James Fisher and Sons : Annual Report and Accounts 2020

March 19, 2021 at 10:37 am EDT

James Fisher and Sons plc Annual report and accounts 2020

www.james-ﬁsher.com

Annual report and accounts 2020

James Fisher and Sons plc is a leading service provider to the global marine industry and a specialist supplier of innovative engineering and technical services to the energy industry. Our 2,500 employees operate across 23 countries around the world striving to deliver our common purpose of pioneering safe and trusted solutions to complex problems in harsh environments. Our customers are predominantly large multinational corporations and governments that value the contribution our specialist skills make. We achieve this through a commitment to the safety and wellbeing of those that work for and alongside us, underpinned by our core valued behaviours: pioneering spirit; integrity; energy; and resilience.

STRATEGIC REPORT

Highlights ................................................................................................................ 1

Chairman's statement ............................................................................................. 2

Chief Executive's review ......................................................................................... 6

Business model ..................................................................................................... 12

Strategy ................................................................................................................. 13

Sector review ........................................................................................................ 14

Financial review ..................................................................................................... 22

Key performance indicators ................................................................................. 25

Engaging our shareholders ................................................................................... 26

Supporting our local communities ....................................................................... 27

Empowering our people ....................................................................................... 29

Health and safety .................................................................................................. 32

Partnering with our customers and suppliers ...................................................... 35

Protecting our environment .................................................................................. 37

Non-ﬁnancial information statement .................................................................... 41

Principal risks and uncertainties ........................................................................... 43

GOVERNANCE

Chairman's introduction ....................................................................................... 52

Board of Directors ................................................................................................ 54

Corporate governance report .............................................................................. 56

Nominations Committee report ........................................................................... 63

Audit Committee report ........................................................................................ 66

Directors' remuneration report .............................................................................. 72

Directors' report .................................................................................................... 88

Statement of Directors' responsibilities ................................................................ 91

FINANCIAL STATEMENTS

Independent auditor's report ................................................................................ 92

Consolidated income statement ........................................................................ 104

Consolidated statement of other comprehensive income ................................. 104

Consolidated and Company statement of ﬁnancial position ............................. 105

Consolidated and Company cash ﬂow statement ............................................. 106

Consolidated statement of changes in equity .................................................... 107

Company statement of changes in equity ......................................................... 108

Notes to the ﬁnancial statements ....................................................................... 109

Subsidiaries and associated undertakings ......................................................... 150

Group ﬁnancial record ........................................................................................ 152

Investor information ............................................................................................ 153

Highlights

2019

Statutory operating (loss)/proﬁt

Statutory (loss)/proﬁt before tax

£55.6m £47.8m

Statutory diluted (loss)/earnings per share

Dividend per share

72.7p 11.3p

•

Priorityremainssafetyandwellbeingofemployeesandcustomers

•

Group faced dual challenges of Covid-19 and energy prices during the year

• Swift management actions taken to reduce costs, optimise cashﬂow and protect liquidity
• Underlying operating margin resilient at 7.8% (2019: 10.7%)
•
Strong cash performance reduced net borrowings by £32.3m
•
Strategic review progressing well

* excludes separately disclosed items

James Fisher uses alternative performance measures (APMs) as key ﬁnancial indicators to assess the underlying performance of the business. APMs are used by management as they are considered to better reﬂect business performance and provide useful additional information. APMs include underlying operating proﬁt, underlying proﬁt before tax, underlying diluted earnings per share, underlying return on capital employed, underlying Ebitda, cash conversion and underlying net borrowings. An explanation of APMs is set out in note 2 of the Notes to the Financial Statements.

Chairman's statement

When I reported at this time last year, few could have imagined the impact that the Covid-19 pandemic would have on communities around the world and also on our own business.

In March 2020, the ﬁrst UK national lockdown was announced which gave rise to the initial challenge of keeping our employees safe, whilst continuing to service our broad customer base. In addition, internationally and offshore, where we often operate in extreme and dangerous environments, we took action to ensure effective and appropriate health and safety regimes were in place. It is right that I ﬁrstly pay tribute to all our management and staff who worked so diligently in extraordinarily difﬁcult circumstances to maintain our services for the beneﬁt of all our stakeholders.

Through a sensible and robust approach to the effective management of our facilities, including the use of protective equipment and social distancing, we were able to continue to operate efﬁciently in many, but not all, of our business divisions. In response to the UK Government's call to manufacturers, we should all be proud that JFD, with its position as a global leader in subsea breathing apparatus, developed the InVicto™ Ventilator, a non-invasive medical device to assist patients with breathing difﬁculties.

The management team has made good progress on the strategic review which has conﬁrmed the strong fundamentals of the Group but identiﬁed scope for signiﬁcant ﬁnancial and operational improvement. We will seek to improve the quality of our business by focusing on structurally growing markets, improving operating margins, increasing returns and sustainably delivering value for all stakeholders. The strategy will be presented to shareholders at a capital markets day in the ﬁrst half of 2021.

Results

Inevitably, the pandemic had a material impact on our annual ﬁnancial results with Group revenue 16% lower at £518.2m (2019: £617.1m). Currency ﬂuctuations had a small adverse effect which was offset by the contribution from recent acquisitions. We had a stronger end to the year with revenue in the fourth quarter 7% higher than the previous quarter.

Underlying operating proﬁt for the year was slightly ahead of previous guidance at £40.5m (2019: £66.3m) and reﬂects a relatively resilient performance in three of our four divisions, all of which were impacted to some degree by the pandemic. Underlying proﬁt before tax and underlying diluted earnings per share were £31.5m (2019: £58.5m) and 47.9p (2019: 92.8p) respectively.

The Marine Support division continued to disappoint. Whilst the ship-to-ship business had another strong year our operations in the challenging offshore marine and oil & gas markets were impacted by the pandemic with projects delayed or cancelled. As announced in January 2021 and within total separately disclosed items of £84.0m (2019: £10.7m), we have made a material impairment charge of £70.4m against the carrying value of certain assets in this division.

On a statutory basis the Group reported a loss before taxation of £52.5m (2019: proﬁt of £47.8m) and statutory diluted earnings per share was a loss of 114.2 pence (2019: earnings of 72.7 pence).

The Group has a strong historical record of cash generation. By continuing to focus on working capital and, with tighter restrictions on capital expenditure in response to the pandemic, net borrowings reduced by £32.3m to £198.1m at December 2020 with headroom from committed bank facilities at the same date increasing to £120.2m (2019: £41.7m).

Swimmer Delivery Vehicles

In 2020, JFD successfully delivered a multiple number of SEAL Carrier swimmer delivery vehicles under a multi-million pound contract to one of its defence customers. JFD supplies a range of surface and subsurface vehicles which facilitate the insertion and extraction of special forces and equipment. Other applications include specialist maritime operations, mine countermeasures, counter-terrorism, counter-narcotics, counter-piracy and maritime protection operations.

The SEAL Carrier can achieve transit speeds of up to 30 knots on the surface before switching to submerged mode for a covert ﬁnal approach at 4 knots. This critical capability along with long endurance and rapid transition to sub surface covert mode were key features in winning the contract.

JFD's advanced range of SDVs is specially designed to provide navies with the capability to deliver the payload (operators) safely to their intended destination at a high level of readiness.

Dividends

Faced with the uncertainty of the pandemic and wishing to preserve cash resources, the Board announced in March 2020 that it had suspended the ﬁnal dividend for the year ended 31 December 2019 and this dividend was subsequently cancelled. Having overcome the initial impact of the pandemic and with trading no longer deteriorating, the Board announced an interim dividend of 8.0p per share, amounting to £4.0m, in August 2020, which was paid in November 2020. During the second half, further enforced Covid-19 restrictions across many of the areas the Group operates negatively affected ﬁnancial performance, particularly in Marine Support. Although the Board recognises the importance of dividends to its shareholders, in view of the 2020 ﬁnancial result, the Board is not recommending a ﬁnal dividend for the year ended 31 December 2020.

Business review

Our principal focus has been on supporting our businesses during these difﬁcult times, ensuring that they have the resources to deliver our services in a safe environment.

In order to preserve cash, we introduced a salary reduction plan across our wider leadership team in the early months of the pandemic which was subsequently repaid, save for our senior leadership team and members of the Board who accepted a salary cut for the second quarter at this crucial time. Where appropriate we made use of the UK Government's Covid-19 support scheme furloughing certain employees especially in the Marine Support division inorder to preserve many jobs. Unfortunately, as the year has continued, we have had to make some redundancies to right size the business to match market opportunities.

In 2019, the Group invested in two dive support vessels to take advantage of identiﬁed market opportunities with diving and offshore construction services for oil majors. Both vessels required an element of refurbishment before they were able to come into service. The purchase and subsequent refurbishment of these vessels coincided with the rapid decline in oil prices coupled with the delays in supply chains brought about by Covid-19. Both vessels are now available for use but, recognising that end markets have changed, we have taken the view that we should write these assets down to their estimated recoverable amount.

The three divisions of Specialist Technical, Offshore Oil and Tankships have all produced creditable results demonstrating our strong and diverse position in these markets. Many of the issues experienced by Marine Support were outside our control but nevertheless, we remain an important provider of services in the offshore marine and renewables sectors and we are well positioned as these markets recover.

Sustainability

During 2020 our business continued to deliver operational carbon reductions, developing business travel alternatives, plastic reduction and continued support to multilateral global environment initiatives. This year also saw our ﬁrst CDP submission, which is an important milestone in our disclosure of greenhouse gas impacts and further demonstrates our

Chairman's statement (continued)

At the beginning of the Covid-19 pandemic, JFD applied its experience in breathing systems to rapidly develop a new ventilator in response to a call from the British government for the design and production of ventilators.

Within a month of the initiative, JFD developed InVictoTM and initial testing of the prototype was carried out at UK hospital laboratories. InVictoTM is a non-invasive ventilator that sits in its own medical device space between traditional continuous positive airway pressure (CPAP) and full invasive ventilation. Its innovative design and function allows it to provide automatic assisted ventilation for sedated patients, whilst it can also operate as a patient triggered non-invasiveventilator for conscious patients. As well as providing a therapeutic advantage over CPAP treatments through respiratory support, the design also controls the consumption of oxygen giving a much reduced consumption rate of oxygen whilst maintaining a high level of oxygen enrichment for the patient. Results show an average consumption rate of ﬁve litres per minute of oxygen versus rates of greater than 40 litres per minute with CPAP treatments.

Whilst the UK Government chose not to proceed with InVictoTM, JFD has begun clinical trials in Bangalore, India, with the ﬁrst patient to use InVictoTM taking place in December 2020. InVictoTM has received two awards for its novel design: Healthcare & Medical-Covid response category at the Collaborate to Innovate Awards and Covid-19 Pandemic Initiatives Award at the 2020 IMCA Awards.

The InVictoTM ventilator is a disposable item between patients thereby minimising the risk of cross contamination and eliminating the need for sterilisation.

commitment to drive the business with renewed purpose over the long-term. We are positioning to take advantage of the ongoing energy market transition, where many of our customers are setting net zero carbon commitments and looking to us for solutions to help them reduce their own carbon footprint. Our history in supporting the marine environment means we are well placed to service the continued global growth in offshore renewables. This global shift to a greener energy transition is also having an impact on our business in parallel ways, as we support sustainable approaches to the decommissioning of existing oil and gas assets.

The Board

It was announced a year ago that, having completed nine years as an independent Non-Executive Director of James Fisher including three years as Chairman, I would step down as a Director once a replacement had been appointed. In January 2021, following an external search, that the Board agreed to appoint Angus Cockburn as a Non-Executive Director and Chairman of the Company with effect from 1 May 2021. I will retire as a Director on 30 April 2021.

Angus is a chartered accountant with an MBA from the IMD Business School in Switzerland and is currently Group Chief Financial Ofﬁcer at Serco Group Plc, a position he has held since October 2014. He will step down from the Serco Board at its AGM in April 2021. His previous roles have included Chief Financial Ofﬁcer and Interim Chief Executive of Aggreko plc and Managing Director of Pringle of Scotland. Angus is currently a Non-Executive Director of Ashtead Group plc and the privately owned Edrington Group Limited.

On 20 March 2020 it was announced that Fergus Graham had stepped down from the Board to pursue other business opportunities. I would like to thank Fergus for his contribution to the Group since his appointment to the Board in 2018 and wish him every success in the future.

I would like to record my thanks to all the Directors for the help and support they have given me over the last ten years and in particular during this difﬁcult last 12 months. Your Company has a well-balanced and experienced Board of Directors who bring a wealth of experience and knowledge across a wide spectrum of subjects. I am conﬁdent that the Board, under the new direction of Angus, will bring the right mix of continuity and change to support the Executive Directors.

Outlook

Although early in 2021, the Group is trading in line with our expectations, however caution remains due to the ongoing effects of the pandemic. The Group has a resilient business model with a broad spread of end markets, customers and geographies, supported by a strong track record of converting its operating proﬁt into cash.

Our ongoing strategic review conﬁrms the fundamental strengths of the Group and has also identiﬁed scope for signiﬁcant ﬁnancial and operational improvement. Our goal is to improve the quality of our business by focusing on structurally growing markets, improving operating margins, increasing returns and sustainably delivering value for all stakeholders.

Malcolm Paul Chairman

Chief Executive's review

Eoghan O'Lionaird Chief Executive Ofﬁcer

I am immensely proud of how our employees have adapted to rapidly changing circumstances and continued to operate safely and efﬁciently.

Having joined the Board on 1 October 2019, my ﬁrst full year as Chief Executive has been one of the most challenging in the Group's 173-year history; a year like no other.

However, despite the many issues we have faced, our employees have shown great resilience and the operating and ﬁnancial performance of the Group held up well in the circumstances, conﬁrming the beneﬁt of strong market positions, responsive niche businesses and a broad spread of end markets and geographies.

Response to Covid-19

In the ﬁrst half of 2020, oil prices were adversely impacted by over production and this was quickly followed by the global lockdown due to Covid-19. At the start of the pandemic we quickly established our priorities: to keep our people safe; preserve as many jobs as possible, and to protect the interests of the Company and its stakeholders. Within that context, we continued as far as possible to provide our services and goods to customers, whilst supporting and maintaining our supply chain. I am immensely proud of how our employees have adapted to rapidly changing circumstances and continued to operate safely and efﬁciently.

In March, we established weekly Executive meetings and a weekly video call for the senior leaders of all our businesses. This ensured a quick and, where appropriate, consistent approach and enabled learning from each other's experiences in conditions not previously experienced. We set out clear Group practices in response to Covid-19 but recognised, as a decentralised international Group, the value of local autonomous teams having the latitude to respond appropriately. In addition, we increased communications to ensure the Group was well informed and aligned.

Our employees

In facing the challenges of the pandemic, our priority throughout has been to protect the safety and wellbeing of our employees. Since the third week of March, the majority of our ofﬁce-based staff throughout the world have been working from home utilising video conferencing technology. At our operational sites we introduced enhanced safety measures, deep cleansing and social distancing which has helped to keep people safe, whilst maintaining good levels of efﬁciency and performance. Additionally, recognising the stress and strain resulting from the pandemic-related constraints, we adopted practices and procedures to support the mental wellbeing of our employees.

Customers and suppliers

Throughout this period our businesses have remained open and our teams have worked hard to provide our unique products and marine services to our customers globally. The pandemic challenged our ability to receive supplies promptly, to complete projects overseas and generally to move people and equipment around. Our businesses responded innovatively to these challenges and supported the supply chain throughout.

Martek, our marine safety products and services business, responded quickly to new crew change guidelines due to the pandemic, by launching a coronavirus antibody test. It also provided comprehensive personal protective equipment to its marine customer base.

JFD responded to the UK Government's call for rapidly manufactured ventilators to provide essential medical equipment to the NHS. Using its world-leading breathing gas reclaim systems, the InVictoTM ventilator was quickly developed, tested and designed for minimal oxygen consumption, which could become a scarce resource. While the UK medical authority did not take InVictoTM forward, the ventilator is being used to treat patients in India.

When the Covid-19 pandemic struck, Martek was quick to respond, launching occupational screening tests designed to help customers test their employees and prevent and manage outbreaks of the virus in the workplace. Martek's Lifecare division launched kits that combined antigen and antibody testing, providing a 98.6% detection rate within the ﬁrst 5.5 days of infection.

The occupational screening tests helped employers continue operating as close to normal as possible and proved useful within the Group as well to external customers, as James Fisher Shipping Services took delivery of 300 kits to test employees, including those working in our Tankships division.

Martek also assisted with sourcing items for a care pack that was delivered to all UK-based James Fisher employees as they began returning to their normal places of work throughout 2020. The packs included items essential for operating safely during the pandemic, such as a reusable facemask, hand sanitiser and disinfectant wipes.

Communities

We recognised the importance of supporting the communities in which our employees live and work during these challenging times. Many of our businesses supported local charities and made donations of protective equipment. In addition our employees helped distribute vital food supplies to the vulnerable unable to leave their homes during the ﬁrst lockdown. In Singapore, we supported the Courage Fund to help provide relief to susceptible individuals and families affected by Covid-19.

Financial response to Covid-19

The Group took swift actions to reduce costs, optimise cash ﬂow and protect liquidity. This included the deferral of all discretionary capital expenditure, instituting a hiring freeze, placing approximately 400 UK employees on furlough and implementing a 20% pay deferral for approximately 800 employees across the world. The deferred pay was repaid in the second half, except for all Board members, the Executive and our senior leaders.

In addition, the Group took immediate action to preserve and improve liquidity, increasing committed borrowing facilities by £50m in the ﬁrst half. Actions taken to defer bonuses, tax payments and deﬁned beneﬁt pension scheme contributions improved liquidity by approximately £16m in the ﬁrst half which reversed in the second half save for around £3m, which will be paid in 2021. Due to the uncertainty of Covid-19, the Board took the decision tocancel the payment of the ﬁnal dividend in relation to the year ended 31 December 2019, which was due to be paid in May 2020 and this reduced cash outﬂows by £11.8m in the year.

Strategic review

After joining James Fisher in the latter part of 2019, this year was an opportune time to revisit and re-test the Group's strategy and to create a plan for further growth in shareholder value for the future. Despite the challenges of 2020, the strategic review has progressed well and each of our businesses has developed a structured plan for future growth. We will provide shareholders with full details at a Capital Markets Day in the ﬁrst half of 2021.

Since 2001, the Group has delivered a strong trend of increasing underlying diluted earnings per share and dividends since 2001. However, in the last ﬁve years, the quality of our business as indicated by its underlying operating margin has remained ﬂat. Over the same period, return on capital employed, our measure of the return to shareholders, has marginally declined. The challenge we have set for ourselves through the strategic review is to sustainably improve the quality of our business by increasing our margins and to increase the return to our stakeholders. Our ﬁndings have led us to the conclusion that to achieve this goal, we need to extend the purview of our strategy to encompass all our primary stakeholders - our employees, our customers and suppliers, the local communities in which we operate, the environment, and our shareholders.

Chief Executive's review (continued)

By creating and executing effective strategies aimed at all our stakeholders, we aim to create a more intrinsically sustainable company.

With the support of the Executive, the Group has commenced a process to become a purpose-led company, which deﬁnes how we sustainably create value for all our stakeholders. We operate a decentralised model that facilitates autonomy and accountability and encourages leadership teams to react quickly to changing circumstances. Whilst each of our businesses has its own identity, there is a common thread linking them together which is to pioneer safe and trusted solutions to complex problems in harsh environments.

The Group has earned a reputation for pioneering unique solutions to demanding operational and technical challenges around the world. In partnership with our customers we continue to tackle the toughest problems, supporting energy production safely and reliably, providing life-saving equipment and securing critical infrastructure.

A diverse group of businesses and people, we are united by an entrepreneurial spirit, technical expertise, and a strong commitment to safety. The Group aspires to be an exceptional place to work, have fair and trusted relationships with customers and suppliers, support communities to grow, protect the environment, and provide strong returns for our investors.

We have identiﬁed three macro-economic trends that will impact the markets in which the Group operates:

(i) Changing energy mix as renewable energy reduces carbon emissions and environmental concerns will lead to an increased focus on innovation, new technologies and decommissioning. Whilst recognising that oil and gas will remain part of the energy mix for some time, we aim to provide services to production, maintenance, delivery and decommissioning in the safest, most sustainable way whilst actively supporting and investing in the energy transition to low carbon sources.
(ii) Acceleration of innovation as customers seek efﬁciencies and more effective asset management; and
(iii) Shifting economic power to developing regions giving potentially increased political risk and increased defence spending.

These trends are central to the development of the Group's strategic aim to deliver sustainable beneﬁts to our ﬁve key stakeholders. Capital will be allocated to growth opportunities, supplemented by selective acquisitions whilst business with below benchmark return potential will be divested. Delivery of the Group's strategy will require a strong focus on both commercial and operational excellence.

Financial performance

The Group's goal is to deliver sustainable long-term growth in underlying earnings per share and dividends. With the sharp drop in energy prices followed by the global pandemic, the results in 2020 interrupted a lengthy period of double-digit growth in earnings and dividends.

Three of the Group's divisions and its ship-to-ship transfer business performed with resilience in the year. However, project-related businesses, particularly subsea activities within Marine Support, were signiﬁcantly impacted by deferrals or cancellations. Group revenue was 16% below 2019 at £518.2m (2019: £617.1m) and underlying operating proﬁt was £40.5m (2019: £66.3m). Swift actions to reduce the cost base resulted in a 17% reduction to selling, general and administration costs.

Underlying cash conversion, which measures the proportion of underlying operating proﬁt that is turned into operating cash, was 217% (2019: 99%) reﬂecting actions taken to optimise cash ﬂow and to increase liquidity.

The Group reported an operating loss, on a statutory basis, of £43.5m (2019: proﬁt of £55.6m) due to signiﬁcant non-recurring charges of £84.0m which are more fully described below and in note 5. Cash performance was strong with net borrowings reduced by £32.3m in the year.

Acquisitions

The Group acquired Fathom Systems in March for £1.2m. It is a market leader in diver communications, gas analysis, diver monitoring and integrated diving control systems and complements JFD in our Specialist Technical division.

JF Nuclear's large-scale righall facility at Bower in Caithness, Scotland is well positioned to provide trial and testing of equipment for the decommissioning of local nuclear power and testing site at Dounreay. In 2020, it has been utilised to support the trials and testing of equipment for the decommissioning of the Magnox Steam Generating Heavy Water Reactor core at Winfrith, Dorset.

The Bower facility allows for the development and integration of equipment for large-scale projects in an inactive environment, before being deployed on-site, and has increased JF Nuclear's capacity to carry out large-scale trials and testing operations.

The site has been ﬁtted with a set of Covid-secure self-contained accommodation modules, to provide safe accommodation for team members working at Bower's test rig and ofﬁces throughout 2021.

Over the next 12 months, trials of remote handling and size reduction equipment will be carried out on a mock-up of parts of the Magnox reactor, before being deployed to the Winfrith site in 2022. Tests of mast-mounted manipulators have already been conducted using a bespoke load testing frame installed during 2020. In addition, JF Nuclear expects to commence design and testing projects for Dounreay.

Divisional performance

Operating
Revenue
(loss)/profit
2020	2019	2020	2019	2020	2019	2020	2019
£m	£m	£m	£m	%	%	£m	£m
Marine Support	249.4	311.6	10.1	24.5	4.0	7.9	(69.5)	14.6
Specialist Technical	130.4	149.4	14.0	18.4	10.7	12.3	12.4	18.1
Offshore Oil	78.0	88.2	11.2	14.2	14.4	16.1	8.4	13.7
Tankships	60.4	67.9	8.0	12.0	13.2	17.7	8.0	12.0
Corporate costs	-	-	(2.8)	(2.8)	-	-	(2.8)	(2.8)
Group	518.2	617.1	40.5	66.3	7.8	10.7	(43.5)	55.6
Marine Support

Underlying operating profit

Marine Support revenue in the year was £62.2m (20%) lower at £249.4m (2019: £311.6m). Subsea projects for offshore wind and oil & gas were c.£70m below than 2019 and the impact of the pandemic substantially reduced revenue across marine services and products, stress testing and monitoring. Despite Covid-19 interruptions, progress on the early and temporary beach landing project for the new gas ﬁelds in Mozambique and a good performance in ship-to-ship transfers partly offset the lack of subsea projects.

Underlying operating margin

Underlying operating proﬁt was £14.4m lower at £10.1m (2019: £24.5m) with the fall in revenue partly mitigated by a 20% reduction in overheads. Ship-to-ship services performed well, with a particularly strong ﬁrst half reﬂecting transfers in and out of storage capacity.

The Group responded swiftly to the challenges, particularly in subsea projects and carried out a signiﬁcant restructure during the second and third quarters of 2020. The division also suffered from challenges in receiving prompt payment

Chief Executive's review (continued)

for offshore services to the oil & gas market in challenging parts of the world and, whilst relentlessly pursuing settlement, considers it prudent to make provision. In light of the performance in 2020, we have taken a goodwill impairment of £17.0m and in consideration of the prospects for dive support vessels, impaired carrying values by £31.6m. Due to their size and their irregular nature, these items have been disclosed separately and are more fully described in note 5.

Marine Support holds leading positions in ship-to-ship services and renewable energy, particularly in high voltage jointing, blade repair and unexploded ordnance. Opportunities in offshore wind continue to increase and are rapidly expanding globally outside of the North Sea.

Specialist Technical

Specialist Technical performed with resilience in 2020 with a 13% reduction in revenue to £130.4m (2019: £149.4m) and the impacts of currency and businesses acquired offset each other. At JFD, our defence and diving equipment provider, the pandemic affected the completion of projects, particularly in the Asia Paciﬁc region and delayed the arrival of specialist components from our suppliers. Submarine rescue and escape exercise services were reduced or curtailed as a consequence of the pandemic. Decisions on new projects were also delayed, which impacted the second half. Our nuclear decommissioning business, which represents around 30% of the division, quickly adjusted to homeworking and delivered increased revenue and proﬁt in the year.

Underlying operating proﬁt was £4.4m lower at £14.0m (2019: £18.4m) due to the revenue fall but mitigated by a 14% reduction in overheads. Underlying operating margin was resilient at 10.7% (2019: 12.3%).

JFD completed customer acceptance testing of its landmark 500m saturation diving system in December, having suffered challenges due to the pandemic of getting into the Asia Paciﬁc region to complete assembly and approval. It also completed its contract to deliver six swimmer delivery vehicles during the fourth quarter. Two submarine rescue vessel projects are progressing well with delivery dates in 2021 and 2022.

Nuclear decommissioning performed well through the pandemic due to improved project delivery and good progress in nuclear source distribution. Its Hamburg based radiation detection and instrumentation business was sold in the year for £1.6m.

Offshore Oil

Despite the dual challenges of energy prices and Covid-19, Offshore Oil performed resiliently. Revenue was 12% lower at £78.0m (2019: £88.2m) and underlying operating proﬁt was 21% down at £11.2m (2019: £14.2m) which was a creditable result given energy price movements and the global pandemic. Lower volumes in 2020 impacted gross margins but pricing was broadly maintained. Selling, general and administration costs were reduced by 18% in the year as the businesses reacted quickly to the challenging economic conditions. This mitigated the impact on underlying operating margin which was 14.4% (2019: 16.1%).

Our businesses in Offshore Oil are predominantly the rental of specialist equipment with specialist people to the inspection, repair and maintenance market and the extension of asset life services. Strategically we have sought to limit our exposure to exploration which reduces earnings volatility in the event of sudden changes to energy prices. In parallel, our businesses continue to evolve to support the changing energy mix. Revenue from supplying our products and services for bubble curtains in renewables and for the decommissioning of oil and gas infrastructure represented 14% of the division's annual sales in 2020.

Tankships

Tankships traded well in the ﬁrst four months of 2020 but experienced a sharp drop in utilisation in May as the immediate effect of the lockdown reduced demand for the clean petroleum products it delivers. Utilisation improved each month thereafter to recover to just below 90% by the end of the third quarter, and despite some ﬂuctuations in the ﬁnal quarter due to the second wave of Covid-19, utilisation was maintained in the high 80s.

Revenue in 2020 was 11% lower than prior year at £60.4m (2019: £67.9m). With the cost of operations relatively ﬁxed, the reduction in sales impacted underlying operating proﬁt and was only partly mitigated by a 13% reduction in overheads. Underlying operating proﬁt was £4.0m lower at £8.0m (2019: £12.0m).

Throughout 2020, James Fisher Offshore (JFO) expanded its presence in the oil and gas decommissioning sector, using the global reach of its expertise and equipment to complete projects around the world.

In the UK, JFO teams conducted critical path well severance work in the Viking ﬁeld off the coast of Lincolnshire, working to cut and remove 30 inch multi-string conductors sitting proud of the seabed, as well as severing two large piles.

Further aﬁeld, JFO completed a high-assurance pipeline and jacket removal project in the Persian Gulf, minimising costs and lead times for the customer by operating from its facility in Dubai. It has also completed projects in Malaysia and Thailand, supporting the latter with its ﬁrst rigs to reef campaign.

JFO has facilities in the UK, Malaysia, Dubai and the Gulf of Mexico, meaning its powerful and effective ultra-high-pressure abrasive water jet cutting system can be used with short lead times in many regions across the globe.

Health and safety

Given the inherent risk in some of the work we complete and the environments in which our people operate, we have a responsibility for the health and safety of our employees, contractors, suppliers and customers at all times. Health and safety is the ﬁrst item on the agenda of every quarterly business board meeting and Group-wide safety meetings share and promote best practice to recognise potentially hazardous situations and appropriate mitigation.

The need to embed and commit to this objective is never more necessary than when catastrophic outcomes occur. I am profoundly saddened to report that in October we lost a long serving employee and a customer to an accident. On a pile-testing project in Kenya, the transportation barge which employees were travelling capsized following an engine failure. Everyone on board was rescued, or managed to swim to safety, except for the two fatalities. We are deeply saddened by this event and investigations indicate that nothing could have been done to avoid this tragic outcome. Our thoughts remain with both families.

Eoghan O'Lionaird Chief Executive Ofﬁcer

Business model

We are focused on market segments where our responsive, niche and entrepreneurial businesses can deploy innovative products and services that create superior value whilst attaining the highest standards of safety, efﬁciency, environmental performance, regulatory compliance and ethical standards. Our customers are predominantly large multinational corporations, governments and other high assurance counterparties. Further details about our products and services is set out in the Sector review on pages 14 to 21.

Purpose

Our purpose has always been clear and consistent, but the continuous expansion of the Group through acquisitions and organic growth has caused us to revisit our purpose and to establish a renewed, shared understanding and direction.

Our purpose seeks to inspire people to contribute their time, energy and imagination to the Company. It ensures an authentic connection between what the organisation believes, states and does and enables us to make practical choices about our day-to-day actions by serving as a constant, unwavering reference point.

Focusing on why we exist and how we create value for all our stakeholders, we have re-deﬁned our purpose as:

Pioneering safe and trusted solutions to complex problems ' in harsh environments to create a sustainable future.

Culture

The key element at the core of James Fisher is our people. Our decentralised and entrepreneurial culture encourages personal accountability and development through an understanding customers' needs, overcoming the unique challenges of the environments in which we operate and supporting development and deployment of unique solutions focused on value creation for all our stakeholders through rapid decision making.

Resources andrelationships

Underpinning our strategy and business model, our aim is to create value for all of our stakeholders:

• Our shareholders
• Our employees
• The local communities in which we operate
• Our customers and suppliers
• The environment

By being purpose-led, we strive to inspire and motivate employees who increasingly seek meaningful work and values-based working cultures, to be better able to adapt to change, and more readily able to harness the power and opportunity for innovation.

We recognise that customers want to work with responsible businesses that take issues such as sustainability seriously and that investors progressively use environmental, social and governance criteria to decide in which companies to invest.

By aligning behind a strong shared purpose, we support the long-term sustainable development of our business and our people and we enhance our impact on society and the environment.

The strategic objectives related to our stakeholders can be found within our strategy on p 13.

Valued behaviours

We are a business that strives to successfully solve our customers' complex and difﬁcult problems in some of the harshest environments. We do this only by engaging, enabling and empowering our people to achieve, supported and guided by our values:

Pioneering spirit:

Integrity:

Energy:

Resilience:

• We respond innovatively to our customers' current and future needs
- • We always strive to do the right thing
• We are entrepreneurial and think creatively to solve difﬁcult problems
- • We treat everyone as we would like to be treated, creating relationships based on trust and fairness
  - • We go above and beyond, delivering exceptional results for all stakeholders
    - • We are accountable and courageous, and face up to difﬁcult situations
  - • We love what we do and take pride in our positive impact
    - • We are tenacious in the pursuit of our purpose
• We challenge conventional thinking and ﬁnd better ways

• We collaborate by listening respectfully and speaking honestly

• We are empowered to take the right decisions, quickly

• We seek feedback, we learn and we develop, together

Strategy

The Group's strategy is to grow organically through leveraging its existing skill, technology and asset base in areas of specialist expertise and through investment in people, working capital and equipment. This is supported by selective acquisitions that expand the product or service offering or extend geographical coverage to strengthen our value proposition. James Fisher has a number of entrepreneurially-led businesses which are market leaders in their speciﬁc operational niche that are supported and encouraged to pursue new opportunities that contribute to our operational excellence objectives.

Our businesses operate in harsh and challenging environments where our specialist expertise in solving complex problems in response to customer needs is highly valued and rewarded. We pursue opportunities in market segments and geographies that are less mature and fast growing where our track record in delivering safe and trusted solutions provides assurance to our customers. Our niche capabilities create further possibilities to pursue adjacent market sectors and exploit integration opportunities to increase the value we create.

Bolt-on acquisitions both broaden and strengthen the range of products and services that we provide. Our acquisition strategy is focused on niche businesses with a strong entrepreneurial culture which ﬁt well with our purpose, valued behaviours, and strategic agenda. As a cash generative Group with a strong balance sheet, businesses are usually acquired using existing cash or borrowing resources. The businesses acquired have a strong track record and typically beneﬁt from the additional resources and support the Group provides to achieve their next growth phase. Where an acquisition bolts on to existing businesses, we seek to optimise shared back ofﬁce functions, and opportunities for procurement efﬁciency and cross-selling within the Group. The Group commenced a strategic review during the year, further details are set out in the Chief Executive's review on pages 6 to 11.

To deliver the Group's strategy we have ﬁve strategic objectives which are aligned with our key stakeholders:

Shareholders: to grow the return for shareholders

Deliver long-term growth in underlying earnings per share, dividends and return on capital employed

Grow organically by leveraging existing specialist skill base to a global market

Create additional value through expansion of our service offering and capabilities through bolt-on acquisitions

Communities: to be a good citizen and active member of the community

Consider sustainability in our decision-making process Encourage our employees to make a difference

Create local employment and sourcing opportunities within our communities

Employees: to make James Fisheran exceptional place to work

Ensure the safety and wellbeing of all employees Encourage and support innovation and accountability

Develop individual and organisational excellence

Customers and suppliers: to establishand deliver on shared goals

Develop our products, service and geographical offering to meet current and anticipated needs of our customers

Exceed our customers' and suppliers' expectations in terms of trust and safety

Choose select suppliers that share our values and commitment to excellence

Environment: to uphold responsible business practices

Conduct our operations in a responsible way, identifying opportunities to improve

Support our customers in achieving their environmental targets

Select suppliers who share our commitment to making positive environmental contributions

More information on stakeholder engagement is set out on pages 26 to 40.

Sector review: Marine Support

Marine Support

Our Marine Support businesses provide products, services and solutions to the global marine industry. These are supplied to a range of end market sectors including marine, oil and gas, ports, construction and renewables.

Revenue (£m)

Underlying operating proﬁt* (£m)

2019 2018 2017 2016

311.6

269.8

229.6

195.9

Statutory operating proﬁt (£m)

Return on capital employed (%)

2018 2017

29.1

24.7

*before separately disclosed items

Sector review: Marine Support

Market drivers

Fendercare is also a leading provider of ship-to-ship services for the transfer of crude or reﬁned oil, liqueﬁed natural gas or bulk cargoes. The demand for these services is driven by the volume of oil trading between oil majors and independent traders, and also by production where local port infrastructure is unable to accommodate large tankers.

Fendercare is a leading provider of pneumatic ﬂoating fenders and other mooring equipment to the global marine industry. It services commercial shipbuilding, ship refurbishment, defence, port developments and the oil and gas markets for project applications.

JF Marine Services is a leading provider of specialist subsea and topside services to support offshore wind construction, operations and maintenance through delivery of an integrated service offerings that encompasses the wide range of marine skills to create increased customer value. Demand for its services is driven by the operation and maintenance activities in the marine, oil and gas, renewables and communication sectors. This includes the specialist provision of ROV systems and diving personnel for underwater surveys, UXO identiﬁcation and disposal, construction support, inspection, repair and maintenance

Our principal businesses

JF Testing Services is a leading provider of strain gauges to the marine industry, which are used in a range of applications such as mooring systems on ships and in ports as well as being used to monitor the structural integrity of infrastructure in the construction and transport sectors. The sectors serviced encompass new shipbuilding, ship refurbishment and life extension, port developments, and projects for the oil and gas market.

It is also a leading provider of specialist testing and monitoring services to the construction and maintenance sectors, and designs and manufactures testing and monitoring equipment, supporting customers worldwide.

The market drivers for JF Testing Services are new projects in the marine, oil and gas, infrastructure and renewables sectors, where our niche offering and innovative products and services provide a competitive advantage.

Subtech provides a range of marine services to the Middle Eastern and Africa region. With locations in Durban, South Africa, Mozambique, Nigeria and Dubai UAE, it supports a wide range of projects requiring specialist diving and marine skills. Demand for its services is driven by port construction, diving and marine projects.

Operations	End markets	Locations
Fendercare
Marine products and services, ship-to-ship transfers,	Marine, oil and gas, renewables and defence	UK, Singapore, Australia,
offshore terminal services	UAE, Brazil
JF Marine Services
Integrated marine services, including remotely operated	Marine, oil and gas, renewables, tidal power	UK, France
vehicle (ROV) systems and diving services	and communications
JF Testing Services
Products and services that measure and monitor	Marine, oil and gas, renewables, civil and	UK, UAE, Singapore,
structural stress, instrumentation and materials testing	construction	Malaysia
Subtech
Marine and diving services	Oil and gas, marine and construction	South Africa, Mozambique,
UAE, Nigeria

Sector review: Specialist Technical

Specialist Technical

Our Specialist Technical businesses supply diving equipment and services, submarine rescue vessels and through-life rescue services and engineering solutions to the international defence market and UK nuclear decommissioning market. Other subsea services provided to the defence sector include special operation swimmer delivery vessels. JFD also supplies saturation diving systems which are installed onto dive support vessels and support deep subsea diving activities. James Fisher Nuclear (JFN) provides engineered solutions which operate in hazardous environments in the nuclear industry.

Revenue (£m)

Underlying operating proﬁt* (£m)

2019 2018 2017 2016

149.4

159.6

149.6

151.8

Statutory operating proﬁt (£m)

Return on capital employed (%)

18.1

2019 2018 2017 2016

20.2

19.0

*before separately disclosed items

19.3

Sector review: Specialist Technical

Market drivers

JFD is a world leader in saturation diving systems and related diving equipment. Its end markets are oil and gas and defence. Saturation diving systems are both ﬁxed and portable. Fixed systems are usually built into dive support vessels (DSVs). JFD provides the equipment and the follow-on consumables, support and maintenance to the DSV operator. The construction and replacement of DSVs drives new build saturation diving systems which in turn drives ancillary service and product spend. JFD's defence market is based on service, repair and on-going calibration requirements, and on projects requiring specialist diving equipment.

JFD is also a leading provider of submarine rescue services. It encompasses the ability to design, deliver and operate submarine rescue vehicles. It has long-term service contracts with navies providing a very niche area of capability. The driver is the tendering of defence projects for

Our principal businesses

provision of the equipment, which can then lead to longer-term service contracts to operate the service. We currently provide submarine rescue services to the UK, Singaporean, Australian and Indian navies. The business also provides swimmer delivery vessels to the special operations markets.

JFN provides engineered products and services to the nuclear industry both in the operation of nuclear power plants and decommissioning. Its products and services operate in hazardous environments. The business provides instrumentation, non-destructive testing, calibration and digital radiography to the nuclear, aerospace and process industries. The market drivers for JFN are the demand for its products, services and lifetime support from the UK decommissioning industry, radiological calibration requirements and projects within the aerospace, process and defence industries.

Operations	End markets	Locations
JFD
Design, supply and servicing of diving and subsea	Defence, commercial and defence diving,	UK, Australia, Singapore,
equipment, submarine rescue and special operations	hyperbaric and submarine rescue	Sweden
services
JFN
Engineered solutions in remote handling, non-	UK nuclear decommissioning and	UK
destructive testing and calibration services	aerospace, process and defence industries

Sector review: Offshore Oil

Offshore Oil

Our Offshore Oil businesses supply a range of services and equipment to the global oil and gas and renewable energy industries. This includes the design and engineering of specialist equipment, platform maintenance and modiﬁcation, well testing support, subsea operations and maintenance services. RMS and renewable energy industries pumptools is also established as a world leader in artiﬁcial lift specialist completion technology and innovative accessory tools for electrical submersible pumps.

Revenue (£m)

Underlying operating proﬁt* (£m)

2019 2018 2017 2016

88.2

71.4

2019 2018

14.2

5.9

63.1

62.8

Statutory operating proﬁt (£m)

Return on capital employed (%)

13.7

2019 2018 2017 2.7

10.3

5.0

2019 2018 2017 2.4

4.6

*before separately disclosed items

Market drivers

Sector review: Offshore Oil

ScanTech AS is a leading provider of ATEX (ATmospheres EXplosives) products and support services to the energy sector. Its products and services are supplied to the Norwegian oil and gas market and are used for platform maintenance, well testing and speciﬁc projects. Equipment is designed and certiﬁed to the NORSOK standard. The driver for the business is the operation and maintenance spend on offshore rigs in the Norwegian sector.

Scantech Offshore is a leading provider of air compressors, steam generators, heat suppression equipment and qualiﬁed personnel for the well testing and offshore wind markets worldwide. It rents equipment to large multinational oil service and major marine contracting companies, and provides qualiﬁed personnel to operate the equipment. The driver for the business is the operation and maintenance spend on offshore rigs around the world and the need to provide protection of the marine environment through the mitigation of noise produced during offshore piling operations and unexploded ordnance (UXO) disposal.

Our principal businesses

RMSpumptools is a world leader in artiﬁcial lift specialist completion technology and innovative accessory tools for electrical submersible pumps. RMSpumptools supplies products to the global downhole oil and gas market which improve the productivity of wells utilising electrical submersible pumps.

Fisher Offshore provides winches, hoists, cutting tools, marine cranes and subsea hydraulic equipment to the oil and gas and marine sectors. Its market driver is maintenance, inspection and repair demand and subsea projects. It also specialises in providing mass-ﬂow excavation tools and services to cover or uncover subsea pipelines or cables, where demand is driven by cable and pipeline projects in the oil and gas, renewables and communication sectors.

Operations

ScanTech AS

Design and engineering of specialist equipment, platform maintenance and modiﬁcation, well testing support and subsea operations

Scantech Offshore

Provides products and services to well testing companies

RMSpumptools

Artiﬁcial lift specialist completion technology and innovative accessory tools for electrical submersible pumps

Fisher Offshore

Provides range of lifting equipment and services to the marine, offshore and subsea and mass-ﬂow excavation services

End markets

Oil and gasOil and gas, Offshore windOil and gasOil and gas, marine

Locations

NorwayUK, UAE, Brazil, Australia, Malaysia

UK, UAEUK, Malaysia, UAE, Mexico, Singapore

Sector review: Tankships

Tankships

Our Tankships division operates a ﬂeet of product and chemical tankers which trade along the UK and northern European coastline carrying clean petroleum products and chemicals including increasing volumes of bio fuels. The division performed 1,362 port calls this year carrying liquid cargos from reﬁneries and terminals, to major coastal storage facilities. The division also operates a port in Plymouth, UK.

Revenue (£m)

Underlying operating proﬁt* (£m)

2019 2018 2017 2016

67.9

60.7

57.0

55.5

Statutory operating proﬁt (£m)

Return on capital employed (%)

*before separately disclosed items

2019 2018 2017 2016

12.0

9.9

8.8

8.2

Market drivers

Sector review: Tankships

James Fisher Everard (JFE) distributes clean petroleum products and chemicals under contracts with primarily oil majors around the European coast and to islands, to ports with restrictions on the size of ships they can accept. It operates a ﬂeet of double-hulled product and chemical tankers with capacity ranging from 3,000mt to 35,000mt. The business driver is the level of consumption of clean products (petrol, diesel, gasoil and kerosene) and chemical/ biofuels in the UK, Ireland and northern Europe. Products carried serve the marine, transport, agriculture, aviation and chemical industries.

Our principal businesses

Shipping dramatically reduces our customers' carbon footprint compared to other modes of transportation. Shipping's CO2 emissions are half that produced by road freight, and just one full ship keeps more than 150 trucks off the roads.

The division operates Cattedown Wharves, a port in Plymouth which provides berthing and marine services to the oil majors which own tank farms in Plymouth. It also handles dry cargoes such as animal feed being imported into the South West and clay being exported from the region. The primary driver for the business is the level of consumption of clean oil products within the South West region of the UK.

Operations

JFE

Delivery of clean petroleum products around the European coastline

Cattedown Wharves Port operations

End markets

Distribution of clean petroleum productsWet and dry product distribution

Locations

Financial review

Two of our objectives at the start of the pandemic were to optimise cash ﬂow and protect liquidity. Net borrowings reduced by 14% in the year to £198.1m, which when combined with a £50m increase in committed facilities, resulted in headroom of just over £120m by the end of 2020.

Stuart Kilpatrick Group Finance Director

2020 results 2020 was undoubtedly challenging to many businesses around the globe and the results for the year are testament to the dedication and hard work of our people.

Whilst revenue for the Group was down by 16%, three divisions, Specialist Technical, Offshore Oil and Tankships were 12% lower than 2019, showing some resilience to the two challenges of the global pandemic and a sharp fall in energy prices. Similarly, underlying operating proﬁt in these three divisions was £11.4m lower, whereas due to the lack of subsea projects, Marine Support was £14.4m lower. Group underlying operating proﬁt was 39% down at £40.5m (2019: £66.3m).

Gross margins decreased from 29.9% to 26.6% due to lower volumes covering the non-variable element of cost of goods sold. Prices held up well. Swift actions to respond to market conditions reduced administrative expenses by £20.5m (17%) in the year and mitigated the fall in underlying operating margin to 7.8% (2019: 10.7%).

The Group's main currency exposure is in respect of US Dollar cash inﬂows and the average rate in 2020 of £1:$1.29 (2019: £1:$1.28) was similar to prior year and therefore had no material impact on the ﬁnancial results.

The challenging market conditions had the largest impact on project dependent businesses, primarily in subsea services. As a result, the Group has taken a substantial separately disclosed charge totalling £84.0m (2019: £10.7m) with the majority in relation to the Marine Support division. A major restructuring in Marine Support cost £3.9m and reduced headcount by 202. This was commenced in the second quarter with due care taken to protect the Group's renewables business where future opportunities are strong globally. Annualised savings from the restructure areapproximately £8.0m. In addition, whilst continuing to pursue settlement vigorously, an impairment provision of £19.3m was considered prudent against overdue receivables in relation to primarily three projects within Marine Support. Non-cash impairments in respect of goodwill and other intangible assets amounted to £19.4m and a further £31.6m was charged in relation to two dive support vessels reﬂecting utilisation experienced to date. The net cash outﬂow in relation to separately disclosed items was £3.3m.

Proﬁt before tax on an underlying basis was £31.5m (2019: £58.5m) and on a statutory basis, a loss of £52.5m (2019: proﬁt of £55.6m).

Finance charges

Net ﬁnance charges were £9.0m (2019: £7.8m) inclusive of non-cash charges in respect of pensions and leases of £1.9m (2019: £2.0m). Bank related ﬁnance charges increased by £1.3m to £7.1m (2019: £5.8m) due to higher borrowings as a result of capital investment in 2019. Interest cover, the ratio of underlying operating proﬁt to net ﬁnance charges, based on our banking agreements was 6.1 times (2019: 12.3 times), which compares to a covenant of 3.0 times.

Taxation

The tax charge before separately disclosed items for the year of £7.2m (2019: £11.6m) represents an underlying effective tax rate (UETR) of 22.8% (2019: 19.8%). The UETR, which reﬂects the geographical mix of proﬁts, tonnage tax relief on the proﬁts from tanker operations and expenses disallowed for tax, increased in the year due to unrelieved losses in a number of jurisdictions. The total tax charge for the year on the loss before tax was £4.8m (2019: £11.1m) as the impairment charges within separately disclosed items did not beneﬁt from tax relief. The Group paid £7.9m (2019: £9.6m) of corporation tax in cash across all of its jurisdictions. A further £28.1m was paid in the UK in respect of payroll taxes (2019: £31.3m).

The Group's tax strategy and policy is 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. Our objectives are to comply with all applicable tax laws and regulations, including the timely submission of all tax returns and tax payments and to undertake all dealings with local tax authorities in a professional and timely manner. The Group's tax strategy is reviewed and approved by the Board annually and is available on our website.

Earnings per share and dividends

Underlying diluted earnings per share were 47.9 pence per share (2019: 92.8 pence) reﬂecting the fall in underlying proﬁt before taxation. Statutory diluted earnings per share were a loss of 114.2 pence per share (2019: earnings of 72.7 pence). Due to the uncertainty created by the global pandemic, the Board initially suspended the proposed dividend in relation to the year ended 31 December 2019 of £11.8m, which was due to be paid on 11 May 2020, and subsequently conﬁrmed its cancellation. An interim dividend of £4.0m was paid on 6 November 2020.

Cash ﬂow and borrowings

Operating cash ﬂow increased to £87.7m (2019: £65.9m) as the 22% reduction in underlying Ebitda was offset by a working capital inﬂow of £19.5m (2019: outﬂow of £21.3m). Cash conversion, which is the ratio of operating cash ﬂow to underlying operating proﬁt, was 217% (2019: 99%).

The cash outﬂow of separately disclosed items relates to Marine Support restructuring costs. Net capital expenditure was much reduced at £17.8m (2019: £90.2m) and the Group spent £7.1m businesses acquired or disposed. Fathom was acquired for £1.2m in February 2020 and the balance was deferred consideration paid to the vendors of Martek (£1.0m), EDS (£2.3m) and businesses now forming part of JFD (£2.7m). Transaction costs were £0.7m and this was offset by net proceeds from disposals of £1.3m.

The net cash inﬂow in the year was £38.4m compared to an outﬂow in 2019 of £84.5m and net borrowings decreased by £32.3m to £198.1m (2019: £230.4m) inclusive of right-of-use operating leases.

2020	2019
Summary of cash flow	£m	£m
Underlying operating profit	40.5	66.3
Depreciation & amortisation	34.2	29.9
Underlying ebitda*	74.7	96.2
Working capital	19.5	(21.3)
Pension / other	(6.5)	(9.1)
Operating cash flow	87.7	65.8
Outflow on separately disclosed	(3.9)	(7.4)
Interest paid & tax	(14.6)	(14.6)
Net capital expenditure	(17.8)	(90.2)
Businesses acquired / disposed	(7.1)	(19.1)
Dividends paid to shareholders	(4.0)	(18.4)
Other	(1.9)	(0.6)
Net cash inflow / (outflow)	38.4	(84.5)
Net borrowings# at 1 January	(203.0)	(113.6)
Non-cash movements	(10.4)	(4.9)
Net borrowings# at 31 December	(175.0)	(203.0)
Right-of-use operating leases	(23.1)	(27.4)
Net borrowings	(198.1)	(230.4)

* Underlying earnings before interest, tax, depreciation and amortisation # Underlying net borrowings before right-of-use operating leases

Balance sheet

The Group swiftly took actions to protect and improve its balance sheet in response to the global pandemic. Additional committed revolving credit facilities of £50m were agreed in the ﬁrst half of 2020 increasing total committed facilities to £300m (2019: £250m).

In addition, the Group reduced discretionary costs and capital expenditure and increased the focus on cash collection. Net borrowings decreased in the year by £32.3m to £198.1m (2019: £230.4m) and at 31 December 2020, the Group had £120.2m (2019: £41.7m) of undrawn committed banking facilities. The ratio of underlying net borrowings, which excludes right-of-use operating leases of £23.1m (2019: £27.4m), to underlying earnings before interest, tax, depreciation and amortisation (Ebitda) was 2.3 times (2019: 2.1 times).

The Group's banking agreements are based on underlying net borrowings but inclusive of bonds and guarantees of £28.3m (2019: £54.8m) and the net debt to Ebitda for covenant calculations was similar to previous year at 2.8 times (2019: 2.7 times). With the support of its banks, the Group's net debt: Ebitda covenant was amended during the year to 3.95 times at 31 December 2020, 3.75 times at 30 June 2021, reverting to 3.5 times at 31 December 2021.

Financial review (continued)

Pensions

In the year, the Group contributed £4.8m (2019: £5.0m) into deﬁned contribution pension schemes through which existing employees receive pension beneﬁts. The Group has an obligation of £8.8m (2019: £0.4m) for its own closed deﬁned beneﬁt scheme. A formal triennial valuation of this scheme was carried out at 31 July 2019 which reported a funding deﬁcit of £8.2m with an 88% funding level. Contributions paid in the year amounted to £1.2m (2019: £1.6m).

The Group also contributes to two industry-wide deﬁned beneﬁt schemes, the Merchant Navy Ofﬁcers Pension Fund and the Merchant Navy Ratings Pension Fund, of which the Group share of the accounting deﬁcit was £1.5m (2019: £5.4m). With no worsening of the deﬁcit based on each one's triennial valuations, contributions are currently scheduled to cease in 2023. The deﬁcit reduction in 2020 was due to contributions of £3.8m (2019: £7.0m).

Scantech Offshore has successfully expanded into renewables, winning a series of contracts to support the construction of wind farms worldwide through using its air compressors and air ﬁlters to create bubble curtains.

Impact of Brexit

The UK's exit from the European Union is not expected to materially impact the Group's proﬁtability. A free trade agreement announced at the end of 2020 is welcomed and, whilst not underestimating the potential impact on trade and logistics between the UK and the EU, it is relevant that 9% of Group turnover is sold to EU countries.

Stuart Kilpatrick Group Finance Director

Over the last year, operations have rapidly expanded from Europe to Taiwan. In 2020, Scantech Offshore successfully supported two major Offshore Wind Farm projects in Taiwan, delivering an exceptional service and on time delivery considering the global pandemic. The success of this earlier work has now led onto a further three major offshore wind contracts in Taiwan being awarded (two out of three of the projects are already underway). These projects will take the team right through 2021 and sets Scantech Offshore up as a trusted provider of noise mitigation in wind farm installation not just in Europe but also in Taiwan.

Bubble curtains are used underwater to protect marine life from loud noises during subsea operations. Ordinary construction noises travel much more easily underwater, and sound levels can be ﬁve times higher than in open air, potentially harming and even killing marine life. However, air bubbles resonate in response to sound, absorbing sound energy and when formed into a curtain they reﬂect the sound, effectively keeping it within the curtained area.

Key performance indicators

Underlying operating proﬁt (£m)

2019 2018 2017 2016

66.3

62.1

54.1

50.8

Underlying operating proﬁt is after adjusting for separately disclosed items and is the underlying proﬁt from operations before interest.

Underlying proﬁt before tax (£m)

2019 2018 2017 2016

48.6

45.8

Operating margin (%)

2019 10.7

2018 11.0

2017 10.8

2016 10.9

Operating margin is the ratio of underlying operating proﬁt to revenue. The Group's operating margin in 2020 was 7.8% (2019: 10.7%).

Return on operating capital employed (%)

58.5

56.1

Underlying proﬁt before taxation is after interest and before separately disclosed items and related taxes. Underlying proﬁt before taxation in 2020 was £31.5m (2019: £58.5m).

Return on operating capital employed is deﬁned as underlying operating proﬁt divided by average operating capital employed. Operating capital employed comprises tangible ﬁxed assets, intangible ﬁxed assets, operating debtors net of creditors, less provisions. The Group's post-tax return on operating capital employed was 6.7% in 2020 (2019: 11.3%).

Cash conversion (%)

157

2019 2018

103

Gearing

2.1

2017 57 2016

2019 2018 2017 2016

1.3

1.7

1.4

Cash conversion is deﬁned as the ratio of operating cash ﬂow to underlying operating proﬁt. Operating cash ﬂow is deﬁned as underlying operating proﬁt, adding back depreciation and amortisation and adjusting for net movements in working capital, pension payments and for the cash proﬁts of associates. The Group's cash conversion was 217% in 2020 (2019: 99%) and has averaged 122% over the last ﬁve years.

Gearing is deﬁned as the ratio of underlying net borrowings to underlying earnings before interest, tax, depreciation and amortisation. The gearing of the Group at 31 December 2020 was 2.3 times (2019: 2.1 times).

Engaging our shareholders

See pages 35-36 for more information

Engaging our shareholders

The Company engages with shareholders by maintaining regular communication from which it values the interaction and feedback. The Annual Report and Accounts and the Group website set out the Group's strategy, progress against its strategy and the Group's activities.

Formal preliminary announcements and interim management statements are provided throughout the year. Investor days are held periodically when presentations are made to investors and analysts. In addition, the Company invites regular direct communication with its shareholders as part of the Company's investor relations programme.

During 2020, these events went ahead, and additionally the Company sought speciﬁc feedback from shareholders and shareholder groups in relation to the proposed changes to the remuneration policy and the LTIP rules, both of which will be presented for approval at the AGM. While the feedback received was largely positive and has been accounted for in the proposed changes, shareholders also communicated their views over remuneration outcomes for 2020 in light of the challenges encountered by the Company over that period. These views have been carefully considered by the Remuneration Committee in establishing the remuneration outcomes set out in the Remuneration report. This engagement was led by Aedamar Comiskey in her role as chair of the Remuneration Committee.

See pages 37-40 for more information

Annual General Meeting (AGM)

Due to the restrictions in place as a result of the Covid-19 pandemic, we were unfortunately unable to welcome shareholders to our AGM. For 2021, and in anticipation of restrictions which may still be in place in April, the Company is planning for an AGM with the minimum number of shareholders present to form a quorum, in the interests of health and safety. However, in order to provide an engagement opportunity for shareholders, the Company will hold an online webinar available to all shareholders before the proxy voting closes. More details can be found in the notice of AGM.

At the webinar the Directors will provide a presentation on the performance of the business, and will hold a question and answer session. The Company intends to return to its traditional AGM in Barrow-in-Furness as soon as possible, with all attendees invited to meet members of the Board informally after the AGM to discuss the business and raise questions. The Company is proposing to change its articles of association to allow for "hybrid" meetings in the future, which will not replace the physical AGM, but will enable those shareholders who are not able to attend in person to attend remotely and have an opportunity to participate.

Supporting our local communities

The Group operates in more than 40 countries worldwide with facilities and employees in the Middle East, Asia, Africa, Brazil, USA and UK.

We are continually seeking opportunities to engage with and support the local communities in which we work through local procurement and content sourcing, recruitment, training and development of local employees, and by supporting local social and economic enterprises. Our initiatives in our local communities are important to the success of our businesses, which are reliant on the support of the people and communities around them.

Each business has its own local communities strategy and actively encourages and supports its employees to engage with projects across the UK and internationally to help make a positive impact, either through charitable fundraising, volunteering their time, or collection and distribution of items to support those less fortunate or in need. At each quarterly business board meeting, the MDs are asked to report on progress against their local communities strategy and each business board considers the potential impact of its decision-making on local communities. This came into particular focus this year, as many of our businesses responded to needs of their local communities in the face of the pandemic. More details are set out below.

The Sir John Fisher Foundation (the Foundation), which owns approximately 25% of the Company's Ordinary share capital, is a charitable trust founded in 1980 by Sir John Fisher (the former chairman of the Company and grandson of the founder) and Lady Maria Fisher with the objective of distributing income to charitable causes throughout the UK focused on seafarers and the Arts, but with special regard to those based in and working for the beneﬁt of people living in Barrow-in-Furness and the Furness Peninsula, where the Company is registered and maintains its headquarters.

Progress against 2020 goals

• Embedding social responsibility as an integral strand of the culture of each operating company by sharing across the Group the activities and contributions being made in the various parts of James Fisher:
- • The intranet and internal newsletter (Pelican) are being used as effective platforms through which to communicate social responsibility case studies and ideas across the Group.
- • All Group companies have embedded delivery of value to local communities into their strategies.
• Encouraging and enabling all our colleagues to contribute to their local communities, and respond to community needs:
- • As part of the roll-out of our employee engagement survey we ran a Group-wide competition with the winners receiving a donation to their chosen charity.

Supporting our local communities

Supporting our local communities (continued)

• Over the course of the year, employees were involved in numerous types of community-focused projects and charity initiatives, for example:
- - EDS HV employees volunteered with local charity SOS Bus NI to help distribute vital food supplies to vulnerable people unable to leave their homes to get food items during the ﬁrst lockdown and have also helped operate a local Covid-related helpline.
- - Strainstall's Isle of Wight ofﬁce donated desks to local Mountbatten Hospice and to members of the community who required equipment to work from home, as well as making ﬁnancial donations to Kidney Research UK and Ability Dogs.
- - Employees from Martek, James Fisher Offshore, Scantech Offshore and the corporate ofﬁce stepped up at Christmas time with donations to food and toy banks and team fundraising for charities such as Macmillan, Save the Children and The Wishing Tree.
- - A number of our businesses have also been actively involved in STEM initiatives, undertaking enterprise advisor work in schools, supporting careers and women in engineering events as well as producing videos to promote adoption of STEM subjects.
• RMSpumptools continue to strengthen their relationship with Acorn (a charity providing support and housing for adults with physical / learning needs) and plan to introduce someone who has beneﬁted from the Acorn program into their production team to enable them to beneﬁt from a working environment. Unfortunately, Covid-19 has temporarily prevented the work experience going ahead but this is planned to resume when it is safe to do so.
• Collections of old IT hardware have been made with items being refurbished for sale to generate proﬁts for the charity.
• Obsolete equipment has been recycled for the beneﬁt of the local community - for example, cable drums have recently been transformed into a wellness seating area for recuperating ﬁreﬁghters.

2020 achievements

• JFD employees in Singapore supported the Courage Fund to help provide relief to susceptible individuals and families affected by Covid-19.
• JFN put its design engineering skills and materials to work using 3D printers to produce mask visors for local hospitals in Preston, UK, as PPE was in short supply.
• EDS sponsored a classroom at Northern Lincolnshire University Technical College and are actively seeking ways to develop the relationship further in 2021.

2021 goals

• Establish a Local Communities working group to help consolidate and focus initiatives where they maximise impact, align with the areas of greatest inﬂuence and to facilitate the sharing of best practice and ideas so as to further support communities around the globe.
• Better understand the local community projects our customers are involved in so we can offer support where possible.
• Further develop our existing local community partnerships.
• Continue to support STEM initiatives in local schools.
• Endeavour to work with local communities as co-implementers rather than simply focusing on them as beneﬁciaries.

Empowering our people

Geographically dispersed across a number of continents and representing a multitude of cultures, our people are our most important asset. United by a common purpose and shared valued behaviours, their talents, energy and commitment enable us to create value for all our stakeholders. We recognise the responsibility we have to our people and are committed to ensuring that James Fisher is a great place to work by empowering and supporting our people so they can make a real contribution to the Group's success and attain their personal goals by achieving their potential. This is a central focus for the Chief Executive Ofﬁcer, responsible for all employee matters, and the Group Head of Human Resources.

This year, navigating through the Covid-19 pandemic has been an obvious priority. Meanwhile our people helped redeﬁne our corporate purpose and values, and with their adoption throughout the Group. Our people have demonstrated their resilience throughout. Our activities in relation to these matters are set out in more detail below. Throughout the year, we have increased our internal communications and also created numerous new working groups to enable the employee voice to reach the Executive team and Board on key issues, including Covid-19. This was complemented by the feedback we received from the engagement survey and the work of Inken Braunschmidt as Non-Executive Director responsible for employee engagement.

In recognition of the pivotal role of our people, the need to retain them and encourage their development, we've revitalised our employee strategy to facilitate an engaged, creative and high performing culture by focusing on ﬁve core components:

Engagement - We are committed to engaging our employees through employee training, management development, CPD, valued behaviours, onboarding, engagement surveys and engagement indices.

Diversity and inclusion (D&I) - We are focusing on talent attraction, global HR planning, graduate / apprenticeship campaigns and enhanced support mechanisms for returning parents.

Wellbeing - We are building on existing initiatives through effective communications and change management, instilling greater trust and conﬁdence in the future and by re-evaluating pay, reward and recognition.

Talent management - We are concentrating on our talent succession, career development paths, performance management, appraisal reviews and development plans.

Organisational structure - We are optimising our resource planning, organisational and job designs to create opportunities for individual development, accountability and recognition.

Gender diversity

Main Board Directors Executive Team

Senior Managers* 13

Employees 634

2020

2019

Male

Female

Male

Female

2,115

623

2,579

634

* Those reporting to members of the Executive Team, including senior managing directors

Empowering our people (continued)

Progress against 2020 goals

• Continue empowering and engaging employees with clear development opportunities:
- • During the year we have celebrated a number of graduate and apprentice success stories - Erin Mutch, a recent business administration apprentice from Fisher Offshore and Carly Robertson, a design and business development graduate at JF AIS, are amongst the most recent employees to complete their programmes and begin progressing their careers within the Group.
- • To embed a culture of high performance conversations, we are currently testing a new performance management system within the business, which enables collaborative goal setting, insightful feedback to drive genuine behavioural change and the ability to measure performance without bias.
- • Supporting continuous development and growth of our internal talent, we are working with our current learning supplier to strengthen our mandatory induction/onboarding initiatives and our career/learning pathways.
• Strengthen the Group's approach to diversity and inclusion (D&I):
- • A new D&I delivery plan has been formulated with a focus on talent attraction and management, engagement, inclusion and reporting.
- • A D&I working group with representatives from all around the Group has been established to actively champion D&I across the Group and to support the delivery of the Group's D&I objectives.
- • Existing Group D&I policies have been reviewed and refreshed.
- • Internal targets have been established to increase female and BAME talent attraction.
- • A review of current recruitment partners has been undertaken as a means to ensure diverse candidate streams.
• Launch a Group-wide communications platform:
- • A new, refreshed group-wide intranet launched in the middle of 2020, and serves as a central portal where employees can access news and information from wellbeing advice and tips, to Group policies, IT and cybersecurity guidance.
- • As part of a wider Ofﬁce 365 roll-out, the collaboration tool Microsoft Teams has been implemented and has enhanced intra-group communication.
• Initiate an engagement and education programme for employees to ensure the promotion of safety during all travel:
- • The difﬁculties of travel during the pandemic and the safety incidents we have encountered in the year have brought this into focus.
• Ensure at least one established mental health ﬁrst aider in operating companies:
- • We are investing in mental health awareness and mental health ﬁrst aid training. Over the course of the last twelve months, we have increased our provision of mental health ﬁrst aiders across the Group from 54 to 110 and have worked to increase their visibility.
• Reinvigorate the recruitment of apprentices into Group operating companies, aiming to take on ﬁve new apprentices across the Group:
- • Following a Group-wide exercise to identify apprenticeship opportunities across the businesses, Covid-19 has unfortunately delayed our plans in this respect but we are keen to progress with our next cohort once conditions allow.

2020 achievements

• Comprehensive review of employee strategy undertaken.
• Regular employee planning discussions held between Inken Braunschmidt, Group CEO and Group Head of Human Resources throughout the year, advancing projects such as the Group-wide pulse survey and comprehensive employee engagement survey, both of which were completed in 2020. Inken regularly invites the Group Head of Human Resources to attend and present to the Board on key issues, and to allow feedback from the workforce to reach the Board.

• Direct employee feedback and insights gained from the engagement survey on topics such as leadership, communications and change management, company strategy and employee recognition:
- • Participation rate was 67% (2019: 40%) and responses indicate a good degree of engagement.
• Employee wellbeing and engagement working groups formed in addition to the diversity and inclusion working group.

2021 goals

• Begin to build a scalable and efﬁcient delivery model capable of responding effectively to strategic business opportunities, ensuring optimal organisational design with no more than ﬁve layers from CEO downwards.
• Continue to create effective recruitment, development and learning opportunities for all employees. We will design and implement a talent management process to 'grow our own', setting us on course for our goal of ﬁlling 25% of all roles by internal candidates by 2025.
• Implement actions in response to the employee engagement survey:
- • Detailed results of the engagement survey will be reviewed by Inken Braunschmidt before the key messages are shared with the Board later in the year.
- • Alongside the Group-level results, detailed business-level results are being shared with the managing directors of each business. Each managing director has been asked to respond directly to the employee feedback relevant to its business, and all managing director presentations to the Board in 2021 will include a summary of actions being taken in response to the employee feedback received.
• Provide further opportunities for direct employee feedback - such as Non-Executive Director Q&A sessions for employees.
• Appoint a dedicated Learning and Development HR business partner.
• Continue to strengthen the Group's approach to diversity and inclusion, utilising the dedicated working group to help build awareness of its importance and to support the implementation of processes focused on promoting diversity in the workplace including through talent attraction, recruitment and STEM initiatives.
• Foster a culture of continuous improvement, using reﬁnements in our performance management system to create a meritocracy, supporting the highest standards of integrity and delivery.
• Ensure strong local expertise and talent across all our geographies.
• Further embed our new Group-wide valued behaviours at all levels of the organisation.
• Continue building on the success of the Group-wide intranet by increasing opportunities for engagement within the platform.
• Form a talent management working group in support of the new employee strategy to help unlock and empower the talent of today, tomorrow and the future.

Health and safety

The health, safety and welfare of our employees, together with those who work with us, or are impacted by our activities, whether customers, suppliers, contractors, agency workers or others is of paramount importance to the Group. Our intention is that everyone who works with us returns home safely, and in that regard health and safety is embedded into our organisational culture and is the ﬁrst priority in all our management reviews and board meetings. Our aim is to equip everyone with the knowledge, skills and equipment to work safely, and to provide the support to foresee potential hazards and to act to mitigate the risks appropriately.

Unfortunately there have been a number of safety incidents in 2020, including one fatality amongst our people working in overseas locations. Whilst thorough investigations show that primary responsibility for the fatality is not with the Group, this is a devastating and sobering event and gives added impetus to our own efforts towards continuous improvement in health, safety and welfare.

Our strong focus on employee training, regulatory compliance and accident reduction provides the support to allow accountability to remain with local management who are best-placed to ensure that their businesses comply with local laws and regulations and speciﬁc needs on a day-to-day basis.

Given the challenging environments and complexity of the solutions we provide, we recognise that there is inherent risk in what we do and that the sharing of incidents, near-misses, investigations and best practice amongst the Group is a powerful means of increasing awareness and providing fresh insight and thinking. We are committed to learning from any events and implementing training, procedural controls, protective equipment and technology to achieve our goal of zero incidents.

The Covid-19 pandemic has served as a reminder that we must constantly be aware of the potential risk posed by our working environment, and has brought the health and wellbeing of all our employees into sharp focus. The Company responded quickly to Covid-19 and the impacts of the resulting restrictions. This included increasing to weekly the frequency of Executive team meetings, as well as introducing a weekly call between the Executive team and the managing directors of the operating businesses. The results of these meetings have been reported on a regular basis to the Board. All of these meetings, along with all Board meetings, have started with an update on the health and safety of our workforce throughout the pandemic.

The imposition of national lockdowns, work and travel restrictions has introduced new, previously un-encountered hazards where our employees need to balance enforced isolation from their colleagues with the need to work in a new way, and in some cases provide support to dependants.

In response we:

• rapidly established a Covid-19 working group responsible for formulating and communicating the Group's response across different Group locations.
• introduced enhanced safety measures, deep cleansing and social distancing at our operational sites to help keep people safe whilst performing their roles.
• provided access to support and advice through the rollout of our Employee Assistance Programme.
• Increased the number and visibility of our mental health ﬁrst aiders.
• Provided employees with a Covid-19 care pack with guidance on safeguarding their own and their families' wellbeing, details of how to access support and practical items such as hand sanitiser and masks.

We are saddened to report that two of our colleagues independently contracted Covid-19 outside of work and sadly passed away.

During these incredibly difﬁcult times, our people have been truly amazing at identifying and organising ways to help safeguard their colleagues and their families from both the direct and indirect effects of the pandemic. A number of colleagues volunteered to be available on Christmas Day, for example, to hold a group call for anyone struggling over the festive period, and a number of mental health ﬁrst aiders made themselves available over the course of the holidays.

Progress against 2020 goals

• Continuing to strive towards zero incidents across the Group:
- • Our Group safety forum, comprising the health and safety leaders from each business, continues to embed lessons learnt from all incidents, to share best practice and to advise the Group Health and Safety Committee on new Group-wide initiatives.
- • The Group adopts the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013 (RIDDOR)1, and the number of reportable incidents across the Group in 2020 was 3 (2019: 3).
- • The Group's overall RIDDOR reportable frequency rate2 in 2020 was 0.06 (2019: 0.05).
- • The Group recorded 1 lost time accident (LTA3) in 2020 (2019: 2).
• Continue to drive focus on health and safety throughout James Fisher:
- • Health and safety is the ﬁrst agenda item at all Board and working group meetings across the Company.
- • In light of the global pandemic, a Covid-19 working group has been established. Meeting regularly, the group actively monitors the ever-changing situation and communicates recommendations and Group guidelines.
• Set up a "Health and Safety Hints and Tips" section on the Group intranet to share best practice:
- • A HSE and wellbeing section has been created on the Group intranet which includes HSE hints and tips as well as including ﬁrst aid and safety performance sections.
• Develop "Health and Wellbeing" programmes in all divisions:
- • Established an employee assistance programme for all employees. A free and conﬁdential service, it provides advice on a range of topics including work/life balance, ﬁnancial management, mental wellbeing and family concerns.
• Continue to enhance reporting of near misses:
- • As a result of the diversity of businesses, geographies and industries supported across the Group, there were numerous near miss reporting and root cause analysis methodologies. During 2020 the Group Safety Committee, assisted by the Group safety forum, has established and implemented a uniform reporting methodology and template, which has improved the quality of information available and enabled better discussion and sharing of best practice amongst the forum. Each business uses the information to roll out monthly H&S campaigns (including messaging and toolbox talks) based around themes emerging from the improved near miss reporting.

1 A reportable incident under RIDDOR is a work-related injury which results in a person's incapacitation for more than seven days.
2 The RIDDOR reportable frequency rate is the number of RIDDOR reportable incidents per one hundred thousand hours of work.
3 An LTA is an incident which causes a worker to be incapacitated for three or more consecutive days, not including the day of incident

Health and safety (continued)

2020 achievements

• A concerted focus on mental wellbeing has led to the doubling of the Group's trained mental health ﬁrst aiders, the development of a dedicated mental health resource library on the intranet, frequent wellbeing communications with hints and tips and initiatives such as a voluntary wellbeing call on Christmas Day.
• Launch of Group-wide exercise challenge, as well as local initiatives promoting exercise and wellbeing at a Group company level.
• Large scale roll-out of Covid-19 care packs. Care packs included practical items such as reusable masks and hand sanitiser as well as informative literature on healthy eating, exercise and Covid-19 guidelines.
• During the year, our Tankships business James Fisher Everard (JFE) made 628 voyages and carried over 2.25m metric tonnes of product with no product spill in the water.
• Our principal operating companies maintain internationally recognised occupational health and safety management systems accredited to OHSAS 18001 or OHSAS 45001.

2021 goals

• Continue striving towards zero LTAs across the Group.
• Continue driving focus on health and safety throughout James Fisher.
• Continue to enhance reporting of near misses, as well as bringing more consistency to root cause analysis through the Group safety forum.
• To act quickly in the event that an accident / incident occurs, to thoroughly investigate and ensure learnings are adopted.
• Further increase the number of mental health ﬁrst aiders to 200 by the end of 2021.
• Continue to monitor the uptake of the Employee Assistance Programme and take action to introduce further support mechanisms where required.

Partnering with our customers and suppliers

Responsiveness to our customers' current needs and anticipating their future requirements deﬁnes our purpose, and reinforces our valued behaviours. Our success depends on achieving a deep understanding of the challenges that our customers face and the complexities posed by the environments in which they operate - an understanding which can form and sustain effective customer relationships.

Individual trading companies within the Group are best placed to understand and respond to these needs and best able to manage their supply chains effectively. They engage directly with their customers and suppliers, supported by Group functions and assisted by the sharing of best practice by the customer and supplier stakeholder working groups. Our businesses rely on being able to deliver services (through our people) and/or products throughout the world. The challenges created by the restrictions on movement imposed by governments in the face of the pandemic have made this more complex. However, our businesses worked quickly to adapt, and have listened to the changing needs of our customers, and worked closely with our supply chain to create dynamic and often complex methods of delivery in the face of adversity. Examples of that resilience and responsiveness are set out below.

We are also alert to the macro-economic trends that will shape our customers' future business, and share their concerns about creating a sustainable future. In response we are: reafﬁrming our commitment to supporting their efforts to drive continuous improvement and efﬁciency; actively taking steps to reduce our greenhouse gas emissions wherever possible; and, identifying adjacent segments where our assets, skills and resources can innovate in pursuit of a sustainable future.

• Scan Tech AS has been developing a solution to improve the health and welfare of ﬁsh stocks for the aquaculture sector in Norway.
• Scantech Offshore has been deploying its offshore air compressors to deliver bubble curtains to protect marine wildlife from noise and debris during offshore wind farm construction.

We wish to work with organisations who share and can assist us with achieving our goals. We will continue to make our supplier choices on: greater clarity on environmental credentials; legal compliance; respect for human rights; and transparent business ethics. Our assessment of performance in these areas will underpin our future sourcing strategy and will be more determinate than simply price or quality.

As we seek to increase alignment between our customer needs and supplier credentials, we are taking steps to gather objective data on our progress and will be seeking feedback from our customers and suppliers that assesses our performance and measures us against our valued behaviours.

Partnering with our customers and suppliers

Partnering with our customers and suppliers (continued)

Progress against 2020 goals

The focus in 2020 has been on the importance of contract negotiation as an engagement opportunity with customers and suppliers in order to build on commercial relationships, to demonstrate the Group's values and to establish a fair balance of risk and reward. Individual businesses have also worked with their supply chain to ensure that they work in a way that is consistent with the Group's values, including respect for human rights and business ethics.

• Leveraging across the Group the beneﬁts already identiﬁed from utilisation of performance monitoring of key suppliers. The goal is to have these incorporated as part of the new supplier process, to facilitate sustainable continuous improvement of our supply base.
• Supporting on-going supplier engagement initiatives to help them identify sustainable cost-savings and tendering enhancements:
- • With respect to the two targets above, the Group is establishing a supplier working group, with an Executive sponsor and purchasing representation from around the Group. The aim of the working group is to identify improvements in supplier engagement through sharing of best practice between businesses, including (i) making shared use of the performance monitoring process and data already available, and increasing its scope to other businesses; and (ii) identifying cost-savings and tendering enhancements. We expect to be able to report further progress on this next year.
• Embedding Group standards and policies within new relationships with suppliers and driving support for our sustainability initiatives through our supply chain:
- • During the year, we have consolidated and rolled out a Group standard on-boarding questionnaire, requiring suppliers to conﬁrm their compliance with Group standards and policies, and our businesses employ health, safety, environment and quality (HSEQ) questionnaires to verify supplier minimum standards in these areas. Going forward, we are aiming to bring some increased consistency and further coverage to the HSEQ questionnaires to seek increased supplier support for our sustainability initiatives.
• Further embedding in all Group operating companies the bespoke web-based platform introduced in 2019, which gives businesses the tools to carry out robust due diligence on agent and joint venture relationships:
- • This initiative has been fully implemented across the Group, covering all historic and future third party agent and joint venture relationships, resulting in better decision-making through enhanced due diligence, and rationalisation of the risk proﬁle of the Group's third party relationships.

2020 achievements

• Martek, our marine safety products and services business, responded quickly to new crew change guidelines due to the pandemic, by launching a Coronavirus antibody test. It also provided comprehensive personal protective equipment to its marine customers.
• JFD promptly answered the UK Government's call for rapidly manufactured ventilators to provide essential medical equipment to the NHS.
• Customer needs have been recognised as an integral part of the Company's new purpose-led approach with an emphasis on the need to adequately align company, customer and supplier interests.
• Customer engagement was a key focus at the Senior Leadership Conference with mechanisms for improvement considered particularly during pre-signature discussions and post-signature contract management.

2021 goals

• Strengthen our feedback processes and report progress on a regular basis with actions identiﬁed and implemented as required.
• Continue to afﬁrm our commitment to supporting customers in their efforts to drive continuous environmental improvements.
• Establish customer and supplier working groups with representation from across the Group, to share best practice and embed consistent approaches.
• Request visibility of suppliers' sustainability plans where possible, with audits performed on key suppliers.

Protecting our environment

The Group is committed to protecting the environment, both in terms of our operational footprint and the nature of the activities we undertake. The acknowledgement of the body of scientiﬁc evidence that identiﬁes the signiﬁcant impact of human activity on climate change will inﬂuence the energy transition, the Group's investment choices and growth agenda. The Group's environmental policy recognises our responsibility to protect the environment for the beneﬁt of all and we set out an intent to ensure that we minimise the impact of our activities, our consumption of raw materials and our production of waste.

As we make further progress, we will continue to push our suppliers for greater clarity on their environmental credentials, as we do with legal compliance, respect for human rights and transparent business ethics, to ensure responsible sourcing throughout our supply chains.

We also consider the direct and indirect impact of our own activities on the environment. 2020 was the ﬁrst year that the Company responded to the Carbon Disclosure Project (CDP). Investors, customers and regulators want to know how companies are adapting to a changing climate. Accordingly, we continue to build on the implementation of the recommendations set out by the Task Force on Climate-related Financial Disclosures (TCFD), more information about which can be found below. We are actively taking steps to reduce our greenhouse gas emissions, moving to lower or zero emission technologies when and where possible.

Operationally, Covid-19 and the rapid shift in working practices enabled by technology has contributed to a signiﬁcant reduction in business travel for our employees. Virtual meetings, digital connectivity and homeworking have changed the requirement for business travel, commuting and ofﬁce space and we will continue to evaluate what positive improvements should be retained for the long-term.

Our operating companies continue to make tangible environmental improvements by continually focusing on innovation, changing customer need and operational excellence:

• RMSpumptools - pioneering electrical submersible pump artiﬁcial lift and subsea connector technologies to maximise well efﬁciency, thereby reducing new exploration and production activities, and minimising local gas emissions through its innovative design.
• Fendercare - sustaining an exemplary safety record in avoiding spills to water during thousands of ship-to-ship transfers.
• JFMS, EDS, Rotos 360 and Scantech Offshore - actively engaged in the transition to renewable energy through supporting construction and maintenance of offshore wind farms.
• Fisher Offshore and JF Nuclear - sustainable decommissioning and waste management of end-of life assets in the nuclear and oil & gas sectors.
• AIS and JF Testing Services - utilising the latest advances in digital technology to provide real-time insights to identify improvements in operating efﬁciencies, reduced maintenance schedules and asset life extension.

Protecting our environment (continued)

The Group has considered the impact of climate change risks and opportunities on the Group in the Principal Risks section of the report on pages 43 to 51.

Progress against 2020 goals

• Driving further fuel efﬁciencies in our shipping activities, including accelerating plans for investment in fuel-efﬁcient and environmentally-friendly technologies:
- • Our Tankships division is supporting its customers to improve fuel efﬁciencies and minimise emissions, including through plans to access dual-fuel propulsion vessels by 2022. This could reduce ﬂeet vessel emissions of carbon dioxide by up to 21%, and of NOx and SOx by over 90%, based on the use of LNG as marine fuel. LNG also provides a signiﬁcant advantage in terms of improving air quality when compared to conventional fuels, which is important in ports and coastal areas.
• Encouraging our businesses to further develop their supply chains to enhance responsible sourcing initiatives:
- • We are establishing a supplier working group, with an Executive sponsor and representation from around the Group to drive forward various initiatives including pursuing more responsible sourcing activities through the supply chain and establishing minimum requirements for supplier onboarding.
• Encouraging all our businesses to make James Fisher a "plastic bottle free zone":
- • A number of companies, including Fisher Offshore and JF Marine Services, have provided their employees with a reusable water bottle. This initiative is ongoing.
• Encouraging employees to make use of all available technologies as alternatives to travel, with air travel to be used only for essential business:
- • The timely and widespread introduction of Ofﬁce 365 with its collaboration tool Teams has enabled widespread adoption of 'virtual' meetings, thereby considerably reducing the need for travel.
• Operating companies to make a positive effort towards investing in LED light ﬁttings to reduce energy consumption at our sites:
- • Strainstall is the latest of our ofﬁces to fully change the lighting throughout its premises to LED.
- • JFD, JF Nuclear, EDS and RMSpumptools are amongst the businesses transitioning or fully-transitioned over to LED lighting.

2020 achievements

During 2020, all of our businesses have embedded their individual environmental strategy into their wider strategy, and report quarterly on progress against that strategy, allowing the environment to be considered alongside other stakeholder interests in individual business decision-making, both in terms of minimising impacts, but also identifying opportunities, as described above. James Fisher acknowledges the global threat posed by climate change and recognises the need to reduce greenhouse gas (GHG) emissions. The Group has a governance structure in place to consider carbon emissions and energy usage to minimise the impact of its operations on the environment.

We accept our responsibility to comply with emerging climate change legislation and regulation, and to reduce our GHG emissions as far as is reasonably practicable through appropriate initiatives. Part of the Sustainability Committee's remit includes keeping this issue under review.

Energy consumption was measured across the Group by recording data on the combustion of fuel and the use of electricity at its facilities. The Group's total GHG emissions are:

Emissions total (in thousands of metric tons)	2020	2019
CO2 equivalent from electricity consumption in facilities	1.6	1.8
CO2 from combustion of fuel at facilities and road vehicles	2.9	3.5
CO2 from combustion of fuel in vessels	76.7	89.4
Total emissions (CO2)	81.1	94.6
The Group's total energy usage is:
Energy usage (Kwh)	2020
UK	207,538
Non-UK	77,692
Total	285,230

• The Group's 2020 carbon intensity ratio calculated against the Group's revenue remained consistent at 0.02% (2019: 0.02%).
• 97% of our operating companies operate environmental management systems (EMS) certiﬁed to ISO 14001 standard.
This internationally recognised EMS enables a systematic approach to handling environmental issues.
• The Group continues to support the UK Government's 'Cycle to Work' scheme, increasing the maximum certiﬁcation value from £1,000 to £5,000 to allow employees greater choice and to take advantage of e-bike offers.
• A number of businesses, have begun investing in solar energy installations to reduce their facility's carbon emissions. Strainstall's new REC N-Peaks panels have reduced their site's carbon emissions to date by over 4,600kg.
• Group companies are also working to reduce their environmental impact by actively monitoring paper usage with a commitment to reducing consumption across our ofﬁces and shredding non-conﬁdential paper for use in product packaging.
• A number of our businesses have committed to using only green merchandise at events and prohibiting the printing of single-use or low-use banner stands by replacing them with laptops or video screens.
• We're actively promoting environment-related days like World Earth Day and Zero Waste Day using social media and newsletters to help raise awareness, both internally and externally.
• 14,000 litres of potentially contaminated diesel fuel returned from job-sites and 22,000 litres of hydraulic oil used in Hydraulic Power Units and cranes have been ﬁltered and recycled by Scan Tech AS.
• Our workshops have introduced re-ﬁllable spray cans to reduce consumables.
• Promoting a greener product line by replacing diesel with electrically powered units at Scan Tech AS - increasing our rental ﬂeet of large electrical compressors for both ATEX and Marine installations. These are a viable alternative to large diesel machines, and have zero emissions, automatic start-stop and are quieter in use. They also require less maintenance, have less ﬂuids to change, weigh less (transport emissions) and have a smaller footprint.
• RMSpumptools is reducing energy usage by adopting lower-power consuming 'mini-desktops' for its employees.

2021 goals

• Continue to raise awareness amongst the Group of the importance of environmental considerations; including rolling out 'lunch and learn' sessions focused on environmental issues for employees.
• Promote chemical-free cleaning methods where possible.
• Use our nanobubble technology to reverse environmental damage at a local lake within Stavanger Municipality - Hålandsvannet, Norway for the beneﬁt of the local community and wildlife.
• Continue our focus on delivering clean alternatives to diesel-fuelled equipment and identify products and systems to reduce the amount of gas ﬂaring for Middle East, Africa and Asia Paciﬁc region.
• Minimise the use of single-use plastics in production and paper usage in stores wherever possible.

Protecting our environment (continued)

Task Force on Climate-related Financial Disclosures (TCFD)

Investors, customers and regulators want to know how companies are adapting to a changing climate. Here we describe in more detail how we are implementing the recommendations set out by the TCFDs, which is enabling us to identify and evaluate the potential risks and opportunities arising from climate change for our business model and to respond accordingly.

Governance

Members of the Board, Audit Committee and Risk Committee maintain oversight of the Group's approach to risk management. This is assisted by the Sustainability Committee which advises those bodies on climate-related risks. Risks are monitored as part of our standard operating processes to ensure that appropriate mitigations are in place as part of regular management reviews. Quarterly operating business board meetings report changing risk and relevant mitigation methods and progress. This business-level view of risk is considered by reference to the Group-level risk proﬁle by the Risk Committee. The Risk Committee and Executive Directors report the results of both the bottom up and top down view of these to the Board and Audit Committee. Climate-related issues are assessed by the Sustainability Committee when reviewing and developing strategy, policies and planning. These are reported to the Board and relevant Committees on an on-going basis via the Group CEO who sits on the Sustainability Committee.

Strategy

Our purpose is pioneering safe and trusted solutions to complex problems in harsh environments, to create a sustainable future. Amongst other macro trends, climate change is creating impacts on the Group and its customers, in particular through an energy transition from fossil fuels to renewable energy sources. The Company has aligned its purpose and strategy to try to meet some of those challenges, in supporting the energy industry's own transition (for example through decommissioning), and in targeting opportunities in the growing renewables market. The Group's fundamental climate-related transition risk is that we fail to gain a strong foothold in the challenging renewables market, threatening our ability to respond to transitioning customer demand. As energy markets change, some of our assets used to provide our services may become of less value to our customers.

The Group's primary climate change-related opportunity is to continue to strengthen our renewables business to match our customers' requirements. We have seen some challenges in 2020 to that strategy, mainly due to the impacts of Covid-19.

However, this remains a core part of the Group's strategy. Alongside this, there are opportunities in our existing oil and gas businesses. Firstly, using our expertise to support the decommissioning of our customers' sites and assets - our Fisher Offshore business continues to grow in this area. Secondly, to repurpose some of our own assets, which have traditionally been used for purely oil and gas related activities, for different applications outside of oil and gas. Our Scantech Offshore and Scan Tech AS businesses have been targeting alternative applications in this respect in the renewables and aquaculture industries respectively.

Risk management

Climate-related risks are identiﬁed and assessed by the Risk Committee, assisted by the Sustainability Committee. Through scenario planning, these bodies identify the risks which the Group may encounter, their relative signiﬁcance by reference to other climate-related risks, and by reference to other risks which the Group faces. Those risks are set out in more detail on page 45. This assessment also takes into account the existing and emerging regulatory requirements related to climate change, including limits on emissions. There is natural mitigation of such requirements, through the diverse nature of the Group's operations and a lack of direct impact of those requirements on the Group's businesses, although we monitor the indirect impacts on our customer base, and the resulting change in their own strategies. The Group completed its ﬁrst CDP reporting in 2020, and is using the results as a baseline to assess the potential size and scope of identiﬁed climate-related risks, as well as to target initiatives that, once implemented, will improve the carbon performance of our businesses. This includes looking at alternative lower carbon fuel supplies for our tanker ﬂeet, and reducing energy consumption at our operating sites. Over the coming months, we will be undertaking analysis to review the resilience of our strategy, taking into consideration various climate-related scenarios.

Metrics and targets

We disclose greenhouse gas emissions performance in this report. Our CDP response also provides further analysis of climate-related risks, opportunities and performance. During 2021, we are targeting establishing more detailed targets and metrics to measure the progress of our initiatives which are aimed at climate-change and reduction of emissions. In this respect our CDP response provides a useful baseline. We aim to provide more detail on this during 2021, and report on progress in our 2021 Annual Report.

Non-ﬁnancial information statement

The information set out below, together with the cross references listed in the table below as to where further information can be found in the main body of the Strategic report, is in compliance with the Non-Financial Reporting requirements as set out in sections 414CA and 414CB of the Companies Act 2006:

Reporting requirement

Description

Location

Page

• Business model

• Group Health, Safety and Environmental policy

• Protecting our environment 37

• Principal risks and uncertainties 43

• Group Health, Safety and Environmental policy
- • Empowering our people 29
• Code of ethics

• Principal risks and uncertainties 43

• Directors' report 88

• Code of ethics
- • Supporting our local communities
• Modern slavery and human trafﬁcking policy
- • Principal risks and uncertainties
27 43
• Code of ethics

• Anti-bribery and corruption policy

• Principal risks and uncertainties
• Principal risks and uncertainties
• Key performance indicators

43 43 25

Our policies

A combination of online and in person training on all the key policies is carried out across the Group, and there is also a system of bi-annual certiﬁcation for compliance ofﬁcers, certifying that the relevant individuals in their businesses have read and understood the policies and are fully compliant. All employees, contractors and third parties are encouraged to report any circumstances where there is a suspected or actual breach of any Group policies, applicable laws, or the high standards as set out in the Code of ethics. All reported incidences of actual or suspected breach of any of the policies are promptly and thoroughly investigated. The Audit Committee also considers any high-risk areas identiﬁed by the internal audit function, the Group legal team or the business' compliance ofﬁcers.

Key policy

Relevant policies

James Fisher is committed to ensuring the highest standards in its activities and is particularly concerned that appropriate and ethical policies and procedures are followed in all business dealings across the Group.

The Group strives for a culture of honesty, openness and accountability. The Group's commitment to the highest level of ethical conduct should be reflected in all our business activities including relationships with our stakeholders.

All employees and others must conduct themselves according to the language and the spirit of this Code and seek to avoid any appearance of improper behaviour.

Health and safety is the top priority and the Group actively strives for the continuous improvement of health and safety in the workplace. We aim to provide a healthy and safe working environment for all our employees and to ensure the safety of others affected by our operations.

The Group recognises its responsibility to protect the environment for the benefit of all. This policy represents a declaration of our intent and commitment to minimise the environmental impact of our activities, our consumption of raw materials and our production of waste.

The ultimate responsibility for health and safety, and the environment rests with the Group Chief Executive Officer, the Board members, and the Executive team. This responsibility is cascaded through the organisation via divisional/regional MDs and their leadership teams.

In the case of health and safety, this is supported by the Group Safety Committee, as well as by the Group safety forum and its individual members, who are the HSEQ representatives for each business.

In the case of the environment, this is supported by the Sustainability Committee, and by the environmental working group, with representation from across the Group.

Non-ﬁnancial information statement

Non-ﬁnancial information statement (continued)

Key policy

Relevant policies

James Fisher has zero tolerance for any form of bribery or corruption and is committed to complying with all applicable anti-bribery and corruption laws. The Group has an established anti-bribery and corruption policy and has introduced a compliance programme which has the support of the Board and senior management within the Group. This includes communication of the statement and policy, training, risk assessment and ongoing monitoring. Employees assessed to be at risk are required to complete the training and to self-certify that they understand and agree to be bound by its provisions. On-going compliance is monitored by local compliance officers who are required to report to their local boards and to the Group Compliance Officer on at least a biannual basis. The compliance officers are responsible for ensuring that risk assessments, training and awareness are carried out where appropriate and are kept up-to-date.

In addition to ensuring that our people are compliant with the Group's anti-bribery and corruption policy, we require that all third party agents and joint venture partners engaging with any Group entity comply with these policies in order to ensure compliance with applicable anti-bribery and corruption laws.

The policy is supplemented by due diligence on all third party agent and joint venture relationships, enabled by a bespoke web-based platform available to all Group businesses. It provides a robust tool through which our businesses can risk assess agent and joint venture partners with whom they are considering doing business. It forms part of our internal control procedures and helps mitigate the business' compliance risk. The platform has been rolled out throughout the Group during 2020.

James Fisher respects fundamental human rights, and is committed to acting ethically and with integrity in all our business dealings and relationships and to implementing and enforcing effective systems and controls to ensure modern slavery is not taking place anywhere in our own business or in any of our supply chains or in the communities in which we operate across our international businesses. We have implemented work practices and policies throughout the Group which are designed to ensure that respect for human rights is integrated into the systems and culture of our businesses. We do not tolerate the use of child or forced labour within our business and take all steps possible to ensure that our suppliers and customers also uphold internationally recognised human rights. This is enabled through risk assessments undertaken by our Group businesses which identify parts of their supply chain which could be susceptible to risk in this area, as well as confirmation from our suppliers of compliance with our policy and relevant law. Our progress in the area of modern slavery is set out in our annual Modern Slavery statement which is available on the Group's website and outlines steps taken by the Group to ensure that there is transparency in the Group and throughout our supply chains. The Group encourages any concerns relating to modern slavery to be raised using the procedure set out in the whistleblowing policy.

Section 172(1) statement

This section serves as our section 172 statement explaining how Directors fulfil section 172 of the Companies Act 2006.

The Board aims to promote the success of the Company for the benefit of its shareholders as a whole, taking into account the long-term consequences of its decisions while giving due consideration to the interests of the Company's stakeholders (including employees, customers, suppliers, shareholders, as well as the environment and local communities which are impacted by our operations), while also considering the importance of maintaining our reputation for high standards of business conduct. Examples of what that has looked like in practice over the past year can be found as follows:

Stakeholder:

Strategic report:

Shareholders Employees Customers/suppliers Environment

Local communities

Page 26 (Engaging our shareholders)

Pages 29 to 34 (Empowering our people) (Health and safety)

Pages 35 to 36 (Partnering with our customers and suppliers)

Pages 37 to 40 (Protecting our environment)

Pages 27 to 28 (Supporting our local communities)

Principal risks and uncertainties

Managing risk during 2020

The Board and Audit Committee continue to recognise the importance of risk management in achieving the Group's strategic objectives. Keeping risk management integral to the operation of our businesses is a priority, requiring a continuous scan of all threats and opportunities. Our risk management processes aim to anticipate risks before they impact upon our activities to ensure that we are in the best place to mitigate those risks, and recognise the opportunities they may bring in a competitive marketplace. For all our key risks, we identify the key mitigating controls and their ownership. Our assurance activities are focused upon those controls so we can continually gauge their effectiveness.

Within that context, the Group is disappointed to report signiﬁcant separately disclosed items in both 2019 and 2020, the details of which are described in the Financial review as set out on pages 22 to 24. The items relate to strategic initiatives that were either not executed successfully or were severely impacted by the global pandemic and energy price changes in the ﬁrst half of 2020. The Board has carried out a detailed cause and effect review and combined with the strategic review, a more rigorous approach to the markets the Group seeks to provide services into and the capital allocated to those activities has been implemented.

Pandemic risk

During the extraordinary circumstances created by the pandemic the Company needed a robust response from all areas of the Group. As events and Government policy have

progressed, the Group has responded quickly to keep our people safe; to preserve as many jobs as possible, and to protect the interests of the Company and its stakeholders.

The pandemic continues to bring signiﬁcant uncertainty to the operation of the Group, and further lockdowns and restrictions are possible. Nonetheless the Group continues to demonstrate sound control and resilience, with people working from home where possible and those not able to work from home working in operational environments adapted in accordance with Government guidelines and best practice, and with those needing to travel to deliver for our customers ﬁnding ways to do so safely and effectively.

Climate change

During 2020 the Group has been impacted by volatile energy prices. Following its analysis of risk and opportunity relating to climate change, the Board expects that oil and gas will remain an important part of the energy mix for many years to come. However the Board considers both the transition from fossil fuels and the matching growth of the renewables market as part of a lower carbon environment represent a risk and an opportunity for the Group. The risk is mitigated by the continuing strategic diversiﬁcation of the Group into new markets by supporting the energy transition, which also provides growth opportunities.

Risk map

1 Health & safety risk
2 Cyber risk
3 Operating in emerging markets
4 Climate change
5 Contractual risk
6 Project delivery risk
7 Recruitment and retention of key staff
8 Financial risk
9 Pandemic risk

tcapmI

Likelihood

Increasing riskDecreasing riskUnchanged riskNew risk

Principal risks and uncertainties (continued)

The Group's emerging and principal risks

We set out below the emerging and principal risks which could materially impact upon the operation of the business and its strategic objectives:

1 Health & safety risk

Nature:

Group trading companies may experience an adverse operational incident or failure to maintain appropriate levels of health and safety

Potential impact:

• The health and safety of our workforce and others could be impacted by our operations
• The Group's reputation could potentially suffer if there was a major accident or health and safety issue
• Claims and regulatory action may be taken against the Company or the affected business

Mitigation:

• First item on Plc and business board agendas
• Policy and training
• Group H&S Committee
• Group safety forum
• Insurance

Context:

There have been a number of safety incidents in 2020 including one fatality. Whilst thorough investigations show that primary responsibility for the fatality is not with the Group, it is a sobering event and gives added impetus to our own policies and processes. Executive management has continued to increase the level of awareness and focus on HSE, including mental health. The net risk has increased in 2020 due to the global pandemic and every effort is being made to mitigate that risk and to learn from and avoid the incidents in 2020, with greater diligence and awareness in this area

Movement:

Increase. In light of the environments in which the Group companies work, health and safety is an inherent risk. There has been an increased focus in this area in the last 12 months

Opportunity:

Operating in competitive markets there is an increased opportunity to provide differentiation to our customers by our strong commitment to health and safety, thereby building long-term trust

2 Cyber security risk

Nature:

The Group may experience loss or harm related to technical infrastructure or the use of technology within the Group

Potential impact:

Cyber-attacks could result in ﬁnancial and reputational damage by way of signiﬁcant interruption to business systems. Phishing could result in ﬁnancial and reputational damage by way of theft or fraud

Mitigation:

• Introduction of new Group-wide operating system with enhanced security, alongside infrastructure and software updates to existing systems
• Regular review of IT security issues, including penetration testing
• Enhanced cyber awareness training and regular brieﬁngs

Context:

Following a cyber security incident in November 2019, a number of infrastructure and security improvements were implemented. A rollout of Ofﬁce 365 was fast-tracked, providing additional security improvements and further investment in specialist cyber security software was approved for implementation early in 2021

Movement:

Unchanged. The Group is reliant on its systems in order to operate effectively and has invested in the last year to enhance security. The external threat is continually adapting and increasing, notwithstanding the mitigating activities. A combination of new software and training will bring extra vigilance

Opportunity:

Upgraded IT systems increase security, but also ﬂexibility, facilitating secure working while travelling or from home

3 Operating in emerging markets

Nature:

The Group operates in overseas emerging markets and key growth economies with ﬂuctuating legislative restrictions, embargoes, sanctions and exchange controls, often undertaken in association with local joint venture partners

Potential impact:

Those operations may expose the Group to increased risk of governance and compliance issues. Any signiﬁcant failure to comply with laws or regulations could lead to penalties and other ﬁnancial liabilities, as well as reputational issues. Where there is a jurisdictional requirement for local investment or representation, the Group's ability to continue business in that jurisdiction could be adversely impacted from an ethical or legal perspective

Mitigation:

• Limits of authority and other internal corporate governance
• Risk tracking of JVs, agents and other third party relationships, including use of bespoke web-based platform
• Policies and training
• Corporate structuring of relationships, using external local legal advice
• Internal audit operating overseas using co-sourced PwC resources to leverage advantages of working in local language and consistent with local law/regulation

Context:

Operating in challenging conditions in developing markets remains a key part of our strategy. This has been made more challenging due to worldwide Government-imposed travel restrictions in response to Covid-19, making control and communications in relation to our operations in developing markets more challenging

Movement:

Decreased. Improved commercial and ﬁnancial controls, project management and on-going improvements in risk management in this area decrease the risk of one-off charges experienced during 2020

Opportunity:

The Group's ability to operate in emerging markets for global customers offers an increased opportunity to be differentiated from our competitors

4 Climate change

Nature:

The Group operates in industries which may be adversely impacted due to the change in energy mix. The Group is committed to minimising the impact of its operations on climate change

Potential impact:

The Group may suffer operational impacts of extreme weather events, as well as potential changes in technologies, markets and regulation in response to climate change which could increase costs, challenge the viability of Group services or affect asset values. The Group is also conscious of the need to reduce its impact on the climate, including its emission of greenhouse gases

Mitigation:

• Continuing the Group's end markets and geographical diversity
• Initiatives to reduce the Group's emissions and other impacts on the environment

Context:

The Board is conscious of the risks and opportunities created by climate change. During 2020, the Group's businesses have been impacted by a combination of volatile oil prices and Covid-19. Whilst it is expected that oil and gas will remain an important part of the energy mix for many years to come, the transition to a lower carbon environment represent both a risk and an opportunity for the Group. The risk is mitigated by the continuing diversiﬁcation of the Group into new markets by supporting the energy transition which also provides growth opportunities

Movement:

New and increasing. The impact of Covid-19 may accelerate the changing energy mix and individuals' travel and work patterns

Opportunity:

The Board believes that the global market for renewable energy will continue to grow, and therefore sees the energy markets as an opportunity

Principal risks and uncertainties (continued)

5 Contractual risk

Nature:

The Group operates in markets where larger project-based contracts may seek to pass risk down the supply chain

Potential impact:

Through its growth and diversiﬁcation into new markets and geographies, the Group may be exposed to increased contractual risks, which could result in ﬁnancial impact caused by late payment, or cost overruns, increased claims and litigation, and/or exposure to non-UK legal jurisdictional uncertainty

Mitigation:

• Internal contract management governance, including policy and training
• Internal and external specialist legal support

• Appropriate balance of risk and reward in contract
• Targeting increased contract management skills

Context:

As the Group continues to grow, contractual risk remains signiﬁcant, as the potential liabilities under contracts increase, and customers attempt to pass more risk down the supply chain

Movement:

Unchanged.

Opportunity:

As the Group pursues its strategy of increased diversiﬁcation, contracts become a key mechanism for managing risk and also enhancing engagement with our customers and suppliers

6 Project delivery

Nature:

Group businesses may fail to meet customer expectations or contractual requirements on project delivery

Potential impact:

This could cause signiﬁcant adverse ﬁnancial and reputational consequences, and/or increased cost and management time resulting from management of disputes and litigation

Mitigation:

• Increasing the specialist project management skillset across the Group through training and recruitment
• Implementation of project management best practices
• Focus on post-signature contract management

Context:

The successful management and delivery of projects continues to be of high importance to the Group, as the proﬁle of the work undertaken by the businesses has moved more towards project work. 2020 has seen on-going and increased challenges in project delivery and close out, exacerbated by the Covid-19 pandemic. While the Group has processes for managing project risk, our focus is to improve outcomes across a diverse group where resource and skills in certain areas are less mature

Movement:

Unchanged.

Opportunity:

Our customers require suppliers which can manage large projects in demanding environments. The Group is in a key position to support them, grow our customer engagement, and win new work

7 Recruitment and retention of key staff

Nature:

Potential impact:

Mitigation:

The Group may fail to attract, retain and develop personnel of the requisite calibre and to plan for succession in key leadership positions

This may result in the Group not being able to maintain its existing strong and experienced management teams in its operational businesses, and/or a risk to the Group's delivery of its strategic objectives, which depends on recruiting and retaining the right people in all areas of our business to maintain competitive advantage

• New employee strategy
• Graduate recruitment
• Talent identiﬁcation and management
• Management development programmes

• Appraisal process
• Training plans
• Remuneration incentives
• Succession planning

Context:

Progress continues on succession planning across the Group. 2020 has seen material senior management changes across the Group, as well as roll out of a new employee strategy aimed at various areas, including improvement in recruitment and retention. The new CEO has brought new focus on people development and retention

Movement:

Unchanged. Succession, recruitment and retention remain a key risk but has been managed well at a business level, and the new employee strategy will bring additional improvements

Opportunity:

Improvements in recruitment and retention will strengthen our teams worldwide, as well as the ability to compete in our chosen markets

8 Financial risk

Nature:

Potential impact:

Mitigation:

The Group is exposed to interest rate, foreign exchange and credit risk

An increase in interest rates or change in exchange rates or credit restriction would have a ﬁnancial impact on the Group

• Non-syndicated banking relationships
• Loans with spread of maturity proﬁles
• Centralised ﬁnance function management of Group cash, debt, and foreign exchange
• Forward currency contracts
• Interest rate swaps

Context:

Interest rates, foreign exchange and credit risks remain key risks and are reviewed regularly by the Board. The Group is exposed to USD cash inﬂows and uses forward contracts to reduce earnings volatility

Movement:

Unchanged.

Opportunity:

None

Principal risks and uncertainties (continued)

9 Pandemic risk

Nature:

The Group is a global business and continues to be impacted by the Covid-19 pandemic. The Group may face a risk of future pandemics, and in particular an enhanced international government response to future potential virus spread which may lead to quicker triggering of restrictions on work and travel in the places where the Group needs to provide its services

Potential impact:

The current impact on the Group's operations created by the Covid-19 pandemic may continue. A future pandemic, or governmental response to a potential virus spread may impact the Group's ability to provide services to its customers

Mitigation:

• Tracking and following Government restrictions and recommendations
• Making ofﬁce locations safe for work
• Home working where possible, supported by improved IT services enabling better communication
• Covid-19 working group providing advice and support to employees
• Enhanced employee assistance programme

Context:

While pandemics have previously been considered a risk for the Group, this is the ﬁrst time the risk has increased and is now considered one of the Group's principal risks. In light of the Covid-19 pandemic, and the restrictions imposed by governments in locations where the Group needs to provide its services, there is an on-going risk posed by Covid-19. Future pandemics may be less problematic, but governments are likely to have a quicker and more conservative approach to tackling possible future pandemics, meaning restrictions may be imposed deeper and quicker

Movement:

New risk.

Opportunity:

We aim to assist our customers and suppliers to manage through a global pandemic and innovatively developed products and services in 2020 in relation to safety and testing

Emerging risks

We have identiﬁed three macro-economic trends that will impact the markets in which the Group operates:

• Changing energy mix as renewable energy reduces carbon emissions and environmental concerns lead to an increased focus on decommissioning. Whilst recognising that oil and gas will remain part of the energy mix for some time, we aim to provide services to production, delivery and decommissioning in the safest, most sustainable way whilst we support the energy transition to low carbon sources. This forms part of the Board's analysis of the impact of climate change on the Group, and has already been considered as one of the Group's principal risks (and opportunities);
• Acceleration of digital innovation as customers seek efﬁciencies and effective asset management; and
• Shifting economic power to developing regions giving potentially increased political risk and increased defence spending.

These macro trends are seen as emerging risks and potential opportunities for the Group and, as such, are central to the development of the Group's strategic aim to deliver sustainable beneﬁts to our ﬁve key stakeholders. Capital will be allocated to growth opportunities, supplemented by selective acquisitions whilst business with below benchmark return potential will be divested. Delivery of the Group's strategy will require a strong focus on both commercial excellence and operational excellence.

Managing risk - our framework

Internal Audit

The Board is 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 Group's risk appetite and strategic objectives, as deﬁned by the Board. A robust assessment of the Company's risk management and internal control systems is carried out annually by the Audit Committee on behalf of the Board. The results of that assessment are reported in the Audit Committee report as set out on pages 66 to 71 and below.

Board oversight

The Board speciﬁcally approves: risk management policies and plans; signiﬁcant insurance claims, legal claims or settlements; acquisitions, disposals and capital expenditures; and the Group budget, forecast and ﬁve-year plan. The Board has put in place a documented organisational structure with strictly deﬁned limits of authority. These have been communicated throughout the businesses and are well understood by the Executive Directors, and by 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. During 2021, the Risk Committee is focused on bringing improvements to the limits of authority and their implementation through the Group. Group functions and operating units are each required to operate within this control environment and in accordance with the established policies and procedures. This includes ethics, anti-bribery and corruption, conﬂicts, treasury, employment, slavery and human trafﬁcking, whistleblowing, data protection, health and safety and environment.

Group functions

The Group's trading companies are supported by Group functions. Each functional head reports to an Executive Director. The Board retains an oversight role and receives regular reports on key issues: on ﬁnancial, tax and treasury matters from the Group Finance Director, on people and HR matters from the Group Head of Human Resources, and on legal and regulatory matters from the Group General Counsel and Company Secretary. The Board has a schedule of matters speciﬁcally reserved to it for decision, designed to ensure 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 Group's Internal Audit function is supported by a co-sourcing arrangement with PwC, and undertakes regular reviews of the individual businesses' operations and their systems of internal controls. It makes recommendations to improve controls and follows up to ensure that management implements the recommendations made. The annual Internal Audit plan is determined on a risk assessment basis and is reviewed and approved by the Audit Committee. Internal Audit's ﬁndings are reported to the individual management team, the Executive management team, the functional heads, and the chairman of the Audit Committee. The head of Internal Audit attends all Audit Committee meetings and twice annually presents a summary of the Internal Audit ﬁndings, recommendations, and implementation progress. Internal Audit also implements the annual risk evaluation process and the internal control and risk management review questionnaire process with the individual businesses, before their presentation to the Board. During 2021, alongside its assistance in overseas locations, making best use of videoconferencing technology, the co-source partner has been asked to expand its remit to include internal audits in certain functional areas within the UK, including IT implementation and ﬁnance, where the partner's specialist skills will complement the Group's Internal Audit function.

Risk Committee

The Board also operates a Risk Committee, which meets quarterly and is attended by the Executive Directors and the heads of the functional teams. Each of the functional teams provides a report at each Risk Committee meeting which identiﬁes any matters in their functional area which relates to the Group's principal risks and uncertainties, or to the individual trading companies' risk registers. The minutes of the Risk Committee are reported to the Board, and any key issues raised are discussed at meetings of the Board. The main responsibilities of the Risk Committee are: to keep under review the effectiveness of the Group's overall risk management framework and processes and ensure corrective action is taken where necessary; to make recommendations to the Board/Audit Committee with respect to the appropriate risk appetite for the Group; to review the principal and emerging risks that the Group is willing to take across all major activities, taking into account the risk appetite, the long-term strategy of the Group and the interests of its stakeholders (shareholders, employees, customers/suppliers, the environment and local communities impacted by the Group's activities); to review reports from the functional leads on risks that their teams are encountering in their interactions with the trading companies; to review reports from the trading companies

Principal risks and uncertainties (continued)

on their principal risks and mitigating activities, as well as any emerging risks; and to ensure that a robust assessment of the principal and emerging risks facing the Group has been undertaken annually by reference to risk registers from trading companies and functions. Through the Executive Directors and the Group General Counsel and Company Secretary, the Risk Committee presents to the Board its annual assessment of the principal and emerging risks of the Group, taking into account the existing principal risks of the trading companies, and those tracked by the functional teams, as well as presenting the emerging macro risks, and those emerging risks identiﬁed by the trading companies, the impact of which could potentially develop to impact the Group as a whole. This enables the Board to carry out its own robust assessment of the principal and emerging risks of the Group as a whole. The results of that assessment, including risk management and mitigating activities, are set out on pages 44 to 48.

During 2020, the Board realigned the terms of reference of the Risk Committee to bring improvements to the reporting of risk information to the Board and Audit Committee, which supports the Board in determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives, and in monitoring the effectiveness of the Company's risk management and internal control systems.

Risk management systems

The key features of the Group's risk management systems used to identify and monitor material risks are as follows:

• A risk evaluation process commences in the operating companies with an annual exercise to identify the signiﬁcant operational and ﬁnancial risks facing the business. Each trading business is required to maintain an up-to-date risk register, which identiﬁes key risks, assigns each a "risk score" based on the likelihood of the identiﬁed risk arising and the potential impact on the business of an adverse outcome, both before and after mitigation measures are taken. The risks and their respective risk scores before and after mitigation are reviewed at business level.
• To support this process, each trading company managing director completes an internal control and risk management review questionnaire on an annual basis, which is a robust self-assessment of operational controls and compliance with Group policies, applicable laws and regulations relating to their business. This ensures that managing directors identify risks and relevant mitigating strategies, and have in place adequate control systems toidentify, mitigate and report any weaknesses that require management attention.

• The risk registers and annual reviews are reviewed by Internal Audit, the Risk Committee and the Board. They are used twice a year by the Board to help to determine the Group's principal and emerging risks and uncertainties, their potential impacts, how they are being managed and/or mitigated, and any change in the nature of the risk. Internal Audit uses them to deﬁne its areas of focus for the forthcoming period.

Business reporting and performance reviews

The Group operates an annual budgeting process and produces quarterly forecasts which are reviewed and approved by the Board. Monthly results are compared with budget and prior year, and individual business reviews are conducted quarterly, which include a review of ﬁnancial results. The businesses also compile a three-year strategic plan. The Executive Directors hold quarterly board meetings with each business unit to discuss strategy, ﬁnancial results and forecasts, business needs and the management of risks facing the business.

Regulatory compliance policies

Whistleblowing

As part of its internal control procedures, the Group maintains a whistleblowing policy which (i) encourages the workforce to report any suspected wrongdoing as soon as possible, in the knowledge that their concerns will be taken seriously and investigated as appropriate, (ii) provides staff with guidance as to how to raise those concerns, and (iii) reassures staff that they should be able to raise genuine concerns without fear of reprisals, even if they turn out to be mistaken. The policy covers any suspicions of criminal activity, failure to comply with any legal obligation, miscarriages of justice, danger to health and safety, damage to the environment, bribery under our anti-bribery and corruption policy, facilitating tax evasion, ﬁnancial fraud or mismanagement, and breach of our internal policies and procedures including our Code of ethics. The policy is designed to ensure that any employee who raises a genuine concern is protected. Any concerns can be raised in the ﬁrst instance with the Group Finance Director or the Group General Counsel and Company Secretary in conﬁdence. The Board has overall responsibility for the policy, its application to individual concerns raised under the policy and for reviewing and approving the effectiveness of actions proposed in response to concerns raised under the policy.

Anti-bribery and corruption

The Board is committed to ensuring the highest standards in all of the Group's business dealings and condemns corruption in all its forms. The Group has a formal anti-bribery and corruption statement and policy and does not tolerate or condone corruption or bribery in any of the Group's business dealings. This policy has been implemented throughout the Group and is supported by a Group-wide training and awareness programme and regular compliance reviews through Internal Audit. This policy is reviewed annually by the Board and is available on the Group's website.

Modern slavery

The Board has a zero-tolerance approach to any form of modern slavery and is committed to acting in an ethical manner and with integrity and transparency in our Group's business dealings. The Group has a formal slavery and human trafﬁcking statement and policy which outlines the steps taken by the Group to ensure that slavery and human trafﬁcking is not taking place within any part of the Group's business or within the Group's supply chains. Both the statement and the policy are available on the Group's website.

Viability statement

The Directors have assessed the Group's viability over a three-year period ending 31 December 2023. The Directors have determined that this is the most relevant time period because it is consistent with the Group's three-year outlook in its planning process whereby the Board reviews the Group's strategy and its detailed three-year plan. This is reviewed and considered in light of the Group's current position and prospects together with factors that might affect the three-year plan. The Boardcarefully assesses the performance and prospects of each business regarding entering new markets and geographies, current and expected growth rates, prospective new projects and the timing of such projects and the robustness of individual business performance.

The Group's three-year plan overlays a number of assumptions and sensitivities which are reviewed by the Board; this includes a review of whether additional bank facilities will be required and available in the plan period, as well as a robust assessment of the likely downside sensitivities aligned to the principal and emerging risks facing the Group as set out on pages 44 to 48, and the potential impact of those sensitivities on its business model, future performance, solvency and liquidity over the period, and taking into account the potential mitigating actions, and the effectiveness of the Group's risk management and control systems, as well as current risk appetite. Sensitivities considered included the diverse nature of the markets and geographies in which the Group's businesses operate, and their ability to react quickly to change.

Based on their assessment of the Group's prospects and viability, and in accordance with Provision 31 of the Code, the Directors conﬁrm they have a reasonable expectation that the Group will be able to continue to operate and to meet its liabilities, as they fall due, for the period to 31 December 2023.

Our Strategic report on pages 1 to 51 was approved by the Board on 10 March 2021.

Eoghan O'Lionaird Chief Executive Ofﬁcer 10 March 2021

Corporate governance report

Dear Shareholders

This has been one of the most demanding years that the Company has faced in its 173-year history.

UK Corporate Governance Code

The Board understands that good corporate governance is an important element in helping to build a successful business in a sustainable manner. The UK Corporate Governance Code 2018, publicly available atwww.frc.org.uk(the Code) applied to the Company, and this report explains how the Company has applied the Principles set out in the Code. During the year ended 31 December 2020 (and up to the date of this report), the Company has complied with the relevant provisions of the UK Corporate Governance Code 2018, except in two instances, where our approach has differed.

Firstly, as outlined in the Chairman's statement in the 2019 Annual Report, by the time of the Company's AGM in May 2021, I will have served as a Director for a period of 10 years. Whilst the Code recommends that Non-Executive Directors should not serve on a board for more than nine years, the Board requested that I continued to serve as Chairman whilst the Senior Independent Non-Executive Director commenced a search for a new Non-Executive Chairman. This was on the basis that my knowledge and experience of the Company would be of beneﬁt to the CEO appointed on 1 October 2019 and to avoid a change of CEO and Chairman in a relatively short timescale. As announced on 25 January 2021, and as described in more detail in the Nominations Committee report on pages 63 to 65, Angus Cockburn will join the Board as independent Non-Executive Director and Chairman on 1 May 2021 and I will step down from my role as Non-Executive Director and Chairman the previous day.

Secondly, while the Code recommends that Executive Director pension provisions should be aligned with the workforce, as outlined on page 74 of the Directors' remuneration report, changes to the remuneration policy have been proposed for both new appointments and incumbent Directors in respect of aligning pension provision to workforce levels by the end of 2022, in accordance with institutional investor guidelines. Eoghan O'Lionaird's pension provision of 7.5% of salary on joining the Company reﬂected the mid-point pension provision across the Group. Stuart Kilpatrick's pension provision will step down to 7.5% of salary from 1 January 2023 without compensation.

Strategic review

The Code provides that a board should establish a company's purpose and values as well as its strategy, and that its directors should lead by example and promote the desired culture. Throughout 2020, the Company has been undertaking a detailed strategic review, including how the Company delivers for and engages with its stakeholders, and to review and re-establish the Group's purpose and values. More details of that review are set out in the Chief Executive's review on pages 6 to 11, and the Board is committed to embedding sustainability and the interest of its ﬁve key stakeholders into day-to-day decision-making and making them central to delivering the Group strategy.

Engagement with stakeholders

The Code highlights the importance of effective engagement with shareholders and other stakeholders. The Group's key stakeholders and their differing perspectives are identiﬁed and taken into account, not only as part of the Board's strategy discussions, but also in our project assessments and in our other Board conversations. These discussions, assessments and conversations focus not only on delivering increased value for shareholders, but also assess the impacts of our decisions and strategies on the Group's wider stakeholders. The Board recognises the importance of regular, open and constructive dialogue with shareholders and other stakeholders and this has long been a key aspect of our culture and of our decision making. More information about how we engage with our stakeholders as part of our Board activities is set out on page 56 and how we do so as a Group is highlighted on pages 26 to 40.

Managing risk

We constantly strive to make sure that our approach to risk management is effective, extending beyond ﬁnancial risk to a wider range of operational risks. There is a full report on our activities in this area in our Principal risks and uncertainties report on pages 43 to 51. Uncertainty continues following Brexit and the Board maintains its watching brief, although the Board's assessment remains that the overall risk to the Group from Brexit remains low.

Board diversity

We remain committed to ensuring that the Board is balanced, with the Directors having a broad range of knowledge, skills and experience. Diversity is a matter which we consider constantly, our diversity policy is available on the Group website and sets out our aims to ensure an appropriate mix of skills and experience as well as gender and ethnic diversity. More details in relation to diversity can be found in the Nominations Committee report on pages 63 to 65.

Board effectiveness review

In the 2019 Annual Report and Accounts, I provided the action plan agreed by the Board following the 2018 externally-facilitated evaluation of the Board. We completed all of the agreed actions in 2019, apart from those with a longer-term outlook, which have been the focus for 2020. Those have now been put into action with the strategic review, and the establishment of the Group's refreshed purpose and values. Also in 2020 we carried out an internal review of how the Board and its Committees function, and to provide recommendations for ways to improve their overall effectiveness. Details of the process, outcomes and actions are described on page 61.

Malcolm Paul Chairman 10 March 2021

This report is structured around the sections of the Code:

1 Board leadership and company purpose
Details about the Company's purpose, culture
and values are set out on page 56
The key activities of the Board during the year
and key priorities for 2021 are summarised on
pages 57 to 58
2 Division of responsibilities
An explanation of our governance structure is set out on page 59
3 Composition, succession and evaluation
Details of this year's Board evaluation is set out
on pages 60 to 61
Report from the Chairman of the Nominations
Committee is set out on pages 63 to 65
4 Audit, risk and internal control
Report from the Chairman of the Audit Committee is set out on pages 66 to 71
5 Remuneration
Report from the Chairman of the Remuneration Committee is set out on pages 72 to 87
Details of the Directors' remuneration policy for 2021 is set out on pages 75 to 79

Board of Directors

Chairman

Malcolm Paul

Executive Directors

Eoghan O'Lionaird

Stuart Kilpatrick

Chairman of the Board and Nominations Committee +

Appointment:

Malcolm was appointed to the Board in February 2011 and was appointed Chairman in May 2018.

Key strengths and experience:

• Extensive business leadership experience.
• Long-term track record of value.

Malcolm is a fellow of the Institute of Chartered Accountants in England and Wales and was a founder and former Finance Director of WSP Group plc between 1987 and 2009. Prior to that Malcolm was a principal at the corporate ﬁnance boutique Financial Decisions and an equity partner at Longcrofts, Chartered Accountants.

External appointments:

Chairman of Anthesis Consulting Group, a private equity backed global sustainability consultancy.

Chief Executive Ofﬁcer

Appointment:

Eoghan joined the Group as an Executive Director of the Board in September 2019, and was appointed Chief Executive Ofﬁcer on 1 October 2019.

Key strengths and experience:

• Strong leadership skills.
• Clear strategic mindset.
• Extensive international experience.
• Commercial and business management.

Eoghan joined from Spectris plc where he was Business Group Director of the Materials Analysis and Test & Measurement segments from February 2014 through June 2019, having previously been President of the Leica Microsystems division of Danaher Corporation in Germany. Prior to that, he spent eleven years at Royal Philips Electronics, latterly as CEO of the Respironics Sleep business unit in the USA. He started his career with Mitsui Kinzoku where he held a number of engineering, commercial and general management positions in Japan, the US and Thailand.

External appointments: None

Group Finance Director

Appointment:

Stuart was appointed to the Board as Group Finance Director in December 2010.

Key strengths and experience:

• Strong ﬁnancial and commercial background.
• Broad experience as ﬁnance director with international and diverse listed companies.

Stuart is a member of the Institute of Chartered Accountants of England and Wales and qualiﬁed with BDO Binder Hamlyn. He was formerly Group Finance Director of Empresaria Group plc, and he previously held senior ﬁnance roles with Vodafone Group plc, Charles Baynes plc and Elementis Group plc.

External appointments: None

Independent Non-Executive Directors

Aedamar Comiskey

Senior Independent Non-Executive Director and Chair of the Remuneration Committee *#+

Appointment:

Aedamar was appointed to the Board in November 2014. She was appointed chair of the Remuneration Committee in May 2018 and Senior Independent Non-Executive Director in March 2019.

Key strengths and experience:

• Extensive global business experience.
• In-depth knowledge of legal, regulatory and governance issues for listed companies.

Aedamar is the Global Head of Corporate and a member of the Executive Committee at Linklaters LLP, where she has been a partner since 2001. Aedamar was previously the Senior Board Member on the ﬁrm's Partnership Board, its governance body. Aedamar specialises in mergers and acquisitions, joint ventures and fundraisings, and is the lead relationship partner for many of the ﬁrm's FTSE clients.

External appointments:

Linklaters LLP and Trustee of Tommy's.

Justin Atkinson

Independent Non-Executive Director and Chairman of the Audit Committee *#+

Appointment:

Justin was appointed to the Board in February 2018 and was appointed chairman of the Audit Committee in May 2018.

Key strengths and experience:

• Signiﬁcant operational and ﬁnancial experience through his previous and current roles.
• Substantial experience on boards of listed companies in both executive and non-executive roles.

Justin was formerly Chief Executive Ofﬁcer of Keller Group plc between April 2004 and May 2015, having previously held the position of Group Finance Director and Chief Operating Ofﬁcer. Justin was a ﬁnancial manager at Reuters plc, and trained and qualiﬁed as a chartered accountant at Deloitte Haskins & Sells.

External appointments:

Chairman of Forterra plc; Senior Independent Non-Executive Director of Kier Group plc; and a member of the Audit Committee of the National Trust.

Michael Salter

Independent Non-Executive Director *#+

Appointment:

Michael was appointed to the Board in August 2013.

Key strengths and experience:

• Signiﬁcant operational and strategic delivery experience through a number of senior management roles.
• In-depth knowledge of oil and gas and marine industries.

Michael was formerly Chief Operating Ofﬁcer at Abbot Group plc and earlier in his career, CEO of Smedvig Limited and Vice President and General Manager of Bawden Drilling UK Ltd and is a Chartered Engineer, Fellow of the Institution of Mechanical Engineers, and a Member of the Institute of Marine Engineering and Technology.

External appointments:

None

Inken Braunschmidt

Independent Non-Executive Director and the Non-Executive Director for Employee Engagement *#+

Appointment:

Inken was appointed to the Board on 1 March 2019.

Key strengths and experience:

• Strategy development.
• Digital innovation.
• Diversity & Inclusion.
• Signiﬁcant operational experience through her previous and current roles.

Inken is Chief Innovation and Digital Ofﬁcer and member of the Executive Board at Halma plc. Prior to joining Halma plc in 2017, Inken spent 13 years at RWE AG, the German energy giant and its renewables subsidiary innogy SE, where she held various international leadership roles focusing particularly on strategy, innovation, digital transformation and change management. Inken studied Innovation & Technology at Kiel University and has a PhD in Technology Management. Inken is committee member of the Royal Academy of Engineering Enterprise Hub.

External appointments: None

Corporate governance report (continued)

Board leadership and company purpose

Board focus in 2020

Through the course of 2020 the Board has, at the same time as the regular cycle of annual reporting and planning processes, focused on a few strategically important areas:

• Covid-19: at the start of the pandemic, the Board established its priorities: to keep our people safe; preserve as many jobs as possible, and protect the interests of the company and its stakeholders.
• Corporate purpose: the Board has reassessed and redeﬁned the Group's corporate purpose during the course of 2020, which deﬁnes how the Group sustainably creates value for all its stakeholders. More details can be found on page 12.
• Strategy: the Board has revisited the Group's strategy to create a plan for sustainable growth in shareholder value for the future. We plan to update shareholders later in 2021.

Purpose, culture and values

The Board recognises the importance of its role in building a sustainable business by setting the tone of James Fisher's culture and embedding it throughout the Group. Our core values and our Code of ethics (the behaviours we expect) underpin everything that we do and set out the type of organisation we want to be. Everyone who works for and with us is asked to strive to comply with these.

The Executive Directors have a critical role in setting the tone of our organisation and demonstrating our valued behaviours. Various indicators are used to provide insight into our culture, including employee engagement and health and safety. We regularly assess the state of our culture, through activities such as compliance reviews and we address behaviour that falls short of our expectations. Following the review of the Group's corporate purpose and our values, the Board tasked the senior leadership to embed the purpose and values into each of their businesses and the Board monitored the success through the employee engagement survey.

Engaging with stakeholders

The stakeholder voice is brought into the boardroom throughout the annual cycle through information provided by the Executive Directors (as well as representatives from the Group's businesses and functions who are invited to present to the Board), and also by direct engagement with stakeholders themselves. On pages 26 to 40 of our Strategic report, we set out our principal stakeholders, how we engage with them, the issues which are important to them and how we respond. The relevance of each stakeholder group may increase or decrease depending on the matter or issue in question, so the Board seeks to consider the needs and priorities of each stakeholder group during its discussions and as part of its decision making.

Board activities during the year

The Non-Executive Directors were expected in 2020 to make visits to businesses in the Group to meet employees and to enhance their knowledge of operations, including the services and products and how they are provided to our customers and to strengthen their contribution to Board debate. Due to the restrictions imposed as a result of the global pandemic, Board members have not been able to make physical visits to Group premises. Instead, employee engagement activities have been moved online, with operating managing directors and functional heads asked to attend certain Board and Committee meetings. In particular, the Board's review of strategy involved presentations from each of the Group's operating management teams in an in-depth analysis of individual strategic plans and application of the Group purpose. The Non-Executive Directors also received presentations from management on key strategic plans, including relating to individual businesses and markets, as well as from the Group Head of Human Resources.

Key activities of the Board during the year and key priorities for 2021:

Topic

Key activities and discussions in 2020

• Reviewed and approved the corporate strategy, assessing stakeholder alignment and interests.
• Reviewed and restated corporate purpose and valued behaviours.
• Reviewed and approved acquisitions.
• Reviewed and approved major capital investments.
• Reviewed impairment to vessels and goodwill.
• Oversaw response to pandemic.
• Reviewed ﬁnancial key performance indicators (KPIs).
• Considered and approved the Group's dividend policy.

• Responded quickly to Covid-19 pandemic, with actions taken to protect the safety and wellbeing of the workforce and to protect the Company.
• Carried out a robust assessment of principal key risks, monitored and reviewed the internal controls process, and assessed the Group risk proﬁle (see the Principal risks and uncertainties section starting on page 43 for more detail).
• Reviewed the potential impact of Brexit on the business.
• Monitored compliance with key Group policies.

• Continued to focus on the composition, balance and effectiveness of the Board, in particular in relation to the process to appoint a new Chairman.
• Reviewed the key operational roles and identiﬁed gaps in experience needed to deliver the strategy.
• Reinforced compliance with Code of ethics, a document which sets out the Group's culture and values, all in accordance with the principles of good corporate governance.
• Engaged with institutional shareholders, investors and other stakeholders throughout the year.
• Separate Non-Executive Director sessions held with the Chairman to discuss leadership and other Board matters.
• Reviewed and approved the 2020 Annual Report and Accounts.
• Reviewed recommendations from the designated Non-Executive Director for employee engagement.

Risk management framework

• Financial risk.
• Project delivery.
• Operating in emerging markets.
• Pandemic risk.
• Climate change.

• Health and safety.
• Project delivery.
• Operating in emerging markets.
• Contractual risk.
• Pandemic risk.

• Recruitment and retention of key staff.

Key priorities for 2021

• Approve the corporate strategy and keep under review by reference to stakeholder interests.
• Embed new corporate purpose and valued behaviours.
• Consider acquisitions and determine appropriate course of action.
• Consider further capital investments.
• Maintain readiness to respond to pandemic changes.
• Keep ﬁnancial KPIs under review.
• Keep the Group's dividend policy under review.

• Continue to monitor the impacts and developments in relation to the Covid-19 pandemic.
• Review key risks and ensure that the Group continues to develop and embed best practice for risk management.
• Continue to monitor the impact of developments related to Brexit.
• Continue to monitor compliance with the key Group policies.

• Ensure that the Company continues to develop and embed best practice in responsible business behaviour.
• Maintain and enhance the Group's culture and values and key policies and procedures.
• Continue to strengthen internal controls and reporting.
• Further understanding and planning actions in response to new regulations over the period.

Corporate governance report (continued)

Stakeholder

Key activities and discussions in 2020

• Monitored health and safety performance across the Group. Regular Board updates received on actions improving health and safety.
• Health and safety governance and reporting reviewed and enhanced.
• Reviewed the governance framework and continued training and awareness drives for key policies.
• Supported by the Nominations Committee, monitored senior executive talent management and development plans with succession planning for all key positions in mind.
• Approved new employee strategy.

• Continued to focus on the composition, balance and effectiveness of the Board. Reviewed Board composition, diversity, and discussed and acted on the recommendations of the Nominations Committee.
• Undertook an internal evaluation of the Board, its Committees and individual Directors, and developed an action plan.

Risk management framework

• Health and safety environment.
• Contractual risk.
• Recruitment and retention of key staff.

• Recruitment and retention of key staff.

Key priorities for 2021

• Continue to monitor senior executive talent management and development plans to provide succession for all key positions.
• Continue to enhance the diversity across the Group.
• Continue to hold meetings with people in the senior talent pipeline to further improve information ﬂow.
• Monitor key initiatives under employee strategy.

• Enhance the Board's strategic understanding of key markets as the Group continues to grow.
• Increase number of Board visits to promote understanding of markets and the business development opportunities they offer, and to promote employee engagement with Board.
• Annual internal evaluation of Board and Committee performance.

Board meetings

The Board and Board Committees held a number of scheduled meetings in 2020 and individual attendance is set out in the table on page 60. Additional unscheduled meetings were held as and when required, for example in response to the Covid-19 pandemic

To enable the Board to discharge its duties, the Chairman ensures that all Directors receive accurate, timely and clear information on all relevant matters in advance of the Board meetings, including comprehensive ﬁnancial and business reports covering the Group's principal activities. All Directors received papers for all meetings and had the opportunity to comment in advance of meetings they were unable to attend.

Should Directors judge it necessary to seek independent legal advice about the performance of their duties with the Company, they are entitled to do so at the Company's expense. Directors also have access to the advice and services of the Group General Counsel and Company Secretary.

The Group General Counsel and Company Secretary is responsible for advising the Board, through the Chairman, on all governance matters and for ensuring that Board procedures are followed, and applicable rules and regulations are complied with. The Group General Counsel and Company Secretary also advises the Directors on any important changes in legislation, regulation and best practice.

Division of responsibilities

The Board

Chaired by Malcolm Paul

Meets regularly, with six scheduled meetings during the year.

The Board is responsible for providing effective leadership to the Group. The Board is responsible for steering the Group's purpose, culture and values, for setting the Group's strategic priorities and overseeing their delivery in a way that enables sustainable long-term growth, while maintaining a balanced approach to risk within a framework of effective controls. It has a schedule of key matters which are reserved for its own decision-making, which is reviewed annually and approved by the Board.

Chairman

• Leads the Board, sets the agenda and promotes a culture of open debate between Executive and Non-Executive Directors.
• Regularly meets with the Chief Executive Ofﬁcer, the other Executive Directors and other senior management to stay informed.
• Ensures effective communication with our shareholders.

Nominations Committee

Chaired by Malcolm Paul Meets at least once a year.

Senior Independent Non-Executive Director

• Provides a sounding board to the Chairman and appraises his performance.
• Meets with Directors to review the Chairman's performance. This review is then shared with the Chairman.

• Acts as intermediary for other Directors, if needed.
• Available to respond to shareholder concerns when contact through the normal channels is inappropriate.

Audit Committee

Chaired by Justin Atkinson

Meets a minimum of three times a year.

Reviews the structure, size and composition of the Board (including skills, knowledge, diversity and experience) and recommends changes, succession planning for Directors and senior executives.

Identiﬁes and nominates candidates for approval to the Board, to ﬁll vacancies when they arise.

The Nominations Committee report on pages 63 to 65 describes in detail the Committee's role and activities.

Special Purposes Board Committee

Assists the Board in its oversight and monitoring of ﬁnancial reporting, reviews the Group's internal ﬁnancial controls and systems for risk management and internal controls and assesses independence and objectivity of external auditor.

The Audit Committee report on pages 66 to 71 describes in detail the Committee's role and activities.

Consisting of the Chairman and the Executive Directors Meets according to business requirements.

Non-Executive Directors

• Contribute to developing our strategy.
• Scrutinise and constructively challenge the performance of management in the execution of our strategy.

Empowered, under written terms of reference, to take actions relating to the affairs of the Company in the normal course of business and of a routine nature, subject to such limits as the Board in its discretion determines.

Non-Executive Director for Employee Engagement

• Responsible for representing the voice of our colleagues in the boardroom.
• Provides a regular platform for the independent element of the Board to have direct conversations with the employees, individually and in group settings, to gain insights into their experiences, concerns and perspectives, and to better understand whether the cultural change is already underway.

Executive Directors

• Responsible for management of the Group as a whole.
• Delivers strategic objectives within the Board's stated risk appetite.

• Responsible for management of Group ﬁnances and records.

Remuneration Committee

Chaired by Aedamar Comiskey Meets at least once a year.

Agrees the remuneration policy for Executive Directors and other senior executives; reviews the appropriateness and relevance of the Group's remuneration policy; and ensures that the provisions of the Code relating to remuneration are fulﬁlled.

The Directors' remuneration report on pages 72 to 87 describes in detail the Committee's role and activities.

Disclosure Committee

Consisting of the Chairman, the Executive Directors and the Group General Counsel and Company Secretary

Meets when necessary.

Oversees the Company's compliance with its disclosure obligations.

Executive Team

Chaired by Eoghan O'Lionaird

Consisting of the Chief Executive Ofﬁcer, Group Finance Director, Head of Corporate Development, Group General Counsel and Company Secretary, Group Head of Human Resources, Group Business Development Director and Group Financial Controller.

Meets monthly.

Responsible for supporting the Executive Directors in the exercise of their delegated authority from the Board and the day-to-day operation of the Group.

Corporate governance report (continued)

Audit	Remuneration	Nominations
Board and Committee scheduled meetings attendance	Board	Committee	Committee	Committee
Total number of scheduled meetings during 2020	7	3	5	4
Executive Directors
Stuart Kilpatrick	7	N/A	N/A	N/A
Eoghan O'Lionaird	7	N/A	N/A	N/A
Non-Executive Directors
Malcolm Paul	7	3	5	4
Aedamar Comiskey	7	3	5	4
Michael Salter	7	3	5	4
Justin Atkinson	7	3	5	4
Inken Braunschmidt	7	3	5	4
Former Directors
Fergus Graham1	2	N/A	N/A	N/A
1 Fergus Graham resigned from the Board on 20 March 2020
Composition, succession and evaluation

Board evaluation

Details about the current composition of the Board are set out in the biographies of the Director on pages 54 to 55.

Board diversity

The Board fully understands the importance of diversity in creating a successful and sustainable business. The Board is committed to increasing diversity in its widest sense, including gender, ethnicity, diversity of thought, tenure, age, experience, skills, geographical expertise, educational and professional background.

In its Board diversity policy, the Board set its own target of having two women on the Board, which, as at the date of this report, has been met. However, the Board acknowledges the recommendations made by the Hampton-Alexander review including its target of 33% representation of women on boards by the end of 2020 and will keep this under review.

The Board targets having a Director from an ethnic minority background by 2024. As at the date of this report the Board has no Directors from an ethnic minority background.

The Executive comprises seven individuals, two of whom are women.

At the end of each year, the Board undertakes an annual evaluation of its own performance and that of the Remuneration, Nominations and Audit Committees and the Chairman against the framework of Board effectiveness produced by the FRC.

The 2020 performance evaluations were designed to assist the Board in identifying strengths and weaknesses and areas for further improving performance and required each Director to complete in conﬁdence a detailed questionnaire relating to key aspects of Board performance, and performance of the Board's principal Committees. The review included an analysis of the Board's and Committees' performance in key areas including corporate governance, structure and procedures, strategy, and effectiveness, risk management and control and communications with shareholders and other stakeholders. The results of the evaluation were collated and reported to the Board via the Chairman with recommendations for further consideration and action as appropriate.

The 2020 review concluded that the Board functions well as a unit and provides a good balance of support and challenge to management. With the last externally-facilitated Board evaluation conducted in 2018, the Board will be conducting a similar process in 2021, led by the new Chairman.

The annual review of individual Directors' performance was conducted internally. The Chairman's performance was reviewed by the other Non-Executive Directors led by the Senior Independent Non-Executive Director and taking into account the views of the Executive Directors. The performance of the Executive Directors was reviewed by the Non-ExecutiveDirectors with the Chairman in attendance. The Chairman and the Executive Directors reviewed the performance of each of the other Non-Executive Directors. The Board considers that each Director continues to contribute effectively and to demonstrate commitment to the role.

The schedule and summary of ﬁndings for Board evaluation is set out below:

Board expertise

Progress against 2019 actions

The Directors continued to build their knowledge of the Company's business. To enable the Board to do this, two full days were dedicated to a strategic review, with operational management teams invited to present to the Board.

This year's ﬁndings

Following the work undertaken in last year's evaluation, the Board positively rated its understanding of the Company's business. However, as the business continues to evolve it was recognised that there would be merit in increased Board discussion in relation to strategy and markets.

Board composition

This year's ﬁndings

The Board's composition was positively rated as part of this year's evaluation.

The new Chairman's appointment to the Board is considered to bring complimentary skills and experience. The Board remains intent on ensuring its composition has the diversity and skills required to be effective.

Board training and development

Progress against 2019 actions

It was recognised that Board members would beneﬁt from more opportunities to take part in site visits and be offered more one-to-one interactions with senior executives.

Although arranged site visits had to be cancelled due to Covid-19, the Board had increased interaction with senior management teams via videoconferencing.

This year's ﬁndings

The Board induction programme was valued by Directors. The deep dives and in depth strategy sessions with senior management were rated as excellent.

As for 2020, it was acknowledged that more NED site visits and management presentations at the Board would be beneﬁcial.

Action for 2021

With Board meetings at operational sites postponed due to Covid-19, the Board in 2021 is considering ways for Non-Executive Directors to further enhance their knowledge of the business and keep updated on developments. Site visits will be made when possible. In the meantime individual MDs are being asked to present to the Board on their business, strategy, including initiatives to further the interests of all stakeholder groups.

Action for 2021

The Board will be considering opportunities to use its natural life-cycle to address the identiﬁed skills gaps to ensure that the Board's composition is diverse and aligned with the Company's strategic goals.

Action for 2021

Efforts will be made to ensure all Directors are provided with relevant on-going training and that they receive the support they need to remain effective in their role. Postponed in 2020 due to Covid-19, more NED site visits are being arranged, along with Board meetings at operational sites.

Corporate governance report (continued)

Training and development

On-going training and development for Directors is available as appropriate and is reviewed and agreed with the Chairman annually. Speciﬁc and tailored updates were provided by external advisers and management to the Audit, Nominations and Remuneration Committees. Key themes included trends and changing disclosure requirements regarding ﬁnancial and narrative reporting, accounting and auditing standards and remuneration developments. During the year the Board also received reports from the Group General Counsel and Company Secretary on compliance, as well as current legal and governance issues. The Board is conﬁdent that all its members have the knowledge, ability and experience to perform the functions required of a director of a listed company.

Upon appointment to the Board, Directors undertake an induction programme, receiving a broad range of information about the Group tailored to their previous experience.

This includes information on the operational performance and business of the Group and details of Group strategy, corporate governance and Board procedures. Assisted by the Group General Counsel and Company Secretary, the Chairman has responsibility for these induction programmes, and also for the Board's training and professional development.

Audit, risk and internal controls

The Board is responsible for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives and for ensuring that the Company maintains sound risk management and internal control procedures. More information in relation to those principal risks, the Group's approach to mitigating them, and the risk management and internal control procedures within the Group are set out in the Strategic report on pages 43 to 51.

On behalf of the Board, the Audit Committee monitors the Group's risk management and internal control process and reviews its effectiveness on an on-going basis. This is part of an established process, in accordance with the Code and the Financial Reporting Council's (FRC) associated Guidance on Risk Management, Internal Control and Related Financial and Business Reporting, for the identiﬁcation, evaluation and management of the signiﬁcant risks facing the Group, which operates and is reviewed continually throughout the year. The Group's internal control systems are designed to provide the Board with reasonable assurance as to the effective andefﬁcient operation of the Group and to ensure the quality of internal and external reporting and compliance with all applicable laws and regulations. However, there are inherent limitations in any system of internal control and accordingly even the most effective system can provide only reasonable and not absolute assurance.

As part of its internal control procedures, the Group maintains policies and processes for whistleblowing, anti-bribery and corruption and to uphold its zero-tolerance approach to any form of modern slavery. More information in relation to those policies are included in the principal risks and uncertainties section of the Strategic report on pages 43 to 51 and in the non-ﬁnancial information statement on pages 41 and 42.

The Board has carried out a robust assessment of the overall effectiveness of the Group's system of internal controls and risk management procedures; and of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity; and of emerging risks. This included a process of self-certiﬁcation by the management teams of each trading business in which they were asked to conﬁrm that their businesses have complied with Group policies and procedures. Details of the report on the review of the effectiveness of the risk management and internal control systems is included in the principal risks and uncertainties section of the Strategic report on pages 43 to 51.

In addition, it involved reviewing the results of the work of the Group's internal audit function and the risk and management processes identiﬁed above.

Financial and business reporting

The Board considers that the Annual Report and Accounts taken as a whole present a fair, balanced and understandable assessment of the Group and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy. More information about how this assessment was made is set out in the Audit Committee report on pages 66 to 71.

The going concern assessment is set out in the Directors' report on page 88; the viability statement is set out in the principal risks section of the Strategic report on page 51; and the Strategic report on pages 12 to 13 sets out an explanation of the Company's business model and the strategy for delivering the Company's objectives.

Nominations Committee report

The Nominations Committee reviews the leadership and succession needs of the Company and ensures that appropriate procedures are in place for nominating, training and evaluating Directors.

Overall, our objective is to ensure that the Board is balanced, with the Directors having a broad range of knowledge, skills and experience. We recognise the beneﬁts of a diverse senior leadership team, including diversity of gender, social background and ethnicity which are designed to ensure the team work together effectively for the beneﬁt of the Company as a whole.

2020 under review

In March 2020 the Company announced that Fergus Graham had stepped down from the Board and from his role as Marine Support Division - Director.

The Committee has continued its programme of planning for succession and diversity at Board and senior management levels. In particular, the Senior Independent Non-Executive

Appointments to the Board and succession planning

The Committee leads the process for Board appointments and makes recommendations to the Board. Appointments are made on merit, against objective criteria, with due regard to the beneﬁts of diversity on the Board, including gender and ethnicity. The Committee adopts a formal, rigorous and transparent procedure for the appointment of new Directors to the Board, working with a number of independent executive search consultants, none of which have any connection to the Company or any individual director, other than in assisting and facilitating in the search for senior management.

During 2020, the Nominations Committee conducted a search for a new Non-Executive Chair, led by the Senior Independent Non-Executive Director, Aedamar Comiskey, who was supported by the external search ﬁrm Korn Ferry. On the instruction of the Committee, Korn Ferry focused on diversity in its broadest sense in identifying candidates for the role, resulting in a shortlist with 50% female representation.

Director led the process for the successful appointment of
Membership	Since
Angus Cockburn as Non-Executive Chair in succession to
Malcolm Paul - Chair of the Nominations Committee	2011
Malcolm Paul who will be retiring from the Board on 30 April
2021.	Michael Salter	2013
Aedamar Comiskey	2015
We are also focused on aligning the needs of the Group
at Board and senior management levels to meet the	Justin Atkinson	2018
recommendations of the Hampton-Alexander Review and
Inken Braunschmidt	2019
Parker Report. Although we have made progress through the
year, this remains at the forefront of the Committee's agenda.	Key objectives
During the year under review the Nominations Committee's
priorities were:

• to scope the key skills, experience and requirements for succession planning for the Board, in particular the succession planning for the role of Non-Executive Chair;
• to keep under review succession planning at the Executive Director level and to support succession planning at senior management levels; and
• to monitor the Group's progress towards increasing the relative number of women in senior management positions.

Key responsibilities:

• To regularly review the structure, size and composition of the Board (including skills, knowledge, independence and experience) and recommend changes.
• Succession planning for Directors and senior executives of both the Company and the operating businesses.
• Identifying and nominating for approval to the Board, candidates for Board positions.

The terms of reference are available on the Group's website.

Meets at least once a year. During 2020 the Nominations Committee met 4 times.

Nominations Committee report (continued)

The Senior Independent Non-The Nominations Committee agreed a detailed candidate proﬁle setting out the capabilities and experience required.

The process to appoint the new Non-Executive Chair was led by the Senior Independent Non-Executive Director, with Korn Ferry appointed to facilitate the process.

The Nominations Committee as a whole was closely involved in identifying and agreeing a shortlist of candidates.

The current Chairman excused himself from all discussions and decision-making in relation to the appointment.

Executive Director considered a full list of candidates with Korn Ferry. The full list was shared with the Nominations Committee. A diverse shortlist of candidates to be invited for interview was agreed.

Following initial interviews with the Senior Independent Non-Executive

Director and a further review with the Executive Directors and Nominations Committee members, the number of candidates was reduced.

The Executive Directors, remaining Nominations Committee members and the Group General Counsel and Company Secretary met with the shortlisted candidate.

Following the interviews, each person who had met with the shortlisted candidates provided feedback to the Senior

Independent Non-Executive

Director.

The Nominations Committee discussed the relative merits of each candidate and agreed that Angus Cockburn should be proposed to the Board for appointment as Non-Executive

Chairman.

The Board approved his appointment as an Non-Executive

Chairman, to take effect on

1 May 2021.

The above graphic sets out the how the process was undertaken by the Nominations Committee which led to an announcement on 25 January 2021 that Angus Cockburn will join the Board as Chair and Non-Executive Director with effect from 1 May 2021. It was felt that the experience gained in Angus' external roles would broaden and deepen the knowledge and experience of the Directors collectively, which in turn beneﬁts the Company.

Time commitments

We keep under review the time commitments of the Directors to ensure that they have sufﬁcient time to discharge their duties effectively. As part of the process of Angus Cockburn's appointment to the Board, we assessed the time commitments required by his other roles, as well as noting the signiﬁcant executive and non-executive experience that he would bring to the Board.

Board composition and diversity

There were seven Directors on the Board as at 31 December 2020, comprising the Non-Executive Chairman, Chief Executive Ofﬁcer, Group Finance Director and four independent Non-Executive Directors. The names and biographical details of the members of the Board are set out on pages 54 and 55.

The majority of the Board are independent Non-Executive Directors. The Company judged the Chairman to be independent at the time of his appointment, and considers all other Non-Executive Directors to be independent under the terms of the Code.

Board diversity

Non-Executive Board tenureBoard skills matrix

The Nominations Committee unanimously recommends the re-election of each of the Directors at the AGM scheduled for 29 April 2021, noting that Malcolm Paul will only serve until 30 April 2021, with the appointment of Angus Cockburn effective from 1 May 2021. In making this recommendation the Board members have evaluated each Director in terms of their performance, their commitment to the role and their capacity to discharge their responsibilities in an effective manner given their other time commitments and responsibilities.

I believe the Board functions effectively and efﬁciently and is appropriate for a Group of our size. The Board carries out an internal Board evaluation each year, and details of the 2020 evaluations are set out on pages 60 to 61. The Board considers that each Director demonstrates the knowledge, ability and experience required to perform the functions of a director of a listed company and is of the calibre necessary to support and develop the Company's long-term strategy and success. The Board also considers that no individual or small group of individuals dominates discussions or the decision-making process.

Diversity is a matter we consider constantly to ensure we beneﬁt from the right balance of skills, range of experience, thought leadership and knowledge. That balance is derived from effective diversity which the Board considers to be an important factor in its own composition and throughout the Group. Diversity arises from a number of potential sources, including in respect of gender, ethnicity age, cultural background, religious belief, sexual orientation or disability. The Board's intention is to maintain diversity in all its senses in its own constitution, and to encourage the same throughout the organisation. While being aware of the Hampton-Alexander Review's revised targets, the Company has two women on the Board representing 29% of Directors, and we acknowledge the requirement to work towards the Parker Report target on ethnic diversity however, we will continue to recommend appointments to the Board based on merit and the individual skills and experience that each candidate would bring. The Board's diversity policy, which is always kept under review, is available on the Group website and sets out our aim to ensure an appropriate mix of skills, experience, age and knowledge, as well as gender and ethnic diversity.

The Chief Executive Ofﬁcer chairs a senior leadership executive team of seven people, with women representing 29% of the team. Apart from creating a forum to bring together a range of specialist skills and experience it also acts as a platform for our succession strategy into the future. Within the wider leadership team, women represent 42% of those reporting to members of the Executive team, and ﬁll two of the four leading roles in our principal operating divisions.

The Board remains committed to ensuring that all our employees have an equal chance of developing their careers within our business. We have created an internal Group diversity policy encouraging our employees to realise their full potential in an environment of trust, honesty and respect. A series of diversity and inclusion initiatives have been launched during 2020. These initiatives are aimed at increasing diversity across the Group, recognising the challenging backdrop of just 12% of the engineering workforce in the UK being women with professional engineering qualiﬁcations and only 8% of engineers and technicians coming from a black, Asian and minority ethnic background.

During 2020, due to the pandemic, the UK Government took the decision to suspend enforcement of the gender pay gap deadlines for this reporting year, and announced that there was no expectation on employers to report the gender pay gap data. Relevant companies within the Group intend to resume their reporting in 2021, including the voluntary Group level report, which will be included in the 2021 report.

More information about our employees, the Group's employment policies, and the Group's commitment to equal opportunities and diversity can be found on pages 29 to 31 and page 89.

Malcolm Paul Chairman of the Nominations Committee 10 March 2021

Audit Committee report

The Audit Committee and the work it performs are of fundamental importance to the Board in discharging its responsibility for oversight and monitoring of ﬁnancial reporting, risk management and internal control. As chairman of the Audit Committee it is my responsibility to ensure that the Audit Committee fulﬁls its responsibilities in a rigorous and effective manner.

Dear Shareholders

I am pleased to present the report of the Audit Committee for the year ended 31 December 2020.

2020 has been a challenging year for the Group as a result of the impacts of the Covid-19 pandemic, including on the working conditions that all of our employees and specialist advisers have had to adapt to and in making best use of videoconferencing technology. I'd like to acknowledge the efforts of the Group's ﬁnance team and our external auditors in responding resiliently to those challenges. To account for the challenges of the pandemic, the Company took the early decision to push our reporting timetable back by one week.

The Audit Committee remains focused on ensuring compliance with the UK Corporate Governance Code 2018 (the Code) and is committed to ensuring the highest standards of corporate governance. In line with the Code, this report seeks to focus on speciﬁc aspects considered by the Audit Committee during the year and aims to provide assurance to our shareholders that the control environment of the Group is being properly supervised and monitored.

I am satisﬁed that the Audit Committee is properly constituted with written terms of reference, which include all matters referred to in the Code and is provided with good quality information to allow proper consideration to be given to topics under review. I am also satisﬁed that meetings are scheduled to allow sufﬁcient time for discussion and to ensure that all matters are considered fully. The Audit Committee's terms of reference are available on our website.

Of particular importance is the requirement to ensure that the Group's ﬁnancial reporting is fair, balanced and understandable. We therefore review all the Group's ﬁnancial reports before publication, including where necessary alternative performance measures, and we are satisﬁed that they provide a fair, balanced and understandable assessment of the Group's position and performance.

This year the Audit Committee has focused on reviewing the Group's systems of risk management and internal controls as the Group continues to grow and increase in complexity, as well as ensuring the integrity of the Group's public ﬁnancial reporting. 2020 has seen a focus on reviewing the integrity of our systems and processes in light of the alternative working conditions to which our employees have had to adapt. In relation to the UK's departure from the EU, our businesses have adapted well and the Group has to date not felt any material impact, although we continue to keep this under review. Our view remains that the UK's departure will not have a material impact on the Group given the relatively small amount of relevant cross border transactions.

Membership	Since
Justin Atkinson, chairman of the Audit Committee	2018
Michael Salter	2013
Aedamar Comiskey	2014
Inken Braunschmidt	2019
Key objectives

To monitor the integrity of the Group's reporting process and ﬁnancial management and to ensure that risks are carefully identiﬁed and assessed and that sound systems of risk management and internal controls are in place.

Key responsibilities:

• The accounting principles, policies and practices adopted in the Group's accounts.
• Reviewing external ﬁnancial reporting and associated announcements.
• Managing the appointment, independence, effectiveness and remuneration of the Group's external auditor, including the policy on the award of non-audit services.
• Initiating and supervising a competitive tender process for the external audit when next required.

• The resourcing, plans and effectiveness of Internal Audit.
• The adequacy and effectiveness of the internal control environment.
• The Group's risk management processes and performance.
• The establishment and oversight of fraud prevention arrangements.
• The provision of advice to the Board on whether the Annual Report and Accounts, when taken as a whole, is fair, balanced and understandable and provides all the necessary information for shareholders to assess the Company's position, performance, business model and strategy.

Met three times during the year.

Audit Committee composition

The Board is satisﬁed that as chair of the Audit Committee, Justin Atkinson has signiﬁcant and relevant ﬁnancial experience being a chartered accountant who formerly served as ﬁnance director of a FTSE 250 company, and also serves as a member of the audit committee of another UK listed company. He has been attending audit committee meetings for over 20 years. The members of the Audit Committee collectively have broad ﬁnancial, commercial, professional and technical experience and as a whole are considered to have competence relevant to the sectors in which the Group operates. Audit Committee attendance is shown on page 60. Details of the Audit Committee's speciﬁc responsibilities and how it exercises those responsibilities are set out in the remainder of this report. The Board and the members of the Audit Committee separately evaluate the performance of the Audit Committee each year and, although the Committee continues to look for continuous improvement, are satisﬁed that the Audit Committee discharges its duties and responsibilities in accordance with its terms of reference.

Audit Committee meetings

The Audit Committee had three scheduled meetings during the year in February, August and November, on dates to coincide with the ﬁnancial reporting cycle. In addition to the Audit Committee members, the Chairman, Chief Executive Ofﬁcer, Group Finance Director, Group General Counsel and Company Secretary, the internal auditor, the Group ﬁnancial controller and other senior members of the ﬁnance team attended parts of each meeting by invitation, together with representatives of the external auditor, including the reporting partner.

At each scheduled meeting the Audit Committee provides the opportunity to discuss matters privately with the external auditor and the internal auditor. In addition, the chairman of the Audit Committee holds regular meetings with the reporting partner of external auditor, KPMG LLP (KPMG) to discuss matters related to the Group.

The ﬁrst meeting in February 2020 considered the accounting, ﬁnancial control and audit issues reported by KPMG that ﬂowed from their audit work and reviewed the ﬁnancial statements and speciﬁc disclosures, including the viability and going concern statements, for recommendation to the Board. In addition to standard agenda items, the February meeting also received evaluations of the external and internal audit process and reviewed the procedures and outputs for the identiﬁcation, assessment and reporting of risk.

The August meeting received a review by KPMG of the Half Year results and considered the accounting, ﬁnancial control and audit issues arising to enable the Audit Committee to review the Interim Statement and recommend it to the Board. The August meeting also reviewed the planning memorandum for the annual audit, including proposed scope and key risks, together with an indication of the proposed audit fee, which was subject to subsequent agreement.

The November meeting considered a detailed report from internal audit on their work for the year, approved the internal audit programme for 2021, considered a report from the KPMG updating the audit plan and strategy for 2021 and an overview of various reviews of the audit profession, as well as consideration of the plan and documentation for the internal evaluation of the Audit Committee, the external auditor and internal audit.

Financial reporting

The Audit Committee's primary responsibility in relation to the Group's ﬁnancial reporting is to review and challenge where necessary, with both senior management and the external auditor, the appropriateness of the Group's Interim Statement and Annual Report and Accounts, with particular focus on:

• whether suitable accounting policies have been adopted and properly applied;
• the clarity of disclosures and compliance with ﬁnancial reporting standards and relevant ﬁnancial and governance reporting requirements; and
• whether management has made appropriate estimates and judgements in material areas or where there has been discussion with or issues raised by the external auditor; and whether the Annual Report and Accounts taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.

To facilitate its ﬁnancial reporting responsibility, the Audit Committee received reports from KPMG at each of the scheduled Audit Committee meetings.

Audit Committee report (continued)

Fair, balanced and understandable

In making its assessment the Board has taken into account its own knowledge of the Group, the markets in which the Group operates, its strategy and performance in the year, a review of content of the Annual Report and Accounts and other periodic ﬁnancial statements and announcements, together with the recommendation from this Audit Committee. Key considerations include ensuring that there was consistency between the accounts and the narrative provided in the front half of the Annual Report and Accounts, and that there was an appropriate balance between the reporting of weaknesses, difﬁculties and challenges (in particular with reference to the Group's principal risks and uncertainties, as set out on pages 43 to 51), as well as successes, in an open and honest manner.

Signiﬁcant issues and accounting judgements

The Audit Committee has a primary responsibility to review the integrity of the Annual Report and Accounts and the Interim Statement of the Company, which includes the review and discussion of papers prepared by management and takes account of the views of the external auditor. The key areas reviewed in the 2020 ﬁnancial year are as follows:

APMs and separately disclosed items

The Committee gave careful consideration to the judgements made in the disclosure of alternative performance measures as set out in note 2, and of separately disclosed items set out in note 5. In particular, the Committee sought to ensure that the treatment followed consistent principles and that reporting in the accounts is suitably clear and understandable. The Committee considered the appropriateness of items included within separately disclosed items and concluded that the judgements made are appropriate.

Vessel valuation

The Audit Committee considered the Group's carrying value of the Groups vessels, in particular in respect of two dive support vessels within Marine Support. Despite current market conditions meaning there is little external evidence of recent similar vessel sales, the Committee reviewed management's estimate of fair market value, which was made with reference to third party valuations and management experience, and is based on an orderly transaction between market participants. The Committee considered management's valuation and resulting impairment of £31.6m to be reasonable and appropriate.

Goodwill valuation

The Audit Committee considered the Group's carrying value of goodwill and impairment reviews based on underlying assumptions, together with the achievability of long-term forecasts and the discount rates applied to forecast cash ﬂows. Senior management provided detailed analysis to determine the sensitivity of the outcome to changes in key assumptions and we are satisﬁed that the judgements made are both reasonable and appropriate.

Operations in overseas jurisdictions with uncertain legislation

Due to the diverse nature of the territories in which the Group operates often with local partners, there is an inherent commercial and ﬁnancial risk arising from operating in these locations. This is particularly prominent in the Group's operations in emerging markets which continue to expand, due to a potentially more uncertain legislative, political and regulatory environment. The Audit Committee received regular updates on the operational and ﬁnancial performance of the Group's business operations in these territories together with the assessment of areas where speciﬁc judgements have been necessary.

Revenue recognition and contract disputes

The estimation of contract margin and the level of revenue and proﬁt to recognise in a single accounting period require the exercise of management judgement. In addition the Group has a number of projects where payments of amounts invoiced or considered due under of the contract have yet to be paid. The Committee reviewed key estimates and judgements applied in determining the ﬁnancial status of the more signiﬁcant projects.

The Audit Committee considered the matters set out above and how they were tested and reviewed, including the judgements and disclosures and representations made.

Going concern

The Audit Committee reviewed the appropriateness of the going concern assumption on page 88 in preparing the ﬁnancial statements. This included a review of papers prepared by senior management in relation to the Group's internal budgets, forecasts of future performance, available ﬁnancing facilities and facility headroom. Taking account of the impact of the Covid-19 pandemic and other possible changes that may impact trading performance as well as other factors that might affect availability, we expect the Group to maintain the appropriate headroom under its borrowing facilities for the forthcoming year. We are satisﬁed that the going concern basis of preparation continues to be appropriate in preparing the ﬁnancial statements.

Viability statement

The Audit Committee reviewed the Company's viability statement set out on page 51 and in particular took care to understand the analysis which was prepared by management, and supports the Board's view that the Company will be able to continue in operation and meet its liabilities as they fall due over the period assessed. The analysis included a review of the Group's three-year plan which overlays a number of assumptions and sensitivities, including the need for and availability of additional bank facilities, an assessment of the likely downside sensitivities aligned to the Group's principal risks, and the potential impact of those sensitivities on its business model, future performance, solvency and liquidity over the period, and taking into account the potential mitigating actions, and the effectiveness of the Group's risk management and control systems, as well as current risk appetite. Sensitivities considered included the diverse nature of the markets and geographies in which the Group's businesses operate, and their ability to react quickly to change.

Risk management and internal controls

The Board has overall responsibility for the Group's risk management and internal control systems, including ﬁnancial, operational and compliance controls. The Audit Committee is responsible for monitoring and reviewing the effectiveness of these systems and the Group's internal audit function. The Board received regular reports throughout the year from the Group Risk Committee and we have reviewed the Group's systems of risk management and internal controls, including ﬁnancial, operational and compliance controls, and have concluded that the systems are sound and effective. Reports on material internal control failings are referred to the Audit Committee for review and oversight to ensure that appropriate and timely actions are identiﬁed and completed. During the year there were no material instances of internal control failure brought to the attention of the Audit Committee. A more detailed summary of the Group's risk management and internal control systems is set out in the principal risks and uncertainties section on pages 43 to 51, along with a description of some of the actions taken and planned to bring improvements to those controls.

Anti-bribery and corruption

We have an established anti-bribery and corruption policy aimed at ensuring adherence to the associated legal and regulatory requirements. The policy includes sections in relation to:

• the Group's zero tolerance approach to payment of bribes.
• the reasonableness and proportionality of offering or receipt of gifts or hospitality.
• the appointment and management of third parties who are engaged to assist with our sales and marketing activities, including approval via procedures which include appropriate internal and external due diligence and authorisation. The Group tracks its agent relationships and reports them back to the Board on a regular basis.
• the Group's condemnation of facilitation payments.

The Group has anti-bribery and corruption training in place which is provided on induction, and each business maintains a training log for its people which is reported back to the Audit Committee via internal audit twice annually.

External audit performance

The Audit Committee continually assesses the performance of the external auditor, KPMG, from the initial planning stage when they receive and discuss the audit plan and proposed strategy, approach, objectives, signiﬁcant risk areas and other areas of focus, drawing on input from the Group's senior management, until conclusion of the audit. The Audit Committee conducts annually a formal assessment of the external auditor's performance based on its own experience and that of the Group's senior management. This process includes the use of questionnaires which focus on the quality and ability of the audit teams, the robustness of the audit process and the quality of communication and governance, including the independence of the audit ﬁrm. The results of the review are considered by the Audit Committee and discussed with KPMG who provide input on the preparedness of the Group's own ﬁnance teams and the conclusions are reported to and discussed by the Board.

For the 2020 audit, the Audit Committee considered that the performance of KPMG, including their interaction with the Company, senior management and the Audit Committee, was good. The Audit Committee was also satisﬁed that KPMG provided an effective audit and remain independent and objective.

Audit Committee report (continued)

KPMG were re-appointed external auditor of the Company in 2017 with a new audit reporting partner Mike Barradell following a competitive tender process given that KPMG were ﬁrst appointed to audit the Company in 2008. 2021 will be Mike's last ﬁnancial year as audit partner for the Company, and he will introduce potential replacements to the Company during the year. Details of the external auditor's remuneration for 2020 are set out in note 4 on page 112. In 2020, there has been an increase of 14% in audit fees from the prior year as a result of the challenges faced by KPMG in undertaking their work remotely.

The Company has complied throughout the ﬁnancial year under review, and up to the date of this report, with the provisions of the Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee Responsibilities) Order 2014.

Non-audit services

The Audit Committee accepts that certain non-prohibited work is best undertaken by the external auditor and to safeguard the external auditor's objectivity and independence the Audit Committee has a policy on engagement of the external auditor for non-audit services, which includes a requirement for Audit Committee approval if the permitted services exceed a threshold of £50,000. The Audit Committee reviews the policy annually and recommends it to the Board for approval. In accordance with EU Audit Regulations and standards published by the FRC in June 2016, the Audit Committee has not engaged the external auditor on matters restricted by those Regulations and standards, and fees from permitted work (including the Half Year report) have been pre-approved by the Audit Committee. KPMG were not instructed to carry out any prohibited non-audit services during 2020.

KPMG provided the following non-audit services to the Group during 2020, all of which were approved by the Audit Committee:

• under the Norwegian Companies Act KPMG provided an assurance service on the control and review procedures over the tax submissions. The work does not result in any accounting judgements and the fee for this service was £3,000.
• KPMG provided attestation services to Scan Tech AS in relation to their application for Norwegian government support. The fee amounted to £4,000.
• KPMG carried out the Group's half year review for the period ended 30 June 2020. The fee amounted to £75,000.

Internal audit

The Audit Committee is responsible for reviewing the work carried out by the internal audit department which considers, reviews and reports on key commercial, ﬁnancial and control risks across the Group. The internal audit function undertake their work in accordance with an annual programme approved by the Audit Committee. The scope of each internal audit review is agreed by the Audit Committee in consultation with the internal auditor to ensure that key areas for each business are addressed.

In 2020, as a result of the Covid-19 pandemic, there were fewer internal audits undertaken compared to 2019. In total ten internal audits were undertaken (2019: 14), all of which were in the UK. No internal audits were carried out overseas by our co-source partner PwC due to Covid-19 restrictions. Reports in relation to the internal audits carried out were presented to the Audit Committee for review and shared with senior managers for action, as well as being provided to the external auditor for information. There were no ﬁndings in the internal audit reports which were of signiﬁcant concern. The internal auditor is responsible to the Audit Committee for ensuring that all required actions are followed up and completed in a timely manner.

Following the ﬁnal 2020 review, the Audit Committee recommended and the Board concluded that the Group's internal audit process was appropriate and effective despite the travel restrictions and other temporary issues faced by the team in 2020 as a result of the Covid-19 pandemic. The effectiveness of the Group's internal audit function is continually reviewed, including an annual formal review undertaken by the Board and the Audit Committee, with the beneﬁt of feedback from Group businesses and functions which have been subject to internal audit during the year.

FRC correspondence

During the year, the FRC wrote to the Company in relation to certain matters in the 2019 Annual Report and Accounts. The principal matters raised related to the accounting for the Group's investment in Murjan Al-Sharq for Marine Contracting LLC, and disclosures in relation to provisions and contingent liabilities. The FRC also highlighted for consideration our presentation of certain other items in the ﬁnancial statements.

Following our response to this matter, the FRC acknowledged our explanations and closed their enquiries on the basis that we would provide enhanced disclosure in relation to the points raised where material, which we have included in the 2020 Annual Report and Accounts.

The FRC's review was based on the Annual Report and

Accounts and did not beneﬁt from detailed knowledge of the business or an understanding of the underlying transactions entered into. It was, however, conducted by staff of the FRC who have an understanding of the relevant legal and accounting framework. The review carried out by the FRC provides no assurance that the Annual Report and Accounts were correct in all material respects; the FRC's role is not to verify the information provided but to consider compliance with reporting requirements.

Conclusion

The Audit Committee operates in an open manner, has clear and concise channels of communication with the Board and, should it be necessary, I would be available to meet with investors. I will also be available to answer any questions at the AGM.

Justin Atkinson Chairman of the Audit Committee

10 March 2021

Directors' remuneration report

Annual statement

Introduction by Aedamar Comiskey, Chair of the Remuneration Committee

On behalf of the Board, and the Remuneration Committee (the Committee), I am pleased to present the Directors' remuneration report for the year ended 31 December 2020.

This report is comprised of two parts, namely:

• Remuneration policy report - which provides a summary of the remuneration policy for which shareholder approval was originally obtained at the 2018 AGM and which will be resubmitted for shareholder approval at the 2021 AGM. While the Committee is not proposing to make material changes to the Policy, a number of updates have been proposed in respect of pensions, post-cessation shareholding guidelines and malus/clawback provisions to reﬂect developments in corporate governance; and
• Annual report on remuneration - which sets out payments and awards made to the Directors and details the link between Company performance and remuneration for 2020, and how the remuneration policy will operate for 2021.

Accordingly, at our 2021 AGM, there will be the: (i) normal annual advisory vote on our Directors' remuneration report; and (ii) vote to approve our new Directors' remuneration policy, which will apply to all payments to be made to Directors from the date of the 2021 AGM and which (unless altered with shareholders' approval) will apply for a period of three years. In addition, shareholders will be asked to approve the rules of the 2021 Long Term Incentive Plan (the LTIP) given that the existing LTIP will shortly reach the end of its shareholder approved life.

Work of the Committee during 2020

The Committee addressed the following main activities during the year, having due regard to the impact of Covid-19 on the Group:

• Agreeing the performance against the targets for the 2019 annual bonus awards;
• Setting the targets for the 2020 annual bonus;
• Agreeing the performance against the targets for the 2017 LTIP awards and determining vesting levels;

• Agreeing the award levels and performance targets for the 2020 LTIP awards; and
• Agreeing the Chairman's fee and Executive Directors' base salaries to apply from 1 January 2021.

Membership

Aedamar Comiskey, chairman of the Remuneration Committee since May 2018

Justin Atkinson

Michael Salter

Inken Braunschmidt

Key objectives

Since

2014

2018

2013 2019

The Committee's objectives are to have a fair, equitable and competitive total reward package that supports our vision; and to ensure the rewards are performance-based and encourage long-term shareholder value creation and are straightforward to communicate and operate.

Key responsibilities:

• Designing the remuneration policy.
• Implementing the remuneration policy.
• Ensuring the competitiveness of reward.
• Designing the incentive plans.
• Setting incentive targets and determining award levels.
• Overseeing all share awards across the Group.

The Committee meets at least three times a year.

In addition, the Committee has sought to ensure that the current and proposed Policy and practices are consistent with the six factors set out in Provision 40 of the 2018 UK Corporate Governance Code:

• Clarity - The current and proposed Policy is understood by our senior executive team and we have sought to articulate it clearly to our shareholders and representative bodies (both on an on-going basis and during consultation when changes are being made).
• Simplicity - The Committee is mindful of the need to avoid overly complex remuneration structures which can be misunderstood and deliver unintended outcomes. Therefore, a key objective of the Committee is to ensure that our executive remuneration policies and practices are straightforward to communicate and operate.
• Risk - Our policy has been designed to ensure that inappropriate risk-taking is discouraged and will not be rewarded via: (i) the balanced use of both short (annual bonuses) and longer term incentive plans (LTIPs), which employ a blend of ﬁnancial, non-ﬁnancial and shareholder return targets; (ii) the signiﬁcant role played by equity in our incentive plans; and (iii) malus/clawback provisions.
• Predictability - Our incentive plans are subject to individual caps, with our share plans also subject to market standard dilution limits.
• Proportionality - There is a clear link between individual awards, delivery of strategy and our long-term performance. In addition, the signiﬁcant role played by incentive/'at-risk' pay, together with the structure of the Executive Directors' service contracts, ensures that poor performance is not rewarded.
• Alignment to culture - Our executive pay policies are aligned to culture through the use of metrics in both the annual bonus and LTIP that measure how we perform against our KPIs.

Discretion and response to Covid-19

Given the impact of Covid-19 on the Group:

• Directors' salaries/fees were reduced by 20% for three months from 1 April 2020;
• Payment of the 2019 annual bonus awards were deferred until the second half of the ﬁnancial year;
• Negative discretion was applied in respect of the 2020 annual bonus - while the personal objectives were partiallymet in respect of 2020 (30% of the annual bonus), the Committee determined that no bonus should be payable in light of the ﬁnancial targets (70% of the annual bonus) being missed; and

• The Remuneration Committee delayed and then reduced the 2020 LTIP award levels by around 15% to reﬂect the prevailing share price. Rather than use the prevailing share price to calculate the relevant number of shares under award, the (higher) average share price between 1 January 2020 and 30 June 2020 was used.

Pay and performance in 2020

James Fisher encountered a difﬁcult year in 2020. The key performance measures for the 2020 ﬁnancial year were as follows:

• Underlying proﬁt before tax £31.5m (2019: £58.5m); and
• Underlying diluted earnings per share 47.9p (2019: 92.8p).

Executive Directors' bonus potential for 2020 was capped at 100% of salary for 2020 with 70% based on meeting the Group's ﬁnancial objectives and 30% based on individual achievement and personal objectives. However, as a result of the Group's ﬁnancial targets for the year ended 31 December 2020 being missed, the Remuneration Committee concluded that it would not be appropriate to award any annual bonus to the Executive Directors with respect to 2020 notwithstanding that the personal objectives were partially met.

Awards under the LTIP granted in 2018 are due to vest on 6 April 2021. However, as a result of failing to hit the threshold earnings per share (EPS) and total shareholder return (TSR) targets, no LTIP awards are expected to vest.

Further detail of the targets and achievement against them is set out on pages 80 to 82.

Stakeholder feedback

The Committee takes an active interest in stakeholder views on our executive remuneration policy and its operation and is particularly mindful of the concerns of shareholders. At the 2020 AGM both the annual statement and Annual report on remuneration were supported by a signiﬁcant majority of shareholders. In advance of the 2021 AGM, the Committee has consulted with the Company's major shareholders and the main representative groups in relation to the proposed changes to the Company's remuneration policy, and the vast majority of feedback received was supportive.

Directors' remuneration report (continued)

Remuneration policy for 2021

The current remuneration policy was originally approved by shareholders at the 2018 AGM. As such, as the policy is nearing the end of its three year life, it will be resubmitted for shareholder approval at the 2021 AGM. The Committee is comfortable that the Policy remains ﬁt for purpose and aligned to our strategy, and we are therefore only proposing to make a limited number of changes to reﬂect developments in corporate governance as follows:

• The existing policy has been amended for both new appointments and incumbent Directors in respect of aligning pension provision to workforce levels;
• A formal post cessation of employment shareholding guideline has been introduced, such that Executive Directors will be required to retain shares in value equal to 200% of salary (or actual shares held, if lower) for two years post cessation of employment, albeit own shares purchased and any shares held in respect of awards granted before the 2021 AGM will be excluded from the calculations; and
• Malus and clawback provisions in respect of the bonus, deferred bonus and new LTIP have been expanded to cover insolvency, corporate failure and reputational damage.

2021 remuneration

A summary of the proposed approach to the implementation of the remuneration policy is as follows:

• The base salaries of Eoghan O'Lionaird and Stuart Kilpatrick remain unchanged at £530,000 and £350,000 respectively;
• Eoghan O'Lionaird and Stuart Kilpatrick will continue to receive 7.5% of salary and 13% of salary pension contributions respectively. Stuart Kilpatrick's pension contributions will decrease to 7.5% of salary from
1 January 2023 without compensation;
• Annual bonus potential for Eoghan O'Lionaird and Stuart Kilpatrick will continue to be 100% of salary. Performance metrics and weightings for 2021 will be similar to those operated for 2020; and
• In respect of 2021 LTIP awards for Executive Directors, award levels will be made as normal after the announcement of the 2020 preliminary results (up to the normal maximum of 125% of salary). 70% of awards will be based on EPS and 30% of awards will be based on relative Total Shareholder Return targets as in prior years. While the Committee has set "cross cycle" EPS growth targets for previous awards, including for the 2020 LTIP awards despite the impact of Covid-19 meaning that these targets are unlikely to be met, the Committee will increase the normal percentage growth range for the 2021 LTIP awards to reﬂect that the 2020 EPS is expected to be a low base year. While these targets had not been agreed at the time of signing this report, they will be formalised prior to grant and disclosed in the RNS issued immediately following the grant date.

With effect from 1 January 2021, the fees payable to the Chairman and Non-Executive Directors remained the same.

I hope you will join me in supporting the remuneration-related resolutions at the AGM on 29 April 2021.

Remuneration policy report

Overview of Directors' remuneration policy

James Fisher and Sons plc operates in a competitive international environment. To continue to compete successfully, the Committee considers that it is essential that the level of remuneration and beneﬁts achieves the objective of attracting, retaining, motivating and rewarding the necessary high calibre individuals at all levels of the business. The Company therefore sets out to provide competitive remuneration to all of its employees, appropriate to the business environment in those countries in which it operates.

The remuneration strategy is designed not only to align with the Company's fundamental values of honesty, integrity and fairness, but also to support the Company's corporate strategy, as a signiﬁcant contributor to competitive advantage.

A cohesive reward structure with a timely pay review process, consistently applied to all employees, with links to corporate performance is seen as critical in ensuring all employees can associate with, and are focused on, the attainment of the Company's strategic goals. Accordingly, the remuneration package for the Executive Directors is normally reviewed annually. Where an Executive Director's responsibilities change during the course of a year, the Committee will consider whether a review is appropriate, outside of the annual process.

Executive remuneration reviews are based upon the following principles:

• total rewards should be set at appropriate levels to reﬂect the competitive market in which the Company operates, and to provide a fair and attractive remuneration package;
• reward elements should be designed to reinforce the link between performance and reward. The majority of the total remuneration package should be linked to the achievement of appropriate performance targets; and
• Executive Directors' incentives should be aligned with the interests of shareholders. This is achieved through setting performance targets to reward increase in shareholder value and through the Committee's policy to encourage shareholding by Executive Directors.

How the Directors' remuneration policy relates to the wider Group

The remuneration policy set out within this report provides an overview of the structure that operates for the Executive Directors in the Group. Employees below Executive levelhave a lower proportion of their total remuneration made up of incentive-based remuneration, with remuneration driven by market comparators and the impact of the role of the employee in question. Long-term incentives are reserved for those judged as having the greatest potential to inﬂuence the Group's earnings growth and share price performance. The Remuneration Committee considers pay and conditions across the workforce when reviewing and setting the Executive Director remuneration policy. The Committee does not currently consult with employees on this matter, although engagement with the workforce in respect of remuneration will be considered as part of the Board's wider employee engagement initiatives.

How shareholders' views are taken into account

The Committee takes an active interest in stakeholder views on our executive remuneration policy and its operation, and is particularly mindful of the concerns of shareholders. At the 2020 AGM both the annual statement and Annual report on remuneration were supported by a signiﬁcant majority of shareholders. In advance of the 2021 AGM, the Committee has consulted with the Company's major shareholders and the main representative groups in relation to the proposed changes to the Company's remuneration policy, and the vast majority of feedback received was supportive.

Directors' remuneration policy

The table below summarises the components of reward for Executive Directors of the Company that will be put forward for shareholder approval at the 2021 AGM. The main changes from the remuneration policy approved by shareholders at the 2018 AGM are as follows:

• The existing policy has been amended for both new appointments and incumbent Directors in respect of aligning pension provision to workforce levels by the end of 2022, in accordance with institutional investor guidelines;
• A formal post cessation of employment shareholding guideline has been introduced such that Executive Directors will be required to retain shares in value equal to 200% of salary (or actual shares held, if lower) for two years post cessation of employment, albeit own shares purchased and any shares held in respect of awards granted before the 2021 AGM will be excluded from the calculations; and
• Malus and clawback provisions in respect of the bonus, deferred bonus and LTIP have been expanded to cover insolvency/corporate failure and reputational damage.

Directors' remuneration report (continued)

ElementPurpose & link to strategy

Designed to attract, retain, motivate and reward the necessary high calibre individuals to the Board.

To offer competitive retirement benefits.

To offer competitive benefits.

To incentivise and reward the Executive Directors to deliver annual financial and operational targets.

To align the interests of the Executive Directors with the Group's long-term performance, strategy and the interests of shareholders.

Operation

Base salaries are a fixed annual sum normally effective 1 January and payable monthly in cash.

Salaries are reviewed each year, normally effective 1 January and recognising the individual's performance and experience, developments in the relevant employment market and having regard to the Group's performance as well as comparing each Executive Director's base salary to market data.

Executive Directors are eligible to join the Group's defined contribution scheme, receive a company contribution into a personal pension scheme or be paid a cash supplement in lieu of pension.

Provision of a company car or cash alternative, life assurance and healthcare insurance. Other benefits may be provided where appropriate. These benefits do not form part of pensionable earnings.

Payable on the achievement of financial and personal objectives and non-pensionable.

The first 70% is payable in cash. Bonus in excess of 70% of basic salary is subject to deferral into shares, with awards vesting after three years, subject to normal good/ bad leaver provisions, but no further performance targets.

Dividend equivalent payments may be awarded (in cash or shares).

Malus and clawback provisions operate.

Annual grant of share awards. Non-pensionable.

A two-year post-vesting holding period applies to awards granted to Executive Directors.

Dividend equivalent payments may be awarded (in cash or shares).

Malus and clawback provisions operate.

Maximum

No prescribed maximum salary or salary increase. Salaries are set for each Executive Director within a range around the market median for similar positions in appropriate comparator companies. The Committee is also guided by the general increase for the employee population although increases may be higher or lower than this to recognise, for example, an increase in the scale, scope or responsibility of an individual and/ or performance.

Workforce aligned on or before 1 January 2023.

No prescribed maximum.

Up to 100% of base salary.

Up to 200% of base salary. Awards above 125% will be subject to stretch targets.

Performance targets

Not applicable.

Majority of the bonus potential is based on a financial target derived from the annual plan; Minority of the bonus potential is based on individual achievement and personal objectives.

Sliding scale targets linked to financial, share price and/or strategic metrics.

No more than 25% of an award vests at threshold, increasing to 100% vesting at maximum.

ElementPurpose & link to strategy

To ensure alignment between the interests of Executive Directors and shareholders.

To encourage share ownership and align the interests of all-employees and shareholders.

To provide fees to reflect the time commitment and responsibilities of each role in line with those provided by similarly sized companies.

Operation

Executive Directors are required to retain half of the shares vesting after tax under the LTIP until the guidelines are met.

Post cessation guidelines apply to share awards granted following the 2021 AGM. In determining the relevant number of shares to be retained post cessation, shares acquired from own purchases and share awards granted prior to the 2021 AGM will not be counted.

An all-employee share plan.

Fixed annual fee, paid monthly in cash reviewed annually; Committee determines the Chairman's fees. The Chairman and Executive Directors determine fees for the other Non-Executive Directors.

Maximum

In employment:

200% of base salary for all Executive Directors.

Post cessation:

100% of the "in employment" requirement, until the second anniversary of cessation (or the actual shareholding if the guideline has not been met at cessation).

As per prevailing HMRC limits.

No prescribed maximum fee or fee increase, although fees are limited by the Company's Articles of Association. The Board/ Committee is guided by market rates, time commitments and responsibility levels.

Performance targets

Not applicable.

Notes:

(1) The choice of the performance metrics applicable to the annual bonus reﬂect the Committee's belief that any incentive compensation should be appropriately challenging and tied to the delivery of both ﬁnancial and personal objectives;
(2) LTIP performance conditions are selected based on the delivery of long-term returns to shareholders and the Group's ﬁnancial growth and are consistent with the Company's strategy. Where operated: (i) TSR performance is monitored by an independent advisor; and (ii) EPS growth is derived from the audited ﬁnancial statements;
(3) The Committee operates its share plans in accordance with the plan rules and the Listing Rules and the Committee, consistent with market practice, retains discretion over a number of areas relating to the operation and administration of the plans (e.g. treatment of awards for leavers, change of control, adjustments to performance targets);
(4) The Committee retains the right to exercise discretion to override formulaic outcomes and ensure that the level of bonus or share awards payable is appropriate. It may use its discretion to adjust outcomes to ensure that any payments made reﬂect overall Company performance and stakeholder experiences more generally. Where exercised, the rationale for this discretion will be fully disclosed to shareholders in the relevant Directors' remuneration report.

(5) Consistent with HMRC legislation, the all-employee arrangement does not have performance conditions; and

(6)In approving the Directors' remuneration policy, authority is given to the Company to honour any past commitments entered into with current or former Directors including the vesting of share awards granted in the past.

Malus and clawback provisions

Malus and clawback provisions operate in respect of the annual bonus (cash and deferred shares) and LTIP awards, with Committee discretion to apply them in the event of a material misstatement in the Company's ﬁnancial results, miscalculation, serious reputational damage to the Company, in the event it is discovered that the participant committed serious misconduct that could have warranted summary dismissal or a corporate failure/insolvency.

The Committee may decide to operate the malus and clawback provisions within a three-year period commencing on the date that the cash part of any annual bonus is paid (for cash and deferred share bonus awards), and within a three-year period of any LTIP vesting date.

Directors' remuneration report (continued)

£'000

£2,250 £2,000 £1,750 £1,500 £1,250 £1,000

£2,117

£1,785

16%

31%

£1,414

37%

£1,189 28%

£1,195

15%

36%

31%

£750 £500 £250

£593

22%

30%

25%

£408

£801 27% 22%

30%

25%

£0

100%

50%

33%

Minimum

28%

100%

51%

34%

On-target

Maximum

Chief Executive Officer

Maximum with share price growth

29%

Minimum

On-target

Maximum

Group Finance Director

Maximum with share price growthShare price growthLong-term incentiveAnnual bonusFixed pay

Approach to recruitment

New Executive Directors will be appointed on remuneration packages with the same structure and elements set out in the Directors' remuneration policy table. On-going incentive pay/share-based awards will be limited to:

• Maximum annual bonus of 100% of salary; and
• Up to 200% of salary LTIP award.

For external appointments, the Committee may offer additional cash or share-based elements to replace deferred or incentive pay forfeited by an executive when leaving a previous employer. It would seek to ensure, where possible, that these awards would be consistent with awards forfeited in terms of vesting periods, expected value and performance conditions. Shareholders will be informed of any such payments as soon as practicable following the appointment.

For an internal appointment, any variable pay element awarded in respect of the prior role may be allowed to pay out according to its original terms. In addition, any other on-going remuneration obligations existing prior to appointment may continue, provided that they are put to shareholders for approval at the earliest opportunity.

For external and internal appointments, the Committee may agree that the Company will meet certain relocation and incidental expenses as appropriate.

Loss of ofﬁce

The Committee has considered remuneration for Executive Directors leaving the Company and is committed to applying a consistent and equitable approach to ensure the Company is equitable but pays no more than necessary. The loss of ofﬁce policy is in line with market practice and will be dependent on whether deemed a 'good leaver' or 'bad leaver'. The 'good leaver' policy includes:

• payment in lieu of notice equal to one year's basic salary or, if termination is part way through the notice period, the amount of salary relating to any unexpired notice to the date of termination. There is an obligation on Directors to mitigate any loss which they may suffer if the Company terminates their service contract;
• bonus payments for the period worked may be made, subject to the original performance targets, at the discretion of the Committee. Any such payments would be made on the normal payment date;
• vesting of share scheme awards is not automatic and the Committee retains the discretion to prevent awards from lapsing depending on the circumstances of the departure and the best interests of the Company. For a 'good leaver': (i) deferred bonus awards will normally vest in full at the normal vesting date (although may vest earlier, including at cessation); and (ii) LTIP awards will normally vest at the normal vesting date (although may vest earlier, including at cessation) subject to performance against the performance targets and LTIP awards will normally be pro-rated. 'good leaver' reasons are death, injury, illness or disability,

redundancy, retirement, transfer of business resulting in cessation of the individual's employment within the Group and any other reason at the Committee's discretion. No compensation is paid for summary dismissal, save for any statutory entitlements;

• Executive Directors will also be entitled to a payment in respect of accrued but untaken annual holiday entitlements on termination; and
• Legal fees and outplacement support may be paid by the Company where appropriate.

Service contracts

It is the Board's policy that Executive Directors are employed on contracts subject to no more than 12 months' notice from either side. The Board recognises however that it may be necessary in the case of new executive appointments to offer an initial longer notice period, which would subsequently reduce to 12 months after the expiry of the initial period. The service agreements do not have a ﬁxed term. If it becomes necessary to consider termination of a service contract, the Committee will have regard to all the circumstances of the case, including mitigation, when determining any compensation to be paid. Details of the current service contracts are as follows:

Contract date	Notice period
Eoghan O'Lionaird	1 September 2019	12 months
Stuart Kilpatrick	1 July 2010	12 months

The Executive Directors are permitted to serve as non-executive directors of other companies, provided the appointment is ﬁrst approved by the Remuneration and Nominations Committees. Directors are allowed to retain their fees from such appointments. During 2020, the Executive Directors held no external appointments.

Non-Executive Directors do not have service contracts but have a letter of appointment setting out their terms and conditions. Non-Executive Directors are appointed each year for up to 12 months and are entitled to one month's prior written notice of early termination for which no compensation is payable. Details of the letters for the currently appointed Non-Executive Directors are set out below:

Malcolm Paul Aedamar Comiskey Michael Salter Justin Atkinson Inken Braunschmidt

1 February 2011

Date of appointment

1 November 2014

1 January 2021

1 August 2013

1 February 2018

1 March 2019

Letter of appointment

1 January 2021

As announced on 25 January 2021, Angus Cockburn will join the Board as Chairman and Non-Executive Director with effect from 1 May 2021. The terms of Angus' letter of appointment are consistent with those for the current Non-Executive Directors. The date of Angus' letter of appointment is 22 January 2021 and the date of his appointment will be 1 May 2021.

Annual report on remuneration

Remuneration Committee

The Committee members have no personal ﬁnancial interest other than as shareholders, in the matters to be decided. They have no conﬂicts of interest arising from cross-directorships with the Executive Directors, nor from being involved in the day-to-day business of the Company.

The Committee operates under clear written terms of reference and conﬁrms that its constitution and operation comply with the applicable provisions of the UK Corporate Governance Code (prevailing at the date this report is signed) in relation to Directors' remuneration policy and practice and that it has applied the Code throughout the year. The Committee's terms of reference include:

• to determine and agree with the Board the framework and policy for Executive Directors and senior managers;
• to review the appropriateness and relevance of the remuneration policy;
• to agree the measures and targets for any performance related bonus and share schemes of the Executive Directors;
• to determine within the terms of the policy the total individual remuneration package of the Executive Directors and selected senior management immediately below Board; and
• to review senior management pay remuneration and workforce remuneration policies and practice.

Directors' remuneration report (continued)

Advisers to the Remuneration Committee

In undertaking its responsibilities, the Committee seeks independent external advice as necessary. To this end, FIT Remuneration Consultants LLP (FIT) acted as the principal external advisers to the Committee during the ﬁnancial year. The Committee is comfortable that the FIT team provide independent remuneration advice to the Committee and do not have any other connections with the Company that may impair their independence. FIT is a founding member and signatory of the Code of Conduct for Remuneration Consultants, details of which can be found at www. remunerationconsultantsgroup.com.

During the year, FIT provided independent advice on a wide range of remuneration matters including the remuneration policy review and the Board changes. FIT provides no other services to the Company. The fees paid to FIT in respect of work carried out for the year under review were £37,066.

Total remuneration of the Executive Directors (audited)

Non-Executive Directors

For 2021, the Non-Executive Directors' fees are set out below, all of which are payable in cash.

Chairman*

Other Non-Executive Director fees: Basic fee

Additional fee for the chair of Audit Committee

Additional fee for the chair of Remuneration Committee

Additional fee for the Senior Independent Director

* The Chairman's fee indicated in the table is the annual fee payable to Malcolm Paul. As announced by the Company on 25 January 2021, Malcolm Paul will step down as Non-Executive Chairman of the Company, and will be replaced by Angus Cockburn on the same annual fee.

2021

2020 £

210,125 210,125

54,632 54,632

12,000 12,000

8,000 8,000

Eoghan O'Lionaird	Stuart Kilpatrick	Fergus Graham(1)
2020	2019	2020	2019	2020	2019
£000	£000	£000	£000	£000	£000
Base salary(2)	464	177	333	318	62	282
Benefits(3)	23	9	12	11	2	10
Pension(4)	35	3	39	38	7	28
Bonus in cash	-	-	-	86	-	48
Bonus in deferred shares	-	-	-	-	-	-
Total short-term remuneration	522	189	384	453	71	368
LTIP - performance	-	-	-	221	-	47
LTIP - share appreciation	-	-	-	47	-	10
Dividend equivalents	-	-	-	12	-	3
LTIP - total(5)	-	-	-	280	-	60
Other	-	346(6)	-	-	-	-
Total remuneration	522	535	384	733	71	428
Total fixed remuneration	522	535	384	367	71	320
Total variable remuneration	-	-	-	366	-	108

(1) The amounts disclosed above for 2020 reﬂect the period until Fergus Graham stepped down from the Board with effect from 20 March 2020. He continues to be paid until cessation of employment on 19 March 2021, subject to mitigation. More details can be found on page 82.
(2) Eoghan O'Lionaird's salary (£530,000) was reduced by 50% and Stuart Kilpatrick's salary (£350,000) was reduced by 20%, in each case for three months from 1 April 2020, and not repaid.
(3) Beneﬁts comprised a cash allowance in lieu of car and medical insurance.

(4) Pension contributions may be paid into personal pension plans, the Company pension scheme or taken as a separate cash allowance, subject to income tax.
(5) The value presented for the 2018 LTIP awards (vesting in April 2021 based on three-year EPS performance to 31 December 2020 and TSR performance to 4
April 2021) is based on an estimated value at vesting. The 2017 LTIP values (vested in April 2020 based on three-year EPS performance to 31 December 2019 and TSR performance to April 2020) were estimates last year, using a share price based on the three-month average share price to 31 December 2019. The table above has been restated for the actual pre-tax value of these awards (based on the share price calculated in accordance with prevailing tax legislation) and the value of dividend equivalents as at vesting on 6 April 2020.
(6) Eoghan O'Lionaird received an award from the Company in connection with his relocation expenses and in respect of amounts forfeited from leaving his previous employer. More details were set out in the 2019 report.

Annual bonus awards for 2020 (audited)

The maximum annual bonus for Executive Directors was 100% of base salary, with 70% based on ﬁnancial objectives (note 1 below) and 30% based on individual achievement and personal objectives (note 2 below). The ﬁrst 70% of any bonus award is paid in cash and the balance is awarded in shares and deferred for three years (with dividend equivalents and malus and clawback provisions applying). No bonus was awarded to Eoghan O'Lionaird or Stuart Kilpatrick with respect to 2020, as set out below.

Fergus Graham left the Company with effect from 20 March 2020, and ceased to be entitled to a bonus with respect to 2020.

Details of the actual performance against the targets are as follows:

Note 1 - Financial objectives (70% of maximum):

Performance measure

Adjusted profit before tax target

Minimum threshold £62m

Maximum £67m

Actual performance

Performance target

£31.5m

Note 2 - Personal objectives (30% of maximum): Eoghan O'Lionaird

Assessment against targets

Threshold starts at 0% and increases to 100% of this element of the bonus at maximum target performance.

0% of this part of the bonus achieved 0% of salary.

Objectives

Weighting (% of salary)

1 Lead and deliver the Group's strategic review 6%

2 Develop management structure including succession planning 6%

3 Set, communicate and lead key management priorities 6%

4 Deliver balanced growth both organically and by acquisitions 6%

5 Lead the Group sustainability initiative 6%

Total

Stuart Kilpatrick

Objectives

30%

Weighting (% of salary)

Total

1	Lead financial reporting to shareholders and management, and oversee financial risk management	6%
2	Oversee internal audit	6%
3	Support the Group's strategic review	6%
4	Work with senior managers to ensure good working relations	6%
5	Deliver defined financial actions	6%
30%

As the actual performance of the Group did not meet the minimum threshold of underlying proﬁt before tax ﬁgure of £62.0m, the ﬁnancial target was not achieved and the Remuneration Committee did not consider that it would be appropriate to award any part of the 2020 bonus to the Executive Directors based on their personal objectives. Therefore no formal assessment of these targets has been disclosed. The Executive Directors' personal objectives have been reset for 2021 and will be disclosed in the 2021 report.

Vesting of 2018 LTIP awards (audited)

The LTIP values included in the table below relate to awards granted on 4 April 2018 which vest on 6 April 2021 dependent on EPS and TSR performance. EPS is measured over the three-year period ended 31 December 2020 while TSR is measured over the three-year period from 4 April 2018. Therefore the ﬁgures set out below for the LTIP vesting are indicative, based on an estimate of TSR as at 6 February 2021.

Directors' remuneration report (continued)

Under the EPS performance target (70% of awards) which uses a sliding scale, 25% of this part of an award vests where growth of diluted earnings per share of RPI plus 9% is achieved over the three-year performance period, increasing pro-rata to full vesting where growth of RPI plus 18% is achieved.

EPS	EPS	Threshold	Maximum	Vesting
Performance target	Base EPS	at year end	growth	RPI +9%	RPI +18%	%
Underlying diluted EPS	81.4	47.9	-	14.8%	23.8%	0%

Under the TSR performance target (30% of awards) which uses a sliding scale, 25% of this part of an award vests for median TSR increasing pro-rata to full vesting for upper quartile TSR, measured against the constituents of the FTSE 250 excluding investment trusts. The estimated three-year performance based on TSR calculations to 6 February 2021 is as follows:

Upper QuartileJames Fisher

Vesting %
0%
Proportion	Maximum	Share price	Exercise price
of salary	shares awarded	at date of grant(1)	at grant
Eoghan O'Lionaird	125%	42,307	1,565.9p	-
Stuart Kilpatrick	125%	27,938	1,565.9p	-

Performance target

TSR v FTSE 250 (excluding investment trusts)

Median TSR -2%

TSR

+30%

-32.5%

As a result of EPS and TSR performance, no LTIP share awards are expected to vest on 6 April 2021.

LTIP awards granted in 2020 (audited)

1) Recognising the prevailing share price, which has been impacted by Covid-19 and market conditions more generally, the Remuneration Committee agreed to set the price based on which the LTIPs were granted as the average share price between 1 January 2020 and 30 June 2020. This effectively reduced the value of the LTIP grants by c.15%. The reduction of LTIP award levels in connection with Covid-19 is in addition to the 20% salary reduction for the three months from 1 April 2020.

Vesting of the 2020 LTIP award is subject to achievement of performance targets over a three-year period with 70% of the award based on EPS targets and 30% based on TSR targets. EPS target performance is measured over the three-year period ending on 31 December 2022. The EPS element of the award vests if EPS growth at least equals the RPI increase over the period plus 9%. At the threshold level, 25% of the EPS element of the award will vest. Full vesting is achieved if EPS growth is greater than or equal to 18% in excess of the RPI increase over the vesting period. The TSR element of the award is subject to the Company's TSR performance relative to the FTSE 250 index excluding investment trusts, over the three-year period from 6 April 2020. If at the end of the period the Company ranks in the upper quartile, all of the TSR element of the award will vest. If the ranking is at median level, 25% of TSR element of the award will vest. No element of the TSR part of the award will vest for performance below the median. For intermediate ranking, a proportionate part of each award will vest reducing on a straight-line basis. Any part of the award that does not vest at the end of a performance period will lapse immediately.

Deferred bonus awards granted in 2020 in respect of 2019 annual bonus (audited)

No deferred bonus awards were granted in 2020 in respect of the 2019 annual bonus as a result of the bonus awards being less than 70% of salary threshold required to trigger the threshold.

Payments for loss of ofﬁce (audited)

As announced on 20 March 2020, Fergus Graham stepped down from the Board and left the Company with effect from 19 March 2020. Details of the arrangements in respect of remuneration are as follows:

• contractual entitlement to salary (based on salary of £281,875) and beneﬁts during a period of garden leave, which continues until his anticipated cessation of employment on 19 March 2021, subject to mitigation.
• £47,919 in respect of his annual bonus for the year ended 31 December 2019.
• In respect of outstanding share awards: (ii) the 2018 deferred bonus awards will continue vest at the normal vesting date; and (ii) unvested LTIP awards will vest on their normal vesting dates, subject to time prorating and performance conditions. Dividend equivalents may be credited to the extent that awards vest.
• The Company paid £4,500 plus VAT in respect of legal fees and £30,000 in respect of outplacement support.

Payments to former Directors (audited)

As previously disclosed, Nick Henry retired from the Board of the Company with effect from 1 October 2019. He remained employed by the Company until 31 March 2020 in order to achieve a smooth and effective transition of responsibilities to Eoghan O'Lionaird. As set out in last year's Directors' remuneration report, he received a total salary of £96,000 in respect of this period. Mr Henry received no further payment in lieu of notice or any other termination payments. In addition to the above, 21,372 shares vested on 6 April 2020, including dividend equivalents, in respect of his 2017 LTIP awards.

CEO pay ratio (unaudited)

The data shows how the CEO's single ﬁgure remuneration for 2020 compares to equivalent single ﬁgure remuneration for full-time equivalent UK employees, on a Group basis, ranked at the 25th, 50th and 75th percentile.

25th percentile	Median	75th percentile
Method	pay ratio	pay ratio	pay ratio
2020	Option A	19 : 1	14 : 1	9 : 1
2019	Option A	28 : 1	19 : 1	13 : 1

No components of pay and beneﬁts have been omitted for the purpose of the above calculations. As in 2019, Option A was selected given that this method of calculation was considered to be the most robust approach in respect of gathering the required data for 2020.

percentile 2020 2019

Salary

Total pay and benefits

25th percentile

Median

75th percentil

25th percentile

Median

75th percentile

£24,000

£33,127

£50,00

£27,000

£37,500

£58,963

£24,480

£34,150

£52,00

£25,459

£36,541

£55,240

Aligning pay with performance (unaudited)

The following graph shows the total shareholder return compared to the FTSE 250 and the FTSE Small Cap indices excluding investment trusts:

Growth in the value of £100 holding over ten years

600

500

)desaber( )£( eulaV

400

300

200

100

31 Dec 10

31 Dec 11

31 Dec 12

31 Dec 13

31 Dec 14

31 Dec 15

31 Dec 16

31 Dec 17

31 Dec 18

31 Dec 19

31 Dec 20

James Fisher and Sons plc

FTSE 250

FTSE SmallCap

This graph shows the value, by 31 December 2020, of £100 invested in the Company on 31 December 2010, compared with the value of £100 invested in the FTSE 250 and FTSE SmallCap indices on the same date. The other points plotted are the values at intervening ﬁnancial year-ends.

Source: Thomson Reuters

Directors' remuneration report (continued)

Remuneration of CEO compared with growth in underlying diluted earnings per share

Eoghan O'Lionaird

Nick Henry

Tim Harris

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

Annual change - underlying diluted EPS (pence)

(52%)

Salary, pensions and benefits (£000) Annual performance bonus (£000) Short-term remuneration (£000) Share schemes (£000)

CEO total remuneration (£000) Actual bonus as a percentage of maximum

522 - - - 522

4% 189 - 189 - 189

14%

11%

(7%)

13%

18%

15%

16%

421

526

512

492

471

439

355

399

448

392

429

287

263

210

268

456

1,010

904

921

589

758

702

565

667

418

889

109

183

318

728

691

781

534

874

1,899

1,013

1,104

907

1,486

1,393

1,346

1,201

17%

91%

88%

100%

23%

100%

LTIP vesting as a percentage of maximum

59%

100%

15%

ESOS vesting as a percentage of maximum

----47% 45%

100%

40%

Percentage change in remuneration (unaudited)

The table below shows the percentage change in salary or fees, beneﬁts and annual bonus earned between the year ended 31 December 2019 and the year ended 31 December 2020 for the Board, compared to the average earnings of all of the Group's other UK employees. The Committee chose the Group's UK employees for pay comparison given that this is considered to be the most meaningful comparator group.

Base
salary/fee	Benefits	Annual bonus
Executive Directors
Eoghan O'Lionaird	(12%)	-	N/A
Stuart Kilpatrick	5%	1%	(100%)
Non-Executive Directors
Malcolm Paul	(3%)	N/A	N/A
Aedamar Comiskey	(3%)	N/A	N/A
Michael Salter	(1%)	N/A	N/A
Justin Atkinson	(3%)	N/A	N/A
Inken Braunschmidt	N/A*	N/A	N/A
Employee population	5%	N/A	(19%)
* Inken Braunschmidt joined the Board in March 2019 so there is no full year comparison.
Relative importance of remuneration (unaudited)
2020	2019	Change
£m	£m	£m
Total employee remuneration	133.7	149.2	(15.5)
Total dividends paid	4.0	16.4	(12.4)
James Fisher and Sons plc Annual report and accounts 2020

Interests in shares (audited)

The interests of Directors and their connected persons in ordinary shares as at 31 December 2020, including any interests in share options and shares provisionally awarded under the LTIP and the 2005 Employee Share Option Scheme (ESOS) are as follows:

Vested but	At
Unvested	unexercised share	Exercised	31 December
Beneficial	Unvested LTIP	deferred	options ESOS	during the year	2019
number	number	bonus shares	number	number	number
Malcolm Paul	13,000	-	-	-	-	13,000
Eoghan O'Lionaird	13,341	42,307	-	-	-	7,283
Stuart Kilpatrick	74,851	74,191	6,901	37,153	-	47,859
Justin Atkinson	3,150	-	-	-	-	3,150

(1) The unvested LTIP awards are subject to performance conditions. The unvested deferred bonus share awards are not subject to performance conditions;
(2) Between 31 December 2020 and 10 March 2021, there were no changes to the Directors' shareholdings;
(3) No Director has an interest in the preference shares of the Company, or in the shares of any subsidiary or associated undertaking;
(4) The Directors' interests stated above include any shares held by their connected persons; and
(5) Aedamar Comiskey, Michael Salter and Inken Braunschmidt had no interests in ordinary shares as at 31 December 2020.

Against the 200% of salary guideline and based on the share price and prevailing base salary levels as at 31 December 2020, Eoghan O'Lionaird held shares equivalent to 27% of his base salary and Stuart Kilpatrick held shares equivalent to 213% of his base salary.

Executive Directors' interest in options over shares (audited)

At 31 December

2020	Exercise	Date from which	Expiry
Stuart Kilpatrick	number	price	exercisable	date
32,274	567p	09.04.15	09.03.22
4,879	1,409p	10.04.17	10.04.24
Total	37,153

All options relate to the ESOS. The 2005 ESOS expired in April 2015 and was not renewed. The last awards were made on 10 April 2014. Options over 32,808 (2019: nil) shares were exercised by Stuart Kilpatrick during the year and gains were made of £204,504 (2019: £nil). As at 10 March 2021, being the last practical date prior to the publication of this report, there were no changes to Directors' options under the ESOS.

Directors' remuneration report (continued)

Executive Directors' interest in share awards (audited)

Granted	Vested	Lapsed
1 January	during year	during year	during year	31 December	Vesting
2020	number	number	number	2020	date
Eoghan O'Lionaird	LTIP	-	42,307	-	-	42,307	24 July 2023
Sharesave1	-	2,935	-	-	2,935	1 December 2025
-	45,242	-	-	45,242
Stuart Kilpatrick	LTIP	23,292	-	(23,292)	-	-	6 April 2020
LTIP	25,669	-	-	-	25,669	6 April 2021
LTIP	20,584	-	-	-	20,584	6 April 2022
LTIP	-	27,938	-	-	27,938	24 July 2023
Deferred Bonus	5,355	-	(5,355)	-	-	9 March 2020
Deferred Bonus	3,527	-	-	-	3,527	4 April 2021
Deferred Bonus	3,374	-	-	-	3,374	2 April 2022
Sharesave1	-	2,935	-	-	2,935	1 December 2025
81,801	30,873	(28,647)	-	84,027
Fergus Graham2	LTIP	4,457	-	(4,457)	-	-	6 April 2020
LTIP	22,770	-	-	(2,186)	20,584	6 April 2021
LTIP	18,260	-	-	(12,173)	6,087	6 April 2022
Deferred Bonus	2,993	-	-	-	2,993	2 April 2022
48,480	-	(4,457)	(14,359)	29,664
Total	130,281	76,115	(33,104)	(14,359)	158,933

(1) Eoghan O'Lionaird and Stuart Kilpatrick were granted options under the ﬁve year all employee Sharesave scheme granted on 21 October 2020. The options will mature on 1 December 2025, at which point the participant may elect to receive shares or the cash saved.

(2) The interests in shares for Fergus Graham are included, although he stepped down from the Board with effect from 20 March 2020.

A two-year holding period applies to awards granted after the 2018 AGM. The schemes above are not tax-advantaged for HM Revenue and Customs purposes. As at 10 March 2021, being the last practical date prior to the publication of this report, there were no changes to the Executive Directors' interest in LTIP and Deferred Bonus Share awards.

Sourcing of shares and dilution

The Remuneration Committee has regard to the limits on dilution advised by the Investment Association and contained in the relevant share plan rules and reviews the number of shares committed and headroom available under share incentive schemes in accordance with these dilution limits.

On vesting, the awards of shares under the LTIP are satisﬁed by the shares held by the James Fisher and Sons plc Employee Share Trust (Trust). During the year the Trust purchased 50,000 ordinary shares on the open market (2019: 50,000) and at

31 December 2020 the Trust held 9,227 ordinary shares (2019: 510).

Share price during the ﬁnancial year

The middle market price of one ordinary share in the Company during the ﬁnancial year ranged from 737p to 2,050p and at 31 December 2020 was 947p.

Non-Executive Directors' remuneration
2020	2019
£000	£000
Malcolm Paul	199	205
Aedamar Comiskey1	60	61
David Moorhouse2	-	10
Michael Salter	52	53
Justin Atkinson3	63	65
Inken Braunschmidt4	52	44

Total fees

(1) The fees include payment in respect of (i) Chair of the Remuneration Committee fee of £8,000 per annum and (ii) Senior Independent Non-Executive Director fee of £8,000 per annum.
(2) David Moorhouse stepped down from the Board on 28 February 2019.
(3) The fees include a payment in respect of Chairman of the Audit Committee fee of £12,000.
(4) The Non-Executive Directors' fees were reduced by 20% for three months from 1 April 2020.

Shareholder voting (unaudited)

The Company is committed to on-going shareholder dialogue and takes an active interest in voting outcomes. Where there are substantial votes against resolutions including in relation to Directors' remuneration, the Company seeks to understand the reasons for any such vote and will report any actions in response to it. Due to government restrictions in response to Covid-19, the Company was not able to hold its AGM in Barrow-in-Furness as originally planned, and it was instead held at the Company's London ofﬁce, with only shareholder-directors present. Voting at the 2020 AGM was therefore by proxy. The following table reﬂects the valid proxy voting instructions received for the 2020 AGM in respect of the Directors' remuneration report for the year ended 31 December 2019 and the remuneration policy voted upon at the 2018 AGM:

For

Against

Total votes cast (excluding withheld votes) Total votes withheld

Total votes cast (including withheld votes)

Directors' remuneration report

(2020 AGM)

Remuneration policy

(2018 AGM)

Total number of votes

% o votes cas

Total number of votes

% of votes cast

26,256,596

94.2%

40,478,854

97.9%

1,628,025

5.8%

872,992

2.1%

27,884,621

41,351,846

1,104,884

20,723

28,989,505

41,372,569

% of votes cast

Implementation of the remuneration policy for 2021 (unaudited)

With effect from 1 January 2021, Eoghan O'Lionaird's base salary remained at £530,000, and Stuart Kilpatrick's base salary remained at £350,000.

The maximum bonus opportunity continues to be set at 100% of base salary. The proposed ﬁnancial target levels have been set to be challenging and appropriately demanding. 70% of the annual bonus will be determined by adjusted proﬁt before tax targets and 30% by personal objectives. The targets are commercially sensitive but disclosure of the targets and performance against targets will be set out in the 2021 Directors' remuneration report.

Awards under the LTIP will be granted to Eoghan O'Lionaird and Stuart Kilpatrick with 70% of the award based on EPS growth targets and 30% based on relative TSR targets. The number of shares under award will represent a maximum 125% of base salary.

The performance period for the EPS element of the award will run for three years ending 31 December 2023. While the Committee has set "cross cycle" EPS growth targets for previous awards, including for the 2020 LTIP awards despite the impact of Covid-19 meaning that these targets are unlikely to be met, the Committee will increase the normal percentage growth range for the 2021 LTIP awards to reﬂect that the 2020 EPS is expected to be a low base year. While these targets had not been agreed at the time of signing this report, they will be formalised prior to grant and disclosed in the RNS issued immediately following the grant date.

For the TSR element, performance will be measured over three years against the constituents of the FTSE 250 excluding investment trusts, with full vesting if the Company ranks in the upper quartile and 25% of the TSR element vesting for ranking median with straight-line vesting in between.

Aedamar Comiskey

Chair of the Remuneration Committee 10 March 2021

Directors' report

Additional information and statutory disclosures

This section contains additional information which the Directors are required by law and regulation to include within the Annual Report and Accounts. The Directors' report comprises this section as well as the rest of the Governance section (from pages 52 to 91) and those sections of the Strategic report or ﬁnancial statements as referenced below.

We have chosen, in accordance with the Act, to include certain information in our Strategic report or ﬁnancial statements that would otherwise be required to be disclosed in the Directors' report. This is as follows:

Subject matter	Location	Page
Likely future developments in the
business	Strategic report	7-8
Research and development	Strategic report	37
Employee involvement/
engagement	Strategic report	29 - 31
Relationships with suppliers,
customers and others	Strategic report	35 - 36
Greenhouse gas emissions	Strategic report	37 - 40
Use of ﬁnancial instruments	Note 28	131

The Directors' report and Strategic report comprise the 'management reports' for the purposes of compliance with Financial Services Authority's Disclosure Guidance and Transparency Rules (DTR) 4.1.8R and the Directors' report fulﬁls the requirements of the Corporate Governance Statement for the purposes of DTR 7.

Going concern

The Group's business activities, together with the factors likely to affect its future development, the ﬁnancial position of the Group and a description of the principal risks and uncertainties are set out in the Strategic report on pages 43 to 51. The Group's primary sources of funding are bilateral revolving credit facilities with a core group of banks, which totalled £300m at 31 December 2020 (2019: £250m). Compliance with banking covenants is tested half yearly for the ratio of net debt: earnings before interest, tax, depreciation and amortisation (Ebitda) and interest cover. No breaches in covenants occurred during the year.

The Group meets its day-to-day working capital requirements through operating cash ﬂows, with borrowings in place to fund acquisitions and capital expenditure. The Group had £120.2m (2019: £41.7m) of undrawn committed facilities as at 31 December 2020. The Group's forecasts and projections, taking account of reasonable changes in tradingperformance, conﬁrm that the Group should be able to operate within the level of its current banking facilities.

The Group uses cash ﬂow forecasts derived from budgets, forecasts and medium-term planning to identify headroom under the covenant tests. After making enquiries, and having evaluated the on-going trading of the businesses, the Directors have a reasonable expectation that the Group has adequate resources to continue to operate for a period considered to be at least 12 months from the date of this report. Accordingly, the Directors consider it appropriate to continue to adopt the going concern basis of accounting in preparing the Annual Report and Accounts.

Dividends

An interim dividend of 8.0p per share (2019: 11.3p) was paid by the Company on 6 November 2020. Given the current level of uncertainty due to Covid-19 and in view of the disappointing performance in Marine Support, the Board is not recommending a ﬁnal dividend for the year ended

31 December 2020. Accordingly, the total dividend for the year is 8.0p per share (2019: 11.3p).

Share capital

Details of the share capital of the Company and the shares held by the Company's Employee Share Trust, including the rights and obligations attaching to the shares are set out in note 29 on page 137. The rights and obligations attaching to the shares are set out in the Company's Articles of Association (Articles). There are no speciﬁc requirements on the size of a holding nor on the transfer of shares, both of which are governed by the general provisions of the Articles and prevailing legislation. The Directors are not aware of any agreements between the holders of the Company's shares that may result in restrictions on the transfer of securities or on voting rights. No person has any special rights of control over the Company's share capital. Where shares are held on behalf of the Company's employee beneﬁt trust, the trustees have discretion to vote on any shares as they see ﬁt and have not waived their right to receive dividends.

At the 2020 AGM, the Company was given authority to purchase up to 2,516,704 of its ordinary shares until the date of its next AGM. No purchases were made during the year and up to the date of this report by the Company.

The Company has one class of ordinary share and one class of preference share. As at 31 December 2020, 50,368,780 ordinary shares of 25p each have been issued, are fully paid up and are listed on the London Stock Exchange and 100,000 cumulative preference shares of £1 each have been issued and fully paid up.

Substantial shareholders

Information provided to the Company pursuant to the DTRs is published on a Regulatory Information Service and on the Company's website. As at 31 December 2020, the Company had been notiﬁed in accordance with Rule 5 of the DTRs, of the following holdings of voting rights attached to the issued Ordinary Share capital of the Company:

Nature of

Ordinary	%1	holding
Trustees of the Sir John Fisher
Foundation*	11,592,3602	22.975	Direct
Schroders plc	4,970,246	9.887	Indirect
Standard Life Aberdeen plc
Investments	3,589,932	7.13	Indirect
Montanaro Asset Management
Limited	1,855,000	3.68	Direct

* Mrs Diane Sara Meacock, Mr David Hart Jackson, Mr Michael John Shields and Mr Daniel Purser Tindall.

1 The percentage of voting rights detailed above was calculated at the time of the relevant disclosures made in accordance with Rule 5 of the DTRs.
2 An additional 1,032,274 Ordinary Shares are held on behalf of the Sir John Fisher 1965 Settlement.

In the period from 31 December 2020 to the date of this report, the Company received no further notiﬁcations of a change in shareholding from the major shareholders.

Directors

The biographies of the current Board of Directors are set out on pages 54 and 55. Changes in the composition of the Board are provided in the Nominations Committee report on pages 63 to 65.

Powers of Directors

The powers of the Directors are determined by the Company's Articles, the Companies Act 2006 and in certain circumstances (including in relation to the issuing or buying back by the Company of its shares) the authority given by the Company in general meeting. The Directors will be seeking to renew the authorities granted to them in prior years at the forthcoming AGM. The Directors are authorised to issue and allot ordinary shares, to disapply statutory pre-emption rights and to make market purchases of the Company's shares. Any shares purchased may be cancelled or held as treasury shares.

Appointment and replacement of Directors

The rules regarding the appointment and replacement of Directors are determined by the Company's Articles and the Companies Act 2006. The Articles provide that at each AGM every Director who has held ofﬁce on the date seven days before the date of notice of the AGM shall retire from ofﬁce and shall be eligible for re-election at the AGM.

In accordance with the UK Corporate Governance Code 2018 (Code), all Directors will offer themselves for re-election at the forthcoming AGM.

Directors' and ofﬁcers' liability insurance

The Company maintains an appropriate level of directors' and ofﬁcers' liability insurance. Pursuant to the Company's Articles, the Company may indemnify the Directors of the Company and its subsidiaries against liability to third parties and against liability incurred in connection with the Company's activities as trustee of an occupational pension scheme, to the extent permitted by the Companies Act 2006.

Directors' conﬂict of interest

Under the Companies Act 2006, a director must avoid a situation where a direct or indirect conﬂict of interest may occur. The Board has adopted established procedures to address the management of any potential or actual conﬂicts of interest. A conﬂict must be authorised in advance by the Board and each authorisation is reviewed annually to check it is appropriate for the relevant matter to remain authorised.

Employment of disabled persons

James Fisher is an equal opportunities employer and is ﬁrmly committed to both the principle and realisation of equality. The Group is committed to complying with all applicable laws governing employment practices and to the prevention of discrimination on the basis of any unlawful criteria.

In addition to complying with legislative requirements, the Group strives to ensure that disabled employees are treated fairly and that their training, career development and promotion needs are met.

The Group recognises its responsibility to provide a safe operating environment for all its employees. Our strong focus on employee training, regulatory compliance and accident reduction provides the support to allow accountability to remain with local management who are best-placed to ensure that their businesses comply with local laws and regulations and speciﬁc needs on a day-to-day basis. The review of health and safety performance is ﬁrst on the agenda at each Board and business board meetings, and remains a top priority for the Group.

We recognise that the success of our business depends on our talented workforce. Employees throughout the Group are encouraged to participate in training and development programmes and to obtain professional qualiﬁcations relevant to their roles.

Directors' report (continued)

Additional information for shareholders

The Articles may only be amended by a special resolution at a general meeting of the shareholders.

No political donations were made during the year. Details of the Group's involvement in charitable initiatives in set out on pages 27 and 28.

Details of Group subsidiaries can be found on pages 150 to 151. Companies within the Group have branches in Chile and Mozambique.

Signiﬁcant agreements - change of control

There are a number of agreements that take effect after, or terminate upon, a change of control of the Company, such as commercial contracts. None of these are considered to be signiﬁcant in terms of their likely impact on the business as a whole apart from those set out below.

The Company is a guarantor of all of the Group's bilateral bank facilities which upon a change of control could be withdrawn.

The Singapore Submarine Rescue Service Agreement made between James Fisher Singapore Pte Ltd. and First Response Marine Pte Ltd. dated 17 October 2008 may terminate upon a change of control of the Company or James Fisher Singapore Pte Ltd.

The rules of the Company's LTIP, ESOS and Sharesave schemes set out the consequences of a change of control on the rights of participants under those schemes. Participants are generally able to exercise their options on a change of control, provided that the relevant performance conditions have been satisﬁed.

There are no agreements between the Company and its Directors or employees providing for compensation for loss of ofﬁce or employment (whether through resignation, purported redundancy or otherwise) that arise in the event of a change of control of the Company.

Information required by UK listing rule 9.8.4

The disclosures required by listing rule 9.8.4 and which form part of the Directors' report can be found at the locations provided in the table below:

Subject matter	Location	Page
Arrangement under which the	Directors' remuneration
directors waived salary or fees	report	73 and 80

Disclosure of information to the Auditor

Each Director in ofﬁce at the date of approval of this Directors' report conﬁrms that:

• so far as the Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
• the Director has taken all the steps that he/she ought to have taken as a director to make him/herself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

Annual General Meeting (AGM)

The AGM is to be held at 11.00am on 29 April 2021. Further details will be provided in the Notice of AGM.

The Directors' report was approved by the Board of Directors and is signed on its behalf by:

Jim Marsh Group General Counsel and Company Secretary 10 March 2021

Directors responsibility statement

Statement of Directors' responsibilities in respect of the Annual Report and the Financial Statements

The Directors are responsible for preparing the Annual Report and the Group and parent Company ﬁnancial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Group and parent Company ﬁnancial statements for each ﬁnancial year. Under that law they are required to prepare the Group ﬁnancial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and applicable law and have elected to prepare the parent company ﬁnancial statements on the same basis. In addition the Group ﬁnancial statements are required under the UK Disclosure and Transparency Rules to be prepared in accordance with International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union (IFRSs as adopted by the EU).

Under company law the Directors must not approve the ﬁnancial statements unless they are satisﬁed that they give a true and fair view of the state of affairs of the Group and parent Company and of the Group's proﬁt or loss for that period. In preparing each of the Group and parent Company ﬁnancial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant and reliable;
• state whether they have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and, as regards the group ﬁnancial statements, International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union (IFRSs as adopted by the EU);
• assess the Group and parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufﬁcient to show and explain the parent Company's transactions and disclose with reasonable accuracy at any time the ﬁnancial position of the parent Company and enable them to ensure that its ﬁnancial statements comply with the Companies Act 2006. They areresponsible for such internal control as they determine is necessary to enable the preparation of ﬁnancial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic report, Directors' report, Directors' Remuneration report and Corporate Governance Statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and ﬁnancial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of ﬁnancial statements may differ from legislation in other jurisdictions.

Responsibility statement of the Directors in respect of the annual ﬁnancial report

Each of the Directors conﬁrms that to the best of his or her 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; and
• the Strategic report and Directors' report includes a fair review of the development and performance of the business and the position of the issuer 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 consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.

Signed on behalf of the Board of Directors

E P O'Lionaird	S C Kilpatrick
Chief Executive Ofﬁcer	Group Finance Director
10 March 2021	10 March 2021

Independent auditor's report

1 Our opinion is unmodiﬁed

We have audited the ﬁnancial statements of James Fisher & Sons plc ("the Company") for the year ended 31 December 2020 which comprise the Consolidated Income Statement, the Consolidated Statement of Other Comprehensive Income, the Consolidated and Company Statement of Financial Position, the Consolidated and Company Cash Flow Statement, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including the accounting policies in note 1.

In our opinion:

• the ﬁnancial statements give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 December 2020 and of the Group's loss for the year then ended;
• the Group ﬁnancial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union;
• the parent Company ﬁnancial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of, and as applied in accordance with the provisions of, the Companies Act 2006; and
• the ﬁnancial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group ﬁnancial statements, Article 4 of the IAS Regulation to the extent applicable.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufﬁcient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the audit committee.

We were ﬁrst appointed as auditor by the directors on 30 June 2008. The period of total uninterrupted engagement is for the 13 ﬁnancial years ended 31 December 2020. We have fulﬁlled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities.

2 Key audit matters: our assessment of risks of material misstatement

Key audit matters are those matters that, in our professional judgement, were of most signiﬁcance in the audit of the ﬁnancial statements and include the most signiﬁcant assessed risks of material misstatement (whether or not due to fraud) identiﬁed by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit matters, in decreasing order of audit signiﬁcance, in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as required for public interest entities, our results from those procedures. These matters were addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the ﬁnancial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.

Impairment of goodwill, £17.0m (2019: nil), carrying value £166.5m (2019: £185.5m) and Parent Company Investment in subsidiaries, £40.5m (2019: nil), carrying value £505.7m (2019: £495.5m) Risk vs 2019: ▲

Refer to page 68 (Audit Committee report), page 143 (accounting policy) and page 117 (ﬁnancial disclosures)

The risks:

Forecast based assessment

The recoverability of goodwill in the Group and Parent Company investment in subsidiaries is subjective due to the inherent uncertainty involved in forecasting and discounting future cash ﬂows, particularly in light of COVID-19's impact on trading performance in the current year leading to impairments being recognised, operational difﬁculties and changes in the external oil market, including climate risk.

We have isolated the risk of impairment to the following CGU's as these have the lowest headroom within both the groups discounted cashﬂow workings and our own sensitivities: Subtech, James Fisher Testing Services, James Fisher Marine Services, DDS, James Fisher Offshore and Scantech AS.

The effect of these matters is that, as part of our risk assessment for audit planning purposes, we determined that the recoverable amount of goodwill had a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the ﬁnancial statements as a whole. The ﬁnancial statements (note 12) disclose the sensitivity estimated by the Group.

Presentation appropriateness

Given the adverse impact of COVID-19 on the Group's trading performance in the year, leading to impairments of goodwill and the carrying amount of investments in subsidiaries being recognised, there is an increased risk regarding presentation of costs as separately disclosed. Items excluded from adjusted proﬁt are not deﬁned by IFRSs and therefore a policy decision is required by the directors to identify such items and to maintain the comparability of results with previous years in accordance with the Group's accounting policy, and there is a risk of management bias. Failure to disclose clearly the nature and impact of items excluded from adjusted proﬁt may distort the reader's view of the ﬁnancial result in the year.

Our response: We performed the tests below rather than seeking to rely on any of the group's controls because the nature of the balance is such that we would expect to obtain audit evidence primarily through the detailed procedures described.

Our audit procedures included:

1. Historical comparisons: assessing the reasonableness of the budgets by considering the historical accuracy of previous forecasts.
2. Our sector experience: assessing whether assumptions used, in particular those relating to forecast revenue growth, proﬁt margins, and maintenance expenditure, including the effect of COVID-19 thereon, reﬂect our knowledge of the business and industries, including known or probable changes in the business environment. We assessed the appropriate inputs building up these forecasts, drawing on historical data and our own research and sector experience. Inputs assessed include terminal growth value, discount rate, and the period of cash ﬂows included within the model.
3. Benchmarking assumptions: challenging the key inputs used in the impairment test, in particular discount rates, by comparing them to externally derived data, including available sources for comparable companies.
4. Sensitivity analysis: performing breakeven analysis on the key assumptions noted above.
5. Applying judgement: assessing whether an understatement of goodwill impairment identiﬁed through these procedures was material.
6. Assessing transparency: assessing whether the Group's disclosures about the sensitivity of the outcome of the impairment assessment to changes in key assumptions reﬂected the risks inherent in the valuation of goodwill and investments, and assessing the Group's presentation of impairment charges as separately disclosed and the related disclosures for impairments in the narrative sections of the annual report in light of the ESMA guidance on the reporting of Alternative Performance Measures and FRC guidance on COVID-19.

Our results: We found the Group goodwill and Parent Company investments in subsidiaries balance, the related impairment charges, and the presentation thereof as separately disclosed, to be acceptable (2019: acceptable).

Independent auditor's report (continued)

Impairment of vessels, £33.0m (2019: nil), carrying value £56.0m (2019: £95.1m) Risk vs 2019: New

Refer to page 68 (Audit Committee report), page 143 (accounting policy) and page 119 (ﬁnancial disclosures)

The risks:

Forecast based assessment

There has been underutilisation of certain vessels held in both the Marine Support and Tankship operating segments, driven by a combination of factors, including operational difﬁculties, the external oil market and the impact of COVID-19. There is therefore uncertainty around the long-term utilisation of these vessels, in particular the Dive Support Vessel's (DSV's) held within the Marine Support operating segment. During the year, the Group identiﬁed an impairment in relation to vessels.

This is considered to be one of the areas that had the greatest effect on our overall Group audit due to the inherent signiﬁcant judgements involved in the vessel impairment test and due to their materiality in the context of the Group ﬁnancial statements.

The effect of these matters is that, as part of our risk assessment for audit planning purposes, we determined that the recoverable amount of vessels had a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the ﬁnancial statements as a whole.

Presentation appropriateness

Given the adverse impact of COVID-19 on the Group's trading performance in the year, leading to asset impairments, there is an increased risk regarding presentation of costs as separately disclosed. Items excluded from adjusted proﬁt are not deﬁned by IFRSs and therefore a policy decision is required by the directors to identify such items and to maintain the comparability of results with previous years in accordance with the Group's accounting policy, and there is a risk of management bias. Failure to disclose clearly the nature and impact of items excluded from adjusted proﬁt may distort the reader's view of the ﬁnancial result in the year.

Our audit procedures included:

1. Valuation credentials: where external experts have been engaged by management, assessing the competence, independence and integrity of these experts.
2. Benchmarking assumptions: challenging management and external experts on the key inputs used in the valuation model and within valuation reports, where applicable, with reference to our sector experience and by comparing them to externally derived data, including available sources for comparable companies and assets.
3. Sensitivity analysis: assessing the sensitivity of the valuation model to changes in key assumptions
4. Inspection and enquiry: performing inquiries with management to identify any vessels disposed of after the period end for which the proceeds were less than the carrying value within the ﬁnancial statements. We made further inquiries on the contracted use of DSV's. We inspected evidence to support the opportunities being pursued and assessed the likelihood that such opportunities being realised.
5. Applying judgement: assessing whether an overstatement of vessel impairment identiﬁed through these procedures was material.

Assessing transparency: assessing the appropriateness of the presentation of the impairment charges as separately disclosed by assessing the Group's presentation of impairment charges as separately disclosed and the related disclosures for impairments in the narrative sections of the annual report in light of the ESMA guidance on the reporting of Alternative Performance Measures and FRC guidance on COVID-19. We also assessed disclosures about the sensitivity of the outcome of the vessel impairment assessment to changes in key assumptions reﬂected the risks inherent in the valuation of the vessels.

Our results: We found the resulting carrying amount of the Group vessels, the related impairment charge, and the presentation thereof as separately disclosed, to be acceptable (2019: acceptable).

Revenue recognition and long-term contracts £518.2m (2019: £617.1m), Contract assets £62.4m (2019: £78.1m) and Contract Liabilities £9.5m (2019: £16.6m) Risk vs 2019: ▲

Refer to page 146 (accounting policy) and pages 111 and 112 (ﬁnancial disclosures)

The risk: Subjective estimates

The contractual arrangements that underpin the measurement and recognition of revenue by the Group can be complex, with subjective estimates involved in the assessment of current and future contract performance. In particular, where services rendered are provided through long-term contracts and are not completed at the balance sheet date and output measures cannot be estimated reliably, revenue is recognised in proportion to the measure of progress of the transaction measured by reference to an input measure, such as physical progress, attributable man hours and costs incurred measured against the expected outcome which leads to contract asset or liabilities at the period end. The measure of progress is estimated by the Group and includes certain judgements as contracts may run over a number of accounting periods and include forecasts in relation to future costs including labour and materials which are not yet known. In addition, contract modiﬁcations and variable consideration can lead to uncertainty over the total contract price. The effect of these matters is that, as part of our risk assessment, we determined that revenue recognition in relation to long-term contracts has a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the ﬁnancial statements as a whole, and possibly many times that amount. In conducting our ﬁnal audit work, we reassessed the degree of estimation uncertainty to be less than that materiality.

We consider the risk level to have increased when compared to the prior year as a result of contract delays primarily caused by COVID-19 resulting in increased estimation uncertainty.

Our audit procedures included:

1. Test of details: for long term contracts, selecting the contracts for substantive audit procedures based on qualitative factors, such as commercial complexity and life of contract, and quantitative factors, such as ﬁnancial signiﬁcance and proﬁtability that we considered to be indicative of risk. For the selected contracts, agreeing observable inputs used in the calculations of costs incurred to date to be able to assess the stage of completion. Costs incurred are those such as direct costs and labour charges; we agreed a sample of these to source data, including customer acceptance acts and countersigned agreements. Our testing included agreeing the allocation of costs incurred to contracts, and assessing the impact of delays to timetable and additional costs incurred as a result of COVID-19.
2. Historical comparisons: assessing the reliability of the Group's forecasts of costs to complete by considering historical accuracy of their forecasts on completed contracts.
3. Personnel enquiries: discussing with operational management for the sample above their expectations for contracts, and comparing these to the forecasts used for the accounting.
4. Our sector experience: assessing, for the sample above, whether the subjective estimates made by the Group over the measure of progress and estimates over cost to complete are consistent with our understanding of contract activities and performance. This involved comparing assumptions such as the estimate over costs to complete to a variety of information as appropriate, including correspondence with customers, historical outcomes and operational management views.
For contracts in the sample above that have signiﬁcant estimation in the total contract price due to contract modiﬁcations and variable consideration, we assessed the assumptions made by the directors in light of the Group's historical experience on similar contracts and correspondence with customers.
5. Applying judgement: assessing whether an overstatement of revenue from long term contracts and contract assets identiﬁed through these procedures was material.
6. Assessing transparency: assessing the appropriateness of the Group's disclosures in respect of revenue from long term contracts, contract assets and liabilities.

Our results: We found revenue recognition from long term contracts, and contract assets and liabilities, to be acceptable (2019: acceptable).

Independent auditor's report (continued)

Group operations in overseas jurisdictions - fraud risk and compliance with laws and regulations, Risk vs 2019:

▲ ▼

Refer to page 68 (Audit Committee report), page 147 (accounting policies) and page 137 (ﬁnancial disclosures).

The risk:

Omitted exposures.

The Group is a multinational and has operations in a number of less developed markets, including countries in South America, South East Asia, the Middle East and Africa. Operating in these territories presents increased operational and ﬁnancial risks both due to the need to comply with potentially uncertain regulatory and legislative environments, including where local regulations in those markets are different from laws and regulations that govern the Group as a whole. Breaches of compliance, either through fraud or error, or inappropriate assumptions over provisioning for the uncertain legislation could have a signiﬁcant effect on the results and ﬁnancial position of the Group and is one of the judgemental areas our audit is focused on.

Our response: We performed the detailed tests below rather than seeking to rely on any of the group's controls because our knowledge of the design of these controls indicated that we would be unlikely to obtain the required evidence to support reliance on controls.

Our audit procedures included:

1. Inspection and enquiry: considering the Group's exposure to potential breaches of legislation by making appropriate enquiry of the Group in relation to compliance with laws and regulations and the existence and status of any known or suspected signiﬁcant legal matters.
2. Compliance data scrutiny: inspecting the biannual self-reporting by local management and testing a sample of reported 3rd party relationships against Group policy in relation to payments, the due diligence process prior to entering into the relationship, and the completeness of listings at Group level in relation to these relationships. We inspected underlying agreements as considered necessary.
3. Enquiry of lawyers: Where signiﬁcant or potential matters were identiﬁed we made enquiries of the Group's legal counsel and legal representative, inspected any related correspondence and documentation, and challenged the Group on whether the criteria for the recognition of a provision have been met.
4. Assessing transparency: assessing whether the Group's contingent liability disclosures adequately disclose the potential liabilities of the Group.

Our results: We considered the non recognition of provisions and contingent liability disclosures within the ﬁnancial statements to be acceptable (2019: acceptable).

In the prior year we reported a key audit matter in respect of the impact of uncertainties due to the UK exiting the European Union. Following the trade agreement between the UK and the EU, and the end of the EU-exit implementation period, the nature of these uncertainties has changed. We continue to perform procedures over material assumptions in forward looking assessments such as going concern and impairment tests however we no longer consider the effect of the UK's departure from the EU to be a separate key audit matter.

3 Our application of materiality and an overview of the scope of our audit

The materiality for the Group ﬁnancial statements as a whole was set at £2.3m (2019: £2.8m), determined with reference to a benchmark of ﬁve year average Group proﬁt before tax of £49.1m normalised to exclude separately disclosed items as disclosed in note 5 (2019: £58.5m), of which it represents 4.7% (2019: 4.8%).

The materiality for the Parent company ﬁnancial statements as a whole was set at £0.7m (2019: £0.7m), determined with reference to a benchmark of gross assets of £527.2m (2019: £539.2m), of which it represents 0.1% (2019: 0.1%).

In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances add up to a material amount across the ﬁnancial statements as a whole. Performance materiality for the group and parent company was set at 65% (2019: 65%) of materiality for the ﬁnancial statements as a whole, which equates to £1.5m (2019 : £1.8m) for the group and £0.5m for the parent (2019: £0.5m). We applied this percentage in our determination of performance materiality based on the level of identiﬁed misstatements during the prior period.

We agreed to report to the Audit Committee any corrected or uncorrected identiﬁed misstatements exceeding £0.12m (2019: £0.14m), in addition to other identiﬁed misstatements that warranted reporting on qualitative grounds.

Of the Group's 146 (2019: 146) reporting components, we subjected 17 (2019: 21) to full scope or speciﬁc procedures audits for Group purposes.

We conducted reviews of ﬁnancial information (including enquiry) at a further 9 (2019: 8) non-signiﬁcant components to obtain further coverage. These components were not individually ﬁnancially signiﬁcant enough to require an audit for Group reporting purposes.

The components within the scope of our work accounted for the following percentages of the Group's results:

Number of componentsGroup revenue

Group proﬁt before taxGroup total assets

Audits and speciﬁed procedures for group reporting purposes Reviews of ﬁnancial information (including enquiry)

17 (2019: 21)

86% (2019: 83%)

76% (2019: 71%)

75% (2019: 73%)

9 (2019: 8)

10% (2019: 8%)

6% (2019: 8%)

8% (2019: 7%)

Total

26 (2019: 29)

96% (2019: 91%)

82% (2019: 79%)

83% (2019: 80%)

The remaining 4% of total Group revenue, 18% of Group proﬁt before tax and 17% of total Group assets is represented by 120 reporting components, none of which individually represented more than 1% of any of total Group revenue, 3% of Group proﬁt before tax and 2% total Group assets. For these residual components, we performed analysis at an aggregated Group level to re-examine our assessment that there were no signiﬁcant risks of material misstatement within these.

The Group audit team instructed component auditors as to the signiﬁcant areas to be covered, including the relevant risks detailed above and the information to be reported back. The Group audit team approved the component materialities, which ranged from £0.1m to £1.25m (2019: £0.1m to £1.4m), having regard to the mix of size and risk proﬁle of the Group across the components. The work on 15 (2019: 16) of the 26 (2019: 28) components was performed by component auditors and the rest, including the audit of the Parent Company, was performed by the Group audit team.

Video and telephone conference meetings were held with all component auditors. At these meetings, the ﬁndings reported to the Group team were discussed in more detail, and any further work required by the Group team was then performed by the component auditor.

For those items excluded from normalised group proﬁt before tax, the component teams performed procedures on items relating to their components. The group team performed procedures on the remaining excluded items.

Independent auditor's report (continued)

4 Going concern

The directors have prepared the ﬁnancial statements on the going concern basis as they do not intend to liquidate the Group or the Company or to cease their operations, and as they have concluded that the Group's and the Company's ﬁnancial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast signiﬁcant doubt over their ability to continue as a going concern for at least a year from the date of approval of the ﬁnancial statements ("the going concern period").

We used our knowledge of the Group, its industry, and the general economic environment to identify the inherent risks to its business model and analysed how those risks might affect the Group's and Company's ﬁnancial resources or ability to continue operations over the going concern period. The risk that we considered most likely to adversely affect the Group's and Company's available ﬁnancial resources and metrics relevant to debt covenants over this period was the signiﬁcant increase in cost to deliver and delays to current and future contracts as a result of COVID-19.

We considered whether these risks could plausibly affect the liquidity or covenant compliance in the going concern period by assessing the directors' sensitivities over the level of available ﬁnancial resources and covenant thresholds indicated by the Group's ﬁnancial forecasts taking account of severe, but plausible, adverse effects that could arise from these risks individually and collectively.

Our procedures also included:

1. Assessing key assumptions in the forecasts - critically assessing assumptions in base case and downside scenarios relevant to liquidity and covenant metrics. This included assessing whether downside scenarios applied are mutually consistent, using our assessment of the possible range of each key assumption and our knowledge of inter-dependencies, and assessing the working capital assumptions inherent in the forecasts to actual recent experience and existing supplier/ customer arrangements.

Assessing the directors' track record of forecast vs actual cash ﬂows - comparing past budgets to actual results to assess the directors' track record of budgeting accurately.

3. Assessing the completeness and accuracy of the matters covered in the going concern disclosure - considering whether the going concern disclosure in note 1 to the ﬁnancial statements gives a full and accurate description of the directors' assessment of going concern, including the identiﬁed risks and related sensitivities.

Our conclusions based on this work:

• we consider that the directors' use of the going concern basis of accounting in the preparation of the ﬁnancial statements is appropriate;
• we have not identiﬁed, and concur with the directors' assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast signiﬁcant doubt on the Group's or Company's ability to continue as a going concern for the going concern period;
• we have nothing material to add or draw attention to in relation to the directors' statement in note 1 to the ﬁnancial statements on the use of the going concern basis of accounting with no material uncertainties that may cast signiﬁcant doubt over the Group and Company's use of that basis for the going concern period, and we found the going concern disclosure in note 1 to be acceptable; and
• the related statement under the Listing Rules set out on page 51 is materially consistent with the ﬁnancial statements and our audit knowledge.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group or the Company will continue in operation.

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James Fisher & Sons plc published this content on 17 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 March 2021 14:36:01 UTC.

Market Closed - London S.E. Other stock markets 11:35:17 2024-04-18 am EDT			5-day change	1st Jan Change
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Apr. 16	James Fisher swings to loss as costs increase but outlook optimistic	AN
Apr. 16	Earnings Flash (FSJ.L) FISHER (JAMES) & SONS Posts FY23 Revenue GBP496.2M	MT

James Fisher swings to loss as costs increase but outlook optimistic	Apr. 16	AN
Earnings Flash (FSJ.L) FISHER (JAMES) & SONS Posts FY23 Revenue GBP496.2M	Apr. 16	MT
Earnings Flash (FSJ.L) FISHER (JAMES) & SONS Posts FY23 Loss GBX-123.90	Apr. 16	MT
James Fisher and Sons plc Reports Earnings Results for the Full Year Ended December 31, 2023	Apr. 16	CI
FTSE 100 boosted after week of rate decisions	Mar. 22	AN
James Fisher shares rise as RMSpumptools to be sold for GBP90 million	Mar. 22	AN
James Fisher Signs GBP90 Million Deal to Sell RMSpumptools Unit	Mar. 22	MT
James Fisher rises as sells RMSpumptools	Mar. 22	AN
Phoenix Group leads FTSE 100 higher	Mar. 22	AN
James Fisher annual trading in line with expectations; shares topple	Feb. 08	AN
Digital 9 falls; Riverstone up on tender	Feb. 08	AN
James Fisher and Sons plc Appoints Shian Jastram as an Independent Non-Executive Director, as A Member of the Audit Committee, Remuneration Committee and Nominations Committee with Effect from 1 March 2024	Jan. 25	CI
New James Fisher CFO to Take Office on Dec. 1	Nov. 09	MT
James Fisher and Sons Says Karen Hayzen-Smith Will Succeed Duncan Kennedy As CFO	Nov. 09	RE
James Fisher and Sons plc Announces Directorate Changes	Nov. 09	CI
James Fisher and Sons plc Announces CFO Changes	Nov. 09	CI
James Fisher rises after interim results	23-09-22	AN
James Fisher swings to interim loss on refinancing costs	23-09-21	AN
DFS Furniture gains share of weak market	23-09-21	AN
Transcript : James Fisher and Sons plc, H1 2023 Earnings Call, Sep 21, 2023	23-09-21
Earnings Flash (FSJ.L) FISHER (JAMES) & SONS Posts H1 Loss GBX-6.30	23-09-21	MT
Earnings Flash (FSJ.L) FISHER (JAMES) & SONS Posts H1 Revenue GBP252M	23-09-21	MT
James Fisher and Sons plc Reports Earnings Results for the Half Year Ended June 30, 2023	23-09-21	CI
James Fisher and Sons plc(LSE:FSJ) dropped from S&P Global BMI Index	23-09-18	CI
FIH Group hires former James Fisher CEO Nick Henry as chair	23-08-11	AN

	1st Jan change	Capi.
JAMES FISHER AND SONS PLC	-10.71%	173M
HAPAG-LLOYD AG	+7.33%	27.23B
COSCO SHIPPING HOLDINGS CO., LTD.	+10.06%	22.69B
AP MOLLER MAERSK	-22.78%	21.22B
NIPPON YUSEN KABUSHIKI KAISHA	-6.38%	12B
MITSUI O.S.K. LINES LTD	+0.46%	10.55B
CHINA MERCHANTS ENERGY SHIPPING CO., LTD.	+46.26%	9.81B
KAWASAKI KISEN KAISHA, LTD.	+1.60%	9.36B
ORIENT OVERSEAS (INTERNATIONAL) LIMITED	-10.28%	7.92B
ADNOC LOGISTICS & SERVICES PLC	+1.83%	7.86B

James Fisher and Sons plc

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FSJ

GB0003395000

Marine Freight & Logistics

James Fisher and Sons : Annual Report and Accounts 2020

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