Interim Results

Braemar Seascope Group PLC 25 November 2002 For immediate release 25 November 2002 Braemar Seascope announces Interim results for the six months ended 31 August 2002 Braemar Seascope Group plc (the 'Group'), providers of specialised broking and consultancy services to international ship owners and charterers in the sale & purchase, tanker, offshore and dry bulk markets, today announced Interim results for the six months ended 31 August 2002. The results for the first half of 2001 did not include a contribution from Braemar Tankers which joined the Group in October 2001 and are not strictly comparable with the first half of 2002. Highlights • Turnover up to £14.23m (2001: £9.81m) • Pre-tax profit up £2.01m to £2.14m (2001: £0.13m) • Adjusted EPS before goodwill and exceptionals 8.24p (2001: 10.06p) • Interim dividend unchanged at 5.0p per share • Integration of Seascope, Braemar Shipbrokers and Braemar Tankers completed successfully Sir Peter Cazalet, Chairman, said: 'The global shipping market has been much weaker during 2002 especially compared with the two previous years when freight rates were exceptionally high. Against this backdrop most of the Group's broking departments performed well in difficult trading conditions benefiting in particular from a higher level of sale and purchase transactions.' 'The outlook for shipping markets is difficult to foresee given the uncertain global economic environment and the threat of war in the Middle East. In the medium term a steady global recovery should be reflected in growth in sea-borne trade which is a key driver for our business. However, political and economic changes occurring in the short term may lead to high volatility in shipping rates'. 'As announced at the AGM Sir Graham Hearne is taking over as Chairman of the Company from today. I am pleased to be handing over a company which has been strengthened by the mergers of 2001 and is now well placed to become a major force in providing shipping services to its worldwide client base.' Sir Graham Hearne, in-coming Chairman, said: 'Sir Peter Cazalet leaves the company a much stronger and more broadly-based shipping services group than when he took over two years ago. The successful mergers of Seascope with Braemar Shipbrokers and Braemar Tankers in 2001 offer considerable possibilities for further business development. I am delighted to be taking over the Chairmanship of Braemar Seascope Group plc at an exciting time and to be working alongside a highly committed management and successful broking team.' For further information, contact: Alan Marsh, Chief Executive 020 7535 2600 James Kidwell, Finance Director 020 7535 2881 Braemar Seascope Group plc Nick Boakes 020 7417 4170 Victoria Morris Grandfield BRAEMAR SEASCOPE GROUP PLC Interim Results for the six months ended 31 August 2002 CHAIRMAN'S REVIEW Results and Dividend Turnover increased to £14.2m (2001: £9.8m) and operating profit before goodwill amortisation and exceptional items increased to £2.6m compared with £1.9m in the first half 2001. Pre-tax profits were £2.1m, up from £0.1m in 2001 and adjusted earnings per share before exceptional items and goodwill amortisation were 8.24 pence compared with 10.06 pence in 2001. The results for the first half of 2001 did not include a contribution from Braemar Tankers which joined the Group in October 2001 and are not strictly comparable with the first half of 2002. It is the Directors' intention to pay an interim dividend of 5.0p per share (Interim 2001: 5.0p). Review of activities The global shipping market has been much weaker during 2002 especially compared with the two previous years when freight rates were exceptionally high. Against this backdrop most of the Group's broking departments performed well in difficult trading conditions benefiting in particular from a higher level of sale and purchase transactions. The performance of the sale and purchase department has been particularly strong in all three sectors; new-building, second hand and demolition, and compares very favourably with the previous two years when the freight markets were much stronger. The new-building transactions also serve to underpin the company's forward income over the next few years. Despite depressed freight rates the second hand market continued to be active with a steady volume of business concluded. Prices levelled off, buoyed by interest primarily from Greek buyers and the support for prices has been maintained as freight rates improved. We were also able to conclude some significant transactions with the company's German partners in the container sector. Tanker chartering freight levels in all sectors of crude transportation - Aframax, Suezmax and VLCC - have been significantly lower in the first half of 2002, reflecting weaker market conditions caused by a higher oil price and excess availability of shipping capacity. Global economies have not recovered as was widely expected in 2002 thereby weakening oil demand and undermining the long haul crude oil transportation business. The uncertainty surrounding crude oil prices has also affected clean petroleum product shipping volumes which have suffered due to lower refinery runs and lower margins as refiners have decreased capacity in order to preserve stocks until prices stabilise. In other related areas both the Chemical and Gas departments experienced a variable trading market place but have both secured significant longer term contractual business commencing in 2003 and the small tanker product shipping market has been weak throughout the year with spot freight rates at their lowest point for many years. The Dry Cargo market has enjoyed a welcome improvement in the last month after six months of extremely slow activity levels. Demand has been weak reflecting tough commodity market conditions and there has been a significant number of newly-built ships delivered into the market which has increased available tonnage and depressed the rates achievable. BRAEMAR SEASCOPE GROUP PLC Interim Results for the six months ended 31 August 2002 Our Offshore business has experienced lower day rates and activity in the North Sea during the first half despite a strong oil price. This is partly due to the windfall tax levied by the UK government in the last budget which was received with great disappointment in the industry, and also because of relatively low exploration activity. However the department has concluded some substantial project business, the benefits of which should come through in the second half. Wavespec's half-year results fell slightly short of expectations due to a reduction in the number of consultants supplied to the Oil Majors. There are early indications that a recovery is underway in the second half, which should yield a modest increase in profitability for the division. The company concluded the divestment of Seascope Capital Services to its management on the basis of a share of the work in progress. Financial The estimated full year tax rate on profits before non-deductible goodwill amortisation has been applied at the half year. This rate is 40% compared to a 14 months to February 2002 tax rate of 38%. After charging goodwill amortisation the estimated tax rate is 50% of pre-tax profits. The average rate of exchange for the company's US$ income in the first half was £/$1.44. Net debt increased to £4.2m at 31 August 2002 from £3.1m at 28 February 2002. The increase reflected a reduction in short term funds held on behalf of clients and the payments of the final dividend and annual bonus relating to the prior year. Underlying operating cash flow was strong at £2.1m. The proposed interim dividend of 5.0 pence will be paid on 20 December 2002 to shareholders on the register at close of business on 6 December 2002. Outlook The outlook for shipping markets is difficult to foresee given the uncertain global economic environment and the threat of war in the Middle East. In the medium term a steady global recovery should be reflected in growth in sea-borne trade which is a key driver for our business. However, political and economic changes occurring in the short term may lead to high volatility in shipping rates. Oil inventories are generally low at present and with the potential war threat to oil movements, there has been a noticeable increase in volumes moved since early October. Volumes are expected to continue increasing at a modest rate in spite of OPEC's stated intention of maintaining production cuts. The high oil price will serve to depress the major economies, especially in Asia. However, if the recent trend of reducing oil prices continues, consumer demand in the major economies should be stimulated thereby bringing about a recovery in transportation rates. We would also expect some improvement in clean rates based on the normal three-month lag from the recent crude rate increase. BRAEMAR SEASCOPE GROUP PLC Interim Results for the six months ended 31 August 2002 If the 20th Century was the oil age then it is possible that the 21st will become the gas age. The company has already been actively involved in the new-building of large LNG carriers, and Wavespec is one of the world's major technical consulting companies covering maritime gas transportation. We expect that our combined expertise in this area will enable us to take a growing share of this market. The sinking of the 1976 built PRESTIGE and subsequent oil spill has brought international calls for much stricter laws and the possibility of an acceleration of the 'phase-out' of older single hull tankers. This will almost certainly result in an increase in both demolition and new-building activity. The dry cargo fleet is largely dependent on the demand for steel, coal and grain. Steel production in particular is driven by global economies. Despite the worldwide economic uncertainties, demand is predicted to grow, albeit at a slower rate than anticipated earlier in the year. China is a key driver in this growth with the demand for steel and steel products forecast to rise at double-digit rates in 2002 and 2003. The demand for steam coal is seasonal with more coal being required for electricity consumption in winter months. We have recently been experiencing an increase in business in China and as a result of this we are now well advanced on plans to open at least one new office there. The initial focus will be in the dry cargo and sale and purchase markets. Board John Denholm joined the Board as non-executive director on 26 July 2002 and James Kidwell joined the Board as Finance Director and Company Secretary on 1 August 2002. As announced at the AGM Sir Graham Hearne is taking over as Chairman of the Company from today. I am pleased to be handing over a company which has been strengthened by the mergers of 2001 and is now well placed to become a major force in providing shipping services to its worldwide client base. Sir Peter Cazalet Chairman 25 November 2002 BRAEMAR SEASCOPE GROUP plc CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 31 AUGUST 2002 6 months to 6 months to 14 months to 31August 2002 30 June 2001 28 Feb 2002 Unaudited Unaudited Audited £'000 £'000 £'000 Turnover 14,227 9,805 25,430 Net operating expenses before exceptional items and (11,668) (7,904) (21,719) goodwill amortisation Goodwill amortisation (517) (310) (3,403) Exceptional items 250 (1,375) (3,310) Total operating expenses (11,935) (9,589) (28,432) Total operating profit/(loss) 2,292 216 (3,002) Net interest payable and similar charges (154) (86) (324) --------- --------- --------- Profit/(loss) on ordinary activities before 2,138 130 (3,326) taxation Taxation on profit on ordinary activities (1,069) (288) (429) ---------- ----------- -------- Profit/(loss) on ordinary activities after taxation 1,069 (158) (3,755) Dividends (856) (678) (1,725) ---------- ---------- -------- Retained profit/(loss) for the period 213 (836) (5,480) Accumulated loss brought forward (6,607) (1,127) (1,127) ----------- ----------- -------- Retained loss carried forward (6,394) (1,963) (6,607) ====== ====== ===== Earnings per ordinary share - pence - Basic 6.24p (1.43)p (27.45)p - Adjusted EPS excluding goodwill - amortisation and exceptional items 8.24p 10.06p 15.43p - Diluted 6.24p (1.43)p (27.45)p BRAEMAR SEASCOPE GROUP plc CONSOLIDATED BALANCE SHEET AS AT 31 AUGUST 2002 As at As at As at 31 Aug 2002 30 June 2001 28 Feb 2002 Unaudited Unaudited Audited £'000 £'000 £'000 Fixed assets Goodwill 19,150 17,391 19,668 Tangible assets 4,520 1,876 4,666 Investments 1,087 1,387 1,087 ---------- ---------- -------- 24,757 20,654 25,421 Current assets Debtors 4,885 4,572 5,680 Cash at bank and in hand 2,707 1,961 3,241 ----------- ----------- -------- 7,592 6,533 8,921 Creditors: amounts falling due within one year (9,937) (7,650) (11,578) ---------- ------------ -------- Net current (liabilities)/assets (2,345) (1,117) (2,657) ----------- ---------- -------- Total assets less current liabilities 22,412 19,537 22,764 Creditors: amounts falling due after More than one year (3,003) (3,459) (3,283) Provisions (1,115) (124) (1,400) ----------- ---------- --------- Net assets 18,294 15,954 18,081 ====== ====== ===== Capital and reserves Called up share capital 1,719 1,349 1,719 Capital redemption reserve 396 396 396 Share premium 4,271 4,421 4,271 Other reserves 18,302 11,443 18,302 Shares to be issued - 308 - Profit and loss account (6,394) (1,963) (6,607) ----------- ---------- --------- Total equity shareholders' funds 18,294 15,954 18,081 ====== ====== ===== BRAEMAR SEASCOPE GROUP plc CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 AUGUST 2002 6 months to 6 months to 14 months to 31 Aug 2002 30 June 2001 28 Feb 2002 Unaudited Unaudited Audited £'000 £'000 £'000 Net cash inflow/(outflow) from operating activities 489 1,508 5,355 Returns on investments and servicing of finance Net interest (paid) excluding finance leases (149) (1) (205) Interest element of finance lease payments (4) (7) (16) -------- --------- --------- Net cash (outflow) from returns on investments and (153) (8) (221) servicing of finance Taxation UK Corporation tax paid (149) (351) (1,961) Capital expenditure and financial investment Payments to acquire tangible fixed assets (40) (47) (133) Receipts from investments - 143 924 -------- -------- -------- Net cash (outflow)/inflow from investing Activities (40) 96 791 Acquisitions and disposals Purchase of subsidiary - (882) (2,019) Cash acquired with subsidiary - 1,200 2,085 Deferred consideration (217) (75) (170) ------- -------- ------- Net cash (outflow)/inflow from acquisitions (217) 243 (104) Equity dividends paid (1,045) (675) (1,354) -------- --------- -------- Cash (outflow)/inflow before financing (1,115) 813 2,506 Financing New loan 1,000 1,800 2,450 Loan repayment - (950) (950) Loan acquired on acquisition - (562) (1,911) Expenses on issue of equity shares - (307) - Repayment of loan notes (375) - - Payment of principal under finance leases (44) (22) (43) -------- -------- --------- Financing 581 (41) (454) -------- --------- --------- (Decrease)/increase in cash (534) 772 2,052 ===== ===== ===== BRAEMAR SEASCOPE GROUP plc NOTES TO THE ACCOUNTS FOR THE SIX MONTHS ENDED 31 AUGUST 2002 1 Accounting policies There have been no changes to the accounting policies set out in the 2002 Annual Report and Accounts. 2 Financial Information The financial information for the half-year ended 31 August 2002 is unaudited. The financial information for the 14 months ended 28 February 2002 and half year ended 31 August 2002 does not constitute full accounts and has been extracted from the Company's accounts for the year/half year on which the auditors gave unqualified reports. The accounts for the 14 months ended 28 February 2002 have been delivered to the Registrar of Companies. 3. Exceptional Item In the 6 months to 31 August 2002 there was exceptional income relating to the successful outcome of litigation. 4. Dividends The interim dividend of 5.00p per ordinary share (2001: 5.00p) will be paid on 20 December 2002 to shareholders on the register at the close of business on 6 December 2002. 5. Earnings per share 2002 2001 2002 6 months 6 months 14 months to 31 Aug to 30 June to 28 Feb £'000 £'000 £'000 Profit/(loss) after taxation 1,069 (158) (3,755) Weighted av. no. of shares - basic 17,120,436 11,082,866 13,680,695 Basic EPS 6.24p (1.43)p (27.45p) Goodwill amortisation 517 310 3,403 Exceptional (income)/ costs (250) 1,375 3,310 Related tax charge/(relief) 75 (412) (847) --------- -------- -------- Adjusted PAT 1,411 1,115 2,111 Adjusted EPS excluding goodwill amort -isation and 8.24p 10.06p 15.43p exceptional items Fully diluted av. no. of shares 17,120,436 11,457,494 13,680,695 Diluted EPS 6.24p (1.43)p (27.45)p 6. Taxation The taxation charge is based on the estimated effective tax rate applicable for the full year. BRAEMAR SEASCOPE GROUP plc NOTES TO THE ACCOUNTS FOR THE SIX MONTHS ENDED 31 AUGUST 2002 7. Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities 2002 2001 2002 31 Aug 30 June 28 Feb £'000 £'000 £'000 Operating profit/(loss) after exceptional items 2,292 216 (3,002) Depreciation charge 186 204 573 Goodwill amortisation and impairment 517 310 3,403 Decrease/(increase) in debtors 850 574 1,275 (Decrease)/Increase in creditors (3,071) 204 1,612 Exceptional write off of fixed assets - - 565 Profit on sale of investments - - (156) (Decrease)/increase in provisions (285) - 1,085 ------- ------- -------- 489 1,508 5,355 ===== ===== ===== The movement in creditors includes a reduction in short terms funds held on behalf of clients of £1.6m (30 June 2001 reduction £0.2m; 28 February 2002 increase £1.3m). Net cash inflow from operating activities eliminating this movement during the respective periods is £2.1m, £1.7m and £4.1m. 8. Reconciliation of Net Cash Flow to Movement in Net Debt 2002 2001 2002 31 Aug 30 June 28 Feb £'000 £'000 £'000 (Decrease)/increase in cash (534) 772 2,052 Decrease in finance leases and bank loan 44 972 993 ------- -------- -------- Change in net debt resulting from cash flows (490) 1,744 3,045 Non cash items New finance leases - (31) (51) Disposal of finance leases - 37 55 ------- ------- -------- Movement in net debt (490) 1,750 3,049 Net funds at beginning of period (3,060) 91 91 New bank loan (1,000) (1,800) (2,450) Issue of convertible unsecured loan stock - (3,000) (3,000) Issue of loan notes in respect of deferred consideration - (750) (750) Repayment of loan notes 375 - - ------ --------- --------- Net (debt)/funds at end of period (4,175) (3,709) (3,060) ===== ===== ======= BRAEMAR SEASCOPE GROUP plc NOTES TO THE ACCOUNTS FOR THE SIX MONTHS ENDED 31 AUGUST 2002 9 Reconciliation of movement in shareholders' funds 2002 2001 2002 31 Aug 30 June 28 Feb £'000 £'000 £'000 Retained profit/(loss) 213 (836) (5,480) Issue of share capital at market value - 12,418 1,037 Other reserves arising on acquisition - - 18,302 Costs debited to share premium account - (307) (457) -------- -------- -------- Net increase in shareholders' funds 213 11,275 13,402 Opening shareholders' funds 18,081 4,679 4,679 -------- -------- -------- Closing shareholders' funds 18,294 15,954 18,081 10 Profit and loss account The negative cumulative profit and loss account balance is the result of a goodwill write-off, in the amount of £5,599,794, which took place in the financial year to 31 December 1998 upon the Company's adoption of FRS10. Independent review report to Braemar Seascope Group plc Introduction We have been instructed by the company to review the financial information which comprises a consolidated profit and loss account, consolidated balance sheet, consolidated cash flow statement and related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 August 2002. PricewaterhouseCoopers Chartered Accountants West London 25 November 2002 Notes: a) The maintenance and integrity of the Braemar Seascope Group plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the website. b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions. This information is provided by RNS The company news service from the London Stock Exchange

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