REG - Tullow Oil PLC - 2016 Half Year Results <Origin Href="QuoteRef">TLW.L</Origin> - Part 2
27/07/2016 07:06
- Part 2: For the preceding part double click ID:nRSa3212Fa
Current liabilities
Trade and other payables 12 (912.0) (843.8) (1,110.6)
Provisions* 13 (143.0) (18.6) (187.0)
Borrowings (652.0) (125.5) (73.8)
Current tax liabilities (99.1) (334.0) (208.3)
Derivative financial instruments (2.4) (3.3) (2.1)
(1,808.5) (1,325.2) (1,581.8)
Non-current liabilities
Trade and other payables 12 (99.6) (79.8) (99.3)
Borrowings (4,335.2) (3,906.3) (4,262.4)
Provisions (1,042.3) (1,205.4) (1,065.1)
Deferred tax liabilities (1,222.1) (1,550.8) (1,164.5)
Derivative financial instruments (2.9) - -
(6,702.1) (6,742.3) (6,591.3)
Total liabilities (8,510.6) (8,067.5) (8,173.1)
Net assets 2,925.2 3,781.5 3,174.7
EQUITY
Called up share capital 14 147.2 147.0 147.2
Share premium 611.5 607.2 609.8
Foreign currency translation reserve (260.1) (252.2) (249.3)
Hedge reserve 283.7 253.8 569.9
Other reserves 740.9 740.9 740.9
Retained earnings 1,392.1 2,260.3 1,336.4
Equity attributable to equity holders of the Company 2,915.3 3,757.0 3,154.9
Non-controlling interest 9.9 24.5 19.8
Total equity 2,925.2 3,781.5 3,174.7
*For comparability purposes current provisions have been re-presented.
Condensed statement of changes in equity As at 30 June 2016
Share Share Foreign currency translation reserve1$m Hedge Reserve2$m Other reserves3$m Retained earnings Total Non-controlling interest Total
capital premium $m $m $m Equity
$m $m $m
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
Loss for the period - - - - - (966.9) (966.9) (2.3) (969.2)
Hedges, net of tax - - - 316.1 - - 316.1 - 316.1
Currency translation adjustments - - 2.9 - - - 2.9 - 2.9
Issue of employee share options 0.2 2.6 - - - - 2.8 - 2.8
Vesting of PSP shares - - - - - (1.9) (1.9) - (1.9)
Share-based payment charges - - - - - 44.9 44.9 - 44.9
Distribution to non-controlling interests - - - - - - - (2.4) (2.4)
At 1 January 2016 147.2 609.8 (249.3) 569.9 740.9 1,336.4 3,154.9 19.8 3,174.7
Profit for the period - - - - - 29.7 29.7 0.2 29.9
Hedges, net of tax - - - (286.2) - - (286.2) - (286.2)
Currency translation adjustments - - (10.8) - - - (10.8) - (10.8)
Issue of employee share options - 1.7 - - - - 1.7 - 1.7
Vesting of PSP shares - - - - - (1.7) (1.7) - (1.7)
Share-based payment charges - - - - - 27.7 27.7 - 27.7
Distribution to non-controlling interests - - - - - - - (10.1) (10.1)
At 30 June 2016 147.2 611.5 (260.1) 283.7 740.9 1,392.1 2,915.3 9.9 2,925.2
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 2016
Notes 6 months ended 30.06.16Unaudited$m 6 monthsended 30.06.15 Unaudited$m Year ended 31.12.15Audited$m
Cash flows from operating activities
Profit/(loss) before taxation 24.1 (10.2) (1,297.3)
Adjustments for:
Depletion, depreciation and amortisation 193.8 305.9 580.1
Loss on disposal 3.4 43.9 56.5
Goodwill impairment - - 53.7
Exploration costs written off 9 59.0 87.5 748.9
Impairment of property, plant and equipment 10 - (11.1) 406.0
Increase in provision for onerous service contracts 13 16.9 - 185.5
Payments under onerous service contracts 13 (59.7) - -
Provision for inventory - - 22.2
Decommissioning payments (7.1) (22.5) (40.8)
Share-based payment charge 23.0 14.9 48.7
(Gain)/loss on hedging instruments (30.2) 25.1 58.8
Finance revenue (36.9) (1.4) (4.2)
Finance costs 69.6 83.0 149.0
Operating cash flow before working capital movements 255.9 515.1 967.1
Decrease/(increase) in trade and other receivables 119.5 (32.8) (26.5)
(Increase)/decrease in inventories (16.8) 11.6 9.0
(Decrease)/increase in trade payables (65.1) (43.9) 366.5
Cash flows from operating activities 293.5 450.0 1,316.1
Taxes (paid)/recieved (94.7) (79.5) 34.9
Net cash from operating activities 198.8 370.5 1,351.0
Cash flows from investing activities
Proceeds from disposals 0.1 57.2 55.8
Purchase of intangible exploration and evaluation assets (149.2) (326.3) (647.6)
Purchase of property, plant and equipment (631.5) (505.8) (1,464.8)
Interest received 0.7 1.4 4.2
Net cash used in investing activities (779.9) (773.5) (2,052.4)
Cash flows from financing activities
Net proceeds from issue of share capital - 0.9 3.5
Debt arrangement fees (16.0) (26.7) (25.7)
Repayment of bank loans (80.2) (54.0) (191.8)
Drawdown of bank loan 741.6 737.5 1,168.8
Repayment of obligations under finance leases (1.6) (0.6) (3.3)
Interest paid (104.2) (86.9) (203.6)
Distribution to non controlling interests (10.0) - (2.4)
Net cash generated by financing activities 529.6 570.2 745.5
Net (decrease)/increase in cash and cash equivalents (51.5) 167.2 44.1
Cash and cash equivalents at beginning of period 355.7 319.0 319.0
Foreign exchange (loss)/gain (0.5) 1.9 (7.4)
Cash and cash equivalents at end of period 303.7 488.1 355.7
Notes to the preliminary financial statements
Six months ended 30 June 2016
1. General information
The condensed financial statements for the six month period ended 30 June 2016
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 2015, 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 2015 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 2015, 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 has 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 has 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 2016 half-yearly financial report are
the same as those adopted in the 2015 Annual report and accounts other than
the following new and revised standards that were effective during 2016. 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 profit for the
period after taxation attributable to equity holders of the parent of $29.7
million (1H 2015: $67.9 million, loss) and a weighted average number of shares
in issue of 911.9 million (1H 2015: 911.0 million).
The calculation of diluted earnings per share is based on the profit 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 39.2 million (1H 2015: 15.2 million) in
respect of employee share options, resulting in a diluted weighted average
number of shares of 951.1 million (1H 2015: 972.2 million).
4. Dividends
The Directors intend to recommend that no interim 2016 dividend be paid (2015
interim dividend: Nil).
5. Approval of Accounts
These unaudited half-yearly financial statements were approved by the Board of
Directors on 26 July 2016.
6. Segmental reporting
The information reported to the Group's Chief Executive Officer for the
purposes of resource allocation and assessment of segment performance is
focused on three 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 2016, the six
months ended 30 June 2015, and the year ended 31 December 2015.
West Africa East Africa New Ventures Unallocated Total
$m $m $m $m $m
Six months ended 30 June 2016 540.6 - - - 540.6
Sales revenue by origin
Segment result 181.0 - (58.6) (16.6) 105.8
Loss on disposal (3.4)
Unallocated corporate expenses (75.8)
Operating profit 26.6
Gain on hedging instruments 30.2
Finance revenue 36.9
Finance costs (69.6)
Profit before tax 24.1
Income tax credit 5.8
Profit after tax 29.9
Total assets 7,547.8 2,642.9 1,056.3 188.8 11,435.8
Total liabilities (2,783.7) (251.5) (462.0) (5,013.4) (8,510.6)
Other segment information
Capital expenditure:
Property, plant and equipment 563.0 - 0.3 0.1 563.4
Intangible exploration and evaluation assets 6.1 68.3 65.2 - 139.6
Depletion, depreciation and amortization (182.9) (0.5) (0.6) (9.8) (193.8)
Exploration costs written off (2.5) - (56.5) - (59.0)
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.
6. Segmental reporting contd.
West Africa East Africa New Ventures Unallocated Total
$m $m $m $m $m
Six months ended 30 June 2015 819.6 - - - 819.6
Sales revenue by origin
Segment result 346.3 (0.1) (80.2) (0.2) 265.8
Loss on disposal of other assets (43.9)
Unallocated corporate expenses (125.4)
Operating profit 96.5
Loss on hedging instruments (25.1)
Finance revenue 1.4
Finance costs (83.0)
Loss before tax (10.2)
Income tax charge (57.5)
Loss after tax (67.7)
Total assets 7,427.8 2,461.4 1,563.2 396.6 11,849.0
Total liabilities (3,134.4) (295.3) (730.4) (3,907.4) (8,067.5)
Other segment information
Capital expenditure:
Property, plant and equipment 526.1 - 0.1 10.3 536.5
Intangible exploration and evaluation assets 16.5 225.7 128.8 - 371.0
Depletion, depreciation and amortization (291.4) (0.5) (0.6) (13.4) (305.9)
Reversal of impairment of property, plant and equipment 11.1 - - - 11.1
Exploration costs written off (9.5) - (78.0) - (87.5)
Year ended 31 December 2015 1,606.6 - - - 1,606.6
Sales revenue by origin
Segment result (189.7) (28.3) (461.2) (123.6) (802.8)
Loss on disposal of oil and gas assets (56.5)
Unallocated corporate expenses (234.4)
Operating Loss (1,093.7)
Loss on hedging instruments (58.8)
Finance revenue 4.2
Finance costs (149.0)
Loss before tax (1,297.3)
Income tax credit 260.4
Loss after tax (1,036.9)
Total assets 7,510.5 2,601.6 1,011.2 224.5 11,347.8
Total liabilities (3,085.8) (341.4) (331.8) (4,414.1) (8,173.1)
Other segment information
Capital expenditure:Property, plant and equipment 1,245.0 0.5 1.5 11.2 1,258.2
Intangible exploration and evaluation assets 23.1 399.6 203.6 - 626.3
Depletion, depreciation and amortization (553.2) (1.1) (1.2) (24.6) (580.1)
Impairment of property, plant and equipment (406.0) - - - (406.0)
Exploration costs written off (380.0) (28.3) (340.6) - (748.9)
Goodwill impairment - - (53.7) - (53.7)
Sales revenue6 months ended 30.06.16$m Sales revenue6 months ended 30.06.15$m Sales revenueYear ended 31.12.15 $m *Non-current assets30.06.16$m *Non-current assets 30.06.15$m *Non-current assets31.12.15 $m
Congo 16.9 27.8 39.7 10.1 86.0 12.2
Côte d'Ivoire 48.9 27.2 91.8 149.5 151.2 159.1
Equatorial Guinea 82.8 92.6 176.1 191.0 309.8 218.6
Gabon 141.3 161.6 284.3 207.8 347.6 234.5
Ghana 183.7 427.5 869.1 5,334.3 4,465.0 4,891.0
Mauritania 11.6 12.7 18.9 - - -
Netherlands 14.2 34.0 57.5 120.9 500.9 115.5
UK 41.2 36.2 69.2 5.1 75.7 6.0
Other - - - 0.5 3.6 0.5
Total West Africa 540.6 819.6 1,606.6 6,019.2 5,939.8 5,637.4
Kenya - - - 909.7 803.7 880.6
Uganda - - - 1,632.3 1,524.7 1,593.5
Total East Africa - - - 2,542.0 2,328.4 2,474.1
Norway - - - 576.4 740.0 474.8
Other - - - 288.0 452.0 297.7
Total New ventures - - - 864.4 1,192.0 772.5
Unallocated - - - 90.4 121.8 108.8
Total 540.6 819.6 1,606.6 9,516.0 9,582.0 8,992.8
*Excludes derivative financial instruments and deferred tax assets.
7. Operating profit/(loss)
6 months ended 30.06.16Unaudited$m 6 monthsended 30.06.15 Unaudited$m Year ended 31.12.15Audited$m
Cost of sales
Operating costs 189.8 220.1 406.3
Depletion and amortisation of oil and gas assets 182.1 290.5 551.2
Underlift, overlift and oil inventory movement (29.5) (31.8) (1.5)
Share-based payment charge included in cost of sales 0.4 0.7 0.8
Other cost of sales 16.1 (2.1) 58.5
Total cost of sales 358.9 477.4 1,015.3
Administrative expenses
Share-based payment charge included in administrative expenses 6.4 14.2 47.9
Depreciation of other fixed assets 11.7 15.4 28.9
Relocation costs associated with simplification project - - 5.9
Other administrative costs 50.3 70.4 110.9
Total administrative expenses 68.4 100.0 193.6
Restructuring costs
Total restructuring costs 7.4 25.4 40.8
8. Taxation on loss on ordinary activities
The overall net tax credit of $6 million (1H 2015: $58 million charge)
includes credits in respect of the Group's North Sea, Gabon, Equatorial Guinea
and Ghanaian production activities, Norwegian exploration and non-recurring
deferred tax credits associated with exploration write-offs, disposals and
onerous lease provisions offset by a tax charge on hedging profits. After
adjusting for the non-recurring amounts related to exploration write-offs,
disposals and onerous lease provisions and their associated deferred tax
benefit, the Group's underlying effective tax rate is 20% (1H 2015: 32%). The
decrease in the underlying effective tax rate is primarily a result of lower
profits from overseas production activities and increased hedging profits
taxed at the UK corporate tax rate.
9. Intangible exploration and evaluation assets
6 months ended 30.06.16Unaudited 6 months ended 30.06.15Unaudited Year ended 31.12.15Audited
$m $m $m
At 1 January 3,400.0 3,660.8 3,660.8
Additions 139.6 371.0 626.3
Disposals - (0.1) (5.2)
Amounts written off (59.0) (87.5) (748.9)
Transfer to property, plant and equipment - (41.0) (63.6)
Currency translation adjustments 9.0 (50.8) (69.4)
At 30 June/31 December 3,489.6 3,852.4 3,400.0
Exploration write-offs Rationale for write-off 6 months ended 30.06.16 Current year expenditurewritten-off 30.06.16Unaudited Prior year expenditurewritten-off 30.06.16Unaudited Post-tax write off30.06.16Unaudited Pre-tax write off30.06.16Unaudited Pre-tax write off30.06.15Unaudited Pre-tax write off 31.12.15Audited
$m $m $m $m $m $m
Côte d'Ivoire c - - - - 0.1 2.9
Ethiopia c 1.6 - 1.6 1.6 (3.3) 39.7
French Guiana - - - - (0.8) 0.3
Gabon c 1.0 - 1.0 1.0 6.1 21.3
Ghana c 1.5 - 1.5 1.5 - 0.4
Guinea c 0.6 - 0.6 0.6 - 60.3
Greenland c 0.1 - 0.1 0.1 - 38.7
Kenya - - - - - 28.3
Netherlands - - - - - 371.3
Norway b, c 0.9 4.3 5.2 23.5 53.7 92.2
Madagascar c 0.1 - 0.1 0.1 - 12.2
Mauritania c (2.8) - (2.8) (2.8) 5.4 7.3
Mozambique c 0.1 - 0.1 0.1 1.3 4.6
Suriname b 0.9 18.0 18.9 18.9 - 28.8
Pakistan a 1.9 6.1 8.0 8.0 - -
Other c (0.7) - (0.7) (0.7) 8.6 15.2
New ventures 5.1 - 5.1 7.1 16.4 25.4
Exploration costs written off 10.3 28.4 38.7 59.0 87.5 748.9
a. Current year unsuccessful drilling results
b. Licence relinquishments
c. Current year expenditure on previously written off assets
10. Property, plant and equipment
Oil and gas assets 6 months ended 30.06.16Unaudited Other fixed Total6 months ended 30.06.16Unaudited Oil and gas assets 6 months ended 30.06.15Unaudited Other fixed Total6 months ended 30.06.15Unaudited Oil and gas assetsYear ended 31.12.15Audited Other fixed assetsYear ended 31.12.15Audited Total Year ended 31.12.15Audited
$m assets $m $m assets $m $m $m $m
6 months ended 30.06.16Unaudited 6 months ended 30.06.15Unaudited
$m $m
Cost
At 1 January 10,439.9 289.5 10,729.4 9,240.3 283.7 9,524.0 9,240.3 283.7 9,524.0
Additions 562.9 0.5 563.4 518.7 17.8 536.5 1,235.1 23.1 1,258.2
Disposals (276.0) (0.1) (276.1) (0.1) (0.3) (0.4) (6.2) (3.6) (9.8)
Transfer from intangible assets - - - 41.0 - 41.0 63.6 - 63.6
Currency translation adjustments (99.7) (19.7) (119.4) (17.7) 2.1 (15.6) (92.9) (13.7) (106.6)
At 30 June/31 December 10,627.1 270.2 10,897.3 9,782.2 303.3 10,085.5 10,439.9 289.5 10,729.4
Depreciation, depletion and amortisation
At 1 January (5,360.0) (165.0) (5,525.0) (4,489.1) (147.9) (4,637.0) (4,489.1) (147.9) (4,637.0)
Charge for the year (182.1) (11.7) (193.8) (290.5) (15.4) (305.9) (551.2) (28.9) (580.1)
Impairment loss - - - (21.6) - (21.6) (467.2) - (467.2)
Impairment reversal - - - 32.7 - 32.7 61.2 - 61.2
Disposal 276.0 0.1 276.1 - 0.3 0.3 6.4 3.6 10.0
Currency translation adjustments 100.1 10.7 110.8 7.4 (0.6) 6.8 79.9 8.2 88.1
At 30 June/31 December (5,166.0) (165.9) (5,331.9) (4,761.1) (163.6) (4,924.7) (5,360.0) (165.0) (5,525.0)
Net book value at 30 June/31 December 5,461.1 104.3 5,565.4 5,021.1 139.7 5,160.8 5,079.9 124.5 5,204.4
11. Other assets
30.06.16Unaudited$m 30.06.15Unaudited$m 31.12.15Audited$m
Non-current
Amounts due from joint venture partners 164.8 117.9 161.8
Uganda VAT recoverable 50.3 50.6 50.3
Norwegian tax receivable 76.4 170.7
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