Braemar Plc · LSE:BMS
Braemar — Braemar Shipping Services — FY2015 Earnings Presentation
30 slides from Braemar's earnings presentation, May 2015
Slide 1: Braemar Shipping Services Plc Preliminary Results Year ended 28 February 2015
BRAEMAR SHIPPING SERVICES PLC Preliminary Results Year ended 28 February 2015 May 2015
Slide 2: Agenda
Agenda • Market Overview & Opera4ng Review: James Kidwell – Chief Execu4ve • Financial Results: Mar4n Beer – Finance Director • Louise Evans: Finance Director designate www.braemar.com 2
Slide 3: Benefits of merger already evident
Benefits of merger already evident Financial Highlights Opera4onal Highlights • Revenue up 16% to £145.8m • Merger with ACM is a step change • Underlying OperaBng Profit* up 21% • 2nd half underlying shipbrokers to £11.3m profit up 27% • Year-‐end net cash at £7.2m as • Shipbrokers forward order book
Slide 4: Successful strategy
Successful strategy shipbroking enBty to a diversified shipping services group: From a small Diversity of Revenue 160 140 120 Special Projects 100 LogisBcs Revenue £m 80 Technical 60 Shipbroking 40 20 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 www.braemar.com 4
Slide 5: Fleet growth & time charter rate
Fleet growth & Bme charter rate Mn Dwt $/day 1,400 100,000 90,000 1,200 80,000 1,000 70,000 60,000 800 50,000 600 40,000 400 30,000 20,000 200 10,000 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total Tanker Fleet Total Bulker Fleet Average of Capesize Bulker & VLCC Tanker 1 Year TC Ra
Slide 6: Five year old yearly average vessel prices
Five year old yearly average vessel prices ($m) 160 140 120 100 80 60 40 20 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -‐ to date Capesize Bulk Carrier VLCC Tanker www.braemar.com 6
Slide 7: Enhanced global broking coverage
Enhanced global broking coverage 180 160 140 120 Research No. of brokers 100 Tankers SNP 80 Offshore 60 LNG Dry 40 Container 20 0 Braemar Braemar ACM Braemar Braemar ACM Braemar Braemar ACM Braemar Braemar ACM Asia Australia EMEA USA www.braemar.com 7
Slide 8: Portfolio balance – Revenue split
Poraolio balance – Revenue split Agency Logis4cs Howells Tankers Broking: 49% Engineering Technical: 40.5% Sale & Purchase 30.5% Braemar SA Logis4cs: 10.5% Offshore 10.5% Adjus4ng *Es4mated revenue split Dry based on H2 2014/15 Technical (excluding logis4cs cost of Offshore sales) 8
Slide 9: Portfolio balance: Exposure to oil price & currency
Poraolio balance: Exposure to oil price & currency OIL PRICE DECLINE CURRENCY INCOME/COST Tankers Ç US$/£ Sale & Purchase -‐ US$/£ Dry US$/A$, S$ Offshore È 75% £/£ Technical Offshore È 60% US$/Asian currencies AdjusBng -‐ Global/Global Salvage AssociaBon -‐ £/£ Engineering -‐ 75% US$/£ Howe
Slide 10: Strategic positioning
Strategic posiBoning • Balanced poraolio of integrated marine and energy services • Marine and energy markets in long term growth • Strong posiBon in global shipbroking with room for growth • Delivered improved margin and step change in profitability through ACM merger • Technical division is a blend
Slide 11: Financial highlights
Financial highlights Revenue Underlying Opera4ng Profit* 2015 2014 2015 2014 £m £m £m £m Shipbroking 5.6 2.6 Shipbroking 53.6 40.9 OperaBng margin 10.4% 6.4% Technical 6.0 6.9 Technical 49.9 45.7 OperaBng Margin 12.6% 15.1% LogisBcs 2.3 2.0 LogisBcs 42.3 38.9 OperaBng Margin 5.4% 5.1% Central costs (
Slide 12: Income statement
Income statement 2015 2014 £m £m • Includes seven months of ACM Revenue 145.8 125.5 • Profit Improvement from acquired business and early implementaBon of Underlying OperaBng Profit 11.3 9.3 synergies ExcepBonal items (6.1) (0.4) • ExcepBonal items relate mostly to ACM merger OperaBng Profit 5.2 8.9 •
Slide 13: Merger with ACM
Merger with ACM Acquisi4on Price 25 July 2014 £’m Cash Paid 10.1 Shares Issued 40.3 50.4 Represen4ng £’m Cash and cash equivalents 2.1 Property & Investments 1.6 Receivables 6.6 Payables (6.3) Net tax and other liability (0.9) Pension Deficit (1.4) Forward Order Book 2.8 Goodwill 45.9 50.4 www.braema
Slide 14: Exceptional items
ExcepBonal items 2015 2016* 2017* £’m £’m £’m Cost linked to acquisiBon (1.2) -‐ -‐ AmorBsaBon of forward order book (1.8) (0.9) (0.2) Share RetenBon plan linked to ACM (0.8) (1.5) (1.6) merger Restructuring costs related to ACM (6.9) -‐ -‐ merger Other restructuring costs (0.8) -‐ -‐ Profit on
Slide 15: Cashflow
Cashflow 2015 2014 £m £m – Foreign exchange variaBons cause negaBve movement in working capital Underlying operaBng profit 11.3 9.3 – Underlying working capital stable Add back depreciaBon 1.9 1.3 – Cash spend on excepBonals largely redundancy and double cost of rent for Change in Working Capital (2.3
Slide 16: Balance sheet
Balance sheet – Increased goodwill from ACM Feb 15 Aug 14 Feb 14 merger represenBng the value of £m £m £m the people we took on Goodwill and other intangibles 79.4 80.6 31.5 – Fixed asset reducBon since half year, due to sale of 35 Cosway Fixed asset and investments 8.2 12.4 9.5 Street Current asset
Slide 17: Dividend
Dividend 30 25 – Proposed final dividend of 17p 20 remains unchanged 15 – Cover down slightly to 1.2x 10 – Dividend policy to rebuild cover 5 towards 1.5 Bmes 0 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 H1 dividend H2 dividend Proposed Final dividend 2009/10 2010/11 2011/12 2012/13 2013/14 2014
Slide 18: Operating Review - Shipbroking
OperaBng Review -‐ Shipbroking • Established merged shipbroking division; Braemar ACM Divisional results summary Shipbroking 2015 2014 • ACM fully integrated £’m £’m • Merger has created one of the largest full-‐service shipbrokers Revenue 53.6 40.9 • Second half performance demonstrates success o
Slide 19: Shipbroking – Combined Entity
Shipbroking – Combined EnBty • Strengthened global presence • Delivered office consolidaBon; 19 to 15 in total • Office locaBons in all major territories • Achieved cost savings greater than £4m p.a. • Strong synergy between exisBng teams • Established improved base for future growth Now 1 Now 3 Now 1 N
Slide 20: Portfolio balance – Broking
Poraolio balance – Broking -‐ Bopom cycle -‐ Strong market -‐ Long term recovery -‐ VolaBlity -‐ Strength in Asia -‐ Oil price -‐ Leader -‐ Major player DRY: 19% -‐ Includes Container S&P -‐ Synergy with Tankers Project Team TANKERS: 53% S&P: 15% -‐ Services vessels OFFSHORE: 13% -‐ Shor
Slide 21: Tanker and Dry Bulk Carrier Earnings ($k/day)
Tanker and Dry Bulk Carrier Earnings 70 ($k/day) 60 50 40 30 20 10 0 -‐10 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 www.braemar.com 21
Slide 22: Operating review - Technical
OperaBng review -‐ Technical • 9% growth in revenue across the division Divisional results summary • Offshore acBvity in the Far East has returned to more normal 2015 2014 levels arer a parBcularly strong 2014 Revenue 49.9 45.7 • Sales and profits up in Braemar AdjusBng, Braemar Engineering OperaBng
Slide 23: Technical - Business overview
Technical -‐ Business overview • Full suite of technical service soluBons for Revenue split the marine and energy industries £’m • DemonstraBng broad-‐ranging capability with a widespread global presence • Provision of experBse to large, long-‐term oil and gas projects • World leader in the field
Slide 24: Operating review - Logistics
OperaBng review -‐ LogisBcs • Management change has reduced cost base and improved sales Divisional results summary and markeBng focus 2015 2014 • Achieved a 9% growth in revenue and 15% growth in underlying Revenue 42.4 38.9 profit OperaBng 2.3 2.0 • Trading in European tanker agency has remained s
Slide 25: Logistics – Business overview
LogisBcs – Business overview • Worldwide services for Port Agency, Liner and LogisBcs Revenue split • A network of offices and trusted partners £’m • Leading UK player with scope to expand • Challenger to global players • Cory Brothers is a long-‐established name with over 170 years in shipping agenc
Slide 26: Summary and Outlook
Summary and Outlook • Successful merger with ACM • Results in line with market expectaBons • Strong dividend yield • Momentum going into new year • Opportunity for further growth and expansion • Plaaorm for growth with strength and breadth of services offering • Expect to make further progress in com
Slide 27: Appendices
BRAEMAR Appendices —_—— 27
Slide 28: Divisional service overview
Divisional service overview • Tanker chartering – Crude oil, Clean Petroleum Products, LPG, LNG, Chemicals, FFAs, Projects (Bme charter) Shipbroking • Sale & purchase – second hand, newbuilding, recycling, valuaBons • Dry Bulk chartering • Offshore – chartering and sale & purchase • Research and cons
Slide 29: Stage in process
Technical Services Offshore Engineering Failure mode & Marine Warranty effect analysis Pre-‐risk Surveys Marine eng. & Ship construcBon naval supervision architecture Towage approvals Stage in process DP audits Expert witness services Adjus4ng SA Post-‐risk Vessel and Energy loss condiBon surveys ad
Slide 30: PLC Board of directors
PLC Board of directors Role Post AGM on 24 June 2015 Re4ring from the Board Execu4ve Directors CEO James Kidwell FD Louise Evans MarBn Beer: leave the company a/er the year end repor2ng cycle ExecuBve Directors Johnny Plumbe: pursue independent consultancy interests Denis Petropoulos: remain as Pres
Braemar Shipping Services — FY2015 Earnings Presentation on 6ix