REG - Hunting PLC - Half Year Results <Origin Href="QuoteRef">HTG.L</Origin> - Part 2
27/08/2015 07:05
- Part 2: For the preceding part double click ID:nRSa2142Xa
1,357.4 1,447.6 1,438.3
Equity attributable to owners of the parent
Share capital 61.7 61.6 61.6
Share premium 153.0 151.9 151.9
Other components of equity 27.6 46.2 30.7
Retained earnings 1,086.5 1,155.3 1,163.9
1,328.8 1,415.0 1,408.1
Non-controlling interests 28.6 32.6 30.2
Total equity 1,357.4 1,447.6 1,438.3
Condensed Consolidated Statement of Changes in Equity
Unaudited
Six months ended 30 June 2015
Other Non-
Share Share components Retained controlling Total
capital premium of equity earnings Total interests 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 period - - - (48.3) (48.3) - (48.3)
Other comprehensive expense - - (2.1) 0.4 (1.7) (0.3) (2.0)
Total comprehensive expense - - (2.1) (47.9) (50.0) (0.3) (50.3)
Dividends - - - (33.9) (33.9) (1.9) (35.8)
Change in non-controlling interest - - - - - 0.6 0.6
Shares issued
- share option schemes and awards 0.1 1.1 - - 1.2 - 1.2
Treasury shares
- purchase of treasury shares - - - (1.3) (1.3) - (1.3)
Share options and awards
- value of employee services - - 4.5 - 4.5 - 4.5
- discharge - - (5.5) 5.4 (0.1) - (0.1)
- taxation - - - 0.3 0.3 - 0.3
Total transactions with owners 0.1 1.1 (1.0) (29.5) (29.3) (1.3) (30.6)
At 30 June 61.7 153.0 27.6 1,086.5 1,328.8 28.6 1,357.4
Unaudited
Six months ended 30 June 2014
Other Non-
Share Share components Retained controlling Total
capital premium of equity earnings Total interests 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 period - - - 52.3 52.3 1.1 53.4
Other comprehensive income - - 5.8 1.4 7.2 0.6 7.8
Total comprehensive income - - 5.8 53.7 59.5 1.7 61.2
Dividends - - - (32.1) (32.1) - (32.1)
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 - - 2.9 - 2.9 - 2.9
- discharge - - (4.1) 10.8 6.7 - 6.7
Total transactions with owners 0.3 1.3 (1.2) (28.8) (28.4) - (28.4)
At 30 June 61.6 151.9 46.2 1,155.3 1,415.0 32.6 1,447.6
Year ended 31 December 2014
Other Non-
Share Share components Retained controlling Total
capital premium of equity earnings Total interests 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 - - (13.5) 1.5 (12.0) (2.2) (14.2)
Total comprehensive 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
Condensed Consolidated Statement of Cash Flows
Restatedi
Unaudited Unaudited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Notes $m $m $m
Operating activities
(Loss) profit from operations (63.1) 72.0 113.9
Depreciation, amortisation and impairment 106.6 48.9 155.7
Loss on disposal of property, plant and equipment 1.3 3.5 6.0
Increase in inventories (4.3) (31.4) (3.1)
Decrease (increase) in receivables 87.8 (35.9) (34.7)
(Decrease) increase in payables (68.2) 34.3 41.6
Decrease in provisions (5.4) (1.8) (8.0)
Other non-cash flow items 6.0 2.8 7.3
Taxation paid (7.7) (18.1) (26.6)
Proceeds from disposal of property, plant and equipment held for rental 1.4 3.0 7.0
Purchase of property, plant and equipment held for rental (5.9) (11.9) (28.9)
Discontinued operations 1.0 (3.2) (0.9)
Net cash inflow from operating activities 49.5 62.2 229.3
Investing activities
Interest received 0.6 1.4 2.0
Dividends received from associates - 4.4 4.5
Purchase of subsidiaries - (3.0) (3.0)
Proceeds from disposal of associates - 0.2 0.2
Net movement on loans to and from associates - (0.1) 0.6
Proceeds from disposal of property, plant and equipment 0.5 0.3 0.6
Purchase of property, plant and equipment (44.9) (42.7) (94.6)
Purchase of intangibles (4.5) (2.4) (5.0)
Increase in bank deposit investments - (2.0) (2.0)
Net proceeds from disposal of subsidiaries 11 0.7 - 3.9
Net cash in subsidiaries sold 11 (3.9) - -
Indemnity receipts in respect of disposed subsidiaries 0.3 - 0.2
Discontinued operations - 0.1 -
Net cash outflow from investing activities (51.2) (43.8) (92.6)
Financing activities
Interest and bank fees paid (3.2) (4.4) (7.6)
Equity dividends paid (33.9) (32.1) (44.1)
Non-controlling interest dividend paid (1.9) - (2.5)
Change in non-controlling interest 0.6 - -
Share capital issued 1.2 1.6 1.6
Purchase of treasury shares (1.3) (7.5) (7.5)
Proceeds from new borrowings 19.4 12.7 70.2
Repayment of borrowings - - (155.9)
Net cash outflow from financing activities (19.1) (29.7) (145.8)
Net cash outflow in cash and cash equivalents (20.8) (11.3) (9.1)
Cash and cash equivalents at the beginning of the period 38.0 52.4 52.4
Effect of foreign exchange rates (0.7) (0.4) (1.5)
Reclassified from (to) held for sale 3.8 - (3.8)
Cash and cash equivalents at the end of the period 20.3 40.7 38.0
Cash and cash equivalents and bank overdrafts at the end of the period comprise:
Cash and cash equivalents 71.6 91.3 88.5
Bank overdrafts included in borrowings (51.3) (50.6) (50.5)
20.3 40.7 38.0
i. The six months ended 30 June 2014 have been restated to show Gibson Shipbrokers as a discontinued operation (note 6).
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 Conduct Authority. The condensed set
of consolidated financial statements should be read in conjunction with the 2014 Annual Report and Accounts, which have
been prepared in accordance with the Companies Act 2006 and International Financial Reporting Standards (IFRSs) and
International Financial Reporting Interpretations Committee (IFRIC) Interpretations as adopted by the European Union. The
accounting policies adopted in this condensed set of consolidated interim financial statements are consistent with those
used to prepare the 2014 Annual Report and Accounts except as described below.
The following has been adopted and is effective for the financial year ending 31 December 2015:
- Annual improvements to IFRSs 2011-2013 Cycle - effective 1 July 2014
There has been no impact on the Group's financial position or performance from the adoption of the above.
Standards effective subsequent to the period end, which are being assessed to determine whether there is a significant
impact on the Group's results or financial position include:
- IFRS 9 Financial Instruments
- IFRS 15 Revenue from Contracts with Customers
In preparing this condensed set of consolidated financial statements, the significant judgements, estimates and assumptions
made by management in applying the Group's accounting policies were the same as those applied in the 2014 Annual Report and
Accounts. The second quarter of 2015 has shown continued declines in the oil and gas market and with this in mind, the
Group performed a goodwill impairment review exercise at 30 June 2015. Further details are provided in note 9.
On 31 March 2015, the Group sold Gibson Shipbrokers to an employee benefit trust formed by Gibson Shipbrokers' employees.
Further details are provided in note 11. As Gibson Shipbrokers was previously reported as a separate segment within
continuing operations, its results and cash flows for 2014 have been re-presented as a discontinued operation. The assets
and liabilities of Gibson Shipbrokers at 31 December 2014 were treated as held for sale. At 30 June 2014 the assets and
liabilities of Gibson Shipbrokers were shown within the relevant Group balances as the disposal process had not yet been
initiated.
Terms used in this condensed set of consolidated financial statements are defined in the Glossary on pages 147 and 148
contained in the 2014 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 2014 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.
Going Concern Basis
The Group has a broad range of products and services, a large portfolio of production and storage facilities, a
sufficiently diverse global customer and supplier base and meets its day-to-day working capital requirements through its
cash and debt facilities. The Group retains limited exposure to credit risk as it has strong, well-developed relationships
with its major customers and maintains insurance cover for 99% of its trade receivables.
In conducting its review of the Group's ability to remain as a going concern, the Board assessed the Group's recent trading
position and its latest forecasts and took account of reasonably predictable changes in future trading performance. The
Board also considered the Group's current business model, its strategy, the principal risks and the potential financial
impact of the estimates, judgements and assumptions that were used to prepare these financial statements. The Board is
satisfied that all material uncertainties have been identified and they are not considered to be sufficiently material to
adversely impact the Group.
The Group has access to considerable financial resources including a $590m (£375m) committed bank facility of which $414m
(£263m) is undrawn at 30 June 2015. This facility expires on 5 August 2016. Discussions with the Group's principal banks
have commenced with the aim of having a replacement facility in place before the end of 2015. The main financial covenants
attached to this facility are (1) EBITDA should not be less than four times net finance charges, and (2) net debt should be
no more than three times adjusted EBITDA. The Group continues to have significant headroom over both covenants.
The Board is satisfied that it has conducted a robust review of the Group's principal risks and has a high level of
confidence that the Group has the necessary liquid resources to meet its liabilities as they fall due, will be able to
sustain its operational requirements and will remain solvent during that period. Consequently the Board considered it
appropriate to adopt the going concern basis of accounting in preparing these condensed consolidated interim financial
statements.
2. Segmental Reporting
For the six months ended 30 June 2015 the Group reports on six operating segments, two of which are discontinued
operations, in its internal management reports, which are used to make strategic decisions. 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 intangibles. Accounting policies used for segment reporting reflect
those used for the Group. Inter-segment sales are priced on an arm's length basis.
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 and so 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.
Discontinued Operations
The discontinued operations comprise Gibson Shipbrokers which was sold on 31 March 2015 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 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.
Results from Operations
Six months ended 30 June 2015
Total gross revenue Inter-segmental revenue Total revenue Profit (loss) from operations before amortisationi and exceptional items Amortisationiandexceptionalitems Total
$m $m $m $m $m $m
Continuing operations:
Hunting Energy Services
Well Construction 126.1 (0.6) 125.5 2.8 (64.2) (61.4)
Well Completion 278.0 (0.2) 277.8 15.5 (17.7) (2.2)
Well Intervention 59.4 (1.2) 58.2 4.2 (0.3) 3.9
463.5 (2.0) 461.5 22.5 (82.2) (59.7)
Other Activities
Exploration and Production 2.1 - 2.1 (2.1) (1.3) (3.4)
Total from continuing operations 465.6 (2.0) 463.6 20.4 (83.5) (63.1)
Net finance expense (2.7) - (2.7)
Profit (loss) before tax from continuing operations 17.7 (83.5) (65.8)
Discontinued operations:
Gibson Shipbrokers 11.6 - 11.6 - 4.9 4.9
Gibson Energy - - - - 0.3 0.3
Total from discontinued operations 11.6 - 11.6 - 5.2 5.2
Net finance income 0.1 - 0.1
Taxation (0.1) (1.1) (1.2)
Profit from discontinued operations - 4.1 4.1
Restated
Six months ended 30 June 2014
Total gross revenue Inter-segmental revenue Total revenue Profit from operations before amortisationi and exceptional items Amortisationiandexceptionalitems Total
$m $m $m $m $m $m
Continuing operations:
Hunting Energy Services
Well Construction 185.1 (2.9) 182.2 24.6 (3.7) 20.9
Well Completion 417.0 (6.3) 410.7 60.5 (17.7) 42.8
Well Intervention 65.7 - 65.7 10.1 (0.5) 9.6
667.8 (9.2) 658.6 95.2 (21.9) 73.3
Other Activities
Exploration and Production 5.5 - 5.5 1.6 (2.9) (1.3)
Total from continuing operations 673.3 (9.2) 664.1 96.8 (24.8) 72.0
Net finance expense (2.8) - (2.8)
Share of associates' post-tax losses (0.3) - (0.3)
Profit before tax from continuing operations 93.7 (24.8) 68.9
Discontinued operations:
Gibson Shipbrokers 23.4 - 23.4 0.3 - 0.3
Net finance expense (0.1) - (0.1)
Taxation (0.2) - (0.2)
Profit from discontinued operations - - -
i. Relates to amortisation of acquired intangibles.
Gibson Shipbrokers' results for the six months ended 30 June 2014 have been re-presented as a discontinued operation and
its results have been restated to exclude central overheads previously allocated to the division.
Year ended 31 December 2014
Total gross revenue Inter-segmental revenue Total revenue Profit from operations before amortisationi and exceptional items Amortisationiandexceptionalitems 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 intangibles.
Geographical Information
External revenue Profit (loss) from operations before amortisationi and exceptional items
Six months ended 30 June 2015 Restatedsix months ended 30 June 2014 Year ended 31 December 2014 Six months ended 30 June 2015 Restated six months ended 30 June 2014 Year ended 31 December 2014
$m $m $m $m $m $m
Continuing operations:
Hunting Energy Services
USA 295.8 407.1 867.3 24.5 74.8 170.0
Canada 30.5 41.5 95.5 (3.4) 0.8 3.8
North America 326.3 448.6 962.8 21.1 75.6 173.8
UK 64.9 77.7 163.5 0.2 2.2 8.4
Rest of Europe 8.1 15.2 30.7 (0.3) 1.4 2.5
Europe 73.0 92.9 194.2 (0.1) 3.6 10.9
Singapore 40.2 76.0 149.0 3.8 14.1 27.4
Rest of Asia Pacific 12.7 33.1 50.5 (1.8) 1.3 3.6
Asia Pacific 52.9 109.1 199.5 2.0 15.4 31.0
Middle East, Africa and Other 9.3 8.0 19.9 (0.5) 0.6 1.9
461.5 658.6 1,376.4 22.5 95.2 217.6
Other Activities
USA 2.1 5.5 10.1 (2.1) 1.6 0.2
Total from continuing operations 463.6 664.1 1,386.5 20.4 96.8 217.8
Discontinued operations:
UK 9.9 20.6 40.4 (0.1) 0.4 (1.4)
Other 1.7 2.8 7.0 0.1 (0.1) 1.9
11.6 23.4 47.4 - 0.3 0.5
i. Relates to amortisation of acquired intangibles.
Gibson Shipbrokers' results for the six months ended 30 June 2014 have been re-presented from other activities to
discontinued operations.
Major Customer Information
The Group received $51.6m (six months ended 30 June 2014 - $69.5m; year ended 31 December 2014 - $155.5m) of revenue from
the Halliburton Company consolidated group which is 11% (six months ended 30 June 2014 - 10%; year ended 31 December 2014 -
11%) of the Group's revenue from continuing operations from external customers. The revenue is reported in the Well
Construction, Well Completion and Well Intervention segments.
3. Amortisation and Exceptional Items
Six monthsended30 June2015$m Six monthsended30 June 2014$m Year ended31 December2014$m
Impairment of assets 28.9 2.9 9.6
Dry hole costs - - 1.7
Charged to cost of sales 28.9 2.9 11.3
Amortisation of acquired intangibles 19.4 21.9 42.8
Impairment of goodwill 35.2 - 49.6
Release of foreign exchange on liquidation of subsidiaries - - 4.8
Excess property provision release - - (4.6)
Charged to operating expenses 54.6 21.9 92.6
Amortisation of acquired intangibles and exceptional operating charges 83.5 24.8 103.9
Taxation on amortisation and exceptional items (18.3) (9.5) (20.5)
Continuing operations 65.2 15.3 83.4
Impairment of assets comprises a $27.0m property, plant and equipment impairment and a $0.6m inventory impairment in the
Drilling Tools business (six months ended 30 June 2014 - $nil; year ended 31 December 2014 - $nil) following a carrying
value review given current trading conditions and future expectations, and an impairment charge of $1.3m (six months ended
30 June 2014 - $2.9m; year ended 31 December 2014 - $9.6m) for exploration and production assets reflecting lower commodity
prices and a reduction in commercial reserve estimates compared to those at 31 December 2014.
A goodwill impairment charge of $35.2m was also recognised in the six months to 30 June 2015 (six months ended 30 June 2014
- $nil; year ended 31 December 2014 - $49.6m). Further details are provided in note 9.
4. EBITDA
Restated
Six Six
months months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
$m $m $m
Reported (loss) profit from continuing operations (63.1) 72.0 113.9
Add: amortisation of acquired intangibles and exceptional items (note 3) 83.5 24.8 103.9
Add: amortisation on purchased intangibles 1.0 - -
Add: depreciation 22.7 24.1 52.0
Underlying EBITDA 44.1 120.9 269.8
Less: exceptional items impacting EBITDA (0.6) - (0.2)
Reported EBITDA 43.5 120.9 269.6
"EBITDA" is a non-GAAP measure. Underlying EBITDA is defined as pre-exceptional earnings from continuing operations before
interest, tax, depreciation, amortisation and impairment of non-current assets. Underlying EBITDA is used by the Board as
one of the measures of the Group's performance. Reported EBITDA is defined as earnings from continuing operations before
interest, tax, depreciation, amortisation and impairment of non-current assets.
5. Taxation
The taxation charge for the six months ended 30 June 2015 is calculated by applying the estimated annual Group effective
rate of tax to the profit for the period.
The estimated weighted average tax rate for continuing operations before amortisation of acquired intangibles and
exceptional items for the year ending 31 December 2015 is 28% and has been used for the six months ended 30 June 2015 (six
months ended 30 June 2014 - 27%; year ended 31 December 2014 - 27%).
Included in the income statement are tax credits of $18.3m in respect of amortisation of acquired intangibles and
exceptional items from continuing operations (six months ended 30 June 2014 - $9.5m; year ended 31 December 2014 -
$20.5m).
A number of changes to the UK corporation tax system were announced in the Chancellor's Budget on 8 July 2015. These
include reductions to the main rate of corporation tax to reduce the rate to 19% from 1 April 2017 and to 18% from 1 April
2020. As the changes had not been substantively enacted at the balance sheet date their effects are not included in these
financial statements. The changes are not expected to have a material impact on the Group's deferred tax balances.
6. Discontinued Operations
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 sale of Gibson Energy Inc., Hunting's Canadian midstream services operation, was completed on 12 December 2008.
Subsequent gains relate to the settlement of tax items.
The results from discontinued operations were as follows:
Six months ended 30 June 2015
Gibson Gibson
Shipbrokers Energy Total
$m $m $m
Trading results:
Revenue 11.6 - 11.6
Gross profit 11.6 - 11.6
Other operating income 0.1 - 0.1
Other operating expenses (11.7) - (11.7)
Profit from operations - - -
Finance income 0.1 - 0.1
Profit before tax 0.1 - 0.1
Taxation (0.1) - (0.1)
Profit for the period - - -
Gain on disposal:
Gain on disposal before tax 4.9 0.3 5.2
Tax on gain (1.1) - (1.1)
Gain on disposal after tax 3.8 0.3 4.1
Total profit from discontinued operations 3.8 0.3 4.1
Further details relating to the sale of Gibson Shipbrokers are provided in note 11.
RestatediSix months ended 30 June 2014
Gibson Gibson
Shipbrokers Energy Total
$m $m $m
Trading results:
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