Half Yearly Report

RNS Number : 4079K

Fisher (James) & Sons plc

21 August 2012

 



21 August 2012

James Fisher and Sons plc

Interim Results 2012

James Fisher and Sons plc ("James Fisher"), the leading marine service provider, announces its results for the six months ended 30 June 2012.

	H1 2012	H1 2011	change
Group revenue	£188.3m	£148.0m	+ 27 %
Underlying operating profit *	£20.1m	£17.1m	+ 18 %
Underlying profit before tax *	£17.1m	£14.1m	+ 21 %
Underlying diluted earnings per share *	26.4p	22.7p	+ 16 %
Proposed interim dividend	5.87p	5.34p	+ 10 %
Statutory profit before tax	£17.0m	£13.9m	+ 22 %
Statutory diluted earnings per share	26.2p	22.5p	+ 16 %

* underlying profit excludes costs incurred in making acquisitions and the amortisation of acquired intangibles.

Key Points:

·      Group revenue up 27%, underlying profit up 21%

·      Robust growth in Specialist Technical, particularly in Asia and Africa

·      Offshore Oil benefitted from increased demand in regions such as Brazil and the Norwegian North Sea

·      BP Angola contract mobilised and operating well

·      Completed Swedish navy submarine rescue vehicle refurbishment

·      Marine Oil, despite subdued markets, posted improved results

·      Cash conversion of 105% and net gearing reduced to 72% at 30 June 2012 (2011: 83%)

·      Interim dividend increased by 10%

·      Charles Rice appointed as non-executive Chairman following the retirement of Tim Harris

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

"James Fisher has made good progress during the period, maintaining the double-digit growth rates achieved in both revenue and profit in 2011. 

The high growth rate achieved in the first half reflect a number of major contract deliveries and should not therefore be extrapolated into the second half. Nevertheless, James Fisher remains on a healthy growth path which provides confidence for the future. The company is trading to management expectations to date in the second half and continues to be well placed to deliver further value to our shareholders."

For further information:

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

James Fisher and Sons plc ("James Fisher")

Interim Results for the six months ended 30 June 2012

Chairman's Statement

Introduction

I am pleased to present my first report as Chairman of James Fisher following the retirement of Tim Harris in July 2012. The result for the first half of 2012 showed strong growth with revenue up 27% to £188.3 million, underlying profit up 21% to £17.1 million and adjusted earnings per share up 16% to 26.4p, all compared with H1 2011.  Cash flow was healthy, with cash conversion of 105% and financial gearing further reduced to 72% compared to 83% at the half year in 2011. The interim dividend has been increased by 10% to 5.87p per share.

Strategy

James Fisher is the UK's leading marine service company and continues to follow a consistent strategy of utilising its core marine skills to develop niche service businesses targeting the vast global marine services market.  Growth has been mainly centred on the world's fastest growing regions, such as Asia Pacific, rather than the more mature markets of Europe and North America.

These skills consist of specialist engineering and operational capabilities which characteristically command net margins in excess of 10% and returns on capital employed of at least 15% pre tax and are cash generative.

Having strengthened our contract development team, the Group is benefiting from the breadth of niche services now offered to find new opportunities for larger integrated service packages to major global customers in the offshore oil and gas sectors.  

Specialist Technical

H1 2012 divisional result £10.6m (H1 2011 £9.1m)

The mooring and ship to ship oil transfer services have continued to produce strong organic growth, particularly in Asia and Africa.  We commenced a significant contract for BP in Angola in H1 and, as expected, this has resulted in strong growth in turnover but at lower margins due to a high proportion of sub-contracted costs, with the three vessels in use on the contract being chartered in.  This contract was not expected to be profitable in the first half due to mobilisation costs but the division benefited from a short term diving contract which was not anticipated.

Part of the organic growth in the division is being driven by contract wins in subsea operations which combine the vessel management and diving operations skills of both the Specialist Technical and Defence divisions of the Group.  The Company sees good opportunities for growth in this area.

Our nuclear business had a strong first half, reflecting the improved business environment in the nuclear decommissioning market and the increased scale and capability of this business unit. The nuclear business also benefited from the completion of a major equipment and installation contract to the London 2012 Olympics.

Offshore Oil

H1 2012 divisional result £7.8m (H1 2011 £5.9m)

The strong increase in profits reflected the benefit of the new capital invested in this business which has enabled the group companies involved to expand their geographical presence into new growth markets around the world.  This was combined with a strong performance in the North Sea, with the Norwegian market in particular showing improved activity levels.

Capital investment continues to be made in new equipment to support further contract gains in locations such as Brazil.

Defence

H1 2012 divisional result £2.0m (H1 2011 £2.7m)

As previously highlighted, profit from the Group's interest in the Foreland private finance initiative (PFI) reduced by approximately £0.7m in the first half due to lower charter income on two of the six vessels covered by the contract.  The Ministry of Defence has reviewed its strategic sealift capability and has concluded that its ongoing requirement is for four vessels.  The changes resulting from this review will be on terms that will protect the Foreland partners from the costs arising from this early reduction in the size of the contract.

The division's subsea operations performed satisfactorily in the first half, with the completion of the refurbishment contract for the Swedish navy's submarine rescue vehicle (URF). The submarine rescue support contracts for the Singapore and the Australian navies continued to perform satisfactorily, with a major rescue exercise for the Australian navy being completed in the first half.

Marine Oil

H1 divisional result £1.2m (H1 2011 £0.9m)

While conditions in the UK and Irish markets continued to be subdued, reflecting weak economic conditions, the division posted a modest improvement in its trading result.  This reflected an improved match between fleet capacity and contract business following the disposal of two ships in 2011 as well some strengthening of spot market rates for these small, specialist vessels.

Change of Chairman

Tim Harris retired as Chairman on 31 July 2012 after over ten years in this role.  Under his leadership, the company has seen its fortunes transformed, with profit and turnover quadrupled and the share price standing at over seven times the level of 2002.  During that time, Tim was successful in reshaping the Group from a small coastal tanker and specialist shipping business into the UK's leading marine service company.  Tim left a company confident of its future, with a stable and well proven strategy and an experienced and successful management team.  On behalf of the Board, I would like to thank Tim for his great contribution both to the Company and to all the staff and shareholders who have benefited from the transformation in the Company's fortunes.

Staff

The rapid growth of the Company and the increasingly international spread of its operations have placed heavy demands on many managers and staff throughout the Group. Having visited all the major operating centres within Europe in the last three months, I have been struck by the enthusiasm and optimism which I have encountered at all levels in the business.  May I thank everyone involved for the commitment which they bring to their work and which contributes to the continued success of James Fisher.

Outlook

The strong result in the first half is further testament to the Company's strategy of applying its core marine skills to the vast and fast growing markets of Asia and the developing world. There continue to be good prospects across all the service divisions to drive further organic growth. The company also remains alert for possible bolt-on acquisitions which can reinforce the market position and growth prospects of its businesses.

The Specialist Technical division is leading the expansion into Asia, Australia, Africa and South America.  The BP contract in Angola has completed its mobilisation phase and is working well operationally.  The nuclear business continues to strengthen its scale and market position but its result in the first half benefited from a one-off contract for the London 2012 Olympics.  The company remains confident about the future prospects for the division to produce further growth.

The Offshore Oil division is seeing the benefits of strong demand for its niche capabilities both within the North Sea and, more particularly, overseas in countries such as Brazil which presents attractive new opportunities for the Group.

The Defence division is well placed in its niche subsea market and is positioned for growth in its submarine rescue and swimmer delivery vehicle segments.  However, the completion of the URF contract in August and the reduction in the size of the Foreland contract means that this business is likely to report a slow second half.

The high growth rates achieved in the first half reflect a number of major contract deliveries and should not therefore be extrapolated into the second half. Nevertheless, James Fisher remains on a healthy growth path which provides confidence for the future.

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

Charles Rice

20 August 2012

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.

C J Rice

Chairman

S C Kilpatrick

Group Finance Director

For and on behalf of the Board of Directors

20 August 2012

CONDENSED CONSOLIDATED INCOME STATEMENT

for the six months ended 30 June 2012

			2012		2011		2011
		Note	Six months ended		Six months ended		Year ended
			30 June		30 June		31 December
			£000		£000		£000
Revenue			188,313		147,956		307,624
Cost of sales			(166,124)		(129,638)		(269,051)
Gross profit			22,189		18,318		38,573
Administrative expenses			(4,245)		(4,095)		(8,379)
Share of post tax results of joint ventures			2,039		2,782		5,685
Operating profit			19,983		17,005		35,879
Analysis of operating profit:
	Underlying operating profit		20,102		17,137		36,133
	Amortisation of acquired intangibles		(119)		(132)		(254)
Finance income			146		109		322
Finance costs			(3,168)		(3,188)		(6,450)
Profit before tonnage and income tax			16,961		13,926		29,751
Analysis of profit before tonnage and income tax:
	Underlying profit before tax		17,080		14,058		30,005
	Amortisation of acquired intangibles		(119)		(132)		(254)
Tonnage tax			(12)		(13)		(23)
Income tax		6	(3,191)		(2,609)		(5,611)
Total tonnage and income tax			(3,203)		(2,622)		(5,634)
Profit for the period			13,758		11,304		24,117
Profit for the period
Attributable to :
Owners of the Company			13,102		11,294		24,091
Non controlling interests			656		10		26
			13,758		11,304		24,117
Earnings per share
			pence		pence		pence
Basic		7	26.4		22.7		48.4
Diluted		7	26.2		22.5		48.0

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2012

	Note	2012		2011		2011
	Six months ended		Six months ended		Year ended
		30 June		30 June	31 December
		£000		£000		£000
Profit for the period		13,758		11,304		24,117
Other comprehensive income
Exchange differences on translation of foreign operations		(803)		2,581		(809)
Net profit/(loss) on hedge of net investment in foreign operations		422		(993)		331
Effective portion of changes in fair value of cash flow hedges		408		273		(541)
Effective portion of changes in fair value of cash flow hedges
in joint ventures		(308)		(280)		(399)
Net change in fair value of cash flow hedges transferred to
profit or loss		(150)		(182)		128
Defined benefit plan actuarial losses	4	(1,521)		(881)		(4,127)
Income tax on other comprehensive income		22		1,430		2,445
Other comprehensive income for the period, net of income tax
		(1,930)		1,948		(2,972)
Total comprehensive income for the period attributable to equity holders		11,828		13,252		21,145
Attributable to :
Owners of the Company		11,166		13,242		21,119
Non controlling interests		662		10		26
		11,828		13,252		21,145

CONDENSED CONSOLIDATED BALANCE SHEET

at 30 June 2012

			2012		2011		2011
		30 June		30 June		31 December
	Note		£000		£000		£000
Assets
Non current assets
Goodwill and other intangible assets			93,820		90,036		93,188
Property, plant and equipment			106,169		105,878		103,898
Investment in joint ventures			12,882		11,095		12,534
Financial assets			1,370		1,370		1,370
Deferred tax assets			2,434		3,295		2,664
			216,675		211,674		213,654
Current assets
Inventories			36,016		38,999		33,691
Trade and other receivables			101,247		77,540		80,526
Derivative financial instruments			306		9		218
Cash and short term deposits	5		26,477		12,695		13,575
			164,046		129,243		128,010
Total assets			380,721		340,917		341,664
Equity and liabilities
Capital and reserves
Called up share capital	7		12,481		12,481		12,481
Share premium			24,924		24,924		24,924
Treasury shares			(1,220)		(368)		(1,681)
Other reserves			4,305		7,431		4,742
Retained earnings			96,674		82,407		91,304
Shareholders' equity			137,164		126,875		131,770
Non controlling interests			571		10		(91)
Total equity			137,735		126,885		131,679
Non current liabilities
Other payables			240		745		607
Retirement benefit obligations	4		29,766		29,172		30,133
Cumulative preference shares			100		100		100
Loans and borrowings			104,101		110,500		103,383
Deferred tax liabilities			1,141		786		1,141
			135,348		141,303		135,364
Current liabilities
Trade and other payables			78,443		59,084		59,124
Current tax			6,336		4,791		4,732
Derivative financial instruments			1,621		1,119		1,880
Loans and borrowings			21,238		7,735		8,885
			107,638		72,729		74,621
Total liabilities			242,986		214,032		209,985
Total equity and liabilities			380,721		340,917		341,664

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

for the six months ended 30 June 2012

			2012		2011		2011
	Note	Six months ended		Six months ended		Year ended
			30 June		30 June	31 December
			£000		£000		£000
Profit before tax for the period			16,961		13,926		29,751
Adjustments to reconcile profit before tax to net cash flows
Depreciation and amortisation			7,703		6,701		13,806
Acquisition costs and amortisation of acquired intangibles			119		132		254
(Profit)/loss on sale of property, plant and equipment			(128)		(68)		335
Finance income			(146)		(109)		(322)
Finance expense			3,168		3,188		6,450
Exchange loss/(gain) on loans			20		(220)		218
Share of profits of joint ventures			(2,039)		(2,782)		(5,685)
Share based compensation			497		515		1,503
Increase in trade and other receivables			(20,531)		(16,133)		(19,491)
Increase in inventories			(2,325)		(6,416)		(2,081)
Increase in trade and other payables			19,202		14,148		12,282
Additional defined benefit pension scheme contributions			(2,461)		(2,251)		(5,012)
Cash generated from operations			20,040		10,631		32,008
Income tax payments			(1,269)		(4,210)		(4,865)
Net cash from operating activities			18,771		6,421		27,143
Investing activities
Dividends from joint venture undertakings			1,090		4,355		5,913
Proceeds from the sale of property, plant and equipment			810		543		3,989
Finance income			146		109		322
Acquisition of subsidiaries, net of cash acquired			-		-		(154)
Proceeds from the sale of business			-		-		459
Acquisition of property, plant and equipment			(10,163)		(7,936)		(17,624)
Acquisition of investment in associates and joint ventures			-		(1,226)		(1,220)
Development expenditure			(1,182)		(286)		(2,779)
Net cash used in investing activities			(9,299)		(4,441)		(11,094)
Financing activities
Proceeds from the issue of share capital			-		239		239
Preference dividend paid			(2)		(2)		(4)
Finance cost			(2,783)		(2,617)		(4,750)
Purchase less sale of own shares by ESOP			(930)		(136)		(1,449)
Capital element of finance lease repayments			(200)		(212)		(423)
Proceeds from other non-current borrowings			37,400		13,451		25,448
Repayment of borrowings			(24,452)		(12,471)		(30,162)
Dividends paid			(5,339)		(4,823)		(7,479)
Net cash from financing activities			3,694		(6,571)		(18,580)
Net increase/(decrease) in cash and cash equivalents			13,166		(4,591)		(2,531)
Cash and cash equivalents at beginning of period			13,575		16,590		16,590
Effect of exchange rate fluctuations on cash held			(264)		696		(484)
Cash and cash equivalents at end of period	5		26,477		12,695		13,575

CONDENSED CONSOLIDATED STATEMENT OF MOVEMENTS IN EQUITY

for the six months ended 30 June 2012

Six months ended 30 June 2012
	Capital				Attributable to equity holders of parent
	Share		Share	Retained			Other	Treasury			Total	Non controlling			Total
	capital		premium	earnings		reserves			shares	shareholders			interests		equity
											equity
	£000		£000		£000		£000		£000		£000		£000		£000
At 1 January 2012	12,481		24,924		91,304		4,742		(1,681)		131,770		(91)		131,679
Profit for the period	-		-		13,758		-		-		13,758		-		13,758
Other comprehensive income for the period	-		-		(2,155)		(437)		-		(2,592)		662		(1,930)
Contributions by and distributions to owners
Ordinary dividends paid	-		-		(5,339)		-		-		(5,339)		-		(5,339)
Share-based compensation expense	-		-		497		-		-		497		-		497
Purchase of shares	-		-		-		-		(930)		(930)		-		(930)
Arising on the issue of shares	-		-		-		-		-		-		-		-
	-		-		(4,842)		-		(930)		(5,772)		-		(5,772)
Transfer on disposal of shares	-		-		(1,391)		-		1,391		-		-		-
At 30 June 2012	12,481		24,924		96,674		4,305		(1,220)		137,164		571		137,735
Six months ended 30 June 2011
	Capital				Attributable to equity holders of parent
	Share		Share	Retained			Other	Treasury			Total	Non controlling			Total
	capital		premium	earnings		reserves			shares	shareholders			interests		equity
											equity
	£000		£000		£000		£000		£000		£000		£000		£000
At 1 January 2011	12,466		24,700		75,146		6,032		(579)		117,765		-		117,765
Profit for the period	-		-		11,304		-		-		11,304		-		11,304
Other comprehensive income for the period	-		-		539		1,399		-		1,938		10		1,948
Contributions by and distributions to owners
Ordinary dividends paid	-		-		(4,823)		-		-		(4,823)		-		(4,823)
Gain on disposal of interest in joint ventures	-		-		72		-		-		72		-		72
Share-based compensation expense	-		-		516		-		-		516		-		516
Purchase of shares	-		-		-		-		(136)		(136)		-		(136)
Arising on the issue of shares	15		224		-		-		-		239		-		239
	15		224		(4,235)		-		(136)		(4,132)		-		(4,132)
Transfer on disposal of shares	-		-		(347)		-		347		-		-		-
At 30 June 2011	12,481		24,924		82,407		7,431		(368)		126,875		10		126,885

Other reserve movements
									Translation		Hedging		Total
									reserve		reserve
									£000		£000		£000
At 1 January 2012									7,207		(2,465)		4,742
Other comprehensive income in the period									(387)		(50)		(437)
At 30 June 2012									6,820		(2,515)		4,305
At 1 January 2011									7,685		(1,653)		6,032
Other comprehensive income in the period									1,588		(189)		1,399
At 30 June 2011									9,273		(1,842)		7,431

NOTES TO THE CONDENSED CONSOLIDATED STATEMENTS

1          Basis of preparation

James Fisher and Sons plc (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 interim financial statements of the Company for the six months ended 30 June 2012 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 5. The Group also has £43,449,000 of undrawn committed facilities. This includes £7,769,000 of facilities which expire on 11 August 2012.

The Group has two £20,000,000 revolving credit facilities due for renewal in 2013, both of which end on 31 January 2013. The Group had drawn down £5,000,000 of these facilities at 30 June 2012. 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 would not be forthcoming on acceptable terms.

The consolidated financial statements of the Group for the year ended 31 December 2011 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 interim 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 2011 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 2011.

The comparative figures for the financial year ended 31 December 2011 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 interim report was approved for issue by the Board of Directors on 20 August 2012.

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 2011.

2          Accounting estimates and judgements

            The preparation of interim 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 2011.

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:

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

            Offshore Oil Services - 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.

            Defence - provision of marine services to the Ministry of Defence (MoD) and other navies including UK submarine rescue services, maintenance, asset management and consultancy services, a joint venture which provides military strategic sealift capability via its operation of six roll-on-roll-off vessels for the MoD, and a joint venture which provides submarine rescue services to the Government of Singapore.

            Marine Oil Services - 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.  The income statement and segmental analysis for June 2011 has been restated to include amortisation related to acquired intangibles to be consistent with that presented at 31 December 2011.  Inter segmental sales are made using prices determined on an arms length basis.

Six months ended
30 June 2012
	Specialist		Offshore Oil			Defence		Marine	Corporate			Total
	Technical			Services				Oil
		Services
		£000		£000		£000		£000		£000		£000
Revenue
Segmental revenue		107,108		38,632		14,468		31,209		-		191,417
Inter segment sales		(2,656)		(269)		(179)		-		-		(3,104)
Group revenue		104,452		38,363		14,289		31,209		-		188,313
Underlying operating profit		10,611		7,842		1,948		1,189		(1,488)		20,102
Amortisation of acquired intangibles		(50)		(69)		-		-		-		(119)
Profit from operations including results		10,561		7,773		1,948		1,189		(1,488)		19,983
of associates and joint ventures
Finance income												146
Finance costs												(3,168)
Profit before tonnage and income tax												16,961
Tonnage and income tax												(3,203)
Profit attributable to equity holders												13,758
Share of post tax results of
joint ventures		787		-		1,252		-		-		2,039
Capital expenditure
Property, plant and equipment		3,765		5,437		81		1,142		4		10,429

3          Segmental information (continued)

Six months ended
30 June 2011
	Specialist		Offshore Oil			Defence		Marine	Corporate			Total
	Technical			Services				Oil
		Services
		£000		£000		£000		£000		£000		£000
Revenue
Segmental revenue		69,543		33,276		13,100		35,033		-		150,952
Inter segment sales		(2,924)		(18)		(54)		-		-		(2,996)
Group revenue		66,619		33,258		13,046		35,033		-		147,956
Underlying operating profit		9,138		5,901		2,733		870		(1,505)		17,137
Amortisation of acquired intangibles		(62)		(70)		-		-		-		(132)
Profit from operations including results		9,076		5,831		2,733		870		(1,505)		17,005
of associates and joint ventures
Finance income												109
Finance costs												(3,188)
Profit before tonnage and income tax												13,926
Tonnage and income tax												(2,622)
Profit attributable to equity holders												11,304
Share of post tax results of
joint ventures		982		-		1,800		-		-		2,782
Capital expenditure
Property, plant and equipment		818		5,884		88		612		4		7,406

Year ended
31 December 2011
	Specialist		Offshore Oil			Defence		Marine	Corporate			Total
	Technical			Services				Oil
		Services
		£000		£000		£000		£000		£000		£000
Revenue
Segmental revenue		146,521		71,580		29,271		66,805		-		314,177
Inter segment sales		(5,077)		(369)		(1,107)		-		-		(6,553)
Group revenue		141,444		71,211		28,164		66,805		-		307,624
Underlying operating profit		19,792		12,783		5,490		1,145		(3,077)		36,133
Amortisation of acquired intangibles		(113)		(141)		-		-		-		(254)
Profit from operations including results		19,679		12,642		5,490		1,145		(3,077)		35,879
of associates and joint ventures
Finance income												322
Finance costs												(6,450)
Profit before tonnage and income tax												29,751
Tonnage and income tax												(5,634)
Profit attributable to equity holders												24,117
Share of post tax results of
joint ventures		2,086		-		3,599		-		-		5,685
Capital expenditure
Property, plant and equipment		4,146		11,110		192		1,506		181		17,135

4          Retirement benefit obligations

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

			2012		2011		2011
		Six months ended		Six months ended			Year ended
			30 June	30 June		31 December
			£000		£000		£000
As at 1 January			(30,133)		(29,786)		(29,786)
Expense recognised in the income statement			(603)		(759)		(678)
Movements on exchange			1		(1)		(4)
Contributions paid to scheme			2,490		2,255		4,462
Actuarial loss			(1,521)		(881)		(4,127)
At period end			(29,766)		(29,172)		(30,133)
The Group's assets and liabilities in respect of its pension schemes at 30 June 2012 were as follows:
			2012		2011		2011
		Six months ended		Six months ended			Year ended
			30 June		30 June	31 December
			£000		£000		£000
Liabilities
Shore Staff pension scheme			(11,338)		(9,644)		(10,840)
MNOPF pension scheme			(18,351)		(19,496)		(19,219)
Scantech Produkt pension scheme			(77)		(32)		(74)
			(29,766)		(29,172)		(30,133)

The Group now operates 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 30 June 2012 and has been incorporated in the interim report. An actuarial loss of £1,182,000 (2011: £943,000) 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 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 decreased as a result of contributions paid. 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 loss of £339,000 (2011: gain of £62,000) has been recognised during the period and is reported in the statement of comprehensive income  together with related deferred tax movements.

Details of changes in the key actuarial assumptions since 31 December 2011 are shown below.

				2012		2011
			Six months ended		Year ended
				30 June	31 December
				%		%
Inflation				2.85		3.00
Rate of increase of pensions in payment - Shore Staff				2.70-2.85		2.60-3.00
Discount rate for scheme liabilities				4.55		5.05

5          Reconciliation of net debt

			1 January		Cash		Other		Exchange		30 June
			2012		flow	non cash			movement		2012
			£000		£000		£000		£000		£000
Cash in hand and at bank			13,575		13,166		-		(264)		26,477
Cash and cash equivalents			13,575		13,166		-		(264)		26,477
Debt due after 1 year			(103,083)		-		(818)		(94)		(103,995)
Debt due within 1 year			(8,490)		(12,948)		494		91		(20,853)
			(111,573)		(12,948)		(324)		(3)		(124,848)
Finance leases			(795)		200		-		4		(591)
Net debt			(98,793)		418		(324)		(263)		(98,962)
			1 January		Cash		Other		Exchange		30 June
			2011		flow	non cash			movement		2011
			£000		£000		£000		£000		£000
Cash in hand and at bank			16,590		(4,591)		-		696		12,695
Cash and cash equivalents			16,590		(4,591)		-		696		12,695
Debt due after 1 year			(110,876)		-		1,228		(349)		(109,997)
Debt due within 1 year			(4,823)		(980)		(1,504)		-		(7,307)
			(115,699)		(980)		(276)		(349)		(117,304)
Finance leases			(1,220)		212		-		(23)		(1,031)
Net debt			(100,329)		(5,359)		(276)		324		(105,640)
			1 January		Cash		Other		Exchange	31 December
			2011		flow	non cash			movement		2011
			£000		£000		£000		£000		£000
Cash in hand and at bank			16,590		(2,531)		-		(484)		13,575
Cash and cash equivalents			16,590		(2,531)		-		(484)		13,575
Debt due after 1 year			(110,876)		-		7,830		(37)		(103,083)
Debt due within 1 year			(4,823)		4,714		(8,380)		(1)		(8,490)
			(115,699)		4,714		(550)		(38)		(111,573)
Finance leases			(1,220)		423		-		2		(795)
Net debt			(100,329)		2,606		(550)		(520)		(98,793)

6          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 income tax on underlying profit provided in the period is 18.9% (30 June 2011: 19.0%, 31 December 2011: 19.0%). The effective rate on profit before income and tonnage tax from continuing operations is 18.9% (30 June 2011: 18.8%, 31 December 2011: 19.1%) based on the estimated effective tax rate for the twelve months to 31 December 2011. Of the total tax charge £1,634,000 relates to overseas businesses (2011: £1,246,000).

            On 21 March 2012 the Chancellor announced the reduction in the main rate of UK corporation tax to 24 per cent with effect from 1 April 2012. This change became substantively enacted on 26 March 2012 and therefore the effect of the rate reduction creates a reduction in the deferred tax assets and liabilities which has been included in the figures above.

            The Chancellor also proposed changes to further reduce the main rate of corporation tax by one per cent per annum to 22 per cent by 1 April 2014, but these changes had not been substantively enacted by 30 June 2012 and therefore are not included in the figures above. It has not been possible to quantify the full anticipated effect of the announced further two per cent rate reduction, although this will further reduce the Group's future current tax charge and reduce the Group's deferred tax assets and liabilities.

7          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:

Weighted average number of shares
		30 June 2012		30 June 2011		31 December 2011
			Number of		Number of		Number of
			shares		shares		shares
For basic earnings per Ordinary share*			49,651,068		49,787,032		49,777,165
Exercise of share options and LTIPs			338,964		488,920		425,687
For diluted earnings per Ordinary share			49,990,032		50,275,952		50,202,852

*     Excludes 212,623 (June 2011: 72,930; December 2011: 329,615) shares owned by the James Fisher and Sons plc Employee Share Ownership Trust.

            No shares were issued during the period. 62,136 Ordinary shares of 25p were allotted on the exercise of share options in the period to 30 June 2011 for an aggregate cash consideration of £239,000.

            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.

					2012		2011		2011
			Six months ended			Six months ended		Year ended
					30 June		30 June	31 December
					£000		£000		£000
Profit attributable to owners of the Company					13,102		11,294		24,091
Amortisation of acquired intangibles net of tax					87		98		182
Adjusted profit attributable to owners of the Company					13,189		11,392		24,273
Basic earnings per share on profit from operations					26.4		22.7		48.4
Diluted earnings per share on profit from operations					26.2		22.5		48.0
Adjusted basic earnings per share on profit from operations					26.6		22.9		48.8
Adjusted diluted earnings per share on profit from operations					26.4		22.7		48.4

8          Interim dividend

            The interim dividend of 5.87p (2011: 5.34p) per Ordinary share is payable on 1 November 2012 to those shareholders on the register of the Company at the close of business on 5 October 2012. The dividend recognised in the statement of movements in equity is the final dividend for 2011 of 10.74p paid on 11 May 2012.

9          Commitments and contingencies

            As at 30 June 2012 the Group had capital commitments of £3,746,000 (2011: £3,503,000). There have been no significant changes to the contingent liabilities set out in the annual report.

10         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 principal risks and uncertainties faced by the Group that could impact the second half can be found in the Company's Annual Report on page 11, as supplemented by the contingent liability note above.

11         Related parties

There have been no significant changes in the nature and size of related party transactions in the period ended 30 June 2012 from that disclosed in the 2011 Annual Report.

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 interim financial report for the six months ended 30 June 2012 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, 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 interim 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 interim financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the DTR of the UK FSA.

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 interim 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 interim 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 interim financial report for the six months ended 30 June 2012 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 2012 

 

END

 

 

IR BKKDBABKDPFB