Interim Results
Fisher (James) & Sons PLC
28 August 2002
28 August 2002
James Fisher and Sons plc
Unaudited interim results to 30 June 2002
James Fisher and Sons plc, the UK's leading provider of marine services
announces interim results for the half year to the 30th June 2002 which exceed
market expectations.
Highlights
Financial Position Strengthens
• Turnover up 6% to £35.6m ( H1 2001: £33.5m )
• Operating Profit up a very substantial 46% to £7.8m ( H1 2001: £5.3m)
• Pre-tax profit up 15% to £6.1m (H1 2001 : £5.3m)
• Proposed dividend increases to 2.20p (H1 2001: 1.96p)
• Tonnage Tax regime results in £609,000 deferred tax release
• Cash flow strong, gearing reduced
• Increased profits in all divisions
Positive developments in all divisions
• Tankship fleet expanded with Pembroke Fisher charter
• Three cable laying ships all operational during the period
• Agreement signed with MOD for six Ro-Ro vessels as part of AWSR consortium
Focus on Marine Support Services
• Fisher Cavalier to be disposed of either by sale or bareboat charter
• Currently seeking alternative use for cable laying vessel, Nexus
• Acquisitions sought in Marine Support Services sector
• Appointment of EC Hambro Rabben & Partners Ltd as corporate finance
advisors to identify potential acquisitions
Commenting on the interim results, Tim Harris, Chairman, said:
'We are delighted to announce a record set of results for the first half, which
have been achieved in spite of challenging conditions in some of our markets.
We will continue our strategy of developing our marine support services division
and are actively looking for acquisitions that would complement our existing
operations or expand our activities in this sector. We look forward with
confidence to being able to produce further growth in profitability for our
shareholders.'
For further information contact:
James Fisher and Sons plc Tel: 020 7338 5808
Tim Harris, Chairman
Angus Buchanan, Chief Executive Officer
Binns & Co PR Ltd Tel: 020 7786 9600 (today)
Judith Parry/Keeley Clarke Tel: 0113 242 1171 (thereafter)
Interim Results 30 June 2002 (un-audited)
Chairman's Statement
Financial
James Fisher has experienced significant growth in both operating and pre tax
profit in the six months period to 30 June 2002.
Cash flow was particularly strong during the six months and gearing was reduced
to 67% at 30 June 2002 from 82% at 31 December 2001.
Turnover grew by 6% to £35.6m (HI 2001: £33.5m)
Group operating profit grew by 46% to £7.8m (H1 2001: £5.3m)
Pre tax profit grew by 15% to £6.1m (H1 2001: £5.3m)
Profit from continuing operations grew by 25% to £6.1m (H1 2001: £4.9m)
Basic earnings per ordinary share grew by 29% to 13.92p (H1 2001: 10.75p)
Dividend
The Board is increasing the interim dividend by 12.25% to 2.20 pence per
ordinary share (H1 2001 : 1.96 pence per ordinary share) payable on 4 November
2002 to shareholders on the register at the close of business on 4 October 2002.
Tax
The net £505,000 tax credit was principally the result of six months' release of
deferred tax provision amounting to £609,000 which stems from the Company's
adoption of the Tonnage Tax regime. It is no longer necessary to provide
deferred tax for the timing differences between depreciation and capital
allowances for our shipping activities.
Tankships
Tankships' result was creditable given that the market trend in the first
half-year was weaker than last year. This was reflected in the carryings under
our Contracts of Affreightment (CoAs) which were 2.7m tonnes in the first half
against 3.1m in the previous year.
In May we finalised an attractive ten-year bareboat charter for the 1997 built
Pembroke Fisher which at 14,122 tonnes is the largest vessel in our Tankship
fleet. The owners undertook a major refit on their account and she entered our
service in mid July 2002. Due to her size and efficiency the vessel is already
producing excellent results.
This charter forms part of our strategy to expand our Tankships operation
without the commitment of substantial further capital. This is one of the
benefits of the Tonnage Tax regime which removes the need for capital allowances
from the purchase of ships.
Cable Ships
The strong performance of the division in the first half of 2002 was the result
of our three cable ships Oceanic Princess, Oceanic Pearl and Nexus all being
operational for the full six months. Oceanic Princess and Oceanic Pearl are
employed on five-year charters with it International Telecom and guaranteed by
its parent company General Dynamics.
Global Marine Systems Limited have given us notice not to take up their option
to renew the charter of Nexus which expires in December 2002. The estimated
contribution to 2002 annual profits for Nexus is some £2.3m and her net book
value at 31 December 2002 some £6.5m. We are actively seeking alternative uses
for Nexus and, given the present state of the cable laying market, we can expect
a lower contribution from her in the medium term. As the vessel has an
excellent operational reputation and a competitive capital cost, we expect we
will be able to find employment that will achieve an acceptable return on the
asset.
Marine Support Services
Performance was good with an increase of 11% over the first half of 2001 and
with a continued excellent return on capital. The ships we manage for British
Nuclear Fuels plc continue to move cargo between Japan, Europe and the UK.
In Aberdeen a reduction in the utilisation of our rental equipment to the
offshore industry was offset by an improved performance by Seafloor Dynamex.
This company operates an inhouse designed hydro digger tool for underwater
excavation. Successful contracts have now been completed in Mexico and West
Africa as well as the North Sea.
Our existing Ministry of Defence contracts continue to perform well. The
profitable expansion of our Marine Support Services is one of our main business
objectives and the finalisation of the AWSR Public Finance Initiative will
strengthen our ties with the Ministry of Defence.
AWSR
We have a 25% shareholding in AWSR Holdings Limited which signed a concession
agreement with the Ministry of Defence on 27 June 2002 for the provision of a
six-ship strategic sea-lift service. Four of the vessels are being built at the
Flensburger Schiffbau-Gesellschaft and two at Harland & Wolff for delivery
between August 2002 and June 2003. The first of these vessels, the Hurst Point,
was delivered to the Ministry of Defence ahead of schedule on 16 August 2002.
At any one time four of the vessels will provide a service to the Ministry of
Defence with the remaining two used for commercial purposes but available to the
Ministry of Defence in exceptional circumstances.
Fisher Cavalier joint venture
During 2002 we have experienced a number of residual contractual problems
relating to the previous operation of Fisher Cavalier, remaining from our joint
venture with Cammell Laird (in receivership) which twice resulted in her arrest
in the USA. These problems are now largely resolved and we remain committed to
the disposal of the vessel by the most practical means, either sale or bareboat
charter. On disposal, the avoidance of future losses of the scale that we have
made in the joint venture over the last two years will have a significantly
beneficial effect on future profitability.
Outlook
James Fisher has again enjoyed strong growth in the first half of 2002. We see
Marine Support Services as a major source of profit growth in 2003 and the
finalisation of the AWSR contract represents a sound first step strengthening
our relationship with the Ministry of Defence.
We intend to expand significantly the proportion of the Company's profit from
Marine Support Services and we have recently appointed EC Hambro Rabben &
Partners, 'a boutique merchant bank' specialising in the marine industries, to
act as our corporate finance advisers. We are already working with them on a
number of acquisition opportunities in the marine services sector.
Tankships' market is currently softer than last year but we are already
benefiting from the introduction of Pembroke Fisher. We will continuously
review ways of improving the profitability of our fleet and operations.
Oceanic Princess and Oceanic Pearl will continue to generate strong cash flow
under their it International Telecom contracts and provide a sound base over the
next few years.
We are focused on two operational challenges - the disposal of Fisher Cavalier
and to find alternative employment for Nexus. Judging from the current
enquiries we expect to resolve the issues relating to both vessels.
James Fisher's core expertise is as a marine service provider and we are
confident that we shall continue to produce growth in profitability for the
benefit of our shareholders both organically and by acquisition.
The above results have been achieved through the considerable effort of the
James Fisher team, both at sea and ashore. I would, therefore, like to take the
opportunity to thank them as we look to a bright future.
Tim Harris, Chairman
28 August 2002
Group profit and loss account
Unaudited Unaudited Audited
Six months to Six months to Year ended
30 June 2002 30 June 2001 31 December 2001
£000 £000 £000
Turnover: group and share of joint venture 35,707 34,276 68,390
less share of joint venture (77) (783) (823)
35,630 33,493 67,567
Continuing operations 35,498 32,219 65,425
Discontinued operations 132 1,274 2,142
Group turnover 35,630 33,493 67,567
Cost of sales (25,969) (26,564) (51,913)
Gross profit 9,661 6,929 15,654
Administrative expenses (1,899) (1,617) (4,005)
Continuing operations 7,788 5,787 12,455
Discontinued shipping operations (26) (383) (713)
Discontinued port operations - (92) (93)
Group operating profit 7,762 5,312 11,649
Share of operating loss in joint venture
Trading (401) (61) (1,050)
Impairment of fixed asset - - (893)
(401) (61) (1,943)
Discontinued shipping operations:
Loss on sale of ships (8) (18) (123)
Provision for loss on disposal - - (267)
Discontinued port operations:
Release of port closure provision - 639 989
Profit on sale of fixed assets - 2,933 2,597
Amounts written off fixed asset investment - (2,701) (2,701)
7,353 6,104 10,201
Net interest payable (1,527) (793) (2,124)
Exchange gain on loan conversion 283 - -
(1,244) (793) (2,124)
Profit on ordinary activities before taxation 6,109 5,311 8,077
Taxation 505 (178) (436)
Profit on ordinary activities after taxation 6,614 5,133 7,641
Dividends
Non equity (2) (2) (4)
Equity (1,041) (946) (2,480)
(1,043) (948) (2,484)
Retained profit for the period/year 5,571 4,185 5,157
pence pence pence
Basic earnings per ordinary share 13.92 10.75 16.01
Adjusted earnings per ordinary share 12.71 10.19 17.43
Diluted earnings per ordinary share 13.81 10.70 15.91
Ordinary dividends paid or payable:
Interim 2.20 1.96 1.96
Final 3.25
Group balance sheet
Unaudited Unaudited Audited
30 June 2002 30 June 2001 31 December 2001
£000 £000 £000
Fixed assets
Intangible assets 598 636 617
Tangible assets 129,815 128,626 137,827
Investments 2,300 1,693 1,795
132,713 130,955 140,239
Current assets
Stocks 750 931 695
Debtors 17,585 13,966 15,725
Cash at bank and in hand 4,204 4,442 6,825
Short term deposits - 1,690 -
22,539 21,029 23,245
Creditors: amounts falling due
within one year
Trade and other (15,439) (16,477) (18,763)
Bank loans (10,347) (9,760) (11,952)
(25,786) (26,237) (30,715)
Net current liabilities (3,247) (5,208) (7,470)
Total assets less current liabilities 129,466 125,747 132,769
Creditors: amounts falling due
after more than one year
Trade and other (35) (64) (5)
Bank loans (48,079) (50,511) (56,531)
(48,114) (50,575) (56,536)
Provisions for liabilities and charges (763) (1,298) (1,298)
Net assets 80,589 73,874 74,935
Capital and reserves
Equity - fully paid 12,068 12,068 12,068
Non equity - cumulative preference shares 100 100 100
Share premium account 23,050 23,050 23,050
Profit and loss account 45,371 38,656 39,717
Shareholders' funds 80,589 73,874 74,935
Group cash flow statement
Unaudited Unaudited Audited
Six months to Six months to Year ended
30 June 2002 30 June 2001 31 December 2001
Notes £000 £000 £000
Net cash inflow from
operating activities 5(a) 12,737 11,025 18,829
Returns on investments and
servicing of finance 5(b) (1,477) (1,428) (3,097)
Taxation 5(c) (357) 215 119
Capital expenditure and
financial investment 5(d) (595) (13,340) (25,879)
Acquisitions and disposals 5(e) (1,621) (2,519) (2,592)
Equity dividends paid (1,534) (1,424) (2,370)
Cash inflow/(outflow) before management
of liquid resources and financing 7,153 (7,471) (14,990)
Management of liquid resources 5(f) - (301) 1,389
Financing 5(g) (9,774) 7,689 15,901
(Decrease)/increase in cash in the period (2,621) (83) 2,300
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash in the period (2,621) (83) 2,300
Cash outflow/(inflow) from
decrease/(increase) in debt 9,774 (7,689) (15,901)
Cash outflow/(inflow) from increase/
(decrease) in liquid resources - 301 (1,389)
Movement in net debt in the 5(h) 7,153 (7,471) (14,990)
period
Exchange differences 283 - -
Net debt at the beginning of 5(h) (61,658) (46,668) (46,668)
period
Net debt at end of period 5(h) (54,222) (54,139) (61,658)
Notes to the Interim Accounts
1. Interim Accounts
The group's interim result consolidates the results of the company and its
subsidiary companies made up to 30 June 2002.
The interim financial information has been prepared on the basis of the
accounting policies set out in the group's statutory accounts for the year ended
31 December 2001, except that the group has adopted FRS 18 on Accounting
Policies and FRS 19 on Deferred Taxation. FRS 18 and FRS 19 have no material
impact on the accounts for the half year. Expenses are accrued in accordance
with the same principles used in the preparation on the annual accounts.
The financial information contained in this interim statement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. The financial information for the full preceding year is based on the
statutory accounts for the financial year ended 31 December 2001. These
accounts, upon which the auditors issued an unqualified opinion, have been
delivered to the Registrar of Companies.
The interim report was approved by the board of directors on 27 August 2002.
2. Segmental analysis
Geographical area
Six months Six months Year ended
to 30 June 2002 to 30 June 2001 31 December 2001
£000 % £000 % £000 %
Turnover
Continuing operations
Tankships
United Kingdom and the
Republic of Ireland 20,722 21,466 40,657
Continental Europe 2,269 3,738 6,615
22,991 65 25,204 75 47,272 70
Cable ships
United Kingdom and the
Republic of Ireland 2,584 2,770 5,422
Americas 6,258 1,082 4,715
8,842 25 3,852 12 10,137 15
Marine support services
United Kingdom and the
Republic of Ireland 3,525 3,033 7,697
Continental Europe 107 125 248
Americas - - 7
Africa 33 5 29
Middle East - - 35
3,665 10 3,163 9 8,016 12
Discontinued operations
Shipping operations
United Kingdom and the
Republic of Ireland 132 1,272 2,140
Port operations
United Kingdom and the
Republic of Ireland - 2 2
132 - 1,274 4 2,142 3
Total turnover 35,630 100 33,493 100 67,567 100
Segmental analysis (continued)
Turnover and profit on ordinary activities before taxation
Six months Six months Year ended
to 30 June 2002 to 30 June 2001 31 December 2001
Turnover Profit Turnover Profit Turnover Profit
£000 £000 £000 £000 £000 £000
Group
Continuing operations
Tankships 22,991 3,705 25,204 3,865 47,272 7,759
Cable ships 8,842 4,337 3,852 2,060 10,137 5,521
Marine support services 3,665 1,645 3,163 1,479 8,016 3,180
35,498 9,687 32,219 7,404 65,425 16,460
Discontinued operations
Shipping operations:
Segment operating loss 132 (26) 1,272 (383) 2,140 (713)
Loss on sale of ships - (8) - (18) - (123)
Provision for loss on - - - - - (267)
disposal
Port operations:
Segment operating loss - - 2 (92) 2 (93)
Release of port closure - - - 639 - 989
provision
Profit on sale of fixed - - - 2,933 - 2,597
assets
Amounts written off - - - (2,701) - (2,701)
fixed asset investment
132 (34) 1,274 378 2,142 (311)
35,630 9,653 33,493 7,782 67,567 16,149
Common costs (1,899) (1,617) (4,005)
Share of operating loss (401) (61) (1,943)
in joint venture
Net interest payable (1,527) (793) (2,124)
Exchange gain on loan 283 - -
conversion
(1,244) (793) (2,124)
6,109 5,311 8,077
Net operating assets
30 June 2002 30 June 2001 31 December 2001
£000 £000 £000
Continuing operations
Tankships 66,655 70,191 71,024
Cable ships 58,869 46,899 59,876
Marine support services 8,702 8,762 7,361
Discontinued operations
Shipping operations - 1,396 320
134,226 127,248 138,581
The net operating assets are reconciled to shareholders' funds as follows:
30 June 2002 30 June 2001 31 December 2001
£000 £000 £000
Net operating assets 134,226 127,248 138,581
Group share of joint 2,291 3,091 1,071
venture loans
Net borrowings (54,222) (54,139) (61,658)
Corporation tax 26 (80) (227)
Deferred tax (689) (1,298) (1,298)
Dividends payable (1,043) (948) (1,534)
80,589 73,874 74,935
3. Net interest payable
Net interest payable includes an amount of £115,000 (six months to 30 June 2001,
£58,000 and twelve months to 31 December 2001, £179,000), in respect of the
joint venture.
4. Taxation
The credit/(charge) for taxation on ordinary activities represents:
Six months Six months Year ended
to 30 June 2002 to 30 June 2001 31 December 2001
£000 £000 £000
UK tonnage tax (16) (16) (33)
UK other corporation tax at 30% (2001 30%) (88) (203) (281)
Deferred tax 609 - -
505 (219) (314)
Adjustments in respect of prior years
UK other corporation tax - 41 (122)
505 (178) (436)
Tax relates to the following:
Parent and subsidiaries 508 (166) (421)
Joint venture (3) (12) (15)
505 (178) (436)
The current year taxation credit of £505,000 includes an amount of £609,000
representing six months release of the deferred tax provision no longer
required.
5. Group cash flow statement
a) Reconciliation of operating profit to net cash inflow from operating activities
Six months Six months Year ended
to 30 June 2002 to 30 June 2001 31 December 2001
£000 £000 £000
Group operating profit 7,762 5,312 11,649
Depreciation and refit amortisation 4,914 4,000 8,695
Amortisation of goodwill 19 19 38
Profit on disposal of tangible fixed assets (37) (40) (100)
(Increase)/reduction in stocks (55) (77) 159
Increase in debtors (1,322) (360) (3,713)
Increase in creditors 1,255 2,127 1,890
Increase in provisions 118 44 122
Share based compensation 83 - 89
Net cash inflow from operating activities 12,737 11,025 18,829
b) Returns on investments and servicing of finance
£000 £000 £000
Interest received 217 254 462
Interest paid (1,692) (1,680) (3,555)
Preference dividend paid (2) (2) (4)
Net cash outflow (1,477) (1,428) (3,097)
5. Group cash flow statement (continued)
Six months Six months Year ended
to 30 June 2002 to 30 June 2001 31 December 2001
£000 £000 £000
c) Taxation
Corporation tax paid (466) (27) (133)
Corporation tax received 109 242 252
Net cash (outflow)/inflow (357) 215 119
d) Capital expenditure and financial investment
£000 £000 £000
Purchase of own shares by ESOP (505) - (638)
Purchase of fixed asset investment - (3,860) (3,858)
Purchase of tangible fixed assets (454) (12,434) (24,937)
Sale of tangible fixed assets 364 2,954 3,554
Net cash outflow (595) (13,340) (25,879)
e) Acquisitions and disposals
£000 £000 £000
Loan to joint venture and associated undertakings (1,621) (2,269) (2,256)
Costs associated with discontinued
port operations - (250) (336)
Net cash outflow (1,621) (2,519) (2,592)
f) Management of liquid resources
£000 £000 £000
Short term investments - (301) 1,389
g) Financing
£000 £000 £000
New secured loan - 11,027 26,513
Repayment of secured loans (9,774) (3,338) (10,612)
Net cash outflow (9,774) 7,689 15,901
h) Reconciliation of net debt
1 January 2002 Cash flow Transfer Exchange movement 30 June 2002
£000 £000 £000 £000 £000
Cash in hand and at bank 6,825 (2,621) - - 4,204
Debt due after 1 year (56,531) 4,000 4,169 283 (48,079)
Debt due within 1 year (11,952) 5,774 (4,169) - (10,347)
(68,483) 9,774 - 283 (58,426)
Net debt (61,658) 7,153 - 283 (54,222)
6. Earnings per share
The calculation of basic and diluted earnings per share are based on the
following profits and numbers of shares:
Six months Six months Year ended
to 30 June to 30 June 2001 31 December
2002 2001
£000 £000 £000
Profit for the 6,614 5,133 7,641
period/year
Preference dividend (2) (2) (4)
6,612 5,131 7,637
Weighted average number of shares
Number of Number of Number of
shares shares shares
For basic earnings 47,512,491 47,734,169 47,692,921
per share
Exercise of share 371,366 231,373 321,138
options
For diluted earnings 47,883,857 47,965,542 48,014,059
per share
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:
Six months Six months Year ended
to 30 June 2002 to 30 June 2001 31 December 2001
£000 p £000 p £000 p
Basic earnings per share 6,612 13.92 5,131 10.75 7,637 16.01
Loss on sale of ships 8 0.02 18 0.04 123 0.26
Provision for loss on - - - - 267 0.56
disposal
Discontinued shipping 26 0.05 383 0.80 713 1.49
operations
Discontinued port - - (779) (1.63) (792) (1.66)
operations
Tax effect of above - - 153 0.32 242 0.51
Prior year element of tax - - (41) (0.09) 122 0.26
charge
Deferred tax release (609) (1.28) - - - -
(575) (1.21) (266) (0.56) 675 1.42
Adjusted earnings per share 6,037 12.71 4,865 10.19 8,312 17.43
7. Reconciliation of movements in group shareholders' funds
30 June 2002 30 June 2001 31 December2001
£000 £000 £000
Profit for the financial 6,614 5,133 7,641
period/year
Dividends paid and proposed
equity and non-equity shares (1,043) (948) (2,484)
Share based compensation 83 - 89
Net addition to shareholders' 5,654 4,185 5,246
funds
Opening shareholders' funds 74,935 69,689 69,689
Closing shareholders' funds 80,589 73,874 74,935
8. Interim dividend
A dividend for the six months to 30 June 2002 on the preference shares was
declared on 30 June 2002. The interim dividend of 2.20p (2001 1.96p net) per 25p
ordinary share is payable on 4 November 2002 to those shareholders registered in
the books of the company at the close of business on 4 October 2002.
9. Interim report
The interim report is to be sent to all shareholders on Wednesday 4 September
2002, posted first class. Copies of the interim report will also be available
from our registered office at: Fisher House, PO Box 4, Barrow-in-Furness,
Cumbria LA14 1HR.
INDEPENDENT REVIEW REPORT TO
JAMES FISHER AND SONS PUBLIC LIMITED COMPANY
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2002 which comprises the group's Profit and Loss
Account, Balance Sheet and Cash Flow Statement and the related notes 1 to 9. We
have read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not express
an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2002.
Ernst & Young LLP
Liverpool
28 August 2002
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