REG - Fisher (James) - Half-year Report
07/09/2022 07:00
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RNS Number : 5167Y Fisher (James) & Sons plc 07 September 2022
7 September 2022
James Fisher and Sons plc
Half year results for the six months ended 30 June 2022
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 2022 ('the period').
H1 2022 H1 2021 % change
Revenue £238.4m £233.7m 2.0%
Underlying operating profit margin 4.0% 5.7% (170)bps
Return on capital employed 2.7% 5.4% (270)bps
Underlying operating profit * £9.5m £13.3m (28.6)%
Underlying profit before tax * £4.8m £9.2m (47.8)%
Underlying diluted earnings per share ** 6.7p 12.8p (47.7)%
Statutory operating profit £7.9m £12.2m (35.2)%
Statutory profit before tax £3.2m £8.1m (60.5)%
Statutory diluted earnings per share 3.7p 26.8p (86.2)%
Interim dividend per share Nil Nil -
* excludes separately disclosed items of £1.6m loss (2021: £1.1m loss) (note
5)
** excludes separately disclosed items of £1.4m loss (2021: £7.1m profit)
(note 5)
Financial summary:
· Revenue growth of 2.0% but business mix held back operating
profit
· Strong growth in Offshore Oil and Tankships offset by lower
contribution from Specialist Technical, as expected, and subdued ship-to-ship
transfer activities in Marine Support
· Net debt at 30 June 2022 of £172.4m (30 June 2021: £189.2m)
Operational progress:
· Turnaround activities continue:
o Restructuring activities expected to deliver c.£3m in annualised savings
o Operational and commercial excellence programmes to be expanded to
additional businesses by year end
o Ongoing programme to rationalise the portfolio
Outlook
· H2 anticipated to be materially stronger than H1
o July and August trading was in line with expectations
o Strong order books in Offshore Oil and Marine Contracting
o Tankships expected to continue trading well
o Encouraging pipeline of potential projects in Specialist Technical, albeit
timing remains subject to risk
· Given the limited visibility on the timing of new contracts in
Specialist Technical, the Group's full year underlying operating profit is now
expected to be broadly in line with 2021
· Seasonally driven operational cash flows are expected to lead to
reduced year end net debt and leverage, which would be further decreased by
any portfolio disposals in H2
· Although the ongoing geopolitical and economic climate is likely
to remain uncertain, the Board is confident that it is taking the right steps
to stabilise the business and create a platform for sustained recovery
Commenting, Angus Cockburn, Chairman said:
"The first half saw an increase in Group revenue but a decrease in profit, due
to portfolio mix. Offshore Oil and Tankships produced strong revenue growth
and improved profitability and Marine Contracting continued its turnaround.
However, Fendercare's markets remained subdued and the cyclical nature of
project work in Specialist Technical was reflected in its performance.
The Board and management team are taking decisive actions to address the
ongoing issues affecting the Group's performance, including rolling out an
operational excellence programme across the Group; continuing to explore ways
to rationalise the portfolio; and restructuring the Fendercare and JFD
businesses. More strategic actions will be completed in the second half.
Trading and order intake in the busy summer months of July and August were in
line with expectations. H2 is anticipated to be materially stronger than H1.
We expect to see continued strong demand within the Offshore Oil and Tankships
divisions throughout the rest of the year. Order book coverage in Marine
Contracting is good. Whilst Specialist Technical's sales pipeline remains
strong, the timing of new, significant, long-term project wins is uncertain.
As a result, full year underlying operating profit is now expected to be
broadly in line with 2021.
The seasonality of working capital and collection of one JFD project milestone
are expected to deliver a reduction in net debt by the end of the year. The
debt position could be further improved by our ongoing portfolio
rationalisation activities, which aim to reduce net debt and simplify and
focus the Group.
Although the ongoing geopolitical and economic climate is likely to remain
uncertain, the Board is confident that it is taking the right steps to
stabilise the business and create a platform for sustained recovery."
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 better reflect business
performance and provide useful additional information. APMs include
underlying operating profit, underlying profit before tax, underlying diluted
earnings per share, underlying return on capital employed and cash
conversion. An explanation of APMs is set out in note 3 in these half year
results.
2. Certain statements contained in this announcement constitute
forward-looking statements. Forward-looking statements involve risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of James Fisher to be materially different from
future results, performance or achievements expressed or implied by such
statements. Such risks, uncertainties and other factors include exchange
rates, general economic conditions and the business environment.
For further information:
James Fisher and Sons plc Jean Vernet Chief Executive Officer 020 7614 9500
Duncan Kennedy Chief Financial Officer
FTI Consulting Richard Mountain 020 3727 1340
Susanne Yule
A virtual analyst presentation of the Half Year Results will take place today
at 9.00am. The presentation can be accessed via:
Webcast link: https://storm-virtual-uk.zoom.us/j/81409724071
(https://storm-virtual-uk.zoom.us/j/81409724071)
Or call in (audio only)
US: +1 646 876 9923
UK: +44 208 080 6591
Webinar ID: 814 0972 4071
Review of the six months ended 30 June 2022
Overview
Revenue increased by 2.0% in the first half to £238.4m (H1 2021: £233.7m)
but portfolio mix held back operating margins, resulting in a reduction in
underlying operating profit to £9.5m (H1 2021: £13.3m).
Strong double digit revenue growth and improved profitability in our Offshore
Oil and Tankships divisions was offset by a more challenging period for the
Specialist Technical division, as expected, where the cyclical nature of
project work is reflected in its lower result. Operating profit in the Marine
Support division was broadly in line with 2021. The Marine Contracting
businesses continued their turnaround towards profitability, benefitting from
ongoing restructuring activities and the Swordfish DSV being on hire. However,
this was offset by subdued market demand for ship-to-ship transfer services in
the higher margin Fendercare business, where current geopolitical events and a
relatively stable, high oil price have adversely affected performance.
The reduced profitability and seasonal nature of the business contributed to
an increase in net bank borrowings of £19.9m in the first half. COVID
lockdowns in China also adversely impacted borrowings, delaying the Group's
ability to complete the final steps of two long-term JFD projects that trigger
final cash milestones. As a result, net debt on a covenant basis was £172.4m
(31 December 2021: £155.8m; 30 June 2021: £189.2m) representing 3.3x EBITDA,
compared to a covenant limit of 3.5x. One JFD milestone was invoiced in August
and this, together with the seasonal profile of the Group's subsea business
activities, is expected to support a working capital inflow over the second
half and an improved net debt and leverage position at year end. The net debt
position could be further improved by our ongoing portfolio rationalisation
activities
Operational progress
The Group's focus remains on the intersection of the Energy, Defence and
Marine markets. Good progress has been made in the renewables and
decommissioning businesses, with a number of successfully completed projects
in the period. The Group has continued to roll out its operational excellence
programme, building on the pilot programme at RMSpumptools where we are
already seeing positive results. Additional businesses are now in the process
of deploying LEAN methodologies, aimed at making process improvement and
efficiencies.
In line with the commitment to rationalise the portfolio, the Group is
exploring strategic options for several businesses, which may result in their
future sale. The Swordfish Dive Support Vessel is now on rent until Summer
2023, although discussions continue with regards to a potential sale of the
vessel. In May, the Group signed a Memorandum of Understanding with National
Marine Dredging Corporation of Abu Dhabi, with a view to jointly pursuing
commercial opportunities, initially in the Middle East, but with the potential
to expand geographically in future.
In response to the extended period of subdued activity, the Fendercare
business completed a restructuring programme during H1, which yielded
annualised cost savings of c.£1.5m. Post period-end the JFD business also
completed a restructuring programme, with annualised cost savings expected to
be c.£1.5m. Costs of achieving the restructurings in the full year results
are anticipated to be c.£3m, of which approximately half is cash.
Financial performance
Revenue increased by 2.0% to £238.4m (H1 2021: £233.7m). Compared to H1 2021
the Group delivered strong growth in Offshore Oil (+28.0%) and Tankships
(+32.5%) offset by reductions in Marine Support (-4.1%) and Specialist
Technical (-17.4%). The mixed performance across divisions reflects market
conditions and, in the case of Specialist Technical, a low point in the
long-term projects cycle following several years of high levels of activity.
Demand for the products and services of the Offshore Oil division was high,
with a significant increase in well-testing activity and record order intake
for RMSpumptools in the period. Tankships performed well and showed
significant growth against a comparator period that was adversely affected by
lockdowns in the UK. The Marine Support division continued to experience lower
levels of activity, particularly in the high-margin ship-to-ship transfer
business. The Group expected a reduction within the Specialist Technical
division as a number of long-term projects are now all-but complete and have
yet to be replaced with new project wins, however the operating loss in that
division was more pronounced due to ~£2m of provisions against
underperforming contracts.
Underlying operating profit, which excludes separately disclosed items, was
£9.5m, £3.8m behind H1 2021, resulting in an underlying operating profit
margin of 4.0% compared to 5.7% in the prior period. The reduction in higher
margin Specialist Technical long-term projects outweighed the positive
progress within the Offshore Oil and Tankships divisions. Planned pay
increases for the first time in two years cost ~£1.5m in the first half of
the year. High levels of inflation are predicted to continue, and the Board is
actively exploring measures to provide support to employees, which could have
some impact on financial performance during H2.
Statutory operating profit, at £7.9m, is £4.3m below prior year, reflecting
the reduction in underlying operating profit performance discussed above, and
net separately disclosed items of £1.6m (H1 2021: £1.1m). The Group
generated a gain of £1.0m on the sale of a Tankships vessel (H1 2021: £0.3m
profit on vessel disposal), which was offset by amortisation of acquired
intangible assets of £1.1m (2021: £1.4m) and a past service cost of £1.5m
recognised in relation to the MNRPF pension fund, of which the Group is a
participant following a High Court ruling in February clarifying additional
ill health benefits. There has been no cash outflow in relation to the pension
fund past service cost.
Profit before tax was £3.2m (H1 2021: £8.1m) and the underlying effective
tax rate was 28.4% compared to 29.3% in the period to 30 June 2021. The prior
period included a £8.2m credit through the income tax in relation to the
recognition of a deferred tax asset. This was shown as a separately disclosed
item in H1 2021. There are no similar one-offs in H1 2022.
Earnings per share was 3.7p compared to 26.8p in H1 2021, reflecting the
reduced operating profit performance and non-repeating tax credit recognised
in the prior period.
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 2022 (2021: Nil).
Liquidity
At 30 June 2022 the Group had revolving credit facilities totalling £287.5m
(31 December 2021: £287.5m; 30 June 2021: £300.0m). Undrawn facilities were
£115.5m. Given the level of undrawn facilities, a £40m revolving credit
facility that expired in July 2022 was not replaced.
Bank borrowings of £159.5m were £19.9m higher than 31 December 2021, but
£10.8m below 30 June 2021. The Group typically experiences a working capital
outflow in the first half of each year due to the seasonality of the business.
£m 30 June 31 Dec 2021 30 June 30 June 31 Dec 2021 30 June
2022
2021
2022
2021
Net bank borrowings 159.5 139.6 170.3 159.5 139.6 170.3
Finance leases (IAS 17) 7.7 7.8 8.4 7.7 7.8 8.4
Right of use liabilities 38.3 38.2 32.3 - - -
Bonds/guarantees - - - 5.2 8.4 10.5
Net debt 205.5 185.6 211.0
Net debt - covenant basis 172.4 155.8 189.2
EBITDA - covenant basis 52.9 54.3 65.0
Net debt : EBITDA 3.3 2.9 2.9
When measured on a covenant basis, the ratio of net debt to EBITDA was 3.3
times (31 December 2021: 2.9 times; 30 June 2021: 2.9 times) compared to a
covenant limit of 3.5 times.
Environmental, Social and Governance
The Group published its sustainability report with its Annual Report. 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.
Improvements in the Group's governance are ongoing, with third party support
received during the period in relation to risk management and internal
controls enhancements. The Group has also, for the first time, completely
outsourced its Internal Audit programme to a third party, with the aim of
providing robust independent challenge to the business, including a review of
the budgeting and forecasting processes conducted during H1.
James Fisher continues to focus on diversity and inclusion. In the first half
of 2022, women represented 38% of our Board membership and 36% of our
Executive Committee, both showing an increase from the 29% and 33% in H1 2021
respectively.
Board changes
There have been two changes to the Board this year. Jean Vernet joined on 5
September 2022 as the Group's Chief Executive Officer, replacing Eoghan
O'Lionaird who had announced his intention to step down in June. Claire
Hawkings replaced Mike Salter as a Non-Executive Director following Mike's
nine years of service to the Group. The Board would like to express its
sincere thanks to both Eoghan and Mike for their contributions to the Group
during their respective tenures.
Summary and Outlook
The first half saw an increase in Group revenue but a decrease in profit, due
to portfolio mix. Offshore Oil and Tankships produced strong revenue growth
and improved profitability and Marine Contracting continued its turnaround.
However, Fendercare's markets remained subdued and the cyclical nature of
project work in Specialist Technical was reflected in its performance.
The Board and management team are taking decisive actions to address the
ongoing issues affecting the Group's performance, including rolling out an
operational excellence programme across the Group; continuing to explore ways
to rationalise the portfolio; and restructuring the Fendercare and JFD
businesses. More strategic actions will be completed in the second half.
Trading and order intake in the busy summer months of July and August were in
line with expectations. H2 is anticipated to be materially stronger than H1.
We expect to see continued strong demand within the Offshore Oil and Tankships
divisions throughout the rest of the year. Order book coverage in Marine
Contracting is good. Whilst Specialist Technical's sales pipeline remains
strong, the timing of new, significant, long-term project wins is uncertain.
As a result, full year underlying operating profit is now expected to be
broadly in line with 2021.
The seasonality of working capital and collection of one JFD project milestone
are expected to deliver a reduction in net debt by the end of the year. The
debt position could be further improved by our ongoing portfolio
rationalisation activities, which aim to reduce net debt and simplify and
focus the Group.
Although the ongoing geopolitical and economic climate is likely to remain
uncertain, the Board is confident that it is taking the right steps to
stabilise the business and create a platform for sustained recovery.
Business review
Marine Support
H1 2022 H1 2021 change
Revenue (£m) 93.6 97.7 (4.1%)
Underlying operating profit (£m) 1.5 2.1 (28.6%)
Underlying operating margin 1.6% 2.1%
Return on capital employed 3.0 % 3.7%
The Marine Support division consists of three businesses, all aimed at
supporting the marine and energy markets. Marine Contracting principally
provides subsea services to both the oil & gas and offshore wind markets;
Fendercare provides essential ship-to-ship transfer services and related
products; and Digital and Data Services ("DDS") provides innovative
technological solutions aimed at improving the efficiency and productivity of
our customers' offshore assets.
Marine Contracting
The Marine Contacting business continued its turnaround in profitability. In
particular, profit growth was delivered in the Middle East, where the
Swordfish dive support vessel is now on full-time hire; Africa, which was
aided by the release of project-related contingencies no longer required; and
Brazil, where demand for its diving services remained strong. The suspended
LNG project in Mozambique has yet to restart. In Europe, although revenue was
marginally above the prior year, a combination of poor operational delivery
and delayed/rescoped projects held back profitability. EDS, the high voltage
cabling business, experienced a difficult six months due to some specific
staffing issues. This matter is now resolved, with vacancies filled, and the
EDS business is looking forward to H2 with greater confidence.
Fendercare
Revenue of £38.4m was £0.4m below H1 2021. This included a 6.2% reduction in
ship-to-ship (STS) transfer revenues offset by good product sales growth
across the Fendercare products and Martek businesses. The Group purchases
global STS operations data from a third party, which estimates that the total
number of global STS operations was 27% behind the peak of 2020. We believe
that levels of commodity trading (each trade is accompanied by a physical
transfer of oil) were low due to the relatively high and stable price of crude
oil during the period. In response to lower demand, management completed a
restructuring programme towards the end of H1 which has reduced annualised
operating costs by c.£1.5m.
The Group's policy in relation to the current conflict in Ukraine meant that
Fendercare chose not to bid for a number of STS operations, particularly
during March and April. More recently, the business has seen increasing
momentum, starting in June, in both crude oil STS and LNG operations, where
Fendercare is well positioned to deliver on the expected increase in demand as
Europe seeks to secure its winter energy supplies.
DDS
Revenue in the period was £11.0m (H1 2021: £12.7m, including £0.6m from a
business sold in December 2021), with growth in AIS, Prolec and Mimic offset
by an expected reduction from Strainstall, which ended the period in line with
our expectations. Demand for the digital twin solutions offered by AIS
remained strong, with several new installations completed in the period for
international energy companies. The business also released an enhanced new
version of its software.
Specialist Technical
H1 2022 H1 2021 change
Revenue (£m) 56.1 67.8 (17.4%)
Underlying operating (loss)/profit (£m) (2.5) 5.6 (144.6%)
Underlying operating margin (4.5)% 8.3%
Return on capital employed 1.6% 11.2%
Performance in the Specialist Technical division was disappointing in the
period. Although 2022 revenue was expected to be lower than 2021 due to the
cyclical nature of long-term projects, ~£2m of provisions were required
against underperforming contracts, resulting in a loss for the period of
£2.5m compared to a £5.6m profit in H1 2021.
JFD, the diving and defence business, saw improved demand for its short-cycle
diving equipment which had experienced a challenging 2021. No new significant
project wins were secured in H1 although the sales pipeline remains strong,
with more than £250m of qualified new business opportunities. The completion
of two long-term projects, triggering final invoicing and cash milestones, was
expected during the period. However, lockdowns in China prevented either being
delivered. One of the milestones was invoiced in August following shipment of
a completed vessel to its customer, but the other milestone is now most likely
delayed until H1 2023. As previously mentioned, management completed a
restructuring programme early in Q3, aimed at delivering annualised cost
savings of £1.5m.
JFN, the Group's nuclear decommissioning business, has continued to work on
its long-term projects during the period. Tenders have been submitted for
significant new opportunities, for which we await customer decisions. The team
has made good progress during the period on implementing a programme of
internal improvements to both the commercial and project management processes.
Revenue in the period was £23.4m compared to £27.1m in 2021. The smaller
"run-rate" projects that were postponed at the end of 2021 began to be awarded
during Q1, however, more recently the industry is again showing signs of
slowing down as inflationary pressures on fixed budgets are forcing customers
to reassess how many new projects will be awarded during 2022.
Offshore Oil
H1 2022 H1 2021 change
Revenue (£m) 50.8 39.6 28.0%
Underlying operating profit (£m) 8.2 5.3 54.7%
Underlying operating margin 16.2% 13.4%
Return on capital employed 12.2% 9.2%
The Offshore Oil division delivered strong growth, with revenue up 28.0% to
£50.8m (H1 2021: £39.6m) and underlying operating profit growth of 54.7% to
£8.2m (H1 2021: £5.3m). Demand for well-testing services was high throughout
the period, and bubble curtain projects also showed an increase from £3.2m to
£4.0m in the period. The Scantech business is investing in a new fleet of
proprietary, fuel-efficient compressors aimed at both replacing its current
aging fleet and improving the customer offering into the renewables market.
RMSpumptools achieved record order intake for its artificial lift technology
in the period. The business is continuing to deploy LEAN methodologies in its
manufacturing operations and has so far delivered improved order fulfilment
(On Time In Full). Geographic expansion activities continued, with a new
manufacturing site in Saudi Arabia planned to be fully operational during the
second half of the year.
The Decommissioning business has delivered good growth following a frustrating
second half of 2021 which saw several projects delayed. Revenue in the period
was £7.0m compared to £2.6m in H1 2021 and £8.0m for the full year in 2021.
Second half order books for the Offshore Oil companies are strong, with
RMSpumptools at record levels.
Tankships
H1 2022 H1 2021 change
Revenue (£m) 37.9 28.6 32.5%
Underlying operating profit (£m) 4.2 2.1 100.0%
Underlying operating margin 11.1% 7.3%
Return on capital employed 20.3% 20.1%
The Tankships division performed well against a comparative period that was
adversely affected by UK lockdowns. Tanker utilisation was strong (88% vs 80%)
and the day rate for charters remained at high levels. Cattedown Wharves has
also seen some recovery in the period. Overall, revenue increased by 32.5% to
£37.9m (H1 2021: £28.6m).
The combination of strong utilisation, high day rates, and an easing of the
Covid-related operating costs incurred in the prior year resulted in
underlying operating profit doubling to £4.2m in the period (H1 2021:
£2.1m).
Progress on the two new-build dual-fuel vessels has been good, with both on
track from a timeline and budget perspective. The first of the vessels (The
Sir John Fisher) is undergoing fit-out and sea trials now ahead of anticipated
delivery in Q4. The new vessels will replace two aging vessels that are
reaching the end of their commercial life. The first of those, The Thames
Fisher, was sold in the period, yielding a £1.0m profit on sale, which is
shown within "Separately disclosed items" in the Income Statement, with sale
proceeds collected over a two-year lease period.
Cashflow and borrowings
Net bank borrowings as at 30 June 2022 were £159.5m, representing a £19.9m
increase in borrowings from 31 December 2021, but an improvement of £10.8m
compared to the same point in 2021.
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 83 in June 2022 vs 87 days in June 2021.
Creditor days are in line with 30 June 2021 at 97 days.
Capital expenditure, at £10.1m, was higher than the £6.5m in H1 2021 and
more in line with 2020, which was £11.8m. The Board approved one significant
capital expenditure project in the period, being investment in
next-generation, fuel-efficient compressors to replace an aging fleet within
ScanTech Offshore. The Group generated £1.5m in asset disposal proceeds,
which compares to £14.5m in the prior period, which included £12.6m in
relation to the Paladin Dive Support Vessel. There were no acquisitions in the
period, or in the prior period, with net outflows of £1.4m in 2022 and £0.4m
in 2021 representing deferred consideration on acquisitions completed in prior
years.
Tax and interest payments were broadly in line with prior year at £7.5m
(2021: £7.8m).
Balance sheet
Non-current assets increased by £3.7m during the period, from £339.9m to
£343.6m. This is principally due to the recognition of a defined benefit
pension fund asset of £5.8m. A surplus, when calculated on an accounting
basis, is recognised when the Group has a right to receive surplus funds from
the pension scheme in the hypothetical situation that there are no remaining
pensioners and pension fund assets remain undistributed. The asset has been
recorded in accordance with the requirements of IAS19 and IFRIC14.
Current assets have increased by £19.5m to £304.5m (31 December 2021:
£285.0m; 30 June 2021: £313.3m). The principal movements are increases in
inventory and receivables, offset by a reduction in short-term cash balances.
Inventory has increased as a result of increased activity, particularly in
RMSpumptools, which has received record orders in the period and is purchasing
additional components to ensure demand is met. Receivables of £184.3m are in
line with 30 June 2021 and £27.0m above 31 December 2021, principally
reflecting the seasonality of the business.
Current liabilities have increased by £12.7m to £212.2m and again are more
closely aligned to the position as at 30 June 2021 (£209.5m). The increase in
trade creditors is consistent with the increase in trade debtors and reflects
the seasonality of the business. Short-term bank borrowings (i.e. overdrafts)
have increased to £42.7m from £33.6m at 31 December 2021, with the net
position of short-term cash and short-term borrowings having reduced to
£11.0m at 30 June 2022 (31 December £34.4m; 30 June 2021: £11.8m) as cash
received close to the year end was used to subsequently pay down borrowings.
Long-term liabilities, at £210.5m, are £4.3m lower than as at 31 December
2021, principally reflecting the movement in long-term borrowings in the
period.
Overall, the Group's net assets have increased in the period from £210.6m at
31 December 2021 to £225.4m at 30 June 2022.
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
2021 Annual Report and Accounts on pages 61-69. The principal risks set out in
the 2021 Annual Report and Accounts were:
· Operational - project delivery, recruitment and retention of
key staff, health and safety, contractual, cyber security and pandemic risks;
· Strategic - climate change, operating in emerging markets; and
· Financial - interest rate, foreign exchange and credit risks.
The Board considers that the principal risks and uncertainties set out in the
2021 Annual Report and Accounts remain the same.
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
6 September 2022
Independent review report to James Fisher and Sons plc
Conclusion
We have been engaged by the company to review the condensed consolidated
interim financial statements in the half-yearly financial report for the six
months ended 30 June 2022 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 2022 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 of 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
6 September 2022
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2022
Six months ended Six months ended Year
30 June 2022
30 June 2021
ended
31 December 2021
Note
£m £m £m
Revenue 4 238.4 233.7 494.1
Cost of sales (182.7) (177.6) (384.6)
Gross profit 55.7 56.1 109.5
Administrative expenses (49.2) (44.9) (132.2)
Share of post tax results of joint ventures 1.4 1.0 2.0
Operating profit/(loss) 4 7.9 12.2 (20.7)
Analysis of operating profit:
Underlying operating profit 9.5 13.3 28.0
Separately disclosed items (1.6) (1.1) (48.7)
Net finance expense 6 (4.7) (4.1) (8.3)
Profit/(loss) before taxation 3.2 8.1 (29.0)
Analysis of profit before tax:
Underlying profit before taxation 4.8 9.2 19.7
Separately disclosed items 5 (1.6) (1.1) (48.7)
Income tax 7 (1.2) 5.5 0.8
Profit/(loss) for the period 2.0 13.6 (28.2)
Attributable to:
Owners of the Company 1.9 13.5 (27.8)
Non-controlling interests 0.1 0.1 (0.4)
2.0 13.6 (28.2)
(Loss)/earnings per share pence pence pence
Basic 8 3.7 26.8 (55.2)
Diluted 8 3.7 26.8 (55.2)
Underlying earnings per share
Basic 8 6.7 12.8 20.0
Diluted 8 6.7 12.8 20.0
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2022
Six months ended Six months ended Year ended
30 June 30 June 31 December
2022 2021 2021
Note £m £m £m
Profit/(loss) for the period 2.0 13.6 (28.2)
Items that will not be reclassified to the income statement
Actuarial gain in defined benefit pension schemes 10 7.6 2.8 6.3
Tax on items that will not be reclassified (0.9) (0.5)
6.7 2.8 5.8
Items that may be reclassified subsequently to the income statement
Exchange differences on foreign currency net investments 6.6 (2.3) (2.6)
Effective portion of changes in fair value of cash flow hedges (1.7) (1.2) (2.6)
Effective portion of changes in fair value of cash flow hedges in joint 0.2 0.1 0.3
ventures
Net change in fair value of cash flow hedges transferred to income statement 0.7 (0.6) 0.3
Deferred tax on items that may be reclassified 0.3 0.1 0.4
6.1 (3.9) (4.2)
Total comprehensive income for the period 14.8 12.5 (26.6)
Attributable to:
Owners of the Company 14.6 12.4 (26.1)
Non-controlling interests 0.2 0.1 (0.5)
14.8 12.5 (26.6)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 June 2022
30 June 30 June 31 December
2022 2021 2021
Note £m £m £m
restated*
Non-current assets
Goodwill 11 135.1 165.8 133.5
Other intangible assets 11.4 18.2 13.3
Property, plant and equipment 120.9 126.7 122.2
Right-of-use assets 39.5 41.0 41.8
Investment in joint ventures 9.6 7.7 8.0
Retirement benefit surplus 10 5.8 - -
Other investments 1.4 1.4 1.4
Deferred tax assets 8.9 10.9 9.6
Other receivables 11.0 - 10.1
343.6 371.7 339.9
Current assets
Inventories 54.3 51.5 49.0
Trade and other receivables 183.4 183.6 157.3
Assets held for sale 13 13.0 15.2 10.7
Cash and cash equivalents 12 53.8 63.0 68.0
304.5 313.3 285.0
Current liabilities
Trade and other payables (155.9) (142.3) (149.5)
Provisions for liabilities and charges (2.0) (0.6) (2.0)
Liabilities associated with assets held for sale 13 - (1.7) -
Current tax (1.6) (4.8) (4.5)
Borrowings (42.7) (51.2) (33.6)
Lease liabilities (10.0) (8.9) (9.9)
(212.2) (209.5) (199.5)
Net current assets 92.3 103.8 85.5
Total assets less current liabilities 435.9 475.5 425.4
Non-current liabilities
Other payables (1.6) (3.3) (1.3)
Provisions (1.3) (1.4) (1.1)
Retirement benefit obligations 10 (0.7) (6.6) (1.9)
Cumulative preference shares (0.1) (0.1) (0.1)
Borrowings (170.5) (182.0) (173.9)
Lease liabilities (36.0) (31.8) (36.1)
Deferred tax liabilities (0.3) (0.5) (0.4)
(210.5) (225.7) (214.8)
Net assets 225.4 249.8 210.6
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 (14.4) (20.5) (20.4)
Retained earnings 200.1 230.7 191.5
Equity attributable to owners of the Company 224.5 249.0 209.9
Non-controlling interests 0.9 0.8 0.7
Total equity 225.4 249.8 210.6
* Right-of-use assets and retained earnings have been restated for the 30 June
2021 comparative to reflect a change in accounting policy in respect of dry
dock overhauls (see note 1 to the Annual Report 2021).
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2022
Share Share Retained Other Treasury Shareholders' Non-controlling Total
capital premium earnings reserves shares equity interests equity
£m £m £m £m £m £m £m £m
At 1 January 2022 12.6 26.8 191.5 (20.4) (0.6) 209.9 0.7 210.6
Profit for the year - - 1.9 - - 1.9 0.1 2.0
Other comprehensive income - - 6.7 6.0 - 12.7 0.1 12.8
Contributions by and distributions to owners:
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
Share Share Retained Other Treasury Shareholders' Non-controlling Total
capital premium earnings reserves shares equity interests equity
£m £m £m £m £m £m £m £m
At 1 January 2021 12.6 26.7 212.6 (16.5) (0.2) 235.2 0.7 235.9
Accounting policy change - Right of use Refit capitalisation - - 2.0 - - 2.0 - 2.0
At 1 January 2021 12.6 26.7 214.6 (16.5) (0.2) 237.2 0.7 237.9
Profit for the year 13.5 - 13.5 0.1 13.6
Other comprehensive income - - 2.8 (3.9) - (1.1) - (1.1)
Remeasurement of non-controlling interest put option - - - (0.1) - (0.1) - (0.1)
Share based payments - - 0.3 - - 0.3 - 0.3
Tax effect of share based payments - - 0.1 - - 0.1 - 0.1
Purchase of shares by ESOT - - - - (0.5) (0.5) - (0.5)
Notional purchase of own shares - - (0.5) - - (0.5) - (0.5)
Issue of shares - 0.1 - - - 0.1 - 0.1
Transfer - - (0.1) - 0.1 - - -
At 30 June 2021 12.6 26.8 230.7 (20.5) (0.6) 249.0 0.8 249.8
Other reserve movements
Translation Hedging Put option
reserve reserve liability Total
Other reserves £m £m £m £m
At 1 January 2021 (14.3) 0.5 (2.7) (16.5)
Other comprehensive income (2.6) (1.5) - (4.1)
Remeasurement of non-controlling interest put option - - 0.2 0.2
At 31 December 2021 (16.9) (1.0) (2.5) (20.4)
Other comprehensive income 6.6 (0.6) - 6.0
Remeasurement of non-controlling interest put option - - - -
At 30 June 2022 (10.3) (1.6) (2.5) (14.4)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2022
Note Six months ended Six months ended Year ended
30 June 30 June 31 December
2022 2021 2021
£m £m £m
Profit/(loss) before tax for the period 3.2 8.1 (29.0)
Adjustments to reconcile profit/(loss) before tax to net cash flows
Depreciation and amortisation 20.4 21.1 44.2
Separately disclosed items (excluding amortisation) 0.5 (0.3) 45.8
Other non-cash items 4.2 3.0 7.8
Increase in inventories (3.9) (5.3) (2.7)
Increase in trade and other receivables (21.2) (24.8) (15.4)
Increase in trade and other payables 0.5 2.8 10.0
Defined benefit pension cash contributions less service cost (1.0) (1.0) (2.2)
Cash generated from operations 2.7 3.6 58.5
Cash outflow from separately disclosed items - - (1.7)
Income tax payments (4.4) (4.5) (7.9)
Cash flow from operating activities (1.7) (0.9) 48.9
Investing activities
Dividends from joint venture undertakings 1.0 0.7 1.6
Proceeds from the disposal of a subsidiary - - 6.2
Proceeds from the disposal of property, plant and equipment 1.5 14.3 14.7
Finance income 0.2 0.2 0.3
Acquisition of subsidiaries, net of cash acquired (1.4) (0.4) (1.1)
Acquisition of property, plant and equipment (10.1) (6.5) (22.1)
Development expenditure (0.6) (0.8) (1.5)
Cash flows (used in)/from investing activities (9.4) 7.5 (1.9)
Financing activities
Proceeds from the issue of share capital - 0.1 0.1
Finance costs (3.1) (3.3) (5.6)
Purchase of own shares by Employee Share Ownership Trust - (0.5) (0.5)
Notional purchase of own shares for LTIP vesting - (0.5) (0.5)
Capital element of lease repayments (7.0) (6.6) (13.7)
Proceeds from borrowings 17.0 10.5 84.0
Repayment of borrowings (21.0) (7.9) (89.9)
Cash flows used in financing activities (14.1) (8.2) (26.1)
Net (decrease)/increase in cash and cash equivalents (25.2) (1.6) 20.9
Cash and cash equivalents at beginning of period 34.5 13.5 13.5
Net foreign exchange differences 1.8 - 0.1
Cash and cash equivalents at end of period 12 11.1 11.9 34.5
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 2022 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 Services Authority, the
condensed consolidated set of financial statements has been prepared applying
the accounting policies and presentation that were applied in the preparation
of the Group's published consolidated financial statements for the year ended
31 December 2021. 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
2021.
The comparative figures for the financial year ended 31
December 2021 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) did not include a reference to any matters
to which the auditors drew attention by way of emphasis without qualifying
their report and (iii) did not contain a statement under section 498 (2) or
(3) of the Companies Act 2006.
The consolidated financial statements of the Group for the
year ended 31 December 2021 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 (£m) except
where otherwise indicated.
Going concern
The Group had £115.5m of undrawn committed facilities at 30 June 2022
(June 2021: £115.6m; December 2021: £111.5m). At 30 June 2022, the Group had
£287.5m of committed facilities, unchanged from December 2021. £40m of
revolving credit facilities which existed at 30 June 2022 were due for renewal
in July 2022, however it was decided not to pursue the renewal.
The committed credit facilities mentioned above are linked to covenant
compliance requirements, being a net debt to EBITDA ratio and interest cover.
The Group has been in compliance with covenant requirements at the 30 June
2022 measurement date and is forecasting to be compliant for at least 12
months from the date of approval of these condensed interim financial
statements. As at the date of approval of the financial statements, the Group
has £46m of undrawn credit facilities available with sufficient headroom
forecasted for the 12 months from the date of this report.
The Group continues to closely monitor and manage its liquidity. The Group has
prepared base case cash flow forecasts for a period of at least 12 months from
the date of approval of the condensed interim financial statements, taking
into account the impacts of wider macro-economic environment. The base case
was prepared under conservative assumptions that no disposals of non-core
businesses would materialise in the assessment period and any expiring
facilities would not be renewed. The Group continues to work on
rationalisation of its business portfolio and expects to renew the expiring
facilities. The base case demonstrated the Company would have headroom against
facilities and comply with covenants. A number of severe but plausible
downside scenarios were modelled compared to the base case forecast of profit
and cash flow to assess headroom against facilities and covenant compliance
for at least the next 12 months.
These scenarios included reducing operating profit by 30% and reducing cash
receipts by £10m in 2022 and £20m in 2023. A combination of these scenarios
was considered as the downside case which showed headroom and no breach of
covenants.
Further mitigating actions could also be taken in such scenarios should they
be required.
Taking into account the level of cash and available facilities outlined above
and 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
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 2021.
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 2021.
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 Directors use these measures in order to assess the
underlying operational performance of the Group and, as such, these measures
are important and should be considered alongside the IFRS measures. The
adjustments are separately disclosed (note 5) and are usually items that are
significant in size and/or non-recurring in nature. The following non-GAAP
measures are referred to in the half year results.
3.1 Underlying operating profit and underlying profit before taxation
Underlying operating profit is defined as operating profit before
separately disclosed items, which comprise: 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, or asset impairment and the profit or loss relating
to the sale of businesses. As acquisition related income and expense
fluctuates with activity, and to provide a better comparison to businesses
that are not acquisitive, the Directors consider that these items should be
separately disclosed to give a better understanding of operating performance.
Underlying profit before taxation is defined as underlying operating profit
less net finance expense.
2022 2021 2021
Six months ended Six months ended Year
30 June 30 June ended
31 December
£m £m £m
Operating profit/(loss) 7.9 12.2 (20.7)
Separately disclosed items before taxation 1.6 1.1 48.7
Underlying operating profit 9.5 13.3 28.0
Net finance expense (4.7) (4.1) (8.3)
Underlying profit before taxation 4.8 9.2 19.7
3.2 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
separately disclosed items included in the calculation of underlying profit
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 set out in note 8.
3.3 Capital employed and Return on Capital Employed (ROCE)
Capital employed is defined as net assets less right of use assets,
less cash and short-term deposits 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. The key performance indicator, Group post-tax ROCE, is defined as
underlying operating profit, less notional tax, calculated by multiplying the
effective tax rate by the underlying operating profit, divided by average
capital employed.
2022 2021 2021
Six months ended Six months ended Year
30 June 30 June ended
31 December
£m £m £m
Net assets 225.4 247.8 210.6
Less right-of-use assets (39.5) (39.0) (41.8)
Plus net borrowings 205.5 211.0 185.6
Capital employed 391.4 419.8 354.4
Underlying operating profit 9.5 13.3 28.0
Notional tax at the effective tax rate (2.7) (3.9) (14.3)
6.8 9.4 13.7
Average capital employed 408.6 459.2 377.4
Return on average capital employed 2.7% 5.4% 3.6%
3.4 Cash conversion
Cash conversion is defined as the ratio of operating cash flow to
underlying operating profit. Operating cash flow comprises:
2022 2021 2021
Six months ended Six months ended Year
30 June 30 June ended
31 December
£m £m £m
Cash generated from operations 2.7 3.6 58.5
Dividends from joint venture undertakings 1.0 0.7 1.6
Capital element of lease repayments (7.0) (6.6) (13.7)
Other - 1.0 0.7
Operating cash flow (3.3) (1.3) 47.1
Underlying operating profit 9.5 13.3 28.0
Cash conversion (35)% (10)% 168%
3.5 Underlying earnings before interest, tax, depreciation and
amortisation (EBITDA)
Underlying EBITDA is defined as the underlying operating profit
before interest, tax, depreciation and amortisation.
2022 2021 2021
Six months ended Six months ended Year
ended
30 June 30 June
31 December
£m £m £m
Underlying operating profit 9.5 13.3 28.0
Depreciation and amortisation (excluding depreciation of ROU assets) 14.3 15.5 31.0
Amortisation - separately disclosed items (note 5) (1.1) (1.4) (2.9)
IFRS16 impact 2.8 (0.5) (1.8)
Underlying EBITDA 25.5 26.9 54.3
4 Segmental information
Management has determined that the Group has four operating
segments reviewed by the Board; Marine Support, Specialist Technical, Offshore
Oil and Tankships. Their principal activities are set out in the Strategic
Report within the consolidated financial statements of the Group for the year
ended 31 December 2021.
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 2022
Marine Specialist Offshore
Support Technical Oil Tankships Corporate Total
£m £m £m £m £m £m
Revenue
Segmental revenue reported 93.7 56.7 50.9 37.9 - 239.2
Inter-segmental sales (0.1) (0.6) (0.1) - - (0.8)
93.6 56.1 50.8 37.9 - 238.4
Underlying operating profit/(loss) 1.5 (2.5) 8.2 4.2 (1.9) 9.5
Separately disclosed items (0.9) - (0.2) 1.0 (1.5) (1.6)
Operating profit/(loss) 0.6 (2.5) 8.0 5.2 (3.4) 7.9
Net finance expense (4.7)
Profit before tax 3.2
Income tax (1.2)
Profit for the period 2.0
Assets & liabilities
Segmental assets 198.8 160.4 140.5 73.2 65.6 638.5
Investment in joint ventures 2.8 3.9 2.9 - - 9.6
Total assets 201.6 164.3 143.4 73.2 65.6 648.1
Segmental liabilities (75.6) (56.9) (29.8) (40.0) (220.4) (422.7)
126.0 107.4 113.6 33.2 (154.8) 225.4
Other segmental information
Capital expenditure 2.7 1.6 3.4 2.5 - 10.1
Depreciation and amortisation 5.4 3.2 5.7 5.9 0.2 20.4
Six months ended 30 June 2021
Marine Specialist Offshore
Support Technical Oil Tankships Corporate Total
£m £m £m £m £m £m
Revenue
Segmental revenue reported 97.8 68.3 39.7 28.6 - 234.4
Inter-segmental sales (0.1) (0.5) (0.1) - - (0.7)
97.7 67.8 39.6 28.6 - 233.7
Underlying operating profit reported 2.1 5.6 5.3 2.1 (1.8) 13.3
Separately disclosed items (0.7) - (0.4) - - (1.1)
Operating profit 1.4 5.6 4.9 2.1 (1.8) 12.2
Net finance expense (4.1)
Profit before tax 8.1
Income tax 5.5
Profit for the period 13.6
Assets & liabilities
Segmental assets 238.1 165.7 141.2 67.9 64.4 677.3
Investment in joint ventures 2.1 3.3 2.3 - - 7.7
Total assets 240.2 169.0 143.5 67.9 64.4 685.0
Segmental liabilities (77.3) (62.4) (27.6) (31.7) (236.2) (435.2)
162.9 106.6 115.9 36.2 (171.8) 249.8
Other segment information
Capital expenditure 2.3 0.8 2.3 0.9 0.2 6.5
Depreciation and amortisation 6.7 3.4 5.8 5.1 0.1 21.1
Year ended 31 December 2021
Marine Specialist Offshore
Support Technical Oil Tankships Corporate Total
£m £m £m £m £m £m
Revenue
Segmental revenue reported 214.7 134.6 86.5 60.1 - 495.9
Inter-segmental sales (0.2) (1.4) (0.2) - - (1.8)
214.5 133.2 86.3 60.1 - 494.1
Underlying operating profit/(loss) 5.0 9.9 11.1 4.8 (2.8) 28.0
Separately disclosed items (26.0) (2.9) (16.3) (3.5) - (48.7)
Operating (loss)/profit (21.0) 7.0 (5.2) 1.3 (2.8) (20.7)
Net finance expense (8.3)
Loss before tax (29.0)
Income tax 0.8
Loss for the year (28.2)
Assets & liabilities
Segmental assets 189.7 154.8 124.2 75.1 73.4 617.2
Investment in joint ventures 2.6 3.2 2.2 - - 8.0
Total assets 192.3 158.0 126.4 75.1 73.4 625.2
Segmental liabilities (77.4) (60.3) (26.4) (39.2) (211.3) (414.6)
114.9 97.7 100.0 35.9 (137.9) 210.6
Other segment information
Capital expenditure 6.1 2.7 6.3 4.3 - 19.4
Depreciation and amortisation 12.3 6.9 12.1 12.4 0.5 44.2
5 Separately disclosed items
Certain items are disclosed separately in the financial statements to provide
a clearer understanding of the underlying financial performance of the Group,
referred to in note 3. They are items that are non-recurring and significant
by virtue of their size and include acquisition related income or charges,
costs of material litigation, restructure or material impairment & related
items. Separately disclosed items comprise:
2022 2021 2021
Six months ended Six months ended Year
ended
30 June 30 June 31 December
£m £m £m
Acquisition related income and (expense):
Costs incurred on acquiring/disposing of businesses - - (0.5)
Amortisation of acquired intangibles (1.1) (1.4) (2.9)
(1.1) (1.4) (3.4)
Gain on disposal of businesses - - 0.3
Gain on disposal of vessel 1.0 0.3 0.3
Costs of material litigation - - (3.1)
Defined benefit obligation - past service cost (1.5) - -
Impairment charges
Intangible assets - - (29.2)
Tangible fixed assets - - (9.3)
Receivables - - (4.3)
Separately disclosed items before taxation (1.6) (1.1) (48.7)
Taxation 0.2 8.2 10.9
Separately disclosed items after taxation (1.4) 7.1 (37.8)
During the six months ended 30 June 2022, the Group has recognised a gain of
£1.0m on disposal of one of its vessels.
A £1.5m past service cost has been recognised for the MNRPF scheme in respect
of ill health early retirement benefits (see note 10).
During the year end 31 December 2021, separately disclosed items were in
relation to the following matters:
- Acquisition related income and expense comprises costs incurred on
the acquisition/disposal of businesses including external due diligence costs,
amortisation of acquired intangibles and any adjustment for contingent
consideration.
- Disposal of businesses relates to the disposal during 2021 of James
Fisher Testing Services Ltd which was sold for proceeds of £5.7m and resulted
in a gain of £0.8m. Also, the sale of James Fisher NDT Ltd for which proceeds
were £1.2m and loss on disposal of £0.5m.
- Disposal of vessel is the sale of the Paladin vessel for $17.3m
proceeds and a £0.3m gain.
- Costs of material litigation relates to various matters as described
in the Annual report and Accounts note 31: Commitment and contingencies.
- Impairment charges: Intangible assets comprise goodwill of £27.5m
and £1.7m development costs. Tangible fixed assets comprise assets in the
Marine support, Specialist technical and Tankship divisions where fair value
is less than carrying net book value. The 2021 impairment in respect of
receivables relates to a specific counterparty risk and receivables billed
over 12 months ago in relation to certain projects.
- Tax on separately disclosed items includes a credit of £7.9m, which
represents deferred tax recognised on the timing differences created following
the impairment of dive support vessels during the year ended 31 December 2020
and the Group's current expectations regarding Dive Support operations.
6 Net finance expense
2022 2021 2021
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 0.2 0.2 0.3
Finance expense:
Interest payable on bank loans and overdrafts (3.8) (3.2) (6.3)
Net interest on pension obligations - (0.1) (0.1)
Unwind of discount on right-of-use lease liability (1.1) (1.0) (2.2)
(4.9) (4.3) (8.6)
Net finance expense (4.7) (4.1) (8.3)
7 Taxation
The Group's effective rate on profit before income tax is 37.3% (30 June 2021:
(67.3)%, 31 December 2021: 2.6%) which includes a separately disclosed tax
credit of £0.2m as detailed in note 5. The effective income tax rate on
underlying profit before income tax, based on an estimated rate for the year
ending 31 December 2022, is 28.4% (30 June 2021: 29.3%, 31 December 2021:
51.2%). Of the total tax charge, £0.8m relates to overseas businesses (30
June 2021: £1.3m). 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
2021: 54,571, December 2021: 54,571) 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.
At 30 June 2022, 2,180,603 options (June 2021: 515,463, December 2021:
650,513) were excluded from the diluted weighted average number of ordinary
shares calculation as their effect would be anti-dilutive. 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.
Weighted average number of shares
30 June 30 June 31 December 2021
2022 2021
Number of Number of Number of
shares shares shares
For basic earnings per ordinary share 50,344,286 50,350,082 50,345,477
Exercise of share options and LTIPs - 17,692 10,560
For diluted earnings per ordinary share 50,344,286 50,367,774 50,356,037
Underlying earnings per share
To provide a better understanding of the underlying performance of the Group,
underlying earnings per share on continuing activities is reported as an
alternative performance measure (note 3).
2022 2021 2021
Six months ended Six months ended Year ended
30 June 30 June 31 December
£m £m £m
Profit/(loss) attributable to owners of the Company 1.9 13.5 (27.8)
Separately disclosed items 1.6 1.1 48.7
Tax on separately disclosed items (0.2) (8.2) (10.9)
Underlying profit attributable to owners of the Company 3.3 6.4 10.0
Earnings per share pence pence pence
Basic earnings per share 3.7 26.8 (55.2)
Diluted earnings per share 3.7 26.8 (55.2)
Underlying basic earnings per share 6.7 12.8 20.0
Underlying diluted earnings per share 6.7 12.8 20.0
9 Interim dividend
No interim dividend is proposed in respect of the period
ended 30 June 2022 (2021: nil).
10 Retirement benefit obligations
Movements during the period in the Group's defined benefit
pension schemes are set out below:
2022 2021 2021
Six months ended Six months ended Year ended
30 June 30 June 31 December
£m £m £m
Net obligation as at 1 January (1.9) (10.3) (10.3)
Expense recognised in the income statement (1.6) (0.1) (0.2)
Contributions paid to scheme 1.0 1.0 2.3
Remeasurement gains and losses 7.6 2.8 6.3
At period end 5.1 (6.6) (1.9)
The Group's net surplus/(deficit) in respect of its pension schemes were as
follows:
2022 2021 2021
Six months ended Six months ended Year
ended
30 June 30 June 31 December
£m £m £m
Shore Staff 5.8 (5.3) (1.0)
Merchant Navy Officers Pension Fund (0.7) (1.1) (0.9)
Merchant Navy Ratings Pension Fund - (0.2) -
5.1 (6.6) (1.9)
The principal assumptions in respect of these liabilities are disclosed in the
December 2021 Annual Report. The Group has not obtained an interim valuation
for the period ended 30 June 2022. In the first half of 2022, the Group paid
contributions to defined benefit schemes of £1.0m (June 2021: £1.0m).
The Shore staff plan assets and obligations have been updated to 30 June
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.
During February 2022, the High Court approved a settlement in respect of ill
health early retirement benefits which were subject to legal uncertainties and
related to the MNRPF scheme. During the first half, a past service cost has
been recognised within separately disclosed items (Note 5) 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:
2022 2021 2021
Six months ended Six months ended Year
ended
30 June 30 June 31 December
£m £m £m
At 1 January 133.5 166.5 166.5
Impairment - - (27.5)
Disposals - - (3.9)
Exchange differences 1.6 (0.7) (1.6)
At period end 135.1 165.8 133.5
At the half year, the results of the impairment tests carried out in respect
of the year ended 31 December 2021, were updated based on the Group's trading
performance and revised outlooks.
The recoverable amount of the cash generating units (CGU's) has been assessed
based on value in use calculations using cash projections based on five-year
strategic plans which take into account the impact of climate change and are
approved by the Board. For all CGUs a terminal value of cash flows beyond that
date have been calculated at a growth rate in line with management's long-term
expectations for the relevant market, using a growth rate of 2.4%. The key
assumptions used in the value in use calculations include gross margin,
discount rate, inflation of overheads and payroll and growth rates.
Sensitivity to impairment
The Directors have carried out sensitivity analysis to determine the impact on
the carrying value of goodwill.
Sensitivities carried out across all CGU's included increasing the discount
rate by 2.0% and reducing the terminal growth to zero and reducing operating
profit by 25.0%.
One CGU within the Marine Support division was identified as having a higher
risk of impairment. The sensitivities identified that the headroom is most
sensitive to changes in the discount rate, which would need to be increased by
1.0% to give rise to a goodwill impairment in respect of this CGU.
One CGU within the Offshore Oil division was identified as having a high risk
of impairment. The sensitivities identified that the headroom is most
sensitive to changes in the discount rate, which would need to be increased by
2.0% to give rise to a goodwill impairment in this CGU and this is considered
to be unlikely.
12 Reconciliation of net borrowings
1 January Cash Other Exchange 30 June
2022 flow non-cash movement 2022
£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 30 June
2021 flow non-cash movement 2021
£m £m £m £m £m
Cash and cash equivalents 13.5 (1.6) - - 11.9
Debt due after 1 year (178.9) (2.7) (0.5) - (182.1)
Debt due within 1 year (0.2) 0.1 - - (0.1)
(179.1) (2.6) (0.5) - (182.2)
Lease liabilities (32.5) 6.6 (15.0) 0.2 (40.7)
Net borrowings (198.1) 2.4 (15.5) 0.2 (211.0)
1 January Cash Other Exchange 31 December
2021 flow non-cash movement 2021
£m £m £m £m £m
Cash and cash equivalents 13.5 20.9 - 0.1 34.5
Debt due after 1 year (178.9) 5.8 (0.9) - (174.0)
Debt due within 1 year (0.2) 0.1 - - (0.1)
(179.1) 5.9 (0.9) - (174.1)
Lease liabilities (32.5) 13.7 (27.0) (0.2) (46.0)
Net borrowings (198.1) 40.5 (27.9) (0.1) (185.6)
Cash and cash equivalents comprise:
2022 2021 2021
Six months ended Six months ended Year
ended
30 June 30 June 31 December
£m £m £m
Cash at bank and in hand 53.8 63.0 68.0
Overdrafts (42.7) (51.1) (33.5)
11.1 11.9 34.5
13 Assets held for sale
In June 2021, management agreed a plan to sell the Dive
Support Vessel (DSV) known as the Swordfish within the Marine Support
division. As at the date of this report management continues to actively
pursue the sale of Swordfish. The value of the asset increased from £10.7m in
December 2021 to £13.0m in June 2022 reflecting the capitalisation of dry
docking costs. The asset held for sale value in June 2021 included certain
non-core businesses within the Marine Support division which were disposed of
during the second half of 2021.
14 Commitments and contingencies
Capital commitments at 30 June 2022 were £1.6m (2021: £nil;
31 December: £1.6m).
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) A Group VAT registration is operated by the Company and six Group
undertakings in respect of which the Company is jointly and severally liable
for all amounts due to HM Revenue & Customs under the arrangement.
14 Commitments and contingencies (continued)
(c) 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.
(d) Subsidiaries of the Group have issued performance and payment guarantees
to third parties with a total value of £33.0m (June 2021: £38.4m, December
2021: £33.5m).
(e) 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.
(f) The Group has given an unlimited guarantee to the Singapore Navy in
respect of the performance of First Response Marine Pte Ltd, its Singapore
joint venture, in relation to the provision of submarine rescue and related
activities.
(g) In the normal course of business, the Company and certain subsidiaries
have given parental and subsidiary guarantees in support of loan and banking
arrangements.
(h) 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
has been made in these accounts where, in the opinion of the Directors,
liabilities may materialise. Other than provisions made against certain
receivables and claims, described in note 34 (b) of the last filed annual
report, there are no other significant provisions and no individually
significant contingent liabilities that required specific disclosure.
15 Related parties
There were no changes to related parties or associated
transactions from those disclosed in the Annual Report for the year ended 31
December 2021.
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