01 March 2017

James Fisher and Sons plc announces its preliminary results for 2016

James Fisher and Sons plc (FSJ.L), the leading marine service provider, announces its results for the year ended 31 December 2016.

Results 2016 2015 % change
Revenue £466.0m £437.9m +6%
Underlying profit before tax * £45.8m £41.2m +11%
Underlying diluted earnings per share * 76.3p 68.5p +11%
Final dividend per share 17.6p 16.0p +10%
Cash conversion 103% 95% +8%
Statutory profit before tax £44.9m £46.2m (3)%
Statutory diluted earnings per share 78.7p 79.2p (1)%


For the full results see the 2016 Annual Report.

James Fisher's 2016 preliminary results highlights:

  • Continued strong underlying operating profit growth at Marine Support, Specialist Technical and Tankships
    • Combined growth of 21%
    • Combined operating margin up 120 basis points to 12.0%
  • Underlying profit before tax 11% higher at £45.8m (2015: £41.2m)
  • Underlying diluted earnings per share up 11% to 76.3p (2015: 68.5p)
  • Increased cash conversion of 103% (2015: 95%)
  • Final dividend raised by 10% to 17.6p per share reflecting continued profitable growth

Commenting on the results, Chief Executive Officer Nick Henry said:

"Underlying profit before tax grew by 11% to £45.8m (2015: £41.2m) reflecting the continued resilience of the James Fisher business model with its well-balanced spread of activities across the marine sector and international markets. This is supported by a robust balance sheet and consistently strong cash generation.

Our Marine Support and Specialist Technical divisions have started 2017 with strong order books and a number of active prospects. Trading volumes in Tankships are stable and we are seeing some early signs of improved activity in Offshore Oil. We therefore have a positive view of the year ahead and are confident of the Group's potential to provide further growth and value for our shareholders in the future."

Chairman's statement

I am pleased to report that James Fisher and Sons plc grew strongly in 2016 producing underlying profit before tax of £45.8m, an increase of 11% over the prior year. This reflected the continued resilience of the Fisher business model with its well-balanced spread of activities across the marine sector and international markets. Three of our four divisions, Marine Support, Specialist Technical and Tankships posted good improvements in results which more than absorbed continued weakness in Offshore Oil. Group revenue for the year grew by 6% to £466.0m (2015: £437.9m) and underlying diluted earnings per share were 76.3 pence, an increase of 11% compared with 2015. Statutory diluted earnings per share were 78.7 pence (2015: 79.2p).

Underlying trading improvements were the key driver of growth with currency gains making only a limited contribution to the increase in profit of £1.4m overall. The Group's cash conversion improved further to 103% and the year end balance sheet gearing remained at a conservative 41% despite acquisition expenditure of £24.6m and higher project related working capital requirements.

The underlying strength of the Group's performance and the positive outlook for the year ahead has led the Board to propose an increase in the final dividend to 17.6 pence per share (2015: 16.0p), making a total for the year of 26.15 pence per share, an increase of 10% compared with 2015.


The 2016 results confirm the resilience of the James Fisher Group with its spread of businesses across multiple sectors of the marine services market. This has enabled the Group to offset the downturn in the oil and gas sector with continued growth elsewhere. The decentralised structure of the Group has allowed focus to be maintained on seizing the new opportunities available in the Marine Support and Specialist Technical areas in particular, without distracting from the rapid restructuring of our Offshore Oil activities.

The Group remains focused on investing in niche businesses which operate in demanding environments where their strong marine service and specialist engineering skills are valued and rewarded. Our businesses have a wide international presence across the faster growing markets of Asia Pacific, the Middle East, Africa and South America and we will continue to invest in expanding our position in these new markets. The Group has only a small presence in Europe outside the UK and Norway and therefore the Brexit process is likely to have limited direct impact on Group trading.

The Board believes that each of our four divisions continues to have attractive prospects based on strong market positions.

The strongest growth opportunities are currently in Marine Support and Specialist Technical. In Marine Support, the award of the Galloper wind farm contract together with the acquisition of Hughes Sub-Surface Engineering marked a significant step up in our presence in the growing renewables market. We continue to find new growth opportunities for our ship-to-ship transfer activities in Asia Pacific, Africa and Brazil. In Specialist Technical, our JFD subsidiary now has a clear market leadership position in the supply of hyperbaric and specialist diving equipment to the commercial market as well as in its niche defence activities. The past year has seen strong growth in orders from the Asia Pacific region and JFD's acquisition of Lexmar in Singapore will further strengthen our presence in this important market. Our nuclear business has also been successful in establishing an initial presence in the Chinese and Japanese markets and we will seek to build on these opportunities in the future.

Over the last seven years, our Tankships division has performed well with profit improvements every year driven mainly by cost efficiencies and tight management of capacity. The point is nearing when some of our older ships will need replacement. While we see opportunities to do this in a cost efficient manner, there will necessarily be some increase in overall vessel costs in the medium term.

The Offshore Oil division is well placed assuming some resumption in customer maintenance spend. Our gross margins have proven to be robust; capital expenditure has been reduced and costs remain under tight control. Our businesses have been very active in seeking out new markets in the Middle East and Asia Pacific. Results have stabilised at levels reported in the second half of 2015. It is too early to be confident of a strong recovery but we have now seen an improvement in the order book in Norway which should benefit 2017. We will continue to invest in Offshore Oil as attractive opportunities arise which meet our niche service criteria.

Our businesses are increasingly technology led with the recent contract gains by JFD being one example of how technological leadership can give our businesses a real competitive edge. When combined with the Group's growing scale and its ability to manage increasingly complex contracts we see good opportunities for organic growth. The strength of our balance sheet enables us to continue to invest for the future and to make bolt-on acquisitions which improve the capability and market presence of our businesses.

The Board

There were no changes in the Board's composition during the year. This year the annual board appraisal was based on an internal evaluation of its performance across the key areas of business performance, strategy, financial reporting and key performance indicators, risk management, succession planning and corporate social responsibility. The Board reviewed the key issues being raised by the investor community in relation to good corporate governance. The Board considers that it functions well as a unit, provides a good balance of support and challenge to management and reports in appropriate detail to investors for a company of its scale.


The Group continues to benefit from a strong and stable management team both at Board level and in our operating companies. It is becoming increasingly international in its operations with growing scale and complexity in the customer contracts that it undertakes. Considerable attention has been given to managing these changes effectively both in terms of management recruitment and via a significant step up in our centrally organised training programmes which have the double benefit of improving cohesion across the Group as well as raising skill levels.

The broad spread of our businesses means that some staff have been coping with the pressures of growth while others have had to face tougher times. On behalf of the Board, I would like to thank all of our employees for their hard work and commitment shown to the continued success of the James Fisher Group.


Our Marine Support and Specialist Technical divisions have started 2017 with strong order books and a number of active prospects. Trading volumes in Tankships are stable and we are seeing some early signs of improved activity in Offshore Oil. We therefore have a positive view of the year ahead and are confident of the Group's potential to provide further growth and value for our shareholders in the future.

Chief Executive's Review

Group strategy and corporate objectives

The Group's strategy is to increase shareholder value by growing its marine service businesses, primarily organically but also supplemented by selective bolt-on acquisitions which broaden our service, product and geographical capability. Our businesses are entrepreneurially led, with market leading positions and focused on less mature markets.

Our corporate objectives are to deliver long-term growth in underlying earnings per share and to deliver progressive dividend growth. Underlying earnings per share grew by 11% in the year with combined underlying operating profit growth of 21% in three divisions which more than offset a reduced result in Offshore Oil. Over the last ten years the Group has achieved compound annual growth in underlying earnings per share of 12%. Dividends have increased in each of the last 22 years and this year, it is proposed that the dividend be increased by 10%.

Business model

The Group provides a wide range of marine services predominantly to large multinational corporations and government bodies. It offers solutions to customers through specialist equipment which is often designed and assembled by our people, who then operate it and provide through-life support to our customers.

The Group has a decentralised management structure and encourages managers to be responsible for making timely decisions in response to changes in the market and the competitive environment. Whilst the Group's primary focus is organic growth, acquisitions, which broaden our range of products and services or potentially extend our geographical coverage, are also part of our business model.

The Key Performance Indicators (KPIs) we use to measure the success of the business model include revenue growth, operating margin, return on capital employed and cash conversion. This year, revenue growth was 6% of which 3% was organic and the underlying operating margin increased by 50 basis points to 10.9% (2015:10.4%).

The Group's post-tax return on capital employed was 13.0% (2015: 13.5%) due to increased investment in new businesses and working capital. The Group's cash conversion, which measures the proportion of operating profit that was turned into operating cash, was 103% (2015: 95%) which compares to an average of 115% over the last five years.

Strategic progress

Our strategy is to grow organically and to supplement organic growth with carefully selected, value enhancing acquisitions which fit into our business model and enhance our products, services or geographic offering. We seek to acquire businesses that have a niche product or service offering, with growth potential, a track record of profitability and cash generation and good management.

In February, the integrated marine services contract to support the construction of the Galloper wind farm, located 27km off the coast of Suffolk, UK, was announced. This contract is worth in excess of £25m and is scheduled to complete in 2018. It encompasses the site set-up, marine logistics OWMS™ marine management system, crew transfer vessels, vessel refuelling and emergency response services. The contract is being delivered by James Fisher Marine Services (JFMS) into which a number of bolt-on acquisitions have been integrated to form a substantial offshore and subsea operator for the renewables market. Hughes Sub-Surface Engineering, which also operates in this sector was acquired in August and has been integrated into JFMS.

The Indian Navy contract to build two submarine rescue systems was announced in March. The £193m contract entails the design and construction of two systems for £83m which will be delivered by the end of 2018. This is then followed by a 25 year service contract to operate and maintain the systems in India. This significant contract award was then followed in November by the award of a c. £35m contract by Shanghai Salvage to supply a 24 man saturation diving system rated for diving support to a depth of 500m.

In August the acquisition of Lexmar in Singapore was completed. Lexmar designs modular saturation diving systems and other diving equipment. This strengthens our presence in the defence and diving equipment markets of the Asia Pacific region, which are of strategic importance for further future growth.

James Fisher Nuclear (JFN) was awarded a £60m contract by Magnox Limited to decommission the largest of the reactor cores at the Winfrith site in Dorset, UK. The contract commenced in April and will run through to 2020. This award further establishes JFN as the leading nuclear reactor decommissioning contractor in the UK.

The Group acquired the visual asset management company, Return To Scene (R2S) in June 2016. R2S provides high definition, 360 degree, photographic images to create a three dimensional image of an asset, enabling remote personnel to view a virtual environment and manage the asset without the expense of physically travelling to the site. With its customer base primarily within the oil & gas sector, it broadens our Offshore Oil services and has the potential to provide services to other sectors serviced by the Group.

You can also download the 2016 preliminary results presentation.