TIDMBMS
RNS Number : 2645Y
Braemar Shipping Services PLC
16 May 2016
BRAEMAR SHIPPING SERVICES PLC
("Braemar", the "Company" or the "Group")
16 May 2016
Preliminary results for the year ended 29 February 2016
Good Strategic Progress Continues
Braemar Shipping Services plc (LSE: BMS), a leading
international provider of broking, consultancy, technical and other
services to the shipping, marine, energy, offshore and insurance
industries, today announces full year results for the year ended 29
February 2016.
FINANCIAL HIGHLIGHTS
-- Revenue from underlying operations up over 9% to GBP159.1
million (2014/15: GBP145.6 million(1) )
-- 20% increase in underlying operating profit(2) to GBP13.8
million (2014/15: GBP11.5 million(1) )
-- Increase of 7.5% in underlying basic EPS(2) to 34.70p (2014/15: 32.28p)
-- Strong free cash flow of GBP13.5m (2014/15: GBP7.3m)
-- Net cash of GBP9.2m at 29 February 2016 (At 28 February 2015: GBP7.2m)
-- Proposed full year dividend maintained at 26p per share;
dividend cover increased to 1.3x (2014/15: 1.2x)
(1) Includes 7 months contribution from ACM Shipping Group PLC
("ACM")
(2) Defined as arising from continuing operations before
non-recurring and acquisition related costs
OPERATIONAL HIGHLIGHTS
-- The Group's diversification strategy ensured a resilient
performance despite some challenging markets.
-- Shipbroking division performed well and was significantly
ahead of the same period last year, driven by the strength of the
tanker markets.
-- Total Shipbroking forward order book remains strong at
approximately US$49 million, of which approximately US$26 million
relates to 2016/17.
-- Technical division performed in line with expectations,
despite pressure from external macro-economic factors.
-- Logistics division well set for future growth due to new
opportunities in USA and Europe, despite having had a challenging
year.
-- New financing arrangements of up to GBP30m with HSBC
established to provide flexibility for future M&A activity
following our delivery of enhanced earnings through our successful
merger to form Braemar ACM Shipbroking.
James Kidwell, CEO of Braemar, commenting on the results and
outlook said:
"Braemar had a good year and achieved a strong, resilient
performance despite some challenging shipping and energy markets.
Our full year results showed a significant improvement on the prior
year, demonstrating the success of our strategy to diversify and
grow the Group."
"The Shipbroking business performed strongly as our diversity of
services increased our competitive edge, enabling us to capitalise
on a strong tanker market."
"Our Technical division continued to respond positively to
conditions in the energy sectors. While we do not expect to see a
short term recovery in oil and gas exploration, early and rapid
management action to address these challenges mean that the
division is appropriately structured for the current phase of the
market cycle and well positioned for the long term."
"The Logistics division had a tough year, but is well set to
deliver future growth having won some important new business."
David Moorhouse, Chairman of Braemar, commenting on the results
and outlook said:
"We are pleased to have delivered on our objectives for the
year, taking the opportunity to grow the business in both scale and
strength during a period when activity in some of our core markets
was reduced. We anticipate that our markets will continue to
experience volatility and uncertainty, but that the balance of our
portfolio creates greater stability which will enable us to
continue to build the business. Our expectation for 2016/17 is for
a broadly similar activity level overall, with the added potential
for both organic and acquisitive growth."
For further information, contact:
Braemar Shipping Services
James Kidwell, Chief Executive Tel +44 (0) 20 3142
4100
Louise Evans, Finance Director Tel +44 (0) 20 3142
4100
Stockdale Securities
Robert Finlay / Antonio Bossi Tel +44 (0) 20 7601
/ Henry Willcocks 6100
Buchanan
Charles Ryland / Victoria Watkins Tel +44 (0) 20 7466
/ Stephanie Watson 5000
Notes to Editors:
About Braemar Shipping Services plc
Braemar Shipping Services plc is a leading international
provider of knowledge and skill-based services to the shipping,
marine, energy, offshore and insurance industries. Founded in 1972,
Braemar employs nearly 1,000 people in more than 70 locations
worldwide across its Shipbroking, Technical and Logistics
divisions.
Braemar joined the Official List of the London Stock Exchange in
November 1997 and trades under the symbol BMS.
For more information, including our investor presentation, visit
www.braemar.com
Preliminary Announcement - Year Ended 29 February 2016
Chairman's statement
Braemar operates across the shipping, marine, energy, offshore
and insurance sectors. We play a critical role in providing skills
and knowledge in markets dominated by uncertain macro-economic
factors. We face challenges arising from a lower level of oil and
gas exploration, changes in global trade patterns and oversupplied
shipping markets. Our diversified portfolio of businesses and
active management strategy has enabled us to deliver a solid
performance in the face of tough markets.
Results for the year
Revenue for the year increased by 9% to GBP159.1 million (2015:
GBP145.6 million) and underlying operating profit from continuing
operations by 19% to GBP13.8 million (2015: GBP11.5 million).
Underlying earnings per share were 34.7 pence compared with 32.3
pence last year and fulfils our expectation of enhancement in the
first full year following the merger with ACM.
The Shipbroking division performed strongly during the year. Our
breadth of services ensured that we were able to capitalise on the
rise in activity in the tanker markets driven by increased oil
production and tonne miles. The offshore and dry bulk shipping
markets were weak and are expected to remain so for the foreseeable
future. However we have already taken action to ensure we are
appropriately structured for these conditions. Our total forward
order book remains strong and is currently US$49 million, of which
approximately US$26 million relates to 2016/17.
The businesses within our Technical division overall performed
as expected. As previously reported, the continuing impact of low
oil prices affected our Offshore businesses. However this was
offset by a strong performance in our Engineering business, which
is a market leader in the provision of LNG engineering
services.
Our Logistics division reported a lower level of profitability,
but invested to expand the business in the UK and USA and won new
work which we expect will generate positive returns in the
future.
Board and management
I was delighted to succeed Sir Graham Hearne as Chairman of the
Group at the AGM in June 2015. We also welcomed Louise Evans to the
Board, succeeding Martin Beer as Group Finance Director in June
2015.
Dividend
The Directors are recommending, for approval at the Annual
General Meeting on 30 June 2016, an unchanged final dividend of 17
pence per share.
This dividend will be paid on 29 July 2016 to those on the
register at close of business on 1 July 2016. Together with the 9
pence interim dividend, the Company's dividend for the year of 26
pence (2015: 26 pence) will be covered 1.3 times (2015: 1.2 times)
by earnings from underlying operations.
Colleagues
Braemar is a people business and it is the hard work, commitment
and enthusiasm of our staff that continue to deliver our business
performance. As always, the Board would like to recognise and thank
everyone in the Group for their untiring efforts to establish and
maintain Braemar as a valued provider of knowledge based services
to the shipping, marine, energy, offshore and insurance markets
across the globe.
Outlook
Our diversified portfolio of businesses has again put us in a
strong position to handle the volatility of the shipping, marine,
energy, offshore and insurance markets during the years ahead. We
anticipate that our markets will continue to experience volatility
and uncertainty, but that the balance of our portfolio creates
greater stability which will enable us to continue to build the
business.
Much has been achieved during recent years and I am encouraged
by our continuing good progress. While there are likely to be
market swings which affect our individual businesses, overall we
expect the Group to achieve a broadly similar level of activity in
the coming year. Over the longer term, we remain confident for the
prospects of our diversified Group and will look to continue to
grow our businesses both organically and by acquisition.
David Moorhouse CBE, FNI
Chairman
13 May 2016
Chief Executive's Statement
Trading performance
Braemar is a diversified group operating in the shipping,
marine, energy, offshore and insurance markets. After a year of
significant change in 2014/15, I am pleased to report this year's
results which demonstrate the success of our on-going strategy to
diversify and grow the business. The results show we made
encouraging progress with revenue increasing by GBP13.5 million to
GBP159.1 million and underlying operating profit increasing by
GBP2.3 million to GBP13.8 million.
Revenue in our Shipbroking division increased by GBP17.1 million
to GBP70.7 million and underlying operating profit by GBP4.1
million to GBP9.7 million. This growth was the result of the
success of our merger with ACM last year where we created a
stronger and larger business. Individual shipping markets have
performed with highly differential results and we have benefited
from the strong tanker markets where we have a larger presence.
Volatility in these sectors has enhanced the demand for our broking
services as clients seek to protect their market exposure. The Dry
Bulk and Offshore markets were universally weak but we have ensured
that all areas are appropriately structured for these market
conditions.
The Technical division met our expectations with revenue
increasing significantly by GBP4.6 million to GBP54.3 million, but
underlying operating profit fell by GBP1.1 million to GBP5.2
million. The division includes a mix of businesses facing different
market dynamics, and while certain business units have suffered
from the falling oil price and slowdown in Asia, others have seen
increased project activity.
Revenue in the Logistics division fell by GBP8.2 million to
GBP34.1 million reflecting a lower level of freight forwarding
business. Underlying operating profit also fell by GBP0.7 million
in the year to GBP1.6 million. This was largely due to the set-up
costs of our new office in Houston and the lead time to the start
of new contracts. The profitability of the freight forwarding and
bespoke projects departments was also affected by delays to
specific infrastructure projects in the UK. Notwithstanding these
factors, the division has laid the foundations for future growth
and the early signs of recovery are underway.
Strategic developments
Our objective remains to build the Braemar Group as the most
valued provider of knowledge and skill-based services to the
shipping, marine, energy, offshore and insurance markets on a
global basis. As we have built our three divisions in recent years
we have created a global presence that provides us with a strong
platform to add to our teams and existing businesses to achieve
this.
Our Executive Committee meets regularly to explore opportunities
to grow the Braemar Group and identify ways to enhance our three
divisions. We continue to seek opportunities to expand either by
acquisition or by developing our business organically. To this end
we have recently concluded a structured refinancing arrangement
with HSBC bank that will make up to GBP30 million available for
future business development.
We invested in information technology and infrastructure across
our offices during the year in order to better support the Group.
We continued to roll out a common accounting system across all
divisions and, once completed, our global Group will operate across
a common accounting platform. This will enable an improved ability
to share information across the Group and make it easier to bolt on
or establish new enterprises.
We increased the resource for developing and training our staff
to ensure there is career development and effective succession in
place in all areas of the Group.
At the end of 2015, we relocated our two Technical London
offices into a single location and fitted out the office to be
consistent with our corporate brand. We have four hub offices in
London, Singapore, Houston and Melbourne from which we will
continue to build the Braemar Group.
I am very pleased with the progress the Group made during the
year and believe that we can continue to develop the Group further.
I am looking forward to working with the staff and leadership team
to move into the next phase of Braemar's development.
James Kidwell
Chief Executive
13 May 2016
Review of Operations
Shipbroking Division - Braemar ACM Shipbroking
Braemar ACM is one of the largest shipbroking companies in the
world. With brokers located in the key shipping geographies
worldwide, covering voyage and contract chartering, sale and
purchase, long term projects and market research across all the
major commercial shipping sectors, Braemar ACM can deliver a
comprehensive shipbroking service in any location and at any
time.
The Shipbroking division reported strong growth with revenue up
32% on the prior year at GBP70.7 million and underlying profits up
73% at GBP9.7 million. This reflects the success of our July 2014
merger to form Braemar ACM Shipbroking.
Deep Sea Tankers
The Deep Sea crude oil and refined product desks operate
predominantly out of London and Singapore with teams in Mumbai,
Dubai, Connecticut and Houston. The teams delivered a strong
performance in 2015/16 driven by increased oil production which
stimulated demand for tankers and served to increase freight rates
to levels not experienced since 2008.
The fall in oil prices continues to support global demand for
oil. Crude oil trade surged during 2015 as refineries increased
activity to meet demand for transport fuels and petrochemical
feedstock. This increased consumption of oil and the demand for
seaborne crude particularly stimulated the VLCC market. The global
rise in supply of oil led to increased competition for tonnage
which was further enhanced as Far Eastern countries diversified
their crude intake from the Middle East to include the Atlantic
Basin producers, thus increasing tonne miles and keeping freight
rates strong. The rise in supply also allowed contangos to develop
which created an incentive for oil traders to store oil, increasing
the levels of land-based storage and leading to some discharge
delays and a reduction in available tonnage.
Despite China's economic slowdown, it continued to fill its
strategic petroleum reserves. The market also benefitted from
relatively low growth in the global tanker fleet with a small
number of new ships coming into the market. However ship owners
also chose to defer demolition of other vessels to capitalise on
the strong freight rates.
The strong spot market had a positive effect on the long-term
period charter market and the freight futures market and our
experienced teams were able to help clients in managing their
exposure to volatile freight markets.
The fall in oil prices also boosted clean product demand
globally, particularly in developing countries that lacked the
refining infrastructure to meet their own product needs.
Importantly, having started 2014 significantly underutilised, the
world's refineries were able to meet this new demand. Rising demand
was supported by rising average voyage duration.
For 2016/17 the market looks to remain uncertain. Low crude oil
prices and longer voyage distances are expected to continue which
may drive further growth in demand, but this could be offset by the
effect of the delivery of new ships and an expected low level of
demolition. With the lifting of economic sanctions against Iran,
more Iranian crude oil volumes are expected but the effect on the
market is unclear and may be offset by the utilisation of
Iranian-owned crude tankers in the international market.
Specialised Tankers
Specialised Tankers covers the transportation of LNG, LPG,
petrochemical gases, chemicals and smaller parcels of products. In
2015/16 each of the teams performed well and delivered growth
performances.
The LNG and LPG markets have experienced overall fleet growth
during recent years, with investment in VLGCs leading expansion.
This growth in fleet size has generated an oversupply of freight
against a lack of world wide demand which has resulted in low rates
in the spot market and a diminishing need for time charters.
Offshore
Our offshore desk operates out of London, Aberdeen, Singapore
and Houston. 2015/16 was a tough year with exploration activity
significantly curtailed as major oil companies sought cost
reductions. Reduced exploration activity led to decreased demand
for vessels while supply increased as time-charter contracts came
to an end resulting in a reduction in spot rates. It is likely that
these market conditions will continue until we see a period of
higher and more stable oil prices stimulating new exploration
activity. Against this challenging backdrop, our Offshore team
performed well to deliver a profitable performance.
Dry Bulk
The Dry Bulk Desk operates from offices in Australia, London,
Singapore, India and China. Despite increased transaction volumes,
2015/16 was one of the poorest Dry Cargo freight markets on record
due to the over supply of tonnage combined with weaker commodity
demand. This was largely driven by the slowdown in the growth rate
in China where iron ore and coal demand remains a significant
influence on the Capesize market. Cape rates reached lows not
experienced since the mid 1980's.
Going into 2016/17, the projected volume of new ships coming
into the market is expected to put further pressure on the current
imbalance between oversupply of tonnage and dry bulk demand. The
full unwind of excess supply is likely to take some time and an
increase in layup and demolition for the older vessels will be
needed to correct the imbalance. In recent weeks freight rates have
recovered somewhat, as measured by the increase in the Baltic Dry
Index from its historic low in February 2016, and we are seeing
increasing interest in investment in the sector.
Nevertheless, market weakness presents opportunities to build
our business and we are selectively hiring experienced brokers to
build our global reach in the Dry Bulk sector.
Sale and Purchase
Our sale and purchase team operates out of London, Singapore,
Beijing and Shanghai. The team achieved a strong performance with
second hand activity in the Dry Cargo market particularly strong.
This was predominantly driven by the oversupply of tonnage and
pressure on ship owners to sell. However, the opposite was true in
the Tanker market as higher charter rates limited owners' desire to
sell vessels.
The shipping markets are subject to regulation to standardise
best practice, preserve the marine environment and reduce global
warming gas emissions. We anticipate that the increased regulation
will lead to more investment in fleet renewal and an acceleration
of demolition of certain ships which will be replaced with new
designs. However the timing of this activity is currently
uncertain.
Technical Division
Braemar's Technical division provides energy loss adjusting,
surveying, marine engineering and consultancy services to the
shipping, marine, energy, offshore and insurance markets.
The division reported revenue up 9% on the prior year at GBP54.3
million, mainly as a result of strong growth in Braemar
Engineering. Operating profit at GBP5.2 million was lower
reflecting margin pressure and lower activity in the Offshore
market.
Braemar Offshore
The fall in oil price resulted in markedly lower exploration and
construction activities in the offshore energy sector as oil
companies seek to reduce their own costs. A number of forecast
large projects have either been shelved or delayed and many
existing projects have been scaled down. Despite the challenging
market environment, Braemar Offshore performed relatively well due
to a pro-active approach to retain existing business and by
expanding its service offering. The highly skilled and versatile
staff employed across the eight offices in the Far East region have
been key to this.
Braemar Engineering
Braemar Engineering continued to benefit from its market-leading
position in the LNG sector and reported a strong result in 2015/16
based on both marine and shore--based LNG consulting for long term
investment programmes. The team in the UK progressed with a major
three-year project for the design, site supervision and crew
training for six LNG ("liquefied natural gas") carrier
newbuildings. The project has now delivered five of the six vessels
with the final vessel due for completion in mid-2016. The office in
Houston has also seen solid growth from its involvement in a
significant project aimed at supplying LNG to vessels for use as
bunker fuel. At the end of 2015, we announced our exclusive
involvement in the development of a new cost-effective technology
for the containment of LNG.
Braemar Adjusting
Braemar Adjusting was also affected by reduced activity in the
oil and gas sector. Output from the four US shale basins declined
with construction projects and major field development being
postponed or experiencing significant regulatory delay. The active
worldwide drilling fleet also reduced significantly during the last
year, impacting all oil & gas service industries. However, over
the last few years management took several strategic decisions
which have helped build and shelter the business. These were to
establish a strong presence in the Middle East, expand North
American operations and to diversify the business to include
refining, petrochemical, power and mining as well as upstream oil
and gas. The business continues to recruit and develop staff and
focus on growing its market share through the current market cycle
to position the business for the future.
Braemar incorporating the Salvage Association
Braemar incorporating the Salvage Association performed well in
the year against a backdrop of fewer casualty claims. Although the
number of surveys undertaken was lower than the previous year an
increase in the number of consultancy assignments, project cargo
surveys and complex Hull & Machinery cases contributed to a
higher level of revenue. This increase reflects our desire to
expand the business into new areas of Marine Consultancy. The
business has a wide network of offices and the performance across
the different locations varied with an improvement in the Middle
East and Americas offset by lower level activity in the South East
Asian region where trading conditions are challenging. We also
increased our workforce with both traditional and new skillsets
which underlines our commitment to growth, supporting our global
client base and maintaining the technical standards of our
staff.
Braemar Howells
Despite the challenges faced in most marine and offshore oil
sectors, Braemar Howells operated at a similar activity level to
the prior year and achieved a higher operating profit due to cost
savings flowing from a restructuring at the end of the previous
financial year. The results benefited from a number of projects
including a project to handle bitumen and the removal of the wreck
of a vessel off the Pembrokeshire Coast. The business prides itself
on the core skill of providing a 24/7 global incident response
service, applying the Company's specialist knowledge and expertise
as required. The International arm of the business currently
operates in West and Central Africa, providing environmental
consultancy and the hire of offshore drilling oil spill support
packages.
Logistics Division - Cory Brothers
Cory Brothers Shipping Agency provides ship agency, freight
forwarding and logistics services within the UK, Singapore and the
US. Cory has extensive industry experience and maintains a
worldwide reputation for customer care and insistence on the
highest standards. An in-depth knowledge of client requirements
across the division ensures the delivery of a first-class
service.
Cory Brothers had a challenging year reflecting the tough Ship
Agency and Logistics markets. Our strategy has been to focus on
higher value work together with geographic expansion into European
and US markets. We aim to provide clients with exceptional customer
service while targeting regional and industry-specific growth
opportunities.
Port Agency
The Ship agency business services UK ports, the port of
Singapore, and has expanded into North America serviced from a new
office in Houston. The agency business also has joint arrangements
with many world wide agency partners most notably in Brazil,
Amsterdam and Gibraltar. Our Global Hub business continues to grow
through our blue chip customer base. The underlying UK port agency
market has been difficult, but our market share has increased and
ship numbers have been maintained. Markets continue to be
challenging but there are signs of improvement in 2016. We are
seeking to build our UK market share in the coming year as well as
continuing to grow the Global Hub business and our presence in
North America.
Forwarding and Logistics
Cory Logistics revenue fell in 2015-16 due to delays to major
infrastructure project cargoes and the impact of lower activity in
the Oil and Gas markets. We were able to sustain our position in
key business areas through growth in new services as well as the
existing contract business. This was achieved despite a market
backdrop of volatile freight rates. The introduction of new
Logistics teams in Houston, Atlanta and Singapore have provided new
opportunities of growth.
Financial review
Summary Income Statement
Restated
2016 2015 2014
GBP'000 GBP'000 GBP'000
============================== ========= -------- ========
Revenue 159,125 145,601 125,531
------------------------------ --------- -------- --------
Cost of sales (33,365) (37,700) (31,758)
------------------------------ --------- -------- --------
Operating costs (109,329) (93,749) (82,252)
============================== ========= ======== ========
Divisional operating profit
- before central costs 16,431 14,152 11,521
------------------------------ --------- -------- --------
Unallocated costs (2,673) (2,621) (2,238)
------------------------------ --------- -------- --------
Operating profit before
exceptional and acquisition
related items 13,758 11,531 9,283
------------------------------ --------- -------- --------
Non-recurring and acquisition
related items (3,445) (5,948) (432)
============================== ========= ======== ========
Operating profit 10,313 5,583 8,851
Divisional highlights
Restated
2016 2015 2014
GBP'000 GBP'000 GBP'000
============================== ========= ======== ========
Shipbroking
============================== ========= ======== ========
Revenue 70,699 53,589 40,866
------------------------------ --------- -------- --------
Divisional operating profit 9,653 5,588 2,635
------------------------------ --------- -------- --------
Operating profit margin 13.7% 10.4% 6.4%
------------------------------ --------- -------- --------
Employee numbers(1) 334 327 286(1)
------------------------------ --------- -------- --------
Technical
============================== ========= ======== ========
Revenue 54,283 49,646 45,748
------------------------------ --------- -------- --------
Divisional operating profit 5,201 6,289 6,905
------------------------------ --------- -------- --------
Operating profit margin 9.6% 12.7% 15.1%
------------------------------ --------- -------- --------
Employee numbers(1) 444 410 385
============================== ========= ======== ========
Logistics
============================== ========= ======== ========
Revenue 34,143 42,366 38,917
------------------------------ --------- -------- --------
Divisional operating profit 1,577 2,275 1,981
------------------------------ --------- -------- --------
Operating profit margin 4.6% 5.4% 5.1%
------------------------------ --------- -------- --------
Employee numbers(1) 189 192 223
(1) Average annual equivalent number of employees.
Overview
Group revenue grew by 9.3% to GBP159.1 million, although the
split of revenue across the three divisions has changed compared to
last year. Revenue in Shipbroking has increased, primarily due to a
full twelve months of results for the enlarged Shipbroking
division. The Technical division reported higher revenue than last
year, but revenue from Logistics decreased due to the lower level
of revenue from freight forwarding. Operating profit margin has
improved significantly in the Shipbroking division due to the
improved business efficiency and economies of scale. The margin in
the Technical division has reduced due to a changing mix of
business within the division. The operating profit margin of the
Logistics division has also reduced partly due to costs associated
with establishing the new offices in the US and partly due to
extended project lead times.
Non-recurring and acquisition-related items
Non-recurring costs largely relate to the completion of the
integration of the Shipbroking businesses.
Intrinsically linked to the acquisition of ACM was a share plan
that was put in place to retain key staff. The cost of this share
plan is categorised as acquisition-related expenses and the charge
in the year was GBP1.6 million (2014/15: GBP0.8 million). This
charge will be approximately GBP1.6 million in 2016/17 and after
that will reduce as the share awards start to vest. Finally, a
charge of GBP1.1 million (2014/15: GBP1.8 million) has been
incurred in relation to the amortisation of intangible assets
arising from the acquisition of ACM as well as acquisitions from
previous years.
Direct and operating costs
Cost of sales comprises freight and haulage costs incurred in
the Logistics division and payments to sub-contractors, materials,
and other costs directly associated with the revenue to which they
relate in other divisions. The level of cost of sales has reduced
in the year in the forwarding and liner business within the
Logistics division due to a lower level of activity, but this has
been partly offset by a higher level of direct costs in the
Technical businesses. The level of operating costs in the year is
higher than last year and partially due to the full year impact of
costs in the combined Shipbroking business compared to only seven
months of costs in the previous year. The level of costs has also
increased in the Technical division following successful
recruitment and retention of staff in Braemar SA and Braemar
Engineering.
Central costs increased slightly during the year as a result of
the increased size of the Group as well as non-recurring costs
incurred in the first half associated with Group Board changes.
Finance costs
The net finance cost for the year of GBP0.4 million (2015:
GBP0.3 million cost) reflects the cost of working capital and the
term facilities required to complete the ACM merger.
Balance sheet
Net assets at 29 February 2016 were GBP107.3 million (2015:
GBP104.3 million). The balance sheet is comparable to last year and
there have been no significant capital transactions during the
year. Net working capital is also at a similar level to last year
but against an increase in business volumes, demonstrating our
drive to improve cash conversion.
Borrowings and cash
At the balance sheet date, the Group has bank facilities of
GBP15 million comprising a revolving facility of GBP10 million and
an amortising term loan of GBP5 million that is repayable at
GBP450,000 each quarter. At the end of the year the Group had net
cash of GBP9.2 million (2015: GBP7.2 million) made up of GBP11.5
million of cash and GBP2.3 million of drawings of the facility.
The normal pattern of cash for the Group is for the second half
of the year to show higher cash generation than the first half when
the majority of staff bonuses are paid and the final dividend is
paid to shareholders.
During April 2016, the Group entered a new banking relationship
with HSBC. This provided total facilities of GBP30 million, made up
of a revolving credit facility of GBP15 million and an accordion
facility of GBP15 million. HSBC also provides access to global cash
management opportunities, notably in our regional hubs of UK,
Singapore and Australia.
Retirement benefits
The Group has a defined benefit pension scheme which is closed
to new members. This scheme has a net liability of GBP1.2 million
(2015: GBP1.5 million) which is recorded on the balance sheet at 29
February 2016. The current level of scheme specific funding is a
cash contribution of GBP0.45 million annually.
Foreign exchange
The US dollar exchange rate relative to sterling moved by 10% in
the year from US$1.55/GBP1 at the start of the year to US$1.39/GBP1
at the end of the year. A significant proportion of the Group's
revenue is earned in US dollars and the movement of the exchange
rate has had a positive impact on earnings. However, the Group has
maintained its treasury policy during the year to mitigate the full
impact of the movement in the US dollar and at the end of the year
held US$31 million of forward cover at an average rate of
US$1.477/GBP1.
Taxation
The Group's effective tax rate in relation to continuing
operations in 2015/16 was 23.9% (2015: 26.5%). The rate is higher
than the UK standard rate of corporation tax of 20% largely due to
the effect of disallowed expenses, the effect of tax deducted on
repatriating cash from overseas and higher overseas corporate tax
rates. The Group's profits are spread across a number of
jurisdictions with both higher and lower corporate tax rates.
Earnings per share
Underlying earnings per share have increased 7.5% to 34.70 pence
and enables a dividend cover for the full year of 1.3 times.
Louise Evans FCA
Finance Director
13 May 2016
Consolidated income statement for the year ended 29 February
2016
29 Feb 2016 28 Feb 2015 - Restated
-------------------- --------------------------------------- -----------------------------------------------
Exceptional Exceptional
and acquisition- and acquisition-
Continuing related related
operations Underlying items Total Underlying items Total
-------------------- ---------- ---------------- --------- --------------- ----------------- ---------
Revenue 159,125 - 159,125 145,601 - 145,601
Cost of sales (33,365) - (33,365) (37,700) - (37,700)
-------------------- ---------- ---------------- --------- --------------- ----------------- -----------
Gross profit 125,760 - 125,760 107,901 - 107,901
Operating costs:
Other operating
costs (112,002) - (112,002) (96,370) - (96,370)
Acquisition-related
expenses and
amortisation - (2,668) (2,668) - (3,738) (3,738)
Non-recurring
expenses - (777) (777) - (7,619) (7,619)
Gain on sale
of property,
plant and equipment - - - - 5,409 5,409
-------------------- ---------- ---------------- --------- --------------- ----------------- -----------
(112,002) (3,445) (115,447) (96,370) (5,948) (102,318)
Operating profit 13,758 (3,445) 10,313 11,531 (5,948) 5,583
Share of loss
from joint ventures - - - (22) (140) (162)
Finance income 45 - 45 238 - 238
Finance costs (432) - (432) (531) - (531)
Profit before
taxation 13,371 (3,445) 9,926 11,216 (6,088) 5,128
-------------------- ---------- ---------------- --------- --------------- ----------------- -----------
Taxation (3,198) 372 (2,826) (2,906) 719 (2,187)
-------------------- ---------- ---------------- --------- --------------- ----------------- -----------
Profit for the
year 10,173 (3,073) 7,100 8,310 (5,369) 2,941
-------------------- ---------- ---------------- --------- --------------- ----------------- -----------
Loss for the
year from
discontinued
operations - (290) (290) - (356) (356)
Profit for the
year attributable
to equity
shareholders
of the parent 10,173 (3,363) 6,810 8,310 (5,725) 2,585
-------------------- ---------- ---------------- --------- --------------- ----------------- -----------
Earnings per
ordinary share
-------------------- ---------- ---------------- --------- --------------- ----------------- -----------
Basic 34.70p 23.23p 32.28p 10.04p
Diluted 31.53p 21.10p 29.48p 9.17p
Consolidated statement of comprehensive income
for the year ended 29 February 2016
29 Feb 28 Feb
2016 2015
GBP'000 GBP'000
---------------------------------------------- -------- --------
Profit for the year 6,810 2,585
Other comprehensive income/(expense)
Items that will not be reclassified
to profit or loss:
Actuarial loss on employee benefit schemes
- net of tax (296) (206)
Items that are or may be reclassified
to profit or loss:
Available for sale investments - net
change in fair value - 352
Foreign exchange differences on retranslation
of foreign operations 2,461 1,309
Cash flow hedges - net of tax (937) (78)
Total comprehensive income for the year
attributable to equity shareholders
of the parent 8,038 3,962
---------------------------------------------- -------- --------
Group balance sheet as at 29 February 2016
As at 29 Feb As at 28 Feb
Assets 2016 2015
GBP'000 GBP'000
------------------------------------ ------------ ------------
Non-current assets
Goodwill 76,912 76,254
Other intangible assets 2,684 3,117
Property, plant and equipment 5,104 4,862
Investments 1,537 1,528
Deferred tax assets 2,177 1,548
Other long-term receivables 355 244
------------------------------------- ------------ ------------
88,769 87,553
Current assets
Trade and other receivables 58,135 57,442
Cash and cash equivalents 11,497 16,289
------------------------------------- ------------ ------------
69,632 73,731
------------------------------------ ------------ ------------
Total assets 158,401 161,284
------------------------------------- ------------ ------------
Liabilities
------------------------------------ ------------ ------------
Current liabilities
Derivative financial instruments 1,233 62
Trade and other payables 43,020 42,270
Short-term borrowings 1,800 6,800
Current tax payable 1,640 757
Provisions 729 1,273
------------------------------------- ------------ ------------
48,422 51,162
Non-current liabilities
Long-term borrowings 500 2,300
Deferred tax liabilities 430 825
Provisions 533 1,242
Pension deficit 1,211 1,482
------------------------------------- ------------ ------------
2,674 5,849
------------------------------------ ------------ ------------
Total liabilities 51,096 57,011
------------------------------------- ------------ ------------
Total assets less total liabilities 107,305 104,273
------------------------------------- ------------ ------------
Equity
Share capital 3,011 2,998
Share premium 52,314 51,970
Shares to be issued (3,439) (3,611)
Other reserves 26,474 24,950
Retained earnings 28,945 27,966
------------------------------------- ------------ ------------
Total equity 107,305 104,273
------------------------------------- ------------ ------------
Consolidated cash flow statements for the year ended 29 February
2016
29 Feb 2016 28 Feb 2015
GBP'000 GBP'000
---------------------------------- ----------- -----------
Cash flows from operating
activities
Cash generated from operations 13,459 7,259
Interest received 45 238
Interest paid (432) (531)
Tax paid (2,688) (3,534)
----------------------------------- ----------- -----------
Net cash generated from operating
activities 10,384 3,432
----------------------------------- ----------- -----------
Cash flows from investing
activities
Acquisition of subsidiaries,
net of cash acquired - (10,204)
Disposal of undertakings - (647)
Purchase of property, plant
and equipment and
computer software (2,098) (4,862)
Proceeds from sale of investments - 800
Proceeds from sale of property,
plant and equipment - 9,573
Other long-term assets (111) (2)
----------------------------------- ----------- -----------
Net cash used in investing
activities (2,209) (5,342)
----------------------------------- ----------- -----------
Cash flows from financing
activities
Proceeds from borrowings - 14,839
Repayment of borrowings (6,800) (5,739)
Proceeds from issue of ordinary
shares, excluding acquisitions 357 601
Dividends paid (7,648) (6,201)
Purchase of own shares (428) (228)
----------------------------------- ----------- -----------
Net cash used in financing
activities (14,519) 3,272
----------------------------------- ----------- -----------
(Decrease)/increase in cash
and cash equivalents (6,344) 1,362
Cash and cash equivalents
at beginning of the period 16,289 13,694
Foreign exchange differences 1,552 1,233
----------------------------------- ----------- -----------
Cash and cash equivalents
at end of the period 11,497 16,289
----------------------------------- ----------- -----------
Consolidated statements of changes in total equity for the year
ended 29 February 2016
Shares
to
Share Share be Other Retained Total
capital premium issued reserves earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------- -------- -------- --------- --------- --------
At 1 March 2014 2,167 12,218 (2,934) 23,719 30,116 65,286
------------------------------- -------- -------- -------- --------- --------- --------
Profit for the year - - - - 2,585 2,585
Available for sale investments
- net change in fair value - - - - 352 352
Actuarial loss on employee
benefits schemes - net of
tax - - - - (206) (206)
Foreign exchange differences - - - 1,309 - 1,309
Cash flow hedges net of tax - - - (78) - (78)
------------------------------- -------- -------- -------- --------- --------- --------
Total recognised income in
the year - - - 1,231 2,731 3,962
------------------------------- -------- -------- -------- --------- --------- --------
Dividends paid - - - - (6,201) (6,201)
Issue of shares 831 39,752 (525) - - 40,058
Purchase of own shares - - (228) - - (228)
ESOP shares allocated - - 76 - (76) -
Credit in respect of share
option schemes - - - - 1,331 1,331
Deferred tax on items taken
to equity - - - - 65 65
------------------------------- -------- -------- -------- --------- --------- --------
At 28 February 2015 2,998 51,970 (3,611) 24,950 27,966 104,273
------------------------------- -------- -------- -------- --------- --------- --------
Profit for the year - - - - 6,810 6,810
Actuarial loss on employee
benefits schemes - net of
tax - - - - (296) (296)
Foreign exchange differences - - - 2,461 - 2,461
Cash flow hedges net of tax - - - (937) - (937)
------------------------------- -------- -------- -------- --------- --------- --------
Total recognised income in
the year - - - 1,524 6,514 8,038
------------------------------- -------- -------- -------- --------- --------- --------
Dividends paid - - - - (7,648) (7,648)
Issue of shares 13 344 - - - 357
Purchase of own shares - - (428) - - (428)
ESOP shares allocated - - 600 - (600) -
Credit in respect of share
option schemes - - - - 2,698 2,698
Deferred tax on items taken
to equity - - - - 15 15
------------------------------- -------- -------- -------- --------- --------- --------
At 29 February 2016 3,011 52,314 (3,439) 26,474 28,945 107,305
------------------------------- -------- -------- -------- --------- --------- --------
Note 1 - General Information
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 29 February 2016 or
28 February 2015 but is derived from those accounts. Statutory
accounts for 2015 have been delivered to the registrar of
companies, and those for 2016 will be delivered in due course. The
auditor has reported on those accounts; their reports were (i)
unqualified; (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report; and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
Note 2 - Accounting Policies
Whilst the financial information included in this preliminary
announcement has been prepared in accordance with International
Financial Reporting Standards (IFRSs) adopted for use in the
European Union, this announcement does not itself contain
sufficient information to comply with IFRSs. The Group expects to
distribute full accounts that comply with IFRSs as adopted for use
in the European Union on 1 June 2016.
Note 3 - Segmental Results
Shipbroking Technical Logistics Central Total
2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----------- --------- --------- -------- --------
Segment revenue 70,699 55,612 34,143 - 160,454
Inter-segment revenue - (1,329) - - (1,329)
----------------------------- ----------- --------- --------- -------- --------
Revenue 70,699 54,283 34,143 - 159,125
----------------------------- ----------- --------- --------- -------- --------
Divisional operating profit 9,653 5,201 1,577 (2,673) 13,758
Acquisition-related expenses
and amortisation (2,476) (159) (33) - (2,668)
Non-recurring items (777) - - - (777)
----------------------------- ----------- --------- --------- -------- --------
Operating profit 6,400 5,042 1,544 (2,673) 10,313
----------------------------- ----------- --------- --------- -------- --------
Finance expense - net (387)
Profit before taxation 9,926
----------------------------- ----------- --------- --------- -------- --------
Taxation (2,826)
----------------------------- ----------- --------- --------- -------- --------
Profit for the year from
continuing operations 7,100
----------------------------- ----------- --------- --------- -------- --------
Restated Restated
Shipbroking Technical Logistics Central Total
2015 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----------- ---------- --------- -------- --------
Revenue 53,589 49,646 42,366 - 145,601
----------------------------- ----------- ---------- --------- -------- --------
Divisional operating profit 5,588 6,289 2,275 (2,621) 11,531
Acquisition-related expenses
and amortisation (3,574) (103) (61) - (3,738)
Non-recurring items (6,825) (179) (251) (364) (7,619)
Gain on sale of property,
plant and equipment 5,409 - - - 5,409
----------------------------- ----------- ---------- --------- -------- --------
Operating profit 598 6,007 1,963 (2,985) 5,583
----------------------------- ----------- ---------- --------- -------- --------
Finance expense - net (293)
Joint ventures (162)
----------------------------- ----------- ---------- --------- -------- --------
Profit before taxation 5,128
----------------------------- ----------- ---------- --------- -------- --------
Taxation (2,187)
----------------------------- ----------- ---------- --------- -------- --------
Profit for the year from
continuing operations 2,941
----------------------------- ----------- ---------- --------- -------- --------
Note 4 - Dividend
The Directors are proposing a final dividend in respect of the
financial year ended 29 February 2016 of 17 pence per share taking
the total dividend for the year to 26.0 pence (2015: 26.0 pence).
This will absorb an estimated GBP5.0 million (2015: GBP5.0 million)
of shareholders' funds.
Note 5 - Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year, excluding
760,409 ordinary shares held by the Employee Share Ownership Plans
(2015: 814,367 shares) which are treated as cancelled.
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive ordinary shares. The Group has one class of potential
dilutive ordinary shares being those options granted to employees
where the exercise price is less than the average market price of
the Company's ordinary shares during the year.
2016 2015
Total operations GBP'000 GBP'000
--------------------------------- -------- --------
Profit for the year attributable
to shareholders 6,810 2,585
--------------------------------- -------- --------
pence pence
--------------------------------- -------- --------
Basic earnings per share 23.23 10.04
Effect of dilutive share options (2.13) (0.87)
--------------------------------- -------- --------
Diluted earnings per share 21.10 9.17
--------------------------------- -------- --------
2016 2015
Continuing operations GBP'000 GBP'000
--------------------------------- -------- --------
Underlying profit for the year
attributable to shareholders 10,173 8,310
--------------------------------- -------- --------
pence pence
--------------------------------- -------- --------
Basic earnings per share 34.70 32.28
Effect of dilutive share options (3.17) (2.80)
--------------------------------- -------- --------
Diluted earnings per share 31.53 29.48
--------------------------------- -------- --------
shares shares
------------------------------------ ---------- ----------
Weighted average number of ordinary
shares 29,318,887 25,745,240
Effect of dilutive share options 2,947,075 2,442,308
------------------------------------ ---------- ----------
Diluted weighted average number
of ordinary shares 32,265,962 28,187,548
------------------------------------ ---------- ----------
Note 6 - Reconciliation of operating profit to net cash flow
from operating activities
2016 2015
GBP'000 GBP'000
-------------------------------------------- -------- --------
Profit/(loss) before tax for
the year from continuing operations 9,926 5,128
Loss before tax for the year
from discontinued operations (290) (356)
Adjustments for:
- Depreciation of property, plant
and equipment 1,540 1,474
- Amortisation of computer software 573 408
- Amortisation of other intangible
assets 1,080 1,772
- (Profit)/loss on sale of property,
plant and equipment - (5,618)
- Other exceptional and acquisition-related
items 2,365 9,822
- Finance income (45) (238)
- Finance expense 432 531
- Share of loss of joint ventures - 22
- Share-based payments (excluding
restricted share plan) 1,110 555
- Net foreign exchange gains
and financial instruments (524) (428)
Changes in working capital:
- Trade and other receivables (1,527) (3,426)
- Trade and other payables 750 1,169
Contribution to defined benefit
pension scheme (488) -
Restructuring-related costs (1,632) (3,675)
Provisions 189 119
-------------------------------------------- -------- --------
Cash generated from operations 13,459 7,259
-------------------------------------------- -------- --------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EXLFFQEFZBBD
(END) Dow Jones Newswires
May 16, 2016 02:00 ET (06:00 GMT)
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