Interim Results

Fisher (James) & Sons PLC 29 August 2007 29 August 2007 James Fisher and Sons plc (James Fisher) Interim Results 2007 James Fisher, the UK marine services provider, announces interim results for the period ended 30 June 2007. 2007 2006 Half year Half year Revenue (Â£m)* Â£88.5m Â£57.0m Profit from operations (Â£m)* Â£10.8m Â£8.7m Profit before tax (Â£m)* Â£9.5m Â£8.4m Adjusted basic earnings per share (pence)* 16.20p 14.87p Dividend (pence) 3.89p 3.47p * profit from continuing operations after charging Â£800,000 of merger costs, before separately disclosed items Highlights â€¢ Strong organic growth in the three marine support services divisions â€¢ Successful integration of FT Everard with Â£14.5 million revenue contribution and Â£800,000 one-off merger costs charged against profit â€¢ Operating profit up 26% in Offshore Oil Services; strong performance from both Norwegian and Aberdeen operations â€¢ Specialist Technical Services grew operating profit by 35%, driven by the excellent performance of FenderCare and the acquisition of The Strainstall Group Limited â€¢ The 22% increase in operating profit in the Defence division resulted primarily from small to medium sized submarine rescue projects Commenting on the results, Chairman, Tim Harris, said: 'The result for the first half was encouraging with strong organic growth in the three marine support services divisions. We are also pleased to report that the integration of FT Everard has now been substantially completed. 'The first half result confirms that the Group continues to be well placed to produce improved profits and growth in shareholder value.' For further information: James Fisher and Sons plc Tim Harris, Chairman 020 7614 9508 Nick Henry, Chief Executive Officer www.james-fisher.co.uk Michael Shields, Group Finance Director Financial Dynamics Richard Mountain/Susanne Yule 020 7269 7121 James Fisher and Sons plc (James Fisher) Interim Results for the six months ended 30 June 2007 Introduction The result for the first half was encouraging and saw strong growth in the three marine support services divisions of offshore oil, specialist technical and defence. Revenues from continuing operations, before separately disclosed items, were Â£88.5 million, up 55% (2006: Â£57.0 million), of which F T Everard contributed Â£14.5 million. Operating profit on continuing operations before separately disclosed items increased by 24% to Â£10.8 million (2006: Â£8.7 million) and profit before tax on the same basis was up 13% to Â£9.5 million (2006: Â£8.4 million), despite charging against profit at least Â£800,000 of one-off costs relating to the F T Everard merger. This means that underlying pre-tax profit was up by 23% when allowance is made for these merger costs. Adjusted basic earnings per share after charging Â£800,000 of merger costs were 16.20p, an increase of 9% (2006: 14.87p) or 17.83p, an increase of 20% after adding back the Â£800,000 of merger costs. Net debt at the end of the period was Â£64.5 million, compared with Â£74.0 million at the end of December 2006. Financial gearing was reduced from 86% at the year-end to 69% at 30 June 2007, primarily owing to the refinancing of the first three Everard newbuilds. The Board proposes to pay an interim dividend of 3.89p, an increase of 12%. The dividend will be paid on 1 November 2007 to shareholders on the register at 5 October 2007. Marine Oil Services divisional result Â£3.8 million (2006 - Â£3.4 million) Progress on the Everard merger The integration of F T Everard and Sons Limited with James Fisher Tankships (JFT) has been the priority for the first half and has gone according to plan. The integration is now substantially complete with a single commercial department in London, a unified fleet management in Barrow and the ships now running according to a single operating system. One-off integration costs of at least Â£800,000 have been incurred, of which the most significant has been redundancies, and they have been charged against profit in the first half. The basic integration has now been achieved and the initial savings made. There remains a further opportunity to improve profitability significantly by steady management over time to improve the productivity of the enlarged James Fisher Everard fleet. We have sold an Everard non core business - Ships Electronic Services Limited - to its management at its net asset value of Â£396,000. The third Everard newbuild, mt Superiority, has been delivered and entered service in April 2007. Delivery of the fourth and final Everard newbuild, mt Supremity, is expected to be delivered by the yard in September 2007. As planned we raised Â£22.6 million in June by re-financing the first three Everard newbuilds as bareboat charters and we have the option to re-finance mt Supremity in the same way. We have also recently agreed terms to sell the 17 year old, single hulled mt Agility and mt Alacrity for US$3 million each, for delivery in September 2007 and January 2008. When completed, these two sales should result in a book profit of in excess of Â£1 million. They are being replaced by two time chartered vessels mt Vedrey Tora and mt Vedrey Thor which came with the Everard acquisition. The merged James Fisher Everard fleet of thirty ships will be one of the youngest and most cost effective in the coastal tanker field. Offshore Oil Services divisional result Â£4.4 million (2006 - Â£3.5 million) At Â£4.4 million, profits were up by 26% over H1 2006 with both the Norwegian and Aberdeen operations performing strongly. Organic growth again was the key to the result and it was pleasing to see a further slight improvement in margins. The underlying market conditions in both sectors of the North Sea remain strong and prospects remain favourable. We have benefited from the acquisitions of Gjerde Lofteteknikk AS in Norway which was bought for Â£644,400 in November 2006 and Buchan Technical Services Limited for net cash of Â£3.4 million in May 2007. Gjerde provides specialist equipment to customers in the Norwegian and UK sector of the North Sea, designing and customising lifting equipment and cranes for sale and rental to the offshore rig and subsea market. Buchan is a market leader in the design and rental of centrifugal pumps, hydraulic power packs and umbilical cords and reels, to the oil & gas majors. Both are complementary to our existing services and have now been integrated. We continue to invest in new equipment where the demand from our customers requires it in both Scotland and Norway. Specialist Technical Services divisional result Â£3.2 million (2006 - Â£2.4 million) Profits were up by 35% for H1 2007 at Â£3.2 million with organic growth and the acquisition of The Strainstall Group Limited in October 2006 the main causes. Margins remained steady against the full year 2006 but slightly down against H1 2006 owing to a change of mix and the start-up of James Fisher Inspection and Measurement Services. FenderCare put in another excellent performance. It is the world market leader in ship to ship transfer of oil. Its ports' products services also did well, enjoying the benefits of a strong market. In the product area, FenderCare enjoys common marketing with the Strainstall Group whose expertise is based on strain gauges rather than the various applications of fenders. Strainstall has settled well into James Fisher, with a continuity of management which enabled it to produce a better than expected result in H1 2007. Its initial earn out payment of Â£1.25 million was made in March 2007. In July 2007 we added to our nuclear capabilities by acquiring Inspection Holdings Limited, whose main operating subsidiary is NDT Inspection and Testing Ltd, for up to Â£2.1 million. NDT will be merged with our start-up James Fisher Inspection and Measurement Services and the combined entity should be well placed in the fast growing non destructive testing market. James Fisher Nuclear produced a similar result in H1 2007 to 2006 but now, with its defined remote handling and plant characterisation, is better placed to grow than it was a year ago. We have recently expanded significantly the international sales capability of Remote Marine Systems (RMS) and for this reason its profit was slightly down in H1 2007 against the previous year. RMS has an excellent product range and reputation and we are actively seeking to expand it further. Defence divisional result including Foreland joint venture Â£1.5 million (2006 - Â£1.2 million) At Â£1.5 million James Fisher Defence's profit was 22% up on H1 2006 with improved margins too. This improvement came primarily from small to medium sized submarine rescue projects, not from the new Singapore and Korean projects. These remain on schedule and according to plan but for reasons of prudence we have not yet booked any profit. Further delays in the delivery of the new NATO system have meant that our contract for operating the UK's own LR5 submarine rescue system has been extended well into next year. We are actively following a number of leads for the exploitation of LR5 when she is finally made available by the Royal Navy. As regards the surface ship market, we continue to pursue a number of opportunities. Recently we won a contract from the UK branch of the Bremen based shipyard, Fr Lurssen Werft GmbH & Co KG, to look after three offshore patrol vessels built by BAe. People Now that the merger of the James Fisher and FT Everard fleets to create the new united James Fisher Everard has been successfully completed, William Everard has decided to step down from the board as Fleet Director. I would like to thank William for his great contribution in bringing this merger about quickly and effectively. William will continue to represent the Company on a number of industry bodies. James Fisher now employs more than one thousand people, principally in the UK and Norway with a few but increasing number in the Middle and Far East. It is committed to its headquarters in Barrow-in-Furness which it intends to develop until it is recognised as one of the key centres of ship management excellence in the UK. The location has advantages in terms of stability and competitive cost but it is sometimes a challenge to persuade people from the South to move there although when they do they seldom leave. We have many talented and hardworking people in all our operations and I would like to thank them for helping produce the encouraging first half result. The financial position of the Company's own pension schemes has improved to the extent that they are in surplus or approaching it after the action taken in the last few years and the recent rise in both interest rates and investment returns. The present main area of focus is on the industry MNOPF scheme for officers which is less easy to influence because it is an industry wide scheme. James Fisher is actively promoting change through The Chamber of Shipping which is the relevant industry body. Strategy for the Future James Fisher's core expertise is the practical application of engineering and operational skills in the marine sector. Following the UK's exit from commercial shipbuilding in the 1970s and the more recent disappearance of the major British owned shipping companies such as P & O, these skills are rare and becoming actively sought in a climate of increased regulation and rising standards on environmental and safety issues. James Fisher's strategy is to use the marine service skills and cash flow from its marine oil operation, James Fisher Everard, to develop its fast-growing marine support services divisions of offshore oil, specialist technical and defence, by acquisition and subsequently by organic growth. The focus is on a number of key areas which share certain characteristics - consistency with James Fisher's marine service skills, niches with strong market shares, real customer relationships preferably with blue chip customers, good margins and returns on capital and, importantly, continuity of management who know what they are doing. The track record over the last five years suggests that the formula works and we shall continue to employ it. Outlook At present, almost all the constituent parts of James Fisher's marine support service divisions share two characteristics - they are good businesses in industries enjoying strong demand. Our intention, as always, will be to add to this underlying growth by making further acquisitions which either strengthen our market positions or complement them. As far as marine oil services are concerned, the Everard merger is now substantially complete and the costs incurred have been expensed against H1 2007 profit. It remains to draw the full synergies in terms of improved profitability whilst continuing to provide a first rate and reliable service to our customers. Growing profitability from marine oil services will have the added advantage of helping to keep James Fisher's overall tax charge down as shipping profits are effectively tax free under the tonnage tax regime. The first half result confirms that your Company continues to be well placed to produce improved profits and growth in shareholder value. GROUP INCOME STATEMENT For the six months ended 30 June 2007 Unaudited Unaudited Audited Notes 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Before Separately Before Separately separately disclosed separately disclosed disclosed items disclosed items items note 5 Total items note 5 Total Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Continuing Operations Group revenue 88,517 88,517 57,010 57,010 118,085 Cost of sales (74,841) (74,841) (45,515) (45,515) (96,438) Gross profit 13,676 13,676 11,495 11,495 21,647 Administrative expenses (2,839) (2,839) (2,793) (2,793) (5,756) Profit from operations before 10,837 10,837 8,702 8,702 15,891 separately disclosed items Profit on Sale of property - - - - - - 1,126 Impairment of ship - - - - - - (2,906) Loss on ship disposals - (104) (104) - (24) (24) (24) Profit from operations 10,837 (104) 10,733 8,702 (24) 8,678 14,087 Finance costs Finance income (revenue) 133 - 133 159 - 159 316 Finance costs (2,546) - (2,546) (1,299) - (1,299) (2,586) Exchange (loss)/gain on loan - (113) (113) - 35 35 35 conversion (2,413) (113) (2,526) (1,140) 35 (1,105) (2,235) Share of post tax results of 1,113 - 1,113 859 - 859 2,295 joint ventures Profit on continuing operations 2 9,537 (217) 9,320 8,421 11 8,432 14,147 before taxation Taxation (including overseas 10 (1,543) - (1,543) (1,133) - (1,133) (2,411) taxation of Â£782,000; 2006 Â£469,000 ) Profit on continuing operations 7,994 (217) 7,777 7,288 11 7,299 11,736 Discontinued operations Profit from discontinued 4 - 1,856 2,041 operations Profit for the period 7,777 9,155 13,777 Profit attributable to : Equity holders of the parent 7,751 9,155 13,780 Minority interests 26 - (3) 7,777 9,155 13,777 Earnings per share (EPS) pence pence pence Basic EPS from continuing 12 15.76 14.89 23.93 operations Diluted EPS from continuing 12 15.60 14.76 23.71 operations Basic EPS on profit from total 12 15.76 18.68 28.09 operations Diluted EPS on profit from total 12 15.60 18.52 27.83 operations Adjusted Earnings per share Basic EPS from continuing 12 16.20 14.87 28.30 operations Diluted EPS from continuing 12 16.03 14.74 28.05 operations Dividends Paid or approved by shareholders in the period Final dividend 6.54 5.69 5.69 Interim dividend - - 3.47 6.54 5.69 9.16 Proposed but not accrued Final dividend - - 6.54 Interim dividend 3.89 3.47 - 3.89 3.47 6.54 GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE For the six months ended 30 June 2007 Unaudited Unaudited Audited Note 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Â£000 Â£000 Â£000 Income and expense recognised directly in equity Exchange differences on translation of foreign operations: Currency translation differences 472 (130) 189 Net investment hedge (256) 147 (571) 216 17 (382) Fair value of gains on cash flow hedges - 52 62 Share of fair value (losses)/gains of cash flow hedges in (29) (17) 39 joint venture Actuarial gains on defined benefit schemes 7 2,169 5,331 4,143 2,356 5,383 3,862 Transfers to the income statement On cash flow hedges 8 (4) 7 Tax on items taken directly to equity 10 (483) (1,054) (772) Net income recognised directly in equity 1,881 4,325 3,097 Profit for the period 7,777 9,155 13,777 Total recognised income for the period 13 9,658 13,480 16,874 Attributable to : Equity holders of the parent 9,632 13,480 16,877 Minority interests 26 - (3) 9,658 13,480 16,874 GROUP BALANCE SHEET At 30 June 2007 Unaudited Unaudited Audited 30 June 2007 30 June 2006 31 December 2006 Note Â£000 Â£000 Â£000 Assets Non current assets Goodwill 58,686 36,205 55,773 Other Intangible assets 58 - 60 Property, plant and equipment 83,780 66,236 102,629 Investment in joint ventures 3,982 3,406 3,575 Available for sale financial assets 1,370 1,368 1,370 Deferred tax assets - 187 - Retirement benefit assets 7 612 - - 148,488 107,402 163,407 Current assets Inventories 14,037 6,673 11,317 Trade and other receivables 41,038 23,913 32,897 Derivative financial instruments - 77 17 Cash and short term deposits 9 7,393 10,098 9,655 62,468 40,761 53,886 Non-current assets classified as held for 4 1,112 - 1,518 sale Total assets 212,068 148,163 218,811 Equity and Liabilities Capital and reserves Called up share capital 13 12,382 12,373 12,377 Share premium 13 24,133 24,081 24,114 Treasury shares 13 (1,134) (1,154) (1,147) Other reserves 13 99 226 (96) Retained earnings 13 57,176 48,666 50,932 Shareholders' Equity 92,656 84,192 86,180 Minority interests 97 - 71 Total equity 92,753 84,192 86,251 Non current liabilities Other payables 1,314 963 1,610 Retirement benefit obligations 7 6,833 5,912 10,049 Cumulative preference shares 100 100 100 Financial liabilities 64,036 30,640 72,449 Deferred tax liabilities 2,654 - 1,987 74,937 37,615 86,195 Current liabilities Trade and other payables 35,145 16,936 33,959 Current tax 1,407 1,616 1,207 Derivative financial instruments 28 30 55 Financial liabilities 7,798 7,774 11,144 44,378 26,356 46,365 Total liabilities 119,315 63,971 132,560 Total equity and liabilities 212,068 148,163 218,811 GROUP CASH FLOW STATEMENT For the six months ended 30 June 2007 Unaudited Unaudited Audited 6 months ended 6 months ended Year ended Note 30 June 2007 30 June 2006 31 December 2006 Â£000 Â£000 Â£000 Group profit from operations 10,733 8,678 14,087 Adjustments to reconcile Group operating profit to net cash inflows from operating activities Profit from discontinued operations - 1,858 2,042 Adjustments for: Depreciation 4,262 2,773 5,661 Profit on sale of property, plant and (491) (185) (377) equipment Profit on disposal of property - - (1,126) Impairment of non - current assets - - 2,906 Loss/(profit) on ship disposals 104 (1,737) (1,912) Increase in trade and other receivables (8,593) (3,035) (3,309) Increase in inventories (3,034) (910) (2,025) Increase in trade and other payables 6,465 2,584 2,553 Additional defined benefit pension scheme contributions (1,673) (2,418) (2,979) Share based compensation 306 263 516 Cash generated from operations 8,079 7,871 16,037 Income tax payments (1,340) (539) (1,481) Cash flow from operating activities 6,739 7,332 14,556 Investing activities Dividends from joint venture undertakings 700 - 1,275 Proceeds from the sale of property, plant and equipment 24,878 9,897 12,255 Proceeds from the sale of subsidiary 494 - - Interest received 135 163 320 Acquisition of subsidiaries, net of cash (7,198) (27) (22,151) acquired Acquisition of property, plant and equipment (9,402) (2,119) (7,424) Acquisition of investment in joint ventures (27) - - Acquisition of available for sale financial - - (1) asset Cash flows from/(used in) investing activities 9,580 7,914 (15,726) Financing activities Proceeds from the issue of share capital 24 149 170 Preference dividend paid (2) (2) (3) Interest paid (2,784) (1,371) (2,807) Proceeds from other non-current borrowings 12,102 309 28,912 Purchase less sales of own shares by ESOP (274) (233) (229) Capital element of finance lease repayments (42) - (7) Repayment of borrowings (24,461) (10,918) (20,362) Dividends paid (3,212) (2,796) (4,499) Cash flows (used in)/ from financing activities (18,649) (14,862) 1,175 Net (decrease)/increase in cash and cash equivalents (2,330) 384 5 Cash and cash equivalents at beginning of 9,655 9,725 9,725 period Net foreign exchange difference 68 (11) (75) Cash and cash equivalents at end of period 9 7,393 10,098 9,655 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 2007. The interim financial information is presented in Sterling and all values are rounded to the nearest thousand pounds (Â£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 28 August 2007. 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 2006. The financial information for the preceding year is based on the statutory accounts for the year ended 31 December 2006. These accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. 1 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 2006 except for the adoption of new standards and interpretation noted below. Other than as stated below none of these interpretations had any effect on the financial position or performance of the Group. IFRIC 14 IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction. This deals with the availability of refunds or reductions in future contributions where a defined benefit asset arises in the financial statements of an entity. This interpretation has been applied in determining the defined benefit asset included in the Group's accounts as set out in note 7. IFRS 7 Financial instruments: disclosures. This introduces additional and revised disclosure requirements in relation to the significance of financial instruments to an entity's financial position and performance. 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 2007 and 2006 and the year ended 31 December 2006. Six months ended Discontinued 30 June 2007 Continuing Operations Operations Offshore Specialist Defence Marine Total Cable Oil Technical Oil Ships Services Services Services Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Revenue Segmental revenue 12,877 33,146 5,505 38,546 90,074 - Inter segment sales - (1,528) (29) - (1,557) - Group revenue 12,877 31,618 5,476 38,546 88,517 - Result Segment result 4,357 3,011 621 3,843 11,832 - Common costs (995) Profit from operations before separately disclosed 10,837 items Loss on ship disposals (104) - Profit from operations 10,733 - Finance income 133 - (revenue) Finance costs (2,546) - Exchange loss on loan conversion (113) - (2,526) - Share of post tax results of joint 224 889 1,113 ventures Profit before tax 9,320 - Taxation (1,543) - Profit attributable to equity 7,777 - holders 2 Segmental information (continued) Six months ended Discontinued 30 June 2006 Continuing Operations Operations Offshore Specialist Defence Marine Total Cable Oil Technical Oil Ships Services Services Services Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Revenue Segmental revenue 11,315 19,176 5,557 22,722 58,770 - Inter segment sales - (1,619) (141) - (1,760) - Group revenue 11,315 17,557 5,416 22,722 57,010 - Result Segment result 3,460 2,275 495 3,450 9,680 97 Common costs (978) Profit from operations before separately disclosed 8,702 items (Loss)/profit on ship disposals (24) 1,761 Profit from operations 8,678 1,858 Finance income 159 - (revenue) Finance costs (1,299) - Exchange gain on loan conversion 35 - (1,105) - Share of post tax results of joint 116 743 859 ventures Profit before tax 8,432 1,858 Taxation (1,133) (2) Profit attributable to equity 7,299 1,856 holders 2 Segmental information (continued) Year ended Discontinued 31 December 2006 Continuing Operations Operations Offshore Specialist Defence Marine Total Cable Oil Technical Oil Ships Services Services Services Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Revenue Segmental revenue 21,977 42,282 11,197 45,937 121,393 - Inter segment sales - (3,217) (91) - (3,308) - Group revenue 21,977 39,065 11,106 45,937 118,085 - Result Segment result 7,320 3,919 1,024 5,819 18,082 106 Common costs (2,191) Profit from operations before separately disclosed 15,891 items Profit on sale of 1,126 - property Impairment of non-current assets (2,906) - (Loss)/profit on ship disposals (24) 1,936 Profit from operations 14,087 2,042 Finance income 316 - (revenue) Finance costs (2,586) - Exchange loss on loan conversion 35 - (2,235) - Share of post tax results of joint 346 1,949 2,295 ventures Profit before tax 14,147 2,042 Taxation (2,411) (1) Profit attributable to equity 11,736 2,041 holders 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 interim valuations carried out at the last balance sheet date, 31 December 2006 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 disposed of in June 2006. The results of discontinued operations are presented below: Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Â£000 Â£000 Â£000 Revenue - - - Cost of sales - 97 106 Gross profit - 97 106 Profit on ship disposals - 1,761 1,936 Profit before tax from discontinued operations - 1,858 2,042 Taxation - (2) (1) Net profit attributable to discontinued - 1,856 2,041 operations Non current assets held for sale At 30 June 2007 this related to the carrying value of the mt Alacrity and mt Agility for which the Group agreed the terms of disposal in July 2007. These vessels are held at their current book value, this being less than the expected net disposal proceeds. At 31 December 2006 this related to the vessels mt Allurity and mt Arduity which were disposed of by the Group in January 2007. The vessels are stated at their fair value less costs to sell. The net cash flows attributable to discontinued operations are: Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Â£000 Â£000 Â£000 Operating cash flows (47) 2,822 3,366 Investing cash flows - 9,091 9,357 Financing activities 39 (7,066) (6,933) (8) 4,847 5,790 Earnings per share from discontinued operations: pence pence pence Basic - 3.79 4.16 Diluted - 3.76 4.12 5 Separately disclosed items Unaudited Unaudited Audited Separately disclosed items consist of: 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Â£000 Â£000 Â£000 Profit on sale of property - - 1,126 Impairment of ships - - (2,906) Loss on ship disposals (104) (24) (24) Exchange (loss)/gain on loan conversion (113) 35 35 (217) 11 (1,769) On 1 December 2006 the Group disposed of an industrial property at Bridge of Don for a gross consideration of Â£2,200,000. The loss on ship disposals in the six months ended 30 June 2007 relates to the disposal of the Group's interest in mt Seniority, mt Speciality and mt Superiority following the refinancing exercise undertaken in June 2007, together with the disposal of mt Allurity and mt Arduity in January 2007. The refinancing exercise involved the disposal of the three vessels to FSL Trust Management Pte Ltd for a consideration of Â£26,403,000 the proceeds of which were used to repay existing debt. The vessels have subsequently been chartered by the Group on bareboat charters for an initial period of ten years. The 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 exchange differences on loans arise on foreign currency financing loans in the UK in relation to vessels disposed of in 2007 and 2006. 6 Property plant and equipment During the six months ended 30 June 2007 the Group acquired assets, including investment in vessels with a cost of Â£9,005,000 (June 2006 Â£2,160,000). Included in 2007 is Â£3,382,000 in relation to mt Superiority which was included in the refinancing transaction referred to in note 5. Assets with a net book value of Â£387,000 (excluding vessels) (June 2006 Â£278,000), were disposed of resulting in a net gain on disposal of Â£491,000 (2006 Â£185,000). 7 Deficit in defined benefit pension schemes The Group operates three 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 0.7% in the discount rate used for valuation of the defined benefit schemes administered on behalf of the group. As a result of this and improved returns on the scheme's assets, two of the Group's schemes, the Shore staff scheme and the F T Everard scheme are now in surplus. The Group has recognised an asset of Â£612,000 in respect of surplus in the Shore staff scheme. This is the amount recoverable from the scheme by the Group through reduced contributions and represents the value of employers service costs over the remaining period until accrual ceases in 2010. No element of surplus has been recognised relating to the FT Everard scheme as this is already closed to future accrual. The actuarial gains reported in the Group statement of recognised income and expense, (SORIE), have been limited due to the restriction of the Group to recognising as an asset only that element of the surpluses which it considers to be recoverable. Had the entire surplus on these schemes been recognised by the Group an additional Â£2,724,000, before the application of deferred tax, would have been recognised in the SORIE. In 2006 the company made special payments totalling Â£1,600,000 into the James Fisher & Sons Public Limited Company Pension Fund for Shore Staff. 8 Share based payment In March 2007 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 Â£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 Â£6.30. The options vest depending on the company's total shareholder return relative to a comparator group of companies comprising the constituents of the FTSE Small Cap index (excluding investment trusts) 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, (second) 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. Following the passing of a resolution at the 2007 Annual General Meeting, the comparator Group for awards made under the ESOS in 2005 and 2006 was extended from the original selected comparator Group to comprise all the constituents of the FTSE Small Cap index. In accordance with the requirements of IFRS 2 - Share based payment, this has been treated as a modification to the original grant of options and the fair values of the options granted under these awards have therefore been recalculated. Details of the changes in fair value of these grants are shown below. In January 2007 an award was made under the All-employee Savings Related Share Option Scheme (SAYE). All employees, subject to the discretion of the remuneration committee, may apply for share options under an employee save as you earn plan which may from time to time be offered by the company. In order to comply with HM Revenue and Customs requirements an individual's participation is limited so that the aggregate price payable for shares under option at any time does not exceed the statutory limit. Options granted under the plans will normally be exercisable if the employee remains in employment and any other conditions set by the remuneration committee have been satisfied. Options are normally exercisable at the end of the related savings contract but early exercise is permitted in certain limited circumstances. The performance period will not normally be less than three and a half years or greater than seven and a half years. The fair value of options granted during the six months ended 30 June 2007 was estimated at the date of grant using the following assumptions: LTIP ESOS SAYE Dividend yield 1.80% 1.80% 1.90% Expected volatility N/A 28% 26%-30% Risk free interest rate N/A N/A 5.10% Expected life of option (years) 3 6.5 3.26 -7.26 Share price at date of grant (Â£) 5.85 5.85 6.18 Options granted (number of shares) 80,200 131,038 154,448 Estimated fair value of option at date of grant (Â£) 5.54 1.49 1.52 - 2.23 The modifications to the awards under the 2005 ESOS made in 2005 and 2006 resulted in incremental increases in the fair value per share as follows: Award date Modification Number of Incremental date options increase in granted fair value per share Â£ 22 June 2005 3 May 2007 217,956 0.06 23 March 2006 3 May 2007 124,573 0.03 9 Reconciliation of net debt 1 January Acquisitions Cash Other Exchange 30 June 2007 Flow Non Cash Movement 2007 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Cash in hand and at bank 9,655 - (2,330) - 68 7,393 Short term deposits - - - - - - Cash and cash 9,655 - (2,330) - 68 7,393 equivalents Debt due after 1 year (72,256) - - 8,383 - (63,873) Debt due within 1 year (11,069) - 12,359 (8,912) (113) (7,735) (83,325) - 12,359 (529) (113) (71,608) Finance leases (368) - 42 - - (326) Net debt (74,038) - 10,071 (529) (45) (64,541) 1 January Acquisitions Cash Other Exchange 30 June 2006 Flow Non Cash Movement 2006 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Cash in hand and at bank 9,725 - 384 - (11) 10,098 Short term deposits - - - - - - Cash and cash 9,725 - 384 - (11) 10,098 equivalents 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 31 Dec 2006 Flow Non Cash Movement 2006 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Cash in hand and at bank 9,725 - 5 - (75) 9,655 Short term deposits - - - - - - Cash and cash 9,725 - 5 - (75) 9,655 equivalents Debt due after 1 year (42,795) (14,690) (4,630) (10,141) - (72,256) Debt due within 1 year (6,363) (10,962) (3,920) 10,141 35 (11,069) (49,158) (25,652) (8,550) - 35 (83,325) Finance leases - (375) 7 - - (368) Net debt (39,433) (26,027) (8,538) - (40) (74,038) 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 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Â£000 Â£000 Â£000 Current tax: UK tonnage tax (16) (13) (21) UK corporation tax (815) (580) (1,309) (831) (593) (1,330) Tax over/(under)provided in previous years 224 (118) 770 Foreign tax (782) (469) (883) Total current tax (1,389) (1,180) (1,443) Deferred tax: Origination and reversal of temporary differences (218) 45 (969) Impact of change in expected rate 64 - - (154) 45 (969) Total taxation expense included in group income (1,543) (1,135) (2,412) statement Share of joint ventures' current tax (10) (40) 130 The total tax charge in the income statement is allocated as follows: Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Â£000 Â£000 Â£000 Taxation expense reported in group income (1,543) (1,133) (2,411) statement Taxation attributable to discontinued activities - (2) (1) Total tax expense (1,543) (1,135) (2,412) Deferred income tax The gross movement on the deferred income tax account is as follows: Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Â£000 Â£000 Â£000 Balance at 1 January (1,987) 1,197 1,197 Included in statement of recognised income and (483) (1,054) (772) expense (Charged)/credited to income (154) 45 (969) statement Exchange differences (2) (1) - Acquired with subsidiaries (28) - (1,443) Balance at period end (2,654) 187 (1,987) At 30 June 2007 the group has no recognised or unrecognised deferred income tax liability (2006 Â£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 period 20,000 (2006 110,423) ordinary shares of 25p were allotted on the exercise of share options for an aggregate cash consideration of Â£24,000 (2006 Â£149,000). 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: 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Â£000 Â£000 Â£000 Profit on continuing activities attributable to equity 7,751 7,299 11,739 holders Profit attributable to discontinued - 1,856 2,041 activities Profit attributable to equity holders 7,751 9,155 13,780 Weighted average number of shares 30 June 2007 30 June 31 December 2006 2006 Number of Number of Number of shares shares shares For basic earnings per ordinary share* 49,176,479 49,017,748 49,058,347 Exercise of share options and LTIPs 524,138 427,898 449,306 For diluted earnings per ordinary share 49,700,617 49,445,646 49,507,653 * Excludes 312,870 (2006:June 395,657,December 392,592) shares owned by the James Fisher & Sons Public Limited Company Employee Share Ownership Trust. 30 June 2007 30 June 2006 31 December 2006 Â£000 pence Â£000 pence Â£000 pence Basic earnings per share on profit on continuing operations 7,751 15.76 7,299 14.89 11,739 23.93 Profit attributable to discontinued activities - - 1,856 3.79 2,041 4.16 Basic earnings per share on total operations 7,751 15.76 9,155 18.68 13,780 28.09 Diluted earnings per share on profit on continuing operations 7,751 15.60 7,299 14.76 11,739 23.71 Profit attributable to discontinued activities - - 1,856 3.76 2,041 4.12 Diluted earnings per share 7,751 15.60 9,155 18.52 13,780 27.83 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 2007 30 June 2006 31 December 2006 Â£000 pence Â£000 pence Â£000 pence Basic earnings per share on profit on continuing operations 7,751 15.76 7,299 14.89 11,739 23.93 Adjustments: Exchange loss/(gain) on loan conversion 113 0.23 (35) (0.07) (35) (0.07) Loss on ship disposals 104 0.21 24 0.05 24 0.05 Profit on sale of property (including tax effect of Â£377,000) - - - - (749) (1.53) Impairment of ship - - - - 2,906 5.92 Adjusted basic earnings per share on profit on continuing operations 7,968 16.20 7,288 14.87 13,885 28.30 Diluted earnings per share on profit on continuing operations 7,751 15.60 7,299 14.76 11,739 23.71 Adjustments: Exchange loss/(gain) on loan conversion 113 0.22 (35) (0.07) (35) (0.07) Loss on ship disposals 104 0.21 24 0.05 24 0.05 Profit on sale of property (including tax effect of Â£377,000) - - - - (749) (1.51) Impairment of ship - - - - 2,906 5.87 Adjusted diluted earnings per share on profit on continuing operations 7,968 16.03 7,288 14.74 13,885 28.05 13 Reconciliation of movements in equity For the 6 months ended 30 June 2007 Capital Reserves Share Share Retained Other Treasury Total Minority Total capital premium earnings reserves shares interests equity Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 At 1 January 2007 12,377 24,114 50,932 (96) (1,147) 86,180 71 86,251 Total recognised income - - 9,437 195 - 9,632 26 9,658 and expense in the period Ordinary dividends paid - - (3,212) - - (3,212) - (3,212) - Share-based - - 306 - - 306 - 306 compensation expense Arising on the issue of 5 19 - - - 24 - 24 shares Purchase less sale of - - - - (274) (274) - (274) shares Transfer on disposal of - - (287) - 287 - - - shares At 30 June 2007 12,382 24,133 57,176 99 (1,134) 92,656 97 92,753 Other reserves Translation Hedging Total reserve reserve Â£000 Â£000 Â£000 At 1 January 2007 (170) 74 (96) Cash flow hedges: Transferred to the income - 8 8 statement Fair value gains in the period - - - Share of fair value gains of joint ventures - (29) (29) Recognised income in the period including the effect of net 216 - 216 investment hedges At 30 June 2007 46 53 99 13 Reconciliation of movements in equity (continued) For the 6 months ended 30 June 2006 Capital Reserves Share Share Retained Other Treasury Total capital premium earnings reserves shares Equity Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 At 1 January 2006 12,345 23,960 38,030 178 (1,184) 73,329 Total recognised income - - 13,432 48 - 13,480 and 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 - - - - (233) (233) shares 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 Â£000 Â£000 Â£000 At 1 January 2006 212 (34) 178 Cash flow hedges: Transferred to the income - (4) (4) statement Fair value gains in the period - 52 52 Share of fair value gains of joint ventures - (17) (17) Recognised income in the period including the effect of 17 - 17 net investment hedges At 30 June 2006 229 (3) 226 13 Reconciliation of movements in equity (continued) For the year ended 31 December 2006 Capital Reserves Share Share Retained Other Treasury Total Minority Total capital premium earnings reserves shares Shareholders interests equity equity Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 At 1 January 2006 12,345 23,960 38,030 178 (1,184) 73,329 - 73,329 At acquisition - - - - - - 74 74 Total recognised income - - 17,151 (274) - 16,877 (3) 16,874 and expense in the period Ordinary dividends paid - - (4,499) - - (4,499) - (4,499) Share-based - - 516 - - 516 - 516 compensation expense Purchase less sale of - - - - (229) (229) - (229) shares Arising on the issue of 32 154 - - - 186 - 186 shares Transfer on disposal of - - (266) - 266 - - - shares At 31 December 2006 12,377 24,114 50,932 (96) (1,147) 86,180 71 86,251 Other reserves Translation Hedging Total reserve reserve Â£000 Â£000 Â£000 At 1 January 2006 212 (34) 178 Cash flow hedges: Transferred to the income - 7 7 statement Fair value gains in the period - 62 62 Share of fair value gains of joint ventures - 39 39 Recognised income in the period including the effect of (382) - (382) net investment hedges At 31 December 2006 (170) 74 (96) 14 Interim Dividend The interim dividend of 3.89p (2006 3.47p) per 25p ordinary share is payable on 1 November 2007 to those shareholders on the register of the company at the close of business on 5 October 2007. The dividend recognised in the reconciliation of movements in equity in note 13 is the final dividend for 2006 of 6.54p paid on 11 May 2007. The proposed interim dividend has not been recognised in this report. 15 Business combinations On 23 May 2007 the Company acquired the entire issued share capital of Buchan Technical Services Limited, (Buchan), a company specialising in the supply of pumps, hydraulic power packs and related equipment and services to the offshore oil industry, for a cash consideration of Â£4,925,000. 15 Business combinations (continued) The provisional fair values of the assets and liabilities acquired are subject to further review to assess the impact of adopting the Group's accounting policies and conversion to IFRS. These provisional values are set out below: Carrying amount and fair value Â£000 Property, plant & 518 equipment Inventories 52 Trade and other 565 receivables Cash and short term 1,582 deposits Trade and other payables (449) Deferred tax liability (28) Fair value of net assets acquired 2,240 Goodwill arising on acquisition 2,805 5,045 Consideration: Cash 4,925 Direct costs associated with acquisition 120 5,045 During the period the Group made payments of contingent consideration of Â£3,000,000 to the vendors of FT Everard and Sons following the delivery of mt Superiority, and of Â£1,250,000 to the vendors of Strainstall Group in accordance with their achievement of the earnout provisions for 2006 included in the purchase agreement. This latter amount was settled in part by the issue of Â£529,000 of loan notes which must be redeemed for cash no later than February 2009. Under the terms of the purchase agreement for FT Everard and Sons the purchase consideration payable has been revised following the agreement of the balance sheet at completion. As a result the total consideration payable has been reduced by Â£2,063,000. This reduction is principally due to the movement in exchange rates between the date of completion and the date of preparation of the initial estimates which affected the valuation of the vessels acquired. Â£1,856,000 of this amount was received during the period with the balance received in July. In December 2006 the amount recoverable was estimated at Â£1,571,000. This revision has been adjusted in the amount attributable to goodwill arising on the acquisition of FT Everard & Sons. A further adjustment to goodwill arising on the acquisition of FT Everard and Sons of Â£175,000 has been made representing an increase in the Group's liability to the MNOPF pension deficit which has been recalculated by the Group's actuaries on a basis consistent with the amount attributable to the pension deficit accounted for by James Fisher & Sons PLC. Since the date of acquisition Buchan has contributed Â£104,000 to the Group's profit after tax. Had the business combination occurred at the start of the financial year the Group profit after tax from continuing operations for the period would have been Â£8,135,000 and the revenue from continuing operations would have been Â£89,786,000. On 28 June 2007 the Group disposed of its interests in Ships Electronic Services Limited, (SES) for a consideration of Â£396,000. 16 Commitments and contingencies As at 30 June 2007 the Group had capital commitments of Â£6,522,000. The principal elements relate to the completion of mt Supremity and the construction of new industrial premises. At June 2006 the Group had capital commitments of Â£1,297,000. 17 Related parties Details of the transactions carried out with related parties in the six months ended 30 June 2006 and 2007 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 Â£000 Â£000 Â£000 Â£000 Â£000 Foreland Shipping Limited 2007 233 - - 29 - 2006 229 - - 29 - Fendercare businesses 2007 - 576 - 61 - 2006 - 34 - - - Everard Insurance Brokers 2007 62 - 171 - 6 The Group provides payroll management services to Foreland Shipping Limited, a wholly owned subsidiary of Foreland Holdings Limited a company in which the Group has a 25% equity interest. No profit is made on these services which are excluded from the Group's revenue. Through its Fendercare business the Group has a 40% interest in several joint ventures providing ship to ship transfer services in West Africa. During the period the Group acquired a 50% interest in a joint venture providing ship to ship transfer services in the BENELUX region for a consideration of Â£27,000. Everard Insurance Brokers (EIB), a company controlled by Mr W D Everard and Mr F M Everard and members of their family, has provided certain insurance services to the Group since the acquisition of F T Everard and Sons Limited in December 2006. EIB shares certain facilities with FT Everard and Sons who make charges to EIB in respect of their usage. On 28 June 2007 the Group disposed of its interest in Ships Electronic Services Limited to its former management including Mr S Roper, who was formerly Group Finance Director of FT Everard & Sons Limited, the immediate parent of SES. The consideration of Â£396,000 was received by the Group on completion with an overdraft of Â£98,000 also taken over by the purchasers. During the period SES which supplies and maintains marine navigation, communication and entertainment equipment, contributed Â£1,466,000 to Group revenue and made a loss after tax of Â£14,000. 18 Post Balance sheet events On 27 July the Group acquired the entire issued share capital of Inspection Holdings Limited and its subsidiaries for a consideration of Â£1,200,000. The principal activity of the main subsidiary of the acquired business, NDT (Inspection and Testing) Limited is the provision of non destructive testing services, principally to the nuclear and aerospace industries. Contingent consideration of up to Â£800,000 is payable based on the performance of the business in the twelve months ended 31 December 2007. 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 2007 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 18. 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 2007. Ernst & Young LLP Manchester 28 August 2007 This information is provided by RNS The company news service from the London Stock Exchange

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