Robin Watson - CEO David Kemp - CFO

Mukhtar Garadaghi - Citigroup Fiona Maclean - Bank America/Merrill Lynch Mick Pickup - Barclays Capital Alex Brooks - Canaccord David Farrell - Macquarie Capital Jamie Maddock - Deutsche Bank Phil Lindsay - Credit Suisse Rahul Bhat - JPMorgan James Evans - Exane PNB Paribas

Good morning, everyone, and welcome to our Half Year Results Presentation. I’m joined today by David Kemp, our CFO, and our Investor Relations team. Our performance in the first half of the year reflected the ongoing challenging market conditions. In 2015 we flagged our objective to emerge from this cycle as a stronger business. We also spoke at length about the early and significant actions we took in response to the tough market, and this has continued into 2016. In the first half of the year we took action to reduce cost, improve efficiency, and to better position the business for the future. In doing this we continued to control what we could control. At this mid-year point, market conditions do remain challenging and this is reflected in our performance in the first half of the year. We’ve reduced our cost base by a further $50 million. This comes on top of almost $150 million of sustainable cost savings last year, and that accounts for about a 30% reduction on SG&A costs over the past 18 months. We’ve managed our utilization to reflect the market, balanced with our need to maintain our capability and headcount is down around 10% since December. We feel, we’ve maintained our market leading positions in our key markets and I’ll cover this in greater detail later, but in short we’re beginning to see a modest pickup in some upstream offshore engineering work. We’ve achieved a strong contract retention performance in the North Sea, and we have also been winning a variety of subsea studies and frame agreements. We’re also transitioning the business to a reorganized, One Wood Group, and I’ll be sharing the backdrop and summary of this in the course of today’s presentation. David will talk further about strong financial position, which gives us a great platform for the future. So, whilst the market remains challenging our outlook for the year remains unchanged and we are well advanced in our strategic journey and have used this past 18 months well in significantly reducing our cost base, improving our efficiency and implementing our organizational change. David, and he’ll take us through our financial summary.

Thank you Robin and good morning everyone. Performance in the first half reflects the challenging oil and gas environment, and the resulting pressure on volume and prices. Our strict management of utilization and significant overhead cost savings have helped mitigate some of the impact. However, total revenue was down 17% and EBITDA was down 26% on 2015. It’s worth noting that the first half of 2015 EBITDA benefit from the release of deferred consideration on acquisitions. EBITDA margin fell by 0.9% reflecting both the challenging market and the release of the deferred consideration on acquisitions. The Board has recommended an interim dividend of $0.108 per share, an increase of 10% in line with previously stated intentions. The dividend coverage ratio is 2.7 times. Though down on 2015, trading performance continues to benefit from the flexibility of our asset-light model. We have continued to focus on what we can control and what we can manage during a period for lower oil prices have endured and activity has fallen. Our focus remains on maintaining utilization and costs, improving efficiency and maintaining our capability. Although the challenging market is evident in our first half margin performance, we did benefit from the sustainability of the 148 million of overhead cost reductions delivered in 2015, and an additional dollars in the first half of 2016. We expect to deliver further savings throughout 2016 although the pace of delivery will slow in the second half. The key message here is that in 18 months, we reduced our overhead cost base by over 30%. Management of utilization remains a priority at all levels of the business and this has resulted in a further 10% fall in headcount in the first half of the year. I’ll take you through the material elements of the bridge between the first half of 2015, and the first half of 2016 margins in the next slide. The cost of reorganization, delayering, and back office rationalization in the first of the year are reflected in the $30 million net exceptional charge. This charge also includes additional provisions for property lease costs, clearly as we reduce headcount we need less property. The first half of 2015, benefited from the deferred consideration provision releases. In the first half of 2016, we faced further pricing pressure in our core markets. For example, we were successfully retaining many of our UK contracts in 2015 and early of 2016, but these were at reduced margins. The pricing pressure has been partially mitigated by further overhead cost reductions of $50 million. Overall, stripping out non-recurring items in the first half of 2015, we believe our underlying margin fell by 0.4%. Turning to our segmental performance, in engineering revenue decreased by 23%, reflecting the subdued market in subsea, and lower activity in our downstream and process plants business, offset by relatively resilient performance in upstream and onshore peoples. EBITDA decreased by 21%, however EBITDA margin increased by 0.3% to 11.5%. This reflects our focus on utilization and drive for efficiency supplemented by improved profitability on legacy engineering projects. Activity in our upstream business has been fairly resilient overall. We have ongoing activity in our contracts in Saudi Arabia, and have moved into the late-stage of follow-on engineering and construction support in our Det Norske, Ivar Aasen, and Hess Stampede projects. Encouragingly, we have progressed into the detailed design phase for Peregrino in Brazil, and have been selected for FEED and detailed design for the Noble Leviathan fixed platforms. Furthermore, we have been awarded our largest ever automation project in Kazakhstan for Tengizchevroil. Robin will speak more about these significant awards later in the presentation. In subsea and pipelines, we are seeing seen significantly reduced activity and have a lack of visibility as minimal large subsea detail design projects come to market. We are confident in our ongoing customer relations with several worldwide master service agreement secured or renewed in the last six months. Our U.S. onshore pipeline business is performing robustly with work on the Dakota access pipeline and others expected to continue through to 2017. In downstream, process and industrial we have seen a reduction of activity in the first half of 2016. The Flint Hills refinery project is winding down and we see increased competitive pressure in our process plants business. We expect the trends in the first half to continue throughout the year, across all sectors customer pricing pressure remains in focus and is reflected in current bidding activity. We are encouraged by recent upstream awards which give us visibility into 2017. However, subsea activity remains muted and we are seeing increased competitive pressure in downstream. In PSN production services, revenue decreased by 15% reflecting the continued pressure on volume and pricing, more significantly in the North Sea and U.S. onshore. EBITDA reduced by 33% and our EBITDA margin reduced by 1.6% as the ongoing pricing pressure outweighed the significant overhead cost reductions and efficiencies made. And in the first half of 2015 we benefit from the release of the deferred consideration on acquisitions, adjusting for this the underlying margin was down 0.8%. The Americas accounted for around 60% of revenue with U.S. onshore representing over half of this and the remainder coming from the Gulf of Mexico, East Canada, Trinidad and South America. In the U.S. onshore business, we are encouraged by the recent bottoming of the rig count and feel well positioned for when the market recovers. However, we are not seeing any immediate improvement in our end activity. The first half also sees the benefit of our strategic acquisitions Kelchner and Infinity, with increased activity expected in the second half due to seasonal nature of their business. The North Sea remains very challenging. We have seen significant pressure on volumes and pricing and some changes in scope which reduced the North Sea to 30% of overall PSN revenue. We continue to have good visibility under longer term contracts and have renewed the vast majority of our contracts over the past 12 months. Our customer relationships remain solid as we work alongside them towards further cost efficiencies and best practice. Activity in our international business has been robust in the first half of 2016. Work is progressing well on our two contracts in Iraq and our contract with BP in Baku. We continue to see the Middle East as an area of growth. In Australia, we recently announced the extension of our contract with Melbourne Water for a further three years. Looking forward, we expect the performance in PSN Production Services to reflect the challenging market conditions specifically in the North Sea and U.S. onshore, albeit these will be offset as far as possible by overhead cost savings and efficiencies. In turbine activities, revenue fell 8% and EBITDA decreased 22%. Growth in RWG was offset by lower performance in TCT. Our EthosEnergy business continues to face various challenges. However, we are moving forward with simplification efforts, alongside our continued focus on capital efficiency and cost reduction. We expect full year performance in our turbines joint venture overall to be in line with 2015, with significant second half weighting as in prior years. In this difficult market, cash generation remains strong, although it was impacted by a small increase in our debtor days, as our customers hold on their cash a little bit longer in the current market conditions. There are no material bad debts, cash generation in 2015 benefit from a significant receipt on the Dorad contract in turbines. We have continued to reinvest in our business. We made four modest-sized acquisitions in the UK and Middle East and invested $55 million in capital expenditure in our business. The group is in a strong financial position. Our balance sheet gives us flexibility to reinvest in the business through acquisition and organic investment. We recently extended our $950 million bilateral bank facilities until 2021, at the same competitive rates. We believe that our solid financial position is a good differentiator. Net debt, including JVs of $351 million, remains towards the lower end of our targeted net debt-to-EBITDA range at around 0.7 times. Robin.

Thank you, David. Okay. We’ve been working hard to ensure we not only deliver through these challenging market conditions, but we also position ourselves to be a better and improved and stronger business coming out of the cycle. This has been an overarching aspect of what we’ve been doing within the business over the past 18 months. In helping you to understand what this has meant to us, I’ll remind you of our enduring investment themes, share with you an overview of the One Wood Group reorganization and go through in more detail some specific highlights from our organizational performance so far in 2016. I’ll also take the opportunity to share with you our repositioning of the business, particularly with regard to the markets which we feel a most likely to recover first, as we experience any oil price recovery. To deliver on our objective of emerging from this cycle is a stronger better business. We have two fundamental strategic objectives for 2016. Firstly, as we did in ’15, we wanted to control what we could control. This has remained critical to the business. Secondly, we wanted to change our organization, such that we could position ourselves to be a stronger business as the market recovers. Let me first cover aspects controlling around controlling what we can control. We will continue win work, by remaining closely to aligned with and responsive to our customers their order book continues to deliver for the business and we feel confident that whilst volumes have certainly reduced our market share has remained robust. We've continued actively manage utilization levels and retain capability within the business. We've been innovative in addressing these challenges. And we feel we have got the balance just about right despite the challenges of the past 18 months. And we continue to reduce the cost base and as David has talked to through in the last 18 months we've now reduced our overhead costs on a sustainable basis by over 30%. We've offered efficient solutions to customers and continue to take a leading role in our industry requirements for a reduced sustainable cost base moving forward. We spend the past 12 months designing and implementing the broader One Wood Group reorganization of our business and I'll take you through this in more detail shortly. Building on the structural rationalization and our functional support capabilities we have successfully moved much of our back office to shared service centers for HR, IT and finance and we are progressing through our ERP system implementation. We started these changes over two years ago and considered benefits reflected in our enduring overhead cost savings. We've also been maturing a strategy through the period and are confident it remains right to take us in the right direction. Though the short-term buyers has been around reducing cost and approving efficiency our organizational changes will help us to fully deliver against our longer term strategic objectives. It is worth noting even in this difficult oil and gas market that the fundamentals of our business remain the same. Our purpose remains to provide smart technical solutions and value for our customers. We are not changing the fundamental nature of our offering or our risk profile. We remain asset light and oil and gas remains our core marketplace. We stay positioned across the lifecycle of our customers’ assets which gives us a range of exposure to both operating and capital expenditure. We feel the breadth we have achieved strengthens a relative resilience of the business. We remain very well positioned in areas with good long-term growth prospects. We look to continue to invest in the business and bolt on M&A remains a preferred use of cash with our discipline in this area as resolute as ever. We retain our measured risk appetite no more than 10% of revenues derived from contracts with fixed price elements that currently sits just below 3%. That means being commercially versatile and the comfortable with performance-based elements and contracts. I now want to share the logic of reorganization and repositioning as One Wood Group with you. And it’s worth taking a couple of things -- making a couple of things clear as they offset. Firstly, we have focused our organizational considerations from a starting point of customer requirements. The shift we've introduced is from an organization defined by brand to an organization defined by service. In doing this we now describe the organization around our traditional and recognizable core services, our asset lifecycle solutions, alongside a very well respected specialist capabilities and often more niche markets our specialist technical solutions. Secondly, the change is also about efficiency and effectiveness by becoming a simpler business, reducing internal complexity, as well as being a more intuitive business to engage with. Thirdly, it’s about developing our smart solutions recognizing and leveraging some of the very smart people and technologies we have. The reorganization will mean a change in external reporting segments for the full year results in February 2017. Ahead of this, we’ll take you through the mapping exercise of the old and the new structures together with a re-cut of historical financials on the new basis. And we will do this in the fourth quarter of 2016. That might help with the questions we’ll get this morning, but we will do that. It may be useful to share it with you in practical terms. This is really quite a simple summary of what the business now looks like. Asset lifecycle solutions, is by far the largest part of the group and will have a Western and Eastern hemisphere management structure. Specialist technical solutions, comprises some of our lower volume, higher margin businesses under more cutting edge technologies. Having a discrete business unit which pulls together these skills, ensures that they do receive the appropriate executive attention investment and strategic direction, we feel this is particularly relevant as the challenges of the man/machine interface digitalization and automation come much more to the fore. We’re well underway with the transition and any exceptional costs associated with the changes are recognized in our first half results. Crucially, we’re getting very encouraging feedback from customers on this reorganization and as a result of our thorough preparation and detailed planning there have been no business disruption issues through the implementation process. It’s probably useful to spend a very brief minute highlighting our logo change, which has been implemented alongside the reorganization. Our Kenny, PSN and Mustang brands have come together under this identity. We’ve evolved the logo itself to better reflect who we are. It’s more simple more focused and red is introduced as our primary color. And that is a connection back to the strong heritage of Wood Group. Sustaining our position in key markets, despite the challenging environment in which we’re now operating, we do remain aligned to our longstanding customers and have relationships that are robust. We’re confident that we have retained our market share. And we are positioning ourselves with customers in key areas to benefit when the market does recover. We have stated that we see early indications of modest recovery in some areas. This really doesn’t change the underlying position of a tough market. With this backdrop, however we’ve been very pleased and have continued to win work in all the geographies, with a broad range of customers and buying a comprehensive suite of services. We're very encouraged by some of the wins we have achieved and I’ll just take you through some of them. We’re delighted to have been selected as the main automation contractor for TCO’s future growth project on the Tengiz field in Kazakhstan for the next six years, and first oil from this project is expected in 2022. Our role covers designing and integrating the entire process automation system and this is a very large project for us around 3 million man-hours over that period. It's the largest automation project we have ever won. In June we were selected by Noble Energy to perform the FEED and detailed design work for the Leviathan fixed platforms in the Mediterranean. This builds in a very good relationship which we have held this Noble, having previously completed similar design work for them over the years and to put in context this will be an 800,000 man-hour project over the next three years. We renewed the majority of our contracts in the North Sea that includes Shell, TAQA, Total, Chevron amongst a number of others. Despite comprehensive rates and generally suppressed activity levels, this positions us well for future opportunities. With this position in the UKCS to lead cost reduction and fair responsible and balanced manner throughout this challenging period. This is a position we’ll continue to take as a largest employer in the basin providing our services. In the Middle East we had contract wins in Iraq and won a significant contract in Baku with BP. Strategically we've increased our stake and our Saudi Arabian engineering business and a significant activity in kingdom from our Saudi Aramco relationship. The subsea market remains very subdue but we do remain confident in our solution independent position and continue to wind FEED awards. We have also secured a number of frame agreements which will obviously be helpful when activity returns. In reflecting on the markets which mainly in our industry feel are likely to recover earliest, an upstream engineering work both FEED and detailed design related to potential upstream projects we have seen modest but encouraging activity and we're delighted to announce engineering wins achieved through the Houston office in particular some of which I've just touched on. In the brownfield maintenance space, there is a point in time when maintenance will be carried out and modifications will be carried out and there will be some cut job required. Our contract expansions and wins put in the more material basins really position us as well in this respect albeit that is well evidenced today that was an increase in activity levels. In the U.S. shale market, it's the view of almost all commentators that the U.S. shale market will be one of first to recover. With this in mind, we feel that helpful to remind you of our unrivalled position across the U.S. onshore shale basins. This particular market was a significant part of the Company's growth through 2013 and 2014 and we have a deep capability across all shale basins. On top of this we have a great range of services and well respective reputation for safe operations to offer our customers. And we also feel the reorganization has really strengthened our position in this particular marketplace. There is a great opportunity to further leverage our engineering and project management capability and we're quite excited by the potential of the business as activity levels pick up. With the complete through cycle offering under a single leadership team, we're confident of an enhanced proposition for customer base across all the shale basins. Whilst it would be too soon to suggest there is an uptick in activity levels we have seen an increase in tender activity both in terms of number and value and there are external metrics which are beginning to show some bottoming out and/or modest uptick such as the onshore rig count. Our Western Hemisphere business is generally very well positioned with both the shale and upstream hub co-located with key players and decision-makers and we think that is important. So in summary, we continue to show relative resilience and we continue to benefit from the flexibility of our asset light business model in what remains a very challenging market. Our operational focus has been on unyielding ensuring cost is reduced whilst capability is sustained. Enduring investment themes remain robust and we believe we are sustaining our market leading positions well in our core markets. Our overall outlook for 2016 remains unchanged and we expect full year EBITDA to be around 20% lower than 2015 in line with our expectations. We have been working hard to ensure we not only deliver through this challenging market environment, but we also positioned ourselves to be an improved and therefore stronger business coming out of the cycle. We firmly believe that our One Wood reorganization better enables delivery of our strategy and therefore positions us well for the future. We remain committed to delivering the vision for the business to be recognized as the best technical services company to work with, work for and invest in and with a relentless focus on excellence. With that we will now take any questions. Q - Mukhtar Garadaghi: Mukhtar Garadaghi from Citi. Two questions for me. So the revenue mix still reflects a number of legacy contracts as you mentioned. How would the margin look going forward do you think, based on that mix shift as well as your ability to cut incremental costs from here without a major shift in the market? That's my first question. And moving to 2017 again, how exactly do you think the recovery will look like, especially in shale, based on the current tenders and the pricing that's being embedded and the parts of your business that are exposed to that pickup in the rig count. Could you give us some measures, some measure of quantum how that will play out in U.S. shale? Thank you.

I will take the shale question first and I will let David share with you some of our thinking on the margin as we move forward. So in terms of shale business, why do we feel as one of the first areas that would recover? We do feel share offers customers relatively modest capital investment for relatively secure returns as a well defined area, the geologies are well defined and actually some of the technologies and knowhow as really advanced significantly I would say between 2010 and 2014 and certainly the downturn obviously is a very competitive basin. So that's why we think shale would be a recovery point. In terms of what happens in quantum for 2017, too soon to say. I think the uptick in rig count as encouraging but is very modest as off a real low point. So I think there is a bit of context here as to how we call the bottom of the cycle and I think Halliburton and Schlumberger have been more bold in suggesting that. I think we feel in our particular sellers here that we are along the bottom in some shape, manner, or form, but there’s still an ebb and flow in that. We are not seeing an uptick in activity levels, to be quite clear on our shale footprint at this point in time. We are seeing an increasing tender activity which in itself is encouraging. And I do think with the reorganization, we have better positioned to do more for our shale customers, where previously in Wood Group it was a field service proposition, we now have a complete lifecycle proposition. So we think that will be an attractive proposition for customers as the basins recover. And the only other bit I would add in terms of shale one advantage we think with the footprint we have a spread right across the shale basins. We’re in the Eagle Ford, the Permian, the Marcellus, the Bakken, Utica, we’re right across all the recognize shale basins. So we do feel and in the map that we showed you there, that actually was our shale only fueled footprint. If we overlaid on top about some of the regional engineering capability we have, it would really be a very comprehensive spread across the lower 48. David you want to touch on margin?

Yes, I’ll maybe touch on margins. Starting overall, I think what we’ve flagged, if you think back to last year, we set out our margin evolution. Over the course of the year, our margin grew by 0.8% from 7.2% to 8%. So what we said is that 0.8% was largely non-recurring and non-trading, so really our trading margin was in that 7.2% space. For the full year, we think our margin is going to be slightly below that, probably at about that 7% level, so just slightly below where we are. In terms of the underlying businesses it maybe goes to your point in U.S. shale a bit as well, if you look at PSN, in the UK we used to talk about that being broadly a 5% margin business, we’ve now consider that below 5% margin business. If you looked at Americas of which, and U.S. shale in particular, U.S. shale, we were marking 10% plus margins in 2014. And now, we’re between 5% and 10%, towards the upper-end of that range. And if you looked at our international business is a real mix there. In the Middle East, we’re making good 10% margins in Australia/Africa it’s more at that 5% level. So there is a mix across our PSN business. Across engineering, we flagged that we benefit from in our legacy engineering projects improved profitability. Unless the quite normal adjusting of contingencies and provisions are you get towards the end of the project. Those legacy carried on in the first half, but they’ve been at a much lower level than we had in 2015 for example, so they’ve had less of an impact. In terms of the overall engineering margin, we do see that coming down by about 1.5% compared to 2015.

If you mind me following up on the shale question, you used to provide a breakdown of bits of shale that do different things, the construction business, the OpEx business and sort of the midstream business. How would you expect, if we assume that, as you said, 50% is roughly shale and we think back to $1 billion of revenues you used to make in that business. As the rig count starts climbing up and hypothetically, we see a 50% increase, a 100% increase over the next couple of years, how do you get to develop from a sense that what percentage will benefit from an increase and where do you still see structurally slow activity whether that's midstream, or your ability to assign new operating OpEx-type contracts?

So, you've got in ’13 and ’14 with a much larger CapEx orientation in this construction business and shale and our more modest operating business and shale that's much more parity now as construction for that is reduced in fact both have reduced but there is much more parity in what we do. As budgets increase it would be capital tend to be in the construction space so you could have a reasonable view that construction activity would pick up more than operating activity of those and operating activity would only pick up once you have more infrastructure to be operated and maintained, so there would be something of a picked up in construction first and foremost. And our project management it might be a different proposition that really was very delineated previously reduced sponsor there will be more opportunities to have a complete solution for customers so that's part of the reorganization that was carried out and do more in that space but even if we compare the like-for-like 2013, 2014 high level of CapEx, high level of construction activity more modest operating business if and when it picks up there would be more construction activity and then in the back of it you would have an uplift of available market from an operations and maintenance perspective.

Thank you, it is Fiona Maclean from Merrill Lynch. I'm struggling to understand the total change in reporting segments. We've had the other divisions in place I'm pretty solid we have for the last 10 years and I'm trying to understand would be why you are putting in these to change them their loss to be probably some concern around what is that you don’t want to see from changing the segments and when precisely we are going to get information on all the back data and are you going to be presenting this kind of more reposition business in a more kind of make sense of which the market because you are bringing language that we haven’t really seeing what's could talking about before? Thank you.

Okay, so it may be disappointed to know what we are doing as we organize the business models in this room so that maybe some years and the change in the structure it's really important to understand this, this is oriented by who our customers require and actually some of the advantages we have had in being brand oriented that provided disadvantages in terms of cross-selling, in terms of being able to provide a complete solution for customers so that I think is really important they understand the genesis of the organizational changes very much driven by that. It will be a change in reporting segments I think a real key point to reflect on what we do as so what we do, and I do understand the point of this different language Fiona as to what we've traditionally used but if you do look at the way we reported just now there is some abnormally in terms of the structure of engineering versus PSA as our brand and as our services and it's what is we are recognized it's not entirely intuitive to current structure of reporting but I do think the important thing the real important thing here is from a reporting perspective that is very clear to everyone in this room and beyond as to what was Mustang Engineering upstream offshore, what is that move and the new all done in the new structure. We do also recognize that is not a 5 minute presentation in the mid-year, so we will invest significantly and proactively through the course of Q4 2016 through the IR team just to make sure that everyone in the models are really clear on it. And I think as important you now I know it's tongue in cheek, but we're hiding nothing by changing the organizational structure that we'll be very clear what we had previously and what we currently have in terms of our order book where it's getting done and how it's getting done. And I think that the right balance to have it and it's always a risk I guess with the mid-year presentation, this is about the first half performance. But we did feel it would be disingenuous not to touch on it because as such a significant change in you very point we've been over the past four years since we've acquired PSN very consistently through reporting in those that we have reported it. So please bear with us is and we will make sure that you're very well informed as to what marks in the reorganizational structural.

Currently our plan is to have a separate session, so we'll make a release of the data that reconciles between where we are now and where we're going and we'll have a separate session probably rarely part Q4 so that you guys have fully understood that before we get to know the full year result.

Mick Pickup of Barclays, can you talk about de-layering of back office personalization, one of your competitors last week who's built through acquisitions suddenly started talking of 27 HR system 45 travel providers and just talk to how far you're through the system and how much more you think can come out? And secondly on your One Wood Group, the same competitor talked about getting into share, can you just tell us what exactly a Mustang brand or One Group can bring on the engineering side to shale, it's very much in blue-collar business to my knowledge, I am just wondering what you can do on the white-color side?

I'll cover the shale and then I'll put a very enthusiastic CFO in to talk about back office rationalization because we've very political randomized piece to-date. From a shale perspective I think you've actually -- you've made a very good point about really the predominance of our footprint in shale has been around field service provision, we have engaged on occasion on project specific basis with PSN and Mustang getting together. One part that is really safe in the board with the reorganization is that's now one leadership team and complete cradle-to-grave capability. Is there a big part for engineer to play in shale? I think that there is a more of part for engineering to play in shale in terms of the product transfer, so the well hedged themselves are fairly simple in terms of it's not a big engineering effort. But once you do start again high volumes lots of pipe work, pumps, etc and that increased complexity, we do feel that as a real opportunity to approach the shale market a bit differently. And we're encouraged by if you look at this customer base we have the XTOs the ConocoPhillips, the Anadarkos. These are companies that do recognize it will need to be done a bit differently and actually be good to have a more comprehensive approach to govern project opportunity. So we do engineering playing out a large role there and we certainly see being able to have that turnkey proposition within one leadership team than wants decision making once they have the BD people that are all selling our One Wood I think that will be really powerful if we redeploy our resources in that manner. So, in that regard it's probably making the most, making the best of the footprint that we have. We just field service oriented and at the end of the day this is about building things in the field, complementing that with engineering capability we have, we've invested heavily over the past four years in shale particularly in ’12, ’13 and ’14 and I think these enduring investments really stand us in good stead. It will be tough to embark on our major set of acquisitive activity, I think for a number of players in the service sector. So I think we're actually in a very good position and a leading position certainly a leading brand with the credibility we have from our safety and delivery perspective. So we're really quite excited by it, back office?

I know you are all excited to hear about our financial systems, I can sense it. I guess what you characterized for Amec was probably where we were about two and half years ago so over the last two and half years we've been investing in our ERPs and our shared services. By the end of this year we will probably have about 80% of our business on an Oracle ERP. So there's been a big transformation over that two year period. And I guess what that has allowed us to do is take advantage of the benefits of the shared services. And you see some of the benefits we've had in the last two years around our taking a 30% of our overhead cost base. A big chunk of that is being through shared series, but it's also in the front-office side as well. You heard Robin talk about having a unified Wood Group. Having common systems and common platforms is central to that as well. Getting a flavor we might be 80% through the ERP journey we're still doing other things in IT in the start of June we signed a deal with IBM to outsource our ITNS infrastructure and so we're going to that transition just now. That will allow us to access a lot in 2017. So it is about an ongoing journey, but from a finance systems and HR systems we'll be 80% through by the end of this year.

Just to put a follow-up. Another M&A going on was that on the subsidy side. One of the reasons they talk about is going forward there will be monster tiebacks going forward or we thought last can you work are you seeing any signs the tiebacks just on new facilities?

I mean we talk about Leviathan, Mick, and that's a good example of those subsea tiebacks was the most cost effective project solution. And true philosophically it does a subsea tieback can be a much more cost effective solution if you got existing infrastructure already, it obviously doesn't fit every scenario across the piece. So no, I think our offshore subsea is more of not just no big projects around there we are keeping the share of the work that we have got and we feel we're still winning work, but it's much more modest much more smaller package of work.

I think we said in the statement we probably we've renewed about six MSEs with a range of global players including Statoil, BP, Dong so we feel we're well positioned for the work, but there is just a lack of work just now.

It's Alex Brooks with Canaccord, a couple of questions, coming back to the first half results. I forgive me if I’ve missed this, but I’m still not entirely clear how the engineering margin held up in the first half, because as you talked through the individual components that made that up, it all sounded pretty dire and yet the end result seemed quite good. So it would be useful to know. Secondly, I noticed that your CapEx was actually up in the first half year-on-year. And I’m just curious that’s somewhat counter to industry trends, and it would be useful to discuss what’s going on.

I guess in terms of the engineering margin, there is a mix impact in there. We talked, upstream held up very well and I think we talked about, we benefit from improved profitability on legacy engineering projects. And again just to repeat to the, as we’re getting towards the end of these projects, we adjust our contingency and provisioning for what we’re seeing. And so that was a benefit in the first half, that we probably expect to see in the second half. Going down through onshore pipelines was pretty robust. In subsea we faced a lot of pricing pressure, but we’ve done a lot of good work in terms of cost reduction in terms of subsea. And then in downstream, we’ve seen a lull in activity and we face competitive pressure there. So looking forward into the second half, we’ve a drop-off in activity. So it is broadly a mix in overall, we do expect engineering markets to come down maybe about 1.5%. And your second question was?

On CapEx.

On CapEx. Overall, we expect of CapEx to be up a little bit compared to 2015. So for you’re seeing the first half is largely a phasing. We had where a new office in Aberdeen which was consolidating a lot of our old office. We had a fit-out of that. So that was in the first half, it would have in the second half.

Hi. It’s David Farrell from Macquarie. Just following up from Alex and some other comments, can I just talk about maintaining guidance for the full year? Your margin guidance for the full year implies 100 basis points improvement in the second half. Historically, engineering PSN has improved about 50 basis points, 60 basis points. It also implies an increase in revenue. It doesn’t really feel as if that going to be coming through in the second half of the year. So could you just talk to that a bit more please?

We do have a biased in the second half in terms of the second half has generally got more activity there. So there’s a real world aspect to this rather than a level of accountancy, which David can talk to as well. But the real world aspect is in our PSN business and turbine business in particular, it is always back-end loaded, if you go back for a number of years. And obviously that business has grown in scale, the effect, particularly the PSN business, there is back-end loading in general terms. So if you win work early in the year, and it’s executed later in the year, there’s an uptick in terms of that activity level. So the broad range of 45, 55 percentage-wise, is true and a true reflection of what happens in reality. And some of that’s, turbine overhauls tend to be back-end loaded as budgets are released et cetera and people use their budgets up before the end of the year, turnarounds, in the blue-collar environment, shutdown activity, related activity in seasonal climates where you’ve got weather windows. That type of activity does physically drive some of that because it would drive some of that backend loading so I think that that is the fundamental driver to it and that's why we would start what the cadence of that we've haven.

Yes probably if you look back to business 2013 onwards we've basically range from 44% to 48% in last year it was 48 we have the significant one off in the differed consideration and a last year so we strip that out we're pretty much banging that sweet spot as Robin said as usually driven by turbines and by PSN again the margins story is pretty similar to that the prior years.

Some of the big contract win announced today. Can you give us some color in accordance on how that ramps up overtime when the peak is here for contribution to the top line and profits.

There is probably not a single lines of to that I mean it sounds as you can imagine the scale of it's a really it's a launch fleet of activity that we are taken on over 6.5 years. There is a Greenfield and Brownfield aspect to it so there is not quite of crystal clear as that there is a million amount of in country 2 million amount out country it will be done in Argentina, the U.S. and the UK and well as in Kazakhstan so a probably revenue and enough there is a what the ramp in around of it is something that there a science that you could put to it but it's such a broad spread of activity over such a long period. I would just double the absolutely delay that we are not contract with that skill and size that customer base should as the Chevron and Exxons and Consortium it's right -- it is actually 100 kilometers East of Kashagan it is in a real good basin in terms of reserve base it really both do not and the BP Baku strategically we're just delighted to have such a strategic position with IOCs in the middle of the Caspian arena.

As Robin says it's largely spread there is not a big peak year but ’17-’18 would be the higher years of activity but Robin says that's a strength.

Good morning. Thank you. It's Jamie Maddock with Deutsche Bank. You said at the outset you would be seen a modest uptick and opportunity I was wondering if you could put down to context for us to try and understand that? Thanks.

So, we probably touched on some of the ones Jamie around Leviathan, obviously the project win Peregrino 2, certainly just talk about TCO there is a number of Gulf of Mexico contracts that we are working on just now that we would be hopeful of being well positioned to do more work on. So we just see a general activity level entities particularly from our Houston office and not Houston reputation for likely top sites, turnkey capability so in general the opportunity list and we can find it quite easily where the projects are in the Gulf of Mexico but there are a number of projects that are around sanction point and we would be hopeful as they do get sanctioned that we would be in a good position to benefit from in the same way that we talked like that the Peregrino 2 and that obviously has now come to fruition.

And a follow-up to that is, in a world of standardization and simplification do you think client is really going to -- be willing to engage with you at the level at which your business against pricing really for the engineering capabilities. How do you sustain that into any up cycle when presumably things are getting simpler and smaller as you said?

Well, I think actually providing a solution is key and so there is something of shift to just providing a service i.e. we will engineer that and then hand it customer to then go coordinate how it's constructed and to go coordinate how it's commissioned. What we're seeing in the IOCs, there has been significant reduction in their technical function certainly in the surface really technical for the facility really technical functions, so in that respect I think the short-term obviously there is a lot of supply chain activity from customers and it's largely a volume margin conversation as you can imagine and even now. I do think however we show customers other restructure having that option for a cradle-to-gave solutions as something as attractive, you can't standardize simplify reduce interfaces, part of our acquisitive activity the very modest acquisition of the enterprise engineering, fabrication facility in the UK wasn't really to get fabricated and it was to provide an ability to do cradle-to-grave repeat orders, fix the price, guarantee it and get it done in the short time frame. And actually we were outsourcing some of that fabrication as a great example that we outsource that we can do our own a measurement, do our own design, do our own fabrication, take it offshore and construct it that really is quite a value proposition to our customer that we see repositions the business. So there is not a simple one solution for a whole range of customers just now we are definitely going through a period, where there is a bit more commodities and there is certainly pressure on price and obviously there is a lack of volume. We do think however we won the TCO award because our automation business has got a fabulous reputation as a largest independent system integrator in our sector. And reputation for delivery, we think, will always have customers have a good customer relationship in a good customer position for you.

Phillip Lindsay from Credit Suisse, two questions really, the first one is a follow-up on the TCO contracts, if you look at that contract sort of price to man-hour it looks very top of the market which suggests that there's a probably some scope within that, that's not just pure engineering or brownfield man-hours but perhaps you could just talk through exactly what is in that scope of work?

There is a large procurement element in it so the man-hour versus headline number, there is a disconnect that there is a channel procurement and not insignificant procurement, I wouldn't break it down because actually is a bit sensitive in terms of -- it's quite obviously the procurement went but there is big procurement element within the $700 million headline and we're responsible for that EP and an element of a commission and etcetera.

Is that maybe a theme for the future with Wood Group future, in terms of the scope of worthy you'd be willing to take on?

Yes, I mean we do that, so we do some EPC and EPCM, so we do have a range engineering procurement construction and engineering procurement construction management. There are probably two things in that I would say from a positioning perspective we've got projects and modifications service team and the new organization. We're working up how we can take the best of Mustang as was the best of PSN and as well as and how we got great modifications capability that we can standardize across the globe which will largely come from the PSN heritage and can recreate a great project capability probably in a sweet spot that's a bit more modest what we'd maybe call Cat C projects a 50 million to 200 million sort of space nothing that's probably the area that we feel we have good track record, good experience and how do we reposition the business there, because we do feel some of our competitors are more recognized as project deliver the service companies than perhaps we naturally are. Our PSN oriented customers probably view us as a brownfield-modifications Company. Our Mustang customers would probably view us more as a project company, but big E, smaller P and C. I think the other bit I would add and that's the back office rationalization, in all seriousness, it does come into play we have now got a President for Strategic Procurement across Wood Group. So we've been really quite excited with that and doing procurement in a much more strategic and tactical manner than we have traditionally done with -- tend to done it work transaction investment that's a great example of back office investment getting your front office capability. So, again we're probably the end of the beginning of creating that that will be something we can take to the market across the globe. But the pockets where we have done it in the past and automation is a great example really typically how the larger procurement element just with the type of business that you're integrating no master control systems, PLC logic and field instrumentation so was inevitably as you are designing is a logic for that there isn't inevitable increase in the procurement that you carry out.

Okay, thank you. And then the second one from me is on M&A you sure mentioned the word discipline in the presentation which may be suggest that you were disciplined enough to walk away from some deals. But perhaps you can just about maybe past experiences and future opportunities?

I think this is so this is quite broad subject really we will tag team on this one. I mean we are M&A's a big part of our strategy it has been in the past it continues to be reducing and you guys all know what that sweet spot as we are dealing we've got sweet spot we're very good visibility on that position it has been a big part of our growth story. Put that couple of things in context I guess we all know the public domain information now those are limit in the number of deals in our traditional space. So the deals that we're doing and if you look over the last 18 months it really placed about broadening agenda they are relatively modest in size but they do position us with our of breadth footprint. Then what is the lack of deals around and the oil and gas fields you have to be thoughtful on expectation and I think that is why I make reference to discipline. So there is still some expectations like in a pre-owned value and a business is obviously performing in a very restricted oil price environment. So there are some deals around they are actually quite good operational businesses but another view overpriced. Sometimes we do diligence and we walk at that point and we have had one of two examples of that over the course of this year. So I think that discipline there is key and the only other point I would make as traditionally we don't buy distressed businesses and there is a between being financially distressed and operationally distressed. So enterprise engineering was a good example it was opportunistic and the issues were financial, excuse me, the structuring of the company rather than operational it was actually a very good facility and it had very good people and a great capability. So that was, and it was immaterial in the scheme of things in terms of the cost. So that’s the M&A story, very committed as our preferred use of free cash flow. There’s a limited number of deals around in our adjacent spaces. We have looked at a number of things and we have walked away from a number of things for a variety of reasons around our own discipline, as we go through the process. Do you want to add anything, David?

No, I think clearly, our acquisitions have been fairly modest in the first half, and we would have preferred that to be bigger. As Robin says, the fundamentals are still the same. Plan A is bolt-on acquisitions. We buy, typically, private companies and the great thing about that is it allows us to do really good diligence on the companies. And so what we found in the first half, we’ve walked away from two deals that had gotten quite far on when we found something in diligence. And we also, there’ve been a couple of cases where we just couldn’t close a price expectation. And so just now, if you look our M&A pipeline, it’s more modest than we’d like it to be, actually, just now.

I’m just thoughtful on time, guys. It’s nearly 10 past. Maybe we can take one, maybe two more questions.

Hi. This is Rahul Bhat from JPMorgan. Just one quick question on your net debt, it came in, I think in the trading update, you guided to around 400 million in net debt. And that came in around 350. Is there something you were expecting to come in the first half and then come in and you’ll probably see it in the second half?

No, well, actually, obviously, our net debt was less than where we’d anticipated it at the end of June. There was no great story there, actually it was just that, as we pull the, clearly, we’re a global business. We’ve got cash all over the world. And the timing of some of the payment runs were just slightly different. So there was no great story. There wasn’t a $30 million check expected or we received $20 million early or anything like that. It was just better general cash management, if I’m honest.

Thank you.

Hi. It’s James Evans, Exane. One last one in it is one for David, actually. You used the word sustainable on your 30% very impressive overhead cost savings. I just wondered, in a fictional world that unfortunately will never exist, where volumes went back to where they were, how much of that would need to come back into the business?

I think, it’s a good question. I think that’s one of the big challenges that we recognize going forward. And we think it’ll be key for our margin performance as well. How we can stop that overhead balloon re-inflating. And that’s where things, we talked about ERP systems, shared services and the structural changes we’re making things like outsourcing to IBM, those structural changes are the ones that will endure. Clearly, there’s a tranche of savings that we’ve made that are activity related that we would expect to see some re-inflation as we go forward. But really our focus will be trying to keep that to a minimum, because we think that will be key to our margin performance.

Good. Well, hopefully that was helpful. Thank you, everyone, for your attendance and patience. See you in February.

Thank you.