, which was awarded in March 2015. We have seen reduced activity in our subsea business, but remain active on BP Shah Deniz in the Caspian, with follow-on work expected through to 2018. In Australia, work on Gorgon is expected to continue at reduced [technical difficulty] in Vietnam. As I noted, the market for detailed design scopes, in upstream and subsea remains very subdued. We are encouraged by our engagement in a high volume of early-stage engineering work, as some of our customers start or restart early phase projects. But the timing of sanction of detailed design engineering scopes remains uncertain. Our U.S. onshore pipelines business has performed well in the first half of the year, with work continuing on our engineering, field services and construction management for Dow and on the Dakota access pipeline for ETC, which will continue throughout 2015 and into 2016. Good performance in downstream process and industrial, accounted for around 25% of revenue in the first half of the year, and this compares to 20% in the first half of 2014. Following the successful completion of early-stage engineering on our refinery modification project for Flint Hills Resources in the Eagle Ford region, we have recently been awarded the detailed engineering, procurement and construction support scope. Downstream financial performance has also benefited from the successful commercial close out of some lump sum projects. Moving on to cash flow and net debt. We delivered strong cash generation and cash conversion in the first half. Cash generated from operations pre-working capital fell $88 million to $242 million. The first half of 2014 benefited from the $58 million Venezuelan settlement included in exceptional income and the business generated lower EBITA in the first half of 2015. Cash generated from operations post-working capital increased by $88 million to $225 million, partly as a result of significant cash receipts on the Dorad contract. Cash conversion from EBITA to cash flow post-working capital was 93%. Acquisition payments comprised $9 million relating to the acquisition of Beta Machinery Analysis and $4 million relating to payments made in respect of companies acquired in prior periods. Payments for CapEx and intangible assets reduced to $42 million, due to the reduction of capital expenditure in challenging market conditions. The balance includes expenditure on continued development of our core ERP systems across the Group. The Group continues to have a strong balance sheet and we are comfortable with the flexibility, diversity and maturity of our funding, following the U.S. private placement in 2014 and the extension of our $950 million bilateral facilities out to 2020 earlier this year. Net debt, including JVs of $277 million is at the lower end of our net debt EBITDA targeted range of 0.5x to 1.5x. And we anticipate strong cash flow generation for the full year. M&A remains a focus, and together with organic investment, is our preferred use of cash. And we expect the environment for completing bolt-on M&A to improve in the second half of 2015. Just to summarize before I hand back to Bob, performance in the first half demonstrates our commitment to cost discipline and the flexibility of Wood Group's through cycle model. Our outlook for 2015 remains unchanged and we anticipate that full year performance will be in line with expectations.

Thanks David. Now, before we move on to some specific examples, I'd like to set the scene more broadly about the market conditions and our responses to them. When I communicate with my staff, I often use popular music references as hooks to make my messages more interesting. And if I take the same approach to the current conditions, I think it can be summarized by three songs. The first is about our customers, and its David Bowie and Queens' hit, Under Pressure. The low oil price has seen a huge impact on some of our customers. Some are actually operating at a loss and many have severe strains on their cash flows. They want lower prices from suppliers. They've had to cancel and defer projects, as well as reduce their own costs. And our response can be summarized as taking the Spice Girls' approach. We need our customers not only tell us what they want, which of course, is lower prices, but what they really, really want, which is actually long-term sustainable lower costs. By listening carefully to our customers, we've been able to identify areas where we can help them to reduce these costs. We can make greater use of our engineering centers in Kuala Lumpur, Delhi, and Bogota. We can reuse previous design mark and we can use standard rather than bespoke design options. And of course, we can reduce our prices. But by being very focused on our own costs, we're able to reduce prices to be competitive, and yet in doing so, do as much as we can to protect their margin. We started reducing our costs in the middle of 2014. We've done a lot to secure the savings we need to make. We've been proactive. And I suppose you could describe our approach as adopting the Elvis Principle: a little less conversation, a little more action. And thankfully I'm not going to attempt to sing any of those songs for you just now. But let me share a couple of things we're doing with our customers in the U.K. for instance to maximize the economic recovery from their assets. We have a number of improvement streams that we collectively call our Xtend project, and I'd like to take a couple of these for you. Now, operating costs of U.K. offshore assets have increased by approximately 20% per year for the last 10 years or so. Detailed work by Mackenzie and others on behalf of the industries shows that up to 40% of the cost increase comes actually from increased inefficiency and that's where we see a lot of opportunities to improve things. Let me start with offshore productivity. Carrying out any work on an offshore can be challenging. Obviously, you need to get your workers, your tools, equipment and materials onto an offshore installation. You need to make sure you have to access to the specific work site, which can sometimes mean scaffolding or rope access. They needed to get all those materials and equipment to that site. We need to be careful that the work doesn't jeopardize other activities on the facility. We need to isolate sources of energy before we start any work. Sometimes we actually have to create temporary pressurized habitats or places where we can do the work from. Work needs to be carefully assessed in terms of its risk and a control measure. All of that together can lead to low productivity. Now, of course, this can be improved by good planning, by good organization, by preparation, by doing things in parallel rather than series, but principally by good supervision. So our focus has been on upscaling our supervisors and giving them the tools and the authority to manage our onsite productivity. We work with our supervisors to define what an ideal supervisor looks like, how they act, how they behave and we're using that as the basis for our training and competency programs. And because we've been much clearer on what these competencies are, we've identified lots of supervisors that have fantastic skill sets. We've also identified others that are actually not cutout for the role. We've actually offered them other jobs. Early indications from the work site, is it's having a step change an improvement in our offshore productivity. The second example I would give for the North Sea is a simple repair order, replacing something that is worn out or corroded with an equivalent, but new item. Because many of the offshore facilities are operating way beyond their original design life in a harsh environment, equipment structures, piping can corrode and some things needs to be replaced, sounds straightforward, but all of our customers have their own processes and controls. This can add time, cost and complexity. Customers have their own quality assurance requirements. Some ask for specific documentation and others want specific inspectors to be involved. By taking all that together, by standardizing our approach, by having a dedicated team executing work on a low fixed price basis, we can take at least 15% of the cost of a typical repair order in a mature environment. Let me give you an example on the engineering side of the business as well. Our engineering work at the early stage of a project can have a significant beneficial impact on the overall project cost. We've secured a leading position in engineering market by establishing a unique track record and capability set by engineering solution at the frontiers of what is possible. We have a comprehensive database or back catalog of proven designs and layouts with uniform methodologies to address most operating conditions. This gives us a great starting point during the conceptual and front-end design phases, resulting in increased efficiency, effectiveness and reduced engineering times. We recognize there will always be a need for bespoke complex engineering solutions, but in some cases a more standardized approach can help accelerate design. An example of this would be in the process of design one, build two approach to Anadarko's Lucius and Heidelberg facilities, two multi-billion dollar deepwater production facilities in the Gulf of Mexico. Incorporating lessons learnt from the Lucius project, which achieved first oil in 2014, we were able to reduce costs and shorten schedules to help optimize project economics. We designed the facilities with the flexibility to allow further expansion for future subsea tie-backs. Crucially, changes in the original design were limited to only those that would be technically required to operate the facility. We stayed away from over-engineering or creating a gold-plated solution. And as the design for Lucius progressed, revisions were corporate into early documents for Heidelberg, accelerating the FEED for that project. Using Lucius equipment information, engineering and established processes, we were able to fine tune the procurement and contracting strategy for Heidelberg, dramatically shortening cycle times. Now, the Heidelberg facility is on schedule to achieve first production in mid-2016, improving on the cycle time for Lucius. It's pre-FEED and FEED phases have already significantly reduced man hours and those benefits extend through detailed designed and fabrication. The schedule compression has additionally led to significant fabrication man hour reduction on both the hull and the topsides and Heidelberg's procurement efforts has resulted in a 50% cycle reduction for topsides equipments, modules, and further reducing costs. The expectation is that this will result in total facilities projects' costs savings running into hundreds of millions of dollars. And these savings will be many times greater than the combined Wood Group revenues for these two projects. I've given you examples of what we've been doing in both engineering and PSN. Now, most of the things that we're doing quite frankly are just common sense. In the past, we've had some frustrations with some customers who would insist on doing everything in a unique and expensive way. Current market conditions mean that our simple cost and time saving proposals are being listened to. The industry has embraced our lower cost culture, which we welcome. Lower costs will ultimately improve project economics and will lead to greater activity. Our approach has been well received by customers, which is reflected in some of the work secured in the first half of 2015, which David mentioned earlier. A number of these awards are as a result of our leading position and track record with customers, and others highlight the breadth and diversity of our operations, which is sometimes overlooked. I'll pick up on that second theme first. David highlighted good activity and improved margins on our onshore pipeline and downstream engineering work. Currently, we're providing engineering services on the 1,000 kilometer of Dakota access pipeline for ETC in the U.S., and work is expected to continue into 2017. Now, to put that in context, the project is around the same size as Hess Stampede. Our onshore pipeline activity in total accounted for around $130 million of revenue in the first half of this year. David also mentioned the detailed design work that we're doing for Flint Hills refinery, as an upgrade on our downstream engineering business in the U.S. This project is a similar size to Heidelberg project and our downstream activity accounted for over $200 million of revenue in the first half of the year. We've also made good progress in a number of good longer-term markets, including Mexico, Africa and the Middle East. In Mexico, the unrivalled track record and experience of Mustang and Kenny as leaders in the Gulf of Mexico facilities design and SURF work helped us to secure a three-year $28 million offshore engineering contract for PEMEX, covering topsides facilities, SURF and floating systems work. It's an important first step for us and positions us well in what could be a long-term good quality market. Africa is a key region for PSN's growth and we're expecting to commence work full on a Shell Gabon contract, multi-million dollar contract, which we announced this morning. Our scope includes engineering, construction and maintenance. This is our first major contract in Gabon. It reflects our strong relationship with Shell, but also reflects our commitments to building business in Africa. In the Middle East, we were awarded a six-year offshore maintained potential contract by Saudi Aramco for greenfield and brownfield engineering services for new facilities in the Gulf. And closer to home, it's probably worth mentioning again, the $250 million contract with Antin Infrastructure Partners awarded in May. This covers the operatorship of the CATS terminal and pipeline, that's both the offshore pipeline and the onshore pipeline. Our PSN U.K. business secured the contract, but a vital element was our offshore subsea pipeline experience, which was brought in by the Wood Group Kenny Partner of our business, and it gives a unique combination. I've said in my introduction that we were focused on what we can control in this tough market, to make sure we're in the best position as and when activity levels recover. We will focus on remaining competitive in protecting our capability. We'll work with our customers to remove and reduce costs, increase efficiency and improve our performance. Managing utilization is a key tool to in our business. It gives us flexibility, but we need to be mindful that the industry is cyclical and there may well be an upturn at some point. We want to make sure we retain the talent and protect our capability. We started our increased focus on efficiency in 2014 and have developed this further in 2015. We have accelerated some initiatives and we have further embedded the cost saving culture in the Group. As David outlined, this has been a key to the first half margin performance and the savings that we're making this year will endure beyond 2015. I have given you a couple of examples in PSN engineering, which demonstrate how we're loading project costs and increasing project efficiencies for customers. A lot of this is about simplification and standardization, being focused on spending every dollar necessary to provide safe and functional solutions, but not one dollar more. Our strong balance sheet provides excellent platform for future growth, developing our international footprint and where appropriate, moving into adjacent sectors. We're still keen to acquire businesses that can enhance Wood Group. We continue to pursue a number of targets and see the potential for M&A environment to improve in the second half of 2015. As David has already covered, our first half performance demonstrates the flexibility of our through-cycle asset-light model. It also reflects our focus on utilization and overhead costs. This means we anticipate full-year performance in line with expectations. And with that, I would like to hand over to questions. And as the usual protocol, because we're doing this on the web, it's important that you wait until a microphone comes to you and you state your name and your organization extremely clearly. And you only get one shot at asking questions, so if you've got more than question tell us upfront and we'll do it that way. And Phil's already got his hand in the air, so I reckon he deserves to go first here. Q - Phil Lindsay: Phil Lindsay from HSBC. Two questions on engineering actually. I think the first one; it looks like you've got some fairly big pieces of business rolling off this year. I know there's a tale that will continue into 2016, but maybe sort of it looks like it mirrors a little bit of the situation you were in 2013, where you had the Ichthys and the Mafumeira big contracts that are rolling off. How do you sort of see the risks, as you move into 2016, in terms of the volume that you need to bring into that business?

I mean, as David mentioned earlier there, we see the market, particularly in upstream and subsea is subdued. I think he used the phrase very subdued, actually. There's a number of projects bubbling through there. But to what extent, have we got confidence that that will come to fruition in 2016? It's too early. We just don't know is the honest answer there. So in terms of our overall engineering business, I suppose the downstream business is compensating for that to some extent, as is the pipeline business, as is the maintenance elements of our subsea business. But in terms of detailed design work, our position at the moment is it looks subdued.

And then the second question, I suppose specifically on the subsea engineering part the JP Kenny business. I think we've seen some quite notable changes in the competitive landscape with some of the later-cycle players teaming up and targeting the front-end et cetera. How do you think that's going to impact JP Kenny moving forward?

I mean, it's a great question, Phil, because in the mid-90s we saw a similar move towards or lurch towards alliances being formed and none of these alliances actually sustained when the market picked up again. And for us, some of our customers are already telling us that they want the flexibility of being able to come to the market and access what the market has available to them. I have no doubt that others will want to avail themselves of the recently-formed joint ventures. And that we've got long track record of working with people in different partnerships at different time. And we think, because we're not selling vessel days, because we're not selling rig time, because we're not selling equipment, we provide that independent view that says, what we're trying to do is provide the best, most economic solution. And we still think customers would be attracted to that.

Just add to that, we don't think any of alliances has actually gotten the breadth and depth of capability that we have in Wood Group Kenny.

Rob Pulleyn from Morgan Stanley. Three questions actually, including a follow-up on Phil's. So in terms of engineering and the headcount reductions we've seen this year, do you think that that is appropriate for the workload you have now or appropriate for the workload you might have in 2016, i.e., could receive further job cuts as some of your work rolls off? The second one around the North Sea. You mentioned that industry activities obviously very subdued in the North Sea. I'd just like to add a little bit more color on that. I mean is that a lack of, just cutting back on maintenance, which might have to basically be boosted in the future? Is that also cutting down on infield drilling and enhanced oil recovery, which might well affect production? And then the third question on M&A, which I noticed, you mentioned quite a bit today. And forgive me if I'm wrong in this, but you seem to be buying lots of different skill sets, which is quite interesting in terms of broadening the offering that PSN and Wood Group overall has. Do you see any risk that you perhaps becoming a little bit fragmented and maybe lacking scale in each one of those units, but doing lots of different things? I mean, how do you think about the sort of balance of risk from that business volume? So three quite long questions, but thank you.

And the chances of me remembering all three, Rob, accurately are about zero. Let's talk about the sizing of the engineering business, which I think was your first question there. I mean we cut our cloth according to what we see ahead of us in the relatively short-term. So where we are today is no reflection on where the business may go in 2016. We're trying to optimize the utilization for the business as we see in the relatively short-term. And we will adjust the business accordingly, as we win new business or as business levels declines. So there's nothing to be read through, I think, from the current levels into the future. And we may well see upturn or downturn in that business going forward. The second question about kind of the North Sea levels there. And there has definitely been a downturn in drilling activity, which has a knock-on effect. There's also been a downturn in discretionary project spend. And there has also been some impact on maintenance, but there's other areas, for instance, where you're looking at, so the impact of rota changes for offshore crews for instance. Where your crews are working on a two and three rota, there's a five-week cycle. And because there's a five-week cycle, to have people on day and night shift on a facility, you need five crews. If you go to an equal time rota, you need four crews, so you need 20% fewer people and that has an impact directly on the headcount that we would have. So there's other factors at play there overall in the North Sea. Most of our customers, I think realize that cutting back on essential maintenance is not a valid long-term strategy. We saw that in the 1990s where people cut back and ended up having to spend vast amounts of money to recover the position later on. So I think people are a bit older and wiser now, saying that we need to do the essential maintenance if we want these assets to keep producing. And actually offshore productivity in the North Sea has gone up recently, as a result of the focus that's been put upon it for the first time in many quarters. The third question, Rob, about the kind of acquisitions that we have done, I mean what we are looking to do is to actually make sure that any acquisition we do makes sense, both to us in terms of what it brings to Wood Group, but also makes sense to the company that we're acquiring. And broadly these are about enhancing our themes. So for instance, if I take integrity management, the acquisition of BETA Machinery Analysis actually provides us with a step-up in our capabilities, but still within the banner of integrity management. So I would say rather than diluting, it broadens potentially our skill profile. Similarly, when we acquired the Intetech business a couple of years ago, it was still within the oil and gas industry, but it was our new skill set that we brought into the team, and has developed well. So what we're looking to do really is say, where are the opportunities to fill in the gaps in our service profile, fill in the gaps in our customer profile or the market we're in, and where it's appropriate is perhaps to look at adjacent spaces, i.e. areas where we can take our skills into a neighboring and nearby market. What we're not trying to do is to make big leaps into new businesses and acquire businesses that nobody can understand, well, what the heck has that got to do with Wood Group. So that's our kind of constraints there that we are looking out there. David, anything you want to add to that?

Just to add something to your U.K. point, specifically related to Wood Group. Our U.K. revenue has been impacted, one, by the foreign exchange, so we've had over a 10% movement there. Two, we had a major project BP Andrew that finished up. And I guess, the third one is, really stating the obvious, but where we cut contractor rates by 10%, that flows directly through to our revenue, because we are a reimbursable business.

It's Alex Brooks from Canaccord. A couple of questions. The first one is on the impact of the special items in the first half results, that you identified a number of things in the release. There was a deferred acquisition consideration reduction, and there was also some lump sum close outs in engineering. It was just useful to get some sort of scoping on how big those were? And second question is on the OpEx. You talked about America's OpEx being less affected than CapEx and it will be useful to quantify both, what is OpEx and what is CapEx, as well as how much less pretty identifiably? And I've got one more, but I'll come back afterwards?

David, do you want to take the first one?

Yes, I'll certainly take the first one. In terms of the deferred consideration, that's roughly about $10 million -- well, it's just over $10 million. In terms of lump sum, that's about $10 million.

And how would that compare, is that a year-on-year, because you get some of that every year anyhow, right?

The lump sum is pretty much an additional gain, the deferred consideration that would take it below $10 million.

And on the OpEx versus CapEx, Robin, do you want to make that comment, in terms of the North American business there, how we differentiate, what falls into OpEx and CapEx?

Yes. 60% OpEx, so that's given us a bit of resilience as the rig counts went down. But there's a lot less drilling going on, there's a lot less construction of pads, I mean, that's just going to naturally flows through. Overall, we're also seeing that some wells are getting drilled and suspended. So there's less construction activity. In general terms, however, it's a good balance to have field services across these regions, because as Bob and David touched on, a fair level of midstream and downstream activities. So we've actually seen some infrastructure design and construction work going on and it continues to be very active in 2015. If anything, the downstream, the refining petrochemical market, given that the feedstock is cheaper is seeing something of a buoyancy.

Let me just add a couple of things to that. In terms of overall America's revenue to give you a scale, that's down pretty much in line with PSN as a whole. And so as Robin touched on there, our OpEx is now a bigger proportion in U.S. onshore and our well CapEx is significantly down. And our midstream is down, but less so than the well CapEx.

And Alex, you said, you had a follow-up question.

Yes. The follow-up really is sort of a bit following on from what Rob was asking. But given what you can see today and given the mix of businesses that you have today, when is the earliest you think you could see a rebound?

That's a good question, because Alex and I joked over coffee earlier on there that I've done several interviews today already and I'm finding new ways to avoid answering that question. So let me try another way. Yes, I mean, at this stage there are no early signs of an upturn there. We are not in the business of forecasting oil price, and those that are have traditionally managed to get it bang on wrong from time to time. And for every bit of news that suggest that there's something supporting a higher price, there's an equal and opposite piece of news that suggests that it may be suppressed. Most of our customers are taking the attitude that's likely to be lower for longer. Whether that's correct or not, I don't suppose it matters, as long as we are ready and flexible and able to react as and when conditions change. But what we have done by making the cost savings that we've done and looking at the back office efficiencies and improvements that we've done is put ourselves in a place where we're able to react and able to be successful in that lower price environment.

Daniel Butcher from JPMorgan. Three questions, if I could. Firstly just, can you quantify the SG&A savings that might be available further in 2016? Obviously, you're down $80 million this year is your target, so can you go further in the next year? Second question would be just PSN being down 22% in revenue year-on-year, would you care to put a quantification on how much that is price versus FX versus volume of work done? And just thirdly, I think from memory the last call you said that you saw a 45-55 earnings split between first half and second half, does that still stand?

Well, I'll take the first part and Dave will get you to take the second two, if I can. So it's interesting, because you've just found another way of asking us to predict what 2016 is going to be like, but looking at it from an SG&A perspective, and again, it's too early, because our SG&A impact is going to be based on, as we see the work levels develop and unfold ahead of us. So what we don't want to do is cut too deeply and jeopardize our capability to deliver customers services, but conversely the momentum that we've got in terms of cost saving and the culture we've got in the business is likely to sustain. So I haven't answered your question quite deliberately, because what I don't want to do is to be drawn into saying specific elements on 2016. Actually this time last year, we were saying exactly the same thing about 2015. We were saying conditions were looking so uncertain that it was difficult for us to make any call on that.

In terms of the cost reductions, we expect the $80 million endure into 2016. And I guess one thing that hopefully this set of number shows is we do have that flexible model, and we will size our cost base to the activity that we have. In terms of the other points, in terms of the weighting, the weighting is slightly less. Obviously, the guidance we've given is unchanged. I think that implies 48%, 52%. If you look historically that's slightly less, but it's within our range to tell you the truth. We always typically have a weighting to the second half, part of that is weather related, part of it is when we get KPI payments. And in this case, we'll also have the full year impact of SG&A savings. So that's what we would expect. In terms of the last one around pricing volume pressure, I guess what we can say, if you look at our PSN business, where we've had most aggressive pricing discussions is in U.S. shale. And in the U.K., because the conversation more reflects the margin we make, we typically make that 5% margin. That's more been, I think as Bob set out in his presentation, around how do we reduce costs. So it's been much more of a volume discussion rather than a rate discussion.

It's Mukhtar Garadaghi from Citi. Two questions for me. In engineering, specifically in the upstream and subsea, could you give us a few projects over sort of next 12 to 18 months that you think guys are very well-positioned for or you think there is a fair chance going ahead, just kind of things to watch? And then my second question is around brownfield. With the cutting that has been done to date, do you think the industry has cut too far or do you think this is genuine, taking out of gold plating and this is a sustainable level of brownfield spend?

Well, I'll give David time to look at the kind of top list of potential projects there. But on the brownfield side, who can tell is the honest answer, have we cut too far, and I suspect not. I suspect what we've done is effectively seen a correction that's necessary and long overdue in terms of taking unnecessary cost with the way we do business, because we feel there is more to be done, because we feel that some of the processes that were currently involved and are still inefficient and could be improved. So we think there is more to be done there as well as cutting rates and things like that. We still think there is optimization and sharing and sharing of assets and knowledge across the mature basins. So I suspect there is further saving to be had, therefore the industry that it will take some time to come to fruition.

And you don't see what has been done so far translating into, let's say, high decline rates for existing assets and such. So you're saying this is pure efficiency.

No. If anything, I would say, actually production efficiency has improved offshore recently. There's a huge focus at the moment in terms of trying to get uptimes availability and reliability. And providing we continue to do all of the necessary maintenance, the essential maintenance both from a safety and a production point of view that balance needs to be carefully struck going forward. But even beyond that, in terms of sharing vessels, sharing spare parts, making better use of knowledge, there is more to be done as an industry in terms of becoming more efficient. And there is probably another two years worth of work there in terms of really getting to the bottom of what the sustainable cost base looks like. On the first part of your question, Dave, do you want to indicate some other potential projects or?

We don't usually talk about specific projects. I'll mention one, because Statoil put out in the public domain that Peregrino Phase 2 is going forward for field development sanction. That's one we have been working on the FEED.

And there's probably another four or five. As Dave says, we're reluctant to mention specific customers or projects. But there's a number of them that may well come to fruition in some during 2016, but its uncertain [multiple speakers].

For us the timing is uncertain.

It's the timing. Yes.

It's Seb Yoshida from Deutsche Bank. And I've got a few questions, if I may.

Do you want to give us one at a time, Seb, rather, because we'll never remember them if you just rattle them all out.

First of all, on M&A, I guess your renewed optimism around M&A in the second half of the year. What's changed I guess since the first half? You previously pointed out that many of the businesses that you look at are private and were simply not willing to engage at this oil price. Is it a function of distress or is that what's driving the opportunity?

There's a couple of things. I mean, generally speaking, we are not looking to buy businesses that are in distress managerially. Now that's not to say there may be something that's financially distressed that might present an opportunity, but that hasn't been the case. I think there is two things at play here. One is, when we're looking to value a business, we need to have some confidence in what the short-term outlook looks like, so we can put a value on it. And because of the uncertainty, it's been really difficult for us to actually understand what does the value of a particular business look like. That's potentially getting easier, as people are readjusting to what they see as being as lower oil price environment. And the second thing is probably what you alluded to there, which is about the expectation levels, perhaps finding a new reality. And therefore, we're beginning to converge on a potential solution rather than being divergent.

And just a follow-up on that. I guess you're right at the bottom end of your leverage range, as it sits at the moment, but you given a relatively subdued outlook. And taking into account, I guess, the mix of a relatively subdued earnings outlook, willingness to do kind of leverage up to make acquisitions, but at the same time commitment to double-digit dividend growth. How should we think about what comes first, is it M&A? Would you be willing to step back from the dividend growth targets to get to 1.5x leverage at this point in the cycle or just some greater color on that would be quite useful?

I mean, you're asking us to speculate on kind of hypotheticals. And I think where we'd like to see ourselves is finding the targets, to do the M&A that takes us back into that kind of target zone between the 0.5 and the 1.5, which we should be able to do without necessarily having an impact on our commitment to the dividend. David, would you comment on that?

No, I probably wouldn't say anything. Obviously, our first use of cash, preferred use, is either organic growth or M&A. In terms of our dividend commitment, we've obviously ran various scenarios and we're comfortable still making that commitment.

And just, finally, on the turbines business, volumes are significantly down in the first half, I guess, largely due to the oil and gas related exposure within that. But can you just give us a sense of confidence around the typical H2 seasonal uptick that we usually see?

I guess the revenue story is actually quite difficult in the first half, because if you remember, we didn't do the Ethos transaction until May. So what you've got is a combination of our old GTS business and Ethos from May. In terms of how Ethos is performing, compared to our pro forma, it's performing significantly better. We still expect the second half weighting to profitability. In terms of our guidance, it's not changed from what we've given out previously.

It's David Farrell from Macquarie Securities here. Just a quick question on PSN, specifically the international side of things. If I look at kind of the market shares of the Americas, U.K., North Sea and international that is same as they have been for a while. Does that mean international is falling in line with the rest of the other areas or is it just kind of a rounding issue there? I think it's something you said potentially could grow.

I'm not sure I understand the question specifically, David. But I think part of it is rounding. I think part of where we're seeing some of the growth in both flagged at is in Africa and the Middle East. And part of that, today, we talked about Shell Gabon five-year contract that will roll in. And equally, we've got some Middle East opportunities that we think are pretty near-term. So that's future-based rather than past-based. Inevitably, Africa has suffered some of the same challenges that we've seen in other parts of our business.

So the materiality of those splits likely to change not hugely in the short-term, David?

I wouldn't say it -- there is an element of rounding to those numbers.

Neill Morton of Investec. I had a couple of questions on the engineering business, please. You mentioned or you've clearly maintained, you've increased margins H1 on H1. You mentioned there was sort of one-off effect in there. But you also made reference to the fact that downstream margins have or the downstream performance has partly mitigated the upstream effect. Of that over 11% margin, can you maybe just give us an idea as to where downstream margin sit today versus upstream margin? I know you said in the past the downstream is typically below upstream. And then just the second question on engineering, I follow on really from Phil's question. In 2013 you had sort of two big projects falling away. In 2015, you've got two big projects falling away. Is that typically the level of activity that you need in terms of detailed projects of sustained margins in that division? And should we be looking for two big awards in terms of news flow over the next few months?

So Neill, let me take the second part first, and David can take the question on the margins there. Specifically, when I talked about the Flint Hills and the ETC project, I did mention they are equivalent in size to the Stampede and the Heidelberg projects and things like that. So having two or three projects in the books is healthy for the business, but they don't necessarily need to be in the upstream offshore arena, because these are similar earning capability and quality that are coming from another arena, where we're seeing more positive prospects. We've increased our level of business both in terms of the downstream and in the pipelines. So yes, maybe that's the kind of projects that we need, but they don't necessarily have to come from the offshore upstream, which is subdued, as we've said. David you want to talk about the downstream market?

Yes, I know and I can talk about that. I guess historically our downstream process industrial margins have been lower than our upstream margins, and subsea has typically been higher than our engineering margin. I think where we are now, downstream is pretty much in line with the overall margin now.

And part of that comes from making more use of our high-value engineering center. And for the U.S. market, for instance, Bogota is an area, where we're doing more and more work in support of U.S. projects.

Can I just be cheeky and ask one follow-up question? Just with regards to the cost cutting, and you've been asked this in the past, but I'll try again. The 6% comes from headcount reduction, but just of that $40 million or even $80 million for the full year split between divisions?

I don't think we've gone into that level. Again, Neill, so it was a good attempt.

To help you a little bit, Neill, I think it broadly maps the size of our businesses.

Was there any further questions down here guys that I see or presumably they've been addressed by the guys here, any further questions? Alex wants another bite of the cherry. Is it the Inspector Columbo question at the end?

It's more a thank, really. Thank you for breaking out the software and development amortization. And I'm hoping that you're hinting that, because it's a big impact on quality of earnings, all right. Well, the question is, where does that actually go? Is that a PSN expense or is it an engineering expense?

It's largely an engineering expense, most of it is. There is PSN, but the bigger element is engineering, because it's engineering software and ERP essentially. End of Q&A

There being no further questions, guys, you know the IR team, you know where to contact us. You know if there is any follow-up stuff, you've got open access to us. Thank you very much indeed for your time. Thank you.