James Fisher and Sons Regulatory News (FSJ)

27 Aug 2008 07:00



27 August 2008 

James Fisher and Sons plc (James Fisher)

Half Year Results 2008

James Fisher, the UK marine services provider, announces results for the Half Year to 30 June 2008.

		% change	H1 2008	H1 2007
	Group revenue	+28.9%	£114.1m	£88.5m
	Profit from operations	+19.2%	£13.1m	£10.9m
	Profit before tax	+16.1%	£11.0m	£9.5m
	Basic earnings per share	+9.9%	17.72p	16.13p
	Interim dividend per share	+12.1%	4.36p	3.89p

Commenting on the results, Chairman, Tim Harris, said:

"Strong organic growth from our marine support divisions of offshore, specialist technical and defence produced good growth in group revenue and profits, despite a disappointing start from the marine oil division.

"James Fisher's consistently strong organic growth record confirms the benefit of our strategy of investing in niche service businesses in the offshore, shipping and ports related sectors which are among the fastest growing and most recession resistant.

"Despite this economic climate, the Company remains well placed to continue further its proven track record of producing good growth and value for our shareholders."

For further information:

James Fisher and Sons plc	Tim Harris	Chairman	020 7614 9508
www.james-fisher.co.uk	Nick Henry	Chief Executive Officer
	Michael Shields	Group Finance Director
Financial Dynamics	Richard Mountain/Sophie Kernon		020 7269 7121

  James Fisher and Sons plc (James Fisher)

Half Yearly Results for the six months ended 30 June 2008

Interim Management Report

for the six months ended 30 June 2008

Chairman's Statement

Results Highlights

	%	H1 2008 £m	H1 2007 £m
Group revenue	+28.9%	114.1	88.5
Profit from operations	+19.2%	13.1	10.9
Profit before tax	+16.1%	11.0	9.5
Basic earnings per share	+9.9%	17.72p	16.13p
Interim dividend per share	+12.1%	4.36p	3.89p

Introduction

Strong organic growth from our marine support divisions of offshore, specialist technical and defence produced good growth in group revenue, up 28.9%, and profit before tax, up 16.1%, despite a disappointing start from the marine oil division. The table below shows the operating profit growth by division, split between organic and acquisition growth respectively:

	Divisional operating profit		% Change	Growth
	H1 2008 £m	H1 2007 £m		organic	acquisition
Offshore Oil Specialist Technical Defence Marine Oil	5,806 4,079 2,595 2,674 15,154	4,525  3,067  1,510  4,056 13,158	+ 28.3% + 33.0% + 71.9% - 34.1% +15.2%	17.5% 30.4% 71.9% -	10.8% 2.6% - -

The Company's consistently strong organic growth record validates its strategy of investing in niche service businesses in the offshore, shipping and ports related sectors which are among the fastest growing and most recession resistant.

The problems experienced in Marine Oil in the first half were operational, not commercial, and should have no lasting effect. There has been no lack of demand for our services.

Net debt at the end of the period was £88.0 million compared with £77.9 million at 31 December 2007. Financial gearing at the period end was 95% (83% year ended 31 December 2007).

The Board proposes to pay an interim dividend of 4.36 pence per share, an increase of 12.1%, payable on 6 November 2008 to shareholders on the register at 10 October 2008.

Offshore Oil - H1 2008 Divisional Result £5.8 million (H1 2007 £4.5 million)

This division for the first time includes the results of our downhole cluster following the acquisition of Pump Tools Limited (Pumptools) in October 2007. As oil drilling related businesses, Pumptools and Remote Marine Systems are more appropriately classified as Offshore Oil than Specialist Technical and the 2007 comparatives have been adjusted to ensure comparability.

Organic growth was 17.5% with the Buchan and Pumptools acquisitions adding another 10.8%. Divisional margins were 29.2% (30.4% full year 2007) and return on capital employed (ROCE), including goodwill, was 16.2%, against 14.6% in full year 2007. The high margins were encouraging given that the downhole cluster has lower margins than our rental businesses. We have been investing in new capital equipment to support organic growth in our offshore businesses so it was also satisfactory to see ROCE improved.

Our offshore division enjoys good diversification, both in terms of customer base and geographical spread. Our customers operate across the oil production, construction and maintenance sectors as well as exploration. Geographically our activities now include not only the UK and Norwegian sectors of the North Sea but also, and increasingly, most of the new oil regions of the world. 

Pumptools has integrated well into our downhole cluster and has significantly strengthened our ability to market our specialist electrical submersible pump equipment worldwide. Both Buchan and Pumptools are exceeding our expectation when we acquired them.

The offshore oil sector continues to offer attractive opportunities and we remain positive about its medium and long-term prospects. Our businesses have a proven track record and we shall continue to support them both by capital investment in new equipment and by acquisitions which strengthen or complement our market position.

Specialist Technical - H1 2008 Divisional Result £4.1 million (H1 2007 £3.1 million)

This division consists of three clusters - FenderCare, Strainstall and Nuclear. It enjoyed an extremely encouraging first half with profit up 33.0% with over 90% from organic growth. Better margins at 10.5% (9.1% full year 2007) and improved ROCE at 17.1% (13.2% full year 2007) were also positive features.

Both FenderCare and Strainstall are market leaders in their fields and focused on high growth sectors such as shipping and ports related services. Both clusters are also increasingly active in the high growth areas of the Middle East and Asia, as opposed to the more mature markets of the United States and Europe. In H1 2008 73% (56% full year 2007) of their revenue came from outside the UK.

FenderCare produced another good result. Its ship-to-ship operations benefited from a strong oil market. The buoyant growth in world shipping and its demand for new ports was also reflected in FenderCare's results.

Strainstall also produced a strong result. Its particular expertise is the construction and operation of strain gauges. These have practical applications in a number of sectors of which shipping, ports, construction and rail are the most important. During H1 2008 its Middle Eastern and Asian operations did particularly well. The acquisition of JCM Scotload (Scotload) for £3.1 million in February 2008 will enable Strainstall to expand its strain gauge skills into the offshore market where Scotload already enjoys a good market position in the North Sea.

The Nuclear cluster produced a mixed result, but inspection and measurement services performed strongly and ahead of plan. Remote handling services were disappointing, reflecting the inertia from delays in awarding decommissioning contracts pending resolution of the future management contract for Sellafield. The recent appointment of the Washington consortium has ended this uncertainty but it remains to be seen how quickly this will filter through to changes on the ground.

The strong organic growth performance in H1 2008 confirms that in this division we have strong market leading companies focused on high growth, international market sectors. We shall continue to support them both by investment in new capital equipment and by acquisition.

Defence - H1 2008 Divisional Result £2.6 million (H1 2007 £1.5 million)

This division consists of two clusters - submarine rescue and surface ship management. Profits increased by 71.9% in H1 2008 owing primarily to the profit taken on the Korean and Singaporean submarine rescue contracts.

Submarine rescue enjoyed a productive first half. The Korean and Singaporean submarine rescue vessels are currently on schedule and budget, for delivery by the end of 2008 and in the first half of 2009 respectively. Both have passed important technical milestones including the pressure testing of both hulls, a critical phase. We have taken revenue of £11.3 million and profit of £1.0 million in total for both contracts in H1 2008. At 30 June 2008, £8.7 million was invested in working capital on the Singaporean hull since we have to finance the vessel during construction. The Koreans are making progress payments during the construction of their vessel so there is no equivalent working capital investment. We have agreed, subject to full documentation, the finance of the Singaporean vessel and its mother ship which is being built by our Singapore partners, ST Marine, and will receive full payment for the vessel on delivery in the first half of 2009. Thereafter we shall benefit until 2029 from the revenues of the through-life service that we shall be providing to the Singaporean Navy.

Our world leadership in this highly specialist market has recently been strengthened with the award of several smaller contracts to the division by other navies. We are also actively engaged in the commissioning of the new NATO Submarine Rescue System which will replace the UK's Submarine Rescue System in December 2008.

We have a uniquely strong expertise and reputation in this specialist market and are confident we can exploit this to produce a consistently profitable and growing business.

The surface ship cluster is responsible for the Company's 25% holding in Foreland Shipping, the military ro-ro PFI company which operates six vessels for the MoD. We also manage five vessels for the British Nuclear Group and are currently supervising the reactivation and maintenance of three Corvettes which BAe Systems built for the Brunei Navy.

Marine Oil - H1 2008 Divisional Result £2.7 million (H1 2007 £4.1 million)

The first half result in 2008 was disappointing, being £1.4 million down on the equivalent half in 2007. Revenue in both H1 2008 and H1 2007 was almost identical at around £38.5 million and there was no shortfall in demand or loss of customer support. On the contrary, the deterioration in result was entirely caused by operational factors, some planned, some unanticipated.

Our largest vessel, mt Pembroke Fisher (14,204 tonnes) was out for unforeseen repairs for a month, costing some £400,000 in costs and lost revenue. As part of the Everard acquisition, we have had to manage a major fleet renewal programme over the last twelve months with the phasing out of five old vessels (mt Arduity, mt Allurity, mt Agility, mt Alacrity and upcoming mt Annuity) and the phasing in of four new vessels (mt Superiority, mt Supremity and the charters mt Vedrey Tora and mt Vedrey Thor). Overall, this complicated task has gone satisfactorily, except for the later than expected delivery of the Vedrey time charters. As time charters, these vessels are manned and managed by a third party ship manager and we have experienced significant problems obtaining vetting approval from the oil majors for their operation. These are not yet resolved but we remain confident of their resolution. These ship phasing and vetting problems have cost some £650,000. In addition, 2008 had a heavier dry-docking programme than the previous year, including the docking of three ships to install the emergency oil recovery equipment required for the new European Maritime Safety Agency (EMSA) contract. This, of course, unlike the other operational issues, was planned. The exceptional merger expenditure of £800,000 in H1 2007 has been more than offset by the increased bareboat charter costs of the three new Everard newbuildings which were sold and chartered back in June 2007 for £26.4 million.

On the demand side, since the Everard merger was announced over eighteen months ago, we have completed contract negotiations with most of our largest customers at acceptable rates and have lost no significant business. Furthermore, to date there has been no evidence of any drop in demand for fuel which might result from a general decline in UK economic activity.

Marine Oil is a stable, cash generative business in which we have a strong market position and a long history. The operational problems experienced in H1 2008 sometimes happen in shipping but are not evidence of any deterioration in the division's earning ability. We remain committed to achieving the historic Fisher's operating margins and ROCE for the combined James Fisher Everard fleet.

Directors and employees

There have been no changes to the Board this year and we are seeing the benefits of a settled and experienced management team. The Company operates with a flat management structure and encourages entrepreneurial management in the divisional clusters with input from the centre in terms of commercial strategy and financial control. Our record suggest that, in the right circumstances, the combination works very well in generating organic growth and helping to identify acquisition targets.

All our people are to be commended and thanked for their hard work in producing an encouraging result in H1 2008.

Risk and the present economic climate

James Fisher's main businesses are in market sectors (eg offshore, shipping and port related services) which continue to grow strongly and are among the most recession proof. It also enjoys good, long-term relationships and credit lines with its banks, with plenty of headroom on its banking covenants so it has been little affected by the recent credit crunch except in terms of paying marginally higher interest rates. Conversely, on the upside the present economic climate has probably reduced the price expectations of potential acquisition candidates and competition from private equity buyers.

Probably the most significant effect of the current well publicised economic problems has been indirect, on the reported pension fund deficits which have increased by £11.5 million over the last year. This has had a direct knock-on effect on financial gearing as increases in pension deficits are charged directly against reserves. Unfortunately, with equity values still declining in value and short-term inflation estimates increasing, this process has probably not yet peaked.

Outlook

In recent years James Fisher has pursued a consistent strategy of expanding its marine service operations by focusing on niche businesses with strong market shares and proven cash generating abilities. It has concentrated on market sectors which are fast growing and internationally orientated such as offshore, shipping and port services. The result has been an established track record of profit growth, particularly organic growth and cash generation.

For the reasons given in the previous section, there are no reasons to alter this strategy in the present more challenging economic climate or to anticipate that it will prove any less successful. In fact, the credit crunch may actually be beneficial to the extent that it reduces the price expectations of acquisition prospects.

Our Offshore Oil and Specialist Technical businesses enjoy strong market positions in expanding sectors. Our Defence division has made progress on the important Korean and Singaporean submarine rescue vessel contracts and their completion can be measured in months not years. Their success will confirm our world leadership position and enable us to develop the business further from strength.

Fortunately the problems experienced in Marine Oil in the first half were operational, not commercial, and should have no lasting effect. Our aim is clear, to achieve for James Fisher Everard the operating margins and ROCE historically earned by James Fisher's fleet.

Despite the present economic climate, the Company remains well placed to continue further its proven track record of producing good growth and value for our shareholders.

  Directors' Responsibilities

We confirm to the best of our knowledge:

The half yearly financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union.

The half yearly management report includes a fair review of the information required by;

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

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

 

T.C.Harris

Chairman

M.J.Shields

Group Finance Director

On behalf of the Board of Directors

CONDENSED CONSOLIDATED HALF YEARLY INCOME STATEMENT

For the six months ended 30 June 2008

							Restated
							Note 15
Notes		6 months ended				6 months ended			Year ended
		30 June 2008				30 June 2007			31 December 2007
		Before	Separately			Before	Separately
		separately	disclosed			separately	disclosed
		disclosed	items			disclosed	items
		items	note 5	Total		items	note 5	Total		Total
		£000	£000	£000		£000	£000	£000		£000
Continuing Operations
Group revenue		114,135		114,135		88,517		88,517		182,046
Cost of sales		(98,451)		(98,451)		(74,628)		(74,628)		(154,327)
Gross profit		15,684		15,684		13,889		13,889		27,719
Administrative expenses		(2,808)		(2,808)		(2,839)		(2,839)		(6,191)
Profit from operations before separately disclosed items		12,876		12,876		11,050		11,050		21,528
Profit/(Loss) on ship disposals		-	175	175		-	(104)	(104)		95
Profit from operations		12,876	175	13,051		11,050	(104)	10,946		21,623
Finance costs
Finance income		183	-	183		133	-	133		375
Finance costs		(3,075)	-	(3,075)		(2,579)	-	(2,579)		(5,036)
Exchange loss on loan		-	(297)	(297)		-	(113)	(113)		(184)
		(2,892)	(297)	(3,189)		(2,446)	(113)	(2,559)		(4,845)
Share of post tax results of joint ventures		1,172	-	1,172		1,113	-	1,113		2,322
Profit on continuing operations before taxation	2	11,156	(122)	11,034		9,717	(217)	9,500		19,100
Taxation (including overseas taxation of £699,000; 2007 £782,000 )	10	(2,151)	-	(2,151)		(1,543)	-	(1,543)		(2,959)
Profit on continuing operations		9,005	(122)	8,883		8,174	(217)	7,957		16,141
Discontinued operations
Loss from discontinued operations	4			-				-		(6)
				8,883				7,957		16,135
Profit for the period
Profit attributable to :
Equity holders of the parent				8,857				7,931		16,078
Minority interests				26				26		57
				8,883				7,957		16,135
Earnings per share (EPS)
				pence				pence		pence
Basic EPS from continuing operations	12			17.72				16.13		32.67
Diluted EPS from continuing operations	12			17.58				15.96		32.40
Basic EPS on profit from total operations	12			17.72				16.13		32.66
Diluted EPS on profit from total operations	12			17.58				15.96		32.39
Adjusted Earnings per share
Adjusted basic EPS from continuing operations	12			17.97				16.57		32.85
Adjusted diluted EPS from continuing operations	12			17.84				16.39		32.58
Dividends
Paid or approved by shareholders in the period
Final dividend				7.52				6.54		6.54
Interim dividend				-				-		3.89
				7.52				6.54		10.43
Proposed but not accrued
Final dividend				-				-		6.54
Interim dividend	14			4.36				3.89		-
				4.36				3.89		6.54

  CONDENSED CONSOLIDATED HALF YEARLY STATEMENT OF RECOGNISED INCOME AND EXPENSE

For the six months ended 30 June 2008

				Restated
				Note15
	Note	6 months ended	6 months ended			Year ended
		30 June 2008	30 June 2007		31 December 2007
		£000		£000		£000
Income and expense recognised directly in equity
Exchange differences on translation of foreign operations:
Currency translation differences		512		472		393
Net investment hedge		400		(256)		1,041
		912		216		1,434
Fair value of losses on cash flow hedges		(731)		-		(188)
Share of fair value losses of cash flow hedges in joint venture		(316)		(29)		(280)
Actuarial (losses)/gains on defined benefit schemes	7	(8,033)		2,169		(4,587)
		(8,168)		2,356		(3,621)
Transfers to the income statement on cash flow hedges		-		8		8
Tax on items taken directly to equity		1,045		(483)		(199)
Net (expense)/income recognised directly in equity		(7,123)		1,881		(3,812)
Profit for the period		8,883		7,957		16,135
Total recognised income and expense for the period	13	1,760		9,838		12,323
Attributable to :
Equity holders of the parent		1,734		9,812		12,266
Minority interests		26		26		57
		1,760		9,838		12,323

  CONDENSED CONSOLIDATED HALF YEARLY BALANCE SHEET

At 30 June 2008

					Restated
					Note 15
			30 June 2008	30 June 2007		31 December 2007
	Note		£000		£000		£000
Assets
Non current assets
Goodwill			69,428		58,707		67,190
Other intangible assets			81		58		76
Property, plant and equipment	6		98,164		83,625		92,311
Investment in joint ventures			3,893		3,982		4,217
Available for sale financial assets			1,369		1,370		1,370
Retirement benefit assets	7		-		612		528
			172,935		148,354		165,692
Current assets
Inventories			14,499		13,988		18,471
Trade and other receivables			52,344		41,006		39,823
Cash and short term deposits	9		11,953		7,393		13,221
			78,796		62,387		71,515
Non-current assets classified as held for sale	4		-		2,321		1,172
Total assets			251,731		213,062		238,379
Equity and Liabilities
Capital and reserves
Called up share capital	13		12,429		12,382		12,428
Share premium	13		24,345		24,133		24,338
Treasury shares	13		(1,036)		(1,134)		(1,134)
Other reserves	13		743		99		878
Retained earnings	13		55,612		57,356		57,395
Shareholders' Equity			92,093		92,836		93,905
Minority interests	13		-		97		128
Total equity			92,093		92,933		94,033
Non current liabilities
Other payables			1,831		1,937		2,012
Retirement benefit obligations	7		17,715		6,833		11,904
Derivative financial instruments			-		-		188
Cumulative preference shares			100		100		100
Loans and borrowings			90,315		64,036		83,628
Deferred tax liabilities			1,168		2,654		2,226
			111,129		75,560		100,058
Current liabilities
Trade and other payables			35,378		35,336		34,907
Current tax			2,671		1,407		1,940
Derivative financial instruments			919		28		-
Loans and borrowings			9,541		7,798		7,441
			48,509		44,569		44,288
Total liabilities			159,638		120,129		144,346
Total equity and liabilities			251,731		213,062		238,379

  CONDENSED CONSOLIDATED HALF YEARLY STATEMENT OF CASH FLOW 

For the six months ended 30 June 2008

					Restated
					Note 15
		6 months ended		6 months ended			Year ended
	Note		30 June 2008		30 June 2007	31 December 2007
			£000		£000		£000
Group profit before tax from continuing operations			11,034		9,500		19,100
Adjustments to reconcile Group profit before tax to net cash flows
Loss from discontinued operations			-		-		(6)
Adjustments for:
Depreciation and amortisation			4,494		4,199		8,344
Profit on sale of property, plant and equipment			(378)		(491)		(735)
(Profit)/loss on ship disposals			(175)		104		(95)
Finance income			(183)		(133)		(375)
Finance expense			3,075		2,579		5,036
Exchange loss on loan			297		113		184
Share of profits of joint ventures			(1,172)		(1,113)		(2,322)
Increase in trade and other receivables			(3,658)		(8,593)		(4,669)
Increase in inventories			(1,982)		(1,180)		(3,203)
Increase in inventories and receivables attributable to submarine rescue vessels			(4,659)		(1,854)		(3,707)
Increase in trade and other payables			3,884		6,315		4,890
Additional defined benefit pension scheme contributions			(1,683)		(1,673)		(3,147)
Share based compensation			331		306		587
Cash generated from operations			9,225		8,079		19,882
Income tax payments			(1,471)		(1,340)		(2,840)
Net Cash from operating activities			7,754		6,739		17,042
Investing activities
Dividends from joint venture undertakings			1,200		700		1,416
Proceeds from the sale of property, plant and equipment			2,132		24,878		28,377
Proceeds from the sale of subsidiary net of cash disposed of			-		494		491
Finance income			183		135		377
Acquisition of subsidiaries, net of cash acquired			(4,742)		(7,198)		(18,486)
Acquisition of property, plant and equipment			(8,937)		(9,402)		(22,967)
Acquisition of investment in joint ventures			(9)		(27)		(27)
Net Cash (used in)/from investing activities			(10,173)		9,580		(10,819)
Financing activities
Proceeds from the issue of share capital			8		24		275
Preference dividend paid			(2)		(2)		(4)
Finance cost			(3,450)		(2,784)		(4,932)
Proceeds from other non-current borrowings			12,547		12,102		43,855
Purchase less sale of own shares by ESOP			(164)		(274)		(274)
Capital element of finance lease repayments			-		(42)		(75)
Repayment of borrowings			(4,269)		(24,461)		(37,017)
Dividends paid			(3,719)		(3,212)		(5,129)
Net Cash from/(used in) financing activities			951		(18,649)		(3,301)
Net (decrease)/increase in cash and cash equivalents			(1,468)		(2,330)		2,922
Cash and cash equivalents at beginning of period			13,221		9,655		9,655
Effect of exchange rate fluctuations on cash held			200		68		644
Cash and cash equivalents at end of period	9		11,953		7,393		13,221

  NOTES TO THE CONDENSED CONSOLIDATED HALF YEARLY STATEMENTS

1 Basis of preparation

James Fisher and Sons Public Limited Company (the Company) is a limited liability company incorporated and domiciled in England and Wales and whose shares are listed on the London Stock Exchange. The consolidated half yearly financial statements of the Company as at and for the six months ended 30 June 2008 comprise the Company and its subsidiaries (together referred to as the Group) and the Group's interests in jointly controlled entities.

The consolidated financial statements of the Group as at and for the year ended 31 December 2007 are available upon request from the Company's registered office at Fisher House, PO Box 4, Barrow-in-Furness, Cumbria LA14 1HR or at www.james-fisher.co.uk.

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

Statement of compliance

The condensed financial statements have been prepared in accordance with International Financial Reporting Standard (IFRS) IAS 34 "Interim Financial Reporting" as adopted by the EU. As required by the Disclosure and Transparency Rules of the Financial Services Authority, the condensed set of financial statements has been prepared applying the accounting policies and presentation that was applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2007. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2007.

The comparative figures for the financial year ended 31 December 2007 are not the Company's statutory accounts for that financial year. These accounts which were prepared under International Financial Reporting Standards (IFRS) as adopted by the EU (adopted IFRS), have been reported on by the Company's auditors and delivered to the Registrar of companies. The report of the auditors was (i) unqualified; (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 237 (2) or (3) of the Companies Act 1985.

The half yearly report was approved for issue by the Board of Directors on 26 August 2008.

Significant accounting policies

Except as described below, the accounting policies applied by the Group in these condensed consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2007.

During the period the Group has adopted the following new standards and interpretations issued under IFRS. Adoption of these standards and interpretations did not have any effect on the financial position or performance of the Group.

IFRIC 11 IFRS 2 - Group and Treasury Share Transactions - This interpretation requires arrangements whereby an employee is granted rights to an entity's equity instruments to be accounted for as an equity settled scheme, even if the entity buys the instrument from a third party, or the shareholders provide the equity instrument needed.

Seasonality of operations

Although some of the Group's operations may sometimes be affected by seasonal factors such as general weather conditions, the Directors do not feel that this has a material effect on the performance of the Group when comparing the half yearly results to those achieved in the second half of the year.

  2 Segmental information

Primary reporting format business segments

The following tables present revenue and profit information regarding the Group's business segments for the six months ended 30 June 2008 and 2007 and the year ended 31 December 2007.

Six months ended
30 June 2008		Continuing Operations
		Offshore Oil		Specialist		Defence		Marine		Total
		Services		Technical				Oil
				Services				Services
		£000		£000		£000		£000		£000
Revenue
Segmental revenue		19,874		40,373		17,186		38,370		115,803
Inter segment sales		(4)		(1,617)		(47)		-		(1,668)
Group revenue		19,870		38,756		17,139		38,370		114,135
Result
Segment result		5,806		3,839		1,663		2,674		13,982
Common costs										(1,106)
Profit from operations before separately disclosed items										12,876
Profit on ship disposals										175
Profit from operations										13,051
Finance income										183
Finance costs										(3,075)
Exchange loss on loan conversion										(297)
										(3,189)
Share of post tax results of joint ventures				240		932				1,172
		5,806		4,079		2,595		2,674
Profit before tax										11,034
Taxation										(2,151)
Profit attributable to equity holders										8,883

  2 Segmental information (continued)

Six months ended

30 June 2007

Segmental information for June 2007 and December 2007 has been restated following the decision to transfer the results of Remote Marine Systems and Pumptools from the Specialist Technical Services division to the Offshore Oil Services division. These businesses are involved in the supply of equipment and services used in oilfield development and it was therefore considered that their activities are more closely aligned with the existing businesses in the Offshore Oil Division.

The impact of the restatement on the June 2007 segmental information is to increase the segmental revenue and result of the Offshore Oil division by £1,335,000 and £168,000 and by £3,960,000 and £647,000 in respect of the year ended 31 December 2007, with a corresponding reduction in the revenue and operating results of the Specialist Technical Services division.

		Continuing Operations
		Offshore Oil		Specialist		Defence		Marine		Total
		Services		Technical				Oil
				Services				Services
		£000		£000		£000		£000		£000
Revenue
Segmental revenue		14,212		31,811		5,505		38,546		90,074
Inter segment sales		-		(1,528)		(29)		-		(1,557)
Group revenue		14,212		30,283		5,476		38,546		88,517
Result
Segment result		4,525		2,843		621		4,056		12,045
Common costs										(995)
Profit from operations before separately disclosed items										11,050
Loss on ship disposals										(104)
Profit from operations										10,946
Finance income										133
Finance costs										(2,579)
Exchange gain on loan conversion										(113)
										(2,559)
Share of post tax results of joint ventures				224		889				1,113
		4,525		3,067		1,510		4,056
Profit before tax										9,500
Taxation										(1,543)
Profit attributable to equity holders										7,957

  2 Segmental information (continued)

Year ended

31 December 2007

												Discontinued
		Continuing Operations										Operations
	Offshore Oil			Specialist		Defence		Marine		Total		Cable
		Services		Technical				Oil				Ships
				Services				Services
		£000		£000		£000		£000		£000		£000
Revenue
Segmental revenue		30,271		65,304		14,132		75,932		185,639		-
Inter segment sales		-		(3,406)		(187)		-		(3,593)		-
Group revenue		30,271		61,898		13,945		75,932		182,046		-
Result
Segment result		9,213		5,066		1,228		8,605		24,112		(6)
Common costs										(2,584)
Profit from operations before separately disclosed items										21,528
Profit on sale of property										-		-
Impairment of non-current assets										-		-
Profit on ship disposals										95		-
Profit from operations										21,623		(6)
Finance income										375		-
Finance costs										(5,036)		-
Exchange loss on loan conversion										(184)		-
										(4,845)		-
Share of post tax results of joint ventures				548		1,774				2,322
		9,213		5,614		3,002		8,605
Profit before tax										19,100		(6)
Taxation										(2,959)		-
Profit attributable to equity holders										16,141		(6)

  3 Changes in estimates

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

Except as described below, in preparing these consolidated half yearly financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2007.

The liabilities reported in respect of the defined benefit pension plans are based on the latest triennial valuation as at 31 March 2007 in respect of the Dock Workers and Everard Group schemes and as at 1st August 2007 in respect of the Shore Staff scheme rolled forward to 30 June 2008 and have been reviewed and updated by a qualified actuary.

There have been no material changes in contingent liabilities during the current half yearly period.

4 Discontinued operations and non current assets classified as held for sale

Discontinued operations

Discontinued operations relate to the withdrawal of the Group from cable laying activities announced in 2005. Following the disposal in 2005 of the cable ship CS Oceanic Pearl, the remaining vessel, CS Oceanic Princess was disposed of in June 2006.

Non current assets classified as held for sale

At 30 June 2007 this related to the carrying value of the mt Alacrity and mt Agility for which the Group agreed the terms of disposal in July 2007. These vessels were held at their current book value, this being less than the expected net disposal proceeds. mt Agility was disposed of in October 2007. The amount included at 31 December 2007 related to mt Alacrity which was disposed of in January 2008 resulting in a profit on disposal of £177,000.

5 Separately disclosed items

Separately disclosed items consist of:			6 months ended		6 months ended		Year ended
		30 June 2008		30 June 2007		31 December 2007
			£000		£000		£000
Loss on ship disposals			(2)		(104)		(77)
Profit on ship disposals			177		-		172
Exchange loss on loan			(297)		(113)		(184)
			(122)		(217)		(89)

The loss on ship disposals in the six months ended 30 June 2007 relates to the disposal of the Group's interest in mt Seniority, mt Speciality and mt Superiority following the refinancing exercise undertaken in June 2007, together with the disposal of mt Allurity and mt Arduity in January 2007.

The refinancing exercise involved the disposal of the three vessels to FSL Trust Management Pte Ltd for a consideration of £26,403,000 the proceeds of which were used to repay existing debt. The vessels have subsequently been chartered by the Group on bareboat charters for an initial period of ten years.

The profit on ship disposals relates to the sale of mt Alacrity in January 2008 and mt Agility in October 2007.

The exchange loss on loan arises on foreign currency financing loans in the UK in relation to vessels.

  6 Property, plant and equipment

				Restated
				Note 15
	6 months ended		6 months ended			Year ended
	30 June 2008		30 June 2007		31 December 2007
		£000		£000		£000
Opening net book value		92,311		102,629		102,629
Restatement (note 15)		-		991		991
Additions		7,950		9,005		23,260
Reclassifications		2,284		-		-
Transfer to assets held for resale		-		(2,321)		(1,172)
Acquisition of subsidiary undertaking		13		518		689
Disposals		(406)		(23,037)		(26,083)
Disposal of subsidiary undertaking		-		(33)		(33)
Depreciation		(4,489)		(4,199)		(8,339)
Exchange differences		501		72		369
Closing net book value		98,164		83,625		92,311

Reclassifications

The reclassification of £2,284,000 relates to assets held by Fisher Offshore which were previously classified as inventory but are now held for hire by the business.

7 Retirement benefit obligations

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

				Restated
				Note 15
	6 months ended		6 months ended		Year ended
	30 June 2008		30 June 2007		31 December 2007
		£000		£000		£000
As at 1 January		(11,376)		(10,224)		(10,224)
(Expense)/income recognised in the income statement		(103)		19		40
Contributions paid to scheme		1,797		1,815		3,395
Actuarial (loss)/gain		(8,033)		2,169		(4,587)
At period end		(17,715)		(6,221)		(11,376)
The Group's assets and obligations in respect of its pension schemes at 30 June 2008 were as follows:
				Restated
				Note 15
	6 months ended		6 months ended		Year ended
	30 June 2008		30 June 2007		31 December 2007
		£000		£000		£000
Assets
Shore Staff pension scheme		-		612		528
		-		612		528
Liabilities
Shore Staff pension scheme		(4,482)		-		-
Dockworkers pension scheme		(1,518)		(709)		(916)
Everard Group pension scheme		(1,893)		-		-
MNOPF pension scheme		(9,822)		(6,124)		(10,988)
		(17,715)		(6,833)		(11,904)

The Group operates three defined benefit schemes and has an obligation to make payments in respect of the funding deficit of the Merchant Navy Officers' Pension Fund. Full actuarial valuations have been performed on all three Group schemes, as at 31 March 2007 in respect of the Dockworkers and Everard Group schemes and at 1 August 2007 in respect of the Shore Staff scheme. These have been rolled forward to 30 June 2008 and have been incorporated in the half yearly report. An actuarial deficit of £8,033,000 has been recognised during the period and is reported in the Group recognised statement of income and expense (SORIE) together with related deferred tax movements. The movements on the actuarial deficit have arisen largely from the incorporation of revised mortality assumptions, changes in the commutation factor, changes in the value of investments and an increase in the discount rate applied to the pension liability. Details of the key actuarial assumptions are shown below.

			6 months ended			Year ended
			30 June 2008		31 December 2007
Inflation				3.3		2.9
Rate of general long term increase in salaries				1.5		1.5
Rate of increase of pensions in payment - Dockworkers				3.0		3.0
Rate of increase of pensions in payment - Shore staff				3.1		2.9
Rate of increase of pensions in payment - Everard				3.0		2.9/3.0
Discount rate for scheme liabilities				6.7		5.8
Expected rates of return on assets
Equities				8.2		7.5
Gilts/Corporate bonds				5.2		4.5
Property				7.2		6.5
Insurance policies				5.2		4.5
Cash/net current assets				5.2		4.5
Post retirement mortality:
All schemes
Current pensioner at 65		male		20.5		16.9-20.8
Current pensioner at 65		female		23.3		19.9-23.6
Future pensioner at 65		male		22.3		19.8-21.5
Future pensioner at 65		female		25.1		22.8-24.3

The post retirement mortality assumptions for each scheme were updated as part of the full actuarial valuations carried out during 2007. The mortality assumptions are now consistent across all three schemes. 

8 Share based payment

In March 2008 awards were granted under the Long Term Incentive Plan (LTIP), and the 2005 Executive Share Option Scheme (ESOS).

In the case of the LTIP the exercise price of the option is £nil. The options vest if the increase in the company's diluted earnings per ordinary share over the performance period is at least equal to the rate of inflation plus 9%. If the performance target is not met over the three year contractual period for performance the option lapses.

In the case of the ESOS the exercise price is equal to the average middle market price for the three dealing days prior to the date of grant, being 623p. The options vest depending on the company's total shareholder return relative to a comparator group of companies comprising the constituents of the FTSE Small Cap index (excluding investment trusts) at the date of grant. If performance over a three year period is in the upper quartile 100% of the options will vest. If performance is at the bottom of the median, (second) quartile 40% will vest. The amount vesting will decrease on a straight line basis between the median and upper quartile. If performance is below the median quartile no shares will vest. The options lapse if these conditions are not met during the performance period.

The fair value of options granted during the six months ended 30 June 2008 was estimated at the date of grant using the following assumptions:

			LTIP		ESOS
Dividend yield			1.80%		1.80%
Expected volatility			N/A		30%
Expected life of option (years)			3		6.5
Share price at date of grant (£)			6.00		6.00
Options granted (number of shares)			102,935		122,136
Estimated fair value of option at date of grant (£)			5.68		1.49

All schemes are treated as equity settled. The total charge to the income statement in respect of all schemes in the six months ended 30 June 2008 is £331,000 (30 June 2007: £306,000).

9 Reconciliation of net debt

		1 January			Cash		Other		Exchange		30 June
			2008		Flow	Non Cash			Movement		2008
			£000		£000		£000		£000		£000
Cash in hand and at bank			13,221		(1,468)		-		200		11,953
Cash and cash equivalents			13,221		(1,468)		-		200		11,953
Debt due after 1 year			(83,500)		-		(6,445)		(275)		(90,220)
Debt due within 1 year			(7,376)		(8,311)		6,233		(22)		(9,476)
			(90,876)		(8,311)		(212)		(297)		(99,696)
Finance leases			(293)		33		-		-		(260)
Net debt			(77,948)		(9,746)		(212)		(97)		(88,003)
		1 January			Cash		Other		Exchange		30 June
			2007		Flow	Non Cash			Movement		2007
			£000		£000		£000		£000		£000
Cash in hand and at bank			9,655		(2,330)		-		68		7,393
Cash and cash equivalents			9,655		(2,330)		-		68		7,393
Debt due after 1 year			(72,256)		-		8,383		-		(63,873)
Debt due within 1 year			(11,069)		12,359		(8,912)		(113)		(7,735)
			(83,325)		12,359		(529)		(113)		(71,608)
Finance leases			(368)		42		-		-		(326)
Net debt			(74,038)		10,071		(529)		(45)		(64,541)
		1 January			Cash		Other		Exchange		31 Dec
			2007		Flow	Non Cash			Movement		2007
			£000		£000		£000		£000		£000
Cash in hand and at bank			9,655		2,922		-		644		13,221
Cash and cash equivalents			9,655		2,922		-		644		13,221
Debt due after 1 year			(72,256)		-		(11,173)		(71)		(83,500)
Debt due within 1 year			(11,069)		(6,838)		10,644		(113)		(7,376)
			(83,325)		(6,838)		(529)		(184)		(90,876)
Finance leases			(368)		75		-		-		(293)
Net debt			(74,038)		(3,841)		(529)		460		(77,948)

During the period the Group obtained an additional facility of 135,700,000 NOK (£13,374,000) to fund the construction of a new operating base for the ScanTech Group in Norway. The loan, which is secured against the property, converts into a 93,000,000 NOK (£9,166,000) term loan on completion of the property. This loan is repayable over thirty years in equal quarterly instalments. Repayment commences from the second anniversary of completion of the property. Interest is charged at 0.8% above NIBOR.

  10 Taxation

The group has entered the UK tonnage tax regime under which tax on its ship owning and operating activities is based on the net tonnage of vessels operated. Any income and profits outside the tonnage tax regime are taxed under the normal tax rules of the relevant tax jurisdiction.

Taxation for the period has been provided at the rate of 19.5% on profit on continuing operations (2007: 16.2%) based on the estimated effective tax rate for the twelve months to 31 December 2008. Of this amount £699,000 relates to overseas businesses (2007: £782,000). No tax has been provided in respect of separately disclosed items or discontinued activities (2007: £nil)

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 30 June 2008 it would have increased the Group's deferred tax liability by £788,000.

11 Share capital

During the period 6,431 (2007 20,000) ordinary shares of 25p were allotted on the exercise of share options for an aggregate cash consideration of £8,000 (2007 £24,000).

 

12 Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period, after excluding ordinary shares purchased by the employee share ownership trust and held as treasury shares.

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

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

				6 months ended		6 months ended		Year ended
				30 June 2008		30 June 2007		31 December 2007
					£000		£000		£000
Profit attributable to equity holders					8,857		7,931		16,078
Loss attributable to discontinued activities					-		-		6
Profit on continuing activities  attributable to equity holders					8,857		7,931		16,084
Weighted average number of shares
					30 June 2008	30 June 2007		31 December 2007
					Number of		Number of		Number of
					shares		shares		shares
For basic earnings per ordinary share*					49,979,552		49,176,479		49,236,346
Exercise of share options and LTIPs					388,747		524,138		399,411
For diluted earnings per ordinary share					50,368,299		49,700,617		49,635,757

* Excludes 229,305 (2007:June 312,870, December 312,870) shares owned by the James Fisher and Sons Public Limited Company Employee Share Ownership Trust.

  

		30 June 2008				30 June 2007				31 December 2007
		£000		p		£000		p		£000		p
Basic earnings per share		8,857		17.72		7,931		16.13		16,078		32.66
Loss attributable to discontinued activities		-		-		-		-		6		0.01
Basic earnings per share on profit from
continuing operations		8,857		17.72		7,931		16.13		16,084		32.67
Diluted earnings per share		8,857		17.58		7,931		15.96		16,078		32.39
Loss attributable to discontinued activities
		-		-		-		-		6		0.01
Diluted earnings per share on profit from continuing operations		8,857		17.58		7,931		15.96		16,084		32.40

Adjusted earnings per share

The earnings per ordinary share from continuing operations before separately disclosed items is shown to highlight the underlying earnings trend and is calculated using the number of shares outlined in the table above.

		30 June 2008				30 June 2007				31 December 2007
		£000		p		£000		p		£000		p
Basic earnings per share on profit from continuing operations
		8,857		17.72		7,931		16.13		16,084		32.67
Adjustments:
Exchange loss on loan conversion		297		0.60		113		0.23		184		0.37
(Profit)/loss on ship disposals		(175)		(0.35)		104		0.21		(95)		(0.19)
Adjusted basic earnings per share on profit from continuing operations
		8,979		17.97		8,148		16.57		16,173		32.85
Diluted earnings per share on profit from continuing operations
		8,857		17.58		7,931		15.96		16,084		32.40
Adjustments:
Exchange loss on loan conversion		297		0.60		113		0.22		184		0.37
(Profit)/loss on ship disposals		(175)		(0.34)		104		0.21		(95)		(0.19)
Adjusted diluted earnings per share on profit from continuing operations
		8,979		17.84		8,148		16.39		16,173		32.58

  13 Reconciliation of movements in equity

For the 6 months ended 30 June 2008

	Capital				Attributable to equity holders of parent
	Share	Share			Retained		Other		Treasury		Total	Minority			Total
	capital	premium			earnings		reserves		shares	Shareholders		interests			equity
											equity
	£000		£000		£000		£000		£000		£000		£000		£000
At 1 January 2008	12,428		24,338		57,395		878		(1,134)		93,905		128		94,033
Total recognised income and expense in the period	-		-		1,869		(135)		-		1,734		26		1,760
Acquisition of minority interest	-		-		-		-		-		-		(154)		(154)
Ordinary dividends paid	-		-		(3,721)		-		-		(3,721)		-		(3,721)
Share-based compensation expense	-		-		331		-		-		331		-		331
Arising on the issue of shares	1		7		-		-		-		8		-		8
Purchase of shares	-		-		-		-		(164)		(164)		-		(164)
Sale of shares	-		-		-		-		-		-		-		-
Transfer on disposal of shares	-		-		(262)		-		262		-		-		-
At 30 June 2008	12,429		24,345		55,612		743		(1,036)		92,093		-		92,093
Other reserves										Translation		Hedging			Total
											reserve	reserve
											£000		£000		£000
At 1 January 2008											1,264		(386)		878
Cash flow hedges:
Transferred to the income statement											-		-		-
Fair value losses in the period											-		(731)		(731)
Share of fair value losses of joint ventures											-		(316)		(316)
Recognised income in the period including the effect of net investment hedges											912		-		912
At 30 June 2008											2,176		(1,433)		743

13 Reconciliation of movements in equity (continued)

For the 6 months ended 30 June 2007

	Capital				Attributable to equity holders of parent
	Share	Share		Retained			Other				Treasury				Total		Minority		Total
	capital	premium		earnings			reserves				shares				Shareholders		interests		equity
																equity
	£000		£000		£000				£000				£000			£000		£000		£000
At 1 January 2007	12,377		24,114		50,932				(96)				(1,147)			86,180		71		86,251
Total recognised income and expense in the period	-		-		9,617				195				-			9,812		26		9,838
Ordinary dividends paid	-		-		(3,212)				-				-			(3,212)		-		(3,212)
																-
Share-based compensation expense	-		-		306				-				-			306		-		306
Arising on the issue of shares	5		19		-				-				-			24		-		24
Purchase of shares	-		-		-				-				(276)			(276)		-		(276)
Sale of shares	-		-		-				-				2			2		-		2
Transfer on disposal of shares	-		-		(287)				-				287			-		-		-
At 30 June 2007	12,382		24,133		57,356				99				(1,134)			92,836		97		92,933
Other reserves															Translation		Hedging		Total
															reserve		reserve
																£000		£000		£000
At 1 January 2007																(170)		74		(96)
Cash flow hedges:
Transferred to the income statement																-		8		8
Fair value losses in the period																-		-		-
Share of fair value losses of joint ventures																-		(29)		(29)
Recognised income in the period including the effect of net investment hedges																216		-		216
At 30 June 2007																46		53		99

13 Reconciliation of movements in equity (continued)

For the year ended 31 December 2007

	Capital				Attributable to equity holders of parent
	Share	Share		Retained			Other	Treasury		Total		Minority		Total
	capital	premium		earnings		reserves		shares		Shareholders		interests		equity
											equity
	£000		£000		£000		£000		£000		£000		£000		£000
At 1 January 2007	12,377		24,114		50,932		(96)		(1,147)		86,180		71		86,251
Total recognised income and expense in the period	-		-		11,292		974		-		12,266		57		12,323
Ordinary dividends paid	-		-		(5,129)		-		-		(5,129)		-		(5,129)
Share-based compensation expense	-		-		587		-		-		587		-		587
Purchase of shares	-		-		-		-		(276)		(276)		-		(276)
Sale of shares	-		-		-		-		2		2		-		2
Arising on the issue of shares	51		224		-		-		-		275		-		275
Transfer on disposal of shares	-		-		(287)		-		287		-		-		-
At 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		£000
At 1 January 2007											(170)		74		(96)
Cash flow hedges:
Transferred to the income statement											-		8		8
Fair value gains in the period											-		(188)		(188)
Share of fair value gains of joint ventures											-		(280)		(280)
Recognised income in the period including the effect of net investment hedges											1,434		-		1,434
At 31 December 2007											1,264		(386)		878

14 Interim Dividend

The interim dividend of 4.36p (2007 3.89p) per 25p ordinary share is payable on 6 November 2008 to those shareholders on the register of the company at the close of business on 10 October 2008. The dividend recognised in the reconciliation of movements in equity in note 13 is the final dividend for 2007 of 7.52p paid on 9 May 2008. The proposed interim dividend has not been recognised in this report.

15 Business combinations

On 7 February 2008 the Company acquired the entire issued share capital of JCM Scotload Limited, (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 set out below.

The Scotload business has been integrated into the Strainstall Group and is expected to benefit from synergies derived from common marketing and distribution bases. Included in goodwill are certain intangible assets that cannot be individually separated and reliably measured due to their nature. 

										Carrying
										amount
									and fair value
										£000
Property, plant & equipment										13
Inventories										138
Trade and other receivable										401
Cash and short term deposits										1,027
Trade and other payables										(395)
Deferred tax										(1)
Fair value of net assets acquired										1,183
Goodwill arising on acquisition										1,888
										3,071
Consideration:
Cash										2,985
Direct costs associated with acquisition										86
										3,071

Since the date of acquisition Scotload has contributed £227,000 to the Group's profit after tax.

Had the business combinations during the year occurred at the start of the financial year the Group profit after tax from continuing operations for the period would have been £8,975,000 and the revenue from continuing operations would have been £114,260,000.

On 1 January 2008 the Group acquired an additional 10% of Fendercare BV for a consideration of £9,000.The Group's interest in this joint venture is now 50%.

In accordance with the acquisition agreement in respect of the Group's acquisition of 70% of Soil Dynamics (Malaysia) SDN BHD (Soil Dynamics) on 24 January 2008 the Group made a payment of £200,000 in respect of contingent consideration.

On 4 April 2008 the Group acquired the outstanding minority interest of 30% in Soil Dynamics for a cash consideration of £225,000. Goodwill of £73,000 arose on the purchase of the minority interest.

On 16 January 2008 the Group made the final payments of contingent consideration in respect of £750,000 due to the vendors of FT Everard and Sons following the delivery into service of mt Superiority.

On 11 March 2008 the Group made a payment of £800,000 to the vendors of Inspection Holdings Limited (NDT) in accordance with their achievement of the earnout provisions for 2007 included in the purchase agreement.

On 27 March 2008 the Group made a payment of £500,000 to the vendors of Strainstall Group in accordance with their achievement of the earnout provisions for 2007 included in the purchase agreement. This amount was settled in part by the issue of £212,000 of loan notes. These loan notes must be redeemed no later than 31 March 2010.

In March 2008 in accordance with the terms of the acquisition agreement between Strainstall Group and The Railway Engineering Company Limited (TRE), the vendors of TRE received a payment of £362,000 in respect of their achievement of the earnout provisions for 2007 included in the purchase agreement. This amount was settled in full by the issue of loan notes by the Company. These loan notes were settled in March 2008.

Restatement of Goodwill arising on acquisitions

The balance sheet at 30 June 2007 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 was revised following the agreement of the balance sheet at completion. As a result the total consideration payable was reduced by £2,062,000. This reduction was 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 was made to creditors due within one year to reflect this additional adjustment.

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 of £231,000 has been provided against with depreciation charged in the period of £76,000 relating to these vessels being removed. An additional provision representing the discounted present value of the expected onerous liability has been made. The utilisation of the provision in the period was £150,000 whilst interest costs increased by £33,000 representing the unwinding of the discount rate applied to the provision. The proportion of the liability arising after one year has been included in trade and other creditors due after one year. The total adjustment 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 and £13,000 of additional depreciation on this amount.

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 Strainstall. The principal adjustment relates to the provisions for obsolete inventory.

A summary of the adjustments is included in the table below:

			2007	Adjustments						2007
		As reported			Everard			Strainstall		Restated
Balance sheet			£000		£000			£000		£000
Goodwill			58,686		(4)			25		58,707
Property, plant & equipment			83,780		(155)			-		83,625
Inventories			14,037		(24)			(25)		13,988
Trade and other receivables			41,038		(32)			-		41,006
Non-current assets classified as held for sale			1,112		1,209			-		2,321
Trade and other payables due after one year			1,314		623			-		1,937
Trade and other payables due within one year			35,145		191			-		35,336
Retained earnings			57,176		180			-		57,356
Income statement
Cost of sales			(74,841)		213			-		(74,628)
Finance costs			(2,546)		(33)			-		(2,579)

16 Commitments and contingencies

As at 30 June 2008 the Group had capital commitments of £9,421,000. The principal elements relate to the

completion of equipment for the offshore oil division and the construction of new industrial premises. At June 2007 the Group

had capital commitments of £6,522,000 which included the completion of mt Supremity.

  17 Financial instruments

Cash flow hedges

At 30 June 2008 the Group held a forward currency contract designated to hedge future income receivable from the Singapore government in respect of the Singapore submarine rescue contract. The details of the contracts, all of which mature on 30 June 2009 are as follows:

						Exchange
						rate
Forward contract to hedge expected future income
Sell
SG$ 20,000,000						2.85
SG$ 10,000,000						2.67
SG$ 10,000,000						2.71

The foreign exchanges contracts have been negotiated to match the expected profile of receipts. At 30 June 2008 these hedges were assessed to be highly effective and a cumulative unrealised loss of £919,000 (31 December 2007: £188,000) relating to the hedging instruments is included in equity.

18 Related parties

Details of the transactions carried out with related parties in the six months ended 30 June 2008 and 2007 are shown in the table below:

		Services to			Sales to			Purchases		Amounts		Amounts
				related		related		from		owed by		owed to
				parties		parties		related		related		related
								parties		parties		parties
				£000		£000		£000		£000		£000
Foreland Shipping Limited		2008		242		-		-		43		-
		2007		233		-		-		29		-
Fendercare businesses		2008		-		409		-		415		-
		2007		-		576		-		61		-
Everard Insurance Brokers		2008		54		-		9		16		1
		2007		62		-		171		-		6

The Group provides payroll management services to Foreland Shipping Limited, a wholly owned subsidiary of Foreland Holdings Limited a company in which the Group has a 25% equity interest. No profit is made on these services which are excluded from the Group's revenue. 

Through its Fendercare business the Group has a 40% interest in several joint ventures providing ship to ship transfer services in West Africa. During the period the Group acquired a further 10% interest in Fender Care Benelux BV for a consideration of £9,000, increasing the Group's interest in this Joint venture to 50%. Fendercare also has a 50% interest in Fender Care Omega Limited (India) and a 25% interest in Fender Care Malaysia SDN BHD (Malaysia).

Everard Insurance Brokers (EIB), a company controlled by Mr W D Everard and Mr F M Everard and members of their family, has provided certain insurance services to the Group since the acquisition of F T Everard and Sons Limited in December 2006. EIB shares certain facilities with FT Everard and Sons who make charges to EIB in respect of their usage.

  Independent review report to James Fisher and Sons Public Limited Company

Introduction

 We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 which comprises the condensed consolidated half-yearly income statement, statement of recognised income and expense, balance sheet, statement of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

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

Directors' responsibilities

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

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

Our responsibility

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

Scope of review

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

KPMG Audit plc

Chartered Accountants  

26 August 2008

ENDIR BCGDIXGDGGIL