Interim Results
Fisher (James) & Sons PLC
30 August 2006
James Fisher and Sons plc (FSJ.L)
('James Fisher' or 'the Company')
Interim Results
James Fisher, the UK's leading marine services provider, announces Interim
Results for the half year ended 30 June 2006.
Revenue, pre-tax profit, earnings per share and cash flow are well ahead of the
comparable period in 2005.
Strong growth, particularly organic growth, in marine support service companies
has more than replaced the discontinued cable ship profit with better quality
marine service income. 57% of the growth is organic with the remaining 43% from
acquisitions, principally Monyana and Fendercare.
Financial Highlights
% 2006 2005
• Revenue +29% £57.0m £44.1m
• Profit for half year from continuing operations +55% £7.3m £4.7m
• Basic earnings per share from total operations +66% 18.68p 11.28p
• Adjusted basic earnings per share from continuing operations +54% 14.87p 9.63p
• Financial gearing 34% 57%
• Interim dividend proposed +12% 3.47p 3.10p
• Group operating cash flow over £7m
Operational Highlights
• Last cable ship sold for US$18.25M - £1.76m better than book value
• Offshore oil service divisional profit from operations up 87%
• Specialist technical services divisional profit from operations including joint venture up 101%
• Defence divisional profit from operations including joint venture up 13%
• Marine oil services divisional profit from operations unchanged, ROCE up to 13.5%, strong cash flow
• Pension fund exposure reduced to £5.9m (2005 - £16.9m)
• Marine support services contribution to profit from operations since 2001 up from 12.5% to 67.3% of
total.
• 4 year record of success in finding, integrating and growing acquisitions
Commenting on the outlook, Chairman, Tim Harris, said:
'The encouraging first half result confirms we have a number of well managed
marine service companies in strong, niche market positions in industries such as
oil, port development, nuclear decommissioning and defence (including submarine
rescue and surface ship related contracts), either trading well in strong
markets or well positioned in markets with potential.
With the cable ship involvement resolved, the pension exposure effectively
controlled and financial gearing at only 34%, the group is well set to make its
next strategic move and to continue to grow profits strongly for its
shareholders.'
For further information:
James Fisher & Sons plc Tim Harris Chairman 020 7338 5808
Nick Henry Chief Executive Officer
www.james-fisher.co.uk Michael Shields Group Finance Director
Adventis Financial PR Peter Binns 07768 392 582
020 7034 4765 Chris Steele 07979 604 687
CHAIRMAN'S STATEMENT
Highlights
2006 2005
Revenue + 29% £57.0m £44.1m
Profit for half year from continuing operations + 55% £7.3m £4.7m
Basic earnings per share from total operations + 66% 18.68p 11.28p
Adjusted basic earnings per share from continuing operations + 54% 14.87p 9.63p
Financial gearing 34% 57%
Overview
James Fisher and Sons has enjoyed a strong first half by any measure - revenue,
profit, earnings per share and cash flow - and produced a result well ahead of
the comparable period in 2005. Strong growth, particularly organic growth, in
our marine support service companies has more than replaced the discontinued
cable ship profit with better quality marine service income. The sale of our
last remaining cable ship, Oceanic Princess, for $18.25 million in June at a
profit of £1.76 million over the carrying value in last year's balance sheet,
concludes our involvement in that business.
Strategy
The following table demonstrates the success of the group strategy in using its
strong cash flow to expand its marine service operations, which now account for
over two thirds of operating profit, by building on its core expertise of
practical engineering and operational skills in the marine sector.
Segmental profit from operations before separately disclosed items
2002 2003 2004 2005 1st half 2006
£m £m £m £m £m
Marine Support Services
offshore oil * * 2.9 4.0 3.5
specialist technical * * 0.9 2.7 2.4
defence * * 2.7 2.1 1.2
1.8 4.8 6.5 8.8 7.1
Marine Oil Services 4.7 6.1 6.9 6.7 3.4
Cable Ship (discontinued 2005) 7.9 4.3 3.9 4.5 -
14.4 15.2 17.3 20.0 10.5
* not available
The growth in marine services has been achieved both organically and by the
acquisition of over 15 small-to-medium sized privately held, entrepreneurially
run businesses costing in total £52.3 million. A particularly pleasing feature
of the 2006 first half result is that 57% of the growth is organic with the
remaining 43% from acquisitions, principally the Monyana group in December 2005.
With gearing at only 34% at 30 June 2006, against 57% last year and the cable
ship issue resolved, the group is well placed to continue aggressively its
successful marine service strategy by supporting its organic growth with further
acquisitions.
Offshore Oil Services
Divisional result £3.5 million (2005 - £1.9 million)
This division benefited from strong underlying markets and the acquisition of
the Monyana group which together enabled a 59% growth in revenue and 87% in
profits, with a margin improvement of 4.6%. 50% of the profit improvement was
due to organic growth. We are increasingly using our strong Aberdeen and
Stavanger market presence to expand by following our customers into the new oil
exploration markets being developed around the world. This is reflected in our
revenue analysis which, for the 2006 first half, was 54% Norwegian North Sea,
29% UK North Sea and 17% other global markets.
The Monyana group acquisition has been successfully integrated and we shall
shortly be combining all of our Aberdeen activities on Monyana's eleven acre
freehold site at Old Meldrum. This will enable both marketing and operational
synergies to be realised as well as enabling the sale of the former Scan Tech UK
freehold site at Bridge of Don. From September 2006 UK activities for Monyana
and Scan Tech UK activities will trade under a united Fishers Offshore brand.
Similarly, in Stavanger we have acquired a new freehold site for development at
Finnestad/Dusavik to which we shall relocate our Scan Tech AS, Scan Tech Air
Supply and Monyana activities. They will trade under the Scan Tech brand which
has significant customer recognition in Norway.
We continue to invest in new equipment in this division to ensure that we can
meet our customer requirements both in the North Sea and increasingly worldwide.
Specialist Technical Services
Divisional result including joint ventures £2.4 million (2005 - £1.2 million)
Revenue was up 87% and profit doubled in this division with margins also
improving. All three of its key components, FenderCare, James Fisher Nuclear
and Remote Marine Systems traded well. Although we benefited from three
additional months from the FenderCare acquisition in March 2005, organic growth
was the main contributor to the improved performance.
The FenderCare group performed exceptionally well. It is well placed in two
markets - oil and port development - both of which are extremely strong at
present. FenderCare is expanding further worldwide, based on its widely
recognised specialist skills and have recently upgraded operations in Singapore
and opened a new base in the Middle East, one of the world's fastest growing
markets.
James Fisher Nuclear had a better six months. The nuclear decommissioning
market, although of real potential, is still suffering from uncertainty
particularly over the future of the British Nuclear Group but also concerning
the decommissioning bidding process itself which, like everything else in the
nuclear business, has been radically revised with uncertain results. However,
we enjoy a niche decommissioning skill in remote handling and attractive
industrial premises at Egremont, close to the Sellafield site. James Fisher
Nuclear has recently teamed with a number of complementary, like-minded
companies to form a joint company called Cumbria Nuclear Solutions Limited.
This has started to bid for some of the larger contracts which, individually, we
previously did not have the capacity to take on.
Remote Marine Systems again performed well in the first half. It enjoys a
strong market niche in the North Sea, for the design and production of
electrical penetrators for oil wells. In the usual James Fisher way we are now
encouraging a more extensive international marketing effort with some success to
date.
Defence
Divisional result including joint venture £1.2 million (2005 - £1.1 million)
Revenue in this division grew by 5% but this was not reflected in the profit
because of increased bidding costs. The position has not changed materially
over the last six months - we continue to track and bid for a number of
significant contracts, both submarine rescue and surface ship related, the
gestations for which are quite long-term. The 'bread and butter', regular,
smaller work is producing a reasonable result but we have yet to win a
transforming contract.
The Foreland joint venture company, which operates the Ministry of Defence's six
military roll-on roll-off vessels, continues to operate well and produced an
improved result demonstrating the potential in the defence arena, given the
right combination of skills and patience.
Marine Oil Services
Divisional result £3.4 million (2005 - £3.4 million)
The result was effectively the same as last year with revenue, profit and margin
virtually unchanged. The return on capital improved by almost 1% to 13.5%,
virtually tax free under the tonnage tax regime, and reflecting the chartered
nature of the new tonnage, Cumbrian Fisher, Clyde Fisher and Shannon Fisher
against the owned tonnage of the three older ships, Lough Fisher, Tees Fisher
and Wear Fisher which we operated in the first half of 2005, then sold. We have
recently taken delivery of the last in the current round of newbuildings, Solway
Fisher, and will benefit from her contribution in the second half. The
Buncefield fire in December 2005 had an adverse effect on one contract for the
6,000 tonne ships because it disrupted the planned distribution of clean
petroleum products around the coast, temporarily reducing the contract
requirement for that class of vessel.
The Marine Oil Services division is now contributing a virtually tax free return
on capital of 13.5% and a strong cash flow which supports the expansion of our
other fast growing marine service divisions. It also provides and underpins
many of our marine service skills and represents an important part of our 'core'
activities.
Directors and Employees
Ian Serjent, our Marine and Technical Services Director, retired from the Board
at this year's AGM after more than thirty years with the Group. In many ways
Ian was the embodiment of James Fisher's 'practical engineering and operational
skills' and I would like to thank him for his great contribution to the Group's
success.
The pension fund deficit reported under IFRS in the balance sheet declined from
£16.9 million at 30 June 2005 to £5.9 million at 30 June 2006. This reduction
was partly the result of management action in phasing out the final salary
scheme to existing members and making special cash contributions to the two
James Fisher Schemes totalling £3.0 million in the last twelve months. However,
improved investment returns and more importantly a rise in longer term interest
rates also played a significant role.
I would like to thank all of our employees and seafarers for their effort in
producing a most encouraging result in the first half. James Fisher
intentionally operates a flat management structure which places delegated
responsibility on managers. The aim is to challenge and encourage individual
initiative. I would particularly like to recognise and thank all of those who
have risen to the challenge and put the group in a position to do even better.
In the same way, I would like to thank all the founding shareholders of the
businesses we have acquired who, in the Fishers way, have remained with us in
such an enthusiastic manner.
Outlook
James Fisher's aim is to be the UK's leading marine service group and in recent
years has followed a clear strategy to achieve it. The encouraging first half
result and current trading confirm that we have a number of well managed marine
service companies which enjoy strong, niche market positions in industries such
as oil, port development, nuclear decommissioning and defence, which are either
growing strongly or have the potential for significant future growth. With the
cable ship issue resolved, the pension exposure effectively controlled and
financial gearing at only 34%, the group is now well set to make its next
strategic move and to continue to grow profits strongly for its shareholders.
GROUP INCOME STATEMENT
For the six months ended 30 June 2006
Unaudited Unaudited Audited
Note six months ended six months ended Year ended
30 June 2006 30 June 2005 31 December 2005
Before Separately Before Separately
separately disclosed separately disclosed
disclosed items disclosed items
items note 5 Total items note 5 Total Total
£000 £000 £000 £000 £000 £000 £000
Continuing operations
Group revenue 57,010 57,010 44,128 44,128 91,411
Cost of sales (45,515) (45,515) (35,631) (35,631) (73,931)
Gross profit 11,495 11,495 8,497 8,497 17,480
Administrative expenses (2,793) (2,793) (2,518) (2,518) (5,413)
Profit from operations before 8,702 8,702 5,979 5,979 12,067
separately disclosed items
Pension benefit curtailment - - - - - - 2,000
Loss on ship disposals - (24) (24) - (1,449) (1,449) (1,617)
Profit from operations 8,702 (24) 8,678 5,979 (1,449) 4,530 12,450
Finance costs
Finance income (revenue) 159 - 159 180 - 180 304
Finance costs (1,299) - (1,299) (1,355) - (1,355) (2,591)
Exchange gain/(loss) on loan - 35 35 - (93) (93) (130)
conversion
(1,140) 35 (1,105) (1,175) (93) (1,268) (2,417)
Share of post tax results of joint 859 - 859 639 - 639 1,413
ventures
Profit on continuing operations 2 8,421 11 8,432 5,443 (1,542) 3,901 11,446
before taxation
Taxation (including overseas 10 (1,133) - (1,133) (753) - (753) (754)
taxation of £469,000; 2005 £260,000)
Profit on continuing operations 7,288 11 7,299 4,690 (1,542) 3,148 10,692
Discontinued operations
Profit/(loss) from discontinued 4 1,856 2,348 (12,889)
operations
Profit/(loss) attributable to equity holders of the 9,155 5,496 (2,197)
parent
Earnings per share (EPS)
pence pence pence
Basic EPS from continuing operations 12 14.89 6.46 21.91
Diluted EPS from continuing 12 14.76 6.40 21.72
operations
Basic EPS on profit/(loss) from 12 18.68 11.28 (4.50)
total operations
Diluted EPS on profit/(loss) from 12 18.52 11.17 (4.50)
total operations
Adjusted earnings per share
Basic EPS from continuing operations 12 14.87 9.63 21.84
Diluted EPS from continuing 12 14.74 9.54 21.64
operations
Dividends
Paid or approved by shareholders
in the period
Final dividend 5.69 4.95 4.95
Interim dividend - - 3.10
5.69 4.95 8.05
Proposed but not accrued
Final dividend - - 5.69
Interim dividend 3.47 3.10 -
3.47 3.10 5.69
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the six months ended 30 June 2006
Unaudited Unaudited Audited
Note six months ended six months ended Year ended
30 June 2006 30 June 2005 31 December 2005
£000 £000 £000
Income and expense recognised directly in equity
Exchange differences on translation of foreign
operations:
Currency translation differences (130) 81 26
Net investment hedge 147 (104) 9
17 (23) 35
Fair value of gains/(losses) on cash flow 52 (163) (134)
hedges
Share of fair value (losses)/gains of cash flow hedges in (17) (67) 169
joint venture
Actuarial gains/(losses) on defined benefit 7 5,331 (4,070) (4,531)
schemes
5,383 (4,323) (4,461)
Transfers to the income statement
On cash flow hedges (4) (40) 36
Tax on items taken directly to equity 10 (1,054) 780 123
Net income/(expense) recognised directly in 4,325 (3,583) (4,302)
equity
Profit/(loss) for the period 9,155 5,496 (2,197)
Total recognised income/(expense) for the 13 13,480 1,913 (6,499)
period
All recognised income/(expense) is attributable to the equity holders of
the parent.
GROUP BALANCE SHEET
At 30 June 2006
Unaudited Unaudited Audited
30 June 2006 30 June 2005 31 December 2005
Note £000 £000 £000
Assets
Non current assets
Goodwill 36,205 30,649 36,168
Property, plant and equipment 66,236 102,042 67,081
Investment in joint ventures 3,406 2,576 2,587
Available for sale financial assets 1,368 1,157 1,368
Deferred tax assets 187 1,825 1,197
107,402 138,249 108,401
Current assets
Inventories 6,673 5,745 5,797
Trade and other receivables 23,913 20,642 21,026
Derivative financial instruments 77 - -
Cash and short term deposits 9 10,098 5,875 9,725
40,761 32,262 36,548
Non-current assets classified as held for sale 4 - 1,189 7,959
Total assets 148,163 171,700 152,908
Equity and liabilities
Capital and reserves
Called up share capital 13 12,373 12,345 12,345
Share premium 13 24,081 23,960 23,960
Treasury shares 13 (1,154) (1,116) (1,184)
Other reserves 13 226 (221) 178
Retained earnings 13 48,666 48,050 38,030
Total equity 84,192 83,018 73,329
Non current liabilities
Other payables 963 33 593
Retirement benefit obligations 7 5,912 16,870 13,536
Derivative financial instruments - - 18
Cumulative preference shares 100 100 100
Interest-bearing loans and borrowings 30,640 41,256 42,695
37,615 58,259 56,942
Current liabilities
Trade and other payables 16,936 17,101 14,802
Current tax 1,616 1,601 1,370
Derivative financial instruments 30 183 102
Interest-bearing loans and borrowings 7,774 11,538 6,363
26,356 30,423 22,637
Total liabilities 63,971 88,682 79,579
Total equity and liabilities 148,163 171,700 152,908
GROUP CASH FLOW STATEMENT
For the six months ended 30 June 2006
Unaudited Unaudited Audited
six months ended six months ended Year ended
Note 30 June 2006 30 June 2005 31 December 2005
£000 £000 £000
Group profit from operations 8,678 4,530 12,450
Adjustments to reconcile Group operating
profit to net cash inflows from operating
activities
Profit/(loss) from discontinued operations 1,858 2,351 (12,886)
Adjustments for:
Depreciation 2,773 3,983 7,670
Profit on sale of property, plant and (185) (17) (51)
equipment
Pension benefit curtailment - - (2,000)
Impairment of non - current assets - - 10,885
(Profit)/loss on ship disposals (1,737) 1,449 11,565
Increase in trade and other receivables (3,035) (3,548) (3,014)
(Increase)/decrease in inventories (910) 471 258
Increase/(decrease) in trade and other payables 2,584 24 (1,291)
Additional defined benefit pension scheme contributions (2,418) (88) (1,994)
Share based compensation 263 201 432
Cash generated from operations 7,871 9,356 22,024
Income tax payments (539) (781) (1,404)
Cash flow from operating activities 7,332 8,575 20,620
Investing activities
Dividends from joint venture undertakings - - 1,068
Proceeds from the sale of property, plant and equipment 9,897 1,015 12,995
Interest received 163 175 321
Acquisition of subsidiaries, net of cash acquired (27) (10,862) (22,077)
Acquisition of property, plant and equipment (2,119) (4,187) (7,357)
Acquisition of available for sale financial asset - - (211)
Cash flows from/(used in) investing activities 7,914 (13,859) (15,261)
Financing activities
Proceeds from the issue of share capital 149 190 190
Preference dividend paid (2) (2) (4)
Interest paid (1,371) (1,386) (2,871)
Proceeds from other non-current borrowings 309 9,332 20,524
Purchase less sales of own shares by ESOP (233) - 7
Repayment of borrowings (10,918) (4,582) (19,547)
Dividends paid (2,796) (2,412) (3,927)
Cash flows (used in)/ from financing activities (14,862) 1,140 (5,628)
Net increase/(decrease) in cash and cash equivalents 384 (4,144) (269)
Cash and cash equivalents at beginning of period 9,725 10,045 10,045
Net foreign exchange difference (11) (26) (51)
Cash and cash equivalents at end of period 9 10,098 5,875 9,725
NOTES TO THE INTERIM FINANCIAL STATEMENTS
General information
The Group's interim result consolidates the results of the company and its
subsidiary companies made up to 30 June 2006.
The interim financial information is presented in Sterling and all values are
rounded to the nearest thousand pounds (£000) except when otherwise indicated.
The company is a limited liability company incorporated and domiciled in England
& Wales and whose shares are listed on the London Stock Exchange.
The interim report was approved for issue by the Board of Directors on 29 August
2006.
Basis of preparation
The financial information contained in this interim report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. It does
not therefore include all the information and disclosures required in the annual
financial statements and should be read in conjunction with the Group's annual
financial statements as at 31 December 2005. The financial information for the
preceding year is based on the statutory accounts for the year ended 31 December
2005. These accounts, upon which the auditors issued an unqualified opinion,
have been delivered to the Registrar of Companies.
Significant accounting policies
The interim report has been prepared using accounting policies consistent with
those followed in the preparation of the Group's annual financial statements for
the year ended 31 December 2005.
Seasonality of operations
Although some of the Group's operations may sometimes be affected by seasonal
factors such as general weather conditions, the Directors do not feel that this
has a material effect on the performance of the Group when comparing the interim
results to those achieved in the second half of the year.
2 Segmental Information
Primary reporting format business segments
The following tables present revenue and profit information
regarding the Group's business segments for the six months ended 30 June 2006
and 2005 and the year ended 31 December 2005.
Six months ended Discontinued
30 June 2006 Continuing Operations Operations
Offshore Specialist Defence Marine Total Cable
Oil
Services Technical Oil Ships
Services Services
£000 £000 £000 £000 £000 £000
Revenue
Group revenue 11,315 19,176 5,557 22,722 58,770 -
Inter segment sales - (1,619) (141) - (1,760) -
Segmental revenue 11,315 17,557 5,416 22,722 57,010 -
Result
Segmental result before 3,460 2,275 495 3,450 9,680 97
separately disclosed items
Common costs (978)
Profit from operations before separately disclosed items and joint ventures 8,702
(Loss)/profit on ship disposals (24) 1,761
Profit from operations before joint ventures 8,678 1,858
Finance income (revenue) 159 -
Finance costs (1,299) -
Exchange gain on loan conversion 35 -
(1,105) -
Share of post tax results of joint ventures 116 743 859
Profit before tax 8,432 1,858
Taxation (1,133) (2)
Profit attributable to equity holders 7,299 1,856
2 Segmental Information (cont'd)
Six months ended Discontinued
30 June 2005 Continuing Operations Operations
Offshore Specialist Defence Marine Total Cable
Oil
Services Technical Oil Ships
Services Services
£000 £000 £000 £000 £000 £000
Revenue
Group revenue 7,103 10,343 5,181 22,480 45,107 4,821
Inter segment sales - (968) (11) - (979) -
Segmental revenue 7,103 9,375 5,170 22,480 44,128 4,821
Result
Segmental result before 1,850 1,130 515 3,440 6,935 2,351
separately disclosed items
Common costs (956)
Profit from operations before separately disclosed items and joint 5,979
ventures
Loss on ship disposals (1,449) -
Profit from operations before joint 4,530 2,351
ventures
Finance income (revenue) 180 -
Finance costs (1,355) -
Exchange loss on loan (93) -
conversion
(1,268) -
Share of post tax results of 57 582 639
joint ventures
Profit before tax 3,901 2,351
Taxation (753) (3)
Profit attributable to equity holders 3,148 2,348
2 Segmental Information
Year ended Discontinued
31 December 2005 Continuing Operations Operations
Offshore Specialist Defence Marine Total Cable
Oil
Services Technical Oil Ships
Services Services
£000 £000 £000 £000 £000 £000
Revenue
Group revenue 14,936 25,898 9,679 44,903 95,416 9,019
Inter segment sales (37) (3,622) (346) - (4,005) -
Segmental revenue 14,899 22,276 9,333 44,903 91,411 9,019
Result
Segmental result before separately 4,017 2,551 782 6,733 14,083 4,552
disclosed items
Common costs (2,016)
Profit from operations before separately disclosed items and joint ventures 12,067
Pension benefit curtailment 2,000 -
Impairment of non-current assets - (10,885)
Recognition of rentals due on sold ships - 3,395
Loss on ship disposals (1,617) (9,948)
Profit/(loss) from operations before joint ventures 12,450 (12,886)
Finance income (revenue) 304 -
Finance costs (2,591) -
Exchange loss on loan (130) -
conversion
(2,417) -
Share of post tax results of joint ventures 79 1334 1,413
Profit/(loss) before tax 11,446 (12,886)
Taxation (754) (3)
Profit/(loss) attributable to equity holders 10,692 (12,889)
3 Changes in estimates
There have been no material effects on the results of the interim period as a
result of changes in estimates reported in prior financial years.
There have been no material changes in contingent liabilities during the current
interim period.
The liabilities reported in respect of the defined benefit pension plans are
based on the valuations carried out at the last balance sheet date, 31 December
2005 and have been reviewed and updated by a qualified actuary.
4 Discontinued operations
Discontinued operations relate to the withdrawal of the Group from
cable laying activities announced in 2005. Following the disposal in 2005 of the
cable ship CS Oceanic Pearl, the remaining vessel, CS Oceanic Princess, was
reclassified as an asset held for sale in December 2005. This vessel was
disposed of in June 2006.
The results of discontinued operations are presented below:
Unaudited Unaudited Audited
six months ended six months ended Year ended
30 June 2006 30 June 2005 31 December 2005
£000 £000 £000
Revenue - 4,821 9,019
Cost of sales 97 (2,470) (4,467)
Gross profit 97 2,351 4,552
Profit/(loss) on ship disposals 1,761 - (9,948)
Recognition of rentals due on sold ship - - 3,395
Profit/(loss) from operations 1,858 2,351 (2,001)
Impairment of non-current assets - - (10,885)
Profit/(loss) before tax from discontinued 1,858 2,351 (12,886)
operations
Taxation (2) (3) (3)
Net profit/(loss) attributable to discontinued 1,856 2,348 (12,889)
operations
Non current assets held for sale
At 31 December 2005 this related to the carrying value of the CS
Oceanic Princess following the Group's decision to withdraw from Cable Laying
activities.
At 30 June 2005 this item comprised the carrying value of the Tees
Fisher and Wear Fisher which were disposed of in August 2005.
The net cash flows attributable to discontinued operations are:
Unaudited Unaudited Audited
six months ended six months ended Year ended
30 June 2006 30 June 2005 31 December 2005
£000 £000 £000
Operating cash flows 2,822 3,549 7,085
Investing cash flows 9,091 (1,111) 8,988
Financing activities (7,066) (1,963) (14,510)
4,847 475 1,563
Earnings/(loss) per share from discontinued operations (pence):
pence pence pence
Basic 3.79 4.82 (26.41)
Diluted 3.75 4.77 (26.41)
5 Separately disclosed items
Unaudited Unaudited Audited
Separately disclosed items consist of: six months ended six months ended Year ended
30 June 2006 30 June 2005 31 December 2005
£000 £000 £000
Pension benefit curtailment - - 2,000
Loss on ship disposals (24) (1,449) (1,617)
Exchange gain/(loss) on loan conversion 35 (93) (130)
11 (1,542) 253
The exchange differences on loans arise on foreign currency
financing loans in the UK in relation to the disposed ship.
Loss on ship disposals in the six months ended 30 June 2006 relates
to additional costs connected with the ships disposed of in 2005.
The pension benefit curtailment arises from the closure of the
Group's defined benefit pension scheme to existing members in 2010 and changes
to the contribution rates. Tax arising on this item amounted to £0.216m. There
is no tax effect relating to the other items included in separately disclosed
items.
6 Property plant and equipment
During the six months ended 30 June 2006 the Group acquired assets,
including investment in vessels with a cost of £2.160m (2005 £4.373m).
Assets with a net book value of £0.278m (excluding vessels) (2005
£0.110m), were disposed of resulting in a net gain on disposal of £0.185m (2005
£0.017m).
7 Deficit in defined benefit pension schemes
The Group operates two defined benefit schemes and has an obligation
to make payments in respect of the funding deficit of the Merchant Navy
Officers' Pension Fund. The decrease in the pension liability in the period
arises mainly from changes in the actuarial assumptions, in particular an
increase of 0.5% in the discount rate used for valuation of the defined benefit
schemes administered on behalf of the Group. In addition the company has made
special payments totalling £1.6m into the James Fisher & Sons Public Limited
Company Pension Fund for Shore Staff, as referred to in the Group's 2005 annual
report.
8 Share based payment
In March 2006 awards were granted under the Long Term Incentive Plan
(LTIP), and the 2005 Executive Share option scheme (ESOS).
In the case of the LTIP the exercise price of the option is £nil.
The options vest if the increase in the company's diluted earnings per ordinary
share over the performance period is at least equal to the rate of inflation
plus 9%. If the performance target is not met over the three year contractual
period for performance the option lapses.
In the case of the ESOS the exercise price is equal to the average
middle market price for the three dealing days prior to the date of grant, being
£4.68. The options vest depending on the Company's total shareholder return
relative to a comparator group of companies selected from the FTSE Small Cap
index at the date of grant. If performance over a three year period is in the
upper quartile 100% of the options will vest. If performance is at the bottom of
the median quartile 40% will vest. The amount vesting will decrease on a
straight line basis between the median and upper quartile. If performance is
below the median quartile no shares will vest. The options lapse if these
conditions are not met during the performance period.
The fair value of options granted during the six months ended 30 June 2006 was
estimated at the date of grant using the following assumptions:
LTIP ESOS
Dividend yield 2.00% 2.00%
Expected volatility N/A 24.2%-29.2%
Risk free interest rate N/A 4.41%
Expected life of option (years) 3 6.5
Share price at date of grant (£) 4.485 4.64
Options granted (number of shares) 66,742 124,573
Estimated fair value of option at date of grant (£) 4.22 1.039
9 Reconciliation of net debt
1 January Acquisitions Cash Other Exchange 30 June
2006 Flow Non Cash Movement 2006
£000 £000 £000 £000 £000 £000
Cash in hand and at bank 9,725 - 384 - (11) 10,098
Short term deposits - - - - - -
Cash and cash equivalents 9,725 - 384 - (11) 10,098
Debt due after 1 year (42,795) - - 12,055 - (30,740)
Debt due within 1 year (6,363) - 10,609 (12,055) 35 (7,774)
(49,158) - 10,609 - 35 (38,514)
Net debt (39,433) - 10,993 - 24 (28,416)
1 January Acquisitions Cash Other Exchange 30 June
2005 Flow Non Cash Movement 2005
£000 £000 £000 £000 £000 £000
Cash in hand and at bank 8,045 - (2,144) - (26) 5,875
Short term deposits 2,000 - (2,000) - - -
Cash and cash equivalents 10,045 - (4,144) - (26) 5,875
Debt due after 1 year (38,572) - - (2,738) (46) (41,356)
Debt due within 1 year (8,179) (1,300) (4,750) 2,738 (47) (11,538)
(46,751) (1,300) (4,750) - (93) (52,894)
Net debt (36,706) (1,300) (8,894) - (119) (47,019)
10 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: Unaudited Unaudited Audited
six months ended six months ended Year ended
30 June 2006 30 June 2005 31 December 2005
£000 £000 £000
Current tax:
UK tonnage tax (13) (11) (24)
UK corporation tax (580) (436) (514)
(593) (447) (538)
Tax (under)/over provided in previous years (118) (44) 327
Foreign tax (469) (260) (567)
Total current tax (1,180) (751) (778)
Deferred tax:
Group deferred tax 45 (5) 21
Total taxation expense included in group income (1,135) (756) (757)
statement
Share of joint ventures' current tax (40) (36) (72)
The total tax charge in the income statement is allocated as follows:
Unaudited Unaudited Audited
six months ended six months ended Year ended
30 June 2006 30 June 2005 31 December 2005
£000 £000 £000
Taxation expense reported in group income statement (1,133) (753) (754)
Taxation attributable to discontinued activities (2) (3) (3)
Total tax expense (1,135) (756) (757)
Deferred income tax
The gross movement on the deferred income tax account is as
follows:
Unaudited Unaudited Audited
six months ended six months ended Year ended
30 June 2006 30 June 2005 31 December 2005
£000 £000 £000
Balance at 1 January 1,197 1,391 1,391
Included in statement of recognised income and expense (1,054) 780 123
Credited/(charged) to income statement 45 (5) 21
Exchange differences (1) - -
Acquired with subsidiaries - (341) (338)
Balance at period end 187 1,825 1,197
At 30 June 2006 the group has no recognised or unrecognised deferred
income tax liability (2005 £nil) in respect of taxes that would be payable on
the unremitted earnings of certain of the group's subsidiaries and joint
ventures. The group has no liability to additional taxation should such amounts
be remitted due to the availability of double taxation relief.
11 Share Capital
During the interim period 110,423 ordinary shares of 25p were
allotted on the exercise of share options for an aggregate cash consideration of
£0.149m.
12 Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the company by the weighted average number of
ordinary shares in issue during the period, after excluding ordinary shares
purchased by the employee share ownership trust and held as treasury shares.
Diluted earnings per share is 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 are based on the
following profits and numbers of shares:
six months ended six months ended Year ended
30 June 2006 30 June 2005 31 December 2005
£000 £000 £000
Profit/(loss) attributable to equity 9,155 5,496 (2,197)
holders
(Profit)/loss attributable to discontinued (1,856) (2,348) 12,889
activities
Profit on continuing activities attributable to 7,299 3,148 10,692
equity holders
Weighted average number of shares
30 June 2006 30 June 2005 31 December 2005
Number of Number of Number of
shares shares shares
For basic earnings per ordinary share* 49,017,748 48,725,767 48,797,076
Exercise of share options and LTIPs+ 427,898 463,183 430,920
For diluted earnings per ordinary share 49,445,646 49,188,950 49,227,996
* Excludes 395,657 (2005 510,237) shares owned by the James Fisher and
Sons Public Limited Company Employee Share Ownership Trust.
+ Share options and LTIPs have been excluded from the calculation of
diluted earnings per share for the year ended 31 December 2005 as they are
antidilutive, but have been included in the calculation of diluted earnings per
ordinary share on continuing activities.
30 June 2006 30 June 2005 31 December 2005
£000 p £000 p £000 p
Basic earnings/(loss) per share on
total operations 9,155 18.68 5,496 11.28 (2,197) (4.50)
(Profit)/loss attributable to
discontinued activities (1,856) (3.79) (2,348) (4.82) 12,889 26.41
Basic earnings per share on profit
on continuing operations 7,299 14.89 3,148 6.46 10,692 21.91
Diluted earnings per share 9,155 18.52 5,496 11.17 (2,197) (4.50)
Diluted earnings per share on
profit on continuing operations 7,299 14.76 3,148 6.40 10,692 21.72
The earnings per ordinary share on continuing operations 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.
30 June 2006 30 June 2005 31 December 2005
£000 p £000 p £000 p
Basic earnings per share on profit
on continuing operations 7,299 14.89 3,148 6.46 10,692 21.91
Adjustments:
Exchange (gain)/loss on loan (35) (0.07) 93 0.19 130 0.27
conversion
Loss on ship disposals 24 0.05 1,449 2.98 1,617 3.31
Pension benefit curtailment
(including tax effect of £216,000) - - - - (1,784) (3.65)
Adjusted basic earnings per share
on profit on continuing operations 7,288 14.87 4,690 9.63 10,655 21.84
Diluted earnings per share on
profit on continuing operations 7,299 14.76 3,148 6.40 10,692 21.72
Adjustments:
Exchange (gain)/loss on loan (35) (0.07) 93 0.19 130 0.26
conversion
Loss on ship disposals 24 0.05 1,449 2.95 1,617 3.28
Pension benefit curtailment
(including tax effect of £216,000) - - - - (1,784) (3.62)
Adjusted diluted earnings per share
on profit on continuing operations 7,288 14.74 4,690 9.54 10,655 21.64
13 Reconciliation of movements in equity
For the six months ended 30 June 2006
Capital Reserves
Share Share retained Other Treasury Total
capital premium earnings reserves shares
£000 £000 £000 £000 £000 £000
At 1 January 2006 12,345 23,960 38,030 178 (1,184) 73,329
Total recognised income and - - 13,432 48 - 13,480
expense in the period
Ordinary dividends paid - - (2,796) - - (2,796)
Share-based compensation - - 263 - - 263
expense
Arising on the issue of 28 121 - - - 149
shares
Purchase less sale of shares - - - - (233) (233)
Transfer on disposal of - - (263) - 263 -
shares
At 30 June 2006 12,373 24,081 48,666 226 (1,154) 84,192
Other reserves Translation Hedging Total
reserve reserve
£000 £000 £000
At 1 January 2006 212 (34) 178
Cash flow hedges:
Transferred to the income statement - (4) (4)
Fair value losses in the - 52 52
period
Share of fair value gains of joint - (17) (17)
ventures
Recognised income in the period including the effect of net 17 - 17
investment hedges
At 30 June 2006 229 (3) 226
For the six months ended 30 June 2005
Capital Reserves
Share Share retained Other Treasury Total
capital premium earnings reserves shares
£000 £000 £000 £000 £000 £000
At 1 January 2005 12,305 23,810 48,151 72 (1,212) 83,126
Total recognised income and - - 2,206 (293) - 1,913
expense in the period
Ordinary dividends paid - - (2,412) - - (2,412)
Share-based compensation - - 201 - - 201
expense
Arising on the issue of 40 150 - - - 190
shares
Transfer on disposal of - - (96) - 96 -
shares
At 30 June 2005 12,345 23,960 48,050 (221) (1,116) 83,018
Other reserves Translation Hedging Total
reserve reserve
£000 £000 £000
At 1 January 2005 177 (105) 72
Cash flow hedges:
Transferred to the income statement - (40) (40)
Fair value losses in the - (163) (163)
period
Share of fair value losses of joint - (67) (67)
ventures
Recognised income in the period including the effect of net investment (23) - (23)
hedges
At 30 June 2005 154 (375) (221)
For the year ended 31 December 2005
Capital Reserves
Share Share retained Other Treasury Total
capital premium earnings reserves shares
£000 £000 £000 £000 £000 £000
At 1 January 2005 12,305 23,810 48,151 72 (1,212) 83,126
Total recognised income and - - (6,605) 106 - (6,499)
expense in the period
Ordinary dividends paid - - (3,927) - - (3,927)
Share-based compensation - - 432 - - 432
expense
Purchase less sale of shares - - - - 7 7
Arising on the issue of 40 150 - - - 190
shares
Transfer on disposal of - - (21) - 21 -
shares
At 31 December 2005 12,345 23,960 38,030 178 (1,184) 73,329
Other reserves Translation Hedging Total
reserve reserve
£000 £000 £000
At 1 January 2005 177 (105) 72
Cash flow hedges:
Transferred to the income statement - 36 36
Fair value losses in the period - (134) (134)
Share of fair value gains of joint ventures - 169 169
Recognised income in the period including the effect of net investment 35 - 35
hedges
At 31 December 2005 212 (34) 178
14 Interim Dividend
A dividend for the six months ended 30 June 2006 on the preference shares was
declared on 30 June 2006. The interim dividend of 3.47p (2005 3.10p) per 25p
ordinary share is payable on 1 November 2006 to those shareholders on the
register of the company at the close of business on 9 October 2006. The dividend
recognised in the reconciliation of movements in equity in note 13 is the final
dividend for 2005 of 5.69p paid on 12 May 2006. The proposed interim dividend
has not been recognised in this report.
15 Interim Report
The interim report is to be sent to all shareholders in early
September. 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 2006 which comprises Group Income Statement, Group
Statement of Recognised Income and Expense, Group Balance Sheet and Group Cash
Flow Statement, and the related notes 1 to 15. 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.
This report is made solely to the company in accordance with guidance contained
in Bulletin 1999/4 'Review of interim financial information' issued by the
Auditing Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company, for our work,
for this report, or for the conclusions we have formed.
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
'Review of interim financial information' 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 International Standards on Auditing (UK and Ireland) 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 2006.
Ernst & Young LLP
Manchester
29th August 2006
This information is provided by RNS
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