Information  X 
Enter a valid email address

Wellstream Hldgs Plc (WSM)

  Print      Mail a friend

Thursday 19 August, 2010

Wellstream Hldgs Plc

Half Yearly Report

RNS Number : 3018R
Wellstream Holdings PLC
19 August 2010
 



Wellstream Holdings plc

 

Interim results for the half year ended 30 June 2010

 

Wellstream, a leading designer and manufacturer of bespoke flexible pipeline products, systems and solutions for the oil and gas industry, today announces its interim results for the half year ended 30 June 2010.

 

Financial Highlights:

 

·     Revenue Backlog of £246m (H1 2009: £215m)

·     Revenue of £128.6m (H1 2009: £194.9m)

·     Gross margin of 24.6% (H1 2009: 23.8%)

·     Profit before tax of £10.6m (H1 2009: £25.7m)

·     EPS of 7.1 pence per share (H1 2009: 16.7 pence)

·     DPS maintained at 4 pence per share (H1 2009: 4 pence)

·     Net debt of £70m (H1 2009: £74m)

 

Awards and Operational Highlights:

 

·     Backlog improvement of 46% compared to the 2009 year end driven by awards in Brazil and by increasing success in winning smaller projects elsewhere.

·     Petrobras Frame Agreement awards in excess of £80m in addition to a contract for the supply of risers to its Marlim Sul field, 150km off Brazil.

·     The award of a substantial supply contract by OGX Petroleo e Gas (OGX) in Brazil.

·     Substantial completion of the pre-salt technical qualification programme enabling the supply of risers and flowlines for sour service applications in up to 2,500m water depths.

·     Launch of integrity management service offering world class inspection and monitoring technologies.

 

As separately announced today, post period end, the Group has been awarded a substantial installation contract by OGX Petroleo e Gas (OGX) in Brazil.

 

Commenting on the results, Alasdair MacDonald, Acting CEO, said:

 

"We have made significant progress during the first half despite the subdued market conditions outside of Brazil.  Encouragingly, the steps we have taken to improve efficiency and adjust the cost base has allowed us to maintain strong margins and profitability.

 

New contract wins boosted backlog to £246m at the half year, and this momentum has been maintained, with current revenue backlog increasing further to in excess of £280m. This is an encouraging development and our expectation therefore remains that the result in the second half of the year will be somewhat ahead of that achieved in the first half of the year.

 

Looking further ahead, the outlook for the subsea sector as a whole is excellent, with a significant number of identified projects awaiting development.  The fundamentals underpinning the demand for subsea technologies remain compelling.

 

We believe that our strategy of focusing on operational excellence, developing leading edge technologies, and building upon our installation initiatives provides the foundation for strong growth as the market strengthens."

 

 

For further information, please contact:

 

On the day:

Thereafter:

Alasdair MacDonald, Acting CEO

+44 (0) 20 7353 4200

+44 (0)191 295 9000

Chris Gill, Finance Director

+44 (0) 20 7353 4200

+44 (0)191 295 9000

Jason Nunn, Investor Relations

+44 (0) 20 7353 4200

+44 (0)20 7968 8200




 

Peter Hewer, Martin Robinson

Tulchan Communications

 

+44 (0) 20 7353 4200

 

+44 (0) 20 7353 4200

 

 

Conference Calls

 

A presentation for analysts and investors will be held at 9.00 am (GMT) today. This presentation will have a call in facility which will be in listen only mode.

 

The presentation is available for download on the company webpage (www.wellstream.com)

 

To participate in the call, dial:

+44 (0) 1452 568 051 (access code 92335809). 

 

A recording will also be available for 7 days after the call, dial:

+44 (0) 1452 55 00 00 (access code: 92335809#).

 

 

Notes to Editors:

 

Wellstream is a leading designer and manufacturer of bespoke flexible pipeline products, systems and solutions for the oil and gas industry. Wellstream's portfolio includes established product lines for use as dynamic flexible risers and static flowlines in deep and ultra-deepwater environments.  In addition, newer product lines designed for use in high temperature/high pressure drilling and well service applications have also been introduced.  With over 850 employees internationally, Wellstream has offices and facilities in the UK, USA, Brazil, and Australia.

 

 



Chairman's Statement

 

Introduction

 

I am pleased to present the report for the Group for the six months ended 30 June 2010.

 

Key financial highlights for the period were:

 

·     Revenue backlog of £246m (H1 2009: £215m)

·     Revenue of £128.6m  (H1 2009: £194.9m)

·     Profit before tax of £10.6m (H1 2009: £25.7m)

·     Total EPS  of 7.1p (H1 2009: 16.7p)

·     Interim dividend proposed of 4 pence per share (H1 2009: 4p)

·     Net debt of £70m (H1 2009: £74m)

 

The backlog improvement to £246m, represents an uplift of 14% versus the same period last year and 46% versus that at the 2009 year end.  This improvement has been driven by awards in Brazil and by increasing success in winning smaller projects elsewhere.

 

The lower revenue in H1 2010 compared with that in H1 2009 is due in part to the challenging market conditions prevailing outside Brazil and in part to the fact that the revenue last year included installation work offshore Australia that is now complete.  We have responded with a series of measures to improve efficiency and reduce costs which have helped deliver an increase in gross margin to 24.6% (H1 2009: 23.8%) and protect operating margin of 9.1% (H1 2009: 13.6%).

 

We are proposing an interim dividend for the year to 31 December 2010 of 4p (2009: 4p)

 

On the strategic front the Group has passed some significant milestones.  Most notably Wellstream:

 

·     was awarded substantial supply and installation contracts by OGX Petroleo e Gas (OGX) in Brazil;

·     successfully completed the Seastream supply and install contract in Australia

·     substantially completed the pre-salt technical qualification programme enabling the supply of risers and flowlines for sour service applications in up to 2,500m water depths;

·     agreed a 3 Year frame agreement with Statoil ASA for the design, fabrication and supply of flexible pipeline products and

·     launched an integrity management service offering which brings together a number of world class inspection and monitoring technologies.

 

These strategic steps will materially enhance the Group's technology and service offerings to our customers and strengthen our growth prospects in the future.

 



Board of Directors

 

The past six months has seen a number of changes to the Board.  As previously announced, Gordon Chapman is stepping down as CEO for health reasons.  His contribution to the business has been immense and his presence at the helm will be greatly missed.  We will however continue to benefit from his advice and support and wish him well for an early recovery.

 

Gordon will be replaced as CEO by David Mullen with effect from 1 September 2010. I am delighted to welcome David, who has a proven track record of leadership and strategic thinking which will enhance Wellstream's ability to develop our market presence around the world.

 

Alasdair MacDonald has undertaken the role of Acting CEO since September 2009 and the Board is appreciative of his significant contribution during this period.

 

We have also announced that Chris Braithwaite will be retiring from the Board on 3 September 2010 to pursue other interests. Chris has been instrumental in developing the business alongside Gordon Chapman before and after the IPO and contributed substantially to its success; we wish him well for the future.

 

It was with great regret that we announced the death of Francisco Gros on 21 May 2010 following a long illness.   Francisco joined the Company in 2007 and was instrumental in the successful float of the Company on the London Stock Exchange in May of that year.  As a non-executive director, Francisco provided an exceptional dimension to the Company and will be sadly missed. 

 

The appointments of Sir Rob Margetts and Rodolfo Landim on 13 May 2010 as Non-Executive Directors significantly strengthen Wellstream's Board.   Their distinguished careers and professional achievements will make a considerable contribution to Wellstream and I am delighted that they have each agreed to join the Board.

 

Outlook

 

We continue to be encouraged by the confidence customers show in our business and by the level of bidding activity within the sector.  The improving backlog position is much to be welcomed and we hope to maintain this momentum as the year progresses.  Our expectation remains that the result in the second half of the year will be somewhat ahead of that achieved in the first half of the year.

 

Looking further ahead, the outlook for the subsea sector as a whole is excellent, with a significant number of identified projects awaiting development.  The fundamentals underpinning the demand for subsea technologies remain compelling.  The Gulf of Mexico oil spill will have an effect on industry practices with increased emphasis on safety and environmental protection but we do not expect it will have a significant long term detrimental effect on the continued pursuit of deepwater exploration.   We believe that our strategy of focusing on operational excellence, developing leading edge technologies, and building upon our installation initiatives provides the foundation for strong growth as the market strengthens.

 

 

 

John Kennedy,

Chairman



Acting Chief Executive's Statement

 

The first half of the year has seen significant progress across the Group despite a generally subdued trading environment outside of Brazil.  In particular I am pleased with the retained focus on safety, quality and operational excellence at both facilities that has allowed the Group to achieve an outstanding and improving safety performance with incident rates in line with best practice in the industry.

 

Sales

 

Notable awards during the period have included:

 

·     Petrobras Frame Agreement awards in excess of £80m;

·     a contract from Petrobras for the supply of risers to its Marlim Sul field, 150km off Brazil.  The risers will connect to the P-56 semi-submersible platform which will be installed in the Campos basin in late 2010;

·     a 3 Year frame agreement with Statoil ASA for the design, fabrication and supply of flexible pipeline products to Norway;

·     the award by Statoil ASA under the frame agreement of contracts to deliver two large diameter dynamic export risers, and a large number of topside jumpers to act as strategic replacements;

·     the award of substantial SURF supply and install contracts by OGX in Brazil;

 

Operations

 

Both facilities have had a successful first half albeit with different work profiles.

 

In Newcastle, despite the many challenges presented by the subdued market conditions outside Brazil, operational performance has remained excellent.  In Niteroi, having increased the capacity to 270nkm in 2009, near record levels of throughput have been maintained during H1 2010.  This performance is particularly impressive considering that much of the production involved the manufacture of technically complex products including that to be used in deepwater pre-salt developments. Focus is now shifting to further improving operational efficiency, particularly with respect to supply chain management and logistics; to this end we have agreed early access to the additional land adjacent to the existing facility.

 

Strategy

 

The Group has made significant progress in the implementation of its strategic initiatives during the first half of 2010.

 

Technology

 

From the perspective of the Group's core technology, the substantial completion of the pre-salt qualification programme has been important in maintaining the Group's position as a leading supplier of flexible pipeline technology in the Brazilian market.  Completion of the programme will enable Wellstream to supply risers and flowlines for sour service applications in water depth up to 2,500m.

 

In terms of expanding the Group's technology offering and diversifying its revenue streams, the launch of an Integrity Management service is also a significant development for the Group.  This new offering brings together a number of world class inspection and monitoring technologies including fibre optic, electromagnetic and acoustic monitoring.

 

Installation

 

The development of a significant capability to offer flexible flowlines and risers on a supply and install basis has long been a strategic focus of the Group.  In line with this strategy, the Group is pleased to have been awarded substantial supply and install contracts by OGX in Brazil.  This further enhances the Group's global track record in subsea installation following on from the successful completion of the Seastream supply and install contract in Australia early in 2010.

 

Market Outlook

 

The immediate market remains buoyant in Brazil but elsewhere the recovery has been slower than anticipated at the beginning of the year.  The backlog growth we have seen in the first half has been driven most significantly by project awards in Brazil though we are achieving increasing success in winning the available smaller project awards elsewhere.

 

The medium to longer term outlook for the subsea sector as a whole remains excellent, with an increasing number of FPSO awards likely in the next 5 years; a strong leading indicator for Wellstream.  The fundamentals underpinning this demand for FPSO's and associated subsea technologies remain compelling and Wellstream, through its focus on operational excellence, development of leading edge technologies and installation capability, is in a strong position to participate fully as the market develops.

 

 

 

 

Alasdair MacDonald,

Acting Chief Executive

 



Financial Review 

 

Revenue

 

Revenue in the period was £128.6m (H1 2009: £194.9m), a reduction of 34% that reflects both the subdued nature of our market outside of Brazil and lower Installation revenues.

 

The strong market in Brazil supported a near record output in Niteroi but the less buoyant market elsewhere led to much reduced activity in Newcastle.  In total 135nkm (H1 2009: 217nkm) of pipe was produced in the period with a 12% increase in corresponding revenue per nkm that reflects a higher value product mix.

 

Profitability

 

Profitability has also been affected by the lower level of market activity seen outside of Brazil.  Significant actions taken to protect product margins and to reduce the fixed cost base of the business have helped to reduce the impact on earnings and this is most clearly seen in gross margin which increased to 24.6% (H1 2009: 23.8%, FY 2009: 22.4%) in the period.

 

Administrative expenses in the period of £20.1m (H1 2009: £20.5m) included a net currency loss of £2.1m (H1 2009: £0.1m gain), this apart, underlying Administrative expenses ran significantly below those seen in 2009.  Operating profit in the period of £11.8m (H1 2009: £26.5m) and Profit before tax of £10.6m (H1 2009: £25.7m) illustrate the success of measures taken to improve the competiveness of the business and to protect profitability in difficult market conditions.  The effective tax rate in the period was 32.0% (H1 2009: 31.3%) giving a Profit for the period of £7.2m (H1 2009: £16.8m).

 

Finance Costs and Currency Risk 

 

Increased facility costs were the main factor behind net finance costs of £1.2m (H1 2009: £0.6m) in the period. Exchange rate movements over the period generated a £19,000 gain on financing (H1 2009: £0.2m loss).  The Group's approach to currency risk management is described in the 2009 Annual Report and there has been no change to this approach.  The Group did not hold any financial instruments to hedge either currency or interest rates at the period end though it currently holds contracts for difference to the value of £6.0m that reduce Brazilian Reais exposure.  These contracts mature before the year end.

 

Operating Cash flow and Capital Expenditure

 

Cash outflow from operating activities in the period was £22.0m (H1 2009: £10.0m inflow).  This outflow is attributable to increases in trade debtors and stock of £31m and £11m respectively, partially offset by an improvement of £16m on net customer contract balances.  Post period end, significant customer receipts have reduced trade debtors to a more normal level.  Capital expenditure in the period was £3.5m (H1 2009: £13.1m).

 

Net Debt and Financing Activities

 

Net debt at 30 June 2010 was £70.0m (30 June 2009: £74.0m).  There have been no changes to the Group's financing arrangements in the period.

 

Risks and Uncertainties

 

The principal risks and uncertainties faced by the Group over the remainder of the year include customer concentration, supply chain volatility during the current economic environment, general volatility of the oil and gas industry and on-going margin pressure and competitor risk.  These risks are set out in detail in our Annual Report for 2009 which was published in March and there have been no significant changes.  We continue to focus on the strategic initiatives in place to mitigate these risks by widening and diversifying our customer base, developing a robust supply chain strategy, and actively managing the Group's cost base to more closely match the flow of incoming work.

 

Related Party Transactions

 

As described in note 11, there have been no significant changes in the nature and size of related party transactions during the period to those reported in the Annual Report and Accounts for the year to 31 December 2009.

 

Dividend

 

The Group intends to pay an interim dividend for the year ended 31 December 2010 of 4p per share (2009: 4p) that will be payable on 13 October 2010 to shareholders on the register at close of business on 10 September 2010.  The ex dividend date is 8 September 2010.

 

 

 

 

Chris Gill,

Finance Director

18 August 2010



 

Condensed Consolidated Income Statement

For the six month period ended 30 June 2010





Six months ended 30 June

Six months ended 30 June

Year ended 31 December

Note

2010

2009

2009


Unaudited

Unaudited

Audited




£000

£000

£000

Continuing operations






Cost of sales



(96,919)

(148,528)

(299,631)













Gross profit



31,668

46,341

86,440







Administrative expenses



(20,123)

(20,473)

(36,800)

Other operating income



219

664

1,128

Restructuring costs



-

-

(5,041)













Operating profit



11,764

26,532

45,727







Foreign exchange gains / (losses) on financing



19

(221)

(676)

Finance income



1,336

1,047

1,775

Finance expenses



(2,549)

(1,639)

(4,474)













Profit before tax



10,570

25,719

42,352







Tax

4


(3,384)

(8,015)

(13,382)













Profit for the period from continuing operations



7,186

17,704

28,970

Discontinued operations






Profit for the period from discontinued operations



-

(906)

5,569













Profit for the period (attributable to equity holders of the parent)



7,186

16,798

34,539













Earnings per share - Continuing operations






Basic earnings per ordinary share (pence)

6


7.2

17.8

29.0

Diluted earnings per ordinary share (pence)

6


7.1

17.6

28.7







Earnings per share - Total operations






Basic earnings per ordinary share (pence)

6


7.2

16.9

34.6

Diluted earnings per ordinary share (pence)

6


7.1

16.7

34.2







 

Condensed Consolidated Statement of Comprehensive Income



For the six month period ended 30 June 2010






Six months ended 30 June

Six months ended 30 June

Year ended 31 December




2010

2009

2009




Unaudited

Unaudited

Audited




£000

£000

£000







Profit for the period



7,186

16,798

34,539

Other comprehensive income:






Exchange differences on translation of foreign operations



2,948

1,297

13,787

Recycling of cumulative foreign exchange gains on disposal of operation, net of tax



-

-

(1,547)













Other comprehensive income for the period, net of tax



2,948

1,297

12,240













Total comprehensive income for the period (attributable to equity holders of the parent)



10,134

18,095

46,779







 



 

Condensed Consolidated Statement of Changes in Equity




Six months ended 30 June 2010 (Unaudited)


Share capital

Share premium

Capital redemption reserve

Translation reserve

Retained earnings

Total


£000

£000

£000

£000

£000

£000








At 1 January 2010

998

66,749

30

28,194

103,778

199,749















Total comprehensive income for the period







Profit for the period (attributable to equity holders of the parent)

-

-

-

-

7,186

7,186

Exchange differences on translation of foreign operations

-

-

-

2,948

-

2,948

Total recognised income







(attributable to equity holders of the parent)

-

-

-

2,948

7,186

10,134

Dividends paid


-

-  

-  

 (6,019)

(6,019)

Issue of share capital

5

145

-  

-  

-  

150

Charge in relation to share options and tax thereon

-

-

-  

-  

895

895















Balance at 30 June 2010

1,003

66,894

30

31,142

105,840

204,909
















Six months ended 30 June 2009 (Unaudited)


Share capital

Share premium

Capital redemption reserve

Translation reserve

Retained earnings

Total


£000

£000

£000

£000

£000

£000








At 1 January 2009

996

66,697

30

15,954

78,120

161,797















Total comprehensive income for the period

-  

-  

-  

-

-

-

Profit for the period (attributable to equity holders of the parent)

-  

-  

-  

-

16,798

16,798

Exchange differences on translation of foreign operations

-  

-  

-  

1,297

-

1,297

Total recognised income







(attributable to equity holders of the parent)

-  

-  

1,297

16,798

18,095

Dividends paid

-  

-  

-  

-

(5,984)

(5,984)

Issue of share capital

1

-  

-  

-

-

1

Charge in relation to share options and tax thereon

-  

-  

-  

-

913

913















Balance at 30 June 2009

        997

       66,697

30

17,251

89,847

174,822








 

 

 

 








Year ended 31 December 2009 (Audited)


Share capital

Share premium

Capital redemption reserve

Translation reserve

Retained earnings

Total


£000

£000

£000

£000

£000

£000








At 1 January 2009

996

66,697

30

15,954

78,120

161,797















Total comprehensive income for the period







Profit for the period (attributable to equity holders of the parent)

-  

-  

-  

-  

34,539

34,539

Exchange differences on translation of foreign operations, net of tax

-  

-  

-  

13,787

-  

13,787

Recycling of cumulative foreign exchange gains, net of tax

-  

-  

-  

 (1,547)

-  

    (1,547)

Total recognised income







(attributable to equity holders of the parent)

-

-

-

12,240

34,539

46,779

Dividends paid

-  

-  

-  

-  

 (9,974)

    (9,974)

Issue of share capital

            2

              52

-  

-  

-  

54

Charge in relation to share options and tax thereon

-  

-  

-  

-  

1,093

1,093















Balance at 31 December 2009

998

66,749

30

28,194

103,778

199,749








 



 

Condensed Consolidated Balance Sheet




As at 30 June 2010










Note

30 June

30 June

31 December

2010

2009

2009

Unaudited

Unaudited

Audited



£000

£000

£000

Non-current assets





Intangible assets

7

6,622

-  

922

Goodwill


39,107

39,107

39,107

Property, plant and equipment


118,343

113,072

118,671













164,072

152,179

158,700
















Current assets





Inventories


47,294

53,934

36,529

Current tax debtor


-  

-  

1,599

Trade and other receivables


166,018

194,268

140,040

Cash and cash equivalents


16,960

11,049

34,771













230,272

259,251

212,939











Total assets


394,344

411,430

371,639











Current liabilities





Trade and other payables


(84,812)

(134,899)

(78,232)

Provisions


-  

-  

(3,436)

Current tax liabilities


(744)

(6,068)

-  

Interest bearing loans and borrowings

8

(25,391)

(16,025)

(10,000)













(110,947)

(156,992)

(91,668)











Net current assets


119,325

102,259

121,271











Non-current liabilities





Interest bearing loans and borrowings

8

(59,962)

(69,062)

(61,547)

Deferred tax liabilities


(18,526)

(10,554)

(18,675)













(78,488)

(79,616)

(80,222)











Total liabilities


(189,435)

(236,608)

(171,890)











Net assets


204,909

174,822

199,749











Equity





Share capital

9

1,003

997

998

Share premium account


66,894

66,697

66,749

Capital redemption reserve


30

30

30

Translation reserve


31,142

17,251

28,194

Retained earnings


105,840

89,847

103,778











Total equity


204,909

174,822

199,749






 

 

Condensed Consolidated Cash Flow Statement

 

For the six month period ended 30 June 2010

 


Six months ended 30 June

Six months ended 30 June

Year ended 31 December


2010

2009

2009


Unaudited

Unaudited

Audited


£000

£000

£000

Operating activities




Profit for the period

7,186

16,798

29,518

Share based payments

895

879

818

Depreciation of property, plant and equipment - Continuing

5,680

4,528

9,346

Depreciation of property, plant and equipment - Discontinued

-  

694

1,033

Gain on disposal of property, plant and equipment

-  

(761)

(1,663)

Finance Income

(1,336)

(1,047)

(1,775)

Finance expense

2,549

1,639

4,474

Tax - Continuing

3,384

8,015

13,382

Tax - Discontinued

-  

(352)

(120)

Foreign exchange (gains) / losses  on financing

(19)

221

676

(Increase) / decrease in inventories

(10,641)

(3,909)

9,457

(Increase) / decrease in receivables

(25,282)

(11,192)

48,497

(Decrease) / increase in payables

(4,024)

5,904

(50,973)









Cash from operations

(21,608)

21,417

62,670









Income taxes received / (paid)

851

(10,107)

(21,069)

Interest received

938

104

1,073

Interest paid

(2,224)

(1,396)

(2,945)









Net cash (decrease) / increase from operating activities

(22,043)

10,018

39,729









Investing activities








Purchases of intangible assets

(500)

-  

-  

Purchases of property, plant and equipment

(2,985)

(13,139)

(19,797)

Proceeds on disposal of property, plant and equipment

-  

995

2,926

Costs of disposal of operation

-  

-  

(286)

Proceeds on disposal of operation

-  

-  

19,561





Net cash used in investing activities

(3,485)

(12,144)

2,404









Financing activities



 

Gross proceeds of new debt

2,442

5,750

61,781

Repayments of debt

(5,000)

(3,000)

(57,000)

Net (repayments) / proceeds of financing

(2,558)

2,750

4,781

Proceeds on issue of share capital

150

1

54

Debt refinancing costs

-

-

(2,151)

Dividends paid

(6,019)

(5,984)

(9,974)









Net cash decrease from financing activities

(8,427)

(3,233)

(7,290)





Net (decrease) / increase in cash and cash equivalents

(33,955)

(5,359)

34,843

Foreign exchange movements on translation of cash balances

753

(221)

(676)

Cash and cash equivalents at beginning of period

34,771

604

604











Cash and cash equivalents at end of period

1,569

(4,976)

34,771











Cash and cash equivalents and bank overdrafts at end of period comprise:

 

Cash and cash equivalents

16,960

11,049

34,771

Bank overdrafts

(15,391)

(16,025)

 -  










1,569

(4,976)

34,771









 



 

Notes to the Condensed set of Financial Statements


 





1  Basis of preparation








The information for the year ended 31 December 2009 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.   A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The report of the auditors on those statutory accounts was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under Section 498 of the Companies Act 2006.





The directors, having re-assessed the factors addressed in the 2009 Annual Report, including current business conditions, internal planning and control procedures and financial risks, and after considering the facilities available, continue to have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.  For this reason the directors continue to adopt the going concern basis in preparing this condensed set of financial statements.





2  Accounting policies








The annual financial statements of Wellstream Holdings PLC are prepared in accordance with IFRSs as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with International Accounting Standard 34 "Interim Financial Reporting", as adopted by the European Union.





The accounting policies and methods of computation applied, other than as detailed below, are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2009. There have been no changes in the nature of key estimates and judgments made in applying the Group's accounting polices as explained in the 2009 Annual Report.





There are no new standards, amendments to standards or interpretations that are mandatory for the first time for the financial year beginning 1 January 2010 that are considered to have a material impact on the Interim Report. The following are mandatory for the first time for the financial year beginning 1 January 2010 but are not considered to have a material impact on the Interim Report:





 - IFRS 3 (revised), 'Business combinations'








 - IAS 27 (revised), 'Consolidated and separate financial statements'








 - Amendment to IAS 39, 'Financial Instruments: Recognition and measurement' on 'Eligible

   hedged items'






 - IFRIC 15, 'Agreements for construction of real estates'








 - IFRIC 16, 'Hedges of a net investment in a foreign operation'








 - IFRIC 17, 'Distributions of non cash assets to owners'








 - IFRIC 18, 'Transfer of assets from customers' "




 

 

3  Operating segments

 


On 30 September 2009 the group disposed of its Onshore operations and therefore the onshore segment has been excluded from the comparatives.


 

Management continue to monitor the Group's continuing Offshore operations as one segment and the chief operating decision maker assesses performance and makes resource allocation decisions based on the results of that segment.

 



 

Segment revenues and results




The following is an analysis of the revenues and results of the Group's reportable segment, as reviewed by the Group's chief operating decision maker:






Six months ended 30 June

Six months ended 30 June

Year ended 31 December


2010

2009

2009


£000

£000

£000

Revenue




External sales

128,587

194,869

386,071





Result




EBITDA (1)

17,444

31,060

55,073





Depreciation

(5,680)

(4,528)

(9,346)





Operating profit

11,764

26,532

45,727





(1) EBITDA is defined as operating profit before depreciation and amortisation.




 





4  Tax








Income tax for the six month period is charged at 32.02% (six months ended 30 June 2009: 31.33%; year ended 31 December 2009: 31.00%), representing the best estimate of the annual effective income tax rate expected for the full year, applied to the pre-tax income of the six month period.





A number of changes to the UK Corporation tax system were announced in the June 2010 Budget Statement. The Finance (No 2) Act 2010, which was substantively enacted on 20 July 2010, includes legislation reducing the main rate of corporation tax from 28 per cent to 27 per cent from 1 April 2011. The changes had not been substantively enacted at the balance sheet date and, therefore, are not included in these financial statements. The resulting decrease in the deferred tax liability is not expected to have a material impact on the group financial statements in terms of current or deferred tax.

 

 

 

 

5  Dividends





Six months ended 30 June

Six months ended 30 June

Year ended

31 December


2010

2009

2009


£000

£000

£000

Dividends paid during the period:




Final dividend paid for the year ended 31 December 2008 of 6p per share

-

5,984

5,984

Interim dividend paid for the year ended 31 December 2009 of 4p per share

-  

-  

3,990

Final dividend paid for the year ended 31 December 2009 of 6p per share

6,019

-  





Dividends proposed during the period:




Interim dividend proposed for the year ended 31 December 2010 of 4p per share

4,013

-  

-  





The proposed dividend was approved by the Board of directors on 18 August 2010 and accordingly has not been included as a liability at the balance sheet date. 

 



 

6  Earnings per share





The calculation of basic and diluted earnings per share is based on the following data:








Six months ended 30 June

Six months ended 30 June

Year ended

31 December



2010

2009

2009



No.

No.

No.

Weighted average number of shares





For basic earnings per share


100,041,162

99,671,250

99,711,536






Options and awards


1,346,920

1,147,505

1,239,850








101,388,082

100,818,755

100,951,386








Six months ended 30 June

Six months ended 30 June

Year ended 31 December

Earnings


2010

2009

2009

From Continuing operations


£000

£000

£000






For basic and diluted earnings per share


7,186

17,704

28,970






Basic earnings per ordinary share (p)


7.2

17.8

29.0






Diluted earnings per ordinary share (p)


7.1

17.6

28.7








Six months ended 30 June

Six months ended 30 June

Year ended 31 December

Earnings


2010

2009

2009

From total operations


£000

£000

£000






For basic and diluted earnings per share


7,186

16,798

34,539






Basic earnings per ordinary share (p)


7.2

16.9

34.6






Diluted earnings per ordinary share (p)


7.1

16.7

34.2






7  Intangible assets










During the period, the Group entered into an exclusive and strategic partnership with MAPS Technology Limited to develop and market unique MAPS stress measurement technology.






This 10 year exclusivity agreement will form part of Wellstream's integrity management service offering. An intangible asset in the amount of £5,700,000 has been recognised in the period representing the best estimate of payments to be made by the Group to MAPS Technology Limited over the life of the agreement.

 

 



 

8  Interest bearing loans and borrowings

 


As at 30 June

As at 30 June

As at 31 December



2010

2009

2009

Current liabilities


£000

£000

£000

Bank overdraft


15,391

16,025

-  

Bank loans


10,000

-  

10,000













25,391

16,025

10,000











Non- current liabilities





Bank Loans


43,427

58,240

48,102

Rio State Government Loan


16,535

10,822

13,445













59,962

69,062

61,547











During the period the first six monthly repayment of £5,000,000 was made in respect of the Group's term loan.

 

9  Share capital






Authorised

No.

Authorised

Issued

Issued

£

No.

£

Ordinary shares of £0.01 each





At 1 January 2010

      150,000,000

              1,500,000

            99,774,204

997,743






Issue of shares

-  

                         -  

                 541,213

5,412











At 30 June 2010

      150,000,000

              1,500,000

           100,315,417

1,003,155











All issued share capital is called-up, allotted and fully paid.

 

10  Contingent liabilities

 

Performance bonds are entered into in the normal course of operations and require the Group to make payments to third parties in the event that the Group does not satisfy its obligations under the terms of any related contracts.


At 30 June 2010 the Group had granted guarantees and performance bonds to third parties totalling £12,438,000  (30 June 2009 : £10,586,000; 31 December 2009 : £15,876,000). Of the total at the balance sheet date £4,707,000 (30 June 2009 : £6,387,000; 31 December 2009 : £6,462,000) is in respect of Seastream JV Australia Pty Limited, a jointly controlled entity in which the Group has a 50% holding.


The Group has put in place a guarantee of financial support, limited to the Group's share of Seastream JV Australia Pty Limited's liabilities, should that company find itself unable to pay liabilities as they fall due.  At the balance sheet date gross assets totalled £5,740,000 (30 June 2009 : £18,216,000;  31 December 2009 : £9,299,000) and gross liabilities totalled £451,000 (30 June 2009: £17,797,000; 31 December 2009 : £5,623,000). The gross assets figure at 30 June 2010 reflects £5,078,000 of advances made to shareholders through the life of the project.


The Group has given guarantees to its bankers in respect of overdrawn balances on certain Group bank accounts and in respect of other overdrafts, loans and guarantees given by the banks to or on behalf of other Group undertakings. At 30 June 2010 there were bank overdrafts of £15,391,000 (30 June 2009 : £16,025,000: 31 December 2009 : £nil) and loans of £71,535,000 (30 June 2009 : £69,822,000; 31 December 2009 : £73,445,000).

 

11  Related party transactions

 

Other than as disclosed in note 10, there have been no related party transactions in the first six months of the current financial year which have materially affected the financial position or performance of the Group.

Related parties are consistent with those disclosed in the Group's Annual report and Accounts for the year ended 31 December 2009.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR GGUGURUPUGBR