James Fisher and Sons Regulatory News (FSJ)

4 March 2014

James Fisher and Sons plc

Preliminary Results for the year ended 31 December 2013

James Fisher and Sons plc (FSJ.L) ("James Fisher"), the leading marine service provider, announces its results for the year ended 31 December 2013.

* underlying profit excludes separately disclosed items

** 2012 has been restated for the adoption of IAS19, Employment Benefits.

· Offshore Oil revenue up by 19%, profit up by 15% due to strong market conditions in Norway and developing markets;

· Specialist Technical profits increased by 55% following successful Divex acquisition;

· Double digit underlying growth at Marine Support;

· Exceptional profit of £6.8m on sale of Foreland;

· Strong cash generation with gearing reduced to 30% (2012: 39%);

· Final dividend raised by 15% to 13.54p per share (2012: 11.83p) making 20.0p for the year (2012: 17.7p).

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

"The Group made significant progress in 2013 from strong organic growth and a good contribution from the recently acquired Divex. Our niche businesses, which operate in demanding environments where their strong marine service and specialist engineering skills are valued and rewarded, have good growth prospects. James Fisher's strong balance sheet will enable us to invest in further organic growth opportunities and to make appropriate bolt-on acquisitions. The Group is currently trading as expected in 2014 and is well placed to provide further growth and value to our shareholders."

For further information:

James Fisher and Sons plc

Chairman's Statement

Group Results and Dividend

James Fisher & Sons plc made significant progress in 2013 with Group revenue up by 14% to £413.7m and underlying profit before tax up 18% to £41.4m. Underlying diluted earnings per share was 65.6 pence per share, an increase of 19% over 2012.

All four of the Group's operating divisions contributed to the strong pattern of growth underpinning these results. Marine Support achieved further expansion of its ship to ship transfer and mooring operations while making good progress with the development of its support contracts and diving businesses. Offshore Oil did particularly well, benefitting from favourable market conditions in the North Sea as well as making significant progress in the new deep sea markets off Brazil and Africa. Specialist Technical's excellent result reflected the first-time contribution from Divex Limited (Divex), a leading equipment supplier to the saturation diving market which was acquired in March and performed ahead of expectations. Our Nuclear business within Specialist Technical also did well, broadening its customer base significantly while producing another good result. Tankships improved its earnings further by careful attention to costs and by managing capacity to reflect the level of contract demand.

The strength of the Group's trading performance in 2013 and the continued positive outlook has led the Board to propose a 15% increase in the final dividend to 13.54 pence per share which together with the 6.46 pence interim will bring the total dividend for the year to 20.0 pence per share (2012: 17.7p).

Strategic developments

The Group continues to benefit from its consistent strategy of investing in niche businesses which operate in demanding environments where their strong marine service and specialist engineering skills are valued and rewarded. The majority of the Group's activities are therefore focused on the offshore oil, gas and renewables sectors together with an increasing presence in the nuclear decommissioning and condition monitoring businesses. Working with their strong multi-national client base, these businesses have expanded their international footprint significantly in recent years and have benefitted from the strong growth seen in the new markets offshore of Africa, Brazil and the Far East.

In March, the Group acquired Divex for an initial consideration of £20.8m. This Aberdeen based company is a leader in the saturation diving equipment market, servicing both the commercial and defence sectors in a strongly international setting. Its expertise, customers and operational bases fit well with our JF Defence submarine rescue business. Together, they will form a strong specialist subsea business with combined operations in the UK, Far East and Australia and a broader spread of customers which will help even out the peaks and troughs that have affected our Defence business in recent years.

In July, we announced the disposal of our 25% interest in Foreland Shipping for an initial consideration of £11.4m in cash with potential additional consideration in the event of the sale of certain assets. This Private Finance Roll-on Roll-off support ship contract to the Ministry of Defence had reduced in scale following the Defence Review. The Board therefore decided that it was better to release the capital tied up in this business for reinvestment into faster growing areas of the Group. An example of this was the acquisition in August of Osiris Marine for £3.3m, a diving services company which enhanced the Group's offering to the offshore renewables sector.

The combination of strong cash conversion from the Group's trading activities together with the sale of our Foreland interest led to a further reduction in year-end gearing to 30%. The strength of our balance sheet means that the Group is well placed to take advantage of further organic growth and acquisition opportunities in the year ahead.

The Board

At our last AGM we announced that Maurice Storey would retire from his role as Senior Non-Executive Director during 2013. In his ten years on the Board, Maurice made a significant contribution to the development of the Group and brought deep technical and maritime expertise. Malcolm Paul was appointed Senior Non-Executive Director on 31 December 2013. In August, I was delighted to be able to announce the appointment of David Moorhouse (formerly Executive Chairman of Lloyds Register) and of Michael Salter (formerly Chief Operating Officer of Abbot Group plc) as new Non-Executive Directors. Between them they strengthen the Board's insight into the oil and gas sectors and provide a full replacement of Maurice Storey's technical and maritime knowledge.

Having ensured a period of hand-over, Michael Everard has also decided to retire from the Board at the end of April. Michael has served on the Board for over seven years and helped shape the integration of FT Everard into the Group following its acquisition in 2006. I would like to thank Maurice and Michael for the great contribution that they have made to the Group's development over the last years.

Staff

The success of James Fisher remains linked to our ability to retain and develop the entrepreneurial drive and professionalism of the staff and management teams in our operating companies. As the Group expands overseas these businesses become increasingly complex. A number of sectors are marked by shortages of skilled engineering staff. As a Group wide initiative we are therefore paying increased attention to our in-house training and to our graduate and management development programmes. This investment comes at a cost but will enable us both to continue growing and to manage increased complexity as we go forward.

Our success depends more than ever on the dedication and professionalism of our staff. On behalf of the Board, I would like to thank all our staff for the tremendous commitment shown throughout all our businesses over the last year.

Outlook

The increased scale of the Group and its enhanced international presence has reinforced the Group's market position in the demanding environments of the offshore, marine and nuclear sectors. This gives us confidence that our operating companies will continue their recent pattern of growth across a broad front. In particular, demand for our services remains strong in our Offshore Oil Division while our Specialist Technical subsea and nuclear businesses have a healthy order book in a growing market. All divisions will benefit from the strength of our balance sheet which will enable us to invest further in organic growth opportunities and to continue with our programme of targeted acquisitions.

Trading to date in 2014 has been to management expectations and we continue to be well placed to provide further growth and value for our shareholders.

Charles Rice

3 March 2014

Chief Executive's Review

Business model and strategy

The Group had a further year of strong growth with underlying diluted earnings per share increasing by 19% on the previous year. Sustained organic growth represented 85% of the 13% increase in underlying operating profit to £46.6m. All four divisions produced significant contributions with underlying profit growth in Marine Support (13% adjusted for prior year disposal), Specialist Technical (55%), Offshore Oil (15%) and Tankships (33%). Operating margins increased in Specialist Technical and Tankships and were in line with prior year in Offshore Oil and Marine Support (adjusted for The Railway Engineering Company (TRE) which was sold in 2012).

Since 2002, the Group has established and grown its Marine Services businesses (Marine Support, Specialist Technical and Offshore Oil) and revenues have increased by a compound rate of 19% over the last five years to £352.4m in 2013. In continuation of this strategy, the Group divested of the non-core TRE in December 2012 for £25.5m and reinvested the proceeds with the acquisition of Divex in March for an initial consideration of £20.8m.

Divex is a global leader in the design and supply of saturation diving systems and related diving equipment to the defence and oil & gas markets. It is complementary to our submarine rescue business, JF Defence, and joins the Group at an interesting time in the market with high activity levels in the subsea market and good prospects for new orders of saturation diving systems.

In August 2013, Osiris Marine (Osiris) was acquired for an initial consideration of £3.3m. Osiris provides diving and subsea services, principally to the renewables sector in the UK.

At the same time, we announced the sale of our 25% shareholding in Foreland Holdings Limited (Foreland). James Fisher & Sons plc was one of the four original investors in Foreland, a Private Finance Initiative to own and operate six roll-on, roll-off vessels for the Ministry of Defence. The disposal realised £11.4m of proceeds and resulted in a profit of £6.8m in the year. Further proceeds conditional on the sale of two vessels may be received in 2014. Whilst a successful investment for the Group, the Board decided that Foreland's contract did not have significant growth prospects. The proceeds will be used to finance further bolt-on acquisitions and to drive further organic growth.

During the year, the Group opened several new bases and early in 2014 will commence operations from Labuan, Malaysia. Our Scantech Offshore business became established in Brazil and won two significant well testing orders from major multinational customers, one of which has contributed strongly to the 2013 result.

The Group invested £24.7m (2012: £26.1m) in capital expenditure of which the majority was spent within our Offshore Oil division in new high specification equipment. Our JF Nuclear business created a new digital radiography facility at Deeside, UK and we recently invested in a new facility in Inchinnan, near Glasgow, UK where operations for JF Defence and Divex will be based. Our Nuclear business successfully implemented a new business information system across its 6 sites.

A recent strategic development has been to seek marine service contracts in the operations and maintenance sector of the European renewables market. In support of strategic bases and diving services within Fendercare and Strainstall Marine's structural stress monitoring services, we acquired Osiris Marine Services Limited and Osiris Underwater Engineering Limited (together "Osiris Marine") which broadens our offering to this sector.

In providing solutions to our customers, an important part of our strategy is to develop new innovative products. Our safety product, the weak link bail is being delivered to customers outside of the Norwegian market for the first time in 2014 and the award winning Pyro Sentry product proved successful in 2013. Our JF Nuclear business has largely completed development and testing of the robotic manipulator, Moduman and within Offshore Oil, we launched the 'Switch' which facilitates the operation of multiple down-hole devices from a single power source.

Business reviews

· Marine Support

· Underlying revenue growth of 14%

· Ship to ship transfer produced further organic growth

· First open seas LNG ship to ship operations completed

· West African contract for mooring buoy refurbishment completed

· Acquisition of Subsea Vision and Osiris Marine for £5.8m

· Further contract wins in UK renewables

Marine Support produced a good financial performance with underlying revenue growth of 14% and operating profit increasing by 13% after adjusting for TRE, the business sold in 2012. Overall margins adjusted for TRE, were maintained in 2013 after reducing by around three percentage points in 2012, when we commenced a large contract in Angola which had a high proportion of third party content.

Ship to ship transfer services achieved further organic growth with South-East Asia performing well and we completed our first open seas Liquefied Natural Gas (LNG) transfer in 2013. Operations in the West African market increased profits through contracts to install and refurbish mooring equipment and Fendercare continued to expand its network of bases around the world, recently opening a new facility in Sharjah, Dubai.

The acquisition of Subsea Vision Limited for £2.5m was completed in January 2014. Subsea Vision is an operator of niche remotely operated vehicles (ROV) used in the support of floating production, storage and offloading (FPSO) in the oil & gas market.

Osiris Marine was acquired in August 2013 for a consideration of £3.3m. Osiris Marine provides diving and subsea services both to the renewables and oil & gas sectors in the UK. This broadens the range of support services to the renewables market which is developing.

Structural monitoring services also produced organic growth both in the UK, South-East Asia and the Middle East, where the market is showing signs of recovery. The contract to provide monitoring services to the new Forth Bridge was won during the year and there are good prospects to provide similar services around the world.

· Specialist Technical

· Divex completed a major saturation diving project and made strong contribution since acquisition in March

· Orders for two further saturation diving systems

· Joint project assembly base established in Glasgow, UK

· Australia - integrating contracts with the navy

· Exceptional profit of £6.8m on sale of Foreland

· Healthy order book at JF Nuclear

The Specialist Technical division produced a strong set of results with revenue increasing by a third and after adjusting for Foreland, underlying operating profit nearly doubled. This reflects the contribution from Divex, the global market leader in the design and delivery of saturation diving systems. During 2013 it completed a system that will ultimately be used by the Russian Navy. It also received orders for two further systems which will be completed over the next two years. The introduction of Divex into the Group has gone smoothly and the integration of the operations in Australia, Singapore and Scotland is underway.

JF Defence, which had a shortage of project work in the first half after completing the refurbishment of the Swedish submarine rescue vehicle in 2012, produced an improved order book in H2, including securing funding for the next stage of development of the Swimmer Delivery Vehicle. In December it also completed a large exercise off Sydney in Australia (Black Carillon) which boosted second half financial performance.

Our Nuclear business produced another solid performance. Whilst there was no significant increase in profit, the prior year included the benefit of the one-off Olympics contract in 2012 and the financial performance in 2013 illustrates the underlying organic growth from the nuclear power sector. The customer base has been further extended during the year with contract wins from Dounreay and the Atomic Weapons Authority (AWE).

· Offshore Oil

· Strong organic growth - revenue up 19%, profits up 15%

· Contract wins for Zone 2 equipment in Africa and South America

· One-off profit on well testing order in Brazil

· New product developments coming to market

The Offshore Oil division had an excellent year with revenue increasing by 19% and underlying operating profit by 15%. The market, both in the North Sea and in the developing markets of West Africa and South America, continued to be very active, particularly in the subsea sector. The strong performance was in part driven by the demand for our designs of Zone 2 and Norsok (Norwegian standard) equipment. This led to significant contracts being won for major international oil & gas suppliers for well testing, both in Brazil and Africa, which were partially completed in 2013.

Capital expenditure of £14.8m was invested into new equipment during the year and will drive further organic growth. The majority of this is targeted at long term rental contracts in Asia, Africa and South America.

We continued to invest in new product development which provides solutions to our customers or improved health and safety. The 'Switch' was exhibited at a major industry workshop in Houston, US in May 2013. This facilitates operating a number of down-hole activities from a single power source from the surface. In addition, new products were developed at Scantech AS, our Norwegian business and at Scantech Offshore which provides well testing related services.

· Tankships

· Steersman & Asperity vessels sold, reducing fleet size

· Milford Fisher chartered out to Mediterranean market

· King Fisher and Knight Fisher introduced

· MoD charters for 2 vessels

Tankships produced an improved result with underlying profits increasing by 33% to £3.2m whilst revenue declined marginally. This was in line with the policy to reduce capacity and improve the yield. During the year the fleet was reduced by a further 2 vessels with m.v. Steersman sold on behalf of its owners in January, and m.v. Asperity sold in December. In addition a further vessel, m.v. Milford Fisher, was chartered out to the Mediterranean market.

The results benefited from the charter of two vessels to the Ministry of Defence, which entailed replacement vessels being chartered in to cover our contract commitments.

The demand for clean petroleum products, whilst not recovering to 2007 levels, remains stable. The fleet has now been reduced to reflect the level of contract demand with the exposure to the spot market significantly reduced.

Financial Review

1 The Railway Engineering Company (TRE) was sold on 31 December 2012

2 Foreland was sold on 19 August 2013

The Group's balance sheet has been strengthened over the last eighteen months with proceeds from businesses sold of around £38m and marine service acquisitions costing around £18m. As a result the Group's financial gearing has reduced to 30% (2012: 39%) from 93% five years ago and the ratio of net debt to earnings before interest, tax and depreciation (EBITDA) at 31 December 2013 was 1.0 times (2012: 1.2 times). In 2013 revenue increased by 14% to £413.7m and underlying profit before taxation was 18% higher at £41.4m (2012: £35.0m). Second half turnover was 21% higher than prior year and operating profit was up by 15%.

Good performance in ship to ship services, marine services and strain monitoring led to a 14% increase in ongoing marine support revenues and a 13% increase in underlying operating profit. Offshore Oil services remained strong in the Norwegian North Sea and in developing markets. Our Scantech Offshore business delivered part of a sale and service order for a customer in Brazil that added around £1.0m to the result in 2013 which under its normal rental arrangements would have arisen over a 4 year period.

Specialist Technical's 35% increase in revenue and 55% increase in underlying operating profit reflects a good contribution from Divex since March net of the impact of divesting of the Group's 25% interest in Foreland, in August 2013. Tankships revenue was flat but profitability was 33% higher as a consequence of reduced operating costs and the benefit of two larger vessels being chartered out for the majority of 2013.

1 Excludes TRE (sold December 2012)

2 Excludes Foreland (sold August 2013)

Operating margins at marine support were consistent with prior year having reduced in 2012 due to the high third party content on the Angola contract but this led to a compensatory increase in ROCE over the period. Offshore Oil margins remain around the 20% level and ROCE of 16% whilst Specialist Technical improved significantly reflecting improved profitability at Divex and continued progress in our JF Nuclear operations. ROCE in Tankships has benefitted from a reduction in vessel book values following an impairment provision taken in 2012.

Restatement of prior year

A change to the accounting standards in relation to defined benefit pension schemes (IAS19) has decreased reported underlying operating profit in 2012 by £0.1m and increased interest payable by £0.3m and as a result, underlying pre-tax profit has been restated from £35.4m to £35.0m. There is no impact on cash flows of this amendment to accounting standards. Following the acquisition of Divex Limited in March, the segmental format has been revised. Our submarine rescue Defence business is now reported together with Divex and our Nuclear business within Specialist Technical. Our fendering, strain monitoring and maritime services businesses are now reported within a new Marine Support segment.

Interest

Net interest reduced by £0.9m to £5.2m (2012: £6.1m) due to lower borrowings and lower total cost of borrowing as the Group's gearing was reduced. Pension interest was £0.3m lower due to a lower discount rate applied and a reduction in the liability.

Separately disclosed items

To provide a better understanding of the underlying trading performance, the Group separately discloses certain items each year. This is done on a consistent basis and comprises gains on sale of businesses, any impairments which are significant by virtue of their size, costs incurred in making business acquisitions and the amortisation of acquired intangible assets. In 2013, there was a gain on sale of the Group's interest in Foreland of £6.8m, costs of acquiring businesses of £0.9m and amortisation of acquired intangible assets of £0.6m. In 2012 the Group reported a profit on sale of TRE of £20.9m, recorded a vessel impairment charge of £9.1m and amortisation of £0.1m.

Taxation

The effective tax rate on underlying profit before tax was 18.6% (2012: 19.1%). The rate is slightly lower than previous year as the Group has reflected future UK rate reductions into its deferred tax calculations. The overall rate is dependent on the mix of profits in overseas operations which have different tax rates to the UK and dependent on the proportion of Tankships profit, which is taxed based on tonnage rather than on profitability.

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.

Earnings per share and dividends

Underlying diluted earnings per share increased by 19% in the year to 65.6p per share (2012: 55.1p) due to the increase in underlying operating profit, lower interest costs and a lower effective tax rate on profits. Diluted earnings per share after separately disclosed items decreased by 4% to 75.7p per share (2012: 78.5p) mainly due to a lower gain on the sale of businesses in 2013.

The Board are recommending a 15% increase to the final dividend for the year to 13.54p per share (2012: 11.83p), which makes a total for the year of 20.0p per share (2012: 17.7p). The final dividend will be paid on 9 May 2014 to shareholders on the register on 11 April 2014. Dividend cover based on underlying earnings was 3.3 times (2012: 3.1 times).

Cash flow and borrowings

Net borrowings decreased by £8.8m in the year due to a cash inflow from operating activities of £53.3m, which was used to finance £24.9m of capital expenditure, net outflows on businesses acquired and disposed of £6.4m and outflows for dividends and interest of £13.2m. The Group's cash conversion, the ratio of operating cash to operating profit was 131% (2012: 132%). At 31 December 2013, the ratio of net borrowings (including guarantees) to earnings before interest, tax, depreciation and amortisation (EBITDA) was 1.0 times (2012: 1.2 times). Net gearing, the ratio of net debt to equity, was reduced to 30% (2012: 39%).

An additional contribution of £5.2m on 31 December 2013 to reduce MNOPF pension liabilities added three percentage points to year-end gearing and reduced cash conversion by eleven percentage points. However, by removing the associated interest cost of spreading payments over ten years, the payment will result in a £1.7m cash flow benefit over the remaining seven years of the obligation.

A small group of relationship banks provide bilateral facilities to the Group on an unsecured basis over a 3-5 year term. At 31 December 2013, the Group had £73.6m (2012: £78.0m) of undrawn facilities of which £68.8m (2012: £65.6m) were committed.

Pensions

The majority of the Group's pension arrangements are defined contribution arrangements where the company's liability is limited to the contributions it agrees on behalf of each employee. The Group has a small defined benefit scheme in Norway and a UK Shore Staff Scheme which closed to further accrual on 31 December 2010. As a consequence of its history in shipping the Group is required to contribute to industry-wide Merchant Navy Pension Funds. The MNOPF's triennial 2012 valuation was finalised in June 2013 and increased the deficit by £4.4m.

As reported last year, the trustees of the Ratings fund (MNRPF) were given permission to extend the requirement for deficit contributions beyond current employers to both current and past employers. The trustees are seeking ratification from the Court of its proposed methodology for future deficit contributions and the extent of any additional contributions will not be known with certainty until the process is concluded.

During the year, the Group made contributions to defined benefit schemes of £10.1m including the additional contribution of £5.2m made in December. Total defined benefit pension deficits at 31 December 2013 were £23.1m (2012: £27.1m). The annual instalment on pension schemes in 2014 is estimated at £4.7m (2012: £4.6m).

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 2013 Annual Report and Accounts that is to be published in April 2014, 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. 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 management team and business leaders who have delegated authority and specific responsibility for ensuring compliance with and implementing policies at corporate, divisional and business unit level. Each operating unit is required to operate within this control environment and in accordance with established policies and procedures which includes ethical, anti-corruption and bribery, treasury, employment, health and safety and environmental issues. The Board retains an oversight role and has a schedule of matters specifically resolved 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.

The following is a summary of the principal risks and uncertainties agreed by the Board: contractual risk, recruitment and retention of key staff, reputational risk for operational incidents, energy prices, financial risk of interest rates and foreign exchange, developing markets and legacy pension liabilities. A full description of these risks and the mitigation actions taken by the Company will be provided in the 2013 Annual Report.

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 2013. The full text of the Directors' responsibility statement will be in the 2013 Annual Report and Accounts

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

· The 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 Company and the undertakings included in the consolidation taken as a whole.

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

· The Annual Report and Accounts, taken as a whole, provides the information necessary to assess the Company's performance, business model and strategy and is fair, balanced and understandable.

CONSOLIDATED INCOME STATEMENT

for the year ended 31 December 2013

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2013

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 at 31 December 2013

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 December 2013

CONSOLIDATED STATEMENT OF MOVEMENTS IN EQUITY