Latest Results
Preliminary Results for the year ended 31 March 2008
ACM Shipping Group plc (AIM:ACMG), a leading international tanker broker, today announces its Preliminary Results for the year ended 31 March 2008.
DownloadThe Full Results are available to download in PDF format |
Highlights
- Total revenue up 54% on 2007 to US$39.3 million (2007: US$25.6 million)
- Like for like revenue up 22% on 2007
- Profit before amortisation and taxation up 49% to £5.5 million (2007: £3.7 million)
- Final dividend of 4 pence per share
- 12% increase in the number of spot fixtures contracted during the period
- Time charter forward order book at record level of US$24.7 million, up 27% on 2007
- Acquisition of ACM Shipping Services in December 2007 for £9.6 million
- Sale and purchase forward order book at US$7.5 million
- Basic EPS up 30%, diluted EPS up 29% while adjusted diluted EPS is up 49%
- New office formally opened in India
Subsequent Highlights
- Acquisition of Harris & Dixon Shipbrokers for a total cash consideration of £2.5 million
Commenting on the results, Johnny Plumbe, Chief Executive of ACM Shipping Group plc, said: "ACM has now been listed on AIM for 18 months and we are very pleased with our progress. As well as having made two important strategic acquisitions we have increased our revenue from organic growth. Our global presence is growing and we are confident that this base will give us a successful future."
Chairman's Statement
This is our first full reporting year following ACM's flotation on AIM in December 2006. I am delighted to report that the Group has had an extremely successful year growing substantially both organically and through acquisition. In December 2007, we further increased our global presence by opening an office in India, which complements our Singapore and Chinese offices.
Results
Our revenue from ship broking increased in US dollar terms by 54% to US$39.3 million (2007: US$25.6 million). Excluding the effect of the acquisition of ACM Shipping Services Limited (“ACMSS”), like for like revenue in dollars increased by 22% on 2007. We fixed a record number of ships and our forward income from time charters as at 31 March 2008 is at US$24.7million up 27% on last year. Sale and purchase had an exceptional year and the current forward order book is valued at US$7.5million. The weakness of the US dollar continued to have an adverse effect on our sterling equivalent revenues. Notwithstanding this weakness profit before amortisation and taxation was up 49% to £5.5 million (2007: £3.7 million) with adjusted diluted earnings per share (at 22.2 pence) up 49% on the preceding year. The business has remained extremely cash generative. The acquisition cost of ACMSS was £9.6 million paid by a mix of shares and cash.
Dividend
ACM is committed to a progressive dividend policy. The Directors are recommending a final dividend of 4 pence per share in respect of the year to 31 March 2008, making a total of 6 pence per share for the year. The dividend is payable on 9 October 2008 to shareholders on the register as at 12 September 2008.
Employees
Since our inception 26 years ago, the Group has developed a very successful business with an extensive and loyal list of clients. It has been particularly encouraging that we have been able to expand our teams with a number of well known senior brokers in the industry. We look forward to continuing to build on this strong platform. It is appropriate to extend our thanks to all members of our staff for their wholehearted commitment to our continued success.
Strategy
ACM's strategy is to expand into an international diversified and integrated shipping services provider, whilst maintaining its position as one of the most profitable firms in the tanker broking business. Our aim is to gain market share by continuing to build an expert team of brokers to penetrate new regional markets and other shipping sectors in order to grow the business with existing and new clients.
Current trading
The start to the current year has been encouraging. Freight rates have been firm and the number of spot deals contracted has continued to rise. Despite the world economic problems, the prospect for the tanker freight market in the near term is good as global demand for transporting oil continues to be positive. Given the strength of our forward order book and the new areas ACM are moving into, the Board looks to the future with confidence.
Peter Sechiari
Chairman
23 June 2008
Chief Executive's Review
We are extremely pleased with the progress the Group has made during the year, both in terms of results for the year and investment in our future. Our US dollar income, including four months of our new acquisition, ACMSS, was up 54% on the previous year. Excluding this acquisition our dollar income grew 22%. This follows an 8% increase in the previous year. We have also continued to invest for organic growth in terms of brokers both in the UK and overseas.
Spot brokerage
The core of ACM's business is spot brokerage, which involves the hire of a vessel for a single voyage. The number of spot deals fixed during the year is an important performance indicator of the business. This grew 12% year on year following a 15% increase the previous year. Total spot income in US dollars showed a 14% uplift. Our average freight income per deal increased slightly during the year. This was due to a significant increase in rates in the last few months of the year following a period of relatively subdued rates in the previous months.
Time charter
Our time charter business, which involves the long term hire of tankers, had an excellent year. Income in US dollars for the year showed a 45% increase over the previous year. An important benefit of having a strong time charter ethos is that it gives the Group a forward order book. At the year end, ACM's forward order book stood at over US$24.7 million and showed an increase of 27% on the previous year. This income includes certain contracts which run to 2018, but US$9 million of this will be invoiced in the 2008/9 financial year.
Sale and purchase
Our sale and purchase business was considerably strengthened during the year by our acquisition of ACMSS in December 2007. ACMSS business had an exceptional period of trading following the acquisition. Although we do not expect this level of performance to continue, we believe it continues to be a sound investment and was an important strategic move for the Group which will strengthen ACM globally.
Overseas operations and new markets
We have continued to expand our business globally. Our Indian office, which formally opened for business in December 2007, has already started to show very encouraging signs of its ability to increase our global market share of the tanker business. This follows a year of becoming established and training our employees. Our Singapore office continued to support our UK office and also increased its own direct business. In China we are in process of changing our operation from a joint venture to a wholly owned and controlled operation. We believe that this approach will increase our opportunities to do business in the new building arena in this important market.
In early 2007 we started to become involved in the gas shipping market. This business is now showing signs of genuine progress and we are confident about a successful future for ACM in this market.
Joint venture
Our joint venture with GFI Group, Inc. to conduct derivative brokerage had another good year although the contribution to profit was slightly below last year at £0.9 million.
Acquisition of Harris & Dixon Shipbrokers
Today we have separately announced the acquisition of the ship broking business of Harris & Dixon Shipbrokers Limited. This acquisition is an excellent strategic step for ACM as they specialise in the one area of tanker broking that ACM is not currently involved in. Furthermore the deal will quickly become earnings enhancing. Harris & Dixon have an extremely experienced broking team who are committed to the company for the long term; they bring with them a solid forward book and the combined customer bases will provide further exciting trading opportunities for the Group.
Outlook
This has been an exciting period for ACM, both organically and through acquisition. Our international footprint is growing and we are confident that this base along with synergies gained through acquisition will help drive profitability throughout the organisation.
Johnny Plumbe
Chief Executive
23 June 2008
Financial review
Profit and earnings
Profit before taxation for the year was £4.8 million (2007: £3.7 million). After adding back amortisation of £0.7 million on intangible assets arising out of the acquisition during the year, adjusted profit before tax and amortisation was £5.5 million. This represents an increase of 49% over the previous year.
Earnings per share increased from 14.9 pence in 2007 to 19.3 pence basic, 19.2 pence diluted, 22.3 p adjusted and 22.2 pence on an adjusted diluted basis.
Foreign exchange
The bulk of the Group's income is denominated in US dollars. The US dollar further weakened during the year. The average effective exchange rate for the year was US$2.00 compared with US$1.94 for the previous year, while the rate at 31 March 2008 was US$1.99 compared with US$1.96 for the previous year. The Group's revenue would have been higher by approximately £0.5 million if the 2007/8 US dollar income had been translated at 2006/7 exchange rates.
Dividends
The Directors are recommending a final dividend of 4 pence per share in respect of the year to 31 March 2008 at a total value of £691,000. Together with an interim dividend of 2 pence paid during the year, the total dividend in respect of the year would be 6 pence at a total value of £1,037,000.
Cash flow
One of the key attributes of the Group is its cash generative nature. Cash generated from operating activities was £4.7 million (2007: inflow £0.3 million, low due to settlement of pre IPO bonuses). This inflow excludes a further £1.3 million (2007: £1.4 million) received from joint ventures and associates. The cash balance at the year end was £3.6 million (2007: £0.6 million). However it should be noted that deferred consideration on the acquisition of ACMSS of £2.9 million was paid on 3 April 2008. The cash outflow for this acquisition during the year was £0.2 million, being £2.8 million cash consideration less £2.6 million cash acquired.
Balance Sheet
Included within non-current assets is £8.7 million for intangible assets which resulted from the acquisition of ACMSS.
Share capital has increased as 1,963,003 shares were issued as part consideration for the acquisition of ACMSS. A share premium account of £3.7million has been set up as a result of this acquisition, being the difference in value between the nominal value of the shares and the market value at the date of the acquisition.
The pension deficit for the defined benefit scheme has reduced to £1.0 million from £1.5 million. A deferred tax asset of £0.3 million (2007: £0.5 million) exists as a result of this liability. This scheme is closed to new members.
The value of net assets at the balance sheet date was £7.9 million (2007: £1.5 million).
Risk management
The Board seeks to identify and monitor risks facing the business.
Foreign exchange risk; the majority of the Group's income is denominated in US dollars and the rate of exchange relative to sterling can have an effect on the performance of the Group. The Group uses foreign exchange instruments to manage this risk. At March 31 2008 the Group had forward foreign exchange contracts in place to sell US$6.4 million (2007: nil) into sterling. The Board has introduced a policy to continually have some forward cover in place to help manage this risk.
Liquidity risk; at 31 March the Group did not hold any net debt but had overdraft facilities with its bank to allow flexibility in its cash management and also to meet the Group's commitments to pay deferred consideration in respect of the acquisition.
Interest rate risk; the Group has exposure to movements in interest rates in respect of its deposits and also in respect of the overdraft when utilised. All deposits are made with reputable banks.
International Accounting Standards
These financial statements are the first annual statements compiled in accordance with International Financial Reporting Standards. The 2007 accounts have been restated to comply with these. However this adoption did not result in substantial changes. A full explanation of the changes, together with appropriate reconciliations, were provided in the Interim Statement issued on 6 December 2007.
Ian Hartley
Finance Director
23 June 2008
Consolidated income statement
Year ended 31 March 2008
| Note | 2008 | 2007 | |
| (restated) | |||
| £'000 | £'000 | ||
| Revenue | 2 | 19,638 | 13,502 |
| Administrative expenses | (15,709) | (11,521) | |
| Amortisation of intangible assets | 4 | (664) | - |
| 3,265 | 1,981 | ||
| Share of operating profits in joint ventures and associates |
3 | 1,308 | 1,480 |
| Operating profit | 4,573 | 3,461 | |
| Net interest receivable | 242 | 215 | |
| Profit before taxation | 4,815 | 3,676 | |
| Taxation | 1,744 | 1,432 | |
| Profit for the year | 3,071 | 2,244 |
All of the activities of the ACM Shipping Group are classed as continuing.
| Earnings per share | 5 | ||
| Basic | 19.3p | 14.9p | |
| Fully Diluted | 19.2p | 14.9p | |
Group statement of recognised income and expense
Year ended 31 March 2008
| 2008 | 2007 | |
| (restated) | ||
| £'000 | £'000 | |
| Profit for the year | 3,071 | 2,244 |
| Actuarial gain in respect of defined benefit pension scheme | 323 | 297 |
| Deferred tax in respect of defined benefit pension scheme | (118) | (89) |
| Exchange differences on translation of foreign operations | 21 | 17 |
| Currency reserve | - | 5 |
| Deferred tax in respect of currency reserve | - | - |
| Total recognised income and expense | 3,297 | 2,474 |
Consolidated balance sheet
As at 31 March 2008
| Note | 2008 | 2007 | |
| (restated) | |||
| £'000 | £'000 | ||
| Non-current assets | |||
| Property and equipment | 484 | 445 | |
| Intangible assets | 4 | 8,702 | - |
| Investments | 1,509 | 1,981 | |
| Deferred tax asset | 293 | 457 | |
| 10,988 | 2,883 | ||
| Current assets | |||
| Trade and other receivables | 3,979 | 2,807 | |
| Cash and cash equivalents | 3,565 | 566 | |
| 7,544 | 3,373 | ||
| TOTAL ASSETS | 18,532 | 6,256 | |
| Current liabilities | |||
| Trade and other payables | (8,097) | (2,669) | |
| Current tax payable | (1,131) | (571) | |
| (9,228) | (3,240) | ||
| Non-current liabilities | |||
| Deferred tax liabilities | (394) | (34) | |
| Pension liability | (1,045) | (1,522) | |
| (1,439) | (1,556) | ||
| TOTAL LIABILITIES | (10,667) | (4,796) | |
| NET ASSETS | 7,865 | 1,460 | |
| Capital and reserves | |||
| Share capital | 173 | 153 | |
| Share premium account | 3,730 | - | |
| Merger reserve | (135) | (135) | |
| Retained earnings | 4,087 | 1,442 | |
| Other reserves | 10 | - | |
| TOTAL EQUITY | 7,865 | 1,460 |
Group cash flow statement
Year ended 31 March 2008
| 2008 | 2007 | |
| (restated) | ||
| £'000 | £'000 | |
| Profit before taxation | 4,815 | 3,676 |
| Depreciation | 166 | 143 |
| Interest receivable | (242) | (215) |
| Shares of operating profits in joint ventures and associates | (1,308) | (1,480) |
| Amortisation of intangibles | 664 | - |
| Share based payments | 9 | - |
| Operating cash flow before changes in working capital and provisions | 4,104 | 2,124 |
| (Increase) in debtors | (394) | (376) |
| Increase/(decrease) in creditors | 1,019 | (1,400) |
| Provision for pension scheme costs | 167 | 188 |
| Pension scheme contributions paid | (221) | (253) |
| Cash generated from operating activities | 4,675 | 283 |
| Taxation paid | (2,063) | (1,007) |
| Net cash from operating activities | 2,612 | (724) |
| Cash flows from investing activities | ||
| Purchase of property and equipment | (195) | (64) |
| Investment | - | (1,006) |
| Acquisition of subsidiary, net of cash acquired | (232) | - |
| Dividends received from associates | 240 | 502 |
| Amounts received from joint ventures | 1,101 | 919 |
| Interest received | 125 | 110 |
| Net cash used in investing activities | 1,039 | 461 |
| Cash flows from financing activities | ||
| Dividends paid | (652) | (500) |
| Issue of new shares, less share issue costs | - | 3 |
| Net cash used in financing activities | (652) | (497) |
| Net increase/(decrease) in cash and cash equivalents | 2,999 | (760) |
| Cash and cash equivalents at the beginning of the year | 566 | 1,326 |
| Cash and cash equivalents at the end of the year | 3,565 | 566 |
Notes
The notes to the financial statement are available in the PDF download.
Page last updated: 23 June 2008