Hunting Regulatory News (HTG)

2 Mar 2006 07:02

Hunting PLC02 March 2006 2 March 2006 HUNTING PLC Preliminary results For the year ended 31 December 2005 Hunting PLC ("Hunting", the "Group" or the "Company"), the international energyservices company, today announces its preliminary results for the year ended 31December 2005. • Turnover £1,521.9m (2004: £1,159.4m) +31% • Total operating profit £44.9m (2004: £20.8m) +116% • Pre-tax profit £40.9m (2004: £16.5m) +148% • Basic earnings per share 21.2p per share (2004: 7.9p) +168% • Final Dividend Per Share 4.0p (2004 : 3.0p) payable on 29th June 2006 +33% Commenting on the outlook for the Group, Dennis Proctor, Hunting's ChiefExecutive, said: "The industry forecasts a continuation of 2005 activity certainly through 2006.Major oil and gas operators have raised their expenditures to levels higher thanprevious years not only for cost increases in drilling and related services, butalso for additional investment in well completions and heavy oil projects. Ourinvestment in new projects in 2005 will enable us to meet the customers' growingdemands. We believe our timing and execution of a distinctive business strategyhas been excellent and will continue to deliver shareholder value. With a strengthened balance sheet, well positioned assets, additional capacityand successful performance trend, Hunting PLC looks forward to the growthopportunities available in 2006." For further information, please contact: Hunting PLC 020 7321 0123Dennis Proctor, Chief ExecutiveDennis Clark, Finance Director Hogarth Partnership Limited 020 7357 9477Andrew 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 positive marketdynamics and trading for the year has outperformed previous market expectations.Profit before taxation for the year to 31 December 2005 was £40.9m (2004 -£16.5m), a 148% increase over the previous year. The Company has benefited from the continuing surge in expenditure onexploration and production of oil and gas in the areas we serve, fuelled by highprices for these vital commodities. Gibson Energy, our Canadian-based midstream operation, has been at the centre ofthe intense level of activity in Alberta and neighbouring provinces. Inparticular, we have been able once again to use our physical infrastructure andhighly developed skills successfully to produce fine Marketing results. We havetaken a full part in handling oil production from conventional crude reservesand from the huge oil sands deposits around Athabasca. We are expanding ourterminal facilities to deal with even higher volumes. Hunting Energy Services is the Company's engineering operation, producingsophisticated equipment for the hydrocarbon drilling and production sectors.With resource companies increasingly concerned about replacing reserves, andtherefore needing to drill for deeper and more difficult deposits, demand forour products has been at a consistently high level in the southern UnitedStates, in the Rocky Mountains, in Canada and in the North Sea as well as inother parts of the world. We were fortunate that the Katrina and Rita hurricanes did little damage to ourimportant Hunting Energy Services facilities in Louisiana and Texas, andproduction was restored rapidly. In 2005, the Board raised new equity capital for expansion, by way of a one forfour Rights Issue of shares. The resulting increase in share capital and thesteady rise in the price since that time have resulted in the shares becoming aconstituent of the FTSE 250 and FTSE 350 indices of the London Stock Exchangeduring January 2006. I am pleased to report that basic earnings per share were 21.2p, an increase of168% on the previous year. We are recommending a final dividend of 4.0p pershare, giving a total of 6.0p for the year, a 33% increase. These excellent results combined with the continuing strength of the markets weserve give us confidence that, barring unforeseen circumstances, the currentyear will show further progress for the company. I wish to thank all our staff for their fine contributions in a busy andrewarding year. Richard HuntingChairman Chief Executive's Review Strong second half activity provided excellent results for the Company in 2005 -the third consecutive year of earnings growth. Industry fundamentals combinedwith product lines and services leveraged to specific market segments providedrecord results in a number of our divisions. As oil and gas operators continuedto increase capital expenditures for drilling and production, coupled withvolume increases in Canadian oil sands projects, your Company's strategy ofmarket share strength, proprietary technology, geographic position and assetutilisation combined to deliver above expected results. The Company improved its balance sheet through increased earnings and thesuccessful Rights Issue. Gearing at the year end was 53% - a 55% decrease from2004. Free cash flow grew 16% while capital expenditures increased by 50% to£32.9m. In spite of growing material and labour costs, gross margins improved fromproduction revenue per man-hour (up 21%), and price increases applied throughoutthe year. The Company does not ignore the improved market conditions as a key factor inits performance. Average oil and gas prices were up 27% and 39% respectively,year over year. Average rig counts were up 14% in the US, 21% in Canada and 7%in the international arena. The differential between light and heavy crudeaveraged US $21.10 up 53% from 2004. However, the Gulf of Mexico rig count was89, its lowest level since 1993. Two hurricanes caused production at TenkayResources to decline by approximately 50% in the fourth quarter and delivery oftubulars and accessories to be delayed by two months. Prices for oil services climbed steadily as the rig activity increased andoperators seemingly are focused more on availability than price. The cyclicalityof the industry has abated as growth has occurred in the past three years withexpectations of continued demand going forward. The Company's commitment toexpansion projects during the last 18 months will provide measurable gains inthe future. While additional capacity was added in 2005, the replacement ofageing equipment for greater output per hour adds to reduced costs and earningsenhancement. Business Developments In August 2005, the Company raised approximately £44 million of new equitycapital through a Rights Issue. These funds are required to finance additionalcapacity to meet the growing backlog and demands from various customer projects.In addition, management continues to review acquisitions that complement theproducts and services currently provided. The Company acquired the assets of Cromar Limited, an Aberdeen based provider ofwell servicing equipment including its proprietary products and applications.Purchased in August 2005, Cromar has exceeded expectations and should be fullyintegrated into our North American and Asian operations by mid 2006. Health, Safety and the Environment The oil service industry is operating at or near capacity and adding newpersonnel weekly. Accordingly, health and safety issues become more at risk andrequire additional focus. Foremost in operational goals is to improvecontinuously the aspects of health and safety. In Gibson Energy, the lost timeincident record was 34% less than the Alberta Provincial average in 2005, animprovement of 14% over 2004. Its truck transportation division has reduced itsincident rate by 37% over the last two years, while operating over 43 millionmiles and handling over 450,000 loads. Of Gibson's 57 facilities, 47 achieved azero lost time incident. Its largest terminal, Hardisty, which handled over180,000 bpd and Moose Jaw Asphalt completed 18 months without a lost timeincident. In Hunting Energy, five of the six US manufacturing facilities completed theyear without a lost time accident. Internationally, the Aberdeen facilityretained its BSC Five Star Award for the eighth consecutive year, with animprovement in marks from the previous year. The facility received its thirdconsecutive National Safety Award. Facilities in Canada, Holland, China andSingapore all completed the year with only one lost time accident. No environmental issues occurred and four additional US facilities received thenew ISO 14001 Environmental Management Specification. Our goals remain simply put - No accidents, No harm to people and No damage tothe environment. GIBSON ENERGY 2005 2004 £m £m Revenue 1,214.4 913.1 Profit from operations 21.8 15.5 Activity in the Canadian oil and gas industry reached record levels in 2005generating the highest profits in the history of Gibson Energy based in Calgary,Alberta. The narrow difference between available supply and demand sustainedcrude oil prices throughout the year. Development of natural gas, heavy oil andbitumen reserves in Canada also proceeded at a record rate stretching demand formid-stream marketing and transportation services. Marketing accounted for 49% of profit from operations benefiting from increasedinventory values, favourable crude oil price arbitrages and wide differentialsbetween light, heavy, sweet and sour grades. Heavy oil differentials are afunction of seasonal heavy oil supply and demand, which is increasing with oilsands development in Canada. Rapidly increasing supply cause pipelinerestrictions and market dislocation resulting in continued volatility anddifferentials. Gibson uses its assets and expertise to optimise crude streamprices with storage capacity, terminals for blending and pipelines and trucksfor crude transport. Truck Transportation generated 22% of profit from operations from new levels ofhigh asset utilisation at all locations. A three year contract with Husky Oilbegan mid-year for the movement of 100,000 bpd. Truck delivery of heavy oilladen with saltwater and solids is the most cost effective aggregation tocentral processing facilities for Husky, the largest regional producer. NGL,asphalt, diluent, propane and wellsite fluids experienced higher haulingrevenues in 2005. Terminals and Pipelines contributed 26% of profit from operations with gains atHardisty and Edmonton from new tank connections for receipt and delivery fromAthabasca and Terasen pipelines. Operations were steady for Bellshill Lake andProvost pipelines in the Hardisty area with tariff adjustments, offsettinggathering volume declines. The seasonal demand for labour and materials delayedcompletion and start-up of the new Edmonton North Terminal until the firstquarter, 2006. Canwest Propane and Natural Gas Liquids accounted for 14% of profit fromoperations. The start of the rail car unloading terminal in Surrey, BritishColumbia, busy construction activity at Ft. McMurray Oil Sands development andoff-road oil patch activities provided good growth in earnings. Propane racksupply prices followed commodity fluctuations, but provided favourable salesmargins through cautious management over the year. Moose Jaw Asphalt produced a profit before the offset from a fixed pricedifferential contract purchased in 2004. Asphalt prices continued to be flatduring the year while feedstock costs escalated. Expanding markets for highvalue products such as roof flux grew slower than the increasing crude costs.Since the acquisition of Moose Jaw in 2002, sales volumes have increased from350,000 cubic metres to 550,000 cubic metres. Efforts are underway for greatervolumes, minimal losses on asphalt, and maximum value and profits in top-of-thebarrel products. Robust energy prices, favourable arbitrages and stream differentials areexpected to continue into 2006, providing high levels of activity and businessdevelopment opportunities. Limitations are expected in the availability of humanresources and equipment supply, hindering growth in certain areas. Secure energysupply to the US for oil and gas is expected to encourage development of newvolumes from Alberta. The supply of gas from unconventional sources and furtherbitumen and heavy oil development in the Athabasca corridor will sustain demandfor Gibson's midstream services. HUNTING ENERGY SERVICES 2005 2004 £m £m Revenue 202.3 159.1 Profit from operations 18.9 8.3 Strong fourth quarter results capped an impressive 2005 financial performancefor Houston, Texas based Hunting Energy Services. This is particularlynoteworthy considering the August and September hurricanes. In addition, theaverage rig count in the Gulf of Mexico for 2005 was 89, its lowest level since1993. The main driver of activity in the US and Canada is natural gas prices andthe resulting effort to increase production. While rig activity has doubled inthe last 4 years, gas production in North America has declined. Our North Seaand SE Asia operations continue to experience increased activity due to thesustained oil price and growing global demand. A total of twenty production machine tools were added to enhance throughput andunits per hour without adding excess capacity. Despite increased material andlabour costs, gross margins improved by 23%, while revenue per man-hour was upby 21%. Quality levels at all facilities remained excellent regardless ofincreased man-hours and activity levels. Well Construction 2005 2004 £m £m Revenue 65.1 42.9 Profit from operations 6.7 4.8 The elements of this group, which accounted for 35% of profit from operations,include: Casing - primarily sold in Canada, oil country tubular goods ("OCTG") forconstruction of the well bore in an oil or gas well. Connections - proprietary (patented) thread forms that enable the connections oftubing or casing to meet or exceed the physical properties of the pipe body. Mud Motors - attached to the drill pipe enabling operators to drill a wellstraighter and/or faster thereby reducing overall cost, particularly as dayrates for rigs continue to escalate. This is the fastest growing division in thelast four years producing the highest return on capital. Drill Rod - used in the telecommunications industry to enable trenchlessinstallation of fibre optic cables. Demand increased for drill rods andaccessories by 38% in 2005 and is expected to continue rapid growth in thefuture. A new manufacturing facility was completed in August and has enabled the companyto machine larger products for deeper, high-pressure applications primarily usedin the Gulf of Mexico. Well Completion 2005 2004 £m £m Revenue 137.2 116.2 Profit from operations 12.2 3.5 Well completion, which accounted for 65% of profit from operations, includes: Accessories - components attached to the tubing and casing of an oil and gaswell including but not limited to pup joints, cement plugs, crossovers, landingnipples, flow couplings and seal rings. Tubulars - includes oil country tubular goods OCTG and premium (patented)connections or devices used on OCTG. Demand for completion tubing and chromesteel tubulars increases with greater rig activity. Slick Line and Wire Line - products used for intervention in a well to maintain,test, clean, put on production or take off production while under control.Activities of slick line and wire line occur throughout the life of a wellproviding repeat revenue. Hunting Energy is highly leveraged to the rig activity and number of wellsdrilled. With such robust and growing demand, the products and services providedby manufacturing facilities in China, Canada, Europe, Singapore and the US, arewell positioned to benefit and grow as energy demands increase. TENKAY RESOURCES 2005 2004 £m £m Revenue 12.3 8.5 Profit from operations 5.3 3.1 Higher oil and natural gas prices, in conjunction with increased productionlevels, contributed to an outstanding year for Tenkay Resources. On a NetEquivalent Barrel ("NEB") basis, production was up 9% compared to 2004 as aresult of successful drilling in the shallow waters of the Gulf of Mexico.Tenkay participated in the drilling of 17 wells with 13 successes. On an NEBbasis, the production of 449,000 bbls would have been higher by an estimated 15%had it not been for Hurricanes Katrina and Rita and the resulting wellshut-downs. Tenkay's properties suffered minimal damage however damage to thirdparty offshore and onshore production infrastructures delayed the restart ofoperations. Year-end reserves of oil and gas on an SEC basis were 2.4m NEBcompared with 2.3m NEB at the end of the previous year. The resumption of fulloperations and new wells coming on-stream are expected to enhance production inthe current year. E. A. GIBSON SHIPBROKERS 2005 2004 £m £m Revenue 21.9 18.8 Profit from operations 2.5 1.6 Although not experiencing the peak rates, particularly in the Crude market seenduring 2004, all sectors experienced high average rates which contributed tomake it another strong year. Tanker income improved during 2005 but the significant increases were in theGas, Sale & Purchase and Dry Cargo sectors. The US Dollar strengthened during the year enhancing the sterling results. In October 2005 a new office in Hong Kong was opened and the Company willcontinue to explore other overseas opportunities to broaden its internationalbase. A staff training scheme was introduced to supplement the recruitment ofexperienced personnel. HUNTING ENERGY FRANCE 2005 2004 £m £m Revenue 12.5 12.5 Profit from operations 1.1 1.0 Profit from operations improved by 9% over 2004 on maintained turnover. Interpecwhich supplies pumps, turbines and compressors for petrochemical plants andturn-key turbo generators sets achieved a record result on lower turnover.Larco, which designs and markets a range of equipment for oil storage tanks hada significant increase in turnover. Turnover was further enhanced by theacquisition of Setmat which provides software solutions to petroleum productstorage facilities. The market for Roforge products remained competitive but thecompany still provided a good contribution to profit from operations. OTHER ACTIVITIES 2005 2004 £m £m Revenue 58.5 47.4 Result from operations (2.1) 0.1 Field Aviation Profit from operations improved over 2004 with all divisions reporting positiveresults. As previously, Field's established niche markets in Special Missionaircraft modification and Parts Manufacturing were the largest contributors.Price stability and productivity improvements allowed the Calgary maintenancefacility to produce its first profit for several years. The contract to maintain the fleet for the Canadian Flight Training School atPortage la Prairie, Manitoba ended on 31 August. Increased activity in SpecialMission modifications is expected to offset the loss of this contract in 2006. In April 2006 the first of three new Dash 8 Q300 aircraft for the Swedish CoastGuard will be delivered by the manufacturer to our Toronto facility formodification into a specialised maritime patrol aircraft under the contract wonin 2004. Field is also a member of the team chosen by the Australian CustomsService as the preferred bidder for their Coastwatch 4 programme starting laterin the year using 10 similarly modified Dash 8 aircraft. The aircraft willprovide all-weather, day and night electronic surveillance of Australia'smaritime Exclusive Economic Zone to detect and deter illegal activity such asdrug and people smuggling, illegal fishing and environmental offences. Hunting Specialized Products The Pipeline Services business continues to offer an exciting future withseveral innovative new products ready for market and a growing reputation andcustomer base. The business which was restructured during the year is beingexpanded in both the USA and UK. Despite difficult trading conditions, theIndustrial Coatings business maintained its operating profit on reduced volumesand continues to provide the core technology to the growing pipeline servicebusiness. In 2005 the business increased its focus on the research and development ofnovel pipeline rehabilitation coatings and launched PolySpray, a structurallining system for pipeline rehabilitation. The costs of this development werewritten off as incurred. The PolySpray system, which literally builds a new pipeinside the existing deteriorated pipeline, can restore almost any pipelineincluding storm, wastewater and industrial process water pipelines. The systemwas successfully demonstrated in the UK, remotely lining an underground gaspipeline and rehabilitating damaged effluent lines at a large industrialfacility. Aero Sekur In spite of cuts in the Italian defence budget, which adversely affected thecash flow during the year, orders for new products have increased substantially,securing revenues for 2006 and beyond. Production and quality efficienciesimproved in 2005 as a result of organisational changes. New emphasis is beingplaced on export initiatives and R & D work continues to grow. OUTLOOK The industry forecasts a continuation of 2005 activity certainly through 2006.Major oil and gas operators have raised their expenditures to levels higher thanprevious years not only for cost increases in drilling and related services, butalso for additional investment in well completions and heavy oil projects.Manufacturing backlogs in some areas of the service industry extend into 2007.Shortages of skilled labour continue to be a challenge to expedite or addadditional projects. Lead times for raw materials are extended and requireadditional planning and capital for inventories and equipment. While a robustmarket exists, management is pressured to contain costs inherent to suchactivity. However, we believe our timing and execution of a distinctive businessstrategy has been excellent and will continue to deliver shareholder value. The world demand for natural resources continues to grow and warrant current oiland gas prices. Climatic and geopolitical events could result in price spikes topush the industry for more activity. With a strengthened balance sheet, well positioned assets, additional capacityand successful performance trend, Hunting PLC looks forward to the growthopportunities available in 2006. Dennis ProctorChief Executive Finance Director's Review The improvement in trading seen in 2004 continued strongly during 2005 withHunting Energy Services in particular making a significant contribution to theimproved result. Revenue for the year was £1,522m (2004 - £1,159m). Profit from operations increased by 116% to £44.9m (2004 - £20.8m) and pre-taxprofit was £40.9m (2004 - £16.5m) a 148% increase over 2004. On 29 June 2005, the Company announced a one for four Rights Issue at 180p whichraised a net £43.6m to finance the capital expenditure programme and potentialacquisitions. On 18 August 2005, £8.1m cash was paid for the acquisition of Cromar Limited,which provides an extension to the range of products and services offered byHunting Energy Services. A further £1.5m deferred consideration is payable inFebruary 2007 on the achievement of future operating profit targets. Earnings Per ShareBasic earnings per share increased to 21.2p (2004 - 7.9p) on an average of115.3m shares outstanding during the year, as adjusted for the Rights Issue. Diluted earnings per share increased to 20.2p (2004 - 7.7p). International Financial Reporting Standards ("IFRS")IFRS was adopted with effect from 1 January 2004. IAS 32 and IAS 39, which coverthe accounting for and disclosure of financial instruments, were adoptedprospectively on 1 January 2005. The Group published its report on the transition to IFRS on 1 September 2005 -this is available on the Company's web site. Exchange RatesThe US Dollar averaged 1.82 (2004 - 1.83) and the Canadian Dollar averaged 2.21(2004 - 2.38) relative to sterling. Year end rates for the US and CanadianDollars against Sterling were 1.72 (2004 - 1.93) and 2.01 (2004 - 2.30)respectively. The Canadian Dollar strengthened significantly in the second half of the year. TaxationAs a result of higher Canadian and US profit, where tax rates are above the UK,the taxation charge for the year excluding exceptional items was £15.5m givingan effective rate of 35.6% (2004 - 32.8%). Financing and Risk ManagementThe Group's centralised Treasury is a service centre with policies andprocedures approved by the Board. These cover funding, bank relationships,foreign currency and interest rate exposures, and cash management. The policiesand procedures covering oil and gas price exposure managed by Gibson Energy areapproved by the Board. There are strict controls on the use of financial instruments, and on theexposure to banks and other parties on borrowing facilities, the management offoreign currencies and interest rates and oil and gas prices. In September a £125m five year multi-currency borrowing facility, and inDecember a £10m two year facility, were signed with our relationship banks.Since the year end a thirteen month multi-currency facility for £20m has beenrenewed. At the end of the year the Group had committed bank facilities of £151.5mtogether with Private Placement notes of US$70m (£40.7m), which mature in 2012and other borrowing lines giving total facilities of £238.1m. These facilitiesprovide the Group with adequate liquidity to meet anticipated futurerequirements. Currency Options are used to reduce currency risk movements on the Group'sresults, by hedging approximately 50% of each year's budgeted Canadian and USDollar earnings into Sterling. Currency exposure on the balance sheet is reducedby financing assets with borrowings in the same currency. Spot and Forward foreign exchange contracts are used to cover the net exposureof purchases and sales in non-domestic currencies. Fluctuations in the value of petroleum product inventories are managed by usingfutures, swaps and options. Interest expense is hedged by using interest rate swaps, interest rate caps,forward rate agreements and currency swaps. At the end of the year interest rateswaps and caps covered 53% of net borrowings. Finance costs in the year have risen to £4.6m from £4.4m in 2004. DividendsAn interim dividend of 2.0p per share (2004 - 1.5p) was paid on 23 November2005. A final dividend, which under IFRS is not accrued for, of 4.0p per share(2004 - 3.0p) payable on 29 June 2006 to shareholders on the Register at 9 June2006 is proposed. Cash FlowFree cash flow after capital expenditure but before equity issues, acquisitionsand dividends increased to £17.9m compared with £15.4m in 2004. Capital expenditure increased to £32.9m (2004 - £21.9m). Expenditure by GibsonEnergy was £16.1m (2004 - £8.4m). Tenkay Resources £5.6m (2004 - £6.4m) andHunting Energy £9.2m (2004 - £5.0m). In total £15.0m was replacement capital and £17.9m new business expenditure. Acquisitions and dividends aggregated £17.5m. Excluding the Rights Issue, thenet cash outflow for the year was £50.4m with cash outflow of £6.8m after theissue. Net debt reduced during the year to £97.0m from £130.6m and gearing reduced to53% from 117%. PensionsIn accordance with IFRS the Group has accounted for Employee Benefits under IAS19. An actuarial valuation of the Group's UK defined benefit plan, which was closedto new entrants in December 2002, was undertaken at 5 April 2005 and updated to31 December 2005. The results of this valuation show at 31 December 2005 asurplus of assets over liabilities of £21.1m (2004 - £23.8m) which is includedwithin the Consolidated Balance Sheet. Whilst the impact of the new post retirement mortality assumption has increasedthe plan obligation by £6.0m at 31 December 2005, this has been mitigated bybetter than expected investment returns. Going ConcernThe Directors, after making enquiries and on the basis of current financialprojections and the facilities available, believe that the Company and the Grouphave adequate financial resources to continue in operation for the foreseeablefuture. For this reason, they continue to adopt the going concern basis inpreparing the financial statements. Dennis ClarkFinance Director Consolidated Income StatementFor the Year ended 31 December 2005 2005 2004 Notes £m £mRevenue 1 1,521.9 1,159.4Cost of sales (1,394.2) (1,066.7) -------- --------Gross profit 127.7 92.7Other operating income 3.9 3.7Operating expenses* (86.7) (75.6) -------- --------Profit from operations 1 44.9 20.8Interest income 7.6 2.3Interest expense and similar charges (12.2) (6.7)Share of post-tax profits in associates 0.6 0.1 -------- --------Profit before tax 40.9 16.5Taxation (14.7) (5.1) -------- --------Profit for the year 26.2 11.4 ======== ========Attributable to:Shareholders of the parent 24.4 10.9Minority interests 1.8 0.5 -------- -------- 26.2 11.4 ======== ========Earnings per share (restated)Basic earnings per 25p ordinary share 21.2p 7.9pDiluted earnings per 25p ordinary share 20.2p 7.7p There are no material differences between the results disclosed above and theresults on an unmodified historicalcost basis.The profit for the year arises from the Group's continuing operations.*Operating expenses include exceptional charges of £2.6m (2004 - £8.8m).The earnings per share in 2004 has been restated for the bonus shares inherentin the 2005 Rights Issue. Consolidated Statement of Recognised Income and ExpenseFor the Year ended 31 December 2005 2005 2004 £m £mProfit for the year 26.2 11.4 ------- -------Exchange adjustments 11.1 (2.7)Transferred to income statement on disposal of cash flowhedges (0.3) -Actuarial (losses) gains on defined benefit pension schemes (5.5) 3.5 - taxation 1.4 (1.1)Transferred to income statement on disposal of available forsale investments (0.2) - ------- -------Net income recognised directly in equity 6.5 (0.3) ------- -------Total recognised income and expense for the year 32.7 11.1 ======= ======= Consolidated Balance SheetAt 31 December 2005 2005 2004 £m £mASSETSNon-current assetsProperty, plant and equipment - at cost 132.1 98.9Property, plant and equipment - at valuation 58.7 56.9Goodwill 58.6 47.5Other intangible assets 5.1 3.1Interests in associates 5.5 8.7Available for sale investments 0.2 3.6Retirement benefit assets 21.1 23.8Trade and other receivables 2.9 3.3Deferred tax assets 14.8 11.2 ------- ------- 299.0 257.0 ------- -------Current assetsInventories 107.6 76.5Trade and other receivables 196.2 140.4Cash and cash equivalents 91.9 15.1 ------- ------- 395.7 232.0 ------- -------LIABILITIESCurrent liabilitiesTrade and other payables 217.1 152.8Current tax liabilities 4.7 1.1Borrowings 93.2 16.4Provisions 2.0 0.6 ------- ------- 317.0 170.9 ------- -------Net current assets 78.7 61.1 ------- -------Non-current liabilitiesBorrowings 95.7 129.3Deferred tax liabilities 74.9 59.5Retirement benefit obligations 2.9 1.9Other payables 4.5 1.9Provisions 16.1 13.6 ------- ------- 194.1 206.2 ------- -------Net assets 183.6 111.9 ======= =======Shareholders' equityShare capital 32.2 25.3Share premium 82.7 41.5Treasury shares (4.6) -Other reserves 21.7 7.2Retained earnings 46.4 34.2 ------- -------- 178.4 108.2Minority interests 5.2 3.7 ------- --------Total equity 183.6 111.9 ======= ======== Cash Flow StatementFor the Year ended 31 December 2005 2005 2004 £m £mOperating activitiesProfit from operations before exceptional items 44.9 25.8Depreciation, amortisation and impairment 23.9 19.9(Profit) on disposal of investments (0.4) (0.4)(Profit) on disposal of property, plant and equipment (0.6) (0.9)(Increase) in inventories (22.6) (10.0)(Increase) in receivables (34.1) (14.2)Increase in payables 46.4 19.2Taxation (paid) received (4.8) 6.6Other non cash flow items 2.1 - ------- -------Net cash inflow from operating activities 54.8 46.0 ------- -------Investing activitiesDividends received from associates 3.8 3.5Purchase of subsidiaries (9.7) (1.5)Cash acquired with subsidiaries 1.5 -Additional investment in existing subsidiaries - -Purchase of minority interest in subsidiary - (0.1)Purchase of and loans to associates (5.3) (0.2)Proceeds from disposal of investments 3.2 2.4Proceeds from disposal of subsidiary - 19.9Proceeds from disposal of property, plant and equipment 2.9 6.0Purchase of property, plant and equipment (32.9) (21.9)Purchase of intangible assets (0.2) (0.4) -------- --------Net cash (outflow) inflow from investing activities (36.7) 7.7 -------- --------Financing activitiesInterest received 7.7 3.1Interest paid (11.7) (8.7)Dividends received from subsidiaries - -Equity dividends paid (5.6) (3.8)Preference dividends paid - (2.4)Minority interest dividend paid (0.3) -Share capital issued 48.1 -Cancellation and repayment of preference share capital - (47.9)Purchase of Treasury shares (4.6) -Proceeds from issue of debt - 92.9Repayment of borrowings (58.3) (87.9)Capital element of finance leases (0.2) (0.3) -------- --------Net cash (outflow) from financing activities (24.9) (55.0) -------- --------Net (outflow) in cash and cash equivalents (6.8) (1.3)Cash and cash equivalents at beginning of year 10.9 12.4Effect of foreign exchange rate changes 0.7 (0.2)Adoption of IAS 32 and IAS 39 (0.3) - -------- --------Cash and cash equivalents at end of year 4.5 10.9 ======== ========Cash and cash equivalents and bank overdrafts at end of yearcomprise:Cash and cash equivalents 91.9 15.1Bank overdrafts included in borrowings (87.4) (4.2) -------- -------- 4.5 10.9 ======== ======== Notes to the Financial Statements 1. SEGMENTAL REPORTINGBusiness segmentsResults from operations Year ended 31 December 2005 Total Inter- Total Profit from Gross Segmental revenue operations revenue revenue £m £m £m £m Gibson EnergyMarketing 1,136.8 (120.1) 1,016.7 10.7Truck Transportation 83.0 (7.9) 75.1 4.9Terminals and Pipelines 17.9 (3.8) 14.1 5.7Canwest Propane and Natural Gas Liquids 109.5 (60.3) 49.2 3.0Moose Jaw Asphalt 109.6 (50.3) 59.3 (2.5) ------- ------- ------- ------- 1,456.8 (242.4) 1,214.4 21.8 ------- ------- ------- -------Hunting Energy ServicesWell Completion 151.7 (14.5) 137.2 12.2Well Construction 68.8 (3.7) 65.1 6.7 ------- ------- ------- ------- 220.5 (18.2) 202.3 18.9 ------- ------- ------- -------Tenkay 12.3 - 12.3 5.3Other operating divisions 92.9 - 92.9 1.5 ------- ------- ------- ------- Total 1,782.5 (260.6) 1,521.9 47.5 ======= ======= =======Exceptional charges not apportioned tobusiness segments (2.6) -------Profit from operations 44.9 ======= Notes to the Financial Statements continued 1. SEGMENTAL REPORTING continuedBusiness segmentsResults from operations Year ended 31 December 2004 Total Inter- Total Profit from gross Segmental revenue operations revenue revenue £m £m £m £m Gibson EnergyMarketing 825.3 (78.1) 747.2 7.0Truck Transportation 60.6 (4.7) 55.9 2.6Terminals and Pipelines 15.2 (3.2) 12.0 5.3Canwest Propane andNatural Gas Liquids 104.0 (44.1) 59.9 1.6Moose Jaw Asphalt 69.3 (31.2) 38.1 (1.0) ------- ------- ------- ------- 1,074.4 (161.3) 913.1 15.5 ------- ------- ------- -------Hunting Energy ServicesWell Completion 124.2 (8.0) 116.2 3.5Well Construction 49.3 (6.4) 42.9 4.8 ------- ------- ------- ------- 173.5 (14.4) 159.1 8.3 ------- ------- ------- -------Tenkay 8.5 - 8.5 3.1Other operating divisions 78.7 - 78.7 2.7 ------- ------- ------- ------- Total 1,335.1 (175.7) 1,159.4 29.6 ======= ======= =======Exceptional charges notapportioned to businesssegments (8.8) -------Profit from operations 20.8 ======= Inter-segmental revenues are priced on an arms-length basis. Costs incurredcentrally are apportioned to the operating units on the basis of the timeattributable to those operations by senior executives. The exceptional chargesrelate to the discontinuance of previous operations and are not thereforeapportionable to the current business segments shown above. Notes to the Financial Statements continued 1. SEGMENTAL REPORTING continuedBusiness segmentsAssets and liabilities 2005 2004 Segment Segment Segment Segment assets liabilities assets liabilities £m £m £m £m Gibson EnergyMarketing 139.9 95.3 75.3 55.1Truck Transportation 45.7 9.9 40.2 10.4Terminals and Pipelines 52.6 2.8 48.4 3.2Canwest Propane and Natural Gas Liquids 44.6 11.1 35.7 7.9Moose Jaw Asphalt 29.1 5.5 27.9 8.9 ------- ------- ------- ------- 311.9 124.6 227.5 85.5 ------- ------- ------- -------Hunting Energy ServicesWell Completion 93.2 49.9 67.9 27.1Well Construction 69.0 12.6 48.0 8.3 ------- ------- ------- ------- 162.2 62.5 115.9 35.4 ------- ------- ------- -------Tenkay 29.1 0.9 23.7 0.8Other operating divisions 54.6 32.1 54.6 27.9 ------- ------- ------- -------Total segment assets and liabilities 557.8 220.1 421.7 149.6 Unallocated assets and liabilities:- interests in associates 5.5 - 8.7 -- current and deferred taxes 14.8 79.6 11.2 60.6- retirement benefit assets 21.1 - 23.8 -- net debt 91.9 188.9 15.1 145.7- central assets and liabilities 3.8 23.8 8.5 23.1- elimination of inter-segmented balances (0.2) (1.3) - (1.9) ------- ------- ------- -------Total assets and liabilities 694.7 511.1 489.0 377.1 ======= ======= ======= ======= Segment assets comprise property, plant and equipment, intangibles, goodwill,inventories and debtors. Assets owned by head office and employed by a segmentare allocated to that segment. Segment liabilities comprise trade payables, provisions and other operatingliabilities. They exclude borrowings and tax liabilities. 2. The above figures have been extracted from the Group's full financial statements for the year ended 31 December 2005, which will be delivered to the Registrar of Companies. These carry an unqualified audit opinion. The extracts do not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange