Braemar Plc (BMS) Earnings Call Transcript & Summary

Welcome to the Braemar Full Year 2023 and Half 1 2024 results webinar. [Operator Instructions] This webinar is being recorded. I now hand over to James Gundy, CEO. James, over to you.

Good afternoon, everyone, and thank you for joining this afternoon for our '22-'23 full year accounts and our first half 2024. I'm sure -- I'm hoping that you know who I am, if you don't, to quick resume at away. I'm the group CEO of Braemar, and did my whole life into ship broking world. And previous to that was at ACM Shipping and before that was Clarksons. I also want to introduce you my left-hand side, Tris Simmonds, who's our COO and Grant Foley, who is our CFO. I'll let them do a bit of a run down themselves for the meantime, Tris to stay doing a sterling job. Tris?

Yes. Thanks, James. So my background is slightly different from James, is in that I come from the energy and commodity space. James and I actually set up a business with GFI over 20 years ago, which is subsequently something that we've expanded on in the last 5 years, and very much the center of our focus on diversifying into the securities industry.

Good afternoon. I joined the business on the first of August as CFO. My background is predominantly financial services. I spent a lot of time in investment banking and broking, and was the CFO and COO of CMC Markets, which is an online trading business, where I led the IPO and have quite a lot of experience in the public markets.

Fantastic. Right, just a little bit and to add to that, I want to thank Grant as well for coming in on the first of August, been a difficult period, but he's on a sterling job to get through this and get the accounts out, which is the most important thing. So really, from our start executive summary here. We've obviously want to emphasize that our 2023 results were record profits as far as ongoing operating profit. The full year dividend was up again to 33%. You can see that. And you can see we strengthened our liquidity, which Grant will explain further down the line. And from basically the idea was originally coming in as CEO was to sell off some of the other core businesses and concentrate on ship broking alone, and you can see we targeted growth opportunities and we've been successful in doing that. As far as the 2024, once again, the first half performance revenue is up. The growth strategy is maintaining itself and the interim is maintained at 4p, but once again, I want to emphasize the fact that we obviously are going to go for dividend growth there as well. Okay. Now strategic update. This is the bit that we want to sort of emphasize here. Now -- the businesses now has shrunk as far as size, but obviously, we've diversified in the ship broking space, concentrating mainly on the shipbuilding, new building side, S&P side, the financing side, the chartering side and the security side. You can see from where we are on the revenues, the Board increased the global offices 17, it's 15 different sectors. And I think we can safely say that we have a great platform to build our business from where we are today. Now, the 2 years on, as I said earlier, we came in there with a very strong strategy when I came in as CEO back in 2021. And -- it basically was -- the main point was to dispose of noncore businesses. We thought they weren't necessarily complementing the ship broking space, and we had a very strong size 2 build with businesses that we understand. So we're focused on the ship broking basis. We have acquired new businesses, for example, like Southport Maritime and [indiscernible] in Madrid and launched a natural gas and oil derivative desk, all in the last year. And I think down the line, Tris will explain more on what we've done there and where we are on that. But most of all, they are complementing our present business. We have reduced our net debt cut costs, increase the dividend. We now have an Executive Board that fully understands ship broking and at the broking arena, which I personally believe is the right way forward. And now I think we can be asked later on about legacy issues. We've gotten involved in that. That's been removed and moved. We can move forward. We're growing our growth policy. All right. Thanks a lot. Now just regarding that independent investigation is fully completed, it was historical transactions that dated back to 2006 and 2013, we had an independent investigation committee led by our [indiscernible]. We had external advisers, [indiscernible]. We had -- we've gone through everything you possibly can, including our own internal investigation on top of the external, and we now can stay here and say we are looking forward to growing the business and continue growth. Thank you. Now I think you say from what I said earlier, I think you can see the fact that the figures speak for themselves, the revenue is up. But the most important thing is to show that our fixture volume is up as well. A transaction is because it's showing that our market share is increasing with our strategy. So from both from '21 to '23, you can see the increase there. And you can see the first half of '22 to '24, everything is an upward projection. And I think that -- and for us, with a partner, obviously, the recent distractions, it shows that we understand our business, and we show our business model is exactly which way we want to go. All right. Thank you, guys.

Thank you, James. Now I will firstly cover the financial performance for the year ended 28th of February 2023. So if we start with the income statement, revenue was 51% up on the previous year at GBP 152.9 million, with strong performances across all segments. Our Chartering business was up 57%, Investment & Advisory up 40% and Risk Advisory up 42%. Although the group did benefit from a stronger U.S. dollar, overall fixture volumes at 7,716 were 32% higher than the previous year. Given the increase in revenue, the main driver for the increase in operating expenses was broker costs. Underlying operating profit at GBP 20.1 million was double the GBP 10.1 million from the previous year. We had a number of specific items, including a goodwill impairment of GBP 9 million on our corporate finance business and acquisition costs of GBP 2 million, which was partly offset by a gain of GBP 3.6 million on the purchase of Southport Maritime. The Corporate Finance business was acquired in 2017, and given the trading and outlook weaker than expected, the impairment of GBP 9 million was recognized in this period. As a result, statutory profits were GBP 9.5 million, 11% higher than the previous year. Underlying earnings per share at 46.22p was 65% higher than the previous year, and a final dividend of 8p has been proposed at the forthcoming annual general meeting. So total dividends for the year to 12p, a 33% increase on the previous year. If we look at the revenue mix in a little more detail, you can see that revenue grew in all areas of the business with the exception of Corporate Finance. The revenue profile for Corporate Finance is typically more lumpy, and there was fewer amount mandates in the year. With that in mind, we reduced our expectations, as I said, and took the impairment, I mentioned on the previous slide. However, you can see here that the group has a well-balanced revenue mix, and this is building resilience through the cycle. And as we continue to expand our global reach, we are generating more revenue from our offices outside of the United Kingdom. With the acquisition of Southport Maritime and the Madrid Tanker Desk, we will see revenues from outside the U.K. continue to grow in future years. Looking at operating expenses. As I've said, of the increase in cost, the majority was due to increased brokerage costs at GBP 35 million. Of this, GBP 5 million was from the new hires and to cover pay rises, GBP 4 million was increased travel and entertainment, which follows the reduced activity in the prior year as a result of COVID, and the remainder was bonuses. Professional fees increased by GBP 1.6 million, partly due to increased audit and compliance fees. Share-based payments also increased by GBP 1.6 million, and the increase in other was due to IT cost of GBP 1 million, non-broking travel and entertainment of GBP 1 million and nonbroking staff costs of GBP 1 million. Importantly, you can see on this slide that despite the increase in costs, we can see the operational leverage coming through, with operating expenses reducing from 90% of revenue in 2022 to 87% in 2023. The strong trading performance in the year improved the group's liquidity position. Moving from a net debt of GBP 9.3 million in 2022, to a positive cash position of GBP 6.9 million in 2023. During the year, we received GBP 6.5 million from the disposal of Cory Brothers, but this was offset by the acquisition costs of Southport Maritime, GBP 6 million and the Madrid Tanker Desk GBP 1.3 million. Importantly, this provides the business with liquidity for future investment. Looking at the key performance indicators for the year. As I've said, revenue improved strongly over the last 3 years, with 2023 revenue 51% higher than 2022 and 83% higher than revenue in 2021. This improvement in revenue has led to improved revenue per head, based on total average staff numbers at GBP 398,000 for FY '23, this was 45% higher than the previous year. And as the business continues to grow, as I've said, we see the operational leverage coming through, with underlying operating profit margin increasing from 10% to 13%. I just talked about liquidity and finally dividends for the year of 12p, an increase of 33% on the prior year. Now moving on to performance for the 6 months ended the 31st of August 2023. Revenue performance has been strong, 8% higher than the same period last year, 5% up in U.S. dollar terms. Fixture numbers have also increased by 8%. During the period, we saw a very strong performance in our Tanker business, offset by a weaker performance in Dry Cargo. Once again, operating expenses were higher due to broker costs as a result of the increased revenue, as well as the additional operating expenses from the new businesses that we invested in at the end of 2022. In the prior period, the business had a GBP 2 million of foreign exchange translation gain. And in this period, there was an GBP 800,000 loss. So we saw a GBP 2.8 million swing year-on-year. In addition, the business has incurred GBP 900,000 in relation to the Madrid Tanker team that joined the business. This cost will be amortized over 3 years and is disclosed within acquisition-related expenditure. Adjusting for these 2 items, underlying operating profit of GBP 8.4 million is GBP 500,000 or 6% lower than the prior year, due to the increased operating expenses from the investments that were made. Underlying operating profit as reported is GBP 6.7 million, GBP 3.2 million lower than the prior year due to the items that I've explained, the FX swing and the Madrid Tanker costs. Just coming back to Slide 3. Specific items of 4.5 million were incurred in the period, including GBP 2.6 million in relation to acquisitions at GBP 1.4 million in relation to the investigation. As a result, statutory profit before tax was GBP 1.9 million, a decrease of GBP 8.2 million on the prior year. Underlying earnings per share at 17.43p, is 45% lower than the prior year, and an interim dividend of 4p declared. It is unchanged on the prior year, but as James has already said, we maintain our progressive dividend policy for the full year. On this slide, you can really see the growing scale and resilience of the business. Strong performances is in Tankers, which includes the USA and Madrid acquisitions, as well as specialized offshore and securities, more than offset a weaker Dry Cargo market as well as lower revenue in sale and purchase and corporate finance. So that overall, our revenues grew by 8% year-on-year. The reduction in revenues that we see in Dry Cargo is rate driven. Overall fixture numbers are at a similar level to the prior year, and it's just the rates that's driven the decrease in revenue. Sale and purchase as well as corporate finance had a lumpier revenue profile. However, importantly, the pipeline for both of these businesses remains strong. Looking at operating expenses for the first half. As I mentioned, with the increased revenue in hires, broker costs have increased by GBP 3.6 million. Other costs have increased due to share-based payments of GBP 1.2 million and GBP 1 million in costs, relating to the new businesses established in both the ship broking and securities areas. The group's liquidity position has also improved, with net cash of GBP 3.1 million, GBP 1.3 million higher than a year earlier. Now this is lower than the GBP 6.9 million which we reported at the end of February, and that reflects the timing of bonus payments that are paid after the year-end. So typically, we pay bonuses after the year-end, and then we see our cash increase in the second half of the year. Finally, looking at key performance indicators for the first half. As I said, revenues were up 8% on the prior period. Revenue per head has increased slightly, due to the number of people in the business with average head count increasing from 362 to 407. Operating profit margin at 10% is lower than the 16% reported in the prior year. However, adjusting for FX, this is 11% versus 13% in the prior year. Importantly, the forward order book continues to strengthen at $67.2 million, which is 21% higher than it was a year earlier. Liquidity continues to improve, as I discussed, 4p dividend is declared. Although I reiterate, we continue to maintain our progressive dividend policy. Thank you. I will now pass to Tris.

Thanks, Grant. Just going to run you through a few slides here that show how we go about identifying growth opportunities for the business and the kind of metrics that we'll use to evaluate those kind of businesses. So first of all, we use a calculated time line for the delivery of profit enhancement. We very much look for the investment to be accretive to our bottom line in a very short space of time. We're always looking at new product lines, but we also look at ways of enhancing our existing portfolio, with new brokers that can bid in our client base. We're looking for new scalable additions, both geographical and through product diversification. And diversification, we're not just looking at broking businesses. Anything that we consider to be value enhancing to our service, we're interested in. As some of you know, we made investment in a tech company, Zuma Labs, last year, which continues to provide lots of solutions for our desks and customers for sharing market information. So on this next slide, we've broken down 35 areas that we've identified in our business. We've then rated our positioning in these spaces. For example, in the vertical tankers, we consider ourselves to have a strong market position in the U.K., but we still see good opportunities in the rest of the world. Using awareness slide was last year, we saw obvious strong opportunities in the Americas and Europe for tankers, which is the main drivers for our acquisitions of Southport in Americas and Madrid Shipping Advisors in Spain, which -- we show that we've been able to successfully execute a strategy based on spots that we can find in the market. You can also see there are clear verticals such as derivatives, where we see some very strong opportunities. As such, these will become key areas of focus in our strategy. We've already executed some of those. One point to note is that even where we have a strong market position, opportunities can still arise. For example, in Dry Cargo, we were successfully able to recruit a team of 7 Panamax brokers, which strengthened that position in the U.K. even further. On the slide, you can also see some still very clear opportunities in the Americas and the Middle East, across all products, but also further good opportunities in the U.K. from 4 out of 7 verticals. The offshore market also presents much opportunity, as a result of the clear transition to renewable energy and also a resurgence in the oil and gas markets. We're very confident we've established a strong platform across 17 offices that is very much scalable for existing and new products. We've also been growing our midland back-office resource to support the business as shipping navigate its way through a more complex and process-based landscape. On to the next one, please. So just talking a little bit about the Southport and the Madrid acquisitions. Southport, first of all, the acquisition is performing well ahead of our expectations. The addition means that Braemar is now one of the largest fixing brokers in the U.S.A. for AFRA and Suezmax tankers. This is a new business line for us in the U.S. Our U.K. and Singapore VLCC desks have enabled Southport to become very active broker in the U.S. and China VLCC market. That was previously not a feature for them, and very much a key driver of global TC rates now. And the new and wider information through is had direct tangible benefits for many of our desks. Even so far as our JV with GFI benefited tremendously from the information flow from the Southport team. Likewise, looking at Madrid Shipping Advisors, a completely new business like for Braemar, the acquisition is allowed us to work large spanish refiners previously very much a local and closed marketplace that we couldn't get access to. Since inception, they fixed over 350 ships. This is all new business to Braemar. And again, the business works very closely with our offices in Geneva and London, providing invaluable information flow for us and our customers. So just looking at securities, I touched on earlier that James and I started a JV with GE about 20 years ago. That was very much the inflection point for him to think about diversifying into securities. We see this as an area for major growth and opportunity, with obvious synergies within the ship broking space. In 2018, James successfully acquired Atlantic Brokers. This provided the regulatory framework for Braemar's expansion into initially a drive for a desk, which now has accompaniment of 14 brokers. At the end of last year, we hired 10 natural gas brokers and 2 few other brokers. We now have in excess of 35 derivatives brokers. That's an increase of nearly 85% in 3 years. With offices in Dubai and Singapore, we see opportunity for growth of our existing desks to new clients in those areas. And we also see the transition into other products from our desks such as LNG, EU ETS carbon credits and energy options. Just going back a little bit to our JV with GFI still going very strong, over 20 years old now and a market-leading broker in that space, with a market share in excess of 30%. Next slide, please. So looking at growth a little bit further forward from FY '25 onwards. Shipbroking, there are a number of significant changes that will challenge the market over the next 5 to 10 years. And these are all supportive of a more buoyant market, requiring expertise in decision-making. There's been a lack of investment in replacing the world fleet, leading to an aging bulk and tanker fleet. There's also a complex transition to greenfields, which is very much underway, but far from clear as to the choice of fuel source. There's not been enough investment in New York capacity for new builds. And the market is having to tackle new regulatory requirements, such as the EU ETS, which starts in January next year. The combination of the above is all very supportive to chartering rates. We also know our customers are demanding much higher standards from their brokers. The KYC vetting process is flowing in both directions, and they are very much choosing trusted providers with good governance and financial stability. We think the smaller shops are going to struggle, and we intend to continue investing in supporting our middle and back-office function. Braemar, our 1 of only 2, public created ship brokers and are well positioned for consolidation in the industry. Touching a little bit more on securities. As I said, we identified this as an area that complements shipbroking, but also provides diversification. We very much see the energy and commodity space as a clear continued area of investment. If we're looking at the larger entity and brokers, if the results so far are suggesting small single-digit growth in their gross revenue, Energy & Commodities is very much a feature, with most of those companies seeing an increase of in excess of 25% year-on-year on revenue for those spaces. Thank you.

Thank you, Tris and Grant. Okay. A little summary now and the outlook. Look, I mean we've touch based on everything where we are on the revenue, the performance of the company and where we're trying to go forward, but the reality is that the revenue is up. The profitability is up. We still believe we're in line with where we said we're going to be in the consensus to the market for 2024. As far as the 2025 going forward, the forward order book is continuing to rise. And I think -- those don't really understand it, we're sort of hitting our first day of our financial year with some 15% of the revenue already booked for the forward year. We believe that's going to increase with what's happening on the newbuilding side and where the values are, et cetera, and how busy our desks are. We very firmly remain positive about the shipping market, our business since the 80s. And yes, I've been in markets, they have been very bold. But it didn't feel like then potentially that the markets would potentially last. It feels it's the first time that there's longevity in the market on all sectors. Ship building capacities shrunk since the 2008, '09 market by some 20-odd percent. So this obviously creates a difficulty for ordering ships as they get further and further out and prices increase. So at the moment, I think Braemar, we're feeling Braemar is, it puts in a very, very strong position to capitalize on where we are, if we can move forward slightly as well. So I want to say this one of the thing. Tris mentioned earlier how the word of shipbroking has changed and evolved in the last 20, 30 years. And although we have a regulated business, ship broking is not regulated, but the compliance world coming in was gotten to sanctions and KYCs, and the bigger companies are coming through as the major clients insist more and more things that we offer as a service, not just in broking, but also with the client service. We feel with also that the fact we have like 17 offices around, these various desks talk to each other to cross [indiscernible] of information that creates more business and fixtures, as you can see from the bottom, the fact that, that's growing the whole time, the securities desk always talking. And sometimes, as I said earlier, the [indiscernible] like the dog as far as the futures market. So it's imperative that we are in those markets because on the training side, on the client side, invariably all those clients, all those traders sit together, the physical broker, the paper broker, the core broker or broker. So we're offering that full service. And for me, of understanding what shipbroking is and where it should be, it's better to run a business that you fully understand. I live from example. I'm a believer of being in 5 days a week. I set the tone and that's why we're pushing this business further and further forward. So very much on the growth projection from our side. So that's probably we'll be coming to an end, I think. I want to say thank you for coming and we'll have some questions and answers after this as well. Thank you so much.

Great. [Operator Instructions] And we have quite a few questions. Starting off, why is the interim dividend unchanged if you've got a progressive dividend policy?

Thank you. Yes. Yes, as I've said, as I went through my part of the presentation, whilst we are giving the interim dividend unchanged at 4p, we do maintain that we do have a progressive dividend policy for the full year. So we expect to see an increase in the dividend for the full year.

Tremendous. And some of you may have seen that the interim dividend date has been changed to the second of April. So it won't be good Friday. It will be the second of April. Next question. The company has said it plans to double full year '21 profit by full year '25. Haven't you already done that?

I think I can answer that question. It's quite interesting as we were talking about this 2 years ago about how we could put the pressure, I guess, the pressure counts back on to the Board to grow to double the business. We talked about what is that size, revenue and profit. So obviously, we said there's profit. Now there's -- we could sit here arrogantly and say, well, we've already hit that. But obviously, it's important to make a sustainable GBP 18 million, and that's what we're pushing for, to make sure we can say we've grown the business and shipbroking is for those that don't know or do know, but markets will move around. And we have a situation where -- 2 years ago, it was all about dry cargo and that's all about tankers. We're making the business. So it's protected against those big swings. If one market falls away, the other market protects itself. That's why we're diversifying within the ship broking space, to make sure that we can hit those figures by 2025 is a sustainable level of earnings.

Great. And I know there's probably a limited amount you can say, but could you give a little more detail on the independent internal investigation?

Yes. I think -- I'll let Grant answer the question because I'm going to get told [indiscernible].

All I'd say is the investigation was complex. And very far, as James said. He ultimately focused on a small number of transactions, in 2006 to 2013. And we cannot say much more about that because of its privilege. But importantly, it's behind us. and we'll look to the future with confidence.

Great. And how do you see the outlook for the shipping industry?

I think I touched based on it earlier by saying that for the various fundamentals, I mentioned the fact that actually as a company and what we are seeing, there's a lot of reason to believe that the shipping cycle is going to last for a good few years, for many reasons, that could be to do with the fact that we've got alternative fuels coming into the market, [indiscernible] geographical politics issues around the world today, which we see, which obviously creates an effect. We're seeing more -- we're seeing longer voyages or more tonne-mile situation. We have issues in the Panama Canal that don't necessarily see it being resolving anytime soon, which is due to rainfall in that part of the area. So it's creating huge congestion. So we -- at the moment, we're feeling very positive in where we are. There's been an issue regarding shipbuilding, which is causing a major problem and the prices are hitting the high -- all-time highs, which are causing concern. And as you said earlier, it's regarding the incentive fuels as well. So we are on a positive position believing we are [indiscernible] markets. Tris, you want to [indiscernible] it all?

Yes. No, I'll just add to what James is saying. I think if you look at the potential challenges the market is facing in the next 5 to 10 years, they're generally very supportive of stronger rates and greater regulation within the market, which obviously is better for us as one of the larger brokers.

Great. And do you have a view on how you think the market will resolve the supply side tanker crunch that may -- it will hit the market in the next few years, because of lack of new tanker building in the last -- in the past few years?

It's an interesting question because theoretically, if you look back to where ships were some 20 years ago, there was a life span between 15 and 20. It feels like the ships will definitely surpass a 20-year age bracket now. So theoretically, as the oil needs to be moved, they will move into older ships to a certain extent as there's a lack of supply. And also, we're seeing the scenario in the bulk of fleet is the same issue as is an aging fleet. So there's going to have to be some form of rebuilding program, irrespective of where the price is. And that's where we're seeing a lot of confidence with the ship owners now as they look to build for the future to the market.

Great. And securities looks like it might get to a GBP 20 million worth of revenue this year from only GBP 3 million 4 years ago. But securities is only in the U.K. market on your circle chart. Can this become a GBP 50 million revenue business over the next 5 to 7 years?

Yes. I think that we actually had this question in another meeting with some analysts. And I think that the simple answer there is it's about how much money the company wants to spend on expanding. If you be moving into those other geographies, a lot of the time you're moving into a completely new client base and a completely new product. But I think insofar as within the scope of the U.K. and Europe and, let's say, Asia, Singapore, it's not inconceivable that we could double, possibly triple the size of the offering that we have now. And certainly, in doing that, we'd be looking to get somewhere close to those kind of revenues in the end.

Tremendous. Will the operating margin in full year '24 match the 13% of full year '23?

The operating margin, yes, if you look at the underlying operating profit consensus excluding acquisition-related items is GBP 18 million. So we expect the operating profit margin to dip in the full year, but then we'd like to see the operating profit margin improve. And the reason for that [indiscernible] said earlier is the operating expenses that we've incurred in the business as a result of bringing on these new businesses. But importantly, what we're building is a platform for growth. So as we continue to build out our revenue streams organically or by acquiring new businesses, you can see, because we have that platform, we see a lot of that coming through to the bottom line, and we should see our operating profit margin growing from FY '25 and beyond.

Great. And why are brokers not expecting any revenue growth in the medium term, given your upbeat comments?

Sorry, just repeat that, please.

Why are brokers not expecting any revenue growth in the medium term, given your upbeat comments?

So I think what this question you said is why are we holding full year '25 flat, really, year-on-year. I think that's worth mentioning that there's quite a lot of things going on behind that. We are -- our revenue is U.S. dollar based. And so we have some exposure into how the U.S. dollar is trading against sterling. There's obviously other things that are going on with regard to rates. And whilst we're building a more resilient business, we think at the moment, it's prudent for us to hold expectations as flat year-on-year.

Great. And the Chairman at the 2023 results talked about the virtuous employee circle that's now underway in the business. Could you elaborate more on where the business culture is and how it's changed in the last few years?

James and Tris can comment obviously how it's changed in the last few years, but it's kind of back to more point that just made really, we have built a platform in the business where we have an integrated offer, a full suite of products that we can offer our clients. We're a listed business. We operate at the highest standards. Our clients expect that, but as a very attractive for other brokers and other businesses to join the group because we have that infrastructure to support them so they can really concentrate on growing their business. And I think to James and Tris who have already touched the point, I'd say from what I've seen the culture change in the way that clients want to ensure they're dealing with [indiscernible] brokers going through onboarding, KYC, et cetera, that really meets their requirements. James, anything you want to add?

Yes. No, I think that's -- I mean, we have touch based on a lot of this the fact that the compliance is really pressing into the business as far as -- and as far as the KYCs and sanctions, we have to be on top of this all the time with internal legal. So it's something that the main customers to big oil companies are asking for -- all these clients are asking for us now as to making sure it all the same when we're doing S&P transactions. We aim to cover this every single time. So it's becoming a part of our cost base for the business. But as Grant mentioned, and as I mentioned earlier as well, it's attracting some of the smaller shops aren't able to -- are offering this service, so they feel like that by coming under the bigger umbrella with the global information and the protection of base compliances, it's helping to attract. So we're able to entice and attract staff to come to our company.

Great. And are the Board and senior management teams now set at Braemar and not expected to change soon?

No, I think you can safely say there's been a lot of changes in the last 2 or 3 years. I think I'd like to say proudly the fact that we're a team and executive teams know exactly to understand the business, we're trying to get. We're very much aligned, and we have a very what we would regard of pushing a very engaging nonexec Board, who are enjoying being on the board and pushing us to get to where we need to go, and complementing ourselves. So yes, we are totally aligned, we work as a team. So that's the most important thing. I think before, I don't want to say this too harshly, but it felt like before. You need to understand -- you need to understand internally before you actually sell the story and explain what we're doing to the outside. That's one thing we have a clear vision now. And I think now its a clear vision. We've actually proven that we can transact. We came in 2 years ago, we said we're going to do this, and we've delivered on what we said we would do, and we're ready on going forward. And some of the issues we've had have been legacy issues, which have now overcome those issues, and we're now looking forward.

Great. Can you explain for us what's happening in the Panama Canal at the moment? And what impact this is having on shipping?

There's having quite a big impact at the moment. I think I touched base on that earlier as well. So -- I mean, it's causing there's a lot of congestion there. So with the fact that you're not able to transit the canal, because of voltage of water in the main lake at the top of the canal, sort of ship can't pass, which is mainly containers and LPG. The alternative options to go around the Cape of Good Hope. That's obviously, the Cape, obviously, is far longer. So once again goes back to that conversation, we said earlier about tonne miles which creates a tightening of the market, which pushes the rates up. It's now [indiscernible] October on record. So yes, so this is probably the reason once gain [indiscernible] got in that situation. That's what makes shipping so interesting because an analyst can never predict exactly what's going to happen because things come at it from different angles. It's not dry cover cape market as we speak now. There's been no rain in Brazil and that market is taking off again, because we're seeing a turnout of more iron ore.

Great. So what are your views of the dry cargo market during 2024? Do you expect it to improve?

Look, we've seen a big bounce in the last 3 or 4 weeks. I'm not [indiscernible] to be sustainable, but it feels like it's a positive [indiscernible] in the last 18 months. Speaking to the guy before I came into this and been touched on the whole time. They're fitting positive in some sectors. I mean there's Panamax, [indiscernible] holding itself. The case has obviously returned. I think it depends a lot what happens in China. I think as Chinese economy starts to move in the right direction. I think that's going to be the outcome of where the dry cargo market is in a moment. What's happening in China, it's been -- I guess some of us thought it might come out of COVID a strong way, but it's pulled back a little bit. That's taken an effect on the oil demand as well as on the dry cargo side. So forward, yes, we're optimistic that it's been going through some pain.

And we've, at this stage, got one final question, which I think you've sort of pretty much answered, but I will ask it in case you've got anything to elaborate. Does Braemar have a particular strength in tankers? And how do you view the tanker market for 2024?

I can safely say we're one of the biggest tanker brokers in the world as far as tankers. So we know that market inside out. Yes. I mean, look, I think as far as the tanker market was very much affected by the political situation with Ukraine and Russia, I guess we don't see that potentially changing in the near future. So there's optimism in the market on the tanker market. I guess, once again, also it relates against China as well because that's obviously a key demand figure as far as our inventories tend to be restocked again. So we are very optimistic in tanker market. It's also showing a lot by our futures market is strength on the next 3 years. It's showing strong rates. It's also saying we're seeing a lot of demand on the longer-term deals. So I mean, yes, very much the next 3 years in that market for sure, it's not 5 years.

I'll just add to that. Just come back to that diversification for ship broking point. You can see on the charts [indiscernible] the business is got growing strength in other areas as well now. So it is building a more resilient business model across the different areas.

Great. And that's the end of questions. James, do you have any closing remarks?

No, I just want to say thank you for your time. I really appreciate it. I think we're proud here as a Board where we've got to, but we realized the pressures on immediately to continue to push for growth. I think we're in a very good place. And yes, as I say, I know that to reassure you that we, as a Board, in addition to the external investigation did a thorough check to make sure that we now can sit there and say to you that that's all legacy issues, and we look forward now to growing the business and contract and what we know best. So thank you very much.

Thank you very much, James, Grant and Tris. And to all listeners, you'll be now taken to a web page to give feedback on today's presentation. If you can't complete it now, you'll get a follow-up e-mail. We be really grateful if you could take a few minutes to complete. Many thanks for joining. This is the end of the webinar.