REG - Fisher (James) - Half year results
21/09/2023 07:00
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RNS Number : 1391N Fisher (James) & Sons plc 21 September 2023
21 September 2023
James Fisher and Sons plc
Half year results for the six months ended 30 June 2023
James Fisher and Sons plc (FSJ:L) ('James Fisher', 'the Group'), the leading
marine service provider, announces its unaudited results for the six months
ended 30 June 2023 ('the period').
Continuing operations H1 2023 H1 2022* change
Revenue (£m) 252.0 215.0 17.2%
Underlying operating profit margin 5.6% 5.3% 30 bps
Return on capital employed 4.7% 2.7% 200 bps
Underlying operating profit (£m) ** 14.0 11.4 22.8%
Underlying profit before tax (£m) ** 6.4 6.8 (5.9%)
Underlying diluted earnings per share (pence) *** 8.7 6.7 29.9%
Statutory operating profit (£m) 3.2 9.8 (67.3%)
Statutory (loss)/profit before tax (£m) (4.4) 5.2 n/m
Statutory diluted (loss)/earnings per share (pence) (6.3) 6.9 n/m
* restated due to a business classified as discontinued operations
** excludes separately disclosed items of £10.8m loss (2022: £1.6m loss)
(note 3)
*** excludes separately disclosed items of £14.0m loss (2022: £1.4m loss)
(note 3)
Financial summary:
· Strong revenue growth of 17.2% to £252.0m (H1 2022: £215.0m),
driven by positive momentum in the Energy Division
· Underlying operating profit up £2.6m to £14.0m (H1 2022:
£11.4m) with all three divisions delivering year on year profit growth
· Underlying operating profit margin enhancement of 30 bps with
growth and improvement initiatives offsetting the impact of cost inflation and
investments in Business Excellence and strengthening of central functions
· Reduction in statutory PBT from £5.2m to a loss of £4.4m due
principally to refinancing legal and advisory costs (£9.3m) and higher
interest rates offsetting the positive operating performance
· Net debt on a covenant basis at 30 June 2023 was £154.5m, (31
December 2022: £142.1m; 30 June 2022: £172.4m) representing 2.8x EBITDA
compared to a covenant limit of 3.5x. The Group expects to reduce net debt in
the second half of the year.
Operational progress:
· Continued progress in simplification of the Group
o Three operating divisions aligned to market verticals
o Sale of Swordfish Dive Support Vessel, Nuclear Decommissioning business
and obsolete assets generating net proceeds of £18.1m
· Key initiatives underway in establishing One James Fisher
operating model
o Business Excellence function established, with the objective of improving
operating practices across the Group, with initial priority given to health
& safety and project management processes
o New and experienced senior hires in key divisional and functional roles
Commenting, Jean Vernet, CEO said:
"All three divisions delivered revenue and profit growth against the first
half of 2022, with a particularly strong increase seen in the Energy division,
driven by demand for the Group's well-testing, artificial lift and bubble
curtain offerings against a relatively weak comparator period.
"The Group's new divisions have now been embedded into the operating and
reporting structures of the Group, and whilst there remains significant work
to do to achieve the anticipated commercial and operating synergies, progress
has been positive to date.
"Further strategic progress is expected in the second half of the year as the
Group continues to execute its stated aims of simplifying and focusing the
portfolio. Although the geopolitical and economic climate remains uncertain,
the Board is confident that it is taking the right steps to create a platform
for sustained recovery. Trading in July and August was in line with
expectations and the Group's full year expectations remain unchanged."
Notes:
1. James Fisher uses alternative performance measures (APMs) as key
financial indicators to assess the underlying performance of the business.
APMs are used by management as they are considered to provide useful
additional information. APMs include underlying operating profit, underlying
earnings per share and underlying return on capital employed. An explanation
of APMs is set out in Note 2 in the full year results.
2. Cautionary statement: This announcement contains certain
forward-looking statements with respect to the operations, performance and
financial condition of the Group. By their nature, these statements involve
uncertainty since future events and circumstances can cause results and
developments to differ materially from those anticipated. The forward-looking
statements reflect knowledge and information available at the date of
preparation of this announcement and James Fisher and Sons plc undertakes no
obligation to update these forward-looking statements. Nothing in this
statement should be construed as a profit forecast.
For further information:
James Fisher and Sons plc Jean Vernet Chief Executive Officer 020 7614 9503
Duncan Kennedy Chief Financial Officer
FTI Consulting Richard Mountain 0203 727 1340
Susanne Yule
A presentation of the Half Year Results for analysts and investors will take
place today at 9.00am. The presentation can also be accessed via:
Webcast link:
https://storm-virtual-uk.zoom.us/webinar/register/WN_xZ0icxwhSj-hZqAHyZr5AQ
(https://storm-virtual-uk.zoom.us/webinar/register/WN_xZ0icxwhSj-hZqAHyZr5AQ)
Webinar ID:
846 8756 8961
Review of the six months ended 30 June 2023
Overview
The Group has continued to stabilise its financial performance during 2023.
Continuing operations delivered revenue growth of 17.2% in the first half of
the year, to £252.0m (H1 2022: £215.0m) and underlying operating profit
growth of 22.8% to £14.0m (H1 2022: £11.4m), representing an improvement of
30bps on underlying operating profit margin to 5.6% (H1 2022: 5.3%). Statutory
operating profit reduced from £9.8m in H1 2022 to £3.2m in H1 2023 as the
positive trading performance was principally offset by costs of refinancing.
Market conditions across all three of the Group's divisions of Energy, Defence
and Maritime Transport were good during the period. Global energy markets
remain strong and the Group has seen high demand for well-testing, artificial
lift and bubble curtain products and services in particular. Subsea defence
activity is moving up the list of many government priorities, resulting in a
number of longer-term and strategically important opportunities for the
Defence division to pursue. Within Maritime Transport, cargo rates for
Tankships have remained at good levels, albeit slightly below the peaks seen
in Q4 2022, and Fendercare's ship-to-ship transfer business traded in line
with the second half of 2022.
The Group completed several disposals during the period, including the
Swordfish Dive Support Vessel in January, the nuclear decommissioning business
in March and the Mersey Fisher, a tanker that had reached the end of its
commercial life, in June. Net proceeds from disposals in the period were
£18.1m. These sales helped to further solidify the Group's funding position
and had a net positive impact on underlying operating profit.
The Group completed the refinancing of its borrowing facilities during the
period. The new revolving credit facility of £210m has a maturity date of 31
March 2025 and a package of covenants that support the delivery of the Group's
strategy. Costs of refinancing of £9.3m were incurred and excluded from
underlying operating profit. Net debt on a covenant basis at 30 June 2023 was
£154.5m, (31 December 2022: £142.1m; 30 June 2022: £172.4m) representing
2.8x EBITDA compared to a covenant limit of 3.5x. The Group's operating
cashflow profile is typically weighted to the second half of the year and
consequently further progress on deleveraging is expected in the second half
of the year.
Operational progress
The Group has continued to implement its internal change agenda during the
period, including a continued focus on improvement and simplification. A
Business Excellence team has been formed, with initial priorities on safety
(see 'Safety Performance' section) and project management. Project management
improvements have included an ongoing roll-out of Lean Six Sigma training,
with 36 Green Belts trained in H1, leading to 32 ongoing improvement projects,
each of which is aligned to an over-arching Group priority. The target for the
end of 2023 is to have certified 30 Green Belts and 3 Black Belts.
Across the Group there is a continued focus on improvement and simplification.
A programme of internal control improvements has continued, prioritising those
businesses and processes that can materially impact financial reporting. This
programme is being supported by BDO and has now been running for 12 months.
After a period of process documentation and gap identification, the teams are
now moving on to remediation activities and are looking to make considerable
progress before the end of 2023. The programme is expected to last at least
until the end of 2024, before moving into a more business as usual process of
continuous improvement.
An enabler of enhanced internal control is the simplification of the Group's
corporate structure, the planning for which is underway and forms a key pillar
of a more cohesive operating model under the internal moniker of "One James
Fisher". Enhancements to the Group's go-to-market and commercial models are
also well underway, for example within the Energy division there is an
increased focus on selling the Group's full suite of products and services
into the Renewables market with positive feedback from offshore windfarm asset
operators that the Group's offering, which spans across the development and
operating life phases of wind farms, is uniquely differentiated from
competitors.
The key focus of the Group's long-term people strategy is ensuring the
recruitment and retention of the required talent to drive the Group's
turnaround and future growth. Key appointments in the year to date include
several members of the Executive Committee including new heads of the Finance,
Legal, Communications, Business Excellence and Commercial functions.
Safety Performance
As part of the Group's commitment to safety, a company-wide programme of work
has been put in place, sponsored by the Executive Committee and embedded
across all senior leadership incentive packages. A Group HSEQ framework,
including policies and process was delivered earlier in the year, alongside
the appointment of a new Head of Group HSEQ. This will align the business
behind a common set of KPIs for Lost Time Incident Frequency ("LTIF") and
Total Recordable Case Frequency ("TRCF"), common benchmarking and delivery of
safe working practices. At 30 June 2023, LTIF was 0.53 vs a target of 0.48
(2022: 0.51) and TRCF was 2.38 vs target of 2.39 (2022: 2.65). Work is also
underway to launch a new global safety campaign in the second half of the
year, including implementation of James Fisher 'Life Saving Rules'. This is
based on industry best practice and will initially target common areas of
highest safety incidents.
Financial performance
The Group delivered strong revenue growth in the period, up 17.2% to £252.0m
(H1 22: £215.0m). All divisions showed growth against H1 22, with Energy up
26.3% (H1 23: £134.0m; H1 22: £106.1m), Defence up 13.5% (H1 23: £37.0m; H1
22: £32.6m) and Maritime Transport up 6.2% (H1 23: £81.0m; H1 22: £76.3m).
Energy division revenue growth was driven by sustained demand for well-testing
services and artificial lift products, with a strong market backdrop and quick
deployment of the Group's new fleet of more efficient air compressors onto
bubble curtain projects on the US East Coast. Within the Defence division,
commercial diving products have performed well, and Maritime Transport has
seen sustained good utilisation and pricing for the Tankships fleet, and
stable demand for ship-to-ship transfer services.
Underlying operating profit, which is the basis on which the Group's banking
covenant EBITDA is calculated, improved by 22.8% to £14.0m (H1 2022:
£11.4m). This includes the negative impact of an onerous contract provision
of £1.7m relating to one of the seasonal vessel charters entered into by the
Inspection, Repairs and Maintenance (IRM) product line within the Energy
Division. The vessel remained idle for several weeks during June, meaning that
it is now anticipated to generate an overall loss over the period of its
rental. Each Division delivered growth in underlying operating profit and
margin, however the Group's overall underlying operating profit margin
improved by a modest 30bps, from 5.3% in H1 22 to 5.6% in H1 23 as the Group
has made necessary investments in its strategic initiatives, including the
establishment of the Business Excellence workstream and projects to strengthen
internal controls and key senior management roles.
Statutory operating profit, at £3.2m, is £6.6m below prior year, reflecting
net adjusting items of £10.8m (H1 2022: £1.6m). The Group incurred £9.3m
legal and advisory costs related to refinancing and obtaining a waiver from
its lenders and £1.4m of costs related to organisational restructuring,
partially offset by a £1.1m gain from the sale of the Mersey Fisher tanker.
Last year, the adjusting items related to a gain of £1.0m on the sale of a
Tankships vessel, which was offset by amortisation of acquired intangible
assets of £1.1m and a past service cost of £1.5m recognised in relation to
the MNRPF pension fund.
Loss before tax was £4.4m (H1 2022: £5.2m profit) and the underlying
effective tax rate was 27.3% compared to 30.6% in the period to 30 June 2022.
The decrease in profit before tax was driven by the statutory operating profit
performance described above as well as a £3.0m increase in net finance
expense driven by increased interest rates and higher amortisation of
arrangement fees.
Loss per share was 19.0p compared to 3.7p earnings in H1 2022, reflecting the
reduced operating profit performance and higher net finance expense.
Dividends
The Board remains committed to reintroducing a sustainable and progressive
dividend policy at the appropriate time. However, considering our current
absolute levels of net debt and the resulting leverage ratio, the Board has
not declared an interim dividend for 2023 (2022: Nil).
Liquidity
At 30 June 2023 the Group had revolving credit facilities totalling £209.9m
(31 December 2022: £247.5m; 30 June 2022: £287.5m). Undrawn facilities were
£40.9m.
The Group typically experiences a working capital outflow in the first half of
each year, due to the seasonality of the business, and bank borrowings of
£147.2m were £14.3m higher than 31 December 2022, but £12.3m below 30 June
2022. As part of its ongoing balance sheet improvement programme, the Group is
actively targeting a reduction in net debt volatility through the year, which
has resulted in a pronounced reduction in creditor days, from 97 to 82. This
initiative had the effect of increasing leverage as at 30 June 2023 by c.0.3x
but represents a more appropriate balance sheet management strategy for the
business.
£m 30 June 31 Dec 2022 30 June 30 June 31 Dec 2022 30 June
2023
2022
2023
2022
Net bank borrowings 147.2 132.9 159.5 147.2 132.9 159.5
Finance leases (IAS 17) 5.7 6.9 7.7 5.7 6.9 7.7
Right of use liabilities 50.6 46.0 38.3 - - -
Bonds/guarantees - - - 1.6 2.3 5.2
Net debt 203.5 185.8 205.5
Net debt - covenant basis 154.5 142.1 172.4
EBITDA - covenant basis 55.4 52.6 53.0
Net debt : EBITDA 2.8 2.7 3.3
When measured on a covenant basis, the ratio of net debt to EBITDA was 2.8
times (31 December 2022: 2.7 times; 30 June 2022: 3.3 times) compared to a
covenant limit of 3.5 times. Interest cover was 3.2 times (31 December 2022:
3.5 times; 30 June 2022: 4.5 times) compared to a covenant requirement to
exceed 2.5 times.
Environmental, Social and Governance
The Group published its sustainability report in the period. This report sets
out our commitment to improving the impact that our products and services have
on the environment and the areas in which we operate and can be found on our
Group website.
Improvements in the Group's governance are ongoing, with good progress made
under the internal controls improvement programme which is now focused on
remediation rather than identification activities.
James Fisher continues to focus on diversity and inclusion. In the first half
of 2023, women represented 38% of our Board membership, in line with 2022 and
29% of our Executive Committee, a slight reduction from 36% in H1 2022. Two
recent new hires to the Executive Committee are women.
Board changes
The Board was pleased to announce on 3 August 2023 the appointment of Karen
Hayzen-Smith as its Chief Financial Officer. Karen will formally join the
Group on 1 December 2023 and brings a wealth of energy and defence sector
experience and a strong background in finance strategy and leadership. Karen
will replace Duncan Kennedy, who announced his intention to step down from the
role earlier in the year. Duncan will remain with the Group for a short period
after Karen's arrival to ensure a smooth handover.
Summary and outlook
All three divisions delivered revenue and profit growth against the first half
of 2022, with a particularly strong increase seen in the Energy division,
driven by demand for the Group's well-testing, artificial lift and bubble
curtain offerings against a relatively weak comparator period.
The Group's new divisions have now been embedded into the operating and
reporting structures of the Group, and whilst there remains significant work
to do to achieve the anticipated commercial and operating synergies, progress
has been positive to date.
The completion of the Group's refinancing in June has provided a more stable
platform to allow the Board to continue its strategy to simplify and
rationalise the Group and the Board is grateful for the continued support of
its lending group. Net bank borrowings and leverage are both expected to
reduce in the second half of the year in line with the Group's typical trading
patterns.
Further strategic progress is expected in the second half of the year as the
Group continues to execute its stated aims of simplifying and focusing the
portfolio. Although the geopolitical and economic climate remains uncertain,
the Board is confident that it is taking the right steps to create a platform
for sustained recovery. Trading in July and August was in line with
expectations and the Group's full year expectations remain unchanged.
Business review
As announced in April 2023, the Group has reorganised as from 1 January 2023
into three divisions, representing the key markets within which the Group
operates, namely: Energy, Defence, and Maritime Transport. The Energy division
combines the division that used to be called Marine Support and Offshore Oil
divisions, without Fendercare, which is added to the Tankships division to
create Maritime Transport. JFD is the only component of the Defence division.
Energy
H1 2023 H1 2022 change
Revenue (£m) 134.0 106.1 26.3%
Underlying operating profit (£m) 7.5 6.2 21.0%
Underlying operating profit margin 5.6% 5.8% (20)bps
Return on capital employed 8.2% 6.3% 190bps
The Energy division provides products and services to the offshore wind and
oil and gas markets. Revenue growth, at 26.3% was strong in the period, with
particularly high demand being seen for well-testing, artificial lift and
bubble curtain products and services. Underlying operating profit growth of
21.0% was also delivered, which included the negative impact of an onerous
contract provision of £1.7m.
Inspection, Repair and Maintenance activities showed strong revenue growth,
from £38.7m in H1 22 to £55.8m in H1 23, with the greatest increase being
achieved in the European market. However, despite the notable increase in
revenue, a period of inactivity for one of the seasonal chartered vessels has
resulted in a £1.7m onerous contract provision being recognised in the H1 23
results, holding back divisional earnings.
Artificial lift product sales increased by 42% (H1 23: £20.3m vs H1 22:
£14.3m), continuing the strong market trend seen in the second half of 2022.
The order book remains at record levels and our new manufacturing plant in
Saudi Arabia which opened during the period will add capacity and additional
market capabilities in the Middle East.
Product rentals from the Scantech companies, which includes bubble curtain
solutions, increased by 47.1% to £32.5m (H1 22: £22.1m). A new fleet of more
energy efficient compressors was completed during the period and quickly
deployed on bubble curtain projects on the East Coast of the USA, a
fast-growing and very attractive opportunity for future growth.
The EDS high voltage cabling business delivered strong revenue growth over a
weak comparator period (H1 23: £16.6m; H1 22: £7.9m) and achieved a small
operating profit compared to an operating loss in H1 22. The market is
continuing to expand at pace globally and the Group continues to believe that
the combined offerings of all products and services into this market will
deliver profitable growth in the future.
The Decommissioning business had a disappointing half, with a decrease in
revenue of 39% vs H1 22 to £9.0m (H1 22: £14.8m). New tendering activity
looks promising for 2024 and a new management team is in place. The
medium-term market growth drivers for this business remain attractive.
Defence
H1 2023 H1 2022 change
Revenue (£m) 37.0 32.6 13.5%
Underlying operating profit/(loss) (£m) 0.6 (1.3) n/m
Underlying operating profit margin 1.6% (4.0%) 560bps
Return on capital employed 1.8% 2.6% (80)bps
The Defence division delivered revenue growth of 13.5% against H1 22 and
reversed a prior year operating loss to deliver an operating profit in H1 23.
Cost saving measures taken in 2022 contributed to the improved performance.
Activity in the period focused on service and training contracts in India and
Korea with good progress. The renewed NATO submarine rescue contract ("NSRS"),
secured at the end of 2022 went live in July 2023.
Diving product sales showed good growth in the period, consistent with higher
levels of activity seen in the Energy division's diving activities and the
team is working on its next generation product portfolio to secure the
long-term sustainability of this important franchise.
The division is continuing to focus on converting its significant sales
pipeline, although there were no large wins in the period. Well qualified and
near-term opportunities represent approximately £270m in future revenue and
the forward order book at 30 June was £224.5m.
Maritime Transport
H1 2023 H1 2022 change
Revenue (£m) 81.0 76.3 6.2%
Underlying operating profit (£m) 10.0 8.4 19.0%
Underlying operating profit margin 12.3% 11.0% 130bps
Return on capital employed 24.1% 14.9% 920bps
The Maritime Transport division includes the Group's tankers, port and
Fendercare businesses. Divisional revenue growth of 6.2% was delivered, with a
high operating leverage leading to 19.0% operating profit growth.
The tanker fleet was well utilised during the period at 91% (H1 22: 88%) and
spot charter rates, although not at the peak levels seen at the end of 2022,
remained at good and stable levels. Fleet improvements continued, with the
Lady Maria Fisher joining the fleet during the period and the Mersey Fisher,
which had reached the end of its commercial life, being sold.
Fendercare's ship-to-ship transfer business has stabilised and a combination
of a relatively high and stable oil price and increased demand for LNG
ship-to-ship transfer services helped deliver 8% growth in the period. A
fourth LNG STS kit was purchased in the period with a customer retainer
agreement quickly in place, meaning all four kits are now under customer
retainers.
Discontinued operations
In the period through to its disposal on 3 March 2023 the Nuclear
Decommissioning business generated revenue of £6.7m (H1 22: £23.4m) and a
loss after tax of £6.4m (H1 22: £1.6m). Subsequent to the sale of the
business, on 9 August 2023, the Group was notified that JFN Limited had
appointed administrators and is in the process of being liquidated. The Group
is engaged with the administrators and certain key customers of JFN that held
parent company guarantees with the intention of mitigating potential claims
against the Group that may arise from the JFN administration. A provision of
£4.0m has been included in the results for the period to 30 June 2023 in
relation to potential claims/settlements under parent company guarantees.
Cashflow and borrowings
Net bank borrowings as at 30 June 2023 were £147.2m, representing a £14.3m
increase in borrowings from 31 December 2022, but an improvement of £12.3m
compared to the same point in 2022.
As anticipated, the Group saw a working capital outflow during the period. The
seasonality of the offshore projects businesses means that receivables build
during May and June as summer projects commence. Debtor days continued to show
some positive progress, being 70 in June 2023 vs 83 days in June 2022.
Creditor days have also reduced to 82 days from 97 days as at 30 June 2022,
which contributed to the increase in borrowings and was a conscious decision
to rebalance the Group's through year working capital.
Capital expenditure, at £16.8m, was higher than the £10.7m in H1 2022. The
increase was mostly driven by the investment in next-generation,
fuel-efficient compressors to replace an aging fleet within ScanTech Offshore.
This investment has an attractive financial profile and was subject to
rigorous review at the Group's Investment Committee before being recommended
to the Board. The Group generated £21.3m in asset disposal proceeds from the
sale of Swordfish Dive Support Vessel and a tanker, which compares to £1.5m
in the prior period. The Group also incurred costs of £3.2m from the sale of
JFN. There were no new acquisitions in the period, or in the prior period,
with net outflows of £1.4m in 2022 representing deferred consideration on
acquisitions completed in prior years.
The Group's tax payments were broadly in line with prior year at £4.1m (1H
2022: £4.4m). Finance costs have gone up by £3.2m (1H 2023: £6.3m; 1H 2022:
£3.1m) due to the increase in interest costs and costs of refinancing.
Balance sheet
Non-current assets increased by £8.8m during the period, from £321.2m at 31
December 2022 to £330.0m (30 June 2022: £337.9m). This is principally due to
the recognition of an additional £9.3m right of use asset following the
delivery of Lady Maria Fisher tanker into our fleet, partially offset by a
£3.8m decrease in goodwill driven by FX retranslation on consolidation.
Current assets have increased by £18.6m to £306.4m (31 December 2022:
£287.8m; 30 June 2022: £295.5m). The principal movements are increases in
short-term cash balances, receivables and inventory, offset by a reduction in
assets held for sale following the sale of Swordfish and JFN. Inventory has
increased as a result of increased activity. Receivables of £163.5m are
£16.2m below 30 June 2022 reflecting improved debtor days and £14.6m above
31 December 2022, principally reflecting the seasonality of the business.
Current liabilities have decreased by £3.5m to £223.0m compared to 31
December 2022 and are £25.5m higher than 30 June 2022. The decrease against
31 December 2022 is mostly driven by the £16.3m reduction in liabilities
associated with assets held for sale following the sale of JFN in March 2023,
offset by a seasonal increase in trade payables and a provision of £4.0m
relating to potential liabilities on performance guarantees for JFN and an
onerous contract provision of £1.7m relating to one of the seasonal vessel
charters entered into by the Inspection, Repairs and Maintenance (IRM) product
line within the Energy Division. Short-term bank borrowings (i.e. overdrafts)
have increased to £70.5m from £67.4m at 31 December 2022, with the net
position of short-term cash and short-term borrowings having reduced to
£19.8m at 30 June 2023 (31 December 2022: £22.8m; 30 June 2022: £11.1m).
Long-term liabilities, at £213.3m, are £49.1m higher than as at 31 December
2022, principally reflecting the reclassification of £36.6m borrowed under
Barclays RCF from short-term as at December 2022 to long-term as at 30 June
2023 following the completion of refinancing as well as an increase in
long-term borrowings in the period.
Overall, the Group's net assets have decreased in the period from £218.3m at
31 December 2022 to £200.1m at 30 June 2023.
Risks and uncertainties
The principal risks and uncertainties which may have the largest impact on
performance in the second half of the year are the same as disclosed in the
2022 Annual Report and Accounts on pages 62-70. The principal risks set out in
the 2022 Annual Report and Accounts were:
- Operational - Group transformation programme, health and safety, cyber
security, contractual, project delivery, recruitment and retention of key
staff, and pandemic risks;
- Strategic - operating in emerging markets, climate change; and
- Financial - maintaining access to adequate funding, interest rate, foreign
exchange and credit risks.
The Board considers that the principal risks and uncertainties set out in the
2022 Annual Report and Accounts remain the same. The global macroeconomic
environment is presenting an emerging risk to the Group. A combination of a
slowdown in key global economies and higher interest rates, which may affect
commodity prices, and high inflation in the UK, reflect an emerging risk that
is being factored into the Group's strategic planning process in particular.
Directors' Responsibilities
We confirm that to the best of our knowledge:
(a) The condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting' as adopted for use in the
United Kingdom;
(b) 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.
Approved by the Board of Directors and signed on its behalf by:
J Vernet D Kennedy
Chief Executive Officer Chief Financial Officer
20 September 2023
INDEPENDENT REVIEW REPORT TO JAMES FISHER AND SONS PLC
Conclusion
We have been engaged by James Fisher and Sons Plc ("the Company") to review
the condensed set of financial statements in the half-yearly financial report
for the six months ended 30 June 2023 which comprises the condensed
consolidated income statement, the condensed consolidated statement of
comprehensive income, the condensed consolidated statement of financial
position, the condensed consolidated statement of changes in equity, the
condensed consolidated cash flow statement and the related explanatory
notes.
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 2023 is not prepared, in all
material respects, in accordance with IAS 34 Interim Financial Reporting as
adopted for use in the UK and the Disclosure Guidance and Transparency Rules
("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued 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. We read the other
information contained in the half-yearly financial report and consider whether
it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) 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.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
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 UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial
statements included in the half-yearly financial report in accordance with IAS
34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
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. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
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 DTR of 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.
Ailsa Griffin
for and on behalf of KPMG LLP
Chartered Accountants
1 St Peter's Square
Manchester
M2 3AE
20 September 2023
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2023
Six months ended Six months Year
30 June 2023
ended
ended
30 June 2022 31 December
2022
Note restated*
£m £m £m
Continuing operations
Revenue 4 252.0 215.0 478.1
Cost of sales (186.5) (159.9) (350.9)
Gross profit 65.5 55.1 127.2
Administrative expenses (62.4) (45.9) (104.4)
Impairment of trade and other receivables (0.4) (0.8) 0.3
Share of post-tax results of associates 0.5 1.4 1.6
Operating profit 4 3.2 9.8 24.7
Finance income 6 1.1 0.2 0.7
Finance expense 6 (8.7) (4.8) (10.9)
(Loss)/profit before taxation (4.4) 5.2 14.5
Income tax 7 1.2 (1.6) (5.5)
(Loss)/profit for the period from continuing operations (3.2) 3.6 9.0
Loss for the period from discontinued operations, net of tax 5 (6.4) (1.6) (19.8)
(Loss)/profit for the period (9.6) 2.0 (10.8)
Attributable to:
Owners of the Company (9.6) 1.9 (11.1)
Non-controlling interests - 0.1 0.3
(9.6) 2.0 (10.8)
(Loss)/earnings per share pence pence pence
Basic 8 (19.0) 3.7 (22.1)
Diluted 8 (19.0) 3.7 (22.1)
(Loss)/earnings per share - continuing activities pence pence pence
Basic 8 (6.3) 6.9 17.4
Diluted 8 (6.3) 6.9 17.4
* 30 June 2022 results are restated due to a business classified as
discontinued operations - see Note 5.
The presentation of the consolidated income statement has been amended to
include a line item 'impairment of trade and other receivables' and for
removal of columns headed 'separately disclosed items' as described in the
2022 Annual Report - Note 1: Presentation of financial statements.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2023
Note Six months ended Six months ended Year ended
30 June 30 June 31 December
2023 2022 2022
£m £m £m
(Loss)/profit for the period (9.6) 2.0 (10.8)
Other comprehensive (loss)/income:
Items that will not be classified to the income statement
Actuarial (loss)/gain in defined benefit pension schemes 10 (1.1) 7.6 7.1
Tax on items that will not be reclassified - (0.9) (1.3)
(1.1) 6.7 5.8
Items that may be reclassified to the income statement
Exchange differences on foreign currency net investments (10.1) 6.6 8.8
Effective portion of changes in fair value of cash flow hedges 4.8 (1.7) 3.6
Effective portion of changes in fair value of cash flow hedges in joint (0.1) 0.2 0.4
ventures
Net change in fair value of cash flow hedges transferred to income statement (1.3) 0.7 0.6
Tax on items that may be reclassified (1.3) 0.3 (1.1)
(8.0) 6.1 12.3
Total other comprehensive income for the period (9.1) 12.8 18.1
Total comprehensive income for the period (18.7) 14.8 7.3
Attributable to:
Owners of the Company (18.7) 14.6 6.9
Non-controlling interests - 0.2 0.4
(18.7) 14.8 7.3
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 June 2023
30 June 30 June 31 December
2023 2022 2022
restated*
Note £m £m £m
Non-current assets
Goodwill 11 112.5 135.1 116.3
Other intangible assets 7.5 11.4 8.2
Property, plant and equipment 120.3 120.9 119.7
Right-of-use assets 61.6 39.5 52.3
Investment in joint ventures 8.5 9.6 8.7
Retirement benefit surplus 10 5.3 5.8 5.5
Other investments 1.4 1.4 1.4
Deferred tax assets 11.5 8.9 8.4
Other receivables 1.4 5.3 0.7
330.0 337.9 321.2
Current assets
Inventories 51.8 54.3 49.8
Trade and other receivables 162.1 174.4 148.2
Assets held for sale 13 2.2 13.0 36.2
Cash and cash equivalents 12 90.3 53.8 53.6
306.4 295.5 287.8
Current liabilities
Trade and other payables (127.2) (141.2) (122.4)
Provisions 14 (11.5) (2.0) (5.3)
Liabilities associated with assets held for sale 13 - - (16.3)
Current tax (1.9) (1.6) (1.9)
Borrowings (70.5) (42.7) (67.4)
Lease liabilities (11.9) (10.0) (13.2)
(223.0) (197.5) (226.5)
Net current assets 83.4 98.0 61.3
Total assets less current liabilities 413.4 435.9 382.5
Non-current liabilities
Other payables - (1.6) (0.5)
Provisions 14 (1.4) (1.3) (1.4)
Retirement benefit obligations 10 (0.5) (0.7) (0.4)
Cumulative preference shares (0.1) (0.1) (0.1)
Borrowings (167.0) (170.5) (121.8)
Lease liabilities (44.3) (36.0) (39.7)
Deferred tax liabilities - (0.3) (0.3)
(213.3) (210.5) (164.2)
Net assets 200.1 225.4 218.3
Equity
Called up share capital 12.6 12.6 12.6
Share premium 26.8 26.8 26.8
Treasury shares (0.6) (0.6) (0.6)
Other reserves (14.8) (14.4) (6.8)
Retained earnings 175.6 200.1 185.8
Equity attributable to owners of the Company 199.6 224.5 217.8
Non-controlling interests 0.5 0.9 0.5
Total equity 200.1 225.4 218.3
* Non-current other receivables, Current trade and other receivables and
Current trade and other payables have been restated for the June 2022
comparative period (see Note 1).
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2023
Total Non-
Share Share Retained Other Treasury shareholders controlling Total
capital premium earnings reserves shares equity interests equity
£m £m £m £m £m £m £m £m
At 1 January 2023 12.6 26.8 185.8 (6.8) (0.6) 217.8 0.5 218.3
Loss for the period - - (9.6) - - (9.6) - (9.6)
Other comprehensive (loss)/income - - (1.1) (8.0) - (9.1) - (9.1)
Share based payments - - 0.5 - - 0.5 - 0.5
At 30 June 2023 12.6 26.8 175.6 (14.8) (0.6) 199.6 0.5 200.1
At 1 January 2022 12.6 26.8 191.5 (20.4) (0.6) 209.9 0.7 210.6
Profit for the period - - 1.9 - - 1.9 0.1 2.0
Other comprehensive income - - 6.7 6.0 - 12.7 0.1 12.8
Changes in ownership interest without a change in control - - (0.3) - - (0.3) - (0.3)
Share based payments - - 0.3 - - 0.3 - 0.3
At 30 June 2022 12.6 26.8 200.1 (14.4) (0.6) 224.5 0.9 225.4
Other reserve movements
Translation Hedging Put option
reserve reserve liability Total
Other reserves £m £m £m £m
At 1 January 2022 (16.9) (1.0) (2.5) (20.4)
Other comprehensive income 6.6 (0.6) - 6.0
At 30 June 2022 (10.3) (1.6) (2.5) (14.4)
Other comprehensive income 2.1 4.1 - 6.2
Remeasurement of non-controlling interest put option - - 1.4 1.4
At 31 December 2022 (8.2) 2.5 (1.1) (6.8)
Other comprehensive (loss)/income (10.1) 2.1 - (8.0)
At 30 June 2023 (18.3) 4.6 (1.1) (14.8)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2023
Note Six months ended Six months ended Year ended
30 June 30 June 31 December
2023 2022 2022
restated*
£m £m £m
(Loss)/profit for the period (9.6) 2.0 (10.8)
Tax (credit)/charge (1.2) 1.2 4.7
Adjustments to reconcile profit/(loss) before tax to net cash flows
Depreciation and amortisation 20.8 20.4 41.1
Other non-cash items (2.5) (1.3) (1.7)
Impairments (0.3) - 0.7
Loss on remeasurement to fair value less costs to sell - - 13.3
(Gain)/loss on disposal of businesses, net of disposal costs 5 2.1 - (2.5)
Net finance expense 7.5 4.6 10.3
Increase in inventories (3.0) (3.9) (3.2)
(Increase)/decrease in trade and other receivables (20.8) (21.0) 2.5
Increase/(decrease) in trade and other payables and provisions 15.4 0.7 (1.9)
Defined benefit pension cash contributions less service cost (0.8) 0.6 0.1
Cash generated from operations 7.6 3.3 52.6
Income tax payments (4.1) (4.4) (8.1)
Cash flow from/(used in) operating activities 3.5 (1.1) 44.5
Investing activities
Dividends from joint venture undertakings - 1.0 1.7
Proceeds from the disposal of a subsidiary, net of cash disposed 5 (3.2) - 15.1
Proceeds from the disposal of property, plant and equipment 21.3 1.5 2.2
Finance income 1.2 0.2 0.8
Acquisition of subsidiaries, net of cash acquired - (1.4) (2.6)
Acquisition of property, plant and equipment (16.8) (10.7) (31.7)
Development expenditure (0.9) (0.6) (1.3)
Cash flows from/(used in) investing activities 1.6 (10.0) (15.8)
Financing activities
Finance costs (6.3) (3.1) (7.5)
Acquisition of non-controlling interests (NCI) - - (1.5)
Capital element of lease repayments (8.5) (7.0) (14.5)
Proceeds from borrowings 192.0 100.0 166.0
Repayment of borrowings (184.6) (104.0) (182.6)
Cash flows used in financing activities (7.4) (14.1) (40.1)
Net decrease in cash and cash equivalents (2.3) (25.2) (11.4)
Cash and cash equivalents at beginning of period 22.8 34.5 34.5
Net foreign exchange differences (0.7) 1.8 2.5
Cash transferred to asset held for sale - - (2.8)
Cash and cash equivalents at end of period 12 19.8 11.1 22.8
* Cash generated from operations for the six-months period ended 30 June 2022
has been re-presented to reallocate 'separately disclosed items' to the
relevant line items within cash generated from operations. In addition, £0.6m
prepayments related to the acquisition of property, plant and equipment has
been reclassified from within cash generated from operations. Proceeds from
borrowings and repayment of borrowings have also been restated (Note 1).
NOTES TO THE CONDENSED CONSOLIDATED HALF YEAR STATEMENTS
1 Basis of preparation
James Fisher and Sons Plc (the Company) is a public limited
company registered and domiciled in England and Wales and listed on the London
Stock Exchange. The condensed consolidated half year financial statements of
the Company for the six months ended 30 June 2023 comprise the Company and its
subsidiaries (together referred to as the Group) and the Group's interests in
jointly controlled entities.
Statement of compliance
These condensed consolidated interim financial statements,
which have been reviewed and not audited, have been prepared in accordance
with International Financial Reporting Standard (IFRS) IAS 34 "Interim
Financial Reporting" as adopted for use in the UK. As required by the
Disclosure and Transparency Rules of the Financial Conduct 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 2022 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 2022.
The comparative figures for the financial year ended 31
December 2022 are not the Group's statutory accounts for that financial year.
Those accounts which were prepared in accordance with UK-adopted International
Financial Reporting Standards (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) included reference to a matter to which the
auditor drew attention by way of emphasis without qualifying their report in
respect of a material uncertainty in respect of going concern 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 2022 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 (http://www.james-fisher.co.uk) .
The half year financial information is presented in Sterling
and all values are rounded to the nearest 0.1 million pounds (£0.1m) except
where otherwise indicated.
Prior period restatements
In the annual report for 31 December 2022, Note 1 made
reference to several restatements to the prior period reported figures Note 1
also referred to amendments following a review of the financial statements for
the year ended 31 December 2021 by the FRC's Corporate Reporting Review Team,
which was concluded in the period. Equivalent restatements have been made in
respect of the 30 June 2022 figures, details as per the below:
Presentation of financial statements
The presentation of the consolidated income statement has
been amended to include a line item for 'impairment of trade and other
receivables'. The June 2022 comparative has been amended to reclassify
£0.8m which was previously within administrative expenses.
Balance sheet restatements
At 30 June 2022, other payables of £9.0m was recognised in
respect of a pain provision which should have been presented as a reduction in
contract assets to represent a single net position on one contract.
At 30 June 2022, a contract asset and corresponding contract liability of
£5.7m was recognised in respect of what was understood to be a commission
payment for which there was considered to be an obligation to make payments
over a number of years. It is now recognised by the Directors from further
analysis of the underlying agreement that these costs relate to services that
will be performed over a number of years which are cancellable under the
agreement. The Directors do not consider there to be a contractual obligation
under the agreement and therefore have restated the comparatives to
derecognise the contract liability and therefore the corresponding asset. This
change in presentation within the Consolidated statement of financial position
has no effect on the profit of the Group or Company, the cash position of the
Group or Company in their balance sheets and has no further impact on the
Group's interim financial statements. The effect of the restatement on the
Consolidated statement of financial position in respect of the comparative
amount for the period ended 30 June 2022 is set out below. The effect of the
restatement on the Consolidated statement of financial position in respect of
the comparative amount for the period ended 30 June 2022 is set out below:
30 June 2022 30 June 2022
As reported Adjustment Adjustment Restated
£m £m £m £m
Current trade and other receivables 183.4 (9.0) - 174.4
Current assets 304.5 (9.0) - 295.5
Non-current other receivables 11.0 - (5.7) 5.3
Non-current assets 343.6 - (5.7) 337.9
Trade and other payables (155.9) 9.0 5.7 (141.2)
Current liabilities (212.2) 9.0 5.7 (197.5)
Total assets less current liabilities 435.9 - - 435.9
Cash flow restatement
The movement in trade and other receivables presented in the
prior year Consolidated cash flow statement included prepayments in respect of
the acquisition of property, plant and equipment of £0.6m which was
incorrectly presented within 'cash flows from operating activities' when it
should have been included within 'cash flows from investing activities'. In
preparing the Consolidated cash flow statement for the period ended 30 June
2023, the comparative amounts have been restated to present the movement in
trade and other receivables of £0.6m in respect of prepayments in relation to
the acquisition of property, plant and equipment within cash flows from
investing activities.
Gross up of drawdowns and repayments of external borrowings
The proceeds from and repayments of borrowings had been
incorrectly calculated in the prior period cash flow statement. In preparing
the cash flow statement for the year ended 30 June 2023, the comparative
amounts have been restated to show the proceeds from and repayments of
borrowings as gross balances in line with IAS 7.21. This change in
presentation within the Group and Company cash flow statement has no effect on
the cash position of the balance sheet and has no further impact on the
financial statements. The effect of the restatement on the Consolidated cash
flow statement in respect of the comparative amount for the period ended 30
June 2022 is set out below.
30 June 2022 30 June 2022
As reported Restated
£m £m
Proceeds from borrowings 17.0 100.0
Repayment of borrowings (21.0) (104.0)
Cash flows used in financing activities (14.1) (14.1)
Going concern
In determining the appropriate basis of preparation of the
financial statements for the six months ended 30 June 2023, the Board is
required to consider whether the Group can continue in operational existence
for a period of at least 12 months from the date of approval of the Financial
Statements. The Board has concluded that it is appropriate to adopt the going
concern basis, having undertaken a rigorous assessment of the financial
forecasts, key uncertainties and sensitivities, as set out below.
The Group had £40.9m of undrawn committed facilities at 30
June 2023 (30 June 2022: £115.5m; 31 December 2022: £88.0m). At 30 June
2023, the Group had £210.0m of committed facilities (30 June 2022:
£115.5m;31 December 2022: £247.5m).
On 7 June 2023, the Group announced that it has signed its
new revolving credit facility. The Group's new £210m secured revolving credit
facility, which matures in March 2025 (the "RCF"), has been provided by its
six existing lenders.
The key terms of the new facility agreement are:
- Maturity date: 31 March 2025.
- Net debt/EBITDA covenant (measured quarterly): 3.5x for 30 June and 30
September 2023, 3.25x for 31 December 2023, 3.0x for 31 March 2024, 2.75x for
30 June 2024 and 2.5x thereafter.
- Interest cover covenant (measured quarterly): 2.5x in June and September
2023, 1.75x in December 2023 and March 2024, 2.0x in June and September 2024,
2.5x in December 2023 and 2.75x in March 2025.
- Scheduled amortisation of: £15m on 30 September 2023, £10m on 31 December
2023 and £10m on 30 June 2024.
- Minimum liquidity requirement: £10m.
The Group has been in compliance with the requirements of its
financial covenants under the existing agreement and remained so at the 30
June 2023 measurement date.
Going concern assessment period
Accounting standards require the Directors to make an
assessment of the Company's ability to continue to operate as a going concern
for at least 12 months from the date of approval of the financial statements.
The Board has considered an appropriate period for going concern assessment
taking into account any known liquidity events that will occur after the 12
months period. Given that the refinancing has been recently completed, the
Directors concluded that the 12 months going concern assessment period is
appropriate.
Board assessment
Base case
The Group continues to closely monitor and manage its
liquidity and covenants compliance. The Group has prepared base case cash flow
forecasts that demonstrate the Board's best estimate for the going concern
assessment period, taking into account the wider macro-economic environment
such as increases in the base interest rate. The Board believes that in the
preparation of the base case it has taken into account some potential downside
risks to business performance, including the likelihood of winning major new
contracts, ongoing project delivery risks and timing of contract cashflows.
The base plan does not include any further disposals or acquisitions. The base
case demonstrated the Company would have headroom against its facilities and
would comply with covenants over the going concern period.
Severe but plausible downside scenario
The Group also modelled severe but plausible downside
scenarios in which the Board has taken account of the following:
- trading downside risks, which assume the Group is not successful in
delivering the anticipated profitability levels due to risks associated with
contract wins and/or delays and forecast margins achievement resulting in
operating profit reduction of 26% in September to December 2023 and 25% in
2024;
- cash inflow disruptions that may result from late payments from customers or
project delivery challenges resulting in £10m cash receipts reduction in
September to December 2023 and a further £10m reduction in 2024;
- cash outflows during the going concern period that may be required to settle
or transfer certain performance guarantees that remained within the Group
following the sale of James Fisher Nuclear (JFN) on 3 March 2023, in the event
of default by JFN in performing its contractual duties and obligations;
- further increase in interest rates from the current rate of 5.25% with
incremental increases to 6.5% SONIA in March 2024 and for the remainder of the
going concern period.
The above scenarios, individually and combined, demonstrated
sufficient liquidity headroom and covenants compliance. However, the
combination of all above scenarios result in limited headroom on the interest
cover and net debt/EBITDA covenants at June 2024. Should the Board need to
take mitigating action moving into the 2024 financial year then it would
initially consider the level of pay increases included in the forecasts that
was appropriate to be awarded in January 2024 and secondly consider an
extension to creditor terms. The severe but plausible downside scenario
includes an average of a 2% increase across all employees, costing the Group
approximately £3m on an annualised basis which the Board believes would
provide sufficient flexibility to mitigate the risk of any potential covenant
breaches.
As part of the new revolving credit facility there is a non-financial covenant
that requires the Group to provide signed audited financial statements for all
guarantors party to the banking arrangement where applicable within 180 days
of the year end. At the time of signing these financial statements the Group
has obtained a waiver from the banks for certain guarantors where this
covenant requirement has not been met. The Board believe that they are able to
meet the revised signing dates as outlined in this waiver however acknowledge
that should the revised signing dates not be met then an additional waiver
will need to be obtained to prevent a breach to the Group's banking facility.
Conclusion
Having undertaken rigorous assessment as detailed above, the Directors are
confident that the Company will have sufficient funds to continue to meet its
liabilities as they fall due for at least 12 months from the date of approval
of the condensed interim financial statements and therefore have prepared the
condensed interim financial statements on a going concern basis.
Significant accounting policies
IFRS 17 Insurance contracts (IFRS 17) as issued in 2017, with
amendments published in 2020 and 2021, was adopted as from 1 January 2023. The
adoption of IFRS 17 had no significant effect on the Group's financial
reporting. Otherwise, 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 2022.
2 Accounting estimates and judgements
The preparation of half year 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 materially 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 as at and
for the year ended 31 December 2022.
3 Alternative performance measures
The Group uses a number of alternative (non-Generally
Accepted Accounting Practice (non-GAAP)) performance measures which are not
defined within IFRS. The alternative performance measures (APMs) should be
considered in addition to and not as a substitute or superior to the
information presented in accordance with IFRS, as APMs may not be directly
comparable with similar measures used by other companies.
The Group believes that APMs, when considered together with
IFRS results, provide the readers of the financial statements with
complementary information to better understand and compare the financial
performance and position of the Group from period to period. The adjustments
are usually items that are significant in size and/or non-recurring in nature.
These measures are also used by management for planning, reporting and
performance management purposes. Some of the measures form part of the
covenant ratios calculation required under the terms of The Group's loan
agreements.
As APMs include the benefits of restructuring programmes or
use of the acquired intangible assets but exclude certain significant costs,
such as amortisation of intangible assets, litigation, material restructuring
and transaction items, they should not be regarded as a complete picture of
the Group's financial performance, which is presented in its IFRS results. The
exclusion of adjusting items may result in underlying profits/(losses) being
materially higher or lower than IFRS earnings.
A review has been performed to determine which APMs are most
relevant to users of the financial results. As a consequence, some measures
have been removed (including underlying dividend cover and underlying cash
conversion) and a leverage (replacing underlying net borrowings) and interest
cover APMs have been added with a view to increase reliance on statutory
measures and reduce the number of APMs. The following APMs are referred to
in the Annual Report and Accounts and described in the following paragraphs.
3.1 Underlying operating profit
Underlying operating profit is defined as operating profit from continuing and
discontinued operations (see Note 5) adjusted for acquisition related income
and expense (amortisation or impairment of acquired intangible assets,
acquisition expenses, adjustments to contingent consideration), the costs of a
material restructuring, litigation, asset impairment and profit/loss relating
to the sale of businesses or any other significant one-off adjustments to
income or expenses (adjusting items).
Underlying operating profit is used as a basis for net debt/EBITDA and
interest cover covenant calculation, required under the terms of the Group's
loan agreements. This APM is also used internally to measure the Group's
performance against previous years and budgets, as the adjusting items
fluctuate year on year and may be unknown at the time of budgeting.
Six months ended 30 June 2023
Continuing operations
As reported Impairment charges/ Re-financing Re-structuring Disposal of businesses and assets Other/ Underlying results Discontinued Total underlying
(reversals) Tax operations results
£m £m £m £m £m £m £m £m £m
Continuing operations
Revenue 252.0 - - - - - 252.0 6.7 258.7
Cost of sales (186.5) - - - (1.1) - (187.6) (6.0) (193.6)
Gross profit 65.5 - - - (1.1) - 64.4 0.7 65.1
Administrative expenses (62.4) (0.3) 9.3 1.4 - 1.5 (50.5) (7.2) (57.7)
Impairment of trade receivables (0.4) - - - - - (0.4) - (0.4)
Share of post-tax results of associates 0.5 - - - - - 0.5 - 0.5
Operating profit/(loss) 3.2 (0.3) 9.3 1.4 (1.1) 1.5 14.0 (6.5) 7.5
Finance income 1.1 - - - - - 1.1 - 1.1
Finance expense (8.7) - - - - - (8.7) - (8.7)
Profit/(loss) before taxation (4.4) (0.3) 9.3 1.4 (1.1) 1.5 6.4 (6.5) (0.1)
Income tax 1.2 - - - - (2.9) (1.7) 0.1 (1.6)
Profit/(loss) for the year from continuing operations (3.2) (0.3) 9.3 1.4 (1.1) (1.4) 4.7 (6.4) (1.7)
Discontinued operations -
(Loss)/profit for the year from discontinued operations, net of tax (6.4) - - - - - (6.4) 6.4 -
Profit/(loss) for the period (9.6) (0.3) 9.3 1.4 (1.1) (1.4) (1.7) - (1.7)
Operating margin (%) 1.3% 5.6% (97%) 2.9%
Segmental underlying operating profit is calculated as follows:
Energy 6.9 (0.5) - 0.4 0.4 0.3 7.5
Defence 0.7 (0.3) - 0.2 - - 0.6
Maritime transport 10.0 0.5 - 0.8 (1.5) 0.2 10.0
Corporate (14.4) - 9.3 - - 1.0 (4.1)
Continuing 3.2 (0.3) 9.3 1.4 (1.1) 1.5 14.0
During the six months ended 30 June 2023, adjusting items were in relation to
the following matters:
The impairment charges/(reversals) relate to tangible assets and assets held
for sale.
Refinancing is related to the costs of the refinancing strategy and obtaining
a waiver from the lenders.
Restructuring costs relates to restructuring programmes in the Fendercare and
JFD businesses.
Disposal of businesses and assets includes a gain of £1.1m on disposal of a
vessel in Tankships.
Other includes £0.4m costs of litigation, £0.6m legal and advisory costs
related to compliance with the new facilities' requirements and amortisation
of acquired intangibles.
Six months ended 30 June 2022
Continuing operations
As reported Amortisation of acquired intangible assets Impairment charges/ Disposal of businesses and assets Other/ Underlying results Discontinued operations Total underlying results
restated
(reversals)
Tax
£m £m £m £m £m £m £m £m
Continuing operations
Revenue 215.0 - - - - 215.0 23.4 238.4
Cost of sales (159.9) - - (1.0) - (160.9) (21.8) (182.7)
Gross profit 55.1 - - (1.0) - 54.1 1.6 55.7
Administrative expenses (45.9) 1.1 - - 1.5 (43.3) (3.5) (46.8)
Impairment of trade receivables (0.8) - - - - (0.8) - (0.8)
Share of post-tax results of associates 1.4 - - - - 1.4 0.0 1.4
Operating profit/(loss) 9.8 1.1 - (1.0) 1.5 11.4 (1.9) 9.5
Finance income 0.2 0.0 - - - 0.2 0.0 0.2
Finance expense (4.8) 0.0 - - - (4.8) (0.1) (4.9)
Profit/(loss) before taxation 5.2 1.1 - (1.0) 1.5 6.8 (2.0) 4.8
Income tax (1.6) 0.0 - - (0.2) (1.8) 0.4 (1.4)
Profit/(loss) for the year from continuing operations 3.6 1.1 - (1.0) 1.3 5.0 (1.6) 3.4
Discontinued operations
(Loss)/profit for the year from discontinued operations, net of tax (1.6) - - - - (1.6) 1.6 -
Profit/(loss) for the period 2.0 1.1 - (1.0) 1.3 3.4 (0.0) 3.4
Operating margin (%) 4.5% 5.3% (8%) 4.0%
Segmental underlying operating profit is calculated as follows:
Energy 5.4 0.8 - - - 6.2
Defence (1.4) 0.1 - - - (1.3)
Maritime transport 9.1 0.2 - (1.0) - 8.4
Corporate (3.4) - - - 1.5 (1.9)
Continuing 9.8 1.1 - (1.0) 1.5 11.4
During the six months ended 30 June 2022, adjusting items were in relation to
the following matters:
Disposal of businesses and assets relates includes a gain of £1.0m on
disposal of a vessel in the Marine Transport division.
Other includes £1.5m past service cost recognised for the MNRPF scheme in
respect of ill health early retirement benefits (see Note 10).
Year ended 31 December 2022
As reported Amorti- Impairment charges/ Specific trade receivables provision Re-structuring Disposal of businesses and assets Other/ Underlying results Dis-continued operations Total underlying results
(reversals)
sation of acquired intangible assets Tax
£m £m £m £m £m £m £m £m £m £m
Continuing operations
Revenue 478.1 - - - - - - 478.1 42.8 520.9
Cost of sales (350.9) - (4.5) - - (0.9) - (356.3) (43.3) (399.6)
Gross profit 127.2 - (4.5) - - (0.9) - 121.8 (0.5) 121.3
Administrative expenses (104.4) 2.1 5.2 - 1.7 (2.5) 1.7 (96.2) (6.9) (103.1)
Impairment of trade receivables 0.3 - - (1.1) - - - (0.8) - (0.8)
Share of post-tax results of associates 1.6 - - - - - - 1.6 0.1 1.7
Operating profit/(loss) 24.7 2.1 0.7 (1.1) 1.7 (3.4) 1.7 26.4 (7.3) 19.1
Finance income 0.7 - - - - - - 0.7 - 0.7
Finance expense (10.9) - - - - - - (10.9) (0.1) (11.0)
Profit/(loss) before taxation 14.5 2.1 0.7 (1.1) 1.7 (3.4) 1.7 16.2 (7.4) 8.8
Income tax (5.5) - - - - - 0.8 (4.6) 0.8 (3.8)
Profit/(loss) for the year from continuing operations 9.0 2.1 0.7 (1.1) 1.7 (3.4) 2.5 11.6 (6.6) 5.0
Discontinued operations
(Loss)/profit for the year from discontinued operations, net of tax (19.8) - - - - - - (19.8) 19.8 -
Profit/(loss) for the year (10.8) 2.1 0.7 (1.1) 1.7 (3.4) 2.5 (8.3) 13.3 5.0
Operating margin (%) 5.2% 5.5% (17.0%) 3.7%
Segmental underlying operating profit is calculated as follows:
Energy 16.4 1.6 (0.8) (1.1) - (2.5) 0.2 13.9
Defence (3.5) 0.1 1.7 - 1.4 - - (0.3)
Maritime transport 19.2 0.4 (0.3) - 0.4 (0.9) - 18.7
Corporate (7.4) - - - - - 1.5 (5.9)
Continuing 24.7 2.1 0.6 (1.1) 1.7 (3.4) 1.7 26.4
During the year ended 31 December 2022, adjusting items were in relation to
the following matters:
Amortisation of acquired intangibles.
The impairment charges/(reversals) relate to goodwill, intangible and tangible
assets, and assets held for sale (see Notes 11, 13).
Specific trade receivables provision relates to a recovery of amounts provided
for in 2021 in relation to specific counterparty risk and receivables billed
over 12 months ago in relation to certain projects.
Restructuring costs relates to restructuring programmes completed during the
year by the Fendercare and JFD businesses.
Disposal of businesses and assets relates to the disposal during 2022 of James
Fisher Mimic Ltd, Prolec Ltd and Strainstall UK Ltd for £18.5m proceeds with
£4.3m gains less £1.8m costs of disposal. In addition, the Group has
recognised a gain of £0.9m on disposal of one of its vessels in the Tankships
division.
Other includes £1.5m past service cost recognised for the MNRPF scheme in
respect of ill health early retirement benefits (see Note 10).
3.2 Covenant EBITDA (Earnings before Interest, Tax, Depreciation and
Amortisation)
Covenant EBITDA is calculated in line with the Group's banking
covenants. It is defined as the underlying operating profit before interest,
tax, depreciation and amortisation, adjusted for impacts of IFRS 16. The
covenants require that EBITDA is calculated excluding the effects of IFRS 16.
The IFRS 16 adjustment is calculated as a difference between depreciation on
right-of-use ("ROU") assets and operating lease payments.
2023 2022 2022
Six months ended 30 June Six months ended 30 June Year ended 31 December
£m* £m £m*
Underlying operating profit 14.0 11.4 26.4
Depreciation and amortisation 20.8 19.8 40.3
Less: Depreciation on right-of-use assets (8.2) (5.9) (12.2)
Amortisation of acquired intangibles (0.5) (1.1) (2.1)
IFRS 16 impact removed 0.9 2.8 0.2
Covenant EBITDA 27.0 27.0 52.6
*Excludes discontinued operations.
3.3 Leverage
Leverage is calculated in line with the Group's banking covenants.
It is defined as Covenant EBITDA divided by underlying net borrowings.
Underlying net borrowings is net borrowings as set out in Note 12, including
guarantees and excluding right-of-use operating leases, which are the leases
which would be considered operating leases under IAS17, prior to the
introduction of IFRS16. Guarantees are those issued by a bank or financial
institution to compensate a stakeholder in the event of a Group company not
fulfilling its obligations in the ordinary course of business in relation to
either advance payments or trade debtors.
2023 2022 2022
Six months ended 30 June Six months ended 30 June Year ended
31 December
£m £m £m
Net borrowings (Note 12) 203.5 205.5 185.8
Guarantees 1.6 5.2 2.3
Less: right-of-use operating leases (50.6) (38.3) (46.0)
Underlying Net borrowings 154.5 172.4 142.1
Covenant EBITDA (12 months) 55.4 53.0 52.6
Leverage 2.8 3.3 2.7
3.4 Underlying Capital employed and Return on Capital Employed (ROCE)
Capital employed is defined as net assets less right-of-use assets, less cash
and cash equivalents and after adding back borrowings. Average capital
employed is adjusted for the timing of businesses acquired and after adding
back cumulative amortisation of customer relationships. Segmental ROCE is
defined as the underlying operating profit, divided by average capital
employed. Group ROCE, is defined as underlying operating profit, less
notional tax, calculated by multiplying the underlying effective tax rate by
the underlying operating profit, divided by average capital employed, as
calculated below. Group ROCE is a KPI that is used internally and externally
and forms part of performance conditions under the Group's LTIP scheme.
2023 2022 2022
Six months ended 30 June Six months ended 30 June Year ended
31 December
£m £m £m
Net assets 200.1 225.4 218.3
Less right-of-use assets (61.6) (39.5) (52.3)
Plus net borrowings 203.5 205.5 185.8
Capital employed 342.0 391.4 351.7
Add: amortisation of customer relationships 0.5 0.8 1.7
342.5 392.2 353.4
Underlying operating profit* 13.6 9.5 19.1
Notional tax at the underlying effective tax rate (3.7) (2.7) (5.1)
9.9 6.8 14.0
Average capital employed 367.3 409.0 355.1
Return on average capital employed 4.7% 2.7% 3.9%
*June 2023 Underlying operating profit excludes £2.1m costs of disposal and a
£4.0m provision for a parent company guarantee (see Note 14).
The three divisional ROCE's are detailed below:
Six months ended 30 June 2023 Maritime
Energy Defence transport
£m £m £m
Net assets 175.2 88.9 87.7
Less right-of-use assets (8.3) (2.5) (49.9)
Plus net borrowings 11.8 2.6 40.6
Capital employed 178.7 89.0 78.4
Add: amortisation of customer relationships 0.3 - 0.2
179.0 89.0 78.6
Underlying operating profit 15.2 1.6 20.1
Average capital employed 184.9 93.0 83.6
Return on average capital employed 8.2% 1.8% 24.1%
Six months ended 30 June 2022 Maritime
Energy Defence transport
£m £m £m
Net assets 185.1 96.6 87.3
Less right-of-use assets (10.3) (3.5) (22.7)
Plus net borrowings 15.0 3.7 23.7
Capital employed 189.8 96.8 88.3
Add: amortisation of customer relationships 0.6 - 0.2
190.4 96.8 88.5
Underlying operating profit 13.0 2.4 13.2
Average capital employed 206.9 94.3 88.8
Return on average capital employed 6.3% 2.6% 14.9%
Year ended 31 December 2022 Maritime
Energy Defence transport
£m £m £m
Net assets 172.4 84.9 82.7
Less right-of-use assets (9.3) (3.0) (39.0)
Plus net borrowings 13.4 3.3 34.8
Capital employed 176.5 85.2 78.5
Add: amortisation of customer relationships 1.1 0.1 0.4
177.6 85.3 78.9
Underlying operating profit 13.9 (0.4) 18.8
Average capital employed 173.6 84.7 83.2
Return on average capital employed 8.0% (0.4)% 22.5%
3.5 Interest cover
Interest cover is calculated in line with the Group's banking covenants. It is
defined as a ratio of underlying net operating profit, adjusted for the IFRS
16 impact, to covenant interest.
2023 2022 2022
Six months ended 30 June Six months ended 30 June Year ended
31 December
£m £m £m
Interest payable on bank loans less interest receivable on short-term deposits 6.3 3.6 8.1
less
Finance lease interest 0.1 - 0.1
Arrangement fees (1.2) (0.5) (1.0)
Covenant interest 5.2 3.1 7.2
Underlying net operating profit* 14.0 11.4 26.4
IFRS 16 impact removed 0.7 2.3 (0.7)
14.7 13.7 25.7
Interest cover 3.2 4.5 3.5
*Excludes discontinued operations.
3.6 Underlying earnings per share
Underlying earnings per share (EPS) is calculated as the total of
underlying profit before tax, less income tax, but excluding the tax impact on
adjusting items, less profit attributable to non-controlling interests,
divided by the weighted average number of ordinary shares in issue during the
year. Underlying earnings per share is a performance condition used for the
LTIP schemes.
2023 2022 2022
Six months ended 30 June Six months ended 30 June Year ended
31 December
Loss attributable to owners of the Company (£m) (9.6) 1.9 (11.1)
Adjusting items (£m)* 16.9 1.6 1.7
Tax on adjusting items (£m) (2.9) (0.2) 0.8
Underlying profit attributable to owners of the Company (£m) 4.4 3.3 (8.6)
Basic weighted average number of shares (Note 8) 50,347,663 50,344,286 50,345,989
Diluted weighted average number of shares (Note 8) 50,347,663 50,344,286 50,367,147
Underlying basic earnings per share (p) 8.7 6.7 (17.1)
Underlying diluted earnings per share (p) 8.7 6.7 (17.1)
*June 2023 adjusting items include £2.1m costs of disposal and a £4.0m
provision for a parent company guarantee (see Note 14).
4 Segmental information
From 1 January 2023, the Group has reorganised as from 1 January 2023 into
three divisions, representing the key markets within which the Group operates,
namely: Energy, Defence, and Maritime Transport. The Energy division combines
the division that used to be called Marine Support and Offshore Oil divisions,
without Fendercare, which is added to the Tankships division to create
Maritime Transport. JFD is the only component of the Defence division. The
comparative segmental information for 2022 has been restated accordingly.
The Board assesses the performance of the segments based on underlying
operating profit. 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. Sector assets exclude cash,
short-term deposits and corporate assets that cannot reasonably be allocated
to operating segments. Sector liabilities exclude borrowings, retirement
benefit obligations and corporate liabilities that cannot reasonably be
allocated to operating segments.
Six months ended 30 June 2023
Energy Defence Maritime transport Corporate Continuing Discontinued
Total Total Total
£m £m £m £m £m £m £m
Revenue
Segmental revenue reported 134.0 37.1 81.0 - 252.1 6.8 258.9
Inter-segmental sales - (0.1) - - (0.1) (0.1) (0.2)
134.0 37.0 81.0 - 252.0 6.7 258.7
Underlying operating profit/(loss) 7.5 0.6 10.0 (4.1) 14.0 (6.5) 7.5
APMs (see Note 3) (0.6) 0.1 - (10.3) (10.8) - (10.8)
Operating profit/(loss) 6.9 0.7 10.0 (14.4) 3.2 (6.5) (3.3)
Finance income 1.1
Finance expense (8.7)
Loss before tax (10.9)
Income tax 1.3
Loss for the period (9.6)
Assets & liabilities
Segmental assets 253.8 110.9 161.1 102.1 627.9 - 627.9
Investment in joint ventures 2.5 3.6 2.4 - 8.5 - 8.5
Total assets 256.3 114.5 163.5 102.1 636.4 - 636.4
Segmental liabilities (81.1) (25.6) (75.8) (253.8) (436.3) - (436.3)
175.2 88.9 87.7 (151.7) 200.1 - 200.1
Other segmental information
Capital expenditure 13.0 0.7 2.5 0.2 16.4 - 16.4
Depreciation and amortisation 8.8 2.0 9.7 0.3 20.8 - 20.8
Six months ended 30 June 2022
Energy Defence Maritime transport Corporate Continuing Discontinued Total
Total Total
£m £m £m £m £m £m £m
Revenue
Segmental revenue reported 106.3 32.6 76.3 - 215.2 24.0 239.2
Inter-segmental sales (0.2) - - - (0.2) (0.6) (0.8)
106.1 32.6 76.3 - 215.0 23.4 238.4
Underlying operating profit reported 6.2 (1.3) 8.4 (1.9) 11.4 (1.9) 9.5
APMs (see Note 3) (0.8) - 0.7 (1.5) (1.6) - (1.6)
Operating profit 5.4 (1.3) 9.1 (3.4) 9.8 (1.9) 7.9
Finance income 0.2
Finance expense (4.9)
Profit before tax 3.2
Income tax (1.2)
Profit for the period 2.0
Assets & liabilities
Segmental assets 270.5 118.5 142.0 65.6 596.6 27.2 623.8
Investment in joint ventures 3.0 3.9 2.7 - 9.6 - 9.6
Total assets 273.5 122.4 144.7 65.6 606.2 27.2 633.4
Segmental liabilities (88.2) (25.8) (57.4) (220.4) (391.8) (16.2) (408.0)
185.3 96.6 87.3 (154.8) 214.4 11.0 225.4
Other segment information
Capital expenditure 4.2 1.4 4.3 - 9.9 0.2 10.1
Depreciation and amortisation 9.7 2.6 7.3 0.2 19.8 0.6 20.4
Year ended 31 December 2022
Energy Defence Maritime transport Corporate Continuing Discontinued Total
Total Total
£m £m £m £m £m £m £m
Revenue
Segmental revenue reported 242.8 68.3 167.3 - 478.4 43.9 522.3
Inter-segmental sales (0.2) (0.1) - - (0.3) (1.1) (1.4)
242.6 68.2 167.3 - 478.1 42.8 520.9
Underlying operating profit/(loss) 13.9 (0.4) 18.8 (5.9) 26.4 (7.3) 19.1
APMs (see Note 3) 2.5 (3.1) 0.4 (1.5) (1.7) (13.3) (15.0)
Operating (loss)/profit 16.4 (3.5) 19.2 (7.4) 24.7 (20.6) 4.1
Finance income 0.7 - 0.7
Finance expense (10.9) - (10.9)
Loss before tax 14.5 (20.6) (6.2)
Income tax (5.5) 0.8 (4.7)
Loss for the year 9.0 (19.8) (10.8)
Assets & liabilities
Segmental assets 250.8 114.5 155.1 63.6 584.0 16.3 600.3
Investment in joint ventures 3.0 3.4 2.3 - 8.7 - 8.7
Total assets 253.8 117.9 157.4 63.6 592.7 16.3 609.0
Segmental liabilities (81.4) (33.0) (74.6) (185.4) (374.4) (16.3) (390.7)
172.4 84.9 82.8 (121.8) 218.3 - 218.3
Other segment information
Capital expenditure 14.2 4.4 8.5 - 27.1 0.3 27.4
Depreciation and amortisation 19.5 5.3 15.1 0.4 40.3 0.8 41.1
5 Discontinued operations
In December 2022, management agreed a plan to sell the Nuclear business as a
result of a strategic decision to rationalise and focus the portfolio within
the Specialist Technical division. At 31 December, the business has been
classified as held for sale and is part of a single co-ordinated plan to
dispose of a separate major line of business. It is classified as a
discontinued operation.
2023 2022 2022
Six months ended 30 June Six months ended 30 June Year ended 31 December
£m £m £m
Revenue 6.8 24.0 43.9
Inter-segmental sales (0.1) (0.6) (1.1)
6.7 23.4 42.8
Expenses (13.2) (25.4) (50.1)
Loss before taxation (6.5) (2.0) (7.3)
Income tax 0.1 0.4 0.8
Loss from operating activities after tax (6.4) (1.6) (6.5)
Loss on remeasurement to fair value less costs to sell - - (13.3)
Loss for the period from discontinued operations (6.4) (1.6) (19.8)
Attributable to:
Owners of the Company (6.4) (1.6) (19.8)
Non-controlling interests - - -
(6.4) (1.6) (19.8)
2023 2022 2022
Cash flows (used in)/from discontinued operations Six months ended 30 June Six months ended 30 June Year ended 31 December
£m £m £m
Net cash from operating activities (0.4) 0.7 (3.1)
Net cash from investing activities - (0.7) (5.0)
Net cash from financing activities - - -
Net cash flows for the period (0.4) - (8.1)
On 3 March 2023, the Group announced that the entire share capital of James
Fisher Nuclear Holdings Limited and related properties were sold to Myneration
Limited, a wholly-owned investment vehicle of Rcapital Partners LLP for a
consideration of £3. The Group has retained certain parent company guarantees
which historically were given to support the obligations of JFN.
2023
Six months ended
30 June
Consideration received -
Net liabilities disposed (0.1)
Costs in relation to businesses sold (2.0)
Loss on disposal (2.1)
Cash flow from the disposal of businesses
Cash received -
Cash and cash equivalents disposed -
Costs in relation to businesses sold (3.2)
(3.2)
6 Net finance expense
2023 2022 2022
Six months ended Six months ended Year ended
30 June 30 June 31 December
£m £m £m
Finance income:
Interest receivable on short-term deposits 1.0 0.2 0.7
Net interest on pension surplus/(obligations) 0.1 - -
1.1 0.2 0.7
Finance expense:
Interest payable on bank loans and overdrafts* (7.3) (3.8) (8.8)
Unwind of discount on right-of-use lease liability (1.4) (1.0) (2.1)
(8.7) (4.8) (10.9)
Net finance expense (7.6) (4.6) (10.2)
*Includes impact of increased interest rates. In June 2023, the Company
completed refinancing which accelerated the recognition of £0.7m unamortised
arrangement fees.
7 Taxation
The Group's effective rate on profit before income tax is 27.3% (30 June 2022:
30.6%, 31 December 2022: 37.9%) which includes an exceptional tax credit of
£2.9m as detailed in Note 3. The effective income tax rate on underlying
profit before income tax, based on an estimated rate for the year ending 31
December 2023, is 27.2% (30 June 2022: 28.4%, 31 December 2022: 28.4%). Of the
total tax charge, £3.9m relates to overseas businesses (30 June 2022:
£0.8m). Taxation on profit has been estimated based on rates of taxation
applied to the profits forecast for the full year.
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 year, after excluding 47,855 (June
2022:47,855, December 2022: 47,855) ordinary shares held by the James Fisher
and Sons plc Employee Share Ownership Trust (ESOT), as treasury shares.
Diluted earnings per share are calculated by dividing the net profit
attributable to ordinary equity holders of the Company by the weighted average
number of ordinary shares that would be issued on conversion of all the
dilutive potential ordinary shares into ordinary shares.
The average market value of the Company's shares for purposes
of calculating the dilutive effect of share options was based on quoted market
prices for the period during which the options were outstanding.
At 30 June 2023, 3,168,869 options (June 2022: 2,180,603, December
2022:1,759,740) were excluded from the diluted weighted average number of
ordinary shares calculation as their effect would be anti-dilutive.
Weighted average number of shares
30 June 30 June 31 December 2022
2023 2023
Number of Number of Number of
shares shares shares
For basic earnings per ordinary share 50,347,663 50,344,286 50,345,989
Exercise of share options and LTIPs - - 21,158
For diluted earnings per ordinary share 50,347,663 50,344,286 50,367,147
(Loss)/earnings per share pence pence pence
Basic earnings per share (19.0) 3.7 (22.1)
Diluted earnings per share (19.0) 3.7 (22.1)
(Loss)/earnings per share - continuing operations pence pence pence
Basic earnings per share (6.3) 6.9 17.4
Diluted earnings per share (6.3) 6.9 17.4
(Loss)/earnings per share - discontinued operations pence pence pence
Basic earnings per share (12.7) (3.2) (39.5)
Diluted earnings per share (12.7) (3.2) (39.5)
9 Interim dividend
No interim dividend is proposed in respect of the period ended 30 June 2023
(2022: nil).
10 Retirement benefit obligations
Movements during the period in the Group's defined benefit pension schemes are
set out below:
2023 2022 2022
Six months ended Six months ended Year
ended
30 June 30 June 31 December
£m £m £m
Net obligation as at 1 January 5.1 (1.9) (1.9)
Expense recognised in the income statement (0.2) (1.6) (2.2)
Contributions paid to scheme 1.0 1.0 2.1
Remeasurement gains and losses (1.1) 7.6 7.1
At period end 4.8 5.1 5.1
The Group's net surplus/(deficit) in respect of its pension schemes were as
follows:
2023 2022 2022
Six months ended Six months ended Year
ended
30 June 30 June 31 December
£m £m £m
Shore Staff 5.3 5.8 5.5
Merchant Navy Officers Pension Fund (0.3) (0.7) (0.4)
Merchant Navy Ratings Pension Fund (0.2) - -
4.8 5.1 5.1
The principal assumptions in respect of these liabilities are disclosed in the
December 2022 Annual Report. The Group has not obtained an interim valuation
for the period ended 30 June 2023. In the first half of 2023, the Group paid
contributions to defined benefit schemes of £1.0m (June 2022: £1.0m).
The Shore staff plan assets and obligations have been updated to 30 June 2023
resulting in a surplus being recognised. A surplus, when calculated on an
accounting basis, is recognised when the Group can realise the economic
benefit at some point during the life of the plan or when the plan liabilities
are all settled and there are no remaining beneficiaries. Based on a review
of the plan's governing documentation, the Company has a right to a refund of
surplus assuming the gradual settlement of the plan liabilities over time
until all members have left. The Directors therefore take the view that it
is appropriate to recognise the surplus.
In 2018, the Trustees became aware of historic legal uncertainties relating to
changes to ill-health early retirement benefits payable from the MNRPF. In
order to resolve the issue the Trustee sought directions from the Court, and
in February 2022, the High Court approved a settlement in principle.
During the year ended 31 December 2022, a £1.5m past service cost has been
recognised within administrative expenses relating to the Group's share of
additional liabilities which have been estimated to date.
11 Goodwill
Movements during the period in the Group's goodwill are set out below:
2023 2022 2022
Six months ended Six months ended Year
ended
30 June 30 June 31 December
£m £m £m
At 1 January 116.3 133.5 133.5
Impairment - - (4.4)
Disposals - - (7.1)
Discontinued operations - - (8.1)
Exchange differences (3.8) 1.6 2.4
At period end 112.5 135.1 116.3
At the half year, the results of the impairment tests carried out in respect
of the year ended 31 December 2022, were updated based on the Group's trading
performance and revised outlooks.
In 2022, the Group saw projects in subsea operations being deferred or
cancelled, leading to a reduction in profitability. As a result, the
impairment loss was recognised in relation to a CGU within the Energy division
with a charge of £4.4m recognised in other expenses, resulting in zero
goodwill being recognised in respect of that CGU.
Key assumptions
The recoverable amount is based on a value-in-use calculation, which is
determined by performing discounted future post-tax cash flow calculations for
a five-year period and projected into perpetuity. The five-year cashflow
forecasts are based on the latest forecast for the current year (year one) and
the strategic business plans for years two to five. The five-year revenue
growth rate is calculated as cumulative average growth rate over five years
and is derived from the five-year plan which is prepared by management, and is
reviewed and approved by the Board. The five-year plan reflects past
experience, management's assessment of the current contract portfolio,
contract wins, contract retention, price increases, as well as future expected
market trends (including the impact of climate change, where relevant),
adjusted to meet the requirements of IAS 36 Impairment of Assets.
Cash flows beyond year five are projected into perpetuity using a long-term
terminal growth rate in line with management's long-term expectations for the
prevailing rates of inflation.
The cash flows are discounted at a post-tax discount rate which is based on
the Group's weighted average cost of capital adjusted for CGUs' specific
country risk and business risk.
Sensitivity to impairment
The value-in-use calculations were assessed for sensitivity to reasonably
possible changes to assumptions. Sensitivities carried out across all CGUs
included increasing the discount rate by 2%, combination of increasing the
discount rate by 2% and reducing operating profit by 10%, reducing the
terminal growth to zero and reducing operating profit by 10%.
None of the CGUs with significant goodwill balances were identified as having
a high risk of impairment and showed positive headroom in all of the
scenarios. The sensitivities identified that the headroom is most sensitive to
changes in the operating profit, which would need to be decreased by 27% for
Fendercare, 33% for JFD and 26% for Scantech to give rise to a goodwill
impairment in these CGUs and this is not considered a reasonably possible
change.
An additional sensitivity was run on JFD to reflect the removal of a large
unsecured contract in 2024 and 2025. Positive headroom remained under this
scenario.
For one CGU without significant goodwill, the sensitivities identified that
the headroom is most sensitive to changes in the operating profit, which would
need to reduce by 1% to give rise to a goodwill impairment in respect of this
CGU. As at June 23, the business has shown strong performance and was ahead of
its budget and forecast. Given the strong performance for this GCU and
increased latest forecast profitability for the full year we do not consider
there to be an impairment of the goodwill associated with this CGU.
All other CGU's without significant goodwill show no impairment under any of
the scenarios.
12 Reconciliation of net borrowings
1 January Cash Other Exchange 30 June
2023 flow non-cash Disposals movement 2023
£m £m £m £m £m £m
Cash and cash equivalents 22.8 (2.3) - - (0.7) 19.8
Cash - classified within Assets held for sale 2.8 - - (2.8) - -
Debt due after 1 year (121.9) (44.0) (1.1) - - (167.0)
Debt due within 1 year (36.6) 36.6 - - - -
(158.5) (7.4) (1.1) - - (167.0)
Lease liabilities (52.9) 8.5 (15.1) - 3.2 (56.3)
Net borrowings (185.8) (1.2) (16.2) (2.8) 2.5 (203.5)
1 January Cash Other Exchange 30 June
2022 flow non-cash Transfers movement 2022
£m £m £m £m £m £m
Cash and cash equivalents 34.5 (25.2) - - 1.8 11.1
Debt due after 1 year (174.0) 3.9 (0.5) - - (170.6)
Debt due within 1 year (0.1) 0.1 - - - -
(174.1) 4.0 (0.5) - - (170.6)
Lease liabilities (46.0) 7.0 (3.8) - (3.2) (46.0)
Net borrowings (185.6) (14.2) (4.3) - (1.4) (205.5)
1 January Cash Other Exchange 31 December
2022 flow non-cash Transfers movement 2022
£m £m £m £m £m £m
Cash and cash equivalents 34.5 (11.4) - (2.8) 2.5 22.8
Cash - classified within Assets held for sale - - - 2.8 - 2.8
Debt due after 1 year (174.0) 16.6 (1.0) 36.5 - (121.9)
Debt due within 1 year (0.1) - - (36.5) - (36.6)
(174.1) 16.6 (1.0) - - (158.5)
Lease liabilities (46.0) 14.5 (17.8) - (3.6) (52.9)
Net borrowings (185.6) 19.7 (18.8) - (1.1) (185.8)
Cash and cash equivalents comprise: 2023 2022 2022
Six months ended Six months ended Year ended
30 June 30 June 31 December
£m £m £m
Cash at bank and in hand 90.3 53.8 53.6
Overdrafts (70.5) (42.7) (30.8)
19.8 11.1 22.8
Revolving credit facilities - refinancing
On 7 June 2023, the Group announced that it has signed its new revolving
credit facility. The Group's new £210m secured revolving credit facility,
which matures in March 2025 (the "RCF"), has been provided by its six existing
lenders.
The key terms of the new facility agreement are:
- Maturity date: 31 March 2025.
- Net debt/EBITDA covenant (measured quarterly): 3.5x for 30 June and 30
September 2023, 3.25x for 31 December 2023, 3.0x for 31 March 2024, 2.75x for
30 June 2024 and 2.5x thereafter.
- Interest cover covenant (measured quarterly): 2.5x in June and September
2023, 1.75x in December 2023 and March 2024, 2x in June and September 2024,
2.5x in December 2023 and 2.75x in March 2025.
- Scheduled amortisation of: £15m on 30 September 2023, £10m on 31 December
2023 and £10m on 30 June 2024.
- Minimum liquidity requirement: £10m.
During the period, £2.1m facility fees were paid and have been included
in the loan liability. £1.1m other non-cash movement includes accelerated
recognition of £0.7m unamortised arrangement fees.
The refinancing of the existing revolving credit facilities and the terms
of the new agreement indicate a significant modification of the liability,
resulting in the extinguishment of the existing liability and recognition of
the associated legal and advisory costs of £9.3m, excluding any facility
fees, in administrative expenses, in line with IFRS 9.
13 Assets and liabilities held for sale
At 30 June 2023, the £2.2m assets held for sale comprises
£1.4m related to land and building for a business within the Defence division
and £0.8m related to a vessel known as M22 within the Energy division. During
July the vessel was sold for USD1.4m.
Year ended 31 December 2022
At 31 December 2022, management agreed a plan to sell the
Nuclear business as a result of a strategic decision to rationalise and focus
the portfolio within the Specialist Technical division. At 31 December, the
business was classified as held for sale. The disposal group was stated at
fair value less costs to sell and comprised the following assets and
liabilities:
2022
Year ended
31 December
£m
Property, plant and equipment 2.3
Inventories 0.7
Trade and other receivables 10.5
Cash and cash equivalents 2.8
Assets held for sale 16.3
Trade and other payables (13.7)
Lease liabilities (2.2)
Taxation (0.3)
Liabilities associated with assets held for sale (16.3)
On transfer of assets to held for sale a £13.3m loss was
recognised on remeasurement to fair value less cost to sell, consisting of
impairments of goodwill (£8.1m), property, plant and equipment (£3.9m) and
anticipated costs of disposal (£1.3m).
The non-recurring fair value measurement for the disposal
group before £1.3m costs to sell has been categorised as a Level 3 fair value
based on the present value of cash flows.
At 31 December 2022, the Dive Support Vessel (DSV) known as
the Swordfish within the Energy division was classified as held for sale.
During January 2023, the vessel was sold for £18.4m being proceeds less
selling costs.
At 31 December 2022, a £5.4m reversal of impairment loss has
been recorded in cost of sales.
At 31 December 2022, £1.5m assets relates to land and
buildings for a business within the Defence division.
14 Provisions
Cost of material
litigation Warranty Other Total
£m £m £m £m
At 1 January 2023 2.0 2.4 2.3 6.7
Provided during the period - (0.1) 6.3 6.2
At 30 June 2023 2.0 2.3 8.6 12.9
Provisions due within one year were £11.5m (30 June 2022: £2.0m and 31
December 2022: £5.3m) and provisions due greater than one year were £1.4m
(30 June 2022: £1.3m and 31 December 2022: £1.4m).
Following the sale of James Fisher Nuclear Limited (JFN) on 3 March 2023 (see
Note 5) a limited number of performance guarantees covering an event of
default by JFN in performing its contractual duties and obligations remained
within the Group. As at 30 June 2023 a provision of £4.0m has been recognised
reflecting management's best estimate at the balance sheet date of the
expenditure required to settle or transfer one performance guarantee, based on
negotiations that were ongoing at the balance sheet date and that were not
ultimately concluded. Subsequent to the period end JFN entered administration
on 9 August 2023. To date, the Group has not received details of any claims
under these performance guarantees and the guarantees remain with the Group.
The Directors are therefore unable to reasonably estimate a range of possible
outcomes or the timing of any outflow. Any amounts that are claimed in the
future and ultimately settled could be materially different from the amount
provided as at 30 June 2023.
An onerous contract provision of £1.7m relating to one of the seasonal vessel
charters entered into by the Inspection, Repairs and Maintenance product line
within the Energy Division, was recognised as the vessel remained idle for
several weeks during June 2023 and is now anticipated to generate an overall
loss over the period of its rental. The provision is expected to unwind over
the second half of 2023.
15 Commitments and contingent liabilities
Capital commitments at 30 June 2023 were £4.1m (30 June
2022: £1.6m; 31 December 2022: £6.0m).
Contingent liabilities
(a) In the ordinary course of the Company's business, counter indemnities
have been given to banks in respect of custom bonds, foreign exchange
commitments and bank guarantees.
(b) Subsidiaries of the Group have issued performance and payment guarantees
to third parties with a total value of £26.8m (30 June 2022: £33.0m, 31
December 2022: £28.3m).
(c) The Group is liable for further contributions in the future to the MNOPF
and MNRPF if additional actuarial deficits arise or if other employers liable
for contributions are not able to pay their share. The Group and Company
remains jointly and severally liable for any future shortfall in recovery of
the MNOPF deficit.
(d) The Company and its subsidiaries may be parties to legal proceedings
and claims which arise in the ordinary course of business, and can be material
in value. Disclosure of contingent liabilities or appropriate provision has
been made in these accounts where, in the opinion of the Directors,
liabilities may materialise. Other than provisions made against foreign offset
agreements, described in Note 34 of the last filed annual report, there are no
other significant provisions and no individually significant contingent
liabilities that required specific disclosure.
(e) The Group operates and has overseas investments in multinational and
less developed markets which presents increased operational and financial risk
in complying with regulation and legislation and where local practices in
those markets may be inconsistent with laws and regulations that govern the
Group. Given this risk, from time to time matters are raised and investigated
regarding potential non-compliance with the legal and regulatory framework
applicable to the Group.
In preparing the financial statements, judgements and estimates were required
to be made in respect of such potential regulatory matters. The Directors'
judgement, relying on the findings of an independent audit as well as the
Group's own investigations, is that the likelihood of adverse findings against
the Company in respect of such matters is not probable albeit possible, and no
provision has been included in the financial statements of the Group.
In the normal course of business, the Company and certain subsidiaries have
given parental and subsidiary guarantees in support of loan and banking
arrangements and the following:
· A guarantee has been issued by the Group and Company to charter
parties in respect of obligations of a subsidiary, James Fisher Everard
Limited, in respect of charters relating to eleven vessels. The charters
expire between 2023 and 2032.
· The Group has given an unlimited performance guarantee to the
Singapore Navy in the event of default by First Response Marine Pte Ltd (its
Singapore joint venture), in providing submarine rescue and related services
under its contract.
There have been no amounts recognised during the year in
relation to these guarantees.
16 Related parties
There were no changes to related parties or the nature of
associated transactions from those disclosed in the Annual Report for the year
ended 31 December 2022.
17 Post balance sheet events
In July 2023, the Group's subsidiary Deep Sea Technical
Support Services LLC, incorporated in Saudi Arabia, sold a M22 Tug vessel for
consideration of USD 1.4m (£1.1m).
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