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Half Year Results 2017

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RNS Number : 2282P
Fisher (James) & Sons plc
30 August 2017
 

 

 

 

30 August 2017

 

James Fisher and Sons plc

Half Year Results 2017

 

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 2017.

 


H1 2017

H1 2016

% change





Group revenue

£235.8m

£209.3m

+13%

Underlying operating profit *

£21.3m

£19.9m

+7%

Underlying profit before tax *

£18.6m

£17.5m

+6%

Underlying diluted earnings per share *

30.1p

29.4p

+2%

Interim dividend per share

9.40p

8.55p

+10%

Statutory profit before tax

£17.6m

£17.4m

+1%









* underlying profit excludes separately disclosed items.

 

Highlights:

 

·   Revenue up 13% at £235.8m (2016: £209.3m)

·   Underlying operating profit 7% higher at £21.3m (2016: £19.9m)

·   Strong profit growth in Specialist Technical

·   Underlying diluted earnings per share up 2% to 30.1p (2016: 29.4p) per share

·   Interim dividend raised by 10% to 9.4p per share

 

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

 

"James Fisher had a positive start to the year with revenue increasing by 13% to £235.8m and underlying operating profit by 7%. The phasing of renewables projects within Marine Support combined with a degree of recovery in maintenance activity in the oil and gas sector indicates stronger growth for the Group in the second half leading to a good improvement in the result for the 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


0203 727 1340

 

Chairman's Statement

 

Half Year Results for the six months ended 30 June 2017

 

Results

 

I am pleased to report that James Fisher had a positive start to the year with revenue in the first half increasing by 13% to £235.8m (2016: £209.3m) and underlying profit before tax by 6% to £18.6m (2016: £17.5m) compared with the same period last year.

 

Three of our divisions continued to trade well, with Marine Support and Tankships profits at similar levels to last year and Specialist Technical significantly ahead. Offshore Oil reported similar revenue but reduced profits after a slow start in the first four months of the year reduced utilisation levels. Trading in May and June in this division gives grounds for some optimism for an improved second half.

 

Strategic Developments

 

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

 

The first half saw the Group's investments of recent years bear fruit with significantly higher volumes of work in Asia Pacific for our Specialist Technical businesses and the opening of an important new market in Brazil for ship-to-ship oil transfer services.  In March we strengthened our product offering to the offshore renewables sector with the acquisition of Rotos 360, a high technology specialist in the repair and reconditioning of wind turbine rotor blades.

 

Outlook

 

Profit in the second half is likely to benefit from the phasing of projects across our renewables businesses due to seasonal factors and across our offshore oil businesses due to some improvement in oil and gas sector demand. We would therefore expect to see good growth from our Marine Support division. In Offshore Oil, orders in our Norwegian and our downhole equipment businesses have begun to show clear signs of recovery. Our Specialist Technical businesses continue to trade well despite some slowing in our nuclear decommissioning activities. Tankships maintain its good performance of recent years. Overall, we therefore expect to see stronger growth for the Group in the second half leading to a good improvement in the result for the 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 9.40 pence per share (2016: 8.55p) payable on 3 November 2017 to shareholders on the register on 6 October 2017.

 

 

C J Rice

29 August 2017

 

Operating and Financial Review

Half Year Results for the six months ended 30 June 2017

 

Operating performance

 

The Group's financial performance in the first half progressed well with a 7% increase in underlying operating profit on revenue that was 13% higher at £235.8m (2016: £209.3m). The overall growth rates reported have been positively impacted by exchange rates as a significant proportion of the Group's revenue is received in US Dollars. Changes at constant exchange rates have been calculated by retranslating the results for the six months ended 30 June 2016 at the average rates for the comparator in 2017.

 

 

 

Revenue

 

 

H1 2017

 

 

H1 2016

 

 

Change

Change at constant currency

Group revenue increased by 13% compared to prior period and by 8% at constant currency. The contribution from businesses acquired was 5% and organic growth, driven by Marine Support and Specialist Technical, was 3%. Offshore Oil revenue was flat but 7% lower excluding currency effects reflecting reduced demand in the first four months, in particular.

 

Underlying operating profit increased by 7% to £21.3m (2016: £19.9m). Underlying operating profits at Marine Support and Tankships were broadly similar to prior period and a 38% increase at Specialist Technical more than offset the lower result at Offshore Oil.

 

Group

 

235.8 

 

209.3 

 

+13% 

 

+8% 

Marine Support

105.6 

92.4 

+14% 

+9% 

Specialist Technical

75.7 

62.9 

+20% 

+19% 

Offshore Oil

27.1 

27.0 

-    

(7)%

Tankships

27.4 

27.0 

+1% 

(2)%






 

 

Underlying operating profit

 

 

H1 2017

 

 

H1 2016

 

 

Change

Change at constant currency

 

Group

 

21.3 

 

19.9 

 

+7% 

 

+4% 

Marine Support

9.1 

9.3 

(2)%

(6)%

Specialist Technical

8.5 

6.1 

+39% 

+38% 

Offshore Oil

1.1 

2.1 

(47)%

(52)%

Tankships

3.9 

3.8 

+3% 

+1% 

Common costs

(1.3)

(1.4)




 

 

Marine Support


H1 2017

H1 2016

Revenue (£m)

105.6

92.4

Underlying operating profit (£m)

9.1

9.3

Underlying operating margin

8.6%

10.1%

Return on capital employed

12.0%

13.6%

 

Revenue in Marine Support grew by 14%. Volumes in ship-to-ship transfers were weaker in Asia Pacific, but this was offset by the commencement of operations for the Brazilian market. Whilst the businesses acquired in the renewables sector contributed to some increase in revenue, the phasing of projects within both the UK renewables and international marine service sectors, suppressed profits in the first half. Subtech, our South African based marine service business, contributed to the first half growth with project wins in the Middle East and West Africa.

 

Underlying operating profit was marginally lower at £9.1m (2016: £9.3m) as the benefit from increased ship-to-ship transfers and businesses acquired was offset by a lower level of marine service projects and by a slow start from our mass-flow excavation business which suffered from the weakness in the oil & gas sector, particularly in the first four months of the year. The Group's marine services and support contract in relation to the construction of the Galloper Wind Farm performed well in the period but did not see the benefit of additional work.

 

On 22 March 2017, the Group acquired Rotos 360 for an initial consideration of £1.5m with potential further consideration of £5.0m dependant on profit targets for the three years ending 31 December 2019. Rotos 360 uses the latest technological innovation to provide solutions in the inspection, repair and reconditioning of wind farm rotor blades, primarily in the offshore environment. The company was established in 2013 as part of a UK Government funded research project to reduce the cost of operation and maintenance of offshore wind turbines.

 

Specialist Technical


H1 2017

H1 2016

Revenue (£m)

75.7

62.9

Underlying operating profit (£m)

8.5

6.1

Underlying operating margin

11.2%

9.7%

Return on capital employed

18.8%

15.6%

 

Specialist Technical revenue was 20% higher than prior period at £75.7m (2016: £62.9m). Our defence and diving equipment business, JFD, was 24% ahead of 2016, reflecting a full six months from the Indian submarine rescue project compared to three months in 2016, the start of a saturation diving system for China and including 5% relating to businesses acquired. In nuclear decommissioning, whilst the Winfrith reactor project continued to perform well, the business saw a 5% reduction in revenue as a change in UK policy has reduced projects awarded across the supply chain.

 

Underlying operating profit was 39% ahead of the equivalent six months in 2016 at £8.5m (2016: £6.1m) reflecting good contributions from JFD's service contracts, products and submarine rescue and diving equipment projects which more than offset a small reduction in nuclear profitability.

 

JFD successfully completed the first operational dive of its Compact Bailout Rebreathing Apparatus (Cobra) which provides 45 minutes of fully independent breathing gas to a diver in an emergency to enable them to return to the diving bell. Our nuclear decommissioning business, JFN, won its first order to supply a manipulator to China in the second half.

 

Offshore Oil


H1 2017

H1 2016

Revenue (£m)

27.1

27.0

Underlying operating profit (£m)

1.1

2.1

Underlying operating margin

4.1%

7.8%

Return on capital employed

1.6%

3.3%

 

Offshore Oil had a slow start to the year and although revenue was similar to 2016, after adjusting for currencies, it was 7% lower. The majority of the reduction was due to low utilisation levels in the early months of the year which decreased margins.

 

Underlying operating profit was £1.0m lower at £1.1m (2016: £2.1m) and underlying earnings before interest, tax, depreciation and amortisation was £6.4m (2016: £7.6m). Overheads in the half were reduced by a further 10%. Whilst the first half result was lower, the business remains profitable and orders received since May, together with indications from customers, suggest a stronger second half.

 

Tankships


H1 2017

H1 2016

Revenue (£m)

27.4

27.0

Underlying operating profit (£m)

3.9

3.8

Underlying operating margin

14.2%

14.1%

Return on capital employed

29.2%

28.3%

 

Tankships reported a similar result to the first half of 2016 with an operating margin of around 14%. The business operated 14 vessels (2016: 15) in the period and received some benefit from lower bareboat charter costs in the period. It also won a contract to supply two vessels for the refuelling of the HMS Queen Elizabeth during the second half of 2017.

 

Finance

 

Interest and taxation

 

Net interest was £0.2m higher at £2.6m (2016: £2.4m) due to increased borrowings mainly arising from the funding of working capital for the project to design and assemble two submarine rescue vessels for the Indian Navy and from other large projects.

 

The effective tax rate on underlying profit before tax in the period increased to 17.2% (2016: 15.4%). This rate is based on estimates for the full year and has increased due to a greater proportion of profits being earned in higher tax jurisdictions such as Brazil and Ghana. The first half of 2016 also benefitted from adjustments to tax provisions in respect of prior years which has not been repeated in 2017. The Group's tanker operations continue to be taxed with respect to tonnage rather than profits and this reduces the effective rate by 2.3 (2016: 2.4) percentage points in the period.

 

Separately disclosed items

 

The directors consider that alternative performance measures described in note 3 assist an understanding of the underlying trading performance of the businesses. These measures exclude separately disclosed items which consist of gains or losses on the sale of a business, asset impairments and charges or income relating to the acquisition of businesses. The net charge for separately disclosed items after tax in the six months ended 30 June 2017 was £0.8m (2016: £nil).

 

Earnings per share and dividends

 

Underlying profit before taxation increased 6% to £18.6m (2016: £17.5m) due to the strong operating profit growth at Specialist Technical. Underlying diluted earnings per share rose by 2% to 30.1 pence per share (2016: 29.4p), which was lower than the uplift in underlying profit before taxation due to the higher effective tax rate and a larger minority interest charge in the period.

 

Diluted earnings per share after separately disclosed items were 28.5 pence per share (2016: 29.4p). The interim dividend has increased by 10% to 9.40 pence per share (2016: 8.55p) and will be paid on 3 November 2017 to shareholders on the register on 6 October 2017.

 

Cash flow and borrowings

 

Summary cash flow



 

Underlying earnings before interest, tax depreciation and amortisation (Ebitda) increased by 8% to £34.4m (2016: £32.0m). This funded the seasonal increase in working capital of £10.2m and a project related increase of £15.4m, including, as previously stated, working capital in relation to the submarine rescue project for the Indian Navy.

 

Cash conversion, the proportion of underlying operating profit converted into operating cash, excluding the project for the Indian Navy was 62% (2016: 102%). Capital expenditure was 31% up on prior period £11.3m (2016: £8.6m) and £4.2m (2016: £7.7m) was spent on business acquisitions, inclusive of £1.5m of deferred consideration in respect of a business that had been acquired in 2013.

 

 


H1 2017

H1 2016


£m

£m

Underlying operating profit

21.3 

19.9 

Depreciation & amortisation

13.1 

12.1 

Ebitda *

34.4 

32.0 

Working capital

(18.9)

(10.1)

Working capital - Indian Navy

(6.7)

-

Pension / other

(2.3)

(1.7)

Operating cash flow

6.5 

20.2 

Interest & tax

(5.1)

(5.1)

Capital expenditure

(11.3)

(8.6)

Acquisitions

(4.2)

(7.7)

Dividends

(8.8)

(8.0)

Other

0.3

(2.4)

Net outflow

(22.6)

(11.6)

Net borrowings at start of period

(105.7)

(93.9)

Net borrowings at end of period

(128.3)

(105.5)

* Underlying earnings before interest, tax,

  depreciation and amortisation

 

After dividends paid in the period of £8.8m (2016: £8.0m), the net cash outflow was £22.6m (2016: £11.6m) and net borrowings increased to £128.3m (2016: £105.5m). The ratio of net borrowings (which includes project related bonds and guarantees) to ebitda increased in line with management expectations, to 2.2 times (2016: 1.8 times) reflecting the working capital bonds and guarantees in relation to the Indian Navy project. Excluding this project, the ratio would be 1.8 times. Net gearing, the ratio of net debt to equity was to 49% (2016: 46%).

 

Balance sheet

 


30 June 2017

30 June 2016

Intangible assets have increased by £21.8m since June 2016 due to the acquisitions of Lexmar and Hughes in the second half of 2016 and the acquisition of Rotos 360 in March 2017.

 

Working capital was £37.5m higher than prior year due to the project for the Indian Navy which cumulatively is £13.4m and from businesses acquired in the last twelve months amounting to £6.9m. The balance relates to project related outflows, mainly in Specialist Technical and Marine Support reflecting the uneven cash flows of a more project led business.

 

£m

£m

Intangible assets

185.6 

163.8 

Other assets

136.6 

135.7 

Working capital

112.8 

75.3 

Other liabilities

(42.3)

 (38.7)

Capital employed

392.7 

336.1 

Borrowings

128.3 

105.5 

Equity

264.4 

230.6 


392.7 

336.1 




Delivery of the two submarine rescue vessels for the Indian Navy is scheduled for March 2018 and December 2018 and as previously stated, a further increase of working capital in the second half of 2017 of around £15m-£18m is expected which reverses when the vessels are delivered during 2018.

 

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 2016 Annual Report and Accounts on pages 20-22. The principal risks set out in the 2016 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 2016 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

 

29 August 2017

CONDENSED CONSOLIDATED INCOME STATEMENT

for the six months ended 30 June 2017

 



Note

Six months ended

30 June 2017


Six months ended

30 June 2016

Year ended

31 December 2016




£000


£000


£000

Revenue

4

235,775 


209,317 


465,969 

Cost of sales


(168,064)


(144,999)


(324,239)

Gross profit


67,711 


64,318 


141,730 

Administrative expenses


(47,379)


(45,083)


(94,641)

Share of post tax results of joint ventures


924 


647 


1,414 

Acquisition related income and (expense)

7

(1,009)


(83)


1,456 

Operating profit

4

20,247 


19,799 


49,959 









Analysis of operating profit:








Underlying operating profit


21,256 


19,882 


50,781 


Separately disclosed items


(1,009)


(83)


(822)









Net finance expense

5

(2,640)


(2,421)


(5,026)

Profit before taxation


17,607 


17,378 


44,933 









Analysis of profit before tax:








Underlying profit before taxation


18,616 


17,461 


45,755 


Separately disclosed items


(1,009)


(83)


(822)









Income tax

6

(3,014)


(2,567)


(6,786)

Profit for the period


14,593 


14,811 


38,147 









Attributable to:







Owners of the Company


14,387 


14,835 


39,753 

Non-controlling interests


206 


(24)


(1,606)




14,593 


14,811 


38,147 









Earnings per share










pence


pence


pence

Basic

8

28.7


29.6


79.4

Diluted

8

28.5


29.4


78.7

 

CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

for the six months ended 30 June 2017

 


Note

2017


2016


2016



Six months ended


Six months ended


Year ended



30 June


30 June

31 December



£000


£000


£000

Profit for the period


14,593 


14,811 


38,147 

Items that will not be reclassified to the income statement






Remeasurement loss on defined benefit pension schemes

10



(3,054)

Actuarial loss in defined benefit pension schemes



(697)


Tax on items that will not be reclassified


28 


(553)


(124)



28 


(1,250)


(3,178)

Items that may be reclassified subsequently to the income statement






Exchange differences on foreign currency net investments


(2,798)


7,158 


16,771 

Effective portion of changes in fair value of cash flow hedges

5,262 


(2,783)


(3,249)

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

(229)


(213)


(139)

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

(282)


(6)


551 

Deferred tax on items that may be reclassified


(742)


488 


432 



1,211 


4,644 


14,366 

Total comprehensive income for the period


15,832 


18,205 


49,335 








Attributable to:







Owners of the Company


15,642 


18,062 


50,725 

Non-controlling interests


190 


143 


(1,390)



15,832 


18,205 


49,335 

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 30 June 2017

 



2017


2016


2016



30 June


30 June

31 December


Note

£000


£000


£000

Non-current assets







Goodwill


163,661 


147,832 


165,047 

Other intangible assets


21,908 


15,979 


15,453 

Property, plant and equipment


128,536 


128,191 


131,026 

Investment in joint ventures


6,678 


6,031 


6,424 

Available for sale financial assets


1,377 


1,478 


1,377 

Deferred tax assets


1,850 


3,588 


2,852 



324,010 


303,099 


322,179 








Current assets







Inventories


56,392 


49,786 


54,092 

Trade and other receivables


178,674 


150,029 


157,384 

Cash and cash equivalents

11

14,861 


29,720 


21,848 



249,927 


229,535 


233,324 








Current liabilities







Trade and other payables


(122,218)


(124,582)


(129,332)

Current tax


(8,394)


(6,515)


(8,426)

Loans and borrowings


(2,891)


(10,800)


(3,086)



(133,503)


(141,897)


(140,844)

Net current assets


116,424 


87,638 


92,480 

Total assets less current liabilities


440,434 


390,737 


414,659 








Non-current liabilities







Other liabilities


(10,280)


(9,141)


(4,962)

Retirement benefit obligations

10

(25,395)


(26,416)


(26,770)

Cumulative preference shares


(100)


(100)


(100)

Loans and borrowings


(140,192)


(124,345)


(124,380)

Deferred tax liabilities


(111)


(153)


(111)



(176,078)


(160,155)


(156,323)

Net assets


264,356 


230,582 


258,336 








Equity







Called up share capital


12,550 


12,543 


12,543 

Share premium


25,690 


25,573 


25,573 

Treasury shares


(75)


(610)


(554)

Other reserves


4,024 


(6,877)


2,797 

Retained earnings


221,233 


197,422 


216,979 

Equity attributable to owners of the Company


263,422 


228,051 


257,338 

Non-controlling interests


934 


2,531 


998 

Total equity


264,356 


230,582 


258,336 

 

 

 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 30 June 2017

 



2017


2016


2016


Note

Six months ended


Six months ended


Year ended



30 June


30 June

31 December



£000


£000


£000

Profit before tax for the period


17,607 


17,378 


44,933 

Adjustments to reconcile profit before tax to net cash flows







     Depreciation and amortisation


13,942 


12,647 


25,821 

     Acquisition costs charged


135 


60 


727 

     Profit on disposal of fixed assets


(818)


(61)


(556)

     Provision for contract cessation




2,278 

     Adjustment to provision for contingent consideration



(522)


(3,384)

     Net finance expense


2,640 


2,421 


5,026 

     Share of post tax results of joint ventures


(924)


(647)


(1,414)

     Share based payments


218 


577 


1,144 

Increase in inventories


(2,550)


(4,177)


(54)

Increase in trade and other receivables


(23,556)


41 


(5,675)

Decrease/(increase) in trade and other payables


454 


(5,962)


(13,291)

Defined benefit pension cash contributions less service cost


(1,686)


(1,691)


(4,233)

Cash generated from operations


5,462 


20,064 


51,322 

Cash outflow from acquisition costs


(231)



(631)

Income tax payments


(2,848)


(3,376)


(6,930)

Cash flow from operating activities


2,383 


16,688 


43,761 








Investing activities







Dividends from joint venture undertakings


988 


172 


700 

Proceeds from the disposal of property, plant and equipment

1,509 


724 


1,678 

Proceeds from the disposal of investments




144 

Finance income


190 


87 


180 

Acquisition of subsidiaries, net of cash acquired


(4,020)


(7,689)


(19,093)

Acquisition of property, plant and equipment


(9,706)


(7,964)


(13,859)

Development expenditure


(1,622)


(1,376)


(2,672)

Cash flows used in investing activities


(12,661)


(16,046)


(32,922)








Financing activities







Proceeds from the issue of share capital


124 


49 


50 

Finance costs


(2,403)


(1,815)


(4,115)

Purchase of own shares by Employee Share Ownership Trust

(709)


(635)


(556)

Capital element of finance lease repayments


(50)


(81)


(174)

Proceeds from other non-current borrowings


15,868 


16,460 


2,363 

Dividends paid


(8,830)


(8,026)


(12,303)

Dividend paid to minority interest


(416)



Cash flows from financing activities


3,584 


5,952 


(14,735)








Net increase in cash and cash equivalents


(6,694)


6,594 


(3,896)

Cash and cash equivalents at beginning of period


21,848 


22,962 


22,962 

Net foreign exchange differences


(293)


164 


2,782 

Cash and cash equivalents at end of period

11

14,861 


29,720 


21,848 

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 June 2017

 

 


Share


Share

Retained


Other

Treasury

Shareholders'

Non-controlling


Total


capital

premium

earnings


reserves


shares


equity


interests


equity


£000


£000


£000


£000


£000


£000


£000


£000

At 1 January 2017

12,543


25,573


216,979 


2,797 


(554)


257,338 


998 


258,336 

Total comprehensive income

-


-


14,415 


1,227 



15,642 


190 


15,832 

Contributions by and distributions to owners:
















Ordinary dividends paid

-


-


(8,830)




(8,830)



(8,830)

Dividend paid to minority interest

-


-






(416)


(416)

Acquisition of minority interest





(318)




(318)


162 


(156)

Share based payments

-


-


218 




218 



218 

Tax effect of share based payments

-


-


(43)




(43)



(43)

Purchase of shares by ESOT

-


-




(1,094)


(1,094)



(1,094)

Sale of shares by ESOT

-


-




385 


385 



385 

Arising on the issue of shares

7


117





124 



124 


7


117


(8,973)



(709)


(9,558)


(254)


(9,812)

Transfer

-


-


(1,188)



1,188 




At 30 June 2017

12,550



221,233 


4,024 


(75)


263,422 


934 


264,356 






























Share

Share

Retained


Other

Treasury

Shareholders'

Non- controlling


Total


capital

premium

earnings


reserves


shares


equity


interests


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

-


-


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 payments

-


-


577 




577 



577 

Tax effect of share based payments

-


-


16 




16 



16 

Purchase of shares by ESOT

-


-




(1,153)


(1,153)



(1,153)

Sale of shares by ESOT

-


-




518 


518 



518 

Arising on the issue of shares

2


48





50 



50 


2


48


(7,433)



(635)


(8,018)



(8,018)

Transfer

-


-


(1,638)



1,638 




At 30 June 2016

12,543



197,422 


(6,877)


(610)


228,051 


2,531 


230,582 

















 

NOTES TO THE CONDENSED CONSOLIDATED HALF YEAR STATEMENTS

 

1          Basis of preparation

 

James Fisher and Sons plc (the Company) is a public limited company registered and domiciled in England and Wales and listed on the London Stock Exchange. The condensed consolidated half year financial statements of the Company for the six months ended 30 June 2017 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). 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 2016 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 2016.

 

The comparative figures for the financial year ended 31 December 2016 are not the Group's statutory accounts for that financial year. Those accounts which were prepared under IFRS as adopted by the EU (adopted IFRS), have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

 

The consolidated financial statements of the Group for the year ended 31 December 2016 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.co.uk.

 

The half year financial information is presented in Sterling and all values are rounded to the nearest thousand pounds (£000) except where otherwise indicated.

 

The half year report was approved for issue by the Board of Directors on 29 August 2017.

 

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. The Group had £34.0m of undrawn committed facilities at 30 June 2017 and no revolving credit facilities due for renewal within the next twelve months.

 

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 2016.

 

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 as at and for the year ended 31 December 2016.

 

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.  Amortisation of acquired intangible assets and acquisition expenses are recurring in nature where business combinations are part of a group's strategy.  As acquisition expenses fluctuate with activity and to provide a better comparison to businesses that are not acquisitive, the Directors consider that both of these items should be separately disclosed to give a better understanding of operating performance.  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.

 





2017


2016


2016





Six months ended 30 June

Six months ended 30 June

Year ended

31 December





£000


£000


£000

Operating profit



20,247 


19,799 


49,959 

Separately disclosed items before taxation

1,009 


83 


822 

Underlying operating profit


21,256 


19,882 


50,781 

Net finance expense

(2,640)


(2,421)


(5,026)

Underlying profit before taxation

18,616 


17,461 


45,755 

 

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 non-controlling 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 8.

 

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 tax rate by the underlying operating profit, divided by average capital employed.

 

3.4.  Cash conversion

 

       Cash conversion is defined as the ratio of operating cash flow to underlying operating profit.  Operating cash flow comprises cash generated from operations adjusted for dividends from joint venture undertakings.

 

4          Segmental information

 

            Management has determined that the Group has four operating segments reviewed by the Board: Marine Support, Specialist Technical, Offshore Oil and Tankships.  Their principal activities are set out in the Strategic report within the consolidated financial statements of the Group for the year ended 31 December 2016.

 

            The Board assesses the performance of the segments based on operating profit. 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. Inter-segmental sales are made using prices determined on an arms-length basis.  Sector assets exclude cash, short-term deposits and corporate assets that cannot reasonably be allocated to operating segments.  Sector liabilities exclude borrowings, retirement benefit obligations and corporate liabilities that cannot reasonably be allocated to operating segments.

 

Six months ended 30 June 2017











Marine


Specialist

Offshore


Tankships


Corporate


Total


Support


Technical


Oil








£000


£000


£000


£000


£000


£000

Segmental revenue

105,791 


75,993 


27,115 


27,418 



236,317 

Inter-segmental sales

(182)


(300)


(60)




(542)

Revenue

105,609 


75,693 


27,055 


27,418 



235,775 













Underlying operating profit

9,060 


8,496 


1,080 


3,860 


(1,240)


21,256 

Acquisition costs

(12)





(123)


(135)

Amortisation of acquired intangibles

(594)


(132)


(148)




(874)

Operating profit

8,454 


8,364 


932 


3,860 


(1,363)


20,247 

Net finance expense











(2,640)

Profit before tax











17,607 

Income tax











(3,014)

Profit for the period











14,593 













Assets and liabilities












Segmental assets

222,589 


155,808 

131,209 


33,173 


24,480 


567,259 

Investment in joint ventures

3,688 


2,990 


-  




6,678 

Total assets

226,277 


158,798 

131,209 


33,173 


24,480 


573,937 

Segmental liabilities

(61,027)


(53,207)


(8,176)


(6,469)


(180,702)


(309,581)


165,250 


105,591 


123,033 


26,704 


(156,222)


264,356 













Other segmental information












Capital expenditure

3,450 


3,270 


729 


1,975 


287 


9,711 

Depreciation and amortisation

4,785 


1,905 


5,328 


1,652 


272 


13,942 

 

 

Six months ended 30 June 2016













Marine


Specialist


Offshore


Tankships


Corporate


Total



Support


Technical


Oil









£000


£000


£000


£000


£000


£000

Segmental revenue


92,600 


63,441 


27,082 


26,991 



210,114 

Inter-segmental sales


(161)


(525)


(102)


(9)



(797)

Revenue


92,439 


62,916 


26,980 


26,982 



209,317 














Underlying operating profit


9,313 


6,149 


2,089 


3,759 


(1,428)


19,882 

Acquisition costs






(60)


(60)

Adjustment to provision for contingent consideration


522 





522 

Amortisation of acquired intangibles


(192)


(353)





(545)

Operating profit

9,121 


6,318 


2,089 


3,759 


(1,488)


19,799 

Net finance expense












(2,421)

Profit before tax












17,378 

Income tax












(2,567)

Profit for the year












14,811 














Assets and liabilities












Segmental assets

204,243 


109,756 

134,062 


33,073 


45,469 


526,603 

Investment in joint ventures


3,380 


2,651 





6,031 

Total assets

207,623 


112,407 

134,062 


33,073 


45,469 


532,634 

Segmental liabilities


(68,877)


(36,308)


(8,169)


(6,549)


(182,149)


(302,052)



138,746 


76,099 


125,893 


26,524 


(136,680)


230,582 














Other segmental information













Capital expenditure


2,687 


918 


2,969 


1,143 


95 


7,812 

Depreciation and amortisation


3,490 


1,780 


5,463 


1,652 


262 


12,647 

 

 

Year ended 31 December 2016













Marine


Specialist


Offshore


Tankships


Corporate


Total


Support


Technical


Oil








£000


£000


£000


£000


£000


£000

Segmental revenue

203,926 


152,678 


55,490 


55,492 



467,586 

Inter-segmental sales

(354)


(893)


(362)


(8)



(1,617)

Revenue

203,572 


151,785 


55,128 


55,484 



465,969 













Underlying operating profit

20,956 


19,950 


4,200 


8,188 


(2,513)


50,781 

Contract cessation costs

(2,278)






(2,278)

Acquisition costs

(249)


(312)


(166)




(727)

Amortisation of acquired intangibles

(400)


(801)





(1,201)

Adjustment to provision for contingent consideration

2,865 


519 





3,384 

Operating profit

20,894 


19,356 


4,034 


8,188 


(2,513)


49,959 

Net finance expense











(5,026)

Profit before tax











44,933 

Income tax











(6,786)

Profit for the year











38,147 













Assets and liabilities












Segmental assets

208,605 


141,792 


133,611 


33,398 


31,673 


549,079 

Investment in joint ventures

3,744 


2,680 





6,424 

Total assets

212,349 


144,472 


133,611 


33,398 


31,673 


555,503 

Segmental liabilities

(48,440)


(60,335)


(8,363)


(7,160)


(172,869)


(297,167)


163,909 


84,137 


125,248 


26,238 


(141,196)


258,336 

Other segmental information












Capital expenditure

4,622 


2,077 


5,599 


1,413 


160 


13,871 

Depreciation and amortisation

7,437 


4,002 


10,978 


3,166 


239 


25,822 

 

 

5          Net finance expense

 


2017


2016


2016


Six months ended


Six months ended


Year ended


30 June


30 June


31 December


£000


£000


£000

Finance income:






Interest receivable on short-term deposits

188 


88 


205 

Finance expense:






Bank loans and overdrafts

(2,365)


(1,901)


(3,982)

Preference dividend

(2)


(2)


(3)

Finance charges payable under finance leases

(1)


(11)


(36)

Net interest on pension obligations

(309)


(453)


(993)

Unwind of discount on contingent consideration

(151)


(142)


(217)


(2,828)


(2,509)


(5,231)

Net finance expense

(2,640)


(2,421)


(5,026)

 

6          Taxation

 

            The effective tax rate on underlying profit before income tax, based on an estimated rate for the year ending 31 December 2017, is 17.2% (30 June 2016: 15.4%, 31 December 2016: 15.4%).  The effective rate on profit before income tax (after separately disclosed items) is 17.1% (30 June 2016: 14.8%, 31 December 2016: 15.1%). Of the total tax charge, £2.0m relates to overseas businesses (2016: £1.5m), and £1.0m relates to UK businesses (2016: £1.1m).

 

7          Separately disclosed items

              


2017


2016


2016


Six months ended


Six months ended


Year ended


30 June


30 June


31 December


£000


£000


£000

Included in operating profit:






Administrative expenses:






  Contract cessation costs in Angola



(2,278)

Acquisition related income and (expense):






  Costs incurred on acquiring businesses

(135)


(60)


(727)

  Amortisation of acquired intangibles

(874)


(545)


(1,201)

  Adjustment to provision for contingent consideration


522 


3,384 


(1,009)


(83)


1,456 

Separately disclosed items before taxation

(1,009)


(83)


(822)

Tax on separately disclosed items

188 


117 


267 


(821)


34 


(555)

 

8          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 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 2017


30 June 2016


31 December 2016



Number of


Number of


Number of



shares


shares


shares

For basic earnings per ordinary share*

50,144,671


50,066,388


50,096,089

Exercise of share options and LTIPs

401,397


332,104


387,067

For diluted earnings per ordinary share

50,546,068


50,398,492


50,483,156

 

      * Excludes 5,950 (June 2016: 46,619; December 2016: 45,368) shares owned by the James Fisher and Sons plc

        Employee Share Ownership Trust.

           

            To provide a better understanding of the performance of the Group, underlying earnings per share on continuing activities are presented as set out in note 3.

           




2017


2016


2016




Six months ended

Six months ended


Year

 ended




30 June


30 June

31 December




£000


£000


£000

Profit attributable to owners of the Company

14,387 


14,835 


39,753 

Separately disclosed items


1,009 


83 


822 

Non-controlling interest in separately disclosed items



(1,800)

Tax on separately disclosed items

(188)


(117)


(267)

Underlying profit attributable to owners of the Company

15,208 


14,801 


38,508 









Basic earnings per share


28.7 


29.6 


79.4 

Diluted earnings per share


28.5 


29.4 


78.7 

Underlying basic earnings per share


30.3 


29.6 


76.9 

Underlying diluted earnings per share


30.1 


29.4 


76.3 

 

9          Interim dividend

 

            The interim dividend of 9.40p (2016: 8.55p) per 25p ordinary share is payable on 3 November 2017 to those shareholders on the register of the Company at the close of business on 6 October 2017. The dividend recognised in the Condensed Consolidated Statement of Changes in Equity is the final dividend for 2016 of 17.60p which was paid on 9 May 2017.

 

10         Retirement benefit obligations

 

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

   




2017


2016


2016



Six months ended

Six months ended


Year ended




30 June


30 June


31 December




£000


£000


£000

Net obligation as at 1 January

(26,770)


(26,956)


(26,956)

Expense recognised in the income statement

(368)


(507)


(1,172)

Contributions paid to scheme

1,743 


1,744 


4,412 

Remeasurement gains and losses


(697)


(3,054)

At period end


(25,395)


(26,416)


(26,770)

   

The Group's net liabilities in respect of its pension schemes at 30 June 2017 were as follows:

 




2017


2016


2016



Six months ended

Six months ended


Year ended




30 June


30 June


31 December




£000


£000


£000

Shore Staff


(9,435)


(8,498)


(10,057)

Merchant Navy Officers Pension Fund

(7,634)


(9,163)


(8,464)

Merchant Navy Ratings Pension Fund

(8,326)


(8,755)


(8,249)




(25,395)


(26,416)


(26,770)

 

The principal assumptions in respect of these liabilities are disclosed in the December 2016 Annual Report.  The Group has not obtained an interim valuation for the period ended 30 June 2017 as there are no material changes to the principal assumptions.

 

11            Reconciliation of net debt

                   


1 January


Cash


Other


Exchange


30 June


2017


flow


non-cash


movement


2017


£000


£000


£000


£000


£000

Cash and cash equivalents

21,848 


(6,694)



(293)


14,861 

Debt due after 1 year

(124,380)


(16,051)


(311)


534 


(140,208)

Debt due within 1 year

(2,994)


183 


-



(2,807)


(127,374)


(15,868)


(311)


538 


(143,015)

Finance leases

(192)


50 


(25)


(1)


(168)

Net debt

(105,718)


(22,512)


(336)


244 


(128,322)












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)


(116,650)


(16,460)


(125)


(1,873)


(135,108)

Finance leases

(201)


81 



(17)


(137)

Net debt

(93,889)


(9,785)


(125)


(1,726)


(105,525)












1 January


Cash


Other


Exchange

31 December


2016


flow


non-cash


movement


2016


£000


£000


£000


£000


£000

Cash and cash equivalents

22,962 


(3,896)



2,782 


21,848 

Debt due after 1 year

(116,650)


(4,066)


(12)


(3,652)


(124,380)

Debt due within 1 year


1,703 


(4,765)


68 


(2,994)


(116,650)


(2,363)


(4,777)


(3,584)


(127,374)

Finance leases

(201)


174 


(127)


(38)


(192)

Net debt

(93,889)


(6,085)


(4,904)


(840)


(105,718)

 

12         Commitments and contingencies

 

            Commitments and contingencies are as set out in the 2016 Annual Report other than for the following changes. At 30 June 2017, the Group had capital commitments of £8.8m (30 June 2016: £1.6m, 31 December 2016: £0.2m) and the Group had issued performance and payment guarantees to third parties with a total value of £44.7m (30 June 2016: £16.9m, 31 December 2016: £42.4m).

 

13            Related parties

 

There have been no significant changes in the nature of related party transactions in the period ended 30 June 2017 from that disclosed in the 2016 Annual Report.

 

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 2017 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 Guidance 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 2017 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA. 

 

Mike Barradell

for and on behalf of KPMG LLP 

Chartered Accountants 

1 St. Peter's Square

Manchester

M2 3AE  

 

29 August 2017

 


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

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