27 February 2018

James Fisher's preliminary results for the year ended 31 December 2017

James Fisher and Sons plc (James Fisher), the leading marine service provider, announces its results for the year ended 31 December 2017.

  2017 2016 % change
Revenue (£m) £505.4m £466.0m +9%
Underlying operating profit* £55.8m £50.8m +10%
Underlying profit before tax* £50.3m £45.8m +10%
Underlying diluted earnings per share* 81.4p 76.3p +7%
Total dividend per share 28.70p 26.15p +10%
Statutory profit before tax £49.0m £44.9m +9%
Statutory diluted earnings per share 79.5p 78.7p +1%

*excludes separately disclosed items


  • Revenue up 9%, exceeding £500m for the first time
  • Underlying operating profit up 10%
    • Increases in Marine Support, Specialist Technical and Tankships
    • Marine Support ahead 17%
  • Underlying profit before tax 10% higher at £50.3m
  • Dividends increased for 23rd consecutive year, up 10% to 28.7 pence per share

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

"James Fisher had another good year in 2017 producing an underlying profit before tax of £50.3m, an increase of 10% over the prior year. Three of our four divisions improved their results with Marine Support leading the way with a 17% improvement in profits.

The strength of the Group's business model with its broad spread of activities across the marine sector; its strong international presence and its ability to innovate and grow new businesses gives the Board a positive view of the year ahead and confidence of the Group's potential to provide further growth and value for our shareholders in the future."

Chairman's statement: Preliminary results for the year ended 31 December 2017

This is the last year that I shall be writing this statement as Chairman and therefore I am particularly pleased to be able to report that James Fisher and Sons plc had another good year in 2017 producing an underlying profit before tax of £50.3m, an increase of 10% over the prior year. This reflected the strength of the Group's business model with its broad spread of activities across the marine sector; its strong international presence and its ability to innovate and grow new businesses.

Three of our four divisions improved their results with Marine Support leading the way with a 17% improvement in profits generated by new markets in Brazil, the Middle East and offshore renewables. Specialist Technical delivered another strong performance making good progress with the delivery of its project pipeline and the Indian submarine rescue contract in particular. Tankships continued its run of profit increases generated by high vessel utilisation levels and careful attention to costs. Offshore Oil managed a result only marginally below the prior year: demand began to firm in some sectors towards year end while the division was also successful in opening new opportunities in the Middle East, Asia and in subsea decommissioning.

Group revenue for the year grew 9% to £505.4m (2016: £466.0m). An increase in the Group's underlying effective tax rate to 17.2% (2016: 15.4%), held back the increase in underlying diluted earnings per share to 7% at 81.4 pence per share. Statutory diluted earnings per share were 79.5 pence (2016: 78.7 pence).

With a number of major projects underway, careful attention has been paid to managing cash flow this year in the face of the expected increase in working capital. This build-up squeezed our cash conversion rate to 56% in 2017 and despite this, the year-end balance sheet gearing remained at a conservative 47% (2016: 41%) with the ratio of net debt (excluding bonds) to underlying earnings before interest, tax, depreciation and amortisation at 1.6 times (2016: 1.4 times).

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 19.3 pence (2016: 17.6 pence) per share making a total for the year of 28.7 pence per share, an increase of 10% compared with 2016.

Strategic overview

Over the last ten years, with the exception of 2015, James Fisher has increased its profit and dividends every year, normally by more than 10%: this despite external events such as the financial crisis of 2007-8, the fall in oil prices in 2014 and most recently, Brexit. Key to this performance, has been the Group's ability to innovate and to build new businesses. The rapid growth of our ship-to-ship transfer (STS) business from 2007; the development of a market leading position in submarine rescue and hyperbaric engineering since 2012 and more recently, the growth of a completely new activity in offshore renewables have enabled the Group to absorb these external shocks and continue to grow.

This growth in turn has built an ever wider international presence so that the Group is not dependent on any one geographical market. With a stable management team in place and a continued commitment to a de-centralised management structure which keeps decision-making close to our customers and markets, this track record of change and innovation is set to continue.

All four of our divisions are well placed for the future. Marine Support is benefiting from the opening of new markets for STS such as in Brazil; from the development of its subsea project businesses and its expanding presence in offshore renewables. Specialist Technical has market leading positions in both its hyperbaric and submarine rescue niches and in its reactor decommissioning business in the nuclear sector. While this division will always be project driven and therefore 'lumpier' in terms of turnover and working capital, it has an attractive pipeline of medium term prospects. Tankships continues to perform well in a relatively stable market: This position will be underpinned by the introduction of more modern tonnage on some routes. Offshore Oil is now positioned for recovery: our businesses and management teams have done well both in terms of reducing their costs and in opening new markets for their services in the Middle East, Africa and Asia.

The strength of our balance sheet enables us to invest in development projects alongside a full capital investment programme. With the focus mainly on organic growth, we nevertheless remain alert for acquisition opportunities to help speed the development of our businesses. The purchase of Rotos 360 in March for an initial consideration of £1.5m and EDS HV Group in December for £9.0m have further extended our range of market leading services to the offshore renewables sector.

The board

After fourteen years on the Board and nearly six as Chairman, I announced in January that I will stand down at the conclusion of this year's Annual General Meeting (AGM). It has been a privilege to have been part of James Fisher during an exciting period in the history of the company. The Group's success is generated by the hard work and dedication of staff and management throughout the Group and it has been a great pleasure to meet and work with so many of them during my time with James Fisher.

The Board has chosen Malcolm Paul to become Chairman at the conclusion of the 2018 AGM. Malcolm has extensive experience in managing de-centralised and international companies similar to James Fisher and has been an independent director since 2011. He has a deep knowledge of the company having chaired the audit and remuneration committees as well as being the Senior Independent Director. He will bring the right balance of continuity and change to this role going forward.

Effective 1 February, I was also pleased to announce that Justin Atkinson had agreed to join the Board as an independent non-executive director. He will succeed Malcolm as chairman of the audit committee. Justin was until recently the CEO of the Keller Group plc, a FTSE 250 business in the international construction sector. He will bring experience of successfully managing a group on a similar growth path to James Fisher's.

With the development of James Fisher in recent years and the increasing spread of its international operations, the Board has been giving careful thought as to when it would be appropriate to strengthen the central executive team. In January 2017, Fergus Graham joined the Group having worked previously at De La Rue Group plc and other international companies in both operations and cross-border business development. He has played a senior role in our Marine Support division during the past year. The Board has now agreed to appoint Fergus as an executive director with effect from 1 March 2018. He will take responsibility for all of the Marine Support division which generated 47% of the Group's turnover in 2017. This will free up more time for Nick Henry as CEO to lead the Group's further development.


The continued growth and success of the Group owes everything to the dedication of our staff who now work in many different countries across the globe. Some have to work in very challenging environments and all have to show a high level of professionalism worthy of the confidence our customers place in us. On behalf of the Board and from me especially in my final year, I would like to thank all our employees for their hard work and commitment shown to the James Fisher Group.


Our Marine Support division has commenced the year with good prospects in its offshore renewables and marine project activities as well as firm demand in the ship-to-ship transfer business. Specialist Technical continues to work through its strong order book and has a good pipeline of active prospects. The timing of the award of these new projects will determine whether this division is able to deliver a further step up in profits in 2018. Tankships continues to operate well in a stable market. Sentiment amongst our Offshore Oil division's customers has turned more positive in recent weeks and, while it is still too early to assess any general trend, this has begun to be reflected in orders received for repair and maintenance work in particular. 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

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 services, products or geographical coverage. Our strategic aim is to deliver long-term growth in earnings per share and to consistently increase shareholder value. Our businesses target an operating margin of at least 10%, a pre-tax return on capital employed of a least 15% and are expected to be cash generative via careful management of working capital and investments.

Whilst the Group prioritises organic growth, our strategy is to supplement it with value enhancing acquisitions which fit into our existing divisions. James Fisher seeks to acquire businesses that have a niche product or service offering, with growth potential, a track record of profitability, cash generation and strong management.

Business model

The Group's businesses provide a range of marine services focused on large corporations and government bodies through its four divisions: Marine Support, Specialist Technical, Offshore Oil and Tankships.

James Fisher's businesses are entrepreneurially led with a decentralised management structure which encourages managers to be responsible for making timely decisions in response to changes in the market and in the competitive environment. Many of the Group's businesses operate in specialist niches and hold market leading positions in their particular sector. Their growth is focused on the less mature markets around the world with 50% of the Group's revenue derived from customers in the Middle East, Africa and Asia Pacific regions.

Key Performance Indicators (KPIs) are used to measure the success of the business model. These include revenue growth, operating margin (the ratio of underlying operating profit to revenue), return on capital employed and cash conversion. This year, revenue growth was 9% and the underlying operating margin increased to 11.0% (2016: 10.9%). The Group's post-tax return on capital employed was 12.2% (2016: 13.0%) and the reduction was due to the working capital requirement in relation to the contract to build two submarine rescue vessels for the Indian Navy. The Group's cash conversion, which measures the proportion of underlying operating profit that is turned into operating cash, was 56% (2016: 103%) after the investment in working capital for the submarine rescue project, which is expected to reverse in 2018 when the vessels are scheduled for delivery.

Strategic progress

The Group's corporate objectives are to deliver long-term growth in underlying earnings per share and to deliver progressive dividend growth. In 2017, underlying earnings per share grew by 7% and the compound rate of growth over the last ten years in underlying earnings per share is 10%. Dividends have increased in each of the last 23 years and the compound rate of dividend growth over the last ten years is 10%.

Over the last few years, the Group has made a number of acquisitions of marine service businesses which have been integrated into James Fisher Marine Services (JFMS) to form a substantial offshore and subsea operator for the renewables industry. JFMS provides a wide range of services to the offshore wind and tidal sector to support both the construction and maintenance of this fast growing industry. During 2017 this range of services was further enhanced through the acquisition of Rotos 360, a leading provider of blade repair services, and EDS HV Limited, the leading provider of high voltage cable connections and cable repair services.

In March 2017, Rotos 360 was acquired for an initial £1.5m in cash, with a further potential £5.0m based on future profitability. The company repairs offshore windfarm rotor blades through the innovative use of suspended work platforms and ultra violet resin curing techniques which reduce operational downtime.

In December 2017, EDS HV Limited (EDS) was acquired for an initial £9.0m with a potential further £5.6m based on profit targets over the next two years. EDS operates in the high voltage sector providing cabling connection services to the offshore wind farms and, in 2017, was a significant supplier to the Rampion wind farm, off the South Coast of the UK.

JFMS' first significant integrated marine services contract to support the construction of the Galloper wind farm, located 27km off the coast of Suffolk, UK, continued to progress well and the contract, worth in excess of £30m, is scheduled to complete in 2018. In November 2017 the Group announced the award of a package of services to support the construction of the East Anglia One wind farm which is worth £3.1m, confirming its position as the leading integrated marine service provider to the offshore renewables sector.

Our Marine Support business, Fendercare, is the world leader in ship-to-ship transfers from a network of over 50 bases around the world, with a 20 year track record of conducting safe and efficient operations. In 2017, it commenced operations in the Santos basin, offshore of Brazil for two oil majors. This is a new market with significant potential for further growth.

JFD, our Specialist Technical business and the world's leading producer and operator of untethered submarine rescue systems, made good progress on the final engineering, assembly and testing of two submarine rescue vessels which are scheduled to be delivered to the Indian Navy in 2018. When the vessels' sea trials are completed JFD will commence a 25 year contract to operate the service in India. Our strategy in this niche continues to be to grow long term service contracts having supplied a submarine rescue vessel of our design. JFD also operates submarine rescue services for NATO, the Singapore Navy and the Royal Australian Navy.

The business also progressed with two saturation diving systems for a Chinese salvage customer. JFD is a market leader in saturation diving and other diving equipment and the installation of its specialist diving systems leads to future demand for its products, for refurbishments or life extension to existing assets.

The Group's Tankships division continued its progress and increased earnings before interest, tax, depreciation by 6% to £15.8m (2016: £14.9m). Its earnings and strong cash flow are utilised in the organic and acquisitive growth of the other three divisions. Tankships further progressed its fleet renewal programme by agreeing terms to lease and sell the Milford Fisher and replace it with a more modern, second hand, 4kT vessel during the first quarter of 2018.

In Offshore Oil, after a slow start to the year the market improvement seen in the early summer months failed to continue into the autumn. This meant that the market remained flat for the year and the backlog of maintenance work remains to be addressed. The Group's competitive position in our various geographic markets remains strong and hence Offshore Oil is well positioned for the upturn in market activity as and when this occurs.

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