J&J DENHOLM has revealed plans to float its oilfield services division as the shipping, logistics and seafood group lifted profits by 7.7 per cent to £23.8 million.

The historic Glasgow group will demerge the division, which employs more than 3600 staff across the UK and the Middle East, into a "free standing" company during the summer.

It then intends to float the business on the Alternative Investment Market (AIM) at a later date.

Denholm said no time-frame had been established for the float, and said that the amount it aims to raise will depend on how much capital the business needs. and on investor appetite, with sentiment towards the oil and gas sector having been shaken by the fall in oil prices. The company signalled it could make up to 30 per cent of the equity available through the placing.

Denholm said the demerger is designed to free up capital for its shipping, logistics, seafood and industrial services businesses, for which the board is mulling a number of expansion opportunities.

During its last financial year the group placed orders for two 37,500 deadweight tonne, log-fitted bulk carriers from Japan for its shipping business, at a cost of US$28 million each.

Denholm, which employs more than 4,500 staff across the group, is scheduled to take delivery of the vessels in the first quarter of 2016, and the second quarter of 2017.

Denholm generated £15.9m of operating profits from its oil field services division in 2014, up 3.9 per cent or £600,000 on the year before - in spite of the fall in oil price and its subsequent effect on the industry in the second half of the year. Its performance was boosted by improved results in Caspian Basin, freight forwarding and UK engineering.

Chairman John Denholm said: "The plan [to demerge] was born about five years ago. We saw this as a market we could grow significantly and took a lot of money out of shipping and put it into oil and gas.

"Why now? Because the oil and gas business has come of age and it is making a consistent return. We believe it is nicely diversified. Across different markets and different sectors it is roughly a third in the UK, a third in the UAE and a third in the Caspian.

"It's come of age and it's able to stand on its own two feet."

The proposal remains subject to shareholder approval, but Denholm said the operation will continue to be led by Michael Beveridge. Mr Denholm will work closely with Mr Beveridge as non-executive chairman, alongside a board of directors and non-executive directors already in place.

Denholm said 2014 had seen a strong performance from its seafood business, despite losing Russia as an export market for mackerel because of a ban on EU food imports. Operating profit rose by 116.7 per cent to £5.2m, boosted by a one-off gain from the "strategic" sale of quota or catching entitlement to fishing vessel skippers.

Denholm offset the loss of Russia by opening of markets in Africa and South-East Asia.

Denholm's logistics division, which offers ship agency, freight forwarding and other services, saw operating profit fall by £0.5m to £1.2m owing to a downturn in its warehousing operations.

In industrial services, operating profit dropped by £0.5m to £0.7m, caused by existing contracts in areas such as painting, scaffolding and cleaning business ending.

Shipping operating profit was down 16.2 per cent to £3.1m due to the lack of income from Saga Andorinha following the sale of the vessel in 2013.

Turnover across the group increased to £416.5m from £392.8m.