Final Results

RNS Number : 3107Z

Fisher (James) & Sons plc

06 March 2013

 



6 March 2013

James Fisher and Sons plc

Preliminary Results 2012

James Fisher and Sons plc ("James Fisher"), the leading marine service provider, announces its results for the year ended 31 December 2012.

	2012	2011	change
Group revenue	£363.3m	£307.6m	+18%
Underlying operating profit *	£41.3m	£36.1m	+14%
Underlying profit before tax *	£35.4m	£30.0m	+18%
Underlying diluted earnings per share *	55.7p	48.4p	+15%
Proposed total dividend	17.70p	16.08p	+10%
Statutory profit before tax	£46.7m	£29.8m	+57%
Statutory diluted earnings per share	79.1p	48.0p	+65%

* underlying profit excludes separately disclosed items

Highlights:

·      Revenue increased by 18%, underlying operating profit by 14% and underlying earnings per share 15%

·      Strong performance resulting from the Group's strategy to focus on high growth niche marine services markets

·      Specialist Technical benefitted from the BP Angola contract

·      Offshore Oil saw improved market conditions in Norway, growth in Asia Pacific, Africa and South America

·      Marine Oil produced an improved result and remains profitable and cash generative

·      Net debt: ebitda of 1.2 times (2011: 2.1); gearing of 39% (2011: 75%) and strong cash conversion of 132%

·      Sale of non-core TRE business for £25.5m in cash realising a profit of £20.9m

·      The Board is recommending a 10% increase in the total dividend to 17.70p per share (2011: 16.08p per share)

·      Announced today: Acquisition of diving and subsea equipment business Divex Limited for an initial cash consideration of £20 million

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

"James Fisher had an excellent year in 2012, demonstrating the continued success of our strategy to focus on niche marine services in high growth markets and trading to date has been in line with management expectations. This, combined with strong market conditions in Offshore Oil and Specialist Technical, as the offshore oil and gas markets continue to develop at a rapid pace, as well as increasing demand for a range of skills to be supplied as a multi-disciplinary contract offering, leave James Fisher well placed to provide further growth and value for our shareholders."

For further information:

James Fisher and Sons plc	Nick Henry Stuart Kilpatrick	Chief Executive Officer Group Finance Director	020 7614 9508
FTI Consulting	Richard  Mountain Sophie McMillan		020 7269 7291

James Fisher and Sons plc (James Fisher)

Full Year Results for the twelve months ended 31 December 2012

Chairman's Statement

Group Results and Dividend

In making my first Full Year statement as Chairman, I am pleased to report that 2012 was another excellent year for James Fisher with revenue up by 18% to £363.3m and underlying profit before tax up by 18% at £35.4m before separately disclosed items and by 57% after such items.  With no acquisitions being made during the year, the 18% headline figure reflected purely organic growth, with the Group benefitting from its consistent strategy of focusing on marine services and the high growth markets outside of the US and Continental Europe.

James Fisher's Offshore Oil businesses did particularly well, reflecting strong market conditions and the benefit of the significant investment made in these businesses in recent years.  Specialist Technical continued to show double digit growth with our Nuclear business doing well and with the benefit of the new Angola contract showing through.  Marine Oil improved as the measures to bring own capacity into line with demand produced benefits.  Only our Defence division, as previously flagged, produced a lower result due to the re-negotiation of two of the Foreland charters and to a gap in project work at our submarine rescue business.

Following the sale of The Railway Engineering Company (TRE) in December, year end gearing was reduced to 39% from 75% last year. This figure reflected both the £25.5m proceeds from this disposal and the continued strong cash conversion of the Group at 132%.

The strong trading performance of the Group in 2012 and the continued positive outlook has led the Board to propose a final dividend of 11.83p per share which is 10% up on prior year and which together with the interim dividend of 5.87p makes a total dividend of 17.70p per share for the year (2011: 16.08p per share).

Strategic Highlights

On December 31, the Group sold TRE for £25.5m in cash and realised a gain on disposal of £20.9m.  TRE was acquired as part of the Strainstall Group in 2006.  Its focus on the rail industry and its rapid growth in recent years led the Board to decide that the time was right for TRE to be sold to a new strategic owner who would take it forward to the next level.  The sale achieved good value for James Fisher.

We have today announced the acquisition of Divex Limited (Divex) for an initial cash consideration of £20m.  Divex is a global leader in the design, supply and assembly of diving and subsea equipment. The company is a lead supplier to the commercial offshore sector as well as to navies across the globe.  It matches James Fisher's strategic criteria well, being a strong niche player with a well established reputation and brand and a broad revenue spread across international markets.

Divex will now form the major part of a new Subsea Division within our Specialist Technical business stream together with our James Fisher Defence submarine rescue unit.  By grouping these businesses together we will aim to achieve significant benefits both in terms of market penetration into the commercial as well as defence sectors and of production efficiencies.

Our earnings in Marine Oil have begun to improve as we have reduced capacity to meet contract demand.  Over the next two to three years we would expect to make further adjustments to our fleet both in total and between tonnage types.  We have therefore decided to recognise the likely book losses that will be incurred as we continue with this process by taking a £9.2m impairment to the value of our ships at year end.

Board and Staff

Tim Harris retired on 31 July 2012.  During his ten years as Executive Chairman, James Fisher saw its fortunes transformed with profit and turnover quadrupled and the share price increased by seven times since 2002.  The Group was reshaped from its origins as a domestically focused coastal tanker business into the UK's leading marine services business, with its subsidiaries operating worldwide and 60% of revenues coming from outside the UK.  The Board would like to express our appreciation to Tim for the great contribution that he made to the Group and wish him well for the future.

With Nick Henry having been a successful CEO of long-standing, the Board decided that the new Chairman should be non-executive.  The transition to this corporate structure has gone well, with the Executive team of Nick Henry and Stuart Kilpatrick (Group Finance Director) leading the Company but with the continued active involvement of the Chairman in the key issues.

One of the strengths of James Fisher has been the strong management teams in the Group's subsidiaries.  This has enabled the Group to be structured in a de-centralised way, with initiative and entrepreneurial ambition supported and encouraged.  I am pleased to say that the transition at Board level has not disrupted this management team which continues to function well and with enthusiasm for the future.

As a service company, our key asset is our people and their professional approach to the business and operating challenges which they face every day, both onshore and at sea.  I would like to thank all our staff for their tremendous contribution to James Fisher's continuing growth and success.

Outlook

Over the last several years, James Fisher has pursued a consistent marine service strategy focused on the world's growing regions rather than on the more mature markets of Europe and North America.  This strategy has worked well and will remain the focus of our development as the Group moves forward. The strength of the Group's balance sheet enables us to continue to invest in our businesses to strengthen their market position and to boost organic growth. We will also keep opportunities for bolt-on acquisitions under review where these can speed the development of our businesses.

The rapid pace of offshore oil and gas development worldwide means that our Specialist Technical and Offshore Oil divisions are well placed to continue their growth pattern of recent years.  The growing scale and scope of James Fisher's service offering means that these divisions have a spread of income across all phases of the production cycle from development, through production to decommissioning. Their engineering and service skills have direct application not only to the oil and gas sector but to the nuclear; offshore renewables and specialist defence sectors. These skills are increasingly interdisciplinary and can be applied to major contract opportunities, where we currently see strong demand.  The Board is conscious of the increased risks which come with these types of contract so we will hold to a measured pace of development in this area.

Our Marine Oil division has improved its results as a result of the management action taken in recent years.  By matching our capacity to the changing requirements of our customers as we move forward, this division should be able to maintain and hopefully improve its trading performance.

Trading in 2013 to date has been to management expectations and we continue to be well placed to provide further growth and value for our shareholders.

Charles Rice

5 March 2013

Operating and Financial Review

James Fisher and Sons plc is reporting another excellent year in 2012 with the main financial measures showing strong double digit growth.

Segmental result

	2012				2011
	revenue	profit*	margin		revenue	profit*	margin	Increase in revenue		Increase in profit
	£m	£m	%		£m	£m	%		(%)	(%)
Specialist Technical	194.8	22.4	11.5		141.5	19.8	14.0		37.7	13.1
Offshore Oil	83.4	17.2	20.7		71.2	12.8	18.0		17.1	34.4
Defence	23.3	2.4	10.3		28.1	5.5	19.6		-17.1	-56.4
Marine Services	301.5	42.0	13.9		240.8	38.1	15.8		25.2	10.2
Marine Oil	61.8	2.4	3.9		66.8	1.1	1.6		-7.5	118.2
common costs	-	(3.1)			-	(3.1)
	363.3	41.3	11.4		307.6	36.1	11.7		18.1
finance costs		(5.9)				(6.1)
profit before tax*		35.4				30.0				18.0
*before separately disclosed items

Strategy

James Fisher has pursued a consistent strategy in recent years of driving growth in its marine services with focus on the fast growing regions of the world rather than the more mature markets which prevail in Europe and North America. The Company has developed a range of niche marine operational and engineering services which it aims to grow internationally. Such niche services typically command margins in excess of 10%, returns on capital in excess of 15% while being cash generative.

The success of this strategy has seen the marine service revenues grow by a compound annual growth rate of 36% in the last eight years, and 60% of Group revenues now originate from outside the UK, compared to 37% five years ago.

Having developed a broad range of such niche capabilities in the marine and offshore markets, the Group can now integrate these into contract packages for our major customers. Demand for this type of service has been expanding particularly in the fast growing regions of Asia Pacific, Africa and South America. The Group intends to build this business going forward in a balanced way, taking into account the operational and country risks involved.

Organic development has driven over 70% of our growth in profits in the past eight years. Investing in our businesses to continue their development will remain our main focus going forward. We will also continue to evaluate for further bolt-on acquisition opportunities which meet our niche criteria and where these will strengthen and broaden our range of services to our multinational customers.

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

Specialist Technical

2012 underlying profit: £22.4m (2011: £19.8m)

The Specialist Technical Division had another strong year with profits up by 13%. Our ship to ship services achieved further organic growth and the underlying margins of our niche businesses were maintained. The year also saw the start-up of our five year contract with BP in Angola as well as a major short-term diving support contract there in the first half. Both businesses involved a high proportion of sub-contracted costs, (mainly ship charters) leading to a reduction in margin for the Division, particularly in the first half.

James Fisher Nuclear also had a strong year producing good profit growth. In the first half of the year it benefitted from the completion of a contract to install detection equipment at the London 2012 Olympics, the scope of which increased and again meant that the division proportionately showed stronger growth in the first half. Whilst this contract will not reoccur in 2013, our nuclear business continues to benefit from improved market conditions in the nuclear power industry and began the year with a stronger order book than in 2012.

On 31 December 2012 the disposal of The Railway Engineering Company (TRE) to Hitachi Rail was completed for £25.5m in cash. TRE was acquired by the Group in 2006 as part of the Strainstall acquisition and for the year ended 31 December 2012 had revenue of £7.0m and an underlying operating profit of £3.1m. The Group reported a gain on sale of TRE of £20.9m which is separately disclosed in the Consolidated Income Statement by virtue of its size. Whilst TRE was  non-core to marine services, it had clear growth potential which has been realised in recent years. The Directors considered that the timing was now right for the business to move to a new strategic owner.

The prospects for further growth within the Specialist Technical division remain strong and we will continue to support this with investment in both people and equipment.

Offshore Oil

2012 underlying profit: £17.2m (2011: £12.8m)

The Offshore Oil Division had an excellent year with revenue increasing by 17% and profits by 34%. This strong performance reflected the improved market conditions in the North Sea, particularly in Norway, and the continued growth due to contract gains in Asia Pacific, Africa and South America. The improved margin reflects the improvement in our rental businesses in particular, with the underlying margins of our other activities remaining consistent.

The Division is beginning to benefit from oil majors upgrading the standard of equipment used for reasons of improved safety performance. This has seen contract gains for Norwegian standard equipment on fields outside of Norway for the first time. It is also improving prospects for ScanTech Offshore in regions such as South America and Africa.

A further £12.9m of capital was invested in 2012 to support and drive further organic development within this division. With the continued high oil price, prospects for further growth remain and the Group will continue to support this with further investment to ensure demands for our niche products is met.

Defence

2012 underlying profit: £2.4m (2011: £5.5m)

Profit in the Defence division reduced in 2012 for two reasons. Firstly, as previously reported, profits from the Group's 25% interest in Foreland, the private finance initiative, reduced by £1.5m due to lower income from the two vessels which are chartered commercially. Secondly, delays to contract awards in the second half impacted profitability within the subsea projects team.

During the year, the division successfully completed a twelve month project to refurbish the Swedish navy's submarine rescue vehicle (URF) which was commissioned in the second half. The submarine rescue contracts for the Singaporean and Australian navies continued to perform satisfactorily. A major rescue exercise for the Australian navy was completed in the first half and there are prospects for further growth in the Asia Pacific region.

Marine Oil

2012 underlying profit: £2.4m (2011: £1.1m)

Marine Oil produced an improved result and remains both profitable and cash generative. This reflects the progress made in the past 2 years in reducing capacity to match the lower contract volumes around the UK and Irish coasts, rather than an improvement in the wider tanker global market which continues to have over capacity and weak spot rates.

In January 2013 a deal was completed to sell mt. Steersman on behalf of her owner and thereby bring forward the completion of her charter from March 2013. This reduces the number of vessels operated in the fleet to 17 and further mitigates the risk of surplus capacity.

The global market for the sale of surplus tonnage has not improved and shows no signs of doing so in the near future. Whilst the trading value of our specialist tankers in their niche operation remains sound, it is possible that if there is no recovery in the sale and purchase market, future vessel sales could be at below current book values. We have therefore concluded that it would be appropriate to make an impairment against this possibility and a separately disclosed impairment provision has been made, reducing the divisional assets to £32.8m which represents 12% of the Group total.

Separately disclosed items

To provide better information on the underlying trading performance, the Group has identified and separately disclosed certain items in reporting the results for the year. Total items separately disclosed amounted to a gain of £11.4m (2011: loss of £0.3m) comprising a gain of £20.9m referred to above for the sale of TRE less the vessel impairment of £9.2m and the amortisation of acquired intangibles of £0.3m (2011: £0.3m).

Interest

Net finance costs are as follows:

			2012		2011
			£m		£m
Interest on bank borrowings			4.8		4.7
Unwind of discount on pension schemes			1.1		1.4
			5.9		6.1

Interest on bank borrowings was in line with previous year as slightly higher average borrowings were partly offset by a lower overall cost of borrowing. The unwind of the discount on defined benefit schemes relates to the Group's Shore Staff scheme which was closed to new entrants in 2001 and to the industry wide Merchant Navy Pension Fund (MNOPF) where the Group has an obligation by virtue of its long history in the shipping industry. The charge to the Income Statement in 2012 decreased due to a lower discount rate applied to the scheme liabilities.  Accounting for defined benefit schemes is changing in 2013 to align the return from assets held in the scheme with the discount rate applied to liabilities. Whilst this has no cash flow impact for the group, the potential adverse impact on the income statement is around £0.3m per annum.

Taxation

The effective tax rate on underlying profit before tax was 19.1% (2011: 19.0%) The rate is lower than the standard UK rate of 24.5% due to the Group having operations in certain overseas countries which have lower tax rates than the UK and due to its tanker fleet within Marine Oil which is taxed on a tonnage basis rather than on profitability. 

Earnings per share

Underlying diluted earnings per share, which excludes separately disclosed items, increased by 15% in the year to 55.7p per share. This is lower than the increase in underlying profit before taxation due to an increase in non-controlling interests, which represent minority shareholdings, in mainly overseas businesses.  Diluted earnings per share after separately disclosed items increased by 65% to 79.1p per share (2011: 48.0p).

Dividends

The Board are recommending a 10% increase to the final dividend for the year to 11.83p per share (2011: 10.74p), which makes a total for the year of 17.70p per share (2011: 16.08p).  The final dividend will be paid on 10 May 2013 to shareholders on the register on 12 April 2013.  Dividend cover based on underlying earnings was 3.1 times (2011: 3.0 times). 

Cash flow and borrowings

Net borrowings decreased by £35.7m in the year due to a cash inflow from operating activities of £47.5m, a net inflow from investing activities of £2.5m and outflows for dividends and interest of £14.0m. The Group's cash conversion, the ratio of operating cash to operating profit was 132% (2011: 105%).  At 31 December 2012, the ratio of net borrowings (including guarantees) to earnings before interest, tax, depreciation and amortisation (EBITDA) was 1.2 times (2011: 2.1 times). Net gearing, the ratio of net debt to equity, was reduced to 39% (2011: 75%) due to strong cash conversion and the proceeds on sale of TRE which were applied to reducing debt.

A small group of relationship banks provide bilateral facilities to the Group on an unsecured basis over a 3-5 year term.  During the year the Group agreed a £20m, four year revolving credit facility with Handelsbanken, a four year, £30m facility with Lloyds Bank and renewed a £20m, five year facility with HSBC Bank plc. At 31 December 2012, the Group had £78.0m (2011: £38.6 m) of  undrawn facilities of which £65.6m (2011: £32.3 m) were committed.

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.  The Group has a small defined benefit scheme in Norway and a UK Shore Staff Scheme which closed to further accrual on 31 December 2010. As a consequence of its history in shipping the Group is required to contribute to industry-wide Merchant Navy Pension Funds. The trustees of the Officers fund (MNOPF) are in the process of conducting a triennial valuation of the scheme's deficit. It is not yet possible to reliably estimate the amount of our obligation but it is expected to increase our commitment possibly by a quarter of the current liability.

Following a Court process in 2010 and 2011, the trustees of the Ratings fund (MNRPF) were given permission to extend the requirement for deficit contributions beyond current employers to both current and past employers. In November 2012, the trustees of the MNRPF wrote to the Group asking for comment on its proposed methodology for future deficit contributions. The trustees expect that ratification from the Court of its proposal will not be before mid 2014 and the extent to which James Fisher will be required to make additional contributions will not be known with certainty until then.

Total defined benefit pension deficits at 31 December 2012 were £27.1m (2011: £30.1m). The annual instalment on pension schemes in 2013 is expected to be £4.6m (2012: £4.8m) subject to the outcome of the triennial valuation referred to above.

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2012

	Notes		Year ended				Year ended
			31 December 2012				31 December 2011
			Before separately	Separately			Before separately	Separately
			disclosed	disclosed			disclosed	disclosed
			items	items			items	items
				(note 3)	Total			(note 3)	Total
			£000	£000	£000		£000	£000	£000
Group revenue			363,338	-	363,338		307,624	-	307,624
Cost of sales			(316,674)	(9,508)	(326,182)		(268,797)	(254)	(269,051)
Gross profit			46,664	(9,508)	37,156		38,827	(254)	38,573
Administrative expenses			(8,494)	-	(8,494)		(8,379)	-	(8,379)
Share of post tax results of joint ventures			3,082	-	3,082		5,685	-	5,685
Operating profit			41,252	(9,508)	31,744		36,133	(254)	35,879
Profit on sale of subsidiaries			-	20,896	20,896		-	-	-
Finance income			262	-	262		322	-	322
Finance costs			(6,157)	-	(6,157)		(6,450)	-	(6,450)
Profit before taxation			35,357	11,388	46,745		30,005	(254)	29,751
Tonnage tax			(15)	-	(15)		(23)	-	(23)
Income tax		4	(6,748)	361	(6,387)		(5,683)	72	(5,611)
			(6,763)	361	(6,402)		(5,706)	72	(5,634)
Profit for the year			28,594	11,749	40,343		24,299	(182)	24,117
Profit attributable to :
Owners of the company			27,995	11,749	39,744		24,273	(182)	24,091
Non - controlling interests			599	-	599		26	-	26
			28,594	11,749	40,343		24,299	(182)	24,117
Earnings per share
					pence				pence
Basic		5			79.7				48.4
Diluted		5			79.1				48.0

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2012

	Note		Year ended		Year ended
		31 December 2012		31 December 2011
			£000		£000
Profit for the year			40,343		24,117
Other comprehensive income
Exchange differences on translation of foreign operations			(219)		(809)
Net (gain)/loss on hedge of net investment in foreign operations			(436)		331
Effective portion of changes in fair value of cash flow hedges			1,193		(541)
Effective portion of changes in fair value of cash flow hedges in joint ventures			(343)		(399)
Net changes in fair value of cash flow hedges transferred to profit or loss			(710)		128
Defined benefit plan actuarial losses			(437)		(4,127)
Income tax on other comprehensive income	4		(189)		2,445
Other comprehensive income for the year, net of income tax			(1,141)		(2,972)
Total comprehensive income for the year			39,202		21,145
Attributable to:
Owners of the Company			38,608		21,119
Non-controlling interests			594		26
			39,202		21,145

CONSOLIDATED BALANCE SHEET

As at 31 December 2012

			Group
	Notes	31 December 2012		31 December 2011
			£000		£000
Assets
Non current assets
Goodwill and other intangible assets			92,633		93,188
Property, plant and equipment			103,484		103,898
Investment in joint ventures			12,391		12,534
Available for sale financial assets			1,370		1,370
Deferred tax assets			2,759		2,664
			212,637		213,654
Current assets
Inventories			36,062		33,691
Trade and other receivables			91,405		80,526
Derivative financial instruments			790		218
Cash and short term deposits	8		18,339		13,575
			146,596		128,010
Total assets			359,233		341,664
Equity and liabilities
Capital and reserves
Called up share capital			12,517		12,481
Share premium			25,144		24,924
Treasury shares			(1,061)		(1,681)
Other reserves			3,432		4,742
Retained earnings			123,437		91,304
Equity attributable to owners of the Company			163,469		131,770
Non-controlling interests			447		(91)
Total equity			163,916		131,679
Non current liabilities
Other payables			743		607
Retirement benefit obligations	7		27,061		30,133
Cumulative preference shares			100		100
Loans and borrowings	8		81,059		103,383
Deferred tax liabilities			933		1,141
			109,896		135,364
Current liabilities
Trade and other payables			76,769		59,124
Current tax			6,664		4,732
Derivative financial instruments			1,686		1,880
Loans and borrowings	8		302		8,885
			85,421		74,621
Total liabilities			195,317		209,985
Total equity and liabilities			359,233		341,664

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2012

	Note	31 December 2012		31 December 2011
			£000		£000
Profit before tax			46,745		29,751
Adjustments to reconcile Group profit before tax to net cash flows
Depreciation and amortisation			16,450		13,806
Acquisition costs and amortisation of acquired intangibles			276		254
(Profit)/loss on sale of property, plant and equipment			(670)		335
Impairment of non - current assets			9,232		-
Profit on disposal of subsidiary			(20,896)		-
Finance income			(262)		(322)
Finance costs			6,157		6,450
Exchange gain on loans			(639)		218
Share of post tax results of joint ventures			(3,082)		(5,685)
Share based compensation			1,192		1,503
Increase in trade and other receivables			(13,217)		(19,491)
Increase in inventories			(3,074)		(2,081)
Increase in trade and other payables			17,795		12,282
Defined benefit pension cash contributions less service costs			(4,821)		(5,012)
Cash generated from operations			51,186		32,008
Income tax payments			(3,719)		(4,865)
Cash flow from operating activities			47,467		27,143
Investing activities
Dividends from joint venture undertakings			4,584		5,913
Proceeds from the sale of property, plant and equipment			2,184		3,989
Finance income			262		322
Acquisition of subsidiaries, net of cash acquired			-		(154)
Proceeds from the sale of business			25,105		459
Acquisition of property, plant and equipment			(25,979)		(17,624)
Acquisition of investment in joint ventures			(1,125)		(1,220)
Development expenditure			(2,500)		(2,779)
Cash flows used in investing activities			2,531		(11,094)
Financing activities
Proceeds from the issue of share capital			256		239
Preference dividend paid			(3)		(4)
Finance costs			(4,836)		(4,750)
Purchase less sales of own shares by ESOP			(771)		(1,449)
Capital element of finance lease repayments			(394)		(423)
Proceeds from other non-current borrowings			37,789		25,448
Repayment of borrowings			(68,531)		(30,162)
Dividends paid			(8,267)		(7,479)
Cash flows from financing activities			(44,757)		(18,580)
Net increase/(decrease) in cash and cash equivalents			5,241		(2,531)
Cash and cash equivalents at 1 January			13,575		16,590
Net foreign exchange differences			(477)		(484)
Cash and cash equivalents at 31 December	8		18,339		13,575

CONSOLIDATED STATEMENT OF MOVEMENTS IN EQUITY

For the year ended 31 December 2012

For the year ended 31 December 2012
	Capital				Attributable to equity holders of parent
	Share		Share	Retained		Other		Treasury		Total		Non-controlling			Total
	capital		premium		earnings		reserves		shares	shareholders		interests			equity
											equity
	£000		£000		£000		£000		£000		£000		£000		£000
At 1 January 2012	12,481		24,924		91,304		4,742		(1,681)		131,770		(91)		131,679
Profit for the period	-		-		39,744		-		-		39,744		599		40,343
Reclassification of tax on other comprehensive income relating to earlier years	-		-		831		(831)		-		-				-
Exchange differences on translation of foreign operations	-		-		-		(214)		-		(214)		(5)		(219)
Net (gain)/loss on hedge of net investment in foreign operations	-		-		-		(358)		-		(358)		-		(358)
Effective portion of changes in cash flow hedges	-		-		-		1,146		-		1,146		-		1,146
Effective portion of changes in fair value of cash flow hedges in joint ventures	-		-		-		(343)		-		(343)		-		(343)
Net changes in fair value of cash flow hedges transferred to profit or loss	-		-		-		(710)		-		(710)		-		(710)
Defined benefit plan actuarial losses	-		-		(657)		-		-		(657)		-		(657)
Contributions by and distributions to owners
Ordinary dividends paid	-		-		(8,267)		-		-		(8,267)		-		(8,267)
Dividends paid to minority interests	-		-		-		-		-		-		(56)		(56)
Share-based compensation	-		-		1,192		-		-		1,192		-		1,192
Tax effect of share based compensation	-		-		681		-		-		681		-		681
Arising on the issue of shares	36		220		-		-		-		256		-		256
Purchase of shares	-		-		-		-		(935)		(935)		-		(935)
Sale of shares	-		-		-		-		164		164		-		164
Transactions with shareholders	36		220		(6,394)		-		(771)		(6,909)		(56)		(6,965)
Transfer on disposal of shares	-		-		(1,391)		-		1,391		-		-		-
At 31 December 2012	12,517		25,144		123,437		3,432		(1,061)		163,469		447		163,916
For the year ended 31 December 2011
	Capital				Attributable to equity holders of parent
	Share		Share	Retained		Other		Treasury		Total		Non-controlling			Total
	capital	premium		earnings		reserves		shares		shareholders		interests		equity
											equity
	£000		£000		£000		£000		£000		£000		£000		£000
At 1 January 2011	12,466		24,700		75,146		6,032		(579)		117,765		-		117,765
Profit for the period	-		-		24,091		-		-		24,091		26		24,117
Other comprehensive income for the period	-		-		-				-						-
Exchange differences on translation of foreign operations	-		-		-		(809)		-		(809)		-		(809)
Net (gain)/loss on hedge of net investment in foreign operations	-		-		-		331		-		331		-		331
Effective portion of changes in cash flow hedges	-		-		-		(541)		-		(541)		-		(541)
Effective portion of changes in fair value of cash flow hedges in joint ventures	-		-		-		(399)		-		(399)		-		(399)
Net changes in fair value of cash flow hedges transferred to profit or loss	-		-		-		128		-		128		-		128
Defined benefit plan actuarial losses	-		-		(1,682)		-		-		(1,682)		-		(1,682)
Contributions by and distributions to owners
Ordinary dividends paid	-		-		(7,479)		-		-		(7,479)		-		(7,479)
Gain on disposal of interest in joint ventures	-		-		72		-		-		72		-		72
Share-based compensation	-		-		1,503		-		-		1,503		-		1,503
Arising on the issue of shares	15		224		-		-		-		239		-		239
Acquired with subsidiaries	-		-		-		-		-		-		(117)		(117)
Purchase of shares	-		-		-		-		(1,449)		(1,449)		-		(1,449)
Transactions with shareholders	15		224		(5,904)		-		(1,449)		(7,114)		(117)		(7,231)
Transfer on disposal of shares	-		-		(347)		-		347		-		-		-
At 31 December 2011	12,481		24,924		91,304		4,742		(1,681)		131,770		(91)		131,679
Other reserve movements
Other reserves						Translation		Hedging			Total
						reserve		reserve
							£000		£000		£000
At 1 January 2011							7,685		(1,653)		6,032
Other comprehensive income for the period							(478)		(812)		(1,290)
At 31 December 2011							7,207		(2,465)		4,742
Other comprehensive income for the period							(1,740)		430		(1,310)
At 31 December 2012							5,467		(2,035)		3,432

NOTES TO THE PRELIMINARY RESULTS

1.      Basis of preparation

In accordance with EU law (IAS Regulation EC 1606/2002), the preliminary results have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted for use in the EU as at 31 December 2012 (adopted IFRS), International Financial Reporting Interpretations Committee (IFRIC) interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The accounting policies are consistent with those presented in the annual report for 2011 with the exception of the new policies given below.

In the current financial year the following new statements have been adopted for the first time;

Amendments to existing standards:

Amendments to IFRS 7 Financial Instruments Disclosures

Improvements to IFRS 2011

The adoption of these standards and interpretations had no impact on the Group.

After making enquiries, 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 financial statements.

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

The format of the Consolidated Income Statement presented in the current period has been amended to show more clearly the results of the group arising from underlying activities, and those related to one-off events or in respect to amortisation of acquired intangibles, for both the current and preceding financial year. Management consider the revised presentation to represent a more easily understandable format given the significant separately disclosed items arising in the current period.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2012 or 2011. Statutory accounts for 2011 have been delivered to the registrar of companies, and those for 2012 will be delivered in due course. The auditors have reported on those accounts; their reports were (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 in respect of the accounts for 2012.

The annual report and accounts for the year ended 31 December 2012 will be posted to shareholders in late March 2013.

The preliminary announcement was approved by the Board of Directors on 5 March 2013.

2.      Principal risks and uncertainties

Risk management framework

The Board is ultimately responsible for the management of risk in the Group. The Board determines the Group's policies on risk, appetite for risk and levels of risk tolerance and specifically approves: risk management policies and plans; significant insurance and/or legal claims and/or settlements; major acquisitions, disposals and capital expenditures; and the Group Budget, Forecast and Three Year Plan. The Board has put in place a documented organisational structure with strictly defined limits of authority from the Board to operating units that have been communicated throughout the businesses and are well understood by the executive directors, the management team and business leaders who have delegated authority and specific responsibility for ensuring compliance with and implementing policies at corporate, divisional and business unit level. Each operating unit is required to operate within this control environment and in accordance with established policies and procedures which includes ethical, anti-corruption and bribery, treasury, employment, health and safety and environmental issues. The Board retains an oversight role and has a schedule of matters specifically resolved to it for decision thus ensuring that it maintains full and effective control over appropriate strategic, investment, financial, organisational and compliance issues. This schedule is subject to review by the Board on an annual basis.

The following is a summary of the principal risks and uncertainties agreed by the Board: contractual risk, economic environment, recruitment and retention of key staff, reputational risk for operational incidents, energy prices, financial risk of interest rates and foreign exchange and pensions.  A full description of these risks and the mitigation actions taken by the Company will be provided in the 2012 Annual Report.

3.      Separately disclosed items

	2012		2011
	£000		£000
Profit on sale of subsidiary	20,896		-
Impairment of vessels	(9,232)		-
Amortisation of acquired intangibles	(276)		(254)
	11,388		(254)

         On 31 December 2012 the Group disposed of the entire issued share capital of The Railway Engineering Company Limited (TRE) for a gross consideration of £25,500,000.

The directors have performed an impairment review of its fleet of vessels. The global market for its tankships has not improved and whilst their trading value in their niche operation remains sound, there has been no recovery in the sale and purchase market and vessel realisable values are potentially below current book values. The Group's strategy is to make further adjustments to its fleet both in total and between tonnage types to meet contracted demand. As a result of the review, the expected realisable values and the projected future contributions of the vessel fleet has resulted in an impairment provision in the Marine Oil division of £7,573,000 and a further £1,659,000 within Specialist Technical.  These provisions are recognised in the income statement.

         Amortisation of acquired intangibles relates to the amortisation of the value attributed to customer relationships arising on the acquisition of certain subsidiaries. The tax credit arising on separately disclosed items is £361,000 (2011: £72,000).

4.      Taxation

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

The tax charge is as follows:		2012		2011
		£000		£000
Current tax:
UK corporation tax		(3,661)		(2,700)
Tax overprovided in previous years		23		935
Foreign tax		(3,724)		(2,381)
Total current tax		(7,362)		(4,146)
Deferred tax:
Origination and reversal of temporary differences		975		(1,465)
Total taxation on continuing operations		(6,387)		(5,611)
The total tax charge in the income statement is allocated as follows:
		2012		2011
		£000		£000
Income tax expense reported in group income statement		6,387		5,611
Share of joint ventures' current tax		174		152
Total income tax expense		6,561		5,763

         Income tax on comprehensive income

						Group
						2012		2011
						£000		£000
Current  tax:
Current tax on foreign exchange losses/(profits) on internal loans						78		177
Current tax on contributions to defined benefit pension schemes						1,034		881
Current tax on contributions to defined benefit pension schemes -  relating to prior year						-		1,770
Deferred tax:
Deferred tax relating to the actuarial gains and losses on defined benefit pension schemes						(1,254)		(547)
Deferred tax relating to fair value of derivatives						(47)		164
						(189)		2,445

Reconciliation of effective tax rate

The tax on the Group's profit on continuing activities differs from the theoretical amount that would arise using the rate applicable under UK corporation tax rules as follows:

										2012		2011
										£000		£000
Profit before tax from continuing operations										46,745		29,751
Tax arising in interests in joint ventures										174		152
										46,919		29,903
At UK statutory tax rate of 24.5% (2011: 26.5%)										11,495		7,924
Difference due to application of tonnage tax to vessel activities										1,369		(248)
Expenses not deductible for tax purposes										274		202
Profit on disposal of subsidiary										(5,120)		-
(Over)/under provision in previous years
	Current tax									(23)		(935)
	Deferred tax									(393)		1,016
Share based payments										(33)		(82)
Lower taxes on overseas income										(429)		(1,360)
Research and development relief										(147)		(151)
Utilisation of losses brought forward										(216)		(6)
Non taxable income										-		(411)
Impact of change of rate										(262)		(270)
Other										46		84
										6,561		5,763

5.      Earnings per share

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

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

At 31 December 2012 10,315 options (2011: 389,000) were excluded from the diluted weighted average number of ordinary shares calculation as their effect would have been anti-dilutive.

The average market value of the Company's shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for the period during which the options were outstanding.

The calculation of basic and diluted earnings per share is based on the following number of shares:

Weighted average number of shares
						2012		2011
						Number of		Number of
						shares		shares
For basic earnings per ordinary share*						49,871,906		49,777,165
Potential exercise of share options and LTIPs						395,964		425,687
For diluted earnings per ordinary share						50,267,870		50,202,852

*        Excludes 186,329 (2011: 329,615) shares owned by the James Fisher and Sons Public Limited Company Employee Share Ownership Trust.

Adjusted earnings per share

To provide a better understanding of the underlying performance of the Group, an adjusted earnings per share on continuing activities is provided. Adjusted earnings are before separately disclosed items.

					2012		2011
					£000		£000
Profit attributable to owners of the Company					39,744		24,091
Adjustments:
Separately disclosed items					(11,388)		254
Tax on separately disclosed items					(361)		(72)
Adjusted profit attributable to owners of the Company					27,995		24,273
					pence		pence
Basic earnings per share on profit from operations					79.7		48.4
Diluted earnings per share on profit  from operations					79.1		48.0
Adjusted basic earnings per share on profit from operations					56.1		48.8
Adjusted diluted earnings per share on profit  from operations					55.7		48.4

6.      Dividends paid and proposed

						2012		2011
						£000		£000
Declared and paid during the year
Equity dividends on ordinary shares:
Final dividend for 2011: 10.74p per share (2010: 9.68p)						5,362		4,830
Interim dividend for 2012: 5.87p per share (2011: 5.34p)						2,939		2,666
Less dividends on own shares held by ESOP						(34)		(17)
						8,267		7,479
Proposed for approval at Annual General Meeting (not recognised as a liability at 31 December)
Equity dividends on ordinary shares:
Final dividend for 2012: 11.83p per share (2011:10.74p)						5,901		5,327

7.      Retirement benefit obligations

The retirement benefit obligations included in the Group balance sheet relate to The James Fisher and Sons Plc Pension Fund for Shore Staff, (Shore staff); together with the Group's obligations to the Merchant Navy Officers Pension Fund (MNOPF), an industry wide scheme which is also accounted for as a defined benefit scheme. The Company has obligations under the Shore Staff and under the MNOPF scheme, the balance of which relates to its subsidiary, FT Everard & Sons.

The Group has two defined benefit schemes located in Norway. These are included in the table below at their fair value based on an actuarial valuation as at 31 December 2012.

The Group's obligations in respect of its pension schemes at 31 December 2012 were as follows:

					Group
					2012		2011
					£000		£000
Shore staff pension scheme					(9,695)		(10,840)
MNOPF pension scheme					(17,428)		(19,219)
GMC pension scheme					62		(74)
					(27,061)		(30,133)

         Details of the schemes operated by the Group are as follows:

         James Fisher and Sons Plc Pension Fund for Shore Staff

         These financial statements incorporate the latest full actuarial valuation of the Shore staff scheme carried out as at 1 August 2010, rolled forward to 31 December 2012.  

         The scheme closed to future accrual on 31 December 2010. No contributions from employees have been made since that date.  Contributions to the scheme from the Company amounted to £1,615,000 (2011: £1,196,000).

         During 2012 a Group subsidiary, James Fisher Nuclear Limited secured a contract which required the provision of defined benefits to three transferring employees. These benefits are provided through the Shore Staff Scheme. There has been no transfer of past service rights into the scheme.

         Merchant Navy Officers Pension Fund (MNOPF)

         In 2005 the High Court established that former as well as existing employers are liable to make payments in respect of the funding deficit of the MNOPF.  The Company was informed by the trustees as to the level of annual payments it will be required to make into the fund over a period of ten years commencing October 2005 representing its share of the deficit disclosed in the initial actuarial valuation carried out as at 31 March 2003.

         The trustees have also indicated that they may make calls for further contributions in the future if new deficits arise or if other employers liable for contributions are not able to pay their share.  The MNOPF is valued every three years and further deficits have typically been funded over a ten year period.  The trustees of the scheme are in the process of conducting a triennial valuation of the scheme as at 31 March 2012.  It is not possible to reliably estimate any further obligation until this valuation is completed.

         Merchant Navy Ratings Pension Fund (MNRPF)

         In 2011, the High Court established that past employers as well as current employers would be required to fund any deficit on the MNRPF.  The trustees of the scheme are currently consulting with past and present employers regarding the method to be used to calculate the liability and based on this the extent of any liability individual employers may have.  Further legal adjudication will be required before the nature and extent of the liabilities in respect of individual employers can be established.  The trustees have confirmed that they believe that the Group has a liability in respect of this scheme.  Due to the uncertainty associated with the timing and calculation of this liability the directors have concluded that it would not be appropriate to make a provision at this time.

8.      Reconciliation of net debt

			1 January		Cash		Other		Exchange	31 December
			2011		flow		non cash		movement		2011
			£000		£000		£000		£000		£000
Cash in hand and at bank			16,590		(2,531)		-		(484)		13,575
Cash and cash equivalents			16,590		(2,531)		-		(484)		13,575
Debt due after 1 year			(110,876)		-		7,830		(37)		(103,083)
Debt due within 1 year			(4,823)		4,714		(8,380)		(1)		(8,490)
			(115,699)		4,714		(550)		(38)		(111,573)
Finance leases			(1,220)		423		-		2		(795)
Net debt			(100,329)		2,606		(550)		(520)		(98,793)
			1 January		Cash		Other		Exchange	31 December
			2012		flow		non cash		movement		2012
			£000		£000		£000		£000		£000
Cash in hand and at bank			13,575		5,241		-		(477)		18,339
Cash and cash equivalents			13,575		5,241		-		(477)		18,339
Debt due after 1 year			(103,083)		-		21,634		384		(81,065)
Debt due within 1 year			(8,490)		30,742		(22,290)		38		-
			(111,573)		30,742		(656)		422		(81,065)
Finance leases			(795)		394		-		5		(396)
Net debt			(98,793)		36,377		(656)		(50)		(63,122)

9.      Related party transactions

         On 1 September 2012 the Group acquired an additional 10% interest in Fender Care Malaysia SDN BHD for a consideration of £957,000 which increased the Group's equity interest in the business to 40%.  Other than this there have been no significant changes in the nature and size of related party transactions from that disclosed in the 2011 Annual Report.

10.     Post balance sheet events

         On 5 March 2013 the Group agreed to purchase Divex Limited and its subsidiaries (Divex), for an initial cash consideration of £20,000,000 with a further contingent consideration of up to a maximum of £13,000,000 linked to future profitability targets.

         In the year ended 30 November 2012 Divex, whose principal activities are the design, supply and assembly of diving and subsea equipment, reported turnover of £34,200,000 and profits after tax of £3,300,000.  

11.     The Annual General Meeting will be held at 12.00 noon, Thursday 2 May 2013 at the Abbey House Hotel, Abbey Road, Barrow in Furness, Cumbria.  Report and accounts will be posted to members in early April 2012.  Copies will be made available to members of the public at Fisher House, PO Box 4, Barrow in Furness, Cumbria, LA14 1HR.  The preliminary statement was approved by the Board of Directors on 5 March 2013.

 

END

 

 

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