Final Results - Year Ended 31 December 1999
Fisher (James) & Sons PLC
17 March 2000
James Fisher and Sons Public Limited Company
Preliminary announcement
Results for the year ended 31 December 1999
Highlights
1999 1998
Summary
Turnover £68.13m £63.52m
Profit before tax £6.28m £3.85m
Earnings per share 37.41p 5.76p
Adjusted earnings per share 12.35p 11.00p
Diluted earnings per share 37.26p 5.71p
Dividend per ordinary share 4.35p 3.75p
* Increased turnover due principally to sale of two second hand
ships.
* Pre-tax profit up sharply in absence of port closure costs.
* Dividend up 16 per cent.
* Strong cash flow and reduced gearing.
* Partial write-back of deferred tax provision.
Prospects
David B. Cobb, Executive Chairman, comments:
'We have made a promising start to 2000, despite operating
conditions remaining very difficult and markets highly
competitive. The board is confident that with the business now
under contract and strong cash flow being produced, the company
will continue to prosper and grow.'
Enquiries: David B. Cobb, CBE, Executive Chairman
Tel: 0171 338 5808
Issued on behalf of James Fisher and Sons Public Limited Company
by Tavistock Communications Limited (contact: Keith Payne, Tel:
0171 600 2288).
Chairman's statement
Financial
I am pleased to report another good financial and operational
performance for the year ended 31 December 1999 in what was a
difficult shipping market.
* Group turnover increased
* Profit before tax increased
* Cash and Bank deposits increased
* Debt down
* Dividend per share up 16%
* Adjusted earnings per share up 12%
* Interest cover 4.0 times
* Ordinary dividend cover 8.6 times
* Deferred tax written back of £12.3 million
Group turnover of £68,129,000 was higher than last year,
principally due to the purchase and onward sale of two ships,
originally sourced and planned for conversion and charter but
restructured following the acquisition of Cable and Wireless
Marine by Global Crossings Limited.
Continuing operating profit of £8,538,000 was £1,211,000 down on
the previous year, reflecting difficult conditions in the dry
cargo and, to a lesser extent, tanker markets. Profit on ordinary
activities before taxation was £6,275,000 (1998 - £3,854,000)
after taking into account a loss on trading ship sales of £153,000
and relocation costs of £281,000.
Accordingly the directors recommend an increase in the final
dividend to 2.81 pence (1998 - 2.35 pence) which together with the
interim dividend of 1.54 pence, amounts to a total of 4.35 pence
(1998 - 3.75 pence), an increase of 16%. The dividend will be
paid on 19 May 2000 to shareholders on the register at the close
of business on 25 April 2000.
Net interest payable was £2,110,000 (1998 - £1,816,000). The
results were after charging depreciation and refit amortisation of
£8,034,000 (1998 - £7,367,000). Adjusted earnings per share rose
from 11.00p to 12.35p.
A decision has been taken, approved by our auditors, to write back
£12,256,000 of deferred tax as our current capital expenditure
projections indicate that only part of the full potential
deferred tax liability is expected to crystallise in the
foreseeable future.
Shipping
The shipping market in the tanker and mini bulker trades was
extremely competitive, particularly in the latter where we
incurred an operating loss.
Our contracts of affreightment in the tanker trade enabled us to
achieve a very respectable operating profit, despite continuing
problems of poor turnround times which were outside our control.
These slow turnrounds prevented us from carrying cargoes in our
contracts pool and also spot cargoes which were available from
time to time. Additionally, severe weather conditions in the last
quarter of the year, made life at sea very trying, resulting in
longer voyages and less opportunity to take advantage of spot
cargoes.
Following an extensive upgrading of the power management system,
our cable laying ship the 'Nexus' continued on her time charter
with Global Marine Systems Limited, formerly Cable & Wireless
Marine. The ship is now operating in the Pacific Ocean to much
acclaim.
The 'New Generation', our beautifully maintained older roll on-
roll off heavy lift ship, had a good operating year boosted by its
contract with National Power and spot cargoes.
The 'Oakleaf' continued on its charter to the Ministry of Defence
and is currently undergoing a refit for their account in Falmouth
at a cost of £5.0 million.
Our management contract with British Nuclear Fuels plc is in place
for yet another year, having been in force for 26 years and the
movement of the ships is continuing.
The management contract for the operation at Ministry of Defence
Sealand, due to have expired in November 1999, was renewed for 2
years to November 2001. This is a well managed and profitable
operation.
We have completed a number of engineering projects during the
year, including a sizeable contract to seek, purchase and design
vessels for conversion to cable laying ships. This contract, to
which reference is made in the financial section of this
statement, was not dissimilar to that which we completed for
Etisalat, the United Arab Emirates Telecommunications company,
when we carried out the sourcing, purchase, design and supervision
of the conversion of the ship 'Umm Al Anber' in 1997. This is the
type of project where our expertise comes to the fore and for
which we shall continue to bid.
Ports
There have been no new developments on our position at the Port of
Newhaven. We have had discussions with a number of interested
parties with a view to their buying out our lease or forming joint
ventures to modernise the port and its requirement for deep water
and associated facilities. These discussions are ongoing.
Engineering
James Fisher (Underwater Engineering Services) Limited had a
profitable year, producing an operating profit of £342,000 on
turnover of £1,195,000. These figures were less than the previous
year due to the downturn in oil related offshore activity.
Seafloor Dynamex made an operating profit of £45,000. During the
fourth quarter we completed our capital expenditure programme with
the delivery of the last two diggers and deployment unit. The
hydro digger has worked well and is now better known and accepted
by the offshore industry. This bodes well for the future.
Tonnage tax
I am happy to report that the campaign to introduce a Tonnage Tax
regime to British Shipping has succeeded. In August last year the
Chancellor of the Exchequer, accepted the recommendations of the
review conducted by Lord Alexander of Weedon. A draft of the
proposed tax rules has been presented to the Industry and
interested parties by the Inland Revenue. Upon completion of the
consultation process the tax proposals are expected to become law
with Royal Assent in August 2000, but backdated to 1 January 2000
to those companies who elect to join the new regime.
This is good news for James Fisher and for the British Shipping
Industry. It should result in a substantially reduced tax charge
on our shipping activities going forward. The certainty of the
level of this tax will also benefit the company in the future.
We welcome the related commitment to training which will give a
boost to the pool of British seafarers. You will be pleased to
know that we already meet the proposed training requirements of
the tonnage tax regime.
New office
During the course of the year we decided to close our Liverpool
office and consolidate our shipping operations in Barrow.
We were sorry to have to part company with some experienced staff
as a result of this move but fortunately have been able to replace
them with high quality people who will represent the company well
in their new positions. This move will result in greater
efficiency and significant savings in future years.
E-commerce
Our website is up and running at www.james-fisher.co.uk. In
addition, we have installed a new computer network system
throughout the group which will form a gateway to the internet
opportunities of the 21st Century. We see great potential in
currently available technology and are actively pursuing
utilisation in a number of different areas. In particular we are
in discussion with a major customer to integrate our respective
operations through a computer interface. The resulting benefits
should improve communication, cut back on the need for paperwork
and inevitably increase the pace at which we are able to respond
to customer requirements. This will be a pilot for use with other
customers with whom we intend to interface directly.
Directors
We were very pleased to welcome Jeremy Hodgson onto the board as a
non-executive director. Jeremy, who headed the Shipping and
Aerospace Banking division at HSBC, will bring a wealth of banking
and related experience to the company.
We were sorry to lose Trevor Hart as a director but wish him every
success in his new endeavours.
Staff
Once again on behalf of the board I would like to pay tribute to
all of our staff, on shore and at sea, for their continuing
efforts and contribution to our results. We put a strong emphasis
on offering our customers the highest level of safety and service.
This can only be achieved by people who are highly motivated and
professional in carrying out their duties. We are fortunate in
having dedicated staff committed to these aims.
Prospects
Our contract of affreightment business continues to provide a
solid base of income. We now have four ships chartered out and
two ships chartered in. The former enabled us to bring three
ships out of lay-up, while the latter are required to cover our
contracts. It is still our intention to sell our mini bulkers and
older tankers as and when opportunities arise.
During the year we investigated several acquisition and merger
possibilities and, indeed, made offers for a number of companies.
Though we were not successful we shall continue to search for
suitable acquisitions, specifically with a view to enhancing
shareholder value. Meanwhile our cash flow remains strong while
our gearing is reducing.
We have made a promising start to 2000, despite operating
conditions remaining very difficult and markets highly
competitive. We are working diligently with our customers to
improve turnround times and if these can be improved so will the
company's progress. The board is confident that with the business
now under contract and strong cash flow being produced, the group
will continue to prosper and grow.
D.B. Cobb CBE
Executive Chairman
Group profit and loss account
Year ended
31 December
1999 1998
£000 £000
Turnover
Continuing operations 68,129 62,377
Discontinued operations - 1,146
------- --------
68,129 63,523
Cost of sales (56,316) (51,947)
------- --------
Gross profit 11,813 11,576
Administrative expenses:
Exceptional - relocation costs (281) -
Others (2,994) (2,743)
------- --------
(3,275) (2,743)
Operating profit
Continuing operations 8,538 9,749
Discontinued operations - (916)
------- --------
8,538 8,833
Continuing operations:
Loss on sale of ships (153) -
Discontinued operations:
Port closure costs - (2,862)
Amounts written off investments - (301)
------- --------
8,385 5,670
Interest receivable 1,073 1,335
Interest payable (3,183) (3,151)
------- --------
Profit on ordinary activities 6,275 3,854
before taxation
Tax on profit on ordinary 11,712 (1,071)
activities
------- --------
Profit for the financial year 17,987 2,783
Dividends paid and proposed
Non-equity (4) (4)
Equity (2,099) (1,809)
------- --------
(2,103) (1,813)
------- --------
Retained profit for the 15,884 970
financial year
======= =======
Restated
pence pence
Earnings per share 37.41 5.76
======= =======
Adjusted earnings per share 12.35 11.00
======= =======
Diluted earnings per share 37.26 5.71
======= =======
Equity dividends per share:
Interim 1.54 1.40
Final - proposed 2.81 2.35
------- --------
4.35 3.75
======= =======
Group statement of total recognised gains and losses
Year ended
31 December
1999 1998
£000 £000
Profit for the financial year 17,987 2,783
-------- -------
Total recognised gains and losses 17,987 2,783
relating to the year
Prior year adjustment - 346
-------- -------
Total gains and losses recognised since 17,987 3,129
last annual report
======= =======
Group balance sheet
at 31 December
1999 1998
£000 £000
Fixed assets
Intangible assets - goodwill 693 731
Tangible assets 90,428 98,802
------ ------
91,121 99,533
Current assets
Stocks 709 717
Debtors 10,604 9,902
Cash and short-term deposits 21,717 17,396
------ ------
33,030 28,015
------ ------
Creditors: amounts falling due within
one year
Trade and other (10,896) (12,328)
Bank loans (5,551) (5,483)
------ ------
(16,447) (17,811)
------ ------
Net current assets 16,583 10,204
------ ------
Total assets less current liabilities 107,704 109,737
Creditors: amounts falling due after
more than one year
Trade and other (11) (10)
Bank loans (37,548) (42,177)
------ ------
(37,559) (42,187)
------ ------
Provisions for liabilities and charges (2,709) (15,998)
------ ------
Net assets 67,436 51,552
======= =======
Capital and reserves
Called-up share capital 12,168 12,168
Share premium account 23,050 23,050
Profit and loss account 32,218 16,334
------ ------
Shareholders' funds 67,436 51,552
======= =======
Group cash flow statement
Year ended
31 December
1999 1998
£000 £000
Net cash inflow from
operating activities 14,837 15,555
Returns on investments and
servicing of finance (2,046) (2,343)
Taxation (1,347) (402)
Capital expenditure
and financial investment (439) (14,136)
Acquisitions and disposals (246) (1,743)
Equity dividends paid (1,877) (1,640)
-------- --------
Cash inflow/(outflow)
before management
of liquid resources and financing 8,882 (4,709)
Management of liquid resources (4,582) (829)
Financing (4,561) 7,490
-------- --------
(Decrease)/increase in cash (261) 1,952
in the year
======= =======
Reconciliation of net cash flow to
movement in net debt
(Decrease)/increase in cash in the year (261) 1,952
Cash outflow/(inflow)from
decrease/(increase)
in debt 4,561 (7,486)
Cash outflow from increase in 4,582 829
liquid resources
-------- --------
Movement in net debt in the year 8,882 (4,705)
Net debt at 1 January (30,264) (25,559)
-------- --------
Net debt at 31 December (21,382) (30,264)
======= =======
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 1998 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 1999 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 1998.
2 Segmental analysis
Geographical market
supplied
1999 1998
£000 % £000 %
Turnover
United Kingdom and the
Republic of Ireland 56,602 83 57,920 90
Continental Europe 10,626 15 3,396 5
Africa 45 - 1,113 2
Asia 551 1 787 1
Middle East 304 1 72 1
Others 1 - 235 1
------- --- ------ ---
68,129 100 63,523 100
===== === ===== ===
Turnover and profit on ordinary activities before taxation
1999 1998
Turnover Profit Turnover Profit
Group £000 £000 £000 £000
Shipping operations:
Continuing operations:
Trading 66,177 8,432 60,468 9,391
Loss on sale of ships (153) -
Exceptional relocation (281) -
costs
Amounts written off - (301)
investments
------ ----- ------ -----
66,177 7,998 60,468 9,090
Engineering operations:
Continuing operations 1,952 387 1,909 358
Port operations:
Discontinued
operations:
Trading - - 1,146 (916)
Closure costs - - - (2,862)
------ ----- ------ -----
68,129 8,385 63,523 5,670
====== ======
Net interest payable (2,110) (1,816)
----- -----
6,275 3,854
===== =====
Included within the turnover and profit of continuing
shipping operations is the effect of the purchase and sale
of two second hand vessels to a third party. In the
opinion of the directors, the disclosure of separate
segmental information for this transaction would be
commercially seriously prejudicial to the interests of the
group.
The comparative figures for turnover and profit have been
restated to show James Fisher and Sons (Seafloor Dynamex)
Limited as an engineering operation rather than as a shipping
operation.
3 Operating profit
Operating profit is stated after charging depreciation of
tangible fixed assets of £8,034,000 (1998 £7,367,000) and
amortisation of goodwill of £38,000 (1998 £31,000).
4 Tax on profit on ordinary activities
1999 1998
£000 £000
The charge for
taxation on the
ordinary activities
represents:
UK corporation tax at (760) (342)
30.25% (1998 31%)
Deferred taxation - (1,015)
------- -------
(760) (1,357)
Adjustments in respect
of prior years:
UK corporation tax 216 (143)
Deferred taxation 12,256 429
------- -------
11,712 (1,071)
===== =====
Had deferred tax been accounted for in full the tax credit
in 1999 would become a tax charge of £3,743,000 with the
current year element of the tax charge increasing by £1,067,000
to £1,827,000.
5 Cash flow statement
(a) Reconciliation of operating profit to net cash inflow
from operating activities
1999 1998
£000 £000
Operating profit 8,538 8,833
Depreciation 8,034 7,367
Amortisation of goodwill 38 31
Decrease in stocks 8 27
Decrease in debtors 131 243
Decrease in creditors (1,196) (691)
Loss on sale of tangible (124) (39)
fixed assets
Own costs capitalised - (214)
Decrease in provisions (592) (2)
------- -------
Net cash inflow from 14,837 15,555
operating activities
===== =====
(b) Returns on investments and
servicing of finance
1999 1998
£000 £000
Interest received 1,042 1,098
Interest paid (3,084) (3,437)
Preference dividend paid (4) (4)
------- -------
Net cash outflow (2,046) (2,343)
===== =====
(c) Taxation
1999 1998
£000 £000
Corporation tax paid (1,347) (520)
Corporation tax received - 118
------- -------
Net cash outflow (1,347) (402)
===== =====
(d) Capital expenditure and
financial investment
Purchase of tangible fixed (3,773) (14,315)
Assets
Sale of tangible fixed assets 3,334 160
Sale of investments - 19
------- -------
Net cash outflow (439) (14,136)
===== =====
(e) Acquisitions and disposals
Purchase of subsidiary - (1,500)
undertaking
Net overdrafts acquired - (193)
with subsidiary undertaking
Cost associated with (246) (50)
discontinued port operations
------- -------
Net cash outflow (246) (1,743)
===== =====
(f) Management of liquid
resources
1999 1998
£000 £000
Short-term investments (4,582) (829)
===== =====
(g) Financing
Issue of ordinary share - 4
capital
New secured loans 990 11,019
Repayment of secured loans (5,551) (3,533)
------- ------
Net cash (inflow)/outflow (4,561) 7,490
===== =====
(h) Reconciliation of net debt
1 Cash Flow 31
January December
1999 1999
£000 £000 £000
Cash in hand, at bank 2,900 (261) 2,639
Debt due after 1 year (42,177) 4,629 (37,548)
Debt due within one year (5,483) (68) (5,551)
------- ----- ------
(47,660) 4,561 (43,099)
Short term deposits 14,496 4,582 19,078
------- ----- ------
Net debt (30,264) 8,882 (21,382)
===== ===== =====
6 Earnings per share
The calculations of earnings per share are based on the
following profits and numbers of shares.
Basic Diluted
1999 1998 1999 1998
£000 £000 £000 £000
Profit for the 17,987 2,783 17,987 2,783
financial year
Preference dividends (4) (4) (4) (4)
------- ----- ----- ------
17,983 2,779 17,983 2,779
===== ===== ===== =====
Weighted average
number of shares:
1999 1998
Number Number
of of
shares Shares
For basic earnings per share 48,075,530 48,251,277
Exercise of share options 180,742 380,445
------- ------
For diluted earnings per share 48,256,272 48,631,722
====== ======
The adjusted earnings per 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:
1999 1998
£000 p £000 p
Earnings per share 37.41 5.76
Adjustments
Exceptional reorganisation
expenses 281 0.58 - -
Discontinued operations - 916 1.89
Port closure costs - - 2,862 5.93
Loss on sale of ships 153 0.32 - -
Amount written off
investments - - 301 0.62
Tax effect of above (222) (0.46) (1,264) (2.61)
Prior year element (12,256) (25.50) (286) (0.59)
of tax charge
(12,044) (25.06) 2,529 5.24
----- -----
Adjusted earnings per share 12.35 11.00
==== ====
7 Dividends paid and
proposed
The directors are recommending a final ordinary dividend of
2.81p per ordinary share which will be payable on 19 May
2000 to ordinary shareholders on the Register on 25 April
2000, making a total for the year of 4.35p per share. This
compares with a final dividend for 1998 of 2.35p per share
and a total distribution for 1998 of 3.75p per share.
The dividend warrants will be posted on Thursday 18 May 2000
by first class mail.
1999 1998
£ £
Rates of dividend paid and
proposed amount
absorbed thereby:
1.54p per ordinary share
interim (1998 1.40p) 743,360 675,714
2.81p per ordinary share
final proposed
(1998 2.35p) 1,356,390 1,134,347
3.5% Non-equity preference paid 3,500 3,500
--------- --------
2,103,250 1,813,561
====== ======
The ordinary dividends are based upon the following number
of ordinary issued shares:
1999 1998
No. No.
Interim 48,270,098 48,265,300
Final 48,270,098 48,270,098
8 The AGM will be held at 12.00 noon on Friday 12 May 2000 at
the Lisdoonie Hotel, Abbey Road, Barrow-in-Furness, Cumbria.
9 Report and Accounts will be posted to members on 10 April
2000. Copies will be made available to members of the public
at Fisher House, P.O. Box 4, Barrow-in-Furness, Cumbria, LA14
1HR.
10 This preliminary statement was approved by the Board of
Directors on 17 March 2000.
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