James Fisher and Sons Regulatory News (FSJ)

14 Mar 2006 07:02

Fisher (James) & Sons PLC14 March 2006 14 March 2006 James Fisher and Sons plc ("James Fisher" or "the Company") Preliminary Results James Fisher, the marine services provider, announces Preliminary Results forthe year ended 31 December 2005. 2005 was the year in which the transformation of James Fisher from a traditionalshipping company into a marine services company came to fruition and, for thefirst time, this is fully reflected in the accounts which show a profit fromcontinuing activities of £10.7 million (2004 - £8.1 million), the tradingresults of which are ahead of market expectations. Financial Highlights % 2005 2004• Group Revenue +28% £91.4m £71.2m• Profit for year on continuing operations +32% £10.7m £8.1m• Pro forma pre tax profit £15.7m, including cable ships 2005 trading• Discontinued operations (loss)/profit - (£12.9m) £3.9m cable ships• Basic earnings per share (4.50p) 24.82p• Basic earnings per share on continuing +41% 21.84p 15.47p operations after adjustment for separately disclosable items• Final dividend per share +15% 5.69p 4.95p• Strong operating cash flows £20.6m £17.7m Operational Highlights • Marine Support Services grew by 34% in 2005, now accounts for 57% of profit from continuing operations • Cable ship division - recognised as a discontinued business, having sold Oceanic Pearl and the write down of the Oceanic Princess • Rescue of Russian submariners by James Fisher Rumic team under Royal Navy builds international reputation in marine support services • £11m FenderCare acquisition, a global market leader in its sector, fully integrated • £11m Monyana acquisition, a market leader in the UK North Sea and Norwegian sectors in refurbishing, design, supply of winches, and other marine equipment • Full year's contributions from both acquisitions in 2006 • Established businesses in the continuing four divisions - offshore oil services, specialist technical services, defence and marine oil services (formerly tankships) - all trading well, many globally Commenting on the outlook, Chairman, Tim Harris, CBE, said:"Our markets remain strong. James Fisher is well placed to generate significantorganic growth through 2006 and beyond. It has the financial strength tocontinue its acquisition strategy when the right opportunities arise. We haveconfidence in our core businesses to grow profits strongly." For further information: James Fisher & Sons PLC Tim Harris Chairman 020 7338 5808 Nick Henry Chief Executive Officerwww.james-fisher.co.uk Michael Shields Group Finance Director Binns & Co PR Ltd 020 7786 9600 Peter Binns 07768 392 582 Paul McManus 07980 541893 CHAIRMAN'S STATEMENT Overview 2005 was the year in which the transformation of James Fisher from a traditionalshipping company into a marine services company came to fruition and, for thefirst time, this is fully reflected in the accounts which show a profit fromcontinuing operations of £10.7 million (2004 - £8.1 million), the tradingresults of which are ahead of market expectations. In view of the increasing importance of our marine support services activity,which grew by 34% in 2005 and now accounts for 57% of profit from continuingoperations, we are providing the individual results of the constituent parts ofoffshore oil services, specialist technical services and defence into three newdivisions. Marine oil services, formerly James Fisher Tankships, is the Group'sother division and has contributed the remaining 43% to profit from operations.Furthermore, we have recognised the cable layers as a discontinued businesshaving sold Oceanic Pearl and have written down severely the remaining ship,Oceanic Princess, which we shall sell in due course. The write down charge andloss on sale amounting to £20.8 million has resulted in that division showing apre tax loss of £12.9 million. The Group pre tax profit before separatelydisclosable items for 2005 would have been £15.7 million, well ahead of marketexpectations, but for these capital and discontinued business write-downs. An operating cash flow of over £20 million again demonstrates the Group's soundcash generating ability and the gearing of only 54% is after the cable shipswrite down, accounting for a pension deficit of £13.5 million and financingthree acquisitions costing over £22 million during the year. The Group is in astrong financial position with its core marine service businesses doing well andour oil related businesses benefiting from a strong oil price. 2005 2004Revenue +28% £91.4 m £71.2 mProfit for year on continuing +32% £10.7 m £8.1 moperationsDiscontinued operations (loss)/profit (£12.9 m) £3.9 m(Loss)/profit to equity holders (£2.2 m) £12.0 mBasic (loss) earnings per share (4.50p) 24.82pBasic earnings per share after +41% 21.84p 15.47padjustment for separately disclosableitems Dividend Your Board is recommending a final dividend of 5.69p per share, a 15% increase,giving a total for the year of 8.79p (2004 - 7.72 p) - an increase of 14%. Thedividend is payable on 12 May 2006, to shareholders on the register on 21 April2006. Offshore Oil Services - divisional result £4.0 million (2004 - £2.9 million) This division consists of the Scan Tech group of companies based in Stavanger,Norway and Aberdeen which hires specialist equipment to the offshore oilindustry, primarily in the North Sea but increasingly in the developing oilareas of the former Soviet Republic, Mexico, West Africa and elsewhere globally.Segmental revenue was £14.90 million (2004 - £12.07 million), margins haveimproved to 27.0% (2004 - 23.9%). The main types of equipment provided arecompressors, steam generators, hydraulic power packs, high pressure wash-downunits and winches. Typically, we customise units for particular customer requests and also providespecialist labour where necessary. Demand for our services was strong during2005 and all parts of the business have produced significant organic growth. We have also been marketing and operating the HydroDigger, a specialist subseaexcavation tool, with increasing financial success. In December 2005, we completed the acquisition of the businesses of the Monyanagroup for £11 million in cash. Monyana is the market leader in the UK sector ofthe North Sea and also fast growing within the Norwegian sector, in therefurbishment, design and supply of a wide range of winches and other marineequipment. It overlaps and strongly complements the Scan Tech group's activitiesand has been integrated with them. Jake Lorimer, one of the managing partners ofMonyana, has become the Managing Director of all our businesses in Aberdeen. Specialist Technical Services - divisional result £2.6 million (2004 - £0.9million) This division includes our nuclear activities and other specialist marineservices, of which FenderCare which was acquired in 2005 and Remote MarineServices are the most important. Segmental revenue was £22.28 million (2004 -£5.81 million), a segmental margin of 11.8% (2004 - 15.7%). All of our nuclear decommissioning activities were merged into one company,James Fisher Nuclear (JFN) during the year. The primary expertise of JFN is thedesign, construction and operation of remote handling systems for nucleardecommissioning on the contaminated or radioactive side of the nuclear shieldand in the underwater storage ponds. 2005 was not the easiest year because ofthe upheaval in the industry caused by the creation of the new NuclearDecommissioning Authority (NDA) and the changed role of British Nuclear Fuelsplc from owner to operator. However, JFN is progressing well and we are seekingto expand both by organic growth and acquisition. We bought the FenderCare group of companies for £11 million on 17 March 2005 andits results are included from that date. FenderCare is a worldwide market leaderin supplying large-scale pneumatic fenders for shipping, offshore, port,construction and defence projects and is the largest global operator ofship-to-ship oil transfers. Although the former shareholders narrowly missedtheir earn out target for the year ended 30 September 2005 and the related£740,000 of deferred consideration was not paid, FenderCare is trading stronglyand represents a most complementary and highly useful addition to James Fisher'smarine service activities. We acquired Remote Marine Services in December 2004, primarily for its nucleardecommissioning operation which was a direct competitor of our own James FisherRumic. Its other business - the design and assembly of electrical penetratorsfor borehole activities in the on and offshore drilling industry - has anexcellent product reputation and significant growth potential. It is doing welland we propose to increase its scope and marketing outreach in the usual JamesFisher way. Defence Service - divisional result (including Foreland JV) £2.1 million (2004 -£2.7 million) Our defence skills are twofold - we are recognised globally as a leader insubmarine rescue and we bring commercial skills to support ships engaged indefence activities. Segmental revenue in 2005 was £9.33 million (2004 - £8.13million), with segmental margin of 22.7% (2004 - 33.6%). The principal reason for the fall in profits was the loss of income as a resultof the exercise of the Oakleaf purchase option by the MoD in September 2004 -the contribution in 2004 had been £0.8 million. Also, James Fisher MIMIC had aquieter year owing to current Royal Navy spending restrictions but is beginningto expand overseas, having recently signed a maintenance management contract forthe Malaysian coastguard vessels. Foreland Shipping Ltd (formerly AWSR ShippingLtd) had another good year with all six ro-ro ships working well, with the twocommercial vessels on charter to Transfennica Deutschland GmbH until December2007. The rescue of the seven Russian submariners in July by the James Fisher Rumicteam, under Royal Navy command, not only confirmed the skill and courage of oursubmarine rescue team but also provided visible proof of our expertise which weare now actively marketing to a growing global market. We have had a very busyyear and have, amongst other things: • completed a major refit of the UK Submarine Rescue (UKSRS) vehicle • extended the contract with the MoD for the operation of UKSRS for a further two years • signed a letter of intent with the MoD for the purchase of UKSRS for a consideration depending on results; we are now marketing the system, with the Royal Navy's active support, to foreign navies • signed a letter of intent with Rolls Royce to jointly operate the new NATO Submarine Rescue Service (NSRS) when it enters service in 2007 • partnered with Singapore Technologies Marine Ltd to bid jointly to the Singapore Navy for a dedicated ship and submersible rescue service When considering the defence result it is worth noting that, under existingaccounting rules, all bid costs are written off until a letter of intent issigned, with no write back of costs even if the bid is successful. During 2005we incurred bid costs of around £0.4 million which have all been charged againstprofit. We have also expanded our overhead as we are increasing our marketingscale and coverage and expect to see the benefit of this in future years. Marine Oil Services - divisional result £6.7 million (2004 - £6.9 million) The key to the Marine Oil Services (formerly James Fisher Tankships) division'sresult in 2005 was the fleet renewal programme, which resulted in us operating7% less capacity in 2005. Segmental revenue was £44.90 million (2004 - £45.15million), with segmental margin of 15.0% (2004 - 15.3%). Over the last threeyears we have sold eight of our oldest vessels, these being replaced by CumbrianFisher (12,800 dwt February 2005), Clyde Fisher (12,800 dwt April 2005), ShannonFisher (5,000 dwt March 2006) and Solway Fisher (5,000 dwt August 2006). Thesale of the older vessels was stimulated by one particular incident for theindustry, the loss of the Prestige off Spain in 2002, which led us to progressthe programme more quickly than we had originally anticipated. Obviously weshall only receive the full benefit from the new tonnage in the second half of2006 and in 2007 when all the new vessels have been delivered. We shall thenhave one of the industry's most modern fleets. The coastal tanker business has longstanding relationships with our customers,the oil majors, and most cargo is carried under contracts of affreightment(COAs) rather than spot. In recent years this has enabled us to develop a recordof more reliable earnings, strong cash flow and, thanks in part to the tonnagetax and our ability to charter newbuilds rather than own them, a decent returnon capital. This subsidiary has appointed a new Managing Director and marketconditions are good. It is a niche marine service business and is core for JamesFisher. Cable Ships - divisional loss £12.9 million (2004 - profit £3.9 million) We have said for some time that we did not see cable ships as part of JamesFisher's core business because the operation is a capital intensive, commoditybusiness which does not fit with our core marine services skills and strategy.We have been playing a waiting game, sheltered by the General Dynamics charterpayments which expire during 2006. In October 2005 we determined it was time tosell Oceanic Pearl when we were able to negotiate a US$20 million sales pricewith a Norwegian buyer who wished to convert her for seismic work. It is ourintention to sell Oceanic Princess too, once we receive an appropriate offer. Inthe meantime we have made an impairment charge to write the book value down to aprudent level. The cable laying market is still deeply recessed but there issome interest in cable ships for conversion for seismic, pipe-laying and otheroffshore work which we hope to take advantage of. The accounting treatment for cable ships as a discontinued business is given inNote 4 to the preliminary results. In short, we have taken the realised loss onOceanic Pearl (£9.9 million), the impairment write down on Oceanic Princess(£10.9 million) and offset them by the actual 2005 divisional profit anddiscounted 2006 charter payments (£7.9 million) which produce overall a totalcharge of £12.9 million against the 2005 profit. Directors and Employees There have been no changes to the Board other than the appointment as a directorof Simon Harris, the Managing Director of James Fisher Defence, in August 2005. The James Fisher Shore Staff Pension Scheme was closed to new members in 2001.During 2005 the decision was taken to phase it out altogether because costs wereescalating disproportionately and it was becoming increasingly inequitable tooffer substantially different pension benefits to employees doing the same job.With the agreement of the Trustees future benefit accrued has been capped at 11/2% per annum on salaries with the scheme ceasing to accrue benefit altogether infive years time. In March 2005, a court case established that former as well as existingemployers will have to make payments in respect of the funding deficit of theMerchant Navy Officers' Pension Fund (MNOPF), of which James Fisher's share isnow currently estimated at £3.0 million. Under the new International Financial Reporting Standards (IFRS), the liabilityfor all defined benefit schemes for which James Fisher has a share are recordedon the balance sheet for the first time and note 7 of the preliminary resultsgives full details of how these deficits are being addressed. Pension policy isnot easy to change because pensions are a key element of staff welfare. However,with the help and understanding of the Trustees, we believe that we have dealtwith the outstanding issues to protect the Group's exposure while being fair toour people. We now provide employment for 471 shore staff and 406 sea staff. I would like totake this opportunity to thank them for their help and support in a constructiveyear for James Fisher. Outlook Over the last few years James Fisher has had a clear strategy to grow its marineservice businesses both organically and by acquisition, as a technically based,commercially driven company, producing better quality earnings and the Group isfast achieving its objective of becoming the UK's leading marine provider. 2005marks a turning point because the recognition of the cable ships as adiscontinued business almost completes the company's transformation. All thatremains is to sell Oceanic Princess for at least her present book value and,whilst it continues to generate income under the General Dynamics charter, wehave time to find a buyer at a fair price. It is disappointing that marketconditions have not allowed us to extricate ourselves from this business withoutloss but it is now time to put this longstanding problem behind us. The remaining divisions in offshore oil and specialist technical services,defence and marine oil services are core and all have potential for growth. Ouracquisition strategy of seeking small to medium sized companies identified byour own research, rather than enter public auctions, has proved successful andall our acquisitions to date are prospering. Since 2002 we have spent £52.3million on acquisitions. We prefer to acquire entrepreneurially run businesseswhich are complementary and well-known to our existing operations. We are alsodemonstrating an ability to generate organic growth, particularly once the newoperations have settled in and been integrated with our existing business. Turning to prospects for 2006, defence will be very busy but the accountingtreatment, requiring bid costs to be recognised up front whilst income isrecognised over the full life of contracts, will militate against any greatimmediate growth in reported earnings. Conversely, our companies serving theoffshore market are well positioned in a strong market and should continue to dowell again. We shall also benefit from a full twelve months from the Monyanaacquisition for the first time. The specialist technical companies are in goodshape and should be able to demonstrate real organic growth and will benefitfrom a full year's contribution for FenderCare for the first time. Marine oilservices (tankships) will benefit from the delivery of their new tonnage with an8% increase in capacity and their earnings should improve at leastproportionately. Our markets remain strong and James Fisher is well placed to generatesignificant organic growth through 2006 and beyond. It also has the financialstrength to continue its acquisition strategy when the right opportunitiesarise. Overall we have confidence in our core businesses to grow profitsstrongly for our shareholders. GROUP INCOME STATEMENT For the year ended 31 December 2005 Year ended Year ended Notes 31 December 2005 31 December 2004 Before Separately Before Separately separately disclosable separately disclosable disclosable items disclosable items items note (5) Total items note (5) Total £000 £000 £000 £000 £000 £000 Group revenue 91,411 91,411 71,153 71,153Cost of sales (73,931) (73,931) (55,726) (55,726) _________ __________ _________ _________Gross profit 17,480 17,480 15,427 15,427Administrative expenses (5,413) (5,413) (4,874) (4,874) _________ __________ _________ _________ Profit from operations before 12,067 12,067 10,553 10,553separately disclosable items Pension benefit curtailment - 2,000 2,000 - - - (Loss)/profit on ship - (1,617) (1,617) - 475 475 disposals _________ _______ ________ _________ ______ ________ Profit from operations 2 12,067 383 12,450 10,553 475 11,028 Finance costs Finance income (revenue) 304 - 304 330 - 330 Finance costs (2,591) - (2,591) (2,511) - (2,511) Exchange (loss)/gain on loan - (130) (130) - 155 155 conversion (2,287) (130) (2,417) (2,181) 155 (2,026) Share of post tax results of 1,413 - 1,413 1,219 - 1,219joint venture _________ _______ ________ _________ ______ ________ Profit on continuing operations 11,193 253 11,446 9,591 630 10,221before taxationTaxation 6 (538) (216) (754) (2,123) - (2,123) _________ _______ ________ _________ ______ ________ Profit for the year on 10,655 37 10,692 7,468 630 8,098 ========= ======= ========= ====== continuing operations Discontinued operations 4(Loss)/profit for the year from (12,889) 3,886 _______ ______Discontinued operations (2,197) 11,984 Preference dividend - (4) -------- ------ (Loss)/profit attributable to (2,197) 11,980equity holders of the parent ======== ====== Earnings per share (EPS) 8 pence penceBasic EPS from continuing 21.91 16.77operationsDiluted EPS from continuing 21.72 16.56operations Basic (loss)/EPS on (loss)/profit from (4.50) 24.82total operationsDiluted (loss)/EPS on (loss)/profit from (4.50) 24.52total operations Adjusted earnings per share Basic adjusted EPS from continuing 21.84 15.47operationsDiluted adjusted EPS from continuing 21.64 15.27operations GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE For the year ended 31 December 2005 Year ended Year ended Notes 31 December 2005 31 December 2004 £000 £000Income and expenses recognised directly inequity Exchange differences on translation of foreignoperations: Currency translation differences 26 (126) Net investment hedge 9 303 ________ _______ 35 177 Fair value of losses on cash flow hedges (134) - Share of fair value gains of cash flow hedges in 169 -joint venture Actuarial (losses)/gains on defined benefit (4,531) 400schemes ________ _______ (4,461) 577 Transfers to the income statement On cash flow hedges 36 Tax on items taken directly to equity 123 (120) ________ _______ Net (expense)/income recognised directly in (4,302) 457equity (Loss)/profit for the year (2,197) 11,980 ________ _______ Total recognised (expense)/income for the 10 (6,499) 12,437year ======== ======= All recognised income is attributable to the equity holders of the parent Effects of changes in accounting policy: 10 Net gain on cash flow hedges on first time 20 -adoption of IAS 39 Loss on cash flow hedges in joint ventures on first time (125) -adoption of IAS 39 ________ _______ (105) - ======== ======= GROUP BALANCE SHEET As at 31 December 2005 Notes 31 December 2005 31 December 2004 £000 £000AssetsNon current assetsGoodwill 36,168 21,254Property, plant and equipment 67,081 103,091Investment in joint ventures 2,587 1,810Financial assets 1,368 1,157Deferred tax assets 1,197 1,391 ________ ________ 108,401 128,703 ________ ________ Current assetsInventories 5,797 4,028Trade and other receivables 21,026 14,901Cash and cash equivalents 9,725 10,045 ________ ________ 36,548 28,974 ________ ________ Non-current assets classified as 7,959 -held for sale ________ ________Total Assets 152,908 157,677 ======== ======== Equity and Liabilities Capital and reservesCalled up share capital 10 12,345 12,305Cumulative preference shares - 100Share premium 10 23,960 23,810Treasury shares 10 (1,184) (1,212)Other reserves 10 178 177Retained earnings 10 38,030 48,151 ________ ________Total equity 73,329 83,331 ________ ________ Non current liabilitiesOther payables 593 14Retirement benefit obligations 7 13,536 12,800Derivative financial instruments 18 -Cumulative preference shares 100 -Interest-bearing loans and 42,695 38,472borrowings ________ ________ 56,942 51,286 ________ ________Current liabilitiesTrade and other payables 14,802 13,280Current tax 1,370 1,601Derivative financial instruments 102 -Interest-bearing loans and 6,363 8,179borrowings ________ ________ 22,637 23,060 ________ ________Total liabilities 79,579 74,346 ________ ________Total equity and liabilities 152,908 157,677 ======== ======== GROUP CASH FLOW STATEMENT For the year ended 31 December 2005 31 December 2005 31 December 2004 £000 £000Group profit from operations 12,450 11,028Adjustments to reconcile Groupoperating profit to net cash inflowsfrom operating activities(Loss)/profit from operations from (12,928) 3,893discontinued operationsAdjustments for:Depreciation 7,670 8,259Profit on sale of property, plant and (51) (59)equipmentPension benefit curtailment (2,000) -Impairment of non-current assets 10,885 -Loss/(profit) on ship disposals 11,565 (475)Income tax payments (1,404) (1,583)Increase in trade and other (3,014) (2,697)receivablesDecrease/(increase) in inventories 258 (150)Decrease in trade and other payables (3,285) (790)Share based compensation 432 289 _______ _______Cash flows from operating activities 20,578 17,715 Investing activitiesDividends from joint venture 1,068 1,000undertakingsProceeds from the sale of property, plant and 12,995 4,966equipmentInterest received 363 314Acquisition of subsidiaries, net of (22,077) (6,250)cash acquiredAcquisition of property, plant and (7,357) (3,649)equipmentLoans to joint venture repaid - 225Acquisition of available for sale (211) -financial assetRefund of payment to acquire property, plant - 3,851and equipmentSale of shipbuilding contracts - 7,293 ________ ________Cash flows (used in)/from investing (15,219) 7,750activities Financing activitiesProceeds from the issue of share capital 190 346Preference dividend paid (4) (4)Interest paid (2,871) (2,482)Proceeds from other non-current 20,524 12,574borrowingsPurchase less sales of own shares by 7 (616)ESOPRepayment of borrowings (19,547) (27,409)Dividends paid (3,927) (3,410) ________ ________Cash flows from financing activities (5,628) (21,001) Net (decrease)/increase in cash and cash (269) 4,464equivalentsCash and cash equivalents at 1 January 2005 10,045 5,455Net foreign exchange difference (51) 126 ________ ________ Cash and cash equivalents at 9,725 10,04531 December 2005 ======== ======== NOTES TO THE PRELIMINARY RESULTS 1. General information This is the first year in which the Group has prepared financial statementsunder International Financial Reporting Standards "IFRS". Comparatives havetherefore, with the exceptions noted below, been restated from UK GenerallyAccepted Accounting Practice "UK GAAP" to comply with IFRS. The Group issued apress release in August 2005 which contained reconciliations to IFRS frompreviously published UK GAAP financial statements. These reconciliations areavailable on the Company's web site at www.james-fisher.co.uk. First time adoption In general the group is required to apply its accounting policies determinedunder IFRS fully retrospectively to determine the opening IFRS balance sheet. Inorder to ease the transition to IFRS the accounting standard IFRS 1 "First TimeAdoption of International Financial Reporting Standards" includes severalexceptions to this principle, some of which are mandatory and some permissive.In preparing these initial statements the group has applied the followingexemptions to the restatement of historical data: • Business combinations - The provisions of IFRS 3 "Business Combinations" have been applied prospectively from 1 January 2004. The accounting treatments applied to business combinations that occurred prior to this date have not been revised in the opening IFRS balance sheet at 1 January 2004. • Cumulative translation differences arising on the consolidation of subsidiaries - IAS 21 "The Effects of Changes in Foreign Exchange Rates" requires that such differences be held in a separate translation reserve. This reserve has been deemed to be nil at 1 January 2004. • Financial instruments - The provisions of IAS 32 "Financial Instruments: Disclosure and Presentation" and IAS 39 "Financial Instruments: Recognition and Measurement" have not been applied to the comparative financial statements for the year ended 31 December 2004. The group has applied these standards prospectively from 1 January 2005. For the comparative period the group has continued to account for its foreign exchange contracts and interest rate swaps under UK GAAP. The principal impacts of applying these standards from 1 January 2005 are: - The 3.5% cumulative preference shares which have a book and fair value of£100,000 have been reclassified from equity to long term debt. From 1 January2005 the dividend on the shares of £3,500 per annum is classified as an interestexpense. - The group has not recognised the fair value of hedging derivatives in its 2004IFRS comparative balance sheet and income statement. - From 1 January 2005 the fair value of these derivatives used forhedging purposes has been included in a hedging reserve and released to theincome statement in the year when the hedged commitment affects profit or loss.The impact of this change is to recognise in reserves a gain on the fair valueof cash flow hedges of £20,000 in the Group and Company and a loss of £125,000in reserves of the Group being the Group's share of the loss on fair value ofcash flow hedges in the Group's joint venture, Foreland Holdings Limited. • Employee benefits - The group has elected to recognise all cumulative actuarial gains and losses relating to its defined benefit pension schemes in equity at 1 January 2004, the date of transition. The Group has elected to recognise all future actuarial gains and losses in equity in the statement of recognised income and expense. • Share based payments - In respect of share based payments, the group has applied the exemption in IFRS 1 "First time adoption of IFRS" and has only applied the standard to equity settled awards granted after 7 November 2002 that had not vested on or before 1 January 2005. The financial information set out above does not constitute statutory accountsfor the years ended 31 December 2005 or 2004 as defined in section 240 of theCompanies Act 1985. Statutory accounts for 2004, which were prepared under UKGAAP, have been delivered to the Registrar of Companies. The auditor's report onthose accounts was unqualified and did not contain any statement under section237(2) or (3) of the Companies Act 1985. The auditors have given an unqualified opinion on the accounts for the yearended 31 December 2005 which have been prepared under IFRS. These will bedelivered 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 liabilityinformation regarding the Group's business segments for the years ended 31December 2005 and 2004. Year ended Discontinued 31 December 2005 Continuing Operations Operations _____________________ ____________ Offshore Specialist Defence Marine Total Cable Total Oil Technical Oil Ships Services Services Services £000 £000 £000 £000 £000 £000 £000Revenue Group revenue 14,936 25,898 9,679 44,903 95,416 9,019Inter segment sales (37) (3,622) (346) - (4,005) - _______ _______ _____ _______ _______ _______Segmental revenue 14,899 22,276 9,333 44,903 91,411 9,019 ======= ======= ===== ======= ======= =======Result Segmental result before 4,017 2,551 782 6,733 14,083 4,510ship disposals Common costs (2,016) _______Profit from operations before separately disclosable items 12,067and joint ventures Pension benefit curtailment 2,000Impairment of non-current - (10,885)assetsRecognition of rentals due - 3,395on sold shipLoss on ship disposals (1,617) (9,948) _______ ________Profit from operations before joint 12,450 (12,928)ventures Finance income (revenue) 304 42Finance costs (2,591) -Exchange loss on loan (130) -conversion (2,417) 42 Share of post tax results - 79 1,334 - 1,413 of joint ventures _______ ________Profit before tax 11,446 (12,886) Taxation (754) (3) _______ ________Profit attributable to 10,692 (12,889)equity holders ======= ======== Assets & Liabilities Segment assets 39,501 24,908 8,867 58,347 131,623 5,095 136,718Investment in joint - 398 2,189 - 2,587 - 2,587venturesNon-current assets - 7,959 7,959classified as held forsaleUnallocated assets 5,644 5,644 _______ _______ _____ _______ _______ _______ ________Total assets 139,854 13,054 152,908 ======= ========Segment liabilities (1,922) (2,802) (1,441) (6,820) (12,985) (1,437) (14,422)Unallocated liabilities (65,157) - (65,157) _______ _______ _____ _______ _______ _______ ________Total liabilities (78,142) (1,437) (79,579) ======= ========Other segment informationCapital expenditure:Property, plant & 7,242 3,733 71 3,317 14,363 588 14,951equipmentUnallocated 53 53 _______ _______ _____ _______ _______ _______ ________ 14,416 588 15,004 ======= ======== Depreciation 939 400 118 3,838 5,295 2,189 7,484Impairment provision 10,885 10,885Unallocated 186 186 _______ _______ _____ _______ _______ _______ ________ 5,481 13,074 18,555 ======= ======== Year ended Discontinued31 December 2004 Continuing Operations Operations _____________________ ____________ Offshore Specialist Defence Marine Total Cable Total Oil Technical Oil Ships Services Services Services £000 £000 £000 £000 £000 £000 £000Revenue Group revenue 12,071 9,576 8,260 45,148 75,055 7,600Inter segment sales - (3,768) (134) - (3,902) - _______ _______ _______ _______ _______ _______Segmental revenue 12,071 5,808 8,126 45,148 71,153 7,600 ======= ======= ======= ======= ======= =======Result Segmental result before 2,884 914 1,509 6,909 12,216 3,893ship disposals Common costs (1,663) _______Profit from operations before separately disclosable items and 10,553joint ventures Profit on ship disposals 475 _______ _______Profit from operations before 11,028 3,893joint ventures _______ _______Finance income (revenue) 330 -Finance costs (2,511) -Exchange gain on loan conversion 155 - (2,026) - Share of post tax - - 1,219 - 1,219 -results of joint ventures _______ _______Profit before tax 10,221 3,893 Taxation (2,123) (7) _______ _______Profit attributable to 8,098 3,886equity holders ======= ======= Assets & Liabilities Segment assets 24,496 8,860 8,274 62,657 104,287 42,095 146,382Investment in joint 1,810 1,810 1,810venturesUnallocated assets 9,485 - 9,485 _______ _______ _______ _______ _______ _______ ________Total assets 115,582 42,095 157,677 ======= ========Segment liabilities (1,763) (728) (1,691) (6,051) (10,233) (1,595) (11,828)Unallocated liabilities (62,518) - (62,518) _______ _______ _______ _______ _______ _______ ________Total liabilities (72,751) (1,595) (74,346) ======= ========Other segment informationCapital expenditure:Property, plant & 2,402 833 92 1,078 4,405 (3,851) 554equipmentUnallocated 747 747 _______ _______ _______ _______ _______ _______ ________ 5,152 (3,851) 1,301 ======= ========Depreciation 851 66 111 4,680 5,708 2,342 8,050Unallocated 209 209 _______ _______ _______ _______ _______ _______ ________ 5,917 2,342 8,259 ======= ======== Unallocated net liabilities comprise certain assets and liabilities of theparent company, loans, pension liabilities and taxation. Geographical segments The following table represents revenue, expenditure and certain assetinformation regarding the group's geographical segments by location for theyears ended 2005 and 2004. UK & Ireland Norway Rest of the Total World 2005 2004 2005 2004 2005 2004 2005 2004 £000 £000 £000 £000 £000 £000 £000 £000RevenueContinuingoperationsGroup revenue 68,964 52,145 8,110 6,643 18,342 16,267 95,416 75,055Inter-segment (4,005) (3,902) - - - - (4,005) (3,902)sales _______ ________ _______ _______ _______ _______ ________ ________Segmental 64,959 48,243 8,110 6,643 18,342 16,267 91,411 71,153revenue ======= ======== ======= ======= ======= ======= ======== ======== DiscontinuedactivitiesGroup revenue - - - - 9,019 7,600 9,019 7,600 ======= ======== ======= ======= ======= ======= ======== ========Segment assets 109,210 123,161 25,091 23,221 2,417 - 136,718 146,382Investment in 2,189 1,810 - - 398 - 2,587 1,810joint venturesNon-current 7,959 - - - - - 7,959 -assetsclassified asheld for saleUnallocated 5,644 9,485corporate assets ________ ________ 152,908 157,677 ======== ========Segment (9,376) (9,635) (2,941) (2,193) (2,105) - (14,422) (11,828)liabilitiesUnallocated (65,157) (62,518)corporateliabilities ________ ________ (79,579) (74,346)Capital ======== ========expenditure:Property, plant 14,211 871 793 430 - - 15,004 1,301and equipment 3. Proforma adjusted segmental information The directors present below an analysis of segmental results adjusted to removethe effect of classifying the cable ship operation as discontinued and toreflect the inclusion of the Group's interest in joint ventures. This provides acomparison of current performance against the previous year of the Group aspreviously structured. 2005 2004 £000 £000Marine Support Services Offshore Oil Services 4,017 2,884Specialist Technical Services 2,551 914Defence 782 1,509 ______ _______ 7,350 5,307 ______ _______Joint Ventures - Defence 1,334 1,219 - Specialist Technical Services 79 - 1,413 1,219 ______ _______Total Marine Support Services 8,763 6,526Marine Oil Services 6,733 6,909Cable Ships 4,510 3,893 Common costs (2,016) (1,663) ______ _______ 17,990 15,665Net Interest (2,245) (2,181) ______ _______Profit from operations before separately 15,745 13,484disclosable items (Loss)/profit on ship disposals (11,565) 475Impairment of non current assets (10,885) -Recognition of rentals due on sold ships 3,395 -Pension benefit curtailment 2,000 -Exchange (loss)/gain on loan conversion (130) 155 ______ _______(Loss)/profit before (1,440) 14,114tax ====== ======= 4. Discontinued operations Discontinued operations relate to the withdrawal of the Group from cable layingactivities. Following the disposal in 2005 of the cable ship CS Oceanic Pearlthe remaining vessel, CS Oceanic Princess, will be disposed of and has thereforebeen reclassified as an asset held for sale. An impairment review has been performed by the Directors, taking into accountthe expected disposal proceeds and costs and revenues anticipated to ariseduring the period prior to disposal, discounted at an appropriate rate whichtakes into account the risks associated with the relevant cash flows. As aresult an impairment provision of £10.885m has been made against the carryingvalue of the vessel and charged to the income statement. The discount rates usedto assess the cash flows were between 4.5% and 10%. Following the disposal of the CS Oceanic Pearl on 6 October 2005, the Group hasrecognised the remaining income due under the General Dynamics charter whichexpires in December 2006. The present value of the remaining income has beenrecognised in the balance sheet at 6 October 2005 after applying a discount rateof 4.5%. The results of discontinued operations are presented below: 2005 2004 £000 £000Revenue 9,019 7,600Cost of sales (4,509) (3,707) _______ _______Gross profit 4,510 3,893 Loss on ship disposal (9,948) -Recognition of rentals due on sold ship 3,395 - _______ _______ (2,043) 3,893 Impairment of non-current assets (10,885) - _______ _______(Loss)/profit from operations (12,928) 3,893 Finance income Movement in discount on receivables 42 - _______ _______(Loss)/profit before tax from discontinued operations (12,886) 3,893Taxation (3) (7) _______ _______Net (loss)/profit attributable to discontinued operations (12,889) 3,886 ======= ======= Taxation is payable on profit from operations under the tonnage tax regime. Non current assets held for sale Other than the vessel CS Oceanic Princess, there are no other assets orliabilities of the cable ship operations which are classified as held for sale. At 31 December 2005 the carrying value of the CS Oceanic Princess was£7,959,000. The net cash flows attributable to discontinued operationsare: 2005 2004 £000 £000 Operating cash flows 7,085 7,019Investing cash flows (5,522) (1,818)Financing activities - (3,900) _______ _______ 1,563 1,301 ======= =======(Loss)/earnings per share from discontinued operations 2005 2004(pence): p pBasic (26.41) 8.05Diluted (26.41) 7.95 5. Separately disclosable items Separately disclosable items consist of: 2005 2004 £000 £000Pension benefit curtailment 2,000 -(Loss)/profit on ship disposals (1,617) 475Exchange (loss)/gain on loan conversion (130) 155 _______ _______ 253 630 ======= ======= The pension benefit curtailment arises from the closure of the Group's definedbenefit pension scheme to existing members in 2010 and changes to thecontribution rates. The exchange differences on loans arise on foreign currency financing loans inthe UK. The tax arising on these items is £216,000 (2004: £nil). 6. Taxation The group has entered the UK tonnage tax regime under which tax on its shipowning 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 normaltax rules of the relevant tax jurisdiction. The tax charge is made up as follows: 2005 2004 £000 £000Current tax:UK tonnage tax (24) (32)UK corporation tax (514) (832) ______ ______ (538) (864) Tax over/(underprovided) in previous years 327 (409)Foreign tax (567) (477) ______ ______Total current tax (778) (1,750) ______ ______Deferred tax: Origination and reversal of temporary differences 21 (380) ______ ______Total taxation expense included in group income (757) (2,130)statement ====== ====== Share of joint ventures' current tax (72) (61) The total tax charge in the income statement isallocated as follows: Taxation on continuing operations 754 2,123Taxation attributable to discontinued operations 3 7 ______ ______ 757 2,130 ====== ====== Tax credited/(charged) to equity included in statement of recognised income andexpense: 2005 2004 £000 £000Deferred tax:Deferred tax relating to the actuarial gains and losses on 123 (120)defined benefit pension schemes ====== ====== 7. Retirement benefit obligations The Retirement benefit obligations included in the Group and Company balancesheets comprise the following elements, details of which are explained below: 2005 2004 £000 £000 Shore staff pension scheme 8,100 10,200Dockworkers pension scheme 2,400 2,600MNOPF pension scheme 3,036 - ______ ______ 13,536 12,800 ====== ====== Shore staff and Dockworkers pension schemes The Company reviews, formally the position of the pension schemes at threeyearly intervals. As a result of the review carried out in 2005 the Company hasagreed a deficit recovery plan with the trustees of the schemes. Under this planthe Company has agreed to make special pension payments into the schemestotalling £3,000,000. The first payment of £1,399,000, which included £400,000paid to the Dockworkers' scheme, was made in December 2005. The balance will bepaid by the Company during the first half of 2006. The Company has also decided to close the Shore staff scheme to existing membersfrom 2010. At this time members contributing to the scheme can transfer to astakeholder scheme option. During the remaining five year period that the schemeremains open to existing members the rate of growth of pensionable salary hasbeen reduced to 1.5% and the rate at which the company contributes to the schemewill be reduced to 14.7% of pensionable pay. As a result of these curtailmentsto the benefits available to the members the Company's liabilities to the schemehave been reduced by £2.0m. This curtailment benefit has been recognised in theincome statement in the current period. MNOPF pension scheme As was reported in the chairman's AGM statement in 2005, a court case on 22March 2005 has established that former as well as existing employers will beliable to make payments in respect of the funding deficit of the Merchant NavyOfficers' Pension Fund "MNOPF". The Company has been informed by the Trusteesthat it will be required to make annual payments of £418,000 into the fund for aperiod of ten years commencing October 2005 representing its share of thecurrent projected deficit. The Company will in the future be exposed on a proportional basis to movementsin the total assets and liabilities of the fund. Therefore the Company hasdetermined that the fund should be accounted for as a defined benefit scheme andits liability recognised accordingly. As this liability has not arisen from anynew benefits in the period since the company ceased to contribute to the schemethe company has concluded that the recognition of the liability should beaccounted for as an actuarial adjustment, and it is therefore recorded in thestatement of recognised income and expense. 8. Earnings per share Basic earnings per share are calculated by dividing the profit attributable toequity holders of the company by the weighted average number of ordinary sharesin issue during the year, after excluding ordinary shares purchased by theemployee share ownership trust and held as treasury shares. Diluted earnings per share are calculated by dividing the net profitattributable to ordinary equity holders of the parent by the weighted averagenumber of ordinary shares that would be issued on conversion of all the dilutivepotential ordinary shares into ordinary shares. The calculations of basic and diluted earnings per share are based on thefollowing profits and numbers of shares: 2005 2004 £000 £000(Loss)/profit attributable to (2,197) 11,984equity holdersPreference dividend* - (4) ______ ______Adjusted (loss)/profit attributable to (2,197) 11,980equity holdersLoss/(profit) attributable to discontinued 12,889 (3,886)activities ______ ______Profit on continuing activities attributable to 10,692 8,094equity holders ====== ====== * Following the adoption of IAS 32 and IAS 39 the preference dividend has beenincluded in finance costs in 2005. Weighted average number of shares 2005 2004 Number of Number of shares sharesFor basic earnings per share** 48,797,076 48,261,182 Exercise of share options and LTIPs+ 430,920 605,628 __________ __________For diluted earnings per share 49,227,996 48,866,810 ========== ==========** Excludes 510,237 (2004:563,008) shares owned by the James Fisher & Sons Public Limited Company Employee Share Ownership Trust. + Share options and LTIPs have been excluded from the calculation of diluted earnings per share in 2005 as they are antidilutive, but have been included in the calculation of diluted earnings per share on continuing operations. 2005 2004 £000 p £000 pBasic (loss)/earnings per (2,197) (4.50) 11,980 24.82share Basic (loss)/earnings per share 12,889 26.41 (3,886) (8.05)attributable to discontinuedoperations _______ ______ _______ _______Basic earnings per share on 10,692 21.91 8,094 16.77profit on continuing operations ======= ====== ======= ======= Diluted earnings per share on 10,692 21.72 8,094 16.56profit on continuingoperations ======= ====== ======= ======= Adjusted Earnings per Share The basic earnings per share on continuing activities before separatelydisclosable items is shown to highlight the underlying earnings trend and iscalculated using the number of shares outlined in the table above. 2005 2004 £000 p £000 pBasic earnings per share on profit 10,692 21.91 8,094 16.77on continuing operationsAdjustments:Exchange loss/(gain) on loan 130 0.27 (155) (0.32)conversionLoss/(profit) on ship disposals 1,617 3.31 (475) (0.98)Pension benefit curtailment (1,784) (3.65) - -(including tax effect of £216,000) ________ ________ _______ _______ 10,655 21.84 7,464 15.47 ======== ======== ======= =======Diluted earnings per share on profit 10,692 21.72 8,094 16.56on continuing operationsAdjustments:Exchange loss/(gain) on loan 130 0.26 (155) (0.32)conversionLoss/(profit) on ship disposals 1,617 3.28 (475) (0.97)Pension benefit curtailment (1,784) (3.62) - -(including tax effect of £216,000) ________ ________ ______ _______ 10,655 21.64 7,464 15.27 ======== ======== ====== ======= 9. Dividends paid and proposed 2005 2004 £000 £000Declared and paid during the year Equity dividends on ordinary shares:Final dividend for 2004 4.95p (2003 4.30p) 2,440 2,110 Interim dividend for 2005 3.10p (2004 2.77p) 1,531 1,359 Less dividends on own shares held by ESOP (44) (59) ______ ______ 3,927 3,410 ====== ====== Proposed for approval at Annual General Meeting (not recognised as a liability at 31December) Equity dividends on ordinary shares:Final dividend for 2005 5.69p (2004 4.95p) 2,781 2,440 ====== ====== The ordinary final dividend will be paid on 12 May 2006 to those shareholdingsregistered in the books of the Company at the close of business on 21 April2006. 10. Reconciliation of movements in equity GROUP Capital Reserves Share Share Retained Other Treasury Total capital premium earnings reserves shares £000 £000 £000 £000 £000 £000At 1 January 2004 12,311 23,558 39,387 - (971) 74,285 Total recognised 12,260 177 12,437income and expensein the periodOrdinary dividends (3,410) (3,410)paidShare-based 289 289compensation expenseArising on the issue 94 252 346of sharesPurchase less sale (616) (616)of sharesTransfer on disposal (375) 375 -of shares _______ _______ _______ ______ _______ _______At 31 December 2004 12,405 23,810 48,151 177 (1,212) 83,331Restatement (100) - - (105) - (205) _______ _______ _______ ______ _______ _______At 1 January 2005 12,305 23,810 48,151 72 (1,212) 83,126 Total recognised (6,605) 106 - (6,499)income and expensein the periodOrdinary dividends (3,927) (3,927)paidShare-based 432 432compensation expensePurchase less sale 7 7of shares Arising on the issue 40 150 190of shares Transfer on disposal (21) 21 -of shares _______ _______ _______ ______ _______ _______At 31 December 2005 12,345 23,960 38,030 178 (1,184) 73,329 ======= ======= ======= ====== ======= =======Other reserves Translation Hedging Total reserve reserve £000 £000 £000At 31 December 2004 177 - 177Restatement - (105) (105) ______ _______ ______At 1 January 2005 177 (105) 72 Cash flow hedges:Transferred to the - 36 36income statementFair value losses in - (134) (134)the periodShare of fair value - 169 169gains of jointventuresRecognised income in 35 - 35the period includingthe effect of netinvestment hedgesAt 31 December 2005 212 (34) 178 Restatement On adoption of IAS 32 and IAS 39 on 1 January 2005 the following restatementshave been made: The fair value of the derivatives used for hedging purposes has been included ina hedging reserve and released to the income statement in the year when thehedged commitment affects profit or loss. The impact of this change is torecognise in reserves a gain on the fair value of cash flow hedges of £20,000and a loss of £125,000 being the Group's share of the loss on fair value of cashflow hedges in the Group's joint venture, Foreland Holdings Limited. The 3.5% cumulative preference shares which have a book and fair value of£100,000 have been reclassified from equity to long term debt. 11. The AGM will be held at 12.00 noon, Thursday 4 May 2006 at the Abbey HouseHotel, Abbey Road, Barrow in Furness, Cumbria. 12. Report and accounts will be posted to members in early April 2006. Copieswill be made available to members of the public at Fisher House, PO Box 4,Barrow in Furness, Cumbria, LA14 1HR. 13. The preliminary statement was approved by the Board of Directors on 13 March2006. This information is provided by RNS The company news service from the London Stock Exchange