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Braemar Shipping Services Reports 93% Increase in Operating Profit

Braemar Shipping Services plc (LSE: BMS), a leading international provider of broking, financial, consultancy, technical and logistics services to the shipping, marine, energy, offshore and insurance industries, yesterday announced results for the year ended 28 February 2018.

Financial Highlights

— 93% increase in underlying operating profit to GBP8.2m (2016/17: GBP4.2m) at the top of the previously announced range

— Revenue broadly unchanged at GBP133.4m (2016/17: GBP135.9m)
— Underlying basic EPS growth of 97% to 21.14p (2016/17: 10.72p)
— Final dividend of 10.0p, giving an increased full year dividend of 15.0p (2016/17: 14.0p). This represents increased dividend cover of 1.4

— Net debt of GBP2.4m at 28 February 2018 (28 February 2017: Net cash of GBP7.1m) following the successful acquisitions of Braemar Naves Corporate Finance GmbH and Braemar Atlantic Brokers Holdings Limited.

Business Highlights

— Technical division has returned to profitability during the second half of 2017/18 and, although new project activity has been low, we are now seeing more enquiries and tenders

— The newly acquired Financial division, Braemar-NAVES, achieved a strong financial performance ahead of expectations and is proving to be a good strategic fit within the Group. Positive synergies with other divisions are already evident

— Shipbroking division has traded in line with market expectation despite the continuing weaker tanker sector. The forward order book has strengthened by 13% to $44m (2016/17: $39m). The division has attracted a number of high value recruits in key market segments whose positive impact should be felt in the medium term

— Logistics, the smallest division, performed reasonably well despite reduced market activity. Performance for the year was adversely affected by a post year end settlement of GBP0.75m for an historic claim relating to activity in the early 2000s

David Moorhouse CBE, Chairman of Braemar, commenting on the results and the outlook said:

“We expect world trade and global shipping demand to continue to grow, in line with economic growth projections, notwithstanding recent political developments over trade.

At this point in the cycle, tanker freight rates are relatively low and, with the growth in the fleet, we are unlikely to see a recovery before next year. The dry bulk market has been recovering and we expect this to continue through the year. In the medium term it is quite likely that we will see an increase in demolition as new environmental legislation takes effect by 2020.

Our Financial division is expected to increase its contribution to the Group’s underlying operating profits due to the full year effect of ownership and the success it is having in developing its advisory business.

We expect the Technical and Logistics divisions to continue their recent recovery trends. We wait to see what impact, if any, Brexit may have on our Logistics business over the medium term.

Overall the Group is well structured and balanced following the investments made this year and we are better equipped to reap reward through the cycle.”

SUMMARY FINANCIAL RESULTS

Underlying Results Reported Results
2017/18 2016/17* 2017/18 2016/17*
Revenue £133.4m £135.9m £133.4m £135.9m
Operating Profit / (loss) £8.2m £4.2m £(0.9)m £0.5m
Basic Earnings / (loss) per Share 21.14p 10.72p (9.70)p (1.66)p
Full Year Dividend per Share 15.0p 14.0p 15.0p 14.0p

*2016/17 underlying and reported results have been restated to reflect the reclassification of Braemar Response following the decision to divest the business.

Underlying measures above are before non recurring specific items, including restructuring costs, gain on sale of shares in The Baltic Exchange and acquisition and disposal related expenditure:

Specific Items
2017/18 2016/17
Restructuring costs £(2.9)m
Gain on sale of investment £1.7m
Acquisition and disposal related expenditure £(9.1)m £(2.5)m

Acquisition related costs are detailed below and include costs directly associated with the purchase of Braemar NAVES Corporate Finance GmbH and Braemar Atlantic Brokers Holdings Limited as well as the run off of the equity based retention programme established during the acquisition of ACM Shipping plc.
Source: Braemar Shipping Services

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