Hunting Regulatory News (HTG)

Hunting PLC

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

Half Year Results

Hunting PLC (LSE:HTG), the international energy services group, today announces its interim results for the six months to 30 June 2012.

Financial Highlights - from continuing operations

Corporate Highlights

·; Advanced Manufacturing Group established combining product and manufacturing expertise to deliver a single source MWD/LWD product suite

·; Capital expenditure in the period of £37.2m (H1 2011: £21.8m)

·; Investment at Wuxi, China to commence manufacturing of Hunting Titan's products

·; Completion of expansion and consolidation of Scottish facilities in Q1 2012

·; Increased manufacturing capacity at HES Stafford in the US

·; New 98,000 sq ft manufacturing facility in Houma, Louisiana to service the Gulf of Mexico scheduled to complete Q3 2012

·; Disposal of Field Aviation Inc. in April 2012

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

"Hunting has reported excellent results today, with our core businesses benefiting from strong momentum in shale related drilling activity and in the international offshore arena, as well as the recovering Gulf of Mexico. The 2011 acquisitions are performing well and starting to develop cross selling opportunities. Across the Company, many of our facilities have orders extending into the final quarter of 2012. Therefore, subject to sustained drilling levels and adequate commodity prices, Hunting is well positioned to deliver a further year of strong growth."

For further information please contact:

MWD/LWD - measurement-while-drilling/logging-while-drilling

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.

Half Year Management Report

Hunting PLC ("the Group"), the international energy services company, announces its results for the six months ended 30 June 2012.

Introduction

The first six months of 2012 have seen good trading across the majority of business units within the enlarged Group, with Hunting's core activities reporting a strong result and a satisfactory performance from the new businesses acquired in 2011.

Trading has been supported by a number of factors, including sustained drilling levels in North America, a supportive oil price, with WTI averaging US$99 for the first half of the year; and renewed drilling activity in the Gulf of Mexico, with a strong year on year increase in the number of active rigs operating in the region. These factors combined have led to a healthy demand for Hunting's broad product offering.

Investment in the Group's manufacturing facilities has continued throughout the year, with the expansion and consolidation of Hunting's Scottish facilities completing in Q1 2012 and manufacturing now focused at the Badentoy and Fordoun facilities. In Houma, Louisiana, our new facility to service the Gulf of Mexico and the expansion project to increase capacity at Stafford, Texas, are both nearing completion. In June 2012, the Board approved capital expenditure for the Group's Wuxi, China facility, which will enable a number of Hunting Titan's product lines to be manufactured in the region. The project is scheduled to complete in Q4 2012.

In April 2012, the Group completed the sale of Field Aviation, resulting in a gain on disposal of £1.5m. Further details can be found in note 10.

Following the sale of Field Aviation, the Group is now a more focused oil and gas products and services company, with a manufacturing, sales and distribution footprint of 2.7m square feet across 62 locations in 9 countries.

Financial Summary

The summary results for the Group from continuing operations are presented below:

Revenue

Revenue from continuing operations for the six months ended 30 June 2012 increased to £406.9m(2011 - £251.3m) due to steady activity levels and contribution from the four acquisitions completed in H2 2011.

EBITDA and Profit before Tax

EBITDA before amortisation and exceptional items was £78.4m, reflecting a 121% increase over the comparative period (2011 - £35.5m). EBITDA margin improved to 19% from 14% in 2011. EBITDA includes a £0.4m charge in respect of acquisition costs incurred in H1 2012.

Profit before tax, amortisation and exceptional items from continuing operations was £62.0m (2011 - £25.8m) and reported profit before tax from continuing operations was £37.6m (2011 - £22.1m). Net finance expense was £3.8m (2011 - £0.4m).

Taxation

The tax charge on continuing operations and before amortisation and exceptional items was £17.9m (2011 - £7.8m) and reflects an effective tax rate of 29% (30 June 2011 - 30%; 31 December 2011 - 28%). The rate has increased by 1% from the previous year, reflecting the underlying changes in the profit mix across our countries of operation. The exceptional charge in the period attracts a tax credit of £9.4m (2011 - £1.0m), to give a net tax charge on continuing operations of £8.5m (2011 - £6.8m).

Amortisation and Exceptional Items

The charge for intangible asset amortisation increased to £14.4m from £2.8m in 2011 as a result of the 2011 acquisitions.

The following exceptional items arose in the first half of 2012:

·; Fair value uplift to inventories charge - £6.1m

·; Retention bonuses for key employees of acquired businesses - £1.2m

·; Impairment of oil and gas reserves - £2.7m

The post tax gain on sale of Field Aviation was £1.5m, which has been recognised as a discontinued operation exceptional gain.

Exchange Rates

Average exchange rates used to translate US dollar and Canadian dollar denominated results into UK sterling were US$1.58 (2011 - US$1.62) and Can$1.59 (2011 -Can$1.58).

Capital Expenditure

Capital expenditure increased to £37.2mduring the period (2011 - £21.8m) of which £12.2m (2011 -£4.7m) was replacement expenditure and £25.0m (2011 -£17.1m) was new business expenditure. The main components within new business expenditure include £3.1m on new drilling tools and £10.9m on facility expansion programmes across the Group. Replacement expenditure includes £2.8m (2011 - £1.4m) capital expenditure by our Exploration and Production unit.

Balance Sheet

Net assets report a small increase from the 2011 year end at £742.6m (31 December 2011 -£732.0m). The net movement comprises the £30.4m retained profit for the period, offset by £16.1m of dividends declared, together with foreign exchange losses and other items of £3.7m.

Cash Flow

Net debt at 30 June 2012 was £191.4m (30 June 2011 - £297.1m net cash) compared to net debt at 31 December 2011 of £218.4m, reflecting a net cash inflow of £27.0m in the first half of 2012. The improved operating EBITDA of £78.4m (2011 - £35.5m), benefiting from the 2011 acquisition programme, is a key component of this net inflow. Working capital movements were broadly neutral.

The principal cash outflows in the period included net finance charges of £3.3m (2011 - £0.3m), capital expenditure of £37.2m (2011 - £21.8m) and taxation payments of £13.3m (2011 - £6.4m).

Proceeds from the sale of Field Aviation were £3.1m, offset by £2.2m of deferred consideration payments arising on the 2011 acquisitions.

Dividend

The Board is paying an interim dividend of 4.5p per share, which represents a 13% increase over the 4.0p per share interim dividend paid in 2011. Dividend cover from continuing operations after amortisation and exceptional items is 4.2 times (30 June 2011 - 2.7 times). This interim dividend will be paid on 16 November 2012 to shareholders on the register at the close of business on 26 October 2012, with an ex-dividend date of 24 October 2012.

Operational Review

Hunting's segmental results are presented below:

Profit from continuing operations*

\* The results for H1 2011 have been restated to show profit from operations before amortisation and exceptional items.

Well Construction

The Drilling Tools platform has seen strong trading in H1 2012, driven by a robust rig count in North America within the various shale areas. Hunting remains a key supplier of mud motors in the region, strengthened in the period through the addition of three new strategically located facilities in Casper, Conroe and Latrobe, coupled with the purchase of additional motors to satisfy customer demand.

Hunting's Premium Connections business has also seen a strong first half performance, with demand for products for the oil-focused EagleFord and Bakken shale plays driving activity levels, together with increased momentum in the Gulf of Mexico and the buoyant global offshore markets.

Hunting's newly branded Advanced Manufacturing Group, which combines the Group's precision engineering and manufacturing capabilities continues to develop its single source measurement-while-drilling/logging-while-drilling ("MWD/LWD") offering, with increasing interest from customers. At the half year stage, Hunting Innova reported increased sales and a strengthened order book for both its manufactured and electronic products and, as part of a strategy to increase capacity, an expansion at the Hunting Dearborn facility was also completed in the period.

Hunting Specialty delivered an excellent performance in H1 2012, with strong sales of non-magnetic accessories and sand screens.

Well Completion

Hunting Titan has performed well in the reporting period, with prevailing commodity prices driving activity in North America. While an increase in competition between suppliers has been noted, the transition from dry-gas shale plays to oil-focused targets continues to drive demand for Titan's broad suite of products. Expansion initiatives to implement pre-acquisition strategic goals, in particular international growth, are being pursued, with sales personnel added in Europe and the Middle East to increase the sales mix of Titan's product lines outside of North America. In addition, capital expenditure has been approved, which will allow the manufacture of Titan's products at the Group's Wuxi, China, facility for sale in that region.

During the period, the integration of Titan into the Group continued, with the production of perforating guns commencing at two of the Group's North American facilities.

Hunting's US Manufacturing unit has seen a marked increase in activity levels in H1 2012. Many of the unit's facilities have increased the number of operating shifts in the year to date and are booked into the latter part of the year.

The Group continues to implement lean manufacturing and best practice initiatives across its facilities, resulting in synergy and production efficiency benefits.

Well Intervention

Hunting's Subsea products were adversely impacted by delays in the recertification of deep water equipment for drilling in the Gulf of Mexico. The business is expected to improve towards the final part of the year, as the unit's expansion programme concludes, coupled with improvements in the international offshore arena and the ongoing recovery in the Gulf of Mexico.

The business continues to see good demand for its pressure control products, with initiatives underway to broaden the geographic reach of these products globally.

Hunting Welltonic experienced poor demand for its ThruTubing product lines in the first six months of the year, however measures have been taken to develop a sales force in North America, where good demand from shale related drilling targets has been identified.

Exploration and Production

During H1 2012, Hunting's Exploration and Production unit participated in four successful exploration wells out of five wells drilled. Commodity prices, particularly natural gas, and production volumes have been lower than expected, resulting in the business delivering results for the first half of the year below the comparable period in 2011.

On a Net Equivalent Barrel ("NEB") basis, production in H1 2012 was 69,000 NEB (2011 - 147,000 NEB), with proven reserves at 30 June 2012 of 1.1m NEB (31 December 2011 - 1.2m NEB).

Following a valuation of oil and gas reserves at 30 June 2012, the business has taken an impairment charge of £2.7m, reflecting lower forward gas commodity prices compared to those at 31 December 2011.

Gibson Shipbrokers

Gibson Shipbrokers continues to expand, with transactions approximately 15% up on last year, with most trading areas returning notable year on year gains - a significant achievement, given the strong competitive market conditions. The business continues to increase its employee headcount in targeted areas particularly within the Asia-Pacific region, with the business now employing 154 (31 December 2011 - 148).

Principal Risks and Uncertainties Facing the Business

The Group has an established risk management, monitoring and review process. The process requires all businesses to identify, evaluate and monitor risks and take steps to reduce, eliminate or manage the risk.

There are a number of potential risks and uncertainties, which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results.

Some of the risks that Hunting is exposed to, which could have a material adverse impact on the Group, arise from the specific activities undertaken by the Group, whereas other risks are common to many international manufacturing companies.

Risks specific to the nature of the Group's businesses are product quality and reliability; integration of acquisitions; capital investment programmes; curtailment of shale drilling; commodity prices; and relationships with key customers.

Other risks facing the business, which are common to other international manufacturing businesses, are fluctuations in currency exchange rates; effective control over subsidiaries; loss of key executives; economics and geopolitics; health, safety and environmental laws and regulations.

The Directors do not consider that the principal risks and uncertainties have changed significantly since the publication of the Annual Report for the year ended 31 December 2011, in which these risks and uncertainties are discussed in detail on pages 27 and 28. As such these risks continue to apply to the Group for the remaining six months of the financial year.

Outlook

In North America, many of the Group's manufacturing units are reporting robust order books, extending into the final quarter of the year. As the US energy industry continues to shift towards oil-focused unconventional drilling targets and as offshore activity levels build, the Group remains well positioned to benefit from this momentum.

In Europe and the Middle East, the medium term outlook is improving as UK government legislation and new exploration licensing rounds add momentum to the current rig count lows seen in the North Sea, while new opportunities in the Middle East continue to develop as exploration drilling increases in countries such as Iraq.

In Asia-Pacific, the Group's presence in Singapore and China position the Company for growth as hydrocarbon exploration and development activity builds, fuelled by regional economic growth.

Industry commentators are forecasting a 10% year on year increase in global exploration and production spending in 2012, which is expected to benefit the Group. This increase, coupled with a stable global outlook for hydrocarbon demand, positions Hunting to continue to deliver good growth across its major business units.

Given the strong growth seen in H1 and subject to sustained drilling activity levels in North America, a supportive oil price, and no further deterioration in the global economic environment, the Company is comfortable with managements' expectations for the full year.

Forward-looking Statements

Certain statements in this half year report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. The Group undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

Richard Hunting, CBE Dennis Proctor

Chairman Chief Executive

30 August 2012

Statement of Directors' Responsibilities

The Directors confirm that, to the best of their knowledge, these condensed, consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union and that the half year management report includes a fair review of the information required by the Disclosure and Transparency Rules 4.2.7 and 4.2.8, namely:

·; an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of consolidated financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

·; material related party transactions in the first six months of the financial year and any material changes in the related party transactions described in the 2011 Annual Report and Accounts.

The Directors of the Company are listed on page 35 in Hunting PLC's 2011 Annual Report and Accounts and on the Company's website: www.huntingplc.com.

By order of the Board

Peter Rose

Finance Director

30 August 2012

Independent Review Report to Hunting PLC

Introduction

We have been engaged by the Company to review the condensed set of consolidated financial statements in the half year report for the six months ended 30 June 2012, which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated statement of cash flows and related notes. We have read the other information contained in the half year report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of consolidated financial statements.

Directors' Responsibilities

The half year report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half year report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of consolidated financial statements included in this half year report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of consolidated financial statements in the half year report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated financial statements in the half year report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

PricewaterhouseCoopers LLP

Chartered Accountants

London

30 August 2012

Notes:

(a) The maintenance and integrity of the Hunting PLC website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the half year report since they were initially presented on the website.

(b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.

Consolidated Income Statement

(Unaudited)

Consolidated Income Statement continued

(Audited)

Consolidated Statement of Comprehensive Income

(Unaudited)

Consolidated Balance Sheet

(Unaudited)

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.

Consolidated Statement of Changes in Equity

(Unaudited)

Consolidated Statement of Changes in Equity continued

(Unaudited)

Consolidated Statement of Changes in Equity continued

(Audited)

Consolidated Statement of Cash Flows

(Unaudited)

Notes

1. Basis of Accounting

The financial information contained in this half year report complies with IAS 34 Interim Financial Reporting, as adopted by the European Union, and with the Disclosure and Transparency Rules of the Financial Services Authority. The condensed set of consolidated financial statements should be read in conjunction with the 2011 Annual Report and Accounts, which have been prepared in accordance with IFRSs and IFRICs, as adopted by the European Union. The accounting policies adopted in this condensed set of consolidated financial statements are consistent with those used to prepare the 2011 Annual Report and Accounts.

This half year report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for the year ended 31 December 2011 has been delivered to the Registrar of Companies. The independent auditors' report on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. This condensed set of consolidated interim financial statements has been reviewed, not audited.

The Group's presentation of intangible asset amortisation was changed for the year ended 31 December 2011, such that the charge was separately presented with exceptional items in the income statement. The results for the six months ended 30 June 2011 have been restated to reflect this change.

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.

Going Concern Basis

The Group has access to considerable financial resources including a £375m committed bank facility. The main financial covenants attached to this facility are EBITDA should not be less than 4 times net finance charges and net debt should be no more than 3.5 times EBITDA. EBITDA, for covenant test purposes, is based on the previous rolling twelve month period, measured twice yearly at 30 June and 31 December. The Group has a broad range of products and services and a diverse, global customer and supplier base and meets its day-to-day working capital requirements through its cash and debt facilities.

The Group has limited exposure to the Euro zone or other regions that are perceived as high risk or regions exposed to the direct impact of austerity measures. The Group also has limited exposure to credit risk, as it has strong, well-developed relationships with its material customers and maintains insurance cover over 90% of its trade receivables.

The Group's results are exposed to currency risk as a major portion of earnings is generated in several currencies, in particular the US dollar, prior to translation into sterling at the period's average exchange rate. Movements in these rates do affect the Group's results. In response to this, forecast results are monitored closely in respect of currency exposure and certain derivatives are purchased to mitigate this risk.

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group is well placed to manage its business successfully in the current economic climate. The Directors, having made appropriate enquiries, are satisfied that the Group has adequate resources to meet the Group's operational requirements for the foreseeable future. The Group, therefore, continues to adopt the going concern basis in preparing these condensed, consolidated interim financial statements.

2. Segmental Reporting

The Group reports on seven operating segments during the current period, 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. There has been no change in the basis of measurement of segment profit or loss since the year ended 31 December 2011.

Results from operations