Interim Results
Hunting PLC
28 August 2003
28 August 2003
HUNTING PLC
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2003
Hunting PLC ('Hunting', the 'Group'), the international energy services company,
today announces its interim results for the six months to 30 June 2003.
• Turnover up 39% to £605.7m (2002: £434.9m)
• Total operating profit up 1% to £10.9m (2002: £10.8m)
• Pre-tax profit up 4% to £8.4m (2002: £8.1m)
• Earnings per share up 31% to 1.7p (2002: 1.3p)
• Interim dividend increased by 25% to 1.25p per share (2002: 1.0p)
Commenting on the results and the outlook for the Group, Dennis Proctor,
Hunting's Chief Executive, said:
'Although slow to start, activity levels in the oil and gas industry have
improved during the first half, and our two major businesses - Gibson Energy and
Hunting Energy - are now seeing the benefits. Gibson Energy benefited throughout
the period from improved Canadian oil and gas activity and sustained commodity
prices, and profits rose by 34%. Hunting Energy, however, only benefited later
in the period from an improvement in North American rig activity.
'This overall momentum is expected to continue during the second half of 2003,
and Hunting is well positioned to capitalise on these trends. We would
therefore expect to benefit from these more favourable market conditions,
although the North Sea and the Gulf of Mexico deepwater activity levels may
constrain the extent of the improvement.'
Full statement and results attached.
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
John Olsen
Notes to Editors:
Hunting PLC is an international oil services company providing support solutions
to the world's largest oil and gas companies.
HUNTING PLC
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2003
Hunting PLC ('Hunting'), the international energy services company, announces
its interim results for the six months to 30 June 2003.
INTRODUCTION
Although slow to start, activity levels in the oil and gas industry have
improved during the first six months of 2003. Canada has led the recovery with
drilling activity above five-year highs and better margins in midstream
marketing. The United States followed with a 30% year-on-year improvement in
drilling permits. International rig activity, which excludes the United States
and Canada, has improved 5% - primarily in Latin America. This momentum, driven
by higher oil and gas prices, is expected to continue during the second half of
2003.
RESULTS SUMMARY
Hunting's profit before tax for the six months to 30 June 2003 was £8.4m,
compared with £8.1m in the corresponding period last year. Total operating
profit of £10.9m compared with £10.8m in the first half of 2002. Earnings per
share were 1.7p per share compared with 1.3p per share in the first half of
2002.
An interim dividend of 1.25p per share (2002: 1.0p per share) will be paid on 25
November 2003 to shareholders on the Register at the close of business on 7
November 2003.
OPERATIONAL REVIEW
Gibson Energy
Gibson Energy, based in Calgary, is one of Canada's premier midstream energy
services companies linking producers and upstream suppliers with the refining
and downstream markets through marketing, transportation, distribution and
processing.
During the six months, Gibson Energy benefited from improved Canadian oil and
gas activity and sustained commodity prices. Overall, operating profits were up
34% from £4.7m in the first six months of 2002 to £6.3m.
Crude Oil Marketing achieved above average margins from heavy/sour crude
differentials and crude inventories were well managed through volatile price
swings. Operating profits for this division improved to £3.8m from £1.7m in
2002.
Truck Transportation had a slow start to the year due to lower levels of crude
hauling. The majority of improved drilling activity is focused towards gas
rather than traditional heavy oil market segments. Operating profits were £0.4m
compared to £1.0m in 2002.
Oil and Gas Operations improved slightly due to volume increases and tariff
adjustments at the Hardisty terminal. Operating profits were £1.9m versus £1.4m
in 2002.
Canwest and Natural Gas Liquids (NGL) Operations in combination produced an
improved performance but experienced a slower period than anticipated. Canwest
Propane had an 11% improvement in volumes due to growth initiatives put in place
in 2002 and the cold weather experienced in Western Canada. Conversely NGL
operations were at 85% of capacity at the Hardisty Fractionation plant.
Operating profits were £1.0m compared to £0.8m in 2002.
Moose Jaw Asphalt has a good level of asphalt production committed for the year
and the road construction season is now under way. Operating losses in the
traditionally weaker first half were £0.8m versus £0.2m in 2002.
For the remainder of the year, Gibson Energy anticipates improved trading due to
growth in drilling activity, asphalt delivery, and volume improvements for
pipelines, terminals and truck transportation.
Hunting Energy
Hunting Energy, based in Houston, Texas, is one of the world's leading
vertically integrated suppliers of tubular products and related services to
upstream oil and gas companies worldwide. Overall, operating profits were down
from £4.8m in the first half of 2002 to £2.0m.
Although North American rig activity rose 15% during the period, Hunting Energy
did not benefit from the improvement until later in the period. This was due to
the fact that much of the increased rig activity was accounted for by land and
shallow water drilling. Tubular Products is primarily focused on deep water,
high temperature/high pressure completions. The Gulf of Mexico rig count at 30
June was 107 compared to 109 at the same time last year. However at the height
of the 2001 drilling recovery the Gulf of Mexico rig count was 148. Also, steel
price increases proposed by the mills did not hold, resulting in a price
increase for the period of only 1%. Tubular Products were break even at the
operating level compared to operating profits of £0.8m in 2002.
Manufacturing Operations benefited from the recovery with most facilities
operating on two shifts. Pricing has remained weak due to low industry
utilisation, however operating efficiencies have steadily improved. Operating
profits were £1.0m compared to £1.2m in 2002.
International Operations were primarily impacted by the North Sea where
exploration levels were the lowest since 1965. One facility has been closed and
costs reduced. Asia was impacted by the SARS scare and Venezuela remains
politically unstable. Operating profits were £1.0m compared to £2.8m in 2002.
Increased Canadian and United States gas drilling is expected to lead to
improved trading for Hunting Energy during the second half of 2003. Rig counts
remain strong, drilling permits have continued to grow and supply/demand
fundamentals remain positive for natural gas prices.
Tenkay Resources
Tenkay Resources is a non-operating oil and gas exploration and production
company with producing reserves principally in the Southern USA.
With 13 successes out of 14 wells drilled, Tenkay Resources' participation in
oil and gas exploration has greatly improved earnings and reserves during the
period. With gas prices exceeding US$5.00/mcf throughout the period and
promising expectations for above average prices for the remainder of the year,
Tenkay anticipates an excellent year. Operating profits for the period were
£2.5m compared to £0.5m in 2002.
EA Gibson Shipbrokers
EA Gibson Shipbrokers is a leading international shipbroker primarily in the oil
and gas tanker market.
Transaction volumes and rates were strong during most of the period enabling EA
Gibson to have a good start to the year. Uncertainty exists for the second half
following a reduction in activity. Operating profits for the period were £0.8m
compared to £0.7m in 2002.
OUTLOOK
Rig activity and production volumes in North America are expected to improve
further in the second half of the year and, with strong commodity prices,
Hunting is well positioned to capitalise on these trends. We would therefore
expect to benefit from these improved market conditions although the North Sea
and the Gulf of Mexico deepwater activity levels may constrain the improvement.
Richard Hunting Dennis Proctor
Chairman Chief Executive
28 August 2003
Consolidated Profit and Loss Account
(Unaudited)
Six Six
months to months to Year to
30 June 30 June 31 December
2003 2002 2002
Notes £m £m £m
Turnover 2 605.7 434.9 951.3
Cost of sales (565.5) (395.9) (872.1)
Gross profit 40.2 39.0 79.2
Net operating expenses (29.3) (28.3) (54.9)
Group operating profit 10.9 10.7 24.3
Share of operating profit in joint
ventures and associated undertakings - 0.1 0.1
Total operating profit - before
goodwill amortisation 11.9 12.0 26.7
Goodwill amortisation (1.0) (1.2) (2.3)
Total operating profit 2 10.9 10.8 24.4
Net interest payable (2.5) (2.7) (5.3)
Profit on ordinary activities before taxation 8.4 8.1 19.1
Taxation on profit on ordinary activities 3 (2.9) (3.2) (7.4)
Profit on ordinary activities after taxation 5.5 4.9 11.7
Equity minority interests (1.9) (1.6) (3.6)
Profit for the period 3.6 3.3 8.1
Dividends (including non equity) 4 (3.2) (3.0) (7.0)
Retained profit for the period 0.4 0.3 1.1
Earnings per 25p ordinary share
Basic 5 1.7 p 1.3 p 4.1 p
Diluted 5 1.7 p 1.3 p 4.1 p
All of the above results relate to continuing operations.
Consolidated Statement of Total Recognised Gains
and Losses
(Unaudited)
Profit for the period 3.6 3.3 8.1
Revaluation of fixed assets - - 2.3
Currency translation differences on foreign currency
net investments 8.0 (0.9) (8.2)
Total recognised gains and losses for the period 11.6 2.4 2.2
Prior year adjustment - (7.9) (8.1)
Total gains and losses recognised since last annual 11.6 (5.5) (5.9)
report
Consolidated Balance Sheet
(Unaudited)
At At At
30 June 30 June 31 December
2003 2002 2002
£m £m £m
Fixed assets
Intangible assets 35.4 41.0 35.6
Tangible assets 169.1 155.9 155.9
Investment in joint ventures and associated undertakings 13.0 1.6 1.7
Other investments 5.8 7.1 5.8
223.3 205.6 199.0
Current assets
Stocks 99.2 113.1 98.3
Debtors 164.2 168.1 175.7
Investments 3.7 7.1 4.3
Cash at bank and in hand 8.3 4.7 10.0
275.4 293.0 288.3
Creditors: amounts falling due within one year (169.3) (161.1) (159.4)
Net current assets 106.1 131.9 128.9
Total assets less current 329.4 337.5 327.9
liabilities
Creditors: amounts falling due after more than one year (100.8) (108.8) (107.7)
Provisions for liabilities and charges (32.2) (25.2) (23.4)
196.4 203.5 196.8
Capital and reserves
Called up share capital 73.2 73.1 73.2
Share premium 41.5 41.5 41.5
Revaluation reserve 17.1 14.2 15.5
Profit and loss account 32.9 31.8 26.1
Shareholders' funds
Equity interests 116.8 112.7 108.4
Non-equity interests 47.9 47.9 47.9
164.7 160.6 156.3
Equity minority interests 31.7 42.9 40.5
196.4 203.5 196.8
Reconciliation of Movements in Consolidated
Shareholders' Funds
(Unaudited)
Six Six
months to months to Year to
30 June 30 June 31 December
2003 2002 2002
£m £m £m
Profit for the period 3.6 3.3 8.1
Dividends (3.2) (3.0) (7.0)
Retained profit for the period 0.4 0.3 1.1
Currency translation differences on foreign currency
net investments 8.0 (0.9) (8.2)
Revaluation of fixed assets - - 2.3
Share capital issued - 0.3 0.4
Net addition (reduction) to shareholders' funds 8.4 (0.3) (4.4)
Opening shareholders' funds (2002 originally
£168.8m before deducting prior year adjustments
of £7.9m and £8.1m respectively) 156.3 160.9 160.7
Closing shareholders' funds 164.7 160.6 156.3
Consolidated Cash Flow Statement
(Unaudited)
Six Six
months to months to Year to
30 June 30 June 31 December
2003 2002 2002
Notes £m £m £m
Net cash inflow from operating activities
Operating profit 10.9 10.8 24.4
Depreciation and amortisation 11.5 10.7 21.3
Other non cash flow items (0.1) (0.2) (1.0)
(Increase) decrease in stocks (0.8) 13.0 22.3
Decrease (increase) in debtors 3.7 (10.5) (26.1)
(Decrease) in creditors and provisions (3.3) (21.4) (2.5)
21.9 2.4 38.4
Returns on investments and servicing of finance
Net interest paid (1.9) (1.7) (4.9)
Preference dividends paid (2.0) (2.0) (3.9)
Dividends paid to minorities - - (2.2)
(3.9) (3.7) (11.0)
Taxation paid (1.9) (6.4) (6.0)
Capital expenditure and financial investment
Purchase of tangible fixed assets (11.8) (17.6) (32.5)
Sale of tangible fixed assets 2.5 0.8 2.1
Purchase of trade and current asset investments (2.3) (0.1) (0.1)
(11.6) (16.9) (30.5)
Acquisitions and disposals
Purchase of subsidiary undertakings (0.4) (17.7) (20.8)
Net cash acquired with subsidiary undertakings - 1.8 1.8
Purchase of joint venture and associated undertakings (0.2) (0.6) (0.8)
Purchase of minority interests in subsidiary undertaking - (0.1) -
Net proceeds from disposal of operations 0.3 - 0.3
Net cash disposed of with subsidiary undertakings (0.3) - -
Net proceeds from disposal of associated undertakings - 0.1 0.1
Proceeds from disposal of other investments - - 0.5
(0.6) (16.5) (18.9)
Equity dividends paid - - (5.0)
Net cash inflow (outflow) before use of liquid resources
and financing 3.9 (41.1) (33.0)
Management of liquid resources
Net movement in short term money market deposits 6 0.2 (0.5) 1.8
Financing
Ordinary share capital issued - 0.3 0.4
Increase (decrease) in borrowings due within one 6 4.8 7.4 (5.4)
year
(Decrease) increase in borrowings due beyond one 6 (12.7) 20.6 26.6
year
Capital element of finance leases 6 (0.1) (0.1) (0.1)
(8.0) 28.2 21.5
(Decrease) in cash 6 (3.9) (13.4) (9.7)
Notes to the Interim Report
1 BASIS OF PREPARATION
The interim financial information has been prepared on the basis of the accounting policies set out in
the Group's 2002 Annual Report and Accounts. Fixed annual charges are apportioned to the interim
period on the basis of time elapsed and other expenses are accrued in accordance with the same
principles used in the preparation of the annual accounts. The financial information contained in this
interim report does not constitute statutory accounts as defined in section 240 of the Companies
Act 1985. The financial information for the year ended 31 December 2002 is an abridged version of
the statutory accounts for that year. Those accounts, upon which the auditors issued an unqualified
opinion, have been filed with the Registrar of Companies.
2 SEGMENTAL ANALYSIS OF TURNOVER AND OPERATING PROFIT
Six months to Six months to Year to
30 June 2003 30 June 2002 31 December 2002
Turnover Operating Turnover Operating Turnover Operating
profit profit profit
Activity £m £m £m £m £m £m
Oil and gas marketing and
distribution 483.9 6.3 274.1 4.7 638.1 11.7
Oilfield services and
tubular products 81.3 2.0 126.1 4.8 233.9 8.3
Exploration and other
activities 40.5 2.6 34.7 1.2 79.3 4.3
Share of joint ventures and
associated undertakings - - - 0.1 - 0.1
605.7 10.9 434.9 10.8 951.3 24.4
The oil and gas marketing and distribution turnover includes £407m of crude oil marketing
sales in the six months to 30 June 2003 (six months to 30 June 2002: £212m).
3 TAXATION
The taxation charge for the six months to 30 June 2003 is calculated by applying the best estimate of
the 2003 annual effective rate of tax to the profit for the period.
4 DIVIDENDS
Six Six
months to months to Year to
30 June 30 June 31 December
2003 2002 2002
£m £m £m
Preference dividends:
Paid 2.0 2.0 3.9
Ordinary dividends:
Interim 1.2 1.0 1.0
Final - - 2.1
3.2 3.0 7.0
5 EARNINGS PER SHARE
Basic and diluted earnings per share have been calculated using the following bases:
Six Six
months to months to Year to
30 June 30 June 31
December
2003 2002 2002
£m £m £m
Profit attributable to shareholders 3.6 3.3 8.1
Less: preference dividends (2.0) (2.0) (3.9)
Earnings attributable to Ordinary shareholders 1.6 1.3 4.2
Weighted average number of Ordinary shares 101.0 100.6 100.8
Dilutive outstanding share options - - -
Adjusted weighted average number of Ordinary shares 101.0 100.6 100.8
pence pence pence
Basic EPS 1.7 1.3 4.1
Diluted EPS 1.7 1.3 4.1
6 ANALYSIS OF CHANGES IN NET DEBT
Reclassification
of a
subsidiary At 30
At 1 Jan Cash as an Exchange June
2003 flow investment movements 2003
£m £m £m £m £m
Cash at bank and in hand 10.0 (1.8) - 0.1 8.3
Overdrafts (5.4) (2.1) 0.1 (0.3) (7.7)
(3.9)
Borrowings due after one year (101.2) 12.7 - (4.3) (92.8)
Borrowings due within one year (4.9) (4.8) - - (9.7)
Finance leases (0.4) 0.1 - (0.1) (0.4)
8.0
Money market deposits 4.3 (0.2) (2.5) - 1.6
Total net debt (97.6) 3.9 (2.4) (4.6) (100.7)
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