Last checked at 30 Oct 2012 07:00
BRAEMAR SHIPPING SERVICES PLC
30 October 2012
Unaudited interim results for the six months ended 31 August 2012
Braemar Shipping Services plc ("Braemar", "the Company" or the "Group"), an international provider of shipping, marine and energy services, today announces unaudited half-year results for the six months ended 31 August 2012.
FINANCIAL HIGHLIGHTS
·; Revenue from continuing operations up by 29% to £79.4 million (interim 2011/12: £61.5 million)
·; Pre-tax profit £5.2 million (interim 2011/12: £5.0 million)
·; Pre-tax profit before amortisation of acquisition related intangibles and non-recurring income up by 27% to £6.1 million (interim 2011/12: £4.8 million)
·; Basic EPS 17.70p (interim 2011/12: 17.60p)
·; EPS before amortisation of acquisition related intangibles and non-recurring income up by 26% to 21.06p (interim 2011/2012: 16.76p)
·; Interim dividend of 9.0p per share unchanged (interim 2011/12: 9.0p)
·; Cash of £17.3 million (31 August 2011: £9.3 million) and no debt
Sir Graham Hearne, chairman of Braemar, said:
"Braemar has delivered a strong first half performance in tough, competitive markets, with each of the divisions performing well and making a strong contribution.
Seaborne trade remains strong and is likely to continue to grow, though any significant recovery in shipping markets is unlikely in the near term. We have a broad range of international shipping and energy services which equip us well to respond to future challenges."
ENDS
For further information, contact:
Braemar Shipping Services | |
James Kidwell | Tel +44 (0) 20 7535 2881 |
Martin Beer | Tel +44 (0) 20 7535 2650 |
Pelham Bell Pottinger | |
Damian Beeley Zoe Pocock | Tel +44 (0) 20 7861 3139 Tel +44 (0) 20 7861 3961 |
Elaborate Communications | |
Sean Moloney | Tel +44 (0) 1296 682356 |
Westhouse Securities | |
Henry Willcocks | Tel +44 (0) 20 7601 6115 |
Notes to editors
Braemar Shipping Services plc is a leading international provider of broking, consultancy, technical, logistics and other services to the shipping, marine and energy industries. The business is organised into the following segments: Shipbroking, Technical, Logistics and Environmental.
It is listed on the Official List of the London Stock Exchange in the Industrial Transport sector.
Principal businesses:
Shipbroking
Braemar Seascope provides chartering, sale and purchase and consulting shipbroking services to international ship owners, charterers and financial institutions operating in the tanker, gas, chemicals, offshore, container and dry bulk markets. The company has shipbroking offices in the UK, China, Australia, Singapore, India and Italy.
www.braemarseascope.com
Technical
Braemar Technical Services provides a range of specialist services to the marine, energy and insurance industries. The principal business arms within the division are:
Braemar Adjusting - provides loss adjusting and other expert witness services to the energy (oil and gas), marine, power and other related industrial sectors. It has offices in London, Houston, Singapore, Calgary and Rio de Janeiro.
Braemar Offshore - provides specialised marine and offshore services mainly performing pre-risk marine warranty surveys. It has offices in the UK, Australia, China, India, Indonesia, Malaysia, Singapore, Thailand and Vietnam.
Braemar incorporating The Salvage Association ("Braemar SA") - undertakes vessel damage surveys and provides marine consultancy to the shipping, energy, offshore and insurance industries. The Salvage Association was acquired in May 2011 and it has a network of offices in Asia, Europe and the United States.
Braemar Engineering - provides consultant marine engineering and naval architecture services to the shipping and offshore markets from offices throughout the Far East and London. It was expanded with the acquisition of Braemar Casbarian in July 2011 which provides consulting engineering services mainly to the offshore industry in the Gulf of Mexico from offices in New Orleans, Houston and Trinidad.
www.braemar.com
Logistics
Cory Brothers Shipping Agency provides port agency, freight forwarding and logistics services in the UK and Singapore.
www.cory.co.uk
Environmental
Braemar Howells provides pollution response and advisory services primarily in the UK, New Zealand and Africa. It has earned an international reputation for its work for the insurance industry in handling the containers from stricken vessels - the MSC Napoli in 2007 and the MSC Rena which is on-going.
www.braemarhowells.com
INTERIM ANNOUNCEMENT - SIX MONTHS ENDED 31 AUGUST 2012
CHAIRMAN'S STATEMENT
Results
Braemar has delivered a strong first half performance in tough, competitive markets.
Group revenues increased by 29% to £79.4 million from £61.5 million last year and underlying pre-tax profits (excluding amortisation of acquisition related intangibles and a non-recurring gain in the first half of last year) increased by 27% to £6.1 million compared with £4.8 million. Reported interim pre-tax profits were £5.2 million (interim 2011/12: £5.0 million).
Underlying earnings per share (before amortisation of acquisition related intangibles and a non-recurring gain) rose by 26% to 21.06p compared with 16.76p last year. Reported earnings per share were 17.70p (interim 2011/12: 17.60p).
Trading
All divisions made a strong contribution and have performed well. Of particular note has been the important work undertaken by Braemar Howells in handling the cargo from the stricken container ship "MSC Rena" in New Zealand which has earned many plaudits in the industry and was responsible for £15 million of revenue in this half. We have played a key role for the vessel owner and insurer in safe-guarding the environment while working in a sensitive area often in difficult conditions. Braemar Howells has proved itself to be the trusted partner of choice to handle such incidents having fulfilled a similar role in 2007 off the coast of southwest England for the "MSC Napoli".
The shipping industry continued to struggle with a surplus of tonnage in most sectors. This was not helped by a weaker rate of growth in most large economies, especially those in the Far East which in recent years have been the engine for shipping demand. However, the process of market correction is underway as is evident in the acceleration of demolition. Shipbroking income has benefitted from increased spot chartering volumes in the main tanker and bulker sectors, offset by the weaker average freight rates. The sale and purchase market was relatively quiet as values have continued to fall and the availability of bank finance remains a constraint, though our share of the activity, particularly in demolition, has been good.
Braemar Technical Services is beginning to show its growth potential. The disciplines it offers are being marketed jointly and are increasingly used in collaboration, especially on larger energy projects. We are involved in several significant energy projects and have seen high activity in South East Asia, Australia and Canada. Ship surveying and loss adjusting services have performed solidly and have opportunities to grow.
Our Logistics division - Cory Brothers - has grown its ship agency business substantially both in the UK and Singapore, including winning a substantial new hub management contract. Logistics activity was lower compared with the strong prior first half and the Olympics were less beneficial than expected, but prospects are good.
Directors
As announced at the AGM, James Kidwell took over as chief executive in June 2012 having been finance director since 2002, and Alan Marsh and Quentin Soanes stepped down from the board on 31 July 2012 with both remaining active in the Group. Subsequently, Martin Beer has joined the board as finance director from 15 October 2012.
Dividend
The board has declared an unchanged interim dividend of 9.0 pence. The interim dividend will be paid on Friday 14 December 2012 to shareholders on the register at the close of business on Friday 16 November 2012.
Outlook
The work on "MSC Rena" is beginning to wind down and is expected to be complete by the end of the financial year.
Collectively the Shipbroking, Technical and Logistics divisions are expected to continue broadly at their first half rate of activity for the remainder of the year.
Seaborne trade remains strong and is likely to continue to grow, though any significant recovery in shipping markets is unlikely in the near term. We have a broad range of international shipping and energy services which equip us well to respond to future challenges.
Sir Graham Hearne CBE
Chairman
29 October 2012
CHIEF EXECUTIVE'S REVIEW OF ACTIVITIES
I am delighted to have taken over as chief executive having enjoyed 10 exciting years as finance director during which Braemar grew significantly in size, geographical spread and through the acquisition and development of new profitable services. The strategy for the Group remains unchanged - we aim to grow our international shipbroking, shipping, marine and energy services businesses and expect to do so organically and by acquisition.
Over the past few years shipping has become increasingly competitive as fleet growth has outstripped demand resulting in a steady fall in vessel values and freight rates. While seaborne trade remains strong, owners' earnings are under extreme pressure and there is now a "survival of the fittest" mentality which inevitably leads to a focus on strategies to improve efficiency.
Braemar's role in this market is often to recognise opportunities and provide solutions for our clients. We do this across each of our shipbroking, logistics, engineering, surveying and environmental consulting disciplines. The Group's broad capabilities have served our clients and our shareholders well over this period.
Shipbroking
Revenue of £24.2 million in the first half was similar to the same period last year (£24.0 million) and interim divisional operating profit was £2.9 million compared with £3.5 million last year (divisional operating profit is defined as operating profit before amortisationof acquisition related intangibles, non-recurring items and central costs and is consistently used throughout the divisional review). We are investing across the division in our people, systems, research and analytical functions which will ensure that, in a changeable market, Braemar remains at the forefront in the efficient provision of client service.
The global dry bulk fleet grew by 9% between 1 January and 1 October 2012 as newbuilding deliveries exceeded demolition. The rate of scrapping has notably increased with the 2011 full-year equivalent volume scrapped in 2012 by 1 September. Demand for large bulk cargoes - iron ore, coal and grain - is still growing and likely to continue to do so for some time. However, the cooling Chinese economy has meant that the growth in steel production has slowed, leaving iron ore inventories at relatively high levels. A number of high-profile iron ore production projects have been scrapped or delayed as the price of ore has fallen close to the cost of production and for most of the period the smaller vessels have out-earned the Capesize sector which is particularly responsive to the iron ore trade. Nevertheless the majority of our dry cargo broking teams are based in the East and their performance in this market has been good.
Our deep sea tanker teams have performed well in the first half benefitting from a steady growth in single voyage transaction volumes. Time charter business is low with charterers and owners reluctant to commit in the present climate, but there are some signs that the level of client enquiry is beginning to increase.
The net global fleet growth in deep sea tankers was 3.5% between 1 January and 1 October 2012 reflecting the newbuilding delivery peak in 2012. Exports of crude oil from the Arabian Gulf have continued to grow and much of the increase is destined for the East where domestic consumption has been growing fast. To meet this demand new refining capacity is being developed in Asia which will have an increasing effect on trading patterns. The USA's dependency on imported crude is declining mainly because of lower consumption, improvements in fuel efficiency, changes in supply patterns and the growth of domestic production. However, the significant production from West Africa and South America allows owners to triangulate and improve their returns in a market affected by a surplus of tonnage.
Our specialised tanker team has performed consistently with a good level of longer-term contract business, mostly with European clients whom we have served for many years. Braemar Quincannon (our Singapore and Shanghai-based joint venture) has performed steadily in the far eastern gas and chemicals markets that they serve.
LNG transportation is set to expand, both for voyage and for term requirements, with both existing production and new project development on the increase. Our team is making in-roads in this emerging sector particularly as we are able to provide both commercial and technical shipping advice.
The global container market remains a challenging environment with a fight for market share among the large lines against the backdrop sluggish consumer demand. We have been building our teams in London and Singapore in preparation for a cyclical recovery.
Vessel values and newbuilding prices have continued to slide in the tanker, bulker and container sectors, although the rate of descent has slowed quite significantly. Second hand activity remains relatively low but we have concluded a high share of business in the thin market. Yard order books have shortened considerably and pricing is expected to become keener in their quest for new orders. Unsurprisingly demolition activity has been brisk and the steel price has been relatively firm. We play an active role in this market for a wide range of clients.
In a steady market our offshore vessel desk has seen increased earnings during the past six months. Business in the Far East is increasing and we are actively expanding our presence in that region, while at the same time we have been successful in concluding term business in East Africa. The outlook continues to be positive, driven by strong E&P activity.
Technical
Braemar Technical Services grew its first half revenue to £19.1m from £15.5m last year which resulted in the divisional operating profit rising to £1.7m, 56% higher than last year. The growth came substantially from our activities in the Far East where our Offshore, Engineering and Surveying businesses were all extremely busy. We are involved in a number of long-term offshore energy projects in the Asia Pacific region, providing marine warranty surveys and engineering consulting and have set up a new office in Thailand to further penetrate this market. It is expected that the energy related activity in the Asia Pacific region will continue to experience growth in the years to come.
Braemar Salvage Association, our vessel damage survey arm, which was acquired in May 2011, has performed in line with our expectations. It has expanded our technical services office network considerably and we are now able to offer our full range of services across all key geographies. Braemar SA has also worked in collaboration with Braemar Howells on the MSC Rena.
Braemar Adjusting has performed steadily without benefitting from any significant client claim incidents in the period. Our office in Calgary has been considerably more active on work in the tar sands region and the Rio de Janeiro office is picking up new offshore business.
Braemar Engineering is involved in plan-approval work for several LNG vessel construction projects, which would normally lead to site supervisory work in due course. Offshore engineering work in the Gulf of Mexico has been more limited than expected which has constrained Braemar Casbarian's activities in that area, although its work in Trinidad has continued well.
Logistics
Cory Brothers reported first half revenues of £18.9 million compared with £19.7 million in the prior half and divisional operating profits were similar at £1.1 million (2011/12: £1.1 million). Our UK and Singaporean ship agency businesses have performed well and gained market share. Recently we won several important new customers including the award of a multi-year contract to manage a European hub for a large oil company. This is a testament to Cory's systems and ability to service big international clients.
The Logistics performance was a little lower than last year because the prior period included a high-level of one-off project forwarding business. In addition the impact of the London Olympics on the cruise business was not as beneficial as originally thought, or for the logistics arm where some client activity was temporarily re-focused. Nevertheless our logistics business is busy with a number of interesting projects in development.
Environmental
Braemar Howells' work in dealing with the distressed and sunken cargo together with cargo debris washed ashore from the stricken container ship MSC Rena has been a key contributor to the divisional result. Revenues of £17.3 million compared with £2.3 million in the previous half and divisional operating profits of £2.0 million compared with a break-even position last year. Nearly all of this growth is attributed to the MSC Rena project. We are recognised as being highly experienced in providing environmental support services in the marine environment, particularly by the insurance industry, for which we play a vital role in containing the cost of a claim.
The environmental business has a regular flow of business from customers on retainer contracts and the provision of consulting services. Periodically the response team will be engaged in the management of a serious incident, as has been the case in New Zealand over the past 12 months. Our involvement is now winding down and is likely to be completed by the end of this year.
The division's return on capital, since acquisition in 2006, has been extremely good although the incident-driven nature of the business means that its year-on-year earnings profile is volatile.
Foreign exchange
The majority of the Group's income is US$ denominated and the average rate of exchange for conversion of US$ income in the six months to 31 August 2012 was $1.57/£ (interim 2011/12: $1.61/£, full year 2011/12: $1.60/£). The rate of translation as at 31 August 2012 was $1.59/£.
Taxation
The effective underlying rate of corporate tax on profits was 28.6% (interim 2011/12: 28.6%). The rate is higher than the UK standard rate of corporation tax due to disallowed expenses and the mix of overseas profits.
Cash flow
Cash balances were £17.3 million at 31 August 2012 compared with cash of £9.3 million at 31 August 2011 and £17.5 million at 29 February 2012. Conversion of profits into operational cash flow was high due to better collections arising from a particular focus on areas in which payments have traditionally been slow and because the mix of business favoured quicker conversion. Discretionary capital expenditure in the Group was low with net acquisition payments totalling £0.3 million in respect of a time charter forward book (Orca Shipping Limited) and £0.4 million expended on property, plant, equipment and computer software.
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 page 15 of the 2012 Annual Report. These include market risk arising from changes in freight rates, vessel values or activity levels in the shipping market; operational risks including ineffective internal systems or controls, loss of key management and staff, professional errors or omissions and the failure of support services such as communications systems and public utilities; foreign exchange risk from fluctuations in the value of the US dollar; liquidity risk arising from funding requirements; and credit risk leading to the non-payment of invoices.
Capital management
The Group has held positive cash balances and no debt for nearly 10 years. This approach provides a level of security for our services businesses over the shipping cycle and enables the Group to take advantage of strategic acquisition opportunities. Capital consists of ordinary shares, retained earnings and cash and the group also has an undrawn bank overdraft facility for £8.0 million. The board monitors underlying business performance to determine the ongoing allocation of capital for executive and staff incentive schemes, acquisition appraisals ahead of potential business combinations, investment in property, plant and equipment and the level of declared dividends.
James Kidwell
Chief Executive
29 October 2012
Statement of Directors' responsibilities
The directors confirm, to the best of their knowledge, that this set of consolidated interim financial information has been prepared in accordance with IAS34 as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 of the Disclosure and Transparency rules of the United Kingdom's Financial Securities Authority.
The directors of Braemar Shipping Services PLC are listed in the Braemar Shipping Services PLC Annual Report for 29 February 2012.
By order of the board
J. R. V. Kidwell, Chief Executive
Braemar Shipping Services plc
Consolidated Income Statement
Unaudited | Unaudited | Audited | ||||
Six months to | Six months to | Year ended | ||||
31 Aug 2012 | 31 Aug 2011 | 29 Feb 2012 | ||||
Continuing operations | Notes | £'000 | £'000 | £'000 | ||
Revenue | 4 | 79,355 | 61,521 | 133,474 | ||
Cost of sales | (26,989) | (15,685) | (36,922) | |||
Gross profit | 52,366 | 45,836 | 96,552 | |||
Operating costs | ||||||
Operating costs excluding amortisation of other intangible assets | (46,412) | (41,176) | (85,806) | |||
Non-recurring income and expense | 11 | - | 991 | 69 | ||
Amortisation of other intangible assets | (918) | (760) | (1,458) | |||
(47,330) | (40,945) | (87,195) | ||||
Operating profit | 4 | 5,036 | 4,891 | 9,357 | ||
Finance income | 104 | 46 | 213 | |||
Finance costs | (45) | (10) | (32) | |||
Share of profit after tax from joint ventures | 88 | 102 | 252 | |||
Profit before taxation | 5,183 | 5,029 | 9,790 | |||
Taxation | 5 | (1,485) | (1,441) | (2,888) | ||
Profit for the period | 3,698 | 3,588 | 6,902 | |||
Attributable to: | ||||||
Equity holders of the parent | 3,678 | 3,555 | 6,841 | |||
Non-controlling interest | 20 | 33 | 61 | |||
Profit for the period | 3,698 | 3,588 | 6,902 | |||
Earnings per ordinary share | 6 | |||||
Basic - pence | 17.70p | 17.60p | 33.84p | |||
Diluted - pence | 16.82p | 17.26p | 32.53p |
Consolidated Statement of Comprehensive Income
Unaudited | Unaudited | Audited | ||||
Six months to | Six months to | Year ended | ||||
31 Aug 2012 | 31 Aug 2011 | 29 Feb 2012 | ||||
Notes | £'000 | £'000 | £'000 | |||
Profit for the period | 3,698 | 3,588 | 6,902 | |||
Other comprehensive income / (expense) | ||||||
Foreign exchange differences on retranslation of foreign operations | (386) | 536 | 341 | |||
Cash flow hedges - net of tax | (36) | (83) | (70) | |||
Total comprehensive income for the period | 3,276 | 4,041 | 7,173 | |||
Attributable to: | ||||||
Equity holders of the parent | 3,256 | 4,008 | 7,112 | |||
Non-controlling interest | 20 | 33 | 61 | |||
Total comprehensive income for the period | 3,276 | 4,041 | 7,173 | |||
Braemar Shipping Services plc
Consolidated Balance Sheet
Unaudited | Unaudited | Audited | |||||
As at | As at | As at | |||||
31 Aug 12 | 31 Aug 11 | 29 Feb 12 | |||||
Assets | Notes | £'000 | £'000 | £'000 | |||
Non-current assets | |||||||
Goodwill | 30,451 | 30,200 | 30,416 | ||||
Intangible assets | 2,151 | 3,221 | 2,630 | ||||
Property, plant and equipment | 6,059 | 6,750 | 6,257 | ||||
Investments | 1,800 | 1,746 | 1,895 | ||||
Deferred tax assets | 1,149 | 1,650 | 1,665 | ||||
Other receivables | 226 | 236 | 233 | ||||
41,836 | 43,803 | 43,096 | |||||
Current assets | |||||||
Trade and other receivables | 44,890 | 43,731 | 46,973 | ||||
Derivative financial instruments | 95 | 154 | 136 | ||||
Restricted cash | 2,523 | - | 335 | ||||
Cash and cash equivalents | 17,311 | 9,295 | 17,467 | ||||
64,819 | 53,180 | 64,911 | |||||
Total assets | 106,655 | 96,983 | 108,007 | ||||
Liabilities | |||||||
Current liabilities | |||||||
Derivative financial instruments | 21 | - | 7 | ||||
Trade and other payables | 33,991 | 28,704 | 36,953 | ||||
Current tax payable | 1,137 | 1,579 | 1,674 | ||||
Provisions | 402 | 305 | 345 | ||||
Client monies held as escrow agent | 2,523 | - | 335 | ||||
38,074 | 30,588 | 39,314 | |||||
Non-current liabilities | |||||||
Deferred tax liabilities | 1,241 | 975 | 1,130 | ||||
Trade and other payables | - | 550 | 400 | ||||
Provisions | 358 | 228 | 325 | ||||
1,599 | 1,753 | 1,855 | |||||
Total liabilities | 39,673 | 32,341 | 41,169 | ||||
Net assets | 66,982 | 64,642 | 66,838 | ||||
Equity | |||||||
Share capital | 9 | 2,163 | 2,110 | 2,160 | |||
Share premium | 9 | 12,079 | 11,080 | 12,018 | |||
Shares to be issued | (3,515) | (4,071) | (3,695) | ||||
Other reserves | 10 | 26,242 | 26,776 | 26,664 | |||
Retained earnings | 29,773 | 28,555 | 29,471 | ||||
Total shareholders' equity | 66,742 | 64,450 | 66,618 | ||||
Non-controlling interest | 240 | 192 | 220 | ||||
Total equity | 66,982 | 64,642 | 66,838 |
Braemar Shipping Services plc
Consolidated Cash Flow Statement
Unaudited | Unaudited | Audited | |||||
Six months | Six months | Year ended | |||||
31 Aug 12 | 31 Aug 11 | 29 Feb 12 | |||||
Notes | £'000 | £'000 | £'000 | ||||
Profit before tax for the period | 5,183 | 5,029 | 9,790 | ||||
Adjustments for: | |||||||
- Depreciation of property, plant and equipment | 527 | 619 | 990 | ||||
- Amortisation of computer software | 84 | - | 259 | ||||
- Amortisation of other intangible assets | 918 | 760 | 1,458 | ||||
- Loss on sale of property, plant and equipment | - | - | 118 | ||||
- Non-recurring income and expense from acquisition and disposal of businesses | - | (991) | (423) | ||||
- Finance income | (104) | (46) | (213) | ||||
- Finance expense | 45 | 10 | 32 | ||||
- Share of profit of joint ventures | (88) | (102) | (252) | ||||
- Share based payments | 497 | 204 | 513 | ||||
Financial instruments | (11) | - | (120) | ||||
Changes in working capital | |||||||
- Trade and other receivables | 2,126 | 900 | (3,305) | ||||
- Trade and other payables | (3,421) | (13,142) | (3,985) | ||||
Provisions | 75 | (5) | 172 | ||||
Cash generated from operations | 5,831 | (6,764) | 5,034 | ||||
Interest received | 104 | 71 | 213 | ||||
Interest paid | (45) | (35) | (32) | ||||
Tax paid | (1,563) | (2,368) | (3,858) | ||||
Net cash generated from / (used in) operating activities | 4,327 | (9,096) | 1,357 | ||||
Cash flows from investing activities | |||||||
Dividends from joint ventures | 187 | 74 | 74 | ||||
Acquisition of subsidiaries, net of cash acquired | 11 | (279) | (2,711) | (3,106) | |||
Purchase of property, plant and equipment | 8 | (384) | (336) | (1,050) | |||
Other long-term receivables | 7 | 2 | 5 | ||||
Net cash used in investing activities | (469) | (2,971) | (4,077) | ||||
Cash flows from financing activities | |||||||
Proceeds from issue of ordinary shares | 64 | 3 | 991 | ||||
Dividends paid | 7 | (3,537) | (3,421) | (5,233) | |||
Purchase of own shares | (156) | (1,004) | (1,222) | ||||
Net cash used in financing activities | (3,629) | (4,422) | (5,464) | ||||
Increase / (decrease) in cash and cash equivalents | 229 | (16,489) | (8,184) | ||||
Cash and cash equivalents at beginning of the period | 17,467 | 25,634 | 25,634 | ||||
Foreign exchange differences | (385) | 150 | 17 | ||||
Cash and cash equivalents at end of the period | 17,311 | 9,295 | 17,467 | ||||
Braemar Shipping Services plc
Consolidated Statement of Changes in Equity
Share capital | Share premium | Shares to be issued | Other reserves | Retained earnings | Total | Non-controlling interest | Total equity | ||
Notes | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
At 1 March 2012 | 2,160 | 12,018 | (3,695) | 26,664 | 29,471 | 66,618 | 220 | 66,838 | |
Profit for the period | - | - | - | - | 3,678 | 3,678 | 20 | 3,698 | |
Foreign exchange differences | - | - | - | (386) | - | (386) | - | (386) | |
Cash flow hedges net of tax | - | - | - | (36) | - | (36) | - | (36) | |
Total recognised income and expense in the period | - | - | - | (422) | 3,678 | 3,256 | 20 | 3,276 | |
Dividends paid | 7 | - | - | - | - | (3,537) | (3,537) | - | (3,537) |
Issue of shares | 3 | 61 | - | - | - | 64 | - | 64 | |
Purchase of own shares | - | - | (156) | - | - | (156) | - | (156) | |
ESOP shares allocated | - | - | 336 | - | (336) | - | - | - | |
Credit in respect of share option schemes | - | - | - | - | 497 | 497 | - | 497 | |
Balance at 31 August 2012 | 2,163 | 12,079 | (3,515) | 26,242 | 29,773 | 66,742 | 240 | 66,982 | |
At 1 March 2011 | 2,110 | 11,077 | (3,275) | 26,323 | 28,424 | 64,659 | 159 | 64,818 | |
Profit for the period | - | - | - | - | 3,555 | 3,555 | 33 | 3,588 | |
Foreign exchange differences | - | - | - | 536 | - | 536 | - | 536 | |
Cash flow hedges net of tax | - | - | - | (83) | - | (83) | - | (83) | |
Total recognised income in the period | - | - | - | 453 | 3,555 | 4,008 | 33 | 4,041 | |
Dividends paid | 7 | - | - | - | - | (3,421) | (3,421) | - | (3,421) |
Issue of shares | - | 3 | - | - | - | 3 | - | 3 | |
Purchase of own shares | - | - | (1,004) | - | - | (1,004) | - | (1,004) | |
ESOP shares allocated | - | - | 208 | - | (208) | - | - | - | |
Credit in respect of share option schemes | - | - | - | - | 205 | 205 | - | 205 | |
Balance at 31 August 2011 | 2,110 | 11,080 | (4,071) | 26,776 | 28,555 | 64,450 | 192 | 64,642 |
BRAEMAR SHIPPING SERVICES PLC
UNAUDITED NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 AUGUST 2012
1. General information
The interim consolidated financial statements of the Group for the period ended 31 August 2012 were authorised for issue in accordance with a resolution of the directors on 29 October 2012. Braemar Shipping Services plc is a Public Limited Company incorporated and domiciled in England and Wales.
The term 'Company' refers to Braemar Shipping Services plc and 'Group' refers to the Company and all its subsidiary undertakings and the employee share ownership trust. The address of its registered office is 35 Cosway Street, London, NW1 5BT, United Kingdom.
These interim condensed consolidated financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. The audited statutory accounts for the year ended 29 February 2012 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.
Forward-looking statements
Certain statements in this half-yearly 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 have been 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
Preparation of the Group's financial statements requires the use of estimates and critical judgements that affect the reported amounts of assets and liabilities, income and expense. Management make specific applications of judgement, not involving estimation, in the preparation of the financial statements, in particular the approach to revenue recognition. Principal areas where assumptions and estimates have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are in respect of the impairment review of goodwill, other intangible assets and impairment of trade receivables.
2. Basis of preparation and statement of compliance
This consolidated interim financial information for the half-year ended 31 August 2012 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union. The half-yearly condensed consolidated financial report should be read in conjunction with the annual financial statements for the year ended 29 February 2012, 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 consolidated financial statements are consistent with those of the annual financial statements for the year ended 29 February 2012, as included in those annual financial statements. New standards and interpretations in issue but not yet effective as at the date of authorisation of these financial statements are deemed not to have a material impact on the results or net assets of the group.
4. Segmental information
Shipbroking | Technical | Logistics | Environmental | Inter-division | Total | |
Six months to 31 August 2012 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Revenue | 24,193 | 19,129 | 18,896 | 17,278 | (141) | 79,355 |
Divisional operating profit | 2,904 | 1,658 | 1,075 | 2,012 | - | 7,649 |
Amortisation of other intangible assets | (395) | (415) | (108) | - | - | (918) |
Segment result | 2,509 | 1,243 | 967 | 2,012 | - | 6,731 |
Unallocated other costs | (1,695) | |||||
Operating profit | 5,036 | |||||
Finance income/(cost) - net | 59 | |||||
Share of profit from joint ventures | 88 | |||||
Profit before taxation | 5,183 | |||||
Taxation | (1,485) | |||||
Profit for the period attributable to shareholders from continuing operations | 3,698 | |||||
Segment operating assets | 41,705 | 26,020 | 13,688 | 2,459 | - | 83,872 |
| ||||||
Six months to 31 August 2011 | ||||||
Revenue | 23,951 | 15,539 | 19,719 | 2,312 | - | 61,521 |
Divisional operating profit | 3,535 | 1,063 | 1,116 | 61 | - | 5,775 |
Amortisation of other intangible assets | (289) | (374) | (95) | (2) | - | (760) |
Non-recurring income and expense | - | 991 | - | - | - | 991 |
Segment result | 3,246 | 1,680 | 1,021 | 59 | - | 6,006 |
Unallocated other costs | (1,115) | |||||
Operating profit | 4,891 | |||||
Finance income/(cost) - net | 36 | |||||
Share of profit from joint ventures | 102 | |||||
Profit before taxation | 5,029 | |||||
Taxation | (1,441) | |||||
Profit for the period attributable to shareholders from continuing operations | 3,588 | |||||
Segment operating assets | 42,720 | 26,806 | 12,871 | 1,895 | - | 84,292 |
4. Segmental information (continued)
Shipbroking | Technical | Logistics | Environmental | Inter-division | Total | |
Year ended 29 February 2012 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Revenue | 49,813 | 31,954 | 37,630 | 14,529 | (452) | 133,474 |
Divisional operating profit | 7,121 | 1,833 | 1,888 | 1,857 | - | 12,699 |
Amortisation of other intangible assets | (531) | (838) | (87) | (2) | - | (1,458) |
Non-recurring income and expense | (354) | 423 | - | - | - | 69 |
Segment result | 6,236 | 1,418 | 1,801 | 1,855 | - | 11,310 |
Unallocated other costs | (1,953) | |||||
Operating profit | 9,357 | |||||
Finance income/(cost) - net | 181 | |||||
Share of profit from joint ventures | 252 | |||||
Profit before taxation | 9,790 | |||||
Taxation | (2,888) | |||||
Profit for the period attributable to shareholders from continuing operations | 6,902 | |||||
Segment operating assets | 42,334 | 25,051 | 13,575 | 5,685 | - | 86,645 |
Segment assets consist primarily of intangible assets (including goodwill), tangible fixed assets, receivables and other assets. Receivables for taxes, cash and cash equivalents and investments have been excluded.
5. Taxation
Current tax expense for the interim periods presented is the expected tax payable on the taxable 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 2012 was 28.6% (six months ended 31 August 2011: 28.6%, year ended 29 February 2012: 29.5%).
6. Earnings per share
Six months to 31 Aug 2012 | Six months to 31 Aug 2011 | Year ended 29 Feb 2012 | |||
£'000 | £'000 | £'000 | |||
Profit for the period attributable to shareholders | 3,678 | 3,555 | 6,841 | ||
Pence | pence | pence | |||
Basic earnings per share | 17.70 | 17.60 | 33.84 | ||
Effect of dilutive share options | (0.88) | (0.34) | (1.31) | ||
Diluted earnings per share | 16.82 | 17.26 | 32.53 | ||
Profit for the period attributable to shareholders before amortisation of other intangible assets and non-recurring items | 4,376 | 3,384 | 7,895 | ||
Pence | pence | Pence | |||
Basic earnings per share | 21.06 | 16.76 | 39.05 | ||
Effect of dilutive share options | (1.05) | (0.33) | (1.51) | ||
Diluted earnings per share | 20.01 | 16.43 | 37.54 |
7. Dividends
The following dividends were paid by the Group:
Six months to | Six months to | Year ended | |||
31 Aug 2012 | 31 Aug 2011 | 29 Feb 2012 | |||
£'000 | £'000 | £'000 | |||
Ordinary shares of 10 pence each | |||||
Final of 17.0 pence per share (2011: 17.0 pence per share) | 3,537 | 3,421 | 3,421 | ||
Interim of 9.0 pence per share paid | - | - | 1,812 | ||
3,537 | 3,421 | 5,233 |
The Directors have declared an interim dividend of 9.0 pence per ordinary share, payable on 14 December 2012 to shareholders on the register on 16 November 2012.
8. Goodwill, other intangible assets and property, plant and equipment
Goodwill, tangible and intangible assets | |||||||
£000 | |||||||
Six months ended 31 August 2012 | |||||||
Opening net book amount at 1 March 2012 | 39,303 | ||||||
Acquisition of subsidiaries (see note 11) | 468 | ||||||
Additions | 384 | ||||||
Depreciation and amortisation | (1,529) | ||||||
Exchange movements | 35 | ||||||
Closing net book amount at 31 August 2012 | 38,661 | ||||||
Six months ended 31 August 2011 | |||||||
Opening net book amount at 1 March 2011 | 39,596 | ||||||
Acquisition of a subsidiary | 1,476 | ||||||
Additions | 336 | ||||||
Depreciation and amortisation | (1,379) | ||||||
Exchange movements | 142 | ||||||
Closing net book amount at 31 August 2011 | 40,171 | ||||||
9. Share capital
Number of | Ordinary | Share | ||||||
shares | Shares | Premium | Total | |||||
(thousands) | £000 | £000 | £000 | |||||
At 1 March 2012 | 21,600 | 2,160 | 12,018 | 14,178 | ||||
Shares issued and fully paid | 33 | 3 | 61 | 64 | ||||
At 31 August 2012 | 21,633 | 2,163 | 12,079 | 14,242 | ||||
At 1 March 2011 | 21,096 | 2,110 | 11,077 | 13,187 | ||||
Shares issued and fully paid | 1 | - | 3 | 3 | ||||
31 August 2011 | 21,097 | 2,110 | 11,080 | 13,190 | ||||
9. Share capital (continued)
The Group's ESOP trust acquired 36,331 of the company's shares in the first half of the year for £156,000.
During the six months ended 31 August 2012 72,750 shares at a value of £243,000 that were awarded to employees in May 2008 as part of the Deferred Bonus Plan (the Plan) were delivered to them in May 2012 following the three year vesting period. Details of the Plan are disclosed in the annual financial statements for the year ended 29 February 2012.
In addition, 26,664 shares at a value of £93,000 that were awarded to executive directors in May 2007 as part of the long-term incentive plan ("LTIP") were delivered to them in May 2012 due to performance conditions being met. Details of the LTIP are disclosed in the annual financial statements for the year ended 29 February 2012.
10. Other reserves
Group | Capital redemption reserve | Merger reserve | Deferred consideration reserve | Translation reserve | Hedging reserve | Total other reserves | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
At 1 March 2012 | 396 | 21,346 | (389) | 5,209 | 102 | 26,664 | |
Cash flow hedges | |||||||
- Transfer to net profit | - | - | - | - | (136) | (136) | |
- Fair value gains in the period | - | - | - | - | 88 | 88 | |
Foreign exchange differences | - | - | - | (386) | - | (386) | |
Deferred tax on items taken to equity | - | - | - | - | 12 | 12 | |
At 31 August 2012 | 396 | 21,346 | (389) | 4,823 | 66 | 26,242 | |
At 1 March 2011 | 396 | 21,346 | (389) | 4,798 | 172 | 26,323 | |
Cash flow hedges | |||||||
- Transfer to net profit | - | - | - | - | (236) | (236) | |
- Fair value gains in the period | - | - | - | - | 120 | 120 | |
Foreign exchange differences | - | - | - | 536 | - | 536 | |
Deferred tax on items taken to equity | - | - | - | - | 33 | 33 | |
At 31 August 2011 | 396 | 21,346 | (389) | 5,334 | 89 | 26,776 |
All other reserves are attributable to the equity holders of the parent company.
11. Acquisitions
On 30 April 2012 the Group acquired 100% of the share capital of Orca Shipping Limited for a total cash consideration of £820,000. Initial consideration paid was £741,000 satisfied by cash from existing resources. Deferred consideration of £79,000 is payable within the next year and will be settled wholly in cash.
The acquired business contributed revenues and a net profit before amortisation of £49,000 to the group for the period from acquisition to 31 August 2012.
Details of provisional net assets acquired are set out below. The fair value of the intangible assets relates to the value of the forward order book acquired and customer relationships.
Acquiree's | |||||
carrying | Fair value | Provisional | |||
amount | adjustments | Fair value | |||
£'000 | £'000 | £'000 | |||
Cash and cash equivalents | 509 | - | 509 | ||
Intangible assets | - | 468 | 468 | ||
Receivables | 36 | - | 36 | ||
Payables | (25) | - | (25) | ||
Current tax liability | (60) | - | (60) | ||
Deferred tax liability | - | (108) | (108) | ||
Net assets acquired by the Group | 460 | 360 | 820 | ||
Purchase consideration | |||||
- cash paid | 741 | ||||
- deferred consideration | 79 | ||||
Total consideration | 820 | ||||
Outflow of cash to acquire the business, net of cash acquired: | |||||
- cash consideration | 741 | ||||
- cash and cash equivalents in subsidiary acquired | (509) | ||||
Cash outflow on acquisition | 232 |
In addition, an amount of £47,000 was incurred in the six months ended 31 August 2012 in respect of an acquisition from a previous period.
In the six months ended 31 August 2011, the Group acquired the business and certain assets of BMT Marine and Offshore Surveys Limited from the Administrator, Deloitte, for a cash consideration of £2.4 million. The difference between the consideration paid and the fair value of the assets acquired resulted in a non-recurring gain of £991,000.
12. Related parties
The Group's related parties are unchanged from 29 February 2012 and there have been no significant related party transactions in the six months ended 31 August 2012.
For further information about the Group's related parties, please refer to the Group's annual financial statements for the year ended 29 February 2012.
INDEPENDENT REVIEW REPORT TOBRAEMAR SHIPPING SERVICES PLC
Introduction
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 2012 which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated cash flow statement, consolidated statement of changes in equity.
We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
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 Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"). 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.
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 FSA.
As disclosed in note 2 the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34Interim Financial Reporting 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.
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. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) 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.
Conclusion
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 2012 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.
John Luke
for and on behalf of KPMG Audit Plc
Chartered Accountants
15 Canada Square,
London, E14 5GL
29 October 2012