Final Results

RNS Number : 9483O
Fisher (James) & Sons PLC
17 March 2009
 







17 March 2009





James Fisher and Sons plc (James Fisher)


Full Year Results 2008


James Fisher, the UK marine services provider, announces results for the Full Year 2008.




  2008

2007

% change


Group revenue

  £233.6m

£182.0m

+28%


Profit from operations*

£27.5m

£21.5m

+28%


Profit before tax*

£24.2m

£19.2m

+26%


Basic earnings per share*

38.10p

32.85p

+16%


Total dividend per share

13.01p

11.41p

+14%



* before separately disclosed items


STATUTORY

  2008

2007

% change

Profit from operations

£28.1m

£21.6m

+30%

Profit before tax

£23.6m

£19.1m

+23%

Basic earnings per share

36.94p

32.66p

+13%



Highlights


  • Group strategy providing resilience in challenging times - strong organic growth in the marine support divisions
  • Offshore Oil - operating profit up 38%, of which 74% was organic. ROCE increased to 16%.
  • Specialist Technical - operating profit up 71%, of which 90% was organic. Margin improved to 12.8%.
  • Defence - operating profit up 49%. Korean submarine commissioned; Singapore submarine completed.
  • Marine Oil - operational issues, not lack of demand, affected performance.
  • Final dividend increased by 15%.



Commenting on the results, Chairman, Tim Harris, said:


'2008 proved to be an excellent year for James Fisher. Group revenue and profit from operations were both up strongly and, once again, our cash flow was impressive. The key to our performance was good organic growth in the marine support divisions of Offshore Oil, Specialist Technical Services and Defence.  


'It is difficult to comment too definitively in an economic climate which is changing rapidly and mainly for the worse. However the immediate outlook for the divisions has not changed from last year and the Company in 2009 is trading to management expectations. On present evidence the Company is well placed, with a proven track record, to continue to produce good growth and further value for our shareholders.'


For further information:


James Fisher and Sons plc                  Tim Harris, Chairman                                                   020 7614 9508

www.james-fisher.co.uk                       Nick Henry, Chief Executive Officer

                                                         Michael Shields, Group Finance Director


Financial Dynamics                             Richard Mountain/Sophie Kernon                                   020 7269 7121

  Preliminary results for the year ending

31 December 2008

Chairman's Statement


Highlights

2008 proved to be an excellent year for James Fisher. Group revenue and profit from operations were both up by over 28%, profit from continuing activities before tax by 23% and adjusted earnings per share by 16%. Cash flow was again strong and the year-end gearing was 94% of which 19% related to the working capital absorbed by the Singaporean Submarine Rescue Service which will be recovered on its commissioning into service in the first half of 2009.


The key to the strong profit performance was organic growth in the marine support divisions of Offshore Oil, Specialist Technical Services and Defence. As flagged at the half-year, the Marine Oil division's results were disappointing, the result primarily of operational problems relating to the introduction of new tonnage rather than a shortfall in demand.


Divisional operating profit growth

  • Organic and acquisition growth split


Divisional operating profit


Growth *

2008

£m

2007

£m

% change

organic

acquisition

Offshore Oil

Specialist Technical

Defence

Marine Oil


12,702

9,598

4,484

5,982

32,766

9,213

5,614

3,002

8,605

26,434

+ 37.9%

+ 71.0%

+ 49.4%

- 30.5%

+ 24.0%

74%

90%

100%

n/a

26%

10%

-

n/a

Organic growth is the difference between actual profits earned and profits earned by the entity in the corresponding period prior to acquisition.


Recognising last year's strong performance and reflecting the ongoing prospects for the Company, the Board proposes to pay a final dividend of 8.65 pence per share, an increase of 15% payable on 15 May 2009 to the shareholders on the register at 17 April 2009.


Company strategy in the credit crunch

James Fisher's consistent strategy since 2002 has been to use its core expertise of marine operational and engineering skills based on its Marine Oil division, to invest in and then generate organic growth from niche service businesses in the marine sector. The marine support businesses typically enjoy strong market positions providing specialist engineering based services, with margins over 10%, pre tax returns on capital employed of over 15% and good cash generating ability. This strategy has proved to be most successful in the favourable trading conditions experienced since 2002 - this section considers its resilience to the more challenging trading conditions prevailing today.


In a credit crunch it is appropriate to start with cash and liquidity. The Company enjoys good, long-term relationships with a wide range of British banks and it has recently finalised a new facility with Barclays Bank PLC for £25 million which will allow it to pursue further expansion opportunities. It has strong credit lines and plenty of headroom on its banking covenants. As already indicated, the delivery of the Singaporean Submarine Rescue Service in the first half of 2009 which we have funded during its construction, will have a materially positive effect on reported gearing. In real terms, the most negative effect of the present economic problems has been to create or increase pension fund deficits, the quantification of which is made volatile under international accounting rules. It is worth noting that their main effect is on reported gearing not liquidity itself.


In assessing resilience to recessionary pressures, it should be emphasised that James Fisher is a service business and as such far less exposed to the swings in asset values which have created adverse headlines about the international shipping and offshore markets, where both ship and rig values have dropped dramatically. In contrast it earns its living by providing specialist services to shipping rather than ship trading and from the oil that its customers continue to produce. As a specialist niche services provider there is also much greater protection against price erosion than in a commoditised market.


The Group's business is broadly based both by activity and geographically. For example, its offshore businesses are more focused on production and maintenance than exploration. It has significant North Sea activities but now earns much of its profit from elsewhere in Asia and Africa. It has very little direct exposure to North America or Russia.


Finally, a weak pound is of overall benefit to James Fisher because a large part of the revenue of its Offshore and Specialist Technical divisions is expressed in US dollars or Norwegian kroner. This is partly offset by the internal hedge of Marine Oil's US dollar bareboat charters and its crewing, about half of which is in Euros. In short, a weak pound is positive news for the marine support divisions but this is tempered to some extent by a negative impact on Marine Oil.


These factors confirm that the Company's existing strategy is still valid in the present credit crunch and gives it a good degree of resilience in an economic downturn.

  


Offshore Oil - 2008 Divisional Result £12.7 million (2007 £9.2 million)

Divisional profits grew by 37.9% over last year with organic growth accounting for 74% of the increase and the 2007 acquisitions of Pump Tools Limited and Buchan Technical Services Limited responsible for the remaining 26%. Divisional margins were 26.3% in 2008 compared with 30.4% in 2007, the reduction reflecting the relative increase in non hire revenue rather than any deterioration in underlying margins. The divisional return on capital employed including goodwill improved to 16.4% from 15.8% in 2007 despite the investment in new premises in both Scotland and Norway.


Both James Fisher Offshore (Aberdeen) and Scan Tech AS (Norway) had successful years supplying lifting, compressor and other specialist equipment to their respective sectors of the North Sea and increasingly using their North Sea skills further afield in the new oil regions of the world. Typically, they provide specialist equipment which is customised for particular purposes, often with personnel to support its operation. A new sector entered by James Fisher Offshore in 2008 was the provision of heavy lifting equipment for the installation of wind farms.


The downhole cluster which was formed by the merger of existing business Remote Marine Services with Pump Tools Limited, after its acquisition in October 2007, creating RMS/Pumptools, had a particularly successful year in 2008. It designs, produces and sells worldwide specialist electrical submersible pump equipment which improves the productivity of oil wells.


We continue to support the good organic growth record of this division by investment in new equipment and new facilities, particularly in Norway where we are halfway through the construction in Stavanger of a new works into which will be consolidated all of our Norwegian operations. In March 2009 part of the Reanco Team AS business which was focused on the fabrication of offshore rig living quarters was sold for £1.2 million, the book value, as it did not represent a core interest. We continue to look for 'bolt-on' acquisitions to supplement or strengthen further our market position. Trading and the immediate outlook to date remain largely unaffected by the present uncertain economic climate.


Specialist Technical - 2008 Divisional Result £9.6 million (2007 £5.6 million)

This division consists of three clusters - FenderCare, Strainstall and Nuclear. It produced particularly good results in 2008 with the divisional profit 71% up over that for the previous year. Strong organic growth accounted for 90% of this uplift with acquisition growth responsible for the remaining 10%. Margins improved to 12.8% in 2008 from 9.1% in the previous year, with the stronger US dollar helping in the second half of 2008. The division's return on capital improved to 16.9% in 2008 from 13.2% in the previous year.


The FenderCare cluster provides a full range of mooring equipment for ships and submarines. It is also the global market leader in providing ship to ship oil transfer services. FenderCare's strong growth was the result of three main factors - increased market share, a growth of its global activities particularly in the Middle East and Asia and the stronger US dollar.


Strainstall's core expertise is the design, production and application of strain and similar gauges. It produced a strong result in 2008 both from organic growth and its JCM Scotload Limited acquisition in February 2008, which has settled in well. Overall Strainstall's market position has similarities to FenderCare's - it is a market leader in the fields in which it operates and it is expanding in the Middle Eastern and Asian markets. It too benefits from a stronger US dollar. 


The Nuclear cluster produced a more positive result in 2008 with an improvement in both the general decommissioning climate and its own performance. JFIMS, the inspection and measurement start-up, again performed well. This cluster is better poised for a growth in profitability and value creation than for some time.


Overall, the Specialist Technical division continues to perform very well. We shall invest further both in working capital and long-term capital assets to support its excellent growth record. We shall also continue to seek further 'bolt-on' acquisitions. Trading to date and the immediate outlook remain largely unaffected by the generally unfavourable economic climate.


Defence - 2008 Divisional Result £4.5 million (2007 £3.0 million)

The division's result was dominated in 2008 by the Korean and Singaporean Submarine Rescue Service contracts which were the main reasons for the 49.4% increase in profit, apparent diminution in margin to 15.3% and a small decline in the return on capital employed to 20.2%, compared with 22.7% in 2007.


The Korean submarine vessel was completed on time and within budget and commissioned into service in Korea just before the year end. A 4% final instalment remains to be received pending the completion of training and the final delivery of spares.


The Singaporean submarine vessel has also been completed and is in Singapore where she has successfully completed her initial sea trials. It remains for her to be installed on the mother ship, Swift Rescue, which is nearing completion by our Singaporean partners, Singapore Technologies Marine Ltd, prior to delivery of the fully integrated rescue service.


On commissioning by the Singaporean Navy, the integrated rescue service will be operated by a joint venture company, First Response Marine Pte Ltd, owned equally by Singapore Technologies Marine Ltd and ourselves and will receive an annual service payment until 2029 for the operation of the system. In addition, on commissioning which is anticipated before 30 June 2009, we shall receive payment for the submarine rescue vessel itself. At 31 December 2008, the carrying cost of £14.4 million for this vessel, including profit taken to date of £0.8 million is included in net current assets. Furthermore under the fair value rules, £4.6 million has been charged directly against reserves representing a fair value of adjustment arising from covering the Singaporean dollar for the vessel delivery against sterling. This will reverse on delivery. Overall, these two factors were responsible for some 19% of the Group's 94% of financial gearing at the year end.


The efficient and early construction of the two rescue vessels has confirmed the Defence division's global market leadership in this most specialist of markets. This has stimulated enquiries for related services and we have recently entered a contract with the Royal Australian Navy to provide standby submarine rescue services using the former UK Submarine Rescue equipment which we are buying from the Ministry of Defence for £1 million.


There were no major new developments relating to the surface ship cluster which is responsible for the Company's 25% holding in Foreland Shipping, the management of the five vessels for the International Nuclear Services and the three Corvettes built by BAE Systems for the Brunei Navy which are in lay-up pending sale.


Marine Oil - 2008 Divisional Result £6.0 million (2007 £8.6 million)

As was flagged at the half year, the result for the Marine Oil division was well down on 2007 with a divisional profit of £6.0 million against £8.6 million last time despite an increase in revenue of 6% from £75.9 million in 2007 to £80.8 million in 2008. Margins were consequently down from 11.3% in 2007 to 7.4% in 2008. The return on capital performance was significantly less affected at 8.8% in 2008 against 11.9% in 2007, reflecting the benefit of ship sales releasing capital.


Operational problems rather than a lack of demand were the cause of the disappointing result. These were explained in detail in the half year results but, in summary, the two most important were phasing problems concerning the fleet renewal programme and issues relating to the new European Maritime Safety Agency (EMSA) contract. Although now resolved, these continued in the second half of 2008 and were exacerbated when Svithoid Tankers AB, the Swedish owner of two of our bareboat charters, went into receivership. 


The fall in the value of sterling, although of benefit to the Group overall, had a significantly adverse effect on the Marine Oil result in the second half as its bareboat charters and half of its payroll are in either US dollars or Euros. Marine Oil acts as a useful internal hedge to some of the Group's growing US dollar exposure but receives no compensation for this role in the divisional results.


Despite the operational problems, revenues held up well in 2008 and there has been no slackening in demand for our services to date. Marine Oil remains a steady, if slow growing, division with proven cash generating capabilities which has been most useful in recent years for investment in the Company's other divisions.


Directors and employees

The Company has benefited from a stable and unchanged board and senior management in the main clusters in 2008 and this is reflected in the results. The Company's philosophy is to give senior cluster management as much responsibility as possible in a flat framework where the centre provides commercial guidance and financial support and control. The Company's pay policies are focused on results where the interests of executives and shareholders are closely aligned.


2008 has been a most successful year for James Fisher and I would like to thank all of our staff for their contribution. Their support and continued hard work in 2009 will be critical for success in a commercial environment which threatens to be more challenging than for many years.


Outlook

It is difficult to comment too definitively in an economic climate which is changing rapidly and mainly for the worse. Furthermore it would be foolhardy to pretend that a deep economic downturn would not have a detrimental effect on the Company's performance. Clearly, if world trade shrinks and oil production falls over a prolonged period, then there will in time be adverse consequences for a service company such as James Fisher focused on the shipping, ports and offshore oil sectors.


However the immediate outlook for the divisions has not changed from last year and the Company in 2009 is trading to management expectations. The consistent strategy of investment in niche operating businesses has ensured that the Company's operations are well balanced and sufficiently diversified:


  • The Offshore Oil division has a broad base both geographically and by activity supplying services to operations and maintenance and should therefore be able to surmount the predicted cutbacks in exploration activity.
  • The FenderCare and Strainstall clusters have strong market positions with excellent growth records. Their competitiveness has been increased internationally by the fall in the value of sterling. The Nuclear cluster is better placed than for some time for both external and internal reasons.
  • The imminent commissioning of the Singaporean Submarine Rescue Service is of major importance to the Defence division as well as the Company, not least because it will reduce gearing so significantly. The successful completion of both the Korean and Singaporean systems on time and budget has considerably strengthened Defence's already strong market position and is already stimulating new enquiries.
  • The UK demand for petrol and heating oil is the key driver for the Marine Oil division's services and this is likely to fall in line with GDP in a recession. However, James Fisher Everard enjoys a strong market position with contract of affreightment cover for most of its tonnage. It is unlikely that a drop in demand in line with GDP would have seriously detrimental results.
  • The strong US dollar and reduced rates are also positive factors. The economic downturn should also make acquisition prices more reasonable.


On present evidence the Company is well placed with a proven track record to continue to produce good growth and further value for our shareholders.



Responsibility Statement of the Directors in respect of the Annual Financial Report


We confirm that to the best of our knowledge:

 

      -    the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the 
           assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a 
           whole; and

      -     the Directors' report, Chairman's statement, and Review of Operations includes a fair review of the development and performance of 
            the business and the position of the company and the undertakings included in the consolidation taken as a whole, together 
            with a description of the principal risks and uncertainties that they face.



T.C. Harris

Chairman



M.J. Shields

Group Finance Director


On behalf of the Board of Directors

  CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2008



Notes

Year ended


Year ended




31 December 2008


31 December 2007




Before

Separately



Before

Separately





separately

disclosed



separately

disclosed





disclosed

items



disclosed

items





items

note 4

Total


items

note 4

Total




£000

£000

£000


£000

£000

£000











Group revenue

3

233,578 


233,578 


182,046 


182,046 

Cost of sales


(199,144)


(199,144)


(154,327)


(154,327)

Gross profit


34,434 


34,434 


27,719 


27,719 











Administrative expenses


(6,932)


(6,932)


(6,191)


(6,191)




 


 


 


 

Profit from operations before separately disclosed items

2

27,502 


27,502 


21,528 


21,528 












Impairment of ship


(107)

(107)



Profit on ship disposals


685 

685 


95 

95 




 

 

 


 

 

 

Profit from operations


27,502 

578 

28,080 


21,528 

95 

21,623 











Finance costs










Finance income


412 

412 


375 

375 


Finance costs


(6,309)

(6,309)


(5,036)

(5,036)


Exchange loss on loan


(1,152)

(1,152)


(184)

(184)




(5,897)

(1,152)

(7,049)


(4,661)

(184)

(4,845)











Share of post tax results of joint ventures


2,547 

2,547 


2,322 

2,322 











Profit on continuing operations before taxation


24,152 

(574)

23,578 


19,189 

(89)

19,100 

Taxation

5

(5,277)

(5,277)


(2,959)

(2,959)

Profit for the year on continuing operations


18,875 

(574)

18,301 


16,230 

(89)

16,141 











Discontinued operations 









Loss for the year from discontinued operations







(6)





















Profit for the year 




18,301 




16,135 

Profit attributable to :









Equity holders of the parent




18,275 




16,078 

Minority interests




26 




57 






18,301 




16,135 











Earnings per share














pence




pence











Basic EPS from continuing operations

6



36.94 




32.67 

Diluted EPS from continuing operations

6



36.75 




32.40 











Basic EPS on profit from total operations

6



36.94 




32.66 

Diluted EPS on profit from total operations

6



36.75 




32.39 











Adjusted Earnings per share



















Basic adjusted EPS from continuing operations

6



38.10 




32.85 

Diluted adjusted EPS from continuing operations

6



37.91 




32.58 

  CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

For the year ended 31 December 2008



Notes

Year ended

Year ended


31 December 2008

31 December 2007




£000


£000







Income and expense recognised directly in equity












Exchange differences on translation of foreign operations:











Currency translation differences



4,906 


393 







Net investment hedge



(1,070)


1,041 




3,836 


1,434 







Fair value losses on cash flow hedges 



(4,420)


(188)







Share of fair value losses of cash flow hedges in joint venture



(1,453)


(280)







Actuarial losses on defined benefit schemes



(7,795)


(4,587)










(9,832)


(3,621)







Transfers to the income statement on cash flow hedges










Tax on items taken directly to equity

5


175 


(199)







Net expense recognised directly in equity



(9,652)


(3,812)







Profit for the year



18,301 


16,135 







Total recognised income for the year

8


8,649 


12,323 













Attributable to:






Equity holders of the parent



8,623 


12,266 

Minority interests



26 


57 




8,649 


12,323 










  CONSOLIDATED BALANCE SHEET

As at 31 December 2008



Notes

31 December 2008

31 December 2007




£000


£000







Assets






Non current assets






Goodwill



69,993  


67,190 

Other intangible assets



76  


76  

Property, plant and equipment



102,018  


92,311 

Investment in joint ventures



4,547  


4,217 

Available for sale financial assets



1,370  


1,370 

Retirement benefit assets

9


-  


528  




178,004 


165,692 







Current assets






Inventories



21,965  


18,471 

Trade and other receivables



62,395  


39,823 

Cash and cash equivalents



16,859 


13,221 




101,219 


71,515 







Non-current assets classified as held for sale

4


-  


1,172  







Total Assets



279,223 


238,379 







Equity and Liabilities












Capital and reserves






Called up share capital

8


12,438  


12,428  

Share premium

8


24,432  


24,338  

Treasury shares

8


(1,036)


(1,134)

Other reserves

8


(1,154)


878  

Retained earnings

8


62,560  


57,395  

Shareholders' Equity



97,240  


93,905  

Minority interests

8


-  


128  

Total equity



97,240  


94,033  







Non current liabilities






Other payables



1,248  


2,012  

Retirement benefit obligations

9


16,082  


11,904  

Derivative financial instruments



-  


188  

Cumulative preference shares



100  


100  

Loans and borrowings



89,315  


83,628  

Deferred tax liabilities



1,781  


2,226  




108,526  


100,058  

Current liabilities






Trade and other payables



45,440  


34,907  

Current tax



4,465  


1,940  

Derivative financial instruments



4,603  


-  

Loans and borrowings



18,949  


7,441  




73,457  


44,288  







Total liabilities



181,983  


144,346  







Total equity and liabilities



279,223  


238,379  


  CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2008




31 December 2008

31 December 2007




£000


£000







Group profit before tax from continuing operations



23,578  


19,100 

Adjustments to reconcile Group profit before tax to net cash flows






Loss from discontinued operations



 -  


 (6)

Adjustments for:






  Depreciation and amortisation



9,431


8,344

  Profit on sale of property, plant and equipment



 (499)


 (735)

  Impairment of non - current assets



107


 -  

  Profit on ship disposals



 (685)


 (95)

  Finance income



 (412)


 (375)

  Finance costs



6,309


5,036

  Exchange loss on loan



1,152


184

  Share of post tax results of joint ventures



 (2,547)


 (2,322)

Increase in trade and other receivables



 (8,530)


 (4,669)

Increase in inventories



 (8,367)


 (3,203)

Increase in working capital attributable to submarine rescue vessels

(10,618)

 

(3,707)

Increase in trade and other payables



13,411


4,890

Additional defined benefit pension scheme contributions



 (3,081)


 (3,147)

Share based compensation



651


587

Cash generated from operations



19,900


19,882

Income tax payments



 (3,522)


 (2,840)

Cash flow from operating activities



16,378  


17,042







Investing activities






Dividends from joint venture undertakings



1,200  


1,416

Proceeds from the sale of property, plant and equipment



4,681  


28,377

Proceeds from the sale of subsidiaries net of cash disposed of


 -  


491

Finance income



411  


377

Acquisition of subsidiaries, net of cash acquired



 (5,487)


 (18,486)

Acquisition of property, plant and equipment



 (18,735)


 (22,967)

Acquisition of investment in joint ventures



 (9)


 (27)

Cash flows used in investing activities



 (17,939)


 (10,819)







Financing activities



 



Proceeds from the issue of share capital



104


275

Preference dividend paid



 (3)


 (4)

Finance costs



 (6,818)


 (4,932)

Proceeds from other non-current borrowings



30,859


43,855

Purchase less sales of own shares by ESOP



 (164)


 (274)

Capital element of finance lease repayments



 (65)


 (75)

Repayment of borrowings



 (14,828)


 (37,017)

Dividends paid



 (5,879)


 (5,129)

Cash flows from/(used in) financing activities



3,206


 (3,301)







Net increase in cash and cash equivalents



1,645


2,922

Cash and cash equivalents at 1 January 2008



13,221


9,655

Effect of exchange rate fluctuations on cash held



1,993


644







Cash and cash equivalents at 31 December 2008



16,859


13,221



  NOTES TO THE PRELIMINARY RESULTS


1.        General information


Basis of preparation of group accounts


In accordance with EU law (IAS Regulation EC 1606/2002), the preliminary results have been prepared in accordance with International Financial Reporting Standards ('IFRS') adopted for use in the EU as at 31 December 2008 ('adopted IFRS'), International Financial Reporting Interpretations Committee ('IFRIC') interpretations and those part of the Companies Act 1985 applicable to companies reporting under IFRS.


The accounting policies are consistent with those presented in the annual report for 2007 with the exception of the new policies given below.


In the current financial year the following new statements have been adopted for the first time;


IFRIC 11    IFRS 2 Group and treasury share transactions

IFRIC 14    IAS 19 The limit on defined benefit asset, minimum funding requirements and their interaction (early adopted)


Adoption of these revised standards did not have a material impact on the Group's financial statements.


After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing the financial statements.


The Group meets its day to day working capital requirements through operating cash flows, with borrowings in place to fund acquisitions and capital expenditure. The group also has £35,430,000 of undrawn committed facilities. The current economic conditions create uncertainty particularly over a) the exchange rate currency between sterling and the US dollar and the consequences for the net cash dollar surplus and b) the exchange rate between sterling and the Euro and thus the consequences on seafarer payroll costs; and c) the availability of bank facilities in the immediate future.


The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current facilities. During 2009 borrowing facilities of £7,750,000 (total facility £12,500,000) are fully repayable. This facility relates to the Singapore Submarine rescue contract which is due to complete in April 2009 when full payment of S$43,868,000 (£15,981,000) will become due and is expected to be received by 30 June 2009, the latest date for repayment of the facility.


The Group has two revolving credit facilities due for renewal in 2010; a £20,000,000 facility which expires on 27 September 2010 and a £20,000,000 facility which ends on 22 December 2010. The amounts drawn on these facilities at 31 December 2008 are £19,215,000 and £16,000,000 respectively. The Group will open renewal negotiations with banks in due course and has at no stage sought any written commitment that the facility will be renewed. However, the Group has held discussions with its bankers about its future borrowing needs and no matters have been drawn to its attention to suggest the renewal may not be forthcoming on acceptable terms.


The Group financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.


The financial information for the years ended 31 December 2008 and 2007 set out above does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985 ('the Act'). Statutory accounts for 2007 have been delivered to the registrar of companies, and those for 2008 will be delivered in due course. The auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985

 

The annual report and accounts for the year ended 31 December 2008 will be posted to shareholders in early April 2009.


The results were approved by the board of directors on the 16 March 2009 and are audited.


Principal Risks and Uncertainties


Competitive pressures

In common with other markets, our businesses compete with others on price and service, which competition is subject to cycles determined by the balance between supply and demand.  


There exists a risk that over-tonnaging may occur in the shipping markets in which the Group operates and given the ease with which, for example, shipping assets may be moved from one geographical market to another, no regional or local market can be totally isolated from the influence of over-tonnaging in other markets should it occur. The global supply of tonnage makes it difficult to predict over-tonnaging in any particular local market with any accuracy. There are however, high barriers of entry to the contract of affreightment business with the oil majors, with vigorous vetting procedures.


Reputational risks for operational incidents

The results of the Group are reliant to a degree on the maintenance by the various businesses of high reputations with their customers. The Group places a particular emphasis on the safety and security of operations but notwithstanding this, it is possible that an adverse operational incident may occur, which could in turn damage the Group's reputation.


Pensions

The Group contributes to a number of defined benefit pension schemes. There is a risk that changes in the market conditions for bond yields and equities and changes in the actuarial assumptions (eg on life expectancy), may result in an increase in the deficits in any of such schemes from time to time. There is further risk that the Group could be obliged to fund additional liabilities of an industry wide scheme, the Merchant Navy Officers Pension Fund, in addition to the liabilities in respect of its own employees, in relation to any other employee(s) unconnected to the Group whose employer has become insolvent.  


World economic outlook

Demand for the Group's products and services is inevitably a factor of wider economic conditions. During an economic slowdown it is possible that demand for certain products and services provided by the Group may reduce. Furthermore the current economic environment may increase the risk that parties with whom the Group trades become unable to meet their commitments to the Group.


Product liability

The Group is involved in the design, manufacture and sale or hire of various items such as engineering tools, software and electronics. It is possible that the Group may become liable for losses which are incurred by customers and others in the event that any such product does not meet the agreed specifications or other quality requirements. The Group seeks to limit the impact of this risk by negotiating appropriate limits on its liability to customers and also through its insurance policies.


Integration benefits

The Group continues to experience growth and development through acquisitions. Integrating the operations and personnel of acquired businesses is a complex process and there is a risk that the anticipated benefits of the acquisition may not be realised in their entirety, or may be realised over a longer time span than originally envisaged. Where appropriate, the Group manages this risk through the formation of an integration committee comprised of senior managers from across the Group with significant experience of the underlying businesses, drawing on external advice and support as appropriate.


Recruitment and retention of talent

The success of the Group is dependent to a significant degree upon the skills and motivation of its workforce, including its senior management team. There is a risk that if the Group loses, or fails to attract personnel of the requisite calibre, that this could have an adverse impact on the performance of the business. The risk is mitigated through the application of appropriate remuneration incentives and the implementation of skills development initiatives, designed to assist in making the Group an attractive environment in which to work.


Legislation and regulation

The businesses conducted by the Group are subject to numerous laws and regulations, both in the United Kingdom and overseas, which regulate matters including safety procedures, employment requirements, taxation, environmental procedures and other operating issues. Failure to comply with such laws and regulations may harm the business or the Group's reputation. The Group draws upon the expertise of various professionals, both within and outside the business, in order to seek to ensure compliance with such provisions.


Financial 

The Group is exposed to interest rate risk and foreign exchange risk which it seeks to manage, where appropriate, via hedging arrangements. Furthermore the loan facilities entered into by the Group include a number of financial covenants. Breach of these covenants would constitute events of default under such facilities which might result in these borrowings becoming immediately repayable. Recent events in the financial markets have demonstrated the risks associated with credit and liquidity. In 2008 the Group has remained proactive in managing these risks, both fostering existing and developing new relationships with lenders.

  


2.         Segmental Information

 

             Primary reporting format business segments

 

            The following tables present revenue and profit and certain asset and liability information regarding the Group's business segments
            for  the years ended 31 December 2008 and 2007.


Year ended










31 December 2008

Continuing Operations














Offshore Oil

Specialist


Defence


Marine


Total



Services


Technical




Oil







Services




Services





£000


£000


£000


£000


£000

Revenue






















Segmental revenue

48,294  


79,893  


29,415  


80,819  


238,421  

Inter segment sales

(8)


(4,629)


(146)


(60)


(4,843)











Group revenue

48,286  


75,264  


29,269  


80,759  


233,578  





















Result




















Segmental result before ship disposals

12,702  

 

9,084  

 

2,451  

 

5,982  


30,219  




Common costs



(2,717)



27,502 

Profit from operations before separately disclosed items and joint ventures







Impairment of non-current assets *



(107)

Profit on ship disposals *



685  




Profit from operations before joint ventures



28,080 




Finance income (revenue)



412  

Finance costs



(6,309)

Exchange loss on loan



(1,152)




(7,049)





Share of post tax results of joint ventures

 

 

514  

 

2,033  

 

 


2,547 


12,702  


9,598 


4,484  


5,982  


 

Profit before tax









23,578 





















Taxation









(5,277)

Profit attributable to equity holders









18,301  

* Relates to the Marine Oil Services division




















Assets & Liabilities




















Segment assets

85,343  


71,850  


25,536  


87,217  


269,946  

Investment in joint ventures

 -  


1,896  


2,651  


 -  


4,547  

Non-current assets classified as held for sale







 -  


 -  

Unallocated assets +

 


 


 


 


4,730  

Total assets









279,223  





















Segment liabilities

(9,217)


(15,830)


(6,036)


(19,567)


(50,650)

Unallocated liabilities









(131,333)

Total liabilities









(181,983)











Other segment information










Capital expenditure:










Property, plant & equipment

14,111  


3,145  


242  


2,385  


19,883  

Unallocated


 


 


 


 

117  










20,000  











Intangible fixed assets

8  


3  


 -  


 -  


11  











Depreciation

2,762  


1,305  


79  


5,078  


9,224  

Amortisation of intangible assets

3  


8  






11  

Unallocated


 


 


 


 

196  










9,431  

+ Unallocated assets comprise available for sale assets, deferred tax and centrally held corporate assets





  

Segmental information for December 2007 has been restated following the decision to transfer the results of Remote Marine Systems and Pumptools from the Specialist Technical Services division to the Offshore Oil Services division. These businesses are involved in the supply of equipment and services used in oilfield development and it was therefore considered that their activities are more closely aligned with the existing businesses in the Offshore Oil division. The impact of the restatement on the year ended 31 December 2007 segmental information is to increase the segmental revenue and result of the Offshore Oil division by £3,960,000 and £647,000 respectively, with a corresponding reduction in the revenue and operating results of the Specialist Technical Services division.

 

Year ended











Discontinued 

31 December 2007

Continuing Operations


Operations


 

















Offshore Oil


Specialist


Defence


Marine


Total


Cable


Total



Services


Technical




Oil




Ships







Services




Services









£000


£000


£000


£000


£000


£000


£000

Revenue






























Segmental revenue

30,271  


65,304  


14,132  


75,932  


185,639  


 -  



Inter segment sales

 -  


(3,406)


(187)


 -  


(3,593)


 -  


















Group revenue

30,271  


61,898  


13,945  


75,932  


182,046  


 -  

































Result






























Segmental result before ship disposals

9,213  

 

5,066  

 

1,228  

 

8,605  


24,112  


(6)





 






 







Common costs

 






 


(2,584)







 






 


21,528  





Profit from operations before separately disclosed items and joint ventures

 






 









 






 







Profit on ship disposals *

 






 


95  


 -  





 






 







Profit from operations before joint ventures

 






 


21,623  


(6)





 






 







Finance income (revenue)

 






 


375  


 -  



Finance costs

 






 


(5,036)


 -  



Exchange loss on loan

 






 


(184)


 -  





 






 


(4,845)






 






 







Share of post tax results of joint ventures

 

 

548  

 

1,774  

 

 


2,322 







9,213  


5,614  


3,002  


8,605  


 


 



Profit before tax









19,100  


(6)

































Taxation










(2,959)


 -  



Profit attributable to equity holders









16,141  


(6)



* Relates to the Marine Oil Services division





























Assets & Liabilities





























Segment assets

69,873  


55,379  


12,405  


90,063  


227,720  


 -  


227,720  

Investment in joint ventures

 -  


946  


3,271  


 -  


4,217  


 -  


4,217  

Non-current assets classified as held for sale







1,172  


1,172  


 -  


1,172  

Unallocated assets +

 


 


 


 


5,270  


  


5,270  

Total assets










238,379  


 -  


238,379  































Segment liabilities

(5,436) 


(11,356)


(2,432)


(19,107)


(38,331)


 -  


(38,331)

Unallocated liabilities









(106,015)


 -  


(106,015)

Total liabilities










(144,346)


 -  


(144,346)
















Other segment information














Capital expenditure:














Property, plant & equipment

7,440  


4,513  


67  


10,938  


22,958  


 -  


22,958  

Unallocated


 


 


 


 


991  




991  











23,949  


 -  


23,949  
















Intangible fixed assets

24  


8  


 -  


 -  


32  



32 
















Depreciation

2,009  


761  


57  


5,334  


8,161  


 -  


8,161  

Amortisation of intangible assets


4  






5  


 -  


5  

Unallocated


 


 


 


 


178  




178  











8,344  


 -  


8,344  

+ Unallocated assets comprise available for sale assets, deferred tax and centrally held corporate assets





  Geographical segments


The following table represents revenue, expenditure and certain asset information regarding the Group's geographical segments for the years ended 2008 and 2007.



UK & Ireland


Norway


Rest of the World


Total


2008


2007


2008


2007


2008


2007


2008


2007


£000


£000


£000


£000


£000


£000


£000


£000

Revenue
















Group revenue

148,368  


118,015  


20,910  


18,271  


69,143  


49,353  


238,421  


185,639  

Inter-segment sales

(4,843)


(3,593)


 -  


 -  


 -  


 -  


(4,843)


(3,593)

Segmental revenue

143,525  


114,422  


20,910  


18,271  


69,143  


49,353  


233,578  


182,046  

















Segment assets

206,365  


182,815  


47,789  


36,044  


15,792  


8,861  


269,946  


227,720  

Investment in joint ventures

2,651  


3,271  


 -  


 -  


1,896  


946  


4,547  


4,217  

Non-current assets classified as
















held for sale

 -  


1,172  










 -  


1,172  

Unallocated assets













4,730  


5,270  














279,223  


238,379  

















Segment liabilities

(43,277)


(34,083)


(4,889)


(2,318)


(2,484) 


(1,930)


(50,650)


(38,331)

Unallocated liabilities













(131,333)


(106,015)














(181,983)


(144,346)

















Capital expenditure:
















Property, plant and equipment

8,976  


17,919  


8,246  


3,432  


2,774  


2,598  


19,996  


23,949  



3      Revenue

        Revenue disclosed in the income statement is analysed as follows:


        Continuing operations

    





2008


2007





£000


£000








      Sale of goods and services



209,352  


160,620  

      Rental income



24,226  


21,426  















      Total Revenue



233,578  


182,046  


Contract work in progress

The following amounts are included in respect of the Singapore and Korea Submarine Rescue contracts:






2008


2007





£000


£000








      Contract revenue recognised in the period



18,339  


4,359  








      Amounts included in the balance sheet:













      Amount due from customers included in receivables


13,569  


 -  








      Work in progress



1,087  


3,905  








      Net advances received included in creditors 



(235)


(33)








      Net investment in contract work in progress



14,421  


3,872  



4.    Separately disclosed items and non current assets held for sale

    

      Separately disclosed items consist of:






2008


2007



£000


£000






      Loss on ship disposals

(2)


(77)

      Profit on ship disposals

687  


172  

      Impairment of ship

(107)


 -  

      Exchange loss on loan

(1,152)


(184)



(574)


(89)


The profit on ship disposals relates to the sale of mt Alacrity in January 2008 and mt Annuity in October 2008 and adjustments in respect of the sale of mt Agility and mt Severn Fisher.


The Directors have performed an impairment review of the carrying value of the mt Rudderman. This vessel is due to be redelivered to its owners in March 2009. In view of the short earnings period before the proposed redelivery full provision has been made against the carrying value of the remaining unamortised special survey expenditure of £107,000.


The exchange differences on loans arose on foreign currency loans used to finance the acquisition of vessels in the UK.


Year ended 31 December 2007


In June 2007 the Group carried out a refinancing exercise which involved the disposal of mt Seniority, mt Speciality and mt Superiority to FSL Trust Management for a consideration of £22,602,000 the proceeds of which were used to repay existing debt. These vessels have subsequently been chartered by the Group on bareboat charters for an initial period of ten years. The loss on disposal also includes the sale of mt Allurity and mt Arduity in January 2007 and mt Severn Fisher in December 2007. The profit on ship disposals relates to the mt Agility which was disposed of in October 2007.


The tax arising on these items is £Nil (2007: £Nil ).


Non current assets held for sale


At 31 December 2007 the mt Alacrity which was disposed of by the Group in January 2008 was classified as held for sale and was recorded at its carrying value of £1,172,000.

  5.       Taxation

    

The group has entered the UK tonnage tax regime under which tax on its ship owning and operating activities is based on the net tonnage of vessels operated. Any income and profits outside the tonnage tax regime are taxed under the normal tax rules of the relevant tax jurisdiction.


      The tax charge is made up as follows:

2008


2007



£000


£000

      Current tax:




      UK tonnage tax

(29)


(31)

      UK corporation tax

(3,100)


(1,433)



(3,129)


(1,464)






      Tax (under)/overprovided in previous years

(41)


175  

      Foreign tax

(1,632)


(1,542)

      Total current tax

(4,802)


(2,831)

      Deferred tax:




      Origination and reversal of timing differences

(475)


(302)

      Impact of change in rate


174 

      Total taxation on continuing operations

(5,277)


(2,959)






      The total tax charge in the income statement is allocated as follows:










2008


2007



£000


£000

      Taxation expense reported in group income statement

5,277 


2,959 

      Attributable to joint ventures

78 


20 

      Total tax expense

5,355 


2,979 


Tax charged to equity in statement of recognised income and expense:



2008


2007



£000


£000

      Current tax:




      Current tax on foreign exchange profits on internal loans

(758)


 -  

      Deferred tax:




      Deferred tax relating to the actuarial gains and losses on defined benefit 
      pension schemes

1,010 


(276)

      Deferred tax relating to share based payments

(77)


77  



175  


(199)

    

Reconciliation of effective tax rate


The tax on the Group's profit before tax differs from the theoretical amount that would arise using the rate applicable under UK corporation tax rules as follows:

    






2008


2007







£000


£000

      Profit before tax from continuing operations



23,578

 

19,100

      Tax arising on interests in joint ventures 


78


20

      Loss before tax from discontinued activities



 - 


(6)







23,656


19,114










      At UK statutory tax rate of 28.5% (2007: 30%)


6,742


5,734










      Difference due to application of tonnage tax to all vessel disposals and operating activities

(803)


(1,882)

      Expenses not deductible for tax purposes




46


42

      Chargeable gains





 - 


(22)

      Over provision in previous years









Current tax





41


(175)


Deferred tax





18


(269)

      Share based payments





332


 -  

      Lower taxes on overseas income


(773)


(258)

      Rate change on deferred tax





 - 


(174)

      Research and development relief



(140)


 - 

      Other






(108)


(17)







5,355


2,979


       Deferred tax at 31 December relates to the following:

    



Group


Group



Balance sheet


Income statement



2008


2007


2008


2007



£000


£000


£000


£000

      Deferred tax assets








      Retirement benefits

1,152  


190  


(48)


(189)

      Share based payments

87  


443  


(279)


118  



1,239  


633  





      Deferred tax liabilities








      Accelerated capital allowances for tax purposes

(1,561)


(1,383)


(165)


(46)

      Roll over gains

(1,459)


(1,476)


17  


(11)



(3,020)


(2,859)














      Deferred income tax charge





(475)


(128)

      Net deferred income tax liability

(1,781)


(2,226)






6.    Earnings per share


Basic earnings per share are calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year, after excluding ordinary shares purchased by the employee share ownership trust and held as treasury shares.


Diluted earnings per share are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.


The calculation of basic and diluted earnings per share is based on the following profits and numbers of shares:







2008


2007







£000


£000

      Profit attributable to equity holders





18,275  


16,078  

      Loss attributable to discontinued activities




 -  


6  

      Profit on continuing activities attributable to equity holders



18,275  


16,084  










      Weighted average number of shares














2008


2007







Number of


Number of







shares


shares

      For basic earnings per ordinary share*



49,472,598 


49,236,346 

      Exercise of share options and LTIPs





248,810 


399,411 

      For diluted earnings per ordinary share



49,721,408 


49,635,757 


*    Excludes 229,305 (2007:312,870) shares owned by the James Fisher and Sons Public Limited Company 
     Employee Share Ownership Trust.



2008


2007



£000


pence


£000


pence










      Basic earnings per share


18,275  


36.94 


16,078  


32.66 

      Loss attributable to discontinued activities








 -  


 -  


6  


0.01 










      Basic earnings per share on profit from continuing   
     operations 








18,275  


36.94 


16,084  


32.67 










      Diluted earnings per share


18,275  


36.75 


16,078  


32.39 

      Loss attributable to discontinued activities








 -  


 -  


6  


0.01  










      Diluted earnings per share on profit from continuing
       operations 








18,275  


36.75 


16,084  


32.40 

  Adjusted Earnings per Share

The basic earnings per share on continuing activities before separately disclosed items is shown to highlight the underlying earnings trend and is calculated using the number of shares outlined in the table above. No tax is attributable to the adjustments included in the table below.




2008


2007



£000


pence


£000


pence

      Basic earnings per share on profit on continuing
       operations 








18,275  


36.94 


16,084  


32.67 

      Adjustments:








      Exchange loss on loan conversion

1,152  


2.33 


184  


0.37  

      Profit on ship disposals

(685)


(1.39)


(95)


(0.19)

      Impairment of ship

107  


0.22 


 -  


 -  

      Basic adjusted earnings per share on profit from
      continuing operations 








18,849  


38.10 


16,173  


32.85 



















      Diluted earnings per share on profit on continuing
       operations 








18,275  


36.75 


16,084  


32.40 

      Adjustments:








      Exchange loss on loan conversion

1,152  


2.32 


184  


0.37  

      Profit on ship disposals

(685)


(1.38)


(95)


(0.19)

      Impairment of ship

107  


0.22 





      Diluted adjusted earnings per share on profit from 
      continuing operations 








18,849  


37.91 


16,173  


32.58 


7.    Dividends paid and proposed

    







2008


2007







£000


£000

      Declared and paid during the year

















      Equity dividends on ordinary shares:








      Final dividend for 2007 7.52p (2006 6.54p)




3,739  


3,238  

      Interim dividend for 2008 4.36p (2007 3.89p)




2,168  


1,929  










      Less dividends on own shares held by ESOP




(28)


(38)







5,879  


5,129  










      Proposed for approval at Annual General Meeting (not recognised as a liability at 31 December)










      Equity dividends on ordinary shares:







 

      Final dividend for 2008 8.65p (2007 7.52p)




4,284  


3,715  



  8.    Reconciliation of movements in equity



















Capital


Reserves






Share


Share


Retained

Other

Treasury


Total


Minority 


Total 


capital

premium


earnings

reserves

shares

shareholders


interests


equity












equity






£000


£000


£000


£000


£000


£000


£000


£000

At 1 January 2007

12,377  


24,114  


50,932  


(96)


(1,147)


86,180  


71  


86,251  

















Total recognised income and expense in the period

 -  


 -  


11,292  


974  


 -  


12,266  


57  


12,323  

Ordinary dividends paid

 -  


 -  


(5,129)


 -  


 -  


(5,129)


 -  


(5,129)




 -  




 -  


 -  




 -  



Share-based compensation expense

 -  


 -  


587  


 -  


 -  


587  


 -  


587  




 













Purchase of shares

 -  


 -  


 -  


 -  


(276)


(276)


 -  


(276)

Sale of shares

 -  


 -  


 -  


 -  


2  


2  


 -  


2  

















Arising on the issue of shares

51  


224  


 -  


 -  


 -  


275  


 -  


275  

















Transfer on disposal of shares

 -  


 -  


(287)


 -  


287  


 -  


 -  


 -  

















At 31 December 2007

12,428  


24,338  


57,395  


878  


(1,134)


93,905  


128  


94,033  

















Total recognised income and expense in the period

 -  


 -  


10,655  


(2,032)


 -  


8,623  


26  


8,649  

Acquisition of minority interest

 -  


 -  


 -  


 -  




 -  


(154)


(154)

















Ordinary dividends paid

 -  


 -  


(5,879)


 -  


 -  


(5,879)


 -  


(5,879)

Share-based compensation expense

 -  


 -  


651  


 -  


 -  


651  


 -  


651  

















Purchase of shares

 -  


 -  


 -  


 -  


(164)


(164)


 -  


(164)

















Arising on the issue of shares

10  


94  


 -  


 -  


 -  


104  


 -  


104  

















Transfer on disposal of shares

 -  


 -  


(262)


 -  


262  


 -  


 -  


 -  

At 31 December 2008

12,438  


24,432  


62,560  


(1,154)


(1,036)


97,240  


 -  


97,240  

















Other reserves






Translation

Hedging


Total











reserve

Reserve














£000


£000


£000





At 1 January 2007







(170)


74  


(96)





Cash flow hedges:
















Transferred to the income statement







8  


8  





Fair value losses in the period








(188)


(188)





Share of fair value gains of joint ventures







(280)


(280)





Recognised income in the period including the effect of net investment hedges


1,434  


 - 


1,434  





At 31 December 2007







1,264  


(386)


878  





















Cash flow hedges:
















Transferred to the income statement







5  


5  





Fair value gains in the period







 -  


(4,420)


(4,420)





Share of fair value gains of joint ventures






 -  


(1,453)


(1,453)





Recognised income in the period including the effect of net investment hedges


3,836  


 -  


3,836  





At 31 December 2008







5,100  


(6,254)


(1,154)





  9.        Retirement benefit obligations


The Retirement benefit obligations included in the Group balance sheets relate to three defined benefit schemes operated by the Group, being The James Fisher and Sons Public Limited Company Pension Fund for Shore Staff, (Shore staff); The James Fisher and Sons Public Limited Company Pension Fund for Permanent Dockworkers, (Dockworkers) and The Everard Group Pension Fund (Everard), together with the Group's obligations to the Merchant Navy Officers Pension Fund (MNOPF), an industry wide scheme which is also accounted for as a defined benefit scheme. 


As required by IAS 19 the valuations of the schemes have been updated to 31 December 2008 by qualified actuaries.


The Group's assets and obligations in respect of its pension schemes at 31 December 2008 were as follows:


      Assets













Group






2008


2007






£000


£000









      Shore staff pension scheme



 -  


528  

      Everard Group pension scheme

 -  


 -  














 -  


528  









      Obligations












Group






2008


2007






£000


£000

      Shore staff pension scheme



(3,259)


 -  

      Dockworkers pension scheme

(1,806)


(916)

      Everard group pension scheme

(1,684)


 -  

      MNOPF pension scheme



(9,333)


(10,988)














(16,082)


(11,904)


James Fisher and Sons Public Limited Company Pension Fund for Shore Staff

In 2005 the Company decided to close the Shore Staff scheme to existing members from 2010. At this time members contributing to the scheme can transfer to a stakeholder scheme option. During the remaining period that the scheme remains open to existing members the rate of growth of pensionable salary reduced to a maximum of 1.5%.


The Company is currently contributing 14.5% (2007:14.7%) of pensionable pay plus regular contributions of £55,000 (2007:£55,000) per month into the Shore Staff Scheme. Contributions will continue at this level in 2009.


In 2007 the Group recognised an asset of £528,000 in respect of the surplus in the Shore Staff scheme. This was the amount recoverable from the scheme by the Group through reduced contributions and represents the value of employer's service costs over the remaining period until accrual ceases in 2010. Following the incorporation of revised mortality assumptions, changes in the commutation factor, changes in the valuation of investments and the discount rate applied to the pension liability as a result of the incorporation of the scheme valuation at 31 March 2007 and subsequent roll forward, the scheme is now in deficit.


James Fisher and Sons Public Limited Company Pension and Life assurance scheme for Permanent Dockworkers

The Group also operates a paid up defined benefit scheme for dockworkers. The latest actuarial valuation of the scheme was at 31 March 2007.


As a result of the review carried out in 2008 the Company agreed a deficit recovery plan with the trustees of the scheme. Under this plan the Company made monthly payments of £20,833 (2007: £20,833) into the scheme. Contributions will continue at this level in 2009.


The Everard Group Pension Fund

FT Everard & Sons operated a defined benefit scheme which was closed to new entrants from 1 April 2004 and closed to future accrual from 1 March 2005. Under a deficit reduction plan agreed with the schemes trustees, FT Everard & Sons Limited is making annual additional contributions of £286,000 for a period of thirteen years commencing 1 March 2005.


At 31 December 2007 an actuarial surplus of £1,506,000 existed relating to the Everard scheme. No element of surplus was recognised relating to the scheme as this is already closed to future accrual. A full actuarial valuation of the scheme as at 1 August 2007 has been performed and the results, rolled forward to 31 December 2008, have been incorporated into these financial statements. As a result of the incorporation of revised mortality assumptions, changes in the commutation factor, changes in the valuation of investments and the discount rate applied to the pension liability, the scheme is now in deficit.


Merchant Navy Officers Pension Fund

In 2005 the High Court established that former as well as existing employers will be liable to make payments in respect of the funding deficit of the MNOPF. The Company is informed by the Trustees as to the level of annual payments it will be required to make into the fund over a period of ten years commencing October 2005 representing its share of the deficit disclosed in the initial actuarial valuation carried out as at 31 March 2003, as revised by the latest valuation as at 31 March 2006. Following the acquisition of Everard in December 2006 the Group took on additional liabilities in respect of the share of the MNOPF attributable to FT Everard & Sons and its subsidiaries.


As a result of the last actuarial valuation of the scheme which was carried out at 31 March 2006, in August 2007 following the approval of this valuation of the scheme, the Trustees issued calls for further contributions. As a result of these additional claims the total amount paid by the Group in 2008 to the MNOPF was £1,885,000 (2007 £1,896,000). Following further correspondence with the MNOPF additional small claims have also been settled in full in 2007 and 2008.The Group is not aware of any further outstanding claims in respect of the MNOPF.


The Group has an annual commitment to make six further annual payments of £1,873,000 to the scheme, payable in two instalments on 31 March and 30 September each year.


10.    Post balance sheet events


On 16 March 2009 the Group entered into an agreement to dispose of the business and assets excluding cash and freehold property of Reanco Team AS for a consideration of 11.5m NOK (£1,195,000) subject to a working capital adjustment.


The Reanco business, which is involved in the fabrication of offshore rig living quarters, forms part of the Offshore Oil Services division but is not considered to be part of the core activities of the division. Completion of the disposal which was at approximate book value is subject to competition approval and is expected to take place in April 2009.


11.    Related party transactions


Details of the transactions carried out with related parties are shown in the table below:

        




Services to

Sales to

Purchases

Amounts

Amounts





related


related


from

owed by

owed to





parties


parties


related


related


related









parties


parties


parties





£000


£000


£000


£000


£000

       Foreland Shipping Limited

2008


413 


 - 


 - 


32 


 - 



2007


414 


 - 


 - 


29 


 - 

      FCM businesses

2008


 - 


868 


 - 


125 


 - 



2007


 - 


1,111 


747 


934 


 - 

      Everard Insurance Brokers

2008


96 


 - 


19 



 - 



2007


678 


 - 


318 


66 


58 


No provision for bad debts has been made in respect of these balances (2007: £nil). No bad debts arose during the period relating to these transactions (2007: £nil).


The Group provides payroll management services to Foreland Shipping Limited, a wholly owned subsidiary of Foreland Holdings a company in which the Group has a 25% equity interest. No profit is made on the provision of these services which are excluded from the Group's revenue.


The Group has interests of between 25% and 50% in several joint ventures providing ship to ship transfer services in West Africa, Northern Europe and Asia through its wholly owned subsidiary, Fender Care Marine Services Limited.


Everard and its subsidiaries purchased insurance services from Everard Insurance Brokers Limited, (EIB). EIB is a wholly owned subsidiary of Alchymist Trading Company Limited, (Alchymist) a company controlled by Mr W.D.Everard and Mr F.M.Everard and members of their family. Everard also provides accommodation and management services to Alchymist and EIB. Following the acquisition of Everard the Group continued to receive insurance services from Everard and to provide accommodation and management services, including the provision of payroll management services. No amounts are due to or from Alchymist.

 

12.    The AGM will be held at 12.00 noon, Thursday 7 May 2009 at the Abbey House Hotel, Abbey Road, Barrow in FurnessCumbria.

 

13.    Report and accounts will be posted to members in early April 2009. Copies will be made available to members of the public at Fisher 
        House, PO Box 4, Barrow in Furness, Cumbria, LA14 1HR.

 

14.    The preliminary statement was approved by the Board of Directors on 16 March 2009.










This information is provided by RNS
The company news service from the London Stock Exchange
 
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