At the Annual General Meeting of the Company to be held at 12 Noon today, James Kidwell, the Company's Chief Executive, will make the following statement:
We recently announced our results for the year ended 29 February 2016, which showed the benefits of our strategy to diversify and grow the business. As anticipated, our market conditions have continued to be challenging. However, we believe that the balance between our divisions creates greater stability which will enable us to continue to build the Group in the long term through organic and acquisitive growth.
We do not believe that demand for our services will be materially impacted by the recent referendum result and the associated market volatility, however there may be second order economic effects that are difficult to foresee at this time. At present, we do not believe that the referendum result will affect our long term strategy.
Trading for the three months ended 31 May 2016 in the Shipbroking division followed the wider market patterns. The tanker markets, the largest sector of our Shipbroking business, have continued to experience high trading volumes as a result of increased worldwide oil production and refining activity but, as expected, tanker freight rates have been lower. Our sale and purchase desk remains good, with similar levels of activity to the previous year. The dry cargo market continues to suffer from a surplus of tonnage and a slow-down in demand and, while our volume of transactions remains good, the rates remain low. Our Offshore desk remains weak due to low activity levels in the sector. We expect the difficulties in these markets to take some time to correct and we will continue to ensure that we are appropriately structured to respond to these market conditions.
The performance of the Technical Services division for the three months to 31 May 2016 was behind the equivalent period last year. In particular, Braemar Offshore and Braemar Engineering are suffering the consequence of project delays and reduced activity, which are currently impacting most service providers to the energy sector. We have implemented aspects of our existing succession plan making several senior management changes throughout the division, including the recently announced appointment of Grant Smith as Managing Director of the Technical Division. The leadership team will ensure that we are appropriately structured for the prevailing market conditions and broaden our service offering to strengthen the division over the longer term.
The ship agency business started the year well as a result of new client business and an active tanker market. Although this was partially offset by a slower freight forwarding result, overall divisional performance is in line with the Board's expectations.
Although the short term outlook remains difficult we expect that our diverse portfolio will provide opportunities to build the Group further and our recently completed bank facility of £30 million puts us in a good position to take advantage of these.
Source: Braemar Shipping Services
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