Interim Results

RNS Number : 6523R

Hunting PLC

26 August 2010

 



For Immediate Release

26 August 2010

Hunting PLC

("Hunting" or "the Company" or "the Group")

Half Year Results

Hunting PLC (LSE:HTG) the international energy services group today announces its results for the six months to 30 June 2010.

Financial Highlights - from continuing operations

·       Revenue increased to £214.2m (2009: £209.0m)

·       Profit from operations before exceptional items of £22.0m (2009: £22.0m), compares with £13.8m profit from operations achieved in the second half of 2009

·       Profit from operations of £14.8m (2009: £22.0m)

·       Basic earnings per share before exceptional items 11.2p (2009: 11.7p)

·       Basic earnings per share 7.3p (2009: 11.7p)

·       Interim dividend declared of 3.7p (2009: 3.5p)

·       Net cash of £314.1m (2009: £387.6m)

Corporate Highlights

·       Acquisition of Innova-Extel announced on 16 August 2010 for a cash consideration of US$125 million extends the Group's product offering in Well Construction portfolio - expected to complete by the end of August

·       Capital expenditure in the period increased to £19.1m (2009: £10.9m) and includes:

o  Expansion of Casper, Wyoming facility o  Completion of drilling tools facility at Conroe, Texas o  Commissioning of Wuxi facility in China o  Completion of pipe and tubular goods inventory and management facility in Fordoun, Scotland o  Purchase of facility in Pennsylvania to access Marcellus shale gas play

·       First commercial orders received for Chemical Injection Systems - 8 units shipped to date

·       Sales and marketing agreement signed with ArcelorMittal for new OCTG mill in Saudi Arabia

Commenting on the results Dennis Proctor, Chief Executive, said:

"Despite the moratorium on deep water drilling in the Gulf of Mexico, the outlook for trading conditions in the second half of 2010 remains encouraging.  Hunting remains in an enviable position, with firming end-markets, a strong balance sheet, and an active acquisition and internal investment programme, which will provide the Group with excellent opportunities for growth. 

"We are particularly pleased to have announced the acquisition of Innova-Extel which will contribute to our ongoing performance, and increases our technology and intellectual property position."

For further information please contact:

Hunting PLC Dennis Proctor, Chief Executive Peter Rose, Finance Director	Tel: [phone]
Buchanan Communications Richard Darby Jeremy Garcia	Tel: [phone]

Notes to Editors:

About Hunting PLC

Hunting PLC is an international energy services provider to the world's leading upstream oil and gas companies. Established in 1874, it is a fully listed public company traded on the London Stock Exchange. The Company maintains a corporate office in Houston and is headquartered in London. As well as the United Kingdom, the Company has principal operations in Canada, China, Holland, Hong Kong, Indonesia, Mexico, Singapore, United Arab Emirates and the United States of America.

Half Year Management Report

Hunting PLC, the international energy services company, announces its results for the six months ended 30 June 2010.

Introduction

For the six months ended 30 June 2010, the Company experienced a 77% improvement in profit before tax and exceptional items compared with the six months to 31 December 2009. A modest improvement in the world economy and a seemingly sustained recovery in oil prices, plus new developments from shale gas, have provided oil and gas operators with the confidence to increase their exploration and production budgets. While not completed in the first half, the US$125m acquisition of Innova-Extel was announced in August. Innova manufactures harsh environment printed circuit boards for downhole logging tools and Extel is a precision machine facility focused on providing downhole completion tools. This acquisition extends Hunting's product offering in complex well construction and completion activities and demonstrates a further commitment to technology driven platforms.

Financial Summary

Revenue from continuing operations for the six months ended 30 June 2010 increased to £214.2m from £209.0m reported for the 2009 comparative period. Profit from continuing operations before exceptional items was £22.0m (2009: £22.0m) and profit from continuing operations was £14.8m (2009: £22.0m). Profit before tax and before exceptional items from continuing operations was £23.2m (2009: £25.4m) and profit before tax from continuing operations was £16.0m (2009: £25.4m). Net interest income was £0.8m (2009: £3.2m).

Profit after tax before exceptional items from continuing operations was £16.0m (2009: £17.3m) (profit after tax from continuing operations was £10.9m (2009: £17.3m)) after a tax charge of £7.2m reflecting an effective tax rate of 31% (2009: 32%).

Exceptional items recorded during the period comprise £2.9m dry hole costs from our Exploration and Production segment, £2.7m oil and gas development expenditure impairment, £1.6m acquisition costs and £3.9m foreign exchange losses arising on Canadian dollar provisions for tax indemnities given in respect of our former Canadian business, Gibson Energy.

Basic earnings per share before exceptional items from continuing operations was 11.2p (2009: 11.7p) and for continuing operations was 7.3p (2009: 11.7p).

Average exchange rates used to translate US$ and Canadian $ denominated results into £-Sterling were US$1.53 (2009: US$1.49) and Can$1.58 (2009: Can$1.80).

Capital expenditure increased to £19.1m during the period (2009: £10.9m) of which £6.2m (2009: £5.7m) was replacement expenditure and £12.9m (2009: £5.2m) was new business expenditure. Replacement expenditure includes £2.9m (2009: £0.3m) capital expenditure by our Exploration and Production segment.

Net cash at 30 June 2010 was £314.1m (2009: £387.6m).

A dividend for the half year of 3.7p per share (2009: 3.5p) will be paid on 19 November 2010 to shareholders on the register at the close of business on 29 October 2010.

Half Year Management Report continued

Operational Review

From mid 2009 to date the North American average rig count increased 86% with the International rig count increasing 15% during the same period. Accordingly, Hunting delivered much improved results over the period. Many of the Company's 28 worldwide manufacturing facilities added personnel and capacity. Margins have improved and backlogs are returning to historical norms.

Profit from operations before exceptional items were as follows:

		H1		H2		H1
		2009		2009		2010
		£m		£m		£m
Hunting Energy Services
Well Construction		3.5		(0.2)		2.9
Well Completion		12.8		7.5		10.9
Well Intervention		1.8		2.2		4.2
Exploration and Production		-		0.3		0.4
		18.1		9.8		18.4
Other Operating Divisions
Gibson Shipbrokers		0.3		0.4		0.5
Field Aviation		3.6		3.6		3.1
Group		22.0		13.8		22.0

Well Construction profit from operations benefitted from a stronger US trading environment compared to H2 2009, however trading conditions in Canada slowed the recovery.

Well Completion reported a 45% increase in profit from operations over H2 2009 with improved results particularly from US Manufacturing facilities. Results from operations in Aberdeen and Holland declined on lower activity levels and Asia Pacific continued to report strong results.

Well Intervention reports strong growth benefitting from the 2009 acquisitions of National Coupling Company and Welltonic.

Exploration and Production profit from operations reported improved results over prior periods, however lower production and activity levels coupled with lower commodity prices impacted profitability.

Gibson Shipbrokers reports improved profits from a more stable global shipping market.

Field Aviation's profit from operations was down in comparison to prior periods on reduced contract activity levels.

The rapid improvement in the global economy combined with a significant rise in the global rig count enabled the Company to recover from the difficulties of the second half of 2009.

Half Year Management Report continued

Operational highlights of the first half of 2010 include:

•	The Wedge Lock premium connection development testing is complete. This flush joint OCTG connection is directed towards horizontal drilling applications requiring high torque and high sealing capability.

•	The Company's Chemical Injection Systems became commercial during the period with 8 units shipped including 2 units for the BP Macondo relief wells.

•	A Premium connection sales and marketing agreement was signed with ArcelorMittal for their new seamless OCTG mill in Saudi Arabia.

•	A Pennsylvania facility was purchased for drilling tools utilised in the prolific Marcellus Shale gas play.

•	A Conroe, Texas facility was completed for drilling tools utilised along the Gulf coast.

•	An expansion of the Casper, Wyoming drilling tools facility was initiated.

•	Mud Motor inventory was established in Dubai and will be directed through the recent acquisition of Welltonic.

•	The Fordoun, Scotland tubular inventory and management facility was completed.

•	The commissioning of a new manufacturing facility in Wuxi, China.

 

Principal Risks and Uncertainties Facing the Business

The principal risks and uncertainties facing the business, which could have a material adverse impact on the Group, include commodity prices, effective control over subsidiaries, global recession, loss of key executives, health, safety and environmental laws and regulations, acquisitions and capital expenditure programme, adequacy of provisions and fluctuations in currency exchange rates. These risks and uncertainties are discussed in more detail in the 2009 Annual Report and Accounts on pages 16 and 17.

In addition, there is the uncertainty of the impact on the Group's results of a continuation of the Gulf of Mexico drilling moratorium.

Board Changes

Iain Paterson retired from the Board on 8 June 2010 having served as an independent non-executive director since 2000. The Board thanks Iain for his valuable contribution and wishes him well for the future.

There are no other details that require disclosure in respect of this directorate change pursuant to Rule 9.6.13 of the Listing Rules.

Half Year Management Report continued

Outlook

Despite the moratorium on deep water drilling in the Gulf of Mexico, the outlook for trading conditions in the second half of 2010 remains encouraging. With the Company's global footprint, one region's demise does not greatly impact overall activity. Continued improvement in the oil price will encourage further investment in exploration and production in all global regions. Although natural gas prices remain depressed, operators continue to benefit from unconventional sources such as shale gas and the rig count in North America should remain constant.

Your Company retains a strong balance sheet, yet the prior year decline did not deter its commitment to facility expansion, new strategically located facilities, one acquisition and further technology developments. The global demand for energy, and the increasing difficulty of acquiring it, will provide the Company with excellent opportunities for growth.

Richard Hunting	Dennis Proctor
Chairman	Chief Executive
26 August 2010

 

 

Statement of Directors' Responsibilities

The Directors confirm that, to the best of their knowledge, this condensed set of consolidated financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union and that the half year management report includes a fair review of the information required by the Disclosure and Transparency Rules 4.2.7 and 4.2.8, namely:

•	an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

•	material related party transactions in the first six months of the financial year and any material changes in the related party transactions described in the 2009 Annual Report and Accounts.

The Directors of the Company are listed on page 18 in Hunting PLC's 2009 Annual Report and Accounts. Iain Paterson retired from the Board on 8 June 2010. A list of current Directors is maintained on the Hunting PLC website: www.hunting.plc.uk

By order of the Board

Peter Rose

Finance Director

26 August 2010

Independent Review Report to Hunting PLC

Introduction

We have been engaged by the Company to review the condensed consolidated interim financial information in the half-yearly financial report for the six months ended 30 June 2010, which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated statement of cash flows and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial information.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed consolidated interim financial information included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed consolidated interim financial information in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial information in the half-yearly financial report for the six months ended 30 June 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

PricewaterhouseCoopers LLP

Chartered Accountants

London

26 August 2010

Notes:

(a)	The maintenance and integrity of the Hunting PLC website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
(b)	Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Consolidated Income Statement

(Unaudited)

				Six months ended 30 June 2010						Six months ended 30 June 2009
				Before						Before
				exceptional		Exceptional				exceptional		Exceptional
				items		items		Total		items		items		Total
		Notes		£m		£m		£m		£m		£m		£m
Revenue		2		214.2		-		214.2		209.0		-		209.0
Cost of sales				(153.5)		(5.6)		(159.1)		(147.8)		-		(147.8)
Gross profit				60.7		(5.6)		55.1		61.2		-		61.2
Other operating income				2.9		-		2.9		1.1		-		1.1
Operating expenses				(41.6)		(1.6)		(43.2)		(40.3)		-		(40.3)
Profit from continuing operations		2		22.0		(7.2)		14.8		22.0		-		22.0
Finance income				2.1		-		2.1		5.0		-		5.0
Finance expense				(1.3)		-		(1.3)		(1.8)		-		(1.8)
Share of post-tax profits of associates				0.4		-		0.4		0.2		-		0.2
Profit before tax from continuing operations				23.2		(7.2)		16.0		25.4		-		25.4
Taxation		4		(7.2)		2.1		(5.1)		(8.1)		-		(8.1)
Profit for the period:
From continuing operations				16.0		(5.1)		10.9		17.3		-		17.3
From discontinued operations		5		-		(3.9)		(3.9)		0.7		1.6		2.3
Profit for the period				16.0		(9.0)		7.0		18.0		1.6		19.6
Profit attributable to:
Owners of the parent				14.7		(9.0)		5.7		16.0		1.6		17.6
Non-controlling interests				1.3		-		1.3		2.0		-		2.0
				16.0		(9.0)		7.0		18.0		1.6		19.6
Earnings (loss) per share
Basic - from continuing operations		6						7.3p						11.7p
- from discontinued operations		6						(3.0)p						1.8p
- Group total								4.3p						13.5p
Diluted - from continuing operations		6						7.2p						11.4p
- from discontinued operations		6						(3.0)p						1.8p
- Group total								4.2p						13.2p

Consolidated Income Statement continued

				Year ended 31 December 2009
				Before
				exceptional		Exceptional
				items		items		Total
		Notes		£m		£m		£m
Revenue		2		359.9		–		359.9
Cost of sales				(261.4)		–		(261.4)
Gross profit				98.5		–		98.5
Other operating income				5.0		–		5.0
Operating expenses				(67.7)		0.6		(67.1)
Profit from continuing operations		2		35.8		0.6		36.4
Finance income				6.2		–		6.2
Finance expense				(4.4)		–		(4.4)
Share of post-tax profits of associates				0.9		–		0.9
Profit before tax from continuing operations				38.5		0.6		39.1
Taxation		4		(12.2)		–		(12.2)
Profit for the period:
From continuing operations				26.3		0.6		26.9
From discontinued operations		5		0.9		3.9		4.8
Profit for the period				27.2		4.5		31.7
Profit attributable to:
Owners of the parent				24.2		4.5		28.7
Non-controlling interests				3.0		–		3.0
				27.2		4.5		31.7
Earnings per share
Basic – from continuing operations		6						18.2p
– from discontinued operations		6						3.7p
– Group total								21.9p
Diluted – from continuing operations		6						17.8p
– from discontinued operations		6						3.6p
– Group total								21.4p

Consolidated Statement of Comprehensive Income
(Unaudited)

		Six months		Six months
		ended		ended		Year ended
		30 June		30 June		31 December
		2010		2009		2009
		£m		£m		£m
Profit for the period		7.0		19.6		31.7
Other comprehensive income after tax:
Exchange adjustments		11.5		(22.6)		(9.8)
Release of foreign exchange adjustments on disposal of subsidiary		–		–		(3.1)
Fair value gains and losses:
– gain (loss) on available for sale financial asset arising during the period		1.8		(2.1)		1.3
– gains originating on cash flow hedges arising during the period		–		0.6		0.6
– losses transferred to income statement on disposal of cash flow hedges		0.1		2.4		2.2
Actuarial losses on defined benefit pension schemes		–		(0.1)		(0.3)
Other comprehensive income after tax		13.4		(21.8)		(9.1)
Total comprehensive income for the period		20.4		(2.2)		22.6
Total comprehensive income attributable to:
Owners of the parent		19.2		(3.8)		19.7
Non-controlling interests		1.2		1.6		2.9
		20.4		(2.2)		22.6

Consolidated Balance Sheet

(Unaudited)

						Restated
		At		At		At
		30 June		30 June		31December
		2010		2009		2009
		£m		£m		£m
ASSETS
Non-current assets
Property, plant and equipment		133.1		111.8		121.4
Goodwill		57.7		47.8		54.8
Other intangible assets		4.0		4.5		4.3
Investments in associates		12.6		10.8		11.7
Available for sale financial assets		31.7		26.4		29.8
Retirement benefit assets		8.2		7.8		8.0
Trade and other receivables		3.7		1.4		3.6
Deferred tax assets		4.7		5.1		4.6
		255.7		215.6		238.2
Current assets
Inventories		107.3		112.5		116.4
Trade and other receivables		88.3		62.2		60.2
Cash and cash equivalents		354.2		414.3		403.6
		549.8		589.0		580.2
LIABILITIES
Current liabilities
Trade and other payables		89.0		127.7		110.4
Current tax liabilities		14.0		15.9		8.3
Borrowings		38.2		26.3		38.0
Provisions		50.9		57.5		61.4
		192.1		227.4		218.1
Net current assets		357.7		361.6		362.1
Non-current liabilities
Borrowings		1.9		0.4		0.6
Deferred tax liabilities		19.3		15.3		18.4
Other payables		1.9		-		2.0
Provisions		16.5		15.8		17.5
		39.6		31.5		38.5
Net assets		573.8		545.7		561.8
Equity attributable to owners of the parent
Share capital		33.1		33.0		33.1
Share premium		90.2		90.0		90.2
Other components of equity		42.4		17.5		28.0
Retained earnings		393.6		391.4		397.2
		559.3		531.9		548.5
Non-controlling interests		14.5		13.8		13.3
Total equity		573.8		545.7		561.8

The balance sheet at 31 December 2009 has been restated to recognise additional goodwill and other payables of £0.7m on the acquisition of the Welltonic group of companies on 10 December 2009.

 

 

Consolidated Statement of Changes in Equity

(Unaudited)

		Six months ended 30 June 2010
						Other						Non-
		Share		Share		components		Retained				controlling		Total
		capital		premium		of equity		earnings		Total		interests		equity
		£m		£m		£m		£m		£m		£m		£m
At 1 January		33.1		90.2		28.0		397.2		548.5		13.3		561.8
Comprehensive income
Profit for the period		-		-		-		5.7		5.7		1.3		7.0
Other comprehensive income
Exchange adjustments		-		-		11.6		-		11.6		(0.1)		11.5
Fair value gains and losses:
- gain on available for sale financial asset arising during the period		-		-		1.8		-		1.8		-		1.8
- losses transferred to income statement on disposal of cash flow hedges		-		-		0.1		-		0.1		-		0.1
Total other comprehensive income		-		-		13.5		-		13.5		(0.1)		13.4
Total comprehensive income for the period		-		-		13.5		5.7		19.2		1.2		20.4
Transactions with owners
Dividends		-		-		-		(9.2)		(9.2)		-		(9.2)
Purchase of Treasury shares		-		-		-		(0.1)		(0.1)		-		(0.1)
Share options
- value of employee services		-		-		0.9		-		0.9		-		0.9
Total transactions with owners		-		-		0.9		(9.3)		(8.4)		-		(8.4)
At 30 June		33.1		90.2		42.4		393.6		559.3		14.5		573.8

Consolidated Statement of Changes in Equity continued

(Unaudited)

		Six months ended 30 June 2009
						Other						Non-
		Share		Share		components		Retained				controlling		Total
		capital		premium		of equity		earnings		Total		interests		equity
		£m		£m		£m		£m		£m		£m		£m
At 1 January		33.0		90.0		47.5		383.5		554.0		12.2		566.2
Change in accounting policy		-		-		(8.8)		(0.1)		(8.9)		-		(8.9)
At 1 January as restated		33.0		90.0		38.7		383.4		545.1		12.2		557.3
Comprehensive income
Profit for the period		-		-		-		17.6		17.6		2.0		19.6
Other comprehensive income
Exchange adjustments		-		-		(22.2)		-		(22.2)		(0.4)		(22.6)
Fair value gains and losses:
- loss on available for sale financial asset arising during the period		-		-		(2.1)		-		(2.1)		-		(2.1)
- gains originating on cash flow hedges arising during the period		-		-		0.6		-		0.6		-		0.6
- losses transferred to income statement on disposal of cash flow hedges		-		-		2.4		-		2.4		-		2.4
Actuarial losses on defined benefit pension schemes		-		-		-		(0.1)		(0.1)		_		(0.1)
Total other comprehensive income		-		-		(21.3)		(0.1)		(21.4)		(0.4)		(21.8)
Total comprehensive income for the period		-		-		(21.3)		17.5		(3.8)		1.6		(2.2)
Transactions with owners
Dividends		-		-		-		(9.2)		(9.2)		-		(9.2)
Purchase of Treasury shares		-		-		-		(1.5)		(1.5)		-		(1.5)
Disposal of Treasury shares		-		-		-		0.8		0.8		-		0.8
Share options
- value of employee services		-		-		0.5		-		0.5		-		0.5
- discharge		-		-		(0.4)		0.4		-		-		-
Total transactions with owners		-		-		0.1		(9.5)		(9.4)		-		(9.4)
At 30 June		33.0		90.0		17.5		391.4		531.9		13.8		545.7

Consolidated Statement of Changes in Equity continued

		Year ended 31 December 2009
						Other						Non-
		Share		Share		components		Retained				controlling		Total
		capital		premium		of equity		earnings		Total		interests		equity
		£m		£m		£m		£m		£m		£m		£m
At 1 January		33.0		90.0		47.5		383.5		554.0		12.2		566.2
Change in accounting policy		-		-		(8.8)		(0.1)		(8.9)		-		(8.9)
At 1 January as restated		33.0		90.0		38.7		383.4		545.1		12.2		557.3
Comprehensive income
Profit for the period		-		-		-		28.7		28.7		3.0		31.7
Other comprehensive income
Exchange adjustments		-		-		(9.7)		-		(9.7)		(0.1)		(9.8)
Release of foreign exchange adjustments on disposal of subsidiary		-		-		(3.1)		-		(3.1)		-		(3.1)
Fair value gains and losses:
- gain on available for sale financial asset arising during the period		-		-		1.3		-		1.3		-		1.3
- gains originating on cash flow hedges arising during the period		-		-		0.6		-		0.6		-		0.6
- losses transferred to income statement on disposal of cash flow hedges		-		-		2.2		-		2.2		-		2.2
Actuarial losses on defined benefit pension schemes		-		-		-		(0.3)		(0.3)		_		(0.3)
Total other comprehensive income		-		-		(8.7)		(0.3)		(9.0)		(0.1)		(9.1)
Total comprehensive income for the year		-		-		(8.7)		28.4		19.7		2.9		22.6
Transactions with owners
Dividends		-		-		-		(13.8)		(13.8)		(1.8)		(15.6)
Shares issued
- share option schemes		0.1		0.1		-		-		0.2		-		0.2
Purchase of Treasury shares		-		-		-		(7.9)		(7.9)		-		(7.9)
Disposal of Treasury shares		-		-		-		4.0		4.0		-		4.0
- taxation		-		-		-		0.2		0.2		-		0.2
Share options
- value of employee services		-		-		1.0		-		1.0		-		1.0
- discharge		-		0.1		(1.6)		1.5		-		-		-
Transfer between reserves		-		-		(1.4)		1.4		-		-		-
Total transactions with owners		0.1		0.2		(2.0)		(14.6)		(16.3)		(1.8)		(18.1)
At 31 December		33.1		90.2		28.0		397.2		548.5		13.3		561.8

Consolidated Statement of Cash Flows

(Unaudited)

		Six months		Six months
		ended		ended		Year ended
		30 June		30 June		31December
		2010		2009		2009
		£m		£m		£m
Operating activities
Continuing operations:
Profit from operations		14.8		22.0		36.4
Depreciation, amortisation and impairment		14.5		7.5		14.8
Loss on disposal of property, plant and equipment		0.3		1.1		1.6
Proceeds from disposal of property, plant and equipment held for rental		0.7		1.4		2.0
Purchase of property, plant and equipment held for rental		(2.5)		(5.8)		(7.3)
Decrease in inventories		14.2		5.2		2.3
(Increase) decrease in receivables		(25.2)		50.1		48.1
Decrease in payables		(26.7)		(32.6)		(38.5)
Decrease in provisions		(1.5)		(3.4)		(6.7)
Taxation paid		(2.3)		(9.3)		(10.0)
Other non-cash flow items		1.0		2.1		2.5
Discontinued operations		(14.3)		(0.4)		(0.9)
Net cash (outflow) inflow from operating activities		(27.0)		37.9		44.3
Investing activities
Continuing operations:
Dividends received from associates		-		-		0.2
Purchase of subsidiaries		(0.7)		(32.1)		(44.3)
Net cash acquired with subsidiaries		-		-		1.4
Disposal of subsidiaries		-		17.6		26.5
Net cash disposed of with subsidiary		-		-		(2.5)
Loans from associates repaid		-		-		(0.5)
Loans from associates		0.4		0.3		-
Loans to associates repaid		-		0.5		1.0
Proceeds from disposal of property, plant and equipment		-		0.3		0.7
Purchase of property, plant and equipment		(16.6)		(5.1)		(14.3)
Purchase of intangibles and investments		-		-		(0.1)
Discontinued operations		-		(0.1)		(0.3)
Net cash outflow from investing activities		(16.9)		(18.6)		(32.2)
Financing activities
Continuing operations:
Interest received		1.6		3.0		4.9
Interest paid		(1.0)		(1.3)		(1.9)
Equity dividends paid		(9.2)		-		(13.8)
Non-controlling interest dividend paid		-		-		(1.8)
Share capital issued		-		-		0.2
Purchase of treasury shares		(0.1)		(1.5)		(7.7)
Disposal of treasury shares		0.1		0.9		3.9
Capital element of finance leases		(0.2)		(0.3)		(1.3)
Proceeds from new borrowings		1.3		-		0.6
Discontinued operations		-		0.1		-
Net cash (outflow) inflow from financing activities		(7.5)		0.9		(16.9)

Consolidated Statement of Cash Flows continued

(Unaudited)

		Six months		Six months
		ended		ended		Year ended
		30 June		30 June		31December
		2010		2009		2009
		£m		£m		£m
Net cash (outflow) inflow in cash and cash equivalents		(51.4)		20.2		(4.8)
Cash and cash equivalents at the beginning of period		365.8		372.4		372.4
Effect of foreign exchange rates		1.6		(4.0)		(1.8)
Cash and cash equivalents at end of period		316.0		388.6		365.8
Cash and cash equivalents at the end of the period comprise:
Cash and cash equivalents		354.2		414.3		403.6
Bank overdrafts included in borrowings		(38.2)		(25.7)		(37.8)
		316.0		388.6		365.8

Notes

1. BASIS OF ACCOUNTING

The financial information contained in this half year report complies with IAS 34 Interim Financial Reporting, as adopted by the European Union, and with the Disclosure and Transparency Rules of the Financial Services Authority. The condensed consolidated interim financial information should be read in conjunction with the 2009 Annual Report and Accounts, which has been prepared in accordance with IFRSs and IFRICs as adopted by the European Union. This half year report has been prepared using the same accounting policies and methods of computation used to prepare the 2009 Annual Report and Accounts, except for the adoption of new standards and interpretations, noted below.

The financial information for the six months ended 30 June 2009 has been represented to disclose Hunting Energy France as a discontinued operation.

The balance sheet at 31 December 2009 has been restated to recognise additional goodwill and other payables of £0.7m on the acquisition of the Welltonic group of companies on 10 December 2009.

This half year report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for the year ended 31 December 2009 has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. This consolidated interim financial information has been reviewed, not audited.

Adoption of new standards, amendments and interpretations

The following new standards, amendments and interpretations have been adopted for the six months ended 30 June 2010:

•	IFRS 3 (revised) Business Combinations
•	IAS 27 (revised) Consolidated and Separate Financial Statements
•	Amendment to IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items
•	Amendment to IFRS 2 - Group Cash-settled Share-based Payment Transactions
•	Improvements to IFRSs - April 2009
•	IFRIC 17 Distributions of Non-Cash Assets to Owners

IFRS 3 (revised) Business Combinations is effective for the Group for all business combinations which complete after 31 December 2009. The revised standard introduces significant changes to the accounting for business acquisitions. All consideration, including contingent consideration, is recorded at fair value at the acquisition date, with contingent consideration liabilities subsequently re-measured through the income statement. All acquisition costs are expensed to the income statement in the period in which they are incurred. IFRS 3 (revised) offers a choice, on an acquisition-by-acquisition basis, to measure any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's identifiable net assets. The comparative figures for 2009 have not been restated on adoption of this standard, as it does not impact the Group's 2009 financial performance or position.

Although the adoption of the other standards, amendments and interpretations represents a change in accounting policy, comparative figures for 2009 have not been restated for these, as the changes do not impact the financial performance or position of the Group.

Notes continued

2. SEGMENTAL REPORTING

The Group reports on six operating segments in its internal management reports. The Group's segments are strategic business units that offer different products and services to international oil and gas companies and the aviation and shipping sectors. There has been no change in the Group's operating segments or in the basis of measurement of segment profit or loss since the year ended 31 December 2009.

Results from operations

		Six months ended 30 June 2010
								Profit from
								operations
		Total		Inter-				before
		gross		segmental		Total		exceptional		Exceptional
		revenue		revenue		revenue		items		items		Total
		£m		£m		£m		£m		£m		£m
Continuing operations:
Hunting Energy Services
Well Construction		44.5		(2.6)		41.9		2.9		-		2.9
Well Completion		113.3		(5.8)		107.5		10.9		-		10.9
Well Intervention		29.6		-		29.6		4.2		-		4.2
Exploration and Production		3.0		-		3.0		0.4		(5.6)		(5.2)
		190.4		(8.4)		182.0		18.4		(5.6)		12.8
Other Operating Divisions
Gibson Shipbrokers		11.3		-		11.3		0.5		-		0.5
Field Aviation		20.9		-		20.9		3.1		-		3.1
		32.2		-		32.2		3.6		-		3.6
Total from continuing operations		222.6		(8.4)		214.2		22.0		(5.6)		16.4
Exceptional items not apportioned to business segments								-		(1.6)		(1.6)
Profit from continuing operations								22.0		(7.2)		14.8
Net finance income								0.8		-		0.8
Share of post-tax profits of associates								0.4		-		0.4
Profit before tax from continuing operations								23.2		(7.2)		16.0
Discontinued operations:
Gibson Energy								-		(3.9)		(3.9)
Loss from discontinued operations								-		(3.9)		(3.9)

Notes continued

2. SEGMENTAL REPORTING continued

		Six months ended 30 June 2009
								Profit from
								operations
		Total		Inter-				before
		gross		segmental		Total		exceptional		Exceptional
		revenue		revenue		revenue		items		items		Total
		£m		£m		£m		£m		£m		£m
Continuing operations:
Hunting Energy Services
Well Construction		50.7		(1.8)		48.9		3.5		-		3.5
Well Completion		109.9		(4.7)		105.2		12.8		-		12.8
Well Intervention		12.3		-		12.3		1.8		-		1.8
Exploration and Production		3.1		-		3.1		-		-		-
		176.0		(6.5)		169.5		18.1		-		18.1
Other Operating Divisions
Gibson Shipbrokers		10.7		-		10.7		0.3		-		0.3
Field Aviation		28.8		-		28.8		3.6		-		3.6
		39.5		-		39.5		3.9		-		3.9
Total from continuing operations		215.5		(6.5)		209.0		22.0		-		22.0
Exceptional items not apportioned to business segments								-		-		-
Profit from continuing operations								22.0		-		22.0
Net finance income								3.2		-		3.2
Share of post-tax profits of associates								0.2		-		0.2
Profit before tax from continuing operations								25.4		-		25.4
Discontinued operations:
Gibson Energy		-		-		-		-		9.6		9.6
Hunting Energy France		10.8		-		10.8		1.0		-		1.0
Total from discontinued operations		10.8		-		10.8		1.0		9.6		10.6
Net finance income								0.1		-		0.1
Taxation								(0.4)		(8.0)		(8.4)
Profit from discontinued operations								0.7		1.6		2.3

Notes continued

2. SEGMENTAL REPORTING continued

		Year ended 31 December 2009
								Profit from
								operations
		Total		Inter-				before
		gross		segmental		Total		exceptional		Exceptional
		revenue		revenue		revenue		items		items		Total
		£m		£m		£m		£m		£m		£m
Continuing operations:
Hunting Energy Services
Well Construction		80.0		(2.1)		77.9		3.3		-		3.3
Well Completion		184.7		(8.5)		176.2		20.3		-		20.3
Well Intervention		29.4		-		29.4		4.0		-		4.0
Exploration and Production		5.6		-		5.6		0.3		-		0.3
		299.7		(10.6)		289.1		27.9		-		27.9
Other Operating Divisions
Gibson Shipbrokers		20.8		-		20.8		0.7		-		0.7
Field Aviation		50.0		-		50.0		7.2		-		7.2
		70.8		-		70.8		7.9		-		7.9
Total from continuing operations		370.5		(10.6)		359.9		35.8		-		35.8
Exceptional items not apportioned to business segments								-		0.6		0.6
Profit from continuing operations								35.8		0.6		36.4
Net finance income								1.8		-		1.8
Share of post-tax profits of associates								0.9		-		0.9
Profit before tax from continuing operations								38.5		0.6		39.1
Discontinued operations:
Gibson Energy		-		-		-		-		1.0		1.0
Hunting Energy France		18.9		-		18.9		1.2		2.8		4.0
Total from discontinued operations		18.9		-		18.9		1.2		3.8		5.0
Net finance income								0.1		-		0.1
Taxation								(0.4)		0.1		(0.3)
Profit from discontinued operations								0.9		3.9		4.8

Notes continued

3. EXCEPTIONAL ITEMS

		Six months		Six months
		ended		ended		Year ended
		30 June		30 June		31December
		2010		2009		2009
		£m		£m		£m
Exceptional items comprise:
Impairment of property, plant and equipment		2.7		-		-
Dry hole costs		2.9		-		-
Acquisition costs		1.6		-		-
Property provisions		(0.2)		1.5		0.9
Other exceptional charges (credits)		0.2		(1.5)		(1.5)
Continuing operations		7.2		-		(0.6)

The impairment charge of £2.7m relates to the write down of oil and gas development expenditure (included in the Exploration and Production operating segment) following a change in the discount rate used to value the oil and gas reserves and a fall in commodity prices during the period. The recoverable amount of oil and gas development expenditure is based on value in use. These calculations use discounted pre-tax cash flow projections based on estimated oil and gas reserves, future production and income attributable to such reserves. Cash flows are based on reserve production lives varying from one to fifteen years. Cash flows are discounted using a pre-tax rate of 10%. The prices of oil and natural gas are derived from published futures prices, with the long term average oil price assumed to be US$84.04 bbl (per barrel) and the long term average gas price at US$5.74 mcf (per 1,000 cubic feet).

4. TAXATION

The taxation charge for the six months ended 30 June 2010 is calculated by applying the estimated annual Group effective rate of tax to the profit for the period.

The estimated pre-exceptional items tax rate for the year ended 31 December 2010 for continuing operations is 31% and has been used for the six months ended 30 June 2010 (six months ended 30 June 2009 and year ended 31 December 2009 - 32%). The reduced effective rate of 31% is mainly due to a greater proportion of profits from lower tax jurisdictions.

Included in the income statement are tax credits of £2.1m in respect of exceptional items from continuing operations (six months ended 30 June 2009 - £nil; year-ended 31 December 2009 - £nil).

A number of changes to the UK corporation tax system were announced in the June 2010 Budget Statement. The Finance (No. 2) Act 2010 includes legislation to reduce the main rate of corporation tax from 28% to 27% from 1 April 2011. Further reductions to the main rate are proposed to reduce the rate by 1% per annum to 24% by 1 April 2014. The changes are not expected to have a material impact on deferred tax balances reported in the financial statements.

Notes continued

5. DISCONTINUED OPERATIONS

On 6 August 2008, the Group entered into an agreement for the sale of Gibson Energy Inc. (Gibson Energy), its midstream services operation. The sale was completed on 12 December 2008. On 22 December 2009, the Group sold Hunting Energy France SA, its French-based business. The results from discontinued operations comprise the trading results of Gibson Energy, Hunting Energy France and the gains on disposal as follows:

	Six months ended
	30 June 2010		Six months ended 30 June 2009
			Hunting
	Gibson		Energy		Gibson
	Energy		France		Energy		Total
	£m		£m		£m		£m
Trading results:
Revenue	-		10.8		-		10.8
Cost of sales	-		(5.3)		-		(5.3)
Gross profit	-		5.5		-		5.5
Operating expenses	-		(4.5)		-		(4.5)
Profit from operations	-		1.0		-		1.0
Finance income	-		0.1		-		0.1
Profit before tax	-		1.1		-		1.1
Taxation	-		(0.4)		-		(0.4)
Profit for the period	-		0.7		-		0.7
Gain on disposal:
(Loss) gain on sale before tax	(3.9)		-		9.6		9.6
Tax on gain	-		-		(8.0)		(8.0)
(Loss) gain on sale after tax	(3.9)		-		1.6		1.6
Total (loss) profit from discontinued operations	(3.9)		0.7		1.6		2.3

Foreign exchange losses of £3.9m have been recognised in the period on Canadian dollar denominated tax warranty provisions.

Notes continued

5. DISCONTINUED OPERATIONS continued

		Year ended 31 December 2009
		Hunting
		Energy		Gibson
		France		Energy		Total
		£m		£m		£m
Trading results:
Revenue		18.9		-		18.9
Cost of sales		(9.1)		-		(9.1)
Gross profit		9.8		-		9.8
Other operating income		0.1		-		0.1
Operating expenses		(8.7)		-		(8.7)
Profit from operations		1.2		-		1.2
Finance income		0.1		-		0.1
Profit before tax		1.3		-		1.3
Taxation		(0.4)		-		(0.4)
Profit for the year		0.9		-		0.9
Gain on disposal:
Gain on sale before tax		2.8		1.0		3.8
Tax on gain		0.1		-		0.1
Gain on sale after tax		2.9		1.0		3.9
Total profit from discontinued operations		3.8		1.0		4.8

Notes continued

6. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the earnings attributable to Ordinary shareholders by the weighted average number of Ordinary shares outstanding during the period.

For diluted earnings per share, the weighted average number of outstanding Ordinary shares is adjusted to assume conversion of all dilutive potential Ordinary shares. The dilution in respect of share options applies where the exercise price is less than the average market price of the Company's Ordinary shares during the period and the possible issue of shares under the Group's long term incentive plans.

Reconciliations of the earnings and weighted average number of Ordinary shares used in the calculations are set out below:

	Six months		Six months		Year
	ended		ended		ended
	30 June		30 June		31 December
	2010		2009		2009
	£m		£m		£m
Basic and diluted earnings (loss) attributable to Ordinary shareholders:
From continuing operations	9.6		15.3		23.9
From discontinued operations	(3.9)		2.3		4.8
Total	5.7		17.6		28.7
	millions		millions		millions
Basic weighted average number of Ordinary shares	131.2		131.0		131.1
Dilutive outstanding share options	1.7		2.2		2.2
Long term incentive plans	1.0		0.5		0.5
Adjusted weighted average number of Ordinary shares	133.9		133.7		133.8
	pence		pence		pence
Basic EPS:
From continuing operations	7.3		11.7		18.2
From discontinued operations	(3.0)		1.8		3.7
	4.3		13.5		21.9
	pence		pence		pence
Diluted EPS:
From continuing operations	7.2		11.4		17.8
From discontinued operations	(3.0)		1.8		3.6
	4.2		13.2		21.4
	pence		pence		pence
Earnings per share adjusted for exceptional items:
Basic EPS from continuing operations	7.3		11.7		18.2
Add: exceptional items after taxation	3.9		-		(0.5)
Basic EPS from continuing operations before exceptional items	11.2		11.7		17.7
	pence		pence		pence
Diluted EPS from continuing operations	7.2		11.4		17.8
Add: exceptional items after taxation	3.8		-		(0.5)
Diluted EPS from continuing operations before exceptional items	11.0		11.4		17.3

 

Notes continued

7. PROPERTY, PLANT AND EQUIPMENT

During 2010, the net book value of property, plant and equipment increased from £121.4m to £133.1m due to additions of £20.2m and foreign exchange gains of £6.9m, offset by disposals of £1.3m, depreciation of £8.5m and impairments and write offs of £5.6m.

Additions include £8.3m for freehold land and buildings, £2.8m for oil and gas exploration and development and £8.7m for plant, machinery and motor vehicles.

Equipment with a carrying value of £1.3m was disposed of during the period.

8. PROVISIONS

During the period, £13.3m of provisions held at the start of the period in respect of Gibson Energy were utilised.

9. DIVIDENDS

		Six months		Six months		Year
		ended		ended		ended
		30 June		30 June		31December
		2010		2009		2009
		£m		£m		£m
Ordinary dividends:
2009 second interim - 7.0p		9.2		-		-
2009 interim - 3.5p		-		-		4.6
2008 final - 7.0p		-		9.2		9.2
		9.2		9.2		13.8

A 2010 interim dividend of 3.7p per share, which will absorb an estimated £4.9m, has been approved by the Board for payment on 19 November 2010.

10. CHANGES IN NET CASH

		At						At
		1 January				Exchange		30 June
		2010		Cash flow		movements		2010
		£m		£m		£m		£m
Cash and cash equivalents		403.6		(51.1)		1.7		354.2
Bank overdrafts		(37.8)		(0.3)		(0.1)		(38.2)
		365.8		(51.4)		1.6		316.0
Non-current borrowings		(0.6)		(1.3)		-		(1.9)
Finance leases		(0.2)		0.2		-		-
Net cash		365.0		(52.5)		1.6		314.1

11. CAPITAL COMMITMENTS

Group capital expenditure committed to the purchase of property, plant and equipment, but not provided for in these financial statements amounted to £22.0m (at 30 June 2009 - £5.7m; at 31 December 2009 - £8.5m).

Notes continued

12. POST BALANCE SHEET EVENTS

The Group announced the acquisition of 100% of the share capital of Innova-Extel Acquisition Holdings Inc. (Innova-Extel) a leading supplier of harsh environment electronics technology, on 16 August 2010 for a cash consideration of US$125m, which will be reduced or increased by any debt or cash in the business on completion.

The acquisition is subject to certain conditions which are expected to conclude by 31 August 2010 when completion will take place.

 

END

 

 

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