TIDMFSJ
RNS Number : 3282K
Fisher (James) & Sons plc
28 August 2019
28 August 2019
James Fisher and Sons plc
Half year results for the six months ended 30 June 2019
James Fisher and Sons plc (FSJ.L) ('James Fisher'), the leading
marine service provider, announces its unaudited results for the
six months ended 30 June 2019.
2019 2018 % change
Revenue GBP286.9m GBP260.5m +10%
Underlying operating profit * GBP24.5m GBP24.5m -
Statutory operating profit GBP24.5m GBP24.3m +1%
Underlying profit before tax
* GBP20.9m GBP21.7m (4)%
Statutory profit before tax GBP20.9m GBP21.5m (3)%
Underlying diluted earnings per
share * 33.2p 34.5p (4)%
Statutory diluted earnings per
share 33.6p 34.5p (3)%
Interim dividend per share 11.3p 10.3p +10%
* excludes separately disclosed items (2019: GBPnil (2018:
charge of GBP0.2m) see note 6)
Highlights:
-- Revenue up 10% and by 4% at constant currency and excluding
acquisitions
-- Cash conversion of 108% (2018: 120%)
-- Strong performance in Offshore Oil and Tankships
-- Investment of GBP52.2m in capital and new businesses
-- Interim dividend increased by 10%
Commenting on the results, Chief Executive Officer, Nick Henry,
said:
"The Group has made good strategic progress in the first half
with the acquisition in Brazil and the purchase of two dive support
vessels. We remain well positioned across all four of our divisions
with significant growth opportunities ahead. As previously advised,
the phasing of projects has made the year more weighted to the
second half, which will also begin to benefit from the investment
committed to in the first half. The Group remains well placed to
deliver an improved financial performance in the year and to
continue to provide future value to its shareholders."
For further information:
Chief Executive
James Fisher and Nick Henry Officer
Sons plc Stuart Kilpatrick Group Finance Director 020 7614 9508
FTI Consulting Richard Mountain 0203 727 1340
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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.
Review of the six months ended 30 June 2019
Performance
The first half of 2019 saw a strong performance from our
Offshore Oil and Tankships divisions. Specialist Technical
performed broadly in line against a strong prior year period and
further developed its order book for delivery in the second half
and future years. Marine Support had a slower start to the year and
has seen several projects deferred into the second half.
Group revenue was 10% ahead of the prior period at GBP286.9m
(2018: GBP260.5m) due to strong growth in Offshore Oil and
Tankships and from the two businesses acquired during the first
half. At constant currency and excluding acquisitions, revenue grew
by 4%. Underlying operating profit was GBP24.5m (2018: GBP24.5m)
reflecting strong performance from Offshore Oil and Tankships.
Marine Support's result reflected its slow start to the year, a
weak market in South Africa and contract and doubtful debt
provisions in the first half. Specialist Technical was broadly in
line with prior period. Statutory operating profit increased to
GBP24.5m (2018: GBP24.3m).
Underlying diluted earnings per share were 33.2 pence per share
(2018: 34.5p), reflecting the lower underlying profit before
taxation and a slightly higher effective tax rate. Diluted earnings
per share after separately disclosed items were 33.6 pence per
share (2018: 34.5p).
Board
With effect from 1 September 2019, Eoghan O'Lionaird will join
the Board to become Chief Executive Officer, replacing Nick Henry,
who retires on 1 October 2019. The Board would like to express its
appreciation to Nick for his contribution to the Group and wish him
well for the future.
On 1 March 2019, Dr Inken Braunschmidt was appointed to the
Board as an Independent Non-Executive Director. Inken is the Chief
Innovation and Digital Officer and a member of the Executive Board
at Halma plc and previously spent 13 years at RWE AG, where she
held various international roles focusing particularly on strategy,
innovation and change management.
David Moorhouse retired from the Board on 28 February 2019
having served on the Board as a Non-Executive Director since August
2013. Aedamar Comiskey was appointed Senior Independent Director on
22 March 2019.
Dividends
The Board has declared an interim dividend of 11.3 pence per
share (2018: 10.3p), an increase of 10%. The dividend will be paid
on 1 November 2019 to shareholders on the register at the close of
business on 4 October 2019. The 2018 final dividend of GBP10.7m
(21.3p per share) was paid on 10 May 2019.
Strategy
The Group's strategy is to grow its business organically by
leveraging its existing marine skill base in areas of specialist
expertise to a global market, supplemented by selective bolt-on
acquisitions which broaden the Group's range of specific niche
services, products or geographical coverage. Our strategic aim is
to deliver long-term growth in earnings per share and to
consistently increase shareholder value. Whilst the Group
prioritises organic growth, this is supplemented by value enhancing
acquisitions which fit into our existing divisions. James Fisher
seeks to acquire businesses that have a niche product or service
offering, with growth potential, a track record of profitability,
cash generation and strong management.
Strategic progress
In January 2019, our Marine Support division completed the
acquisition of Martek Marine, which is headquartered in the UK with
an office in Singapore, and provides a range of innovative safety
and calibration systems and products to the marine sector.
The Group has also purchased two saturation dive support vessels
(DSV) for the West African market for GBP40.2m which come into
service during the second half of 2019 and will be operated by
Subtech. The second DSV purchase completed in July 2019 for a cash
outflow of GBP17.4m.
The Group also acquired a 60% interest in Murjan, based in Saudi
Arabia, for GBP4.1m. Murjan is a near shore subsea operations
business whose services are complementary to our offshore services
in the Arabian Gulf and which enables the Group to increase the
local content of services provided in the region.
Our renewables business has continued work on the East Anglia
One windfarm construction and James Fisher has been awarded phase 2
of the unexploded ordnance work and boulder clearance, as well as
met mast (measurement tower) decommissioning. This is in addition
to providing ongoing construction support services and marine
co-ordination and communications services for the project. On the
Moray East windfarm, it was awarded a contract for marine
co-ordination and communication and its work on site preparations
continues at Innogy's Triton Knoll Offshore Wind Farm with a new
contract for unexploded ordnance work and boulder clearance. An
initial contract in Taiwan for unexploded ordnance and survey work
and structural monitoring and consultancy work for high voltage
engineering was also awarded in the first half of 2019.
Our strategy to provide services to support the operational
efficiency of established windfarms benefited from our first
significant contract to provide maintenance support to London
Array, announced last year. In 2019, we were awarded a 15 year
operations and maintenance contract for offshore transmission
(OFTO) assets at Greater Gabbard in Lowestoft, Suffolk.
Our ship-to-ship operations continued to develop with initial
operations commenced in Chile during 2019 and good growth in South
Africa. Operations in Brazil were lower in the first quarter but
improved in the second quarter.
In August, the Group announced the acquisition of a 60% interest
in the diving and marine service business, SM Continental SA. Based
in Brazil, Continental increases the Group's presence in this
important and growing market for subsea services. The combination
of its reputation for safety and reliable service delivery and
James Fisher's more extensive inspection, repair and maintenance
capability provides strong opportunities in a key geographic growth
market.
In Specialist Technical, sea trials for the second vessel,
delivered to the Indian Navy in December 2018, were completed and
we were awarded a contract to supply a submarine rescue vessel for
South Korea. Our strategy to provide submarine rescue vessels and
long-term support contracts to manage submarine rescue services
continues to develop with long-term support contracts in Singapore,
India, UK/NATO and Australia.
Our Offshore Oil strategy is to be a niche service provider of
equipment and people for the inspection and maintenance market. The
sector downturn in 2015 impacted not only exploration but our
market for ongoing maintenance. Our reaction to the downturn was to
reduce costs and, in particular, headcount by around 40%. Recent
months have seen a gradual improvement in demand in the sector and
market share gains in our artificial lift services business,
RMSpumptools. Our fleet of equipment with a net book value of
GBP42.9m, is well maintained and any upturn in market conditions
requires little further investment, leaving the division well
placed to take advantage of its operationally geared structure.
In July, the Tankships division was awarded a five year contract
from the Ministry of Defence to support the Royal Navy's fueling
requirements for which the Raleigh Fisher, a 35kT tanker was
purchased for GBP9m.
Marine Support
H1 2019 H1 2018 change
Revenue (GBPm) 144.3 127.2 +13%
Underlying operating profit (GBPm) 6.6 10.8 (39)%
Underlying operating margin 4.6% 8.5% (390)bps
Return on capital employed 6.3% 12.2% (590)bps
Revenue increased by 13% to GBP144.3m (2018: GBP127.2m) in the
first half, mainly due to businesses acquired which contributed 10%
of the growth and the balance split evenly between currency effects
and organic growth. Underlying operating profit of GBP6.6m (2018:
GBP10.8m) reflected a slow first quarter, particularly in ship-to
ship services in Brazil, weak demand in South Africa and contract
and doubtful debt provisions. Ship-to-ship services improved in the
second quarter and a number of marine service projects are weighted
to the second half.
The Group has won a contract in Northern Mozambique worth GBP32m
for the design and installation of an early beach landing and
temporary beach landing. This is the first stage of a major
liquefied natural gas development project which was expected to
commence earlier in the year but started in July and will take two
years to complete.
Diving and subsea services for the Oil & Gas sector in West
Africa and the Middle East continued to grow in the first half of
2019. In addition to taking a 60% interest in Murjan to further
develop business in the Middle East, the Group made an investment
of GBP22.8m in the first half and a further GBP17.4m in July in two
dive support vessels to enter the saturation diving market in West
Africa. Both vessels are due to be put into service during the
second half.
Specialist Technical
H1 2019 H1 2018 change
Revenue (GBPm) 75.6 77.6 (3)%
Underlying operating profit (GBPm) 9.3 9.6 (3)%
Underlying operating margin 12.3% 12.4% (10)bps
Return on capital employed 16.1% 17.3% (120)bps
Specialist Technical produced a similar financial result to the
first half of 2018, despite the build phase of the Indian submarine
rescue vessel contract largely completing at the end of 2018. A
GBP30m order from Daewoo Shipbuilding & Marine Engineering for
the design, construction and delivery of a third generation deep
search and rescue vehicle for the Korean navy, together with
training and in-service support was announced and commenced in
December 2018 and is due to be delivered in 2021.
Progress continued in the first half on two saturation diving
systems for Shanghai Salvage due for delivery in the second half
and JFD's Swedish business continued to progress its order for six
swimmer delivery vehicles with the first one undergoing sea trials
in July. In August 2019, the assets, intellectual property and
design rights of Ortega Submersibles BV were acquired, expanding
our offering of advanced swimmer delivery vehicles.
Profits from nuclear decommissioning are expected to be second
half weighted and progress in developing a range of radiation
monitors and inspection devices is on track with product
availability due in the second half of 2019. In the first half, a
rig hall near Dounreay was purchased for GBP0.9m to offer an
off--site facility in which to test and trial equipment, prior to
site installation and to conduct operator training.
Offshore Oil
H1 2019 H1 2018 change
Revenue (GBPm) 33.8 27.2 +24%
Underlying operating profit (GBPm) 4.5 1.2 +275%
Underlying operating margin 13.3% 4.4% +890bps
Return on capital employed 7.6% 1.9% +570bps
Revenue was 24% ahead of 2019 at GBP33.8m (2018: GBP27.2m)
reflecting a steady improvement in market conditions in the
inspection and maintenance market in recent months within the oil
& gas sector. However, well testing remained flat and
regionally Middle East continued to be positive whilst Norway
showed some improvement. Underlying operating profit increased by
GBP3.3m reflecting the operational gearing from the increased
utilisation of hire equipment together with skilled operators.
The division further broadened its end markets by winning its
first significant tooling and cutting work in the first half of
2019 and supplying its compressors for offshore renewable
applications.
Tankships
H1 2019 H1 2018 Change
Revenue (GBPm) 33.2 28.5 +17%
Underlying operating profit (GBPm) 5.9 4.3 +37%
Underlying operating margin 17.8% 15.1% +270bps
Return on capital employed 40.7% 31.0% +970bps
Tankships performed strongly in the first half of 2019 with
revenue 17% higher at GBP33.2m (2018: GBP28.5m) and underlying
operating profit 37% higher at GBP5.9m (2018: GBP4.3m). Vessel
utilisation remained high and the results benefited from
temporarily having one additional 4kT vessel in the fleet as a more
modern vessel was acquired in 2018 and an older vessel was sold in
June 2019. In addition, strong spot trading revenue gave rise to
the improved trading performance.
In July, a five year contract was awarded by the Ministry of
Defence to support the Royal Navy's refuelling requirements for
which the Raleigh Fisher, a 35kT tanker was purchased for GBP9m and
put into service.
Outlook
The Group made good strategic progress in the first half with
the acquisition in Brazil and the purchase of two dive support
vessels. We remain well positioned across all four of our divisions
with significant growth opportunities ahead.
Marine Support is more second half weighted due to delays and
phasing of projects and lower ship-to-ship transfers at the
beginning of the year. Activity has picked up in the summer months.
In the renewables sector the order book continues to rise, and a
significant contract in Northern Mozambique has commenced.
Specialist Technical is performing well and has secured further
contracts for submarine rescue equipment which has strengthened its
order book leading into 2020. Offshore Oil continues to benefit
from a partial recovery in the market and the division is well
positioned to benefit from any upturn. Tankships continues to
perform well and in the second half will begin to benefit from the
new long-term contract for the Ministry of Defence.
As previously advised, the phasing of projects has made the year
more weighted to the second half, which will also begin to benefit
from the investment committed to in the first half. The Group
remains well placed to deliver an improved financial performance in
the year and to continue to provide future value to its
shareholders.
Financial review
Change of accounting standards
The Group adopted IFRS 16 'Leases' with effect from 1 January
2019 and using the modified retrospective method is not required to
restate prior year financial information. IFRS 16 effectively
brings operating lease obligations onto the balance sheet by
establishing a 'right-of-use' asset representing the discounted
value of the operating lease obligations. The right-of-use asset is
amortised with an 'interest' charge recognised within finance
charges. In the income statement therefore, an operating expense of
the lease rental is replaced by amortisation charged against
operating profit and an interest cost within finance charges. The
Group primarily has operating leases in respect of vessels within
the Tankships division and in respect of rented property.
The impact of IFRS 16 on the first half is to increase operating
profit and underlying operating profit by GBP0.5m and net finance
charges by GBP0.9m. The net impact on profit before taxation and
underlying profit before taxation in the first half of 2019
therefore is a reduction of GBP0.4m. Lease liabilities at 30 June
2019 were GBP31.1m and associated right-of-use assets were
GBP30.7m. The adoption of IFRS 16 has no impact on the Group's
lending covenants as these are based upon frozen GAAP.
Taxation
The effective tax rate on underlying profit before tax in the
period increased to 20.0% (2018: 18.7%). This rate is based on
estimates for the full year and has increased due to a greater
proportion of profits being earned in higher tax jurisdictions in
the Middle East, Africa and South America. The Group's tanker
operations continue to be taxed with respect to tonnage rather than
profits and this reduces the effective rate by around 2.6
percentage points in the period.
The Group has adopted IFRIC 23 'Uncertainty over income tax
treatments' and recognised additional current tax liabilities of
GBP2.0m on 1 January 2019 reflecting potential tax issues across
the Group's international jurisdictions.
Separately disclosed items
The Directors consider that alternative performance measures
described in note 3 assist an understanding of the underlying
trading performance of the businesses. These measures exclude
separately disclosed items which consist of gains or losses on the
sale of a business, asset impairments, costs of material litigation
and charges or income relating to the acquisition of businesses.
Net separately disclosed items before taxation in the six months
ended 30 June 2019 were GBPnil (2018: charge of GBP0.2m). Statutory
profit before tax was GBP20.9m (2018: GBP21.5m).
Cash flow and borrowings
Underlying Ebitda, which is adjusted
in the summary to exclude the effect
of IFRS 16 for comparative purposes,
was 3% higher at GBP39.3m (2018:
GBP38.1m). Cash conversion, the
ratio of operating cash flow to
underlying operating profit was
108% (2018: 120%), after a GBP3.8m
catch-up payment to an industry
wide pension scheme.
Investment in acquisitions of GBP13.9m
comprised Martek (GBP8.3m), Murjan
(GBP4.1m) with the balance for joint
ventures and acquisition costs.
Capital investment of GBP38.3m included
GBP22.8m on dive support vessels,
GBP1.4m for cutting tools in Offshore
Oil and GBP0.9m for a rig hall in
Dounreay.
This investment, together with dividends,
interest and tax, increased net
borrowings by GBP45.8m (2018: GBP12.2m)
to GBP159.4m at 30 June 2019 (2018:
GBP144.7m). Net borrowings including
operating leases following the adoption
Summary cash flow of IFRS 16 were GBP190.5m.
------------------------------- -------- --------
H1 2019 H1 2018
GBPm GBPm
------------------------------- -------- --------
Underlying operating profit
(pre IFRS 16) 24.0 24.5
Depreciation & amortisation 15.3 13.6
-------------------------------
Ebitda * 39.3 38.1
Working capital (7.1) (7.5)
Pension / other (6.2) (1.2)
-------------------------------
Operating cash flow 26.0 29.4
Interest & tax (6.2) (5.5)
Capital expenditure (38.3) (15.4)
Acquisitions (13.9) (9.4)
Dividends (11.1) (9.7)
Other (2.3) (1.6)
-------------------------------
Net outflow (45.8) (12.2)
Net borrowings at start
of period (113.6) (132.5)
------------------------------- -------- --------
Net borrowings at end
of period (159.4) (144.7)
------------------------------- -------- --------
Net borrowings plus operating
leases (190.5) n/a
=============================== ======== ========
* Underlying earnings before interest, tax, depreciation and
amortisation
The ratio of net borrowings, excluding right-of-use lease
liabilities, to Ebitda was 1.7 times (2018: 1.7 times) and
inclusive of project related bonds and guarantees was 2.3 times
(2018: 2.2 times). Net gearing, the ratio of net debt to equity was
52% (2018: 51%).
Balance sheet
30 June 30 June
2019 2018
--------------------------
GBPm GBPm
-------------------------- -------- --------
Intangible assets 212.5 197.7
Other assets 183.8 152.3
Right-of-use assets 30.7 -
Working capital 94.8 116.0
Pensions (10.7) (19.7)
Other liabilities (11.9) (17.8)
--------------------------
Capital employed 499.2 428.5
-------------------------- -------- --------
Net borrowings 159.4 144.7
Right-of-use liabilities 31.1 -
Equity 308.7 283.8
--------------------------
Intangible assets have increased
by GBP14.8m since June 2018 due to
the acquisitions of Martek and Murjan
in January 2019. Other assets have
increased due to the capital investment
referred to above.
The ratio of working capital to sales
at 30 June 2019 was 16.1% (2018:
21.9%) reflecting the unwind of working
capital from 2018 from the submarine
rescue vessel project for the Indian
Navy. Net pension liabilities have
reduced by GBP9.0m in the last year
to GBP10.7m reflecting contributions
paid over the period.
At 30 June 2019 the Group had committed
revolving credit facilities of GBP250.0m
(2018: GBP225.0m) and GBP83.7m of
499.2 428.5 headroom (2018: GBP67.7m).
-------------------------- -------- --------
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 2018 Annual Report and Accounts on pages 20-25.
The principal risks set out in the 2018 Annual Report and Accounts
were:
-- Strategic - energy markets, operations in emerging
markets;
-- Operational - project delivery, recruitment and retention of
key staff, health, safety and environment, contractual risk and
cyber security; and
-- Financial - foreign currency and interest rates.
The Board considers that the principal risks and uncertainties
set out in the 2018 Annual Report and Accounts have not changed and
remain relevant for the second half of the financial year.
On 29 March 2017, the United Kingdom invoked Article 50 of the
Treaty on European Union (EU) which began the member state's
withdrawal, commonly known as Brexit, from the EU. The Board
continues to monitor the progress of the UK's proposed exit from
the EU. In addition, and in view of the time scale, the Group has
been assessing the implications and potential mitigating actions of
a no-deal scenario. The Board continues to consider that the UK's
exit from the European Union is unlikely to have a material impact
on the Group, as its business interests and customer base in the EU
are not significant.
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
by the European Union.
(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:
N P Henry S C Kilpatrick
Chief Executive Officer Group Finance Director
27 August 2019
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2019
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
Note GBPm GBPm GBPm
Revenue 4 286.9 260.5 561.5
Cost of sales (204.9) (184.8) (394.9)
----------- ----------- -------------
Gross profit 82.0 75.7 166.6
Administrative expenses (58.7) (52.4) (107.1)
Share of post-tax results of joint
ventures 1.2 1.0 1.9
Operating profit 4 24.5 24.3 61.4
Analysis of operating profit:
Underlying operating profit 24.5 24.5 62.1
Separately disclosed items 6 - (0.2) (0.7)
Net finance expense 5 (3.6) (2.8) (6.0)
----------- ----------- -------------
Profit before taxation 20.9 21.5 55.4
Analysis of profit before tax:
Underlying profit before taxation 20.9 21.7 56.1
Separately disclosed items 6 - (0.2) (0.7)
Income tax 7 (4.0) (3.8) (10.1)
Profit for the period 16.9 17.7 45.3
=========== =========== =============
Attributable to:
Owners of the Company 17.0 17.4 44.9
Non-controlling interests (0.1) 0.3 0.4
16.9 17.7 45.3
=========== =========== =============
Earnings per share
pence pence pence
Basic 8 33.8 34.7 89.5
Diluted 8 33.6 34.5 88.9
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE
INCOME
for the six months ended 30 June 2019
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2019 2018 2018
Note GBPm GBPm GBPm
Profit for the period 16.9 17.7 45.3
Items that will not be reclassified to the
income statement
Actuarial loss in defined benefit pension
schemes 10 - (1.5) (1.1)
Fair value adjustment to financial asset - - (0.9)
Tax on items that will not be reclassified - 0.3 0.2
----------- ----------- ------------
- (1.2) (1.8)
Items that may be reclassified subsequently to
the income statement
Exchange differences on foreign currency
net investments 1.2 0.2 1.3
Effective portion of changes in fair value
of cash flow hedges (0.7) (2.5) (4.0)
Effective portion of changes in fair value of
cash flow hedges in joint ventures (0.1) 0.2 0.2
Net change in fair value of cash flow hedges transferred
to income statement (0.6) 0.2 0.1
Deferred tax on items that may be reclassified 0.3 0.4 0.5
----------- ----------- ------------
0.1 (1.5) (1.9)
Total comprehensive income for the period 17.0 15.0 41.6
=========== =========== ============
Attributable to:
Owners of the Company 17.1 14.7 41.2
Non-controlling interests (0.1) 0.3 0.4
17.0 15.0 41.6
=========== =========== ============
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 June 2019
30 June 30 June 31 December
2019 2018 2018
Note GBPm GBPm GBPm
Non-current assets
Goodwill 184.2 171.9 171.4
Other intangible assets 28.3 25.8 26.1
Property, plant and equipment 172.8 141.7 145.4
Right-of-use assets 30.7 - -
Investment in joint ventures 9.6 8.3 8.2
Other investments 1.4 2.3 1.4
Deferred tax assets 4.0 3.1 3.7
431.0 353.1 356.2
-------- -------- ------------
Current assets
Inventories 50.2 49.8 44.9
Trade and other receivables 202.5 217.8 186.2
Cash and cash equivalents 11 17.4 12.1 18.6
270.1 279.7 249.7
-------- -------- ------------
Current liabilities
Trade and other payables (155.2) (151.6) (132.2)
Provisions for liabilities and charges (5.7) (4.5) (2.6)
Current tax (9.8) (8.9) (8.7)
Borrowings (10.9) - (10.0)
Lease liabilities (8.9) (0.3) (0.1)
(190.5) (165.3) (153.6)
-------- -------- ------------
Net current assets 79.6 114.4 96.1
Total assets less current liabilities 510.6 467.5 452.3
-------- -------- ------------
Non-current liabilities
Provisions for liabilities and charges (0.6) (6.8) (6.0)
Retirement benefit obligations 10 (10.7) (19.7) (16.1)
Cumulative preference shares (0.1) (0.1) (0.1)
Borrowings (165.6) (156.4) (122.0)
Lease liabilities (22.4) - -
Deferred tax liabilities (2.5) (0.7) (1.7)
(201.9) (183.7) (145.9)
-------- -------- ------------
Net assets 308.7 283.8 306.4
======== ======== ============
Equity
Called up share capital 12.6 12.6 12.6
Share premium 26.2 25.9 25.9
Treasury shares - (0.6) (0.4)
Other reserves (0.9) (0.5) (0.9)
Retained earnings 270.7 245.1 267.8
-------- -------- ------------
Equity attributable to owners of the
Company 308.6 282.5 305.0
Non-controlling interests 0.1 1.3 1.4
Total equity 308.7 283.8 306.4
======== ======== ============
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2019
Six months Six months
Note ended ended Year ended
30 June 30 June 31 December
2019 2018 2018
GBPm GBPm GBPm
Profit before tax for the period 20.9 21.5 55.4
Adjustments to reconcile profit before tax
to net cash flows
Depreciation and amortisation 16.8 15.0 31.0
Depreciation of right-of-use assets 5.0 - -
Acquisition costs charged 0.5 0.1 0.7
Profit on disposal of fixed assets (0.2) 0.6 0.3
Transferred from hedging reserve to income
statement (0.6) 0.2 0.1
Other separately disclosed items (2.0) (1.3) (2.6)
Net finance expense 3.6 2.8 6.0
Share of post-tax results of joint ventures (1.2) (1.0) (1.9)
Share based payments 0.9 0.4 1.4
(Increase)/decrease in inventories (4.8) (2.4) 2.6
(Increase)/decrease in trade and other receivables (14.3) (20.7) 12.5
Decrease/(increase) in trade and other payables 12.0 15.6 (4.0)
Defined benefit pension cash contributions
less service cost (5.6) (1.8) (5.3)
----------- ----------- ------------
Cash generated from operations 31.0 29.0 96.2
Cash outflow from acquisition costs (0.6) (0.2) (0.2)
Income tax paid (4.1) (3.0) (8.6)
----------- ----------- ------------
Cash flow from operating activities 26.3 25.8 87.4
Investing activities
Dividends from joint venture undertakings 0.5 0.4 1.4
Proceeds from the disposal of property, plant
and equipment 1.1 0.7 2.8
Finance income 0.1 0.1 0.2
Acquisition of subsidiaries, net of cash
acquired (11.3) (9.2) (10.2)
Acquisition of property, plant and equipment (37.6) (13.2) (32.4)
Investment in joint ventures and available
for sale assets (0.7) (0.2) (2.1)
Development expenditure (1.7) (2.2) (6.1)
Cash flows used in investing activities (49.6) (23.6) (46.4)
Financing activities
Proceeds from the issue of share capital 0.3 0.2 0.2
Finance costs (2.2) (2.5) (4.9)
Purchase of own shares by Employee Share
Ownership Trust (2.3) (1.1) (0.9)
Capital element of lease repayments (2018: Capital
element of finance lease repayments) (5.6) (0.1) (0.2)
Proceeds from borrowings 111.3 76.7 121.1
Repayment of borrowings (68.4) (73.1) (142.5)
Dividends paid (10.7) (9.7) (14.9)
Dividend paid to non-controlling interest (0.4) (0.3) (0.3)
----------- ----------- ------------
Cash flows from financing activities 22.0 (9.9) (42.4)
Net decrease in cash and cash equivalents (1.3) (7.7) (1.4)
Cash and cash equivalents at beginning of
period 18.6 20.3 20.3
Net foreign exchange differences 0.1 (0.5) (0.3)
Cash and cash equivalents at end of period 11 17.4 12.1 18.6
=========== =========== ============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2019
Share Share Retained Other Treasury Shareholders' Non-controlling Total
capital premium earnings reserves shares equity interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January
2019 12.6 25.9 267.8 (0.9) (0.4) 305.0 1.4 306.4
IFRIC 23 -
opening
balance
adjustments
- note 14(b) - - (2.0) - - (2.0) - (2.0)
Total
comprehensive
income - - 17.1 - - 17.1 (0.1) 17.0
Contributions by
and
distributions
to owners:
Ordinary
dividends
paid - - (10.7) - - (10.7) - (10.7)
Dividend paid to
non-controlling
interest - - - - - - (0.4) (0.4)
Acquisition of
non-controlling
interest - - - - - - (0.8) (0.8)
Share based
payments - - 0.9 - - 0.9 - 0.9
Tax effect of
share
based payments - - 0.3 - - 0.3 - 0.3
Purchase of
shares
by ESOT - - - - (2.3) (2.3) - (2.3)
Arising on the
issue of shares - 0.3 - - - 0.3 - 0.3
-------- -------- --------- --------- --------- -------------- ---------------- -------
- 0.3 (9.5) - (2.3) (11.5) (1.2) (12.7)
Transfer - - (2.7) - 2.7 - - -
--------- --------- --------------
At 30 June 2019 12.6 26.2 270.7 (0.9) - 308.6 0.1 308.7
======== ======== ========= ========= ========= ============== ================ =======
Non-
Share Share Retained Other Treasury Shareholders' controlling Total
capital premium earnings reserves shares equity interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January
2018 12.6 25.7 238.9 1.0 (0.4) 277.8 1.2 279.0
Total
comprehensive
income - - 16.2 (1.5) - 14.7 0.3 15.0
Contributions by
and
distributions
to owners:
Ordinary
dividends
paid - - (9.7) - - (9.7) - (9.7)
Dividend paid to
non-controlling
interest - - - - - - (0.3) (0.3)
Acquisition of
non-controlling
interest - - - - - - 0.1 0.1
Share based
payments - - 0.4 - - 0.4 - 0.4
Tax effect of
share
based payments - - 0.2 - - 0.2 - 0.2
Purchase of
shares
by ESOT - - - - (0.7) (0.7) - (0.7)
Sale of shares
by ESOT - - (0.7) - 0.3 (0.4) - (0.4)
Arising on the
issue of shares - 0.2 - - - 0.2 - 0.2
-------- -------- --------- --------- --------- -------------- ---------------- -------
- 0.2 (9.8) - (0.4) (10.0) (0.2) (10.2)
Transfer - - (0.2) - 0.2 - - -
At 30 June 2018 12.6 25.9 245.1 (0.5) (0.6) 282.5 1.3 283.8
======== ======== ========= ========= ========= ============== ================ =======
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 2019 comprise the Company and its subsidiaries (together
referred to as the Group) and the Group's interests in jointly
controlled entities.
Statement of compliance
The condensed consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standard (IFRS) IAS 34 'Interim Financial Reporting' as adopted by
the European Union (EU). As required by the Disclosure and
Transparency Rules of the Financial Services Authority, the
condensed consolidated set of financial statements has been
prepared applying the accounting policies and presentation that
were applied in the preparation of the Group's published
consolidated financial statements for the year ended 31 December
2018 with the exceptions described below. They do not include all
of the information required for full annual financial statements,
and should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 December 2018.
The comparative figures for the financial year ended 31 December
2018 are not the Group's statutory accounts for that financial
year. Those accounts which were prepared under International
Financial Reporting Standards (IFRS) as adopted by the EU (adopted
IFRS), have been reported on by the Group's auditors and delivered
to the Registrar of Companies. The report of the auditors was (i)
unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
The consolidated financial statements of the Group for the year
ended 31 December 2018 are available upon request from the
Company's registered office at Fisher House, PO Box 4,
Barrow-in-Furness, Cumbria, LA14 1HR or at
www.james-fisher.co.uk.
The half year financial information is presented in Sterling and
all values are rounded to the nearest million pounds (GBPm) except
where otherwise indicated.
Going concern
After making enquires, the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly they continue to adopt the going concern basis in
preparing the condensed consolidated financial statements.
The Group meets its day to day working capital requirements
through operating cash flows with borrowings in place to fund
acquisitions and capital expenditure. The Group had GBP83.7m of
undrawn committed facilities at 30 June 2019 (2018: GBP67.7m) and
no revolving credit facilities due for renewal within the next
twelve months.
Significant accounting policies
The Group has adopted IFRS 16 'Leases', using the modified
retrospective approach, and consequently has not restated its
comparatives. Otherwise, the accounting policies applied by the
Group in these condensed consolidated financial statements are the
same as those applied by the Group in its consolidated financial
statements as at and for the year ended 31 December 2018.
The Group has adopted IFRIC 23 'Uncertainty over income tax
treatments' from 1 January 2019 with an adjustment to the opening
retained earnings of GBP2.0m and with no impact on profit.
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 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
2018.
3 Alternative performance measures
The Group uses a number of alternative (non-Generally Accepted
Accounting Practice (non-GAAP)) financial 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 6) and are usually items that are significant in
size 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 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.
2019 2018 2018
Six months
Six months ended 30 Year ended
ended 30 June June 31 December
GBPm GBPm GBPm
Operating profit 24.5 24.3 61.4
Separately disclosed items
before taxation - 0.2 0.7
Underlying operating
profit 24.5 24.5 62.1
Net finance expense (3.6) (2.8) (6.0)
Underlying profit before taxation 20.9 21.7 56.1
=================== =========== =============
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. The Directors believe
that underlying EPS provides an important measure of the underlying
earnings capability of the Group. 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 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.
3.4 Cash conversion
Cash conversion is defined as the ratio of operating cash flow
to underlying operating profit. Operating cash flow comprises:
2019 2018 2018
Six months
ended 30 Six months Year ended
June ended 30 June 31 December
GBPm GBPm GBPm
Cash generated from
operations 31.0 29.0 96.2
----------- --------------- -------------
Dividends from joint venture
undertakings 0.5 0.4 1.4
Operating lease payments (5.5) - -
26.0 29.4 97.6
=============== =============== =============
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.
3.6 Underlying dividend cover
Underlying dividend cover is the ratio of the underlying diluted
earnings per share to the dividend per share.
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
2018.
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 2019
Marine Specialist Offshore Tankships Corporate Total
Support Technical Oil
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
Segmental revenue reported
- point in time 143.8 24.8 35.6 - - 204.2
- over time 0.5 51.7 - 33.2 - 85.4
Inter-segmental sales - (0.9) (1.8) - - (2.7)
144.3 75.6 33.8 33.2 - 286.9
======== =========== ========= ========== ========== ========
Underlying operating profit 6.6 9.3 4.5 5.9 (1.8) 24.5
Acquisition costs (0.5) - - - - (0.5)
Amortisation of acquired
intangibles (0.9) (0.2) (0.4) - - (1.5)
Adjustment to provision for
contingent consideration 3.5 - - - - 3.5
Costs of material litigation (1.5) - - - - (1.5)
-------- ----------- --------- ---------- ---------- --------
Operating profit 7.2 9.1 4.1 5.9 (1.8) 24.5
Net finance expense (3.6)
--------
Profit before tax 20.9
Income tax (4.0)
Profit for the period 16.9
========
Assets & liabilities
Segmental assets 307.7 152.7 134.9 45.4 20.1 660.8
Right-of-use assets 3.8 7.0 7.5 10.4 2.0 30.7
Investment in joint ventures 5.1 3.4 1.1 - - 9.6
-------- ----------- --------- ---------- ---------- --------
Total assets 316.6 163.1 143.5 55.8 22.1 701.1
Segmental liabilities (97.0) (54.7) (23.7) (27.9) (189.1) (392.4)
219.6 108.4 119.8 27.9 (167.0) 308.7
======== =========== ========= ========== ========== ========
Other segmental information
Capital expenditure 29.9 1.6 5.4 1.6 - 38.5
Depreciation and amortisation 7.1 4.0 5.8 4.7 0.2 21.8
======== =========== ========= ========== ========== ========
Six months ended 30 June
2018
Marine Specialist Offshore Tankships Corporate Total
Support Technical Oil
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
Segmental revenue reported
- point in time 126.8 24.0 27.7 - - 178.5
- over time 0.4 54.0 - 28.5 - 82.9
Inter-segmental sales - (0.4) (0.5) - - (0.9)
127.2 77.6 27.2 28.5 - 260.5
======== =========== ========= ========== ========== ========
Underlying operating profit 10.8 9.6 1.2 4.3 (1.4) 24.5
Acquisition costs - (0.1) - - - (0.1)
Amortisation of acquired
intangibles (0.8) (0.1) (0.5) - - (1.4)
Adjustment to provision for
contingent consideration 1.3 - - - - 1.3
-------- ----------- --------- ---------- ---------- --------
Operating profit 11.3 9.4 0.7 4.3 (1.4) 24.3
Net finance expense (2.8)
--------
Profit before tax 21.5
Income tax (3.8)
Profit for the period 17.7
========
Assets & liabilities
Segmental assets 253.9 179.6 128.4 38.5 24.1 624.5
Investment in joint ventures 4.4 3.5 0.4 - - 8.3
-------- ----------- --------- ---------- ---------- --------
Total assets 258.3 183.1 128.8 38.5 24.1 632.8
Segmental liabilities (78.6) (64.8) (11.9) (10.2) (183.5) (349.0)
179.7 118.3 116.9 28.3 (159.4) 283.8
======== =========== ========= ========== ========== ========
Other segment information
Capital expenditure 2.4 1.2 2.6 6.8 0.2 13.2
Depreciation and amortisation 4.7 2.9 5.5 1.6 0.3 15.0
======== =========== ========= ========== ========== ========
Year ended 31 December 2018
Marine Specialist Offshore Tankships Corporate Total
Support Technical Oil
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
Segmental revenue reported
- point in time 279.7 49.5 62.7 - - 391.9
- over time 1.0 111.1 - 60.7 - 172.8
Inter-segmental sales (1.0) (1.0) (1.2) - - (3.2)
279.7 159.6 61.5 60.7 - 561.5
======== =========== ========= ========== ========== ========
Underlying operating profit 29.0 20.9 5.1 9.9 (2.8) 62.1
Acquisition costs (0.5) (0.2) - - - (0.7)
Amortisation of acquired
intangibles (1.2) (0.5) (0.9) - - (2.6)
Adjustment to provision for
contingent consideration 2.6 - - - - 2.6
-------- ----------- --------- ---------- ---------- --------
Operating profit 29.9 20.2 4.2 9.9 (2.8) 61.4
Net finance expense (6.0)
--------
Profit before tax 55.4
Income tax (10.1)
Profit for the year 45.3
========
Assets & liabilities
Segmental assets 252.5 145.9 130.0 44.3 25.0 597.7
Investment in joint ventures 4.2 3.0 1.0 - - 8.2
-------- ----------- --------- ---------- ---------- --------
Total assets 256.7 148.9 131.0 44.3 25.0 605.9
Segmental liabilities (73.9) (48.4) (12.7) (16.0) (148.5) (299.5)
182.8 100.5 118.3 28.3 (123.5) 306.4
======== =========== ========= ========== ========== ========
Other segment information
Capital expenditure 8.6 5.2 6.4 13.2 - 33.4
Depreciation and amortisation 11.3 5.7 10.4 3.6 - 31.0
======== =========== ========= ========== ========== ========
5 Net finance expense
2019 2018 2018
Six months
Six months ended ended Year ended
30 June 30 June 31 December
GBPm GBPm GBPm
Finance income:
Interest receivable on short-term
deposits 0.1 0.1 0.2
Finance expense:
Bank loans and overdrafts (2.5) (2.6) (5.4)
Net interest on pension obligations (0.2) (0.2) (0.5)
Unwind of discount on right-of-use
lease liability (0.9) - -
Unwind of discount on contingent
consideration (0.1) (0.1) (0.3)
-------- ----------- ------------
(3.7) (2.9) (6.2)
Net finance expense (3.6) (2.8) (6.0)
======== =========== ============
6 Separately disclosed items
2019 2018 2018
Six months
Six months ended ended Year ended
30 June 30 June 31 December
GBPm GBPm GBPm
Included in operating profit:
Acquisition related income and
(expense):
Costs incurred on acquiring businesses (0.5) (0.1) (0.7)
Amortisation of acquired intangibles (1.5) (1.4) (2.6)
Adjustment to provision for contingent
consideration 3.5 1.3 2.6
Costs of material litigation (1.5) - -
-------- ----------- ------------
Separately disclosed items before
taxation - (0.2) (0.7)
Tax on separately disclosed items 0.2 0.2 0.4
0.2 - (0.3)
======== =========== ============
Adjustments to the provision for contingent consideration are
based on the most recent forecasts and estimates such that the
balance sheet liability represents the Directors' best estimate of
amounts likely to be paid based on current information. The costs
of material litigation relate to a contract claim made against one
of our Marine Support businesses which was contested and
subsequently lost on appeal.
7 Taxation
The effective income tax rate on underlying profit before income
tax, based on an estimated rate for the year ending 31 December
2019, is 20.0% (30 June 2018: 18.7%, 31 December 2018: 18.7%). The
effective rate on profit before income tax is 18.9% (30 June 2018:
18.0%, 31 December 2018: 18.2%). This is based on the estimated
effective tax rate for the year to 31 December 2019. Of the total
tax charge, GBP2.5m relates to overseas businesses (30 June 2018:
GBP3.1m). Taxation on profit has been estimated based on rates of
taxation applied to the profits forecast for the full year. The
increase in the effective tax rate is due to the mix of profits
increasing in higher rate tax countries in the Middle East, South
America and Africa. The adoption of IFRIC 23 has resulted in the
recognition of tax liabilities of GBP2.0m which have been
recognised on 1 January 2019 in the condensed consolidated
statement of changes in equity.
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
31 December
30 June 2019 30 June 2018 2018
Number
Number of of Number of
shares shares shares
For basic earnings per ordinary
share (*) 50,248,652 50,188,922 50,210,684
Exercise of share options and
LTIPs 298,511 283,795 299,374
For diluted earnings per ordinary
share 50,547,163 50,472,717 50,510,058
=========== ============= ============
* Excludes 510 (June 2018: 38,980; December 2018: 28,630) shares
owned by the James Fisher & Sons Plc Employee Share Ownership
Trust.
To provide a better understanding of the performance of the
Group, underlying earnings per share on continuing activities are
presented as set out in note 3.
2019 2018 2018
Six months Six months Year
ended ended ended
30 June 30 June 31 December
GBPm GBPm GBPm
Profit attributable to owners of
the Company 17.0 17.4 44.9
Separately disclosed items - 0.2 0.7
Tax on separately disclosed items (0.2) (0.2) (0.4)
Underlying profit attributable to
owners of the Company 16.8 17.4 45.2
=========== =============== ============
Earnings per share pence pence pence
Basic earnings per share 33.8 34.7 89.5
Diluted earnings per share 33.6 34.5 88.9
Adjusted basic earnings
per share 33.4 34.7 90.0
Adjusted diluted earnings
per share 33.2 34.5 89.5
9 Interim dividend
The proposed interim dividend of 11.3p (2018: 10.3p) per
ordinary share is payable on 1 November 2019 to those shareholders
on the register of the Company at the close of business on 4
October 2019. The dividend recognised in the condensed consolidated
statement of changes in equity is the final dividend for 2018 of
21.3p per share which was paid on 10 May 2019.
10 Retirement benefit obligations
Movements during the period in the Group's defined benefit
pension schemes are set out below:
2019 2018 2018
Six months Six months Year
ended ended ended
30 June 30 June 31 December
GBPm GBPm GBPm
Net obligation as at 1 January (16.1) (19.8) (19.8)
Expense recognised in the income
statement (0.2) (0.3) (0.6)
Contributions paid to scheme 5.6 1.9 5.4
Remeasurement gains and losses - (1.5) (1.1)
At period end (10.7) (19.7) (16.1)
=========== =========== ============
The Group's net liabilities in respect of its pension schemes were
as follows:
2019 2018 2018
Six months Six months Year
ended ended ended
30 June 30 June 31 December
GBPm GBPm GBPm
Shore Staff (4.0) (4.9) (4.6)
Merchant Navy Officers Pension Fund (4.2) (6.0) (5.1)
Merchant Navy Ratings Pension Fund (2.5) (8.8) (6.4)
(10.7) (19.7) (16.1)
=========== =========== ============
The principal assumptions in respect of these liabilities are
disclosed in the December 2018 Annual Report. The Group has not
obtained an interim valuation for the period ended 30 June 2019. In
the first half of 2019, the Group paid a one-off contribution of
GBP3.8m to the Merchant Navy Ratings Pension Fund. Contributions to
pension schemes in 2019 are expected to be GBP8.6m (2018:
GBP5.4m).
11 Reconciliation of net borrowings
1 January Cash Other Exchange 30 June
2019 flow non-cash movement 2019
GBPm GBPm GBPm GBPm GBPm
Cash and cash equivalents 18.6 (1.3) - 0.1 17.4
Debt due after 1 year (122.0) (43.4) (0.2) (0.1) (165.7)
Debt due within 1 year (10.0) 0.5 (1.4) - (10.9)
---------- ------- --------- --------- ------------
(132.0) (42.9) (1.6) (0.1) (176.6)
Lease liabilities (0.2) 5.6 (36.7) - (31.3)
---------- ------- --------- --------- ------------
Net borrowings plus operating
leases (113.6) (38.6) (38.3) - (190.5)
---------- ------- --------- --------- ------------
Right-of-use liability - (5.5) 36.6 - 31.1
---------- ---------
Net borrowings (113.6) (44.1) (1.7) - (159.4)
========== ======= ========= ========= ============
1 January Cash Other Exchange 30 June
2018 flow non-cash movement 2018
GBPm GBPm GBPm GBPm GBPm
Cash and cash equivalents 20.3 (7.7) - (0.5) 12.1
Debt due after 1 year (152.2) (3.8) (0.3) (0.2) (156.5)
Debt due within 1 year (0.2) 0.2 - - -
---------- ------- --------- --------- ------------
(152.4) (3.6) (0.3) (0.2) (156.5)
Finance lease liabilities (0.4) 0.1 - - (0.3)
Net borrowings (132.5) (11.2) (0.3) (0.7) (144.7)
========== ======= ========= ========= ============
1 January Cash Other Exchange 31 December
2018 flow non-cash movement 2018
GBPm GBPm GBPm GBPm GBPm
Cash and cash equivalents 20.3 (1.4) - (0.3) 18.6
Debt due after 1 year (152.2) 31.2 (0.4) (0.6) (122.0)
Debt due within 1 year (0.2) (9.8) - - (10.0)
---------- ------- --------- --------- ------------
(152.4) 21.4 (0.4) (0.6) (132.0)
Finance lease liabilities (0.4) 0.2 (0.1) 0.1 (0.2)
Net borrowings (132.5) 20.2 (0.5) (0.8) (113.6)
========== ======= ========= ========= ============
12 Commitments and contingencies
Capital commitments
At 30 June 2019, the Group had capital commitments of GBP26.5m
(30 June 2018: GBP5.7m, 31 December 2018: GBP0.5m).
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 25
Group undertakings in respect of which the Company is jointly and
severally liable for all amounts due to HM Revenue & Customs
under the arrangement.
(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 seven
vessels. The charters expire between 2019 and 2023.
(d) Subsidiaries of the Group have issued performance and
payment guarantees to third parties with a total value of GBP70.6m
(2018: GBP45.4m).
(e) The Group is liable for further contributions in the future
to the MNOPF 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 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 Group operates in multinational and less developed
markets which presents increased operational and financial risk in
both complying with potentially uncertain regulatory and
legislative (including in relation to tax) environments and where
local practice in those markets may be inconsistent with laws and
regulations that govern the Group. Given this risk, from time to
time, concerns are raised and investigated regarding the potential
for non-compliance with the legal and regulatory framework
applicable to the Group.
In preparing the consolidated financial statements, judgements
and estimates are required to be made in respect of any matters
under active consideration at that time. This may include matters
in areas such as relevant exchange control regulations, compliance
with relevant laws and regulations, the impact of political
instability, tax legislation and overall operating environments.
Any changes impacting the assumptions underlying those estimates or
judgements may give rise to a liability. The Directors consider the
possibility of any liability arising in the future cannot currently
either be excluded or quantified and therefore no provision has
been included within the financial statements of the Company and
the Group for any such matters.
(i) 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. Appropriate provision has
been made in these accounts where, in the opinion of the Directors,
liabilities may materialise.
13 Post balance sheet events
In July 2019, the Group completed the purchases of the
Swordfish, a dive support vessel targeted at the West African
market and the Raleigh Fisher, a 35kT tanker which will support the
refuelling requirements for the Ministry of Defence. Having paid
deposits in the first half of GBP1.9m and GBP0.9m respectively, a
further GBP17.4m was paid for the Swordfish and GBP8.1m for the
Raleigh Fisher.
On 7 August 2019, we announced that the Group acquired 60% of
the share capital of Continental Participação E Administração
Ltda., the holding company of Serviços Marítimos Continental S.A.
(together 'Continental') for a total cash consideration of GBP7.5m,
GBP4.9m payable on completion and GBP2.6m payable in January 2022.
Continental is an established air diving service provider to the
offshore oil sector in Brazil, providing inspection, repair and
maintenance services to offshore oil terminals.
14 Changes in accounting policies
This note explains the impact of the adoption of IFRS 16
'Leases' on the Group's financial statements and discloses the new
accounting policies that have been applied from 1 January 2019.
(a) Adjustments recognised on adoption of IFRS 16
In adopting IFRS 16 retrospectively from 1 January 2019, the
Group has not restated comparatives for the 2018 reporting period,
as permitted under the specific transitional provisions. The
reclassifications and adjustments arising from IFRS 16 are
recognised in the opening balance sheet at 1 January 2019.
On adoption of IFRS 16, the Group recognised lease liabilities
in respect of leases previously classified as operating leases
under IAS 17 'Leases'. These liabilities were measured at the
present value of remaining lease payments, discounted at the
lessees weighted average incremental borrowing rate of 5.6%. For
leases previously classified as finance leases, the carrying amount
of the assets and related finance lease liability as at 1 January
2019 under IAS 17 is unchanged.
GBPm
Operating lease commitment at 31 December 2018 as disclosed
in Group's consolidated financial statements 38.2
------
Discounted using the incremental borrowing rate at
1 January 2019 34.5
Finance lease liabilities recognised as at 31 December
2018 0.2
Recognition exemption for:
- Short-term leases (1.0)
- Leases of low-value items (0.1)
Extension and termination options reasonably certain
to be exercised 1.3
Lease liabilities recognised at 1 January 2019 34.9
======
The Group elected to apply recognition exemptions to short-term
leases (12 months or less) and leases of low-value at inception,
recognising the lease payments associated with these leases as an
expense on a straight-line basis over the lease term. For leases of
other assets, which were classified as operating leases under IAS
17, the Group recognised right-of-use assets and lease liabilities.
The carrying amounts of right-of-use assets and depreciation for
the six months ended 30 June 2019 are:
Property, plant and equipment
Property Vessels Other Total
GBPm GBPm GBPm GBPm
Balance at 1 January 2019 21.1 13.1 0.5 34.7
---------- -------- ------ ------
Balance at 30 June 2019 19.8 10.3 0.6 30.7
---------- -------- ------ ------
Depreciation 2.1 2.8 0.1 5.0
---------- -------- ------ ------
The right-of-use assets were initially measured at cost, which
comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement date, plus
any initial direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to restore the
underlying asset or the site on which it is located less any lease
incentives received.
The Group primarily leases vessels in its Tankships division and
operating premises or offices. From 1 January 2019, leases are
recognised as a right-of-use asset with a corresponding liability.
Each lease payment is allocated between the liability and finance
costs; the latter is charged to the income statement over the lease
period to produce a constant periodic rate of interest on the
remaining liability in each period. The right-of-use asset is
depreciated over the shorter of the useful life and the lease term
on a straight-line basis.
In applying IFRS 16 for the first time the Group used the
following practical expedients when applying IFRS 16 to leases
previously classified as operating leases under IAS 17:
-- Applied a single discount rate to a portfolio of leases with similar characteristics;
-- Applied the exemption not to recognise right-of-use assets
and liabilities for leases with less than 12 months of lease
term;
-- Excluded initial direct costs from measuring the right-of-use
asset at the date of application; and
-- Used hindsight when determining the lease term if the
contract contains options to extend or terminate the lease.
Impact for the period
1 January 30 June
The impact of applying IFRS 16 was as follows: 2019 2019
GBPm GBPm
Right-of-use asset 34.7 30.7
=========== =========
Lease liability
- current 9.6 8.7
- non-current 25.1 22.4
34.7 31.1
=========== =========
In relation to those leases under IFRS 16, the Group has
recognised GBP5.0m of depreciation on right-of-use assets and
GBP0.9m of interest charges instead of an operating leases expense
of GBP5.5m.
(b) IFRIC 23 Uncertainty over income tax treatments
This interpretation clarifies accounting for uncertainties for
income taxes providing additional requirements to those of IAS 12
'Income Taxes' to reflect the effects of uncertainty in accounting
for corporate taxes. On 1 January 2019, the Group recognised
additional current tax liabilities of GBP2.0m as an adjustment to
retained earnings with no impact on profit.
15 Business combinations
On 4 January 2019, the Group acquired the entire share capital
of Martek Holdings Limited (Martek) for an initial cash
consideration of GBP9.0m, with potential further consideration of
up to GBP1.0m subject to a profit target for the year ending 28
February 2020. Martek was founded in Rotherham in 2000 and provides
a range of innovative safety and calibration systems and products
to the marine sector. Martek, which joined the Marine Support
division, further enhances the Group's capability to offer
innovative solutions to the marine sector and provides a proven
channel to market for the Group's adjacent products and
services.
On 8 January 2019, the Group acquired 60% of the share capital
of Murjan Al-Sharq for Marine Contracting LLC (Murjan) for an
initial consideration of GBP4.1m in cash, with potential further
consideration of up to GBP4.5m subject to profit targets for the
year ending 31 December 2019. Murjan, which was established in 2010
by Abdullah Akbar Natheer and is headquartered in Al Khobar,
Kingdom of Saudi Arabia, provides near shore marine construction
and maintenance services. The 40% minority interest in Murjan has
been retained by Mr Natheer and the Company is part of the Marine
Support division.
The fair values of the assets and liabilities acquired are set
out below:
Fair value
Book value adjustments Total
GBPm GBPm GBPm
Martek
--------------------------------------- ------------- ------------- --------
Intangible assets - 2.2 2.2
Property, plant and equipment 0.4 - 0.4
Inventories 1.5 (0.2) 1.3
Trade and other receivables 1.8 (0.2) 1.6
Cash and short term deposits 2.3 - 2.3
Trade and other payables (3.2) (0.5) (3.7)
Interest bearing loans and borrowings (0.4) - (0.4)
Deferred tax - (0.3) (0.3)
--------------------------------------- ------------- ------------- --------
Fair value of net assets acquired 2.4 1.0 3.4
Goodwill 7.7
--------
11.1
--------
Consideration:
Cash consideration 10.2
Contingent consideration 0.9
--------
11.1
--------
Fair value
Book value adjustments Total
GBPm GBPm GBPm
Murjan
--------------------------------------- ------------- ------------- --------
Intangible assets - 0.8 0.8
Property, plant and equipment 2.7 - 2.7
Trade and other receivables 2.0 (0.3) 1.7
Cash and short term deposits 0.1 - 0.1
Trade and other payables (6.2) - (6.2)
Interest bearing loans and borrowings (1.0) - (1.0)
Deferred tax - (0.1) (0.1)
--------------------------------------- ------------- ------------- --------
Fair value of net assets acquired (2.4) 0.4 (2.0)
Minority interest 1.0 (0.2) 0.8
Goodwill 4.4
--------
Cash consideration 3.2
--------
The book value of these business combinations have been adjusted
for fair values relating to intangible assets relating to customer
relationships, the writedown of irrecoverable debtors, provisioning
in respect of warranty claims, slow moving or obsolete inventory
and taxation. Further adjustments to the assets and liabilities
acquired may arise on finalisation of the completion accounts and
review of fair values.
Independent review report to James Fisher and Sons plc
Conclusion
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 2019 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of other comprehensive income, the condensed consolidated statement
of financial position, the condensed consolidated cash flow
statement, the condensed consolidated statement of changes in
equity 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 2019 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU and
the Disclosure Guidance and Transparency Rules ('the DTR') of the
UK's Financial Conduct Authority ('the UK FCA').
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. 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.
The impact of uncertainties due to the UK exiting the European
Union on our review
Uncertainties related to the effects of Brexit are relevant to
understanding our review of the condensed financial statements.
Brexit is one of the most significant economic events for the UK,
and at the date of this report its effects are subject to
unprecedented levels of uncertainty of outcomes, with the full
range of possible effects unknown. An interim review cannot be
expected to predict the unknowable factors or all possible future
implications for a company and this is particularly the case in
relation to Brexit.
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 International Financial
Reporting Standards as adopted by the EU. 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 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.
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.
Mike Barradell
for and on behalf of KPMG LLP
Chartered Accountants
1 St Peters Square
Manchester
M2 3AE
27 August 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR UBSWRKOAWUAR
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