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Expro International (EXR)

  Print      Mail a friend       Annual reports

Thursday 24 November, 2005

Expro International

Interim Results

Expro International Group PLC
24 November 2005

                                                                24 November 2005

                          EXPRO INTERNATIONAL GROUP PLC
                            ("Expro" or "the Group")
           Interim results for the six months ended 30 September 2005

Expro International Group PLC, the oilfield services company, today announces 
interim results for the six months ended 30 September 2005.

                                            Six months ended         Year ended
                                              30 September             31 March
                                            2005            2004           2005
Revenue - continuing operations          £131.6m         £100.6m        £211.3m
Operating profit                          £13.6m           £8.2m         £12.5m
Headline operating profit (a)             £13.6m           £9.7m         £19.0m
Basic EPS continuing & discontinued        10.4p            7.0p           5.7p
Headline EPS (b)                           10.0p            8.0p          13.6p
Dividends per share                         3.8p            3.8p          10.9p
Net bank borrowings (c)                   £52.8m          £47.3m         £53.7m

(a) Based on continuing operations before significant non-recurring items as  
    extracted from the consolidated income statement

(b) Based on continuing operations before significant non-recurring items and
    basic number of shares, as calculated under Note 6
    Comment on EPS under previously adopted standards is provided on Page 1 of 
    the Chairman's and Chief Executive's Statement

(c) Net bank borrowings are bank loans less cash and cash equivalents, as 
    calculated under Note 9

• Results in line with expectations
• The strategy continues to deliver financial performance
• Enquiry levels and order book continue to increase, fuelled by advances in 
  technology and increased customer focus combined with improved market 
• Additional investment to resource future demand
• Dividend maintained

Commenting on the results, Graeme Coutts, Chief Executive, said, "I am very 
pleased to announce today a set of results that not only fulfil our short term 
performance goals, but also incorporate initiatives that evidence our continued 
commitment to strategic investment for the future. Headline EPS under IFRS of 10.0p
is a significant growth on prior year and is equivalent to 11.1p under our previous 
accounting requirements. The execution of the strategy has generated strong revenue 
growth and, combined with the group's operating leverage, has not only offset 
adverse currency movements, and funded investments in the future, but also 
provided continued growth in earnings.  The market outlook for the second half 
and beyond remains positive."

                                    - Ends -

For further information please contact:

Expro International Group PLC                     On 24 November: 020 7067 0700
Graeme Coutts, Chief Executive                        Thereafter: 0118 959 1341
Michael Speakman, Finance Director

Weber Shandwick Square Mile                                       020 7067 0700
James Chandler/Rachel Taylor/Stephanie Badjonat

  An analyst meeting will be held at 09.30 this morning at the offices of Weber
      Shandwick Square Mile, Fox Court, 14 Gray's Inn Road, London, WC1X 8WS

                         EXPRO INTERNATIONAL GROUP PLC
                            ("Expro" or "the Group")

           Interim results for the six months ended 30 September 2005

                   Chairman's and Chief Executive's Statement

There has been a continued improvement in market conditions for upstream oil and 
gas services during the last six months, driven by a combination of increased 
global economic demand for oil and gas and a general tightening of supply. The 
supply issue predominantly results from strong discipline displayed by the 
Organisation of Petroleum Exporting Countries ("OPEC") and several years of low
activity levels in drilling and well intervention.  This has resulted in heavy 
production declines and a low rate of reserves replacement.

This improved environment has provided a robust platform for Expro to implement 
global growth strategies. With oil prices being sustained above USD 30 per bbl,
client capital and operating expenditure levels have risen. Our customers are 
focusing on increasing production from existing wells, bringing on additional 
production from existing reserves through developing new fields, and adding new
reserves by increasing exploration activities. These conditions play heavily 
to Expro's strengths, and the Group is well placed to take advantage of the 
late cycle element of these improved market conditions.

As anticipated at the time of our preliminary results announcement in June, 
demand for our products and services has strengthened in the first half of the 
year, driven by the implementation of our focused strategy published two years 
ago and assisted by the aforementioned improvement in market conditions.

The headline EPS(a) at 10.0p is an increase of 25% compared to the same period 
last year. Shareholders will recognise that since we last reported there have been 
changes to UK GAAP and we have now adopted IFRS for the first time for 
reporting purposes. It has not been possible to allocate the effect of each of 
these changes, but EPS under the previously adopted reporting standards, 
pre-goodwill and exceptional items, would be 11.1p. The earnings benefit of 
the 31% improvement in revenue, compared to the corresponding period in the 
prior year, is masked by unfavourable foreign exchange effects and specific 
expenditures which should result in improved revenues in the future.  The Group 
operates a consistent hedging policy that largely protects earnings within a 
twelve month time horizon, consequently delaying the impact of currency 
fluctuations, and in this period the foreign exchange hedges that have unwound 
are less beneficial compared to those that matured last year.  The investments 
in infrastructure relate mainly to expanding capacity and capability in Group 
Engineering and to growing Expro's strategic hub in West Africa.


Expro published its IFRS prior period restatements on 15 November 2005 and a 
full copy of these restatements can be found on the Group's website at:

The most significant differences between UK GAAP and IFRS that contribute to 
changes in reported financial information are:

•inclusion of the net deficit on defined benefit pension schemes within the 
 balance sheet
•reversal of goodwill amortisation charges, partially offset by increased 
 impairment costs
•recognition of dividends only when paid or approved
•adjustments for deferred tax
•capitalisation, as finance leases, buildings previously disclosed as held 
 under operating leases

The transition to IFRS had no impact on the Group's reported cash balances.

(a) Based on continuing operations before significant non-recurring items and 
    basic number of shares, as calculated under Note 6


The Board remains confident in the long term outlook for the Group and therefore 
believes that it is appropriate to declare a maintained interim dividend of 
3.8p per share (2004: 3.8p per share). This will be payable on 31 January 2006 
to shareholders on the register at 31 December 2005.

Business strategy

As indicated in the pre-close trading statement of 28 September 2005, Expro 
has made several key management appointments to ensure both strategic and 
operational delivery are maintained. The current Group businesses have been 
re-organised to give additional focus and to capitalise on the strong market 
dynamics. This structural management change is designed to improve further the 
organisation's alignment with our markets and customers.

The Global Businesses, comprising businesses which are driven by customer 
capital expenditure, are areas where Expro has clear market leadership. They 
are, in the main, highly technically differentiated and require strong project
management skills. Robin Mair has assumed overall responsibility for this 
division, which includes our market leading global subsurface systems brands 
of Tronic/Matre and Subsea Safety Tools ("SST"), as well as our Early Production 
Facilities ("EPF").

The Regional Businesses, under the direction of Gavin Prise, are the technologies 
and services which are predominantly local, infrastructure dependent, and driven 
by client operating expenditure. This division encompasses our Cased Hole Services 
("CHS") and well testing offerings.

Additionally, the strategic importance placed by Expro on future development 
and commercial exploitation of rigless technologies has been reinforced by the 
appointment of Trevor Burgess as our first Managing Director of this emerging 

Business segment overview

As previously described, the business now operates in two distinct segments, 
which are driven by different market characteristics.

Global Businesses

Our Global Businesses are driven predominantly by the increase in customer 
capital expenditure. This segment consists of our deepwater businesses; Tronic 
connectors, Matre instruments, SST and our 50% stake in the QuantX joint venture, 
coupled with our capital intensive EPF business. All of these businesses have 
made strong progress within the period with total segment revenues up by 39% to
£55 million compared to the corresponding period in the prior year.

Tronic, Matre and QuantX have all benefited from the increased capital spend 
and project sanctions in the deepwater markets of the world. With the exception
of QuantX, Expro holds leading market positions in this subsurface arena. Our 
focused strategy to position Expro as the supplier of choice for the provision 
of seabed and well access technologies has resulted in increased market shares 
in strong market conditions. Demand for all products and services has improved.
Most notable has been the performance of Tronic which has positioned itself to
meet future industry demands for seabed power and instrumentation connectors. 
The integration of the acquired Matre instrumentation business with Tronic is 
driving the market to buy combined, system based, solutions.

Our SST business strengthened considerably in the period due to prior investment 
made in the development of this technology. These investments in new deep and 
ultra-deep water tools have allowed us to take advantage of the emerging deepwater 
field developments, many of which are now sanctioned for future development. Much 
of our forward order book lies in this area with over USD 100 million of announced 
contracts phased over the coming years.

The period under review also included the highly successful installation and 
commissioning of the EPF for ExxonMobil on Sakhalin Island. This achievement is
acknowledged by our client as outstanding, with first gas processed on time 
and within budget. This major contract commenced towards the end of the period 
under review and will extend throughout 2006.

The final product line within our global portfolio is QuantX where we held a 
50% stake in a joint venture with Baker Hughes. As announced in the pre-close 
statement in September, our partner elected to exercise the right to acquire 
the business outright. The consideration of USD 27.2 million is based on a 
predetermined formula and the transaction has an effective date of 31 October 

Regional Businesses

The Group continues to service its customers from a three region geographic 
structure; Europe and Former Soviet Union, Africa Asia Middle East and the 
Americas. Expro's strategy is to manage product lines which have short term 
call-out characteristics on a local, regional basis. These product lines demand 
local infrastructure to serve markets which are predominantly mature in nature, 
lower in technology requirement and where we may have a number of local 
competitors. These markets are also more resilient to change in customer spend 
patterns and provide steady revenues, driven mostly by our customer operating
expenditure needs.

The specific product lines are CHS, a range of temporary in-well products and 
services designed to maintain and enhance productivity from wells, and Surface 
Welltest, a range of temporarily deployed production vessels capable of 
measurement and disposal of hydrocarbon well effluent in an environmentally 
sound manner. Our key strategic focus is to optimise asset utilisation in 
markets where Expro has developed or is developing critical mass. In these cases 
both Expro and our customers enjoy economies of scale.

Total income from the combined regional businesses has increased by 25% to £77 
million on a like for like basis compared to the corresponding period last year.

Our biggest regional business remains Europe and Former Soviet Union where 
income increased by 22% to £34 million versus the corresponding period last 
year, with the majority coming from the North Sea area. During the period under 
review, we announced over USD 100 million of major contract awards which has 
given us a strong position and increased visibility in a very active market. 
The North Sea remains an important and growth market for the Group. The region 
is making slow progress in the Former Soviet Union. Like many of our peers, we 
are attracted to these emerging markets but we are equally cautious over timing
and commitment to the establishment of a local call-off infrastructure.

Our Africa Asia Middle East region covers vast geographic markets. Total income
for the region increased by 35% to £27 million. All areas showed progress most 
notably within West Africa where the Group has secured an excellent position 
providing well clean up services for the up-coming deepwater developments. 
The newly established regional management office in Dubai is allowing us to 
increase our understanding of the important but complex Middle East markets.

Turning to the Americas, where Group performance has historically been 
disappointing, we are delighted to note that our strategy to re-engineer our 
business portfolio is showing positive effects. In the 2003/04 year Expro had 
experienced trading exposure to the volatile shallow water Gulf of Mexico market. 
This year, despite severe weather disruption, our business has delivered an 
increase in income of 18% to £15 million. This encouraging position reflects 
the focused strategy to improve the quality of our earnings and lessen our 
dependency on the shallow water commodity markets. The outlook for our Americas 
business is now somewhat more positive and the Group's strong Houston presence 
is increasingly pivotal in our global customer strategies.


Expro remains firmly committed to the development and commercialisation of 
technology to help our customers meet their future requirements in all areas 
relating to our core businesses. The emerging deep water developments continue 
to offer us opportunities to progress our business through the application of 
our considerable experience of operating in this environment. To enable us to 
remain at the forefront of this market, in September 2005 the Group opened a 
new Technology Centre located in Aberdeen, Scotland. This centre houses over 80
professional engineers and management focused on technology and project delivery.
This commitment is recognised by our customers as further evidence of the 
Group's intention to be the market leader in the area of subsea wells and 
associated technologies. As already mentioned above, this commitment is further
evidenced by the recent appointment of Trevor Burgess as Managing Director for 
our rigless technology business. Trevor will assume responsibility for the 
ongoing joint industry project with bp, Shell and Chevron.


The outlook for the upstream services sector remains positive, but, in the long 
term, cyclical. As a late cycle player, Expro has yet to experience the full 
effects of the current up-cycle, but our strong order book indicates the benefit 
to Expro of the improving market. We continue to field high levels of customer 
enquiry and build on a record level of order backlog.

We have invested heavily in our strategy to re-establish Expro as a leading 
provider of services and investment will continue at levels which will enable 
the Group to benefit from the up-cycle in the market and the success of our 

The outlook for the remainder of this year remains favourable, and our strategic 
goal remains unchanged; our objective is to reward shareholders with profitable 
growth beyond the cycle.

Dr Chris Fay, CBE             Graeme Coutts                    23 November 2005
Chairman                      Chief Executive Officer

for the six months ended 30 September 2005

                                               Six months ended    Year ended 31
                                                 30 September              March
                                              2005          2004            2005
                                   Note     £000's        £000's          £000's
Continuing operations
Revenue                               2    131,647       100,648         211,273
Operating costs                          (118,050)      (92,490)       (198,772)
                                        ----------    ----------      ----------
Operating profit                            13,597         8,158          12,501

Headline operating profit                   13,597         9,704          19,018
Provision for goodwill impairment                -             -         (4,971)
Provision for inventory obsolescence             -       (1,546)         (1,546)
                                        ----------    ----------      ----------
Operating profit                            13,597         8,158          12,501

Share of post tax profit from
 joint venture operations             2          -         2,034           2,038

Headline post tax profit                         -         1,296           1,300
Provision for goodwill impairment                -         (726)           (726)
Credit from release of provision                 -         1,464           1,464
                                        ----------    ----------      ----------
Share of post tax profit from
 joint venture operations                        -         2,034           2,038
                                        ----------    ----------      ----------
                                            13,597        10,192          14,539
Investment income                            1,847         1,498           3,055
Finance costs                              (4,140)       (3,241)         (6,643)
                                        ----------    ----------      ----------
Profit before tax                           11,304         8,449          10,951
Tax on profit on ordinary
 activities                           3    (4,215)       (3,971)         (7,829)
                                        ----------    ----------      ----------
Profit after tax from continuing
 operations                                  7,089         4,478           3,122

Discontinued operations
Share of post tax profit from
 discontinued joint venture
 operations                           4        348           136             658
                                        ----------    ----------      ----------
Profit for the period                        7,437         4,614           3,780
Ordinary dividends                    5    (5,181)       (4,692)         (7,204)
                                        ----------    ----------      ----------
Retained profit/(loss) for the
 period                                      2,256          (78)         (3,424)
                                        ==========    ==========      ==========

Attributable to:
Equity holders of the parent                 2,186          (90)         (3,425)
Minority interest                               70            12               1
                                        ----------    ----------      ----------
                                             2,256          (78)         (3,424)
                                        ==========    ==========      ==========

Earnings per share
From continuing operations            6
Basic                                        10.0p          6.8p            4.7p
Diluted                                       9.8p          6.8p            4.7p

From continuing and discontinued
operations                            6
Basic                                        10.4p          7.0p            5.7p
Diluted                                      10.3p          7.0p            5.7p

for the six months ended 30 September 2005

                                               Six months ended       Year ended
                                                  30 September          31 March
                                              2005          2004            2005
                                            £000's        £000's          £000's
Profit for the period                        7,437         4,614           3,780
Net income recognised directly 
 in equity
Fair value losses on cash flow
 hedges                                    (2,200)             -               -
Translation of foreign operations            4,250          (36)         (1,962)
(Loss)/gain on movement in retirement
 benefit obligation                        (2,586)            77         (7,847)
Tax on items taken directly to equity          673         (114)           2,233
                                        ----------    ----------      ----------
                                               137          (73)         (7,576)

                                        ----------    ----------      ----------
Total recognised income and expense
 for the period                              7,574         4,541         (3,796)
                                        ==========    ==========      ==========

Attributable to:
Equity holders of the parent                 7,504         4,529         (3,797)
Minority interest                               70            12               1
                                        ----------    ----------      ----------
                                             7,574         4,541         (3,796)
                                        ==========    ==========      ==========

Effects of changes in accounting policy:

Attributable to equity holders of the 
- Increase in retained earnings at the 
 beginning of the year                         621             -               -
                                        ==========    ==========      ==========

The effects of changes in accounting policy arise from the adoption of IAS 32 
and IAS 39 with effect from 1 April 2005.

at 30 September 2005

                                                 30 September           31 March
                                              2005          2004            2005
                                   Note     £000's        £000's          £000's
Non-current assets
Goodwill                                    20,954        21,286          18,166
Other intangible assets                     10,535         7,362           7,119
Property, plant and equipment               89,236        65,408          72,426
Investment in joint ventures                     -         8,496           3,242
Deferred tax assets                          5,367         2,493           3,470
Derivative financial instruments                72             -               -
                                        ----------    ----------      ----------
                                           126,164       105,045         104,423
                                        ----------    ----------      ----------
Current assets
Inventories                                 16,971        14,424          15,213
Trade and other receivables                 91,414        65,636          74,789
Cash and cash equivalents             9      9,573        13,213           5,009
Assets in disposal group held 
 for sale                             4      3,786             -               -
                                        ----------    ----------      ----------
                                           121,744        93,273          95,011
                                        ----------    ----------      ----------
Current liabilities
Trade and other payables                  (51,345)      (37,071)        (45,290)
Retirement benefit obligation              (2,946)       (2,793)         (2,806)
Current tax liabilities                    (8,964)       (5,034)         (6,625)
Obligations under finance leases      9      (688)         (332)           (478)
Derivative financial instruments           (1,417)             -               -
Provisions                                   (115)         (350)           (349)
                                        ----------    ----------      ----------
                                          (65,475)      (45,580)        (55,548)
                                        ----------    ----------      ----------

                                        ----------    ----------      ----------
Net current assets                          56,269        47,693          39,463
                                        ----------    ----------      ----------

Non-current liabilities
Retirement benefit obligation             (23,890)      (13,312)        (21,076)
Deferred tax liabilities                   (3,109)       (4,013)         (1,629)
Obligations under finance leases      9    (8,049)       (6,568)         (6,496)
Derivative financial instruments             (235)            -               -
Bank loans                            9   (62,331)      (60,513)        (58,715)
Provisions                                 (2,754)       (5,581)         (2,780)
                                        ----------    ----------      ----------
                                         (100,368)      (89,987)        (90,696) 
                                        ----------    ----------      ----------

                                        ----------    ----------      ----------
Total liabilities                        (165,843)     (135,567)       (146,244)
                                        ----------    ----------      ----------

                                        ----------    ----------      ----------
Net assets                                  82,065        62,751          53,190
                                        ==========    ==========      ==========

Shareholders' equity
Share capital                         8      7,319         6,615           6,646
Share premium account                          281        61,650             929
Own shares                                    (407)           (7)          (407)
Capital reserve                                  -            24               -
Share options reserve                          640            39             417
Hedging and translation reserve                894           (36)        (1,963)
Retained earnings                           73,201        (5,578)         47,535
                                        ----------    ----------      ----------
Total shareholders' equity                  81,928        62,707          53,157
Minority interest in equity                    137            44              33
                                        ----------    ----------      ----------
Total equity                                82,065        62,751          53,190
                                        ==========    ==========      ==========

for the six months ended 30 September 2005

                                               Six months ended       Year ended
                                                 30 September          31 March 
                                              2005          2004            2005
                                   Note     £000's        £000's          £000's

Net cash inflow from operating
 activities                           9      8,988        12,669          32,786
                                        ----------    ----------      ----------

Investing activities
Interest received                              273           432             407
Proceeds on disposal of property,
 plant and equipment                           314            11             181
Purchase of property, plant and
 equipment                                (22,758)       (9,277)        (29,080)
Purchase of other intangible
 assets                                      (213)          (47)           (317)
Acquisition of subsidiary
 undertaking                          7    (6,269)            -          (6,421)
Cash acquired in subsidiary
 undertaking                          7        281            -              553
Deferred consideration from
 disposal of joint venture                   4,797            -                -
Payment of deferred consideration            (291)            -             (59)
Net repayment of loans from joint
 venture operations                             -             -               33
                                        ----------    ----------      ----------
Net cash used in investing
 activities                                (23,866)      (8,881)        (34,703)
                                        ----------    ----------      ----------

Financing activities
Issue of share capital                      25,258            -              959
Own shares acquired by ESOP trust               -             -            (400)
Dividends paid                             (5,181)       (4,692)         (7,204)
Repayment of obligations under
 finance leases                              (635)         (446)           (992) 
                                        ----------    ----------      ----------
Net cash from/(used in) financing
 activities                                 19,442       (5,138)         (7,637)
                                        ----------    ----------      ----------
Net increase/(decrease) in cash
 and cash equivalents                        4,564       (1,350)         (9,554)
Cash and cash equivalents at
 beginning of the year                       5,009        14,563          14,563
                                        ----------    ----------      ----------
Cash and cash equivalents at end
 of the period                               9,573        13,213           5,009
                                        ==========    ==========      ==========


1  Basis of preparation

   For the year ended 31 March 2006 the Group is required to prepare consolidated 
   financial statements under International Financial Reporting Standards 
   ("IFRS") issued by the International Accounting Standards Board ("IASB"). 
   These financial statements will be prepared in accordance with IFRS that are 
   in force at that time, comprising those International Accounting Standards, 
   International Financial Reporting  Standards and related interpretations 
   SIC-IFRIC interpretations), subsequent amendments to those standards and 
   related interpretations and future standards and related interpretations that 
   have been issued by the IASB and endorsed by the European Commission.

   IFRS that are currently in issue are subject to ongoing interpretation and 
   endorsement by the IASB, its committees, and other regulatory bodies 
   applicable to the Group.  In particular the European Commission has yet to 
   endorse the amendment to IAS 19 Employee Benefits that permits immediate 
   recognition of all actuarial gains and losses on defined benefit 
   post-retirement pension schemes outside of the income statement.  Furthermore, 
   changes to IAS 39 Financial Instruments: Recognition and Measurement 
   ("IAS 39") concerning the requirements for assigning a fair value to financial 
   liabilities and the circumstances in which hedge accounting may be applied 
   have also not been endorsed by the European Commission at this time.

   Management has used its best knowledge of the expected standards and 
   interpretations, facts and circumstances, and accounting policies that will be 
   applied when the Group prepares its first set of IFRS consolidated financial 
   statements as at 31 March 2006.  Therefore, until such time as the Group 
   prepares these financial statements, in accordance with standards endorsed by 
   the European Commission at that time, the possibility cannot be excluded that 
   the financial information presented herein may require adjustment.

   The Interim Results have been prepared under the historical cost convention. 
   The comparative figures presented for the year ended 31 March 2005 and for the 
   six month period ended 30 September 2004, which were previously reported in 
   accordance with United Kingdom Generally Accepted Accounting Practice 
   ("UK GAAP") have been restated to conform to these same accounting policies. 
   The reconciliation of certain key financial information from UK GAAP to IFRS 
   along with the accounting policies and methods of computation adopted as part 
   of the transition to IFRS were published on 15 November 2005, and are 
   available on the Group's website at

   The Group has elected to apply the exemption from restatement of comparative
   information for IAS 32 Financial Instruments: Disclosure and Presentation 
   ("IAS 32") and IAS 39.  As such, UK GAAP rules have been applied to 
   derivatives, financial assets and financial liabilities and to hedging 
   relationships for the information presented for the year ended 31 March 2005 
   and for the six month period ended 30 September 2004. The adjustments required 
   for differences between UK GAAP and IAS32 and IAS39 have been determined and 
   have been recognised at 1 April 2005.  The effect of these adjustments is 
   shown in the consolidated statement of recognised income and expense.

   The results for the six months ended 30 September 2005 and the comparative 
   results for the six months ended 30 September 2004, as restated for the 
   effects of IFRS, have not been audited by the Company's auditors or reviewed 
   in accordance with APB Bulletin 1999/4. The comparative information for the 
   year ended 31 March 2005, as restated for the effects of IFRS, does not 
   constitute statutory accounts as defined in section 240 of the Companies Act 
   1985. A copy of the statutory accounts for that year prepared in accordance 
   with UK GAAP has been delivered to the Registrar of Companies. The auditors' 
   report on those accounts was unqualified.

   Operations discontinued in the period are detailed in Note 4. The results of 
   these operations are separately disclosed within the consolidated income 
   statement, requiring changes to the disclosure of financial information 
   previously presented for the year ended 31 March 2005 and for the six month 
   period ended 30 September 2004.

2. Segmental information

   During the period since 31 March 2005 management of the Group has been 
   re-organised into two distinct operations - Global Businesses and Regional 
   Businesses - as follows:

   Global Businesses provides products and services which are driven by customer 
   capital expenditure.  These products and services, which are often based upon 
   bespoke engineering or technology based solutions, are delivered remotely over 
   a long term, typically offshore project.

   Regional Businesses provides services which are driven by customer operating 
   expenditure.  Customer requirement is often for a shorter period of time and 
   delivery is made through, and supported by, the Group's locally established 

   These Global and Regional businesses, which have different market 
   characteristics, are the basis on which the Group reports its primary segment 
   information.  Segment information previously reported for the year ended 31 
   March 2005 and for the six month period ended 30 September 2004 has been 
   represented in accordance with the current management structure.

                                                Six months ended      Year ended
                                                  30 September          31 March
                                              2005          2004            2005
                                            £000's        £000's          £000's
   Segment revenue
   Global Businesses                        54,804        39,311          79,670
   Regional Businesses                      76,843        61,337         131,603
                                        ----------    ----------      ----------
   Total                                   131,647       100,648         211,273
                                        ----------    ----------      ----------

   Segment result
   Global Businesses
   - group                                  11,053         7,373          15,615
   - share of joint venture (post-tax)           -         2,034           2,038
                                        ----------    ----------      ----------
                                            11,053         9,407          17,653
   Regional Businesses                      10,425         5,069           4,588
                                        ----------    ----------      ----------
   Total result                             21,478        14,476          22,241

   Unallocated corporate expenses          (7,881)       (4,284)         (7,702)
                                        ----------    ----------      ----------
                                            13,597        10,192          14,539
   Investment income                         1,847         1,498           3,055
   Finance costs                           (4,140)       (3,241)         (6,643)
                                        ----------    ----------      ----------
   Profit before tax                        11,304         8,449          10,951
   Tax                                     (4,215)       (3,971)         (7,829)
   Profit for the period from
    discontinued operations                    348           136             658
                                        ----------    ----------      ----------
   Profit for the period                     7,437         4,614           3,780
                                        ==========    ==========      ==========

   Profit for the period arising from discontinued operations represents the
   Group's share of the post tax profit of joint venture operations which were
   disposed of subsequent to 30 September 2005 (Note 4).

   Revenues by geographical segment are outlined below:

                                               Six months ended       Year ended
                                                 30 September           31 March
                                              2005          2004            2005
                                            £000's        £000's          £000's
   Global Businesses
   Europe FSU (a)                           25,777        21,440          41,426
   Africa Asia ME (b)                       21,988        12,473          28,459
   Americas                                  7,039         5,398           9,785
                                        ----------    ----------      ----------
                                            54,804        39,311          79,670
                                        ----------    ----------      ----------
   Regional Businesses
   Europe FSU (a)                           34,419        28,308          60,015
   Africa Asia ME (b)                       27,168        20,108          44,149
   Americas                                 15,256        12,921          27,439
                                        ----------    ----------      ----------
                                            76,843        61,337         131,603
                                        ----------    ----------      ----------
   Europe FSU (a)                           60,196        49,748         101,441
   Africa Asia ME (b)                       49,156        32,581          72,608
   Americas                                 22,295        18,319          37,224
                                        ----------    ----------      ----------
                                           131,647       100,648         211,273
                                        ==========    ==========      ==========

   (a) Former Soviet Union
   (b) Middle East

3. Tax on profit on ordinary activities
                                               Six months ended       Year ended
                                                 30 September           31 March
                                              2005          2004            2005
                                            £000's        £000's          £000's
   Current tax
   UK corporation tax                        1,687         1,506           2,381

   Foreign tax                               3,100         1,986           5,451
                                        ----------    ----------      ----------
                                             4,787         3,492           7,832

   Deferred tax                              (572)           479             (3)

                                        ----------    ----------      ----------
   Total                                     4,215         3,971           7,829
                                        ==========    ==========      ==========

   The tax charge for the six months to 30 September 2005 has been based on an
   estimated effective rate for the year to 31 March 2006 of 37.3%.  This compares
   with the UK standard rate of 30%, with the difference largely attributable to
   foreign profits taxed at rates higher than the UK rate and expenses not
   deductible for tax purposes.

4. Discontinued operations

   On 31 August 2005, Baker Hughes Inc. exercised its option to purchase from the
   Group its remaining equity interests in the joint venture companies QuantX
   Wellbore Instrumentation Limited, QuantX Wellbore Instrumentation LLC and 
   QuantX Wellbore Instrumentation (International) Limited including the 
   subsidiaries of QuantX Wellbore Instrumentation Limited, Blenheim Technology 
   Group Limited and Plus Design Limited. The sale to Baker Hughes Inc. and transfer 
   of ownership was completed on 31 October 2005 for a purchase price of USD 27.2 
   million, settled in cash on 15 November 2005.

   At 30 September 2005, these operations have been classified as a disposal group
   held for sale and presented separately in the consolidated balance sheet.

   The results of the discontinued operations are disclosed separately in the
   consolidated income statement and the prior period results have been restated

5. Dividends
                                              Six months ended        Year ended
                                                 30 September           31 March
                                              2005          2004            2005
                                            £000's        £000's          £000's
   Amounts recognised as distributions
    to equity  holders in the period
   Final dividend paid for the year 
    ended 31 March 2005 of 7.1p 
    (2004: 7.1p) per ordinary share          5,181         4,692           4,692

   Interim dividend paid for the year 
    ended 31 March 2005 of 3.8p per 
    ordinary share                               -             -           2,512
                                        ----------    ----------      ----------
                                             5,181         4,692           7,204
                                        ==========    ==========      ==========

   A proposed interim dividend of 3.8 pence per ordinary share was approved by the
   Board after 30 September 2005 and has not been included as a liability at the
   balance sheet date.

6. Earnings per share

   The calculation of the basic and diluted earnings per share is based on the
   following information:

                                            Six months ended          Year ended
                                                30 September            31 March
   Earnings per share - continuing and        2005           2004           2005
    discontinued                            £000's         £000's         £000's
   Profit for the period                     7,437          4,614          3,780

   Less minority interest                     (70)           (12)            (1)
                                        ----------    ----------      ----------
   Earnings attributable to equity
    holders of the parent - continuing
    and discontinued                         7,367          4,602          3,779

   Less discontinued operations              (348)          (136)          (658)
                                        ----------    ----------      ----------
   Earnings for the purpose of basic
    earnings per share - continuing          7,019          4,466          3,121

   Goodwill impairment in group and
    joint ventures                               -            726          5,756

   Provision for inventory obsolescence          -          1,546          1,546

   Credit from release of joint venture
    provisions                                   -        (1,464)        (1,464)
                                        ----------    ----------      ----------
   Earnings for the purpose of headline
    earnings per share - continuing          7,019         5,274           8,959
                                        ==========    ==========      ==========

   Number of shares

   Weighted average number of 
    ordinary shares for the purposes 
    of basic and adjusted earnings 
    per share                          70,536,545     66,075,394      66,110,613

   Effect of dilutive potential ordinary

   Share options                         1,041,912        57,828         617,745
                                        ----------    ----------      ----------
   Weighted average number of 
    ordinary shares for the purposes 
    of diluted earnings per share       71,578,457    66,133,222      66,728,358
                                        ==========    ==========      ==========

   Earnings per share
   From continuing operations
   Basic                                     10.0p          6.8p            4.7p
                                        ==========    ==========      ==========
   Diluted                                    9.8p          6.8p            4.7p
                                        ==========    ==========      ==========
   Headline                                  10.0p          8.0p           13.6p
                                        ==========    ==========      ==========

   From continuing and discontinued
   Basic                                     10.4p          7.0p            5.7p
                                        ==========    ==========      ==========
   Diluted                                   10.3p          7.0p            5.7p
                                        ==========    ==========      ==========

   Headline earnings per share is based on continuing operations before significant
   non-recurring items and on the basic number of shares. The directors believe
   that presentation of headline earnings per share assists in understanding the
   underlying performance of the Group.

7. Acquisition of subsidiary

   On 11 April 2005 the Group acquired Downhole Video International which is the
   market leading supplier to the oil and gas industry of downhole video services.
   The acquisition comprised a 100% interest in Downhole Video International Inc.
   (registered in the USA) and its subsidiary companies, Downhole Video Canada Inc.
   (registered in Canada), Downhole Video International Limited (registered in the
   British Virgin Islands) and a 75% interest in Downhole Video Far East Pty
   Limited (registered in Singapore).

                                                       Fair value     
                                         Book value    adjustment     Fair value
                                             £000's        £000's         £000's
   Net assets acquired
   Property, plant and
    equipment                                   724            -             724
   Other intangible assets                       44        3,611           3,655
   Inventories                                  212            -             212
   Trade and other receivables                1,087            -           1,087
   Cash and cash equivalents                    281            -             281
   Trade and other payables                   (424)            -           (424)
   Obligations under finance
    leases                                    (141)            -           (141)
   Deferred tax liability                        -        (1,351)        (1,351)
   Less: Minority interest's
    share of net assets                        (31)            -            (31)
                                        ----------    ----------      ----------
                                             1,752         2,260           4,012

   Goodwill                                                                2,257
   Total consideration                                                     6,269
   Satisfied by:
   Cash                                                                    6,192
   Directly attributable costs                                                77

   Net cash outflow arising on acquisition:
   Cash consideration                                                      6,269
   Cash and cash equivalents
   acquired                                                                (281)

   The most significant factor contributing towards goodwill was the value
   attributed to the acquired workforce.
   The acquisition has been accounted for with an effective date of 1 April 2005.

8. Share issue

   On 2 June 2005, 6,640,000 new ordinary shares of 10 pence each were placed at 
   a price of 390 pence per share. The share issue was credited as fully paid and
   ranked pari passu in all respects with Expro's existing ordinary shares.

9. Cash flow information
                                              Six months ended        Year ended
                                                 30 September           31 March
                                              2005          2004            2005
                                            £000's        £000's          £000's
   Operating profit                          13,597         8,158          12,501

   Depreciation of property, plant 
    and equipment                           11,134         8,834          18,991
   Amortisation of intangible assets           873           510           1,300
   Impairment of goodwill                        -             -           4,971
   Loss on disposal of property, plant 
    and equipment                               397           155           1,123
   Share based payments charge                 223            39             416
   Movement in retirement benefit 
    obligation                               (285)         (130)             230
   Provision for inventory obsolescence          -         1,546           1,546
                                        ----------    ----------      ----------
   Operating cash flows before movement 
    in working capital                      25,939        19,112          41,078

   (Increase)/decrease in inventories        (704)           326           1,124
   (Increase)/decrease in trade and other 
    receivables                           (16,934)         1,541           (180)
   Increase/(decrease) in trade and 
    otherpayables                            5,034       (3,317)           (506)
                                        ----------    ----------      ----------
   Cash generated by operations             13,335        17,662          41,516

   Income taxes paid                       (2,513)       (3,379)         (5,752)
   Interest paid                           (1,834)       (1,614)         (2,978)
                                         ---------    ----------      ----------
   Net cash inflow from operating 
    activities                               8,988        12,669          32,786
                                        ==========    ==========      ==========

   Analysis of net debt
                           1 April         Cash      non-cash      Foreign   30 September
                              2005         flow       changes     exchange           2005
                           £'000's      £'000's       £'000's      £'000's        £'000's

   Cash and cash 
    equivalents              5,009        4,564             -            -          9,573
   Bank loans             (58,715)            -             -      (3,616)       (62,331)
                         ---------    ---------     ---------    ---------      ---------
   Net bank borrowings    (53,706)        4,564             -      (3,616)       (52,758)
   Finance leases          (6,974)          635       (2,279)        (119)        (8,737)
                         ---------    ---------     ---------    ---------      ---------
                          (60,680)        5,199       (2,279)      (3,735)       (61,495)
                         =========    =========     =========    =========      =========

   Finance lease obligations reported under UK GAAP at 1 April 2005 were increased
   by £6,704,000 on transition to IFRS. Reported net debt has been restated

   Other non-cash changes include additional obligations under finance leases of
   £1,978,000, of which £141,000 was acquired with the DHVI business, and notional
   interest on finance leases of £301,000.

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