Final Results
Fisher (James) & Sons PLC
27 March 2007
27 March 2007
James Fisher and Sons plc
('James Fisher' or 'the Company')
Preliminary Results
James Fisher, the marine services provider, announces Preliminary Results for
the year ended 31 December 2006.
2006 was a productive and successful year for the Group, with profit from the
continuing activities before separately disclosed items and tax of £15.9 million
(2005 - £11.2 million). Over 70% of the Group's segmental profit from continuing
operations is now generated by Marine Support Services activities.
Financial Highlights
% 2006 2005
• Group Revenue +29% £118.1m £91.4m
• Profit from continuing activities before separately disclosed items and tax +42% £15.9m £11.2m
• Basic earnings/(loss) per share 28.09p (4.50p)
• Basic earnings per share after adjustment for separately disclosed items +30% 28.30p 21.84p
• Final dividend per share +15% 6.54p 5.69p
Operational Highlights
• Marine Support Services contribution now over 70% of profit
• 65% of profit growth organic
• 35% of profit from Monyana and FenderCare acquisitions
• Disposal of last cable ship for US$ 18.25m and £1.94m book profit
• Purchase of Strainstall in October
• Purchase of F.T. Everard in December
• Integration proceeding to plan
Commenting on the outlook, Chairman, Tim Harris, CBE, said:
'James Fisher increased the scale of activities significantly in 2006. Trading
for 2007 to date is to management expectations. We are well placed in strong
markets with a proven strategy and track record to continue to produce good
growth and value for our shareholders.'
For further information:
James Fisher & Sons plc Tim Harris Chairman 020 7614 9508
Nick Henry Chief Executive Officer
www.james-fisher.co.uk Michael Shields Group Finance Director
Adventis Financial PR Chris Steele 020 7034 4759
07979 604 687
Annie Evangeli 020 7034 4757
07778 507 162
CHAIRMAN'S STATEMENT
Overview
2006 was a productive and successful year for James Fisher, in particular:
• the trading results were good by all relevant measures, revenue up
29%, profit from continuing operations before separately disclosed items and tax
up 42%, with strong organic growth the key component of profit growth.
• we completed the purchase on 28 December 2006 of F T Everard & Sons
Limited (Everard), a long established competitor of our Tankship business, which
has a fine operational record and modern fleet, for an enterprise value of
£51.7m, which approximated to underlying asset value.
• in June the cs Oceanic Princess, the last of the cable ships, was
sold for US$18.25m or £1.94m above her written down value, thus completing our
exit from commodity shipping. We have impaired the value of our oldest vessel
mt Severn Fisher by £2.9m to £2.1m.
Strategy
Our consistent aim since 2002 has been to become and be recognised as the UK's
leading marine service company. The strategy we have followed is to use our
core expertise of practical marine engineering and operational skills together
with the strong cash flow from our marine oil services division to build the
marine support service divisions of offshore oil, specialist technical and
defence, both by acquisition and increasingly by organic growth. We have
withdrawn from commodity shipping business such as bulk shipping and cable
ships.
The two tables below show the growth in segmental profits since 2002 (Table 1)
and the split between organic growth and growth from acquisitions for the marine
support divisions of offshore oil, specialist technical and defence which have
been the prime focus for growth (Table 2).
Table 1 shows that, by 2006, over 70% (£14.5 million) of segmental
profits are coming from the marine support divisions with marine oil services'
share being reduced to less than 30% (£5.8 million). It is relevant that,
during that time the capital employed in marine oil services fell from £67.9m to
£48.6m
Table 2 shows that, by 2006, over half of the growth in profits (£7.4
million) in the marine support divisions is coming from organic growth achieved
in the years following our acquisition, with the share of profits 'bought' at
the time of acquisition now falling to less than 50% (£7.1 million)
Prior to the Everard acquisition we had spent approximately £60 million on
eleven significant acquisitions since 2002, all in the three marine support
services divisions.
Table 1 Segmental profit from operations before
separately disclosed items
2002 2003 2004 2005 2006
£m £m £m £m £m
Marine Support Services
Offshore Oil * * 2.9 4.0 7.3
Specialist Technical * * 0.9 2.7 4.3
Defence * * 2.7 2.1 2.9
1.9 4.8 6.5 8.8 14.5
Year on year growth +153% +35% +34% +65%
Marine Oil Services 4.7 6.1 6.9 6.7 5.8
* not available
Table 2 Constituents of marine support service growth
over 2002 base (£1.9 million)
2003 2004 2005 2006
£m £m £m £m
2002 base profit 1.9 1.9 1.9 1.9
Cumulative growth in profit from
acquisitions 1.9 2.9 5.0 7.1
organic 1.2 2.4 3.6 7.4
common costs/Oakleaf* (0.2) (0.7) (1.7) (1.9)
4.8 6.5 8.8 14.5
* RFA Oakleaf charter to MoD ceased September 2004.
Reasons for the Everard Acquisition
In strategic terms, the acquisition of the Everard fleet should enable James
Fisher to repeat the successful formula of the last few years, with the
anticipated cash flow benefits from a larger tankships fleet helping fund an
even stronger and faster development of the offshore oil, specialist technical
and defence divisions.
Specific opportunities arising from this acquisition include:
• the ability to offer our customers a wider choice of modern,
double-hulled vessels
• the opportunity to increase the profitability of the combined fleet
at least to James Fisher levels
• the introduction of the Everard vessels into the tonnage tax regime
thereby reducing the taxation payable on profits to a nominal amount
• the acquisition, as part of a package deal, of the Cattedown port
business whose complementary and highly rated profits will be
included in the marine oil division
Offshore Oil Services divisional result - £7.3 million (2005 - £4.0 million)
This division enjoyed an excellent result with profits up by 82% over 2005, with
49% from the acquisition of Monyana Engineering Services in the UK and Monyana
Eurotech AS in Norway (Monyana) and Gjerde Lofteteknikk AS (Gjerde) in December
2005 and November 2006 respectively and the remaining 51% from organic growth.
Margins were up by 6% compared to 2005 reflecting the very strong offshore
market.
Our offshore activities consist of the Scan Tech group of companies based in
Stavanger, Norway, and Fisher Offshore which was formed this year in Aberdeen
from the merger of Monyana with our other UK based activities. Both Scan Tech
and Fisher Offshore operate in a similar way but with a slightly different
product range. Typically, we customise and rent out specialist equipment and
provide specialist labour where this is necessary. Our main products are
compressors, power packs, winches, wash down units and the HydroDigger
excavation tool.
The offshore market has been and continues to be extremely strong. A major
challenge in a period of high demand has been to keep and expand our specialist
labour force which gives us an edge in our niche markets. We have been
investing in new equipment so that we can meet our customers' demands,
particularly at peak periods.
In November 2006 we bought Gjerde, a privately owned company which specialises
in designing and customising lifting equipment for the offshore industry, for
£644,400. In the eleven months to 30 November 2006 Gjerde had a turnover of
£2.2 million and a pre tax profit of £153,000. We have merged it into our
existing Scan Tech operation with which it is complementary.
During the year we concentrated all our Aberdeen operations onto the eleven acre
freehold Oldmeldrum site which we acquired with the Monyana acquisition. This
enabled us to sell the Bridge of Don premises for £2.2m with a book profit of
£1.1m. In Stavanger we have bought a four acre freehold site at Finnestad/
Dusavik which we are developing as the centre for all our Norwegian Scan Tech
activities.
Specialist Technical Services Divisional Result - £4.3 million
(2005 - £2.6 million)
This division includes James Fisher's specialist marine services businesses of
which FenderCare and the Strainstall group of companies are the largest, and
Remote Marine Systems (RMS), plus the nuclear decommissioning businesses.
Profits for the year were up by 62% with 70% from organic growth and the
remainder from the FenderCare (March 2005) and Strainstall (October 2006)
acquisitions. Margins remained stable at around 10% which was commendable,
given the decline in the US dollar.
FenderCare had an excellent year demonstrating strong growth in all of its
activities. It is the market leader for supplying large-scale pneumatic fenders
for shipping, offshore, port, construction and defence projects and is also the
largest global operator of ship-to-ship oil transfers.
In October 2006 we bought the privately owned Strainstall Group for a maximum of
£7.0 million plus the assumption of £4.2 million of debt. We have put in place
earn out arrangements designed to ensure that payment only takes place against
results. Strainstall is complementary to FenderCare in that it has for some
time undertaken joint marketing of port related products, particularly
quick-release mooring systems. It also provides a wide variety of load and
stress monitoring applications which are relevant in the rail and construction
industries.
RMS, which designs and produces electrical penetrators for oil wells, had a good
year. It has long enjoyed a strong niche position in the North Sea and we are
now increasing its marketing on a global basis, with some success.
Conditions in the nuclear decommissioning industry have been less helpful owing
to the uncertainty caused by the privatisation of the British Nuclear Group
(BNG) leading to disruption to the flow of decommissioning work. There has also
been some cost escalation in the nuclear industry as contractors, including BNG,
have sought staff with specialist skills. James Fisher Nuclear had a more
difficult year financially but made progress in focusing on core skills of
remote handling and plant characterisation. We took the opportunity, during the
year, to set up a new nuclear company, James Fisher Inspection and Measurement
Services (JFIMS) under Dr Paul Read, the former Managing Director of BIL
Solutions Ltd, a BNG subsidiary. It has already obtained some contracts which
give us a base level of work for further development. The net cost of this
start up was charged against the 2006 results and we anticipate that JFIMS will
be profit generative by the end of 2007.
Defence Divisional Result including Foreland joint venture - £3.0
million (2005 - £2.1 million)
Our defence operations consist of two parts - submarine rescue and providing
commercial skills to support ships engaged in defence and related activities.
Although, in 2006, segmental profits were up 41% over 2005, this was not the
most significant development for this division. More importantly, we have won
contracts in competitive tenders for the supply of submarine rescue systems to
the South Korea and Singapore navies, confirming our world leading position in
the specialist submarine rescue market, which was highlighted by the rescue of
the seven Russian submariners off Kamchatka in July 2005. The key task for this
division is now to deliver the two systems on time and to cost, and to build on
our leading position in this most specialist of world markets. The key
submarine rescue contracts we have today are:
• the support of the UK Submarine Rescue Service (UKSRS) until at least
December 2007 when the new NATO Submarine Rescue Service (NSRS) is
now scheduled to enter service
• the operation of NSRS as a sub-contractor to Rolls Royce
• the marketing or sale of the UKSRS vehicle to foreign navies in
conjunction with the Ministry of Defence
• the delivery of a purpose built submarine rescue vehicle to the South
Korean Navy - this contract is worth £10 million in turnover over
three years
• together with our Singapore partners, Singapore Technologies Marine
Ltd, the delivery to the Singaporean Navy of a comprehensive
submarine rescue system, including a mother ship and submersible, by
the end of 2008. The annual financial effect of this contract is
anticipated to be approximately equivalent to that of UKSRS and it
lasts for 20 years from delivery.
The South Korean and Singapore vehicles share a similar design and there should
be some synergy in their joint construction. These developments confirm our
leading position globally in the specialist submarine rescue market. We shall
seek to build further on them in 2007.
The surface ship market has been quieter in 2006 although we are engaged on a
number of long-term projects. The excellent results from Foreland confirm the
potential of such projects if realised, although its 2006 result included
£188,000 of exceptional tax write-back. We consider that there is further
potential for the management of specialist surface ships, including defence
ships, because there are now few remaining UK companies with the necessary
skills and track record.
Marine Oil Services Divisional Result £5.8 million (2005 - £6.7 million)
The second half result for marine oil services was disappointing and the result
of three main factors:
i. difficult dry-docks for two vessels each of which were out of
service for two months
ii. the termination of a remunerative Ministry of Defence contract for
mt Severn Fisher in the Falklands which we had anticipated would
last longer
iii. persistent gales in November and December which significantly
increased voyage times
Despite these adverse factors, James Fisher Tankships still earned an
effectively tax free return of capital of 12.0% in 2006.
Severn Fisher which is approaching 25 years of age, is the last of the James
Fisher 'old ladies' which is not double-hulled and as a result of the loss of
the Falklands contract we have concluded that we should write down her book
value by £2.9 million to £2.1 million.
The reasons for the Everard acquisition have been elaborated already. In future
our marine oil service division will operate under the James Fisher Everard
name. The merger is on track and considerable progress has been made in
bringing the Everard's operation together with James Fisher Tankships. In
January the commercial and chartering departments were amalgamated and it is
planned that, the technical management will be fully merged into one team based
in Barrow before the end of June 2007. The three oldest Everard vessels, mt
Allurity, mt Activity and mt Arduity, have been sold for cash by Everard at
prices consistent with the share purchase agreement and over fifty seafarers
made redundant. Delivery from the Chinese yard of the third Everard newbuild,
mt Superiority, took place in February 2007, about a month later than originally
anticipated. There have also been delays to the fourth newbuild, mt Supremity,
which is now scheduled for late Summer 2007. In some ways, the key integration
risk is operational in that our customers rely on us for an excellent technical
and operational service where second best will not do. The merger must not be
allowed to disrupt this.
Directors and Employees
I would like to welcome Michael Everard and William Everard to the Board,
Michael as a Non-executive Director and Chairman of Cattedown Wharves and
William as Technical Director of the Fleet. For many years Everard enjoyed a
first rate operational reputation with our customers and we look forward to
their contribution at James Fisher.
Maurice Storey, who is one of the most experienced marine managers in the UK, is
helping facilitate the integration of Everard with James Fisher. For these
services, he will receive an additional fee of £50,000 in the first half of
2007. Maurice is a Non-executive Director but it would be a waste of his
experience and talent if this were to bar him from providing such a useful
contribution. This is an excellent example of the value a non-executive
director can bring.
Ian Serjent stood down as Marine and Technical Services Director at the last AGM
and again I would like to thank him for his outstanding career with, and
contribution to, the Company.
With the Everard acquisition, James Fisher now employs well over 1,000 people.
Irrespective of the long-term benefits, mergers are never easy for the people
involved and I would like to recognise the inconvenience and stress that it
inevitably brings to employees. Their patience is much appreciated and I would
like to thank them for their hard work and goodwill in 2006 and as the merger
goes forward in 2007.
Outlook
In the early part of 2007, James Fisher's first priority is to complete the
integration of Everard and draw in full the potential synergies. This process
is underway but it is important that it is completed without disruption to our
service to our customers. The potential for profit improvement in the medium to
longer term is significant as, for a variety of reasons, Everards' profitability
was well below that of James Fisher. The second task, which is already in
process, is to complete the refinancing of three of the Everard newbuilds as
bareboat charters. It is anticipated that the full integration of Everard will
be completed by the end of the first half from which time we shall begin to
benefit financially from the acquisition.
The offshore oil and specialist technical divisions experienced strongly
favourable market conditions in 2006. To date there has been no change in
circumstances, for example the number of rigs forecast to be operational in the
Norwegian sector of the North Sea is rising over the next three years. Our
businesses are well positioned and well led but it would be unrealistic to
expect the same rate of organic growth as achieved in 2006 to be achieved every
year. We shall continue to make complementary acquisitions and to strengthen
their performance and growth in their markets. We shall also encourage acquired
companies further to market their skills on an international basis.
The defence division has achieved a strong strategic position in international
submarine rescue and its prime task in 2007 and 2008 will be to deliver the
Korean and Singaporean contracts on time and with the estimated profit.
James Fisher increased the scale of its activities significantly in 2006.
Trading for 2007 to date is to management expectations. We are well placed in
strong markets with a proven strategy and track record to continue to produce
good growth and value for our shareholders.
Timothy C.Harris
Chairman
GROUP INCOME STATEMENT
For the year ended 31 December 2006
Notes Year ended Year ended
31 December 2006 31 December 2005
Before Separately Before Separately
separately disclosed separately disclosed
disclosed items disclosed items
items note 4 Total items note 4 Total
£000 £000 £000 £000 £000 £000
Group revenue 118,085 118,085 91,411 91,411
Cost of sales (96,438) (96,438) (73,931) (73,931)
Gross profit 21,647 21,647 17,480 17,480
Administrative expenses (5,756) (5,756) (5,413) (5,413)
Profit from operations before 2 15,891 15,891 12,067 12,067
separately disclosed items
Profit on sale of property - 1,126 1,126 - - -
Impairment of ship - (2,906) (2,906) - - -
Pension benefit curtailment - - - - 2,000 2,000
Loss on ship disposals - (24) (24) - (1,617) (1,617)
Profit from operations 15,891 (1,804) 14,087 12,067 383 12,450
Finance costs
Finance income (revenue) 316 - 316 304 - 304
Finance costs (2,586) - (2,586) (2,591) - (2,591)
Exchange gain/(loss) on - 35 35 - (130) (130)
loan conversion
(2,270) 35 (2,235) (2,287) (130) (2,417)
Share of post tax results of 2,295 - 2,295 1,413 - 1,413
joint venture
Profit on continuing operations 15,916 (1,769) 14,147 11,193 253 11,446
before taxation
Taxation (including overseas 5 (2,034) (377) (2,411) (538) (216) (754)
taxation of £883,000; 2005
£567,000)
Profit for the year on 13,882 (2,146) 11,736 10,655 37 10,692
continuing operations
Discontinued operations
Profit/(loss) for the year from 3 2,041 (12,889)
discontinued operations
Profit/(loss) for the year 13,777 (2,197)
Profit/(loss) attributable to :
Equity holders of the parent 13,780 (2,197)
Minority interests (3) -
13,777 (2,197)
Earnings per share (EPS)
pence Pence
Basic EPS from continuing 6 23.93 21.91
operations
Diluted EPS from continuing 6 23.71 21.72
operations
Basic EPS on profit/(loss) from 6 28.09 (4.50)
total operations
Diluted EPS on profit/(loss) 6 27.83 (4.50)
from total operations
Adjusted Earnings per share
Basic EPS from continuing 6 28.30 21.84
operations
Diluted EPS from continuing 6 28.05 21.64
operations
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the year ended 31 December 2006
Notes Year ended Year ended
31 December 2006 31 December 2005
£000 £000
Income and expense recognised directly in equity
Exchange differences on translation of foreign operations:
Currency translation differences 189 26
Net investment hedge (571) 9
(382) 35
Fair value of gains/(losses) on cash flow hedges 62 (134)
Share of fair value gains of cash flow hedges in joint 39 169
venture
Actuarial gains/(losses) on defined benefit schemes 4,143 (4,531)
3,862 (4,461)
Transfers to the income statement
On cash flow hedges 7 36
Tax on items taken directly to equity 5 (772) 123
Net income/(expense) recognised directly in equity 3,097 (4,302)
Profit/(loss) for the year 13,777 (2,197)
Total recognised income/(expense) for the year 8 16,874 (6,499)
Attributable to:
Equity holders of the parent 16,877 (6,499)
Minority interests (3) -
16,874 (6,499)
Effects of changes in accounting policy:
Net gain on cash flow hedges on first time adoption of IAS 39 20
Loss on cash flow hedges in joint ventures on first time adoption of IAS 39 (125)
(105)
GROUP BALANCE SHEET
As at 31 December 2006
Notes 31 December 2006 31 December 2005
£000 £000
Assets
Non current assets
Goodwill 55,773 36,168
Other intangible assets 60 -
Property, plant and equipment 102,629 67,081
Investment in joint ventures 3,575 2,587
Available for sale financial assets 1,370 1,368
Deferred tax assets - 1,197
163,407 108,401
Current assets
Inventories 11,317 5,797
Trade and other receivables 32,897 21,026
Derivative financial instruments 17 -
Cash and cash equivalents 9,655 9,725
53,886 36,548
Non-current assets classified as held for sale 3 1,518 7,959
Total Assets 218,811 152,908
Equity and Liabilities
Capital and reserves
Called up share capital 12,377 12,345
Share premium 24,114 23,960
Treasury shares (1,147) (1,184)
Other reserves (96) 178
Retained earnings 50,932 38,030
Shareholders' Equity 86,180 73,329
Minority interests 71 -
Total equity 86,251 73,329
Non current liabilities
Other payables 1,610 593
Retirement benefit obligations 9 10,049 13,536
Derivative financial instruments - 18
Cumulative preference shares 100 100
Financial liabilities 72,449 42,695
Deferred tax liabilities 1,987 -
86,195 56,942
Current liabilities
Trade and other payables 33,959 14,802
Current tax 1,207 1,370
Derivative financial instruments 55 102
Financial liabilities 11,144 6,363
46,365 22,637
Total liabilities 132,560 79,579
Total equity and liabilities 218,811 152,908
GROUP CASH FLOW STATEMENT
For the year ended 31 December 2006
31 December 2006 31 December 2005
£000 £000
Group profit from operations 14,087 12,450
Adjustments to reconcile Group profit from operations
to net cash inflows from operating activities
Profit/(loss) from operations from discontinued operations 2,042 (12,886)
Adjustments for:
Depreciation 5,661 7,670
Profit on sale of plant and equipment (377) (51)
Profit on disposal of property (1,126) -
Pension benefit curtailment - (2,000)
Impairment of non-current assets 2,906 10,885
(Profit)/loss on ship disposals (1,912) 11,565
Increase in trade and other receivables (3,309) (3,014)
(Increase)/decrease in inventories (2,025) 258
Increase/(decrease) in trade and other payables 2,553 (1,291)
Additional defined benefit pension scheme contributions (2,979) (1,994)
Share based compensation 516 432
Cash generated from operations 16,037 22,024
Income tax payments (1,481) (1,404)
Cash flows from operating activities 14,556 20,620
Investing activities
Dividends from joint venture undertakings 1,275 1,068
Proceeds from the sale of property, plant and equipment 12,255 12,995
Interest received 320 321
Acquisition of subsidiaries, net of cash acquired (22,151) (22,077)
Acquisition of property, plant and equipment (7,424) (7,357)
Acquisition of available for sale financial assets (1) (211)
Cash flows used in investing activities (15,726) (15,261)
Financing activities
Proceeds from the issue of share capital 170 190
Preference dividend paid (3) (4)
Interest paid (2,807) (2,871)
Proceeds from other non-current borrowings 28,912 20,524
Purchase less sales of own shares by ESOP (229) 7
Capital element of finance lease repayments (7) -
Repayment of borrowings (20,362) (19,547)
Dividends paid (4,499) (3,927)
Cash flows from/(used in) financing activities 1,175 (5,628)
Net increase/(decrease) in cash and cash equivalents 5 (269)
Cash and cash equivalents at 1 January 2006 9,725 10,045
Net foreign exchange difference (75) (51)
Cash and cash equivalents at 31 December 2006 9,655 9,725
NOTES TO THE PRELIMINARY RESULTS
1. General information
Statement of compliance
The consolidated financial statements have been prepared in accordance with IFRS
adopted by the European Union (EU) as at 31 December 2006 and are applied in
accordance with the provisions of the Companies Act 1985.
Basis of preparation of group accounts
The financial statements are prepared on an historical cost basis except for
derivative financial instruments which are measured at fair value.
The Group financial statements are presented in Sterling and all values are
rounded to the nearest thousand pounds (£000) except when otherwise indicated.
The financial information set out above does not constitute statutory accounts
for the years ended 31 December 2006 or 2005 as defined in section 240 of the
Companies Act 1985. Statutory accounts for 2005 have been delivered to the
Registrar of Companies. The auditor's report on those accounts was unqualified
and did not contain any statement under section 237(2) or (3) of the Companies
Act 1985.
The auditors have given an unqualified opinion on the accounts for the year
ended 31 December 2006. These will be delivered to the Registrar of Companies
following the annual general meeting.
2. Segmental Information
Primary reporting format business segments
The following tables present revenue and profit and certain asset
and liability information regarding the Group's business segments for the years
ended 31 December 2006 and 2005.
Year ended Discontinued
31 December 2006 Continuing Operations Operations
Offshore Oil Specialist Defence Marine Total Cable Total
Services Technical Oil Ships
Services Services
£000 £000 £000 £000 £000 £000 £000
Revenue
Group revenue 21,977 42,282 11,197 45,937 121,393 -
Inter segment sales - (3,217) (91) - (3,308) -
Segmental revenue 21,977 39,065 11,106 45,937 118,085 -
Result
Segmental result before ship 7,320 3,919 1,024 5,819 18,082 106
disposals
Common costs (2,191)
Profit from operations before separately disclosed items and joint 15,891
ventures
Profit on sale of property 1,126 -
Impairment of ship (2,906) -
(Loss)/profit on ship (24) 1,936
disposals
Profit from operations before joint ventures 14,087 2,042
Finance income (revenue) 316 -
Finance costs (2,586) -
Exchange loss on loan 35 -
conversion
(2,235) -
Share of post tax results of - 346 1,949 - 2,295 -
joint ventures
Profit before tax 14,147 2,042
Taxation (2,411) (1)
Profit attributable to equity 11,736 2,041
holders
Assets & Liabilities
Segment assets 45,432 46,686 8,844 110,343 211,305 10 211,315
Investment in joint ventures - 598 2,977 - 3,575 - 3,575
Unallocated assets 3,921 3,921
Total assets 218,801 10 218,811
Segment liabilities (3,895) (9,046) (1,082) (15,738) (29,761) (58) (29,819)
Unallocated liabilities (102,741) - (102,741)
Total liabilities (132,502) (58) (132,560)
Other segment information
Capital expenditure:
Property, plant & equipment 3,108 2,973 58 40,643 46,782 - 46,782
Unallocated 611 611
47,393 - 47,393
Other intangible assets 60 60 60
Depreciation 1,527 543 89 3,353 5,512 - 5,512
Unallocated 149 149
5,661 - 5,661
Amortisation of intangible 1 1 1
assets
Year ended Discontinued
31 December 2005 Continuing Operations Operations
Offshore Oil Specialist Defence Marine Total Cable Total
Services Technical Oil Ships
Services Services
£000 £000 £000 £000 £000 £000 £000
Revenue
Group revenue 14,936 25,898 9,679 44,903 95,416 9,019
Inter segment sales (37) (3,622) (346) - (4,005) -
Segmental revenue 14,899 22,276 9,333 44,903 91,411 9,019
Result
Segmental result before ship 4,017 2,551 782 6,733 14,083 4,552
disposals
Common costs (2,016)
Profit from operations before separately disclosed items and joint 12,067
ventures
Pension benefit curtailment 2,000 -
Impairment of non-current assets - (10,885)
Recognition of rentals due on - 3,395
sold ship
Loss on ship disposals (1,617) (9,948)
Profit from operations before joint 12,450 (12,886)
ventures
Finance income (revenue) 304 -
Finance costs (2,591) -
Exchange loss on loan conversion (130) -
(2,417) -
Share of post tax results of - 79 1,334 - 1,413 -
joint ventures
Profit before tax 11,446 (12,886)
Taxation (754) (3)
Profit attributable to equity 10,692 (12,889)
holders
Assets & Liabilities
Segment assets 39,501 24,908 8,867 58,347 131,623 5,095 136,718
Investment in joint ventures - 398 2,189 - 2,587 - 2,587
Non-current assets classified as - 7,959 7,959
held for sale
Unallocated assets 5,644 5,644
Total assets 139,854 13,054 152,908
Segment liabilities (1,922) (2,802) (1,441) (6,820) (12,985) (1,437) (14,422)
Unallocated liabilities (65,157) - (65,157)
Total liabilities (78,142) (1,437) (79,579)
Other segment information
Capital expenditure:
Property, plant & equipment 7,242 3,733 71 3,317 14,363 588 14,951
Unallocated 53 53
14,416 588 15,004
Depreciation 939 400 118 3,838 5,295 2,189 7,484
Impairment provision - 10,885 10,885
Unallocated 186 186
5,481 13,074 18,555
Unallocated net liabilities comprise certain assets and liabilities of the
parent company, loans, pension liabilities and taxation.
Geographical segments
The following table represents revenue, expenditure and certain asset
information regarding the Group's geographical segments for the years ended 2006
and 2005.
UK & Ireland Norway Rest of the World Total
2006 2005 2006 2005 2006 2005 2006 2005
£000 £000 £000 £000 £000 £000 £000 £000
Revenue
Continuing operations
Group revenue 85,621 68,964 9,988 8,110 25,784 18,342 121,393 95,416
Inter-segment sales (3,308) (4,005) - - - - (3,308) (4,005)
Group revenue 82,313 64,959 9,988 8,110 25,784 18,342 118,085 91,411
Segmental revenue - - - - - 9,019 - 9,019
Segment assets 177,427 109,210 28,350 25,091 4,240 2,417 209,797 136,718
Investment in joint 2,977 2,189 - - 598 398 3,575 2,587
ventures
Non-current assets 1,518 7,959 - - - - 1,518 7,959
classified as held for
sale
Unallocated assets 3,921 5,644
218,811 152,908
Segment liabilities (25,991) (9,376) (2,897) (2,941) (931) (2,105) (29,819) (14,422)
Unallocated liabilities (102,741) (65,157)
(132,560) (79,579)
Capital expenditure:
Property, plant and 46,097 14,211 1,294 793 2 - 47,393 15,004
equipment
3. Discontinued operations
Discontinued operations relate to the withdrawal of the Group from
cable laying activities announced in 2005. Following the disposal in 2005 of the
cable ship CS Oceanic Pearl, the remaining vessel, CS Oceanic Princess, was
reclassified as an asset held for sale in December 2005. This vessel was
disposed of on 12 June 2006.
Following the disposal of the CS Oceanic Pearl on 6 October 2005, the
Group had recognised the remaining income due under the General Dynamics charter
which expires in December 2006. The present value of the remaining income had
been recognised in the balance sheet at 6 October 2005 after applying a discount
rate of 4.5%.
Following the reclassification of CS Oceanic Princess as an asset held
for sale an impairment review was performed by the Directors, taking into
account the expected disposal proceeds and costs and revenues anticipated to
arise during the period prior to disposal, discounted at an appropriate rate to
take into account the risks associated with the relevant cash flows. As a result
an impairment provision of £10,885,000 was made against the carrying value of
the vessel and charged to the income statement in December 2005. The discount
rates used to assess the cash flows were between 4.5% and 10%.
The results of discontinued operations are presented below:
2006 2005
£000 £000
Revenue - 9,019
Cost of sales 106 (4,467)
Gross profit 106 4,552
Profit/(loss) on ship disposals 1,936 (9,948)
Recognition of rentals due on sold ship - 3,395
2,042 (2,001)
Impairment of non- current assets - (10,885)
Profit/(loss) before tax from discontinued operations 2,042 (12,886)
Taxation (1) (3)
Net profit/(loss) attributable to discontinued operations 2,041 (12,889)
Taxation is payable on the profit/(loss) from operations under the tonnage tax regime as explained in
note 5.
The net cash flows attributable to discontinued operations are:
2006 2005
£000 £000
Operating cash flows 3,366 6,190
Investing cash flows 9,357 10,227
Financing activities (6,933) (14,854)
5,790 1,563
Earnings/(loss) per share from discontinued operations (pence):
pence pence
Basic 4.16 (26.41)
Diluted 4.12 (26.18)
Non current assets held for sale
Other than the vessel CS Oceanic Princess, there were no other assets or
liabilities of the cable ship operation which were classified as held for
disposal.
At 31 December 2005 the carrying value of the CS Oceanic Princess was
£7,959,000.
The assets classed as held for sale at 31 December 2006 are the mt Allurity and
mt Arduity which were disposed of by the Group in January 2007. The vessels are
recorded at their fair value less costs of disposal.
4. Separately disclosed items
Separately disclosed items consist of:
2006 2005
£000 £000
Profit on sale of property 1,126 -
Impairment of ship (2,906) -
Pension benefit curtailment - 2,000
Loss on ship disposals (24) (1,617)
Exchange gain/(loss) on loan conversion 35 (130)
(1,769) 253
On 1 December 2006 the Group disposed of an industrial property at Bridge of
Don, Aberdeen for a gross consideration of £2,200,000.
The Directors have performed an impairment review of the carrying value of the
mt Severn Fisher, built in 1983 and the Group's oldest tanker. The review has
taken account of the ending of a contract with the Ministry of Defence in 2006
and the limits to trading in the European Union increasingly imposed by the
International Maritime Organisation and the major oil companies as the vessel
nears the twenty fifth anniversary of its construction.
The review has taken into account the expected residual value and the cost and
revenues anticipated to arise during the period prior to disposal, discounted at
a rate of 6.5% which the Directors believe takes into account the risks
associated with the relevant cash flows.
As a result the Group has recognised an impairment provision of £2,906,000
against the carrying value of the vessel in the income statement.
The pension benefit curtailment arose from the closure of the Group's defined
benefit pension scheme to existing members in 2010 and changes to the
contribution rates as explained in note 9.
The loss on ship disposals arose from the sale in 2005 of the CS Oceanic Pearl
and mt Tees Fisher and mt Wear Fisher.
The exchange differences on loans arise on foreign currency financing loans in
the UK.
The tax arising on these items is £377,000 (2005: £216,000).
5. 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 made up as follows: 2006 2005
£000 £000
Current tax:
UK tonnage tax (21) (24)
UK corporation tax (1,309) (514)
(1,330) (538)
Tax overprovided in previous years 770 327
Foreign tax (883) (567)
Total current tax (1,443) (778)
Deferred tax:
Group deferred tax (969) 21
Total taxation on continuing operations (2,412) (757)
Share of joint ventures' current tax 130 (72)
The total tax charge in the income statement is allocated as follows:
2006 2005
£000 £000
Taxation expense reported in group income statement 2,411 754
Taxation attributable to discontinued activities 1 3
Total tax expense 2,412 757
Tax (charged)/credited to equity in statement of recognised income and expense:
2006 2005
£000 £000
Deferred tax:
Deferred tax relating to the actuarial gains and losses on defined benefit (772) 123
pension schemes
Reconciliation of effective tax rate
The tax on the Group's profit/(loss) before tax differs from the theoretical
amount that would arise using the rate applicable under UK corporation tax rules
as follows:
2006 2005
£000 £000
Profit before tax from continuing operations 14,017 11,518
Profit/(loss) before tax from discontinued activities 2,042 (12,886)
16,059 (1,368)
At UK statutory tax rate of 30% (2005 30%) 4,818 (410)
Difference due to application of tonnage tax to all vessel (1,355) 2,015
disposals and operating activities
Expenses not deductible for tax purposes 673 146
Chargeable gains 60 -
Over provision in previous years (960) (327)
Joint ventures (650) -
Share base payments - 180
Special pension contribution - (409)
Lower taxes on overseas income (174) (40)
Pension curtailment - (384)
Other - (14)
2,412 757
6. Earnings per share
Basic earnings per share are 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 purchased 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 parent by the weighted average
number of ordinary shares that would be issued on conversion of all the dilutive
potential ordinary shares into ordinary shares.
The calculation of basic and diluted earnings per share is based on the
following profits and numbers of shares:
2006 2005
£000 £000
Profit/(loss) attributable to equity holders 13,780 (2,197)
(Profit)/loss attributable to discontinued activities (2,041) 12,889
Profit on continuing activities attributable to equity 11,739 10,692
holders
Weighted average number of shares
2006 2005
Number of Number of
Shares Shares
For basic earnings per ordinary share* 49,058,347 48,797,076
Exercise of share options and LTIPs+ 449,306 430,920
For diluted earnings per ordinary share 49,507,653 49,227,996
* Excludes 392,592 (2005:510,237) shares owned by the James Fisher & Sons
Public Limited Company Employee Share Ownership Trust.
+ Share options and LTIPs have been excluded from the calculation of
diluted earnings per share in 2005 as they are antidilutive, but have been
included in the calculation of diluted earnings per ordinary share on continuing
activities.
2006 2005
£000 pence £000 pence
Basic earnings/(loss) per share 13,780 28.09 (2,197) (4.50)
(Profit)/loss attributable to discontinued (2,041) (4.16) 12,889 26.41
activities
Basic earnings per share on profit from continuing 11,739 23.93 10,692 21.91
operations
Diluted earnings/(loss) per share 13,780 27.83 (2,197) (4.50)
(Profit)/loss attributable to discontinued (2,041) (4.12) 12,889 26.18
activities
Diluted earnings per share on profit from
continuing operations + 11,739 23.71 10,692 21.72
Adjusted Earnings per Share
The basic earnings per share on continuing activities before separately
disclosed items is shown to highlight the underlying earnings trend and is
calculated using the number of shares outlined in the table above.
2006 2005
£000 pence £000 pence
Basic earnings per share on profit on continuing
operations 11,739 23.93 10,692 21.91
Adjustments:
Exchange (gain)/loss on loan conversion (35) (0.07) 130 0.27
Loss on ship disposals 24 0.05 1,617 3.31
Profit on sale of property including tax effect of (749) (1.53) - -
£377,000
Impairment of ship 2,906 5.92 - -
Pension benefit curtailment including tax effect of - - (1,784) (3.65)
£216,000
Basic adjusted earnings per share on profit from
continuing operations 13,885 28.30 10,655 21.84
Diluted earnings per share on profit on continuing
operations 11,739 23.71 10,692 21.72
Adjustments:
Exchange (gain)/loss on loan conversion (35) (0.07) 130 0.26
Loss on ship disposals 24 0.05 1,617 3.28
Profit on sale of property including tax effect of (749) (1.51) - -
£377,000
Impairment of ship 2,906 5.87 - -
Pension benefit curtailment including tax effect of - - (1,784) (3.62)
£216,000
Diluted adjusted earnings per share on profit from
continuing operations 13,885 28.05 10,655 21.64
7. Dividends paid and proposed
2006 2005
£000 £000
Declared and paid during the year
Equity dividends on ordinary
shares:
Final dividend for 2005 5.69p (2004 4.95p) 2,816 2,440
Interim dividend for 2006 3.47p (2005 3.10p) 1,717 1,531
Less dividends on own shares held by ESOP (34) (44)
4,499 3,927
Proposed for approval at Annual General Meeting (not recognised as a liability at 31 December)
Equity dividends on ordinary shares:
Final dividend for 2006 6.54p (2005 5.69p) 3,212 2,781
The ordinary final dividend will be paid on 11 May 2007 to those
shareholders registered in the books of the Company at the close of business on
10 April 2007.
8. Reconciliation of movements in equity
GROUP
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 £000
At 31 December 2004 12,405 23,810 48,151 177 (1,212) 83,331 - 83,331
Restatement (100) - - (105) - (205) - (205)
At 1 January 2005 12,305 23,810 48,151 72 (1,212) 83,126 - 83,126
Total recognised income (6,605) 106 (6,499) (6,499)
and expense in the period
Ordinary dividends paid (3,927) (3,927) (3,927)
Share-based 432 432 432
compensation expense
Purchase less sale of 7 7 7
shares
Arising on the issue of 40 150 190 190
shares
Transfer on disposal of (21) 21 - -
shares
At 31 December 2005 12,345 23,960 38,030 178 (1,184) 73,329 - 73,329
At acquisition - 74 74
Total recognised income 17,151 (274) - 16,877 (3) 16,874
and expense in the
period
Ordinary dividends paid (4,499) (4,499) (4,499)
Share-based 516 516 516
compensation expense
Purchase less sale of (229) (229) (229)
shares
Arising on the issue of 32 154 186 186
shares
Transfer on disposal of (266) 266 - -
shares
At 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 £000
At 1 January 2005 177 (105) 72
Cash flow hedges:
Transferred to the income statement 36 36
Fair value losses in the period (134) (134)
Share of fair value gains of joint ventures 169 169
Recognised income in the period including the effect of net 35 - 35
investment hedges
At 31 December 2005 212 (34) 178
Cash flow hedges:
Transferred to the income statement 7 7
Fair value gains in the period 62 62
Share of fair value gains of joint ventures 39 39
Recognised income in the period including the effect of net (382) - (382)
investment hedges
At 31 December 2006 (170) 74 (96)
9. Retirement benefit obligations
The Retirement benefit obligations included in the Group balance
sheet comprise the following elements, details of which are explained below:
Group
2006 2005
£000 £000
Shore staff pension scheme (1,400) (8,100)
Dockworkers pension scheme (1,550) (2,400)
Everard Group pension scheme (73) -
MNOPF pension scheme (7,026) (3,036)
(10,049) (13,536)
Shore Staff and Dockworkers pension schemes
The Company reviews the position of the pension schemes at three yearly
intervals. As a result of the review carried out in 2005 the Company agreed a
deficit recovery plan with the trustees of the schemes. Under this plan the
Company agreed to make special pension payments into the schemes totalling
£3,000,000. The first payment of £1,399,000, which included £400,000 paid to
the Dockworkers's scheme, was made in December 2005. The balance was paid by
the Company during the first half of 2006.
In 2005 the Company also decided to close the Shore staff scheme to existing
members from 2010. At this time members contributing to the scheme can transfer
to a stakeholder scheme option. During the remaining period that the scheme
remains open to existing members the rate of growth of pensionable salary has
been reduced to 1.5% and the rate at which the company contributes to the scheme
has been reduced to 14.7% of pensionable pay. As a result of these curtailments
to the benefits available to the members the Company's liabilities to the scheme
have been reduced by £2,000,000. This curtailment benefit was recognised in the
income statement in December 2005.
Everard Group pension scheme
F.T Everard and Sons Limited operates a defined benefit scheme, The Everard
Group Pension Fund. The scheme was closed to new entrants from 1 April 2004 and
closed to future accrual from 1 March 2005. The scheme is currently in deficit.
Under an agreed reduction plan F.T Everard and Sons Limited is making annual
additional contributions of £286,000 for thirteen years commencing 1 March 2005.
MNOPF Pension Scheme
In 2005 the High Court established that former as well as existing employers
will be liable to make payments in respect of the funding deficit of the
Merchant Navy Officers' Pension Fund (MNOPF). The Company has been informed by
the Trustees that it will be required to make annual payments of £555,000 (2005
£418,000) into the fund for a period of ten years commencing October 2005
representing its share of the deficit disclosed in the actuarial valuation
carried out as at 31 March 2003. The increase in the payments in 2006 over 2005
is explained below.
The Trustees have also indicated that it 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. In February 2007 the Group
was notified that the Trustees are expecting a shortfall in receipts from
members of approximately 10% of the amount requested. As a result the
outstanding deficit has been reallocated with the result being that the Company
is liable for an additional £80,000 per annum payable in eight annual
instalments from 31 March 2007. An adjustment of £537,000 has been included in
the statement of recognised income and expense representing the fair value of
this liability.
Following further review and discussion with the MNOPF during 2006, the Company
established that there are additional liabilities in respect of three additional
claims relating to former employers covered under the scheme. Two of these have
been added to the ten year payment plan and one small claim settled in full
during the period. As a result of these claims the liability attributable to the
Company has increased by £579,000 and the annual payment obligation has
increased from £418,000 to £475,000. The Company is not aware of any further
outstanding claims in respect of the MNOPF.
F.T.Everard and Sons also have a liability to the MNOPF arising from the same
circumstances. The annual obligation of this subsidiary to make payments to the
MNOPF is £443,000 payable over the ten years commencing October 2005. Everard
have also been assessed for additional payments resulting in an increase in the
amount due of £75,000 per annum for eight years commencing 31 March 2007.
Since the Company has no control over the calls for contributions made from the
MNOPF, it has determined that the fund should be accounted for as a defined
benefit scheme and its liability recognised accordingly. The Company has
concluded that the recognition of the liability should be accounted for as an
actuarial adjustment, and is therefore recorded in equity in the statement of
recognised income and expense.
10. Post balance sheet events
The Group completed the sale of the mt Arduity and mt Allurity on 5 January and
11 January 2007 respectively. The gross proceeds from these disposals were
$3,300,000. The net proceeds of £1,500,000 were used to repay bank borrowings.
On 13 February 2007 the Group took delivery of mt Superiority.
Under the terms of the acquisition of Strainstall Group (Strainstall) on 6
October 2006 contingent consideration of £1,750,000 is payable to the vendors
dependent on achieving certain performance conditions for the year ended 31
December 2006 and 31 December 2007. In March 2007 following confirmation that
the performance criteria for the year ended 31 December 2006 had been achieved
the vendors were paid £1,250,000 in cash and loan notes.
11. The AGM will be held at 12.00 noon, Thursday 3 May 2007 at the Abbey
House Hotel, Abbey Road, Barrow in Furness, Cumbria.
12. Report and accounts will be posted to members in early April 2007.
Copies will be made available to members of the public at Fisher House, PO Box
4, Barrow in Furness, Cumbria, LA14 1HR.
13. The preliminary statement was approved by the Board of Directors on
26 March 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 22nd November 2024
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