Hunting Regulatory News (HTG)

Hunting PLC

("Hunting", the "Company" or the "Group")

Full Year Results

Hunting PLC (LSE:HTG), the international energy services group, today announces its full year results for the year ended 31 December 2011.

Financial Highlights - continuing operations*

Corporate Highlights

·; Four acquisitions totalling £597.9m completed during the year:

o Dearborn Precision Tubular Products - a precision machining specialist, including MWD/LWD# tools, for a consideration of £50.6m

o W L Doffing - a critical tolerance and prototyping specialist for a consideration of £14.2m

o Titan - a leading manufacturer of perforating gun systems and shaped charges for a consideration of £508.6m

o Specialty Supply - a leading manufacturer of directional drilling products and drill pipe screens for a consideration of £24.5m

·; Capital expenditure in the period increased to £58.0m (2010 - £49.0m) and includes:

o Completion of consolidation of Aberdeen operations following a total investment of £15.0m at the Group's Badentoy and Fordoun facilities

o Formal opening of Wuxi manufacturing facility in China

Segmental Results from continuing operations - before amortisation, exceptional items, interest and share of associates' post-tax profits.

Commenting on the results Dennis Proctor, Chief Executive, said:

"2011 has seen the continued transformation of Hunting, with four acquisitions completed in the year. Of note is Titan whose products and services extend the Hunting offering further into the well bore, broadening our customer reach and enhancing the Group's profile as a key supplier of well construction and completion products.

"Hunting's existing businesses have also exceeded management's expectations, with strong sales growth in the Group's premium connections and manufacturing operations, particularly in the final quarter of the year.

"The Group has started 2012 on a solid footing as the demand for energy remains firm and therefore is well positioned to deliver a further year of growth."

An analyst presentation will be held at 10.30a.m. today at the offices of Buchanan, 107 Cheapside, London, EC2V 6DN.

For further information please contact:

(#) Measurement while drilling/logging while drilling

(*) 2010 figures have been restated to reflect the reclassification of Field Aviation as a discontinued operation

Notes to Editors:

About Hunting PLC

Hunting PLC is an international energy services provider to the world's leading upstream oil and gas companies. Established in 1874, it is a fully listed public company traded on the London Stock Exchange. The Company maintains a corporate office in Houston and is headquartered in London. As well as the United Kingdom, the Company has principal operations in Canada, China, Hong Kong, Indonesia, Mexico, Netherlands, Singapore, United Arab Emirates and the United States of America.

Chairman's Statement

The Group has once again produced excellent results in a year of continuing expansion. Profit before tax from continuing operations and before amortisation and exceptional items in 2011 was £79.8m (2010 - £47.0m), a 70% increase. After amortisation and exceptional items, profit before tax from continuing operations was £38.8m (2010 - £33.0m).

Outstanding acquisition opportunities arose and the Group took advantage of these, with the support of our banks and equity shareholders, as well as existing cash, to buy four companies - Titan being the largest purchase we have ever made. Despite this and the continuing investment in our manufacturing plants and service facilities, the balance sheet remains strong and healthy.

Industry trends identified in previous years continued in 2011, with high oil prices, low natural gas prices (at least in North America) and an even more emphatic rush to develop unconventional, especially shale, resources.

Global financial worries have not seriously impacted the demand for energy in most of our markets, so that customers have continued with their development and investment programmes - leading to high demand for our products.

Activity levels in the Gulf of Mexico, an important market for us, are beginning to recover to somewhere near their pre-2010 levels. Meanwhile, the abundant resources available in shale deposits onshore in the United States and elsewhere are being tapped at an increasing rate, with the emphasis moving to liquids for reasons of price.

A higher proportion of wells than ever before are being drilled horizontally and the Group has a comprehensive suite of products to support this trend. Our 2011 acquisitions give us even more strength in MWD ("measurement-while-drilling") and LWD ("logging-while-drilling") applications, while the growing demand for fracturing shale deposits is well served by Hunting Titan, the largest acquisition.

The Well Construction operations of our principal operating company, Hunting Energy Services, contributed strongly in a very much improved year while the largest activity, Well Completion, again performed magnificently. Well Intervention had another profitable year. It is notable that Asian activities and markets became ever more important to us.

We have continued our capital spending programme in all areas of Hunting Energy Services activity, with a particular emphasis on advanced production machinery to improve efficiency and to reduce costs. Outside the Hunting Energy Services stable, Gibson Shipbrokers had a successful year in highly volatile markets.

Diluted earnings per share from continuing operations, before amortisation and exceptional items, were 38.7p, an increase of 70% on the previous year. Reported diluted earnings per share from continuing operations were 20.3p (2010 - 15.4p).

We are recommending a final dividend for 2011 of 11.0p per share, payable on 2 July 2012 to shareholders on the register on 8 June 2012, giving a total of 15.0p for the year, a 25% increase.

George Helland, a non-executive Director since 2001, retired from the Company during the year. The Board thanks him for his thorough and constructive work, particularly in the role of Remuneration Committee Chairman.

Andrew Szescila, a US citizen and former Chief Operating Officer of Baker Hughes, joined the Board as a non-executive Director. David Barr, who had been appointed a non-executive Director at the beginning of the year, left us to take up an executive position elsewhere.

Your Company has had another excellent year and is considerably larger than before. The markets it serves seem poised to continue to grow as standards of living and energy consumption per head increase in much of the world.

We are well placed to take advantage of this growth and look forward to the opportunities and challenges ahead. I am grateful to our staff throughout the world for their fine contribution to our success.

Richard Hunting C.B.E.

Chairman

8 March 2012

Chief Executive's Review

Introduction

During 2011, Hunting achieved a number of significant milestones in its growth strategy leading to the excellent financial results reported. The Group successfully concluded four acquisitions totalling £597.9m in the second half of the year, which extended our technology offering and product reach into the oil and gas wellbore, while also broadening our advanced manufacturing capabilities offered to our customers. In parallel to these acquisitions, Hunting has continued its significant investment programme within its existing manufacturing facilities, with new sites formally opening in China and Scotland and further expansion projects commencing in North America. Within this positive operating environment, Hunting has seen many of its facilities increase the number of production shifts in the year, with demand in certain areas of the Group exceeding the historic highs seen in 2008.

Supporting our strategy for growth has been a strengthening in market momentum. In 2011, worldwide rig counts increased 12% to close the year at a near record high of 3,612 active units. Accompanying this increase has been a 20% increase in horizontal drilling compared to 2010 and a further shift to focusing on oil drilling. These factors have driven the demand for Hunting's products and with the WTI oil price averaging US$95 per barrel in the year, which reflects a tight balance between supply and demand, the Group enters 2012 with a confident outlook.

Much of what Hunting has achieved in the year has been due to the high quality people we employ. Following the acquisitions, the Group now has 3,453 employees (2010 - 2,233). As part of the integration of the new businesses and personnel, the senior management within our primary operating unit, Hunting Energy Services, has been restructured, with the new positions of Chief Operations Officer, Director of Manufacturing, Manufacturing Analyst and a new Managing Director of Hunting Americas being created. These new positions will direct new initiatives to maximise the manufacturing efficiencies across the Group's operations.

With this strong business momentum, particularly seen in the final quarter of the year, coupled with the business development highlighted, the Group reported a 44% increase in revenue to £608.8m (2010 - £423.3m). Our existing businesses contributed £120.7m to this growth, with the balance of £64.8m coming from our newly acquired companies. Profit from continuing operations before amortisation and exceptional items increased 80% to £81.0m (2010 - £45.0m) comprising £65.9m from existing operations and £15.1m from acquisitions. This performance leads us to report a 70% increase in diluted earnings per share from continuing operations before amortisation and exceptional items to 38.7p (2010 - 22.7p).

Profit from continuing operations after amortisation and exceptional items was £41.0m (2010 - £31.0m) and the reported diluted earnings per share from continuing operations was 20.3p (2010 - 15.4p).

Group Income Statement

Business Development

Hunting's strong financial performance during 2011 has been driven by an excellent performance from our existing businesses and a good contribution from the acquisitions made in the second half of the year.

Hunting's strategy is to invest in proprietary products, which have a strong market share and good synergies with the existing products offered by the Group. Each of the acquisitions completed during the year fulfilled these criteria:

Dearborn Precision Tubular Products ("Dearborn")- In August 2011, the Group completed the acquisition of Dearborn for a consideration of £50.6m. The business provides specialist precision machining services to the energy, aviation and power generation sectors, which demand close tolerance machining for components used in critical applications. Dearborn's energy related product lines include the manufacture of complex components used in measurement-while-drilling ("MWD") and logging-while-drilling ("LWD") tools. Each customer has specific MWD/LWD requirements and each order is highly complex and can take many hours to complete. Dearborn fits well with the product lines manufactured by Hunting Innova, as Innova's electronic measurement tools are often housed in Dearborn's products.

W L Doffing ("Doffing") - In early September 2011, Hunting completed the acquisition of the business and assets of Doffing, a precision machining services business, for a consideration of £14.2m. Doffing complements Dearborn, in that it supplies critical tolerance machining, prototyping and first-pass specialist production services used in MWD/LWD applications.

Titan - In mid-September 2011, the Group also completed the acquisition of Titan, the largest acquisition in the Group's history, for a consideration of £508.6m. Titan is a leading provider of perforating gun systems, shaped charges, well logging instrumentation and perforating gun switches used in drilling complex horizontal wells, predominantly for shale related drilling. Titan is a supplier of proprietary perforating products in North America and further exposes Hunting to the high growth global shale drilling market, to which the Group already supplies many other components. Part of the immediate integration strategy of Titan is to commence the manufacturing of its products at other Hunting facilities including the Wuxi facility in China where large growth opportunities have been identified. Further cross-selling opportunities for Hunting's existing products through Titan's 20 distribution outlets throughout North America are also being developed.

Specialty Supply ("Specialty") - In October 2011, Hunting completed the acquisition of Specialty Supply, a supplier of precision machined components, for a consideration of £24.5m. Speciality's products are used in the global directional drilling markets and include drill pipe screens, running gear, steering tools and gyro systems.

Since the completion of these acquisitions, all businesses have performed in line with management expectations, with business momentum being maintained from the final quarter of 2011 into the new trading year. Manufacturing and sales synergies have already been identified and are being implemented, with further systems integration planned for the near future.

From the start of 2012, Hunting has commenced a unified marketing initiative for the Innova, Dearborn and Doffing product lines. Under the new branding of 'Hunting Advanced Manufacturing Group', the Group now offers a single source solution for MWD/LWD measurement tools. Using the technical expertise of these three businesses, Hunting is aiming to become a leading supplier of MWD/LWD tools, removing the need for multiple component-sourcing currently required by our customers.

Following the four acquisitions, Hunting now has 38 manufacturing facilities worldwide (2010 - 30) with a global footprint totalling over 2.5m square feet of capacity.

During the year, Hunting continued its internal investment programme across its global facilities. In 2011, the Group increased capital expenditure to £58.0m (2010 - £49.0m), of which £57.8m (2010 - £48.7m) was invested within the Group's primary operating unit, Hunting Energy Services. Within the Group figure of £58.0m, new business development comprised of £45.2m (2010 - £36.8m) and replacement expenditure was £12.8m (2010 - £12.2m). During 2011 the Group completed a project in Scotland to consolidate manufacturing to two principal sites at Badentoy and Fordoun, relocated and consolidated its manufacturing capabilities in Dubai and formally opened its Wuxi facility in China. In 2012 new capital projects at Houma, Louisiana and Stafford, Texas are due to be completed, which will further increase the total operating footprint.

The Group also continued to build its Exploration and Production business where £2.3m was invested during the year (2010 - £7.1m).

Health, Safety and Environment

During 2011, Hunting Energy Services recorded 3.36m personnel hours compared to 2.30m in 2010, an increase of 46%. We are pleased to report that even with this increase, the number of recordable incidents decreased by 26% to 26 incidents compared to 35 in 2010. The incident per million person hours worked therefore decreased 49% to 7.7 compared to 15.2 in 2010.

Outlook

Hunting has commenced 2012 on a solid footing, as the demand for energy remains firm. The Group now has an established global manufacturing presence in key energy regions around the world, with a broad product and service offering for our customers. With our new acquisitions, we have extended the number of touch points in the oil and gas well bore and have many opportunities to cross-sell our products into the new and existing market segments in which we serve, while maximising the Group's manufacturing efficiency with our enlarged operating footprint.

In North America, shale related drilling will continue to support product demand as customers continue to focus on oil related resource plays. As activity in the Gulf of Mexico continues to increase, Hunting anticipates increased business in this area, which will increase the demand for our products, particularly those applicable to deepwater drilling activity. In Europe, despite the reduced number of active rigs following the UK government's new tax legislation, new development projects continue to be sanctioned in the North Sea, which will maintain activity throughout the year. In South East Asia, the continued increase in demand for energy will support our manufacturing activities in Singapore and China.

Oil and gas demand is forecast to continue to grow as we continue through the year, subject to the economic and geopolitical climate not declining further. In the medium to long term industry commentators are forecasting a 70% increase in investment in capital spending over the next decade to meet anticipated hydrocarbon demand, which provides confidence that Hunting's products will be required in the future.

Business Strategy

The key elements of the Group's business strategy to deliver long term shareholder value remain:

• To deliver both acquisitive and organic growth across all of the Group's core operations.

• To invest and develop the business platforms to augment:

- Proprietary products and services;

- Increased market share strength;

- Enlarged global footprint; and

- Capture of synergies from the opportunities thus created.

Underpinning these strategic objectives is a commitment to manufacture and deliver high quality products and services with a reputation for reliability and on time delivery under the Hunting brand.

Business Model

The key features of the Group's business model which seeks to deliver its strategic objectives are:

• A decentralised management structure allowing local management to identify and react to customer or local market requirements.

• Close monitoring, support and direction from the centre.

• Short chains of command allowing for faster decision making.

• Framework of controls with discretionary limits and powers for local management.

• Flexible cost structures which can adapt to market conditions.

• Common standards for quality, health and safety across operations.

Maintaining high operational standards across all of the Group's activities is viewed as one of the building blocks in delivering a strong financial performance.

Operating Review

Hunting manufactures or distributes those products that enable the extraction of oil and gas. The Group's customers include international energy companies, national oil companies and mid to large oil services groups. With increasingly complex resources to define and develop, in ever increasing challenging locations, Hunting continues to position its technical expertise and operating footprint to meet the requirements of these customers.

Hunting Energy Services

Hunting Energy Services is the primary operating unit of the Group and during 2011 reported a 45% increase in revenue to £582.8m (2010 - £400.7m) and an 80% increase in profit from continuing operations before amortisation and exceptional items to £79.3m (2010 - £44.1m). Reported profit from continuing operations was £50.1m (2010 - £33.2m).

This growth has been achieved through:

• Near record levels of activity within certain businesses, including Premium Connections, Drilling Tools and Manufacturing.

• Good contributions from newly opened facilities around the Group including Conroe, Latrobe, Casper and Wuxi.

• Continued rollout of lean manufacturing across Hunting's 38 locations.

• Addition of new acquisitions to the Hunting portfolio.

Our existing businesses delivered revenue growth of £117.3m to £518.0m, with the balance of £64.8m coming from our newly acquired companies. Profit from continuing operations before amortisation and exceptional items from existing operations was £64.2m, with £15.1m being generated from the new companies in the Group.

As the business enters 2012, Hunting Energy Services is continuing this momentum with increased demand from its chosen markets, while also benefiting from new opportunities being presented from our newly acquired businesses.

Segmental Results

The Group reports through a divisional structure arranged into the following operating segments:

Well Construction

Hunting's Well Construction division includes those businesses that are positioned in the initial drilling and construction phase of the wellbore. The division now includes Hunting Advanced Manufacturing Group which comprises Hunting Innova and the newly acquired Dearborn and Doffing businesses.

The Well Construction division reported revenue of £194.5m (2010 - £111.3m), with benefits in the final quarter from the three new businesses in the segment. Profit from continuing operations before amortisation and exceptional items increased in the year to £28.5m (2010 - £9.5m). Reported profit from continuing operations was £20.7m (2010 - £7.8m). The platform comprises six business areas: Premium Connections, Drilling Tools, Oil Country Tubular Goods ("OCTG"), Trenchless Technologies, Hunting Advanced Manufacturing Group and Specialty Supply.

Premium Connections

Hunting's Premium Connections business which comprises a range of connections including the SEAL-LOCK™ and WEDGELOCK™ product lines reported record results during 2011, following completion of a number of major orders in the year. Momentum within the business has increased as customers prepare for renewed drilling in the Gulf of Mexico, in addition to continued demand for shale related connections in all of the key drilling regions across North America.

Drilling Tools

The Hunting Drilling Tools platform provides mud motors, shock tools, non-magnetic drill collars and other technologies to assist in the efficient drilling of oil and gas wells. During the year, demand for Hunting's products increased strongly, leading to record sales in the final quarter of 2011. Following the opening of three new facilities during 2010, demand has been driven by shale drilling in North America, particularly with customers drilling in the Bakken, Marcellus and EagleFord shale plays. New regional sales were also developed in Kurdistan during the year, as frontier exploration drilling continues to increase and more licenses are granted to western companies. Hunting's recently established Equipment Management Services ("HEMS") business, which provides downhole tool rental equipment, also reported its first profit during the final quarter of 2011 after strong increases in sales throughout the year. HEMS has developed new opportunities across the MENA region and in December 2011 successfully signed a contract to supply a leading oil services provider.

OCTG

Hunting's OCTG business includes casing products and management services for customers. The Group has key relationships with steel manufacturers to facilitate just-in-time logistics.

Trenchless Technologies

During 2011, the Trenchless business exceeded management's expectations. All three product lines, drill stems, premium tubing threading and motor components achieved good sales growth in the year with business momentum extending into early 2012. The business also increased its number of distributors during the year to broaden the geographic reach of the Group's product offering.

Advanced Manufacturing Group

Since the completion of the acquisitions of Dearborn and Doffing in the second half of 2011, the businesses have performed in line with management's expectations. With these new manufacturing capabilities, Hunting is now positioned to capture a higher proportion of the lower volume/higher margin manufacturing contracts related to the increasingly complex oil and gas well designs developed by our customers.

At Hunting Innova, the business continues to be integrated into the Group, following its first full year of ownership, with demand for products remaining strong, ending the year with a good order backlog. Innova continues to supply to the leading US oil service companies and during the year added new clients who will broaden the product reach of the business in the future.

Specialty Supply

Specialty manufactures precision machined MWD parts used in directional drilling markets worldwide. These include a comprehensive line of running gear and associated products for MWD, LWD, steering tools and gyro systems. Additionally, Specialty's product offering includes drill pipe screens for all drilling applications. Since completion of the acquisition, Specialty has exceeded management's expectations, with new initiatives underway to reduce outsourcing.

Well Completion

Hunting's Well Completion division provides products to customers during the completion phase of an oil and gas well. The Well Completion division reported revenue of £327.2m in 2011 (2010 - £224.2m) and benefited from the acquisition of Hunting Titan on 16 September.

Profit from operations before amortisation and exceptional items totalled £41.2m (2010 - £23.2m). Reported profit from continuing operations was £21.4m (2010 - £23.2m). The division operates from four platforms: Hunting Titan, Premium Tubing, Manufacturing and Thread Protection.

Hunting Titan

Following completion of the acquisition of Titan, the business has performed in line with management's expectations, with continued demand for shale related products and services, driven by the strong rig counts reported during the year. During 2011, the business has continued to expand its manufacturing and distribution presence in North America to capture more market share in the region. It is anticipated that Titan will utilise Hunting's existing facilities in China, Europe and Canada to maximise manufacturing opportunities, while developing new sales across South East Asia where the Group has an established presence.

Premium Tubing

Hunting's Premium Tubing business reported its best year since 2008. While shale drilling has been a primary driver for this performance, new business has been captured in new regions including East Africa and the Middle East.

Manufacturing

The Group's manufacturing business continued to perform well during 2011, with particularly strong trading seen in the final quarter of the year. With the continuation of the implementation of lean manufacturing initiatives across the Group's operations, further efficiency gains have been realised. During the year, the business commenced an expansion project in Houma, Louisiana, which is anticipated to be completed during mid 2012.

Thread Protection

Hunting's thread protection platform provides protection solutions including SealLube™ thread compound, Preserve-A-Thread corrosion protection and CLEAR-RUN™, its environmentally friendly advanced tubular solution. In 2011, the business performed strongly, following both external customer and internal demand for our product lines. Following an excellent year, the business will increase its in-house manufacturing of certain product lines to reduce outsourcing to other suppliers.

Well Intervention

Hunting's Well Intervention division supplies a range of products and services required throughout the life of a well to enhance and maintain production and in 2011 reported a profit from operations before amortisation and exceptional items of £7.9m (2010 - £10.1m). Reported profit from continuing operations was £7.3m (2010 - £9.3m).

The subsea valves and connections platform has seen a mixed performance in the year, predominantly due to the slowdown in deep water drilling activity following the Macondo disaster in 2010, which impacted the demand for the business' products. While the backlog remains strong and activity in the Gulf of Mexico improves, the revised regulatory procedures in the region have led to customers delaying orders during the year. With industry wide preparations underway anticipating increased drilling activity in the Gulf of Mexico, the business is shortly to complete an expansion of its facilities to address the future drilling demand anticipated both regionally and globally.

Hunting Welltonic provides pressure control equipment, control panels, e-line (wireline) and slickline tools. During 2011 the business performed well following good demand for a number of product lines and a new product receiving acceptance from a major oil services company. Welltonic is currently expanding its presence in the US to develop sales of both Thru Tubing and pressure control products in the region.

Exploration & Production

Hunting's Exploration and Production division has interests in the Southern US and offshore Gulf of Mexico, holding equity interests in over 70 production properties. On a Net Equivalent Barrel ("NEB") basis, production in the year was 252,000 barrels (2010 - 230,000 barrels), with proven reserves at year end being 1.2m NEB (2010 - 1.3m NEB). Based on firm commodity prices throughout the year, the business reported a profit from operations before amortisation and exceptional items of £1.7m (2010 - £1.3m). Reported profit from continuing operations was £0.7m (2010 - £7.1m loss).

During 2011, the business participated in four successful exploration wells in Lavaca County, Texas; Hidalgo County, Texas; Brooks County, Texas; and Goliad County, Texas. A fifth well drilled in Matagorda County resulted in a dry hole.

Following a year end valuation of reserves, which requires individual oil and gas properties to be impaired when the realisable value is less than the book value based on future production and commodity prices, the business has taken an impairment charge of £1.0m reflecting lower gas prices.

Oil and Gas Reserves:

All figures are Net Equivalent Barrels '000.

Other Operating Divisions

Gibson Shipbrokers

Gibson is one of the leading global shipbrokers and employs 148 staff. Despite extremely depressed shipping markets, caused by an oversupply of tonnage, the company expanded its depth of market coverage with an increase in staff and a 15% increase in trading volume during the year. Income and profit exceeded expectations reporting a profit from operations before amortisation and exceptional items of £1.7m (2010 - £0.9m).

With shipping markets expected to remain severely depressed for at least another 12 months, the operating policy remains one of cautious expansion. Mindful of these difficult times we are engaged in positioning the business to be able to capture a greater share of projected market improvements.

Division expansion has not been restricted to the London Headquarters. Singapore has grown with the addition of Dry Cargo, and more recently Clean Tankers, to the already successful Specialised and Gas activities.

Today, Gibson is active in Crude, Fuel and Clean Tanker chartering, Dry Bulk, Vegoils, Chemicals, LPG, LPG Broking and LNG, Sale and Purchase for New Buildings, second hand and re-sales as well as Demolition, Offshore including Seismic and renewables, and an enviable in-house Research and Consultancy section.

Field Aviation

Field Aviation is reported as a discontinued business, as it remains our intention to sell the business to management. On 30 June 2011, the business was classified as a held for sale asset, reflecting progress on the sale of the company. Active discussions are currently in progress and the sale is considered to be highly probable.

Field Aviation is recognised worldwide as a modifier of aircraft for special mission roles. The Aircraft Modification Centre in Toronto carries out the design, installation, testing and certification of aircraft modification. Interior modification capabilities transform regional airliners into VIP or corporate shuttle aircraft. Leading-edge avionics modifications keep aircraft productive, profitable and technologically advanced. As a build-to-print aircraft parts manufacturer, the Parts Manufacturing facility in Calgary specialises in the production of parts and spares for the international commercial and military aerospace industry. The business manufactures airframe parts and accessories for both current-production aircraft and out-of-production aircraft.

Field Aviation, as predicted, faced a challenging market with a weak order book on the back of reduced government spending worldwide. In 2011, Field Aviation delivered a profit from operations of £0.8m (2010 - £5.2m) on revenues of £25.9m (2010 - £38.3m).

Performance Measures

A number of performance measures are used to compare the development, underlying business performance and position of the Group and its business segments. These are used collectively and periodically reviewed to ensure they remain appropriate and meaningful monitors of the Group's performance.

Note 1- 2010 figures restated due to the reclassification of Field Aviation as a discontinued operation.

Indicators of future Group performance closely monitored by management include:

Financial Review

Introduction

2011 has seen record results and improving margins on the back of strong market demand for our products and services. Delivering on our strategic objectives we completed four acquisitions in the year at a cost of £597.9m - all four acquisitions have added to the Group's product offering. Integration of the acquisitions is a priority, with measures including new IT systems and additional management resource being implemented.

The financial strength of the Group remains robust, with strong support from our shareholders and banks, as seen by our £83.5m share placing completed during the year and our new £375.0m five year bank facility signed on 5 August 2011.

Results

Revenue

Group revenues increased 44% to £608.8m in 2011 (2010 - £423.3m). Acquisitions contributed £64.8m of this revenue growth and revenue from existing businesses was up £120.7m or 29%. Well Construction was the strongest performing division, with revenue up 75% to £194.5m (2010 - £111.3m). This division has benefited from a full year contribution from Innova, acquired in September 2010, as well as the Dearborn, Doffing and Specialty acquisitions contributing to the last quarter of 2011. US Connections performed strongly leveraging the development of shale projects and improved activity in the Gulf of Mexico. Drilling Tools also performed strongly, benefiting from its wider distribution network and shale activity levels in North America. Well Completion revenue was up 46% to £327.2m (2010 - £224.2m), mainly due to the contribution from the Titan acquisition, however, the like-for-like business was still up 25%. The Well Intervention division has had a more challenging year with revenues declining by 10% to £52.9m (2010 - £58.7m) partly due to product delivery delays associated with the increased regulatory environment in the Gulf of Mexico which affected sales from our subsea connections and intervention platform.

EBITDA and Profit from Operations

EBITDA before amortisation and exceptional items was £102.5m, £39.9m ahead of 2010, with acquisitions contributing £16.4m to this growth. The EBITDA margin increased from 15% in 2010 to 17% in 2011 helped by product mix and the higher margins from the acquisitions completed in 2011. The year ended particularly strongly, aided by strong demand across most of our manufacturing facilities and benefiting from favourable weather conditions in key regions of the US and Canada.

Profit from continuing operations before amortisation and exceptional items was £81.0m for 2011, an increase of 80% over 2010 despite sterling strengthening against the US dollar to US$1.60 (2010 - US$1.55). The operating profit margin increased from 11% in 2010 to 13% in 2011. Well Construction profit from operations before amortisation and exceptional items was up 200% to £28.5m (2010 - £9.5m) due to the year-on-year impact of the acquisitions and growth in the Premium Connections and Drilling Tools businesses. In Well Completion, profit from operations before amortisation and exceptional items increased 78% to £41.2m (2010 - £23.2m) predominantly due to the addition of Titan to the division. In Well Intervention, the 22% decline in profit from operations to £7.9m (2010 - £10.1m) was due to the slower trading environment within the subsea platform, referred to earlier.

Amortisation and Exceptional Items

Intangible asset amortisation charges increased from £2.5m in 2010 to £12.2m in 2011 due to the increased charge arising on intangible assets recognised on the four acquisitions completed in the year. The expected full year amortisation charge in 2012 is estimated to be £30m.

The following exceptional charges arose in the year:

• Acquisition costs of £8.6m relating to the four acquisitions, which were completed in 2011.

• Under IFRS, at acquisition, inventory values are adjusted from their carrying values (generally at cost of production) to a fair value, which includes profit attributable to the degree of completion of the inventory. This resulted in a fair value uplift totalling £23.6m for the four acquisitions. This uplift is charged to the income statement as the inventory is sold, thereby reducing reported operating profits. In 2011, the charge was £12.9m and this has been treated as exceptional. The balance of £10.7m is expected to be charged to the income statement in 2012.

• A £1.6m charge relating to key employee retention was also recognised in 2011, relating to the acquisitions completed during the year.

• Charges under onerous leases for properties have been assessed at £2.2m.

• The impairment of oil and gas capitalised expenditure of £1.0m arose largely as a result of declining forward gas commodity prices compared to 31 December 2010.

• Goodwill impairment reviews undertaken during the year have resulted in a £1.5m impairment charge.

• Unamortised loan facility fees of £1.0m were written off as a result of the acquisition.

Profit from continuing operations, after amortisation and exceptional items, was £41.0m in 2011 compared to £31.0m in 2010.

Net Finance Costs

Net finance costs before exceptional items in 2011 were £2.2m compared to a £1.0m net finance income in 2010. The change from net income to net expense is due to the Group moving into a net debt position in the second half of the year following the acquisition programme, together with an increased charge for bank loan facility fees.

Taxation

The Group tax rate before amortisation and exceptional items for 2011 was 28% (2010 - 30%) resulting in a tax charge of £22.5m (2010 - £14.0m). The lower tax rate reflects the weighting of profits in lower tax jurisdictions, together with a reduced UK corporate tax rate. The tax rate for 2012 is currently expected to remain at 28%, however, this is dependent on the mix of profits going forward. The exceptional charge in the year attracts a tax credit of £15.2m to give a net tax charge on continuing operations in 2011 of £7.3m (2010 - £9.9m).

Earnings per Share

Diluted earnings per share before amortisation and exceptional items for continuing operations increased 70% to 38.7p from 22.7p in 2010. Reported diluted earnings per share at 20.3p was 32% above 2010. The weighted average number of shares used in calculating the diluted earnings per share in 2011 was 140.1m compared to 134.0m in 2010, with the increase mainly due to the 13.2m share placing completed in August 2011.

Cash Flow

The free cash flow generated in 2011 of £38.9m is £29.4m ahead of 2010. The improved operating EBITDA of £102.5m (2010 - £62.6m) is a key component of this as described above. Working capital movements were £5.7m better year-on-year. There was a significant reversal on interest and bank fees with an inflow of £1.6m in 2010 becoming an outflow of £7.6m in 2011, as a result of moving into a net debt position during 2011, together with fees related to the new bank facility. Tax paid in 2011 was £12.3m higher than 2010 due to low tax payments in 2010 which were shielded by brought-forward losses.

Expansion capital expenditure in the year of £45.2m principally related to the internal investment programmes in Scotland, US and China. Capital expenditure on exploration and production was £2.3m (2010 - £7.1m). Total capital expenditure for 2011 was £58.0m an increase of £9.0m.

Capital expenditure in 2012 is expected to increase to around £75m, as expansion projects at Houma, Louisiana, and Stafford, Texas, are completed, together with increased equipment requirements for the ongoing expansion of the Drilling Tools and Titan operations.

The total cash flow incurred in the purchase of subsidiaries, net of cash acquired and including expenses of £8.6m, was £581.1m. This includes Titan, Dearborn, Doffing and Specialty with Titan being the largest component at £506.6m. The acquisitions were partly funded by an equity placing which raised £83.5m.

Total dividends paid during the year were £18.0m (2010 - £15.6m). Dividends paid to equity shareholders of £16.8m were 19% ahead of 2010 and reflects the Board's confidence in the strength of the Group.

Cash of £85.3m was received when the Gibson Energy warrant was repaid in June 2011.

Balance Sheet

Due to the 2011 acquisitions, the balance sheet profile has changed significantly. Goodwill has increased by £215.9m of which £180.7m arose on the acquisition of Titan. Other intangibles have increased by £198.2m and include customer relationships, technological know-how and trademarks.

Property, plant and equipment has increased by £77.1m largely due to £45.4m recognised as part of the acquisitions as well as gross capital expenditure of £58.0m during the year.

Other assets have fallen by £48.9m, primarily due to the repayment of the Gibson Energy warrant during 2011. The £10.3m balance at 31 December 2011 includes a net pension surplus of £4.8m (2010 - £5.5m) based on the IAS 19 valuation of the Group's UK defined benefit pension scheme.

Working capital has increased by £126.1m to £262.6m. The 2011 acquisitions represent £100.2m of the increase, with inventory being £86.3m of this. Inventories at the year end include £10.7m of fair value uplift expected to be charged to the income statement in 2012.

As a result of the above, capital employed has increased by £568.0m to £950.4m at 31 December 2011.

The cash outflow in 2011 of £430.6m has put the Group into a net debt position at the year end of £218.4m, with cash and cash equivalents and investments of £73.2m and borrowings of £291.6m.

Net assets at 31 December 2011 were £732.0m which, after non-controlling interests of £16.8m, result in equity shareholder's funds of £715.2m. This is an increase of £134.8m over 31 December 2010, which reflects the retained result for the year of £79.1m, exchange gains of £5.9m, share placing of £83.5m, offset by £16.8m dividend payments together with other items of £16.9m.

Financial Capital Management

Since the sale of Gibson Energy in 2008, the strategic objective of the Group has been to focus on upstream energy services by expanding our proprietary technologies and geographic footprint. The acquisitions during 2011 represent a further significant step in delivering this strategy. A priority for 2012 is to fully integrate the new businesses and leverage their potential within the Group.

The expenditure on acquisitions of £597.9m during 2011 was funded by a combination of cash, an equity placing and new bank facilities. The Group's financial position remains robust, with total credit facilities of £423.6m in place (2010 - £153.9m) of which £375.0m (2010 - £120.0m) is committed. The committed facility is a £375.0m multi-currency revolving credit facility from a syndicate of ten banks which extends to August 2016.

The level of net debt and related gearing ratio of 30% at 31 December 2011 is considered comfortable, with adequate headroom remaining giving management ongoing flexibility. Our bank facility covenants require EBITDA to cover relevant finance charges by a minimum of 4 times and net debt to adjusted EBITDA has a maximum of 3.5 times. Both key bank covenant metrics at year end were well covered.

Return on average capital employed is a KPI management use to assess business unit performance. The Group's return on capital employed has fallen from 16% during 2010 to 15% in 2011 primarily due to the higher level of capital employed following the acquisition programme.

The Board considers each ordinary dividend proposed based on the merits of the information available to it at the time. Consideration is given to the financial projections of business performance and capital investment needs, together with feedback from shareholder discussions.

The Group operates a centralised treasury function with policies and procedures approved by the Board. These cover funding, banking relationships, foreign currency, interest rate exposures, cash management and the investment of surplus cash.

The Group has significant foreign operations and hence results originate in a number of currencies, particularly in US dollars. As a result, the Group's financial statements, which are reported in sterling, are subject to the effects of foreign exchange rate fluctuations with respect to currency conversions. Currency options are used to reduce currency risk movements on the Group's results, by hedging approximately 50% of each year's budgeted US dollar earnings into sterling. Currency exposure on the balance sheet is, where practical, reduced by financing assets with borrowings in the same currency. Spot and forward foreign exchange contracts are used to cover the net exposure of purchases and sales in non-domestic currencies.

Critical Accounting Policies

The Group accounts are prepared using accounting policies in accordance with IFRS.

The preparation of these accounts require the use of estimates, judgements and assumptions that affect the reported amount of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities. Directors' estimates are based on historical experience, consultation with experts and other methods that they believe are reasonable and appropriate.

Retirement Benefits

Actuarial Assumptions:

Expected future lifetime is the number of years a 65 year old is expected to live based on current mortality tables.

The Group operates a defined benefit pension scheme in the UK, which was closed to new entrants with effect from 31 December 2002, as well as a number of defined contribution schemes within the Group. The defined benefit scheme is accounted for under IAS 19 and the main actuarial assumptions used are shown in the table above.

Held for Sale and Discontinued Operations

The Group is currently in active negotiations to sell the Field Aviation business. The Directors took the view in preparing the June 2011 half year financial statements that the business was available for sale in its current condition and that it was highly probable a sale would occur within 12 months. The Directors remain of this opinion at 31 December 2011.

Amortisation and Exceptional items

In presenting its income statement, the Group identifies the results before amortisation and exceptional items, which is the basis on which the Directors assess the business in internal reporting. In the Directors' view this is necessary to get a clear understanding of the underlying performance of the business.

Property, Plant and Equipment and Other Intangible Assets

The Group's property, plant and equipment and other intangible assets are subject to annual rates of depreciation intended to spread the cost of the assets over their estimated service life. These rates are regularly reviewed. In addition if, in management's judgement, events or circumstances indicate a potential impairment may have occurred, then a review of the carrying value of the asset will be carried out.

Goodwill

The carrying value of goodwill held on the balance sheet is reviewed for impairment at least annually. The review compares the carrying value with the estimated future cash flows from the business unit to which the goodwill relates. The cash flows are based on management's view of future trading prospects. Any shortfall identified is treated as an impairment and written off.

Taxation

The effective tax rate for the full year is 28% and is the combined rate arising from the regional mix of Group results. The rate also takes into account the estimated future utilisation of tax losses and the agreements with regional tax authorities of corporate tax computations.

Deferred Tax

Deferred tax assets and liabilities are recorded within the financial statements at 31 December 2011 at £20.5m and £35.3m respectively. These balances are derived from assumptions which include the future utilisation of trading losses and provisions at assumed tax rates.

Share-based Payments

The estimated cost of grants and awards of equity instruments to Group employees is spread evenly over the vesting period.

Provisions

Provisions amounting to £60.5m are held on balance sheet at the year end. These are based on Directors' estimates of the future cost of current obligations.

Principal Risks and Uncertainties

The Group has an established risk management monitoring and review process described in the Corporate Governance Report of the Annual Report and Accounts 2011. The process requires all businesses to identify, evaluate and monitor risks and take steps to reduce, eliminate or manage the risk. Group risks are formally reviewed by the Board at least three times a year and are discussed at every Board meeting. The principal risks identified through this process that Hunting is exposed to, which could have a material adverse impact are listed below, together with the steps the Group has taken to mitigate against these risks. Some arise from the specific activities undertaken by the Group whereas others are common to many international manufacturing companies.

Risks Specific to the Nature of Hunting Group Businesses

Product Quality and Reliability

Product quality and reliability is critical to the Group's reputation with its customers.

Quality assurance standards are monitored, measured and regulated within the Group under the authority of a Quality Assurance Director, who reports directly to the Chief Executive.

Acquisitions and Capital Investment

Acquisitions are an integral part of the continuing Group's strategy of expansion and development. While recent new acquisitions to the Group have integrated well, the Board is conscious of the potential disruption to both the Group and acquire, of an acquisition process and subsequent integration.

The Board is actively involved in monitoring, approving and assessing acquisitions through post acquisition appraisals to mitigate the risk of poor investment decisions. All acquisitions require Board approval prior to commitment.

The Group continues to seek opportunities for organic growth and maintains an active capital investment programme. The programme encompasses investments in new territories, buildings, production equipment, rental equipment and IT systems. There is a range of risks involved in such programmes, including poor financial returns, management distraction, facility upheaval and risk of IT systems failure.

The Board and senior management follow a rigorous process of approving, managing and monitoring capital investments along with planning for contingencies. All capital expenditure above discretionary limits requires Board approval prior to commitment.

Shale Drilling

The Group is increasingly providing products that serve the oil and gas shale drilling industry, particularly following the recent acquisition of Titan. There may be considerable future resistance to further oil and gas shale exploration and development from significant sections of the public, and a drilling moratorium or new laws and regulations may unfavourably impact the industry.

The Board monitors public and political opinion and maintains an awareness of the potential for changes to legislation especially with regard to the US where the Group is mainly exposed.

Raw Material Commodity Prices

Although not under the Group's control, a material movement in oil or gas commodity prices could impact demand for the Group's products and services.

Working capital and in particular inventory levels are closely managed to mitigate against exposure to commodity price movement.

Relationships with Key Customers

The Group's success is defined by relationships with its key customers. A material reduction in orders from a major customer, whether through competitive action, contractual dispute, business consolidation or change in strategy could impact the Group's financial performance and prospects. The Group is also reliant upon the conduct of its customers, given its products are exported by those customers across the world and used in a range of environments, including deep sea exploration and production. Senior management maintain close relationships with key customers and seek to maintain the highest level of service to preserve Hunting's reputation for quality.

Other Risks Common to International Manufacturing Businesses

Fluctuation in Currency Exchange Rates

The Group has significant overseas operations, hence results are denominated in a variety of currencies. As a result, the Group's financial statements, which are reported in sterling, are subject to the effects of foreign exchange rate fluctuations with respect to currency conversions.

The Group maintains an active strategy of financial hedging to mitigate such risk, subject to the availability of suitable products at the right cost.

Effective control over subsidiaries

Group subsidiaries operate within a control framework with a degree of autonomy vested in local management. The operations of subsidiaries are subject to regular checking by management through board and management meetings, regular reporting and contact together with external and internal audit.

Key Executives

The Group is highly reliant on the continued service of its key executives and senior management, who possess commercial, engineering, technical and financial skills that are critical to the success of the Group. Remuneration packages are regularly reviewed to ensure they are remunerated in line with market rates. External consultants are engaged to provide guidance on best practice.

Failure to retain suitably qualified individuals, or to attract and retain strong management and technical staff in the future, could have an adverse effect upon the Group and the results of its operations. Senior management continually reviews the availability of the necessary skills within the Group and seeks to find suitable staff where they feel there is vulnerability.

Economics and Geopolitics

The economic and political environment in the geographic areas in which the Group operates impacts demand for energy and therefore the Group's range of products and services.

Management and the Board closely monitor trading results, forecasts, political developments and projected economic trends in order to match capacity to demand and, where possible, minimise the impact of adverse trends on the Group. In addition overheads are monitored regularly to ensure the cost base is actively managed.

Health, Safety and Environmental ("HS&E")

The Group is subject to a number of HS&E laws and regulations that affect its operations, facilities and products in each of the jurisdictions in which it operates. The Group is committed to operating in compliance with all HS&E laws and regulations relating to its products, operations and business activities. However, there is a risk that it may have to incur unforeseen expenditures to cover HS&E liabilities, to maintain compliance with current or future HS&E laws and regulations or to undertake any necessary remediation.

It is difficult to estimate with any reasonable certainty the future impact of HS&E matters, including potential liabilities, due to a number of factors and especially the lengthy time intervals often involved in resolving them. There is regular HS&E compliance reporting to the Board.

Dennis Proctor

Chief Executive

Peter Rose

Finance Director

8 March 2012

Statement of Directors' Responsibility

The Directors confirm that the 2011 Annual Report and Accounts, which will be issued on 15 March 2012, complies with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority in respect of the requirement to produce an annual financial report.

The Directors' confirm that to the best of their knowledge and belief:

A list of current Directors is maintained on the Hunting PLC website: www.huntingplc.com  

By order of the Board

Peter Rose

Finance Director

8 March 2012

Consolidated Income Statement

For the Year ended 31 December 2011

Consolidated Statement of Comprehensive Income

For the Year ended 31 December 2011

Consolidated Balance Sheet

At 31 December 2011

The balance sheet at 31 December 2010 has been restated to recognise additional goodwill and other payables of £0.3m on the acquisition of Innova on 3 September 2010. The balance sheet at 1 January 2010 has not been presented, as there was no impact on the previous year's numbers from this adjustment.

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

For the Year ended 31 December 2011

Notes

1. Basis of Accounting

The financial statements have been prepared in accordance with the Companies Act 2006 and those International Financial Reporting Standards ("IFRS") as adopted by the European Union and IFRIC Interpretations. The financial statements have been prepared on a going concern basis under the historical cost convention as modified by the revaluation of available for sale financial assets and those financial assets and financial liabilities held for trading. The comparative amounts for the year ended 31 December 2010 have been restated to reflect Field Aviation as a discontinued operation.

The presentation of the Group's intangible asset amortisation charge has been changed such that the charge is separately presented with exceptional items in the income statement. The 2010 income statement has been re-presented to reflect this change.

The financial information set out below does not constitute the Company's statutory accounts for the years ended 31 December 2011 or 31 December 2010, but is derived from those accounts. Statutory accounts for 2010 have been delivered to the Registrar of Companies and those for 2011 will be delivered in due course. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matter by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006. Whilst the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards this announcement does not itself contain sufficient information to comply with IFRS.

Adoption of New Standards, Amendments and Interpretations

The following new standards, amendments and interpretations became effective for and were adopted during the year ended 31 December 2011:

·; IAS 24 (revised) Related Party Disclosures

·; Amendment to IFRIC 14 - Prepayments of a Minimum Funding Requirement

·; Improvements to IFRSs - May 2010

Although the adoption of these standards, amendments and interpretations represent a change in accounting policy, comparative figures for 2010 have not been restated for these, as the changes do not impact the financial performance or position of the Group.

Standards, Amendments and Interpretations Effective Subsequent to the Year End

·; IFRS 9 Financial Instruments*

·; IFRS 10 Consolidated Financial Statements*

·; IFRS 11 Joint Arrangements*

·; IFRS 12 Disclosure of Interests in Other Entities*

·; IFRS 13 Fair Value Measurement*

·; IAS 27 (revised) Separate Financial Statements*

·; IAS 28 (revised) Investments in Associates and Joint Ventures*

·; Amendment to IFRS 7 Financial Instruments: Disclosures - Transfers of Financial Assets

·; Amendment to IAS 12 - Deferred tax: Recovery of Underlying Assets*

·; Amendment to IAS 1 - Presentation of Items of Other Comprehensive Income*

·; Amendments to IAS 19 Employee Benefits*

* Not yet endorsed by the European Union.

It is not anticipated that any of the new requirements will significantly impact the Group's results or financial position.

2. Segmental Reporting

The Group reports on eight operating segments, three of which are discontinued operations, in its internal management reports, which are used to make strategic decisions. The Group's segments are strategic business units that offer different products and services to international oil and gas companies and the aviation and shipping sectors.

The discontinued operations comprise Field Aviation, which was classified as held for sale on 30 June 2011, Gibson Energy, which was sold in 2008, and Hunting Energy France, which was sold in 2009. Gibson Energy and Hunting Energy France continue to generate accounting entries due to sale related transactions and are required for reconciliation purposes.

The Well Construction segment provides products and services used by customers for the drilling phase of oil and gas wells, along with associated equipment used by the underground construction industry for telecommunication infrastructure build-out and precision machining services for the energy, aviation and power generation sectors.

The Well Completion segment provides products and services used by customers for the completion phase of oil and gas wells.

The Well Intervention segment provides products and services used by customers for the production, maintenance and restoration of existing oil and gas wells.

The Exploration and Production segment includes the Group's oil and gas exploration and production activities in the Southern US and offshore Gulf of Mexico.

Gibson Shipbrokers is a global energy shipping broker headquartered in London. Crude oil, fuel oil and bio fuels are actively shipped along with dry bulk such as coal, iron ore and grain. Gibson Shipbrokers is also involved in the shipping of liquefied petroleum gas ("LPG"), petrochemicals and liquefied natural gas ("LNG").

Field Aviation is an aircraft service organisation providing modification, installation, distribution, maintenance and manufacturing services for regional, business and government operators worldwide. Field Aviation has been presented as a discontinued operation and its results have been restated to exclude central costs previously allocated to the division. All central costs have been allocated to continuing operations.

The following tables present the results of the operating segments on the same basis as that used for internal reporting purposes to the Chief Operating Decision Maker.

The Group measures the performance of its operating segments based on revenue and profit from operations, before any exceptional items and the amortisation of intangible assets. Accounting policies used for segment reporting reflect those used for the Group. Inter-segment sales are priced on an arm's length basis. Costs and overheads incurred centrally are apportioned to the continuing operating segments on the basis of time attributed to those operations by senior executives.

Results from operations