BRAEMAR SHIPPING SERVICES PLC

("Braemar", "the Company" or "the Group")

19 May 2015

Preliminary results for the year ended 28 February 2015

Benefits from merger already evident

Braemar Shipping Services plc (LSE: BMS), a leading international provider of broking, consultancy, technical and other services to the shipping and energy industries, today announces full year results for the year ended 28 February 2015.

FINANCIAL HIGHLIGHTS

·    Revenue up 16% to £145.8m (2014: £125.5m)

·    Underlying Operating Profit ⁽¹⁾ up 21% at £11.3m (2014: £9.3m)

·    Year end net cash £7.2m (2014: £13.7m) as expected, following merger related expenditure

·    EPS from underlying operations⁽¹⁾ at 31.3p (2014: 33.5p) reflecting shares issued during year

·    Net exceptional and acquisition related costs of £6.2m (2014: £0.4m)

·    Dividend maintained at 26.0p (2014: 26.0p)

OPERATIONAL HIGHLIGHTS

·    Merger with ACM  represents a step change in our Shipbroking division

·    Second half underlying operating profit of merged Shipbroking businesses up 27% on equivalent period last year.

·    Shipbroking forward order book up by 5% to US$58 million

·    Technical division increased revenue by 9%  although underlying operating profit fell 13% to £6.0m

·    Logistics division increased revenue by 9% and underlying operating profit rose by 15% to £2.3m

James Kidwell, chief executive of Braemar Shipping Services plc, said:

"Our objective is to build the Braemar brand to be the most valued provider of knowledge and skill based services to the shipping and offshore markets on a global basis.  The merger with ACM, developing stronger broking teams globally, has been a significant step in this direction, but it is far from the last.  We will continue to look to expand in all divisions."

⁽¹⁾ Underlying Operating profit throughout this document is defined as Operating Profit before exceptional and acquisition related items

ENDS

For further information, contact:

Notes to Editors:

About Braemar Shipping Services plc

Braemar Shipping Services plc is a leading international provider of knowledge and skill-based services to the shipping, marine, energy, offshore and insurance industries. Founded in 1972, Braemar employs approximately 1,000 people in more than 70 locations worldwide across its Shipbroking, Technical and Logistics divisions.  In July 2014 Braemar merged with ACM Shipping Group PLC.

Braemar joined the Official List of the London Stock Exchange in November 1997 and trades under the symbol BMS.

For more information, visit www.braemar.com.

PRELIMINARY ANNOUNCEMENT - YEAR ENDED 28 FEBRUARY 2015

CHAIRMAN'S STATEMENT

As shareholders will recognise the most significant event in this financial year was the merger with ACM Shipping Group Plc ("ACM"), and the substantial commitment it represented to the growth of our Shipbroking business.  The merger went ahead as your Board recommended at the end of July 2014, and the integration of the two businesses was successfully concluded during the year.  I am pleased to say that the benefits of the merger, as evidenced by the improved combined profitability, have exceeded the Board's expectations.

Results for the year

Revenue for the year increased by 16% to £145.8million (2014: £125.5million) and underlying operating profit by 21% to £11.3million (2014: £9.3million). Adjusted earnings per share were 31.3p compared with 33.5p last year.

The Shipbroking division contributed £53.6million in revenues (an increase of £12.7million) and Underlying operating profit of £5.6 million (an increase of £3.0million). This is not surprising given that these represent the combined revenues and profits of the two businesses for the second half of the year.  But the success of the merger can best be measured by comparing the second half combined profit of £4.2million with the £3.3million combined profit of the two separate entities in the second half year of 2013/14, an increase of 27%.  And of even greater importance was the reorganisation of the desk teams to provide enhanced services to our clients and an improvement in the forward order book.

This was not, of course, achieved without cost - we incurred cash transaction costs of £1.2 million and acquisition related accounting charges of £2.2million related to the merger and some £6.9million of exceptional costs, offset in part by a gain of £5.4million on the sale of our office in Cosway Street.  More details of these can be found in the Financial Review.

Shipping markets last year generally worked in our favour. The sharp fall in the oil price resulted in increased activity and freight rates in the tanker market where we operate the largest of our four Shipbroking teams.  This undoubtedly helped to bind the teams together and build the forward order book.  But by the same token, the lower oil price led to a significant fall-off in rates in the Offshore market which offset some of the gains on the tanker desk.

In the Technical services businesses, the year produced mixed results.  Our Technical division which had enjoyed two years of exceptional performance saw some slow-down of activity in South East Asia, as a result of the decline in the oil price, but this was offset to a large extent by increased demand for Liquefied Natural Gas (LNG) services.  Underlying operating profit was £6.0million compared with £6.9million in the previous year.

Our Logistics division again achieved a solid performance with operating profit increased to £2.3million compared with £2.0million the previous year.

Board and management

I have been privileged to serve as chairman of Braemar for the past 12 years.  This has been a period of significant change.  We embarked on a substantial diversification in shipping services, which I believe has underpinned our success for several years, especially during the low points in the shipping cycle.   And the recent merger with ACM will enable us to develop the shipbroking business as a competitive force in global markets for the benefit of our clients, employees and shareholders.

This is, therefore, an appropriate time for me to step down as Chairman of the Group.  It has been an enormously enjoyable experience, not least for the many friends I have made during the past 12 years, for whose support and enthusiasm I shall be forever grateful.

I am delighted that David Moorhouse has agreed to succeed me as Chairman.  David has long experience serving on the Boards of public and private companies in the shipping and energy fields, most recently as Chairman of Lloyds Register.

This also seemed an appropriate moment to reorganise the Group Board to make it smaller and fit for purpose going forward.  We, therefore, announced on 9 April 2015 that Denis Petropoulos, Johnny Plumbe and Tim Jaques will not seek re-election as directors at the AGM. Denis Petropoulos will become President of Braemar Asia, with responsibility for developing all of Braemar's growing business in the region as well as remaining a member of the Braemar Group Executive Committee. Johnny Plumbe will retire from the Group to pursue his independent consultancy interests. 

As announced on 9 April 2015, Martin Beer will step down from the Board at the AGM and be replaced by Louise Evans, who was formerly the Group Finance Director for Williams Grand Prix Holdings plc.

Following these changes, that will take place immediately following the AGM, the Board will comprise:

Non-executive Chairman: David Moorhouse

Chief Executive: James Kidwell

Finance Director: Louise Evans

Non-Executive Directors: Alastair Farley (Senior Independent Director), Jurgen Breuer and Mark Tracey

I would like to express the Board's appreciation for the great contribution of Johnny Plumbe to the success of ACM and its successful integration with Braemar and for Tim Jaques' wise counsel over the years. The Board would also wish me to convey particular thanks to Martin Beer for his exceptional contribution as Group Finance Director over the past two and a half years and to welcome Louise Evans to that role.

Dividend

The Directors are recommending for approval, at the Annual General Meeting on 24 June 2015, an unchanged final dividend of 17 pence per share.

This dividend will be paid on 31 July 2015 to those on the register at close of business on 3 July 2015. Together with the 9 pence interim dividend, the Company's dividend for the year of 26 pence (2014: 26 pence) will be covered 1.2 times by earnings from underlying operations.

Colleagues

It is often said that this is above all a people business.  I know this to be true.  And it is the people of the Braemar businesses who are to be thanked for their efforts over the past year.

Outlook

We have now set a platform for growing our earnings in the years ahead with the volatility of the shipping markets balanced to some degree by the strength and breadth of our services offering. In 2015/16, the Shipbroking division will benefit from a full year of ACM and the associated improvements in efficiency. In addition we expect that the benefit of the improved tanker markets and the strength of the US $, will balance the effect of the lower oil price on this division. The Technical division will see a continued strong contribution from LNG related projects but this is likely to be offset by the impact of slower offshore markets. The Logistics division is expected to benefit from a lower cost base and some improvement in activity. Overall we expect to make further progress in the coming year and the Group's performance since the start of this financial year meets our expectations.

Sir Graham Hearne CBE

Chairman

18^th May 2015

CHIEF EXECUTIVE'S REVIEW OF THE BUSINESS

The merger with ACM

Our major focus during the year just ended has been the evaluation, delivery and successful integration of the merger with ACM. This was a significant task affecting all of our staff in the Shipbroking division. As part of this integration we have amalgamated 6 offices, fitted out and opened a new office in London and reshaped all the desks around the world to best suit the needs of our clients. We now have substantially stronger and more profitable desks and a strong base from which to grow. While we have strong positions in all the areas where we are represented there are still areas both functionally and geographically where we can expand and it is our intention to do this in the coming years.

Trading performance

I am pleased to report that the results for the year show significant progress and are in line with our plan.  Revenue for the year at £145.8milllion was up £20.3million on last year and underlying operating profit at £11.3million was up £2.0million on last year.  The underlying operating profit quoted is before net exceptional costs of £6.0million (2014: £0.4million) and benefits (property sale) associated with all the reorganisations that happened this year. We have separately disclosed these non-recurring activities and the details can be found in the Financial Review.

The Shipbroking division's revenue increased by £12.7million to £53.6million and generated a significant improvement in operating profit from £2.6million to £5.6million. It is no longer possible to identify the revenue and profit streams from the integrated ACM business, so it is most instructive to look at the running rate of profitability. The combined business made sales of £32.4million in the second half, resulting in operating profit of £ 4.2 million for a half year, which compares with second half published  underlying operating profit for last year of £1.5million and £1.8million for Braemar shipbroking and ACM respectively - an improvement in combined profitability of 27%. Most importantly we quickly established new desk teams in the first two months following the completion of the merger and the newly merged teams were able to provide enhanced services to our clients. As a result our total forward order book has grown by 5% to approximately US$58million, of which $29million relates to 2015/16.  This has been done on a lower cost base than expected due to the cost savings made of more than £4million per annum.  We will invest more to strengthen this base and look to expand further.

After an extremely strong performance from the Technical Division in 2013/14 we have delivered a robust performance in challenging market conditions in 2014/15. Revenue from the division was £49.9million compared with £45.7million in the prior year. Underlying operating profit at £6.0million was £0.9million below the record level of 2013/14. Having consolidated Braemar Environmental into this division, the division consists of five operating entities. Braemar Offshore, which provides surveying and engineering services to the Offshore market in Asia, saw lower revenue and profit reflecting reduced activity levels and increased competition. Braemar Engineering, largely providing engineering consultancy to the LNG marketplace, had an excellent year on the back of major contract work. Braemar Adjusting and Braemar Salvage Association, providing surveying and adjusting services to the insurance marketplace, both also showed strong year on year progress on the back of stronger and bigger teams. Braemar Howells, our environmental business, did not have any major emergency work and performed in line with the prior year.

Revenue for the Logistics division rose by 9% to £42.4million mostly on the back of an improvement in freight forwarding business.  Underlying operating profit at £2.3million reflected a strong focus on costs that will continue to benefit the year ahead. Despite this focus on costs we have increased headcount where appropriate and these investments have been rewarded with business wins in Houston for the agency business.

Strategic development

Our objective is to build the Braemar corporate brand to be the most valued provider of knowledge and skill-based services to the shipping and offshore markets on a global basis. The merger with ACM, developing stronger broking teams globally, has been a significant step in this direction, but it is far from the last. We will continue to look to expand in all three of our divisions.

Some of our best opportunities may be available in our Shipbroking division as the marketplace continues to consolidate. Following the merger with ACM, we are in a much stronger position to attract individuals, teams and other businesses. We will look to do this when we identify the right value opportunities that we are confident we are able to integrate and derive further value from.

The Technical division is steadily identifying ways of benefitting from the Braemar umbrella. It is now consistently branded and promoted under the "BRAEMAR" brand. We are in the process of rolling out a single accounting system that will provide benefits to each of the five business units and also enable them to exchange information in a consistent and timely manner. We will build further on this division as and when the opportunities arise.

The Logistics division has used the Braemar presence in Houston to help establish an office there, which is now winning business. We will continue to look at ways of leveraging the Group's scale and geographic coverage to help the expansion of the division. The Tours business which was non-core was sold in April 2014.

In a business that is totally dependent on its people we have increased our resourcing behind talent recruitment and retention.

Chairman Succession

Finally, I would like to express my thanks to Sir Graham Hearne for his Chairmanship of the Board.  Graham joined the Board in 1999 becoming Chairman in 2002.  He played a key role in the merger of Braemar with Seascope, oversaw the diversification of strategy and most recently the merger of Braemar with ACM.  His contribution to Braemar has been immense and we have been very fortunate to benefit from his incisive wisdom and vast experience over the years.

I am now looking forward to working with David Moorhouse and with our new Board to lead the next phase of Braemar's development.

James Kidwell

Chief Executive

18 May 2015

REVIEW OF OPERATIONS

Shipbroking

The Shipbroking division reported revenue up 31% to £53.6million and underlying operating profit which has more than doubled that achieved in 2013/14 to £5.6million, following the merger with ACM and the resulting synergies.

Deep Sea Tankers

The respective Braemar and ACM Deep Sea dirty and clean desks have now been fully integrated as planned, and have enhanced the market coverage around the world. The major office locations are London and Singapore, and we also have teams operating from Beijing, Mumbai, Dubai, Connecticut and Houston. In the second half of the year, OPEC did not seek to cut production to maintain the price of crude oil which has meant that oil supply has continued to improve and the demand for VLCC's and Suezmaxes, in particular, has been consistently strong. Owners have enjoyed the highest freight rates for more than 5 years and in the first quarter of 2015 VLCC earnings were approximately $60,000 per day as compared with around $20,000 per day for much of the last few years. The Clean trades have enjoyed a significant improvement in product carrier demand as the price of crude fell, refinery margins improved and activity increased. The renewed demand and strength in the tanker markets along with an expectation of future volatility has also acted as a stimulus to the long term period market and our experienced team has been successful in concluding business for the forward order book.  The ACM merger brought with it a 50% share in a Freight Forward Agreement (FFA) desk.  This desk also had a good second half on the back of increased volatility in the market.

Specialised Tankers

Specialised Tankers covers the transportation of LNG, LPG, petrochemical gases, chemicals and smaller parcels of products. The LNG team, which operates from London and Singapore performed well increasing their transaction numbers and also concluding significant newbuilding business. The Gas and small tanker teams which are based in London are, post-merger, bigger and have a wider market coverage. During the year the petrochemical gas team has been involved in special long term projects to assist major petrochemical companies securing their future feedstock needs. European spot activity was quite soft for much of 2014 although refinery activity has been stronger in the latter half of the financial year.

Offshore

Our Offshore department had another good year working from London, Aberdeen and Singapore. Both chartering activity (mainly of anchor handlers and platform supply vessels) and project business was good. However, the fall in the oil price in the second half has caused the exploration and production industry to re-evaluate their budgets and curtail exploration activity which has led to a fall in market sentiment and freight rates. Undoubtedly the outlook for the offshore market in 2015/6 is challenging, with an expectation of lower activity and rates which is in part cushioned by a good forward order book.

Dry Bulk

The Dry Cargo desk predominantly operates from the Far East with our Australian and Singapore offices the most notable contributors. We are active in all major market categories - Cape, Panamax and Supra/Handysize - and in the early part of 2014 the freight rates were reasonable in most sectors. Chinese iron ore demand is a key driver of the Cape market and the significant increase in new mines particularly in Australia and Brazil has driven the ore price down over the course of the year which has generally been supportive for demand. However, the continued flow of new tonnage into the market and the slowdown in the growth rate in China has exacerbated the over-supply of dry bulk tonnage and in the final quarter of 2014 freight rates fell by an average of at least 20% and still remain low. An increase in the scrapping of older vessels is needed to correct the imbalance and while we have begun to see this in 2015, the full unwind of excess supply is likely to take some time. 

Sale and Purchase

Sale and purchase income was higher than last year mainly due to an increase in second hand business across the tanker, bulk carrier and container vessel categories. Second hand tanker values have appreciated quite significantly over the last year in line with the growth in earnings. However, the reverse trend has been evident for bulk carriers, especially in the last 6 months as their earnings dipped. Newbuilding prices have fallen somewhat over the course of the last year. Demolition was steady for much of 2014 but has picked up strongly in 2015 as older bulkers have been scrapped.

Technical

The division reported revenue up 9% on the prior year at £49.9million as a result of strong growth in Engineering, Adjusting and Braemar SA. Operating profit at £6.0million was £0.9million lower reflecting margin pressure and lower activity in Offshore.

Braemar Offshore

The fall in the oil price in the latter half of 2014 caused a slowdown in worldwide offshore oil and gas exploration activity, and after an excellent performance in 2013, Braemar Offshore's revenue was lower. The company remains a key player in the Asia Pacific region in both the marine warranty survey and engineering consultancy markets and has continued to win important business, notwithstanding the industry slowdown. However, market conditions were and continue to be tough and pricing is very competitive. Nevertheless Braemar Offshore is involved with several long term energy projects which underpin its business and enable it to continue to pursue a long term expansion plan in the region.It now has 160 highly skilled staff employed across its eight offices in the Far East.

Braemar Engineering

Braemar Engineering continued to build on a strong result in 2013/14 reporting higher revenue and profits in 2014/15 which are attributable to an increase in both the marine and shore based LNG consulting. The team in the UK has underlined its reputation as a world leader in LNG vessel engineering and has progressed well with the three-year project for the design, site supervision and crew training for six LNG carrier newbuildings. In the first half, this project moved from the design stage to the construction supervision stage as planned. The office in Houston has also seen solid growth and was appointed to the role of Owner's Engineers to a significant LNG Bunkering and Fuelling project which is aimed at supplying LNG to vessels for use as bunker fuel. Towards the end of the year, we announced our exclusive involvement in the marketing and development of a new cost-effective technology for the design of an LNG containment system. Braemar Engineering will derive revenue next year from the initial development phase of this project. The combination of skills across the two locations will contribute to the overall growth of the business.

Braemar Adjusting

The Adjusting business has performed well in the year and despite the fall in oil price affecting activity in the oil sector in the latter part of the year revenue from Adjusting has increased in comparison to previous years. The increase in revenue is largely attributed to the ability of the business to retain and expand its market share in existing markets as well as to increase its presence in new areas of operation. The business has carried out a significant recruitment drive and has restructured some areas of the organisation over the past 18 months. This has resulted in a higher level of professional staff at the end of the year compared to the start of the year supported by a lower level of support staff.   In the US, in response to relatively flat activity levels in the Gulf of Mexico, Adjusting has expanded its operation in the North Eastern states to capitalise on the existing refining, petrochemical and power sectors and the expanding shale plays.   We restructured an underperforming Brazilian operation, during the second half of the year and are already seeing improvements in this region.  Performances from the offices in London, Singapore and Calgary were strong and in particular our office in Dubai had a successful second full year of operation. 

Braemar SA

Braemar SA performed well in the year and reported a further circa 15% improvement in profitability compared to prior year.  Although the number of surveys undertaken was lower than the previous year, reflecting a general trend for fewer casualty claims within the Hull & Machinery market, an increase in the number of consultancy assignments, project cargo surveys, and the more complex Hull & Machinery cases contributed to a higher level of revenue. The business has a wide network of offices and the performance across the different locations varied with a lower level of activity in the South East Asia region, where trading conditions are challenging, offset by an improved performance in the UK and Europe. The business also increased its workforce which underlines its commitment to growth and to supporting its global client base, and to maintaining the technical standards of its staff and strengthening succession planning.

Braemar Howells

Braemar Howells carried out a routine level of business during the year with no major incidents undertaken. The business continues to pride itself on its core skill of providing a 24/7 response service to incidents requiring specialist knowledge and was successfully reaccredited to ISO 9001, 14001 and OHSAS 18001 during the year. Braemar Howells division with its UK bases strategically positioned around the country gained its 12th consecutive safety award in 2014. Internationally, the business continues to maintain its presence in West and Central Africa which provides consultancy and hire of oil spill response equipment. It has now opened a new office in Perth, Western Australia to provide consultancy services, including the design and implementation of MARPOL waste reception facilities which are aimed at preventing and minimising the pollution from ships.

Logistics

Cory Brothers increased revenue and divisional operating profit due to stronger than expected volumes from the Freight Forwarding business despite the competitive market place. We carried out a cost reduction programme and management restructuring during the year in order to structure the business efficiently for the future. In the first half of the year we disposed of the non-core cruise tours business.

Port Agency

The Ship agency business services UK ports, the port of Singapore, and has recently expanded into North America with a new office in Houston. The agency business has joint arrangements with many agency partners in particular in Brazil and Gibraltar.  The Global Hub business continues to grow through its blue chip customer base. The underlying UK port agency market has been challenging, but our market share has increased and ship numbers and profitability have been maintained. In the second half, markets showed signs of improvement and we are seeking to build our market share in 2015/16, as well as growing a presence in North America and continued growth of the Global Hub business.

Forwarding and Logistics

Cory Logistics was able to sustain its position in key business areas, with growth in new services as well as the existing Contract business which was achieved despite a market back drop of volatile sea freight rates.  The number of forwarding jobs increased by 20% and the Liner business provided support for 533 calls during the year.

The division's strategy includes expansion into European markets, continued growth of existing core areas which include contract logistics, import and exports, plus newer services such as "reefer" refrigeration containers. The focus remains on providing clients with exceptional customer service while targeting regional and industry-specific growth segments. 

FINANCIAL REVIEW

Divisional highlights

Overview

Group revenue increased compared to 2013/14, primarily as a result of the merger with ACM which contributed seven months of revenue in the year, but also due to increase in revenue from both the Technical and Logistics divisions each growing by 9%. Operating profit margin has improved significantly in the Shipbroking division following the actions taken after completion of the merger to integrate the teams and reduce cost, and also in the Logistics division which has reduced its cost base. In the Technical division, operating profit margin has reduced in comparison to last year due to a change in mix of business.

Acquisition - ACM Shipping Group plc

On 25 July 2014 we completed the acquisition of ACM Shipping Group plc for a total consideration of £50.9million, made up of £40.8million of which was paid through the issue of 8,093,610 shares and £10.1million in cash. The acquisition of ACM generated goodwill of £45.9million and an intangible asset of £2.8million in relation to the forward book of business that ACM held at 25 July 2014. The primary driver behind the acquisition of ACM was the strategy of strengthening the teams of people in the Shipbroking division and as a consequence the majority of the consideration of the transaction has been assessed as goodwill which represents the value of the ACM staff and their contribution to the new larger and stronger business that has been created. During the year, £1.4million has been amortised in relation to the intangible asset. This will reduce significantly in future years due to the phasing of the revenue that will be recognised from the forward book.

Exceptional and acquisition related items

2014/15 has been a year of significant change for the Group with a number of restructuring projects carried out across all divisions, the most significant being the merger of our Shipbroking division with ACM. As a consequence a significant amount of cost and profit have been recognised within exceptional and acquisition related items in the year. The pre-tax net cost of all items was £6.2million.

The acquisition of ACM itself incurred transaction costs of £1.2million. Intrinsically linked to the merger was a share plan that was put in place to retain key staff. This share plan will bear a cost for the next few years and will be categorised as acquisition related expenses in future annual and interim reports. The charge in 2014/15 was £0.8million and will be £1.5million in 2015/16, £1.6million in 2016/17 and after that will reduce as the share awards start to vest. Finally, a charge of £1.8 million has been incurred in the year in relation to intangible assets arising from the acquisition of ACM as well as acquisitions from previous years.

In addition, the Group has charged £6.9million in relation to the restructure of the Shipbroking division which includes redundancy payments, retention bonuses, the closure of smaller offices and the provision for onerous lease contracts. Restructuring projects in the Group's other divisions have also incurred costs of £0.8million which have been charged within exceptional and acquisition related items in the year.

Finally, following the Group's relocation of its head office in London, it disposed of its long leasehold property. After accounting for the costs of disposal the Group has recognised a profit on disposal of £5.4million as an exceptional item.

Direct and operating costs

Cost of sales comprises freight and haulage costs incurred in the Logistics division, payments to sub-contractors and materials, and other costs directly associated with the revenue to which they relate. The level of costs has increased during the year due to the higher level of business generated by our Forwarding and Liner business in our Logistics division and also the higher level of work undertaken by the Engineering business in our Technical division. Operating costs have also increased due to the inclusion of ACM.

Central costs increased during the year partly as a function of having a larger Board to oversee the merger of Braemar and ACM in the Shipbroking division, and also due to extra resource put in place to support Group wide projects. The size of the Board will reduce in 2015/16.

Finance Costs and Joint Ventures

The increased net finance cost for the year of £0.3million (2014: £0.2million income) reflects the facility taken out for the ACM merger. The joint venture with Quincannon ceased during the year and we made a small loss on disposal.

Balance sheet

Net assets at 28 February 2015 were £104.3million (2014: £65.3million), the increase mainly reflecting the £45.9million of goodwill recognised from acquiring ACM, but there are also other changes to the composition of the Group balance sheet. The acquisition also led to an increase in working capital items which is representative of the higher revenue.

Borrowings and cash

The Group has bank facilities of £15million comprising a revolving facility of £10million and an amortising term loan of £5million that is repayable at £450k each quarter. This facility was established at the time of the ACM merger to enable the payment of the £10.1million portion of the consideration and to facilitate a higher level of capital expenditure (£4.9million, 2014: £1.3million) in the year associated with office relocation and fit-out. At the year end the Group had net cash of £7.2million made up of £16.3million of cash and £9.1million of drawings of the facility. A significant portion of the Group cash balances are trading balances overseas to fund local operations.

The normal pattern of cash for the Group is for more cash to be generated in the second half of the year than in the first half when payments are made for staff bonuses and the final dividend is paid to shareholders.

Retirement benefits

As part of the acquisition of ACM, the Group acquired a defined benefit pension scheme. This scheme has a net liability of £1.5million which is recorded on the balance sheet at 28 February 2015 and is similar to the level at the date of acquisition (£1.4million). The scheme is closed to new members and currently has 4 active members. We are currently in the process of agreeing scheme specific funding with the pension trustees which will result in an annual cash contribution to the scheme. The current level of contributions is £0.3million annually.

Foreign exchange

The US dollar exchange rate relative to sterling moved by 8% in the year from US$1.68/£ at the start of the year to US$1.55/£ at the end of the year. The average rate of exchange allowing for our forward hedge policy was $1.64/£ (2014: $1.58/£). A significant proportion of the Group's revenue is earned in US dollars and the movement of the exchange rate has impacted earnings to some extent. However, the Group has maintained its treasury policy during the year to mitigate the full impact of the movement in the US dollar and at the end of the year held $12million of forward cover at an average rate of $1.56/£1.

Taxation

The Group's effective tax rate in relation to continuing operations in 2014/15 was 26.5% (2014: 25.7%). The rate is higher than the UK standard rate of corporation tax of 21% due to disallowed expenses and in the current year, also includes the effect of tax deducted on repatriating cash from overseas, without which the effective tax rate would be 24.8%. The Group's profits are spread across a number of jurisdictions with both higher and lower tax rates. In the UK it is expected that the further reduction of the rate of corporation tax from 21% to 20% in 2015/16 will reduce the effective tax rate in future years. Following the merger with ACM it is also expected that a higher proportion of the Group's earnings will be generated in the UK which will change the balance of the effective tax rate towards the UK rate.

Earnings per share

The earnings per share calculation is adjusted for the issuance of shares relative to the ACM acquisition. The weighted average number of shares used within the calculation increases from 20,929,329 to 25,754,240. As a result our adjusted EPS before exceptional and acquisition related items is 31.3p (2014: 33.5p). After exceptional and acquisition related items it is 10.0p (2014: 21.4p).

Martin Beer

Finance Director and Company Secretary

18 May 2015

Braemar Shipping Services PLC

Audited Consolidated Income statement for the year ended 28 February 2015

Audited Consolidated Statement of comprehensive income for the year ended 28 February 2015

Braemar Shipping Services PLC

Audited Consolidated Balance sheet as at 28 February 2015

Braemar Shipping Services PLC

Audited Consolidated Cash flow statement for the year ended 28 February 2015

Braemar Shipping Services PLC

Audited Consolidated Statement of Changes in Total Equity for the year ended 28 February 2015

Braemar Shipping Services PLC

Notes to the financial statements                  

Note 1 - General Information

The financial information set out above does not constitute the company's statutory accounts for the years ended 28 February 2015 or 28 February 2014 but is derived from those accounts. Statutory accounts for 2014 have been delivered to the registrar of companies, and those for 2015 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Note 2 - Accounting policies

Whilst the financial information included in this preliminary announcement has been prepared in accordance with International Financial Reporting Standards (IFRSs) adopted for use in the European Union, this announcement does not itself contain sufficient information to comply with IFRSs.  The company expects to distribute full accounts that comply with IFRSs as adopted by the EU on 27 May 2015.

Note 3 - Segmental results

(¹) During the year, management assessed that the activities of the Group that were previously reported within the Environmental division should be included within the results of the Technical division.  The comparative results have been restated to reflect this change.

Braemar Shipping Services PLC

Notes to the financial statements                  

Note 4 - Exceptional and acquisition related items

2014/15 has been a year of significant change for the Group with a number of restructuring projects carried out across all divisions, the most significant being the merger of our Shipbroking division with ACM. As a consequence a significant amount of cost and profit have been recognised within exceptional and acquisition related items in the year.

The following is a summary of our exceptional and acquisition related items incurred:

Acquisition related expenditure

Restructuring costs

Profit or loss on disposal of property, plant and equipment

The acquisition of ACM itself incurred transaction costs of £1.2million. Intrinsically linked to the merger was a restrictive share plan that was put in place to retain key staff. This share plan will bear a cost for the next few years and will be categorised as acquisition related expenses in future annual and interim reports. The charge in 2014/15 was £0.8million. Finally, a charge of £1.8 million has been incurred in the year in relation to intangible assets arising from the acquisition of ACM as well as acquisitions from previous years.

The Group has charged £6.9million in relation to the restructure of the Shipbroking division which includes redundancy payments, retention bonuses, the closure of smaller offices and the provision for onerous lease contracts. Restructuring projects in the Group's other divisions have also incurred costs of £0.8million which have been charged to exceptional and acquisition related items in the year.

Finally, following the Group's relocation of its head office in London, it disposed of its long leasehold property. After accounting for the costs of disposal the Group has recognised a profit on disposal of £5.4million as an exceptional and acquisition related item.

Note 5 - Dividend

The proposed final dividend of 17.0 pence per share (2014: final 17.0 pence) takes the total dividend for the year to 26.0 pence (2014: 26.0 pence). The cost of the final dividend will be approximately £5million (2014: £3.6million) based on 29.2m shares (which excludes shares held in the ESOP for which the dividend has been waived).

Note 6 - Earnings per share

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, excluding 814,367 ordinary shares held by the employee share trusts (2014: 659,682) which are treated as cancelled. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive ordinary shares. The Group has one class of potential dilutive ordinary shares being those granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year.

Note 7 - Business Combinations

On 25 July 2014 the Company acquired 100% of the share capital of ACM Shipping Group plc for consideration of £50.4million.

The fair value of the assets and liabilities acquired was:

In addition, the Group issued 125,621 shares which replaced the shares held in the EBT operated by ACM Shipping Group plc.

Goodwill is attributable to ACM's staff. The intangible asset of £2,783,000 relates to the forward book acquired.

Following the acquisition of ACM, the businesses have merged across the various locations and as a consequence it is not possible to separately identify the revenue and profits made from the date of acquisition until the end of the financial year.  In the period from 1 March 2014 to the date of acquisition, ACM Shipping Group Plc reported revenue of £9.8 million and operating profit of £1.0 million. The results of ACM Shipping Group plc are included in the Shipbroking division (see note 3).

In addition, to the above, the Group has charged £776,000 in relation to the Group's restrictive share plan. This plan was put in place to retain key staff.

Furthermore, in respect of the acquisition of Lawrence Holt Limited in October 2013, an amount of £97,000 has been paid against the deferred consideration balance.

Note 8 - Reconciliation of operating profit to net cash flow from operating activities