Interim Results

Seascope Shipping Holdings PLC 20 September 2001 20 September 2001 Seascope Shipping Holdings plc Seascope announces Interim results for the six months ended June 2001 Seascope Shipping Holdings PLC (the 'Group'), providers of specialised broking and consultancy services to the international shipowning, shipbuilding and oil industries, today announced Interim results for the six months ended 30 June 2001. Highlights * Merger of Group with Braemar Shipbrokers successfully completed * Turnover up 114 per cent. to £9.81m (2000: £4.58m)* * Operating profit before goodwill amortisation and exceptional operating expenses of £1.90m (2000: (£0.18m))* * EPS before goodwill amortisation and exceptionals 10.06p (2000: (1.59p))* * Dividend unchanged at 5.0p per share * Acquisition of Braemar Tankers subject to approval at EGM *including 4 months of Braemar Shipbrokers results Sir Peter Cazalet, Chairman, said: 'The first half of the year has seen the merger of the Group with Braemar Shipbrokers and I am pleased to announce an agreement to acquire Braemar Tankers subject to shareholders' approval. I believe the Enlarged Group will generate value for shareholders once we have completed the full integration.' 'Even before the terrible events of last week, many analysts believed that low global oil stocks would necessitate an increase in oil production during the fourth quarter of this year to meet demand. In the past few days OPEC have stated their willingness to make increased supplies available. Since last week we have seen some increased chartering activity and strengthening of freight rates in particular for larger crude carriers. However, given the major uncertainties, it is difficult to predict whether this will continue in the medium to longer term.' Alan Marsh, Chief Executive, added: 'I am delighted that we have reached agreement with Braemar Tankers. I have worked alongside their executives and brokers for many years and know of their commitment and dedication to work with existing Seascope management to develop and expand the Group's activities.' For further information, contact: Alan Marsh, Chief Executive 020 7535 2600 Derek Walter, Finance Director 020 7903 2727 Seascope Shipping Holdings PLC Clare Abbot/Kirsty Black 020 7417 4170 Grandfield SEASCOPE SHIPPING HOLDINGS PLC Interim Results for the six months ended 30 June 2001 CHAIRMAN'S REVIEW Results The major impact on the Group's results for the first six months of the year has been the completion of the merger with Braemar Shipbrokers, following the approval of the Extraordinary General Meeting held on 7th March. The results for the first half of the year include four months' contribution from Braemar Shipbrokers. Turnover increased to £9.8m (2000: £4.6m) with £2.9m being contributed by Braemar Shipbrokers and operating profit before goodwill and exceptional items was £1.9m compared with a £0.2m loss in the first half of last year. The integration of the businesses of the two groups is well underway. Full integration (including the relocation of the Seascope broking business to the Braemar Shipbrokers office at Cosway Street, Marylebone) has had to await the outcome of talks with Braemar Tankers Limited. These talks continued throughout the first half and have, I am now pleased to announce, reached a positive conclusion with the execution of an agreement and issuing of a circular requesting approval of the acquisition at an Extraordinary General Meeting on 11th October. The acquisition of Braemar Tankers will complement our existing operations extremely well and add valuable expertise and resource particularly in the areas of product, gas and chemical chartering, where we see significant growth opportunities. Completion of the deal will now enable us to focus our attention on maximising the market position of the Enlarged Group and we expect some cost savings from efficiency gains. Review of activities In summary, almost all the Group's divisions enjoyed strong trading conditions during the first quarter of the year. The tanker chartering market continued from last year in a buoyant mood but in the second quarter fell back. The offshore market benefited from enlarged oil exploration budgets and has strengthened further as the year progressed. The climate for Sale and Purchase transactions was good as freight markets held the potential for healthy returns on most types of second hand vessels. As we have seen in the past, the tanker freight market has been dominated by the decisions taken by OPEC on the level of crude oil supply. In the first three months of the year we continued to enjoy a strong tanker market as the OPEC members pumped oil at fourth quarter 2000 levels. However, in the Spring the oil price softened from the previous year end high and the second quarter of the year saw our crude tanker chartering business reflect a lower level of activity. Notwithstanding that, the Group has been successful in increasing its period forward book over the first half of the year. Offshore trading conditions have improved through the period with both exploration drilling and construction activity increasing compared with 2000. Offshore vessel charter rates have strengthened during the period and in addition the department has been successful in concluding more overseas term charter contracts than in any previous half year and increasing its order book and it is working on some interesting newbuild projects. Offshore charter rates are expected to continue at current levels for the remainder of the year and into next year provided that the oil price stays stable. The benefits of the merger have probably best been demonstrated to date in the Sale and Purchase department. Despite experiencing lower prices, the Group has performed well in terms of the number of tanker sales with Braemar Shipbrokers having exceeded the number of deals compared with their corresponding four months last year. The added depth in dry cargo expertise has enabled the department to expand its client base and maintain a good level of activity in an otherwise very quiet market. Falling dry cargo chartering rates usually lead to increased dry cargo sale and purchase activity - an area in which Seascope, before the merger with Braemar Shipbrokers, had not normally been very active. Demolition sales have also been a significant contributor. The Group's newbuilding department has been successful in a number of product tanker deals and is working on other promising projects. In other areas, Wavespec increased its volume of business and has been successful in gaining valuable ship construction supervision contracts. Seascope Capital Services has been active in pursuing a variety of opportunities, which we hope to bring to fruition in the second half. Dry cargo chartering has reflected the slow down in the global economy but we are encouraged by progress in our new container chartering department. Financial results, interim dividend and change of year end. The profit before taxation of £0.13m is after charging £1.4m exceptional items. The main cost within these exceptional items was the redemption of all the outstanding options under the 1996 Unapproved Share Option Scheme as part of the integration process. The cost of the acquisition of Braemar Shipbrokers of £16.6m was funded mainly from the issue of 6.7m shares and £3.0m convertible unsecured loan stock. In addition, the requirements for allotting the additional consideration of 150,000 shares have been met and these shares were issued in September. The Company has entered into a five year revolving line of credit with its bank to meet its ongoing financial requirements. It is the Directors' intention to pay an unchanged interim dividend of 5.0p per share. The dividend will be paid on 15 November to shareholders on the register at close of business on 19 October 2001. The Company has changed its year-end to 28 February and the second half results will cover the eight months ending 28 February 2002. Prospects Even before the terrible events of last week, many analysts believed that low global oil stocks would necessitate an increase in oil production during the fourth quarter of this year to meet demand. In the past few days OPEC have stated their willingness to make increased supplies available. Since last week we have seen some increased chartering activity and strengthening of freight rates in particular for larger crude carriers. However, given the major uncertainties, it is difficult to predict whether this will continue in the medium to longer term. Assuming the acquisition of Braemar Tankers is approved by shareholders, we will face further challenges and opportunities but with the confidence that we will have a strong and broadly based shipping services group fully capable of competing in global markets. Although the results this year are affected by exceptional items and other non recurring costs associated with completing the two deals, the Board believes that the enlargement of the Group will prove beneficial to shareholders and staff, when the integration process has been completed. Sir Peter Cazalet Chairman 19 September 2001 SEASCOPE SHIPPING HOLDINGS PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30 JUNE 2001 6 months to 6 months to 12 months to 30 June 2001 30 June 2000 31 Dec 2000 Unaudited Audited Audited £'000 £'000 £'000 Turnover continuing operations 6,900 4,582 12,068 acquisition 2,905 - - ---------- ----------- ---------- 9,805 4,582 12,068 ------------------------------------------------------------------------------ ' Net operating expenses ' ' before exceptional items and ' ' goodwill amortisation (7,904) (4,763) (10,101) ' ' Goodwill amortisation (310) (55) (110) ' ' Exceptional items (1,375) - - ' '----------------------------------------------------------------------------- Total operating expenses (9,589) (4,818) (10,211) Operating profit/(loss) continuing operations (881) (236) 1,857 acquisition 1,097 - - ---------- ---------- -------- Total operating profit/(loss) 216 (236) 1,857 Net interest payable and similar charges (86) (9) (40) ---------- ---------- -------- Profit/(loss) on ordinary activities before taxation 130 (245) 1,817 Taxation on profit on ordinary activities (288) 83 (662) ---------- ----------- -------- (Loss)/profit on ordinary activities after taxation (158) (162) 1,155 Dividends (678) (337) (1,012) ---------- ---------- -------- Retained (loss)/profit for the period (836) (499) 143 Accumulated loss brought forward (1,127) (1,270) (1,270) --------- ----------- -------- Retained loss carried forward (1,963) (1,769) (1,127) ========= =========== ======== Earnings per ordinary share - pence - Basic (1.43)p (2.40)p 17.12p - Basic excluding goodwill amortisation and exceptional items 10.06p (1.59)p 18.75p - Diluted (1.43)p (2.40)p 15.96p SEASCOPE SHIPPING HOLDINGS PLC CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2001 6 months to 6 months to 12 months to 30 June 2001 30 June 2000 31 Dec 2000 Unaudited Audited Audited £'000 £'000 £'000 Fixed assets Goodwill 17,391 2,104 2,801 Tangible assets 1,876 1,090 1,005 Investments 1,387 734 734 ---------- ---------- ---------- 20,654 3,928 4,540 Current assets Debtors 4,572 2,494 2,949 Cash at bank and in hand 1,961 623 1,189 ----------- ---------- ---------- 6,533 3,117 4,138 Creditors: amounts falling due within one year (7,650) (1,984) (3,111) ---------- ----------- ---------- Net current (liabilities)/ assets (1,117) 1,133 1,027 ----------- ----------- ---------- Total assets less current liabilities 19,537 5,061 5,567 Creditors: amounts falling due after more than one year (3,459) (1,024) (888) Provisions (124) - - ----------- ---------- ---------- Net assets 15,954 4,037 4,679 =========== ========== ========== Capital and reserves Called up share capital 1,349 682 682 Capital redemption reserve 396 396 396 Share premium 4,421 4,728 4,728 Other reserves 11,443 - - Shares to be issued 308 - - Profit and loss account (1,963) (1,769) (1,127) ---------- --------- --------- Total equity shareholders' funds 15,954 4,037 4,679 ========== ========= ========= SEASCOPE SHIPPING HOLDINGS PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2001 6 months to 6 months to 12 months to 30 June 2001 30 June 2000 31 Dec 2000 Unaudited Audited Audited £'000 £'000 £'000 Net cash inflow/(outflow) from operating activities 1,508 (680) 850 Returns on investments and servicing of finance Net interest (paid) excluding finance leases (1) 8 (16) Interest element of finance lease payments (7) (9) (18) --------- ---------- ---------- Net cash (outflow) from returns on investments and servicing of finance (8) (1) (34) Taxation UK Corporation tax paid (351) (140) (590) Capital expenditure and financial investment Payments to acquire tangible fixed assets (47) (145) (162) Acquisitions and disposals Purchase of subsidiary (882) - (2) Cash acquired with subsidiary 1,200 - - Receipts from investment 143 - - Deferred consideration (75) (75) (75) -------- --------- --------- Net cash inflow/(outflow) from acquisitions 386 (75) (77) Equity dividends paid (675) (675) (1,012) -------- --------- -------- Cash inflow/(outflow) before financing 813 (1,716) (1,025) Financing New loan 1,800 1,000 1,000 Loan repayment (950) - (50) Loan acquired on acquisition (562) - - Expenses on issue of equity shares (307) - - Payment of principal under finance leases (22) (77) (152) -------- -------- --------- Financing (41) 923 798 -------- -------- --------- Increase/(decrease) in cash 772 (793) (227) ======== ======== ========= SEASCOPE SHIPPING HOLDINGS PLC NOTES TO THE ACCOUNTS FOR THE SIX MONTHS ENDED 30 JUNE 2001 1 Accounting policies There have been no changes to the accounting policies set out in the 2000 Annual Report and Accounts. The Group will be adopting FRS19 'Deferred Tax' in the 14 months ending 28 February 2002. The principal effect is expected to be the recognition of a small deferred tax asset in respect of the excess of book depreciation over capital allowances claimed on eligible fixed assets. The impact of this new standard does not have a material effect on the Group's results for the 6 months ended 30 June 2001. 2 Financial Information The financial information for the half year ended 30 June 2001 is unaudited. The financial information for the year ended 31 December 2000 and half year ended 30 June 2000 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 year ended 31 December 2000 have been delivered to the Registrar of Companies. The results for the six months 30 June 2001 were approved by the Board on 19 September 2001. 3 Exceptional items These comprise mainly the cost of redemption of the outstanding share options, which were subsequently cancelled. 4 Dividends The interim dividend of 5.00p per ordinary share (2000:5.00p) will be paid on 15 November 2001 to shareholders on the register at the close of business on 19 October 2001. 5 Earnings per share 2001 2000 2000 6 months 6 months 12 months £'000 £'000 £'000 (Loss)/profit after taxation (158) (162) 1,155 Weighted av. no. of shares - basic 11,082,866 6,748,463 6,748,463 Basic EPS (1.43)p (2.40)p 17.12p Goodwill amortisation 310 55 110 Exceptional costs 1,375 - - Related tax relief (412) - - ----------- ---------- ---------- Adjusted PAT 1,115 (107) 1,265 Basic EPS excluding goodwill amortisation and exceptional items 10.06p (1.59)p 18.75p Fully diluted av. no. of shares 11,457,494 7,663,018 7,238,499 Diluted EPS (1.43)p (2.40)p 15.96p 6 Taxation The taxation charge is based on the forecast results for the year excluding exceptional items. Tax relief on the exceptional items has been calculated at 30 per cent. 7 Acquisition The Company acquired on 7 March 2001 the whole of the issued share capital of Braemar Shipbrokers Limited. The provisional assets and liabilities as at that date are set out below. £'000 Fair value to the Group Tangible assets and investments 1,830 Current assets Debtors 2,197 Cash at bank and in hand 1,200 --------- Total assets 5,227 Liabilities Creditors (3,827) --------- Net assets before goodwill 1,400 Goodwill 14,900 --------- Net assets 16,300 ========= Satisfied by: Issue of shares 12,110 Additional shares to be issued 308 Convertible unsecured loan stock 3,000 Expenses incurred in the acquisition(excluding the costs debited to the share premium account) 882 --------- 16,300 ========= 8 Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities 2001 2000 2000 30 June 30 June 31 Dec £'000 £'000 £'000 Operating profit/(loss) after exceptional items 216 (236) 1,857 Depreciation charge 204 140 295 Goodwill amortisation 310 55 110 Decrease/(increase) in debtors 574 (845) (1,298) Increase/(decrease) in creditors 204 206 (114) -------- -------- -------- 1,508 (680) 850 ======== ======== ======== 9 Reconciliation of Net Cash Flow to Movement in Net Debt/Funds 2001 2000 2000 30 June 30 June 31 Dec £'000 £'000 £'000 Increase/(decrease) in cash 772 (793) (227) Decrease in finance leases and bank loan 972 77 202 ------- -------- ------- Change in net debt resulting from cash flows 1,744 (716) (25) Non cash items New finance leases (31) (171) (251) Disposal of finance leases 37 5 122 ------- -------- ------- Movement in net debt 1,750 (882) (154) Net funds at beginning of period 91 1,245 1,245 New bank loan (1,800) (1,000) (1,000) Issue of convertible unsecured loan stock (3,000) - - Issue of loan notes in respect of deferred consideration (750) - - -------- --------- ------- Net (debt)/funds at end of period (3,709) (637) 91 ======== ========= ======= 10 Reconciliation of movement in shareholders' funds 2001 2000 2000 30 June 30 June 31 Dec £'000 £'000 £'000 Retained (loss)/profit (836) (499) 143 Issue of share capital at market value 12,418 - - Costs debited to share premium account (307) - - -------- ------- ------- Net increase in shareholders' funds 11,275 (499) 143 Opening shareholders' funds 4,679 4,536 4,536 -------- ------- ------- Closing shareholders' funds 15,954 4,037 4,679 ======== ======= ======= 11 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. 12 Contingent liability Under the Merger Agreement dated 7 March 2001 between the Company and Braemar Shipbrokers Limited (Braemar) the vendors personally gave a joint and several indemnity to the Company for any income tax or national insurance contribution obligations up to £10 million that might arise as a result of transactions with or within an Employee Benefit Trust for Braemar's employees prior to acquisition. The Company could be liable, under certain circumstances, for any unpaid income tax or national insurance contributions from the date the indemnity expires on 6 March 2011 or earlier should any obligations not be recovered under the indemnity. The Company does not expect to incur any liability in respect of these contingent liabilities and accordingly no provision has been made in these accounts. 13 Change of year end The Company has changed its year end to 28 February. The second 'half' of the year will cover the eight months to 28 February 2002. 14 Post balance sheet events (a) Subsequent to the half year, 150,000 shares were issued to the vendors of Braemar Shipbrokers Limited pursuant to the merger agreement and satisfaction of the conditions therein. These shares have been shown on the balance sheet as 'shares to be issued' as at 30 June 2001. (b) Braemar Tankers deal: the acquisition of the Braemar Tankers Group has been agreed subject to shareholder approval and a circular is being sent to all shareholders outlining details of the transaction and the Extraordinary General Meeting being called to approve the transaction.

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