Half Yearly Report

RNS Number : 4328R

Fisher (James) & Sons PLC

23 August 2010

 



23 August 2010

James Fisher and Sons plc

Half Year Results 2010

James Fisher and Sons plc ("James Fisher"), the leading marine service provider, announces its results for the half year to 30 June 2010.

	H1 2010	H1 2009	% change
Group revenue £m	131.6	130.0	+1%
Profit before tax £m *	13.5	13.0	+4%
Basic earnings per share *	21.42p	20.11p	+7%
Interim dividend per share	5.04p	4.80p	+5%
* adjusted for acquisition costs

Highlights

·      Marine Services continue to perform well, with strong profit growth in Specialist Technical

·      Marine Oil returned to profit as markets recovered

·      Good cash generation resulting in reduced financial gearing

·      Two acquisitions in the period: ACM ( £3.4m) and GMC Produkt AS in Norway (£11.8m)

·      Group Finance Director Mike Shields to retire on 30 November after 46 years with the company

Commenting on the results, Chairman, Tim Harris, said:

"The results for the first half represented an encouraging performance in the present economic conditions and trading for the period since the half year to date has been to management expectations. 

Specialist Technical continues to trade encouragingly with Fendercare in the lead.  One would hope for a better performance from the Nuclear cluster in the second half as the recent hiatus in nuclear decommissioning ordering ceases and our new Rig Hall and Calibration Unit investments come on stream. However, it would be prudent to expect some slightly lower ship to ship transfer activity due to the reduced oil contango market.

For Offshore there is an increasing level of customer activity but, given project lead times, it is unclear how much of this work will benefit this year.  BP's recent problems should not have an immediate effect on our market, although increased attention to safety and the environment should be positive for the future - conversely a decline in offshore drilling long-term would not.  We have little or no exposure to the US Gulf and may benefit from the transfer of rigs elsewhere - for example to Brazil.

It is hoped that, on the basis of existing contracts, Defence will demonstrate further progress in the second half.  Obviously any major new contract for a new Submarine Rescue System or surface ship outsourcing would have a beneficial effect but none is forecast this year.

Clearly the Group's overall result for the full year will be significantly influenced by how far the recent improvement in Marine Oil is maintained.  The upside for this division should be material in the medium term, but its precise incidence and timing is much more difficult to predict.

The Company benefits from a strong dollar because of its export focus, so any significant weakening of the dollar in the second half would have an adverse effect.

We intend to continue with our proven policy of making small "bolt on" acquisitions to strengthen our existing businesses and encourage their further organic growth.  James Fisher continues to be well placed with a proven track record to provide further growth and value for our shareholders."

For further information:

James Fisher and Sons plc www.james-fisher.co.uk	Tim Harris Nick Henry Michael Shields	Chairman Chief Executive Officer Group Finance Director	020 7614 9508
Financial Dynamics	Richard Mountain Sophie McMillan		020 7269 7291

James Fisher and Sons plc (James Fisher)

Half Yearly Results for the six months ended 30 June 2010

Interim Management Report

for the six months ended 30 June 2010

Chairman's Statement

Introduction

The results for H1 2010 represented an encouraging performance in the present economic conditions.  In particular the Marine Oil division returned to profit and we sold a surplus vessel for £7.5 million which was £200,000 more than its book value.  These indicators suggest that we may be through the worst as far as this division is concerned.  The Specialist Technical and Defence divisions were well ahead of last year because of good organic growth.  The Offshore result was down on H1 2009 because of a number of coincidental reasons rather than a general deterioration in our market position.

Group revenue at £131.6 million was a modest increase over last year (H1 2009 £130.0 million) but well ahead when allowance is made for the one-off effect of the sale of the Singaporean Submarine Rescue vessel in H1 2009.  Profitability comparisons are made more difficult by IFRS 3 (2008) which now requires the costs of acquisitions to be expensed through the income statement for the first time.  After excluding acquisition costs of £0.5 million (2009 nil), the profit on continuing operations before tax increased by 4% to £13.5 million (H1 2009 £13.0 million).  Similarly, adjusted earnings per share were up by 7% to 21.42p per share from 20.11p per share.  The interim dividend is up by 5% to 5.04p per share from 4.80p per share.

Strategy

Despite a challenging economic environment particularly in the UK, James Fisher's strategy puts it in a strong position to continue to prosper and grow for the following reasons:

i.          Its core marine service skills are rare in the UK and increasingly valuable in an age of increasing focus on safety and the
            environment

 

ii.         The marine services sector in which it operates is huge and growing even in a worldwide recession

 

iii.         It is targeting the rapidly growing markets, particularly Asia Pacific, rather than the more mature US and European markets

 

iv.         Its niche businesses typically have significant market shares in their market segments with margins over 10% and have good
            cash generating abilities

The recent downturn has not been without its costs.  Firstly, the 2009 result for Marine Oil was some £10.2 million worse than that for 2007 but H1 2010 shows the first improvement since the downturn began.  Secondly, as for many companies, pension deficits have increased significantly affecting the reported financial gearing adversely, although and more importantly, the related cash flows by far less.  Our relationships with our banks and ability to fund our growing activities remain sound and strong.  Cash generation in H1 2010 was good and the sale of the Norwegian property company, which owns our new Norwegian works, for £17.0 million in June and the sale of mt Supremity for £7.5 million in May improved cash flow and financial gearing.

Despite the challenges of the last two years, the Company's marine service divisions have been able to produce organic growth.  To support this we have made further "bolt on" acquisitions in H1 2010 - Australian Commercial Marine Pty Ltd (ACM) for £3.4 million in January and GMC Produkt AS (GMC) in Norway for £11.8 million in April.

Specialist Technical

H1 2010 divisional result £9.5 million (H1 2009 £7.9 million)

The division produced another excellent result with profits up by 19% and margins steady at 16%.  Fendercare's performance was again the key component as it drives James Fisher's presence in the emerging markets, where its formula for serving the global maritime sector has proved most successful.  Both the ship to ship transfer of oil (STS) and mooring services sides of the business continued to do well.  The demand for STS services in Europe, in part stimulated by the oil contango trade, declined in the second quarter but in all other sectors, where the contango market is far less relevant, we have continued to do well.  The ACM acquisition in Perth, Western Australia, provides Fendercare with a base to expand its mooring equipment sales and services in the Asia Pacific region.  This new base joins those already operating successfully in Dubai, Singapore and Brazil.  Overall Fendercare is well placed to continue its strong growth record of recent years.

The results for JF Nuclear were slightly disappointing in H1 2010 primarily because of a sudden curtailment in the early part of the year of work commissioned by Sellafield and other major nuclear sites.  It appears that the implications of cuts in funding have delayed the commissioning of many new projects.  However, this delay should only be temporary because much of the decommissioning work needs to be done and should  not be discretionary.  The Faber acquisition made in August 2009 has settled in well and broadens our product offering and market presence significantly.  We remain optimistic about the prospects for our new Rig Hall in Egremont (c £2.0 million) and Calibration Unit (at £0.4 million) which will become fully operational in H2 2010.

Results for the Strainstall companies, where activities are based on the supply and application of strain gauges, were more mixed.  We have suffered from the decline in the Dubai construction market where in 2008 we did particularly well and from the slowdown in new port construction around the world.  Conversely our UK companies, whose activities relate more to maintenance rather than capital projects, have continued to do well.

Offshore Oil

H1 2010 divisional result £4.6 million (H1 2009 £5.8 million)

The decline in profitability of this division was mainly the result of two factors - the absence of work from the renewables sector in Aberdeen, which has been strong over the last two years and a low number of well test jobs in Norway.  Neither issue is considered to have particularly long-term significance.  The Aberdeen offshore market has been generally slow for the last two years and although there are some signs of recovery, they are still quite muted.  The Norwegian sector is more important to James Fisher and far less mature.  For this reason we purchased GMC, which provides lifting equipment, cranes, winches and spooling, for £11.8 million in April 2010.  GMC is complementary to Scan Tech AS, James Fisher's existing winch and bespoke lifting equipment business and offers potential synergies as well as giving greater scale to Scan Tech's existing business.

All of Scan Tech's businesses have now been consolidated and integrated into a new workshop/office complex at Dusavika which opened in June 2010.  At the end of June we sold the company holding the Dusavika works to a property investment company for £17.0 million and entered a 15 year lease agreement based on a yield of c 7.0%.  The consideration was set on a no profit/no loss basis.  The consolidation at Dusavika has enabled us to sell our Haugesund lease for £0.7 million at a book profit of some £0.2 million post tax.  However, this profit has been offset by the costs of moving and consolidating our activities in the new works.

RMSpumptools' "downhole" cluster continues to grow and prosper.  As for other James Fisher operations, its activities are particularly focused on the new, emerging oil markets.  Its increasing turnover, now some £14.5 million per annum coupled with its slightly lower margins, is partly responsible for the apparent decline in margins for this division.

Defence

H1 2010 divisional result £2.3 million (H1 2009 £1.8 million)

This was an encouraging result for a number of reasons relating to our submarine activities.  Firstly, our existing rescue contracts in Singapore, Australia and the UK have now begun to produce a more consistent income stream as they settle down.  Secondly, we have begun to win an increasing number of small to medium sized submarine related engineering projects, probably as a result of our growing international reputation following the successful delivery of the major South Korean and Singaporean systems in 2008 and 2009 respectively.  Such major systems, a number of which we continue to track, will always play an important role for us but in many ways small to medium sized projects have an equal value as they provide a more regular income stream.

We have begun to commit more business development expenditure with the aim of winning more outsourced specialist surface ship management contracts from Government.  Although the economic case for such outsourcing is strong, the potential for cost cuts substantial and the political climate probably favourable, the process is expensive and time consuming.

Marine Oil

H1 2010 divisional result £0.7 million (H1 2009 £0.7 million)

Although the divisional profit at £657,000 was small it was equivalent to that in H1 2009 and as such significant improvement over the £2.3 million loss recorded in H2 2009.  The main reasons for this was a slight increase in the contract volumes carried, an improvement in spot rates and the cost saving measures taken last year.  An added advantage of the return to profitability is that it benefits the group tax charge, shipping profits being effectively tax free under the tonnage tax regime, while shipping losses are not available for offset against taxable profits elsewhere in the Group.

There is still a long way to go to achieve historic levels of profitability and return on capital.  The spot market, particularly for the larger vessels, remains weak in the high summer months and it will be interesting to see how far it recovers in the winter months when it is usually stronger.  However, there are a number of positive factors.  We have the opportunity to return the two bareboat charters for mt Summity and mt Stability when they expire in September 2010 further reducing our fixed cost base by some £1.8 million for annual charter hire.  Their redelivery will enable us to reactivate mt Asperity and mt Superiority the last two vessels we have held in warm layup since mid 2009.  Furthermore, the sale of mt Supremity in May for more than book value suggests the second-hand market is recovering.  It is almost two years now since the Lehman Brothers collapse when newbuilding finance and activity dramatically slowed, so there should not be too much more newbuild capacity that needs to be absorbed.  The demand/supply balance should be helped further in December 2010 when the regulations require the withdrawal of the final single skinned coastal tankers of more than 5,000 tonnes.

Board and staff

Mike Shields who joined the Company in 1964 is retiring as Group Finance Director on 30 November 2010 and will be replaced by Stuart Kilpatrick, who joined us as Group Finance Director Designate in July.  I would like to thank Mike both personally and on behalf of the Company for his outstanding contribution to James Fisher.  He will be a hard act to follow.  We welcome Stuart who will join the Board on 1 December 2010 as Group Finance Director.  There have been no other board changes.

There was no general pay rise this year for either the Board or employees, as was the case for many other private sector companies.  In these circumstances I would like particularly to thank everybody for their understanding, patience and hard work at a time when inevitably their standard of living is shrinking.

As was flagged in the 2009 Annual Report and Accounts, the Merchant Navy Officers Pension Fund's triennial revaluation revealed the expected substantial deficit for which an additional £14.5 million as our share, less the related deferred tax credit of £3.9 million, has been charged directly against reserves.  This will be paid off over the next 10 years.  The Company's own schemes, which have now been consolidated into one scheme closed to new entrants, showed an additional £1.2 million deficit at 30 June 2010 which too has been charged against reserves.

Outlook

The results for the first half represented an encouraging performance in the present economic conditions and trading for the period since the half year to date has been to management expectations. 

Specialist Technical continues to trade encouragingly with Fendercare in the lead.  One would hope for a better performance from the Nuclear cluster in the second half as the recent hiatus in nuclear decommissioning ordering ceases and our new Rig Hall and Calibration Unit investments come on stream. However, it would be prudent to expect some slightly lower ship to ship transfer activity due to the reduced oil contango market.

For Offshore there is an increasing level of customer activity but, given project lead times, it is unclear how much of this work will benefit this year.  BP's recent problems should not have an immediate effect on our market, although increased attention to safety and the environment should be positive for the future - conversely a decline in offshore drilling long-term would not.  We have little or no exposure to the US Gulf and may benefit from the transfer of rigs elsewhere - for example to Brazil.

It is hoped that, on the basis of existing contracts, Defence will demonstrate further progress in the second half.  Obviously any major new contract for a new Submarine Rescue System or surface ship outsourcing would have a beneficial effect but none is forecast this year.

Clearly the Group's overall result for the full year will be significantly influenced by how far the recent improvement in Marine Oil is maintained.  The upside for this division should be material in the medium term, but its precise incidence and timing is much more difficult to predict.

The Company benefits from a strong dollar because of its export focus, so any significant weakening of the dollar in the second half would have an adverse effect.

We intend to continue with our proven policy of making small "bolt on" acquisitions to strengthen our existing businesses and encourage their further organic growth.  James Fisher continues to be well placed with a proven track record to provide further growth and value for our shareholders.

Tim Harris

20 August 2010

Directors' Responsibilities

We confirm to the best of our knowledge:

The half yearly financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union.

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

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

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

T C Harris

Chairman

M J Shields

Group Finance Director

For and on behalf of the Board of Directors

CONDENSED CONSOLIDATED HALF YEARLY INCOME STATEMENT

For the six months ended 30 June 2010

	Note			6 months ended			6 months ended			Year ended
				30 June  2010			30 June  2009		31 December 2009
				Before	Separately
				separately	disclosed
				disclosed	items
				items	Note 13	Total		Total		Total
				£000	£000	£000		£000		£000
Continuing operations
Revenue				131,647		131,647		129,978		249,594
Cost of sales				(114,703)		(114,703)		(113,657)		(218,497)
Gross profit				16,944		16,944		16,321		31,097
Administrative expenses				(4,402)	(493)	(4,895)		(3,708)		(7,380)
Operating profit before associates and joint ventures				12,542	(493)	12,049		12,613		23,717
Share of results of associates and joint ventures				2,881		2,881		2,156		4,183
Operating profit				15,423	(493)	14,930		14,769		27,900
Finance costs
	Finance income			129		129		87		228
	Finance costs			(2,020)		(2,020)		(1,816)		(3,386)
Profit on continuing operations before tonnage and income tax		2		13,532	(493)	13,039		13,040		24,742
	Tonnage tax			(15)		(15)		(15)		(25)
	Income tax (including overseas taxation of £1,342,000; 2009 £1,129,000)			(2,875)		(2,875)		(3,054)		(6,293)
Total tonnage and income tax		8		(2,890)	-	(2,890)		(3,069)		(6,318)
Profit  on continuing operations attributable to equity holders				10,642	(493)	10,149		9,971		18,424
Earnings per share
						pence		pence		pence
Basic		11				20.43		20.11		37.14
Diluted		11				20.33		20.04		37.00
Dividends
Paid or approved by shareholders in the period
Final dividend						8.80		8.65		8.65
Interim dividend						-		-		4.80
						8.80		8.65		13.45
Proposed but not accrued
Final dividend						-		-		8.80
Interim dividend						5.04		4.80		-
						5.04		4.80		8.80

CONDENSED CONSOLIDATED HALF YEARLY STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2010

Note		6 months ended		6 months ended			Year ended
		30 June 2010		30 June 2009		31 December 2009
			£000		£000		£000
Profit for the period			10,149		9,971		18,424
Other comprehensive income
Foreign currency translation differences for foreign operations			484		(3,822)		1,275
Net profit/(loss) on hedge of net investment in foreign operations			706		770		(1,283)
Exchange losses/(gains) transferred to income statement on disposal of subsidiary assets			2		(195)		(195)
Effective portion of changes in fair value of cash flow hedges			(1,984)		422		(60)
Effective portion of changes in fair value of cash flow hedges
in associates and joint ventures			72		1,008		730
Net change in fair value of cash flow hedges transferred to
profit or loss			646		4,604		4,624
Defined benefit plan actuarial losses	5		(15,645)		(3,205)		(5,839)
Income tax on other comprehensive income	9		4,294		426		455
Other comprehensive income for the period, net of income tax
			(11,425)		8		(293)
Total comprehensive income for the period attributable to equity holders			(1,276)		9,979		18,131

 

CONDENSED CONSOLIDATED HALF YEARLY BALANCE SHEET

At 30 June 2010

		30 June 2010		30 June 2009		31 December 2009
	Note		£000		£000		£000
Assets
Non current assets
Goodwill and other intangible assets			83,573		69,083		73,438
Property, plant and equipment	4		95,157		104,807		111,086
Investment in associates and joint ventures			10,680		8,197		8,978
Financial assets			1,370		1,370		1,370
Deferred tax assets			3,700		-		-
Derivative financial instruments			-		453		-
			194,480		183,910		194,872
Current assets
Inventories			32,589		23,808		28,441
Trade and other receivables			60,851		67,791		50,760
Derivative financial instruments			88		279		170
Cash and short term deposits	7		14,668		13,019		20,563
Assets classified as held for sale			-		-		1,375
			108,196		104,897		101,309
Total Assets			302,676		288,807		296,181
Equity and Liabilities
Capital and reserves
Called up share capital	10		12,457		12,446		12,456
Share premium			24,593		24,518		24,576
Treasury shares			(579)		(768)		(768)
Other reserves			3,863		1,633		3,937
Retained earnings			61,388		63,453		66,877
Total equity			101,722		101,282		107,078
Non current liabilities
Other payables			693		1,113		934
Retirement benefit obligations	5		36,933		20,649		22,361
Derivative financial instruments			-		31		-
Cumulative preference shares			100		100		100
Loans and borrowings			104,866		98,391		109,490
Deferred tax liabilities			712		1,222		1,147
			143,304		121,506		134,032
Current liabilities
Trade and other payables			42,815		39,438		39,640
Current tax			5,185		2,865		4,706
Derivative financial instruments			1,467		160		230
Loans and borrowings			8,183		23,556		10,495
			57,650		66,019		55,071
Total liabilities			200,954		187,525		189,103
Total equity and liabilities			302,676		288,807		296,181

CONDENSED CONSOLIDATED HALF YEARLY STATEMENT OF CASH FLOW

For the six months ended 30 June 2010

		6 months ended		6 months ended			Year ended
	Note	30 June 2010		30 June 2009		31 December 2009
			£000		£000		£000
Profit before tax from continuing operations			13,039		13,040		24,742
Adjustments to reconcile profit before tax to net cash flows
Adjustments for:
Depreciation and amortisation			5,296		4,949		10,149
(Profit)/loss on sale of property, plant and equipment			(454)		(5)		388
Loss/(profit) on disposal of trade and assets of subsidiary			15		(160)		(160)
(Profit)/loss on ship disposals			(209)		14		14
Finance income			(129)		(87)		(228)
Finance expense			2,020		1,816		3,386
Exchange loss/(gain) on loans			402		(454)		(150)
Share of profits of associates and joint ventures			(2,881)		(2,156)		(4,183)
Share based compensation			456		481		438
(Increase)/decrease in trade and other receivables			(7,742)		276		(1,695)
Increase in inventories			(2,469)		(3,000)		(7,318)
Decrease/(increase) in inventories and receivables attributable to submarine rescue vessels			612		(5,159)		14,044
Increase/(decrease) in trade and other payables			6,017		(4,398)		(6,474)
Additional defined benefit pension scheme contributions			(1,672)		(1,617)		(3,069)
Cash generated from operations			12,301		3,540		29,884
Income tax payments			(2,572)		(3,996)		(5,655)
Net cash from operating activities			9,729		(456)		24,229
Investing activities
Dividends from joint venture undertakings			1,473		1,200		2,286
Proceeds from the sale of property, plant and equipment			7,979		442		531
Proceeds from the sale of trade and assets of subsidiary			-		1,040		1,040
Finance income			129		87		228
Acquisition of subsidiaries, net of cash acquired			(13,935)		(388)		(4,540)
Proceeds from the sale of business			13,698		-		-
Acquisition of Norway property			(5,940)		(2,820)		(5,223)
Acquisition of property, plant and equipment			(6,577)		(7,300)		(13,891)
Acquisition of investment in associates and joint ventures			(6)		(2,102)		(2,102)
Net cash used in investing activities			(3,179)		(9,841)		(21,671)
Financing activities
Proceeds from the issue of share capital			18		94		162
Preference dividend paid			(2)		(2)		(4)
Finance cost			(2,464)		(1,828)		(3,542)
Proceeds from other non-current borrowings			38,960		17,645		38,840
Purchase less sale of own shares by ESOP			(180)		(31)		(31)
Capital element of finance lease repayments			(51)		(33)		(69)
Repayment of borrowings			(46,276)		(3,431)		(26,717)
Dividends paid			(4,374)		(4,291)		(6,673)
Net cash from financing activities			(14,369)		8,123		1,966
Net (decrease)/increase in cash and cash equivalents			(7,819)		(2,174)		4,524
Cash and cash equivalents at beginning of period			20,563		16,859		16,859
Effect of exchange rate fluctuations on cash held			1,924		(1,666)		(820)
Cash and cash equivalents at end of period	7		14,668		13,019		20,563

CONDENSED CONSOLIDATED HALF YEARLY STATEMENT OF MOVEMENTS IN EQUITY

For the six months ended 30 June 2010

For the 6 months ended 30 June 2010
	Capital						Attributable to equity holders of parent
	Share		Share				Retained		Other		Treasury		Total
	capital		premium				earnings		reserves		shares		shareholders
													equity
	£000		£000				£000		£000		£000		£000
At 1 January 2010	12,456		24,576				66,877		3,937		(768)		107,078
Profit for the period	-		-				10,149		-		-		10,149
Other comprehensive income for the period	-		-				(11,351)		(74)		-		(11,425)
Contributions by and distributions to owners
Ordinary dividends paid	-		-				(4,374)		-		-		(4,374)
Share-based compensation expense	-		-				456		-		-		456
Purchase of shares	-		-				-		-		(180)		(180)
Arising on the issue of shares	1		17				-		-		-		18
	1		17				(3,918)		-		(180)		(4,080)
Transfer on disposal of shares	-		-				(369)		-		369		-
At 30 June 2010	12,457		24,593				61,388		3,863		(579)		101,722
For the 6 months ended 30 June 2009
	Capital						Attributable to equity holders of parent
	Share		Share				Retained		Other		Treasury		Total
	capital		premium				earnings		reserves		shares		shareholders
													equity
	£000		£000				£000		£000		£000		£000
At 1 January 2009	12,438		24,432				60,370		(1,154)		(1,036)		95,050
Profit for the period	-		-				9,971		-		-		9,971
Other comprehensive income for the period	-		-				(2,779)		2,787		-		8
Contributions by and distributions to owners
Ordinary dividends paid	-		-				(4,291)		-		-		(4,291)
Share-based compensation expense	-		-				481		-		-		481
Purchase of shares	-		-				-		-		(31)		(31)
Arising on the issue of shares	8		86				-		-		-		94
	8		86				(3,810)		-		(31)		(3,747)
Transfer on disposal of shares	-		-				(299)		-		299		-
At 30 June 2009	12,446		24,518				63,453		1,633		(768)		101,282
Other reserve movements
									Translation		Hedging		Total
For the 6 months ended 30 June 2010									reserve		reserve
									£000		£000		£000
At 1 January 2010									4,897		(960)		3,937
Transferred to the income statement on disposal of subsidiary assets									2		-		2
Cash flow hedges:
Transferred to the income statement									-		646		646
Fair value losses in the period									-		(1,984)		(1,984)
Share of fair value gains of associates and joint ventures									-		72		72
Recognised income in the period including the effect of net investment hedges									1,190		-		1,190
At 30 June 2010									6,089		(2,226)		3,863
For the 6 months ended 30 June 2009
At 1 January 2009									5,100		(6,254)		(1,154)
Transferred to the income statement on disposal of subsidiary assets									(195)		-		(195)
Cash flow hedges:
Transferred to the income statement									-		4,604		4,604
Fair value gains in the period									-		422		422
Share of fair value gains of associates and joint ventures									-		1,008		1,008
Recognised expense in the period including the effect of net investment hedges									(3,052)		-		(3,052)
At 30 June 2009									1,853		(220)		1,633

NOTES TO THE CONDENSED CONSOLIDATED HALF YEARLY STATEMENTS

1          Basis of preparation

James Fisher and Sons Public Limited Company (the Company) is a limited liability company incorporated and domiciled in England and Wales and whose shares are listed on the London Stock Exchange. The condensed consolidated half yearly financial statements of the Company as at and for the six months ended 30 June 2010 comprise the Company and its subsidiaries (together referred to as the Group) and the Group's interests in jointly controlled entities.

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

The Group meets its day to day working capital requirements through operating cash flows, with borrowings in place to fund acquisitions and capital expenditure. Movements on the Group's overall net debt position are shown in Note 7. The Group also has £16,252,000 of undrawn committed facilities.

The Group has two revolving credit facilities due for renewal in 2011; a £15,000,000 facility which ends on 12 August 2011 and a £12,500,000 facility which expires on 30 November 2011. These facilities are fully drawn down at 30 June 2010.The Group will open renewal negotiations with the banks in due course and has at no stage sought any written commitment that the facility will be renewed. However, the Group has held discussions with its bankers about its future borrowing needs and no matters have been drawn to its attention to suggest the renewal may not be forthcoming on acceptable terms.

The consolidated financial statements of the Group as at and for the year ended 31 December 2009 are available upon request from the Company's registered office at Fisher House, PO Box 4, Barrow-in-Furness, Cumbria LA14 1HR or at www.james-fisher.co.uk.

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

Statement of compliance

The condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standard (IFRS) IAS 34 "Interim Financial Reporting" as adopted by the European Union (EU). As required by the Disclosure and Transparency Rules of the Financial Services Authority, the condensed consolidated set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2009 with the exceptions described below. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2009.

The comparative figures for the financial year ended 31 December 2009 are not the Company's statutory accounts for that financial year. Those accounts which were prepared under International Financial Reporting Standards (IFRS) as adopted by the EU (adopted IFRS), have been reported on by the Company's auditors and delivered to the Registrar of companies. The report of the auditors was (i) unqualified; (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The half yearly report was approved for issue by the Board of Directors on 20 August 2010.

Significant accounting policies

Except as described below, the accounting policies applied by the Group in these condensed consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2009.

During the period the Group has adopted the following new standards, amendments to standards and interpretations issued under IFRS:

Standards:

IFRS 3 (2008)                Business combinations

                                    Improvements to IFRS

Amendments to:

IAS 27                          Consolidated and separate Financial Statements

Interpretations:

IFRIC 16                        Hedges of a net investment in a foreign operation

IFRIC 17                        Distribution of Non cash assets to owners

IFRIC 18                        Transfers of assets from customers

The adoption of these standards and interpretations had no impact on the Group other than those set out below.

IFRS 3 (2008) - Business combinations

The Group is now required to expense to the income statement all direct costs relating to business combinations. Previously these costs were capitalised and included in the calculation of goodwill.  This change applies to all acquisitions made on or after 1 January 2010. There is no requirement to apply these changes retrospectively to earlier acquisitions and consequently no restatement is required in respect of earlier acquisitions.  The costs charged to the income statement in 2010 in relation to business combinations are included in separately disclosed items.

Seasonality of operations

            Although some of the Group's operations may sometimes be affected by seasonal factors such as general weather conditions, the Directors do not feel that this has a material effect on the performance of the Group when comparing the interim results to those achieved in the second half of the year.

2          Segmental information

            Operating segments

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

            Marine Oil Services - Engaged in the sea transportation of clean petroleum products

            Offshore Oil Services - Engaged in the design and assembly, rental and sale of specialist equipment and the provision of related specialist labour to the offshore sector.

            Specialist Technical Services - Includes the hire and sale of large scale pneumatic fenders, the design and supply of systems for monitoring strains and stress in structures and equipment, ship to ship transfer services, non-destructive testing, and the provision of services to the nuclear decommissioning industry.

            Defence - Provides a range of specialist services for the defence sector, focusing on the design, construction and operation of submarine rescue vehicles and the operation of surface ships.

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

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

            No individual customer accounted for more than 10% of external revenue in the periods included in these condensed consolidated financial statements.

2          Segmental information (continued)

Six months ended
30 June 2010
		Specialist		Offshore Oil		Defence		Marine		Total
		Technical		Services				Oil
		Services						Services
		£000		£000		£000		£000		£000
Revenue
Segmental revenue		60,855		25,600		10,169		37,150		133,774
Inter segment sales		(1,967)		(125)		(35)		-		(2,127)
Group revenue		58,888		25,475		10,134		37,150		131,647
Result
Segment result before acquisition costs		9,454		4,644		2,300		657		17,055
Acquisition costs		(173)		(320)		-		-		(493)
Common costs										(1,632)
Operating profit including results of associates and joint ventures										14,930
Finance income										129
Finance costs										(2,020)
Profit on continuing operations before tonnage and income tax										13,039
Tonnage and income tax										(2,890)
Profit on continuing operations										10,149
Share of results of associates and joint ventures		1,276				1,605				2,881

2          Segmental information (continued)

Six months ended
30 June 2009
		Specialist		Offshore Oil		Defence		Marine		Total
		Technical		Services				Oil
		Services						Services
		£000		£000		£000		£000		£000
Revenue
Segmental revenue		52,094		23,082		19,586		37,278		132,040
Inter segment sales		(1,964)		-		(98)		-		(2,062)
Group revenue		50,130		23,082		19,488		37,278		129,978
Result
Segment result before acquisition costs		7,971		5,764		1,797		704		16,236
Acquisition costs										-
Common costs										(1,467)
Operating profit including results of associates and joint ventures										14,769
Finance income										87
Finance costs										(1,816)
Profit on continuing operations before tonnage and income tax										13,040
Tonnage and income tax										(3,069)
Profit on continuing operations										9,971
Share of results of associates and joint ventures		1,125				1,031				2,156

2          Segmental information (continued)

Year ended
31 December 2009
		Specialist		Offshore Oil		Defence		Marine		Total
		Technical		Services				Oil
		Services						Services
		£000		£000		£000		£000		£000
Revenue
Segmental revenue		107,261		48,163		27,164		71,123		253,711
Inter segment sales		(3,833)		(4)		(280)		-		(4,117)
Group revenue		103,428		48,159		26,884		71,123		249,594
Result
Segment result before acquisition costs		15,983		12,516		3,657		(1,593)		30,563
Acquisition costs										-
Common costs										(2,663)
Operating profit including results of associates and joint ventures										27,900
Finance income										228
Finance costs										(3,386)
Profit on continuing operations before tonnage and income tax										24,742
Tonnage and income tax										(6,318)
Profit on continuing operations										18,424
Share of results of associates and joint ventures		1,713				2,470				4,183

  

3          Changes in estimates

The preparation of half yearly financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

Except as described below, in preparing these consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2009.

The liabilities reported in respect of the defined benefit pension plans are based on the latest triennial valuations rolled forward to 30 June 2010 and have been reviewed and updated by a qualified actuary. The assumptions underlying this valuation are disclosed in Note 5.

There have been no material changes in contingent liabilities during the current interim period.

4          Property, plant and equipment

	6 months ended		6 months ended		Year ended
	30 June 2010		30 June 2009		31 December 2009
		£000		£000		£000
Opening net book value		111,086		102,018		102,018
Additions		11,862		9,386		19,295
Acquisition of subsidiary undertaking		2,917		-		197
Disposals		(7,287)		(450)		(933)
Disposal of assets of a subsidiary		(17,423)		(34)		(34)
Depreciation		(5,252)		(4,944)		(10,116)
Exchange differences		(746)		(1,169)		659
Closing net book value		95,157		104,807		111,086

Additions include 49,067,000 NOK (£5,043,000) in respect of the Group's Stavanger headquarters which was subsequently disposed of as part of the sale of Scan Tech Eiendom referred to below.

During the period the Group disposed of its interest in mt Supremity for a gross consideration of US$10,909,000 (£7,521,000). The Group also disposed of its interests in Norway in the property formerly occupied by its Reanco business for 6,600,000 NOK (£678,000). As explained in Note 13, the Group disposed of its interest in Scan Tech Eiendom AS. This business included the Group's interest in the Stavanger headquarters of its Norway based operations.

5          Retirement benefit obligations

            Movements during the period in the Group's defined benefit pension schemes are set out below:

	6 months ended		6 months ended		Year ended
	30 June 2010		30 June 2009		31 December 2009
		£000		£000		£000
As at 1 January		(22,361)		(18,648)		(18,648)
Expense recognised in the income statement		(643)		(562)		(1,125)
Contributions paid to scheme		1,749		1,766		3,251
Acquisition of subsidiaries		(33)		-		-
Actuarial loss		(15,645)		(3,205)		(5,839)
At period end		(36,933)		(20,649)		(22,361)

The Group's assets and liabilities in respect of its pension schemes at 30 June 2010 were as follows:

	6 months ended		6 months ended		Year ended
	30 June 2010		30 June 2009		31 December 2009
		£000		£000		£000
Liabilities
Shore Staff pension scheme		(15,186)		(7,502)		(14,209)
Dockworkers pension scheme		-		(1,836)		-
Everard Group pension scheme		-		(2,741)		-
MNOPF pension scheme		(21,716)		(8,570)		(8,152)
GMC pension scheme		(31)		-		-
		(36,933)		(20,649)		(22,361)

Following the merger of the Dockworkers and Everard Group pension schemes into the Shore Staff pension scheme on 30 June 2009, the Group now operates one defined benefit scheme and has an obligation to make payments in respect of the funding deficit of the Merchant Navy Officers' Pension Fund (MNOPF). The last full actuarial valuation was performed on the Shore Staff scheme at 1 August 2007.This has been rolled forward to 30 June 2010 and has been incorporated in the half yearly report. An actuarial deficit of £1,220,000 has been recognised during the period and is reported in the statement of comprehensive income together with related deferred tax movements. The movements on the actuarial deficit have arisen largely from the incorporation of revised mortality assumptions, changes in the inflation assumptions, movements in the value of investments and changes in the discount rate applied to the pension liability.

The deficit relating to the MNOPF pension scheme has increased as a result of the incorporation of the actuarial valuation carried out as at 31 March 2009. The Group has agreed a payment schedule which will result in this liability being discharged over a ten year period with payments commencing 30 September 2010. An actuarial deficit of £14,425,000 has been recognised during the period and is reported in the statement of comprehensive income together with related deferred tax movements.

During 2010 the Group acquired GMC Produkt AS (GMC).  This company has two defined benefit schemes.  These are included in the above table at their provisional fair values based on actuarial valuations as at 31 December 2009.  Further details of the acquisition of GMC are included in Note 13.

Details of the key actuarial assumptions are shown below.

		6 months ended			Year ended
			30 June 2010		31 December 2009
				%		%
Inflation				3.1		3.3
Rate of general long term increase in salaries - Shore staff				1.5		1.5
Rate of increase of pensions in payment - Shore staff				2.9-3.1		3.0-3.3
Discount rate for scheme liabilities				5.65		5.95
Expected rates of return on assets
Equities				8.4		8.4
Fixed interest bonds				4.9		4.9
Gilts/Corporate bonds				4.9/5.9		4.9/5.9
Other assets				4.9		4.9
Post retirement mortality:				years		years
Current pensioner at 65		male		20.3		20.7
Current pensioner at 65		female		23.3		23.7
Future pensioner at 65		male		22.1		22.5
Future pensioner at 65		female		25.2		25.8

The post retirement mortality assumptions for each of the pre existing schemes were updated as part of the full actuarial valuations carried out at 31 March 2007 and 31 August 2007. These mortality assumptions are now applied to the Shore Staff scheme.

6          Share based compensation

In March 2010 awards were granted under the Long Term Incentive Plan (LTIP), and the 2005 Executive Share option scheme (ESOS).

In the case of the LTIP the exercise price of the option is £nil. The options vest using a sliding scale, with one third of the award vesting if the increase in the Company's diluted earnings per ordinary share over the performance period is at least equal to the rate of inflation (measured by the Retail prices index (RPI)), plus 9%, rising to full vesting where growth of RPI plus 18% is achieved over the same period. If the performance target is not met over the three year contractual period for performance the option lapses.

In the case of the ESOS the exercise price is equal to the average middle market price for the three dealing days prior to the date of grant, being 410.33p for those shares granted in 2010. The options vest depending on the Company's total shareholder return relative to a comparator group of companies comprising the constituents of the FTSE Small Cap index (excluding investment trusts) at the date of grant. If performance over a three year period is in the upper quartile 100% of the options will vest. If performance is at the bottom of the median, (second) quartile 40% will vest. The amount vesting will decrease on a straight line basis between the median and upper quartile. If performance is below the median quartile no shares will vest. The options lapse if these conditions are not met during the performance period.

In April 2010 an award was made under the all-employee Savings Related Share Option Scheme (SAYE).

All employees, subject to the discretion of the remuneration committee, may apply for share options under an employee save as you earn plan which may from time to time be offered by the Company. In order to comply with HM Revenue and Customs requirements an individual's participation is limited so that the aggregate price payable for shares under option at any time does not exceed the statutory limit. Options granted under the plans will normally be exercisable if the employee remains in employment and any other conditions set by the remuneration committee have been satisfied. Options are normally exercisable at the end of the related savings contract but early exercise is permitted in certain limited circumstances. The performance period will not normally be less than three and a half years or greater than seven and a half years.

The fair value of options granted during the six months ended 30 June 2010 was estimated at the date of grant using the following assumptions:

		SAYE		LTIP		ESOS
Dividend yield		3.00%		3.00%		3.00%
Expected volatility		N/A		N/A		40%
Risk free interest rate	2.13%-3.69%			N/A		3.30%
Expected life of option (years)		3.26-7.26		3		6.5
Share price at date of grant (p)		426.50		418.00		430.50
Options granted (number of shares)		114,842		281,355		221,919
Estimated fair value of option at date of grant (£)		1.04-1.45		3.93		1.28

All schemes are treated as equity settled. The total charge to the income statement in respect of all schemes in the six months ended 30 June 2010 is £456,000 (30 June 2009: £481,000).

7          Reconciliation of net debt

			1 January		Acquisitions		Cash		Other		Exchange		30 June
			2010				Flow	Non Cash			Movement		2010
			£000		£000		£000		£000		£000		£000
Cash in hand and at bank			20,563		-		(7,819)		-		1,924		14,668
Cash and cash equivalents			20,563		-		(7,819)		-		1,924		14,668
Debt due after 1 year			(109,501)		-		-		5,341		(539)		(104,699)
Debt due within 1 year			(10,421)		-		7,292		(4,894)		-		(8,023)
			(119,922)		-		7,292		447		(539)		(112,722)
Finance leases			(163)		(339)		51		-		24		(427)
Net debt			(99,522)		(339)		(476)		447		1,409		(98,481)
			1 January		Acquisitions		Cash		Other		Exchange		30 June
			2009				Flow		Non Cash		Movement		2009
			£000		£000		£000		£000		£000		£000
Cash in hand and at bank			16,859		-		(2,174)		-		(1,666)		13,019
Cash and cash equivalents			16,859		-		(2,174)		-		(1,666)		13,019
Debt due after 1 year			(89,255)		-		-		(9,608)		497		(98,366)
Debt due within 1 year			(18,881)		-		(14,214)		9,563		46		(23,486)
			(108,136)		-		(14,214)		(45)		543		(121,852)
Finance leases			(228)		-		33		-		-		(195)
Net debt			(91,505)		-		(16,355)		(45)		(1,123)		(109,028)
			1 January		Acquisitions		Cash		Other		Exchange	31 December
			2009				Flow	Non Cash			Movement		2009
			£000		£000		£000		£000		£000		£000
Cash in hand and at bank			16,859		-		4,524		-		(820)		20,563
Cash and cash equivalents			16,859		-		4,524		-		(820)		20,563
Debt due after 1 year			(89,255)		-		-		(20,390)		144		(109,501)
Debt due within 1 year			(18,881)		-		(12,123)		20,566		17		(10,421)
			(108,136)		-		(12,123)		176		161		(119,922)
Finance leases			(228)		(4)		69		-		-		(163)
Net debt			(91,505)		(4)		(7,530)		176		(659)		(99,522)

            Net debt is defined as interest bearing loans and borrowings including preference shares less cash and cash equivalents.

            On 27 May the Company repaid the outstanding amount due under a vessel financing loan of US$8,149,000 (£5,625,000) following the disposal of mt Supremity. On 28 June the Group repaid the outstanding amount of the Norway building loan facility of 134m NOK (£13,732,000) following the disposal of its investment in the borrower, Scan Tech Eiendom AS. Following the sale of the property formerly occupied by Reanco Team AS, in July 2010 the Group repaid the outstanding borrowings secured against this asset of 2m NOK (£200,000).

8          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.

Taxation for the period (including tax arising in associates and joint ventures) has been provided at the rate of 22.7% on profit on continuing operations (30 June 2009: 23.7%, 31 December 2009: 25.7%) based on the estimated effective tax rate for the twelve months to 31 December 2010. Of this amount £1,342,000 relates to overseas businesses (2009: £1,129,000).

The Emergency Budget on 22 June 2010 announced that the UK corporation tax rate will reduce from 28% to 24% over a period of four years from 2011. The first reduction in the UK corporation tax rate from 28% to 27% was substantively enacted on 20 July 2010 and will be effective from 1 April 2011. This will reduce the Group's future current tax charge accordingly. If the rate change from 28% to 27% had been substantively enacted on or before the balance sheet date it would have had the effect of reducing the deferred tax asset recognised at that date by £132,000. It has not been possible to quantify the full anticipated effect of the announced further 3% rate reduction, although this will further reduce the Group's future tax current tax charge and reduce the Group's deferred tax liabilities.

9          Income tax on comprehensive income

	6 months ended		6 months ended		Year ended
	30 June 2010		30 June 2009		31 December 2009
		£000		£000		£000
Deferred tax:
Defined benefit pension schemes		4,198		271		471
Fair value of derivatives		399		(91)		-
Current tax:
Taxation of foreign exchange profit on internal loans		(303)		246		(224)
Defined benefit pension schemes		-		-		208
		4,294		426		455

            The Group has made provision for deferred tax on the basis that a proportion of contributions made to the MNOPF will be eligible for deduction against UK profits subject to corporation tax.  The deferred tax credit in respect of defined benefit pension schemes includes £3,877,000 in respect of the MNOPF liability provided at 30 June 2010.

10         Share capital

During the period 5,763 (2009: 29,725) ordinary shares of 25p were allotted on the exercise of share options for an aggregate cash consideration of £18,000 (2009: £94,000).

11         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 period, after excluding ordinary shares purchased by the employee share ownership trust and held as treasury shares.

            Diluted earnings per share is calculated by dividing the profit attributable to 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.

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

			6 months ended		6 months ended			Year ended
			30 June 2010		30 June 2009		31 December 2009
				£000		£000		£000
Profit attributable to equity holders				10,149		9,971		18,424
Weighted average number of shares
			30 June 2010		30 June 2009		31 December 2009
				Number of		Number of		Number of
				shares		shares		shares
For basic earnings per ordinary share*				49,678,742		49,581,661		49,604,476
Exercise of share options and LTIPs				234,943		161,073		184,300
For diluted earnings per ordinary share				49,913,685		49,742,734		49,788,776

*     Excludes 126,698 (June 2009 and December 2009: 169,068) shares owned by the James Fisher & Sons Public Limited Company Employee Share Ownership Trust.

		30 June 2010				30 June 2009			31 December 2009
		£000		p		£000		p		£000		p
Basic earnings per share on profit from continuing operations
		10,149		20.43		9,971		20.11		18,424		37.14
Diluted earnings per share on profit from continuing operations
		10,149		20.33		9,971		20.04		18,424		37.00

            Adjusted earnings per share

            Adjusted  earnings per ordinary share on continuing operations  is disclosed to provide an understanding of the underlying trading performance of the Group and is calculated using the number of shares outlined in the table above.

		30 June 2010				30 June 2009				31 December 2010
		£000		p		£000		p		£000		p
Basic earnings per share on profit from continuing operations
		10,149		20.43		9,971		20.11		18,424		37.14
Adjustments:
Acquisition expenses		493		0.99		-		-		-		-
Adjusted basic earnings per share on profit from continuing operations
		10,642		21.42		9,971		20.11		18,424		37.14
Diluted earnings per share on profit from continuing operations
		10,149		20.33		9,971		20.04		18,424		37.00
Adjustments:
Acquisition expenses		493		0.99		-		-		-		-
Adjusted diluted earnings per share on profit from continuing operations
		10,642		21.32		9,971		20.04		18,424		37.00

12         Interim dividend

            The interim dividend of 5.04p (2009 4.80p) per 25p ordinary share is payable on 4 November 2010 to those shareholders on the register of the company at the close of business on 8 October 2010. The dividend recognised in the statement of movements in equity is the final dividend for 2009 of 8.80p paid on 14 May 2010. The proposed interim dividend has not been recognised in this report.

13         Business combinations and disposals

On 1 March the Group acquired the business and certain assets of Australian Commercial Marine Pty Ltd (ACM) for a consideration of A$ 5,192,000 (£3,185,000). ACM provides marine equipment to the commercial shipping, port and offshore industries in Western Australia. The acquisition will enable the Group's Fendercare business to further expand its operations in the Asia Pacific region. The principal assets acquired were long term leases on the offices and warehousing facilities used by ACM and rented to third parties.

On 29 April the Group acquired the entire share capital of GMC Produkt AS (GMC) for a consideration of NOK 103,667,000, (£11,469,000). GMC provides lifting equipment, cranes, winches and related services to the Norwegian offshore and oilfield services markets. The acquisition enabled the Group to expand its existing Stavanger based businesses serving the Norwegian offshore services sector.

For the six months to June 2010 the businesses acquired during the period contributed £227,000 to the Group's profit after tax and generated revenue of £1,207,000. Had the businesses been acquired on 1 January 2010 management estimates that they would have contributed £4,078,000 to Group revenue and £308,000 to profit after tax.

Provisional fair values of the assets and liabilities acquired are as follows:

Australian Commercial Marine					Book		Fair		Total
					Value		Value
							Adjustments
					£000		£000		£000
Intangible assets: Customer relationships					-		67		67
Property, plant and equipment					1,649		-		1,649
Inventories					757		-		757
Trade and other payables					-		(32)		(32)
Deferred tax					-		(20)		(20)
Fair value of assets acquired					2,406		15		2,421
Goodwill arising on acquisitions									764
									3,185
Consideration:
Cash									3,185
GMC					Book		Fair		Total
					Value		Value
							Adjustments
					£000		£000		£000
Property, plant and equipment					1,268		-		1,268
Pensions schemes					87		(120)		(33)
Inventories					922		-		922
Trade and other receivables					1,585		-		1,585
Cash and short term deposits					784		-		784
Trade and other payables					(2,080)		-		(2,080)
Interest bearing loans and other borrowings					(339)		-		(339)
Deferred tax					(91)		-		(91)
Fair value of assets acquired					2,136		(120)		2,016
Goodwill arising on acquisitions									9,453
									11,469
Consideration:
Cash									11,469

Trade receivables in GMC comprise gross contracted amounts of £1,438,000 of which £44,000 was expected to be uncollectable at the acquisition date.

Provisional fair values for GMC will be updated following the finalisation of completion accounts.

Consideration for both acquisitions was entirely in cash, which is stated at fair value in the tables above.

The Group has identified intangible assets in respect of customer relationships in respect of ACM valued at £67,000. These relate to the major customers of ACM. Cash flow forecasts have been calculated over five years being the expected period over which the Group will benefit from the relationships which have been inherited with the acquisition. the calculations are based on local management forecasts and have been discounted at a rate of 20% reflecting the risk factors associated with these cash flows.

A full assessment of intangible assets at GMC has not been completed as at the balance sheet date and this is expected to be completed by the year end.

GMC now forms part of the Group's Stavanger based offshore oil business, with ACM becoming part of the Asia Pacific operations of the Group's Fendercare business. Both businesses are expected to benefit from synergies derived from common marketing and distribution bases. Included in goodwill are certain intangible assets including the anticipated impact on these businesses of distributing products to existing Group customers and skills and technical talent of the acquiree's workforce, that cannot be individually separated and reliably measured due to their nature.

None of the goodwill is expected to be deductable for income tax purposes.

Acquisition expenses

The Group incurred acquisition expenses of £493,000 in relation to these business combinations. As referred to in Note 1, in accordance with the requirements of IFRS 3 (2008) these expenses have been included in the income statement rather than in the calculation of goodwill. This item has been separately disclosed within administration expenses on the face of the income statement to reflect the unique nature of this type of expense.

Disposals

On 26 June 2010 the Group completed the disposal of ScanTech Eiendom AS (STE) for a gross consideration of 165,557,000 NOK (£17,016,000) including internal and external debt. Net consideration excluding the repayment of debt was 6,931,000 NOK (£712,000) of which 4,468,000 NOK (£459,000) is payable following finalisation of the completion accounts. STE owned the Group's newly constructed Stavanger headquarters and contained the related financial liabilities incurred during construction. The property has been leased back by Scan Tech AS under an operating lease arrangement for a period of 15 years.

Details of the disposal are set out below:

								£000		£000
Cash proceeds										712
Net assets disposed of
Property, plant & equipment								17,423
Trade and other receivables								622
Cash and short term deposits								-
Trade and other payables								(3,622)
Loans and other borrowings								(13,754)
Deferred tax								(253)
										(416)
Disposal costs										(309)
Foreign exchange losses recycled										(2)
Loss on disposal										(15)

14         Commitments and contingencies

            As at 30 June 2010 the Group had capital commitments of £3,073,000. The principal elements relate to the completion of equipment for the offshore oil division and the construction of new industrial premises. At June 2009 the Group had capital commitments of £6,639,000 relating to similar projects.

15         Financial instruments

Cash flow hedges

At 30 June 2010 the Group held interest rate swap contracts designated to hedge future cash flows relating to interest payments on its core revolving credit facilities. The details of the contracts which swap interest payments from variable to fixed rates and their maturity dates are as follows:

Principal amount		interest rate	maturity date
		(3 month LIBOR)
£13,500,000		2.36% - 2.40%	30 January 2012
£10,500,000		2.91% - 2.99%	30 January 2014
£6,000,000		3.49% - 3.71%	30 January 2019

The Group also held an interest rate swap contract designated against future cash flows relating to interest payments on the borrowings of its Norwegian operations. The details of the contract and its maturity date are as follows:

Principal amount		interest rate	maturity date
		(3 month NIBOR)
80,000,000	NOK	3.85%	30 June 2014

At 30 June 2010 the Group held forward currency contracts in respect of future income receivable and future liabilities of subsidiaries as follows:

sell			maturity			rate		£000
US$ 11,640,000			July - December 2010			1.5123		(71)
€ 258,777			July 2010			1.1053		23
SEK 9,500,000			November 2010			10.8292		61
buy
€ 79,720			October 2010			1.1521		(4)

At 30 June 2010 the Group held forward currency contracts in respect of future liabilities in respect of bareboat charters as follows:

buy
€ 1,741,000			July - December 2010			1.1490		(90)

Financial instruments not qualifying for hedge accounting

At 30 June 2010 the Group held foreign currency option contracts to sell US Dollars during the period July to December 2010 as follows:

						Exchange
sell						rate
US$ 6,000,000						1.70

These contracts do not qualify for hedge accounting. During the period a fair value loss of £39,000 has been recognised in the income statement in operating profit in respect of these contracts.

The following financial instruments outstanding at the end of the previous accounting period matured during the period:

						Exchange		Included in
						rate		income statement
Period ended 30 June 2010								£000
Forward contracts to hedge expected future income
€ 1,930,784						1.1066-1.1227		20

Period ended 30 June 2009
Forward contract to hedge expected future income
SG$ 40,000,000						2.67 - 2.85		4,589
US$ 132,300						1.76		15
Option contracts
US$ 7,500,000						1.45		130

16         Principal Risks and Uncertainties

Set out below is a summary of principal risks and uncertainties facing the Group for the remaining six months of the year.

            Competitive pressures

In common with other markets our businesses compete with others on price and service, and these markets are subject to cycles determined by the balance between supply and demand. 

There exists a risk that over-tonnaging may occur in the shipping markets in which the Group operates and given the ease with which, for example, shipping assets may be moved from one geographical market to another, no regional or local market can be totally isolated from the influence of over-tonnaging in other markets should it occur.  The global supply of tonnage makes it difficult to predict over-tonnaging in any particular local market with any accuracy.  There are however, high barriers of entry to the contract of affreightment business with the oil majors, with vigorous vetting procedures.

Reputational risks for operational incidents

The results of the Group are reliant to a degree on the maintenance by the various businesses of high reputations with their customers.  The Group places a particular emphasis on the safety and security of operations but notwithstanding this, it is possible that an adverse operational incident may occur, which could in turn damage the Group's reputation.

Pensions

The Group contributes to a number of defined benefit pension schemes. There is a risk that changes in the market conditions for bond yields and equities and changes in the actuarial assumptions (eg on life expectancy), may result in an increase in the deficits in any of such schemes from time to time.  There is further risk that the Group could be obliged to fund additional liabilities of the industry wide schemes, the Merchant Navy Officers Pension Fund and the Merchant Navy Ratings Pension Fund, in addition to the liabilities in respect of its own employees, in relation to any other employee(s) unconnected to the Group whose employer has become insolvent. 

World economic outlook

Demand for the Group's products and services is inevitably a factor of wider economic conditions.  During an economic slowdown it is possible that demand for certain products and services provided by the Group may reduce. This risk is mitigated to a degree by the diverse nature of the Group's businesses and its expanding geographical spread. Furthermore the current economic environment may increase the risk that parties with whom the Group trades become unable to meet their commitments to the Group.  The Group seeks to manage this risk by performing credit checks and taking third party comfort, including guarantees, where appropriate.

Product liability

The Group is involved in the design, manufacture and sale or hire of various items such as engineering tools, software and electronics.  It is possible that the Group may become liable for losses which are incurred by customers and others in the event that any such product does not meet the agreed specifications or other quality requirements.  The Group seeks to limit the impact of this risk through its quality assurance processes by negotiating appropriate limits on its liability to customers and also through its insurance policies.

Integration benefits

The Group continues to experience growth and development through acquisitions.  Integrating the operations and personnel of acquired businesses is a complex process and there is a risk that the anticipated benefits of the acquisition may not be realised in their entirety, or may be realised over a longer time span than originally envisaged.  Where appropriate, the Group manages this risk through the formation of an integration committee comprised of senior managers from across the Group with significant experience of the underlying businesses, drawing on external advice and support as appropriate.

Recruitment and retention of talent

The success of the Group is dependent to a significant degree upon the skills and motivation of its workforce, including its senior management team.  There is a risk that if the Group loses, or fails to attract personnel of the requisite calibre, that this could have an adverse impact on the performance of the business.  The risk is mitigated through the application of appropriate remuneration incentives and the implementation of skills development initiatives, designed to assist in making the Group an attractive environment in which to work.

Legislation and regulation

The businesses conducted by the Group are subject to numerous laws and regulations, both in the United Kingdom and overseas, which regulate matters including safety procedures, employment requirements, taxation, environmental procedures and other operating issues.  Failure to comply with such laws and regulations may harm the business or the Group's reputation.  The Group draws upon the expertise of various professionals, both within and outside the business, in order to seek to ensure compliance with such provisions.

Financial

The Group is exposed to interest rate risk and foreign exchange risk which it seeks to manage, where appropriate, via hedging arrangements.  Furthermore the loan facilities entered into by the Group include a number of financial covenants.  Breach of these covenants would constitute events of default under such facilities which might result in these borrowings becoming immediately repayable.  Recent events in the financial markets have demonstrated the risks associated with credit and liquidity.  In 2010 the Group has continued to be proactive in managing these risks, both fostering existing and developing new relationships with lenders.

17         Related parties

            Details of the transactions carried out with related parties in the six months ended 30 June 2010 and 2009 are shown in the table below:

		Services to				Sales to		Purchases		Amounts		Amounts
				related		related		from		owed by		owed to
				parties		parties		related		related		related
								parties		parties		parties
				£000		£000		£000		£000		£000
Foreland Shipping Limited		2010		262		-		-		39		-
		2009		228		-		-		30		-
Fendercare businesses		2010		-		1,223		1		466		-
		2009		-		932		-		725		-
Everard Insurance Brokers		2010		50		-		1		16		-
		2009		64		-		15		9		-
First Response Marine		2010		520		-		26		49		-
		2009		279		19,420		-		19,699		-

The Group provides payroll management services to Foreland Shipping Limited, a wholly owned subsidiary of Foreland Holdings Limited a company in which the Group has a 25% equity interest. No profit is made on these services which are excluded from the Group's revenue.

Through its Fendercare business the Group has a 40% interest in several joint ventures providing ship to ship transfer services in West Africa.  Fendercare also has a 50% interest in Fender Care BV (Netherlands) and Fender Care Omega (India) and a 25% interest in Fender Care Malaysia SDN BHD (Malaysia).

Everard Insurance Brokers (EIB), a company controlled by Mr W D Everard and Mr F M Everard and members of their family, has provided certain insurance services to the Group since the acquisition of F T Everard and Sons Limited in December 2006. EIB shares certain facilities with FT Everard and Sons who make charges to EIB in respect of their usage.

In 2009 the Group acquired through its James Fisher Marine Services subsidiary (JFMS) a 50% interest in First Response Marine Pte Ltd (FRM). FRM provides submarine rescue services to the Singapore government under a 20 year service contract which commenced in March 2009. Included in the contract is the provision of a submarine rescue vessel acquired by FRM from JFMS which was invoiced in 2009 at a cost of £18,141,000. FRM subcontracts part of the provision of the submarine rescue service to JFMS and its subsidiary James Fisher Singapore Pte Ltd. JFMS has also provided a loan to FRM of S$3,624,000 (£1,735,000) to support its day to day operations. The loan which is included in the Group balance sheet under the heading investment in associates and joint ventures is interest bearing and is repayable at the end of the project. Interest charged in the period amounted to £40,000 (2009: £8,000).

Independent review report to James Fisher and Sons Public Limited Company

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 which comprises the condensed consolidated half yearly income statement, the condensed consolidated half yearly statement of comprehensive income, the condensed consolidated half yearly balance sheet, the condensed consolidated half yearly cash flow statement, the condensed consolidated statement of movements in equity and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA.

As disclosed in Note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

Jonathan Hurst

for and on behalf of KPMG Audit Plc

Chartered Accountants

St James Square, Manchester, M2 6DS
20 August 2010

 

END

 

 

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