Sector review

James Fisher's strategy is to grow its business organically by leveraging its existing marine skill base in areas of specialist expertise to a global market and through investment in people, working capital and equipment. 

2019 annual financial information by division:

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*2017 restated for IFRS 15 ‘Revenue from contracts with customers’ 

Our Marine Support businesses provide products, services and solutions to the global marine industry. These are supplied to a range of end market sectors including marine, oil and gas, ports, construction and renewables.

Market drivers

Fendercare is the leading provider of pneumatic floating fenders and other mooring equipment to the global marine industry. It services commercial shipbuilding, ship refurbishment, defence, port developments and the oil and gas markets for project applications.

Fendercare is also the leading provider of ship-to-ship services for the transfer of crude or refined oil, liquefied natural gas or bulk cargoes. The demand for these services is driven by the volume of oil trading between oil majors and independent traders, and also by production where local port infrastructure is unable to accommodate large tankers.

JF Marine Services is the leading provider to the renewable offshore wind sector and delivers an integrated service offering that utilises the wide range of marine skills across the Group to provide added value to its customers. Demand for its services is driven by the operation and maintenance activities in the marine, oil and gas, renewables and communication sectors. This includes the specialist provision of ROV systems and diving personnel for underwater surveys, inspections, construction and diver support.

JF Testing Services is the leading provider of strain gauges to the marine industry, which are used in a range of applications such as mooring systems on ships and in ports as well as being used to monitor the structural integrity of infrastructure in the construction and transport sectors. The sectors serviced encompass new shipbuilding, ship refurbishment and life extension, port developments, and projects for the oil and gas market.

It is also a leading provider of specialist testing and monitoring services to the construction and maintenance sectors, and designs and manufactures testing and monitoring equipment, supporting customers worldwide.

The market drivers for JF Testing Services are new projects in the marine, oil and gas, infrastructure and renewables sectors, where our niche offering and innovative products and services provide a competitive advantage.

Subtech provides a range of marine services to the Middle Eastern and Africa region. With locations in Durban, South Africa, Mozambique, Tanzania, Nigeria and Dubai UAE, it supports a wide range of projects requiring specialist diving and marine skills. Demand for its services is driven by port construction, diving and marine projects.

Our principal businesses

Business Operations End markets Locations
Fendercare Marine products and services, ship-to-ship transfers, offshore terminal services  Marine, oil and gas, renewables and defence UK, Singapore, Australia, UAE, Brazil
JF Marine Services Integrated marine services, including remotely operated vehicle (ROV) systems and diving services Marine, oil and gas,renewables, tidal power and communications UK, France
JF Testing Services Products and services that measure and monitor structural stress, instrumentation and materials testing Marine, oil and gas, renewables, civil and construction UK, UAE, Singapore, Malaysia
Subtech Marine and diving services Oil and gas, marine and construction South Africa, Mozambique, UAE, Nigeria, Tanzania

 

Divisional performance:

Revenue increased by 13% in the year to £306.1m (2018: £269.8m) and after adjusting for businesses acquired and changes in foreign exchange rates, organic revenue growth was 7% with growth in ship-to-ship services and dive related services. Underlying operating profit was £3.1m lower despite a strong financial performance in ship-to-ship services. Challenges on contract delivery and debtor recoverability issues caused the reduction.

The £30m contract in nothern Mozambique for the design and installation of an early beach landing and temporary beach landing commenced in July and progressed well in the second half. This first stage of a major liquefied natural gas development project will take two years to complete and holds the promise of further opportunities both for Subtech and other businesses in the Group.

Diving and subsea services for the oil and gas sector in West Africa and the Middle East continued to grow and the Group invested £56.2m to acquire two dive support vessels, Subtech Paladin and Subtech Swordfish, specifically for the saturation diving market in West Africa. Though the vessels went into service later than expected, the Paladin was operational during the final quarter and the Swordfish will be available for work in the first quarter of 2020.

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*2017 restated for IFRS 15 ‘Revenue from contracts with customers’ 

Our Specialist Technical businesses supply diving equipment and services, submarine rescue vessels and through-life rescue services and engineering solutions to the international defence market and UK nuclear decommissioning market. Other subsea services provided to the defence sector include diving equipment and special operation swimmer delivery vessels. JFD also supplies saturation diving systems which are installed onto dive support vessels and support deep subsea diving activities. James Fisher Nuclear (JFN) provides engineered solutions which operate in hazardous environments in the nuclear industry.

Market drivers

JFD is the world’s leading supplier of saturation diving systems and related diving equipment. Its end markets are oil and gas and defence. Saturation diving systems are both fixed and portable. Fixed systems are usually built into dive support vessels (DSVs). JFD provides the  equipment and the follow-on consumables, support and maintenance to the DSV operator. The construction and replacement of DSVs drives new build saturation diving systems which in turn drives ancillary service and product spend. JFD’s defence market is based on service, repair and on-going calibration requirements, and on projects requiring specialist diving equipment.

JFD is also a leading provider of submarine rescue services. It encompasses the ability to design, deliver and operate submarine rescue vehicles. It has long-term service contracts with navies providing a very niche area of capability. The driver is the tendering of defence projects for provision of the equipment, which can then lead to longer-term service contracts to operate the service. We currently provide submarine rescue services to the UK, Singaporean, Australian and Indian navies. The business also provides swimmer delivery vessels to the special operations markets.

JFN provides engineered products and services to the nuclear industry both in the operation of nuclear power plants and decommissioning. Its products and services operate in hazardous environments. The business provides instrumentation, non-destructive testing, calibration and digital radiography to the nuclear, aerospace and process industries. The market drivers for JFN are the demand for its products, services and lifetime support from the UK decommissioning industry, radiological calibration requirements and projects within the aerospace, process and defence industries.

Our principal businesses

Business Operations End markets Locations
JFD Design, supply and servicing of diving and subsea equipment, submarine rescue and special operations services Defence, commercial and defence diving, hyperbaric and submarine rescue UK, Australia, Singapore, Sweden
JFN Engineered solutions in remote handling, non-destructive testing and calibration services UK nuclear decommissioning and aerospace, process and defence industries UK, Germany

 

Divisional performance:

Revenue in Specialist Technical was 4% lower than 2018, which represented a robust performance as the prior period included the last twelve months of the build program for two submarine rescue vessels delivered to the Indian Navy. Underlying operating profit was 12% lower due to weak financial performance in nuclear decommissioning which offset a credible result in JFD.

Two saturation diving systems for Shanghai Salvage are broadly on track but delivery of the landmark 500m system has been pushed back into 2020 by the customer. Our order for six swimmer delivery vehicles progressed well with two passing customer acceptance in November 2019; a further two are scheduled for delivery in Q2 and the last two scheduled for Q3 2020. Two orders for the design, construction and delivery of submarine rescue vehicles commenced in the year for delivery to the Asia Pacific region in 2021 and 2022 respectively.

Nuclear decommissioning had a disappointing year with challenges on project delivery and delays in orders for its radiation monitor and inspection devices.

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*2017 restated for IFRS 15 ‘Revenue from contracts with customers’ 

Our Offshore Oil businesses supply a range of services and equipment to the global oil and gas industry. This includes the design and engineering of specialist equipment, platform maintenance and modification, well testing support, subsea operations and maintenance services. RMSpumptools is also established as a world leader in artificial lift specialist completion technology and innovative accessory tools for electrical submersible pumps.

Market drivers

ScanTech AS is Norway’s leading provider of ATEX (ATmospheres EXplosives) products and support services to the energy sector. Its products and services are supplied to the Norwegian oil and gas market and are used for platform maintenance, well testing and specific projects. Equipment is designed and certified to the NORSOK standard. The driver for the business is the operation and maintenance spend on offshore rigs in the Norwegian sector.

Scantech Offshore is a leading provider of air compressors, steam generators, heat suppression equipment and qualified personnel for the well testing market worldwide. It rents equipment to large multinational oil service companies, and provides qualified personnel to operate the equipment. The driver for the business is the operation and maintenance spend on offshore rigs around the world.

RMSpumptools is a world leader in artificial lift specialist completion technology and innovative accessory tools for electrical submersible pumps. RMSpumptools supplies products to the global downhole oil and gas market which improve the productivity of wells utilising electrical submersible pumps.

Fisher Offshore provides winches, hoists, cutting tools, marine cranes and subsea hydraulic equipment to the oil and gas and marine sectors. Its market driver is maintenance, inspection and repair demand and subsea projects. It also specialises in providing mass-flow excavation tools and services to cover or uncover subsea pipelines or cables, where demand is driven by cable and pipeline projects in the oil and gas, renewables and communication sectors.

Our principal businesses

Business Operations End markets Locations
Scan Tech AS Design and engineering of specialist equipment, platform maintenance and modification, well testing support and subsea operations Oil and gas Norway
Scantech Offshore Provides products and services to well testing companies Oil and gas UK, UAE, Brazil, Australia, Malaysia
RMSpumptools Artificial lift specialist completion technology and innovative accessory tools for electrical submersible pumps Oil and gas UK, UAE
Fisher Offshore Provides a range of lifting equipment and services to the marine, offshore, subsea and mass flow excavation industries Oil and gas UK, Malaysia, Mexico

 

Divisional performance: 

Revenue in Offshore Oil was 27% ahead at £90.4m (2018: £71.4m) reflecting a steady improvement in market conditions in the inspection and maintenance market within the oil and gas sector. Well testing remained flat but the Norwegian market showed some improvement. Our artificial lift business, RMSpumptools continued to increase market share and continued to support its customers in well life extension. Boosted by a strong order book and increased capacity, its financial performance was c.50% ahead of 2018.

Underlying operating profit increased by £7.7m reflecting the operational gearing from the increased utilisation of hire equipment together with skilled operators. An underlying operating margin of 15% compares to the division's peak year in 2014 of 22%.

The division further broadened its end markets with James Fisher Offshore winning its first significant tooling and cutting decommissioning work in the Middle East, and Scantech Offshore supplying its compressors for offshore renewable applications.

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*2017 restated for IFRS 15 ‘Revenue from contracts with customers’ 

Our Tankships division operates a fleet of product and chemical tankers which trade along the UK and northern
European coastline carrying clean petroleum products and chemicals including increasing volumes of bio fuels. The division performs nearly
2,000 port calls each year carrying liquid cargos from refineries and terminals, to major coastal storage facilities. The division
also operates a port in Plymouth, UK.

Market drivers

James Fisher Everard (JFE) distributes clean petroleum products and chemicals under contracts with primarily oil majors around the European coast and to islands, to ports with restrictions on the size of ships they can accept. It operates a fleet of double-hulled product and chemical tankers with capacity ranging from 3,000mt to 35,000mt. The business driver is the level of consumption of clean products (petrol, diesel, gasoil and kerosene) and chemical/biofuels in the UK, Ireland and northern Europe. Products carried serve the marine, transport, agriculture, aviation and chemical industries.

JFE has undertaken about 24,000 voyages since the year 2000, carrying in excess of 107.3m tonnes of products. This has been achieved whilst maintaining an excellent safety record.

Shipping dramatically reduces our customers’ carbon footprint compared to other modes of transportation. Shipping’s CO2 emissions are half that produced by road freight, and just one full ship keeps more than 150 trucks off the roads.

The division operates Cattedown Wharves, a port in Plymouth which provides berthing and marine services to the oil majors which own tank farms in Plymouth. It also handles dry cargoes such as animal feed being imported into the South West and clay being exported from the region. The primary driver for the business is the level of consumption of clean oil products within the South West region of the UK.

Our principal businesses

Business Operations End markets Locations
JFE Delivery of clean petroleum products around the European coastline Distribution of clean petroleum products UK
Cattedown Wharves Port operations Wet and dry product distribution UK

 

Divisional performance:

Tankships produced another strong year with an additional vessel in the first half and the addition of a new five-year contract from the Royal Navy benefitting the second half. The business was also delighted to support the sea trials during the fourth quarter, of the Royal Navy's new aircraft carrier, the HMS Prince of Wales, providing refueling from the port of Invergordon. Revenue in 2019 was 12% higher at £67.9m (2018: £60.7m) and underlying operating profit 21% higher at £12.0m (2018: £9.9m).

In addition to investing £9m in the Raleigh Fisher, a 35kT tanker, for its new Royal Navy contract, the business continued its fleet renewal process, transferring a vessel out of the fleet in June and expecting further modernisation of the fleet in 2020.

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