James Fisher and Sons Regulatory News (FSJ)

2 March 2016

James Fisher and Sons plc

Preliminary Results for the year ended 31 December 2015

James Fisher and Sons plc (FSJ.L) ("James Fisher"), the leading marine service provider, announces its results for the year ended 31 December 2015.

* underlying profit excludes separately disclosed items

Highlights:

· Specialist Technical, Marine Support and Tankships combined underlying operating profit up 25%;

· Sharp decline in activity in Offshore Oil mitigated by swift cost reduction actions; gross margins held up well;

· Cash conversion strong at 95%;

· Full year dividend increased 8% to 23.8p per share;

· Galloper Windfarm contract announced last week worth in excess of £25m.

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

"With the award of the Galloper Windfarm contract, we have started 2016 with good momentum.

Looking forward, our Marine Support division looks well placed to deliver growth and Tankships continues to trade well at the levels seen last year. Prospects in our Specialist Technical businesses are strong but, as always, are linked to the timing of specific contract awards. Whilst the outlook in our Offshore Oil division is difficult to predict, the business has been strengthened by the cost actions management implemented last year.

With a strong financial position and robust business model, the Board remains confident in the Group's ability to deliver further growth and value for its shareholders."

For further information:

Chairman's Statement

I am pleased to report that James Fisher and Sons plc finished 2015 strongly with an underlying profit before tax for the year of £41.2m (2014: £46.9m), making for a much improved second half. While this represents a 12% decline compared with 2014, the result demonstrates the resilience of the Group's business model in challenging times. The breadth of James Fisher's activities across the marine sector meant that three of our four divisions continued to trade well, partially mitigating the sharp down-turn in our Offshore Oil division. Group revenue for the year was marginally lower at £437.9m (2014: £444.8m). Underlying diluted earnings were 68.5 pence per share, a decrease of 7% compared with 2014.

Our Marine Support and Tankships divisions showed strong profit growth. Marine Support's performance reflected increased project revenues which were phased towards the second half as well as the initial contributions from businesses acquired earlier in the year. Tankships built further on its strong track record of recent years with costs reduced and utilisation improved. Specialist Technical delivered another strong result broadly in line with last year, making good progress with the delivery of its order book.

Our Offshore Oil businesses faced progressive oil and gas industry expenditure cut-backs as the year wore on with inspection and maintenance work being deferred, particularly in Norway. This has required management to take tough action to reduce costs and, sadly, staff numbers. The division is now on a firmer footing going forward assuming at least some stabilisation of demand.

The Group's cash conversion continued to be strong at 95% with year-end balance sheet gearing remaining at a conservative 43% despite acquisition expenditure of £27.2m in the year and an increase in project related working capital.

The resilience of the Group's performance has led the Board to propose an increase in the final dividend to 16.0 pence per share compared with 14.9 pence last year, making a total for the year of 23.8 pence per share, an increase of over 8% compared with 2014.

Strategy

The continued strong performance of the majority of the Group's businesses together with the strength of its balance sheet has enabled James Fisher to maintain its strategic course. 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. By a combination of organic investment and targeted bolt-on acquisitions, these companies have grown both in terms of service capability and international presence and have been integrated into a wider service offering for our customers. The success of this strategy is reflected not only in the profit growth of recent years but also in the increased size of contracts being won and the growing strength of the Group's international presence.

With the down-turn in Offshore Oil, the Board has given particular attention to our forward strategy this year. Overall, we believe that your company remains well positioned to generate long-term growth.

Our Marine Support businesses are global leaders in ship to ship transfers and they have strengthened their project management capabilities both offshore and subsea. In recent years their worldwide network has grown significantly with new bases in the Asia Pacific region and in Brazil. The acquisition of Subtech in Southern Africa and increased investment in our Nigerian business were further steps forward in 2015. The division's Subsea capabilities were boosted by the purchase of the mass-flow excavator assets of X-Subsea and our development initiative in the offshore renewables sector was strengthened by the acquisition of Mojo Maritime in May. The recently announced offshore support service contract for the construction phase of the Galloper wind farm marks a significant breakthrough in establishing James Fisher as an important service integrator to the offshore renewables sector.

Our Specialist Technical division is also well placed strategically. James Fisher Nuclear has been successful in becoming a recognised Tier 2 supplier to the nuclear decommissioning industry in the UK. Its growing reputation offers openings to overseas markets in the future. The company will also be able to provide services to the UK's nuclear new-build sector once this moves forward. JFD is a world leader in hyperbaric and submarine rescue service provision to both the commercial and defence sectors. The company has benefitted in recent years from strong orders for saturation diving systems from the commercial sector. We reinforced our position in this field with the acquisition of the National Hyperbaric Centre in Aberdeen in February. We expect orders in this division from the oil and gas sector to slow but prospects overall to remain strong due to increased demand for our defence related products and submarine rescue services. JFD has been successful in strengthening its position in Asia Pacific and we would expect this region to grow further. In both James Fisher Nuclear and JFD, the Group has businesses with strong market positions and good growth prospects. As project based businesses, their profits are inevitably 'lumpy' but this variability can more easily be absorbed by a Group with three other more broadly based divisions.

Our Tankships division has produced an excellent performance in recent years. It provides some hedge to our Offshore Oil activities in that its volumes benefit as the price of oil falls. We remain focused on investing in the management and fleet operational performance of this division to ensure that it remains a strong niche provider to the coastal shipping sector both now and in the future.

The Offshore Oil division has been a key contributor to the profit growth of recent years. We have lived through previous cyclical down-turns in the oil and gas sector before, but the speed and depth of this cycle has been greater than we expected. That said, I believe that the Group entered this cycle in a strong position. We consciously decided against chasing over-priced acquisitions in this division in the past ensuring that we entered this tougher market with a strong balance sheet. Our businesses are predominately focused on niche services to the inspection and maintenance sector and are well placed to benefit from a resumption in maintenance and development work which cannot be postponed indefinitely. Tough action was taken during the past year to cut our cost base significantly but we have been successful in retaining the experienced management teams which have helped to generate our past success. We are therefore confident that this division will bounce back and we remain committed to investing appropriately to strengthen further its niche market coverage.

Overall, the Board believes that each of our four divisions continues to have attractive prospects based on strong market positions. The strength of our balance sheet means that the Group is well placed both to meet the organic investment needs of all four divisions and to continue with incremental acquisitions designed to reinforce our market positioning and our international network. Longer term, with its growing presence in the nuclear and renewables industries as well as the oil and gas sectors, the Group is well able to adapt to changes in the global energy mix.

The Board

Following the new appointments of non-executive directors in recent years, there were no changes in the board composition in 2015. During the year, an external board appraisal was carried out which concluded that the board functions well as a unit and has a good mix of business experience to ensure that issues are examined from a broad range of perspectives. The documentation reviewed by the Board was considered to reflect an appropriate and good level of governance and process.

Staff

James Fisher has continued to benefit from a strong and stable management team both at Board level and in our operating companies. This has enabled the Group to adapt successfully to the new opportunities opening up in Marine Support and Specialist Technical and to deal with the increased scale and complexity of our international operations. In Offshore Oil, management and staff have had to face the tough task of restructuring our businesses to meet the downturn in the Oil and Gas sector which has involved substantial redundancies. On behalf of the Board, I would like to thank all employees for their hard work and dedication to the continued success of the James Fisher Group.

Outlook

The strong finish to 2015 and the recently announced award of the Galloper windfarm contract in Marine Support means that we start 2016 on a firmer footing. This contract will gain momentum later this year leading to a pronounced weighting of earnings to the second half. It is too early to be certain that our Offshore Oil businesses have bottomed out, but we may reasonably expect that the impact of continued adverse market conditions on this division's earnings is likely to be limited following the restructuring work undertaken last year. Our Marine Support division looks well placed to deliver growth and Tankships continues to trade well at the levels seen last year. Prospects in our Specialist Technical businesses are strong but are linked to the timing of specific contract signings. Subject to confirmation of these, we remain positive for the year ahead and confident of the Group's potential to provide good growth and value for our shareholders in the future.

Chief Executive's Review

Results

Operating profit in the Offshore Oil division was sharply down reflecting the challenging market conditions, as maintenance expenditure was severely cut with work deferred as a result of the fall in global oil prices. Our other three divisions, Specialist Technical, Marine Support and Tankships performed strongly, increasing their combined underlying operating profit by 25%. The Group's underlying operating margin was 10.4% (2014: 11.6%) and underlying earnings per share was 68.5p (2014: 74.0p). The degree to which the oil and gas sector postponed maintenance and modification work was greater than had been anticipated or had been experienced in previous cycles. Whilst activity levels were severely reduced, gross margins were largely sustained reflecting the specialist nature of our niche services.

Business model and strategy

The Group's strategy over the past decade has been to grow its marine services through organic growth from its niche businesses supplemented by selective bolt-on acquisitions to broaden our service and product offering. The Group leverages its marine skills to the global market focussing on less mature markets. Our businesses are entrepreneurially led, with market leading positions through operational excellence, delivering operating margins in excess of 10%, generating cash and producing a return on capital employed in excess of 15%.

Our strategic goal is to deliver long-term growth in underlying earnings per share and progressive dividend growth. The compound annual growth rate over the last ten years in underlying earnings per share is 12% and the compound growth in dividends over the same period is 11%.

The Group provides an extensive range of services to a broad range of industries. Our customers are predominantly large multinational corporations and government bodies. No customer amounts to more than 7% of Group revenue.

During 2015 the Group completed 5 acquisitions.

· In February, the National Hyperbaric Centre in Aberdeen was acquired for £3.5m. This broadens the Group's offering in hyperbaric testing and consolidates JFD's market leading position in the design, manufacture, testing and operation of hyperbaric reception facilities.

· In March, Subtech was acquired for an initial consideration of £3.3m. Subtech is based in Durban, South Africa with operations in Namibia, Mozambique, Tanzania and South Africa. The business provides a range of marine services and is well positioned in sub-saharan Africa for potential growth as offshore projects are developed in the future.

· In May, Mojo Maritime was acquired for £3.2m. Mojo have considerable experience and reputation within the offshore renewables sector providing project management, engineering and consultancy services. Mojo will be integrated into James Fisher Marine Services, the process of which has already commenced.

· In May the assets of X Subsea were acquired for £14.8m. X Subsea had gone into administration and were one of the competitors of James Fisher Subsea Excavation. This acquisition means we become a leading global operator of such specialist subsea tools which are used in the oil & gas and telecoms sectors and increasingly in the offshore renewables markets.

· A small nuclear sources distributor was acquired in January 2015 which has been integrated into James Fisher Nuclear.

From an operational perspective, the Group merged Testconsult, which was acquired in 2014 with Strainstall Monitoring to create James Fisher Testing Services to streamline the marketing of our load monitoring, bridge monitoring and testing services to the marine and construction sectors. James Fisher Subsea Services was created to pull together our diving and remotely operated vessel inspection businesses.

Divisional performance

Marine Support

Revenue in Marine Support increased by 18% in the year mainly due to businesses acquired and favourable currency movements. After excluding these and the corvette vessel management contract which ended in 2014, underlying revenue growth was 3% in the year. Underlying operating profit increased by 37% to £19.4m with a strong second half as businesses acquired in the first half contributed and due to projects falling into the latter part of the year. Excluding the effect of currency movements and businesses acquired, the organic growth in underlying operating profit was 7%.

Ship to ship transfers of hydrocarbons increased by 8% in volume terms. Despite the backdrop of declining oil prices in 2015, underlying revenue increased by around 20% compared to prior year. The markets in South East Asia and Middle East performed particularly well. Six transfers of liquefied natural gas were also completed and we remain well positioned for future growth in the medium term in this emerging sector.

Our contract in Angola for mooring and diving services performed well in 2015 but will cease early in 2016 reflecting the different market conditions and customer operational re-structuring. We are currently in discussions with our customer for a managed handover of those operations.

Good progress was achieved in our renewables business as we successfully completed the first phase of the project for Meygen to install a tidal array in the Firth of Forth. Our acquisition of Mojo Maritime in May 2015 broadened our expertise and experience in tidal and offshore wind energy. We continued to provide services to the Offshore Transmission (OFTO) operators in 2015.

The recent announcement of the contract with RWE to provide an integrated range of marine services to the Galloper windfarm project demonstrates the market potential in this sector. Worth in excess of £25.0m, the contract will commence in the second quarter of 2016 and will progressively ramp up during the year and into 2017. The project will also utilise our Offshore Wind Management System which has been developed as an operational portal for the renewables industry.

Our acquisition of the assets of X Subsea in June further expanded our mass flow excavation business and we now have bases in key locations in the UK, North America, the Middle East and Singapore. This business performed well in the second half winning pipeline and cable burial and retrieval projects in the renewables and oil and gas sectors.

Testconsult, which was acquired in 2014, was merged during the year with Strainstall Monitoring to form James Fisher Testing Services (JFTS). JFTS saw continued growth in the Middle East and Malaysia. In the UK the new Bridgewatch data monitoring and asset management system was installed onto the new Forth Bridge during 2015 which will provide real-time information on the performance of the crossing over its lifetime. When the current Forth Bridge was closed after a crack was discovered in December 2015, JFTS rapidly deployed Bridgewatch to provide information of the effects of wind and traffic loading on the structure. This information helped the decision to re-open the bridge two weeks earlier than planned.

Offshore Oil

Offshore Oil revenue was 40% lower as inspection, repair and maintenance work was deferred more than expected following the sharp decline in oil prices. The scale of the reduction in maintenance activity and the length of the lull in operations were greater than had been experienced in previous cycles. The Norwegian market, which had previously represented a quarter of the divisional revenue, was the most affected with a 37% reduction in revenue. The subsea market held up better owing to the longer lead time of subsea projects but fewer projects were initiated during 2015 which will affect 2016.

The degree of impact varied. Activity in the Middle East, Asia and Brazil were less affected, whereas West Africa saw a far greater decline in activity. The UK North Sea saw sharp declines later in the year but this sector represented a small proportion of the division.

Despite the tough market conditions, gross margins held up well and were only slightly below prior year. This reflects the specialist nature of our niche services. We took swift action to reduce costs and have reduced headcount by 25% since December 2014. Redundancy costs of £1.2m were incurred in the year and on-going annual costs have been reduced by £3.3m.

2014 had seen one-off product sales of £12.4m by Scantech Offshore. If this is excluded, divisional revenue was 28% lower. Whilst underlying operating profit reduced by £15.0m in the year, the underlying operating margin remained above the Group's benchmark at 11.7% (2014: 21.4%).

Specialist Technical

Revenue grew by 7% and underlying operating profit by 5% in Specialist Technical as our diving equipment, defence and nuclear decommissioning businesses delivered well against a strong order book.

JFD made good progress on a 24 man saturation diving system which will be installed onto a dive support vessel in 2016 to service Northern Europe and on an 18 man system to be installed on a vessel being built in Singapore and which will be completed in Baku, Azerbaijan in 2017. A third smaller system was commenced in the latter part of the year. Our service contracts to provide submarine rescue services for the UK, Singapore and Australian continued to perform well.

Delays in the procurement processes for contracts in the defence sector dampened growth in 2015 but the company remains well placed for further contract awards in 2016 which will drive future growth.

In February 2015 the acquisition of the National Hyberbaric Centre (NHC) in Aberdeen was completed for an initial cash consideration of £3.5m. NHC provide hyperbaric reception, testing and training services to the subsea industry and this further consolidates our industry leading position to the global market.

Our Nuclear business increased revenue by 13% with strong growth in decommissioning. This included the first phase of a purpose built nuclear waste store for Sellafield. Revenues for non-destructive testing services were below the previous year as a result of a reduction in workflow from the Magnox plants and our aerospace customers. The company has begun to see revenue from projects outside of the UK and has invested in business development for international markets. The business has continued to broaden the size and scope of projects that it bids for and is well placed for further growth in 2016. A small nuclear sources distributor was acquired in early 2015 for £2.2m which has performed well following its integration into the division.

Tankships

On 3% lower revenue, our Tankships division increased profits by 51% as vessel utilisation increased and operating costs were reduced compared to prior year. Volume of product transported was slightly higher and on average these cargoes were transported over longer distances which improved vessel utilisation. The number of vessels in the fleet was unchanged in the year and we continued to benefit from a contract with the Ministry of Defence which is expected to continue through the first half of 2016.

Operating costs benefited from the renegotiation of charter rates for vessels introduced to the fleet in 2004/2005. The company continues to have an excellent operational safety record, which is a credit to all our officers and crews at sea and to the support team ashore. During the year the company was awarded the Operational Excellence Award at the annual Tanker Shipping and Trade Conference.

Volumes of clean petroleum product transported through our Plymouth port were 3% higher than 2014.

Financial Review

The financial results in 2015 reflected challenging conditions in Offshore Oil markets but good progress was achieved in our other divisions. As anticipated, underlying operating profit in the second half was slightly below 2014 and 28% higher than in the first half of 2015. For the year, underlying operating profit at Offshore Oil was reduced by £15.0m compared to previous year but increases in all of the other divisions of £9.1m limited the shortfall in the Group's underlying result against 2014 to £5.9m.

Revenue for the year was 2% lower than 2014 at £437.9m (2014: £444.8m).

The Group's underlying operating margin reduced from 11.6% to 10.4% due to the profit reduction in Offshore Oil. Each of our four divisions reported an underlying operating margin in excess of 10% in the year. The Group is exposed to fluctuations in exchange rates, primarily in respect of US Dollar cash flows and the translation of business results from Norwegian Kroner to UK Sterling. The table below sets out average exchange rates in 2015 and 2014:

A significant proportion of revenue is invoiced in US Dollars and the Group benefits from the US Dollar weakening against UK Sterling and conversely a stronger US Dollar has an adverse impact. Forward currency contracts are entered into to mitigate the risk of an adverse impact on profits for a portion of expected US dollar net cash flows. The Group does not hedge translation exposure where the local business records its transaction in local currency. The net impact of changes in currency rates compared to 2014, after forward contract hedging, was to increase underlying operating profit by £3.2m.

Underlying profit before taxation and net finance charges

Net finance charges comprise interest payable and similar charges on the Group's borrowings, notional interest on legacy defined benefit pension schemes and non-cash interest in unwinding the discount on contingent consideration for businesses acquired. The total net finance charge for the year was £0.4m lower than previous year at £4.3m (2014: £4.7m). Interest payable on bank borrowings was £0.1m higher as increased borrowings offset a reduced overall cost of borrowing. Notional pension interest was £0.2m less than prior year due to a lower net deficit at the start of the year and the unwinding of the discount on contingent consideration was £0.3m lower following a provision reduction in 2014. Underlying profit before taxation was 12% lower at £41.2m (2014: £46.9m).

Taxation

The effective tax rate on underlying profit before tax was 14.3% (2014: 19.2%) The reduction compared to last year is due to tonnage tax relief on the profits of its Tankships operation which were 16.2% (2014: 9.1%) of underlying operating profit in 2015. Over provisions in prior years have been reduced as estimates of cash tax payable were revised downwards due to greater certainty particularly with regards to overseas jurisdictions. This reduced the effective tax rate by three percentage points. In addition, UK corporation tax rates reduced by 1.25 percentage points compared to 2014.

The Group's tax policy has been approved by the Board and shared with the UK tax authorities. Whilst the Group has a duty to shareholders to seek to minimise its tax burden, its tax policy is to do so in a manner which is consistent with its commercial objectives, meets its legal obligations and its code of ethics. We aim to manage our tax affairs in a responsible and transparent manner and with regard for the intention of the legislation rather than just the wording itself.

Separately disclosed items

The Directors' consider that the alternative performance measures described in note 2 assist an understanding of the underlying trading performance of the businesses. These measures exclude separately disclosed items which comprise gains or losses on the sale of businesses, material impairments and acquisition related charges and income and are set out below:

Costs incurred on acquiring businesses increased due to more businesses being acquired in 2015 and greater complexity on overseas acquisitions. Contingent consideration was provided on the acquisition of Subtech in March 2015 with an element based on 2015 earnings and an earn-out for the two year period ending 31 December 2017. The provision was adjusted at 31 December 2015 resulting in a credit to the income statement of £5.0m as the 2015 target was not achieved. A further £3.5m relates to Divex, which was acquired in 2013, where some specific saturation diving system orders have fallen outside of the qualifying period.

The Group disposed of two small businesses in the year with revenue of £1.2m, resulting in a book loss of £1.0m.

Earnings per share and dividends

Underlying diluted earnings per share decreased by 7% to 68.5p per share (2014: 74.0p) which was less than the change in underlying profit before taxation due to favourable variances on net finance expense and taxation. Diluted earnings per share after separately disclosed items was unchanged at 79.2p per share (2014: 79.2p).

The Board are recommending an 8% increase to the total dividend for the year to 23.8p per share (2014: 22.0p). A final dividend of 16.0p per share (2014: 14.9p) will be paid, subject to approval at the Annual General Meeting on 6 May 2015 to shareholders on the register on 8 April 2015. Dividend cover based on the ratio of underlying earnings per share divided by the dividend per share was 2.9 times (2014: 3.4 times).

Cash flow and borrowings

Net borrowings increased in the year by £31.5m to £93.8m (2014: £62.3m) as a result of the businesses acquired and the working capital outflow. At 31 December 2015, the ratio of net borrowings (including guarantees) to underlying EBITDA was 1.4 times (2014: 1.0 times) and the Group had £67.4m (2014: £82.5m) of undrawn committed banking facilities. Net gearing, the ratio of net debt to equity, was 43% (2014: 31%).

Pensions

As previously flagged, the trustees of an industry-wide Merchant Navy Ratings Pension Fund (MNRPF) have been given permission by the High Court to extend the requirement for deficit contributions beyond current employers to both current and past employers. During 2015, the trustees notified employers of their potential liability and related payment plan proposals. The Group has recognised through the Consolidated Statement of Other Income a liability of £8.6m as at 31 December 2015 and is in discussion with the trustees to finalise contribution arrangements. The Group is also liable for contributions to a similar industry-wide scheme, the Merchant Navy Officers Pension Fund (MNOPF) and following its triennial valuation as at March 2015, no additional contributions over the current payment plan were requested by the trustees.

During the year, the Group made cash contributions to these schemes and its own shore staff scheme of £3.5m (2014: £4.7m). Total defined benefit net liabilities were £27.0m (2014: £21.8m) reflecting the addition of the MNRPF liability less cash contributions in the year.

Annual Financial Report

In accordance with Disclosure and Transparency Rule (DTR) 6.3.5, the following additional information is required to be made through a Regulatory Information Service: Principal risks and uncertainties; and Directors' responsibility statement. The information below, which is summarised and extracted from the 2015 Annual Report and Accounts that is to be published in March 2016, is included solely for the purpose of complying with DTR 6.3.5 (2) and the requirements it places on issuers on external communications.

Risk management

The Board is ultimately responsible for the management of risk in the Group. Our internal control and risk management framework is regularly monitored and reviewed by the Board and the Audit Committee and comprises a series of policies, processes, procedures and organisational structures which are designed to ensure that the level of risk to which the Group is exposed is consistent with the Board's risk appetite and the Company's strategic objectives.

The Board determines the Group's policies on risk, appetite for risk and levels of risk tolerance and specifically approves: risk management policies and plans; significant insurance and/or legal claims and/or settlements; major acquisitions, disposals and capital expenditures; and the Group budget, forecast and three year plan. The Board has put in place a documented organisational structure with strictly defined limits of authority from the Board to operating units that have been communicated throughout the businesses and are well understood by the Executive Directors, the central management team, functional and business leaders who have delegated authority and specific responsibility for ensuring compliance with and implementing policies at corporate, divisional and business unit level. Central functions and operating units are each required to operate within this control environment and in accordance with the Group's established policies and procedures which include ethical, anti-bribery and corruption, treasury, employment, health and safety and environmental policies and procedures.

The Group's trading companies are supported by centralised finance, treasury, taxation, internal audit, legal and company secretarial, human resource and payroll and information systems functions: the functional heads report to a nominated Executive Director. The Board retains an oversight role, receives regular reports on key issues and has a schedule of matters specifically reserved to it for decision thus ensuring that it maintains full and effective control over appropriate strategic, investment, financial, organisational and compliance issues. This schedule is subject to review by the Board on an annual basis.

Principal risks and uncertainties

The most significant risks that the Board considers may affect the Group based on its risk evaluation process are as follows:

· Project delivery

· Recruitment and retention of key staff

· Reputational risk from operations

· Financial risk of interest rate and currency changes

· Energy markets

· Operations in emerging markets

· Cyber security

A full description of these risks and their management and mitigation is set out in the 2015 Annual Report and Accounts.

Directors' responsibility statement

The following is an extract of the full statement prepared in connection with the Company's Annual Report and Accounts for the year ended 31 December 2015.

The Directors of the Company confirm that to the best of their knowledge:

· the Group financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the undertakings included in the consolidation taken as a whole; and

· the Preliminary Results report includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

The Directors of James Fisher and Sons plc and their respective responsibilities are set out in the 2014 Annual Report and Accounts. The responsibility statement was approved by the Board on 1 March 2016 and signed on its behalf by:

CONSOLIDATED INCOME STATEMENT

for the year ended 31 December 2015

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2015

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 at 31 December 2015

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 December 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

NOTES TO THE PRELIMINARY RESULTS

1. General information

James Fisher and Sons plc is a public limited company registered and domiciled in England and Wales and listed on the London Stock Exchange. The consolidated financial statements comprise the financial statements of the Company, its subsidiary undertakings and its interest in associates and jointly controlled entities (together referred to as the Group), for the year ended 31 December 2015. The Company's shares are listed on the London Stock Exchange. The Company and consolidated financial statements were approved for publication by the Directors on 1 March 2016.

The Group and Company financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), adopted by the European Union (adopted IFRS). The financial statements are prepared on a going concern basis and on an historical cost basis, modified to include revaluation to fair value of certain financial instruments. The Group financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.

The consolidated financial statements and those of the Company have been prepared in accordance with IFRS adopted by the EU as at 31 December 2015 and are applied in accordance with the provisions of the Companies Act 2006.

Financial information

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2015 or 2014. Statutory accounts for 2014 have been delivered to the registrar of companies, and those for 2015 will be delivered in due course. The auditors have reported on those accounts; their reports were (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 in respect of the accounts for 2015.

The Annual Report and Accounts for the year ended 31 December 2015 will be posted to shareholders in March 2016. The preliminary announcement was approved by the Board of Directors on 1 March 2016.

2. Alternative performance measures

The Group uses a number of alternative (non-Generally Accepted Accounting Practice ("non-GAAP")) financial measures which are not defined within IFRS. The Directors use these measures in order to assess the underlying operational performance of the Group and, as such, these measures are important and should be considered alongside the IFRS measures. The adjustments are separately disclosed and are usually items that are significant in size or non-recurring in nature. The following non-GAAP measures are referred to in this Annual Report and Accounts.

2.1 Underlying operating profit and underlying profit before taxation

Underlying operating profit is defined as operating profit before amortisation or impairment of acquired intangible assets, acquisition expenses, adjustments to deferred consideration (together, 'acquisition related income and expense'), the costs of a material restructuring, asset impairment or rationalisation of operations and the profit or loss relating to the sale of businesses or property. The Directors believe that the underlying operating profit is an important measure of the operational performance of the Group. Underlying profit before taxation is defined as underlying operating profit less net finance expense.

2.2 Underlying earnings per share

Underlying earnings per share ('EPS') 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 minority interests, divided by the weighted average number of ordinary shares in issue during the year. The Directors believe that underlying EPS provides an important measure of the underlying earnings capability of the Group.

2.3 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 and adding back cumulative amortisation of customer relationships. 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.

3. Segmental information

For management reporting purposes, the Group has four operating segments reviewed by the Board: Marine Support, Offshore Oil, Specialist Technical and Tankships. These operating segments form the basis of the primary segmental disclosures below.

The Board assess the performance of the segments based on operating profit as set out in note 2. 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 and short term deposits, deferred tax and corporate assets that cannot reasonably be allocated to operating segments. Sector liabilities exclude borrowings, retirement benefit obligations, deferred tax and corporate liabilities that cannot reasonably be allocated to operating liabilities.

4. Separately disclosed items

In order for a better understanding of the underlying performance of the Group certain items are disclosed separately as set out in note 2. Separately disclosed items are as follows:

The adjustment to provisions for contingent consideration comprises £5.0m in respect of Subtech Group Holdings (Pty) Limited which was acquired for an initial consideration of £3.3m on 2 March 2015. An element of consideration was dependent on a profit target for the year ended 31 December 2015 which was not achieved. In addition, contingent consideration liabilities have been adjusted based on most recent business short-term and medium-term forecasts resulting in a further credit of £3.5m.

5. Taxation

Reconciliation of effective tax rate

The Group falls under the UK tonnage tax regime on its ship owning and operating activities and a charge is based on the net tonnage of vessels operated. Profits for these activities are not subject to corporation tax. The tax on the Group's profit before tax differs from the theoretical amount that would arise using the rate applicable under UK corporation tax rules as follows:

6. 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 148,275 (2014:153,192) ordinary shares held by the James Fisher and Sons plc Employee Share Ownership Trust (ESOT), held 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 31 December 2015 332,893 options (2014: 182,124) were excluded from the diluted weighted average number of ordinary shares calculation as their effect would have been 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