Interim Results
Hunting PLC
6 September 2001
6th September 2001
Hunting PLC
Interim Results Announcement
Highlights of the six months ended 30 June 2001:
* Operating profit up 40% to £24.4m (H1 2000: £17.4m)
* Oil operating profit up 176% to £25.9m (H1 2000: £9.4m)
* Profit before tax £57.1m (H1 2000: £13.3m)
* Basic earnings per share 39.1p (H1 2000: 3.7p)
* Special one-off dividend of 10p per ordinary share
* Oil Division: continued strong growth
* Defence Division: affected by timing and the sales process
Commenting on the results, Dennis Proctor, Hunting PLC Chief Executive, said:
'This has been a very successful first six months of the year and the
disposal of the Defence businesses is now substantially completed. This
latest step in the transformation of Hunting will allow us to concentrate on
our higher growth oil service businesses where we will be investing both
through organic expansion and acquisitions.
'It is our strategic intent to continue to enhance and diversify our
technology capabilities and develop closer customer relationships to secure
our further growth. We look forward to the future with confidence.'
Enquiries:
Hunting PLC 020 7321 0123
Dennis Proctor, Chief Executive
Dennis Clark, Finance Director
Brunswick Group Limited 020 7404 5959
Derek Bainbridge
Catriona McDermott
Notes to Editors:
Hunting PLC is an international oil services company providing support
solutions to the world's largest oil and gas companies.
INTERIM STATEMENT
The recent disposal of our Defence interests and our reclassification into
the oil and gas sector signals a new phase in the Group's evolution into an
international oil services company.
With a number of market leading positions we are now focused on our higher
growth oil services businesses where we will be investing for the future,
both through organic expansion and acquisitions.
GROUP RESULTS
Profit before tax for the six months to June 2001 after an exceptional profit
of £36.2m was £57.1m, compared to £13.3m in the corresponding period last
year. Total operating profit of £24.4m is 40% higher than the first half of
2000. The operating profit of our Oil activities of £25.9m is an increase of
176% as a result of higher activity levels experienced in the oil and gas
markets in the second half of 2000 continuing in the first half of 2001.
ACQUISITIONS AND DISPOSALS
During the six months, we have sold Hunting Contract Services, Hunting
Technical Support and the Irvin Companies based in the UK, USA and Canada for
an aggregate consideration of £75.2m. The exceptional profit on these sales
before tax and after costs, provisions and goodwill previously written off is
£41.0m. On 12 July 2001 we also announced the sale of Hunting Engineering for
a consideration of £42.3m. Completion of this disposal is expected to take
place shortly, substantially completing the sale of our Defence activities.
On 19 March 2001 we completed the acquisition of Vinson Supply, a major US
pipe distributor, for £38.6m. This has been successfully integrated within
our oilfield services activity and the Board is very pleased with its
performance since the acquisition.
OIL ACTIVITIES
Gibson Petroleum, based in Alberta, Canada, continued to benefit from buoyant
market conditions, specifically in crude oil marketing. Performances in
transportation and LPGs improved over the previous period due to Western
Canada drilling activity.
Turnover for Gibson was £346m, compared with £323m for the first half of
2000. Operating profit increased to £13.0m, a 55% increase. The company
purchased the assets of GN Transportation Services and is currently
investigating several potential acquisition opportunities.
Hunting Oilfield Services, headquartered in Houston, Texas with its
international network of facilities, benefited from the industry's aggressive
global drilling campaign. What began as a North American gas drilling effort
in the second half of 2000 evolved into an oil drilling push in the
international arena. Accordingly, turnover grew to £117m for the period,
compared with £50m in the first half of 2000. Operating profits were £10.6m,
a 172% increase.
Our trenchless drilling products and services saw a decrease in activity due
to the major disruption within the telecommunications industry, though this
was mitigated by the increased use of the facilities for oilfield services
production. The business is well positioned when telecommunications demand
increases again.
Tenkay Resources participated in a number of promising gas discoveries in the
Southern USA and production from these wells should lead to benefits in the
second half of 2001.
DEFENCE
The Defence activities reported an operating loss of £1.5m, a result which
was adversely affected by the sales processes. The results of the Zimbabwe
activity, which though marginally profitable, are not material to the Group
and have not been consolidated due to continuing difficulties in that
country. Full provision has been made against this investment.
FINANCIAL
Net borrowings of £97.4m reduced from £100.8m at 31 December 2000 with
gearing reducing from 55% to 43%. Net proceeds received from the Defence
disposals were £69.4m, with acquisitions, principally Vinson, of £39.9m.
Working capital absorbed cash of £31.0m reflecting the high activity levels.
Capital expenditure and taxation paid were £15.4m and £10.1m respectively.
TAXATION
The effective tax rate on the profit before exceptional items was 39% which
compares with 38.5% for the year to 31 December 2000.
DIVIDEND
Following the disposal of the Defence activities, the Board has concluded
that its future dividend policy should be more appropriate to a focused oil
services group in order to take advantage of the opportunities for growth in
the sector. Accordingly, in the absence of special circumstances, future
dividends will be covered at a level that enables the appropriate investment
in the business to be made. However, as part of the review of its dividend
policy, the Board has decided to pay a one-off special dividend of 10p per
ordinary share from the exceptional profit on the disposal of the Defence
activities. This special interim dividend will be paid on 5 December 2001 to
shareholders on the register at the close of business on 14 September 2001
together with an interim dividend of 2p per share in respect of the trading
results to 30 June 2001.
OUTLOOK
The transition to our new management team has been successfully completed and
our Oil businesses have shown excellent growth. Whilst there remains some
uncertainty about oil and gas commodity prices in the short term, current
drilling and production activities show strength well into 2002. We expect
that our market leading positions will allow us to maintain market share in
the energy sector and we look forward to the future with confidence.
Richard Hunting Dennis Proctor
Chairman Chief Executive
6 September 2001
Consolidated Profit and Loss Account
(Unaudited)
Six months Year to
Six months to 30 June 2001 to 30 June 31 December
Notes Continuing Discontinued Total 2000 2000
£m £m £m £m £m
Turnover 2 558.0 21.6 579.6 618.8 1,215.9
Cost of sales (496.3) (18.4) (514.7) (552.6) (1,090.1)
________ ________ ________ ________ ________
Gross profit 61.7 3.2 64.9 66.2 125.8
Net operating
expenses (35.0) (5.5) (40.5) (50.0) (86.0)
________ ________ ________ ________ ________
Group
operating
profit 26.7 (2.3) 24.4 16.2 39.8
Share of
operating
profit in
joint venture
and
associated
undertakings - - - 1.2 2.1
________ ________ ________ ________ ________
Total
operating
profit 2 26.7 (2.3) 24.4 17.4 41.9
Exceptional
items:
Profit on
disposal of
discontinued
operations - 41.0 41.0 - -
Provision for
diminution in
value of
business to
be disposed of (1.9) - (1.9) - -
Provision for
impairment of
net assets of
deconsolidated
subsidiary (2.9) - (2.9) - -
________ ________ ________ ________ ________
Profit on
ordinary
activities
before
interest 21.9 38.7 60.6 17.4 41.9
Net interest
payable ________ ________ (3.5) (4.1) (8.5)
________ ________ ________
Profit on
ordinary
activities
before
taxation 57.1 13.3 33.4
Taxation on
profit on
ordinary
activities 4 (13.6) (4.9) (12.8)
________ ________ ________
Profit on
ordinary
activities
after
taxation 43.5 8.4 20.6
Equity
minority
interests (2.4) (2.7) (5.2)
________ ________ ________
Profit for
the period 41.1 5.7 15.4
Dividends
(including
non equity) 5 (14.0) (5.0) (13.2)
________ ________ ________
Retained
profit for
the period 27.1 0.7 2.2
________ ________ ________
Earnings per
25p ordinary
share
Basic 6 39.1p 3.7p 11.5p
________ ________ ________
Diluted 6 39.0p 3.7p 11.4p
________ ________ ________
Consolidated Statement of Total Recognised Gains and Losses
Profit for the period 41.1 5.7 15.4
Revaluation of fixed assets - - 3.9
Currency translation differences on
foreign currency net investments 5.0 2.8 2.8
________ ________ ________
Total recognised gains and losses for
the period 46.1 8.5 22.1
________ ________ ________
Consolidated Balance Sheet
(Unaudited)
At At At
30 June 30 June 31 December
2001 2000 2000
Notes £m £m £m
Fixed assets
Intangible assets 32.1 27.4 28.9
Tangible assets 150.4 135.3 144.2
Investment in joint
venture:
Share of gross assets - 8.6 7.9
Share of gross liabilities - (6.3) (6.0)
- 2.3 1.9
Investment in associates 3.3 3.1 3.6
Other investments 6.8 18.2 15.0
________ ________ ________
192.6 186.3 193.6
Working capital
Stocks 161.7 105.8 107.9
Debtors 194.1 190.6 178.1
Creditors (220.4) (202.9) (191.7)
135.4 93.5 94.3
Provisions for liabilities
and charges (4.0) (5.5) (4.3)
Net borrowings 7 (97.4) (98.6) (100.8)
________ ________ ________
226.6 175.7 182.8
________ ________ ________
Capital and reserves
Called up share capital 73.1 73.1 73.1
Share premium 41.0 41.0 41.0
Revaluation reserve 23.4 20.4 24.3
Special capital reserve - 0.7 -
Profit and loss account 44.1 (2.0) 0.5
Shareholders' funds
Equity interests 133.7 85.3 91.0
Non-equity interests 47.9 47.9 47.9
181.6 133.2 138.9
Equity minority interests 45.0 42.5 43.9
________ ________ ________
226.6 175.7 182.8
________ ________ ________
Reconciliation of Movements in Consolidated
Shareholders' Funds
Profit for the period 41.1 5.7 15.4
Dividends (14.0) (5.0) (13.2)
________ ________ ________
Retained profit for the period 27.1 0.7 2.2
Currency translation differences on
foreign currency net investments 5.0 2.8 2.8
Revaluation of fixed assets - - 3.9
Share capital (repaid) - (0.7) (0.7)
Goodwill written back on disposals 10.6 - 0.3
________ ________ ________
Net addition to shareholders' funds 42.7 2.8 8.5
Opening shareholders' funds 138.9 130.4 130.4
________ ________ ________
Closing shareholders' funds 181.6 133.2 138.9
________ ________ ________
Consolidated Cash Flow Statement
(Unaudited)
Six months Six months to Year to
to 30 June 30 June 31 December
Notes 2001 2000 2000
£m £m £m
Net cash inflow
from operating
activities
Operating profit 24.4 17.4 41.9
Depreciation and
amortisation 10.3 8.0 20.0
Other non cash flow
items (1.3) (1.6) (3.4)
(Increase) decrease
in stocks (11.4) 3.8 1.8
(Increase) decrease
in debtors (24.8) 15.6 29.9
Increase (decrease)
in creditors and
provisions 4.2 (12.7) (30.0)
________ ________ ________
1.4 30.5 60.2
________ ________ ________
Returns on
investments and
servicing of
finance
Net interest paid (3.3) (2.9) (8.8)
Preference
dividends paid (2.0) (2.0) (3.9)
Dividends paid to
minorities (1.8) (6.3) (6.9)
________ ________ ________
(7.1) (11.2) (19.6)
________ ________ ________
Taxation paid (10.1) (2.2) (6.1)
________ ________ ________
Capital expenditure
and financial
investment
Purchase of
tangible fixed
assets (15.4) (12.2) (21.7)
Sale of tangible
fixed assets 1.7 1.1 1.6
Purchase of trade
investments (0.6) (0.2) (0.2)
________ ________ ________
(14.3) (11.3) (20.3)
________ ________ ________
Acquisitions and
disposals
Purchase of
subsidiary
undertakings (39.9) (24.1) (28.9)
Net cash acquired
with subsidiary
undertakings - 1.3 1.4
Purchase of
associated
undertakings - (0.7) (0.7)
Purchase of
minority interests
in subsidaries - - (1.4)
Net proceeds from
disposal of
operations 69.4 - -
Net cash disposed
of with subsidiary
undertakings (0.4) - -
Net proceeds from
disposal of joint
venture and
associated
undertakings 3.7 - 1.6
Proceeds from
disposal of other
investments 8.1 - 0.8
________ ________ ________
40.9 (23.5) (27.2)
________ ________ ________
Equity dividends
paid (3.0) (3.0) (9.2)
________ ________ ________
Net cash inflow
(outflow) before
use of liquid
resources and
financing 7.8 (20.7) (22.2)
Management of
liquid resources
Net movement in
short term money
market deposits 7 7.1 5.0 (1.0)
________ ________ ________
Financing
Preference share
capital repaid - (0.7) (0.7)
(Decrease) in
borrowings due
within one year 7 (0.1) (3.8) (20.8)
(Decrease) increase
in borrowings due
beyond one year 7 (20.3) 24.4 28.8
Capital element of
finance leases 7 (0.3) (0.1) (0.2)
________ ________ ________
(20.7) 19.8 7.1
________ ________ ________
(Decrease) increase
in cash 7 (5.8) 4.1 (16.1)
________ ________ ________
Notes to the Interim Statement
1. BASIS OF PREPARATION
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's 2000 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 the interim statement does not constitute statutory
accounts as defined in section 240 of the Companies Act 1985. The financial
information for the year ended 31 December 2000 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 2001 30 June 2000 31 December
2000
Operating Operating Operating
Turnover Profit Turnover Profit Turnover Profit
Activity £m £m £m £m £m £m
Oil & Gas
marketing
and
distribution 345.8 13.0 324.0 7.6 703.9 19.2
Less share
of joint
venture
undertaking - - (1.3) - (2.5) -
Share of
joint
venture - - - 0.8 - 1.4
undertaking
Oilfield
services
and tubular
products 116.8 10.6 49.7 3.9 106.3 7.4
Exploration
and other
activities 43.4 2.3 29.8 (3.1) 67.9 1.0
Share of
associate
undertakings
- - - 0.2 - 0.5
________ ________ ________ ________ ________ ________
Oil
activities 506.0 25.9 402.2 9.4 875.6 29.5
Defence 52.0 0.8 105.2 2.1 182.7 3.0
Share of
associated
undertakings - - - 0.2 - 0.2
________ ________ ________ ________ ________ ________
Continuing
operations 558.0 26.7 507.4 11.7 1,058.3 32.7
Discontinued
operations
Defence 21.6 (2.3) 111.4 5.7 157.6 9.2
________ ________ ________ ________ ________ ________
579.6 24.4 618.8 17.4 1,215.9 41.9
________ ________ ________ ________ ________ ________
The oil and gas marketing and distribution turnover includes £277 million of
crude oil and related sales in the six months to 30 June 2001 (six months to
30 June 2000 £276 million)
3. ANALYSIS OF CONTINUING AND DISCONTINUED ACTIVITIES
The analysis of continuing and discontinued activities during the six
months to 30 June 2000 and the year to 31 December 2000 is set out below.
Six months to 30 June 2000 Year to 31 December 2000
as restated as restated
__________________________________ ___________________________________
Continuing Discontinued Total Continuing Discontinued Total
£m £m £m £m £m £m
Turnover 507.4 111.4 618.8 1,058.3 157.6 1,215.9
Cost of
sales (467.0) (85.6) (552.6) (966.4) (123.7) (1,090.1)
________ ________ _______ ________ ________ ________
_
Gross
profit 40.4 25.8 66.2 91.9 33.9 125.8
Net
operating
expenses (29.9) (20.1) (50.0) (61.3) (24.7) (86.0)
________ ________ _______ ________ ________ ________
Group
operating
profit 10.5 5.7 16.2 30.6 9.2 39.8
Share of
operating
profit
in joint
venture
and
associated
undertakings 1.2 - 1.2 2.1 - 2.1
________ ________ _______ ________ ________ ________
Total
operating
profit 11.7 5.7 17.4 32.7 9.2 41.9
________ ________ _______ ________ ________ ________
There were no exceptional items in the year to 31 December 2000.
4 TAXATION
The taxation charge for the six months ended 30 June 2001 is calculated
by applying the best estimate of the 2001 annual effective rate of tax to the
profit for the period.
5 DIVIDENDS
Six months to Six months to Year to
30 June 30 June 31 December
2001 2000 2000
£m £m £m
Preference
dividends:
Paid 2.0 2.0 3.9
Ordinary dividends:
Interim proposed 2.0 3.0 3.0
Special dividend
proposed 10.0 - -
Final proposed - - 6.3
________ ________ ________
14.0 5.0 13.2
________ ________ ________
6. EARNINGS PER SHARE
Basic and diluted earnings per share have been calculated using the following
bases:
Six months to Six months to Year to
30 June 30 June 31 December
2001 2000 2000
£m £m £m
Profit attributable
to shareholders 41.1 5.7 15.4
Less: preference
dividends (2.0) (2.0) (3.9)
________ ________ ________
Earnings
attributable to
Ordinary
shareholders 39.1 3.7 11.5
Effect of dilutive
share options - - -
________ ________ ________
Adjusted earnings 39.1 3.7 11.5
________ ________ ________
Weighted average
number of Ordinary
shares 100.2 100.2 100.2
Dilutive outstanding
share options 0.2 - 0.2
________ ________ ________
Adjusted weighted
average number of
Ordinary shares 100.4 100.2 100.4
________ ________ ________
Basic EPS 39.1p 3.7p 11.5p
________ ________ ________
Diluted EPS 39.0p 3.7p 11.4p
________ ________ ________
7. ANALYSIS OF CHANGES IN NET DEBT
Acquisitions
and
disposals Exclusion
At 1 Cash (excluding of Exchange At 30
Jan flow cash and subsidiary movements June
2001 overdrafts) 2001
£m £m £m £m £m £m
Cash at
bank and
in hand 14.7 2.9 - (0.2) 0.4 17.8
Overdrafts (6.1) (8.7) - - - (14.8)
_____
(5.8)
_____
Borrowings
due after
one year (108.6) 20.3 - - (5.9) (94.2)
Borrowings
due
within
one year (12.1) 0.1 - 1.0 0.1 (10.9)
Finance
leases (0.5) 0.3 0.2 - - -
_____
20.7
_____
Money
market
deposits 11.8 (7.1) - - - 4.7
_____ _____ _____ _____ _____ _____
Total net (100.8) 7.8 0.2 0.8 (5.4) (97.4)
debt
_____ _____ _____ _____ _____ _____
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