James Fisher and Sons Regulatory News (FSJ)

29 Aug 2007 07:01

Fisher (James) & Sons PLC29 August 2007 29 August 2007 James Fisher and Sons plc (James Fisher) Interim Results 2007 James Fisher, the UK marine services provider, announces interim results for theperiod ended 30 June 2007. 2007 2006 Half year Half yearRevenue (£m)* £88.5m £57.0mProfit from operations (£m)* £10.8m £8.7mProfit before tax (£m)* £9.5m £8.4mAdjusted basic earnings per share (pence)* 16.20p 14.87pDividend (pence) 3.89p 3.47p * profit from continuing operations after charging £800,000 of merger costs,before separately disclosed items Highlights • Strong organic growth in the three marine support services divisions • Successful integration of FT Everard with £14.5 million revenue contribution and £800,000 one-off merger costs charged against profit • Operating profit up 26% in Offshore Oil Services; strong performance from both Norwegian and Aberdeen operations • Specialist Technical Services grew operating profit by 35%, driven by the excellent performance of FenderCare and the acquisition of The Strainstall Group Limited • The 22% increase in operating profit in the Defence division resulted primarily from small to medium sized submarine rescue projects Commenting on the results, Chairman, Tim Harris, said: "The result for the first half was encouraging with strong organic growth in thethree marine support services divisions. We are also pleased to report that theintegration of FT Everard has now been substantially completed. "The first half result confirms that the Group continues to be well placed toproduce improved profits and growth in shareholder value." For further information: James Fisher and Sons plc Tim Harris, Chairman 020 7614 9508 Nick Henry, Chief Executive Officerwww.james-fisher.co.uk Michael Shields, Group Finance Director Financial Dynamics Richard Mountain/Susanne Yule 020 7269 7121 James Fisher and Sons plc (James Fisher) Interim Results for the six months ended 30 June 2007 Introduction The result for the first half was encouraging and saw strong growth in the threemarine support services divisions of offshore oil, specialist technical anddefence. Revenues from continuing operations, before separately disclosed items, were£88.5 million, up 55% (2006: £57.0 million), of which F T Everard contributed£14.5 million. Operating profit on continuing operations before separatelydisclosed items increased by 24% to £10.8 million (2006: £8.7 million) andprofit before tax on the same basis was up 13% to £9.5 million (2006: £8.4million), despite charging against profit at least £800,000 of one-off costsrelating to the F T Everard merger. This means that underlying pre-tax profitwas up by 23% when allowance is made for these merger costs. Adjusted basicearnings per share after charging £800,000 of merger costs were 16.20p, anincrease of 9% (2006: 14.87p) or 17.83p, an increase of 20% after adding backthe £800,000 of merger costs. Net debt at the end of the period was £64.5 million, compared with £74.0 millionat the end of December 2006. Financial gearing was reduced from 86% at theyear-end to 69% at 30 June 2007, primarily owing to the refinancing of the firstthree Everard newbuilds. The Board proposes to pay an interim dividend of 3.89p, an increase of 12%. Thedividend will be paid on 1 November 2007 to shareholders on the register at 5October 2007. Marine Oil Services divisional result £3.8 million (2006 - £3.4 million) Progress on the Everard merger The integration of F T Everard and Sons Limited with James Fisher Tankships(JFT) has been the priority for the first half and has gone according to plan.The integration is now substantially complete with a single commercialdepartment in London, a unified fleet management in Barrow and the ships nowrunning according to a single operating system. One-off integration costs of atleast £800,000 have been incurred, of which the most significant has beenredundancies, and they have been charged against profit in the first half. Thebasic integration has now been achieved and the initial savings made. Thereremains a further opportunity to improve profitability significantly by steadymanagement over time to improve the productivity of the enlarged James FisherEverard fleet. We have sold an Everard non core business - Ships Electronic Services Limited -to its management at its net asset value of £396,000. The third Everard newbuild, mt Superiority, has been delivered and enteredservice in April 2007. Delivery of the fourth and final Everard newbuild, mtSupremity, is expected to be delivered by the yard in September 2007. Asplanned we raised £22.6 million in June by re-financing the first three Everardnewbuilds as bareboat charters and we have the option to re-finance mt Supremityin the same way. We have also recently agreed terms to sell the 17 year old,single hulled mt Agility and mt Alacrity for US$3 million each, for delivery inSeptember 2007 and January 2008. When completed, these two sales should resultin a book profit of in excess of £1 million. They are being replaced by twotime chartered vessels mt Vedrey Tora and mt Vedrey Thor which came with theEverard acquisition. The merged James Fisher Everard fleet of thirty ships willbe one of the youngest and most cost effective in the coastal tanker field. Offshore Oil Services divisional result £4.4 million (2006 - £3.5 million) At £4.4 million, profits were up by 26% over H1 2006 with both the Norwegian andAberdeen operations performing strongly. Organic growth again was the key tothe result and it was pleasing to see a further slight improvement in margins.The underlying market conditions in both sectors of the North Sea remain strongand prospects remain favourable. We have benefited from the acquisitions of Gjerde Lofteteknikk AS in Norwaywhich was bought for £644,400 in November 2006 and Buchan Technical ServicesLimited for net cash of £3.4 million in May 2007. Gjerde provides specialistequipment to customers in the Norwegian and UK sector of the North Sea,designing and customising lifting equipment and cranes for sale and rental tothe offshore rig and subsea market. Buchan is a market leader in the design andrental of centrifugal pumps, hydraulic power packs and umbilical cords andreels, to the oil & gas majors. Both are complementary to our existing servicesand have now been integrated. We continue to invest in new equipment where the demand from our customersrequires it in both Scotland and Norway. Specialist Technical Services divisional result £3.2 million (2006 - £2.4million) Profits were up by 35% for H1 2007 at £3.2 million with organic growth and theacquisition of The Strainstall Group Limited in October 2006 the main causes.Margins remained steady against the full year 2006 but slightly down against H12006 owing to a change of mix and the start-up of James Fisher Inspection andMeasurement Services. FenderCare put in another excellent performance. It is the world market leaderin ship to ship transfer of oil. Its ports' products services also did well,enjoying the benefits of a strong market. In the product area, FenderCareenjoys common marketing with the Strainstall Group whose expertise is based onstrain gauges rather than the various applications of fenders. Strainstall hassettled well into James Fisher, with a continuity of management which enabled itto produce a better than expected result in H1 2007. Its initial earn outpayment of £1.25 million was made in March 2007. In July 2007 we added to our nuclear capabilities by acquiring InspectionHoldings Limited, whose main operating subsidiary is NDT Inspection and TestingLtd, for up to £2.1 million. NDT will be merged with our start-up James FisherInspection and Measurement Services and the combined entity should be wellplaced in the fast growing non destructive testing market. James Fisher Nuclearproduced a similar result in H1 2007 to 2006 but now, with its defined remotehandling and plant characterisation, is better placed to grow than it was a yearago. We have recently expanded significantly the international sales capability ofRemote Marine Systems (RMS) and for this reason its profit was slightly down inH1 2007 against the previous year. RMS has an excellent product range andreputation and we are actively seeking to expand it further. Defence divisional result including Foreland joint venture £1.5 million (2006 -£1.2 million) At £1.5 million James Fisher Defence's profit was 22% up on H1 2006 withimproved margins too. This improvement came primarily from small to mediumsized submarine rescue projects, not from the new Singapore and Korean projects.These remain on schedule and according to plan but for reasons of prudence wehave not yet booked any profit. Further delays in the delivery of the new NATO system have meant that ourcontract for operating the UK's own LR5 submarine rescue system has beenextended well into next year. We are actively following a number of leads forthe exploitation of LR5 when she is finally made available by the Royal Navy. As regards the surface ship market, we continue to pursue a number ofopportunities. Recently we won a contract from the UK branch of the Bremenbased shipyard, Fr Lurssen Werft GmbH & Co KG, to look after three offshorepatrol vessels built by BAe. People Now that the merger of the James Fisher and FT Everard fleets to create the newunited James Fisher Everard has been successfully completed, William Everard hasdecided to step down from the board as Fleet Director. I would like to thankWilliam for his great contribution in bringing this merger about quickly andeffectively. William will continue to represent the Company on a number ofindustry bodies. James Fisher now employs more than one thousand people, principally in the UKand Norway with a few but increasing number in the Middle and Far East. It iscommitted to its headquarters in Barrow-in-Furness which it intends to developuntil it is recognised as one of the key centres of ship management excellencein the UK. The location has advantages in terms of stability and competitivecost but it is sometimes a challenge to persuade people from the South to movethere although when they do they seldom leave. We have many talented andhardworking people in all our operations and I would like to thank them forhelping produce the encouraging first half result. The financial position of the Company's own pension schemes has improved to theextent that they are in surplus or approaching it after the action taken in thelast few years and the recent rise in both interest rates and investmentreturns. The present main area of focus is on the industry MNOPF scheme forofficers which is less easy to influence because it is an industry wide scheme.James Fisher is actively promoting change through The Chamber of Shipping whichis the relevant industry body. Strategy for the Future James Fisher's core expertise is the practical application of engineering andoperational skills in the marine sector. Following the UK's exit fromcommercial shipbuilding in the 1970s and the more recent disappearance of themajor British owned shipping companies such as P & O, these skills are rare andbecoming actively sought in a climate of increased regulation and risingstandards on environmental and safety issues. James Fisher's strategy is to use the marine service skills and cash flow fromits marine oil operation, James Fisher Everard, to develop its fast-growingmarine support services divisions of offshore oil, specialist technical anddefence, by acquisition and subsequently by organic growth. The focus is on anumber of key areas which share certain characteristics - consistency with JamesFisher's marine service skills, niches with strong market shares, real customerrelationships preferably with blue chip customers, good margins and returns oncapital and, importantly, continuity of management who know what they are doing.The track record over the last five years suggests that the formula works andwe shall continue to employ it. Outlook At present, almost all the constituent parts of James Fisher's marine supportservice divisions share two characteristics - they are good businesses inindustries enjoying strong demand. Our intention, as always, will be to add tothis underlying growth by making further acquisitions which either strengthenour market positions or complement them. As far as marine oil services are concerned, the Everard merger is nowsubstantially complete and the costs incurred have been expensed against H1 2007profit. It remains to draw the full synergies in terms of improvedprofitability whilst continuing to provide a first rate and reliable service toour customers. Growing profitability from marine oil services will have theadded advantage of helping to keep James Fisher's overall tax charge down asshipping profits are effectively tax free under the tonnage tax regime. The first half result confirms that your Company continues to be well placed toproduce improved profits and growth in shareholder value. GROUP INCOME STATEMENT For the six months ended 30 June 2007 Unaudited Unaudited Audited Notes 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 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 £000Continuing OperationsGroup revenue 88,517 88,517 57,010 57,010 118,085Cost of sales (74,841) (74,841) (45,515) (45,515) (96,438)Gross profit 13,676 13,676 11,495 11,495 21,647 Administrative expenses (2,839) (2,839) (2,793) (2,793) (5,756) Profit from operations before 10,837 10,837 8,702 8,702 15,891separately disclosed items Profit on Sale of property - - - - - - 1,126 Impairment of ship - - - - - - (2,906) Loss on ship disposals - (104) (104) - (24) (24) (24) Profit from operations 10,837 (104) 10,733 8,702 (24) 8,678 14,087 Finance costs Finance income (revenue) 133 - 133 159 - 159 316 Finance costs (2,546) - (2,546) (1,299) - (1,299) (2,586) Exchange (loss)/gain on loan - (113) (113) - 35 35 35 conversion (2,413) (113) (2,526) (1,140) 35 (1,105) (2,235) Share of post tax results of 1,113 - 1,113 859 - 859 2,295joint ventures Profit on continuing operations 2 9,537 (217) 9,320 8,421 11 8,432 14,147before taxationTaxation (including overseas 10 (1,543) - (1,543) (1,133) - (1,133) (2,411)taxation of £782,000; 2006£469,000 ) Profit on continuing operations 7,994 (217) 7,777 7,288 11 7,299 11,736 Discontinued operationsProfit from discontinued 4 - 1,856 2,041operations Profit for the period 7,777 9,155 13,777Profit attributable to :Equity holders of the parent 7,751 9,155 13,780Minority interests 26 - (3) 7,777 9,155 13,777 Earnings per share (EPS) pence pence pence Basic EPS from continuing 12 15.76 14.89 23.93operationsDiluted EPS from continuing 12 15.60 14.76 23.71operations Basic EPS on profit from total 12 15.76 18.68 28.09operationsDiluted EPS on profit from total 12 15.60 18.52 27.83operations Adjusted Earnings per share Basic EPS from continuing 12 16.20 14.87 28.30operationsDiluted EPS from continuing 12 16.03 14.74 28.05operations Dividends Paid or approved by shareholdersin the period Final dividend 6.54 5.69 5.69Interim dividend - - 3.47 6.54 5.69 9.16 Proposed but not accruedFinal dividend - - 6.54Interim dividend 3.89 3.47 - 3.89 3.47 6.54 GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE For the six months ended 30 June 2007 Unaudited Unaudited Audited Note 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 £000 £000 £000 Income and expense recognised directly in equity Exchange differences on translation of foreignoperations: Currency translation differences 472 (130) 189 Net investment hedge (256) 147 (571) 216 17 (382) Fair value of gains on cash flow hedges - 52 62 Share of fair value (losses)/gains of cash flow hedges in (29) (17) 39joint venture Actuarial gains on defined benefit schemes 7 2,169 5,331 4,143 2,356 5,383 3,862 Transfers to the income statementOn cash flow hedges 8 (4) 7 Tax on items taken directly to equity 10 (483) (1,054) (772) Net income recognised directly in equity 1,881 4,325 3,097 Profit for the period 7,777 9,155 13,777 Total recognised income for the period 13 9,658 13,480 16,874 Attributable to :Equity holders of the parent 9,632 13,480 16,877Minority interests 26 - (3) 9,658 13,480 16,874 GROUP BALANCE SHEET At 30 June 2007 Unaudited Unaudited Audited 30 June 2007 30 June 2006 31 December 2006 Note £000 £000 £000 AssetsNon current assetsGoodwill 58,686 36,205 55,773Other Intangible assets 58 - 60Property, plant and equipment 83,780 66,236 102,629Investment in joint ventures 3,982 3,406 3,575Available for sale financial assets 1,370 1,368 1,370Deferred tax assets - 187 -Retirement benefit assets 7 612 - - 148,488 107,402 163,407 Current assetsInventories 14,037 6,673 11,317Trade and other receivables 41,038 23,913 32,897Derivative financial instruments - 77 17Cash and short term deposits 9 7,393 10,098 9,655 62,468 40,761 53,886 Non-current assets classified as held for 4 1,112 - 1,518sale Total assets 212,068 148,163 218,811 Equity and Liabilities Capital and reservesCalled up share capital 13 12,382 12,373 12,377Share premium 13 24,133 24,081 24,114Treasury shares 13 (1,134) (1,154) (1,147)Other reserves 13 99 226 (96)Retained earnings 13 57,176 48,666 50,932Shareholders' Equity 92,656 84,192 86,180Minority interests 97 - 71Total equity 92,753 84,192 86,251 Non current liabilitiesOther payables 1,314 963 1,610Retirement benefit obligations 7 6,833 5,912 10,049Cumulative preference shares 100 100 100Financial liabilities 64,036 30,640 72,449Deferred tax liabilities 2,654 - 1,987 74,937 37,615 86,195Current liabilitiesTrade and other payables 35,145 16,936 33,959Current tax 1,407 1,616 1,207Derivative financial instruments 28 30 55Financial liabilities 7,798 7,774 11,144 44,378 26,356 46,365 Total liabilities 119,315 63,971 132,560 Total equity and liabilities 212,068 148,163 218,811 GROUP CASH FLOW STATEMENT For the six months ended 30 June 2007 Unaudited Unaudited Audited 6 months ended 6 months ended Year ended Note 30 June 2007 30 June 2006 31 December 2006 £000 £000 £000 Group profit from operations 10,733 8,678 14,087Adjustments to reconcile Group operating profitto net cash inflows from operating activitiesProfit from discontinued operations - 1,858 2,042Adjustments for: Depreciation 4,262 2,773 5,661 Profit on sale of property, plant and (491) (185) (377) equipment Profit on disposal of property - - (1,126) Impairment of non - current assets - - 2,906 Loss/(profit) on ship disposals 104 (1,737) (1,912)Increase in trade and other receivables (8,593) (3,035) (3,309)Increase in inventories (3,034) (910) (2,025)Increase in trade and other payables 6,465 2,584 2,553Additional defined benefit pension scheme contributions (1,673) (2,418) (2,979)Share based compensation 306 263 516Cash generated from operations 8,079 7,871 16,037Income tax payments (1,340) (539) (1,481)Cash flow from operating activities 6,739 7,332 14,556 Investing activitiesDividends from joint venture undertakings 700 - 1,275Proceeds from the sale of property, plant and equipment 24,878 9,897 12,255Proceeds from the sale of subsidiary 494 - -Interest received 135 163 320Acquisition of subsidiaries, net of cash (7,198) (27) (22,151)acquiredAcquisition of property, plant and equipment (9,402) (2,119) (7,424)Acquisition of investment in joint ventures (27) - -Acquisition of available for sale financial - - (1)assetCash flows from/(used in) investing activities 9,580 7,914 (15,726) Financing activitiesProceeds from the issue of share capital 24 149 170Preference dividend paid (2) (2) (3)Interest paid (2,784) (1,371) (2,807)Proceeds from other non-current borrowings 12,102 309 28,912Purchase less sales of own shares by ESOP (274) (233) (229)Capital element of finance lease repayments (42) - (7)Repayment of borrowings (24,461) (10,918) (20,362)Dividends paid (3,212) (2,796) (4,499)Cash flows (used in)/ from financing activities (18,649) (14,862) 1,175 Net (decrease)/increase in cash and cash equivalents (2,330) 384 5Cash and cash equivalents at beginning of 9,655 9,725 9,725periodNet foreign exchange difference 68 (11) (75) Cash and cash equivalents at end of period 9 7,393 10,098 9,655 NOTES TO THE INTERIM FINANCIAL STATEMENTS General information The Group's interim result consolidates the results of the company and itssubsidiary companies made up to 30 June 2007. The interim financial information is presented in Sterling and all values arerounded to the nearest thousand pounds (£000) except when otherwise indicated. The company is a limited liability company incorporated and domiciled in England& Wales and whose shares are listed on the London Stock Exchange. The interim report was approved for issue by the Board of Directors on 28 August2007. Basis of preparation The financial information contained in this interim report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. It doesnot therefore include all the information and disclosures required in the annualfinancial statements and should be read in conjunction with the Group's annualfinancial statements as at 31 December 2006. The financial information for thepreceding year is based on the statutory accounts for the year ended 31 December2006. These accounts, upon which the auditors issued an unqualified opinion,have been delivered to the Registrar of Companies. 1 Significant accounting policies The interim report has been prepared using accounting policies consistent withthose followed in the preparation of the Group's annual financial statements forthe year ended 31 December 2006 except for the adoption of new standards andinterpretation noted below. Other than as stated below none of theseinterpretations had any effect on the financial position or performance of theGroup. IFRIC 14 IAS 19 - The limit on a defined benefit asset, minimum fundingrequirements and their interaction. This deals with the availability of refunds or reductions in futurecontributions where a defined benefit asset arises in the financial statementsof an entity. This interpretation has been applied in determining the definedbenefit asset included in the Group's accounts as set out in note 7. IFRS 7 Financial instruments: disclosures. This introduces additional and revised disclosure requirements in relation tothe significance of financial instruments to an entity's financial position andperformance. Seasonality of operations Although some of the Group's operations may sometimes be affected by seasonalfactors such as general weather conditions, the Directors do not feel that thishas a material effect on the performance of the Group when comparing the interimresults 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 theGroup's business segments for the six months ended 30 June 2007 and 2006 and theyear ended 31 December 2006. Six months ended Discontinued30 June 2007 Continuing Operations Operations Offshore Specialist Defence Marine Total Cable Oil Technical Oil Ships Services Services Services £000 £000 £000 £000 £000 £000Revenue Segmental revenue 12,877 33,146 5,505 38,546 90,074 -Inter segment sales - (1,528) (29) - (1,557) - Group revenue 12,877 31,618 5,476 38,546 88,517 - Result Segment result 4,357 3,011 621 3,843 11,832 - Common costs (995) Profit from operations before separately disclosed 10,837items Loss on ship disposals (104) - Profit from operations 10,733 - Finance income 133 -(revenue)Finance costs (2,546) -Exchange loss on loan conversion (113) - (2,526) - Share of post tax results of joint 224 889 1,113ventures Profit before tax 9,320 - Taxation (1,543) -Profit attributable to equity 7,777 -holders 2 Segmental information (continued) Six months ended Discontinued30 June 2006 Continuing Operations Operations Offshore Specialist Defence Marine Total Cable Oil Technical Oil Ships Services Services Services £000 £000 £000 £000 £000 £000Revenue Segmental revenue 11,315 19,176 5,557 22,722 58,770 -Inter segment sales - (1,619) (141) - (1,760) - Group revenue 11,315 17,557 5,416 22,722 57,010 - Result Segment result 3,460 2,275 495 3,450 9,680 97 Common costs (978) Profit from operations before separately disclosed 8,702items (Loss)/profit on ship disposals (24) 1,761 Profit from operations 8,678 1,858 Finance income 159 -(revenue)Finance costs (1,299) -Exchange gain on loan conversion 35 - (1,105) - Share of post tax results of joint 116 743 859ventures Profit before tax 8,432 1,858 Taxation (1,133) (2)Profit attributable to equity 7,299 1,856holders 2 Segmental information (continued) Year ended Discontinued31 December 2006 Continuing Operations Operations Offshore Specialist Defence Marine Total Cable Oil Technical Oil Ships Services Services Services £000 £000 £000 £000 £000 £000Revenue Segmental revenue 21,977 42,282 11,197 45,937 121,393 -Inter segment sales - (3,217) (91) - (3,308) - Group revenue 21,977 39,065 11,106 45,937 118,085 - Result Segment result 7,320 3,919 1,024 5,819 18,082 106 Common costs (2,191) Profit from operations before separately disclosed 15,891items Profit on sale of 1,126 -propertyImpairment of non-current assets (2,906) -(Loss)/profit on ship disposals (24) 1,936 Profit from operations 14,087 2,042 Finance income 316 -(revenue)Finance costs (2,586) -Exchange loss on loan conversion 35 - (2,235) - Share of post tax results of joint 346 1,949 2,295ventures Profit before tax 14,147 2,042 Taxation (2,411) (1)Profit attributable to equity 11,736 2,041holders 3 Changes in estimates There have been no material effects on the results of the interim period as aresult of changes in estimates reported in prior financial years. There have been no material changes in contingent liabilities during the currentinterim period. The liabilities reported in respect of the defined benefit pension plans arebased on the interim valuations carried out at the last balance sheet date, 31December 2006 and have been reviewed and updated by a qualified actuary. 4 Discontinued operations Discontinued operations relate to the withdrawal of the Group from cable laying activities announced in 2005. Following the disposal in 2005 of thecable ship CS Oceanic Pearl, the remaining vessel, CS Oceanic Princess wasdisposed of in June 2006. The results of discontinued operations are presented below: Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 £000 £000 £000Revenue - - -Cost of sales - 97 106Gross profit - 97 106 Profit on ship disposals - 1,761 1,936 Profit before tax from discontinued operations - 1,858 2,042Taxation - (2) (1)Net profit attributable to discontinued - 1,856 2,041operations Non current assets held for sale At 30 June 2007 this related to the carrying value of the mtAlacrity and mt Agility for which the Group agreed the terms of disposal in July2007. These vessels are held at their current book value, this being less thanthe expected net disposal proceeds. At 31 December 2006 this related to the vessels mt Allurity and mt Arduity whichwere disposed of by the Group in January 2007. The vessels are stated at theirfair value less costs to sell. The net cash flows attributable to discontinued operations are: Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 £000 £000 £000Operating cash flows (47) 2,822 3,366Investing cash flows - 9,091 9,357Financing activities 39 (7,066) (6,933) (8) 4,847 5,790 Earnings per share from discontinued operations: pence pence penceBasic - 3.79 4.16Diluted - 3.76 4.12 5 Separately disclosed items Unaudited Unaudited AuditedSeparately disclosed items consist of: 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 £000 £000 £000 Profit on sale of property - - 1,126Impairment of ships - - (2,906)Loss on ship disposals (104) (24) (24)Exchange (loss)/gain on loan conversion (113) 35 35 (217) 11 (1,769) On 1 December 2006 the Group disposed of an industrial property at Bridge of Donfor a gross consideration of £2,200,000. The loss on ship disposals in the six months ended 30 June 2007 relates to thedisposal of the Group's interest in mt Seniority, mt Speciality and mtSuperiority following the refinancing exercise undertaken in June 2007, togetherwith the disposal of mt Allurity and mt Arduity in January 2007. The refinancing exercise involved the disposal of the three vessels to FSL TrustManagement Pte Ltd for a consideration of £26,403,000 the proceeds of which wereused to repay existing debt. The vessels have subsequently been chartered by theGroup on bareboat charters for an initial period of ten years. The loss on ship disposals in the six months ended 30 June 2006 relates toadditional costs connected with the ships disposed of in 2005. The exchange differences on loans arise on foreign currency financing loans inthe UK in relation to vessels disposed of in 2007 and 2006. 6 Property plant and equipment During the six months ended 30 June 2007 the Group acquired assets,including investment in vessels with a cost of £9,005,000 (June 2006£2,160,000). Included in 2007 is £3,382,000 in relation to mt Superiority whichwas included in the refinancing transaction referred to in note 5. Assets with a net book value of £387,000 (excluding vessels) (June2006 £278,000), were disposed of resulting in a net gain on disposal of £491,000(2006 £185,000). 7 Deficit in defined benefit pension schemes 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. The decrease in the pension liability in the period arises mainly from changes in the actuarial assumptions, in particular an increase of 0.7% in the discount rate used for valuation of the defined benefit schemes administeredon behalf of the group. As a result of this and improved returns on the scheme'sassets, two of the Group's schemes, the Shore staff scheme and the F T Everard scheme are now in surplus. The Group has recognised an asset of £612,000 inrespect of surplus in the Shore staff scheme. This is the amount recoverablefrom the scheme by the Group through reduced contributions and represents thevalue of employers service costs over the remaining period until accrual ceasesin 2010. No element of surplus has been recognised relating to the FT Everardscheme as this is already closed to future accrual. The actuarial gains reported in the Group statement of recognised income andexpense, (SORIE), have been limited due to the restriction of the Group torecognising as an asset only that element of the surpluses which it considers tobe recoverable. Had the entire surplus on these schemes been recognised by theGroup an additional £2,724,000, before the application of deferred tax, wouldhave been recognised in the SORIE. In 2006 the company made special paymentstotalling £1,600,000 into the James Fisher & Sons Public Limited Company PensionFund for Shore Staff. 8 Share based payment In March 2007 awards were granted under the Long Term Incentive Plan (LTIP), andthe 2005 Executive Share option scheme (ESOS). In the case of the LTIP the exercise price of the option is £nil. The optionsvest if the increase in the company's diluted earnings per ordinary share overthe performance period is at least equal to the rate of inflation plus 9%. Ifthe performance target is not met over the three year contractual period forperformance the option lapses. In the case of the ESOS the exercise price is equal to the average middle marketprice for the three dealing days prior to the date of grant, being £6.30. Theoptions vest depending on the company's total shareholder return relative to acomparator group of companies comprising the constituents of the FTSE Small Capindex (excluding investment trusts) at the date of grant. If performance over athree year period is in the upper quartile 100% of the options will vest. Ifperformance is at the bottom of the median, (second) quartile 40% will vest. Theamount vesting will decrease on a straight line basis between the median andupper 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. Following the passing of a resolution at the 2007 Annual General Meeting, thecomparator Group for awards made under the ESOS in 2005 and 2006 was extendedfrom the original selected comparator Group to comprise all the constituents ofthe FTSE Small Cap index. In accordance with the requirements of IFRS 2 - Sharebased payment, this has been treated as a modification to the original grant ofoptions and the fair values of the options granted under these awards havetherefore been recalculated. Details of the changes in fair value of thesegrants are shown below. In January 2007 an award was made under the All-employee Savings Related ShareOption Scheme (SAYE). All employees, subject to the discretion of the remuneration committee, mayapply for share options under an employee save as you earn plan which may fromtime to time be offered by the company. In order to comply with HM Revenue andCustoms requirements an individual's participation is limited so that theaggregate price payable for shares under option at any time does not exceed thestatutory limit. Options granted under the plans will normally be exercisable ifthe employee remains in employment and any other conditions set by theremuneration committee have been satisfied. Options are normally exercisable atthe end of the related savings contract but early exercise is permitted incertain limited circumstances. The performance period will not normally be lessthan three and a half years or greater than seven and a half years. The fair value of options granted during the six months ended 30 June 2007 wasestimated at the date of grant using the following assumptions: LTIP ESOS SAYE Dividend yield 1.80% 1.80% 1.90%Expected volatility N/A 28% 26%-30%Risk free interest rate N/A N/A 5.10%Expected life of option (years) 3 6.5 3.26 -7.26Share price at date of grant (£) 5.85 5.85 6.18 Options granted (number of shares) 80,200 131,038 154,448Estimated fair value of option at date of grant (£) 5.54 1.49 1.52 - 2.23 The modifications to the awards under the 2005 ESOS made in 2005 and 2006resulted in incremental increases in the fair value per share as follows: Award date Modification Number of Incremental date options increase in granted fair value per share £22 June 2005 3 May 2007 217,956 0.0623 March 2006 3 May 2007 124,573 0.03 9 Reconciliation of net debt 1 January Acquisitions Cash Other Exchange 30 June 2007 Flow Non Cash Movement 2007 £000 £000 £000 £000 £000 £000Cash in hand and at bank 9,655 - (2,330) - 68 7,393Short term deposits - - - - - -Cash and cash 9,655 - (2,330) - 68 7,393equivalentsDebt 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 Acquisitions Cash Other Exchange 30 June 2006 Flow Non Cash Movement 2006 £000 £000 £000 £000 £000 £000Cash in hand and at bank 9,725 - 384 - (11) 10,098Short term deposits - - - - - -Cash and cash 9,725 - 384 - (11) 10,098equivalentsDebt due after 1 year (42,795) - - 12,055 - (30,740)Debt due within 1 year (6,363) - 10,609 (12,055) 35 (7,774) (49,158) - 10,609 - 35 (38,514)Net debt (39,433) - 10,993 - 24 (28,416) 1 January Acquisitions Cash Other Exchange 31 Dec 2006 Flow Non Cash Movement 2006 £000 £000 £000 £000 £000 £000Cash in hand and at bank 9,725 - 5 - (75) 9,655Short term deposits - - - - - -Cash and cash 9,725 - 5 - (75) 9,655equivalentsDebt due after 1 year (42,795) (14,690) (4,630) (10,141) - (72,256)Debt due within 1 year (6,363) (10,962) (3,920) 10,141 35 (11,069) (49,158) (25,652) (8,550) - 35 (83,325)Finance leases - (375) 7 - - (368)Net debt (39,433) (26,027) (8,538) - (40) (74,038) 10 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 normal tax rules of the relevant tax jurisdiction. The tax charge is made up as follows: Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 £000 £000 £000Current tax:UK tonnage tax (16) (13) (21)UK corporation tax (815) (580) (1,309) (831) (593) (1,330) Tax over/(under)provided in previous years 224 (118) 770Foreign tax (782) (469) (883)Total current tax (1,389) (1,180) (1,443)Deferred tax:Origination and reversal of temporary differences (218) 45 (969)Impact of change in expected rate 64 - - (154) 45 (969) Total taxation expense included in group income (1,543) (1,135) (2,412)statement Share of joint ventures' current tax (10) (40) 130 The total tax charge in the income statement is allocated as follows: Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 £000 £000 £000Taxation expense reported in group income (1,543) (1,133) (2,411)statementTaxation attributable to discontinued activities - (2) (1)Total tax expense (1,543) (1,135) (2,412) Deferred income tax The gross movement on the deferred income tax account is as follows: Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 £000 £000 £000Balance at 1 January (1,987) 1,197 1,197 Included in statement of recognised income and (483) (1,054) (772)expense(Charged)/credited to income (154) 45 (969)statementExchange differences (2) (1) -Acquired with subsidiaries (28) - (1,443)Balance at period end (2,654) 187 (1,987) At 30 June 2007 the group has no recognised or unrecognised deferred income taxliability (2006 £nil) in respect of taxes that would be payable on theunremitted earnings of certain of the group's subsidiaries and joint ventures.The group has no liability to additional taxation should such amounts beremitted due to the availability of double taxation relief. 11 Share capital During the period 20,000 (2006 110,423) ordinary shares of 25p were allotted on the exercise of share options for an aggregate cash consideration of £24,000 (2006 £149,000). 12 Earnings per share Basic earnings per share is calculated by dividing the profit attributable toequity holders of the company by the weighted average number of ordinary sharesin issue during the period, after excluding ordinary shares purchased by theemployee share ownership trust and held as treasury shares. Diluted earnings per share is calculated by dividing the net profit attributableto ordinary equity holders of the parent by the weighted average number ofordinary shares that would be issued on conversion of all the dilutive potentialordinary 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 2007 30 June 2006 31 December 2006 £000 £000 £000Profit on continuing activities attributable to equity 7,751 7,299 11,739holdersProfit attributable to discontinued - 1,856 2,041activitiesProfit attributable to equity holders 7,751 9,155 13,780 Weighted average number of shares 30 June 2007 30 June 31 December 2006 2006 Number of Number of Number of shares shares sharesFor basic earnings per ordinary share* 49,176,479 49,017,748 49,058,347Exercise of share options and LTIPs 524,138 427,898 449,306For diluted earnings per ordinary share 49,700,617 49,445,646 49,507,653 * Excludes 312,870 (2006:June 395,657,December 392,592) shares owned by the James Fisher & Sons Public Limited Company Employee Share Ownership Trust. 30 June 2007 30 June 2006 31 December 2006 £000 pence £000 pence £000 pence Basic earnings per share on profit oncontinuing operations 7,751 15.76 7,299 14.89 11,739 23.93 Profit attributable to discontinued activities - - 1,856 3.79 2,041 4.16 Basic earnings per share on totaloperations 7,751 15.76 9,155 18.68 13,780 28.09 Diluted earnings per share on profit oncontinuing operations 7,751 15.60 7,299 14.76 11,739 23.71 Profit attributable to discontinued activities - - 1,856 3.76 2,041 4.12 Diluted earnings per share 7,751 15.60 9,155 18.52 13,780 27.83 The earnings per ordinary share on continuing operations before separatelydisclosed items is shown to highlight the underlying earnings trend and iscalculated using the number of shares outlined in the table above. 30 June 2007 30 June 2006 31 December 2006 £000 pence £000 pence £000 penceBasic earnings per share on profit oncontinuing operations 7,751 15.76 7,299 14.89 11,739 23.93Adjustments:Exchange loss/(gain) on loan conversion 113 0.23 (35) (0.07) (35) (0.07)Loss on ship disposals 104 0.21 24 0.05 24 0.05Profit on sale of property (including taxeffect of £377,000) - - - - (749) (1.53)Impairment of ship - - - - 2,906 5.92Adjusted basic earnings per share on profit oncontinuing operations 7,968 16.20 7,288 14.87 13,885 28.30 Diluted earnings per share on profit oncontinuing operations 7,751 15.60 7,299 14.76 11,739 23.71Adjustments:Exchange loss/(gain) on loan conversion 113 0.22 (35) (0.07) (35) (0.07)Loss on ship disposals 104 0.21 24 0.05 24 0.05Profit on sale of property (including taxeffect of £377,000) - - - - (749) (1.51)Impairment of ship - - - - 2,906 5.87Adjusted diluted earnings per share on profiton continuing operations 7,968 16.03 7,288 14.74 13,885 28.05 13 Reconciliation of movements in equity For the 6 months ended 30 June 2007 Capital Reserves Share Share Retained Other Treasury Total Minority Total capital premium earnings reserves shares interests equity £000 £000 £000 £000 £000 £000 £000 £000At 1 January 2007 12,377 24,114 50,932 (96) (1,147) 86,180 71 86,251 Total recognised income - - 9,437 195 - 9,632 26 9,658and expense in theperiodOrdinary dividends paid - - (3,212) - - (3,212) - (3,212) -Share-based - - 306 - - 306 - 306compensation expense Arising on the issue of 5 19 - - - 24 - 24shares Purchase less sale of - - - - (274) (274) - (274)shares Transfer on disposal of - - (287) - 287 - - -sharesAt 30 June 2007 12,382 24,133 57,176 99 (1,134) 92,656 97 92,753 Other reserves Translation Hedging Total reserve reserve £000 £000 £000At 1 January 2007 (170) 74 (96) Cash flow hedges:Transferred to the income - 8 8statementFair value gains in the period - - -Share of fair value gains of joint ventures - (29) (29)Recognised income in the period including the effect of net 216 - 216investment hedgesAt 30 June 2007 46 53 99 13 Reconciliation of movements in equity (continued) For the 6 months ended 30 June 2006 Capital Reserves Share Share Retained Other Treasury Total capital premium earnings reserves shares Equity £000 £000 £000 £000 £000 £000At 1 January 2006 12,345 23,960 38,030 178 (1,184) 73,329 Total recognised income - - 13,432 48 - 13,480and expense in theperiodOrdinary dividends paid - - (2,796) - - (2,796) -Share-based compensation - - 263 - - 263expense -Arising on the issue of 28 121 - - - 149shares -Purchase less sale of - - - - (233) (233)shares Transfer on disposal of - - (263) - 263 -sharesAt 30 June 2006 12,373 24,081 48,666 226 (1,154) 84,192 Other reserves Translation Hedging Total reserve Reserve £000 £000 £000At 1 January 2006 212 (34) 178 Cash flow hedges:Transferred to the income - (4) (4)statementFair value gains in the period - 52 52Share of fair value gains of joint ventures - (17) (17)Recognised income in the period including the effect of 17 - 17net investment hedgesAt 30 June 2006 229 (3) 226 13 Reconciliation of movements in equity (continued) For the year ended 31 December 2006 Capital Reserves Share Share Retained Other Treasury Total Minority Total capital premium earnings reserves shares Shareholders interests equity equity £000 £000 £000 £000 £000 £000 £000 £000At 1 January 2006 12,345 23,960 38,030 178 (1,184) 73,329 - 73,329 At acquisition - - - - - - 74 74Total recognised income - - 17,151 (274) - 16,877 (3) 16,874and expense in theperiodOrdinary dividends paid - - (4,499) - - (4,499) - (4,499)Share-based - - 516 - - 516 - 516compensation expense Purchase less sale of - - - - (229) (229) - (229)shares Arising on the issue of 32 154 - - - 186 - 186shares Transfer on disposal of - - (266) - 266 - - -sharesAt 31 December 2006 12,377 24,114 50,932 (96) (1,147) 86,180 71 86,251 Other reserves Translation Hedging Total reserve reserve £000 £000 £000At 1 January 2006 212 (34) 178 Cash flow hedges:Transferred to the income - 7 7statementFair value gains in the period - 62 62Share of fair value gains of joint ventures - 39 39Recognised income in the period including the effect of (382) - (382)net investment hedgesAt 31 December 2006 (170) 74 (96) 14 Interim Dividend The interim dividend of 3.89p (2006 3.47p) per 25p ordinary share is payable on1 November 2007 to those shareholders on the register of the company at theclose of business on 5 October 2007. The dividend recognised in thereconciliation of movements in equity in note 13 is the final dividend for 2006of 6.54p paid on 11 May 2007. The proposed interim dividend has not beenrecognised in this report. 15 Business combinations On 23 May 2007 the Company acquired the entire issued share capital of Buchan Technical Services Limited, (Buchan), a company specialising in the supply ofpumps, hydraulic power packs and related equipment and services to the offshoreoil industry, for a cash consideration of £4,925,000. 15 Business combinations (continued) The provisional fair values of the assets and liabilities acquired are subjectto further review to assess the impact of adopting the Group's accountingpolicies and conversion to IFRS. These provisional values are set out below: Carrying amount and fair value £000Property, plant & 518equipmentInventories 52Trade and other 565receivablesCash and short term 1,582depositsTrade and other payables (449)Deferred tax liability (28)Fair value of net assets acquired 2,240Goodwill arising on acquisition 2,805 5,045 Consideration:Cash 4,925Direct costs associated with acquisition 120 5,045 During the period the Group made payments of contingent consideration of£3,000,000 to the vendors of FT Everard and Sons following the delivery of mtSuperiority, and of £1,250,000 to the vendors of Strainstall Group in accordancewith their achievement of the earnout provisions for 2006 included in thepurchase agreement. This latter amount was settled in part by the issue of£529,000 of loan notes which must be redeemed for cash no later than February2009. Under the terms of the purchase agreement for FT Everard and Sons the purchaseconsideration payable has been revised following the agreement of the balancesheet at completion. As a result the total consideration payable has beenreduced by £2,063,000. This reduction is principally due to the movement inexchange rates between the date of completion and the date of preparation of theinitial estimates which affected the valuation of the vessels acquired.£1,856,000 of this amount was received during the period with the balancereceived in July. In December 2006 the amount recoverable was estimated at£1,571,000. This revision has been adjusted in the amount attributable togoodwill arising on the acquisition of FT Everard & Sons. A further adjustment to goodwill arising on the acquisition of FT Everard andSons of £175,000 has been made representing an increase in the Group's liabilityto the MNOPF pension deficit which has been recalculated by the Group'sactuaries on a basis consistent with the amount attributable to the pensiondeficit accounted for by James Fisher & Sons PLC. Since the date of acquisition Buchan has contributed £104,000 to the Group'sprofit after tax. Had the business combination occurred at the start of thefinancial year the Group profit after tax from continuing operations for theperiod would have been £8,135,000 and the revenue from continuing operationswould have been £89,786,000. On 28 June 2007 the Group disposed of its interests in Ships Electronic ServicesLimited, (SES) for a consideration of £396,000. 16 Commitments and contingencies As at 30 June 2007 the Group had capital commitments of £6,522,000. Theprincipal elements relate to the completion of mt Supremity and the constructionof new industrial premises. At June 2006 the Group had capital commitments of£1,297,000. 17 Related parties Details of the transactions carried out with related parties in the six monthsended 30 June 2006 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 £000Foreland Shipping Limited 2007 233 - - 29 - 2006 229 - - 29 -Fendercare businesses 2007 - 576 - 61 - 2006 - 34 - - -Everard Insurance Brokers 2007 62 - 171 - 6 The Group provides payroll management services to Foreland Shipping Limited, awholly owned subsidiary of Foreland Holdings Limited a company in which theGroup has a 25% equity interest. No profit is made on these services which areexcluded from the Group's revenue. Through its Fendercare business the Group has a 40% interest in several jointventures providing ship to ship transfer services in West Africa. During theperiod the Group acquired a 50% interest in a joint venture providing ship toship transfer services in the BENELUX region for a consideration of £27,000. Everard Insurance Brokers (EIB), a company controlled by Mr W D Everard and Mr FM Everard and members of their family, has provided certain insurance servicesto the Group since the acquisition of F T Everard and Sons Limited in December2006. EIB shares certain facilities with FT Everard and Sons who make charges toEIB in respect of their usage. On 28 June 2007 the Group disposed of its interest in Ships Electronic ServicesLimited to its former management including Mr S Roper, who was formerly GroupFinance Director of FT Everard & Sons Limited, the immediate parent of SES. Theconsideration of £396,000 was received by the Group on completion with anoverdraft of £98,000 also taken over by the purchasers. During the period SESwhich supplies and maintains marine navigation, communication and entertainmentequipment, contributed £1,466,000 to Group revenue and made a loss after tax of£14,000. 18 Post Balance sheet events On 27 July the Group acquired the entire issued share capital of InspectionHoldings Limited and its subsidiaries for a consideration of £1,200,000. Theprincipal activity of the main subsidiary of the acquired business, NDT(Inspection and Testing) Limited is the provision of non destructive testingservices, principally to the nuclear and aerospace industries. Contingentconsideration of up to £800,000 is payable based on the performance of thebusiness in the twelve months ended 31 December 2007. Independent review report to James Fisher and Sons Public Limited Company Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2007 which comprises Group Income Statement, GroupStatement of Recognised Income and Expense, Group Balance Sheet and Group CashFlow Statement, and the related notes 1 to 18. We have read the otherinformation contained in the interim report and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation. This report is made solely to the company in accordance with guidance containedin Bulletin 1999/4 'Review of interim financial information' issued by theAuditing Practices Board. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the company, for our work,for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4'Review of interim financial information' issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data, and based thereon,assessing whether the accounting policies and presentation have beenconsistently applied, unless otherwise disclosed. A review excludes auditprocedures such as tests of controls and verification of assets, liabilities andtransactions. It is substantially less in scope than an audit performed inaccordance with International Standards on Auditing (UK and Ireland) andtherefore provides a lower level of assurance than an audit. Accordingly we donot express an audit opinion on the financial information. Review conclusion On the basis of our review, we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. Ernst & Young LLPManchester28 August 2007 This information is provided by RNS The company news service from the London Stock Exchange