Braemar Plc · LSE:BMS
Braemar — Braemar Shipping Services — FY2017 Earnings Presentation
33 slides from Braemar's earnings presentation, May 2017
Slide 1: Preliminary Results for year ended 28 February 2017
Braemar Shipping Services plc Preliminary Results for year ended 28 February 2017 May 2017
Slide 2: Agenda
Agenda Introduction Financial Results Technical Division Shipbroking Division Logistics Division Dividend and outlook Group Strategy Summary 2 www.braemar.com
Slide 3: Our Diversified Structure
Our Diversified Structure Technical Shipbroking Logistics 31% of Group Revenue 45% of Group Revenue 24% of Group Revenue Event orientated Tanker chartering Agency: – Vessel surveys – Crude Oil - Port & Liner Agency – Energy Loss Adjusting – Clean Petroleum Products – Liquefied Petroleum Gas (“
Slide 4: Braemar Shipping – Global Clients
Braemar Shipping – Global Clients 4
Slide 5: Operational Key Points
Operational Key Points Technical division suffered oil and gas led downturn in E&P activity New management team appointed Restructuring programme completed One off cost of £3m Annualised cost savings of over £6m from 2017/18 Resilient Shipbroking business Logistics performance underpin
Slide 6: Summary of 2017 Results
Summary of 2017 Results Momentum Group Revenue (£m) • Shipping demand positive in most sectors 160 • Technical restructuring programme complete 140 120 • Broking transaction volumes steady 100 • Logistics agency contract wins 80 60 40 Offset by 20 • Shipping supply – excess capacity in most sectors
Slide 7: Segmental Results
Segmental Results 2016/17 2015/16 2014/15* Revenue Profit Margin Revenue Profit Margin Revenue Profit Margin £m £m % £m £m % £m £m % Shipbroking 63.1 7.9 12.5% 70.7 9.7 13.7% 53.6 5.6 10.4% Technical 42.9 (2.9) (6.8)% 54.3 5.2 9.6% 49.6 6.3 12.7% Logistics 33.9 1.3 3.7% 34.1 1.6 4.6% 42.4 2.3 5.4% C
Slide 8: Group Specific Items
Group Specific Items 2016/17 2015/16 2014/15 £m £m £m Restructuring Costs (3.0) - - (mainly Technical) Gain of Sale of 1.7 ⁽¹⁾ - 5.4⁽²⁾ Investments Acquisition related (2.5) (2.7) (3.7) expenditure Acquisition related - (0.8) (7.6) restructuring (3.8) (3.4) (5.9) ⁽¹⁾ Sale of investment in The Baltic
Slide 9: Group Balance Sheet
Group Balance Sheet 2016/17 2015/16 2014/15 £m £m £m Goodwill and other intangibles 80.0 79.6 79.4 Non-Current Assets 9.9 9.2 8.2 Current assets 57.2 58.1 57.4 Current liabilities (48.6) (46.6) (44.3) Pension (4.3) (1.2) (1.5) Provisions / Other (1.1) (1.0) (2.1) Net Cash 7.1 9.2 7.2 Net Assets 100.
Slide 10: Group Cashflow Statement
Group Cashflow Statement 2016/17 2015/16 2014/15 £m £m £m Cashflow from underlying operations 6.9 10.4 3.4 Restructuring cash outflow (2.2) - - Acquisitions (net) - - (0.5) Investing Activities (1.0) (2.2) (14.5) Proceeds from sale of investment 1.8 - 9.6 Dividends/purchase of own shares (8.3) (7.7)
Slide 11: Technical Division
Technical Division 2016/17 2015/16 2014/15 Revenue £42.9m £54.3m £49.6m Underlying Operating Profit £(2.9)m £5.2m £6.3m Margin (6.8)% 9.6% 12.7% • Cumulative divisional underlying operating profit from 2011/12 to 2015/16 was £29.1m 11 www.braemar.com
Slide 12: Technical Revenue By Business Unit
Technical Revenue By Business Unit Divisional Revenue (£m) 60.0 50.0 40.0 30.0 20.0 10.0 - 2013/14 2014/15 2015/16 2016/17 Offshore Engineering Adjusting Marine Environmental 12 www.braemar.com
Slide 13: Technical: Why change?
Technical: Why change? Improve financial performance Increase efficient utilisation of fee earning staff Drive back office efficiencies (including infrastructure) Remove internal competition inefficiencies Improve client focus and leverage relationships Enable continuous development and
Slide 14: Technical Annualised Cost Savings
Technical Annualised Cost Savings Pay Cuts Headcount Property Total £m £m £m £m Offshore 0.9 1.7 - 2.6 Engineering - 1.3 0.1 1.4 Adjusting - 0.3 - 0.3 Marine - 1.4 - 1.4 Response - 0.3 0.1 0.4 0.9 5.0 0.2 6.1 • Annualised cost savings achieved at a cost of £3.0m during 2016/17 • Savings will be effe
Slide 15: New Divisional Matrix Structure
New Divisional Matrix Structure Service Line Asia Pacific EMEA Americas Michael Chan Geoff Jones Sheila McClain Offshore Michael Chan Engineering Sheila McClain Adjusting Geoff Jones Marine Geoff Jones Response Zal Rustom - - Business Activity 15 www.braemar.com
Slide 16: Technical: Future Opportunities
Technical: Future Opportunities Improve staff utilisation in each geography Increase event orientated activity Recovery of oil and gas exploration and production activity LNG infrastructure programmes 16 www.braemar.com
Slide 17: Shipbroking Division
Shipbroking Division 2016/17 2015/16 2014/15 Revenue £63.1m £70.7m £53.6m Underlying Operating Profit £7.9m £9.7m £5.6m Forward Order Book $39m $49m $58m Headcount 291 334 327 Total Transactions 6,454 6,643 n/a Strong divisional performance, despite tough market conditions Steady transaction vol
Slide 18: Shipbroking – Divisional Revenue
Shipbroking – Divisional Revenue • Tanker freight rates are softer than 2016/17 prior year, but transaction volumes are strong Dry Cargo 16% • Dry bulk rates are recovering in key markets S&P 15% Tankers 63% • Offshore remains depressed due to Offshore 6% global oil and gas activity levels • Sale &
Slide 19: Global Supply and Demand
Global Supply and Demand Demand Supply Index Index 2.7 Dry bulk (m dwt) 2.7 Dry bulk 2.5 LPG (cbm) 2.5 LPG 2.3 Container (TEU lifted) 2.3 Container 2.1 Tanker (dwt demand) Tanker 2.1 1.9 LNG LNG (cbm) 1.9 1.7 1.7 1.5 1.5 1.3 1.1 1.3 0.9 1.1 0.7 0.9 2017 f 2018 f 2019 f 2020 f 2021 f 2017 f 2018 f 20
Slide 20: Tankers Market
Tankers Market Global oil trade billion tonnes 3,000 Dirty Clean (incl. LPG) 2,500 2,000 1,500 1,000 500 - 2017e 2018e 2019e 2020e 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Braemar ACM 20 www.braemar.com
Slide 21: Dry Bulk Market
Dry Bulk Market Global dry bulk trade Dry Bulk Fleet Billion tonnes Mn DWT Cape Panamax Handy 6 900 Coal & Iron Ore Agribulk Other 800 5 700 4 600 500 3 400 2 300 200 1 100 0 - 2018e 2019e 2020e 2121e 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2017e 2018e 2019e 2
Slide 22: Global Fleet
Global Fleet 22 www.braemar.com Source: Braemar ACM
Slide 23: Logistics Division – Port Agency
Logistics Division – Port Agency 2016/17 2015/16 2014/15 Revenue £7.8m £6.9m £6.9m Operating Profit £0.8m £0.7m £0.9m Margin 10.7% 9.8% 13.0% Strong increase in revenue following key hub agency contract wins Margin reduced by investment in new geographies, particularly USA 23 www.braemar.com
Slide 24: Logistics Division – Freight Forwarding
Logistics Division – Freight Forwarding 2016/17 2015/16 2014/15 Revenue £26.1m £27.3m £35.5m Operating Profit £0.5m £0.9m £1.4m Margin 1.9% 3.3% 3.9% Business stream softening due to lack of high value project work and increased price competition for general work Major client contracts have rece
Slide 25: Earnings and Dividend per share
Earnings and Dividend per share 2016/17 2015/16 2014/15 Half Year 9.0 9.0 9.0 Full Year 5.0 17.0 17.0 Total (pence) 14.0 26.0 26.0 Underlying EPS (pence) 8.7 34.7 32.3 Cover 0.6 1.3 1.2 Cash Returned (£m) 4.3 7.7 7.7 • Proposed final dividend of 5p, payable on 28 July 2017 • Dividend cover target re
Slide 26: Braemar Group Strategy
Braemar Group Strategy Continuous improvement in utilisation and efficiency Improve market coverage and ability to service clients Diversify business operations Grow scale of Group through organic and acquisitive development 26 www.braemar.com
Slide 27: Summary
Summary • 2016/17 was a tough year in volatile market conditions • Technical has realigned its business and is well prepared for the future • Shipbroking has a good order book and is maintaining its position in current markets • Logistics is growing its agency business and rebuilding freight forward
Slide 28: Appendix – Additional Information
Appendix – Additional Information • Group Revenue History • Group Risk Summary • Braemar Analysts’ Forecasts • Disclaimers 28 www.braemar.com
Slide 29: Group Revenue History
Group Revenue History Group Revenue (£m) 160 140 120 100 80 60 40 20 0 2014/15* 2011/12 2012/13 2013/14 2015/16 2016/17 Logistics Technical Shipbroking * Includes 7 months contribution from ACM Shipping Group plc 29 www.braemar.com
Slide 30: Group Risk Summary
Group Risk Summary Risk Rating Pre Management Post Management Action Action Key Staff Staff Retention Downturn in Market Conditions Competition Currency Exposure Liquidity and working capital Reputation Claims from errors and omissions Loss of IT Services Cyber Cr
Slide 31: Braemar Analysts’ Forecasts
Braemar Analysts’ Forecasts Issued Underlying Operating Target Price Rating Profit* 2017/18 Stockdale Securities 23/1/17 £8.0m U/R BUY Cantor Fitzgerald 27/1/17 £7.8m 330p BUY Cenkos 23/1/17 £7.7m U/R BUY Edison 23/1/17 £8.0m - - * Excludes specific items being acquisition related expenses, restruct
Slide 32: 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 33: James Kidwell
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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