REG - Hunting PLC - 2015 Full Year Results <Origin Href="QuoteRef">HTG.L</Origin> - Part 3
03/03/2016 07:10
- Part 3: For the preceding part double click ID:nRSC8677Qb
Charged to cost of sales 37.9 11.3
Amortisation of acquired intangible assets (note 11) 38.9 42.8
Impairment of goodwill (note 10) 208.2 49.6
Impairment of other intangible assets (note 11) 11.2 -
Restructuring costs 2.4 -
Release of foreign exchange on liquidation of subsidiaries - 4.8
Excess property provision release - (4.6)
Charged to operating expenses 260.7 92.6
Amortisation and exceptional items 298.6 103.9
Taxation on amortisation and exceptional items (note 6) (63.2) (20.5)
Continuing operations 235.4 83.4
Plant and equipment impairment of $26.8m (2014 - $nil) was recognised in the Drilling Tools business following a review of
the carrying value given current trading conditions and future expectations and an impairment charge of $6.4m (2014 -
$11.3m) for oil and gas exploration and development expenditure was recorded. Dry hole costs of $1.7m were incurred and
paid during 2014 from Exploration and Production activities. Further details can be found in note 9.
A goodwill impairment charge of $208.2m (2014 - $49.6m) has been recognised. Further details can be found in note 10.
Restructuring costs of $7.1m (2014 - $nil) have been recognised in the year, reflecting the reduction in the Group's
workforce and the closure of the Canada Drilling Tools business. Restructuring costs gave rise to cash outlflows of $5.9m
(2014 - $nil) in the year.
Foreign exchange losses of $4.8m relating to cumulative foreign exchange differences previously recognised in the currency
translation reserve were transferred to the income statement following the voluntary liquidation of central non-operating
companies in 2014.
Property provisions of $4.6m were released in 2014 as they were no longer required following the signing of a lease
termination agreement with the owner of a leasehold property. During the year, payments of $4.6m were made.
6. Taxation
2015 2014
Before Before
amortisationi Amortisationi amortisationi Amortisationi
and and and and
exceptional exceptional exceptional exceptional
items items Total items items Total
$m $m $m $m $m $m
Current tax
- current year (credit) expense (0.7) (26.8) (27.5) 58.4 (19.1) 39.3
- adjustments in respect of prior years (0.4) - (0.4) (6.5) - (6.5)
(1.1) (26.8) (27.9) 51.9 (19.1) 32.8
Deferred tax
- origination and reversal of temporary differences 6.1 (36.4) (30.3) 2.6 (1.4) 1.2
- change in tax rate 0.1 - 0.1 - - -
- adjustments in respect of prior years 0.3 - 0.3 2.7 - 2.7
6.5 (36.4) (29.9) 5.3 (1.4) 3.9
Taxation charge (credit) - continuing operations 5.4 (63.2) (57.8) 57.2 (20.5) 36.7
i. Relates to amortisation of acquired intangible assets.
The weighted average applicable tax rate for continuing operations before amortisation and exceptional items is 57% (2014 -
27%).
The tax credit in the income statement of $63.2m (2014 - $20.5m) for amortisation and exceptional items comprises credits
of $15.1m (2014 - $16.4m) on the amortisation of acquired intangible assets, $9.2m (2014 - $nil) on the impairment of
plant, machinery and motor vehicles, $2.6m (2014 - $3.7m) on the impairment of oil and gas development expenditure, $3.1m
(2014 - $nil) on the impairment of other intangible assets, $31.9m (2014 - $nil) on the impairment of goodwill, $1.3m (2014
- $nil) relating to restructuring costs, $nil (2014 - $0.7m) for dry hole costs, $nil (2014 - $0.7m) on the release of
foreign exchange on liquidation of subsidiaries and a charge of $nil (2014 - $1.0m) on the excess property provision
release.
The total tax credit for the year is lower (2014 - the total tax charge was higher) than the standard rate of UK
corporation tax of 20.25% (2014 - 21.5%) for the following reasons:
2015 2014
$m $m
(Loss) profit before tax from continuing operations (289.2) 108.5
Tax at 20.25% (2014 - 21.5%) (58.6) 23.3
Permanent differences including tax credits 2.1 (4.0)
Recognition of previously unrecognised deferred taxes - (0.1)
Non-tax deductible (untaxed) exceptional items 41.4 11.1
Higher rate of tax on overseas profits (45.8) 10.2
Current year losses not recognised 3.1 -
Change in tax rates 0.1 -
Adjustments in respect of prior years (0.1) (3.8)
Taxation - continuing operations (57.8) 36.7
Tax effects relating to each component of other comprehensive income were as follows:
2015 2014
Before tax Tax (charged) credited After tax Before tax Tax (charged) credited After tax
$m $m $m $m $m $m
Exchange adjustments (17.2) 0.1 (17.1) (19.4) 1.5 (17.9)
Release of foreign exchange losses 0.6 - 0.6 4.8 (1.0) 3.8
Fair value gains and losses:
- gain transferred to income statement on redemption of available for sale investment - - - (0.2) - (0.2)
- losses originating on cash flow hedges arising during the year - - - (0.1) - (0.1)
- gains transferred to income statement on disposal of cash flow hedges - - - (1.7) 0.4 (1.3)
Remeasurement of defined benefit pension schemes 10.9 (1.7) 9.2 1.7 (0.2) 1.5
(5.7) (1.6) (7.3) (14.9) 0.7 (14.2)
In respect of the tax on the remeasurement of defined benefit pension schemes, a $2.0m charge (2014 - $0.2m) arises on the
current year's movement and a credit of $0.3m (2014 - $nil) is due to a change in tax rates. The $1.7m charge comprises
$1.5m deferred tax and $0.2m current tax.
In July 2013, the UK Government enacted a change in the UK corporation tax rate from 21% to 20% effective from 1 April
2015. The impact of the change in rate to 20% has been recognised in calculating the effective tax rate for the year ended
31 December 2015.
A number of changes to the UK corporation tax system were announced in the Summer 2015 Budget Statement, whereby from 1
April 2017 the main rate of corporation tax will reduce from 20% to 19%, with a further reduction from 19% to 18% on 1
April 2020. The Finance Bill which included these changes
received Royal Assent on 18 November 2015. The changes have not had a material impact on the Group's UK deferred tax
balances.
7. Discontinued Operations
The results from discontinued operations were as follows:
2015 2014
Gibson Shipbrokers Gibson Energy Total Gibson Shipbrokers Field Aviation Gibson Energy Total
$m $m $m $m $m $m $m
Trading results:
Revenue 11.6 - 11.6 47.4 - - 47.4
Gross profit 11.6 - 11.6 47.4 - - 47.4
Other operating income 0.1 - 0.1 0.4 - - 0.4
Other operating expenses (11.7) - (11.7) (47.3) - - (47.3)
Profit from operations - - - 0.5 - - 0.5
Finance income 0.1 - 0.1 0.2 - - 0.2
Profit before tax 0.1 - 0.1 0.7 - - 0.7
Taxation (0.1) - (0.1) (0.4) - - (0.4)
Profit for the year - - - 0.3 - - 0.3
Gain on disposal:
Gain on sale before tax 4.9 0.4 5.3 - 0.9 0.2 1.1
Taxation (1.1) - (1.1) - - - -
Gain on sale after tax 3.8 0.4 4.2 - 0.9 0.2 1.1
Total profit from discontinued operations 3.8 0.4 4.2 0.3 0.9 0.2 1.4
Gibson Shipbrokers
On 31 March 2015, the Group sold E.A. Gibson Shipbrokers Limited and its subsidiaries (together referred to as "Gibson
Shipbrokers") to an employee owned trust formed by Gibson Shipbrokers' employees. The selling price was $3.7m, with $3.0m
deferred in the form of an interest-bearing loan note and the remainder paid in cash. A curtailment gain on the Group's
pension obligations of $5.5m was also recognised upon the sale.
Field Aviation
On 27 April 2012, the Group sold its aviation engineering services business, Hunting Canadian Airport Holdings Ltd and its
subsidiaries, including Field Aviation Company Inc. (together referred to as "Field Aviation"). Under the terms of the
sale, Hunting PLC and the purchaser established an environmental escrow account to address ongoing site condition costs
relating to Field Aviation's hangar facilities in Calgary. Additionally, part of the consideration was deferred in the form
of an interest-bearing promissory note issued to Hunting PLC, repayable by the purchaser on or before 31 December 2018. On
30 September 2014, the promissory note was repaid in full and the environmental escrow account was wound up, with remaining
funds distributed between Hunting PLC and the purchaser. This resulted in a gain of $0.9m included within discontinued
items in 2014.
Gibson Energy
The sale of Gibson Energy Inc., Hunting's Canadian midstream services operation, was completed on 12 December 2008.
Subsequent gains reported relate to the settlement of tax items.
8. Earnings per Share
Basic earnings per share ("EPS") is calculated by dividing the earnings attributable to Ordinary shareholders by the
weighted average number of Ordinary shares outstanding during the year.
For diluted earnings per share, the weighted average number of outstanding Ordinary shares is adjusted to assume conversion
of all dilutive potential Ordinary shares. The dilution in respect of share options applies where the exercise price is
less than the average market price of the Company's Ordinary shares during the year and the possible issue of shares under
the Group's long-term incentive plans.
Reconciliations of the earnings and weighted average number of Ordinary shares used in the calculations are set out below:
2015 2014
$m $m
Basic and diluted (loss) earnings attributable to Ordinary shareholders
From continuing operations (230.8) 67.8
From discontinued operations 4.2 1.4
Total (226.6) 69.2
Basic and diluted (loss) earnings attributable to Ordinary shareholders before amortisationi and exceptional items
From continuing operations (230.8) 67.8
Add: amortisationi and exceptional items after taxation (note 5) 235.4 83.4
Total 4.6 151.2
From discontinued operations 4.2 1.4
Less: exceptional items after taxation (4.2) (1.1)
Total - 0.3
millions millions
Basic weighted average number of Ordinary shares 147.8 147.3
Dilutive outstanding share options 0.1 0.6
Long term incentive plans 2.0 3.2
Adjusted weighted average number of Ordinary shares 149.9 151.1
cents cents
(a) Reported (Loss) Earnings per Share
Basic EPS
From continuing operations (156.1) 45.9
From discontinued operations 2.8 1.0
(153.3) 46.9
Diluted EPSii
From continuing operations (156.1) 44.8
From discontinued operations 2.8 1.0
(153.3) 45.8
(b) Underlying Earnings per Share
Basic EPS
From continuing operations 3.1 102.6
From discontinued operations - 0.2
3.1 102.8
Diluted EPSii
From continuing operations 3.1 100.0
From discontinued operations - 0.2
3.1 100.2
i. Relates to amortisation of acquired intangible assets.
ii. For the year ended 31 December 2015, the effect of dilutive share options and long-term incentive plans was
anti-dilutive and, therefore, they have not been used to calculate diluted earnings per share.
9. Property, Plant and Equipment
Year ended 31 December 2015
Oil and gas
Plant, exploration
Land and machinery and Rental and
buildings motor vehicles tools development Total
$m $m $m $m $m
Cost:
At 1 January 243.6 304.2 139.4 178.4 865.6
Exchange adjustments (3.3) (8.9) (2.0) - (14.2)
Additions 28.5 36.5 9.6 2.5 77.1
Disposals (1.9) (5.7) (7.7) - (15.3)
Classified as held for sale - - (35.9) - (35.9)
Reclassification to inventory - - (0.2) - (0.2)
At 31 December 266.9 326.1 103.2 180.9 877.1
Accumulated depreciation and impairment:
At 1 January 24.8 152.2 49.7 165.9 392.6
Exchange adjustments (0.9) (5.8) (1.1) - (7.8)
Charge for the year 4.9 28.1 6.8 3.8 43.6
Impairment of assets 0.5 0.1 26.2 6.4 33.2
Disposals (1.2) (5.2) (3.0) - (9.4)
Classified as held for sale - - (35.9) - (35.9)
Reclassification - 0.7 (0.7) - -
At 31 December 28.1 170.1 42.0 176.1 416.3
Net book amount 238.8 156.0 61.2 4.8 460.8
The Drilling Tools business experienced a decline in revenue of over 68% and a reduction in workforce of 63% in 2015, with
a major restructuring programme completed at the business unit in the year to align with lower activity levels. Following a
review of the carrying value of property, plant and equipment, given current trading conditions and future expectations,
completed mid-year, an impairment of $26.8m (2014 - $nil) was recognised in the Drilling Tools business relating to rental
tools of $26.2m (2014 - $nil), land and buildings of $0.5m (2014 - $nil) and plant, machinery and motor vehicles of $0.1m
(2014 - $nil). Although remaining property, plant and equipment at Drilling Tools is being utilised in the business, at the
year end their carrying value remains sensitive to further decline in projected business performance. In the review of
carrying value at the year end, a fair value less costs to sell model was used with cash flows discounted using a nominal
pre-tax rate of 13% and long-term growth of 2%, with revenue expected to recover to approximately 55% of revenue reported
in 2014 by the end of the five year projection period in 2020. If the discount rate was increased by 25 basis points and
revenue only recovered to 50% of the 2014 level by 2020, a further impairment charge of $11.4m would be required.
Productive assets are tested for impairment, at least annually. Following a valuation of oil and gas reserves at 31
December 2015, performed for impairment purposes, an impairment charge of $6.4m (2014 - $11.3m) for property, plant and
equipment was incurred in the year reflecting a decline in the oil price and a reduction in reserve estimates compared to
those at 31 December 2014. The recoverable amount of oil and gas development expenditure is based on value in use. These
calculations use discounted cash flow projections based on estimated oil and gas reserves, future production and the income
and costs in generating this production. Cash flows are based on productive lives between one and fifteen years and are
discounted using a nominal pre-tax rate of 12% (2014 - 13%).
Included in the net book amount is expenditure relating to assets in the course of construction of $50.2m (2014 - $60.1m)
for land and buildings, $nil (2014 - $0.7m) for oil and gas exploration and development, $26.3m (2014 - $20.2m) for plant
and machinery and $2.5m (2014 - $0.8m) for rental tools.
Group capital expenditure committed for the purchase of property, plant and equipment, but not provided for in these
financial statements, amounted to $4.8m (2014 - $23.3m).
The net book amount of land and buildings of $238.8m (2014 - $218.8m) comprises freehold land and buildings of $234.1m
(2014 - $215.4m) and short leasehold land and buildings of $4.7m (2014 - $3.0m).
Year ended 31 December 2014
Oil and gas
Plant, exploration
Land and machinery and Rental and
buildings motor vehicles tools development Total
$m $m $m $m $m
Cost:
At 1 January 192.1 281.5 135.2 171.3 780.1
Exchange adjustments (3.7) (6.6) (1.6) - (11.9)
Additions 56.0 36.3 25.7 7.1 125.1
Disposals (0.1) (4.6) (19.7) - (24.4)
Classified as held for sale (2.0) (1.3) - - (3.3)
Reclassification 1.3 (1.1) (0.2) - -
At 31 December 243.6 304.2 139.4 178.4 865.6
Accumulated depreciation and impairment:
At 1 January 22.7 133.3 42.5 149.8 348.3
Exchange adjustments (0.8) (4.1) (0.9) - (5.8)
Charge for the year* 4.4 28.6 14.5 4.8 52.3
Impairment of assets - - - 11.3 11.3
Disposals (0.1) (4.2) (6.4) - (10.7)
Classified as held for sale (1.6) (1.2) - - (2.8)
Reclassification 0.2 (0.2) - - -
At 31 December 24.8 152.2 49.7 165.9 392.6
Net book amount 218.8 152.0 89.7 12.5 473.0
*Included in the charge for the year is $0.3m for discontinued operations.
10. Goodwill
2015 2014
$m $m
Cost:
At 1 January 522.5 529.2
Exchange adjustments (5.4) (3.7)
Classified as held for sale - (3.0)
At 31 December 517.1 522.5
Accumulated impairment:
At 1 January 81.9 34.0
Exchange adjustments (3.6) (0.5)
Charge for the year 208.2 49.6
Classified as held for sale - (1.2)
At 31 December 286.5 81.9
Net book amount 230.6 440.6
The net book amount of goodwill at 1 January 2014 was $495.2m.
(a) Impairment Tests for Goodwill
Goodwill is allocated to the Group's cash-generating units ("CGUs") as follows:
2015 2014
CGU $m $m
Titan 180.4 288.4
Hunting Stafford "Subsea" (formally National Coupling Company) 15.0 32.7
Electronics - 28.7
Dearborn 12.5 25.5
Welltonic 5.2 18.0
Drilling Tools - 4.4
Hunting Specialty 5.0 17.0
US Manufacturing 12.5 12.5
US Pipe - 2.3
Canada Pipe - 8.9
PT Hunting Energy Asia - 2.2
At 31 December 230.6 440.6
The downturn of the oil and gas sector continued to worsen during 2015. Likewise, the general view on the outlook for
commodity prices remains progressively "lower for longer". Hence, in addition to the $35.2m charge reflected in the half
year report, a further $173.0m impairment charge has been recognised at the year end, bringing the total charge for the
year to $208.2m.
The recoverable amount for each CGU has been determined based on a fair value less costs to sell approach, thereby
including currently approved capital projects which are in progress and deducting appropriate selling costs. The
recoverable amount calculations use discounted pre-tax nominal cash flow projections. The key assumptions for the
recoverable amount calculations are revenue growth rates, taking into account the impact these have on margins, terminal
growth rates and the discount rates applied.
For 2016 and 2017, projections are based on management's latest forecasts. For 2018 to 2020 management has made revenue
projections using Spears and Associates "Drilling and Production Outlook" reports as a basis, selecting the most
appropriate geographic market and driver (rig count, footage drilled or E&P spend) for each CGU. Management has then
applied judgemental decreases to reflect the worsening of expectations and has then modelled the expected impact on margin
and cash flow from the resulting revenue projections.
Market conditions remain volatile, difficult to predict and will impact CGUs differently. The compound annual growth rates
("CAGR") for revenue for the CGUs between 2015 and 2020 vary between minus 7% and positive 12%. After 2020 a terminal value
has been calculated assuming growth above inflation between 35 and 50 basis points, giving nominal growth rates between 2%
and 6%.
Cash flows have been discounted using nominal pre-tax rates between 8% and 14%. The discount rates reflect current market
assessments of the time value of money, the risks associated with the cash flows, the likely external borrowing rate of the
CGU and expected levels of leverage. Consideration has also been given to other factors such as currency risk, operational
risk and country risk.
(b) Impairment of Goodwill and Sensitivities
Titan - An impairment charge of $107.6m (2014 - $nil) has been recognised reflecting the downturn in the sector, and in
particular relates to the impact for onshore US shale which is Titan's primary market. Titan represents 78% of the goodwill
balance at 31 December 2015 (2014 - 65%) and has a carrying value, including amounts recognised on consolidation such as
goodwill, of $503.0m (2014 - $654.0m). Projected annual growth rates vary between minus 13% and positive 11%. Cash flows
have been discounted at a nominal pre-tax rate of 10%. If the expected upturn is delayed from 2017 to 2018 and if discount
rates increase by a further 25 basis points, then a further $13.8m of impairment would be incurred.
Hunting Stafford ("Subsea") - An impairment charge of $17.7m (2014 - $nil) has been recognised reflecting the downturn in
the sector. Cash flows have been discounted at a nominal pre-tax rate of 12%. If the expected upturn is delayed from 2017
to 2018 and if discount rates increase by a further 25 basis points, then a further $10.5m of impairment would be
incurred.
Hunting Dearborn - An impairment charge of $13.0m (2014 - $nil) has been recognised reflecting the downturn in the sector.
Cash flows have been discounted at a nominal pre-tax rate of 9%. If the expected upturn is delayed from 2017 to 2018 and
if discount rates increase by a further 25 basis points, then a further $8.6m of impairment would be incurred.
Welltonic - An impairment charge of $12.2m (2014 - $nil) has been recognised reflecting the downturn in the sector. Cash
flows have been discounted at a nominal pre-tax rate of 9%. If the expected upturn is delayed from 2017 to 2018 and if
discount rates increase by a further 25 basis points, then a further $2.2m of impairment would be incurred.
Hunting Specialty - An impairment charge of $12.0m (2014 - $nil) has been recognised reflecting the downturn in the sector.
Cash flows have been discounted at a nominal pre-tax rate of 8%. If the expected upturn is delayed from 2017 to 2018 and
if discount rates increase by a further 25 basis points, then a further $1.3m of impairment would be incurred.
Canada Pipe - An impairment charge of $8.1m (2014 - $nil) has been recognised reflecting the downturn in the sector, which
reduced the balance on goodwill to $nil (2014 - $9.0m). Cash flows have been discounted at a nominal pre-tax rate of 9%.
US Pipe - An impairment charge of $2.3m (2014 - $nil) has been recognised reflecting the downturn in the sector, which
reduced the balance on goodwill to $nil (2014 - $2.3m). Cash flows have been discounted at a nominal pre-tax rate of 11%.
Electronics - An impairment charge of $28.7m was incurred in the first half of 2015 following a prolonged period of
customer de-stocking, increased competition, in particular from the Far East, and as a result of the sector downturn. Cash
flows have been discounted at a nominal pre-tax rate of 10%. This fully impaired the goodwill leaving the balance at $nil
(2014 - $28.7m).
Drilling Tools - An impairment charge of $4.3m was incurred in the first half of 2015 as a result of increased competition,
higher maintenance costs and the significant impact of the downturn on the US shale and Canadian markets in which this CGU
operated. Cash flows have been discounted at a nominal pre-tax rate of 13%. This fully impaired the goodwill leaving the
balance at $nil (2014 - $4.4m). The Canadian Drilling Tools business has been closed in the year.
PT Hunting Energy Asia - An impairment charge of $2.2m was incurred in the first half of 2015 as a result of the sector
downturn. This fully impaired the goodwill leaving the balance at $nil (2014 - $2.2m).
US Manufacturing - No impairment charge has been incurred as a result of the downturn (2014 - $nil). Cash flows have been
discounted at a nominal pre-tax rate of 11%. If the expected upturn is delayed from 2017 to 2018, and if discount rates
increase by a further 25 basis points, no impairment is required.
11. Other Intangible Assets
2015
Customer relationships Unpatented technology Patents & Trademarks Other Total
$m $m $m $m $m
Cost:
At 1 January 247.6 60.2 50.7 22.6 381.1
Exchange adjustments (0.2) (0.2) - (0.3) (0.7)
Additions - 4.4 3.2 0.4 8.0
Disposals - - - (0.3) (0.3)
At 31 December 247.4 64.4 53.9 22.4 388.1
Accumulated amortisation and impairment:
At 1 January 92.1 17.5 28.6 18.1 156.3
Exchange adjustments (0.2) 0.1 - (0.2) (0.3)
Charge for the year 25.8 5.9 7.6 1.5 40.8
Impairment of assets 11.2 - - - 11.2
Disposals - - - (0.3) (0.3)
At 31 December 128.9 23.5 36.2 19.1 207.7
Net book amount 118.5 40.9 17.7 3.3 180.4
2014
Customer relationships Unpatented technology Patents & Trademarks Other Total
$m $m $m $m $m
Cost:
At 1 January 247.8 53.4 53.2 22.7 377.1
Exchange adjustments (0.2) (0.1) - (0.4) (0.7)
Additions - 3.9 0.2 0.9 5.0
Classified as held for sale - - - (0.3) (0.3)
Reclassification - 3.0 (2.7) (0.3) -
At 31 December 247.6 60.2 50.7 22.6 381.1
Accumulated amortisation:
At 1 January 66.3 12.2 21.1 14.5 114.1
Exchange adjustments (0.2) - - (0.1) (0.3)
Charge for the year 26.0 5.3 7.5 4.0 42.8
Classified as held for sale - - - (0.3) (0.3)
At 31 December 92.1 17.5 28.6 18.1 156.3
Net book amount 155.5 42.7 22.1 4.5 224.8
The net book amount of other intangible assets at 1 January 2014 was $263.0m.
A review of the carrying value of other intangible assets was undertaken, which lead to the impairment of customer
relationships arising on the acquisition of the Electronics and Doffing businesses of $11.2m (2014 - $nil).
Other intangible assets include software of $2.7m (2014 - $3.7m).
Internally generated intangible assets have been included within unpatented technology. Additions during the year amounted
to $1.1m (2014 - $3.2m). The carrying value at the beginning of the year was $5.9m (2014 - $2.7m) and at the end of the
year was $6.4m (2014 - $5.9m).
All intangible assets are regarded as having a finite life and are amortised accordingly. All amortisation charges relating
to intangible assets have been charged to operating expenses.
Individual Material Intangible Assets
Included in the table above are the following individual material intangible assets:
2015
Customer relationships - Dearborn Customer relationships - Titan
$m $m
Cost:
At 1 January and 31 December 14.7 190.2
Accumulated amortisation:
At 1 January 6.2 62.6
Charge for the year 1.9 19.0
At 31 December 8.1 81.6
Net book amount 6.6 108.6
Remaining amortisation period at 31 December - years 3.5 5.8
12. Financial Instruments: Fair Values
The carrying value of investments, non-current trade and other receivables, net trade receivables, accrued revenue, other
receivables, deposits maturing after three months, cash and cash equivalents, assets classified as held for sale, trade
payables, accruals, other payables, provisions, liabilities classified as held for sale, bank overdrafts, unsecured bank
loans and other unsecured loans approximates their fair value. Drawdowns under the multi-currency loan facility are
typically for periods of one month or less, and as a result, the carrying value and the fair value are considered to be the
same.
The following tables present the Group's other financial assets and liabilities that are measured at fair value at the year
end and show the level in the fair value hierarchy in which the fair value measurements are categorised. There were no
transfers between Level 1 and Level 2 during the year.
Fair value at 31 December 2015 Level 1 Level 2
$m $m $m
Non-current investments
Listed equity investments and mutual funds 9.1 9.1 -
Derivatives held for trading
Derivative financial liabilities (0.1) - (0.1)
9.0 9.1 (0.1)
Fair value at 31 December 2014 Level 1 Level 2
$m $m $m
Non-current investments
Listed equity investments and mutual funds 8.9 8.9 -
Derivatives held for trading
Derivative financial assets 0.1 - 0.1
9.0 8.9 0.1
The fair value hierarchy has the following levels:
Level 1 - inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability.
The fair value of forward foreign exchange contracts is determined by comparing the cash flows generated by the contract
with the coterminous cash flows potentially available in the forward exchange market on the balance sheet date. The fair
value of listed equities and mutual funds is based on their current bid prices in an active market, which is considered to
be the most representative of fair value, at the balance sheet date. The fair values of non-US dollar denominated financial
instruments are translated into US dollars using the year end exchange rate.
The inputs used to determine the fair value of derivative financial instruments are inputs other than quoted prices that
are observable and so the fair value measurement can be categorised in Level 2 of the fair value hierarchy. The fair value
of listed equity investments and mutual funds is based on quoted market prices and so the fair value measurement can be
categorised in Level 1 of the fair value hierarchy.
13. Dividends Paid
2015 2014
Cents per share $m Cents per share $m
Ordinary dividends:
2015 interim paid 4.0 5.9 - -
2014 final paid 22.9 33.9 - -
2014 interim paid - - 8.1 12.0
2013 final paid - - 21.8 32.1
26.9 39.8 29.9 44.1
A final dividend of 4.0 cents per share has been proposed by the Board, amounting to an estimated distribution of $5.9m.
The dividend will be paid in Sterling on 6 July 2016, to shareholders on the register on 10 June 2016, and the Sterling
value of the dividend payable per share will be fixed and announced approximately two weeks prior to the payment date based
on the average spot exchange rate over the three business days preceding the announcement date. The proposed final dividend
is subject to approval by the shareholders at the Annual General Meeting to be held on 13 April 2016 and has not been
provided for in these financial statements.
14. Business Disposals
On 31 March 2015, the Group sold E.A. Gibson Shipbrokers Limited and its subsidiaries (together referred to as "Gibson
Shipbrokers") to an employee owned trust. The selling price was $3.7m, with $3.0m deferred in the form of an
interest-bearing loan note and the remainder paid in cash. A curtailment gain on the Group's pension obligations of $5.5m
was also recognised upon the sale.
Details of the net assets disposed and consideration are set out below:
$m
Property, plant and equipment 0.5
Goodwill 1.8
Investments 0.7
Deferred tax assets 0.1
Trade and other receivables 10.4
Cash and cash equivalents* 3.9
Trade and other payables (13.2)
Current tax liabilities (0.5)
Net assets disposed 3.7
Gain on curtailment of pension obligations (5.5)
Release of foreign exchange adjustments 0.6
Gain on disposal (note 7) 4.9
Consideration 3.7
The consideration comprised the following:
Net cash proceeds 0.7
Deferred consideration 3.0
3.7
* Cash and cash equivalents of $3.8m were classified as held for sale at 31 December 2014.
As part of the consideration, the Group subscribed to a loan note, which is carried as a receivable at amortised cost. The
note is repayable by 31 March 2019 and is unsecured.
Supplementary Information
Our Business Model
AN OVERVIEWHOW WE CREATE CAPTURE AND DISTRIBUTE VALUE.
OIL AND GAS EXTRACTIONFOCUS ON THE WELLBORE
SUPPLIERS
RAW MATERIALS CAPITAL EQUIPMENT
OUR RESOURCES
OUR PEOPLE KNOW-HOW / PATENTS OPERATING FACILITIES
Our highly skilled people apply their sector know-howand market knowledge across our globally distributed operating facilities
OPERATING PROCESSES
MANUFACTURING TRADING EQUIPMENT RENTAL
Our management approach is decentralised and empowers our local businesses to react to local market conditions.
OUTPUTS
Our diverse range of products and services. Categorised into six major product groups with distinct business characteristics.
CUSTOMERS
A broad customer base spread across the oil and gas value chain.
SUSTAINABLE VALUE CREATION
We create value for:
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