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RNS Number:6687I
Abbot Group PLC
13 March 2003
13 March 2003
Considerable Opportunities for Growth
Profits Surge
Abbot Group plc, the international drilling services provider, announces
preliminary results for the year ended 31 December 2002.
* Turnover #437 million UP 66%
* Operating profit, excluding goodwill amortisation,
exceptional items and discontinued businesses, #31.8 million UP 101%
* Profit before tax, excluding goodwill amortisation,
exceptional items and discontinued businesses, #23.4 million UP 87%
* Adjusted earnings per share 9.7p UP 47%
* Recommended final dividend of 2.75p per share UP 14%
* Strong balance sheet with gearing of 35%
* Disposals of:
- Interest in Powergen Renewables
- OIS International Inspection ("OIS")
* All operations trading well
* Continued opportunities for growth
Commenting on the results, Alasdair Locke, Executive Chairman, said: "As a
result of the disposal of our interests in renewable energy and inspection
services, the Group is now focussed on its oil drilling contracting and
engineering business and is rapidly becoming a major participant in its key core
markets, which have been identified as North and West Africa, the Middle East,
the Caspian Sea, Russia, the UK and mainland Europe.
The financial strength of the Group, as evidenced from its balance sheet, has
been substantially enhanced and we are now in a position to pursue the
considerable opportunities for growth that we see in several of our main
markets. This, together with our continuing drive for greater efficiency with
particular emphasis on margin improvement, leads me to believe that we shall
show a significant improvement in results for the current year."
For Further Information:
Alasdair Locke Peter Willetts
Executive Chairman Justin Griffiths
Abbot Group plc Tavistock Communications Limited
Tel: 020 7600 2288 Tel: 020 7600 2288
Chairman's Statement
Overview
I am pleased to report an excellent year in 2002, which saw the Group focussing
on its activities as a major international drilling services provider. We have
made progress in all our principal markets; North and West Africa, the Middle
East, the Caspian Region, Russia, the UK and mainland Europe.
The benefits that continue to accrue from our acquisition of DEUTAG are clearly
evidenced from this highly satisfactory performance in 2002.
Results
Operating profits, (excluding exceptional items, goodwill amortisation and
discontinued businesses) more than doubled to #31.8 million (2001: #15.8
million), an increase of 101%. Operating profits rose to #24.8 million (2001:
#11.3 million), an increase of 118%.
The Group made an exceptional gain on the sale of its 50% share in the wind
energy joint venture with Powergen of #46.1 million, partly offset by provisions
totalling #9.8 million in respect of the disposal/closure of operations of its
inspection division in early 2003, to give an overall exceptional gain of #36.3
million.
Pre tax profits, (excluding exceptional items, goodwill amortisation and
discontinued businesses) increased to #24.7 million (2001: #13.2 million), a
rise of 87%. Pre tax profits rose to #50.2 million (2001: #10.2 million), an
increase of almost 400%.
Adjusted earnings per share, (excluding exceptional items, goodwill amortisation
and discontinued businesses) rose by 47% to 9.7p (2001: 6.6p). Basic earnings
per share rose by 500% from 4.3p to 25.8p.
Dividend
The directors are recommending an increase in the final dividend to 2.75p (2001:
2.40p) per ordinary share, which, taken together with the interim dividend
already paid, would give a total distribution of 4.0p (2001:3.5p) per ordinary
share, an increase of 14.3%. If approved, the final dividend will be paid on 6
June 2003 to eligible shareholders on the register at 9 May 2003.
Disposals
In October we disposed of our 50% interest in Powergen Renewables to Powergen UK
plc ("Powergen") for a cash consideration of #57.5 million resulting in a profit
on disposal of #46.1 million. Under the terms of the joint venture agreement
with Powergen, E.ON's acquisition of Powergen in July 2002 enabled us to review
our interest in the joint venture. While our investment would have continued to
provide profitable growth, it would nevertheless have required an increasing
level of capital expenditure. The Board, therefore, concluded that shareholder
interests were best served by focussing our resources on the profitable
expansion of our core international drilling businesses.
After the year end, we sold OIS International Inspection ("OIS") to Oceaneering
International Services Ltd for a cash consideration of #16.9 million, which
after repayment of bank overdrafts and inter-company debt, resulted in a loss on
disposal of #7.5 million over book value of which #5.8 million related to
goodwill. The Surveys Division of OIS was retained and provision has been made
for losses on the closure of this operation totalling #2.3 million.
The decision to sell OIS was taken following the acquisition of DEUTAG, which
effectively doubled the size of our drilling operations, thereby resulting in
OIS becoming a non-core business in relation to the Group as a whole.
Borrowings
As a result of the disposal of Powergen Renewables, referred to above, an early
loan repayment of #40 million to Bank of Scotland ("BoS") was made. In December,
we reached agreement with BoS, in return for a one off payment of #4 million (of
which #3.2 million is shown as a exceptional item), to prepay deferred interest
of #7 million due to BoS in October 2006. In addition the warrants owned by BoS
to subscribe for 9,254,539 ordinary shares in Abbot up to 30 September 2006 at
an exercise price of 200p, were cancelled. Total debt at the year end was #45.6
giving a gearing level of 35%.
Operating Review
The Drilling Group
Following the acquisition of DEUTAG, we have undertaken a substantial
reorganisation of operations in both Aberdeen and Germany and have achieved our
targeted cost savings within budget and more quickly than planned.
We are continuing with an efficiency programme within which the Drilling Group
has set medium and long-term targets for further cost savings and improved
operating margins.
Significant progress has been made in the efforts to centralise certain
functions, in particular, purchasing and logistics which are now co-ordinated
centrally with savings beginning to be realised not only through operational
efficiencies but also through greater purchasing power.
Work will continue to centralise other functions, particularly those relating to
commercial activities.
The onshore rig disposal programme for redundant or mislocated equipment was
essentially completed during the year, although the two units in Algeria,
earmarked for disposal, were moved to Jebel Ali in the UAE for upgrading to meet
improved market demand. Subsequently, the larger unit has been awarded a
contract which will commence in mid 2003.
Land Drilling
The major event for the land drilling division was the successful placement,
commissioning and start-up of an arctic class drilling unit on an artificial
island in the Kazakh sector of the Caspian for AGIP/KCO, a consortium of
international oil companies in partnership with the Kazakh National Oil Company.
This is a demanding project in an area of high environmental concern, difficult
logistics and extremes of weather.
Following extensive modification, the rig was mobilised from Bad Bentheim, via
the Russian canal system in late 2001 just prior to the winter freeze, and
commenced operations in mid-April.
This time last year we stated that we intended to concentrate the land drilling
operations in areas where we could gain most benefit from existing operations.
During the year we withdrew from Algeria and Venezuela, focussing efforts on our
principal markets. These efforts were rewarded by the start up of an additional
rig in Oman during the year, and in December by the award of contracts for two
further rigs all for Petroleum Development Oman, a subsidiary of Shell
International. By mid-2003 we will have 8 rigs working in Oman.
Nigeria saw the addition of two more rigs to the existing two already in
operation with new contracts for Shell and Pan Ocean.
In Pakistan the company put two rigs to work complementing the single string
operation in that country at the time of the DEUTAG acquisition.
Much of the preparatory work done in Iran came to fruition during 2002 with rigs
starting up onshore for TotalFinaElf, AGIP and Norsk Hydro. The two Petrom
jack-ups we manage for Pedec, also in Iran, continued to work throughout the
year.
An innovative European contract was won for Danish Olje og Natur Gas (DONG) and
Lunds Energi for the drilling of geothermal wells in Denmark and Sweden, thus
far a very successful contract which could lead to further work. Existing
operations in Germany and Holland continued satisfactorily throughout the year.
In the autumn of 2002 the company mobilised another arctic class rig, this time
to Western Siberia for a project with Sibneft. This rig was successfully
commissioned commencing operations in late January 2003.
Offshore Drilling
Operations in the North Sea continued satisfactorily with significant
improvements in performance in a number of key areas, and it is a market which
continues to provide us with steady and profitable business activity.
For BP, the overall operational performance, and in particular regarding safety,
was enhanced very significantly to the satisfaction of the client. Further
improvements are anticipated following the award of a performance improvement
contract to Technical Limit Services, a joint venture between KCA DEUTAG and RLG
International which, following the inclusion of some incentives into the primary
contract, should deliver enhanced benefits to the company.
For a number of other clients including Shell, performance improvements in some
cases relating to safety, yielded rewards under various incentive schemes.
Safety performance is particularly important in the winning of new and the
retention of existing contracts. The continuing emphasis in this area and the
results that accrue are particularly pleasing.
Contract renewals or extensions were negotiated with BP, TotalFinaElf, Exxon
Mobil and Amerada Hess, and the company won a tender for new work on the
TotalFinalElf Dunbar platform. This was the only such contract tendered during
the year, and it followed alterations to the platform enabling on-platform
operations rather than the tender assisted operations which had been in place.
During the latter half of 2002 CNR International (UK) Limited took over the
Ninian Field assets from Kerr McGee. This resulted in an almost immediate
increase in activity for the company. We are optimistic therefore that the
recently announced asset sales of the Forties complex by BP to Apache, should
similarly lead to increased work.
Internationally, the company continued to make progress on AIOC's Central Azeri
and Shah Deniz project in Azerbaijan. Both of these projects have received
sanction to proceed and we anticipate an announcement shortly with regard to the
operating contracts. The Central Azeri contract should commence operations in
2004 with Shah Deniz following in 2006. The company has also been awarded a
training and development contract for personnel to be utilised on the two
primary contracts. Activities under this contract have already commenced in
Baku. This followed extensive project engineering work which is continuing.
In the Russian Far East, a contract for Sakhalin Energy (Shell) for drilling and
workover operations on the Molikpaq mobile platform near Sakhalin Island has
commenced.
In all areas KCA DEUTAG has continued to press for improvements in safety
performance, and has in almost all areas achieved or exceeded its aims.
Engineering
This is now reported separately and covers the operations of the Engineering
Group based in Aberdeen and Germany.
The Aberdeen and Houston based offshore engineering provides a clear lead into
major offshore projects, and is the vehicle, particularly in the Caspian Region,
Sakhalin and Angola, to lead KCA DEUTAG into long-term operating contracts.
The Group also carries out a significant number of facilities upgrade projects,
which become necessary over the life of rigs or fixed platforms. Opportunities
arise as reservoir characteristics change and the requirement for long reach
wells, which were not envisaged by the original design, becomes evident.
The Aberdeen Group carried out up-grade work on Talisman's Claymore platform,
and was also awarded a contract for further work on Amerada Hess's Scott
platform. Major projects include continuing work on AIOC's Central Azeri and
Shah Deniz projects in the Caspian which has led to further work on phases II
and III of the overall field development. The Group has some 130 engineers
working in Paris and London on these projects.
KCA DEUTAG's Houston office has won a number of study contracts and is marketing
the company's services in particular for the Russian far east and Angola. The
recent award of engineering work for Hyundai Heavy Industries for the Exxon
Neftegas Sakhalin project should be followed shortly by further contract wins.
Bentec, which is largely concerned with land drilling projects and
electromechanical products and maintenance services, continued to provide
support for the AGIP/KCO Kashegan project, following its successful delivery of
the modified rig for the project.
A number of upgrades to rigs and equipment were carried out during the year,
with satisfactory results, including the major upgrade to arctic class of the
rig for the Sibneft project. In addition, Bentec has managed to pursue a number
of new markets for its electrical products and for its service and repairs
facilities. It is now successfully gaining work from third parties in both of
these areas, a trend which should continue following a product and services
review. This review also addressed the cost base of the facility and actions
are now being put in place to balance resources to ensure the future profitable
growth of the company.
The Board
In December we welcomed Dr. George Watkins CBE to the Board as a non-executive
director. George has a wealth of experience in the oil and gas industry having
held senior appointments with Conoco both in the UK and abroad since 1973,
becoming Chairman and Managing Director of Conoco (U.K.) LTD in 1993 until his
retirement from that company in 2002. His experience will be of great benefit to
the group.
At the same time Guy Lafferty resigned from the Board. I would like to thank Guy
for his contribution to the success of the Group since our stockmarket flotation
in 1995.
Corporate Governance
We continue to comply with the provisions of the Code of Best Practice set out
in The Combined Code on corporate governance, particularly with regard to the
independence of non-executive directors. To this end, and as a result of his
appointment as a director of Iskut Investment Holdings Limited, a significant
shareholder in Abbot, Guy Lafferty tendered his resignation as a non-executive
director as he felt he could no longer be considered to be truly independent.
With regard to my own position as Executive Chairman, the Board has concluded
that, with my substantial shareholding in the Group, my interests are very much
aligned to those of all other shareholders, and therefore it does not believe
that there is any conflict between my position and the continuing prosperity of
the Group. In any event, the day to day operation of the Group is undertaken by
the Chief Operating Officer.
The recently published Higgs Report on corporate governance and the Smith Report
on guidance on audit committees contain many proposals which the Board will
consider and look to implement as appropriate for the future well-being of the
Group.
Outlook
The current year has started well and in-line with our internal forecasts. As a
result of the disposal of our interests in renewable energy and inspection
services, the Group is now focused on its oil drilling contracting and
engineering business and is a major participant in its key core markets.
The Government's Royalty Relief Provisions which took effect from 1 January
2003, coupled with the sale of assets by major companies to larger independents,
should have a positive impact on UK activity overall. At the same time, onshore
drilling in all of our core areas continues to grow steadily having strong
visibility of contracts for 2003 and into 2004/5, with confirmed utilisation of
our marketable rigs being at very high levels for the current year and beyond.
It is anticipated that world-wide demand for oil and oil based products will
continue to increase. Provided any conflict in Iraq does not escalate into
neighbouring territories, there should not be any detrimental affect on our
operations in the Middle East.
The financial strength of the Group, as evidenced from its balance sheet, has
been substantially enhanced and we are now in a position to pursue the many
opportunities for growth that we see in several of our main markets. This,
together with our continuing drive for greater efficiency with particular
emphasis on margin improvement, leads me to believe that we shall show a
significant improvement in results for the current year.
Alasdair Locke
Executive Chairman
13 March 2003
Consolidated profit and loss account
For the year ended 31 December 2002
Before goodwill Goodwill
amortisation & amortisation &
exceptional exceptional Total results
Notes items items
2002 2002 2002 2001
(as restated)
#'000 #'000 #'000 #'000
Turnover: group and share of
joint venture turnover
Continuing operations 379,159 - 379,159 194,114
Discontinued operations 62,869 - 62,869 72,198
442,028 - 442,028 266,312
Less share of JV turnover
(discontinued operations) (4,943) - (4,943) (2,266)
Group turnover 2 437,085 - 437,085 264,046
Cost of sales (370,521) - (370,521) (222,123)
Gross profit 66,564 - 66,564 41,923
Operating expenses (35,468) (6,303) (41,771) (30,575)
Group operating profit 2 31,096 (6,303) 24,793 11,348
Continuing operations 31,787 (6,303) 25,484 9,874
Discontinued operations (691) - (691) 1,474
Share of operating profit in
- joint venture (discontinued
operations) 215 (100) 115 351
- associates (continuing
operations) 87 - 87 (45)
31,398 (6,403) 24,995 11,654
Profit on sale of operations
(discontinued operations) - 46,074 46,074
Provision for loss on impending
sale of business (discontinued
operations) - (7,500) (7,500) -
Provision for loss on termination
of operations (discontinued
operations) - (2,250) (2,250) -
31,398 29,921 61,319 13,465
Net interest payable 3 (7,963) (3,125) (11,088) (3,302)
Profit on ordinary activities
before taxation 23,435 26,796 50,231 10,163
Taxation on profit on ordinary 4 (7,408) 2,448 (4,960) (3,682)
activities
Profit on ordinary activities
after taxation 16,027 29,244 45,271 6,481
Minority interest - - - 90
Profit for the year 16,027 29,244 45,271 6,571
Dividends paid and proposed 5 (7,033) - (7,033) (5,856)
Retained profit for the year 8,994 29,244 38,238 715
Earnings per ordinary share
Basic 6 25.8p 4.3p
Diluted 6 25.8p 4.3p
Adjusted, basic - excluding
goodwill amortisation,
exceptional items and
discontinued operations 6 9.7p 6.6p
Statement of total recognised gains and losses
For the year ended 31 December 2002
2002 2001
#'000 #'000
(as restated)
Profit for the year 45,271 6,571
Exchange adjustments offset in reserves 6,022 (1,843)
Tax on exchange adjustments offset in reserves (363) -
Total recognised gains for the year 50,930 4,728
Prior period adjustment (2,385) -
Total recognised gains and losses since last annual report 48,545 4,728
Consolidated balance sheet
31 December 2002
2002 2001
(as restated)
#'000 #'000
Fixed assets
Goodwill 64,142 67,245
Intangible assets - 736
Tangible assets 140,992 125,730
Investments - joint venture
share of gross assets - 32,602
share of gross liabilities - (29,266)
goodwill - 1,976
- 5,312
Investments - others 603 626
205,737 199,649
Current assets
Investment held for resale 5,585 5,146
Stocks 18,039 16,485
Debtors 123,915 112,197
Cash at bank and in hand 9,706 9,145
157,245 142,973
Creditors: Amounts falling due within one year (113,915) (113,210)
Net current assets 43,330 29,763
Total assets less current liabilities 249,067 229,412
Creditors: Amounts falling after more than one year (59,066) (106,981)
Provisions for liabilities and charges (58,256) (34,551)
Net assets 131,745 87,880
Capital and reserves
Called-up share capital 26,375 26,375
Share premium account 90,123 90,123
Profit and loss account 14,274 (29,623)
Total equity shareholders' funds 130,772 86,875
Equity minority interests 973 1,005
131,745 87,880
Consolidated cash flow statement
For the year ended 31 December 2002
Reconciliation of operating profit to operating cash flows
2002 2001
#'000 #'000
Operating profit 24,793 11,348
Goodwill amortisation 3,758 1,981
Depreciation and amortisation 17,494 6,159
Profit on sale of tangible fixed assets (1,245) (58)
(Increase) decrease in stocks (3,324) 152
(Increase) in debtors (12,913) (25,097)
(Decrease) increase in creditors (13,919) 31,781
(Increase) decrease in provisions for liabilities and charges 5,589 (623)
Share incentive plan - (credit) in the year - (2)
Exchange and other non-cash movement (2,973) 1,530
Net cash inflow from operating activities 17,260 27,171
Cash flow statement 2002 2001
#'000 #'000
Net cash inflow from operating activities 17,260 27,171
Returns on investments and servicing of finance (6,044) (2,851)
Taxation (8,907) (3,586)
Capital expenditure and financial investment (23,478) (27,490)
Acquisitions and disposals 65,149 (99,614)
Equity dividends paid (6,418) (4,836)
Net cash inflow (outflow) before financing 37,562 (111,206)
Financing
Issue of ordinary share capital - net of issue costs - 44,506
Redemption of preference shares - (201)
(Decrease) increase in debt (46,521) 76,045
Net cash (outflow) inflow from financing (46,521) 120,350
(Decrease) increase in cash (8,959) 9,144
Notes to Accounts
31 December 2002
1 Basis of preparation and financial information
The financial information set out in this preliminary announcement has been
prepared on the basis of the accounting policies set out in the Group's 2001
statutory accounts with the exception of the policy on deferred taxation. With
effect from 1 January 2002 the Group has adopted Financial Reporting Standard
19, "Deferred Tax", and has therefore provided for deferred tax in full.
Previously, deferred tax was provided in full across the Group with the
exception of the joint venture with Powergen where no deferred tax was provided
as it was deemed that the timing differences would probably not reverse.
The cumulative effect is to reduce opening reserves at 1 January 2002 by
#2,385,000, and this charge has been accounted for as a prior period adjustment.
The prior year comparatives have been restated to comply with FRS 19. The
effect is to reduce retained profit for the year ended 31 December 2001 by
#658,000 from #1,373,000 to #715,000. Earnings per share for the year ended 31
December 2001 have been restated from 4.7p to 4.3p, diluted earnings per share
from 4.7p to 4.3p and adjusted, basic earnings per share from 7.3p to 6.8p. (As
explained in note 6 the 2001 adjusted, basic earnings per share has been further
reduced to 6.6p.)
The information shown for the years ended 31 December 2002 and 31 December 2001
does not constitute statutory accounts within the meaning of S240 of the
Companies Act 1985 and has been extracted from the full accounts for the years
ended 31 December 2002 and 31 December 2001 respectively.
The reports of the auditors on those accounts were unqualified and did not
contain a statement under either S237(2) or S237(3) of the Companies Act 1985.
The accounts for the year ended 31 December 2001 have been filed with the
Registrar of Companies. The accounts for the year ended 31 December 2002 will
be delivered to the Registrar of Companies in due course.
2 Segmental analysis
Group turnover and operating profit are analysed as follows:
Turnover
2002 2001
#'000 #'000
Drilling - continuing operations 378,576 193,042
Inspection - discontinued operations 57,926 59,883
Drilling fluids - discontinued operations - 10,049
Corporate and other - continuing operations 583 1,072
Total 437,085 264,046
There is no material inter-segment turnover.
Operating
profit (loss)
before goodwill
amortisation
and
exceptional Goodwill Exceptional Operating
items amortisation items profit (loss)
2002 2002 2002 2002
#'000 #'000 #'000 #'000
Drilling - continuing operations 32,750 (3,283) *(2,545) 26,922
Inspection - discontinued operations (691) (475) - (1,166)
Corporate and other - continuing operations (963) - - (963)
Total 31,096 (3,758) (2,545) 24,793
In respect of the drilling division, turnover and operating profit, before
goodwill amortisation and exceptional items, from the offshore and land drilling
activities totalled #280,843,000 and #29,713,000 respectively, giving an
operating margin of 10.6%, whilst engineering and other services contributed
turnover of #97,733,000 and an operating profit of #3,037,000 giving a margin of
3.1%.
* Drilling division: exceptional item - reorganising, restructuring and
integration costs in respect of the acquisition of Deutag.
Notes to accounts
31 December 2002
2 Segmental analysis (continued)
Operating
profit (loss)
before goodwill
amortisation
and exceptional Goodwill Exceptional Operating
items amortisation items profit (loss)
2001 2001 2001 2001
#'000 #'000 #'000 #'000
Drilling - continuing operations 16,942 (826) *(2,148) 13,968
Inspection - discontinued operations 2,015 (356) - 1,659
Drilling fluids - discontinued operations 614 (799) - (185)
Corporate and other - continuing operations (1,094) *(3,000) (4,094)
Total 18,477 (1,981) (5,148) 11,348
* Drilling division: exceptional item - reorganising, restructuring and
integration costs in respect of the acquisition of Deutag.
* Corporate and other: exceptional item - fee relating to reorganisation of bank
facilities.
3 Net interest payable
2002 2001
#'000 #'000
On bank loans and overdrafts 7,248 2,915
On other loans 529 45
Share of joint venture interest payable 974 927
Interest payable 8,751 3,887
Bank interest receivable (448) (325)
On other loans (206) -
Share of joint venture interest receivable (134) (260)
Interest receivable (788) (585)
Net interest payable, excluding exceptional items 7,963 3,302
Agreement was reached in December 2002 with the Bank of Scotland ("BoS") to
prepay a deferred interest charge of #7 million due to BoS in October 2006 for a
payment of #4 million. The #7 million, which was being accrued at a charge of
#700,000 per annum, relates to the #20 million 10 year loan stock facility due
for repayment on 1 October 2011. #875,000 of the interest charge had been
accrued since the loan was drawn down on 1 October 2001 to 31 December 2002,
giving an exceptional interest charge of #3,125,000.
Notes to accounts
31 December 2002
4 Taxation
(a) Analysis of charge in period
2002 2002 2001 2001
#'000 #'000 #'000 #'000
(as restated) (as restated)
United Kingdom
Corporation tax at 30% (2001: 30%) 1,841 2,375
Adjustments in respect of previous periods 35 (248)
1,876 2,127
Double tax relief (1,337) (150)
539 1,977
Overseas taxation
Corporate taxes 5,479 2,050
Adjustments in respect of previous periods 146 -
5,625 2,050
Total current tax 6,164 4,027
Deferred tax
Origination and reversal of timing differences (1,024) 39
Adjustments in respect of previous periods (102) (62)
Total deferred tax (1,126) (23)
Share of joint venture and associates tax (281) (322)
Adjustments in respect of previous periods 203 -
(78) (322)
Tax on profit on ordinary activities 4,960 3,682
Tax on recognised gains and losses not
included in the profit and loss account 2002 2001
#'000 #'000
UK corporation tax at 30%
Current tax charge on exchange movements
offset in reserves
363 -
Notes to Accounts
31 December 2002
4 Taxation (continued)
(b) Factors affecting tax charge for period
The tax assessed for the period is lower (2001: higher) than the standard rate
of corporation tax in the UK (30%).
The differences are explained below:
2002 2001
#'000 #'000
Profit on ordinary activities before tax 50,231 10,163
Add: share of joint venture and associates loss before tax 538 161
50,769 10,324
Profit on ordinary activities multiplied by standard rate of
corporation tax in the UK of 30% (2001: 30%) 15,231 3,097
Effects of:
Profit on sale of joint venture exempt from taxation (13,822) -
Profit on sale of subsidiary exempt from taxation - (543)
Provision for loss on impending sale of business not
deductible for tax purposes 2,250 -
Amortisation of goodwill not deductible for tax purposes 1,158 594
Other expenses not (taxable) deductible for tax purposes (955) 713
Taxation effect of timing differences 1,126 23
Higher tax rates on overseas earnings 995 391
Adjustments to tax charge in respect of previous periods 181 (248)
Current tax charge for period (note 9 (a)) 6,164 4,027
Factors that may affect future tax charges
The Group has substantial activities in overseas tax jurisdictions where rates
of tax vary from that in the UK. The Group's effective rate of tax is therefore
subject to fluctuation depending upon where the Group obtains contracts, the
effective tax rates in the countries concerned and the availability of double
tax relief.
No deferred tax is recognised on the unremitted earnings of overseas
subsidiaries, joint ventures or associates. As the earnings are continually
reinvested by the Group, no tax is expected to be payable on them in the
foreseeable future.
5 Dividends
2002 2001
#'000 #'000
Dividends on ordinary shares
Adjustment in respect of shares issued during the year and ranking
for prior year final dividend - 15
Interim dividend 1.25p (2001 : 1.10p) 2,198 1,612
Proposed final dividend 2.75p (2001 : 2.40p) 4,835 4,220
Dividends on preference shares - 9
7,033 5,856
Notes to accounts
31 December 2002
6 Earnings per ordinary share
The calculations of earnings per share are based on the following profits and
numbers of shares:
Basic Diluted Adjusted basic
2002 2001 2002 2001 2002 2001
(as (as (as
restated) restated) restated)
#'000 #'000 #'000 #'000 #'000 #'000
Profit for the financial year 45,271 6,571 45,271 6,571 45,271 6,571
Preference dividends - (9) - - - (9)
Goodwill amortisation - - - - 3,858 2,181
Operating expenses - exceptional items * - - - - 1,709 3,604
Profit on sale of joint venture/
subsidiary - - - (46,074) (1,811)
Provision for loss on impending
sale of business - - - 7,500 -
Provision for loss on termination
of operations * - - - 1,575 -
Interest - exceptional items * - - - 2,188 -
45,271 6,562 45,271 6,571 16,027 10,536
Discontinued operations - inspection * - - - - 624 -
Discontinued operations - wind * - - - - 321 -
Discontinued operations - drilling
fluids * - - - - - (327)
45,271 6,562 45,271 6,571 16,972 10,209
Weighted average number of shares 175,836,246 154,079,236 175,836,246 154,079,236 175,836,246 154,079,236
Earnings per share 25.8p 4.3p 25.8p 4.3p 9.7p 6.6p
The adjusted basic earnings per share figure for 2001 has been recalculated to
take account of the adoption of FRS 19 thereby reducing the figure from 7.3p to
6.8p, and a further reduction of 0.2p to 6.6p in order to exclude those
operations that were discontinued in 2001.
* The above adjustments have been stated net of any applicable taxation effects.
No ordinary shares were issued during the year and there are no share options
outstanding at 31 December 2002.
The warrants issued under the financing arrangements for the acquisition of the
Deutag Group were anti-dilutive and therefore have not been included in the
calculation of the weighted average number of shares under the diluted basis.
Notes to accounts
31 December 2002
7 Reconciliation of net cash flow to movement in net debt
2002 2001
#'000 #'000
(Decrease) increase in net cash in the year (8,959) 9,144
Decrease (increase) in loans and finance leases 46,521 (76,045)
Change in net debt resulting from cash flows 37,562 (66,901)
Loans transferred on sale of subsidiary - 1,799
Exchange movements 388 (109)
Movement in net debt in the year 37,950 (65,211)
Net debt at 1 January (83,597) (18,386)
Net debt at 31 December (45,647) (83,597)
8 Analysis of net debt
At
At Other non Exchange 31 December
1 January 2002 Cash flow cash changes movement 2002
#'000 #'000 #'000 #'000 #'000
Cash in hand and at bank 9,145 561 - - 9,706
Overdrafts (2,624) (9,520) - - (12,144)
6,521 (8,959) - - (2,438)
Debt due after 1 year (83,557) 40,000 6,500 388 (36,669)
Debt due within 1 year (6,500) 6,500 (6,500) - (6,500)
Finance leases (61) 21 - - (40)
(83,597) 37,562 - 388 (45,647)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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