TIDMBMS
RNS Number : 0902F
Braemar Shipping Services PLC
25 October 2018
BRAEMAR SHIPPING SERVICES PLC
("Braemar", the "Company" or the "Group")
25 October 2018
Unaudited interim results for the six months ended 31 August
2018
Shipbroking and Financial Divisions Driving Growth
Braemar Shipping Services plc (LSE: BMS), a leading
international provider of broking, financial, consultancy,
technical and other services to the shipping, marine, energy,
offshore and insurance industries, today announces unaudited
half-year results for the six months ended 31 August 2018.
Underlying results* Reported results
--------------------------
H1 2018/19 H1 2017/18** Change H1 2018/19 H1 2017/18**
GBPm GBPm % GBPm GBPm
------------------------- ----------- ------------- ------- ----------- -------------
Revenue 71.6 64.5 11% 71.6 64.5
Operating profit/(loss) 2.8 2.5 12% (3.3) 0.7
Profit/(loss) before
tax 2.5 2.3 11% (3.8) 0.5
Earnings/(loss)
per share 6.53p 5.96p 10% (18.71)p 0.18p
Dividend per share 5.0p 5.0p - 5.0p 5.0p
------------------------- ----------- ------------- ------- ----------- -------------
OPERATIONAL KEY POINTS
-- Shipbroking division achieved a strong performance and
increased its forward order book by 5% to $46.0 million from the
year end position. Compared to the first half last year, the
forward order book has grown by 9.5%. Subsequent to the half year,
a dry bulk fleet was successfully delivered.
-- New Financial division performed ahead of management's
expectations, with a good pipeline of sizeable advisory and
refinancing mandates which we expect will bear fruit in the coming
year.
-- Technical division continued to face tough trading,
especially in the Offshore market where recovery was slower than
expected.
-- Logistics division was slightly behind the prior year, after weaker summer activity.
-- Disposal of loss making Braemar Response was successfully
completed on 9 October 2018, after the reporting period, for total
cash consideration of GBP0.8 million.
FINANCIAL KEY POINTS
-- Improving performances in Shipbroking and Financial divisions
continued to drive the Group's underlying trading.
-- Revenue in the first half was GBP71.6 million (interim
2017/18: GBP64.5 million), a rise of 11%.
-- Underlying* operating profit increased by 12% to GBP2.8
million (interim 2017/18: GBP2.5 million), before one-off
acquisition related charges of GBP6.1 million (interim 2017/18:
GBP1.8 million) - the increase relates to the acquisition of
Braemar NAVES in September 2017 and Braemar Atlantic in February
2018.
-- 10% increase in underlying* basic EPS of 6.53p (interim 2017/18: 5.96p).
-- Significant one-off costs incurred in the period predominately due to Board changes.
-- Unchanged interim dividend of 5.0p per share.
* Underlying measures above are before non-recurring specific
items, including acquisition-related charges.
**H1 2017/18 underlying and reported results have been
re-presented to reflect the reclassification of Braemar Response
following the decision to divest the business.
Reconciliation of underlying profit before tax to reported
(loss)/profit before tax:
H1 2018/19 H1 2017/18
Underlying profit before GBP2.5m GBP2.3m
tax
Acquisition related charges GBP(6.1)m GBP(1.8)m
Acquisition related finance GBP(0.2)m -
costs
----------- -----------
Reported (loss)/profit GBP(3.8)m GBP0.5m
before tax
----------- -----------
Acquisition related charges includes costs directly associated
with the purchase of Braemar NAVES Corporate Finance GmbH and
Braemar Atlantic Brokers Securities Holdings Limited as well as the
run off of the equity-based retention programme established during
the acquisition of ACM Shipping Group plc.
David Moorhouse CBE, Chairman of Braemar, commenting on the
results and the outlook said:
"An improving performance in our Shipbroking and Financial
divisions continued to drive the Group's results. We expect a
stronger second half performance compared with the first half of
our financial year supported by an increased forward order book in
Shipbroking and a strong pipeline in our Financial division."
"The changes to the composition of the Group over the last year
make it better equipped to deliver higher value-added services in
cyclical and volatile markets."
"We expect to meet market expectations for the current financial
year, dependent on the timing of certain large shipping finance
projects concluding during the period, as currently planned."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information, contact:
Braemar Shipping Services
James Kidwell, Chief Executive Tel +44 (0) 20 3142 4100
James Hayward, Interim Finance Director Tel +44 (0) 20 3142 4100
Stockdale Securities
Robert Finlay / Antonio Bossi / Henry Tel +44 (0) 20 7601 6100
Willcocks
Buchanan
Charles Ryland / Stephanie Watson Tel +44 (0) 20 7466 5000
/ Matilda Abraham
Notes to Editors:
Alternative Profit Measures ("APMs")
Braemar uses APMs as key financial indicators to assess the
underlying performance of the Group. Management considers the APMs
used by the Group to better reflect business performance and
provide useful information to investors and other interested
parties. Our APMs include underlying operating profit and
underlying earnings per share. Explanations of these terms and
their calculation are shown in summary above and in detail in our
Operating and Financial Review.
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 approximately 750 people in more than 60 locations
worldwide across its Shipbroking, Technical, Logistics and
Financial 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
INTERIM ANNOUNCEMENT - SIX MONTHSED 31 AUGUST 2018
CHAIRMAN'S STATEMENT
Results
An improving performance in our Shipbroking and Financial
divisions continues to drive the Group's improving results,
partially offset by the Technical division where recovery was slow.
Revenue for the period increased 11% to GBP71.6 million compared
with GBP64.5 million in the first half of 2017/18. Underlying
operating profit from continuing operations was up by 12% to GBP2.8
million compared with GBP2.5 million in the first half of 2017/18.
The reported loss before tax was GBP3.8 million compared with a
profit of GBP0.5 million in the first half of 2017/18, which
reflects the recognition of deferred accounting charges following
the Group's acquisitions of Braemar NAVES and Braemar Atlantic
which completed in the prior year. Underlying earnings per share
grew 10% to 6.53 pence compared with 5.96 pence in the first half
of 2017/18 and the reported loss per share was 18.71 pence compared
with earnings of 0.18 pence per share in the first half of
2017/18.
Trading
The Shipbroking division achieved a solid performance during the
first half of 2018/19. Revenue increased by 14% versus the same
period in the prior year, with underlying operating profit also up
14%. Our forward order book has increased by $2.0 million since the
start of the year, and this along with the successful sale of a
fleet in September is expected to underpin our full year
performance.
The Financial division performed ahead of management's
expectations and has an encouraging pipeline of mandates. The
division is increasingly involved in advisory and refinancing
business, with less demand for restructuring services. This gives
rise to enhanced upside potential driven by material success fees,
which is likely to make the division's results fluctuate more than
has generally been the case.
The Technical division reported an underlying operating loss of
GBP0.7 million versus a loss in the comparative period of GBP0.2
million and a full year profit of GBP0.7 million in 2017/18. We
expected a more sustained market recovery, which has yet to be
evident, especially in the Offshore industry. We are working on
ways to improve the financial performance.
The Logistics division delivered a profit for the period
slightly below the equivalent 2017/18 period, reflecting a quieter
market over the summer.
Dividend
The Board has declared an interim dividend of 5.0 pence per
share (Full year 2017/18: 15.0p). The interim dividend will be paid
on Friday 14 December 2018 to shareholders on the register at the
close of business on Friday 2 November 2018. The last date for
Dividend Reinvestment Plan (DRIP) elections will be Friday 23
November 2018.
Board of Directors
As announced on 5 September 2018, Mark Tracey stood down from
the board of directors effective from 26 September 2018. The Board
would like to thank Mark for his contribution to Braemar.
As I announced on 3 October 2018, I intend to stand down on 31
December 2018. The Nominations Committee is leading the process to
appoint a new non-executive Chairman and an announcement will be
made in due course.
Colleagues
The calibre of our people is at the centre of what we do and it
is their hard work and creativity that enables Braemar to build our
brand and reputation to develop our business. The Board would like
to thank our staff for their efforts on behalf of the Group.
Outlook
The changes that the management team has made to the composition
of the Group over the last year make it better equipped to deliver
higher value-added services in cyclical and volatile markets.
We expect to meet market expectations for the current financial
year, dependent on the timing of certain large shipping finance
projects concluding during the period, as currently planned.
David Moorhouse CBE
Chairman
24 October 2018
OPERATING AND FINANCIAL REVIEW
The trading performance in our major business units for the six
months ended 31 August 2018 is detailed below.
SHIPBROKING
H1 2018/19 H1 2017/18 FY 2017/18
--------------------- ---------------- ---------------- ---------------
Revenue GBP34.7 million GBP30.4 million GBP61.8 million
Underlying operating GBP3.9 million GBP3.5 million GBP7.7 million
profit
The Shipbroking division performed well during the first half
with most sectors being more profitable compared with the same
period last year.
The physical broking markets continued to be characterised by
historically low tanker and offshore rates and a healthy
improvement in the dry cargo market. Our total forward order book
grew to $46.0 million from $44.0 million at the start of the year.
Approximately $21.7 million of this is deliverable in the second
half of the year.
We are starting to see the benefits from our strategic broking
recruitment in dry cargo, securities and specialised tankers and
intend to continue recruiting selectively to further enhance the
business.
Tankers
As expected, tanker freight rates remained low during our first
half. Although the number of vessels scrapped increased, the market
remained over-tonnaged which continued to suppress freight rates.
The upcoming 2020 low sulphur fuel regulations for ships means we
are seeing upgrades to refineries and we believe it is likely that
this will translate into new shipping opportunities.
Within the last few weeks, VLCC rates have increased
significantly. The initial catalyst was bad weather, but the fact
that long term rates have risen is indicative of other factors,
such as an increase in OPEC production and the re-imposition of
Iranian sanctions for which replacement barrels will increase tonne
miles.
The LNG tanker market saw a significant recovery in spot freight
rates as new production comes on stream. Demand for shipping is
likely to exceed available tonnage over the next few years,
although the number of speculative orders for newbuilds for beyond
2020 is expected to re-balance the market over time.
The LPG market experienced further deliveries of new tonnage,
which continued to put pressure on freight rates and restrict the
demand for time charters. However our teams performed well, holding
their fixing volumes and earnings.
The chemical tanker market has experienced a slowdown over
recent months with a tonnage surplus on many routes. Arbitrage
windows gave short-lived regional opportunities, but not enough to
sustain increased freight rates. However, we are witnessing
increased activity after a difficult summer, indicating a more
positive outlook and some charterers are already considering longer
term contracts.
Offshore
The market continued to be impacted by vessel overcapacity and
low global oil and gas exploration activity. The higher oil price
is taking time to drive increased spend in exploration and
production although we are seeing more enquiries. If the oil price
remains stable at these levels, then we expect more projects to
commence, which should improve demand.
Dry Cargo
The dry cargo market rose significantly during the last six
months with the Baltic Dry Index ("BDI") moving from 1,192 points
at the end of February 2018 to 1,597 at the end of August 2018, a
rise of 34%. This growth has been predominantly in the Capesize
sector, which is mostly associated with shipments of iron ore to
China. Commodity demand remains strong across the various sectors,
especially in the minor bulks. Chinese domestic iron ore production
has declined significantly, replaced by higher grade ore from
Australia and Brazil which has stimulated demand for Cape
shipping.
New building deliveries across all vessel sizes were lower but
these are forecast to increase in 2019 and 2020 when recent
ordering is delivered.
Sale and Purchase
The team concluded a higher volume of second hand and demolition
vessel transactions at a higher average commission compared to the
same period last year. As expected, most vessel sales were dry bulk
carriers reflecting the upward trend in that market.
Our second half will benefit from the delivery of a fleet of 13
dry bulk vessels which completed in September and October 2018.
Despite weak tanker freight rates, which led to a reduced number of
quality tanker vessels being sold, our team managed to increase
tanker Sale and Purchase activity compared with last year.
The challenges facing the shipyards have meant that the total
number of new build orders placed so far this year have been
significantly lower compared with last year, but despite this, we
have secured multiple VLCC new builds adding to our forward order
book.
Demolition sales for the period were similar to last year.
Securities
Atlantic Brokers Holdings Limited, which was acquired at the end
of the last financial year, was successfully integrated as a
regulated coal desk, Braemar Atlantic Securities. The subsequent
addition of a dry Forward Freight Agreement ("FFA") broking team
further complemented our broking services and the desk now has a
team of 12 brokers across coal and dry FFAs.
The dry FFA derivatives market grew as the physical market
improved. However, the coal derivative market has been relatively
subdued so far this year. We continue to be the leading physical
broker for certain markets.
FINANCIAL
FY 2017/18
H1 2018/19 H1 2017/18 (5 months)
--------------------- --------------- ------------ ---------------
Revenue: GBP4.4 million - GBP3.7 million
Underlying operating GBP1.7 million - GBP1.8 million
profit:
Braemar's newest division, Financial, was created following the
acquisition of NAVES in September 2017. The business provides
maritime related corporate finance advice to international clients
covering finance advisory, M&A, asset brokerage,
interim/pre-insolvency management and financial management
including loan servicing.
The division performed ahead of our expectations, adding
significant value to the Group as a whole. The division shifted the
mix of its business towards more refinancing and financial advisory
work, with less emphasis on its traditional restructuring business.
We are optimistic for the next 12 months as the positioning of the
division in the international markets has been successful and the
advisory work on behalf of large buyers of shipping loan portfolios
offers significant potential for further transaction activity.
The division has completed a record first six months of revenue
and the positioning of the firm increased significantly through the
successful completion of high profile refinancing transactions,
where it worked in conjunction with the Shipbroking and Technical
divisions in order to provide a full-service shipping offering. Our
new London office is integrating well with the wider Group and we
are establishing a presence for the Financial division in
Singapore.
TECHNICAL
H1 2018/19 H1 2017/18 FY 2017/18
--------------------- ----------------- ----------------- ----------------
Revenue: GBP16.7 million GBP17.7 million GBP34.6 million
Underlying operating GBP(0.7) million GBP(0.2) million GBP0.7 million
(loss)/profit:
The markets that the Technical Services businesses operate in
continue to be tough, and the division reported a trading loss for
the six months to 31 August 2018. The results across the division's
business lines have been quite variable. Notably, we are not yet
seeing any significant increase in activity in the Energy
Exploration and Production sectors following the recent increase in
the oil price, which is a driver of demand for our Offshore
business.
We expect to see an improvement in performance in the second
half of the year, driven by a mix of recent contract awards,
continued cost management and selective recruitment.
The performance of the division in the first half of 2018/19 by
business line was as follows:
Adjusting
Braemar Adjusting, our energy loss adjusting business, continued
to perform well, with an encouraging volume of new claims being
awarded, despite the low level of overall incidents reported.
Performance in the Far East continued to exceed expectations and
other offices performed largely in line with the prior period. We
are continuing to recruit personnel with complementary skillsets to
broaden the level of expertise.
Marine
Braemar Marine, which specialises in hull and machinery damage
surveying and marine consultancy, experienced a fall in turnover
and underlying trading in the period. The level of casualty claims
in the Marine sector has declined and has impacted this division's
performance. Some encouraging project awards in the UK and improved
activity in the USA were offset by lower activity levels in the
Middle East and in Asia.
Engineering
Braemar Engineering, our consultant engineering and naval
architecture business, is project orientated (mainly in the LNG
sector) and saw an improvement in trading activity compared with
the first half of 2017/18. The team successfully concluded the
newbuild supervision of an LNG carrier, working in conjunction with
our shipbroking team, and has an interesting pipeline of projects
and potential opportunities.
Offshore
Braemar Offshore, our marine warranty surveying and engineering
consultancy business located in the Asia Pacific region, continued
to be adversely affected by project delays and very competitive
pricing, in common with all regional service providers to the
energy sector. This has impacted both the level of activity and
average fees for Braemar Offshore. Mobile rig activity levels are
continuing to show approximately 55% utilisation, although there
was a slight increase within the last few months. Some recent
contract wins are anticipated to deliver an improved performance in
the mid-term, and we are managing costs to improve results.
LOGISTICS
H1 2018/19 H1 2017/18 FY 2017/18
--------------------- ---------------- ---------------- ----------------
Revenue: GBP15.9 million GBP16.4 million GBP33.2 million
Underlying operating GBP0.5 million GBP0.6 million GBP0.8 million
profit:
Port Agency
Trading was in line with expectations and we retained our
position as market leader in the UK, with a particularly good
performance from our global hub management operations. Overseas, we
established two new offices (Gibraltar and New Jersey), the set up
costs of which were borne in the first half. We anticipate that the
second half of the year will show an improved performance as these
offices start to deliver.
Freight Forwarding
Revenue fell short of our expectations with reduced activity
across several key clients as well as operational issues in the
Port of Felixstowe. We won new business from a number of customers
who came on stream late in our first half, which should deliver
more in the key trading period up to Christmas.
OTHER OPERATING COSTS
Central costs H1 2018/19 H1 2017/18 FY 2017/18
--------------- ----------------- ----------------- -----------------
Central costs: GBP(2.6) million GBP(1.4) million GBP(2.9) million
The Group incurred costs of GBP0.2 million in the period as a
result of one-off IT consulting costs.
Central costs include GBP0.8 million of one-off costs related to
Board changes. Following a competitive tender process in September
and October 2018, the Group intend to appoint BDO as their external
auditor for the year ending 28 February 2019.
Specific items H1 2018/19 H1 2017/18 FY 2017/18
---------------------- ----------------- ----------------- -----------------
Acquisition-related GBP(9.1) million
charges GBP(6.1) million GBP(1.8) million
We have separately identified certain items that are not part of
the ongoing trade of the Group. These specific items are material
in both size and/or nature and we believe may distort understanding
of the underlying performance of the business. The majority of
these costs relate to acquisitions completed in previous financial
years. These are primarily non-cash and driven by the accounting
requirements of IFRS 3, Business Combinations.
The Group incurred GBP4.4 million of costs which are directly
linked to the acquisition of Braemar NAVES. They include GBP0.9
million of intangible asset amortisation and GBP3.5 million of
non-cash post-acquisition consideration payable to certain sellers
under the terms of the acquisition agreement. The Braemar NAVES
acquisition agreement included substantial payments to the working
vendors which are conditional on their continuing employment.
The Group also incurred GBP1.4 million of costs directly linked
to the acquisition of Braemar Atlantic. GBP1.3 million of this
relates to consideration paid on the completion date which is
charged to the Income Statement over a three year claw-back
period.
Foreign exchange
The US dollar exchange rate relative to sterling strengthened
from US$1.40/GBP1 at 1 March 2018 to US$1.30/GBP1 at 31 August
2018. A significant proportion of the Group's revenue is earned in
US dollars.
At 31 August 2018, the Group held forward currency contracts to
sell US$11.5 million at an average rate of $1.3937:GBP1 and options
over a further US$11.5 million at an average rate of
$1.3937:GBP1.
Balance sheet
Net assets at 31 August 2018 were GBP83.8 million (31 August
2017: GBP97.0 million; 28 February 2018: GBP93.7 million). The
Group paid dividends totalling GBP3.1 million in the period and
purchased 250,000 shares at a cost of GBP0.6 million into its
Employee Share Ownership Plan.
Trade and other receivables increased by GBP6.4 million to
GBP59.0 million compared with GBP52.6 million at 28 February 2018.
Trade and other payables have increased by GBP4.5 million to
GBP45.9 million compared to GBP41.5 million at 28 February
2018.
The Group continued to invest in global IT infrastructure with
our focus being on improved business management tools to facilitate
cross business working and improved client service. In the period,
the Group capitalised GBP0.9 million of property, plant &
equipment and computer software (31 August 2017: GBP0.4
million).
Borrowings and cash
At the balance sheet date, the Group had bank facilities
totalling GBP40.0 million, made up of a revolving credit facility
of GBP25.0 million and an accordion facility of GBP15.0 million
provided by HSBC. The Group also has access to global cash
management arrangements, notably in our regional hubs of UK,
Germany and Singapore.
Net debt (excluding convertible loan notes) was GBP9.3 million
at 31 August 2018 compared with net cash of GBP6.2 million at 31
August 2017 and net debt of GBP2.4 million at 28 February 2018.
We would expect the second half of the year to generate more
cash from underlying operations than the first half due to the
timing of bonus and dividend payments.
Disposal of discontinued operation
On 9 October 2018 and after the reporting date, the Group
successfully concluded the sale of Braemar Response which was loss
making and which has been accounted for under discontinued
operations for the period. The consideration for the disposal
comprises an initial cash payment of GBP0.4 million with a further
GBP0.4 million payable twelve months from the date of
completion.
Taxation
The effective underlying rate of corporation tax on profits was
20.0% (interim 2017/18: 22.5%). The effective rate of tax is higher
than the UK standard rate of corporation tax as a result of
disallowed business expenses, the effect of tax deducted on
repatriating cash from overseas and higher overseas corporate tax
rates.
Braemar Shipping Services plc
Condensed Consolidated Income Statement
Period ended 31 Period ended 31 August
August 2018 2017
unaudited unaudited Year ended
28 Feb
Specific Specific 2018 Audited
Underlying items Total Underlying items Total Total
Continuing GBP'000 GBP'000
operations Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------ ----------- ---------- ---------- --------------- ---------- --------- --------------
Revenue 4 71,637 - 71,637 64,480 - 64,480 133,409
Cost of sales (11,332) - (11,332) (12,490) - (12,490) (24,767)
--------------------- ------ ----------- ---------- ---------- --------------- ---------- --------- --------------
Gross profit 60,305 - 60,305 51,990 - 51,990 108,642
Operating expense
--------------------- ------ ----------- ---------- ---------- --------------- ---------- --------- --------------
Other operating
costs (57,544) - (57,544) (49,530) - (49,530) (100,471)
Acquisition-related
expenditure 5 - (6,070) (6,070) - (1,775) (1,775) (9,067)
--------------------- ------ ----------- ---------- ---------- --------------- ---------- --------- --------------
(57,544) (6,070) (63,614) (49,530) (1,775) (51,305) (109,538)
Operating
profit/(loss) 4 2,761 (6,070) (3,309) 2,460 (1,775) 685 (896)
Finance income 112 - 112 20 - 20 95
Finance costs (348) (229) (577) (213) - (213) (713)
Profit/(loss) before
taxation 2,525 (6,299) (3,774) 2,267 (1,775) 492 (1,514)
Taxation 6 (505) 241 (264) (510) 233 (277) (877)
--------------------- ------ ----------- ---------- ---------- --------------- ---------- --------- --------------
Profit/(loss) for
the period/year
from continuing
operations 2,020 (6,058) (4,038) 1,757 (1,542) 215 (2,391)
--------------------- ------ ----------- ---------- ---------- --------------- ---------- --------- --------------
Loss for the
period/year
from discontinued
operations - (1,747) (1,747) - (162) (162) (503)
--------------------- ------ ----------- ---------- ---------- --------------- ---------- --------- --------------
Profit/(loss) for
the period/year
attributable to
equity shareholders
of the parent 2,020 (7,805) (5,785) 1,757 (1,704) 53 (2,894)
--------------------- ------ ----------- ---------- ---------- --------------- ---------- --------- --------------
Earnings per
ordinary
share 7
Basic - underlying
operations 6.53p 5.96p 21.14p
Diluted - underlying
operations 6.01p 5.37p 19.51p
Basic - total (18.71)p 0.18p (9.70)p
Diluted - total (18.71)p 0.16p (9.70)p
--------------------- ------ ----------- ---------- ---------- --------------- ---------- --------- --------------
Braemar Shipping Services plc
Condensed Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
Six months Six months
to to Year ended
31 Aug 31 Aug 28 Feb
2018 2017 2018
GBP'000 GBP'000 GBP'000
--------------------------------------- ----- ----------- ----------- -----------
(Loss)/profit for the period/year (5,785) 53 (2,894)
Other comprehensive income/(expense)
Items that will not be reclassified
to profit or loss:
Actuarial gain on employee
benefit schemes - net of tax - - 339
Items that are or may be reclassified
to profit or loss:
Foreign exchange differences
on retranslation of foreign
operations 552 (2,668) (3,674)
Cash flow hedges - net of tax (542) 621 808
---------------------------------------- ---- ----------- ----------- -----------
Total comprehensive expense
for the period/year attributable
to the equity shareholders of
the parent (5,775) (1,994) (5,421)
----------------------------------------- --- ----------- ----------- -----------
Braemar Shipping Services plc
Condensed Consolidated Balance Sheet
Unaudited Unaudited Audited
As at As at As at
31 Aug 31 Aug 28 Feb
2018 2017 2018
Assets Notes GBP'000 GBP'000 GBP'000
---------------------------------- ------ ---------- ---------- --------
Non-current assets
Goodwill 89,441 77,624 88,961
Other intangible assets 2,927 2,196 3,393
Property, plant and equipment 3,067 3,802 3,322
Investments 1,356 1,353 1,356
Deferred tax assets 3,105 3,734 3,120
Other receivables 307 344 300
---------------------------------- ------ ---------- ---------- --------
100,203 89,053 100,452
Current assets
Trade and other receivables 9 59,023 51,384 52,605
Derivative financial instruments - - 159
Assets held for sale 14 654 2,508 2,865
Cash and cash equivalents 5,027 6,200 5,424
---------------------------------- ------ ---------- ---------- --------
64,704 60,092 61,053
Total assets 164,907 149,145 161,505
---------------------------------- ------ ---------- ---------- --------
Liabilities
Current liabilities
Derivative financial instruments 513 76 -
Trade and other payables 45,917 44,956 41,462
Short term borrowings 14,307 - 7,873
Current tax payable 903 1,090 1,858
Provisions 353 572 320
Convertible loan notes
and deferred consideration 998 - 366
Liabilities directly associated
with assets classified
as held for sale 14 - 377 766
62,991 46,774 52,645
Non-current liabilities
Deferred tax liabilities 982 866 999
Provisions 521 465 424
Convertible loan notes
and deferred consideration 13,420 - 10,341
Pension deficit 3,185 4,022 3,437
---------------------------------- ------ ---------- ---------- --------
18,108 5,353 15,201
Total liabilities 81,099 52,127 67,846
Total assets less total
liabilities 83,808 97,018 93,659
---------------------------------- ------ ---------- ---------- --------
Equity
Share capital 10 3,144 3,018 3,144
Share premium 10 55,805 52,510 55,805
Shares to be issued (2,470) (1,289) (2,701)
Other reserves 11 26,095 26,904 26,085
Retained earnings 1,234 15,875 11,326
---------------------------------- ------ ---------- ---------- --------
Total equity 83,808 97,018 93,659
---------------------------------- ------ ---------- ---------- --------
Braemar Shipping Services plc
Condensed Consolidated Statement of Cash Flows
Unaudited Unaudited Audited
Six months Six months
to to Year ended
31 Aug 28 Feb
2018 31 Aug 2017 2018
Notes GBP'000 GBP'000 GBP'000
------------------------------------- ------ ----------- ------------ -----------
Cash flows from operating activities
Cash (used in)/generated from
operations 16 (2,004) 3,461 3,704
Interest received 112 20 95
Interest paid (577) (213) (619)
Tax paid (190) (724) (119)
Net cash generated (used in)/from
operating activities (2,659) 2,544 3,061
--------------------------------------------- ----------- ------------ -----------
Cash flows from investing
activities
Purchase of property, plant and equipment
and computer software (945) (380) (995)
Acquisition of businesses,
net of cash acquired (112) (382) (5,933)
Other long-term assets (7) 40 110
-----------
Net cash used in investing
activities (1,064) (722) (6,818)
------------------------------------- ------ ----------- ------------ -----------
Cash flows from financing
activities
Proceeds from borrowings 6,434 - 11,537
Repayment of borrowings - (622) (4,285)
Dividends paid 8 (3,076) (1,473) (2,974)
Gift to ESOP for purchase
of own shares (644) (850) (1,073)
-----------
Net cash from/(used in) financing
activities 2,714 (2,945) 3,205
------------------------------------- ------ ----------- ------------ -----------
Decrease in cash and cash
equivalents (1,009) (1,123) (552)
Cash and cash equivalents
at beginning of the period/year 5,424 7,674 7,674
Reclassified as held for sale - (150) (144)
Foreign exchange differences 612 (201) (1,554)
------------------------------------- ------ ----------- ------------ -----------
Cash and cash equivalents
at end of the period/year 5,027 6,200 5,424
------------------------------------- ------ ----------- ------------ -----------
Braemar Shipping Services plc
Condensed Consolidated Statement of Changes in Equity
Shares
Share Share to be Other Retained Total
capital premium issued reserves earnings equity
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ------ --------- --------- -------- ---------- ---------- --------
At 1 March 2018 3,144 55,805 (2,701) 26,085 11,326 93,659
Change in accounting
policy on adoption
of IFRS 9 1 - - - - (1,081) (1,081)
Revised 1 March
2018 3,144 55,805 (2,701) 26,085 10,245 92,578
Loss for the period - - - - (5,785) (5,785)
Foreign exchange
differences - - - 552 - 552
Cash flow hedges
- net of tax - - - (542) - (542)
----------------------- ------ --------- --------- -------- ---------- ---------- --------
Total comprehensive
income - - - 10 (5,785) (5,775)
----------------------- ------ --------- --------- -------- ---------- ---------- --------
Dividends paid 8 - - - - (3,076) (3,076)
Purchase of shares - - (644) - - (644)
ESOP shares allocated - - 875 - (875) -
Credit in respect
of share option
schemes - - - - 725 725
----------
Balance at 31
August 2018 3,144 55,805 (2,470) 26,095 1,234 83,808
----------------------- ------ --------- --------- -------- ---------- ---------- --------
At 1 March 2017 3,018 52,510 (2,962) 28,951 18,655 100,172
Profit for the
period - - - - 53 53
Foreign exchange
differences - - - (2,668) - (2,668)
Cash flow hedges
- net of tax - - - 621 - 621
----------------------- ------ --------- --------- -------- ---------- ---------- --------
Total comprehensive
income - - - (2,047) 53 (1,994)
----------------------- ------ --------- --------- -------- ---------- ---------- --------
Dividends paid 8 - - - - (1,473) (1,473)
Purchase of shares - - (850) - - (850)
ESOP shares allocated - - 2,523 - (2,523) -
Credit in respect
of share option
schemes - - - - 1,163 1,163
----------
Balance at 31
August 2017 3,018 52,510 (1,289) 26,904 15,875 97,018
----------------------- ------ --------- --------- -------- ---------- ---------- --------
Braemar Shipping Services plc
Unaudited Notes to The Financial Information
For the Six Months Ended 31 August 2018
1. General information
Braemar Shipping Services plc (the "Company") is a Public
Limited Company incorporated and domiciled in England and Wales.
The interim condensed consolidated financial statements for the six
months ended 31 August 2018 comprise the Company, its subsidiaries
and the employee share ownership trust (together referred to as the
"Group"). The address of the Company's registered office is One
Strand, Trafalgar Square, London, WC2N 5HR, United Kingdom. The
interim condensed consolidated financial statements of the Group
were authorised for issue in accordance with a resolution of the
directors on 24 October 2018.
These interim condensed consolidated financial statements do not
comprise statutory accounts within the meaning of Section 434 of
the Companies Act 2006, but have been reviewed by KPMG LLP, the
Group's auditor. The audited statutory accounts for the year ended
28 February 2018 have been delivered to the Registrar of Companies
in England and Wales. The report of the auditors on those accounts
was unqualified, did not contain an emphasis of matter paragraph
and did not contain any statements under Section 498 of the
Companies Act 2006. The interim condensed consolidated financial
statements have been prepared on a going concern basis.
Forward-looking statements
Certain statements in this interim report are forward-looking.
Although the Group believes that the expectations reflected in
these forward-looking statements are reasonable, we can give no
assurance that these expectations will prove to be correct. Because
these statements involve risks and uncertainties, actual results
may differ materially from those expressed or implied by these
forward-looking statements. We undertake no obligation to update
any forward-looking statements whether as a result of new
information, future events or otherwise.
Accounting estimates and critical judgements
The preparation of interim financial statements in conformity
with IFRSs requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and
expenses. Actual results may differ from these estimates. In
preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were consistent with those that applied to
the consolidated financial statements as at and for the year ended
28 February 2018.
2. Basis of preparation and statement of compliance
The condensed consolidated interim financial information for the
six months ended 31 August 2018 has been prepared in accordance
with the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority and with IAS 34, 'Interim financial
reporting' as adopted by the European Union. The interim condensed
consolidated financial report should be read in conjunction with
the Group's Annual Report 2018 for the year ended 28 February 2018,
which have been prepared in accordance with IFRSs as adopted by the
European Union.
3. Accounting policies
Changes in accounting policies
The accounting policies adopted in the preparation of these
interim condensed consolidated financial statements are consistent
with those of the Annual Report for the year ended 28 February
2018, as included in those annual financial statements.
The Group has re-presented results in relation to the
discontinued operations for the period ended 31 August 2017,
following the Group's decision to dispose of these operations.
During the period, a number of amendments to existing accounting
standards became effective. These have been considered by the
directors the impact on the Group's interim condensed consolidated
financial statements is as follows:
IFRS 9, 'Financial instruments', became effective from 1 January
2018 and applies to the classification and measurement of financial
assets and financial liabilities, impairment provisioning and hedge
accounting. The Group has considered the impact in respect of trade
receivables on the newly introduced expected credit losses model
which IFRS 9 applies and has adopted the simplified approach to
measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables. Management have grouped
trade receivables on shared credit risk characteristics and the
days past due. The group will need to apply an expected credit loss
("ECL") model when calculating impairment losses on its trade and
other receivables. This will result in increased impairment
provisions and greater judgement due to the need to factor in
forward looking information when estimating the appropriate amount
of provisions. In applying IFRS 9 the group must consider the
probability of a default occurring over the contractual life of its
trade receivables and contracts asset balances on initial
recognition of those assets. Applying the new ECL model has
resulted in an adjustment to the opening reserves, as noted in the
Statement of Changes in Equity.
IFRS 15, 'Revenue from contracts with customers', became
effective from 1 January 2018. This standard deals with revenue
recognition and establishes principles for reporting useful
information to users of financial statements about the nature,
amount, timing and uncertainty of revenue and cash flows arising
from an entity's contracts with customers. The Group, in the prior
year, completed an impact assessment analysis for all divisions and
revenue streams, including an analysis of revenue recognition
policy compared to the requirements of IFRS 15. In the majority of
cases the requirements of IFRS 15, performance obligations are
fully satisfied at a point in time. There has been no material
impact on the Group's financial statements from the application of
IFRS 15. The Group continues to disaggregate revenue over
Shipbroking, Technical, Logistics and Financial. All revenue is
deemed to relate to revenue from contracts with customers.
As at the date of authorisation of these interim financial
statements, the following standards and interpretations were in
issue but not yet effective (and in some cases had not yet been
adopted by the EU). The Group has not applied these standards and
interpretations in the preparation of these financial
statements.
- IFRIC 23 'Uncertainty over income tax treatments', effective
from 1 January 2019 and not yet endorsed by the EU.
- IFRS 16, 'Leases', effective from 1 January 2019. This
standard requires lessees to recognise a lease liability reflecting
future lease payments and a 'right-of-use asset' for virtually all
lease contracts. The Group continues to assess the full impact of
IFRS 16 and at present it is not yet possible to reasonably
quantify its effects. The potential impact is expected to be
significant given that the Group had non-cancellable net operating
lease commitments of GBP17.0 million as at 28 February 2018. This
implementation may have a material impact upon the Group's reported
performance, Statement of Financial Position and operating cash
flows.
The impact on the Group's financial statements of the future
adoption of these and other new standards and interpretations is
still under review and further disclosure will be provided in the
annual report for the year ending 28 February 2019.
4. Segmental information
The Group's reportable segments are trading divisions that are
managed separately due to a combination of factors including the
variety of services provided and method of service delivery.
The reportable segments reflect the way financial information is
reviewed by the Group's Chief Operating Decision Maker ("CODM").
The CODM for the Group is the Board of Directors.
Revenue Results
H1 2018/19 H1 2017/18 FY 2017/18 H1 2018/19 H1 2017/18 FY 2017/18
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Shipbroking 34,702 30,356 61,846 3,945 3,468 7,742
Technical 16,667 17,705 34,579 (699) (151) 722
Logistics 15,869 16,419 33,237 461 574 777
Financial 4,399 - 3,747 1,661 - 1,785
Trading segments revenue/results 71,637 64,480 133,409 5,368 3,891 11,026
----------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Central costs (2,607) (1,431) (2,855)
----------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Underlying operating profit 2,761 2,460 8,171
----------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Acquisition related expenditure (6,070) (1,775) (9,067)
Operating (loss)/profit (3,309) 685 (896)
----------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Finance expense - net (465) (193) (618)
----------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
(Loss)/profit before taxation (3,774) 492 (1,514)
Taxation (264) (277) (877)
(Loss)/profit for the period/year
from continuing operations (4,038) 215 (2,391)
----------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Loss for the period/year
from discontinued operations (1,747) (162) (503)
----------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
(Loss)/profit for the period/year (5,785) 53 (2,894)
----------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
The Group does not allocate income tax expense or interest to
reportable segments. Treasury management is managed centrally.
Assets and liabilities information is reported internally in
total and not by reportable segment and, accordingly, no
information is provided in this note on assets and liabilities
split by reportable segment.
5. Specific items
During the period/year, the Group incurred the following
acquisition-related items:
Six months Six months
to to Year ended
31 Aug 31 Aug 28 Feb
2018 2017 2018
GBP'000 GBP'000 GBP'000
------------------------------------------------------------ ----------- ----------- -----------
Acquisition-related items
- Amortisation charge of intangible
assets (1,040) (92) (2,378)
Acquisition related expenditure
* Group share retention plan directly attributable to
the acquisition of ACM Shipping Group plc (82) (547) (608)
* Acquisition of NAVES Corporate Finance GmbH (3,533) (905) (5,071)
* Acquisition of Atlantic Brokers Holdings Limited (1,387) - (594)
- Other acquisition-related costs (28) (231) (416)
------------------------------------------------------------ ----------- ----------- -----------
(6,070) (1,775) (9,067)
------------------------------------------------------------ ----------- ----------- -----------
6. Taxation
Current tax expense for the interim periods presented is the
expected tax payable on the taxable net income for the period,
calculated as the estimated average annual effective income tax
rate applied to the pre-tax income of the interim period. Current
tax for current and prior periods is classified as a current
liability to the extent that it is unpaid. Amounts paid in excess
of amounts owed are classified as a current asset.
The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates that are enacted or
substantively enacted at the balance sheet date.
The Group's consolidated effective tax rate for the six months
ended 31 August 2018 was 20% (six months ended 31 August 2017:
22.5%), which primarily reflects the Group's effective tax rate for
the year ended 28 February 2018.
7. Earnings per share
Six months Six months Year ended
to 31 Aug to 31 Aug 28 Feb
2018 2017 2018
Total operations GBP'000 GBP'000 GBP'000
------------------------------------- -------- ----------- --------------------
(Loss)/profit for the period/year
attributable to equity holders of
the parent (5,785) 53 (2,894)
------------------------------------- -------- ----------- --------------------
pence pence pence
------------------------------------- -------- ----------- --------------------
Basic (loss)/earnings per share (18.71) 0.18 (9.70)
Effect of dilutive share options - (0.02) -
Diluted (loss)/earnings per share (18.71) 0.16 (9.70)
------------------------------------- -------- ----------- --------------------
Underlying operations
----------------------------------------- ------- ---------------- -------
Profit for the period/year attributable
to equity shareholders of the parent 2,020 1,757 6,313
----------------------------------------- ------- ---------------- -------
pence pence pence
----------------------------------------- ------- ---------------- -------
Basic earnings per share 6.53 5.96 21.14
Effect of dilutive share options (0.52) (0.59) (1.63)
Diluted earnings per share 6.01 5.37 19.51
----------------------------------------- ------- ---------------- -------
Earnings per share from underlying operations for the
comparative period ended 31 August 2017 has been restated following
the re-presentation of Braemar Response as a discontinued
operation.
Where any potential ordinary shares would have the effect of
decreasing a loss per share, they have not been treated as
dilutive.
8. Dividends
The following dividends were paid by the Group:
Six months Six months
to to Year ended
31 Aug 31 Aug 28 Feb
2018 2017 2018
GBP'000 GBP'000 GBP'000
-------------------------------------- ----------- ----------- -----------
Ordinary shares of 10 pence each
Final of 10.0 pence per share (2017:
5.0 pence per share) 3,076 1,473 1,473
Interim of 5.0 pence per share paid - - 1,501
3,076 1,473 2,974
-------------------------------------- ----------- ----------- -----------
The Board has declared an interim dividend of 5.0 pence per
share. The interim dividend will be paid on Friday 14 December 2018
to shareholders on the register at the close of business on Friday
2 November 2018.
9. Trade and other receivables
As at As at As at
31 Aug 31 Aug 28 Feb
2018 2017 2018
GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- --------
Trade receivables 44,237 38,893 37,909
Provision for impairment of trade
receivables (5,865) (5,220) (4,629)
----------------------------------- -------- -------- --------
38,372 33,673 33,280
Other receivables 8,071 4,724 7,571
Accrued income 8,522 9,744 9,494
Prepayments 4,058 3,243 2,260
----------------------------------- -------- -------- --------
59,023 51,384 52,605
----------------------------------- -------- -------- --------
The Directors consider that the carrying amounts of trade
receivables approximate to their fair value.
10. Share capital
Number of Ordinary Share
shares Shares Premium Total
(thousands) GBP'000 GBP'000 GBP'000
-------------- ------------ --------- -------- --------
At 1 March
2018 31,436 3,144 55,805 58,949
At 31 August
2018 31,436 3,144 55,805 58,949
--------------- ------------ --------- -------- --------
At 1 March
2017 30,173 3,018 52,510 55,528
At 31 August
2017 30,173 3,018 52,510 55,528
--------------- ------------ --------- -------- --------
11. Other reserves
Capital Total
redemption Merger Translation Hedging other
reserve reserve reserve reserve reserves
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ------------ --------- ------------ --------- ----------
At 1 March 2018 396 21,346 4,217 126 26,085
Cash flow hedges
- Fair value losses in
the period - - - (542) (542)
Foreign exchange differences - - 552 - 552
At 31 August 2018 396 21,346 4,769 (416) 26,095
------------------------------ ------------ --------- ------------ --------- ----------
Capital Total
redemption Merger Translation Hedging other
reserve reserve reserve reserve reserves
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 March 2017 396 21,346 7,891 (682) 28,951
Cash flow hedges
- Fair value gains in
the period - - - 621 621
Foreign exchange differences - - (2,668) - (2,668)
At 31 August 2017 396 21,346 5,223 (61) 26,904
------------------------------ ------------ --------- ------------ --------- ----------
All other reserves are attributable to the equity holders of the
parent company.
12. Contingencies
From time to time the Group may be engaged in litigation in the
ordinary course of business. The Group carries professional
indemnity insurance. There are currently no liabilities expected to
have a material adverse financial impact on the Group's
consolidated results or net assets.
13. Related parties
The Group's related parties are unchanged from 28 February 2018
and there have been no significant related party transactions in
the six months ended 31 August 2018.
For further information about the Group's related parties,
please refer to the Group's Annual Report 2018 for the year ended
28 February 2018.
14. Events after the reporting date
On 9 October 2018, the Group sold the entire share capital of
Braemar Response Limited. This is in line with the Group's decision
to divest the business, having classified the operations as
discontinued for the financial year ended 28 February 2018. The
sale is for a total consideration of GBP774,000 which comprises an
initial cash payment of GBP400,000 with a further GBP374,000
payable within twelve months of completion.
The carrying value of the assets held for sale has accordingly
been decreased to its fair value less costs to sell of GBP0.7
million as at 31 August 2018, with a corresponding impairment loss
of GBP1.2 million being recognised in the Income Statement within
the loss for the period from discontinued operations.
15. Principal risks
The Directors consider that the principal risks and
uncertainties that could have a material effect on the Group's
performance are unchanged from those identified on pages 34 to 37
of the Annual Report 2018. These include risks associated with
macroeconomic changes, financial liquidity, management bandwidth,
the failure to attract and retain skilled individuals, inadequate
financial capacity to execute growth plans, the threat of
technological changes, currency fluctuations, implementation of
inappropriate reward structures, poor communications, legal or
regulatory breach and cyber crime.
The Group holds professional indemnity insurance to an amount
considered adequate for its size and potential exposure.
16. Reconciliation of operating profit to net cash flow from
operating activities
Unaudited Unaudited Audited
Six months Six months
to to Year ended
31 Aug 31 Aug 28 Feb
2018 2017 2018
GBP'000 GBP'000 GBP'000
--------------------------------------- ----- ----------- ------------------- -----------
(Loss)/profit before tax for the
period/year (3,774) 492 (1,514)
Loss before tax for the period/year
from discontinued operations (1,747) (209) (595)
Adjustments for:
- Depreciation of property,
plant and equipment (continuing) 518 563 1,165
- Depreciation of property,
plant and equipment (discontinued) 11 22 39
- Amortisation of computer
software 200 323 583
Specific items:
- Amortisation of other intangible
assets 1,040 92 2,378
- Other specific items 5,030 1,683 6,689
Finance income (112) (20) (95)
Finance expense 577 213 713
Share based payments (excluding
restricted share plan) 726 621 1,131
Net foreign exchange (gains)/losses
& financial instruments 542 163 (809)
Changes in working capital:
- Trade and other receivables (7,499) 4,130 4,950
- Trade and other payables 6,502 (3,633) (3,717)
Contribution to defined benefit
pension scheme (225) (283) (450)
Provisions 120 (183) (399)
----------------------------------------------- ----------- ------------------- -----------
Cash generated from operations
before acquisition and disposal
related activities 1,909 3,974 10,069
Movement in net assets held
for sale 975 (513) (515)
Acquisition fees paid (203) - (2,870)
Amounts due to acquisition-related
retention payments (4,685) - (2,980)
----------------------------------------------- ----------- ------------------- -----------
Cash (used in)/generated from
operations after acquisition-related
activities (2,004) 3,461 3,704
----------------------------------------------- ----------- ------------------- -----------
Statement of Directors' responsibilities
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU;
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the condensed set of financial statements; and a description of
the principal risks and uncertainties for the remaining six months
of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the current financial year and that have
materially affected the financial position or performance of the
entity during that period; and any changes in the related party
transactions described in the last annual report that could do
so.
By order of the Board
David Moorhouse CBE, Chairman Peter Mason, Company Secretary
INDEPENDENT REVIEW REPORT TO BRAEMAR SHIPPING SERVICES PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 August 2018 which comprises the condensed
consolidated income statement, condensed consolidated statement of
comprehensive income, condensed consolidated balance sheet,
condensed consolidated statement of changes in equity, and
condensed consolidated statement of cash flows and the related
explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
August 2018 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU and the Disclosure Guidance and Transparency Rules ("the
DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
The annual financial statements of the group are prepared in
accordance with International Financial Reporting Standards as
adopted by the EU. The directors are responsible for preparing the
condensed set of financial statements included in the half-yearly
financial report in accordance with IAS 34 as adopted by the
EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Jonathan Downer
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
24 October 2018
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR USAVRWVARUAA
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