Final Results

Seascope Shipping Holdings PLC 31 May 2002 For immediate release 31 May 2002 Seascope Shipping Holdings PLC Preliminary Results for the 14 months ended 28 February 2002 Seascope Shipping Holdings PLC, one of the UK's leading providers of shipbroking services, today announced preliminary results for the period ended 28 February 2002. HIGHLIGHTS 14 months to 12 months to 28.02.02 31.12.00 £000 £000 Turnover 25,430 12,068 Profit before tax before exceptional items and goodwill charges 3,387 1,927 Exceptional items and goodwill charges (6,713) (110) (Loss)/profit before tax (3,326) 1,817 EPS - basic - pence (27.45)p 17.12p EPS excluding exceptional items and 15.43p 18.75p goodwill charges - pence EPS excluding exceptional items and 13.23p 18.75p goodwill charges - annualised* - pence Shareholders funds 18,081 4,679 *The EPS before exceptional items and goodwill charges has been annualised by taking the 14 month figure of 15.43p and reducing it by 12/14 to arrive at a notional 12 months figure as a more meaningful comparison with the year ended 31 December 2000. Commenting on the outlook, Sir Peter Cazalet, Chairman, said: 'The outlook for the current financial year is uncertain. The decline in chartering rates especially affecting the U/VLCC tonnage has been partially counterbalanced by our increased activity in the second hand sale and purchase market and in demolition, areas where the Group is strong. The Specialist Tankers division remains upbeat with contract volumes holding up on Clean and Chemicals. Offshore and Wavespec also continue to perform well in their respective sectors. During the first two months of this year the Group has traded marginally above internal expectations' For further information, please contact: Seascope Shipping Holdings PLC Alan Marsh Tel: 020 7100 0000 Derek Walter Tel: 020 7535 2881 Grandfield Tel: 020 7417 4170 Clare Abbot Tel: 07715 169 326 PRELIMINARY ANNOUNCEMENT - PERIOD ENDED 28 FEBRUARY 2002 CHAIRMAN'S STATEMENT The 14 months to 28th February 2002 has been one of the most eventful periods in the Group's history. The additions of the Braemar Shipbrokers group on 7th March 2001 and the Braemar Tankers group on 11th October 2001 have doubled the size of the Group and have resulted in a strong and broadly based shipping services business. Both Seascope and Braemar are strong brand names and, having combined the companies onto one site, the Board is proposing a resolution at the AGM that the holding company's name should be changed to Braemar Seascope Group plc. On the trading front, in January 2001 tanker chartering rates were at very high levels but fell during the period until in 2002 rates were at the lowest levels we have seen in a decade or so. Dry cargo rates and new build prices also fell significantly. However, our Sale and Purchase division performed well and surpassed expectations. Profit before taxation for the 14 month period, excluding exceptional items and goodwill charges, was £3.4m. As announced on 21st February, the Board is recommending a final dividend of 7p per ordinary share, payable on 31st July to shareholders on the register at 5th July. Together with the 5p interim dividend the total dividend per ordinary share for the period will be 12p. In November we welcomed Richard Agutter to the Board. Richard is a former senior partner of KPMG and set up successful corporate finance businesses in the UK and overseas. I am also very pleased that John Denholm is being proposed as a non-executive director at the AGM. John Denholm is chairman of J&J Denholm Ltd, a leading British shipping services group, and of Anglo-Eastern Management Group Limited. Derek Walter will be leaving at the end of July and we are very grateful to him for his major contribution during his time at Seascope. He will be replaced as Finance Director by James Kidwell. The outlook for the current financial year is uncertain. The decline in chartering rates especially affecting the U/VLCC tonnage has been partially counterbalanced by our increased activity in the second hand sale and purchase market and in demolition, areas where the Group is strong. The Specialist Tankers division remains upbeat with contract volumes holding up on Clean and Chemicals. Offshore and Wavespec also continue to perform well in their respective sectors. During the first two months of this year the Group has traded marginally above internal expectations. In difficult markets, the hard work of the employees may not be so readily visible in terms of financial results and I would like to thank all members of staff for their efforts and dedication over the last 14 months in building our new Group. CHIEF EXECUTIVE'S OPERATIONAL AND FINANCIAL REVIEW Reporting on the results for the 14 month period to 28th February 2002 is complicated by changes in the Group's composition, making any meaningful comparison with the previous year very difficult. The Seascope businesses (primarily Crude Tanker Chartering and Offshore broking, Wavespec and Capital Services) are included in the results for 14 months. The Braemar Shipbrokers businesses (primarily the Sale and Purchase and Dry Cargo divisions) are included for 12 months and the Braemar Tankers businesses (Crude and Clean Tanker Chartering - both deep sea and coastal, as well as Gas and Chemicals broking) are included for 4 months from 1st November 2001. Chartering The price of oil fell by a third between January 2001 and December 2001 and resulted in significant oil production cuts by the main OPEC and non-OPEC producing areas in an attempt to underpin prices. This had an inevitable negative impact on oil tanker freight rates, which turned out to be more severe than the most pessimistic pundits had foreseen. The events of 11th September only served to exacerbate an already nervous market and after a short lived recovery, crude tanker freight rates dropped even further thereafter to the lowest levels that we have seen in the last decade or so. In spite of the reduction in our earnings reflecting the weak freight rates, we believe we have maintained and in some areas improved our market share of business. We can also take some encouragement from the increased volume of demolition of older tankers, especially the larger sizes, which has to some extent offset the delivery of newbuildings and enabled a reasonable supply / demand balance of tonnage to be maintained. The coming year promises to be a challenging one and, in the face of the political problems, the freight markets are especially difficult to predict. We intend to use the diversity of skills that we have within the enlarged Group to broaden our base of business and to increase our forward book to provide a greater measure of countercyclicality to the spot markets. The Clean, Short Sea and Gas and Chemicals divisions, which were part of Braemar Tankers, all experienced a relatively quiet four months between November 2001 and February 2002, reflecting the worldwide economic downturn, volatile crude oil prices, lower petrochemical demand and the entry of LPG newbuilding. While the outlook remains uncertain, with the advent of these new divisions joining the Group, the emphasis continues on developing chartering relationships, especially long term supply agreements, and the current rate of business flow is encouraging. The Dry Cargo division, which was part of Braemar Shipbrokers, was impacted by a market declining from the peaks of late calendar 2000, similar to our experiences in the Crude tanker market. Supply and demand fundamentals progressively worsened during calendar 2001, causing rates to spiral downwards during the second six months. Bearish market conditions have continued into calendar 2002 and, whilst a modest economic recovery is hoped for during this year, this will not be enough to absorb the large influx of new tonnage expected and which will provide a significant surplus of supply, but also, on the other hand, increased demolition activity. Sale and Purchase In a difficult trading environment the division performed well. Against a background of declining new and second hand values, (especially in the second half of the year) and a very uncertain investment climate, the division completed a large volume of transactions with a high level of demolition activity helping to offset other areas. The division enjoyed some considerable successes in the newbuilding and resale sectors of the market. Looking forward we expect to see significant recovery in activity in the dry cargo sector and falls in tanker values are likely to stimulate an upturn in this sector also. We have already completed some significant transactions so far in the current year, including more newbuilding business, thus increasing the good forward order book we already have. Offshore The period started slowly with low activity levels during the first three months of calendar 2001. Rates went up in the next quarter as drilling activity increased worldwide and remained strong for the rest of 2001. The division achieved a good performance and increased the forward book considerably. The opening months of calendar 2002 have seen less activity as any recovery lags increases in the oil price and rates in these months have been at much lower levels. There are also a considerable number of newbuildings due to deliver within the next few months, which will put pressure on day rates. We do, however, expect that we will be successful with some projects and we would hope that 2002/3 will still prove to be a reasonably good year for the Offshore industry. Wavespec Our technical consultancy division, Wavespec, has had a successful trading performance increasing its turnover and achieving a profitable result over the 14 months. The company won some significant contracts for supervising LNG newbuildings and supplied an increased number of specialist contract staff. The division is now focusing on carrying out complete turnkey projects and is also seeking to take on discrete design projects in the current year. Capital Services Delays on two major contracts severely affected results for the period. Following the period end it has been decided to divest the business and talks are being held with a view to achieving a satisfactory exit. The related goodwill of £2.4m has been fully provided for in the Accounts at 28 February 2002. Financial results The Group issued shares worth £19.3m and convertible loan stock and other consideration totalling £3.2m in respect of the acquisitions of Braemar Shipbrokers and Braemar Tankers, resulting in goodwill of £20.3m and an annual goodwill amortisation charge of £1.0m. To fund the Group's working capital requirements, the Group has entered into an £8.0m revolving line of credit for a period of 5 years. At 28th February 2002, the Group's net debt was £3.1m. Operating profit, excluding £3.3m exceptional items, the £2.4m goodwill impairment provision mentioned above and a £1.0m goodwill amortisation charge, was £3.7m for the 14 months compared with £2.0m for the previous 12 months. Exceptional items of £3.3m arose from the integration of Braemar Shipbrokers and Braemar Tankers and include the costs of vacating the former Seascope offices, the redemption of options and other costs relating to staff changes and reorganisation. Earnings per share excluding the goodwill charges and exceptional items and after being adjusted to a notional 12 month period, were 13.23p against Seascope's EPS of 18.75p for the year ended 31 December 2000. The Board is proposing a final dividend of 7p for the period, compared with a 10p final dividend in the previous year, making a total dividend of 12p for the period. Despite the difficult market conditions, the Group has achieved a great deal in the last 14 months. We now have a sound platform on which to build and develop a truly global business and with the help of all the members of staff I look forward to the challenge of the next few years in achieving our objectives of providing a comprehensive, distinctive and standard-setting level of service for all our clients. SEASCOPE SHIPPING HOLDINGS PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE 14 MONTHS ENDED 28 FEBRUARY 2002 14 months to 12 months to 28-02-2002 31-12-2000 £000 £000 Turnover 25,430 12,068 Administrative expenses before exceptional items and goodwill charges (21,719) (10,101) Goodwill amortisation and impairment (3,403) (110) Exceptional items (3,310) - Total administrative expenses (28,432) (10,211) ------------ ----------- Operating (loss)/profit (3,002) 1,857 Interest receivable and similar income 72 35 Interest payable and similar charges (396) (75) ------------ ------------ (Loss)/profit on ordinary activities before taxation (3,326) 1,817 Taxation on (loss)/ profit on ordinary activities (429) (662) ------------ ------------ (Loss)/profit on ordinary activities after taxation (3,755) 1,155 Dividends (1,725) (1,012) ------------ ------------ Retained (loss)/profit for the period (5,480) 143 ======= ======= Earnings per ordinary share - Pence -Basic (27.45)p 17.12p -Basic excluding goodwill charges 15.43p 18.75p and exceptional items -Diluted (27.45)p 15.96p The Group has no recognised gains or losses other than those included in the consolidated profit and loss account above and therefore no separate statement of total recognised gains and losses has been presented. There is no material difference between the loss on ordinary activities before taxation and the retained loss for the period stated above and their historical cost equivalents. SEASCOPE SHIPPING HOLDINGS PLC CONSOLIDATED BALANCE SHEET AS AT 28 FEBRUARY 2002 28 Feb 31 Dec 2002 2000 £000 £000 Fixed assets Intangible fixed assets: goodwill 19,668 2,801 Tangible assets 4,666 1,005 Investments 1,087 734 ----------- ----------- 25,421 4,540 Current assets Debtors 5,680 2,949 Cash at bank and in hand 3,241 1,189 ------------- ------------ 8,921 4,138 Creditors: amounts falling due within one year (11,578) (3,111) ------------ ------------ Net current (liabilities)/assets (2,657) 1,027 ------------ ------------ Total assets less current liabilities 22,764 5,567 Creditors: amounts falling due after more than one year (3,283) (888) Provisions for liabilities and charges (1,400) - ------------- ------------ Net assets 18,081 4,679 ======== ======= Capital and reserves Called up share capital 1,719 682 Capital redemption reserve 396 396 Share premium 4,271 4,728 Other reserves 18,302 - Profit and loss account (6,607) (1,127) ------------ ------------ Total equity shareholders' funds 18,081 4,679 ======= ======= SEASCOPE SHIPPING HOLDINGS PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE 14 MONTHS ENDED 28 FEBRUARY 2002 14 months 12 months to 28 Feb 2002 to 31 Dec 2000 £000 £000 Net cash inflow from operating activities 5,355 850 Returns on investments and servicing of finance Interest received 72 36 Interest paid (277) (52) Interest element of finance lease rental payments (16) (18) ----------- ----------- Net cash (outflow) from returns on investments and servicing of finance (221) (34) Taxation UK Corporation tax paid (1,961) (590) Capital expenditure and financial investment Payments to acquire tangible fixed assets (133) (162) Receipts from investments 924 - --------- ----------- Net cash inflow/(outflow) from investing activities 791 (162) Acquisitions and disposals Purchase of subsidiaries incl. expenses (2,019) (2) Cash acquired with subsidiaries 2,085 - Deferred consideration paid (170) (75) --------- ----------- Net cash (outflow) for acquisitions (104) (77) Equity dividends paid (1,354) (1,012) ------------- ----------- Net cash inflow/(outflow) before financing 2,506 (1,025) Financing New loan 2,450 1,000 Loan repayment (950) (50) Loan acquired on acquisition repaid (1,911) - Payment of principal under finance leases (43) (152) ---------- ---------- Net cash (outflow)/inflow from financing (454) 798 ------------- ------------ Increase/(decrease) in cash 2,052 (227) ======== ======= Note 1 - Earnings per share The fully diluted earnings per share figures are based on the weighted average number of shares after taking into account the potentially dilutive share options issued but remaining unexercised. 2002 2000 14 months 12 months to February to December £000 £000 (Loss)/profit after taxation (3,755) 1,155 Weighted av. no. of shares - basic 13,680,695 6,748,463 Basic EPS (27.45)p 17.12p Goodwill amortisation and impairment 3,403 110 Exceptional costs 3,310 - Related tax relief (847) - Adjusted earnings 2,111 1,265 Basic EPS excluding goodwill charges and exceptional items 15.43p 18.75p Fully diluted av. no. of shares 13,680,695 7,238,499 Diluted EPS (27.45)p 15.96p Note 2 - Reconciliation of movement in shareholders' funds 2002 2000 £000 £000 Retained (loss)/profit (5,480) 143 Issue of ordinary share capital 1,037 - Other reserves arising on acquisition 18,302 - Acquisition costs debited to share premium (457) - --------- --------- Net increase in shareholders' funds 13,402 143 Opening shareholders' funds 4,679 4,536 ---------- --------- Closing shareholders' funds 18,081 4,679 ====== ====== Note 3 - Reconciliation of operating (loss)/profit to net cash inflow from operating activities 2002 2000 £000 £000 Operating (loss)/profit (3,002) 1,857 Depreciation charge 573 295 Exceptional write off of fixed assets 565 - Goodwill amortisation and impairment 3,403 110 Profit on sale of investments (156) - Decrease/(increase) in debtors 1,275 (1,298) Increase/(decrease) in creditors 1,612 (114) Increase in provisions 1,085 - ----------- ------------ Net cash flow from operating activities 5,355 850 ======= ======== Note 4 - Reconciliation of net cash flow to movement in net funds 2002 2000 £000 £000 Increase/(decrease)in cash 2,052 (227) Decrease in finance leases 43 152 Decrease in bank loan 950 50 ----------- ------------ 3,045 (25) Change in net funds resulting from cash flows Non cash items Acquired finance leases (20) - New finance leases (31) (251) Disposal of finance leases 55 122 ----------- ------------ Movement in net funds 3,049 (154) Net funds at beginning of period 91 1,245 New bank loan (2,450) (1,000) Issue of loan stocks (3,750) - ------------ ------------ Net funds at end of period (3,060) 91 ======= ======= Note 5 The financial information set out above does not constitute the Company's statutory accounts for the 14 months ended 28 February 2002 and the year ended December 2000. The financial information in respect of the 14 months ended 28 February 2002 has been extracted from the audited accounts which will be posted to shareholders shortly. Statutory accounts for the year ended 31 December 2000 on which the auditors have given an unqualified report pursuant to section 235 of the Companies Act 1985, have been filed with the Registrar of Companies. Note 6 The accounting policies are consistent with the year ended 31 December 2000 statutory accounts in all material respects. -------------------------- This information is provided by RNS The company news service from the London Stock Exchange END FR AMMPTMMMJBPT

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