Interim Results PART 2
Enterprise Oil PLC
5 September 2000
PART 2
Consolidated Profit and Loss Account
Six months ended Six months ended Year ended
30 June 2000 30 June 1999 31 December
(Unaudited) (Unaudited) 1999
£m £m £m
------------------------------------------------------------------------------
Turnover (note 2) 835.1 293.4 850.0
Cost of sales (note 3) (318.6) (181.5) (427.5)
------------------------------------------------------------------------------
Gross profit 516.5 111.9 422.5
Exploration costs (20.7) (27.0) (64.0)
Administrative and selling expenses (18.4) (15.1) (35.9)
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Operating profit 477.4 69.8 322.6
Income from fixed asset investments 0.5 0.7 0.7
Gain on sales of oil and gas assets 1.0 0.7 1.5
Interest receivable and similar
income (note 4) 19.3 8.4 18.3
Interest payable and similar
charges (note 4) (41.7) (21.4) (53.9)
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Profit on ordinary activities
before taxation 456.5 58.2 289.2
Tax on profit on ordinary
activities (note 5) (260.5) (22.6) (112.0)
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Profit on ordinary activities
after taxation 196.0 35.6 177.2
Dividends - preference shares
(non-equity) (4.0) (3.7) (6.9)
Dividends - ordinary shares (14.5) (13.7) (35.8)
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Retained profit for the period 177.5 18.2 134.5
------------------------------------------------------------------------------
Basic earnings per ordinary
share (note 6) 39.3p 6.5p 34.8p
Diluted earnings per ordinary share 39.0p 6.5p 34.6p
Dividends per ordinary share 3.0p 2.8p 7.3p
In the result for the six months ended 30 June 2000 cost of sales includes an
exceptional charge relating to a ceiling test write-down of £42.9 million
(note 3 (i)).
Group Balance Sheet
30 June 2000 31 December
(Unaudited) 1999
£m £m
------------------------------------------------------------------------------
Fixed assets
Intangible assets (note 7) 232.6 209.8
Tangible assets (note 7) 2,178.1 2,106.8
Investments 72.6 52.6
------------------------------------------------------------------------------
2,483.3 2,369.2
------------------------------------------------------------------------------
Current assets
Stocks 14.8 15.1
Debtors 276.9 208.2
Investments (liquid resources) 632.4 307.7
Cash at bank and in hand 102.1 68.5
------------------------------------------------------------------------------
1,026.2 599.5
Creditors: amounts falling due within one year (683.8) (437.2)
------------------------------------------------------------------------------
Net current assets 342.4 162.3
------------------------------------------------------------------------------
Total assets less current liabilities 2,825.7 2,531.5
Creditors: amounts falling due after more
than one year (1,180.0) (1,104.7)
Provisions for liabilities and charges (370.2) (349.0)
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Net assets 1,275.5 1,077.8
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Capital and reserves
Called up share capital 198.9 198.9
Reserves 1,076.6 878.9
------------------------------------------------------------------------------
1,275.5 1,077.8
------------------------------------------------------------------------------
Analysis of shareholders' funds
Equity 1,201.2 1,003.5
Non-equity 74.3 74.3
------------------------------------------------------------------------------
1,275.5 1,077.8
Consolidated Cash Flow Statement
Six months ended Six months ended Year ended
30 June 2000 30 June 1999 31 December
(Unaudited) (Unaudited) 1999
£m £m £m
------------------------------------------------------------------------------
Cash flow from operating
activities (note 8 (i)) 601.0 156.3 514.4
Returns on investments and servicing
of finance (note 8 (iii)) (39.8) (41.7) (84.0)
Taxation (note 8 (iv)) (57.8) (20.3) (38.1)
------------------------------------------------------------------------------
Operating cash flow after tax and
finance costs 503.4 94.3 392.3
Capital expenditure and financial investment:
- capital expenditure (note 8 (v)) (137.2) (228.2) (437.5)
- financial investment (19.3) (0.9) (14.0)
Equity dividends paid (22.0) - (13.7)
------------------------------------------------------------------------------
Cash flow before management of liquid
resources and financing 324.9 (134.8) (72.9)
Management of liquid resources (324.6) 192.4 51.1
Financing - issue of shares 1.0 0.2 2.0
- increase (decrease) in debt 30.5 (29.9) 63.4
------------------------------------------------------------------------------
Increase in cash in the period 31.8 27.9 43.6
Reconciliation of net cash flow to movement in net debt
------------------------------------------------------------------------------
Increase in cash in the year 31.8 27.9 43.6
Cash (inflow) outflow from increase (decrease)
in debt and lease financing (30.5) 29.9 (63.4)
Cash outflow (inflow) from movement in
liquid resources 324.6 (192.4) (51.1)
------------------------------------------------------------------------------
Change in net debt resulting from
cash flows 325.9 (134.6) (70.9)
Translation differences (44.0) (29.9) (19.2)
Other differences (0.6) (0.4) (0.4)
------------------------------------------------------------------------------
Movement in net debt in the period 281.3 (164.9) (90.5)
Net debt brought forward (860.7) (770.2) (770.2)
------------------------------------------------------------------------------
Net debt at end of period
(note 8 (ii)) (579.4) (935.1) (860.7)
Consolidated Statement of Total Recognised Gains and Losses
Six months ended Six months ended Year ended
30 June 2000 30 June 1999 31 December
(Unaudited) (Unaudited) 1999
£m £m £m
------------------------------------------------------------------------------
Profit on ordinary activities
after taxation 196.0 35.6 177.2
Unrealised currency translation
differences 19.2 10.7 1.5
------------------------------------------------------------------------------
Total recognised gains and losses
relating to the period 215.2 46.3 178.7
------------------------------------------------------------------------------
Prior year adjustment - 58.8 58.8
------------------------------------------------------------------------------
Total recognised gains and losses since
the last financial statements 215.2 105.1 237.5
In 1999 a prior year adjustment arose from the implementation of FRS12
'Provisions, Contingent Liabilities and Contingent Assets'.
The unrealised currency translation differences shown above are the net result
of retranslating to sterling, in accordance with our accounting policy, of
significant overseas investments and certain foreign currency borrowings which
provide a partial hedge against the impact of currency movements on those
investments.
Notes
1. Accounting policies
---------------------------------------------------------------------------
The interim accounts have been prepared using the same policies as those
adopted in the accounts for the financial year ended 31 December 1999 and are
unaudited. The financial information for the year ended 31 December 1999 is an
abridged version of the accounts for that year which were delivered to the
Registrar of Companies. The accounts contained an unqualified auditor's report
and did not contain a statement under section 237(2) or (3) of the Companies
Act 1985. During the period, the group adopted FRS 15 'Tangible Fixed Assets'
and FRS 16 'Current Tax'. There was no effect on the group's net assets and
results for the period arising from the adoption of either of these financial
reporting standards.
2. Turnover - by location of production
(unaudited six months to 30 June 2000)
Norway and Gulf of
UK Denmark Italy Mexico Total
£m £m £m £m £m
------------------------------------------------------------------------------
Oil 435.5 300.2 11.0 12.5 759.2
Gas 41.9 6.8 1.0 2.8 52.5
Natural gas liquids 17.3 1.7 - - 19.0
------------------------------------------------------------------------------
494.7 308.7 12.0 15.3 830.7
Other, including
tariff income 3.2 0.6 - 0.6 4.4
------------------------------------------------------------------------------
497.9 309.3 12.0 15.9 835.1
(unaudited six months to 30 June 1999)
Norway and Gulf of
UK Denmark Italy Mexico Total
£m £m £m £m £m
------------------------------------------------------------------------------
Oil 167.2 65.0 4.3 - 236.5
Gas 36.7 6.7 0.7 - 44.1
Natural gas liquids 6.7 1.0 - - 7.7
------------------------------------------------------------------------------
210.6 72.7 5.0 - 288.3
Other, including
tariff income 3.4 0.7 1.0 - 5.1
------------------------------------------------------------------------------
214.0 73.4 6.0 - 293.4
(year ended 31 December 1999)
Norway and Gulf of
UK Denmark Italy Mexico Total
£m £m £m £m £m
------------------------------------------------------------------------------
Oil 489.9 222.3 9.0 6.0 727.2
Gas 69.1 12.9 1.2 0.8 84.0
Natural gas liquids 19.6 2.6 - - 22.2
------------------------------------------------------------------------------
578.6 237.8 10.2 6.8 833.4
Other, including
tariff income 13.2 1.5 0.1 1.8 16.6
------------------------------------------------------------------------------
591.8 239.3 10.3 8.6 850.0
3. Cost of Sales
Six months ended Six months ended Year ended
30 June 2000 30 June 1999 31 December
(Unaudited) (Unaudited) 1999
£m £m £m
------------------------------------------------------------------------------
Depreciation of development
costs (i), (ii) 191.4 90.7 203.8
Operating costs 115.9 81.8 199.5
Research and development 0.4 0.8 1.8
Royalties 10.9 8.2 22.4
------------------------------------------------------------------------------
318.6 181.5 427.5
(i) The exceptional charge of £42.9 million arose from a reduction in the
estimated reserves of the Garden Banks 161 field in the US Gulf of Mexico.
There was no related taxation.
(ii) The depreciation charge for the six months ended 30 June 1999 included a
credit of £7.1 million arising from the application of ceiling tests to the
Garden Banks 161 field in the US Gulf of Mexico and the Siri field in Denmark.
There was no related taxation.
4. Net interest and similar items (payable) receivable
Six months ended Six months ended Year ended
30 June 2000 30 June 1999 31 December
(Unaudited) (Unaudited) 1999
£m £m £m
------------------------------------------------------------------------------
Interest receivable and similar income 19.3 8.4 18.3
------------------------------------------------------------------------------
Interest payable and similar charges (53.1) (48.6) (97.8)
Amount capitalised 14.4 30.0 49.5
Unwinding of discount on long
term provisions (3.0) (2.8) (5.6)
------------------------------------------------------------------------------
Net interest payable and similar
Charges (41.7) (21.4) (53.9)
------------------------------------------------------------------------------
Net interest and similar items payable (22.4) (13.0) (35.6)
5. Taxation charge
Six months ended Six months ended Year ended
30 June 2000 30 June 1999 31 December
(Unaudited) (Unaudited) 1999
£m £m £m
------------------------------------------------------------------------------
UK petroleum revenue tax
- current 55.1 16.5 57.1
- deferred (3.3) (4.2) (5.7)
UK corporation tax
- current 76.2 0.5 42.8
- deferred (2.3) 1.8 17.9
Overseas tax principally Norwegian taxes
- current 123.0 - 0.1
- deferred 11.8 8.0 (0.2)
------------------------------------------------------------------------------
260.5 22.6 112.0
6. Earnings per share
------------------------------------------------------------------------------
The calculation of basic earnings per share is based upon the profit
attributable to ordinary shareholders for the six months ended 30 June 2000 of
£192.0 million (six months ended 30 June 1999: £31.9 million and year ended 31
December 1999: £170.3 million) and the adjusted weighted average number of
ordinary shares outstanding during the period of 488.5 million ordinary shares
(six months ended 30 June 1999: 489.7 million and year ended 31 December 1999:
489.8 million). Profit attributable to ordinary shareholders is arrived at by
deducting preference share dividends from profit on ordinary activities after
taxation. The weighted average number of ordinary shares outstanding excludes
9.8 million shares (six months ended 30 June 1999 and year ended 31 December
1998: 8.1 million) held by employee share scheme trusts on which no dividend
is payable.
Diluted earnings per share differs from basic earnings per share in that the
weighted average number of ordinary shares includes potential shares, being
any financial instrument or right that may entitle its holder to ordinary
shares, such as share options. The weighted number of ordinary shares used to
calculate diluted earnings per share is 492.2 million for the six months ended
30 June 2000 (six months ended 30 June 1999: 491.5 million and year ended 31
December 1999: 491.9 million).
7. Capital expenditure
Six months ended Six months ended Year ended
30 June 2000 30 June 1999 31 December
(Unaudited) (Unaudited) 1999
Capital expenditure comprises: £m £m £m
------------------------------------------------------------------------------
Exploration and appraisal expenditure:
Exploration and appraisal 32.5 52.7 99.9
Acquisitions 0.4 - 0.1
------------------------------------------------------------------------------
32.9 52.7 100.0
Development expenditure:
Development 118.4 172.6 320.0
Capitalised interest 14.4 30.0 49.5
Decommissioning 4.6 8.5 13.1
Acquisitions 88.6 - 7.0
------------------------------------------------------------------------------
226.0 211.1 389.6
Other fixed assets 1.8 1.3 2.1
------------------------------------------------------------------------------
Total capital expenditure 260.7 265.1 491.7
Notes:
(i) In June 2000 the group agreed to acquire all of R&B Falcon Corp's
exploration and production assets in the US Gulf of Mexico. The consideration
for this deal of approximately £84.1 million resulted in additions to
development assets of £88.6 million and an increase in decommissioning
provisions of £4.5 million.
(ii) As at 30 June 2000 interest capitalised as part of tangible fixed assets
was £228.5 million (31 December 1999 £238.6 million and 30 June 1999 £220.8
million).
8. Cash Flow Statement
(i) Reconciliation of operating profit (loss) to operating cash flow
Six months ended Six months ended Year ended
30 June 2000 30 June 1999 31 December
(Unaudited) (Unaudited) 1999
£m £m £m
------------------------------------------------------------------------------
Operating profit 477.4 69.8 322.6
Depreciation charges 193.7 93.7 211.4
Exploration costs 20.7 27.0 64.0
Movements in stocks 0.4 2.3 4.3
Movements in operating debtors (70.7) (26.0) (84.0)
Movements in operating current
liabilities (20.5) (10.6) (8.8)
Other deferrals and accruals of
operating cash flows - 0.1 4.9
------------------------------------------------------------------------------
Net cash from operations 601.0 156.3 514.4
(ii) Analysis of net debt
At At At
30 June 2000 30 June 1999 31 December
(Unaudited) (Unaudited) 1999
£m £m £m
-----------------------------------------------------------------------------
Cash at bank and in hand 102.1 54.5 68.5
Overdrafts (1.5) (1.6) (1.7)
------------------------------------------------------------------------------
100.6 52.9 66.8
Current asset investments
(liquid resources) 632.4 166.4 307.7
Debt due within one year (133.3) (202.9) (132.7)
Debt due after more than one year (1,174.2) (931.4) (1,097.6)
Finance leases (4.9) (20.1) (4.9)
------------------------------------------------------------------------------
(579.4) (935.1) (860.7)
(iii) Returns on investments and servicing of finance
Six months ended Six months ended Year ended
30 June 2000 30 June 1999 31 December
(Unaudited) (Unaudited) 1999
£m £m £m
------------------------------------------------------------------------------
Interest received 14.7 10.1 17.5
Interest paid (50.5) (48.0) (94.5)
Interest element of finance
lease rentals paid - (0.1) (0.1)
Preference dividends paid (4.0) (3.7) (6.9)
------------------------------------------------------------------------------
Net cash outflow for returns on investments
and servicing of finance (39.8) (41.7) (84.0)
(iv) Taxation
Six months ended Six months ended Year ended
30 June 2000 30 June 1999 31 December
(Unaudited) (Unaudited) 1999
£m £m £m
------------------------------------------------------------------------------
UK petroleum revenue tax (55.7) (11.6) (31.6)
UK corporate taxes (1.8) (8.7) (6.5)
Overseas tax (0.3) - -
------------------------------------------------------------------------------
Net cash outflow for tax paid (57.8) (20.3) (38.1)
(v) Capital expenditure
Six months ended Six months ended Year ended
30 June 2000 30 June 1999 31 December
(Unaudited) (Unaudited) 1999
£m £m £m
------------------------------------------------------------------------------
Capital expenditure:
- Development (118.0) (163.8) (310.1)
- Exploration and appraisal (28.2) (58.4) (113.3)
- Sale of licence interests 13.1 1.9 2.9
- Purchase of licence interests (2.3) (6.6) (14.9)
- Purchase of other fixed assets (1.8) (1.3) (2.1)
------------------------------------------------------------------------------
Net cash outflow for capital
expenditure (137.2) (228.2) (437.5)
Independent Review Report
By KPMG Audit Plc to Enterprise Oil plc
We have been instructed by the company to review the interim financial
information set out on pages 12 to 19 and we have read the other information
contained in the interim report and considered whether it contains any
apparent misstatements or material inconsistencies with the financial
information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The Listing
Rules of the Financial Services Authority require that the accounting policies
and presentation applied to the interim figures should be consistent with
those applied in preparing the preceding annual accounts except where they are
to be changed in the next annual accounts in which case any changes, and the
reason for them, are to be disclosed.
Review of work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4: Review of Interim Financial Information issued by the Auditing
Practices Board. A review consists principally of making enquiries of
management and applying analytical procedures to the financial information and
underlying financial data and, based thereon, assessing whether accounting
policies and presentation have been consistently applied, unless otherwise
disclosed. A review is substantially less in scope than an audit performed in
accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly we do not express an audit opinion on
the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2000.
KPMG Audit Plc
Chartered Accountants
London
5 September 2000
Additional Information Under US Accounting Principles
The information regarding production and financial results reported in this
statement is prepared in accordance with the group's established reporting and
accounting policies which comply with UK accounting principles.
The following supplementary information is prepared under US accounting
principles:
Six months ended Six months ended
30 June 2000 30 June 1999
------------------------------------------------------------------------------
Production (mboe per day) 272.9 190.8
Approximate profit after tax (net income) (£m) 131.8 14.6
Approximate earnings per share (pence) 26.2 2.2
Approximate shareholders' equity (£m) as at 30 June 909.6 774.8
Except for the historical information contained herein, this Interim Statement
includes forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 that involve risks, and other risk
factors detailed form time to time in the company's publicly available
Securities and Exchange Commission reports, which could cause actual results
to be materially different.
Shareholder Information
Financial Calendar
Interim dividend payment qualifying date 22 September 2000
Interim dividend payment date 1 November 2000
Full year results 8 March 2001
Annual General Meeting, Glaziers Hall, London 17 May 2001
Final ordinary dividend payment date 1 June 2001
Half year results 6 September 2001
Stock Exchange Listings
The ordinary shares of the company of 25p each are listed on the London Stock
Exchange. Ordinary shares and cumulative dollar preference shares of the
company are also traded on the New York Stock Exchange in the form of American
Depositary Shares and held in the form of American Depositary Receipts (ADRs).
ADR holders receive the annual and interim reports issued to shareholders as
well as a supplement to the annual report providing certain accounting
information prepared under US accounting principles. The company has filed a
Form 20-F for the year ended 31 December 1999 with the United States
Securities and Exchange Commission.
Published Information
Further copies of the interim report as well as copies of the annual report,
the Form 20-F, the US accounting supplement to the annual report,
environmental review and the company's 2000 Key Facts may be obtained from the
Corporate Communications Department, Enterprise Oil plc, Grand Buildings,
Trafalgar Square, London WC2N 5EJ. Company information may also be viewed on
the website: www.entoil.com
Shareholder Services
The company's brokers, Cazenove & Co, regulated by The Securities and Futures
Authority and a member of the London Stock Exchange, provide a simple low-cost
postal share dealing facility in Enterprise Oil plc ordinary shares.
Commission rates are 1 per cent up to £5,000 of the value of the shares bought
or sold, 0.5 per cent on the next £145,500 and 0.3 per cent for amounts
thereafter, subject to a £10 minimum charge. Further details can be obtained
from Enterprise Oil Share Dealing Service, Cazenove & Co, 12 Tokenhouse Yard,
London EC2R 7AN (Tel: 020 7606 1768).
Registrar - UK Shareholders
Lloyds TSB Registrars Scotland
117 Dundas Street
Edinburgh
EH3 5ED
Telephone: 0870 601 5366
Broker Helpline: 0870 600 0158
Holders of American Depositary Receipts
Citibank N.A.
111 Wall Street
New York
NY 10005
USA
Telephone: 00 1 800 422 2066
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