REG - Tullow Oil PLC - 2015 Half Year Results <Origin Href="QuoteRef">TLW.L</Origin> - Part 2
29/07/2015 07:02
- Part 2: For the preceding part double click ID:nRSc3698Ua
$m $m $m
At 1 January 2014 146.9 603.2 (155.1) 2.3 740.9 3,984.7 5,322.9 123.5 5,446.4
Loss for the period - - - - - (75.3) (75.3) (19.8) (95.1)
Hedges, net of tax - - - (1.0) - - (1.0) - (1.0)
Currency translation adjustments - - 0.6 - - - 0.6 - 0.6
Issue of employee share options 0.1 1.8 - - - - 1.9 - 1.9
Vesting of PSP shares - - - - - (0.1) (0.1) - (0.1)
Share-based payment charges - - - - - 32.0 32.0 - 32.0
Dividends paid - - - - - (121.0) (121.0) - (121.0)
Distribution to non-controlling interests - - - - - - - (15.0) (15.0)
At 30 June 2014 147.0 605.0 (154.5) 1.3 740.9 3,820.3 5,160.0 88.7 5,248.7
Loss for the period - - - - - (1,480.4) (1,480.4) (64.4) (1,544.8)
Hedges, net of tax - - - 400.3 - - 400.3 - 400.3
Currency translation adjustments - - (51.2) - - - (51.2) - (51.2)
Issue of employee share options - 1.4 - - - - 1.4 - 1.4
Vesting of PSP shares - - - - - (0.3) (0.3) - (0.3)
Share-based payment charges - - - - - 27.5 27.5 - 27.5
Dividends paid - - - - - (61.3) (61.3) - (61.3)
At 1 January 2015 147.0 606.4 (205.7) 401.6 740.9 2,305.8 3,996.0 24.3 4,020.3
Loss for the period - - - - - (67.9) (67.9) 0.2 (67.7)
Hedges, net of tax - - - (147.8) - - (147.8) - (147.8)
Currency translation adjustments - - (46.5) - - - (46.5) - (46.5)
Issue of employee share options - 0.8 - - - - 0.8 - 0.8
Share-based payment charges - - - - - 22.4 22.4 - 22.4
At 30 June 2015 147.0 607.2 (252.2) 253.8 740.9 2,260.3 3,757.0 24.5 3,781.5
1. The foreign currency translation reserve represents exchange gains and
losses arising on translation of foreign currency subsidiaries, monetary items
receivable from or payable to a foreign operation for which settlement is
neither planned nor likely to occur, which form part of the net investment in
a foreign operation, and exchange gains or losses arising on long-term foreign
currency borrowings which are a hedge against the Group's overseas
investments.
2. The hedge reserve represents gains and losses on derivatives classified
as effective cash flow hedges.
3. Other reserves include the merger reserve and the treasury shares reserve
which represents the cost of shares in Tullow Oil plc purchased in the market
and held by the Tullow Oil Employee Trust to satisfy awards held under the
Group's share incentive plans.
Condensed consolidated cash flow statement Six months ended 30 June 2015
Notes 6 months ended 30.06.15Unaudited$m 6 monthsended 30.06.14 Unaudited$m Year ended 31.12.14Audited$m
Cash flows from operating activities
Loss before taxation (10.2) (28.9) (2,047.4)
Adjustments for:
Depletion, depreciation and amortisation 305.9 324.1 621.8
Loss on disposal 9 43.9 114.8 482.4
Goodwill impairment - - 132.8
Exploration costs written off 10 87.5 402.2 1,657.3
Impairment of property, plant and equipment 11 (11.1) 7.9 595.9
Decommissioning payments 13 (22.5) (1.1) (20.4)
Share-based payment charge 14.9 20.4 39.5
Loss/(gain) on hedging instruments 25.1 18.0 (50.8)
Finance revenue (1.4) (7.3) (9.6)
Finance costs 83.0 54.5 143.2
Operating cash flow before working capital movements 515.1 904.6 1,544.7
(Increase)/decrease in trade and other receivables (32.8) (234.8) 29.9
Decrease in inventories 11.6 11.5 61.0
(Decrease)/increase in trade payables (43.9) 44.9 (119.6)
Cash flows from operating activities 450.0 726.2 1,516.0
Taxes paid (79.5) (161.6) (34.2)
Net cash from operating activities 370.5 564.6 1,481.8
Cash flows from investing activities
Proceeds from disposals 9 57.2 (36.9) 21.3
Purchase of intangible exploration and evaluation assets (326.3) (664.4) (1,255.1)
Purchase of property, plant and equipment (505.8) (531.1) (1,098.3)
Interest received 1.4 3.1 4.6
Net cash used in investing activities (773.5) (1,229.3) (2,327.5)
Cash flows from financing activities
Net proceeds from issue of share capital 0.9 1.9 3.3
Debt arrangement fees (26.7) (22.0) (22.2)
Repayment of bank loans (54.0) (642.7) (1,202.1)
Drawdown of bank loan 737.5 936.8 1,749.8
Issue of senior loan notes - 650.0 650.0
Repayment of obligations under finance leases (0.6) (1.1) (1.1)
Interest paid (86.9) (63.2) (172.9)
Dividends paid - (121.0) (182.3)
Distribution to non controlling interests - (15.0) (15.0)
Net cash generated by financing activities 570.2 723.7 807.5
Net increase/(decrease) in cash and cash equivalents 167.2 59.0 (38.2)
Cash and cash equivalents at beginning of period 319.0 352.9 352.9
Cash transferred to held for sale - - 16.2
Foreign exchange gain/(loss) 1.9 (1.0) (11.9)
Cash and cash equivalents at end of period 488.1 410.9 319.0
Notes to the preliminary financial statements
Six months ended 30 June 2015
1. General information
The condensed financial statements for the six month period ended 30 June 2015
have been prepared in accordance with International Accounting Standard (IAS)
34 Interim Financial Reporting and the requirements of the Disclosure and
Transparency Rules (DTR) of the Financial Conduct Authority (FCA) in the
United Kingdom as applicable to interim financial reporting.
The Condensed financial statements represent a 'condensed set of financial
statements' as referred to in the DTR issued by the FCA. Accordingly, they do
not include all of the information required for a full annual financial report
and are to be read in conjunction with the Group's financial statements for
the year ended 31 December 2014, which were prepared in accordance with
International Financial Reporting Standards (IFRS) adopted for use by the
European Union (EU). The Condensed financial statements are unaudited and do
not constitute statutory accounts as defined in section 434 of the Companies
Act 2006. The financial information for the year ended 31 December 2014 does
not constitute statutory accounts as defined in section 434 of the Companies
Act 2006. This information was derived from the statutory accounts for the
year ended 31 December 2014, a copy of which has been delivered to the
Registrar of Companies. The auditor's report on these accounts was
unqualified, did not include a reference to any matters to which the auditor
drew attention by way of an emphasis of matter and did not contain a statement
under sections 498 (2) or (3) of the Companies Act 2006.
2. Accounting policies
The annual financial statements of Tullow Oil plc are prepared in accordance
with IFRSs as issued by the International Accounting Standards Board and as
adopted by the European Union. The condensed set of financial statements
included in this half-yearly financial report have been prepared in accordance
with International Accounting Standard 34 'Interim Financial Reporting', as
adopted by the European Union and the Disclosure and Transparency Rules of the
Financial Services Authority.
Basis of preparation
The condensed set of financial statements included in this half-yearly
financial report have been prepared on a going concern basis as the Directors
consider that the Group has adequate resources to continue in operational
existence for the foreseeable future as explained in the Finance Review.
The accounting policies adopted in the 2015 half-yearly financial report are
the same as those adopted in the 2014 Annual report and accounts other than
the following new and revised standards that impact Tullow became effective
during 2015:
· IAS 19 Defined benefit Plans: Employee Contributions
· IFRS 2 Share-based Payment - Definition of vesting conditions
· IFRS 3 Business Combinations - Accounting for contingent consideration
in a business combination
· IFRS 8 Operating Segments - Aggregation of operating segments
· IFRS 8 Operating Segments - Reconciliation of the total reportable
segments assets to the entity's assets
· IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets -
Revaluation method - proportionate restatement of accumulated
depreciation/amortisation
· IAS 24 Related Party Disclosures - Key management personnel
· IFRS 13 Fair Value Measurement - Scope of paragraph 52 (portfolio
exemption)
· IAS 40 Investment Property - Interrelationship between IFRS 3 and IAS 40
(ancillary services)
The adoption of these standards has not had a material impact on the financial
statements of the Group.
3. Earnings per Share
The calculation of basic earnings per share is based on the loss for the
period after taxation attributable to equity holders of the parent of $67.9
million (1H 2014: $75.3 million, loss) and a weighted average number of shares
in issue of 911.0 million (1H 2014: 910.2 million).
The calculation of diluted earnings per share is based on the loss for the
period after taxation as for basic earnings per share. The number of shares
outstanding, however, is adjusted to show the potential dilution if employee
share options are converted into ordinary shares. The weighted average number
of ordinary shares is increased by 15.2 million (1H 2014: 1.8 million) in
respect of employee share options, resulting in a diluted weighted average
number of shares of 927.2 million (1H 2014: 912.0 million).
4. Dividends
The Directors intend to recommend that no interim 2015 dividend be paid (2014
interim dividend: 4.0p).
5. Approval of Accounts
These unaudited half-yearly financial statements were approved by the Board of
Directors on 28 July 2015.
6. Segmental reporting
During 2015 the Group reorganised its operational structure so that the
management and resources of the business are better aligned with the delivery
of the business objectives. As a result the information reported to the
Group's Chief Executive Officer for the purposes of resource allocation and
assessment of segment performance has changed to focus on three new business
delivery teams, West Africa (including non-operated producing European
assets), East Africa and New Ventures. The Group has one class of business,
being the exploration, development, production and sale of hydrocarbons and
therefore the Group's reportable segments under IFRS 8 are West Africa; East
Africa; and New Ventures. The following tables present revenue, profit and
certain asset and liability information regarding the Group's business
segments for the six months ended 30 June 2015 and 2014 and the year ended 31
December 2014. The tables for the six months ended 30 June 2014 and the year
ended 31 December 2014 have been restated to reflect the new reportable
segments of the business.
West Africa East Africa New Ventures Unallocated Total
$m $m $m $m $m
Six months ended 30 June 2015 819.6 - - - 819.6
Sales revenue by origin
Segment result 346.3 (0.1) (80.2) (0.2) 265.8
Loss on disposal of other assets (43.9)
Unallocated corporate expenses (125.4)
Operating profit 96.5
Loss on hedging instruments (25.1)
Finance revenue 1.4
Finance costs (83.0)
Loss before tax (10.2)
Income tax charge (57.5)
Loss after tax (67.7)
Total assets 7,427.8 2,461.4 1,563.2 396.6 11,849.0
Total liabilities (3,134.4) (295.3) (730.4) (3,907.4) (8,067.5)
Other segment information
Capital expenditure:
Property, plant and equipment 526.1 - 0.1 10.3 536.5
Intangible exploration and evaluation assets 16.5 225.7 128.8 - 371.0
Depletion, depreciation and amortization (291.4) (0.5) (0.6) (13.4) (305.9)
Reversal of impairment of property, plant and equipment 11.1 - - - 11.1
Exploration costs written off (9.5) - (78.0) - (87.5)
Unallocated expenditure and net liabilities include amounts of a corporate
nature and not specifically attributable to a geographic area. The liabilities
comprise the Group's external debt and other non attributable corporate
liabilities.
*Restated West Africa East Africa New Ventures Unallocated Total
$m $m $m $m $m
Six months ended 30 June 2014 1,259.5 - 5.1 - 1,264.6
Sales revenue by origin
Segment result 664.3 (0.3) (387.8) (5.1) 271.1
Loss on disposal of oil and gas assets (114.8)
Unallocated corporate expenses (120.0)
Operating profit 36.3
Loss on hedging instruments (18.0)
Finance revenue 7.3
Finance costs (54.5)
Loss before tax (28.9)
Income tax expense (66.2)
Loss after tax (95.1)
Total assets 6,998.6 2,313.1 2,775.8 284.3 12,371.8
Total liabilities (2,826.8) (306.8) (1,147.9) (2,841.6) (7,123.1)
Other segment information
Capital expenditure:
Property, plant and equipment 539.5 1.7 1.7 29.7 572.6
Intangible exploration and evaluation assets 42.9 261.2 400.0 - 704.1
Depletion, depreciation and amortization (309.1) (0.2) (0.5) (14.3) (324.1)
Impairment of property, plant and equipment (6.4) - (1.5) - (7.9)
Exploration costs written off (12.3) (0.4) (389.5) - (402.2)
*Restated West Africa East Africa New Ventures Unallocated Total
$m $m $m $m $m
Year ended 31 December 2014 2,205.2 - 7.7 - 2,212.9
Sales revenue by origin
Segment result 371.8 0.8 (1,656.1) (6.3) (1,289.8)
Loss on disposal of oil and gas assets (482.4)
Unallocated corporate expenses (192.4)
Operating Loss (1,964.6)
Gain on hedging instruments 50.8
Finance revenue 9.6
Finance costs (143.2)
Loss before tax (2,047.4)
Income tax credit 407.5
Loss after tax (1,639.9)
Total assets 7,454.2 2,354.7 1,397.3 215.5 11,421.7
Total liabilities (3,285.9) (267.6) (588.5) (3,259.4) (7,401.4)
Other segment information
Capital expenditure:Property, plant and equipment 1,463.1 1.6 11.0 59.6 1,535.3
Intangible exploration and evaluation assets 181.9 555.8 667.8 - 1,405.5
Depletion, depreciation and amortization (577.1) (0.9) (1.2) (42.6) (621.8)
Impairment of property, plant and equipment (592.4) - (3.5) - (595.9)
Exploration costs written off (134.6) 0.8 (1,523.5) - (1,657.3)
Goodwill impairment - - (132.8) - (132.8)
*Restated Sales revenue6 months ended 30.06.15$m Sales revenue6 months ended 30.06.14$m Sales revenueYear ended 31.12.14 $m **Non-current assets30.06.15$m **Non-current assets 30.06.14$m **Non-current assets31.12.14 $m
Congo 27.8 25.5 52.4 86.0 126.9 82.9
Côte d'Ivoire 27.2 14.0 58.5 151.2 104.9 143.3
Equatorial Guinea 92.6 139.6 262.8 309.8 323.8 354.7
Gabon 161.6 164.2 275.4 347.6 380.4 313.1
Ghana 427.5 736.3 1,272.1 4,465.0 3,720.6 4,102.9
Mauritania 12.7 19.7 35.9 - 143.1 1.4
Netherlands 34.0 55.9 93.1 500.9 854.1 572.6
UK 36.2 104.3 155.0 75.7 384.3 93.9
Other - - - 3.6 3.7 10.6
Total West Africa 819.6 1,259.5 2,205.2 5,939.8 6,041.8 5,675.4
Kenya - - - 803.7 466.9 659.4
Uganda - - - 1,524.7 1,339.6 1,444.2
Total East Africa - - - 2,328.4 1,806.5 2,103.6
Norway - 5.1 7.7 740.0 1,129.5 573.9
Other - - - 452.0 991.1 412.2
Total New ventures - 5.1 7.7 1,192.0 2,120.6 986.1
Unallocated - - - 121.8 131.5 121.1
Total 819.6 1,264.6 2,212.9 9,582.0 10,100.4 8,886.2
**Excludes derivative financial instruments and deferred tax assets.
7. Operating profit/(loss)
6 months ended 30.06.15Unaudited$m 6 monthsended 30.06.14 Unaudited$m Year ended 31.12.14Audited$m
Cost of sales
Operating costs 220.1 227.0 511.5
Depletion and amortisation of oil and gas assets 290.5 305.0 572.2
Underlift, overlift and oil inventory movement (31.8) 44.7 27.1
Share-based payment charge included in cost of sales 0.7 0.9 1.6
Other cost of sales (2.1) 5.8 4.3
Total cost of sales 477.4 583.4 1,116.7
Administrative expenses
Share-based payment charge included in administrative expenses 14.2 19.5 37.9
Depreciation of other fixed assets 15.4 19.1 49.6
Other administrative costs 70.4 81.4 104.9
Total administrative expenses 100.0 120.0 192.4
8. Taxation on loss on ordinary activities
The overall net tax charge of $58 million (1H 2014: $66 million) includes a
one-off tax charge of $108 million for settling the Uganda CGT liability. This
matter is discussed further below. The tax charge also includes recurring
charges in respect of the Group's North Sea, Gabon, Equatorial Guinea and
Ghanaian production activities offset by the tax credits arising from
Norwegian exploration and non-recurring deferred tax credits associated with
losses on disposal, exploration write-offs and impairments. After adjusting
for the non-recurring amounts related to Uganda CGT, losses on disposal,
exploration write-offs and impairments and related deferred tax benefit, the
Group's underlying effective tax rate is 32% (1H 2014: 37%). The decrease in
the underlying effective tax rate is primarily a result of higher PSC income
and the tax credit recognised on the derivative financial instruments.
In respect of the Uganda CGT settlement noted above, on 22 June 2015,
following constructive discussions with the Government of Uganda and the
Uganda Revenue Authority, Tullow announced that it had agreed to pay $250
million to the Uganda Revenue Authority in full and final settlement of its
CGT liability for the farm-downs to Total and CNOOC that completed in 2012.
This sum comprises $142 million that Tullow paid in 2012 and $108 million to
be paid in three equal instalments. The first of these was paid upon
settlement and the remainder will be paid in 2016 and 2017.
9. Disposals
Income statement 6 months ended 30.06.15Unaudited $m Cash flow Income statement 6 months ended 30.06.14Unaudited $m Cash flow Income statement Year ended 31.12.14Audited$m Cash flow Year ended 31.12.14Audited
6 months ended 30.06.15Unaudited 6 months ended 30.06.14Unaudited$m $m
$m
Uganda farm-down consideration adjustments - - (36.6) (36.6) (36.6) (36.6)
Write-off of Uganda contingent consideration - - (77.8) - (370.1) -
Disposal of L&Q blocks (Netherlands) (46.2) 54.8 - - - -
Farm-out of E blocks (Netherlands) - 0.1 - - - -
Disposal of Brage (Norway) - - - - 21.1 8.4
Farm-out of Schooner & Ketch (UK) 2.2 2.2 - - (90.4) 38.1
Other 0.1 0.1 (0.4) (0.3) (6.4) 11.4
Total (43.9) 57.2 (114.8) (36.9) (482.4) 21.3
On 30 April 2015 Tullow completed the sale of its operated and non-operated
interests in the L12/15 area and Blocks Q4 and Q5 to AU Energy. The
consideration was E64 million ($54.8 million) producing a profit after tax of
$7.4 million and a loss before tax of $46.2 million. On 5 June 2015, Tullow
completed the farm-down to GDF Suez E&P Nederland of 30% equity and the
operatorship of Exploration Licences E10, E11 (including Tullow's Vincent
discovery), E14, E15c and E18b.
10. Intangible exploration and evaluation assets
6 months ended 30.06.15Unaudited 6 months ended 30.06.14Unaudited Year ended 31.12.14Audited
$m $m $m
At 1 January 3,660.8 4,148.3 4,148.3
Additions 371.0 704.1 1,405.5
Disposals (note 9) (0.1) - (26.8)
Amounts written off (87.5) (402.2) (1,662.4)
Write-off associated with Norway contingent consideration - (37.7) (88.8)
Transfer to assets held for sale - - (13.8)
Transfer to property, plant and equipment (41.0) - -
Currency translation adjustments (50.8) (6.4) (101.2)
At 30 June/31 December 3,852.4 4,406.1 3,660.8
Exploration write-offs after tax Rationale for 6 months ended 30.06.15write-off Current year expenditure6 months ended 30.06.15Unaudited Prior year expenditure6 months ended 30.06.15Unaudited Post-tax write off6 months ended 30.06.15Unaudited Post-tax write off6 months ended 30.06.14Unaudited Post-tax write offYear ended 31.12.14Audited
$m $m $m $m $m
Norway a, b 6.1 5.7 11.8 28.1 80.4
Mauritania c 5.4 - 5.4 146.1 568.2
French Guiana c (0.8) - (0.8) - 343.1
Gabon a, c 3.2 0.2 3.4 11.2 33.3
Côte d'Ivoire c 0.1 - 0.1 58.2 58.0
Ethiopia c (3.3) - (3.3) 28.4 65.1
Ghana c - - - - 20.4
Kenya c - - - 1.9 0.6
Uganda c - - - - (1.5)
Mozambique c 1.3 - 1.3 (5.8) (6.2)
Other c 3.8 2.4 6.2 3.5 55.7
New ventures 12.4 - 12.4 21.4 42.3
Exploration costs written off after tax 28.2 8.3 36.5 293.0 1,259.4
Associated deferred tax credit 28.3 22.7 51.0 109.2 397.9
Exploration costs written off before tax 56.5 31.0 87.5 402.2 1,657.3
a. Current year unsuccessful drilling results
b. Licence relinquishments
c. Current year expenditure on previously written off assets
11. Property, plant and equipment
Oil and gas assets 6 months ended 30.06.15Unaudited Other fixed Total6 months ended 30.06.15Unaudited Oil and gas assets 6 months ended 30.06.14Unaudited Other fixed Total6 months ended 30.06.14Unaudited Oil and gas assetsYear ended 31.12.14Audited Other fixed assetsYear ended 31.12.14Audited Total Year ended 31.12.14Audited
$m assets $m $m assets $m $m $m $m
6 months ended 30.06.15Unaudited 6 months ended 30.06.14Unaudited
$m $m
Cost
At 1 January 9,240.3 283.7 9,524.0 8,692.4 221.4 8,913.8 8,692.4 221.4 8,913.8
Additions 518.7 17.8 536.5 536.2 36.4 572.6 1,454.7 80.6 1,535.3
Disposals (0.1) (0.3) (0.4) - - - (601.3) 0.1 (601.2)
Transfer to assets held for sale - - - - - - (177.2) - (177.2)
Transfer from intangible assets 41.0 - 41.0 - - - - - -
Currency translation adjustments (17.7) 2.1 (15.6) 51.0 5.4 56.4 (128.3) (18.4) (146.7)
At 30 June/31 December 9,782.2 303.3 10,085.5 9,279.6 263.2 9,542.8 9,240.3 283.7 9,524.0
Depreciation, depletion and amortisation
At 1 January (4,489.1) (147.9) (4,637.0) (3,942.3) (108.6) (4,050.9) (3,942.3) (108.6) (4,050.9)
Charge for the year (290.5) (15.4) (305.9) (305.0) (19.1) (324.1) (572.2) (49.6) (621.8)
Impairment loss (21.6) - (21.6) (7.9) - (7.9) (595.9) - (595.9)
Impairment reversal 32.7 - 32.7 - - - - - -
Disposal - 0.3 0.3 - - - 448.0 (0.1) 447.9
Transfer to assets held for sale - - - - - - 73.3 - 73.3
Currency translation adjustments 7.4 (0.6) 6.8 (41.6) (2.4) (44.0) 100.0 10.4 110.4
At 30 June/31 December (4,761.1) (163.6) (4,924.7) (4,296.8) (130.1) (4,426.9) (4,489.1) (147.9) (4,637.0)
Net book value at 30 June/31 December 5,021.1 139.7 5,160.8 4,982.8 133.1 5,115.9 4,751.2 135.8 4,887.0
Impairments after tax Trigger for impairment 6 months ended 30.06.15 6 months ended 30.06.15Unaudited 6 months ended 30.06.14Unaudited Year ended 31.12.14Audited Discount Short-term Long-term price assumption
$m $m $m rate assumption price
assumptione
UK a 1.1 - 128.2 10% 3yr forward curve 55p/th
Netherlands a 9.6
- More to follow, for following part double click ID:nRSc3698UcRecent news on Tullow Oil
See all newsREG - Tullow Oil PLC - Director/PDMR Shareholding
AnnouncementREG - Tullow Oil PLC - Receipt of Tranche B payment for Kenya assets sale
AnnouncementREG - Tullow Oil PLC - Refinancing Transaction Update
AnnouncementREG - Tullow Oil PLC - Trading Statement
AnnouncementREG - Tullow Oil PLC - Tullow signs SPA to acquire TEN FPSO in Ghana
Announcement