Half Yearly Report

RNS Number : 0606Q

Fisher (James) & Sons plc

27 August 2014

 



27 August 2014

James Fisher and Sons plc

Interim Results 2014

James Fisher and Sons plc (FSJ.L) ("James Fisher"), the leading marine service provider, announces its results for the six months ended 30 June 2014.

	H1 2014	H1 2013	Change
Group revenue	£216.1m	£200.7m	+8%
Underlying operating profit *	£24.4m	£22.2m	+10%
Underlying profit before tax *	£21.9m	£19.4m	+13%
Underlying diluted earnings per share *	34.0p	29.9p	+14%
Proposed interim dividend	7.10p	6.46p	+10%
Statutory profit before tax	£20.8m	£18.6m	+12%
Statutory diluted earnings per share	32.0p	28.3p	+13%

* underlying profit excludes separately disclosed items

Highlights:

·   Underlying profit before taxation up 13%;

·   Underlying diluted earnings per share rose 14%;

·   Marine Services divisional revenue increased by 12%;

·   Increased Specialist Technical order book, robust performance at Divex;

·   Offshore Oil revenue up 20%, led by growth in Latin America, West Africa and Asia Pacific;

·   Three bolt-on acquisitions completed for £14m;

·   Interim dividend raised by 10%.

Announced today:

·   Divex wins third major saturation diving system order since joining the Group.

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

"James Fisher continued to trade well in the first half of 2014 despite an adverse currency backdrop.  These results reflect the growing success of the Group in winning significant new contract business both at home and overseas.  Offshore Oil benefitted from the delivery of two major equipment sales which, together with a strong underlying performance, led to a profit increase of over 30%.  Specialist Technical produced an excellent result, up 50% after adjustment for our Foreland associate.  The Group is well placed to deliver further value to shareholders and to date is trading to management expectations."

For further information:

James Fisher and Sons plc	Nick Henry Stuart Kilpatrick	Chief Executive Officer Group Finance Director	020 7614 9508
FTI Consulting	Richard  Mountain Sophie McMillan		020 3727 1374

Chairman's Statement

for the six months ended 30 June 2014

The James Fisher Group ("the Group") continued to trade well in the first half of 2014.  Revenue increased by 8% to £216.1m and underlying operating profit by 10% to £24.4m, compared to the same period last year. Underlying profit before tax rose 13% to £21.9m and underlying diluted earnings per share was 34.0 pence, up 14%.  These figures were achieved despite an adverse currency backdrop and reflect the growing success of the Group in winning significant new contract business both at home and overseas.  This trend underlines the increased scale and credibility of the Group's operations for major customers.

Our Marine Support businesses had a slow start to the year with reduced ship-to-ship activity in the Far East and with a number of marine maintenance contracts not commencing until the second quarter.  These contracts should underpin a stronger second half of the financial year.  By contrast, our Offshore Oil division benefitted from the delivery of two major equipment sales in the first half which, together with a strong underlying performance, boosted profit by over 30%.  Specialist Technical produced an excellent result, up 50% compared with the same period last year after adjustment for the sale of our Foreland associate.  Within Specialist Technical, Divex continued to perform strongly; our Defence business regained momentum having filled the gap in its order book and our Nuclear businesses gained market share and significant new contracts in both the decommissioning and design and tooling sectors.  Our Tankships division again managed to improve its result due to a further increase in the proportion of contract business and careful attention to costs.

During the first half, the Group made three bolt-on acquisitions.  In our Marine Support division, Subsea Vision, an operator of underwater remotely operated vehicles was acquired for £2.5m to improve our offering to the marine maintenance market.  In the same division, Testconsult was acquired for £8.0m to complement our Strainstall Monitoring business and to broaden our service offering in the structural monitoring sector.  Within Specialist Technical, James Fisher Defence acquired Design Consulting Europe, a Swedish company, for an initial consideration of £3.7m to broaden the Group's expertise and market presence in the swimmer delivery vehicle sector.  Together with significant investment in our existing operations, the Group's ability to source a continuing flow of bolt-on acquisitions at reasonable cost strengthens James Fisher's market position and reinforces the Group's ability to grow in the future.  Despite this continuing level of investment, the Group's balance sheet remains strong with gearing still at a conservative 43%.  This reflects the healthy cash generating qualities of our operating companies.

Looking forward, we would expect further progress in the second half with a recovery in Marine Support due to the factors mentioned above.  Offshore Oil will not have the benefit of the large one-off contracts seen in the first half but we would expect its underlying trading position to remain strong.  Our Specialist Technical businesses are well placed both for the second half and further forward due to the significant contract order book underpinning their trading.  We have announced separately today a major contract win for Divex.

The continued positive outlook for the Group has led the Board to increase the interim dividend by 10% to 7.1 pence per share.

In April, Michael Everard retired from the Board as a non-executive director.  Michael served on the Board for over seven years and helped shape the integration of FT Everard into the Group following its acquisition in 2006. I would like to thank Michael for his valuable contribution to the Group's development.

The James Fisher Group is trading to management expectations in the second half and continues to be well placed to deliver further value to our shareholders.

C J Rice

26 August 2014

Operating and Financial Review

for the six months ended 30 June 2014

Strategy

James Fisher has continued to pursue a consistent strategy in recent years of investing in niche businesses where their strong marine service and specialist engineering skills are valued and rewarded.  Our focus is on providing solutions to our customers who are moving into the less mature, fast growing and operationally demanding markets such as Africa, South America and the Far East.  Such niche services typically command margins in excess of 10% and returns on capital in excess of 15%, and are cash generative.

Whilst organic development has driven the majority of our growth in profits, we have broadened our range of marine services with three bolt-on acquisitions.  Our main focus will continue to be investing for organic growth going forward.  We will also continue to evaluate further bolt-on acquisition opportunities which meet our niche criteria and where these will strengthen and broaden our range of services or geographical coverage to our multinational customers.

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

Results

Revenue in the six months ended 30 June 2014 increased by 8% to £216.1m (2013: £200.7m).  Excluding the Tankships division where fewer vessels were in operation than in the prior year, the Marine Services divisions increased revenue by 12%.

Underlying operating profit was 10% higher at £24.4m (2013: £22.2m) and underlying profit before tax and diluted earnings per share were 13% and 14% ahead of last half year respectively.  The organic growth in underlying operating profit, adjusted for the impact of businesses acquired and sold and for currency fluctuations, was 14%.

Marine Support

H1 2014 underlying profit: £7.7m (H1 2013: £9.4m)

Marine Support had a slow start to the year in the first quarter with lower market activity for ship-to-ship operations, particularly in South East Asia and Nigeria.  This improved in the second quarter.  Marine projects in Africa have continued to perform well, although there has been some slippage into the second half of the year.  Fender and mooring product sales also had a slower start to the year, with orders from the US navy being received later than expected.

The bridge monitoring contracts won during 2013 are in progress but have been subject to delays into the second half of the year.  The naval corvettes which have been managed on behalf of Luerssen in recent years were successfully delivered to the Indonesian navy in July.

This division is most impacted by the effects of strong Sterling compared to the US dollar.

Offshore Oil

H1 2014 underlying profit: £11.9m (H1 2013: £9.0m)

The Offshore Oil division has had a strong start to the year with revenue increasing by 20% and profit by 32%.  This is as a result of continued growth of long term contracts in Latin America, West Africa and Asia Pacific, which has been led by the demand for zone 2 equipment.  The first half performance was also boosted by the second contract for the sale of equipment to Brazil which was announced last year.  Growth in the North Sea has been more modest and has been impacted by the weakening of the Norwegian Kroner against Sterling.

Our downhole and subsea tools company, RMSpumptools, produced steady growth and has made good progress with new products coming to market.

Specialist Technical

H1 2014 underlying profit: £4.5m (H1 2013: £3.7m)

The Specialist Technical division produced a strong performance with revenue increasing by 22%.  Excluding the earnings from our shareholding in Foreland Shipping which was sold in August 2013, profit in the first half has increased by 50%.

Divex has made good progress with two major saturation diving systems under construction. With the announcement of an order for a third system from Keppel Shipyard for a vessel for BP, it has a significant forward order book for delivery in 2015 and 2016.  James Fisher Defence also has an improved order book and in March it completed the acquisition of Defence Consulting Europe (DCE) which increases the product range of swimmer delivery vehicles.  Mike Howarth was appointed in April as Managing Director of James Fisher Defence and Divex, to lead the integration of these two businesses which is progressing according to plan.

Our nuclear business produced steady growth and has enhanced its order book through significant contract wins both in decommissioning and other served markets.

Tankships

H1 2014 underlying profit: £1.9m (H1 2013: £1.7m)

Tankships produced a solid performance in the first half with profit increasing by 12%.  Revenue declined by 15% reflecting the reduction in capacity over the past year which has increased vessel utilisation and has further reduced reliance on the spot market.  The result has also benefitted from the charter of two vessels to the Ministry of Defence which was extended through the first half of 2014.

Acquisitions

James Fisher acquired Subsea Vision Limited for £2.5m in January 2014 which provides remotely operated vehicles (ROV) to the North Sea oil & gas sector.  This £1.6m revenue business is now part of the Marine Support division.  In March, the Group acquired, for an initial outlay of £3.7m, the intellectual property and business of DCE which was subsequently renamed JF Defence Sweden (JFDS) and joined the Specialist Technical division.  JFDS design, build and service swimmer delivery vehicles for operations around the World.

In June 2014, Testconsult Limited was acquired for £8m.  This company is a market leading provider of monitoring, instrumentation and testing services and also designs and produces specialist testing equipment used in over 70 countries worldwide.  Testconsult will extend and complement the range of services provided by James Fisher's Strainstall Monitoring business. Strainstall uses strain gauges and sensors to provide structural monitoring and dynamic load testing of bridges, other structures and offshore installations. 

Income statement

The Group is primarily exposed to currency fluctuations of the US dollar and the Norwegian Kroner against Sterling.  In the first half of 2014, the average rate of exchange was 1.67 compared to 1.55 in the prior period.  Stronger Sterling compared to the US dollar has had a negative impact on the Group's results which has partly been mitigated in the short term by cash flow hedging of a portion of the exposure.  The results of our Norwegian operations have been translated at 10.1 (2013: 8.9) as Sterling has strengthened by 14% against the Norwegian Kroner.  Overall changes to currency rates have impacted first half reported results when compared to the previous half year by approximately £1.5m.  Despite this background of adverse currency movements, the Group operating margin increased from 11.1% to 11.3%.

Net interest costs were £0.3m lower in the period due to a reduction in the average cost of borrowing.  Separately disclosed costs comprise costs incurred in making business acquisitions of £0.7m (2013: £0.7m) and the amortisation of acquired intangible assets of £0.4m (2013: £0.1m).  These are disclosed separately to give a clear view of the underlying trading performance of the Group.

Taxation

The effective tax rate on underlying profit before tax in the period was 19.5% (2013: 20.1%).  The rate is lower than the standard UK rate of 21.5% due to the Group having operations in certain overseas countries which have lower tax rates than the UK and due to its Tankships operations which are taxed on a tonnage basis rather than on profitability. 

Earnings and dividends

Underlying diluted earnings per share, which excludes separately disclosed items, increased by 14% in the period to 34.0p per share (2013: 29.9p).  Diluted earnings per share after charging separately disclosed items was 32.0p per share (2013: 28.3p).  The Board is declaring a 10% increase to the interim dividend for the period to 7.10p per share (2013: 6.46p) payable on 3 November 2014 to shareholders on the register on 3 October 2014.   

Cash flow and borrowings

Net borrowings were £82.4m at the end of the period compared to £76.1m at 30 June 2013.  The Group's cash conversion, the ratio of operating cash to operating profit for the last twelve months was 95% (2013: 146%) compared to an average of 115% over the last five years.  Conversion was lower due to a cash outflow in the first half from working capital of £15.6m as the ratio of working capital to sales reverted to 14% (2013: 14%) from 11% at 31 December 2013.

Cash generated from operations decreased by 38% in the period to £16.7m (2013: £27.0m) mainly due to the working capital outflow.  Payments of interest and tax were £6.0m (2013: £5.3m) and capital expenditure amounted to £17.6m (2013: £12.8m) as the Group continued to invest for the future.  Businesses acquired resulted in a net cash outflow of £11.0m (2013: £15.2m) and dividends paid in the first half were £6.8m (2013: £5.9m).

At 30 June 2014, the ratio of net borrowings (including guarantees) to earnings before interest, tax, depreciation and amortisation (ebitda) was 1.3 times (2013: 1.4 times). Net gearing, the ratio of net debt to equity, was 43% (2013: 45%).

Pensions

The majority of the Group's pension arrangements are defined contribution arrangements where the company's liability is limited to the contributions it agrees on behalf of each employee.  As a consequence of its history in shipping the Group is required to contribute to industry-wide Merchant Navy Pension Funds and has its own legacy defined benefit scheme.

Total defined benefit pension deficits at 30 June 2014 were £21.2m (2013: £29.7m).  The annual instalment on pension schemes in 2014 is expected to be £4.7m (2013: £4.9m).

We reported a potential liability notified to the Group by the trustees of the Ratings fund (MNRPF) in our 2012 Annual Report.  We have not received any further information from the trustees to date.

Balance sheet

	30 June 2014	30 June 2013
	£m	£m
Intangible assets	127.1	111.4
Other assets	128.4	123.8
Working capital	58.4	52.4
Other liabilities	(40.9)	(43.1)
	273.0	244.5
Borrowings	82.4	76.1
Equity	190.6	168.4
	273.0	244.5

The balance sheet at 30 June 2014 shows an increase in intangible assets following the acquisitions.  Shareholders' equity increased by £22.2m reflecting profits retained since June 2013 including the sale of the Group's minority stake in Foreland for £11.4m which resulted in a gain of £6.8m in August 2013.

N P Henry	S C Kilpatrick
26 August 2014	26 August 2014

Directors' Responsibilities

We confirm to the best of our knowledge:

The interim financial report has 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.

N P Henry

Chief Executive Officer

S C Kilpatrick

Group Finance Director

For and on behalf of the Board of Directors

26 August 2014

CONDENSED CONSOLIDATED INCOME STATEMENT

for the six months ended 30 June 2014

				2014		2013		2013
	Note		Six months ended		Six months ended		Year ended
				30 June		30 June	31 December
						restated		restated
						(note 1)		(note 1)
				£000		£000		£000
Revenue				216,081		200,684		413,667
Cost of sales				(149,816)		(143,991)		(296,545)
Gross profit				66,265		56,693		117,122
Administrative expenses				(43,125)		(37,278)		(74,601)
Share of post tax results of joint ventures				176		1,974		2,378
Operating profit				23,316		21,389		44,899
Analysis of operating profit:
	Underlying operating profit			24,442		22,248		46,637
	Separately disclosed items	4		(1,126)		(859)		(1,738)
Profit on sale of subsidiary and joint venture undertaking				-		-		6,613
Finance income				31		116		256
Finance costs				(2,550)		(2,931)		(5,545)
Profit before tonnage and income tax				20,797		18,574		46,223
Analysis of profit before tonnage and income tax:
	Underlying profit before tax			21,923		19,433		41,348
	Separately disclosed items	4		(1,126)		(859)		4,875
Tonnage tax				(6)		(12)		(13)
Income tax		7		(4,167)		(3,867)		(7,462)
Total tonnage and income tax				(4,173)		(3,879)		(7,475)
Profit for the period				16,624		14,695		38,748
Profit for the period
Attributable to:
Owners of the Company				16,193		14,294		38,254
Non controlling interests				431		401		494
				16,624		14,695		38,748
Earnings per share
				pence		pence		pence
Basic		8		32.4		28.6		76.6
Diluted		8		32.0		28.3		75.7

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2014

	Note		2014		2013		2013
		Six months ended		Six months ended		Year ended
			30 June		30 June	31 December
			£000		£000		£000
Profit for the period			16,624		14,695		38,748
Other comprehensive income
Items that will not be reclassified to profit or loss
Defined benefit plan actuarial losses	5		-		(4,439)		(5,541)
Income tax on items that will not be reclassified to profit or loss			23		902		617
			23		(3,537)		(4,924)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations			(2,198)		290		(6,093)
Net loss on hedge of net investment in foreign operations			-		(366)		(366)
Effective portion of changes in fair value of cash flow hedges			(18)		(1,323)		1,531
Effective portion of changes in fair value of cash flow hedges
in joint ventures			(94)		554		703
Net change in fair value of cash flow hedges transferred to
profit or loss			17		947		14
Income tax on items that may be reclassified subsequently to profit or loss			-		(18)		(442)
Other comprehensive income for the period, net of income tax			(2,293)		84		(4,653)
			(2,270)		(3,453)		(9,577)
Total comprehensive income for the period			14,354		11,242		29,171
Attributable to:
Owners of the Company			13,868		10,805		28,716
Non controlling interests			486		437		455
			14,354		11,242		29,171

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 30 June 2014

			2014		2013		2013
			30 June		30 June	31 December
	Note		£000		£000		£000
Assets
Non current assets
Goodwill			116,425		104,756		104,176
Other intangible assets			10,714		6,686		9,482
Property, plant and equipment			117,537		108,694		108,202
Investment in joint ventures			9,434		13,636		9,467
Financial assets			1,378		1,378		1,378
Deferred tax assets			2,531		4,046		2,770
			258,019		239,196		235,475
Current assets
Inventories			44,992		44,375		46,476
Trade and other receivables			111,938		99,157		91,673
Derivative financial instruments			1,304		218		1,413
Cash and short term deposits	6		20,879		32,849		23,982
			179,113		176,599		163,544
Total assets			437,132		415,795		399,019
Equity and liabilities
Capital and reserves
Called up share capital	8		12,525		12,525		12,525
Share premium			25,238		25,238		25,238
Treasury shares			(738)		(1,757)		(1,392)
Other reserves			(3,531)		3,480		(1,183)
Retained earnings			155,672		128,010		147,716
Shareholders' equity			189,166		167,496		182,904
Non controlling interests			1,389		884		903
Total equity			190,555		168,380		183,807
Non current liabilities
Other payables			15,677		11,670		12,503
Retirement benefit obligations	5		21,233		29,671		23,141
Cumulative preference shares			100		100		100
Loans and borrowings			103,084		101,243		78,020
Deferred tax liabilities			1,132		1,091		1,132
			141,226		143,775		114,896
Current liabilities
Trade and other payables			98,450		88,976		93,656
Current tax			6,317		5,145		5,866
Derivative financial instruments			495		1,946		654
Loans and borrowings			89		7,573		140
			105,351		103,640		100,316
Total liabilities			246,577		247,415		215,212
Total equity and liabilities			437,132		415,795		399,019

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 30 June 2014

			2014		2013		2013
	Note	Six months ended		Six months ended		Year ended
			30 June		30 June	31 December
			£000		£000		£000
Profit before tax for the period			20,797		18,574		46,223
Adjustments to reconcile profit before tax to net cash flows
Depreciation and amortisation			10,182		8,553		17,761
Acquisition costs and amortisation of acquired intangibles			1,126		859		1,738
Profit on sale of property, plant and equipment			(279)		(357)		(476)
Profit on disposal of subsidiary			-		-		(6,613)
Finance income			(31)		(116)		(256)
Finance expense			2,550		2,931		5,545
Share of profits of joint ventures			(176)		(1,974)		(2,378)
Share based compensation			611		606		1,205
Increase in trade and other receivables			(17,756)		(2,297)		6,474
Decrease in inventories			2,213		3,599		1,167
Increase in trade and other payables			(43)		(894)		(2)
Additional defined benefit pension scheme contributions			(2,508)		(2,461)		(10,102)
Cash generated from operations			16,686		27,023		60,286
Cash outflow from acquisition costs			(398)		(711)		(939)
Income tax payments			(3,753)		(3,657)		(6,054)
Net cash from operating activities			12,535		22,655		53,293
Investing activities
Dividends from joint venture undertakings			-		1,774		2,337
Proceeds from the sale of property, plant and equipment			1,480		1,258		3,574
Finance income			31		116		256
Acquisition of subsidiaries, net of cash acquired	9		(10,580)		(14,536)		(18,329)
Proceeds from the sale of business			-		-		12,820
Acquisition of property, plant and equipment			(18,301)		(13,466)		(24,907)
Development expenditure			(797)		(634)		(1,370)
Net cash used in investing activities			(28,167)		(25,488)		(25,619)
Financing activities
Proceeds from the issue of share capital			-		102		102
Finance costs			(2,188)		(1,692)		(4,317)
Purchase less sale of own shares by ESOP			(1,686)		(2,227)		(2,259)
Capital element of finance lease repayments			(492)		(197)		(332)
Proceeds from other non-current borrowings			25,584		26,211		5,500
Repayment of borrowings			-		-		(7,198)
Dividends paid			(6,780)		(5,917)		(9,142)
Net cash from financing activities			14,438		16,280		(17,646)
Net (decrease)/increase in cash and cash equivalents			(1,194)		13,447		10,028
Cash and cash equivalents at beginning of period			23,982		18,339		18,339
Effect of exchange rate fluctuations on cash held			(1,909)		1,063		(4,385)
Cash and cash equivalents at end of period	6		20,879		32,849		23,982

CONDENSED CONSOLIDATED STATEMENT OF MOVEMENTS IN EQUITY

for the six months ended 30 June 2014

For the six months ended 30 June 2014
	Capital				Attributable to equity holders of parent
	Share	Share		Retained		Other		Treasury		Total shareholders'		Non controlling		Total
	capital	premium		earnings		reserves		shares		equity		interests		equity
	£000		£000		£000		£000		£000		£000		£000		£000
At 1 January 2014	12,525		25,238		147,716		(1,183)		(1,392)		182,904		903		183,807
Profit for the period	-		-		16,193		-		-		16,193		431		16,624
Other comprehensive income for the period	-		-		23		(2,348)		-		(2,325)		55		(2,270)
Contributions by and distributions to owners
Ordinary dividends paid	-		-		(6,780)		-		-		(6,780)		-		(6,780)
Share-based compensation expense	-		-		611		-		-		611		-		611
Tax effect of share based compensation	-		-		249		-		-		249		-		249
Purchase of shares	-		-		-		-		(2,051)		(2,051)		-		(2,051)
Sale of shares	-		-		-		-		365		365		-		365
	-		-		(5,920)		-		(1,686)		(7,606)		-		(7,606)
Transfer on disposal of shares	-		-		(2,340)		-		2,340		-		-		-
At 30 June 2014	12,525		25,238		155,672		(3,531)		(738)		189,166		1,389		190,555
For the six months ended 30 June 2013
	Capital				Attributable to equity holders of parent
	Share	Share		Retained		Other		Treasury		Total shareholders'		Non controlling		Total
	capital	premium		earnings		reserves		shares		equity		interests		equity
	£000		£000		£000		£000		£000		£000		£000		£000
At 1 January 2013	12,517		25,144		123,437		3,432		(1,061)		163,469		447		163,916
Profit for the period	-		-		14,294		-		-		14,294		401		14,695
Other comprehensive income for the period	-		-		(3,537)		48		-		(3,489)		36		(3,453)
Contributions by and distributions to owners
Ordinary dividends paid	-		-		(5,917)		-		-		(5,917)		-		(5,917)
Share-based compensation expense	-		-		606		-		-		606		-		606
Tax effect of share based compensation					658						658		-		658
Purchase of shares	-		-				-		(2,536)		(2,536)		-		(2,536)
Sale of shares									309		309		-		309
Arising on the issue of shares	8		94		-		-		-		102		-		102
	8		94		(4,653)		-		(2,227)		(6,778)		-		(6,778)
Transfer on disposal of shares	-		-		(1,531)		-		1,531		-		-		-
At 30 June 2013	12,525		25,238		128,010		3,480		(1,757)		167,496		884		168,380

NOTES TO THE CONDENSED CONSOLIDATED HALF YEARLY STATEMENTS

1          Basis of preparation

James Fisher and Sons Plc (the Company) is a limited liability company incorporated and domiciled in the United Kingdom, whose shares are listed on the London Stock Exchange. The condensed consolidated half yearly financial statements of the Company for the six months ended 30 June 2014 comprise the Company and its subsidiaries (together referred to as the Group) and the Group's interests in jointly controlled entities.

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 Group's published consolidated financial statements for the year ended 31 December 2013 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 for the year ended 31 December 2013.

The comparative figures for the financial year ended 31 December 2013 are not the Group'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 Group'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 consolidated financial statements of the Group for the year ended 31 December 2013 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 where otherwise indicated.

The half yearly report was approved for issue by the Board of Directors on 26 August 2014.

Going concern

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 6. The Group has £53,747,000 of undrawn committed facilities at 30 June 2014.

At 30 June 2014 the Group had two revolving credit facilities that are due for renewal in the next twelve months. The Group had no outstanding balances drawn down on these facilities at 30 June 2014. Renewal negotiations will be opened with the banks in due course and the Group has not sought any written commitment that the facilities 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 renewals will not be forthcoming on acceptable terms.

Significant accounting policies

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 2013.

In order to provide an improved understanding of the Group's performance, the presentation of cost of sales and administrative expenses has been revised to better reflect those variable and non-variable costs incurred in providing goods and services to our customers separately from those costs of selling, distribution and administration. Cost of sales for the year ended 31 December 2013 has been reduced by £64,006,000 (six months ended 30 June 2013: £33,013,000) with administrative expenses increasing by the corresponding amount.

2          Accounting estimates and judgements

            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.

            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 and for the year ended 31 December 2013.

3          Segmental information

            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 Support - includes the hire and sale of large scale pneumatic fenders and ship to ship transfer services, and the design and supply of systems for monitoring strains and stress in structures.

Offshore Oil - manufacture and rental of equipment for the offshore oil and gas industry and the design and manufacture of specialist downhole tools and equipment for extracting oil.

Specialist Technical - provision of subsea services including submarine rescue and saturation diving including maintenance, asset management and consultancy services and non-destructive testing, decommissioning and remote operations and monitoring services predominantly to the nuclear industry.

Tankships - engaged in the sea transportation of clean petroleum products in North West Europe.

The Board assesses the performance of the segments based on operating profit before central common costs, acquisition costs and amortisation of acquired intangible assets but after the Group's share of the post tax results of associates and 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.

Six months ended 30 June 2014
	Marine		Offshore Oil		Specialist		Tankships		Corporate			Total
	Support				Technical
		£000		£000		£000		£000		£000		£000
Revenue
Segmental revenue		86,040		57,324		52,699		27,510		-		223,573
Inter segment sales		(3,978)		(1,741)		(888)		(885)		-		(7,492)
Group revenue		82,062		55,583		51,811		26,625		-		216,081
Underlying operating profit		7,699		11,985		4,524		1,871		(1,637)		24,442
Acquisition costs		(405)		-		(250)		-		-		(655)
Amortisation of acquired intangibles		(64)		(63)		(344)		-		-		(471)
Operating profit		7,230		11,922		3,930		1,871		(1,637)		23,316
Finance income												31
Finance costs												(2,550)
Profit before tonnage and income tax												20,797
Tonnage and income tax												(4,173)
Profit attributable to equity holders												16,624
Share of post  tax results of
joint ventures		(111)		-		287		-		-		176
Capital expenditure
Property, plant and equipment		6,389		8,155		2,190		1,129		438		18,301
Segment assets		115,490		148,244		91,813		42,608		29,543		427,698
Investment in joint ventures		7,283		-		2,151		-		-		9,434
Total assets		122,773		148,244		93,964		42,608		29,543		437,132
Segment liabilities		(27,039)		(17,538)		(51,483)		(11,905)		(138,612)		(246,577)
		95,734		130,706		42,481		30,703		(109,069)		190,555

3          Segmental information (continued)

Six months ended 30 June 2013
		Marine	Offshore Oil		Specialist			Tankships		Corporate		Total
		Support			Technical
		£000		£000		£000		£000		£000		£000
Revenue
Segmental revenue		82,678		46,501		43,515		31,432		-		204,126
Inter segment sales		(2,035)		(136)		(1,271)		-		-		(3,442)
Group revenue		80,643		46,365		42,244		31,432		-		200,684
Underlying operating profit		9,410		8,997		3,712		1,670		(1,541)		22,248
Acquisition costs		-		-		(711)		-		-		(711)
Amortisation of acquired intangibles		(52)		(71)		(25)		-		-		(148)
Operating profit		9,358		8,926		2,976		1,670		(1,541)		21,389
Finance income												116
Finance costs												(2,931)
Profit before tonnage and income tax												18,574
Tonnage and income tax												(3,879)
Profit attributable to equity holders												14,695
Share of post  tax results of
joint ventures		970		-		1,004		-		-		1,974
Capital expenditure
Property, plant and equipment		2,332		7,720		1,909		932		274		13,167
Segment assets		100,922		133,609		63,411		48,641		55,576		402,159
Investment in joint ventures		8,381		-		5,255		-		-		13,636
Total assets		109,303		133,609		68,666		48,641		55,576		415,795
Segment liabilities		(33,165)		(17,564)		(15,009)		(18,214)		(163,463)		(247,415)
		76,138		116,045		53,657		30,427		(107,887)		168,380

Year ended 31 December 2013
	Marine		Offshore Oil		Specialist		Tankships		Corporate		Total
	Support				Technical
		£000		£000		£000		£000		£000		£000
Revenue
Segmental revenue		174,918		99,632		84,164		61,312		-		420,026
Inter segment sales		(3,651)		(442)		(2,266)		-		-		(6,359)
Group revenue		171,267		99,190		81,898		61,312		-		413,667
Underlying operating profit		18,262		19,690		7,755		3,989		(3,059)		46,637
Impairment of vessels		(150)		-		-		(789)		-		(939)
Amortisation of acquired intangibles		(114)		(137)		(548)		-		-		(799)
Operating profit		17,998		19,553		7,207		3,200		(3,059)		44,899
Profit on sale of subsidiary and joint venture undertakings		(182)				6,795						6,613
Finance income												256
Finance costs												(5,545)
Profit before tonnage and income tax												46,223
Tonnage and income tax												(7,475)
Profit attributable to equity holders												38,748
Share of post  tax results of
joint ventures		831		-		1,547		-		-		2,378
Capital expenditure
Property, plant and equipment		4,293		14,812		3,615		1,243		786		24,749
Segment assets		92,591		136,486		81,078		43,990		35,407		389,552
Investment in joint ventures		7,458		-		2,009		-		-		9,467
Total assets		100,049		136,486		83,087		43,990		35,407		399,019
Segment liabilities		(35,898)		(17,858)		(36,473)		(11,831)		(113,152)		(215,212)
		64,151		118,628		46,614		32,159		(77,745)		183,807

4          Separately disclosed items

		2014		2013		2013
	Six months ended		Six months ended		Year ended
		30 June		30 June	31 December
		£000		£000		£000
Included in operating profit:
Acquisition costs		(655)		(711)		(939)
Amortisation of acquired intangibles		(471)		(148)		(799)
		(1,126)		(859)		(1,738)
Included in profit before tax:
Profit on sale of subsidiary and joint venture undertakings		-		-		6,613
		(1,126)		(859)		4,875

            As set out in note 9 the Group has made three acquisitions during the period. In accordance with the requirements of IFRS, the costs incurred in making these acquisitions of £655,000 have been expensed in the Income Statement. In order for a better understanding of underlying performance these have been disclosed separately, together with the amortisation of intangible assets which arise on the acquisition of businesses.

In August 2013 the Group disposed of its interest in Foreland Holdings realising a profit of £6,795,000. A loss of £182,000 was recognised on the disposal of the marine leisure business of Fendercare Australia.

5          Retirement benefit obligations

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

			2014		2013		2013
		Six months ended		Six months ended		Year ended
			30 June		30 June	31 December
			£000		£000		£000
As at 1 January			(23,141)		(27,061)		(27,061)
Expense recognised in the income statement			(574)		(652)		(1,284)
Settlement gains			-		-		610
Movements on exchange			(4)		-		(6)
Contributions paid to scheme			2,486		2,481		10,141
Actuarial loss			-		(4,439)		(5,541)
At period end			(21,233)		(29,671)		(23,141)
The Group's assets and liabilities in respect of its pension schemes at 30 June 2014 were as follows:
			2014		2013		2013
		Six months ended		Six months ended			Year ended
			30 June		30 June		31 December
			£000		£000		£000
Assets
Scantech Produkt pension scheme			92		36		96
Liabilities
Shore Staff pension scheme			(9,250)		(9,140)		(9,777)
MNOPF pension scheme			(12,075)		(20,567)		(13,460)
			(21,325)		(29,707)		(23,237)

The Group now has one defined benefit scheme and has an obligation 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 2010. This has been rolled forward to 31 December 2013. The Group has not obtained an interim valuation for the period ended 30 June 2014 and so has not recognised an actuarial movement in this period.

6          Reconciliation of net debt

		1 January		Acquisition		Cash		Other		Exchange		30 June
		2014				flow		non cash		movement		2014
		£000		£000		£000		£000		£000		£000
Cash in hand and at bank		23,982		-		(1,194)		-		(1,909)		20,879
Cash and cash equivalents		23,982		-		(1,194)		-		(1,909)		20,879
Debt due after 1 year		(78,049)		-		(25,584)		(289)		797		(103,125)
Debt due within 1 year		-		-		-		-		-		-
		(78,049)		-		(25,584)		(289)		797		(103,125)
Finance leases		(211)		(428)		492		-		(1)		(148)
Net debt		(54,278)		(428)		(26,286)		(289)		(1,113)		(82,394)
		1 January		Acquisition		Cash		Other		Exchange		30 June
		2013				flow		non cash		movement		2013
		£000		£000		£000		£000		£000		£000
Cash in hand and at bank		18,339		-		14,554		-		(44)		32,849
Cash and cash equivalents		18,339		-		14,554		-		(44)		32,849
Debt due after 1 year		(81,065)		-		-		(19,026)		(635)		(100,726)
Debt due within 1 year		-		-		(26,211)		18,785		(530)		(7,956)
		(81,065)		-		(26,211)		(241)		(1,165)		(108,682)
Finance leases		(396)		(51)		197		-		16		(234)
Net debt		(63,122)		(51)		(11,460)		(241)		(1,193)		(76,067)
		1 January		Acquisition		Cash		Other		Exchange	31 December
		2013				flow		non cash		movement		2013
		£000		£000		£000		£000		£000		£000
Cash in hand and at bank		18,339		-		10,028		-		(4,385)		23,982
Cash and cash equivalents		18,339		-		10,028		-		(4,385)		23,982
Debt due after 1 year		(81,065)		-		-		1,940		1,076		(78,049)
Debt due within 1 year		-		-		1,698		(2,146)		448		-
		(81,065)		-		1,698		(206)		1,524		(78,049)
Finance leases		(396)		-		332		(191)		44		(211)
Net debt		(63,122)		-		12,058		(397)		(2,817)		(54,278)

7          Taxation

            The Group falls within 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 effective rate on profit before income and tonnage tax from continuing operations is 20.1% (30 June 2013: 20.9%, 31 December 2013: 16.2%) based on the estimated effective tax rate for the twelve months to 31 December 2014. Of the total tax charge, £1,392,000 relates to overseas businesses (2013: £1,956,000). The effective income tax rate on underlying profit provided in the period is 19.5% (2013: 20.1%, 31 December 2013: 18.6%).

            The deferred tax asset at 30 June 2014 has been calculated based on the rate of 20% substantively enacted at the balance sheet date.

8          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 held by the Employee Share Ownership Trust 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:

            Weighted average number of shares

		30 June 2014		30 June 2013		31 December 2013
			Number of		Number of		Number of
			shares		shares		shares
For basic earnings per ordinary share*			49,985,894		49,921,873		49,921,772
Exercise of share options and LTIPs			636,081		594,605		588,818
For diluted earnings per ordinary share			50,621,975		50,516,478		50,510,590

*     Excludes 58,218 (June 2013: 194,621; December 2013: 154,170) shares owned by the James Fisher & Sons Plc Employee Share Ownership Trust.

            No ordinary shares of 25p were allotted on the exercise of share options in the period to 30 June 2014. In the period to 30 June 2013 31,193 (31 December 2013: 31,193). Ordinary shares of 25p were allotted on the exercise of share options for an aggregate cash consideration of £102,000.

            To provide a better understanding of the underlying performance of the Group, an adjusted earnings per share on continuing activities is provided.  Adjusted earnings are before the costs of any business combinations and amortisation of acquired intangibles.

					2014		2013		2013
			Six months ended			Six months ended		Year ended
				30 June		30 June		31 December
					£000		£000		£000
Profit attributable to owners of the Company					16,193		14,294		38,254
Separately disclosed items					1,126		859		(4,875)
Attributable tax					(101)		(39)		(270)
Adjusted profit attributable to owners of the Company					17,218		15,114		33,109
Basic earnings per share on profit from operations					32.4		28.6		76.6
Diluted earnings per share on profit from operations					32.0		28.3		75.7
Adjusted basic earnings per share on profit from operations					34.4		30.3		66.3
Adjusted diluted earnings per share on profit from operations					34.0		29.9		65.6

9          Business combinations

On 24 January 2014 the Group acquired the entire issued share capital of Subsea Vision Limited (Subsea), for a cash consideration of £2,225,000. Subsea owns and operates remotely operated vehicles providing underwater surveys, inspections and construction support to the oil and gas industry including floating production, storage and off take vessels. Subsea is included in the Marine Support division reporting into Fendercare.

On 14 March 2014 the Group acquired the entire issued share capital of Defence Consulting Europe AB (DCE), for an initial cash consideration of £2,856,000. Contingent consideration is payable of up to £1,903,000 related to the achievement of profit targets and £952,000 is dependent on certain contractual obligations which are expected to be completed in the next twelve months. The contingent consideration relating to future earnings has been discounted to reflect the impact of the time value of money on the expected dates on which the consideration will be paid. DCE provides a range of specialist swimmer delivery vehicles to the Defence and related industries. The business is included in the Specialist Technical division.

On 19 June 2014 the Group acquired the entire issued share capital of Testconsult Limited (Testconsult), for a cash consideration of £8,669,000. Testconsult provides monitoring, instrumentation and testing services and is complementary to the Strainstall Monitoring business. Both businesses are part of the Marine Support division.

Details of the assets acquired and consideration payable are set out below.

The provisional book and fair values of Subsea and Testconsult are as follows:

		Subsea		Testconsult		Total
		£000		£000		£000
Investments		-		44		44
Property, plant and equipment		1,327		669		1,996
Inventories		-		264		264
Trade and other receivables		310		1,671		1,981
Cash and short term deposits		135		1,010		1,145
Trade and other payables		(242)		(981)		(1,223)
Interest bearing loans and borrowings		(394)		(34)		(428)
Deferred tax		(109)		(44)		(153)
Fair value of net assets acquired		1,027		2,599		3,626
Goodwill arising on acquisitions		1,198		6,070		7,268
						10,894
Consideration
Cash		2,225		8,669		10,894

The provisional fair values and accounting adjustments of DCE are as follows:

			Accounting
	Book		policy		Fair value
	value		adjustments		adjustments		Total
	£000		£000		£000		£000
Intangible assets	-		-		1,428		1,428
Property, plant and equipment	37		(4)		(17)		16
Inventories	2,632		(2,108)		(56)		468
Trade and other receivables	365		-		178		543
Cash and short term deposits	2,025		-		-		2,025
Trade and other payables	(4,988)		661		(476)		(4,803)
Fair value of net assets acquired	71		(1,451)		1,057		(323)
Goodwill arising on acquisitions							5,755
							5,432
Consideration
Cash							2,856
Contingent consideration							2,576
							5,432

The book value of DCE has been adjusted to reflect adoption of the Group's income recognition policy and provision for warranty claims.  Intangible assets relate to intellectual property relating to the company's swimmer delivery systems.

Further fair value adjustments may arise as a result of the finalisation of completion accounts and review of fair values.

10         Fair values

            The fair value of financial assets and financial liabilities, together with the carrying amounts in the Condensed Consolidated Statement of Financial Position, are as follows:

Group					30 June 2014				31 December 2013
					Carrying		Fair		Carrying		Fair
					value		value		value		value
					£000		£000		£000		£000
Assets carried at fair value
Forward exchange contracts - cash flow hedges					783		783		866		866
Interest rate swaps - cash flow hedges					56		56		-		-
					839		839		866		866
Assets carried at amortised cost
Receivables					101,491		101,491		84,655		84,655
Cash and cash equivalents					20,879		20,879		23,982		23,982
Other investments					1,378		1,378		1,378		1,378
					123,748		123,748		110,015		110,015
Liabilities carried at fair value
Forward exchange contracts - cash flow hedges					(30)		(30)		(13)		(13)
Contingent consideration					(14,819)		(14,819)		(12,082)		(12,082)
Interest rate swaps - cash flow hedges					-		-		(94)		(94)
					(14,849)		(14,849)		(12,189)		(12,189)
Liabilities carried at amortised cost
Trade and other payables					(85,765)		(85,765)		(86,557)		(86,557)
Finance leases					(148)		(162)		(211)		(227)
Preference shares					(100)		(100)		(100)		(100)
					(86,013)		(86,027)		(86,868)		(86,884)

                        Financial risk management

            The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 December 2013.

            Fair value hierarchy

            The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of inputs used in making measurements of fair value. The fair value hierarchy has the following levels:

(a)    Level 1    - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

(b)    Level 2    - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e.derived from prices); and

(c)    Level 3    - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

            The following table shows an analysis of financial instruments carried at fair value by the level of fair value hierarchy:

					30 June 2014					31 December 2013
Group					Level 1	Level 2	Level 3	Total		Level 1	Level 2	Level 3	Total
					£000	£000	£000	£000		£000	£000	£000	£000
Financial assets measured at fair value
Forward exchange contracts - cash flow hedges					-	56	-	56		-	-	-	-
Interest rate swaps - cash flow hedges					-	783	-	783		-	866	-	866
					-	839	-	839		-	866	-	866
Financial liabilities measured at fair value
Forward exchange contracts - cash flow hedges					-	(30)	-	(30)		-	(13)	-	(13)
Interest rate swaps - cash flow hedges					-	-	-	-		-	(94)	-	(94)
Contingent consideration					-	-	(14,819)	(14,819)		-	-	(12,082)	(12,082)
Financial liabilities not measured at fair value
Finance leases					-	(162)	-	(162)		-	(227)	-	(227)
					-	(192)	(14,819)	(15,011)		-	(334)	(12,082)	(12,416)

10        Fair values (continued)

Level 2 fair values for simple over-the-counter derivative financial instruments are based on broker quotes. Those quotes are tested for reasonableness by discounting expected future cash flows using market interest rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Group entity and counterparty when appropriate.

            Level 3 fair values for contingent consideration are based on discounting expected future cash flows using market interest rates at the measurement date.

11         Interim dividend

            The proposed interim dividend of 7.10p (2013: 6.46p) per 25p ordinary share is payable on 3 November 2014 to those shareholders on the register of the Company at the close of business on 3 October 2014. The dividend recognised in the Statement of Movements in Equity is the final dividend for 2013 of 13.54p paid on 9 May 2014. The proposed interim dividend has not been recognised in this report.

12         Commitments and contingencies

            As at 30 June 2014 the Group had capital commitments of £4,009,000 (2013: £6,123,000). There have been no significant changes to the contingent liabilities set out in the Annual Report.

13         Principal risks and uncertainties

            The Group has policies, processes and systems in place to help identify, evaluate and manage risks at all levels throughout the organisation. Certain key risks, because of their size, likelihood and severity are reviewed regularly by the Board to ensure that appropriate action is taken to eliminate, reduce or mitigate where possible, significant risks that can lead to financial loss, harm to reputation or business failure. The principle risks and uncertainties faced by the Group that could impact the second half can be found in the Company's Annual Report on page 18, as supplemented by the contingent liability note above.

14         Related parties

There have been no significant changes in the nature of related party transactions in the period ended 30 June 2014 from that disclosed in the 2013 Annual Report.

15         Other reserve movements

				Translation		Hedging		Total
				reserve		reserve
				£000		£000		£000
At 1 January 2013				5,467		(2,035)		3,432
Other comprehensive income in the period				(112)		160		48
At 30 June 2013				5,355		(1,875)		3,480
At 1 January 2014				(940)		(243)		(1,183)
Other comprehensive income in the period				(2,253)		(95)		(2,348)
At 30 June 2014				(3,193)		(338)		(3,531)

Independent review report to James Fisher and Sons Plc

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 2014 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Condensed Consolidated 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 Conduct Authority ("the UK FCA").  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 FCA. 

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 34 Interim 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 2014 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA. 

David Bills

for and on behalf of KPMG LLP 

Chartered Accountants 

St James' Square

Manchester

M2 6DS

26 August 2014 

 

END

 

 

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