TIDMFSJ
RNS Number : 0172X
Fisher (James) & Sons plc
25 August 2020
25 August 2020
James Fisher and Sons plc
Half year results for the six months ended 30 June 2020
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 2020.
2020 2019 % change
Revenue GBP258.1m GBP286.9m (10)%
Underlying operating profit * GBP19.5m GBP24.5m (20)%
Underlying profit before tax
* GBP15.1m GBP20.9m (28)%
Underlying diluted earnings per
share * 23.6p 33.2p
Cash conversion 312% 106% (29)%
Interim dividend per share 8.0p 11.3p (29)%
Statutory operating profit GBP11.5m GBP24.5m (47)%
Statutory profit before tax GBP7.1m GBP20.9m (59)%
Statutory diluted earnings per
share 9.9p 33.6p (62)%
* excludes separately disclosed items of GBP(8.0)m (2019:
GBPnil) (note 5).
Highlights:
-- Key priority remains the safety and wellbeing of employees
and customers
-- Swift response to Covid-19 to reduce costs, optimise cash
flow and protect liquidity
-- Resilient trading performance
-- GBP30m reduction in debt
-- Interim dividend of 8.0p per share
Commenting on the results, Chief Executive Officer, Eoghan
O'Lionaird, said:
"The first half of 2020 was one of the most demanding periods
the Company has faced, and the commitment, support and engagement
of our employees in stepping up to the challenges has been
remarkable. The Group responded swiftly to both the unprecedented
headwinds presented by Covid-19 and the longer-term implications
for energy demand by taking actions to reduce costs and protect the
Group's liquidity. Whilst the second half is expected to remain
challenging and the outlook for our end markets is uncertain, we
expect trading to improve through the second half, assuming no
material deterioration in the Covid-19 situation.
James Fisher is well diversified by geographical sector and end
market. The resilience of the Group, our strong liquidity position
combined with swift actions taken to reduce costs, position James
Fisher well for any improvement in market conditions in the second
half and beyond. Whilst the financial performance in 2020 will be
lower than 2019, the Group remains well placed to deliver future
growth for its shareholders."
For further information:
Chief Executive
James Fisher and Eoghan O'Lionaird 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 2020
Resilient performance in challenging conditions
The first half of 2020 was particularly challenging for our
employees, customers and suppliers, local communities and
shareholders as, after a stable start to the year, oil prices were
adversely impacted by over production relative to real demand which
was then quickly followed by the global lockdown due to
Covid-19.
The Group responded quickly to these challenges with our
priority being to protect our employees and, within that context,
to do all we could to continue to provide our services and goods to
customers, whilst supporting and maintaining our supply chain. The
commitment, support and engagement of our 3,000 employees during
this period has been remarkable. Since the third week of March,
approximately 70% of our office-based staff have been working from
home, made possible by our past investment in the appropriate
technology. At our operational sites we introduced enhanced safety
measures, deep cleansing and social distancing which has helped to
keep people safe, whilst maintaining good levels of efficiency and
performance.
The Group took swift actions to reduce costs, optimise cash flow
and protect liquidity. This included the deferral of all
discretionary capital expenditure, instituting a hiring freeze,
placing approximately 400 UK employees on furlough and implementing
a 20% pay deferral for approximately 800 employees across the
world. The deferred pay will be repaid to our employees during the
second half of the current year, with the exception of all Board
members, the Executive Committee and our senior leadership team,
who have agreed that their pay reduction of 20% for the second
quarter will not be reimbursed. The Group has returned to full
salaries with effect from 1 July 2020 and has ceased to take
advantage of the UK Government's furlough scheme since July.
In addition, the Group has deferred payment of cash bonuses in
relation to the 2019 financial year until July and deferred
payments of taxes where possible and defined benefit pension scheme
contributions, with the agreement of the Pension Trustees. We
announced on 26 March 2020 that the payment of the final dividend
in relation to the year ended 31 December 2019 had been suspended
as part of our response to protect the Group's liquidity going into
the Covid-19 lockdown and we have now taken the decision to cancel
this dividend.
Financial performance
Revenue in the first half of 2020 was 10% lower than the prior
year period comparator at GBP258.1m (2019: GBP286.9m). All our
divisions showed good resilience and traded profitably in each
month during the second quarter and underlying operating profit for
the first half was GBP19.5m (2019: GBP24.5m).
Underlying profit before taxation was GBP15.1m (2019: GBP20.9m)
and underlying diluted earnings per share were 23.6p (2019:
33.2p).
The strong momentum we saw in Offshore Oil through the second
half of 2019 continued into the first quarter of 2020 and although
there was a negative impact in the second quarter, this division
reported a first half underlying operating profit which was 23%
ahead of the prior period.
The combination of Covid-19 and the sharp decline in energy
prices has resulted in projects in our subsea operations in both
Renewables and Oil & Gas being deferred into the second half of
2020 and beyond. In response to these challenges, we have taken
actions, which are ongoing, to restructure our Marine Support
division. In addition, less favourable market conditions have led
us to revise assumptions of the carrying values of certain assets
across the Group which has resulted in an impairment charge. These
items are included within separately disclosed items by virtue of
their size and nature. Total separately disclosed items in the
period were GBP8.0m (2019: GBPnil) comprising restructuring in
Marine Support of GBP1.5m, impairment charges of GBP4.8m and
acquisition related charges of GBP1.7m.
Statutory operating profit for the first six months of 2020,
which is the underlying operating profit less separately disclosed
items, was GBP11.5m (2019: GBP24.5m) and statutory diluted earnings
per share were 9.9p (2019: 33.6p).
Dividends
We believe the Group has weathered the initial storm of Covid-19
and we have seen a significant improvement in the financial
headroom on our committed banking facilities. Global economies are
slowly recovering, and the price of oil has partially recovered
from the low point in April. We operate in diverse markets and have
a wide geographic spread so whilst certain parts of our business
have been seriously impacted by Covid-19, other parts of our
business have been resilient.
With this backdrop the Board has declared an interim dividend of
8.0 pence per share (2019: 11.3p), reflecting the reduction in
underlying profit before taxation in the period. The dividend will
be paid on 6 November 2020 to shareholders on the register at the
close of business on 2 October 2020.
Strategic Review
Our strategy has been to grow our business organically by
leveraging our extensive marine services skill base in areas of
specialist expertise across global markets, 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 has been supplemented by value
enhancing acquisitions which fit into our existing divisions. James
Fisher looks to acquire businesses that have a niche product or
service offering with growth potential, a track record of
profitability, cash generation and strong management.
The appointment of Eoghan O'Lionaird as CEO on 1 October 2019
was an opportune time to revisit and retest the Group's strategy
and to create a plan for further growth in the years ahead. We had
intended to hold a capital markets day in June 2020 to update
shareholders on our strategic review but whilst considerable
progress has been made, our primary focus has been on protecting
the Group, its employees and its financial integrity and we have
deferred any announcement until next year.
Environmental, Social and Governance
The Health and Safety of our employees is always our highest
priority and new measures in response to Covid-19 were quickly
implemented throughout our Group. Regrettably, 56 James Fisher
employees have contracted the virus and one has sadly passed away.
The majority of cases in the Group have been in Brazil and many of
our team working in Mozambique were quarantined following an
outbreak at their operational base. We have sought to ensure any
affected employees receive the best medical care and support.
Our work in reviewing the Group strategy includes expanding our
focus to include our five key stakeholder groups: employees,
customers and suppliers, the local communities in which we operate,
the environment and our shareholders. With the objective of
ensuring that our strategy is intrinsically sustainable, each of
our operating companies is updating their respective strategies to
include policies, objectives and actions focused on each of these
primary stakeholders.
James Fisher continues to focus on diversity and inclusion. In
the first half of 2020, women represented 29% of our Board
membership and 29% of our Executive Committee.
Liquidity
During the first half, with the support of its bankers, the
Group increased its committed revolving credit facilities by GBP50m
to GBP300m (30 June 2019: GBP250m). Rapid actions taken to protect
the Company and improve liquidity resulted in a GBP29.9m reduction
in borrowings when compared to 31 December 2019. At 30 June 2020,
the Group had headroom against its committed revolving credit
facilities of GBP115.6m (2019: GBP83.7m). The ratio of net debt
(inclusive of bonds and guarantees) to Ebitda was 2.5 times (2019:
2.3 times) as calculated under our banking agreements, which
require a covenant of less than 3.5 times.
Outlook
The first half of 2020 was one of the most demanding periods the
Company has faced, and the commitment, support and engagement of
our employees in stepping up to the challenges has been remarkable.
The Group responded swiftly to both the unprecedented headwinds
presented by Covid-19 and the longer-term implications for energy
demand by taking actions to reduce costs and protect the Group's
liquidity. Whilst the second half is expected to remain challenging
and the outlook for our end markets is uncertain, we expect trading
to improve through the second half, assuming no material
deterioration in the Covid-19 situation.
James Fisher is well diversified by geographical sector and end
market. The resilience of the Group, our strong liquidity position
combined with swift actions taken to reduce costs position James
Fisher well for any improvement in market conditions in the second
half and beyond. Whilst the financial performance in 2020 will be
lower than 2019, the Group remains well placed to deliver future
growth to its shareholders.
Business review
Marine Support
H1 2020 H1 2019 change
Revenue (GBPm) 121.2 140.0 (13)%
Underlying operating profit (GBPm) 4.8 6.7 (28)%
Underlying operating margin 4.0% 4.8% (80)bps
Return on capital employed 4.4% 6.7% (230)bps
Revenue in Marine Support was 13% lower in the period at
GBP121.2m (2019: GBP140.0m), mainly due to lack of subsea and high
voltage projects in the Renewables sector, as projects were
cancelled or deferred.
Despite the challenges of Covid-19, good progress in the early
beach landing project in Mozambique offset a reduction of subsea
oil & gas projects in the Middle East and West Africa.
Ship-to-ship services performed strongly with revenue 20% higher
than the first half of 2019.
Given the GBP18.8m fall in revenue, underlying operating profit
was resilient, decreasing by GBP1.9m compared to the prior period
comparative as the lack of subsea projects offset excellent profit
growth in ship-to-ship services. The Group responded quickly to the
challenges within Marine Support and reduced headcount in the first
half with an associated one-off charge of GBP1.5m which will lead
to annualised savings in the future.
The businesses acquired in 2019, Martek Marine and Brazil based,
Servicos Maritimos Continental, adapted well to the Covid-19
situation and both made strong contributions to the first half.
Specialist Technical
H1 2020 H1 2019 change
Revenue (GBPm) 65.7 74.1 (11)%
Underlying operating profit (GBPm) 7.5 9.3 (19)%
Underlying operating margin 11.4% 12.6% (120)bps
Return on capital employed 13.4% 16.1% (270)bps
Revenue was 11% lower in Specialist Technical with difficulty
experienced in receiving components from the supply chain and in
progressing and completing projects in Asia Pacific as a result of
Covid-19. This adversely affected our defence and diving equipment
business, JFD, but our nuclear decommissioning business remained
resilient and posted a 3% increase in revenue in the first
half.
Underlying operating profit was GBP1.8m lower at GBP7.5m (2019:
GBP9.3m). Despite lower volumes, gross margins were one percentage
point higher on a similar cost of operations.
Whilst progress on saturation diving systems for Shanghai
Salvage was delayed by Covid-19, JFD made good progress on its
swimmer delivery vehicle order due for completion in 2021 as well
as on two submarine rescue vessel projects which commenced during
2019. JFD was awarded a three-year extension to its submarine
rescue service for NATO. This contract extension secures the safe
and continued in-service support, through maintenance and
operation, of a globally deployable submarine rescue system for the
UK MoD and the partner nations of France and Norway.
In March 2020, Fathom Systems, a leading provider of diving
communications, gas analysis and integrated diving control systems,
was acquired. Fathom further enhances JFD's ability to provide
differentiated solutions to support safe diving operations in the
most extreme environments.
We were proud of JFD's response to the UK Government's call for
rapidly manufactured ventilators to provide essential medical
equipment to the NHS. Using its world-leading breathing gas reclaim
systems, the InVicto ventilator was quickly developed, tested and
designed for minimal oxygen consumption, which could become a
scarce resource. While the UK medical authority did not take
InVicto forward, clinical trials are continuing in other
countries.
Offshore Oil
H1 2020 H1 2019 change
Revenue (GBPm) 41.3 39.6 +4%
Underlying operating profit (GBPm) 5.4 4.4 +23%
Underlying operating margin 13.1% 11.1% +200bps
Return on capital employed 8.6% 6.8% +180bps
The momentum from the second half of 2019 in Offshore Oil flowed
through into the first quarter of 2020 until the logistical issues
caused by Covid-19 in late March started to adversely impact the
division. Lower energy prices typically have a delayed impact in
Offshore Oil. Revenue in the first half was 4% higher than the
prior period and underlying operating profit was 23% higher at
GBP5.4m (2019: GBP4.4m). Underlying operating margins increased to
13.1% (2019: 11.1%).
RMSpumptools, which provides solutions to extend the life of
existing wells, experienced good demand throughout the first half
and enters the second half with a similar order book to last year.
Scantech Offshore further increased its services to the Renewables
market where it provides compressors for bubble curtains, which
reduce subsea sound and pollution during construction and protects
marine life. Fisher Offshore won good orders for its specialist
cutting tool services for oil rig decommissioning projects. This is
an area where demand is increasing, which augurs well for the
future.
Tankships
H1 2020 H1 2019 change
Revenue (GBPm) 29.9 33.2 (10)%
Underlying operating profit (GBPm) 3.6 5.9 (39)%
Underlying operating margin 12.0% 17.8% (580)bps
Return on capital employed 24.3% 40.7% (1640)bps
Revenue at Tankships was 10% lower at GBP29.9m (2019: GBP33.2m)
and underlying profit 39% lower at GBP3.6m (2019: GBP5.9m). The
business operated two fewer tankers in the first half of 2020 and
was trading in line with expectations until the end of April when
the impact of lockdown significantly reduced the transportation of
clean petroleum products and hence tanker utilisation. Despite the
Covid-19 challenges, the division traded profitably in both May and
June. Volumes improved in June and further in July as the lockdown
was gradually eased.
Cash flow and borrowings
Summary cash flow
----------------------------- -------- --------
H1 2020 H1 2019
GBPm GBPm
----------------------------- -------- --------
Underlying operating profit 19.5 24.5
Depreciation & amortisation 16.5 15.3
-----------------------------
Underlying ebitda * 36.0 39.8
Working capital 24.7 (7.1)
Pension / other 0.2 (6.7)
-----------------------------
Operating cash flow 60.9 26.0
Cash outflow on separately
disclosed (1.1) (0.6)
Interest & tax (8.8) (6.2)
Capital expenditure (12.7) (38.2)
Acquisitions (4.5) (13.6)
Dividends - (11.1)
Other (3.9) (2.1)
-----------------------------
Net inflow/(outflow) 29.9 (45.8)
net debt (IAS 17) at start
of period (203.0) (113.6)
----------------------------- -------- --------
Net debt on an IAS 17 basis reduced
by GBP29.9m to GBP173.1m (2019:
GBP159.4m) reflecting the rapid
actions taken to conserve cash and
increase liquidity. These included
suspending payment of the final
proposed dividend in relation to
2019, deferring pensions and employee
related tax liabilities and a significant
drive on collections from customers.
As a result, working capital improved
by GBP31.8m compared to 2019 and
operating cash flow by GBP34.9m
to GBP60.9m (2019: GBP26.0m). Cash
conversion, the ratio of operating
cash flow to underlying operating
profit, was 312% (2019: 106%).
Acquisition spend comprised Fathom
Systems for GBP1.2m, deferred consideration
for businesses purchased in prior
years of GBP2.7m with the balance
related to a joint venture in Norway.
Capital expenditure of GBP12.7m
(2019: GBP38.2m) reflected the spending
freeze imposed to respond to Covid-19
but with careful attention to ensure
net debt (IAS 17) at end investment for future growth was
of period (173.1) (159.4) maintained.
----------------------------- -------- --------
* Underlying earnings before interest, tax, depreciation and
amortisation
At 30 June 2020 the Group had committed revolving credit
facilities of GBP300m (2019: GBP250m) and GBP115.6m of headroom
(2019: GBP83.7m). The ratio of net debt to underlying Ebitda on an
IAS 17 basis was 1.9 times (2019: 1.7 times). Our banking
agreements are on a frozen GAAP basis and the ratio of net debt
(including bonds and guarantees) to Ebitda, was 2.5 times (2019:
2.3 times). Net borrowings including operating leases (IFRS16
basis) were GBP31.9m lower than 31 December 2019 at GBP198.5m
(2019: GBP190.5m).
Balance sheet
Working capital was GBP16.2m lower
than at 30 June 2019 and GBP23.2m
lower than at 31 December 2019. The
ratio of working capital to sales
at 30 June 2020 was 13.4% (2019:
16.1%) reflecting the improvement
in the period, but also the reduction
in revenue.
Net gearing, the ratio of net debt
30 June 30 June (IAS 17) to equity was 55 % (2019:
2020 2019 52%).
--------------------------
GBPm GBPm
-------------------------- -------- --------
Intangible assets 208.4 212.5
Other assets 218.5 183.8
Right-of-use assets 24.4 30.7
Working capital 78.6 94.8
Deferred consideration (3.3) (3.6)
Pensions (5.2) (10.7)
Tax (6.7) (8.3)
--------------------------
Capital employed 514.7 499.2
-------------------------- -------- --------
Net debt (IAS 17) 173.1 159.4
Right-of-use liabilities 25.4 31.1
Equity 316.2 308.7
--------------------------
514.7 499.2
-------------------------- -------- --------
Risks and uncertainties
Aside from Covid-19, 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 2019 Annual Report and
Accounts on pages 25-27. The principal risks set out in the 2019
Annual Report and Accounts were:
-- Operational - project delivery, recruitment and retention of
key staff, health, safety and environment, contractual risk and
cyber security;
-- Strategic - operating in emerging markets; and
-- Financial - foreign currency and interest rates.
The Board considers that the principal risks and uncertainties
set out in the 2019 Annual Report and Accounts remain the same,
although there has been a slight increase in some of the
operational and financial risks, predominantly as a result of the
impact and uncertainties of the global pandemic which have been set
out above. The principal risks set out in the 2019 Annual Report
and Accounts, together with the addition of a global pandemic,
remain relevant for the second half of the financial year.
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:
E P O'Lionaird S C Kilpatrick
Chief Executive Officer Group Finance Director
24 August 2020
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2020
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
Note GBPm GBPm GBPm
Revenue 4 258.1 286.9 617.1
Cost of sales (187.2) (204.9) (432.4)
----------- ----------- -------------
Gross profit 70.9 82.0 184.7
Administrative expenses (60.1) (58.7) (129.9)
Share of post tax results of joint
ventures 0.7 1.2 0.8
----------- ----------- -------------
Operating profit 4 11.5 24.5 55.6
Net finance expense 6 (4.4) (3.6) (7.8)
----------- ----------- -------------
Profit before taxation 7.1 20.9 47.8
Income tax 7 (2.0) (4.0) (11.1)
Profit for the period 5.1 16.9 36.7
=========== =========== =============
Attributable to:
Owners of the Company 5.0 17.0 36.7
Non-controlling interests 0.1 (0.1) -
5.1 16.9 36.7
=========== =========== =============
Earnings per share
pence pence pence
Basic 8 9.9 33.8 73.1
Diluted 8 9.9 33.6 72.7
Alternative performance measures 3 GBPm GBPm GBPm
Operating profit 11.5 24.5 55.6
Separately disclosed items 5 8.0 - 10.7
----------- ----------- -------------
Underlying operating profit 19.5 24.5 66.3
Net finance expense (4.4) (3.6) (7.8)
----------- ----------- -------------
Underlying profit before tax 15.1 20.9 58.5
=========== =========== =============
Underlying earnings per share
pence pence pence
Basic 8 23.6 33.4 93.2
Diluted 8 23.6 33.2 92.8
------------------------------------- ----- ----------- ----------- -------------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2020
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
Note GBPm GBPm GBPm
Profit for the period 5.1 16.9 36.7
Items that will not be reclassified to the
income statement
Remeasurement loss on defined benefit pension
schemes 10 (0.4) - 2.2
Tax on items that will not be reclassified 0.1 - 0.6
-------- ----------- ------------
(0.3) - 2.8
Items that may be reclassified subsequently to
the income statement
Exchange differences on foreign currency
net investments 1.8 1.2 (8.1)
Effective portion of changes in fair value
of cash flow hedges (3.6) (0.7) 2.3
Effective portion of changes in fair value of
cash flow hedges in joint ventures (0.3) (0.1) (0.1)
Net change in fair value of cash flow hedges
transferred to income statement 0.6 (0.6) (1.4)
Deferred tax on items that may be reclassified 0.7 0.3 (0.4)
-------- ----------- ------------
(0.8) 0.1 (7.7)
Total comprehensive income for the period 4.0 17.0 31.8
======== =========== ============
Attributable to:
Owners of the Company 3.9 17.1 31.8
Non-controlling interests 0.1 (0.1) -
4.0 17.0 31.8
======== =========== ============
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 June 2020
30 June 30 June 31 December
2020 2019 2019
Note GBPm GBPm GBPm
Non-current assets
Goodwill 11 182.8 184.2 185.5
Intangible assets 25.6 28.3 29.7
Property, plant and equipment 208.2 172.8 210.6
Right-of-use assets 24.4 30.7 27.1
Investment in joint ventures 8.9 9.6 8.5
Other investments 1.4 1.4 1.4
Deferred tax assets 5.6 4.0 4.5
456.9 431.0 467.3
-------- -------- ------------
Current assets
Inventories 52.3 50.2 47.9
Trade and other receivables 201.2 202.5 213.7
Cash and cash equivalents 12 20.8 17.4 18.5
274.3 270.1 280.1
-------- -------- ------------
Current liabilities
Trade and other payables (173.6) (158.8) (158.0)
Provisions for liabilities and charges (0.9) (2.1) (0.7)
Current tax (7.1) (9.8) (10.5)
Borrowings (8.2) (10.9) (11.3)
Lease liabilities (8.4) (8.9) (8.9)
(198.2) (190.5) (189.4)
-------- -------- ------------
Net current assets 76.1 79.6 90.7
Total assets less current liabilities 533.0 510.6 558.0
-------- -------- ------------
Non-current liabilities
Other payables (3.7) (0.6) (4.8)
Retirement benefit obligations 10 (5.2) (10.7) (5.8)
Cumulative preference shares (0.1) (0.1) (0.1)
Borrowings (182.8) (165.6) (207.3)
Lease liabilities (19.8) (22.4) (21.3)
Deferred tax liabilities (5.2) (2.5) (4.7)
(216.8) (201.9) (244.0)
-------- -------- ------------
Net assets 316.2 308.7 314.0
======== ======== ============
Equity
Called up share capital 12.6 12.6 12.6
Share premium 26.6 26.2 26.5
Treasury shares (0.3) - -
Other reserves (11.0) (0.9) (10.6)
Retained earnings 287.4 270.7 284.7
-------- -------- ------------
Equity attributable to owners of the
Company 315.3 308.6 313.2
Non-controlling interests 0.9 0.1 0.8
Total equity 316.2 308.7 314.0
======== ======== ============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2020
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
2020 12.6 26.5 284.7 (10.6) - 313.2 0.8 314.0
Total
comprehensive
income - - 4.2 (0.3) - 3.9 0.1 4.0
Acquisitions - - - (0.1) - (0.1) - (0.1)
Share based
payments - - 0.2 - - 0.2 - 0.2
Tax effect of
share
based payments - - (0.3) - - (0.3) - (0.3)
Purchase of
shares
by ESOT - - - - (0.9) (0.9) - (0.9)
Award of
treasury
shares - - (1.4) - 0.6 (0.8) - (0.8)
Arising on the
issue
of shares (0.0) 0.1 - - - 0.1 - 0.1
-------- -------- --------- --------- ------------ -------------- ---------------- -------
At 30 June 2020 12.6 26.6 287.4 (11.0) (0.3) 315.3 0.9 316.2
======== ======== ========= ============ ============== ================ =======
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 - - (2.0) - - (2.0) - (2.0)
Total
comprehensive
income - - 17.1 - - 17.1 (0.1) 17.0
Ordinary
dividends
paid - - (10.7) - - (10.7) - (10.7)
Dividends 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)
Award of
treasury
shares - - (2.7) - 2.7 - - -
Arising on the
issue
of shares - 0.3 - - - 0.3 - 0.3
-------- -------- --------- --------- ------------ -------------- ---------------- -------
At 30 June 2019 12.6 26.2 270.7 (0.9) - 308.6 0.1 308.7
======== ======== ========= ========= ============ ============== ================ =======
Other reserve
movements Translation Hedging Put option
reserve reserve liability Total
Other reserves GBPm GBPm GBPm GBPm
At 1 January
2019 0.3 (1.2) - (0.9)
Other
comprehensive
income (8.1) 1.0 - (7.1)
Remeasurement of non-controlling interest
put option - - (2.6) (2.6)
------------ -------------- ---------------- -------
At 31 December
2019 (7.8) (0.2) (2.6) (10.6)
Other
comprehensive
income 1.9 (2.9) - (1.0)
Remeasurement of non-controlling interest
put option - - (0.1) (0.1)
At 30 June 2020 (5.9) (3.1) (2.7) (11.7)
============ ============== ================ =======
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2020
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
Note GBPm GBPm GBPm
Profit before tax for the period 7.1 20.9 47.8
Adjustments to reconcile profit before tax
to net cash flows
Depreciation and amortisation 23.3 21.8 43.1
Separately disclosed items (excluding amortisation) 6.5 (1.5) 7.6
Other non cash items 6.0 2.5 6.4
Increase in inventories (3.4) (4.8) (2.4)
Decrease/(increase) in trade and other receivables 14.5 (14.3) (31.1)
Decrease in trade and other payables 13.6 12.0 12.2
Defined benefit pension cash contributions
less service cost (1.2) (5.6) (8.4)
-------- ----------- ------------
Cash generated from operations 66.4 31.0 75.2
Cash outflow from separately disclosed items (1.1) (0.6) (7.5)
Income tax payments (5.2) (4.1) (9.6)
-------- ----------- ------------
Cash flow from operating activities 60.1 26.3 58.1
Investing activities
Dividends from joint venture undertakings 0.6 0.5 1.7
Proceeds from the disposal of property, plant
and equipment 0.6 1.1 2.2
Finance income 0.1 0.1 0.3
Acquisition of subsidiaries, net of cash
acquired (4.0) (11.3) (12.5)
Investment in joint ventures and other investments (0.5) (0.7) (4.7)
Acquisition of property, plant and equipment (11.8) (37.6) (88.9)
Development expenditure (1.5) (1.7) (3.5)
Cash flows used in investing activities (16.5) (49.6) (105.4)
Financing activities
Proceeds from the issue of share capital 0.1 0.3 -
Finance costs (3.7) (2.2) (5.3)
Purchase of own shares by Employee Share
Ownership Trust (0.9) (1.1) (1.1)
Notional purchase of own shares for LTIP
award (0.8) (1.2) (1.3)
Capital element of lease repayments (6.2) (5.6) (11.3)
Proceeds from borrowings 43.9 111.3 106.6
Repayment of borrowings (73.1) (68.4) (21.2)
Dividends paid - (10.7) (16.4)
Dividend paid to non-controlling interest - (0.4) (2.0)
-------- ----------- ------------
Cash flows from/(used in) financing activities (40.7) 22.0 48.0
Net increase/(decrease) in cash and cash
equivalents 2.9 (1.3) 0.7
Cash and cash equivalents at beginning of
period 18.5 18.6 18.6
Net foreign exchange differences (0.6) 0.1 (0.8)
Cash and cash equivalents at end of period 12 20.8 17.4 18.5
======== =========== ============
NOTES TO THE CONDENSED CONSOLIDATED HALF YEAR STATEMENTS
1 Basis of preparation
James Fisher and Sons Plc (the Company) is a public limited
company registered and domiciled in England and Wales and listed on
the London Stock Exchange. The condensed consolidated half year
financial statements of the Company for the six months ended 30
June 2020 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
2019 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 2019.
The comparative figures for the financial year ended 31 December
2019 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 2019 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
The Directors have, at the time of approving these Condensed
Consolidated Interim Financial Statements, a reasonable expectation
that the Group has adequate resources to continue in operational
existence for at least 12 months from this reporting date.
In light of the Covid-19 global pandemic experienced in 2020 and
subsequent uncertainty, the Group has undertaken a detailed
viability review and taken appropriate mitigating actions to
protect the business and liquidity. Operations have been impacted
by travel restrictions, supply chain logistics and actions to
protect employees to ensure safe working conditions. The Group's
quick response to Covid-19 has mitigated the impact on financial
performance, however the potential impact of a second wave or a
post pandemic recession gives ongoing risk to future financial
performance.
The Group had GBP115.6m of undrawn committed facilities at 30
June 2020 (2019: GBP83.7m) and increased committed facilities by
GBP50m in the period to GBP300m (30 June 2019: GBP250m). No
revolving credit facilities are due for renewal within the next
twelve months. In addition, on 21 July 2020, the Group was
confirmed as an eligible issuer under the Bank of England's Covid
Corporate Financing Facility (CCFF), under which the Group can draw
up to GBP60m. The Group has not needed to draw on this CCFF
facility and assumes that this facility continues to remain
undrawn.
For the interim going concern review, the base case forecast
reflected financial performance in the six months ended 30 June
2020 and the associated impacts of Covid-19. A number of scenarios
were calculated compared to the base case forecast of profit and
cash flow to assess headroom against facilities for the next 30
months. Against negative scenarios, mitigating actions were applied
and in the severe but plausible downside, which reduced operating
profit by GBP10m in 2020 and by GBP20m in 2021 and 2022, adjusted
projections showed no breach of covenants. Additional sensitivities
which reduced cash receipts by GBP10m in 2020, GBP20m in 2021 and
GBP10m in 2022 and delayed project delivery deferring debtor
allocation by GBP3m in 2020 and by GBP6m in 2021 and 2022 were also
run separately in combination with the severe but plausible
downside and adjusted projections showed no breach of
covenants.
Taking into account the level of cash and available facilities
outlined above, the Directors consider that the Group has
sufficient funds to allow it to meet its liabilities as they fall
due for at least 12 months from the date of approval of the
financial statements, having undertaken a rigorous assessment of
financial forecasts and therefore continue to adopt the going
concern basis of accounting in preparing these Condensed
Consolidated Interim Financial Statements.
Adoption of standards
IAS 20 Accounting for Government Grants and Disclosure of
Government Assistance
During the period, some employees across the Group were placed
on furlough under the Coronavirus Jobs Retention Scheme. Furlough
income of GBP1.9m in relation to a maximum of 400 employees has
been recognised in the six months ended 30 June 2020 and as such
the Group has adopted IAS 20 in accounting for this government
income. The grant has been recognised as income and matched with
the associated payroll costs over the same period. The
corresponding asset is shown within trade and other receivables on
the balance sheet, to the extent that claimed amounts remain
outstanding at 30 June 2020.
Significant accounting policies
The accounting policies applied by the Group in these condensed
consolidated financial statements are the same as those applied by
the Group in its consolidated financial statements as at and for
the year ended 31 December 2019.
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
2019.
3 Alternative performance measures
The Group presents a number of alternative (non-Generally
Accepted Accounting Practice (non-GAAP)) performance measures which
are not defined within IFRS. These measures are presented to assist
investors in gaining a clear and balanced view of the underlying
operational performance of the Group and, are consistent year on
year and with how business performance is measured internally. The
adjustments are separately disclosed (note 5) 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.
3.2 Underlying earnings per share
Underlying earnings per share is calculated as the total of
underlying profit before tax, less income tax, but excluding the
tax impact on separately disclosed items included in the
calculation of underlying profit less profit attributable to
non-controlling interests, divided by the weighted average number
of ordinary shares in issue during the year. Underlying earnings
per share is set out in note 8.
3.3 Capital employed and Return on Capital Employed (ROCE)
Capital employed is defined as net assets less cash and
short-term deposits and after adding back borrowings. Average
capital employed is adjusted for the timing of businesses acquired,
right-of-use assets, and after adding back cumulative amortisation
of acquired intangible assets. 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.
2020 2019 2019
Six months ended Six months Year ended
30 June ended 30 June 31 December
GBPm GBPm GBPm
Net assets 316.2 308.7 314.0
Less right-of-use
assets (24.4) (30.7) (27.1)
----------------- --------------- -------------
291.8 278.0 286.9
Less cash and short-term deposits (13.3) (17.4) (18.5)
Plus borrowings and lease
liabilities 211.7 207.8 248.8
Capital employed 490.2 468.4 517.2
----------------- --------------- -------------
Underlying operating
profit 19.5 24.5 66.3
Notional tax at the effective
tax rate (4.1) (4.9) (13.1)
----------------- --------------- -------------
15.4 19.6 53.2
Average capital employed 471.9 449.3 471.1
Return on average capital
employed 6.6% 8.7% 11.3%
----------------- --------------- -------------
3.4 Cash conversion
Cash conversion is defined as the ratio of operating cash flow
to underlying operating profit. Operating cash flow comprises:
2020 2019 2019
Six months Six months Year ended
ended 30 June ended 30 June 31 December
GBPm GBPm GBPm
Cash generated from operations 66.4 31.0 75.2
Dividends from joint venture
undertakings 0.6 0.5 1.7
Capital element of lease
repayments (6.2) (5.6) (11.3)
less capital element of finance
lease repayments 0.1 0.1 0.2
--------------- --------------- -------------
Operating cash flow 60.9 26.0 65.8
Underlying operating
profit 19.5 24.5 66.3
Cash conversion 312% 106% 99%
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.
2020 2019 2019
Six months
ended 30 Six months Year ended
June ended 30 June 31 December
GBPm GBPm GBPm
Underlying operating
profit 19.5 24.5 66.3
Depreciation and
amortisation 23.3 21.8 43.1
Less: Deprecation on right-of-use
assets (5.3) (5.0) (10.1)
Amortisation of acquired intangibles
(note 5) (1.5) (1.5) (3.1)
----------- --------------- -------------
Underlying depreciation and
amortisation 16.5 15.3 29.9
----------- --------------- -------------
Underlying
Ebitda 36.0 39.8 96.2
----------- --------------- -------------
3.6 Underlying dividend cover
Underlying dividend cover is the ratio of the underlying diluted
earnings per share to the dividend per share.
pence pence pence
Underlying earnings per
share 23.6 33.2 92.8
Dividends per share 8.0 11.3 34.7
Underlying dividend cover
(times) 3.0 2.9 2.7
3.7 Organic
Organic growth represents the performance for the current year
in sterling compared to the prior year, adjusted for current and
prior year acquisitions and for a constant currency. The constant
currency adjustment takes the non-sterling results for the prior
year and re-translates them at the average exchange rate for the
current year.
3.8 Leases
IFRS 16 'Leases' became effective from 1 January 2019. The
financial impact of IFRS 16 compared to accounting under the
previous leasing standard IAS 17 is excluded under frozen GAAP
arrangements set out in our banking agreements and is summarised
below:
2020 2019 2019
Six months Six months
ended 30 ended 30 Year ended
June June 31 December
GBPm GBPm GBPm
Operating lease charges 6.1 5.5 11.1
Depreciation on right-of-use
assets (5.3) (5.0) (10.1)
----------- ----------- -------------
Increase in operating profit 0.8 0.5 1.0
Right-of-use interest (0.8) (0.9) (1.7)
----------- ----------- -------------
Decrease in profit before
tax - (0.4) (0.7)
=========== =========== =============
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
2019.
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 2020
Marine Specialist Offshore
Support Technical Oil Tankships Corporate Total
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
Segmental revenue reported
- point in time 104.7 18.7 41.5 - - 164.9
- over time 16.6 47.5 - 29.9 - 94.0
Inter-segmental sales (0.1) (0.5) (0.2) - - (0.8)
121.2 65.7 41.3 29.9 - 258.1
======== =========== ========= ========== ========== ========
Underlying operating
profit 4.8 7.5 5.4 3.6 (1.8) 19.5
Acquisition costs (0.1) (0.1) - - - (0.2)
Amortisation of acquired
intangibles (1.0) (0.1) (0.4) - - (1.5)
Impairment charge (1.7) (0.9) (2.2) - - (4.8)
Restructuring costs (1.5) - - - - (1.5)
-------- ----------- --------- ---------- ---------- --------
Operating profit 0.5 6.4 2.8 3.6 (1.8) 11.5
Net finance expense (4.4)
--------
Profit before tax 7.1
Income tax (2.0)
Profit for the period 5.1
========
Assets & liabilities
Segmental assets 320.7 163.5 153.4 58.6 18.6 714.8
Investment in joint
ventures 3.5 3.0 2.4 - - 8.9
-------- ----------- --------- ---------- ---------- --------
Total assets 324.2 166.5 155.8 58.6 18.6 723.7
Segmental liabilities (101.5) (55.6) (30.4) (28.8) (191.2) (407.5)
222.7 110.9 125.4 29.8 (172.6) 316.2
======== =========== ========= ========== ========== ========
Other segmental information
Capital expenditure 4.9 1.3 3.2 2.4 - 11.8
Depreciation and amortisation 8.0 3.3 6.5 5.3 0.2 23.3
======== =========== ========= ========== ========== ========
Six months ended 30 June 2019
Marine Specialist Offshore
Support Technical Oil Tankships Corporate Total
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
Segmental revenue reported
- point in time 139.5 23.3 41.4 - - 204.2
- over time 0.5 51.7 - 33.2 - 85.4
Inter-segmental sales - (0.9) (1.8) - - (2.7)
140.0 74.1 39.6 33.2 - 286.9
======== =========== ========= ========== ========== ========
Underlying operating
profit reported 6.7 9.3 4.4 5.9 (1.8) 24.5
Acquisition costs (0.5) - - - - (0.5)
Amortisation of acquired
intangibles (0.9) (0.2) (0.4) - - (1.5)
Costs of material litigation (1.5) - - - - (1.5)
Adjustment to provision
for contingent consideration 3.5 - - - - 3.5
-------- ----------- --------- ---------- ---------- --------
Operating profit 7.3 9.1 4.0 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 290.6 159.7 163.3 55.8 22.1 691.5
Investment in joint
ventures 5.1 3.4 1.1 - - 9.6
-------- ----------- --------- ---------- ---------- --------
Total assets 295.7 163.1 164.4 55.8 22.1 701.1
Segmental liabilities (90.6) (54.7) (30.1) (27.9) (189.1) (392.4)
205.1 108.4 134.3 27.9 (167.0) 308.7
======== =========== ========= ========== ========== ========
Other segment information
Capital expenditure 29.4 1.6 5.9 1.6 - 38.5
Depreciation and amortisation 6.5 4.0 6.4 4.7 0.2 21.8
======== =========== ========= ========== ========== ========
Year ended 31 December 2019
Marine Specialist Offshore
Support Technical Oil Tankships Corporate Total
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
Segmental revenue reported
- point in time 270.6 58.8 93.4 - - 422.8
- over time 35.6 95.4 - 67.9 - 198.9
Inter-segmental sales (0.1) (1.5) (3.0) - - (4.6)
306.1 152.7 90.4 67.9 - 617.1
======== =========== ========= ========== ========== ========
Underlying operating
profit reported 25.1 18.4 13.6 12.0 (2.8) 66.3
Acquisition costs (0.5) (0.1) - - - (0.6)
Amortisation of acquired
intangibles (2.1) (0.2) (0.8) - - (3.1)
Costs of material litigation (1.5) - - - - (1.5)
Adjustment to provision
for contingent consideration 3.5 - - - - 3.5
Impairment charge (9.0) - - - - (9.0)
-------- ----------- --------- ---------- ---------- --------
Operating profit 15.5 18.1 12.8 12.0 (2.8) 55.6
Net finance expense (7.8)
--------
Profit before tax 47.8
Income tax (11.1)
Profit for the year 36.7
========
Assets & liabilities
Segmental assets 325.8 166.1 164.2 60.7 22.1 738.9
Investment in joint
ventures 3.6 3.0 1.9 - - 8.5
-------- ----------- --------- ---------- ---------- --------
Total assets 329.4 169.1 166.1 60.7 22.1 747.4
Segmental liabilities (99.5) (53.1) (29.8) (28.9) (222.1) (433.4)
229.9 116.0 136.3 31.8 (200.0) 314.0
======== =========== ========= ========== ========== ========
Other segment information
Capital expenditure 66.1 4.5 11.9 12.8 - 95.3
Depreciation and amortisation 13.0 7.0 13.0 9.7 0.4 43.1
======== =========== ========= ========== ========== ========
5 Separately disclosed items
Certain items are disclosed separately in the financial
statements to provide a clear understanding of the underlying
financial performance of the Group, referred to in note 3. They are
items that are non-recurring and significant by virtue of their
size and include acquisition related income or changes, costs of
material litigation, restructure or material improvement.
Separately disclosed items comprise:
2020 2019 2019
Six months
Six months ended ended Year ended
30 June 30 June 31 December
GBPm GBPm GBPm
Acquisition related income and (expense):
Costs incurred on acquiring businesses (0.2) (0.5) (0.6)
Amortisation of acquired intangibles (1.5) (1.5) (3.1)
Adjustment to provision for contingent
consideration - 3.5 3.5
(1.7) 1.5 (0.2)
Material restructure of Marine Support (1.5) - -
Material litigation - (1.5) (1.5)
Impairment charge (4.8) - (9.0)
-------- ----------- ------------
Separately disclosed items before
taxation (8.0) - (10.7)
Taxation 1.1 - 0.5
-------- ----------- ------------
Separately disclosed items after
taxation (6.9) - (10.2)
======== =========== ============
Due to the impact of Covid-19 combined with a sharp fall in
energy prices, project work within Marine Support has sharply
declined or has been deferred and the Group commenced a material
restructure of the division. In the first half, a charge of GBP1.5m
(2019: GBPnil) was recognised.
The Group has taken an impairment charge of GBP4.8m in relation
to certain tangible and intangible assets within Marine Support,
Offshore Oil and Specialist Technical reflecting a reduction in
medium term opportunities for these assets to generate acceptable
cash flow returns based on latest forecasts.
Acquisition related income and charges benefitted from a release
in contingent consideration in 2019 which was not repeated and
primarily comprises amortisation on acquired intangibles.
6 Net finance expense
2020 2019 2019
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 0.3
Finance expense:
Bank loans and overdrafts (3.4) (2.5) (5.8)
Net interest on pension obligations (0.2) (0.2) (0.3)
Unwind of discount on right-of-use
lease liability (0.8) (0.9) (1.7)
Unwind of discount on contingent
consideration (0.1) (0.1) (0.3)
-------- ----------- ------------
(4.5) (3.7) (8.1)
Net finance expense (4.4) (3.6) (7.8)
======== =========== ============
7 Taxation
The Group's effective rate on profit before income tax was 28.2%
(30 June 2019: 18.9%, 31 December 2019: 23.2%). The effective
income tax rate on underlying profit before income tax, based on an
estimated rate for the year ending 31 December 2020, was 20.7% (30
June 2019: 20.0%, 31 December 2019: 19.8%). This is based on the
estimated effective tax rate for the year to 31 December 2020. Of
the total tax charge, GBP2.0m relates to overseas businesses (30
June 2019: GBP2.5m). Taxation on profit has been estimated based on
rates of taxation applied to the profits forecast for the full
year.
8 Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the year, after
excluding 9,227 (June 2019: 510, December 2019: 510) ordinary
shares held by the James Fisher and Sons plc Employee Share
Ownership Trust (ESOT), as treasury shares. Diluted earnings per
share are calculated by dividing the net profit attributable to
ordinary equity holders of the Company by the weighted average
number of ordinary shares that would be issued on conversion of all
the dilutive potential ordinary shares into ordinary shares.
At 30 June 2020, 139,506 options (June 2019: nil, December 2019:
44,809) were excluded from the diluted weighted average number of
ordinary shares calculation as their effect would be anti-dilutive.
The average market value of the Company's shares for purposes of
calculating the dilutive effect of share options was based on
quoted market prices for the period during which the options were
outstanding.
Weighted average number of shares
31 December
30 June 2020 30 June 2019 2019
Number of Number of Number of
shares shares shares
For basic earnings per ordinary share 50,332,654 50,248,652 50,282,962
Exercise of share options and LTIPs 107,576 298,511 240,597
For diluted earnings per ordinary
share 50,440,230 50,547,163 50,523,559
=========== ============= ============
Underlying earnings per share
To provide a better understanding of the underlying performance
of the Group, underlying earnings per share on continuing
activities is reported as an alternative performance measure (note
3).
2020 2019 2019
Six months
Six months ended ended Year ended
30 June 30 June 31 December
GBPm GBPm GBPm
Profit attributable to owners
of the Company 5.0 17.0 36.7
Separately disclosed items 8.0 - 10.7
Tax on separately disclosed
items (1.1) (0.2) (0.5)
Underlying profit attributable
to owners of the Company 11.9 16.8 46.9
================= =========== ============
Earnings per share pence pence pence
Basic earnings per share 9.9 33.8 73.1
Diluted earnings per share 9.9 33.6 72.7
Underlying basic earnings
per share 23.6 33.4 93.2
Underlying diluted earnings
per share 23.6 33.2 92.8
9 Interim dividend
The proposed interim dividend of 8.0p (2019: 11.3p) per 25p
ordinary share is payable on 6 November 2020 to those shareholders
on the register of the Company at the close of business on 2
October 2020.
10 Retirement benefit obligations
Movements during the period in the Group's defined benefit
pension schemes are set out below:
2020 2019 2019
Six months
Six months ended ended Year ended
30 June 30 June 31 December
GBPm GBPm GBPm
Net obligation as at 1 January (5.8) (16.1) (16.1)
Expense recognised in the income
statement (0.2) (0.2) (0.5)
Contributions paid to scheme 1.2 5.6 8.6
Remeasurement gains and losses (0.4) - 2.2
At period end (5.2) (10.7) (5.8)
================= =========== ============
The Group's net liabilities in respect of its pension schemes were as
follows:
2020 2019 2019
Six months
Six months ended ended Year ended
30 June 30 June 31 December
GBPm GBPm GBPm
Shore Staff (0.3) (4.0) (0.4)
Merchant Navy Officers Pension Fund (3.2) (4.2) (3.4)
Merchant Navy Ratings Pension Fund (1.7) (2.5) (2.0)
(5.2) (10.7) (5.8)
================= =========== ============
The principal assumptions in respect of these liabilities are
disclosed in the December 2019 Annual Report. The Group has not
obtained an interim valuation for the period ended 30 June 2020. In
the first half of 2020, the Group paid contributions to defined
benefit schemes of GBP0.3m (2019: GBP5.6m).
11 Goodwill
2020 2019 2019
Six months
Six months ended ended Year ended
30 June 30 June 31 December
GBPm GBPm GBPm
At 1 January 185.5 171.4 171.4
Acquisitions - 12.1 15.6
Transfers - - 0.7
Exchange differences (2.7) 0.7 (2.2)
At period end 182.8 184.2 185.5
================= =========== ============
At the half year, the results of the impairment tests carried
out in respect of the year ended 31 December 2019, were revisited
in light of the current impact of Covid-19 on the Group's
performance.
The recoverable amount of the cash generating units (CGU's) has
been assessed based on value in use calculations using cash
projections based on 3 year plans approved by the Board which have
been adjusted based on information available to reflect the impact
of the Covid-19 outbreak and the sharp decline in energy prices
which particularly impacted projects in our Marine Support and
Offshore Oil divisions. A terminal value of cash flows beyond that
date has been calculated at a growth rate in line with management's
long-term expectations for the relevant market. The key assumptions
used in the value in use calculations include gross margin,
discount rate, inflation of overheads and payroll and growth
rates.
Sensitivity to impairment
The Directors have carried out sensitivity analysis to determine
the impact on the carrying value of goodwill of a change in
discount rate, revenue growth and terminal value growth none of
which gave rise to an impairment to goodwill of any of the
CGU's.
12 Reconciliation of net borrowings
1 January Cash Other Exchange 30 June
2020 flow non-cash movement 2020
GBPm GBPm GBPm GBPm GBPm
Cash and cash equivalents 18.5 2.9 - (0.6) 20.8
Debt due after 1 year (207.4) 26.1 (0.1) (1.5) (182.9)
Debt due within 1 year (11.3) 3.1 - - (8.2)
---------- ------ --------- --------- --------
(218.7) 29.2 (0.1) (1.5) (191.1)
Lease liabilities (30.2) 6.2 (3.8) (0.4) (28.2)
---------- ------ --------- --------- --------
Net borrowings (IFRS
16) (230.4) 38.3 (3.9) (2.5) (198.5)
---------- ------ --------- --------- --------
Right-of-use liability 27.4 (6.1) 3.7 0.4 25.4
---------- ---------
Net borrowings (IAS 17) (203.0) 32.2 (0.2) (2.1) (173.1)
========== ====== ========= ========= ========
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 (IFRS
16) (113.6) (38.6) (38.3) - (190.5)
---------- ------- --------- --------- ------------
Right-of-use liability - (5.5) 36.6 - 31.1
Net borrowings (IAS 17) (113.6) (44.1) (1.7) - (159.4)
========== ======= ========= ========= ============
1 January Cash Other Exchange 31 December
2019 flow non-cash movement 2019
GBPm GBPm GBPm GBPm GBPm
Cash and cash equivalents 18.6 0.7 - (0.8) 18.5
Debt due after 1 year (122.0) (84.1) (2.3) 1.0 (207.4)
Debt due within 1 year (10.0) (1.3) - - (11.3)
---------- ------- --------- --------- ------------
(132.0) (85.4) (2.3) 1.0 (218.7)
Lease liabilities (0.2) 11.3 (40.7) (0.6) (30.2)
---------- ------- --------- --------- ------------
Net borrowings (IFRS
16) (113.6) (73.4) (43.0) (0.4) (230.4)
---------- ------- --------- --------- ------------
Right-of-use liability - (11.1) 37.9 0.6 27.4
---------- ---------
Net borrowings (IAS 17) (113.6) (84.5) (5.1) 0.2 (203.0)
========== ======= ========= ========= ============
13 Commitments and contingencies
Capital commitments at 30 June 2020 were GBP0.9m (2019:
GBP26.5m; 31 December: GBP1.3m).
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
seven 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 nine
vessels. The charters expire between 2020 and 2023.
(d) Subsidiaries of the Group have issued performance and
payment guarantees to third parties with a total value of GBP81.3m
(June 2019: GBP70.6m, December 2019: GBP73.9m).
(e) The Group is liable for further contributions in the future
to the MNOPF and MNRPF if additional actuarial deficits arise or if
other employers liable for contributions are not able to pay their
share. The Group and Company remains jointly and severally liable
for any future shortfall in recovery of the MNOPF deficit.
(f) The Group has given an unlimited guarantee to the Singapore
Navy in respect of the performance of First Response Marine Pte
Ltd, its Singapore joint venture, in relation to the provision of
submarine rescue and related activities.
(g) In the normal course of business, the Company and certain
subsidiaries have given parental and subsidiary guarantees in
support of loan and banking arrangements.
(h) The 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 considerations 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.
14 Related parties
There were no changes to related parties or associated
transactions disclosed in the Annual Report for the year ended 31
December 2019.
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
6 month period ended 30 June 2020 which comprises condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated balance sheet,
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 6 month period ended 30
June 2020 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.
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.
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.
Mike Barradell
for and on behalf of KPMG LLP
Chartered Accountants
1 St Peters Square
Manchester
M2 3AE
24 August 2020
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