James Fisher and Sons Regulatory News (FSJ)

18 Mar 2008 07:01

Fisher (James) & Sons PLC18 March 2008 18 March 2008 James Fisher and Sons plc (James Fisher) Full Year Results 2007 James Fisher, the UK marine services provider, announces results for the FullYear 2007. 2007 2006 Revenue (£m) + 54% £182.0m £118.1m Profit from operations (£m)* + 35% £21.5m £15.9m Profit before tax (£m)* + 21% £19.2m £15.9m Adjusted basic earnings per share (pence)* + 16% 32.85p 28.30p Final dividend per share (pence) + 15% 7.52p 6.54p * Profit before separately disclosed items Highlights • Organic growth the main source of increased profitability • Offshore Oil - strong performance from Norwegian and Aberdeen operations, resulting in good operating profit growth at steady margins • Specialist Technical - good revenue and operating profit growth, driven by the excellent performance of FenderCare and the first full year's contribution from The Strainstall Group • Defence - increased operating profit and steady margins, resulting from a number of submarine rescue projects • Marine Oil - Successful integration of FT Everard with segmental profit of £8.6 million after £800,000 one-off merger costs charged against profit Commenting on the results, Chairman, Tim Harris, said: "2007 was another good year for James Fisher with significant increases in allthe key financial metrics. James Fisher has a proven track record, consistentlygenerating cash and good margins. Trading so far in 2008 has met managementexpectations. Our main markets of shipping, offshore and port services remainstrong. The company is well placed in these markets to continue to produce goodgrowth and value for our shareholders." For further information: James Fisher and Sons plc Tim Harris, Chairman 020 7614 9508www.james-fisher.co.uk Nick Henry, Chief Executive Officer Michael Shields, Group Finance Director Financial Dynamics Richard Mountain/Sophie Kernon 020 7269 7121 CHAIRMAN'S STATEMENT 2007 Chairman's Statement Highlights 2007 was another good year for James Fisher with profit on continuing operationsbefore tax up 21% on 2006 and basic earnings per share up by 16%. Particularhighlights were: • organic growth was the prime source of increased profitability• the Everard integration has been successfully completed and returns are approaching planned levels• robust cash flow enabled the Company to spend £15.2 million on acquisitions and still reduce financial gearing. Strategy James Fisher's goal is to be recognised as the UK's leading marine servicecompany. Its strategy is to grow its marine service activities based on itscore expertise of the practical application of technical and operational skillsin the marine sector. Key factors of this strategy are:1. to use the strong cash flows from Marine Oil Services (Tankships) to grow the Marine Support Divisions of Offshore Oil, Specialist Technical and Defence by capital investment and acquisitions2. to encourage organic growth in these marine support divisions3. to focus on high cash generating, high margin niche businesses4. to develop the Group's ship management activities into one of the UK's leading marine 'centres of excellence' based on tankships, which can be leveraged in the other marine services divisions The results are released against an uncertain global economic backdrop. While itwould be unrealistic to suggest that James Fisher is immune from the generaleconomy, we believe it is well placed to ride out and indeed prosper in anyupcoming storm because: • it has a proven track record generating cash and organic profit growth• its businesses are firmly established in three of the fastest growing market sectors, eg offshore oil, marine and port related services• a growing proportion of group revenue (2007 37% - 2006 30%) is now generated outside the UK• as a service business it is largely unaffected by cyclical swings in asset values• it has good, long-term relationships and credit lines with its banks and healthy margins on its bank covenants Offshore Oil Division - 2007 divisional result £8.6m (2006 £7.3m) Profits grew 17% over last year, with both margins and returns on capitalemployed (including goodwill) steady at around 33% and over 16% respectively.Organic profit growth was 57%. The only acquisition in Offshore Oil during theyear was of Buchan Technical Services Limited in May for net cash of £3.5million. This division is evenly split between its bases in Stavanger, Norway andAberdeen. It enjoys a number of distinct market niches - hiring, customisingand selling specialist equipment, together with the associated labour, to theoffshore market. This equipment includes compressors, generators, reels,winches and other lifting equipment. Increasingly it is going with establishedEuropean based contractors beyond the North Sea into the new oil provinces ofthe world. Its customers operate across the oil production, construction and maintenancemarkets as well as exploration. These markets remain strong with good prospectsreflecting the global economy's demand for oil. Specialist Technical - 2007 divisional result £6.3 million (2006 £4.3 million) This division enjoyed strong revenue and profit growth in 2007, with revenue up69% and profits 47% greater than in the previous year. Of this profit growth,74% was organic. Overall margins were slightly lower at 9.5% in 2007, from10.9% last year. This was primarily caused by the start up costs of JamesFisher Inspection and Measurement Services Limited (JFIMS). This division is well placed strategically in the service markets related toworld shipping, port related services and offshore, all of which are growingrapidly. It also has a modest exposure to the UK nuclear decommissioning marketwhich has potential, but is not yet as fast growing as other markets in whichthis division operates. The FenderCare group, the James Fisher cluster most directly related to worldshipping and ports development, again enjoyed strong growth in all itsactivities. The Strainstall group, whose prime expertise is the application of strain andsimilar gauges, enjoyed a strong year in its first full year in the Group. Ittoo is focused on the port and shipping industries, but its applications includea wider range than FenderCare, including the rail industry. We made a smallacquisition in February 2008 for £3.0 million net cash - JCM Scotload Limited,which is involved in the design and application of strain gauges - to strengthenthe Strainstall cluster. James Fisher's "downhole" cluster based on Remote Marine Systems Limited (RMS)was strengthened by the purchase of the Aberdeen based Pump Tools Limited(Pumptools) for £7.4 million net cash in October 2007. RMS and Pumptoolsproduce related, specialist electrical submersible pump (ESP) equipment for theoil industry and will shortly start joint marketing. In the typical JamesFisher way they enjoy strong market niches in a fast growing market and we areoptimistic about this cluster's growth potential. James Fisher's nuclear cluster is based on the core skills of remote handlingand plant characterisation for nuclear decommissioning and inspectionmeasurement services. The nuclear decommissioning industry in the UK iscurrently in a state of confusion and some restriction of funds. Our policy isto identify and invest in market sectors where our skills are not commoditisedand can command a decent margin. In line with this policy, in July 2007 westrengthened our start-up, JFIMS, through the acquisition of Inspection HoldingsLimited and its main operating subsidiary, NDT Inspection and Testing LTD (NDT),for £1.0 million net cash. The JFIMS start-up has been successful and to plan and we expect our nuclearcluster to show real progress in 2008. Defence Division - 2007 divisional result £3.0 million (2006 £3.0 million) The 2007 operating profit result was 8% better than 2006 when a one off taxcredit of £0.2 million from Foreland Shipping Limited, our military roll on-rolloff (ro-ro) shipping associate company, is eliminated from the result for theearlier year. Margins on a like for like basis remained steady at 26%. TheDefence division has two principal activities: the design, construction andoperation of submarine rescue equipment and the operation of surface ships withthe services associated thereto. Submarine rescue has been particularly active in 2007 with the construction ofrescue vehicles for the South Korean (delivery end 2008) and Singaporean (1sthalf of 2009) navies well underway. The Korean contract is for thestraightforward delivery of a rescue vehicle and is funded by stage paymentsthroughout the build period. The Singaporean contract is more comprehensive aswe work together with our partners, Singapore Technologies Marine Limited (STMarine) the Singapore naval dockyard, to provide a through life rescue serviceuntil 2029. We are funding the construction of the rescue vessel from our ownresources until its sale in 2009 to a 50/50 joint venture company with STMarine, who are providing the mother ship. It is then planned to re-finance thejoint venture company with Singaporean banks. Both Korean and Singaporeanvessels, which share a similar design, are under construction in our Renfrewbase and progress to date has been to plan both in terms of costs and timeline.We have taken revenue of £4.4 million and profit of £0.3 million on the Koreancontract in the 2007 results. No revenue or profit has been taken on theSingaporean contract and costs to date of £3.8 million have been included inwork in progress. For the surface vessels Foreland, the military ro-ro PFI company in which wehave a 25% shareholding, continues to prosper. During the year we were awardedthe management of the lay-up of three corvettes built by BAe Systems for theBrunei Navy. One of these has since been re-activated and has successfullycompleted a series of sea trials. This exercise demonstrated the range ofmarine skills that James Fisher offers, skills which are becoming increasinglyrare in the UK. Marine Oil Services Division - 2007 divisional result £8.6 million (2006 £5.8million) There was much activity in this division in 2007 owing to the Everardacquisition made on 28 December 2006. The Everard fleet was commercially,operationally and managerially integrated with James Fisher Tankships to formJames Fisher Everard Limited by the half year, when we announced one off mergercosts of £800,000 which had been charged directly against profit. Despite this,profit for the full year 2007 was 48% higher than 2006 and importantly marginsat 11.3% (12.4% after adjustment for the £800,000 merger costs) were close tothose of 2006 (12.7%). The return on capital was 12% in 2007, unchanged from2006, the great majority of which is effectively tax free because of thetonnage tax. Through greater productivity with a larger fleet our aim is topush margins and return on capital closer to those achieved by James Fisher inearlier years, eg 2005, margin 15%, ROCE 13%. Highlights of a busy year included the entry to trade of the last two of thefour Everard 4,000 tonne newbuildings, mt Superiority and mt Supremity and there-financing of the first three of them as bareboat charters raising £22.6million. We also sold two older ships, mt Severn Fisher and mt Agility, for£3.3 million cash booking a profit of £0.2 million. A further vessel, mtAlacrity, has been sold in January 2008 for £1.5 million net cash. James Fisher Everard has recently been awarded a contract from the EuropeanMaritime Safety Agency (EMSA) to provide standby oil recovery services. Thiscontract is for the provision of three tankers from the James Fisher Everardfleet which have been prepared to receive emergency oil recovery equipment sothat they can be called on in case of an oil slick emergency. It has an initialthree-year period from 31 March 2008, renewable for a further three years andwill provide gross revenue earnings of £1 million per annum. Directors and Employees There have been no changes to the Board during the year other than WilliamEverard who stood down as Technical Director of the Fleet in September after themerger of the two fleets to create James Fisher Everard. I would like to thankWilliam for his contribution to the process. He will continue to represent theCompany in a number of industry bodies. Actuarial losses on defined benefit schemes during the year caused a £4.6million charge to reserves compared to a £4.1 million write-back in 2006 withthe industry MNOPF scheme for officers, the main cause. This scheme is now theprimary area of focus because all of the other schemes have been closed to newentrants but as an industry scheme it is less easy to influence. Realisticallyincreased deficits must be anticipated in 2008 owing to a likely combination oflower interest rates together with increased life expectancy assumptions. James Fisher continues to grow in terms of employee numbers and in 2007 employedover 1,300 people. Particularly interesting is that we are now increasinglyable to offer qualified people of talent, engineering work to support ourtechnically based marine support activities and much of this work is in Cumbriaand the North where such employment is particularly beneficial. I would like torecognise and thank all at James Fisher for their contribution in making 2007another successful year. Outlook James Fisher has a proven track record, consistently generating cash and organicprofit growth. Trading so far in 2008 has met management expectations. Our main markets ofshipping, offshore and port services continue to be strong. Both the offshoreoil and specialist technical divisions are well positioned to continue to growprofits organically, as they have in recent years. We shall continue to supportthem by selective capital expenditure and further "bolt on" acquisitions. In Defence our main task in 2008 will be to deliver the Korean and Singaporeansubmarine contracts on time and to budget. If we achieve this, our globalleadership of this market will be confirmed. Our aim for Marine Oil must be to consolidate the progress made in 2007 withJames Fisher Everard and, through hard work and increased productivity, toimprove margins to the historical levels earned by James Fisher. The Company is well placed in its markets to continue to produce good growth andvalue for our shareholders. GROUP INCOME STATEMENTFor the year ended 31 December 2007 Notes Year ended Year ended 31 December 2007 31 December 2006 Before Separately Before Separately separately disclosed separately disclosed disclosed items disclosed items items note 4 Total items note 4 Total £000 £000 £000 £000 £000 £000 Group revenue 182,046 182,046 118,085 118,085Cost of sales (154,327) (154,327) (96,438) (96,438)Gross profit 27,719 27,719 21,647 21,647 Administrative expenses (6,191) (6,191) (5,756) (5,756) Profit from operations before 2 21,528 21,528 15,891 15,891separately disclosed items Profit on sale of property - - - - 1,126 1,126 Impairment of ship - - - - (2,906) (2,906) Profit/(loss) on ship - 95 95 - (24) (24) disposals Profit from operations 21,528 95 21,623 15,891 (1,804) 14,087 Finance costs Finance income (revenue) 375 - 375 316 - 316 Finance costs (5,036) - (5,036) (2,586) - (2,586) Exchange (loss)/gain on - (184) (184) - 35 35 loan conversion (4,661) (184) (4,845) (2,270) 35 (2,235) Share of post tax results of 2,322 - 2,322 2,295 - 2,295joint ventures Profit on continuing operations 19,189 (89) 19,100 15,916 (1,769) 14,147before taxationTaxation 5 (2,959) - (2,959) (2,034) (377) (2,411)Profit for the year on 16,230 (89) 16,141 13,882 (2,146) 11,736continuing operations Discontinued operations(Loss)/profit for the year from 3 (6) 2,041discontinued operations Profit for the year 16,135 13,777Profit attributable to :Equity holders of the parent 16,078 13,780Minority interests 57 (3) 16,135 13,777 Earnings per share pence penceBasic EPS from continuing 6 32.67 23.93operationsDiluted EPS from continuing 6 32.40 23.71operations Basic EPS on profit/(loss) from 6 32.66 28.09total operationsDiluted EPS on profit/(loss) 6 32.39 27.83from total operations Adjusted Earnings per share Basic EPS from continuing 6 32.85 28.30operationsDiluted EPS from continuing 6 32.58 28.05operations GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSEFor the year ended 31 December 2007 Notes Year ended Year ended 31 December 2007 31 December 2006 £000 £000 Income and expense recognised directly in equity Exchange differences on translation of foreign operations: Currency translation differences 393 189 Net investment hedge 1,041 (571) 1,434 (382) Fair value (losses)/gains on cash flow hedges (188) 62 Share of fair value (losses)/gains of cash flow hedges in joint (280) 39venture Actuarial (losses)/gains on defined benefit schemes (4,587) 4,143 (3,621) 3,862 Transfers to the income statement On cash flow hedges 8 7 Tax on items taken directly to equity 5 (199) (772) Net (expense)/income recognised directly in equity (3,812) 3,097 Profit for the year 16,135 13,777 Total recognised income for the year 8 12,323 16,874 Attributable to:Equity holders of the parent 12,266 16,877Minority interests 57 (3) 12,323 16,874 GROUP BALANCE SHEETAs at 31 December 2007 Restated note 11 Notes 31 December 2007 31 December 2006 £000 £000 AssetsNon current assetsGoodwill 67,190 55,814Other intangible assets 76 60Property, plant and equipment 92,311 103,620Investment in joint ventures 4,217 3,575Available for sale financial assets 1,370 1,370Retirement benefit assets 9 528 - 165,692 164,439 Current assetsInventories 18,471 11,268Trade and other receivables 39,823 32,865Derivative financial instruments - 17Cash and cash equivalents 13,221 9,655 71,515 53,805 Non-current assets classified as held for sale 3 1,172 1,518 Total Assets 238,379 219,762 Equity and Liabilities Capital and reservesCalled up share capital 8 12,428 12,377Share premium 8 24,338 24,114Treasury shares 8 (1,134) (1,147)Other reserves 8 878 (96)Retained earnings 8 57,395 50,932Shareholders' Equity 93,905 86,180Minority interests 8 128 71Total equity 94,033 86,251 Non current liabilitiesOther payables 2,012 2,358Retirement benefit obligations 9 11,904 10,224Derivative financial instruments 188 -Cumulative preference shares 100 100Financial liabilities 83,628 72,449Deferred tax liabilities 2,226 1,987 100,058 87,118Current liabilitiesTrade and other payables 34,907 33,987Current tax 1,940 1,207Derivative financial instruments - 55Financial liabilities 7,441 11,144 44,288 46,393 Total liabilities 144,346 133,511 Total equity and liabilities 238,379 219,762 GROUP CASH FLOW STATEMENTFor the year ended 31 December 2007 Notes 31 December 2007 31 December 2006 £000 £000 Group profit before tax from continuing operations 19,100 14,147Adjustments to reconcile Group profit before tax tonet cash flows(Loss)/profit from operations from discontinued operations (6) 2,042 Depreciation and amortisation 8,344 5,662 Profit on sale of plant and equipment (735) (377) Profit on disposal of property - (1,126) Impairment of non-current assets - 2,906 Profit on ship disposals (95) (1,912) Interest income (375) (316) Interest expense 5,220 2,551 Share of profits of joint ventures (2,322) (2,295)Increase in trade and other receivables (4,669) (3,310)Increase in inventories attributable to submarine rescue vessels (3,707) (198)Increase in other inventories (3,203) (1,827)Increase in trade and other payables 4,890 2,553Additional defined benefit pension scheme contributions (3,147) (2,979)Share based compensation 587 516Cash generated from operations 19,882 16,037Income tax payments (2,840) (1,481)Cash flows from operating activities 17,042 14,556 Investing activitiesDividends from joint venture undertakings 1,416 1,275Proceeds from the sale of property, plant and equipment 28,377 12,255Proceeds from the sale of subsidiaries net of cash disposed of 491 -Interest received 377 320Acquisition of subsidiaries, net of cash acquired (18,486) (22,151)Acquisition of property, plant and equipment (22,967) (7,424)Acquisition of investment in joint ventures (27) -Acquisition of available for sale financial asset - (1)Cash flows used in investing activities (10,819) (15,726) Financing activitiesProceeds from the issue of share capital 275 170Preference dividend paid (4) (3)Interest paid (4,932) (2,807)Proceeds from other non-current borrowings 43,855 28,912Purchase less sales of own shares by ESOP (274) (229)Capital element of finance lease repayments (75) (7)Repayment of borrowings (37,017) (20,362)Dividends paid (5,129) (4,499)Cash flows (used in)/from financing activities (3,301) 1,175 Net increase in cash and cash equivalents 2,922 5Cash and cash equivalents at 1 January 2007 9,655 9,725Net foreign exchange difference 644 (75) Cash and cash equivalents at 31 December 2007 13,221 9,655 NOTES TO THE PRELIMINARY RESULTS 1. General information Statement of compliance The consolidated financial statements have been prepared in accordance with IFRS adopted by the European Union (EU) as at 31 December 2007 and are applied in accordance with the provisions of the Companies Act 1985. Basis of preparation of group accounts The Group financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated. The financial information set out above does not constitute statutory accounts for the years ended 31 December 2007 or 2006 as defined in section 240 of the Companies Act 1985 but is derived from those financial statments. Statutory accounts for 2006 have been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain any statement under section 237(2) or (3) of the Companies Act 1985. The auditors have given an unqualified opinion on the accounts for the year ended 31 December 2007. These will be delivered to the Registrar of Companies following the annual general meeting. 2. Segmental Information Primary reporting format business segments The following tables present revenue and profit and certain asset and liability information regarding the Group's business segments for the years ended 31 December 2007 and 2006. Year ended Discontinued31 December 2007 Continuing Operations Operations Offshore Oil Specialist Defence Marine Total Cable Total Services Technical Oil Ships Services Services £000 £000 £000 £000 £000 £000 £000Revenue Segmental revenue 26,311 69,264 14,132 75,932 185,639 -Inter segment sales - (3,406) (187) - (3,593) - Group revenue 26,311 65,858 13,945 75,932 182,046 - Result Segmental result before ship 8,566 5,713 1,228 8,605 24,112 (6)disposals Common costs (2,584)Profit from operations before separately disclosed items and joint 21,528ventures Profit on ship disposals 95 - Profit from operations before 21,623 (6)joint ventures Finance income (revenue) 375 -Finance costs (5,036) -Exchange loss on loan conversion (184) - (4,845) - Share of post tax results of 548 1,774 2,322joint ventures Profit before tax 19,100 (6) Taxation (2,959) -Profit attributable to equity 16,141 (6)holders Assets & Liabilities Segment assets 57,941 68,289 12,405 89,793 228,428 - 228,428Investment in joint ventures - 946 3,271 - 4,217 - 4,217Non-current assets classified 1,172 1,172 - 1,172as held for saleUnallocated assets 4,562 4,562Total assets 238,379 - 238,379 Segment liabilities (4,358) (12,434) (2,432) (19,107) (38,331) - (38,331)Unallocated liabilities (106,015) - (106,015)Total liabilities (144,346) - (144,346) Other segment informationCapital expenditure:Property, plant & equipment 7,139 4,814 67 10,938 22,958 - 22,958Unallocated 991 991 23,949 - 23,949 Intangible fixed assets 76 76 76 Depreciation 1,934 836 57 5,334 8,161 - 8,161Amortisation of intangible 5 5 - 5assetsUnallocated 178 178 8,344 - 8,344 Year ended Discontinued31 December 2006 Continuing Operations Operations Offshore Oil Specialist Defence Marine Total Cable Total Services Technical Oil Ships Services Services £000 £000 £000 £000 £000 £000 £000Revenue Segmental revenue 21,977 42,282 11,197 45,937 121,393 -Inter segment sales - (3,217) (91) - (3,308) - Group revenue 21,977 39,065 11,106 45,937 118,085 - Result Segmental result before ship 7,320 3,919 1,024 5,819 18,082 106disposals Common costs (2,191)Profit from operations before separately disclosed items and joint 15,891ventures Profit on sale of property 1,126 -Impairment of ship (2,906) -(Loss)/profit on ship disposals (24) 1,936 Profit from operations before joint 14,087 2,042ventures Finance income (revenue) 316 -Finance costs (2,586) -Exchange loss on loan conversion 35 - (2,235) - Share of post tax results of 346 1,949 2,295joint ventures Profit before tax 14,147 2,042 Taxation (2,411) (1)Profit attributable to equity 11,736 2,041holders Assets & Liabilities Segment assets 45,432 46,770 8,844 109,692 210,738 10 210,748Investment in joint ventures - 598 2,977 - 3,575 - 3,575Non-current assets classified as 1,518 1,518 1,518held for saleUnallocated assets 3,921 3,921Total assets 219,752 10 219,762 Segment liabilities (3,895) (9,130) (1,082) (16,430) (30,537) (58) (30,595)Unallocated liabilities (102,916) - (102,916)Total liabilities (133,453) (58) (133,511) Other segment informationCapital expenditure:Property, plant & equipment 3,108 2,973 58 41,634 47,773 - 47,773Unallocated 611 611 48,384 48,384Intangible fixed assets 60 60 60 Depreciation 1,527 543 89 3,353 5,512 5,512Amortisation of intangible 1 1 1assetsUnallocated 149 149 5,662 - 5,662 Geographical segments The following table represents revenue, expenditure and certain asset information regarding the Group's geographical segments for the years ended 2007 and 2006. UK & Ireland Norway Rest of the World Total 2007 2006 2007 2006 2007 2006 2007 2006 £000 £000 £000 £000 £000 £000 £000 £000RevenueSegmental revenue 118,015 85,621 18,271 9,988 49,353 25,784 185,639 121,393Inter-segment sales (3,593) (3,308) - - - - (3,593) (3,308)Group revenue 114,422 82,313 18,271 9,988 49,353 25,784 182,046 118,085 Segment assets 183,522 178,158 36,044 28,350 8,861 4,240 228,427 210,748Investment in joint 3,271 2,977 - - 946 598 4,217 3,575venturesNon-current assetsclassified asheld for sale 1,172 1,518 1,172 1,518Unallocated assets 4,563 3,921 238,379 219,762 Segment liabilities (34,083) (26,767) (2,318) (2,897) (1,930) (931) (38,331) (30,595)Unallocated liabilities (106,015) (102,916) (144,346) (133,511) Capital expenditure:Property, plant and 17,919 47,088 3,432 1,294 2,598 2 23,949 48,384equipment 3. Discontinued operations Discontinued operations relate to the withdrawal of the Group from cable laying activities announced in 2005. Following the disposal in 2005 of the cable ship CS Oceanic Pearl, the remaining vessel, CS Oceanic Princess, was disposed of on 12 June 2006. The results of discontinued operations are presented below: 2007 2006 £000 £000 Cost of sales (6) 106Gross (loss)/profit (6) 106 Profit on ship disposals - 1,936 (Loss)/profit before tax from discontinued operations (6) 2,042Taxation - (1)Net (loss)/profit attributable to discontinued operations (6) 2,041 Taxation is payable on the (loss)/profit from operations under the tonnage tax regime as explained in note 5. The net cash flows attributable to discontinued operations are: 2007 2006 £000 £000 Operating cash flows (10) 3,366 Investing cash flows - 9,357 Financing activities - (6,933) (10) 5,790 (Loss)/earnings per share from discontinued operations (pence): pence pence Basic (0.01) 4.16 Diluted (0.01) 4.12 Non current assets held for sale At 31 December 2007 the mt Alacrity which was disposed of by the Group in January 2008 was classified as held for sale and was recorded at its carrying value of £1,172,000. The assets classed as held for sale at 31 December 2006 were the mt Allurity and mt Arduity which were disposed of by the Group in January 2007. The vessels were recorded at their fair value less costs to sell. 4. Separately disclosed items Separately disclosed items consist of: 2007 2006 £000 £000 Profit on sale of property - 1,126Impairment of ship - (2,906)Loss on ship disposals (77) (24)Profit on ship disposals 172 -Exchange (loss)/gain on loan conversion (184) 35 (89) (1,769) In June 2007 the Group carried out a refinancing exercise which involved the disposal of mt Seniority, mt Speciality and mt Superiority to FSL Trust Management for a consideration of £22,602,000 the proceeds of which were used to repay existing debt. These vessels have subsequently been chartered by the Group on bareboat charters for an initial period of ten years. The loss on disposal also includes the sale of mt Allurity and mt Arduity in January 2007 and mt Severn Fisher in December 2007. The profit on ship disposals relates to the mt Agility which was disposed of in October 2007. Year ended 31 December 2006 On 1 December 2006 the Group disposed of an industrial property at Bridge of Don, Aberdeen for a gross consideration of £2,100,000. The Directors performed an impairment review of the carrying value of the mt Severn Fisher, built in 1983 and the Group's oldest tanker. The review took account of the ending of a contract with the Ministry of Defence in 2006 and the limits to trading in the European Union increasingly imposed by the International Maritime Organisation and the major oil companies as the vessel neared the twenty fifth anniversary of its construction. The review took into account the expected residual value and the cost and revenues anticipated to arise during the period prior to disposal, discounted at a rate of 6.5% which the Directors believed took into account the risks associated with the relevant cash flows. As a result the Group recognised an impairment provision against the carrying value of the vessel of £2,906,000 in the income statement. This vessel was disposed of in December 2007 realising an additional loss of £8,000. The loss on ship disposals in 2006 arose from adjustments following the sale in 2005 of the CS Oceanic Pearl and mt Tees Fisher and mt Wear Fisher. The exchange differences on loans arose on foreign currency loans used to finance the acquisition of vessels in the UK. The tax arising on these items is £Nil (2006: £377,000). 5. Taxation The group has entered the UK tonnage tax regime under which tax on its ship owning and operating activities is based on the net tonnage of vessels operated. Any income and profits outside the tonnage tax regime are taxed under the normal tax rules of the relevant tax jurisdiction. The tax charge is made up as follows: 2007 2006 £000 £000Current tax:UK tonnage tax (31) (21)UK corporation tax (1,433) (1,309) (1,464) (1,330) Tax overprovided in previous years 175 770Foreign tax (1,542) (883)Total current tax (2,831) (1,443)Deferred tax:Group deferred tax (128) (969)Total taxation on continuing operations (2,959) (2,412) Share of joint ventures' current tax (20) 130 The total tax charge in the income statement is allocated as follows: 2007 2006 £000 £000Taxation expense reported in group income statement 2,959 2,411Taxation attributable to discontinued activities - 1Total tax expense 2,959 2,412 Tax (charged)/credited to equity in statement of recognised income and expense: 2007 2006 £000 £000Deferred tax:Deferred tax relating to the actuarial gains and losses on defined benefit pension (276) (772)schemesDeferred tax relating to share based payments 77 - (199) (772) Reconciliation of effective tax rate The tax on the Group's profit before tax differs from the theoretical amountthat would arise using the rate applicable under UK corporation tax rules asfollows: 2007 2006 £000 £000Profit before tax from continuing operations 19,100 14,147(Loss)/profit before tax from discontinued activities (6) 2,042 19,094 16,189 At UK statutory tax rate of 30% (2006: 30%) 5,728 4,857 Difference due to application of tonnage tax to all vessel disposals and operating (1,882) (1,394)activitiesExpenses not deductible for tax purposes 42 673Chargeable gains (22) 60Over provision in previous years Current tax (175) (770) Deferred tax (269) (190)Share based payments - (650)Lower taxes on overseas income (272) (174)Rate change on deferred tax (174) -Other (17) - 2,959 2,412 Group Deferred tax at 31 December relates to the following: Group Group Balance sheet Income statement 2007 2006 2007 2006 £000 £000 £000 £000Deferred tax assetsRetirement benefits 190 677 (189) (362)Share based payments 443 248 118 23 633 925Deferred tax liabilitiesAccelerated capital allowances for tax purposes (1,383) (1,447) (46) (630)Roll over gains (1,476) (1,465) (11) - (2,859) (2,912) Deferred income tax charge (128) (969)Net deferred income tax liability (2,226) (1,987) 6. Earnings per share Basic earnings per share are calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year, after excluding ordinary shares purchased by the employee share ownership trust and held as treasury shares. Diluted earnings per share are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. The calculation of basic and diluted earnings per share is based on the following profits and numbers of shares: 2007 2006 £000 £000Profit attributable to equity holders 16,078 13,780Loss/(profit) attributable to discontinued activities 6 (2,041)Profit on continuing activities attributable to equity 16,084 11,739holders Weighted average number of shares 2007 2006 Number of Number of shares sharesFor basic earnings per ordinary share* 49,236,346 49,058,347Exercise of share options and LTIPs 399,411 449,306For diluted earnings per ordinary share 49,635,757 49,507,653 * Excludes 312,870 (2006:392,592) shares owned by the James Fisher andSons Public Limited Company Employee Share Ownership Trust. 2007 2006 £000 pence £000 pence Basic earnings per share 16,078 32.66 13,780 28.09 Loss/(profit) attributable to discontinued activities 6 0.01 (2,041) (4.16) Basic earnings per share on profit from continuingoperations 16,084 32.67 11,739 23.93 Diluted earnings per share 16,078 32.39 13,780 27.83 Loss/(profit) attributable to discontinued activities 6 0.01 (2,041) (4.12) Diluted earnings per share on profit from continuingoperations 16,084 32.40 11,739 23.71 Adjusted Earnings per Share The basic earnings per share on continuing activities before separately disclosed items is shown to highlight the underlying earnings trend and is calculated using the number of shares outlined in the table above. 2007 2006 £000 pence £000 penceBasic earnings per share on profit on continuingoperations 16,084 32.67 11,739 23.93Adjustments:Exchange loss/(gain) on loan conversion 184 0.37 (35) (0.07)(Profit)/loss on ship disposals (95) (0.19) 24 0.05Profit on sale of property including tax effect of - - (749) (1.53)£377,000Impairment of ship - - 2,906 5.92Basic adjusted earnings per share on profit oncontinuing operations 16,173 32.85 13,885 28.30 Diluted earnings per share on profit on continuingoperations 16,084 32.40 11,739 23.71Adjustments:Exchange loss/(gain) on loan conversion 184 0.37 (35) (0.07)(Profit)/loss on ship disposals (95) (0.19) 24 0.05Profit on sale of property including tax effect of - - (749) (1.51)£377,000Impairment of ship - - 2,906 5.87Diluted adjusted earnings per share on profit oncontinuing operations 16,173 32.58 13,885 28.05 7. Dividends paid and proposed 2007 2006 £000 £000Declared and paid during the year Equity dividends on ordinary shares:Final dividend for 2006 6.54p (2005 5.69p) 3,238 2,816Interim dividend for 2007 3.89p (2006 3.47p) 1,929 1,717 Less dividends on own shares held by ESOP (38) (34) 5,129 4,499 Proposed for approval at Annual General Meeting (not recognised as a liability at 31 December) Equity dividends on ordinary shares:Final dividend for 2007 7.52p (2006 6.54p) 3,715 3,212 8. Reconciliation of movements in equity GROUP Capital Reserves Share Share retained Other Treasury Total Minority Total capital premium earnings reserves shares shareholders Interests equity equity £000 £000 £000 £000 £000 £000 £000 £000At 1 January 2006 12,345 23,960 38,030 178 (1,184) 73,329 - 73,329 At acquisition - - - - - - 74 74 Total recognised income 17,151 (274) - 16,877 (3) 16,874and expense in theperiodOrdinary dividends paid (4,499) (4,499) (4,499) Share-based 516 516 516compensation expense Purchase of shares (242) (242) (242)Sale of shares 13 13 13Arising on the issue of 32 154 186 186shares Transfer on disposal of (266) 266 - -shares At 31 December 2006 12,377 24,114 50,932 (96) (1,147) 86,180 71 86,251 At acquisition - - - - - - - - Total recognised income 11,292 974 - 12,266 57 12,323and expense in theperiodOrdinary dividends paid (5,129) (5,129) (5,129)Share-based 587 587 587compensation expense Purchase of shares (276) (276) (276)Sale of shares 2 2 2Arising on the issue of 51 224 275 275shares Transfer on disposal of (287) 287 - - -sharesAt 31 December 2007 12,428 24,338 57,395 878 (1,134) 93,905 128 94,033 Other reserves Translation Hedging Total reserve reserve £000 £000 £000At 1 January 2006 212 (34) 178Cash flow hedges:Transferred to the income 7 7statementFair value losses in 62 62the periodShare of fair value gains of 39 39joint venturesRecognised income in the period including the effect of (382) (382)net investment hedgesAt 31 December 2006 (170) 74 (96) Cash flow hedges:Transferred to the income 8 8statementFair value gains in the - (188) (188)periodShare of fair value gains of - (280) (280)joint venturesRecognised income in the period including the effect of 1,434 - 1,434net investment hedgesAt 31 December 2007 1,264 (386) 878 9. Retirement benefit obligations The Retirement benefit obligations included in the Group balance sheets relate to three defined benefit schemes operated by the Group, being The James Fisher and Sons Public Limited Company Pension Fund for Shore Staff, (Shore staff); The James Fisher and Sons Public Limited Company Pension Fund for Permanent Dockworkers, (Dockworkers) and The Everard Group Pension Fund (Everard), together with the Group's obligations to the Merchant Navy Officers Pension Fund (MNOPF), an industry wide scheme which is also accounted for as a defined benefit scheme. As required by IAS 19 the valuations of the schemes have been updated to 31 December 2007 by qualified actuaries. The Group's assets and obligations in respect of its pension schemes at 31 December 2007 were as follows: Assets Group 2007 2006 £000 £000 Shore staff pension scheme 528 -Everard Group pension scheme - - 528 - Obligations Group Restated note 11 2007 2006 £000 £000Shore staff pension scheme - (1,400)Dockworkers pension scheme (916) (1,550)Everard group pension scheme - (73)MNOPF pension scheme (10,988) (7,201) (11,904) (10,224) James Fisher and Sons Public Limited Company Pension Fund for Shore Staff In 2005 the Company decided to close the Shore staff scheme to existing members from 2010. At this time members contributing to the scheme can transfer to a stakeholder scheme option. During the remaining period that the scheme remains open to existing members the rate of growth of pensionable salary reduced to 1.5%. The Company is currently contributing 14.7% (2006:14.7%) of pensionable pay plus regular contributions of £55,000 (2006:£55,000) per month into the Shore Staff Scheme. Contributions will continue at this level in 2008. At 31 December 2007 the scheme had an actuarial surplus of £657,000. The Group has recognised £528,000 in respect of this surplus. This represents the amount recoverable from the scheme by the Group through reduced contributions and represents the value of employers service costs over the remaining period until accrual ceases in 2010. James Fisher and Sons Public Limited Company Pension and Life assurance scheme for Permanent Dockworkers The Group also operates a paid up defined benefit scheme for dockworkers. The latest actuarial valuation of the scheme was at 31 March 2005. As a result of the review carried out in 2005 the Company agreed a deficit recovery plan with the trustees of the scheme. Under this plan the Company made monthly payments of £20,833 (2006: £20,833) into the scheme. Contributions will continue at this level in 2008. The Everard Group Pension Fund FT Everard & Sons operated a defined benefit scheme which was closed to new entrants from 1 April 2004 and closed to future accrual from 1 March 2005. Under a deficit reduction plan agreed with the schemes trustees, FT Everard & Sons Limited is making annual additional contributions of £286,000 for a period of thirteen years commencing 1 March 2005. At 31 December 2007 the scheme had an actuarial surplus of £1,506,000. The Group has not recognised any of this surplus as the scheme is already closed to future accrual. Merchant Navy Officers Pension Fund In 2005 the High Court established that former as well as existing employers will be liable to make payments in respect of the funding deficit of the MNOPF. The Company is informed by the Trustees as to the level of annual payments it will be required to make into the fund over a period of ten years commencing October 2005 representing its share of the deficit disclosed in the initial actuarial valuation carried out as at 31 March 2003, as revised by the latest valuation as at 31 March 2006. Following the acquisition of Everard in December 2006 the Group took on additional liabilities in respect of the share of the MNOPF attributable to FT Everard & Sons and its subsidiaries. A new actuarial valuation of the scheme was carried out at 31 March 2006. In August 2007 following the approval of this 2006 actuarial valuation of the scheme, the Trustees issued calls for further contributions. As a result of these additional claims the total amount paid by the Group in 2007 to the MNOPF was £1,896,000 (2006 £524,000). The amount paid in 2006 excludes any amount relating to Everard which was acquired in December 2006. The total paid by the enlarged Group in 2006 was £1,074,000. Following further review and discussion with the MNOPF during 2006, the Company established that there are additional liabilities in respect of three additional claims relating to former employers covered under the scheme. Two of these have been added to the ten year payment plan and one small claim settled in full during the period. One further claim has also been settled in 2007.The Group is not aware of any further outstanding claims in respect of the MNOPF. The Group has an annual commitment to make seven further annual payments of £1,837,000 to the scheme. 10. Post balance sheet events On 16 January 2008 the Group made a payment of £750,000 to the former shareholders of FT Everard & Sons Limited representing the final instalment of contingent consideration due on the acquisition of the company. The Group completed the sale of the mt Alacrity on 29 January 2008. The gross proceeds from this disposal were $3,000,000. The net proceeds of £1,454,000 were used to repay bank borrowings. On 30 January 2008 Scan Tech AS based in Norway entered into an agreement for the construction of new premises in Stavanger. This construction will be financed by a loan from SR-Bank, such loan being secured upon the premises. On 7 February 2008 the Group acquired the entire issued share capital of JCM Scotload (Scotload) for a cash consideration of £2,985,000. Scotload designs and manufactures a range of load measurement instruments for the offshore oil and related industries. The provisional fair values of the assets and liabilities acquired are subject to further review to assess the impact of adopting the Group's accounting policies and conversion to IFRS. These provisional values are set out below: Scotload Carrying amount & fair value £000Property, plant & equipment 13Inventories 138Trade and other receivable 401Cash and short term deposits 1,027Trade and other payables (396)Fair value of net assets acquired 1,183Goodwill arising on acquisition 1,946 3,129 Consideration:Cash 2,985Direct costs associated with 144acquisition 3,129 On 11 March 2008 the Group made a payment of £800,000 to the former shareholders of Inspection Holdings Limited representing the contingent consideration due on the acquisition of the company. Under the terms of the acquisition of Strainstall Group (Strainstall) on 6 October 2006 contingent consideration of £500,000 is payable to the vendors dependent on achieving certain performance conditions for the year ended 31 December 2007. In March 2008 following confirmation that the performance criteria for the year ended 31 December 2006 had been achieved the vendors were paid £500,000 in cash and loan notes. On 21 March 2007 the Chancellor of the Exchequer announced that he intended to phase out Industrial Buildings Allowances (IBA's) from April 2008. Had the proposed change been enacted at 31 December 2007 it would have increased the Group's deferred tax liability by £788,000. 11. Restatement of Goodwill arising on acquisitions The balance sheet at 31 December 2006 has been restated to accommodate adjustments to goodwill which have been incorporated into the accounts in 2007 during the twelve month review period allowed in the provisions of IFRS 3 - Business Combinations. The most significant adjustments arose on the acquisition of FT Everard & Sons which was acquired on 28 December 2006. Details of the principal adjustments are explained below. Under the terms of the purchase agreement for FT Everard & Sons the purchase consideration payable has been revised following the agreement of the balance sheet at completion. As a result the total consideration payable has been reduced by £2,062,000. This reduction is principally due to the movement in exchange rates between the date of completion and the date of preparation of the initial estimates which affected the valuation of the vessels acquired. This amount was received in 2007. In December 2006 the amount recoverable was estimated at £1,571,000 and the deferred consideration payable was reduced by this amount. An adjustment of £492,000 has been made to creditors due within one year to reflect this additional adjustment. A further adjustment to goodwill arising on the acquisition of FT Everard & Sons of £175,000 has been made representing an increase in the Group's liability to the MNOPF pension deficit which has been recalculated by the Group's actuaries on a basis consistent with the amount attributable to the pension deficit accounted for by James Fisher and Sons Plc. Following a review of the fleet requirements the initial fair value of the mt Agility and mt Alacrity was increased to reflect the decision to dispose of these vessels and the prevailing market conditions. A review of the vessels operated under bareboat leases, mt Summity and mt Stability, indicated that the terms of the bareboat leases constituted a significant liability to the Group. As a result of this the carrying value of the vessels at acquisition has been provided against and an additional provision representing the discounted present value of the expected onerous liability has been made. The proportion of the liability arising after one year has been included in trade and other creditors due after one year. The total adjustments to property plant and equipment is £991,000 including £1,222,000 relating to the revision of the fair value of mt Agility and mt Alacrity. Other adjustments have been made to trade and other creditors due within one year representing additional liabilities arising from the costs of the acquisition and adjustments to amounts provided for in respect of financial liabilities. Adjustments have been made to trade and other creditors due within one year representing additional liabilities arising from the costs of the acquisition and adjustments to amounts provided for in respect of financial liabilities in respect of Gjerde and Strainstall. The principal adjustment to the acquisition of Strainstall relates to provisions for obsolete inventory. A summary of the adjustments are included in the table below: 2006 Adjustments 2006 As reported Everard Gjerde Strainstall restated £000 £000 £000 £000 £000Goodwill 55,773 (68) 55 54 55,814Property, plant & equipment 102,629 991 - - 103,620 Inventories 11,119 (24) - (25) 11,070Trade and other receivable 32,897 (32) - - 32,865 Trade and other payables due after 76,146 748 - - 76,894one yearRetirement benefit obligations 10,049 175 - - 10,224Trade and other payables due within 46,365 (56) 55 29 46,393one year 12. The AGM will be held at 12.00 noon, Thursday 1 May 2008 at the Abbey House Hotel, Abbey Road, Barrow in Furness, Cumbria. 13. Report and accounts will be posted to members in early April 2008. Copies will be made available to members of the public at Fisher House, PO Box 4, Barrow in Furness, Cumbria, LA14 1HR. 14. The preliminary statement was approved by the Board of Directors on 17 March 2008. This information is provided by RNS The company news service from the London Stock Exchange