London-listed Braemar Shipping Services is lining up more investment to grow its core shipbroking business.
The company said key areas will be the US market and offshore renewables, while securities operations will be expanded to complement the physical markets already covered.
And Braemar also announced that chairman Ronald Series has decided to step down, having joined in April 2019 and stepped up to become executive chairman as the company sought a successor to retired chief executive James Kidwell that July.
With James Gundy now installed in the CEO role, the chairman felt "this was an appropriate time to step down", the company said.
He will stay on until a new chairman has been appointed.
New markets explored
In a trading update for the year ended 28 February, Braemar said new geographies and markets are being identified in which to invest and further increase the scale and success of the business.
"Opportunities have also been identified for further technology products to offer our clients as part of the recent collaboration with Zuma Labs and in support of efforts within the shipping industry to introduce carbon offsetting for voyages," the shipbroker added.
The group is now looking to strengthen its balance sheet further in the coming months, in order to improve its ability and flexibility to refocus and invest in the shipbroking division.
Net bank debt has fallen to around £10m ($13.9m), down from £21m a year ago.
The target is to bring the net debt-to-Ebitda ratio below 1.5 times. The figure was 1.7 times at the end of February.
No dividend for now
Braemar will not be paying a dividend until the balance sheet has been strengthened sufficiently to support growth ambitions, the company said.
Strong trading in the last two months has meant that underlying performance for the year will be above market expectations, Braemar added.
Revenue has been higher than expected and cost levels continue to benefit from lower company expenses due to the Covid-19 restrictions.
Underlying operating profit is expected to be at least £8.7m, compared to £9.6m a year ago.
The shipbroking division, in particular, traded well in the second half.
S&P beats expectations
Market share was maintained in weaker tanker markets, and dry cargo and sale-and-purchase desks outperformed expectations with stronger performances than in the first half of the year, Braemar said.
The forward orderbook is expected to close the financial year at around $43m, compared with $50m last year, which was unusually high due to the strong tanker market in the months running up to the end of February 2020.
Braemar said it is confident that shipping markets will steadily recover from the Covid-19 slowdown over the coming year. Freight forward rates in Braemar's markets are already indicating increases later in 2021.
CEO Gundy said: "I am looking forward to completing the rationalisation of the historic divisional structure and the continuation of the growth of the shipbroking business at the heart of Braemar’s future growth strategy.
"I would also like to pay tribute to all of our employees who have maintained an excellent service to our clients during the unprecedented challenges caused by the Covid-19 pandemic, and I am looking forward to welcoming them back into our offices as soon as it is safe to do so."
Naves payments deferred
Financial division Braemar Naves earned several transaction-based success fees in the second half of the year.
The deal flow pipeline is strong and there are "multiple current mandates and live transactions that are expected to close in the coming months", the broker said.
Braemar has agreed to reschedule payments still owed to the previous owners of Naves, which it bought in 2017.
More than €2.9m ($3.4m) due for payment in the next 12 months will be rescheduled to be paid no earlier than September 2025.
Braemar will also use new stock to pay another €0.75m.
Integration of finance division
The financial division is being integrated into shipbroking to "further improve collaboration and enhance client service", the company said.
Braemar also announced a deal with Vertom UCS Holdings to form a joint venture with its Cory Brothers logistics arm, creating a port agency business with stronger reach and breadth than either business alone.
The two companies already work together with smaller-scale joint ventures in the Amsterdam and Rotterdam region and in Gibraltar.
