Braemar Shipping Services — Update 25 October 2016

Braemar (LSE: BMS)

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Research: Industrials

Braemar Shipping Services — Update 25 October 2016

Braemar Shipping Services

Analyst avatar placeholder

Written by

Nigel Harrison

Industrials

Braemar Shipping Services

Fighting the waves

Interim results

Industrial support services

25 October 2016

Price

322.3p

Market cap

£97m

£/US$1.22

Net cash (£m) 31 August 2016

0.7

Shares in issue

30.1m

Free float

70%

Code

BMS

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(3.1)

(16.9)

(22.9)

Rel (local)

(5.2)

(20.7)

(29.7)

52-week high/low

495.0p

311.0p

Business description

Braemar Shipping Services is a leading global shipping services group, with interests ranging from shipbroking (44% of FY16 revenues) to the supply of specialist technical (34%) and logistics (22%) support to various parties involved in the transport of goods by sea and in the energy sector.

Next events

Trading update

Mid-January 2017

Analysts

Nigel Harrison

+44 (0)20 3077 5700

Roger Johnston

+44 (0)20 3077 5722

Braemar Shipping Services is a research client of Edison Investment Research Limited

Management action in response to a tough trading climate and falling profits should contribute to a sound recovery in profits next year. Following share price weakness, the group is valued at a substantial discount to both the broking market leader Clarkson and to other peers. Meanwhile, if the dividend can be held, the shares offer a well above-average yield, pending an eventual improvement in trading conditions.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

02/15

145.6

11.22

32.28

26.0

10.0

8.1

02/16

159.1

13.37

34.70

26.0

9.3

8.1

02/17e

142.0

8.50

21.43

26.0

15.0

8.1

02/18e

150.0

11.70

29.40

26.0

11.0

8.1

Note: *PBT and EPS normalised, excluding intangible amortisation and exceptional items.

Challenging half year

Interim results reflect the extremely tough trading climate cited in the group’s August trading update – deep sea tanker spot rates fell back, as anticipated, but the impact of cutbacks in oil exploration, especially in South-East Asia, were more severe than initially expected. H1 revenue was down by 12% y-o-y to £70.2m, while adjusted PBT, before restructuring costs of £1.8m, fell sharply from £7.0m to £3.0m. There should be some recovery in H2 as the restructuring takes effect, but we have further reduced our FY17 estimate from £8.8m to £8.5m.

Adapting to the market

The majority of the restructuring was in the Technical division, adjusting the cost base to current levels of activity; there was also cost cutting in Shipbroking, largely on the dry cargo desk. Further restructuring, especially in Technical, can be expected during the second half of the year. On the other hand, management continues to target new business opportunities. There have also been important business wins, while management is looking to add experienced teams to the broking desk. There has also been an increase in the number of acquisition opportunities. With the full year benefit of restructuring measures and the £/US$ exchange movement, we are leaving our FY18 PBT estimates unchanged.

Finances remain strong

The seasonal cash outflow left the group with net cash of £0.7m at August 2016. Despite the tough trading conditions, we look for end FY17 net cash of £7.0m, some £2.2m below the FY16 figure. With bank facilities of £30m, including a £15m accordion facility for acquisitions, Braemar is placed to respond to opportunities.

Valuation: Discount rating

The Braemar share price has fallen by 28% since our Outlook report published in May, in anticipation of the tough trading climate and then when it was confirmed in August. The shares are rated at a 28% P/E discount (14.1x vs 19.6x) to global shipbroking market leader, Clarkson, on the basis of prospective CY16 earnings and at a discount to other peer group members.

Investment summary

Broking and specialist shipping services

Braemar is a broadly based international shipping services group. The largest source of income is shipbroking, where the group has a strong position in deep sea oil tankers and the offshore sectors, with principal offices in the UK, Singapore and Australia, supported by a number of other strategically placed overseas offices. The group’s non-broking businesses offer a range of technical and logistics services from offices across the UK and several overseas locations, especially in the Asia Pacific region. Technical services include specialist marine surveys involving site supervision, marine engineering, incident response and adjustment work for the insurance industry. Logistics work ranges from ship agency to freight forwarding.

Valuation

The Braemar share price has fallen by 28% since publication of our Outlook report in May, This reflects the tough trading climate for both shipbroking and the oil & gas sector, as shown in the group’s trading update issued in late August, which led to sharp reductions in market estimates. Braemar’s prospective P/E rating is 28% below that of Clarkson (global shipbroking market leader) on the basis of prospective CY16 earnings (14.1x vs 19.6x). It is also rated at a discount to each of the other members of its peer group. We believe that this discount reflects market fears about the strength of the tanker market and the timing of recovery in oil exploration. The main support for the shares remains the strong balance sheet and high dividend yield. While management will, naturally, make no forecast about future dividends, the maintained interim and the prospect that it will be covered by consensus FY18 estimates, suggests to us that the payment will be held.

Financials

Sharply reduced H1 adjusted PBT of £3.0m, down from £7.0m, was foreshadowed in the group’s August trading update; we are cutting our FY17 estimate by a further £0.3m to £8.5m.

An £8.9m cash outflow reducing net cash to £0.7m was largely seasonal; we look for FY17 net cash of around £7.0m, some £2.2m below the £9.2m of the previous year.

Exhibit 1: Estimate changes

EPS

PBT

EBITDA

To Feb

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

2016

34.7

34.7

N/A

13.4

13.4

N/A

15.9

15.9

N/A

2017e

22.6

21.4

-5

8.8

8.5

-4

11.2

10.1

-10

2018e

30.7

29.4

-4

11.7

11.7

0

14.1

13.3

-7

Source: Braemar Shipping Services; Edison Research estimates. Note: PBT and EPS normalised, excluding intangible amortisation and exceptional items

Sensitivities

Shipbroking profits are sensitive to movements in spot freight rates and the £/US$ exchange rate. Volatile shipping rates will lead to fluctuating gross margins, although with a relatively high proportion of employee remuneration linked to income generated, the impact is lessened. Similarly, with considerable revenues generated in US$ and the cost base largely in sterling, the business is a beneficiary when the dollar strengthens, and vice versa. There is also a potential vulnerability to the loss of key personnel, who manage the group’s relationships with the oil majors, charterers and leading ship owners. Braemar has countered the vagaries of the shipping cycle by acquisition, introducing internationally based businesses, where income tends to reflect the volume of shipping movements and offshore oil and gas work.

Tough half-year’s trading

Braemar has been adversely affected by very challenging trading conditions during the six months to August 2016. Group revenue came back by 12% to £70.2m, with adjusted PBT falling by more than 50% from £6.96m to £3.01m, reflecting the cautious pre-close trading statement issued in late August. There were reduced returns from all three divisions; Technical was severely affected by the reaction of large parts of its customer base to the weak oil price and slipped into losses; Shipbroking saw an inevitable profits reduction as the tanker market predictably rebounded from the heady levels of business seen last year; in Logistics a sound performance from port services was just overshadowed by disappointing freight forwarding returns.

Exceptional debits were down from £1.8m to £1.1m, again mostly related to 2014 merger with ACM Shipping. In addition, the group absorbed £1.8m of one-off restructuring costs (£1.5m Technical division; £0.3m Shipbroking division), which we have added back in the table below and to calculate our adjusted earnings estimates for the current year. After allowing for 24.5% tax on this adjustment, interim EPS emerge at 8.5p, almost covering the unchanged interim dividend of 9.0p.

Exhibit 2: Half-year results

£000s

H115

H215

H116

H216

H117

Revenue

Shipbroking

20,980

32,609

33,336

37,363

30,826

Technical

22,938

26,955

28,622

25,661

21,726

Logistics

20,555

21,811

17,627

16,516

17,665

64,473

81,375

79,585

79,540

70,217

Operating profit

Shipbroking

1,355

4,233

4,597

5,056

4,322

Technical

2,342

3,688

3,149

2,052

(512)

Logistics

1,046

1,229

981

596

864

4,743

9,150

8,727

7,704

4,674

Unallocated costs

(1,137)

(1,484)

(1,632)

(1,041)

(1,519)

3,606

7,666

7,095

6,663

3,155

Interest

(50)

(243)

(135)

(252)

(141)

Joint ventures

(30)

8

0

0

0

Pre-tax profit

3,526

7,431

6,961

6,410

(3,014)

Gross margin

73.1%

75.0%

78.1%

80.0%

78.0%

Operating margin

6.4%

9.4%

8.9%

8.4%

4.5%

Source: Braemar Shipping RNS. Note: Before amortisation of intangible assets and exceptional items; H117 adjusted for £1.8m restructuring costs (£0.3m Shipbroking; £1.5m Technical; consolidates ACM Shipping from July 2014.

Shipbroking (44% of H1 revenue)

Shipbroking revenues slipped back by 8% to £30.8m over the half year, entirely the result of lower shipping rates; the group actually increased the number of shipping movements managed. The reduction in adjusted operating profits was kept to just 6%, from £4.6m to £4.3m, because of the previous year’s restructuring, which sharply reduced the cost base. However, as indicated above, there were one-off restructuring costs of £0.3m in the dry cargo section, leaving declared operating profits down to £4.0m.

In the key deep-sea tanker market (est 60% of divisional revenues) there was a softening of spot rates in Q2 reflecting a combination new tonnage coming on to the market and an easing of port congestion, which adjusted the supply/demand equation. We understand that rates have recovered in recent weeks, but it is too early to assess whether the improvement is sustainable. However, as we indicated a year ago, the increased uncertainty in markets has led to a shift in the market, with key operators tending to require higher levels of support from the brokers with recognised specialist research capabilities. As a leading player in this segment of the market, Braemar believes it has at least sustained its high market share.

Similarly, the offshore market remains subdued, with exploration activity having fallen away as the oil price collapsed and, to date, shows little sign of recovery. Exploration budgets have been cut back, with spot rates weakening with the drop in demand. Braemar’s performance may have been cushioned, to a certain extent, by the continued demand for supply vessels and from a number of time charters, but another disappointing result appears inevitable in H2.

Conditions in the dry bulk cargo market have also been challenging. Despite the accelerated scrapping of older vessels, shipping capacity has stubbornly remained too high at a time when demand, especially from China, continues to fall below earlier expectations. Braemar has undertaken a restructuring in this sector, especially in Australia where the group may have been overstaffed following the ACM merger. By contrast, it has increased its exposure to the capsize sector, taking on a small, but experienced team. With spot rates tending higher in recent weeks and the reduced cost base, we are hoping for a much improved H2 in this segment of the market.

The sale and purchase operation has seen sustained income, with increased second hand and demolition activity transacted at lower average prices. We look for similar trading during the second half of the year. We still remain confident about the medium to long term – the merging of the former ACM projects desk with the Braemar sale & purchase team has led to a number of new business prospects, although many of these are subject to delay in the current shipping climate.

Technical (31% of H1 revenue)

The drop in the oil price and its impact on exploration activity had a serious adverse effect across the Technical division. The offshore and engineering businesses both saw major trading reverses. Divisional revenue fell by 24% from £28.6m to £21.7m, while last year’s operating profit of £3.1m fell to a loss of £0.5m, which was increased to £2.0m as a result of an extensive restructuring programme. Further restructuring can be expected during H2, as new managers across the division assess the impact of the more challenging trading environment.

Braemar Offshore, supplying services to the South-East Asia offshore market, suffered a number of contract delays, accentuating the impact of reduced activity levels. Considerable cost was taken out of the higher cost operations in Singapore and Australia, the benefits of which should be seen in H2, despite the continuing tough trading climate.

There was a similar story at Braemar Engineering. It had been expected that new contracts in the US and Europe would emerge to fill gaps in the order book following completion of a major Nigerian contract, overseeing the design, construction and commissioning of three LNG carriers. We understand from management that the business has a very high level of enquiries, but several orders have been deferred pending greater clarification in the market place. The company has restructured its UK team and relocated key personnel out in the field back to the main offices in London and Houston. Several potential customers had originally indicated that the long-term potential of LNG markets was encouraging them to proceed with new vessels, but fears about the duration of the present malaise has prompted a more cautious policy over the past few months. Cost cutting should lead to an improved H2 performance, but a return to last year’s performance levels will take time.

The two insurance-based businesses, Braemar SA and Braemar Adjusting, both reported more challenging conditions. SA has seen a sustained level of in activity, especially in South-East Asia, but the average incident value was lower; diversification plans continued and the signs are still promising but will take time to deliver increased profits. Adjusting did well in the Middle East and Singapore, while the tougher conditions in the UK, US and Canada are being countered in H2 with a number of new instructions.

Braemar Howells, the environmental problem-solving business, delivered modest progress. No new major incidents arose, but the underlying business continues to develop steadily.

Logistics (25% of H1 revenue)

Logistics experienced a mixed half year, with the ship agency business delivering useful progress, although it was insufficient to balance the impact of more challenging trading conditions for the freight forwarding operation. Divisional revenue was virtually unchanged, rising by just 0.2% to £17.7m, but there was a 12% reduction in operating profit at £0.9m.

The main factor behind the varied performances was probably timing. Action to broaden the base and quality of the ship agency business began some three years ago and is already delivering useful returns despite the challenging trading conditions. The change of leadership in freight forwarding was much more recent – investment in strengthening the teams in Houston, Atlanta and Singapore are only just starting to deliver new business, with management targeting an improved result during the second half.

Strategy maintained

The chairman’s statement highlights action taken by management to address the cost-base in the light of the more challenging trading environment. Investment in recent years has created an overall business that is less vulnerable to the volatility of the shipping cycle, while the approach to seeking out and exploiting opportunities for organic and acquisition-based growth has not changed.

In Shipbroking the 2014 merger with ACM transformed the business. Integration of the two dealing desks was successful, with a positive attitude across each of the teams, despite the uncertain conditions in several segments of the market. The wet market remains today’s success story but teams in both the offshore and dry cargo sections continue to look more widely for business opportunities despite challenging market conditions. Meanwhile, the sale and purchase operation is linking much more closely with the special projects desk to secure new leads. Our forward profit estimates are naturally cautious, but there are growing opportunities to take on key teams or individuals that can add to the overall business.

The toughest challenges are currently in Technical. Management has acted quickly to cut costs, where appropriate, but is still looking for opportunities to move forward. We understand that recent management changes within the division will lead to closer liaison between the various divisional companies on a regional basis to develop cross-selling opportunities. Acquisitions remain firmly on the agenda; the number of potential deals has increased with the more challenging trading climate, but any deal will have meet stiff criteria. Consideration payable must reflect the risks involved, however, we sense that many asking prices are still too high.

Although not yet reflected in the bottom line, Logistics has responded positively to recent management changes. Both core parts of the division are targeting higher value-added work and walking away from unremunerative commodity-type contracts.

Sensitivities

Currencies: with a majority of group costs incurred in sterling and substantial income in US dollars, exchange rate movements can have a considerable impact on profits in any specific year. Braemar carries out forward transactions to de-risk the £/US$ situation; at 31 August 2016, the group held forward currency contracts to sell $30m at an average rate of $1.43/£1. The benefits of the recent weakness of sterling will, consequently, be deferred for several months. Our profit estimates are based on no further material change from current levels. Management has indicated that because of the global nature of the overall business, the impact of Brexit should not be material.

Key personnel: the business has few tangible assets. Its strengths lay in the strong relationships the group and key individuals have with ship owners, charterers (including the major oil companies), insurance specialists and traders. The defection of specific individuals or teams to a competitor could have an adverse impact on profits, especially in the short term. Management is fully aware of this risk and invests considerable time in staff motivation and retention; all shipbrokers, for example, operate bonus schemes, which generate a substantial part of an employee’s income. Obviously, the risks have increased as the group has become larger, but we understand that merging the Braemar and ACM broking teams proved highly motivating, especially for younger members of the team.

The shipping cycle: the shipping cycle is a major factor affecting the performance of shipbroking shares. However, the group’s acquisition strategy over the past five years has introduced businesses with differing cycles. The past six years have seen unprecedented extremes, with spot rates and ship valuations fluctuating more sharply than for many years. This stems from the unexpected global trading downturn, which led to high levels of overcapacity exacerbated by long shipbuilding order books. Numbers of shipping movements have already recovered, while many older ships have been retired earlier than was originally planned; tanker rates have largely recovered, but other sectors remain under extreme pressure.

Oil price: normal day-to-day fluctuations in the oil price do not have a material impact on group profitability. However, the extent of movements over the past few years has had contrasting effects across the group. The obvious adverse factor relates to the impact on exploration activity, which affected the offshore broking desk and Braemar Offshore and Braemar Engineering in the Technical division. Balancing this were the benefits of increased global demand for oil, which led to a reversal of the previous tanker overcapacity situation, transforming the profitability of the largest segment of the broking business.

Valuation

Exhibit 3: Peer group comparison

Share price

(p)

Market cap

(£m)

Last reported revenue

(£m)

Yield
2015 (%)

P/E
CY16e (x)

P/E
CY17e (x)

Clarkson

1985

600

302

3.2

19.6

18.0

James Fisher

1640

823

438

1.6

21.7

19.6

ICAP

482

3,147

460

4.6

17.7

16.1

Brewin Dolphin

263

744

284

4.6

15.9

14.7

Braemar Shipping

322

97

159

8.1

14.1

11.7

Source: Edison Investment Research, Thomson Datastream consensus estimates. Note: Based on annualised adjusted profits, before exceptional items and amortisation of intangibles. Prices as at 24 October 2016.

While the share prices of each of the other members of its peer group have traded within a fairly narrow band since publication of our Outlook report last May, the Braemar share price has fallen by 28%. This reflects the tough trading climate for both shipbroking and the oil & gas sector, as epitomised by the group’s trading update, issued in late August, which led to sharp reductions in consensus estimates. It is no coincidence that Clarkson, the global leader in shipbroking was the weakest performer of the remainder of the peer group (down 13%), as it was facing many of the group’s challenges. Braemar’s high exposure to deep sea oil tankers has limited its shipbroking difficulties, but the sharp falls in oil exploration activity has also been recognised in the share price.

While we have cut our estimates sharply, Braemar’s prospective P/E rating is 28% below that of Clarkson on the basis of prospective CY16 earnings, rising to a 35% discount on the basis of those for CY17. It is also rated at a discount to each of the other members of its peer group. We believe that this discount reflects market fears about the continued strength of the tanker market and the timing of recovery in oil exploration.

The main support for the shares remains in the strong balance sheet and high dividend yield. While management will, naturally, make no forecast about future dividends, the maintained interim and the prospect that it will be covered by consensus FY18 estimates, suggests to us that the payment will be maintained.

Financials

Uncovered dividend

The cautious note in the pre-close trading statement published in August made it clear that interim figures would be well below earlier expectations; this was borne out by the drop in H1 adjusted PBT from £7.0m to £3.0m. The Q2 downturn in tanker spot rates suggests that H2 Shipbroking profits will be below those declared in H1, although the recent recovery in rates and the cost-cutting measures suggest that the shortfall will be limited. On the other hand, returns in both of the other divisions should show useful recovery, stemming from the restructuring in Technical and the new contracts reported in Logistics. At the time of the August statement, we reduced our FY17 adjusted PBT estimate from £13.5m to £8.8m. In the light of the full interim statement, we have decided to edge this lower to £8.5m. The resultant EPS, on the basis of an indicated 24.5% tax charge, of 21.4p would leave the unchanged dividend of 26.0p uncovered.

Exhibit 4: Edison profit estimates

Year to February

2015

£000s

2016

£000s

2017e

£000s

2018e

£000s

Operating profit

Shipbroking

5,588

9,653

7,500

8,000

Technical

6,289

5,201

2,100

4,500

Logistics

2,275

1,577

2,200

2,500

14,152

16,431

11,800

15,000

Unallocated costs

(2,621)

(2,673)

(3,000)

(3,000)

11,531

13,758

8,800

12,000

Interest

(293)

(387)

(300)

(300)

Joint ventures

(22)

0

0

0

Pre-tax profit

11,216

13,371

8,500

11,700

Source: Braemar Shipping RNS, Edison Investment Research estimates. Note: Before amortisation of intangible assets and exceptional items; FY17 figures before restructuring costs.

The restructuring, which has continued into H2, should benefit profits into the future. At the time of the August statement we reduced our FY18 adjusted PBT estimate from £14.0m to £11.7m. While trading conditions may be a little more challenging than we had been expecting, the potential cost benefits of the restructuring should be correspondingly higher, while the impact of the movement in the £/US$ exchange rate will also come through to profits. We have decided to leave this estimate unchanged; EPS of 29.3p would also cover a maintained dividend.

Balance sheet remains strong

The balance sheet at August 2016 shows net cash of £0.7m, compared with net borrowings of £3.1m 12 months earlier and net cash of £9.2m at February 2016. The cash outflow over the half year was largely seasonal, related to the timing of the staff bonus and the final dividend. Despite the tough trading conditions, our current estimates show a £2.2m reduction in the y-o-y net cash position at February 2017. The group owns a 2% stake in The Baltic Exchange, which is the subject of an agreed bid by Singapore Stock Exchange – if the transaction completes, Braemar will receive £1.8m for its stake, including a one-off profit of £1.5m, boosting net funds further.

The group has negotiated a new £30m facility with HSBC, comprising a £15m RCF and a £15m accordion facility; the latter is available to help finance potential acquisitions.

Exhibit 5: Financial summary

£'000s

2013

2014

2015

2016

2017e

2018e

February

UK GAAP

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

139,664

125,531

145,601

159,125

142,000

150,000

Cost of Sales

(43,599)

(31,758)

(37,700)

(33,365)

(31,200)

(33,000)

Gross Profit

96,065

93,773

107,901

125,760

110,800

117,000

EBITDA

 

 

12,066

10,552

13,553

15,871

10,100

13,300

Operating Profit (before amort. and except.)

10,828

9,283

11,671

13,758

8,800

12,000

Intangible Amortisation

(1,498)

(432)

(1,772)

(1,080)

(400)

(400)

Exceptionals

0

0

(4,316)

(2,365)

(4,100)

(1,600)

Operating Profit

9,330

8,851

5,583

10,313

4,300

10,000

Net Interest

255

196

(293)

(387)

(300)

(300)

Share in profits from joint ventures

62

(88)

(162)

0

0

0

Discontinued

(351)

(2,209)

0

0

0

0

Profit Before Tax (norm)

 

 

11,145

9,391

11,216

13,371

8,500

11,700

Profit Before Tax (FRS 3)

 

 

9,296

6,750

5,128

9,926

4,000

9,700

Tax

(2,447)

(2,268)

(2,187)

(2,826)

(2,050)

(2,850)

Profit After Tax (norm)

8,698

7,023

8,310

10,173

6,450

8,850

Profit After Tax (FRS 3)

6,849

4,482

2,941

7,100

1,950

6,850

Average Number of Shares Outstanding (m)

20.8

20.9

25.7

29.3

30.1

30.1

EPS - normalised (p)

 

 

41.7

33.5

32.3

34.7

21.4

29.4

EPS - normalised and fully diluted (p)

 

40.3

32.1

29.5

31.5

19.5

26.8

EPS - (IFRS) (p)

 

 

32.8

21.4

11.4

24.2

6.5

22.8

Dividend per share (p)

26.0

26.0

26.0

26.0

26.0

26.0

Gross Margin (%)

68.8

74.7

74.1

79.0

78.0

78.0

EBITDA Margin (%)

8.6

8.4

9.3

10.0

7.1

8.9

Operating Margin (before GW and except.) (%)

7.8

7.4

8.0

8.6

6.2

8.0

BALANCE SHEET

Fixed Assets

 

 

41,314

40,959

87,553

88,769

90,069

89,569

Intangible Assets

32,071

31,460

79,371

79,596

79,196

78,796

Tangible Assets

6,426

6,140

5,106

5,459

5,359

5,259

Investments

2,817

3,359

3,076

3,714

5,514

5,514

Current Assets

 

 

68,237

61,681

73,731

69,632

71,518

75,496

Stocks

0

0

0

0

0

0

Debtors

44,621

47,351

57,442

58,135

59,979

63,358

Cash

23,277

13,694

16,289

11,497

11,540

12,138

Other

339

636

0

0

0

0

Current Liabilities

 

 

(38,733)

(36,488)

(51,162)

(48,422)

(53,087)

(55,943)

Creditors

(38,733)

(36,488)

(44,362)

(46,622)

(48,587)

(51,443)

Short term borrowings

0

0

(6,800)

(1,800)

(4,500)

(4,500)

Long Term Liabilities

 

 

(975)

(866)

(5,849)

(2,674)

(6,347)

(3,847)

Long term borrowings

0

0

(2,300)

(500)

0

0

Other long term liabilities

(975)

(866)

(3,549)

(2,174)

(6,347)

(3,847)

Net Assets

 

 

69,843

65,286

104,273

107,305

102,153

105,275

CASH FLOW

Operating Cash Flow

 

 

14,996

2,158

7,259

13,459

10,416

12,577

Net Interest

251

196

(293)

(387)

(300)

(300)

Tax

(3,625)

(1,358)

(3,534)

(2,688)

(2,244)

(2,650)

Capex

(1,198)

(1,247)

5,512

(2,209)

(1,200)

(1,200)

Acquisitions/disposals

(279)

(524)

(10,851)

0

0

0

Financing

1,077

(197)

601

357

(1,000)

0

Dividends

(5,412)

(5,441)

(6,201)

(7,648)

(7,829)

(7,829)

Other including FX exchange differences

0

(3,170)

1,002

1,124

0

0

Net Cash Flow

5,810

(9,583)

(6,505)

2,008

(2,157)

598

Opening net debt/(cash)

 

 

(17,467)

(23,277)

(13,694)

(7,189)

(9,197)

(7,040)

HP finance leases initiated

0

0

0

0

0

0

Other

0

0

0

0

0

0

Closing net debt/(cash)

 

 

(23,277)

(13,694)

(7,189)

(9,197)

(7,040)

(7,638)

Source: Braemar Shipping Services accounts, Edison Investment Research Note: Share-based payments not added back for adjusted earnings; FY17 figures before restructuring costs..

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Braemar Shipping Services and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2016. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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