ACM Shipping Group Plc : Interim Results

RNS Number : 9211S

ACM Shipping Group PLC

29 November 2011

Press Release

29 November 2011

ACM Shipping Group plc

("ACM" or the "Group")

Interim Results

ACM Shipping Group plc (AIM:ACMG), a leading international shipbroker, today announces its interim results for the half year ended 30 September 2011.

Overview

•	Revenue decreased by 9% to £13.2 million (H1 2010: £14.5 million) mainly due to adverse currency movements, with revenue in US$ only down by 3% to US$21.4 million (H1 2010: US$22.0 million)
•	Profit before amortisation, impairment and taxation adjusted for minority interest of £2.3 million (H1 2010: £3.2 million)
•	Adjusted earnings per share of 8.5 pence (H1 2010: 12.5 pence) (adjusted for non-cash impacts of amortisation and impairment of intangible assets)
•	Interim dividend increased to 3.15 pence per share (H1 2010: 3 pence per share)
•	Strong cash position of £4.9 million at 30 September 2011 and no debt (£5.0 million as at 31 March 2011)
•	Progress continues on global expansion plans
•	Successful move to new offices in London to allow for further expansion

"The Group has continued to perform steadily and the Board remains confident of the medium and longer-term prospects for ACM, despite the current weak freight rates.  The Group's global network and structure are well positioned to capitalise on current markets and on the upturn in the market when it occurs.  Although the period under review has presented some challenges, the Board believes that the Group has the right strategy and team in place for long term growth."

For further information, please contact:

ACM Shipping Group plc
Johnny Plumbe, Chief Executive	Tel: [phone]

Media enquiries:

Abchurch
Henry Harrison-Topham / Joanne Shears	Tel: [phone]

Chairman and Chief Executive's Statement

During the period, the Group has continued to make progress, and ACM's strategy remains firmly on track.  ACM has produced decent results despite the ongoing challenges of the markets and has positioned itself to take advantage of strengthening shipping markets when they occur. 

Results

The Group's overall revenue for the period decreased by 9% to £13.2 million (H1 2010: £14.5 million), mainly due to adverse currency movements with revenue in US$ at US$21.4 million (H1 2010: US$22.0 million), a decrease of just 3%.  Profit before amortisation, impairment and taxation adjusting for minority interest was £2.3 million as per note 2(c) (H1 2010: £3.2 million).  Earnings per share were 8.5 pence on an adjusted basis (adjusted for the non-cash impact of amortisation and impairment of intangible assets) (H1 2010: 12.5 pence).

The tanker spot business performed well in a subdued market, with US$ income level year-on-year.  The small tanker part of the business performed extremely well and continued to grow its volume, although freight rates have continued to show weakness for most of the period. 

The Group's revenue from time charter business decreased by 19% compared to the same period last year, as it continues to prove difficult to conclude new long term deals with ship owners reluctant to commit at current low market rates. 

As announced on 6 October 2011, the sale and purchase business was impacted during the period by a number of personnel departures, and as a result revenue declined by 50% on H1 2010.  The Group is making a one-off £6.85 million write-down of intangible assets (a non-cash item) capitalised in relation to the acquisition of ACM Shipping Services Limited in 2007.   

During the period, the dry cargo division achieved revenue of US$2.8 million, compared to US$1.4 million for the same period last year.  ACM's dry cargo desk globally is now gaining momentum in a very challenging market, and the number of deals is increasing significantly. 

The Group's cash position remains strong at £4.9 million as at 30 September 2011 (£5.0 million as at 31 March 2011), with no debt.  The Company moved into new London offices in August 2011. This move involved spending £1 million on fitting out the offices and new computer equipment.  This project was completed successfully and there will be no further significant expenditure. 

Interim dividend

Given the Board's longer term confidence in the business, the interim dividend is to be increased to 3.15 pence per share (H1 2010: 3 pence).  This dividend is well covered by the Group's normalised earnings and reflects the strong longer term prospects for the Group. The dividend will be paid on 24 February 2012 to those shareholders on the register at 20 January 2012. 

The total dividend paid in respect of the year to 31 March 2011 was 10 pence per share.

The Market

Freight rates in all sectors of the market have continued to see volatility and have been at historically low levels.

Global oil demand has continued to grow during the period.  Industry forecasts for 2012 expect this growth to accelerate and to be above previous years.  This, combined with historically low oil stocks, offers an increase in trading volumes for oil.  However, there are still a number of ship new builds to be delivered that will have to be absorbed by the increase in shipping volumes. 

In the dry cargo sector of the market, industry forecasts expect an increase in the volume of iron ore and coal to be shipped.  This is a positive indicator for shipbroking but there are also a number of vessels on order in this market. 

Strategy

The Group continues to make good strategic progress and the Board is confident that ACM is well positioned to take advantage of the market upturn when it occurs.  Despite the challenges of the current shipping environment, the Board believes that the fundamentals of the business remain robust.  

The Board is restructuring and recruiting in the sale and purchase division, ensuring that this is in line with the Group's global network, and is confident that ACM will maintain its position in this market. 

The Board believes that the dry cargo division will continue to make progress, although at a slower rate than originally anticipated due to the global economic conditions. 

Overall, the structure of the Group is robust and the global offices are working together well.  The key strategic objectives continue to be met across the divisions, and when freight rates improve the Group is well positioned to capitalise on this.  

Outlook

Despite the challenges that the whole sector has faced during the period, ACM's overall strategy remains on track and has led to a robust cash generating business incorporating highly motivated people.    

The Board remains optimistic about the medium and longer-term prospects for the Group, as validated by the progressive dividend policy.  Whilst freight rates remain low at present, ACM has the right global structure and team in place to capitalise on current markets and strengthening markets.

Peter Sechiari	Johnny Plumbe
Chairman	Chief Executive
29 November 2011	29 November 2011

Unaudited consolidated income statement

		Half year to	Half year to	Year to
		30 September	30 September	31 March
	Note	2011	2010	2011
		£000	£000	£000
Revenue	2	13,218	14,475	29,257
Administrative expenses		(11,848)	(12,111)	(24,469)
Amortisation of intangible assets		(199)	(312)	(800)
Impairment of intangible assets		(6,850)	-	-
		(5,679)	2,052	3,988
Share of operating profit in joint venture
		573	645	1,174
Operating (loss) /profit		(5,106)	2,697	5,162
Net interest		144	65	138
(Loss)/Profit before taxation	2	(4,962)	2,762	5,300
Taxation	3	(548)	(829)	(1,558)
(Loss)/Profit for the period		(5,510)	1,933	3,742
Minority interest		138	109	287
(Loss)/Profit attributable to equity shareholders		(5,372)	2,042	4,029

All of the activities are classed as continuing.

(Loss)/Earnings per share	4
Basic		(28.3p)	11.3p	21.7p
Fully diluted		(28.2)p	11.2p	21.6p

Unaudited consolidated statement of comprehensive income

	Half year to	Half year to	Year to
	30 September	30 September	31 March
	2011	2010	2011
	£000	£000	£000
(Loss)/Profit attributable to equity shareholders	(5,372)	2,042	4,029
Actuarial (loss)/profit in respect of defined benefit pension scheme	(1,598)	(437)	1,337
Deferred tax in respect of defined benefit pension scheme	415	99	(374)
Exchange differences on translation of foreign operations	(172)	189	454
Currency reserve	(104)	200	159
Deferred tax in respect of currency reserve	27	(56)	(45)
Total comprehensive incomeattributable to equity shareholders	(6,804)	2,037	5,560

Unaudited consolidated balance sheet

		30 September	30 September	31 March
		2011	2010	2011
		£000	£000	£000
Non-current assets
Property, plant and equipment		1,353	405	450
Intangible assets		8,564	15,892	15,805
Investments		1,050	1,050	1,050
Deferred tax asset		828	766	373
		11,795	18,113	17,678
Current assets
Trade and other receivables		6,046	6,317	5,291
Cash and cash equivalents		4,906	5,834	4,955
		10,952	12,151	10,246
TOTAL ASSETS		22,747	30,264	27,924
Current liabilities
Trade and other payables		(6,879)	(7,992)	(6,321)
Current tax payable		(645)	(1,023)	(750)
Dividend payable		(1,331)	(1,283)	-
		(8,855)	(10,298)	(7,071)
Non-current liabilities
Deferred tax liabilities		(623)	(414)	(649)
Pension liability		(1,629)	(2,301)	(319)
		(2,252)	(2,715)	(968)
TOTAL LIABILITIES		(11,107)	(13,013)	(8,039)
NET ASSETS		11,640	17,251	19,885
Capital and reserves
Share capital		196	195	196
Share premium account		6,823	6,760	6,823
Retained earnings		5,662	10,735	13,720
Other reserves		(1,041)	(439)	(854)
TOTAL EQUITY		11,640	17,251	19,885

Unaudited Group cash flow statement

	Half year to	Half year to	Year to
	30 September	30 September	31 March
	2011	2010	2011
	£000	£000	£000
(Loss)/Profit before taxation	(4,962)	2,762	5,300
Depreciation	161	105	233
Net interest	(144)	(64)	(138)
Share of operating profit in joint venture	(573)	(645)	(1,174)
Amortisation of intangible assets	199	312	800
Impairment of intangible assets	6,850	-	-
Share-based payments	145	209	267
Operating cash flow before changes in working capital and provisions	1,676	2,679	5,288
(Increase)/decrease in debtors	(755)	(467)	559
Increase/(decrease) in creditors	464	2,126	409
Provision for pension scheme costs	79	77	162

1.       Accounting policies

These statements have been prepared in accordance the Companies Act and those EU endorsed IFRS standards and IFRIC interpretations issued and effective as at the time of preparing these statements. 

All principal accounting policies of the Group are consistent with those set out in the Annual Report and Accounts for 2011 and have been consistently applied to all periods presented.

2.        Segmental analysis

The Group operates in one business sector and does not report internally any segmental information other than revenue streams. As a result no additional business sector information is provided. Business is the Group's primary reporting segment. Geographical information is not produced and is not readily available. In view of management, the cost of developing this information would be excessive.

a) Analysis of Group revenue:

	Half year to	Half year to	Year to
	30 September	30 September	31 March
	2011	2010	2011
	£000	£000	£000
Tanker broking:
Spot brokerage	6,888	7,353	13,530
Time charter	2,732	3,587	6,560
Demurrage	877	541	1,285
Sale and purchase	981	2,080	5,140
	11,478	13,561	26,515
Dry cargo broking	1,740	914	2,742
	13,218	14,475	29,257

b) Analysis of Group (loss)/profit before taxation and minority interest:

	Half year to	Half year to	Year to
	30 September	30 September	31 March
	2011	2010	2011
	£000	£000	£000
Tanker broking	(4,705)	3,024	6,150
Dry cargo broking	(401)	(327)	(988)
	(5,106)	2,697	5,162
Interest	144	65	138
(Loss)/Profit before taxation	(4,962)	2,762	5,300

c) Analysis of Group profit before amortisation taxation adjusted for minority interest:

	Half year to	Half year to	Year to
	30 September	30 September	31 March
	2011	2010	2011
	£000	£000	£000
(Loss)/Profit before taxation	(4,962)	2,762	5,300
Add back:
Amortisation of intangible assets	199	312	800
Impairment of intangible assets	6,850	-	-
Minority Interest	184	149	382
	2,271	3,223	6,482

Tanker broking	2,268	3,182	6,466
Dry cargo broking	(141)	(24)	(122)
	2,127	3,158	6,344
Interest	144	65	138
	2,271	3,223	6,482

3.       Taxation

The tax charge for the half year to 30 September 2011 has been provided at the estimated rate of 29% (2010:30%) applicable for the year. The tax charge is calculated on the (loss)/profit excluding impairment of intangible assets as there is no taxation impact on this item.

4.       Earnings per share

(Loss)/Earnings per share (EPS) is calculated by dividing the (loss)/profit attributable to equity shareholders in the period ended by the weighted average number of shares in issue during each relevant period.

	Half year to	Half year to	Year to
	30 September	30 September	31 March
	2011	2010	2011
	£000	£000	£000
Earnings
(Loss)/Earnings  for the period	(5,372)	2,042	4,029
Adjust for amortisation of intangibles	199	312	800
Adjust for taxation impact of amortisation of intangibles	(56)	(87)	(234)
Adjust for impairment of intangible assets	6,850	-	-
Earnings for adjusted EPS	1,621	2,267	4,595
Number of shares	Number	Number	Number
Weighted average number of shares	18,981,450	18,116,667	18,545,836
Dilution effect of share plans	63,172	153,676	94,163
Diluted weighted average number of shares	19,044,622	18,270,343	18,639,999
(Loss)/Earnings per share (pence)
Basic	(28.3)	11.3	21.7
Diluted	(28.2)	11.2	21.6
Adjusted	8.5	12.5	24.8
Adjusted diluted	8.5	12.4	24.7

5.       Dividends

The interim dividend for the half year ended 30 September 2010 is 3.15 pence per share payable on 24 February 2012 to shareholders on the register on 20 January 2012.  An interim dividend of 3.00 pence was paid in the previous year which together with a final dividend of 7.00 pence resulted in a total dividend of 10.00 pence in respect of the year to 31 March 2011.

6.         Nature of financial information

The Interim Results announcement set out above does not represent statutory accounts for ACM Shipping Group plc or for any of the entities comprising the ACM Shipping Group.

The Directors

ACM Shipping Group plc

Grand Buildings

1-3 Strand

London

WC2N 5HR

- Ends -

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