28 August 2019
James Fisher's half year results for the six months ended 30 June 2019
James Fisher and Sons plc (FSJ.L) ('James Fisher'), the leading marine service provider, announces its unaudited results for the six months ended 30 June 2019.
|2019||2018 restated||% change|
|Underlying operating profit *||£24.5m||£24.5m||-|
Statutory operating profit
|Underlying profit before tax *||£20.9m||£21.7m||(4)%|
|Statutory profit before tax||£20.9m||£21.5m||(3)%|
|Underlying diluted earnings per share *||33.2p||34.5p||(4)%|
|Statutory diluted earnings per share||33.6p||34.5p||(3)%|
|Interim dividend per share||11.3p||10.3p||+10%|
*excludes separately disclosed items (2019: £nil (2018: charge of £0.2m) see note 6)
James Fisher's highlights:
Revenue up 10% and by 4% at constant currency and excluding acquisitions
Cash conversion of 108% (2018: 120%)
Strong performance in Offshore Oil and Tankships
Investment of £52.2m in capital and new businesses
Interim dividend increased by 10%
Commenting on the results, Chief Executive Officer, Nick Henry, said:
"The Group has made good strategic progress in the first half with the acquisition in Brazil and the purchase of two dive support vessels. We remain well positioned across all four of our divisions with significant growth opportunities ahead. As previously advised, the phasing of projects has made the year more weighted to the second half, which will also begin to benefit from the investment committed to in the first half. The Group remains well placed to deliver an improved financial performance in the year and to continue to provide future value to its shareholders."
James Fisher's review of the six months ended 30 June 2019
For the full James Fisher half year announcement, please read the financial release:
The Group's strategy is to grow its business organically by leveraging its existing marine skill base in areas of specialist expertise to a global market, supplemented by selective bolt-on acquisitions which broaden the Group's range of specific niche services, products or geographical coverage. Our strategic aim is to deliver long-term growth in earnings per share and to consistently increase shareholder value. Whilst the Group prioritises organic growth, this is supplemented by value enhancing acquisitions which fit into our existing divisions. James Fisher seeks to acquire businesses that have a niche product or service offering, with growth potential, a track record of profitability, cash generation and strong management.
In January 2019, our Marine Support division completed the acquisition of Martek Marine, which is headquartered in the UK with an office in Singapore, and provides a range of innovative safety and calibration systems and products to the marine sector.
The Group has also purchased two saturation dive support vessels (DSV) for the West African market for £40.2m which come into service during the second half of 2019 and will be operated by Subtech. The second DSV purchase completed in July 2019 for a cash outflow of £17.4m.
The Group also acquired a 60% interest in Murjan, based in Saudi Arabia, for £4.1m. Murjan is a near shore subsea operations business whose services are complementary to our offshore services in the Arabian Gulf and which enables the Group to increase the local content of services provided in the region.
Our renewables business has continued work on the East Anglia One windfarm construction and James Fisher has been awarded phase 2 of the unexploded ordnance work and boulder clearance, as well as met mast (measurement tower) decommissioning. This is in addition to providing ongoing construction support services and marine co-ordination and communications services for the project. On the Moray East windfarm, it was awarded a contract for marine co-ordination and communication and its work on site preparations continues at Innogy's Triton Knoll Offshore Wind Farm with a new contract for unexploded ordnance work and boulder clearance. An initial contract in Taiwan for unexploded ordnance and survey work and structural monitoring and consultancy work for high voltage engineering was also awarded in the first half of 2019.
Our strategy to provide services to support the operational efficiency of established windfarms benefited from our first significant contract to provide maintenance support to London Array, announced last year. In 2019, we were awarded a 15 year operations and maintenance contract for offshore transmission (OFTO) assets at Greater Gabbard in Lowestoft, Suffolk.
Our ship-to-ship operations continued to develop with initial operations commenced in Chile during 2019 and good growth in South Africa. Operations in Brazil were lower in the first quarter but improved in the second quarter.
In August, the Group announced the acquisition of a 60% interest in the diving and marine service business, SM Continental SA. Based in Brazil, Continental increases the Group's presence in this important and growing market for subsea services. The combination of its reputation for safety and reliable service delivery and James Fisher's more extensive inspection, repair and maintenance capability provides strong opportunities in a key geographic growth market.
In Specialist Technical, sea trials for the second vessel, delivered to the Indian Navy in December 2018, were completed and we were awarded a contract to supply a submarine rescue vessel for South Korea. Our strategy to provide submarine rescue vessels and long-term support contracts to manage submarine rescue services continues to develop with long-term support contracts in Singapore, India, UK/NATO and Australia.
Our Offshore Oil strategy is to be a niche service provider of equipment and people for the inspection and maintenance market. The sector downturn in 2015 impacted not only exploration but our market for ongoing maintenance. Our reaction to the downturn was to reduce costs and, in particular, headcount by around 40%. Recent months have seen a gradual improvement in demand in the sector and market share gains in our artificial lift services business, RMSpumptools. Our fleet of equipment with a net book value of £42.9m, is well maintained and any upturn in market conditions requires little further investment, leaving the division well placed to take advantage of its operationally geared structure.
In July, the Tankships division was awarded a five year contract from the Ministry of Defence to support the Royal Navy's fueling requirements for which the Raleigh Fisher, a 35kT tanker was purchased for £9m.
With effect from 1 September 2019, Eoghan O'Lionaird will join the Board to become Chief Executive Officer, replacing Nick Henry, who retires on 1 October 2019. The Board would like to express its appreciation to Nick for his contribution to the Group and wish him well for the future.
On 1 March 2019, Dr Inken Braunschmidt was appointed to the Board as an Independent Non-Executive Director. Inken is the Chief Innovation and Digital Officer and a member of the Executive Board at Halma plc and previously spent 13 years at RWE AG, where she held various international roles focusing particularly on strategy, innovation and change management.
David Moorhouse retired from the Board on 28 February 2019 having served on the Board as a Non-Executive Director since August 2013. Aedamar Comiskey was appointed Senior Independent Director on 22 March 2019.
The Group made good strategic progress in the first half with the acquisition in Brazil and the purchase of two dive support vessels. We remain well positioned across all four of our divisions with significant growth opportunities ahead.
Marine Support is more second half weighted due to delays and phasing of projects and lower ship-to-ship transfers at the beginning of the year. Activity has picked up in the summer months. In the renewables sector the order book continues to rise, and a significant contract in Northern Mozambique has commenced. Specialist Technical is performing well and has secured further contracts for submarine rescue equipment which has strengthened its order book leading into 2020. Offshore Oil continues to benefit from a partial recovery in the market and the division is well positioned to benefit from any upturn. Tankships continues to perform well and in the second half will begin to benefit from the new long-term contract for the Ministry of Defence.
As previously advised, the phasing of projects has made the year more weighted to the second half, which will also begin to benefit from the investment committed to in the first half. The Group remains well placed to deliver an improved financial performance in the year and to continue to provide future value to its shareholders.
For the full James Fisher half year announcement, please read the financial release: