Final Results
Hunting PLC
03 March 2005
3 March 2005
Preliminary results
For the year ended 31 December 2004
Hunting PLC, the international energy services Company, today announces its
preliminary results for the year ended 31 December 2004.
• Turnover £1,255m (2003: £1,195m) +5%
• Adjusted operating profit £30.8m* (2003: £25.2m)
(Statutory operating profit £27.0m (2003: £25.2m)) +22%
• Adjusted pre-tax profit £25.2m* (2003: £21.1m)
(Statutory pre-tax profit £15.4m (2003: £21.1m)) +19%
• Adjusted basic earnings per share 12.7p per share* (2003: 6.4p)
(Statutory basic earnings per share 6.2p (2003: 6.4p)) +98%
• Ordinary dividend per share 4.5p (2003: 3.5p) +29%
* before exceptional items
Commenting on the outlook for the Group, Dennis Proctor, Hunting's Chief
Executive, said:
'The industry is forecasting 2005 to be the busiest year for drilling since
1985.
'The limiting factors in meeting these forecasts may be the availability of
certain equipment and labour. In general, the increase in global spending will
be approximately 5%, with many independent operators expanding their exploration
and production budgets far above that. As we begin 2005, oil inventories remain
tight and some experts question how much excess capacity remains in the major
oil producing countries to help meet continued demand growth. Natural gas
continues to be a primary driver for increased drilling as 50% depletion rates
after one year are more common. Internationally, the world demand for natural
resources is expected to continue and sustain the recent price levels.
'The Company's recent performance trend, coupled with the positive outlook from
our customer base, should provide excellent opportunities for our assets,
shareholders and staff in 2005.'
Cont/...2
For further information, please contact:
Hunting PLC 020 7321 0123
Dennis Proctor, Chief Executive
Dennis Clark, Finance Director
Hogarth Partnership Limited 020 7357 9477
Andrew Jaques
Edward Westropp
Notes to Editors:
Hunting PLC is an international oil services company providing support solutions
to the world's largest oil and gas companies.
Chairman's Statement
Profit before taxation for the year to 31 December 2004 was £25.2m, prior to
exceptional items of £9.8m, (2003 - £21.1m) a 19% increase.
Confidence in the energy industries we serve increased during the course of
2004, resulting in a long-delayed improvement in exploration and development
drilling to address the worldwide production challenge.
However, the continuing weakness of the US dollar relative to sterling, our
reporting currency, reduced what would otherwise have been an even more
satisfactory result.
Hunting Energy Services, the Group's engineering operation providing
sophisticated goods for the hydrocarbon drilling and production sector,
benefited from another year of high commodity prices - with oil and gas
companies increasing their expenditure, particularly in the second half.
There was strong activity onshore in the United States, especially in the Rocky
Mountain region, but offshore drilling in the Gulf of Mexico remained flat. Our
North Sea customer base proved to be substantially more active than we had
expected at the start of the year.
Gibson Energy, the Group's Canadian based midstream operation, had another
successful year following our purchase of the outstanding 36% minority in the
company. Oil purchasing, transportation, blending, storage and marketing were
all very busy and the Canwest Propane subsidiary, Canada's second largest
distributor of that gas, expanded its operations in British Columbia.
Our US-based exploration and production company, Tenkay Resources, was affected
by delays in new production coming on stream and by the unusually severe
hurricane season in the Gulf of Mexico but succeeded in increasing its reserve
base once again. The E.A. Gibson Shipbrokers operation continued its strong
contribution, benefiting from high tanker and dry cargo rates.
In August we cancelled and repaid the 8.25% cumulative convertible preference
shares in order to improve the Group's capital structure and returns to
shareholders. I am pleased to report that basic earnings per share (before
exceptional items) were 12.7p, an increase of 98% on 2003. We are recommending a
final dividend of 3.0p per share, giving a total of 4.5p for the year, a 29%
increase on the previous year.
Our confidence for 2005 and future years is strengthened by these results and,
barring unforeseen events, I expect continued progress.
The Board wishes to thank our staff for their outstanding contribution to our
success.
Richard Hunting
Chairman
Chief Executive's Review
Introduction
Additional supply capacity of oil and gas has clearly become the focus of the
upstream and midstream industries we serve. Rig activity continues to climb as
many operators saw their reserve replacement in 2004 fall to 75% of production
following historical levels of 100% or better. Hunting benefited in 2004 from
sustained higher commodity prices and increased spending by our customers.
Positive signs exist in all markets we serve and we expect the trend experienced
in 2004 to continue. The reserve replacement shortfall combined with limited
worldwide excess oil production capacity of 2% or less sets the stage for
continued increases in drilling, exploration, production and transportation.
In conjunction with an improvement in profits, the Company reduced its long term
debt including the convertible preference shares by 29% and litigation matters
were settled thereby reducing our exposure to future earnings impairment.
Your Company's strategy is reflected in its strong position in four key areas
that management continues to enhance:
1. Proprietary Technology - In Hunting Energy Services, numerous products
are patented including premium connections, burst discs, make up
processes for tubulars, coating of threads and thread protectors.
2. Geographic Position - From Canada to China, Hunting has plants,
properties, equipment and people to serve its global customers with
local talent and products.
3. Market Share Strength - Gibson Truck Transportation, Iberia
Manufacturing, E.A. Gibson Shipbrokers and Tianjin Huaxin Premium
Connections, the China Threading venture, all have leading shares in
their respective product or service markets.
4. Asset Utilisation - In Gibson Energy, the marketing division utilises
pipelines, storage tanks, terminals and truck transportation to obtain
various grades of heavy oil and blend them with diluents to produce a
lighter grade, higher priced crude for sale.
The diversity of the Group's activities and skills enables us to balance
earnings in a cyclical industry while achieving increases in gross margins.
Higher oil and gas prices enabled Tenkay Resources to continue increasing its
reserve base. Greater oil demand, primarily in Southeast Asia and developing
countries, resulted in significantly increased tanker rates thereby providing
excellent results for E.A. Gibson Shipbrokers. With the return to health of the
major telecommunication companies, our drill rod manufacturer in Iberia,
Louisiana saw its output improve 50% year-on-year in 2004. It is expected that
the telecommunication industry will spend billions of dollars for fibre optic
cable installations to residential and commercial consumers.
Drilling activity across Western Canada including conventional, oil sands and
shallow gas sectors is high and only limited by the ability to find sufficient
qualified personnel to fill all the jobs. There were 21,000 wells drilled in
2004 of which 73% were targeted towards gas. Such increased activity offers our
Canadian assets excellent opportunities for continued performance and growth.
Business Developments
In May 2004, the Company sold its under-performing assets of five inch and above
oil country tubular goods for £25.6m. These assets were primarily targeted
toward the deepwater Gulf of Mexico activity that has been depressed over the
last two years and is not expected to experience sustained improvement in the
foreseeable future. In August 2004, the Company cancelled and repaid its 8.25%
convertible preference shares thereby reducing the cost of the Group's debt
financing. Our reported results in sterling suffered from the negative impact of
exchange rate movements, which have understated the profit improvement and the
higher rates of tax in North America compared to the UK.
Health, Safety and the Environment
The Company remains diligent in efforts to continuously improve the health and
safety aspects of its operating divisions. In Gibson Energy, the lost time
incident record was 32% less than the Alberta Provincial average in 2004. Its
truck transportation division has reduced its incident rate by 17% over the last
two years, while operating over 40 million miles per year. Its largest
terminals, Hardisty and Edmonton, handled over 250,000 barrels per day of crude
and achieved a zero lost time incident record in 2004. In Hunting Energy, only
one lost time injury was recorded in its seven manufacturing plants in spite of
increased man-hours and the addition of new employees. In Aberdeen, the facility
was awarded a second consecutive National Safety Award by the British Safety
Council. For the seventh consecutive year, it received the Five Star rating for
safety. No environmental issues occurred and one facility in Houston received
the new ISO 14001 Environmental Management Specification.
Simply put, our goals are - No accidents, No harm to people and No damage to the
environment.
Operational Review
Turnover for the year increased to £1,255m (2003 - £1,195m) with operating
profits before exceptional items of £30.8m compared to £25.2m in 2003. Pre-tax
profit before exceptional items increased to £25.2m from £21.1m in 2003 and
earnings per share before exceptional items increased 98% to 12.7p (2003 -
6.4p).
GIBSON ENERGY
2004 2003
£m £m
Turnover 1,002.9 939.6
Operating Profit 14.7 13.6
Crude oil prices continue to be the driver for higher activity levels in the
Canadian oil and gas industry and this contributed to an 8% increase in
operating profits for Calgary, Alberta based Gibson Energy. Heavy oil, bitumen
and synthetic oil volumes from Northern Alberta and Fort McMurray averaged over
one million barrels per day eclipsing conventional oil as a majority of
Alberta's production volume. This combined with record levels of drilling
activity led to a recovery in truck transportation and excellent marketing
results. Further development of these large non-conventional reserves will
provide many opportunities for the expansion of Gibson's marketing,
transportation and distribution business.
Marketing accounted for 50% of Gibson's operating profits. Good volumes and
favourable margins for crude oil, diluents, trading, custom terminaling and
gains from higher priced inventory were achieved. New volumes of well site
fluids from Moose Jaw, natural gas trading and the Hardisty fractionation plant
generated increased profits over prior years. Despite commodity price volatility
during the year, Gibson's risk management systems minimised the exposure to
large market swings. Expansion began in the fourth quarter of 2004 for
additional storage, terminaling and piping of heavy crude through the Edmonton
corridor. This project will complete by mid-year 2005.
Truck Transportation recorded operating profits of £2.5m versus £1.3m in 2003.
Additional hauling in the Lloydminster area as well as new developments from
Athabasca and Northern frontiers provided an excellent recovery over the prior
year. LPG and propane volumes remained steady but asphalt hauling was below
expectations due to seasonal weather and the high cost of supplies.
Oil and Gas Operations accounted for 33% of Gibson Energy's operating profits
with steady volumes throughout the year. Pipeline volumes for conventional oil
in the Hardisty area declined but were offset by increased tariffs, stabilised
revenues and volume increases from the new Athabasca pipeline connections.
Edmonton terminal volumes from Suncor Fort McMurray steadily increased
throughout the year.
Canwest and Natural Gas Liquids accounted for 11% of Gibson Energy's operating
profits. A new rail terminal was commissioned in November 2004 and the Canwest
branch in Surrey, British Columbia will provide growth opportunities and more
cost efficient distribution.
Trading at Moose Jaw Asphalt remained difficult due to the higher costs of
asphalt feed stock and heavy crude oil. These increased costs resulted in lower
margin asphalt sales to various provincial and regional governments. However,
the division experienced a record year for asphalt and tops volumes. The plant
continues to provide profitable service opportunities for Gibson Truck
Transportation and Marketing.
Robust commodity prices are expected to continue in 2005 and expectations are
for another strong year of activity. Gibson Energy's leadership position in
existing mid-stream assets, people and services should provide excellent
opportunities.
HUNTING ENERGY SERVICES
2004 2003
£m £m
Turnover 159.9 168.6
Operating Profit 8.8 5.4
Houston, Texas based Hunting Energy Services has enjoyed a significant
improvement year over year, driven by higher oil and gas prices as well as rig
activity reaching levels not seen since 1985. Most of the growth in drilling
activity was land based as the offshore Gulf of Mexico rig count recorded its
worst year of activity since 1993, 11% off the 2003 level.
With oil and gas operators reporting record earnings, the momentum for expanding
exploration and production is now being generated. Seismic activity has
progressed, rig rates in some cases have doubled over the past few months and
there is evidence that both long and short-term contracts are being issued. In
May, the company sold its inventory of oil country tubular goods in sizes 5 inch
outside diameter and above but retained its more profitable proprietary products
of 41/2 inch outside diameter and below. The company continues to focus on
proprietary products with market niche opportunities that enable it to be a
leading supplier to its customer base.
Hunting Energy continues to develop new products for complex well applications
both on and offshore. Proprietary connection testing is on going in China for
national oil companies and the Tianjin Huaxin Premium Connections threading
operation remains at full capacity. While the offshore Gulf of Mexico market has
less opportunity for proprietary products, the company continued new
developments in large diameter connections for depths of 25-30,000 feet. During
the year, the company developed the Clear Run product for use on oil country
tubular goods. Clear Run removes the need for environmentally damaging
lubricants and storage compounds from the process of well construction and
greatly improves the speed at which this piping can be deployed.
Manufacturing
The manufacturing division had its best performance since 2001 with turnover
increasing 15% year over year. The manufacturing segment of Hunting Energy is
divided into three product lines:
• Accessory Manufacturing is comprised of those ancillary products
connected to the casing or tubing necessary to complete an oil or gas well.
Customers include the major oil and gas companies as well as Original
Equipment Manufacturers ('OEMs'). These products are often required in a
time sensitive fashion thereby warranting significantly higher gross
margins.
• Drill Rod Manufacturing. Since 2001, the company has provided trenchless
drill rods, similar to that of oil country tubular goods, to the
telecommunication industry. As more and more fibre optic cable is laid in a
trenchless fashion, the demand for drill rod and accessories has increased.
Activity for 2004 was up 60% over 2003 and due to the financial recovery of
the telecommunication industry, expectations are for continued expansion
and improvement in this market.
• Mud Motors. Hunting entered the mud motor business three years ago and
now has 300 motors throughout the Rocky Mountain region, primarily for
natural gas drilling through hard rock. The patented technology within the
motors enables operators to drill a well straighter and/or faster thereby
reducing overall cost. This division will expand into Grand Junction,
Colorado in 2005.
The manufacturing segment of Hunting Energy is the highest gross margin division
due to the requirement for quick deliveries, proprietary product manufacturing
and geographic location. As major OEMs continue to outsource much of their
business, Hunting manufacturing must respond with additional capacity. This
combined with expected increases in drilling activity has justified the
construction of a new threading facility in Houston and a large diameter
accessory facility in Houma, Louisiana.
International
In the North Sea, the transition from major operators to independents took place
throughout the year resulting in a very good performance for the operations in
Aberdeen. Although rig activity is lower, the customer base of Hunting's
facility has grown and with steel prices higher, margins have improved. The
company continues to qualify its products in China for national oil companies
and the Tianjin Huaxin Premium Connections threading operation remains at full
capacity. Discussions are underway to expand this facility as China's energy
demand continues to grow. The Singapore facility also had an excellent year in
2004 with expectations of increased exploration and production activity in the
region. In December 2004, a larger manufacturing plant was acquired to
accommodate this growth.
TENKAY RESOURCES
2004 2003
£m £m
Turnover 8.4 10.4
Operating Profit 3.2 4.3
Tenkay Resources turnover was down 19% from 2003 as a result of various delays
in new wells coming on stream and temporary curtailment of production due to
pipeline and platform damage from the unusually severe hurricanes in the Gulf of
Mexico. However, strong product pricing for oil and natural gas generally
continued throughout the year. Tenkay Resources increased its reserve base once
again and the production increases that were expected in the second half of 2004
are now being realised in the first quarter of 2005. Tenkay Resources
participated in the drilling of 19 wells offshore Louisiana and Texas with 13
successes. On a Net Equivalent Barrel ('NEB') basis, 411,000 bbls were produced
over the twelve month period, and at year end, the reserves of oil and gas on an
SEC basis were 2.3m NEB compared with 2.1m NEB at the end of the previous year.
In addition to new wells, several workovers/recompletions are underway that are
expected to further enhance production in the current year.
E. A. GIBSON SHIPBROKERS
2004 2003
£m £m
Turnover 18.8 14.9
Operating Profit 2.5 1.8
Record freight levels in the Crude and Dry Bulk sectors were mainly responsible
for another very satisfactory year. E. A. Gibson's results, although affected by
the weakness of the US Dollar, were complemented by strong returns from the LPG
Products and Specialist Tankers segments. The performance of the latter was
particularly encouraging and benefited from the acquisition of the specialist
broker BE Moors, completed earlier in the year, giving E. A. Gibson entry into
the chemical and 'veg' oil tanker sectors.
HUNTING ENERGY FRANCE
2004 2003
£m £m
Turnover 12.5 11.4
Operating Profit 1.0 0.7
Operating profit improved by 43% over 2003 with a strong contribution from
Interpec for compressors and pumps and from Larco, which benefited from a change
in the mix of its oil storage products. Roforge successfully introduced a new
range of valves during the year but was adversely affected by raw material price
increases.
OTHER
2004 2003
£m £m
Turnover 52.6 50.5
Operating Profit 0.6 (0.6)
Field Aviation
Field Aviation Canada had an excellent year in 2004 with operating profits
increasing by 87%.
In 2004 Field Aviation confirmed its position as a world leader in the
modification of aircraft for Special Missions by being chosen to provide three
new maritime patrol aircraft to the Swedish Coast Guard. The new aircraft will
be delivered to Field's Toronto facility in 2006 and modified with specialised
equipment to enforce immigration, customs, pollution and fishing regulations as
well as performing search and rescue missions. Other customers for these types
of modifications include Australia, Denmark and the US Department of Homeland
Security.
Parts manufacturing continues to do well in the niche markets it has
established. Commercial Aviation showed some improvement in the year but
continues to suffer from the ongoing difficulties of oversupply and low pricing
plaguing the airline industry.
Hunting Specialised Products
Sales increased over the previous year but not sufficiently for the company to
break into profit. During 2004 the Custom Packaging operation was closed and
operations relocated to one site in the USA (Cincinnati) and one in the UK
(Widnes). Opportunities in pipeline rehabilitation offer an exciting future and
during the year the company was awarded a development contract with Transco plc.
The company also successfully completed several above ground linings with its
polymer application system.
Aero Sekur
Italian defence budget cuts adversely impacted both cash flow and the acceptance
testing of manufactured goods in the second half of the year. However, the
company was awarded six new R&D contracts by the Ministry of Defence and there
is increased customer interest in its technological capability.
Outlook
The industry is forecasting 2005 to be the busiest year for drilling since 1985
and expecting the limiting factors on activity to come from the availability of
certain equipment and labour. In general, the increase in global spending is
expected to be approximately 5%, with many independent operators expanding their
exploration and production budgets far above that.
As we begin 2005, oil inventories remain tight and some experts question how
much excess capacity remains in the major oil producing countries to help meet
continued demand growth. Natural gas continues to be the primary driver for
increased drilling as 50% depletion rates after one year are more common.
Internationally, the world demand for natural resources is expected to continue
and sustain the recent price levels. The Company's recent performance trend,
coupled with the positive outlook from our customer base, should provide
excellent opportunities for our assets, shareholders and staff in 2005.
Dennis Proctor
Chief Executive
Finance Director's Review
2004 saw a significant increase in the activities and profitability of Hunting
Energy Services and with an improved return from most other areas of the Group,
operating profit before exceptional charges increased by 22% over 2003. Net
interest payable including interest on the £47.9m cumulative convertible
preference shares which were cancelled and repaid on 6 August 2004 was higher at
£5.6m (2003 - £4.1m). The repayment of the 8.25% preference shares with their
high interest coupon should lead to improved future returns.
In the first half of the year operating profit before exceptional charges was
£12.7m (2003 - £10.9m) and pre-tax profit was £10.1m (2003 - £8.4m). In the
second half of the year, operating profit before exceptional items increased to
£18.1m (2003 - £14.3m) and pre-tax profit before exceptional items to £15.1m
(2003 - £12.7m). The £3.8m exceptional charge included within operating profit
includes the costs and anticipated future rental deficit of a UK leasehold
property where the previous tenant went into liquidation. Other exceptional
charges of £6.0m comprise the settlement of a claim on the disposal of a former
subsidiary in 2001 and the closure of Hunting Custom Packaging in the US.
Earnings Per Share
Basic earnings per share before exceptional items increased to 12.7p (2003 -
6.4p) on an average of 101.0m shares outstanding during the year. Basic earnings
per share after exceptional items but before goodwill amortisation increased to
8.8p (2003 - 8.5p).
International Financial Reporting Standards ('IFRS')
The Group has adopted IFRS with effect from 1 January 2005 and will be reporting
the 2005 interim results in compliance with IFRS. Excluding mark-to-market
adjustments which cannot be predicted, the implementation of IFRS is not
expected to affect earnings materially; balance sheet reserves will be affected
by a number of transitional changes including deferred taxation.
Exchange Rates
Both the US and Canadian Dollars weakened during the year relative to Sterling
with the US Dollar averaging 1.83 (2003 - 1.64) and the Canadian Dollar
averaging 2.38 (2003 - 2.29). Year end rates for the US and Canadian Dollars
against Sterling were 1.93 (2003 - 1.78) and 2.30 (2003 - 2.30) respectively.
Taxation
The taxation charge for the year excluding exceptional items was £9.5m, an
effective rate of 37.7% (2003 - 34.6%). 2003 benefited from the initial changes
in the Group's Canadian corporate structure.
Financing and Risk Management
The Group's centralised Treasury is a service centre with policies and
procedures approved by the Board. These cover funding, banking relationships,
foreign currency, interest rate exposures and cash management. The policies and
procedures covering oil and gas price exposure managed by Gibson Energy are
approved by the Board.
On 12 May 2004, Hunting Energy Services sold its US tubular assets business in
the five inch and above oil country tubular goods sector, for £25.6m in cash.
On 1 July 2004, US$50m Private Placement Notes were repaid and on 6 August 2004
the £47.9m 8.25% cumulative convertible preference shares were cancelled and
repaid at par.
Currency options are used to reduce currency risk movements on the Group's
results, by hedging approximately 50% of each year's budgeted Canadian and US
Dollar earnings into Sterling. Currency exposure on the balance sheet is, where
practical, reduced by financing assets with borrowings in the same currency.
Forward foreign exchange contracts are used to cover the net exposure of
purchases and sales in non-domestic currencies. Fluctuations in the selling
price of crude oil inventories are managed by using futures, swaps and options.
Interest expense is hedged by using interest rate swaps, interest rate caps,
forward rate agreements and currency swaps. At 31 December 2004, interest rate
swaps and caps covered 43.5% of net borrowings.
On 17 December 2004, the issue of US$70m Private Placement Notes was concluded.
These have a maturing profile commencing in January 2008 with final payment in
January 2012. The proceeds of these Notes and other facilities were used to
prepay the £45m three year term loan that was due to mature in July 2005.
The Private Placement, the committed multi-currency facilities, and other
borrowing lines provide total facilities of £201m, £160m of which are committed.
As at 31 December 2004, £144m was drawn down. These facilities provide the Group
with adequate liquidity to meet anticipated future requirements.
Net interest payable of £5.6m (2003 - £4.1m) was 5.5 times covered before
exceptional items.
Dividends
An interim dividend of 1.5p per share (2003 - 1.25p) was paid on 25 November
2004. A final dividend of 3.0p per share payable on 29 June 2005 to shareholders
on the Register at 10 June 2005 is now proposed, giving a total of 4.5p (2003 -
3.5p) for the year.
Cash Flow
Free cash flow, that is cash flow before new business acquisitions, asset
disposals and cancellation and repurchase of share capital, increased to £18.1m
compared to £4.8m in 2003. Capital expenditure in the year was £22.1m (2003 -
£28.2m) which included £8.5m in Gibson Energy, £6.5m in Tenkay Resources and
£5.0m in Hunting Energy Services. In total £13.2m was replacement capital and
£8.9m new business expenditure.
Net debt excluding the convertible preference shares, increased during the year
to £130.6m from £126.6m. Gearing, defined as net debt as a percentage of
shareholders' funds and minority interests, increased from 77% to 111% following
the repayment of the preference shares.
Pensions
In 2004 the Group accounted for pensions under SSAP 24 'Accounting for Pension
Costs'. A review of the financial position of the Group's UK Defined Benefit
Scheme ('the Scheme') was undertaken as at 5 April 2004. Included in the
Consolidated Balance Sheet at 31 December 2004 is £25.8m representing the
pension prepayment on a SSAP 24 basis (£18.1m net of deferred tax). The funding
position of the UK Defined Benefit Scheme under FRS 17 principles shows that at
31 December 2004 assets exceeded liabilities by £24.0m. The Scheme remains
funded on both a SSAP 24 and a FRS 17 basis. On 31 December 2002 the Scheme was
closed to new UK employees who are now offered membership of a defined
contribution scheme.
Going Concern
The Directors, after making enquiries and on the basis of current financial
projections and the facilities available, believe that the Company and the Group
have adequate financial resources to continue in operation for the foreseeable
future. For this reason, they continue to adopt the going concern basis in
preparing the financial statements.
Dennis Clark
Finance Director
Consolidated Profit and Loss Account
For the Year ended 31 December 2004
Before Exceptional Total Total
exceptional items 2004 2003
items 2004
2004
Notes £m £m £m £m
Turnover 1 1,255.1 - 1,255.1 1,195.4
Cost of
sales (1,161.5) - (1,161.5) (1,112.9)
-------- -------- ------- -------
Gross profit 93.6 - 93.6 82.5
Net operating
expenses (after
goodwill
amortisation of
£2.7m
(2003 - £2.1m)) (62.9) (3.8) (66.7) (57.0)
-------- -------- ------- -------
Group 30.7 (3.8) 26.9 25.5
operating
profit
Share of operating
profit (loss) in
associated
undertakings 0.1 - 0.1 (0.3)
-------- -------- ------- -------
Total 1 30.8 (3.8) 27.0 25.2
operating
profit
Exceptional
items
Sale and
termination of
operations - (6.0) (6.0) -
-------- -------- ------- -------
Profit on ordinary
activities before
interest 30.8 (9.8) 21.0 25.2
Interest receivable
and 0.8 - 0.8 1.3
similar income
Interest
payable and
similar
charges (6.4) - (6.4) (5.4)
-------- -------- ------- -------
Profit on ordinary
activities before
taxation 25.2 (9.8) 15.4 21.1
Taxation (9.5) 3.2 (6.3) (7.3)
-------- -------- ------- -------
Profit after 15.7 (6.6) 9.1 13.8
taxation
Equity
minority
interests (0.5) - (0.5) (3.4)
-------- -------- ------- -------
Profit for the
financial year 15.2 (6.6) 8.6 10.4
Dividends
(including
non-equity) (6.9) - (6.9) (7.5)
-------- -------- ------- -------
Retained
profit for the
year 8.3 (6.6) 1.7 2.9
======== ======== ======= =======
Basic earnings per 25p
ordinary share 12.7p (6.5)p 6.2p 6.4p
======== ======== ======= =======
Diluted earnings per
25p ordinary share 6.1p 6.4p
======= =======
There are no material differences between the results disclosed above and the
results on an unmodified historical cost basis.
The profit for the year arises from the Group's continuing operations.
Consolidated Statement of Total Recognised Gains and Losses
For the Year ended 31 December 2004
2004 2003
£m £m
Profit for the financial year 8.6 10.4
Currency translation differences on foreign
currency net investments (2.3) 2.5
------- -------
Total recognised gains and losses for the year 6.3 12.9
======= =======
Consolidated Balance Sheet
At 31 December 2004
2004 2003
£m £m
Fixed assets
Intangible assets 44.8 49.1
Tangible assets 158.1 160.5
Investment in joint ventures and associated
undertakings 8.7 13.0
Other investments 3.8 5.6
-------- --------
215.4 228.2
-------- --------
Current assets
Stocks 75.7 93.2
Debtors: amounts falling due within one year 140.5 135.3
: amounts falling due after more than one year 29.2 23.1
Investments - 0.4
Cash at bank and in hand 15.1 15.3
-------- --------
260.5 267.3
Creditors: amounts falling due within one year (174.7) (147.0)
-------- --------
Net current assets 85.8 120.3
-------- --------
Total assets less current liabilities 301.2 348.5
Creditors: amounts falling due after more
than one year (132.3) (136.5)
Provisions for liabilities and charges (51.0) (47.2)
-------- --------
117.9 164.8
======== ========
Capital and reserves
Called up share capital 25.3 73.2
Share premium 41.5 41.5
Revaluation reserve 16.6 17.8
Profit and loss account 30.8 29.2
Treasury shares - (0.1)
Shareholders' funds
-------- --------
Equity interests 114.2 113.7
Non-equity interests - 47.9
-------- --------
114.2 161.6
Equity minority interests 3.7 3.2
-------- --------
117.9 164.8
======== ========
Reconciliation of Movements in Consolidated Shareholders' Funds
For the Year ended 31 December 2004
2004 2003
£m £m
Profit for the financial year 8.6 10.4
Dividends - ordinary (4.5) (3.6)
- preference (2.4) (3.9)
-------- --------
Retained profit for the year 1.7 2.9
Currency translation differences on foreign
currency net investments (2.3) 2.5
Goodwill reinstated on closure of operations 1.0 -
Allotment of Treasury shares 0.1 -
Cancellation and repayment of preference
shares (47.9) -
-------- --------
Net (reduction) addition to shareholders'
funds (47.4) 5.4
Opening shareholders' funds 161.6 156.2
-------- --------
Closing shareholders' funds 114.2 161.6
======== ========
Consolidated Cash Flow Statement
For the Year ended 31 December 2004
2004 2003
£m £m
Net cash inflow from operating activities 42.6 48.5
-------- --------
Returns on investments and servicing of finance
Interest received 3.1 1.3
Interest paid (8.7) (5.2)
Dividends received from associated undertakings 3.5 -
Preference dividends paid (2.4) (3.9)
Dividends paid to minorities - (0.4)
-------- --------
Net cash (outflow) from returns on investments
and servicing of finance (4.5) (8.2)
-------- --------
Taxation received (paid) 6.6 (1.7)
-------- --------
Capital expenditure and financial investment
Purchase of tangible fixed assets (22.1) (28.2)
Sale of tangible fixed assets 6.0 10.9
Purchase of trade investments - (0.2)
Sale of investments 2.4 -
Loans advanced to associated undertakings - (0.1)
-------- --------
Net cash (outflow) from capital expenditure and
financial investment (13.7) (17.6)
-------- --------
Acquisitions and disposals
Purchase of minority interests in subsidiary
undertakings (0.1) (43.7)
Purchase of subsidiary undertakings and
businesses (1.5) (0.5)
Purchase of joint venture and associated
undertakings (0.2) (0.4)
Net proceeds from disposal of subsidiary
undertakings 19.9 1.1
Net cash disposed of with subsidiary
undertakings - (0.4)
-------- --------
Net cash inflow (outflow) from acquisitions and
disposals 18.1 (43.9)
-------- --------
Equity dividends paid (3.8) (3.3)
-------- --------
Net cash inflow (outflow) before use of liquid
resources and financing 45.3 (26.2)
-------- --------
Management of liquid resources
Net movement in short term money market deposits 0.4 1.4
-------- --------
Financing
Increase in borrowings due within one year 6.4 0.1
(Decrease) increase in borrowings due beyond one
year (4.8) 32.1
Capital element of finance leases (0.3) (0.1)
Cancellation and repayment of preference share
capital (47.9) -
-------- --------
Net cash (outflow) inflow from financing (46.6) 32.1
-------- --------
(Decrease) increase in cash (0.9) 7.3
======== ========
Notes to the Financial Statements
1 SEGMENTAL ANALYSIS
Turnover and pre-exceptional operating profit, including joint venture and associated undertakings but before
net interest costs and taxation, are shown below.
2004 2004 2004 2003 2003 2003
Turnover Operating Net assets Turnover Operating Net assets
profit (loss)* (liabilities) profit (loss) (liabilities)
£m £m £m £m £m £m
ACTIVITY
Oil and gas
marketing and
distribution 1,002.9 14.7 121.3 939.6 13.6 137.7
Oilfield
services and
tubular
products 159.9 8.3 79.7 168.6 5.4 114.6
Share of
associated
undertakings - 0.5 1.6 - - 1.2
Exploration
and other
activities 92.3 7.7 43.5 87.2 6.5 42.6
Share of joint
venture and - (0.4) 7.1 - (0.3) 11.8
associated
undertakings
------- -------- -------- ------- ------- -------
1,255.1 30.8 253.2 1,195.4 25.2 307.9
======= ======== ======= =======
Net funding (130.6) (126.6)
Pension fund
prepayment
(net) 18.1 15.2
Central
liabilities (22.8) (31.7)
-------- -------
117.9 164.8
======== =======
AREA OF
OPERATION
Europe - UK 55.1 1.3 6.8 42.4 (1.3) 13.1
- Continent 28.8 1.1 21.2 27.7 0.8 7.8
Canada 1,059.3 20.2 148.3 989.8 19.2 165.7
US 107.3 7.7 66.9 132.6 6.5 96.9
Share of joint
venture - UK - - - - 0.1 0.8
Share of
associates -
UK - (0.4) 7.1 - (0.4) 11.0
Share of
associates -
Other - 0.5 1.6 - - 1.2
Other 4.6 0.4 1.3 2.9 0.3 11.4
------- -------- -------- ------- ------- -------
1,255.1 30.8 253.2 1,195.4 25.2 307.9
======= ======== ======= =======
Net funding (130.6) (126.6)
Pension fund
prepayment
(net) 18.1 15.2
Central
liabilities (22.8) (31.7)
-------- -------
117.9 164.8
======== =======
Inter-divisional turnover is not material and turnover by destination is not materially different to the area
of operation.
*Segmental analysis is provided at pre-exceptional operating profit level as most of the Group's financing is
arranged centrally and interest is not specifically attributable to individual activities or geographic areas.
Of the exceptional items, £2.9m related to other activities and £6.9m related to businesses disposed of in
earlier years.
All of the Group's activities are from continuing
operations.
2. The above figures have been extracted from the Group's full financial statements which, for the year ended
31 December 2003, have been delivered and for the year ended 31 December 2004, will be delivered to the
Registrar of Companies. Both carry an unqualified audit report. The extracts do not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 5th July 2024
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