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    Burmah Annual Report 1980

    Uploaded by

    RoberticoZea

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    © All Rights Reserved
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    of 48
    gare. TheBurmah OilCompany Limited Bu rmah ine Burmah Oi! Company Directors Sir Alastair Down, OBE, MC, TD, Chairman "SJ Wilson, Managing Director and Group Chiet Executive *C McC Anderson "0 Brooks: +6 C Butcher +A Pde Boer *JN Maltby (appointed 16 April 1980) @ $RG Martin *M J Roberts *LmUrquhart ‘Execunvo descters +t Auaiteammntter Secretary: A Bentley Registered Office : 48 St Vincent Street, Glasgow G2 STW telephone Glasnow (041) 221 3783 Hoadquarters : Sunash House, Pipars Way, Swindon SN31 RE telephone Sweindon (783) $9161 Transit Offige : Chnsna-e Bank Limited, Registrars Department, JO St Vincent Place, Glasgow G1 2HL telepho.se Glasgow (047) 248 7070 Solicitors: Milisr, Thompson, Henderson & Co ; Allen & Overy, Auditors : Ernst & Whinney Contents _Notice of meating ‘The board of The Burmah Oil Company Limited ‘Chairman's statement to stockholders Directors’ review: chief executive's commentary, irectors’ raview : analysis of group operations Directors’ review : operational report Report of the directors a Financial calendar and miscellaneous information “Accounting policies . lidated profit and loss acoount solidated balance sheet Balance shest of tha company Notes on the accounts Principal subsidiary companies Principal trade investments Report of the uuditors Gurtent cost statement Fiveyearsummary idings and stockholders’ interests 2 Analysis of ordinary stockhol Senior exeoutives of the Burmah group Thi annual roport was roleazerl tu te printer on 16 April 1980 Notice ot meeting _ The Burraai Gal Camnany Linnted Notice is hereby given that the seventy-eighth annual general mecting of the members of the company will be held at the Central Hotel, Gordon Streat, Glasgow, on Friday 6 June 1980 at 11.30 am for the transaction of the following business: Resolution No. 1 To receive and adopt the accounts for the year ended 31 December 1879 together with the report of the directors and of the auditors thereon. Resolution No. 2 To declare a dividend. Resolution No. 3 Toro-clect Sir Aiastair Down as a director. Resolution No. 4 Tore-elact Mr 0 Brooks as a director. Resolution No, 5 Tore-elect Mr JN Maltby as director. Resolution No. 6 To re-appoint Ernst & Whinney as auditors. Resolution No. 7 To authorise the directors to fix the remuneration of the auditors. By order of the board A Bentley Secretary 48 St Vincent Street, Glasgow G2 STW 12 May 1980 Novos 1. Oniy the holdrs of 6% (now 42% plus tax credit) cumulative iret and second preferenestocks and orinary stock srsentived ‘o.tiendandvote a the moeting This notices sent for information onlyio the holders of 8% (now 6-6% plus ax erelt)comeiative reference stock. 74% (now 8-078% plus tax efit) cumulative redeemable preference steck and unsecured ioansteces, 2, Amamber ented to bo presant and vote at he meeting msy sppoint proxy, or roms, 0 sttond anu vote insted ot him and such proxy need notbe a riemberof the compeny.A fori of proxys enclosed, 8, Copies ofall controcts of service whereunder crcetors ofthe company aro employed by the company ot any susie wi bo ‘availabe forinspastion at tn registred office ofthe company, 48 StVineant Steet, sagen 12 STW wating usual busngss howe ‘on any weekday (Saturdays and pudie hatdeys exceoted) from the date of this netee until the fate ofthe annual Generel ‘masting. Copies ef such contracts of service wil also be availabe for inspection ot the place ol the annul genera mocting for atleast 1 minutes prior to and during the mest. The board of The Burmah Oil Company Limited S.J Wilson Managing Director and Chief Executive eae CMe Anderson. LM Urquhart JN Maltby. Oi Industrial Finance trom 6 June 1980) 1 ( i ey G C Butcher RG Martin O Brooks Nun-exacutrve and members of 118 audit committee MJ Roberts, Oi! (retires 6 June 1980) Chairman's statement to stockholders 1979 was a notable year for the company: turnover exceeded £1 billion and we were able toachiove a very significantimprovementin profit before tex from £17 million to £67 niin. The tanker fleet was reduced from 20t0 15, and we received a substantial sum following the settlement of disputes with Pertamina, tha Indonesian State oil company. and other parties, bringing to an ond prolonged litigation arising from oll tanker charters. Itwas therefore with much pleasure that the ‘board decided to deciare an interim dividend for the first timo since tho difficulties of 1974. ‘The directors now recommend a final dividend of Sp making a total of 6p for the yeer. ‘The return of the company to the dividend lists ‘marks the restoration of the Burmah group toa healthy financial condition as @ consequence of which the auditors have no longer fettit necessary to qualify their reportas they have done since 1974, One effect of the improvement in our fortunes ‘was tha doubling of the price of ourstock in the ‘market over the year, and Ithas risen further during 1980, Restructuring of financing In March 1980. we announced that we had been able to take adventage of the group's strengthened position by restructuring its financing errangements on more advantageous terms. The group prepaid the balance of US $70 million remaining of the US $100 rnillion syndicated borrowing thathad been ‘guarantead by the Bank of England in 1976, Us $30 million having already been repaid on due date in November 1979. In giving its ‘guarantee, the Bank of England had taken as seourity fixed charges on certain assets, together with a floating charge on the remainder of the assets of Burmeh Oil Trading Limited, the group's principal subsidiary, The repayment of the syndicated loen earlier than scheduled will enable the charge on the assats tobe removed shortly. Of the measures taken by the Bank of England tosupport Burmah, whicl; originated at the end 0f1974, the only remaining items are now unsecured stand-by credit facilities of some. £60 million, available until June 1982, of which some £19 million has been drawn down to in financing *he Thistle oilfield, Aso part of the process of restructuring, Burmah concluded an agreement in March ‘1980 with an international syndicate of banks which makes evailable a further unsecured credit facility of £60 million aver a seven year period. The syndicate consists of the Barclays Bank Group, Bank of America, Citibank, ‘Morgan Guarenty, and the Royal Bank of Canada, The standing of these banksin the international financial community and the terms and conditions of tne credit facility full reflect the new-found stability of the group, The BP stock ciaim ‘Stockholders ill recall thatin October 1976 Burmah issueda weitfor an orderthat 77,812,507 stock units of €1 each of BP be transferred beck to Burmeh from the Bank of England against repayment of the purchase price of £178,980,266 less any dividends received. Qn 1 Novernber1978, the House of Lords dismissed the company’s pre-trial appeal seeking the disclosure of €2 documents for whieh Grown pivitege had boon load, On 21 December 1 978 the company received details ofa further claim to Crown privilege involving 118 documents. In the light of the opinions expressed by the Law Lords, the company zpplied to the High Court for disclosure of five of these additional documents butits application was again unsuccessful and ithas been decided not to appeal against this latter decision, The vial of the main action against the Bank of England fortheretum of the BP Stacks due to begin in June 1987. SEC {have in the pastreferred to the factthet the Securities and Exchange Commission in the United States was enquiring inte certain matters relativeto the pre-1975 period, We have now been informed by the staff of the SEC. that their private investigation has been completed andwe are therefore hopeful that this matter can be brought to a conclusion before long, The Burmah team In December 1979 Mr R S Haddow retired from the board aad from the group. Mr Haddow came into Burmah in 1978, assumed responsibility or shipping operations the following year and joined the board at the beginning of 1978. Hewas principally. responsible for he reduction and rationelisation Of the tanker fleet and thus played a major part inreducing the group's exposure in this sector to manageable proportions. We are grateful to him for his outstanding efforts on Butmah’s ‘behalf and wish him every suecess in the future, «ne shipping operations now hoaded by MrS EN Pollock, a ditector of Burmah Oil Trading Limited, On 6 June 1980 MriM J Roberts will be retiring from the board, and from fulltime service with the group, on reaching normal retirement age. Mr roberts joined Castrol in Australia in 1946 and served with distinction in a number of senier group posts before joining the board in 1976. He assumed responsibilty for all the group's oil operations in October lest year. In thanking him for his invaluable services to the ‘group we wish him many years of health and happiness. ‘Mr Roberts will be succeeded by Mr JN Maltby, who had a distinguished careerin Shell between 1951 and 1968, when he left to become managing director of Panocean imited, later known as Panocean-Anco Limited. Mr. Maltby joined Burmah in Jonuery 1980 and was appointed to the board on 16 April 1980; his experiance and expertise will be ‘greet asset to the company and | have no hesitation in recommending thatyou support hisre-election at the annual general mesting, ‘As you may have read in the press, I retired from fulltime executive duties with the group on 29 February 1980, although, as chairman of the erent company, continue to accept, together with the board as @ whole, ful responsibility for the conduct of the company’s affairs, | was able to take this decision confident in the knowledge thot Mr Stanley J Wilson, the managing director and new chief executive, and his colleagues will provide the group with an excellent management team, Mr Wilson, who heeds the Burmah group management coramitiee, which is responsible for the day-to-day direction of the group's affairs, has now become chairman ‘of Burmah Oil Trading Limited, During all the distractions of recent years, Mr Wilson and | have always placed the greatest priority upon putting together strong management team. {believe that the results for 1979 confirm that we have succeeded. The improvement in Burmah’s fortunes isitsolf a tribute to thezbility, understanding and ‘goodwill of those who work far the group throughout theworld, Visiting various of our companies in many cifferentcountries over these last five years, Inave been improssed with the widespreaddedication to the teskof recovery, and know that stockholders will wish tojoinwith me in expressing to all ooncstned ‘our thanks for hair Contribution tothe successes achieved. cpr In wishing Sir Alastair Down many years of health and happiness on his decision to retire from fulltime executive duties, the board ‘would also like to thank end congratulate him ‘on the remarkable leadership that has enabled Us to restore the group to its present healthy ‘and vigorous condition, Itis pleasing to record that, in acceding othe boatd's request thathe remain chairman, Sir Alastair will continue to place at Burmeh’s disposal his very considerable wisdom and experience. Sir Alastair hes, in fect, retired from the haitmanshp and the board of Burmah Oil Trading Limited which. as the company’s principal subsidiary, is esconsible for the ‘day-to-day management of the group. | am pleased to report that, following his retirement, an ex-gratia payment of £100,000 was made to himby that company in recognition of his outstanding contribution and achievernent in restoring the group's fortunes, ‘The measure of success of the past five years can be seen on page 46. A1975 pre-tax loss of £13-6 million has been converted progressively 108 1979 profitof £67:3 million. Our progress in the past year is summarised below. Profit and loss account 1979 selected figures 19781978, gm £m Operating profit, 0 288 Interest 203 107 Profit bofore taxation e738 174 Taxation 22-6 rofitbofore extraordinary toms. 440 Profit retained 387 Ordinary dividends Earnings per ordinary stock unit ‘The year's trading The accounts themselves show that operating sr0fit benefited from improved results in all divisions, including shipping. Itmust, however, be emphesised that the shipping profit includes £13°0 million representing the release of provisions made in Past years against outstanding charter hires. Operating profit—class of business ‘cmon 100 [encroaing [lirica (S000 Megson, This exceptional item arose from the agreemonts signed in July 1879 with Pertamina, the Indonesian State oil company, and others, wheratsy al litigation arising from various cit tanker charters wes settled, in-charterson two vessels were cancelled and the group received $43 mitiion icashandtloan notes payable between 7980 and 1982. Without the release of £13-0 miltion there would have bbeena loss on shipping of £855 million. Nevertheless, this compares favourably with the loss of £22°9 million for 1978, reflecting a further reduction in the number of vessels and a market inwhichrateswerehigher. —* ‘Tha principal ingrovementin operating profit other than shipping came from the oll sector i the United Kingdom, where @ hardening of retail prices enabled the refining and fuels ‘marketing business tomakea positive contribution to profitfor the first time for many years. Group laboratories achieved a technological breakthrough enabling the refinery to become the first to produces ‘ommercial range of lubricants and specialties from North Seacil. Castrol once again proved itself a veluable member of the group by improving its profits both in Britain and overseas, The group's intorestin the Thistle oilfield contributed én operating profit of £13:0 million as production continued to build up. Elsewhere Halfords, Quinton Hazell and the Industrial products and engineering groups all improved on the previous year’s performance. ‘The apparently large increase in unallocated central expenses and provisions is mainly accounted for by two factors :in 1978 there was ‘an exceptionally low pension charge arising from a revaluation of the main UK pension plan andin 1879 thas been considered prudent to provide st group level against ine possibly unfavourable outcome of certain commerciat disputes. ‘The chert on the facing page shows the contributions of the various operations. (Also se@ table on page 10.) Other items The apparent anomaly betwean the rise inthe interest charge and tho fallin the leval of debt atthe year end, as shown in the balance sheet, is predominantly due to two fectors ‘considerable scheduled debtrepayments were made towards the end of the year, the sums involved having incurred interest up to that time, and there was a marked rise in interest rates generally over those prevailing in 1978. ‘The tise in taxationis notdirectly related to the rise in operating profit, which is largely due to improved results in areas where tax feliefs are available. in fact, the increase in tax from 1978 mainly arises because in 1979 there ‘was no special relief comparable to the £8-0 million available on setting revenue losses ‘against chargeable capital gains, A further ‘elements the provision for petroleum revenue taxon increased Thistle earnings. Inflation Encouraging though itis to see the various ‘onorating subsidiaries doing well. itis important to bear in mind that thase improved profits are essential for the continuation of the business. Ata time of exceptionally high inflation. particularly inthe price of crude oil of which the group is a net buyer, the cost of, replenishing stocks and the associated need for greater working capital become increasingly burdensome, ‘The current cost profit and loss statement on page 45 gives an indication of the problem. Although this statements based onthe recommendationsof the Accounting Standards Committee, itshoué be ead with some caution since itisintonded to reflect the situation in broadterms only. Nevertheless, when its implications are applied to the conventional profitand loss account, it becomes clear thetltis essential to retain a ‘considerable proportion of the group's earnings. Added value “The value added to goods and services by the group's overeionss shown inthe fllowing ‘able, ‘Statement of addod value 1973 1978 Added value fm fm Soles notof dues 1,087 985 Less cost of materials ond services purchased 814 788 Value added by wading 273202 Investment income 5 8 ‘Total edded value 278 207 Shared astollows Re-investedinthobusiness eprociation dopletion, amortisation aaretentions = 627 Employeos ‘wages, solares,ponsion fund cantrioutions ana othorbeneiits 180 152 Governments taxation on profs ast External providersof funds interestonborewing (net) [20] [77 ‘minorities shaeof pros ‘yh Stockholders ‘dividends Apart from the except tise, itwill be seen that the lion's share of the increase jn value added by manufacturing and trading has been 10-invested in the business Of the total re-invested, some £26 million is represented by depreciation. depletion and amortisation, and the remaining £39 million by fetentions. The increase in employees’ shara is ‘materially affected by the fact that the number ‘employed groupwide has falien from 32,200 to 28,000, arising from the exclusion of certain Indian operations whose disposal to the Government ofIndi3 isunder negotiation. Bolance sheat The effect ofthe year's trading, corporate and financial transactions, can be seen in the consolidated balance sheet, of which a simplified version is given here, ‘Simplified balance sheet 1979 fm Funds provided by stockhotd 345 ‘ram extemal sources 287 632. Employed as fixed capital —fixedassers.investments ete working copital stocks, debtors, cath balancesete. Funds employed ‘The substantial transfer to reserves resulting from the year's trading increased siockholders* funds by some nine per cent. atera dividend distribution of £10-3 million, despite 2 ‘eduction in the amount ofthe group's overseas assets when expressed in sterling, due to the strength ofthe pound. Funds employed By contrast. externally- provides tunds fellby about nine per cant, mainly becsusea Satisfactory cash flow enabled us to make Scheduled repayments against existing lorg~ term betrowings. We were he'ped in this case by the pound’s strength agaist the US dollar. ‘The repayments were more “ian enough to offset new borrowings that arose in 1979 from. the reduction of tanker chertercommitments. The chart shows that. descite the company's difficulties during is recovery period, wewere able to maintaiathe amount of sivexholders funds by devoting he profits of successful operating compenies and the capital gains we were able to achieve on disposal of asses, t0 funding shipping losses and reducing ‘commitments, twes, However, inevitablein the Course of events that stockholders” funds showed no retum and did notkeep up with inflation. The dividend end retentions of 1879 marka new phesein the company’s fortunes ‘and there is good reasonto expect that, now the ‘group is re-established on a sounder besis, the stockholders can look forward to a fairer reward for their investment in future, The 1979 accountsshow thatwe were able to achieve a further reduction in the ratio of debi to equity iastyearfiom 48: 82 to 44; 68, Employmentof funds In the simpusfied balance shzet. the principal movements urderthe “fixed capital” heading are an increase in xed assets. mainly 2s 2 result of capital investment, and a reduction in shipping advances and prepayments, atising from the recovery of advances and the purchase of avessel previously hited. Itis, however, heinerease inworking capital thatillustrates the problems the company must face. In this simplified table the apoarer ‘unexceptiona.1iseof three per cont can da mis.ecding, Thisis partly because the fisein the Value of current assets overseasis comzealed by thesirenath of sterling against ‘other currencies :ifexchange rates had remained constant the net increase would have ‘been of the orderof ten per cent. ‘The employment of funds chart on the facing age shows the movement over the pasifive years, [oemesomssses [Bb roiceaoy vests Employment of funds Frecopta! I wating Cais Liquidity ‘Within the total of working capital the value of stocks rase sharply by some 30 per cent in 1979. Aithough a large part of the higher value of stocks is funded by suppliers, by way of normal business credit (creditors are up by 17 percent) there is inevitably some pressure to tighten credit terms and the company and its subsidiaries mustin eny case finance the balance. This can prove costiy ata time when interest rates have been rising rapidly : during 1979 by over a third in Britain, more than @ quarter in the USA and at comparable rates in most countries throughout the world, In times of high inflation there is the natural desire to seek to maintain income in real terms, and the differing groups with interests i Burmak are no exception. Itis the difficut and sensitive duty of the board to try to reconcile competing demands and to ensure thal the group's liquid resources are wisely managed and shared, whilst maintaining the vigour of the business as a whole, Our abitity to do so will largely depand on the group's productivity in genorating the ‘Maximum return on its capital investment. In 1979, industrial disputes such as the lorry driers’ strike and, in particular, the national engineering digoute, detracted from the performance of a number of the operating companies. itis particularly unfortunate that this should be 80, since neither of these Gisruptions arose directly from the group's relations with Its own employees. Indeed, our ow relationships wera inte main harmonious with few hours lostin dispute, and would like to join Sir Alastair Down inpaying tribute to the efforts madety all employees throughout the group, Prospects In 1980 the results of thetanker fleet will not have the benefitof lastyear’s exceptional item, but despite a slackening ia tanker demand since the end of the yearwe remain hopeful that outgoings will befuther minimised. On the liquefied natural gas transportation side, since all seven vessolr dedicated to the Indonesia-Japan trade have now been delivered and are operating successfully, we expect to derive the benefits from our ‘transportation agreementwith Pertamina, No permanentemployment hasyet been found for the eighth vessel, butvarious possibilities are being actively pursued. While such factors obtain, itisnot expocted thet income fram aur shipping operations as a whole will fully cover associated interest costs, Outside the shipping sector, eemnings trom the Thistle oilfield should continue to increase. ‘The group’s other oil and industrial operations should continue to makesignificant contributions, Notwithstanding a growing recognition of the realities of economisdepression and sluggish growth, the geographical spread and diversity of our pamticulerinterests wil, In some measure, alleviate the olfect on the group of various trade cycles andwe believe we are well Poised to take advantage of future ‘opportunities, ‘al Lia lysis of group operations Directors’ review : Turnover Operating Capital Employees (net of duties) profit expenditure 1979 1978 1979 1978 1979 1978 19781978 E million Geographical United Kingdom & Eire 488-5 380-2 © 364 14.7 «= 207-226 = -18,000 17,700 Europe 263-5 287-6 20-0 21-2 37 42 3,600 3,700 i Africa 529 614 «= 4028087 2,800 2.200 | ‘The Americas 69:2 69-6 67 66 14 08 1,200 1,200 ‘ Asia 509 866 0 77 45 18 12N0 5,700 Australasia 49-4 47-3 37 29 12 1 1,400 1,500 ; Shipping 131-2 83-1 45 (22:9) 29 480 200 200 | 10866 9848 830 288 328 794 28,000 92,200 Class of business : Oil and ges 8667 547-4 637 31-7 193 224 9,100 13,800 Automotive 2763 2608 173 166 64 §8 13,800 13.200 : Engineering 205 288 08 08 18 09 1,300 1.400 Industrial products 29 752 «76 «64 «62728-3300 3.800 Shipping 1312 0 ea 45 (229) 29 480 200 200 Be. Unallocated central ‘expenses and (11-0) (3-6) 300 300 ‘group provisions 10866 0848 850 288 328 791 28,000 82,200 = Divectors’ review: operational Oi! ard gas: exploration and production 4979 1978 € million £ million Tumover 33 aed Profit 149 45 Number of employees $00 Burmah holds an 8-708 per centiaterestin the Thistle oilfield in the North Sea, for which The British National Oil Corporation (BNOC) is the operator. Oil from the alatform ismayed via the Brant System pipeline to the Sullam Voe terminal in the Shetlands where constustion workon plant for gonditioning crude oll is still in progress. Tho crude cer alternatively be loaded direct into tankers through a single anchor leg mooring incialletion, Elsewhere ir the North Sea, Surmah has @ 12:16 per cent interest in Blocks 16 /Gandioart-Blocks 81/21, 81/28 and 31/27 ina jointventure wath BNOC. The group alsotiasan 11-26 por centinterest in Block 70/2 as ameraner 2} an inteinational partnership in which BNOC holds a majorityinteres. BNOCis :permt.farhoth ventures. In Pakistan, Strnah lias 470. prs xtinterectin Pekistan Petrolour Limit, which owns the Sui gasfield, Offshore Gabon, Burmah is operator of an exploration programme over eteas totalling «pproximavaly 3,200 square mils underan agreement which will antilete grouptoasre of any ll or gab discover Offshora UK Construction work on the Thistle platforra was ‘completed during the year and operations are now centred on dling and completing oi! production anid weter injection wells. Eighteen ‘wells had boen completed by the end of tre Year which, fortechnical reasons, was fewer {han programnmed. Production atthe end of the year was averaging about 100,000 barrels a day. ‘Operations in other North Sea areas were confined to detailed seismic surveys, end diiling originally proarummed for 1979 should now be undertaken in 1980. Workin pogresson tie Sullors vee Shetlands, whore cil icon tho Thistlo petra collectad vio tho Bront Sy sterayapcne Burmah is operator for two separate consortia which ate prepatingapplications for blocks in the seventh round of UKoffshoie licensing, one concentrating on tha North Sea and the other on the English Channel. Overseas ‘The main activity offshore Gabon wes a 1,900 mile seismic survey, the results of which are now being assessed, ‘Surmah Oil Seychelles Limited, which was ‘operator for an international consortium ‘exploring offshore Seychelles, withdrew from the area after studying rosults of detailed seismic surveys. {n Pakistan sales trom the Sui gesfield rose ight per cent to averac:2..16 milion cubic leet ‘a day. Production tsts established ollin the ‘Adhi structure of the East Porwar Block, which {is being explored inajoint venture with ‘Amoco, and plans ae in hand for production to beaiin there in the seoond quarter of 7980, ” Directors’ Gil and gas: ra Although its supplies of Iranian crude oil were Cutoff, the Ellesmere Portrefinery suconeded in sustaining operations using three types of crude not previously processed at the plant, ane of which was from the North Sea, Following special studies in the cefinery laboratory and a full-scale tial run, a range of base lubricating oils, sulahonates, white oils and food-grade waxes vies produced from @ UK feedstock view : operational report ining wows marketing The technical innovation involved is considered an important breaktirough as this isthe first time such specialised products have been manufactured commercially from North Sea oil, Itcould give the company greater flexibility ata time vinen the pattern of crude oil supply throughout the world is constantly subject to the uncertainty of change and disruption. © Bunnaly Eases Port etn a ight Lubricants and specialties ste reduces baat qu Gost AGN for BTR motor oll, asa a 3 fonnis part af Castral's review, Profits from operstions were generally improved, However. rapid rises in the costof base oils led to a need for increased working capital. United Kingdom Profitincreased with an improvement in margins, partly because the strength of sterling lessened the impact of risesin the dollar price of raw materials, Castrol GTX continued as Britain's biggest selling motor oil, but there was litte growth in the market. Industrial lubricants sales declined with the depressed level of industrial ectivity, though merine oil sales showed aslight improvement and sales of specialty products, such as white oils, rose significantly. Exports continued tomake a useful contribution toprofit. Europe The year was characterised by arepid increase in material costs and wages. However. demand for both Castiol and Veedol sgain increased and, despite government price controle in some countries, there was an inciease in profit for the fourth year in succession, Plant operations in France were rationalised to provide additional capacity forindustrial oils and the successful Veedo! agency in Belgium was acquired. international ting performance was good, with minor exceptions Growth in both voluma of seles and profit was sustained inmost countries despite sluggish marketing conditions and poor economic growsh. Particulany noteworthy were the incieases in both salcz and profit in the USA and Brazil. The Brazilian improvement wae achieved despite extremely difficult trading conditions, very high Inflation and the fact ‘hatits transla Ity tubricents and specialty praducis which ::emaketed worldwicia, ssalso firmly establishd in supplying the agricul inal, produc1an Ploctacal, aviation and maring industries. The long-established Vevy ied m a number of countries. Tabbert, which for manayementand administative uropean operations, appears in the Automolve Suction sf this Trange of motor sterling was further affected by a substantial devaluation of the cruzeito towards tho end of ‘the year. Australia, Soulh Attica, India, Malaysia and Singapore also performed well and a umber of companies elsewhere increased market share and margins aginst intense ‘competition. Research and development Now that group laboratories have established that high quality lubricating oils canbe manufactured from certain North Sea crude oils, work is in hand to optimise theyields, The Castrol international laboratories applied fora number of patents resulting from their continuing workin product research and development, Sponsorship Motor sport continued tobe one of Castrol's major promotional activites. The company was particularly successful inrallying and the Castrol-lubricated Ford Motor Company team Of Escort RS Group 4 cats won the 1979 World Rally Championshipfor Manufacturers. {© World Rally Chamyionship winnarin action, 18 Directors’ review : operational report {9 Bilis Atrvays TiStar‘Alpha Hotel chowing the oil ares Other petroleum products Eounvdnd 8 small eter Maar ail Apaex bra Repulse ef ltckw ¢ In Britain, market conditions improved in the second half, when trading activities became profitable, although substantial adgitional ‘working capital was needed because of Increases in the cost of crude oil (©-An Apux serview tation at Mitton Kayn aon Th sb certo te Banna Fresher vilobs In Sweden, Uno-X again performed well, continuing to benefit fromits investment programme in modem petrol stations ned advanced equipment, In Belgium, government price control squeezed ‘margins on gasoline and profits were consequently lower than in 1978. Automotive Quinton Hazell atoup Haltonds group “abbert Numbor of omployoos 12.200 Quinton Hazell ‘Quinton Hazell is one of she warld’s lectin manufact Quinton Hazell Automat: vnanufactares ‘throunh tv9 dictribunon centres. thas z successful expat trade with ov erof components and "epiacame-nt ports Motorists’ Centres. the largoet specialist ntuil tyre and exhaust fh Yorry Ultiasanies, a leader in the use of ultrasonic cleaning, wold ‘jon mnanufactures end markets in 3 parts Inthe |. gem, of the group ute Parco. awhulesal Tiezinternational di Quinton Hazell Automotive Although 1: was e difficult year for Quinton Hazeli Automotive, the company was able to achiave a worthwhile improvement on the previous year’s profits. Some sectors of she UK market hald up well but export seles suffered from overseas, competition. the strenath of sterling abroad and uncertainties in the Middle Eastern and African markets, Manufacturing was adversely affected by the national engineering dispute in ‘September and October. ‘The company further extended its product range and introduced a programme of reconditioning clutches for commercial vehicles. Turnover Profit 1979 1378 1979 14/6 € million € lion EC mthon 1320 9 Wit 5 1176 HU 7 a7 7 4 2763 10-8 sof yehile commonents =n raplacemerit at five foctorinaand suppliges loser ve OOwrunthe>. Fther organigatan in Eusnpe, ana ndmachininy techniqnies. umber of averse. courntrios Apolicy was introduced of buying components internationally where these can be acquired ‘more beneficially than ifthey were ‘manufactured internally. At the same time the mariufacturing divisions were strengthened. with the introduction of nev piant, Research and development continued, particularly on safety refated products. Progress was made towards acquusinting vehicle fleet ‘owners and safety legislators in the EEC anc the USA with the benefits of the safety Underider, a device fitted to heavy road vehicles to minimise the effects of arear-end collision. © Tae Quinton Haxalsotety Underder (left) anda Groscrup view ofa Cake Froehaut mechanic iting ont tonheovy goods vehi, 16 (ontinnedy : arket goneray. Sinco theend of the year, the tiadalied sequleiton of asmal oxhaust oxen nee ee eile adifioultading year Pantcowssable added stengthiolocelmanufonnre ooo i tribution, to imoreve on last year's profit, The expansion i Brogremme continued, and Partco now trades ‘through 138 branches. Kerry Ultrasonics 3 iets’ Notwithstanding the general industrial wee at cats Senression, Ken traded satisfactorily in tists Sanda Moto Cannes aiid 26th-anniversary year. Trading yooo tes aya oy 8 eessl Overseas, progress wes made in Japenand in trading yearin the David Boler aequisition: Oversea, prog nade in Jo : v,andl efforts are now being aad ton completed towards the end of 1978, aly andatiors Shack absorbers were introduced tothe : productrongwatover sooo crgngingthe An imporany edn the uliasonie fits Tepid tting Service offered tothe publa. © tora developing their own system, using eines Ouinton Hazoll International rocessor technology, which wil bs the host available in the Ui, The division as a whole was able to’ improve advanced avai significentiy on the previous year's prof, {n Europe, results were good even though trading conditions became difficult towards the end of the year. Elsewhere, a downtum in the merket adversely plfected results from Australia which, though otter than the previous year's, fell short of ‘expectations, ‘The South African subsidiaries performed well, arliculerly those in the electrical sector of the automouve market, despite difficulties in the © Akers Blastietoye, Halvords Fh delforte group ste laigest specialist reta‘er of motor ‘2ccessorics and eysles in the United sence 16 UK retail division, established over omen 290, operates 258 siores which are now ones om s atibution centroin Zed. tn the ete Handle. aretaildivision established in 1973 NOW operates 20.stores, Subsidiary companies include Maccers, a motor acoessory cush- Halmanco, witha ye fac K ‘and-sarry wholesale company cycles, and Leonay on oF a AUCING an oxciasivavangeat Haltardsooreee porterof cycle accessories, Qpersting profit resched a re ord level with a Se 28 @ steady dormand for tne compeny’s 33 por contincrease aver 97% ons tarneaes pone Ees. Principally motor accessories and Up by 23 percent Pats. Cycles and their accossories enjoyed & Fecord year, partly because of the partly fthowshiobeat Tay ‘ ind partly bocause ofthe rush to bast TA Retail stores inereasesin June, Fetal sales in the UK showed an incressoof {Programme snow underway to reinforce th 8 percent. with operating profitetfi aie. ctr maany ohana ieee hope SPecialictimage ofthe company tofeporer sd Gesianedhousestyleis bang intod scat Six new stores were opened at Stratford (east campaign i Andon). Livarpos!, Lonator, taananeatee Milton Keynes and Viertington, and fee thers Ho Netherlands. whore: fesults showed a ¢ . HRarked improvement on earlier years afer Space was ncreasedbyiweporecre five stores ere aedos. eons efurher Se Maccess i opening of the Glacriowsnit in Sarit ‘fought thy total to seven, Both turnovor 4nd ‘opeiating profit were ahes) of exnuctations, and the comoany cuntinues to be theiescar in iis specialised field Halmanco During he yar, the final work on remacehing The entire range of cyoies was comple Barker reorganisation ha aw come to fruition with improved she 1yhput and efficiency at the fartory and sales to ‘ll substantially. This, together sralermined both consiimer spendirg2nd wath pressure anmargins and high develo pment desler financing, causing dealets tc reduce ‘costs of new madel ranges, tured the small stock: significantly, particularly in Germany, profit of the previots year into a loss. ” Directors’ review operational report foes) « Engineering : 1978 £ milion, Turovei 28 Profit Number of emplovess 1.300 “The Burmah Engingonng group hes its headquarters m Manchester tembr ser Shree Cperouns aaa ealfint venture company in he UK. and nine subsites 20a five associated ‘companies overseas. Themarkets forthe group's prodcis and services aro vane; Flexbux manufactures Frees, aa eh arioa soa and pew transrasion coupligs. ch mat kas fo me process ano ne fonginsering nduswos, Arange ol gas oil chemeal andcry2es ore Hes, a a a nega by Petiocarbon Develapmenis as een ns talleOLreua ous ers See esa prgotes and related industies, The Telezommunications “elec Mien croton ol anddata rancling systems and telephor zexsrange net werls. The Sects develops tle co cranes manufactured by JH Carruthers have applic tions 13°90 fom feb aoe reg one fo ne spoulaing and fabrication indusinek wyerever bad oF Up TS aad e rn Oe ited. Pel\eur Engineering is a company oimly-cwnedl wih the Folsh state ore ae Polimex- Gekor which provides procuremert an¢ technica services to*he chemical engineering industry. Flexibox Limited recovery wasestablist ed in the USA with Dil and Gas Cryogenics, Inc. Despite the depressed won: iemand for process equipmentand se3re parts, most ‘Telecommunscations activities were meintained Pigkibox companies wero hia tomaintain their at asatisfactorylevel for both offshore and volume of orders. However, both turnover and industrial communications systems profit fell below expectation: of ths: UK engineering disput mainly because which ‘drasucally reduced output and eroded margins. @ Powe nbonen ogenicunit, part o”a larg titrogen prodye n jplont.o11ts way te Nanh Amerte, Petrocarbon Developments Limited ‘The level of orders suffered fram tho worldwide recession in process plant activities. The company continued to perform within budget onthe large PVC project butdifficulties continued on some other plants in Poland, The ‘market for cryogenic hydrogen recovery plants continued to expand and a new joint business venture involving the sale af nitrogen for ort JH Carruthers Limited ‘Tho forecest retum toprofit was not achieved, Following the appointment in June 1979 ofa Rew chief executive, afresh soles and marketing initiative and a programme of product developmenters being undertaken to Counter the effects of the depression inthe crane marker. PoliBur Engineering Limited Postponement of e large UK project and the general world recession adversely influenced the momentum achieved during the previous two years. A contract for tine supply of cold stores to Egypt gave some help to profit, {© A merino gearbox using Matastcam flexible power {tonsmission couplings masc by Flexibox. This one 's installed in tho airrah cor, AIMS Invincible. Industrial products 1979 1978 : Emilion £ milion Turnover 228 752 Profit 76 64 Numba of employees 3,300 Burmah industrial Products has tive divisions : Atles. Dussek, Expandite, Rawiplug and International, These divisions prcduce and sell sevaral ranges of technical products and services to such industries as construction, packaging. cable, rubber. timbor thermal insulation and agnculture. Additionally the group is involved in the expanding DIY and home improvement markets, Atlas The excellent results of the previous year were fot maintained, mainly becausa of the !1K industiial situation at the beginning of the year and the Middle East crisis. However, sales of agrochemicals, thermal insulation protection and cleaning products made further progress. Dussek ‘The businesses of Dussek Brothers and Gampboll Technical Waxes were merged during the year into one rationalised organisation, Dussek Campbell which. together with Solignum, forms the Dussek Division, The power cable site of the business showed some improvement during the year, although, world demand in the telephone cable and packaging sectors was depressed, Direct and Indirect exports suffered as a result of the increasing strength of sterling but. despite these difficult trading conditions, profit was up to expectations. ‘© A somplc of products that use Dussok Campbell Packaging waxes, LIrEctors review : Opersuunan topwse Expandite Profit was increased. Desptte the low level of activity in the construstion industry, the ‘company succeeded in achieving a substentio! growth in home sales, Against this, the Strengthening of sterling andthe unstable Middle East situation created some difficulty in exporting. Rawlplug In adifficultyear profit suffored by comparison vith the exceptional esults ofthe previous year, The national isineering dispute particularly affected production atthe Glasgow factory und, nacaiticn, export sales were inhibited by the ardening of sterling ang the Uncertaine/ inthe Middle East, Home sales were ‘depressed al the beginning of the year but ‘egained mostof what had been lostby the end: progress in the DIY sector was w maintained. Mason Master succeeded in Improving turnover and profitsstil further. International Despite difficult wading conditions in many ‘countries, both in Europe and overseas, turnover advanced strongly and the division achieved a substential increase in profit, © Shing tor Have sang. Rawiplug Fivings Bor Shipping Turnover Profit/(lose) Number of umpioyses 200 Vanker operations LNG operations 1979 1978 1979 578 £ million fmnilion — € million 663 ATG 64:9 08 (26-6) 37 In adeitvon to the operation of a crude oll tanker fleet, the group aperetes amnyo nl Baliama [sland ond transports hquefed natura’ gas (LNG) ia tronsshipment facility on vessels time-chartered by US subsitisrie: te ull “The Bahumas terminalis the nearest transshipment terminal to the ports of the eastern US ancl Mexican Gulf, mor? of which can handle anly shallew-craughi tonkers, The teyminal consis deep water "sea island’ , an inner harbour, tank stornew apanity af 69 milan barrels and re pumping andl other aperating euuipnionr. Th. armiin“'sthrounhove e-cay ia depondenton the Giversity of crude ovls handled and ranges between 110-150 millionbarralsa vost. “The group has along -term agreament with Pestamina, the {nclonesisn State oll com: any, totransport Cee eee oes Indacesta and Japan The project became fully operational tthe beaiinning of 1980 andis served by seven of the: LNG is supphad frum two hquefaction plants in Aran in North Sumatra, and Is delivated to 4 num ‘companies. Tanker fleet Market rates were firmer than they had been. for some years and those prevailing during the second halt of 1979 were the highest since 1973, Rates for smaller tankers in particular were at profitable levels. One of the two ultraclarge crude carriers: (ULCCs}, Burmah Enterprise, wes chartered to Texaco for three years from Dr rember 1979. Two other vessels have bean profitably chartered out short-term, ght 25,000 cuba jometre LNG vesselschartered in by Bucneh. The Indonesia, located a Boritang in East Kalimantan and ther of major Japanese utihty anidindustral Previously reported negotiations to reduce charter commitments wereconcludedand four uneconomic vessels were sold, It is a matter of greatragretthat 31 crew members diedwhen the Burmah Agate. @ small tanker chartered in forthe Bahamas shuttle service, was stuck by a freighter. The vessel was subsequently declared constructive total Toss. ‘9 The mojorcrudeoit transshipment tarminalon Grand Bahama sland. Directors’ review : operat jonal report (ean) By the end of the year the fleet had beon reduced 0 15, all but one of which were tolatively modetn vessels and were trading Although demand has slackened since the year ‘and, the rationalised fleat hes good prospects Forprofitable ifacing when the market improves again. Two new 55,000 ton vessels, designed for shuttle purposes, have joined the fleet since the end af the year: Burmeh Excelsior, delivered in January, and Burman Bahamas, delivered in Marcin. These vessels are expected to trade protitably during the term of thelr charters. Two ‘ther vessols have been returned to their owners onexpiry of theircharters. In July, agreement was reached settling all litigation concerning seven vessels ciartered to Pertamine before 1975, The effect of te agreement on results for 1979 is explained in the notes to the accounts and the chief ‘executive's commentary. © A,Jopaness house's ennting by gas, Liquatied ‘natural gasis"ranspoted from indo. n-S@ by 22 ‘cubic motre LNG vessels chartaredin by Burm Bahamas terminal “Throughputatthe terminal was down by some 14 per cant to 82miblion barrels, mainly because of the Iranian erisis andthe cessation of Crude oll Imports under the United States Strategie Petroleum Reserve Program Negotiations ona now agreement with the Bahamian Govenmnentcontinued during the year. The agreenient isnow awaiting Signature, a LNG operations During the year, the delivery of the three vessels LNG Libre, LNG Taurus and LNG Virgo marked the completion of the ship construction programme. Thevolume of liquefied natural gas transported totalled approximately 14 million cubiometes, some 12 percentinore then expected, involving 111 completed voyages. LNG Aquarius, the only one of the eight vessels not permanently dedicated to the Pertamina trade, was employed tem porarily on the trade uring the first quarter. Various possibilities are being actively pursued for both short aa, term employment Group persennel ‘The éverage number of people employed by the {group in the year was 28,000. The ‘g2cgraphical distribution of personnel is shown on page 10, Training and development policy Each subsidiary of the group has a respons|bility for training and developing its ownestaff. In addition, to ensure that the senior mnagoment needs of the group 4s a whole are ‘met, the group management development committee, consisting of the executive members of the board and the personnel director, has ultimate responsibilty forthe development and appointment of the most senior managers. School leavers In Britain, group companies continued to support the work experience programme ‘organised by the Manpower Services ‘Commission to give unemployed schoo! {eavers training and experience in industry. During the year 220 unemployed school leavers were placed fora minimum period of six months and 62 of these were subsequently given permanent employment. Ip adgition. Sheth form “Insight into Industry” programme was introduced, Employeo involvement In 1979 further progress was made with the. introduction of pansions consultation and employee annual reports in group companies. Preparations have been made to establish: councils in various group compatnies in 1980. similar to the Quinton Hazell pensions council already in existence, The aims are toenable mombers to gainagraster understanding of their pension plans and to acquaint companies and trustees withthe views of members on the operation and further development of such pens, Employee annual:eports are now published by Quinton Hazell, Halfords, Burmah-Castrol and Burmah Industrial Products. Health, safety and the environment ‘The group healthand safety committee, under the chalrmanshipof the group chief executive, reviews accidentstatistcs sad the results of safety audits. Ansgreed programme of safety promotion includes setting safety objectives foreach operation full tims group chief medical adviser has been appointed with aview to providing improved madica attention to employeehoalth. Anoil spill contingency plan has been established by he group environment unit and is now fully operational. 23 4 Report of the directors __ The directors present thelr seventy-sighth ‘annual report, together with the audited accounts for the yoar ended 1 December 1979. Principal activities ‘The Burmah group is an oil-based industrial ‘enterprise which on 1 December 1979 ‘employed funds of £632 million (totat assets £910 million). Its oil and gas activities range frum exploration torrefining, distribution and marketing on 2 worldwide but selective basis, with emphasis on the lubricants business Burmah is committe 3 to a crutie oll tanker ‘leet structured primarily to serve the interests of tne Bahamas transshipment terminal, and is 2lso involved in the ocean transportation of liquefied natural gas. Ithas substential interests in manufacturing, distritution and selling to the automotive and leisure markets, and in supplying special products and services toa variety of otner industries. Further information on the group's activities is given in the directors’ review on pages 6 10 23, Results and idends ‘The profitattributable to orsinary stockholde:s is £48,042,000 (1978 £3,364,000). The diractore declared an interim dividend of 1-5p per £1 unit of ordinary stock which was aid on 9 January 1980 and now recommend a final dividend of 5p por £1 unit of ordinary steak This will give a total distribution forthe yeur of 6-5p per £1 unitof ordinary stock amounting to £9,358,000 (1978 nil). With (elated tax credit this is equivelentto 9:2857p per £1 unit of ordinary stock. The surplus for the year transferred to reserves amounts te £38,684,000 (1978 £3,364,000). Givectors. Mr Ps} Simonis,Mr HH Tainsh and Mr S Haddowretired from the boardon 9 February, 18 Apri and 21 December! 972 respactively. ‘The present directors of the company are lisiod on page 1. Thedlrectors retiring by rotation are Sir Alsstair Down and MrO Brookswho, being eligible, offer themselves for re-election. Mit ‘4 J Robertshas advised the boardof his intention to ratte on 6 June 1980 reaching normal retirement ace later this year. The board appointed MrJN Maltby asa directoron 16 April 1980 and in accordance with the company’s Articles of Association he now retires and, being eligible, offers himsalf for re-election, Directors’ interests Directors’ interests, which were all beneficially held, in the share and loan capital of the company end itssubsidiaries at 31 Decerner 1979 were as shown below. Holdings at 31 December 1978, oron joining the board, where these differ from those at 31 December 1979, are shownin brackets. ‘There have beenno changes in the directors’ inter asts between 31 December 1979 and 18 April 1980, save thet MrJ N Maltbyholds 1,000 ordinary stock units, which he helel on joining the board on 16 April 1 980. The Burmah Oil Company Limited Ordinary 84% loan, stock units stock Sir Alastair Dow 10,000 ST Wilson 20,000 ~~ *20,000 RG Marin MJ Robenis CwiUrguhen ‘*Represcnted by American Depositary Receipts: Auditors ‘The auditors Emst & Whinney (who previously rectised under the name of Whinney Murray & Co) have expressed their willingness to v0 to-appointed andiin accordance with Section 14 of the Companies Act 1976 a resolution proposing the re-appointment of Ernst & ‘Whinney as auditors of the company will be put tothe members atthe annual general meeting. Employees ‘The average number of persons employed full ‘time and part time in each week of the year in the UK was 17.716 end their aggregate remuneration for the year was £72,288,000. Exports ‘The value cf goods exported from the UK by the group during 1979 was £88,074,000 (1978 £72,092,000). Donations Payments for charitable purposes duisng the ‘year mounted to £82,000, No potitical contributiens were made, Properties ‘Tha book velue of land and buildings included as fixed usset sin the yroup balance sheet at 31 December 1979 amount to £62 million. ‘The directors conaider that the market-alue of these propertine is some £55 million in excess ‘of such book value. South Africa In accordance with the EEC Code of Conduct for companies with interests in South Africa, areport has keen submitted to the Secretary of State for Trade, A guidance note relative to this information has been separately prepared and is available from the company on request. ‘Otherinformation (i) Noshares or debentures wore issued during the year. Gi) No contracts ofsignficsnes in retation to the company’s businoss subsisted at 31 December 1879, or atany time during the yeer, in which directors ofthe com aany had amatarial interest. (iil) Mr J N Maltoy,a director propesed for re-election at the forthcoming annual general mesting, has a service contract having ¢ patiod of fouryears unexpired, (iv) Details of substantial interests in the company’s ordinaty stock and 6% (now 4 2% plus tax credit) cumulative first and second ‘preference stocks are shown on page 47. (v) The company isnoteclosscompany inthe meaning of the Income and Corporation Taxes Act 1970 (a8 amended) By order of the board ABentley Secretary 48 StVincent Street, Glasgow G2 STW 16 April 1980 cr Financial caiendar sna results: Proliminary steterment issued 18 Aprit 1980 Annual report: Mailed 12 May 1980 ‘Annual general meeting : Tobe held 6 June 1980 Final dividend for 1978: Fayable 3 July 1980 Half yoer 1980 results: Expected to be issued 17 September 1880 | Ordinary stock~ ‘ later: Early January Final: Early July Preference stocks: 30 April and 31 October 3% Loan stock: 18 February and 18 August i 83% Deutsche mark bonds: 1 May and 1 November i 734% Loan stock 30 June and 31 December i ‘79% Luxembourg francbonds: 30 June : 83% Loar atock 28 February and 31 August 53% US dollar bond 1 April and 1 October Dividend and interest payment dates i Miscellaneous information a Capital gains tox ‘Ya market prices of the undermentioned basis the costfor capital gains tax purpesses por stooks on 6 Apri 1968 were: £100 of stockis £02-836610" loan stock and camel 243g £71834 forseven warrants issued therawith. 8% (now 4-2% plus tax credit) Where former Quinton Hezell (Holding) Lid ‘cumilatie first proference stock S24p (Meza held of ly pa shares tesiee j : otdinary stockunits, ocinary stock warrants } 8% (now 4:29 plus tax credit) 1972/78 or 83% unéecured loan stock 1861/96 Ee £896 (now 5-6% plus tax credit) ‘the costof these securities for capital gains tax q cumulative preference stock 1124p purposesisenived atby apportioningthe : i Original costofsharesin Hazell (reduced by The warrants issued with the 84% loan stock any cash consideration received fromthe 1981/96 became valueless on $0 June 1875 Company) by reference to the market Values of and holders of such warrants on that date ere the ordinary stack, werranis andloan stock an Entitled o claim a loss for capital gains tax the first day of dealings, nemely 40435, 1083p Waren, esPectoFtheabanconmentofthe and £804, hotelovent market edo Poneto ‘warrants ofsuch secure issued toformer iy !fholders of the 84% oan stock and warrents Seed ee etoeMnoldars oF Hsze! were issued in 1969 acquired thoir stook botore the E8820. 107spand c8o4. Wifertswere separately quoted on ths Stock “Alasedv.aenalevnde ing npaldtor ap Exchange the cost of the loan stack with Wetrents should be apportioned between the loan stock and warrants by reference to thelt . fespective markat values on the ficstday of dealings, namely £86-75 and 96:625p, On this Accounts for the year ended 31 December 1978 Basle of connolidation (a) The consolidated accounts include the accounts of the patent ‘company and its subsidiary companies, which. with minor ‘axcaptions, are made up to 81 December. Appropriate adjustments ‘0 mode on consaidetion to bring the accounts of subsiiares, ‘where loca conditions prevent them fam complying fully vith {10up accounting policies, nto fine with these policies, {b) Accounts are prepared under the historical cost convention ‘except for tho revaluation of ado investments, (2) Tha results of subsidiaries acquired are normally dealt with {fom the commencement of the year of acquisition but appropriate deductions are made te oliminate that pert of such sesulls deemed ‘Ap haveavisen prior to tho offactive date of acquis (@) Tho resule of subsidiaries disposad of are daoit with up to the cHlectiva date of sale, The profit or loss arising on such sales tupeenants the difference between tho proceads and the cost of ansuetmant plus post-acquisition reserves of the subsidiary dealt ‘with inthe consolidated accounts. shipplig ‘Income end expenditure including interest charges are deztt with on normal accrual bases. provision being made where appropriate for losses on voyages incomolete at 31 December. No adjustments, ‘whether to the book amounts of assets or otherwise, are made by tferancato any estimated outcome of future operations. profits and {asses resulting therefrom remaining to be dealt within the accounts of tater yess, Infozmation important in the context of tis policy is ‘contained in tha notes on the accounts. Exploration intarests inthe North Sea {a) Revenue and cosis including royalties are recognised on the basisof the groups entity share of production for the year. {(b) As set out in the accounting policy relating to fixed assots, the cost ef exploration and development, including estimated future ‘costs,’ depleted on aunitof production basis. (c} Provision is made for the eventual cost of sit restoration by charging against avenue a proportion of the estimated cost at Curtant pices on aunitof production basis (2) Potioleum revenue taxis calculsted atthe latest indicated rates ‘var the life ofthe '9ld and is allocated to accounting pariods on a unitol production basi. (0) Corporation tax arising on profits trom North Sea interests is considered to bo payable in tho forosoeable future end due provision fs made under the deferred taxation policy set out below. Transtation of foreign currencies (a) Assets and lisbilites in foreign currencies, with the exception, Of the company’s dolisr bonds, sce note 19, and trading results of ‘overseas subsidiaries are stated in sterling at the approximate rates, of exchange ruling on 31 December. (0) Paslised exchange differences are dealt with in profit before taxation or in extraordinary ‘items, 9¢ aparopriste, Unrealized ‘exchange differences are dealt with as a movement in reserves. Fixed assots (a) Properties and opersting assets are stated at cast lees invast- ‘ant and othar grants reduced, except for freehold land where the ‘vole is separately ascettainable, by depreciation which is celoulated 50 08 to varite uff the assets by equal annual instalments over thei affective lives atthe following rates: Froshold buildings at rates varying between 2% and 10%. ‘Leasohold properties over period of lease with a maximum of 60, yeas, 28 Plast atrates varying botween 6% nd 323%, Fixturos ond fittings tates varying botween S' and 30%. Motor veluclos at etes varying baton 14% and 334i, In the case of ULCE vossols, the cost less the estimated omount of their rosidual value is being wittn off over 15 yeare fram the datoct delivery. : (©) Exploration and development essete comprise expondituio in ‘counties (I) whore commercial production has been achieved. (if) witare the commercial value of proven reserves Is estimated to ‘oxceed tho total cost of exploration and development (li) where certain costs attributable to unexplered areas have been incuTed. Interest prior to production may be teated ss forming part of such, ‘costs. Exploration and development atsets are ceploted by 2 unit of production method from the date of commencement of commercial Production. Full provision is made for exploration costs in ‘counties whare commercial raseveshave netbeen discovered. Investments (a) The arous's share of profits les losses is included, «tere ‘material, in respect of associated companies in vihich the group ‘owns at least 20 por cant of tho equity and, in the opinion of tna itectors, exercises a slanificantinflvince in he management. Such investments ata stated at the total of cost less amourits written off and the group's share of post-anquisition undistributed reserves tracted from the relevant accounts, made up to 31 December adjusted to conform with group accounting policies. (b) Investments listed on stock exchanges are revalued each yaar fat market volues ruling on 81 Oscember and the movements resulting therottom are adjusted though reserves. (c) Unlisted investments aie stated at a value estimated by the directors. ‘Stock valuation Stocks are stated at the lower of cost and nat realisable value, Cost. ‘which in cartain cases refers to average cost,includes manufacturing overheads in addition to airect matsials and labour ‘Turnover ‘Tumover consists of the arnounts invoiced for goods supplied and services provided to external qustomers excluding value added tex. Rosoarch oxponditure Expenditure on research fs written ofas incurred. Ponsion contribution: Current service contributions to group pension schemes and instalments to cover labile for past sence arising from benefit improvements are charged egainst profits asincured. Investmentincome Income from trade investments Inludes dividends in respect of ‘accounting periods ending on or before 31 December which have ‘been declerad prior to the last practicable date for inclusion in tesa accounts. Dwvidends from UX companies include related taxeredits, Deferred taxation Provision is made, using the liabifiy method, for deferred texation where itis considered that the lsblty will become payable in the foreseeable future, The provision comprises tax allowances Which are In oxcoss of the equivalent charge for depreciation, deslation and emoitisation, relief for incrasses in stock values and ater timing differences, year 1979 __ : eee Tao Haunat 1979 197 nates € thousands FP thorasanels 3 Turnover net of duties 7 1,086,581 984,845 264 Oporating profit 82,969 28,843 8 Income frominvestments : 4,637 4,980 87,606 38,793 2&6 — Interest 20,263 16,663 Profit before taxation 67,343 17.030 8 ‘Taxation 22,681 8,504 Profit after taxation 44,692 8.626 9 Minority interests and pre-acaquisition profit, 64 ant Profit before extraordinary items. 44,043, 2.088 10 Extraordinary items 4,970 « 3.420) Profit after extraordinary items 49013 4,835 Preference stock dividends on Profit attributable to ordinary stockholders 48,082 Ordinary stock di Profit retained 38,684 idonds 9,388 Nr eae i 2{itBi> {Viovements in reserves @ Kalanceasat 1 January 223,401 224.987 12 Adjustmenton cuneoy realignments { 9,608) {waits Decrease in value of listed nvastmonts « 13) (3.508) Profitforthayoarretaied 38,684 3,964 Balance as at 31 December 252,366, 223,401 Hs 13 _ Profit usfore extraordinary items per ordinary stock unit 2992p 471p # nots the accounts me on pane 90 42 | : Consolidated balance sheet at 31 Decembor 1979 The Brom 9 f 1979 1978 notes £ thousands: Etho, busands Funds amployed 14 ‘Share capital 162,972 162,972 15 Reserves: 252,366 223,401 Less Goodwill including that arising on consolidation 70,919 70.197 181,447 ‘Stockholders’ funds 344,419 Minority interests 3,395 B.7eF 16 Deferred income 11,337 v7 Deferred liabilities 28,990 41,313 19 Long-term borrowings (243,373 263,045 testes 631,514 630870 Employment of funds 1 Fivedassets 297,081 289.608 eee ge tnvestments, 49,795 89,500 23 ‘Shipping advances and prepayments 57,235, 72,025 24 Long-term receivables 16,474 8341 26 Net currentassets 210,959 204,398 631,514 630870 30 ALASTAIR DOWN | WY Carila he Ce Dire STANLEY WiLson | °° halabawl yor wre 1979 1978 E thousands F thausands Sourzo of funds Funds from trading operations Profit before extraordinary items 44,088 Adjustment for non-cash items 30,627 22,880 74870 woses | Funds from other sources } Proceeds from realisation of investments, shipping ' advances ete 17,756 28,602 Proceeds from sale of assets 7410 raga Long-term receivables now current 4,901 2440 | | Long-term borrowings 19,838 98.927 424,275 102 388 i Application of funds Dividends sm w Expenditure on fixed assets 32,881 70980 Additions to investments, shipping advances ete 22,555 19,442 Reduction in long-term borrowings 29,751 12429 Deferred liabilities, deferrad income and minorities 6131 ¢ 5.618) ‘Shipping cancellation fees and provisions - 14,602 Miscellaneous 238 408 92,538 119,184 Increase/ (decrease) in working capital 28,737 (16780) 121,278 102,398 Note 32 on the accounts on page 88 forms pat of this statement Balance ‘nine sheet at 31 December 1979 1979 notes £ thousands Funds employed 44 ‘Share capital 162,972 492,972 15 ___Resorves 193,771 190.489 ‘Stockholders’ funds 356,743 19 Long-term borrowings 91,516 (448,258 462,822 Employment of funds: 20 Subsidiary companies $04,180 A188 22 Investments: 20,288 29,886, 23 Shipping advances 16,679 85,202 24 Long-term receivables 5,885, 4.701 26 Net current assets 1,228 10,878 448,258 482,582 hl ag Ho Koran, \ . ALASTAIR DOWN, ‘STANLEY WILSON Directors 32 Notes on the accounts Fhe Burman group aoe eeL aan ‘Those notes form part of the annual accounts, 1 The Burmahgroup {2) Tho term “The Buimah group’ or ‘group’ means The Burmah Oil ‘Company Limited andits subsidiary compat (b) ‘The term ‘shipping’ raters to the activities of group companies jengagod in tanker operations and liqusfied natural ges trenscor- tation, 2 Shipping Ht was announced on 11 July 4879 that agraoments hea been Feached with Portemina and other parties which resulted in a ‘settlement for past and future chartr hires, the cancalltion of two Jn-chartes, the dizsolution of certain joirit venture arrangements ‘and the termination of all tigation betwesn Burmah end the various patties ‘Ase result of these sottiements, provisions amounting to £12,967,000 mainly in respect of past chatter hives, have been released to profit and loss account. After taking account sf this ‘exceptional Item. the contribution to operating profit of shipeing subsidiarioe amounts 10 4,456,000 (1978 loss £22,916.000). ‘Not interest payable to third parties by such subsidiries amounts to £6.318,000 (7978 £7,909,000).. ‘urnover 191076 a rear Cthoue Invoiced value of salesto external customers 1,197,980 1.122.321, Duties, taxos and other impos levies by ‘govornments estimated at 111409. 157.478 Tumover net of dutios 1,086,581 984,845 4 Operating profit Operating proftis after charging depreciation sation £23,918,000 (1978 £79,978,000), the cost of chartering ‘tankers ond LNG carirs £69,442,000 (1978 £68,661,000) and hire of plant and machinery £4,973.000 (7978 £4,617,000). Auditors’ temunoration amounted to £1,814,000 (1978 £1,241,000). income from investments 1a 17 mae eons ‘fthous Labour Share ofprfits of associates 405 1.379 Income rom sted investments 2748 2301 income om united investments 14861270 4637 4360 “Thosharet pottsoten: pcatesoiduing 1978 wotineused uo othe aoatvo Gatrorsate, tem t978 thee Etat *Bank advances, end loansrapayabite within five years 23,388 Allother loans 9.898 32,908 2,222 Less intorestracorvableon short-term investments ae 12,723 11.868 20.203 18,668 ‘cluding in 1978 400,000 caplaice so part of te cesto ind aos tort tonandgavelopmes ie — SS 7 Emoluments ot directors and 11078 senior employees. pene ae eee (0) Pre-taxemeluments ofthe directors of ‘The Burman Oil Co Ltdp ‘company and its ul Fees wo Romuneration 358953 Pension contributions m2 482486 ‘One coro: Ras waves nang aoa emclurents amuning E9196 in 197 apd £14980 1080. Prostex amolumets inclu hos ofa distor whovo dules woe sched Panty outtde he UR. (b%, Payments to directors onorsubsequentto cessation of whole timo savicowithsubeldiaries =] — (©) Pension payments to former directors ae 18 (8) Pre-tox emoluments, excluding pension contibutions, of irectors and senior employees whose duties wore discharged ‘wholly or mainly in the UK tom 1078 ewhoue cious Directors (i) The chairman a” A6 (i) Otnerdtroctors Numbers Numbers Notmorethen £6,000 é 2 £5,001 to £1000 - 2 £96,001 to £40,000 1 4 £40,001 to £48,000 1 - £45,001 t9 £60,000 1 - £00001 10 £66,000 7 1 £70,001 10 £78,000 1 - Senior employees £20091 to £26,000 “48 £26,001 to £80,000 1 3 £90,001 to £96,000 3 - 88 Notes on the accounts eae 0 Tontlon WT bintsonae = a . it Paloenes ae (a) The charge in the consolidated profit and loss account, whichis Pret stad onthe eve tertosese san 08 (now 256 tx ers cumaive Cnet tecte cae se ame tant noni thous — Es 86 (now 4:2% plus tax credit} cumulative: Corparation tax at 52% 12,019 8.007 second praferonce stock 2 32 te 10268 8.007 8% (now 546% plus tax cred) cumulative aa ae cei tee 8 SE ee erst crit) amulathe \puionendiniorartemUKeompanics VAIS aga PEM rey FOE pet co) Sage Peete ae aiaaae cae BB ki mH Wie 1053 Sanay Less rorya uso Pee aoe aera Se REE Legs amount epresenting corporation tex rellof availabe on setting revenue losses ‘against chargeable capita gains (698 n010 10) = 9.053 22687 8004 Proposed final of Sp per £1 unitot ‘ordinary stoak (7978 nl) ‘Whereof appiieabie tothe shee of profits ofassoctates se 4G7 {(@) Provision has not bean made In respect of G) taxation on sales (of sundiy fixed assote wharo claims for ‘rol-ovor relief under the Capital Gains Tex Act 1979 are avaliable, and (i) ">xation which ‘would arto if cortsin oversoas subsidiaries were 10 distribute theit {e) Substantsl iossos for UK toxstion purposes, the precise ‘anmount of which has not yer been finally agtood with the Inland Revenue, romain avellablain certain companies. (2) The tox charge of £22.051,000 (1978 28,504,000) includes ‘eetred taxation of £8,099,000 (797Beredi £647,000) butexclades taxation not payable in tha forasevabie future by vive oft som 1078 etout ettaut Acceleretedcapial allowences 1.908472 {neteaso in stock values 708 7,309 Other timing differences 4ar (254) 3088 7.528 12. Adjustment on currency 137978 realigaments emus caus ‘Adjustments arising from the eaignment Df sterling egainet other currencies affecting the Valuaof overseas subsiiaies 97,224) (8.717) Velue of overseas assacietes — (33) Currency liabilities of UK companies 9861 5,736 Currency a%s0tsof UKcomesnies (2243)'387) (808) 1.a77) 18. Profitper ordinary stock unit ‘The computation for 1979 is basodon the profi before extiaorainary ltoms ettibutable to ordinary stockholders 43,072,000 (7978 £6,784,009) and tha amount of efdinaty stock in issue during tho year £143,972,000 (7978 £749,972.000). 9 Minority interestsand 1791070 pre-acquisition profit eihovs — ethave Profit sitibutable tominortyinteresis 649825 Pre-acquisiton pofitof subsidiaries acquired during the yeat - 4 ear 10 Extraordinary iteme 1870 tw etoweeatout Brousionsinrespectofsnppingeportons 3785. (14.600 Profits, less losses on realisation of t ievostmentsandosher sete, 1488 aca Adsiional amount ecoiveble un greemontsforsaloot NorhSeaintarests imiare = 7908 ‘Adjustments relating to cancellation fees and aaa Cato) Escaartnary toms for 1970 war aa ae arging FOOSE ORG ‘epee coroaion ton hagas capi ans. spt ‘ahish guns hare wer revenue losis svacbe ocahe toes lof (sce note 8), eee Fe a6 4 14 Share capital Issued and fully paid {fs (now 4-2% plus tex credit) cumulative os 12 Deferred lisbitttios Amounts payable under tankervancellation end ‘ther agreements 1878 first preference stock 250780 Dae. FF (nui 2 pus tex rect) cumuloave Dotered taxation (000 (8)) raaoh 908 Sccondpeiewmrestack 780750. Povisonstorponsions andovatos soil Be (row Soh poston et) curative tegalation (ve ote 20) neat 7478 pyoterenca stock oo eee pea "79% (now 6-075% plus tax credit) curnulative se oe 23 ‘adesmabl pefernce sock 15000 16000 Tee Ordinay 120% vse oe nde 0¢e 5250 F500 au nee unde cent an er apo e aay eens 145,872 143.972 BeSESUO' Borba preae bos _ leet yea.72, 162.972 ee nfesved : 13. Doforrea taxation Drainoryanarot £ each sors gain 18, atennettes : Sis ar esa oach eBS22 BEBh Ie Setar etn 1 1 Dente +272 as pn nevis ‘Authonsed share capital 200,000 200,000 ee EE ERS SEG GOTT Oner er Cabs Aovoorte cept swans ca2? Trrkvapomansiukeve ete wera Increasein stock values 223 ner persed brand Powroleomrevenvetx 2.008 oars cesoucpuatinowepeseckeiciene? Unroased gainer iste invatnen's ‘aa tae cir aan hd Seg . 290 Se anssau a sown weh ce Othorimingdiferacces 176 Petrus cledoseton — e Uptest Seber 882 70 Gog eee ae Seog resa ot oxtbr 1996 eae = Taree teaato St etaber 886 a {(d) Thereiea potenca eo Maoaeedaur ee 1B tard oxaion not provided tin that Meer Nee EE secon smac ~ eesti atoances 3368 1499 nace eeu che incteasein took values via0s 11.087 Grow company Group Comps —_Unreilised gains on listed invesinen ts 208383 Share promiu some ‘S038 30200 20299 turing differences ee tevostrentrevelusvon = sausaiianaueusiaes seen 567 3675 70.0% 10708 Taxe7a.a0 other 216907 167,707 102804 187484 — neces a —— Feze6 168,771 223401 106488 Giherofaibvble tpassocltos (ean (ase

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