Braemar Plc · LSE:BMS
Braemar — Braemar Shipping Services — H1 2018/19 Earnings Presentation
23 slides from Braemar's earnings presentation, October 2018
Slide 1: Braemar Shipping Services plc Interim Results Presentation
Braemar Shipping Services plc Interim Results Presentation October 2018
Slide 2: Key Highlights
Key Highlights • Shipbroking achieved a strong performance, developed the dry cargo desk and increased its forward order book • Financial division increased their mandates and performed ahead of expectations • Technical division – recovery has been slower than expected especially in Offshore • Logis
Slide 3: Investment characteristics
Investment characteristics Shipbroking Financial • Diverse business mix • High margin • Portfolio effect • Advisory led • Remuneration balance • New client facing • Consistent returns • Group enhancing Logistics Technical • Volume led • Competitive pricing • Low capital cost • Late cycle delivery •
Slide 4: Segmental Results (underlying)
Segmental Results (underlying) H1 2018/19 H1 2017/18 FY 2017/18 Revenue Profit Margin Revenue Profit Margin Revenue Profit Margin £m £m % £m £m % £m £m % Shipbroking 34.7 3.9 11.4% 30.4 3.5 11.4% 61.8 7.7 12.5% Financial 4.4 1.7 37.8% - - - 3.7 1.8 47.6% Logistics 15.9 0.5 2.9% 16.4 0.6 3.5% 33.2 0.
Slide 5: Specific Items
Specific Items H1 2018/19 H1 2017/18 FY 2017/18 £m £m £m Amortisation (1.0) (0.1) (2.4) Acquisition Items • ACM (0.1) (0.6) (0.6) • Braemar-Naves (3.5) (0.9) (5.1) • Braemar-Atlantic (1.4) - (0.6) • Other <(0.1) (0.2) (0.4) (6.1) (1.8) (9.1) Reconciliation of Underlying PBT to reported PBT: Underlyi
Slide 6: Group Balance Sheet
Group Balance Sheet H1 H1 FY 2018/19 2017/18** 2017/18 £m £m £m Goodwill and other intangibles 92.4 79.8 92.4 Non current assets 7.8 9.2 8.1 Current assets 59.7 53.9 55.6 Current liabilities (47.7) (46.8) (44.4) Convertible loan notes and deferred (14.4) - (10.7) consideration* Pension (3.2) (4.0) (
Slide 7: Group Cashflow Statement
Group Cashflow Statement H1 H2 H1 FY 2018/19 2017/18 2017/18 2017/18 £m £m £m £m Cashflow from continuing trading operations 1.3 1.0 3.1 4.1 Working capital movement (1.0) 0.7 0.5 1.2 One-off Board changes (0.8) - - - Capital expenditure (1.0) (0.6) (0.4) (1.0) Investments in Shipbroking hires (1.0)
Slide 8: Earnings and Dividend per share
Earnings and Dividend per share H1 2018/19 2017/18 2016/17 Half Year 5.0 5.0 9.0 Full Year n/a 10.0 5.0 Total (pence) n/a 15.0 14.0 Underlying EPS (pence) 6.53 21.14 10.70 Cover 1.3 1.4 0.8 • Proposed interim dividend of 5p (at a cost of c£1.5m), payable on 14 December 2018 • Dividend policy to pay
Slide 9: Shipbroking Division
Shipbroking Division H1 2018/19 H2 2017/18 H1 2017/18 Revenue £34.7m £31.4m £30.4m Underlying Operating Profit £3.9m £4.3m £3.5m Staff 296 298 302 Forward Order Book $46m $44m $42m Total Transactions 3,069 2,995 3,079 ▪ Revenues excluding Atlantic up by 9.5% year on year ▪ Forward order book up by 9
Slide 10: Shipbroking – Revenue by Desk
Shipbroking – Revenue by Desk • Investment in Dry Cargo desk has contributed towards material uplift in revenues Note: Revenue per head is for 6 months only *Revenues exclude FX and research www.braemar.com 10
Slide 11: Shipbroking – consistent returns
Shipbroking – consistent returns • Operating margins have been stable over last 4 years – reflecting the diverse mix of shipbroking transactions, the counterbalancing effect of individual market trading cycles and the appropriate balance between fixed and variable remuneration structures H1 FY19 FY1
Slide 12: Seaborne trade outlook
Seaborne trade outlook “Global seaborne trade rose by 4% in volume terms in 2017, according to UNCTAD, the fastest growth rate in five years. Expansion was largely driven by increased industrial production in emerging markets, which account for 60% of shipped exports. Rising trade was accompanied by
Slide 13: Dry v Crude – time charter rates
Dry v Crude – time charter rates Source: Braemar ACM Shipbroking 13 www.braemar.com
Slide 14: Financial Division
Financial Division H1 2018/19 H2 2017/18* H1 2017/18 Revenue £4.4m £3.7m - Underlying Operating Profit £1.7m £1.8m - Operating Margin 37.8% 47.6% - * 5 months only • Trading ahead of expectations • Good pipeline of advisory and refinancing business in both Hamburg and London; less reliance on restru
Slide 15: Financials – broad client base
Financials – broad client base • Increasingly diversified and broad client base • Retainer income more than covers base operating costs # Retainer only 16 Retainer + success fee 5 Current mandates include: Success fee only 9 • Sell-side advice for dry bulk fleet disposal • Sell-side advice for tanke
Slide 16: Technical Division
Technical Division H1 2018/19 H2 2017/18 H1 2017/18 Revenue £16.7m £16.9m £17.7m Underlying Operating Profit / (Loss) (£0.7m) £0.9m (£0.2m) Staff 265 261 277 • Offshore recovery slower than expected resulting in trading losses in H1 2018/19 • Tendering activity increasing but low-pricing is cut-thro
Slide 17: Technical Revenue By Business Unit
Technical Revenue By Business Unit Projects Event / casualty appointments 17 www.braemar.com
Slide 18: Logistics Division – Port Agency
Logistics Division – Port Agency H1 2018/19 H2 2017/18 H1 2017/18 Revenue £4.1m £4.2m £4.0m Underlying Operating Profit £0.4m £0.2m £0.4m Margin 8.5% 4.7% 12.0% • Trading in line with expectations • Good performance from global hub operations • Two new overseas offices – set-up costs incurred in H1;
Slide 19: Logistics Division – Freight Forwarding
Logistics Division – Freight Forwarding H1 2018/19 H2 2017/18 H1 2017/18 Revenue £11.8m £12.6m £12.4m Underlying Operating Profit £0.1m £0m £0.2m Margin 1.0% 0% 1.0% • Revenue and margins below expectations • Operational issues in the Port of Felixstowe • New business wins in H1 expected to deliver
Slide 20: Summary and Outlook
Summary and Outlook • Shipbroking - investment in staff, especially in Dry Cargo is paying off - recent uptick in the tanker market • Financial - access to much larger transactions - high value added services - access to new financial clients - success orientated income will make earnings more varia
Slide 21: Contact details
James Kidwell E: james.kidwell@braemar.com T: 020 3142 4100 James Hayward E: james.hayward@braemar.com T: 020 3142 4100
Slide 22: Appendix 1 – NAVES consideration breakdown
Appendix 1 – NAVES consideration breakdown TRANCHE DATE €'000 €'000 COLLATERAL Management sellers Initial consideration 26-Sep-2017 7,400 cash represented 69.9% of the 26-Sep-2017 7,400 convertible loan notes (all sellers) 26-Sep-2017 total sellers (non- 1,505 shares (non-management sellers) 16,305
Slide 23: 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
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