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Chairman and Chief Executive's statement Results The Group delivered a profit before tax and amortisation of £3.3 million (2008: £3.4 million) for the first six months on revenue of US$19.8 million (2008: US$24.4 million). The Board is encouraged by this start to the year, particularly following the expected significant decline in freight rates, and we are confident that we will meet the Group's expectations for the full year. The fall in revenue solely arose from the spot desk. Following an exceptionally good period, freight rates have fallen and the Group's average freight rate per fixture fell by 64%. However, ACM continues to increase its share of the spot market and the number of spot fixtures was up by 11% compared to the same period in 2008. This has put the Group in a strong position to benefit when freight rates recover. The other divisions of the Group have continued to see growth. Revenue from time charter fixtures, which provides ACM with a forward order book and visibility on its future earnings, was up 6% to US$7.1 million (2008: US$6.7 million). The Group's time charter forward order book currently stands at US$23.6 million compared to US$25.3 million at the year end, 31 March 2009. This decline is due to a number of ship owners not wishing to fix their ships for long periods of time whilst freight rates are at a low level. ACM expects to quickly build this back up when rates improve. Revenue from the sale and purchase desk continues to deliver being up 56% to US$3.4 million (2008:$US2.2 million) as the Group maintained a steady rate of contracts for the period. The Group's joint venture with GFI Group, Inc. to conduct derivative brokerage performed strongly during the period. It increased its customer base and there was a significant rise in the volume of deals and the contribution to profit was up 28%. This venture continues to add significant value to ACM. The Group benefitted from the strengthening of the US dollar during the period. In pound sterling terms revenue was down just 1% compared to 19% in US$ terms. The average rate for the period was US$1.59 compared to US$1.93 last year. This in effect added £2.2 million to the Group's top line and £0.9 million to profit before taxation. The success of ACM is dependent on its team of high quality brokers. To ensure the Group is well positioned for the future it has invested in its people both in the UK and overseas. During the period ACM opened offices in Moscow and Beijing. These steps increased administration costs in line with the strategic objective of delivering rewards in the future. The Group remains cash generative and ended the period with a strong cash position of £6.4 million and no debt. The pension deficit for the defined benefit scheme has increased to £2.5 million from £1.2 million. This is mainly due to corporate bond yields falling. On the back of a full actuarial valuation as at 31 March 2008 the Group agreed to make additional contributions of £300,000 per annum to the pension scheme. The calculation of the deficit as at 30 September 2009 does not affect the funding plan or the charge to the income statement. Dividend ACM continues to maintain a progressive dividend policy. The Group is paying an interim dividend of 2.75 pence per share for the first six months of the year. This is a 10% increase over the previous period and is covered 4.8 times on first half adjusted earnings. This dividend is payable on 26 February 2010 to shareholders on the register as at 22 January 2010. The full year dividend to 31 March 2009 was 8.5 pence per share. The Market During the period ACM continued to focus on the wet tanker market. There is still strong global demand for oil and the situation is becoming more optimistic as the world economy recovers, this recovery is likely to assist the strengthening of freight rates. Medium and long term forecasts show a continuing increase in the world demand for oil, particularly in the Far East. ACM is not currently involved in the dry bulk market but continues to review opportunities to enter into this market in a controlled and measured way. Strategy ACM continues to be a growing and profitable wet tanker broker. The Group has built a solid structure for future growth. In line with its strategy to become an international diversified and integrated shipping services broker, ACM continues to expand its services and global reach. Since the Group floated in December 2006 it has opened offices in India, Shanghai, Beijing and Moscow as well as having made two strategic and complementary acquisitions. ACM has expanded its teams both in the UK and in Singapore and has also started a gas desk. All of these developments are key to the Group's future growth. The Group is continuously looking for opportunities for growth and continues to consider expanding into new shipping sectors including the dry cargo market. Whilst expansion in these areas remains a key consideration, the Group maintains a prudent view to growing its service offering and will not make changes that could jeopardise the underlying profitable and growing business. Outlook Despite the decline in freight rates, ACM had an encouraging start to the financial year, the volume of trades held up and the Group has continued to increase its market share. Based on current trading conditions the Group expects the full year performance to be in line with the Board's expectations. The Group's strategy has proven to be highly successful and has laid the foundations for future growth. The Board is confident that in continuing to execute its strategy of expanding its offering through the addition of new services and offices in new locations, particularly in the Far East, that it should enhance shareholder returns over the medium and longer term future. ACM Shipping Group plc |
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ACM Shipping Group plc (AIM:ACMG), a leading international tanker broker, today announces its interim results for the half year ended 30 September 2009