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BRAEMAR PLC — Interim / Quarterly Report 2013
Oct 29, 2013
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Interim / Quarterly Report
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RNS Number : 5794R
Braemar Shipping Services PLC
29 October 2013
BRAEMAR SHIPPING SERVICES PLC
29 October 2013
Unaudited interim results for the six months ended 31 August 2013
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 2013.
FINANCIAL HIGHLIGHTS
· Revenue from continuing operations £66.1 million (interim 2012/13: £79.4 million). The higher revenue in the first half of last year includes revenue of £15.0 million from the RENA project which came to a conclusion in February 2013.
· Pre-tax profit £4.3 million (interim 2012/13: £5.2 million). The first half profits last year included £1.8 million from the RENA project.
· Strong performance from Braemar Technical Services which is benefiting from involvement in LNG vessel technical consulting and provision of expertise to large energy projects.
· Basic EPS 15.12p (interim 2012/13: 17.70p).
· Interim dividend of 9.0p per share unchanged.
Sir Graham Hearne, chairman of Braemar, said:
"Braemar is a leading provider of services to the shipping and energy industries globally. The results, which show a 3% growth in revenue excluding the RENA project, reflect a strong and growing contribution from Braemar Technical Services.
"Although freight rates and vessel values continued to be depressed, during the period under review, there is now a degree of optimism in some shipping markets that a cyclical recovery is underway. We believe the Shipbroking division is well placed to benefit from this recovery.
"Overall the Group delivered a stable first half performance and our expectation for the full year remains unchanged."
ENDS
For further information, contact:
| Braemar Shipping Services | |
| James Kidwell | Tel +44 (0) 20 7535 2881 |
| Martin Beer | Tel +44 (0) 20 7903 2654 |
| Bell Pottinger | |
| Stephen Benzikie | Tel +44 (0) 20 7861 3879 |
| Zoe Pocock | Tel +44 (0) 20 7861 3961 |
| Westhouse Securities | |
| Henry Willcocks | Tel +44 (0) 20 7601 6000 |
| Richard Johnson |
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 shipbroking services to international ship owners, charterers and financial institutions operating in the tanker, gas, chemicals, offshore, container and dry bulk markets. There are shipbroking offices in the UK, USA, Norway, China, Australia, Singapore, India and Italy.
Follow on Twitter @BraemarResearch
Technical
Braemar Technical Services provides a range of specialist services to shipping, insurance and energy industries. These services include:
- Energy Loss Adjusting: specialist loss adjusting and other expert services to the energy (oil and gas), marine, power and other related industrial sectors from offices in London, Houston, Singapore, Calgary, Dubai and Rio de Janeiro.
- Marine surveying: specialised marine and offshore services for the energy and insurance industries which mainly comprise pre-risk marine warranty surveys from offices in the UK, Australia, China, India, Indonesia, Malaysia, Singapore, Thailand and Vietnam.
- Hull and machinery damage surveys and expert marine consultancy services to the shipping and insurance industries from a global network of offices.
- Engineering: consultant marine engineering and naval architecture services to the shipping and offshore industries from offices throughout the Far East, London and Houston. In particular it has a long established reputation as a technical advisor for LNG vessels.
www.braemar.com
Logistics
Cory Brothers Shipping Agency is engaged in ship agency, freight forwarding and logistics in the UK and Singapore.
www.cory.co.uk
Environmental
Braemar Howells provides pollution response clean up and contingency planning services primarily in the UK and Africa. It has earned an international reputation for its work for the insurance industry in handling several high profile and environmentally sensitive projects.
www.braemarhowells.com
INTERIM ANNOUNCEMENT - SIX MONTHS ENDED 31 AUGUST 2013
CHAIRMAN'S STATEMENT
Results
Braemar has delivered a stable first half performance with encouraging results from our Technical division and improved newbuilding orders in Shipbroking.
Group revenue was £66.1 million in the first half of this year compared to £79.4 million in the first half of 2012/13.The higher revenue in the first half of last year was mostly in Braemar Howells and resulted from £15.0 million of revenue from the RENA project that came to a conclusion in February 2013. Excluding this project revenue increased by 3%. Interim profit before tax was £4.3 million compared to £5.2 million last year. Profit before tax (excluding the RENA project) has grown from £3.4 million in the first half of 2012/13 to £3.5 million in the second half of 2012/13 and to £4.3 million in the first half of the current year.
Earnings per share were 15.12p compared to 17.70p last year and 15.08p in the second half of last year.
Trading
In the first half the oversupply of tonnage in most shipping sectors continued to depress the markets and our shipbroking income. However, our Technical and Logistics businesses performed well and enabled us to ride the cycle and produce a solid result.
Braemar Seascope felt the impact of low freight rates and vessel values, which served to reduce income even though transaction volumes were maintained. The division finished the first half with some optimism, boosted by a resurgence in dry bulk rates and the addition of significant newbuilding business.
Braemar Technical Services ("BTS") has reported an excellent half year performance, demonstrating its broad-ranging capability with a widespread global presence. In particular, BTS is providing expertise to several large, long-term oil and gas projects as well as fulfilling the role of technical consultant to a number of LNG interests.
Our Logistics division, Cory Brothers, continues to see its profitability grow with a strong contribution from ship agency and an improving logistics business.
The activities in our Environmental division have returned to a routine level following the completion of the work on the RENA.
Dividend
The board has declared an unchanged interim dividend of 9.0 pence. The interim dividend will be paid on Friday 13 December 2013 to shareholders on the register at the close of business on Friday 15 November 2013.
Outlook
After several tough years, there is now a degree of optimism in some shipping markets that a cyclical recovery is underway. This is most evident in the volume of new vessels being ordered and the rise in dry bulk chartering rates.
Shipping is intrinsically linked to wider global economic conditions where a gradual improvement can be expected over a number of years. We expect our Shipbroking division to produce an improved performance in the second half of the year and our Technical, Logistics and Environmental divisions to continue with a similar level of activity to the first half. Overall our full year expectation remains unchanged.
Sir Graham Hearne CBE
Chairman
28 October 2013
CHIEF EXECUTIVE'S REVIEW OF ACTIVITIES
Braemar is a highly respected provider of services to the shipping and energy industries globally. We operate using four major brands: Braemar Seascope (international shipbroking), Braemar Technical Services (technical consulting mainly for shipping and oil and gas), Cory Brothers (ship agency and logistics) and Braemar Howells (environmental services). Our aim is to grow the businesses by developing first-class service propositions, extending geographic presence and by capitalising on their ability to work together and share resources where it makes sense.
We have continued to invest in our people, systems and research and analysis despite the tough environment in the shipping markets, and this investment will stand us in good stead to benefit from a cyclical recovery. Our presence in the Far East, particularly in Singapore, continues to grow and we have opened new offices in Europe and the US. After several years of weak shipping markets, desire for operating efficiencies (particularly in relation to fuel consumption) combined with new flows of capital are now creating more opportunities within shipbroking.
Braemar Technical Services is a global provider of engineering, surveying and loss adjusting services to the shipping, insurance and energy industries. We have a multi-disciplinary work force of 350 staff operating from more than 15 countries across the world. We are benefiting in particular from our expertise in the technical aspects of LNG ships and from the marine warranty surveying services we provide to major energy companies and insurers. The Salvage Association was established by the Lloyd's insurance market more than a century ago as a hull and machinery surveyor. It has strong links with the marine insurance community, as do the other arms of BTS.
Cory Brothers has a heritage of which we are enormously proud, having been in UK ship agency for over 150 years. Cory is a leading UK player in ship agency providing a top class service using its own system "Shiptrak", which enables us to capture, analyse and report a wide variety of relevant information for clients. Our presence in agency has been successfully extended to Singapore and we believe further international opportunities exist. In addition Cory Brothers provides freight forwarding and logistics services and is well known for dealing efficiently with complex projects.
Our environmental arm, which operates under the Braemar Howells brand, has handled several major clean-up projects in recent years, and in so doing built a reputation for sensitively handling difficult projects.
| Shipbroking | |
| Revenue: | £19.0 million (interim 2012/13: £24.2 million) |
| Divisional operating profit 1: | £1.1 million (interim 2012/13: £2.9 million) |
1 Divisional operating profit is a management KPI used consistently throughout this report and represents the operating profit of the division before amortisation of other intangible assets
Braemar Seascope has continued to feel the effect of a difficult market with low freight rates and vessel values. However, the volume of transactions has been maintained in the period as has the overall number of brokers. We continue to invest in the people and systems infrastructure in readiness for the recovery in shipping markets.
At the end of the first half of the year we saw some encouraging activity, culminating in a boost to our forward book of business from in excess of 30 newbuilding and resale contracts secured by our sale and purchase and offshore departments. Revenue from sale and purchase business was lower in the first half of the year compared to last year, predominantly because of a lower newbuilding forward book. However, new investment in the market has favoured newbuilding and resales which has seen a significant recovery and we have been successful in concluding a good level of business.
Our tanker teams have experienced low freight rates throughout the period. The Baltic Dirty Tanker Index was on average 12% lower than the same period last year which has resulted in lower revenue. The volume of transactions, particularly with long haul cargoes to the Far East, has been steady although income generally has suffered due to the depressed freight rates. The clean product tanker market has been relatively firm and we have benefited from good volumes in the Far East. We have opened a new specialised tanker office in Oslo. Our LNG and gas departments have won contracts which have added to the forward book of business and will generate revenue in future years.
In the dry cargo market, freight rates were depressed throughout the first half of our year. The Baltic Dry Index ("BDI") averaged 962 during the period and finished the half at 1,132. However, since then, freight rates have seen a dramatic improvement driven by a slow-steaming fleet and Chinese iron ore imports which have increased the demand for capesize vessels. The BDI currently stands at 1,671 with capes earning on average in excess of $20,000 per day having peaked at $40,000 per day. During the period we moved the centre of our Dry Cargo business to the Far East to be closer to the customer base.
The last few months have been extremely busy for our offshore desk which achieved a 20% increase in fixture volumes compared to the same period last year. The spot market has been active with good rates being achieved due to the oil price remaining around $100 per barrel, which has supported exploration activity. Our offshore team has also been active in the sale and purchase market, securing the contracts for several newbuilding resales during the period.
| Technical | |
| Revenue: | £22.8 million (interim 2012/13: £19.1 million) |
| Divisional operating profit: | £3.0 million (interim 2012/13: £1.7 million) |
Braemar Technical Services has delivered a strong first half performance and a significant increase in profitability. We expect this momentum to continue with our involvement in long term projects; although the market is likely to soften in the second half of the year due to seasonal variation on offshore activities in the Far East.
The improvement in BTS over last year has been driven mainly by our marine warranty surveying and engineering consultancy businesses in the Far East. All offices in the area were extremely busy and have benefited from a high volume of work arising from the development of large energy projects in the region. We have recently won further significant business from these developments and as the business continues to grow are looking to expand our geographic presence.
Hull and machinery damage surveying has seen an increase in the number of assignments carried out in the first half compared to the same period last year, with a corresponding increase in revenue. The offices in Dubai and the Far East have performed especially well following expansion in these areas and we have seen an improving performance in North America.
Energy loss adjusting has performed steadily in a competitive market with improved trading compared to last year. We have recently opened up a new office in Dubai which will give us increased access to the Middle East and East Africa markets.
Consultant engineering which specialises in the design, plan approval and site supervision for newbuildings is a world leader in the field of LNG carrier design and construction supervision. In the first half of this year we commenced work on a three year contract for the design and site supervision of six LNG newbuildings together with local staff training. Since the end of the period, we have won additional prestigious business as owner's engineers for the world's largest floating LNG production project. We have recently recruited new senior management in Houston to expand our presence in North America.
| Logistics | |
| Revenue: | £21.1 million (interim 2012/13: £18.9 million) |
| Divisional operating profit: | £1.3 million (interim 2012/13: £1.1 million) |
Cory Brothers has performed well in both the UK and Singapore. The UK agency business has benefited from increased port calls and a multi-year hub agency contract with an oil major which commenced in the second half of last year, although the market in which it operates remains volatile. In Singapore, our agency business has been extremely busy in line with regional activity.
The freight forwarding and logistics performance has improved in comparison to last year with a general rise in economic activity and confidence. We expect a similar performance in the second half of the year with the business benefiting from a number of projects in the pipeline.
The tours business has also had a better cruise ship season than last year which benefits our first half.
| Environmental | |
| Revenue: | £3.2 million (interim 2012/13: £17.3 million) |
| Divisional operating profit: | £0.2 million (interim 2012/13: £2.0 million) |
Following completion of the work onthe stricken container ship, the RENA, in the second half of last year, Braemar Howells has reverted to a routine level of activity, without any major on-going project work. The work on the RENA contributed revenue of approximately £15 million and divisional operating profit of £1.8 million in the first half of last year. So far, activities this year have been steady and we expect a similar level of performance in the second half in the absence of any major event.
Other operating costs
| Amortisation of other intangible assets: | £0.3 million (interim 2012/13: £0.9 million) |
The charge in respect of the amortisation of other intangible assets has reduced in the first half of this year because a number of the intangible assets arising from acquisitions in previous years are now fully amortised.
| Unallocated other costs: | £1.1 million (interim 2012/13: £1.7 million) |
Unallocated other costs have fallen in the current period because of cost savings and an increase last year in relation to the succession changes on the Board.
Foreign exchange
A large proportion 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 2013 was $1.53/£ (half year 2012/13: $1.57/£, full year 2012/13: $1.56/£). The rate of translation as at 31 August 2013 was $1.55/£ (31 August 2012: $1.52/£).
The effect of the retranslation of balances held in foreign currencies is recognised through the consolidated statement of comprehensive income. The weakening of Singapore dollar, Malaysian ringgit and Indian rupee have all been significant in the last six months.
The Group has a hedging policy which reduces its major currency exposure. The policy is based on expected receipts from contracted revenue, which approximates to 50% of the next nine months of revenue and is generally only material for the US dollar. The policy also reduces the translation exposure as significant currency reserves will be converted back to sterling on a regular basis. In the long term, shipbroking revenues denominated in US$ remain exposed to the US$/£ exchange rate.
At 31 August 2013 the Group held forward currency contracts to sell US$7.0 million at an average rate of $1.51/£.
Taxation
The effective underlying rate of corporate tax on profits was 26.2% (interim 2012/13: 28.6%). The fall in the effective rate in comparison to last year is principally as a result of the reduction to the UK standard rate of corporation tax from 24% to 23%. Further reductions of the rate to 20% by April 2015 are expected to reduce the rate in future years. 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 £7.1 million at 31 August 2013 compared with cash of £17.3 million at 31 August 2012 and £23.3 million at 28 February 2013. This largely follows the normal cycle of cash flow whereby staff bonuses in respect of the previous year together with the final dividend to shareholders are both paid in the first half of the following year. During the first half there has been an increase in the level of trade and other receivables causing a cash outflow, whereas in the first half of last year cash flow benefited from strong cash conversion on the RENA project. The increase this year is partly explained by the increase in the level of business in the Technical division, but is also due to the timing of collections in a number of other areas. We anticipate improved collections in the second half of the year. The Group continues to have no debt.
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 17 of the 2013 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. The Group holds professional indemnity insurance to an amount considered adequate for its size and potential exposure.
James Kidwell
Chief Executive
28 October 2013
Statement of Directors' responsibilities
The directors confirm, to the best of their knowledge, that the 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 Conduct Authority.
The directors of Braemar Shipping Services plc are listed in the Braemar Shipping Services plc Annual Report for 28 February 2013.
By order of the board
J. R. V. Kidwell, Chief Executive M. F. S. Beer, Finance Director
Braemar Shipping Services plc
Consolidated Income Statement
| Unaudited | Unaudited | Audited | ||||
| Six months to | Six months to | Year ended | ||||
| 31 Aug 2013 | 31 Aug 2012 | 28 Feb 2013 | ||||
| Continuing operations | Notes | £'000 | £'000 | £'000 | ||
| Revenue | 4 | 66,117 | 79,355 | 143,774 | ||
| Cost of sales | (17,924) | (26,989) | (43,867) | |||
| Gross profit | 48,193 | 52,366 | 99,907 | |||
| Operating costs | ||||||
| Operating costs excluding amortisation of other intangible assets | (43,703) | (46,412) | (89,386) | |||
| Amortisation of other intangible assets | (300) | (918) | (1,538) | |||
| (44,003) | (47,330) | (90,924) | ||||
| Operating profit | 4 | 4,190 | 5,036 | 8,983 | ||
| Finance income | 75 | 104 | 296 | |||
| Finance costs | (6) | (45) | (45) | |||
| Share of profit after tax from joint ventures | 37 | 88 | 62 | |||
| Profit before taxation | 4,296 | 5,183 | 9,296 | |||
| Taxation | 5 | (1,126) | (1,485) | (2,447) | ||
| Profit for the period | 3,170 | 3,698 | 6,849 | |||
| Attributable to: | ||||||
| Equity holders of the parent | 3,161 | 3,678 | 6,824 | |||
| Non-controlling interest | 9 | 20 | 25 | |||
| Profit for the period | 3,170 | 3,698 | 6,849 | |||
| Earnings per ordinary share | 6 | |||||
| Basic - pence | 15.12p | 17.70p | 32.78p | |||
| Diluted - pence | 14.40p | 16.82p | 31.72p |
Consolidated Statement of Comprehensive Income
| Unaudited | Unaudited | Audited | ||||
| Six months to | Six months to | Year ended | ||||
| 31 Aug 2013 | 31 Aug 2012 | 28 Feb 2013 | ||||
| Notes | £'000 | £'000 | £'000 | |||
| Profit for the period | 3,170 | 3,698 | 6,849 | |||
| Other comprehensive income / (expense) | ||||||
| Items that may be reclassified to profit or loss: | ||||||
| Foreign exchange differences on retranslation of foreign operations | (1,857) | (386) | 1,131 | |||
| Cash flow hedges - net of tax | 157 | (36) | (165) | |||
| Total comprehensive income for the period | 1,470 | 3,276 | 7,815 | |||
| Attributable to: | ||||||
| Equity holders of the parent | 1,461 | 3,256 | 7,790 | |||
| Non-controlling interest | 9 | 20 | 25 | |||
| Total comprehensive income for the period | 1,470 | 3,276 | 7,815 |
Braemar Shipping Services plc
Consolidated Balance Sheet
| Unaudited | Unaudited | Audited | |||||
| As at | As at | As at | |||||
| 31 Aug 13 | 31 Aug 12 | 28 Feb 13 | |||||
| Assets | Notes | £'000 | £'000 | £'000 | |||
| Non-current assets | |||||||
| Goodwill | 30,318 | 30,451 | 30,547 | ||||
| Intangible assets | 1,252 | 2,151 | 1,524 | ||||
| Property, plant and equipment | 6,040 | 6,059 | 6,165 | ||||
| Investments | 1,879 | 1,800 | 1,796 | ||||
| Deferred tax assets | 757 | 1,149 | 1,021 | ||||
| Other receivables | 277 | 226 | 261 | ||||
| 40,523 | 41,836 | 41,314 | |||||
| Current assets | |||||||
| Trade and other receivables | 50,393 | 44,985 | 44,621 | ||||
| Restricted cash | 325 | 2,523 | 339 | ||||
| Cash and cash equivalents | 7,121 | 17,311 | 23,277 | ||||
| 57,839 | 64,819 | 68,237 | |||||
| Total assets | 98,362 | 106,655 | 109,551 | ||||
| Liabilities | |||||||
| Current liabilities | |||||||
| Trade and other payables | 26,640 | 34,012 | 36,343 | ||||
| Current tax payable | 1,964 | 1,137 | 1,638 | ||||
| Provisions | 467 | 402 | 413 | ||||
| Client monies held as escrow agent | 325 | 2,523 | 339 | ||||
| 29,396 | 38,074 | 38,733 | |||||
| Non-current liabilities | |||||||
| Deferred tax liabilities | 538 | 1,241 | 612 | ||||
| Provisions | 359 | 358 | 363 | ||||
| 897 | 1,599 | 975 | |||||
| Total liabilities | 30,293 | 39,673 | 39,708 | ||||
| Net assets | 68,069 | 66,982 | 69,843 | ||||
| Equity | |||||||
| Share capital | 9 | 2,166 | 2,163 | 2,165 | |||
| Share premium | 9 | 12,166 | 12,079 | 12,150 | |||
| Shares to be issued | (3,287) | (3,515) | (3,309) | ||||
| Other reserves | 10 | 26,319 | 26,242 | 27,630 | |||
| Retained earnings | 30,705 | 29,773 | 30,962 | ||||
| Total shareholders' equity | 68,069 | 66,742 | 69,598 | ||||
| Non-controlling interest | - | 240 | 245 | ||||
| Total equity | 68,069 | 66,982 | 69,843 |
Braemar Shipping Services plc
Consolidated Cash Flow Statement
| Unaudited | Unaudited | Audited | |||||
| Six months | Six months | Year ended | |||||
| 31 Aug 13 | 31 Aug 12 | 28 Feb 13 | |||||
| Notes | £'000 | £'000 | £'000 | ||||
| Profit before tax for the period | 4,296 | 5,183 | 9,296 | ||||
| Adjustments for: | |||||||
| - Depreciation of property, plant and equipment | 497 | 527 | 1,051 | ||||
| - Amortisation of computer software | 114 | 84 | 187 | ||||
| - Amortisation of other intangible assets | 300 | 918 | 1,538 | ||||
| - Loss on sale of property, plant and equipment | - | - | (37) | ||||
| - Finance income | (75) | (104) | (296) | ||||
| - Finance expense | 6 | 45 | 45 | ||||
| - Share of profit of joint ventures | (37) | (88) | (62) | ||||
| - Share based payments | 332 | 497 | 679 | ||||
| Financial instruments | - | (11) | (185) | ||||
| Changes in working capital | |||||||
| - Trade and other receivables | (5,685) | 2,126 | 3,458 | ||||
| - Trade and other payables | (9,325) | (3,421) | (769) | ||||
| Provisions | 37 | 75 | 91 | ||||
| Cash (used in)/generated from operations | (9,540) | 5,831 | 14,996 | ||||
| Interest received | 75 | 104 | 296 | ||||
| Interest paid | (6) | (45) | (45) | ||||
| Tax paid | (659) | (1,563) | (3,625) | ||||
| Net cash (used in)/generated from operating activities | (10,130) | 4,327 | 11,622 | ||||
| Cash flows from investing activities | |||||||
| Dividends from joint ventures | - | 187 | 189 | ||||
| Acquisition of subsidiaries, net of cash acquired | 11 | (348) | (279) | (279) | |||
| Purchase of property, plant and equipment | 8 | (482) | (384) | (1,253) | |||
| Proceeds from sale of property, plant and equipment | - | - | 83 | ||||
| Other long-term receivables | (16) | 7 | (28) | ||||
| Net cash used in investing activities | (846) | (469) | (1,288) | ||||
| Cash flows from financing activities | |||||||
| Proceeds from issue of ordinary shares | 17 | 64 | 137 | ||||
| Dividends paid | 7 | (3,526) | (3,537) | (5,412) | |||
| Purchase of own shares | - | (156) | (148) | ||||
| Net cash used in financing activities | (3,509) | (3,629) | (5,423) | ||||
| Decrease / (increase) in cash and cash equivalents | (14,485) | 229 | 4,911 | ||||
| Cash and cash equivalents at beginning of the period | 23,277 | 17,467 | 17,467 | ||||
| Foreign exchange differences | (1,671) | (385) | 899 | ||||
| Cash and cash equivalents at end of the period | 7,121 | 17,311 | 23,277 |
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 2013 | 2,165 | 12,150 | (3,309) | 27,630 | 30,962 | 69,598 | 245 | 69,843 | |
| Profit for the period | - | - | - | - | 3,161 | 3,161 | 9 | 3,170 | |
| Foreign exchange differences | - | - | - | (1,857) | - | (1,857) | - | (1,857) | |
| Cash flow hedges net of tax | - | - | - | 157 | - | 157 | - | 157 | |
| Total recognised income and expense in the period | - | - | - | (1,700) | 3,161 | 1,461 | 9 | 1,470 | |
| Dividends paid | 7 | - | - | - | - | (3,526) | (3,526) | - | (3,526) |
| Issue of shares | 1 | 16 | - | - | - | 17 | - | 17 | |
| Consideration paid | - | - | - | 389 | (202) | 187 | (254) | (67) | |
| ESOP shares allocated | - | - | 22 | - | (22) | - | - | - | |
| Credit in respect of share option schemes | - | - | - | - | 332 | 332 | - | 332 | |
| Balance at 31 August 2013 | 2,166 | 12,166 | (3,287) | 26,319 | 30,705 | 68,070 | - | 68,069 | |
| 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 |
BRAEMAR SHIPPING SERVICES PLC
UNAUDITED NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 AUGUST 2013
1. General information
The interim consolidated financial statements of the Group for the period ended 31 August 2013 were authorised for issue in accordance with a resolution of the directors on 28 October 2013. 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 28 February 2013 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 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
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 2013 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 28 February 2013, 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 28 February 2013, as included in those annual financial statements, other than presentational changes required by IAS1 Revised. 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 2013 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Revenue | 18,995 | 22,839 | 21,079 | 3,234 | (30) | 66,117 |
| Divisional operating profit | 1,076 | 3,028 | 1,314 | 189 | - | 5,607 |
| Amortisation of other intangible assets | (226) | (52) | (22) | - | - | (300) |
| Segment result | 850 | 2,976 | 1,292 | 189 | 5,307 | |
| Unallocated other costs | (1,117) | |||||
| Operating profit | 4,190 | |||||
| Finance income/(cost) - net | 69 | |||||
| Share of profit from joint ventures | 37 | |||||
| Profit before taxation | 4,296 | |||||
| Taxation | (1,126) | |||||
| Profit for the period from continuing operations | 3,170 | |||||
| Segment operating assets | 42,810 | 28,002 | 14,778 | 2,713 | - | 88,303 |
| Segment operating liabilities | (6,825) | (4,836) | (14,528) | (1,277) | - | (27,466) |
| Six months to 31 August 2012 | ||||||
| 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 from continuing operations | 3,698 | |||||
| Segment operating assets | 41,075 | 26,020 | 13,688 | 2,459 | - | 83,872 |
| Segment operating liabilities | (11,481) | (4,313) | (14,823) | (4,155) | - | (34,772) |
4. Segmental information (continued)
| Shipbroking | Technical | Logistics | Environmental | Inter-division | Total | |
| Year ended 28 February 2013 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Revenue | 46,362 | 36,778 | 37,495 | 23,399 | (260) | 143,774 |
| Divisional operating profit | 5,348 | 3,437 | 2,006 | 2,681 | - | 13,472 |
| Amortisation of other intangible assets | (709) | (684) | (145) | - | - | (1,538) |
| Segment result | 4,639 | 2,753 | 1,861 | 2,681 | - | 11,934 |
| Unallocated other costs | (2,951) | |||||
| Operating profit | 8,983 | |||||
| Finance income/(cost) - net | 251 | |||||
| Share of profit from joint ventures | 62 | |||||
| Profit before taxation | 9,296 | |||||
| Taxation | (2,447) | |||||
| Profit for the period from continuing operations | 6,849 | |||||
| Segment operating assets | 39,937 | 25,800 | 14,094 | 2,206 | - | 82,037 |
| Segment operating liabilities | (13,945) | (4,576) | (16,899) | (1,699) | - | (37,119) |
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 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 2013 was 26.2% (six months ended 31 August 2012: 28.6%).
6. Earnings per share
| Six months to 31 Aug 2013 | Six months to 31 Aug 2012 | Year ended 28 Feb 2013 | ||||
| £'000 | £'000 | £'000 | ||||
| Profit for the period attributable to equity shareholders of the parent | 3,161 | 3,678 | 6,824 | |||
| pence | pence | pence | ||||
| Basic earnings per share | 15.12 | 17.70 | 32.78 | |||
| Effect of dilutive share options | (0.73) | (0.88) | (1.06) | |||
| Diluted earnings per share | 14.40 | 16.82 | 31.72 | |||
7. Dividends
The following dividends were paid by the Group:
| Six months to | Six months to | Year ended | |||
| 31 Aug 2013 | 31 Aug 2012 | 28 Feb 2013 | |||
| £'000 | £'000 | £'000 | |||
| Ordinary shares of 10 pence each | |||||
| Final of 17.0 pence per share (2012: 17.0 pence per share) | 3,526 | 3,537 | 3,542 | ||
| Interim of 9.0 pence per share paid | - | - | 1,870 | ||
| 3,526 | 3,537 | 5,412 |
The Directors have declared an interim dividend of 9.0 pence per ordinary share, payable on 13 December 2013 to shareholders on the register on 15 November 2013.
8. Goodwill, intangible assets and property, plant and equipment
| Goodwill, intangible assets and property, plant and equipment | |||||||
| £000 | |||||||
| Six months ended 31 August 2013 | |||||||
| Opening net book amount at 1 March 2013 | 38,236 | ||||||
| Additions | 517 | ||||||
| Depreciation and amortisation | (911) | ||||||
| Exchange movements | (232) | ||||||
| Closing net book value at 31 August 2013 | 37,610 | ||||||
| Six months ended 31 August 2012 | |||||||
| Opening net book amount at 1 March 2012 | 39,303 | ||||||
| Acquisition of a subsidiary | 468 | ||||||
| Additions | 384 | ||||||
| Depreciation and amortisation | (1,529) | ||||||
| Exchange movements | 35 | ||||||
| Closing net book value at 31 August 2012 | 38,661 |
9. Share capital
| Number of | Ordinary | Share | ||||||
| shares | Shares | Premium | Total | |||||
| (thousands) | £000 | £000 | £000 | |||||
| At 1 March 2013 | 21,647 | 2,165 | 12,150 | 14,315 | ||||
| Shares issued and fully paid | 13 | 1 | 16 | 17 | ||||
| At 31 August 2013 | 21,660 | 2,166 | 12,166 | 14,332 | ||||
| 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 |
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 2013 | 396 | 21,346 | (389) | 6,340 | (63) | 27,630 | |
| Cash flow hedges | |||||||
| - Transfer to net profit | - | - | - | - | 94 | 94 | |
| - Fair value gains in the period | - | - | - | - | 122 | 122 | |
| Foreign exchange differences | - | - | - | (1,857) | - | (1,857) | |
| Consideration paid | - | - | 389 | - | - | 389 | |
| Deferred tax on items taken to equity | - | - | - | - | (59) | (59) | |
| At 31 August 2013 | 396 | 21,346 | - | 4,483 | 94 | 26,319 | |
| 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 |
All other reserves are attributable to the equity holders of the parent company.
11. Acquisitions
During the six months ended 31 August 2013, the Group acquired the remaining 20% of Fred. Olsen Freight Limited for a consideration of £235,000.
In addition, £113,000 was incurred in respect of deferred and contingent consideration relating to acquisitions from previous periods.
12. Related parties
The Group's related parties are unchanged from 28 February 2013 and there have been no significant related party transactions in the six months ended 31 August 2013.
For further information about the Group's related parties, please refer to the Group's annual financial statements for the year ended 28 February 2013.
INDEPENDENT REVIEW REPORT TO BRAEMAR 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 2013 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, condensed consolidated cash flow statement, condensed consolidated statement of changes in equity and the related explanatory notes. 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 Conduct Authority ("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.
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 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 34 Interim 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 2013 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Ian Griffiths
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square, London, E14 5GL
28 October 2013
This information is provided by RNS
The company news service from the London Stock Exchange
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