Look at its structure, and it’s clear Braemar Shipping Services (BMS) is designed to sail on an even keel. But in the six months to August, strong trading in the core (and lower-margin) shipbroking division was again driven by the higher-margin and lumpy financial business. Revenue was flat for the barely profitable logistics arm, while the engineering practice posted a £0.5m underlying loss on revenues of £1.9m
Accordingly, there are good reasons to believe the group’s dividend is not yet shipshape and Bristol fashion. Underlying pre-tax profit was down 14 per cent, and there was also a decrease in success fees within the transactional division – down to £1.4m, from £2.6m a year ago.
The health of the balance sheet has also deteriorated. Net debt – which excludes £6.7m of convertible notes – more than doubled to £18.8m, as corporate and restructuring costs increased the reliance on a revolving credit facility. Although the “outturn for the full financial year” is expected to meet market expectations, the outlook pointed to tough trading ahead, even as volatility within shipping markets typically leads to greater demand for broking services.
Broker FinnCap expects adjusted earnings per share of 22.3p for the year to February 2020, rising to 24.4p in FY2021.
| BRAEMAR SHIPPING SERVICES (BMS) | ||||
| ORD PRICE: | 219p | MARKET VALUE: | £69.1m | |
| TOUCH: | 215-220p | 12-MONTH HIGH: | 248p | LOW: 160p |
| DIVIDEND YIELD: | 6.8% | PE RATIO: | na | |
| NET ASSET VALUE: | 171p* | NET DEBT^: | 35% | |
| Half-year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 57.4 | -2.8 | -9.0 | 5.0 |
| 2019 | 59.5 | -1.3 | -4.4 | 5.0 |
| % change | +4 | - | - | |
| Ex-div: | 31 Oct | |||
| Payment: | 13 Dec | |||
| *Includes intangible assets of £86.2m, or 273p a share. ^Excludes lease liabilities. | ||||
