James Fisher and Sons plc ($FSJ)

Good afternoon, ladies and gentlemen, and welcome to the James Fisher & Sons plc Full Year Results Investor Presentation. Questions are encouraged. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself; however, the company can review the questions submitted today and will publish all responses where it's appropriate to do so on the Investor Meet Company platform. Before we dive into the live Q&A session, we would just like to play a recorded presentation covering the results.

Hello, everyone, and welcome to our 2025 full year results earnings call. Well, I'm joined by our Chief Financial Officer, Karen Hayzen-Smith. I will start by going through the key highlights for the year. Then Karen will take us through the financial results, both at group and division level. And I will follow with an update on our business turnaround and how the actions taken over the past 3 years are positioning us for growth. This will be followed by our outlook before we conclude with Q&A. So let's start with the highlights. 2025 was a turning point for James Fisher. It's marked a year in which our efforts to focus, simplify and deliver have shown results and laid the groundwork for future growth. Over the past 3 years, we have both streamlined and strengthened the group, creating a more resilient business and a coherent platform that can unlock our strategic potential. In 2025, we delivered a solid financial performance with a 4% uplift in like-for-like revenue and 60 basis points improvement in underlying operating margin to 7.6% as well as a 250 basis points improvement in ROCE to 8.6%. We ended the year with covenant leverage down to 1.3x at the midpoint of our target range. We have made continued progress on our turnaround and expect further benefits from the initiatives already underway. In addition, we have strengthened our Defense division capabilities where operational readiness is critical. As we look ahead to 2026, the focus, discipline and execution we demonstrated over the past few years will remain. We are investing in new technology and products aligned with our customer-led geographic expansion plans. Also, as a service company, we are developing a global talent pool that will ensure consistent levels of services delivery around the world. These 3 areas are the hallmark of James Fisher competitive position, and I will come back to this later. Before we move on, I would like to address the ongoing conflict in the Middle East. James Fisher has operations in the region and our #1 priority is the safety of our people. To that effect, we have mobilized our emergency response team since March 1, working closely with customers to manage this situation responsibly. At this stage, it is too early to estimate the business impact of the conflict, but we are monitoring developments. As a reminder, we have an agile model and are adept at managing change. Over the long term, this flows into focus the increasing importance of energy and maritime security, which are at the intersection of our business. Let me now give a quick snapshot of James Fisher. Today, our company is organized around 3 divisions: Defense, Energy and Maritime Transport, where we solved our customers' complex challenges in the blue economy. The Defense division supports and rescues lives underwater through our global leadership in submarine rescue, rebreathers and mobility solution for special forces. Our Energy division provides upstream services across oil and gas and offshore wind. So energy companies can meet increasing demand more efficiently, safely and sustainably. Maritime Transport ensures on-time delivery of refined products through coastal shipping and provides global ship-to-ship transfer of oil and gas cargoes to third parties. With that, I'll hand over to Karen to take you through the financial results.

Thank you, Jean, and good morning, everyone. As we outlined at the recent trading update, we have continued to make progress, and I'm pleased that we've been able to deliver a solid set of results. Trading followed the usual seasonal trend with a stronger second half and the group managed to replace the majority of profitability lost from the disposals of RMSpumptools and Martek in '24. Our underlying operating profit margin also increased, as we focused on our key improvement levers. Starting with the headlines. Disposals in '24 and the IRM closures in '25 impacted the financial competitors. So we have chosen to show the movements on the slides adjusted for these. Revenue was up over 4% across the group when compared to '24 with operating profit up just over 56%, resulting in a margin of 7.6%. And net debt improved from the half year, ending the year at GBP 54 million. For covenant purposes, this gives a leverage ratio of 1.3, which is comfortably within our target range. Lastly, return on capital employed also increased to 8.6%, a 250 basis point uplift. Moving to the next slide, which shows the movements in revenue over the period. Overall, adjusted revenue increased to GBP 377 million, as I said, a 4% uplift. This was from a mix of increased volume in defense and better utilization in Tankships. Moving on to operating profit. As we forecast, we experienced a stronger second half with an increase in profit to GBP 28.6 million, a 56% increase. This was largely due to turning around the decommissioning business that had been loss-making, improved flow-through from execution in defense and a strong finish for Fendercare as well as efficiency savings across the group. We did this whilst continuing to invest in capabilities and transform it to a higher-quality cost base. The next slide keeps track of the margin improvements we have made over the last few years, demonstrating progress as we move towards an overall profit margin of 10%. As you can see, the margin dropped to around 5% following the disposals, but it has now increased to 7.6%, and we've been able to return to a margin greater than we had predisposals. As some of you will be aware, we have identified 4 levers to increase margins. And in '25, we made incremental improvements in all of these, namely, self-help, cost reductions, supply chain savings, defense volume flow-through and turning around underperforming businesses. As we turn our attention to revenue growth, we will continue to balance investing in the requirements for growth with margin improvements. I'll now spend a few minutes on the divisions, starting with Defense. The Defense division had a stronger second half as it increased revenue, mainly from a new special forces, tactical diving, vessel contract. Year-on-year revenue increased by around 11% to just under GBP 89 million. The increase in revenue flowed through together with cost and supply chain improvements, increasing operating profit to GBP 5.5 million with an increase in margin to 6.2%. The division has continued to replenish its orders, finishing the year with an order book of GBP 317 million and around GBP 50 million of orders under framework agreements. Together with a GBP 15 million annual run rate in Commercial diving, the division enters '26 with strong revenue coverage. Moving to Energy. Overall, Energy had a solid year and revenue was up 2% to GBP 141 million. In Energy Services, overall performance improved with a change in the mix across the product lines. Well Services had a solid performance in the first half of '25. But as we flagged in September last year, we experienced some softening in Africa as projects were phased further out. Subsea and decommissioning had a strong performance with continued improvement in the business in the second half. In Renewables, '25 was steady on the offshore wind construction activities, which uses our Bubble Curtain technology. The blades and cable repair business in the offshore wind aftermarket made progress, but some other areas are not yet performing at our hurdle rates, and we continue to work on these. Despite the ups and downs I've just mentioned, overall operating profit in the division was up around 23% to GBP 17.6 million and margin increased to 12.4%. Moving on to Maritime Transport, Tankships saw revenue up over 7.5% to GBP 86.5 million, and this was the result of improved rates and good utilization. And the Cattedown business also had a solid year with petroleum and dry cargo volumes remaining pretty consistent through the port. Although Fendercare's revenue was down slightly year-on-year to just over GBP 60 million, it had a strong second half, driven by a high number of operations in South America, reflecting increased activity in the region. It also simplified its site portfolio, positioning to higher-margin areas. Therefore, overall, the Maritime Transport division delivered operating profit improvement of over 44% to GBP 20.8 million and increased margins to 14%. Just moving on to the income statement. Looking at the breakdown, the full year benefit from the debt reduction and refinancing in '24 can now be clearly seen with finance interest down from just over GBP 16 million to GBP 9.5 million. Interest expense on leases increased in the period by GBP 2 million to GBP 6.4 million, mainly as a result of additional vessel lease interest in Fendercare. The tax expense on underlying profits from continuing operations for the year is GBP 5 million, with the increase in the prior period being driven by increased taxable profits in higher tax rate countries such as Brazil. Turning to the cash flow. I will just pick up a few points on this slide. Overall, our operational cash flow improved in the year. We had over a GBP 10 million inflow in working capital, which included strong debtor collection, including recovery of cash on the Mozambique contract, some of which have been outstanding in '24 and also recovery of some historic debt. Included within working capital, inventory increased by GBP 5 million to support growth contracts. CapEx was GBP 25 million, with spend on new compressors, including building new ones to assist in electrification requirements together with tankships deposits. And we continue to focus on innovation, spending GBP 8 million on development expenditure in the year, which was mainly in relation to new products in the Defense division. Net finance interest paid was GBP 7.2 million, made up of GBP 9.4 million bank interest with an average interest rate of around 8.5%, offset by GBP 2.2 million of interest income. And then overall, net debt reduced to GBP 54 million at the end of '25. I'll now look at our borrowing and funding position. On a covenant basis, the net debt-to-EBITDA ratio was 1.3 with interest cover of 6.9x. Right-of-use liabilities increased related primarily to new vessel leases in tankships and Fendercare. And this week, we signed an amendment to our banking facilities with the support of our lenders, adding a new bank to the existing RCF to provide GBP 25 million of additional headroom, increasing our facilities to GBP 117.5 million. Our leverage target remains unchanged even with the additional funding. The next slide shows our priorities in relation to capital allocation, with the first being to continue to invest for organic growth. Our CapEx, including development expenditure to depreciation ratio was 1.5 for the year. And we have also called out innovation as an investment priority given the focus as a diver for growth, which can take the form of new product developments and also small investments in corporate venture opportunities. We will continue to keep our dividend policy under consideration, and we'll also begin developing our inorganic pipeline. This would be underpinned by ensuring we retain a strong balance sheet and a disciplined approach in investment decisions. Therefore, just wrapping up on the financial update. We had a strong second half and delivered a solid set of results. We made progress on our turnaround actions. Margins improved through cost efficiencies and supply chain, and we turned around underperforming businesses, and we'll continue to focus on those areas not yet meeting our hurdle rates. Our cash position was strengthened, and we invested for growth whilst maintaining discipline and debt levels. And I'll now hand back to Jean, who can take us through the next presentation.

Over the past 3 years, we have been through a fundamental turnaround for the group. The first 2 years were focused on simplifying the organization with a one company approach, fixing what was broken or missing and stabilizing the business. In 2025, we became a more focused, financially resilient business with a simplified portfolio, a strengthened balance sheet and a clear leadership structure through the One James Fisher operating model. We also made good progress to define, refine and establish our core business model guided by the voice of the customer. Through leadership and accountability, we have improved our UOP margin and ROCE and exceeded more low-quality and noncore businesses. We are also feeling the impact of our operational and functional investment, including a stronger supply chain, enhanced governance controls and a set of self-help initiatives that are improving efficiency and effectiveness. The Defense division's order intake has increased and the decommissioning product line within energy returned to profit in 2025. Also, we are now 3 years into implementing our 5-year people strategy, building a vibrant and proactive people management culture while technology and innovation are taking center stage. All these measures and achievements contributed to these improved results. Let me now take you through our path to reaching our 10% UOP margin, which has been a key measure of our turnaround. We ended 2025 with a profit margin of 7.6%. We are in the process of closing the Subsea Middle East and Africa business. In addition, we turned around the decommissioning business and positioned it for growth. The disciplined self-help programs we launched in 2024 are starting to bear fruit, supporting the divisions as they scale and improve productivity, leading to a higher profit fall-through. Defense made good progress in the second half with a strengthened order book and improved order intake across most product lines. We entered 2026 with the right foundations to focus on operational delivery. The integration of our supply chain delivered GBP 4.6 million of savings in 2025, while also improving key supplier relationships and processes. Our 3-year supply chain integration plan will continue, allowing us to build our operations in support to our strategy. Beyond this, we see further scope to improve these key metrics as we grow, thanks to market tailwinds, differentiating through our people expertise and technology innovation. Let me now talk you through the growth approach that we are taking. Top line growth will be propelled by 3 engines. First, customer intimacy. We are deepening relationships with Tier 1 customers who already trust us, giving us a strong base to increase share in our existing markets. We're introducing global key account managers to build these relationships and drive higher quality, repeatable business enhanced by product managers who are focused on sharpening the value of our offering. Second, we are expanding the sale of existing products and services into new geographies, acquiring new customers. In 2025, we entered Japan, Uruguay and the U.S., bringing the full capability and track records of One James Fisher, leveraging subsegments where we can compete effectively, scale and earn attractive returns. And finally, innovation is a core differentiator and a diver for us. Clients rely on us to solve their complex challenges. And for James Fisher, investing in new products and technologies is critical to increase value across the customer value chain. Together, these 3 divers provide clarity to deliver targeted growth across the group. Now if I look at the market backdrop, our sales strategy is underpinned by powerful megatrends impacting across all 3 divisions. The first is a sustained long-term growth in global energy demand, now increasingly influenced by energy security with decarbonization and reliability of supply remaining critical necessities. The second is rising geopolitical tensions alongside accelerating digitalization, which is reshaping how our customers operate with a greater emphasis on local content. As One James Fisher, these trends provide clear tailwinds for our growth focus, which is what I will unpack now for you. We have identified 8 subsegments within defense and across energy with superior growth potential across a range of mature as well as emerging markets. In Defense, this includes submarine rescue, military diving rebreathers for both combat and demining, commercial diving and tactical diving vehicles. In Energy, they include Bubble Curtains for offshore wind construction, cables and blades repair for offshore wind aftermarket and decommissioning across both oil and gas and offshore wind as well as well testing for oil and gas. In all these segments, which vary in degree of maturity, we compete by bringing disruptive technologies that create substantial values to our customers. We are investing in our people, strengthening our talent bench to deliver greater consistency of service worldwide. In 2025, we introduced strategic workforce planning and targeted areas of development centered around leadership and technical training. These programs are central to customer service and operational excellence. Our technology and innovation program is centered around disciplined product -- new product development. Our stage-gate process has embedded well, and we have developed 6 new products across all divisions in 2025. The rigor, combined with our entrepreneurial spirit has seen our vitality index increased to 9.9% this year, moving towards our 15% midyear target. To complement our internal efforts, our James Fisher corporate venture practice is scouting for disruptive emerging technologies across the world with entrepreneurial partners who can expand our breadth. In February this year, we made our first investment, securing a minority stake in Ocean Aero, a U.S.-based technology company, which has brought to market the only sustainable automated underwater vehicle in existence today. Now let's turn back to our division in more detail. In defense, growing geopolitical tensions are translating into increasing defense spending across many markets. And we see this as a long-term trend. Against that backdrop, we expect strong demand for our specialist capabilities, particularly in submarine rescue, military diving and tactical diving vehicles where operational readiness, reliability and interoperability are critical. During the year, we deepened relationships with leading global defense partners in Europe and Indo-Pac through new engagements and strategic wins. Notably, we secured a material contract with the Polish Navy to deliver a submarine rescue and saturation diving system. And in February, we secured an important long-term service contract in support of our TDVs in Asia. These wins further improve the quality and visibility of our order book. To ensure that we are well positioned to meet the rising market demand, we invested in new service centers across the U.K. and Australia, enhancing both delivery capability and customer proximity. We are also advancing our technology road map, including the soft launch of our Stealth Multi-Role military diving rebreather. Further developments and enhancements are underway, including for our Carrier Seal Tactical Diving Vehicle used in covert special forces operations as well as our biometric platforms for divers. On the business development front, we are thrilled by the headway we are making in the U.S. where we have established a Special Security Agreement that allows us direct commercial engagement with the U.S. military. Together with our strategic partnership, including [ SEB ] and Singapore-based ST Engineering, this enhances our ability to serve customers globally. We also have the opportunity to support AUKUS, a security partnership between Australia, the U.K. and the U.S. Now let's turn to energy. We operate in global energy markets shaped by energy security and decarbonization with oil and gas inherently cyclical as we saw in 2025, when oversupply led to soft level of activities. However, the long-term supply imperative is clear. Global oil demand is expected to grow to 110 million barrels per day by 2035. But in addition, as production rates from existing fields will decline by more than 2/3 by 2035, extra exploration and production effort is required to meet that demand, which is good for oilfield services. In offshore wind, the industry met some big challenges in 2025, but longer term, the industry is expected to add another 225 gigawatts by 2030, this excluding China. Technology and digitization will be key to improve industry efficiency and meet environmental targets. In addition, an increasing proportion of assets are coming out of warranty for offshore wind, providing us with additional services opportunities. Against this backdrop, we continue to integrate our offering by providing specialist services across the asset life cycle. In 2025, we expanded our presence in key regions across Asia Pacific and Latin America, securing well test contracts in the Philippines and multi-rig services in Brazil and Suriname. We also expanded our presence in Guyana and Japan, providing commissioning services for Japan's largest offshore wind farm. We tested the offshore wind market by delivering the first decommissioning project, completing a 10-meter monopile cutting job in the U.S. This is an example of how we can apply our expertise across sectors. Innovation was a priority for energy in 2025 with several products developed or enhanced. Highlights included next-generation electric air compressors out of Norway. We expanded the use case of -- and capabilities of SEABASS, our game-changing subsea well plugging and abandonment tool. And we further deployed and sea trialed our Cable Guardian solution for offshore wind. Finally, we are expanding our presence geographically with key opportunities in decommissioning and subsea tranching across all regions for oil and gas and renewables. In offshore wind, Europe is forecast to see the largest increase in construction, creating attractive opportunities for our high-voltage blades and cables offering. At the same time, the scale of industry challenges around cable and blades reinforces the case for targeted investment in disruptive technologies that will increase customer efficiency. Now turning to Maritime Transport. Conditions for this market remained supportive in 2025 with global vessel supply tightening in Northwest Europe as demand for subintermediate shipping remaining stable. Across the sector, customers are increasingly prioritizing safety, reliability, service quality and decarbonization in line with evolving environmental and safety regulation. Against this backdrop, utilization across our tankship fleet remained high during the year with 80% of fleet on long-term contract. During the year, we also expanded our ship-to-ship services to Uruguay and acquired additional vessels to consolidate our Caribbean coastal shipping position in tankships. We also signed an agreement to support operations at the U.K. strategic defense base. Looking ahead, fleet modernization in tankship is path critical to our strategy and maintain the franchise. 4 new tankers are scheduled for delivery across 2026 and 2027, perpetuating the James Fisher's name in shipping and supporting our sustainability ambitions while improving operational efficiency. We are also pursuing selective expansions into new territories and markets within Fendercare with new Fender product introduced in the market in 2025. Finally, our success depends on our ability to scale, maturing our core operating model and deploying our services consistently as One James Fisher. Delivering more consistently will be helped by an integrated supply chain, supported by stronger governance, closer supplier relationships and process consistency and by a more mature manufacturing standardized across all our locations. We will continue to execute our delivery strategy, managing risk and creating the operational foundation required to support the next stage of growth. Now looking ahead and to summarize what we covered today. We ended the year with stronger foundations and greater clarity on our path forward. Over the past 3 years, the actions we have taken have transformed James Fisher, and we continue to invest in technology, commercial excellence and our people to enable the next phase of our success. The group operates in largely supportive end markets, while we monitor geopolitical development in the Middle East, in particular, including the potential for more macroeconomic impact. We also now have a stronger financial foundation with increased headroom to allow targeted investment in strategic markets. We entered 2026 as a more focused, resilient and coherent business. We are moving towards our medium-term financial targets of 10% underlying operating profit margin and 15% ROCE. Trading has started in line with management expectation for 2026. In conclusion, I would also like to acknowledge our colleagues who remain focused on serving our customers, working as One James Fisher and staying responsive in a fast-paced environment. I thank them for their commitment, resilience and passion that is driving our future.

[Operator Instructions] Jean, Karen, as you can see, we have received a number of questions, so perhaps if we dive straight into it. The first question that we have here reads as follows: You launched 6 new products in full year '25 and stepped up development spend, which products are you most excited about? And when should they start to move the needle financially?

So all the products we're developing are exciting in our opinion, some of them are game-changing such as our next-generation rebreather, which essentially bring the industry in a new era. Others are more incremental, but nevertheless, quite in response of specific customer challenges in oil and gas, in particular, which will result into probably very fast revenue response from that. So it's a bit of a mix. Every time we bring in next-generation products such as the new rebreathers, it will take a little bit of time for the revenue to linger up just by the fact that those products are sold through tenders, those tenders take a few months to a few years. But I would expect to see our vitality from these new product to start kicking in this year, right?

The next question asks, do you expect to do any further portfolio simplification this year?

I think where we are at this stage is where we need to be. We've got still some business to fix within the portfolio, such as offshore wind cable and blades. But in terms of what we have is what we need. And on the other hand, we'll continue to streamline internally to make sure everyone of those activities are kicking up together as opposed to separate businesses. So we still have some internal alignment to work on, which we started 2 years ago to make the management, command and control management more streamlined.

Are you confident that you put a full stop to liabilities arising from the James Fisher Nuclear business?

Yes.

Just turning to the next question. Underlying revenue growth in 2025 was half of that in 2024. Do you see James Fisher's revenue growth rate recovering to 2024 levels in the current year?

2024 was about 8%. So -- but I guess it's about the CAGR, right? So the 2025 revenue was impacted by a mix effect on oil and gas. In prior years we were in a robust cycle of well services around the world as well as Bubble Curtains and both were growing hand-in-hand. So in '25, the well test became a little bit softer. So probably that is an impact on the mix. But this is a normal thing in the oil and gas. I would expect that to resume to the back end of this year. But not taking into account the effect of Iran, the Iran conflict, which is very hard to assess, right? But if anything, the Middle East prices should be accretive to a normal recovery that we were expecting in well test and well services towards the end of this year. So overall, when I look at energy, it was influenced by that. I think JFD was quite solid in terms of growth. And it's on the back of an order book, which has been growing itself, so that will continue. And then I think in Maritime Transport, we had quite a weak start of Fendercare in the first half that picked up in the second half. And I think if you consider a full year effect, as we see that continuing, we should see the growth in Maritime Transport top line come back more to normal next year, in '26. Yes. So I would expect the top line growth in '26 like-for-like being a bit more punchy than what we had in '25.

We have someone here asking why have corporate costs jumped from GBP 2.8 million in 2021 to GBP 15.3 million in 2025?

Yes. And some of that is to do with the way in which the group is now structured, and we made a conscious decision to have greater visibility on some of that corporate cost. So there is a structural change. But over the last few years, we have also been investing in some core capabilities to help the business grow and scale going forward. And that's in areas such as technology support. We've recruited a Chief Technology Officer and there's a significant impact we've seen on innovation over the 2025 year. We've had to invest in procurement and supply chain. We're building our systems to support our people, whether that's an HR frameworks. So we've actually invested quite a bit to help us scale going forward.

Yes. I think what you're comparing here is 2 completely different models. The James Fisher of yesteryears was essentially managed as a portfolio company, so benign neglect, essentially business left to themselves. So there was no need of central functions. But the result of this was -- and by the way, the growth was fed by acquisitions, financed by debt, which at the time was free, and we saw all where this led, right, total collapse. So when we arrived, I made very clear that I intended to have this company have a logic. I intended to have this company build on its synergies of a logic portfolio that meant transforming -- bringing up the capabilities to be able to bring the company back to a normal state to be able to essentially grow the company to a level which was never achieved before. So the difference in the growth that you see today is a growth which is organic, which is built on differentiation and synergies, not through acquisitions. And to be able to be the best at what we do, whether it's technology, a technology that gets adopted and bring us to the next level of quantum of revenue to be able to grow and have consistency of service and compliance across everything we do across the world, we need strong central function. And the investment we're doing will pay off multiple times through the pathway we are on. Overall, I just want to share with you that the economic model of what we are looking for is probably reaching 35% gross margin, which is much higher than what was before. And maybe SG&A, including central costs of about 20% of revenue at steady state, right? So that should bring us comfortably at or above our 10% underlying operating margin. So we are not investing in central functions and functions in general. It's not just central. Those functions are pretty deep into the organization. We are doing this with a purpose.

The Defense order book has grown to GBP 317 million, but revenue growth in the division was only 11% this year. Given the supportive geopolitical environment and your recent wins like the Polish Navy contract, why is a substantial backlog not converting into top line revenue more rapidly? Are you facing capacity constraints or execution bottlenecks that are slowing down this momentum?

So typically, the order that we get are either OEM type orders. And these have a typical cycle of being delivered between 1 to 3 years. And the rest is services, services start immediately, but they are spread out over longer years, like typically 5 years or more. So you will see a gearing up of the revenue through the acceleration of order intake we took. It just needs to kick start, right? I remind the audience that we were in a trough of about GBR 60-ish million in 2022. We are now in GBR 88 million. Some of this has to do with the phasing of the delivery, but you can expect the translation of the order bump to be reflected into some higher revenue going forward in the nondistant future. I mean any...

Just turning to the next question. You've highlighted the Defense division as a key growth driver. But even with the recent recovery, it's operating margin of 6.2% lags behind the group's 7.6% underlying margin and your medium-term target of 10%. As Defense becomes a larger part of the revenue mix, isn't there a risk that it actually dilutes your progress towards that 10% group wide margin goal? What specific steps are you taking to ensure defense isn't just busy but actually hits the double-digit margins?

Well, the problem of Defense was precisely it was not busy enough. So we were at subscale for the capabilities that we had. And we always shared with the market that for sustaining the capability that we have, the revenue range would be around GBP 100 million plus to get to the 10%, right? So we are getting there. And the jump from GBP 88 million to GBP 100 million, I would expect would come with significant fall-through to the margin and get us at threshold in that growth. Now we don't intend to stop there. A lot of -- I mean, you can see in the velocity of order intake that we're not going to stop at GBP 100 million. The -- once you start going into the GBP 110 million, GBP 120 million, that's where you need to increase capacity. Now a lot of what we do is subcontracted. So when we say increased capacity, we mean increased sales on the front end, increased translating sales into engineered manufacturing product, but everything else pretty much is subcontracted. So it's about making sure that our supply chain can handle the sudden growth, right? So that's why integrating supply chain, maturing supply chain is so critical path for us. And as we grow above the GBP 100 million mark, this will be coming from orders from markets such as the U.S. or some large countries in Asia that will ask that we build some of those things in country, which we are planning for, right? So that capacity will naturally grow into those places that become more prominent markets for us. Everything we bid is at rates that are above our thresholds. So we would not go out and bid for things that bring us down below our threshold no matter what. So we see this growth as accretive to the margin even after we reach our level of -- our cruising level of GBP 100 million. I don't see that dilutive at all.

And just sticking with that target of 10% margin, we have a question here, which asks, James Fisher is 3 years into its turnaround. How many years until you meet your targets of 10% margin and 15% ROCE?

Yes. I mean we haven't given a precise target for that. But as Jean said, there's a number of areas that we are working quite hard on. So depending on how conditions work, we could get there within 1 or 2 years. If you look at some of the analyst consensus out there, they would be expecting us to reach that 10% margin within 2 years. The one thing that we always like to point out, though, is that there's a balance in obtaining that margin because we are continuing to invest for the scale and the growth because obviously, we've got largely supportive markets. We can see that growth coming. So we balance that position and we're continually investing as well. But to give a degree of comfort, a lot of our businesses operate well in excess of 10% anyway. And so that gives us a lot of confidence that we could get to the 10%. There's the areas that we want to fix. As Jean said, there's a few businesses that we need to turn around that would push it up. Volume flow-through will push it up. So I think we have enough levers to be able to get to the 10% in the shorter side of the medium term.

Does the current geopolitical environment increase the requirement for Fendercare services?

I was actually speaking to our team just before this call, Tim, which is here today. It's too early to understand the impact, the magnitude of the impact of -- on Fendercare. I would expect the turmoil to result in there in activities in transfer, a little bit like what we saw in -- during the Ukraine invasion a few years ago. But we haven't -- I mean, we have -- there is a lot of activity on the phone for that. You also have to realize that by choice, we refuse to work for sanctioned cargo. I mean we cannot work for illegal cargo. We also cannot -- we have as a policy that we will not do Russian cargo, right? So a lot of this -- I mean, we've seen some transactions coming through, which we chose not to take because they had to do with Putin sending stuff to India and that we don't touch, right? But in what is within our perimeter, there's a lot of communication with customers going. I would expect this to translate with additional work.

And perhaps one final question here. Can you give more information on the activities you have in the Middle East?

So in the Middle East, the 2 real activity we have are, on the one hand, oil field services, so energy services around well test and decommissioning. That activity has continued, I mean probably 80% of the activity has continued. The only part, which don't have to do with Qatar, which we had -- which was actually closed down, but the rest is going on. I mean it's really playing it by the day, right? Because our priority #1 is to protect our people. So when a customer comes to us, ask us, okay, let's do -- let's start for that campaign or that job, we sit down together with the customer and map out the security consideration. Do we put our people at risk, what are the evacuation in play? So it's all around security of the people. And if we feel comfortable with the risk assessment, then we'll go and do the job. But we will turn down jobs that we think are too risky. On the ship-to-ship transfer, since we talked about it a few seconds ago, that activity stood down. At least for us, we chose not to work on ship-to-ship transfer in the Gulf until the situation clarifies. It's just too dangerous. Apart from that, we've had some ongoing Defense activity on diving between diving -- sales of diving sets and also training of the diving fleet across the Emirates and Saudi Arabia and -- so that, of course, is not happening now, but we'll come to action once the conflict subsides, and it will be time to demine the Gulf of Arabia.

And that actually concludes all the questions that have come in this afternoon. So thank you very much indeed for being so generous of your time there, guys, and addressing all of those questions that came in from investors. But apart from that, I will end the session now. Thank you once again for updating investors today.