TIDMFSJ
RNS Number : 0605Z
Fisher (James) & Sons plc
29 August 2018
29 August 2018
James Fisher and Sons plc
Half Year results for the six months ended 30 June 2018
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 2018.
2017
2018 restated % change
Revenue GBP260.5m GBP232.5m +12%
Underlying operating profit * GBP24.5m GBP20.7m +18%
Underlying operating margin * 9.4% 8.9% +50bps
Underlying profit before tax
* GBP21.7m GBP18.1m +20%
Underlying diluted earnings per
share * 34.5p 29.3p +18%
Interim dividend per share 10.3p 9.4p +10%
Statutory profit before tax GBP21.5m GBP17.1m +26%
Statutory diluted earnings per
share 34.5p 27.7p +25%
* excludes separately disclosed items (note 3)
2017 restated for IFRS 15 'Revenue from contracts with
customers' (note 14)
Highlights:
-- Organic growth in revenue of 11%
-- Underlying operating profit up 18% at GBP24.5m; 25% at constant currency
-- Profit growth in all divisions - Marine Support up 21%; Specialist Technical up 19%
-- First Indian Navy submarine rescue system delivered
-- First long-term maintenance contract in Renewables
-- Strong cash conversion of 120%
-- Interim dividend up 10% to 10.3p per share
Commenting on the results, Chief Executive Officer, Nick Henry,
said:
"We have had an encouraging first half, with particularly strong
performances from our Marine Support and Specialist Technical
divisions. We continue to invest in those companies with the best
prospects for organic growth and to track a number of interesting
acquisition prospects. Our cash conversion is strong and a
significant working capital unwind is expected in the second half
subject to successful delivery of the second submarine rescue
vessel to the Indian Navy. The Board believes that the Group's
outlook for the year is positive and that James Fisher continues to
be well placed to provide further growth and value for
shareholders."
For further information:
Chief Executive
James Fisher and Nick Henry Officer
Sons plc Stuart Kilpatrick Group Finance Director 020 7614 9508
Richard Mountain
FTI Consulting Susanne Yule 0203 727 1340
----------------------------------------------- --------------
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 2018
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, our strategy is to supplement it with
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
The Group's corporate objectives are to deliver long-term growth
in underlying earnings per share and to deliver progressive
dividend growth. In the first half of 2018, underlying diluted
earnings per share grew by 18% and the interim dividend was
increased by 10%. Whilst the strong growth in the first half of
2018 was encouraging, it is partly due to a weaker first half
comparative in 2017.
change
H1 2017 at constant
Revenue H1 2018 restated change currency
Group 260.5 232.5 +12% +14%
---------------------- ---------- ----------- --------- -------------
Marine Support 127.2 105.6 +21% +23%
Specialist Technical 77.6 72.5 +7% +8%
Offshore Oil 27.2 27.0 +1% +5%
Tankships 28.5 27.4 +4% +5%
---------------------- ---------- ----------- --------- -------------
All divisions increased
revenue in the first half
of 2018 with Marine Support
delivering a 21% increase.
Group revenue was 12% ahead
and up by 14% at constant
currency, due to, on average,
an 8% strengthening of Sterling
compared to the US Dollar.
Each division grew organically
in the half and the Group's
overall constant currency
increase comprised 11% organic
and 3% from businesses acquired.
Underlying operating profit growth was achieved at all four
divisions with Marine Support and Specialist Technical achieving
the highest growth at 21% and 19% respectively. Offshore Oil was
slightly ahead of prior period, despite an adverse currency impact
and Tankships delivered 10% growth. The Group's underlying
operating margin increased from 8.9% to 9.4% in the period.
James Fisher offers a broad range of services to a wide range of
sectors and geographical markets in the marine industry. The first
half saw encouraging growth across all divisions, broadly spread
across all sectors and regions.
Marine Support delivered continued growth in our ship-to-ship
operations in Brazil and South East Asia, and in the offshore wind
renewable energy market in the UK. The acquisition of EDS in the
fourth quarter of 2017 has strengthened and broadened our offering
to this market and has been successfully integrated into the Group
during the first half of 2018. Our strategic goal has been to
establish the Group in the emerging maintenance market for offshore
wind and in the first half we were awarded our first longer term
contract for maintenance services to the London Array wind farm in
the Thames Estuary.
Progress has been made in increasing our market share in the
Middle East which remains a buoyant market and in expanding the
range of services provided in Brazil. East African gas remains a
significant opportunity for future years and the Group has
continued to position itself to support potential projects in this
area.
In March, the first of two submarine rescue systems was
delivered on schedule to the Indian Navy and will complete sea
trials in Mumbai after the monsoon season is over. The second
system is on schedule for completion before the end of the
year.
The Group remains well positioned for an upturn in the oil &
gas market. The first half has seen a limited improvement in
activity levels but there is growing momentum in the industry.
Tankships has continued to trade strongly and has completed the
acquisition of two tankers for GBP10.6m in line with the policy to
refresh the fleet over the coming years.
Marine Support
H1 2018 H1 2017 change
restated
Revenue (GBPm) 127.2 105.6 +21%
Underlying operating profit (GBPm) 10.8 8.9 +21%
Underlying operating margin 8.5% 8.4% +10bps
Return on capital employed 12.2% 12.1% +10bps
The main contribution to revenue growth came from the UK
offshore wind market. In 2017 this project work was heavily
weighted towards the second half of the year but 2018 has seen an
improved spread of work and an earlier start to the summer peak of
activity. The contract to provide support services to the Galloper
windfarm development for Innogy was successfully completed by the
middle of the year. The second quarter also saw the commencement of
work for the East Anglia One windfarm for ScottishPower Renewables
which included a contract for the clearance of unexploded
ordnance.
A 5 year contract was also secured for the London Array wind
farm in the Thames Estuary for the balance of plant
maintenance.
Ship-to-ship operations continued to perform well with volumes
in Brazil reflecting the momentum built up during 2017. Whilst the
market in South East Asia showed growth this was partially offset
by a weaker market in West Africa.
In April, a 10 year integrated marine services contract was
secured for the management of three vessels, oil transfer
operations, buoy maintenance and diving operations in support of a
UK refinery. The contract value is c. GBP50m and the operations
commenced in late June.
The division has also increased its order book in the Middle
East, West Africa and Gulf of Mexico through awards for diving and
subsea operations for international oil majors. The market in Saudi
Arabia has delivered good growth and represents a significant
opportunity for the future. Our mass flow excavation subsea
services have benefited from an improving oil & gas market and
we have seen the first projects completed in the Gulf of Mexico in
recent times.
Specialist Technical
H1 2017
H1 2018 restated change
Revenue (GBPm) 77.6 72.5 +7%
Underlying operating profit (GBPm) 9.6 8.1 +19%
Underlying operating margin 12.4% 11.2% +120bps
Return on capital employed 17.3% 18.8% (150)bps
Within Specialist Technical, our defence and diving equipment
business, JFD, continued to perform well. In March, the first of
two submarine rescue systems was delivered on schedule to the
Indian Navy only 2 years after the contract was signed. Sea trials
in Mumbai are ongoing and will be completed after the monsoon
season is over. The second system is on schedule for completion
before the end of the year. The business has also increased its
order book for swimmer delivery vehicles which now exceeds GBP20m
for delivery over the next 3 years. Sales have also been achieved
to plan for our commercial diving rebreather product, Cobra, which
increases safety, and is on track to become the industry
standard.
Profits from nuclear decommissioning have been held back due to
customer delays in the programme for decommissioning the reactor at
Winfrith, resulting in an extension to the GBP60m project by a year
to 2021.
Offshore Oil
H1 2018 H1 2017 change
Revenue (GBPm) 27.2 27.0 +1%
Underlying operating profit (GBPm) 1.2 1.1 +9%
Underlying operating margin 4.4% 4.1% +30bps
Return on capital employed 1.9% 1.6% +30bps
Performance in the first half was broadly in line with 2017
despite currency headwinds. This reflects improved activity in the
maintenance market, particularly in Norway, which was offset by
well testing activity being down on the prior year. Whilst the
maintenance markets in Norway and the Middle East have shown marked
improvements, there has been little increase in activity in the UK
sector or in Brazil. Confidence levels in the industry have
increased with a high level of project quotations for
2019/2020.
Tankships
H1 2018 H1 2017 change
Revenue (GBPm) 28.5 27.4 +4%
Underlying operating profit (GBPm) 4.3 3.9 +10%
Underlying operating margin 15.1% 14.2% +90bps
Return on capital employed 31.0% 29.2% +180bps
Tankships has continued to perform strongly with vessel
utilisations in the first quarter, which is traditionally the
weakest quarter, showing an improvement on 2017.
The fleet renewal programme has been progressed with the
purchase of the Dee Fisher (deadweight (dwt) 4,653 tonnes) for
GBP5.2m in June. She was built in 2006 and replaces the Milford
Fisher in the UK and Irish market. The Corrib Fisher (dwt 6,090
tonnes) was then purchased for GBP5.4m in July. She was built in
2008 and replaces the Solent Fisher which was withdrawn from the UK
and Irish market at the end of 2017. The Corrib Fisher will service
the west coast of Ireland including the contract for the oil
spillage recovery service for the European Maritime Safety Agency
(EMSA).
Results
The increases in revenue and underlying operating profit
referred to above resulted in a 20% increase in underlying profit
before taxation with interest broadly similar to prior period. The
first half results partly reflect a weaker comparative performance
in 2017. Underlying diluted earnings per share rose by 18% to 34.5
pence per share (2017: 29.3p), which was lower than the uplift in
underlying profit before taxation due to the higher effective tax
rate and a larger minority interest charge in the period. Diluted
earnings per share after separately disclosed items were 34.5 pence
per share (2017: 27.7p).
The Group adopted IFRS 15 'Revenue from contracts with
customers' with effect from 1 January 2018 and has restated the
2017 results accordingly. The detail of the adjustments is set out
in note 14 and the headline adjustments for the six months ended 30
June 2017 were as follows:
H1 2017 H1 2017
Reported Adjustment Restated
Revenue (GBPm) 235.8 (3.3) 232.5
Underlying operating profit
(GBPm) 21.2 (0.5) 20.7
Underlying profit before
tax (GBPm) 18.6 (0.5) 18.1
Underlying diluted earnings
per share (p) 30.1 (0.8) 29.3
Interim dividend per share
(p) 9.4 0.0 9.4
----------------------------- ----------- ----------- ----------
The adjustments to statutory operating profit, profit before tax
and earnings per share are as above. The adjustments relate to the
recognition of revenue on long-term contracts where revenue was
previously recognised on the basis of percentage completion whereas
under IFRS 15, revenue is recognised on completion of separately
recognised performance obligations.
Taxation
The effective tax rate on underlying profit before tax in the
period increased to 18.7% (2017: 17.1%). 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 percentage
points in the period.
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 and charges or income
relating to the acquisition of businesses. The net charge for
separately disclosed items after tax in the six months ended 30
June 2018 was GBPnil (2017: GBP0.8m). Statutory profit before tax
increased in the period by 26% to GBP21.5m (2017: GBP17.1m) and
statutory diluted earnings per share for the period was 34.5 p per
share (2017: 27.7p). Underlying diluted earnings per share, which
excludes separately disclosed items, increased by 18% to 34.5p
(2017: 29.3p).
Cash flow and borrowings
Summary cash flow
----------------------------- -------- ----------
H1 2017
H1 2018 restated
GBPm GBPm
----------------------------- -------- ----------
Underlying operating profit 24.5 20.7
Depreciation & amortisation 13.6 13.7
-----------------------------
Ebitda * 38.1 34.4
Working capital (7.5) (25.7)
Pension / other (1.2) (2.2)
-----------------------------
Operating cash flow 29.4 6.5
Interest & tax (5.5) (5.1)
Capital expenditure (15.4) (11.3)
Acquisitions (9.4) (4.2)
Dividends (9.7) (8.8)
Other (1.6) 0.3
-----------------------------
Net outflow (12.2) (22.6)
Net borrowings at start
of period (132.5) (105.7)
----------------------------- -------- ----------
The main feature of the Group's
cash flow over the last two years
has been the working capital investment
to design, assemble and deliver
two submarine rescue vessels to
the Indian Navy. This investment
peaked in March 2018 when the first
vessel was delivered. The Group
subsequently received a milestone
payment for GBP24.5m in April with
further significant sums expected
on delivery of the second system
which falls due in the second half
of 2018.
The outflow of working capital of
GBP7.5m in the period is after a
net inflow from the Indian Navy
contract of GBP5.8m. The underlying
increase of GBP13.3m reflects seasonally
strong trading in the latter months
of the half and a significant Marine
Support renewables contract where
Net borrowings at end receivables fall due in the second
of period (144.7) (128.3) half.
============================= ======== ==========
* Underlying earnings before interest, tax, depreciation and
amortisation
Cash conversion, the proportion of underlying operating profit
converted into operating cash flow was 120% (2017: 31%). Capital
expenditure included GBP6.0m on the Tankships fleet modernisation
programme and GBP0.8m on product development in relation to nuclear
decommissioning. Business acquisitions included payment of GBP7.9m
for EDS which joined the Group in December 2017 with the balance
for Cowan, which was acquired in February 2018. After dividends
paid in the period of GBP9.7m (2017: GBP8.8m), the net cash outflow
was GBP12.2m (2017: GBP22.6m) and net borrowings increased to
GBP144.7m (2017: GBP128.3m).
The ratio of net borrowings (inclusive of project related bonds
and guarantees) to ebitda was 2.2 times (2017: 2.2 times)
reflecting the working capital, bonds and guarantees in relation to
the Indian Navy project. Excluding this project, the ratio would be
1.8 times. Net gearing, the ratio of net debt to equity was 51%
(2017: 50%).
Balance sheet
30 June
30 June 2017
2018 restated
-------------------
GBPm GBPm
------------------- -------- ----------
Intangible assets 197.7 185.6
Other assets 152.3 136.6
Working capital 116.0 108.9
Other liabilities (37.5) (44.8)
-------------------
Capital employed 428.5 386.3
------------------- -------- ----------
Borrowings 144.7 128.3
Equity 283.8 258.0
-------------------
Intangible assets have increased
by GBP12.1m since June 2017 due to
the acquisition of EDS in the second
half of last year. Other assets have
increased due to capital investment
in organic growth and development
spend on new products and services.
The ratio of working capital to sales
at 30 June 2018 was 21.9% (2017:
22.9%). Working capital to sales
excluding the India project was reduced
to 16.7% at the end of the period
428.5 386.3 from 20.2% at 30 June 2017.
------------------- -------- ----------
Dividends
The Board has declared an interim dividend of 10.3 pence per
share (2017: 9.4p), an increase of 10%. The dividend will be paid
on 2 November 2018 to shareholders on the register at the close of
business on 5 October 2018. The 2017 final dividend of GBP9.7m
(19.3p per share) was paid on 11 May 2018.
Board
At the conclusion of the Annual General Meeting on 3 May 2018,
Charles Rice retired as Chairman of the Group and was succeeded by
Malcolm Paul. Justin Atkinson, who was appointed on 1 February
2018, succeeded Malcolm Paul as Chair of the Audit Committee and
Aedamar Comiskey was appointed Chair of the Remuneration Committee.
David Moorhouse is now the Senior Independent Non-Executive
Director. Fergus Graham was appointed to the Board as an Executive
Director on 1 March 2018.
Outlook
We expect that the second half will benefit from the contracts
secured and momentum built during the first half in our Marine
Support division. The division's results were heavily weighted to
the second half in 2017 due to the timing of various projects. 2018
has returned to a more usual spread of business over the summer
months such that any growth in the second half will be modest. The
division continues to see significant opportunities for 2019 and
beyond.
Our Specialist Technical division continues to trade well and
has a solid order book for the remainder of the year. Prospects for
further significant projects remain strong but the timing of such
awards will remain uncertain.
Our Offshore Oil division remains well placed for an upturn in
maintenance activity in the sector but it is expected that it will
be 2019 before any significant benefit is seen.
Tankships has delivered a strong increase in the first half and
with its stable market should continue to perform well as it
introduces two more modern vessels into its fleet in the second
half.
We continue to invest capital in those companies with the best
prospects for organic growth and to track a number of interesting
acquisition prospects. Our cash conversion is strong and a
significant working capital unwind is expected in the second half
subject to successful delivery of the second submarine rescue
vessel to the Indian Navy. The Board believes that the Group's
outlook for the year is positive and that James Fisher continues to
be well placed to provide further growth and value for
shareholders.
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 2017 Annual Report and Accounts on pages 19-21.
The principal risks set out in the 2017 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 2017 Annual Report and Accounts have not changed and
remain relevant for the second half of the financial year.
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
28 August 2018
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2018
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
restated restated
Note GBPm GBPm GBPm
Revenue 4 260.5 232.5 499.3
Cost of sales (184.8) (165.3) (346.6)
----------- ----------- -------------
Gross profit 75.7 67.2 152.7
Administrative expenses (52.2) (47.4) (100.3)
Share of post-tax results of joint
ventures 1.0 0.9 1.7
Acquisition related income and (expense) 6 (0.2) (1.0) (1.3)
----------- ----------- -------------
Operating profit 4 24.3 19.7 52.8
Analysis of operating profit:
Underlying operating profit 24.5 20.7 54.1
Separately disclosed items (0.2) (1.0) (1.3)
Net finance expense 5 (2.8) (2.6) (5.5)
----------- ----------- -------------
Profit before taxation 21.5 17.1 47.3
Analysis of profit before tax:
Underlying profit before taxation 21.7 18.1 48.6
Separately disclosed items (0.2) (1.0) (1.3)
Income tax 7 (3.8) (2.9) (7.9)
Profit for the period 17.7 14.2 39.4
=========== =========== =============
Attributable to:
Owners of the Company 17.4 14.0 38.9
Non-controlling interests 0.3 0.2 0.5
17.7 14.2 39.4
=========== =========== =============
Earnings per share
pence pence pence
Basic 8 34.7 27.9 77.5
Diluted 8 34.5 27.7 76.9
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE
INCOME
for the six months ended 30 June 2018
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2018 2017 2017
restated restated
Note GBPm GBPm GBPm
Profit for the period 17.7 14.2 39.4
Items that will not be reclassified to the
income statement
Remeasurement loss on defined benefit pension
schemes 10 (1.5) - -
Actuarial gain in defined benefit pension
schemes - - 3.2
Tax on items that will not be reclassified 0.3 - (0.2)
(1.2) - 3.0
Items that may be reclassified subsequently to
the income statement
Exchange differences on foreign currency net
investments 0.2 (2.8) (7.5)
Effective portion of changes in fair value
of cash flow hedges (2.5) 5.2 7.8
Effective portion of changes in fair value of
cash flow hedges in joint ventures 0.2 (0.2) (0.2)
Net change in fair value of cash flow hedges transferred
to income statement 0.2 (0.3) (0.9)
Deferred tax on items that may be reclassified 0.4 (0.7) (1.0)
(1.5) 1.2 (1.8)
Total comprehensive income for the period 15.0 15.4 40.6
Attributable to:
Owners of the Company 14.7 15.2 40.1
Non-controlling interests 0.3 0.2 0.5
15.0 15.4 40.6
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 June 2018
30 June 30 June 31 December
2018 2017 2017
restated restated
Note GBPm GBPm GBPm
Non-current assets
Goodwill 171.9 163.7 174.6
Other intangible assets 25.8 21.9 24.6
Property, plant and equipment 141.7 128.5 132.5
Investment in joint ventures 8.3 6.7 7.1
Other investments 2.3 1.4 2.3
Deferred tax assets 3.1 2.6 4.3
353.1 324.8 345.4
-------- --------- ------------
Current assets
Inventories 49.8 50.0 47.2
Trade and other receivables 217.8 177.2 199.3
Cash and cash equivalents 11 12.1 14.9 20.3
279.7 242.1 266.8
-------- --------- ------------
Current liabilities
Trade and other payables (151.6) (118.3) (133.5)
Provisions for liabilities and charges (4.5) (3.2) (4.8)
Current tax (8.9) (8.4) (8.5)
Loans and borrowings (0.3) (2.9) (0.4)
(165.3) (132.8) (147.2)
-------- --------- ------------
Net current assets 114.4 109.3 119.6
Total assets less current liabilities 467.5 434.1 465.0
-------- --------- ------------
Non-current liabilities
Provisions for liabilities and charges (6.8) (10.3) (11.5)
Retirement benefit obligations 10 (19.7) (25.4) (19.8)
Cumulative preference shares (0.1) (0.1) (0.1)
Loans and borrowings (156.4) (140.2) (152.3)
Deferred tax liabilities (0.7) (0.1) (2.3)
(183.7) (176.1) (186.0)
-------- --------- ------------
Net assets 283.8 258.0 279.0
======== ========= ============
Equity
Called up share capital 12.6 12.6 12.6
Share premium 25.9 25.7 25.7
Treasury shares (0.6) (0.1) (0.4)
Other reserves (0.5) 4.0 1.0
Retained earnings 245.1 214.9 238.9
-------- --------- ------------
Equity attributable to owners of the
Company 282.5 257.1 277.8
Non-controlling interests 1.3 0.9 1.2
Total equity 283.8 258.0 279.0
======== ========= ============
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2018
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2018 2017 2017
restated restated
Note GBPm GBPm GBPm
Profit before taxation for the period 21.5 17.1 47.3
Adjustments to reconcile profit before
tax to net cash flows
Depreciation and amortisation 15.0 14.6 28.7
Acquisition costs charged 0.1 0.1 1.0
Loss/(profit) on disposal of fixed assets 0.6 (0.8) (0.9)
Transferred from hedging reserve to income
statement 0.2 - (1.5)
Adjustment to provision for contingent
consideration (1.3) - (1.7)
Net finance expense 2.8 2.6 5.5
Share of post-tax results of joint ventures (1.0) (0.9) (1.7)
Share based payments 0.4 0.2 0.9
Increase in inventories (2.4) (2.5) (2.3)
Increase in trade and other receivables (20.7) (23.9) (43.1)
Decrease in trade and other payables 15.6 0.7 1.9
Defined benefit pension cash contributions
less service cost (1.8) (1.7) (4.4)
----------- ----------- ------------
Cash generated from operations 29.0 5.5 29.7
Cash outflow from acquisition costs (0.2) (0.2) (0.8)
Income tax payments (3.0) (2.9) (8.0)
----------- ----------- ------------
Cash flow from operating activities 25.8 2.4 20.9
Investing activities
Dividends from joint venture undertakings 0.4 1.0 1.4
Proceeds from the disposal of property,
plant and equipment 0.7 1.5 2.6
Finance income 0.1 0.2 0.4
Acquisition of subsidiaries, net of cash
acquired (9.2) (4.0) (2.6)
Acquisition of property, plant and equipment (13.2) (9.7) (23.1)
Investment in joint ventures and available
for sale assets (0.2) - (0.6)
Development expenditure (2.2) (1.6) (4.2)
------------
Cash flows used in investing activities (23.6) (12.6) (26.1)
Financing activities
Proceeds from the issue of share capital 0.2 0.1 0.1
Finance costs (2.5) (2.4) (5.3)
Purchase of own shares by Employee Share
Ownership Trust (1.1) (0.7) (0.9)
Capital element of finance lease repayments (0.1) (0.1) (0.1)
Proceeds from borrowings 76.7 59.4 95.4
Repayment of borrowings (73.1) (43.5) (70.4)
Dividends paid (9.7) (8.8) (13.5)
Dividend paid to minority interest (0.3) (0.4) (0.4)
----------- ----------- ------------
Cash flows from financing activities (9.9) 3.6 4.9
Net decrease in cash and cash equivalents (7.7) (6.6) (0.3)
Cash and cash equivalents at beginning
of period 20.3 21.8 21.8
Net foreign exchange differences (0.5) (0.3) (1.2)
Cash and cash equivalents at end of period 11 12.1 14.9 20.3
=========== =========== ============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2018
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
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
minority
interest - - - - - - (0.3) (0.3)
Acquisition of
minority
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
======== ======== ========= ========= ========= ============== ================ =========
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
2017
as reported 12.5 25.6 217.0 2.8 (0.6) 257.3 1.0 258.3
Implementation
of IFRS 15 - - (5.9) - - (5.9) - (5.9)
At 1 January
2017
restated 12.5 25.6 211.1 2.8 (0.6) 251.4 1.0 252.4
-------- -------- --------- --------- --------- -------------- ---------------- ---------
Total
comprehensive
income - - 14.0 1.2 - 15.2 0.2 15.4
Contributions
by
and
distributions
to owners:
Ordinary
dividends
paid - - (8.8) - - (8.8) - (8.8)
Dividend paid
to
minority
interest - - - - - - (0.4) (0.4)
Acquisition of
minority
interest - - (0.4) - - (0.4) 0.1 (0.3)
Share based
payments - - 0.2 - - 0.2 - 0.2
Purchase of
shares
by ESOT - - - - (1.1) (1.1) - (1.1)
Sale of shares
by ESOT - - - - 0.4 0.4 - 0.4
Arising on the
issue of
shares 0.1 0.1 - - - 0.2 - 0.2
-------- -------- --------- --------- --------- -------------- ---------------- ---------
0.1 0.1 (9.0) - (0.7) (9.5) (0.3) (9.8)
Transfer - - (1.2) - 1.2 - - -
At 30 June 2017 12.6 25.7 214.9 4.0 (0.1) 257.1 0.9 258.0
-------- -------- --------- --------- --------- -------------- ---------------- ---------
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 2018 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
2017 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 2017.
The comparative figures for the financial year ended 31 December
2017 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 2017 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 enquiries, 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 GBP67.7m of
undrawn committed facilities at 30 June 2018 (2017: GBP34.0m) and
no revolving credit facilities due for renewal within the next
twelve months.
Significant accounting policies
The Group has adopted IFRS 15 'Revenue from contracts with
customers' and restated its comparatives accordingly, which is set
out in note 14. The Group has adopted IFRS 9 'Financial
Instruments' which has had no impact on 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 2017.
In preparation for the adoption of IFRS 16, Leases, in the
financial statements for the year ending 31 December 2019,
management are in the process of assessing the potential
impact.
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
2017.
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 amortisation or impairment of acquired intangible assets,
acquisition expenses, adjustments to deferred consideration
(together, acquisition related income and expense), the costs of a
material restructuring, asset impairment or rationalisation of
operations and the profit or loss relating to the sale of
businesses. Amortisation of acquired intangible assets and
acquisition expenses are recurring in nature where business
combinations are part of a group's strategy. As acquisition
expenses fluctuate with activity and to provide a better comparison
to businesses that are not acquisitive, the Directors consider that
both of these items should be separately disclosed to give a better
understanding of operating performance. The Directors believe that
the underlying operating profit is an important measure of the
operational performance of the Group. Underlying profit before
taxation is defined as underlying operating profit less net finance
expense.
2018 2017 2017
Six months
ended 30 Six months Year ended
June ended 30 June 31 December
restated restated
GBPm GBPm GBPm
Operating profit 24.3 19.7 52.8
Separately disclosed items
before taxation 0.2 1.0 1.3
Underlying operating
profit 24.5 20.7 54.1
Net finance expense (2.8) (2.6) (5.5)
Underlying profit before taxation 21.7 18.1 48.6
=========== =============== =============
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 cash
generated from operations adjusted for dividends from joint venture
undertakings.
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
2017.
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
2018
Marine Specialist Offshore Tankships Corporate Total
Support Technical Oil
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
Segmental revenue 127.2 78.0 27.7 28.5 - 261.4
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 segmental 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
======== =========== ========= ========== ========== ========
Six months ended 30 June
2017
Marine Specialist Offshore Tankships Corporate Total
Support Technical Oil
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
Segmental revenue reported 105.8 76.0 27.1 27.4 - 236.3
Implementation of IFRS
15 (0.1) (3.2) - - - (3.3)
-------- ----------- --------- ---------- ---------- --------
Segmental revenue restated 105.7 72.8 27.1 27.4 - 233.0
Inter-segmental sales (0.1) (0.3) (0.1) - - (0.5)
105.6 72.5 27.0 27.4 - 232.5
======== =========== ========= ========== ========== ========
Underlying operating profit
reported 9.0 8.5 1.1 3.9 (1.3) 21.2
Implementation of IFRS
15 (0.1) (0.4) - - - (0.5)
Underlying operating profit
restated 8.9 8.1 1.1 3.9 (1.3) 20.7
Acquisition costs - - - - (0.1) (0.1)
Amortisation of acquired
intangibles (0.6) (0.1) (0.2) - - (0.9)
-------- ----------- --------- ---------- ---------- --------
Operating profit 8.3 8.0 0.9 3.9 (1.4) 19.7
Net finance expense (2.6)
--------
Profit before tax 17.1
Income tax (2.9)
Profit for the period 14.2
========
Assets & liabilities
Segmental assets 220.3 151.5 130.7 33.2 24.5 560.2
Investment in joint ventures 3.7 3.0 - - - 6.7
-------- ----------- --------- ---------- ---------- --------
Total assets 224.0 154.5 130.7 33.2 24.5 566.9
Segmental liabilities (60.3) (53.2) (8.2) (6.5) (180.7) (308.9)
163.7 101.3 122.5 26.7 (156.2) 258.0
======== =========== ========= ========== ========== ========
Other segment information
Capital expenditure 3.4 3.3 0.7 2.0 0.3 9.7
Depreciation and amortisation 5.0 2.4 5.3 1.6 0.3 14.6
======== =========== ========= ========== ========== ========
Year ended 31 December
2017
Marine Specialist Offshore Tankships Corporate Total
Support Technical Oil
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
Segmental revenue reported 237.5 156.3 56.6 57.0 - 507.4
Implementation of IFRS
15 - (6.1) - - - (6.1)
-------- ----------- --------- ---------- ---------- --------
Segmental revenue restated 237.5 150.2 56.6 57.0 - 501.3
Inter-segmental sales (1.2) (0.6) (0.2) - - (2.0)
236.3 149.6 56.4 57.0 - 499.3
======== =========== ========= ========== ========== ========
Underlying operating profit
reported 24.5 21.1 3.8 8.8 (2.4) 55.8
Implementation of IFRS
15 0.8 (2.3) (0.2) - - (1.7)
Underlying operating profit
restated 25.3 18.8 3.6 8.8 (2.4) 54.1
Acquisition costs (0.7) (0.3) - - - (1.0)
Amortisation of acquired
intangibles (1.4) (0.3) (0.3) - - (2.0)
Adjustment to provision for
contingent consideration 0.9 0.8 - - - 1.7
-------- ----------- --------- ---------- ---------- --------
Operating profit 24.1 19.0 3.3 8.8 (2.4) 52.8
Net finance expense (5.5)
--------
Profit before tax 47.3
Income tax (7.9)
Profit for the year 39.4
========
Assets & liabilities
Segmental assets 232.8 178.9 127.4 32.2 33.9 605.2
Investment in joint ventures 4.1 3.0 - - - 7.1
-------- ----------- --------- ---------- ---------- --------
Total assets 236.9 181.9 127.4 32.2 33.9 612.3
Segmental liabilities (68.8) (57.3) (13.4) (8.1) (185.7) (333.3)
168.1 124.6 114.0 24.1 (151.8) 279.0
======== =========== ========= ========== ========== ========
Other segment information
Capital expenditure 15.6 2.8 2.0 2.4 0.3 23.1
Depreciation and amortisation 10.2 5.0 9.6 3.3 0.6 28.7
======== =========== ========= ========== ========== ========
5 Net finance expense
2018 2017 2017
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 0.2 0.4
Finance expense:
Bank loans and overdrafts (2.6) (2.4) (4.4)
Interest element of cash flow hedges - - (0.5)
Net interest on pension obligations (0.2) (0.3) (0.7)
Unwind of discount on contingent
consideration (0.1) (0.1) (0.3)
-------- ----------- ------------
(2.9) (2.8) (5.9)
Net finance expense (2.8) (2.6) (5.5)
======== =========== ============
6 Separately disclosed items
2018 2017 2017
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 (0.1) (0.1) (1.0)
Amortisation of acquired intangibles (1.4) (0.9) (2.0)
Adjustment to provision for contingent
consideration 1.3 - 1.7
-------- ----------- ------------
Separately disclosed items before
taxation (0.2) (1.0) (1.3)
Tax on separately disclosed items 0.2 0.2 0.4
- (0.8) (0.9)
======== =========== ============
The adjustment to the provision for contingent consideration is
based on the most recent business forecasts and relates to a
business acquired in 2015, Subtech Group Holdings Pty.
7 Taxation
The effective rate on profit before income tax is 18.0% (30 June
2017: 17.0%, 31 December 2017: 16.6%). This is based on the
estimated effective tax rate for the year to 31 December 2018. Of
the total tax charge, GBP3.1m relates to overseas businesses (30
June 2017: GBP2.0m). Taxation on profit has been estimated based on
rates of taxation applied to the profits forecast for the full
year. Prior period and year effective rates have been restated
following the implementation of IFRS 15 from the rates reported at
30 June 2017: 17.2% and 31 December 2017: 16.9%. The increase in
the effective tax rate is due to the mix of profits increasing in
higher rate tax countries such as Australia, South America and
Africa. The effective income tax rate on underlying profit before
income tax, based on an estimated rate for the year ending 31
December 2018 is 18.7% (30 June 2017: 17.1%, 31 December 2017:
17.2%).
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 2018 30 June 2017 2017
Number Number
of of Number of
shares shares shares
For basic earnings per ordinary share
* 50,188,922 50,144,671 50,163,144
Exercise of share options and LTIPs 283,795 401,397 391,640
For diluted earnings per ordinary
share 50,472,717 50,546,068 50,554,784
=========== ============= ============
* Excludes 38,980 (June 2017: 5,950; December 2017: 27,620)
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.
2018 2017 2017
Six months Six months
ended ended Year ended
30 June 30 June 31 December
restated restated
GBPm GBPm GBPm
Profit attributable to owners
of the Company 17.4 14.0 38.9
Separately disclosed items 0.2 1.0 1.3
Tax on separately disclosed items (0.2) (0.2) (0.4)
Underlying profit attributable to
owners of the Company 17.4 14.8 39.8
Earnings per share pence pence pence
Basic earnings per share 34.7 27.9 77.5
Diluted earnings per share 34.5 27.7 76.9
Adjusted basic earnings
per share 34.7 29.6 79.3
Adjusted diluted earnings
per share 34.5 29.3 78.7
9 Interim dividend
The proposed interim dividend of 10.30p (2017: 9.40p) per 25p
ordinary share is payable on 2 November 2018 to those shareholders
on the register of the Company at the close of business on 5
October 2018. The dividend recognised in the Statement of changes
in equity is the final dividend for 2017 of 19.30p per above paid
on 11 May 2018.
10 Retirement benefit obligations
Movements during the period in the Group's defined benefit
pension schemes are set out below:
2018 2017 2017
Six months
Six months ended ended Year ended
30 June 30 June 31 December
GBPm GBPm GBPm
Net obligation as at 1 January (19.8) (26.8) (26.8)
Expense recognised in the income
statement (0.3) (0.3) (0.8)
Contributions paid to scheme 1.9 1.7 4.6
Remeasurement gains and losses (1.5) - 3.2
At period end (19.7) (25.4) (19.8)
================= =========== ============
The Group's net liabilities in respect of its pension
schemes were as follows:
GBPm GBPm GBPm
Shore Staff (4.9) (9.5) (5.8)
Merchant Navy Officers Pension
Fund (6.0) (7.6) (6.8)
Merchant Navy Ratings Pension Fund (8.8) (8.3) (7.2)
(19.7) (25.4) (19.8)
================= =========== ============
The principal assumptions in respect of these liabilities are
disclosed in the December 2017 Annual Report. The Group has not
obtained an interim valuation for the period ended 30 June 2018 but
has recognised a remeasurement loss of GBP1.5m in respect of the
Group's share of the MNRPF triennial valuation at 31 March
2017.
11 Reconciliation of net debt
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 leases (0.4) 0.1 - - (0.3)
Net debt (132.5) (11.2) (0.3) (0.7) (144.7)
========== ======= ========= ========= ============
1 January Cash Other Exchange 30 June
2017 flow non-cash movement 2017
GBPm GBPm GBPm GBPm GBPm
Cash and cash equivalents 21.8 (6.6) - (0.3) 14.9
Debt due after 1
year (124.4) (16.1) (0.3) 0.5 (140.3)
Debt due within
1 year (3.0) 0.2 - - (2.8)
---------- ------- --------- --------- ------------
(127.4) (15.9) (0.3) 0.5 (143.1)
Finance leases (0.1) 0.1 (0.1) - (0.1)
Net debt (105.7) (22.4) (0.4) 0.2 (128.3)
========== ======= ========= ========= ============
1 January Cash Other Exchange 31 December
2017 flow non-cash movement 2017
GBPm GBPm GBPm GBPm GBPm
Cash and cash equivalents 21.8 (0.3) - (1.2) 20.3
Debt due after 1
year (124.4) (27.8) (0.8) 0.8 (152.2)
Debt due within
1 year (3.0) 2.8 - - (0.2)
---------- ------- --------- --------- ------------
(127.4) (25.0) (0.8) 0.8 (152.4)
Finance leases (0.1) 0.1 (0.4) - (0.4)
Net debt (105.7) (25.2) (1.2) (0.4) (132.5)
========== ======= ========= ========= ============
12 Commitments and contingencies
Commitments and contingencies are as set out in the 2017 Annual
Report other than for the following changes. At 30 June 2018, the
Group had capital commitments of GBP5.7m (30 June 2017: GBP8.8m, 31
December 2017: GBP0.3m) and the Group had issued performance and
payment guarantees to third parties with a total value of GBP45.4m
(30 June 2017: GBP44.7m, 31 December 2017: GBP44.6m).
13 Related parties
There have been no significant changes in the nature of related
party transactions in the period ended 30 June 2018 from that
disclosed in the 2017 Annual Report.
14 IFRS 15 'Revenue from contracts with customers'
The Group adopted IFRS 15 on 1 January 2018 using the fully
retrospective method, utilising the practical expedients available
referred to in the Financial Statements for 2017. Two revenue
streams were identified as requiring Group policy change to align
with IFRS 15. These were the rendering of services and delivery of
construction contracts.
The main revenue streams within the Group are:
Sale of goods
Revenue is recognised when a customer obtains control of the
goods. Based on the Group's assessment, the application of IFRS 15
has not resulted in a significant impact.
Construction Contracts
Under IFRS 15 performance obligations in contracts with
customers are identified and the total contract value is allocated
to each of the performance obligations identified. Revenue is
recognised as each performance obligation is satisfied.
Rendering of Services
The Group is involved in providing a range of services including
submarine rescue services. The transfer of risks and rewards is
assumed to pass to the customer on delivery of the goods or
completion of the provision of the relevant services. Under IFRS
15, the total consideration in the service contracts is allocated
to all services based on their stand-alone prices. The stand-alone
selling prices are determined based on the list prices at which the
Group sells such services in separate transactions.
The impact due to these changes is set out below. Line items
that are not affected by the changes have not been included. As a
result, the sub-totals and totals disclosed cannot be recalculated
from the numbers provided.
Six months ended 30 June Year ended 31 December
2017 2017
Reported Adjustments Restated Reported Adjustments Restated
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 235.8 (3.3) 232.5 505.4 (6.1) 499.3
Cost of sales (168.1) 2.8 (165.3) (350.9) 4.3 (346.6)
--------- ------------ --------- --------- ------------ ---------
Gross profit 67.7 (0.5) 67.2 154.5 (1.8) 152.7
Administrative
expenses (47.4) - (47.4) (100.4) 0.1 (100.3)
Share of post-tax
results of joint
ventures 0.9 - 0.9 1.7 - 1.7
Acquisition related
income and (expense) (1.0) - (1.0) (1.3) - (1.3)
--------- ------------ --------- --------- ------------ ---------
Operating profit 20.2 (0.5) 19.7 54.5 (1.7) 52.8
Net finance expense (2.6) - (2.6) (5.5) - (5.5)
--------- ------------ --------- --------- ------------ ---------
Profit before taxation 17.6 (0.5) 17.1 49.0 (1.7) 47.3
Income tax (3.0) 0.1 (2.9) (8.3) 0.4 (7.9)
Profit for the
period 14.6 (0.4) 14.2 40.7 (1.3) 39.4
========= ============ ========= ========= ============ =========
The main impact of IFRS 15 is within Specialist Technical on
long-term contracts. Under IAS 11, revenue under long-term
contracts was recognised using the percentage of completion method.
The Group has determined that, within Specialist Technical, the
performance obligations identified in a number of contracts will
satisfy the criteria in IFRS 15 for recognition over time. As
result under IFRS 15, it is no longer deemed appropriate to
recognise significant work in progress as an asset on the Group's
balance sheet and consequently the Group will recognise revenue
based on costs incurred reflecting the continuous transfer of the
benefit of the Group's performance to the customer.
Six months ended 30 June Year ended 31 December
2017 2017
Reported Adjustments Restated Reported Adjustments Restated
GBPm GBPm GBPm GBPm GBPm GBPm
Non-current assets
Deferred tax assets 1.8 0.8 2.6 3.2 1.1 4.3
========= ============ ========= ========= ============ =========
Current assets
Inventories 56.4 (6.4) 50.0 52.1 (4.9) 47.2
Trade and other
receivables 178.7 (1.5) 177.2 201.9 (2.6) 199.3
========= ============ ========= ========= ============ =========
Total assets 574.0 (7.1) 566.9 618.6 (6.4) 612.2
========= ============ ========= ========= ============ =========
Current liabilities
Trade and other
payables (122.2) 0.7 (121.5) (132.7) (0.8) (133.5)
========= ============ ========= ========= ============ =========
Net assets 264.4 (6.4) 258.0 286.2 (7.2) 279.0
========= ============ ========= ========= ============ =========
The impact on the Group's retained earnings at 31 December 2016
is a reduction of GBP5.9m relating to the elimination of bid costs
(GBP0.4m), rendering of services (GBP1.0m), recognition of revenue
over time (GBP5.2m) offset by deferred taxation (GBP0.7m).
IFRS 15 Revenue from contracts with customers - accounting
policy applied since 1 January 2018
Following the adoption of IFRS 15, the Group's accounting policy
in respect of revenue is as follows:
Revenue represents income derived from contracts for the
provision of goods and services by the Company and its subsidiary
undertakings to customers in exchange for consideration in the
ordinary course of the Group's activities.
Performance obligations
Upon approval by the parties to a contract, the contract is
assessed to identify each promise to transfer either a distinct
good or service or a series of distinct goods or services that are
substantially the same and have the same pattern of transfer to the
customer. Goods and services are distinct and accounted for as
separate performance obligations in the contract if the customer
can benefit from them either on their own or together with other
resources that are readily available to the customer and they are
separately identifiable in the contract.
Transaction price
At the start of the contract, the total transaction price is
estimated as the amount of consideration to which the Group expects
to be entitled in exchange for transferring the promised goods and
services to the customer, excluding sales taxes. Variable
consideration, such as price escalation, is included based on the
expected value or most likely amount only to the extent that it is
highly probable that there will not be a reversal in the amount of
cumulative revenue recognised. The transaction price does not
include estimates of consideration resulting from contract
modifications, such as change orders, until they have been approved
by the parties to the contract. The total transaction price is
allocated to the performance obligations identified in the contract
in proportion to their relative stand-alone selling prices where
appropriate. Given the bespoke nature of many of the Group's
products and services, which are designed and/or manufactured under
contract to the customer's individual specifications, there are
typically no observable stand-alone selling prices. In such cases,
stand-alone selling prices are typically estimated based on
expected costs plus contract margin consistent with the Group's
pricing principles.
Revenue and profit recognition
Revenue is recognised as performance obligations are satisfied
as control of the goods and services is transferred to the
customer.
For each performance obligation within a contract, the Group
determines whether it is satisfied over time or at a point in time.
Performance obligations are satisfied over time if one of the
following criteria is satisfied:
- the customer simultaneously receives and consumes the benefits
provided by the Group's performance as it performs;
- the Group's performance creates or enhances an asset that the
customer controls as the asset is created or enhanced; or
- the Group's performance does not create an asset with an
alternative use to the Group and it has an enforceable right to
payment for performance completed to date.
Contracts that satisfy the over time criteria primarily occur in
the Group's Specialist Technical business, either because the
customer simultaneously receives and consumes the benefits provided
by the Group's performance as it performs (typically services or
support contracts) or the Group's performance does not create an
asset with an alternative use and it has an enforceable right to
payment for performance completed to date (typically production
contracts).
For each performance obligation to be recognised over time, the
Group typically recognises revenue using an input method, based on
costs incurred in the period. Revenue and attributable margin are
calculated by reference to reliable estimates of transaction price
and total expected costs, after making suitable allowances for
technical and other risks. Revenue and associated margin are
therefore recognised progressively as costs are incurred.
If the over time criteria for revenue recognition are not met,
revenue is recognised at the point in time that control is
transferred to the customer, which is usually when legal title
passes to the customer and the business has the right to payment,
for example, on delivery.
When it is probable that total contract costs will exceed total
contract revenue, the expected loss is recognised immediately as an
expense.
Bid costs
All pre-contract bidding costs which are incurred irrespective
of whether the contract is awarded relating to the design,
manufacture or operation of assets or the position of services are
expensed when incurred.
15 Financial Instruments
IFRS 9 Financial Instruments became effective on 1 January 2018.
This standard replaces IAS 39 and introduces new requirements for
classifying and measuring financial instruments and puts in place a
new hedge accounting model that is designed to be more closely
aligned with how entities undertake risk management activities when
hedging financial and non-financial risk exposures. IFRS 9 has been
implemented prospectively from 1 January 2018 and the impact on the
Group has been not been material. The key areas of focus for the
Group under IFRS 9 are:
- Expected credit losses being recognised on trade debtors and
contract assets recognised under IFRS 15;
- Hedge accounting and related hedge documentation; and
- Reclassification of Assets Held for Sale as Other Investments,
with these being fair valued at each reporting period.
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 year financial report for the
six months ended 30 June 2018 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 year financial report for the six months ended 30 June
2018 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
year 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.
Directors' responsibilities
The half year financial report is the responsibility of, and has
been approved by, the Directors. The Directors are responsible for
preparing the half year 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 year
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
28 August 2018
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 UWVKRWWAWUAR
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