REG - Tullow Oil PLC Tullow Oil PLC - FP Tullow Oil PLC - NP - Half Year Results <Origin Href="QuoteRef">TLW.L</Origin> - Part 2
26/07/2017 07:06
- Part 2: For the preceding part double click ID:nRSZ0804Ma
formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with IFRSs 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.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2017 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
London
25 July 2017
Condensed consolidated income statementSix months ended 30 June 2017
Notes 6 months ended 30.06.17Unaudited$m 6 months ended 30.06.16Unaudited$m Year ended 31.12.16 Audited$m
Continuing activities
Sales revenue 787.5 540.6 1,269.9
Other operating income - lost production insurance proceeds 54.3 - 90.1
Cost of sales 7 (538.6) (358.9) (813.1)
Gross profit 303.2 181.7 546.9
Administrative expenses 7 (51.4) (68.4) (116.4)
Restructuring costs 7 (1.4) (7.4) (12.3)
Loss on disposal (0.6) (3.4) (3.4)
Goodwill impairment - - (164.0)
Exploration costs written off 10 (3.9) (59.0) (723.0)
Impairment of property, plant and equipment, net 11 (641.7) - (167.6)
Provision for onerous service contracts, net 0.9 (16.9) (114.9)
Operating (loss)/profit (394.9) 26.6 (754.7)
Gain on hedging instruments 42.3 30.2 18.2
Finance revenue 8 12.9 36.9 26.4
Finance costs 8 (179.1) (69.6) (198.2)
(Loss)/profit from continuing activities before tax (518.8) 24.1 (908.3)
Income tax credit 9 209.8 5.8 311.0
(Loss)/profit for the year from continuing activities (309.0) 29.9 (597.3)
Attributable to:
Owners of the Company (308.6) 29.7 (599.9)
Non-controlling interest (0.4) 0.2 2.6
(309.0) 29.9 (597.3)
Earnings per ordinary share from continuing activities ¢ ¢ ¢
Basic 3 (25.2) 2.8 (55.8)
Diluted 3 (25.2) 2.7 (55.8)
Condensed consolidated statement of comprehensive income and expenseSix months ended 30 June 2017
6 months ended 30.06.17Unaudited$m 6 monthsended 30.06.16 Unaudited$m Year ended 31.12.16Audited$m
(Loss)/profit for the period (309.0) 29.9 (597.3)
Items that may be reclassified to the income statement in subsequent periods
Cash flow hedges
Gains/(losses) arising in the period 78.1 (101.4) (135.3)
Reclassification adjustments for items included in profit on realisation (88.3) (234.8) (415.2)
Exchange differences on translation of foreign operations (3.3) (10.8) 17.1
Other comprehensive expense (13.5) (347.0) (533.4)
Tax relating to components of other comprehensive (expense)/ income (0.6) 50.0 108.8
Net other comprehensive expense for the period (14.1) (297.0) (424.6)
Total comprehensive expense for the period (323.1) (267.1) (1,021.9)
Attributable to:
Owners of the Company (322.7) (267.3) (1,024.5)
Non-controlling interest (0.4) 0.2 2.6
(323.1) (267.1) (1,021.9)
Condensed consolidated balance sheet As at 30 June 2017
Notes 30.06.17Unaudited$m 30.06.16Unaudited$m 31.12.16 Audited$m
ASSETS
Non-current assets
Goodwill - 164.0 -
Intangible exploration and evaluation assets 10 2,100.6 3,489.6 2,025.8
Property, plant and equipment 11 4,365.9 5,565.4 5,362.9
Investments 1.0 1.0 1.0
Other non-current assets 12 200.3 296.0 175.7
Derivative financial instruments 21.8 98.6 15.8
Deferred tax assets 763.8 291.6 758.9
7,453.4 9,906.2 8,340.1
Current assets
Inventories 145.6 121.0 155.3
Trade receivables 112.8 49.0 118.4
Other current assets 12 525.4 696.0 838.9
Current tax assets 143.2 136.2 138.3
Derivative financial instruments 101.8 223.7 91.7
Cash and cash equivalents 318.4 303.7 281.9
Assets classified as held for sale 13 963.6 - 837.1
2,310.8 1,529.6 2,461.6
Total assets 9,764.2 11,435.8 10,801.7
LIABILITIES
Current liabilities
Trade and other payables 14 (624.0) (912.0) (916.1)
Provisions 15 (88.1) (143.0) (51.9)
Borrowings (512.5) (652.0) (591.5)
Current tax liabilities (22.4) (99.1) (83.1)
Derivative financial instruments (0.9) (2.4) (5.9)
Liabilities classified as held for sale 13 (111.0) - -
(1,358.9) (1,808.5) (1,648.5)
Non-current liabilities
Trade and other payables 14 (105.6) (99.6) (112.3)
Borrowings (3,553.0) (4,335.2) (4,388.4)
Provisions 15 (962.7) (1,042.3) (1,106.7)
Deferred tax liabilities (1,079.9) (1,222.1) (1,292.4)
Derivative financial instruments (0.1) (2.9) (10.9)
(5,701.3) (6,702.1) (6,910.7)
Total liabilities (7,060.2) (8,510.6) (8,559.2)
Net assets 2,704.0 2,925.2 2,242.5
EQUITY
Called up share capital 16 207.5 147.2 147.5
Share premium 16 1,311.8 611.5 619.3
Equity component of convertible bonds 48.4 - 48.4
Foreign currency translation reserve (235.5) (260.1) (232.2)
Hedge reserve 117.4 283.7 128.2
Other reserves 740.9 740.9 740.9
Retained earnings 504.6 1,392.1 778.0
Equity attributable to equity holders of the Company 2,695.1 2,915.3 2,230.1
Non-controlling interest 8.9 9.9 12.4
Total equity 2,704.0 2,925.2 2,242.5
Condensed statement of changes in equity As at 30 June 2017
Share Share Equity component of convertible bonds$m 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 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
Loss for the period - - - - - - (629.6) (629.6) 2.4 (627.2)
Hedges, net of tax - - - - (155.5) - - (155.5) - (155.5)
Currency translation adjustments - - - 27.9 - - - 27.9 - 27.9
Issue of convertible bonds - - 48.4 - - - - 48.4 - 48.4
Issue of employee share options 0.3 7.8 - - - - (7.7) 0.4 - 0.4
Share-based payment charges - - - - - - 23.2 23.2 - 23.2
Distribution to non-controlling interests - - - - - - - 0.1 0.1
At 1 January 2017 147.5 619.3 48.4 (232.2) 128.2 740.9 778.0 2,230.1 12.4 2,242.5
Profit for the period - - - - - - (308.6) (308.6) (0.4) (309.0)
Hedges, net of tax - - - - (10.8) - - (10.8) - (10.8)
Currency translation adjustments - - - (3.3) - - - (3.3) - (3.3)
Issue of shares - Rights Issue 60.0 692.5 - - - - - 752.5 - 752.5
Share-based payment charges - - - - - - 35.2 35.2 - 35.2
Distribution to non-controlling interests - - - - - - - - (3.1) (3.1)
At 30 June 2017 207.5 1,311.8 48.4 (235.5) 117.4 740.9 504.6 2,695.1 8.9 2,704.0
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 2017
Notes 6 months ended 30.06.17Unaudited$m 6 monthsended 30.06.16 Unaudited$m Year ended 31.12.16Audited$m
Cash flows from operating activities
(Loss)/profit before taxation (518.8) 24.1 (908.3)
Adjustments for:
Depreciation, depletion, and amortisation 272.1 193.8 466.9
Loss on disposal 0.6 3.4 3.4
Goodwill impairment - - 164.0
Exploration costs written off 10 3.9 59.0 723.0
Impairment of property, plant and equipment, net 11 643.8 - 167.6
Provision for onerous service contracts, net 0.9 16.9 114.9
Payment under onerous service contracts - (59.7) (132.0)
Decommissioning expenditure (10.5) (7.1) (23.0)
Share-based payment charge 20.4 23.0 43.9
Gain on hedging instruments (42.3) (30.2) (18.2)
Finance revenue (12.9) (36.9) (26.4)
Finance costs 8 179.1 69.6 198.2
Operating cash flow before working capital movements 536.3 255.9 774.0
Decrease/(increase) in trade and other receivables 123.3 119.5 (99.4)
Decrease/(increase) in inventories 9.6 (16.8) (47.8)
Decrease in trade payables (129.8) (65.1) (29.8)
Cash flows from operating activities 539.4 293.5 597.0
Taxes paid (37.2) (94.7) (84.5)
Net cash from operating activities 502.2 198.8 512.5
Cash flows from investing activities
Proceeds from disposals 7.0 0.1 62.8
Purchase of intangible exploration and evaluation assets (91.4) (149.2) (275.2)
Purchase of property, plant and equipment (68.4) (631.5) (756.0)
Interest received 2.2 0.7 1.2
Net cash used in investing activities (150.6) (779.9) (967.2)
Cash flows from financing activities
Net proceeds from issue of share capital 754.7 - 9.9
Debt arrangement fees (8.0) (16.0) (31.7)
Repayment of borrowings (1,069.9) (80.2) (769.1)
Drawdown of borrowings 155.0 741.6 1,187.5
Issue of convertible bond - - 300.0
Repayment of obligations under finance leases (1.7) (1.6) (3.3)
Finance costs paid (143.3) (104.2) (284.0)
Distributions to non-controlling interests (3.0) (10.0) (10.0)
Net cash (used in)/generated by financing activities (316.2) 529.6 399.3
Net increase/(decrease) in cash and cash equivalents 35.4 (51.5) (55.4)
Cash and cash equivalents at beginning of period 281.9 355.7 355.7
Foreign exchange gain/(loss) 1.1 (0.5) (18.3)
Cash and cash equivalents at end of period 318.4 303.7 281.9
Notes to the preliminary financial statements
Six months ended 30 June 2017
1. General information
The condensed financial statements for the six month period ended 30 June 2017
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 2016, 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 2016 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 2016, 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 2017 half-yearly financial report are
the same as those adopted in the 2016 Annual report and accounts other than
the following new and revised standards that were effective during 2017. The
adoption of these standards has not had a material impact on the financial
statements of the Group.
Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS
12)
Disclosure Initiative (Amendments to IAS 7)
Annual Improvements to IFRS Standard 2014-2016 Cycle - Amendments to IFRS 12
3. (Loss)/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 $308.6
million (1H 2016: $29.7 million profit) and a weighted average number of
shares in issue of 1,227.2 million (1H 2016: 1,069.7 million).
The calculation of diluted earnings per share is based on the (loss)/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 49.0 million (1H 2016: 39.2
million) in respect of employee share options, resulting in a diluted weighted
average number of shares of 1,276.2 million (1H 2016: 1,115.7 million).
Comparative basic and diluted earnings per share have been re-presented as a
result of the Rights Issue. The shares in issue have been amended by an
adjustment factor to reflect the bonus element inherent in a discounted Rights
Issue, and to allow meaningful comparison between periods.
4. Dividends
The Directors intend to recommend that no 2017 interim dividend be paid (2016
interim dividend: Nil).
5. Approval of accounts
These unaudited half year results were approved by the Board of Directors on
25 July 2017.
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 2017, the six
months ended 30 June 2016, and the year ended 31 December 2016.
West Africa East Africa New Ventures Unallocated Total
$m $m $m $m $m
Six months ended 30 June 2017 787.5 - - - 787.5
Sales revenue by origin
Other operating income - lost production insurance proceeds - - - 54.3 54.3
Segment result (406.5) 0.1 2.6 62.3 (341.5)
Loss on disposal (0.6)
Unallocated corporate expenses (52.8)
Operating loss (394.9)
Gain on hedging instruments 42.3
Finance revenue 12.9
Finance costs (179.1)
Profit before tax (518.8)
Income tax credit 209.8
Profit after tax (309.0)
Total assets 6,665.2 2,441.7 487.4 169.9 9,764.2
Total liabilities (2,751.0) (140.8) (145.5) (4,022.9) (7,060.2)
Other segment information
Capital expenditure:
Property, plant and equipment (27.9)* 0.3 0.3 0.7 (26.6)
Intangible exploration and evaluation assets 5.0 124.2 15.5 - 144.7
Depletion, depreciation and amortisation (264.5) (0.3) - (7.3) (272.1)
Impairment of property, plant and equipment, net (641.7) - - - (641.7)
Exploration costs written off/(reversed) (5.7) - 1.8 - (3.9)
* Additions to property, plant and equipment are presented net of $13m of
insurance proceeds and $69m of reversals of prior year accruals as a result of
changes to estimates.
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.
West Africa East Africa New Ventures Unallocated Total
$m $m $m $m $m
Six months ended 30 June 2016 540.6 - - - 540.6
Sales revenue by origin
Segment result 181.0 - (58.6) (16.6) 105.8
Loss on disposal of other assets (3.4)
Unallocated corporate expenses (75.8)
Operating profit 26.6
Gain on hedging instruments 30.2
Finance revenue 36.9
Finance costs (69.6)
Profit before tax 24.1
Income tax charge 5.8
Profit after tax 29.9
Total assets 7,547.8 2,642.9 1,056.3 188.8 11,435.8
Total liabilities (2,783.7) (251.5) (462.0) (5,013.4) (8,510.6)
Other segment information
Capital expenditure:
Property, plant and equipment 563.0 - 0.3 0.1 563.4
Intangible exploration and evaluation assets 6.1 68.3 65.2 - 139.6
Depletion, depreciation and amortization (182.9) (0.5) (0.6) (9.8) (193.8)
Exploration costs written off (2.5) - (56.5) - (59.0)
Year ended 31 December 2016 1,269.9 - - - 1,269.9
Sales revenue by origin
Other operating income - lost production insurance proceeds - - - 90.1 90.1
Segment result 269.9 (341.0) (512.3) (39.2) (622.6)
Loss on disposal of oil and gas assets (3.4)
Unallocated corporate expenses (128.7)
Operating Loss (754.7)
Gain on hedging instruments 18.2
Finance revenue 26.4
Finance costs (198.2)
Loss before tax (908.3)
Income tax credit 311.0
Loss after tax (597.3)
Total assets 7,701.7 2,383.5 467.2 249.3 10,801.7
Total liabilities (3,200.9) (157.6) (142.0) (5,058.7) (8,559.2)
Other segment information
Capital expenditure:Property, plant and equipment 817.0 0.3 0.4 0.8 818.5
Intangible exploration and evaluation assets 9.9 137.4 144.1 - 291.4
Depletion, depreciation and amortization (450.4) (0.9) (1.0) (14.6) (466.9)
Impairment of property, plant and equipment (167.2) - (0.4) - (167.6)
Exploration costs written off (7.7) (341.0) (374.3) - (723.0)
Goodwill impairment - - (164.0) - (164.0)
Sales revenue6 months ended 30.06.17$m Sales revenue6 months ended 30.06.16$m Sales revenueYear ended 31.12.16 $m *Non-current assets30.06.17$m *Non-current assets 30.06.16$m *Non-current assets31.12.16 $m
Congo 9.1 16.9 22.8 - 10.1 -
Côte d'Ivoire 39.9 48.9 61.3 86.1 149.5 108.6
Equatorial Guinea 39.9 82.8 141.4 131.1 191.0 166.1
Gabon 102.3 141.3 241.2 148.4 207.8 206.0
Ghana 537.2 183.7 666.6 4,395.9 5,334.3 5,188.8
Mauritania 5.5 11.6 23.9 - - -
Netherlands 17.4 14.2 31.5 - 120.9 113.0
UK 36.2 41.2 81.2 4.0 5.1 0.4
Other - - - - 0.5 -
Total West Africa 787.5 540.6 1,269.9 4,765.5 6,019.2 5,782.9
Kenya - - - 995.0 909.7 936.9
Uganda - - - 530.8 1,632.3 489.1
Total East Africa - - - 1,525.8 2,542.0 1,426.0
Norway - - - 12.8 576.4 12.1
Other - - - 284.6 288.0 264.1
Total New ventures - - -
- More to follow, for following part double click ID:nRSZ0804McRecent news on Tullow Oil
See all newsREG - Tullow Oil PLC - Refinancing Transaction Update
AnnouncementREG - Tullow Oil PLC - Appointment of four Independent NEDs
AnnouncementREG - Tullow Oil PLC - Launch of Consent Solicitation
AnnouncementREG - Tullow Oil PLC - Director/PDMR Shareholding
AnnouncementREG - Tullow Oil PLC - Receipt of Tranche B payment for Kenya assets sale
Announcement