RNS Number:1025T
Braemar Seascope Group PLC
25 October 2005
BRAEMAR SEASCOPE GROUP plc
PRESS RELEASE
For immediate release 25 October 2005
Interim Results - 6 months ended 31 August 2005
Braemar Seascope Group plc (the "Group"), a leading provider of shipping
services, today announced half-year results for the six months ended 31 August
2005.
HIGHLIGHTS
* Turnover #30.6m, up 75% (2004/5: #17.4m)
* Pre-tax profit #5.3m, up 62% (2004/5: #3.3m)
* Basic EPS 18.29p, up 54% (2004/5: 11.89p)
* Interim dividend 6.50p per share (2004: 6.00p)
* Net cash #9.2m (28 February 2005 - #6.5m)
Commenting on the results and outlook, Sir Graham Hearne, Chairman, said:
"The Group has performed well in markets which showed exceptional strength in
the second half of last year and which continued through to the early months of
this financial year."
"While it seems unlikely that the second half results will reach the levels of
the first half, the outlook for the rest of the financial year nevertheless
remains positive with freight rates in recent weeks having recovered quite
significantly, particularly in the wet markets. We expect the winter months in
the wet market to remain firm though the dry market continues to be difficult to
predict and likely to experience volatility."
For further information, contact:
Braemar Seascope Group plc
Alan Marsh Tel 020 7535 2650
James Kidwell Tel 020 7535 2881
Aquila Financial
Peter Reilly Tel 020 7849 3319
Charles Stanley & Company Limited
Philip Davies Tel 020 7953 2000
Notes to editors:
Through its subsidiaries Braemar Seascope Group plc's services provided
comprise:
Braemar Seascope Limited Specialised shipbroking and consultancy services to international
ship owners and charterers in the tanker, gas, offshore,
container and dry bulk markets.
www.braemarseascope.com
Braemar Seascope Pty Ltd (formerly Specialised shipbroking and consultancy services for the dry bulk
Seawise) market in Australia.
www.seawise.com.au
Cory Brothers Shipping Agency Limited Liner and port ship agency services within the UK.
www.cory.co.uk
Wavespec Limited Marine engineering and naval architecture consultants to the
shipping and offshore markets.
www.wavespec.com
INTERIM ANNOUNCEMENT - SIX MONTHS ENDED 31 AUGUST 2005
CHAIRMAN'S STATEMENT
I am delighted to announce a strong set of results for the first half of the
year. Revenue was #30.6m up 75 per cent from #17.4m in the equivalent half of
last year and pre-tax profits increased by 62% to #5.3m. The good performance
was also reflected in the cash generated from operating activities which was
#4.4m (Interim 2004/5: #0.7m) resulting in the Group's net cash position
increasing by #2.7m since the beginning of the financial year to #9.2m at 31
August 2005. Earnings per share increased by 54 per cent to 18.29 pence per
share compared with 11.89 pence in 2004/5.
The Group has performed well in markets which showed exceptional strength in the
second half of last year and which continued through to the early months of this
financial year. Profits have also benefited from the initial contribution from
Braemar Seascope Pty Ltd (formerly Seawise), acquired in February 2005, and by a
much-improved performance from Cory.
It is the Directors' intention to pay an interim dividend of 6.50 pence per
share an increase of 8 per cent over last year (Interim 2004/5: 6.00 pence). The
proposed interim dividend will be paid on 13 December 2005 to shareholders on
the register at the close of business on 18 November 2005, with an ex-dividend
date of 16 November 2005.
During the summer there has been a general softening in the shipping market
since the exceptional highs experienced at the beginning of the year. However,
the Group is continuing to perform strongly - transaction volumes remain at
least as good as last year and we have seen a greater proportion of higher value
transactions in the overall mix.
While it seems unlikely that the second half results will reach the levels of
the first half, the outlook for the rest of the financial year nevertheless
remains positive with freight rates in recent weeks having recovered quite
significantly, particularly in the wet market. We expect the winter months in
the wet market to remain firm though the dry market continues to be difficult to
predict and likely to experience volatility. The continuing demand for the
long-range transportation of raw materials, oil and consumer products underpins
shipping. While seaborne trade continues to grow and the sector produces
attractive returns the prospects for the Group are good.
CHIEF EXECUTIVE'S REVIEW OF ACTIVITIES
Shipbroking
During the first half of our financial year the tanker freight market was much
less volatile than during the second half of last year, and oil prices have
continued to rise throughout the period. This has affected owners' net earnings,
as the cost of bunker fuel has risen by more than 50 per cent. Daily earnings on
the benchmark Very Large Crude Carriers ("VLCC") drifted below $30,000 per day
during the middle of the summer, but have since recovered to more than double
this level. More recently the 'Katrina effect' has stimulated activity. As the
fragility of the American refining sector was so starkly exposed, and the demand
surged for product carriers to take gasoline to the USA, there was a consequent
sharp rise in freight rates. A significant proportion of the offshore crude oil
production facilities in the Gulf of Mexico were damaged by the hurricanes and
will remain shut down during the period when refiners normally build stocks
ahead of winter demand. This is expected to create more demand for long haul
crude oil and product shipments to replace the shortfall in local supplies; a
trend from which we expect to achieve further benefits.
The Gas and Chemicals markets have generally enjoyed more favorable market
conditions which are expected to persist for the remainder of the year.
The Dry market over the last six months has shown significant volatility. The
Baltic Dry Index ("BDI") on 1 March 2005 was 4,663, falling to a low of 1,747 on
3 August 2005 before recovering to 2,592 at 31 August 2005 and 3,361 on 18
October 2005. The average of the BDI for the first half-year was 3,328 (average
BDI for last financial first half and full year - 4,021 and 4,375 respectively).
At the start of our financial year markets were still firm and raw material
demand, particularly for iron ore, peaked in March 2005. Subsequently ore demand
fell due to high stockpiles. Congestion at ports diminished adding to the supply
of available tonnage and causing a decline in freight rates lasting through the
summer. Our activity in the dry market has more than doubled with the addition
of our Australian offices and we are working hard to utilize the worldwide
connections that dry offices in London, Beijing, Melbourne, Perth and Sydney now
offer. Australia contributed revenue of #1.8m and operating profit of #416,000
in the first half.
Vessel values have fallen but to a lesser extent than freight rates and sale and
purchase activity in the market place has also slowed. However, our own
performance has been particularly strong both in terms of the number of
successfully concluded negotiations and the mix of transactions which has
generally favoured higher value deals. In particular, we have had significant
involvement in ship purchases connected to the public markets where recently
substantial new capital has been raised. Our newbuilding activity, for which the
income earned is mostly for future years, has also continued to flourish despite
the high level of the shipyards' order books.
The Offshore market has enjoyed an increased level of activity particularly in
the North Sea, supported by the higher oil price. Strong charter rates have
benefited income as has our involvement in some substantial vessel sales.
The Container shipping market continued its growth phase in the early part of
the fiscal year before a downturn in the early summer which has continued into
autumn. Our team, which is held through a joint venture company, is active in
chartering, second hand and newbuilding and has successfully concluded business
in all areas during this half.
Our shipbroking representative offices in Shanghai and Beijing have contributed
well during the half and we are steadily growing the activities of our joint
ventures based in Delhi, Mumbai, Singapore and Shanghai.
Technical shipping support - Wavespec
Wavespec's results show some improvement but were affected by the delay in the
start of its involvement in the Qatargas II project - a project which is
expected to yield a significant income for the company for at least a further 3
years. The overall activity level has now picked up and the company's engineers
are currently fully employed across a variety of projects, which presages well
for profits in the second half of the year.
Ship agency, forwarding and logistics - Cory Brothers
Cory Brothers' results are significantly better than last year partly because of
improved volumes in ship agency but predominantly due to new income streams in
forwarding and logistics. Agency has seen an improvement across the majority of
its UK offices during the first half. Forwarding and Logistics is building its
customer base primarily on its forwarding business which has contributed
significantly to the overall Cory result. In July 2005, Cory acquired Geo M
Morrison & Company (Leith) Ltd, which trades as Morrison Shipping & Morrison
Tours, for a cash consideration of #525,000, part of which is deferred and
profit dependent. Morrison is based in Scotland and acts as a ship's agent, a
project forwarder and provider of shore excursions for cruise ships. It has
built up long term business relationships with many cruise operators and Cory
hope to build on these relationships to develop cruise business elsewhere in the
UK.
Financial
The first half results and relevant comparatives have been prepared in
accordance with International Financial Reporting Standards ("IFRS"). The IFRS
adjusted results for the first half and full year 2004/5 were set out in a
statement issued on 19 October 2005 which details the changes from UK GAAP to
IFRS. These new accounting standards have no material effect on the underlying
performance of the Group or the cash generated from operations.
As can be seen from the segment note 2 in the accounts, all business segments
improved both their turnover and operating profits over last year. Group
operating profit in the first half was #5.2m (2004/5: interim #3.1m, Full year
#7.8m) and the operating margin remained broadly unchanged at 18 per cent. The
majority of the Group's income is US$ denominated and the average rate of
exchange for conversion of US$ income in the six months to August 2005 was $1.80
/# (Interim 2004/5: $1.70/#, Full Year 2004/5: $1.82/#).
The estimated full year tax rate on profits has been applied at the half year.
This rate was 33% (Interim 2004/5: 32%, Full year 2004/5: 33%).
Net cash was #9.2m at 31 August 2005 compared with net cash of #6.5m as at 28
February 2005. This excludes #1.1m of restricted cash, which the company was
holding as escrow agent for certain clients pending completion of transactions
in which the company acted as broker. The increase in net cash reflects strong
operational cash generation offset by the payment of the final dividend and
annual bonus relating to the prior year.
Braemar Seascope Group PLC
Consolidated income statement
For the half year ended 31 August 2005
Unaudited Unaudited Unaudited
Six months to Six months to Year to
31-Aug-05 31-Aug-04 28-Feb-05
Notes #000 #000 #000
Revenue 2 30,592 17,439 45,203
Operating costs (25,381) (14,297) (37,535)
Other gains - - 123
(25,381) (14,297) (37,412)
Operating profit 2 5,211 3,142 7,791
Finance income 47 5 28
Finance costs (15) (50) (53)
Share of profits from joint ventures 54 171 365
Profit before tax 5,297 3,268 8,131
Taxation 3 (1,769) (1,063) (2,699)
Profit for the period attributable to shareholders 3,528 2,205 5,432
Earnings per share 5
Basic (pence) 18.29 11.89 29.50
Diluted (pence) 17.79 11.78 28.59
Comparatives have been restated for International Financial Reporting
Standards.
Braemar Seascope Group PLC
Consolidated Balance Sheet
As at 31 August 2005 Unaudited Unaudited Unaudited
Notes 31-Aug-05 31-Aug-04 28-Feb-05
ASSETS #000 #000 #000
Non-current assets
Property, plant and equipment 4,954 4,911 4,960
Goodwill 21,953 18,537 21,587
Other intangible assets 245 - 215
Investments 1,410 1,625 1,555
Deferred tax assets 269 250 262
Other receivables 71 107 95
28,902 25,430 28,674
Current assets
Trade and other receivables 15,591 9,729 11,688
Financial instruments 194 - -
Restricted cash 1,090 8,329 4,434
Cash and cash equivalents 11,464 4,894 9,606
28,339 22,952 25,728
Total assets 57,241 48,382 54,402
LIABILITIES
Current liabilities
Trade and other payables 18,929 11,633 17,170
Current tax payable 4,148 1,161 1,556
Short term borrowings 2,198 3,830 3,067
Finance leases 31 - 39
Client monies held as escrow agent 1,090 8,329 4,434
26,396 24,953 26,266
Deferred tax 58 - -
Provisions 341 121 151
Total liabilities 26,795 25,074 26,417
Total assets less total liabilities 30,446 23,308 27,985
EQUITY
Share capital 1,975 1,862 1,945
Capital redemption reserve 396 396 396
Share premium 7,880 7,506 7,505
Shares to be issued (637) (65) (637)
Merger reserve 21,346 18,302 21,346
Hedging reserve 241 - -
Other reserves 148 61 100
Translation reserve 37 - (8)
Retained earnings 7 (940) (4,754) (2,661)
Total equity 30,446 23,308 27,985
Comparatives have been restated for International Financial Reporting
Standards.
Braemar Seascope Group PLC
Consolidated Cash Flow Statement
For the Half Year Ended 31 August 2005
Unaudited Unaudited Unaudited
Six months to Six months to Year to
31-Aug-05 31-Aug-04 28-Feb-05
#000 #000 #000
Cash flows from operating activities
Cash generated from operations 5,732 1,622 11,044
Interest received 43 3 26
Interest paid (16) (20) (52)
Tax paid (1,389) (884) (2,448)
Net cash generated from operating activities 4,370 721 8,570
Cash flows from investing activities
Dividends from joint ventures 228 - -
Purchase of business, net of cash acquired (274) - (1,026)
Purchase of property, plant and equipment (115) (102) (175)
Proceeds from sale of property, plant and equipment - - 11
Purchase of investments (29) (26) (21)
Proceeds from sale of investment - - 386
Other long term assets 24 (4) 8
Net cash used in investing activities (166) (132) (817)
Cash flows from financing activities
Proceeds from issue of ordinary shares 405 1 1
Dividends paid (1,923) (1,484) (2,597)
Purchase of own shares - - (572)
Payment of principal under finance leases (11) - (2)
Other - - (2)
Net cash used in financing activities (1,529) (1,483) (3,172)
Increase/(decrease) in cash and cash equivalents 2,675 (894) 4,581
Cash and cash equivalents at beginning of the period 6,539 1,958 1,958
Foreign exchange differences 52 - -
Cash and cash equivalents at end of the period 9,266 1,064 6,539
Reconciliation of net funds
Cash and cash equivalents at end of the period 9,266 1,064 6,539
Finance leases (31) - (39)
Net funds at the end of the period 9,235 1,064 6,500
Comparatives have been restated for International Financial Reporting
Standards.
BRAEMAR SEASCOPE GROUP PLC
NOTES TO THE ACCOUNTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2005
1. Accounting policies and basis of preparation
The Group's interim result consolidates the results of the Company and its
subsidiary companies made up to 31 August 2005.
The interim financial information has been prepared according to recognition and
measurement requirements of International Financial Reporting Standards ("IFRS")
that are in issue and have been endorsed by the European Union or are expected
to be endorsed and effective at 28 February 2006, the Group's first annual
reporting date under IFRS. The directors have revised the Group's accounting
policies based on these requirements. Details of these accounting policies
together with a reconciliation of the adjustments made to the comparative
information provided below were published in the investor relations section of
the Braemar Seascope website, www.braemarseascope.com, as supporting information
for the press release "Braemar Seascope Group PLC Adoption of International
Financial Reporting Standards" issued on 19 October 2005.
The IFRS and IFRIC interpretations are still subject to change. As a result
there may be further changes applicable to this half year and the comparative
financial information when the Group prepares its first full year IFRS financial
statements.
The financial information contained in this interim statement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. The financial information for the preceding year is based on the
statutory accounts for the year ended 28 February 2005, as restated to comply
with IFRS. The statutory accounts prepared under UK GAAP for the year ended 28
February 2005, upon which the auditors issued an unqualified opinion, have been
delivered to the Registrar of Companies.
2. Segmental Information
Unaudited Unaudited Unaudited
Six months to Six months to Year to
31-Aug-05 31-Aug-04 28-Feb-05
Revenue #000 #000 #000
Shipbroking 21,838 13,277 32,420
Ship agency, forwarding & logistics 6,433 2,100 8,461
Technical shipping support 2,321 2,062 4,322
30,592 17,439 45,203
Operating profit
Shipbroking 4,929 3,295 8,864
Ship agency, forwarding & logistics 180 (226) (1,213)
Technical shipping support 102 73 140
5,211 3,142 7,791
Net assets
Shipbroking 27,678 20,526 25,838
Ship agency, forwarding & logistics 1,361 996 376
Technical shipping support 838 1,195 996
Share of joint ventures 569 590 775
30,446 23,307 27,985
BRAEMAR SEASCOPE GROUP PLC
NOTES TO THE ACCOUNTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2005
3. Taxation
The taxation charge for the half-year is calculated using the estimated
effective tax rate for the full year applied to the pre-tax profits at the half
year.
4. Dividends
The following dividends were paid by the Group:
Half year to Half year to Year ended
31-Aug-05 31-Aug-04 28-Feb-05
#000 #000 #000
Interim dividend 6.0 pence per share - - 1,134
Final dividend 10.0 pence (2004: 8 pence) per share 1,902 1,491 1,491
1,902 1,491 2,625
The Directors have declared a dividend of 6.50 pence per ordinary share, payable on 13 December 2005
to shareholders on the register on 18 November 2005.
5. Earnings per share
Half year to Half year to Year to
31-Aug-05 31-Aug-04 28-Feb-05
Profit after tax #000 3,528 2,205 5,432
Earnings per share (pence per share)
- Basic 18.29 11.89 29.50
- Diluted 17.79 11.78 28.59
Weighted average number of ordinary shares
Basic 19,293,750 18,545,851 18,412,881
Share options 536,150 585,077
166,818
Diluted 19,829,900 18,712,669 18,997,958
BRAEMAR SEASCOPE GROUP PLC
NOTES TO THE ACCOUNTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2005
6. Cash generated from operations
Unaudited Unaudited Unaudited
Six months to Six months to Year to
31-Aug-05 31-Aug-04 28-Feb-05
#000 #000 #000
Profit for the period 3,528 2,205 5,432
Adjustments for:
-Tax 1,769 1,063 2,699
-Depreciation 143 153 297
-Amortisation of intangible assets 172 - -
-Goodwill impairment charge - - 931
-Derivative financial instruments 201 - -
-Profit on sale of investment - - (123)
-Interest income (47) (5) (28)
-Interest expense 15 50 53
-Share of profit of associates (54) (171) (365)
-Stock option expense 48 39 78
Changes in working capital
-Trade and other receivables (1,335) (380) (1,416)
-Trade and other payables 1,106 (1,123) 3,715
-Provisions 186 (209) (229)
Cash generated from operations 5,732 1,622 11,044
7. Consolidated statement of changes in equity
Attributable to equity holders of the Company
Share Share Shares Other Retained Total
Capital Premium to be Reserves Earnings Equity
issued
#000 #000 #000 #000 #000 #000
Balance at 1 March 2005 1,945 7,505 (637) 21,834 (2,662) 27,985
Change in accounting policies
regarding adoption of IAS39 - - - 981 96 1,077
Balance at 1 March 2005 1,945 7,505 (637) 22,815 (2,566) 29,062
(restated)
Profit for the period - - - - 3,528 3,528
Cash flow hedges net of tax - - - (740) - (740)
Currency translation
differences - - - 45 - 45
Total recognised income and
expense for the period - - - (695) 3,528 2,833
Employees share option scheme:
-value of employee services - - - 48 - 48
Share issues in respect of
share option schemes 30 375 - - - 405
Final dividend relating to 2004/5 - - - - (1,902) (1,902)
30 375 - 48 (1,902) (1,449)
Balance at 31 August 2005 1,975 7,880 (637) 22,168 (940) 30,446
Independent review report to Braemar Seascope Group plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 August 2005 which comprises the consolidated interim
balance sheet as at 31 August 2005 and the related consolidated interim
statements of income, cash flows and changes in shareholders' equity for the six
months then ended. We have read the other information contained in the interim
report and considered whether it contains any apparent misstatements or material
inconsistencies with the financial information. The IFRS restatement dated 19
October 2005, as referred to in Note 1, does not form part of these accounts.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority.
As disclosed in note 1, the next annual financial statements of the group will
be prepared in accordance with accounting standards adopted for use in the
European Union. This interim report has been prepared in accordance with the
basis set out in Note 1.
The accounting policies are consistent with those that the directors intend to
use in the next annual financial statements. As explained in note 1, there is,
however, a possibility that the directors may determine that some changes are
necessary when preparing the full annual financial statements for the first time
in accordance with accounting standards adopted for use in the European Union.
The IFRS standards and IFRIC interpretations that will be applicable and adopted
for use in the European Union at 28 February 2006 are not known with certainty
at the time of preparing this interim financial information.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the disclosed accounting policies have
been applied. A review excludes audit procedures such as tests of controls and
verification of assets, liabilities and transactions. It is substantially less
in scope than an audit and therefore provides a lower level of assurance.
Accordingly we do not express an audit opinion on the financial information.
This report, including the conclusion, has been prepared for and only for the
company for the purpose of the Listing Rules of the Financial Services Authority
and for no other purpose. We do not, in producing this report, accept or assume
responsibility for any other purpose or to any other person to whom this report
is shown or into whose hands it may come save where expressly agreed by our
prior consent in writing.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 August 2005.
PricewaterhouseCoopers LLP
Chartered Accountants
West London
25 October 2005
This information is provided by RNS
The company news service from the London Stock Exchange
END
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