Final Results - Year Ended 31 December 1999

Fisher (James) & Sons PLC 17 March 2000 James Fisher and Sons Public Limited Company Preliminary announcement Results for the year ended 31 December 1999 Highlights 1999 1998 Summary Turnover £68.13m £63.52m Profit before tax £6.28m £3.85m Earnings per share 37.41p 5.76p Adjusted earnings per share 12.35p 11.00p Diluted earnings per share 37.26p 5.71p Dividend per ordinary share 4.35p 3.75p * Increased turnover due principally to sale of two second hand ships. * Pre-tax profit up sharply in absence of port closure costs. * Dividend up 16 per cent. * Strong cash flow and reduced gearing. * Partial write-back of deferred tax provision. Prospects David B. Cobb, Executive Chairman, comments: 'We have made a promising start to 2000, despite operating conditions remaining very difficult and markets highly competitive. The board is confident that with the business now under contract and strong cash flow being produced, the company will continue to prosper and grow.' Enquiries: David B. Cobb, CBE, Executive Chairman Tel: 0171 338 5808 Issued on behalf of James Fisher and Sons Public Limited Company by Tavistock Communications Limited (contact: Keith Payne, Tel: 0171 600 2288). Chairman's statement Financial I am pleased to report another good financial and operational performance for the year ended 31 December 1999 in what was a difficult shipping market. * Group turnover increased * Profit before tax increased * Cash and Bank deposits increased * Debt down * Dividend per share up 16% * Adjusted earnings per share up 12% * Interest cover 4.0 times * Ordinary dividend cover 8.6 times * Deferred tax written back of £12.3 million Group turnover of £68,129,000 was higher than last year, principally due to the purchase and onward sale of two ships, originally sourced and planned for conversion and charter but restructured following the acquisition of Cable and Wireless Marine by Global Crossings Limited. Continuing operating profit of £8,538,000 was £1,211,000 down on the previous year, reflecting difficult conditions in the dry cargo and, to a lesser extent, tanker markets. Profit on ordinary activities before taxation was £6,275,000 (1998 - £3,854,000) after taking into account a loss on trading ship sales of £153,000 and relocation costs of £281,000. Accordingly the directors recommend an increase in the final dividend to 2.81 pence (1998 - 2.35 pence) which together with the interim dividend of 1.54 pence, amounts to a total of 4.35 pence (1998 - 3.75 pence), an increase of 16%. The dividend will be paid on 19 May 2000 to shareholders on the register at the close of business on 25 April 2000. Net interest payable was £2,110,000 (1998 - £1,816,000). The results were after charging depreciation and refit amortisation of £8,034,000 (1998 - £7,367,000). Adjusted earnings per share rose from 11.00p to 12.35p. A decision has been taken, approved by our auditors, to write back £12,256,000 of deferred tax as our current capital expenditure projections indicate that only part of the full potential deferred tax liability is expected to crystallise in the foreseeable future. Shipping The shipping market in the tanker and mini bulker trades was extremely competitive, particularly in the latter where we incurred an operating loss. Our contracts of affreightment in the tanker trade enabled us to achieve a very respectable operating profit, despite continuing problems of poor turnround times which were outside our control. These slow turnrounds prevented us from carrying cargoes in our contracts pool and also spot cargoes which were available from time to time. Additionally, severe weather conditions in the last quarter of the year, made life at sea very trying, resulting in longer voyages and less opportunity to take advantage of spot cargoes. Following an extensive upgrading of the power management system, our cable laying ship the 'Nexus' continued on her time charter with Global Marine Systems Limited, formerly Cable & Wireless Marine. The ship is now operating in the Pacific Ocean to much acclaim. The 'New Generation', our beautifully maintained older roll on- roll off heavy lift ship, had a good operating year boosted by its contract with National Power and spot cargoes. The 'Oakleaf' continued on its charter to the Ministry of Defence and is currently undergoing a refit for their account in Falmouth at a cost of £5.0 million. Our management contract with British Nuclear Fuels plc is in place for yet another year, having been in force for 26 years and the movement of the ships is continuing. The management contract for the operation at Ministry of Defence Sealand, due to have expired in November 1999, was renewed for 2 years to November 2001. This is a well managed and profitable operation. We have completed a number of engineering projects during the year, including a sizeable contract to seek, purchase and design vessels for conversion to cable laying ships. This contract, to which reference is made in the financial section of this statement, was not dissimilar to that which we completed for Etisalat, the United Arab Emirates Telecommunications company, when we carried out the sourcing, purchase, design and supervision of the conversion of the ship 'Umm Al Anber' in 1997. This is the type of project where our expertise comes to the fore and for which we shall continue to bid. Ports There have been no new developments on our position at the Port of Newhaven. We have had discussions with a number of interested parties with a view to their buying out our lease or forming joint ventures to modernise the port and its requirement for deep water and associated facilities. These discussions are ongoing. Engineering James Fisher (Underwater Engineering Services) Limited had a profitable year, producing an operating profit of £342,000 on turnover of £1,195,000. These figures were less than the previous year due to the downturn in oil related offshore activity. Seafloor Dynamex made an operating profit of £45,000. During the fourth quarter we completed our capital expenditure programme with the delivery of the last two diggers and deployment unit. The hydro digger has worked well and is now better known and accepted by the offshore industry. This bodes well for the future. Tonnage tax I am happy to report that the campaign to introduce a Tonnage Tax regime to British Shipping has succeeded. In August last year the Chancellor of the Exchequer, accepted the recommendations of the review conducted by Lord Alexander of Weedon. A draft of the proposed tax rules has been presented to the Industry and interested parties by the Inland Revenue. Upon completion of the consultation process the tax proposals are expected to become law with Royal Assent in August 2000, but backdated to 1 January 2000 to those companies who elect to join the new regime. This is good news for James Fisher and for the British Shipping Industry. It should result in a substantially reduced tax charge on our shipping activities going forward. The certainty of the level of this tax will also benefit the company in the future. We welcome the related commitment to training which will give a boost to the pool of British seafarers. You will be pleased to know that we already meet the proposed training requirements of the tonnage tax regime. New office During the course of the year we decided to close our Liverpool office and consolidate our shipping operations in Barrow. We were sorry to have to part company with some experienced staff as a result of this move but fortunately have been able to replace them with high quality people who will represent the company well in their new positions. This move will result in greater efficiency and significant savings in future years. E-commerce Our website is up and running at www.james-fisher.co.uk. In addition, we have installed a new computer network system throughout the group which will form a gateway to the internet opportunities of the 21st Century. We see great potential in currently available technology and are actively pursuing utilisation in a number of different areas. In particular we are in discussion with a major customer to integrate our respective operations through a computer interface. The resulting benefits should improve communication, cut back on the need for paperwork and inevitably increase the pace at which we are able to respond to customer requirements. This will be a pilot for use with other customers with whom we intend to interface directly. Directors We were very pleased to welcome Jeremy Hodgson onto the board as a non-executive director. Jeremy, who headed the Shipping and Aerospace Banking division at HSBC, will bring a wealth of banking and related experience to the company. We were sorry to lose Trevor Hart as a director but wish him every success in his new endeavours. Staff Once again on behalf of the board I would like to pay tribute to all of our staff, on shore and at sea, for their continuing efforts and contribution to our results. We put a strong emphasis on offering our customers the highest level of safety and service. This can only be achieved by people who are highly motivated and professional in carrying out their duties. We are fortunate in having dedicated staff committed to these aims. Prospects Our contract of affreightment business continues to provide a solid base of income. We now have four ships chartered out and two ships chartered in. The former enabled us to bring three ships out of lay-up, while the latter are required to cover our contracts. It is still our intention to sell our mini bulkers and older tankers as and when opportunities arise. During the year we investigated several acquisition and merger possibilities and, indeed, made offers for a number of companies. Though we were not successful we shall continue to search for suitable acquisitions, specifically with a view to enhancing shareholder value. Meanwhile our cash flow remains strong while our gearing is reducing. We have made a promising start to 2000, despite operating conditions remaining very difficult and markets highly competitive. We are working diligently with our customers to improve turnround times and if these can be improved so will the company's progress. The board is confident that with the business now under contract and strong cash flow being produced, the group will continue to prosper and grow. D.B. Cobb CBE Executive Chairman Group profit and loss account Year ended 31 December 1999 1998 £000 £000 Turnover Continuing operations 68,129 62,377 Discontinued operations - 1,146 ------- -------- 68,129 63,523 Cost of sales (56,316) (51,947) ------- -------- Gross profit 11,813 11,576 Administrative expenses: Exceptional - relocation costs (281) - Others (2,994) (2,743) ------- -------- (3,275) (2,743) Operating profit Continuing operations 8,538 9,749 Discontinued operations - (916) ------- -------- 8,538 8,833 Continuing operations: Loss on sale of ships (153) - Discontinued operations: Port closure costs - (2,862) Amounts written off investments - (301) ------- -------- 8,385 5,670 Interest receivable 1,073 1,335 Interest payable (3,183) (3,151) ------- -------- Profit on ordinary activities 6,275 3,854 before taxation Tax on profit on ordinary 11,712 (1,071) activities ------- -------- Profit for the financial year 17,987 2,783 Dividends paid and proposed Non-equity (4) (4) Equity (2,099) (1,809) ------- -------- (2,103) (1,813) ------- -------- Retained profit for the 15,884 970 financial year ======= ======= Restated pence pence Earnings per share 37.41 5.76 ======= ======= Adjusted earnings per share 12.35 11.00 ======= ======= Diluted earnings per share 37.26 5.71 ======= ======= Equity dividends per share: Interim 1.54 1.40 Final - proposed 2.81 2.35 ------- -------- 4.35 3.75 ======= ======= Group statement of total recognised gains and losses Year ended 31 December 1999 1998 £000 £000 Profit for the financial year 17,987 2,783 -------- ------- Total recognised gains and losses 17,987 2,783 relating to the year Prior year adjustment - 346 -------- ------- Total gains and losses recognised since 17,987 3,129 last annual report ======= ======= Group balance sheet at 31 December 1999 1998 £000 £000 Fixed assets Intangible assets - goodwill 693 731 Tangible assets 90,428 98,802 ------ ------ 91,121 99,533 Current assets Stocks 709 717 Debtors 10,604 9,902 Cash and short-term deposits 21,717 17,396 ------ ------ 33,030 28,015 ------ ------ Creditors: amounts falling due within one year Trade and other (10,896) (12,328) Bank loans (5,551) (5,483) ------ ------ (16,447) (17,811) ------ ------ Net current assets 16,583 10,204 ------ ------ Total assets less current liabilities 107,704 109,737 Creditors: amounts falling due after more than one year Trade and other (11) (10) Bank loans (37,548) (42,177) ------ ------ (37,559) (42,187) ------ ------ Provisions for liabilities and charges (2,709) (15,998) ------ ------ Net assets 67,436 51,552 ======= ======= Capital and reserves Called-up share capital 12,168 12,168 Share premium account 23,050 23,050 Profit and loss account 32,218 16,334 ------ ------ Shareholders' funds 67,436 51,552 ======= ======= Group cash flow statement Year ended 31 December 1999 1998 £000 £000 Net cash inflow from operating activities 14,837 15,555 Returns on investments and servicing of finance (2,046) (2,343) Taxation (1,347) (402) Capital expenditure and financial investment (439) (14,136) Acquisitions and disposals (246) (1,743) Equity dividends paid (1,877) (1,640) -------- -------- Cash inflow/(outflow) before management of liquid resources and financing 8,882 (4,709) Management of liquid resources (4,582) (829) Financing (4,561) 7,490 -------- -------- (Decrease)/increase in cash (261) 1,952 in the year ======= ======= Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash in the year (261) 1,952 Cash outflow/(inflow)from decrease/(increase) in debt 4,561 (7,486) Cash outflow from increase in 4,582 829 liquid resources -------- -------- Movement in net debt in the year 8,882 (4,705) Net debt at 1 January (30,264) (25,559) -------- -------- Net debt at 31 December (21,382) (30,264) ======= ======= NOTES 1 Financial information The financial information set out above does not comprise the company's statutory accounts. Statutory accounts for the previous financial year ended 31 December 1998 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under section 237(2) or (3) or the Companies Act 1985. The auditors have given an unqualified opinion on the accounts for the year ended 31 December 1999 which will be delivered to the Registrar of Companies following the annual general meeting. The financial information above has been prepared on the basis of the accounting policies as set out in the annual report and accounts for the year ended 31 December 1998. 2 Segmental analysis Geographical market supplied 1999 1998 £000 % £000 % Turnover United Kingdom and the Republic of Ireland 56,602 83 57,920 90 Continental Europe 10,626 15 3,396 5 Africa 45 - 1,113 2 Asia 551 1 787 1 Middle East 304 1 72 1 Others 1 - 235 1 ------- --- ------ --- 68,129 100 63,523 100 ===== === ===== === Turnover and profit on ordinary activities before taxation 1999 1998 Turnover Profit Turnover Profit Group £000 £000 £000 £000 Shipping operations: Continuing operations: Trading 66,177 8,432 60,468 9,391 Loss on sale of ships (153) - Exceptional relocation (281) - costs Amounts written off - (301) investments ------ ----- ------ ----- 66,177 7,998 60,468 9,090 Engineering operations: Continuing operations 1,952 387 1,909 358 Port operations: Discontinued operations: Trading - - 1,146 (916) Closure costs - - - (2,862) ------ ----- ------ ----- 68,129 8,385 63,523 5,670 ====== ====== Net interest payable (2,110) (1,816) ----- ----- 6,275 3,854 ===== ===== Included within the turnover and profit of continuing shipping operations is the effect of the purchase and sale of two second hand vessels to a third party. In the opinion of the directors, the disclosure of separate segmental information for this transaction would be commercially seriously prejudicial to the interests of the group. The comparative figures for turnover and profit have been restated to show James Fisher and Sons (Seafloor Dynamex) Limited as an engineering operation rather than as a shipping operation. 3 Operating profit Operating profit is stated after charging depreciation of tangible fixed assets of £8,034,000 (1998 £7,367,000) and amortisation of goodwill of £38,000 (1998 £31,000). 4 Tax on profit on ordinary activities 1999 1998 £000 £000 The charge for taxation on the ordinary activities represents: UK corporation tax at (760) (342) 30.25% (1998 31%) Deferred taxation - (1,015) ------- ------- (760) (1,357) Adjustments in respect of prior years: UK corporation tax 216 (143) Deferred taxation 12,256 429 ------- ------- 11,712 (1,071) ===== ===== Had deferred tax been accounted for in full the tax credit in 1999 would become a tax charge of £3,743,000 with the current year element of the tax charge increasing by £1,067,000 to £1,827,000. 5 Cash flow statement (a) Reconciliation of operating profit to net cash inflow from operating activities 1999 1998 £000 £000 Operating profit 8,538 8,833 Depreciation 8,034 7,367 Amortisation of goodwill 38 31 Decrease in stocks 8 27 Decrease in debtors 131 243 Decrease in creditors (1,196) (691) Loss on sale of tangible (124) (39) fixed assets Own costs capitalised - (214) Decrease in provisions (592) (2) ------- ------- Net cash inflow from 14,837 15,555 operating activities ===== ===== (b) Returns on investments and servicing of finance 1999 1998 £000 £000 Interest received 1,042 1,098 Interest paid (3,084) (3,437) Preference dividend paid (4) (4) ------- ------- Net cash outflow (2,046) (2,343) ===== ===== (c) Taxation 1999 1998 £000 £000 Corporation tax paid (1,347) (520) Corporation tax received - 118 ------- ------- Net cash outflow (1,347) (402) ===== ===== (d) Capital expenditure and financial investment Purchase of tangible fixed (3,773) (14,315) Assets Sale of tangible fixed assets 3,334 160 Sale of investments - 19 ------- ------- Net cash outflow (439) (14,136) ===== ===== (e) Acquisitions and disposals Purchase of subsidiary - (1,500) undertaking Net overdrafts acquired - (193) with subsidiary undertaking Cost associated with (246) (50) discontinued port operations ------- ------- Net cash outflow (246) (1,743) ===== ===== (f) Management of liquid resources 1999 1998 £000 £000 Short-term investments (4,582) (829) ===== ===== (g) Financing Issue of ordinary share - 4 capital New secured loans 990 11,019 Repayment of secured loans (5,551) (3,533) ------- ------ Net cash (inflow)/outflow (4,561) 7,490 ===== ===== (h) Reconciliation of net debt 1 Cash Flow 31 January December 1999 1999 £000 £000 £000 Cash in hand, at bank 2,900 (261) 2,639 Debt due after 1 year (42,177) 4,629 (37,548) Debt due within one year (5,483) (68) (5,551) ------- ----- ------ (47,660) 4,561 (43,099) Short term deposits 14,496 4,582 19,078 ------- ----- ------ Net debt (30,264) 8,882 (21,382) ===== ===== ===== 6 Earnings per share The calculations of earnings per share are based on the following profits and numbers of shares. Basic Diluted 1999 1998 1999 1998 £000 £000 £000 £000 Profit for the 17,987 2,783 17,987 2,783 financial year Preference dividends (4) (4) (4) (4) ------- ----- ----- ------ 17,983 2,779 17,983 2,779 ===== ===== ===== ===== Weighted average number of shares: 1999 1998 Number Number of of shares Shares For basic earnings per share 48,075,530 48,251,277 Exercise of share options 180,742 380,445 ------- ------ For diluted earnings per share 48,256,272 48,631,722 ====== ====== The adjusted earnings per share is shown to highlight the underlying earnings trend and is calculated using the same number of shares for the basic earnings calculation referred to above and the amounts shown below: 1999 1998 £000 p £000 p Earnings per share 37.41 5.76 Adjustments Exceptional reorganisation expenses 281 0.58 - - Discontinued operations - 916 1.89 Port closure costs - - 2,862 5.93 Loss on sale of ships 153 0.32 - - Amount written off investments - - 301 0.62 Tax effect of above (222) (0.46) (1,264) (2.61) Prior year element (12,256) (25.50) (286) (0.59) of tax charge (12,044) (25.06) 2,529 5.24 ----- ----- Adjusted earnings per share 12.35 11.00 ==== ==== 7 Dividends paid and proposed The directors are recommending a final ordinary dividend of 2.81p per ordinary share which will be payable on 19 May 2000 to ordinary shareholders on the Register on 25 April 2000, making a total for the year of 4.35p per share. This compares with a final dividend for 1998 of 2.35p per share and a total distribution for 1998 of 3.75p per share. The dividend warrants will be posted on Thursday 18 May 2000 by first class mail. 1999 1998 £ £ Rates of dividend paid and proposed amount absorbed thereby: 1.54p per ordinary share interim (1998 1.40p) 743,360 675,714 2.81p per ordinary share final proposed (1998 2.35p) 1,356,390 1,134,347 3.5% Non-equity preference paid 3,500 3,500 --------- -------- 2,103,250 1,813,561 ====== ====== The ordinary dividends are based upon the following number of ordinary issued shares: 1999 1998 No. No. Interim 48,270,098 48,265,300 Final 48,270,098 48,270,098 8 The AGM will be held at 12.00 noon on Friday 12 May 2000 at the Lisdoonie Hotel, Abbey Road, Barrow-in-Furness, Cumbria. 9 Report and Accounts will be posted to members on 10 April 2000. Copies will be made available to members of the public at Fisher House, P.O. Box 4, Barrow-in-Furness, Cumbria, LA14 1HR. 10 This preliminary statement was approved by the Board of Directors on 17 March 2000.

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