Interim Results

SEASCOPE SHIPPING HOLDINGS PLC 7 October 1999 Pre-tax up 32% against difficult market Interim dividend maintained Cautious outlook for full year Seascope Shipping Holdings PLC today announced interim results for the six months ended 30 June 1999. Seascope provides specialised broking and consultancy services to the international shipowning, shipbuilding and oil industries. Against a market background overshadowed by Opec production constraints, low oil prices and excess tanker capacity, Seascope increased turnover and profits, a performance supported by the completion of new building contracts commissioned in earlier years. FINANCIAL HIGHLIGHTS 6 months 6 months to 30 June 1999 to 30 June 1998 £'000 £'000 Turnover 5,284 3,894 Pre-tax profit 1,320 1,001 Earnings per share 11.96p 9.33p Dividend per share 5.00p 5.00p Tom Young, Chairman, said: 'As we expected 1999 has been a difficult year, but this is a good performance against a poor market which has affected all of the sectors in which we operate. It underlines the benefit to the company of secure earnings from its long-term charter business. 'While we expect that trading conditions may start to improve in the last quarter of 1999 and into 2000, the current uncertainty within a number of our markets make it even more difficult then usual to predict the outcome for the current year. On the basis of the business contracted as at today for completion prior to the year end, it presently appears that we will not achieve original market expectations. Furthermore, in advance of clear evidence of changing sentiment in our core markets, we remain cautious in our internal planning as to the scale of the expected upturn in activity and its impact during financial year 2000. We have decided to maintain the level of the interim dividend reflecting the outlook for the full year.' For further information, contact: Seascope Shipping Holdings 0171 235 2022 Tom Young, Chairman Duncan Hill, Chief Executive Grandfield 0171 417 4170 Michael Henman/Clare Abbot Chairman's Review For the six months ended 30 June 1999 Highlights * First half pre-tax profits increased by 32% in difficult market conditions * Interim dividend of 5.0p per share (same). * Positive cash flow with liquid resources at 30th June up to £3.0m from £2.4m in 1998. * Cautious outlook for full year. * Sir Graham Hearne joins Board as a non-executive director Introduction I am pleased to announce improved results for the six months to 30 June 1999. These were achieved against deteriorating market conditions, which are affecting the main sections of the Company's business. The results reflect in part the delivery of new-building vessels contracted in the more benign commercial climate of 1997 and 1998. The outlook for most of the second six months of the year may continue to be affected by adverse trading factors. These include reduced activity in the offshore sectors of the North Sea as a reaction to the low oil price during the period June 1998 to June 1999 and over capacity in the tanker market primarily due to OPEC production cuts. In both cases these have resulted in weak freight rates. We expect that trading conditions should start to improve shortly, particularly as global oil demand continues to grow, and the recovery in the Far Eastern economies gather momentum. Review of Activities Offshore newbuilding deliveries and long term employment contracts resulted in a particularly successful first half for our Offshore division, but the recent strong increase in oil prices will have to prove reasonably sustainable before strong demand for rigs and their support vessels is going to return. However, prospects for a recovery sooner rather than later appear reasonable, as alluded to in my last report. Our Sale and Purchase and Newbuilding activities are following the same pattern as last year, namely a number of significant contracts concluded in the earlier part of the year will not be completed, and vessels handed over, until the second half. Tanker rates started to suffer from the Spring when OPEC introduced and maintained production constraints forcing the supply and demand - particularly for VLCCs - into a negative position for tanker owners. However, encouraging new long terms charters were concluded, which will contribute to future stability of earnings. Market share in all three brokerage activities mentioned above has grown this year which bodes well for the future and is a clear sign of commitment and effort from our employees. Progress has been achieved in building the financial services team within Seascope Shipping Capital Services and Wavespec Limited has integrated well. However both these activities are in development phase and neither company made a contribution to profits during the period under review. Interim Dividend In view of the weak shipping markets, we feel it would be imprudent to increase last year's interim dividend of 5.00pence per ordinary share. The dividend will be paid on 19 November 1999 to shareholders on the register on 22 October 1999 with an ex-dividend date of 18 October 1999. Financial The net profit before taxation of £1.32 million (1998: £1.001 million) is calculated before any performance-linked bonus provision. A performance-linked bonus only becomes payable in the event that the full year earnings per share exceed those of the prior year. The increase in administrative expenses at £3.543 million (1998: £2.937) reflects the investment we have made in building Capital Services and Wavespec both of which are included in the figures for the first time. The underlying increase on the previous core business, which includes the taking of more space at Grosvenor Place London, amounted to 8.9%. Cash balances at the 30 June 1999 remain strong at £2.995 million (1998: £2.397). Interest received in the six months at £0.054 million (1998: £0.063) reflects the downward trend in interest rates. Earnings per share fully diluted for the six months improved to 11.96p (1998: 9.33p). The Company's exposure to both the US$ and Norwegian Krone exchange rate remain firmly controlled by planned forward currency sales with average conversion rates achieved of US$1.61 (1998: 1.65) and NKR 12.39 (1998: 12.80) to £1. Prospects As stated earlier, our current expectation is that trading conditions may start to improve during the last quarter of 1999 and that this trend will continue into 2000. This is based on an expected( if unofficial) marginal relaxation of the OPEC production cuts, the world economy continuing to improve and crude oil inventories declining in the industrialised countries as winter draws in. Any increase in crude oil production should be reflected in extra tanker demand thereby lifting freight rates as vessel supply and demand come back into balance. Additionally, this situation should stabilise vessel values and assist sale & purchase and newbuilding activity. Furthermore it is not expected that a marginal relaxation by OPEC will have a major downwards impact on oil prices. Thus we also expect an increase in offshore oil drilling, exploration and development work, all of which will benefit our Offshore activities. The integration of Wavespec and Capital Services should start to bring positive results shortly, as outsourcing continues to be a policy of many of our group clients. The current uncertainty in a number of our markets makes it even more difficult than usual to predict the outcome for the current year but based upon business contracted as at today for completion prior to the year end, it presently appears we will not achieve original market expectations. Furthermore, in advance of clear evidence of changing sentiment in our core markets, we remain cautious in our internal planning as to the scale of the expected upturn in activity and its impact during financial year 2000. Board Changes With effect from today, we are delighted to welcome Sir Graham Hearne to our Board as a non-executive director. His well known business acumen and oil industry experience can only add strength to our Board. As stated at the Company's last AGM, Mr. A. B. Marshall will stand down as a non-executive director on 31st December 1999. Also as advised at the AGM, I have with effect from 1st October 1999 handed over the role of Chief Executive to Duncan Hill. I will continue as Chairman, concentrating on corporate strategy and longer term earnings for the benefit of the Company. Group Strategy Your Board's strategy remains that of seeking opportunities for growth in our existing business and to lessen our exposure to the cyclical nature of the spot charter markets both by securing long term contracts and through further acquisitions. In connection with the latter, we have an active ongoing dialogue with potential candidates both within our existing activities and in related areas of the marine services sector. T.D.H. Young SEASCOPE SHIPPING HOLDINGS PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30TH JUNE 1999 6 months to 6 months to 12 months to 30-06-1999 30-06-1998 31-12-1998 £'000 £'000 £'000 Turnover 5,284 3,894 9,454 Cost of sales (463) - - Administrative expenses (3,543) (2,937) (6,317) ---------- -------------------- Operating profit 1,278 957 3,137 Interest receivable and similar income 54 63 116 Interest payable and similar charges (12) (19) (33) ---------- ---------- -------- Profit on ordinary activities before taxation 1,320 1,001 3,220 Taxation on profit on ordinary activities (454) (325) (1,082) ---------- ------------------- Profit on ordinary activities after taxation 866 676 2,138 Dividends (including dividends in respect of Non-equity shares) (320) (310) (930) ---------- ---------- -------- Retained profit for the period 546 366 1,208 Accumulated loss brought forward (1,612) (2,821) (2,820) ----------- --------- ---------- Retained loss carried forward (1,066) (2455) (1,612) ====== ====== ===== Earnings per ordinary share Basic 13.54p 10.90p 34.49p Earnings per ordinary share Fully Diluted 11.96p 9.33p 29.53p SEASCOPE SHIPPING HOLDINGS PLC CONSOLIDATED BALANCE SHEET AS AT 30TH JUNE 1999 Consolidated Consolidated Consolidated 30-06-1999 30-06-1998 30-12-1998 £'000 £'000 £'000 Fixed Assets Goodwill 180 - 63 Tangible assets 539 576 509 Investments 620 619 620 ---------- ---------- -------- 1,339 1,195 1,192 Current Assets Stock 30 - - Debtors 2,472 1,849 2,285 Cash at bank and in hand 2,995 2,397 2,861 ---------- ------------ -------- 5,497 4,246 5,146 Creditors: amounts falling due within one year (2,711) (2,462) (2,821) ---------- ------------ -------- Net current assets/(liabilities) 2,786 1,784 2,325 ---------- ----------- -------- Total assets less current liabilities 4,125 2,979 3,517 Creditors: amounts falling due after more than one year (135) (540) (235) ----------- ---------- --------- Net Assets 3,990 2,439 3,282 ====== ====== ===== Capital and Reserves Called up share capital 647 627 627 Capital Redemption Reserve 396 396 396 Share Premium 4,013 3,871 3,871 Profit and Loss account (1,066) (2,455) (1,612) ----------- ---------- --------- Total shareholders' funds 3,990 2,439 3,282 ====== ====== ===== Comprising: Equity shareholders' funds 3,990 2,439 3,282 SEASCOPE SHIPPING HOLDINGS PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30TH JUNE 1999 6 Months to 6 Months to 12 Months to 30-06-1999 30-06-1998 31-12-1998 £'000 £'000 £'000 Net cash inflow from operating activities 1,226 313 2,267 Returns on investments and servicing of finance Interest received 56 63 114 Interest paid (1) - - Interest element of finance lease rental payments (11) (18) (32) --------- --------- --------- Net cash inflow from returns on investments and servicing of finance 44 45 82 Taxation UK Corporation tax paid (77) (60) (1,089) Capital expenditure and financial investment Payments to acquire tangible fixed assets (115) (29) (83) Receipts from sale of tangible fixed assets - - 3 -------- -------- --------- Net cash (outflow) from investing activities (115) (29) (80) Acquisition and disposal Purchase of subsidiary (279) - (71) Cash acquired with subsidiary 17 - 3 -------- -------- -------- Net cash (outflow) for acquisitions (262) - (68) Equity dividends paid (620) (546) (856) -------- -------- --------- Cash inflow/(outflow) before financing 196 (277) 256 Financing Payment of principal under finance lease (62) (85) (154) -------- ------- --------- (62) (85) (154) -------- ------- --------- Increase/(Decrease) in cash 134 (362) 102 ====== ===== ===== SEASCOPE SHIPPING HOLDINGS PLC NOTES TO THE ACCOUNTS FOR THE SIX MONTHS ENDED 30TH JUNE 1999 1 Accounting policies There have been no changes to the accounting policies set out in the 1998 Report and Accounts. 2 Financial Information The financial information for the half years ended 30 June 1998 and 30 June 1999 is unaudited. The financial information for the year ended 31 December 1998 does not constitute full accounts but is an extract from the Company's accounts for the year which have been delivered to the Registrar of Companies and on which the auditors gave an unqualified report. The results for the six months 30 June 1999 were approved by the board on 5 October 1999. 3 Dividends The interim dividend of 5.00p per ordinary share (1998: 5.00p) will be paid on 19 November 1999 to shareholders on the register at the close of business on 29 October 1999. 4 Earnings Per Share The basic earnings per share figure to 30 June 1999 is based on the weighted average of shares in issue during the six months and reflects the 199,915 share options converted and admitted to the stock exchange on the 17 June 1999. The actual number of shares in issue at 30 June 1999 was 6,472,045 (1998: 6,272,130). The Fully diluted number of shares remains unaltered at the 30 June 1999 at 7,313,200 (1998: 7,313,200) with the number of share options outstanding at the date reduced to 842,155 (1998: 1,042 070). 5 Taxation The taxation charge is calculated by applying the rate of 34% to the profit on ordinary activities before taxation, being the Directors' best estimate of the annual tax rate. 6 Fixed Assets-Investments The Investment figure of £620,000 is comprised as follows: Unlisted shares at cost 555,007 Interest in own shares 65,308 The unlisted shares include investments in subsidiary undertakings and 1,000 £1 ordinary shares in The London Tanker Broker Panel Limited, a company registered in England. The London Tanker Broker Panel Limited has 6,000 ordinary shares in issue. The interest in own shares represents the assets of the Employee Share Ownership plan. 7 Share Options There are outstanding options over 842,155 of the company's Ordinary shares. These options are held by directors and employees of the company and other group companies and are exercisable between 27 March 1999 and 27 March 2003 at an exercise price of £0.812p per share. SEASCOPE SHIPPING HOLDINGS PLC NOTES TO THE ACCOUNTS FOR THE SIX MONTHS ENDED 30TH JUNE 1999 8 Forward foreign exchange commitments At 30th June 1999 the group had entered into forward contracts for the sale of US dollars amounting to $2,000,000 (1998: $2,250,000) and Norwegian Kroner amounting to Nil (1998: Nil) in the ordinary course of business. 9 Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities 1999 1998 1998 30 June 30 June 31 Dec £'000 £'000 £'000 Operating profit 1,278 956 3,137 Depreciation charge 86 92 173 Goodwill amortisation 5 - 1 Increase in stock (30) - - Decrease/(Increase) in debtors 170 (195) (723) Decrease in creditors (283) (540) (321) ------- --------- -------- 1,226 313 2,267 ==== ===== ======= 10 Reconciliation of Net Cash Flow to Movement in Net Funds 1999 1998 1998 30 June 30 June 31 Dec £'000 £'000 £'000 Increase/(Decrease) in cash 134 (362) 102 Cash inflow from decrease in debt 62 85 154 ------- -------- -------- Change in net funds resulting From cash flows 196 (277) 256 Non cash items New Finance Leases - (94) (94) Disposal Finance Leases 38 75 114 ------- -------- ------- Movement in net funds 234 (296) 276 Net funds at beginning of period 2,500 2,223 2,224 -------- --------- ------- Net funds at end of period 2,734 1,927 2,500 ===== ===== ======== 11Major non-cash transactions During the period the group entered into finance lease arrangements with a capital value at the inception of the leases of £Nil (1998: £94,414). SEASCOPE SHIPPING HOLDINGS PLC NOTES TO THE ACCOUNTS FOR THE SIX MONTHS ENDED 30TH JUNE 1999 12Employee Share Ownership Plan An Employee Share Ownership Plan (ESOP) was established on 23 January 1995. The ESOP has been set up to purchase shares in the Company. These shares, once purchased, are held on trust by the Trustee of the ESOP, Grange Trustees Limited, for the benefit of the employees. The shares are purchased by the Trustee when they become available. As at 30 June 1999, the ESOP had purchased 73,510 Ordinary Shares of 10p each at a cost of £65,308 including stamp duty associated with the purchase. The funding for the purchase has been provided by the Company in the form of an interest free loan and the trustees have contracted with the Company to waive the ESOP's right to receive dividends. The fees charged by the trustee's for the operation of the ESOP trust are paid by the Company and charged to the profit and loss account as they fall due. The shares owned by the ESOP had a market value at the 30 June 1999 of £155,841 (1998: £184,877). The distribution of these shares will be determined by the Remuneration Committee and none of the shares had been allocated or distributed at 30 June 1999 or at 7 October 1999.

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