Hunting Regulatory News (HTG)

Hunting PLC

("Hunting" or "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 2012.

Financial Highlights - continuing operations*

Corporate Highlights

·; Continued integration of Hunting Titan products across the Group:

o components being manufactured at three Hunting facilities

o sales personnel appointed in Aberdeen, Calgary, Dubai and Singapore

o site secured in UK to distribute Hunting Titan products across the EMEA region

·; Good progress with 'Sole Supplier' concept within Advanced Manufacturing Group

·; Facilities footprint now exceeding 2.7m square feet, reflecting investment and ongoing facility consolidation

·; Capital expenditure in the year increased to £61.6m (2011 - £58.0m) and includes:

o Completion of deepwater facility at Houma, Louisiana to service Gulf of Mexico activities

o Further investment at Wuxi, China to manufacture Hunting Titan products

o Two new distribution centres opened in North America to service onshore drilling activity

·; Enlarged facility at Stafford completed providing increased capacity for Hunting Subsea

·; Disposal of Field Aviation in April 2012 for £7.5m

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

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

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

"The Group has commenced 2013 steadily, with current backlogs, facility expansions, product introductions and inquiry levels indicating that this will be another year of progress.

"In North America, market sentiment is indicating that onshore drilling will show a modest increase throughout the year, with offshore drilling remaining strong, as activity in the Gulf of Mexico increases in momentum. In Europe, current rig activity levels are providing a positive outlook for the year, while in the Middle East and Asia Pacific, our facilities are well positioned to increase their contribution to the Group's performance.

"While the Board is mindful of the current geopolitical and economic issues which prevail, it is confident of delivering a further satisfactory year."

For further information please contact:

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 had another successful year of further expansion as management integrate the activities of the companies acquired in 2011 and continue to invest substantial capital in new facilities. Underlying profit before tax from continuing operations in 2012 was £123.6m (2011 - £79.8m), a 55% increase. Reported profit before tax from continuing operations was £80.7m (2011 - £38.8m).

Despite the world economic uncertainty, global demand for energy continued to grow in the year. The industry we serve needs not only to provide for that growth but also to replace rapidly depleting reserves, leading to increasing demand for our sophisticated and highly engineered products.

Within that general picture, the great success of new methods of extracting unconventional oil and gas ('the shale revolution') has had extraordinary effects, particularly in the US. The resulting excess supply of natural gas has led to low US prices for that commodity, but similar drilling and production methods are being applied to 'shale oil'. The result is that crude oil production in the US is rising after many years of decline.

The Group is well placed in the shale revolution, particularly following the 2011 acquisition of Hunting Titan, and is actively exporting their technology to other areas of shale potential such as Europe and the Far East.

Activity in the Gulf of Mexico has fully returned to the levels it enjoyed prior to the tragic Macondo incident of 2010. Our facilities serving that market are stretched, with further expansion under way. In Europe, the North Sea is busy and, once again, several of our recently expanded facilities are experiencing high utilisation. Similarly, our activities in South-East Asia and in China are moving ahead strongly.

Within Hunting Energy Services, Well Construction activities had another highly successful year - emphasising the deep strength of several of the core activities we have been developing over many years. Well Completion, the largest contributor, had a satisfactory year with profits well ahead of 2011. The smaller Well Intervention activity reported continued volatility in the year, however activity levels are anticipated to improve across the coming year.

For over 70 years, the Group has had a small oil exploration and production business in the southern US. We have decided to produce from existing wells but not to invest further in new exploration and production projects, except as contractually committed.

Gibson Shipbrokers, a world leader in its industry, did well to produce fine results in difficult and highly volatile markets.

Shareholders of longer standing will know that the Group once had many aviation-related activities in its stable. The last of these, the Canadian company Field Aviation, was sold during the year to the management. We wish the company every success in the future.

Capital expenditure on new and replacement facilities in 2012 was even greater than in the previous year. Despite this, the Group generated more than £54.6m of cash with the result that net debt reduced by a similar amount. The balance sheet is in excellent shape, with financial gearing reduced during the year from 30% to 20%.

Underlying diluted earnings per share from continuing operations were 57.5p (2011 - 38.7p), an increase of 49% on the previous year. Reported diluted earnings per share from continuing operations were 40.0p (2011 - 20.3p).

We are recommending a final dividend for 2012 of 14.0p per share, payable on 1 July 2013 to shareholders on the register on 14 June 2013, giving a total of 18.5p for the year, a 23% increase.

Your Company has once again had a good year in strong markets and I am confident we will be able to take advantage of further developments in this exciting industry.

I thank all our staff throughout the world for our continued success.

Richard Hunting C.B.E.

Chairman

7 March 2013

Chief Executive's Review

Introduction

Hunting has again reported a record set of financial results in a year where the Group has progressed its strategy to internationalise its product portfolio enhanced by the businesses acquired in recent years. 2012 has been a year of integration, consolidation and further organic expansion aimed at maximising the enlarged Group's profit and margin potential. Plans to further grow the manufacturing footprint are also under way as expansion opportunities in new geographic territories are considered.

Group Income Statement

The Group has reported an annual increase in revenue of 36% to £825.8m. The increase in business momentum

seen in the first quarter of the year, and generally consistent demand for our products throughout 2012, led to underlying profit from continuing operations increasing 59% to £128.8m (2011 - £81.0m). Underlying diluted earnings per share from continuing operations increased by 49% to 57.5p (2011 - 38.7p).

Reported profit from continuing operations was £85.9m (2011 - £41.0m) and reported diluted earnings per share from continuing operations was 40.0p (2011 - 20.3p).

Our results have been delivered against a market backdrop where the energy industry in North America has seen a shift in focus from onshore natural gas drilling to liquids-focused targets, resulting in a 13% decline in the number of active onshore rig units in the year. This has been partially offset by a 19% increase in the number of offshore active units drilling in the Gulf of Mexico, further supported by a 6% increase in other regions where Hunting operates internationally. The WTI crude oil price has also been relatively stable throughout the year ensuring that capital expenditure by the major energy exploration and services companies has been sustained. These factors have enabled many of Hunting's businesses to achieve outstanding operating results.

In the year Hunting Titan products and components began to be manufactured at a number of Hunting's North

American locations to maximise cost benefits and plans are in place to commence manufacturing in China during 2013. Hunting Titan's sales reach has been extended to Europe, the Middle East and Asia Pacific, with personnel being appointed at our key regional facilities, extending sales opportunities for perforating systems and accessories into a wider international customer base.

Hunting's efforts to further extend its Well Construction, Well Completion and Well Intervention product offering throughout all of its international operating hubs is also producing results. This includes combining sales and manufacturing capabilities of the new acquisitions into our Canadian, European and Asia Pacific markets and also broadening the existing product and service lines offered by our UK operations into larger North American markets where new demand has been identified.

In parallel to these integration initiatives, Hunting continues to increase its international presence. Hunting Specialty has broadened its manufacturing and sales reach into Canada and the Advanced Manufacturing Group is planning international expansion with new markets being developed in Asia Pacific over the coming year.

Our European and Middle East operations continued strong recruitment efforts during the year, supporting the opening of our expanded facility at Badentoy, Scotland and relocation of our Middle East operations to new enlarged facilities allowing service and repair functions to be undertaken. Hunting has also commenced a greenfield initiative in sub-Sahara Africa, driven by increasing sales into West Africa and strong oil and gas exploration activities in East Africa. In November 2012, a new management team based in South Africa joined the Group and were tasked to develop further sales across the continent and to develop plans for establishing a manufacturing presence in the region. While this initiative will take time to develop, it marks a further step in the Group's strategy to further expand its international manufacturing capabilities into new geographic territories.

In a globally tighter regulatory environment and with an increasingly diverse operating landscape Hunting continues to focus on new product innovation and development. In the year, the Group integrated its global engineering operations, with centres of excellence being focused at our Aberdeen and Houston facilities. The engineering group has a clear pipeline of new connection products under development with new WEDGE-LOCK™ and SEAL-LOCK™ designs either continuing or completing testing in the year. As part of the coordinated drive to be the independent supplier of choice for premium connection product lines, the Group has sanctioned the construction of a new development and testing facility in Houston. This is targeted at accelerating approval timescales for new product lines and reducing reliance on third party laboratory testing.

Elsewhere in the Group, in April 2012 we concluded the sale of Field Aviation Company Inc, for a total consideration of £7.5m. With this disposal, the last of its aviation entities, Hunting is now a more focused energy services group.

The Group continues to recruit key personnel in all of its major business units, strengthening its core manufacturing, sales, human resources and finance functions, with the global workforce increasing 12% to 3,866 by year-end (2011 - 3,453).

With these encouraging initiatives and achievements, Hunting is well positioned as an integrated global energy service group driven by innovation for our international customer base.

Health, Safety and Environment

During 2012 Hunting Energy Services recorded 8.44m personnel hours, with 82 recordable incidents arising in the year. There were no fatalities in the year (2011 - nil).

Outlook

Our view for 2013 is a slow start with an improving second half. This conclusion is derived from discussions with major oil and gas companies, independents and OEM clients about their capital spend forecasts. Further, order intake in Q4 2012, current backlogs, facility expansions, product introductions and inquiry levels are blended to conclude that 2013 will be a year of progress.

Activity levels within our three core reporting divisions, Well Completion, Well Construction and Well Intervention will be driven by factors within each of the geographic regions they operate in:

North America

The current rig count for the US and Canada is 11% below this period in 2012. Forecasts are evenly split between a rising versus a falling rig count for the year. Our belief is, with strong oil prices prevailing, it will improve modestly onshore and remain strong offshore. Further improvements in drilling and completions will provide increasing activity and product usage despite a lagging rig count.

Premium Connections will benefit from the offshore demand. Accordingly, new capacity will be added throughout the year. Mud motor usage will lag in some regions, climb in others but will offer little growth due to slower natural gas development.

Within the Advanced Manufacturing Group a number of product lines still retain an 11 to 12 month backlog resulting in expansion plans for the second half of the year.

The Subsea division will return to expected profitability following a year of "re-certification". Its backlog has grown significantly with major call off from clients expected Q2 2013 onward. Our manufacturing and accessories activity will benefit from a new facility in Houma, Louisiana and the offshore growth.

UK and Europe

A doubling of rig activity in offshore UK combined with renewed and new supply contracts, Hunting is optimistic about year-over-year growth in this region. New facilities for fracking equipment and explosives bunkering are in place with steady inquiries resulting. Again, some product demand exceeds our ability to supply and efforts are underway to solve the issue.

Middle East and Asia Pacific

Both regions expect growth in rig count and both regions will be providing a larger complement of Hunting products. Fracking equipment and explosives distribution will be in place with manufacturing in China. Additional capacity has been placed in Singapore with new sales efforts in Australia, Indonesia, Pakistan and India.

The Board is mindful of the geopolitical and economic issues which can negatively impact our markets. Further, the ability to hire/train key personnel remains a difficult task inherent to all in the oil and gas industry. Clients change plans, projects are delayed and competition can become hungrier. Against a backdrop which is robust and where timings remain unclear, the Group is well positioned for further international expansion and business growth.

Operating Review

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 the highest 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 global 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.

Hunting Energy Services

Hunting Energy Services manufactures and distributes high quality precision engineered products and components that enable the extraction of oil and gas. Our customers include international energy companies, national oil companies and mid to large oil services groups. Hunting continues to position its technical expertise and operating footprint to meet the requirements of these customers who are developing increasingly complex energy resources and operating in ever increasingly challenging conditions and locations.

During 2012 Hunting Energy Services reported a 38% increase in revenue to £793.4m (2011 - £574.6m) and a 63% increase in underlying profit from continuing operations to £126.7m (2011 - £77.6m). Reported profit from continuing operations was £91.0m (2011 - £49.4m).

This growth has been driven by a full year contribution from the acquisitions made in 2011, sustained onshore drilling activity in North America, increased drilling in the Gulf of Mexico where rig counts have now returned to pre-2010 levels, and a general improvement in international rig counts particularly in the North Sea where rigs have recovered from the historic lows seen in 2011.

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

Well Construction

Hunting's Well Construction division includes businesses that are positioned in the initial drilling and construction phase of the wellbore. This division reported revenue of £279.3m (2011 - £194.5m), with underlying profit from continuing operations increasing in the year to £45.7m (2011 - £28.5m). Reported profit from continuing operations was £40.6m (2011 - £20.7m).

The division operates globally and comprises six business areas: Premium Connections, Drilling Tools, Oil Country Tubular Goods ("OCTG"), Trenchless, Advanced Manufacturing Group and Hunting Specialty.

Premium Connections

Hunting's Premium Connections business has delivered an excellent result in the year, with demand supported by shale related activity and increasing global offshore drilling. Natural gas programmes in North America slowed during the year impacting demand in the Marcellus, Haynesville and East Texas gas-prone shale basins. The switch to liquids-focused drilling by many operators helped offset some of the decline in momentum, as projects

continued within the Bakken, Eagle Ford and Williston shale areas. Further to this onshore activity, renewed drilling in the Gulf of Mexico also supported demand for Hunting's connections product lines. In the year, sales of Hunting's proprietary 'Annular Pressure Release Systems' increased compared to 2011, with sales to customers globally.

Drilling Tools

While the Group's Drilling Tools business has delivered its best result since 2008, the unit has experienced a volatile year, as the industry moved from gas to liquids-focused shale regions. As the effects of this shift across North America were realised, management responded by redeploying people and its mud motor fleet to the busier regions, which included the opening of a new facility in Williston, North Dakota, to service the demand from the Bakken oil shale play. Management have also initiated Lean Manufacturing protocols across a number of the unit's

facilities which will contribute to further efficiencies going forward. Hunting's Drilling Tools are now recognised as industry leaders with equipment regularly being utilised to drill lateral sections of a wellbore in excess of 10,000 feet during a single drilling cycle.

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

Hunting's Trenchless business delivered a good result in the year, as sales benefited from a wider distribution network driving growth in demand for the unit's drill stems. The business is now planning further international expansion with South America and Africa identified as regions offering good sales opportunities for its products which includes drill stems, premium tubing threads and mud motor drilling components.

Advanced Manufacturing Group

The businesses within the Advanced Manufacturing Group have reported excellent results during 2012, with Hunting Dearborn and Hunting Innova both delivering record results driven by strong demand for MWD/LWD tools.

Hunting Innova manufactures and assembles printed circuit boards which are utilised in MWD/LWD measuring tools. In the year, Hunting Innova continued to attract new customers which helped deliver record revenues and income. Plans to develop new markets for the unit's MWD/LWD tools include the establishing of a sales and manufacturing presence in Asia Pacific in the coming year.

Hunting Dearborn manufactures the precision engineered housings for MWD/LWD tools. A programme to expand the facility was completed in the first half of the year which will see improved lead times for its specialist product lines.

In the year, the Advanced Manufacturing Group made good progress with its 'sole supplier' concept, combining the capabilities of Hunting Innova, Hunting Dearborn and Hunting Doffing. The concept has been well received by a number of major international service groups.

Hunting Specialty

Hunting Specialty manufactures precision machined MWD parts used in directional drilling markets, including steering tools and gyro systems and delivered an excellent result in the year, with the business operating at near- capacity. Hunting Specialty has focused its expansion plans on increasing sales in Canada during the year. In the future the business will be driving further international growth through Hunting's regional manufacturing hubs.

Well Completion

Hunting's Well Completion division provides products to customers during the completion phase of an oil and gas well. The division reported revenue of £457.4m in 2012 (2011 - £327.2m) with underlying profit from operations totalling £74.1m (2011 - £41.2m). Reported profit from continuing operations was £44.1m (2011 - £21.4m).

The division operates globally and comprises four business areas: Hunting Titan, Premium Tubing, Manufacturing and Accessories and Thread Protection.

Hunting Titan

Hunting Titan manufactures perforating gun systems, shaped charges and associated instrumentation for the global hydraulic fracturing market and operates through three business lines, Perforating, Energetics and Instrumentation. During 2012, the unit's results were impacted by the switch from natural gas to liquids drilling in

North America and increased competition in the short perforating gun segment of its markets. While drilling in the oil focused regions offset some of this reduced demand, management adapted by shifting inventory to the busier shale regions. This strategy included the opening of two new distribution centres in the US, with a further two planned in Canada in the short term. During 2012, Lean Manufacturing initiatives were introduced at a number of the unit's facilities, which has improved production efficiencies. Development of Hunting Titan's international markets made excellent progress in the year, as sales personnel were added throughout the Group's international manufacturing hubs, and plans to produce key Hunting Titan products were progressed in Mexico, Canada and China. In 2012, Hunting Titan sold products to 52 countries around the world, with management confident of generating additional sales from these regions going forward.

Premium Tubing

Hunting's Premium Tubing unit, which machines and sells premium alloy pipe, reported a good result for 2012, despite increased volatility due to the shift from natural gas to liquids drilling. While the short term outlook for the unit is softer when compared to 2012, with increased levels of inventory being held across the industry, Hunting remains a key just-in-time supplier of premium pipe product lines supporting increased activity in the Gulf of Mexico and the liquids-focused shales.

Manufacturing and Accessories

Hunting's Manufacturing and Accessories unit has seen a record performance during 2012, with the majority of the unit's facilities operating at capacity driven by the increase in offshore drilling in the Gulf of Mexico and other international drilling markets, including an improving North Sea. In the final quarter of the year, our deepwater-focused facility in Houma, Louisiana was commissioned which will primarily service clients in the Gulf of Mexico and warehouse a number of Hunting Titan product lines.

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. The unit reported a good result in the year, driven by new product lines being introduced and qualified for use with a number of key customers.

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 2012 reported an underlying profit from operations of £6.9m (2011 - £7.9m). Reported profit from continuing operations was £6.3m (2011 - £7.3m).

The division operates globally and comprises two business areas: Hunting Subsea and Hunting Welltonic.

Hunting Subsea

Hunting Subsea manufactures and distributes precision engineered subsea valves, couplings and chemical injector systems. In 2012, the Subsea business continued to report mixed trading, as efforts to complete the recertification of the valves and chemical injector product lines for use in the Gulf of Mexico extended throughout the year. Looking forward, the Subsea business is poised for a year of good growth driven by increased offshore global rig counts.

Hunting Welltonic

Hunting Welltonic provides well intervention technologies, services and pressure control systems, to maintain and enhance the productivity of an oil and gas well. During 2012, the unit continued to grow its international revenue streams as North Sea drilling activity decreased in the early part of the year. The business has successfully entered markets in the US, where demand for Thru-Tubing and pressure control products has been identified across the various shale regions in the country. The business has established a presence at Hunting's Conroe, Texas facility in the US and is now exploring sales growth opportunities in the Canadian market.

Other Operating Divisions

Exploration and Production

Hunting's Exploration and Production division has interests in the southern US and offshore Gulf of Mexico, holding equity interests in over 50 production properties. On a Net Equivalent Barrel ("NEB") basis, production in the year was 131,000 NEB (2011 - 252,000 NEB), with proven reserves at year end being 1.1m NEB (2011 - 1.2m NEB). Due to disruptions in the region's gas pipeline system, primarily as a result of inspection and maintenance work, production volumes in the year were significantly reduced, leading to lower revenues and income. Additionally, the continuing depressed natural gas price in the US contributed to lower revenues. Based on these operating conditions, the business reported an underlying profit from operations of £0.5m (2011 - £1.7m). The reported loss from continuing operations was £6.7m (2011 - £0.7m profit).

During 2012, the business participated in 12 onshore wells and three offshore wells, with eight of the onshore wells and one offshore well finding reserves, contributing to the reserve base at year end. Costs of £2.0m associated with wells deemed to be uncommercial have been written off as dry hole costs.

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 £5.2m reflecting lower gas prices.

The Board of Hunting has reviewed the strategic rationale of the Exploration and Production division and from 2013 will not be making any new capital investment, beyond where the division has contractual commitments. The division will in future focus on producing out its remaining reserves, with a view to winding down the operation. As a result, Exploration and Production is now presented within other operating divisions.

Exploration and Production - Oil and Gas Reserves: (NEB 000's)

Gibson Shipbrokers

Gibson continues to be one of the foremost global shipbroking businesses and now employs 165 personnel in the

UK, Norway, Singapore and Hong Kong, an increase of 11% compared to 2011. During the year, despite continuing hostile trading conditions, good progress has been made across the business with fixing volumes increasing 18% year on year leading to an increase in revenue of 6% to £27.5m (2011 - £26.0m). Underlying profit from operations decreased 6% to £1.6m (2011 - £1.7m).

The business continues to be a leading broker in crude oil, fuel oil and clean petroleum products. The gas division

covers LNG and LPG broking. The specialised division focuses on smaller shipments of chemicals, biofuels, vegoil, palm oil and lubes. The dry bulk division focuses on Panamax and Cape liftings of iron ore, grain and coal.

The offshore division has also grown its subsea, seismic and renewable energy broking activities and the sale and purchase division remains active covering newbuilds, resales, scrap and valuations. A world class consultancy department works closely with all the divisions and undertakes commission work for existing and new clients.

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.

Financial Review

Overview

The 2012 annual report reflects another year of strong earnings growth and improving margins underpinned by a full year contribution from the acquisitions completed during 2011.

The Group's balance sheet continues to strengthen, net assets are now in excess of £800m, providing a sound financial base from which to support further expansion through organic and acquisitive growth. Resolution of a legacy tax dispute during the year is of particular note providing a release of provisions and an inflow of cash which together with strong free cash flow from the Group's global operations results in net debt improving to £163.8m from £218.4m at 31 December 2011. The Group's gearing has improved as a consequence and is now 20%.

Given the increased scale and geographic footprint of the Group and the ongoing programme of growth, the framework of internal and financial controls continues to be enhanced with appropriate investment in IT and central management resource.

Revenue

Group revenues increased 36%, or £217.0m, to £825.8m in 2012 (2011 - £608.8m). The year on year effect of the acquisitions made in the latter part of 2011 added £155.2m to revenue. The remaining £61.8m of revenue growth from existing businesses resulted from like-for-like growth of 11%.

Well Construction was the strongest performing division, with revenue up 44% to £279.3m (2011 - £194.5m). This division has benefited from a full year contribution from the Hunting Dearborn, Hunting Doffing and Hunting Specialty acquisitions which collectively added £49.1m of revenue growth. Like-for-like growth in the division was 20%. Despite volatile conditions caused by the change in focus for onshore drilling from gas to oil, the Drilling Tools business performed very well supported by the opening of new facilities. The Premium Connections business faced similar challenges onshore, but was supported by increasing global offshore activity. The other key strong performer in this division was Hunting Innova which forms part of the Advanced Manufacturing Group.

Well Completion revenue was up 40% to £457.4m (2011 - £327.2m) with the full year impact of the Hunting Titan acquisition adding £106.1m of revenue. The base businesses also performed well with like-for-like revenue up 9%. The Manufacturing and Accessories unit set a record performance driven by improving global offshore markets.

The Well Intervention division has recovered to some extent after recent declines post-Macondo. Revenue grew by 7% to £56.7m (2011 - £52.9m). Our Subsea business experienced modest year on year revenue growth in 2012 with an improved outlook for 2013 as the sector recovers and we benefit from the extension of our Stafford facility. The Hunting Welltonic businesses increased revenues by developing new markets in the US.

Revenue from other divisions fell by a net £1.8m. Exploration and Production revenues fell by £3.3m due to pricing and lower production volumes. This was partly offset by a £1.5m improvement from Gibson Shipbrokers on higher trading volumes.

EBITDA from Continuing Operations

Underlying EBITDA increased to £154.3m for 2012 and was £51.8m ahead of 2011 largely driven by the full year contribution from businesses acquired in 2011.

Profit from Continuing Operations

Underlying profit from continuing operations increased by £47.8m, from £81.0m in 2011 to £128.8m in 2012 with £35.2m resulting from the year on year effect of acquisitions made in 2011. Operating margins also increased from 13% to 16% as a result of the improved product mix following the 2011 acquisitions.

Well Construction's underlying profit from operations was up 60% to £45.7m (2011 - £28.5m) driven by the benefit of acquisitions and improved trading in Premium Connections, Drilling Tools and at Hunting Innova. The division's operating margin also improved from 15% in 2011 to 16%.

In Well Completion, underlying profit from operations increased by 80% to £74.1m (2011 - £41.2m) predominantly due to the full year contribution from Hunting Titan, which was acquired in September 2011, with the division's margin improving from 13% in 2011 to 16% in 2012 as a result of this.

In Well Intervention, whilst there was a modest increase in revenue, underlying profit fell by £1.0m following the previously reported issues associated with the tighter regulations in the Gulf of Mexico which adversely affected the results of our Subsea operation.

Amortisation and Exceptional Items

Intangible asset amortisation charges increased from £12.2m in 2011 to £28.1m in 2012 due to the full year effect of the acquisitions made in 2011.

The following exceptional charges arose in the year:

·; Unwinding of the fair value uplift applied to inventory taken on with the 2011 acquisitions has resulted in a £7.6m charge reflecting acquired stock sold in the period. The remaining uplift of £2.6m is expected to be charged in 2013.

·; The final charges under employee retention schemes put in place as part of the 2011 acquisitions were incurred in 2012 and totalled £1.1m.

·; The Exploration and Production division incurred charges of £7.2m as a result of £5.2m of impairments to its oil and gas capitalised expenditures largely due to future commodity price expectations and dry hole costs of £2.0m.

·; £1.1m has been credited to the income statement reflecting the release of amounts provided on the Hunting Doffing acquisition for profit related earn-outs.

Reported profit from operations in 2012 for the Group was £85.9m which was £44.9m better than 2011. This increase was similar to the underlying improvement with amortisation and exceptional items relatively consistent year on year.

Taxation

The Group's underlying tax rate for 2012 has remained at 28% (2011 - 28%), resulting in an underlying tax charge of £34.6m (2011 - £22.5m). The tax rate reflects the weighting of profits in lower tax jurisdictions, together with a reduced UK corporate tax rate. The underlying tax rate for 2013 is currently expected to reduce to 27% as a result of reductions in global corporate tax rates in the countries where we operate, however, the actual rate will be dependent on the regional mix of profits.

Amortisation and exceptional items in the year attracted tax credits of £16.7m to give a net tax charge on continuing operations in 2012 of £17.9m (2011 - £7.3m).

Net Finance Costs

Net reported finance costs in 2012 were £6.2m (2011 - £3.2m) increasing in line with higher average levels of debt following the 2011 acquisition programme.

Earnings per Share

Underlying diluted earnings per share for continuing operations increased 49% or 18.8p over 2011 to 57.5p in 2012. Reported diluted earnings per share for continuing operations at 40.0p was 19.7p above 2011.

The weighted average number of shares used in calculating the diluted earnings per share in 2012 was 149.5m compared to 140.1m in 2011, with the increase mainly due to the full year effect of the 13.2m share placing completed in August 2011.

Discontinued Operations

The reported profit for the year from discontinued operations was £69.2m (2011 - £50.7m) and was entirely exceptional. The main feature of the profit was a £56.9m gain relating to the resolution of a legacy tax dispute in Canada. Following the sale of Gibson Energy in 2008, Hunting established provisions for tax indemnities given to the purchaser in respect of two tax disputes with the Canadian tax authorities. The larger of the two disputes has been settled resulting in the gain which comprises:

·; The refund of tax payments from the tax authority totalling £17.2m received in December 2012.

·; The refund of related tax payments from provincial authorities totalling £8.7m, which was received on 28 February 2013.

·; The release of provisions totalling £30.7m (see note 6).

·; Movements on other Gibson related provisions totalling £0.3m.

Provisions totalling £7.7m have been retained relating to the smaller dispute. In addition a £1.4m gain was realised on the sale of Field Aviation Company Inc. in April 2012 (see note 15).

Cash Flow

The free cash flow generated in 2012 was £86.5m compared to £38.9m in 2011. The underlying improvement in

EBITDA from £102.5m to £154.3m was the key driver of this. Working capital movements absorbed £18.6m, with finance costs and taxation paid absorbing £5.2m and £15.1m respectively.

Replacement capital spend increased from £12.8m to £27.0m largely due to equipment replacement in the Drilling

Tools business, general machine replacement projects across the Group, together with £5.5m (2011 - £2.3m) spend within the Exploration and Production division.

Expansion capital expenditure in the year was £34.6m (2011 - £45.2m). Facility expansion projects across the Group absorbed £15.7m, including key projects at Stafford, Houma and Hunting Dearborn. Total capital expenditure for 2012 was £61.6m compared to £58.0m in 2011.

Payments of £2.2m were made in respect of final price adjustments and earn-out arrangements related to the acquisitions made in 2011. Further payments of £1.2m are expected in 2013 after which the potential liabilities will be extinguished.

As described above, a £17.2m repayment of tax was received from the Canadian tax authorities on the resolution of a legacy tax dispute relating to our former subsidiary Gibson Energy.

Total dividends paid during the year were £24.1m (2011 - £18.0m). Dividends paid to equity shareholders of £22.6m were 35% ahead of 2011 and reflects the Board's confidence in the strength of the Group.

Movements in foreign exchange rates, particularly the US$ against £-sterling, which moved from 1.55 at 31 December 2011 to 1.63 at 31 December 2012, benefited the cash flow by £9.4m (2011 - £4.0m outflow). This is mainly attributable to the retranslation of the Group's US$ borrowings at the year end.

Financial Capital Management

2012 was a year of integrating the acquisitions made in 2011 into the Group and in making our final strategic disposal, being that of the Field Aviation business. This combined with the decision to cease investing in the Exploration and Production business leaves the Group a more focused supplier of products and services to the energy sector.

The Group's financial position remains robust, with total credit facilities of £416.2m in place (2011 - £423.6m) of which £375.0m (2011 - £375.0m) is committed. The committed facility is a £375.0m multi-currency revolving credit facility from a syndicate of 10 banks which extends to August 2016.

Net debt has reduced significantly in the year with gearing falling to 20% at 31 December 2012 (2011 - 30%) with an adequate level of headroom remaining compared to the Group's committed credit facilities providing management with ongoing financial 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 current maximum of 3.5 times. Both key bank covenant metrics at year end were well covered.

The maximum net debt to EBITDA permitted will reduce to 3 times in June 2013 and will remain at that level until the facility expires in 2016.

Return on average capital employed is a KPI management use to assess business unit performance. The Group's return on average capital employed has fallen from the 15% reported in 2011 to 14% for 2012 due to the year on year impact of the 2011 acquisitions.

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 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.

Balance Sheet

Whilst foreign exchange rates used in the translation of results have remained very similar between 2011 and 2012, there has been a more significant change in the closing rates used for US dollar denominated assets and liabilities with 2011 at US$1.55 and 2012 at US$1.63 to £1.

Foreign exchange is the only reason for the movement in goodwill. Other intangible assets have also been impacted by foreign exchange but the principal movement is the amortisation charge of £28.1m reflected in the year (2011 - £12.2m).

Property, plant and equipment has increased by £17.3m with £63.4m of additions, offset by £25.5m of depreciation, disposals of £6.8m, impairment of £5.2m in Exploration and Production assets and foreign exchange of £8.6m.

Working capital has increased by £10.6m reflecting increased activity levels including a year on year increase in the number of Group operational facilities - now at 66. Inventories at the year end include £2.6m of fair value uplift expected to be charged to the income statement in 2013.

Provisions have reduced by £30.9m during the year following resolution of a Canadian tax dispute as described above. This settlement is also the major contributory factor to the increase in other net assets of £6.5m, which includes the £8.7m further tax repayments due from Canadian provincial authorities, received on 28 February 2013.

Overall, capital employed in the Group has remained steady at £977.6m (2011 - £950.4m).

Thanks to strong free cash generation, the overall cash inflow in 2012 of £54.6m has reduced net debt to £163.8m at 31 December 2012.

Net assets at 31 December 2012 were £813.8m which, after non-controlling interests of £18.3m, result in equity shareholders' funds of £795.5m. This is an increase of £80.3m over 31 December 2011, which reflects the retained result for the year of £128.9m, exchange losses of £27.3m, offset by £22.6m dividend payments together with other gains of £1.3m.

Critical Accounting Policies

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

The preparation of these accounts requires 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.

Amortisation and Exceptional Items

In addition to presenting reported IFRS GAAP results in its income statement, the Group discloses results on an underlying basis i.e. before amortisation and exceptional items. This is the basis on which the Directors assess the business in internal reporting. In the Directors' view this is necessary to obtain a clear understanding of the underlying performance of the business. More details on amortisation and exceptional items can be found in note 3.

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 cash generating 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.

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.

Provisions

Provisions amounting to £29.6m are held on balance sheet at the year end. These are based on Directors' estimates of the future cost of current obligations. The main element of provisions is in respect of onerous lease obligations on premises not occupied by Group entities where assessments have been made as to the period properties are likely to remain vacant and what market rents can be achieved upon occupancy.

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 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 2012 at £7.2m and

£25.7m respectively. These balances are derived from assumptions which include the future utilisation of trading losses and provisions at assumed tax rates and eligibility for offset within a tax jurisdiction.

Share-based Payments

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

Retirement Benefits

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 below.

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

Review of 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 2012. 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

Shale Drilling

The Group provides products to the oil and gas shale drilling industry. 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.

Acquisitions and Capital Investment

Acquisitions are an integral part of the continuing Group's recent strategy of expansion and development. While recent acquisitions made by the Group have integrated well, the Board is conscious of the potential disruption to both the Group and acquiree, 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 disruption 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.

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 maintains close relationships with key customers and seeks to maintain the highest level of service to preserve Hunting's reputation for quality.

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.

Other Risks Common to International Manufacturing Businesses

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.

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 regularly review the availability of the necessary skills within the Group and seeks to find suitable staff where they feel there is vulnerability.

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.

Effective Control Over Subsidiaries

Group subsidiaries operate within a control framework with a degree of autonomy vested in local management. The control framework has been enhanced with additional central staff in areas such as finance and taxation, the introduction of new IT systems and stronger co-ordination of IT activities. 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.

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 a strategy of financial hedging to mitigate such risk, subject to the availability of suitable products at the right cost.

Dennis Proctor

Chief Executive

Peter Rose

Finance Director

7 March 2013

Statement of Directors' Responsibilities

The Directors confirm that the 2012 Annual Report and Accounts, which will be issued on 14 March 2013, 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

7 March 2013

Consolidated Income Statement

For the Year ended 31 December 2012

Consolidated Statement of Comprehensive Income

For the Year ended 31 December 2012

Consolidated Balance Sheet

At 31 December 2012

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

For the Year ended 31 December 2012

Notes

1. Basis of Preparation

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 at fair value through profit or loss.

As permitted under IFRS 3, the balance sheet at 31 December 2011 has been restated to recognise additional goodwill of £1.4m and a reduction in inventories of £1.4m on the acquisition of Hunting Titan on 16 September 2011. The balance sheet at 1 January 2011 has not been presented, as there was no impact on the previous year's numbers from this adjustment.

The 2011 Consolidated Balance Sheet deferred tax assets and deferred tax liabilities have been restated to offset balances where there is a legally enforceable right to offset. The balance sheet at 1 January 2011 has not been presented as the figures previously reported for deferred tax assets and deferred tax liabilities do not require adjustment.

In addition, the current tax assets and current tax liabilities have been restated in the 2011 Consolidated Balance Sheet to reflect the underlying position within each tax jurisdiction. The balance sheet at 1 January 2011 has not been presented, as the figures previously reported for the current tax assets and current tax liabilities do not require adjustment.

Where a change in the presentational format between the prior year and current year financial statements has been made during the period, comparative figures have been restated accordingly.

The principal accounting policies have been consistently applied to all the years presented.

The financial information set out below does not constitute the Company's statutory accounts for the years ended 31 December 2012 or 31 December 2011, but is derived from those accounts. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 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

There are no new IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning 1 January 2012 that have a material impact on the Group's financial performance or position.

The Group has early adopted the amendment to IAS 1 - Presentation of items of Other Comprehensive Income, issued June 2011. The presentation of items in the consolidated statement of comprehensive income has been altered to show items which will or might potentially be reclassified from other comprehensive income into profit or loss separately from those for which reclassification is not permitted.

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 - Offsetting Financial Assets and Financial Liabilities

·; Amendment to IAS 32 - Offsetting Financial Assets and Financial Liabilities

·; Amendments to IAS 19 Employee Benefits

·; Improvements to IFRSs 2009-2011 (May 2012)*

* Not yet endorsed by the European Union.

New requirements contained within International Reporting Standards, referred to above, are not expected to significantly impact the Group's results or financial position.

2. Segmental Reporting

The Group reports on seven operating segments, two 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 shipping sector.

The discontinued operations comprise Field Aviation, which was sold on 27 April 2012 and Gibson Energy, which was sold in 2008. Gibson Energy continues to generate accounting entries due to sale related transactions and is 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. The Board of Hunting has reviewed the strategic rationale of the Exploration and Production division and from 2013 will not be making any new capital investment, beyond where the division has contractual commitments. The division will in future focus on producing out its remaining reserves, with a view to winding down the operation. As a result, Exploration and Production is now presented within other operating divisions.

Gibson Shipbrokers is a global energy shipping broker headquartered in London. Crude oil, fuel oil and bio fuels are 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").

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 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