RNS Number:0636L
Braemar Seascope Group PLC
26 October 2006
BRAEMAR SEASCOPE GROUP plc
PRESS RELEASE
Interim Results - 6 months ended 31 August 2006
Braemar Seascope Group plc (the "Group"), an international provider of shipping
services, today announced half-year results for the six months ended 31 August
2006.
HIGHLIGHTS
* Turnover #50.5m (2005/6: #30.6m)
* Pre-tax profit before impairment charge #5.0m (2005/6: #5.3m)
* Reported pre-tax profit #4.1m (2005/6: #5.3m)
* Basic EPS before impairment charge 16.88p (2005/6: 18.29p)
* Reported EPS 12.03p (2005/6: 18.29p)
* Increased interim dividend declared 6.75p per share (2005/6: 6.50p)
* Net cash #8.1m (31 August 2005: #9.3m, February 2006: #13.6m)
Commenting on the results and outlook, Sir Graham Hearne, Chairman, said:
"The overall performance in shipbroking has been good and our forward order book
is at a record level reflecting a shift towards longer-term business."
"The outlook for the remainder of the year is positive. The diversity of our
shipbroking activities tends to moderate the influence of any one aspect of
shipping on our earnings. Overall conditions are expected to remain favourable
and, taking into account the level of business already concluded this year, we
expect second half earnings to show an improvement over the first half."
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 7202 2601
Charles Stanley Securities
Philip Davies Tel 020 7149 6457
Notes to editors:
Through its subsidiaries Braemar Seascope Group plc's services 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
DV Howells Limited Environmental services provided principally to the oil, marine,
rail industries
www.dvhowells.co.uk
Cory Brothers Shipping Agency Limited Freight forwarding and logistics and port 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 2006
CHAIRMAN'S STATEMENT
I am pleased to announce another strong set of results for the first half of the
year. The markets in which the Group operates have for the most part remained
buoyant, though perhaps at somewhat lower levels than experienced in 2004 and
2005. The overall performance in shipbroking has been good and our forward
order book is at a record level reflecting a shift towards longer-term business.
In August 2006 we were able to complete the acquisition of the 50 per cent
interest in Braemar Container Shipping and Chartering Limited which the Group
did not already own for #1.3m, thereby consolidating our interest in the
important chartering and sale and purchase broking for container vessels.
Our non-broking businesses - Cory Brothers and Wavespec - also achieved good
results and contributed 20 per cent of our underlying operating profits. This
is a useful start towards our objective of broadening the range of shipping
services we can provide outside of the pure shipbroking field.
A further step in this direction was achieved with the establishment of an
environmental services business through the acquisition of DV Howells in March
2006 and Hi-bar in September for a maximum combined consideration of #1.0m.
Services provided include pollution incident response, training and consultancy
mainly for the oil majors and other transportation companies. We also increased
our presence in the UK agency market, particularly in Liverpool, through the
purchase of Gorman Cory which will take place over two years.
Pre-tax profits in the first half were #4.1m compared to #5.3m in the first half
of last year and earnings per share were 12.03 pence per share compared to 18.29
pence per share in 2005/6. The difference was mainly attributable to an
impairment charge of #0.95m against goodwill on the acquisition of our
Australian dry cargo business due to a lower trading performance and a
restructuring of its business operations. Excluding this impairment charge,
pre-tax profits were #5.0m (2005/6: #5.3m) and earnings per share were 16.88
pence per share (2005/6:18.29 pence per share).
The outlook for the remainder of the year is positive. The diversity of our
shipbroking activities tends to moderate the influence of any one aspect of
shipping on our earnings. Overall, conditions are expected to remain favourable
and, taking into account the level of business already concluded this year, we
expect second half earnings to show an improvement over the first half.
In light of the positive outlook the Directors have declared an interim dividend
of 6.75 pence per share. The interim dividend will be paid on 13 December 2006
to shareholders on the register at the close of business on 17 November 2006,
with an ex-dividend date of 15 November 2006.
Sir Graham Hearne
Chairman
25 October 2006
CHIEF EXECUTIVE'S REVIEW OF ACTIVITIES
Shipbroking
The tanker chartering market remained healthy for the first half of our
financial year, after a slow start in the first calendar quarter. Over the
summer, demand for sweet crudes produced in Atlantic regions for Far East
destinations served to increase voyage lengths for many of the larger crude
tankers and by the end of the second quarter freight rates improved to the
levels seen in 2005. However, the recent reduction in oil prices has now had
some effect on the crude tanker chartering, although since refining margins
remain good the volume of product shipments is being sustained. There is concern
that oil production may be constrained and that this could have some effect on
the freight markets, although this may be offset by rising global demand
especially from China and India and seasonal increases in crude shipments.
The chemical sector is currently enjoying sustained growth both on volume and
rates and this should only be strengthened with the change in regulations for
the transport of biofuels which will mean those cargoes falling more under the
'chemical shipping' banner in the future.
During the first half the gas sector remained reasonably strong but started
weakening in the third calendar quarter, associated with a high crude price.
However, as crude prices have fallen certain sectors of the gas market have
shown marked increases in volumes moved.
The average of the Baltic Dry Index for the first half was 2,837 (first half of
2005: 2,959) having declined quite sharply in the early part of the year before
undergoing a steady recovery since August. Our volume of fixtures has increased,
particularly for smaller Handymax vessels, but a larger proportion of business
written so far this year is period charter business where commissions will be
earned evenly over the duration of the charters. Forecasts for the dry cargo
market are positive and the outlook for the remainder of the year is promising.
We opened new offices in Singapore in March and in Brazil in September, to
service the growing importance of both places for ship owners and charterers.
There are significant fiscal incentives for ship operators who base their
operations in Singapore and our new office has been staffed from our Australian
company, in recognition of the attraction to clients.
Sale and purchase activity has seen a shift in the activity mix from second hand
to newbuilding. There have been fewer high value second hand transactions this
half, especially when compared with the first half of 2005/6 which benefited
from a number of deals financed by new capital raised in the public markets.
Offsetting this is a substantial increase in newbuilding orders placed at
shipyards in China, Japan, Korea, Vietnam and Poland. This is despite the
extensiveness of shipyards' order books, which is an indication of the
confidence in the long-term returns that can be made from shipping assets. The
newbuilding forward order book is now at its highest level (both in terms of the
number of ships and commission value) with ship deliveries stretching out to
2010/11. There is a steady rise in demolition business, which we expect will
increase as the phase-out of single hull tankers accelerates.
Our Offshore team had their most successful ever six months in a market that has
seen greater exploration activity in the North Sea and around the World. The
stimulus for this activity has been provided by a higher oil price. Day rates
and spot activity have both been high and the addition of good period charter
and project business has increased an already extensive forward book.
The Container chartering market was relatively stable during the first half and
our business has grown through involvement in both chartering and sale and
purchase transactions. The first half results are reflected as a 50 per cent
joint venture and, following our buyout of the other shareholders, the second
half will include 100 per cent of the results. The market is expected to soften
in the coming months providing new opportunities for our young team, which will
be well placed to take advantage of greater liquidity in the charter market as
more tonnage becomes available for employment.
Technical shipping support - Wavespec
Both revenue and profits have increased significantly as the company is now
benefiting from the plan approval and supervisory work at three shipyards for
the construction of up to 48 new LNG vessels in connection with the Qatargas II
project. This project is expected to generate income for the company for
several years. Wavespec and Braemar Seascope together are playing a leading role
in the development of the seaborne transportation of Compressed Natural Gas,
both in a technical and commercial capacity.
Ship agency, forwarding and logistics - Cory Brothers
Cory Brothers has shown an improved performance across all activities. Agency
volumes at all offices have continued strongly following the increases seen in
the latter part of 2005. The acquisition of the business and assets of Gorman
Shipping, which handles over 750 vessels per annum concentrated on the Mersey
and the Manchester Ship Canal, has strengthened our UK agency activities. The
business has been combined with the existing Cory Liverpool office making it one
of the foremost ships' agents in the area. The Liner, Logistics and Forwarding
businesses continue to grow their income from most key logistics contracts and
supplemented these with a number of one-off projects. The acquisitions made in
2005 have both performed in line with expectations. Morrison Tours has added to
its customer base and improved the take-up of the shore excursions on offer,
whilst in forwarding, Planetwide has seen significant growth of existing
services and added new consolidation routes to the Middle East. Recently Cory
has been successful in winning several new pieces of business such that activity
levels should be at least maintained in the second half of the year.
Environmental services - DV Howells
DV Howells has had a promising first six months in the Group, maintaining
activity with its core customers while focusing on growing its customer base.
The success in winning the prestigious MOD contract is an indication of the
potential the company has to build its business within the UK and beyond. The
purchase of Hi-bar's business in September 2006 has completed the incident
response coverage within the UK and enhanced the company's training and
consultancy capability.
Bunker trading
Bunker sales have been lower than expected due to the high oil price which has
to some extent limited demand in the Australasian region. The second half is
expected to benefit from an upturn associated with the cruise season in the
Pacific and also the recent drop in the crude oil price which has resulted in
lower bunker prices.
Financial
The Group's profits and earnings are seen most clearly in the analysis below
which shows the figures before the Braemar Seascope Pty goodwill impairment
charge, which is not a cash cost. The impairment has arisen because the earnings
derived from the Australian business have been less than expected at acquisition
mainly as a result of a weaker handymax chartering market in the Pacific region.
First half 2006/7 First half 2005/6
#000 #000
Profit before impairment charge and tax 5,023 5,297
Impairment of Braemar Seascope Pty goodwill (950) -
Reported profit before tax 4,073 5,297
pence Pence
EPS (pre impairment charge) 16.88 18.29
Impairment of goodwill (4.85) -
Basic EPS 12.03 18.29
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 2006 was
$1.81/# (Interim 2005/6: $1.80/#, Full Year 2005/6: $1.80/#). The rate of
translation at 31 August 2006 was $1.90/#.
The estimated full year tax rate on profits has been applied at the half year.
This rate was 33.0% excluding the impact of the impairment charge which is
non-deductible for tax (Interim 2005/6: 33.3%, Full year 2005/6: 30.3%).
Net cash was #8.1m at 31 August 2006 compared with net cash of #13.6m as at 28
February 2006. This excludes #4.9m 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 Group normally generates most of its
annual cash flow in the second half of the year and the reduction in cash
principally reflects the payment of the annual broking bonus and full year
dividend relating to the prior year.
Net cash expended on acquiring businesses was #1.1m in respect of DV Howells, 50
per cent of Braemar Container Shipping and Chartering and 41 per cent of Gorman
Cory. This is net of #0.7m of cash in the acquired balance sheets but does not
include further potential cash consideration of, in aggregate, #0.9m dependent
on profitability.
Alan Marsh
Chief Executive
25 October 2006
Income statement for the six months ended 31 August 2006
Unaudited Unaudited Unaudited
Six months to Six months to Year ended
31 Aug 2006 31 Aug 2005 28 Feb 2006
Continuing operations Notes #'000 #'000 #'000
Revenue 2 50,512 30,592 68,497
Operating costs (46,725) (25,381) (58,607)
Amortisation of other intangibles (62) (172) (287)
Impairment of goodwill (950) - -
Operating costs excluding amortisation of
other intangibles and impairment of goodwill (45,713) (25,209) (58,320)
Operating profit 2 3,787 5,211 9,890
Finance income 148 47 162
Finance costs (4) (15) (2)
Share of post-tax profit from joint ventures 142 54 243
Profit before taxation 4,073 5,297 10,293
Taxation 3 (1,657) (1,769) (3,115)
Profit for the period 2,416 3,528 7,178
Attributable to:
Ordinary shareholders 2,357 3,528 7,178
Minority interest 59 - -
Profit for the period 2,416 3,528 7,178
Earnings per ordinary share 5
Basic - pence 12.03 p 18.29 p 37.03 p
Diluted - pence 11.84 p 17.79 p 36.18 p
Consolidated Balance Sheet as at 31 August 2006
Unaudited Unaudited Unaudited
As at As at As at
31 Aug 06 31 Aug 05 28 Feb 06
Assets Notes #'000 #'000 #'000
Non current assets
Goodwill 21,909 21,953 22,480
Other intangible assets 1,812 245 462
Property, plant and equipment 5,349 4,954 5,034
Investments 1,481 1,410 1,611
Deferred tax assets 566 269 510
Other receivables 76 71 58
31,193 28,902 30,155
Current assets
Trade and other receivables 18,732 15,591 17,717
Financial assets
- Derivative financial
instruments 473 194 12
Restricted cash 4,946 1,090 -
Cash and cash equivalents 8,134 11,464 13,567
32,285 28,339 31,296
Total assets 63,478 57,241 61,451
Liabilities
Current liabilities
Financial liabilities
- Short term borrowings - 2,198 -
- Derivative financial
instruments - - 99
Trade and other payables 21,831 18,929 25,490
Current tax payable 2,362 4,148 2,224
Finance leases - 31 11
Provisions 210 - 288
Client monies held as escrow agent 4,946 1,090 -
29,349 26,396 28,112
Non-current liabilities
Deferred tax liabilities 239 58 139
Provisions 433 341 343
672 399 482
Total liabilities 30,021 26,795 28,594
Total assets less total
liabilities 33,457 30,446 32,857
Equity
Share capital 2,014 1,975 1,988
Capital redemption reserve 396 396 396
Share premium 8,434 7,880 8,046
Merger reserve 21,346 21,346 21,346
Shares to be issued (997) (637) (997)
Other reserves 393 426 639
Retained earnings 1,541 (940) 1,439
33,127 30,446 32,857
Minority interest 330 - -
Total equity 33,457 30,446 32,857
Consolidated Cash Flow Statement
Unaudited Unaudited Unaudited
Six months Six months Year ended
31 Aug 06 31 Aug 05 28 Feb 06
Notes #'000 #'000 #'000
Cash flows from operating activities
Cash generated from operations 6 (771) 5,732 13,769
Interest received 148 43 156
Interest paid (4) (16) (1)
Tax paid (1,670) (1,389) (3,210)
Net cash generated from operating activities (2,297) 4,370 10,714
Cash flows from investing activities
Dividends received from joint ventures 145 228 239
Acquisition of subsidiaries, net of cash
acquired (1,132) (274) (521)
Purchase of property, plant and equipment (246) (115) (387)
Proceeds from sale of property, plant and
equipment - - 29
Purchase of investments - (29) (36)
Other long term receivables (18) 24 37
Net cash used in investing activities (1,251) (166) (639)
Cash flows from financing activities
Proceeds from issue of ordinary shares 414 405 535
Dividends paid (2,255) (1,923) (3,194)
Purchase of own shares - - (360)
Payment of principal under finance leases (11) (11) (28)
Net cash used in financing activities (1,852) (1,529) (3,047)
Foreign exchange differences (33) 52 -
(Decrease)/increase in cash and cash
equivalents (5,433) 2,727 7,028
Cash and cash equivalents at beginning of the
period 13,567 6,539 6,539
Cash and cash equivalents at end of the
period 8,134 9,266 13,567
Consolidated Statement of changes in shareholders' equity
Unaudited 2006 2005
Share Share Other Retained Total Total equity
capital premium reserves earnings equity
#'000 #'000 #'000 #'000 #'000 #'000
At 28 February 1,988 8,046 21,384 1,439 32,857 29,062
Profit for the period - - - 2,357 2,357 3,528
Cash flow hedges - - 364 - 364 (740)
Exchange differences - - (17) - (17) 45
Dividends paid - - - (2,255) (2,255) (1,902)
Issue of shares 26 388 - - 414 405
Consideration to be paid - - (738) - (738) -
Credit in respect of
share option schemes - - 145 - 145 48
At 31 August 2,014 8,434 21,138 1,541 33,127 30,446
BRAEMAR SEASCOPE GROUP PLC
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 AUGUST 2006
1. Basis of preparation
This financial information comprises the consolidated interim balance sheets as
of 31 August 2006 and 31 August 2005 and related consolidated interim statements
of income and cash flows and statement of changes in equity for the six months
then ended of Braemar Seascope Group PLC (herein after referred to as "financial
information"). In preparing this financial information management has used the
principal accounting policies as set out in the Group's financial statements for
the year ended 28 February 2006 on pages 22 to 25.
The comparative figures for the financial year ended 28 February 2006 are not
the company's statutory accounts for that financial year, but have been
extracted from those accounts. Those accounts have been reported on by the
company's auditors and delivered to the registrar of companies. The report of
the auditors was (i) unqualified, (ii) did not include a reference to any
matters to which the auditors drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement under Section 237
(2) or (3) of the Companies Act 1985.
2. Segmental information
Revenue Six months to Six months to Year ended
31 Aug 2006 31 Aug 2005 28 Feb 2006
#'000 #'000 #'000
Shipbroking 17,348 21,838 39,745
Ship agency, forwarding & logistics 10,904 6,433 15,851
Technical shipping support 3,191 2,321 5,202
Environmental services 1,121 - -
Bunker trading 17,948 - 7,699
50,512 30,592 68,497
Operating profit
Shipbroking 3,828 4,929 9,003
Goodwill impairment charge - shipbroking (950) - -
2,878 4,929 9,003
Ship agency, forwarding & logistics 588 180 568
Technical shipping support 245 102 289
Environmental services 68 - -
Bunker trading 8 - 30
3,787 5,211 9,890
Net Assets As at As at As at
31 Aug 2006 31 Aug 2005 28 Feb 2006
#'000 #'000 #'000
Shipbroking 26,261 23,885 19,355
Ship agency, forwarding & logistics (1,888) (1,363) (755)
Technical shipping support 1,377 1,185 1,599
Environmental services 622 - -
Bunker trading (495) - (667)
Operating group 25,877 23,707 19,532
Cash and cash equivalents 8,134 11,464 13,567
Short term borrowings - (2,198) -
Current and deferred taxation (2,035) (3,937) (1,853)
Share of joint ventures 698 627 828
Other investments 783 783 783
Group 33,457 30,446 32,857
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:
Six months to Six months to Year ended
31-Aug-06 31-Aug-05 28-Feb-06
#000 #000 #000
Interim dividend 6.5 pence per share - - 1,271
Final dividend 11.5 pence (2005: 10 pence) per share 2,255 1,902 1,902
2,255 1,902 3,173
The Directors have declared a dividend of 6.75 pence per ordinary share, payable
on 13 December 2006 to shareholders on the register on 17 November 2006.
5. Earnings per share
Six months to Six months to Year ended
31 Aug 2006 31 Aug 2005 28 Feb 2006
#'000 #'000 #'000
Earnings - continuing operations 2,357 3,528 7,178
Goodwill impairment charge 950 - -
Earnings before impairment charge 3,307 3,528 7,178
Pence Pence Pence
Earnings per share - pence 12.03 18.29 37.03
Goodwill impairment - pence 4.85 - -
Earnings before impairment charge - pence 16.88 18.29 37.03
Shares Shares Shares
Weighted average number of ordinary shares 19,586,694 19,293,750 19,385,615
Share options 326,503 536,150 452,339
Diluted weighted average number of ordinary shares 19,913,197 19,829,900 19,837,954
BRAEMAR SEASCOPE GROUP PLC
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 AUGUST 2006
6. Cash generated from operations
#'000 #'000 #'000
Profit for the period 2,416 3,528 7,178
Adjustments for:
-Tax 1,657 1,769 3,115
-Depreciation 232 143 339
-Amortisation 62 172 287
-Goodwill impairment charge 950 - -
-Derivative financial instruments - 201 -
-Profit on sale of property plant and - - (17)
equipment
-Interest income (148) (47) (162)
-Interest expense 4 15 2
-Share of post-tax profits of joint ventures (142) (54) (243)
-Stock option expense 145 48 244
Changes in working capital
-Trade and other receivables (625) (1,335) (129)
-Trade and other payables (5,336) 1,106 2,913
-Provisions 14 186 242
Cash generated from operations (771) 5,732 13,769
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 2006 which comprises the consolidated interim
balance sheet as at 31 August 2006 and the related consolidated interim
statements of income, cash flows and changes in shareholders' equity and related
notes 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.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing Rules
of the Financial Services Authority require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
This interim report has been prepared in accordance with the basis set out in
Note 1.
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 2006.
PricewaterhouseCoopers LLP
Chartered Accountants
West London
25 October 2006
This information is provided by RNS
The company news service from the London Stock Exchange
END
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