Interim Results
Hunting PLC
26 August 2004
26 August 2004
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2004
Hunting PLC ('Hunting', the 'Group' or the 'Company'), the international energy
services Company, today announces its interim results for the six months to 30
June 2004.
• Turnover £580.6m (2003: £605.7m) -4%
• Operating profit £12.7m (2003: £10.9m) +17%
• Pre-tax profit £10.1m (2003: £8.4m) +20%
• Basic earnings per share 4.0p (2003: 1.7p) +135%
• Ordinary dividend per share 1.5p (2003: 1.25p) +20%
Commenting on the outlook for the Group, Dennis Proctor, Hunting PLC's Chief
Executive, said:
'With high commodity prices, activity levels in the oil and gas industry have
significantly improved during the first six months of 2004. North American
activity for natural gas drilling has increased to levels not seen since 2001,
and forecast capital expenditure by the oil and gas operators is now expected to
exceed 10% growth in 2004.
'A continuation of this momentum, strong order books at our manufacturing
facilities, higher volumes in our distribution activities and better margins on
all products and services should continue to benefit Hunting in the second half
of 2004.'
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
Tom Leatherbarrow
Notes to Editors:
Hunting PLC is an international oil services company providing support solutions
to the world's largest oil and gas companies.
Interim Results
For the six months to 30 June 2004
Hunting PLC ('Hunting'), the international energy services Company, announces
its interim results for the six months to 30 June 2004.
INTRODUCTION
With high commodity prices, activity levels in the oil and gas industry have
significantly improved during the first six months of 2004. North American
activity for natural gas drilling has increased to levels not seen since 2001.
With international activity reaching double-digit growth levels, forecast
capital expenditure outlays by the oil and gas operators have been revised and
are now expected to exceed 10% in 2004 against 5% anticipated earlier in the
year. Although the US and particularly the Canadian dollars have weakened
against sterling during the period, most divisions of Hunting have experienced
improvements in profits.
RESULTS SUMMARY
Operating profit for the six months to 30 June 2004 increased by 16.5% to £12.7m
(2003 - £10.9m). Profit before tax increased by 20% to £10.1m (2003 - £8.4m).
Earnings per share were 135% higher at 4.0p per share (2003 - 1.7p). An interim
dividend of 1.5p (2003 - 1.25p) per share will be paid on 25 November 2004 to
shareholders on the register at the close of business on 5 November 2004.
OPERATIONAL REVIEW
Gibson Energy
Gibson Energy, based in Canada, achieved a strong result as the Canadian oil and
gas industry is on track to establish another record year for oil and gas well
completions in 2004. Gibson is one of Canada's premier mid-stream energy service
companies providing marketing services, truck transportation, processing and
distribution. During the six months, operating profits increased by 6% to £6.7m
(2003 - £6.3m).
Marketing achieved an excellent result for the period benefiting from
heavy/sour crude differentials and commodity prices while managing
inventories through volatile price swings. Operating profits were 11% up at
£4.2m (2003 - £3.8m). Truck Transportation returned to historical levels of
activity due to higher levels of heavy crude hauling. Operating profits
increased to £1.1m (2003 - £0.4m).
Oil and Gas Operations were in line with forecast with operating profits
unchanged at £1.9m.
Canwest Propane and Natural Gas Liquids ('NGL') are below expectations due
to lower volumes at their natural gas liquids operation and reduced
margins. Operating profits were £0.7m (2003 - £1.0m).
Moose Jaw Asphalt had a slower than expected start for the period. Lower
asphalt volumes and margins as a result of higher oil prices and wet
weather are expected to constrain the result for the year. Operating losses
in the traditionally weaker first six months were £1.2m (2003 - £0.8m
loss). Gibson Energy expects a continued improvement in its operations but
the marketing profit will depend on the volatility of oil prices during the
balance of the year.
Hunting Energy
Hunting Energy is a leading international supplier of products and related
services to the upstream oil and gas companies worldwide. Operating profits in
the first half increased by 110% to £4.2m (2003 - £2.0m).
With sustained higher commodity prices, onshore upstream exploration and
production drilling activity has gradually strengthened. Product and service
price increases have been sustained in the first half and this trend is expected
to continue. Gulf of Mexico deepwater oil and gas exploration continues to be at
a 12 year low and on 12 May 2004, the company announced the sale for £25m of its
Tubular Products casing business. However, activity for onshore tubing
completions has shown significant improvement, and the small diameter OCTG
Tubular Products inventory was retained to service this market area. With steel
prices 30% above historical levels, the company benefited from its lower valued
inventory and better margins. Operating profits in the first half of 2004 were
£1.4m compared to a break even position in 2003.
Manufacturing Operations were up 20% on the same period in 2003 due to
higher utilisation, operating efficiencies and price increases. Operating
profits increased 20% to £1.2m (2003 - £1.0m).
International Operations benefited primarily from the growth of the
independent E&P operators in the North Sea. Operating profits increased by
60% to £1.6m (2003 - £1.0m).
Global activity in the second half of 2004 is expected to continue its
steady improvement and benefit all regions where Hunting Energy is
positioned. New offices will be opened in the Middle East as well as the
former Soviet Union in the next six months.
Tenkay Resources
Tenkay Resources is a non-operating oil and gas exploration and production
company with producing reserves principally in the Southern USA. Production was
lower than anticipated in the first half. However, with 10 successes out of 13
wells drilled during the first half, Tenkay's reserves have improved during the
period and with most of the successful completions expected to be producing in
the second half and with oil and natural gas prices continuing to be strong,
Tenkay is expected to have a satisfactory year. Operating profits for the period
were £1.2m (2003 - £2.5m).
E. A. Gibson Shipbrokers
E. A. Gibson Shipbrokers is a leading international shipbroker primarily in the
oil and gas tanker market.
Transaction volumes and rates continue to be strong following an excellent
second half in 2003. The global supply of, and demand for, crude oil has enabled
tanker rates to remain above the historical average. Operating profits for the
period were £0.7m (2003 - £0.8m).
Hunting Energy France
Hunting Energy France in Paris continues to benefit from a management
reorganisation implemented in 2003. Operating profits for the period were £0.4m
(2003 - £0.2m).
Post balance sheet financing
On 6 August 2004 the £47.9m Convertible Preference Shares in issue were
cancelled and repaid at par. As the Convertible Preference Shares carried a rate
of interest in excess of that currently paid by the Group on its borrowings
their cancellation will enhance earnings per share.
OUTLOOK
Oil and gas operators are generating significant levels of cash for future
activity. Supply/demand for oil and gas remains tight but is driven by calls for
more energy. World rig activity continues an uptrend at a steady pace, with the
US and Canada very busy. A continuation of this momentum, improved order books
at our manufacturing facilities, higher volumes in our distribution activities
and better margins on most products and services should continue to benefit
Hunting in the second half of 2004.
Richard Hunting Dennis Proctor
Chairman Chief Executive
26 August 2004
Consolidated Profit and Loss Account
(Unaudited)
Six Six
months to months to Year to
30 June 30 June 31 December
2004 2003 2003
Notes £m £m £m
Turnover 2 580.6 605.7 1,195.4
Cost of sales (538.4) (565.5) (1,112.9)
--------- --------- ---------
Gross profit 42.2 40.2 82.5
Net operating expenses (29.5) (29.3) (57.0)
--------- --------- ---------
Group operating profit 12.7 10.9 25.5
Share of operating (loss) in
joint ventures
and associated undertakings - - (0.3)
Total operating profit -
before --------- --------- ---------
goodwill amortisation 14.1 11.9 27.3
Goodwill amortisation (1.4) (1.0) (2.1)
--------- --------- ---------
Total operating profit 2 12.7 10.9 25.2
Net interest payable (2.6) (2.5) (4.1)
--------- --------- ---------
Profit on ordinary
activities 10.1 8.4 21.1
before taxation
Taxation on profit on
ordinary activities 3 (4.0) (2.9) (7.3)
--------- --------- ---------
Profit on ordinary
activities 6.1 5.5 13.8
after taxation
Equity minority interests (0.1) (1.9) (3.4)
--------- --------- ---------
Profit for the period 6.0 3.6 10.4
Dividends (including
non-equity) 4 (3.5) (3.2) (7.5)
--------- --------- ---------
Retained profit for the
period 2.5 0.4 2.9
--------- --------- ---------
Earnings per 25p ordinary
share
Basic 5 4.0p 1.7p 6.4p
--------- --------- ---------
Diluted 5 3.9p 1.7p 6.4p
--------- ---------- ---------
All of the above results relate to
continuing operations.
Consolidated Statement of Total Recognised Gains and Losses
(Unaudited)
Profit for the period 6.0 3.6 10.4
Currency translation differences on
foreign currency
net investments (4.9) 8.0 2.5
--------- ---------- ---------
Total recognised gains and
losses for the period 1.1 11.6 12.9
--------- ---------- ---------
Consolidated Balance Sheet
(Unaudited)
As at As at As at
30 June 30 June 31 December
2004 2003 2003
£m £m £m
Fixed assets
Intangible assets 46.2 35.4 49.1
Tangible assets 152.6 169.1 160.5
Investment in joint ventures
and associated undertakings 8.8 13.0 13.0
Other investments 5.7 5.7 5.6
--------- --------- ---------
213.3 223.2 228.2
--------- --------- ---------
Current assets
Stocks 82.0 99.2 93.2
Debtors 165.7 164.2 158.4
Investments 1.3 3.7 0.4
Cash at bank and in hand 7.3 8.3 15.3
--------- --------- ---------
256.3 275.4 267.3
Creditors: amounts falling
due within one year (156.1) (169.3) (147.0)
--------- --------- ---------
Net current assets 100.2 106.1 120.3
--------- --------- ---------
Total assets less current
liabilities 313.5 329.3 348.5
Creditors: amounts falling
due after more than one year (102.8) (100.8) (136.5)
Provisions for liabilities
and charges (48.2) (32.2) (47.2)
--------- --------- ---------
162.5 196.3 164.8
--------- --------- ---------
Capital and reserves
Called up share capital 73.2 73.2 73.2
Share premium 41.5 41.5 41.5
Treasury shares (0.1) (0.1) (0.1)
Revaluation reserve 15.9 17.1 17.8
Profit and loss account 28.7 32.9 29.2
Shareholders' funds
--------- --------- ---------
Equity interests 111.3 116.7 113.7
Non-equity interests 47.9 47.9 47.9
--------- --------- ---------
159.2 164.6 161.6
Equity minority interests 3.3 31.7 3.2
--------- --------- ---------
162.5 196.3 164.8
--------- --------- ---------
Reconciliation of Movements in Consolidated Shareholders' Funds
(Unaudited)
Six Six
months to months to Year to
30 June 30 June 31 December
2004 2003 2003
£m £m £m
Profit for the period 6.0 3.6 10.4
Dividends (3.5) (3.2) (7.5)
--------- --------- ----------
Retained profit for the
period 2.5 0.4 2.9
Currency translation differences
on foreign currency
net investments (4.9) 8.0 2.5
--------- --------- ----------
Net (reduction) addition to
shareholders' funds (2.4) 8.4 5.4
Opening shareholders' funds 161.6 156.2 156.2
--------- --------- ----------
Closing shareholders' funds 159.2 164.6 161.6
--------- --------- ----------
Consolidated Cash Flow Statement
(Unaudited)
Six Six
months to months to Year to
30 June 30 June 31 December
2004 2003 2003
Notes £m £m £m
Net cash inflow from
operating activities
Operating profit 12.7 10.9 25.2
Depreciation and amortisation 10.7 11.5 22.3
Other non cash flow items (0.8) (0.1) (0.2)
(Increase) decrease in stocks (15.7) (0.8) 1.4
(Increase) decrease in
debtors (16.1) 3.7 10.1
Increase (decrease) in
creditors and provisions 12.0 (3.3) (10.3)
--------- ---------- -----------
2.8 21.9 48.5
--------- ---------- -----------
Returns on investments and
servicing of finance
Net interest paid (2.9) (1.9) (3.9)
Preference dividends paid (2.0) (2.0) (3.9)
Dividends received from
associates and joint ventures 3.5 - -
Dividends paid to minorities - - (0.4)
--------- ---------- -----------
(1.4) (3.9) (8.2)
--------- ---------- -----------
Taxation received (paid) 8.6 (1.9) (1.7)
--------- ---------- -----------
Capital expenditure and
financial investment
Purchase of tangible fixed
assets (11.5) (11.8) (28.2)
Sale of tangible fixed assets 5.0 2.5 10.9
Purchase of trade and current
asset investments - (2.3) (0.2)
Loans advanced to associated
undertakings - - (0.1)
--------- ---------- -----------
(6.5) (11.6) (17.6)
--------- ---------- -----------
Acquisitions and disposals
Purchase of subsidiary
undertakings (0.5) (0.4) (0.5)
Purchase of joint venture and
associated undertakings (0.2) (0.2) (0.4)
Purchase of minority
interests in subsidiary
undertaking (0.4) - (43.7)
Net proceeds from disposal of
operations 22.9 0.3 1.1
Net cash disposed of with
subsidiary undertakings - (0.3) (0.4)
--------- ---------- -----------
21.8 (0.6) (43.9)
--------- ---------- -----------
Equity dividends paid (2.4) - (3.3)
--------- ---------- -----------
Net cash inflow (outflow)
before use of
liquid resources and
financing 22.9 3.9 (26.2)
--------- ---------- -----------
Management of liquid
resources
Net movement in short term
money market deposits 6 (0.9) 0.2 1.4
--------- ---------- -----------
Financing
(Decrease) increase in
borrowings due
within one year 6 (3.6) 4.8 0.1
(Decrease) increase in
borrowings due
beyond one year 6 (28.5) (12.7) 32.1
Capital element of finance
leases 6 (0.2) (0.1) (0.1)
--------- ---------- -----------
(32.3) (8.0) 32.1
--------- ---------- -----------
(Decrease) increase in cash 6 (10.3) (3.9) 7.3
--------- ---------- -----------
Notes to the Interim Report
1. BASIS OF PREPARATION
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's 2003 Annual Report and Accounts.
Fixed annual charges are apportioned to the interim period on the basis of
time elapsed and other expenses are accrued in accordance with the same
principles used in the preparation of the annual accounts. The financial
information contained in this interim report does not constitute statutory
accounts as defined in section 240 of the Companies Act 1985. The financial
information for the year ended 31 December 2003 is an abridged version of
the statutory accounts for that year. Those accounts, upon which the
auditors issued an unqualified opinion, have been filed with the Registrar
of Companies.
2. SEGMENTAL ANALYSIS OF TURNOVER AND OPERATING PROFIT
Six months to Six months to Year to
30 June 2004 30 June 2003 31 December 2003
Turnover Operating Turnover Operating Turnover Operating
profit profit profit
Activity £m £m £m £m £m £m
Oil and gas
marketing
and
distribution 461.5 6.7 483.9 6.3 939.6 13.6
Oilfield
services
and
tubular
products 82.8 4.2 81.3 2.0 168.6 5.4
Exploration
and other
activities 36.3 1.8 40.5 2.6 87.2 6.5
Share of
joint
ventures
and
associated
undertakings - - - - - (0.3)
------- -------- ------- ------- -------- --------
580.6 12.7 605.7 10.9 1,195.4 25.2
------- -------- ------- ------- -------- --------
The oil and gas marketing and distribution turnover includes £388m of
marketing sales in the six months to 30 June 2004 (six months to 30 June
2003 - £407m).
3. TAXATION
The taxation charge for the six months to 30 June 2004 is calculated by
applying the best estimate of the 2004 annual effective rate of tax to the
profit for the period.
4. DIVIDENDS
Six Six
months to months to Year to
30 June 30 June 31 December
2004 2003 2003
£m £m £m
Preference dividends:
Paid 2.0 2.0 3.9
Ordinary dividends:
Interim 1.5 1.2 1.2
Final - - 2.4
-------- -------- ---------
3.5 3.2 7.5
-------- -------- ---------
Notes to the Interim Report
continued
5. EARNINGS PER SHARE
Basic and diluted earnings per share have been calculated using the
following bases:
Six Six
months to months to Year to
30 June 30 June 31 December
2004 2003 2003
£m £m £m
Profit attributable to
shareholders 6.0 3.6 10.4
Less: preference dividends (2.0) (2.0) (3.9)
--------- -------- --------
Earnings attributable to
Ordinary shareholders 4.0 1.6 6.5
--------- -------- --------
Weighted average number of
Ordinary shares 101.0 101.0 101.0
Dilutive outstanding share
options 1.2 - -
--------- -------- --------
Adjusted weighted average
number of Ordinary shares 102.2 101.0 101.0
--------- -------- --------
pence pence pence
Basic EPS 4.0 1.7 6.4
--------- -------- --------
Diluted EPS 3.9 1.7 6.4
--------- -------- --------
6. ANALYSIS OF CHANGES IN NET DEBT
Inception
of finance
At 1 Jan Cash lease Exchange At 30 June
2004 flow contracts movements 2004
£m £m £m £m £m
Cash at bank 15.3 (7.4) - (0.6) 7.3
and in hand
Overdrafts (3.4) (2.9) - 0.3 (6.0)
--------
(10.3)
--------
Borrowings due
after one (133.0) 28.5 - 5.5 (99.0)
year
Borrowings due
within one (5.1) 3.6 - 0.3 (1.2)
year
Finance leases (0.8) 0.2 (0.6) (0.1) (1.3)
--------
32.3
--------
Money market 0.4 0.9 - - 1.3
deposits --------- -------- -------- -------- ---------
Total net debt (126.6) 22.9 (0.6) 5.4 (98.9)
--------- -------- -------- -------- ---------
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