Braemar Plc · LSE:BMS
Braemar — Braemar Shipping Services — H1 2016/17 Earnings Presentation
35 slides from Braemar's earnings presentation, October 2016
Slide 1: Braemar Shipping Services plc Interim Results Presentation
Braemar Shipping Services plc Interim Results Presentation October/November 2016
Slide 2: Agenda
Agenda Group Strategy and Business Model Recent Trading Financial Highlights Operational Highlights Group Results Outlook 2 www.braemar.com
Slide 3: Group Strategy and Business Model
Group Strategy and Business Model - Scale - Coverage - Diversification - Broking/Consulting - Not a principal - Income mix : Commission, Fee, Day Rate - US$ weighted - Forward visibility - Client diversity 3 www.braemar.com
Slide 4: Broad Client Base
BRAEMAR Broad Client Base hy ConocoPhill S 9 (Mees p oe we ff SCF Ww} PetroChina nee Sa Shell TRAFIGURA INEQs “Vitol opp ENCORE Rio Tinto gyonmopir ohpbilliton — FRONTLINE © @G - EURONAV.
Slide 5: Recent Trading
Recent Trading Overall tough market conditions and is taking action to ensure Braemar is appropriately structured for the future Shipbroking achieved a resilient performance in volatile conditions. Transaction volumes improved - well placed for any upturn Technical division suffered from indus
Slide 6: Group Financial Highlights
Group Financial Highlights H1 2016/17 H1 2015/16 FY 2015/16 FY 2014/15 Revenue £70.2m £79.6m £159.1m £145.6m Underlying* Operating Profit £1.4m £7.1m £13.8m £11.5m One Off Restructuring Costs £1.8m - - - Operating Profit (excluding restructuring costs) £3.2m £7.1m £13.8m £11.5m Net Cash /(Debt) £0.7
Slide 7: Group Financial Highlights
Group Financial Highlights Revenue of £70.2m (Interim 2015/16: £79.6m) Underlying operating profit of £1.4m (Interim 2015/16: £7.1m), including one off restructuring costs of £1.8m Restructuring activity to date has delivered annualised cost savings of £3.2m Net cash of £0.7m at 31 August 20
Slide 8: Financial Highlights - Shipbroking
Financial Highlights - Shipbroking H1 2016/17 H1 2015/16 FY 2015/16 FY 2014/15 Revenue £30.8m £33.3m £70.7m £53.6m Underlying Operating Profit £4.0m £4.6m £9.7m £5.6m Forward Order Book $46m $56m $49m $58m Total Transactions 3,368 3,216 6,643 n/a Reduced revenue due to pressure on freight rates
Slide 9: Financial Highlights - Technical
Financial Highlights - Technical H1 2016/17 H1 2015/16 FY 2015/16 FY 2014/15 Revenue £21.7m £28.6m £54.3m £49.6m Reported Underlying Operating Profit £(2.0)m £3.1m £5.2m £6.3m One Off Restructuring Costs £1.5m - - - Operating (Loss)/Profit £(0.5)m £3.1m £5.2m £6.3m Challenging market conditions, w
Slide 10: Financial Highlights - Logistics
Financial Highlights - Logistics H1 2016/17 H1 2015/16 FY 2015/16 FY 2014/15 Revenue £17.7m £17.6m £34.1m £42.4m Underlying Operating Profit £0.9m £1.0m £1.6m £2.3m Margin 4.9% 5.6% 4.6% 5.4% Consistent revenue and profitability. Margin reduction due to change in business mix. Increased agency a
Slide 11: Shipbroking Division - Operating Review
Shipbroking Division - Operating Review WHAT WE DO BUSINESS GROWTH DRIVERS Tanker chartering Market Led: – Crude Oil – Clean Petroleum Products - Seaborne Trade – Liquefied Petroleum Gas (“LPG”) - Transaction volumes – Liquefied Natural Gas (“LNG”) – Specialised tankers - Freight Rates – Forward
Slide 12: Shipbroking Division – Operating Review
Shipbroking Division – Operating Review Divisional performance was strong, despite difficult trading conditions Tanker freight rates softened significantly since last year, but transactional activity remains high Dry Bulk freight rates remain relatively depressed as overcapacity continues, alt
Slide 13: Tankers – Net Fleet Growth History and Forecast
Tankers – Net Fleet Growth History and Forecast 12 10 8 6 Annual % 4 2 0 2013 2014 2015 2016 2017 -2 VLCC Suezmax Aframax/LR2 13 www.braemar.com
Slide 14: VLCC Fleet Growth
VLCC Fleet Growth Fleet Size* (end year) 80 VLCC Fleet Growth (# of ships) Projection assumes no future orders Scheduled 60 Current avg. age of trading fleet = 9 yrs old 688 727 747 747 Deliveries 40 Delivered Unverified 16 59 65 640 Orders 52 48 612 623 50 20 38 36 35 39 36 27 28 31 28 575 30 2 4 1
Slide 15: Baltic Dry Indices – Capesize Growth
Baltic Dry Indices – Capesize Growth 3,000 2,500 2,000 1,500 1,000 500 0 BCI BPI BSI BHSI 15 www.braemar.com
Slide 16: Five year old yearly average vessel prices ($m)
Five year old yearly average vessel prices ($m) 160 140 120 100 80 60 40 20 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Capesize Bulk Carrier VLCC Tanker 16 www.braemar.com
Slide 17: Technical Division - Operating Review
Technical Division - Operating Review WHAT WE DO KEY BUSINESS DRIVERS Market Led: Vessel surveys - Volume of activity in Offshore and Liquefied Natural Gas consulting LNG industry sectors Marine engineering - Fleet Size Ship construction – supervision - Significant insured events Marine wa
Slide 18: Technical Division – Operating Review
Technical Division – Operating Review Technical faced an extremely tough trading period mainly due to continued downturn in global oil and gas exploration and project development activity New divisional Managing Director and four of the five business stream heads changed during first half Rest
Slide 19: Technical Division – Revenue Diversity History
Technical Division – Revenue Diversity History 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% H1 2016 H1 2015 H1 2014 H1 2013 Offshore Adjusting Salvage Association Engineering Environmental 19 www.braemar.com
Slide 20: Logistics Division - Operating Review
Logistics Division - Operating Review WHAT WE DO KEY BUSINESS DRIVERS Agency: Braemar Led: - Port & Liner Agency - Key long term client relationships - Hub Agency especially in Tankers - Growing geographical presence Freight Forwarding: - Bespoke project management capability - Brand recogniti
Slide 21: Logistics Division - Operating Review
Logistics Division - Operating Review Consistent profitability and new business opportunities Port Agency expanding current and new geographic markets, with key tanker clients Tough freight forwarding market limiting current year performance, but increasing overseas opportunities Major infra
Slide 22: Dividend
Dividend 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 Half year 9.0 9.0 9.0 9.0 9.0 9.0 Full year 17.0 17.0 17.0 17.0 17.0 Total (pence) 26.0 26.0 26.0 26.0 26.0 Underlying EPS (pence) 33.8 32.8 32.3 31.3 34.7 Cover 1.3 1.3 1.3 1.2 1.3 Cash Returned (£m) 5.4 5.4 5.4 7.7 7.7 2.7 Strong and cons
Slide 23: Braemar Outlook
Braemar Outlook Issued Underlying Operating Profit* Target Price Rating 2016/17 2017/18 Stockdale Securities 30/8/16 £9.0m £11.4m 500p BUY Cantor Fitzgerald 05/09/16 £9.0m £10.6m 400p HOLD Edison 30/08/16 £9.1m £12.0m - - * Excludes acquisition related expenses, non-recurring items and restructuring
Slide 24: Summary
Summary Shipbroking has forward order book of $22million for H2 2016/17 and strong ongoing market coverage Technical is addressing market volatility and restructuring for prevailing industry conditions Logistics has secured ongoing agency contracts and are seeing an upturn in freight forwardin
Slide 25: Appendix 1 – Fleet Statistics
APPENDIX 1 – Fleet Statistics • Tankers • Dry Bulk 25 www.braemar.com
Slide 26: Fleet Statistics - Tankers
Fleet Statistics - Tankers Number of Ships ON ORDER EXISTING ORDERED IN NB DEL SO REMOVED IN STORAGE CATEGORY FLEET FAR 2016 VERIFIED % OF FLEET 14 15 16 13 14 15 16 CRUDE CPP VLCC 675 36 69 6 36 20 13 3 1 104 15% 39 0 SUEZMAX 457 37 69 5 20 4 11 0 0 96 21% 11 0 AFRAMAX / LR2 925 24 105 7 43 21 23 8
Slide 27: Fleet Statistics – Dry Bulk
Fleet Statistics – Dry Bulk 'Handy' 'Supramax' 'Panamax' 'Capesize' 10-40k DWT 40-70k DWT 70-100k DWT >100k DWT 58-79k DWT (LOA ≥ 208m/7 Hatches) 60-70k DWT (LOA ≤ 208m/Geared) >200k DWT (Coal and Iron Ore) 79-100k DWT (beam ≤ 32.3m) 79-100k DWT (beam> 32.3m) >200k DWT (Iron Ore only) Today's Dry Bu
Slide 28: Appendix 2 – Primary Financial Statements
APPENDIX 2 – Primary Financial Statements • Group Income Statement • Group Balance Sheet • Group Cashflow 28 www.braemar.com
Slide 29: Group Income Statement
Group Income Statement H1 2016/17 H1 2015/16 FY 2015/16 FY 2014/15 £m £m £m £m Revenue 70.2 79.6 159.1 145.6 Operating profit 3.2 7.1 13.8 11.5 Restructuring Costs (1.8) - - - Merger Related Items (1.1) (1.8) (3.4) (5.9) Reported profit 0.3 5.3 10.3 5.6 Net finance Income/(expense) (0.1) (0.1) (0.4)
Slide 30: Group Balance Sheet
Group Balance Sheet H1 H1 FY FY 2016/17 2015/16 2015/16 2014/15 £m £m £m £m Goodwill and other intangibles 79.9 78.7 79.6 79.4 Includes deferred tax Non-Current Assets 11.1 7.8 9.2 8.2 impact of DB Scheme and current period profits Current assets 60.5 63.0 58.1 57.4 Current liabilities (44.1) (40.1)
Slide 31: Group Cashflow Statement
Group Cashflow Statement H1 H1 FY FY 2016/17 2015/16 2015/16 2014/15 £m £M £m £m Cashflow from operations (3.0) (4.1) 10.4 3.4 Acquisitions (net) - - - (0.5) Capital Expenditure (0.5) (0.6) (2.2) (4.9) Dividends/purchase of own shares (5.4) (4.9) (7.7) (5.8) FX Impact 0.4 (0.7) 1.5 1.2 Movements in
Slide 32: Appendix 3 – Additional Information
Appendix 3 – Additional Information • Board of Directors • Disclaimer 32 www.braemar.com
Slide 33: Board of Directors
Board of Directors Non-Executive Directors Chairman David Moorhouse CBE Non-Executive Directors Jurgen Breuer Alastair Farley Senior Independent Director Mark Tracey Executive Directors Chief Executive Officer James Kidwell Finance Director Louise Evans 33 www.braemar.com
Slide 34: Disclaimer
Disclaimer 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 a
Slide 35: James Kidwell and Louise Evans contact details
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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