Interim Results
Braemar Shipping Services PLC
23 October 2007
BRAEMAR SHIPPING SERVICES PLC
PRESS RELEASE
For immediate release 23 October 2007
Interim Results - 6 months ended 31 August 2007
Braemar Shipping Services plc (the 'Group'), an international provider of
shipping services, today announced unaudited half-year results for the six
months ended 31 August 2007.
HIGHLIGHTS
• Revenue £68.7m (2006: £50.5m), a rise of 36%
• Pre-tax profit £7.1m (2006: £4.1m), up 75% (up 42% if the impairment
charge in 2006 is excluded)
• Basic EPS 23.66p (2006: 12.03p), up 97% (up 40% if the impairment charge
in 2006 is excluded)
• Increased interim dividend declared 8.00p per share (2006: 6.75p)
• Net cash £11.1m (31 August 2006: £8.1m, February 2007: £14.6m)
• Falconer Bryan acquired and performing well
Commenting on the results and outlook, Sir Graham Hearne, Chairman, said:
'Shipbroking has gone from strength to strength with more chartering
transactions concluded and more long-term business placed particularly for
newbuilding contracts and period charters. Our forward order book of business is
at a record level and significantly higher than at the beginning of the year.'
'Our non-broking businesses are now contributing approximately one quarter of
the Group's profits.'
'The outlook for the second half of the year remains favourable. The level of
business already concluded this year means that we can be confident that the
full year out-turn should see good growth over last year.'
For further information, contact:
Braemar Shipping Services plc
Alan Marsh Tel +44 (0) 20 7535 2650
James Kidwell Tel +44 (0) 20 7535 2881
Aquila Financial
Peter Reilly Tel +44 (0) 20 7202 2601
Elaborate Communications
Sean Moloney Tel +44 (0) 1296 682356
Charles Stanley Securities
Philip Davies Tel +44 (0) 20 7149 6457
Notes to Editors
Braemar Shipping Services plc (previously known as Braemar Seascope Group plc)
is a leading integrated provider of broking and consultancy services to the
shipping industry. The Group includes the following businesses:
Braemar Seascope
Specialised shipbroking and consultancy services to international ship owners
and charterers in the sale & purchase, tanker, gas, chemicals, offshore,
container and dry bulk markets with offices in UK, Australia, India, China,
Brazil and Singapore.
www.braemarseascope.com
Cory Brothers Shipping Agency
Port agency, freight forwarding and logistics services within the UK.
www.cory.co.uk
Wavespec
Marine engineering and naval architecture consultants to the shipping and
offshore markets.
www.wavespec.com
Falconer Bryan
Survey, engineering and loss adjusting services to the marine and energy
industries. Headquartered in Singapore it operates throughout the Far East from
offices in Indonesia, Malaysia, Vietnam, China, India and Australia.
www.falconer-bryan.com
DV Howells
Pollution response service primarily in the UK for marine and rail operations.
www.dvhowells.co.uk
INTERIM ANNOUNCEMENT - SIX MONTHS ENDED 31 AUGUST 2007
CHAIRMAN'S STATEMENT
The Group has performed well in the first half with strong contributions from
all business segments. The results reflect this excellent performance, with a
36% increase in revenue to £68.7m, a 75% increase in profit before tax to £7.1m
and a 97% increase in earnings per share to 23.66 pence. If these results were
adjusted to exclude the impairment charge in the prior half, pre-tax profits
would have increased by 42% and earnings per share by 40% on last year.
Shipbroking has gone from strength to strength with more chartering transactions
concluded and increased long-term business placed, in both newbuilding contracts
and period charters. Our forward order book of business is at a record level and
significantly higher than at the beginning of the year. The Dry Bulk market has
seen record freight rates in recent months and these look set to remain high for
some time to come. Tanker rates have been lower this year than last, but our
volumes have grown offsetting the rate effect. Both the Container and Offshore
markets have also seen conditions which have enabled our teams to thrive.
Our recently established environmental services arm - DV Howells - has been
instrumental in providing incident response services to the stricken container
vessel off the coast of Devon and we are proud of the role it has played in
helping to minimise the environmental consequences of this incident. Its
business is incident-driven and therefore likely to be variable though there are
many opportunities to develop its activities. Cory Brothers and Wavespec both
performed steadily over the half.
The non-broking businesses of Cory Brothers, Wavespec and DV Howells contributed
approximately a quarter of the Group's profits. This proportion is likely to
grow as we continue to pursue a strategy of broadening the Group's range of
services. Most recently, in July 2007 the Group added to its technical services
division through the acquisition of Falconer Bryan Pte for a cash consideration
of £5.9m. Falconer Bryan is headquartered in Singapore and employs 90 full time
staff. It has a network of offices throughout the Far East from which it
provides a range of survey, engineering and loss adjusting services to the
marine and energy industries.
At the end of the last financial year we stated that we were reviewing options
for the bunker business and as a result we have ceased activity in Bunker
trading in September 2007 although these results include the activity for the
whole of the period.
The outlook for the second half of the year remains favourable. The level of
business already concluded this year means that we can be confident that the
full year out-turn should see good growth over last year.
The Board has declared an interim dividend of 8.00 pence, an increase of 19%
over 2006/7. The interim dividend will be paid on 11 December 2007 to
shareholders on the register at the close of business on 9 November 2007, with
an ex-dividend date of 7 November 2007.
Sir Graham Hearne
Chairman
22 October 2007
CHIEF EXECUTIVE'S REVIEW OF ACTIVITIES
Shipbroking
The average Baltic Dry Index for the six months ended 31 August 2007 was 6,146
(first half of 2006/7: 2,837) with all market sectors considerably up on last
year. The BDI currently stands at 10,798 which is a record high, driven by high
demand for tonnage, particularly for the transportation of iron ore to China.
The volume of business transacted by our dry cargo offices has improved
markedly. Moreover a significant number of long-term time charters have been
concluded such that the dry cargo chartering element of the forward book is now
at its highest ever level. We continue to increase our presence in Singapore
which has become a major centre for shipowning and a significant hub for cargo
interests in Asia. Prospects for the remainder of the financial year remain
positive as demand will continue to be strong in the foreseeable future.
Our deep-sea tanker chartering desk has increased the number of transactions
concluded though rates have generally softened over the course of the half as
newbuildings have been delivered into the market. The continuing rise in oil
demand by China and India is maintaining crude oil shipments to the region and
with western inventories still relatively low an increase in oil shipments is
expected. The steady rise of crude oil prices since the beginning of the year
has adversely affected refining margins and in turn the product trades and this
combined with new tonnage coming on stream has served to reduce the product
carrier rates.
Activity levels in the specialised chemical chartering market were quite
variable during the first quarter of the year as the market came to terms with
new regulations, but since then rates have stabilised. Freight rates,
particularly for the more sophisticated vessels, have been relatively strong and
this is not expected to change significantly over the forthcoming months, but
the introduction of new tonnage means that an increase in volumes will be
required to maintain current rates.
Rates in the LPG chartering market have been strengthening since the beginning
of the year due to increasing volumes being moved. Ethylene carried in LPG
vessels from the Middle East to South East Asia for the production of plastics
has been particularly active.
LNG chartering has increased recently and voyage rates have risen from the low
levels seen at the beginning of the year. The winter months may create further
demand and again improve trading conditions. Looking ahead, many of the delayed
LNG facilities projects are now under construction and completion dates are
becoming more visible which should absorb the newbuilding tonnage delivering on
schedule. We are building a dedicated presence in LNG based on our belief that
LNG will be a major energy market in the future.
Vessel values have remained very firm particularly for bulk carriers where
record prices have been set reflecting the ship's earning capability. Sale and
purchase activity has generally favoured newbuildings where we have been
involved in placing our highest ever number of orders, a significant proportion
of which will be for the benefit of future years' earnings. Second hand and
demolition activity has seen a reasonable deal flow though at similarly high
prices.
Our container desk has enjoyed a period of strong activity for both sale and
purchase and chartering business with freight rates and vessel values remaining
relatively firm so far in 2007. The rise in container newbuilding tonnage coming
into the market should offer plenty of opportunities though conceivably at lower
rates if demand growth slows.
The offshore desk has continued to perform well benefiting from the high level
of oil exploration activity. Day rates for the hire of supply vessels have been
at historically high levels and these look set to continue while the price of
oil remains high. The rise in earnings in the industry has also provided a
stimulus to sale and purchase activity and investment in newbuildings.
Technical services - Wavespec and Falconer Bryan
Revenue and profits for the half year grew steadily mainly in respect of work on
the Qatargas LNG supervision contract which has now been extended until 2010.
While LNG carrier construction remains strong we are currently making strenuous
efforts to increase our activities in the areas of offshore, dynamic positioning
and failure mode and effect analysis where there is potential for long-term
growth. We have recently been successful in winning three further projects in
these areas.
We significantly increased our presence in this market through the acquisition
of Falconer Bryan on 7 July 2007. Services provided to the marine and energy
industries include loss prevention surveys such as, towage and transport
approvals, location approvals and location moves for mobile offshore drilling
units and associated naval architectural/structural engineering support and
energy loss adjusting investigation services resulting from an insurable
incident. The group operates from offices in Singapore, Indonesia, Malaysia,
Vietnam, China, India and Australia with a skilled work force, the majority of
whom are either class 1 mariners/engineers, structural engineers, naval
architects or loss adjusters. The skill sets are similar to those at Wavespec
which should prove advantageous as the business develops within the Group.
During its first few months as part of the Group, Falconer Bryan's trading has
been in line with expectations and we are encouraged by the new opportunities we
are seeing for the development of its business.
Logistics - Cory Brothers
Cory's forwarding business increased both revenue and profits through increased
project work and growth at Planetwide which was acquired at the end of 2005.
Ship agency has performed steadily although the recent change of ownership of a
refinery saw some reduction in activity in the period. This is expected to
improve in the second half due to the opening of a new office at Immingham and
the full benefit of new contract business comes through.
Environmental services - DV Howells
DV Howells has had a very busy period with a significant increase in man hours
worked. In addition to its regular business performing specialist environmental
clean up and consulting services, mainly in respect of ports, rail and roads in
the UK, it has been closely involved with the stricken container ship off the
coast of Devon and in particular the protection and clean up of the beaches and
of the containers. Most of this work has now been concluded.
Bunker trading
Bunker trading activities, which were based in Australia, ceased in September
2007. There will be a small revenue contribution in the second half for the
final month's trading but thereafter the activity is discontinued.
Financial
A comparison of the Group's reported profits and earnings and a more meaningful
like-for-like comparison is shown in the table below:
First half First half
2007/8 2006/7 Change %
£000 £000
Profit before impairment charge and tax 7,116 5,023 +42%
Impairment charge - (950)
Reported profit before tax 7,116 4,073 +75%
Pence pence
Basic EPS (pre impairment charge) 23.66 16.88 +40%
Impairment charge - (4.85)
Basic EPS 23.66 12.03 +97%
The majority of the Group's income is US$ denominated and the average rate of
exchange for conversion of US$ income in the six months to August 2007 was
$2.02/£ (Interim 2006/7: $1.81/£, Full Year 2006/7: $1.86/£). The rate of
translation at 31 August 2007 was $2.02/£.
Net cash was £11.1m at 31 August 2007 compared with net cash of £14.6m as at 28
February 2007. Cash balances increased by £1.7m in respect of amounts held
within Falconer Bryan at acquisition. In September 2007, the Group paid £3.4m,
being the balance of consideration due to the Falconer Bryan vendors in respect
of cash and working capital acquired with the business. The Group normally
generates most of its annual cash flow in the second half of the year and the
reduction in cash principally reflects the payment of the annual broking bonus
and full year dividend relating to the prior year.
Alan Marsh
Chief Executive
22 October 2007
Braemar Shipping Services PLC
Consolidated Income Statement (unaudited)
Six months to Six months to Year ended
31 Aug 2007 31 Aug 2006 28 Feb 2007
Continuing operations Notes £'000 £'000 £'000
Revenue 4 68,686 50,512 107,200
Cost of sales (35,719) (27,194) (53,529)
Gross profit 32,967 23,318 53,671
Operating costs (26,188) (19,531) (44,121)
Impairment of goodwill - (950) (950)
Operating costs excluding impairment of (26,188) (18,581) (43,171)
goodwill
Operating profit 4 6,779 3,787 9,550
Finance income 245 148 335
Finance costs (8) (4) (16)
Share of post-tax profit from joint ventures 100 142 207
Profit before taxation 7,116 4,073 10,076
Taxation 5 (2,323) (1,657) (3,604)
Profit for the period 4,793 2,416 6,472
Attributable to:
Equity holders of the parent 4,713 2,357 6,367
Minority interest 80 59 105
4,793 2,416 6,472
Earnings per ordinary share 7
Basic - pence 23.66p 12.03p 32.29p
Diluted - pence 23.48p 11.84p 31.87p
Braemar Shipping Services PLC
Consolidated Balance Sheet (unaudited)
As at As at As at
31 Aug 07 31 Aug 06 28 Feb 07
Assets Notes £'000 £'000 £'000
Non-current assets
Goodwill 24,218 22,259 22,606
Other intangible assets 2,254 1,462 1,582
Property, plant and equipment 5,771 5,349 5,478
Investments 1,535 1,481 1,538
Deferred tax assets 644 566 642
Other receivables 60 76 81
34,482 31,193 31,927
Current assets
Inventories 70 - 70
Trade and other receivables 28,394 18,732 21,750
Financial assets
- Derivative financial instruments 77 473 27
Restricted cash - 4,946 -
Cash and cash equivalents 11,122 8,134 14,634
39,663 32,285 36,481
Total assets 74,145 63,478 68,408
Liabilities
Current liabilities
Trade and other payables 32,264 21,831 29,011
Current tax payable 3,099 2,362 2,402
Provisions 9 277 210 294
Client monies held as escrow agent - 4,946 -
35,640 29,349 31,707
Non-current liabilities
Deferred tax liabilities 287 239 283
Provisions 9 40 433 169
327 672 452
Total liabilities 35,967 30,021 32,159
Net assets 38,178 33,457 36,249
Equity
Share capital 10 2,049 2,014 2,023
Capital redemption reserve 396 396 396
Share premium 10 9,001 8,434 8,554
Merger reserve 21,346 21,346 21,346
Shares to be issued (1,844) (997) (1,047)
Other reserves (936) (344) (722)
Retained earnings 7,842 2,278 5,390
Total shareholders' equity 37,854 33,127 35,940
Minority interest 324 330 309
Total Equity 38,178 33,457 36,249
Braemar Shipping Services PLC
Consolidated Cash Flow Statement
(unaudited)
Six months Six months Year ended
31 Aug 07 31 Aug 06 28 Feb 07
Notes £'000 £'000 £'000
Profit before tax for the period 7,116 4,073 10,076
Adjustments for:
-Depreciation 312 232 518
-Amortisation 189 62 284
-Goodwill impairment charge - 950 950
-Profit on sale of investments (93) - -
-Profit on sale of property, plant and equipment - - (12)
-Finance income (245) (148) (335)
-Finance expense 8 4 16
-Share of post-tax profit of joint ventures (100) (142) (207)
-Share based payments 190 145 309
Changes in working capital
-Inventory - - 7
-Trade and other receivables (4,166) (625) (3,874)
-Trade and other payables (747) (5,336) 2,098
-Provisions (145) 14 (162)
Cash generated from operations 2,319 (771) 9,668
Interest received 245 148 335
Interest paid (8) (4) (16)
Tax paid (1,904) (1,670) (3,413)
Net cash generated from / (used in) operating 652 (2,297) 6,574
activities
Cash flows from investing activities
Dividends received from joint ventures - 145 263
Acquisition of subsidiaries, net of cash 11 (931) (1,132) (1,844)
acquired
Purchase of property, plant and 8 (561) (246) (654)
equipment
Proceeds from sale of property, plant and equipment 7 - 25
Sale of investments 191 - -
Other long-term receivables 21 (18) (23)
Net cash used in investing activities (1,273) (1,251) (2,233)
Cash flows from financing activities
Proceeds from issue of ordinary shares 473 414 569
Dividends paid 6 (2,451) (2,255) (3,595)
Dividends paid to minority (65) - (100)
Purchase of own shares (797) - (50)
Payment of principal under finance leases - (11) (11)
Net cash used in financing activities (2,840) (1,852) (3,187)
(Decrease)/increase in cash and cash equivalents (3,461) (5,400) 1,154
Cash and cash equivalents at beginning of the period 14,634 13,567 13,567
Foreign exchange differences (51) (33) (87)
Cash and cash equivalents at end of the period 11,122 8,134 14,634
Braemar Shipping Services PLC
Condensed consolidated half-yearly statement of changes in equity
(unaudited)
Share capital, Merger
share premium reserve,
and capital shares to be
redemption issued and Retained Total Minority Total
reserve other reserves earnings interest equity
Notes £'000 £'000 £'000 £'000 £'000 £'000
At 28 February 2006 10,430 20,396 2,031 32,857 - 32,857
Cash flow hedges - 364 - 364 - 364
Exchange differences - (17) - (17) - (17)
Net income recognised
directly in equity - 347 - 347 - 347
Profit for the period - - 2,357 2,357 59 2,416
Total recognised
income for
the half year - 347 2,357 2,704 59 2,763
Acquisition - - - - 271 271
Dividends paid 6 - - (2,255) (2,255) - (2,255)
Issue of shares 414 - - 414 - 414
Consideration to be - (738) - (738) - (738)
paid
Credit in respect of
share option schemes - - 145 145 - 145
At 31 August 2006 10,844 20,005 2,278 33,127 330 33,457
At 28 February 2007 10,973 19,577 5,390 35,940 309 36,249
Cash flow hedges - 43 - 43 - 43
Exchange differences - (36) - (36) - (36)
Net income recognised
directly in equity - 7 - 7 - 7
Profit for the period - - 4,713 4,713 80 4,793
Total recognised income
for the half year - 7 4,713 4,720 80 4,800
Dividends paid 6 - - (2,451) (2,451) (65) (2,516)
Issue of shares 473 - - 473 - 473
Purchase of shares - (797) - (797) - (797)
Consideration to be - (221) - (221) - (221)
paid
Credit in respect of
share option schemes - - 190 190 - 190
At 31 August 2007 11,446 18,566 7,842 37,854 324 38,178
BRAEMAR SHIPPING SERVICES PLC
UNAUDITED NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 AUGUST 2007
1. General Information
The Company is a limited liability company incorporated and domiciled in the UK
and listed on the London Stock Exchange. The address of its registered office
is 35 Cosway Street, London NW1 5BT.
The condensed consolidated half-yearly financial information was approved on 22
October 2007 for issue on 23 October 2007.
These interim financial results do not compromise statutory accounts within the
meaning of Section 240 of the Companies Act 1985. Statutory accounts for the
year ended 28 February 2007 were approved by the Board of Directors on 10 May
2007 and delivered to the Registrar of Companies. The report of the auditors on
those accounts was unqualified, did not contain an emphasis of matter paragraph
and did not contain any statement under Section 237 of the Companies Act 1985.
2. Basis of preparation
This condensed consolidated half-yearly financial information for the half-year
ended 31 August 2007 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with IAS34, '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 2007, which have been
prepared in accordance with IFRSs as adopted by the European Union.
3. Accounting Policies
The accounting policies are consistent with those of the annual financial
statements for the year ended 28 February 2007, as described in those annual
financial statements.
The following new standards, amendments to standards or interpretations are
mandatory for the first time for the financial year ending 29 February 2008.
• IFRIC 8, 'Scope of IFRS 2', effective for annual periods beginning on or
after 1 May 2006. This interpretation has not had any impact on the
recognition of share-based payments in the group.
• IFRIC 9, 'Reassessment of embedded derivatives', effective for annual periods
beginning on or after 1 June 2006. This interpretation has not had a
significant impact on the reassessment of embedded derivatives as the group
already assessed if embedded derivatives should be separated using
principles consistent with IFRIC 9.
• IFRIC 10, 'Interims and impairment', effective for annual periods beginning
on or after 1 November 2006. This interpretation has not had any impact on
the timing or recognition of impairment losses as the group already accounted
for such amounts using principles consistent with IFRIC 10.
• IFRS 7, 'Financial instruments: Disclosures', effective for annual periods
beginning on or after 1 January 2007. IAS 1, 'Amendments to capital
disclosures', effective for annual periods beginning on or after 1 January
2007. IFRS 4, 'Insurance contracts', revised implementation guidance,
effective when an entity adopts IFRS7. As this interim report only contains
condensed financial statements, and as there are no material financial
instrument related transactions in the period, full IFRS 7 disclosures are
not required at this stage. The full IFRS 7 disclosures, including the
sensitivity analysis to market risk and capital disclosures required by the
amendment of IAS 1, will be given in the annual financial statements.
• IFRIC 11, 'IFRS 2 - Group and treasury share transactions', effective for
annual periods beginning on or after 1 March 2007. Management do not expect
this interpretation to be relevant for the group.
The following new standards, amendments to standards and interpretations have
been issued, but are not effective for the financial year ending 29 February
2008 and have not been early adopted:
• IFRS 8, 'Operating segments', effective for annual periods beginning on or
after 1 January 2009, subject to EU endorsement. Management are currently
gathering information to make a revision to the group's geographical
segments. Management do not currently foresee any changes to the group's
business segments.
• IAS1 (Revised) - 'Presentation of Financial Statements', effective for annual
periods beginning on or after 1 January 2009.
• IAS23 (Revised) - 'Borrowing costs', effective for annual periods beginning
on or after 1 January 2009.
• IFRIC 12, 'Service concession arrangements', effective for annual periods
beginning on or after 1 January 2008. Management do not expect this
interpretation to be relevant for the group.
• IFRIC 13, 'Customer loyalty programmes', effective for annual periods
beginning on or after 1 July 2008.
• IFRIC 14, 'IAS19 - The limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction', effective for annual periods beginning
on or after 1 January 2008.
None of the above standards are expected to have any impact on the group.
4. Segmental information
Revenue Six months to Six months to Year ended
31 Aug 2007 31 Aug 2006 28 Feb 2007
£'000 £'000 £'000
Shipbroking 23,879 17,348 40,530
Logistics 12,013 10,904 23,449
Technical services (1) 3,774 3,191 6,623
Environmental services 7,004 1,121 3,229
46,670 32,564 73,831
Bunker trading 22,016 17,948 33,369
68,686 50,512 107,200
Operating profit
Shipbroking 4,793 3,828 8,749
Goodwill impairment charge - shipbroking - (950) (950)
4,793 2,878 7,799
Logistics 432 588 911
Technical services (1) 316 245 553
Environmental services 1,226 68 225
Bunker trading 12 8 62
6,779 3,787 9,550
(1) The results for Falconer Bryan Pte Limited for the period from the date of
acquisition to 31 August 2007 are included in Technical Services (see Note 11).
5. Taxation
The taxation charge for the half-year is calculated using the estimated
effective tax rate for the full year applied to the pre-tax profits at the half
year.
6. Dividends
The following dividends were paid by the Group:
Six months to Six months to Year ended
31 Aug 2007 31 Aug 2006 28 Feb 2007
£000 £000 £000
Interim dividend 6.75 pence per share - - 1,340
Final dividend 12.25 pence (2006: 11.5 pence) per 2,451 2,255 2,255
share
2,451 2,255 3,595
The Directors have declared an interim dividend of 8.00 pence per ordinary
share, payable on 11 December 2007 to shareholders on the register on 9 November
2007.
7. Earnings per share
Six months to Six months to Year ended
31 Aug 2007 31 Aug 2006 28 Feb 2007
£'000 £'000 £'000
Earnings - continuing operations 4,713 2,357 6,367
Goodwill impairment charge - 950 950
Earnings before goodwill impairment charge 4,713 3,307 7,317
pence Pence Pence
Earnings per share 23.66 12.03 32.29
Goodwill impairment - 4.85 4.82
Earnings before goodwill impairment charge 23.66 16.88 37.11
Shares Shares Shares
Weighted average number of ordinary shares 19,922,544 19,586,694 19,715,846
Dilutive effect of share options 153,532 326,503 264,693
Diluted weighted average number of ordinary shares 20,076,076 19,913,197 19,980,539
8. Capital expenditure
Goodwill,
tangible
and intangible
Assets
Six months ended 31 August 2006 £000
Opening net book amount at 1 March 2006 27,976
Acquisition of a subsidiary 2,103
Additions 246
Depreciation, amortisation, impairment and other movements (1,255)
Closing net book amount at 31 August 2006 29,070
Six months ended 31 August 2007
Opening net book amount at 1 March 2007 29,666
Acquisition of a subsidiary (see note 11) 2,524
Additions 561
Disposals (7)
Depreciation, amortisation, impairment and other movements (501)
Closing net book amount at 31 August 2007 32,243
In addition to the movements disclosed above, in the six months ended 31 August
2007, the Group reduced its interest in London Tankers Brokers Panel to 16.7%
following the sale of 200 shares for consideration of £200,000.
9. Provisions
Onerous Employee
lease entitlements Total
£'000 £'000 £'000
At 1 March 2006 577 54 631
Foreign exchange - (3) (3)
Charged in the year 36 - 36
Utilised in the year (21) - (21)
At 31 August 2006 592 51 643
Onerous Employee
lease entitlements Total
£'000 £'000 £'000
At 1 March 2007 418 45 463
Foreign exchange - (4) (4)
Released in the year (86) (25) (111)
Utilised in the year (132) - (132)
Reclassification from accruals - 101 101
At 31 August 2007 200 117 317
Provisions have been analysed between current and non-current as follows:
31 Aug 2007 31 Aug 2006 28 Feb 2007
£'000 £'000 £'000
Current 277 210 294
Non-current 40 433 169
317 643 463
10. Share capital
Number of Ordinary Share
shares Shares Premium Total
(thousands) £000 £000 £000
At 1 March 2006 19,877 1,988 8,046 10,034
Issues - share option schemes 275 26 388 414
At 31 August 2006 20,152 2,014 8,434 10,448
At 1 March 2007 20,231 2,023 8,554 10,577
Issues - share option schemes 263 26 447 473
At 31 August 2007 20,494 2,049 9,001 11,050
The Group's ESOP trust acquired 197,900 of the company's shares through
purchases on the London Stock Exchange at dates between 15 May 2007 and 27 July
2007 at prices ranging between 383 and 417 pence. The total amount paid to
acquire the shares was £797,000 and has been deducted from shareholders' equity.
During the six months ended 31 August 2007, 262,916 shares were issued at prices
ranging between 137.5 pence and 314 pence between 9 March 2007 and 31 August
2007 for aggregate proceeds of £473,000.
11. Acquisitions
On 7 July 2007 the Company acquired 100% of the share capital of Falconer Bryan
Pte Limited for a cash consideration of £5.9m.
The acquired business contributed revenues of £647k and a net profit before
amortisation of £66k to the group for the period from acquisition to 31 August
2007. The results of operations as if the acquisition had been made at the
beginning of the year would have been revenues of £2,507k and profit before tax
of £335k.
Details of net assets acquired and goodwill are set out below. The goodwill is
attributable to Falconer Bryan's skilled engineering staff. The group has yet
to finalise the amount of the fair value of the identifiable assets acquired.
Purchase consideration £'000
- cash paid 2,443
- cash payable 3,370
- acquisition expenses 96
Total purchase consideration 5,909
- fair value of identifiable assets acquired (see below) 4,296
Goodwill 1,613
Acquiree's Provisional
Carrying Fair
Amount value
£'000 £'000
Cash and cash equivalents 1,732 1,732
Property, plant and equipment 50 50
Customer relationships - 861
Receivables 2,538 2,538
Payables (900) (900)
Net deferred tax 15 15
assets
Net identifiable assets acquired 3,435 4,296
Outflow of cash to acquire the business, net of cash acquired:
- cash consideration 2,443
- cash and cash equivalents in subsidiary acquired (1,732)
- acquisition expenses 96
Cash outflow on acquisition 806
In addition, £125,000 was paid in respect of deferred cash consideration on
previous acquisitions.
On 28 September 2007, the Group paid £3.4m, being the balance of consideration
due to the Falconer Bryan vendors in respect of cash and working capital
acquired with the business.
In respect of the businesses acquired by the Group in the year ended 28 February
2007, the only adjustment since the publication of the accounts for that year is
to adjust the Gorman Cory deferred contingent consideration to £959,000 (2007:
£738,000).
12. Related party transactions
Key management compensation amounted to £0.7m for the six months ended 31 August
2007 (31 August 2006 - £0.5m).
31 Aug 2007 31 Aug 2006
£000 £000
Salaries and other short term benefits 603 424
Social security costs 66 49
Pension contributions 27 26
Share-based payments 27 7
723 506
The above table does not include any bonus awards as they have not been
individually determined.
Statement of Directors' responsibilities
The Directors confirm that this set of financial statements 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.
The Directors of Braemar Shipping Services PLC are listed in the Braemar
Shipping Services PLC Annual Report for 28 February 2007.
By order of the Board
A R. W. Marsh, Chief Executive J. R.V. Kidwell, Finance Director
Independent review report to Braemar Shipping Services plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 August 2007 which comprises the consolidated balance
sheet as at 31 August 2007 and the related consolidated income statement,
consolidated cash flow statement and condensed consolidated half-yearly
statement of changes in equity for the six months then ended and related notes.
We have read the other information contained in the half-yearly report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Directors' responsibilities
The half-yearly 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 Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of Braemar Shipping
Services plc are prepared in accordance with IFRSs as adopted by the European
Union. The financial information included in this half-yearly financial report
has been prepared in accordance with International Accounting Standard 34, '
Interim Financial Reporting,' as adopted by the European Union.
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 disclosed accounting policies have
been applied. 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 and therefore provides a lower level of assurance.
Accordingly we do not express an audit opinion on the financial information.
This report, including the conclusion, has been prepared for and only for the
company for the purpose of the Disclosure and Transparency Rules of the
Financial Services Authority and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
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 2007.
PricewaterhouseCoopers LLP
Chartered Accountants
West London
22 October 2007
1 The maintenance and integrity of the Braemar Shipping Services plc web site 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 financial
statements since they were initially presented on the website.
2 Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
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