Braemar Plc · LSE:BMS
Braemar — Braemar Shipping Services — H1 2017/18 Earnings Presentation
31 slides from Braemar's earnings presentation, October 2017
Slide 1: Braemar Shipping Services plc Interim Results Presentation
Braemar Shipping Services plc Interim Results Presentation October 2017
Slide 2: Agenda
Agenda Introduction The “New” Braemar Structure Interim Results Shipbroking Division Technical Division Logistics Division Financial Division Dividend Summary and Outlook 2 www.braemar.com
Slide 3: Introduction
Introduction • Shipbroking achieved a resilient performance and has a strong forward order book to support full year performance • Technical cost savings have been realised and new contracts have commenced during September 2017 • Logistics is profitable with Port Agency performing well • Acquisition
Slide 4: The “New” Braemar Structure
The “New” Braemar Structure Shipbroking Financial • Chartering • Restructuring • Sale and Purchase • Debt advisory • Valuations • Loan Service Monitoring • Research and Analysis • Corporate finance Logistics Technical • Ship Agency • Marine • Hub Agency • Adjusting • Freight Forwarding • Response •
Slide 5: Segmental Results
Segmental Results H1 2017/18 H1 2016/17 FY 2016/17 Revenue Profit Margin Revenue Profit Margin Revenue Profit Margin £m £m % £m £m % £m £m % Shipbroking 30.4 3.5 11.4% 30.8 4.0 13.0% 63.1 7.9 12.5% Technical 19.8 (0.4) (1.8)% 21.7 (0.6) (2.6)% 42.9 (2.9) (6.8)% Logistics 16.4 0.6 3.5% 17.7 0.9 4.9%
Slide 6: Group Specific Items
Group Specific Items H1 2017/18 H1 2016/17 FY 2016/17 £m £m £m Restructuring Costs - (1.5) (3.0) Gain on sale of investment - - 1.7⁽¹⁾ Acquisition related (1.8)⁽²⁾ (1.1) (2.5) expenditure (1.8) (2.6) (3.8) ⁽¹⁾ Sale of investment in The Baltic Exchange ⁽²⁾ Includes £0.9m associated with the acquisiti
Slide 7: Group Balance Sheet
Group Balance Sheet H1 2017/18 H1 2016/17 FY 2016/17 £m £m £m Goodwill and other intangibles 79.8 79.9 80.0 Non-Current Assets 9.4 11.1 9.9 Current assets (excl cash) 53.6 60.6 57.2 Current liabilities (excl debt) (46.8) (44.1) (48.6) Pension (4.0) (5.5) (4.3) Provisions / Other (1.4) (0.9) (1.1) Ne
Slide 8: Group Cashflow Statement
Group Cashflow Statement H1 H1 FY 2017/18 2016/17 2016/17 £m £m £m Cashflow from underlying operations 2.5 (1.5) 6.9 Restructuring cash outflow - (1.5) (2.2) Investing Activities (0.7) (0.5) (1.0) Proceeds from sale of investment - - 1.8 Dividends/purchase of own shares (2.3) (5.3) (8.3) FX Impact (
Slide 9: Shipbroking Division
Shipbroking Division H1 2017/18 H2 2016/17 H1 2016/17 Revenue £30.4m £32.3m £30.8m Underlying Operating Profit £3.5m £3.9m £4.0m Staff 302 299 310 Forward Order Book $42m $39m $46m Total Transactions 3,079 3,089 3,365 Transaction volumes maintained Improved forward order book (up 7% despite diff
Slide 10: Shipbroking – Revenue by Desk
Shipbroking – Revenue by Desk £30.4m £32.3m £30.8m 100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% H1 2017/18 H2 2016/17 H1 2016/17 Tankers Offshore S&P Dry Cargo 10 www.braemar.com
Slide 11: Tanker Market
Tanker Market 5 Year old tanker asset values Monthly average tanker TCE earnings m$ $ k/Day 90 120 Thousands 80 100 70 60 80 50 60 40 30 40 20 20 10 0 0 Jul-16 Jul-17 Nov-15 Jan-16 Apr-16 May-16 Jun-16 Nov-16 Jan-17 Apr-17 May-17 Jun-17 Dec-15 Feb-16 Mar-16 Aug-16 Sep-16 Dec-16 Feb-17 Mar-17 Aug-17
Slide 12: Dry Cargo Market
Dry Cargo Market 5 Year Old Vessel Prices $m Timecharter Averages $/day 25,000 40 Capesize Panamax Capesize Panamax Supramax Handysize Supramax Handysize 35 20,000 30 25 15,000 20 10,000 15 10 5,000 5 0 0 Jul-16 Jul-17 May-17 Nov-15 Jan-16 Apr-16 May-16 Jun-16 Nov-16 Jan-17 Feb-17 Apr-17 Jun-17 Aug-
Slide 13: Technical Division
Technical Division EVENT-LED PROJECT-LED Marine Adjusting Response Engineering Offshore Dynamic Marine Incident Warranty Consultancy Loss Adjusting Preparedness Positioning, FMEA, Audits Surveys LNG, Afloat, Offshore Litigation Incident Surveys Support Response Onshore & Installation bunkering Engin
Slide 14: Technical Revenue By Business Unit
Technical Revenue By Business Unit £19.8m £21.1m £21.8m £25.3m £29.1m 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% H1 2017/18 H2 2016/17 H1 2016/17 H2 2015/16 H1 2015/16 Offshore Engineering Adjusting Marine Response 14 www.braemar.com
Slide 15: Technical Division
Technical Division H1 2017/18 H2 2016/17 H1 2016/17 Revenue £19.8m £21.1m £21.7m Underlying Operating Loss £(0.4)m £(2.4)m £(0.6)m Restructuring Costs* - £(1.5)m £(1.5)m Staff 327 332 400 • Impact of cost savings effective from 1st March 2017 • New management and marketing structure having positive
Slide 16: Technical Division
Technical Division Underlying Operating Profit Bridge • Annualised cost savings in excess of £6 million 16 www.braemar.com
Slide 17: Logistics Division – Port Agency
Logistics Division – Port Agency H1 2017/18 H2 2016/17 H1 2016/17 Revenue £4.0m £3.7m £4.1m Underlying Operating Profit £0.4m £0.3m £0.5m Margin 12.0% 8.0% 14.0% Strong tanker activity offset by downturn in grain and potash Continuing strong links with key clients (such as ENI, Phillips 66, etc)
Slide 18: Logistics Division – Freight Forwarding
Logistics Division – Freight Forwarding H1 2017/18 H2 2016/17 H1 2016/17 Revenue £12.4m £12.5m £13.6m Underlying Operating Profit £0.2m £0m £0.5m Margin 1.0% 0% 5.0% Started to recover from low point in H2 2016/17 New senior sales team appointments made Contract wins starting to deliver in H2
Slide 19: Financial Division
Financial Division Acquisition of NAVES Corporate Finance GmbH completed on 26/09/2017, for consideration of €24-35 million (depending on performance) Comprises 22 staff, largely based in Hamburg, with strong links to the German banking and shipping communities Braemar NAVES has established a
Slide 20: Financial Division
Financial Division BRAEMAR NAVES develops and implements corporate finance and financial asset management solutions Transactions & Financial and loan Insolvency Offices Restructuring capital raising servicing advisory • Advice on disposal • Development and • Financial • Establishment of and purchase
Slide 21: Synergy Opportunities
Synergy Opportunities Key issues Lenders face capacity constraints Sometimes little transparency on the exposure Key issues Regulators and committees require third party opinion Decision-making support required Solution Division Asset inspection (vessels and offshore assets) Technical Fi
Slide 22: Earnings and Dividend per share
Earnings and Dividend per share 2017/18 2016/17 2015/16 Half Year 5.0 9.0 9.0 Full Year 5.0 17.0 Total (pence) 14.0 26.0 Underlying EPS (pence) 8.7 34.7 Cover 0.6 1.3 • Proposed interim dividend of 5p (at a cost of c£1.5m), payable on 15 December 2017 • Dividend policy to pay 1:2 split between inter
Slide 23: Summary and Outlook
Summary and Outlook “We are well placed to deliver a stronger second half business performance compared with the first half of our financial year, as Braemar’s improving momentum continues. The principal drivers of this are the continuing recovery in the Technical division following the cost saving
Slide 24: Appendices – Additional Information
Appendices– Additional Information • Acquisition of NAVES Corporate Finance GmbH • Disclaimers 24 www.braemar.com
Slide 25: NAVES Corporate Finance GmbH
NAVES Corporate Finance GmbH Three year historic financial information 31 Dec 2016 31 Dec 2015 31 Dec 2014 €m €m €m Revenue 7.5 5.4 4.3 Underlying operating profit 3.0 2.0 1.5 Margin 40.1% 37.0% 36.2% Net cash generated from operations 2.6 1.2 1.6 Net Assets 2.0 3.5 2.4 25 www.braemar.com
Slide 26: Deal structure
Deal structure Total Consideration Capped at €35m (cash and principal value of loan notes) Core Consideration €24m Core Consideration: • €14.8m on completion 50% in cash, and 50% in convertible loan notes pro- rata to all sellers • €1.5m paid to non management in shares (based on 30 day average shar
Slide 27: Deal structure
Deal structure Convertible Loan Notes • Convertible at a fixed 30% (390.3p) / 50% (450.3p) premium for Management and Non-Management shareholders respectively, to 300.2p completion equity price • Euro denominated, 3% p.a. coupon, redeemable two years after issue by Braemar or holder • Unsecured, unl
Slide 28: Accounting Treatment
Accounting Treatment Braemar’s accounting policy is to exclude Specific Items from underlying profits. The following specific transaction items will be recognised within reported operating profit but excluded from underlying operating profit: • Transaction expenses • Fair value movements on earn out
Slide 29: Future Accounting Treatment
Future Accounting Treatment 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 TOTAL £m £m £m £m £m £m £m Acquisition Costs 1.7 - - - - - 1.7 Retention 1.5 2.3 1.2 0.5 0.2 0.1 5.8 Maximum earn-out 3.1 4.4 1.9 0.6 - - 10.0 6.3 6.7 3.1 1.1 0.2 0.1 17.5 • All future payments to management sellers will be
Slide 30: Disclaimers
Disclaimers This presentation (this "presentation") is for general information only and is the property of Braemar Shipping Services Plc ("Braemar"). Making this presentation available in no circumstances whatsoever implies the existence of a commitment or contract by or with Braemar, or any of its
Slide 31: James Kidwell E: james.kidwell@braemar.com T: 020 3142 4100
James Kidwell E: james.kidwell@braemar.com T: 020 3142 4100 Louise Evans E: louise.evans@braemar.com T: 020 3142 4100
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