REG - Hunting PLC - 2015 Full Year Results <Origin Href="QuoteRef">HTG.L</Origin> - Part 2
03/03/2016 07:10
- Part 2: For the preceding part double click ID:nRSC8677Qa
$m $m $m $m $m $m
Revenue 4 810.5 - 810.5 1,386.5 - 1,386.5
Cost of sales (615.3) (37.9) (653.2) (942.6) (11.3) (953.9)
Gross profit 195.2 (37.9) 157.3 443.9 (11.3) 432.6
Other operating income 3.8 - 3.8 9.5 - 9.5
Operating expenses (182.6) (260.7) (443.3) (235.6) (92.6) (328.2)
Profit (loss) from continuing operations 3 16.4 (298.6) (282.2) 217.8 (103.9) 113.9
Finance income 3.3 - 3.3 7.5 - 7.5
Finance expense (10.1) - (10.1) (12.4) - (12.4)
Share of associates' post-tax losses (0.2) - (0.2) (0.5) - (0.5)
Profit (loss) before tax from continuing operations 9.4 (298.6) (289.2) 212.4 (103.9) 108.5
Taxation 6 (5.4) 63.2 57.8 (57.2) 20.5 (36.7)
Profit (loss) for the year:
From continuing operations 4.0 (235.4) (231.4) 155.2 (83.4) 71.8
From discontinued operations 7 - 4.2 4.2 0.3 1.1 1.4
Profit (loss) for the year 4.0 (231.2) (227.2) 155.5 (82.3) 73.2
Profit (loss) attributable to:
Owners of the parent 4.6 (231.2) (226.6) 151.5 (82.3) 69.2
Non-controlling interests (0.6) - (0.6) 4.0 - 4.0
4.0 (231.2) (227.2) 155.5 (82.3) 73.2
Earnings (loss) per share cents cents cents cents
Basic - from continuing operations 8 3.1 (156.1) 102.6 45.9
- from discontinued operations 8 - 2.8 0.2 1.0
Group total 3.1 (153.3) 102.8 46.9
Diluted - from continuing operations 8 3.1 (156.1) 100.0 44.8
- from discontinued operations 8 - 2.8 0.2 1.0
Group total 3.1 (153.3) 100.2 45.8
i. Relates to amortisation of intangible assets that arise on the acquisition of businesses (referred to hereafter as
amortisation of acquired intangible assets).
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2015
2015 2014
$m $m
Comprehensive income
(Loss) profit for the year (227.2) 73.2
Components of other comprehensive income after tax
Items that have been reclassified to profit or loss:
Fair value gains and losses:
- gains transferred to income statement on disposal of cash flow hedges - (1.3)
- gain transferred to income statement on redemption of available for sale investment - (0.2)
Release of foreign exchange losses 0.6 3.8
0.6 2.3
Items that may be reclassified subsequently to profit or loss:
Exchange adjustments (17.1) (17.9)
Fair value gains and losses:
Losses originating on cash flow hedges arising during the year - (0.1)
(17.1) (18.0)
Items that will not be reclassified to profit or loss:
Remeasurement of defined benefit pension schemes 9.2 1.5
Other comprehensive expense after tax (7.3) (14.2)
Total comprehensive (expense) income for the year (234.5) 59.0
Total comprehensive (expense) income attributable to:
Owners of the parent (231.9) 57.2
Non-controlling interests (2.6) 1.8
(234.5) 59.0
Total comprehensive (expense) income attributable to owners of the parent arises from:
Continuing operations (236.5) 56.0
Discontinued operations 4.6 1.2
(231.9) 57.2
Consolidated Balance Sheet
As at 31 December 2015
2015 2014
Notes $m $m
ASSETS
Non-current assets
Property, plant and equipment 9 460.8 473.0
Goodwill 10 230.6 440.6
Other intangible assets 11 180.4 224.8
Investments in associates 3.7 4.4
Investments 9.1 8.9
Retirement benefit assets 41.4 30.9
Trade and other receivables 4.0 3.3
Deferred tax assets 2.0 1.2
932.0 1,187.1
Current assets
Inventories 331.2 381.8
Trade and other receivables 140.2 285.6
Current tax assets 33.5 1.6
Investments 4.6 3.8
Cash and cash equivalents 54.4 88.5
Assets classified as held for sale - 20.3
563.9 781.6
LIABILITIES
Current liabilities
Trade and other payables 104.2 197.7
Current tax liabilities 14.6 20.9
Borrowings 52.3 65.4
Provisions 5.4 10.6
Liabilities classified as held for sale - 15.5
176.5 310.1
Net current assets 387.4 471.5
Non-current liabilities
Borrowings 117.2 157.9
Deferred tax liabilities 10.2 37.1
Provisions 12.6 14.1
Trade and other payables 11.3 11.2
151.3 220.3
Net assets 1,168.1 1,438.3
Equity attributable to owners of the parent
Share capital 61.7 61.6
Share premium 153.0 151.9
Other components of equity 15.7 30.7
Retained earnings 911.5 1,163.9
1,141.9 1,408.1
Non-controlling interests 26.2 30.2
Total equity 1,168.1 1,438.3
Consolidated Statement of Changes in Equity
Year ended 31 December 2015
Share capital Share premium Other components of equity Retained earnings Total Non-controlling interests Total equity
$m $m $m $m $m $m $m
At 1 January 61.6 151.9 30.7 1,163.9 1,408.1 30.2 1,438.3
Loss for the year - - - (226.6) (226.6) (0.6) (227.2)
Other comprehensive (expense) income - - (14.5) 9.2 (5.3) (2.0) (7.3)
Total comprehensive expense - - (14.5) (217.4) (231.9) (2.6) (234.5)
Dividends - - - (39.8) (39.8) (2.0) (41.8)
Shares issued
- share option schemes and awards 0.1 1.1 - - 1.2 - 1.2
Treasury shares
- Purchase of Treasury shares - - - (1.4) (1.4) - (1.4)
Share options and awards
- value of employee services - - 6.2 - 6.2 - 6.2
- discharge - - (6.7) 6.5 (0.2) - (0.2)
- taxation - - - (0.3) (0.3) - (0.3)
Investment by non-controlling interest - - - - - 0.6 0.6
Total transactions with owners 0.1 1.1 (0.5) (35.0) (34.3) (1.4) (35.7)
At 31 December 61.7 153.0 15.7 911.5 1,141.9 26.2 1,168.1
Year ended 31 December 2014
Share capital Share premium Other components of equity Retained earnings Total Non-controlling interests Total equity
$m $m $m $m $m $m $m
At 1 January 61.3 150.6 41.6 1,130.4 1,383.9 30.9 1,414.8
Profit for the year - - - 69.2 69.2 4.0 73.2
Other comprehensive (expense) income - - (13.5) 1.5 (12.0) (2.2) (14.2)
Total comprehensive (expense) income - - (13.5) 70.7 57.2 1.8 59.0
Dividends - - - (44.1) (44.1) (2.5) (46.6)
Shares issued
- share option schemes and awards 0.3 1.3 - - 1.6 - 1.6
Treasury shares
- purchase of Treasury shares - - - (7.5) (7.5) - (7.5)
Share options and awards
- value of employee services - - 7.2 - 7.2 - 7.2
- discharge - - (4.6) 11.3 6.7 - 6.7
- taxation - - - 3.1 3.1 - 3.1
Total transactions with owners 0.3 1.3 2.6 (37.2) (33.0) (2.5) (35.5)
At 31 December 61.6 151.9 30.7 1,163.9 1,408.1 30.2 1,438.3
Consolidated Statement of Cash Flows
For the year ended 31 December 2015
2015 2014
Notes $m $m
Operating activities
(Loss) profit from operations (282.2) 113.9
Acquisition amortisation and exceptional items 5 298.6 103.9
Depreciation and non-acquisition amortisation 45.5 52.0
Underlying EBITDA 61.9 269.8
Loss on disposal of property, plant and equipment 1.8 6.0
Decrease (increase) in inventories 39.4 (3.1)
Decrease (increase) in receivables 143.5 (34.7)
(Decrease) increase in payables (86.9) 41.6
Decrease in provisions (6.7) (3.4)
Restructuring costs 5 (5.9) -
Taxation paid (10.5) (26.6)
Proceeds from disposal of property, plant and equipment held for rental 2.9 7.0
Purchase of property, plant and equipment held for rental (9.0) (28.9)
Other non-cash flow items 10.8 2.5
Discontinued operations 1.0 (0.9)
Net cash inflow from operating activities 142.3 229.3
Investing activities
Interest received 1.1 2.0
Dividends received from associates 0.1 4.5
Purchase of subsidiaries - (3.0)
Proceeds from disposal of associates - 0.2
Net movement on loans to and from associates (0.2) 0.6
Proceeds from disposal of property, plant and equipment 1.3 0.6
Purchase of property, plant and equipment (72.1) (94.6)
Purchase of intangible assets (8.0) (5.0)
Increase in bank deposit investments (1.1) (2.0)
Net proceeds from disposal of subsidiaries 0.7 3.9
Net cash in subsidiaries sold 14 (3.9) -
Indemnity receipts in respect of disposed subsidiaries 0.4 0.2
Net cash outflow from investing activities (81.7) (92.6)
Financing activities
Interest and bank fees paid (8.5) (7.6)
Equity dividends paid (39.8) (44.1)
Non-controlling interest dividend paid (2.0) (2.5)
Investment by non-controlling interest 0.6 -
Share capital issued 1.2 1.6
Purchase of Treasury shares (1.4) (7.5)
Proceeds from new borrowings 7.6 70.2
Repayment of borrowings (36.3) (155.9)
Net cash outflow from financing activities (78.6) (145.8)
Net cash outflow in cash and cash equivalents (18.0) (9.1)
Cash and cash equivalents at the beginning of the year 38.0 52.4
Effect of foreign exchange rates (1.9) (1.5)
Reclassified from (to) held for sale 3.8 (3.8)
Cash and cash equivalents at the end of the year 21.9 38.0
Cash and cash equivalents at the end of the year comprise:
Cash at bank and in hand 54.4 88.5
Bank overdrafts included in borrowings (32.5) (50.5)
21.9 38.0
Notes to the Consolidated Financial Statements
1. Basis of Preparation
The financial statements consolidate those of Hunting PLC (the "Company") and its subsidiaries (together referred to as the
"Group") and include the Group's interests in associates.
The financial statements have been prepared in accordance with the Companies Act 2006 and those International Financial
Reporting Standards ("IFRS") and IFRS Interpretations Committee ("IFRS IC") Interpretations as adopted by the European
Union. 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, the defined benefit pension asset and those financial
assets and financial liabilities held at fair value through profit or loss. The Board's consideration of the applicability
of the going concern basis is detailed further on pages 48 and 49.
The principal accounting policies applied in the preparation of these financial statements are set out in note 37 of the
2015 Annual Report and Accounts. These policies have been consistently applied to all the years presented.
Adoption of New Standards, Amendments and Interpretations
The following standards, amendments and interpretations have been adopted and are effective for the Group's accounting
period beginning on or after 1 January 2015:
· Annual Improvements to IFRSs 2011-2013 Cycle
Although the adoption of these amendments represents a change in accounting policy, comparative figures for 2014 have not
been restated for these, as the changes do not impact the financial performance or position of the Group.
The following standards, amendments and interpretations are effective subsequent to the year end and are being assessed to
determine whether there is a significant impact on the Group's results or financial position:
· IFRS 9 Financial Instruments*
· IFRS 15 Revenue from Contracts with Customers*
· IFRS 16 Leases*
· Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception*
· Amendments to IAS 1: Disclosure Initiative
· Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture*
· Amendments to IAS 27: Equity Method in Separate Financial Statements
· Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation
· Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations
· Amendments to IAS 19: Defined Benefit Plans: Employee Contributions
· Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses*
· Amendments to IAS 7: Disclosure Initiative*
· Annual Improvements to IFRSs 2010-2012 Cycle
· Annual Improvements to IFRSs 2012-2014 Cycle
* Not yet endorsed by the European Union.
2. Critical Accounting Estimates and Judgements
The preparation of financial statements requires management to make judgements and assumptions about the future, resulting
in the use of accounting estimates. These will, by definition, seldom equal the related actual results and adjustments will
consequently be necessary. Estimates are continually evaluated, based on experience, consultation with experts and
reasonable expectations of future events. Accounting estimates are applied in determining the carrying amounts of the
following significant assets and liabilities:
Asset/liability Nature of estimates
Goodwill Carrying value at31 December 2015$230.6m (2014 - $440.6m) - The Group comprises a number of cash generating units ("CGUs") with each one having independent business profiles and cash flows. When goodwill is initially recognised upon a business combination, it is allocated to the CGUs that are expected to
benefit from the combination.- The goodwill of each CGU is subsequently reviewed for impairment at least annually by comparing its carrying value with the recoverable amount based on the estimated future gross cash flows that are expected to be
generated by the CGU.- The estimated future gross cash flows are based on the Directors' view of their future trading prospects and are discounted at a rate that is determined for each CGU in isolation by consideration of their business risk profiles.
- Any shortfall in the recoverable amount is charged to the income statement immediately.- During the year, the estimated future gross cash flows expected from a number of CGUs were revised downwards to reflect the severity of the downturn in the
oil and gas sector and its impact on business activity levels. Consequently, goodwill was impaired by $208.2m during the year to reflect these revised estimates.- Further details of goodwill are disclosed in note 10.
Property, plant andequipment and otherintangible assets Combined carrying valueat 31 December 2015$641.2m (2014 - $697.8m) - The Group's property, plant and equipment and intangible assets (except goodwill) are depreciated/amortised at rates that are intended to spread the irrecoverable cost of the assets over their useful lives. The Directors must therefore estimate the
useful lives of the assets, their residual values and the pattern of consumption of their carrying values. Each asset is also regularly reviewed to ensure it remains consistent with the Directors' assumptions and, when required, adjustments are made
prospectively.- In addition, the carrying value of each asset must not be less than the minimum future benefits that are expected to be generated by that asset. As part of the impairment exercise referred to above, a number of property, plant and
equipment assets in the Drilling Tools business have been impaired during the year to reflect a reduction in the estimated future cash flows arising from the sustained current downturn in the oil and gas sector.- Further details of the Group's
property, plant and equipment and the other intangible assets are disclosed in notes 9 and 11 respectively.
Taxation Carrying value of thenet tax asset at31 December 2015$10.7m (2014 - $55.2m net liability) - In determining current tax estimates, management has to consider the likelihood of tax authority challenges and estimates tax payable accordingly. Management base their estimates in relation to current taxes by considering the enacted and
substantively enacted tax laws and rates at the balance sheet date. This incorporates territories in which the Group operates and any uncertainty in interpretation of those laws and their assessment of the tax risks and exposures and judgement of likely
outcome, taking into account their past experience of enquiries from tax authorities and other relevant information.- The deferred tax balances at 31 December 2015 represent an estimate of the amounts that are expected to be paid or recovered from the
tax authorities in future periods if assets and liabilities in the balance sheet were recovered at their carrying values based on tax laws and rates that have been substantively enacted by the balance sheet date. Measurement of deferred tax balances
therefore requires management to assess the substantively enacted tax laws and rates, the timing of the reversal of existing taxable and deductible temporary differences and the nature, timing and amount of taxable income which would potentially be
available to support the recognition of deferred tax assets. Management base their estimates of recoverability of deferred tax assets using these criteria for each separate significant category of deductible temporary difference and losses carried forward.
Oil and gas explorationand development assets Carrying value at31 December 2015$4.8m (2014 - $12.5m) - The carrying value of the Group's oil and gas exploration and development assets is subject to the value in use of the Group's oil and gas reserves.- The value in use is determined by applying a present value to the estimated future producible
reserves at a given forecast market price.- The estimate of producible reserves is principally extracted using a combination of geological data and production performance records.- The estimate of market prices is based on the medium-term futures
prices (four to six years) issued by NYMEX.- The discount rate is based on the activity's cost of capital and specific risk premium, which is estimated to be 12% pre-tax.
3. Segmental Reporting
The Group reports on seven operating segments, three of which are discontinued operations, in its internal management
reports, which are used to make strategic decisions by the Hunting PLC Board, the Group's Chief Operating Decision Maker
("CODM"). The Group's continuing operating segments are strategic business units that offer different products and services
to international oil and gas companies and undertake exploration and production activities.
The Group measures the performance of its operating segments based on revenue and profit from operations, before
exceptional items and the amortisation of acquired 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.
(a) Continuing Operations
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 will not be making any new capital investment, beyond where
the division has contractual commitments. No exploration and evaluation activities have occurred during the year. The
division will in future focus on producing out its remaining reserves, with a view to winding down the operation.
Costs and overheads incurred centrally are apportioned to the continuing operating segments on the basis of time attributed
to those operations by senior executives.
(b) Discontinued Operations
The discontinued operations comprise Gibson Shipbrokers, which was sold on 31 March 2015, Field Aviation, which was sold in
2012, and Gibson Energy, which was sold in 2008. Gibson Energy and Field Aviation continue to generate accounting entries
due to sale-related transactions and are required for reconciliation purposes.
The following tables present the results of the operating segments on the same basis as that used for internal reporting
purposes to the CODM.
(c) Results from Operations
Year ended 31 December 2015
Profit from
operations
before
amortisationi Amortisationi
Total Inter- and and
gross segmental Total exceptional exceptional
revenue revenue revenue items items Total
$m $m $m $m $m $m
Continuing operations:
Hunting Energy Services
Well Construction 216.6 (5.2) 211.4 1.9 (113.8) (111.9)
Well Completion 495.0 (6.4) 488.6 14.2 (146.8) (132.6)
Well Intervention 107.6 (1.3) 106.3 4.6 (31.6) (27.0)
819.2 (12.9) 806.3 20.7 (292.2) (271.5)
Other Activities
Exploration and Production 4.2 - 4.2 (4.3) (6.4) (10.7)
Total from continuing operations 823.4 (12.9) 810.5 16.4 (298.6) (282.2)
Net finance expense (6.8) - (6.8)
Share of associates' post-tax losses (0.2) - (0.2)
Profit (loss) before tax from continuing operations 9.4 (298.6) (289.2)
Discontinued operations:
Gibson Shipbrokers 11.6 - 11.6 - 4.9 4.9
Gibson Energy - - - - 0.4 0.4
Total from discontinued operations 11.6 - 11.6 - 5.3 5.3
Net finance income 0.1 - 0.1
Taxation (0.1) (1.1) (1.2)
Profit from discontinued operations - 4.2 4.2
i. Relates to amortisation of acquired intangible assets.
Year ended 31 December 2014
Profit from
operations
before
amortisationi Amortisationi
Total Inter- and and
gross segmental Total exceptional exceptional
revenue revenue revenue items items Total
$m $m $m $m $m $m
Continuing operations:
Hunting Energy Services
Well Construction 384.3 (6.0) 378.3 53.0 (57.1) (4.1)
Well Completion 877.6 (15.0) 862.6 140.8 (34.7) 106.1
Well Intervention 135.8 (0.3) 135.5 23.8 (0.8) 23.0
1,397.7 (21.3) 1,376.4 217.6 (92.6) 125.0
Other Activities
Exploration and Production 10.1 - 10.1 0.2 (11.3) (11.1)
Total from continuing operations 1,407.8 (21.3) 1,386.5 217.8 (103.9) 113.9
Net finance expense (4.9) - (4.9)
Share of associates' post-tax losses (0.5) - (0.5)
Profit before tax from continuing operations 212.4 (103.9) 108.5
Discontinued operations:
Gibson Shipbrokers 47.4 - 47.4 0.5 - 0.5
Gibson Energy - - - - 0.2 0.2
Field Aviation - - - - 0.9 0.9
Total from discontinued operations 47.4 - 47.4 0.5 1.1 1.6
Net finance income 0.2 - 0.2
Taxation (0.4) - (0.4)
Profit from discontinued operations 0.3 1.1 1.4
i. Relates to amortisation of acquired intangible assets.
(d) Other Segment Items
2015 2014
Amortisation Amortisation
of intangible of intangible
Depreciation assets Impairment Depreciation assets Impairment
$m $m $m $m $m $m
Continuing operations:
Hunting Energy Services
Well Construction 14.1 7.7 106.8 21.7 7.5 49.6
Well Completion 18.4 32.4 118.7 19.2 34.5 -
Well Intervention 7.3 0.7 30.0 6.3 0.8 -
39.8 40.8 255.5 47.2 42.8 49.6
Other Activities
Exploration and Production 3.8 - 6.4 4.8 - 11.3
Total - continuing operations 43.6 40.8 261.9 52.0 42.8 60.9
Discontinued operations:
Gibson Shipbrokers - - - 0.3 - -
(e) Geographical Information
The Group operates across a number of geographical areas. The UK is the domicile of Hunting PLC. The table below shows
revenues from external customers, which are attributed to individual countries on the basis of the location in which the
sale originated. Information on the location of non-current assets is also presented below. Non-current assets exclude
defined benefit assets and deferred tax assets.
External revenue Profit from operations before amortisationi and exceptional items Non-current assets
2015 2014 2015 2014 2015 2014
$m $m $m $m $m $m
Continuing operations:
Hunting Energy Services
US 507.0 867.3 31.7 170.0 748.4 985.6
Canada 56.1 95.5 (3.6) 3.8 9.1 25.6
North America 563.1 962.8 28.1 173.8 757.5 1,011.2
UK 119.4 163.5 (2.7) 8.4 66.3 75.0
Rest of Europe 15.2 30.7 (1.5) 2.5 4.7 4.4
Europe 134.6 194.2 (4.2) 10.9 71.0 79.4
Singapore 67.2 149.0 1.6 27.4 10.8 11.8
Rest of Asia 22.9 50.5 (1.9) 3.6 17.3 22.4
Asia Pacific 90.1 199.5 (0.3) 31.0 28.1 34.2
Middle East, Africa and Other 18.5 19.9 (2.9) 1.9 25.6 14.6
806.3 1,376.4 20.7 217.6 882.2 1,139.4
Other activities
US 4.2 10.1 (4.3) 0.2 6.4 15.6
810.5 1,386.5 16.4 217.8 888.6 1,155.0
Discontinued operations:
UK 9.9 40.4 (0.2) (1.4) - -
Other 1.7 7.0 0.2 1.9 - -
11.6 47.4 - 0.5 888.6 1,155.0
Unallocated assets:
Deferred tax assets 2.0 1.2
Retirement benefit assets 41.4 30.9
Total non-current assets 932.0 1,187.1
i. Relates to amortisation of acquired intangible assets.
(f) Major Customer Information
The Group received $86.3m (2014 - $155.5m) of revenue from the Halliburton Company Group, which is 11% (2014 - 11%) of the
Group's revenue from external customers. The revenue is included within the Well Construction, Well Completion and Well
Intervention segments.
4. Revenue
2015 2014
$m $m
Sale of goods 687.0 1,154.5
Revenue from services 72.3 110.3
Rental revenue 51.2 121.7
Continuing operations 810.5 1,386.5
5. Amortisation and Exceptional Items
2015 2014
$m $m
Impairment of property, plant and equipment (note 9) 33.2 9.6
Dry hole costs (note 9) - 1.7
Restructuring costs 4.7 -
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