The analogy going around the oil industry at the moment is that someone has taken a giant snow plough and shovelled all the work to the right. That’s how it has been for James Fisher and Sons, the marine engineering group, which reported a 54 per cent drop in offshore oil work in its first half.
Nobody had expected the Barrow-in-Furness-based business to be immune to the plunging oil price but the drying up of work was worse than it had expected.
Offshore oil has been the growth driver for James Fisher for three years but it was sanguine about the work seizing up. It is not exposed to oil exploration and the owners of the oil rigs that it serves will have to put down the keys to the snow plough and dust off their wallets at some point. It is a fairly diversified business that operates in deep sea diving equipment, submarine rescue, nuclear decommissioning and renewable energy. When one wheel slows, another can speed up.
One of the spinning wheels is nuclear where decommissioning projects at Sellafield and Hunterston have been embellished by new contract wins. James Fisher and Sons operates robotic arms to collect toxic materials and notes that it was nuclear that was in decline as its offshore oil business started to pick up. “Every dog has its day,” Nick Henry, the chief executive, said.
Another part of the business that is rising fast is its saturation diving arm after a big win with a Japanese contract. Russian sanctions have slowed its submarine business but rumours have suggested that the company has been named preferred bidder for a huge Indian submarine contract.
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Group revenue was down a modest £3 million to £213 million in the first half although pre-tax profit was off by a larger magnitude, dropping to £17.8 million from £20.7 million last year. That did not stop it raising the dividend by 10 per cent to 7.8p — a sign of confidence.
The company traces its roots to 1847 when James Fisher, the son of a yeoman farmer with muttonchop sideburns, founded The Barrow Company. It listed shares in 1952 and has proved a good bet for investors until this year, when it has lost a fifth of its value. That has left it trading on 15 times earnings, which is cheap, and it’s worth holding for the income.
Revenue £213m
Profit £17.8m
MY ADVICE Hold for income
WHY The company is adept at navigating the choppy waters and with oil rig work in the doldrums other areas are coming to the fore
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The serviced office operator has been on a spending spree that triggered concerns among some that this heavy investment could hit its half-year results.
Not so. Pre-tax profit at Regus, which has a presence in more than 100 countries, including Nepal, rose to £79.1 million from £31 million in the six months ending June 30, while revenue was 16 per cent higher at £937 million. Returns on investment rose a healthy 23 per cent.
There are natural risks to Regus amid the continuing market turmoil. According to Hector Forsythe, an analyst at Stifel, “an economic downturn brings pressure on occupancy potential, adding marketing costs and potentially putting pressure on rental rates”.
This, he said, should be partly mitigated by geographic and industry diversification as well as a cost structure that incorporated variable and flexible leases.
Mark Dixon, Regus’s founder and chief executive, believes that demand for flexible working space will increase in such an environment, and investors agreed.
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The stock ended the day 9 per cent higher at 271½p.
Mr Dixon is still aiming for net investments for the whole of 2015 of approximately £230 million, the equivalent of 600 new locations globally.
Regus boomed during the tech bubble and has been on the long road to recovery.
It has proved the doubters wrong this quarter, which should steady the nerves that a further spending spree will not backfire. There is plenty of flair in this office space.
£937m
Profit £79.1m
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MY ADVICE Buy
WHY Spending spree is paying off
Who said that UK investors don’t love technology stock? Kainos Group, the Belfast IT services company, hit the button on its float on the main market this summer. The 130p-a-share float was welcomed with open arms as the shares surged 50 per cent in the first month.
The company, which traces its roots back to the old ICL juggernaut, was rewarded for its bravery after floating a company with a Greek name (Kainos means new) at the height of the eurozone wobble.
Perhaps it should invest some of the funds in branding. Yesterday it launched a new health platform for mobile phones called “mobile-enabled healthcare platform”.
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If that doesn’t trip off the tongue then Kainos was quick to highlight that it is working with Apple on a healthcare product for the iPhone. It noted that Luca Maestri, Apple’s chief financial officer, namedropped Kainos on a conference call in July as one of its “select” group of mobility partners.
Kainos shares have burst through 200p and could have further to go if the Apple partnership ripens. The company is a welcome addition to the UK tech stable shorn of familiar IT names such as ICL and Logica.
Revenue £61m
Profit £11.8m
MY ADVICE Buy
WHY Apple partnership could bear fruit
And finally . . .
One company that has profered a sick note recently is Totally. The AIM-listed healthcare company has lost almost two thirds of its value over the past year. Not totally surprising then that it has moved to raise another £1 million and dispensed with the services of Michael Sinclair, its chairman. In comes as his replacement Bob Holt, who bought Mears, the outsourcer, for £50,000 in 1996 and led the float of the company that is now worth £405 million. Signs of life then, as Totally stock rose 7 per cent.