Final Results

Fisher (James) & Sons PLC 12 March 2002 12 March 2002 James Fisher and Sons plc Preliminary Results for the year ended 31 December 2001 James Fisher and Sons - the leading provider of marine services Highlights Financial Position Strengthens • Turnover up by 11.6% to £67.6m (2000 - £60.6m) • Pre tax profit up by 62.0% to £8.1m (2000 - £5.0m) • Basic earnings per ordinary share increased to 16.01p - up 71.4% (2000 - 9.34p) • An excellent year for tankships • Company benefits from tonnage tax, a strongly favourable tax regime Focus on core operations • Dry cargo and port activities have been eliminated as loss making activities • New emphasis on provision of marine services • New tonnage required in Tankships to meet increasing demand from customers • Three cable laying vessels now in operation following conversion, two on five year charters • Management contracts continue with blue chip customers; British Nuclear Fuels plc and Ministry of Defence Board Changes • Appointment of new Chairman, Tim Harris and new Chief Executive, Angus Buchanan • Appointment of Ian Serjent as Marine and Technical Services Director Commenting on the results, Tim Harris, Chairman, said: ' This has been an excellent year for the company both in terms of the financial results and the progress we have made in changing the emphasis of our strategy. We have disposed of our loss making dry cargo and port activities and will now concentrate on our core area of expertise, the provision of marine services. Against the background of the tonnage tax regime, our skills as a marine services provider, puts us in a strong position to produce growth in profitability that is more dynamic and more reliable. I look forward to the future with great enthusiasm.' Enquiries: James Fisher and Sons plc Tim Harris, CBE, Chairman Tel: 020 7338 5808 Angus Buchanan, Chief Executive Officer Binns & Co PR Ltd Judith Parry Tel: 0113 242 1171 Paul McManus Tel: 020 7786 9600 Chairman's statement Summary of Performance 2001 has been an excellent year for James Fisher, with strong growth in both operating and pre tax profit. We have also made good progress in eliminating loss-making activities and concentrating on our core expertise as a marine service provider. Turnover grew by 11.6% to £67.6m (2000 - £60.6m) Group operating profit grew by 75.8% to £11.6m (2000 - £6.6m) Pre tax profit grew by 62.0% to £ 8.1m (2000 - £5.0m) Basic earnings per ordinary 71.4% to 16.01p (2000 - 9.34p) share Proposed final dividend 10.2% to 3.25p (2000 - 2.95p) Your Board recommends a final dividend of 3.25p per share giving a total for the year of 5.21p (2000 - 4.65p per share) - an increase of 12%. The dividend is covered more than three times. Tankships Tankships had a good year in 2001 owing to a combination of good vessel utilisation and a modest improvement in rates. We have a close relationship with our oil major customers and to meet their growing requirements we shall need to provide some new tonnage. We are currently studying a number of different ways of meeting this provision, from purchase to different forms of charter. Cable Layers The two new cable layers, Oceanic Princess and Oceanic Pearl, were delivered in May and December 2001 respectively from the Viktor Lenac Yard in Croatia. Both are employed on five-year charter with it International Telecom, a subsidiary of General Dynamics in the USA. Although both vessels were late and cost more than anticipated, there are terms in our charter party which provides some compensation for the extra cost incurred. Nexus, our remaining cable layer, had another good year on a charter to Global Marine Systems Limited which expires in December 2002. Their parent company, Global Crossings Inc, is currently in Chapter 11 but this is not currently affecting our charter. Marine and Logistic Services We continue to provide specialist marine and logistical services based principally on our technical skills to a variety of different customers. We manage a high quality ship management service for British Nuclear Fuels including the subsidiary company Pacific Nuclear Transport Limited. During 2001 we provided a consultancy service for the conversion of a vessel due for their fleet for which we shall subsequently receive a new ship management contract. Another key relationship is with the Ministry of Defence; Oakleaf's long-term charter continues and we manage a stores and logistics facility at Sealand for the RAF. Negotiations are also well advanced for a long-term contract for six RoRo ships for use in Strategic Sealift. We have 25% of this joint venture, termed AWSR Limited, along with our joint venture partners Bibby Line Limited, Andrew Weir Shipping Limited and Houlder Hadley Shipping Limited. The Aberdeen operation, at which we build and supply rental equipment to the offshore industry, had a solid year, benefiting from steadily growing equipment refurbishment and hire activity. This is as a result of better freehold facilities purchased last year and marketing initiative by the team located there. Our hydro digger tool had a much improved year with six contracts in the North Sea. Elimination of Loss Makers As reported in our interim results, in June 2001 we concluded our withdrawal from un-profitable port activities, when we sold our assets and terminated our leasehold obligations at Newhaven. As part of the transaction we now hold a minority 19.9% shareholding interest in SEML, a French company owning the port, which has been written down to £1.1m. We no longer have any active part in port operations. The transactions produced an exceptional net profit of £885,000 after writing back previous provisions. I am pleased to report the completion of our strategic withdrawal from the loss making dry cargo market. During 2001 we sold three vessels, with the sale of the final two vessels being concluded in February 2002. The loss on the sale of all five vessels, £390,000, has been included in the 2001 results. Our joint venture with Cammell Laird, which owns the diving support vessel Fisher Cavalier, experienced considerable problems during 2001 and our aim is to exit this business as soon as practicable. Not only did Cammell Laird go into receivership during the year but we also experienced significant contractual problems. The joint venture made provision for losses in the 2001 accounts and has also made an impairment provision against the carrying cost of the vessel. The group's share of these losses and the provision is £1,943,000. Directors and Staff There have been some changes in the senior posts at James Fisher, moving the company into the next phase of its long history. David Cobb, Chairman and Chief Executive, retired at the end of last year following seven years of strong leadership for the company. During that period he focused on a much narrower range of activities, developing the company to the enterprise it is today. On behalf of the company it is appropriate that I record our thanks. I am delighted to take on the role of Chairman, finding a company with great potential through the core skills it possesses and an excellent reputation with its customers. Splitting the Chairman and Chief Executive role, Angus Buchanan has been appointed the group's CEO following a period of four years as Managing Director of the tankships company and most recently the group's Operations Director. Angus, a 38 year old graduate engineer was previously with Yarrow Shipbuilders Limited as their Project Director, responsible for Type 23 and Horizon Warship contracts. Ian Serjent has been appointed Marine and Technical Services Director for the Group. He is responsible for all ship management activities for the vessels that we trade ourselves as well as our operation in Aberdeen. Ian, a qualified Engineer, trained with Blue Funnel, and has a wealth of experience covering thirty years in operational management, ship construction and ship conversion. Michael Shields continues as Group Finance Director. We also have seen some changes to our non-executive Board members. Anthony Cooke joined the Board on 23 January 2002. Anthony has wide experience in commercial shipping having been responsible for the management buy-out of Ellerman Lines plc in 1985 and its subsequent sale to Trafalgar House in 1987. Recently he was Chairman of Andrew Weir Shipping Limited and was President of The Chamber of Shipping in 1997. Meanwhile Sir Julian Oswald and Jeremy Hodgson have retired from the Board as non-executive directors. I would like to thank them both for their contribution during their term of office. With a number of substantial new projects this year our staff have surmounted the challenges presented with great determination and professionalism - in some instances away from home for long periods of time. While it is easy to focus on the new projects it would be a mistake not to recognise the quality of service provided by both those ashore and at sea undertaking our ongoing business. I would like to thank them all for their contribution and congratulate them on their success. A New Emphasis - Marine Service Provider James Fisher's core expertise is as a marine service provider - much more than a traditional Shipowner. We already run marine management operations for customers such as British Nuclear Fuels and the Ministry of Defence which demonstrate that ownership of vessels is incidental to, rather than the core of, our business. In Tankships, it is our longstanding relationships with our customers and our ability to service their requirement for quality in the UK's and near Continent's congested waters which form the basis of our business. Similarly in cable ships, from Nexus to the two new cable layers for it International Telecom, our ability to convert vessels to a new and profitable use and then to manage successfully a turnkey operation on a worldwide basis, has been key to our approach. In Aberdeen we hire out a full range of sub-sea equipment and tools that we have adapted as required, or designed and constructed for the offshore oil and gas industry. This is another demonstration of core expertise in providing technical marine solutions for our customers. Our in-house Project Department consisting of naval architects, master mariners, mechanical and electrical engineers, possess all the necessary skills to support our marine service expertise. With the tonnage tax, we now have a strongly favourable tax regime within which to expand our activities profitably at a minimal tax charge. One benefit, which is not universally understood, is that a new range of ship financing arrangements, including leasing and chartering, becomes more attractive because we no longer need capital allowances from the purchase of ships. In future, our business concentration will be on activities in which our core marine expertise enables us to have a distinct commercial advantage away from commodity type businesses such as bulk and some other international shipping businesses. Outlook 2001 was a good year for James Fisher and represents an excellent base for further profit growth in 2002. Tankships needs to grow to meet its oil major customer requirements and can now do so from a profitable base, probably by means of the new methods of ship finance made more attractive by the tonnage tax. 2002 will benefit for the first time from a full year's income from Oceanic Princess and Oceanic Pearl. Their five-year charter helps protect us from the present downturn in the cable laying market. The disposal and full provision in the 2001 results for Newhaven and remaining bulk ships means that their trading losses will not be repeated in 2002. The joint venture with Cammell Laird has made a provision against the carrying value of the vessel, although the actual disposal of Fisher Cavalier remains to be concluded. Our remaining businesses are based on core expertise as a marine service provider. They should enable us to produce growth in profitability that is both more dynamic and more reliable than would be possible from exposure to the cyclical and intensely competitive nature of the international shipping market. Tim Harris CBE Chairman Group profit and loss account Year ended 31 December 2001 2000 £000 £000 Turnover: group and share of joint venture 68,390 61,261 less share of joint venture (823) (684) 67,567 60,577 Continuing operations 65,425 57,739 Discontinued operations 2,142 2,838 Group turnover 67,567 60,577 Cost of sales (51,913) (50,883) Gross profit 15,654 9,694 Administrative expenses (4,005) (3,139) Continuing operations 12,455 7,641 Discontinued shipping operations (713) (957) Discontinued port operations (93) (129) Group operating profit 11,649 6,555 Share of operating (loss)/profit in joint venture Trading (1,050) 83 Impairment of fixed asset (893) - (1,943) 83 Discontinued shipping operations: Loss on sale of ships (123) (162) Provision for loss on disposal (267) - Discontinued port operations: Release of port closure provision 989 - Profit on sale of fixed assets 2,597 - Amounts written off fixed asset investment (2,701) - 10,201 6,476 Net interest payable (2,124) (1,469) Profit on ordinary activities before taxation 8,077 5,007 Taxation (436) (506) Profit on ordinary activities after taxation 7,641 4,501 Dividends Non equity (4) (4) Equity (2,480) (2,244) (2,484) (2,248) Retained profit for the year 5,157 2,253 Pence pence Basic earnings per ordinary share 16.01 9.34 Adjusted earnings per ordinary share 17.43 13.04* Diluted earnings per ordinary share 15.91 9.29 Ordinary dividends paid or payable: Interim 1.96 1.70 Final 3.25 2.95 There are no recognised gains or losses in either year other than the profit for that financial year. * restated for the effect of discontinued operations. Group Balance Sheet at 31 December 2001 2000 £000 £000 Fixed assets Intangible assets - goodwill 617 655 Tangible assets 137,827 117,066 Investments 1,795 107 140,239 117,828 Current assets Stocks 695 854 Debtors 15,725 12,241 Cash and short-term deposits 6,825 5,914 23,245 19,009 Creditors: amounts falling due within one year Trade and other (18,763) (12,242) Bank loans (11,952) (6,949) (30,715) (19,191) Net current liabilities (7,470) (182) Total assets less current liabilities 132,769 117,646 Creditors: amounts falling due after more than one year Trade and other (5) (37) Bank loans (56,531) (45,633) (56,536) (45,670) Provisions for liabilities and charges (1,298) (2,287) Net assets 74,935 69,689 Capital and reserves Called-up share capital 12,168 12,168 Share premium account 23,050 23,050 Profit and loss account 39,717 34,471 Shareholders' funds 74,935 69,689 Group cash flow statement Year ended 31 December 2001 2000 £000 £000 Net cash inflow from operating activities 18,829 13,070 Returns on investments and servicing of finance (3,097) (1,985) Taxation 119 22 Capital expenditure and financial investment (25,879) (32,726) Acquisitions and disposals (2,592) (1,491) Equity dividends paid (2,370) (2,176) Cash outflow before management of liquid resources and financing (14,990) (25,286) Management of liquid resources 1,389 17,689 Financing 15,901 9,483 Increase in cash in the year 2,300 1,886 Reconciliation of net cash flow to movement in net debt Increase in cash in the year 2,300 1,886 Cash inflow from increase in debt (15,901) (9,483) Cash inflow from decrease in liquid resources (1,389) (17,689) Movement in net debt in the year (14,990) (25,286) Net debt at 1 January (46,668) (21,382) Net debt at 31 December (61,658) (46,668) NOTES 1 Financial information The financial information set out above does not comprise the company's statutory accounts. Statutory accounts for the previous financial year ended 31 December 2000 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under section 237(2) or (3) or the Companies Act 1985. The auditors have given an unqualified opinion on the accounts for the year ended 31 December 2001 which will be delivered to the Registrar of Companies following the annual general meeting. The financial information above has been prepared on the basis of the accounting policies as set out in the annual report and accounts for the year ended 31 December 2000. 2 Segmental analysis The segmental analysis has been restated to reflect more clearly the trading segments of the group Geographical market supplied 2001 2000 £000 % £000 % Turnover Continuing operations Tankers United Kingdom and the Republic of Ireland 40,657 42,122 Continental Europe 6,615 3,788 47,272 70 45,910 76 Cable layers United Kingdom and the Republic of Ireland 5,422 5,432 Americas 4,715 - 10,137 15 5,432 9 Marine services United Kingdom and the Republic of Ireland 7,697 6,104 Continental Europe 248 282 Americas 7 - Africa 29 2 Middle East 35 9 8,016 12 6,397 10 Discontinued operations Shipping operations United Kingdom and the Republic of Ireland 2,140 2,804 Port operations United Kingdom and the Republic of Ireland 2 34 2,142 3 2,838 5 Total turnover 67,567 100 60,577 100 Turnover and profit on ordinary activities before taxation 2001 2000 Turnover Profit Turnover Profit Group £000 £000 £000 £000 Continuing operations Tankers 47,272 7,759 45,910 5,087 Cable layers 10,137 5,521 5,432 2,933 Marine services 8,016 3,180 6,397 2,760 65,425 16,460 57,739 10,780 Discontinued operations Shipping operations: Segment operating loss 2,140 (713) 2,804 (957) Loss on sale of ships - (123) - (162) Provision for loss on disposal (267) Port operations: Segment operating loss 2 (93) 34 (129) Release of port closure provision - 989 - - Profit on sale of fixed assets - 2,597 - - Amounts written off fixed asset investments - (2,701) - - 2,142 (311) 2,838 (1,248) 67,567 16,149 60,577 9,532 Common costs (4,005) (3,139) Share of operating (loss)/profit in joint venture (1,943) 83 Net interest payable (2,124) (1,469) 8,077 5,007 Net operating assets 2001 2000 £000 £000 Continuing operations: Tankers 71,024 80,429 Cable layers 59,876 30,041 Marine Services 7,361 6,402 Discontinued operations: Shipping operations 320 2,021 Port operations - (989) 138,581 117,904 The net operating assets are reconciled to shareholders' funds as follows: Net operating assets 138,581 117,904 Group share of joint venture loans 1,071 862 Net borrowings (61,658) (46,668) Corporation tax (227) 313 Deferred tax (1,298) (1,298) Dividends payable (1,534) (1,424) 74,935 69,689 3 Group operating profit Group operating profit is stated after charging depreciation of tangible fixed assets of £8,695,000 (2000 £7,385,000) and amortisation of goodwill of £38,000 (2000 £38,000). 4 Tax on profit on ordinary activities 2001 2000 £000 £000 The charge for taxation on the ordinary activities represents: UK tonnage tax 33 30 UK corporation tax at 30% (2000 30%) 281 17 314 47 Irrecoverable ACT - 127 Adjustments in respect of prior years: UK corporation tax 122 332 Deferred taxation - - 436 506 5 Cash flow statement (a) Reconciliation of operating profit to net cash inflow from operating activities 2001 2000 £000 £000 Group operating profit 11,649 6,555 Depreciation and refit amortisation 8,695 7,385 Amortisation of goodwill 38 38 Decrease/(increase) in stocks 159 (145) Increase in debtors (3,713) (1,209) Increase in creditors 1,890 787 Profit on sale of tangible fixed assets (100) (136) Share based compensation 89 - Increase/(decrease) in provisions 122 (205) Net cash inflow from operating activities 18,829 13,070 (b) Returns on investments and servicing of finance 2001 2000 £000 £000 Interest received 462 765 Interest paid (3,555) (2,746) Preference dividend paid (4) (4) Net cash outflow (3,097) (1,985) (c) Taxation 2001 2000 £000 £000 Corporation tax paid (133) (121) Corporation tax received 252 143 Net cash inflow 119 22 (d) Capital expenditure and financial investment 2001 2000 £000 £000 Purchase of own shares by ESOP (638) - Purchase of fixed asset investment (3,858) - Purchase of tangible fixed assets (24,937) (33,390) Sale of tangible fixed assets 3,554 664 Net cash outflow (25,879) (32,726) (e) Acquisitions and disposals 2001 2000 £000 £000 Loan to joint venture and associated undertakings (2,256) (862) Purchase of interest in joint venture - (51) Cost associated with discontinued port operations (336) (578) Net cash outflow (2,592) (1,491) (f) Management of liquid resources 2001 2000 £000 £000 Short-term investments 1,389 17,689 (g) Financing 2001 2000 £000 £000 New secured loans 26,513 30,034 Repayment of secured loans (10,612) (20,551) Net cash inflow 15,901 9,483 (h) Reconciliation of net debt 1 January Cash Flow 31 December 2001 2001 £000 £000 £000 Cash in hand, at bank 4,525 2,300 6,825 Debt due after one year (45,633) (10,898) (56,531) Debt due within one year (6,949) (5,003) (11,952) (52,582) (15,901) (68,483) Short term deposits 1,389 (1,389) - Net debt (46,668) (14,990) (61,658) 6 Earnings per ordinary share The calculations of earnings per ordinary share are based on the following profits and numbers of shares. Basic Diluted 2001 2000 2001 2000 £000 £000 £000 £000 Profit for the financial year 7,641 4,501 7,641 4,501 Preference dividends (4) (4) (4) (4) 7,637 4,497 7,637 4,497 Weighted average number of shares (excluding the shares owned by James Fisher and Sons Public Limited Company Share Trust): 2001 2000 Number of Number of shares shares For basic earnings per ordinary share 47,692,921 48,156,317 Exercise of share options 321,138 268,235 For diluted earnings per ordinary share 48,014,059 48,424,552 The adjusted earnings per ordinary share is shown to highlight the underlying earnings trend and is calculated using the same number of shares for the basic earnings calculation referred to above and the amounts shown below: 2001 2000 £000 p £000 p Basic earnings per ordinary share 7,637 16.01 4,497 9.34 Adjustments Exceptional relocation expenses - - 103 0.21 Loss on sale of ships 123 0.26 162 0.34 Provision for loss on disposal 267 0.56 - - Discontinued shipping operations 713 1.49 957 1.99 Discontinued port operations (792) (1.66) 129 0.27 Tax effect of above 242 0.51 (31) (0.06) Irrecoverable ACT - - 127 0.26 Prior year element of tax charge 122 0.26 332 0.69 675 1.42 1,779 3.70 Adjusted earnings per ordinary share 8,312 17.43 6,276 * 13.04 * * Restated for the effect of discontinued operations. 7 Dividends paid and proposed The directors are recommending a final ordinary dividend of 3.25p per ordinary share which will be payable on 17 May 2002 to ordinary shareholders on the Register on 19 April 2002, making a total for the year of 5.21p per share. This compares with a final dividend for 2000 of 2.95p per share and a total distribution for 2000 of 4.65p per share. The dividend warrants will be posted on Thursday 16 May 2002 by first class mail. 2001 2000 £000 £000 Rates of dividend paid and proposed amount absorbed thereby: Equity: Ordinary interim paid of 1.96p per share (2000 1.70p per share) 946 820 Ordinary final proposed of 3.25p per share (2000 2.95p per share) 1,570 1,424 Non equity: 3.5% Preference paid (2000 3.5%) 4 4 Less dividends on own shares (36) - 2,484 2,248 The ordinary dividends are based upon the following number of ordinary issued shares: 2001 2000 No. No. Interim 48,270,098 48,270,098 Final 48,270,098 48,270,098 8 The AGM will be held at 12.00 noon on Friday 10 May 2002 at the Abbey House Hotel, Abbey Road, Barrow-in-Furness, Cumbria. 9 Report and Accounts will be posted to members on 8 April 2002. Copies will be made available to members of the public at Fisher House, PO Box 4, Barrow-in-Furness, Cumbria, LA14 1HR. 10 This preliminary statement was approved by the Board of Directors on 12th March 2002. END This information is provided by RNS The company news service from the London Stock Exchange

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