REG - Fisher (James) - Half Yearly Report <Origin Href="QuoteRef">FSJ.L</Origin> - Part 2
29/10/2014 15:27
- Part 2: For the preceding part double click ID:nRSa0606Qa
- (250) - - (655)
Amortisation of acquired intangibles (64) (63) (344) - - (471)
Operating profit 7,230 11,922 3,930 1,871 (1,637) 23,316
Finance income 31
Finance costs (2,550)
Profit before tonnage and income tax 20,797
Tonnage and income tax (4,173)
Profit attributable to equity holders 16,624
Share of post tax results of
joint ventures (111) - 287 - - 176
Capital expenditure
Property, plant and equipment 6,389 8,155 2,190 1,129 438 18,301
Segment assets 115,490 148,244 91,813 42,608 29,543 427,698
Investment in joint ventures 7,283 - 2,151 - - 9,434
Total assets 122,773 148,244 93,964 42,608 29,543 437,132
Segment liabilities (27,039) (17,538) (51,483) (11,905) (138,612) (246,577)
95,734 130,706 42,481 30,703 (109,069) 190,555
3 Segmental information (continued)
Six months ended 30 June 2013
Marine Offshore Oil Specialist Tankships Corporate Total
Support Technical
£000 £000 £000 £000 £000 £000
Revenue
Segmental revenue 82,678 46,501 43,515 31,432 - 204,126
Inter segment sales (2,035) (136) (1,271) - - (3,442)
Group revenue 80,643 46,365 42,244 31,432 - 200,684
Underlying operating profit 9,410 8,997 3,712 1,670 (1,541) 22,248
Acquisition costs - - (711) - - (711)
Amortisation of acquired intangibles (52) (71) (25) - - (148)
Operating profit 9,358 8,926 2,976 1,670 (1,541) 21,389
Finance income 116
Finance costs (2,931)
Profit before tonnage and income tax 18,574
Tonnage and income tax (3,879)
Profit attributable to equity holders 14,695
Share of post tax results of
joint ventures 970 - 1,004 - - 1,974
Capital expenditure
Property, plant and equipment 2,332 7,720 1,909 932 274 13,167
Segment assets 100,922 133,609 63,411 48,641 55,576 402,159
Investment in joint ventures 8,381 - 5,255 - - 13,636
Total assets 109,303 133,609 68,666 48,641 55,576 415,795
Segment liabilities (33,165) (17,564) (15,009) (18,214) (163,463) (247,415)
76,138 116,045 53,657 30,427 (107,887) 168,380
Year ended 31 December 2013
Marine Offshore Oil Specialist Tankships Corporate Total
Support Technical
£000 £000 £000 £000 £000 £000
Revenue
Segmental revenue 174,918 99,632 84,164 61,312 - 420,026
Inter segment sales (3,651) (442) (2,266) - - (6,359)
Group revenue 171,267 99,190 81,898 61,312 - 413,667
Underlying operating profit 18,262 19,690 7,755 3,989 (3,059) 46,637
Impairment of vessels (150) - - (789) - (939)
Amortisation of acquired intangibles (114) (137) (548) - - (799)
Operating profit 17,998 19,553 7,207 3,200 (3,059) 44,899
Profit on sale of subsidiary and joint venture undertakings (182) 6,795 6,613
Finance income 256
Finance costs (5,545)
Profit before tonnage and income tax 46,223
Tonnage and income tax (7,475)
Profit attributable to equity holders 38,748
Share of post tax results of
joint ventures 831 - 1,547 - - 2,378
Capital expenditure
Property, plant and equipment 4,293 14,812 3,615 1,243 786 24,749
Segment assets 92,591 136,486 81,078 43,990 35,407 389,552
Investment in joint ventures 7,458 - 2,009 - - 9,467
Total assets 100,049 136,486 83,087 43,990 35,407 399,019
Segment liabilities (35,898) (17,858) (36,473) (11,831) (113,152) (215,212)
64,151 118,628 46,614 32,159 (77,745) 183,807
4 Separately disclosed items
2014 2013 2013
Six months ended Six months ended Year ended
30 June 30 June 31 December
£000 £000 £000
Included in operating profit:
Acquisition costs (655) (711) (939)
Amortisation of acquired intangibles (471) (148) (799)
(1,126) (859) (1,738)
Included in profit before tax:
Profit on sale of subsidiary and joint venture undertakings - - 6,613
(1,126) (859) 4,875
As set out in note 9 the Group has made three acquisitions during the period. In accordance with the requirements of IFRS,
the costs incurred in making these acquisitions of £655,000 have been expensed in the Income Statement. In order for a
better understanding of underlying performance these have been disclosed separately, together with the amortisation of
intangible assets which arise on the acquisition of businesses.
In August 2013 the Group disposed of its interest in Foreland Holdings realising a profit of £6,795,000. A loss of £182,000
was recognised on the disposal of the marine leisure business of Fendercare Australia.
5 Retirement benefit obligations
Movements during the period in the Group's defined benefit pension schemes are set out below:
2014 2013 2013
Six months ended Six months ended Year ended
30 June 30 June 31 December
£000 £000 £000
As at 1 January (23,141) (27,061) (27,061)
Expense recognised in the income statement (574) (652) (1,284)
Settlement gains - - 610
Movements on exchange (4) - (6)
Contributions paid to scheme 2,486 2,481 10,141
Actuarial loss - (4,439) (5,541)
At period end (21,233) (29,671) (23,141)
The Group's assets and liabilities in respect of its pension schemes at 30 June 2014 were as follows:
2014 2013 2013
Six months ended Six months ended Year ended
30 June 30 June 31 December
£000 £000 £000
Assets
Scantech Produkt pension scheme 92 36 96
Liabilities
Shore Staff pension scheme (9,250) (9,140) (9,777)
MNOPF pension scheme (12,075) (20,567) (13,460)
(21,325) (29,707) (23,237)
The Group now has one defined benefit scheme and has an obligation in respect of the funding deficit of the Merchant Navy
Officers' Pension Fund (MNOPF). The last full actuarial valuation was performed on the Shore Staff scheme at 1 August 2010.
This has been rolled forward to 31 December 2013. The Group has not obtained an interim valuation for the period ended 30
June 2014 and so has not recognised an actuarial movement in this period.
6 Reconciliation of net debt
1 January Acquisition Cash Other Exchange 30 June
2014 flow non cash movement 2014
£000 £000 £000 £000 £000 £000
Cash in hand and at bank 23,982 - (1,194) - (1,909) 20,879
Cash and cash equivalents 23,982 - (1,194) - (1,909) 20,879
Debt due after 1 year (78,049) - (25,584) (289) 797 (103,125)
Debt due within 1 year - - - - - -
(78,049) - (25,584) (289) 797 (103,125)
Finance leases (211) (428) 492 - (1) (148)
Net debt (54,278) (428) (26,286) (289) (1,113) (82,394)
1 January Acquisition Cash Other Exchange 30 June
2013 flow non cash movement 2013
£000 £000 £000 £000 £000 £000
Cash in hand and at bank 18,339 - 14,554 - (44) 32,849
Cash and cash equivalents 18,339 - 14,554 - (44) 32,849
Debt due after 1 year (81,065) - - (19,026) (635) (100,726)
Debt due within 1 year - - (26,211) 18,785 (530) (7,956)
(81,065) - (26,211) (241) (1,165) (108,682)
Finance leases (396) (51) 197 - 16 (234)
Net debt (63,122) (51) (11,460) (241) (1,193) (76,067)
1 January Acquisition Cash Other Exchange 31 December
2013 flow non cash movement 2013
£000 £000 £000 £000 £000 £000
Cash in hand and at bank 18,339 - 10,028 - (4,385) 23,982
Cash and cash equivalents 18,339 - 10,028 - (4,385) 23,982
Debt due after 1 year (81,065) - - 1,940 1,076 (78,049)
Debt due within 1 year - - 1,698 (2,146) 448 -
(81,065) - 1,698 (206) 1,524 (78,049)
Finance leases (396) - 332 (191) 44 (211)
Net debt (63,122) - 12,058 (397) (2,817) (54,278)
7 Taxation
The Group falls within the UK tonnage tax regime under which tax on its ship owning and operating activities is based on
the net tonnage of vessels operated. Any income and profits outside the tonnage tax regime are taxed under the normal tax
rules of the relevant tax jurisdiction.
The effective rate on profit before income and tonnage tax from continuing operations is 20.1% (30 June 2013: 20.9%, 31
December 2013: 16.2%) based on the estimated effective tax rate for the twelve months to 31 December 2014. Of the total tax
charge, £1,392,000 relates to overseas businesses (2013: £1,956,000). The effective income tax rate on underlying profit
provided in the period is 19.5% (2013: 20.1%, 31 December 2013: 18.6%).
The deferred tax asset at 30 June 2014 has been calculated based on the rate of 20% substantively enacted at the balance
sheet date.
8 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the period, after excluding ordinary shares held by the Employee Share
Ownership Trust as treasury shares.
Diluted earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the
weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares
into ordinary shares.
The calculation of basic and diluted earnings per share is based on the following profits and numbers of shares:
Weighted average number of shares
30 June 2014 30 June 2013 31 December 2013
Number of Number of Number of
shares shares shares
For basic earnings per ordinary share* 49,985,894 49,921,873 49,921,772
Exercise of share options and LTIPs 636,081 594,605 588,818
For diluted earnings per ordinary share 50,621,975 50,516,478 50,510,590
* Excludes 58,218 (June 2013: 194,621; December 2013: 154,170) shares owned by the James Fisher & Sons Plc Employee
Share Ownership Trust.
No ordinary shares of 25p were allotted on the exercise of share options in the period to 30 June 2014. In the period to 30
June 2013 31,193 (31 December 2013: 31,193). Ordinary shares of 25p were allotted on the exercise of share options for an
aggregate cash consideration of £102,000.
To provide a better understanding of the underlying performance of the Group, an adjusted earnings per share on continuing
activities is provided. Adjusted earnings are before the costs of any business combinations and amortisation of acquired
intangibles.
2014 2013 2013
Six months ended Six months ended Year ended
30 June 30 June 31 December
£000 £000 £000
Profit attributable to owners of the Company 16,193 14,294 38,254
Separately disclosed items 1,126 859 (4,875)
Attributable tax (101) (39) (270)
Adjusted profit attributable to owners of the Company 17,218 15,114 33,109
Basic earnings per share on profit from operations 32.4 28.6 76.6
Diluted earnings per share on profit from operations 32.0 28.3 75.7
Adjusted basic earnings per share on profit from operations 34.4 30.3 66.3
Adjusted diluted earnings per share on profit from operations 34.0 29.9 65.6
9 Business combinations
On 24 January 2014 the Group acquired the entire issued share capital of Subsea Vision Limited (Subsea), for a cash
consideration of £2,225,000. Subsea owns and operates remotely operated vehicles providing underwater surveys, inspections
and construction support to the oil and gas industry including floating production, storage and off take vessels. Subsea is
included in the Marine Support division reporting into Fendercare.
On 14 March 2014 the Group acquired the entire issued share capital of Defence Consulting Europe AB (DCE), for an initial
cash consideration of £2,856,000. Contingent consideration is payable of up to £1,903,000 related to the achievement of
profit targets and £952,000 is dependent on certain contractual obligations which are expected to be completed in the next
twelve months. The contingent consideration relating to future earnings has been discounted to reflect the impact of the
time value of money on the expected dates on which the consideration will be paid. DCE provides a range of specialist
swimmer delivery vehicles to the Defence and related industries. The business is included in the Specialist Technical
division.
On 19 June 2014 the Group acquired the entire issued share capital of Testconsult Limited (Testconsult), for a cash
consideration of £8,669,000. Testconsult provides monitoring, instrumentation and testing services and is complementary to
the Strainstall Monitoring business. Both businesses are part of the Marine Support division.
Details of the assets acquired and consideration payable are set out below.
The provisional book and fair values of Subsea and Testconsult are as follows:
Subsea Testconsult Total
£000 £000 £000
Investments - 44 44
Property, plant and equipment 1,327 669 1,996
Inventories - 264 264
Trade and other receivables 310 1,671 1,981
Cash and short term deposits 135 1,010 1,145
Trade and other payables (242) (981) (1,223)
Interest bearing loans and borrowings (394) (34) (428)
Deferred tax (109) (44) (153)
Fair value of net assets acquired 1,027 2,599 3,626
Goodwill arising on acquisitions 1,198 6,070 7,268
10,894
Consideration
Cash 2,225 8,669 10,894
The provisional fair values and accounting adjustments of DCE are as follows:
Accounting
Book policy Fair value
value adjustments adjustments Total
£000 £000 £000 £000
Intangible assets - - 1,428 1,428
Property, plant and equipment 37 (4) (17) 16
Inventories 2,632 (2,108) (56) 468
Trade and other receivables 365 - 178 543
Cash and short term deposits 2,025 - - 2,025
Trade and other payables (4,988) 661 (476) (4,803)
Fair value of net assets acquired 71 (1,451) 1,057 (323)
Goodwill arising on acquisitions 5,755
5,432
Consideration
Cash 2,856
Contingent consideration 2,576
5,432
The book value of DCE has been adjusted to reflect adoption of the Group's income recognition policy and provision for
warranty claims. Intangible assets relate to intellectual property relating to the company's swimmer delivery systems.
Further fair value adjustments may arise as a result of the finalisation of completion accounts and review of fair values.
10 Fair values
The fair value of financial assets and financial liabilities, together with the carrying amounts in the Condensed
Consolidated Statement of Financial Position, are as follows:
Group 30 June 2014 31 December 2013
Carrying Fair Carrying Fair
value value value value
£000 £000 £000 £000
Assets carried at fair value
Forward exchange contracts - cash flow hedges 783 783 866 866
Interest rate swaps - cash flow hedges 56 56 - -
839 839 866 866
Assets carried at amortised cost
Receivables 101,491 101,491 84,655 84,655
Cash and cash equivalents 20,879 20,879 23,982 23,982
Other investments 1,378 1,378 1,378 1,378
123,748 123,748 110,015 110,015
Liabilities carried at fair value
Forward exchange contracts - cash flow hedges (30) (30) (13) (13)
Contingent consideration (14,819) (14,819) (12,082) (12,082)
Interest rate swaps - cash flow hedges - - (94) (94)
(14,849) (14,849) (12,189) (12,189)
Liabilities carried at amortised cost
Trade and other payables (85,765) (85,765) (86,557) (86,557)
Finance leases (148) (162) (211) (227)
Preference shares (100) (100) (100) (100)
(86,013) (86,027) (86,868) (86,884)
Financial risk management
The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated
financial statements as at and for the year ended 31 December 2013.
Fair value hierarchy
The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of inputs used in
making measurements of fair value. The fair value hierarchy has the following levels:
(a) Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
(b) Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e.derived from prices); and
(c) Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following table shows an analysis of financial instruments carried at fair value by the level of fair value hierarchy:
30 June 2014 31 December 2013
Group Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£000 £000 £000 £000 £000 £000 £000 £000
Financial assets measured at fair value
Forward exchange contracts - cash flow hedges - 56 - 56 - - - -
Interest rate swaps - cash flow hedges - 783 - 783 - 866 - 866
- 839 - 839 - 866 - 866
Financial liabilities measured at fair value
Forward exchange contracts - cash flow hedges - (30) - (30) - (13) - (13)
Interest rate swaps - cash flow hedges - - - - - (94) - (94)
Contingent consideration - - (14,819) (14,819) - - (12,082) (12,082)
Financial liabilities not measured at fair value
Finance leases - (162) - (162) - (227) - (227)
- (192) (14,819) (15,011) - (334) (12,082) (12,416)
10 Fair values (continued)
Level 2 fair values for simple over-the-counter derivative financial instruments are based on broker quotes. Those quotes
are tested for reasonableness by discounting expected future cash flows using market interest rates for a similar
instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take
account of the credit risk of the Group entity and counterparty when appropriate.
Level 3 fair values for contingent consideration are based on discounting expected future cash flows using market interest
rates at the measurement date.
11 Interim dividend
The proposed interim dividend of 7.10p (2013: 6.46p) per 25p ordinary share is payable on 3 November 2014 to those
shareholders on the register of the Company at the close of business on 3 October 2014. The dividend recognised in the
Statement of Movements in Equity is the final dividend for 2013 of 13.54p paid on 9 May 2014. The proposed interim dividend
has not been recognised in this report.
12 Commitments and contingencies
As at 30 June 2014 the Group had capital commitments of £4,009,000 (2013: £6,123,000). There have been no significant
changes to the contingent liabilities set out in the Annual Report.
13 Principal risks and uncertainties
The Group has policies, processes and systems in place to help identify, evaluate and manage risks at all levels throughout
the organisation. Certain key risks, because of their size, likelihood and severity are reviewed regularly by the Board to
ensure that appropriate action is taken to eliminate, reduce or mitigate where possible, significant risks that can lead to
financial loss, harm to reputation or business failure. The principle risks and uncertainties faced by the Group that could
impact the second half can be found in the Company's Annual Report on page 18, as supplemented by the contingent liability
note above.
14 Related parties
There have been no significant changes in the nature of related party transactions in the period ended 30 June 2014 from
that disclosed in the 2013 Annual Report.
15 Other reserve movements
Translation Hedging Total
reserve reserve
£000 £000 £000
At 1 January 2013 5,467 (2,035) 3,432
Other comprehensive income in the period (112) 160 48
At 30 June 2013 5,355 (1,875) 3,480
At 1 January 2014 (940) (243) (1,183)
Other comprehensive income in the period (2,253) (95) (2,348)
At 30 June 2014 (3,193) (338) (3,531)
Independent review report to James Fisher and Sons Plc
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report
for the six months ended 30 June 2014 which comprises the Condensed Consolidated Income Statement, the Condensed
Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Condensed
Consolidated Cash Flow Statement, the Condensed Consolidated Statement of Movements in Equity and the related explanatory
notes. We have read the other information contained in the half-yearly financial report and considered whether it contains
any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting
the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK
FCA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by
the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the
half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for
use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less
in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently
does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an
audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June 2014 is not prepared, in all material
respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.
David Bills
for and on behalf of KPMG LLP
Chartered Accountants
St James' Square
Manchester
M2 6DS
26 August 2014
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