Final Results

Hunting PLC 01 March 2007 For immediate release 1 March 2007 HUNTING PLC Preliminary results For the year ended 31 December 2006 Hunting PLC ('Hunting', the 'Group' or the 'Company'), the international energy services company, today announces its preliminary results for the year ended 31 December 2006. Revenue Â£1,810m (2005: Â£1,522m) +19% Profit from operations Â£86.3m (2005: Â£44.9m) +92% Pre-tax profit Â£80.8m (2005: Â£40.9m) +98% Free cashflow increased to Â£31.0m (2005: Â£17.9m) +73% Basic earnings per share 37.6p per share (2005: 21.2p) +77% Total Ordinary dividend per share 7.5p (2005: 6.0p) +25% Commenting on the outlook for the Group, Dennis Proctor, Hunting's Chief Executive, said: 'The Company has experienced a doubling of profit in each of the last two years. While such levels of growth are unsustainable, management expects that the continued strength in the market will provide excellent growth opportunities. The balance sheet of Hunting PLC is strong. Its assets are well positioned globally. Its commitment to shareholder value is solid.' 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 Anthony Arthur 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 As we announced in December, the Company has benefited from strong trading and our performance has exceeded market expectations. Profit before taxation for the year to 31 December 2006 was Â£80.8m (2005 - Â£40.9m), a 98% increase. The Company is essentially a North American energy business, with strong positions also in the North Sea and internationally. Commodity prices remain strong relative to historical levels so that recent corrections have not adversely impacted the Company's activities, order books or production backlogs. Gibson Energy, the Company's Canadian-based midstream services operation, is at the hub of an extremely active energy scene. It has been able to benefit from its involvement in both conventional heavy crude oil and ever-increasing volumes of production from Alberta's extensive oil sand deposits. The Marketing division, concentrating on quality management of the province's diverse product streams, has once again produced outstanding results. Operating margins in this activity are typical for the industry but returns on capital are excellent. Moose Jaw Refinery has substantially improved its results, benefiting from better prices in its traditional products and from a successful emphasis on products from the lighter half of the crude oil barrel. Trucking operates the largest crude oil fleet in Western Canada and has had a busy and successful year. Canwest Propane, the second largest propane company in Canada, produced fine results and is expanding its activities into the northern United States. Hunting Energy is the Company's upstream operation, providing sophisticated equipment for the upstream sector of the world's hydrocarbon industry - with special emphasis on tubular products destined for below-ground applications. As easily exploitable reserves become harder to locate and produce, the emphasis on deeper and more difficult deposits plays to Hunting Energy's strengths. Manufacturing plants in the United States, Canada, United Kingdom, Netherlands, Singapore and China have been working flat out throughout the year. Outstanding technical achievements have been recorded during the year in the Gulf of Mexico and in the North Sea. The Company continued to invest in capital equipment to support its strong market positions. Lead times and skilled labour shortages amongst suppliers limit our ability to do this but progress is being made. Basic earnings per share were 37.6p, an increase of 77% on the previous year. We are recommending a final dividend of 5.2p per share, giving a total of 7.5p for the year, a 25% increase. This has been a superb year for your Company. There will continue to be short term fluctuations in commodity prices but the fundamentals of hydrocarbon supply and demand in the markets we serve suggest that the future looks bright. I thank our fine staff for their hard work and dedication during another successful year. Richard Hunting Chairman Business Review Chief Executive's Review The global thirst for energy continues to provide your Company with the opportunity to deliver excellent results. Oil and gas operators once again increased their budgets to satisfy growing demand and to offset rapid depletion. For some operators, this increased expenditure did not replace produced reserves while others only increased their reserves modestly. Going forward, a greater number of wells must be drilled - often to greater depths, and more activity in Canadian oil sands projects must occur. The Company's 2,600 employees, proprietary products, strategically located assets, market share leadership and financial strength combined will continue to capitalise on the industry growth. The vibrancy of the industry is recognised as the key factor for the improved performance. However, profit from operations increased 92% from last year on a 19% increase in revenue, reflecting a significant gain in equipment utilisation, manpower efficiencies, and margin improvement. Prior period capital expenditures benefited the results as did new business from the Middle East and Asia. Balance sheet gearing at the year end was 33% - a significant improvement from the 53% reported in 2005. Free cash flow, as defined and presented on page 13, grew to Â£31.0m, from Â£17.9m in 2005. Despite high levels of natural gas storage and lower natural gas prices in the second half of the year for North America, order books remained strong, and were offset by significant activity growth in other parts of the world. The Company's products and services are more directed towards high pressure, high temperature and deeper applications therefore receiving no impact from the US or Canadian decline in rig activity for shallow gas well completions. With oil prices averaging US $66.40 bbl for the year compared to US $56.70 bbl for 2005, the Canadian oil sands projects continued their robust activity. Strategic goals remain focused on the following key areas: Proprietary Technology - Hunting Energy Services owns and develops proprietary patented products including premium connections, burst discs, make up processes for tubulars, coating of threads and thread protectors. Geographic Footprint - In strategic locations around the globe Hunting owns and operates plants, properties and equipment employing people to serve its global customers with local services and products. Market Share Strength - Gibson Truck Transportation, Iberia Manufacturing, E.A. Gibson Shipbrokers and Tianjin Huaxin Premium Connections, the China Threading venture, have leading shares in their respective product or service markets. Asset Utilisation - In Gibson Energy, the marketing division utilises pipelines, storage tanks, terminals and truck transportation to obtain various grades of heavy oil blending them with diluents to produce a lighter grade, higher priced crude for sale. Business Developments Capital Expenditure increased to Â£54.2m (2005 - Â£32.9m) of which Â£26.8m was new business expansion and Â£27.4m on replacement capital. Gibson Energy invested Â£21.6m (2005 - Â£16.1m) with Â£16.1m for new business and Â£5.5m on replacement capital. Â£3.1m was invested in the new Edmonton North Terminal completing the new blending and trading terminal that began in 2005 at a total cost of Â£11.2m. At the Edmonton South Terminal Â£5.4m was invested in expanding capacity with a new 20,000 bbl tank and converting the previous MTBE rail car loading system to load ultra low sulphur diesel for the adjacent Petro Canada Refinery. At the Hardisty tank terminal, Â£2.7m was invested in modifying two 80,000 bbl tanks to accommodate bitumen volumes from the Enbridge Athabasca Pipeline and new capacity for railcar unloading of diluent. Truck Transportation invested Â£0.9m on replacement equipment and Â£2.7m on new trailer capacity. Moose Jaw Refinery capital expenditure was Â£1.9m for the upgrading of facilities and tank refurbishments to enlarge capacity and improve product specifications. At Canwest Propane Â£1.0m was invested in replacement delivery units and Â£1.6m in expanding capacity with additional tanks and the acquisition of LVP Propane for Â£0.9m to strengthen growth in West Central Alberta. A new propane terminal at Tacoma, Washington (USA) was completed during the year. Hunting Energy Services invested Â£30.8m in capital expenditures during 2006 of which Â£9.9m was replacement expenditure and Â£10.2m was Exploration and Production expenditure. The balance of Â£10.7m included expenditure of Â£5.6m on additional facilities and tooling for Hunting Performance at Oklahoma City and Casper, Wyoming and within Well Completion, manufacturing facilities incurred Â£2.6m on a new pressure control equipment facility in Houston, Texas, expansion of the Rankin Road facility in Houston, Texas, expansion of the Lafayette, Louisiana facility and the build-out of a new ID boring facility in Houma, Louisiana. A further Â£2.5m was invested in new machinery and tools for the global manufacturing facilities including CNC machines and coupling machines for expansion of the business. Outlook Geopolitical considerations, global oil demand, the OPEC cartel, non-OPEC supplies, alternative energy supplies and weather will continue to impact the price of oil and gas and therefore the level of activity in 2007. Oil and gas producers - state owned oil companies being the most aggressive - are expected to continue with the necessary investment to boost reserves and production capability throughout the world. Manufacturing backlogs in the oil service industry extend well beyond 2007 for certain equipment and products. Deliverability may well be the only constraint to the industry for gains beyond the prevailing wisdom of a 7% growth. Manpower availability continues to challenge management, however training programmes have been initiated, benefit packages have been reviewed and recruitment efforts have mitigated the problem. While currency movements will impact the results, the capital committed in 2006 for new capacity will generate full year benefits in 2007. The Company has experienced a doubling of profit in each of the last two years. While such levels of growth are unsustainable, management expects that the continued strength in the market will provide excellent growth opportunities. The balance sheet of Hunting PLC is strong. Its assets are well positioned globally. Its commitment to shareholder value is solid. Operating Review Income Statement 2006 2005 Increase Â£m Â£m Revenue 1,810.4 1,521.9 + 19% -------- -------- EBITDA 119.6 71.4 + 67% Depreciation, amortisation & impairment (28.3) (23.9) Exceptional charges (5.0) (2.6) -------- -------- Profit from operations 86.3 44.9 + 92% Net interest charge (8.1) (4.6) Share of associates 2.6 0.6 -------- -------- Profit before tax 80.8 40.9 + 98% Taxation (28.6) (14.7) -------- -------- Profit after tax 52.2 26.2 -------- -------- Earnings per share - pence 37.6 21.2 + 77% Return on capital employed 33% 19% Average exchange rates to sterling US Dollar 1.84 1.82 Canadian Dollar 2.09 2.21 Euro 1.47 1.46 Average number of employees 2,572 2,343 The Group reports through a divisional structure arranged into the following business segments: Segmental Results 2006 2005 Revenue Profit from Revenue Profit from Operations Operations Â£m Â£m Margin Â£m Â£m Margin Gibson Energy Marketing 1,147.9 13.0 1% 1,016.7 10.7 1% Truck Transportation 103.8 9.6 9% 75.1 4.9 7% Terminals and Pipelines 15.6 5.3 34% 14.1 5.7 40% Canwest Propane and 69.2 5.2 8% 49.2 3.0 6% Natural Gas Liquids Moose Jaw Refinery 92.5 14.2 15% 59.3 (2.5) (4)% ------- ------- ------- ------- 1,429.0 47.3 3% 1,214.4 21.8 2% ------- ------- ------- ------- Hunting Energy Services Well 182.6 26.2 14% 137.2 12.2 9% Completion Well Construction 73.5 8.8 12% 65.1 6.7 10% Exploration 10.0 2.0 20% 12.3 5.3 43% and Production ------- ------- ------- ------- 266.1 37.0 14% 214.6 24.2 11% ------- ------- ------- ------- Other operating divisions 115.3 7.0 6% 92.9 1.5 2% ------- ------- ------- ------- Group 1,810.4 91.3 5% 1,521.9 47.5 3% ------- ------- Exceptional charges (5.0) (2.6) ------- ------- Group profit from operations 86.3 44.9 ------- ------- Gibson Energy Crude oil prices continued to be the driver for higher activity levels in the Canadian oil and gas industry and this contributed to a 117% increase in operating profits for Calgary, Alberta based Gibson Energy. Heavy oil, bitumen and synthetic oil volumes from the Northern Alberta Athabasca oil sands region 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 non-conventional reserves will provide many opportunities for the expansion of Gibson's marketing, transportation and distribution businesses. The Moose Jaw refinery made an outstanding turnaround in the year and a significant contribution to the overall result with profit from operations increasing from a loss of Â£2.5m in 2005 to a profit of Â£14.2m in 2006. Employee numbers have risen from an average number employed in 2005 of 500 to over 610 at the end of 2006. Marketing activities comprise the buying, selling and blending of crude oil, diluent, natural gas and wellsite fluids across North America. The price risk on volumes purchased and inventories is managed through publicly traded commodity instruments. Marketing accounted for 27.5% of Gibson's profit from operations. 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 profit over prior years. Despite commodity price volatility during the year, Gibson's risk management systems minimised the exposure to large market swings. Edmonton North Terminal was fully commissioned in the second quarter providing additional storage and blending opportunities. Gibson is one of Canada's largest independent crude oil marketers, dealing with all of the major, intermediate and smaller Canadian producing companies and income trusts. Truck Transportation operates a fleet of over 600 tractors and 1,000 trailers that move in excess of 90 million barrels of hydrocarbon products per annum across Western Canada and the north western United States. Truck Transportation accounted for 20.3% of Gibson's profit from operations. Additional hauling in the Lloydminster area as well as new contracts from Athabasca and Northern frontiers provided excellent growth opportunities in the year. In terms of market size it is the largest crude oil truck hauler in Western Canada. Most competition is from smaller Independent Owner/Operators in the Operational areas. Health, Safety and Environmental performance is rigorously monitored and maintained to Governmental and Provincial standards and beyond. Terminals and Pipeline operations incorporate an infrastructure of over 270 miles of pipelines and 9 terminals with a storage capacity in excess of 2.3 million barrels. With these assets Gibson Energy provide storage and blending services for crude oil and diluent products. Terminals and Pipeline operations accounted for 11.2% of Gibson Energy's profit from operations 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's Fort McMurray operations steadily increased throughout the year. Canwest Propane and Natural Gas Liquids includes the operations of Canwest Propane Ltd, which is the second largest Canadian retail distributor of propane utilising a fleet of 160 trucks from 45 branches across Western Canada and the North Western US handling 220 million litres of propane per annum. Natural Gas Liquid products are purchased, trucked to and processed at the Group's Hardisty fractionation plant into ethane, propane, butane and condensate LPG products that Gibson markets and distributes through third parties and proprietary storage terminals. The division accounted for 11% of Gibson Energy's profit from operations. New facilities were opened in Alberta, Washington and North Dakota, US with further expansion into the US planned for bulk distribution terminals. The Moose Jaw Refinery processes heavy crude oil into asphalt and lighter (TOPS) distillate products which are shipped via rail cars and trucks from Moose Jaw, Saskatchewan, to markets in the US and across Western Canada. Some of the TOPS are separated into speciality frac fluids products distributed to the drilling industry. An excellent result was achieved during the year as trading margins continued to improve. There has been a strong demand for lighter products from the top of the crude barrel which are distributed for drilling and fracturing fluids and to the railroads for off-road diesel fuel. The facility processed 4.2 million barrels of heavy crude into 2.0 million barrels of asphalt and 2.2 million barrels of TOPS. The plant capacity is currently 5 million barrels per annum. Both Truck Transportation and Marketing work closely with Moose Jaw achieving trading and transportation synergies. Most customers for road grade asphalt are regionally located in Saskatchewan, while roofing flux asphalt products are shipped to major suppliers in the US. Gibson wellsite fluids marketing distributes one-third of the TOPS for distillates and frac fluids to the Canadian drilling industry with two-thirds of the lighter ends going into crude blending and off-road diesel fuel. Hunting Energy Services Hunting Energy Services recorded profit from operations of Â£37.0m versus Â£24.2m in 2005. At the year end the business employed 1,186 under 3 business platforms: Well Construction, Well Completion and Exploration and Production. Both Well Construction and Well Completion benefited from excellent market conditions, generic growth of global footprint, meeting customer demands and the expansion of product offerings while Exploration and Production saw lower results than 2005 due to well completion delays. The Well Construction platform provides products and services used by customers for the drilling phase of oil and gas wells along with associated equipment used by the underground construction industry for telecommunication infrastructure build out. The oil and gas business is primarily focused on drilling activities at depths of 10,000ft and deeper and the Trenchless business focuses on supplying drill rods to manufacturers and dealers. The Mud Motor, Premium Connection aspects of the business platform reported historical record revenues and profits. Canadian operations and Trenchless business reported above average revenues and profits. The Well Completion platform provides products and services used by customers for the completion and intervention phases of oil and gas wells. The business focuses on products and services to both the major oil service companies along with the end user community. Operations in Holland, Aberdeen and Asia Pacific together with US Pipe, US Manufacturing and Well Intervention platforms all reported historical record revenue and profits. Canadian operations reported above average revenue and profits. Exploration and Production includes the Group's oil and gas exploration and production activities in the Southern US and offshore Gulf of Mexico. The Group takes minority non operating equity holdings and currently participates in over seventy oil and gas production facilities. Although revenue and profit from operations were down year on year a notable drilling record was achieved over the year, with 15 successful wells out of 18 wells drilled - five of the successes being onshore Texas. These new offshore and onshore wells will significantly enhance oil and gas production, which has been slow to recover following the damages wrought by Hurricanes Katrina and Rita in September of 2005. Third party production infrastructure was suspended as much as ten months in some cases, resulting in shut-in wells that required extensive workovers to restart. On a Net Equivalent Barrel ('NEB') basis, full year production was down 15% as compared to 2005, with improved recovery beginning in the fourth quarter. Natural gas prices, although lower than 2005 levels, continued at historically strong levels, contributing to good profits and returns overall. Year-end reserves of oil and gas on an SEC basis were 2.3m NEB compared with 2.4m NEB at the end of the previous year. Other Operating Divisions EA Gibson Shipbrokers is an international London based ship-broker engaged in the transportation of crude oil and other petroleum products, liquefied natural and petroleum gas and other related services. Results, although affected by the weak US $, were a record for the company complemented by strong returns from the LPG Products and Specialist Tankers segments. Hunting Energy France includes the activities of the Group's French based operations providing petrochemical equipment to the French and international energy and associated industries. Interpec increased its profit from operations and finished the year with a strong order book following the slippage of a number of orders into 2007. The other French based companies comprising Larco, Setmat and Roforge also maintained or increased their results with strong order books at the end of the year. Aero Sekur, based in Italy, provides defence and safety products including parachutes, inflatable equipment and camouflage, primarily to the Italian military. Italian defence budget cuts continue to adversely impact both cash flow and new order placement. Alternative markets are being targeted both within and outside Italy for the company's range of products and services. A strong research and development function has been established to provide the company with a higher value added product line and production efficiencies continue to improve. Financial Overview An excellent year with revenues and margins at record levels. Revenue was Â£1,810.4m (2005 - Â£1,521.9m) with profits from operations up 92% at Â£86.3m (2005 - Â£44.9m). Profit before tax recorded a 98% increase at Â£80.8m (2005 - Â£40.9m). Net Finance Costs Net finance costs increased to Â£8.1m (2005 - Â£4.6m) following the increase in capital expenditure and higher levels of working capital and increased interest rates, particularly in the US and Canada. Interest cover was 11 times compared to 7 times in 2005. Exchange Rates 2006 2005 Average Year End Average Year End US Dollar 1.84 1.96 1.82 1.72 Canadian Dollar 2.09 2.28 2.21 2.01 Rates quoted to sterling Year end rates for the US and Canadian Dollar weakened by 14% and 13% respectively and resulted in a Â£16.4m exchange loss charged to reserves at 31 December 2006. Earnings Per Share Basic earnings per share increased to 37.6p in 2006 from 21.2p in 2005. The average number of shares used in calculating the earnings per share in 2006 was 128.9m compared to 115.3m in 2005. Taxation The tax charge for 2006 was Â£28.6m which reflects an effective rate of 35.4% (2005 - 35.9%). The higher than UK tax charge is primarily due to permanent differences and higher North American tax rates. Balance Sheet 2006 2005 Â£m Â£m Total assets 735.3 694.7 Total liabilities (523.8) (511.1) ------- ------ Net assets 211.5 183.6 ------- ------ Net debt 69.3 97.0 Gearing ratio 33% 53% Net Assets The increase in total assets is principally due to capital expenditure on property, plant and equipment and higher commodity prices and activity increasing the amount invested in working capital. Net Debt Net debt reduced to Â£69.3m (2005 - Â£97.0m) as the increased capital expenditure and working capital were more than offset by strong cash management. Gearing reduced from 53% at the end of 2005 to 33% at 31 December 2006. Pensions The Group continues to account for pensions in accordance with IAS 19 and at the end of the year the net surplus on the Group's balance sheet was Â£27.7m (2005 - Â£18.2m) of which Â£30.1m (2005 - Â£21.1m) related to the UK defined benefit scheme which was closed to new entrants in 2002. An additional cash contribution of Â£5.6m was paid to the UK defined benefit scheme in January 2006 to fund the forecast cost on a buyout basis. Liquidity, Resources and Capital Expenditure Cash Flow 2006 2005 Â£m Â£m Cash from Operations 104.5 59.6 Tax Paid (11.2) (4.8) Capital Expenditure (54.2) (32.9) Interest (8.1) (4.0) -------- ------- Free Cash Flow 31.0 17.9 Acquisitions (1.0) (9.7) Disposals - 3.2 Rights Issue - 48.1 Dividends (8.2) (5.6) Other Movements 5.9 (20.3) -------- ------- Decrease in Net Debt 27.7 33.6 -------- ------- Free cash flow defined as profit from operations adjusted for working capital, tax, capital expenditure and interest, generated during the year was Â£31.0m compared to Â£17.9m in 2005. Capital expenditure was Â£54.2m (2005 - Â£32.9m) and included Â£21.6m in Gibson Energy and Â£30.8m in Hunting Energy Services which includes Â£10.2m (2005 - Â£5.6m) related to Exploration and Production. Liquidity and Funding The Group has sufficient credit facilities to meet its anticipated funding requirements over the short and medium term. These facilities which total Â£248.9m include committed bank facilities of Â£162.5m, US$ 70m (Â£35.7m) Private Placement Notes which mature in 2012 and uncommitted facilities of Â£50.7m. The committed bank facilities include a Â£125m five year multi-currency borrowing facility expiring in September 2010. The maturity profile of the Group's undrawn credit facilities is shown within note 26 to the 2006 Annual Report. Dennis Proctor Chief Executive Dennis Clark Finance Director Consolidated Income Statement For the Year ended 31 December 2006 2006 2005 Notes Â£m Â£m Revenue 1 1,810.4 1,521.9 Cost of sales (1,639.8) (1,394.2) ------- ------- Gross profit 170.6 127.7 Other operating income 7.5 3.9 Operating expenses (91.8) (86.7) ------- ------- Profit from operations 1 86.3 44.9 Interest income 8.3 7.6 Interest expense and similar charges (16.4) (12.2) Share of post-tax profits in associates 1 2.6 0.6 ------- ------- Profit before tax 80.8 40.9 Taxation 2 (28.6) (14.7) ------- ------- Profit for the year 52.2 26.2 ------- ------- Attributable to: Shareholders of the parent 48.4 24.4 Minority interests 3.8 1.8 ------- ------- 52.2 26.2 ------- ------- Earnings per share Basic earnings per 25p ordinary share 3 37.6 21.2p Diluted earnings per 25p ordinary share 3 35.7 20.2p Dividend declared per share - interim 4 2.3p 2.0p Dividend declared per share - final 4 5.2p 4.0p The profit for the year arises from the Group's continuing operations. Consolidated Statement of Recognised Income and Expense For the Year ended 31 December 2006 2006 2005 Â£m Â£m Profit (loss) for the year 52.2 26.2 ------ ------ Exchange adjustments net of tax (15.8) 11.1 Fair value gains (losses) net of tax: - on cash flow hedges 0.4 - - transferred to income statement on disposal of cash flow hedges - (0.3) - transferred to income statement on disposal of available for sale investments - (0.2) Actuarial gains (losses) on defined benefit pension schemes 2.6 (5.5) - taxation (0.6) 1.4 ------ ------ Net (expense) income recognised directly in equity (13.4) 6.5 ------ ------ Total recognised income and expense for the year 38.8 32.7 ------ ------ Attributable to: Shareholders' equity 35.4 30.9 Minority interests 3.4 1.8 ------ ------ 38.8 32.7 ------ ------ Consolidated Balance Sheet At 31 December 2006 2006 2005 Â£m Â£m ASSETS Non-current assets Property, plant and equipment - at cost 146.5 133.6 Property, plant and equipment - at valuation 48.1 57.2 Goodwill 53.0 58.6 Other intangible assets 4.0 5.1 Interests in associates 8.0 5.5 Available for sale investments 0.2 0.2 Retirement benefit assets 30.1 21.1 Trade and other receivables 2.8 2.9 Deferred tax assets 12.4 14.8 ------ ------ 305.1 299.0 ------ ------ Current assets Inventories 120.0 107.6 Trade and other receivables 191.1 196.2 Investments 0.6 - Cash and cash equivalents 118.5 91.9 ------ ------ 430.2 395.7 ------ ------ LIABILITIES Current liabilities Trade and other payables 226.6 217.1 Current tax liabilities 8.8 4.7 Borrowings 108.5 93.2 Provisions 4.2 2.0 ------ ------ 348.1 317.0 ------ ------ Net current assets 82.1 78.7 ------ ------ Non-current liabilities Borrowings 79.9 95.7 Deferred tax liabilities 76.3 74.9 Retirement benefit obligations 2.4 2.9 Other payables 1.9 4.5 Provisions 15.2 16.1 ------ ------ 175.7 194.1 ------ ------ Net assets 211.5 183.6 ------ ------ Shareholders' equity Share capital 32.8 32.2 Share premium 85.6 82.7 Other reserves 5.6 21.7 Retained earnings 79.8 41.8 ------ ------ 203.8 178.4 Minority interests 7.7 5.2 ------ ------ Total equity 211.5 183.6 ------ ------ Consolidated Cash Flow Statement For the Year 31 December 2006 2006 2005 Â£m Â£m Operating activities Profit (loss) from operations 86.3 44.9 Exceptional charges 5.0 2.6 Depreciation, amortisation and impairment 28.3 23.9 Profit on disposal of investments - (0.4) Loss (profit) on disposal of property, plant and equipment 2.9 (0.6) Increase in inventories (25.3) (22.6) Increase in receivables (11.9) (34.1) Increase (decrease) in payables 25.0 46.4 Taxation (paid) received (11.2) (4.8) UK pension scheme contribution (5.6) - Other non cash flow items (0.2) (0.5) ------ ----- Net cash inflow (outflow) from operating activities 93.3 54.8 ------ ----- Investing activities Dividends received from associates 0.2 3.8 Purchase of subsidiaries (1.0) (9.7) Cash acquired with subsidiaries 0.1 1.5 Additional investment in existing subsidiaries - - Closure of a subsidiary (1.0) - Purchase of and loans to associates 2.1 (5.3) Proceeds from disposal of investments - 3.2 Proceeds from disposal of property, plant and equipment 1.1 2.9 Purchase of property, plant and equipment (54.2) (32.9) Purchase of intangible assets (0.7) (0.2) ------ ----- Net cash (outflow) from investing activities (53.4) (36.7) ------ ----- Financing activities Interest received 6.4 7.7 Interest paid (14.5) (11.7) Dividends received from subsidiaries - - Equity dividends paid (8.2) (5.6) Minority interest dividend paid (0.9) (0.3) Share capital issued 3.3 48.1 Purchase of Treasury shares (12.4) (4.6) Disposal of Treasury shares 4.0 - Proceeds from new borrowings 11.9 - Repayment of borrowings (14.6) (58.3) Purchase of deposits (0.6) - Capital element of finance leases (0.6) (0.2) ------ ----- Net cash (outflow) inflow from financing activities (26.2) (24.9) ------ ----- Net inflow (outflow) in cash and cash equivalents 13.7 (6.8) Cash and cash equivalents at beginning of year 4.5 10.9 Effect of foreign exchange rate changes (1.3) 0.7 Adoption of IAS 32 and IAS 39 - (0.3) ------ ----- Cash and cash equivalents at end of year 16.9 4.5 ------ ----- Cash and cash equivalents and bank overdrafts at end of year comprise: Cash and cash equivalents 118.5 91.9 Bank overdrafts included in borrowings (101.6) (87.4) ------ ----- 16.9 4.5 ------ ----- Notes 1. SEGMENTAL REPORTING Business segments Results from operations Year ended 31 December 2006 Total Inter- Total Profit from gross segmental revenue operations revenue revenue Â£m Â£m Â£m Â£m Gibson Energy Marketing 1,294.9 (147.0) 1,147.9 13.0 Truck Transportation 113.1 (9.3) 103.8 9.6 Terminals and Pipelines 19.5 (3.9) 15.6 5.3 Canwest Propane and Natural Gas Liquids 149.5 (80.3) 69.2 5.2 Moose Jaw Refinery 167.4 (74.9) 92.5 14.2 ------- ------- ------- ------- 1,744.4 (315.4) 1,429.0 47.3 ------- ------- ------- ------- Hunting Energy Services Well Completion 207.6 (25.0) 182.6 26.2 Well Construction 80.6 (7.1) 73.5 8.8 Exploration and Production 10.0 - 10.0 2.0 ------- ------- ------- ------- 298.2 (32.1) 266.1 37.0 ------- ------- ------- ------- Other operating divisions 115.3 - 115.3 7.0 ------- ------- ------- ------- Total 2,157.9 (347.5) 1,810.4 91.3 ------- ------- ------- Exceptional charges not apportioned to business segments (5.0) ------- Profit from operations 86.3 ------- Year ended 31 December 2005 Total Inter- gross segmental Total Profit from revenue revenue revenue operations Â£m Â£m Â£m Â£m Gibson Energy Marketing 1,136.8 (120.1) 1,016.7 10.7 Truck Transportation 83.0 (7.9) 75.1 4.9 Terminals and Pipelines 17.9 (3.8) 14.1 5.7 Canwest Propane and Natural Gas Liquids 109.5 (60.3) 49.2 3.0 Moose Jaw Refinery 109.6 (50.3) 59.3 (2.5) ------- ------- ------- ------- 1,456.8 (242.4) 1,214.4 21.8 ------- ------- ------- ------- Hunting Energy Services Well Completion 151.7 (14.5) 137.2 12.2 Well Construction 68.8 (3.7) 65.1 6.7 Exploration and Production 12.3 - 12.3 5.3 ------- ------- ------- ------- 232.8 (18.2) 214.6 24.2 ------- ------- ------- ------- Other operating divisions 92.9 - 92.9 1.5 ------- ------- ------- ------- Total 1,782.5 (260.6) 1,521.9 47.5 ------- ------- ------- Exceptional charges not apportioned to business segments (2.6) ------- Profit from operations 44.9 ------- Inter-segmental revenues are priced on an arms-length basis. Costs incurred centrally are apportioned to the operating units on the basis of the time attributed to those operations by senior executives. Exceptional items are regarded as one-off items of income and expense that do not intentionally recur and, due to their size and nature, need to be disclosed separately in order to give a true and fair view of the results of the Group. The exceptional charges relate to the discontinuance of operations and are not therefore apportionable to the current business segments shown above. The share of post-tax profits in associates is derived from the following business segments: 2006 2005 Â£m Â£m Hunting Energy Services - Well Completion 1.1 0.9 Central 1.5 (0.3) ------ ------ 2.6 0.6 ------ ------ Business segments Assets and liabilities 2006 2005 Segment Segment Segment Segment assets liabilities assets liabilities Â£m Â£m Â£m Â£m Gibson Energy Marketing 121.1 72.9 139.9 95.3 Truck Transportation 41.4 12.3 45.7 9.9 Terminals and Pipelines 53.1 3.5 52.6 2.8 Canwest Propane and Natural Gas Liquids 46.4 12.4 44.6 11.1 Moose Jaw Refinery 31.2 8.8 29.1 5.5 --------- -------- ------- ------- 293.2 109.9 311.9 124.6 --------- -------- ------- ------- Hunting Energy Services Well Completion 111.5 55.8 93.2 49.9 Well Construction 75.9 13.1 69.0 12.6 Exploration and Production 28.9 1.3 29.1 0.9 --------- -------- ------- ------- 216.3 70.2 191.3 63.4 --------- -------- ------- ------- Other operating divisions 51.1 33.7 54.6 32.1 --------- -------- ------- ------- Interests in associates Gibson Energy - Canwest Propane and Natural Gas Liquids 0.2 - - - Hunting Energy Services - Well Completion 3.3 - 2.5 - Central 4.5 - 3.0 - --------- -------- ------- ------- 8.0 - 5.5 - --------- -------- ------- ------- Total segment assets and liabilities 568.6 213.8 563.3 220.1 Unallocated assets and liabilities: - current and deferred taxes 12.4 85.1 14.8 79.6 - retirement benefit assets 30.1 - 21.1 - - net debt 119.1 188.4 91.9 188.9 - central assets and liabilities 5.3 36.7 3.8 23.8 - elimination of inter-segmental balances (0.2) (0.2) (0.2) (1.3) --------- -------- ------- ------- Total assets and liabilities 735.3 523.8 694.7 511.1 --------- -------- ------- ------- Segment assets comprise property, plant and equipment, intangibles, goodwill, inventories and receivables. Assets owned centrally and employed by a segment are allocated to that segment. Segment liabilities comprise trade payables, provisions and other operating liabilities. 2. TAXATION The tax charge to the income statement arises as follows: 2006 2005 Â£m Â£m UK 5.7 2.3 Non-UK 22.9 12.4 ------ ------ 28.6 14.7 ------ ------ 3. EARNINGS PER SHARE Basic and diluted earnings per share are calculated as follows: 2006 2005 Earnings Weighted Earnings per Earnings Weighted average number Ordinary share average number of Ordinary of Ordinary Earnings per shares shares Ordinary share Â£m millions pence Â£m millions pence Profit attributable to shareholders of the parent and for 48.4 128.9 37.6 24.4 115.3 21.2 basic EPS Effect of dilutive shares Options - 6.4 - 5.7 Long term incentive plans - 0.5 - 0.3 ------- --------- ------- --------- Diluted EPS 48.4 135.8 35.7 24.4 121.3 20.2 Adjusted earnings ------- --------- ------- --------- 4. DIVIDENDS PAID 2006 2005 Ordinary dividends: Pence per share Â£m Pence per share Â£m 2006 interim paid 2.3 3.0 - - 2005 final paid 4.0 5.2 - - 2005 interim paid - - 2.0 2.6 2004 final paid - - 3.0 3.0 ------- ------ ------ ------- Total dividends paid 6.3 8.2 5.0 5.6 ------- ------ ------ ------- The Directors recommend a final Ordinary dividend of 5.2p per share (2005 - 4.0p) payable on 2 July 2007 to shareholders on the register at 15 June 2007. 5. The above figures have been extracted from the Group's full financial statements for the year ended 31 December 2006, which will be delivered to the Registrar of Companies. Those financial statements carry an unqualified audit opinion. They have been prepared in accordance with the Companies Act 1985 and International Financial Reporting Standards as adopted by the European Union. The accounting policies are set out in those financial statements. These 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

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