Wellstream Holdings PLC Annual Report & Accounts 2007
Project1:Layout 1  17/4/08  12:32  Page 1 Financial Highlights 1
Chairman’s Statement 2
Chief Executive’s Review 4
Financial Review 30
Board of Directors 34
Directors’ Report 36
Corporate Governance Report 44
Audit Committee Report 49
Directors’ Remuneration Report 51
Statement of Directors’ Responsibilities 57
Independent auditors’ report to the members of Wellstream Holdings PLC 58
Group Income Statement 60
Statements of Recognised Income and Expense 60
Balance Sheets 61
Cash Flow Statements 62
Notes to the Accounts 63
Historical Results 90
Shareholder Information 91
Glossary 92
Notice of Annual General Meeting 93
Contents
48723 MG Annual Report - Front  17/4/08  11:39  Page 2 Wellstream Holdings PLC Annual Report & Accounts 2007 | 1
Financial Highlights
Revenue Backlog is the aggregate of revenue that has not yet been recognised in the accounts from contracts that have been entered
into and from contracts that the directors are confident will be entered into.
Backlog £m
2006 2007
226.8
335.9
Profit before T ax £m
2006 2007
25.4
41.7
Revenue £m
Revenue up 81.2%
Profit before T ax up 64.1%
Backlog up 48.1%
2006 2007
147.2
266.8
48723 MG Annual Report - Front  17/4/08  11:39  Page 1 2 | Chairman’s Statement
Chairman’s Statement
Wellstream has achieved a record
financial performance during 2007.
48723 MG Annual Report - Front  17/4/08  11:39  Page 2 Chairman’s Statement
I am pleased to announce that Wellstream
has achieved a record financial
performance during 2007. 
In addition, we successfully completed
the Initial Public Offering (IPO) and
listed our shares on the London Stock
Exchange on 1 May 2007.
Financial performance
In the 12 months to 31 December 2007,
Revenue increased by 81% to £266.8m
(2006: £147.2m), Adjusted EBITDA
increased by 136% to £56.9m (2006:
£24.1m), and adjusted earnings per
share reached 34.7p against 11.4p for
2006. We maintain a strong backlog
which has increased by £109.1m during
2007, ending the year at £335.9m.
Improved utilisation in Newcastle
High utilisation rates have been achieved
throughout the year in Newcastle and we
achieved a record throughput of 237 nkm.
This contributed substantially to our
buoyant performance this year. Following
a programme of process improvements,
we also revised our capacity in Newcastle
to 260 nkm and plan to further expand
that capacity.
Successful start-up of our new
production plant in Brazil
We officially opened the Niterói plant in
July 2007 having started production in
May and I am pleased to report that the
plant is already making a contribution in
excess of our expectations. In total we
achieved a throughput of 52 nkm, which
was ahead of our ramp-up plan. On
29 November 2007 we announced plans
to further expand capacity at Niterói,
recognising the Board’s confidence in
future demand for our products. 
Establishment of Seastream JV
In July 2007, we successfully established
a Joint Venture called Seastream. It has
secured a major contract from BHP Billiton,
in which we offered our products on
an installed basis for the first time.
This project is progressing to plan
and we look forward with confidence to
securing additional contracts for
installation of our flexible pipe products.
Board additions
I welcome the addition to the board of
three industry specialists, Neil Gaskell,
the former Treasurer of Royal Dutch Shell,
Francisco Gros, former CEO of Petrobras
and Pat Murray the former CEO of
Dresser Inc. I also welcome Chris Gill as
Finance Director, who joined us on
7 January 2008. Marek Gumienny, of
Candover Partners, resigned as a non-
executive director at the IPO and Andrew
Turk, Finance Director, left the Company
on 31 December 2007. I thank them both
for their contribution during a period of
rapid growth and considerable change
in the Company. 
Outlook
With our new investment in capacity, 
we have set the foundations to take
advantage of the anticipated demand for
flexible pipe. The market fundamentals
remain strong and we have confidence
that we are well positioned to capture a
significant share of this growing market.
Finally, I pay tribute to the professionalism
of our staff, whose hard work and
dedication have helped bring about these
record breaking results.
John Kennedy 
Chairman
Wellstream Holdings PLC Annual Report & Accounts 2007 | 3
48723 MG Annual Report - Front  17/4/08  11:39  Page 3 4 | Chief Executive’s Review
Chief Executive’s Review
“In 2007 Wellstream
had approximately
30% of the global
offshore flexible pipe
market and was the
world’s second
largest supplier.”
2007 was a remarkable year for
Wellstream. Several records were broken
and strong foundations were set for
future growth.
Significant highlights included the strong
performance from the Newcastle
operation, on-time start up of the new
Niterói plant in Brazil, further growth of
the onshore FlexSteel
TM
business and
the launch of an installation capability
through the Seastream JV. Towards the
end of the year the Company decided to
further expand its future offshore
flexible capacity by some 40% through
an investment programme in the Niterói
and Newcastle offshore production
facilities. 
Scope of the business
With over 20 years’ experience,
Wellstream is a leading designer and
supplier of high quality unbonded
flexible pipeline products and systems.
In 2007 Wellstream had approximately
30% of the global offshore flexible pipe
market and was the world’s second
largest supplier. Our portfolio includes
dynamic risers, static flowlines, subsea
and topside jumpers, fluid transfer lines
and well service lines for use in the
offshore oil and gas market. Onshore
we produce FlexSteel™ a flexible
pipeline product. Our success is based
on strong technology supported by
continuous research and development,
excellent customer relationships and a
focus on working collaboratively with
customers and partners.
Wellstream’s core business addresses
the needs of the floating production
and subsea sectors of the offshore oil
and gas industry. This is a fast growing
segment, where deepwater applications
are becoming more common and for
which flexible pipe is often a critical
element of the development solution.
I am delighted to deliver my first Chief Executive’s Review for Wellstream as
a newly listed Public Company.
Financial Highlights 2007 2006 Change
Revenue £266.8m £147.2m +81.2%
Adjusted EBITDA (b) £56.9m £24.1m +136%
Backlog (a) £335.9m £226.8m +48.1%
48723 MG Annual Report - Front  17/4/08  11:39  Page 4 Wellstream Holdings PLC Annual Report & Accounts 2007 | 5
Year End Annualised Offshore Capacity
2005
200
220
360
410
2006 2007 2008(F)
+10%
+64%
+14%
In normalised km of 8 inch ID pipe.
A mechanism for determining the equivalent length of
any pipe to a ‘standard’ product.
Revenue & Backlog Growth
(a) Blue arrows represent year-on-year revenue growth.
Revenue Backlog is the aggregate of revenue that has
not yet been recognised in the accounts from contracts
that have been entered into and from contracts that the
directors are confident will be entered into. Revenue
Backlog is not a measure of profit or operating performance
recognised under IFRS. 
Revenue
(in £ millions)
Offshore Flexible Pipeline Throughput
2005
169.5
208.0
289.1
2006 2007
+23%
+39%
2005
90.1
78.6
147.2
226.8
266.8
335.9
2006 2007
+63%
+81%
In normalised km of 8 inch ID pipe.
A mechanism for determining the equivalent length of
any pipe to a ‘standard’ product.
(in £ millions)
Adjusted EBITDA
2005
9.1
24.1
56.9
2006 2007
+165%
+136%
(b) Adjusted EBITDA represents operating profit before
depreciation and excludes the share option expense as
defined on page 30 of the Financial Review. Adjusted
EBITDA is not a measure of profit or operating performance
recognised under IFRS. 
Revenue
Backlog
48723 MG Annual Report - Front  17/4/08  11:39  Page 5 Offshore Market Overview
Oil and gas are expected to continue as
the world’s dominant energy sources for
the foreseeable future. As many of the
more easily accessible offshore
hydrocarbon deposits have now been
discovered and produced, the industry
has to explore in progressively more
remote locations, often in deeper water
depths. This has increased the capital
intensity of the newer developments and
sparked an evolution in development
concepts from fixed platforms to floating
production facilities such as FPSO
(Floating Production, Storage and
Offloading) vessels.
Industry analysts, Infield Systems Ltd,
have estimated that capital expenditure
on deepwater developments has
increased from approximately $9bn in
2004 to $19bn in 2007. Over the next
five years, they expect this expenditure
to increase further to in excess of
$25bn per annum.
As oil companies move in to more remote
areas, and deeper water depths, the use
of floating production facilities has
become more prevalent. Flexible
pipelines are a critical element of the
majority of FPSO developments;
connecting the wellheads to the surface
via flexible risers. Thus, the increased
use of FPSOs worldwide has been one
of the drivers for rapid growth in
Wellstream’s business. 
1980 1995 2004 2015 2030
250
200
150
100
50
0
Quadrillion BTU
World Marketed Energy Use by Fuel Type,
1980-2030
(1)
Nuclear
Renewables
Natural Gas
Coal
Liquids
6 | Chief Executive’s Review
(1) 
Source: Energy Information Administration (EIA) 2007.
48723 MG Annual Report - Front  17/4/08  11:39  Page 6 Wellstream Holdings PLC Annual Report & Accounts 2007 | 7
(Courtesy: Subsea 7 and Chevron)
Capital expenditure on deepwater
developments has increased from
approximately $9bn in 2004 to
$19bn in 2007.
Over the next 5 years expenditure
is expected to increase
further to in excess of
$25bn per annum.
48723 MG Annual Report - Front  17/4/08  11:39  Page 7 8 | Chief Executive’s Review
Source:
(1) 
International Maritime Associates Inc (2008). 
(2)
Energy Information Administration, (EIA).
50,000
40,000
30,000
20,000
10,000
T otal U.S. Wells Completed
(2)
95 96 97 98 99 00 01 02 03 04 05 06 07
70,000
60,000
0
There are now approximately 200 floating
production systems in service worldwide,
of which some 60% are FPSOs.
International Maritime Associates Inc.
project that this inventory of FPSOs will
double over the next five years.
The most important regions globally for
this type of development are Latin
America and West Africa which together
account for over 40% of the global
installed base for FPSOs. The market in
Latin America dominates the worldwide
flexible market, underpinned by Brazil,
and if the potential of the major
discoveries made in the country during
2007 is realised, this trend is expected
to continue. A significant market is also
developing in Asia.
In addition to FPSOs, subsea
developments are also an important
driver for Wellstream’s business. Whilst
much of the subsea market has evolved
in support of floating production vessels
and deepwater developments, subsea
tiebacks in shallow water remain
significant, particularly in mature
production basins like the North Sea and
Gulf of Mexico. In these regions, the
current high oil and gas prices have made
the development of marginal fields
economic. Many of these developments
have been facilitated by the use of
flexible flowlines, which can be quickly
manufactured and rapidly installed using
readily available and cost effective
offshore installation vessels.
Onshore Market Overview
The onshore market in North America,
and in particular the USA, has
remained robust during 2007 as oil
companies have sought to increase
production and exploit unconventional
gas plays. A growing market for
refurbishment of existing flowline
infrastructure is also emerging. 
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
150
100
50
0
30 Year Development of the Worldwide FPSO Inventory
(1)
(no. units as of end year)
48723 MG Annual Report - Front  17/4/08  11:39  Page 8 Wellstream Holdings PLC Annual Report & Accounts 2007 | 9
The increased use 
of FPSOs worldwide 
has been one of the 
drivers for rapid growth 
in Wellstream’s business.
48723 MG Annual Report - Front  17/4/08  11:39  Page 9 10 | Chief Executive’s Review
Wellstream’s ability to deliver
against its goals rests firmly with
its employees and Wellstream
therefore seeks to create an
environment of enthusiasm,
engagement and opportunity for
all of its staff.
48723 MG Annual Report - Front  17/4/08  11:39  Page 10 Wellstream Holdings PLC Annual Report & Accounts 2007 | 11
Strategy for Growth
Wellstream aims to build a leadership
position as a supplier of bespoke
engineered flexible pipeline products for
oil companies around the world. This
leadership position will be built upon
superior customer relationships,
innovation, technology, manufacturing
and project delivery excellence.
Wellstream’s ability to deliver against
these goals rests firmly with its employees
and Wellstream therefore seeks to create
an environment of enthusiasm,
engagement and opportunity for all of
its staff. The business will deliver growth
organically and through alliances and
acquisitions that add capacity and
capability. Currently, the Company is:
 Increasing production throughput in 
Brazil and the UK
 Adding capacity in Newcastle, UK to 
reach 300 nkm/pa in 2009
 Increasing capacity in Niterói, Brazil 
to reach 270 nkm/pa in 2009
 Continuing to grow production of 
onshore flowline products
 Developing the Seastream JV focused
on installation of flexible pipelines and
risers to support Wellstream’s strategic
intent to keep the installed cost of
flexible pipe visible to end customers.
48723 MG Annual Report - Front  17/4/08  11:39  Page 11 12 | Chief Executive’s Review
Newcastle
The centrepiece of 2007’s strong
performance was the Newcastle
manufacturing operation which
successfully met many challenges
including complexity in design,
manufacturing, testing, packaging and
shipping of flexible pipe. The capacity
at Newcastle, measured in normalised
kilometres (nkm), was upgraded at the
start of the year to 240 nkm/pa and
further upgraded mid year to 260 nkm/pa
T otal throughput of 237 nkm represented
a new annual record for the plant, being
14% ahead of 2006. The outcome
validated the ongoing focus on
continuous improvement in all facets of
the operation. 
Brazil
Undoubtedly a major 2007 milestone was
the successful commissioning of the new
plant in Niterói, Brazil in May 2007. The
Niterói plant was formally inaugurated
on 11 July 2007 with Government
representatives, Petrobras, and other
major customers and suppliers in
attendance. The ramp-up of production
at the plant progressed ahead of plan
for the remainder of the year and a
total of 52 nkm throughput was
achieved. The plant has also received
full accreditation from Petrobras. The
ramp-up of the Niterói plant exceeded
expectations and we have brought
forward the commitment to a 4 shift
system to allow 24/7 operations.
With the establishment of two manufacturing facilities for our offshore business,
the operational teams in Niterói and Newcastle are actively working on
production optimisation and taking advantage of the plants’ combined and
complementary capabilities.
Throughput in the Newcastle plant 2004-2007
2007 2006 2005 2004
237 nkm
48723 MG Annual Report - Front  17/4/08  11:39  Page 12 Wellstream Holdings PLC Annual Report & Accounts 2007 | 13
Major Projects
In total 26 projects were at an execution
stage during 2007. Of particular note was
the Frade project for Chevron in Brazil.
This is a contract valued in the order of
£100m requiring the design and production
of 138km of pipes varying in size from
2 inch to 8 inch. The Frade project
accounted for some two thirds of the annual
production in Newcastle and at year end
the programme was on schedule and over
70% complete.
The year also featured eight major projects
for Petrobras. These projects involved both
the Newcastle and Niterói operations. Of
particular note was the technically complex
P52 16 inch loading line contract which
was successfully completed in July and
has now been installed offshore by the
customer. Other major contracts included
UNBC phase 1 which is the first project to
be entirely executed and manufactured in
Brazil. The UNBC projects are continuing
into 2008 where several pipe designs are
being delivered from the Niterói plant.
Of particular note was the
Frade project for Chevron in
Brazil. This is a contract
valued in the order of £100m.
Frade Field Layout
Niterói Plant, Brazil
Partners: Chevron, Petrobras and INPEX
48723 MG Annual Report - Front  17/4/08  11:40  Page 13 14 | Chief Executive’s Review
Supply Chain Management
The supply chain is critical to
Wellstream’s operations with carbon
steels, alloy steels, high grade polymers,
end fittings and ancillaries being sourced
globally for our three major operations.
Overall, there have been no major
interruptions to the supply chain
throughout 2007 and we are continuing
to extend material solutions and the
vendor base. We are intensively
developing further Brazilian sources of
supply to support the Niterói plant.
A notable success has been the
introduction of the new PA12 nylon grade,
which was developed collaboratively
with Degussa. This new pipeline barrier
and shield material has achieved rapid
and widespread acceptance by our
customers and is a welcome alternative
to the previously existing nylon solution.
We have seen recent encouraging signs
in stabilisation and in some cases
reduction in raw material prices.
This is most prominent in the high value
alloy steels. 
Capacity Expansion
In November we announced capacity
expansions in both Niterói (from 150
nkm/pa to 270 nkm/pa) and Newcastle
(from 260 nkm/pa to 300 nkm/pa); a £35
million investment has been approved
for this. This is further supported by a
global continuous improvement initiative. 
The capacity expansion project has
successfully transitioned from the
definition to execution phase. Critical
activities are on track to support the
Q1 2009 operational handover. Long lead
equipment items have been ordered
and pre-construction activities for Niterói
and Newcastle are progressing well. 
In support of capacity expansion, an
accelerated reel build programme has
been progressing in both Brazil and the
UK and will run through 2008. 
48723 MG Annual Report - Front  17/4/08  11:40  Page 14 Wellstream Holdings PLC Annual Report & Accounts 2007 | 15
A £35 million investment
has been approved for
capacity expansion.
Year End Annualised Capacity - Wellstream Newcastle & Niterói
2004
200 nkm
2005
200 nkm
2006
220 nkm
2007
360 nkm
260 nkm
410 nkm
260 nkm
300 nkm
2008
FCST
2009
FCST
570 nkm
+10%
+64%
+14%
+39%
Niterói
Newcastle
48723 MG Annual Report - Front  17/4/08  11:40  Page 15 Safety
Wellstream places great emphasis on
Health, Safety and Environmental (HSE)
performance. In terms of key
measurables, 2007’s performance was
almost twice as effective as 2006.
Two Lost Time Incidents (LTIs) were
recorded (eight in 2006) and the OSHA
recordable rate was 1.68 (3.33 in 2006).
In order to continue this improvement
and further enhance the entire
organisation’s focus on safety, new
initiatives have been launched that
concentrate on leading HSE indicators
and the behavioural aspects of safety.
In 2007 the Company embarked upon
a programme of change - “Journey to
Zero”. The driver for this change has
been the Company’s belief that all
accidents and incidents are preventable
and the programme ensures that this
principle is embedded within the
Company’s organisational culture.
Building on the successes of 2007, we
aim to further develop our policies and
practices. We have identified the
following objectives as being
fundamental to this goal in 2008;
 Continuous Improvement - 
Implementing lean manufacturing 
principles throughout the business
 Supply Chain Management - Engaging
with our key suppliers to assess HSE
competencies and share learning
 Percentage Safe Auditing - A daily work
routine involving a team of
Management, Operators and HSE
personnel
 Behavioural Safety Training - To
support the “Journey to Zero”
 OHSAS 18001/ISO 14001
certification - Expanding the scope to
include the Niterói plant in Brazil.
Jan
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
2007 OSHA Recordable Incident Frequency Rates
(last 12 months rolling)
Nov
Dec
16 | Chief Executive’s Review
Health, Safety and Environment
Wellstream places great emphasis on
Health, Safety and Environmental (HSE)
performance. In terms of key
measurables, 2007’s performance was
almost twice as effective as 2006.
OSHA Recordable Incident 1 Day Lost Time Incident
48723 MG Annual Report - Front  17/4/08  11:40  Page 16 Wellstream Holdings PLC Annual Report & Accounts 2007 | 17
Environment
Wellstream is committed to seeking ways
to minimise avoidable harm to the
environment. In Newcastle, Wellstream
has implemented an Environmental
Management system, certified to
ISO 14001. Resource conservation and
pollution prevention principles are
integrated into our business processes,
facilities, operations and products. In
Brazil and Panama City, USA, 2008 will
see a focus on improving monitoring
and setting of targets.
The Company is in the early stages of
implementing an Energy and Waste
Management Programme. This
encompasses auditing, further definition
of waste production and the carbon
footprint. The intention is to further refine
reduction targets and recycling initiatives. 
48723 MG Annual Report - Front  17/4/08  11:40  Page 17 Customers and Awards
Our 20 year relationship with Petrobras
has been further enhanced by the
opening of the plant in Niterói, Brazil.
18 | Chief Executive’s Review
This has already begun to benefit the
business by facilitating greater
co-operation in terms of collaborative
capacity planning, product qualification
and technology development. Key
commitments have been received from
Petrobras for 2008.
The Niterói plant has also supported
other Wellstream customers such as
Devon Energy, Chevron, Anadarko and
StatoilHydro, all of whom have projects
that were executed in 2007 or will be
manufactured in 2008. 
In total this customer support translated
into a backlog at 31 December 2007 of
£335.9m.
Seastream and the Pyrenees project
On 3 July 2007, BHP Billiton awarded
Wellstream and its Seastream Joint
Venture, contracts for its Pyrenees
project offshore Western Australia.
The contracts involve the supply and
installation of flexible flowlines and risers
and installation of the subsea
infrastructure and the Floating Production
Storage and Offloading vessel (FPSO).
The value of these contracts is in excess
of £100m and represents a significant
milestone for both Wellstream and the
Joint Venture. At the end of the year
preparations were well underway from
a new operating centre in Perth, Australia
for the offshore programme which is due
to commence in early 2009. The pipe
manufacturing programme will
commence in Newcastle in mid 2008 and
the project team is overseeing an
extensive engineering, procurement and
manufacturing preparedness programme.
At year end we also received a
commitment from Devon Energy for
remedial installation work on the Polvo
field in Brazil. The offshore work was
completed in February 2008.
48723 MG Annual Report - Front  17/4/08  11:40  Page 18 Wellstream Holdings PLC Annual Report & Accounts 2007 | 19
The Seastream initiative underpins
Wellstream’s strategic intent to keep
the installed cost of flexible pipes
visible to end customers.
48723 MG Annual Report - Front  17/4/08  11:40  Page 19 20 | Chief Executive’s Review
The onshore FlexSteel
TM
business has performed well
with encouraging new sales
being achieved in Latin
America. 
48723 MG Annual Report - Front  17/4/08  11:40  Page 20 Onshore
The onshore FlexSteel
TM
business has
performed well with encouraging new
sales being achieved in Latin America.
Production in the Panama City plant has
accelerated with the introduction of new
equipment during the first quarter of 2007.
In total 618 nkm
(1)
of pipeline was
produced during 2007. The period also
saw the successful introduction of
5.5 inch and 6 inch diameter products.
The first 6 inch pipe delivery is destined
for Pemex in Mexico. South America
continues to show promise with Petrobras
placing initial orders and negotiations
continuing in Venezuela.
The American and Canadian markets
continue to underpin the business and
despite the drop-off in the Canadian gas
market, the high pressure market for the
FlexSteel
TM
product has remained positive.
Wellstream Holdings PLC Annual Report & Accounts 2007 | 21
Note (1): Normalised kilometre (nkm) for Wellstream’s
onshore pipe is based on a standard 4 inch Internal
Diameter pipe. A relative scale factor is applied to other
pipes to convert actual production lengths and
composition into nkm.
48723 MG Annual Report - Front  17/4/08  11:40  Page 21 Organisation
With the upturn in activity, global
staff numbers have grown from
715 at 31 December 2006 to 945 at
31 December 2007.
Organisation
The principal growth has been in
Brazil with the start-up of the new
plant and associated operations. The
smooth start-up in Niterói has been
facilitated by an intensive induction
and training programme which
included the placement of Brazil
employees in the UK in the first half
of the year and the deployment of
several UK and US based specialists
in Niterói to assist with knowledge
transfer in the second half of the year. 
Following flotation, an SAYE scheme
was made available to UK employees
with 79% of the eligible UK workforce
participating. This has had a positive
effect and has raised the sense of long
term involvement in the Company’s
future. To further emphasise this, at
year end a 3 year pay agreement has
been concluded with the Newcastle
workforce.
The success of the Company was
recognised locally and nationally in
the UK. Wellstream became North
East of England Company of the Year
at the North East Business Awards. In
November, Wellstream received the
UK Company of the Year award from
the British Chamber of Commerce. 
ERP system
2007 also saw the start-up of a
company wide Enterprise Resource
Planning (ERP) project. The intention
is to replace stand-alone systems,
spreadsheets and databases that have
served their purpose to date, with a
new integrated system.
T echnology R&D
We have an extensive R&D
programme designed to meet
customer and market needs and to
create and commercialise new
designs and solutions. Full-scale test
and qualification work for customer-
funded programmes are now being
scheduled out to 2011.
During 2007 our strategic programme
has included completion of a high
pressure deepwater riser qualification.
As a result of the qualification
requirements there are a number of
full-scale tests such as burst, tension
and dynamic cycling of complete
riser structures to demonstrate the
performance against industry
standards. Each flexible riser is a
complex non-bonded structure
comprising polymers, metals, structural
tapes and end terminations. These
layers all interact with one another and
the testing ensures that during service
no unacceptable wear, cracks or
breaks occur within the structure.
Completion of the 540 bar design adds
to the qualification envelope and also
provides invaluable performance
data as even more challenging
service requirements are considered.
It is important to continue to enhance
the knowledge base of materials
technology even for existing materials.
Industry requirements for service in the
order of 25 years mean that fatigue
testing to demonstrate performance
in excess of 250 years is required.
Significant investment continues to
be made in the fatigue testing of 
pressure and tensile armour materials
under differing environmental
conditions enhancing the customer’s
confidence in the predictive lifetime of
a riser in very challenging conditions.
As increasing numbers of offshore
fields are turning to “sour service”,
where the oil is strongly composed of
contaminants like hydrogen sulphide,
a major materials test programme
has been undertaken to validate the
permeable characteristics of all our
polymers used as an internal fluid
barrier for this application.
22 | Chief Executive’s Review
48723 MG Annual Report - Front  17/4/08  11:40  Page 22 Wellstream Holdings PLC Annual Report & Accounts 2007 | 23
Business Area KPI Measure
Financial Delivery EBITDA (Group)
(1)
136% increase on 2006
Project Offshore Gross Margin
(2)
93% increase on 2006
Management
Supply Chain Material Receipts
(3)
99% on-time delivery
Manufacturing Throughput
(4)
39% increase on 2006
Technology Patents lodged
(5)
7 certificates of 
invention filed
Business Acquisition Offshore orders
(6)
27% increase on 2006
Key Performance Indicators (KPIs)
Wellstream implements a
performance management system
throughout the business. At the
start of every year the critical
success factors are reviewed and
key performance indicators are set
for the Group. The Board approves
these KPI targets and monitors and
assesses performance against these 
throughout the year. These KPIs are
cascaded throughout the business
and more detailed KPIs are also
created that align with geographical
centres and business functions.
These KPIs drive the appropriate
focus in the Group and the top 6
KPIs for 2007 were as follows;
(1) EBITDA is defined on page 30 in the
Financial Review.
(2) Offshore Gross Margin measures the
profitability of project production in the
year. It is calculated by deducting
material and transportation costs from
revenue on a contract by contract basis.
(3) On-time material receipts are important
in ensuring minimal interruption to
production. We measure any delay to the
planned production that results directly
from delayed material receipts and this is
calculated as a proportion of production
hours available.
(4) Throughput is measured in normalised
kilometres. It is a measure of capacity
utilisation.
(5) The lodging of patents is important
because it allows for protection of
intellectual property. The filing of an
application by our patent agent with the
UK Patent Office (or patent offices in
other jurisdictions) is an important step
and is therefore treated as a KPI.
(6) Offshore orders are the value of future
revenue added to backlog on receipt of a
customer order. It is a measure of the
rate at which we win new business.
48723 MG Annual Report - Front  17/4/08  11:40  Page 23 24 | Chief Executive’s Review
Risks and Uncertainties
Since Wellstream is a technologically
complex business operating in a
challenging industry, risk management is
a key facet of day-to-day management.
48723 MG Annual Report - Front  17/4/08  11:40  Page 24 Wellstream Holdings PLC Annual Report & Accounts 2007 | 25
At an operational level there are strict
processes in place to review risks and
uncertainties during the bidding process
and during engineering, procurement,
manufacturing, testing and post-delivery
project phases. Risk assessments are
performed on a project-by-project
basis and the operations are reviewed
monthly through formal processes.
At the corporate level, the Executive T eam
in Wellstream regularly performs a risk
mapping exercise which is reviewed
with the Board and the Audit Committee.
This includes an assessment of
operational, financial, strategic,
compliance and environmental risks.
This risk mapping exercise is extensive
as is the tracking of mitigating actions.
Key risks highlighted include:
Petrobras is a key customer
of Wellstream
Petrobras commands a significant
proportion of Wellstream’s business. The
demand for flexible pipe is progressively
defined as part of a continuous dialogue
between the two companies. Regular
and open review meetings establish
capacity availability and Petrobras’
offshore field development priorities. 
Wellstream continues to diversify the
customer base both in Brazil (where
international oil companies are
increasingly active) and internationally.
Senior Management and key
personnel
Experienced and qualified personnel
are in high demand in the oil and gas
industry. It is important for Wellstream to
maintain a close focus on both retention
and effective recruitment of key
personnel at a time of growth. Actions to
support this include detailed succession
planning, regular remuneration reviews,
industry benchmarking, improved
employee welfare arrangements and
careful career development.
Single source vendors in the
supply chain
Wellstream’s supply chain is critical to
the operation and for certain material
types there are sole source vendors. In
addition, for the materials that are
imported into Brazil, the supply chain is
long and time consuming. These
challenges are mitigated by having a
clear supply chain strategy in place,
careful maintenance of stocking
programmes, constant vigilance of
vendor performance, the development
of commercial risk and reward
arrangements and, where appropriate,
the establishment of effective long term
vendor frame agreements.
48723 MG Annual Report - Front  17/4/08  11:40  Page 25 26 | Chief Executive’s Review
Customer concentration 
Wellstream’s business is founded on
a relatively small number of high value
customers including Petrobras. If
requested project lead times from
these customers change significantly,
revenue and margin performance
could be put at risk. In order to
mitigate this, Wellstream continues to
broaden its customer base, develop
new relationships in selected regions
and apply the principle of focused
account management to its
strategically targeted customer base.
Product mix 
During the sales and business
development process, Wellstream
strives to influence product mix to
manufacturing friendly solutions but it
is not always possible to achieve an
optimal outcome. Poor product mix
can affect throughput and hence
revenue and margin performance. 
To mitigate this exposure Wellstream
constantly manages the “funnel” of
incoming work and encourages
standardisation of its pipe structures
during project planning phases. In
addition it is always the aim to gain
sufficient margins on projects that have
more challenging product scopes.
Volatility of the oil and gas industry 
The price of oil and gas and levels of
business confidence across oil and gas
markets are key drivers for Wellstream’s
business. The trends towards the use
of deepwater, floating production and
subsea technologies are also important.
A sustained and significant reduction in
oil and gas prices and/or a reduction
in business confidence could have an
adverse impact on the level of customer
spending. To mitigate this exposure
Wellstream strives to maintain in-depth
market intelligence, to gather and use
client feedback and to plan capacity,
throughput and its cost base so that any
downturn can be weathered effectively.
Seastream initiative
The risk profile of offshore installation
of flexible pipe is significantly different
to that of design and manufacturing
activity. Recognising that this is a
newly developing business stream for
Wellstream, great care has been taken
to negotiate acceptable risk profiles
on projects as they are secured. 
48723 MG Annual Report - Front  17/4/08  11:40  Page 26 Wellstream Holdings PLC Annual Report & Accounts 2007 | 27
48723 MG Annual Report - Front  17/4/08  11:40  Page 27 28 | Chief Executive’s Review
Corporate Social Responsibility
Local involvement is at the very heart of
Wellstream’s social responsibility programme.
48723 MG Annual Report - Front  17/4/08  11:40  Page 28 Wellstream Holdings PLC Annual Report & Accounts 2007 | 29
Corporate Social Responsibility
Wellstream is focussed on working in
partnership with all elements of our
communities - education, charities, local
organisations, support groups, business
and the public sector.
On a routine basis Wellstream actively
works with clients on project specific
HSE Performance Recognition Schemes
where HSE ‘best practice’ is rewarded
with a charitable donation. In 2007,
PetroSA’s Southern Gas Field project,
in which Wellstream was involved,
generated a donation to two South
African schools.
Local involvement is at the very heart of
Wellstream’s social responsibility
programme; such involvement can be
seen in Wellstream’s support of the local
Walker Central Junior Football Club in
Newcastle upon Tyne, UK to which in
2007 Wellstream donated £10,000. 
The Company has a specific budget for
community involvement activities.
Of the budget set aside for charitable
giving, a proportion is given to charities
with which the Company has formed
partnerships, such as St Oswald’s
Hospice (UK), Santa Clara Project (Brazil)
and United Way (USA). 
Many of our employees give generously
of their money, time and energy and
in support of their efforts; Wellstream
operates a charitable giving policy
whereby the Company matches
the monies raised up to a set limit by
any employee. 
Ethical Trading Policies
Wellstream has a robust business
conduct policy that ensures the
Company trades legally, fairly, openly,
honestly and with transparency in all
dealings. The policy is highly visible and
governs the actions of all employees in
the conduct of Wellstream’s business
and in respect of the Company’s
dealings with customers, suppliers,
clients, contractors and intermediaries.
The Company’s business conduct policy
covers gifts and hospitality, international
business relationships, conflicts of
interest, confidential information and
the reporting of misconduct.
The Company is committed to following
a stringent fraud and anti-corruption
policy to ensure all business is
conducted in a legal, fair and honest
manner. This policy governs the actions
of all employees and is accessible to all;
the Company will not tolerate fraud,
corrupt, dishonest or illegal activity
amongst employees, customers,
suppliers or intermediaries. 
Wellstream also operates under the
guidance of a whistle blowing policy.
The whistle blowing policy states the
course of action an employee should
take if they have concerns. All policies
are available to view on the website.
www.wellstream.com
Outlook
Looking ahead, we will continue to apply
ourselves to maintain our strong
throughput and ensure we deliver against
our targets for investment in capacity
expansion. This investment will boost
total capacity by some 40% in 2009.
The long term industry fundamentals
remain strong and we continue to see
growth opportunities across all aspects
of our business. 
Gordon Chapman
Chief Executive Officer
1 April 2008
48723 MG Annual Report - Front  17/4/08  11:40  Page 29 Financial Review
30 | Financial Review
Overview
Revenue for the year ended 31 December
2007 increased by 81.2% to £266.8m
(2006: £147.2m). Resulting Operating
profit increased by 139.7% to £47.6m
(2006: £19.8m) which generated profit
before taxation of £41.7m (2006: £25.4m)
and diluted earnings per share of 31.6p
(2006: 34.6p).
The Company successfully completed
its IPO on the London Stock Exchange
during the year and its shares were
admitted to trading on 1 May 2007. 
This and the consequent repayment of
pre IPO debt resulted in a number of
transactions of a substantially one-off or
non-recurring nature, a summary of
which is included below.
(1) EBITDA represents Operating profit before depreciation is charged.
(2) Prior to IPO, share options were issued to a non-executive director and these were exercised and
converted into shares at IPO. A charge of £4.1m, inclusive of employer’s taxes, was made in this regard.
(3) Foreign exchange gains on financing of £2.8m (2006: £17.0m) arose substantially on long term US
Dollar denominated debt that was converted to Sterling on 1 May 2007 as part of the IPO.
(4) Upon the bank refinancing and repayment of the Deep Discount Bonds, the associated fees, previously
capitalised, of £2.7m were written off.
Operating Profit before Diluted Diluted
EBITDA (1) profit Taxation EPS(p) EPS(p)
£000 £000 £000 2007 2006
Unadjusted measure 52,836 47,561 41,740 31.6 34.6
Non Exec options see (2) below 4,089 4,089 4,089 3.1 -
Exchange gains on financing see (3) below - - (2,755) (2.1) (23.2)
Repayment of DDBs see (4) below - - 2,716 2.1 -
Adjusted measure 56,925 51,650 45,790 34.7 11.4
48723 MG Annual Report - Front  17/4/08  11:40  Page 30 Revenue
Revenue for the year ended 31 December
2007 totalled £266.8m (2006: £147.2m).
The Group’s Offshore business
contributed the bulk of this growth
ending the year with revenue of £255.6m
(2006: £139.4m). This result is
underpinned by the opening and
subsequent revenues from the facility in
Brazil and strong underlying growth
originating from existing UK operations.
The Onshore business also saw strong
growth albeit from a lower base, recording
revenue of £11.2m (2006: £7.8m).
EBITDA
Adjusted EBITDA for the year ended 
31 December 2007 totalled £56.9m
(2006: £24.1m). The corresponding
EBITDA margin in the period was 21.3%
(2006: 16.4%), an incremental margin
earned in the period of 27.2%. This
incremental margin reflects increased
use of installed capacity, offset
somewhat by start-up inefficiencies in
the newly installed Brazilian capacity.
Financing Costs
Financing costs comprise net interest
expense of £8.6m (2006: £11.4m) and
foreign exchange gains on financing of
£2.8m (2006: £17.0m). The exchange
 gain on foreign currency denominated
balances was primarily incurred in the
period prior to IPO and relates
substantially to US Dollar denominated
debt which was repaid on IPO.
Profit before T axation
Profit before Taxation of £41.7m 
(2006: £25.4m) includes items of a
substantially one-off or non-recurring
nature totalling £4.1m (see table opposite).
T axation
The Group effective rate of taxation in
the year was 30.5%. Corporate tax rates
in the UK and Brazil of 30% and 34%
respectively and a favourable tax regime
in the UK for research and development
underlie this rate. The full year rate is
higher than that anticipated in the Group’s
Interim Report of 29.2% due to the
successful start-up in Brazil and
consequent increase in second half
profits taxed at 34%. Cash tax payments
commenced in the UK during 2007 as
prior year losses have been exhausted.
EPS
Adjusted diluted earnings per share for the
year ended 31 December 2007 was 34.7p
(2006: 11.4p). Basic earnings per share
for the year ended 31 December 2007
was 31.8p (2006: 34.6p). Diluted earnings
per share was 31.6p (2006: 34.6p).
Dividend
The Company, in line with its Prospectus,
has not proposed a dividend for 2007.
The Prospectus also identifies that,
assuming the Company has accumulated
sufficient distributable reserves, its
directors anticipate paying both an interim
and final dividend for 2008. 
Wellstream Holdings PLC Annual Report & Accounts 2007 | 31
48723 MG Annual Report - Front  17/4/08  11:40  Page 31 32 | Financial Review
Operating Cash Flow
Cash flow from operations was
£32.7m (2006: £0.2m). Working capital
in the period increased by £24.6m
(2006: £23.7m). This increase reflects the
longer supply chain currently associated
with our Brazilian operations and phasing
of customer payments over the year end.
Net interest paid of £3.1m (2006: £4.8m)
and taxation paid of £4.5m (2006: £0.1m)
resulted in a net cash increase from
operating activities of £25.1m
(2006: decrease £4.7m), which more than
covered the significant investment in
capital equipment made in the period.
Capital Expenditure
Capital expenditure in the year ended
31 December 2007 was £16.7m 
(2006: £14.0m). The most significant
investment was in Brazil where the Group
has created new capacity in a leasehold
facility. The total investment in Brazil in
the past two years has been £17.9m of
which in excess of 90% was incurred in
respect of new plant and equipment. In
November 2007 the Group announced
a further £35m investment in new
capacity, which is expected to occur
during 2008 and early 2009.
Financing Activities
The IPO generated net proceeds from the
sale of new share capital of £66.8m which,
along with draw-down on the Group’s
£85m revolving facility, enabled the
repayment of long-term debt and deep
discounted bonds that existed pre-IPO.
The net cash raised from financing
activities of £12.9m (2006: £2.8m), was
applied to short-term debt leaving net
cash at the period end of £0.8m (2006:
£20.9m deficit).
Net Debt
Net debt at 31 December 2007 was
£46.7m (2006: £119.2m) which is currently
denominated substantially in Sterling.
Total debt available to the Group is
£89.4m which, after allowing for
performance bonds, guarantees and
cash balances held overseas, leaves
the Group with in excess of £30m of
available headroom.
48723 MG Annual Report - Front  17/4/08  11:40  Page 32 Wellstream Holdings PLC Annual Report & Accounts 2007 | 33
Treasury
The Group’s day-to-day cash requirements
and its capital investment programme are
financed through an £85m revolving
credit facility. Short-term fixed interest
rate loans, normally over a period of 1-3
months, form the significant part of the
drawn-down facility with the balance
being carried at variable interest rates.
The overall credit facility is planned to
reduce periodically from November 2008
until its expiry in May 2013.
Although a substantial part of the Group’s
revenue and profit is earned outside the
UK, subsidiaries generally trade in either
local currency or Sterling. The Group is
therefore not normally exposed to
significant foreign exchange transactional
risk. Occasionally the Group does
generate revenue in a third party currency
and, where this occurs, the potential risk
is assessed against any natural hedges
that exist within the Group before any
financial hedges are considered. The
Group also has an exposure to foreign
currency that arises upon the translation
of overseas results into Sterling. 
The Group does not currently hold any
financial instruments to hedge either
currency or interest rates.
Accounting Policies
The Group has updated its accounting
policies in order to provide the most
relevant and tailored information to
stakeholders. Details are included on
page 63.
Going Concern
Based on normal business planning
and control procedures, the directors
have a reasonable expectation that the
Company and the Group have adequate
resources to continue in operational
existence for the foreseeable future.
For this reason, the directors continue
to adopt the going concern basis in
preparing the accounts.
Chris Gill
Finance Director
1 April 2008
48723 MG Annual Report - Front  17/4/08  11:40  Page 33 John W Kennedy
Chairman 
Mr Kennedy, aged 58, joined Wellstream
in 2003 as Chairman. Mr Kennedy has
over 30 years of experience, holding
executive positions in Halliburton,
Brown & Root and Dresser Enterprises.
In 1993, Mr Kennedy received the Sloan
Fellowship, London Business School
and also holds a M.Sc., B.E. and C.Eng.
from University College Dublin.
Mr. Kennedy is currently a director of the
United Kingdom Atomic Energy Authority,
Integra Group, Maxwell Drummond
International Ltd, Hydrasun Holdings Ltd,
Bifold Fluid Power Ltd, and also acts as
an advisor and a consultant to several
oil field service companies.
Gordon Chapman 
Chief Executive Officer
Mr Chapman, aged 57, originally joined
Wellstream in 1991 and is now the
Company’s Chief Executive Officer having
led the management Buy-out in 2003.
He has over 30 years of experience in
the oil field services sector, including
15 years with Wellstream. Prior to joining
Wellstream, Mr Chapman worked on
pipeline projects in South America, India,
the Caribbean, Nigeria and the North
Sea. He is a chartered civil engineer
with a degree in Civil Engineering from
Salford University.
Christopher Braithwaite 
Chief Operating Officer
Mr Braithwaite, aged 51, joined
Wellstream in August 2004 as Chief
Operating Officer. He has over 25 years
of experience in project management,
engineering and manufacturing
businesses in companies including
Halliburton/Brown & Root and ABB.
He has a B.Sc. (Hons) degree in Civil
Engineering from the University of
Surrey and a M.Sc. degree in Business
Administration & Project Management
from Cranfield School of Management.
He is chairman of Subsea NE and
director of NOF Energy, both industry
bodies.
Chris Gill
Finance Director
Mr Gill, aged 45, joined the Company as
Finance Director on 7 January 2008.
He qualified as a Chartered Accountant
in 1988 with Ernst and Whinney and
has a B.Sc. in Mining Engineering from
Newcastle University. 
He has over 20 years of financial
experience across a diverse range of
businesses, most recently as Finance
Director at the Noble Organisation and
domnick hunter group plc and prior to
that in Black and Decker Corp. He is a
non-executive director of Stadium
Group plc and a board member of the
North of England Industrial
Development Board.
1. John W Kennedy
2. Gordon Chapman
3. Christopher Braithwaite
4. Chris Gill
5. Sir Graham Hearne
6. Neil Gaskell
7. Francisco Gros
8. Nils Stoesser
9. Patrick M Murray
34| Board of Directors 
1234
Wellstream Holdings PLC
Board of Directors
48723 MG Annual Report - Front  17/4/08  11:40  Page 34 Wellstream Holdings PLC Annual Report & Accounts 2007 | 35
5678 9
Sir Graham Hearne 
Senior Independent 
Non-Executive Director
Sir Graham, aged 70, joined Wellstream
in 2003 as an independent non-
executive director . Sir Graham practiced
law before taking a number of senior
executive positions, including Chief
Executive of Enterprise Oil. Sir Graham
is currently non-executive Chairman
of Braemer Shipping Services Group
PLC, Catlin Group Limited and Stratic
Energy Corporation. He is a
non-executive director of N.M.
Rothschild & Sons Ltd and Rowan
Companies, Inc.
Neil Gaskell 
Independent Non-Executive
Director
Mr Gaskell, aged 59, joined Wellstream
in 2007 as an independent non-
executive director. Mr. Gaskell has 25
years of experience in senior
management roles at various Shell
companies including from 2000 to
2003 as Group Treasurer, responsible
for all financing policies, funding and
risk management. Mr Gaskell is
currently a non-executive director of
several companies including Integra
Group and Aberdeen All Asia
Investment Trust PLC and others in
the oil and gas industry. Mr Gaskell
is a fellow of the Association of
Chartered Certified Accountants and
has a B.A. in Philosophy and
Economics from the London School
of Economics.
Francisco Gros 
Independent Non-Executive
Director
Francisco R. Gros, age 65, has been
a director of the Company since 2007.
Mr Gros is non-executive Vice
Chairman of OGX Petroleo e Gas
Participacoes S.A., a company involved
in the exploration of oil and gas
reserves in Brazil. Previously Mr Gros
was President and Chief Executive
Officer of Fosfertil from 2003 to 2007.
In addition, Mr Gros was President and
Chief Executive Officer of Petróleo
Brasileiro S.A. from January 2002 to
December 2002, and President and
Chief Executive Officer of the Brazilian
Development Bank from 2000 to
December 2001. Previously, Mr Gros
was also a Managing Director of
Morgan Stanley from 1993 to 2000,
and was Governor of the Central
Bank on two occasions, in 1987 and
from 1991 to 1992. Mr Gros is also
the Chairman of the Board for Wilson
Sons Ltd. and serves on the Boards of
Globex Utilidades S.A., EDP-Energias
do Brasil S.A., Lojas Renner, Fosfertil,
and Agco Corp. Mr Gros has a B.A.
(cum laude) from the Woodrow Wilson
School of Public and International
Affairs at Princeton University.
Nils Stoesser 
Non-Executive Director
Mr Stoesser, aged 33, joined
Wellstream in 2003 as a non- executive
director. He is a director of Candover
Partners Limited, which he joined in
1999 from Arthur Andersen, where he
qualified as a chartered accountant.
Mr Stoesser also holds non-executive
directorships with Qioptiq and Linos
AG groups. Mr Stoesser has a
M.Eng (Hons) degree in Mechanical
Engineering from Newcastle upon
Tyne University.
Patrick M Murray 
Independent Non-Executive
Director 
Patrick Murray, aged 65, joined
Wellstream in July 2007 as an
independent non-executive director.
Mr Murray has 25 years of experience
in senior management positions, most
recently as Chairman of the Board
and CEO of Dresser, Inc. Mr Murray
holds a B.S. degree in Accounting and
a Master of Business Administration
from Seton Hall University. Mr Murray
is on the Board of Directors of Harvest
Natural Resources, Inc., Precision
Drilling Corporation, Rancher Energy
Corp., the Maguire Energy Institute,
the World Affairs Council of
Dallas/Fort Worth, and the Board of
Regents of Seton Hall University.
48723 MG Annual Report - Front  17/4/08  11:40  Page 35 36 | Directors’ Report 
Directors’ Report
The directors present their annual report on the
affairs of the Group, together with the financial
statements and independent auditors’ report, 
for the year ended 31 December 2007.
48723 MG Annual Report - Mid  17/4/08  11:42  Page 36 Principal activities
The principal activities of the Group continue to be the design and manufacture of bespoke flexible
pipeline products and systems for the oil and gas industry.
The subsidiary and associated undertakings principally affecting the profits or net assets of the Group in
the year are listed in note 13 to the financial statements.
The Company has operations in Newcastle UK, Panama City Florida USA, Niterói Brazil, Perth Australia,
and offices in Rio de Janeiro Brazil, Houston USA and Calgary Canada, including a branch in Panama
City USA.
Business review
The Chief Executive’s Review which contains key performance indicators, principal risks and
uncertainties, business performance and strategy is set out on pages 4 - 29 and is included in the
Directors’ Report by reference.
Results and Dividends
The results for the year and amounts transferred to reserves are detailed on pages 60 - 62. In accordance
with the dividend policy set out in the Company’s Prospectus, the directors are not recommending the
payment of a dividend for the financial year ended 31 December 2007.
Articles of Association
The Company’s Articles may only be amended by special resolution at a general meeting of the shareholders.
At the Annual General Meeting to be held on 19 May 2008, a resolution will be put to shareholders
proposing the adoption of new Articles of Association. An explanation of the principal proposed changes
can be found in the Appendix to the Notice of Meeting.
Capital Structure
The Company’s authorised share capital as at 31 December 2007 was £1,500,000 divided into 150,000,000
ordinary shares of £0.01 each. The Company’s issued share capital as at that date and at 1 April 2008
was 99,579,750 ordinary shares of £0.01 each, each credited as fully paid.
The changes that took place to the share capital of the Company throughout the reporting period are set
out below, divided between the periods before and after the Company’s shares were admitted to listing
on the Official List of the UK Listing Authority and to trading on the London Stock Exchange on 1 May
2007 (Admission). 
Before Admission 
The authorised share capital of the Company as at 1 January 2007 was £28,043 divided into 78,000
preferred ordinary shares of £0.01 each and 27,263 “A” ordinary shares of £1.00 each. 78,000 preferred
ordinary shares of £0.01 each were issued to various Candover shareholders and 20,000 “A” ordinary
shares of £1.00 each were issued to members of the management team of Wellstream.
On 27 March 2007 the authorised share capital of the Company was increased from £28,043 to £58,043
by the creation of 30,000 redeemable non-voting shares of £1.00 each. Such shares were issued fully
paid on the same date to Candover Partners Limited.
Wellstream Holdings PLC Annual Report & Accounts 2007 | 37
48723 MG Annual Report - Mid  17/4/08  11:42  Page 37 38 | Directors’ Report continued
From and after Admission
At a meeting of the Board held on 25 April 2007 it was resolved that, with effect from and conditional upon
Admission, the Company would:
 issue 2,000 “A” ordinary shares of £1.00 each to Uberior Trading Limited, an indirect wholly owned
subsidiary of HBOS, pursuant to the exercise in full of warrants issued by the Company to Uberior
Trading Limited in connection with the Company’s financing arrangements; 
 issue 1,523 “A” ordinary shares of £1.00 each to Sir Graham Hearne (a non-executive director), pursuant
to the exercise in full of options issued by the Company to Sir Graham Hearne and;
 redeem the 30,000 redeemable non-voting shares of £1.00 each issued to Candover Partners Limited
on 27 March 2007.
Pursuant to a resolution passed by the shareholders of the Company at an extraordinary general meeting
of the Company held on 25 April 2007, with effect from and conditional upon Admission:
 each issued and unissued “A” ordinary share of £1.00 each was subdivided into 100 “A” ordinary shares
of £0.01 each, resulting in a total of 2,352,300 “A” ordinary shares of £0.01 each in issue;
 the authorised share capital of the Company was increased from £58,043 (divided into 2,726,300 “A”
ordinary shares of £0.01 each, 78,000 preferred ordinary shares of £0.01 each and 30,000 redeemable
non-voting shares of £1.00 each) to £135,263 by the creation of 7,722,000 preferred ordinary shares of
£0.01 each;
 99 bonus preferred ordinary shares of £0.01 each were issued to the holders of the preferred ordinary
shares of £0.01 each for each preferred ordinary share of £0.01 each held by members on the day
immediately prior to Admission, such bonus issue funded by the capitalisation of amounts standing to
the credit of the Company’s share premium account, resulting in a total of 7,800,000 preferred ordinary
shares of £0.01 each in issue; 
 the issued and unissued “A” ordinary shares of £0.01 each and the issued and unissued preferred
ordinary shares of £0.01 each were re-designated as ordinary shares of £0.01 each, resulting in a total
of 10,152,300 ordinary shares of £0.01 each in issue;
 the authorised share capital of the Company was increased from £135,263 (divided into 10,526,300
ordinary shares of £0.01 each and 30,000 redeemable non-voting shares of £1.00 each) to £1,530,000
by the creation of 139,473,700 ordinary shares of £0.01 each; 
 6.5 bonus ordinary shares of £0.01 each were issued to the holders of the ordinary shares of £0.01 each
for each ordinary share of £0.01 each held at such time, such bonus issue funded by the capitalisation
of amounts standing to the credit of the Company’s share premium account; and
 all the authorised redeemable non-voting shares of £1.00 each were cancelled.
Upon Admission, on 1 May 2007, the Company’s ordinary shares were admitted to the Official List of the
UK Listing Authority and to trading on the London Stock Exchange. The global offer comprised 67,037,500
ordinary shares of £0.01 each, of which 23,437,500 new ordinary shares of £0.01 each were issued by the
Company and 43,600,000 were sold by existing shareholders. 
The changes to the authorised and issued share capital of the Company up to 31 December 2007 are
also set out in note 23 to the financial statements. 
Resolutions relating to the Company’s share capital being proposed at the Annual General Meeting are
set out in the Notice of Meeting. Further details are given in the accompanying letter from the Chairman.
The rights and obligations attaching to the Company’s ordinary shares are set out in the Company’s Articles,
copies of which can be obtained from Companies House in the UK or by writing to the Company Secretary.
48723 MG Annual Report - Mid  17/4/08  11:42  Page 38 Wellstream Holdings PLC Annual Report & Accounts 2007 | 39
There are no restrictions on transfer or voting of securities in the Company and there are no agreements
known to the Company which might result in such restrictions. There are no shareholders carrying special
rights with regard to control of the Company.
At an extraordinary general meeting of the Company on 25 April 2007, the Company was authorised, with
effect from and conditional upon Admission, to purchase up to 9,957,975 of its own shares at a price
between the nominal value and 105 per cent of the market price. The resolutions being proposed at the
Annual General Meeting include a resolution to renew this authority.
Significant Agreements - Change of Control
The following significant commercial agreements contain certain termination and other rights for our
counterparties upon a change of control of the Company.
All Petrobras contracts follow their standard terms and conditions which provide for rights on a change of
control. The following are the current significant contracts;
 Flowlines and risers for Marlim Sul Module 2 in excess of £40m
 Water injection and gas lift flowlines for Marlim Leste in excess of £40m
 Flexible risers and flowlines for the Campos Basin in excess of £50m
All the Company’s share schemes have change of control provisions.
The Company’s banking arrangements, including the £85m revolving facility and the debenture, have
change of control provisions.
There are no agreements between the Company or directors or employees which provide for
compensation for loss of office or employment that occurs because of a takeover bid.
48723 MG Annual Report - Mid  17/4/08  11:42  Page 39 40 | Directors’ Report continued 
Directors
The directors, who served throughout the year and since except as noted, were as follows:
John Kennedy appointed 8 March 2003
Executive Chairman and member of the 
Nomination Committee
Gordon Chapman appointed 13 January 2003
Chief Executive Officer (CEO)
Chris Braithwaite appointed 27 August 2004
Chief Operating Officer (COO)
Andrew Turk appointed 19 March 2003
Finance Director (who left the Company on
31 December 2007)
Sir Graham Hearne appointed 18 July 2003
Senior Independent non-executive Director, 
Chairman of the Nomination Committee and
member of the Audit and Remuneration Committees
Chris Gill appointed 7 January 2008
Finance Director (FD)
Francisco Gros appointed 19 March 2007
Independent non-executive director, Chairman of the
Remuneration Committee and member of the
Nomination Committee
Neil Gaskell appointed 19 March 2007
Independent non-executive director and Chairman of
the Audit Committee
Pat Murray appointed 10 July 2007
Independent non-executive director, member of the
Remuneration and Audit Committees
Nils Stoesser appointed 13 January 2003
Non-executive director and member of the 
Audit Committee
Marek Gumienny appointed 18 March 2003
Non-executive director (resigned on 19 March 2007)
Election and re-election of directors
In accordance with the Company’s Articles of Association, all of the Board will retire and offer themselves for election or
re-election.
Three non-executive directors were appointed this year. Pat Murray appointed July 2007, Francisco Gros appointed
March 2007 and Neil Gaskell appointed March 2007, all retire at the next Annual General Meeting and, being eligible,
offer themselves for election. Sir Graham Hearne, Senior Independent non-executive Director and Nils Stoesser non-
executive director who have both held office for more than three years retire in accordance with the requirements of the
Company’s Articles of Association and being eligible, offer themselves for re-election. The Board believes that all of the
non-executive directors offering themselves for election or re-election should be elected to their non-executive roles
because of the contribution they have made to the success of the Company and because their experience is valuable
for the future growth of the Company. 
Chris Gill, who joined the Company on 7 January 2008 as Finance Director also retires and offers himself for election. 
John Kennedy Chairman, Gordon Chapman CEO and Chris Braithwaite COO who have held office for more than three
years, all retire in accordance with the Articles and being eligible offer themselves for re-election.
All directors who are due for election or re-election continue to perform effectively in terms of contribution, time
commitment and commitment to the relevant Committees of the Board.
The rules regarding the appointment and replacement of directors are set out in the Articles of the Company. Directors
are appointed by the Company by ordinary resolution at a general meeting of holders of ordinary shares or by the
Board on the recommendation of the Nomination Committee. The Corporate Governance Report sets out further details
on page 44.
Powers of the Directors
The directors are responsible for managing the business of the Company and may exercise all the powers of the Company
subject to the provisions of relevant statutes, any directions given by special resolution and the Company’s Memorandum
and Articles. The Articles, for example, contain specific provisions and restrictions concerning the Company’s power to
borrow money. Powers relating to the issuing of shares and power to purchase the Company’s own shares are also included
in the Articles (subject to relevant statutory provisions) and the resolutions being proposed at the Annual General Meeting,
as set out in the Notice of Meeting, include resolutions to renew such authorities. The Corporate Governance Report sets
out details of matters reserved to the Board on page 45.
For fuller biographies of all the directors please see pages 34 - 35
48723 MG Annual Report - Mid  17/4/08  11:42  Page 40 Wellstream Holdings PLC Annual Report & Accounts 2007 | 41
Directors’ interests
The directors who held office at 31 December 2007 had the following interests in the shares and
debentures of Wellstream Holdings PLC:
Name of Director Beneficial Non-Beneficial Beneficial Non-Beneficial
John Kennedy* Ord 1p shares 4,078,125 - 5,000 Ord £1.00 shares -
Gordon Chapman Ord 1p shares 2,500,000 - 5,000 Ord £1.00 shares -
Chris Braithwaite Ord 1p shares 2,000,000 - 4,000 Ord £1.00 shares -
Andrew T urk Ord 1p shares 1,250,000 - 2,500 Ord £1.00 shares -
Sir Graham Hearne Ord 1p shares 692,250 - - - -
Neil Gaskell Ord 1p shares 28,125 - - - -
Description
of shares or
debentures
Description
of shares
31 December 2007 1st January 2007
(1)
or subsequent
date of
appointment
*Held by Amko Energy SA.
No changes in the interests of directors took place between 31 December 2007 and the date of this report.
Note (1): The share capital of the Company since 31 December 2006 has been reorganised and the figures
are not comparable with their current holdings.
Directors’ share options
None of the directors currently hold share options in the Company except under the Performance Share
Plan. Details of share option grants are included in the Directors’ Remuneration Report on page 56.
Directors’ indemnities
The directors have the benefit of qualifying third party indemnity provisions.
Supplier payment policy
The Company’s policy, which is also applied by the Group, is to settle terms of payment with suppliers
when agreeing the terms of each transaction, ensure that suppliers are made aware of the terms of payment
and abide by the terms of payment. Trade creditors of the Group at 31 December 2007 were equivalent to
45 (2006: 50) days’ purchases, based on the average daily amount invoiced by suppliers during the year.
Charitable and political contributions
During the year the Group made charitable donations of £35,000 (2006: £5,000) principally to local charities
serving the communities in which the Group operates.
No political donations were made or EU political expenditure incurred during the year.
48723 MG Annual Report - Mid  17/4/08  11:42  Page 41 Name of Holder Number of Shares Percentage Nature of Holding
Candover Shareholders 13,771,250 13.8% Direct
Legal and General Group PLC 7,735,046 7.7% Direct 3,552,970
Indirect 4,182,076
Janus Capital Management LLC 6,736,698 6.8% Direct
John Kennedy 4,078,125 4.1% Indirect
Aegon UK Group of Companies 3,879,951 3.9% Direct
Schroders PLC 3,847,025 3.9% Direct
Disabled employees
Applications for employment by disabled persons are always fully considered, bearing in mind the
aptitudes of the applicant concerned. In the event of members of staff becoming disabled every effort is
made to ensure that their employment with the Group continues and that appropriate training is arranged.
It is the policy of the Group that the training, career development and promotion of disabled persons
should, as far as possible, be identical to that of other employees.
Employee consultation
The Group places considerable value on the involvement of its employees and has continued to keep
them informed on matters affecting them as employees and on the various factors affecting the
performance of the Group. This is achieved through formal and informal meetings. Employee
representatives are consulted regularly on a wide range of matters affecting their current and future interests.
Environment and social responsibility
The Company recognises that it is part of the wider community and strives to act responsibly to promote
the interests of the community. Further details of the Company’s approach to these issues is given on
pages 17 and 29 of the Chief Executive’s Review.
Employee share plans
The Company is keen to promote employee involvement in the success and growth of the Company.
A Sharesave plan was implemented soon after IPO and was well received with over 75% of staff in the UK
participating. It is open to all UK employees who can elect to save up to £250pm for 3 or 5 years and may
then use the accumulated capital and interest to buy shares at the discounted price fixed at the beginning
of the savings period.
Performance Share Plan
During the year a Performance Share Plan was set up as part of performance related pay. Executive
directors and senior employees were granted nominal cost share options which vest over a three year
period when certain performance conditions set by the Remuneration Committee are met. Further details
are given in the Directors’ Remuneration Report.
Neither scheme has issued any shares.
Research and development
Further details are provided in the Chief Executive’s Review on page 22.
Financial Instruments
Information about the use by the Company and its subsidiaries of financial instruments is given in note 22.
Substantial shareholdings
On 26 March 2008 the Company had been notified, in accordance with the Disclosure and Transparency
Rules, of the following interests in the ordinary share capital of the Company.
42 | Directors’ Report continued
48723 MG Annual Report - Mid  17/4/08  11:42  Page 42 Special business
A resolution will be placed before the Annual General Meeting to amend the Articles of the Company to
take account of the Companies Act 2006 requirements relating to conflicts of interests of the directors.
An explanation of the resolutions is attached to the Notice of Meeting on page 94.
Auditors
Each of the persons who is a director at the date of this annual report confirms that:
 so far as the director is aware, there is no relevant audit information of which the Company’s auditors
are unaware; and
 the director has taken all the steps that he/she ought to have taken as a director in order to make
himself/herself aware of any relevant audit information and to establish that the Company’s auditors are
aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of s234ZA of the
Companies Act 1985. 
Deloitte & Touche LLP have expressed their willingness to continue in office as auditors and a resolution
to reappoint them will be proposed at the forthcoming Annual General Meeting.
Wellstream Holdings PLC
By order of the Board,
Rob Lamb
Company Secretary
1 April 2008
Wellstream Holdings PLC Annual Report & Accounts 2007 | 43
48723 MG Annual Report - Mid  17/4/08  11:42  Page 43 44 | Corporate Governance Report
Corporate Governance Report
The Company is committed to the principles of
corporate governance contained in the Combined
Code on Corporate Governance issued by the
Financial Reporting Council in June 2006 (the Code),
for which the Board is accountable to shareholders.
Statement of compliance with the Combined Code
The Company’s shares were admitted to listing on the Official List of the UK Listing Authority and to trading
on the London Stock Exchange on 1 May 2007 (Admission). The Financial Services Authority requires listed
companies to disclose how they have applied, and complied with, the provisions set out in section 1 of the
Code. From Admission until September 2007, when the Company entered the FTSE 250, the Company
was “a smaller listed Company” for the purposes of the Combined Code and so certain provisions of the
Combined Code did not apply. Subject to this since Admission the Company has complied fully with the
provisions set out in section 1 of the Code, except that one non-independent non-executive director remains
a member of the Audit Committee contrary to C.3.1 of the Combined Code in order to provide continuity
for the Committee after Admission. This corporate governance statement sets out details of how the
Company has applied the provisions of section 1 of the Code since Admission. The Board will carry out an
evaluation of the effectiveness of the Board and of the effectiveness of the system of internal controls on
an annual basis but as the Company has only recently listed neither was completed during 2007 contrary
to A.6 and C.2.1 of the Combined Code. 
The Board
Board composition and independence
At the date of this report, the Board of Wellstream Holdings PLC consists of the executive Chairman, three
executive directors and five non-executive directors. The roles of Chairman and Chief Executive Officer
are separate and each has clearly defined responsibilities. 
The Chairman’s main role is to lead the Board, ensuring its effectiveness in all aspects of its role and setting
its agenda. The Chairman is also responsible for ensuring that the directors receive accurate, timely and
clear information; a process that will be reviewed annually. The Chairman also ensures that the Company
maintains clear communication with shareholders, facilitates the effective contribution of non-executive
directors in particular and ensures constructive relations between executive and non-executive directors.
The Chairman devotes two days a week to the business of the Company in an executive role, assisting in
framing and developing strategy. Following its review, the Nomination Committee is satisfied that the
Chairman is able to dedicate significant time to the business and that there has been no change in the level
of his commitments since Admission. The Chief Executive Officer is responsible for implementing Group
strategy and for managing the Group.
The Board aims to embody an appropriate balance of skills and experience to support the Company’s
strategy and performance and has consequently appointed experienced non-executive directors who bring
to the Company a wealth of skills and knowledge of the oil and gas industry. The non-executive directors
represent the majority of the board. Of the five non-executive directors, Neil Gaskell, Francisco Gros, Sir
Graham Hearne and Pat Murray are considered to be independent non-executive directors. 
48723 MG Annual Report - Mid  17/4/08  11:42  Page 44 Wellstream Holdings PLC Annual Report & Accounts 2007 | 45
The Board is satisfied that there are no relationships or circumstances which are likely to affect, or could
appear to affect, the judgement of these directors. Nils Stoesser, also a non-executive director, is not
considered by the Board to be independent as he represents Candover Investments plc, a significant
shareholder of the Company. Sir Graham Hearne is recognised as the Senior Independent non-executive
Director and is available to shareholders should they have concerns that cannot be resolved through
normal channels with the Chairman, Chief Executive Officer or Finance Director. The independent non-
executive directors will meet annually without the Chairman present to review the performance of the
Chairman.
The non-executive directors are entitled to a fee for their services. They are not entitled to participate in any
of the Company’s share schemes and are not eligible to join the Company’s pension scheme. Other than
their fees, no non-executive director received remuneration from the Company during the year other than
Sir Graham Hearne who made a gain of £3,624,616 at Admission upon exercise of options over shares in
the Company granted by the Company before Admission in recognition of his contribution to the Company.
The terms and conditions of appointment of the non-executive directors are available for inspection at the
Annual General Meeting or by any person during normal business hours at the Company’s registered office. 
The role of the Board
The Board approved at its meeting in April 2007 a schedule of matters specifically reserved for the Board’s
attention. The types of decisions taken by the Board include the approval of the Company’s strategy and
annual budget and financial statements, acquisitions or disposals, documents sent to the Company’s
shareholders, changes in capital structure, dividends and matters relating to its committees. Operational
decisions are delegated to the Company’s management.
The Board holds ultimate responsibility for the management and success of the Company, developing
strategy, scrutinising performance and maintaining internal controls and corporate governance.
Responsibility for the day-to-day management of the Group is delegated to the Chief Executive Officer.
Further, the Chief Operating Officer is responsible for managing the operating functions of the Group.
All directors are to be appointed via the recommendation of the Nomination Committee chaired by the
Senior Independent non-executive Director, Sir Graham Hearne. Directors must retire and offer themselves
for re-election by shareholders every three years in accordance with the Articles of the Company.
All directors joining the Company benefit from a tailored induction process familiarising them with the
Company and updating their existing skills based on reports to the Board, factory visits and briefings from
advisers. The Board intends to conduct annual performance appraisals of the effectiveness of the Board.
No evaluation was carried out in the period from Admission to 31 December 2007. 
The Board holds meetings on a regular basis, at least five per year and additionally for specific purposes as
and when required. There were eight Board meetings in the period from Admission to 31 December 2007.
Five meetings are scheduled in 2008. The number of meetings of the Board and of its committees held
during the year is given below, together with the attendance details of each director or Committee member:
Board Audit Committee Remuneration Committee Nomination Committee 
14 5 5 3
John Kennedy 13 1 1 3
Gordon Chapman 13 1
Chris Braithwaite 12
Andrew Turk 11 1
Sir Graham Hearne 13 4 4 3
Francisco Gros 10 4 3
Neil Gaskell 10 4
Nils Stoesser 13 5 1
Pat Murray 6 2 4
Marek Gumienny 2 1
Number of meetings during the
year ended 31 December 2007 
48723 MG Annual Report - Mid  17/4/08  11:42  Page 45 46 | Corporate Governance Report continued 
Committees of the Board
The Board formally delegates certain of its responsibilities to committees by way of written terms of reference. The terms
of reference for the Board’s committees were posted to the Company’s website on 10 December 2007. Details of each
committee, its membership and its terms of reference are summarised below.
Audit Committee
Prior to 19 March 2007, the Committee comprised John Kennedy, Andrew Turk, Marek Gumienny and Nils Stoesser. 
On 19 March 2007 the Board approved new terms of reference for the Committee and appointed Neil Gaskell as chairman
together with Sir Graham Hearne in replacement for John Kennedy and Andrew Turk. Marek Gumienny also resigned on
19 March 2007. On 10 July 2007, Pat Murray was appointed as an additional member. The current members of the
Committee therefore are Neil Gaskell (chairman of the Committee), Sir Graham Hearne, Pat Murray and Nils Stoesser.
All members of the Committee are financially literate non-executive directors and a majority are considered independent.
Neil Gaskell is considered to have “recent and relevant financial experience”. 
The Committee met five times in the year, principally to review and approve the financial statements, approve its terms
of reference, review the appointment of the auditors and review matters relating to risk control. Further details about the
Committee are included in the Audit Committee Report on page 49.
Remuneration Committee
From Admission to 10 July 2007, the Committee comprised Francisco Gros (chairman of the Committee) and Sir Graham
Hearne, both independent non-executive directors who were appointed on 19 March 2007. Pat Murray, an independent
non-executive director, was appointed to the Committee on 10 July 2007. Pre IPO, the Committee members were
John Kennedy, Marek Gumienny, Nils Stoesser and Gordon Chapman. They ceased to be members of the Committee
19 March 2007. 
The Committee met five times during the year. Its principal activity is to review and make recommendations on the
remuneration of the executive directors. During the year the Committee approved its terms of reference and approved
the setting up of the Company’s share plans and bonus arrangements based on performance targets agreed by the
Committee. Further details about the Committee and details of the remuneration of directors are included in the
Directors’ Remuneration Report on page 51.
Nomination Committee
The Nomination Committee is responsible for appointments to the Board and reviewing the Board’s evaluation processes.
This includes the re-appointment of non-executive directors at the conclusion of their specified terms of office and the
re-election by shareholders of any director under the retirement by rotation provisions of the Company’s Articles of
Association. The Committee also considers plans that are in place for succession planning, appointments of senior
management and reviews the balance of skills and experience within the Company.
The Committee was appointed by the Board on 19 March 2007 and comprises Sir Graham Hearne (chairman of the
Committee), John Kennedy and Francisco Gros. A majority of the Committee are independent non-executive directors.
The Committee met three times during the period from Admission to 31 December 2007. It reviewed and approved the
appointment of Pat Murray and Chris Gill as well as a senior staff appointment. 
48723 MG Annual Report - Mid  17/4/08  11:42  Page 46 Accountability and Audit
Internal control 
The Board is responsible for the Group’s system of internal control and for reviewing its effectiveness.
Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives
and can only provide reasonable and not absolute assurance against material misstatement or loss.
To be in compliance with provision C.2.1 of the Combined Code the Board should perform a specific review
of the effectiveness of internal controls for the purpose of the Annual Report. It has not formally completed
this review but will do so in future years. In so doing, the Board will receive a report from the Audit
Committee which addresses the results of its review of the risk assessment process to the Board. The Board
will then evaluate the effectiveness of the system of internal control.
The key procedures, which the directors have established with a view to providing effective internal control,
are as follows:
Indication of business risks
Prior to the Company’s shares being admitted to listing on the Official List of the UK Listings Authority and
to trading on the London Stock Exchange, a comprehensive risk review was undertaken. During the
period since the Admission, the Company has supplemented the processes used to identify and manage
key risks to the business by establishing an internal audit function and instituting a formal process of
recording key business risks. These activities enhance those that are already an integral part of the
business’ internal control environment such as Strategic Planning, the appointment of Senior Managers,
the regular reporting of performance and control over capital expenditure and evaluation of acquisitions.
The process by which key business risks are recorded and reported against was formalised in the fourth
quarter of 2007, it will be monitored and maintained by an executive director who is responsible at Board
level for these matters. Regular reviews and periodic updates with senior executives and management are
carried out. This process considers the significant risks facing the Group including those risks arising from
social, environmental and ethical issues and undertakes risk audits. In identifying significant risks to which
the Group is exposed, it reviews the results of any relevant internal audit work and agrees mitigating actions,
when possible.
Quality and integrity of personnel
The integrity and competence of personnel is ensured through high recruitment standards and subsequent
training courses. High quality personnel are seen as an essential part of the control environment.
Management Structure
The Board has overall responsibility for the Group. Each executive director has been given responsibility
for specific aspects of the Group’s affairs. A clearly defined organisation structure exists within which
individual responsibilities are identified and can be monitored. The management of the Group as a whole is
delegated to the Chief Executive Officer and the executive directors. The conduct of individual businesses
is delegated to the local executive management teams. These teams are accountable for the conduct and
performance of their businesses within the agreed business strategy. They have full authority to act subject
to the reserved powers and sanctioning limits laid down by the Board and to Group policies and guidelines.
Wellstream Holdings PLC Annual Report & Accounts 2007 | 47
48723 MG Annual Report - Mid  17/4/08  11:42  Page 47 48 | Corporate Governance Report continued 
Internal Audit
The Group established an internal audit function in September 2007. It has an agreed programme of
activities to review compliance with procedures and assess the integrity of the control environment.
Internal audit acts as a service to the business by assisting with the continuous improvement of controls
and procedures. Actions are agreed in response to its recommendations and these are followed up by
the Audit Committee to ensure that satisfactory control is maintained.
Budgetary Process
A comprehensive budgeting system is in place, with annual budgets for all operating subsidiaries. The
combined budget is subject to consideration and approval by the Board. Management information
systems provide the directors with relevant and timely information required to monitor financial performance.
Investment appraisal
Budgetary approval and defined authorisation levels regulate capital expenditure. As part of the budgetary
process the Board considers proposals for research and development programmes.
Whistle Blowing Policy
The Company has in place a whistle blowing policy by which concerns may be reported and investigated
confidentially.
Through these processes the Board believes it had an appropriate system of internal controls in place
throughout the period and that the enhanced control environment established during 2007 will allow
compliance with provision C.2.1 of the Combined Code in 2008.
Relations with shareholders
Dialogue with institutional shareholders
Most shareholder contact is with the Chief Executive Officer and Finance Director, however the Chairman
and the Senior Independent non-executive Director and other directors as appropriate maintain contact
with major shareholders to understand their issues and concerns and are available for discussion with
shareholders.
Constructive use of the AGM
The Annual General Meeting is to be held on 19 May 2008, and shareholders are encouraged to attend
and to raise areas of interest or concern to directors.
Regular reports are made to the Board concerning shareholder’s views and market expectations. Investor
road shows have been carried out to brief analysts and shareholders on the Company’s activities and
information is regularly posted to the website.
48723 MG Annual Report - Mid  17/4/08  11:42  Page 48 Audit Committee Report
Summary of the role of the Audit Committee
Overview
The Audit Committee arrangements that were in place prior to the IPO were revised in March 2007 to reflect
those appropriate for a publicly quoted company. New Terms of Reference were approved and the executive
directors who had been members were replaced by two independent non-executive directors among whom
Neil Gaskell was appointed as Chairman. During the remainder of 2007, the Audit Committee ensured that
steps were taken to establish the appropriate arrangements including all those required to meet the
requirements of the Combined Code on Corporate Governance except that the composition of the Committee
included Nils Stoesser who is a non-independent non-executive director because the Committee wished
to benefit from his extensive prior experience on the Company’s Audit Committee. This report describes
how the Audit Committee has carried out its work and discharged its responsibilities.
As reported in the Corporate Governance Report in this Annual Report, the Company joined the main List
of the London Stock Exchange on 1 May 2007 when the Audit Committee comprised two independent
non-executive directors and one non-independent non-executive director. A further independent non-executive
director joined the Committee in July 2007. The names and qualifications of the members of Committee
are given in the Corporate Governance Report on page 46 and in the directors’ biographies on pages 34 -
35. The Committee met five times during the year of which three meetings were after Admission and
attendance is indicated in the table on page 45. The Audit Committee invites the Group Finance Director,
the Internal Auditor, and senior representatives of the external auditors to attend all of its meetings. Other
senior management are invited to attend as required for the Committee to discharge its duties.
Summary of the role of the Audit Committee
The Audit Committee’s role is to assist the Board’s oversight of:
 the integrity of the Company’s financial statements
 the Company’s compliance with applicable legal and regulatory requirements
 the external auditor’s qualifications and independence
 the performance of the Company’s internal audit function, and of the external auditors
 the adequacy of the Company’s financial disclosure, and
 the effectiveness of the Company’s risk management and internal control systems.
During the year the principal activities of the Committee have been to:
 approve new Terms of Reference which are publicly available on the investor relations section of the
Company’s website www.wellstream.com which will be reviewed annually in future
 approve the terms of the external auditor’s appointment, audit plan and remuneration for 2007
 authorise and oversee the establishment of an Internal Audit department which started operation in
September 2007 with a programme of work approved by the Committee
 considered the output from the group-wide process used to identify, evaluate and mitigate risks and
agreed with management an enhanced group risk management process
 review the unaudited interim report for the first half of 2007, issued in September 2007 and monitored
compliance with IFRS reporting standards.
Wellstream Holdings PLC Annual Report & Accounts 2007 | 49
48723 MG Annual Report - Mid  17/4/08  11:42  Page 49 50 | Audit Committee Report continued 
The Audit Committee evaluates and makes recommendations to the Board about the appropriateness of
the accounting policies and practices, areas of judgement, compliance with Accounting Standards, stock
exchange and legal requirements and the results of the external audit. It reviews the unaudited half yearly
and the annual financial statements and makes recommendations on specific actions or decisions
(including formal adoption of the financial statements and reports) that the Board should consider in order
to maintain the integrity of the financial statements. From time to time the Committee may also review
other statements released to the stock exchange, shareholders and the financial community.
The Audit Committee manages the relationship with external auditors on behalf of the Board. It proposes
to the Board the appointment, compensation and retention of the external auditors and oversees their
work, reviews and monitors their independence, objectivity and performance.
The Audit Committee has also established and monitors the implementation of policies related to all
non-audit services that the external auditors provide. The Committee noted that non-audit fees excluding
Admission-related fees were £328,000 compared with £172,000 audit and other fees pursuant to legislation.
While this total exceeds that which the Committee would prefer to target, £170,000 of the non-audit fees
related to remuneration consultancy advice generated prior to and as a result of the IPO. In addition, IPO-
related fees amounted to £1,050,000. The Committee concluded that the independence of the external
auditors continues to be maintained.
The Audit Committee reviews and assesses the remit of the internal audit function. It monitors and discusses
whether the risk management and internal control system is effective, including any significant matters
arising from the audits which are discussed with, as appropriate, the Internal Auditor, management or the
external auditors, Deloitte & T ouche LLP . It monitors the qualifications, expertise, resources and independence
of the Internal Auditor and will assess each year the Internal Auditor’s performance and effectiveness.
The Audit Committee reports its findings to the Board, identifying any matters in respect of which it
considers that action or improvement is needed, and makes recommendations as to the steps to be taken.
The Committee is responsible for monitoring the implementation of the Group’s Whistleblowing Policy
enabling employees to submit concerns confidentially or anonymously, and to ensure independent
investigation with follow-up action where suitable. A copy of this policy may be viewed on the Company’s
website www.wellstream.com.
The Committee is satisfied with the results of its activities regarding the external audit and recommend to
the Board that the external auditors are re-appointed. The Committee has concluded it has acted in
accordance with its Terms of Reference and ensured the independence and objectivity of the external
auditors. The Chairman of the Audit Committee will be available at the Annual General Meeting to answer
any questions about the work of the Committee.
Neil Gaskell
Chairman of the Audit Committee
1 April 2008
48723 MG Annual Report - Mid  17/4/08  11:42  Page 50 Directors’ Remuneration Report
Introduction
This report has been prepared in accordance with Schedule 7A to the Companies Act 1985 (“the Act”).
The report also meets the relevant requirements of the Listing Rules of the Financial Services Authority
and describes how the Board has applied the principles relating to directors’ remuneration. As required
by the Act, a resolution to approve the report will be proposed at the Annual General Meeting of the
Company at which the financial statements will be approved.
The Act requires the auditors to report to the Company’s members on certain parts of the Directors’
Remuneration Report and to state whether in their opinion those parts of the report have been properly
prepared in accordance with the Companies Act 1985. The report has therefore been divided into
separate sections for audited and unaudited information.
Unaudited information
Remuneration Committee
The Company has established a Remuneration Committee which is constituted in accordance with the
recommendations of the Combined Code. The members of the Committee since Admission were Chairman
Francisco Gros and Sir Graham Hearne; and Pat Murray who was appointed on 10 July 2007. They are all
independent non-executive directors. Pre IPO, the Committee members were John Kennedy, Marek Gumienny,
Nils Stoesser and Gordon Chapman. They ceased to be members of the Committee on 19 March 2007.
None of the Committee has any personal financial interest (other than as shareholders), conflicts of
interests arising from cross-directorships or day-to-day involvement in running the business. The Committee
makes recommendations to the Board. No director plays a part in any discussion about his or her own
remuneration. Sir Graham Hearne was awarded share options pre IPO, details of which are given on page 55.
The Committee appointed Deloitte & Touche LLP executive remuneration consulting team to provide
advice on market practice and current trends in directors’ remuneration and benchmarking data. Deloitte
& Touche LLP are the Company’s auditors. The Audit Committee has considered the independence of the
auditors in relation to the provision of non-audit services to the Company and has concluded that there is
no conflict with its policy set out further in the Audit Committee Report.
The Board approved the Committee’s Terms of Reference on 19 March 2007 and a revision approved on
14 September 2007. The Terms of Reference are available to view on the Company’s website
www.wellstream.com
Remuneration policy for the executive directors
Executive remuneration packages are designed to attract, motivate and retain directors of the high calibre
needed to maintain the Group’s position as a market leader and to reward them for achieving appropriate
levels of performance and for enhancing value to shareholders. The performance measurement of the
executive directors and key members of senior management and the determination of their annual
remuneration package are undertaken by the Committee.
There are five main elements of the remuneration package for executive directors and senior management:
 basic annual salary
 benefits-in-kind
 annual bonus payments which cannot exceed 100% of basic salary
 Performance Share Plan awards, and
 pension arrangements.
Executive directors are entitled to accept appointments outside the Company providing that the
Chairman’s permission is sought.
Wellstream Holdings PLC Annual Report & Accounts 2007 | 51
48723 MG Annual Report - Mid  17/4/08  11:42  Page 51 52 | Directors’ Remuneration Report continued
Basic salary
An executive director’s basic salary is reviewed by the Committee prior to the beginning of each year and
when an individual changes position or responsibility. In deciding appropriate levels, the Committee
considers the Group as a whole and relies on objective research which gives up-to-date information.
Benchmarking data was reviewed which included an all sector analysis of the FTSE 250, other published
survey data and comparator groups within the Company’s sector. Executive directors’ contracts of service
which include details of remuneration will be available for inspection at the Annual General Meeting.
Benefits-in-kind
The executive directors receive certain benefits-in-kind, principally a car and private medical insurance.
Annual bonus payments
The Committee establishes the objectives that must be met for each financial year if a cash bonus is to be
paid. In setting appropriate bonus parameters the Committee refers to market practice. Bonus targets for
2007 were based on a combination of EBIT and Backlog targets. The maximum performance-related bonus
that can be paid is 100% of basic annual salary for the CEO and 80% of basic salary for the COO and FD.
Maximum bonus payments for the year ended 31 December 2007 were paid as all targets were exceeded. 
Performance Share Plan
Following approval at the Extraordinary General Meeting on 11 April 2007, the Company established a
new Performance Share Plan (PSP). This plan was designed to align the interests of shareholders and
directors by means of performance targets. The Committee has responsibility for supervising the scheme
and the grant of awards subject to performance conditions under its terms.
The performance criterion that must be met requires the Company’s earnings per share exceed certain
targets set by the Remuneration Committee over a three year period. Thereafter the option may be exercised
for the remaining part of its five year life without further test. 
The Performance Share Plan rules permit a maximum of 200% of salary to be available for an award in
exceptional circumstances at the discretion of the Committee.
Save As You Earn Share Scheme (SAYE)
The Company also operates an SAYE scheme where options may be granted at up to a 20% discount to
market value at date of grant. The executive directors are not eligible to participate in this scheme.
Pension arrangements
A sum is paid to money purchase (defined contribution) arrangements for the executive directors and life
cover is also provided.
48723 MG Annual Report - Mid  17/4/08  11:42  Page 52 Performance graph
The following graph shows the Company’s performance, measured by total shareholder return, compared
with the performance of the FTSE Mid 250 (excluding investment trusts) Index also measured by total
shareholder return. The graph is based on average monthly data from the first month post IPO from 
1 June 2007 to 31 December 2007.
Wellstream is in the FTSE 250 Index.
Directors’ Contracts
It is the Company’s policy that executive directors should have contracts with an indefinite term providing
for a maximum of one year’s notice by either party. 
Pat Murray, Francisco Gros and Neil Gaskell being all non-executive directors appointed this year are proposed
for election at the Annual General Meeting. Sir Graham Hearne and Nils Stoesser, non-executive directors
retire in accordance with the Articles of Association and being eligible, offer themselves for re-election.
No non-executive director has a service contract. Chris Gill Finance Director, who joined the Company on
7 January 2008 is proposed for election at the Annual General Meeting in May. He has a service contract
which contains one year’s notice period. John Kennedy Chairman has a fixed term three year contract.
In view of the IPO and the requirements of the Articles all directors will resign and submit themselves for
election or re-election at the Annual General Meeting. All of the contracts are available for inspection before
and during the Annual General Meeting.
The details of the executive directors’ contracts are summarised in the table below:
1/6/07 1/7/07 1/8/07 1/9/07 1/10/07 1/11/07 1/12/07 31/12/07
Wellstream
FTSE Mid 250 EXC Investment Trusts
Name of director Date of contract Notice period
John Kennedy 11 April 2007 12 months
Gordon Chapman 11 April 2007 12 months
Chris Braithwaite 11 April 2007 12 months
Andrew Turk 11 April 2007 12 months
Chris Gill 7 January 2008 12 months
300
250
200
150
100
50
0
Wellstream Holdings PLC Annual Report & Accounts 2007 | 53
48723 MG Annual Report - Mid  17/4/08  11:42  Page 53 Non-executive directors
All non-executive directors have specific terms of engagement and their remuneration is determined by the
Board within the limits set by the Articles of Association and based on independent surveys of fees paid to
non-executive directors of similar companies. The basic fee paid to Sir Graham Hearne is £60,000 pa as
the Senior Independent non-executive Director. Each of the other non-executive directors is paid a fee of
£50,000 pa. Marek Gumienny who resigned in March 2007 was paid fees pro-rata at the rate of $30,000 pa.
The non-executive directors receive further fees for additional work performed for the Company in respect
of chairing of the Remuneration Committee, Nomination Committee and Audit Committee. The additional
fees paid during the year were at a rate of £5,000 pa for chairing of a committee. Non-executive
directors cannot participate in any of the Company’s share schemes and are not eligible to join the Company’s
pension scheme. 
Audited information
Aggregate directors’ remuneration
The total amounts for directors’ remuneration were as follows:
2007 2006
££
Emoluments 1,810,236 1,184,854
Compensation for loss of office 230,000 -
Gains on exercise of share options 3,624,616 -
Money purchase pension contributions 90,173 52,517
5,755,025 1,237,371
54 | Directors’ Remuneration Report continued
48723 MG Annual Report - Mid  17/4/08  11:42  Page 54 Directors’ emoluments and compensation
Fees/Basic Benefits Annual Compensation 2007 2006
salary in kind bonuses for loss total total
of office
Name of director £ £ £ £ £ £
Executive
John Kennedy 181,221 - - - 181,221 143,664
Gordon Chapman 295,667 6,308 330,000 - 631,975 434,755
Chris Braithwaite 229,667 2,741 184,000 - 416,408 327,759
Andrew Turk
(1)
201,515 6,864 160,000 230,000 598,379 229,654
Non Executive
Sir Graham Hearne 50,065 - - - 50,065 16,341
Pat Murray 25,000 - - - 25,000 -
Neil Gaskell 55,000 - - - 55,000 -
Nils Stoesser 38,319 - - - 38,319 16,341
Francisco Gros 38,769 - - - 38,769 -
Marek Gumienny 5,100 - - - 5,100 16,341
Aggregate emoluments 1,120,323 15,913 674,000 230,000 2,040,236 1,184,854
Fees to third parties - - - - - -
Note
(1) Andrew Turk was paid compensation for loss of office, being one year’s salary and one third of his
Performance Share Plan award.
Chairman’s award
John Kennedy (Chairman) is paid a fee of £200,000 per annum and is eligible to receive an annual
discretionary allocation of shares over a three year period from the date of Admission. At the discretion of
the Remuneration Committee, he may be awarded each year a number of Wellstream shares calculated
by dividing up to £250,000 by the share price on Admission (£3.20). For each annual award, 80% is
issued to him on or within 30 days of the anniversary of the date of Admission (1 May) of the relevant year.
The remaining 20% of the first and second awards, and all of the third award, are to be issued to him on
or within 30 days of the third anniversary of the date of Admission (1 May 2010) provided he remains in
employment with the Company at that date. If his employment terminates prior to that date, the
Remuneration Committee may determine the amount of deferred allocation to be issued to him, if any.
John Kennedy is not a member of any Wellstream pension scheme.
Sir Graham Hearne received share options pre-Admission over 1,523 A ordinary shares of £1.00 each with
an exercise price of £1.00 each. These options were exercised on Admission and a gain made of £3,624,616.
Wellstream Holdings PLC Annual Report & Accounts 2007 | 55
Name of
Director
Value as at
date of
Admission
No of shares
80% of award
Vesting on
Anniversary 
of Admission
Balance of
award
Vesting date
for balance 
of award
Vesting
criterion
John 
Kennedy
£3.20 per
share
62,500 1 May 2008 15,625 1 May 2010 Remaining in
service at
relevant vesting
date
48723 MG Annual Report - Mid  17/4/08  11:42  Page 55 2007 2006
Gordon Chapman 50,667 20,267
Chris Braithwaite 21,666 19,000
Andrew Turk 17,840 13,250
Total 90,173 52,517
Approval
This report was approved by the Board of Directors on 1 April 2008 and signed on its behalf by:
Francisco Gros
Chairman of the Remuneration Committee
1 April 2008 
Directors’ pension entitlements
The Company paid a contribution to the pension arrangements of the executive directors, Gordon Chapman,
Chris Braithwaite and Andrew Turk as follows:
56 | Directors’ Remuneration Report continued 
Directors’ Performance Share Plan
No of shares Value at date Performance Vesting Lapsed Exercise
30 August 2007 period criteria price
Gordon Chapman 79,327 £5.20 1 Jan 2007 - Exceed - 1p per share
per share 31 Dec 2009 EPS
targets
Chris Braithwaite 44,230 £5.20 1 Jan 2007 - Exceed - 1p per share
per share 31 Dec 2009 EPS
targets
Andrew Turk 38,461 £5.20 1 Jan 2007 - Exceed 25,641 1p per share
per share 31 Dec 2009 EPS
targets
48723 MG Annual Report - Mid  17/4/08  11:42  Page 56 Statement of Directors’ Responsibilities 
The directors are responsible for preparing the
Annual Report and the financial statements. 
Statement of Directors’ Responsibilities 
The directors are responsible for preparing the Annual Report and the financial statements. The directors
are required to prepare financial statements for the Group in accordance with International Financial
Reporting Standards (IFRS) and have also elected to prepare financial statements for the Company in
accordance with IFRS. Company law requires the directors to prepare such financial statements in
accordance with IFRS, the Companies Act 1985 and Article 4 of the IAS Regulation.
International Accounting Standard 1 requires that financial statements present fairly for each financial year
the Company’s financial position, financial performance and cash flows. This requires the faithful
representation of the effects of transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities, income and expenses set out in the International
Accounting Standards Board’s “Framework for the preparation and Presentation of Financial Statements”.
In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable
International Financial Reporting Standards. Directors are also required to:
 properly select and apply accounting policies;
 present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information; and
 provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to
enable users to understand the impact of particular transactions, other events and conditions on the
entity’s financial position and financial performance.
The directors are responsible for keeping proper accounting records which disclose with reasonable
accuracy at any time the financial position of the Company, for safeguarding the assets, for taking
reasonable steps for the prevention and detection of fraud and other irregularities and for the preparation
of a Directors’ Report and Directors’ Remuneration Report which comply with the requirements of the
Companies Act 1985.
The directors are responsible for the maintenance and integrity of the company website. Legislation in the
United Kingdom governing the preparation and dissemination of financial statements differs from
legislation in other jurisdictions.
Wellstream Holdings PLC Annual Report & Accounts 2007 | 57
48723 MG Annual Report - Mid  17/4/08  11:42  Page 57 58 | Independent auditors’ report to the members of Wellstream Holdings PLC
Independent auditors’ report to the members of Wellstream Holdings PLC
We have audited the group and parent company financial statements (the “financial statements”) of
Wellstream Holdings PLC for the year ended 31 December 2007 which comprise the Group Income
Statement, the Group and Parent Company Statements of Recognised Income and Expense, the Group
and Parent Company Balance Sheets, the Group and Parent Company Cash Flow Statements, and the
related notes 1 to 30. These financial statements have been prepared under the accounting policies set
out therein. We have also audited the information in the Directors’ Remuneration Report that is described
as having been audited.
This report is made solely to the company’s members, as a body, in accordance with section 235 of the
Companies Act 1985. Our audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditors’ report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit work, for this report, or for the opinions
we have formed.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report, the Directors’ Remuneration Report and the
financial statements in accordance with applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union are set out in the Statement of Directors’ Responsibilities.
Our responsibility is to audit the financial statements and the part of the Directors’ Remuneration Report to
be audited in accordance with relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and whether
the financial statements and the part of the Directors’ Remuneration Report to be audited have been
properly prepared in accordance with the Companies Act 1985 and, as regards the group financial
statements, Article 4 of the IAS Regulation. We also report to you whether in our opinion the information
given in the Directors’ Report is consistent with the financial statements. The information given in the
Directors’ Report includes that specific information presented in the Chief Executive’s Review that is cross
referred from the Business Review section of the Directors’ Report.
In addition we report to you if, in our opinion, the company has not kept proper accounting records, if we
have not received all the information and explanations we require for our audit, or if information specified
by law regarding directors’ remuneration and other transactions is not disclosed.
We review whether the Corporate Governance Statement reflects the company’s compliance with the nine
provisions of the 2006 Combined Code specified for our review by the Listing Rules of the Financial
Services Authority, and we report if it does not. We are not required to consider whether the board’s
statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the
group’s corporate governance procedures or its risk and control procedures.
We read the other information contained in the Annual Report as described in the contents section and
consider whether it is consistent with the audited financial statements. We consider the implications for our
report if we become aware of any apparent misstatements or material inconsistencies with the financial
statements. Our responsibilities do not extend to any further information outside the Annual Report.
48723 MG Annual Report - Mid  17/4/08  11:42  Page 58 Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued
by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to
the amounts and disclosures in the financial statements and the part of the Directors’ Remuneration
Report to be audited. It also includes an assessment of the significant estimates and judgments made by
the directors in the preparation of the financial statements, and of whether the accounting policies are
appropriate to the group’s and company’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that
the financial statements and the part of the Directors’ Remuneration Report to be audited are free from
material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we
also evaluated the overall adequacy of the presentation of information in the financial statements and the
part of the Directors’ Remuneration Report to be audited. 
Opinion
In our opinion:
 the group financial statements give a true and fair view, in accordance with IFRSs as adopted by the
European Union, of the state of the group’s affairs as at 31 December 2007 and of its profit for the year
then ended;
 the parent company financial statements give a true and fair view, in accordance with IFRSs as
adopted by the European Union as applied in accordance with the provisions of the Companies Act
1985, of the state of the parent company’s affairs as at 31 December 2007;
 the financial statements and the part of the Directors’ Remuneration Report to be audited have been
properly prepared in accordance with the Companies Act 1985 and, as regards the group financial
statements, Article 4 of the IAS Regulation; and
 the information given in the Directors’ Report is consistent with the financial statements.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors 
Newcastle upon Tyne
1 April 2008
Wellstream Holdings PLC Annual Report & Accounts 2007 | 59
48723 MG Annual Report - Mid  17/4/08  11:42  Page 59 Wellstream Holdings PLC Annual Report & Accounts 2007
60 | Group Income Statement
Group Income Statement
For the year ended 31 December 2007
Notes 2007 2006
£000 £000
Revenue 4,5 266,810 147,221
Cost of sales (187,382) (105,850)
Gross profit 79,428 41,371
Administrative expenses (32,963) (22,763)
Other operating income 1,096 1,237
Operating profit 6,7 47,561 19,845
Foreign exchange gains on financing 8 2,755 17,002
Finance income 9 1,115 402
Finance expenses 10 (9,691) (11,817)
Profit before tax 41,740 25,432
Income tax expense 11 (12,727) (23)
Profit for the year (all attributable to equity holders of the parent) 29,013 25,409
Basic earnings per ordinary share 12 31.8 34.6
Diluted earnings per ordinary share 12 31.6 34.6
All results are derived from continuing operations.
Statements of Recognised Income and Expense
For the year ended 31 December 2007
Group Company
2007 2006 2007 2006
£000 £000 £000 £000
Exchange differences on translation of foreign operations 7,578 (1,887) - -
Net income/(expense) recognised directly in equity 7,578 (1,887) - -
Profit/(loss) for the year 29,013 25,409 (4,133) (21)
Total recognised income/(expense) 
(all attributable to equity holders of the parent) 36,591 23,522 (4,133) (21)
As permitted by Section 230 of the Companies Act 1985, the income statement of the parent Company is not presented
as part of these accounts. The parent Company’s result for the year was a £4,133,000 loss (2006 - £21,000 loss).
48723 MG Annual Report - End  17/4/08  11:37  Page 60 Balance Sheets | 61
Balance Sheets
As at 31 December 2007
Group Company
Notes 2007 2006 2007 2006
£000 £000 £000 £000
Non-current assets
Investments 13 - - 794 1
Goodwill 14 39,107 39,107 - -
Property, plant and equipment 15 59,350 45,298 - -
98,457 84,405 794 1
Current assets
Inventories 16 29,247 15,050 - -   
Trade and other receivables 17 136,307 65,023 67,250 1,001
Cash and cash equivalents 5,904 726 - -   
Derivative financial instruments 22 - 434 - -
171,458 81,233 67,250 1,001
Total assets 269,915 165,638 68,044 1,002
Current liabilities
Trade and other payables 20 (106,728) (51,153) - -   
Current tax liabilities (1,030) (23) - (21)
Interest bearing loans and borrowings 21 (5,148) (25,674) - -
(112,906) (76,850) - (21)
Net current assets 58,552 4,383 67,250 980
Non-current liabilities
Interest bearing loans and borrowings 21 (47,439) (94,261) - -   
Deferred tax liabilities 19 (6,782) - - -   
(54,221) (94,261) - -   
Total liabilities (167,127) (171,111) - (21)
Net assets/(liabilities) 102,788 (5,473) 68,044 981
Shareholders’ equity
Share capital 23,25 996 21 996 21
Share premium account 25 66,697 943 66,697 943
Translation reserve 25 7,351 (227) - -   
Capital redemption reserve 25 30 -   30 -  
Share based payment reserve 25 - -  793 -
Retained earnings/(losses) 25 27,714 (6,210) (472) 17
Total equity/(deficit) 25 102,788 (5,473) 68,044 981
These financial statements were approved by the Board of directors and authorised for issue on 1 April 2008.
Signed on behalf of the Board of directors
Gordon Chapman Chris Gill
Director Director
48723 MG Annual Report - End  17/4/08  11:37  Page 61 62 | Cash Flow Statements
Cash Flow Statements
For the year ended 31 December 2007
Group Company
2007 2006 2007 2006
£000 £000 £000 £000
Profit/(loss) for the year 29,013 25,409 (4,133) (21)
Share based payments 4,467 -  3,674 -  
Depreciation of property, plant and equipment 5,275 4,231 - -  
Gain on disposal of property, plant and equipment (29) (237) - -  
Finance income (1,115) (402) - -  
Finance expenses 9,691 11,817 - -  
Tax 12,727 23 (5) 21  
Foreign exchange gains on financing (2,755) (17,002) - -  
(Increase)/decrease in inventories (13,246) 2,811 - -
Increase in receivables (65,696) (43,898) (66,244) -  
Increase in payables 54,332 17,403 - -  
Cash from operations 32,664 155 (66,708) -
Income taxes paid (4,464) (32) (21) -
Interest received 1,115 402 - -    
Interest paid (4,229) (5,234) - -  
Net cash increase/(decrease) from operating activities 25,086 (4,709) (66,729) -
Investing activities
Purchases of property, plant and equipment (16,744) (14,038) - -  
Proceeds on disposal of property, plant and equipment 38 403 - -  
Net cash used in investing activities (16,706) (13,635) - -  
Financing activities
Gross proceeds of new debt 62,526 9,672 - -  
Repayments of debt (115,304) (6,713) - -  
Net (repayment)/proceeds on new financing (52,778) 2,959 - -   
Proceeds on issue of share capital 75,063 -   75,063 -
Redemption of own shares (30) -   (30) -   
Costs of issuing equity (8,304) -   (8,304) -   
Debt refinancing costs (1,088) (190) - -      
Net cash increase from financing activities 12,863 2,769 66,729 -
Net increase/(decrease) in cash and cash equivalents 21,243 (15,575) - -   
Foreign exchange movements on translation of cash balances 374 2,902 - -   
Cash and cash equivalents at beginning of year (20,861) (8,188) - -
Cash and cash equivalents at end of year 756 (20,861) - -
Cash and cash equivalents and bank overdrafts at end of year comprise:
Cash and cash equivalents 5,904 726 - -   
Bank overdrafts (5,148) (21,587) - -   
756 (20,861) - -   
Wellstream Holdings PLC Annual Report & Accounts 2007
48723 MG Annual Report - End  17/4/08  11:37  Page 62 Accounting Policies
1 General information
Wellstream Holdings PLC (“the Company”) is a Company incorporated in England and Wales under the Companies Act
1985 and is domiciled in the United Kingdom. The Group comprises Wellstream Holdings PLC and its subsidiaries. The
nature of the Group’s operations and its principal activities are set out in note 4 and within the directors’ report.
The Company listed on the London Stock Exchange on 1 May 2007 and there is now a wider spread of investors, and
stakeholders generally. Consequently, the directors have reconsidered the wording of the Group’s accounting policies
in order to provide the most relevant and tailored information to stakeholders. It should be noted that the Group’s
accounting policies are consistent with the prior year, with the exception of the adoption of new and revised standards.
2 Adoption of new and revised standards
In the current year, the Group has adopted IFRS 7 Financial Instruments: Disclosures which is effective for annual
reporting periods beginning on or after 1 January 2007, and the related amendment to IAS 1 Presentation of Financial
Statements. The impact of the adoption of IFRS 7 and the changes to IAS 1 has been to expand the disclosures
provided in these financial statements regarding the Group’s financial instruments and management of capital (see note
22). Four Interpretations issued by the International Financial Reporting Interpretations Committee are effective for the
current period. These are: IFRIC 7 Applying the Restatement Approach under IAS 29, Financial Reporting in
Hyperinflationary Economies; IFRIC 8 Scope of IFRS 2; IFRIC 9 Reassessment of Embedded Derivatives; and IFRIC 10
Interim Financial Reporting and Impairment. The adoption of these Interpretations has not led to any changes in the
Group’s accounting policies.
In addition, the Group has elected to adopt the following in advance of the effective date:
 IFRS 8 Operating Segments (effective for accounting periods beginning on or after 1 January 2009)
 IFRIC 11 IFRS 2: Group and treasury share transactions (effective for accounting periods beginning on or after
1 March 2007)
IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reports about
components of the Group that are regularly reviewed by the Board to allocate resources to the segments and to assess
their performance. In contrast, the predecessor Standard (IAS 14 Segment Reporting) required the Group to identify two
sets of segments (business and geographical), using a risks and rewards approach, with the Group’s system of internal
financial reporting to key management personnel serving only as the starting point for the identification of such
segments. As a result, following the adoption of IFRS 8 Operating Segments, the identification of the Group’s reportable
segments (note 5) has changed.
IFRIC 11 IFRS2: Group and treasury share transactions provides guidance on applying IFRS 2 to Group share based
payment transactions where the parent company grants rights to its equity instruments to employees of its subsidiary.
The guidance requires the subsidiary to measure the services received using the requirements for equity-settled
transactions in IFRS 2, and to recognise a corresponding increase in equity as a contribution from the parent. As this is
the first period in which share based payment transactions have occurred, this has not required a change in
accounting policy.
At the date of authorisation of these financial statements the following standards and interpretations, were in issue but
not yet effective:
 IFRIC 12 Service Concession Arrangements (effective for accounting periods beginning on or after 1 January 2008)
 IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
(effective for accounting periods beginning on or after 1 January 2008)
 IFRS 2 Share Based Payment: Vesting Conditions and Cancellations (effective 1 January 2009)
 IFRS 3 Business Combinations (revised January 2008; effective 1 July 2009)
 IAS 27 Consolidated and Separate Financial Statements (amended January 2008; effective 1 July 2009)
 IFRIC 13 Customer Loyalty Programmes (effective 1 July 2008)
 IAS 23 (Revised) Borrowing Costs (effective for accounting periods beginning on or after 1 January 2009)
Notes to the Accounts | 63
48723 MG Annual Report - End  17/4/08  11:37  Page 63 The directors anticipate that, with the exception of IAS 23 (Revised) Borrowing Costs, the adoption of these standards
and interpretations in future periods will not have a material impact on the financial statements of the Group. IAS 23
(Revised) Borrowing Costs requires that all eligible borrowing costs incurred in respect of qualifying assets are
capitalised as part of the cost of those assets. It is currently Group policy to expense all such borrowing costs as
incurred and therefore the adoption of IAS 23 (Revised) may require a change in accounting policy. However, this
change in accounting policy would not be retrospective and so would not impact on previously reported results. The
impact of this future change in accounting policy on the Group’s financial statements is not reasonably estimable, as the
nature of future borrowings, and the existence of qualifying assets is not yet known. 
3 Significant accounting policies
The consolidated financial information has been prepared under the historical cost convention, except for the
revaluation of certain financial instruments, in accordance with International Financial Reporting Standards (“IFRSs”)
and the Companies Act 1985 as applicable to companies reporting under IFRSs. The financial statements have been
prepared in accordance with IFRSs adopted for use in the European Union and therefore comply with Article 4 of the EU
IAS Regulation.
Basis of consolidation
The consolidated financial information includes the results, cash flows and assets and liabilities of Wellstream Holdings
PLC (the Company) and the enterprises under its control (its subsidiaries). Control is defined as the ability to govern the
financial and operating policies of an investee enterprise so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement
from the effective date of acquisition or up to the effective date of disposal. Adjustments are made, where necessary, to
the financial statements of subsidiaries to bring their accounting policies into line with Group policies. All intra-Group
transactions, balances, income and expenses are eliminated on consolidation.
Jointly controlled entities are those entities over which the Group has joint control established by contractual
agreement. The consolidated financial statements include the Group’s proportionate share of the entities’ assets,
liabilities, income and expenses with items of similar nature on a line by line basis, from the date that joint control
commences, until the date that joint control ceases.
Goodwill
On the acquisition of a business, fair values are attributed to the net assets acquired. Goodwill arises where the fair
value of the consideration given exceeds the fair value of the net assets acquired. Goodwill is recognised as an asset at
cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is reviewed for
impairment at least annually, with impairments being recognised immediately in the income statement. Goodwill is
allocated to cash generating units for the purpose of impairment testing. An impairment loss recognised for goodwill is
not reversed in a subsequent period.
On the disposal of a business, goodwill relating to that business remaining on the balance sheet is included in the
determination of the profit or loss on disposal.
Goodwill arising on acquisitions before the date of transition to IFRSs has been retained at the previous UK GAAP
amounts subject to being tested for impairment at that date. Goodwill written off to reserves under UK GAAP prior to
1998 has not been reinstated and is not included in determining any subsequent profit or loss on disposal.
Property, plant and equipment
Property, plant and equipment is shown at historical cost, net of accumulated depreciation and any provision for
impairment. Depreciation is provided at rates calculated to write off the cost, less estimated residual value, of each asset
on a straight-line basis over its expected useful life as follows:
 Leasehold improvements - between 15 and 30 years
 Freehold buildings - 30 years
 Plant and equipment - between 3 and 15 years  
Freehold land is not depreciated.
Property, plant and equipment is impaired if its recoverable amount falls below its carrying value. Impairment losses are charged
to the income statement immediately. A reversal of an impairment loss is recognised immediately in the income statement.
Wellstream Holdings PLC Annual Report & Accounts 2007
64 | Notes to the Accounts continued
48723 MG Annual Report - End  17/4/08  11:37  Page 64 Assets under construction represent buildings and plant pending installation, and are stated at cost less accumulated
impairment losses. Costs include construction and other directly attributable costs. No provision for depreciation is
made until such time when the assets are completed and ready for use. 
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where
applicable, direct labour costs and overheads that have been incurred in bringing the inventories to their current
location and condition. Cost is calculated using the average cost method. Net realisable value represents the estimated
selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. 
Cash and cash equivalents
Cash and cash equivalents comprise cash-in-hand and bank overdrafts, where there is right of offset. Bank overdrafts
are presented as current liabilities to the extent that there is no right of offset with cash balances. 
The directors have reconsidered the classification of interest received within the cash flow statement. As a result interest
received is now classified within operating activities as it represents interest received on operational working capital. As
a result of this change in accounting policy, the comparatives have been restated accordingly.
Operating profit
Operating profit is stated before exchange gains on financing, finance income and finance expenses.
Recognition of revenue and costs under construction contracts
The Group follows the generally accepted practice of accounting for construction contracts. Under this method, revenue
and costs are recognised according to the stage of completion reached in the contract by reference to the extent to
which obligations identified at the commencement of the contract are considered to have been met. These obligations
may be contractual or non-contractual. Variations in contract work and incentive payments are included to the extent
that they have been formally agreed with the customer.
Profit is only recognised where the outcome of a contract can be reliably estimated. Typically, for pipe manufacture
contracts, this means that profit is recognised on a stage of completion basis. For installation contracts, profit is
recognised in accordance with the risk profile of the contract as assessed by management. The pattern of revenue
recognition for installation contracts will depend on individual contract circumstances and terms. 
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent
that it is probable that contract costs incurred will be recovered. Contract costs are recognised as expenses in the
period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the
expected loss is recognised as an expense immediately.
Recognition of revenue other than under construction contracts
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for
goods and services provided in the normal course of business, net of trade discounts, VAT and other sales related
taxes. With the exception of goods sold under construction contracts, sales of goods are recognised when goods are
delivered and title has passed.
Research and development
Expenditure on research activities is charged as an expense in the period in which it is incurred. Development costs
which are expected to generate probable future economic benefits are capitalised in accordance with IAS 38 Intangible
Assets and amortised on a straight-line basis over their useful economic lives. All other development expenditure is
charged to the income statement.
Borrowing costs
Borrowing costs are recognised as an expense in the period in which they are incurred.
Government grants
Government grants are recognised as income over the periods necessary to match them with the related costs.
Leasing
Operating lease rentals are charged to the income statement on a straight line basis over the term of the lease.
Taxation
The charge for taxation is based on the result for the year and takes into account current and deferred taxation. The
charge is recognised in the income statement except to the extent that it relates to items recognised in equity, in which
case it is recognised in equity.
Notes to the Accounts continued | 65
48723 MG Annual Report - End  17/4/08  11:37  Page 65 The current tax charge is based on the taxable profit for the year. Taxable profit differs from profit as reported in the
income statement because it excludes items of income or expenses that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible.  
Deferred taxation is provided for all temporary differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases. The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that the related tax benefit will be realised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
Retirement benefits
The Group operates a defined contribution scheme for eligible employees. The pension costs are charged to the
income statement as they become payable. The assets of the scheme are held separately from those of the Group in
independently administered funds. The amount charged against profits represents the contributions payable to the
schemes in respect of the accounting period.
Foreign currencies
The financial statements for each of the Group’s subsidiaries are prepared using their functional currency. The functional
currency is the currency of the primary economic environment in which an entity operates.   
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s
functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the
transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the balance sheet date.
On consolidation, assets and liabilities of overseas subsidiaries and associates are translated into sterling at the market
rates ruling at the balance sheet date. Trading results are translated at the average rates for the period. Exchange
differences arising on the consolidation of the investment in overseas subsidiaries and joint ventures, together with
those on foreign currency loans accounted for as net investment hedges, are taken to equity.
On the disposal of a business, the cumulative exchange differences previously recognised in the foreign currency
translation reserve relating to that business are transferred to the income statement as part of the gain or loss on disposal.
Financial guarantee contract liabilities
Financial guarantee contract liabilities are measured initially at their fair values and are subsequently measured at the
higher of:
 the amount of the obligation under the contract, as determined in accordance with IAS 37 Provisions, Contingent
Liabilities and Contingent Assets; and
 the amount initially recognised less, where appropriate, cumulative amortisation recognised in accordance with the
revenue recognition policies set out above.
Financial instruments 
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party
to the contractual provisions of the instrument.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an
active market are classified as loans and receivables. Loans and receivables are measured at amortised cost, using the
effective interest method, less any impairment. Finance income is recognised by applying the effective interest rate,
except for short-term receivables when the recognition of interest would be immaterial.
Wellstream Holdings PLC Annual Report & Accounts 2007
66 | Notes to the Accounts continued
48723 MG Annual Report - End  17/4/08  11:37  Page 66 Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance
charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an
accruals basis to the income statement using the effective interest method and are added to the carrying amount of the
instrument to the extent that they are not settled in the period in which they arise.
Trade payables
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost.
Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Derivative financial instruments and hedge accounting
The Group’s activities expose it to the financial risks of changes in foreign currency exchange rates and interest rates.
The Group uses derivative financial instruments, principally foreign currency and interest rate swaps and caps, to
reduce its exposure to exchange rate and interest rate movements. The Group does not enter into derivatives for
speculative or trading purposes. The use of financial derivatives is governed by the Group’s policies approved by the
Board of directors.
Under IFRSs, derivative financial instruments are recognised as assets and liabilities measured at their fair values at the
balance sheet date. The Group has chosen not to use hedge accounting to date and therefore changes in the fair value
of any derivative instruments are recognised in the income statement as they arise.
Share based payments 
In accordance with IFRS 2 Share Based Payments, the fair value of equity settled share options granted is recognised
as an employee expense with a corresponding increase in equity.
The fair value is measured at the date of grant and the charge is only amended if vesting does not take place due to
non-market conditions not being met. The fair value determined at the grant date of the equity-settled share based
payments is expensed over the vesting period, based on the Group’s estimate of awards that will eventually vest. Fair
value is measured using the Black-Scholes option pricing model.
With respect to share based payments, a deferred tax asset is recognised on the relevant tax base. The tax base is then
compared to the cumulative share based payment expense recognised in the income statement. Deferred tax arising on
the excess of the tax base over the cumulative share based payment expense recognised in the income statement has
been recognised directly in equity outside the SORIE as share based payments are considered to be transactions with
shareholders. 
Where the Company grants options over its own shares to the employees of its subsidiaries it recognises, in its own
financial statements, an increase in the cost of investment in its subsidiaries equivalent to the equity based payment
charge recognised in the consolidated financial statements with the corresponding credit being recognised in equity.
Key estimates and judgements in applying the Group’s accounting policies
Management considers the key estimates and judgements made in the financial statements to be as follows:
 Recognition of revenue and costs under construction contracts
Revenue and costs under construction contracts are recognised by reference to the stage of completion of the contract
activity at the balance sheet date, where the outcome of the contract can be estimated reliably. Stage of completion is
determined by reference to the extent to which obligations identified at the commencement of the contract are
considered to have been met. Where the outcome of a construction contract cannot be estimated reliably, contract
revenue is recognised to the extent that it is probable that contract costs incurred will be recovered.
The determination of whether the outcome of the contract can be estimated reliably, the stage of completion of contract
activity and the probability that contract costs incurred will be recovered can be inherently difficult to estimate and
require management judgement. The amounts recognised in the income statement in respect of construction contracts
are regularly reviewed in light of the most current information available.
 Share based payments
Share based payment charges are calculated based upon the fair value of equity settled options granted to employees
of the Group. The fair value is calculated using the Black-Scholes option pricing model. These calculations require the
use of estimates (note 24).
Notes to the Accounts continued | 67
48723 MG Annual Report - End  17/4/08  11:37  Page 67 Notes to the Accounts
4 Revenue
An analysis of the Group’s revenue is as follows:
2007 2006
£000 £000
Revenue from construction contracts 255,637 139,438
Revenue from the sale of other product 11,173 7,783
266,810 147,221
Other operating income 1,096 1,237
Finance income (see note 9) 1,115 402
269,021 148,860
5 Operating segments
Operating segments
The Group has adopted IFRS 8 Operating Segments in advance of its effective date, with effect from 1 January 2007.
IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that
are regularly reviewed by the Board to allocate resources to the segments and to assess their performance. In contrast,
the predecessor Standard (IAS 14 Segment Reporting) required the Group to identify two sets of segments (business
and geographical), using a risks and rewards approach, with the Group’s system of internal financial reporting to key
management personnel serving only as the starting point for the identification of such segments. As a result, following
the adoption of IFRS 8, the identification of the Group’s reportable segments has changed.
The Group’s reportable segments under IFRS 8 Operating Segments are therefore as follows:
Offshore - The design, production and installation of flexible unbonded pipelines for use in the offshore oil and gas industry.
Onshore - The design and production of flexible unbonded pipelines for use in the onshore oil and gas industry.
Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable segment in 2007:
Consolidated
Onshore Offshore year ended
2007 2007 2007
£000 £000 £000
Revenue
External sales 11,173 255,637 266,810
Result
EBITDA (217) 53,053 52,836
Depreciation (5,275)
Operating profit 47,561
68 | Notes to the Accounts continued
Wellstream Holdings PLC Annual Report & Accounts 2007
48723 MG Annual Report - End  17/4/08  11:37  Page 68 Notes to the Accounts continued | 69
5 Operating segments (continued)
The following is an analysis of the Group’s revenue and results by reportable segment in 2006:
Consolidated
Onshore Offshore year ended
2006 2006 2006
£000 £000 £000
Revenue
External sales 7,783 139,438 147,221 
Result
EBITDA (3,342) 27,418 24,076 
Depreciation (4,231)
Operating profit 19,845 
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 3.
Figures reported to the Board, as presented above, are based on the financial information used to produce the entity’s
financial statements.
Segment assets
2007 2006
£000 £000
Onshore 10,689 7,704 
Offshore 259,226 157,934
Segment assets 269,915 165,638
Unallocated assets - -
Consolidated assets 269,915 165,638
For the purposes of monitoring segment performance and allocating resources between segments, the Board monitors
the tangible, intangible and financial assets attributable to each segment. Inter-segmental funding has been excluded
from the segment assets disclosure. Goodwill has been allocated entirely to the Offshore segment. Assets used jointly
by reportable segments are allocated on the basis of the revenues earned by individual reportable segments.
Segment liabilities 2007 2006
£000 £000
Onshore 1,704 1,341 
Offshore 158,641 169,770 
Segment liabilities 160,345 171,111
Deferred tax liabilities 6,782 - 
Consolidated liabilities 167,127 171,111
For the purposes of monitoring segment performance and allocating resources between segments, the Board monitors
the external liabilities attributable to each segment, and therefore inter-segmental funding is excluded from the segment
liabilities disclosure.
48723 MG Annual Report - End  17/4/08  11:37  Page 69 5 Operating segments (continued)
Geographic information
Revenue from external customers:
2007 2006
£000 £000
UK 3,894 15,458 
Rest of world 262,916 131,763
266,810 147,221
Included in revenues from external customers derived from outside of the UK is £216,692,000 (2006 - £80,017,000)
derived from customers in Brazil and £24,671,000 (2006 - £1,571,000) derived from customers in the USA.
Non-current assets by location (excluding goodwill):
2007 2006
£000 £000
UK 36,522 32,728 
Rest of world 22,828 12,570
59,350 45,298
Included in non-current assets located outside of the UK is £19,950,000 (2006 - £11,540,000) at net book value of assets
located in Brazil.
Information about major customers
Included in offshore revenues is an amount of £136,999,000 (2006 - £76,346,000) arising from sales to the Group's
largest customer, and an amount of £72,521,000 (2006 - £nil) to the Group's second largest customer.
6 Operating profit
Operating profit for the year has been arrived at after charging / (crediting):
2007 2006
£000 £000
Net foreign exchange gains (2,257) (325)
Research and development 3,187 2,321
Depreciation of property, plant and equipment 5,275 4,231
Gain on disposal of fixed assets (29) (237)
Inventory impairment 505 439
Write back of credit balances (261) (1,456)
Cost of inventories (raw materials) 137,898 77,207
Staff costs (all) 39,978 25,174
Net foreign exchange gains on trading items represent the effect of movements in exchange rates on foreign currency
denominated working capital and other trading items during the year.
The write back of credit balances represents a reduction of £261,000 (2006 - £1,456,000) in accruals against warranty
and other claims which in the view of the directors are no longer required.
Wellstream Holdings PLC Annual Report & Accounts 2007
70 | Notes to the Accounts continued
48723 MG Annual Report - End  17/4/08  11:37  Page 70 Notes to the Accounts continued | 71
6 Operating profit (continued) 
An analysis of amounts payable by the Group to the Company’s auditors, Deloitte & Touche LLP , and their associates is
provided below:
2007 2006
£000 £000
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts 65 20
Fees payable to the Company’s auditor and their associates for other services:
The audit of the Company’s subsidiaries, pursuant to legislation 70 66
Total audit fees 135 86
Other services pursuant to legislation 37 -
Tax services 158 129
Remuneration services 170 42
Corporate finance services 1,050 500
Other services - 20
Total non-audit fees 1,415 691
1,550 777
Fees payable to Deloitte & Touche LLP and their associates for non-audit services to the Company are not required to
be disclosed because the consolidated financial statements are required to disclose such fees on a consolidated basis.
7 Staff costs
Group Company
2007 2006 2007 2006
£000 £000 £000 £000
Staff costs during the year (including directors)
Wages and salaries 30,867 21,726 - -
Social security costs 3,870 2,476 465 -
Other pension costs 774 972 - -
Share based payments 4,467 - 3,674 -
39,978 25,174 4,139 -
The share based payment expense of £4,467,000 is net of employer’s National Insurance contributions and consists of
£3,624,000 relating to the granting of share options to Sir Graham Hearne on 19 March 2007, £793,000 relating to the
Group’s employee share schemes, and £50,000 in relation to the exercise of warrants. 
Social security costs include National Insurance payable in relation to share based payment expenses in addition to
Employer’s National Insurance contributions on wages and salaries.
48723 MG Annual Report - End  17/4/08  11:37  Page 71 7 Staff costs (continued)
Group Company
2007 2006 2007 2006
No. No. No. No.
Average number of persons employed
Administration 235 166 - -
Sales 21 27 - -
Manufacturing 562 486 - -
818 679 - -
Details of directors’ remuneration are given in the Directors’ Remuneration Report on pages 51 to 56.
8 Foreign exchange gains on financing
2007 2006
£000 £000
Foreign exchange gains on financial liabilities held at amortised cost 2,755 17,002
Exchange gains on financing reflects the change in value of the US dollar denominated bank debt and deep discount bonds.
9 Finance income
2007 2006
£000 £000
Interest income on loans and receivables
Interest on bank deposits 1,115 402
10 Finance expenses 2007 2006
£000 £000
Interest expense on financial liabilities held at amortised cost
Interest on bank overdrafts and loans 4,650 5,531
Accretion of discount of deep discount bonds 1,783 5,451
Amortisation of arrangement fees 344 677
6,777 11,659
Write off of arrangement fees on extinguishing of related debt 2,718 -
Bank charges 224 268
Fair value gains on interest rate swaps (28) (110)
9,691 11,817
Deep discount bonds, bank loans, and overdrafts were fully repaid during the year and replaced with new facilities.
Arrangement fees relating to those facilities repaid were expensed during the year.
During the year the Group made net losses of £6,740,000 (2006 - £5,343,000 gain) on financial liabilities held at
amortised cost.
Wellstream Holdings PLC Annual Report & Accounts 2007
72 | Notes to the Accounts continued
48723 MG Annual Report - End  17/4/08  11:37  Page 72 Notes to the Accounts continued | 73
11 Income tax expense 
2007 2006
£000 £000
Current tax
Current tax charge 5,273 23
Adjustments in respect of prior years 198 -
5,471 23
Deferred tax
Origination and reversal of temporary differences 7,441 -
Adjustments in respect of prior years (185) -
7,256 -
Total income tax in the income statement 12,727 23
UK corporation tax is calculated at 30% of the estimated assessable profit/(loss) for the year. 
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
2007 2007 2006 2006
% £000 % £000
Reconciliation of effective tax rate
Profit before tax 41,740 25,432
Tax calculated at UK corporation tax rate  30.00% 12,522 30.00% 7,630
Non deductible expenses 0.58% 242 0.95% 242
Research and development tax relief -0.56% (236) --
Effect on deferred tax balances due to change in
income tax rate from 30% to 28% -0.97% (403) --
Effect of higher tax rates in overseas jurisdictions 1.63% 682 --
Effect of utilisation of tax losses and 
tax offset not recognised -0.22% (93) -30.86% (7,849)
Adjustments in respect of prior years 0.03% 13 --
Effective tax rate and income tax expense for the year 30.49% 12,727 0.09% 23
Income Deferred Total Total
Tax T ax
2007 2007 2007 2006
£000 £000 £000 £000
Tax recognised directly in equity
Relating to share based payments - 474 474 -
The UK Government has announced its intention to phase out and withdraw from 2011 capital allowances on qualifying
buildings and that the necessary legislation will be enacted in the forthcoming Finance Act. This proposal, when
enacted, will lead to an increase in the deferred tax provision required for accelerated tax depreciation in the region of
£1,500,000 and will give rise to a one off deferred tax charge for this amount in the year ending 31 December 2008.
48723 MG Annual Report - End  17/4/08  11:37  Page 73 12 Earnings per share
Basic earnings per ordinary share is calculated by dividing earnings by the weighted average number of ordinary shares
in issue during the year. 
Diluted earnings per ordinary share uses the same figure as the basic calculation except that the weighted average
number of shares has been adjusted to reflect the dilutive effect of the outstanding share options allocated under
employee share schemes where the market value exceeds the option price. It is assumed that all dilutive potential
ordinary shares are converted at the beginning of the accounting period. Diluted earnings per ordinary share is
calculated by dividing earnings by the diluted average number of ordinary shares.
Reconciliations of the earnings and the weighted average number of shares used in the calculations are outlined below:
Basic and diluted earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings Weighted Earnings Weighted 
average number average number
of ordinary shares of ordinary shares
2007 2007 2006 2006
£000 No. £000 No.
For basic earnings per share 29,013 91,291,391 25,409 73,500,000 
Options and awards - 538,546 -   - 
For diluted earnings per share 29,013 91,829,937 25,409 73,500,000
Basic earnings per share (p) 31.8 34.6
Diluted earnings per share (p) 31.6 34.6
Adjusted diluted earnings per share
2007 2006
Adjusted earnings (£000) 31,828 8,407
Diluted weighted average number of shares 91,829,937 73,500,000 
Adjusted diluted earnings per share (p) 34.7 11.4 
Adjusted EPS is discussed further in the Financial Review on pages 30 to 33.
All ordinary shares had the same entitlement to share in profit for all periods presented. The weighted average number
of ordinary shares outstanding for all periods presented has been adjusted for certain bonus issues and
redesignations described in note 23 that have changed the number of ordinary shares outstanding without a
corresponding change in resources.
All redeemable non-voting shares were issued and redeemed during the period and hence no separate earnings per
share figure has been presented. At 1 January 2006 the Company had 2,000 warrants in issue for contingently issuable
shares, and on 19 March 2007 it granted options for contingently issuable shares as described in note 23. These are
both excluded from the calculation of diluted earnings per share in 2006 as the related conditions were not met until
1 May 2007 at which date the shares were issued.
The difference between the weighted average number of ordinary shares for the purposes of basic and diluted earnings
per share is due to the dilutive effect of the Company’s Performance Share Plan, Save As You Earn scheme and
Chairman’s award.
Wellstream Holdings PLC Annual Report & Accounts 2007
74 | Notes to the Accounts continued
48723 MG Annual Report - End  17/4/08  11:37  Page 74 Notes to the Accounts continued | 75
13 Investments in subsidiaries and jointly controlled entities
Group
Subsidiary undertakings
The principal subsidiary undertakings of the Wellstream Group and the Company are summarised below:
Country of Activity Proportion of 
incorporation ordinary shares
held
Wellstream Finance Limited Great Britain Dormant 100%
Wellstream International Limited* Great Britain Sales and manufacturing 100%
Wellstream do Brazil Industria e Servicos Ltda* Brazil Sales and manufacturing 100%
Wellstream Canada Limited* Canada Sales and installation 100%
Wellstream Australia Pty Limited* Australia Sales 100%
Wellstream (Trustee) Limited* Great Britain Trustee to employee benefit trust 100%
*Investments held indirectly
Jointly controlled entity
Country of incorporation Percentage of shares owned
directly by Wellstream Australia Pty Ltd
Seastream JV Australia Pty Limited Australia 50%
Aggregated amounts relating to share of jointly controlled entity
2007
£000
Non-current assets 159
Current assets 3,611
Current liabilities (3,717)
Non-current liabilities -
Net assets 53
Income 854
Expenses (801)
Wellstream Holdings PLC has put in place a joint and several guarantee of financial support, limited to the Group’s share
of Seastream Australia Pty Limited’s liabilities, should the company find itself unable to pay liabilities as they fall due.
Company
Subsidiary undertakings
2007 2006
£000 £000
Cost
At 1 January 1 1 
Additions (note 7) 793 - 
At 31 December 794 1
48723 MG Annual Report - End  17/4/08  11:37  Page 75 14 Goodwill
Group 2007 2006
£000 £000
Cost and net book value at 1 January and 31 December 39,107 39,107 
Accumulated amortisation is £nil at 1 January 2007 and 31 December 2007.
Existing goodwill relates entirely to the initial purchase of the offshore business and has been allocated to that
business, which is considered to be a single cash generating unit. Upon further acquisitions goodwill acquired in a
business will be allocated to the cash generating units that expect to benefit from that business acquired.
The basis on which the recoverable amount has been determined is the value in use. 
The Group calculates the value in use of each cash generating unit by applying an appropriate discount rate based
on the Group’s borrowing profile, which was 10% at 31 December 2007. This discount rate is applied to the pre-tax
cash flows within the latest approved forecast and this is compared to the carrying value of its net assets in order to
test for impairment. No impairment of goodwill is evident for the year ended 31 December 2007.
15 Property, plant and equipment
Assets in the Leasehold Freehold land Plant and Total
course of improvements and buildings equipment
construction
£000 £000 £000 £000 £000
Cost 
At 1 January 2006 -   144 15,570 30,837 46,551
Additions 12,573 -   177 1,288 14,038
Exchange differences (254) (13) -   (814) (1,081)
Disposals -   -   -   (216) (216)
At 1 January 2007 12,319 131 15,747 31,095 59,292
Additions 2,225 232 191 14,09616,744
Transfers (12,319) -   -   12,319 -   
Exchange differences -   20 -   2,684 2,704
Disposals -   (26) -   (25) (51)
At 31 December 2007 2,225 357 15,938 60,169 78,689
Depreciation
At 1 January 2006 -   33 1,706 8,208 9,947
Charge for year -   23 602 3,606 4,231
Exchange differences -   (4) -   (129) (133)
Eliminated on disposals -   -   -   (51) (51)
At 1 January 2007 -   52 2,308 11,634 13,994 
Charge for year -   48 623 4,604 5,275
Exchange differences -   2 -   110 112
Eliminated on disposals -   (21) -   (21) (42)
At 31 December 2007 -   81 2,931 16,327 19,339
Net book value
At 31 December 2007 2,225 276 13,007 43,842 59,350
At 31 December 2006 12,319 79 13,439 19,461 45,298
The Company holds no property, plant or equipment.
Wellstream Holdings PLC Annual Report & Accounts 2007
76 | Notes to the Accounts continued
48723 MG Annual Report - End  17/4/08  11:37  Page 76 Notes to the Accounts continued | 77
16 Inventories
2007 2006
£000 £000
Raw materials 22,049 7,944
Work in progress 4,449 5,138
Finished goods 2,749 1,968
29,247 15,050
17 Trade and other receivables
Group 2007 2006
£000 £000
Trade receivables 81,970 15,962
Impairment provision - (102)
81,970 15,860
Amounts due from contract customers (note 18) 32,600 40,257
Prepayments 5,804 4,063
Other receivables 15,933 4,843
136,307 65,023
2007 2006
£000 £000
Movement in allowance for doubtful debts
Balance at the beginning of the period 102 -   
Impairment losses recognised - 102
Amounts recovered in the year (102) -   
- 102
2007 2006
£000 £000
Ageing of past due but not impaired receivables
1-30 days past due 4,924 9,182   
31-90 days past due 1,447 922
91 days and more 541 99   
6,912 10,203
The Group has not provided for these as they are considered recoverable.
Company 2007 2006
£000 £000
Amounts due from subsidiary undertaking 67,245 1,001
Corporation tax receivable 5 -   
67,250 1,001
The above amount of £67,245,000 is owed by Wellstream International Limited to Wellstream Holdings PLC and is non-
interest bearing with no fixed repayment terms.
The directors consider that the carrying amount of trade and other receivables approximates their fair value.
Trade and other receivables are predominantly non-interest bearing.
48723 MG Annual Report - End  17/4/08  11:37  Page 77 18 Construction contracts in progress at the balance sheet date
Group 2007 2006
£000 £000
Amounts due from contract customers included in trade and other receivables (note 17) 32,600 40,257
Amounts due to contract customers included in trade and other payables (note 20) (57,314) (29,981)
(24,714) 10,276
Contract costs incurred plus recognised profits less recognised losses to date 83,646 83,373
Less progress billings (108,360) (73,097)
(24,714) 10,276
At 31 December 2007 retentions held by customers for contract work amounted to £3,573,000 (2006 - £972,000).
Retentions held by customers for contract work are due for settlement after more than one year; all other trade
receivables arising from construction contracts are all due for settlement within one year.
19 Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and the movements thereon
during the current and prior reporting periods:
Accelerated tax Share based Goodwill Other timing Tax Total
depreciation payments differences losses
£000 £000 £000 £000 £000 £000
At 1 January 2006 2,128 -   854 97 (3,079) -   
Charge/(credit) to income 296 -   489 (97) (688) -   
At 31 December 2006 2,424 -   1,343 -   (3,767) -   
Charge/(credit) to income 85 (222) 367 3,259 3,767 7,256
Credit to equity -   (474) -   -   -   (474)
At 31 December 2007 2,509 (696) 1,710 3,259 -   6,782
At the balance sheet date the aggregate amount of temporary differences associated with foreign exchange translation
differences arising from overseas subsidiary companies for which deferred tax liabilities have not been recognised is
£7,351,000 (2006 - temporary differences of £227,000 in respect of which a deferred tax asset was not recognised). No
liability has been recognised in respect of these differences because the Group is in a position to control the reversal of
the temporary differences and it is probable that such differences will not reverse in the foreseeable future.
20 Trade and other payables
Group 2007 2006
£000 £000
Trade payables 16,778 10,642
Accruals and deferred income 25,704 9,647
Amounts due to contract customers (note 18) 57,314 29,981
Other tax and social security 764 883
Other payables 6,168 -
106,728 51,153
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. 
The average credit period taken for credit purchases is 45 days (2006 - 50 days).
The directors consider that the carrying amount of trade and other payables approximates their fair value.
Wellstream Holdings PLC Annual Report & Accounts 2007
78 | Notes to the Accounts continued
48723 MG Annual Report - End  17/4/08  11:37  Page 78 Notes to the Accounts continued | 79
21 Interest bearing loans and borrowings
The carrying value and fair value of the Group’s short-term and long-term borrowings are as follows:
Group Company
Current liabilities 2007 2006 2007 2006
£000 £000 £000 £000
Secured borrowings held at amortised cost
Bank loans - 4,087 - -   
Bank overdrafts 5,148 21,587 - -
5,148 25,674 - -
Group Company
Non-current liabilities 2007 2006 2007 2006
£000 £000 £000 £000
Secured borrowings held at amortised cost
Bank loans 44,000 40,975 - -   
Less: Unamortised costs (961) (1,653) - -   
43,039 39,322 - -   
Rio State Government loan 4,400 -   - -
Deep discount bonds - 56,212 - -   
Less: Unamortised costs - (1,273) - -   
- 54,939 - -   
47,439 94,261 - -      
Analysis of repayments
Group
2007 2006
£000 £000
Bank overdrafts
Within one year 5,148 21,587   
Bank loans
Within one year - 4,087 
In the second year - 4,087 
In third to fifth years 31,500 22,481 
After five years 12,500 14,407 
44,000 45,062 
Less: amounts due within one year - (4,087)
Less: unamortised costs (961) (1,653)
Amount due after more than one year 43,039 39,322
48723 MG Annual Report - End  17/4/08  11:37  Page 79 21 Interest bearing loans and borrowings (continued)
Group
2007 2006
£000 £000
Rio State Government loan
In third to fifth years 1,137 -   
After five years 3,263 -   
4,400 -   
Group
2007 2006
£000 £000
Deep discount bonds
After five years - 56,212
Less unamortised cost - (1,273)
- 54,939 
With respect to interest bearing borrowings, fair value approximates to book value:
Fair Value
2007 2006
Group £000 £000
Bank overdrafts 5,148 21,587
Bank loans 43,039 43,409
Rio State Government Loan 4,400 -   
Deep discount bonds - 53,106
52,587 118,102
Principal features of the Group’s borrowings are as follows:
Bank Loans and overdraft
On 1 May 2007 the Group completed a refinancing of all its long term US Dollar denominated debt with an £85,000,000
Revolving Credit Facility. The facility will reduce to £nil over a six year period from 1 May 2007 to 1 May 2013, with
staged reductions in the size of the facility occurring six monthly from 1 November 2008. 
Although the overdraft forms part of the revolving credit facility, this element is repayable on demand. Such a demand
for repayment would result in a corresponding increase in the level of long term borrowings available, subject to the
staged reductions in the overall size of the facility. 
Interest on drawn funds is charged at a margin of between 1.00% and 2.25% above LIBOR, by reference to the Group’s
capital  structure. The average effective interest rate for the year was 7.56% in respect of term borrowings, and 7.08% in
respect of overdrafts. 
Borrowings under the Revolving Credit Facility are secured by fixed and floating charges over the net assets of
Wellstream International Limited and a share pledge over that portion of Wellstream do Brazil Industrial e Servicos Ltda
that is not secured under the Rio State Government loan (see below). 
At 31 December 2007 the Group had available £26,027,000 (2006 - £nil) of undrawn committed borrowing facilities.
Rio State Government loan
This facility is provided by the State Government of Rio de Janeiro and has a maximum value of £21,280,000. The loan
is drawn down progressively on a monthly basis. The value of the monthly draw down is calculated as the lesser of 9%
of gross monthly revenue or 70% of the ICMS tax payable on sales in the month. 
Interest on the Rio State Government loan is charged at 6.0%. The average effective interest rate for the year was 6.0%. 
Borrowings under the Rio State Government loan are secured by fixed and floating charges over certain items of plant
and equipment with a carrying value of £4,368,000.
Wellstream Holdings PLC Annual Report & Accounts 2007
80 | Notes to the Accounts continued
48723 MG Annual Report - End  17/4/08  11:37  Page 80 Notes to the Accounts continued | 81
22 Financial instruments
Group
Categories of financial instruments:
2007 2006
£000 £000
Financial Assets
Fair value through profit or loss (FVPL) - 434
Loans and receivables 96,858 19,069
Financial Liabilities
Amortised cost 158,551 170,205
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the
Group consists of debt, which includes the borrowings disclosed in note 21, cash and cash equivalents and equity
attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in note 25.
Financial risk management objectives
The Board monitors and manages the financial risks relating to the operations of the Group. These risks include market
risk, credit risk and liquidity risk. 
Where appropriate, the Group seeks to minimise the effects of these risks by using derivative financial instruments to
hedge these risk exposures. The use of financial derivatives is approved by the Finance Director and any such financial
derivatives are reported to the Board of directors. The Group does not enter into or trade financial instruments, including
derivative financial instruments, for speculative purposes. 
Market risk 
The Group’s activities expose its financial instruments to risks of changes in foreign currency exchange rates and
interest rates. 
Foreign currency risk management
The Group undertakes the bulk of its business in Sterling or in the local currency of its overseas operations. Trade
carried out in any other currency is by exception and as such any exposure to transactional currency risk can be easily
identified. In such circumstances natural hedges are first sought and if significant residual exposure exists, it is hedged
using derivative financial instruments. There were no such contracts in existence at the year end.
The Group has significant foreign currency denominated monetary assets and monetary liabilities by virtue of its
overseas operations. At the reporting date they were as follows:
Liabilities Assets
2007 2006 2007 2006
£000 £000 £000 £000
Brazilian Real 15,108 2,981 59,127 2,112 
US Dollar 6,481 128,695 13,423 27,213 
48723 MG Annual Report - End  17/4/08  11:37  Page 81 22 Financial instruments (continued)
Foreign currency sensitivity analysis
The Group is mainly exposed to the Brazilian Real and US Dollar.
The following table details the Group’s sensitivity to a 10% increase and decrease in Sterling against the relevant foreign
currencies, being management’s reasonable assessment of the possible change in foreign exchange rates. The
sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation
at the period end for a 10% change in foreign currency rates.  
A positive number below indicates an increase in profit or equity where Sterling strengthens 10% against the relevant
currency. For a 10% weakening of Sterling against the relevant currency, there would be an equal and opposite impact
on the profit and other equity, and the balances below would be negative. 
Real impact US Dollar impact
2007 2006 2007 2006
£000 £000 £000 £000
Recognised in equity (15,597) 363 (1,382) 19,862
The Group’s sensitivity to changes in the value of Sterling against the US Dollar has decreased during the current
period mainly due to the settling of US dollar denominated debt. The increase in the scale of operations in Brazil during
the year has increased the Group's exposure to changes in the value of the Brazilian Real.
Foreign exchange gains and losses on foreign currency denominated monetary items arise primarily on consolidation
and therefore are shown as recognised in equity in the table above.
Interest rate risk management and sensitivity analysis
The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates.
At the period end fixed interest rate loans represented 90% of total borrowings and were for periods of less than three
months.
The Group had no interest rate swaps at the year end.
If interest rates had been 0.5% higher/lower and all other variables were held constant, the Group’s profit for the year
ended 31 December 2007 would decrease/increase by £298,000 (2006: decrease/ increase by £297,000).  
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group contracts all of its significant business in such a way that it receives regular stage payments from its
customers that are appropriate to the stage of completion of the contract. This payment profile is approved by senior
management in advance of accepting the contract and is monitored subsequent to acceptance at regular intervals.
This approach and the Group’s customer profile which consists largely of national and international oil companies with
well established and substantial credit histories, significantly mitigates the risk of financial loss from default.
At 31 December 2007 and 31 December 2006 there was credit risk associated with the concentration of the offshore
business into a number of large contracts with a limited number of customers and counterparties. Information about
these major customers and their geographic profile is included in note 5. No significant unrecovered receivables have
arisen as a result of this risk.
The directors consider that the carrying amount of trade and other receivables approximates their fair value. Trade and
other receivables are predominantly non-interest bearing.
The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses,
represents the Group’s maximum exposure to credit risk without taking account of the value of collateral obtained.
Wellstream Holdings PLC Annual Report & Accounts 2007
82 | Notes to the Accounts continued
48723 MG Annual Report - End  17/4/08  11:37  Page 82 Notes to the Accounts continued | 83
22 Financial instruments (continued)
Liquidity risk management 
The Group was contractually obliged to make repayments of principal and payments of interest at 31 December as
detailed below:
Within one 1-2 years 2-5 years More than Total
year or on 5 years
demand
£000 £000 £000 £000 £000
2007
Bank overdrafts 5,512 -   -   -   5,512
Bank borrowings* 3,142 3,142 39,198 12,798 58,280
Rio State Government loan 196 196 1,724 3,850 5,966
8,850 3,338 40,922 16,648 69,758
Within one 1-2 years 2-5 years More than Total
year or on 5 years
demand
£000 £000 £000 £000 £000
2006
Bank overdrafts 23,115 -   -   -   23,115 
Bank borrowings 7,077 6,754 29,206 17,249 60,286 
Deep discount bonds -   -   -   100,481 100,481 
30,192 6,754 29,206 117,730 183,882 
*
With respect to bank borrowings under the revolving credit facility, the timing of repayments assumes capital is repaid
at the latest possible date, determined by staged reductions in the overall size of the facility. The facility offers the
flexibility of repaying borrowings at one month’s notice.
Ultimate responsibility for liquidity risk management rests with the Board of directors. Liquidity risk arising from the
maturity profile of financial assets is detailed in the credit risk section above.
The Group has access to financing facilities; the total unused amount at the balance sheet date is £31,382,000, being
£26,027,000 of undrawn committed borrowing facilities in the UK and £5,355,000 of cash held overseas. The Group
expects to meet its other obligations from operating cash flows and proceeds of maturing financial assets.
Company 2007 2006
£000 £000
Loans and receivables
Intercompany receivables (note 17) 67,245 1,001
The Company has no financial assets or liabilities other than the intercompany balance with Wellstream International Limited.
Where applicable the Company complies with Group policies and risk management procedures as outlined above.
48723 MG Annual Report - End  17/4/08  11:37  Page 83 23 Share capital
Authorised Authorised Issued Issued
No. £ No. £
A Ordinary shares of £1.00 each
At 1 January 2006 and 1 January 2007 27,263 27,263 20,000 20,000
Exercise of warrants - - 2,000 2,000
Exercise of options - - 1,523 1,523
Redesignation as A Ordinary shares of £0.01 each 2,699,037 - 2,328,777 -
Redesignation as Ordinary shares of £0.01 each (2,726,300) (27,263) (2,352,300) (23,523)
At 31 December 2007 - - - -
Preferred Ordinary shares of £0.01 each
At 1 January 2006 and 1 January 2007 78,000 780 78,000 780
Increase in share capital 7,722,000 77,220 - -
99 for 1 bonus issue - - 7,722,000 77,220
Redesignation as Ordinary shares of £0.01 each (7,800,000) (78,000) (7,800,000) (78,000)
At 31 December 2007 - - - -
Ordinary shares of £0.01 each
At 1 January 2006 and 1 January 2007 - - - -
Redesignation of A Ordinary and 
Preferred Ordinary shares 10,526,300 105,263 10,152,300 101,523
Increase in share capital 139,473,700 1,394,737 - -
6.5 for 1 bonus issue - - 65,989,950 659,900
Issue of shares - - 23,437,500 234,375
At 31 December 2007 150,000,000 1,500,000 99,579,750 995,798
Redeemable non-voting shares of £1.00 each
At 1 January 2006 and 1 January 2007 - - - -
Increase in share capital 30,000 30,000 - -
Issue of shares - - 30,000 30,000
Redemption and cancellation (30,000) (30,000) (30,000) (30,000)
At 31 December 2007 - - - -
All issued share capital is called-up, allotted and fully paid. 
All changes affecting the Company’s authorised or issued A Ordinary Shares, Preferred Ordinary Shares, and Ordinary
Shares during the period were effective from, and Conditional upon, the Company’s admission to the Official List of the
UKLA which occurred on 1 May 2007.
Redeemable non-voting shares were issued on 27 March 2007 and redeemed at par on 11 June 2007. They carried no
rights to vote or entitlement to dividend but ranked pari passu with Ordinary shares on winding up.
On 8 March 2003 the Company issued 2,000 warrants over its A Ordinary Shares. These warrants could be exercised at
a price of £1 per share within 15 days of any sale, listing, or asset sale of the Company, and all such warrants were
exercised and the resulting shares then issued on 1 May 2007.
The Ordinary Shares, A Ordinary Shares and Preferred Ordinary Shares ranked pari passu except that, as further
defined in the Company’s articles of association, the holders of the Preferred Ordinary Shares were entitled to receive a
Preferred Dividend after a certain date and in certain circumstances the holders of the Preferred Ordinary Shares were
entitled to exercise such multiple of votes which is equal to 95.01 per cent of the Preferred Ordinary Shares and the
A Ordinary Shares taken as a whole.
Share options
At 31 December 2007 the outstanding options to purchase ordinary shares in Wellstream Holdings PLC in accordance
with the terms of the applicable schemes are as detailed in note 24.
Wellstream Holdings PLC Annual Report & Accounts 2007
84 | Notes to the Accounts continued
48723 MG Annual Report - End  17/4/08  11:37  Page 84 Notes to the Accounts continued | 85
24 Share based payments
As at 31 December 2007, the following material share based payment arrangements existed:
Type of arrangement Performance Save As You Earn Save As You Earn Chairman’s Award
Share Plan scheme (5 year) scheme (3 year)
Timing of grant 30-Aug-07 29-May-07 29-May-07 1-May-07
1 year - 62,500
2 year - 62,500
Number of options granted in 2007 479,341 302,353 408,275 3 year - 109,375
1 year - 311
2 year - 301
Fair value per share for 2007 grant (p) 564 137 124 3 year - 293
Method of settlement Equity Equity Equity Equity
Contractual life 3 years 5 years 3 years  1, 2 or 3 years
Vesting conditions See note (i) See note (ii) See note (ii) See note (iii)
Notes:
(i) Options granted by invitation at an exercise price of £0.01. Options are exercisable at the end of a three year
incentive plan, with vesting subject to performance conditions based on aggregate earnings per share over a 3 year
period from 1 January 2007. Participants are not entitled to dividends in the period prior to exercise of the options. 
(ii) Options granted at a 10% discount to the market price at the date of invitation. Options are exercisable at the end of a
three or five year sharesave contract. Participants are not entitled to dividends in the period prior to exercise of the options.
(iii) Where three fair values are given for the Chairman’s award the first relates to an award which may vest in 2008, the
second to an award which may vest in 2009 and the third to an award which may vest in 2010.
Further details on the operation of share based payment arrangements can be found in the Directors’ Remuneration Report.
Details of movements for equity-settled share option schemes during the year ended 31 December 2007 were as follows:
Outstanding at 
start of the year -   -   -   -   
Granted during 
the year 479,341 1 302,353 339 408,275 339 234,375 nil 
Exercised during 
the year -   -   -   -   
Forfeited/Lapsed 
during the year (25,640) - (2,619) -
Outstanding at 
end of year 453,701 1 302,353 339 405,656 339 234,375 nil
Exercisable at 
end of year - - - -
Number of
options
Weighted
average
excercise
price (p) 
Number of
options
Weighted
average
excercise
price (p)
Number of
options
Weighted
average
excercise
price (p)
Number of
shares
Weighted
average
excercise
price (p)
Performance
Share
Plan
Chairman’s
Award
Save As
You Earn
scheme 
(3 year)
Save As
You Earn
scheme 
(5 year)
48723 MG Annual Report - End  17/4/08  11:37  Page 85 24 Share based payments (continued)
Assumptions used in the Black-Scholes models to determine the fair value of share options at grant date were as follows:
Performance Save As You Earn Save As You Earn Chairman’s Award
Share Plan scheme (5 year) scheme (3 year)
Grant date 30-Aug-07 29-May-07 29-May-07 1-May-07
Share price at date of grant (p) 618 423 423 377
Exercise price (p) 1 339 339 nil-cost
Volatility 30.00% 30.00% 30.00% 30.00%
Average expected term to exercise
(minimum months) 36 61 37 12, 24, 36
Date of vesting 30-Aug-10 30-Jun-12 30-Jun-10 1-May-08,
1-May-09
and 1-May-10
Risk free rate (%) 4.50% 4.50% 4.50% 4.50%
Assumed long term dividend yield(%) 3.00% 3.00% 3.00% 3.00%
Shares of the Company became listed for the first time on admission to the London Stock Exchange on 1 May 2007. 
The directors therefore do not consider the Company’s historic share price volatility to be a suitable basis on which to set 
an expectation for the purpose of option valuations. Therefore the expected share price volatility was determined by reference
to historic volatilities in the share prices of a selection of UK companies operating in the same industry as the Group.
The average expected term to exercise used in the models has been adjusted, based on management's best estimate
for the effects of exercise restrictions, behavioural conditions and forfeiture. 
The risk free rate has been determined by reference to yields on UK government gilts.
Prior to IPO share options were issued to Sir Graham Hearne, a non-executive director. These were exercised and
converted into shares at IPO, giving rise to a share based payment expense of £3,624,000 in the year. The weighted
average share price at exercise of these share options was 320p.
25 Statement of changes in equity
Share Capital Share Translation Capital Retained Total
premium reserve redemption earnings
reserve
£000 £000 £000 £000 £000 £000
Group
At 1 January 2006 21 943 1,660 - (31,619) (28,995)
Profit for the year - - - - 25,409 25,409
Exchange difference on translation
of overseas operations - - (1,887) - - (1,887)
At 1 January 2007 21 943 (227) - (6,210) (5,473)
Profit for the year - - - - 29,013 29,013
Bonus issues 737 (737) - - - -
Issue of share capital 264 74,766 - - - 75,030
Write off of expenses on new issue - (8,304) - - - (8,304)
Redemption of own shares (30) - - 30 (30) (30)
Share options exercised 2 29 - - 3,624 3,655
Exercise of warrants 2 - - - 50 52
Exchange difference on translation
of overseas operations - - 7,578 - - 7,578
Charge in relation to share options
and tax thereon - - - - 1,267 1,267
At 31 December 2007 996 66,697 7,351 30 27,714 102,788
Wellstream Holdings PLC Annual Report & Accounts 2007
86 | Notes to the Accounts continued
48723 MG Annual Report - End  17/4/08  11:37  Page 86 Notes to the Accounts continued | 87
25 Statement of changes in equity (continued)
Share Share Capital Share based Retained Total
Capital premium redemption payment earnings
reserve reserve
£000 £000 £000 £000 £000 £000
Company
At 1 January 2006 21 943 - - 38 1,002
Loss for the year - - - - (21) (21)
At 1 January 2007 21 943 - - 17 981
Loss for the year - - - - (4,133) (4,133)
Share based payment charge - IFRIC 8 - - - 793 - 793
Bonus issues 737 (737) - - - -
Issue of share capital 264 74,766 - - - 75,030
Write off of expenses on new issue - (8,304) - - - (8,304)
Redemption of own shares (30) - 30 - (30) (30)
Share options exercised 2 29 - - 3,624 3,655
Exercise of warrants 2 - - - 50 52
At 31 December 2007 996 66,697 30 793 (472) 68,044
26 Commitments
Group
Operating lease commitments
The Group has entered into commercial leases on certain properties, motor vehicles and items of machinery. The leases
have various terms, escalation clauses, purchase options and renewal rights.
Lease commitments include a property lease incepted on 1 January 2006. This lease relates to the factory in Brazil, for
which there is an initial lease term of 10 years, which may be extended for a further 10 years at the Group’s option with a
revised rental based on the prevailing market value. The terms of the lease include a base rental, included in the table
below, and a contingent element to be calculated by reference to Group revenue.
Future minimum lease payments under non-cancellable operating leases comprise:
2007 2006
£000 £000
Within one year 7,279 3,154 
In the second to fifth years inclusive 23,359 11,240 
After five years 18,131 11,464
48,769 25,858
Capital and other financial commitments
2007 2006
£000 £000
Contracts placed for future capital expenditure not provided in the financial statements 6,024 6,000
Purchase commitments - -
6,024 6,000
Company
The commitments of the Company were £nil (2006 - £nil).
48723 MG Annual Report - End  17/4/08  11:37  Page 87 27 Contingent liabilities
At 31 December 2007 the Group had granted guarantees and performance bonds to third parties totalling £10,374,000
(2006 - £4,676,000). Of this total £8,404,000 (2006 - £nil) was in respect of Seastream Australia Pty Limited, the jointly
controlled entity in which the Group has a 50% holding.
Performance bonds are entered into in the normal course of operations and require the Group to make payments to
third parties in the event that the Group does not satisfy its obligations under the terms of any related contracts.
The Group has put in place a joint and several guarantee of financial support, limited to the Group’s share of Seastream
Australia Pty Limited’s liabilities, should the jointly controlled entity find itself unable to pay liabilities as they fall due. 
The Company is liable, jointly and severally with other members of the Group under guarantees given to the Group’s
bankers in respect of overdrawn balances on certain Group bank accounts and in respect of other overdrafts, loans and
guarantees given by the banks to or on behalf of other Group undertakings. At 31 December 2007 there were bank
overdrafts of £5,148,000 (2006 - £21,587,000) and loans of £48,400,000 (2006 - £101,274,000).
28 Pension costs
Contributions are made to personal money purchase pension plans for eligible employees.
The pension charge for the directors for the year was £90,000 (2006 - £53,000). The charge for the personal pension
plans for all other employees was £684,000 (2006 - £919,000).
29 Ultimate parent company and controlling party
As at 31 December 2006 the majority shareholders in Wellstream Holdings PLC, and hence the Company’s ultimate
controlling party were Candover Partners Limited and its associates (“Candover”), who together controlled 79.59%
(2005: 79.59%; 2004: 81.67%) of the allotted share capital of the Company. 
Candover was also the sole holder of the deep discount bonds disclosed within note 21. The amount due to
bondholders at 31 December 2007 was £nil (2006 - £56,212,000) and the amount of interest accruing during the year
was £1,783,000 (2006 - £5,451,000).
On 5 April 2007 the Company was re-registered as Wellstream Holdings PLC. In April 2007 Wellstream Holdings PLC
issued a Prospectus for the Global Offer of new shares and some existing shares in the Company. The result was that
Wellstream Holdings PLC became listed on the London Stock Exchange on 1 May 2007. Upon this flotation, Candover
Partners Limited ceased to be deemed the ultimate controlling party of the Company.
At 31 December 2007 there is no controlling party.
30 Related party transactions
Group
Transactions between fellow subsidiaries which are related parties have been eliminated on consolidation and are
not disclosed.
Transactions with key management personnel
The directors believe that the Board of directors is the Group’s key management personnel as defined by IAS 24
“Related party transactions”. Compensation paid to the Company’s Board of directors is disclosed in the Directors’
Remuneration Report. 
During the year ended 31 December 2007, and since, neither any director nor any other executive officer, nor any
associate of any director or any other executive officer, was indebted to the Group.
During the year the Group incurred a share based payment charge of £4,042,000 (2006 - £nil) in respect of share
options granted to key management personnel.
Other than as disclosed above, the Group has not been, and is not now, a party to any material transaction, or
proposed transactions, in which any member of the key management personnel (including directors, any spouse or
relative of the directors, or any relative of such spouse), had or was to have a direct or indirect material interest.
Wellstream Holdings PLC Annual Report & Accounts 2007
88 | Notes to the Accounts continued
48723 MG Annual Report - End  17/4/08  11:37  Page 88 Notes to the Accounts continued | 89
30 Related party transactions (continued)
Transactions with Candover, the Group’s former ultimate controlling party
The deep discount bonds disclosed in note 21 were all held by Candover. Other transactions between the Company
and Candover are set out below:
2007 2006 2007 2006
£000 £000 £000 £000
Directors’ fees 43 38 - -
2007 2006
£000 £000
Transactions with jointly controlled entity
Amounts invoiced to and owed by jointly controlled
entity in respect of corporate administration fees: 687 -
Group guarantees in respect of the jointly controlled entity are disclosed in note 27.
Company 2007 2006
£000 £000
Amounts due from subsidiary undertaking 67,245 1,001
During the year the Company made cash advances of £66,244,000 (2006 - £nil) to Wellstream International Limited.
During the year the Company incurred a share based payment charge of £3,624,000 (2006 - £nil) in respect of share
options granted to Sir Graham Hearne, a non-executive director.
Goods and services
provided
Amounts owing from
related party
48723 MG Annual Report - End  17/4/08  11:37  Page 89 90 | Historical Results
Historical Results
IFRS
2007 2006 2005 2004
£000 £000 £000 £000
Income statement
Revenue 266,810 147,221 90,109 50,069
Operating profit/(loss) 47,561 19,845 5,354 (9,735)
Foreign exchange gains/(losses) on financing 2,755 17,002 (14,258) 6,010
Finance income 1,115 402 1 2
Finance expenses (9,691) (11,817) (10,551) (7,993)
Profit/(loss) before tax 41,740 25,432 (19,454) (11,716)
Tax (12,727) (23) (289) (229)
Profit/(loss) for the year (all attributable 29,013 25,409 (19,743) (11,945)
to equity holders of the parent)
Balance sheet
Assets
Non-current assets 98,457 84,405 75,711 77,358
Current assets 171,458 81,233 55,356 23,326
Liabilities
Current liabilities (112,906) (76,850) (61,736) (25,404)
Non-current liabilities (54,221) (94,261) (98,326) (85,648)
Net assets/(liabilities) 102,788 (5,473) (28,995) (10,368)
Equity
Total equity/(deficit) 102,788 (5,473) (28,995) (10,368)
The amounts disclosed above relate to the year ended 31 December 2004 and subsequent years. Earlier years were
reported under UK GAAP and it is not practical to restate amounts to International Financial Reporting Standards (IFRSs)
for periods prior to the date of transition to IFRSs. 
48723 MG Annual Report - End  17/4/08  11:37  Page 90 Payment of dividends
As stated in the Prospectus there will no payment
of a dividend for 2007.
Officers and Advisers
Company Secretary & Registered Office
Rob Lamb
Wellstream Holdings PLC
Wellstream House, Wincomblee Road
Walker Riverside, Newcastle upon Tyne
NE6 3PF , UK
Tel: +44 (0)191 295 9000
Company Number 4601199 
Auditors
Deloitte & Touche LLP
Gainsborough House
34-40 Grey Street
Newcastle upon Tyne
NE1 6AE
Tel: +44 (0)191 261 4111 
Investor Relations Manager
Jason Nunn
Wellstream Holdings PLC
Bennet House, 54 St James Street
London, SW1A 1JT , UK
Tel: +44 (0)20 7318 1986 
Legal Advisors to the Company
Clifford Chance LLP
10 Upper Bank Street, Canary Wharf
London, E14 5JJ
Tel: +44 (0)20 7006 1000 
Registrar
Equiniti
Aspect House
Spencer Road
Lancing, BN99 6DA
Tel: +44 (0)871 384 2030 
Corporate and Financial PR
Tulchan Communications
6th Floor, Kildare House, 3 Dorset Rise
London, EC4Y 8EN
Tel: +44 (0)20 7353 4200 
Brokers
Credit Suisse
One Cabot Square
Canary Wharf
London, E14 4QJ
Tel: +44 (0)20 7888 8888 
Annual General Meeting 19 May 2008 
Interim results to be announced around end of August 2008.
Website www.wellstream.com
Our shares are traded under the London Stock Exchange ticker WSM. All announcements and press
releases are listed on our website under investor relations.
The Company’s share register is open to the public by law. If you receive unsolicited mail you can limit
what you receive by registering with the Mailing Preference Society Freepost 22 London W1E 7EZ.
Shareholder information
Shareholder information | 91
48723 MG Annual Report - End  17/4/08  11:37  Page 91 92 | Glossary
Glossary
Continuous Improvement Programme -
Wellstream’s programme to improve efficiency
and production at its manufacturing facilities
Deepwater - Water depths greater than 
500 metres
EBITDA - Earnings before interest, tax,
depreciation and amortisation
E&P - Exploration and production
Flexbarrier - Polymer fluid barrier layer of flexible
offshore pipe
FlexSteel™ - A specially designed flexible pipe
for use in onshore applications
Flowlines - Static pipelines used to carry fluids
on the sea bed
Fluid transfer lines - Large diameter dynamic
pipelines often hanging in a large “U” bend in the
water column connecting to two structures which
are often dynamic
FPSO - Floating Production, Storage and
Offloading; a converted or custom-built ship-
shaped floater, employed to process oil and gas
for temporary storage of oil prior to transhipment
HSE - Health, Safety and Environmental
HSEQ - Health, Safety, Environmental and Quality
ID - Internal diameter
ISO 14001 - A global certification administered
by the International Organisation for Standardisation
confirming low environmental impact
ISO 9001 - A global certification administered by
the International Organisation for Standardisation
confirming efficient and effective production
processes
km - Kilometres
nkm - A normalised km is based on the work
centre hours required to produce a standard
eight inch ID offshore pipe or a standard four
inch ID onshore pipe. A relative time factor is
applied to other pipes, where applicable, to
convert actual production lengths and
composition into normalised km
OHSAS 18001 - An international occupational
health and safety management system
specification
PA12 - A new grade of nylon polymer developed
jointly by Wellstream International Limited and
Degussa, using Degussa’s trademarked product
VESTAMID_ LX9020
Reels - Devices around which lengthy
continuous items such as cables or flexible pipes
are wrapped for transportation or storage
Revenue Backlog - Is the aggregate of revenue
that has not yet been recognised in the accounts
from contracts that have been entered into and
from contracts that the directors are confident will
be entered into
Riser - A pipe or assembly of pipes used to
transfer produced fluids from the seabed to the
surface facilities or to transfer injection fluids,
control fluids or lift gas from the surface facilities
and the seabed. Risers can be flexible or hybrids
of flexible and rigid pipe
48723 MG Annual Report - End  17/4/08  11:37  Page 92 Notice of AGM | 93
Annual General Meeting
to be held at 3pm on 19 May 2008
The Notice of Annual General Meeting of the Company to be held at 3pm on
Monday, 19 May 2008, at Credit Suisse, One Cabot Square, Canary Wharf,
London E14 4QJ, is set out on pages 93 to 100. 
The action to be taken by Shareholders is set out on page 95. 
This Document Is Important And Requires Y our
Immediate Attention. 
If you are in any doubt as to what action you should take, you are recommended
to consult immediately your stockbroker , bank manager , solicitor , accountant or
other independent financial advisor duly authorised under the Financial
Services and Markets Act 2000 if you are resident in the United Kingdom or, if
you reside elsewhere, another appropriately authorised financial advisor .
If you have sold or otherwise transferred all your ordinary shares in Wellstream
Holdings PLC (the “Company”) please forward this document, together with the
accompanying documents to the purchaser or transferee of your ordinary
shares or to the bank, stockbroker or other agent through whom the sale or
transfer was effected, for transmission to the purchaser or transferee.
48723 MG Annual Report - End  17/4/08  11:37  Page 93 94 | Notice of AGM continued
Wellstream Holdings PLC
Wellstream House 
Wincomblee Road 
Walker Riverside 
Newcastle upon Tyne 
NE6 3PF
Tel: +44 (0)191 295 9000
Fax: +44 (0)191 295 9001
Letter from the Chairman
16 April 2008
Dear Shareholder
2008 Annual General Meeting
It is my great pleasure to be writing to you enclosing the Notice convening the first Annual General
Meeting of the Company, to be held at 3pm on Monday, 19 May 2008 at Credit Suisse, One Cabot
Square, Canary Wharf, London E14 4QJ. The Notice details the business to be considered at the meeting
and is set out on pages 96 to 98 of this document. The purpose of this letter is to explain certain elements
of that business to you. A summary of the action to be taken by Shareholders is set out at the end of this
letter, on page 95.
This year, as well as the ordinary business usually dealt with at an Annual General Meeting (“AGM”), there
are four additional items of special business (Resolutions 12 to 15). The ordinary business includes
motions to re-elect individually all of the directors. Under the Company’s Articles of Association, a director
of the Company appointed by the board may only hold office until the next following AGM, unless
reappointed at that AGM. Further, a director appointed more than three years prior to an AGM must also
retire from office at that AGM. Those directors who were appointed by the board in 2007 will be proposed
for election at the AGM (see Resolutions 3 to 6). All the remaining directors were appointed more than three
years prior to the AGM and so will also be proposed for re-election at the AGM (see Resolutions 7 to 10).
Short biographical details of each director appear on pages 34 and 35 of the Annual Report. Having
considered the performance of and contribution made by each of the directors, the board remains
satisfied that the performance of each director continues to be effective and to demonstrate commitment
to the role and, as such, recommends their re-election.
On 8 April 2008, Candover, a major shareholder, sold its shares in the Company, as announced to the
London Stock Exchange. Consequently Nils Stoesser, their representative on the Board, resigned as a
non-executive director on 8 April 2008. Because this was after the date of the Annual Report (1 April) but
before the date of this letter to you, references in the Annual Report do not reflect the fact of the share
sale or Nils Stoesser’s resignation. I would like to thank Nils for his very valuable contribution and support
over the years. We appreciated his counsel and wish him well for the future.
The four additional items of special business for consideration at the AGM, of which resolutions 13, 14 and
15 will be proposed as special resolutions, are explained in this letter:
Resolutions 12 and 13 - directors’ power to allot shares and dis-application of pre-emption rights
Resolution 12 will be proposed to continue the directors’ authority to allot ordinary shares up to an
aggregate nominal amount of £331,900, being slightly under one-third of the Company’s issued ordinary
share capital on 16 April 2008. This authority will expire at the earlier of the end of the next AGM or
20 August 2009, unless renewed at the AGM in 2009. The directors do not intend to exercise the authority,
however they do consider it prudent to maintain the flexibility that this authority provides.
If shares are being issued for cash, the Companies Act 1985 says that they must in the first instance be
offered to existing Shareholders in proportion to their holdings. Resolution 13 will be proposed to
continue the directors’ power to allot new ordinary shares for cash otherwise than in proportion to existing
holdings. In the case of allotments other than for rights issues or other pre-emptive offers, the authority is
limited to shares representing an aggregate nominal amount of £49,789.88, amounting to 5% of the
Company’s issued ordinary share capital. This power will expire at the earlier of the end of the next AGM
or 20 August 2009, unless renewed at the AGM in 2009.
48723 MG Annual Report - End  17/4/08  11:37  Page 94 Notice of AGM continued | 95
Resolution 14 - Power to purchase shares
Resolution 14 will be proposed to enable the Company to purchase in the market up to a maximum of
9,957,975 ordinary shares (representing 10 per cent of the Company’s issued ordinary share capital on
16 April 2008) for cancellation at a minimum price of £0.01 per share and a maximum price of not more
than 5 per cent above the average of the middle market quotations for an ordinary share as derived from
The London Stock Exchange Daily Official List for the five business days immediately preceding the day
on which that ordinary share is purchased. This authority will lapse on the earlier of the end of the next
AGM or 20 August 2009, unless renewed at the AGM in 2009.
The directors would not expect to purchase ordinary shares in the market unless, in the light of market
conditions prevailing at the time, they considered that to do so would enhance earnings per share and
would be in the best interests of Shareholders generally. Further, the directors expect that if any ordinary
shares were to be purchased, such shares would be cancelled. Any purchases made by the Company
will be announced no later than 7.30am on the business day following the transaction.
Resolution 15 - Adoption of new Articles of Association
Resolution 15 will be proposed to adopt new Articles of Association in order to update the Company’s
current Articles of Association primarily to take account of changes in English company law brought
about by the Companies Act 2006. The principal changes introduced in the new Articles of Association
are summarised in the Appendix on pages 99 to 100 of this document. Other changes, which are of a
minor, technical or clarificatory nature and also some more minor changes which merely reflect changes
brought in by the Companies Act 2006 have not been noted in the Appendix. 
Copies of the proposed new Articles of Association (marked to show the proposed amendments) are
available for inspection at the Company’s registered office, Wellstream House, Wincomblee Road, Walker
Riverside, Newcastle upon Tyne, NE6 3PF , and at Clifford Chance LLP , 10 Upper Bank Street, Canary
Wharf, London E14 5JJ, during usual business hours on any weekday (public holidays excluded) from the
date of this notice until the close of the AGM and a copy will also be available for inspection at Credit
Suisse, One Cabot Square, Canary Wharf, London E14 4QJ from 2.45pm on Monday 19 May 2008 until
the end of the meeting.
Action to be taken by Shareholders
Accompanying this document are the Annual Report and Accounts 2007 and a Form of Proxy. 
You are asked to complete and sign the Form of Proxy and return it to the Company’s registrars, Equiniti,
at Aspect House, Spencer Road, Lancing BN99 6ZR by 3pm on Thursday 15 May 2008. 
A map showing how to get to Credit Suisse, One Cabot Square, Canary Wharf, London E14 4QJ has also
been included.
Recommendation
The directors consider that all the resolutions to be proposed at the Annual General Meeting are in
the best interests of the Company and recommend you to vote in favour of them, as the directors
intend to do in respect of their own beneficial holdings.
John W. Kennedy
Chairman
48723 MG Annual Report - End  17/4/08  11:37  Page 95 96 | Notice of AGM continued
NOTICE IS HEREBY GIVEN that the FIRST ANNUAL GENERAL MEETING of the Company will be held at
Credit Suisse, One Cabot Square, Canary Wharf, London E14 4QJ on Monday, 19 May 2008 at 3pm.
Resolutions 13 to 15 will be proposed as Special Resolutions and the remainder as Ordinary Resolutions.
Pursuant to the Company’s Articles of Association, items 1 to 11 are Ordinary Business and items 12 to
15 are deemed Special Business.
Resolution 1
To receive the Company’s annual accounts for the financial year ended 31 December 2007, together with
the Directors’ Report, the Directors’ Remuneration Report and the auditors’ report on those accounts and
on the auditable part of the Directors’ Remuneration Report.
Resolution 2
To reappoint Deloitte & Touche LLP as auditors to hold office from the conclusion of this meeting until the
conclusion of the next general meeting of the Company at which accounts are laid and to authorise the
directors to fix their remuneration. 
Resolution 3
To elect Mr Neil Gaskell as a director of the Company.
Resolution 4
To elect Mr Christopher Gill as a director of the Company.
Resolution 5
To elect Mr Francisco Gros as a director of the Company.
Resolution 6
To elect Mr Patrick Murray as a director of the Company.
Resolution 7
To re-elect Mr Christopher Braithwaite as a director of the Company. 
Resolution 8
To re-elect Mr Gordon Chapman as a director of the Company.
Resolution 9
To re-elect Sir Graham Hearne as a director of the Company.
Resolution 10
To re-elect Mr John Kennedy as a director of the Company.
Resolution 11
To approve the Directors’ Remuneration Report for the financial year ended 31 December 2007.
Resolution 12
THAT in substitution for all existing authorities the directors be generally and unconditionally authorised in
accordance with section 80 of the Companies Act 1985 to exercise all the powers of the Company to allot
relevant securities (within the meaning of that section) up to an aggregate nominal amount of £331,900
for a period expiring on the date of the next Annual General Meeting of the Company after the passing of
this resolution or, if earlier, 20 August 2009, but the Company may before such expiry make an offer or
agreement which would or might require relevant securities to be allotted after expiry of this authority and
the directors may allot relevant securities in pursuance of that offer or agreement as if the authority
conferred by this resolution had not expired.
48723 MG Annual Report - End  17/4/08  11:37  Page 96 Notice of AGM continued | 97
Resolution 13
THAT , in substitution for all existing powers and subject to the passing of resolution 12, the directors be
generally empowered pursuant to section 95 of the Companies Act 1985 (the "Act") to allot equity
securities (within the meaning of section 94(2) of the Act) for cash pursuant to the general authority
conferred by resolution 12 as if section 89(1) of the Act did not apply to the allotment, provided that the
power conferred by this resolution:
(A) will expire on the date of the next Annual General Meeting of the Company after the passing of this
resolution or, if earlier, 20 August 2009, but the Company may before such expiry make an offer or
agreement which would or might require equity securities to be allotted after expiry of this power
and the directors may allot equity securities in pursuance of that offer or agreement as if the power
conferred by this resolution had not expired; and
(B) is limited to:
(i) allotments of equity securities in connection with a rights issue; and
(ii) allotments of equity securities for cash otherwise than pursuant to paragraph (B)(i)
up to an aggregate nominal amount of £49,789.88.
For the purpose of this resolution 13, "rights issue" means an offer of equity securities, open for
acceptance for a period fixed by the directors, to holders of ordinary shares made in proportion (as nearly
as may be) to their respective existing holdings of ordinary shares but subject to the directors having a
right to make such exclusions or other arrangements in connection with the offer as they deem necessary
or expedient: 
(a) to deal with equity securities representing fractional entitlements; and
(b) to deal with legal or practical problems arising in any overseas territory or by virtue of shares being
represented by depositary receipts, the requirements of any regulatory body or stock exchange, or
any other matter whatsoever.
The power conferred on the directors by this resolution 13 shall also apply to a sale of treasury shares,
which is an allotment of equity securities by virtue of section 94(3A) of the Act, but with the omission of
the words “pursuant to the general authority conferred by resolution 12”.
Resolution 14
THAT the Company be generally and unconditionally authorised to make one or more market purchases
(within the meaning of section 163(3) of the Companies Act 1985) of ordinary shares of £0.01 each in the
capital of the Company (“ordinary shares”) provided that:
(a) the maximum aggregate number of ordinary shares authorised to be purchased is 9,957,975
(representing 10 per cent of the issued ordinary share capital);
(b) the minimum price which may be paid for an ordinary share is £0.01;
(c) the maximum price which may be paid for an ordinary share is an amount equal to 105 per cent of
the average of the middle market quotations for an ordinary share as derived from The London
Stock Exchange Daily Official List for the five business days immediately preceding the day on
which that ordinary share is purchased;
(d) this authority expires the date of the next Annual General Meeting of the Company after the
passing of this resolution or, if earlier, 20 August 2009; and
the Company may make a contract to purchase ordinary shares under this authority before the expiry of
the authority which will or may be executed wholly or partly after the expiry of the authority, and may make
a purchase of ordinary shares in pursuance of any such contract.
48723 MG Annual Report - End  17/4/08  11:37  Page 97 98 | Notice of AGM continued
Resolution 15
THAT the form of the Articles of Association produced to the meeting and initialled by the Chairman for
the purposes of identification be and are hereby adopted as the new Articles of Association of the
Company in substitution for and to the exclusion of all existing Articles of Association of the Company.
By order of the Board
Rob Lamb
Company Secretary
16 April 2008
Registered Office:
Wellstream House 
Wincomblee Road 
Walker Riverside
Newcastle upon Tyne 
NE6 3PF
Registered in England and Wales No. 4601199
NOTES
1. A member of the Company is entitled to appoint a proxy to exercise all or any of his rights to attend,
speak and vote at a general meeting of the Company. A member may appoint more than one proxy,
provided that each proxy is appointed to exercise the rights attached to different shares. 
2. A person who is not a member of the Company, but has been nominated by a member of the
Company (the “relevant member”) to enjoy information rights (the “nominated person”), does not
have a right to appoint any proxies under note 1 above. A nominated person may have a right
under an agreement with the relevant member to be appointed or to have somebody else
appointed as a proxy for the meeting. If a nominated person does not have such a right, or has
such a right and does not wish to exercise it, he may have a right under an agreement with the
relevant member to give instructions as to the exercise of voting rights.
3. To be effective, the instrument appointing a proxy and any authority under which it is executed (or
a notarially certified copy of such authority) must be deposited at the Company’s registrars,
Equiniti, at Aspect House, Spencer Road, Lancing BN99 6ZR by 3pm on Saturday 17 May 2008.
A form of proxy is enclosed with this Notice. Delivery or receipt of an appointment of proxy does
not prevent a member attending and voting in person at the meeting. 
4. In accordance with Regulation 41 of the Uncertificated Securities Regulations 2001, only those
members entered on the relevant register of members of the Company as at 6pm on 17 May 2008
shall be entitled to attend or vote at the meeting in respect of the number of shares registered in their
name at that time. Changes to entries on the relevant register of members after 6pm on 17 May 2008
shall be disregarded in determining the rights of any person to attend or vote at the meeting. 
5. The register referred to in note 4 means the issuer register of members and the operator register of
members maintained in accordance with Regulation 20 of the Uncertificated Securities Regulations
2001.
6. Copies of the letters of appointment for the non-executive directors of the Company and a copy of
the Articles of Association of the Company (marked to show the proposed amendments) will be
available for inspection at the Company’s registered office, Wellstream House, Wincomblee Road,
Walker Riverside, Newcastle upon Tyne, NE6 3PF , and at Clifford Chance LLP , 10 Upper Bank
Street, London E14 5JJ, during usual business hours on any weekday (public holidays excluded)
from the date of this Notice until the close of the AGM and will also be available for inspection at
Credit Suisse, One Cabot Square, Canary Wharf, London E14 4QJ from 2.45pm on Monday
19 May 2008 until the end of the meeting.
48723 MG Annual Report - End  17/4/08  11:37  Page 98 Notice of AGM continued | 99
7. At 15 April 2008 (being the last business day prior to the publication of this Notice) the issued
share capital of the Company consists of 99,579,750 ordinary shares, carrying one vote each.
Therefore, the total voting rights in the Company as at 15 April 2008 are 99,579,750. 
8. In order to facilitate voting by corporate representatives at the meeting, arrangements will be put in
place at the meeting so that: (i) if a corporate Shareholder has appointed the Chairman of the
meeting as its corporate representative with instructions to vote on a poll in accordance with the
directions of all of the other corporate representatives for that Shareholder at the meeting, then on
a poll those corporate representatives will give voting directions to the Chairman and the Chairman
will vote (or withhold a vote) as corporate representative in accordance with those directions; and
(ii) if more than one corporate representative for the same corporate Shareholder attends the
meeting but the corporate Shareholder has not appointed the Chairman of the meeting as its
corporate representative, a designated corporate representative will be nominated, from those
corporate representatives who attend, who will vote on a poll and the other corporate
representatives will give voting directions to that designated corporate representative. Corporate
Shareholders are referred to the guidance issued by the Institute of Chartered Secretaries and
Administrators on proxies and corporate representatives (www.icsa.org.uk) for further details of this
procedure. The guidance includes a sample form of representation letter if the Chairman is being
appointed as described in (i) above. 
Appendix
Explanatory Notes on Principal Changes to the Company’s Articles of Association
1. Articles which duplicate statutory provisions
Provisions in the current Articles of Association, which replicate provisions contained in the Companies
Act 2006, are in the main amended to bring them into line with the Companies Act 2006. Certain
examples of such provisions include provisions as to the form of resolutions, the variation of class rights
and provisions regarding the period of notice required to convene general meetings. The main changes
proposed to reflect this approach are detailed below.
2. Form of resolution
The current Articles of Association contain a provision that, where for any purpose an ordinary resolution
is required, a special or extraordinary resolution is also effective. This provision is being amended as the
concept of extraordinary resolutions has not been retained under the Companies Act 2006. 
3. Variation of class rights
The current Articles of Association contain provisions regarding the variation of class rights. The
proceedings and specific quorum requirements for a meeting convened to vary class rights are contained
in the Companies Act 2006. The relevant provisions have therefore been amended in the new Articles of
Association.
4. Convening extraordinary and annual general meetings
The provisions in the current Articles of Association dealing with the convening of general meetings and
the length of notice required to convene general meetings are being amended to conform to new
provisions in the Companies Act 2006. In particular a general meeting to consider a special resolution can
be convened on 14 days’ notice, whereas previously 21 days’ notice was required.
5. Votes of members
Under the Companies Act 2006 proxies are entitled to vote on a show of hands whereas under the current
Articles of Association proxies are only entitled to vote on a poll. The time limits for the appointment or
termination of a proxy appointment have been altered by the Companies Act 2006 so that the articles
cannot provide that they should be received more than 48 hours before the meeting or in the case of a
poll taken more than 48 hours after the meeting, more than 24 hours before the time for the taking of a
poll, with weekends and bank holidays being permitted to be excluded for this purpose. Multiple proxies
may be appointed provided that each proxy is appointed to exercise the rights attached to a different
share held by the Shareholder. Multiple corporate representatives may also be appointed in accordance
with the Companies Act 2006. The new Articles of Association reflect all of these new provisions.
48723 MG Annual Report - End  17/4/08  11:37  Page 99 100 | Notice of AGM
6. Conflicts of interest
The Companies Act 2006 sets out directors’ general duties which largely codify the existing law but with
some changes. Under the Companies Act 2006, from 1 October 2008 a director must avoid a situation
where he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the
Company’s interests. The requirement is very broad and could apply, for example, if a director becomes a
director of another company or a trustee of another organisation. The Companies Act 2006 allows directors
of public companies to authorise conflicts and potential conflicts where appropriate, provided that the
articles of association contain a provision to this effect. The Companies Act 2006 also allows the articles of
association to contain other provisions for dealing with directors’ conflicts of interest to avoid a breach of
duty. The new Articles of Association give the directors authority to approve such situations and to include
other provisions to allow conflicts of interest to be dealt with in a similar way to the current position.
There are safeguards that will apply when directors decide whether to authorise a conflict or potential
conflict. Firstly, only directors who have no interest in the matter being considered will be able to take the
relevant decision and, secondly, in taking the decision the directors must act in a way they consider, in
good faith, will be most likely to promote the Company’s success. The directors will be able to impose
limits or conditions when giving authorisation if they think this is appropriate.
It is also proposed that the new Articles of Association should contain provisions relating to confidential
information, attendance at board meetings and availability of board papers to protect a director being in
breach of duty if a conflict of interest or potential conflict of interest arises. These provisions will only apply
where the position giving rise to the potential conflict has previously been authorised by the directors.
It is the Board’s intention to report annually on the Company’s procedures for ensuring that the Board’s
powers to authorise conflicts are operated effectively.
7. Directors’ indemnities and loans to fund expenditure
The Companies Act 2006 has in some areas widened the scope of the powers of a company to indemnify
directors and to fund expenditure incurred in connection with certain actions against directors. In addition,
the existing exemption allowing a company to provide money for the purpose of funding a directors’
defence in court proceedings now expressly covers regulatory proceedings and applies to associated
companies.
8. General
Generally the opportunity has been taken to bring clearer language into the new Articles of Association
and in some areas to conform the language of the new Articles of Association.
48723 MG Annual Report - End  17/4/08  11:37  Page 100