TIDMBMS
RNS Number : 6969A
Braemar Shipping Services PLC
03 June 2021
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO
CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE
REGULATION (EU NO. 596/2014) WHICH IS PART OF UK LAW BY VIRTUE OF
THE EUROPEAN UNION (WITHDRAWAL) ACT 2018. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE
IN THE PUBLIC DOMAIN
BRAEMAR SHIPPING SERVICES PLC
("Braemar", the "Company" or the "Group")
3 June 2021
Preliminary Results for the year ended 28 February 2021
Strong Performance; New Strategy; Dividend Reinstated
Braemar Shipping Services plc (LSE: BMS), a leading provider of
expert advice in shipping investment, chartering and risk
management, today announces preliminary results for the year ended
28 February 2021.
Financial Highlights
-- Underlying financial performance ahead of market consensus*
and management's Covid-19 adjusted expectations:
o Revenue of GBP111.8 million ('m') (2020: GBP117.6 m)
o Underlying operating profit from continuing operations GBP8.9m
(2020: GBP11.0m)
o Reported continuing profit before tax of GBP9.5m (2020:
GBP6.3m), reflecting the profit on the sale of shares held in
AqualisBraemar of GBP2.2m
-- Balance sheet substantially strengthened:
o Net bank debt reduced by 56% to GBP8.9m (2020: GBP20.0m)
o Sale of approximately half of the shares held in
AqualisBraemar for net proceeds of GBP6.0m
-- Reinstatement of dividend payments:
o Intention to declare a dividend of 5p per share for the
year
o Progressive dividend policy to include interim and final
payments in future years
Operational Highlights
-- Strong progress on management objectives:
o Refocused strategy on core Shipbroking business
o Board appointments made to strengthen the Group's experience
relative to its shipbroking-focused growth strategy
o Joint venture for the Logistics Division between Cory Brothers
& Vertom UCS Holdings BV being explored
o Investment in Zuma Labs technology to improve workflow and
client interaction
-- Led by the Group COO and Finance Director, a new committee
formed to lead Braemar's ESG and diversity improvement initiatives
within the business
Post period end Highlights
-- New strategy continuing to drive re-energised growth
-- Areas of specific interest are growing presence in the US
market, developing offices in continental Europe and growing the
derivatives coverage
-- Disposal of Wavespec Engineering Division on 31 March 2021
(results treated as discontinued operations)
-- Appointment of Nigel Payne as non-executive Chairman as of 1 May 2021
-- Sale of remaining AqualisBraemar shares on 20 May 2021 for net proceeds of GBP7.2m, further strengthening the Group's balance sheet and realising a profit on sale of GBP3.9m
-- Agreement reached to reschedule certain liabilities connected
with the Braemar Naves acquisition to improve short term
liquidity
-- Encouraging start to current year:
o Trading has been strong in the first few months
o Forward order book up to $50.5m from $43.3m at the year end
and $42m at half year
SUMMARY FINANCIAL RESULTS
Underlying Results** Reported Results***
2020/21 2019/20 2020/21 2019/20
----------- ---------- ---------- ----------
Revenue GBP111.8m GBP117.7m GBP111.8m GBP117.7m
Operating Profit GBP8.9m GBP11.0m GBP10.5m GBP7.7m
Profit for the year from GBP4.4m GBP7.8m GBP5.1m GBP4.0m
continuing operations
Basic Earnings per Share 14.0p 24.9p 16.2p 12.9p
Full Year Dividend per 5p 5p 5p 0p
Share GBP8.9m GBP20.0m GBP8.9m GBP20.0m
Net Bank Debt
----------- ---------- ---------- ----------
* Underlying operating profit of at least GBP8.7m
** Underlying profit measures above are before non-recurring
specific items, including acquisition-related charges and loss from
discontinued operations.
*** Reported results are from continuing operations,
comparatives have been re-presented in relation to discontinued
operations.
Specific Items
2020/21 2019/20
----------- -----------
Acquisition related income/(expenditure) GBP(1.2)m GBP(2.4)m
Other operating and restructuring costs GBP(0.3)m GBP(1.3)m
Gain on disposal of investment in AqualisBraemar GBP2.2m -
Other gains relating to investment GBP0.9m GBP0.4m
in AqualisBraemar GBP0.1m GBP0.7m
Share of associate profit
Finance costs associated with acquisitions GBP(0.4)m GBP(0.5)m
Total Specific items before tax GBP1.3m GBP(3.1)m
----------- -----------
James Gundy, Group Chief Executive Officer of Braemar,
commenting on the performance and the outlook said:
"I am delighted with the performance of Braemar this year where,
in such a challenging period, we have not only exceeded market and
indeed our own expectations for financial performance, but we have
re-aligned many aspects of the business towards our new
growth-oriented shipbroking strategy. We have also simplified the
business, reduced net debt to manageable levels, improved our
management structure and put ourselves in an ideal position to
capitalise on the global recovery that is now underway, driving
global trade and shipping markets which are showing indicators of
future strength as a result. Our trading at the start of the new
year has been strong and we are delighted to show our confidence in
the business by reinstating a dividend of 5p per share to
shareholders."
The outlook for Braemar for the next few years is positive. With
a clear focus on growth, particularly in Shipbroking, our
streamlined business is well positioned to take advantage of
favourable market conditions."
-Ends-
A presentation for analysts will be h osted via conference call
at 10.00am today. If you would like to join, please contact
Buchanan at braemar@buchanan.uk.com to request dial in details.
For further information, contact:
Braemar Shipping Services plc
James Gundy, Group Chief Executive Tel +44 (0) 20 3142 4100
Officer
Nick Stone, Group Chief Operating Officer
and Finance Director
finnCap
Matt Goode/ James Thompson (Corporate Tel +44 (0) 20 7220 0500
Finance)
Andrew Burdis (ECM)
Buchanan
Charles Ryland / Victoria Hayns / Stephanie Tel +44 (0) 20 7466 5000
Watson / Matilda Abraham
Notes to Editors:
About Braemar
Braemar is a leading international Shipbroker and provider of
expert advice in shipping investment, chartering and risk
management. Braemar employs approximately 520 people in 30 offices
worldwide across its Shipbroking, Financial and Logistics
divisions.
Braemar joined the Official List of the London Stock Exchange in
November 1997 and trades under the symbol BMS. For more
information, including our investor presentation, visit
www.braemar.com
Disclaimer
This document contains forward-looking statements, including
statements regarding the intentions, beliefs or current
expectations of our Directors, officers and employees concerning,
among other things, the Group's results of operations, financial
condition, liquidity, prospects, growth, strategies and the
business. These statements are based on current expectations and
assumptions and only relate to the date on which they are made.
They should be treated with caution due to the inherent risks,
uncertainties and assumptions underlying any such forward-looking
information. The Group cautions investors that a number of factors,
including matters referred to in this document, could cause actual
results to differ materially from those expressed or implied in any
forward-looking statement, including general business and economic
conditions globally, industry trends, competition, changes in
government and other regulation and policy, interest rates and
currency fluctuations, and political and economic uncertainty
(including as a result of global pandemics). Neither the Group, nor
any of the Directors, officers or employees, provides any
representation, assurance or guarantee that the occurrence of the
events expressed or implied in any forward-looking statements in
this document will actually occur. Undue reliance should not be
placed on these forward-looking statements. Other than in
accordance with our legal and regulatory obligations, the Group
undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
PRELIMINARY ANNOUNCEMENT - YEARED 28 FEBRUARY 2021
Chairman's Statement
I am delighted to have been appointed as the Chairman of Braemar
at an exciting time for the business and to present my first
Chairman's statement to shareholders.
In common with many other businesses, the past financial year
has been a disruptive and challenging year for the Group. At the
same time as maintaining a priority focus on the health and safety
of our employees and their families, the business has had to
navigate its way through a plethora of COVID-19 ('COVID') related
operating restrictions. Notwithstanding this, however, the breadth
and depth of the Group's service lines and the resilience of the
Braemar business model have shone through, enabling the business to
continue to service its clients to the high standards that they
expect from Braemar as well as delivering strong results for the
benefit of all stakeholders. Indeed, the Group's underlying
financial performance from continuing operations for the year is
ahead of management's expectations that were set at the beginning
of the pandemic.
I would like to pay tribute to the management and employees of
the Group for their hard work and unstinting dedication to the
business and its customers, achieved under such difficult
circumstances. The financial results for the year reflect well on
both the strength and robustness of the Braemar brand as well as on
the professionalism and dedication of the Group's management and
employees.
The outlook for the current year is encouraging and with a
renewed focus on growth, the business is well positioned to take
advantage of favourable market conditions.
Results for the year
Revenue from continuing operations for the year was GBP111.8
million ('m') compared with GBP117.7m in 2019/20. Underlying
operating profit from continuing operations was GBP8.9m compared
with GBP11.0m in 2019/20 and underlying earnings per share were
19.4 pence ('p') compared to 29.5p in the prior year.
These figures exclude the Wavespec Engineering Division
('Wavespec') that was held for sale at the balance sheet date.
Wavespec was sold after the year-end on 31 March 2021 and its
results for the year are treated as discontinued operations.
Reported profit for the year from continuing operations before
tax was GBP9.4m (2020: GBP6.3m) after taking into account a profit
relating to the Group's holding of AqualisBraemar LOC ASA
('AqualisBraemar') of GBP3.1m, which included a profit on the sale
of part of the holding of GBP2.2m. This measure is also after
charging certain acquisition and disposal related expenditures,
which totalled GBP1.2m (2020: GBP2.4m) and interest charges.
The Group's cash flow has been strong and the year-end balance
sheet is much stronger as a result, with net bank debt reducing by
56% from GBP20.0m as at 29 February 2020 to GBP8.9m as at 28
February 2021. The sale of the remaining holding of AqualisBraemar
shares after the year-end in May 2021 generated an additional
GBP7.2m of proceeds and further strengthened the balance sheet.
Board changes
The Board has carried out a number of composition changes during
the year, designed to align and strengthen the Board's experience
relative to its shipbroking-focused growth strategy.
James Gundy was appointed Group Chief Executive Officer on 1
January 2021 and joined the Board on that date, having successfully
led the highly profitable Shipbroking Division since 2014. Nick
Stone was appointed as the Group's Chief Operating Officer in June
2020, alongside the Group Finance Director role that he has held
since April 2019.
Ronald Series was the Executive Chairman of the Group until 31
December 2020, a role that he took on an interim basis in July
2019. Upon James' appointment, Ronald reverted to non-executive
Chairman and stepped down from the Board on 30 April 2021 when I
was appointed to succeed him as Chairman. On behalf of everyone at
Braemar, I would like to thank Ronald for his role in steering
Braemar through the last couple of years and look forward to
working with James, Nick and the rest of the Board to develop the
exciting next phase of growth for Braemar.
Strategy
During the last two years, the Board has carried out a number of
structural changes to the Group, disposing of the Technical
Services Division, developing a potential joint venture for the
Logistics Division and reducing net debt. The rescheduling of
payments made for the 2017 acquisition of Braemar Naves and the
planned integration of the Financial Division into the Shipbroking
Division now underway will complete this reorganisation and we
expect these latter two steps to be completed during the first half
of the current financial year.
Braemar will then be a far more streamlined business,
concentrated on providing expert advice in shipping investment,
chartering and risk management. The Board will then focus on a
product and geographically oriented growth strategy, supported by a
far stronger balance sheet and an investment proposition that is
more streamlined and also one that will become easier to understand
and support.
Dividend
In the Group's trading update on 9 March 2021, the Board stated
that it had set a target of achieving a net debt to EBITDA ratio
sustainably below 1.5 times on average over the seasonal working
capital cycle. I am pleased to report that excellent progress has
been made towards this goal with the ratio falling to 2.14 for the
year, down from 2.77 for the prior year. With the second sale of
AqualisBraemar shares completed since the year-end, the Board
anticipates reducing the net debt to EBITDA ratio substantially
further in the current financial year to a level well below the 1.5
times average.
Accordingly, the Board has decided to supplement its growth
strategy with a progressive dividend policy involving the payment
of dividends to shareholders each year, subject to financial
performance. In reaching this decision, the Directors were mindful
of their duties under Section 172 of the Companies Act 2006,
including the importance of balancing the potentially competing
interests of its shareholders seeking a dividend with the need to
continue to reward, incentivise and retain staff and the stated
target of strengthening the Group's balance sheet for future
growth.
With regard to the year to 28 February 2021, the Directors are
recommending for approval at the AGM on 20 July 2021 a dividend of
5p per share. This dividend will be paid on 30 July 2021 to all
ordinary shareholders on the register at the close of business on
25 June 2021, with a corresponding ex-dividend date of 24 June
2021. The last date for Dividend Reinvestment Plan ("DRIP")
elections will be 9 July 2021. For subsequent years, the Board
intends, subject to financial performance, to declare an interim
and a final dividend each year, on a progressive basis.
Outlook
All areas of the business have started the year well and initial
signs are encouraging with respect to financial results to date and
the prospects for the rest of the year. Whilst the Board remains
mindful of the uncertainty arising from the impact of new variants
of COVID and, as the majority of the Group's revenues are in
dollars, the impact of sterling/dollar movements in any unhedged
income, we believe that the Group is well positioned and look
forward to the current year with confidence. There is sufficient
strength and demand returning to shipping markets to support the
Board's expectations for a stronger year as global trading patterns
return to pre-COVID levels.
I am looking forward to helping develop the business and taking
further steps in our growth strategy as the year progresses.
Nigel Payne
Chairman
2 June 2021
Review of Operations
The year started with significant uncertainty and volatility in
the shipping markets, coupled with the challenges of operating
under restrictions imposed by COVID. The trading results for the
year are an improvement on our expectations set in that environment
and contain some strong performances. Despite a strong start to the
year, the Tanker markets were weak in the second half and revenues
fell as a result, in what is the Group's single biggest revenue
class, although not as much as we initially feared. Dry Cargo
revenues also fell, due to the sharp slowdown seen in Chinese
imports at the start of the pandemic, but recovered strongly toward
the end of the year. These falls were partially offset by stronger
performances in Sale and Purchase and Securities, especially in the
final months of the year.
Revenues in Braemar Naves, the Financial Division, were in line
with the previous year, but operating profits were impacted by
increased bad debt provisions. Revenues in Cory Brothers, the
Logistics Division, fell marginally due to a slowdown in
import/export activities early in the year, but operating profits
showed an increase due to the mix of revenue, cost savings and an
increase in Brexit-related new business.
SHIPBROKING DIVISION
2020/21 2019/20
--------------------- ---------- ----------
Revenue GBP77.7m GBP82.4m
Underlying operating GBP10.1m GBP11.8m
profit
The Shipbroking Division had a strong year in the circumstances
and achieved a full-year performance ahead of expectations set at
the beginning of the pandemic, although revenue was GBP77.7m, down
from GBP82.4m the year before. Employees adjusted well to home
working for long periods and there has been a positive effect on
our inter-office communication now that a full return to offices is
in prospect. Underlying operating profits were GBP10.1m, down from
GBP11.8m the previous year. Lower travel and entertaining
expenditure helped reduce the impact of the decline in revenue
although there were higher costs of an investment nature and the
deferred share charge was also increased.
Those costs of an investment nature include the sign-on costs
for the new clean fuels team in Geneva and other costs related to
the establishment the new office there. The costs are charged to
the income statement, but are excluded from the profits used for
calculation of broker bonuses. They also include the sign-on costs
of new broker teams in Dry Cargo, Securities and other desks in
recent years where sign-on bonuses are subject to claw backs were
those brokers to leave and are spread over the period of the claw
back. The total was GBP1.7m (2020: GBP1m).
The majority of revenue is earned in US Dollars and on constant
currency basis compared to the prior year, revenue would have been
circa GBP79m with a marginally improved underlying operating
profit. The forward order book of revenue that has been contracted
but not yet recognised at 1 March 2021 was $43.3m (2020: $49.7m), a
decline resulting from the very strong shipping market at the end
of the previous year which wasn't replicated. The order book has
increased since the year-end to $50.5m at the end of May 2021.
Tankers
The Tankers desk is the single biggest desk within Braemar's
operations, mainly dealing with chartering of deep-sea tankers for
the transportation of crude oil and refined products. It was the
driver of the strong revenue growth in the prior year, but
experienced a slow second half this year when the northern
hemisphere winter didn't lead to the usual higher seasonal demand.
As a result, revenues fell by 16%.
The financial year started with unusual strength and volatility
in the tanker market caused by the sharp COVID-related decline in
oil and refined product demand. This had eased off by the end of
April as the strong contango in forward oil prices evaporated. By
June, the 80+ strong fleet of oil tankers tied up storing unwanted
oil began to redeliver into the spot market. That coincided with
the lowest levels of OPEC oil production seen in many years as the
burgeoning global oil stocks dampened efforts to shore up oil
prices. The combination of low oil exports and fleet growth set the
tanker market on a downward spiral that meant earnings from
chartering for the vessel owners declined markedly by August 2020.
The small seasonal recovery in the fourth quarter of 2020 was
short-lived and demand for the largest crude oil tankers, the
VLCCs, quickly descended into one of the weakest markets for many
years. The market has largely remained that way with successive
waves of COVID-related lockdowns keeping a tight lid on oil
production in the Middle East and Russia, and weak oil prices
discouraging shale production in the USA. Smaller tanker classes,
Suezmaxes and Aframaxes, fared marginally better, regaining some
strength during the first quarter of 2021 before easing back in
April. Product tankers were also offered some protection from the
exceptionally weak oil demand in early 2021 as oil refinery
closures, notably in OECD countries, triggered import
substitution.
The addition of a new clean fuels team in Geneva during the year
has strengthened the reach across that market and has augmented the
resources already in London and Dubai and enabled further expansion
in Singapore. Geneva is home to many of the largest commodity
traders and the new office located there will enable further
investment and expansion of coverage.
Specialised Tankers and Gas
The Specialised desk covers the Chemicals, small product
tankers, US Flag vessels and barges, Petrochemical Gas, LPG and LNG
markets. This desk has seen significant investment and revenue
growth in recent years. However, it was subject to similar
COVID-related impact to the main Tankers desk, although not on the
same scale, and therefore revenue fell by 6%.
After a strong first half, the combined effect of significantly
reduced European petroleum demand and patchy chemical volumes made
for a year of two halves for the desk. The year saw consolidation
of ownership of the Chemical fleet into pools and through
acquisition and as a consequence the desk worked on growing market
share and developing new markets.
There has been an investment in the Houston office with
additional analytical resource for the US Flag and Barges market
where there are opportunities to grow further. This has allowed
expansion into the US asphalt market and created opportunities to
promote sale and purchase capability on top of existing chartering
activity as well as strengthening client relationships.
The LPG transportation market showed extreme volatility with
rates being impacted by product price arbitrage between the US Gulf
and the Far East and tight vessel availability due to heavy
drydocking schedules. Confidence in the future market for LPG
transportation is high with demand for new Dual Fuel large carriers
as the owners and traders look to the new cleaner propulsion
technology. Consolidation of ownership has also been seen in the
Petrochemical Gas market, in a year that saw production challenges
and high unpredictability.
LNG carrier rates also saw historical highs over the 2020/21
winter for short term charters in what is becoming a better
supplied and more liquid market. The year also saw delivery of a
second new build vessel allied to a long-term multi-year charter as
well as some second-hand sale and purchase transactions, in what is
being seen as a more buoyant market.
Dry Cargo
The Dry Cargo market was one of the first hit by the COVID
pandemic and although there was a recovery later in the year,
revenues fell for the year as a whole by 14%. The financial year
began amid disruption from the pandemic, which caused a temporary
slowdown in cargo volumes and slump in freight rates, mainly due to
significant falls in Chinese imports. However, China's economy
recovered from the pandemic quickly, underpinned by raw
material-intensive stimulus measures. Industrial activity in China
bounced back to pre-pandemic levels by mid-2020, pushing market
rates back to the five-year highs seen the previous year as
heightened demand for iron ore coincided with easing of supply
bottlenecks from Brazil.
More recently, as the global economic recovery has gathered
pace, dry bulk volumes have continued to grow, pushing rates to
their highest levels in ten years. This boost has been seen across
the majority of dry bulk cargoes, with all vessel sizes enjoying a
surge in demand, which has continued unabated since the year-end
with the Baltic Dry Index seeing new ten-year highs during April
2021.
Additions to the Dry Cargo teams have been made in London and
Singapore, and as part of the opening of a new office in Geneva,
despite the challenging landscape of the pandemic. Focus on growth
of market share and diversification into new markets continues and
the benefit of the strength of the Braemar securities operation in
this market supports this drive.
Sale and Purchase and Projects
The Sale and Purchase desk had another successful year with
increased activity in all sectors, especially with respect to new
building in the tankers sector. Revenues grew by 26%. The year saw
multiple new building contracts for the largest class of tanker,
VLCCs, at the largest shipyard in the world, which added to the
forward order book. Revenues in this area also increased during the
year due to long-term charters connected to the new build projects
and were well ahead of our expectations despite lower levels of
market activity.
There was also significant success in selling second-hand
tankers at higher price levels at the beginning of the year due to
the rise in spot charter rates in the second half of 2019 and first
half of 2020. The subsequent slow-down in the tanker market in the
second half of the year saw the sale and purchase activity decline
as well. However, the year-end was marked with the well-publicised
increase in both dry cargo and container freight rates, which
stimulated the second-hand market for bulkers and container vessels
across the board. On the back of this, the desk had a strong finish
to the year with much higher transaction volumes.
Securities
Despite the obvious disruptions of last year and perhaps because
of the market volatility that was caused, the year was a good one
for the Securities desk and saw growth of 16% in revenue. All desks
were fully operational throughout lockdown and were able to provide
the services needed to their clients. Strategic hires and a strong
market in Dry Cargo Freight Forward Agreements ('FFA') saw revenue
double in that market. The strategic technology investment with
Zuma Labs has delivered a very well-received platform for price
discovery and execution, initially in the Dry FFA market, which
contributed to the strong revenue growth. The technology is now
being rolled out across various other products within the Group.
The long-standing partnership with the GFI Group on Wet Tanker FFAs
continues to deliver strong and consistent profits. The current
year will see new products added and plans to build market share as
a result.
Offshore
The Offshore desk had a difficult year on the back of the fall
in oil demand and offshore exploration and production activity and
revenue fell by 35% as a consequence. The recruitment of new
personnel in Singapore with the capability to focus on subsea and
renewables, as well as oil and gas, has started to gain some
traction, but the main source of historic revenues has been the
North Sea where activity levels saw significant declines. The
restructuring and refocus of the desk away from the North Sea and
oil and gas and onto renewables has been accelerated as a result
into what is expected to be a strong growth area in the future.
FINANCIAL DIVISION
2020/21 2019/20
--------------------- -------- --------
Revenue GBP6.0m GBP5.9m
Underlying operating GBP1.0m GBP1.1m
profit
The Financial Division, Braemar Naves, is headquartered in
Hamburg with a smaller presence in London and Singapore and
provides advisory corporate finance services to investors and
lenders in the shipping industry. Revenue for the year was GBP6m, a
small increase from the previous year, but underlying operating
profit was marginally lower due to an increase in bad debt
provisions. Thanks to its broad spectrum of advisory services, the
Division demonstrated its resilience to adverse market
circumstances by effectively repeating last year's results, despite
business travel being very difficult throughout the entire
year.
At the beginning of the financial year, the business suffered
from a few European financing projects evaporating in the beginning
of the COVID pandemic, whereas the Singaporean office managed to
conclude the acquisition financing of second-hand vessels by
bringing in Japanese lease capital. The shortfall of European
financing mandates was replaced by an unexpected increased
restructuring activity in the summer of 2020 where two
restructurings were concluded in Greece. Later in the year,
refinancing activity came back into focus and a large
restructuring-related refinancing project was concluded, which had
been under way for more than 18 months. Several clients also bought
back and refinanced their loans with German banks, international
lenders and PE Funds with the advisory support of Braemar
Naves.
In the second half of the year, the scope of our business was
diversified further by commencing M&A mandates in transhipment,
heavy lift and ultra-high-power batteries for the maritime and
aerospace sector. At the very end of the financial year, Braemar
Naves managed to take advantage of the boom in container shipping
by successfully selling container ships for clients with whom they
had previously been involved in the loan restructuring. Braemar
Naves also started supporting a long-standing client entering the
container box leasing market with a large acquisition, which was
successfully concluded in the current financial year.
LOGISTICS DIVISION
2020/21 2019/20
--------------------- ---------- ---------
Revenue GBP28.1m GBP29.3m
Underlying operating GBP1.2m GBP1.0m
profit
The Logistics Division, Cory Brothers has extensive industry
experience and a worldwide reputation for delivering on customers'
requirements. The business provides a high-quality service that is
carried out by experienced staff based in the UK and overseas.
Revenue was slightly down from the previous year at GBP28.1m (2020:
GBP29.3m); however, underlying operating profit showed a 16%
increase to GBP1.2m as a result of a lower cost base and reduced
travel and entertaining expenditure.
Port and Hub Agency
The Port Agency business services UK ports, the port of
Singapore, and ports in North America and the Netherlands and has
joint arrangements with a number of worldwide agency partners via
the Group's UK-based hub management business.
The majority of the Port Agency business arises from activity in
UK ports where Cory Brothers has a strong presence with a total of
11 port-based offices, together with its global hub activity, which
is coordinated out of the UK. The hub business saw growth across
all key clients in the financial year, in total up 8% versus the
prior year. However, the UK Port Agency operation declined by 10%,
which was driven by a reduction in demand for aviation fuel and
other reduced import / export volumes.
There was growth of 24% in revenues versus the prior year in the
overseas operations, which at operating profit level now deliver
close to half of the total for the Agency business. The strongest
overseas region was in the USA, which benefitted from additional
business from new customers and an increase in LPG shipments.
Liner Agency and Freight Forwarding
The liner and freight forwarding gross profit was slightly lower
than prior year. However, this was entirely driven by the impact of
COVID in the first half of the financial year with import activity
being hit following the lockdowns in China and the reduced domestic
demand in certain sectors. The Division chose not to furlough any
staff and thereby maintained the service level its customers expect
throughout the pandemic as well as allowing for new business
development activity. As a result, the second half of the financial
year saw a strong recovery, with gross profit up 10% compared to
the first half as demand recovered. Momentum continued to build in
the last couple of months of the financial year with Brexit driving
additional business from the existing client base, as well as
attracting new customers. This momentum has continued into the new
financial year.
Freight rates for containers bound into Europe from Asia
increased significantly as the COVID lockdowns eased and supply and
demand strengthened and remained high as the new financial year
began. This did initially impact some customers' bookings, but with
little sign of rates softening bookings have now recovered, the
impact of which will inevitably feed through to consumer price
inflation.
AqualisBraemar
2020 2019
-------------------------- -------- ----------
Group share of underlying GBP0.3m GBP(0.3)m
associate profit/(loss)
The financial year saw AqualisBraemar complete the acquisition
of LOC Group to form AqualisBraemarLOC, an energy and marine
consulting business with nearly twice the number of consultants
over 39 countries. The acquisition was partially funded by a rights
issue that saw the equity interest held by Braemar fall from 27.3%
to 20.8%. Revenues and operating profits grew on the back of this
acquisition and good progress on the development of the original
group that was formed by the merger of Aqualis ASA and the Braemar
Technical Services Division in June 2019.
The Board took the opportunity to sell 9.6m shares (around one
half of its interest) in AqualisBraemar in January 2021 to satisfy
strong demand for the shares on the back of the acquisition in
order to reduce net bank debt. The remaining shares were then sold
after the balance sheet date generating net receipts of GBP7.3m to
further reduce bank debt. The Group's interest in AqualisBraemar
following the sale of these shares is limited to 1m warrants that
are expected to vest in June 2021.
Financial Review
Resilient performance in the face of difficult trading
conditions
A strong year for the Shipbroking Division in the circumstances
and significantly improved margins in the Logistics Division are
evident in the increased underlying operating profit from
continuing operations delivered during the year.
2021 2020
Summary income statement 2021 GBP'000 GBP'000
------------------------------------------------------ -------- --------
Revenue 111,778 117,655
------------------------------------------------------ -------- --------
Cost of sales (17,000) (18,121)
------------------------------------------------------ -------- --------
Operating costs (82,485) (85,647)
------------------------------------------------------ -------- --------
Central costs (3,383) (2,857)
------------------------------------------------------ -------- --------
Underlying operating profit before specific items 8,910 11,030
------------------------------------------------------ -------- --------
Acquisition and disposal-related income/(expenditure) 1,873 (2,008)
------------------------------------------------------ -------- --------
Restructuring & other operating costs (262) (1,336)
------------------------------------------------------ -------- --------
Operating profit 10,521 7,686
------------------------------------------------------ -------- --------
Overview
Statutory operating results improved, with operating profit
increasing to GBP10.5m from GBP7.7m as a result of the sale of
AqualisBraemar shares and reduced acquisition-related and
restructuring costs. The underlying measure fell to GBP8.9m from
GBP11m as a result of lower Shipbroking revenues, higher central
and investment type costs. The net impact of acquisition-related
items are separately identified as specific items and have
decreased from GBP2.4m to GBP1.2m. There was an overall non-trading
profit related to the holding of AqualisBraemar shares of GBP3.1m
compared to GBP0.4m in the prior year as shown in Note 8. Losses
from discontinued operations were GBP2.5m (2020: GBP2.3m) of which
GBP1.7m related to trading losses in the Engineering Division,
Wavespec. Reported profits for the year were GBP5.1m compared to
GBP4.0m in the previous year.
Direct and operating costs
Cost of sales mainly comprise freight and haulage costs incurred
in the Logistics Division where margins have remained fairly
constant over the year. Operating costs reduced due to lower levels
of travel and entertaining expenditure and employee bonuses in the
Shipbroking Division being partially offset by increases in the
costs of new broker teams, IT and central costs. Staff costs have
also been reduced temporarily in Singapore and Australia by certain
government grants totalling GBP0.9m as described in Note 3.
Specific items
We have separately identified certain items that we do not
consider to be part of the ongoing trade of the Group. These
significant items are material in both size and/or nature and we
believe may distort understanding of the underlying performance of
the business. These are summarised below:
Acquisition and disposal related expenditure
We have accounted for GBP1.2m (2020: GBP2.4m)
acquisition-related charges during the year, for the acquisitions
of NAVES Corporate Finance GmbH and Atlantic Brokers Holdings
Limited. Of these acquisition-related specific items, GBP1.9m was
paid during the period in cash.
Of the total charge of GBP1.2m, the Group incurred GBP0.8m of
costs which are directly linked to the acquisition of Braemar Naves
(2020: GBP1.2m). These include GBP0.9m of post-acquisition
consideration payable to certain sellers under the terms of the
acquisition agreement. The acquisition agreement included
substantial payments to the working vendors, conditional on their
continuing employment, some of which were related to the
profitability of the Financial Division during the first three
years of ownership.
Costs incurred on the Braemar Atlantic acquisition were GBP0.3m
(2020: GBP1.1m) of post-acquisition consideration payable to
certain sellers under the terms of the acquisition agreement.
There are also several non-trading specific items relating to
the holding of AqualisBraemar shares and warrants totalling a net
profit of GBP3.1m. In the prior year accounts, there was a credit
of GBP0.4m relating to an increase in the carrying value of the
warrants, which reversed in the year as a result of COVID-related
deteriorating forecasts in their business. During the year,
AqualisBraemar acquired the LOC Group to form AqualisBraemarLOC as
described in Note 18. As a result of the associated rights issue,
the Group's shareholding was diluted to 20.8% of the enlarged
Group, but the transaction also resulted in a gain of GBP0.8m in
the book value of that holding following the completion of the
acquisition. In January 2021, the Group sold 9.6m shares
representing around 10.4% of the AqualisBraemarLOC share capital
resulting in a gain of GBP2.2m. These items are described in more
detail in Note 8.
Discontinued operations
A decision was taken in August 2020 to dispose of the Group's
Engineering Division, Wavespec, and therefore it has been treated
as a discontinued operation. Consequently, the Wavespec results do
not form part of the Group's underlying performance. Comparative
periods have been restated to reflect consistent reporting between
periods. In the prior year, the results of the three business units
of the former Braemar Technical Services Division that were sold in
June 2019 were also classified in this way.
The discontinued operations made a total post-tax loss of
GBP2.5m during the period of ownership in the year of which GBP1.7m
relates to trading losses and the balance to certain specific
sale-related items as described in Note 9. In the prior year, a
loss of GBP2.3m was reported, of which GBP1.4m relates to the
trading losses made by Wavespec and GBP0.9m relates to the disposal
of the Technical Services Division business units.
Other specific items
In the prior year, there was an aggregate charge of GBP1.3m
relating to the one-off costs of a restructuring program in the
Logistics Division and to Board changes during the year.
Share of associate profit for the period
The reported share of associate profit for the period relates to
the ownership of shares in AqualisBraemar and comprises the Group's
share of trading profits of GBP0.3m (2020: (GBP0.3)m) and the
movement in fair value of contingent consideration of GBP0.1m
(2020: GBP0.7m), which is treated as a specific item and not part
of underlying profits. Dividends of GBP0.6m (2020: GBPnil) were
paid by AqualisBraemar during the year.
Finance costs
The net finance cost for the year of GBP1.5m (2020: GBP1.9m)
reflects the cost of working capital associated with the revolving
credit facility held with HSBC, the convertible loan notes
associated with the acquisition of Braemar Naves and the interest
charge associated with right of use assets under IFRS 16. GBP1.1m
has been attributed to underlying operations (2020: GBP1.4m),
including GBP0.4m for the IFRS 16 charge (2020: GBP0.4m), and
GBP0.4m to the funding of the Braemar Naves acquisition (2020
GBP0.5m).
Capital expenditure
Total capital expenditure was GBP2.4m (2020: GBP3.9m). The most
significant item of capital expenditure relates to the treatment of
office leases under IFRS 16 whereby the lease is treated as an
asset addition. These lease additions totalled GBP1.2m in the year
(2020: GBP2.2m) and do not relate to cash payments in the year. The
balance relates to capitalised expenditure on computer software of
GBP0.6m (2020: GBP0.6m) and other expenditure on fixtures and
fittings and leasehold improvements of GBP0.5m (2020: GBP1.1m).
Balance sheet
Net assets at 28 February 2021 were GBP63.6m (2020: GBP57.5m).
The year saw a reduction in gross trade receivables to GBP27.3m
from GBP31.9m at the previous year-end after strong cash
collections. The proportion of trade receivables provided against
was broadly in line with the previous year.
Borrowings and cash
At the balance sheet date, the Group had a revolving credit
facility available to it of GBP35.0m with HSBC. The Group also has
access to a global cash pooling facility in the UK, Germany and
Singapore which allows efficient management of liquidity between
our main regional hubs. The Group operates a pooling arrangement
for cash management purposes and at the end of the year the Group
had net debt across those pools of GBP8.9m (2020: GBP20m).
The HSBC facility was extended in May 2021 from its original
termination date of September 2022 by one year to September 2023.
The facility available within the extended facility was reduced to
GBP30m with amended covenant ratios in the light of the reduced
requirements following the sale of AqualisBraemar shares both
before and after the year-end.
Retirement benefits
The Group has a defined benefit pension scheme which was closed
to new members during the 2015/16 financial year. The scheme has a
net liability of GBP3.8m (2020: GBP3.7m), which is recorded on the
balance sheet at 28 February 2021. The agreed annual
scheme-specific funding since the triennial valuation as at March
2014 was a cash contribution of GBP0.5m. The latest triennial
funding valuation as at March 2020 was carried out during the year
and the result was an unchanged annual employer cash contribution
of GBP0.5m, which was agreed with the trustees and is being paid in
monthly instalments.
Convertible loan notes and deferred consideration
In total, the Group has committed to the issue of up to EUR24.0m
convertible loan note instruments in respect of the acquisition of
Braemar Naves. These convertible loan note instruments are
unsecured, unlisted and non-transferable. The notes are Euro
denominated and carry a 3% per annum coupon. Each tranche is
redeemable on or after two years from the date of issue, by the
Group or by the individual holder. The conversion prices were fixed
at 390.3p for management sellers and 450.3p for non-management
sellers.
The fair value of convertible instruments and deferred
consideration as at 28 February 2021 was GBP10.4m (2020: GBP10.5m).
Of the total EUR24m, a total of only EUR18.3m will now be issued
after the measurement of the final earn out in September 2020 as
described in Note 14. Agreement has been reached with the holders
of the loan notes that the earliest redemption dates of the
outstanding balance (including amounts to be satisfied by the issue
of new shares) will be as follows:
Feb-22 GBP3.1m
Feb-23 GBP1.4m
Feb-24 GBP0.6m
Feb-25 GBP0.6m
Feb-26 GBP2.5m
The documents for this agreement are in agreed form and will be
executed immediately following the announcement of the preliminary
results for the year and the parties are free from the close period
restrictions.
Foreign exchange
The US dollar exchange rate has moved from US$1.28/GBP1 at the
start of the year to US$1.39/GBP1 at the end of the year. A
significant proportion of the Group's revenue is earned in US
dollars. In order to protect the future sterling value of those
revenues, at 28 February 2021, the Group held forward currency
contracts to sell US$49m at an average rate of US$1.33/GBP1.
Taxation
The Group's underlying effective tax rate in relation to
continuing operations in 2020/21 was a charge of 19.2% (2020:
credit of 1.0%), which is broadly in line with the current UK tax
rate. The prior year credit arose as a result of overprovisions in
earlier years and deferred tax credits arising on the creation of
IFRS 16 lease assets.
Alternative profit measures ('APMs')
Braemar uses APMs as key financial indicators to assess the
underlying performance of the Group. Management considers the APMs
used by the Group to better reflect business performance and
provide useful information to investors and other interested
parties. In particular, we have separated the impact of
individually material capital transactions, such as acquisitions
and disposals, from ongoing trading activity to allow a focus on
ongoing operational performance.
Our APMs include underlying operating profit and underlying
earnings per share. Our prior year APMs have been restated to
reflect the reclassification of discontinued operations noted
above.
Capital management
The Group manages its capital structure and adjusts it in
response to changes in economic conditions and its capital needs.
To maintain or adjust the capital structure, the Group may adjust
the dividend payment to shareholders, return capital to
shareholders or issue new shares and debt instruments. The Group
has a policy of maintaining positive cash balances whenever
possible, which can be supported by short-term use of its revolving
credit facility. This is drawn down as required to provide cover
against the peaks and troughs in our working capital
requirements.
ESOP Trust
During the previous year the Company requested that SG Kleinwort
Hambros Trust Company (CI) Ltd, as Trustee of the Company's ESOP
Trust, purchase shares in Braemar Shipping Services Plc. During the
year a total of 540,000 shares in the Company were purchased by the
Trustee; as a result at 28 February 2021 the ESOP held 525,837
shares (2020: 348,400 shares).
Dividend
The Directors are recommending for approval at the AGM on 20
July 2021 a final dividend of 5p. No interim dividend was paid, nor
was a final dividend paid for the previous year due to the
uncertainties created by the COVID pandemic. This total dividend of
5p for the year is covered 3.9 times by the underlying earnings per
share of 19.4p.
Going concern
Particular care has been taken in preparing these accounts to
the going concern review and viability statement due to the ongoing
COVID impact on global trade. However, the strong cash flows
exhibited during the year and the sale of shares in AqualisBraemar
have meant that the Group is in a much stronger position than at
the previous year-end. This balance sheet strength has been
increased further since year-end with a further sale of the
remaining AqualisBraemar shares. Nevertheless, careful and frequent
monitoring of cash forecasts and client payments will be maintained
to ensure this situation continues.
Nick Stone
Group Operating Officer and Finance Director
2 June 2021
Consolidated income statement
for the year ended 28 February 2021
28 Feb 2021 29 Feb 2020 restated
------------------------------ ------------------------------
Specific Specific
Underlying items Total Underlying items Total
Continuing operations Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ----- ---------- -------- -------- ---------- -------- --------
Revenue 111,778 - 111,778 117,655 - 117,655
Cost of sales (17,000) - (17,000) (18,121) - (18,121)
------------------------------------- ----- ---------- -------- -------- ---------- -------- --------
Gross profit 94,778 - 94,778 99,534 - 99,534
------------------------------------- ----- ---------- -------- -------- ---------- -------- --------
Operating expense:
Other operating costs 3,5 (85,868) (262) (86,130) (88,504) (446) (88,950)
Restructuring costs 5 - - - - (890) (890)
Acquisition and disposal-related
income /(expenditure) 5 - 1,873 1,873 - (2,008) (2,008)
------------------------------------- ----- ---------- -------- -------- ---------- -------- --------
(85,868) 1,611 (84,257) (88,504) (3,344) (91,848)
------------------------------------- ----- ---------- -------- -------- ---------- -------- --------
Operating profit/(loss) 8,910 1,611 10,521 11,030 (3,344) 7,686
Share of associate profit/(loss)
for the period 9 255 91 346 (262) 698 436
Finance income 170 - 170 458 - 458
Finance costs (1,250) (432) (1,682) (1,861) (450) (2,311)
------------------------------------- ----- ---------- -------- -------- ---------- -------- --------
Profit/(loss) before taxation 8,085 1,270 9,355 9,365 (3,096) 6,269
Taxation (1,999) 198 (1,801) (182) 228 46
------------------------------------- ----- ---------- -------- -------- ---------- -------- --------
Profit/(loss) for the year
from continuing operations 6,086 1,468 7,554 9,183 (2,868) 6,315
Loss for the year from discontinued
operations 6 (1,706) (754) (2,460) (1,407) (892) (2,299)
------------------------------------- ----- ---------- -------- -------- ---------- -------- --------
Profit/(loss) for the year
attributable to equity shareholders
of the Parent 4,380 714 5,094 7,776 (3,760) 4,016
------------------------------------- ----- ---------- -------- -------- ---------- -------- --------
Total
------------------------------------- ----- ---------- -------- -------- ---------- -------- --------
Earnings per ordinary share
Basic 8 13.96p 16.24p 24.94p 12.88p
Diluted 8 11.55p 13.44p 22.54p 11.64p
------------------------------------- ----- ---------- -------- -------- ---------- -------- --------
Continuing operations
------------------------------------- ----- ---------- -------- -------- ---------- -------- --------
Earnings per ordinary share
Basic 8 19.40p 24.08p 29.45p 20.26p
Diluted 8 16.05p 19.92p 26.62p 18.31p
------------------------------------- ----- ---------- -------- -------- ---------- -------- --------
The year ended 29 February 2020 has been restated for the
presentation of Engineering as discontinued operations.
The accompanying notes form an integral part of this financial
information.
Consolidated statement of comprehensive income
for the year ended 28 February 2021
28 Feb 29 Feb
2021 2020
Notes GBP'000 GBP'000
---------------------------------------------------------- ----- -------- --------
Profit for the year 5,094 4,016
---------------------------------------------------------- ----- -------- --------
Other comprehensive income/(expense)
Items that will not be reclassified to profit or
loss:
Actuarial loss on employee benefit schemes - net
of tax (424) (1,638)
Items that are or may be reclassified to profit or
loss:
Foreign exchange differences on retranslation of
foreign operations (715) (503)
Recycling of foreign exchange reserve* 6 (488) -
Cash flow hedges - net of tax 2,126 (828)
---------------------------------------------------------- ----- -------- --------
Other comprehensive income/(expense) 499 (2,969)
---------------------------------------------------------- ----- -------- --------
Total comprehensive income for the year from continuing
operations 5,593 1,047
Recycling of foreign exchange reserve - 670
---------------------------------------------------------- ----- -------- --------
Total comprehensive income for the year from discontinued
operations - 670
---------------------------------------------------------- ----- -------- --------
Total comprehensive income for the year attributable
to equity shareholders of the Parent 5,593 1,717
---------------------------------------------------------- ----- -------- --------
*The recycling of foreign exchange reserve relates to the
dilution and partial disposal of the Group's investment in
AqualisBraemar LOC ASA. See Note 9.
The accompanying notes form an integral part of this financial
information.
Balance sheet
as at 28 February 2021
As at As at
28 Feb 2021 29 Feb 2020
Note GBP'000 GBP'000
--------------------------------------- ---- ------------ ------------
Assets
Non-current assets
Goodwill 83,955 83,812
Other intangible assets 2,129 2,411
Property, plant and equipment 9,841 11,928
Other investments 1,962 1,962
Investment in associate 3,763 7,315
Financial assets - 1,184
Derivative financial instruments 200 -
Deferred tax assets 2,900 3,620
Other long-term receivables 1,888 2,467
--------------------------------------- ---- ------------ ------------
106,638 114,699
Current assets
Trade and other receivables 34,800 39,541
Financial assets 746 -
Derivative financial instruments 1,573 -
Cash and cash equivalents 14,111 28,749
Assets held for sale 6 436 -
51,666 68,290
--------------------------------------- ---- ------------ ------------
Total assets 158,304 182,989
--------------------------------------- ---- ------------ ------------
Liabilities
Current liabilities
Derivative financial instruments 60 527
Trade and other payables 46,237 48,031
Short-term borrowings 10 23,000 48,758
Current tax payable 1,318 1,334
Provisions 307 201
Convertible loan notes 5,130 4,340
Deferred consideration 608 600
Liabilities directly associated with
assets classified as held for sale 6 125 -
--------------------------------------- ---- ------------ ------------
76,785 103,791
Non-current liabilities
Long-term borrowings 10 8,634 10,943
Deferred tax liabilities 174 903
Provisions 690 765
Convertible loan notes 1,217 2,398
Deferred consideration 3,358 3,031
Pension deficit 3,819 3,672
--------------------------------------- ---- ------------ ------------
17,892 21,712
--------------------------------------- ---- ------------ ------------
Total liabilities 94,677 125,503
--------------------------------------- ---- ------------ ------------
Total assets less total liabilities 63,627 57,486
--------------------------------------- ---- ------------ ------------
Equity
Share capital 3,174 3,167
Share premium 55,805 55,805
Shares to be issued (1,362) (2,498)
Other reserves 22,790 22,279
Retained earnings (16,780) (21,267)
--------------------------------------- ---- ------------ ------------
Total equity 63,627 57,486
--------------------------------------- ---- ------------ ------------
The accompanying notes form an integral part of this financial
information.
Consolidated cash flow statement
for the year ended 28 February 2021
28 Feb
2021 29 Feb
2020 restated
Notes GBP'000 GBP'000
------------------------------------------------------- ----- -------- --------------
Profit before tax 9,355 6,269
Loss from discontinued operations 6 (2,460) (2,299)
Depreciation and amortisation charges 3,702 3,390
Loss on disposal of fixed assets 78 801
Gain on sub-lease arrangements - (101)
Share of profit in associate (346) (436)
Share scheme charges 1,820 1,582
Net foreign exchange gains of financial instruments (84) (70)
Net finance cost 1,512 1,853
Fair value loss/(profit) on warrants 5 438 (418)
Rights Issue gain on shareholding in AqualisBraemar
LOC ASA 5 (826) -
Gain on disposal of shares in AqualisBraemar LOC
ASA 5 (2,229) -
Gain on recycling of foreign exchange on rights issue
and disposal of shares 5 (488) -
Impairment of right-of-use asset 5 210 -
Impairment of assets held for sale 6 432 -
Loss on disposal 6 - 892
Contribution to defined benefit scheme (450) (450)
Operating cash flow before changes in working capital 10,664 11,013
------------------------------------------------------- ----- -------- --------------
Decrease/(increase) in receivables 5,493 (1,629)
(Decrease)/increase in payables (1,468) 632
Increase in provisions and employee benefits 31 552
------------------------------------------------------- ----- -------- --------------
Cash flows from operating activities 14,720 10,568
------------------------------------------------------- ----- -------- --------------
Interest received 84 385
Interest paid (1,274) (1,895)
Tax (paid)/received (822) 1,193
------------------------------------------------------- ----- -------- --------------
Net cash generated from operating activities 12,708 10,250
------------------------------------------------------- ----- -------- --------------
Cash flows from investing activities
Purchase of property, plant and equipment and computer
software (502) (1,743)
Purchase of other intangible assets (643) -
Investment in associate - (1,605)
Dividend received from associate 641 -
Acquisition of associate (418) -
Acquisition of other investment - (150)
Cash in subsidiaries disposed - (3,910)
Proceeds from disposal of investments 5,983 -
Principal received on finance lease receivables 804 661
------------------------------------------------------- ----- -------- --------------
Net cash generated from/(used in) investing activities 5,865 (6,747)
------------------------------------------------------- ----- -------- --------------
Cash flows from financing activities
Proceeds from borrowings 11,333 8,500
Repayment of principal under lease liabilities (3,928) (3,473)
Repayment of revolving credit facility (11,975) (6,339)
Repayment of overdraft facilities (25,116) -
Net proceeds from pooling arrangements - 4,595
Dividends paid - (4,630)
Gift to ESOP for purchase of shares (860) -
Deferred consideration paid (1,901) (600)
------------------------------------------------------- ----- -------- --------------
Net cash used in financing activities (32,447) (1,947)
------------------------------------------------------- ----- -------- --------------
Increase/(decrease) in cash and cash equivalents (13,874) 1,556
Cash and cash equivalents at beginning of the period 28,749 28,021
Foreign exchange differences (711) (828)
Cash and cash equivalents at end of the period 14,164 28,749
------------------------------------------------------- ----- -------- --------------
The year ended 29 February 2020 has been restated for the
presentation of Engineering as discontinued operations.
The accompanying notes form an integral part of this financial
information.
Statement of changes in total equity
for the year ended 28 February 2021
Shares
Share Share to Other Retained Total
capital premium be issued reserves earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ------------------ -------- -------- ---------- --------- --------- --------
At 1 March 2019 3,144 55,805 (3,446) 22,857 (20,007) 58,353
Change in accounting policy
- IFRS 16 - - - - 381 381
---------------------------------- ------------------ -------- -------- ---------- --------- --------- --------
At 1 March 2019 after adoption
of IFRS 16 3,144 55,805 (3,446) 22,857 (19,626) 58,734
Profit for the year - - - - 4,016 4,016
---------------------------------- ------------------ -------- -------- ---------- --------- --------- --------
Actuarial loss on employee
benefits schemes - net of
tax - - - - (1,638) (1,638)
Foreign exchange differences - - - 167 - 167
Cash flow hedges - net of
tax - - - (828) - (828)
Total other comprehensive
expense - - - (661) (1,638) (2,299)
---------------------------------- ------------------ -------- -------- ---------- --------- --------- --------
Total comprehensive
(expense)/income - - - (661) 2,378 1,717
---------------------------------- ------------------ -------- -------- ---------- --------- --------- --------
Dividends paid 7 - - - - (4,630) (4,630)
Deferred tax on items taken
to equity - - - 83 - 83
RSP shares purchased 23 - - - (23) -
ESOP shares allocated - - 948 - (948) -
Share-based payments - - - - 1,582 1,582
---------------------------------- ------------------ -------- -------- ---------- --------- --------- --------
At 29 February 2020 3,167 55,805 (2,498) 22,279 (21,267) 57,486
Profit for the year - - - - 5,094 5,094
---------------------------------- ------------------ -------- -------- ---------- --------- --------- --------
Actuarial loss on employee
benefits schemes - net of
tax - - - - (424) (424)
Foreign exchange differences - - - (1,203) - (1,203)
Cash flow hedges - net of
tax - - - 2,126 - 2,126
---------------------------------- ------------------ -------- -------- ---------- --------- --------- --------
Total other comprehensive
income/(expense) - - - 923 (424) 499
---------------------------------- ------------------ -------- -------- ---------- --------- --------- --------
Total comprehensive income - - - 923 4,670 5,593
---------------------------------- ------------------ -------- -------- ---------- --------- --------- --------
Deferred tax on items taken
to equity - - - (412) - (412)
RSP shares purchased 7 - - - (7) -
Gift to ESOP for purchase
of own shares - - (860) - - (860)
ESOP shares allocated - - 1,996 - (1,996) -
Share-based payments - - - - 1,820 1,820
At 28 February 2021 3,174 55,805 (1,362) 22,790 (16,870) 63,627
---------------------------------- ------------------ -------- -------- ---------- --------- --------- --------
The accompanying notes form an integral part of this financial
information.
Notes to the FINANCIAL INFORMATION
Note 1 - General information
The Group and Company financial statements of Braemar Shipping
Services Plc for the year ended 28 February 2021 were authorised
for issue in accordance with a resolution of the Directors on 2
June 2021. Braemar Shipping Services Plc is a public limited
company incorporated in England and Wales.
The term "Company" refers to Braemar Shipping Services Plc and
"Group" refers to the Company and all its subsidiary undertakings
and the Employee Share Ownership Plan trust.
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 28 February 2021 or
29 February 2020 but is derived from those accounts. Statutory
accounts for 2020 have been delivered to the registrar of
companies, and those for 2021 will be delivered in due course. The
auditor has reported on those accounts; their reports were (i)
unqualified; (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report; and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
Note 2 - Basis of preparation and forward-looking statements
Whilst the financial information included in this preliminary
announcement has been prepared in accordance with international
financial reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union (" IFRSs"). The
Group expects to distribute full accounts that comply with IFRSs as
adopted by the European Union and in accordance with the Companies
Act 2006.
The financial information has been prepared under the historic
cost convention except for items measured at fair value as set out
in the accounting policies below.
Certain statements in the Annual Report are forward-looking.
Although the Group believes that the expectations reflected in
these forward-looking statements are reasonable, we can give no
assurance that these expectations will prove to have been correct.
These statements involve risks and uncertainties, so actual results
may differ materially from those expressed or implied by these
forward-looking statements. We undertake no obligation to update
any forward-looking statements whether as a result of new
information, future events or otherwise.
The Group financial information is presented in pounds sterling
and all values are rounded to the nearest thousand pounds (GBP'000)
except where otherwise indicated.
The Group and Company Financial Statements have been prepared on
a going concern basis. In reaching this conclusion regarding the
going concern assumption, the Directors considered cash flow
forecasts for a period of greater than twelve months from the date
of signing of these Financial Statements.
The cash flow forecasts have been prepared by the Directors
having considered the impact of the COVID pandemic. Although the
Group has faced considerable operational challenges as a result of
the pandemic, the Group's underlying financial performance from
continuing operations for the year is ahead of management's
expectations that were set at the beginning of the pandemic.
Therefore, the Directors have concluded that COVID is unlikely to
have a significantly adverse impact on the Group's future
cashflows.
As at 28 February 2021 the Group's net debt1 was GBP8.9 million
with available headroom in the GBP35.0 million revolving credit
facility ("RCF") of GBP12.0 million. As at 31 May 2021 net debt had
decreased by GBP2.9 million to GBP6.0 million with available
headroom in the extended and amended GBP30.0 million RCF of GBP11.0
million and cash balances of GBP9.8 million.
During the year the Group disposed of 9,600,000 shares in
AqualisBraemar LOC ASA for net cash proceeds of GBP6.0 million
which significantly reduced net debt at 28 February 2021. On 19 May
2021 the Group disposed of its remaining 9,640,621 shares for net
cash proceeds of GBP7.2 million which significantly offset the
annual bonus payments made in May. The Group's interest in
AqualisBraemar LOC ASA is now limited to its holding of 6,523,977
performance-based warrants, of which one million are expected to
vest shortly.
28 February 31 May 2021
Note 2021 GBPm
GBPm
------------------------------------- ------- ------------ ------------
Secured revolving credit facilities 10 (23.0) (19.0)
Cash 14.1 13.0
------------------------------------- ------- ------------ ------------
Net debt (8.9) (6.0)
------------------------------------- ------- ------------ ------------
The RCF has a number of financial covenant tests that must be
adhered to. During the year the financial covenant relating to debt
to twelve months' rolling EBITDA was relaxed. The ratio was
increased from 3x to 4x until May 2021, reducing to 3.5x until May
2022 and returning to 3x until the facility expires in September
2022. At 31 May 2021 and for the year ended 28 February 2021 the
Group met all financial covenant tests.
On 25 May 2021 the Group completed an extension and amendment to
the RCF. The RCF facility limit was reduced from GBP35.0 million to
GBP30.0 million while the accordion limit was increased from GBP5.0
million to GBP10.0 million. Drawdown of the accordion facility is
subject to additional credit approval. The EBITDA covenant is set
at 3.0x until January 2022, and 2.5x until the facility expires in
September 2023. At 31 May 2021 and for the year ended 28 February
2021 the Group met all financial covenant tests.
The cash flow forecasts assessed the ability of the Group to
operate both within the revised covenants and the facility
headroom, and included a number of downside sensitivities,
including a reverse stress test scenario. The reverse stress test
performed ascertained the point at which the covenants would be
breached in respect of the key assumption of forecast revenue
decline. The Directors considered from a review of the forecast
assumptions and principal risks that revenue was the most sensitive
assumption in the models. The reverse stress test indicated that
the business, alongside certain mitigating actions which are fully
in control of the Directors, would be capable of withstanding
approximately a 29% reduction in budgeted revenue in the base case
assumptions from June 2021 through to June 2022. In light of
current trading, forecasts and the Group's performance since the
COVID pandemic begun in March 2020, the Directors having assessed
this downturn in revenue and concluded the likelihood of such a
reduction to be remote, such that it does not impact the basis of
preparation of the Financial Statements and there is no material
uncertainty in this regard.
In reaching this conclusion, the Directors have considered
forward-looking market data in respect of the shipping market, the
forward order book within the Shipbroking Division, the resilience
within the Logistics Division owing to the flexible cost model and
the nature of the clients supplying essential goods and the
potential within the Financial Division, should a global recession
become apparent.
The Directors consider revenue as the key assumption in the
Group's forecasts as there is a low level of cost of sales, other
than in the Freight Forwarding business within its Logistics
Division, which generates a low gross margin. The remaining costs
are largely fixed or made up of discretionary bonuses,
predominately within the Shipbroking Division and which are
directly linked to profitability. Should the need arise, further
mitigating actions would be available to reduce the size of the
workforce or defer bonus payments to reflect the downturn in
revenue.
Over the course of COVID pandemic the Group has faced
unprecedented challenges and has operated successfully despite the
various lockdown restrictions. The Group has the benefit of this
experience when assessing how COVID may impact future trading but
some uncertainty remains over the outlook, and revisions to trade
projections are possible. The Directors are, however, comfortable
that under the reverse stress test scenarios we have run, the Group
could withstand a decline in revenue and continue to operate within
the available banking facilities. Accordingly, the Group and the
Company continues to adopt the going concern basis in preparing the
Financial Statements.
Note 3 - Operating profit
Operating profit represents the results from operations before
finance income and costs, share of profit/(loss) in associate,
taxation and discontinued operations.
This is stated after charging/(crediting):
2020
2021 restated
GBP'000 GBP'000
---------------------------------------------- -------- ---------
Staff costs 69,123 75,900
Depreciation of property, plant and equipment 3,298 2,980
Amortisation of computer software 404 410
Net movements in bad debt provisions (187) 166
Auditor's remuneration 793 623
Net foreign exchange losses 193 69
Specific items included in operating profit (1,873) 3,344
----------------------------------------------- -------- ---------
A total of GBP0.9 million (2020: GBPnil) has been netted against
other operating costs. GBP0.5 million relates to a grant from the
Singaporean government for retaining all Singaporean locals during
the COVID pandemic. GBP0.4 million relates to a grant from the
Australian government for maintaining the wages of Australian
employees above a certain threshold during the COVID pandemic. All
criteria for the retention of both grants has been satisfied and
therefore the full amount has been recognised in the Income
Statement.
Note 4 - Segmental information and revenue
Management has determined the operating segments for the Group
based on the reports reviewed by the Chief Operating Decision Maker
to make strategic decisions. The Chief Operating Decision Maker is
the Group's Board of Directors.
The Board considers the business from both service line and
geographic perspectives.
The Group was previously organised into four operating
divisions: Shipbroking, Financial, Logistics and Engineering.
Following the decision to dispose of the Engineering business the
Group's continuing operations are organised into three operating
divisions: Shipbroking, Financial and Logistics while the results
of the Engineering business are presented as discontinued
operations.
Central costs relate to Board costs and other costs associated
with the Group's listing on the London Stock Exchange. All segments
meet the quantitative thresholds required by IFRS 8 as reportable
segments.
Underlying operating profit is defined as operating profit for
continuing activities before restructuring costs, gain on disposal
of investment and acquisition and disposal-related items.
Sales between and within business segments are carried out on an
arm's-length basis.
Capital expenditure comprises additions to property, plant and
equipment, goodwill and other intangibles including additions
resulting from business acquisitions.
Segment assets consist primarily of intangible assets (including
goodwill), property, plant and equipment, receivables and other
assets. Receivables for taxes, cash and cash equivalents and
investments have been excluded. Segment liabilities relate to the
operating activities and exclude liabilities for taxes and
borrowings.
Corporate assets consist primarily of property, plant and
equipment and receivables. Corporate liabilities relate to deferred
consideration and lease liabilities.
The segmental information provided to the Board for reportable
segments for the year ended 28 February 2021 is as follows:
Revenue Operating profit/(loss)
----------------------- -------------------------
2021 2020 restated 2021 2020 restated
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------- -------- ------------- --------- --------------
Shipbroking 77,727 82,377 10,068 11,763
Financial 5,968 5,931 1,034 1,101
Logistics 28,083 29,347 1,191 1,023
Trading segments revenue/results 111,778 117,655 12,293 13,887
----------------------------------------------- -------- ------------- --------- --------------
Central costs (3,383) (2,857)
----------------------------------------------- -------- ------------- --------- --------------
Underlying operating profit 8,910 11,030
----------------------------------------------- -------- ------------- --------- --------------
Specific operating costs (262) (1,336)
Acquisition related income/(expenditure) 1,873 (2,008)
----------------------------------------------- -------- ------------- --------- --------------
Operating profit 10,521 7,686
Share of associate profit for the period 346 436
Finance expense - net (1,512) (1,853)
----------------------------------------------- -------- ------------- --------- --------------
Profit before taxation 9,355 6,269
Taxation (1,801) 46
----------------------------------------------- -------- ------------- --------- --------------
Profit for the year from continuing operations 7,554 6,315
Loss for the year from discontinued operations (2,460) (2,299)
----------------------------------------------- -------- ------------- --------- --------------
Profit for the year 5,094 4,016
----------------------------------------------- -------- ------------- --------- --------------
Discontinued
Shipbroking Financial Logistics Operations Corporate Total
2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- --------- --------- ------------ --------- --------
Capital additions 1,537 106 578 - 151 2,372
Depreciation of property, plant
and equipment and amortisation
of computer software (1,195) (50) (433) (37) (1,923) (3,638)
Segment operating assets 34,627 29,622 23,556 1,628 70,659 160,092
Segment operating liabilities (25,757) (28,661) (21,711) (23) (18,540) (94,692)
-------------------------------- ----------- --------- --------- ------------ --------- --------
Discontinued
Shipbroking Financial Logistics Operations Corporate Total
2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- --------- --------- ------------ --------- ---------
Capital additions 252 - 478 56 3,137 3,923
Depreciation of property, plant
and equipment and amortisation
of computer software 430 13 104 124 2,696 3,367
Segment operating assets 47,743 34,252 27,831 3,526 45,520 158,872
Segment operating liabilities (28,571) (28,322) (22,070) (409) (21,014) (100,386)
-------------------------------- ----------- --------- --------- ------------ --------- ---------
b) Geographical segment - by origin
The Group manages its business segments on a global basis. The
operation's main geographical area and also the home country of the
Company is the United Kingdom.
Geographical information determined by location of customers is
set out below:
Non-current
Revenue assets
----------------------- ------------------
2021 2020 restated 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
United Kingdom 77,701 79,904 75,951 82,128
Singapore 14,135 14,638 1,299 2,224
United States 1,815 2,173 18 124
Australia 7,159 7,672 303 296
Germany 3,585 4,870 25,640 25,770
Rest of the World 7,383 8,398 1,074 120
------------------------ -------- ------------- -------- --------
Continuing operations 111,778 117,655 104,285 110,662
Discontinued operations 1,661 3,139 - -
------------------------ -------- ------------- -------- --------
Total 113,439 120,794 104,285 110,662
------------------------ -------- ------------- -------- --------
c) Revenue analysis
The Group disaggregates revenue into Shipbroking, Financial and
Logistics in line with the segmental information presented above.
All revenue arises from the rendering of services. There is no
single customer that contributes greater than 10% of the Group's
revenue.
Remaining performance obligations
The Group enters into some contracts, primarily in the
Shipbroking Division, which are for a duration longer than twelve
months and where the Group has outstanding performance obligations
on which revenue has not yet been recognised. The amount of revenue
that will be recognised in future periods on these contracts when
those remaining performance obligations will be satisfied is set
out below:
Forward order book
Within More than
12 months 1-2 years 2 years Total
2021 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ---------- --------- --------- --------
Sale and purchase 3,594 1,337 290 5,221
Chartering 13,994 4,483 7,385 25,862
------------------ ---------- --------- --------- --------
Total 17,588 5,820 7,675 31,083
------------------ ---------- --------- --------- --------
Within More than
12 months 1-2 years 2 years Total
2020 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ---------- --------- --------- --------
Sale and purchase 7,571 1,845 703 10,119
Chartering 17,235 2,954 8,412 28,601
------------------ ---------- --------- --------- --------
Total 24,806 4,799 9,115 38,720
------------------ ---------- --------- --------- --------
Note 5 - Specific items
The following is a summary of specific items incurred. Each item
has a material impact on the reported results for the year and is
not expected to be incurred on an ongoing basis and, as such, will
not form part of the underlying profit in future years.
2021 2020
GBP'000 GBP'000
----------------------------------------------------------- -------- --------
Other operating costs
Impairment of ROU assets (210) -
Board changes - (468)
(Loss)/profit on sublet of office (52) 22
----------------------------------------------------------- -------- --------
(262) (446)
----------------------------------------------------------- -------- --------
Acquisition and disposal related items
- Acquisition of ACM Shipping Group plc (115) (153)
- Acquisition of NAVES Corporate Finance GmbH (949) (1,190)
- NAVES tax reimbursement 115 -
- Acquisition of Atlantic Brokers Holdings Limited (283) (1,083)
- Movement in fair value of warrants (438) 418
- Gain on rights issue of AqualisBraemar LOC ASA 826 -
- Disposal of shares in AqualisBraemar LOC ASA 2,229 -
- Recycle of amounts in other comprehensive income and
foreign currency translation reserve 488 -
1,873 (2,008)
Other items
Restructuring costs - (890)
Share of profit/(loss) in associate in respect of warrants 91 (120)
Gain on bargain purchase - 818
Finance costs (432) (450)
Taxation 198 228
Loss on disposal of discontinued operations (Note 6) (754) (892)
----------------------------------------------------------- -------- --------
Total 714 (3,760)
----------------------------------------------------------- -------- --------
Other operating costs
In the current year a loss of GBP0.3m has been recognised in
other operating costs. GBP0.2 million is an impairment to a
right-of-use asset in respect of a London office which will be
vacated by AqualisBraemar LOC ASA and GBP52,000 is a loss on
disposal in respect of the Group subletting a portion of its
Singapore office space to AqualisBraemar LOC ASA. In the prior year
GBP0.5 million of costs were incurred in relation to the former
Chief Executive left the Board in July 2019 and a profit on
disposal of GBP22,000 was recognised in the prior year in respect
off the sub-let of certain office space.
Acquisition and disposal related items
The Group received total income of GBP1.9 million (2020:
expenditure of GBP2.0 million) in respect of acquisition related
items.
GBP0.1 million (2020: GBP0.2 million) was incurred in relation
to the restricted share plan implemented to retain key staff
following the merger between Braemar Shipping Services Plc and ACM
Shipping plc. This restricted share plan expired in July 2020.
Expenditure of GBP0.9 million (2020: GBP1.2 million) is directly
linked to the acquisition of NAVES Corporate Finance GmbH. This
includes charges of GBP0.1 million related to foreign exchange
translation of euro liabilities plus charges of GBP0.3 million in
respect of interest and GBP0.6 million of post-acquisition
remuneration payable to certain vendors under the terms of the
acquisition agreement. This agreement has a three-year earn-out
period which ended on 31 August 2020, over which the contingent
costs of the acquisition will be charged to the Income Statement
depending on the earnings of the Financial Division during that
period. A credit of GBP0.1 million is included in respect of a
reimbursement from the sellers of certain expenses incurred by the
Financial division prior to acquisition.
Expenditure of GBP0.3 million (2020: GBP1.1 million) is directly
linked to the acquisition of Atlantic Brokers Holdings Limited in
respect of incentive payments to working sellers. The cash payment
was made in the year to 28 February 2018 but is subject to clawback
provisions if the working sellers were to leave employment of the
Group before 28 February 2021 and, as such, the costs are charged
to the Income Statement over that clawback period.
The Group recognised a loss of GBP0.4 million on the fair value
movement of warrants.
The Group recognised a gain of GBP0.8 million on a rights issue
of AqualisBraemar LOC ASA as well as a gain of GBP2.2 million on
the disposal of 9,600,000 shares in AqualisBraemar LOC ASA. A
further gain of GBP0.5 million was recognised in respect of amounts
recycled from other comprehensive income and foreign currency
translation reserves both at the date of dilution and the date of
disposal. See Note 9.
Other specific items
In the current year the Group did not incur any restructuring
costs. In the prior year costs of GBP0.9 million were incurred in
the Logistics Division as a result of a restructuring
programme.
The Group recognised specific income of GBP0.1 million (2020:
GBP0.7 million) in relation to its investment in AqualisBraemar LOC
ASA. This is the Group's share of the fair value movement of
contingent consideration due from AqualisBraemar LOC ASA. The
recognition of this investment is a one-off event and is therefore
treated as a specific item. In the prior year a gain of GBP0.8
million was recognised in relation to the gain on bargain purchase
on initial recognition of the investment.
GBP0.4 million (2020: GBP0.5 million) of interest charges
related to the Group's revolving credit facility have been included
in finance costs. These charges relate to interest payable on
tranches of the revolving credit facility that were used to fund
the acquisition of NAVES Corporate Finance GmbH.
A tax credit of GBP0.2 million (2020: GBP0.2 million) has been
recognised in respect of specific items which are allowable for UK
corporation tax purposes.
The Group recognised a further GBP1.0 million (2020: GBP0.9
million) in relation to discontinued operations. See Note 6.
Note 6 - Discontinued operations
In August 2020 the Board announced its intention to dispose of
Wavespec, the Group's Engineering Division and engaged a corporate
finance advisor to conduct a sale process. Following the Group's
decision to dispose of the Engineering Division, the results of the
current and comparative periods have been re-presented to include
the results of the Engineering Division as discontinued operations.
Previously losses from discontinued operations comprised the
results of the Offshore, Adjusting and Marine product lines which
were divested to Aqualis ASA on 21 June 2019.
Subsequent to the year-end, the sale of the Engineering Division
completed for a maximum consideration of GBP2.6 million. See Note
11. The consideration will be satisfied by the issuance of a
promissory note with a maturity date of 31 March 2026, the fair
value less cost to sell is based on the net present value of the
promissory note less legal and professional fees directly
associated with the transaction and intercompany receivables which
will be waived on completion of the transaction.
The major classes of assets and liabilities comprising the
operations held for sale are as follows:
Year ended Year ended
28 Feb 29 Feb
2021 GBP'000 2020 GBP'000
------------------------------------------------------- ------------- -------------
Intangibles 90 -
Property plant and equipment 1 -
Cash 53
Trade and other receivables 292 -
Assets held for sale 436 -
Trade and other payables (125) -
Liabilities directly associated with assets classified
as held for sale (125) -
Net assets of discontinued operations 311 -
------------------------------------------------------- ------------- -------------
An impairment to fair value less costs to sell of GBP432,000 has
been pro-rated across intangibles and property, plant and
equipment.
The results of the discontinued operations which have been
included in the Income Statement are as follows:
Engineering Division
Year ended Year ended
28 Feb 29 Feb
2021 GBP'000 2020 GBP'000
------------------------------------------------ ------------- -------------
Revenue 1,661 3,139
Costs (3,367) (4,550)
Trading loss (1,706) (1,411)
Impairment to fair value less costs to sell (432) -
Disposal costs (322) -
------------------------------------------------ ------------- -------------
Loss before taxation (2,460) (1,411)
Taxation - 4
------------------------------------------------ ------------- -------------
Loss for the year from the Engineering Division (2,460) (1,407)
------------------------------------------------ ------------- -------------
No taxation arises in relation to discontinued operations as the
Engineering Division is loss-making.
Offshore, Marine and Adjusting product lines
Year ended Year ended
28 Feb 29 Feb
2021 GBP'000 2020 GBP'000
---------------------------------------------------------- ------------- -------------
Net assets disposed of - (7,128)
Proceeds - 8,509
Transactions costs - (1,741)
Disposal-related costs - (403)
Recycling of foreign exchange - 670
---------------------------------------------------------- ------------- -------------
Loss on disposal - (93)
Trading loss - (799)
---------------------------------------------------------- ------------- -------------
Loss for the year from the Offshore, Marine and Adjusting
product lines - (892)
---------------------------------------------------------- ------------- -------------
Total discontinued operations
Year ended Year ended
28 Feb 29 Feb
2021 GBP'000 2020 GBP'000
restated
------------------------------------------------------------ ------------- -------------
Trading loss of the year from total discontinued operations (1,706) (1,407)
Specific items from total discontinued operations (754) (892)
------------------------------------------------------------ ------------- -------------
Total loss for the year from total discontinued operations (2,460) (2,299)
------------------------------------------------------------ ------------- -------------
The basic and diluted earnings per share in respect of
discontinued operations were as follows:
Year ended
Year ended 29 Feb
28 Feb 2020
2021 restated
--------------------------- ---------- ----------
Basic earnings per share (7.84)p (7.37)p
Diluted earnings per share (7.84)p (7.37)p
--------------------------- ---------- ----------
As any potential ordinary shares would have the effect of
increasing a loss per share, they have been treated as
anti-dilutive in the current and prior year.
During the year the discontinued operations had net operating
cash flows of GBP1.0 million (2020: GBP0.9 million). There were no
cash outflows relating to financing or investing activities (2020:
GBPnil).
Note 7 - Dividends
Amounts recognised as distributions to equity holders in the
year:
2021 2020
GBP'000 GBP'000
--------------------------------------------------------------- -------- --------
Ordinary shares of 10 pence each
Final dividend of nil per share for the year ended 29 February
2020 (2019: 10.0 pence per share) - 3,066
Interim dividend of nil per share (2020: 5.0 pence per
share) - 1,564
--------------------------------------------------------------- -------- --------
- 4,630
--------------------------------------------------------------- -------- --------
The right to receive dividends on the shares held in the ESOP
has been waived. The dividend saving through the waiver is GBPnil
(2020: GBP87,000).
The distributable reserves of the Company at 28 February 2021
were GBP2.73 million (2020: GBP2.22 million).
Note 8 - Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year, excluding
588,127 ordinary shares held by the Employee Share Ownership Plan
(2020: 410,690 shares) which are treated as cancelled.
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive ordinary shares. The Group has one class of dilutive
ordinary shares, being those options granted to employees where the
exercise price is less than the average market price of the
Company's ordinary shares during the year. The Group has other
potential dilutive ordinary shares, including convertible loan
notes, however these are not currently dilutive because the
exercise price is less that the Group's current share price.
2021 2020
Total operations GBP'000 GBP'000
------------------------------------------------- -------- --------
Profit for the year attributable to shareholders 5,094 4,016
------------------------------------------------- -------- --------
pence pence
------------------------------------------------- -------- --------
Basic earnings per share 16.24 12.88
Effect of dilutive share options (2.80) (1.24)
------------------------------------------------- -------- --------
Diluted earnings per share 13.44 11.64
------------------------------------------------- -------- --------
As any potential ordinary shares would have the effect of
decreasing a loss per share in the prior year, they have not been
treated as dilutive.
2021 2020
Underlying operations GBP'000 GBP'000
----------------------------------------------------- --------- ---------
Underlying profit from continuing operations for the
year attributable to shareholders 4,380 7,776
----------------------------------------------------- --------- ---------
pence pence
----------------------------------------------------- --------- ---------
Basic earnings per share 13.96 24.94
Effect of dilutive share options (2.41) (2.40)
----------------------------------------------------- --------- ---------
Diluted earnings per share 11.55 22.54
2020
2021 GBP'000
Underlying continuing operations GBP'000 restated
Profit for the year from continuing operations 6,086 9,183
pence pence
Basic earnings per share 19.40 29.45
Effect of dilutive share options (3.35) (2.83)
Diluted earnings per share 16.05 26.62
----------------------------------------------------- --------- ---------
2020
2021 GBP'000
Continuing operations GBP'000 restated
------------------------------------------------------------ -------- ---------
Profit from continuing operations for the year attributable
to shareholders 7,554 6,315
------------------------------------------------------------ -------- ---------
pence pence
------------------------------------------------------------ -------- ---------
Basic earnings per share 24.08 20.26
Effect of dilutive share options (4.16) (1.95)
------------------------------------------------------------ -------- ---------
Diluted earnings per share 19.92 18.31
------------------------------------------------------------ -------- ---------
The weighted average number of shares used in basic earnings per
share is 31,366,379 (2020: 31,176,947).
The weighted average number of shares used in the diluted
earnings per share is 37,914,547 (2020: 34,494,250) after adjusting
for the effect of 6,548,168 (2020: 3,317,303) dilutive share
options.
Note 9 - Investment in associate
On 29 October 2020 the Group subscribed for 1,000 ordinary
shares in Zuma Labs Limited. Zuma Labs Limited is a private company
incorporated in England and Wales and its registered address is
Kemp House, 160 City Road, London, United Kingdom, EC1V 2NX. Zuma
Labs Limited has one share class and each share carries one vote.
At 28 February 2021 the Group's shareholding was 1,000 shares,
which equates to 9% of Zuma Lab Limited's share capital and 9% of
voting rights. The Group has representation on the board of Zuma
Labs Limited and has a commitment to purchase further shares which
will result in the Group owning more that 20% of Zuma Labs
Limited's share capital. Based on this the Group consider that they
have the power to exercise significant influence for the year ended
28 February 2021.
The investment in Zuma Labs Limited has been accounted for using
the equity method. The movement post acquisition is immaterial.
On 21 June 2019 the Group recognised an investment in associate
as a result of the divestment of the Offshore, Marine and Adjusting
product lines in return for a significant shareholding in
AqualisBraemar LOC ASA.
On completion, 14,865,621 ordinary shares in AqualisBraemar LOC
ASA were issued to the Group. Warrants were also issued to the
Group, the vesting of which was subject to performance conditions
over a two-year period. On 16 July 2019 the Group acquired a
further 4,375,000 shares through a private placement at a cost of
GBP1.6 million. The Group's then Executive Chairman was appointed
to the Board of AqualisBraemar LOC ASA on completion of the
transaction.
The Group are entitled to representation on the Board of
AqualisBraemar LOC for as long as the Group's shareholding remains
more than 10.0%. Based on this the Group consider that they have
the power to exercise significant influence for the year ended 28
February 2021.
During the year the Group reached an agreement with
AqualisBraemar LOC ASA which specified a minimum number of warrants
which would vest, regardless of the performance conditions over the
two-year vesting period.
AqualisBraemar LOC ASA is listed on the Oslo Børs, its principal
place of business is Oslo and its registered address is Olav Vs
gate 6, 0161, Oslo, Norway. AqualisBraemar LOC ASA has one share
class and each share carries one vote.
On 17 December 2020 the Group's shareholding was diluted as a
result of a rights issue, resulting in a gain of GBP0.8m. On 28
January 2021 the Group disposed of 9,600,000 shares in
AqualisBraemar LOC ASA for a profit of GBP2.7 million. See Note
5.
At 28 February 2021 the Group's shareholding was 9,640,621
ordinary shares, which equates to 10.42% of AqualisBraemar ASA's
share capital and 10.42% of voting rights.
The share price of AqualisBraemar LOC ASA on 28 February 2021
was NOK 7.85. The market value of the Group's shareholding at 28
February 2021 was GBP6.3 million (NOK 75.7 million). The market
value of the Group's shareholding in the prior year at 29 February
2020 was GBP5.9 million (NOK 71.2 million). On 19 May 2021 the
Group sold its entire remaining shareholding in AqualisBraemar LOC
ASA. See Note 11.
The investment in AqualisBraemar LOC ASA has been accounted for
using the equity method.
Zuma GBP'000 AqualisBraemar
GBP'000 Total GBP'000
------------------------------------------ ------------ -------------- -------------
At 1 March 2019 - - -
Cost of investment - 5,395 5,395
Private placement - 1,605 1,605
Gain on bargain purchase - 818 818
Share of loss in associate - underlying - (262) (262)
Share of loss in associate - specific - (120) (120)
Foreign exchange movements - (121) (121)
------------------------------------------ ------------ -------------- -------------
At 1 March 2020 - 7,315 7,315
Cost of investment 418 - 418
Share of profit in associate - underlying - 255 255
Share of profit in associate - specific - 91 91
Share of associate's OCI - 312 312
Dividends received - (641) (641)
Gain on rights issue - 826 826
Book value of 9,600,000 shares disposed - (3,753) (3,753)
Foreign exchange movements - (1,060) (1,060)
------------------------------------------ ------------ -------------- -------------
418 3,345 3,763
------------------------------------------ ------------ -------------- -------------
In the prior year purchase price allocation ("PPA") exercise was
carried out to compare the fair value of the Group's share of
identifiable net assets in AqualisBraemar LOC ASA to the fair value
of the purchase price. The notional PPA exercise resulted in a
bargain purchase of GBP0.8 million which increased the carrying
value of the investment in associate to GBP6.2 million. The gain on
bargain purchase arises as a result of the fair value of the
identifiable net assets acquired through the notional PPA exercise
being greater than the cost of acquisition of the investment in
AqualisBraemar LOC ASA.
A reconciliation of the book value of the 9,600,000 shares
disposed of to the profit on disposal is as follows:
Number of shares sold 9,600,000
Share price NOK 7.50
NOK'000
Gross disposal proceeds 72,000
Brokers commission at 2% (1,440)
-------------------------- ---------
Net disposal proceeds 70,560
-------------------------- ---------
GBP'000
Net disposal proceeds 5,982
Book value of shares sold (3,753)
Recycle of amounts in OCI 488
-------------------------- ---------
Profit on disposal 2,717
-------------------------- ---------
Management have reviewed the carrying value of the investment at
28 February 2021 and do not consider this to be impaired.
IAS 28 requires the most recent financial statements of an
associate are used for accounting purposes, and that coterminous
information should be used unless it is impractical to do so.
AqualisBraemar LOC ASA have a year end of 31 December and for
practical reasons AqualisBraemar LOC ASA full year accounts will be
used for the purposes of the Group's full year reporting at 28
February with adjustments made for any significant transactions and
events. For the period to 28 February 2021, the Group has included
its share of the AqualisBraemar LOC ASA results to 31 December
2020. There were no other significant transactions or events
between 31 December 2020 and 28 February 2021. At 31 December 2020
AqualisBraemar LOC ASA had no contingent liabilities.
The summarised financial information of AqualisBraemar LOC ASA
for the period ended 31 December 2020 is as follows. These figures
are taken from the annual report of AqualisBraemar LOC ASA,
adjusted for any fair value adjustments but before any intercompany
eliminations.
31 Dec 2020 31 Dec 2019
GBP'000 GBP'000
------------------------------------------- ----------- -----------
Balance Sheet
Current assets 60,976 36,741
Non-current assets 15,269 2,633
Current liabilities (28,586) (9,155)
Non-current liabilities (9,924) (3,450)
Net assets (100%) 37,736 26,769
Group share of net assets (10.42% / 27.3%) 3,345 7,315
------------------------------------------- ----------- -----------
Income Statement
Revenues 55,212 42,650
Post-tax profit 1,085 7,034
Total comprehensive income 2,273 7,015
Dividends received from associate 641 -
------------------------------------------- ----------- -----------
The share of loss in associate recognised during the year has
been adjusted for the elimination of gains and losses on
transactions with AqualisBraemar ASA LOC.
Zuma Labs Limited will prepare its first set of financial
statements for the year ended 31 March 2021. The Group has not
recognised any share of profit or loss in Zuma Labs Limited as the
amount is considered to be trivial.
Note 10 - Borrowings
2021 2020
GBP'000 GBP'000
----------------------------------------- -------- --------
Short-term borrowings
Secured revolving credit facilities 23,000 23,642
Secured bank pooled overdraft facilities - 25,116
----------------------------------------- -------- --------
Total 23,000 48,758
----------------------------------------- -------- --------
Long-term borrowings
----------------------------------------- -------- --------
Lease liabilities 8,634 10,943
----------------------------------------- -------- --------
The revolving credit facility expires in September 2022 and has
been classified as short term on that basis. The Group holds no
other bank borrowings with a contractual maturity of greater than
one year from the Balance Sheet date and, as such, all bank
borrowings are classified as short-term.
All revolving credit facilities are drawn within Braemar
Shipping Services Plc and appear in the accounts of the Company.
The revolving credit facility bears interest based on LIBOR and
EURIBOR.
On 1 March 2019 the Group adopted IFRS 16 "Leases" and now
recognises short-term and long-term lease liabilities on the
Balance Sheet.
For all borrowings, the Directors consider that the fair value
of the liability is equivalent to the carrying amount.
Note 11 - Events after the reporting date
Logistics Division
On 8 March 2021 the Group signed a non-binding term sheet with
Vertom UCS Holdings BV with the possibility of forming a joint
venture with Cory Brothers. It is intended that the two businesses
will work more closely together in the year ended 28 February 2022,
with certain profit-sharing arrangements to be put in place.
Depending on the success of the profit-sharing arrangement, the
Group may explore a full corporate joint venture in the future.
Discontinued Operations
On 31 March 2021 the Group completed the disposal of Wavespec
for consideration of GBP2.6 million. The consideration will be
satisfied by the issuance of a promissory note with a maturity date
of 31 March 2026, which is currently expected to be retained by the
Company. The disposal agreement contains an obligation for the
Buyer to secure the note by providing a standby letter of credit
issued by an international bank with an acceptable credit rating.
The disposal agreement contains an obligation for the buyer to
secure the promissory note by providing a standby letter of credit
issued by an international bank with an acceptable credit rating.
Should the buyer fail to deliver such a letter of credit, the Group
can elect to receive a sum of cash of GBP0.5 million from the buyer
with the balance of the note of GBP2.135 million remaining
unsecured.
Investment in AqualisBraemar LOC ASA
On 19 May 2021 the Group sold its entire remaining shareholding
in AqualisBraemar LOC ASA. 9,640,261 shares were sold at a price of
NOK9.0. The net proceeds were GBP7.2 million and the carrying value
of the shares was GBP3.3 million, resulting in a profit on disposal
of GBP3.9 million. Following the sale, the Group's interest in
AqualisBraemar LOC ASA is limited to its holding of 6,523,977
performance-based warrants, of which one million are expected to
vest shortly.
Extension of Revolving Credit Facility
On 25 May 2021 the Group completed an extension and amendment to
the RCF. The RCF facility limit was reduced from GBP35.0 million to
GBP30.0 million while the accordion limit was increased from GBP5.0
million to GBP10.0 million. The EBITDA to net debt covenant is set
at 3.0x until January 2022, and 2.5x until the facility expires in
September 2023.
Naves Loan Note and Deferred Consideration Rescheduling
A rescheduling of deferred consideration amounts owed by the
Group in relation to its acquisition of Naves in 2017 was agreed in
principle in March 2021. The documents for this agreement are in
agreed form and will be executed immediately following the
announcement of the preliminary results for the year and the
parties are free from the close period restrictions. As a result,
over GBP2.5 million (EUR2.9 million), which was previously due for
repayment before the end of December 2022, will be deferred to be
paid no earlier than September 2025. In addition, a further amount
of approximately GBP0.65 million (EUR0.75 million) will be
satisfied by the issue of new ordinary shares in the capital of the
Company in three tranches between September 2021 and December 2022,
thereby tying in the management and extending their commitment to
the Group.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR EXLBBFQLBBBV
(END) Dow Jones Newswires
June 03, 2021 02:00 ET (06:00 GMT)
Braemar (LSE:BMS)
Historical Stock Chart
From Apr 2024 to May 2024
Braemar (LSE:BMS)
Historical Stock Chart
From May 2023 to May 2024