Interim Results

Expro International Group PLC 5 December 2001 EXPRO INTERNATIONAL GROUP PLC Interim results for the six months ending 30 September 2001 'Expro reports strong first half results' Expro International Group PLC, the oil field services company, today announces interim results for the six months ending 30 September 2001. Six months Six months ending 30 ending 30 September September Change 2001 2000 Turnover £103.6m* £77.0m 37%* Operating profit £13.2m* £7.6m 61%* Profit before tax £10.5m* £5.4m 74%* Basic EPS 9.5p 6.8p 40% Dividend per share 3.7p 3.4p 9% *Results exclude discontinued operations - Operating profits on continuing operations up 61% to £13.2m - Earnings per share up 40% to 9.5p - Client capital spending robust and increasing, especially in deep water - Strong growth achieved across all three business streams - US development and deep water key drivers of future growth - Order book up 20% to £190m Commenting on these results, John Dawson, Chief Executive, said: 'We are pleased to report a good set of results for the first six months, sustaining the strong progress made in the second half of last year. Our order book is now some 20% higher than six months ago, and stands at about £190m. This backlog includes a string of recent orders for Africa totalling over £30m, from clients such as bp, BHP, BG, CNRI (previously Ranger) and Soekor, in countries as diverse as Algeria, Angola, Ivory Coast, South Africa and Egypt. These contracts are for services and products across the entire portfolio, all linked to new field development programmes. These awards confirm the long term objectives of our clients to increase their production base and address the very real issue of declining reservoir productivity.' For further information please contact: Expro International Group PLC On 5 December: 020 7601 1000 John Dawson, Chief Executive Thereafter: 01189 591 341 Eric Woolley, Group Finance Director Weber Shandwick Square Mile 020 7601 1000 Tim Jackaman, Kirsty Hall, Rachel Taylor EXPRO INTERNATIONAL GROUP PLC Interim results for the six months ended 30 September 2001 Chairman's & Chief Executive's Statement Results Summary We are pleased to report continuing good progress, with first half earnings substantially ahead of those for the same period last year. Strong growth has been delivered by all three business streams, building on the momentum established in the second half of last year. The resurgence in client capital spending on new deepwater field developments has been a key driver, leading to an increase in demand for our subsurface products and services. The results for the six months to 30 September 2001 compared with the same period last year: - Turnover increased 37% to £103.6m* - Operating Profit increased 61% to £13.2m* - Profit before Tax increased 74% to £10.5m* - Earnings per Share increased 40% to 9.5p - Interim dividend of 3.7p up 9% * Results exclude discontinued operations Dividend The Board is increasing the interim dividend by 9% to 3.7p per share. This will be payable on 31 January 2002 to shareholders on the register at 31 December 2001. Overview Cased Hole Services, which focus on production optimisation solutions, saw turnover increase 28% to £42.0m compared with this period last year. North America was a key driver of growth through the expanding activities of Tripoint, Production Wireline and Kinley. We have discontinued our operations in Venezuela as we have been unable to sustain acceptable rates of return. Our business in North Africa and Kazakhstan continues to build on contracts established towards the end of last year including those with BHP, bp and Baker Hughes. Supply of new equipment for the major well services contract with Santos in Australia is now complete, with full deployment taking place during the second half of the year. Utilisation rates are high in the North Sea and there are increasing opportunities to use our new specialist tooling to secure superior margins in this competitive market place. Subsurface Systems, our deepwater field development business increased turnover by 41% to £25.6m relative to the first half of last year. Strong growth was achieved in all four of our geographic markets. Significant projects included Shell's Malampaya deepwater gas to power project in the Philippines; Kerr McGee's North Sea Leadon development; Kerr McGee's Boomvang and Mariner's King Kong field developments in the Gulf of Mexico and Chevron's Kuito development along with that of Total Fina Elf's Girassol project in Angola. The increasing population of ageing deepwater wells is leading to an increase in the number of interventions required for maintenance purposes, very often associated with the use of our cased hole and surface and environmental services. Demand continues at a healthy level for our Permanent Monitoring systems and Tronic's new range of connectors, both linked to introduction of new deepwater wells. The Surface and Environmental business, which provides products and services for the production of marginal fields, well clean-up and reservoir characterisation, increased turnover 39% to £36.2m, compared with the same period last year. Significant progress has been made in Asia Pacific driven by our activities in China, the Philippines and Indonesia, the latter resulting from the PTI acquisition made last year. We commissioned two major early production systems during the latter part of the first half, one for Coparex, offshore Tunisia, and the other for Shell, offshore Iran. We are also mobilising equipment to perform an extended test on the oil rim for Shell's Malampaya project. In Europe, the North Sea remains relatively static but elsewhere business is more buoyant, the highlight being ENI's Gaggiano project in Italy, where we are providing production and environmental services, to assist in continuing the programme of reservoir assessment. Outlook The long-term outlook for the services sector remains positive, as clients strive to reach their production growth targets of 3-5% per annum. With existing assets in inexorable decline this will require both production enhancements and new fields to be brought into production. In the short-term however, with volatile commodity prices and economic slowdown, clients are reviewing their activity levels. In the US, Expro's focus is on the high-value deepwater projects in the Gulf of Mexico which are unaffected by short- term swings in commodity prices. Shallow water and onshore gas activity has been affected by lower gas prices but a strong recovery is expected in the second half of next year as lower drilling activity and steep decline rates create a supply response. Expro's positioning and growth in the important US market has provided increased profitability and reinforces our involvement as a global player in important niche markets, particularly in the deepwater area. Outside of North America, there continues to be steady increases in demand for services, supported by a significant project backlog. During the second half, we expect the rate of growth in the US to decline, which may reduce the extent of bias in activity towards the second half, which has been a feature of the Group's performance in prior years. However, the Group is in an excellent position to respond strongly when economic recovery returns. With a product and service portfolio focussed on the more stable development and production phase activities, a bias towards the key deepwater growth markets and wide geographic coverage, Expro has resilience to short term commodity price weakness. This is evidenced by our order book, which remains high relative to the start of the year. In view of the Group's strength and diversity, the directors continue to look to the future with confidence. Dr Chris Fay, CBE John Dawson Chairman Chief Executive Officer 5 December 2001 For further information please contact: Expro International Group PLC On 5 December: 020 7601 1000 John Dawson, Chief Executive Thereafter: 01189 591 341 Eric Woolley, Group Finance Director Weber Shandwick Square Mile 020 7601 1000 Tim Jackaman, Kirsty Hall, Rachel Taylor EXPRO INTERNATIONAL GROUP PLC UNAUDITED GROUP PROFIT AND LOSS ACCOUNT for the six months ended 30 September 2001 Six months Year ended 30 ended 31 September March Six months ended 30 September 2001 2000 2001 Continuing Discontinuing Total operations operations (restated (restated note note 2) 2) Note £000's £000's £000's £000's £000's Turnover: Group and share of joint ventures 103,619 199 103,818 77,025 174,256 Less; share of joint ventures (3,740) - (3,740) - (2,559) ------------------------------------------------------------------------------ Group turnover 3 99,879 199 100,078 77,025 171,697 ------------------------------------------------------------------------------ Operating profit/(loss): Group 12,037 (447) 11,590 7,557 20,510 Share of joint ventures 1,144 - 1,144 - 356 ------------------------------------------------------------------------------ Total 13,181 (447) 12,734 7,557 20,866 Loss on termination of discontinued operations 7 - (1,964) (1,964) - - ------------------------------------------------------------------------------ Profit/(loss) on ordinary activities before finance charges 13,181 (2,411) 10,770 7,557 20,866 Finance charges (net) (2,694) - (2,694) (2,193) (4,932) ------------------------------------------------------------------------------ Profit/(loss) on ordinary activities before tax 10,487 (2,411) 8,076 5,364 15,934 Tax on profit on ordinary activities 4 (3,169) - (3,169) (1,770) (5,013) ------------------------------------------------------------------------------ Profit / (loss) on ordinary activities after tax 7,318 (2,411) 4,907 3,594 10,921 Minority equity interests (6) - (6) (10) (1) ------------------------------------------------------------------------------ Profit / (loss) for the period 7,312 (2,411) 4,901 3,584 10,920 Dividends paid and proposed 5 (2,434) - (2,434) (2,192) (6,394) ------------------------------------------------------------------------------ Retained profit/(loss) for the period 4,878 (2,411) 2,467 1,392 4,526 ------------------------------------------------------------------------------ Earnings per ordinary share: Basic 6 11.4p 7.6p 5.6p 17.0p Diluted 6 11.3p 7.5p 5.5p 16.9p Basic before goodwill amortisation 6 13.3p 9.5p 6.8p 19.7p Total recognised gains and losses for the six months ended 30 September 2001 comprise the profit for the period of £4,901,000 and a net gain of £562,000 on foreign currency translation and overseas borrowings (six months ended 30 September 2000 - gain of £143,000; year ended 31 March 2001 loss of £1,455,000) . EXPRO INTERNATIONAL GROUP PLC UNAUDITED GROUP BALANCE SHEET at 30 September 2001 30 September 30 September 31 March 2001 2000 2001 £000's £000's £000's Intangible fixed assets and goodwill 44,492 33,034 46,541 Tangible fixed assets and investments 74,141 66,369 72,393 Investments in joint ventures 2,149 - 1,164 ------------------------------------------------------------------------------ Fixed assets 120,782 99,403 120,098 ------------------------------------------------------------------------------ Stocks and work-in-progress 13,309 10,937 11,759 Debtors 82,062 62,659 73,457 Cash at bank and in hand 9,342 8,889 6,272 ------------------------------------------------------------------------------ Current assets 104,713 82,485 91,488 Creditors due within one year (104,703) (65,611) (93,320) ------------------------------------------------------------------------------ Net current assets/(liabilities) 10 16,874 (1,832) ------------------------------------------------------------------------------ Total assets less current liabilities 120,792 116,277 118,266 Creditors due after more than one year (39,270) (45,789) (40,270) Provisions for liabilities and charges (2,910) (3,182) (2,911) ------------------------------------------------------------------------------ Net assets 78,612 67,306 75,085 ------------------------------------------------------------------------------ Called-up share capital 6,579 6,447 6,575 Share premium account and capital reserve 60,447 54,341 60,465 Profit and loss account 11,592 6,521 8,057 ------------------------------------------------------------------------------ Shareholders' funds being equity interests 78,618 67,309 75,097 Minority interest (6) (3) (12) ------------------------------------------------------------------------------ Total capital and reserves 78,612 67,306 75,085 ------------------------------------------------------------------------------ UNAUDITED GROUP CASH FLOW STATEMENT for the six months ended 30 September 2001 Six months Six months Year ended ended ended 30 September 30 September 31 March 2001 2000 2001 Note £000's £000's £000's Cash inflow from operating activities 8 4,423 6,611 25,479 Finance charges (net) (2,122) (1,565) (4,785) Taxation (4,121) (976) (4,603) Capital expenditure and financial investment (11,071) (4,914) (25,272) Acquisitions and disposals 2,979 (5,793) (8,780) Equity dividends paid (4,203) (4,105) (6,297) ------------------------------------------------------------------------------ Net cash outflow before financing (14,115) (10,742) (24,258) Financing (5,281) 9,875 5,771 ------------------------------------------------------------------------------ Decrease in cash in period (19,396) (867) (18,487) ------------------------------------------------------------------------------ NOTES TO THE INTERIM RESULTS 1.The results for the six months to 30 September 2001 and the comparative results for the six months to 30 September 2000 are unaudited and have been prepared on a basis consistent with the accounting policies set out in the statutory accounts for the year ended 31 March 2001 with the exception of Financial Reporting Standard 19 'Deferred Tax' which was implemented in the period without material effect. The comparative figures for the year ended 31 March 2001 do not constitute statutory accounts for the purpose of section 240 of the Companies Act 1985 and have been extracted from the Company's published accounts, a copy of which has been delivered to the Registrar of Companies and on which an unqualified audit report has been made by the auditors under Section 235 of the Companies Act 1985. 2.Restatement of prior period results Prior period comparative figures have been restated to separately disclose the results of operations discontinued in the current period as follows; Six months ended Year ended 30 September 31 March 2000 2001 £000's £000's Turnover Continuing operations 75,848 169,305 Discontinued operations 1,177 2,392 ------------------------------------------------------------------------------ Group turnover 77,025 171,697 ------------------------------------------------------------------------------ Operating profit (loss) Continuing operations 8,216 22,098 Discontinued operations (659) (1,232) ------------------------------------------------------------------------------ Total 7,557 20,866 ------------------------------------------------------------------------------ 3.Analysis of Turnover Six months ended Six months ended Year ended 30 September 30 September 31 March 2001 2000 2001 £000's £000's £000's Cased Hole Services 41,998 32,779 71,220 Subsurface Systems 25,603 18,124 39,856 Surface & Environmental Systems 32,477 26,122 60,621 ------------------------------------------------------------------------------ Group turnover 100,078 77,025 171,697 Surface & Environmental Systems Joint Ventures 3,740 - 2,559 ------------------------------------------------------------------------------ Total turnover 103,818 77,025 174,256 ------------------------------------------------------------------------------ 4.Taxation Tax on profits on ordinary activities has been calculated based on an estimated weighted average tax rate for the year ended 31 March 2002 and includes overseas tax of £3,539,000 (six months ended 30 September 2000 £1,981,000; year ended 31 March 2001 £5,806,000). The weighted average tax charge for the period on profit on ordinary activities is 39.2% and on profit on ordinary activities before exceptional item (see note 7) is 31.5%. This is compared to the standard rate of UK and overseas tax of 30.2% with the difference largely attributable to expenses not deductible for tax purposes. 5.Dividends An interim dividend of 3.7 pence per ordinary share is declared for payment on 31 January 2002 (six months ended 30 September 2000, 3.4p; year ended 31 March 2001, 9.8p). 6.Earnings per share Basic earnings per share are based on the Group's profit on ordinary activities after taxation. For the six months to 30 September 2001 the earnings per share are calculated on a weighted average number of ordinary shares in issue during the period of 64,397,756 shares. The earnings per share for the six months to 30 September 2000 and for the year ended 31 March 2001 are based on 64,146,434 and 64,384,050 shares respectively. Diluted earnings per share are calculated in accordance with FRS14. The basic earnings per share before goodwill amortisation is calculated by adjusting earnings for £1,238,000 goodwill amortisation in the period (six months ended 30 September 2000 goodwill amortisation of £749,000; year ended 31 March 2001 goodwill amortisation of £1,733,000). 7. Exceptional item Six months ended Six months ended Year ended 30 September 30 September 31 March 2001 2000 2001 £000's £000's £000's Loss on termination of operations 1,581 - - Goodwill previously eliminated against reserves 506 - - Capitalised goodwill (266) - - Loss on disposal of fixed assets 143 - - ------------------------------------------------------------------------------ 1,964 - - ------------------------------------------------------------------------------ The exceptional item represents the costs associated with the closure of the Group's Venezuelan operation. 8.Cash flow information Reconciliation of operating profit to net cash flow from operating activities Six months ended Six months ended Year ended 30 September 30 September 31 March 2001 2000 2001 £000's £000's £000's Operating profit 11,590 7,557 20,510 Depreciation and amortisation 8,888 7,765 16,003 Profit on sale of tangible fixed assets - (5) (5) Increase in stocks and work-in-progress (1,550) (2,660) (1,261) Increase in debtors (8,682) (12,511) (12,616) (Decrease)/increase in creditors and provisions (5,823) 6,465 2,848 ------------------------------------------------------------------------------ Net cash inflow from operating activities 4,423 6,611 25,479 ------------------------------------------------------------------------------ Analysis of net debt 1 April Other non- 2001 Cash flow cash changes 2001 £000's £000's £000's £000's Cash at bank and in hand 6,272 3,070 - 9,342 Bank overdrafts (32,246) (22,466) - (54,712) Debt due within one year (12,866) 5,267 228 (7,371) Debt due after one year (38,106) - 877 (37,229) ------------------------------------------------------------------------------ (76,946) (14,129) 1,105 (89,970) ------------------------------------------------------------------------------

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