RNS Number:2025E
Braemar Seascope Group PLC
25 November 2002
For immediate release 25 November 2002
Braemar Seascope announces Interim results for the six months ended 31 August
2002
Braemar Seascope Group plc (the "Group"), providers of specialised broking and
consultancy services to international ship owners and charterers in the sale &
purchase, tanker, offshore and dry bulk markets, today announced Interim results
for the six months ended 31 August 2002. The results for the first half of 2001
did not include a contribution from Braemar Tankers which joined the Group in
October 2001 and are not strictly comparable with the first half of 2002.
Highlights
* Turnover up to #14.23m (2001: #9.81m)
* Pre-tax profit up #2.01m to #2.14m (2001: #0.13m)
* Adjusted EPS before goodwill and exceptionals 8.24p (2001: 10.06p)
* Interim dividend unchanged at 5.0p per share
* Integration of Seascope, Braemar Shipbrokers and Braemar Tankers
completed successfully
Sir Peter Cazalet, Chairman, said:
"The global shipping market has been much weaker during 2002 especially compared
with the two previous years when freight rates were exceptionally high. Against
this backdrop most of the Group's broking departments performed well in
difficult trading conditions benefiting in particular from a higher level of
sale and purchase transactions."
"The outlook for shipping markets is difficult to foresee given the uncertain
global economic environment and the threat of war in the Middle East. In the
medium term a steady global recovery should be reflected in growth in sea-borne
trade which is a key driver for our business. However, political and economic
changes occurring in the short term may lead to high volatility in shipping
rates".
"As announced at the AGM Sir Graham Hearne is taking over as Chairman of the
Company from today. I am pleased to be handing over a company which has been
strengthened by the mergers of 2001 and is now well placed to become a major
force in providing shipping services to its worldwide client base."
Sir Graham Hearne, in-coming Chairman, said:
"Sir Peter Cazalet leaves the company a much stronger and more broadly-based
shipping services group than when he took over two years ago. The successful
mergers of Seascope with Braemar Shipbrokers and Braemar Tankers in 2001 offer
considerable possibilities for further business development. I am delighted to
be taking over the Chairmanship of Braemar Seascope Group plc at an exciting
time and to be working alongside a highly committed management and successful
broking team."
For further information, contact:
Alan Marsh, Chief Executive 020 7535 2600
James Kidwell, Finance Director 020 7535 2881
Braemar Seascope Group plc
Nick Boakes 020 7417 4170
Victoria Morris
Grandfield
BRAEMAR SEASCOPE GROUP PLC
Interim Results for the six months ended 31 August 2002
CHAIRMAN'S REVIEW
Results and Dividend
Turnover increased to #14.2m (2001: #9.8m) and operating profit before goodwill
amortisation and exceptional items increased to #2.6m compared with #1.9m in the
first half 2001. Pre-tax profits were #2.1m, up from #0.1m in 2001 and adjusted
earnings per share before exceptional items and goodwill amortisation were 8.24
pence compared with 10.06 pence in 2001. The results for the first half of 2001
did not include a contribution from Braemar Tankers which joined the Group in
October 2001 and are not strictly comparable with the first half of 2002.
It is the Directors' intention to pay an interim dividend of 5.0p per share
(Interim 2001: 5.0p).
Review of activities
The global shipping market has been much weaker during 2002 especially compared
with the two previous years when freight rates were exceptionally high. Against
this backdrop most of the Group's broking departments performed well in
difficult trading conditions benefiting in particular from a higher level of
sale and purchase transactions.
The performance of the sale and purchase department has been particularly strong
in all three sectors; new-building, second hand and demolition, and compares
very favourably with the previous two years when the freight markets were much
stronger. The new-building transactions also serve to underpin the company's
forward income over the next few years. Despite depressed freight rates the
second hand market continued to be active with a steady volume of business
concluded. Prices levelled off, buoyed by interest primarily from Greek buyers
and the support for prices has been maintained as freight rates improved. We
were also able to conclude some significant transactions with the company's
German partners in the container sector.
Tanker chartering freight levels in all sectors of crude transportation -
Aframax, Suezmax and VLCC - have been significantly lower in the first half of
2002, reflecting weaker market conditions caused by a higher oil price and
excess availability of shipping capacity. Global economies have not recovered as
was widely expected in 2002 thereby weakening oil demand and undermining the
long haul crude oil transportation business. The uncertainty surrounding crude
oil prices has also affected clean petroleum product shipping volumes which have
suffered due to lower refinery runs and lower margins as refiners have decreased
capacity in order to preserve stocks until prices stabilise. In other related
areas both the Chemical and Gas departments experienced a variable trading
market place but have both secured significant longer term contractual business
commencing in 2003 and the small tanker product shipping market has been weak
throughout the year with spot freight rates at their lowest point for many
years.
The Dry Cargo market has enjoyed a welcome improvement in the last month after
six months of extremely slow activity levels. Demand has been weak reflecting
tough commodity market conditions and there has been a significant number of
newly-built ships delivered into the market which has increased available
tonnage and depressed the rates achievable.
BRAEMAR SEASCOPE GROUP PLC
Interim Results for the six months ended 31 August 2002
Our Offshore business has experienced lower day rates and activity in the North
Sea during the first half despite a strong oil price. This is partly due to the
windfall tax levied by the UK government in the last budget which was received
with great disappointment in the industry, and also because of relatively low
exploration activity. However the department has concluded some substantial
project business, the benefits of which should come through in the second half.
Wavespec's half-year results fell slightly short of expectations due to a
reduction in the number of consultants supplied to the Oil Majors. There are
early indications that a recovery is underway in the second half, which should
yield a modest increase in profitability for the division.
The company concluded the divestment of Seascope Capital Services to its
management on the basis of a share of the work in progress.
Financial
The estimated full year tax rate on profits before non-deductible goodwill
amortisation has been applied at the half year. This rate is 40% compared to a
14 months to February 2002 tax rate of 38%. After charging goodwill amortisation
the estimated tax rate is 50% of pre-tax profits.
The average rate of exchange for the company's US$ income in the first half was
#/$1.44.
Net debt increased to #4.2m at 31 August 2002 from #3.1m at 28 February 2002.
The increase reflected a reduction in short term funds held on behalf of clients
and the payments of the final dividend and annual bonus relating to the prior
year. Underlying operating cash flow was strong at #2.1m.
The proposed interim dividend of 5.0 pence will be paid on 20 December 2002 to
shareholders on the register at close of business on 6 December 2002.
Outlook
The outlook for shipping markets is difficult to foresee given the uncertain
global economic environment and the threat of war in the Middle East. In the
medium term a steady global recovery should be reflected in growth in sea-borne
trade which is a key driver for our business. However, political and economic
changes occurring in the short term may lead to high volatility in shipping
rates.
Oil inventories are generally low at present and with the potential war threat
to oil movements, there has been a noticeable increase in volumes moved since
early October. Volumes are expected to continue increasing at a modest rate in
spite of OPEC's stated intention of maintaining production cuts. The high oil
price will serve to depress the major economies, especially in Asia. However, if
the recent trend of reducing oil prices continues, consumer demand in the major
economies should be stimulated thereby bringing about a recovery in
transportation rates. We would also expect some improvement in clean rates based
on the normal three-month lag from the recent crude rate increase.
BRAEMAR SEASCOPE GROUP PLC
Interim Results for the six months ended 31 August 2002
If the 20th Century was the oil age then it is possible that the 21st will
become the gas age. The company has already been actively involved in the
new-building of large LNG carriers, and Wavespec is one of the world's major
technical consulting companies covering maritime gas transportation. We expect
that our combined expertise in this area will enable us to take a growing share
of this market.
The sinking of the 1976 built PRESTIGE and subsequent oil spill has brought
international calls for much stricter laws and the possibility of an
acceleration of the 'phase-out' of older single hull tankers. This will almost
certainly result in an increase in both demolition and new-building activity.
The dry cargo fleet is largely dependent on the demand for steel, coal and
grain. Steel production in particular is driven by global economies. Despite the
worldwide economic uncertainties, demand is predicted to grow, albeit at a
slower rate than anticipated earlier in the year. China is a key driver in this
growth with the demand for steel and steel products forecast to rise at
double-digit rates in 2002 and 2003. The demand for steam coal is seasonal with
more coal being required for electricity consumption in winter months.
We have recently been experiencing an increase in business in China and as a
result of this we are now well advanced on plans to open at least one new office
there. The initial focus will be in the dry cargo and sale and purchase markets.
Board
John Denholm joined the Board as non-executive director on 26 July 2002 and
James Kidwell joined the Board as Finance Director and Company Secretary on 1
August 2002.
As announced at the AGM Sir Graham Hearne is taking over as Chairman of the
Company from today. I am pleased to be handing over a company which has been
strengthened by the mergers of 2001 and is now well placed to become a major
force in providing shipping services to its worldwide client base.
Sir Peter Cazalet
Chairman
25 November 2002
BRAEMAR SEASCOPE GROUP plc
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 31 AUGUST 2002
6 months to 6 months to 14 months to
31August 2002 30 June 2001 28 Feb 2002
Unaudited Unaudited Audited
#'000 #'000 #'000
Turnover 14,227 9,805 25,430
Net operating expenses before exceptional items and (11,668) (7,904) (21,719)
goodwill amortisation
Goodwill amortisation (517) (310) (3,403)
Exceptional items 250 (1,375) (3,310)
Total operating expenses (11,935) (9,589) (28,432)
Total operating profit/(loss) 2,292 216 (3,002)
Net interest payable and similar charges (154) (86) (324)
--------- --------- ---------
Profit/(loss) on ordinary activities before 2,138 130 (3,326)
taxation
Taxation on profit on ordinary activities (1,069) (288) (429)
---------- ----------- --------
Profit/(loss) on ordinary activities after taxation 1,069 (158) (3,755)
Dividends (856) (678) (1,725)
---------- ---------- --------
Retained profit/(loss) for the period 213 (836) (5,480)
Accumulated loss brought forward (6,607) (1,127) (1,127)
----------- ----------- --------
Retained loss carried forward (6,394) (1,963) (6,607)
====== ====== =====
Earnings per ordinary share - pence
- Basic 6.24p (1.43)p (27.45)p
- Adjusted EPS excluding goodwill
- amortisation and exceptional items 8.24p 10.06p 15.43p
- Diluted 6.24p (1.43)p (27.45)p
BRAEMAR SEASCOPE GROUP plc
CONSOLIDATED BALANCE SHEET AS AT 31 AUGUST 2002
As at As at As at
31 Aug 2002 30 June 2001 28 Feb 2002
Unaudited Unaudited Audited
#'000 #'000 #'000
Fixed assets
Goodwill 19,150 17,391 19,668
Tangible assets 4,520 1,876 4,666
Investments 1,087 1,387 1,087
---------- ---------- --------
24,757 20,654 25,421
Current assets
Debtors 4,885 4,572 5,680
Cash at bank and in hand 2,707 1,961 3,241
----------- ----------- --------
7,592 6,533 8,921
Creditors: amounts falling due
within one year (9,937) (7,650) (11,578)
---------- ------------ --------
Net current (liabilities)/assets (2,345) (1,117) (2,657)
----------- ---------- --------
Total assets less current liabilities 22,412 19,537 22,764
Creditors: amounts falling due after
More than one year (3,003) (3,459) (3,283)
Provisions (1,115) (124) (1,400)
----------- ---------- ---------
Net assets 18,294 15,954 18,081
====== ====== =====
Capital and reserves
Called up share capital 1,719 1,349 1,719
Capital redemption reserve 396 396 396
Share premium 4,271 4,421 4,271
Other reserves 18,302 11,443 18,302
Shares to be issued - 308 -
Profit and loss account (6,394) (1,963) (6,607)
----------- ---------- ---------
Total equity shareholders' funds 18,294 15,954 18,081
====== ====== =====
BRAEMAR SEASCOPE GROUP plc
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 31 AUGUST 2002
6 months to 6 months to 14 months to
31 Aug 2002 30 June 2001 28 Feb 2002
Unaudited Unaudited Audited
#'000 #'000 #'000
Net cash inflow/(outflow) from operating activities 489 1,508 5,355
Returns on investments and servicing of finance
Net interest (paid) excluding finance leases (149) (1) (205)
Interest element of finance lease payments (4) (7) (16)
-------- --------- ---------
Net cash (outflow) from returns on investments and (153) (8) (221)
servicing of finance
Taxation
UK Corporation tax paid (149) (351) (1,961)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (40) (47) (133)
Receipts from investments - 143 924
-------- -------- --------
Net cash (outflow)/inflow from investing Activities (40) 96 791
Acquisitions and disposals
Purchase of subsidiary - (882) (2,019)
Cash acquired with subsidiary - 1,200 2,085
Deferred consideration (217) (75) (170)
------- -------- -------
Net cash (outflow)/inflow from acquisitions (217) 243 (104)
Equity dividends paid (1,045) (675) (1,354)
-------- --------- --------
Cash (outflow)/inflow before financing (1,115) 813 2,506
Financing
New loan 1,000 1,800 2,450
Loan repayment - (950) (950)
Loan acquired on acquisition - (562) (1,911)
Expenses on issue of equity shares - (307) -
Repayment of loan notes (375) - -
Payment of principal under finance leases (44) (22) (43)
-------- -------- ---------
Financing 581 (41) (454)
-------- --------- ---------
(Decrease)/increase in cash (534) 772 2,052
===== ===== =====
BRAEMAR SEASCOPE GROUP plc
NOTES TO THE ACCOUNTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2002
1 Accounting policies
There have been no changes to the accounting policies set out in the 2002 Annual
Report and Accounts.
2 Financial Information
The financial information for the half-year ended 31 August 2002 is unaudited.
The financial information for the 14 months ended 28 February 2002 and half year
ended 31 August 2002 does not constitute full accounts and has been extracted
from the Company's accounts for the year/half year on which the auditors gave
unqualified reports. The accounts for the 14 months ended 28 February 2002 have
been delivered to the Registrar of Companies.
3. Exceptional Item
In the 6 months to 31 August 2002 there was exceptional income relating to the
successful outcome of litigation.
4. Dividends
The interim dividend of 5.00p per ordinary share (2001: 5.00p) will be paid on
20 December 2002 to shareholders on the register at the close of business on 6
December 2002.
5. Earnings per share
2002 2001 2002
6 months 6 months 14 months
to 31 Aug to 30 June to 28 Feb
#'000 #'000 #'000
Profit/(loss) after taxation 1,069 (158) (3,755)
Weighted av. no. of shares - basic 17,120,436 11,082,866 13,680,695
Basic EPS 6.24p (1.43)p (27.45p)
Goodwill amortisation 517 310 3,403
Exceptional (income)/ costs (250) 1,375 3,310
Related tax charge/(relief) 75 (412) (847)
--------- -------- --------
Adjusted PAT 1,411 1,115 2,111
Adjusted EPS excluding goodwill amort -isation and 8.24p 10.06p 15.43p
exceptional items
Fully diluted av. no. of shares 17,120,436 11,457,494 13,680,695
Diluted EPS 6.24p (1.43)p (27.45)p
6. Taxation
The taxation charge is based on the estimated effective tax rate
applicable for the full year.
BRAEMAR SEASCOPE GROUP plc
NOTES TO THE ACCOUNTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2002
7. Reconciliation of Operating Profit to Net Cash Inflow from Operating
Activities
2002 2001 2002
31 Aug 30 June 28 Feb
#'000 #'000 #'000
Operating profit/(loss) after exceptional items 2,292 216 (3,002)
Depreciation charge 186 204 573
Goodwill amortisation and impairment 517 310 3,403
Decrease/(increase) in debtors 850 574 1,275
(Decrease)/Increase in creditors (3,071) 204 1,612
Exceptional write off of fixed assets - - 565
Profit on sale of investments - - (156)
(Decrease)/increase in provisions (285) - 1,085
------- ------- --------
489 1,508 5,355
===== ===== =====
The movement in creditors includes a reduction in short terms funds held on
behalf of clients of #1.6m (30 June 2001 reduction #0.2m; 28 February 2002
increase #1.3m). Net cash inflow from operating activities eliminating this
movement during the respective periods is #2.1m, #1.7m and #4.1m.
8. Reconciliation of Net Cash Flow to Movement in Net Debt
2002 2001 2002
31 Aug 30 June 28 Feb
#'000 #'000 #'000
(Decrease)/increase in cash (534) 772 2,052
Decrease in finance leases and bank loan 44 972 993
------- -------- --------
Change in net debt resulting from cash flows (490) 1,744 3,045
Non cash items
New finance leases - (31) (51)
Disposal of finance leases - 37 55
------- ------- --------
Movement in net debt (490) 1,750 3,049
Net funds at beginning of period (3,060) 91 91
New bank loan (1,000) (1,800) (2,450)
Issue of convertible unsecured loan stock - (3,000) (3,000)
Issue of loan notes in respect of deferred consideration - (750) (750)
Repayment of loan notes 375 - -
------ --------- ---------
Net (debt)/funds at end of period (4,175) (3,709) (3,060)
===== ===== =======
BRAEMAR SEASCOPE GROUP plc
NOTES TO THE ACCOUNTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2002
9 Reconciliation of movement in shareholders' funds
2002 2001 2002
31 Aug 30 June 28 Feb
#'000 #'000 #'000
Retained profit/(loss) 213 (836) (5,480)
Issue of share capital at market value - 12,418 1,037
Other reserves arising on acquisition - - 18,302
Costs debited to share premium account - (307) (457)
-------- -------- --------
Net increase in shareholders' funds 213 11,275 13,402
Opening shareholders' funds 18,081 4,679 4,679
-------- -------- --------
Closing shareholders' funds 18,294 15,954 18,081
10 Profit and loss account
The negative cumulative profit and loss account balance is the result of a
goodwill write-off, in the amount of #5,599,794, which took place in the
financial year to 31 December 1998 upon the Company's adoption of FRS10.
Independent review report to Braemar Seascope Group plc
Introduction
We have been instructed by the company to review the financial information which
comprises a consolidated profit and loss account, consolidated balance sheet,
consolidated cash flow statement and related notes. 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 directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which 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.
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 accounting policies and presentation
have been consistently applied unless otherwise disclosed. 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
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not express
an audit opinion on the financial information.
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 2002.
PricewaterhouseCoopers
Chartered Accountants
West London
25 November 2002
Notes:
a) The maintenance and integrity of the Braemar Seascope Group plc website
is the responsibility of the directors; the work carried out by the auditors
does not involve consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred to the interim
report since it was initially presented on the website.
b) Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other
jurisdictions.
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