Hunting Regulatory News (HTG)

1 Mar 2007 07:03

Hunting PLC01 March 2007 For immediate release 1 March 2007 HUNTING PLC Preliminary results For the year ended 31 December 2006 Hunting PLC ("Hunting", the "Group" or the "Company"), the international energyservices company, today announces its preliminary results for the year ended 31December 2006. Revenue £1,810m (2005: £1,522m) +19% Profit from operations £86.3m (2005: £44.9m) +92% Pre-tax profit £80.8m (2005: £40.9m) +98% Free cashflow increased to £31.0m (2005: £17.9m) +73% Basic earnings per share 37.6p per share (2005: 21.2p) +77% Total Ordinary dividend per share 7.5p (2005: 6.0p) +25% Commenting on the outlook for the Group, Dennis Proctor, Hunting's ChiefExecutive, said: "The Company has experienced a doubling of profit in each of the last two years.While such levels of growth are unsustainable, management expects that thecontinued strength in the market will provide excellent growth opportunities.The balance sheet of Hunting PLC is strong. Its assets are well positionedglobally. Its commitment to shareholder value is solid." For further information, please contact: Hunting PLC 020 7321 0123 Dennis Proctor, Chief ExecutiveDennis Clark, Finance Director Hogarth Partnership Limited 020 7357 9477 Andrew JaquesAnthony Arthur Notes to Editors: Hunting PLC is an international oil services company providing support solutionsto the world's largest oil and gas companies. Chairman's Statement As we announced in December, the Company has benefited from strong trading andour performance has exceeded market expectations. Profit before taxation for theyear to 31 December 2006 was £80.8m (2005 - £40.9m), a 98% increase. The Company is essentially a North American energy business, with strongpositions also in the North Sea and internationally. Commodity prices remainstrong relative to historical levels so that recent corrections have notadversely impacted the Company's activities, order books or production backlogs. Gibson Energy, the Company's Canadian-based midstream services operation, is atthe hub of an extremely active energy scene. It has been able to benefit fromits involvement in both conventional heavy crude oil and ever-increasing volumesof production from Alberta's extensive oil sand deposits. The Marketingdivision, concentrating on quality management of the province's diverse productstreams, has once again produced outstanding results. Operating margins in thisactivity are typical for the industry but returns on capital are excellent.Moose Jaw Refinery has substantially improved its results, benefiting frombetter prices in its traditional products and from a successful emphasis onproducts from the lighter half of the crude oil barrel. Trucking operates thelargest crude oil fleet in Western Canada and has had a busy and successfulyear. Canwest Propane, the second largest propane company in Canada, producedfine results and is expanding its activities into the northern United States. Hunting Energy is the Company's upstream operation, providing sophisticatedequipment for the upstream sector of the world's hydrocarbon industry - withspecial emphasis on tubular products destined for below-ground applications. Aseasily exploitable reserves become harder to locate and produce, the emphasis ondeeper and more difficult deposits plays to Hunting Energy's strengths.Manufacturing plants in the United States, Canada, United Kingdom, Netherlands,Singapore and China have been working flat out throughout the year. Outstandingtechnical achievements have been recorded during the year in the Gulf of Mexicoand in the North Sea. The Company continued to invest in capital equipment to support its strongmarket positions. Lead times and skilled labour shortages amongst supplierslimit our ability to do this but progress is being made. Basic earnings per share were 37.6p, an increase of 77% on the previous year. Weare recommending a final dividend of 5.2p per share, giving a total of 7.5p forthe year, a 25% increase. This has been a superb year for your Company. There will continue to be shortterm fluctuations in commodity prices but the fundamentals of hydrocarbon supplyand demand in the markets we serve suggest that the future looks bright. I thank our fine staff for their hard work and dedication during anothersuccessful year. Richard HuntingChairman Business Review Chief Executive's Review The global thirst for energy continues to provide your Company with theopportunity to deliver excellent results. Oil and gas operators once againincreased their budgets to satisfy growing demand and to offset rapid depletion.For some operators, this increased expenditure did not replace produced reserveswhile others only increased their reserves modestly. Going forward, a greaternumber of wells must be drilled - often to greater depths, and more activity inCanadian oil sands projects must occur. The Company's 2,600 employees,proprietary products, strategically located assets, market share leadership andfinancial strength combined will continue to capitalise on the industry growth. The vibrancy of the industry is recognised as the key factor for the improvedperformance. However, profit from operations increased 92% from last year on a19% increase in revenue, reflecting a significant gain in equipment utilisation,manpower efficiencies, and margin improvement. Prior period capital expendituresbenefited the results as did new business from the Middle East and Asia. Balance sheet gearing at the year end was 33% - a significant improvement fromthe 53% reported in 2005. Free cash flow, as defined and presented on page 13,grew to £31.0m, from £17.9m in 2005. Despite high levels of natural gas storage and lower natural gas prices in thesecond half of the year for North America, order books remained strong, and wereoffset by significant activity growth in other parts of the world. The Company'sproducts and services are more directed towards high pressure, high temperatureand deeper applications therefore receiving no impact from the US or Canadiandecline in rig activity for shallow gas well completions. With oil pricesaveraging US $66.40 bbl for the year compared to US $56.70 bbl for 2005, theCanadian oil sands projects continued their robust activity. Strategic goals remain focused on the following key areas: Proprietary Technology - Hunting Energy Services owns and develops proprietarypatented products including premium connections, burst discs, make up processesfor tubulars, coating of threads and thread protectors. Geographic Footprint - In strategic locations around the globe Hunting owns andoperates plants, properties and equipment employing people to serve its globalcustomers with local services and products. Market Share Strength - Gibson Truck Transportation, Iberia Manufacturing, E.A.Gibson Shipbrokers and Tianjin Huaxin Premium Connections, the China Threadingventure, have leading shares in their respective product or service markets. Asset Utilisation - In Gibson Energy, the marketing division utilises pipelines,storage tanks, terminals and truck transportation to obtain various grades ofheavy oil blending them with diluents to produce a lighter grade, higher pricedcrude for sale. Business Developments Capital Expenditure increased to £54.2m (2005 - £32.9m) of which £26.8m was newbusiness expansion and £27.4m on replacement capital. Gibson Energy invested £21.6m (2005 - £16.1m) with £16.1m for new business and£5.5m on replacement capital. £3.1m was invested in the new Edmonton NorthTerminal completing the new blending and trading terminal that began in 2005 ata total cost of £11.2m. At the Edmonton South Terminal £5.4m was invested inexpanding capacity with a new 20,000 bbl tank and converting the previous MTBErail car loading system to load ultra low sulphur diesel for the adjacent PetroCanada Refinery. At the Hardisty tank terminal, £2.7m was invested in modifyingtwo 80,000 bbl tanks to accommodate bitumen volumes from the Enbridge AthabascaPipeline and new capacity for railcar unloading of diluent. Truck Transportation invested £0.9m on replacement equipment and £2.7m on newtrailer capacity. Moose Jaw Refinery capital expenditure was £1.9m for the upgrading of facilitiesand tank refurbishments to enlarge capacity and improve product specifications. At Canwest Propane £1.0m was invested in replacement delivery units and £1.6m inexpanding capacity with additional tanks and the acquisition of LVP Propane for£0.9m to strengthen growth in West Central Alberta. A new propane terminal atTacoma, Washington (USA) was completed during the year. Hunting Energy Services invested £30.8m in capital expenditures during 2006 ofwhich £9.9m was replacement expenditure and £10.2m was Exploration andProduction expenditure. The balance of £10.7m included expenditure of £5.6m on additional facilities andtooling for Hunting Performance at Oklahoma City and Casper, Wyoming and withinWell Completion, manufacturing facilities incurred £2.6m on a new pressurecontrol equipment facility in Houston, Texas, expansion of the Rankin Roadfacility in Houston, Texas, expansion of the Lafayette, Louisiana facility andthe build-out of a new ID boring facility in Houma, Louisiana. A further £2.5mwas invested in new machinery and tools for the global manufacturing facilitiesincluding CNC machines and coupling machines for expansion of the business. Outlook Geopolitical considerations, global oil demand, the OPEC cartel, non-OPECsupplies, alternative energy supplies and weather will continue to impact theprice of oil and gas and therefore the level of activity in 2007. Oil and gasproducers - state owned oil companies being the most aggressive - are expectedto continue with the necessary investment to boost reserves and productioncapability throughout the world. Manufacturing backlogs in the oil serviceindustry extend well beyond 2007 for certain equipment and products.Deliverability may well be the only constraint to the industry for gains beyondthe prevailing wisdom of a 7% growth. Manpower availability continues to challenge management, however trainingprogrammes have been initiated, benefit packages have been reviewed andrecruitment efforts have mitigated the problem. While currency movements willimpact the results, the capital committed in 2006 for new capacity will generatefull year benefits in 2007. The Company has experienced a doubling of profit in each of the last two years.While such levels of growth are unsustainable, management expects that thecontinued strength in the market will provide excellent growth opportunities.The balance sheet of Hunting PLC is strong. Its assets are well positionedglobally. Its commitment to shareholder value is solid. Operating Review Income Statement 2006 2005 Increase £m £mRevenue 1,810.4 1,521.9 + 19% -------- --------EBITDA 119.6 71.4 + 67%Depreciation, amortisation & impairment (28.3) (23.9)Exceptional charges (5.0) (2.6) -------- --------Profit from operations 86.3 44.9 + 92%Net interest charge (8.1) (4.6)Share of associates 2.6 0.6 -------- --------Profit before tax 80.8 40.9 + 98%Taxation (28.6) (14.7) -------- --------Profit after tax 52.2 26.2 -------- --------Earnings per share - pence 37.6 21.2 + 77%Return on capital employed 33% 19%Average exchange rates to sterlingUS Dollar 1.84 1.82Canadian Dollar 2.09 2.21Euro 1.47 1.46Average number of employees 2,572 2,343 The Group reports through a divisional structure arranged into the followingbusiness segments: Segmental Results 2006 2005 Revenue Profit from Revenue Profit from Operations Operations £m £m Margin £m £m MarginGibson EnergyMarketing 1,147.9 13.0 1% 1,016.7 10.7 1%TruckTransportation 103.8 9.6 9% 75.1 4.9 7%Terminals andPipelines 15.6 5.3 34% 14.1 5.7 40%CanwestPropane and 69.2 5.2 8% 49.2 3.0 6%Natural GasLiquidsMoose JawRefinery 92.5 14.2 15% 59.3 (2.5) (4)% ------- ------- ------- ------- 1,429.0 47.3 3% 1,214.4 21.8 2% ------- ------- ------- -------Hunting EnergyServicesWell 182.6 26.2 14% 137.2 12.2 9%CompletionWellConstruction 73.5 8.8 12% 65.1 6.7 10%Exploration 10.0 2.0 20% 12.3 5.3 43%andProduction ------- ------- ------- ------- 266.1 37.0 14% 214.6 24.2 11% ------- ------- ------- -------Otheroperatingdivisions 115.3 7.0 6% 92.9 1.5 2% ------- ------- ------- -------Group 1,810.4 91.3 5% 1,521.9 47.5 3% ------- -------Exceptionalcharges (5.0) (2.6) ------- -------Group profitfromoperations 86.3 44.9 ------- ------- Gibson Energy Crude oil prices continued to be the driver for higher activity levels in theCanadian oil and gas industry and this contributed to a 117% increase inoperating profits for Calgary, Alberta based Gibson Energy. Heavy oil, bitumenand synthetic oil volumes from the Northern Alberta Athabasca oil sands regionaveraged over one million barrels per day eclipsing conventional oil as amajority of Alberta's production volume. This combined with record levels ofdrilling activity led to a recovery in truck transportation and excellentmarketing results. Further development of these non-conventional reserves willprovide many opportunities for the expansion of Gibson's marketing,transportation and distribution businesses. The Moose Jaw refinery made anoutstanding turnaround in the year and a significant contribution to the overallresult with profit from operations increasing from a loss of £2.5m in 2005 to aprofit of £14.2m in 2006. Employee numbers have risen from an average numberemployed in 2005 of 500 to over 610 at the end of 2006. Marketing activities comprise the buying, selling and blending of crude oil,diluent, natural gas and wellsite fluids across North America. The price risk onvolumes purchased and inventories is managed through publicly traded commodityinstruments. Marketing accounted for 27.5% of Gibson's profit from operations. Good volumesand favourable margins for crude oil, diluents, trading, custom terminaling andgains from higher priced inventory were achieved. New volumes of well sitefluids from Moose Jaw, natural gas trading and the Hardisty fractionation plantgenerated increased profit over prior years. Despite commodity price volatilityduring the year, Gibson's risk management systems minimised the exposure tolarge market swings. Edmonton North Terminal was fully commissioned in thesecond quarter providing additional storage and blending opportunities. Gibsonis one of Canada's largest independent crude oil marketers, dealing with all ofthe major, intermediate and smaller Canadian producing companies and incometrusts. Truck Transportation operates a fleet of over 600 tractors and 1,000 trailersthat move in excess of 90 million barrels of hydrocarbon products per annumacross Western Canada and the north western United States. Truck Transportationaccounted for 20.3% of Gibson's profit from operations. Additional hauling inthe Lloydminster area as well as new contracts from Athabasca and Northernfrontiers provided excellent growth opportunities in the year. In terms ofmarket size it is the largest crude oil truck hauler in Western Canada. Mostcompetition is from smaller Independent Owner/Operators in the Operationalareas. Health, Safety and Environmental performance is rigorously monitored andmaintained to Governmental and Provincial standards and beyond. Terminals and Pipeline operations incorporate an infrastructure of over 270miles of pipelines and 9 terminals with a storage capacity in excess of 2.3million barrels. With these assets Gibson Energy provide storage and blendingservices for crude oil and diluent products. Terminals and Pipeline operationsaccounted for 11.2% of Gibson Energy's profit from operations with steadyvolumes throughout the year. Pipeline volumes for conventional oil in theHardisty area declined but were offset by increased tariffs, stabilised revenuesand volume increases from the new Athabasca pipeline connections. Edmontonterminal volumes from Suncor's Fort McMurray operations steadily increasedthroughout the year. Canwest Propane and Natural Gas Liquids includes the operations of CanwestPropane Ltd, which is the second largest Canadian retail distributor of propaneutilising a fleet of 160 trucks from 45 branches across Western Canada and theNorth Western US handling 220 million litres of propane per annum. Natural GasLiquid products are purchased, trucked to and processed at the Group's Hardistyfractionation plant into ethane, propane, butane and condensate LPG productsthat Gibson markets and distributes through third parties and proprietarystorage terminals. The division accounted for 11% of Gibson Energy's profit from operations. Newfacilities were opened in Alberta, Washington and North Dakota, US with furtherexpansion into the US planned for bulk distribution terminals. The Moose Jaw Refinery processes heavy crude oil into asphalt and lighter (TOPS)distillate products which are shipped via rail cars and trucks from Moose Jaw,Saskatchewan, to markets in the US and across Western Canada. Some of the TOPSare separated into speciality frac fluids products distributed to the drillingindustry. An excellent result was achieved during the year as trading marginscontinued to improve. There has been a strong demand for lighter products fromthe top of the crude barrel which are distributed for drilling and fracturingfluids and to the railroads for off-road diesel fuel. The facility processed 4.2million barrels of heavy crude into 2.0 million barrels of asphalt and 2.2million barrels of TOPS. The plant capacity is currently 5 million barrels perannum. Both Truck Transportation and Marketing work closely with Moose Jawachieving trading and transportation synergies. Most customers for road gradeasphalt are regionally located in Saskatchewan, while roofing flux asphaltproducts are shipped to major suppliers in the US. Gibson wellsite fluidsmarketing distributes one-third of the TOPS for distillates and frac fluids tothe Canadian drilling industry with two-thirds of the lighter ends going intocrude blending and off-road diesel fuel. Hunting Energy Services Hunting Energy Services recorded profit from operations of £37.0m versus £24.2min 2005. At the year end the business employed 1,186 under 3 business platforms:Well Construction, Well Completion and Exploration and Production. Both WellConstruction and Well Completion benefited from excellent market conditions,generic growth of global footprint, meeting customer demands and the expansionof product offerings while Exploration and Production saw lower results than2005 due to well completion delays. The Well Construction platform provides products and services used by customersfor the drilling phase of oil and gas wells along with associated equipment usedby the underground construction industry for telecommunication infrastructurebuild out. The oil and gas business is primarily focused on drilling activitiesat depths of 10,000ft and deeper and the Trenchless business focuses onsupplying drill rods to manufacturers and dealers. The Mud Motor, PremiumConnection aspects of the business platform reported historical record revenuesand profits. Canadian operations and Trenchless business reported above averagerevenues and profits. The Well Completion platform provides products and services used by customersfor the completion and intervention phases of oil and gas wells. The businessfocuses on products and services to both the major oil service companies alongwith the end user community. Operations in Holland, Aberdeen and Asia Pacifictogether with US Pipe, US Manufacturing and Well Intervention platforms allreported historical record revenue and profits. Canadian operations reportedabove average revenue and profits. Exploration and Production includes the Group's oil and gas exploration andproduction activities in the Southern US and offshore Gulf of Mexico. The Grouptakes minority non operating equity holdings and currently participates in overseventy oil and gas production facilities. Although revenue and profit from operations were down year on year a notabledrilling record was achieved over the year, with 15 successful wells out of 18wells drilled - five of the successes being onshore Texas. These new offshoreand onshore wells will significantly enhance oil and gas production, which hasbeen slow to recover following the damages wrought by Hurricanes Katrina andRita in September of 2005. Third party production infrastructure was suspendedas much as ten months in some cases, resulting in shut-in wells that requiredextensive workovers to restart. On a Net Equivalent Barrel ("NEB") basis, fullyear production was down 15% as compared to 2005, with improved recoverybeginning in the fourth quarter. Natural gas prices, although lower than 2005levels, continued at historically strong levels, contributing to good profitsand returns overall. Year-end reserves of oil and gas on an SEC basis were 2.3mNEB compared with 2.4m NEB at the end of the previous year. Other Operating Divisions EA Gibson Shipbrokers is an international London based ship-broker engaged inthe transportation of crude oil and other petroleum products, liquefied naturaland petroleum gas and other related services. Results, although affected by the weak US $, were a record for the companycomplemented by strong returns from the LPG Products and Specialist Tankerssegments. Hunting Energy France includes the activities of the Group's French basedoperations providing petrochemical equipment to the French and internationalenergy and associated industries. Interpec increased its profit from operationsand finished the year with a strong order book following the slippage of anumber of orders into 2007. The other French based companies comprising Larco,Setmat and Roforge also maintained or increased their results with strong orderbooks at the end of the year. Aero Sekur, based in Italy, provides defence and safety products includingparachutes, inflatable equipment and camouflage, primarily to the Italianmilitary. Italian defence budget cuts continue to adversely impact both cash flow and neworder placement. Alternative markets are being targeted both within and outsideItaly for the company's range of products and services. A strong research anddevelopment function has been established to provide the company with a highervalue added product line and production efficiencies continue to improve. Financial OverviewAn excellent year with revenues and margins at record levels. Revenue was £1,810.4m (2005 - £1,521.9m) with profits from operations up 92% at£86.3m (2005 - £44.9m). Profit before tax recorded a 98% increase at £80.8m (2005 - £40.9m). Net Finance CostsNet finance costs increased to £8.1m (2005 - £4.6m) following the increase incapital expenditure and higher levels of working capital and increased interestrates, particularly in the US and Canada. Interest cover was 11 times comparedto 7 times in 2005. Exchange Rates 2006 2005 Average Year End Average Year EndUS Dollar 1.84 1.96 1.82 1.72Canadian Dollar 2.09 2.28 2.21 2.01 Rates quoted to sterling Year end rates for the US and Canadian Dollar weakened by 14% and 13%respectively and resulted in a £16.4m exchange loss charged to reserves at 31December 2006. Earnings Per ShareBasic earnings per share increased to 37.6p in 2006 from 21.2p in 2005. Theaverage number of shares used in calculating the earnings per share in 2006 was128.9m compared to 115.3m in 2005. TaxationThe tax charge for 2006 was £28.6m which reflects an effective rate of 35.4%(2005 - 35.9%). The higher than UK tax charge is primarily due to permanentdifferences and higher North American tax rates. Balance Sheet 2006 2005 £m £mTotal assets 735.3 694.7Total liabilities (523.8) (511.1) ------- ------Net assets 211.5 183.6 ------- ------Net debt 69.3 97.0Gearing ratio 33% 53% Net AssetsThe increase in total assets is principally due to capital expenditure onproperty, plant and equipment and higher commodity prices and activityincreasing the amount invested in working capital. Net DebtNet debt reduced to £69.3m (2005 - £97.0m) as the increased capital expenditureand working capital were more than offset by strong cash management. Gearingreduced from 53% at the end of 2005 to 33% at 31 December 2006. PensionsThe Group continues to account for pensions in accordance with IAS 19 and at theend of the year the net surplus on the Group's balance sheet was £27.7m (2005 -£18.2m) of which £30.1m (2005 - £21.1m) related to the UK defined benefit schemewhich was closed to new entrants in 2002. An additional cash contribution of£5.6m was paid to the UK defined benefit scheme in January 2006 to fund theforecast cost on a buyout basis. Liquidity, Resources and Capital Expenditure Cash Flow 2006 2005 £m £mCash from Operations 104.5 59.6Tax Paid (11.2) (4.8)Capital Expenditure (54.2) (32.9)Interest (8.1) (4.0) -------- -------Free Cash Flow 31.0 17.9Acquisitions (1.0) (9.7)Disposals - 3.2Rights Issue - 48.1Dividends (8.2) (5.6)Other Movements 5.9 (20.3) -------- -------Decrease in Net Debt 27.7 33.6 -------- ------- Free cash flow defined as profit from operations adjusted for working capital,tax, capital expenditure and interest, generated during the year was £31.0mcompared to £17.9m in 2005. Capital expenditure was £54.2m (2005 - £32.9m) andincluded £21.6m in Gibson Energy and £30.8m in Hunting Energy Services whichincludes £10.2m (2005 - £5.6m) related to Exploration and Production. Liquidity and FundingThe Group has sufficient credit facilities to meet its anticipated fundingrequirements over the short and medium term. These facilities which total£248.9m include committed bank facilities of £162.5m, US$ 70m (£35.7m) PrivatePlacement Notes which mature in 2012 and uncommitted facilities of £50.7m. Thecommitted bank facilities include a £125m five year multi-currency borrowingfacility expiring in September 2010. The maturity profile of the Group's undrawn credit facilities is shown withinnote 26 to the 2006 Annual Report. Dennis ProctorChief Executive Dennis ClarkFinance Director Consolidated Income StatementFor the Year ended 31 December 2006 2006 2005 Notes £m £mRevenue 1 1,810.4 1,521.9Cost of sales (1,639.8) (1,394.2) ------- -------Gross profit 170.6 127.7Other operating income 7.5 3.9Operating expenses (91.8) (86.7) ------- -------Profit from operations 1 86.3 44.9Interest income 8.3 7.6Interest expense and similar charges (16.4) (12.2)Share of post-tax profits in associates 1 2.6 0.6 ------- -------Profit before tax 80.8 40.9Taxation 2 (28.6) (14.7) ------- -------Profit for the year 52.2 26.2 ------- -------Attributable to:Shareholders of the parent 48.4 24.4Minority interests 3.8 1.8 ------- ------- 52.2 26.2 ------- -------Earnings per shareBasic earnings per 25p ordinary share 3 37.6 21.2pDiluted earnings per 25p ordinary share 3 35.7 20.2p Dividend declared per share - interim 4 2.3p 2.0pDividend declared per share - final 4 5.2p 4.0p The profit for the year arises from the Group's continuing operations. Consolidated Statement of Recognised Income and ExpenseFor the Year ended 31 December 2006 2006 2005 £m £mProfit (loss) for the year 52.2 26.2 ------ ------Exchange adjustments net of tax (15.8) 11.1Fair value gains (losses) net of tax:- on cash flow hedges 0.4 -- transferred to income statement on disposal ofcash flow hedges - (0.3)- transferred to income statement on disposal ofavailable for sale investments - (0.2)Actuarial gains (losses) on defined benefit pension schemes 2.6 (5.5)- taxation (0.6) 1.4 ------ ------Net (expense) income recognised directly in equity (13.4) 6.5 ------ ------Total recognised income and expense for the year 38.8 32.7 ------ ------Attributable to:Shareholders' equity 35.4 30.9Minority interests 3.4 1.8 ------ ------ 38.8 32.7 ------ ------ Consolidated Balance SheetAt 31 December 2006 2006 2005 £m £mASSETSNon-current assetsProperty, plant and equipment - at cost 146.5 133.6Property, plant and equipment - at valuation 48.1 57.2Goodwill 53.0 58.6Other intangible assets 4.0 5.1Interests in associates 8.0 5.5Available for sale investments 0.2 0.2Retirement benefit assets 30.1 21.1Trade and other receivables 2.8 2.9Deferred tax assets 12.4 14.8 ------ ------ 305.1 299.0 ------ ------Current assetsInventories 120.0 107.6Trade and other receivables 191.1 196.2Investments 0.6 -Cash and cash equivalents 118.5 91.9 ------ ------ 430.2 395.7 ------ ------LIABILITIESCurrent liabilitiesTrade and other payables 226.6 217.1Current tax liabilities 8.8 4.7Borrowings 108.5 93.2Provisions 4.2 2.0 ------ ------ 348.1 317.0 ------ ------Net current assets 82.1 78.7 ------ ------Non-current liabilitiesBorrowings 79.9 95.7Deferred tax liabilities 76.3 74.9Retirement benefit obligations 2.4 2.9Other payables 1.9 4.5Provisions 15.2 16.1 ------ ------ 175.7 194.1 ------ ------Net assets 211.5 183.6 ------ ------Shareholders' equityShare capital 32.8 32.2Share premium 85.6 82.7Other reserves 5.6 21.7Retained earnings 79.8 41.8 ------ ------ 203.8 178.4Minority interests 7.7 5.2 ------ ------Total equity 211.5 183.6 ------ ------ Consolidated Cash Flow StatementFor the Year 31 December 2006 2006 2005 £m £mOperating activitiesProfit (loss) from operations 86.3 44.9Exceptional charges 5.0 2.6Depreciation, amortisation and impairment 28.3 23.9Profit on disposal of investments - (0.4)Loss (profit) on disposal of property, plant andequipment 2.9 (0.6)Increase in inventories (25.3) (22.6)Increase in receivables (11.9) (34.1)Increase (decrease) in payables 25.0 46.4Taxation (paid) received (11.2) (4.8)UK pension scheme contribution (5.6) -Other non cash flow items (0.2) (0.5) ------ -----Net cash inflow (outflow) from operating activities 93.3 54.8 ------ -----Investing activitiesDividends received from associates 0.2 3.8Purchase of subsidiaries (1.0) (9.7)Cash acquired with subsidiaries 0.1 1.5Additional investment in existing subsidiaries - -Closure of a subsidiary (1.0) -Purchase of and loans to associates 2.1 (5.3)Proceeds from disposal of investments - 3.2Proceeds from disposal of property, plant andequipment 1.1 2.9Purchase of property, plant and equipment (54.2) (32.9)Purchase of intangible assets (0.7) (0.2) ------ -----Net cash (outflow) from investing activities (53.4) (36.7) ------ -----Financing activitiesInterest received 6.4 7.7Interest paid (14.5) (11.7)Dividends received from subsidiaries - -Equity dividends paid (8.2) (5.6)Minority interest dividend paid (0.9) (0.3)Share capital issued 3.3 48.1Purchase of Treasury shares (12.4) (4.6)Disposal of Treasury shares 4.0 -Proceeds from new borrowings 11.9 -Repayment of borrowings (14.6) (58.3)Purchase of deposits (0.6) -Capital element of finance leases (0.6) (0.2) ------ -----Net cash (outflow) inflow from financing activities (26.2) (24.9) ------ -----Net inflow (outflow) in cash and cash equivalents 13.7 (6.8)Cash and cash equivalents at beginning of year 4.5 10.9Effect of foreign exchange rate changes (1.3) 0.7Adoption of IAS 32 and IAS 39 - (0.3) ------ -----Cash and cash equivalents at end of year 16.9 4.5 ------ -----Cash and cash equivalents and bank overdrafts atend of year comprise:Cash and cash equivalents 118.5 91.9Bank overdrafts included in borrowings (101.6) (87.4) ------ ----- 16.9 4.5 ------ -----Notes 1. SEGMENTAL REPORTING Business segments Results from operations Year ended 31 December 2006 Total Inter- Total Profit from gross segmental revenue operations revenue revenue £m £m £m £mGibson EnergyMarketing 1,294.9 (147.0) 1,147.9 13.0TruckTransportation 113.1 (9.3) 103.8 9.6Terminals andPipelines 19.5 (3.9) 15.6 5.3CanwestPropane andNatural GasLiquids 149.5 (80.3) 69.2 5.2Moose JawRefinery 167.4 (74.9) 92.5 14.2 ------- ------- ------- ------- 1,744.4 (315.4) 1,429.0 47.3 ------- ------- ------- -------Hunting EnergyServicesWell Completion 207.6 (25.0) 182.6 26.2WellConstruction 80.6 (7.1) 73.5 8.8Explorationand Production 10.0 - 10.0 2.0 ------- ------- ------- ------- 298.2 (32.1) 266.1 37.0 ------- ------- ------- -------Otheroperatingdivisions 115.3 - 115.3 7.0 ------- ------- ------- ------- Total 2,157.9 (347.5) 1,810.4 91.3 ------- ------- -------Exceptionalcharges notapportioned tobusinesssegments (5.0) -------Profit fromoperations 86.3 ------- Year ended 31 December 2005 Total Inter- gross segmental Total Profit from revenue revenue revenue operations £m £m £m £mGibson EnergyMarketing 1,136.8 (120.1) 1,016.7 10.7Truck Transportation 83.0 (7.9) 75.1 4.9Terminals andPipelines 17.9 (3.8) 14.1 5.7Canwest Propane andNatural Gas Liquids 109.5 (60.3) 49.2 3.0Moose Jaw Refinery 109.6 (50.3) 59.3 (2.5) ------- ------- ------- ------- 1,456.8 (242.4) 1,214.4 21.8 ------- ------- ------- -------Hunting EnergyServicesWell Completion 151.7 (14.5) 137.2 12.2Well Construction 68.8 (3.7) 65.1 6.7Exploration andProduction 12.3 - 12.3 5.3 ------- ------- ------- ------- 232.8 (18.2) 214.6 24.2 ------- ------- ------- -------Other operatingdivisions 92.9 - 92.9 1.5 ------- ------- ------- ------- Total 1,782.5 (260.6) 1,521.9 47.5 ------- ------- -------Exceptional chargesnot apportioned tobusiness segments (2.6) -------Profit fromoperations 44.9 ------- Inter-segmental revenues are priced on an arms-length basis. Costs incurredcentrally are apportioned to the operating units on the basis of the timeattributed to those operations by senior executives. Exceptional items areregarded as one-off items of income and expense that do not intentionally recurand, due to their size and nature, need to be disclosed separately in order togive a true and fair view of the results of the Group. The exceptional chargesrelate to the discontinuance of operations and are not therefore apportionableto the current business segments shown above. The share of post-tax profits in associates is derived from the followingbusiness segments: 2006 2005 £m £mHunting Energy Services - Well Completion 1.1 0.9Central 1.5 (0.3) ------ ------ 2.6 0.6 ------ ------ Business segments Assets and liabilities 2006 2005 Segment Segment Segment Segment assets liabilities assets liabilities £m £m £m £mGibson EnergyMarketing 121.1 72.9 139.9 95.3Truck Transportation 41.4 12.3 45.7 9.9Terminals andPipelines 53.1 3.5 52.6 2.8Canwest Propane andNatural Gas Liquids 46.4 12.4 44.6 11.1Moose Jaw Refinery 31.2 8.8 29.1 5.5 --------- -------- ------- ------- 293.2 109.9 311.9 124.6 --------- -------- ------- -------Hunting EnergyServicesWell Completion 111.5 55.8 93.2 49.9Well Construction 75.9 13.1 69.0 12.6Exploration andProduction 28.9 1.3 29.1 0.9 --------- -------- ------- ------- 216.3 70.2 191.3 63.4 --------- -------- ------- -------Other operatingdivisions 51.1 33.7 54.6 32.1 --------- -------- ------- -------Interests inassociatesGibson Energy -Canwest Propane andNatural Gas Liquids 0.2 - - -Hunting EnergyServices - WellCompletion 3.3 - 2.5 -Central 4.5 - 3.0 - --------- -------- ------- ------- 8.0 - 5.5 - --------- -------- ------- -------Total segment assetsand liabilities 568.6 213.8 563.3 220.1Unallocated assets andliabilities:- current anddeferred taxes 12.4 85.1 14.8 79.6- retirement benefitassets 30.1 - 21.1 -- net debt 119.1 188.4 91.9 188.9- central assets andliabilities 5.3 36.7 3.8 23.8- elimination ofinter-segmentalbalances (0.2) (0.2) (0.2) (1.3) --------- -------- ------- -------Total assets andliabilities 735.3 523.8 694.7 511.1 --------- -------- ------- ------- Segment assets comprise property, plant and equipment, intangibles, goodwill,inventories and receivables. Assets owned centrally and employed by a segmentare allocated to that segment. Segment liabilities comprise trade payables, provisions and other operatingliabilities. 2. TAXATION The tax charge to the income statement arises as follows: 2006 2005 £m £mUK 5.7 2.3Non-UK 22.9 12.4 ------ ------ 28.6 14.7 ------ ------ 3. EARNINGS PER SHARE Basic and diluted earnings per share are calculated as follows: 2006 2005 Earnings Weighted Earnings per Earnings Weighted average number Ordinary share average number of Ordinary of Ordinary Earnings per shares shares Ordinary share £m millions pence £m millions penceProfitattributabletoshareholdersof theparentand for 48.4 128.9 37.6 24.4 115.3 21.2basicEPS Effect ofdilutivesharesOptions - 6.4 - 5.7Long termincentiveplans - 0.5 - 0.3 ------- --------- ------- ---------Diluted EPS 48.4 135.8 35.7 24.4 121.3 20.2Adjustedearnings ------- --------- ------- --------- 4. DIVIDENDS PAID 2006 2005Ordinary dividends: Pence per share £m Pence per share £m2006 interim paid 2.3 3.0 - -2005 final paid 4.0 5.2 - -2005 interim paid - - 2.0 2.62004 final paid - - 3.0 3.0 ------- ------ ------ -------Total dividends paid 6.3 8.2 5.0 5.6 ------- ------ ------ ------- The Directors recommend a final Ordinary dividend of 5.2p per share (2005 -4.0p) payable on 2 July 2007 to shareholders on the register at 15 June 2007. 5. The above figures have been extracted from the Group's fullfinancial statements for the year ended 31 December 2006, which will bedelivered to the Registrar of Companies. Those financial statements carry anunqualified audit opinion. They have been prepared in accordance with theCompanies Act 1985 and International Financial Reporting Standards as adopted bythe European Union. The accounting policies are set out in those financialstatements. These extracts do not constitute statutory accounts within themeaning of section 240 of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange