James Fisher and Sons Regulatory News (FSJ)

27 August 2014

James Fisher and Sons plc

Interim Results 2014

James Fisher and Sons plc (FSJ.L) ("James Fisher"), the leading marine service provider, announces its results for the six months ended 30 June 2014.

* underlying profit excludes separately disclosed items

Highlights:

· Underlying profit before taxation up 13%;

· Underlying diluted earnings per share rose 14%;

· Marine Services divisional revenue increased by 12%;

· Increased Specialist Technical order book, robust performance at Divex;

· Offshore Oil revenue up 20%, led by growth in Latin America, West Africa and Asia Pacific;

· Three bolt-on acquisitions completed for £14m;

· Interim dividend raised by 10%.

Announced today:

· Divex wins third major saturation diving system order since joining the Group.

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

"James Fisher continued to trade well in the first half of 2014 despite an adverse currency backdrop. These results reflect the growing success of the Group in winning significant new contract business both at home and overseas. Offshore Oil benefitted from the delivery of two major equipment sales which, together with a strong underlying performance, led to a profit increase of over 30%. Specialist Technical produced an excellent result, up 50% after adjustment for our Foreland associate. The Group is well placed to deliver further value to shareholders and to date is trading to management expectations."

For further information:

Chairman's Statement

for the six months ended 30 June 2014

The James Fisher Group ("the Group") continued to trade well in the first half of 2014. Revenue increased by 8% to £216.1m and underlying operating profit by 10% to £24.4m, compared to the same period last year. Underlying profit before tax rose 13% to £21.9m and underlying diluted earnings per share was 34.0 pence, up 14%. These figures were achieved despite an adverse currency backdrop and reflect the growing success of the Group in winning significant new contract business both at home and overseas. This trend underlines the increased scale and credibility of the Group's operations for major customers.

Our Marine Support businesses had a slow start to the year with reduced ship-to-ship activity in the Far East and with a number of marine maintenance contracts not commencing until the second quarter. These contracts should underpin a stronger second half of the financial year. By contrast, our Offshore Oil division benefitted from the delivery of two major equipment sales in the first half which, together with a strong underlying performance, boosted profit by over 30%. Specialist Technical produced an excellent result, up 50% compared with the same period last year after adjustment for the sale of our Foreland associate. Within Specialist Technical, Divex continued to perform strongly; our Defence business regained momentum having filled the gap in its order book and our Nuclear businesses gained market share and significant new contracts in both the decommissioning and design and tooling sectors. Our Tankships division again managed to improve its result due to a further increase in the proportion of contract business and careful attention to costs.

During the first half, the Group made three bolt-on acquisitions. In our Marine Support division, Subsea Vision, an operator of underwater remotely operated vehicles was acquired for £2.5m to improve our offering to the marine maintenance market. In the same division, Testconsult was acquired for £8.0m to complement our Strainstall Monitoring business and to broaden our service offering in the structural monitoring sector. Within Specialist Technical, James Fisher Defence acquired Design Consulting Europe, a Swedish company, for an initial consideration of £3.7m to broaden the Group's expertise and market presence in the swimmer delivery vehicle sector. Together with significant investment in our existing operations, the Group's ability to source a continuing flow of bolt-on acquisitions at reasonable cost strengthens James Fisher's market position and reinforces the Group's ability to grow in the future. Despite this continuing level of investment, the Group's balance sheet remains strong with gearing still at a conservative 43%. This reflects the healthy cash generating qualities of our operating companies.

Looking forward, we would expect further progress in the second half with a recovery in Marine Support due to the factors mentioned above. Offshore Oil will not have the benefit of the large one-off contracts seen in the first half but we would expect its underlying trading position to remain strong. Our Specialist Technical businesses are well placed both for the second half and further forward due to the significant contract order book underpinning their trading. We have announced separately today a major contract win for Divex.

The continued positive outlook for the Group has led the Board to increase the interim dividend by 10% to 7.1 pence per share.

In April, Michael Everard retired from the Board as a non-executive director. Michael served on the Board for over seven years and helped shape the integration of FT Everard into the Group following its acquisition in 2006. I would like to thank Michael for his valuable contribution to the Group's development.

The James Fisher Group is trading to management expectations in the second half and continues to be well placed to deliver further value to our shareholders.

C J Rice

26 August 2014

Operating and Financial Review

for the six months ended 30 June 2014

Strategy

James Fisher has continued to pursue a consistent strategy in recent years of investing in niche businesses where their strong marine service and specialist engineering skills are valued and rewarded. Our focus is on providing solutions to our customers who are moving into the less mature, fast growing and operationally demanding markets such as Africa, South America and the Far East. Such niche services typically command margins in excess of 10% and returns on capital in excess of 15%, and are cash generative.

Whilst organic development has driven the majority of our growth in profits, we have broadened our range of marine services with three bolt-on acquisitions. Our main focus will continue to be investing for organic growth going forward. We will also continue to evaluate further bolt-on acquisition opportunities which meet our niche criteria and where these will strengthen and broaden our range of services or geographical coverage to our multinational customers.

The Group has a strong and stable divisional management team who have a wealth of expertise and experience in their specialist fields. Their entrepreneurial drive combined with the commercial and financial support from the centre has produced consistent growth in the business.

Results

Revenue in the six months ended 30 June 2014 increased by 8% to £216.1m (2013: £200.7m). Excluding the Tankships division where fewer vessels were in operation than in the prior year, the Marine Services divisions increased revenue by 12%.

Underlying operating profit was 10% higher at £24.4m (2013: £22.2m) and underlying profit before tax and diluted earnings per share were 13% and 14% ahead of last half year respectively. The organic growth in underlying operating profit, adjusted for the impact of businesses acquired and sold and for currency fluctuations, was 14%.

Marine Support

H1 2014 underlying profit: £7.7m (H1 2013: £9.4m)

Marine Support had a slow start to the year in the first quarter with lower market activity for ship-to-ship operations, particularly in South East Asia and Nigeria. This improved in the second quarter. Marine projects in Africa have continued to perform well, although there has been some slippage into the second half of the year. Fender and mooring product sales also had a slower start to the year, with orders from the US navy being received later than expected.

The bridge monitoring contracts won during 2013 are in progress but have been subject to delays into the second half of the year. The naval corvettes which have been managed on behalf of Luerssen in recent years were successfully delivered to the Indonesian navy in July.

This division is most impacted by the effects of strong Sterling compared to the US dollar.

Offshore Oil

H1 2014 underlying profit: £11.9m (H1 2013: £9.0m)

The Offshore Oil division has had a strong start to the year with revenue increasing by 20% and profit by 32%. This is as a result of continued growth of long term contracts in Latin America, West Africa and Asia Pacific, which has been led by the demand for zone 2 equipment. The first half performance was also boosted by the second contract for the sale of equipment to Brazil which was announced last year. Growth in the North Sea has been more modest and has been impacted by the weakening of the Norwegian Kroner against Sterling.

Our downhole and subsea tools company, RMSpumptools, produced steady growth and has made good progress with new products coming to market.

Specialist Technical

H1 2014 underlying profit: £4.5m (H1 2013: £3.7m)

The Specialist Technical division produced a strong performance with revenue increasing by 22%. Excluding the earnings from our shareholding in Foreland Shipping which was sold in August 2013, profit in the first half has increased by 50%.

Divex has made good progress with two major saturation diving systems under construction. With the announcement of an order for a third system from Keppel Shipyard for a vessel for BP, it has a significant forward order book for delivery in 2015 and 2016. James Fisher Defence also has an improved order book and in March it completed the acquisition of Defence Consulting Europe (DCE) which increases the product range of swimmer delivery vehicles. Mike Howarth was appointed in April as Managing Director of James Fisher Defence and Divex, to lead the integration of these two businesses which is progressing according to plan.

Our nuclear business produced steady growth and has enhanced its order book through significant contract wins both in decommissioning and other served markets.

Tankships

H1 2014 underlying profit: £1.9m (H1 2013: £1.7m)

Tankships produced a solid performance in the first half with profit increasing by 12%. Revenue declined by 15% reflecting the reduction in capacity over the past year which has increased vessel utilisation and has further reduced reliance on the spot market. The result has also benefitted from the charter of two vessels to the Ministry of Defence which was extended through the first half of 2014.

Acquisitions

James Fisher acquired Subsea Vision Limited for £2.5m in January 2014 which provides remotely operated vehicles (ROV) to the North Sea oil & gas sector. This £1.6m revenue business is now part of the Marine Support division. In March, the Group acquired, for an initial outlay of £3.7m, the intellectual property and business of DCE which was subsequently renamed JF Defence Sweden (JFDS) and joined the Specialist Technical division. JFDS design, build and service swimmer delivery vehicles for operations around the World.

In June 2014, Testconsult Limited was acquired for £8m. This company is a market leading provider of monitoring, instrumentation and testing services and also designs and produces specialist testing equipment used in over 70 countries worldwide. Testconsult will extend and complement the range of services provided by James Fisher's Strainstall Monitoring business. Strainstall uses strain gauges and sensors to provide structural monitoring and dynamic load testing of bridges, other structures and offshore installations. 

Income statement

The Group is primarily exposed to currency fluctuations of the US dollar and the Norwegian Kroner against Sterling. In the first half of 2014, the average rate of exchange was 1.67 compared to 1.55 in the prior period. Stronger Sterling compared to the US dollar has had a negative impact on the Group's results which has partly been mitigated in the short term by cash flow hedging of a portion of the exposure. The results of our Norwegian operations have been translated at 10.1 (2013: 8.9) as Sterling has strengthened by 14% against the Norwegian Kroner. Overall changes to currency rates have impacted first half reported results when compared to the previous half year by approximately £1.5m. Despite this background of adverse currency movements, the Group operating margin increased from 11.1% to 11.3%.

Net interest costs were £0.3m lower in the period due to a reduction in the average cost of borrowing. Separately disclosed costs comprise costs incurred in making business acquisitions of £0.7m (2013: £0.7m) and the amortisation of acquired intangible assets of £0.4m (2013: £0.1m). These are disclosed separately to give a clear view of the underlying trading performance of the Group.

Taxation

The effective tax rate on underlying profit before tax in the period was 19.5% (2013: 20.1%). The rate is lower than the standard UK rate of 21.5% due to the Group having operations in certain overseas countries which have lower tax rates than the UK and due to its Tankships operations which are taxed on a tonnage basis rather than on profitability.

Earnings and dividends

Underlying diluted earnings per share, which excludes separately disclosed items, increased by 14% in the period to 34.0p per share (2013: 29.9p). Diluted earnings per share after charging separately disclosed items was 32.0p per share (2013: 28.3p). The Board is declaring a 10% increase to the interim dividend for the period to 7.10p per share (2013: 6.46p) payable on 3 November 2014 to shareholders on the register on 3 October 2014.

Cash flow and borrowings

Net borrowings were £82.4m at the end of the period compared to £76.1m at 30 June 2013. The Group's cash conversion, the ratio of operating cash to operating profit for the last twelve months was 95% (2013: 146%) compared to an average of 115% over the last five years. Conversion was lower due to a cash outflow in the first half from working capital of £15.6m as the ratio of working capital to sales reverted to 14% (2013: 14%) from 11% at 31 December 2013.

Cash generated from operations decreased by 38% in the period to £16.7m (2013: £27.0m) mainly due to the working capital outflow. Payments of interest and tax were £6.0m (2013: £5.3m) and capital expenditure amounted to £17.6m (2013: £12.8m) as the Group continued to invest for the future. Businesses acquired resulted in a net cash outflow of £11.0m (2013: £15.2m) and dividends paid in the first half were £6.8m (2013: £5.9m).

At 30 June 2014, the ratio of net borrowings (including guarantees) to earnings before interest, tax, depreciation and amortisation (ebitda) was 1.3 times (2013: 1.4 times). Net gearing, the ratio of net debt to equity, was 43% (2013: 45%).

Pensions

The majority of the Group's pension arrangements are defined contribution arrangements where the company's liability is limited to the contributions it agrees on behalf of each employee. As a consequence of its history in shipping the Group is required to contribute to industry-wide Merchant Navy Pension Funds and has its own legacy defined benefit scheme.

Total defined benefit pension deficits at 30 June 2014 were £21.2m (2013: £29.7m). The annual instalment on pension schemes in 2014 is expected to be £4.7m (2013: £4.9m).

We reported a potential liability notified to the Group by the trustees of the Ratings fund (MNRPF) in our 2012 Annual Report. We have not received any further information from the trustees to date.

Balance sheet

The balance sheet at 30 June 2014 shows an increase in intangible assets following the acquisitions. Shareholders' equity increased by £22.2m reflecting profits retained since June 2013 including the sale of the Group's minority stake in Foreland for £11.4m which resulted in a gain of £6.8m in August 2013.

Directors' Responsibilities

We confirm to the best of our knowledge:

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

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

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

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

N P Henry

Chief Executive Officer

S C Kilpatrick

Group Finance Director

For and on behalf of the Board of Directors

26 August 2014

CONDENSED CONSOLIDATED INCOME STATEMENT

for the six months ended 30 June 2014

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2014

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 30 June 2014

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 30 June 2014

CONDENSED CONSOLIDATED STATEMENT OF MOVEMENTS IN EQUITY

for the six months ended 30 June 2014

NOTES TO THE CONDENSED CONSOLIDATED HALF YEARLY STATEMENTS

1 Basis of preparation

James Fisher and Sons Plc (the Company) is a limited liability company incorporated and domiciled in the United Kingdom, whose shares are listed on the London Stock Exchange. The condensed consolidated half yearly financial statements of the Company for the six months ended 30 June 2014 comprise the Company and its subsidiaries (together referred to as the Group) and the Group's interests in jointly controlled entities.

Statement of compliance

The condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standard (IFRS) IAS 34 "Interim Financial Reporting" as adopted by the European Union (EU). As required by the Disclosure and Transparency Rules of the Financial Services Authority, the condensed consolidated set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 31 December 2013 with the exceptions described below. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2013.

The comparative figures for the financial year ended 31 December 2013 are not the Group's statutory accounts for that financial year. Those accounts which were prepared under International Financial Reporting Standards (IFRS) as adopted by the EU (adopted IFRS), have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The consolidated financial statements of the Group for the year ended 31 December 2013 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 where otherwise indicated.

The half yearly report was approved for issue by the Board of Directors on 26 August 2014.

Going concern

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

The Group meets its day to day working capital requirements through operating cash flows with borrowings in place to fund acquisitions and capital expenditure. Movements on the Group's overall net debt position are shown in note 6. The Group has £53,747,000 of undrawn committed facilities at 30 June 2014.

At 30 June 2014 the Group had two revolving credit facilities that are due for renewal in the next twelve months. The Group had no outstanding balances drawn down on these facilities at 30 June 2014. Renewal negotiations will be opened with the banks in due course and the Group has not sought any written commitment that the facilities will be renewed. However, the Group has held discussions with its bankers about its future borrowing needs and no matters have been drawn to its attention to suggest the renewals will not be forthcoming on acceptable terms.

Significant accounting policies

The accounting policies applied by the Group in these condensed consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2013.

In order to provide an improved understanding of the Group's performance, the presentation of cost of sales and administrative expenses has been revised to better reflect those variable and non-variable costs incurred in providing goods and services to our customers separately from those costs of selling, distribution and administration. Cost of sales for the year ended 31 December 2013 has been reduced by £64,006,000 (six months ended 30 June 2013: £33,013,000) with administrative expenses increasing by the corresponding amount.

2 Accounting estimates and judgements

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.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements and for the year ended 31 December 2013.

3 Segmental information

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

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

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

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

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

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

Inter segmental sales are made using prices determined on an arms length basis.