Source - RNS
RNS Number : 4760I
Fisher (James) & Sons plc
31 August 2016
 



 

31 August 2016

 

James Fisher and Sons plc

Half Year Results 2016

 

James Fisher and Sons plc (FSJ.L) ("James Fisher" or "the Group"), the leading marine service provider, announces its results for the six months ended 30 June 2016.

 


H1 2016

H1 2015




Group revenue

£209.3m

£213.1m

Underlying operating profit *

£19.9m

£20.0m

Underlying profit before tax *

£17.5m

£17.8m

Underlying diluted earnings per share *

29.4p

29.5p

Interim dividend per share

8.55p

7.80p

Statutory profit before tax

£17.4m

£17.9m

Statutory diluted earnings per share

29.4p

30.0p




* underlying profit excludes separately disclosed items.

 

Highlights:

 

·   Specialist Technical, Marine Support and Tankships performed well, increasing underlying operating profit by 18%;

·   Offshore Oil in line with second half of 2015;

·   Recent contract wins, Galloper Windfarm, Indian submarine rescue and Winfrith decommissioning progressing well;

·   Acquisitions of Lexmar and Hughes since period end;

·   Continued strong cash conversion of 102% (2015: 96%);

·   Interim dividend increased by 10% to 8.55p per share.

 

Commenting on the results, Nick Henry, Chief Executive Officer said:

 

"Strong performances in Specialist Technical, Marine Support and Tankships, which together increased underlying operating profit by 18%, offset reduced activity levels in Offshore Oil leaving the first half similar to last year.  With new contracts in renewables, defence and nuclear decommissioning contributing fully in the second half and continued firm demand for ship to ship services, we expect to see a resumption of growth in the second half leading to a good improvement in the result for the full year."

 

For further information:

 

James Fisher and Sons plc

Nick Henry

Stuart Kilpatrick

Chief Executive Officer

Group Finance Director

020 7614 9508

FTI Consulting

Susanne Yule

Richard Mountain


020 3727 1340

 

 

 

Chairman's Statement

Half Year Results for the six months ended 30 June 2016

 

Results

 

I am pleased to report that in the first half of 2016, James Fisher traded in line with management expectations as outlined in my AGM statement on 28 April with revenue and profit similar to the comparable period last year. This solid start to 2016 gives us confidence that the Group will produce good growth for the year as a whole.

 

Revenue was slightly lower than last year at £209.3m (2015: £213.1m) reflecting reduced activity levels in Offshore Oil, the cessation of the Angola contract in the second quarter and revenues from our new contract wins only starting to come through. Underlying profit before tax was £17.5m compared with £17.8m last time and underlying diluted earnings per share was 29.4p (2015: 29.5p).

 

Three of our divisions, Marine Support (+26%), Specialist Technical (+9%) and Tankships (+15%) showed strong profit growth with our new contracts in renewables, defence and nuclear beginning to contribute from the second quarter and Marine Support benefitting from strong demand in the ship to ship (STS) transfer market.

 

Offshore Oil, by contrast, continued to face tough trading conditions with a result similar to that seen in the second half of 2015 but sharply lower compared to last year's first half which had not seen the full impact of the industry downturn. Demand in our Offshore Oil markets appears to have stabilised but at the low levels experienced since the middle of last year.

 

Strategic Developments

 

James Fisher continues to pursue a consistent strategy of investing in niche businesses operating in demanding environments where strong marine service and specialist engineering skills are valued and rewarded. Whilst organic growth has driven the majority of James Fisher's development in recent years, the Group continues to be alert for incremental acquisition opportunities which will strengthen our range of products, services or geographical coverage.

 

During the last month, we have announced two bolt-on acquisitions. Lexmar, based in Singapore, has joined our JFD business within Specialist Technical, helping to build our regional presence and hyperbaric engineering capability in the growing Asia Pacific market. Hughes Engineering Services Limited has built a strong presence in the UK offshore renewables market in recent years. Hughes will further strengthen our ability to integrate multiple services into single source contracts for this developing sector. 

 

James Fisher is well placed to face the uncertainties created by the 23 June 2016 Brexit referendum result.  The Group trades relatively little with the European Union being focused, outside the UK, on the growth markets of Asia Pacific, South America, Middle East and Africa. A substantial part of the Group's revenues are dollar based bringing at least a short term benefit from any fall in the value of Sterling.

 

Outlook 

 

With the STS market firm and the recently announced Galloper project commencing, our Marine Support division is performing well. In Specialist Technical, our defence and nuclear businesses are gaining momentum as the Indian submarine rescue and Winfrith decommissioning contracts are mobilised. Tankships continue their excellent track record. In Offshore Oil, it is too early to look for recovery but our businesses in the division do appear to have stabilised, albeit at a low level.  Looking forward, we therefore expect to see a resumption of growth for the Group in the second half leading to a good improvement in the result for the full year.

 

Dividend

 

The Board believes that James Fisher remains well placed to provide further growth and value for its shareholders. The Board has agreed a 10% increase in the interim dividend to 8.55p per share (2015: 7.80p) payable on 4 November 2016 to shareholders on the register on 7 October 2016.

 

 

C J Rice

30 August 2016

 

 

 

Operating and Financial Review

Half Year Results for the six months ended 30 June 2016

 

Business Model

 

The Group's business model is based on high quality niche businesses offering a range of marine services predominantly to large multinational customers and governments globally. Our businesses are linked together by a set of common marine service skills. We operate a decentralised management structure which encourages timely decision making but with the benefit of the support and resources of a larger group.

 

Results

 

Revenue was 2% lower at £209.3m (2015: £213.1m) for the six months ended 30 June 2016. Offshore Oil was similar to the second half of 2015 but lower than its first half comparator. The cessation of a significant contract in the first quarter of 2016, masked strong underlying sales growth in Marine Support.  The benefit to revenue of more favourable exchange rates compared to prior year was £4.6m (2015: £3.8m).

 

Underlying operating profit was £19.9m (2015: £20.0m) as a lower result in Offshore Oil was offset by strong financial performance in the other three divisions. With net finance charges £0.2m higher, underlying profit before tax was £17.5m (2015: £17.8m).  The currency benefit to underlying operating profit was £1.2m (2015: £0.9m).

 

Cash conversion remained strong at 102% (2015: 96%) and net borrowings were slightly higher than prior year at £105.5m (2015: £103.6m). Balance sheet gearing reduced to 46% (2015: 50%).

 

Marine Support

 


H1 2016

H1 2015

Revenue (£m)

92.4

87.2

Underlying operating profit (£m)

9.3

7.4

Underlying operating margin

10.1%

8.5%

Return on capital employed

13.6%

13.4%

 

Revenue in Marine Support was 6% higher as strong growth in ship to ship transfers and currency benefits more than offset reduced revenue in the second quarter following the cessation of our contract in Angola for mooring and diving services in March 2016.  Discussions with our customer in Angola are ongoing and costs incurred in connection with the cessation of the contract are expected to be recovered.

 

Underlying operating profit was 26% ahead of the first half of 2015 following an 18% increase in ship to ship transfers in the period with strong performance in Asia Pacific and Africa. Contributions from businesses acquired in 2015 and weaker Sterling compared to the US Dollar benefitted the first half result and offset a decline in project related income which is more weighted to the second half of this year.

 

In February 2016, the Group was awarded a marine services and support contract worth in excess of £25m in relation to the construction of the Galloper windfarm. The Group is providing a wide range of marine services including unexploded ordinance identification and disposal, vessel refuelling, crew transfer and diving together with our Offshore Wind Management System. This provides real-time data covering a wide range of offshore wind farm activities from vessel motion monitoring and crew tracking to turbine structural monitoring and tracking of strategic spares. The modular system enables efficient management and improved personnel safety during vessel transfers, reduces costs and captures historic data for analysis and to support future operational predictions.

 

In August 2016, the Group acquired Hughes Sub Surface Engineering Limited ("Hughes") for an initial consideration of £9.0m. Hughes was founded in Liverpool in 2005 to provide commercial diving and civil engineering services to underwater projects. The business operates in the marine renewables, power generation, oil and gas, and inshore civil engineering sectors and further strengthens our renewables service offering.

 

Offshore Oil


H1 2016

H1 2015

Revenue (£m)

27.0

36.1

Underlying operating profit (£m)

2.1

5.3

Underlying operating margin

7.8%

14.7%

Return on capital employed

3.3%

8.7%

 

Whilst a disappointing result compared to the first half of 2015, revenue and underlying operating profit were in line with the second half of last year. The division continued to experience a lack of activity with ongoing deferment of maintenance work. Scan Tech AS, our Norwegian business, has experienced the toughest market conditions with revenue 55% lower than in the first half of 2015. The rest of the division was only 11% lower by comparison.

 

Gross margins, which held up in 2015, were similar to prior comparator confirming the niche position of the businesses. Overheads were £2.0m lower than the comparative period following cost reductions made in 2015. Our businesses remain well placed to benefit from any recovery in maintenance and repair expenditure although indications of any significant recovery in the sector have yet to emerge. 

 

Specialist Technical

 


H1 2016

H1 2015

Revenue (£m)

62.9

63.7

Underlying operating profit (£m)

6.1

5.6

Underlying operating margin

9.7%

8.8%

Return on capital employed

15.6%

16.6%

 

Specialist Technical increased underlying operating profit by 9% on a similar level of revenue. Project revenue was lower as the significant contract to build two rescue submarines for the Indian Navy only commenced in the second quarter whereas the prior comparative included two large saturation diving contracts. Commercial diving equipment sales were strong and nuclear decommissioning revenue increased by 11%.  The contract to decommission the core reactor at Winfrith, which is worth £60m over a four year period, commenced in May 2016.

 

On 1 August 2016, the Group acquired Lexmar Engineering Pte Limited and Lexmar Sat Systems Pte Limited (together "Lexmar"). This specialist provider of diving equipment will enhance JFD's saturation diving offering to the Asia Pacific region. Lexmar is currently completing three 18 man twin bell saturation diving systems. They are currently in the process of undertaking installation and commissioning in China and will complete and commission the third system in Singapore in the first half of 2017.

Tankships

 


H1 2016

H1 2015

Revenue (£m)

27.0

26.1

Underlying operating profit (£m)

3.8

3.3

Underlying operating margin

14.1%

12.6%

Return on capital employed

28.3%

27.0%

 

Our Tankships division continued to trade well and increased underlying operating profit by £0.5m in the period. Vessel utilisation was maintained at prior year levels and the division benefitted from improved spot cargo rates.  A charter for two of its vessels has been extended for a further eighteen months to November 2017.

 

Finance

 

Interest and taxation

 

Net interest was £0.2m higher at £2.4m (2015: £2.2m) partly due to increased borrowings and due to a £0.1m increase in notional charges on legacy defined benefit pension schemes.

 

The effective tax rate on underlying profit before tax in the period was similar to prior period at 15.4% (2015: 15.3%). This rate is based on estimated profits for the full year and reflects the impact of lower UK rates, the benefit from profits within its tanker operations not being subject to corporation tax and from conservative provisioning in previous years.

 

Separately disclosed items and earnings per share

 

In order better to present the underlying performance of the Group, items are consistently disclosed separately which include costs incurred in making a business acquisition, the amortisation of intangible assets arising from a business acquisition and adjustments to provisions for contingent consideration. The net charge in the six months ended 30 June 2016 was £0.1m (2015: credit of £0.1m).

 

Underlying diluted earnings per share was similar to last year at 29.4 pence per share (2015: 29.5p). Diluted earnings per share after separately disclosed items are taken into account were also 29.4 pence per share (2015: 30.0p).

 

Cash flow and borrowings

 

Summary cash flow



Cash conversion, the ratio of operating cash flow to underlying operating profit was 102% (2015: 96%). Working capital cash out flow was £10.1m as the timing of project related cashflows and seasonal working capital of £8.9m more than offset the unwind of debtor positions at 31 December 2015.

 

Capital expenditure was 31% lower at £8.6m (2015: £12.4m) and £7.7m (2015: £30.2m) was spent on business acquisitions which includes £5.8m paid for the third party interest in Fendercare Nigeria which was effectively acquired in November 2015.

 

The net outflow in the period was £11.6m (2015: £41.3m) and as a result net borrowings were £1.9m higher than at 30 June 2015. The ratio of net borrowings (which includes an increased level of project related bonding) to Ebitda was 1.8 times (2015: 1.5 times). Net gearing, the ratio of net debt to equity, reduced to 46% (2015: 50%).


H1 2016

H1 2015


£m

£m

Underlying operating profit

19.9 

20.0 

Depreciation & amortisation

12.1 

12.2 

Ebitda *

32.0 

32.2 

Working capital

(10.1)

(12.0)

Pension / other

(1.7)

(1.0)

Operating cash flow

20.2 

19.2 

Interest & tax

(5.1)

(7.4)

Capital expenditure

(8.6)

(12.4)

Acquisitions

(7.7)

(30.2)

Dividends

(8.0)

(7.5)

Other

(2.4)

(3.0)

Net outflow

(11.6)

(41.3)

Net borrowings at start of period

(93.9)

(62.3)

Net borrowings at end of period

(105.5)

(103.6)

* Underlying earnings before interest, tax,

  depreciation and amortisation

 

Pensions

 

The majority of the Group's pension arrangements are defined contribution arrangements where the company's liability is limited to the contributions it agrees on behalf of each employee.  As a consequence of its history in the shipping industry, the Group is required to contribute to industry-wide Merchant Navy Pension Funds and has its own legacy defined benefit scheme. Total defined benefit pension deficits at 30 June 2016 were £26.4m (2015: £20.5m) which was marginally lower than as at 31 December 2015 when the Group recognised the Merchant Navy Ratings scheme liability. The pension scheme valuations were updated to 30 June 2016 following the Brexit vote reflecting any changes to long term interest rates. As a result the deficit increased by £0.7m.

 

Balance sheet


30 June 2016

30 June 2015

Intangible assets have increased by £11.4m since June 2015 reflecting the acquisitions made in the last year and the impact of weaker Sterling.  Working capital was £11.9m higher mainly due to increased project working capital and the ratio of working capital to sales was 16% at 30 June 2016 (2015: 14%).

 

Following the Brexit vote on 23 June 2016, Sterling weakened by 10% against the US Dollar, which is the main currency pairing that impacts the Group. There was little net impact on net assets as the Group seeks to match its US Dollar cash and working capital assets with US Dollar denominated borrowings.

£m

£m

Intangible assets

163.8 

152.4 

Other assets

135.7 

139.2 

Working capital

75.3 

63.4 

Other liabilities

(38.7)

 (42.2)

Capital employed

336.1 

312.8 

Borrowings

105.5 

103.6 

Equity

230.6 

209.2 


336.1 

312.8 




 

Risks and uncertainties

 

The principal risks and uncertainties which may have the largest impact on performance in the second half of the year are the same as disclosed in the 2015 Annual Report and Accounts on pages 10-11. In addition, the Directors have considered the impact of the UK's vote to leave the European Union and as referred to in the Chairman's Statement, do not consider this will materially impact the Group's viability.

 

The principal risks set out in the 2015 Annual Report and Accounts were:

 

·      Strategic - energy markets, operations in emerging markets;

·      Operational - project delivery, recruitment and retention of key staff, reputational risk and cyber security;

·      Financial - foreign currency and interest rates.

 

The Directors consider that the principal risks and uncertainties set out in the 2015 Annual Report and Accounts have not changed and remain relevant for the second half of the financial year.

 

 

Directors' Responsibilities

 

We confirm to the best of our knowledge:

 

The interim financial report has been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union.

 

The interim management report includes a fair review of the information required by:

 

(a)     DTR 4.2.7R of the "Disclosure and Transparency Rules", being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

 

(b)     DTR 4.2.8R of the "Disclosure and Transparency Rules", being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during the period; and any changes in the related party transactions described in the last annual report that could do so.

 

 

 

 

 

N P Henry

S C Kilpatrick

Chief Executive Officer

Group Finance Director

 

30 August 2016

 

 

 

CONDENSED CONSOLIDATED INCOME STATEMENT

for the six months ended 30 June 2016

 


Note

Six months

ended

30 June 2016


Six months

ended

30 June 2015


Year ended 31

December

2015




£000


£000


£000

Group revenue

4

209,317 


213,061 


437,930 

Cost of sales


(144,999)


(148,713)


(307,208)

Gross profit


64,318 


64,348 


130,722 

Administrative expenses


(45,083)


(44,320)


(85,219)

Share of post tax results of joint ventures


647 


(66)


87 

Acquisition related (expense)/income

5

(83)


93 


5,926 

Operating profit

4

19,799 


20,055 


51,516 

Analysis of operating profit:







    Underlying operating profit


19,882 


19,962 


45,590 

    Separately disclosed items


(83)


93 


5,926 

Loss on sale of business




(959)

Net finance expense


(2,421)


(2,194)


(4,343)

Profit before taxation


17,378 


17,861 


46,214 

Analysis of profit before tax:







    Underlying profit before taxation


17,461


17,768 


41,247 

    Separately disclosed items


(83)


93 


4,967 

Income tax

8

(2,567)


(2,609)


(5,507)

Profit for the period


14,811 


15,252 


40,707 

Attributable to:







Owners of the Company


14,835 


15,098 


39,885 

Non controlling interests


(24)


154 


822 




14,811 


15,252 


40,707 

Earnings per share










pence


pence


pence

Basic

9

29.6


30.2


79.7

Diluted

9

29.4


30.0


79.2









 

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2016

 



2016


2015


2015


Six months

ended

Six months

ended

Year

ended



30 June


30 June

31 December



£000


£000


£000








Profit for the period


14,811 


15,252 


40,707 

Items that will not be reclassified to income statement







Remeasurement loss on defined benefit plan liabilities




(8,596)

Actuarial (loss)/gain in defined benefit pension schemes


(697)



813 

Income tax on items that will not be reclassified


(553)


(415)


1,635 



(1,250)


(415)


(6,148)

Items that may be reclassified subsequently to income statement







Exchange differences on foreign currency net investment


7,158 


(4,356)


(4,587)

Effective portion of changes in fair value of cash flow hedges


(2,783)


2,039 


836 

Effective portion of changes in fair value of cash flow hedges in joint ventures


(213)


243 


354 

Net change in fair value of cash flow hedges transferred to income statement


(6)


168 


77 

Income tax on items that may be reclassified

488 



(220)

Other comprehensive income for the period, net of income tax


4,644 


(1,906)


(3,540)








3,394 


(2,321)


(9,688)

Total comprehensive income for the period


18,205 


12,931 


31,019 








Attributable to:







Owners of the Company


18,062 


12,783 


30,067 

Non controlling interests


143 


148 


952 



18,205 


12,931 


31,019 

 

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 30 June 2016

 



2016


2015


2015



30 June


30 June

31 December


Note

£000


£000


£000

Assets







Non current assets







Goodwill


147,832 


135,949 


140,414 

Other intangible assets


15,979 


16,455 


16,041 

Property, plant and equipment


128,191 


128,525 


127,594 

Investment in joint ventures


6,031 


9,141 


6,250 

Available for sale financial assets


1,478 


1,478 


1,478 

Deferred tax assets


3,588 


2,203 


3,189 



303,099 


293,751 


294,966 








Current assets







Inventories


49,786 


47,381 


47,436 

Trade and other receivables


150,029 


127,759 


141,734 

Derivative financial instruments


-  


1,558 


Cash and short term deposits

7

29,720 


28,071 


22,962 



229,535 


204,769 


212,134 








Total assets


532,634 


498,520 


507,100 








Equity and liabilities














Capital and reserves







Called up share capital


12,543 


12,541 


12,541 

Share premium


25,573 


25,525 


25,525 

Treasury shares


(610)


(442)


(1,613)

Other reserves


(6,877)


(9,584)


(11,354)

Retained earnings


197,422 


179,551 


192,908 

Shareholders' equity


228,051 


207,591 


218,007 

Non controlling interests


2,531 


1,584 


2,388 

Total equity


230,582 


209,175 


220,395 








Non current liabilities







Other payables


9,141 


14,981 


8,728 

Retirement benefit obligations

6

26,416 


20,511 


26,956 

Cumulative preference shares


100 


100 


100 

Loans and borrowings


124,345 


113,600 


116,645 

Deferred tax liabilities


153 


545 


153 



160,155 


149,737 


152,582 

Current liabilities







Trade and other payables


120,112 


112,418 


125,381 

Current tax


6,515 


7,846 


7,190 

Derivative financial instruments


4,470 


1,333 


1,446 

Loans and borrowings


10,800 


18,011 


106 



141,897 


139,608 


134,123 








Total liabilities


302,052 


289,345 


286,705 








Total equity and liabilities


532,634 


498,520 


507,100 

 

 

 



CONDENSED CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 30 June 2016

 



2016


2015


2015


Note

Six months

ended

Six months

ended


Year

ended



30 June


30 June

31 December



£000


£000


£000








Profit before taxation


17,378 


17,861 


46,214 







     Depreciation and amortisation


12,647 


12,745 


24,442 

     Acquisition costs charge


60 


721 


1,355 

     Profit on sale of property, plant and equipment


(61)


(160)


(418)

     Loss on sale of business




959 

     Adjustment to provision for contingent consideration


(522)


(1,330)


(8,491)

     Net finance expense


2,421 


2,194 


4,343 

     Share of profits of joint ventures


(647)


66 


(87)

     Share based compensation


577 


426 


214 

Increase in trade and other receivables


(4,177)


(674)


(19,911)

Decrease/(increase) in inventories


41 


(6,164)


(6,073)

(Decrease)/increase in trade and other payables


(5,962)


(5,179)


3,095 

Defined benefit pension cash contributions less service cost


(1,691)


(1,756)


(3,494)

Cash generated from operations


20,064 


18,750


42,148 

Cash outflow from acquisition costs



(748)


(1,325)

Income tax payments


(3,376)


(5,702)


(8,828)

Net cash from operating activities


16,688 


12,300 


31,995 








Investing activities







Dividends from joint venture undertakings


172 


65 


1,089 

Proceeds from the sale of property, plant and equipment


724 


1,499 


2,208 

Finance income


87 


91 


236 

Acquisition of subsidiaries, net of cash acquired


(7,689)


(27,653)


(25,933)

Acquisition of property, plant and equipment


(7,964)


(12,707)


(19,597)

Development expenditure


(1,376)


(1,042)


(2,704)

Net cash used in investing activities


(16,046)


(39,747)


(44,701)








Financing activities







Proceeds from the issue of share capital


49 


303 


303 

Finance costs


(1,815)


(1,734)


(3,603)

Purchase of own shares by Employee Share Ownership Trust

(635)


(1,376)


(2,590)

Capital element of finance lease repayments


(81)


(56)


(102)

Proceeds from other non-current borrowings


16,460 


48,209 


35,807 

Dividends paid


(8,026)


(7,463)


(11,364)

Net cash from financing activities


5,952 


37,883 


18,451 








Net increase in cash and cash equivalents


6,594 


10,436 


5,745 

Cash and cash equivalents at beginning of period


22,962 


17,719 


17,719 

Exchange movement


164 


(84)


(502)








Cash and cash equivalents at end of period

7

29,720 


28,071 


22,962 

 

 

CONDENSED CONSOLIDATED STATEMENT OF MOVEMENTS IN EQUITY

for the six months ended 30 June 2016

 


Capital


Attributable to equity holders of parent






Share

capital

Share

premium

Retained

earnings


Other

reserves


Treasury

shares

Total

shareholders

equity

Non

controlling

interests

Total

equity








£000


£000


£000


£000


£000


£000


£000


£000

At 1 January 2016

12,541


25,525


192,908 


(11,354)


(1,613)


218,007 


2,388 


220,395 

Total comprehensive income for the period

-


-


13,585 


4,477 



18,062 


143 


18,205 

Contributions by and distributions to owners
















Ordinary dividends paid

-


-


(8,026)




(8,026)



(8,026)

Share-based compensation expense

-


-


577 




577 



577 

Tax effect of share based compensation

-


-


16 




16 



16 

Purchase of shares

-


-




(1,153)


(1,153)



(1,153)

Sale of shares

-


-




518 


518 



518 

Arising on the issue of shares

2


48





50 



50 


2


48


(7,433)



(635)


(8,018)



(8,018)

Transfer on disposal of shares

-


-


(1,638)



1,638 




At 30 June 2016

12,543


25,573


197,422 


(6,877)


(610)


228,051


2,531 


230,582 

















At 1 January 2015

12,525


25,238


174,663 


(7,684)


(1,988)


202,754 


1,436 


204,190 

Total comprehensive income  for the period

-


-


14,683 


(1,900)



12,783 


148 


12,931 

Contributions by and distributions to owners
















Ordinary dividends paid

-


-


(7,463)




(7,463)



(7,463)

Share-based compensation expense

-


-


426 




426 



426 

Tax effect of share based compensation

-


-


164 




164 



164 

Purchase of shares

-


-




(1,535)


(1,535)



(1,535)

Sale of shares

-


-




159 


159 



159 

Arising on the issue of shares

16


287





303 



303 


16


287


(6,873)



(1,376)


(7,946)



(7,946)

Transfer on disposal of shares

-


-


(2,922)



2,922 




At 30 June 2015

12,541


25,525


179,551 


(9,584)


(442)


207,591 


1,584 


209,175 

 

 

NOTES TO THE CONDENSED CONSOLIDATED HALF YEAR STATEMENTS

 

1          Basis of preparation

 

James Fisher and Sons plc ("the Company") is a limited liability company incorporated and domiciled in the United Kingdom, whose shares are listed on the London Stock Exchange. The condensed consolidated half year financial statements of the Company for the six months ended 30 June 2016 comprise the Company and its subsidiaries (together referred to as "the Group") and the Group's interests in jointly controlled entities.

 

Statement of compliance

 

The condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standard ("IFRS") IAS 34 "Interim Financial Reporting" as adopted by the European Union ("EU") ("adopted IFRS"). As required by the Disclosure and Transparency Rules of the Financial Services Authority, the condensed consolidated set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 31 December 2015 with the exceptions described below. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2015.

 

The comparative figures for the financial year ended 31 December 2015 are not the Group's statutory accounts for that financial year. Those accounts which were prepared under adopted IFRS, have been reported on by the Group's auditor and delivered to the Registrar of Companies. The report of the auditor was: (i) unqualified; (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

 

The consolidated financial statements of the Group for the year ended 31 December 2015 are available upon request from the Company's registered office at Fisher House, PO Box 4, Barrow-in-Furness, Cumbria LA14 1HR or at www.james-fisher.com.

 

The half year report is presented in Sterling and all values are rounded to the nearest thousand pounds (£000) except where otherwise indicated and was approved for issue by the Board of Directors on 30 August 2016.

 

Going concern

 

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

 

The Group meets its day to day working capital requirements through operating cash flows with borrowings in place to fund acquisitions and capital expenditure. Movements on the Group's overall net debt position are shown in note 7. The Group had £19.1m of undrawn committed facilities at 30 June 2016.  On 27 July 2016 one of the Group's revolving credit facilities was increased from £20m to £30m.

 

At 30 June 2016, the Group had one revolving credit facility that is due for renewal in the next twelve months. The Group had £10.7m outstanding balances drawn down on this facility at 30 June 2016. Renewal negotiations will be commenced with the bank in due course and the Group has not sought any written commitment that the facilities will be renewed. However, the Group has held discussions with its bankers about its future borrowing needs and no matters have been drawn to its attention to suggest the renewals will not be forthcoming on acceptable terms.

 

Significant accounting policies

 

            The accounting policies applied by the Group in these condensed consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2015.

 

2          Accounting estimates and judgements

 

            The preparation of half year financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

 

            The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements and for the year ended 31 December 2015.

 

3          Alternative performance measures

 

            The Group uses a number of alternative (non-Generally Accepted Accounting Practice ("non-GAAP")) financial measures which are not defined within IFRS. The Directors use these measures in order to assess the underlying operational performance of the Group and, as such, these measures are important and should be considered alongside the IFRS measures.  The adjustments are separately disclosed and are usually items that are significant in size or non-recurring in nature.  The following non-GAAP measures are referred to in the half year results.

 

3.1.  Underlying operating profit and underlying profit before taxation

 

Underlying operating profit is defined as operating profit before amortisation or impairment of acquired intangible assets, acquisition expenses, adjustments to deferred consideration (together, 'acquisition related income and expense'), the costs of a material restructuring, asset impairment or rationalisation of operations and the profit or loss relating to the sale of businesses or property.  The Directors believe that the underlying operating profit is an important measure of the operational performance of the Group.  Underlying profit before taxation is defined as underlying operating profit less net finance expense.

 



2016

Six months ended

30 June


2015

Six months ended

30 June


2015

Year ended

31 December



£000


£000


£000

Operating profit


19,799 


20,055 


51,516 

Separately disclosed items before taxation


83 


(93)


(5,926)

Underlying operating profit


19,882 


19,962 


45,590 

Net finance expense


(2,421)


(2,194)


(4,343)

Underlying profit before taxation


17,461 


17,768 


41,247 

 

3.2.  Underlying earnings per share

 

Underlying earnings per share ("EPS") is calculated as the total of underlying profit before tax, less income tax, but excluding the tax impact on separately disclosed items included in the calculation of underlying profit less profit attributable to minority interests, divided by the weighted average number of ordinary shares in issue during the year.  The Directors believe that underlying EPS provides an important measure of the underlying earnings capability of the Group.  Underlying earnings per share is set out in note 9.

 

3.3.  Capital employed and return on capital employed ("ROCE")

 

Capital employed is defined as net assets less cash and short-term deposits and after adding back borrowings.  Average capital employed is adjusted for the timing of businesses acquired and after adding back cumulative amortisation of customer relationships.  Segmental ROCE is defined as the underlying operating profit divided by average capital employed.  The key performance indicator, Group post tax ROCE is defined as underlying operating profit, less notional tax, calculated by multiplying the effective rate by the underlying operating profit, divided by average capital employed.

 

4          Segmental information

 

            Management has determined the operating segments based on the reports reviewed by the Board that are utilised to make strategic decisions. The Board considers the business primarily from the products and services perspective and has four reportable segments;

 

            Marine Support - includes the hire and sale of large scale pneumatic fenders and ship to ship transfer services, and the design and supply of systems for monitoring strains and stress in structures.

 

            Offshore Oil - manufacture and rental of equipment for the offshore oil and gas industry and the design and manufacture of specialist downhole tools and equipment for extracting oil.

 

            Specialist Technical - provision of subsea services including submarine rescue and saturation diving including maintenance, asset management and consultancy services and non-destructive testing, decommissioning and remote operations and monitoring service predominantly to the nuclear industry.

 

            Tankships - engaged in the sea transportation of clean petroleum products in North West Europe.

 

            The Board assesses the performance of the segments based on operating profit before central common costs and acquisition related income and expenses but after the Group's share of the post tax results of associates and joint ventures. The Board believes that such information is the most relevant in evaluating the results of certain segments relative to other entities which operate within these industries.

 

           

Six months ended 30 June 2016













Marine


Offshore


Specialist


Tankships


Corporate


Total



Support


Oil


Technical









£000


£000


£000


£000


£000


£000

Revenue













Segmental revenue


92,600 


27,082 


63,441 


26,991 



210,114 

Inter segment sales


(161)


(102)


(525)


(9)



(797)

Group revenue


92,439 


26,980 


62,916 


26,982 



209,317 














Underlying operating profit


9,313 


2,089 


6,149 


3,759 


(1,428)


19,882 

Acquisition expenses






(60)


(60)

Adjustment to provision for contingent consideration



522 




522 

Amortisation of acquired intangibles


(192)



(353)




(545)

Operating profit

9,121 


2,089 


6,318 


3,759 


(1,488)


19,799 

Net finance expense












(2,421)

Profit before tax












17,378 

Income tax












(2,567)

Profit for the period












14,811 

Assets & liabilities












Segment assets

204,243 


134,062 

109,756 


33,073 


45,469 


526,603 

Investment in joint ventures


3,380 



2,651 




6,031 

Total assets

207,623 


134,062 

112,407 


33,073 


45,469 


532,634 

Segment liabilities


(68,877)


(8,169)


(36,308)


(6,549)


(182,149)


(302,052)



138,746


125,893 


76,099 


26,524 


(136,680)


230,582 














Other segment information













Capital expenditure


2,687 


2,969 


918 


1,143 


95 


7,812 

Depreciation and amortisation


3,490 


5,463 


1,780 


1,652 


262 


12,647 

 

 

Six months ended 30 June 2015













Marine


Offshore


Specialist


Tankships


Corporate


Total



Support


Oil


Technical









£000


£000


£000


£000


£000


£000

Revenue













Segmental revenue


88,327 


36,869 


64,243 


26,088 



215,527 

Inter segment sales


(1,154)


(731)


(554)


(27)



(2,466)

Group revenue


87,173 


36,138 


63,689 


26,061 



213,061 














Underlying operating profit


7,400 


5,347 


5,595 


3,256 


(1,636)


19,962 

Acquisition expenses


(270)



(451)




(721)

Adjustment to provision for contingent consideration





1,330 


1,330 

Amortisation of acquired intangibles


(158)


(41)


(317)




(516)

Operating profit

6,972 


5,306 


4,827 


3,256 


(306)


20,055 

Net finance expense












(2,194)

Profit before tax












17,861 

Income tax












(2,609)

Profit for the period












15,252 














Assets & liabilities












Segment assets


176,585


136,177

100,714 


33,732 


42,171 


489,379 

Investment in joint ventures


6,685 



2,456 




9,141 

Total assets

 183,270 


136,177

103,170 


33,732 


42,171 


498,520 

Segment liabilities


(49,115)


(13,082)


(32,638)


(9,672)


(184,838)


(289,345)



134,155


123,095


70,532 


24,060 


(142,667)


209,175 














Other segment information













Capital expenditure


5,838


4,922 


528 


1,053 


366 


12,707 

Depreciation and amortisation


3,447


5,661 


1,761 


1,656 


220 


12,745 

 

 

Year ended 31 December 2015













Marine


Offshore


Specialist


Tankships


Corporate


Total



Support


Oil


Technical









£000


£000


£000


£000


£000


£000

Revenue













Segmental revenue

194,389 


63,742 

130,293 


52,627 



441,051 

Inter segment sales


(1,411)


(786)


(850)


(74)



(3,121)

Group revenue

192,978 


62,956 

129,443 


52,553 



437,930 














Underlying operating profit


19,352 


7,399 


13,907 


7,164 


(2,232)


45,590 

Acquisition expenses


(904)



(451)




(1,355)

Adjustment to provision for contingent consideration

4,998 



3,494 




8,492 

Amortisation of acquired intangibles


(397)


(45)


(769)




(1,211)

Operating profit

23,049 


7,354 


16,181 


7,164 


(2,232)


51,516 

Loss on sale of business


(393)


(566)








(959)

Net finance expense












(4,343)

Profit before tax












46,214 

Income tax












(5,507)

Profit for the year












40,707 














Assets & liabilities












Segment assets

202,612 


126,405

100,480 


32,898 


38,455 


500,850 

Investment in joint ventures


4,023 



2,227 


-  


-  


6,250 

Total assets

206,635 


126,405

102,707 


32,898 


38,455 


507,100 

Segment liabilities


(66,346)


(8,300)


(41,881)


(6,441)


(163,737)


(286,705)



140,289 


118,105


60,826 


26,457 


(125,282)


220,395 

Other segment information













Capital expenditure


7,221 


7,898 


2,324 


1,629 


525 


19,597 

Depreciation and amortisation


6,708 


10,812 


3,174 


3,294 


454 


24,442 

 

5          Separately disclosed items

              


2016


2015


2015

Six months ended

Six months ended


Year ended


30 June


30 June


31 December


£000


£000


£000

Included in operating profit:






Acquisition costs

(60)


(721)


(1,355)

Amortisation of acquired intangibles

(545)


(516)


(1,210)

Adjustment to provision for contingent consideration

522 


1,330 


8,491 

Acquisition related (expense) and income

(83)


93 


5,926 

Loss on disposal of business

 - 



(959)

Separately disclosed items before taxation

(83)


93 


4,967 

Tax on separately disclosed items

117 


111 


396 


34 


204 


5,363 

 

            In order for a better understanding of underlying performance acquisition costs have been disclosed separately, together with the amortisation of intangible assets which arise on the acquisition of businesses.  The adjustment to the provision for contingent consideration of £0.5m relates to the acquisition of Divex Limited (now JFD Limited) on 6 March 2013.  Contingent consideration was based on the future contract wins and a share of related profits.

 

6          Retirement benefit obligations

 

Movements during the period in the Group's defined benefit pension schemes are set out below:

        


2016


2015


2015

Six months ended

Six months ended


Year ended


30 June


30 June


31 December


£000


£000


£000







As at 1 January

(26,956)


(21,806)


(21,806)

Expense recognised in the income statement

(507)


(449)


(882)

Contributions paid to scheme

1,744 


1,744 


3,515 

Remeasurement gains and losses

(697)



(7,783)

At period end

(26,416)


(20,511)


(26,956)







The Group's net liabilities in respect of its pension schemes at 30 June 2016 were as follows:








2016


2015


2015

Six months ended

Six months ended


Year ended


30 June


30 June


31 December


£000


£000


£000







Shore Staff

(8,498)


(9,970)


(8,630)

Merchant Navy Officers Pension Fund

(9,163)


(10,541)


(9,730)

Merchant Navy Ratings Pension Fund

(8,755)



(8,596)


(26,416)


(20,511)


(26,956)

 

The principal assumptions in respect of these liabilities are disclosed in the December 2015 Annual Report.  These assumptions have been updated to 30 June 2016.

 

7          Reconciliation of net debt

                       



1 January


Cash


Other


Exchange


30 June



2016


flow

non cash


movement


2016



£000


£000


£000


£000


£000

Cash and cash equivalents


22,962 


6,594 



164 


29,720 

Debt due after 1 year


(116,650)


(5,724)


(125)


(1,873)


(124,372)

Debt due within 1 year



(10,736)




(10,736)

Finance leases


(201)


81 



(17)


(137)

Net debt


(93,889)


(9,785)


(125)


(1,726)


(105,525)














1 January


Cash


Other


Exchange


30 June



2015


flow

non cash


movement


2015



£000


£000


£000


£000


£000

Cash and cash equivalents


17,719 


10,436 



(84)


28,071 

Debt due after 1 year


(79,965)


(30,388)


(932)


(2,326)


(113,611)

Debt due within 1 year



(17,821)




(17,821)

Finance leases


(88)


56 


(247)



(279)

Net debt


(62,334)


(37,717)


(1,179)


(2,410)


(103,640)














1 January


Cash


Other


Exchange

31 December



2015


flow

non cash


movement


2015



£000


£000


£000


£000


£000

Cash and cash equivalents


17,719 


5,745 



(502)


22,962 

Debt due after 1 year


(79,965)


(35,807)


1,276 


(2,154)


(116,650)

Finance leases


(88)


102 


(247)


32 


(201)

Net debt


(62,334)


(29,960)


1,029 


(2,624)


(93,889)

 

8          Taxation

 

            The effective rate on profit before income tax from continuing operations is 14.8% (30 June 2015: 15.8%, 31 December 2015: 11.9%).  This is based on the estimated effective tax rate for the year to 31 December 2016. Of the total tax charge, £1.5m relates to overseas businesses (30 June 2015: £1.0m). The effective income tax rate on underlying profit before income tax, based on an estimated rate for the year ending 31 December 2016, in the period is 15.4% (30 June 2015: 15.3%, 31 December 2015: 14.3%).

 

9          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 held by the James Fisher and Sons plc Employee Share Ownership Trust as treasury shares.

 

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

 

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

 

            Weighted average number of shares



30 June 2016


30 June 2015

31 December 2015



Number of


Number of


Number of



shares


shares


shares

For basic earnings per ordinary share*

50,066,388


50,022,223


50,040,647

Exercise of share options and LTIPs

332,104


385,989


344,743

For diluted earnings per ordinary share

50,398,492


50,408,212


50,385,390

 

*     Excludes 46,619 (June 2015: 34,037; December 2015: 148,275) shares owned by the James Fisher and Sons plc Employee Share Ownership Trust.

 

           

            To provide a better understanding of the underlying performance of the Group, an adjusted earnings per share on continuing activities is provided.  Adjusted earnings are before the costs of any business combinations and amortisation of acquired intangibles.   

 






2016


2015


2015






Six months

ended

Six months

ended

Year

ended






30 June


30 June

31 December






£000


£000


£000

Profit attributable to owners of the Company



14,835 


15,098 


39,885 

Separately disclosed items




83 


(93)


(4,967)

Attributable tax


(117)


(111)


(396)

Adjusted profit attributable to owners of the Company

14,801 


14,894 


34,522 











Basic earnings per share on profit from operations



29.6


30.2


79.7

Diluted earnings per share on profit from operations



29.4


30.0


79.2

Adjusted basic earnings per share on profit from operations

29.6


29.8


69.0

Adjusted diluted earnings per share on profit from operations

29.4


29.5


68.5

              

10         Interim dividend

 

            The proposed interim dividend of 8.55p (2015: 7.80p) per 25p ordinary share is payable on 4 November 2016 to those shareholders on the register of the Company at the close of business on 7 October 2016. The dividend recognised in the Statement of Movements in Equity is the final dividend for 2015 of 16.00p paid on 6 May 2016. The proposed interim dividend has not been recognised in this report.

 

11        Commitments and contingencies

 

            Commitments and contingencies are as set out in the 2015 Annual Report other than for the following changes.  At 30 June 2016 the Group had capital commitments of £1.6m (2015: £1.0m) and the Group had issued performance and payment guarantees to third parties for a total value of £16.9m (30 June 2015: £5.9m, 31 December 2015: £5.9m).

 

12        Related parties

 

There have been no significant changes in the nature of related party transactions in the period ended 30 June 2016 from that disclosed in the 2015 Annual Report.

 

13        Post balance sheet events

 

            On 1 August 2016, the Group acquired the entire share capital of Lexmar Engineering Pte Limited and Lexmar Sat Systems Pte Limited (together "Lexmar"), for an initial cash consideration of SGD17.5m (£9.8m), with further contingent consideration of up to a maximum of SGD9.3m (£5.2m) subject to the successful completion of certain projects.  The consideration is based on net cash held by Lexmar at acquisition of SGD8.8m (£4.9m).  Founded in Singapore in 1996, Lexmar is a specialist provider of service and support of diving equipment and saturated diving systems.  The business is completing three 18 man twin bell diving systems and is complementary to JFD, within our Specialist Technical division.

 

            On 11 August 2016, the Group acquired the entire share capital of Hughes Marine Engineering Limited, the holding company of Hughes Sub Surface Engineering Limited ("Hughes"), for an initial cash consideration of £9.0m, with further contingent consideration of up to a maximum of £1.0m subject to certain profit targets being met by 28 February 2017.  Hughes was founded in Liverpool in 2005 to provide commercial diving and civil engineering services to underwater projects.  The business operates in the marine renewables, power generation, oil and gas, and inshore civil engineering sectors.

 

 

Independent review report to James Fisher and Sons plc

 
Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated cash flow statement, the condensed consolidated statement of movements in equity and the related explanatory notes.  We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").  Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. 

 

Directors' responsibilities 

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA. 

 

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

 

Our responsibility 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. 

 

Scope of review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion. 

 

Conclusion 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA. 

 

 

 

David Bills

for and on behalf of KPMG LLP 

Chartered Accountants 

1 St Peter's Square

Manchester

M2 3AE

30 August 2016

 


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