Final Results
Hunting PLC
02 March 2006
2 March 2006
HUNTING PLC
Preliminary results
For the year ended 31 December 2005
Hunting PLC ('Hunting', the 'Group' or the 'Company'), the international energy
services company, today announces its preliminary results for the year ended 31
December 2005.
• Turnover £1,521.9m (2004: £1,159.4m) +31%
• Total operating profit £44.9m (2004: £20.8m) +116%
• Pre-tax profit £40.9m (2004: £16.5m) +148%
• Basic earnings per share 21.2p per share (2004: 7.9p) +168%
• Final Dividend Per Share 4.0p (2004 : 3.0p) payable
on 29th June 2006 +33%
Commenting on the outlook for the Group, Dennis Proctor, Hunting's Chief
Executive, said:
'The industry forecasts a continuation of 2005 activity certainly through 2006.
Major oil and gas operators have raised their expenditures to levels higher than
previous years not only for cost increases in drilling and related services, but
also for additional investment in well completions and heavy oil projects. Our
investment in new projects in 2005 will enable us to meet the customers' growing
demands. We believe our timing and execution of a distinctive business strategy
has been excellent and will continue to deliver shareholder value.
With a strengthened balance sheet, well positioned assets, additional capacity
and successful performance trend, Hunting PLC looks forward to the growth
opportunities available in 2006.'
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 positive market
dynamics and trading for the year has outperformed previous market expectations.
Profit before taxation for the year to 31 December 2005 was £40.9m (2004 -
£16.5m), a 148% increase over the previous year.
The Company has benefited from the continuing surge in expenditure on
exploration and production of oil and gas in the areas we serve, fuelled by high
prices for these vital commodities.
Gibson Energy, our Canadian-based midstream operation, has been at the centre of
the intense level of activity in Alberta and neighbouring provinces. In
particular, we have been able once again to use our physical infrastructure and
highly developed skills successfully to produce fine Marketing results. We have
taken a full part in handling oil production from conventional crude reserves
and from the huge oil sands deposits around Athabasca. We are expanding our
terminal facilities to deal with even higher volumes.
Hunting Energy Services is the Company's engineering operation, producing
sophisticated equipment for the hydrocarbon drilling and production sectors.
With resource companies increasingly concerned about replacing reserves, and
therefore needing to drill for deeper and more difficult deposits, demand for
our products has been at a consistently high level in the southern United
States, in the Rocky Mountains, in Canada and in the North Sea as well as in
other parts of the world.
We were fortunate that the Katrina and Rita hurricanes did little damage to our
important Hunting Energy Services facilities in Louisiana and Texas, and
production was restored rapidly.
In 2005, the Board raised new equity capital for expansion, by way of a one for
four Rights Issue of shares. The resulting increase in share capital and the
steady rise in the price since that time have resulted in the shares becoming a
constituent of the FTSE 250 and FTSE 350 indices of the London Stock Exchange
during January 2006.
I am pleased to report that basic earnings per share were 21.2p, an increase of
168% on the previous year. We are recommending a final dividend of 4.0p per
share, giving a total of 6.0p for the year, a 33% increase.
These excellent results combined with the continuing strength of the markets we
serve give us confidence that, barring unforeseen circumstances, the current
year will show further progress for the company.
I wish to thank all our staff for their fine contributions in a busy and
rewarding year.
Richard Hunting
Chairman
Chief Executive's Review
Strong second half activity provided excellent results for the Company in 2005 -
the third consecutive year of earnings growth. Industry fundamentals combined
with product lines and services leveraged to specific market segments provided
record results in a number of our divisions. As oil and gas operators continued
to increase capital expenditures for drilling and production, coupled with
volume increases in Canadian oil sands projects, your Company's strategy of
market share strength, proprietary technology, geographic position and asset
utilisation combined to deliver above expected results.
The Company improved its balance sheet through increased earnings and the
successful Rights Issue. Gearing at the year end was 53% - a 55% decrease from
2004. Free cash flow grew 16% while capital expenditures increased by 50% to
£32.9m.
In spite of growing material and labour costs, gross margins improved from
production revenue per man-hour (up 21%), and price increases applied throughout
the year.
The Company does not ignore the improved market conditions as a key factor in
its performance. Average oil and gas prices were up 27% and 39% respectively,
year over year. Average rig counts were up 14% in the US, 21% in Canada and 7%
in the international arena. The differential between light and heavy crude
averaged US $21.10 up 53% from 2004. However, the Gulf of Mexico rig count was
89, its lowest level since 1993. Two hurricanes caused production at Tenkay
Resources to decline by approximately 50% in the fourth quarter and delivery of
tubulars and accessories to be delayed by two months.
Prices for oil services climbed steadily as the rig activity increased and
operators seemingly are focused more on availability than price. The cyclicality
of the industry has abated as growth has occurred in the past three years with
expectations of continued demand going forward. The Company's commitment to
expansion projects during the last 18 months will provide measurable gains in
the future. While additional capacity was added in 2005, the replacement of
ageing equipment for greater output per hour adds to reduced costs and earnings
enhancement.
Business Developments
In August 2005, the Company raised approximately £44 million of new equity
capital through a Rights Issue. These funds are required to finance additional
capacity to meet the growing backlog and demands from various customer projects.
In addition, management continues to review acquisitions that complement the
products and services currently provided.
The Company acquired the assets of Cromar Limited, an Aberdeen based provider of
well servicing equipment including its proprietary products and applications.
Purchased in August 2005, Cromar has exceeded expectations and should be fully
integrated into our North American and Asian operations by mid 2006.
Health, Safety and the Environment
The oil service industry is operating at or near capacity and adding new
personnel weekly. Accordingly, health and safety issues become more at risk and
require additional focus. Foremost in operational goals is to improve
continuously the aspects of health and safety. In Gibson Energy, the lost time
incident record was 34% less than the Alberta Provincial average in 2005, an
improvement of 14% over 2004. Its truck transportation division has reduced its
incident rate by 37% over the last two years, while operating over 43 million
miles and handling over 450,000 loads. Of Gibson's 57 facilities, 47 achieved a
zero lost time incident. Its largest terminal, Hardisty, which handled over
180,000 bpd and Moose Jaw Asphalt completed 18 months without a lost time
incident.
In Hunting Energy, five of the six US manufacturing facilities completed the
year without a lost time accident. Internationally, the Aberdeen facility
retained its BSC Five Star Award for the eighth consecutive year, with an
improvement in marks from the previous year. The facility received its third
consecutive National Safety Award. Facilities in Canada, Holland, China and
Singapore all completed the year with only one lost time accident.
No environmental issues occurred and four additional US facilities received the
new ISO 14001 Environmental Management Specification.
Our goals remain simply put - No accidents, No harm to people and No damage to
the environment.
GIBSON ENERGY
2005 2004
£m £m
Revenue 1,214.4 913.1
Profit from operations 21.8 15.5
Activity in the Canadian oil and gas industry reached record levels in 2005
generating the highest profits in the history of Gibson Energy based in Calgary,
Alberta. The narrow difference between available supply and demand sustained
crude oil prices throughout the year. Development of natural gas, heavy oil and
bitumen reserves in Canada also proceeded at a record rate stretching demand for
mid-stream marketing and transportation services.
Marketing accounted for 49% of profit from operations benefiting from increased
inventory values, favourable crude oil price arbitrages and wide differentials
between light, heavy, sweet and sour grades. Heavy oil differentials are a
function of seasonal heavy oil supply and demand, which is increasing with oil
sands development in Canada. Rapidly increasing supply cause pipeline
restrictions and market dislocation resulting in continued volatility and
differentials. Gibson uses its assets and expertise to optimise crude stream
prices with storage capacity, terminals for blending and pipelines and trucks
for crude transport.
Truck Transportation generated 22% of profit from operations from new levels of
high asset utilisation at all locations. A three year contract with Husky Oil
began mid-year for the movement of 100,000 bpd. Truck delivery of heavy oil
laden with saltwater and solids is the most cost effective aggregation to
central processing facilities for Husky, the largest regional producer. NGL,
asphalt, diluent, propane and wellsite fluids experienced higher hauling
revenues in 2005.
Terminals and Pipelines contributed 26% of profit from operations with gains at
Hardisty and Edmonton from new tank connections for receipt and delivery from
Athabasca and Terasen pipelines. Operations were steady for Bellshill Lake and
Provost pipelines in the Hardisty area with tariff adjustments, offsetting
gathering volume declines. The seasonal demand for labour and materials delayed
completion and start-up of the new Edmonton North Terminal until the first
quarter, 2006.
Canwest Propane and Natural Gas Liquids accounted for 14% of profit from
operations. The start of the rail car unloading terminal in Surrey, British
Columbia, busy construction activity at Ft. McMurray Oil Sands development and
off-road oil patch activities provided good growth in earnings. Propane rack
supply prices followed commodity fluctuations, but provided favourable sales
margins through cautious management over the year.
Moose Jaw Asphalt produced a profit before the offset from a fixed price
differential contract purchased in 2004. Asphalt prices continued to be flat
during the year while feedstock costs escalated. Expanding markets for high
value products such as roof flux grew slower than the increasing crude costs.
Since the acquisition of Moose Jaw in 2002, sales volumes have increased from
350,000 cubic metres to 550,000 cubic metres. Efforts are underway for greater
volumes, minimal losses on asphalt, and maximum value and profits in top-of-the
barrel products.
Robust energy prices, favourable arbitrages and stream differentials are
expected to continue into 2006, providing high levels of activity and business
development opportunities. Limitations are expected in the availability of human
resources and equipment supply, hindering growth in certain areas. Secure energy
supply to the US for oil and gas is expected to encourage development of new
volumes from Alberta. The supply of gas from unconventional sources and further
bitumen and heavy oil development in the Athabasca corridor will sustain demand
for Gibson's midstream services.
HUNTING ENERGY SERVICES
2005 2004
£m £m
Revenue 202.3 159.1
Profit from operations 18.9 8.3
Strong fourth quarter results capped an impressive 2005 financial performance
for Houston, Texas based Hunting Energy Services. This is particularly
noteworthy considering the August and September hurricanes. In addition, the
average rig count in the Gulf of Mexico for 2005 was 89, its lowest level since
1993. The main driver of activity in the US and Canada is natural gas prices and
the resulting effort to increase production. While rig activity has doubled in
the last 4 years, gas production in North America has declined. Our North Sea
and SE Asia operations continue to experience increased activity due to the
sustained oil price and growing global demand.
A total of twenty production machine tools were added to enhance throughput and
units per hour without adding excess capacity. Despite increased material and
labour costs, gross margins improved by 23%, while revenue per man-hour was up
by 21%. Quality levels at all facilities remained excellent regardless of
increased man-hours and activity levels.
Well Construction
2005 2004
£m £m
Revenue 65.1 42.9
Profit from operations 6.7 4.8
The elements of this group, which accounted for 35% of profit from operations,
include:
Casing - primarily sold in Canada, oil country tubular goods ('OCTG') for
construction of the well bore in an oil or gas well.
Connections - proprietary (patented) thread forms that enable the connections of
tubing or casing to meet or exceed the physical properties of the pipe body.
Mud Motors - attached to the drill pipe enabling operators to drill a well
straighter and/or faster thereby reducing overall cost, particularly as day
rates for rigs continue to escalate. This is the fastest growing division in the
last four years producing the highest return on capital.
Drill Rod - used in the telecommunications industry to enable trenchless
installation of fibre optic cables. Demand increased for drill rods and
accessories by 38% in 2005 and is expected to continue rapid growth in the
future.
A new manufacturing facility was completed in August and has enabled the company
to machine larger products for deeper, high-pressure applications primarily used
in the Gulf of Mexico.
Well Completion
2005 2004
£m £m
Revenue 137.2 116.2
Profit from operations 12.2 3.5
Well completion, which accounted for 65% of profit from operations, includes:
Accessories - components attached to the tubing and casing of an oil and gas
well including but not limited to pup joints, cement plugs, crossovers, landing
nipples, flow couplings and seal rings.
Tubulars - includes oil country tubular goods OCTG and premium (patented)
connections or devices used on OCTG. Demand for completion tubing and chrome
steel tubulars increases with greater rig activity.
Slick Line and Wire Line - products used for intervention in a well to maintain,
test, clean, put on production or take off production while under control.
Activities of slick line and wire line occur throughout the life of a well
providing repeat revenue.
Hunting Energy is highly leveraged to the rig activity and number of wells
drilled. With such robust and growing demand, the products and services provided
by manufacturing facilities in China, Canada, Europe, Singapore and the US, are
well positioned to benefit and grow as energy demands increase.
TENKAY RESOURCES
2005 2004
£m £m
Revenue 12.3 8.5
Profit from operations 5.3 3.1
Higher oil and natural gas prices, in conjunction with increased production
levels, contributed to an outstanding year for Tenkay Resources. On a Net
Equivalent Barrel ('NEB') basis, production was up 9% compared to 2004 as a
result of successful drilling in the shallow waters of the Gulf of Mexico.
Tenkay participated in the drilling of 17 wells with 13 successes. On an NEB
basis, the production of 449,000 bbls would have been higher by an estimated 15%
had it not been for Hurricanes Katrina and Rita and the resulting well
shut-downs. Tenkay's properties suffered minimal damage however damage to third
party offshore and onshore production infrastructures delayed the restart of
operations. Year-end reserves of oil and gas on an SEC basis were 2.4m NEB
compared with 2.3m NEB at the end of the previous year. The resumption of full
operations and new wells coming on-stream are expected to enhance production in
the current year.
E. A. GIBSON SHIPBROKERS
2005 2004
£m £m
Revenue 21.9 18.8
Profit from operations 2.5 1.6
Although not experiencing the peak rates, particularly in the Crude market seen
during 2004, all sectors experienced high average rates which contributed to
make it another strong year.
Tanker income improved during 2005 but the significant increases were in the
Gas, Sale & Purchase and Dry Cargo sectors.
The US Dollar strengthened during the year enhancing the sterling results.
In October 2005 a new office in Hong Kong was opened and the Company will
continue to explore other overseas opportunities to broaden its international
base. A staff training scheme was introduced to supplement the recruitment of
experienced personnel.
HUNTING ENERGY FRANCE
2005 2004
£m £m
Revenue 12.5 12.5
Profit from operations 1.1 1.0
Profit from operations improved by 9% over 2004 on maintained turnover. Interpec
which supplies pumps, turbines and compressors for petrochemical plants and
turn-key turbo generators sets achieved a record result on lower turnover.
Larco, which designs and markets a range of equipment for oil storage tanks had
a significant increase in turnover. Turnover was further enhanced by the
acquisition of Setmat which provides software solutions to petroleum product
storage facilities. The market for Roforge products remained competitive but the
company still provided a good contribution to profit from operations.
OTHER ACTIVITIES
2005 2004
£m £m
Revenue 58.5 47.4
Result from operations (2.1) 0.1
Field Aviation
Profit from operations improved over 2004 with all divisions reporting positive
results. As previously, Field's established niche markets in Special Mission
aircraft modification and Parts Manufacturing were the largest contributors.
Price stability and productivity improvements allowed the Calgary maintenance
facility to produce its first profit for several years.
The contract to maintain the fleet for the Canadian Flight Training School at
Portage la Prairie, Manitoba ended on 31 August. Increased activity in Special
Mission modifications is expected to offset the loss of this contract in 2006.
In April 2006 the first of three new Dash 8 Q300 aircraft for the Swedish Coast
Guard will be delivered by the manufacturer to our Toronto facility for
modification into a specialised maritime patrol aircraft under the contract won
in 2004. Field is also a member of the team chosen by the Australian Customs
Service as the preferred bidder for their Coastwatch 4 programme starting later
in the year using 10 similarly modified Dash 8 aircraft. The aircraft will
provide all-weather, day and night electronic surveillance of Australia's
maritime Exclusive Economic Zone to detect and deter illegal activity such as
drug and people smuggling, illegal fishing and environmental offences.
Hunting Specialized Products
The Pipeline Services business continues to offer an exciting future with
several innovative new products ready for market and a growing reputation and
customer base. The business which was restructured during the year is being
expanded in both the USA and UK. Despite difficult trading conditions, the
Industrial Coatings business maintained its operating profit on reduced volumes
and continues to provide the core technology to the growing pipeline service
business.
In 2005 the business increased its focus on the research and development of
novel pipeline rehabilitation coatings and launched PolySpray, a structural
lining system for pipeline rehabilitation. The costs of this development were
written off as incurred. The PolySpray system, which literally builds a new pipe
inside the existing deteriorated pipeline, can restore almost any pipeline
including storm, wastewater and industrial process water pipelines. The system
was successfully demonstrated in the UK, remotely lining an underground gas
pipeline and rehabilitating damaged effluent lines at a large industrial
facility.
Aero Sekur
In spite of cuts in the Italian defence budget, which adversely affected the
cash flow during the year, orders for new products have increased substantially,
securing revenues for 2006 and beyond. Production and quality efficiencies
improved in 2005 as a result of organisational changes. New emphasis is being
placed on export initiatives and R & D work continues to grow.
OUTLOOK
The industry forecasts a continuation of 2005 activity certainly through 2006.
Major oil and gas operators have raised their expenditures to levels higher than
previous years not only for cost increases in drilling and related services, but
also for additional investment in well completions and heavy oil projects.
Manufacturing backlogs in some areas of the service industry extend into 2007.
Shortages of skilled labour continue to be a challenge to expedite or add
additional projects. Lead times for raw materials are extended and require
additional planning and capital for inventories and equipment. While a robust
market exists, management is pressured to contain costs inherent to such
activity. However, we believe our timing and execution of a distinctive business
strategy has been excellent and will continue to deliver shareholder value.
The world demand for natural resources continues to grow and warrant current oil
and gas prices. Climatic and geopolitical events could result in price spikes to
push the industry for more activity.
With a strengthened balance sheet, well positioned assets, additional capacity
and successful performance trend, Hunting PLC looks forward to the growth
opportunities available in 2006.
Dennis Proctor
Chief Executive
Finance Director's Review
The improvement in trading seen in 2004 continued strongly during 2005 with
Hunting Energy Services in particular making a significant contribution to the
improved result.
Revenue for the year was £1,522m (2004 - £1,159m).
Profit from operations increased by 116% to £44.9m (2004 - £20.8m) and pre-tax
profit was £40.9m (2004 - £16.5m) a 148% increase over 2004.
On 29 June 2005, the Company announced a one for four Rights Issue at 180p which
raised a net £43.6m to finance the capital expenditure programme and potential
acquisitions.
On 18 August 2005, £8.1m cash was paid for the acquisition of Cromar Limited,
which provides an extension to the range of products and services offered by
Hunting Energy Services. A further £1.5m deferred consideration is payable in
February 2007 on the achievement of future operating profit targets.
Earnings Per Share
Basic earnings per share increased to 21.2p (2004 - 7.9p) on an average of
115.3m shares outstanding during the year, as adjusted for the Rights Issue.
Diluted earnings per share increased to 20.2p (2004 - 7.7p).
International Financial Reporting Standards ('IFRS')
IFRS was adopted with effect from 1 January 2004. IAS 32 and IAS 39, which cover
the accounting for and disclosure of financial instruments, were adopted
prospectively on 1 January 2005.
The Group published its report on the transition to IFRS on 1 September 2005 -
this is available on the Company's web site.
Exchange Rates
The US Dollar averaged 1.82 (2004 - 1.83) and the Canadian Dollar averaged 2.21
(2004 - 2.38) relative to sterling. Year end rates for the US and Canadian
Dollars against Sterling were 1.72 (2004 - 1.93) and 2.01 (2004 - 2.30)
respectively.
The Canadian Dollar strengthened significantly in the second half of the year.
Taxation
As a result of higher Canadian and US profit, where tax rates are above the UK,
the taxation charge for the year excluding exceptional items was £15.5m giving
an effective rate of 35.6% (2004 - 32.8%).
Financing and Risk Management
The Group's centralised Treasury is a service centre with policies and
procedures approved by the Board. These cover funding, bank relationships,
foreign currency and interest rate exposures, and cash management. The policies
and procedures covering oil and gas price exposure managed by Gibson Energy are
approved by the Board.
There are strict controls on the use of financial instruments, and on the
exposure to banks and other parties on borrowing facilities, the management of
foreign currencies and interest rates and oil and gas prices.
In September a £125m five year multi-currency borrowing facility, and in
December a £10m two year facility, were signed with our relationship banks.
Since the year end a thirteen month multi-currency facility for £20m has been
renewed.
At the end of the year the Group had committed bank facilities of £151.5m
together with Private Placement notes of US$70m (£40.7m), which mature in 2012
and other borrowing lines giving total facilities of £238.1m. These facilities
provide the Group with adequate liquidity to meet anticipated future
requirements.
Currency Options are used to reduce currency risk movements on the Group's
results, by hedging approximately 50% of each year's budgeted Canadian and US
Dollar earnings into Sterling. Currency exposure on the balance sheet is reduced
by financing assets with borrowings in the same currency.
Spot and Forward foreign exchange contracts are used to cover the net exposure
of purchases and sales in non-domestic currencies.
Fluctuations in the value of petroleum product inventories are managed by using
futures, swaps and options.
Interest expense is hedged by using interest rate swaps, interest rate caps,
forward rate agreements and currency swaps. At the end of the year interest rate
swaps and caps covered 53% of net borrowings.
Finance costs in the year have risen to £4.6m from £4.4m in 2004.
Dividends
An interim dividend of 2.0p per share (2004 - 1.5p) was paid on 23 November
2005. A final dividend, which under IFRS is not accrued for, of 4.0p per share
(2004 - 3.0p) payable on 29 June 2006 to shareholders on the Register at 9 June
2006 is proposed.
Cash Flow
Free cash flow after capital expenditure but before equity issues, acquisitions
and dividends increased to £17.9m compared with £15.4m in 2004.
Capital expenditure increased to £32.9m (2004 - £21.9m). Expenditure by Gibson
Energy was £16.1m (2004 - £8.4m). Tenkay Resources £5.6m (2004 - £6.4m) and
Hunting Energy £9.2m (2004 - £5.0m).
In total £15.0m was replacement capital and £17.9m new business expenditure.
Acquisitions and dividends aggregated £17.5m. Excluding the Rights Issue, the
net cash outflow for the year was £50.4m with cash outflow of £6.8m after the
issue.
Net debt reduced during the year to £97.0m from £130.6m and gearing reduced to
53% from 117%.
Pensions
In accordance with IFRS the Group has accounted for Employee Benefits under IAS
19.
An actuarial valuation of the Group's UK defined benefit plan, which was closed
to new entrants in December 2002, was undertaken at 5 April 2005 and updated to
31 December 2005. The results of this valuation show at 31 December 2005 a
surplus of assets over liabilities of £21.1m (2004 - £23.8m) which is included
within the Consolidated Balance Sheet.
Whilst the impact of the new post retirement mortality assumption has increased
the plan obligation by £6.0m at 31 December 2005, this has been mitigated by
better than expected investment returns.
Going Concern
The Directors, after making enquiries and on the basis of current financial
projections and the facilities available, believe that the Company and the Group
have adequate financial resources to continue in operation for the foreseeable
future. For this reason, they continue to adopt the going concern basis in
preparing the financial statements.
Dennis Clark
Finance Director
Consolidated Income Statement
For the Year ended 31 December 2005
2005 2004
Notes £m £m
Revenue 1 1,521.9 1,159.4
Cost of sales (1,394.2) (1,066.7)
-------- --------
Gross profit 127.7 92.7
Other operating income 3.9 3.7
Operating expenses* (86.7) (75.6)
-------- --------
Profit from operations 1 44.9 20.8
Interest income 7.6 2.3
Interest expense and similar charges (12.2) (6.7)
Share of post-tax profits in associates 0.6 0.1
-------- --------
Profit before tax 40.9 16.5
Taxation (14.7) (5.1)
-------- --------
Profit for the year 26.2 11.4
======== ========
Attributable to:
Shareholders of the parent 24.4 10.9
Minority interests 1.8 0.5
-------- --------
26.2 11.4
======== ========
Earnings per share
(restated)
Basic earnings per 25p ordinary share 21.2p 7.9p
Diluted earnings per 25p ordinary share 20.2p 7.7p
There are no material differences between the results disclosed above and the
results on an unmodified historical
cost basis.
The profit for the year arises from the Group's continuing operations.
*Operating expenses include exceptional charges of £2.6m (2004 - £8.8m).
The earnings per share in 2004 has been restated for the bonus shares inherent
in the 2005 Rights Issue.
Consolidated Statement of Recognised Income and Expense
For the Year ended 31 December 2005
2005 2004
£m £m
Profit for the year 26.2 11.4
------- -------
Exchange adjustments 11.1 (2.7)
Transferred to income statement on disposal of cash flow
hedges (0.3) -
Actuarial (losses) gains on defined benefit pension schemes (5.5) 3.5
- taxation 1.4 (1.1)
Transferred to income statement on disposal of available for
sale investments (0.2) -
------- -------
Net income recognised directly in equity 6.5 (0.3)
------- -------
Total recognised income and expense for the year 32.7 11.1
======= =======
Consolidated Balance Sheet
At 31 December 2005
2005 2004
£m £m
ASSETS
Non-current assets
Property, plant and equipment - at cost 132.1 98.9
Property, plant and equipment - at valuation 58.7 56.9
Goodwill 58.6 47.5
Other intangible assets 5.1 3.1
Interests in associates 5.5 8.7
Available for sale investments 0.2 3.6
Retirement benefit assets 21.1 23.8
Trade and other receivables 2.9 3.3
Deferred tax assets 14.8 11.2
------- -------
299.0 257.0
------- -------
Current assets
Inventories 107.6 76.5
Trade and other receivables 196.2 140.4
Cash and cash equivalents 91.9 15.1
------- -------
395.7 232.0
------- -------
LIABILITIES
Current liabilities
Trade and other payables 217.1 152.8
Current tax liabilities 4.7 1.1
Borrowings 93.2 16.4
Provisions 2.0 0.6
------- -------
317.0 170.9
------- -------
Net current assets 78.7 61.1
------- -------
Non-current liabilities
Borrowings 95.7 129.3
Deferred tax liabilities 74.9 59.5
Retirement benefit obligations 2.9 1.9
Other payables 4.5 1.9
Provisions 16.1 13.6
------- -------
194.1 206.2
------- -------
Net assets 183.6 111.9
======= =======
Shareholders' equity
Share capital 32.2 25.3
Share premium 82.7 41.5
Treasury shares (4.6) -
Other reserves 21.7 7.2
Retained earnings 46.4 34.2
------- --------
178.4 108.2
Minority interests 5.2 3.7
------- --------
Total equity 183.6 111.9
======= ========
Cash Flow Statement
For the Year ended 31 December 2005
2005 2004
£m £m
Operating activities
Profit from operations before exceptional items 44.9 25.8
Depreciation, amortisation and impairment 23.9 19.9
(Profit) on disposal of investments (0.4) (0.4)
(Profit) on disposal of property, plant and equipment (0.6) (0.9)
(Increase) in inventories (22.6) (10.0)
(Increase) in receivables (34.1) (14.2)
Increase in payables 46.4 19.2
Taxation (paid) received (4.8) 6.6
Other non cash flow items 2.1 -
------- -------
Net cash inflow from operating activities 54.8 46.0
------- -------
Investing activities
Dividends received from associates 3.8 3.5
Purchase of subsidiaries (9.7) (1.5)
Cash acquired with subsidiaries 1.5 -
Additional investment in existing subsidiaries - -
Purchase of minority interest in subsidiary - (0.1)
Purchase of and loans to associates (5.3) (0.2)
Proceeds from disposal of investments 3.2 2.4
Proceeds from disposal of subsidiary - 19.9
Proceeds from disposal of property, plant and equipment 2.9 6.0
Purchase of property, plant and equipment (32.9) (21.9)
Purchase of intangible assets (0.2) (0.4)
-------- --------
Net cash (outflow) inflow from investing activities (36.7) 7.7
-------- --------
Financing activities
Interest received 7.7 3.1
Interest paid (11.7) (8.7)
Dividends received from subsidiaries - -
Equity dividends paid (5.6) (3.8)
Preference dividends paid - (2.4)
Minority interest dividend paid (0.3) -
Share capital issued 48.1 -
Cancellation and repayment of preference share capital - (47.9)
Purchase of Treasury shares (4.6) -
Proceeds from issue of debt - 92.9
Repayment of borrowings (58.3) (87.9)
Capital element of finance leases (0.2) (0.3)
-------- --------
Net cash (outflow) from financing activities (24.9) (55.0)
-------- --------
Net (outflow) in cash and cash equivalents (6.8) (1.3)
Cash and cash equivalents at beginning of year 10.9 12.4
Effect of foreign exchange rate changes 0.7 (0.2)
Adoption of IAS 32 and IAS 39 (0.3) -
-------- --------
Cash and cash equivalents at end of year 4.5 10.9
======== ========
Cash and cash equivalents and bank overdrafts at end of year
comprise:
Cash and cash equivalents 91.9 15.1
Bank overdrafts included in borrowings (87.4) (4.2)
-------- --------
4.5 10.9
======== ========
Notes to the Financial Statements
1. SEGMENTAL REPORTING
Business segments
Results from operations
Year ended 31 December 2005
Total Inter- Total Profit from
Gross Segmental revenue operations
revenue revenue
£m £m £m £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 Asphalt 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
------- ------- ------- -------
220.5 (18.2) 202.3 18.9
------- ------- ------- -------
Tenkay 12.3 - 12.3 5.3
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
=======
Notes to the Financial Statements continued
1. SEGMENTAL REPORTING continued
Business segments
Results from operations
Year ended 31 December 2004
Total Inter- Total Profit from
gross Segmental revenue operations
revenue revenue
£m £m £m £m
Gibson Energy
Marketing 825.3 (78.1) 747.2 7.0
Truck Transportation 60.6 (4.7) 55.9 2.6
Terminals and Pipelines 15.2 (3.2) 12.0 5.3
Canwest Propane and
Natural Gas Liquids 104.0 (44.1) 59.9 1.6
Moose Jaw Asphalt 69.3 (31.2) 38.1 (1.0)
------- ------- ------- -------
1,074.4 (161.3) 913.1 15.5
------- ------- ------- -------
Hunting Energy Services
Well Completion 124.2 (8.0) 116.2 3.5
Well Construction 49.3 (6.4) 42.9 4.8
------- ------- ------- -------
173.5 (14.4) 159.1 8.3
------- ------- ------- -------
Tenkay 8.5 - 8.5 3.1
Other operating divisions 78.7 - 78.7 2.7
------- ------- ------- -------
Total 1,335.1 (175.7) 1,159.4 29.6
======= ======= =======
Exceptional charges not
apportioned to business
segments (8.8)
-------
Profit from operations 20.8
=======
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
attributable to those operations by senior executives. The exceptional charges
relate to the discontinuance of previous operations and are not therefore
apportionable to the current business segments shown above.
Notes to the Financial Statements continued
1. SEGMENTAL REPORTING continued
Business segments
Assets and liabilities
2005 2004
Segment Segment Segment Segment
assets liabilities assets liabilities
£m £m £m £m
Gibson Energy
Marketing 139.9 95.3 75.3 55.1
Truck Transportation 45.7 9.9 40.2 10.4
Terminals and Pipelines 52.6 2.8 48.4 3.2
Canwest Propane and Natural Gas Liquids 44.6 11.1 35.7 7.9
Moose Jaw Asphalt 29.1 5.5 27.9 8.9
------- ------- ------- -------
311.9 124.6 227.5 85.5
------- ------- ------- -------
Hunting Energy Services
Well Completion 93.2 49.9 67.9 27.1
Well Construction 69.0 12.6 48.0 8.3
------- ------- ------- -------
162.2 62.5 115.9 35.4
------- ------- ------- -------
Tenkay 29.1 0.9 23.7 0.8
Other operating divisions 54.6 32.1 54.6 27.9
------- ------- ------- -------
Total segment assets and liabilities 557.8 220.1 421.7 149.6
Unallocated assets and liabilities:
- interests in associates 5.5 - 8.7 -
- current and deferred taxes 14.8 79.6 11.2 60.6
- retirement benefit assets 21.1 - 23.8 -
- net debt 91.9 188.9 15.1 145.7
- central assets and liabilities 3.8 23.8 8.5 23.1
- elimination of inter-segmented balances (0.2) (1.3) - (1.9)
------- ------- ------- -------
Total assets and liabilities 694.7 511.1 489.0 377.1
======= ======= ======= =======
Segment assets comprise property, plant and equipment, intangibles, goodwill,
inventories and debtors. Assets owned by head office and employed by a segment
are allocated to that segment.
Segment liabilities comprise trade payables, provisions and other operating
liabilities. They exclude borrowings and tax liabilities.
2. The above figures have been extracted from the Group's full financial
statements for the year ended 31 December 2005, which will be delivered to
the Registrar of Companies. These carry an unqualified audit opinion. The
extracts do not constitute statutory accounts within the meaning of section
240 of the Companies Act 1985.
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