Braemar Shipping Services Plc
02286034
Annual Report and Accounts 2022
Page 1
We are a leading provider of expert advice in shipping investment, chartering
and risk management.
Financial highlights
• Underlying financial performance ahead of management’s expectations:
• Revenue from continuing operations of £101.3 million (“m”) (2021 restated*: £83.7m)
• Underlying operating profit from continuing operations of £10.1m (2021 restated*: £7.7m)
• Reported continuing profit before tax of £8.5m (2021 restated*: £5.1m)
• Final dividend of 7.0 pence per share making a total of 9.0 pence per share for the year (2021: 5.0 pence)
• Underlying earnings per share of 27.95 pence (2021 restated*: 13.96 pence)
Strategic highlights
• Refocused strategy on core Shipbroking business
• Disposal of Cory Brothers on 28 February 2022
• Restructuring of Braemar Naves acquisition liabilities in June 2021
• Disposal of investment in AqualisBraemar in May/August 2021
• Disposal of loss-making Wavespec in March 2021
Post period end highlights
• Receipt on 2 March 2022 of £6.5m upfront cash consideration from the disposal of Cory Brothers
• Re-branding and launch of new corporate website on 15 June 2022
* The year ended 28 February 2021 has been restated for the presentation of Cory Brothers and AqualisBraemar as
discontinued operations and a prior period adjustment as disclosed in Note 34 of the Financial Statements.
Page 2
Contents
Strategic update ......................................................................................................................................................... 4
Chairman’s Statement ............................................................................................................................................. 5
Business model ........................................................................................................................................................... 7
Strategic direction ..................................................................................................................................................... 9
Facilitating climate-smart shipping ................................................................................................................. 10
Investment case ......................................................................................................................................................... 11
James Gundy Q&A .................................................................................................................................................. 12
Group Chief Executive Officer’s Statement ............................................................................................... 14
Operating Review ...................................................................................................................................................... 17
Key performance indicators ............................................................................................................................... 21
Financial Review ...................................................................................................................................................... 22
Section 172(1) Statement ..................................................................................................................................... 27
EPSG Report .............................................................................................................................................................. 28
EPSG Framework .................................................................................................................................................... 29
Environment ................................................................................................................................................................ 31
People ........................................................................................................................................................................... 34
Society .......................................................................................................................................................................... 36
Governance ............................................................................................................................................................... 37
Non-Financial Information Statement ........................................................................................................... 38
Principal risks and uncertainties for the year ended 28 February 2022 ..................................... 39
Task Force on Climate-related Financial Disclosures .......................................................................... 47
Corporate Governance Report ........................................................................................................................ 49
Report of the Audit Committee ........................................................................................................................ 54
Report of the Nomination Committee .......................................................................................................... 60
Directors’ Remuneration Report ...................................................................................................................... 62
Remuneration Policy .............................................................................................................................................. 65
Director’s Report ...................................................................................................................................................... 79
Independent auditor’s report to the members of Braemar Shipping Services Plc ............... 83
Consolidated Income Statement .................................................................................................................... 92
Consolidated Statement of Comprehensive Income ........................................................................... 93
Consolidated Balance Sheet ............................................................................................................................. 94
Consolidated Cash Flow Statement ............................................................................................................. 95
Statements of Changes in Total Equity ....................................................................................................... 97
Notes to the Financial Statements ................................................................................................................. 98
Company Balance Sheet ................................................................................................................................... 167
Company Statement of Changes in Total Equity ................................................................................. 168
Notes to the Company Financial Statements ......................................................................................... 169
Five-year financial summary (unaudited) .................................................................................................. 185
Contact information .............................................................................................................................................. 187
Page 3
“The strong trading results are testament to the hard work and dedication of our people, and to our
clear and focused strategy which has been delivered by a united new board and management team.
Under unusual conditions and working from home for much of 2021, our achievements have been a
huge team effort and prove we are well positioned for future growth.”
James Gundy, CEO
Page 4
Strategic update
During the year the board has successfully executed several transactions with the aim of simplifying the Group’s
operations to concentrate on a new growth strategy centred around Shipbroking.
Disposal of Cory Brothers 28 February 2022
• The Group completed the disposal of its Logistics Division, Cory Brothers to Vertom for upfront cash
consideration of £6.5m and further deferred and contingent consideration of up to £9.0m over a three-year
earnout period.
• The Group expects to receive £4.8m of the deferred and contingent consideration.
• Vertom are a long-term strategic partner of Braemar, and we look forward to continuing working with them and
seeing the new VertomCory business thrive.
• The disposal will provide a strong platform for the new VertomCory business to accelerate growth and the
Group will share in that success via an earnout mechanism.
Braemar Naves deferred consideration restructuring 3 June 2021
• The Group strengthened its Balance Sheet during the year by agreeing a restructuring of deferred consideration
amounts owed in relation to its acquisition of Braemar Naves in 2017.
• The restructuring sees over £2.5m, which was previously due for repayment before the end of December 2022,
deferred to be paid no earlier than September 2025.
• The development of this business as the Corporate Finance desk of the Group’s overall Shipbroking activities is
progressing well.
Disposal of investment in AqualisBraemar 19 May 2021/20 August 2021
• The Group further strengthened the Balance Sheet by selling its entire remaining non-core investment in
AqualisBraemar.
• On 19 May 2021 9,640,621 shares were sold for cash proceeds of £7.2m, additionally on 20 August 2021
1,000,000 warrants vested and the resulting shares were sold for cash proceeds of £0.7m.
• The residual investment in AqualisBraemar was the result of the disposal in June 2019 of the loss-making
Offshore, Adjusting and Marine businesses.
• Including 9,600,000 shares sold in FY20/21, the Group has realised total cash proceeds of £13.9m in respect of
this disposal.
Disposal of Wavespec 31 March 2021
• The Group completed the disposal of its loss-making Engineering Division, Wavespec.
• Although no proceeds are expected to be received, the disposal of the Engineering business was the final step
in exiting the activities of the Group’s Technical Division.
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Chairman’s Statement
I am delighted to have been appointed as Chairman of the board in May 2021 with a remit to help the Group’s new
management team simplify its operations and develop an ambitious growth strategy centred around Shipbroking.
I am pleased to report that during the year, in addition to successfully navigating the challenges of the global
pandemic, the Group has completed all the key strategic steps required to simplify its operations and provided the
framework to further expand the business.
In addition to maintaining a first class service to its clients, during the year the board has put in place a clear and
focused strategy; increased the scale of the business; disposed of non-core assets and businesses; delivered a
strong trading performance exceeding the board’s expectations; reduced net debt (including £6.5m of Cory
Brothers disposal proceeds received on 2 March 2022) to £2.8m (2021: £8.9m) and restored the payment of interim
and final dividends to shareholders.
Strong trading results
The Group traded well throughout the financial year, because of increasing the scale of its Shipbroking operations
as well as generally favourable market conditions. Revenue from continuing operations increased by 21% to
£101.3m (2021: £83.7m) and operating profit from continuing operations increased by 31% to £10.1m (2021: £7.7m),
ahead of the board’s previously upgraded expectations. Reported profit after tax increased by 209% to £13.9m
(2021: £4.5m), reflecting the strong underlying trading, combined with a profit of £4.1m on the disposal of Cory
Brothers and a profit of £3.4m on the disposal of the Group’s investment in AqualisBraemar.
Underlying earnings per share increased by 100% to 27.95 pence (2021: 13.96 pence). Reported earnings per share,
which amongst other things includes the benefit of the sale of the non-core investment in AqualisBraemar and the
disposal of Cory Brothers, increased by 215% to 45.56 pence (2021: 14.45 pence).
Well-covered dividend
Mindful of the importance of dividends to shareholders and reflecting the strong cash generation of the Group’s
Shipbroking business, the board has decided to supplement its growth strategy with a progressive dividend policy,
subject to financial performance.
The board will recommend a well-covered final dividend for the current financial year of 7.0 pence per share for
approval by shareholders at its reconvened AGM which will be held on 6 October 2022. This is in addition to the
interim dividend of 2.0 pence per share in respect of the six months to 31 August 2021 which was paid on 16
December 2021, yielding a total dividend for the year of 9.0 pence per share (2021: 5.0 pence).
The final dividend will be paid on 14 October 2022 to shareholders who are on the register at the close of business
on 9 September 2022, with a corresponding ex-dividend date of 8 September 2022. The last date for Dividend
Reinvestment Plan (“DRIP”) elections will be 23 September 2022.
Delay in publishing results
Over the past year and a half, the new board has made substantial progress in laying the foundations for growth,
clarifying Braemar’s strategic direction and substantially increasing its profitability. Loss-making business have been
closed, ongoing central costs have been reduced, the core Shipbroking business has been expanded, the board
has been strengthened, net debt reduced to near zero and dividend payments restored.
However, while we can celebrate the progress that has been made in the business, we must also acknowledge that
this year’s accounts are being published later than would normally be the case. In summary, this delay has been
caused by the auditors and the board reviewing the accuracy of certain foreign exchange and other Balance Sheet
reserve accounts of the business. The foundations of an accelerated growth agenda mandate a solid bedrock of
accounting integrity and I regard it as essential that a full check on the integrity of these areas over the past three
years has been carried out.
A very significant workstream was initiated, therefore, re-examining these Balance Sheet areas over the past three
years. In doing so, some errors, largely historic, in accounting for the Naves acquisition, the foreign exchange gain
on the AqualisBraemar share disposal and the Balance Sheet classification of certain other reserves have been
identified and corrected. None of these prior year errors impact the underlying profitability of the business that has
been previously reported.
The board has now completed this exercise and these areas have been subject to audit to the extent required. I
trust that shareholders will fully understand that it was essential that this exercise was done in order that we can
move forward with confidence. I would like to take this opportunity to thank the auditors and Braemar’s finance
team for carrying out this significant piece of work over the past few weeks with unstinting diligence, clarity of
focus and sheer effort.
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Climate-smart shipping
The Group recognises the importance of climate change generally and specifically the importance of
environmental, social and governance factors in our business and in the shipping industry. During the year the
Group launched its environmental, people, social and governance framework (“EPSG Framework”). The board has
chosen four of the seventeen United Nations Sustainable Development Goals (“SDGs”) to underpin its mission to
facilitate climate-smart shipping.
The drive for both those owning and chartering ships to operate in a climate-friendly environment continues to
develop, and the Group has made good progress in developing responsible climate-smart shipping policies that
are fit-for-purpose in this sought-after greener environment.
Further information can be found in the EPSG Report on page 28.
Board changes
With effect from 1 August 2021, Tristram Simmonds and Elizabeth Gooch MBE were appointed to the board of the
Company as Chief Operating Officer (Executive) and non-executive director respectively.
Tristram was previously the Managing Director of Braemar Atlantic Securities, the Group's derivative brokerage
business. Elizabeth has over 16 years' experience of governance, compliance and financial reporting of publicly
listed companies. Elizabeth has joined the Group's Audit and Nomination Committees and has chaired the Group's
Remuneration Committee since Jürgen Breuer stood down from the board on 26 August 2021.
With effect from 1 March 2022, Joanne Lake was appointed to the board of the Company as a Non-Executive
Director. Joanne has over 25 years’ experience of business development, strategy and corporate finance in several
financial and professional services organisations. Joanne was appointed Audit Committee Chair with effect from 1
April 2022. Joanne joined the Remuneration and Nomination Committees from 1 March 2022. Lesley Watkins
resigned from the board with effect from 31 March 2022, and Elizabeth Gooch succeeded Lesley in the role of
senior independent director from 1 April 2022.
I am delighted to welcome Tristram, Elizabeth and Joanne to the board. The addition of Tristram creates a stronger
executive team with the bandwidth and experience needed to deliver the board's growth aspirations to the benefit
of all stakeholders of the Group. Both Elizabeth's and Joanne’s prior governance, public company, and technology
experience in growth-oriented, people-based businesses is highly complementary to the Group's strategy and
existing non-executive skill base. I would also like to thank Jürgen and Lesley for their significant contributions to the
Group, and I wish them the very best for the future.
Our people
The results for the year are a tribute to the dedication and expertise of our staff. The calibre of our people is central
to the high quality of service that we provide to our clients. It is their hard work and creativity that enables Braemar
to continue to build its brand and reputation as we develop our business. I would like to thank all our staff for their
continuing efforts on behalf of the Group.
Outlook
The present global marketplace is generally characterised today by geopolitical uncertainty, trading sanctions,
exchange rate volatility, logistical challenges remaining from the global pandemic, together with inflationary and
interest rate pressures.
Notwithstanding these challenges, market conditions in the Shipbroking industry remain favourable, driven both by
strong demand and restricted supply. For Braemar, trading during the first five months of the new financial year has
been very strong and the Group continues to benefit from the increased scale and breadth of its broking
operations in these generally favourable market conditions. As a result expectations for the current financial year
are expected to be well ahead of the board’s previous expectations.
Compliance with existing sanctions, put in place because of the conflict in the Ukraine, is not expected to have any
material effect on trading or cash flows in the current financial year nor does the Group have any existing material
exposure. The board continues to look to the future with confidence as it sets about delivering on its growth
strategy centred on Shipbroking.
Nigel Payne
Chairman
28 August 2022
Page 7
Business model
Who we are
Why Braemar
Purpose
To leverage our expertise and experience to secure sustainable returns and mitigate risk in the volatile world of
shipping.
How we operate
Experienced brokers work in tandem with specialist professionals to offer an integrated service supported by a
collaborative culture.
Management structure
Our team draws on a wealth of diverse sector experience to provide the most advanced market intelligence in the
shipping industry.
Vision
To enable more prosperous, secure and sustainable global trade within the shipping industry.
What we do
Shipping Investment Advisory
The right vessels. At the right price. At the right time. Our team combines years of commercial, financial, technical
and operational expertise with the most comprehensive market analytics in the industry to create investment
opportunities that are both protected and maximised for sustainable returns.
Chartering
Customised chartering solutions built around the specific needs of our clients. By investing in cutting-edge
technology and bespoke databases, our brokers and analysts create innovative strategies that deliver long-term
gains over short-term fixes.
Shipping Risk Advisory
Volatile price movements are commonplace in shipping markets. Our Securities desk helps our clients manage their
exposure by providing a liquid marketplace, while our Corporate Finance desk assists those facing liquidity
crunches with loan portfolio pricing, management and restructuring.
How we operate
Expertise
Information can empower – but only when you know how to use it. Our specialists know exactly how market
intelligence can be applied to give our clients the best advantage.
Experience
We draw on in-depth knowledge and a wide breadth of coverage to help clients navigate a complicated landscape.
Values
We are committed to proactive, measurable EPSG initiatives and the facilitation of climate-smart shipping. We set
high standards for our team and give them clear frameworks and policies within which to operate.
Collaboration
By sharing knowledge and resources across desks, our team can anticipate our clients’ needs and provide prompt,
informed solutions.
Page 8
Stakeholders
Through our activities we aim to create value for all our stakeholders.
For shareholders
By streamlining our key services towards Shipbroking and maintaining a strong, clear Balance Sheet, we’re focused
on creating sustainable growth that delivers long-term returns for our shareholders.
For clients
Our team has a proven track record of delivering expert advice in Investment Advisory, Chartering and Risk
Advisory. We leverage our strong network to secure the best prices for our clients.
For our team
Without our team, Braemar would not exist. Our people are integral to our business and are the key to our success.
We provide a positive working environment, rewarding careers and opportunities for development.
For communities
Our EPSG framework seeks to support long-term, strategic partnerships with charities and organisations that
support the communities in which we operate. Further information on our EPSG framework can be found on pages
29 to 30 of this Annual Report.
Underlying EPS
27.95 pence
2021 restated*: 13.96 pence
Reported EPS
45.56 pence
2021 restated*: 14.45 pence
Dividend per share
9.0 pence
2021: 5.0 pence
Global reach (worldwide continuing operations)
14 offices
2021 restated*: 14 offices
* The year ended 28 February 2021 has been restated for the presentation of Cory Brothers and AqualisBraemar as
discontinued operations and a prior period adjustment as disclosed in Note 34 of the Financial Statements.
Page 9
Strategic direction
Our new strategy is focused on Shipbroking
Our strategy is focused on Shipbroking and the provision of expert advice in shipping investment, chartering and
risk management.
We have focused the business on our Shipbroking core with its strong track record of growth. We have simplified
the Group through targeted divestments and strengthened the Group’s Balance Sheet through the sale of our
AqualisBraemar shares and rescheduling of Naves acquisition liabilities.
Our updated strategic priorities will enable us to take advantage of future growth opportunities.
01. Grow Shipbroking breadth and market share
Diversify and grow our geographical presence
Expand our activities into growth sectors including renewables and carbon offsetting
Grow our capabilities in existing areas of business
Integrate Corporate Finance activities
02. Technology-driven innovation
Develop technology solutions that enhance our offering as a broker
Use Braemar Offset to offer a carbon offsetting solution
Continue to develop Braemar Screen in partnership with Zuma Labs Limited
Deliver market-leading digital solutions to the shipping industry
Future-proof our business
03. Build our brand
Using our new brand as a bedrock for growth
Unite our team and our client offering
Page 10
Facilitating climate-smart shipping
Shipping will remain the most energy-efficient way to transport freight for the foreseeable future. On average, it
produces 25 grams of CO
2
per tonne-kilometre, compared to 600g CO
2
/tonne-km for aviation and 50–150g
CO
2
/tonne-km for road-based transportation. Nevertheless, the international shipping industry still accounts for
approximately 2–3% of worldwide greenhouse gas emissions – roughly the same as the aviation industry – and it
faces significant challenges in reducing its carbon emissions and transitioning to net zero.
Braemar’s direct environmental footprint is a very small percentage of the shipping industry’s emissions. Although
we can have no direct role in delivering the decarbonisation of the industry, we can work with owners and
charterers to support them as they navigate towards a low carbon shipping industry. We recognise that we have a
responsibility to minimise our own office-based emissions as well as a role in facilitating the decarbonisation of the
wider industry.
Further details on what this means for our business are as follows:
Offsetting Braemar’s operational emissions
We recognise that carbon offsetting is our only solution to historic emissions but going forward we aim to reduce
our direct carbon footprint and use carbon credits to offset our unavoidable emissions. We have purchased carbon
offsets sufficient to make our operations carbon neutral since 2017.
Enhancing Braemar’s environmental footprint
As we transition towards net zero, we aim to reduce our direct footprint by becoming more energy efficient and
incorporating sustainability into our decision making.
Enabling clients to achieve their climate change ambitions through carbon offsetting
Working in partnership with CHOOOSE – a respected provider of digital tools, including to several of the biggest
names in aviation – we have created Braemar Offset. Braemar Offset directly connects our clients with some of the
most impactful and verified climate projects available today. By working with Braemar Offset to reduce their carbon
footprint, companies will be able to play a proactive role in improving their sustainability and accelerate climate
action.
Growing our renewables offering
As part of our overall growth strategy, we are investing in our renewables offering. We are positioning the business
to support the transition to a low carbon economy and for future growth in renewable energy and low carbon fuels.
While transporting fossil fuels is a key part of our clients’ businesses today, we expect – and are planning for –
major change on this front as the industry transitions to net zero. We do not expect that phasing out the use of coal
will have a significant impact on our business in the short to medium term.
Helping our clients navigate new regulations
We are assessing the ways in which we can provide support and advice to our clients. For example, advising
charterers who are facing new regulations such as the EU Emissions Trading System (“ETS”) which comes into
force in 2023, or advising owners who are facing uncertainty around alternative fuels. There is a strong drive in the
industry to ensure that future investment is focused on more sustainable and cleaner ships and our brokers are
working alongside owners to help them make the right choices of investment.
Page 11
Investment case
Proven history, promising future.
By streamlining our key services towards Shipbroking and maintaining a strong, clear Balance Sheet, we’re focused
on creating sustainable growth that delivers long-term returns for our shareholders.
We are one of only two publicly traded Shipbroking companies on the London Stock Exchange, offering an
attractive opportunity to invest in the shipping industry without needing to invest directly in ships.
As a leading global shipbroker with offices in London, Singapore, Geneva, Dubai, Athens, Aberdeen, Hamburg,
Beijing, Shanghai, Melbourne, Mumbai, Perth and Houston, we’re well-positioned to serve key industry players
across different time zones and cultures. Our operations are diversified across Tankers, Dry Cargo, Sale and
Purchase, Renewables, Financial and Offshore to generate a reliable, less cyclical income stream.
Our new, future-facing strategy is clearly designed toward sustainable profit and growth. We refreshed our
management team and successfully divested any non-core businesses to lessen our liquidity risk while
strengthening our Balance Sheet.
In line with our commitment to UN SDG 8.4, we will endeavour to decouple our profit from environmental
degradation while promoting inclusive and sustainable economic growth across the industry.
Page 12
James Gundy Q&A
Q1 What do you see as the key challenges facing the shipping industry today?
The consequences of interconnected global supply chains is the unifying theme of the 2020s so far. Over the last
two and a half years every country has received a daily tutorial about the practical realities of supply and demand,
and how integral shipping is to their GDP and the lifestyles of their citizens.
Shipping’s vital role must never be taken for granted. The world relies on our sector, and it’s a trust that we must
earn every day. Over the next 12 to 24 months there are several challenges ahead which must be successfully
overcome if shipping is to thrive and not just survive as an industry: regulation, climate change, energy prices, and
the evolution of supply chains.
Q2 What has changed in shipping over the last year? Can we expect those changes to last?
Whether it comes in the form of regionalisation, replication or reshoring it seems increasingly likely that we will see a
reconfiguration of trade as businesses adapt to the disruption that has become globally common.
The conflict in the Ukraine is only the most recent catalyst for nearshoring, supply chain redundancy, or
diversification. But whether it’s conflict, pandemic or resource nationalism that’s causing it, we’re seeing an
increasing need for more strategic thinking to navigate these complicated currents.
To take one example, if manufacturing becomes more dependent upon robots than humans, the price of electricity
will become more important than the cost of labour. Countries with the lowest, most sustainable energy would be
poised to benefit, and the trade routes and the ships that serve them would need to adjust.
Q3 How have the changes in energy markets affected shipping?
The link between economic growth and energy use has been self-evident since the Industrial Revolution. I started
my career as a tanker broker, and I’ve seen all too clearly the impact that high prices or resource scarcity can have
on our clients as well as the global economy.
Even before the recent conflict in Ukraine, it was clear that the lack of spare production capacity and small oil
inventories could lead to high prices if demand picked up. The price of the most used ship fuel more than doubled
over the last year, and there are credible reasons to believe prices will remain higher for longer. To remain
competitive in this market shipowners will need to invest in “eco” technologies, either through retrofits or future-
proofed newbuilds.
Q4 The shipping industry is a critical part of the global economy, but it has a huge carbon
footprint. What do you see as the key challenges for decarbonising the industry?
There is a clear consensus that shipping must improve its environmental footprint. Shipping's global regulator, the
International Maritime Organization, has set some rules, such as short-term targets for reductions in carbon
intensity.
However, the overall lack of regulatory clarity is delaying investment and making long-term compliance very
challenging. Until we see final, comprehensive legislation from the IMO and other bodies such as the EU,
shipowners will remain hesitant to invest. Nobody wants to back the propulsion technology that turns out to be the
shipping equivalent of Betamax.
Q5 How might current geopolitical issues affect the industry?
The scope and complexity of shipping’s operating environment is likely to remain challenging in the coming years.
Sanctions, piracy and trade wars – to name only three risks shipping faces – are disrupting supply chains and
making it harder to operate.
These risks have no geographical constraint, and the political environments can change rapidly. However, we don’t
expect our compliance with existing sanctions put in place because of the conflict in Ukraine to have a material
effect on trading in the current financial year.
Page 13
Q6 In light of these challenges how would you describe the outlook for Braemar?
Over the next decade shipping could revolutionise the way it operates. I believe sustainability and success are
going to become two sides of the same coin, and those who make the right investments will benefit their bottom
line and our world.
Fossil fuels represent almost 40% of freight volumes today, and that will continue to be the case in the short to
medium term. However, while the cargoes that ships carry will change enormously in the longer term, there will still
be a huge need for transport of hydrogen, ammonia, or whatever other low carbon fuels that the world chooses to
replace fossil fuels to meet our energy needs. We see this as a huge opportunity, and we are investing in our
renewables offering and our capacity to serve these trades in the physical and paper markets.
Moreover, most of the global fleet will need to be renewed if it’s to become compliant with the ambitions of the
Paris Agreement. While I don’t expect it to be at the same level of intensity, decarbonisation could well be the
biggest driver of demand since China in the first few years of this century. For brokers who know the market, and
who can help their clients to effectively navigate this rapidly evolving market, there is a huge opportunity ahead.
Page 14
Group Chief Executive Officer’s Statement
I am extremely proud of our performance in my first full year leading the Group. Before I became CEO, I led
Shipbroking at Braemar, and I was previously the CEO of ACM, which merged with Braemar in 2014. That division
was always Braemar's driving force, and my vision for the Company has long been to take the business back to its
basics.
As you'll see below in more detail, we've started to see the results of our focus on Shipbroking and Corporate
Finance. We've become a more effective and more dynamic company by trimming the fat, investing in our people
and technology, and focusing on what we know works through our wealth of experience.
The strong trading results are testament to the hard work and dedication of our people, and to our clear and
focused strategy which has been delivered by a united new board and management team. Under unusual
conditions and working from home for much of 2021, our achievements have been a huge team effort and prove
we are well positioned for future growth.
Our future success: We have rebuilt the foundations, now we grow
Trading in our Shipbroking business was very strong throughout the year, with revenue and profits significantly
ahead of our initial expectations from the previous year. Our performance reflects the core steps we have taken to
increase the scale of our Shipbroking activities as well as favourable market conditions.
Examples of where our expanded and diversified business and market conditions combined to increase the
Group’s profitability include:
• a volatile and busy Dry Cargo market which helped increase revenue on our expanded Physical and Securities
desks;
• our global Sale and Purchase team concluding a significantly higher number of transactions within their market;
and
• a strong container market volume which augmented the synergies gained from working closely with our
Corporate Finance business.
Although Tanker market rates remained supressed throughout the year due to continued pandemic-related
weakness for oil demand, the number of transactions we performed increased by more than 21% compared to the
previous year. Chartering fixture volumes were up 8% across all desks, Securities’ revenue increased 60%, and Sale
& Purchase volumes grew 59%.
Strengthening the Balance Sheet
The board has focused this year on reducing the net bank debt of the Group, and I am delighted that we have
achieved our objective; a total reduction of £17.2m from 29 February 2020 to 2 March 2022.
Enhancing our cash flow
Cash flow from operating activities in the year increased by 61% to £20.5m (2021: £12.7m). Excluding the initial
proceeds of the sale of Cory Brothers, as of 28 February 2022, the Group held cash of £14.0m (2021: £14.1m). The
initial consideration of £6.5m from the disposal was received on 2 March and is accounted for as a receivable on
the Balance Sheet date.
Reducing the debt burden
The board previously stated that that it had set a target of achieving a net bank debt to EBITDA ratio sustainably
below 1.5 times on average over the seasonal working capital cycle. I am pleased to report that excellent progress
has been made towards this goal. Net bank debt at 28 February 2022 was £9.3m (2021: £8.9m) with the ratio falling
to 0.96 times for the twelve months to 28 February 2022, down from 1.32 times for the prior year. Including the
£6.5m proceeds from Cory Brothers which were received on 2 March 2022, net bank debt reduces to £2.8m and
the ratio falls further to 0.60 times.
Moreover, the future earnout consideration that will be received for Cory will almost totally offset the outstanding
debt relating to the Naves acquisition, and it means that we enter the new financial year very close to debt-free.
When you compare this situation to where we were four years ago, it’s like colour versus black and white. A
similarly concrete change has been achieved in our reduced exposure to deferred share promises relating to the
employee bonus scheme now, and in the future.
The Group’s revolving credit facility with our main bankers, HSBC, is due to expire in September 2023. We have
already received acceptable indicative terms for an extension and we expect to conclude these discussions well in
advance of the current facility end.
Page 15
Successful execution of strategic changes
While we’ve achieved plenty during my first complete year in charge, there will be no resting on our laurels. There is
too much left to do if we’re to achieve our objectives.
I have a strong, experienced team around me led by my CFO, Nicholas Stone, and COO, Tristram Simmonds, and
we are executing on our plan that was agreed by the board. We’ve reduced net debt, invested in our people and
technology, and implemented a focused programme of change. This has strengthened the Group compared to
where we were recently, and will allow us to continue to grow organically, or through acquisitions.
Disposal of Cory Brothers
The disposal of Cory Brothers was completed on 28 February 2022, the last key step on the execution of Braemar’s
strategy of focusing on our core Shipbroking business. The all-cash consideration consists of a £6.5m upfront
payment with deferred and contingent payments of up to £9.0m over a three-year earnout period. The Group
expects to receive £4.8m of the deferred and contingent consideration. The buyers of Cory are a long-term
strategic partner of the Group, and we look forward to seeing the new combined VertomCory business thrive. The
business combination will provide a strong platform from which to accelerate growth and Braemar will share in the
success of the new business via an earnout mechanism.
Braemar Naves consideration restructuring
On 3 June 2021, the Group amicably restructured the deferred consideration owed in relation to its 2017 acquisition
of Braemar Naves. The restructuring saw over £2.5m, which was previously due for repayment before the end of
December 2022, deferred to be paid no earlier than September 2025. Total liability for the Naves acquisition is now
reduced to £4.7m, which is conveniently offset with receipts from the VertomCory transaction.
The development of this division as the Corporate Finance offering of the Group’s Shipbroking business has
progressed well with many transactions concluded together. The expected synergies with our sale and purchase
department are strong and growing, especially in the container market.
Disposal of investment in AqualisBraemar
The Group further strengthened its Balance Sheet by selling its non-core investment in AqualisBraemar. On 19 May
2021 9,640,621 shares were sold for cash proceeds of £7.2m and on 20 August 2021 1,000,000 warrants vested
and the resulting shares were sold for cash proceeds of £0.7m. The investment in AqualisBraemar was the result of
the June 2019 disposal of the loss-making Offshore, Adjusting and Marine businesses. Including 9,600,000 shares
sold in the year ending 28 February 2021, the Group has realised total cash proceeds of £13.9m in respect of this
disposal.
Disposal of Wavespec
The Group completed the disposal of its loss-making Engineering Division, Wavespec on 31 March 2021. Although
no proceeds are expected to be received, the disposal of this engineering business was the final step in disposing
of the Group’s Technical Division.
Reinvigorating the Braemar brand
The board’s strategic development work has included a re-branding initiative. An important part of this was the
launch of our new corporate website in June 2022, which clearly positions and communicates the Group’s new
focus, objectives and purpose. This was also an ideal time to set out the Group’s work regarding compliance and
EPSG. We see many new growth opportunities created by the rapidly developing area of environmental
sustainability, and we are positioning the Company to capture an outsize share of them.
Our new strategic ambition and direction
Our primary medium-term ambition is, through strategic hires and acquisitions, to double the size of the business,
such that our sustainable annual underlying operating profit, regardless of market factors, is twice the £7.7m
underlying operating profit restated in FY20/21. It is pleasing to note that we have already achieved a 30% increase
over the last year, we’ve grown our operating margin from 9% to 10%, and we continue to believe that this can be
achieved within the four-year timeline we outlined in 2021.
We believe that scale has become increasingly important within our industry to service the needs of our clients. It is
also needed to provide us with sufficient geographical and product diversification, reduce the impact of cyclical
markets, and create further cost efficiencies. Buoyant shipping markets, a strong market share and a robust
forward order book position us well to grow at an accelerated pace.
The board believes that the delivery of our core strategic ambition requires investment in our business support
infrastructure and technology. Together, they will provide essential foundations for growth, as well as ensuring that
we can continue to meet the growing demands of our clients. We continue to develop technology solutions that
enhance our offering as a broker, for example, by investing and working in partnership with Zuma Labs Limited, and
most recently by partnering with CHOOOSE, a supplier of digital toolkits that enable climate-based solutions for
Page 16
many industries. Through these partnerships we are delivering market-leading digital solutions to the shipping
industry and future-proofing our business.
We have an active programme for organic expansion, and recent highlights include the establishment of Geneva
and Houston offices as we expand into new markets, as well as moving to a larger Dubai office and growing our
market-leading specialisms. Our Australian Dry Cargo Business in Melbourne and Perth continues to grow, and it
remains the dominant broker in its field. Our Singapore office continues to expand and is a key partner with the
Singapore Maritime Academy (“SMA”), providing an approved trainee scheme for young Singaporeans wanting to
join the maritime industry.
Our expansion strategy is already paying dividends and there are good indications within the year’s trading
performance that the investments we are making to increase the breadth, focus and depth of the Group’s
Shipbroking activities are starting to deliver growth unrelated to movements in market rates themselves. Notably,
amid the volatile Dry Cargo market, the Group increased both revenue and market share on the Physical and
Securities desks. The Sale and Purchase desk has concluded a significantly higher number of transactions partially
due to the strong container market, as well as through the synergies gained from working closer with the Corporate
Finance desk. Tanker market rates remained low, impacted by pandemic-related weakness in oil demand.
However, Tanker transaction volumes have increased by more than 25% compared with the previous year, aided
by strategic hires and growth of the Geneva office within the oil product sector.
To better align shareholder and employee interests and support the growth agenda, the board concluded that it
should reduce the overall amount of deferred equity issued annually as part of employee remuneration
arrangements. Under the previous scheme, deferred shares were awarded and issued to employed recipients over
a three-year vesting period and generally settled by shares purchased in the market. Whilst this scheme will remain
unchanged, the amount paid in such deferred shares will be halved with an increase in cash bonuses paid of the
same amount for the current and future years. Future years will involve claw back arrangements on the additional
cash payments to encourage employees to remain in Braemar’s employment. During the year the ESOP acquired
2.7m shares. This reduced the Company’s exposure, and it ensures that all historic liabilities are now covered.
Outlook
Trading at the start of the new financial year has been strong and I look forward to the remainder of the year with
confidence as we continue to reap the benefits of our increased scale and focused strategy.
Over the last year, the advisory and facilitation that Braemar provides to shipowners and charterers have increased
our forward order book by 15% to US$50.0m (£37.3m) at the year-end compared with US$43.4m (£31.1m) at the
beginning of the period. Since the year-end, the order book has grown by a further 14% to US$57.1m (£42.6m) at
the end of July 2022.
We have seen strong ordering, particularly in the gas carrier and container markets, where there’s very high
demand for new buildings, and capacity at many shipyards is now unavailable until 2025 at the earliest. Shipowners
in other sectors are therefore finding it hard to renew their fleets and relying upon the second-hand market instead.
All these factors have strongly benefitted our Sale and Purchase desk.
In the coming years, these factors are likely to benefit several of our chartering desks as well, because if older ships
are retired and there’s no ability to replace them it will restrict vessel supply in those sectors and put a higher floor
on charter rates. I firmly believe that it is through our investments in our people as well as offices and technology
that we have achieved these high levels of activity. I look forward to another strong year of trading as their benefits
continue to compound.
The only other point I wanted to raise is that I’m enjoying working with Nigel and the other non-executives. The
synergies and their benefit to Braemar are already apparent as we now focus on looking forward, with confidence
about what the future holds.
James Gundy
Group Chief Executive Officer
28 August 2022
Page 17
Operating Review
Introduction
Seaborne trade continues to recover from the global pandemic. Growth in ton-miles and logistical disruption have
combined to strengthen freight rates in many markets, which, in turn, has benefitted Braemar.
The Dry Cargo, Gas and Container sectors have performed particularly strongly. Specialised Tankers has made a
slower recovery, and Deep Sea Tankers has recently returned to better rates. The resurgent interest in the shipping
industry from both a lending and equity investment point of view has meant the Corporate Finance desk has also
performed well. As a result, we have grown our revenue and volume of fixtures in almost every sector.
The macroeconomic outlook for shipping is broadly favourable to Braemar. Seaborne volumes are expected to
continue increasing, and between a combination of high ship recycling prices and shipyard capacity, only
Containers and Gas are likely to see major fleet growth in the coming years. Through office expansion, new hires
and the positive momentum in the markets, we are well positioned for strong performance in the Dry Cargo and
Specialised Tanker markets; to continue to increase our Securities’ market share; and well positioned for a full
recovery in Deep Sea Tankers.
In April 2022, we created a Digital Transformation desk and appointed our first Head of Digital Transformation. The
desk is working to further integrate digital tools into all areas of the Group to enhance our ability to serve our clients'
growing requirements, as well as to make workflows more engaging and efficient for our people.
Shipbroking
FY21/22
£’000
FY20/21 restated
£’000
Revenue
94,659
77,727
Underlying operating profit
12,422
10,068
Sale and Purchase
Sale and Purchase activity has been exceptionally strong throughout the financial year ending 28 February 2022,
which has driven a major increase in our revenues, and the desk has made several strategic new hires who are
already making good contributions. Strong spot and time charter markets in the Dry and Container sectors since
2020 have lifted asset values to long-term highs. Consequently, asset value and transaction growth continued in
the Containership sector for the second consecutive year, as charter rates and asset values grew to exceptional
highs and fed into enhanced revenue for the desk.
Containerships and LNG carriers are dominating the newbuild orderbook, but in other sectors newbuilding ordering
activity has been suppressed by a lack of space in shipyards, rising labour and material costs, and a lack of clarity
regarding what fuels and technologies to adopt to ensure regulatory compliance. Owners have therefore focused
their investment on second-hand units, which has resulted in one of the busiest periods of asset play in recent
memory, which Braemar has profited from our superior ability to connect buyers and sellers. We expect second-
hand activity and prices to remain elevated for the dry cargo and container sectors. Due to the lack of newbuilding
capacity, even in a weak tanker market we are still seeing an increase in second-hand values in this sector. On top
of that we are seeing one of the strongest ship recycling markets, which has been to the advantage of our
Demolition team.
With interest rates close to historic lows and a consensus that the worst of the COVID pandemic is behind us, there
was a lot of liquidity in the capital markets this year. Improving markets also enabled restructurings in
Multipurpose/Heavylift and Offshore, for example, to be completed after years of preparation, all of which also
benefitted Braemar’s Corporate Finance desk.
Sale and Purchase's revenue increased by 31% from £15.0m in FY20/21 to £19.6m in FY21/22 and represented 19%
of Braemar’s total revenue. Fixture volumes increased by 59% compared with the previous year.
Deep Sea Tankers
Tanker markets have weakened throughout the financial year as successive waves of COVID-related restrictions
have reduced global oil demand, particularly for diesel and jet fuel. A large “shadow” fleet of tankers moving
sanctioned Iranian and Venezuelan crude oil has provided employment for vessels that would otherwise have been
sold to ship recyclers for their steel, and reduced employment for other vessels. Despite these hindrances, the desk
has achieved fixture growth that’s a fifth better than the preceding financial year. The conflict in the Ukraine
Page 18
threatens to withdraw crude supply from the already undersupplied market. A global stock build, once oil prices
have eased, is likely to support tanker trades, and the desk is well positioned for when this occurs.
Deep Sea Tankers' revenue decreased by 32% from £26.3m in FY20/21 to £17.8m in FY21/22 and represented 18%
of Braemar’s total revenue. Although revenue decreased due to weak markets, fixture volumes were up 21%
compared to the previous year.
Specialised Tankers and Gas
The Specialised Tankers and Gas market is diverse, and it includes very different types of vessels servicing the
unique needs of the oil products, LPG, petrochemicals and LNG markets – to take only four examples that Braemar
services.
The return of activity from oil products’ end users as COVID vaccinations were rolled out as well as a sizeable
percentage of ships reaching their maximum trading age caused the global fleet’s availability to tighten towards the
end of 2021. This has continued into 2022 to Braemar’s advantage as charter rates have remained robust. The
Chemical market struggled at the start of the financial year with a combination of lower volumes, higher bunker
prices, and increased competition from swing tonnage. It took until Q4 2021 for a significant increase in tanker
earnings to occur, and Braemar has realised good gains as this upturn continued into 2022. There is cautious
optimism about the sector’s potential over the next twelve months, and that is expected to create further growth
for the desk. Braemar’s decision to invest in our Geneva office is already showing dividends, with substantial new
business growth already from its recent hires, and the expectations that the compound benefits of this expansion
will reap larger dividends in the new financial year.
Total demand is growing across the gas markets, and production is expected to continue to grow in tandem, which
has combined to improve the desk’s margins. A substantial number of larger capacity ships are set to be delivered
in the next few years and it is hoped that the cumulative demand growth of these products will be able to absorb
these newbuilds. However, there is a continued lack of newbuilding orders in smaller sectors as well as further
owner consolidation. Braemar’s Gas desk has substantially increased its spot and period business over the last year
for petrochemicals and larger LPG, and it continues to diversify its client base. The desk has also increased its
forward physical freight agreements, which has provided Braemar with increased liquidity for future spot business.
In previous years, relatively stable LNG delivered prices averaged at around $7–12 per MMBtu with seasonal
fluctuations of between $5–6, has given way to highs of almost $70 this year and rapid fluctuations of $20–30
almost over 24-hour periods. Consequently, Braemar is seeing huge interest in LNG shipping, as charterers are
being forced to take longer-term charters to mitigate these commodity price swings, which has soaked up almost
all available tonnage. Braemar has benefitted from the high price for LNG as it has led to an increase of newbuild
orders. On the chartering side, Braemar has recently achieved two 7–10-year charters, and several multi-month
charters as customers work to secure their long-term security of supply. The long-term revenue for Braemar's LNG
desk has almost doubled over the last twelve months, and it is optimistic about the prospects for the sector over
the next year.
Specialised Tankers' and Gas revenue increased by 6% from £10.9m in FY20/21 to £11.6m in FY21/22 and
represented 11% of Braemar’s total revenue. Fixture volumes increased by 12% compared with the previous year.
Dry Cargo
Dry freight markets rose strongly during the first half of the financial year, reaching highs not seen since before the
financial crisis in 2008, and we have realised substantial gains from its advisory and facilitation. COVID-related port
congestion coupled with resurgent demand for raw materials, particularly in China, resulted in a significant
tightening in the supply and demand balance, and consequently higher rates from which Braemar has profited.
While the conflict in the Ukraine is likely to dent economic growth, we expect dry cargo demand to be supported by
Chinese growth when COVID restrictions are fully eased. Thanks to sanctions and the loss of Ukraine’s port
facilities, the loss of Russian coal and grain exports to Europe will need to be replaced from further afield. The
resulting reshuffling of global trades is likely to increase the average length of haul, supporting dry cargo freight
rates in the short term and the profitability of this desk.
Dry Cargo's revenue increased by 95% from £15.3m in FY20/21 to £29.8 in FY21/22 and represented 29% of
Braemar’s total revenue. Fixture volumes were marginally lower than the previous year.
Offshore and Renewables
A combination of high oil and gas prices, political pressure for low carbon energies, and an increase in total demand
has created some of the brightest prospects for the offshore energy markets and the Offshore desk in many years.
Activity in traditional and new energy sectors will prove beneficial for almost all vessel classes, as well as providing a
welcome relief from the low demand and massive overcapacity that has inhibited the sector over much of the last
decade. Braemar’s Offshore Energy Services desk achieved 30% more business in FY21/22 compared to the
previous twelve months, and in collaboration with other desks beat off stiff competition to be awarded a seven-
year framework agreement with the UK’s Ministry of Defence. Driven by end user pressure, progressive
Page 19
environmental regulation and cost declines, there is significant worldwide demand for offshore wind projects and
clean energy more broadly that is likely to remain elevated for several years. To capitalise on this trend, Offshore
has doubled its number of Renewables brokers, and recently became the first major shipbroker to hire a dedicated
Renewables broker on the east coast of the USA.
Offshore and Renewables’ revenue increased by 41% from £2.7m in FY20/21 to £3.8m in FY21/22 and represented
4% of Braemar’s total revenue. Fixture volumes increased by 43% compared with the previous year.
Securities
High volatility over the course of the last twelve months has helped to drive overall market volumes higher. Braemar
has been able to capture an increasingly large proportion of trading volumes, growing our market share
considerably. Major concerns about European energy security led to exponential moves in dry FFAs. After several
years of depressed values on dry cargo, 2021 finally achieved levels not seen for over a decade, with the Capesize
index peaking in early October at US$86,593. Over the following six months, supply disruptions and seasonality
saw the same index approach US$5,000, but positive 2H22 expectations have kept the forward curve in a steep
contango, with deferred contracts trading at large premiums. (Coal FFA)
Braemar's dry FFA desk has grown substantially during this period, catering to the needs of investors who wish to
speculate on price moves as well as those who need high performance tools to manage their risk exposure.
Braemar's partnership with Zuma Labs Limited and the popularity of Braemar Screen is bringing clear, sustainable
benefits to the business despite only being developed less than three years ago. The Braemar FFA desk is one of
the few desks in the market that has an active trading platform, which has helped us to substantially increase our
market share. The prospects for further growth are good, and the desk will continue to focus on developing digital,
data-led solutions for its client base. Revenue growth for 2021 versus 2022 was nearly 4.5x, and market share more
than doubled over the same period. (Dry FFA)
The lack of global oil demand caused by COVID has dragged rates on the largest ships to the floor and kept them
there since Q3 2020. The decline was only stopped by the conflict in the Ukraine, which caused major volatility.
Ultimately, that is what all forward curves have been missing for some time, and so liquidity wasn’t far behind. Our
desk was well positioned as this disruption occurred. Market volumes in March 2022 were only surpassed by
November 2021 in the last twelve months. This was largely due to an exciting aspect of FFAs in the last year: traders
covering their positions much further into the future. The desk has seen good volume out to 2025, and this has
enabled it to provide our clients with the opportunity to capably manage their shipping exposure for up to almost
four years. This is the first time that the market has seen open interest extending that far, and it puts the desk and
the whole market in a very strong position moving forward. This desk is a joint venture between Braemar and GFI.
(Wet FFA)
Securities' revenue increased by 60% from £7.5m in FY20/21 to £12.0m in FY21/22 and represented 12% of
Braemar’s total revenue.
Financial
FY21/22
£’000
FY20/21 restated
£’000
Revenue
6,651
5,968
Underlying operating profit
1,798
1,034
Braemar’s Corporate Finance desk (formerly “Braemar Naves”) is continuing to benefit from its extensive
restructuring experience and relationships in two ways. Firstly, several large international restructuring mandates
were completed after years of preparation in the financial year ending February 2022 as well as in Q1/2022. Such
restructuring mandates involved accompanying capital raising activities in the Offshore, Multipurpose and Heavylift
segments. Secondly, the strong recovery in the Container and Multipurpose market enabled us to support our
clients to refinance loans – many of which Braemar’s Corporate Finance desk had helped to restructure in
preceding years. The desk diversified its market presence, and it worked with several large Container lines for the
first time. The successful cooperation and combination of expertise with Braemar’s Sale and Purchase desk was a
key driver of this success. In expectation that the worst is behind in the passenger shipping markets, cruise
companies, lenders and investors have started to request Braemar’s support to find solutions to financial problems
that were caused by the COVID pandemic. Investor appetite is returning in this segment, and expectations are to
complete a number of similar assignments in the coming year. Corporate Finance's revenue increased by 12% from
£6.0m in FY20/21 to £6.7m in FY21/22 and represented 7% of Braemar’s total revenue.
Page 20
Logistics
FY21/22
£’000
FY20/21
£’000
Revenue
45,215
28,083
Underlying operating profit
2,456
1,191
Cory Brothers, the Group’s Logistics business was sold to Vertom on 28 February 2022 and consequently the
results for the current and prior year are presented as discontinued operations. Cory Brothers had an extremely
strong year, particularly from its Freight Forwarding activities. The pressure on container space and Brexit-related
import/export complexities led to a greater demand for services. Challenges were faced in the UK Agency
business, particularly due to the loss of a key contract which will impact revenue in FY22/23.
Revenue increased by 61% from £28.1m in FY20/21 to £45.2m in FY21/22. As this revenue is presented within
discontinued operations it does not form part of Braemar’s total revenue.
The board took the decision to sell Cory Brothers to Vertom, a long-term strategic partner of the business, because
they believe scale and management expertise are key to the long-term success of the business. This will be better
achieved under the new ownership, whilst Braemar has tightened its Balance Sheet because of the transaction and
is better placed to grow its core Shipbroking business. The board look forward to seeing Cory Brothers thrive under
its new ownership, and Braemar has retained upside potential in the future performance of the business from the
three-year earnout mechanism.
Conclusion
Over the last twelve months there has been stimulus from almost every government, and huge vaccination
progress has released pent-up consumer demand in ways that are likely to benefit shipping for at least the next
year. Outside of the tanker market, almost every sector has achieved profitability levels that have not been seen in
many years. Moreover, the logistical bottlenecks which continue to exist around the world have balanced the fleet
expansion. Consequently, we are predicting another year of strong rates across almost every sector. Thanks to our
strong investments in our people, technology, and growing our geographical footprint we are well positioned to
secure an outsize share of opportunities available in those markets.
We have realised total revenue growth of 21% across all our Shipbroking and Corporate Finance desks over the last
year, and in the growing and evolving markets in FY22/23, we are optimistic about seeing further return on our
investments and continuing to grow both revenues and fixtures.
Page 21
Key performance indicators
Trading in our Shipbroking business was very strong with revenue and profits significantly ahead of our
expectations and the previous year. The strong performance reflects good market conditions and a return from the
steps that we have made to increase the breadth and focus of our Shipbroking activities.
The Dry Cargo, Gas and Container sectors have performed particularly strongly. Specialised Tankers has made a
slower recovery, and Deep Sea Tankers has recently returned to better rates. The resurgent interest in the shipping
industry from both a lending and equity investment point of view has meant the Corporate Finance desk has also
performed well.
As a result, we have realised total revenue growth of 21% across all our Shipbroking and Corporate Finance desks.
Our underlying operating profit has increased by 31% and our cash flow from operations by 61%.
All KPIs relate to continuing operations.
Revenue
+21%
2022: £101.3m
2021 restated*: £83.7m
Underlying operating profit
+31%
2022: £10.1m
2021 restated*: £7.7m
Cash generated from operations
+61%
2022: £20.5m
2021 restated*: £12.7m
Underlying EPS
2022: 27.95 pence
2021 restated*: 13.96 pence
Reported EPS
2022: 45.56 pence
2021 restated*: 14.45 pence
Full-year dividend per share
2022: 9 pence
2021: 5 pence
Number of employees
2022: 362
2021 restated*: 359
Equity scheme participation
2022: 37%
2021 restated*: 37%
Number of locations
2022: 11
2021 restated*: 11
Number of offices
2022: 14
2021 restated*: 14
* The year ended 28 February 2021 has been restated for the presentation of Cory Brothers and AqualisBraemar as
discontinued operations.
Page 22
Financial Review
A strong trading performance and the successful execution of our strategic objectives
“This excellent performance reflects the investments we have made to increase the breadth, focus and
depth of the Group's core Shipbroking activities.”
Nicholas Stone, Chief Financial Officer
Summary Income Statement 2022
The strong trading and higher revenues have meant that all our profit measures have increased significantly.
• Statutory operating profit over the last year increased by 44% to £9.5m (2021 restated*: £6.6m).
• Underlying operating profit increased by 31% to £10.1m (2021 restated*: £7.7m).
• Statutory reported profits for the year were up 209% to £13.9m (2021 restated*: £4.5m).
The final measure benefitted from the Group’s strong underlying trading, as well as the profits on disposal of non-
core assets and businesses.
2022
£’000
2021
Restated*
£’000
% Inc/(Dec)
Revenue
101,310
83,695
21%
Operating costs
(87,090)
(72,593)
20%
Central costs
(4,160)
(3,383)
23%
Underlying operating profit before specific items
10,060
7,719
30%
Specific items – Acquisition and disposal-related expenditure
(122)
(835)
(85%)
Specific items – Other operating costs
(392)
(262)
50%
Operating profit
9,546
6,622
44%
Share of associate loss
(19)
–
100%
Net finance costs
(984)
(1,486)
(34%)
Taxation
(1,839)
(1,574)
17%
Profit after tax from continuing operations
6,704
3,562
88%
Discontinued operations – underlying
1,493
(513)
391%
Discontinued operations – specific
5,722
1,483
286%
Profit attributable to equity shareholders of the Company
13,919
4,532
209%
* The year ended 28 February 2021 has been restated for the presentation of Cory Brothers and AqualisBraemar as
discontinued operations and a prior period adjustment as disclosed in Note 34 of the Financial Statements.
Continuing operations
Revenue
Revenue from continuing operations grew by 21% from £83.7m to £101.3m. As seaborne trade recovered from the
COVID pandemic and logistical disruption strengthened freight rates, revenue and fixture volumes across almost
every Shipbroking desk increased. Total revenue also increased on the Corporate Finance desk and due to the
completion of several large mandates, and there was a consequent increase in success fees compared with
retainer income.
Page 23
Operating costs
Due to the substantial increase in revenue there was a corresponding increase in profit-related bonuses paid to the
brokers responsible for generating them, which was the main contributor to the increase in operating costs. The
increase in the percentage of cash bonuses paid on last year’s profits, as noted in the CEO Report, also contributed
to this increase. Cash bonuses are charged in the year in which they are earnt whereas deferred share bonuses,
which were reduced at the same time, are charged over multiple years. Future years will see a consequent
reduction in deferred share charges as a result.
As COVID restrictions were eased during 2021, travelling and entertaining expenditure increased as the Group’s
brokers re-engaged with charterers and ship owners. In the prior year, £0.9m of Singaporean and Australian
Government grants were netted off against staff costs; these grants were received by the Group for retaining
employees during the COVID pandemic. No such grants were received in the current year. As a result of all these
factors, operating costs increased by 20% from £72.6m to £87.1m.
Central costs
Central costs increased in total by 23% from £3.4m to £4.2m. This was the result of various changes to the Group’s
board as well as additional one-off professional fees associated with the delayed year-end audit process and a
one-off impact of £0.5m of costs related to an office building that was vacated by a sub-tenant during the year.
The office lease was assigned to a new tenant in March 2022 and that cost will not re-occur in FY22/23. Therefore,
on an ongoing basis, central costs were reduced during the year.
Net finance costs
Net finance costs for the year decreased by 34% to £1.0m (2021: £1.5m). The cost has three elements: the revolving
credit facility provided by HSBC which provides the seasonal working capital needed by the business as well as the
core indebtedness; the convertible loan notes associated with the acquisition of Braemar Naves; and the interest
charge associated with right-of-use assets under IFRS 16. The reduction in cost follows the reduction seen in net
debt in the business, as well as the ongoing repayment of the convertible loan notes.
Included within the net finance costs is a credit of £0.2m. This is in respect of the accounting for the restructuring
of deferred consideration owed in relation to the acquisition of Braemar Naves. In the prior year £0.4m was charged
to finance costs in respect of interest payable on tranches of the revolving credit facility that was used to fund the
acquisition of Braemar Naves. This is no longer considered specific, and in the current year all interest payable is
included in underlying finance costs.
Prior period adjustments
As mentioned in the Chairman’s Statement, a thorough review of the historic accounting for several corporate
transactions and the classification of various reserve balances was carried out as part of the year-end audit
process. The process was prompted by the errors identified in the accounting for the 2017 Naves acquisition and
was extended to incorporate a detailed review of other transactions and consolidation adjustments. The results of
the process are described in detail in Note 34 to the Financial Statements.
Specific items and discontinued operations
During the year the board has successfully executed several transactions with the aim of simplifying the Group’s
operations to concentrate on a new growth strategy centred around Shipbroking.
Items that are not considered to be part of the ongoing trade of the Group have been presented as specific. These
items are material in both size and/or nature and we believe may distort understanding of the underlying
performance of the business if not identified separately.
The financial results of Wavespec, AqualisBraemar and Cory Brothers which were disposed of during the year have
been presented as discontinued operations.
Specific items
Acquisition-related expenditure – Braemar Naves
There were £0.1m (2021 restated: £0.6m) of acquisition-related charges during the year for the acquisition of Naves
Corporate Finance GmbH in 2017. This charge includes £0.2m elements of post-acquisition consideration payable
to the sellers; £0.1m of interest charges; and an FX gain of £0.2m on conversion of Euro denominated acquisition
liabilities to GBP.
Other operating costs – lease assignment
On 28 March 2022 the assignment of the office referred to above was completed. The lease was impaired to
reflect the commercial terms of the assignment at 28 February 2022. A charge of £0.4m was recognised as a
specific item in other operating costs. This compares with a prior year charge of £0.3m in respect of the sublet of
the same office.
Page 24
Braemar Naves consideration restructuring
On 3 June 2021, a restructuring of the deferred consideration owed in relation to its 2017 acquisition of Braemar
Naves was agreed. This restructuring will see the deferral of more than £2.5m (€2.9m) that was previously due for
repayment before the end of December 2022 paid no earlier than September 2025. In addition, a further amount of
approximately £0.7m (€0.75m) is to be satisfied by the issue of new ordinary shares in the capital of the Company
in three tranches. The first two tranches were completed during the year, and the third is due in December 2022. At
28 February 2022 the total principal amount outstanding was £5.0m (€6.0m).
At 28 February 2022 the net present value of the outstanding liabilities was £4.9m (2021 restated: £8.1m).
As a result of the rescheduling, the model that had been used to generate the accounting entries for the acquisition
since it was made in 2017 was reviewed to determine the amendments needed. That review identified certain
computational errors. In particular the calculation of amounts in relation to the outstanding deferred consideration
arising from the acquisition and the consequent entity accounting eliminations on consolidation were incorrect. The
error resulted in an overstatement of liabilities at February 2021 and February 2020, and an overstatement of
charges in other comprehensive income in 2021. There is no impact on profit and loss or earnings per share in
either period. Further details of the restatement can be found in Note 34 of the Financial Statements.
Discontinued operations
A total of £7.2m has been recognised from discontinued operations, as can be seen in the table below. £1.5m
relates to the underlying trading results of Cory Brothers and Wavespec prior to the disposal, as well as the Group’s
share of AqualisBraemar’s results to 19 May 2021. £5.7m relates to the specific profits and losses on the disposal
transactions.
Underlying
£’000
Specific
£’000
Total
£’000
Cory Brothers
1,563
4,134
5,697
AqualisBraemar
76
3,375
3,451
Wavespec
(146)
(1,787)
(1,933)
Total
1,493
5,722
7,215
Disposal of Cory Brothers
On 28 February 2022, the planned disposal of Cory Brothers, its Logistics Division, to Vertom was completed; total
consideration will range between £10.25m and £15.5m. The consideration comprises initial cash proceeds of £6.5m,
together with three further deferred and contingent payments based on the percentage of the gross profit of the
newly formed VertomCory business for a three-year earnout period ending on 31 December 2024. The three
earnout payments combined will be a minimum of £3.75m and a maximum of £9.0m. The fair value of the expected
earnout consideration at 28 February 2022 is estimated to be £4.8m. The consideration from the disposal will be
used to reduce net debt and strengthen the Balance Sheet in furtherance of the Group’s growth strategy. The
trading result for Cory Brothers up to the point of disposal was a profit of £2.4m, although this is drawn before
amortisation and depreciation charges of £0.3m which were reversed upon the assets being held for sale. After
costs of disposal and recycling of foreign exchange, the Group realised a profit on disposal of £4.1m.
Disposal of investment in AqualisBraemar
On 19 May 2021, the Group sold 9,640,621 shares of its non-core investment in AqualisBraemar for cash proceeds
of £7.2m. On 20 August 2021, 1,000,000 warrants vested and were exercised, and the remaining warrants lapsed.
The resulting shares were sold for additional cash proceeds of £0.7m on 31 August 2021. After legal costs and
recycling of foreign exchange, the Group realised a total profit of £3.4m on these disposal transactions.
As part of the exercise to re-examine and Balance Sheet reserves balances, it was identified that the amount
recycled from other comprehensive income from the foreign exchange translation reserve in the previous year and
reported as gain of £0.5m was misstated and should have been a loss of £0.5m. The gain on disposal that arose
from the partial sale in the year to 28 February 2021 is therefore restated as described in Note 34 to the accounts.
On 19 May 2021 the Group’s interest in AqualisBraemar was limited to its holding of 6,523,977 performance-based
warrants. Consequently, the Group ceased to equity account for its interest in AqualisBraemar. The Group’s share
of profits in AqualisBraemar up to 19 May 2021 was £0.1m.
Disposal of Wavespec
On 31 March 2021, the Group completed the disposal of its loss-making Engineering Division, Wavespec, for a
maximum consideration of £2.6m. The consideration was intended to be satisfied by the issuance of a promissory
note with a maturity date of 31 March 2026. The recognised fair value of the consideration of £2.4m was based on
Page 25
the net present value of the promissory note and this resulted in a profit on disposal of £0.6m. However, as at 28
February 2022, the buyer had not delivered on its obligations to secure the promissory note and the board took a
view that the promissory note was unlikely to be honoured, and that consequently the consideration has been
credit impaired. The total loss for the year from Wavespec was £1.9m. This consisted of a trading loss of £0.1m, a
gain on disposal of £0.6m and a credit impairment of charge of £2.4m.
Balance Sheet
Net assets at 28 February 2022 were £75.1m (2021 restated: £66.5m). The year saw a decrease in gross trade
receivables to £25.0m from £27.3m at the previous year end due to the disposal of Cory Brothers, partially offset by
the growth in debtors in Shipbroking and Financial due to the strong revenue growth in the period. The proportion
of trade receivables provided against was broadly in line with the previous year. A receivable of £6.5m is included in
other receivables in respect of the VertomCory completion proceeds received on 2 March 2022. A receivable of
£4.8m is included in other long-term receivables in respect of the VertomCory deferred and contingent
consideration.
Capital expenditure
Total capital expenditure was £2.3m (2021: £2.3m). The most significant item of capital expenditure relates to the
treatment of office leases under IFRS 16 whereby the lease is treated as an asset addition. These lease additions
totalled £1.0m in the year (2021: £1.2m) and do not relate to cash payments in the year. The balance relates to
capitalised expenditure on computer software of £0.6m (2021: £0.6m) and other expenditure on fixtures and
fittings and leasehold improvements of £0.7m (2021: £0.5m).
Borrowings and cash
At the Balance Sheet date, the Group had a revolving credit facility with HSBC of £30.0m. The facility also provides
access to a global cash pooling facility in the UK, Germany and Singapore which enables efficient management of
liquidity between its main regional hubs. The Group operates a pooling arrangement for cash management
purposes and at the end of the year the Group had net debt across those pools of £9.3m (2021: £8.9m). Including
the £6.5m proceeds from Cory Brothers which were received on 2 March 2022, net bank debt reduces to £2.8m.
The Group’s revolving credit facility (“RCF”) liability was previously reported as a short-term liability. However, a
review of the facility agreement has confirmed that the lender is obliged to continue the facility for a period greater
than twelve months from the respective reporting date. The liability has therefore been restated as a non-current
liability at 29 February 2020 and 28 February 2021.
Retirement benefits
The Group has a defined benefit pension scheme which was closed to new members during FY15/16. The scheme
has a net liability of £2.1m (2021: £3.8m), which is recorded on the Balance Sheet at 28 February 2022. The agreed
annual scheme-specific funding since the triennial valuation as at March 2014 was a cash contribution of £0.5m.
The latest triennial funding valuation as at March 2020 was carried out during the year and the result was an
unchanged annual employer cash contribution of £0.5m, which was agreed with the trustees and is being paid in
monthly instalments.
Foreign exchange
The US Dollar exchange rate has moved from US$1.39/£1 at the start of the year to US$1.34/£1 at the end of the
year. A significant proportion of the Group’s revenue is earned in US Dollars. To protect the future Sterling value of
those revenues, at 28 February 2022, the Group held forward currency contracts to sell US$53.8m at an average
rate of US$1.37/£1.
An error in allocating amounts between the translation reserve and hedging reserve has been identified. These
reserves are both presented within other reserves in the primary statements as detailed in Note 30. The hedging
reserve was understated and the translation reserve overstated by £0.5m at 29 February 2020. At 28 February
2021, the hedging reserve was understated and the translation reserve overstated by £0.6m. These errors have
been corrected in the restated Balance Sheets at 28 February 2020 and 28 February 2021.
Taxation
The Group’s underlying effective tax rate in relation to continuing operations in FY21/22 was a charge of 21.2%
(2021: charge of 31.4%) which is broadly in line with the UK tax rate in the current year. The tax charge on
discontinued operations was £0.8m (2021: £0.2m).
Alternative profit measures (“APMs”)
Braemar uses APMs as key financial indicators to assess the underlying performance of the Group. Management
considers the APMs used by the Group to better reflect business performance and provide useful information to
investors and other interested parties. We have separated the impact of individually material capital transactions,
such as acquisitions and disposals, from ongoing trading activity to allow a focus on ongoing operational
performance. Our APMs include underlying operating profit and underlying earnings per share. Our prior year APMs
have been restated to reflect the reclassification of discontinued operations noted above.
Page 26
Capital management
The Group manages its capital structure and adjusts it in response to changes in economic conditions and its
capital needs. To maintain or adjust the capital structure, the Group may adjust the dividend payment to
shareholders, return capital to shareholders or issue new shares and debt instruments. The Group has a policy of
maintaining positive cash balances whenever possible, which can be supported by short-term use of its revolving
credit facility. This is drawn down as required to provide cover against the peaks and troughs in our working capital
requirements.
ESOP Trust
During the previous year the Company requested that SG Kleinwort Hambros Trust Company (CI) Ltd, as Trustee of
the Company’s ESOP Trust, purchase shares in Braemar Shipping Services Plc. During the year a total of 2,740,164
shares in the Company were purchased by the Trustee and 596,398 shares were released; as a result, at 28
February 2022, the ESOP held 2,669,603 shares (2021: 525,837 shares). The total cash outflow as a result of these
share purchases was £6.3m (2021: £0.9m). Subsequent to the year-end the ESOP purchased a further 1,670,000
shares. As at 10 August 2022 the ESOP held 4,339,603 shares and now contains sufficient shares as are expected
to be needed to cover all current share awards as described in Notes 28 and 29 of the Financial Statements.
Dividend
The Directors are recommending for approval at the reconvened AGM on 6 October 2022 a final dividend of 7.0
pence per share. The interim dividend of 2.0 pence per share in respect of the six months to 31 August 2021 was
paid on 16 December 2021. The total dividend of 9.0 pence for the year is covered 3.1 times by the underlying
earnings per share from continuing operations of 27.95 pence. The total cash outflow in respect of dividends paid
during the year ended 28 February 2022 was £2.1m (2021: £nil).
Going concern
Particular care has been taken in preparing these accounts to the going concern review and viability statement due
to the ongoing geopolitical impacts on global trade. The Group's compliance with sanctions put in place because of
the conflict in the Ukraine is not expected to have any material effect on trading in the current financial year nor
does the Group have any existing material exposure. The strong cash flows exhibited during the year and the Cory
Brothers cash consideration received on 2 March 2022 have meant that the Group is in a much stronger position
than at the previous year-end. Nevertheless, careful and frequent monitoring of cash forecasts and client payments
will be maintained to ensure this situation continues. The Group’s revolving credit facility is due to expire in
September 2023, however the Group has already received acceptable indicative terms for an extension and
expects discussions to be concluded well in advance of the expiration of the current facility.
Nicholas Stone
Chief Financial Officer
28 August 2022
Page 27
Section 172(1) Statement
The Companies Act 2006 (the “Act”), as amended by the Companies (Miscellaneous Reporting) Regulations 2018,
requires companies to include a “Section 172(1) Statement” in the Strategic Report describing how directors have
had regard to the matters set out in Section 172(1)(a) to (f) of the Act when performing their duties under Section
172. Section 172 of the Act requires directors of a company to act in a way that they consider, in good faith, would
be most likely to promote the success of the company for the benefit of its members, and in doing so have regard
(amongst other matters) to the:
• likely consequences of any decision in the long term;
• interests of the company’s employees;
• need to foster the company’s business relationships with suppliers, customers and others;
• impact of the company’s operations on the community and the environment;
• desirability of the company maintaining a reputation for high standards of business conduct; and
• need to act fairly as between members of the company.
The directors’ duties under Section 172 are embedded in all the decisions that the board and its Committees make
– as are a range of other factors, including alignment with our strategy and our values. As such, information on how
Section 172 matters have been considered can be found throughout this Annual Report.
The board understands the importance of effectively engaging with the Company’s key stakeholders, to better
understand their views and interests, and to better consider the potential impact of the directors’ decisions on
them. Information on the Company’s key stakeholders can be found on page 52 and information on how the
Company engaged with various stakeholders during the year can be found in the EPSG report on pages 28-37, the
Chairman’s introduction to governance section on page 49 and the shareholder relations section of the Corporate
Governance Report on page 52 of this Annual Report.
The board recognises that the interests of stakeholders may conflict with each other and that it may not always be
possible to provide a positive outcome for all stakeholders from a particular decision. The board looks to follow best
corporate governance practice and has a governance framework in place that allows it to assess the broad range
of interests and perspectives, to balance potentially competing interests, and, ultimately, to make informed and
reasoned decisions. Information on how the board and its committees operate can be found in the Corporate
Governance Report on page 52 of this Annual Report.
The principal decisions that the Company took in the year (and as part of the year-end processes) are discussed in
this Annual Report and provide examples of how the directors have had regard to Section 172 matters. These are:
• the disposal of Wavespec which was the final step in disposing of the Group’s Technical Divisions, more
information on which can be found in the Strategic Update on page 4 and in the Chief Executive’s Report on
page 14 of this Annual Report;
• the sale of the Group’s entire remaining non-core interest in AqualisBraemar which followed the sale of
9,600,000 shares in FY20/21 in the Strategic Update on page 4 and in the Chief Executive’s Report on page 14
of this Annual Report;
• the rescheduling of deferred consideration amounts owed in respect of the 2017 acquisition of Braemar Naves
and the integration of the Group’s Shipbroking and Corporate Finance activities, more information on which can
be found in the Strategic Update on page 4 and in the Chief Executive’s Report on page 14 of this Annual Report;
• the strategic review of the Cory Brothers and the decision to dispose of that business rather than enter a joint
venture arrangement, more information on which can be found in the Strategic Update on page 4 and in the
Chief Executive’s Report on pages 14 of this Annual Report;
• the decision to appoint Tristram Simmonds as Chief Operating Officer and Elizabeth Gooch and Joanne Lake as
non-executive directors, more information on which can be found in the Nomination Committee report on pages
60 & 61 of this Annual Report;
• the decision to reduce the overall amount of deferred equity issued annually as part of employee remuneration
arrangements to better align shareholder and employee interests and support the Group's growth agenda, more
information on which can be found in the Chief Executive’s Report on page 16 and in the Remuneration
Committee Report on page 63 of this Annual Report;
• the decisions to pay an interim dividend of 2.0 pence per share, and to recommend a final dividend of 7.0 pence
per share more information on which can be found in the Chairman’s Statement on pages 5, in the Financial
Review on page 26 and in the Viability Statement on page 45 of this Annual Report; and
• the launch of the Group’s Environmental, People, Social and Governance (“EPSG”) Framework, more information
on which can be found on pages 28 to 37 of this Annual Report.
Page 28
EPSG Report
We have recently launched our Environmental, People, Social and Governance (‘EPSG’) framework. At Braemar, we
recognise the importance of sustainability to our success as a business. The environmental, social, and governance
elements of traditional ‘ESG’ criteria help us to measure, manage, and demonstrate our contributions to fairer, more
prosperous, and more sustainable way of doing business. However, we believe that because of the importance of
people to our business, we need to explicitly recognise their contribution in the title of our Framework and to ensure
we maintain equal focus on our most important asset. Without our team, Braemar would not exist.
Shipping will remain the most energy-efficient way to transport freight for the foreseeable future. On average, it
produces 25 grams of CO
2
per tonne-kilometre, compared to 600g CO
2
/tonne-km for aviation and 50-150g
CO
2
/tonne-km for road-based transportation. Nevertheless, the international shipping industry still accounts for
approximately 2-3% of worldwide greenhouse gas emissions – roughly the same as the aviation industry – and it
faces significant challenges in reducing its carbon emissions and transitioning to net zero. As climate change and
the transition to net zero emissions becomes increasingly important to the shipping industry and the world at large,
we believe we can have a role in supporting the industry accelerate the sustainability of ships and shipping. Or, as
we’ve defined it in our mission, to facilitate climate-smart shipping.
As a broker, our direct environmental footprint is a very small percentage of the shipping industry’s emissions.
Although we can have no direct role in delivering the decarbonisation of the industry we can work with owners and
charterers to support them as they navigate towards a low carbon shipping industry. Our goals are to support our
clients with this transition as well as minimise our own office-based emissions. Further details on what this means
for our business can be found on page 10 of this Annual Report.
Tristram Simmonds, COO and Nicholas Stone, CFO are the executive directors leading management’s
implementation of our EPSG framework.
“We aim to optimise our EPSG framework so that we can fully align our business and our customers
with the sustainability challenges that our industry faces.”
Tristram Simmonds, COO and Nicholas Stone, CFO
Elizabeth Gooch, non-executive director and senior independent director is the non-executive director responsible
for oversight of our EPSG framework.
“I am delighted to work with my fellow board members and our wider team as we implement the
activities we have planned to achieve our EPSG goals and targets. We are confident that our EPSG
strategy will benefit both Braemar and our world.”
Elizabeth Gooch, non-executive director and senior independent director
Page 29
EPSG Framework
Our EPSG Framework is aligned to four of the 17 United Nations SDGs. The SDGs that we have selected, and the
references to specific targets which we are working towards are as follows. Ongoing work is being carried out in
FY22/23 to define the Group’s targets and metrics as well as the effect on the business and any material costs.
Performance against these targets will be measured once they have been defined.
SDG 6: Clean water and sanitation
Ensure availability and sustainable management of water and sanitation for all
Target 6.3 ... improve water quality by reducing pollution ... minimising release of hazardous chemicals and
materials ... and substantially increasing recycling and safe reuse globally
Target 6.6 ... protect and restore water-related ecosystems, including mountains, forests, wetlands, rivers,
aquifers and lakes
Page 30
SDG 8: Decent work and economic growth
Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work
for all
Target 8.4 ... endeavour to decouple economic growth from environmental degradation
Target 8.6 ... reduce the proportion of youth not in employment, education or training
SDG 13: Climate action
Take urgent action to combat climate change and its impacts
Target 13.3 Improve education, awareness-raising and human and institutional capacity on climate change
mitigation, adaptation, impact reduction and early warning
SDG 14: Life below water
Conserve and sustainably use the oceans, seas and marine resources for sustainable development
Target 14.1 ... prevent and significantly reduce marine pollution of all kinds
Target 14.2 ... sustainably manage and protect marine and coastal ecosystems to avoid significant adverse
impacts, including by strengthening their resilience, and take action for their restoration in order to
achieve healthy and productive oceans
(Source: United Nations Department of Economic and Social Affairs)
These SDGs were chosen by our team as the most currently relevant to Braemar. We will keep a watching brief on
the SDGs and our strategic alignment as the EPSG Framework evolves in the future.
Page 31
Environment
Working in partnership with CHOOOSE – a respected provider of digital tools, including to several of the biggest
names in aviation – we have created Braemar Offset. Braemar Offset directly connects our clients with some of the
most impactful and verified climate projects available today. By working with Braemar Offset to reduce their carbon
footprint, companies will be able to play a proactive role improving their sustainability and accelerate climate action.
The Group is developing metrics to report on the success of Braemar Offset from FY22/23.
We used the Braemar Offset platform to purchase carbon credits to offset 3,500 tonnes of carbon dioxide, which
are approximately equal to our entire Scope 1, 2 and 3 emissions for the last five years. The schemes that these
carbon credits invested in included wind power, solar photovoltaic projects, conservation initiatives and
biomass/landfill gas projects, two case studies are detailed below.
Our EPSG strategy, including our commitment to our chosen SDGs, guided the selection of these schemes. By
aligning our carbon offsetting investments with our EPSG strategy we are strengthening the impact of our
contribution to our chosen SDGs.
Hasanbeyli Wind Farm, Turkey
Hasanbeyli Wind Farm is a 50MW onshore wind power project. It is located in Osmaniye, Turkey. The main purpose
of this project is to generate electricity from the Power Plant and supply power generated to the Turkey national
grid.
SDGs: 7 Affordable and clean energy, 8 Decent work and economic growth, 13 Climate action
Nii Kaniti Community Forest Management in Peru
The Nii Kanti project in Peru focuses on protecting rainforest and avoiding deforestation on community land. The
main purpose of this project is to integrate conservation activities and sustainable community forest management.
SDGs: 1 No poverty, 2 Zero hunger, 8 Decent work and economic growth, 12 Responsible consumption and
production, 13 Climate action, 15 Life on land
We recognise that carbon offsetting is our only solution to historic emissions but going forward we aim to first
reduce our direct carbon footprint, and then use carbon credits to offset our unavoidable emissions. During the
year ended 28 February 2022, we put in place several initiatives to minimise our direct carbon footprint. For
example, we have optimised all our computer equipment with power saving modes and we have moved from on-
site servers to cloud storage in order to reduce energy consumption and emissions. In our offices we continue to
promote recycling and reduced paper consumption. We also launched an electric vehicle salary-sacrifice scheme
in the UK to support our team members who wish to reduce their own carbon footprint.
Climate-related risks and opportunities
Our TCFD disclosures on pages 47 to 48 set out how we incorporate climate-related risks and opportunities into
the four pillars set out by the TCFD. These disclosures also provide references to other sections of this Annual
Report where further disclosures are provided.
Streamlined Energy and Carbon Reporting (“SECR”)
We measure and monitor our energy and calculate our greenhouse gas emissions based on the use of gas and
electricity in our offices, car usage for business purposes and business travel, as shown in the table below. The
data in this table represents the Group’s GHG emissions and excludes associates and joint ventures. In the current
year the data for Cory Brothers is presented as discontinued operations. The prior year comparatives include Cory
Brothers and have been restated to include the impact of working from home. The effect of the restatement for
working from home increased Scope 3 emissions by 197 tCO2e to 287 tCO2e (2021 published Scope 3 emissions:
90 tCO2e). Cory Brothers had no RoW Scope 1 or Scope 2 emissions in either year because the business did not
have any of its own offices outside of the UK. Cory Brothers occupied RoW offices owned by the continuing Group
and therefore the Scope 1 and Scope 2 emissions associated with these offices are reported in continuing.
Page 32
Braemar Shipping Services Plc – Group Energy Use and Associated GHG Emissions
Year 1 March 2021 to 28 February 2022
Year ended 28 February 2022
Year ended 28 February 2021 restated
Continuing
Discontinued
Total
UK
RoW
UK
RoW
Total
UK
RoW
Total
Energy consumption
Gas
–
10,000
100,686
–
110,686
43,848
1,386
45,234
Electricity
313,063
263,338
98,160
–
674,561
298,125
107,450
405,575
Milage
–
56,064
90,409
–
146,473
30,619
22,600
53,219
Total energy consumption in
kWh
313,063
329,402
289,255
–
931,720
372,592
131,436
504,028
GHG emissions
Scope 1 in tCO
2
e
–
10
41
–
51
9
6
15
Emissions from combustion of
gas
–
2
18
–
20
4
5
9
Emissions from combustion of
fuel for the purposes of owned
transport
–
9
22
–
31
5
1
6
Scope 2 tCO
2
e
66
126
21
–
213
71
24
95
Emissions from purchased
electricity (location based)
66
126
21
–
213
71
24
95
Scope 3 tCO
2
e
116
149
75
6
346
195
93
288
Emissions from transportation
and distribution (T&D of
electricity)
6
5
2
–
13
7
1
8
Emissions from employees
working from home
40
49
58
6
152
118
72
190
Emissions from business travel
in rental cars or employee-
owned vehicles
–
5
–
–
5
3
1
4
Emissions from flights
70
91
15
–
176
67
19
86
Intensity ratio
Total gross emissions tCO
2
e
183
286
136
6
611
275
123
398
Number of employees
174
188
173
17
552
341
196
537
Carbon intensity per
employee
1.1
1.5
0.8
0.4
1.1
0.8
0.6
0.7
Page 33
The Group’s total emissions have increased by 213 tCO
2
e to 611 tCO
2
e (2021 restated: 398 tCO
2
e). This is mainly
due to increases in electricity consumption and emissions from flights. As pandemic restrictions have been lifted
the number of employees returning to our offices and travelling for business purposes has increased. We are
seeking to reduce these emissions going forward by making use of video conferencing where possible and being
mindful of our carbon footprint when considering business travel.
In line with the SECR requirements, we have calculated our Intensity Ratio based on our emissions per employee,
which we feel is an appropriate measure for a people-based business.
Scope 1 covers direct emissions from owned or controlled sources.
Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating and cooling
consumed by the Group.
Scope 3 includes the following indirect emissions from the Group’s value chain: business travel, employee
commuting and working from home and transportation and distribution. Scope 3 emissions do not currently include
purchased goods and services, waste disposal, investments or leased assets.
Our carbon footprint has been calculated using the GHG Protocol Corporate Standard guidelines, using the UK
emission conversion factors produced for 2021 by the UK Department of Business, Energy and Industrial Strategy
(“BEIS”) and Department for the Environment, Food and Rural Affairs (“DEFRA”). The model used to calculate the
Group’s GHG emissions was developed by an independent consultant however the data used to populate this
model has not been independently verified.
Page 34
People
The biggest achievements in a business are never the result of one person; they require a group effort. Braemar
has thrived over the last twelve months, and the success we've had is a direct result of the calibre of people that
we employ and the team-spirit that connects us.
“My priority is to develop a HR strategy that unites our teams across the globe and provide a rock-hard
foundation for building our brand and growing our business.”
Becki Mackay, Group Head of HR.
Shipbroking is a people-driven business. Our ability to recruit and retain high performing individuals is a competitive
strength, and we recognise that our future success will depend upon our ability to continue to do so.
In FY21/22 the Group’s continuing operations had an average of 362 employees (2021: 359) located in 14 offices
(2021: 14) across 11 countries (2021: 11).
We are making an increased effort to ensure that our business objectives are aligned with our team's interests, and
that we are enabling a high-performance working environment. The well-being and productivity of our team has a
substantial impact on our shareholder returns, and that is why we are investing more in how we support, motivate
and manage our people.
In January 2022, Becki Mackay was appointed Group Head of HR. Becki was previously Global HR Manager at Cory
Brothers and from July 2021 held a dual Braemar-Cory Brothers position. Becki has a track record of creating
environments in which people feel valued and productive, and removing barriers which prevent them from
delivering their full potential.
Well-being
Under Becki’s direction the Group has focused on navigating out of pandemic restrictions, while continuing to build
on the people-focused initiatives that were put in place in recent years.
During the COVID pandemic we focused on efforts to better support mental health and well-being, as well as
supporting clients, colleagues and their families who’d been affected by COVID. The Mental Health First Aider
scheme continues to run successfully in the UK, and our Employee Assistance Programme has been rolled out
globally.
The conflict in the Ukraine has sent ripples through the global shipping markets. Although we don’t have anyone
directly employed in either country, Russians and Ukrainians crew many of the ships we charter, several of our
colleagues have family connections to those countries, and many of our clients have offices in the Black Sea. Our
sympathies are with those affected during this difficult period.
Employee engagement
In October 2021 we surveyed our global Shipbroking team. During a time when we were still often working from
spare rooms or the kitchen, we were delighted to see that 75% of respondents felt proud to work for Braemar, and
81% understood how their specific role contributes to the success of the business. The next engagement survey is
planned for October 2022 and will provide vital insights into the development and enhancement of our HR
approach.
In FY22/23 several initiatives are planned to execute the Group’s HR strategy and respond to some of the themes
identified in the engagement survey. Stephen Kunzer and Elizabeth Gooch, our non-executive directors responsible
for employee engagement, are progressing additional workstreams.
During the year Stephen has reviewed the global broker desk coverage while Elizabeth has benchmarked
employee remuneration. Elizabeth has also reviewed, clarified and improved employee incentive packages, and
taken overall responsibility for the EPSG Framework. Through the Remuneration Committee chaired by Elizabeth,
the board intends to further encourage and improve employee engagements in FY22/23 through closer discussion,
and the next employee engagement survey.
Training and development
Over the last couple of years, we have been actively working to develop the next generation of leaders at Braemar.
Millennials are already the largest generation in the workforce, and through our Associate Director programme
we’re actively identifying, training and developing those who’ll be at the helm in years to come. The West cohort
Page 35
(Europe and the US) is twelve strong, mainly based in London and the East cohort (Singapore and Australia) has
eleven members.
In Singapore, our Graduate Trainee programme is now in its second year. A pioneer group started in July 2021 and
were offered permanent positions on various desks as Trainee Broker, Operator and Research Analyst in May 2022.
In the forthcoming year up to ten new graduates and young adults will join us in July 2022. The twelve-month
programme offers personal development, in-depth understanding of Shipbroking and career coaching through a
combination of workshops, desk rotations, on-the-job training and mentoring. Following the success of the
programme in Singapore, plans are in place to launch a similar scheme in London, and possibly in other key
locations.
In FY22/23 the Group plans to launch a custom performance management platform. This will better enable the
Group to align and engage our employees with clearer objectives and enhance our ability to provide structured
feedback about their promotional prospects and career paths.
Gender diversity
The shipping industry has traditionally been dominated by men and Braemar is no exception. As at 28 February
2022, women accounted for 23% of our global workforce (2021: 25%). The Group’s senior management comprises
one female and ten males, with two females and five male directors on the board. Addressing the gender
imbalance across our organisation is a priority for our HR and EPSG strategy and we look to report on our progress
in this area going forward.
Page 36
Society
Under the new EPSG Framework our approach to social issues will change. We will seek to support long-term,
strategic partnerships with charities and organisations that align with our goals, such as addressing inequalities in
the locations where we have offices. We will also engage our teams locally and globally regarding issues they feel
passionate about, with a particular focus on the marine environment.
During FY21/22 many of our teams have participated in charitable initiatives and some examples are shown below.
We also continue to support Mercy Ships – an international surgical care charity; Ronald MacDonald House – a
children’s hospital in Singapore; and Willing Hearts – a soup kitchen in Singapore. Cory Brothers was an active
member of the Suffolk Chamber of Commerce and Managing Director Peter Wilson was included in the Suffolk 100,
a collection of 100 individuals who have made a positive difference to the commercial, community or cultural life of
the county.
Going forward we are excited to align our charitable and fundraising initiatives with our EPSG Framework and we
wish Cory Brothers well in their continuing efforts under the new ownership.
The Mission to Seafarers
In February 2022, team members from Braemar’s Singapore office took part in Eastern Pacific Shipbroking’s
Around the World Fundraiser, an event which raised money for The Mission to Seafarers. This charity provides help
and support to the 1.5 million crewmen and women who literally keep the global economy afloat. Our team ran,
walked and cycled through Singapore’s green corridor, tracking the kilometres they travelled to help the maritime
community collectively achieve 100,000km during the fundraising period.
“Our participation in this fundraiser was an important part of bringing the maritime industry together to
support a cause that is near and dear to all of us.”
Shenny, Singapore.
The Special Boat Services Association (“SBSA”)
In partnership with GFI, the Wet FFA desk supported The Special Boat Services Association, a charity that provides
practical, financial and emotional support for members of the Special Boat Services and their families. The desk
was a significant contributor to the SBSA’s annual fundraising event which raised money via open and silent
auctions.
“The SBSA is a thoroughly deserving cause, and we recognise the importance of supporting veterans
and their families in times of hardship and trouble.”
Jay, London.
Crisis at Christmas
In London we see homelessness as a key local issue which is why we support Crisis at Christmas, a campaign run
by Crisis, a charity committed to ending homelessness. Our donations help Crisis to open centres over the festive
week that provides companionship, support and a wide range of vital services to people without homes. Each
centre delivers a safe, warm and friendly sanctuary over the Christmas period for people who have nowhere else to
go.
“We see homelessness every day here in London, so we’re pleased to be able to support Crisis. As a
people business we’re minded to think about supporting others, and especially at this time of year we
know that our donations can make a big difference to those experiencing homelessness.”
Katie, London.
Page 37
Governance
We maintain a high standard of corporate governance, which is essential to enable our business to succeed in
delivering its strategy. Moreover, it is integral to enhancing its reputation and maintaining the trust and support of its
shareholders, clients, employees and other stakeholders. Further details of the Group’s compliance with the UK
Corporate Governance Code can be found in the Corporate Governance Report on pages 49 to 53 of this Annual
Report.
We set high standards for our team and give them clear frameworks and policies within which to operate. This is
supported by an externally provided telephone line to report any incidents under our whistleblowing policy, and by
the Group’s internal training programme.
The importance of sanctions screening to our compliance programme and KYC processes has been reiterated by
the recent events in Ukraine. The Group has reviewed its sanctions policy considering these events and is providing
regular communication to employees. The Group's compliance with sanctions put in place as a result of the conflict
in the Ukraine is not expected to have any material effect on trading in the current financial year nor does the Group
have any existing material exposure.
Our Anti-Money Laundering (“AML”) and Know Your Customer (“KYC”) policies and procedures form a key
component of Braemar’s governance framework. The importance of compliance with this policy’s customer due
diligence process was reinforced with training this year to help ensure the approach is consistent across our
organisation. Initial screening of new customers includes a risk assessment, with the customer's risk profile
determining if enhanced due diligence is required. Where customers are approved to proceed, the risk profile also
determines automated re-screening alert intervals (6, 12, or 24 months). Additionally, to help ensure timely update of
customer screening information, we have enabled automatic alerts for any changes in screening data and require
any new sanctions indicators to be escalated to our Legal team for review.
We are committed to protecting human rights and ensuring there is no slavery or human trafficking in our business
or supply chain. There is a clear statement of our intent on our website www.braemar.com.
As part of employee onboarding, new joiners must complete our Governance Framework training which covers all
our key polices and includes the following training modules:
Module One: Anti-Money Laundering/Know your Customer, Modern Slavery, Sanctions and Anti-Bribery and
Corruption policies and procedures.
Module Two: Conflicts of Interest, Anti-Fraud, Anti-Tax Evasion, Entertainment, Meals and Gifts, Whistleblowing
and Complaints policies and procedures.
Module Three: Data Protection, Health & Safety, Share Dealing, Cybersecurity Awareness and IT Acceptable Use
policies.
In addition to training, this year we implemented annual attestations for each policy. Employees are required to
attest that they understand, and comply with, our policies. Completion of training and attestations are monitored
and reported quarterly to the Group Risk and Audit Committees.
Page 38
Non-Financial Information Statement
This is our Non-Financial Information Statement, prepared to comply with sections 414CA and 414CB of the
Companies Act 2006. We explain here where you can find further information on how we act responsibly in relation
to our employees, wider society and the environment.
Reporting requirement
Key policies and standards
(which include relevant due diligence
requirements)
Further information
Environmental matters
! Health, safety and environmental
For more on environment
See pages 31 to 33
Our employees
! Employee handbook
! Whistleblowing
! Health and safety
For more on our people
See pages 34 to 35
Social matters
For more on communities
See page 52
Human rights
! Anti-slavery
! GDPR
For more on ethics
See page 37
Anti-bribery and corruption
! Anti-Bribery and Corruption
! Anti-Tax Evasion
! Anti-Fraud
! Anti-Money Laundering/Know Your
Customer
! Entertainment, Meals and Gifts
For more information
See page 37
Our business model
For more information
See page 7
Principal risks – Risk management
For more information
See pages 39 to 46
Non-financial key performance indicators
For more on key performance
indicators
See page 21
Page 39
Principal risks and uncertainties for the year ended 28 February 2022
Risk management
Effective risk management forms an integral part of how we operate. it is essential for delivering our strategic
objectives as well as protecting our relationships and reputation.
The Group’s Risk Management Framework
Risk awareness is a key element of Braemar’s organisational culture at all levels and is key in managing risks to our
business, helping to ensure the process of risk identification, assessment and response is embedded within daily
operational and functional activities across the Group.
The board is responsible for managing the Group’s risk, overseeing the internal control framework, and determining
the nature and extent of the principal risks the Company is willing to take to achieve its long-term objectives. The
Group’s risk management and internal control frameworks are continually monitored and reviewed by the board
and the Audit Committee, with support from a Management Risk Committee. The board is committed to
maintaining a reputation for the highest standards of conduct in all aspects of its business, but in considering the
other matters set out in Section 172 of the Companies Act 2006, the directors are mindful that the approach must
be balanced with both employee interests and the Group’s need to foster business relationships. As such, Group
policies and procedures have been designed to ensure that the level of risk to which the Group is exposed is
consistent with the Group’s risk appetite and aligned with the Group’s long-term strategy, but also to avoid a
disproportionate administrative burden on employees, clients and counterparties.
Reporting to the Chair of the Audit Committee and administratively to the Chief Financial Officer, the Group Head of
Internal Audit and Group Risk & Compliance Manager leads the Risk Management, Internal Controls and
Compliance functions.
Risk management process
The Group’s risk management approach or framework incorporates both bottom-up and top-down identification,
evaluation, and management of risks. Within our framework:
• senior management teams have initial responsibility for identifying, monitoring, and updating business risks,
while
• Group IT, HR, Legal and Finance management teams assess their respective functions for operational and
functional risks not identified by senior management.
The Group’s Risk Management Framework is managed via a new online system/solution which is accessible to the
senior management team and operational and functional management teams globally. The new system’s
functionality has allowed for enhanced monitoring and reporting automation, which was a limitation of the system
previously used. The new system allows for:
• Group-wide real-time updating;
• distribution and completion of periodic internal control self-assessment surveys;
• ongoing monitoring of risks and mitigation activities at Group, Operational and Functional levels; and
• Risk Management reporting at Group, Regional and Company location levels.
The Group’s Risk Management Framework considers both the likelihood and the impact of identified risks
materialising. Risks are offset, where possible, by the implementation of control activities, which are evaluated to
determine their effectiveness in mitigating or reducing risk to acceptable levels.
All identified risks are aggregated and reviewed to assess their impact on the Group’s strategic objectives and the
resources required to manage them effectively. Key (or Principal) risks are aggregated together with associated
issues or areas of uncertainty. The extent of controls and mitigation as well as the potential for a material effect on
the market value of the Group are then assessed. Unmitigated risks can be significant, but our control processes
and management actions reduce the risk level.
The risk management process evaluates the timescale over which new or emerging risks may occur. The risk
management process also considers the potential impact and likelihood of risks, as well as the timescale in which
risks may occur. The outcome of this process is then reviewed with further consideration and assessment provided
by the Risk Committee, the Audit Committee and the board.
Oversight and evaluation of the effectiveness of Braemar’s Risk Management Framework is led by the Chief
Financial Officer, supported by a Management Risk Committee whose membership includes the Chief Operating
Officer, General Counsel, Group Head of Internal Audit and Group Risk and Compliance Manager, and
representatives of other functions and locations of the business. The Committee monitors risks regularly, taking into
consideration the appetite, tolerance and potential impact for specific risks on the Group.
Page 40
Environment and climate change
During FY21/22 environment and climate change risk was assessed as part of ongoing discussions of key and
emerging risks for the Group and the shipping and energy sectors within which it operates. Consideration of the
potential short to medium-term impact of environment and climate change risk resulted in its inclusion as a Group
principal risk this year. Review and analysis of Group principal risks, including environment and climate change risk,
is a standing agenda topic for the Risk Committee, and as such was discussed in Risk Committee meetings
throughout FY21/22. Below is a summary of matters considered.
Classification of environment and climate change risks
The Risk Committee recognised that there are several specific environmental and climate-related risks. Under
TCFD recommendations climate-related risks can be classified into two main categories:
Transitional risks: The risks associated with transitioning to a lower-carbon economy which include
regulatory, market and technology-related risks and adaptations related to climate
change.
Physical risks: The risks associated with acute weather events or longer-term shifts in climate patterns.
Further work is in progress to develop a climate-related risk matrix which classifies all climate-related risks and
opportunities into the two main categories and documents them in a way that is consistent with the Group’s overall
Risk Management Framework.
Timeframe
The nature of climate-related risks is such that the potential impacts to the Group can be classified into short,
medium and long term. The Risk Committee have initially identified these timeframes as follows:
Short term: 0–2 years
Medium term: 3–10 years
Long term: Beyond 10 years
Impacts to the Group’s strategy
The Risk Committee discussed several climate-related opportunities such as carbon offsetting, growing the
Renewables desk and supporting clients with climate-friendly ship design and sustainable ship recycling via the
Sale and Purchase desk. In the short term, carbon offsetting is a key part of the Group’s strategy and further details
of the implementation of the CHOOSE platform can be found on page 31.
Impacts on financial performance
Management does not expect climate-related risks to have a material impact on the Group’s short-term financial
performance. The potential impact of climate change and other environmental issues has not formed a significant
element in any key judgements or estimates disclosed in the Group’s Financial Statements for the year ended 28
February 2022.
Significance relative to other principal risks
The Group has not ranked any of its principal risks and therefore the significance of environment and climate
related-risks relative to the Group’s other principal risks has not been assessed.
The Chief Financial Officer was responsible for providing the board and the Audit Committee with updates on these
discussions. After our financial year-end, the Group established a Climate Change Management Committee which
has specific responsibility for identifying and managing the Group’s climate-related risks and opportunities. The
Climate Change Committee is chaired by the Group’s Chief Operating Officer and includes the Managing Director
of the Singapore office plus other team members from Shipbroking and Corporate. The Climate Change
Committee will report to the board and the Audit Committee via the Chief Operating Officer. The Risk Committee
retains responsibility for monitoring this as a principal risk, incorporating this risk into the Group’s overall Risk
Management Framework, and ensuring that the impacts of the risks are appropriately monitored and mitigated.
Page 41
Risk mitigation
The Group takes various measures to mitigate risk. Key steps in our risk management process throughout the year
included:
• ongoing periodic review and updating of policies and procedures, including AML and KYC, to
enhance/strengthen the Group’s Governance Framework, with ongoing monitoring of Employee compliance by
the Group Head of Internal Audit & Group Risk and Compliance Manager;
• a system of internal checks and authorisations, complemented by independent assurance activities;
• usage of common finance, HR and operations systems across the Group supported by our IT team;
• succession planning and strategic recruitment supported by the Group HR team;
• establishment of board-approved Group budgets with ongoing performance monitoring against
budgets/reforecasts and investigation of significant variances;
• regular reporting of Treasury management activity to the board by the Chief Financial Officer (note the Group
does not enter speculative treasury transactions);
• ongoing monitoring of contractual risk by the Group legal team;
• operation of the Group’s whistleblowing procedure; and
• maintenance of appropriate insurance cover.
Group risk governance
Page 42
Principal risks
The directors have carried out an assessment of the principal and emerging risks facing the Company. The most
significant risks to which the board considers the Group is exposed, based on the evaluation process described in
the Group’s Risk Management Framework are set out alphabetically below.
Change management
Shipbroking is a
business that is evolving
in nature and Braemar
needs to ensure it
evolves with it. The lack
of an appropriate
change management
framework and
leadership structure
could lead to the
ineffective introduction
and embedding of
change required to
achieve the Group’s
strategic objectives
The business may not operate efficiently
and effectively, leading to projected
revenue or returns not being realised and
strategic objectives not being achieved.
Internal and external relationships could
be damaged or lost. Business
development opportunities could be
damaged.
Ongoing review and enhancement of Braemar’s
corporate governance framework, management
structure, and succession planning and job
mapping processes to help ensure:
! continuous improvement; and
! alignment with leading industry practice.
Training programme to help ensure all employees
are kept updated with the governance framework
and related policies.
Ongoing monitoring to ensure employee
completion of Group governance training,
compliance with all relevant Group policies, and
completion of Group policy attestation
requirements.
The effectiveness of Internal Audit
and Compliance processes is enhanced by Senior
Leadership and Audit Committee oversight, and
career path transparency is improved by our
management infrastructure changes.
UNCHANGED
(The residual
or net risk
after
consideration
of current
mitigating
actions is
unchanged
from the prior
year.)
Compliance with laws and regulations
Braemar generates
revenues from a global
business that exposes
the Group to risks
associated with legal
and regulatory
requirements, including
sanctions.
Legal and regulatory breaches could
result in fines, sanctions being imposed on
our business, and the loss of Braemar’s
ability to continue operating.
Note:
Recent increased scrutiny from regulatory
bodies and rising geopolitical and
macroeconomic issues, including the
current conflict in the Ukraine, has
increased the potential impact of risks
associated with breaches of legal and
regulatory requirements.
Group-wide training programme to help ensure
employee awareness of, and compliance with,
all relevant legal and regulatory obligations:
! Braemar Corporate Governance Framework;
! Braemar Risk Management methodology;
! compliance with our policies, including our
AML/KYC policies’ (enhanced) customer due
diligence requirements; and
! compliance with relevant laws & regulations.
Enhanced KYC procedures and ongoing
monitoring of compliance with governance
policies and legal/regulatory requirements across
the Group to help ensure requirements are not
breached.
INCREASED
Currency fluctuations
The Group is exposed
to foreign exchange risk
because of a large
proportion of its revenue
being generated in US
Dollars while the cost
base is in multiple
currencies.
A change in exchange rates could result in
a financial gain or loss.
On a continuous basis, the board monitors
macroeconomic issues to assess possible foreign
exchange movements.
Forward currency (US$) contracts are entered into
to mitigate the risk of adverse currency
movements.
UNCHANGED
Cybercrime/data security
Cybercrime could result
in loss of business
assets or disruption to
the Group’s IT systems
and its business. Lack of
appropriate data
security could result in
loss of data.
Loss of service and associated loss
of revenue. Reputational damage.
Potential for loss of cash due to fraud
or phishing.
Globally, cyber-attacks increased significantly
during and post the COVID pandemic. To address
the increased risk, and to enhance security
measures already in place, management
partnered with external advisers to develop and
implement a Cyber Assurance programme, which
will be rolled out during FY22/23.
Ongoing implementation of Security Operations
Centre using DarkTrace technology.
Improved security with the movement of on-
premises data storage facilities in Singapore and
Australia to the cloud.
Ongoing implementation of a range of security
measures including Microsoft’s Advanced Threat
Protection suite and a new SD-WAN to provide
improved security and connectivity to our
corporate systems.
UNCHANGED
Page 43
Disruptive technology
Shipbroking is still
largely a business that is
transacted via personal
relationships dependent
on quality service.
Hence the risk of
technological change,
disintermediation and
increased customer
demands for enhanced
technological offerings
could render aspects of
our current services
obsolete, potentially
resulting in loss of
customers.
Relationships could be devalued and
replaced by disruptive technology
platforms, resulting in increased
competition, consequent price reductions,
and loss of revenue
Investment in technology through our venture with
Zuma Labs Limited has resulted in effectively
differentiating Braemar, as our brokers have
begun utilising Zuma Labs Limited’s versatile
Venetian platform in advance of other firms.
Ongoing modernisation of our infrastructure to
allow for focus on innovation and
strategic direction.
UNCHANGED
Environment and climate change
Seaborne transportation
is estimated to create
2.5% of the world’s
carbon emissions and
there will be increased
pressure to reduce that
in future years. Failure to
monitor and address the
risks associated with
that reduction process
could result in loss of
revenue for Braemar
and its customers and
counterparties.
The Group’s P&L and liquidity could be
negatively impacted if customers are lost
as a result of our not keeping pace with
our peers and industry best-practice.
Non-compliance with regulations or
disclosure requirements could result in
fines or penalties.
Failure to appropriately monitor and
mitigate these risks could lead to Braemar
suffering serious reputational damage.
Note:
Management does not expect climate-
related risks to have a material impact on
the Group’s short-term financial
performance.
Investment in the offshore renewables market and
technology to allow the Group and its clients to
offset carbon emissions.
Ongoing development of an EPSG strategy which
allows the Group to monitor and report on
environmental and climate-related risks.
Establishment of a Climate Change Committee to
help ensure climate-related risks are identified,
monitored and appropriately managed.
INCREASED
Financial capacity
Braemar has set itself a
growth strategy that will
require investment in the
coming years and
limited financial capacity
could hamper our ability
to deliver on the
objectives.
Without sufficient financial resources the
Group may not be able to meet current
and near-term obligations and may not be
able to take advantage of potential growth
opportunities.
Several strategic achievements have
strengthened the Group’s Balance Sheet,
effectively decreasing financial capacity risk:
! Disposal of Cory Brothers for all-cash
consideration generated £6.5m of cash in
March 2022. £4.7m of earnout cash
consideration is expected to be received
between May 2023 and May 2025.
! Restructuring of deferred consideration
amounts owed in respect of the acquisition of
Braemar Naves resulted in a repayment deferral
of £2.5m which was due for repayment before
the end of December 2022. The repayment is
now to be paid no earlier than Septe
mber 2025.
! Disposal of non-core investment in
AqualisBraemar generated £7.2m of cash
proceeds during FY21/22.
Ongoing mitigations include:
! prioritisation of identified growth opportunities
to ensure resources are appropriately allocated
to opportunities with the best potential return
on investment;
! regular review of debt levels, our dividend
policy, and a three-year extension of banking
facilities; and
! consultations with external advisers to review
current banking relationships as compared to
other potential banks and/or banking facilities.
DECREASED
Page 44
Geopolitical and macroeconomic
Braemar’s businesses is
reliant on global trade
flows and as such may
be negatively impacted
by geopolitical and/or
macroeconomic issues,
such as changes in
crude oil price,
restrictions in global
trade due to pandemics
such as COVID,
sanctions, and changes
in supply and demand.
A downturn in the world economy could
affect transaction volumes, resulting in
reduced revenue.
Changes in shipping rates and/or changes
in the demand or pricing of commodities
could affect supply activity.
Note:
The current conflict in the Ukraine and
related global sanctions has increased the
potential impact of risks associated with
both geopolitical and/or macroeconomic
issues and compliance with relevant laws
and regulations.
Diversification on a sector and geographic basis
reduces dependency on individual business areas.
Ongoing monitoring to ensure the Group is
appropriately resourced across its activities and
geographies.
Ongoing management of costs based on current
and reasonably foreseeable market conditions.
Enhanced KYC procedures and ongoing
monitoring of compliance with governance
policies, sanctions, and other legal/regulatory
requirements across the Group to help ensure
laws and regulations are not breached.
INCREASED
Major business disruption
The risk of disruption to
our business due to a
disaster or unplanned
events occurring.
The business may be unable to operate as
effectively as usual, resulting in financial
loss.
Significant investment upgrading our network and
telecoms estate to provide a more robust,
scalable and resilient platform for global delivery
of applications and services.
Network and telecoms upgrades include:
! decommissioning of on-premises data storage
in Singapore and Australia to facilitate
movement to the cloud;
! re-architecting of our network with an SD-WAN
to improve security and connectivity to our
corporate systems; and
! increased utilisation of the Microsoft 365 suite
to allow for more efficient and effective work
and communication across the Group.
Enhanced systems monitoring to help ensure
improved and uninterrupted service delivery.
Identification of key staff and potential points of
failure, and the consideration of adaptable/flexible
ways of working, help to ensure preparedness in
the event of major business disruption.
UNCHANGED
People and culture
Braemar is a people-
based business and
people are vital to its
success. Inadequate
policies and reward
structures could
incentivise negative
behaviours, create
internal conflict, lead to
reputational damage,
and contribute to failure
in attracting and/or
retaining skilled
personnel.
Failure to adapt to, or
align with, post COVID
market expectations,
including the offering
flexible or hybrid
working arrangements,
could result in the
inability to attract and
retain skilled personnel.
Lack of appropriate
consideration of
environmental and wider
social issues could also
contribute to the inability
to attract and retain
skilled personnel.
Employee relations claims/litigation
/tribunals attributed to negative
behaviours or actions, increases the
potential for reputational damage because
of negative publicity in the public domain.
Loss of key staff could result in reduced
revenue when staff take “their” contacts
and business with them.
Strategic growth objectives may not be
achieved if Braemar fails to attract and
retain skilled personnel.
Note:
The potential impact of risks associated
with failing to attract and retain personnel
has increased post the relaxation of
COVID social restrictions due to current
market expectations for flexible or hybrid
working arrangements for both current
and prospective employees.
Whilst the Group has not formally
implemented flexible or hybrid working,
the increase of People risk is partially
mitigated by ongoing consideration of
roles suitable for flexible working
arrangements, as included under
mitigating controls/actions.
Recognition of environmental and social
issues is becoming increasingly important
to certain people, particularly graduates
and younger skilled professionals who are
at the start of their careers. Failure to
attract or retain these people could
negatively affect the Group’s recruitment,
retention and succession planning.
Ongoing review of policies including Conflict of
Interest, Code of Conduct, and the Employee
Handbook, to ensure behavioural expectations
and employment practices for managers and
employees are clearly defined.
Organisation structure changes included the
creation of associate director roles to identify key
employees and more clearly show progression
opportunities.
Ongoing development of a culture of engagement
and professional development, including
implementation of performance management
objectives, clearly defined pathways for career
progression, and succession planning at senior
management levels.
Annual review of compensation with external
benchmarking helps to ensure remuneration
packages continue to be appropriate and
competitive.
Ongoing consideration of roles potentially suitable
for hybrid and flexible working arrangements.
Ongoing development an EPSG strategy which
allows the Group to monitor and report on
environmental and social risks.
Communication of the EPSG strategy to existing
and potential employees, demonstrating
Braemar’s commitment to efforts addressing
environmental and social issues.
INCREASED
Page 45
Internal audit
The Group’s internal audit function is monitored and reviewed by the Audit Committee, to ensure that the Group’s
risk management and internal controls processes are working effectively. A detailed description of the Group’s
internal audit function can be found on pages 58 to 59 of this Annual Report.
Going concern
The Group generated strong underlying operational cash flow in the year, 61% higher than in FY20/21, and has
continued to do so in the first months of trading in the current year. In addition, the Group’s Balance Sheet has been
strengthened significantly due to the strong trading and disposals of non-core assets during the year. Therefore,
the directors believe that the Group is well positioned to manage its risks. Whilst there are still uncertainties facing
the business including those related to the conflict in the Ukraine and COVID disruptions, they are nothing like those
that were the case in the previous two years.
A more detailed analysis of the risks facing the business is outlined in Note 1 (see page 99). The analysis concludes
that there is no material uncertainty relating to going concern. The directors have a reasonable expectation that the
Company and Group have adequate resources to continue to trade for twelve months from the date of the
approval of these Financial Statements and for this reason they continue to adopt the going concern basis in
preparing the Financial Statements.
Viability statement
In accordance with the UK Corporate Governance Code, the directors have assessed the prospects of the Group
over a period of three years, which they believe is an appropriate period based on the Group’s current financial
position, budgets and forecasts, strategy, principal risks, and exposure to potentially volatile market forces.
In recent years and particularly during the early months of the COVID pandemic, the Group’s bankers, HSBC, have
been highly supportive and allowed relaxations of covenants to give the board the time to make alternative plans to
ensure sufficient liquidity is available to continue the Group’s plans. Those relaxations of covenant levels were never
in fact required and the Group has traded comfortably within the covenants relating to the facility during the last
financial year and is confident that it will continue to do so.
During the year, the directors have continued to work with HSBC such that acceptable indicative terms have been
offered for a longer-term facility to replace the current one which expires in September 2023. It is the intention that
these discussions will be concluded well in advance of the expiry of the current facility. The viability assessment
therefore assumes that similar banking facilities will be made available to the Group for the balance of the three-
year viability period. The directors’ assessment considers those current facility terms and includes a review of the
financial impact of significant adverse scenarios.
In generating those scenarios, consideration was also given to the risks to the business that have been identified in
this report on pages 42 to 44 as increasing:
Compliance with laws and regulation – the risks to the business caused by the increasing degree of sanctions
resulting from the conflict in the Ukraine have clearly increased over the last six months but have yet to manifest
itself in reduced revenues. Exposure to sanctioned business isn’t material to the Group and experience to date
suggests that although freight patterns are changing as a result, overall volumes are not declining.
Environment and climate change – environmental and climate change factors will have a significant long-term
impact on the Shipping industry and pose a risk to the Group if they aren’t recognised and adapted to. In the short
to medium term, these changes will also provide opportunities to provide additional support to the industry and for
additional revenue generation. The longer-term risks are not expected to have an impact on the business during
the period under review.
Geopolitical and macroeconomic – similar to the compliance with laws and regulation risk the conflict in the
Ukraine war raised the risk level due to geopolitical and macroeconomic risk with a resultant global downturn or
recession likely to have a negative impact on the business. The experience to date is that the shipping market
volatility has if anything increased revenue generation rather than reduced it.
People and culture – failure to adapt to changing cultural and working practise norms following the COVID
pandemic and to maintain competitive remuneration structures could lead to difficulties in attracting new
employees and to existing employees leaving. Losing and not replacing revenue generating employees in the
business would lead to reductions in revenue if suitable policies are not put in place.
Revenue was chosen as the main variable in generating the adverse scenarios as there are no costs of sale within
the business and the remaining costs are largely fixed or made up of bonus pools which will vary in line with the
levels of revenue. Set against those falls in revenue is the likely effectiveness of potential mitigations that are
reasonably believed to be available to the Group over this period.
In considering these potential mitigations, the board was mindful of its duties under Section 172 of the Companies
Act 2006 and considered the potentially competing interests of different stakeholder groups and the potential
Page 46
long-term consequences of the actions, including the use of funds for employee remuneration (and the role this
plays in the retention of staff), paying dividends, making investments and repaying debt.
The assessment involves the production of cash flow forecasts designed to assess the ability of the Group to
operate both within the banking facility covenants and liquidity headroom. The main downside sensitivities used
were annual revenue reductions of 7.5% and 15% from September 2022 to August 2023 and stabilised thereafter.
Under these two cases the board concluded that even without use of any of the cost-saving or cash management
mitigations available to it, the Group could continue to operate under the current banking facilities over the three-
year period.
The assessment also incorporated a “reverse stress test” which was designed to identify scenarios under which
the Group’s banking facilities would be inadequate to continue as a going concern despite using all the mitigating
options available. The result of this test shows that all available mitigations would be exhausted, and facilities
breached if there was a 41% decrease in forecast revenue from September 2022 through to August 2023.
The directors have concluded that whilst future outcomes cannot be guaranteed or predicted with certainty the
revenue and operating margin scenarios that would lead to such a failure are highly unlikely. This is especially so in
the light of current trading where revenues are running ahead of previous forecasts. They also noted that the facility
headroom in terms of liquidity remained adequate even under the reverse stress test conditions and that it was the
leverage covenant which would be breached if revenue fell by more than 41% and then only during 2024.
There is no evidence indicating that revenues will fall to levels indicated in this test and that the likelihood is
therefore remote and that there is therefore no material uncertainty in this regard, nor any impact based on
preparation of the Financial Statements. There is also a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due over the next three financial years.
Page 47
Task Force on Climate-related Financial Disclosures
The Group recognises that the international shipping industry accounts for approximately 2–3% of worldwide
greenhouse gas emissions which presents significant risks and opportunities for our business. We seek to
incorporate Task Force on Climate-related Financial Disclosures (“TCFD”) recommendations into our decision
making and in our first year of TCFD reporting we have developed a solid foundation from which the Group can
progress to full compliance with TCFD-recommended disclosures in future years.
The following summary sets out how the Group incorporates climate-related risks and opportunities into the four
pillars set out by the TCFD: governance, strategy, risk management, and metrics and targets. This summary
includes references to other sections of this Annual Report where further disclosures are provided and an
explanation is given where the Group’s compliance with TCFD disclosures is partial or omitted.
Governance
Describe the board’s oversight of
climate-related risks and
opportunities
Full
The board has overall responsibility and oversight of climate-related risks and
opportunities.
The Audit Committee reviews the impact of climate-change risks and opportunities and
incorporates these risks and opportunities into the Group’s Risk Management Framework.
The Risk Committee and the newly created Climate Change Committee report to the
board and the Audit Committee via the COO and CFO. Further details of the respective
roles and responsibilities of these two management committees can be found on page
52.
Principal risks and uncertainties on page 40
Audit Committee Report on page 57
Describe management’s role in
assessing and managing climate-
related risks and opportunities
Full
During FY21/22 the CFO, with the support of the Risk Committee, had overall responsibility
for assessing and managing climate-related risks and uncertainties.
In FY22/23 the COO and the newly created Climate Change Committee became
responsible for identifying, assessing and managing climate-related risks and
opportunities. The Risk Committee retains responsibility for monitoring this as a principal
risk.
Principal risks and uncertainties on page 40
Strategy
Describe the climate-related risks
and opportunities the organisation
has identified over the short,
medium and long term
Partial
The Risk Committee has considered the Group’s climate-related risks and opportunities
and has identified the following relevant timeframes:
Short term: 0–2 years
Medium term: 3–10 years
Long term: Beyond 10 years
Work is ongoing to develop a climate-related risk matrix which categorises climate-
related risks and opportunities according to these timeframes. This matrix will be
published in the Group’s FY22/23 Annual Report.
Principal risks and uncertainties on page 40
Describe the impact of climate-
related risks and opportunities on
the organisation’s businesses,
strategy and financial planning
Omitted
The Group has not yet quantified the impact of climate-related risks and opportunities on
the organisation’s business, strategy and financial planning.
The Climate Change Committee has been tasked with ensuring that the impacts of
climate-related risks and opportunities are assessed in the Group’s business, strategy
and financial planning. Further updates will be provided in the FY22/23 Annual Report.
Describe the resilience of the
organisation’s strategy, taking into
consideration different climate-
related scenarios, including a 2°C or
lower scenario
Omitted
The Group has not yet developed a model climate-related scenarios and therefore
cannot assess the resilience of the organisation’s strategy to these scenarios.
The Group incorporates various financial scenarios in its strategic modelling, including
freight rates, commodity prices and foreign exchange rates. In FY22/23 work will
commence to incorporate climate change scenarios into the Group’s financial modelling.
When this work is complete the Group will be able to quantify the impacts and assess the
resilience of the Group’s strategy. Further updates will be published in the Group’s
FY22/23 Annual Report.
Page 48
Risk management
Describe the organisation’s
processes for identifying and
assessing climate-related risks
Full
During FY21/22 the Risk Committee had responsibility for identifying and assessing
climate-related risks.
In FY22/23 the Climate Change Committee became responsible for identifying, assessing
and managing climate-related risks and opportunities. The Risk Committee retains
responsibility for monitoring this as a principal risk.
Describe the organisation’s
processes for managing climate-
related risks
Full
The Risk Committee is responsible for monitoring climate change as a principal risk.
The Climate Change Committee is responsible for identifying and managing the Group’s
climate-related risks and opportunities.
Describe how processes for
identifying, assessing and managing
climate-related risks are integrated
into the organisation’s overall risk
management
Full
The processes described above are fully integrated into the Group’s overall risk
management processes.
Principal risks and uncertainties on page 40
Metrics and targets
Disclose the metrics used by the
organisation to assess climate-
related risks and opportunities in line
with its strategy and risk
management process
Omitted
The Group has not yet identified the metrics that will be used to assess climate-related
risks and opportunities.
Work is ongoing in FY22/23 to develop a set of metrics. An update on this work will be
published in the FY22/23 Annual Report.
These metrics will be aligned to the Group’s specific climate-related risks as well as the
Environment pillar of the Group’s EPSG Framework.
EPSG Report on page 31
Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse
gas (“GHG”) emissions, and the
related risks
Partial
The Group has disclosed all mandatory Scope 1 and Scope 2 GHG emissions.
The Group has also disclosed certain voluntary Scope 3 emissions, including the GHG
emissions as a result of employees working from home.
SECR Disclosures on page 33
Describe the targets used by the
organisation to manage climate-
related risks and opportunities and
performance against targets
Omitted
The Group has not yet identified the targets that will be used to manage climate-related
risks and opportunities and performance against targets.
Work is ongoing in FY22/23 to develop a set of targets from which performance can be
measured and monitored. An update on this work will be published in the FY22/23 Annual
Report.
In its EPSG framework, the Group has committed to aligning its climate-related targets to
certain references in the United Nations Sustainable Development Goals (“SDGs”). The
references that are relevant to climate-related risks and opportunities are:
SDG 8.4 Improve Resource Efficiency in Consumption and Production.
The Group is developing targets to improve the energy-efficiency of its offices.
SDG 13.3 Improve education, awareness-raising and human and institutional capacity on
climate change mitigation, adaptation, impact reduction and early warning.
The Group is developing targets to raise awareness of climate change and mitigations in
our industry amongst both our team and our clients.
EPSG Report on pages 29 to 30
On behalf of the board
Nicholas Stone
Director
28 August 2022
Page 49
Corporate Governance Report
Chairman’s introduction
I am delighted to introduce this report in my first full year as Chairman of the board, having been appointed in May
2021. The board is responsible for ensuring that the governance controls within the Group help to support the
Group’s long-term strategy and values, and continues to be committed to maintaining a high standard of corporate
governance across the Group. This framework creates a strong foundation for the Group to build on its global
brand and develop its relations with its clients, shareholders and other key stakeholders.
In FY21/22, the Company was subject to the UK Corporate Governance Code published by the Financial Reporting
Council (the “FRC”) in 2018 (the “Code”). The Code is publicly available on the FRC’s website at: www.frc.org.uk. The
board endorses the principles and provisions set out in the Code and believes that the Company has been
compliant with the Code throughout the year.
This year has also seen the launch of our EPSG framework, which places the governance pillar alongside the
traditional environmental and social pillars and an additional fourth pillar of people to recognise that people are the
foundation of our business. A high standard of corporate governance is essential for the Group to succeed in
delivering its strategy and is integral to enhancing its reputation and maintaining the trust of its shareholders, clients,
employees and other stakeholders. More information on our EPSG Framework can be found on pages 29 to 30 of
this Annual Report.
This report, which comprises this introduction, the following pages 50 to 53, the Audit Committee Report on pages
54 to 59, the Nomination Committee Report on pages 60 to 61, together with the Directors’ Remuneration Report
on pages 62 to 64, describes how the board and its Committees operate and how the Company has applied the
Code during the year ended 28 February 2022.
Nigel Payne
Chairman
28 August 2022
Page 50
The board
The board is responsible for ensuring that the governance controls within the Group help to support the Group’s
long-term strategy and values. The board is committed to maintaining a high standard of corporate governance
across the Group and ensuring that a framework is in place to create a strong foundation for the Group to deliver
on its growth strategy in line with its core values, desired culture and risk appetite.
The board consists of the non-executive Chairman, the Group Chief Executive Officer, the Group Chief Operating
Officer, the Group Chief Financial Officer and three independent non-executive Directors. The Chairman leads the
board and is responsible for its overall effectiveness in directing the Company, taking into account the interests of
the Company’s various stakeholders. The Group Chief Executive Officer leads the executive management in the
development of strategy and the management of all aspects of the performance and operations of the Company
and its subsidiaries.
The non-executive directors, none of whom has fulfilled an executive role within the Company, are appointed for an
initial three-year term subject to annual re-election at the AGM in accordance with the Code. The non-executive
directors are responsible for constructively challenging and scrutinising the strategies and performance of the
executive directors using their independence and perspectives gained from their diverse experiences, as well as
having broader oversight of the Group, via the work of the board and its Committees.
Profiles of each director, together with information on their experience relevant to the Group and their external
appointments, are set out on the following pages of this Annual Report. All of the Directors have access to the
Company Secretary, Emma Camilleri, for advice on all governance matters and to help ensure that the board is able
to discharge its duties and function effectively and efficiently.
The board met 15 times during the year (FY20/21: 15) and the attendance by each of the directors is set out below.
Non-executive directors
Attended
Executive directors
Attended
Jürgen Breuer
1
9/9
Nicholas Stone
15/15
Stephen Kunzer
15/15
James Gundy
15/15
Lesley Watkins
2
15/15
Tristram Simmonds
3
7/7
Ronald Series
4
3/3
Nigel Payne
5
12/12
Elizabeth Gooch
6
7/7
Joanne Lake
7
0/0
James Gundy
Nicholas Stone
Tristram Simmonds
57
58
52
Group Chief Executive Officer
Chief Financial Officer
Chief Operating Officer
Committee
Memberships
None.
None.
None.
Background
and relevant
experience
James has over 35 years’ Shipbroking
experience specialising in Tankers and
Sale and Purchase Projects. He joined
the Company in 2014 as Chief
Executive Officer of Shipbroking
following the merger of Braemar
Shipping Services Plc and ACM
Shipping Group Plc. James was an
integral part of the successful
integration of the two businesses
which led to his appointment as Group
Chief Executive Officer in January 2021.
Nicholas joined the Company as
Finance Director in April 2019 with over
20 years’ experience in operational
and financial director roles in
organisations including The
Appointment Group, Hornby Plc and
KB Advanced Technologies Plc. He
occupied a dual Chief Operating
Officer/Chief Financial Officer role
during Braemar’s recent management
transition and was appointed as Chief
Financial Officer in August 2021.
Nicholas is a chartered accountant.
Tristram has over 30 years’ experience
in the commodities industry including
14 years at GFI Group where he
became Head of European
Commodities. Tristram founded
Atlantic Brokers in 2013 which was
sold to Braemar Shipping Services Plc
in 2018. Since the acquisition in 2018
Tristram held the position of Managing
Director of Braemar’s derivative
brokerage business and he was
appointed as Chief Operating Officer in
August 2021.
External
appointments
None.
None.
None.
1
Jürgen Breuer left the board on 26 August 2021.
2
Lesley Watkins left the board on 31 March 2022.
3
Tristram Simmonds joined the board with effect from 1 August 2021.
4
Ronald Series left the board on 30 April 2021.
5
Nigel Payne joined the board as non-executive Chairman with effect from 1 May 2021.
6
Elizabeth Gooch joined the board with effect from 1 August 2021.
7
Joanne Lake joined the board with effect from 1 March 2022.
Page 51
Nigel Payne
Elizabeth Gooch MBE
Joanne Lake
62
61
58
Chairman of the Board
Non-executive director and
Senior Independent Director (from 1
April 2022)
Non-executive director
Committee
memberships
Chair of the Nomination Committee
Chair of the Remuneration
Committee
Member of the Nomination and Audit
Committees
Chair of the Audit Committee
Member of the Nomination and
Remuneration Committees
Background and
relevant experience
Nigel joined the Company as non-
executive Chairman in May 2021,
previously he was the CEO of
Sportingbet Plc. He has a proven
record of enhancing shareholder
value and over 30 years’ experience
on public and private boards both as
an executive and non-executive
director with organisations including
EG Solutions Plc, Stride Gaming Plc,
Hangar8 Plc, ECSE Plc and Gamma
Aviation Plc. Nigel is a chartered
accountant.
Elizabeth joined the Company as
non-executive director on 1 August
2021 and was appointed Senior
Independent Director on 1 April 2022.
She has over 16 years’ experience in
governance, compliance and
financial reporting of publicly listed
companies, having founded and run
EG Solutions plc from 2005 until its
acquisition by Verint Systems Inc. in
2017. Elizabeth was awarded an MBE
in 2012.
Joanne joined the Company as non-
executive director on 1 March 2022.
She has over 30 years’ experience in
financial and professional services –
both in investment banking, with
firms including Panmure Gordon,
Evolution Securities and Williams de
Broe, and in audit and business
advisory services with Price
Waterhouse. Joanne is a chartered
accountant and fellow of the
Chartered Institute for Securities &
Investment.
External
appointments
Non-executive chairman of Gateley
(Holdings) Plc
Non-executive chairman of Green
Man Gaming Ltd
Non-executive director of Ascot
Racecourse Betting & Gaming Ltd
Non-executive director of Kwalee
Ltd
Director of Bubble Stuff Ltd
Non-executive Director of GetBusy
Plc
Non-executive director of ECSC
Group Plc
Non-executive director of Nivo
Solutions Ltd
Director of Expandly Ltd
Non-executive chair of Made Tech
Group Plc
Non-executive director of Henry Boot
Plc
Non-executive director of Gateley
(Holdings) Plc
Non-executive director of
Honeycomb Investment Trust Plc
Non-executive director of Morson
Group Ltd
Stephen Kunzer
Lesley Watkins
55
63
Non-executive director
Non-executive director and
Senior Independent Director
(Resigned 31 March 2022)
Committee
memberships
Member of the Audit, Nomination
and Remuneration Committees
Chair of the Audit Committee
Member of the Nomination and
Remuneration Committees
Background and
relevant experience
Stephen has over 30 years’
experience in the shipping industry
in the UK and the Asia Pacific region
and joined the Company as a non-
executive director in February 2019.
His previous roles include Chief
Executive Officer of Eastern Pacific
Shipping Pte Ltd and Managing
Director of Tanker Pacific
Management (Singapore) Pte Ltd.
Stephen has also held a number of
held a number of management
positions with Zodiac Maritime
Agencies Ltd.
Lesley has over 18 years’ experience
in the banking industry and joined the
Company as non-executive director
in June 2017. She has also held a
number of executive and non-
executive positions including Finance
Director and Company Secretary of
Calculus Capital Ltd, non-executive
director of Metropolitan Safe
Custody Ltd and non-executive
Council Member and Chair of the
Audit Committee of the Competition
Commission. Lesley is a Chartered
Accountant.
External
appointments
Independent Director of
Dampskibsselskabet NORDEN A/S
Non-Executive Director of Investec
Bank Plc
Non-Executive Director of Chaucer
Syndicates Ltd
Page 52
Board committees
The board has three standing committees: Audit, Nomination and Remuneration. Each of the board committees
comprises solely independent non-executive directors. The composition and responsibilities of the Audit,
Nomination and Remuneration Committees are set out in each of the Committee reports, on pages 54, 60 to 61 and
62 of this Annual Report respectively. The Remuneration Committee Report on pages 62 to 64 of this Annual
Report is incorporated into this report by reference. The terms of reference for each of the Committees can be
found in the Investors section of the Company’s website.
The Group also has an Executive Committee to support the Group Chief Executive Officer with the day-to-day
management of the Group and the development and execution of the Group’s strategy. The Executive Committee
comprises the executive directors, the Group Finance Director, the Global Head of Sale and Purchase and the
Managing Director of Braemar Corporate Finance.
The Group also has a Risk Committee, which, like the Executive Committee, is not a formal board committee. The
Risk Committee meets regularly and reports to the Audit Committee on matters such as emerging risks and other
changes to the risk matrix, the work of the internal audit function, and the day-to-day monitoring of the Group’s
Risk Management Framework. It comprises the Group Chief Financial Officer, the Group Chief Operating Officer, the
Group Finance Director, the Head of Human Resources, the Group IT Director, the Group Head of Internal Audit and
Group Risk and Compliance Manager and representatives of the Group’s finance team and other functions and
locations. Other colleagues are invited from time to time to provide additional experience of the Group’s operations
and potential risk exposure.
Risk management, compliance and effective controls
The directors have a duty to the Company’s shareholders to ensure that the information presented to them is fair,
balanced and understandable, and provides shareholders with the necessary information to assess the Company’s
position, performance, business model and strategy. Further details of the directors’ responsibilities for preparing
the Company’s Financial Statements are set out in the statement of directors’ responsibilities on pages 81 to 82 of
this Annual Report.
In fulfilling its responsibilities, the board has established procedures for identifying and evaluating any risks
associated with its strategic objectives (including both emerging and principal risks) and considering how those
risks can be managed effectively. The Audit Committee is responsible for the independent review and challenge of
the adequacy and effectiveness of the Company’s approach to risk management and reports its findings to the
board. The Audit Committee receives regular reports from the Group’s Risk Committee and Internal Audit function
and there were no matters of concern warranting further investigation identified in the Group during the year.
More information on the work of the Audit Committee and the Internal Audit function can be found in the Audit
Committee Report on page 58 of this Annual Report, and more information on the Company’s risk management
processes, including a summary of the principal risks facing the Group and the procedures in place to identify
emerging risks, is set out on pages 39 to 44 of this Annual Report.
Culture and values
As mentioned above, we have recently launched our EPSG Framework. The framework recognises the three pillars
of environmental, social and governance that have become the widespread definition of ESG, with the addition of a
fourth pillar to recognise the people that are the foundation of our business and integral to the communities we live
and work in. As part of this framework, Braemar remains committed to providing its services to the highest
standards and operating ethically, lawfully and with professional integrity at all times. The framework will allow us to
create a Group-wide culture and operating practices that incorporate our values. We believe that this will support
the Group with its strategy to grow the Braemar brand in an increasing number of global markets. More information
on our culture and values, what action has been taken during the year to ensure that policies, practices and
behaviour across the Group are aligned with them, how we engage with, invest in and reward our workforce, and
our commitment to diversity and inclusion, can all be found in the EPSG Report on pages 28 to 37 of this Annual
Report.
Shareholder relations
The board recognises the importance of maintaining good communication with key stakeholders of the Company’s
business and taking the interests of those stakeholders into consideration in its decision making. Key stakeholders
of the Company include its shareholders, with whom the board seeks to engage regularly in order to fulfil its duties
under Section 172 of the Companies Act 2006. The Company follows an active investor relations programme
carried out mostly through regular meetings of the Group Chief Executive Officer and Group Chief Financial Officer
with existing and potential investors following the announcements of the interim and preliminary full year results of
the Group. The Company has also organised a number of other investor events throughout the year to enable
existing and prospective investors to hear more from the executive directors on the business and its strategy. From
Page 53
time to time the non-executive directors and the non-executive Chairman will also consult with the Company’s
major shareholders. Feedback from the Company’s shareholders is also received through the Group’s corporate
broker and public relations team. The Company ensures that shareholders are kept updated on material
information, especially that of a potentially price sensitive nature, as soon as possible and at the same time via
corporate announcements which are made available on the Company’s website and through an RNS, in
accordance with legal and regulatory requirements.
The Company encourages participation in its AGM where each resolution is separately put to the meeting for a vote
and where the board provides an overview of the Company’s performance in the current financial year to date and
the financial outlook for the coming financial year. The board was delighted to welcome the Company’s
shareholders to attend the 2021 and 2022 AGM in person, after the 2020 AGM took place behind closed doors due
to the COVID pandemic. The Company notes that at last year’s AGM, all resolutions proposed were passed with the
requisite majorities of votes and comfortably above 80% of votes cast.
Page 54
Report of the Audit Committee
The Audit Committee (the “Committee”) comprises three independent non-executive directors. The Committee
continued to be chaired during the financial year by Lesley Watkins and its terms of reference can be found in the
Investors section of the Company’s website. The Committee is now chaired by non-executive director Joanne Lake,
who was appointed to the board with effect from 1 March 2022 and succeeded Lesley as chair of the Committee
following Lesley’s departure on 31 March 2022. Joanne is a chartered accountant with a strong financial
background and with the complementary skills of the other members, continues to ensure that the Committee has
a sufficient level of both financial experience and competence relevant to the sector in which the Company
operates. The qualifications and experience of the members of the Committee can be found on pages 50 to 51 of
this Annual Report.
Meetings of the Committee are attended, by invitation, by the Chairman of the board, the Group Chief Executive
Officer, the Group Chief Operating Officer, the Chief Financial Officer, the Company Secretary, the Group Risk and
Compliance Manager and Group Head of Internal Audit, and representatives of the external auditor. The Committee
held four meetings during the year, the attendance of which was as follows:
Attended
Jürgen Breuer
1
1/1
Stephen Kunzer
4/4
Lesley Watkins
2
4/4
Elizabeth Gooch
3
3/3
Joanne Lake
4
0/0
In addition to these formal Committee meetings, the Chair of the Committee meets separately with the Group audit
partner at least twice a year.
The key function of the Committee is to address the following specific responsibilities, while adapting its activities
as appropriate to address changing priorities within the business:
• Financial reporting: reviewing the published half-year and annual Financial Statements and reports, and any
other formal announcement relating to the Group’s financial performance, and advising the board on whether
such information represents a fair, balanced and understandable assessment of the Company’s position and
prospects; monitoring compliance with relevant statutory reporting and listing requirements; reviewing and
considering any changes in accounting standards; and considering the suitability of, and any changes to,
accounting policies used by the Group, including the use of estimates and judgements.
• Internal control and risk management: reviewing the adequacy of the Group’s internal controls; assisting the
board in conducting a robust assessment of the Company’s emerging and principal risks; and monitoring the
scope and effectiveness of the activities of the Group’s internal audit activities in the context of the Group’s
overall risk management system. As part of this responsibility, the Committee receives regular reports from the
Group’s Risk Committee and regularly reviews the Group’s compliance policies and procedures, including those
relating to whistleblowing, the prevention of bribery, corruption and fraud, and the Group’s KYC processes.
• Reviewing and monitoring the effectiveness of the external audit process and the independence of the external
auditor: conducting the tender process to appoint an external auditor and making recommendations to the
board on the appointment, reappointment and removal of the external auditor; planning with the external auditor
the half-year review and full-year audit programme, including agreement as to the nature and scope of the
external audit as well as the terms of remuneration in the context of the overall audit plan; monitoring the
ongoing effectiveness of the external auditor; monitoring the objectiveness and independence of the external
auditor; and approving and monitoring any non-audit services undertaken by the external auditor, together with
the level of non-audit fees.
1
Jürgen Breuer left the Committee on 26 August 2021.
2
Lesley Watkins left the Committee on 31 March 2022.
3
Elizabeth Gooch was appointed to the Committee with effect from 26 August 2021.
4
Joanne Lake joined the Committee with effect from 1 March 2022.
Page 55
The following sections describe the work of the Committee during the year ended 28 February 2022.
Review of Financial Statements
The Committee monitors the integrity of the Company’s Financial Statements and has reviewed the presentation of
the Group’s interim and annual results. As part of this review, it considered matters raised by the Chief Financial
Officer, together with reports presented by the external auditor summarising the findings of their annual audit and
interim reviews.
The key areas of estimates and judgements considered for the year ended 28 February 2022 are:
Estimates
•
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value-in-use of the cash-generating
units to which these assets have been allocated. The value-in-use calculation estimates the present value of
future cash flows expected to arise for the cash-generating unit. The key estimates are therefore the selection
of suitable discount rates and the estimation of future growth rates which vary between cash-generating units
depending on the specific risks and the anticipated economic and market conditions related to each cash-
generating unit. Climate change risk has been taken into account in determining the underlying inputs used in
calculations used for impairment reviews and is not considered to have a material impact on the value-in-use
calculations.
The Committee considered the work done to support the discount rate and growth assumptions and are
satisfied these estimates are appropriate and that there are no indications of impairment.
•
Fair value of VertomCory deferred consideration
The current estimate of the fair value of the earnout payments is £4.7m. The fair value of the earnout payments
involves two critical estimates; the future profitability of the combined business and the discount rate used to
calculate the net present value. The future profitability forecasts are based on a business plan prepared by the
combined VertomCory business and was reviewed by management as part of the financial due diligence
process. The discount rate was used to calculate the net present value which was based on the credit risk of
Vertom Agencies BV following a credit check performed by management.
The Committee reviewed the assumptions on future profitability and considered the most recent budget
provided by the combined VertomCory business. The Committee concluded that management’s estimates are
appropriate and that the carrying value of the earnout payment is reasonable.
•
Recoverability of deferred tax assets
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered.
The Committee considered the expected future taxable profits of the Group and are satisfied that these are
sufficient to allow the deferred tax asset to be recovered.
•
Share option vesting
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of the number of equity instruments
that will eventually vest. At each reporting date, the Group revises its estimate of the number of equity
instruments expected to vest as a result of the effect of non-market based vesting conditions.
The Committee is satisfied that the processes to determine the effect of non-market based vesting conditions
are appropriate.
•
Provision for impairment of trade receivables and accrued income
The provision for impairment of trade receivables and accrued income represents management’s best
estimate at the Balance Sheet date. A number of judgements are made in the calculation of the provision,
primarily the age of the invoice, the existence of any disputes, recent historical payment patterns and the
debtor’s financial position. Further details can be found in Note 21 to the Financial Statements.
The Group has considered the impact of both COVID and the conflict in the Ukraine on the Financial
Statements at 28 February 2022. However, at 28 February 2022 there was no evidence to suggest that the
Group’s trade receivables may be at a higher risk of becoming credit impaired as a result of the pandemic or
Page 56
the conflict in the Ukraine. No impairment allowances were made in respect of either COVID or the conflict in
the Ukraine.
The Committee reviewed management’s process for determining the provision and considered the likelihood
of the conflict in the Ukraine impacting the collection of trade receivable and were satisfied that the
judgements are appropriate.
•
Valuation of defined benefit pension scheme
The Group uses an independent actuary to provide annual valuations of the defined benefit pension scheme.
The actuary uses a number of estimates in respect of the scheme membership, the valuation of assets and
assumptions regarding discount rates, inflation rates and mortality rates. The membership details are provided
by an independent trustee while the valuation of assets is verified by an independent fund manager. The
discount rates, inflation rates and mortality rates are reviewed by management for reasonability. Further details
can be found in Note 27 to the Financial Statements.
The Committee considered the review work performed by management in respect of the estimates made by
the independent actuary and the information provided by the independent trustee and are satisfied with the
process.
Judgements
•
Wavespec
Fair value of consideration
In the year ended 28 February 2022, the sale of Wavespec, the Group’s Engineering Division, completed for a
maximum consideration of £2.6m. The fair value of the consideration is a critical accounting judgement.
The consideration was due to be satisfied by the issuance of a promissory note with a maturity date of 31
March 2026. The fair value of the consideration was based on the net present value of the promissory note
(£2.4m). A discount rate of 2.11% was used to calculate the net present value. The discount rate was made up
of two elements, the first being a five-year BBB+ bond yield of 1.51%, the second being a premium for lack of
marketability at 0.60%. A five-year BBB+ bond yield was used because it matches the maturity of the
promissory note and reflects the credit rating of the bank that was expected to provide the letter of credit.
Impairment
As at 28 February 2022, the buyer had not delivered on its obligations to secure the promissory note and
therefore management have made a judgement that the promissory note is unlikely to be honoured and
consequently the fair value of the consideration is impaired and an impairment charge of £2.4m has been
recorded within discontinued operations.
The Committee considered the likelihood of the purchaser delivering on its obligations and are satisfied with
the decision to impair the promissory note.
•
Measurement of right-of-use assets and liabilities
The Group determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any period covered by an
option to terminate the lease, if it is reasonably certain not to be exercised. The Group has several lease
contracts that include extension and termination options. Management applies judgement in evaluating
whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it
considers all relevant factors that create an economic incentive for the Group to exercise either the renewal or
termination option. After the commencement date, the Group reassesses the lease term if there is a significant
event or change in circumstances that is within its control and affects its ability to exercise or not to exercise
the option to renew or to terminate the lease.
The Committee is satisfied that the process to determine the lease term of each lease is appropriate.
Page 57
•
Revenue recognition
IFRS 15 “Revenue from Contracts with Customers” requires judgement to determine whether revenue is
recognised at a “point in time” or “over time”, as well as determining the transfer of control for when
performance obligations are satisfied.
The Committee considered the work done to validate the accuracy of revenue transactions and is satisfied
that management’s judgement on the timing of revenue recognition is materially correct.
•
Classification and recognition of specific items
The Group excludes specific items from its underlying earnings measure; management judgement is required
as to what items qualify for this classification. Each item reported as specific is either directly related to
acquisitions or not expected to be incurred on an ongoing basis. Further details can be found in Note 8 to the
Financial Statements.
The Committee reviewed the items for reasonableness and consistency and are satisfied with management’s
classification.
•
Climate
-
related risks
Management have considered the impact of climate-related risks in respect of impairment of goodwill, and
recoverability of receivables in particular and do not consider that climate-related risks have a material impact
on any key judgements, estimates or assumptions in the consolidated Financial Statements. The potential
impact of climate change has been reviewed by the Risk Committee and has been identified an emerging risk
for the shipping and energy sectors within which the Group operates.
The Committee has also assessed the short-to-medium-term impact relating to climate change risks and
believes that it is not significant for the Group.
•
Going concern and viability:
The Group has drawn up its accounts on a going concern basis and the directors have assessed the viability of
the Group over a three-year period. Three years is used because the Group’s revolving credit facility renews
every three years.
The Committee received reports to support these matters and considered the assumptions made, the sources
of liquidity and funding, the risks and sensitivities to the forecasts and the stress tests used. The Committee
concluded that the application of the going concern basis for the preparation of the Financial Statements is
appropriate. More detail can be found in the Principal risks and uncertainties section of this Annual Report.
Prior period adjustments
During the year ended 28 February 2021, the Group restructured part of the outstanding liabilities due to
management sellers of Naves. As part of its work the Committee considered the rescheduling of the Naves
acquisition liabilities in the last year and the impact on the Group’s Balance Sheet. This exercise identified that the
carrying amount of the future obligations in the Group Balance Sheet exceeded the nominal value of consideration
to be paid and prompted a review of the accounting for the Naves consideration in full and of certain other
corporate acquisition and disposal transactions in recent years.
The review took a critical analysis of the historical accounting for the amounts paid and payable on the Naves
acquisition, including the issue of shares, and identified a number of errors. In order to address these errors,
accounting analysis was reviewed and new calculations were performed from the original acquisition in September
2017 to date. The review also examined the classification of certain reserves on the Balance Sheet and identified
certain other misstatements that have been corrected in these accounts.
As a result of these errors, which are described in detail in Note 34 to the Financial Statements, the year-end audit
was prolonged while additional reconciliation work was performed in order to satisfy the board and the Group’s
auditors that there were no further misstatements.
Dividend payments
The year-end process also identified certain procedural errors in connection with the payment of the Group’s final
dividend relating to FY20/21 and the interim dividend relating to FY21/22, each made by the Company during
FY21/22 (the “Relevant Distributions”). Notwithstanding these procedural errors, the Company had sufficient
reserves at the respective dates of approving and making each of the Relevant Distributions. However, the
Company did not satisfy the requirements of the Companies Act 2006 to properly prepare and file interim accounts
that justified the Relevant Distributions.
Page 58
No party has been or is in a worse position as a result of these procedural breaches, but the Company has been
advised that a consequence of the Relevant Distributions being made otherwise than in accordance with the
Companies Act 2006 is that it may have claims against past and present shareholders who were recipients of the
Relevant Distributions and against those persons who were directors of the Company at the time of the declaration
and payment of the Relevant Distributions.
The Company wishes to put all potentially affected parties so far as possible in the position in which they were
always intended to be had the Relevant Distributions been made in accordance with the procedural requirements,
and consequently intends to present resolutions at the reconvened Annual General Meeting which will, if passed,
give the board authority to enter into deeds of release to discharge these parties from any obligation to repay any
amount to the Company in connection with the Relevant Distributions. The errors are explained in more detail in the
Group’s AGM notice which included full details of the errors and the resolutions being proposed in its notice of
Annual General Meeting.
Review of the control environment and financial processes
The year-end audit has highlighted weaknesses in certain of the Group’s accounting processes. The Committee is
reviewing the causes of these errors and the associated control environment, under the leadership of the new
Chair. In order to make the changes required to ensure there is no repeat, a plan is under way to strengthen the
resources within the Finance team and the tools available to it. In particular, the errors highlighted weaknesses in
the Group’s consolidation processes and system when dealing with complex non-trading transactions. Investment
in the consolidation system is required to strengthen its reporting capability to ensure more regular monitoring is
possible.
External audit
BDO LLP was reappointed as external auditor at the 2021 AGM. The lead audit partner at BDO LLP responsible for
the external audit is Scott McNaughton, who has held the role for four years, since BDO were first appointed
following the last tender conducted by the Company in the financial year ended 28 February 2019. The Group has a
clear policy for the approval of non-audit services, which sets a limit on the level of fees for non-audit services at
70% of the external audit fee. The external auditor is only appointed to perform a non-audit service when doing so
would not compromise the independence and effectiveness of the external audit function, and when its skills and
expertise make it the most suitable supplier. The Group policy for the approval of non-audit services requires the
Committee’s prior approval of all non-audit services. This year, the external audit fee represents 91% of the total fee
paid to BDO LLP (FY20/21: 91%). The Committee also continues to agree the scope and related fee for the annual
external audit. The only non-audit service performed relates to the interim review.
The Committee additionally monitors the independence of the external audit function, as well as its objectivity and
effectiveness, through the annual schedule of meetings (at which it discusses the auditor’s reports and
performance), through inviting feedback from people involved with the external auditor’s work across the business,
and through additional meetings between the Chair of the Committee and the audit partner. Following
consideration of all of these matters, the Committee recommends the reappointment of BDO LLP for approval at
the AGM.
Internal audit
Internal audit is an independent assurance function which supports Braemar in improving its overall control
framework. The internal audit function contributes to the maintenance of a systematic and disciplined approach to
evaluate and improve the design and effectiveness of Braemar’s risk management, internal control, and
governance processes. The Audit Committee defines the responsibility and scope of the internal audit function and
approves its annual plan. The Group Head of Internal Audit reports functionally to the Chair of the Audit Committee
and administratively to the Chief Financial Officer.
The Audit Committee ensures that the internal audit plan is met during the year and that management is sufficiently
responsive to any audit findings. The Group Head of Internal Audit is supported in the completion audit activities by
a co-sourcing arrangement with Mazars UK LLP.
Business functions, processes and areas forming part of the rolling three-year risk-based Group internal audit plan
are based on assessment of risks to the business, as described on pages 39 to 46 of this Annual Report. The plan
is reviewed and updated at least annually to help ensure key Group and new or emerging risks receive appropriate
and timely audit focus. Updates or changes to the audit plan, and internal audit reports, are reviewed by the Audit
Committee during the year.
Page 59
The Group’s operational and functional management teams are engaged and involved in the risk assessment
process and in the development of the internal audit plan by way of the following activities:
• quarterly Risk Committee meetings to agree and coordinate compliance, risk management, and to provide input
into internal audit activity;
• submission of operational and financial senior management confirmations that the results of their respective
business areas are accurate, that stated levels of debtors and accrued income are recoverable, adequate
provisions have been made for uncollectible amounts, and that the business complies with the Group’s position
on the UK Bribery Act and there have been no breaches of applicable sanctions;
• completion of semi-annual control self-assessment questionnaires by all Group entities to help ensure that
adequate controls are in place. Completed questionnaires are reviewed and discussed with senior management
for their respective business areas; and
• suggestions for internal audit activity are sought from each business area, and operational and functional
departments.
Audits were conducted this year on banking and cash processes, data protection and data security, and on
integrated assurance. Management action plans were developed and agreed with action implementation dates for
identified control gaps or deficiencies. Timely implementation of management actions from these audits, and from a
FY20/21 payroll audit, are monitored through regular updates to the Audit Committee. While no significant findings
were identified in the completion of these audits, actions completed to address audit findings included the
establishment of BACS direct credit payments and the implementation of a formal delegation of authority, while
actions are ongoing to address findings related to vendor due diligence, vendor data maintenance, and data
protection processes.
In its final meeting of 2022, the Audit Committee revisited the rolling three-year plan and confirmed its agreement
with the audits proposed for the coming year.
Risk and internal control framework
During the year, the Audit Committee continued its focus on review and enhancement of the Group’s risk and
internal control framework. Braemar is committed to the highest standards of conduct in all aspects of its business.
In reviewing and improving this framework of policies, processes and procedures, the directors remained mindful of
the potentially competing interests of the Company’s stakeholders, particularly the need to balance cost, resource,
and the interests and perspectives of clients and other market participants with the need to maintain its reputation
for integrity and to comply with international laws and best practice. This review, and the Audit Committee’s
ongoing responsibilities in this area, saw the Audit Committee involved in:
• reviewing the work of the Risk Committee, particularly on matters such as the regular reviews of the Group’s
emerging and principal risks and the development of its enhanced Risk Management Framework;
• reviewing and improving the Group’s framework of compliance policies and procedures, including in relation to
Sanctions, Bribery and Corruption, Conflicts of Interest, Know Your Customer, Entertainment, Meals, and Gifts,
Tax Evasion, and Whistleblowing;
• reviewing the design of a comprehensive programme of compliance training for all staff;
• reviewing the financial reporting framework and improving the processes for regular reporting of key financial
judgements and estimates, as well as other elements of risk management across the business;
• reviewing the Group’s IT cyber security monitoring and planning programme;
• reviewing the Group’s insurance coverage; and
• reviewing the Group’s foreign exposure and hedging strategy.
More information on the Group’s emerging and principal risks, including a summary of the principal risks facing the
Group and how these are managed can be found on pages 39 to 46 of the Annual Report.
Joanne Lake
On behalf of the Audit Committee
28 August 2022
Page 60
Report of the Nomination Committee
The Nomination Committee comprises three independent non-executive directors. As documented in last year’s
report, the Committee is now chaired by the Company’s non-executive Chairman, Nigel Payne, who was appointed
with effect from 1 May 2021. During the year, the meetings were also attended, by invitation, by the Group Chief
Financial Officer, the Group Chief Operating Officer, and the Company Secretary. The Committee’s terms of
reference can be found in the Investors section of the Company’s website.
The primary responsibilities of the Nomination Committee are to ensure that the board and its committees have the
right composition to lead the process for appointments to the board, and to ensure that the Company has
appropriate plans in place for succession to the board and senior management roles.
The Committee held four meetings during the year, the attendance of which was as follows:
Attended
Jürgen Breuer
1
2/3
Elizabeth Gooch
2
1/1
Stephen Kunzer
4/4
Lesley Watkins
3
4/4
Ronald Series
4
2/2
Nigel Payne
5
2/2
Joanne Lake
6
0/0
The following sections describe the work of the Nomination Committee during the year ended 28 February 2022.
Board changes
In FY21/22, the Committee considered the appointment of two non-executive and one executive board members.
In considering the optimum criteria and attributes for these roles, the Committee considered the existing structure
and diversity of the board and senior management, the culture of the organisation and the focus of the Group’s
future strategy. The Committee felt that it was important to add bandwidth and experience to the executive team,
in order to assist the board with the delivery of the Group’s new growth strategy, and was delighted to be able to
recommend an internal candidate, Tristram Simmonds, Managing Director of Braemar Atlantic, as its preferred
candidate for the role of Group Chief Operating Officer. Tristram takes these responsibilities as Group Chief
Operating Officer from Nicholas Stone (current Group Chief Financial Officer) who previously held both the role of
Group Chief Operating Officer and Group Chief Financial Officer prior to the recent management transition.
The Committee also needed to lead the processes to find a successor for Jürgen Breuer, who decided not to offer
himself for re-election at the 2021 AGM, and Lesley Watkins, who announced her intention to resign from the board
with effect from 31 March 2022 in February. As part of these processes, the Committee decided not to spend
additional money using an external search consultancy. Both Elizabeth Gooch and Joanne Lake were known to the
board and the Committee believed that the process with Heidrick & Struggles earlier in the financial year which had
culminated in Nigel Payne’s appointment as Chairman had provided a good indication of available candidates to
which both Elizabeth and Joanne Lake compared. The Committee also scrutinised the independence of Elizabeth
and Joanne as a result of this decision and their having both served on the boards of other companies with Nigel
Payne, and determined that both would be independent (a decision that was supported by the board). Whilst the
Committee believes that appointments should be based on merit and objective criteria, it was delighted to be able
to recommend two female candidates for these roles and thus improve an important element of diversity on the
board, together with the broader diversity of skills, experience, knowledge and other cognitive and personal
strengths that Elizabeth and Joanne bring.
The Committee was also pleased that Stephen Kunzer agreed to serve as a non-executive director for a further
three-year term (subject to annual re-election and the terms of his letter of appointment). This will be his second
three-year term.
1
Jürgen Breuer left the Committee on 26 August 2021.
2
Elizabeth Gooch was appointed to the Committee with effect from 26 August 2021.
3
Lesley Watkins left the Committee on 31 March 2022.
4
Ronald Series left the Committee with effect from 30 April 2021.
5
Nigel Payne joined the board and took up the role of Chair of the Nomination Committee with effect from 1 May 2021.
6
Joanne Lake joined the Committee with effect from 1 March 2022.
Page 61
As reported in last year’s Annual Report, an important task for the Committee at the start of FY21/22 was to find a
new non-executive Chairman following Ronald Series’ decision to step down from the board – a process that
resulted in the appointment of Nigel Payne with effect from 1 May 2021. The Committee was chaired by the Senior
Independent Director when dealing with this matter and, following a tender process, chose to engage Heidrick &
Struggles to assist with the process. Whilst the Committee had professional contacts at Heidrick & Struggles, and
one of the directors had previously been placed by them into another role, the Committee felt that this would not
undermine the firm’s ability to assist with a rigorous and transparent process.
Succession planning
The Nomination Committee’s succession planning has two key areas of focus: firstly, to ensure that the board has
the right combination of skills, experience, knowledge and independence; and secondly, to ensure that the
Company has plans in place for orderly succession, including the development of a diverse talent pipeline, for the
Company’s senior management and more broadly. The Committee manages the former through its rigorous and
formal approach to new board appointments and also regularly challenges the directors to consider the size and
composition of the board and the appropriate range of skills and balance between executive and non-executive
directors through an evaluation process, more on which is set out below.
The Committee manages the second area through the review of the succession plans in place for the senior
management across the Group, as part of which it looks to challenge the executive directors and the divisional
management to present detailed insights into the organisational structures and personnel profiles of the businesses
and how they look to develop key talent and mitigate succession risk. More information on how the Company
invests in the training and development of its people can be found on pages 34 and 35 of this Annual Report.
Where necessary, the Company also considers how best to fill potential vacancies from outside the organisation.
In both of these areas, the Committee ensures that the directors and senior management remain mindful of the
Group’s diversity policy. Braemar recognises the importance of diversity in all respects, including (but by no means
limited to) gender, skills, age, experience, ethnicity and background, and the Committee believes that diversity and
an inclusive culture are important contributors to a company’s ability to achieve its strategic goals and deliver long-
term, sustainable success. As at the date of this report, approximately 10% of the Group’s Executive Committee and
its members’ direct reports are female. More information on the Group’s policies and approach on diversity can be
found in the “Culture and values” section earlier in this Corporate Governance Report and in the EPSG Report on
pages 52 and 35 of this Annual Report.
Board evaluation
The board carries out regular self-evaluations to monitor and improve on its performance and address any
weaknesses. Action continued in FY21/22 in addressing the findings of the evaluation exercise done in 2021,
including the strengthening of the board (as discussed above), the development and launch of the Company’s new
growth strategy, the improvement of monthly financial and non-financial management reporting, and the in-house
development and introduction of a new board portal to improve access to board materials. It was again decided
that the formal annual evaluation done earlier in 2022 could be effectual without the need of external facilitation,
with the process being led by the Chairman with the assistance of the Company Secretary. As with the previous
year’s exercise, an important component of the evaluation was the completion of a set of questionnaires by the
directors. The outcomes of this evaluation exercise will be further considered and addressed during FY22/23.
Nigel Payne
On behalf of the Nomination Committee
28 August 2022
Page 62
Directors’ Remuneration Report
The Remuneration Committee (the “Committee”) is appointed by the board and comprises three non-executive
directors. The Committee is chaired by Elizabeth Gooch and its terms of reference can be found in the Investors
section of the Company’s website. The Committee’s main responsibilities are to:
• determine the policy and framework for executive remuneration;
• set the remuneration for the executive directors, the Chairman and the Group’s senior management;
• review remuneration and related policies for employees across the Group; and
• approve the design of, and determine targets for, performance-related incentive schemes and/or equity
participation schemes across the Group.
In discharging these responsibilities, the Committee may call for information and advice from advisers inside and
outside the Group. During the year, the Committee took advice from the Chairman of the board, the Chief Executive
Officer, the Chief Operating Officer, the Chief Financial Officer and the Company Secretary, who attended by the
invitation of the Committee, but did not participate in any decision making, nor were they present for any
discussions, regarding or affecting their own remuneration.
The Committee received independent remuneration advice from FIT Remuneration Consultants LLP (“FIT”) on a
range of matters within the Committee’s remit, for which fees of £46,305 (excluding VAT and disbursements and
calculated on a time-spent basis) were charged during the year. The Committee also received independent advice
from PricewaterhouseCoopers LLP (“PwC”) relating to two reviews conducted by the Committee during the year,
for which fees of £8,500 (excluding VAT and calculated on a time-spent basis) were charged during the year. FIT
and PwC are members of the Remuneration Consultants Group and, as such, voluntarily operate under the Code of
Conduct in relation to executive remuneration consulting in the UK. FIT were also engaged to provide advice in
relation to the operation of the Company’s share plans, and the Committee is comfortable that the FIT team
continues to provide objective and independent advice. PwC were also engaged to provide tax advice to the
Group, and the Committee is comfortable that the PwC team also provided objective and independent advice.
Remuneration philosophy
The Committee’s approach to executive remuneration remains unchanged. The pay structures in our sector are
atypical compared with the norm of Executive pay. However, they are proven to work within Braemar as well as
being accepted practice across the Shipbroking sector as a whole. The Committee is focused on retaining our
executive directors and incentivising them appropriately to deliver shareholder value, whilst also being mindful of
best practice and market trends (including the guidelines of investor bodies). This year the new Executive team has
made substantial progress in laying the foundations for growth, substantially increasing profitability whilst also
reducing net debt as well as restoring dividend payments. The Committee has worked within the existing approved
shareholder policy to reward these achievements.
Our framework is based on five core principles:
• Market competitiveness: the success of our business is totally dependent upon the experience and skills of our
employees and management team, the specialist advice they offer, and the relationships that they develop with
our clients. The structures, designs and quantum of our remuneration arrangements must be sufficient to allow
us to retain our team and compete in these highly competitive global talent markets.
• Proportionality and alignment to performance: we seek to pay no more than is necessary and also ensure that a
substantial portion of executive reward is aligned to both profitability and delivery of strategy. In line with our
competitors, we operate profit sharing arrangements for those individuals directly engaged in broking activities.
• Simplicity and transparency: our executive remuneration structures must be clear and understandable for
participants and other stakeholders.
• Alignment with shareholders: we align long-term rewards with the long-term value of our shares through share
ownership guidelines and share-based remuneration.
• Alignment with culture and risk appetite: we ensure that remuneration drives the right behaviours to support our
strategy and reflects our values, including the identification and mitigation of any risks that could arise from our
incentive plans.
Page 63
Activity during the year
This year has been another busy one for the Committee, with eight meetings being held, the attendance of which
was as follows:
Attended
Jürgen Breuer
1
5/5
Lesley Watkins
2
8/8
Stephen Kunzer
8/8
Elizabeth Gooch
3
3/3
Joanne Lake
4
0/0
The Committee undertook three main activities in the year as well as considering performance and reward for
FY21/22 as detailed below.
Review of firm-wide deferred equity plans
The Company has a long-standing pay policy which sees a large number of employees receiving part of their
bonus deferred into the Company’s shares for a three-year period under the Company’s Deferred Bonus Plan
(“DBP”). This policy has had a number of positive features for Braemar, including material numbers of our senior
employees becoming shareholders, thereby creating a direct alignment of interests between a wide body of
employees and all other shareholders.
However, an unintended consequence of high levels of bonus deferral and share retention by employees within a
relatively “SmallCap” company has been a negative impact on the liquidity of Braemar’s stock. This position is then
accentuated by strong company performance: this produces higher bonus outcomes, higher deferral amounts as
absolute values, and (in the foreseeable future as deferred awards mature) further reduced liquidity.
It was for this reason that, as announced on 3 February 2022, the proportion of deferred share awards would be
reduced by around half (from c.14% to c.7% of total annual bonus outcomes) for the financial year ended 28
February 2022 and future years.
The Committee believes that this change is both proportionate and in shareholders’ best interests given continuing
high levels of employee shareholdings and strong company performance driving high absolute values of bonus
deferral. However, we will continue to monitor this position and, if it becomes appropriate to do so, we will revert to
higher bonus deferral levels to maintain the positive benefits of aligning our senior employees with shareholder
experience as we have described above.
Review of Executive Leadership Team remuneration
During the year, the Committee also undertook a review of the pay levels and structures for both the executive
directors and the next level of the Executive Leadership Team. This review focused on achieving consistency
within the executive group regarding annual bonus, pension and LTIP provision, aligning with market practice
amongst the Group’s peers, as well as incentivising and retaining our team.
Appointment of COO
Tristram Simmonds was appointed as our COO from 1 August 2021. Details of Tristram’s remuneration are
contained throughout the Directors’ Remuneration Report but in summary included:
• salary on appointment of £250,000 per annum;
• consistent with his existing terms and conditions and our shareholder approved policy for those undertaking
broking activities, continued participation in the Brokers’ Bonus which Tristram has participated in for a number
of years before his appointment to the plc-Board; and
• pension contribution aligned with employee levels at 5% of base salary.
Following the year-end, the Committee further reviewed Tristram’s remuneration package and confirmed that his
basic salary should be increased to £375,000 per annum during FY22/23 (effective from 1 July 2022). This
represented a phased approach to Tristram attaining the salary level which was considered appropriate for his role,
given the responsibilities which it entails and also recognising his strong performance since coming into post. In
addition, Tristram will receive an LTIP award over shares worth 200% of base salary in FY22/23. This represents
two years worth of LTIP awards following his appointment. Tristram did not participate in the LTIP in FY21/22, and
the Company’s normal policy allows up to 200% of base salary in exceptional circumstances. The Committee
1
Jürgen Breuer left the Committee on 26 August 2021.
2
Lesley Watkins left the Committee on 31 March 2021.
3
Elizabeth Gooch joined the board and became Chair of the Remuneration Committee on 26 August 2021.
4
Joanne Lake joined the Committee with effect from 1 March 2022.
Page 64
recognises that Tristram has made a significant contribution to Group performance in the year and these changes
to his remuneration reward him for his outstanding contribution.
The Remuneration Committee also reviewed the base salary of the Chief Executive Officer, James Gundy, in the
light of his significant contribution to Group performance and recommended that his base salary be increased to
£475,000. This took effect from 1 July 2022.
Performance and reward for FY21/22
As is detailed in the Strategic Report, FY21/22 has seen very strong performance from Braemar, which is reflected in
the proposed executive directors’ annual bonus outcomes for the year. In line with the amendment to firm-wide
deferred equity plans mentioned above, the Committee agreed that the percentage of Executive bonuses to be
deferred into shares should be set at 10%, the same level that applies for our CEO and the Group’s peers.
A further action taken by the Committee was to consider the vesting outcomes of the 2019 LTIP awards, which
were assessed against adjusted EPS targets for FY21/22 (target range of 35 pence to 46 pence). The Committee
determined that a vesting level slightly above threshold (35% vesting) was an appropriate outcome and reflected
overall shareholder experience. As detailed on page 73, in making this assessment technical adjustments to
reported EPS for continuing operations (27.95 pence) were approved by the Committee to recognise the impact of
the sale of Cory Brothers and the acceleration of remuneration costs in FY21/22 resulting from the changes to firm-
wide deferred share awards described above. Without proportionate adjustments, the recipients of these LTIP
awards would have been adversely impacted by the steps taken by the board in the year on these two matters of
strategic importance which were identified as being in shareholders’ long-term best interests.
Statement of voting at AGM
The following table sets out the votes cast (including those cast by proxy) at the 2021 AGM in respect of the
Committee’s report for the year ending 28 February 2021 and at the 2020 AGM in respect of the new Directors’
Remuneration Policy (“Policy”) (which was the last general meeting of the Company at which a resolution was
moved by the Company in respect of the Policy).
Votes for
Votes against
Total votes
cast
Votes
withheld
Resolution
#
%
#
%
#
#
Approval of Remuneration Report for year
ending 28 February 2021
6,749,027
83.51
1,333,085
16.49
8,082,112
26,957
Approval of Remuneration Policy
7,623,464
97.50
195,386
2.50
7,818,850
1,540,245
Format of the report and matters to be approved at our 2022 AGM
The remainder of this report comprises two sections:
1. a summary of the Policy (pages 65 to 69). This is included solely for information purposes and the full Policy can
be found within the Company’s Annual Report and Accounts 2020, which are available on the Company’s
website. As this is the first full year in which James Gundy has been the Company’s Group Chief Executive
Officer, we have also included the summary of his remuneration structure for the year that was included in the
Company’s Annual Report and Accounts 2021; and
2. the Annual Report on Remuneration, which sets out the details of how the Policy was implemented during
FY21/22 and the decisions taken in relation to the application of the Policy in FY22/23.
This report reflects how the Committee has implemented the policy that was approved by shareholders at the
2020 AGM. We trust that our shareholders will recognise the outstanding year of performance from our Executive
team and vote in favour of this report at our forthcoming 2022 AGM.
Finally, the Committee would like to put on record its thanks to its previous Committee Chair, Jürgen Breuer, for his
work and his contribution to the business of the Committee.
Elizabeth Gooch
On behalf of the Remuneration Committee
28 August 2022
Page 65
Remuneration Policy
The Remuneration Committee is not proposing to make any changes to the Policy approved by shareholders at the
2020 AGM. The full Policy is contained on pages 46 to 53 of the Company’s Annual Report and Accounts 2020,
and can be found on our website at http://braemar.com/investors/. Key extracts of the current Policy are shown
below for information.
Policy table for Executive Directors
BASE SALARY
Purpose and link to
strategy
Operation
Maximum opportunity
Performance
measures
To provide an element
of fixed remuneration
as part of a market-
competitive
remuneration package
to attract and retain
the calibre of talent
required to deliver the
Group’s strategy.
Base salaries are determined by the Committee,
taking into account:
! skills and experience of the individual;
! size, scope and complexity of the role;
! market competitiveness of the overall
remuneration package;
! performance of the individual and of the
Group as a whole; and
! pay and conditions elsewhere in the Group.
Base salaries are normally reviewed annually
with changes effective from the start of the
financial year.
While there is no defined maximum,
salary increases are normally made with
reference to increases for the wider
employee population.
The Committee retains discretion to
award larger increases where
considered appropriate, to reflect, for
example:
! an increase in scope or responsibility;
! development and performance in role;
and
! alignment to market-competitive
levels.
None.
BENEFITS
Purpose and link to
strategy
Operation
Maximum opportunity
Performance
measures
To provide a market-
competitive benefits
package for the nature
and location of the
role.
Incorporates various cash/non-cash benefits
which are competitive in the relevant market,
and which may include such benefits as a car
(or car allowance), club membership,
healthcare, life assurance, income protection
insurance, and reimbursed business expenses
(including any tax liability).
Where relevant, other benefits on broadly the
same terms as provided to the wider workforce
or to reflect specific individual circumstances,
such as housing, relocation, travel, or other
expatriate allowances may also be provided.
Executive Directors may also participate in the
Company’s Save As You Earn (“SAYE”) scheme
on the same basis as other employees and
subject to statutory limits.
Benefit provision, for which there is no
prescribed monetary maximum, is set at
an appropriate level for the specific
nature and location of the role.
None.
PENSION
Purpose and link to
strategy
Operation
Maximum opportunity
Performance
measures
To provide a post-
retirement benefit to
attract and retain
talent.
The Committee may offer participation in a
defined contribution pension scheme or provide
a cash allowance.
The maximum contribution for any
executive director will be in line with the
level available for the majority of UK
employees at any given time (currently
5% of salary).
None.
Page 66
ANNUAL BONUS
Purpose and link to
strategy
Operation
Maximum opportunity
Performance measures
To incentivise and
reward annual
performance aligned
with the long-term
objectives of
individuals and the
delivery of strategy.
Deferral into shares
strengthens long-term
alignment with
shareholders
Executive directors are eligible to
participate in the annual bonus at the
discretion of the Committee each year.
The performance measures and targets
are determined annually by the
Committee to reflect prevailing Group
financial and strategic objectives.
Pay-out levels are determined by the
Committee after year-end based on
performance against targets set at the
start of the year.
The Committee retains the discretion to
override formulaic bonus outcomes, both
upward and downward, where necessary,
to take account of overall or underlying
Group performance. The Committee will
consult with shareholders prior to the
exercise of any upward discretion.
A portion of the annual bonus will be
deferred into shares under the Deferred
Bonus Plan (“DBP”), described in more
detail below.
Clawback provisions will also apply as
explained below.
100% of base salary.
The payment for threshold
performance will not exceed 25%
of the maximum. Any part of the
annual bonus that is subject to
financial measures will be made
on a straight-line basis for
performance between threshold
and target, and on a separate
straight-line basis for performance
between target and maximum.
At least 50% of the annual
bonus will be based on
Group financial
performance.
The Committee may make
up to 50% of the annual
bonus subject to
performance measures
and targets to reflect:
! Group strategic or
operational objectives;
and/or
! targets specific to a
subsidiary company or
section of the Group (if
applicable to an
executive director);
and/or
! individual objectives,
and will make the pay-out
by reference to these
measures and targets
subject to a financial
underpin.
Where an appointed executive director will undertake broking activities, they may, at the discretion of the
Committee, be eligible to participate in the Brokers’ Bonus arrangements (instead of the normal annual bonus
referred to above).
LONG-TERM INCENTIVE PLAN (“LTIP”)
Purpose and link to
strategy
Operation
Maximum opportunity
Performance measures
To provide a variable
element which aligns
the reward of all
executive directors
with long-term
performance delivered
for shareholders.
Awards are made under the 2014 Long-
Term Incentive Plan (“LTIP”) as approved
by shareholders at the 2014 AGM.
Awards vest subject to performance
measured over a period of at least three
years.
Vested awards are subject to an
additional holding period, which unless
the Committee determines otherwise will
run up to the fifth anniversary of the date
of grant.
All executive directors are eligible to
participate each year at the discretion of
the Committee.
The Committee retains the discretion to
override formulaic vesting outcomes
downward, where necessary, to take
account of overall or underlying Group
performance.
Awards are subject to clawback
provisions as described in more detail
below.
The usual maximum award
opportunity in respect of a
financial year is 100% of base
salary.
However, in circumstances that
the Committee considers to be
exceptional, awards of up to
200% of base salary may be
made.
Vesting is based on the
achievement of
performance targets set in
respect of key
performance measures
aligned to the strategy and
shareholder value
(currently underlying
earnings per share).
25% vests for threshold
performance.
Page 67
SHAREHOLDING REQUIREMENTS
Purpose and link to
strategy
Operation
Maximum
opportunity
Performance
measures
In-employment
shareholding
requirement
To create greater
alignment between
executive directors
and shareholders.
Executive directors are required to build a shareholding of 100% of base
salary within five years of appointment. Shares subject to unvested or
vested but unexercised awards under the DBP and vested but
unexercised LTIP awards may be included, in all cases on a net of tax
basis.
Executive directors will be required to retain all of the shares (net of tax)
that vest under the DBP and the LTIP until the shareholding requirement is
met.
The Committee shall retain a discretion to waive the requirements, in
whole or in part, in exceptional circumstances such as critical illness or
personal financial hardship (including divorce).
Not applicable
Not applicable
Post-employment
shareholding
requirement
To ensure continued
alignment of the long-
term interests of
executive directors
and shareholders
post-cessation.
Executive directors are required to maintain a shareholding equivalent to
the in-employment shareholding requirement immediately prior to
departure (or the actual share and award holding on departure, if lower)
for two years post-cessation. Shares subject to unvested awards under
the DBP and vested but unexercised LTIP awards may be included, in
both cases on a net of tax basis.
The requirement will only apply to shares vesting under DBP and LTIP
awards made from the effective date of the amended Policy onwards and
will not apply to shares acquired either from awards granted before this
date or from shares purchased directly by the executive director.
There are appropriate contractual arrangements in place to ensure
enforceability.
The Committee shall retain a discretion to waive the requirements, in
whole or in part, in exceptional circumstances such as death, critical
illness or personal financial hardship (including divorce).
Not applicable
Not applicable
Bonus deferral
A portion of the annual bonus will be deferred into share awards under the DBP, the latest plan rules for which were
approved by the approved by shareholders on 26 August 2021. Such awards will vest, unless the Committee
determines otherwise, after three years from the date of grant, subject to continued employment with the Group.
The Committee may determine that DBP awards are made in conjunction with the Company Share Option Plan
(“CSOP”) to enable UK tax resident individuals to benefit from the growth in value of the shares subject to the
awards in a tax-efficient manner. In such circumstances, when DBP awards are granted, a corresponding market
value option will be granted under the terms of the CSOP, the maximum, aggregate face value of which will be
£30,000. The options will vest on the same terms as and on the same date as the corresponding DBP awards.
Under the terms of a CSOP, no income tax or employees’ or employer’s National Insurance contributions will be
payable, on exercise, on the growth in value of the shares. The number of shares in respect of which the DBP
awards will vest will be reduced to take account of the gain in value, as at exercise, of the corresponding CSOP
options. CSOP awards would only be made in conjunction with the DBP as described above, and not on a stand-
alone basis.
Clawback
Under the DBP and the LTIP, the Committee may reduce the number of shares subject to unvested awards and/or
impose further conditions on unvested awards and/or require payments in cash or shares be made in certain
circumstances which include:
• a material misstatement or restatement of any financial results of the Company;
• a material failure of risk management by the Company or a relevant business unit;
• serious reputational or financial damage to the Company or a relevant business unit as a result of the
participant’s misconduct or failure of supervision;
• the discovery of facts that could have led to the dismissal of the participant prior to the vesting of the award;
• an error of calculation;
• the Company suffering corporate failure; or
• such other exceptional circumstances as the Committee considers relevant.
Clawback will also apply in the case of the cash element of the annual bonus.
The relevant discovery periods are until the time of vesting of the relevant award in the case of DBP awards and at
any time prior to the second anniversary of vesting or payment of the award (as relevant) in the case of awards
made under the LTIP and an annual bonus.
Page 68
Chief Executive remuneration
James Gundy’s remuneration as Chief Executive Officer is set within the scope of the Policy and aligns to the norms
of pay for senior brokers across global markets in the sector. As this is his first full year as Chief Executive Officer,
we thought it would be helpful to repeat the summary of his remuneration for FY21/22 that was included in the
Company’s Annual Report and Accounts 2021, as follows:
Pay element
Detail
Base salary
£425,000 from appointment
Benefits
In line with Group policies
Pension
Employer contribution level of 5% (aligned to contribution levels for the majority of employees). Paid as taxable cash
supplement.
Annual bonus
Participation in the “Broker’s Bonus” commission arrangements, which deliver a percentage of profits from personal
Shipbroking revenues for the year.
The first £425,000 of Broker’s Bonus earned in any year (equivalent to 100% of base salary) will not be paid unless
the Committee is satisfied as to the Group’s overall financial performance in the year as assessed against the
achievement of the Group’s budgets.
A cap applies, so that James’ annual bonus cannot exceed £4m in any one year.
A proportion of outcomes for each year will be deferred into shares under the Deferred Bonus Plan (“DBP”):
! where James’ shareholding is worth at least £700,000, which it currently is (see Shareholding Guidelines and
Share Interests below), this will be deferral of 10% of outcomes,
! in any other case, one-third of outcomes will be deferred,
! deferral under the DBP is for a period of three years.
LTIP
Standard participation in the LTIP, with awards subject only to goals to be based on the Group’s strategic and/or
financial performance.
Normal annual award levels will be over shares worth up to 100% of base salary, although in FY21/22, James’ award
will be over shares worth 200% of base salary as a one-off promotion matter.
Shareholding
guidelines
100% of base salary, to apply whilst in-post and for a two-year post-employment period. James Gundy’s current
shareholding (as at 28 February 2022) is worth over 372% of base salary.
Malus and clawback
Applies to both annual bonuses and to LTIP awards.
Page 69
Policy table for Chairman and non-executive directors
Purpose and link
to strategy
Operation
Maximum opportunity
To provide market
appropriate fees
to recruit and
retain individuals
of the calibre to
deliver the
strategy.
The remuneration of the Chairman is determined by the Committee and the
remuneration of the non-executive directors is determined by the board
(excluding the non-executive directors).
Fees are normally reviewed on an annual basis.
Where the Chairman is a non-executive Chairman, they will receive a single fee
encompassing all duties. Where the Company has an executive Chairman, they
will be eligible for additional elements in line with the Executive Director Policy
table.
Non-executive directors receive a basic fee and may also receive additional fees
for Committee or other board duties.
Fees are payable in cash, although the Company may retain the right to make
payment in shares.
Expenses reasonably incurred in the performance of the role may be
reimbursed or paid for directly by the Company, as appropriate, including any
tax due on the benefits.
A non-executive Chairman and non-executive directors do not participate in any
of the Group’s bonus arrangements, share plans or pension schemes.
While there is no maximum
fee level, fees are set
considering:
! market practice for
comparative roles;
! the time commitment and
duties involved; and
! the requirement to attract
and retain the quality of
individuals required by
the Company.
Service contracts and letters of appointment
The policy for executive directors is for them to have rolling service contracts that provide for a notice period by
either party. The notice period for each of the executive directors is six months. The Company may terminate the
executive director’s contract by making a payment in lieu of notice of the unexpired notice period equivalent to a
value comprising salary, pension and contractual benefits with such payment being able to be made on a phased
basis subject to mitigation. There is no provision in any of the service contracts of the executive directors for any
ex-gratia payments. It is intended that the policy above would be applied to the service contracts for future
executive director appointments.
A non-executive Chairman and non-executive directors are appointed pursuant to a letter of appointment. The
policy is that non-executive directors are appointed for an initial term of three years which may be extended for
further three-year periods on the recommendation of the Nomination Committee and with the board’s agreement,
subject to annual re-election at the Annual General Meeting. The non-executive directors’ letters of appointment
are to be terminable on one month’s notice from either party.
Date of contract/letter
Unexpired term as at
28 February 2022
Executive
James Gundy
10 November 2020
6 months
Tristram Simmonds
21 July 2021
6 months
Nicholas Stone
11 December 2018
6 months
Non-executive
Elizabeth Gooch
21 July 2021
1 month
Stephen Kunzer
26 February 2019
1 month
Joanne Lake
2 February 2022
1 month
Nigel Payne
6 April 2021
1 month
Page 70
ANNUAL REPORT ON REMUNERATION
Implementation of the Policy for FY22/23
This part of the report sets out details of how the Remuneration Committee intends to apply the Directors’
Remuneration Policy (the “Policy”) to the current Directors in FY22/23.
Base salary
The base salaries for the current executive directors are shown below.
FY21/22
£’000
FY22/23
£’000
Change
James Gundy
425
475
2
12%
Nicholas Stone
250
250
0%
Tristram Simmonds
250
1
375
2
50%
Benefits and pension
James Gundy, Tristram Simmonds and Nicholas Stone receive benefits and pension in line with the Policy.
Annual bonus
In line with the Policy, as James Gundy continues to undertake Shipbroking activities, he continues to be eligible to
participate in the Brokers’ Bonus arrangements instead of the Group annual bonus. This bonus is non-contractual
and is based on profits generated in respect of the year from commission received through individual broking
activities. Whilst any award under these arrangements remains discretionary, the Committee has agreed additional
provisions including an underpin assessed against Group financial performance and a maximum annual cap of
£4m. A proportion of the Brokers’ Bonus outcome is deferred into share awards. As James Gundy has already
accumulated a significant shareholding in the Company over his years of service as an employee of the Group, the
Committee has agreed that where his shareholding remains at least £700,000, 10% of any bonus earned will be
deferred into shares, but where his shareholding is below £700,000, one-third will be deferred.
The annual bonus for Tristram Simmonds also reflects his continuing involvement in broking activities. In line with
our shareholder approved remuneration policy for those undertaking broking activities, and in line with his existing
terms and conditions, Tristram remains eligible to participate in the Brokers’ Bonus arrangements. These are non-
contractual and are calculated as a percentage of the profits generated during the year through broking activities
of the relevant desk or reporting unit. A portion of any bonus awarded will be deferred into shares under the
Deferred Bonus Plan. The deferral level will be at 10% of bonus outcomes in line with the CEO and the review of
firm-wide deferred equity plans.
The annual bonus for Nicholas Stone is based on a combination of performance measures linked to Group financial
performance and the achievement of the Group’s strategy and operational objectives for the year. The deferral
level will be at 10% of bonus outcomes in line with the CEO and the review of firm-wide deferred equity plans.
The board believes annual bonus targets to be commercially sensitive and, consequently, does not publish details
of them on a prospective basis. However, it will consider a fuller disclosure on a retrospective basis when it reports
on the performance against them in the following year’s Annual Report. A portion of any bonus awarded will be
deferred into shares under the Deferred Bonus Plan.
LTIP
The Committee proposes to grant our CEO and COO an LTIP award for FY22/23. For the CEO this award will be at
normal policy levels of 100% of salary. As disclosed in the introduction to this report, the COO’s LTIP award for
FY22/23 only will be at 200% of base salary (representing two years’ worth of LTIP awards following his promotion
to the COO role). All awards will take the form of nil cost options to acquire ordinary shares of 10 pence each in the
Company following a three-year vesting period subject to meeting the performance criteria and the rules of the
LTIP. The performance criteria will be based on increasing the Group’s Earnings Per Share by CAGR 20% per
annum over a three-year performance period. More detail on the performance metrics and targets will be disclosed
in the related RNS when the awards are made. Any vested awards will be subject to a further two-year holding
period.
1
Tristram Simmonds was appointed Chief Operating Officer with effect from 1 August 2021 and this is his salary with effect from that date.
2
To take effect from 1 July 2022. The rationale for this increase is more fully set out in the introduction to this report.
Page 71
Chairman and non-executive directors’ fees
The Company appointed a new non-executive Chairman with effect from 1 May 2021. His annual fee is £108,000,
which is the same as the base fee of the previous Chairman (excluding amounts paid to the previous Chairman by
AqualisBraemar for serving on the board of AqualisBraemar). The board also reviewed the fees of the other non-
executive directors at the time of the appointment of Joanne Lake in February this year and decided that she should
be appointed on an increased annual fee of £50,000, plus the additional £10,000 fee for her role as Audit
Committee chair. The board also decided that Elizabeth Gooch’s fee should be increased to £50,000, plus an
additional £10,000 for her role as Remuneration Committee chair, with effect from 1 March 2022. These reflect the
first increase in the non-executive director fees since 2016 and the board believes they are both reasonable (as
relating to newly appointed non-executive directors) and required in order to recruit and retain individuals of the
calibre to help the Company to deliver its strategy. A summary is set out in the table below.
FY21/22
£’000
FY22/23
£’000
Chairman fee
108
108
Non-executive director fee
42.5
50
Audit Committee Chair fee
10
10
Remuneration Committee Chair fee
7.5
10
Implementation of the Policy in FY21/22
This section sets out details of the remuneration outcomes in respect of the year ended 28 February 2022. Those
sections that have been audited have been identified below.
Single total figure of remuneration for FY21/22 (audited)
The remuneration of the executive directors in respect of FY21/22 is shown in the table below (with the prior year
comparative).
James Gundy
Nicholas Stone
Tristram Simmonds
1
FY21/22
£’000
FY20/21
£’000
FY21/22
£’000
FY20/21
£’000
FY21/22
£’000
FY20/21
£’000
Base salary
425
70.8
2
250
242.7
145.8
–
Benefits
3
3.6
0.5
4
2.2
1.8
2.1
–
Pension
5
21.3
3.5
6
12.5
18.7
7.3
–
Annual bonus
7
1,948
310
8
44
203
145
–
LTIP
9
479
78
10
106
–
–
–
Total
2,877
463
414
466
300
–
Total Fixed
449.9
74.9
264.7
263.2
155.2
–
Total Variable
2,427
388
150
203
145
–
1
Tristram was appointed as Group Chief Operating Officer on 1 August 2021 and this row represents his remuneration for the year as a director and does not include his remuneration as an
employee for his role prior to his promotion.
2
This figure represents the amount of base salary paid to James during the financial year ending 28 February 2021 following his appointment as Group Chief Executive Officer on 1 January 2021.
3
Benefits include private healthcare.
4
This figure represents a 2/12ths pro-rated amount of James’ benefits for FY20/21.
5
Pension includes the value of pension contributions to the Company’s defined contribution pension scheme (or an equivalent cash allowance) in respect of the relevant year.
6
This figure is James’ equivalent cash allowance since his appointment as Group Chief Executive Officer on 1 January 2021.
7
Annual bonus represents the full value of the annual bonus awarded in respect of the relevant financial year, including the portion that is deferred into shares pursuant to the DBP.
8
This figure represents 2/12ths of James’ total discretionary bonus for FY20/21.
9
LTIP represents the value of the LTIP award that vests in respect of a performance period ending in the relevant financial year.
10
This figure represents the value of the LTIP award that vested in respect of a performance period ending in the financial year in which James was appointed as Group Chief Executive Officer
on 1 January 2021.
Page 72
The fees of the non-executive directors are shown in the table below.
Fixed fee
FY21/22
£’000
FY20/21
£’000
Jürgen Breuer
1
24.6
50
Ron Series
2
19.5
–
Lesley Watkins
52.5
52.5
Stephen Kunzer
42.5
42.5
Elizabeth Gooch
3
28.7
N/A
Nigel Payne
4
90
N/A
Joanne Lake
5
N/A
N/A
Payments to past directors and payments for loss of office (audited)
As reported in the 2020 Annual Report, James Kidwell, the Group’s former CEO, was awarded a bonus for FY19/20
of £70,000, half of which was deferred to be released on a sliding scale according to the number of warrants
received as part of the AqualisBraemar transaction vesting in 2021. 1,000,000 of the 6,523,977 warrants vested
(approximately 15% of the maximum), which resulted in £5,364.83 being released to James in September 2021.
Annual bonus for FY21/22 (audited)
Nicholas Stone participated in the annual performance-related bonus arrangements, with a maximum annual bonus
opportunity of 100% of salary. The annual bonus was based on a mix of financial, operational and strategic
objectives aligned to the business priorities for the year, assessed against objectives set by the Committee.
This year, financial performance comprised 65% of the potential outcome and was measured against underlying
operating profit metrics as follows:
Underlying
Operating Profit
for FY21/22
Threshold
(25%
attainment)
£’m
Target
(50%
attainment)
£’m
Maximum
(100%
attainment)
£’m
Performance
attained
£’m
Vesting
outcome (of this
part)
8.0
8.5
9.5
10.1
100% vesting
The following bonus payments have been provided for:
• Tristram participated in the Broker’s Bonus arrangements for the period prior to his joining the board and in the
PLC directors’ bonus for the period since his appointment as COO. His COO’s bonus for the year was £145,000.
• James continues to participate in the Broker’s Bonus, which delivered an outturn of £1,948,000 from a
successful year.
• Nicholas did not believe it was appropriate to take a full year-end bonus in the light of the delays to the
production of the accounts for the year and a bonus of £44,000 was determined.
LTIP award – granted during 2021/22 (audited)
The Committee granted LTIP awards to James Gundy and Nicholas Stone during the period at a level of 100% of
salary for Nicholas Stone and an exceptional 200% of salary for James Gundy in his first year as Chief Executive
Officer. The awards have performance criteria based on the Company's growth in absolute Total Shareholder
Return ("TSR"), measured over a three-year performance period ending on 13 June 2024, as follows: the maximum
possible opportunity will vest if growth in TSR is equivalent to a compound annual growth rate ("CAGR") of 22% or
1
Jürgen Breuer resigned on 28 August 2021.
2
Ron Series resigned on 30 April 2021. Prior to the appointment of James Gundy as Group Chief Executive Officer on 1 January 2021, Ron was Executive Chairman of the Group, and so there is
no prior year comparison available.
3
Elizabeth Gooch joined the board on 1 August 2021.
4
Nigel Payne joined the board on 1 April 2021.
5
Joanne Lake joined the board on 1 March 2022.
Page 73
more per annum over the three-year performance period; if CAGR over the performance period is less than 12%
per annum, none of the awards will vest; if CAGR is 12% per annum, 25% of the award will vest; and if CAGR is
between 12% and 22% per annum, the vesting outcome will be calculated on a straight-line basis between 25%
and 100%.
TSR reflects movement in share price and reinvestment of dividends over the performance period, with the share
prices to be used being the three-month averages ending on 13 June 2021 and 13 June 2024. To ensure sufficient
stretch within the targets for awards, the base point measurement (three-month average TSR to 13 June 2021) was
raised by a further 10%.
2019 LTIP award – vesting in respect of FY21/22 (audited)
The 2019 LTIP awards were granted in July 2019 and were based on performance over a three-year performance
period ending 28 February 2022 against the following adjusted EPS targets set when the award was granted: 25%
vesting for adjusted EPS of 35 pence in FY21/22 (the final year of the performance period for the award), rising on a
straight-line basis for 100% vesting for adjusted EPS of 46 pence.
As described in the introduction to this report, the adjusted EPS number (36.44 pence) used for the assessment of
the performance conditions for the 2019 LTIP awards reflects adjustments approved by the Committee from the
reported EPS number for FY21/22 (27.95 pence), which reflects continuing operations only. The adjustments reflect
the following:
1. the inclusion of Cory Brothers’ profits for FY21/22 (£2.45m). These are not reflected in the reported Underlying
Operating Profit, which relates only to continuing operations. This adjustment maintains integrity with the original
targets which were set out on the basis of a group that included Cory Brothers;
2. the exclusion of the accelerated recognition of remuneration costs for FY21/22 (£2.7m) resulting from the
changes to firm-wide deferred equity plans described in the introduction to this report; and
3. the inclusion of the related increased tax impacts from these adjustments.
The adjustment for the accelerated recognition of remuneration costs in FY21/22, while a technical matter, likewise
maintains integrity with the assumptions when the targets were originally set and (as explained in the introduction
to this report) the related change in compulsory deferral requirements was undertaken to benefit shareholders by
seeking to improve the liquidity of the Company’s shares.
As James Gundy’s award was granted prior to his becoming Group Chief Executive Officer, his award included a
performance condition linked to underlying operating profit achieved by the Shipbroking Division with 15% of the
award vesting by reference to adjusted EPS (with the same thresholds as Nicholas Stone’s award) and 85% vesting
by reference to the Shipbroking Division’s underlying operating profit achieved in FY21/22 (the final year of the
performance period for the award) with 25% of this portion vesting for underlying operating profit of £11.25m rising
on a straight-line basis for 100% vesting for underlying operating profit of £15m.
With an adjusted EPS outturn of 36.44 pence and a Shipbroking Division underlying operating profit outturn of
£15.2m, the vesting outturn for each of Nicholas and James was 36,653 and 166,200 awards respectively, with the
remainder of the awards lapsing. The awards that vested are now subject to a two-year holding period, following
which they will be released and become exercisable.
Page 74
Shareholding guidelines and share interests (audited)
Under the shareholding guidelines, executive directors are required to build and retain a shareholding in the Group
at least equivalent to 100% of their base salary. This guideline is expected to be met within five years of
appointment to the board. Non-executive directors are not subject to a shareholding guideline. The following table
sets out the shareholdings (including by connected persons) of the directors in the Company as at 28 February
2022. This shows that James Gundy and Tristram Simmonds have met the shareholding guideline, but that Nicholas
Stone has not yet done so (Nicholas was appointed to the board with effect from 1 April 2019).
Number of shares
beneficially held
at 28 February 2022
Shareholding
as % of salary
1
Guideline met
Executive directors
James Gundy
657,436
372%
Yes
Nicholas Stone
10,000
10%
No
Tristram Simmonds
320,080
308%
Yes
Non-executive directors
Stephen Kunzer
10,000
Nigel Payne
8,258
Elizabeth Gooch
0
Joanne Lake
0
Lesley Watkins
2
3,000
1
Shareholding as a percentage of salary is calculated using the base salary/fee and the closing share price on 28 February 2022.
2
Lesley Watkins resigned on 31 March 2022.
Page 75
The table below provides details of the interests of the executive directors in incentive awards during the year.
Awards
held at
1 Mar 2021
Grant
date
Share
price on
grant £
1
Granted
Exercised/
released
Lapsed
Awards
held at
28 Feb
2022
Exercise
price £
Exer-
cisable
from
Exer-
cisable
to
James Gundy
2018 DBP
38,354
22 Jun 18
2.58
–
38,354
–
–
–
–
–
2018 LTIP
150,537
29 Oct 18
2.30
–
–
117,243
33,294
2
–
26 May 23
29 Oct 28
2019 DBP
194,000
17 Jun 19
2.10
–
–
–
194,000
–
30 Aug 22
30 Aug 22
2019 LTIP
184,210
1 Jul 19
1.855
–
–
–
184,210
–
1 Jul 24
1 Jul 29
2019 SAYE
5,625
5 Jul 19
1.80
–
–
–
5,625
1.60
1 Aug 22
1 Feb 23
2020 DBP
386,195
9 Jul 20
1.21
–
–
–
386,195
1.22
1
9 Jul 23
9 Jul 23
2020 LTIP
218,250
24 Jul 20
1.23
–
–
–
218,750
–
24 Jul 25
24 Jul 30
2021 DBP
–
8 Jun 21
2.66
169,925
–
–
169,925
2.66
8 Jun 24
8 Jun 24
2021 LTIP
–
14 Jun 21
2.91
300,884
–
–
300,884
–
14 Jun 26
14 Jun 31
Nicholas
Stone
2019 LTIP
105,263
1 Jul 19
1.855
–
–
–
105,263
–
1 Jul 24
1 Jul 29
2019 SAYE
4,500
5 Jul 19
1.80
–
–
–
4,500
1.60
1 Aug 22
1 Feb 23
2020 DBP
28,245
9 Jul 20
1.21
–
–
–
28,245
1.22
3
9 Jul 23
9 Jul 23
2020 LTIP
156,250
24 Jul 20
1.23
–
–
–
156,250
–
24 Jul 25
24 Jul 30
2021 DBP
–
8 Jun 21
2.66
25,398
–
–
25,398
2.66
8 Jun 24
8 Jun 24
2021 LTIP
–
14 Jun 21
2.91
88,495
–
–
88,495
–
14 Jun 26
14 Jun 31
Tristram
Simmonds
2019 DBP
50,000
17 Jun 19
2.035
–
–
–
50,000
2.00
3
30 Aug 22
1 Sep 22
2020 DBP
34,511
9 Jul 20
1.22
–
–
–
34,511
–
9 Jul 23
9 Jul 23
2021 DBP
–
8 Jun 21
2.66
26,315
–
–
26,315
–
8 Jun 24
8 Jun 24
The performance conditions attached to the outstanding LTIP awards are as follows:
• 2019 LTIP: Nicholas Stone’s 2019 LTIP award is tested solely on adjusted EPS in FY21/22 (the final year of the
performance period for the award) with 25% vesting for adjusted EPS of 35 pence rising on a straight-line basis
for 100% vesting for adjusted EPS of 46 pence. As James Gundy’s award was granted prior to his becoming
Group Chief Executive Officer, his award included a performance condition linked to underlying operating profit
achieved by the Shipbroking Division with 15% of the award vesting by reference to adjusted EPS (with the same
thresholds as Nicholas Stone’s award) and 85% vesting by reference to the Shipbroking Division’s underlying
operating profit achieved in FY21/22 (the final year of the performance period for the award) with 25% of this
portion vesting for underlying operating profit of £11.25m rising on a straight-line basis for 100% vesting for
underlying operating profit of £15m. Detail on the outturn of these awards is set out above.
• 2020 LTIP: Nicholas Stone’s 2020 LTIP award is tested solely on underlying EPS in FY22/23 (the final year of the
performance period for the award) with 25% vesting for underlying EPS of 30 pence rising on a straight-line
basis for 100% vesting for underlying EPS of 42 pence. As James Gundy’s award was granted prior to his
becoming Group Chief Executive Officer, his award again included a performance condition linked to underlying
operating profit achieved by the Shipbroking Division with 35% of the award vesting by reference to underlying
EPS (with the same thresholds as Nicholas Stone’s award) and 65% vesting by reference to the Shipbroking
Division’s underlying operating profit achieved in FY22/23 (the final year of the performance period for the
1
Share price included is the market price on the date of grant. When calculating the number of awards to be made, the Company uses the middle market quotations for the three trading days
prior to grant.
2
James Gundy’s 2018 LTIP award vested in regard to 33,294 shares on 26 May 2021, with the remainder lapsing. The award that vested is now subject to a two-year holding period, following
which it will be released and becomes exercisable.
3
James Gundy and Nicholas Stone were also given corresponding options under the Company Share Option Plan (“CSOP”) over 24,650 shares, which will vest on the same date as the DBP
award. Tristram Simmonds was given corresponding options under the CSOP over 15,000 shares, which will vest on the same date as the DBP award. The number of shares in respect of which
the DBP award will vest will be reduced to take account of any gain in value, as at exercise, of the CSOP options.
Page 76
award) with 25% of this portion vesting for underlying operating profit of £13.8m rising on a straight-line basis for
100% vesting for underlying operating profit of £18m.
• 2021 LTIP: Both James Gundy’s and Nicholas Stone’s 2021 LTIP awards had performance criteria based on the
Company's growth in absolute TSR measured over a three-year performance period ending on 13 June 2024, as
follows: the maximum possible opportunity will vest if growth in TSR is equivalent to a CAGR of 22% or more per
annum over the three-year performance period; if CAGR over the performance period is less than 12% per
annum, none of the awards will vest; if CAGR is 12% per annum, 25% of the award will vest; and if CAGR is
between 12% and 22% per annum, the vesting outcome will be calculated on a straight-line basis between 25%
and 100%.
Percentage change in remuneration of the directors compared with average UK employees
The following table shows the year-on-year percentage change in the salary, benefits and annual bonus of the
directors and the employees of the Company for FY21/22. The table also includes a comparison against the
average for the Group’s UK employees for FY21/22 compared to FY20/21. The Company considers that the Group’s
UK employees is the more representative comparator group, as the majority of the Group’s employees are not
employed by the Company itself, and as the Group Chief Executive Officer and the majority of the Group’s
workforce are UK-based.
% Change in base salary
% Change in benefits
% Change in Annual Bonus
FY20/21 to
FY21/22
FY19/20 to
FY20/21
FY20/21 to
FY21/22
FY19/20 to
FY20/21
FY20/21 to
FY21/22
FY19/20 to
FY20/21
All UK Employees
6%
3%
0%
1%
13%
-42%
All PLC Employees
10%
N/A
-20%
N/A
119%
N/A
Executive directors
James Gundy
500%
N/A
1
635%
N/A
528%
N/A
Nicholas Stone
3%
25%
22%
-40%
-78%
32%
Tristram Simmonds
2
N/A
N/A
N/A
N/A
N/A
N/A
Non-executive directors
Jürgen Breuer
3
0%
0%
N/A
N/A
N/A
N/A
Lesley Watkins
4
0%
0%
N/A
N/A
N/A
N/A
Stephen Kunzer
0%
0%
N/A
N/A
N/A
N/A
Nigel Payne
5
N/A
N/A
N/A
N/A
N/A
N/A
Elizabeth Gooch
6
N/A
N/A
N/A
N/A
N/A
N/A
Ronald Series
7
N/A
N/A
N/A
N/A
N/A
N/A
1
James Gundy joined the board on 1 January 2021, so there is no prior year comparison in respect of FY19/20 and FY20/21.
2
Tristram Simmonds was appointed as Group Chief Operating Officer on 1 August 2021, so there is no prior year comparison.
3
Jürgen Breuer resigned on 28 August 2021.
4
Lesley Watkins resigned on 31 March 2022.
5
Nigel Payne joined the board on 1 May 2021, so there is no prior year comparison.
6
Elizabeth Gooch joined the board on 1 August 2021, so there is no prior year comparison.
7
Ronald Series resigned on 30 April 2021, having reverted to the role of non-executive director on 1 January 2021 following a period as interim Executive Chairman. The table simply includes N/A
as there are no direct prior year comparisons.
Page 77
CEO pay ratio
The table below shows how the Group Chief Executive Officer’s single-figure remuneration for FY21/22 compares
to the equivalent single-figure remuneration for the Group’s UK employees ranked at the 25
th
, 50
th
and 75
th
percentile.
Year
Method
25
th
percentile
pay ratio
Median
pay ratio
75
th
percentile
pay ratio
2022
Option A
80:1
54:1
21:1
2021
Option A
21:1
13:1
5:1
2020
Option A
11:1
7:1
3:1
2022
CEO
25
th
percentile
pay £
Median
pay £
75
th
percentile
pay £
Total pay and benefits
2,830,279
30,140
44,350
114,930
Salary element of total pay and benefits
425,000
26,510
37,500
100,000
The Company has again selected Option A as the method for calculating the CEO pay ratio. Option A calculates a
single figure for every UK-based employee in the year to 28 February 2022 and identifies the employees that fall at
the 25
th
, 50
th
and 75
th
percentiles. This method was chosen as it is considered the most accurate way of identifying
the relevant employees and aligns to how the single figure table is calculated.
The Company has included the following elements of pay in its calculation: annual basic salary, allowances,
bonuses, share awards, employer’s pension contributions, and P11D benefits. These pay elements were separated
into recurring and non-recurring components. The recurring components were scaled relative to the proportion of
the financial year worked by each individual employee before being added to the non-recurring elements such as
bonus and share awards.
This resulted in a single figure for each employee, from which the individuals at the 25
th
, 50
th
and 75
th
percentiles
could be identified. The Company notes the increase in the ratios from last year, which can be explained by it being
the first full financial year that the Group Chief Executive Officer has been in post.
Relative importance of spend on pay
The chart below shows total employee remuneration and distributions to shareholders paid during FY21/22 and
FY20/21 (and the difference between the two).
FY21/22
£ million
FY20/21
£ million
Change
(%)
Total employee remuneration
72.0
68.8
4.7%
Distributions to shareholders
2
0
100%
Page 78
Performance graph and table
The chart below shows the Total Shareholder Return of the Company against the FTSE All-Share Index over the last
ten years. The Committee believes the FTSE All-Share Index is the most appropriate index against which the Total
Shareholder Return of the Company should be measured.
The table below provides remuneration data for the role of the CEO for the current and each of the last ten financial
years over the equivalent period.
CEO
FY21/22
£’000
James
Gundy
2020/21
£’000
Ronald
Series/
James
Gundy
1
FY19/20
£’000
James
Kidwell/
Ronald
Series
2
FY18/19
£’000
James
Kidwell
FY17/18
£’000
James
Kidwell
FY16/17
£’000
James
Kidwell
FY15/16
£’000
James
Kidwell
FY14/15
£’000
James
Kidwell
FY13/14
£’000
James
Kidwell
FY12/13
£’000
Alan
Marsh/Ja
mes
Kidwell
Single total figure of
remuneration
2,830
714
324
404
579
404
577
549
438
662
Annual bonus (% of
maximum)
49%
34%
10%
0%
50%
0%
60%
55%
23%
87%
LTIP vesting (% of
maximum)
90%
18
0%
3
0%
0%
0%
N/A
4
0%
0%
0%
Elizabeth Gooch
On behalf of the Remuneration Committee
28 August 2022
1
The FY20/21 remuneration is the pro-rata amount paid to Ronald Series and James Gundy during the year for their respective periods of employment as Executive Chairman and Group Chief
Executive Officer during the year. The maximum is based on a pro-rated proportion of Ronald Series’ maximum bonus potential and the cap that is to apply to James Gundy’s bonus.
2
The FY19/20 remuneration is the pro-rata amount paid to James Kidwell and Ronald Series during that year for their respective periods of employment as Group Chief Executive Officer and
Executive Chairman during that year.
3
James Kidwell was paid £25,000 in lieu of LTIP entitlements on his retirement.
4
No LTIP awards were made in 2013, which would have vested in respect of performance to FY15/16.
0.0
50.0
100.0
150.0
200.0
250.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Indexed Total Return
Braemar Shipping Services FTSE All-Share
Page 79
Director’s Report
FOR THE YEAR ENDED 28 FEBRUARY 2022
This section contains additional information that the Directors are required to include within the Annual Report.
Together with the Strategic Report on pages 4 to 48, it forms the Management Report for the purposes of DTR
4.1.5R. Other information that is relevant to this Directors’ Report, and which is incorporated by reference into this
Directors’ Report, can be found elsewhere in this Annual Report, as follows:
• Results and decisions relating to dividends on page 5.
• Important events during the year ended 28 February 2022 and likely future developments in the business of the
Company or its subsidiaries on pages 5 and 12 to 16.
• Greenhouse gas emissions on page 32.
• Employee engagement and diversity on pages 34 and 35.
• Engagement with clients and other key stakeholders on pages 27, and 52.
• Corporate Governance Report on pages 49 to 53.
• Section 172(1) Statement on page 27.
• Risk and compliance framework review on pages 39 and 59.
• Principal decisions taken during the year on pages 4, 14 to 16 and 27.
• Non-Financial Information Statement on page 38.
Amendment of Articles of Association
The Company’s shareholders may amend the Company’s Articles of Association by special resolution.
Branches outside the United Kingdom
The Group has branches and/or representative offices in China, Switzerland and Greece.
Change of control – significant agreements
No person holds securities in the Company carrying special rights with regard to control of the Company. The
Company is not aware of any agreements between holders of securities that may result in restrictions in the
transfer of securities or voting rights.
The Convertible Loan Notes that are summarised below carry certain accelerated conversion rights in the event of
default on financial commitments associated with the instruments or business distress within the Group. The
Convertible Loan Notes shall automatically convert or be redeemed in the event that any person or persons acting
in concert hold more than 50% of the issued share capital of the Group or an impairment charge in excess of
€50m is reflected in the audited Financial Statements of the Group.
There are a number of ordinary course of business agreements that take effect, alter or terminate following a
change of control of the Company, but none of these are considered to have a significant potential impact on the
business of the Group as a whole.
Convertible Loan Note Instruments
On 26 September 2017, the Company completed the acquisition of Braemar Naves. A new class of convertible loan
note instruments (the “Convertible Loan Notes”) formed a core part of the consideration for this transaction and the
Group has committed to the issue of up to €24.0m Convertible Loan Notes in respect of this acquisition. To date,
the Company has issued €17,623,956’s worth of Convertible Loan Notes in connection with this acquisition, of
which €5,421,956’s worth remain outstanding.
In June 2021, the Company agreed a rescheduling of the deferred consideration amounts owed in relation to the
Convertible Loan Notes, which deferred €2.9m that was originally due for repayment before the end of December
2022 to be paid no earlier than September 2025. Additionally, €0.75m was agreed to be satisfied by the issue of
new ordinary shares in the Company in three tranches between September 2021 and December 2022. Two of
these tranches occurred during the financial year ended 28 February 2022, leaving approximately €125,000 still to
be satisfied by the issue of new ordinary shares in the Company in December 2022.
These Convertible Loan Notes are unsecured and unlisted. The Convertible Loan Notes are denominated in Euros
and, as part of the restructuring, it was agreed that they would carry a 5% per annum coupon from September
2025, increasing from 3%. The conversion prices were fixed at 390.3 pence for management note holders and
450.3 pence for non-management note holders. For more information on the Convertible Loan Notes, please see
Note 15 to the Financial Statements.
Page 80
Political contributions
There were no political contributions during the year ended 28 February 2022 (2021: £nil).
Share capital and voting rights
As at 28 February 2022, the Company’s total issued ordinary share capital was 32,200,279 shares of 10 pence each
(28 February 2021: 31,731,218 shares). All of the Company’s shares are fully paid up and quoted on the London Stock
Exchange plc’s Official List. The rights and obligations attaching to the Company’s ordinary shares (as well as the
powers of the Company’s directors and any rules relating to their appointment and replacement) are set out in the
Company’s Articles of Association, copies of which can be found online at Companies House, or by writing to the
Company Secretary. There are no restrictions on the voting rights or the transfer restrictions attaching to the
Company’s issued ordinary shares.
At the upcoming AGM, shareholders will be asked to consider a resolution to renew the Directors’ authority to allot
shares in the Company. Further details will be provided in the Notice of the AGM.
Purchase of own ordinary shares
The Company is authorised to make market purchases of the Company’s ordinary shares pursuant to the authority
granted by its shareholders at the AGM held on 26 August 2021. This authority will expire at the end of the next
AGM. The Company did not use this authority in either the year ended 28 February 2021 or the year ended 28
February 2022.
However, the directors will have proposed that this authority be renewed at the 2022 AGM in accordance with the
Company’s Articles of Association and, at the 2022 AGM held on 19 August 2022, this authority was renewed. In
accordance with the ABI Investor Protection Guidelines, the maximum number of ordinary shares which may be
acquired under such authority is 10% of the Company’s issued ordinary shares. The Directors will only make a
purchase of shares using this authority if it is expected to result in an increase in earnings per share and will take
into account other available investment opportunities, appropriate gearing levels and the overall position of the
Company. Any shares purchased in accordance with this authority will subsequently be cancelled.
Options and ESOP Trust
The total number of options to subscribe for shares in the Company that were outstanding as at 28 February 2022
was 1,554,620, being 4.83% of the issued share capital. If the options to subscribe for shares were fully exercised,
the proportion of issued share capital represented by all options would be equivalent to 4.61%.
During the year ended 28 February 2022, 2,740,164 of the Company’s ordinary shares were purchased by SG
Kleinwort Hambros Trust Company (CI) Ltd, as Trustee of the Company’s ESOP Trust (2021: 540,000). The Trustee
had absolute discretion and independence in respect of any trading decisions it made in respect of these
purchases. As at 28 February 2022, the ESOP held 2,669,603 shares.
Directors and their interests
The directors of the Company as at the date of this Directors’ Report are shown on pages 50 to 51. In addition, and
as discussed elsewhere in this Annual Report, Lesley Watkins served as a director of the Company during the year
ended 28 February 2022 and until 31 March 2022. Jürgen Breuer also served as a director of the Company during
the year ended 28 February 2022 and until 26 August 2021.
The directors’ beneficial interests in the ordinary shares and share options of the Company as at 28 February 2022
are disclosed in the Directors’ Remuneration Report on page 74 and 75. There have not been any changes in such
interests between 28 February 2022 and 28 August 2022.
As at 28 February 2022, the executive directors, in common with other employees of the Group, also have an
interest in 2,669,837 (2021: 525,837) ordinary 10 pence shares held by SG Kleinwort Hambros Trust Company (CI)
Ltd on behalf of the Employee Share Ownership Plan and in 62,290 (2021: 62,290) ordinary 10 pence shares held by
Computershare Trustees (Jersey) Limited on behalf of the ACM Shipping Limited Employee Trust.
The directors held no material interest in any contract of significance entered into by the Company or its
subsidiaries during the year ended 28 February 2022.
During the year, the Group maintained cover for its directors and officers and those of its subsidiary companies
under a directors’ and officers’ liability insurance policy, as permitted by the Companies Act 2006.
Significant shareholdings
As at 28 February 2022, the Company was aware of approximately 19% of its ordinary shares being held by Group
employees and the ESOP Trust. The working vendors of Braemar Naves Corporate Finance GmbH currently hold
€5,211,256’s worth of Convertible Loan Notes.
Page 81
As at 28 February 2022, the Company was aware of the following significant direct or indirect shareholdings of 3%
or more:
Name
Number
of shares
Percentage of
issued ordinary
share capital
1
SG Kleinwort Hambros Trust Company (CI) Limited as Trustee of the Braemar Shipping Services Plc
ESOP
2,641,893
8.20%
Hargreaves Lansdown Asset Management
2,561,280
7.95%
Interactive Investor
2,312,804
7.18%
Barclays Wealth
1,318,533
4.09%
Quentin Soanes
1,288,990
4.00%
Unicorn Asset Management
1,184,363
3.68%
National Financial Services
1,154,429
3.59%
Magnus Halvorsen
1,117,507
3.47%
Charles Stanley
1,059,849
3.47%
Following 28 February 2022, the Company has received a number of notifications in relation to the shareholdings
held by SG Kleinwort Hambros Trust Company (CI) Limited and, as at 96 August 2022, the latest of such
notifications reported the Trustee’s shareholding to be 4,189,603 shares (equivalent to 13.01% of the Company’s
issued ordinary share capital). Apart from these notifications, the Company has not received any other notifications
in relation to the above between 28 February 2022 and 28 August 2022.
Financial instruments
The Group’s financial risk management objectives and policies are set out in the Corporate Governance Report on
pages 52 and in the Strategic Report on pages 39 to 46.
Statement of directors’ responsibilities
The directors are responsible for preparing this Annual Report and the Group and Company Financial Statements in
accordance with applicable laws and regulations.
Company law requires the Directors to prepare Group and Company Financial Statements for each financial year.
Under such law, they are required to prepare the Group Financial Statements in accordance with UK adopted
international accounting standards and applicable law and have elected to prepare the Company Financial
Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law). Under company law the directors must not approve the Financial
Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and
Company and of the profit or loss of the Group for that period.
In preparing these Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state for the Group Financial Statements whether they have been prepared in accordance with UK adopted
international accounting standards, subject to any material departures disclosed and explained in the Group
Financial Statements and for the Company Financial Statements, state whether applicable UK Accounting
Standards have been followed;
• prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the
Group and the Company will continue in business; and
• prepare a directors’ report, a strategic report and directors’ remuneration report which comply with the
requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company
and enable them to ensure that the Financial Statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities. The directors are responsible for ensuring that the
Annual Report and Accounts, taken as a whole, are fair, balanced, and understandable and provides the information
necessary for shareholders to assess the Group’s performance, business model and strategy.
1
Percentages are shown as a percentage of the Company’s total voting rights as at 28 February 2022.
Page 82
Website publication
The directors are responsible for ensuring that the Annual Report and the Financial Statements are made available
on a website. Financial Statements are published on the Company's website in accordance with legislation in the
UK governing the preparation and dissemination of Financial Statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the directors. The
directors’ responsibility also extends to the ongoing integrity of the Financial Statements contained therein.
Directors’ responsibilities pursuant to DTR4:
The directors confirm that to the best of their knowledge:
• the Group Financial Statements have been prepared in accordance with the applicable set of accounting
standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and
• the Annual Report includes a fair review of the development and performance of the business and the financial
position of the Group and Company, together with a description of the principal risks and uncertainties that they
face.
The directors confirm that they consider this Annual Report, taken as a whole, is fair, balanced and understandable
and provides the information necessary for the Company’s shareholders to assess the Group’s position,
performance, business model and strategy.
Disclosure of information to the auditors
In accordance with Section 418 of the Companies Act 2006, each person who is a director at the date of approval
of this Annual Report confirms that:
• so far as the director is aware, there is no relevant audit information of which the Company’s auditor is unaware;
and
• the director has taken all the steps that they ought to have taken as a director to make themselves aware of any
relevant audit information and to establish that the Company’s auditor is aware of that information.
Forward-looking statements
Where this Annual Report contains forward-looking statements, these are based on current expectations and
assumptions and only relate to the date on which they are made. These statements should be treated with caution
due to the inherent risks, uncertainties and assumptions underlying any such forward-looking information. The
Group cautions investors that a number of factors, including matters referred to in this Annual Report, could cause
actual results to differ materially from those expressed or implied in any forward-looking statement. Such factors
include, but are not limited to, those discussed on pages 42 to 44 of this Annual Report.
Forward-looking statements in this Annual Report include statements regarding the intentions, beliefs or current
expectations of our Directors, officers and employees concerning, among other things, the Group’s results of
operations, financial condition, liquidity, prospects, growth, strategies and the business. Neither the Group, nor any
of the directors, officers or employees, provides any representation, assurance or guarantee that the occurrence of
the events expressed or implied in any forward-looking statements in this Annual Report will actually occur. Undue
reliance should not be placed on these forward-looking statements. Other than in accordance with our legal and
regulatory obligations, the Group undertakes no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.
Reappointment of the auditors
In accordance with Section 489 of the Companies Act 2006, a resolution for the reappointment of BDO LLP as
auditor of the Company is to be proposed at the forthcoming AGM.
AGM
The 2022 AGM of the Company was held at 10 a.m. on 19 August 2022 at the Company’s head offices. It was
proposed at the AGM that only the resolutions which were not dependent on the Annual Report being available to
shareholders be voted upon at such meeting. All such resolutions were duly passed at the AGM and the AGM was
adjourned. The remaining business of the AGM will be dealt with at a reconvened meeting, which will be held at 10
a.m. on 6 October 2022. Further details of such meetings will be published on the Company’s website and posted
to shareholders.
On behalf of the board
Nicholas Stone
Director
28 August 2022
Page 83
Independent auditor’s report to the members of Braemar Shipping Services
Plc
Opinion on the Financial Statements
In our opinion:
• the Financial Statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs
as at 28 February 2022 and of the Group’s profit for the year then ended;
• the Group Financial Statements have been properly prepared in accordance with UK adopted international
accounting standards;
• the Parent Company Financial Statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
• the Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the Financial Statements of Braemar Shipping Services Plc (the ‘Parent Company’) and its
subsidiaries (the ‘Group’) for the year ended 28 February 2022 which comprise:
Composition
Financial reporting framework
Group
! Consolidated Income Statement
! Consolidated Statement of Comprehensive Income
! Consolidated Balance Sheet
! Consolidated Cash Flow Statement
! Consolidated Statement of Changes in Total Equity
! Notes to the Financial Statements, including a summary
of significant accounting policies.
Applicable law and UK adopted international accounting
standards.
Parent Company
! Company Balance Sheet
! Company Statement of Changes in Total Equity
! Notes to the Financial Statements, including a summary
of significant accounting policies.
Applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 101 Reduced
Disclosure Framework (United Kingdom Generally
Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the audit
committee.
Independence
Following the recommendation of the Audit Committee, we were appointed by the Board of Directors on 2 October
2018 to audit the Financial Statements for the year ended 28 February 2019 and subsequent financial periods. The
period of total uninterrupted engagement is four years, covering the years ended 28 February 2019 to 28 February
2022. We remain independent of the Group and the Parent Company in accordance with the ethical requirements
that are relevant to our audit of the Financial Statements in the UK, including the FRC’s Ethical Standard as applied
to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. The non-audit services prohibited by that standard were not provided to the Group or the Parent
Company.
Conclusions relating to going concern
In auditing the Financial Statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the Financial Statements is appropriate. Our evaluation of the Directors’
assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis of
accounting included:
• Evaluating the going concern assessment and forecasts prepared by management and approved by the
Directors post the disposal of Cory Brothers Division. This including assessing the underlying base case cash
flow forecasts, the potential impact of the ongoing Ukraine-Russia conflict on the business and the shipping
industry as a whole, impact of current economic matters and climate-change considerations;
• Reviewing whether the forecast used in the going concern assessment is consistent with the forecast used in
the impairment review;
• Assessing the forecasts used by the Directors to ensure consistency with those used for other purposes such
as goodwill impairment reviews;
Page 84
• Evaluating the stress tests performed by the Directors to ensure they are appropriate and whether further stress
tests should be performed;
• Reviewing the reverse stress test forecast to assess the point at which covenants would be breached or a
liquidity event occurred;
• Considering managements conclusion that the likelihood of the reverse stress case scenario materialising as
being remote and the ability of the directors to undertake further mitigating actions should this be required;
• Assessing the Group’s covenant compliance calculations (both at year end and post year end) with the terms of
the new facility agreement;
• Assessing the impact of prior period adjustments on retrospective covenant compliance submissions; and
• Assessing the financial statement disclosures regarding going concern to ensure they are complete and
accurate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability
to continue as a going concern for a period of at least twelve months from when the Financial Statements are
authorised for issue.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the Directors’ statement in the Financial Statements about
whether the Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
Overview
Coverage
98% (2021: 93%) of Group revenue from continuing operations and 95% (2021: 92%) of Group
total assets
Key audit matters
2022
2021
Disposal of Cory Brothers Division
P
Cut-off on revenue recognition and compliance with the
requirement of IFRS 15 revenue recognition
P
P
Materiality
Group Financial Statements as a whole
£450,000 (2021: £400,000) based on 5% (2021: 5%) of underlying profit before tax from continuing
operations
Page 85
An overview of the scope of our audit
The Group has diverse international operations. Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including the Group’s system of internal control, and assessing the risks of material
misstatement in the Financial Statements. We also addressed the risk of management override of internal controls,
including assessing whether there was evidence of bias by the Directors that may have represented a risk of
material misstatement.
We designed an audit strategy to ensure we have obtained the required audit assurance for each component for
the purposes of our Group audit opinion. Components were scoped in to address aggregation risk and to ensure
sufficient coverage was obtained of group balances on which to base our audit opinion. The coverage of our audit
procedures is summarised graphically below and then detailed in the following table.
Our involvement with component auditors
For the work performed by component auditors, we determined the level of involvement needed in order to be able
to conclude whether sufficient appropriate audit evidence has been obtained as a basis for our opinion on the
Group Financial Statements as a whole. Our involvement with component auditors included the following:
Significant
components
! We focussed our Group audit scope primarily on the audit work at five significant components (from continuing
operations) including the Parent Company, which were subject to full scope audit procedures.
! These significant components comprise 80% of Group Revenue from continuing operations.
! The group audit team audited all significant components with the exception of the Singapore, Germany and Australia
divisions which were audited by local BDO member firms in the respective countries.
! The Group audit team issued the group instructions, ensured involvement in the risk assessment and set the overall
audit approach and strategy with the component auditors at the planning stage. The Group audit team performed
remote reviews of the significant components working papers. The Group audit team attended several virtual
conference meetings with the component auditors throughout the planning, fieldwork and completion stages of the
audit.
! All testing was performed by BDO Member Firms under the direction and supervision of the Group audit team.
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Specified audit
procedures
! There were four components which were considered for specific audit procedures.
! Specified audit procedures were performed to address the risk of material misstatement limited to our significant risk
on revenue recognition within these components. All other balances were scoped in for analytical review procedures.
! This specific scope audit testing was performed on components that contribute an aggregate of 18% of the Group
Revenue from continuing operations.
! These specific audit procedures were performed by both BDO and a UK non-BDO Member firm, and the Group audit
team directed the work for the specified procedures through the issuance of detailed instructions, briefings and
performing a review of selected working papers on significant risk areas.
! In addition a full scope audit was completed on the Cory Brother Division by a BDO UK component team.
Remaining
components
! The remaining 21 components were scoped in for analytical review procedures to confirm our conclusion that there
were no significant risks of material misstatement in the aggregated financial information.
! All of the analytical reviews were completed by the group audit team or BDO member firms with the exception of one
component which was subject to analytical review performed by non-BDO Member firms.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the Financial Statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How the scope of our audit addressed the key audit matter
Disposal of
Cory
Brothers,
formerly the
Logistics
Division (see
Note 9)
Effective 28 February 2022, Cory Brothers (also
referred to as the Logistics Division or Cory) was
sold to VertomCory Holdings Ltd (VertomCory).
The sale consideration included £6.5m of initial
cash consideration, £3.6m deferred consideration
and £1.2m contingent consideration. The deferred
consideration element is required to be
discounted at an appropriate rate to determine its
fair value at initial recognition.
Furthermore, the determination of the contingent
considerations' fair value involves judgements and
estimates particularly the:
i. the future profitability of the combined
VertomCory business; and
ii. the discount rate used to calculate its net
present value.
Disposal accounting is complex and there is a risk
that the profit on disposal has not been calculated
appropriately.
For these reasons we treated this area as a key
audit matter.
Our procedures included:
! Reviewed the Sale and Purchase Agreement (“SPA”) and assessed
the accounting treatment of the key terms and conditions to check
that these were in line with the requirements of the applicable
accounting standards;
! Confirmed the transaction completed on 28 February 2022 through
inspecting the signed SPA and receiving confirmation from the
Group’s external legal advisors;
! Reconciled the assets and liabilities disposed of to the audited
underlying ledgers at the date of disposal;
! Reviewed the accuracy of the foreign currency translation reserve
recycled to the profit and loss relating to the disposed Division’s
foreign operations;
! Reviewed the gain on disposal by agreeing the inputs to underlying
supporting documentation; and
! Challenged management on the assumptions used in the earnout
forecast of the combined VertomCory business used to calculate
the fair value of contingent consideration as well as the discount
rates used. This involved corroborating these assumptions to
supporting documentation, sensitising the earnout forecast and
inquiring with individuals involved with the combined VertomCory
business. With regard to the discount rate used in both the
deferred and contingent consideration, we involved our internal
valuations expert to review the appropriateness of the rate used.
Key observations:
Based on the procedures performed, we are satisfied with the
accounting treatment for the disposal of Cory Brothers and the profit
on disposal recorded.
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Key audit matter
How the scope of our audit addressed the key audit matter
Cut-off on
revenue
recognition
(see note 2
and the
accounting
policy in note
1(e) )
The Group’s entitlement to commission revenue in
the Shipbroking Division and success fee income
in the Financial Division are dependent upon the
fulfilment of certain obligations.
IFRS 15 Revenue from Customers with Contracts
requires management to consider the underlying
performance obligations and the point at which
revenue should be recognised.
There is a risk in respect of cut-off at the year end
in determining when performance obligations
have been delivered and therefore when the
related commission or success fee income should
be recognised.
Timing of revenue recognition requires judgement
to determine whether it is at a “point in time” or
“over time” as well as determining the transfer of
control for when performance obligations are
satisfied.
For these reasons we treated this area as a key
audit matter
The remaining revenue streams were not
considered complex from a revenue recognition
perspective.
Our procedures included:
! Challenged and assessed management’s revenue recognition
policy for compliance with the requirements of IFRS 15 on revenue
from commissions in the Shipbroking division and success fee
income in the Financial Division;
! On a sample basis, testing of the revenue and accrued income with
a focus on revenue from Shipbroking’s Spot Fixtures recognised
close to the year-end (pre- and post) through obtaining third party
evidence to confirm the discharge date evidencing satisfaction of
the performance obligation and that cut-off had been correctly
applied;
! For a sample of invoices on either side of the year end across the
Shipbroking Division and Financial Division revenue stream, we
tested cut-off by agreeing to the third party evidence confirming
the date of satisfaction of the IFRS 15 performance obligation.
Where required, we obtained a third party confirmation from the
customer to further corroborate the cut-off date; and
! We have tested material manual journals to revenue posted close
to the year-end in the Shipbroking Division and Financial Division by
tracing to third party supporting documents and assessed the
validity and business rationale of these manual revenue journals.
Key observations:
Based on the procedures performed, we are satisfied with cut-off in
the Shipbroking’s commission income and Financial Divisions’
success fee income and the recognition of revenue being materially
in line with IFRS 15.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the Financial Statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a
lower materiality level, performance materiality, to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the
nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their
effect on the Financial Statements as a whole.
Based on our professional judgement, we determined materiality for the Financial Statements as a whole and
performance materiality as follows:
Group
Parent company
Materiality
£ 450,000 (2021: £400,000)
£405,000 (2021: £350,000)
Basis
5% (2021: 5%) of underlying profit (before tax) from continuing
operations
Based on 1% of total assets capped at 90% (2021:
90%) of group materiality
Rationale
Underlying profit (before tax) from continuing operations is
considered the most appropriate benchmark based on the
nature of the trading business where in our judgement the
stakeholders would be most interested in the performance of
the business and underlying profit being a key performance
measure in this regard. This is also consistent with the market
practice and investor expectations.
Capped materiality at 90% (2021: 90%) of group given
the assessment of components aggregation risk.
Page 88
Further materiality measures applied in the conduct of the audit include:
Measure
Application
Performance
materiality
Group: £283,000 (2021: £280,000)
Parent: £252,000 (2021: £245,000)
Performance materiality was set at 63% (2021:70%) based on the history of
misstatements identified in the prior years and the number of accounts subject to
high degrees of estimation and judgement.
Component
materiality
The range of materiality used for
components ranged from £120,000
to £405,000 (2021: £100,000 to
£350,000)
Our audit work at each component has been executed at levels of materiality
applicable to each individual entity based on its size and risk as approved by the
Group audit team and in each case, lower than that applied to the Group.
We set materiality for each component of the Group based on a percentage of
between 27% and 90% (2021: 25% and 90%) of Group materiality dependent on
the size and our assessment of the risk of material misstatement of that
component. Component materiality ranged from £120,000 to £360,000. In the
audit of each component, we further applied performance materiality levels of
62% to 70% (2021:70%) of the component materiality to our testing to ensure
that the risk of errors exceeding component materiality was appropriately
mitigated.
Reporting
threshold
£8,000 (2021: £8,000)
All audit differences in excess of the ‘reporting threshold’ are reported to the Audit
and Risk Committee, as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
Quantitative &
qualitative
disclosures
We also report to the Audit and Risk Committee on disclosure matters that we identified when assessing the overall
presentation of the Financial Statements.
Other information
The directors are responsible for the other information. The other information comprises the information included in
the Annual Report other than the Financial Statements and our auditor’s report thereon. Our opinion on the Financial
Statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or
our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the Financial Statements themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Page 89
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and
that part of the Corporate Governance Statement relating to the parent company’s compliance with the provisions
of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the Financial Statements or our knowledge obtained
during the audit.
Going concern and
longer-term viability
! The Directors' statement with regards to the appropriateness of adopting the going concern basis of accounting
and any material uncertainties identified set out on page 45; and
! The Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers
and why the period is appropriate set out on page 99.
Other Code
provisions
! Directors' statement on fair, balanced and understandable set out on page 82;
! Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on
page 42;
! The section of the annual report that describes the review of effectiveness of risk management and internal
control systems set out on page 59; and
! The section describing the work of the Audit Committee set out on page 54.
Other Companies Act 2006 reporting
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
! the information given in the Strategic report and the Directors’ report for the financial year for which the Financial
Statements are prepared is consistent with the Financial Statements; and
! the Strategic report and the Directors’ report have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in
the course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report.
Directors’
remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Matters on which we
are required to report
by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
! adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
! the Parent Company Financial Statements and the part of the Directors’ remuneration report to be audited are
not in agreement with the accounting records and returns; or
! certain disclosures of Directors’ remuneration specified by law are not made; or
! we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the statement of Directors’ responsibilities, the Directors are responsible for the
preparation of the Financial Statements and for being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable the preparation of Financial Statements that are
free from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, the Directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent
Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these Financial Statements.
Page 90
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
• We gained an understanding of the legal and regulatory framework applicable to the Group and the industry in
which it operates, through discussion with management and the Audit Committee and our knowledge of the
industry;
• We focused on significant laws and regulations that could give rise to a material misstatement in the Financial
Statements, including, but not limited to, the Companies Act 2006, the UK Listing Rules, UK adopted
international accounting standards for the Group and United Kingdom Generally Accepted Accounting Practice
for the Parent Company, Health and Safety legislations, the Bribery Act 2010 and tax legislations;
• We considered compliance with these laws and regulations through discussions with management and the in-
house legal counsel, reviewing internal audit reports and discussing with the Audit Committee. Our procedures
also included reviewing minutes from board meetings of those charged with governance to identify any
instances of non-compliance with laws and regulations as well as attending Audit Committee meetings;
• With the support of our internal tax specialists we also reviewed the Group’s tax computations and Financial
Statements against the requirements of the relevant tax legislation and applicable accounting framework
respectively and where applicable, reviewed correspondences with relevant taxation authorities.
• We assessed the susceptibility of the Group’s Financial Statements to material misstatement, including how
fraud might occur. We performed a robust risk assessment and obtained and understanding of the design and
implementation of relevant controls surrounding the revenue recognition process for each revenue streams and
the relevant controls over the financial reporting close process (FRCP) such as controls over the posting of
journals and the consolidation process and obtained an understanding of the segregation of duties in these
processes;
• In addressing the risk of fraud including management override of controls and improper revenue recognition, we
tested the appropriateness of journal entries made throughout the year by applying specific criteria, verified to
supporting documents and obtained an understanding of the business rationale for each of the journal entries.
We also tested the application of cut-off in revenue recognition specifically on the revenue streams covered in
our key audit matter;
• We performed a detailed review of the Group’s year end adjusting and consolidation entries and investigated
any that appeared unusual as to nature or amount through inquiry with management on the nature of the
adjustment and verification to supporting evidence; assessed whether the judgements made and accounting
estimates were indicative of a potential bias particularly on one-off transactions such as the disposal of Cory
Brothers which involved judgements and estimates (refer to the key audit matter section above);
• With regards the consolidation process, due to the prior period errors identified coupled with the complexity of
certain corporate transactions we undertook a detailed risk assessment of consolidation journals. We requested
management, along with external third party support, undertake a full review of all consolidation journals for the
years ended 28 February 2021 and 2022 to ensure they were complete and accurate. We assessed the
process performed by management and scrutinised the output with a focus on transaction related consolidation
journals;
• We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team
members and component auditors, and remained alert to any indications of fraud or non-compliance with laws
and regulations throughout the audit;
• The component teams also considered the susceptibility of the Financial Statements due to fraud in respect of
the relevant components. Testing of management override was completed by the component teams through
testing the appropriateness of a sample of journal entries in line with the journal testing procedures as detailed
above and assessment of risk of management bias on the significant judgements and estimates as detailed in
Note 1(d);
• We applied professional scepticism in our audit procedures and performed randomised procedures to include a
level of unpredictability; and
• We performed an assessment of the Group’s IT and the wider control environment and as part of this work
obtaining an understanding of the design and implementation of IT access controls.
Our audit procedures were designed to respond to risks of material misstatement in the Financial Statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the
Page 91
further removed non-compliance with laws and regulations is from the events and transactions reflected in the
Financial Statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent
Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
Scott McNaughton (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
28 August 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Page 92
Consolidated Income Statement
For the year ended 28 February 2022
28 Feb 2022
28 Feb 2021 (Restated)
Continuing operations
Notes
Underlying
£’000
Specific
items
£’000
Total
£’000
Underlying
£’000
Specific
items
£’000
Total
£’000
Revenue
2
Operating expense:
Operating costs
3,8
(91,250 )
(392 )
(91,642 )
(75,976 )
(262 )
(76,238 )
Acquisition-related expenditure
8
(122 )
(122 )
(835 )
(835 )
Total operating expense
(91,250 )
(514 )
(91,764 )
(75,976 )
(1,097 )
(77,073 )
Operating profit/(loss)
(514 )
(1,097 )
Share of associate loss for the period
19
(19 )
(19 )
Finance income
6
Finance costs
6
(1,237 )
(1,237 )
(1,210 )
(432 )
(1,642 )
Profit/(loss) before taxation
(342 )
(1,529 )
Taxation
7
(1,839 )
(1,839 )
(1,772 )
(1,574 )
Profit from continuing operations
(342 )
(1,331 )
Profit/(loss) net of tax from discontinued
operations
9
(513 )
Profit attributable to equity shareholders
of the Company
Total
Earnings per ordinary share
Basic
11
Diluted
11
Continuing operations
Earnings per ordinary share
Basic
11
Diluted
11
The year ended 28 February 2021 has been restated for prior period adjustments (see Note 34) and the
presentation of Cory Brothers and AqualisBraemar as discontinued operations (see Note 9). As all of the Group’s
costs of sales relate only to discontinued operations, neither cost of sales nor gross profit is presented on the face
of the Income Statement in respect of continuing operations.
The accompanying notes on pages 98 to 166 form an integral part of these Financial Statements.
Page 93
Consolidated Statement of Comprehensive Income
For the year ended 28 February 2022
Notes
28 Feb 2022
£’000
28 Feb 2021
Restated
£’000
Profit for the year
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on employee benefit schemes – net of tax
(424 )
Items that are or may be reclassified to profit or loss:
Foreign exchange differences on retranslation of foreign operations
Cash flow hedges – net of tax
30
(1,968 )
Other comprehensive income from continuing operations
(112 )
Discontinued operations
Share of other comprehensive income/(expense) of associates
Foreign exchange differences on revaluation of investment
(1,060 )
Recycling of foreign exchange reserve*
9, 19
Other comprehensive expense from discontinued operations
(277 )
Total comprehensive income attributable to equity shareholders of the Company
The year ended 28 February 2021 has been restated for the presentation of Cory Brothers and AqualisBraemar as
discontinued operations (see Note 9) and for a prior period adjustment (see Note 34).
*The recycling of foreign exchange reserve relates to the disposals of Cory Brothers and AqualisBraemar (2021:
Dilution and partial disposal of AqualisBraemar). See Note 9 and Note 19.
The accompanying notes on pages 98 to 166 form an integral part of these Financial Statements.
Page 94
Consolidated Balance Sheet
As at 28 February 2022
Note
As at
28 Feb 2022
£’000
Restated
As at
28 Feb 2021
£’000
Restated
As at
1 Mar 2020
£’000
Assets
Non-current assets
Goodwill
12
Other intangible assets
13
Property, plant and equipment
16
Other investments
18
Investment in associate
19
Financial assets
22
Derivative financial instruments
22
Deferred tax assets
7
Other long-term receivables
20
Current assets
Trade and other receivables
21
Financial assets
22
Derivative financial instruments
22
Cash and cash equivalents
23
Assets held for sale
9
Total assets
Liabilities
Current liabilities
Derivative financial instruments
22
Trade and other payables
24
Short-term borrowings
25
Current tax payable
Provisions
26
Convertible loan notes
25, 34
Deferred consideration
25, 34
Liabilities directly associated with assets classified as held for sale
9
Non-current liabilities
Long-term borrowings
25
Deferred tax liabilities
7
Derivative financial instruments
22
Provisions
26
Convertible loan notes
25, 34
Deferred consideration
25, 34
Pension deficit
27
Total liabilities
Total assets less total liabilities
Equity
Share capital
28
Share premium
28
ESOP reserve
29
(6,771 )
(1,362 )
(2,498 )
Other reserves
30
Retained earnings
(1,543 )
(15,906 )
(19,831 )
Total equity
The Balance Sheets as at 28 February 2020 and 28 February 2021 have been restated for a prior period
adjustment, see Note 34 for more detail.
The Financial Statements on pages 98 to 166 were approved by the board of directors on 28 August 2022 and
were signed on its behalf by:
James Gundy
Group Chief Executive Officer
Nicholas Stone
Chief Financial Officer
Registered number: 02286034
Page 95
Consolidated Cash Flow Statement
For the year ended 28 February 2022
Notes
28 Feb 2022
£’000
28 Feb 2021
restated
£’000
Profit before tax from continuing operations
Profit before tax from discontinued operations
9
Adjustment for non-cash transactions included in profit before tax
Depreciation and amortisation charges
13, 16
Loss on disposal of fixed assets
Share of profit in associate from continuing and discontinued operations
19
(56 )
(346 )
Share scheme charges
Net foreign exchange gains of financial instruments
Net finance cost
Fair value loss on warrants
8
Rights issue gain on shareholding in AqualisBraemar
8
(826 )
Gain on disposal of shares in AqualisBraemar
8, 9
(3,375 )
(1,758 )
Gain on disposal of Cory Brothers
8, 9
(4,134 )
Gain on disposal of Wavespec
8, 9
(594 )
Loss on impairment of Wavespec receivable
8, 9
Impairment of right-of-use asset
8
Impairment of assets held for sale
9
Adjustment for cash items in other comprehensive income/expense
Contribution to defined benefit scheme
27
(450 )
(450 )
Operating cash flow before changes in working capital
(Increase)/decrease in receivables
(9,209 )
Increase/(decrease) in payables
(1,894 )
Increase in provisions
Cash flows from operating activities
Interest received
6
Interest paid
6
(592 )
(1,274 )
Tax paid
(2,161 )
(822 )
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
13, 16
(652 )
(502 )
Purchase of other intangible assets
13
(515 )
(643 )
Investment in associate
19
(326 )
(418 )
Dividend received from associate
19
Disposal of Cory Brothers, net of cash disposed
9, 14
(12,353 )
Disposal of Wavespec, net of cash disposed
9
(53 )
Proceeds from disposal of investment in associate
19
Principal received on finance lease receivables
17
Net cash generated from/(used in) investing activities
(5,868 )
Page 96
For the year ended 28 February 2022
Notes
28 Feb 2022
£’000
28 Feb 2021
restated
£’000
Cash flows from financing activities
Proceeds from borrowings
Repayment of principal under lease liabilities
17
(3,950 )
(3,928 )
Repayment of revolving credit facility
(11,975 )
Repayment of overdraft facilities
(25,116 )
Dividends paid
10
(2,109 )
Purchase of own shares
(7,043 )
(860 )
Settlement of convertible loan notes
22
(2,596 )
(1,901 )
Net cash used in financing activities
(15,406 )
(32,447 )
Decrease in cash and cash equivalents
(477 )
(13,874 )
Cash and cash equivalents at beginning of the period
23
Foreign exchange differences
(711 )
Cash and cash equivalents at end of the period
23
Cash and cash equivalents (continuing operations)
Cash and cash equivalents (included in assets held for sale)
Total cash and cash equivalents at end of the period
The year ended 28 February 2021 has been restated for the presentation of Cory Brothers and AqualisBraemar as
discontinued operations and the impact of prior year adjustments described in Note 34.
The accompanying notes on pages 98 to 166 form an integral part of these Financial Statements.
Page 97
Statements of Changes in Total Equity
For the year ended 28 February 2022
Group
Note
Share
capital
£’000
Share
premium
£’000
ESOP
reserve
£’000
Other
reserves
£’000
Retained
earnings
£’000
Total
equity
£’000
At 28 February 2020
(2,498 )
(21,267 )
Restatement
34
(3,295 )
At 28 February 2020 (restated)
(2,498 )
(19,831 )
Profit for the year (restated)
Actuarial loss on employee benefits schemes – net of tax
(424 )
(424 )
Foreign exchange differences (restated)
Cash flow hedges – net of tax
Other comprehensive expense from discontinued operations
(277 )
(277 )
Other comprehensive expense
(424 )
Total comprehensive income (restated)
Shares issued
(7 )
Acquisition of own shares
(860 )
(860 )
ESOP shares allocated
(1,996 )
Share-based payments
Transactions with owners
(183 )
At 28 February 2021 (restated)
(1,362 )
(15,906 )
Profit for the year
Actuarial loss on employee benefits schemes – net of tax
Foreign exchange differences
Cash flow hedges – net of tax
(1,968 )
(1,968 )
Other comprehensive expense from discontinued operations
Other comprehensive expense
(970 )
Total comprehensive income
(970 )
Dividends
10
(2,109 )
(2,109 )
Shares issued
28, 29
(25 )
Acquisition of own shares
(7,043 )
(7,043 )
ESOP shares allocated
(1,659 )
Share-based payments
28
Transactions with owners
(5,409 )
(874 )
(5,716 )
At 28 February 2022
(6,771 )
(1,543 )
The accompanying notes on pages 98 to 166 form an integral part of these Financial Statements.
Page 98
Notes to the Financial Statements
General information
The Group Financial Statements of Braemar Shipping Services Plc for the year ended 28 February 2022 were
authorised for issue in accordance with a resolution of the directors on 28 August 2022. Braemar Shipping Services
Plc is a public limited company incorporated in England and Wales .
The term “Company” refers to Braemar Shipping Services Plc and “Group” refers to the Company and all its
subsidiary undertakings and the Employee Share Ownership Plan trust.
1. Accounting policies
a. Basis of preparation and forward-looking statements
The Consolidated Financial Statements have been prepared in accordance with UK-adopted international
accounting standards and with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards.
The Financial Statements have been prepared under the historic cost convention except for items
measured at fair value as set out in the accounting policies below.
Certain statements in this Annual Report are forward-looking. Although the Group believes that the
expectations reflected in these forward-looking statements are reasonable, we can give no assurance that
these expectations will prove to have been correct. These forward-looking statements involve risks and
uncertainties, so actual results may differ materially from those expressed or implied by these forward-
looking statements. We undertake no obligation to update any forward-looking statements whether as a
result of new information, future events or otherwise.
The Group Financial Statements are presented in Sterling and all values are rounded to the nearest
thousand Sterling (£’000) except where otherwise indicated.
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and
became UK-adopted international accounting standards, with future changes being subject to
endorsement by the UK Endorsement Board. The Group transitioned to UK-adopted international
accounting standards in its Consolidated Financial Statements on 1 March 2021. There was no impact or
changes in accounting policies from the transition.
New standards, amendments and interpretations effective for the financial year beginning 1 March 2021
There were no new standards or amendments (including the amendments to IFRS 9, IAS 39, IFRS 7 IFRS 4
and IFRS 16 in respect of Interest rate benchmark reform IBOR “phase 2”) that were adopted in the annual
Financial Statements for the year ended 28 February 2022 which had a significant effect on the Group.
New standards, amendments and interpretations issued but not yet effective for the financial year beginning
1 March 2021 and not early adopted
There are a number of standards, amendments to standards and interpretations which have been issued by
the IASB that are effective in future accounting periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning 1 March 2022:
! Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
! Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
! Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41);
and
! References to Conceptual Framework (Amendments to IFRS 3).
The following amendments are effective for the period beginning 1 March 2023:
! Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
! Definition of Accounting Estimates (Amendments to IAS 8); and
! Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).
The adoption of these standards and amendments is not expected to have a material impact on the
Financial Statements of the Group in future periods.
In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether
liabilities are classified as current or non-current. These amendments clarify that current or non-current
classification is based on whether an entity has a right at the end of the reporting period to defer settlement
of the liability for at least twelve months after the reporting period. The amendments also clarify that
“settlement” includes the transfer of cash, goods, services, or equity instruments unless the obligation to
Page 99
transfer equity instruments arises from a conversion feature classified as an equity instrument separately
from the liability component of a compound financial instrument. The amendments were originally effective
for Annual Reporting periods beginning on or after 1 January 2022. However, in May 2020, the effective date
was deferred to Annual Reporting periods beginning on or after 1 January 2023.
The Group is currently assessing the impact of these new accounting standards and amendments. The
Group does not believe that the amendments to IAS 1 will have a significant impact on the classification of
liabilities.
b. Going concern
The Group and Company Financial Statements have been prepared on a going concern basis. In reaching
this conclusion regarding the going concern assumption, the directors considered cash flow forecasts to 31
August 2023 which is twelve months from the date of signing of these Financial Statements and coincides
with the expiry of the Group’s current bank facilities with HSBC.
A set of cash flow forecasts (“the base case”) have been prepared by the directors based on revenue and
cost forecasts considered reasonable in the light of work done on budgets for the current year and the
current shipping markets. Uncertainties related to the conflict in the Ukraine, around forecasting success
fees in the Naves business, the need to continue purchasing shares for the employee trust, COVID and
climate change and note the following:
! The Group's compliance with sanctions put in place as a result of the conflict in the Ukraine is not
expected to have any material effect on trading FY22/23 nor does the Group have any existing material
exposure.
! Forecasting success fee revenue involves uncertainties in terms of both timing and actual closure of
transactions but current levels of transaction activity in the industry suggests that there won’t be a
significant decline in the going concern period and indeed one large transaction has already closed this
year.
! The ESOP now contains sufficient shares as are expected to be needed to cover all current share
awards that have not yet vested as described in Notes 28 and 29 to these accounts. This is on the
assumption that the majority of recipients elect to sell sufficient shares back to the trust immediately in
order to settle their tax liability as they have done in the past.
! The effects of COVID are nothing like those that were the case in the previous two years, despite some
disruptions still prevalent, particularly in Asia. However, these are not expected to have a material impact
on trading in the going concern period.
! The impact of climate change is not expected to have any material impact on the business in the short
term and indeed could lead to additional opportunities.
The directors have concluded therefore that none of these factors are likely to have a significantly adverse
impact on the Group’s future cash flows.
The Group’s Balance Sheet has been strengthened significantly due to the strong trading and disposals of
non-core assets during the year. As at 28 February 2022 the Group’s net bank debt was £9.3m with
available headroom in the £30.0m revolving credit facility (“RCF”) of £6.7m but following receipt of the initial
consideration from the sale of Cory Brothers on 2 March 2022 that net bank debt had reduced to £2.8m. As
at 31 July 2022 the Group had net bank debt of £7.1m with available headroom in the RCF of £5.7m and
cash balances of £17.2m. Employee bonuses are paid in May each year and bank debt tends to be at a high
point following those bonus payments and associated payroll taxes.
Notes
31 July 2022
£m
28 Feb 2022
£m
Secured revolving credit facilities
25
(24.3)
(23.3)
Cash
23
17.2
14.0
Net debt
(7.1)
(9.3)
The RCF has a number of financial covenant tests that must be adhered to. At the start of the year the
financial covenant relating to debt to twelve months rolling EBITDA was 3.5x after May 2022 the covenant
was reduced to 3x until the facility expires in September 2023. At 31 May 2022 and for the year ended 28
February 2022 the Group met all financial covenant tests. During FY21/22 the directors have discussed the
extension of the RCF with the Group’s main bankers, HSBC, and have received acceptable indicative terms
for such an extension. It is intended that these discussions will be concluded well in advance of the expiry of
the current facility.
Page 100
The cash flow forecasts in the base case assessed the ability of the Group to operate both within the
banking covenants and the facility headroom, and included a number of downside sensitivities on the
budgeted revenue, including a reverse stress test scenario. The directors consider revenue as the key
assumption in the Group’s forecasts. The remaining costs are largely fixed or made up of discretionary
bonuses, predominately within the Shipbroking Division and which are directly linked to profitability. Based
on two flex scenarios; a revenue decrease of 7.5% and a revenue decrease of 15% from the base case, no
mitigations were necessary to meet banking covenants.
A reverse stress test was also performed to ascertain the point at which the covenants would be breached
in respect of the key assumption of forecast revenue decline. This test indicated that the business,
alongside certain mitigating actions which are fully in control of the directors, would be capable of
withstanding a reduction of approximately 41% in budgeted revenue from the base case assumptions from
September 2022 through to August 2023. In light of current trading, forecasts and the Group’s performance
over FY21/22 the directors having assessed this downturn in revenue and concluded the likelihood of such a
reduction to be remote, such that it does not impact the basis of preparation of the Financial Statements
and there is no material uncertainty in this regard.
c. Basis of consolidation
The consolidated Financial Statements incorporate the Financial Statements of the Braemar Shipping
Services Plc and all its subsidiaries made up to 28 February each year or 29 February in a leap year.
The results of subsidiaries are consolidated using the purchase method of accounting, from the date on
which control of the net assets and operation of the acquired company are effectively transferred to the
Group. Similarly, the results of subsidiaries divested cease to be consolidated from the date on which
control of the net assets and operations are transferred out of the Group.
All intercompany balances and transactions have been eliminated in full.
d. Use of estimates and critical judgements
The preparation of the Group’s Financial Statements requires management to make judgements, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the
disclosure of contingent liabilities, at the reporting date. Estimates and judgements are continually evaluated
based on historical experience and other factors, including expectations of future events that are believed
to be reasonable under the circumstances. In the future, actual experience may differ from these estimates
and assumptions.
The following are key areas where the Group typically makes judgements involving estimates:
Estimates
The key assumptions concerning the future, and other key sources of estimation uncertainty at the Balance
Sheet date, that may have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year, are discussed below.
Impairment of goodwill
Goodwill is tested for impairment on an annual basis, and the Group will also test for impairment at other
times if there is an indication that an impairment may exist. Determining whether goodwill is impaired
requires an estimation of the value-in-use of the cash-generating units to which these assets have been
allocated. The value-in-use calculation estimates the present value of future cash flows expected to arise
for the cash-generating unit. The key estimates are therefore the selection of suitable discount rates and
the estimation of future growth rates which vary between cash-generating units depending on the specific
risks and the anticipated economic and market conditions related to each cash-generating unit (see Note
12 for a description of the approach used by management to determine these key values). Climate change
risk has been taken into account in determining the underlying inputs used in calculations used for
impairment reviews and is not considered to have a material impact on the value in use calculations.
Fair value of Cory Brothers deferred and contingent consideration receivable
On 28 February 2022 the Company sold Cory Brothers to Vertom Agencies BV for maximum consideration
of £15.5m. Initial cash proceeds of £6.5m were received on completion of the transaction, and three
contractual “earnout” payments will be made, being an agreed percentage of the future gross profits of the
combined VertomCory business over three subsequent earnout periods. Each of the three earnout
payments are subject to minimum and maximum amounts which are specified in the share purchase
agreement.
Page 101
The minimum earnout consideration has been classified as deferred consideration receivable. The minimum
amount is specified in the SPA and is therefore not an estimate, however an estimate of a discount rate is
necessary to discount the deferred consideration receivable to fair value. A discount rate of 2.39% was
used to calculate the net present value, this was based on the credit risk of Vertom Agencies BV following a
credit check performed by management. Deferred consideration receivable is initially recognised at fair
value and subsequently measured at amortised cost. The current estimate of the fair value of the deferred
consideration receivable is £3.6m.
The balance of the earnout consideration, up to the maximum specified in the SPA has been classified as
contingent consideration receivable because it is contingent on the future profitability of the combined
business. The fair value of the contingent consideration receivable involves two critical estimates; the future
profitability of the combined business and the discount rate used to calculate the net present value. The
future profitability forecasts are based on a business plan prepared by the combined VertomCory business
and was reviewed by management as part of the financial due diligence process. The discount rate used to
calculate the net present value was also 2.39%. Contingent consideration receivable is initially recognised at
fair value and subsequently measures at fair value through profit and loss.
See Note 9 for further details, including a sensitivity analysis of the contingent consideration receivable to
the discount rate and the assumptions of future profitability.
Recoverability of deferred tax assets
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to
be recovered. See Note 7.
Share option vesting
The fair value determined at the grant date of the equity-settled share-based payments is typically
expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the number of
equity instruments that will eventually vest. At each reporting date, the Group revises its estimate of the
number of equity instruments expected to vest as a result of the effect of non-market based vesting
conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that
the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves. See
Note 28.
Provision for impairment of trade receivables and accrued income
Trade receivables and accrued income are amounts due from customers in the ordinary course of
business. Trade receivables and accrued income are classified as current assets if collection is due within
one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as
non-current assets.
The provision for impairment of trade receivables and accrued income represents management’s best
estimate at the Balance Sheet date. A number of judgements are made in the calculation of the provision,
primarily the age of the invoice, the existence of any disputes, recent historical payment patterns and the
debtor’s financial position.
The application of IFRS 9 “Financial Instruments” results in an additional provision for expected credit losses.
When measuring expected credit losses, the Group uses reasonable and supportable forward-looking
information, which is based on assumptions for the future movement of different economic drivers and how
these drivers will affect each other. Probability of default constitutes a key input in measuring expected
credit losses. Probability of default is an estimate of the likelihood of default over a given time horizon, the
calculation of which includes historical data, assumptions and expectations of future market conditions. See
Note 20.
The Group has considered the impact of both COVID and the conflict in the Ukraine on the Financial
Statements at 28 February 2022. However, at 28 February 2022 there was no evidence to suggest that the
Group’s trade receivables may be at a higher risk of becoming credit impaired as a result of COVID or the
conflict in the Ukraine. No impairment allowances were made in respect of either COVID or the conflict in
the Ukraine.
Valuation of defined benefit pension scheme
The Group uses an independent actuary to provide annual valuations of the defined benefit pension
scheme. The actuary uses a number of estimates in respect of the scheme membership, the valuation of
assets and assumptions regarding discount rates, inflation rates and mortality rates. The membership
details are provided by an independent trustee while the valuation of assets is verified by an independent
fund manager. The discount rates, inflation rates and mortality rates are reviewed by management for
reasonability. See Note 27.
Page 102
Judgements
Naves prior year adjustment
For details of judgements made relating to the prior year adjustment, see Note 34.
Wavespec
Fair value of consideration
In the year ended 28 February 2022, the sale of Wavespec, formerly the Group’s Engineering Division,
completed for a maximum consideration of £2.6m. The fair value of the consideration is a critical accounting
judgement.
The consideration was due to be satisfied by the issuance of a promissory note with a maturity date of 31
March 2026. The fair value of the consideration was based on the net present value of the promissory note
(£2.4m). A discount rate of 2.11% was used to calculate the net present value. The discount rate was made
up of two elements, the first being a five-year BBB+ bond yield of 1.51%, the second being a premium for
lack of marketability at 0.60%. A five-year BBB+ bond yield was used because it matches the maturity of the
promissory note and reflects the credit rating of the bank that was expected to provide the letter of credit.
Impairment
As at 28 February 2022, the buyer had not delivered on its obligations to secure the promissory note and
therefore management have made a judgement that the promissory note is unlikely to be honoured and
consequently the fair value of the consideration is impaired and a credit loss of £2.4m has been recorded
within discontinued operations.
Measurement of right-of-use assets and liabilities
The Group determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any period covered by
an option to terminate the lease, if it is reasonably certain not to be exercised. The Group has several lease
contracts that include extension and termination options. Management applies judgement in evaluating
whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That
is, it considers all relevant factors that create an economic incentive for the Group to exercise either the
renewal or termination option. After the commencement date, the Group reassesses the lease term if there
is a significant event or change in circumstances that is within its control and affects its ability to exercise or
not to exercise the option to renew or to terminate the lease. See Note 17.
Revenue recognition
IFRS 15 “Revenue from Contracts with Customers” requires judgement to determine whether revenue is
recognised at a “point in time” or “over time” as well as determining the transfer of control for when
performance obligations are satisfied.
For Shipbroking, the Group has defined the performance obligation to be the point in time where the
negotiated contract between counterparties has been successfully completed, and therefore revenue is
recognised at this point in time. This is a critical judgement since revenue recognition would differ if the
performance obligations were deemed to be satisfied at a different point in time.
Classification and recognition of specific items
The Group excludes specific items from its underlying earnings measure. The directors believe that such
additional performance measures can provide the users of the Financial Statements with a better
understanding of the Group’s underlying financial performance, if properly used. Management judgement is
required as to what items qualify for this classification. There can also be judgement as to the point at which
costs should be recognised and the amount to record to ensure that the understanding of the underlying
performance is not distorted. Specific items include the results from discontinued operations. See Note 8.
Climate
-
related risks and opportunities
Management have considered the impact of climate-related risks in respect of impairment of goodwill,
recoverability of receivables and the recoverability of deferred tax assets in particular and do not consider
that climate-related risks have a material impact on any key judgements, estimates or assumptions in the
consolidated Financial Statements.
During FY21/22 climate change was assessed as part of ongoing discussions of key and emerging risks for
the Group and the shipping and energy sectors within which it operates. Consideration of the potential
short to medium-term impact of environment and climate change risk resulted in its inclusion as a Group
principal risk this year.
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e. Revenue recognition
Revenue is recognised in accordance with satisfaction of performance obligations. Revenue of the Group
consists of:
i. Shipbroking desks – income comprises commission arising from tanker and dry cargo charter broking,
sale and purchase broking, offshore broking and consultancy, valuation fees and fees relating to the
facilitation of commodity and commodity derivatives. The Group acts as a broker for several types of
shipping transactions, each of which gives rise to an entitlement to commission:
Deep Sea Tankers, Specialised Tankers and Gas, Dry Cargo and Offshore:
! for single voyage chartering, the contractual terms are governed by a standard charterparty contract
in which the broker’s performance obligation is satisfied when the cargo has been discharged
according to the contractual terms;
! for time charters, the commission is specified in the hire agreement and the performance obligation is
spread over the term of the charter at specified intervals in accordance with the charter party terms;
Sale and Purchase:
! in the case of second-hand sale and purchase contracts, the broker’s performance obligation is
satisfied when the principals in the transaction complete on the sale/purchase and the title of the
vessel passes from the seller to the buyer;
! with regard to newbuilding contracts, the commission is recognised when contractual stage
payments are made by the purchaser of a vessel to a shipyard which in turn reflects the performance
of services over the life of the contract;
! for income derived from providing ship and fleet valuations, the Group recognises income when a
valuation certificate is provided to the client and the service is invoiced; and
Securities:
! for income derived from commodity broking, the commission is recognised when the services have
been performed.
ii. Financial – income comprises retainer fees and success fees generated by corporate finance related
activities. Revenue is recognised in accordance with the terms agreed in individual client terms of
engagement. Recurring monthly retainers are recognised in the month of invoice and success fees are
recognised at the point when the performance obligations of the particular engagement are fulfilled.
iii. Logistics – the performance obligation for agency income is satisfied at the point in time when the
vessel sails from the port. For forwarding and logistics income the performance obligation is satisfied
when the goods depart from their load location. Where the Group acts as a principal rather than as
agent, the revenue and costs are shown gross.
At the Balance Sheet date, there may be amounts where invoices have not been raised but performance
obligations have been satisfied, and these are recognised as accrued income. The movement in the asset
between years is due to the invoicing of all prior year assets and the accrual of amounts relating to the
current year.
Dividend income from investments is recognised when the shareholders’ legal rights to receive payment
have been established with certainty.
f. Government grants
Government grants are netted against the cost incurred by the Group. When retention of a government
grant is dependent on the Group satisfying certain criteria, it is initially recognised as deferred income and
released to the Income Statement once the criteria for retention have been satisfied. See Note 3.
g. Foreign currencies
The presentational currency of the Group is Sterling. Transactions in currencies other than Sterling are
recorded at the rates of exchange prevailing on the date of the transaction. Foreign exchange gains and
losses resulting from the settlement of such transactions and from the translation at year-end exchange
rates of monetary assets and liabilities denominated in foreign currency are recognised in the Income
Statement.
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In order to hedge its exposure to certain foreign exchange risks, the Group enters into derivative financial
instruments contracts, mainly forward contracts and other derivative currency contracts (see Note 1(p)).
Assets and liabilities of overseas subsidiaries, branches and associates are translated from their functional
currency into Sterling at the exchange rates ruling at the Balance Sheet date. Trading results are translated
at the average rates for the period. Exchange differences arising on the consolidation of the net assets of
overseas subsidiaries are dealt with through the foreign currency translation reserve (see Note 30), whilst
those arising from trading transactions are dealt with in the Income Statement. On disposal of a business,
the cumulative exchange differences previously recognised in the foreign currency translation reserve
relating to that business are transferred to the Income Statement as part of the gain or loss on disposal.
h. Taxation
The taxation expense represents the sum of the current and deferred tax.
The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as
reported in the Income Statement because it excludes items of income and expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Group and
Company’s liability for current tax is calculated using rates that have been enacted or substantively enacted
by the Balance Sheet date.
Full provision is made for deferred taxation on all taxable temporary differences. Deferred tax assets and
liabilities are recognised separately on the Balance Sheet. Deferred tax assets are recognised only to the
extent that they are expected to be recoverable. Deferred taxation is recognised in the Income Statement
unless it relates to taxable transactions taken directly to equity, in which case the deferred tax is also
recognised in equity. The deferred tax is released to the Income Statement at the same time as the taxable
transaction is recognised in the Income Statement. Deferred taxation on unremitted overseas earnings is
provided for to the extent a tax charge is foreseeable.
i. Goodwill
Business combinations are accounted for using the purchase method.
On the acquisition of a business, fair values are attributed to the net assets (including any identifiable
intangible assets) acquired. Goodwill arises where the fair value of the consideration given exceeds the fair
value of the net assets acquired. Goodwill is recognised as an asset and is reviewed for impairment at least
annually. Impairments are recognised immediately in operating costs in the Income Statement. Goodwill is
allocated to cash-generating units for the purposes of impairment testing. On the disposal of a business,
goodwill relating to that business remaining on the Balance Sheet is included in the determination of the
profit or loss on disposal. As permitted by IFRS 1, goodwill on acquisitions arising prior to 1 March 2004 has
been retained at prior amounts and is tested annually for impairment.
In relation to acquisitions where the fair value of assets acquired exceeds the fair value of the consideration,
the excess fair value is recognised immediately in the Income Statement.
j. Intangible assets
Computer software
The Group capitalises computer software at cost. It is amortised on a straight-line basis over its estimated
useful life of up to four years. The carrying value of intangible assets with a finite life is reviewed for
impairment whenever events or changes in circumstances indicate that the carrying value may not be
recoverable.
Development costs
The Group capitalises internally generated development costs when it is able to demonstrate:
! the technical feasibility of completing the intangible asset so that it is subsequently available for use;
! that there is a clear intention that the intangible asset would be completed and then used;
! that it is able to use the intangible asset;
! that future economic benefits are probable;
! that there are adequate technical, financial and other resources to complete the development and to
use the asset; and
! the expenditure attributable to the intangible asset during its development can be reliably measured.
The Group amortises development on a straight-line basis over its estimated useful economic life of up to
three years. See Note 13.
Research costs are expensed as incurred.
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Other intangible assets
Intangible assets acquired as part of a business combination are stated in the Balance Sheet at their fair
value at the date of acquisition less accumulated amortisation and any provisions for impairment. The
amortisation of the carrying value of the capitalised forward order book and customer relationships is
charged to the Income Statement over an estimated useful life of the lesser of two to ten years or when
based on historical attrition rates. The amortisation in respect of capitalised brand assets is expensed to the
Income Statement over an estimated useful life of three years.
The carrying values of intangible assets are reviewed for impairment at least annually or when there is an
indication that they may be impaired.
k. Property, plant and equipment
Property, plant and equipment are shown at historical cost less accumulated depreciation and any
impairment value.
Depreciation is provided at rates calculated to write off the cost, less estimated residual value of each asset,
on a straight-line basis over its expected useful life as follows (except for long and short leasehold interests
which are written off against the remaining period of the lease):
Motor vehicles – three years
Computers – four years
Fixtures and equipment – four years
l. Leases
The Company has various lease arrangements for properties, and other equipment. At inception of a lease
contract, the Company assesses whether the contract conveys the right to control the use of an identified
asset for a certain period of time and whether it obtains substantially all the economic benefits from the use
of that asset, in exchange for consideration. The Company recognises a lease liability and a corresponding
right-of-use asset with respect to all lease arrangements in which it is a lessee, except low-value leases and
short-term leases of twelve months or less, costs for which are recognised as an operating expense within
the Income Statement as they are incurred.
A right-of-use asset is capitalised on the Balance Sheet at cost which comprises the present value of future
lease payments determined at the inception of the lease adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs incurred in addition to an estimate of costs to
remove or restore the underlying asset. Where a lease incentive is receivable, the amount is offset against
the right-of-use asset at inception. Right-of-use assets are depreciated using the straight-line method over
the shorter of the estimated life of the asset or the lease term and are reviewed for impairment to account
for any loss when events or changes in circumstances indicate the carrying value may not be fully
recoverable.
The lease liability is initially measured at amortised cost using the effective interest rate method to calculate
the present value of future lease payments and is subsequently increased by the associated interest cost
and decreased by lease payments made. The effective interest rate is based on estimates of relevant
incremental borrowing costs. Lease payments made are apportioned between an interest charge and a
capital repayment amount which are disclosed within the financing activities and the operating activities
sections of the consolidated statement of cash flows respectively. Lease payments comprise fixed lease
rental payments only, with the exception of property leases for which the associated fixed service charge is
also included. Lease liabilities are classified between current and non-current on the Balance Sheet.
The lease term comprises the non-cancellable period in addition to the determination of the enforceable
period which is covered by an option to extend the lease, where it is reasonably certain that the option will
be exercised.
A modification to a lease which changes the lease payment amount (e.g. due to a renegotiation or market
rent review) or amends the term of the lease, results in a reassessment of the lease liability with a
corresponding adjustment to the right-of-use asset.
m. Investments
Investments in associates and joint ventures where the Group has joint control or significant influence are
accounted for under the equity method. Investments in associates are initially recognised in the
Consolidated Balance Sheet at cost. Subsequently associates are accounted for under the equity method,
where the Group’s share of post-acquisition profits and losses and other comprehensive income is
recognised in the Income Statement and Statement of Comprehensive Income.
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Profits and losses arising on transactions between the Group and its associates are recognised only to the
extent of unrelated investors’ interests in the associate. The investor’s share in the associate’s profits and
losses arising from these transactions is eliminated against the carrying value of the associate.
Where the Group’s share of the associate’s identifiable net assets is greater than the cost of investment, a
gain on bargain purchase is recognised in the Income Statement and the carrying value of the investment in
the Consolidated Balance Sheet is increased.
When the Group’s investment in associates or joint ventures is diluted the Group recognises a profit or loss
on the book value of the investment that is derecognised along with any recycling of foreign exchange
previously recognised in other comprehensive income. On a rights issue the Group remeasures its share of
net assets and recognises a corresponding gain.
When the Group disposes of shares in associates or joint ventures the Group recognises a profit or loss on
disposal based on the net proceeds less the weighted average cost of the shares disposed of. On disposal
the Group reclassifies foreign exchange amounts previously recognised in other comprehensive income
relating to that reduction in ownership interest if that gain or loss would be required to be reclassified to
profit or loss on the disposal of the related assets or liabilities.
The most recent Financial Statements of an associate are used for accounting purposes unless it is
impractical to do so. Where the Group and an associate have non-coterminous reporting dates the
associate’s full-year accounts will be used for the purposes of the Group’s reporting at 28 February with
adjustments made for any significant transactions or events.
Where there is objective evidence that the investment in an associate has been impaired, the carrying
amount of the investment is tested for impairment in the same way as other non-financial assets.
Investments where the Group has no significant influence are held at fair value, with movements in fair value
recorded in profit and loss.
n. Impairment
The carrying amount of the Group’s assets, other than financial assets within the scope of IFRS 9 and
deferred tax assets, are reviewed at each Balance Sheet date to determine whether there is an indication of
impairment. If any such indication exists, or annually for goodwill, the asset’s recoverable amount is
estimated. The recoverable amount is determined based on the higher of value-in-use calculations and fair
value less costs to sell, which requires the use of estimates. An impairment loss is recognised in the Income
Statement whenever the carrying amount of the assets exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying amount of the assets, with the exception of
goodwill, is increased to the revised estimate of its recoverable amount. This cannot exceed the carrying
amount prior to the impairment charge. An impairment recognised in the Income Statement in respect of
goodwill is not subsequently reversed.
o. Deferred and contingent consideration receivables
Contingent consideration receivables are initially recognised at fair value and are subsequently remeasured
at their fair value at each Balance Sheet date. The resulting gain or loss is recognised immediately in the
Income Statement. Contingent consideration receivables are classified as level 3 in accordance with the fair
value hierarchy specified by IFRS 13. See Notes 14 and 22.
p. Derivative financial instruments and hedging
Derivatives are initially recognised at fair value and are subsequently remeasured at their fair value at each
Balance Sheet date. Recognition of the resulting gain or loss depends on whether the derivative is
designated as a hedging instrument and, if it is, the nature of the item being hedged. Changes in the fair
value of derivatives that do not qualify for hedge accounting are recognised immediately in the Income
Statement. The Group designates derivatives that qualify for hedge accounting as a cash flow hedge where
there is a high probability of the forecast transactions arising. The Group has applied the IFRS 9 hedge
accounting model since 1 March 2020. The effective portion of changes in the fair value of these derivatives
is recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately in the
Income Statement. Amounts accumulated in equity are recycled to the Income Statement at the same time
as the gains or losses on the hedged items. When a forecast transaction is no longer expected to occur,
the cumulative gains or losses that were reported in equity are immediately transferred to the Income
Statement.
To qualify for hedge accounting, the terms of the hedge must be clearly documented at inception and there
must be an expectation that the derivative will be highly effective in offsetting changes in the cash flow of
the hedged risk. Hedge effectiveness is tested throughout the life of the hedge and if at any point it is
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concluded that the relationship can no longer be expected to remain highly effective in achieving its
objective, the hedge relationship is terminated.
The hedging instruments and the hedged transactions offset each other in currency terms and in amounts,
meaning there is a clear economic relationship between the hedging instrument and hedged item as
required under IFRS 9. Thereby, management qualitatively demonstrate that the hedging instrument and the
hedged items will move equally in the opposite direction. Additionally, the credit rating of the counterparty to
the derivatives is high, so the effect of credit risk is considered as neither material nor dominant in the
economic relationship.
When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of
the hedge relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or
loss at that point remains in equity and is recognised in accordance with the above policy when the
transaction occurs.
The fair value of forward foreign exchange contracts is based either directly (i.e. as prices) or indirectly (i.e.
derived from prices) at the Balance Sheet date.
Financial assets are initially recognised at fair value and are subsequently measured at fair value through
profit or loss at each Balance Sheet date.
Financial assets and liabilities are classified in accordance with the fair value hierarchy specified by IFRS 13.
See Note 21.
q. Trade receivables and accrued income
Trade receivables and accrued income are recognised and carried at the lower of their original value less
impairment. Specific provision is made where there is evidence that the balances will not be recovered in
full. A provision for expected credit losses is made for trade receivables and accrued income using the
simplified approach. A provision matrix is used to calculate an expected credit loss as a percentage of
carrying value by age. The percentages were determined based on historical credit loss experience as well
as forward-looking information. Expected credit loss provisions are made for other receivables based on
lifetime expected credit losses using a model that considers forward-looking information and significant
increases in credit risk.
Trade and other receivables are non-interest bearing and generally on terms payable within 30 to 90 days.
r. Cash and cash equivalents
Cash and cash equivalents included in the Balance Sheet comprise cash in hand, short-term deposits with
an original maturity of three months or less and restricted cash.
Cash and cash equivalents included in the Cash Flow Statement include cash and short-term deposits.
Bank overdrafts are included in the Balance Sheet within short-term borrowings.
s. Provisions
Provisions are recognised when the Group has a present obligation (legal or otherwise) as a result of a past
event and it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the amount of the obligation. If material, the provisions
are discounted using an appropriate current post-tax interest rate.
Short-term provisions for long service leave expected to be settled wholly within twelve months of the
reporting date are measured at the amounts expected to be paid when the liabilities are settled.
The provision for long service leave not expected to be settled within twelve months of the reporting date is
measured at the present value of expected future payments to be made in respect of services provided by
employees up to the reporting date. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using
market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as
closely as possible, the estimated future cash outflows.
t. Share-based payments
The Group operates a number of equity-settled share-based payment schemes.
During the year the Company operated employee save-as-you-earn option schemes called the Braemar
Shipping Services Plc Savings-Related Share Option Scheme 2014 (the “SAYE Scheme”) and the Braemar
Shipping Services Plc International Savings-Related Share Option Scheme 2019 (the “International SAYE
Scheme”). No option may be granted under either scheme which would result in the total number of shares
issued or remaining issuable under all of the schemes (or any other Group share schemes), in the ten-year
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period ending on the date of grant of the option, exceeding 10% of the Company’s issued share capital
(calculated at the date of grant of the relevant option). Options are granted at up to a 20% discount to the
prevailing market price.
In 2005 the Company put in place a Deferred Bonus Plan (the “Plan”) whereby part of the annual
performance-related bonus is delivered in shares, on a discretionary basis, to staff including executive
directors. Under the Plan the shares are bought and held in an employee trust (“ESOP”) until vesting, which
will normally occur after three years from the date of grant, subject to the employee beneficiary remaining in
employment with the Group, at which time the award will be settled by the transfer of shares to the
beneficiary. Shares are valued at fair value at the date of grant.
The Company adopted a new Deferred Bonus Plan in May 2020 (the “New DBP”), pursuant to which future
discretionary bonus awards will be granted to staff including executive directors. Awards under the New
DBP may be linked to an option granted under the new Braemar Company Share Option Plan 2020, which
was also adopted by the Company in May 2020 (the “New CSOP”). Where an employee receives a linked
award under the New DBP, where the Company’s share price rises over the vesting period, the New CSOP
award can be exercised with the value of shares delivered on the vesting of the New DBP award being
reduced by the exercise gain on the New CSOP award. Awards under the New DBP and the New CSOP
may be settled by the issue of new shares of by way of transfer of shares from the ESOP. Historic practice
has been to settle via the transfer of shares from the ESOP and it is the current intention to continue to
operate in this manner.
During the year ended 28 February 2015, the Company established a Restricted Share Plan (“RSP”). This
scheme was set up to grant awards to certain key staff to try to retain them following the merger between
Braemar and ACM Shipping Group Plc, but it can also be used where the Remuneration Committee
considers it necessary to secure the recruitment of a particular individual. Executive directors of the
Company are not eligible to participate in the RSP. RSP awards are made in the form of a nil cost option and
there are no performance criteria other than continued employment.
The Company also operates an LTIP, which was approved by shareholders and adopted in 2014. LTIP
awards under this plan take the form of a conditional right to receive shares at nil cost. The awards normally
vest over three years and are subject to a performance condition such as earnings per share (“EPS”).
Share options granted under the save-as-you-earn schemes are valued using a binomial pricing model. All
other share awards are nil cost options and their fair value is approximated to the share price at the time of
grant less the expected dividend to be paid during the vesting period.
The value of awards granted under the Deferred Bonus Plan each year are related to the profits generated
in the previous year. The cost of the award is therefore expensed from the beginning of that profit period
until the vesting date which is usually three years after the date of award. Awards made to new joiners are
expensed over the period from date of joining to date of vesting. The quantum of the charge made for each
set of awards is calculated on the value of the shares granted, reduced by the expected attrition rate.
The Group may provide a net settlement feature, whereby it withholds the number of equity instruments
equal to the monetary value of the employee’s tax obligation arising from the exercise (or vesting) of the
award if the total number of shares that otherwise would have been issued to the employee. The Group
has no contractual obligation to provide a net settlement option, and therefore the award is still accounted
for as an equity-settled award in full and the value of the shares foregone by the employee is accounted for
as a deduction from equity.
An Employee Share Ownership Plan (“ESOP”) was established on 23 January 1995. The ESOP has been set
up to purchase shares in the Company. These shares, once purchased, are held in trust by the Trustee of
the ESOP, SG Kleinwort Hambros Trust Company (CI) Limited, for the benefit of the employees. Additionally,
an Employee Benefit Trust (“EBT”) previously run by ACM Shipping Group plc also holds shares in the
Company. The ESOP and EBT are accounted for within the Company accounts.
The net cost of the shares acquired for the shares held by the ESOP and the EBT are a deduction from
shareholders’ funds and represent a reduction in distributable reserves. Note 29 provides detail on the
ESOP and the EBT and movements in shares to be issued.
u. Commissions payable
Commissions payable to co-brokers are recognised in trade payables due within one year of the earlier of
the date of invoicing or the date of receipt of cash.
v. Long-term employee benefits
The Group has the following long-term employee benefits:
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i. Defined contribution schemes
The Group operates a number of defined contribution schemes. Pension costs charged against profits in
respect of these schemes represent the amount of the contributions payable to the schemes in respect
of the accounting period. The assets of the schemes are held separately from those of the Group within
independently administered funds. The Group has no further payment obligations once the contributions
have been paid.
ii. Defined benefit schemes
The Group holds a defined benefit scheme, the ACM Staff Pension Scheme, with assets held separately
from the Group. The cost of providing benefits under the scheme is determined using the projected unit
credit actuarial valuation method which measures the liability based on service completed and allowing
for projected future salary increases and discounted at an appropriate rate.
The current service cost, which is the increase in the present value of the retirement benefit obligation
resulting from employee service in the current year, and gains and losses on settlements and
curtailments, are included within operating profit in the Income Statement. The unwinding of the discount
rate on the scheme liabilities which is shown as a net finance cost and past service costs are presented
and recognised immediately in the Income Statement.
The pension liabilities recognised on the Balance Sheet in respect of this scheme represents the
difference between the present value of the Group’s obligations under the scheme and the fair value of
the scheme’s assets. Actuarial gains or losses and return on plan assets excluding interest are
recognised in the period in which they arise within the Statement of Comprehensive Income.
iii. Other long-term benefits
The current service cost of other long-term benefits resulting from employee services in the current year
is included within the Income Statement. The unwinding of any discounting on the liabilities is shown in
net finance costs.
w. Borrowings and loan notes
Arrangement costs for loan facilities are capitalised and amortised over the life of the debt at a constant
rate.
Finance costs are charged to the Income Statement, based on the effective interest rate of the associated
external borrowings and debt instruments.
The convertible loan notes are considered to be a financial liability host with an embedded derivative
convertible feature which is required to be separated from the host. The Group has an accounting choice to
record the instrument in its entirety at fair value through profit and loss but has not chosen to apply this
treatment. Instead, the financial liability host will be recognised as a Euro liability initially recognised at fair
value and prospectively accounted for applying the effective interest rate method. The derivative
conversion feature will be recognised at fair value through profit and loss. Where there are conversion
options that can be exercised within one year, the liability is recognised as current.
Modification of terms of financial liability
When the terms of an existing financial liability are modified, management will consider both quantitative
and qualitative factors to assess whether the modification is substantial. In the case that the modification of
the terms of existing financial liability is considered to be substantial, the modification shall be accounted for
as an extinguishment of that financial liability and the recognition of a new financial liability. If the
modification is not considered substantial, then the existing financial liability is remeasured in accordance
with its original classification and any gain or loss is recognised immediately in the Income Statement.
x. Segmental analysis
The Group’s segmental analysis previously recognised four segments, being the Shipbroking, Financial,
Logistics and Engineering Divisions. Two business segments have been disposed of during the year, the
Logistics Division (Cory Brothers) and the Engineering Division (Wavespec). The prior year comparatives
have been restated for the presentation of Cory Brothers as discontinued operations together with
Wavespec. The restated segmental analysis is based on its two continuing business segments: the
Shipbroking and Financial Divisions. The segmental analysis is consistent with the way the Group manages
itself and with the format of the Group’s internal financial reporting.
The second analysis is presented according to the geographic markets, comprising the UK, Singapore, the
US, Australia, Germany and the Rest of the World. The Group’s geographical segments are determined by
the location of the Group’s assets and operations.
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y. Specific items
Specific items are significant items considered material in size or nature, including acquisition and disposal-
related gains and losses. These are disclosed separately to enable a full understanding of the Group’s
ongoing financial performance.
z. Non-current assets held for sale and discontinued operations
A non-current asset or a group of assets, such as a disposal group, is classified as held for sale if its
carrying amount will be recovered principally through sale rather than through continuing use, it is available
for immediate sale and sale is highly probable within one year.
On initial classification as held for sale, non-current assets and disposal groups are measured at the lower
of previous carrying amount and fair value less costs to sell with any adjustments taken to profit or loss.
A discontinued operation is a component of the Group’s business that represents a separate line of
business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary
acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal
or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is
classified as a discontinued operation, the comparative Income Statement is restated as if the operation has
been discontinued from the start of the comparative period.
aa. Contingent assets
Contingent assets are not recognised but are disclosed where an inflow of economic benefits is probable.
2. Segmental information and revenue
a. Business segments
Following the disposal of the Engineering and Logistics Divisions during the period, there are now two
operating segments within the Group, which each provide different services to the shipping industry, being
Shipbroking and Financial. They are managed separately because each business requires different
technology and resources to deliver its strategy. The reports reviewed by the Chief Operating Decision
Maker to make strategic decisions are disaggregated by Division. The Chief Operating Decision Maker is the
Group’s board of directors. The Logistics and Engineering Divisions were disposed of during the year and
have been presented as discontinued operations.
The board considers the business from both service line and geographic perspectives. A description of
each of the lines of service is provided on pages 17 to 20.
Central costs relate to board costs and other costs associated with the Group’s listing on the London Stock
Exchange. All segments meet the quantitative thresholds required by IFRS 8 as reportable segments.
Underlying operating profit is defined as operating profit for continuing activities before restructuring costs,
gain on disposal of investment and acquisition and disposal-related items.
Sales between and within business segments are carried out on an arm’s-length basis.
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The segmental information provided to the board for reportable segments for the year ended 28 February
2022 is as follows:
Revenue
Operating profit/(loss)
2022
£’000
2021
Restated
1
£’000
2022
£’000
2021
Restated*
£’000
Shipbroking
94,659
77,727
12,422
10,068
Financial
6,651
5,968
1,798
1,034
Trading segments revenue/results
101,310
83,695
14,220
11,102
Central costs
(4,160)
(3,383)
Underlying operating profit
10,060
7,719
Specific items included in operating expenses
(514)
(1,097)
Operating profit
9,546
6,622
Share of associate’s loss for period
(19)
–
Net finance expense
(984)
(1,486)
Profit before taxation
8,543
5,136
Geographical segment – by origin
The Group manages its business segments on a global basis. The operation’s main geographical area and
also the home country of the Company is the United Kingdom.
Geographical information determined by location of customers is set out below:
Revenue
Non-current assets
2022
£’000
2021
Restated
£’000
2022
£’000
2021
Restated
£’000
United Kingdom
54,524
51,664
68,122
67,804
Singapore
19,423
13,691
949
1,275
United States
972
663
262
28
Australia
12,565
7,159
334
303
Germany
2,488
3,585
25,592
25,640
Rest of the World
11,338
6,933
855
1,042
Continuing operations
101,310
83,695
96,114
96,092
Discontinued operations
45,215
28,083
–
7,646
Total
146,525
111,778
96,114
103,738
1
The year ended 28 February 2021 has been restated for the presentation of Cory Brothers and AqualisBraemar as discontinued operations and prior period errors. See Note 9 and Note 34.
Page 112
b. Revenue analysis
The Group disaggregates revenue into Shipbroking and Financial in line with the segmental information
presented above and also by desk. Revenue analysed by desk is provided below.
2022
£’000
2021
Restated
£’000
Tankers
17,837
26,251
Specialised Tankers
11,622
10,949
Dry Cargo
29,789
15,230
S&P
19,646
15,019
Offshore
3,776
2,728
Securities
11,989
7,550
Shipbroking
94,659
77,727
Financial
6,651
5,968
Total continuing operations
101,310
83,695
All revenue arises from the rendering of services. There is no single customer that contributes greater than
10% of the Group’s revenue.
Remaining performance obligations
The Group enters into some contracts, primarily in Shipbroking which are for a duration longer than twelve
months and where the Group has outstanding performance obligations on which revenue has not yet been
recognised. The amount of revenue that will be recognised in future periods on these contracts when those
remaining performance obligations will be satisfied is set out below:
Forward order book
2022
Within
12 months
£’000
1–2 years
£’000
More than
2 years
£’000
Total
£’000
Sale and purchase
6,584
1,832
924
9,340
Chartering
15,724
3,211
9,057
27,992
Total
22,308
5,043
9,981
37,332
2021
Within
12 months
£’000
1–2 years
£’000
More than
2 years
£’000
Total
£’000
Sale and purchase
3,594
1,337
290
5,221
Chartering
13,994
4,483
7,385
25,862
Total
17,588
5,820
7,675
31,083
3. Operating profit from continuing operations
Operating profit represents the results from operations before finance income and costs, share of profit/(loss)
in associate, taxation and discontinued operations.
This is stated after charging/(crediting):
Notes
2022
£’000
2021
Restated
£’000
Staff costs
4
75,814
60,783
Depreciation of property, plant and equipment
16
2,834
2,894
Amortisation of intangibles
13
262
313
Bad debt charge/(credit)
21
747
(170)
Page 113
Notes
2022
£’000
2021
Restated
£’000
Auditor’s remuneration
5
960
793
Other professional costs
2,782
2,028
Office costs
1,600
875
IT and communication costs
2,507
2,144
Insurance
875
700
Net foreign exchange (gains)/losses
(432)
76
Specific items included in operating profit (see Note 8)
(514)
(1,097)
Staff costs are stated after netting off grants totalling £0.1m (2021: £0.8m) against staff costs for continuing
operation detailed in Note 4. The grants were received from both the Singaporean Government and the
Australian Government during COVID. All criteria for the retention of both grants have been satisfied and
therefore the full amount has been recognised in the Income Statement.
4. Staff costs
a. Staff costs for the Group during the year (including directors)
Notes
2022
£’000
2021
Restated
£’000
Salaries, wages and short-term employee benefits
68,043
55,282
Other pension costs
27
1,613
1,514
Social security costs
3,347
3,009
Share-based payments
28
2,951
1,788
Continuing operations
75,954
61,593
Discontinued operations
8,344
8,384
Total
84,298
69,977
The prior period numbers have been restated to present Cory Brothers and AqualisBraemar within
discontinued operations. The numbers above include remuneration and pension entitlements for each
director. Details are included in the Directors’ Remuneration Report on pages 70 to 78.
b. Average number of full-time employees
2022
number
2021
Restated
number
Shipbroking
322
323
Financial
22
23
Central
18
13
Continuing operations
362
359
Discontinued operations
190
178
Total
552
537
The directors’ remuneration is borne by Braemar Shipping Services Plc.
c. Key management compensation
The remuneration of key management is set out below. Further information about the remuneration of
individual directors is provided in the Directors’ Remuneration Report on pages 70 to 71. Key management
represents the board of the Company.
Page 114
2022
£’000
2021
£’000
Salaries, short-term employee benefits and fees
3,484
3,410
Other pension costs
41
68
Share-based payments
521
71
Total
4,046
3,549
Retirement benefits are accruing to three (2021: three) members of key management in respect of a defined
contribution pension scheme.
5. Auditor’s remuneration
A more detailed analysis of the auditor’s services is given below:
2022
£’000
2021
£’000
Audit services
! Fees payable to the Company’s auditor for audit of the Company and Group Financial Statements
540
288
Fees payable to the Group’s auditor and its associates for other services:
! The audit of the Group’s subsidiaries pursuant to legislation
334
435
! Other service – interim review
86
70
Total
960
793
All fees paid to the auditor were charged to operating profit in both years.
6. Finance income and costs
Note
2022
£’000
2021
Restated
£’000
Finance income:
! Gain on modification of deferred consideration
8
172
–
! Interest on bank deposits
9
70
! Interest on IFRS 16 lease receivables
72
86
Total finance income
253
156
Finance costs:
! Interest payable on rolling credit and pooled overdraft
facilities
(758)
(912)
! Interest payable on pooled overdraft facilities
(98)
(107)
! Interest payable on convertible loan notes
(52)
(214)
Subtotal finance costs before IFRS 16 lease liabilities
(908)
(1,233)
! Interest on IFRS 16 lease liabilities
(329)
(409)
Total finance costs
(1,237)
(1,642)
Finance costs – net (continuing operations only)
(984)
(1,486)
The finance costs for the prior year have been restated (see Note 34), and the analysis of the finance income
and expenses has been amended.
Page 115
7. Taxation
a. Analysis of charge in year
2022
£’000
2021
Restated
£’000
Current tax
UK corporation tax charged to the Income Statement
–
–
UK adjustment in respect of previous years
335
355
Overseas tax on profits in the year
3,432
2,003
Overseas adjustment in respect of previous years
(517)
(136)
Total current tax
3,250
2,222
Deferred tax
UK current year origination and reversal of temporary differences
377
(909)
Due to change in rate of tax
(473)
(96)
UK adjustment in respect of previous years
(41)
573
Overseas current year origination and reversal of temporary differences
(95)
(385)
Overseas adjustment in respect of previous years
(313)
395
Total deferred tax
(545)
(422)
Taxation
2,705
1,800
Taxation on continuing operations
1,839
1,574
Taxation on discontinued operations
866
226
Taxation
2,705
1,800
Included within the UK current year origination and reversal of temporary differences is a credit of £348,000
(2021: £100,000 debit on actuarial gain) in respect of deferred tax on the actuarial loss on the Group’s
defined benefit pension scheme.
Reconciliation between expected and actual tax charge
2022
£’000
2021
Restated
£’000
Profit before tax from continuing operations
8,543
5,136
Profit before tax at standard rate of UK corporation tax of 19% (2021: 19%)
1,623
976
Utilisation of deferred tax asset at lower effective tax rate
69
(185)
Net expenses not deductible for tax purposes
843
202
Utilisation of previously unrecognised losses
(478)
(73)
Tax on overseas branch
234
–
Tax calculated at domestic rates applicable to profits in overseas subsidiaries
392
292
Other differences leading to a (decrease)/increase in tax
4
–
Temporary differences
1
93
(1,187)
Prior year adjustments
2
(941)
1,549
Total tax charge for the year
1,839
1,574
The year ended 28 February 2021 has been restated for the presentation of Cory Brothers and
AqualisBraemar as discontinued operations. Included within the total tax charge is £0.5m (2021: £0.2m) in
respect of specific items disclosed separately on the face of the Income Statement. See Note 8.
1
Included within temporary differences are movements related to share options, cash flow hedges and IFRS 16.
2
Included within prior year adjustments is release of overprovided corporation tax creditor of £0.8m in respect of Singapore following a tax rate change from 17.0% to 10.5%.
Page 116
A tax charge of £0.3m (2021: £nil) is included in the results for discontinued operations as a result of the
trading loss contained therein (see Note 9). This tax charge arose mainly as a result of the trading profits of
Cory Brothers.
Reconciliation between expected and actual tax charge
2022
£’000
2021
Restated
£’000
Profit before tax from discontinued operations
8,081
1,196
Profit before tax at standard rate of UK corporation tax of 19% (2021: 19%)
1,535
227
Due to change in rate of tax
6
23
(Net gains)/net expenses not (taxable)/deductible for tax purposes
(1,098)
882
Utilisation of losses
(74)
(177)
Other differences leading to (decrease)/increase in tax
3
–
Temporary differences*
88
(367)
Other prior year adjustments
406
(362)
Total tax charge/(credit) for the year
866
226
b. Amounts recognised in OCI
2022
£’000
2021
Restated
£’000
Items that will not be reclassified to profit or loss
Actuarial gain/(loss) in respect of defined benefit pension scheme
1,391
(524)
Deferred tax asset on defined benefit pension scheme
(348)
100
Movement in opening balance due to change in rate of tax
275
–
Sub-total
(73)
100
–
Total
1,318
(424)
Items that will be reclassified to profit or loss
Cash flow hedge
(2,482)
2,210
Deferred tax liability on cash flow hedge
620
(420)
Movement in opening balance of tax due to change in rate of tax
(106)
–
Sub-total
514
(420)
Total
(1,968)
1,790
Total tax recognised in OCI
441
(320)
Total amounts recognised in OCI
(650)
1,366
Page 117
c. Deferred tax asset
Deferred Tax )/Asset
Accelerated
Capital
Allowances
Trading
Losses
Other
provisions
Employee
Benefits
Total
At 1 March 2020
573
316
2,331
400
3,620
(Charge)/Credit to Statement of Total Comprehensive
income
(493)
430
(1,255)
918
(400)
Credit to equity
–
–
(320)
–
(320)
At 28 February 2021
80
746
756
1,318
2,900
Charge to Statement of Total Comprehensive income
(128)
(498)
428
569
371
Charge to equity
–
–
442
–
442
Balance at end of year
(48)
248
1,626
1,887
3,713
The movement in the deferred tax asset
2022
£’000
2021
Restated
£’000
Balance at beginning of year
2,900
3,620
Movement to Income Statement
Adjustments in respect of prior years
180
(968)
Movement in opening balance due to change in rate of tax
25%/19%
472
200
Arising on pension costs
(94)
28
Arising on other
(187)
340
Total movement to Income Statement
371
(400)
Movement to equity and other comprehensive income
Movement in opening balance due to change in rate of tax
25%/19%
169
–
Related deferred tax asset
273
(320)
Total movement to equity and other comprehensive income
442
(320)
Balance at end of year
3,713
2,900
A deferred tax asset of £3.7m (2021: £2.9m) has been recognised as the directors believe that it is probable
that there will be sufficient taxable profits in the future to recover the asset in full.
Page 118
d. Deferred tax liability
Analysis of the deferred tax liabilities
As at
28 Feb 2022
£’000
As at
29 Feb 2021
£’000
Temporary differences
–
(174)
Balance at end of year
–
(174)
The movement in the deferred tax liability
As at
28 Feb 2022
£’000
As at
28 Feb 2021
£’000
Balance at beginning of year
(174)
(903)
Movement in opening balance due to change in rate of tax
–
(104)
Adjustment in respect of previous years
174
Movement to Income Statement
–
833
Balance at end of year
–
(174)
No deferred tax has been provided in respect of temporary differences associated with investments in
subsidiaries and interests in joint ventures where the Group is in a position to control the timing of the
reversal of the temporary differences and it is probable that such differences will not reverse in the
foreseeable future. The aggregate amount of temporary differences associated with investments in
subsidiaries, for which a deferred tax liability has not been recognised, is approximately £0.1m (2021: £0.1m).
8. Specific items
The following is a summary of specific items incurred. Each item meet the definition of specific items detailed in
Note 1y), and has an impact on the reported results for the year that is considered material either by size or
nature and is not expected to be incurred on an ongoing basis and, as such, will not form part of the underlying
profit in future years.
2022
£’000
2021
Restated
£’000
Other operating costs
Impairment of ROU assets
(392)
(210)
(Loss)/profit on sublet of office
–
(52)
(392)
(262)
Acquisition-related items
– Acquisition of Naves Corporate Finance GmbH
(122)
(552)
– Naves tax reimbursement
–
115
– Acquisition of ACM Shipping Group plc
–
(115)
– Acquisition of Atlantic Brokers Holdings Limited
–
(283)
(122)
(835)
Discontinued operations
- Wavespec
(1,787)
(754)
- Cory Brothers
4,134
–
- AqualisBraemar
3,375
2,237
5,722
1,483
Other items
Finance income – credit on modification of deferred consideration
172
–
Finance costs
–
(432)
Taxation
–
198
Total
5,380
152
Page 119
Other operating costs
In the year, a loss of £0.4m was recognised in other operating costs arising from the impairment to a right-of-
use asset in respect of a London office which was vacated by AqualisBraemar LOC ASA (see Note 16 for more
details). In the prior year there was an impairment charge of £0.3m, of which £0.2m arose on the same London
office and £0.1m loss on disposal in respect of the Group subletting a portion of its Singapore office space to
AqualisBraemar LOC ASA.
Acquisition-related items
The Group incurred total costs of £0.1m (2021 restated: £0.8m) in respect of acquisition-related items.
Expenditure of £0.1m (2021: £0.6m) is directly linked to the acquisition of Naves Corporate Finance GmbH. This
includes charges of £0.1m (2021: £0.1m) related to foreign exchange translation of Euro liabilities The prior year
expenditure linked to the acquisition of Naves Corporate Finance GmbH also included charges of £0.3m in
respect of interest and £0.4m of post-acquisition remuneration payable to certain vendors under the terms of
the acquisition agreement, and a credit of £0.1m which was included in respect of a reimbursement from the
sellers of certain expenses incurred by the Financial Division prior to acquisition.
In the prior year, expenditure of £0.1m was incurred in relation to the restricted share plan implemented to
retain key staff following the merger between Braemar Shipping Services Plc and ACM Shipping Plc. The
restricted share plan expired in July 2020 and no further amounts were charged to the Income Statement.
Also in the prior year expenditure of £0.3m was directly linked to the acquisition of Atlantic Brokers Holdings
Limited in respect of incentive payments to working sellers. The cash payment was made in the year to 28
February 2018 but was subject to clawback provisions if the working sellers were to leave employment of the
Group before 28 February 2021. The cost was charged to the Income Statement over the clawback period and
no further amounts were charged to the Income Statement after 28 February 2021.
Discontinued operations
The Group recognised a net gain of £5.7m on the disposal of discontinued operations (2021: £1.5m).
Gains on the disposal of Cory Brothers, AqualisBraemar and Wavespec of £4.1m, £3.4m and £0.6m
respectively, were offset by an impairment charge of £2.4m on the consideration due in respect of Wavespec.
See Note 9.
Other specific items
On 3 June 2021 the Group completed a restructuring of the deferred consideration amounts in relation to the
acquisition of Naves. This resulted in a gain on modification of £0.2m, which is classified as specific finance
income (see Note 14).
In the prior year £0.4m of interest charges related to the Group’s revolving credit facility were included in
finance costs. These charges relate to interest payable on tranches of the revolving credit facility that were
used to fund the acquisition of Naves Corporate Finance GmbH. This interest charge is not considered to be a
specific item in the current year.
In the prior year, a tax credit of £0.2m was recognised in respect of specific items which are allowable for UK
corporation tax purposes.
9. Discontinued operations
During the year the Group has sold its Engineering Division, Wavespec, its Logistics Division, Cory Brothers, and
its entire shareholding in AqualisBraemar.
a. Post-tax profit/loss related to discontinued operations
2022
2021 Restated
Underlying
£’000
Specific
£’000
Total
£’000
Underlying
£’000
Specific
£’000
Total
£’000
Wavespec
(146)
(1,787)
(1,933)
(1,706)
(754)
(2,460)
Cory Brothers
1,563
4,134
5,697
938
–
938
AqualisBraemar
76
3,375
3,451
255
2,237
2,492
Profit/(loss)
1,493
5,722
7,215
(513)
1,483
970
Wavespec
On 31 March 2021, the Group completed the sale of Wavespec, which was classified as held for sale at 28
February 2021. A gain of £0.6m was recognised on disposal. The sale was for maximum consideration of
Page 120
£2.6m which was expected to be satisfied by the issuance of a promissory note with a maturity date of 31
March 2026. The disposal agreement contained an obligation for the buyer to secure the note by providing
a standby letter of credit issued by an international bank with an acceptable credit rating. Should they fail to
deliver such a letter of credit, the Group could elect to receive a sum of cash of £0.5m from the buyer with
the balance of the note of £2.1m remaining unsecured. The fair value of the consideration was £2.4m (see
Note 14 for details of assessment of discount rate). At 28 February 2022, the buyer had not delivered a
secured letter of credit nor had the cash sum of £0.5m been received. Management believe that the
consideration (fair value of £2.4m) is unlikely to be received and consequently has been provided in full
(charge of £2.4m).
Year ended
28 Feb 2022
£’000
Year ended
28 Feb 2021
£’000
Underlying
Revenue
15
1,661
Costs
(161)
(3,367)
Trading loss before tax
(146)
(1,706)
Taxation
–
–
Underlying loss for the year from Wavespec
(146)
(1,706)
Specific items
Impairment to fair value and other disposal costs
(7)
(754)
Gain on disposal
594
–
Credit impairment charge
(2,374)
–
Loss from specific items
(1,787)
(754)
Loss for the year from Wavespec
(1,933)
(2,460)
No taxation arises in relation to this discontinued operation as Wavespec was loss making.
A reconciliation of the derecognition of the Wavespec assets held for sale to gain on disposal is as follows:
£’000
Intangibles
90
Property, plant and equipment
1
Cash
53
Trade and other receivables
292
Trade and other payables
(271)
Net assets held for sale disposed of
165
£’000
Disposal proceeds
2,374
Net assets disposed of
(165)
Loan waiver
(1,006)
Disposal related costs
(609)
Gain on disposal of Wavespec
594
Intercompany loans totalling £1.0m owed to the Group from Wavespec were waived on disposal.
There were no cash proceeds from disposal in the period.
Page 121
Cory Brothers
On 28 February 2022 the Company sold Cory Brothers to Vertom Agencies BV for a maximum
consideration of £15.5m.
Although legal completion occurred on 28 February 2022, the initial cash proceeds of £6.5m were not
received till post year-end and are presented within trade and other receivables at the year-end (see Note
21).
In addition, three further cash payments are due based on a percentage of the gross profit of the combined
VertomCory business. Each of the three earnout payments is subject to a minimum and a maximum. The
minimum aggregate earnout payment is £3.75m and the maximum aggregate earnout payment is £9.0m.
The current estimate of the fair value of the deferred and contingent consideration is £4.8m, which is
presented within long-term receivables (more detail on the calculation of the deferred consideration is
included in Note 14).
The profit on disposal including foreign exchange recycling totalled £4.2m.
Year ended
28 Feb 2022
£’000
Year ended
28 Feb 2021
£’000
Underlying
Revenue
45,215
28,083
Costs
(42,759)
(26,892)
Trading profit before tax
2,456
1,191
Finance income
9
14
Finance expense
(36)
(41)
Profit before taxation
2,429
1,164
Taxation
(866)
(226)
Underlying profit from Cory Brothers
1,563
938
Specific items
Gain on disposal
4,134
–
Total profit from Cory Brothers
5,697
938
A reconciliation of the derecognition of the Cory Brothers assets held for sale to gain on disposal is as
follows:
£’000
Goodwill
3,645
Intangibles
1,190
Property, plant and equipment
1,220
Investments
119
Cash
12,353
Trade and other receivables
15,110
Trade and other payables
(27,042)
Net assets held for sale disposed of
6,595
£’000
Disposal proceeds
11,258
Net assets disposed of
(6,595)
Disposal related costs
(492)
FX recycling
(37)
Gain on disposal of Cory Brothers
4,134
Page 122
The disposal proceeds of £11.3m are included on the Balance Sheet as follows:
! £6.5m of completion cash proceeds recognised in current other receivables, see Note 21. The cash was
received on 2 March 2022.
! £3.6m of deferred consideration recognised in non-current other receivables, see Note 20. Deferred
consideration receivable comprises of the minimum earnout consideration due to the Group as per the
SPA and is not contingent on the future performance of the VertomCory business.
! £1.2m of contingent consideration recognised in non-current other receivables, see Note 20. Contingent
consideration receivable represents the balance of the earnout consideration above the guaranteed
minimum and up to a maximum specified in the SPA which is contingent on the future gross profits of
the VertomCory business.
A sensitivity analysis of the contingent consideration to changes in the gross profits and discount rate is
provided in Note 14.
AqualisBraemar
The Group recognised its minority shareholding in AqualisBraemar as an investment in associate until its
disposal on 19 May 2021.
The Group's share of profit of associate and the profit on disposal including foreign exchange recycling
totalled £3.5m, the disposal of 9,600,000 shares in AqualisBraemar in the preceding year gave rise to a gain
of £1.8m (see Note 19). In the prior year the Group recognised a gain of £0.8m on a rights issue from
AqualisBraemar and a loss of £0.4m on the fair value movement of warrants to acquire further shares in
AqualisBraemar. There was a matching gain recognised in the financial statements of AqualisBraemar, and
the Group's share of this gain was £0.1m and is also presented within specific items.
Year ended
28 Feb 2022
£’000
Year ended
28 Feb 2021
£’000
Underlying
Share of associate profit for the period – trading
76
255
Specific items
Gain on rights issue
–
826
Share of associate profit for the period – fair value movement in warrants
–
91
Movement in fair value on warrants
–
(438)
Profit on disposal
3,375
1,758
Profit from specific items
3,375
2,237
Total profit for the period from AqualisBraemar
3,451
2,492
b. Earnings per share in respect of discontinued operations
The basic and diluted earnings per share in respect of discontinued operations were as follows:
Year ended
28 Feb 2022
Year ended
28 Feb 2021
Basic earnings per share
23.62p
3.09p
Diluted earnings per share
19.24p
2.56p
c. Cash flows in respect of discontinued operations
During the year the discontinued operations had net operating cash inflows of £7.3m (2021: net operating
cash outflows of £4.3m). There were net cash outflows of £4.7.m (2021: nil) relating to investing activities,
which includes the £7.2m proceeds from the sale of AqualisBraemar shares less the combined cash of
£12.4m held within Wavespec and Cory Brothers at the time of their disposal. No cash proceeds were
received in the period in respect of the disposal of either Wavespec or Cory Brothers.
Page 123
d. Assets and liabilities held for sale
The major classes of assets and liabilities comprising the operations held for sale are as follows:
Year ended
28 Feb 2022
£’000
Year ended
28 Feb 2021
£’000
Intangibles
–
90
Property plant and equipment
–
1
Cash
–
53
Trade and other receivables
–
292
Assets held for sale
–
436
Trade and other payables
–
(125)
Liabilities directly associated with assets classified as held for sale
–
(125)
Net assets of discontinued operations
–
311
All assets and liabilities held for sale at 28 February 2021 related to Wavespec. An impairment to fair value
less costs to sell of £432,000 was pro-rated across intangibles and property, plant and equipment at 28
February 2021.
10. Dividends
Amounts recognised as distributions to equity holders in the year:
2022
£’000
2021
£’000
Ordinary shares of 10 pence each
Final dividend of 5.0 pence per share for the year ended 28 February 2021 (2020: nil)
1,499
–
Interim dividend of 2.0 pence per share (2021: nil)
610
–
2,109
–
The dividends paid by the Group during the year ended 28 February 2022 totalled £2.1m (7.0 pence per share)
which comprised a final dividend in respect of the year ended 28 February 2021 of £1.5m (5.0 pence per share)
paid on 1 September 2021 and an interim dividend for the year ended 28 February 2022 of £0.6m (2.0 pence
per share) paid on 16 December 2021. The right to receive dividends on the shares held in the ESOP has been
waived (see Note 29). The dividend saving through the waiver is £0.1m (2021: £nil). No dividends were paid by
the Group during the year ended 28 February 2021.
The Company has become aware of an administrative oversight during the year ended 28 February 2022,
whereby the Company did not properly prepare and file unaudited interim accounts at Companies House, as
required by the Companies Act 2006, prior to declaring and paying distributions to shareholders in respect of
the Company’s 1 September 2021 final dividend and 16 December 2021 interim dividend. As a result of this
administrative oversight, the Company did not comply with certain provisions of the Act and, whilst there were
sufficient distributable reserves to make the relevant distributions, they were therefore paid in technical
infringement of the Act. Neither the amount nor payment of the relevant distributions, nor the Company’s prior
audited accounts, are affected by this, nor is there any impact on the Company’s financial position either at the
time of payment(s) or now.
The Company has proposed a resolution to be considered when the Annual General Meeting re-convenes on
6 October 2022 which will, if passed, give the board authority to enter into deeds of release to discharge these
parties from any obligation to repay any amount to the Company in connection with the Relevant Distributions.
The Company has not recorded the potential right to make claims against shareholders as an asset or a
contingent asset in its Financial Statements. The directors of the Company have concluded that any inflow of
economic benefits as a result of such claims is less than probable.
For the year ended 28 February 2022, a final ordinary dividend of 7.0 pence per share has been proposed
totalling £2.3m.
Page 124
11. Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the year, excluding 2,731,893 ordinary shares
held by the Employee Share Ownership Plan (2021: 588,127 shares) which are treated as cancelled.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume
conversion of all dilutive ordinary shares. The Group has one class of dilutive ordinary shares, being those
options granted to employees where the exercise price is less than the average market price of the Company’s
ordinary shares during the year. The Group has other potential dilutive ordinary shares, including convertible
loan notes, however these are not currently dilutive because the exercise price is less than the Group’s current
share price.
Total operations
2022
£’000
2021
Restated
£’000
Profit for the year attributable to shareholders
13,919
4,532
Pence
Pence
Basic earnings per share
45.56
14.45
Effect of dilutive share options
(8.43)
(2.50)
Diluted earnings per share
37.13
11.95
Underlying operations
2022
£’000
2021
Restated
£’000
Underlying profit for the year attributable to shareholders
8,539
4,380
Pence
Pence
Basic earnings per share
27.95
13.96
Effect of dilutive share options
(5.17)
(2.41)
Diluted earnings per share
22.78
11.55
Underlying continuing operations
2022
£’000
2021
Restated
£’000
Underlying profit for the year from continuing operations
7,046
4,893
Pence
Pence
Basic earnings per share
23.06
15.60
Effect of dilutive share options
(4.27)
(2.69)
Diluted earnings per share
18.79
12.91
Continuing operations
2022
£’000
2021
Restated
£’000
Profit from continuing operations for the year attributable to shareholders
6,704
3,562
Pence
Pence
Basic earnings per share
21.94
11.36
Effect of dilutive share options
(4.06)
(1.96)
Diluted earnings per share
17.88
9.40
The weighted average number of shares used in basic earnings per share is 30,552,532 (2021: 31,366,379).
The weighted average number of shares used in the diluted earnings per share is 37,490,784 (2021:
37,914,547) after adjusting for the effect of 6,938,253 (2021: 6,548,168) dilutive share options.
Page 125
12. Goodwill
£’000
Cost
At 29 February 2020
91,471
Exchange adjustments
143
At 28 February 2021
91,614
Disposal of Cory Brothers
(3,645)
Exchange adjustments
(419)
At 28 February 2022
87,550
Accumulated impairment
At 28 February 2022 and 28 February 2021
7,659
Net book value at 28 February 2022
79,891
Net book value at 28 February 2021
83,955
All goodwill is allocated to cash-generating units. The allocation of goodwill to cash-generating units is as
follows:
2022
£’000
2021
£’000
Shipbroking
68,696
68,696
Financial
11,195
11,614
Logistics
–
3,645
79,891
83,955
These cash-generating units represent the lowest level within the Group at which goodwill is monitored for
internal management purposes.
All goodwill is denominated in the Group’s reporting currency, with the exception of the Financial Division which
is denominated in Euros. Goodwill denominated in foreign currencies is revalued at the Balance Sheet date.
The exchange adjustment at 28 February 2022 was a loss of £419,000 (2021: gain of £143,000).
The Logistics Division, Cory Brothers, was disposed of on 28 February 2022, the goodwill previously held in
respect of this cash-generating unit was therefore disposed of. See Note 9.
The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The
recoverable amount is determined based on value-in-use calculations. The use of this method requires the
estimation of future cash flows and the determination of a discount rate in order to calculate the present value
of the cash flows. The results of the impairment tests are as follows:
Page 126
a. Shipbroking
The post-tax discount rate was determined from the post-tax weighted average cost of capital calculation
which was not based on an entity-specific capital structure.
The estimated cash flows were based on the approved annual budget for the next financial year and
projections for the following four years which are based on management’s estimates of revenue growth
and cost inflation which reflect past experience and management’s expectation of future events given the
specific risks and economic and market conditions of each cash-generating unit. Cash flows have been
used over a period of five years as management believes this reflects a reasonable time horizon for
management to monitor the trends in the business. After five years a terminal value is calculated using a
long-term growth rate of 1.7% (2021: 1.0%). Revenue growth rates have increased year on year for
Shipbroking reflecting increased inflation. The key assumptions and resulting net present values are as
follows:
Shipbroking
2022
2021
Post-tax discount rate
10.87%
9.10%
Equivalent pre-tax discount rate
13.19%
10.76%
Average revenue growth rate
5.0%
3.0%
Operating profit margin years 2-5
12.5–16.1%
11.2–21.9%
At 28 February 2022, the net present value of the Shipbroking Division is significantly higher than the
carrying value of the goodwill in respect of this cash-generating unit. At the Balance Sheet date,
management concluded that there were no reasonably possible changes in the key assumptions used in
the impairment review that would reduce headroom to nil or result in an impairment.
b. Financial
The post-tax discount rate for the Financial Division includes an additional premium of 1.5% to reflect the
Group’s risk assessment of this cash-generating unit, for which revenues are harder to forecast than in the
rest of the Group.
The estimated cash flows were based on the approved annual budget for the next financial year and
projections for the following four years which are based on management’s estimates of revenue growth
and cost inflation which reflect past experience and management’s expectation of future events given the
specific risks and economic and market conditions of each cash-generating unit. Cash flows have been
used over a period of five years as management believes this reflects a reasonable time horizon for
management to monitor the trends in the business. After five years a terminal value is calculated using a
long-term growth rate of 1.7% (2021: 0.6%). Revenues for the Financial Division are challenging to forecast
because of the highly variable nature of this revenue stream. Growth rates used in the value in use tests
reflect this variability and were based on the best estimates of the senior management team in Financial.
There is expected to be one year in the following four where there is a decline in performance during which
time future deals will be entered into to secure the following years as well as one exceptional and one
average year of performance.
Financial
2022
2021
Post-tax discount rate
12.37%
10.60%
Equivalent pre-tax discount rate
15.01%
14.94%
Average revenue growth rate
8.0%
3.5%
Operating profit margin years 2-5
34.5–45.6%
23.1–25.8%
Page 127
Sensitivity to impairment
The tests performed indicated aggregate headroom over the carrying value of the goodwill in both cash-
generating units. To test the sensitivity of the results of the impairment review, the calculations have been
re-performed, flexing the three key assumptions:
! revenue growth;
! post-tax discount rate; and
! underlying operating profit.
Change in revenue growth
Change in discount rate
Change in underlying
operating profit
+1%
-1%
+1%
-1%
+5%
-5%
£’000
£’000
£’000
£’000
£’000
£’000
Shipbroking
12,339
(12,275)
(16,026)
16,022
7,854
(7,125)
Financial
2,079
(1,992)
(1,945)
2,344
1,496
(1,496)
The results showed that in all scenarios the net present values of the cash-generating units were still in
excess of the carrying value in all stressed scenarios and therefore there was no indication of impairment.
The breakeven point, i.e. the point where the headroom over the carrying value is zero is reached by a
reduction in average revenue growth rate of 4.0%/6.4% for Shipbroking and Financial Divisions respectively
and by increasing the pre-tax discount rate by +12.8% for Shipbroking and +3.8% for Financial.
Management does not believe that climate-related risks or the potential impact of climate change on the
Group’s operations would affect the recoverability of goodwill in either of the cash-generating units (see
Note 1d).
Page 128
13. Other intangible assets
Computer
software
£’000
Research and
development
£’000
Other
intangible
assets
£’000
Total
£’000
Cost
At 29 February 2020
5,805
836
11,005
17,646
Additions
643
–
–
643
Reclassified as held for sale
(28)
(836)
–
(864)
At 28 February 2021
6,420
–
11,005
17,425
Additions
515
–
–
515
Disposal of Cory Brothers
(1,344)
–
(1,480)
(2,824)
Exchange rate adjustments
(5)
–
–
(5)
At 28 February 2022
5,586
–
9,525
15,111
Amortisation
At 29 February 2020
4,379
224
10,632
15,235
Charge for the year
404
–
–
404
Reclassified as held for sale
(14)
(224)
(111)
(349)
Exchange adjustments
6
–
–
6
At 28 February 2021
4,775
–
10,521
15,296
Charge for the year
346
–
107
453
Disposal of Cory Brothers
(275)
–
(1,359)
(1,634)
Exchange adjustments
(1)
–
–
(1)
At 28 February 2022
4,845
–
9,269
14,114
Net book value at 28 February 2022
741
–
256
997
Net book value at 28 February 2021
1,645
–
484
2,129
Other intangible assets brought forward from the prior year relate to forward books of income acquired in
acquisitions which are being amortised over the period that the income is being recognised; customer
relationships which are amortised over a period of five years; and brand which is being amortised over ten
years.
At 28 February 2022, the Group had no contractual commitments for the acquisition of computer software
(2021: £nil).
14. Deferred and contingent consideration receivable
Fair value of Cory Brothers deferred and contingent consideration receivable
On 28 February 2022 the Company sold Cory Brothers to Vertom Agencies BV for maximum consideration of
£15.5m. Initial cash proceeds of £6.5m were received on completion of the transaction, three further cash
payments are due contingent on an agreed percentage of future gross profit of the combined VertomCory
business. These “earnout” payments are subject to a combined minimum of £3.75m and a combined
maximum of £9.0m.
The completion payment of £6.5m is included in trade and other receivables (see Note 21).
Each agreed minimum earnout payment is presented as deferred consideration recognised at amortised cost,
using a discount rate of 2.39%. The uncertain element of each earnout payments is recognised at fair value
through profit or loss and presented as contingent consideration. The fair value is calculated using the forecast
Page 129
gross profit for the combined VertomCory business for each earnout period, applying the agreed percentage
and discounting the forecast cash flow using the discount rate of 2.39%. Deferred and contingent
consideration are included in other long-term receivables (see Note 20).
The current estimate of the fair value of the deferred consideration is £4.8m. The fair value of the contingent
consideration involves two critical estimates; the future profitability of the combined business and the discount
rate used to calculate the net present value. The future profitability forecasts are based on a business plan
prepared by the combined VertomCory business and was reviewed by management as part of the financial
due diligence process. A discount rate of 2.39% was used to calculate the net present value, this was based
on the credit risk of Vertom Agencies BV following a credit check performed by management.
Sensitivity analysis
Management have considered the sensitivity of the contingent consideration receivable to both changes in the
estimate of future profitability of the VertomCory agency business, and the discount rate selected.
Sensitivity to the estimate of
future gross profits of the
VertomCory agency business
Sensitivity to change in the
discount rate selected
Carrying value
as at
28 Feb 2022
Discounted
value as at
28 Feb 2022
Decrease by
10%
Increase by
10%
Decrease by
1% p.a.
Increase by 1%
p.a.
£’000
£’000
£’000
£’000
£’000
£’000
Payment due on 31
May 2023
336
326
(139)
140
4
(4)
Payment due on 31
May 2024
433
411
(167)
166
9
(9)
Payment due on 31
May 2025
507
469
(169)
170
16
(14)
Total
1,276
1,206
(475)
476
29
(27)
The 10% increase/decrease in future gross profits of the VertomCory agency business considered in the
sensitivity analysis is selected to reflect a reasonably likely variation in outcomes, which lie within range covered
by the minimum and maximum earnout thresholds. The change in discount rate considered reflects the
observed range of three-year GBP corporate bond rates with similar credit risk.
15. Deferred consideration payable
Acquisition of Naves Corporate Finance GmbH
In September 2017, the Group acquired the entire share capital of Naves Corporate Finance GmbH (“Naves”).
Naves was an established and successful business, headquartered in Hamburg, Germany, which advises
national and international clients on corporate finance related to the maritime industry including restructuring
advisory, corporate finance advisory, M&A, asset brokerage, interim/pre-insolvency management and financial
asset management including loan servicing.
The accounting values for the deferred consideration and associated payments to management sellers are set
out in Note 25. These amounts are subject to a prior period adjustment set out in Note 34.
The acquisition agreement provided for consideration of £16.0m (€18.4m) payable as follows:
i. at completion in cash £7.3m (€8.3m), in shares £1.3m (€1.5m) and in convertible loan notes £6.4m
(€7.4m); and
ii. deferred consideration in cash of £0.5m (€0.6m) and convertible loan notes of £0.5m (€0.6m), payable
in instalments over the three years after the acquisition.
No consideration was contingent consideration. As at 28 February 2022, there is nil outstanding deferred
consideration (2021: nil) to non-management sellers.
The acquisition agreement also provided deferred amounts that would be payable to management sellers,
conditional on their ongoing service in the business. IFRS 3 states that amounts paid to former owners which
are conditional on ongoing service are for the benefit of the acquirer and not for the benefit of former owners.
Consideration linked to the ongoing service of former owners is treated as remuneration for post-combination
services and classified as acquisition-related expenditure under specific items in the Income Statement.
The deferred amounts payable to management sellers comprised:
Page 130
i. deferred cash of £1.3m (€1.5m) and deferred convertible loan notes of £4.3m (€4.9m) conditional only on
the individual management seller’s continued service payable in instalments over the five years after the
acquisition; and
ii. deferred convertible loan notes of up to £9.4m (€11.0m) conditional on the individual management
seller’s continued service and the post-acquisition Naves’ EBIT in the three years post-acquisition. By
February 2021, there was no contingency remaining and the total amount paid was £4.6m (€5.3m).
At February 2022 £0.5m (2021: £1.0m) of amounts to management sellers were subject to future service
conditions, of which £0.5m (2021: £0.9m) had been accrued. This accrual is presented within deferred
consideration.
The tables below relate the amounts payable under the sale and purchase agreement to the values reflected in
the Balance Sheets of the Group and parent company. The comparative values have been restated, and
further details of the restatement are provided in Note 34.
Nominal value of Naves deferred consideration
2022
2022
2021
2021
(All denominated in Euros)
£'000
€'000
£'000
€'000
Historical
1
Historical
1
Amounts paid on acquisition
Convertible loan notes settled in cash at maturity
6,430
7,400
6,430
7,400
Shares
1,308
1,505
1,308
1,505
Cash
7,172
8,254
7,172
8,254
Total consideration paid on acquisition
14,910
17,159
14,910
17,159
Settled deferred consideration
Deferred cash settled
549
632
549
632
Convertible loan notes settled in cash at maturity
359
421
183
211
Deferred consideration settled
908
1,053
732
843
Deferred consideration convertible loan notes on Balance Sheet
191
211
367
421
Total deferred consideration
1,099
1,264
1,099
1,264
Total consideration for the business combination
16,009
18,423
16,009
18,423
2021
2021
£'000*
€'000
Historical*
Variable amounts paid and payable for post-acquisition services
4,636
5,328
Fixed amounts paid and payable for post-acquisition services
5,614
6,431
Total amounts paid and payable for post-acquisition services
10,250
11,759
Total consideration for the business combination
16,009
18,423
Total due under the Naves acquisition agreement
26,259
30,182
Potential variable payments not incurred
5,672
Working capital adjustment on acquisition
(854)
Maximum consideration disclosed in shareholder circular
35,000
Post-acquisition remuneration of £0.2m associated with the acquisition were incurred during the year ended
28 February 2022 (2021: £0.2m) and have been classified as acquisition-related expenditure under specific
items in the Income Statement. See Note 8.
1
Pounds Sterling values are presented at the period end closing rate.
Page 131
Acquisition of Atlantic Brokers Holdings Ltd
In February 2018 the Group acquired the entire share capital of Atlantic Brokers Holdings Ltd, the holding
company for Atlantic Brokers Ltd (together, “Atlantic”).
The cash payment was made in the year to 28 February 2018 but was subject to clawback provisions if the
working sellers were to leave employment of the Group before 28 February 2021. The cost was charged to the
Income Statement over the clawback period and no further amounts were charged to the Income Statement
after 28 February 2021.
16. Property, plant and equipment
Leaseholds
£’000
Computers
£’000
Fixtures and
equipment
£’000
Total
£’000
Cost or fair value
At 29 February 2020
13,818
1,082
2,414
17,314
Additions at cost
1,232
237
260
1,729
Disposals
(784)
(75)
(153)
(1,012)
Reclassification to assets held for sale (Wavespec)
(65)
(385)
(170)
(620)
Exchange differences
107
–
33
140
At 28 February 2021
14,308
859
2,384
17,551
Additions at cost
1,087
315
337
1,739
Disposals
(244)
–
(631)
(875)
Disposal of Cory Brothers
(1,294)
(416)
(478)
(2,188)
Exchange differences
75
6
42
123
At 28 February 2022
13,932
764
1,654
16,350
Accumulated depreciation
At 29 February 2020
2,742
701
1,943
5,386
Charge for the year
2,886
94
318
3,298
Disposals
(397)
(75)
(153)
(625)
Impairment
210
–
–
210
Reclassification to assets held for sale (Wavespec)
(63)
(379)
(170)
(612)
Exchange differences
–
11
42
53
At 28 February 2021
5,378
352
1,980
7,710
Charge for the year
2,663
148
220
3,031
Disposals
(244)
–
(620)
(864)
Impairment
392
–
–
392
Disposal of Cory Brothers
(490)
(300)
(178)
(968)
Exchange differences
(65)
26
10
(29)
At 28 February 2022
7,634
226
1,412
9,272
Net book value at 28 February 2022
6,298
538
242
7,078
Net book value at 28 February 2021
8,930
507
404
9,841
The prior period movement table has been represented to include impairment within accumulated depreciation
instead of cost.
Page 132
On 28 March 2022, the Group assigned the lease for its Bevis Marks premises to Beat Capital. The impairment
charge of £392,000 is equal to the subsequent loss on assignment of this lease, being the lease assignment
premium paid plus the net book value of the ROU asset disposed of less the outstanding lease liability. At 28
February 2022, the Group had no contractual commitments for the acquisition of property, plant and
equipment (2021: £nil).
17. Leases
Right-of-use assets
The Group leases a number of properties in the jurisdictions from which it operates. In some jurisdictions it is
customary for lease contracts to provide for payments to increase each year by inflation and in other property
leases the periodic rent is fixed over the lease term. The Group also leases certain items of plant and
equipment which are typically motor vehicles. These contracts normally comprise only fixed payments over the
lease terms.
Leaseholds
£’000
Fixtures and
equipment
£’000
Total
£’000
At 1 March 2020
9,219
267
9,486
Additions
1,148
37
1,185
Amortisation
(2,494)
(178)
(2,672)
Impairment
(210)
–
(210)
Disposals
(361)
–
(361)
Exchange differences
5
12
17
At 28 February 2021
7,307
138
7,445
Additions
1,036
11
1,047
Amortisation
(2,079)
(77)
(2,155)
Impairment
(392)
–
(392)
Disposals
–
(10)
(10)
Disposal of Cory Brothers
(856)
(51)
(907)
Exchange differences
166
–
166
At 28 February 2022
5,182
11
5,194
Details on the impairment charge of £0.4m are provided in Note 16.
Lease liabilities
Total
£’000
At 1 March 2020
14,777
Additions
1,185
Interest expense
409
Lease payments
(3,928)
Exchange differences
111
At 28 February 2021
12,554
Additions
814
Interest expense
329
Lease payments
(3,950)
Disposal of Cory Brothers
(1,243)
Exchange differences
1
At 28 February 2022
8,505
Page 133
Lease receivables
Total
£’000
At 1 March 2020
3,214
Additions
324
Interest income
86
Lease payments
(804)
Exchange differences
7
At 28 February 2021
2,827
Additions
–
Disposal
(236)
Interest income
72
Lease payments
(870)
Disposal of Cory Brothers
(272)
Exchange differences
(9)
At 28 February 2022
1,512
2022
£’000
2021
£’000
Short-term lease expense
234
282
Short-term lease income
73
73
Low value lease expense
–
–
Lease liabilities
Within
1 year
£’000
1 to 2
Years
£’000
2 to 5
years
£’000
More than
5 years
£’000
Total
£’000
Uncharged
interest
£’000
Net
payable
£’000
At 28 February 2022
3,431
3,197
2,131
16
8,775
(270)
8,505
At 28 February 2021
3,969
3,431
5,000
623
13,023
(479)
12,544
Lease receivables
Within
1 year
£’000
1 to 2
years
£’000
2 to 5
years
£’000
More than
5 years
£’000
Total
£’000
Unearned
interest
£’000
Net
receivable
£’000
At 28 February 2022
642
642
284
–
1,568
(56)
1,512
At 28 February 2021
939
939
1,189
–
3,067
(240)
2,827
Page 134
18. Investments
2022
£’000
2021
£’000
Unlisted investments
1,780
1,962
The Group recognises unlisted investments at fair value through profit or loss.
Movement in unlisted investments
Total
£’000
At 1 March 2020, and 28 February 2021
1,962
Disposal
(182)
At 28 February 2022
1,780
A list of subsidiary undertakings is included in Note 32.
The Financial Statements of the principal subsidiary undertakings are prepared to 28 February 2022.
Unlisted investments
The Group’s unlisted investments include 1,000 (2021: 1,000) ordinary £1 shares in London Tanker Broker Panel
Limited. The investment is carried at fair value of £1.5m, being the value of the most recent comparable
transaction, which occurred during the year ended 28 February 2019. There have been no transactions or
events in the current or prior year which would result in an adjustment to the fair value at 28 February 2022.
19. Investment in associate
Zuma Labs Limited
On 29 October 2020 the Group subscribed for 1,000 ordinary shares in Zuma Labs Limited. Zuma Labs Limited
is a private company incorporated in England and Wales and its registered address is Kemp House, 160 City
Road, London, United Kingdom, EC1V 2NX. Zuma Labs Limited has one share class and each share carries one
vote.
During the period, in accordance with the shareholders' agreement, three further subscriptions for shares were
made totalling US$0.5m (£0.3m), increasing Braemar's shareholding increased by 1,125 shares.
At 28 February 2022 the Group's shareholding was 2,500 shares, which equates to 20.0% of Zuma Labs
Limited's share capital and 20.0% of voting rights (2021: 1,375 shares, 12.1% of share capital and 12.1% of voting
rights). The Group has representation on the board of Zuma Labs Limited, as a result, the Group considers that
it has the power to exercise significant influence in Zuma Labs Limited and the investment in it has been
accounted for using the equity method.
A purchase price allocation exercise was undertaken to measure the fair value of the net assets on the date at
which Zuma Labs Limited became an associate, and also at each date at which further shares were subscribed
for. Based on the purchase price allocation exercise, the difference between the cost of the investment and
Braemar’s share of the net fair value of Zuma Labs Limited’s identifiable assets and liabilities will be accounted
for as goodwill. Amortisation of that goodwill is not permitted.
IAS 28 requires the most recent Financial Statements of an associate are used for accounting purposes, and
that coterminous information should be used unless it is impractical to do so. Zuma Labs Limited has a year-
end of 31 March and for practical reasons Zuma Labs Limited’s management accounts for the 15 months
ended 28 February 2022 will be used for the purposes of the Group’s full-year reporting at 28 February with
adjustments made for any significant transactions and events. Zuma Labs Limited will prepare its next set of
Financial Statements for the year ended 31 March 2022. At 28 February 2022 Zuma Labs Limited had no
contingent liabilities.
Page 135
The summarised financial information of Zuma Labs Limited for the period ended 28 February 2022 is as
follows. These figures are taken from the management accounts of Zuma Labs Limited, adjusted for any fair
value adjustments but before any intercompany eliminations.
28 Feb 22
£’000
Balance Sheet
Current assets
283
Non-current assets
359
Current liabilities
(45)
Net assets (100%)
597
Group share of net assets (20%)
119
Income Statement
Revenues
–
Post-tax profit
(130)
Total comprehensive income
(19)
Management have reviewed the carrying value of the investment in Zuma Labs Limited at 28 February 2022
and do not consider this to be impaired.
AqualisBraemar
On 21 June 2019 the Group recognised an investment in associate as a result of the divestment of the Offshore,
Marine and Adjusting product lines in return for a significant shareholding in AqualisBraemar. AqualisBraemar is
listed on the Oslo Børs, its principal place of business is Oslo and its registered address is Olav Vs gate 6, 0161,
Oslo, Norway. AqualisBraemar has one share class and each share carries one vote.
On 28 January 2021 the Group sold 9,600,000 shares and on 19 May 2021 the Group sold its entire remaining
shareholding in AqualisBraemar, see Note 9. The Group was entitled to representation on the board of
AqualisBraemar for as long as the Group’s shareholding remains more than 10.0%. Based on this the Group
consider that it had the power to exercise significant influence for the year ended 28 February 2021, and until it
sold its shareholding on 19 May 2021. At that point significant influence was lost, the Group ceased to equity
account for AqualisBraemar and the Group's interest in AqualisBraemar was limited to its holding of 6,523,977
performance-based warrants which were accounted for as a financial asset at fair value.
On 20 August 2021, 1,000,000 of the 6,523,977 warrants vested with the remainder lapsing. A loss on vesting
of £2,000 was recognised in specific items. The shares received were subsequently sold on 31 August 2021
crystallising a further loss of £4,000.
At 28 February 2022 the Group's shareholding was nil which equates to 0% of AqualisBraemar's share capital
and 0% of voting rights (2021: market value of £6.3m, being 10.42% of share capital and 10.42% of voting
rights).
The results of AqualisBraemar are presented within discontinued operations.
Page 136
The movements in the investment in associates are provided below.
Zuma
£’000
AqualisBraemar
£’000
Total
£’000
At 1 March 2020
–
7,315
7,315
Cost of investment
418
–
418
Share of profit in associate – underlying
–
255
255
Share of profit in associate – specific
–
91
91
Share of associate’s other comprehensive income
–
312
312
Dividends received
–
(641)
(641)
Gain on rights issue
–
826
826
Book value of 9,600,000 shares disposed
–
(3,753)
(3,753)
Foreign exchange movements
–
(1,060)
(1,060)
At 29 February 2021
418
3,345
3,763
Book value of 450 shares acquired
326
–
326
Share of profit in associate – underlying
(20)
76
56
Share of associate’s other comprehensive income
–
52
52
Book value of 9,640,621 shares disposed
–
(3,473)
(3,473)
At 28 February 2022
724
–
724
A reconciliation of the book value of the AqualisBraemar shares disposed of to the profit on disposal in Note 9
is as follows:
19 May 2021
28 Jan 2021
Number of shares sold
9,640,621
9,600,000
Share price NOK
9.00
7.50
NOK’000
NOK’000
Gross disposal proceeds
86,776
72,000
Broker’s commission at 1.5%/2%
(1,301)
(1,440)
Net disposal proceeds
85,475
70,560
£’000
£’000
Net disposal proceeds
7,232
5,982
Book value of shares sold
(3,473)
(3,753)
Legal costs
(13)
–
Recycle of amounts in other comprehensive income
(371)
(471)
Profit on disposal
3,375
1,758
Page 137
20. Other long-term receivables
Note
2022
£’000
2021
£’000
Other long-term receivables
Deferred consideration
9
3,482
–
Contingent consideration
9
1,276
–
Security deposits
17
34
Finance lease receivables
17
861
1,854
5,636
1,888
Deferred consideration of £3.6m and contingent consideration of £1.2m relates to the earnout payments
receivable in respect of the disposal of Cory Brothers, further detail is provided in Note 14.
See Note 17 for a maturity analysis which reconciles the long-term finance lease receivables to the
undiscounted lease receipts and unearned finance income.
21. Trade and other receivables
2022
£’000
2021
£’000
Trade receivables
24,970
27,266
Provision for impairment of trade receivables
(3,159)
(2,858)
Net trade receivables
21,811
24,408
Other receivables
13,314
5,567
Finance lease receivables
633
974
Accrued income
1,965
2,570
Prepayments
1,085
1,281
Total
38,808
34,800
Included in other receivables at 28 February 2022 is £6.5m of completion proceeds relating to the disposal of
Cory Brothers. The cash was due on completion of the transaction but was not received into the Group’s bank
account until 2 March 2022. Also included in other receivables in both years are security deposits, VAT and
other sales tax receivables, employee loans and capitalised sign-on bonuses which are being charged to the
Income Statement in accordance with the clawback provisions of the underlying contracts.
The total receivables balance is denominated in the following currencies:
2022
£’000
2021
£’000
US Dollars
23,099
17,804
Sterling
14,451
13,792
Other
1,258
3,204
Total
38,808
34,800
The directors consider that the carrying amounts of trade receivables approximate to their fair value.
Trade receivables are non-interest bearing and are generally on terms payable within 30–90 days; terms
associated with the settlement of the Group’s trade receivables vary across the Group. Specific debts are
provided for where recovery is deemed uncertain, which will be assessed on a case-by-case basis whenever
debts are older than the due date, but always when debts are older than usual for the industry in which each
business in the Group operates.
As at 28 February 2022, trade receivables of £1,251,000 (2021: £613,000) which were over 24 months old were
treated as credit impaired and have been provided for and trade receivables of £757,000 (2021: £613,000)
Page 138
which were between 12 months old and 24 months old were treated as impaired and have been provided for.
A provision of £396,000 (2021: £477,000) has been made for specific trade receivables which are less than 12
months overdue.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime
expected credit loss provision for trade receivables and contract assets. To measure expected credit losses
on a collective basis, trade receivables and contract assets are grouped based on similar credit risk and
ageing. The contract assets have similar risk characteristics to the trade receivables for similar types of
contracts.
The expected loss rates are based on the Group’s historical credit losses and rates are then adjusted for
current and forward-looking information on macroeconomic factors affecting the Group’s customers.
The ageing profile of trade receivables and the lifetime expected credit loss for provisions and contract assets
is as follows:
2022
Trade
receivables
£’000
Expected loss
rate
%
Group
provision
£’000
ECL
provision
£’000
Total provision
for impairment
of trade
receivables
£’000
Up to 3 months
14,562
0.015
100
210
310
3 to 6 months
3,952
0.020
100
77
177
6 to 12 months
4,036
0.051
196
196
392
Over 12 months
2,420
0.591
2,008
243
2,251
Trade receivables
24,970
0.096
2,404
726
3,130
Accrued income
1,965
0.015
–
29
29
Total
26,935
0.028
2,404
755
3,159
2021
Trade
receivables
£’000
Expected loss rate
%
Group
provision
£’000
ECL
provision
£’000
Total provision for
impairment
of trade
receivables
£’000
Up to 3 months
19,668
0.014
110
275
385
3 to 6 months
2,794
0.022
134
61
195
6 to 12 months
2,906
0.046
233
135
368
Over 12 months
1,898
0.154
1,579
293
1,872
Trade receivables
27,266
0.028
2,056
764
2,820
Accrued income
2,570
0.015
–
38
38
Total
29,836
0.027
2,056
802
2,858
Movements on the provision for impairment of trade receivables and accrued income were as follows:
2022
£’000
2021
£’000
At 1 March
2,858
3,405
Bad debt charge/(credit)
747
(170)
Receivables written off during the year as uncollectible
(204)
(360)
Transferred on disposal
(242)
–
Reclassified as held for sale
–
(17)
At 28 February
3,159
2,858
Page 139
22. Financial instruments and risk management
The Group is exposed through its operations to the following financial risks:
! Currency risk
! Interest rate risk
! Credit risk
! Liquidity risk
In common with all other businesses, the Group is exposed to risks that arise from its use of financial
instruments. This note describes the Group’s objectives, policies and processes for managing those risks and
the methods used to measure them. Further quantitative information in respect of these risks is presented
throughout the Financial Statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives,
policies and processes for managing those risks or the methods used to measure them from previous periods
unless otherwise stated in this note.
a. Financial instruments
i. Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as
follows:
! Trade and other receivables
! Cash and cash equivalents
! Deferred consideration receivable
! Contingent receivable
! Unlisted investments
! Warrants
! Trade and other payables
! Bank overdrafts
! Revolving credit facility
! Lease liabilities
! Forward currency contracts
! Deferred and contingent consideration
Page 140
ii. Financial instruments by category
Financial instruments measured at fair value
The Group’s financial assets and liabilities measured at fair value through profit and loss, including their
fair value hierarchy, are as follows. Fair value is the amount at which a financial instrument could be
exchanged in an arm’s-length transaction, other than in a forced or liquidated sale.
Level 1
£’000
Level 2
£’000
Level 3
£’000
As at
28 Feb 2022
£’000
Financial assets
Unlisted investments
–
1,500
–
1,500
Contingent consideration receivable
–
–
1,276
1,276
Forward currency contracts
1
–
62
–
62
Total
–
1,562
1,276
2,838
Financial liabilities
Forward currency contracts
1
–
772
–
772
Embedded derivative
–
–
251
251
Total
–
772
251
1,023
Level 1
£’000
Level 2
£’000
Level 3
£’000
As at
28 Feb 2021
£’000
Financial assets
Unlisted investments
–
1,500
–
1,500
Forward currency contracts
2
–
1,773
–
1,773
Warrants
–
–
746
746
Total
–
3,273
746
4,019
Financial liabilities
Embedded derivative (restated)
–
–
56
56
Total
–
–
56
56
Fair value hierarchy
The level in the fair value hierarchy within which the financial asset or liability is categorised is determined
on the basis of the lowest level input that is significant to the fair value measurement.
Financial assets and liabilities are classified in their entirety into one of three levels:
! Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
! Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly.
! Level 3: Inputs for the asset or liability that are not based on observable market data.
Unlisted investment
The unlisted investment relates to the Group’s investment in the London Tanker Broker Panel, see Note
17. The investment is carried at fair value, being the value of the most recent comparable transaction and
is therefore classified as Level 2 in the fair value hierarchy.
There was no movement in the fair value of the unlisted investment.
Deferred and contingent consideration receivable
The fair value of the deferred and contingent consideration receivable includes unobservable inputs and
are therefore classified as Level 3. The deferred and contingent consideration receivable relates to the
1
At 28 February 2022, currency forwards with a fair value of £54,000 maturing within 12 months have been shown as current assets. Currency forwards with a fair value of £8,000 maturing
within 12 to 18 months of the Balance Sheet date have been shown as non-current assets. Liabilities include currency forwards with a fair value of £688,000 maturing within 12 months shown as
current liabilities and currency forwards with a fair value of £84,000 maturing within 12 to 18 months of the Balance Sheet date shown as non-current liabilities.
2
At 28 February 2021, currency forwards with a fair value of £1,573,000 maturing within 12 months have been shown as current assets. Currency forwards with a fair value of £200,000 maturing
within 12 to 18 months of the Balance Sheet date have been shown as non-current assets.
Page 141
disposal of the Logistics Division whereby Braemar is entitled to three future cash payments. The SPA
provides for a minimum guaranteed amount in each of the three years, this amount has been classified
as deferred consideration. The fair value of the deferred consideration has been determined by
discounting the guaranteed minimum amounts as per the SPA to present value using a discount rate of
2.39%. The balance of the earnout consideration is contingent on the future performance of the
combined business up to a maximum specified in the SPA, this has been classified as contingent
consideration. The fair value of the contingent consideration has been calculated by reference to
management’s expectation of the future profitability of the combined business and discounted to
present value using a discount rate of 2.39%. The discount rate of 2.39% was based on the credit risk of
Vertom Agencies BV assessed by a third party credit agency. See Note 9 for further details and a
sensitivity analysis on the contingent element.
Forward currency contracts
The fair value of the forward currency contracts are based on prices quoted by the counterparty within
these contracts versus the market rate at the Balance Sheet date and have therefore been classified as
Level 2 in the fair value hierarchy. See the currency risk section for further details.
Warrants
At 28 February 2021 the warrants were valued at £0.7m. The fair value of the warrants includes
unobservable inputs and are therefore classified as Level 3. The key assumptions underpinning the fair
value of the warrants relate to the future expected share price of AqualisBraemar, the GBP:NOK and
GBP:US$ exchange rate and the future performance of both AqualisBraemar as a whole, and of the
former Braemar Marine and Adjusting product lines. The fair value has been determined using the Black-
Scholes valuation model. The inputs in the Black-Scholes valuation model are:
! the share price of AqualisBraemar NOK 4.03
! the exercise price of the option NOK 0.01
! the length of the exercise period 3 months
! the compound risk-free interest rate
! the annualised standard deviation
On 20 August 2021, the warrants vested and a loss of £2,000 was recognised. There were no
movements in the fair value of the warrants between 28 February 2021 and 20 August 2021.
Embedded derivative
The convertible loan note instruments issued on the acquisition of Naves contain an embedded
derivative, being a Euro liability of principal and interest. The equity value of the underlying derivative is
not considered closely related to the debt host, therefore the loan note is considered to be a financial
liability host with an embedded derivative convertible feature which is required to be separated from the
host. The fair value of the embedded derivative includes unobservable inputs and is therefore classified
as Level 3. They key assumptions underpinning the fair value of the embedded derivative relate to the
expected future share price of the Group and the GBP:EUR exchange rate. The fair value has been
determined using the Black-Scholes valuation model.
A gain of £97,000 has been recognised in the Income Statement in respect of the fair value movement
of the embedded derivative from 1 March 2021 to 28 February 2022 (2021 (restated): loss of £52,000).
Financial instruments not measured at fair value
The Group’s financial assets and liabilities that are not measured at fair value are held at amortised costs.
Due to their short-term nature, the carrying value of these financial instruments approximates their fair
value. Their carrying values are as follows:
Financial assets
2022
£’000
2021
restated
£’000
Cash and cash equivalents
13,964
14,111
Deferred consideration receivable
3,482
–
Trade and other receivables
38,601
35,407
Total
56,047
49,518
Page 142
Financial liabilities
2022
£’000
2021
£’000
Trade and other payables
7,779
26,414
Deferred and contingent consideration
4,666
8,370
Lease liabilities
8,506
12,554
Loans and borrowings
23,254
23,000
Total
44,205
70,338
b. Currency risk
Currency risk arises when Group entities enter into transactions denominated in a currency other than their
functional currency. The Group’s policy is, where possible, to allow Group entities to settle liabilities
denominated in their functional currency with the cash generated from operations in that currency. The
Group’s currency risk exposure arises mainly as a result of the majority of its Shipbroking earnings being
denominated in US Dollars while the majority of its costs are denominated in Sterling. There is also some
currency exposure related to convertible loan notes and deferred consideration denominated in Euros and
from the carrying values of its overseas subsidiaries being denominated in foreign currencies.
The Group manages the exposure to US Dollar currency variations by spot and forward currency sales and
other derivative currency contracts, including participating hedging arrangements.
At 28 February 2022 the Group held forward currency contracts to sell US$53.8m at an average rate of
US$1.370/£1.
At 28 February 2021 the Group held forward currency contracts to sell US$48.8m at an average rate of
US$1.328/£1.
The net fair value of forward currency contracts that are designated and effective as cash flow hedges
amount to a £709,000 liability (2021: £1,773,000 asset) which has been deferred in equity.
Amounts of £1,613,000 have been credited (2021: £84,000 credited) to the Income Statement in respect of
forward contracts which have matured in the period.
Excluding the effect of hedging, the effect on equity and profit before tax if the US Dollar or the Euro
strengthened/(weakened) by 10% against Sterling, with all other variables being equal, is as follows:
Profit or loss
Equity, net of tax
+10% strengthening
£’000
–10%
weakening
£’000
+10% strengthening
£’000
–10%
weakening
£’000
28 February 2022
US Dollars
2,697
(2,697)
2,185
(2,185)
Euros
(111)
111
(90)
90
Total
2,586
(2,586)
2,095
(2,095)
28 February 2021
US Dollars
2,141
(2,141)
1,734
(1,734)
Euros
819
(819)
663
(663)
Total
2,960
(2,960)
2,397
(2,397)
c. Interest rate risk
The Group is exposed to interest rate risk from borrowings at floating rates. The Group minimises its short-
term exposure to interest rate risk on its cash and cash equivalents by pooling cash balances across the
Group’s hubs.
The Group has not entered into any financial instruments to fix or hedge the interest rates applied to its
bank borrowings and overdrafts.
Page 143
The following table sets out the carrying amount, by maturity, of the Group’s financial instruments which are
exposed to interest rate risk:
Notes
2022
£’000
2021
£’000
Floating rate:
Within one year
Cash and cash equivalents
23
13,964
14,111
Secured rolling credit facilities and other borrowings
25
(23,254)
(23,000)
(9,290)
(8,889)
Cash balances are generally held on overnight deposits at floating rates depending on cash requirements
and the prevailing market rates for the amount of funds deposited. The other financial instruments of the
Group are non-interest bearing.
The effect on equity and profit before tax of a 1% increase/(decrease) in the interest rate, all other variables
being equal, is as follows:
Profit or loss
Equity, net of tax
+1%
increase
£’000
–1%
decrease
£’000
+1%
increase
£’000
–1%
decrease
£’000
28 February 2022
Cash and cash equivalents
63
(63)
51
(50)
RCF and overdrafts
(104)
104
(84)
84
Total
(41)
41
(33)
34
28 February 2021
Cash and cash equivalents
7
(6)
5
(5)
RCF and overdrafts
(11)
10
(9)
8
Total
(4)
4
(4)
3
d. Credit risk
Concentrations of credit risk with respect to trade receivables are limited due to the diversity of the Group’s
customer base. The directors believe there is no further credit risk provision required in excess of normal
provisions for doubtful receivables, estimated by the Group’s management based on prior experience and
their assessment of the current economic environment. The Group seeks to trade only with creditworthy
parties and carries out credit checks where appropriate. The maximum exposure is the carrying amount as
disclosed in Note 21.
e. Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal
repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its
financial obligations as they fall due.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when
they become due. Management receive rolling 13-week cash flow projections on a weekly basis to ensure
the Group has sufficient liquidity.
The board receives rolling twelve-month cash flow projections on a monthly basis as well as information
regarding cash balances. At the end of the financial year, these projections indicated that the Group
expected to have sufficient liquid resources to meet its obligations under all reasonably expected
circumstances.
Page 144
The following table sets out the carrying amount, by maturity, of the Group’s financial instruments which are
exposed to liquidity risk:
At 28 February 2022
Up to
3 months
£’000
Between
3 and
12 months
£’000
Between
1 and
2 years
£’000
Between
2 and
5 years
£’000
Over
5 years
£’000
Trade and other payables
5,649
2,130
–
–
–
Loans and borrowings
–
–
23,254
–
–
Lease liabilities
864
2,567
3,197
2,131
16
Deferred and contingent consideration
–
1,450
1,654
1,562
–
Total
6,513
6,147
28,105
3,693
16
Forward currency contracts
Gross outflows
11,204
18,748
6,498
–
–
Gross inflows
(11,034)
(18,231)
(6,414)
–
–
Net outflow from forward currency contract
170
517
84
–
–
At 28 February 2021
Up to
3 months
£’000
Between
3 and
12 months
£’000
Between
1 and
2 years
£’000
Between
2 and
5 years
£’000
Over
5 years
£’000
Trade and other payables
12,048
14,366
–
–
–
Loans and borrowings
146
438
23,341
–
–
Lease liabilities
992
2,977
3,431
5,000
623
Deferred and contingent consideration
–
2,596
1,450
3,926
–
Total
13,186
20,377
28,222
8,926
623
Forward currency contracts
Gross outflows
11,040
18,066
5,879
–
–
Gross inflows
(11,557)
(19,164)
(6,031)
–
–
Net inflow from forward currency contract
(517)
(1,098)
(152)
–
–
Loans and borrowings have been represented to show the expected interest payments payable on the
revolving credit facility in addition to the repayment of the loan. The presentation of future cash flows arising
from forward currency contracts has been represented for the prior year to show grossed up cash inflows
and outflows in addition to the net flow position.
f. Capital management
The Group manages its capital structure so as to maintain investor and market confidence and to provide
returns to shareholders that will support the future development of the business. The Group makes
adjustments to the capital structure if required in response to changes in economic conditions. The Group
considers its capital as consisting of ordinary shares and retained earnings. To maintain or adjust the capital
structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or
issue new shares.
The Group has a policy of maintaining positive cash balances and also has a revolving credit facility which it
draws down as required to provide cover against the cyclical nature of the shipping industry.
The board monitors underlying business performance to determine the ongoing use of capital, namely
executive and staff incentive schemes (and whether to fund this through cash or share incentives);
acquisition appraisals ahead of potential business combinations; investment in property, plant and
equipment; and the level of dividends.
No changes were made in the objectives, policies or processes during the years ended 28 February 2022
and 28 February 2021.
Page 145
g. Reconciliation of financing cash flows
Non-current
loans and
borrowings
£’000
Non-current
deferred
consid-
eration
£’000
Non-current
lease
liabilities
£’000
Current
loans
and
borrowings
£’000
Current
deferred
consid-
eration
£’000
Current
lease
liabilities
£’000
Total
£’000
At 1 March 2021
1,217
3,358
8,634
28,130
608
3,920
45,867
Prior period adjustment (see
Note 34)
24,464
(2,476)
–
(23,669)
(608)
–
(2,289)
Restated at 1 March 2021
25,681
882
8,634
4,461
–
3,920
43,578
Cash flows
(362)
–
–
(2,593)
–
(3,950)
(6,905)
Non-cash flows:
! Shares issued
–
–
–
(541)
–
–
(541)
! Derivatives issued
(293)
–
–
–
–
–
(293)
! Interest accruing in the period
537
238
329
134
–
–
1,238
! Lease adjustment
–
–
814
–
–
–
814
! Amounts reclassified from
non-current to current
(95)
–
(3,947)
95
–
3,947
–
! Amounts reclassified from
deferred consideration to
loans
625
(625)
–
–
–
–
–
! Cory Brothers disposal
–
–
(753)
–
–
(490)
(1,243)
! Effects of foreign exchange
(84)
–
–
(140)
–
2
(222)
At 28 February 2022
26,009
495
5,077
1,416
–
3,429
36,426
Non-current
loans and
borrowings
£’000
Non-current
deferred
consid-
eration
£’000
Non-current
lease
liabilities
£’000
Current
loans
and
borrowings
£’000
Current
deferred
consid-
eration
£’000
Current
lease
liabilities
£’000
Total
£’000
At 1 March 2020
2,398
3,031
10,943
53,098
600
3,834
73,904
Prior period adjustment
23,883
(738)
–
(23,538)
(423)
–
(816)
Restated at 1 March 2020
26,281
2,293
10,943
29,560
177
3,834
73,088
Cash flows
(1,554)
–
–
(27,153)
(177)
(3,928)
(32,812)
Non-cash flows:
! Interest accruing in the period
1,028
–
409
240
–
–
1,677
! Lease adjustment
–
–
1,185
–
–
–
1,185
! Amounts reclassified from
non-current to current
(1,697)
–
(3,970)
1,697
–
3,970
–
! Amounts reclassified from
deferred consideration to
loans
1,553
(1,553)
–
–
–
–
–
! Retention accrual net charge
–
142
–
–
–
–
142
! Effects of foreign exchange
70
–
67
117
–
44
298
At 28 February 2021
25,681
882
8,634
4,461
–
3,920
43,578
Page 146
23. Cash and cash equivalents
2022
£’000
2021
£’000
Cash at bank and cash on hand
13,964
14,111
Cash held for sale (Wavespec – see Note 9d)
–
53
Total
13,964
14,164
Cash and cash equivalents largely comprise bank balances denominated in Sterling, US Dollars, Euros and
other currencies for the purpose of settling current liabilities.
Cash includes an amount of £2.9m (2021: £1.4m) held in the bank accounts of regulated entities where there is
a requirement to hold a certain amount of cash at any one time in order to cover future obligations. No charge
or other restriction of use is held over this cash.
The directors consider that the carrying amounts of these assets approximate to their fair value.
24. Trade and other payables
Current liabilities
2022
£’000
2021
£’000
Trade payables
3,397
21,285
Lease liabilities
3,429
3,920
Other taxation and social security
721
988
Other payables
–
42
Accruals
31,082
19,412
Total
38,629
45,647
Accruals includes accrued bonuses and other general accruals.
The average credit period taken for trade payables is 102 days (2021: 77 days). The directors consider that the
carrying amounts of trade payables approximate to their fair value.
25. Borrowings
2022
£’000
2021
£’000
Long-term borrowings
Secured revolving credit facilities
23,254
23,000
Lease liabilities
5,077
8,634
Total
28,331
31,634
The revolving credit facility expires in September 2023. Amounts can be rolled on a monthly basis until the
facility expires subject to certain conditions and on that basis the borrowings have been classified as long-
term. The revolving credit facility bears interest based on SONIA.
All revolving credit facilities are drawn within Braemar Shipping Services Plc and appear in the accounts of the
Company. During the period, the revolving credit facility has been renegotiated so that SONIA replaced LIBOR
and EURIBOR as the applicable interest rate. The applicable interest rate is between 2.25–3.25% dependent on
net leverage. The change has not had a material impact on the Financial Statements. See Note 22 for details of
the Group’s cash pooling arrangements and the net overdraft available to the Group.
The directors consider that the fair value of the revolving credit facility liability and the fair value of the long-
term lease liabilities are equivalent to the carrying amount.
Convertible instruments
The Group issues convertible loan notes in connection with its acquisition of Naves in September 2017.
Page 147
These convertible loan note instruments are unsecured, unlisted and non-transferable. The notes are Euro
denominated and carry a 3% per annum coupon. Each tranche is redeemable on or after two years from the
date of issue by the Group or by the individual holder. The conversion prices were fixed at 390.3 pence for
management sellers and 450.3 pence for non-management sellers.
The convertible loan note instruments carry certain accelerated conversion rights in the event of default on
financial commitments associated with the instruments or business distress within the Group. The loan notes
shall automatically convert or be redeemed in the event that any person or persons acting in concert hold
more than 50% of the issued share capital of the Group or an impairment charge in excess of £42.8m
(€50.0m) is reflected in the audited Financial Statements of the Group.
The convertible loan notes and financial derivatives are valued using level 3 hierarchy techniques under IFRS 13.
See Note 21.
The total value of convertible loan note liability is £4.9m (2021: £8.1m).
Reconciliation of nominal amounts paid and payable to Balance Sheet amounts
2022
£'000
Closing rate
2022
€'000
2021
£'000
Closing rate
Restated
2021
€'000
Deferred consideration convertible loan notes on Balance Sheet
176
211
366
421
Total amounts paid and payable for post-acquisition services
10,415
12,458
10,218
11,759
Of which
–
–
Settled in cash
(3,078)
(3,682)
(1,276)
(1,468)
Settled in shares
(522)
(625)
–
–
Settled in convertible loan notes settled in cash at maturity
(1,987)
(2,377)
(1,032)
(1,188)
Nominal value of Naves-related liabilities outstanding
5,004
5,985
8,276
9,524
Effect of discounting and separation of derivatives
(232)
(36)
Total carrying amount in parent company accounts
4,772
8,240
Effect of measurement differences and remaining service conditions
145
(160)
Total carrying amount in consolidated accounts
4,917
8,080
2022
2021
Represented in the Consolidated Balance Sheet by:
£'000
£'000
Current liabilities
Convertible loan notes
1,416
4,461
Non-current liabilities
Convertible loan notes
2,755
2,681
Accrued employee costs
495
882
Derivatives
251
56
3,501
3,619
4,917
8,080
2022
2021
Represented in the parent company Balance Sheet by:
£'000
£'000
Current liabilities
Convertible loan notes
1,416
4,461
Non-current liabilities
Convertible loan notes
3,271
3,640
Derivatives
85
139
3,356
3,779
4,772
8,240
Page 148
The movement in the Naves-related balances in the Group Balance Sheet during the year is explained by the
items below:
2022
£'000
2021
£'000
Total Naves-related balances at start of year
8,080
9,557
Finance expense
130
303
Post-acquisition remuneration
238
141
Foreign exchange movements
(225)
186
Renegotiation gain
(172)
–
Cash paid
(2,593)
(2,107)
Equity issued
(541)
Total movements
(3,163)
(1,477)
Total Naves-related balances at year-end
4,917
8,080
The loan notes have the following maturities:
Accounting value
Nominal value
2022
£'000
2021
£'000
2022
€'000
2021
€'000
Due at the reporting date
–
3,206
–
3,667
30-Sep-21
–
1,238
–
1,399
31-Dec-21
–
1,352
–
1,539
30-Sep-22
1,184
1,238
1,399
1,399
31-Dec-22
215
108
–
122
30-Sep-23
592
not yet earned
699
699
30-Sep-24
not yet earned
not yet earned
699
699
30-Sep-25
2,180
–
2,929
–
4,171
7,142
5,726
9,524
Derivatives thereon
251
56
Accrual for notes subject to future service
495
882
Total liabilities on loan notes
4,917
8,080
Note that current liabilities in respect of the loan notes differs from the amounts shown above maturing within
one year due to interest payable within one year on non-current loans and the outstanding current liability to
deliver cash and shares in respect of matured loan notes.
Where loan notes are subject to future service conditions, they are accrued as an employee expense over the
relevant service period. At the end of the service period they are recognised as financial instruments. The
nominal value of loan notes subject to future service are included in the maturity analysis above but are not
included in the Group’s financial liabilities. The accrual in respect of these items was £0.5m at 28 February
2022 (2021: £0.8m).
Renegotiation of amounts payable to management sellers
On 3 June 2021 the Group reached an agreement with two of Braemar Naves' Managing directors, Axel
Siepmann and Mark Kuchenbecker, and their connected parties, to restructure certain convertible loan notes
owed by the Group. These loan notes arose on variable consideration for post-acquisition services arising from
the 2017 Naves acquisition. At the time of the renegotiation there were no contingencies or further service
obligations outstanding in respect of any of these amounts.
A total of £2.5m (€2.9m) which was previously due to mature before the end of December 2022 has been
deferred to mature no earlier than September 2025. In addition, a further amount of £0.7m (€0.75m) was
Page 149
agreed to be satisfied by the issue of Braemar shares in three tranches. The first two tranches, totalling £0.6m
(€0.6m) were issued in September and December 2021 with the remaining tranche of £0.1m (€0.1m) to be
issued in December 2022. As part of the modification the Group has also agreed to increase the interest rate
on certain convertible loan notes, to the extent that they are still outstanding, to 5% per annum from
September 2025 from the 3% payable until that date.
A credit of £0.2m has been recognised in respect of the accounting for the modification and classified in
finance income under specific items in the Income Statement. See Note 8.
26. Provisions
Dilapidations
£’000
Employee
entitlements
£’000
Total
£’000
At 29 February 2020
570
396
966
Provided in the year
105
9
114
Utilised in the year
–
(83)
(83)
At 28 February 2021
675
322
997
Provided in the year
7
279
286
At 28 February 2022
682
601
1,283
Current
–
486
486
Non-current
682
115
797
At 28 February 2022
682
601
1,283
Dilapidations relate to future obligations to make good certain office premises upon expiration of the lease
term. The provision is calculated with reference to the location and square footage of the office.
Employee entitlements relate to statutory long service leave in Braemar ACM Shipbroking Pty Limited. This is
based on the principal that each Australian employee is entitled to eight weeks of leave over and above any
annual leave on completion of ten years’ continuous service. The provision is calculated with reference to the
number of employees who have at least seven years of continuous service.
27. Retirement benefit schemes
The Company operates a defined benefit scheme in the UK. A full actuarial valuation was carried out as at 31
March 2020 and updated by the IAS 19 as at 28 February 2022. All valuations were carried out by a qualified
independent actuary.
The Group’s obligations in respect of the funded defined benefit scheme at 28 February 2022 were as follows:
2022
£’000
2021
£’000
Present value of funded obligations
15,156
16,174
Fair value of scheme assets
(13,104)
(12,355)
Total deficit of defined benefit pension scheme
2,052
3,819
Funded defined benefit scheme
The Group sponsors a funded defined benefit scheme (The ACM Staff Pension Scheme) for qualifying UK
employees. The Scheme is administered by a separate board of trustees which is legally separate from the
Group. The Trustees are composed of representatives of both the employer and employees. The Trustees are
required by law to act in the interest of all relevant beneficiaries and are responsible for the investment policy
with regard to the assets plus the day-to-day administration of the benefits.
Under the Scheme, employees are entitled to annual pensions on retirement at age 60 of one-sixtieth of final
pensionable salary for each year of service. Pensionable salary is defined as basic salary plus the average of
the previous three years’ bonuses (capped at three times basic salary). Pensionable salaries for members who
joined after 1 June 1989 are also restricted to an earnings cap. Other benefits are payable, for example those
provided on death.
Page 150
From 1 February 2016, post-retirement benefits are provided to these employees through a separate defined
contribution arrangement.
Profile of the Scheme
The defined benefit obligation includes benefits for current employees, former employees and current
pensioners. Broadly, around 62% of the liabilities are attributable to deferred pensions for current and former
employees, with the remaining 38% to current pensioners.
The Scheme duration is an indicator of the weighted average time until benefit payments are made. For the
Scheme as a whole, the duration is around 18.7 years.
Funding implications
UK legislation requires that pension schemes are funded prudently. The last funding valuation of the Scheme
was carried out by a qualified actuary as at 31 March 2020 and showed a deficit of £1.5m. As a result, the
Company has been paying deficit contributions of £450,000 per annum since 1 April 2020 which, along with
investment returns from return-seeking assets, are expected to make good this shortfall by 31 January 2023.
Risks associated with the Scheme
The Scheme exposes the Group to a number of risks, the most significant of which are:
Asset volatility
The liabilities are calculated using a discount rate set with reference to corporate bond yields; if assets
underperform this yield, this will create a deficit. The Scheme holds a significant proportion of growth assets
which, though expected to outperform corporate bonds in the long term, create volatility and risk in the short
term. The allocation to growth assets is monitored to ensure it remains appropriate given the Scheme’s long-
term objectives.
Changes in bond yields
A decrease in corporate bond yields will increase the value placed on the Scheme’s liabilities for accounting
purposes, although this will be partially offset by an increase in the value of the Scheme’s bond holdings.
Inflation risk
AA significant proportion of the Scheme’s benefit obligations are linked to inflation and higher inflation will lead
to higher liabilities (although, in most cases, caps on the level of inflationary increases are in place to protect
against extreme inflation). The majority of the assets are either unaffected by or only loosely correlated with
inflation, meaning that an increase in inflation will also increase the deficit.
Life expectancy
The majority of the Scheme’s obligations are to provide benefits for the life of the member, so increases in life
expectancy will result in an increase in the liabilities.
The Company and Trustees have agreed a long-term strategy for reducing investment risk as and when
appropriate. This includes moving assets to match pensioner liabilities when members reach retirement.
The Trustees insure certain benefits payable on death before retirement.
A contingent liability exists in relation to the equalisation of Guaranteed Minimum Pension (“GMP”). The UK
Government intends to implement legislation which could result in an increase in the value of GMP for males.
This would increase the defined benefit obligation of the plan. We have made an estimate of the impact of this
based on our current understanding and it will increase the liabilities by 0.36%.
Page 151
The principal assumptions used for updating the latest valuation of the Scheme were:
2022
(% p.a.)
2021
(% p.a.)
Discount rate
2.65
1.9
CPI inflation
3.1
2.0
Pension increases:
CPI capped at 2.5% p.a.
2.1
2.1
CPI capped at 5.0% p.a.
3.2
2.8
Deferred pension increases:
CPI capped at 2.5% p.a.
2.1
2.1
CPI capped at 5.0% p.a.
3.2
2.8
2022
Years
2021
Years
Life expectancy from age 60 for:
Current 60-year-old male
27.5
27.9
Current 60-year-old female
28.7
29.1
Pre-retirement mortality
–
–
Post-retirement mortality
S2 Light Tables, CMI 2020 (min 1.25%)
Early retirement
33% of members retire at age 55, with the remainder retiring at age 60
Withdrawals from active service
No allowance
Cash commutation
25% of the member’s pension is commuted
Under early retirement it is assumed that 33% of members will retire at age 55, with the remainder retiring at
age 60.
Scheme assets
2022
£’000
2021
£’000
Scheme assets are comprised as follows:
UK equities
366
128
Overseas equities
4,391
3,926
Unquoted equities
57
352
Absolute return
315
200
High yield debt
325
303
Cash
322
350
Inflation-linked bonds
4,354
4,217
Corporate bonds
1,547
1,328
Government bonds
234
422
Other
1,193
1,129
Total
13,104
12,355
Page 152
Expense recognised in the Income Statement (included in operating costs)
2022
£’000
2021
£’000
Current service cost
–
–
Curtailment credit
–
–
Interest on net liability
73
73
Expense recognised in Income Statement
73
73
Remeasurements in other comprehensive expense:
Return on assets in excess of that recognised in net interest
(316)
(801)
Actuarial losses due to changes in financial assumptions
(2,174)
1,597
Actuarial losses due to changes in demographic assumptions
(268)
29
Actuarial gains due to liability experience
1,368
(301)
Amount recognised in other comprehensive expense
(1,390)
524
Total amount recognised in Income Statement and other comprehensive expense
(1,317)
597
Changes to the present value of the defined benefit obligation are analysed as follows:
2022
£’000
2021
£’000
Opening defined benefit obligation
16,174
16,004
Past service cost
–
–
Interest expense
307
320
Contributions by participants
–
–
Actuarial losses on liabilities
(1,074)
1,325
Net benefit payments from scheme
(251)
(1,475)
Closing value at 28 February
15,156
16,174
Changes in the fair value of plan assets are analysed as follows:
2022
£’000
2021
£’000
Opening fair value at 1 March
12,355
12,332
Expected return on assets
235
247
Actuarial gains on liabilities
316
801
Contributions by employers
450
450
Contributions by participants
–
–
Net benefit payments from scheme
(252)
(1,475)
Closing value at 28 February
13,104
12,355
The Group expects to contribute £412,500 to its defined benefit pension scheme in the next twelve months
(2021: £450,000).
Actual return on Scheme assets
2022
£’000
2021
£’000
Expected return on assets
235
247
Remeasurement gain on assets
316
801
Actual return on assets
551
1,048
Page 153
Sensitivity analysis
The table below illustrates the sensitivity of the Scheme liabilities at 28 February 2022 to changes in the
principal assumptions. The sensitivities assume that all other assumptions remain unchanged and the
calculations are approximate (full calculations could lead to a different result).
Change in assumption
Approximate
increase in
liabilities
%
Approximate
increase in
liabilities
£’000
Interest rate reduced by 0.5% p.a.
11.2
1,697
Inflation assumption reduced by 0.5% p.a.
1
7.2
1,091
Increase in life expectancy of one year for all members reaching 60
2.2
333
Defined contribution schemes
There are a number of defined contribution schemes in the Group, the principal scheme being the Braemar
Pension Scheme, which is open to all UK employees. Cash contributions paid into the defined contribution
schemes are accounted for as an Income Statement expense as they are incurred. The total charge for the
year in respect of this and other defined contribution schemes amounted to £1,234,000 (2021: £1,280,000) of
which £915,000 (2021: £893,000) was in respect of continuing operations.
Contributions of £99,000 were due to these schemes at 28 February 2022 (2021: £97,000).
The assets of these schemes are held separately from those of the Group in funds under the control of the
Trustees.
28. Share capital
Ordinary shares
Ordinary shares
2022
Number
2021
Number
2022
£’000
2021
£’000
a. Authorised
Ordinary shares of 10 pence
each
34,903,000
34,903,000
3,490
3,490
Ordinary shares
Ordinary shares
Share premium
2022
Number
2021
Number
2022
£’000
2021
£’000
2022
£’000
2021
(restated)
£’000
b. Issued
Fully paid ordinary shares of 10
pence each
As at start of year
31,731,218
31,673,829
3,174
3,167
52,510
52,510
Shares issued and fully paid
(see below)
474,372
57,389
47
7
520
–
As at end of year
32,205,590
31,731,218
3,221
3,174
53,030
52,510
Share premium has been restated (see Note 34) reducing by £3.3m to £52.5m at 29 February 2020 and 28
February 2021.
227,281 shares were issued to the Group’s ESOP to satisfy share awards under the Company Share Option
Plan. In addition, 204,944 shares were issued to settle part of the deferred consideration payable in respect of
the acquisition of Naves during the year ended 28 February 2022.
During the year ended 28 February 2022, no shares were issued as part of the restricted share plan scheme
(2021: 57,389 shares were issued at nil cost).
1
The inflation assumption sensitivity applies to both the assumed rate of increase in the CPI and the RPI, and includes the impact on the rate of increases to pensions, both before and after
retirement.
Page 154
No shares were issued in the year as part of the Save-As-You-Earn (“SAYE”) Scheme. No shares remained
unpaid at 28 February 2022 or 28 February 2021.
The Company has one class of ordinary shares which carry no right to fixed income.
c. Share-based payments
The Company operates a variety of share-based payment schemes which are listed below.
i. Share options
The Company operates an employee save-as-you-earn option scheme called the Braemar Shipping
Services Plc Savings-Related Share Option Scheme 2014 (“SAYE”) and the Braemar Shipping Services
Plc International Savings-Related Share Option Scheme 2019 (the “International SAYE Scheme”). No
option may be granted under any scheme which would result in the total number of shares issued or
remaining issuable under all of the schemes (or any other Group share schemes), in the ten-year period
ending on the date of grant of the option, exceeding 10% of the Company’s issued share capital
(calculated at the date of grant of the relevant option). Options are granted at a 20% discount to the
prevailing market price.
Details of the share options in issue and the movements in the year are given below:
Share
scheme
Year
option
granted
Number at
1 Mar 2021
Granted
Exercised
Lapsed
Number
at 28 Feb
2022
Exercise
price
(pence)
Exercisable
between
SAYE
2019
413,771
–
–
–
413,771
160.0
2022–2023
Options are valued using a binomial pricing model. The fair value per option granted and the
assumptions used in the calculation at the date of grant were as follows:
SAYE 2019
Grant date
5 Jul 2019
Share price at grant date
199.67p
Exercise price
160.0p
Number of employees
164
Shares under option
656,070
Vesting period (years)
3.0
Expected volatility
30.49%
Option life (years)
3.5
Risk-free rate
0.35%
Expected dividends expressed as a dividend yield
7.51%
Possibility of ceasing employment before vesting
9.62%
Expectation of meeting performance criteria
100.00%
Fair value per option
33.62p
The expected volatility is based on historical volatility of the Company’s shares as traded on the London
Stock Exchange. The risk-free rate of return is based on LIBOR.
The value of the awards are expensed over the period from the date of grant to the vesting date.
No options were exercised in the current year or the prior year.
ii. Deferred Bonus Plan
In 2005, the Company put in place a Deferred Bonus Plan (the “Plan”) whereby part of the annual
performance-related bonus is delivered in shares, on a discretionary basis, to staff including executive
directors.
The provisional value of the Deferred Bonus Plan for a given financial year is set in the budgeting process
preceding the financial year, and this value is expensed over the period from provisional determination
until vesting. Once the actual performance for the financial year is known the rate of accrual is corrected
accordingly.
Page 155
Vesting normally occurs three years from the date of grant, subject to the employee beneficiary
remaining in employment with the Group, at which time the award will be settled by the transfer of
shares to the beneficiary.
The Company adopted a new Deferred Bonus Plan in May 2020 (the “New DBP”), pursuant to which
subsequent discretionary bonus awards will be granted to staff including executive directors. Awards
under the New DBP may be linked to an option granted under the new Braemar Company Share Option
Plan 2020, which was also adopted by the Company in May 2020 (the “New CSOP”). Where an
employee receives a linked award under the New DBP, where the Company’s share price rises over the
vesting period, the New CSOP award can be exercised with the value of shares delivered on the vesting
of the New DBP award being reduced by the exercise gain on the New CSOP award. Awards under the
New DBP and the New CSOP will continue to be settled via the transfer of shares from the ESOP and not
through new issue.
Details of the share awards in issue and the movements in the year are given below:
Share scheme
Number at
1 March
2021
Granted
Exer-cised
Lapsed
Number at
28 February
2022
Exercise
price
(pence)
Exercisable
September 2017
20,000
–
–
(20,000)
–
nil
Sep 2020
June 2018
901,070
–
(837,081)
(30,602)
33,387
nil
Jun 2021
June 2019
1,636,422
–
–
(30,000)
1,606,422
nil
Jun 2022
July 2020
3,299,322
–
–
(131,467)
3,167,855
nil
Jul 2022
November 2020
315,975
–
–
–
315,975
nil
Nov 2023
June 2021
–
1,378,586
–
(50,050)
1,328,536
nil
Jun 2024
Deferred Bonus Plan
6,172,789
1,378,586
(837,081)
(262,119)
6,462,175
nil
The weighted average share price on exercise for awards exercised during the year was £2.77 (2021:
£1.40). The weighted average share price at grant date for awards granted during the year was £3.03
(2021: £1.23).
The Company also grants certain awards under the Deferred Bonus Plan to attract and retain key staff
hires. No options were granted in the financial year.
Under both the Plan and the New DBP, sufficient shares to satisfy each award are bought over the
course of the vesting period, and held in an employee trust (“ESOP”) until vesting. As at 28 February
2022, the ESOP held 2,669,603 ordinary shares (2021: 525,837). The ESOP holding is in line with
expectations of how many shares will be needed to satisfy the current awards under this scheme. This
amount is net of expected lapses in the scheme and the fact that recipients typically forego sufficient
shares in order to satisfy the associated tax liability that arises on their vesting.
iii. Restricted Share Plan
During the year ended 28 February 2015, the Company established a Restricted Share Plan (“RSP”). This
scheme was set up and awarded to employees to retain key staff following the merger between
Braemar Shipping Services Plc and ACM Shipping plc, but it can also be used where the Remuneration
Committee considers it necessary to secure the recruitment of a particular individual. Executive directors
of the Company are not eligible to participate in the RSP. RSP awards are made in the form of a nil cost
option and there are no performance criteria other than continued employment.
During the year ended 28 February 2015 the Company issued 1,409,000 RSP awards, of which 50% will
vest after three years and 25% after each of the fourth and fifth years provided the individuals remain
employed by the Group.
During the year ended 29 February 2016 a further 315,000 RSP awards were granted, of which 50% will
vest after three years and 25% after each of the fourth and fifth years provided the individuals remain
employed by the Group.
During the year ended 28 February 2018 a further 77,120 RSP awards were granted, of which 50% will
vest after three years and 25% after each of the fourth and fifth years provided the individuals remain
employed by the Group.
During the year ended 28 February 2019 a further 144,000 RSP awards were granted, of which 100% will
vest after three years provided the individuals remain employed by the Group.
Page 156
Details of the RSP share awards in issue and the movements in the year are given below:
Share scheme
Number at
1 March
2021
Granted
Exercised
Lapsed
Number at
28 February
2022
Exercisable
between
July 2014
13,750
–
–
–
13,750
Jul 17 – Jul 24
Aug 2015
18,750
–
(6,250)
–
12,500
Aug 18 – Aug 25
March 2016
12,500
–
(12,500)
–
–
Mar 22 – Mar 26
May 2017
38,560
–
(38,560)
–
–
May 20 – May 27
July 2018
36,320
–
–
–
36,320
Jul 21 – Jul 28
Feb 2019
144,000
–
–
–
144,000
Feb 22 – Feb 29
Restricted Share Plan
263,880
–
(57,310)
–
206,570
The weighted average share price on exercise for awards exercised during the year was £2.81 (2021:
£1.24).
The fair value of the nil cost options is approximated to the share price at the time of grant less the
expected dividend to be paid during the vesting period.
The value of the awards are expensed over the period from the date of grant to the vesting date or if
used as a recruitment incentive, from the date of joining to the vesting date. The awards are satisfied by
the issue of new shares.
iv. Long-Term Incentive Plan (“LTIP”)
The Company also has LTIP awards, which allow for the form of a conditional right to receive shares at
nil cost. The awards normally vest over three years and are subject to various performance conditions
based on earnings per share (“EPS”) or divisional operating profit.
In June 2018, awards of 527,464 shares were made to one executive director and three senior members
of management.
In June 2019, awards of 394,735 shares were made to one executive director and three senior members
of management.
In June 2020, awards of 506,250 shares were made to one executive director and three senior
members of management.
Details of the LTIP share awards in issue and the movements in the year are given below:
Share scheme
Number at
1 March
2021
Granted
Exercised
Lapsed
Number at
28 February
2022
Exercisable
between
LTIP 2018
150,537
–
–
(117,243)
33,294
Nov 21 – Jun 28
LTIP 2019
394,735
–
–
–
394,735
Dec 21 – Dec29
LTIP 2020
506,250
–
–
–
506,250
Aug 23 – Jun30
Long-Term Incentive Plan
1,051,522
–
–
(117,243)
934,279
The weighted average share price at grant date for awards granted during the prior year was £1.23.
The fair value of the nil cost options is approximated to the share price at the time of grant less the
expected dividend to be paid during the vesting period calculated using the market consensus dividend
yield.
The value of the awards are expensed over the period from the date of grant to the vesting date. The
awards are satisfied by the issue of new shares.
Page 157
Movement in share-based payment reserve
Movement in share-based payment reserve
Total
£’000
Share-based payment expense
- Continuing operations
2,951
- Discontinued operations
58
Total charge to Income Statement
3,009
Transfer to accruals
(115)
2,894
Awards vesting
(1,659)
Net movement in share-based payment reserve for year ended 28 February 2022
1,235
The share-based payment reserve is presented within retained earnings.
29. ESOP reserve
An Employee Share Ownership Plan (“ESOP”) was established on 23 January 1995. The ESOP has been set up
to purchase shares in the Company. These shares, once purchased, are held in trust by the Trustee of the
ESOP, SG Kleinwort Hambros Trust Company (CI) Limited, for the benefit of the employees. Additionally, an
Employee Benefit Trust (“EBT”) previously run by ACM Shipping Group plc also holds shares in the Company.
The ESOP and EBT are accounted for within the Company accounts.
The ESOP reserve represents a deduction from shareholders’ funds and a reduction in distributable reserves.
The deduction equals the net purchase cost of the shares held in by the ESOP. Shares allocated by the ESOP
to satisfy share awards issued by the Group are released at cost on a FIFO basis.
Group and Company
£’000
At 29 February 2020
2,498
Shares acquired by the ESOP
860
ESOP shares allocated
(1,996)
At 28 February 2021
1,362
New shares fully paid up and issued to the ESOP
25
Shares acquired by the ESOP
7,043
ESOP shares allocated
(1,659)
At 28 February 2022
6,771
As at 28 February 2022, the ESOP held 2,669,603 (2021: 525,837) ordinary shares of 10 pence each. The
funding of the purchase has been provided by the Company in the form of a gift and the Trustees have
contracted with the Company to waive the ESOP’s right to receive dividends. The fees charged by the
Trustees for the operation of the ESOP are paid by the Company and charged to the Income Statement as
they fall due. Since the year-end a further 1,670,000 shares have been acquired by the Trustees making the
total in the ESOP currently 4,339,603.
As part of the acquisition of ACM Shipping Group plc in July 2014, the Company issued 125,621 shares into an
Employee Trust (“EBT”) previously run by ACM Shipping Group plc. As at 28 February 2022, the EBT held
62,290 (2021: 62,290) ordinary shares of 10 pence each.
The total cost to the Company of shares and cash held in the ESOP and EBT at 28 February 2022 was
£6,771,000 (2021: £1,362,000) including stamp duty associated with the purchase. The shares owned by the
ESOP and EBT had a market value at 28 February 2022 of £6,420,395 (2021: £1,305,642). The distribution of
these shares is determined by the Remuneration Committee.
596,398 shares (2021: 362,563) have been released to employees during the year. The shares acquired by the
ESOP had an aggregate cost of £7.0m, of which £6.3m was settled in cash whilst share awards with a market
value of £0.7m were forfeited by employees to the ESOP to cover the tax charge arising on the gross awards
which were subsequently settled by the Group.
Page 158
30. Other reserves
Restated
Note
Capital
redemption
reserve
£’000
Merger
reserve
£’000
Foreign
currency
translation
reserve
£’000
Hedging
reserve
£’000
Total
£’000
At 28 February 2020
396
21,346
1,385
(848)
22,279
Restatement
–
3,295
(205)
493
3,583
At 28 February 2020 (restated)
396
24,641
1,180
(355)
25,862
Cash flow hedges
! Transfer to net profit
–
–
–
292
292
! Fair value losses in the period
–
–
–
1,918
1,918
Exchange differences
–
–
442
–
442
Deferred tax on items taken to equity
–
–
–
(420)
(420)
At 28 February 2021
396
24,641
1,622
1,435
28,094
Cash flow hedges
! Transfer to net profit
–
–
–
(1,613)
(1,613)
! Fair value gain/losses in the period
–
–
–
(869)
(869)
Exchange differences
–
–
998
–
998
Deferred tax on items taken to equity
–
–
–
514
514
At 28 February 2022
396
24,641
2,620
(533)
27,124
The capital redemption reserve arose on previous share buy-backs by the Company.
The merger reserve arises on transactions where the Company issues shares pursuant to an arrangement to
acquire more than an 90% interest in another company and no share premium is recorded. The merger
reserve arose principally in 2001 in relation to the acquisitions of Braemar Shipbrokers Limited and Braemar
Tankers Limited. Further additions have arisen in respect of Naves and Atlantic Brokers included in the prior
period adjustment (£1.3m and £2.0m respectively). The amounts in merger reserve are unrealised profits
relating to the corresponding assets acquired by the Company on the issue of shares. These profits may
become realised on the disposal or write down of these assets.
The hedging reserve comprises the effective portion of the cumulative net change in fair value of cash flow
hedging instruments relating to hedged transactions that have not yet occurred of £710,000 liability (2021:
£1,773,000 asset). An increase in of £514,000 in the deferred tax asset (2021: £420,000 decrease) is
attributable to these transactions.
A correction to the merger reserve has been transferred from share premium has been recognised as a prior
period adjustment – see Note 34.
A correction to the hedging reserve and retained earnings in respect of consolidation errors has been
recognised as a prior period adjustment – see Note 34.
Page 159
31. Contingent liabilities
The Group has contingent liabilities in respect of guarantees entered into in the normal course of business
given as follows:
2022
£’000
2021
£’000
Bank guarantees given to:
HM Revenue and Customs
–
1,410
Third parties (non-cash collateralised)
837
787
Total
837
2,197
In the prior year the Group had issued a guarantee of £1.4m to HMRC in respect of VAT, duty and excise which
was collected on imports which was collected by Cory Brothers as part of its trading activity and subsequently
paid to HMRC. As a result of Brexit, HMRC no longer required the guarantee and it was cancelled by the Group
prior to the disposal of Cory Brothers.
In addition, the Company and certain of its subsidiaries have provided cross guarantees and fixed and floating
rate charges over their assets to secure their borrowing facilities and other financial instruments (see Note 22).
From time to time the Group may be engaged in litigation in the ordinary course of business. The Group carries
professional indemnity insurance. There are currently no liabilities expected to have a material adverse financial
impact on the Group’s consolidated results or net assets.
32. Related party transactions
During the period the Group entered into the following transactions with joint ventures and investments:
2022
2021
Group
Recharges
to/(from)
£’000
Dividends
£’000
Balance
due(to)/from
£’000
Recharges
to/(from)
£’000
Dividends
£’000
Balance
due(to)/from
£’000
London Tanker Broker Panel
324
–
–
310
–
–
AqualisBraemar LOC ASA
221
–
282
610
641
240
Risorto GmbH
(453)
–
(31)
(865)
–
(33)
Worldscale
84
–
–
60
–
–
London Tanker Broker Panel
Recharges to London Tanker Broker Panel consist of a monthly fee payable to the Group for the provision of
data.
AqualisBraemar
Recharges to AqualisBraemar consisted primarily of rent, IT services and HR services in accordance with a
transitional services agreement. Included in the net recharge to AqualisBraemar is a fee payable to the Group’s
former Chairman, Ronald Series of £3,750 (2021: £15,000).
In the prior year, the Group received £641,000 of dividends from AqualisBraemar which were credited to cost
of investment. See Note 19.
A loss of £262,000 was recognised in the prior year in respect of the Group subletting a portion of its
Singapore office space to AqualisBraemar, and an impairment to a right-of-use asset in respect of a London
office which will be vacated by AqualisBraemar. See Note 8.
The balance due from AqualisBraemar is unsecured, interest-free and immediately repayable.
Risorto GmbH
Risorto GmbH is owned and controlled by the management of Braemar Naves Corporate Finance GmbH. The
amount charged by Risorto GmbH in the year to the Group for management fees was €0.5m (2021: €0.7m).
The balance owing to Risorto GmbH as at 28 February 2022 was less than €0.1m (2021: less than €0.1m).
Page 160
Worldscale Association Limited
Management consider that Worldscale Association Limited is a related party because Nico Borkmann, a senior
employee in the Group, is one of its directors. Recharges to Worldscale consist of a monthly fee payable to the
Group for the provision of data.
Key management compensation is disclosed in Note 4.
Transactions with wholly owned subsidiaries
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this Note.
A list of the Group’s subsidiary undertakings is provided below. Unless otherwise indicated, all shareholdings
owned directly or indirectly by the Company represent 100% of the issued share capital of the subsidiary and
the share capital comprises ordinary shares. All entities primarily operate in their country of incorporation.
Subsidiaries
Direct holdings of the Company as at 28 February 2022:
Incorporated in England & Wales
One Strand, Trafalgar Square, London WC2N 5HR
Principal activity
Registration number
Braemar ACM Group Limited*
Holding company
05990315
Braemar Atlantic Securities Holdings Limited*
Holding company
10010995
Braemar Financial Holdings Limited*
Holding company
10917096
Braemar Shipbrokers Limited*
Shipbroking
01674710
Seascope Capital Services Limited
Dormant
03592796
GFL (UK) Limited
Dormant
02360525
Braemar Developments Limited*
Dormant
02186790
Braemar Tankers Limited
Dormant
02001027
Incorporated in the US
2800 North Loop West, Suite 900, Houston, Texas 77092, US
Principal activity
Registration number
Braemar Holdings (USA) Inc
Holding company
FEIN 81-1568938
Indirect holdings of the Company as at 28 February 2021:
Incorporated in England & Wales
One Strand, Trafalgar Square, London WC2N 5HR
Principal activity
Registration number
Braemar ACM Shipbroking Group Limited*
Holding company
01611096
Braemar ACM Shipbroking Limited
Shipbroking
01020997
Braemar ACM Shipbroking (Dry Cargo) Limited*
Shipbroking
07223509
A.C.M. Shipping USA Limited*
Shipbroking
08391132
Braemar ACM Valuations Limited*
Valuations
03439765
Braemar Atlantic Securities Limited
Futures broker
07899358
Braemar Naves Corporate Finance Limited*
Corporate finance
02710842
Cagnoil Limited^
Dormant
05696624
Orca Shipping Limited^
Dormant
07067104
ACM Shipping EBT Limited^
Dormant
05747447
ACM Shipping CIS Limited
Dormant
06934055
Braemar Maritime Limited
Dormant
03321899
Braemar Burness Maritime Limited
Dormant
03674230
Burness Marine (Gas) Limited
Dormant
01081837
Burness Marine (Tankers) Limited^
Dormant
02367038
Braemar Chartering Limited^
Dormant
01912501
Braemar Pension Trustees Limited
Dormant
05502209
Page 161
Incorporated in Germany
Domstrasse 17, 20095 Hamburg, Germany
Principal activity
Registration number
Braemar Naves Corporate Finance GmbH
Corporate finance
HRB 114161
Braemar Financial Holdings Germany GmbH
Holding company
HRB 146089
Incorporated in United Arab Emirates
One JLT 06-55 One JLT, Plot No. Dmcc-Ez1-1ab, Jumeirah Lakes
Towers, Dubai, UAE
Principal activity
Registration number
Braemar ACM Shipbroking DMCC
Shipbroking
DMCC-749556
Incorporated in the US
2800 North Loop West, Suite 900, Houston, Texas 77092, US
Principal activity
Registration number
Braemar ACM Shipbroking (USA) Inc
Shipbroking
46-2641490
Braemar Technical Services (USA) Inc
Energy loss adjuster
76-0036958
Incorporated in the US
24 Grassy Plain Street – Ste 4, Bethel, CT 06801-1700 US
Principal activity
Registration number
Braemar ACM Shipbroking LLP
Shipbroking
1099337
Incorporated in Singapore
80 Robinson Rd, #24-01/02, Singapore 068898
Principal activity
Registration number
Braemar ACM Shipbroking Pte Limited
Shipbroking
200602547M
Braemar Naves Pte Limited
Corporate finance
201834760K
Incorporated in Australia
Level 5, 432 St Kilda Road, Melbourne, Victoria 3004, Australia
Principal activity
Registration number
Braemar ACM Shipbroking Pty Limited
Shipbroking
ACN 000862 993
ABN 35 000 862 993
Incorporated in other overseas countries
Principal activity
Registration number
Piazza 2 Giugno No 14, 54033 Carrara, Italy
Braemar Seascope Italia SRL
Shipbroking
01268770458
Suite 2009, Building C Luneng International Center,
No.211, GuoYoa Road, Pudong District, Shanghai, 200126
Braemar Seascope (Shanghai) Limited
Shipbroking
913100005588064761
2nd Floor, Building No. 22, Pushp Vihar, Commercial Complex,
Madangir, New Delhi – 110 062
Braemar ACM Shipbroking India Private Limited (50% owned)
Shipbroking
U63090DL2003PTC120247
Office No. 1004, 10th Floor, Dalamal House, 206-Jamanalal Bajaj
Road, Nariman Point, Mumbai-400021, India
ACM Shipping India Limited
Shipbroking
U93090MH2006FLC164019
Subsidiaries marked with an asterisk (*) are exempt from the requirements of the Companies Act 2006 relating
to the audit of individual accounts by virtue of Section 479A of the Companies Act 2006 for the financial year
ended 28 February 2022. The Company has provided a guarantee of all outstanding liabilities to which these
subsidiaries were subject as at 28 February 2022 in accordance with Section 479C of the Companies Act
2006.
Applications to voluntarily strike off subsidiaries marked ^ were in progress subsequent to the year-end.
Page 162
33. Events after the reporting date
There were no adjusting or significant non-adjusting events between the reporting date and the date these
Financial Statements were authorised.
34. Prior period adjustments
The prior periods have been restated to reflect discontinued operations and corrected errors as described
below.
During the year ended 28 February 2021, the Group restructured part of the outstanding liabilities due to
management sellers of Naves. This exercise identified that the carrying amount of the future obligations in the
Group Balance Sheet exceeded the nominal value of consideration to be paid and prompted a review of the
accounting for the Naves consideration in full and of certain other corporate acquisition and disposal
transactions in recent years.
The review took a critical analysis of the historical accounting for the amounts paid and payable on the Naves
acquisition, including the issue of shares, and identified a number of errors. In order to address these errors,
accounting analysis was reviewed and new calculations were performed from the original acquisition in
September 2017 to date. The review also examined the classification of certain reserves on the Balance Sheet
and identified certain other misstatements that have been corrected in these accounts.
The adjustments identified are as follows:
a. Merger reserve on the Naves and Atlantic acquisitions
Share premium had been incorrectly recognised on both the Naves and Atlantic acquisitions in the year to
28 February 2018. The requirement to record share premium does not apply where shares are issued in
pursuance of an arrangement to acquire more than 90% of the equity in another company. Accordingly, no
share premium should have been recorded and the premium on the issue of shares should have been
recorded as a merger reserve. The amount restated from share premium to merger reserve in respect of
Naves is £1.3m, and £2.0m in respect of Atlantic Brokers.
b. Naves
The net measurement error to 29 February 2020 was principally due to a mathematical error resulting in the
overstatement of the amounts due to management sellers accrued in earlier periods. The correction in the
consolidated accounts at 29 February 2020 has been to reduce liabilities and increase retained earnings by
£0.9m.
In the year to 28 February 2021, a remeasurement of the outstanding loan note liabilities identified an
overstatement of £2.3m on the Balance Sheet at year end. Included within this error was an incorrect
charge to the translation reserve, to the amount of £1.0m which has now been reversed.
The balance of the overstatement related to charges to the Income Statement including net operating
expense in FY20/21 has been reduced by £0.4m. This was as a result of an incorrect allocation of liabilities
between those subject to future service conditions and those with no service conditions, these have now
been corrected.
c. RCF
The Group’s revolving credit facility (“RCF”) liability was previously incorrectly reported as a short-term
liability. The lender is obliged to continue the facility for a period greater than twelve months from the
respective reporting date, the facility end date is 31 August 2023. The liability has therefore been restated as
a non-current liability at 29 February 2020 and 28 February 2021.
d. Consolidation errors
The historical review of the financial reporting systems identified certain errors in the Group’s accounting
practices for the elimination of intercompany balances and movements on the foreign exchange translation
reserve.
These errors resulted in the overstatement of current liabilities at 29 February 2020 of £0.8m and 28
February 2021 of £0.6m.
An amount of £1m was identified in foreign exchange reserve which should have been recycled through
profit and loss relating to the dilution of the investment in AqualisBraemar in 2021 and has been restated in
profit and loss for that year. An amount of £0.5m at 1 March 2020 was identified as being a misallocation
between the Hedging reserve and the Translation reserve and has been corrected in the opening Balance
Page 163
Sheet. Further smaller errors have been identified as misallocations from retained earnings in both the
Balance Sheets at 1 March 2020 and 28 February 2021. The total impact of these errors resulted in an
increase in net assets of £0.8m at 1 March 2020 and £0.6m at 28 February 2021.
Discontinued operations
The Group disposed of its controlling interest in AqualisBraemar on 19 May 2021 and completed its disposal
of its Logistics Division, Cory Brothers, on 2 March 2022. AqualisBraemar and the Logistics Division have
therefore been presented as discontinued operations in the current and prior period Income Statement with
no impact on net income.
The impact of these adjustments on the Financial Statements is set out in the schedules below:
Correction of prior period errors
28 Feb
2021
Reported
a) Merger
reserve
b) Naves
c) RCF
d) Con-
solid-
ation
errors
28 Feb
2021
Cor-
rected
Discon-
tinued
oper-
ations
28 Feb
2021
Restated
Consolidated Income
Statement
Revenue
111,778
–
–
–
–
111,778
(28,083)
83,695
Cost of sales
(17,000)
–
–
–
–
(17,000)
17,000
0
Gross profit
94,778
–
–
–
–
94,778
(11,083)
83,695
Operating Expense
–
–
–
–
–
–
–
–
Other operating costs -
underlying
(85,868)
–
–
–
–
(85,868)
9,892
(75,976)
Other operating costs -
specific
(262)
–
–
–
(262)
(262)
Acquisition related
income/(expenditure)
1,873
–
397
–
–
2,270
(3,105)
(835)
(84,257)
–
397
–
–
(83,860)
6,787
(77,073)
Operating profit/(loss) -
underlying
8,910
8,910
(1,191)
7,719
Operating profit/(loss) -
specific items
1,611
397
–
2,008
(3,105)
(1,097)
Operating profit/(loss)
10,521
–
397
–
–
10,918
(4,296)
6,622
Share of associate profit for
the period - underlying
255
–
–
–
–
255
(255)
–
Share of associate profit for
the period - specific items
91
–
–
–
–
91
(91)
–
Finance income - underlying
170
–
–
–
–
170
(14)
156
Finance income - specific
items
–
–
–
–
–
–
–
–
Finance expense - underlying
(1,250)
–
–
–
–
(1,250)
41
(1,209)
Finance expense - specific
items
(432)
–
–
–
–
(432)
–
(432)
Profit/(loss) before taxation -
underlying
8,085
–
–
–
–
8,085
(1,419)
6,665
Profit/(loss) before taxation -
specific items
1,270
–
397
–
–
1,667
(3,196)
(1,529)
Profit/(loss) before taxation -
total
9,355
–
397
–
–
9,752
(4,615)
5,136
Taxation - underlying
(1,999)
–
–
–
–
(1,999)
227
(1,772)
Taxation - specific items
198
–
–
–
–
198
–
198
Taxation
(1,801)
–
–
–
–
(1,801)
227
(1,574)
Profit/(loss) for the year from
continuing operations -
underlying
6,086
–
–
–
6,086
(1,193)
4,894
Profit/(loss) for the year from
continuing operations -
specific items
1,468
–
397
–
–
1,865
(3,196)
(1,331)
Profit/(loss) for the year from
continuing operations
7,554
–
397
–
–
7,951
(4,389)
3,563
Page 164
Correction of prior period errors
28 Feb
2021
Reported
a) Merger
reserve
b) Naves
c) RCF
d) Con-
solid-
ation
errors
28 Feb
2021
Cor-
rected
Discon-
tinued
oper-
ations
28 Feb
2021
Restated
Profit/(loss) for the year from
discontinued operations -
underlying
(1,706)
–
–
–
–
(1,706)
1,163
(513)
Profit/(loss) for the year from
discontinued operations -
specific items
(754)
–
–
–
(959)
(1,713)
3,196
1,483
Profit/(loss) for the year from
discontinued operations
(2,460)
–
–
–
(959)
(3,419)
4,389
970
Profit/(loss) for the year -
underlying
4,380
–
–
–
–
4,380
–
4,380
Profit/(loss) for the year -
specific
714
–
397
–
(959)
152
–
152
Profit/(loss) for the year
5,094
–
397
–
(959)
4,532
–
4,532
Correction of prior period errors
28 Feb
2021
Reported
a) Merger
reserve
b) Naves
c) RCF
d) Con-
solid-
ation
errors
28 Feb
2021
Cor-
rected
Discon-
tinued
oper-
ations
28 Feb
2021
Restated
Consolidated Statement of
Comprehensive Income
–
–
–
–
Profit for the year
5,094
–
397
–
(959)
4,532
–
4,532
Other comprehensive
income/(expense)
Items that will not be
reclassified to profit or loss
–
–
–
–
–
–
–
–
Actuarial loss on employee
benefit schemes - net of tax
(424)
–
–
–
–
(424)
–
(424)
Items that are or may be
reclassified to profit or loss
–
–
–
–
–
–
–
–
Foreign exchange differences
on retranslation of foreign
operations
(715)
–
994
–
(308)
(29)
748
719
Recycling of foreign exchange
reserve
(488)
–
–
–
959
471
(471)
–
Cash flow hedges - net of tax
2,126
–
–
–
(336)
1,790
–
1,790
Other comprehensive
income from continuing
operations
499
–
994
–
314
1,808
277
2,085
Share of other comprehensive
income/(expense) of
associates
–
–
–
–
–
–
312
312
Foreign exchange differences
on revaluation of investment
–
–
–
–
–
–
(1,060)
(1,060)
Recycling of foreign exchange
reserve (DiscOps)
–
–
–
–
–
–
471
471
Other comprehensive
expense from discontinued
operations
–
–
–
–
–
–
(277)
(277)
Total comprehensive income
for the year attributable to
5,593
–
1,391
–
(644)
6,340
–
6,340
Page 165
Correction of prior period errors
28 Feb 2021
Reported
a) Merger
reserve
b) Naves
c) RCF
d) Con-
solidation
errors
28 Feb 2021
Restated
Non-current assets
106,638
106,638
Trade and other receivables
34,800
34,800
Financial assets
746
746
Derivative financial
instruments
1,573
1,573
Cash and cash equivalents
14,111
14,111
Assets held for sale
436
436
51,666
–
–
–
–
51,666
Total assets
158,304
–
–
–
–
158,304
Current liabilities
–
Derivative financial
instruments
(60)
–
60
–
–
–
–
Short-term borrowings
(23,000)
–
–
23,000
–
–
–
Convertible loan notes
(5,130)
–
669
–
–
(4,461)
Deferred consideration
payable
(608)
–
608
–
–
–
Other current liabilities
(47,987)
–
–
–
590
(47,397)
(76,785)
–
1,337
23,000
590
(51,858)
Non-current liabilities
Derivative financial
instruments
–
–
(56)
–
–
(56)
Convertible loan notes
(1,217)
–
(1,464)
–
–
(2,681)
Deferred consideration
payable
(3,358)
–
2,476
–
–
(882)
Other non-current liabilities
(13,317)
–
–
(23,000)
–
(36,317)
(17,892)
–
956
(23,000)
–
(39,936)
Total liabilities
(94,677)
–
2,293
–
590
(91,794)
Total assets less total
liabilities
63,627
–
2,293
–
590
66,510
Equity
–
Share capital
3,174
–
–
–
–
3,174
Share premium
55,805
(3,295)
–
–
–
52,510
Shares to be issued
(1,362)
–
–
–
–
(1,362)
Other reserves
22,790
3,295
994
–
1,015
28,094
Retained earnings
(16,780)
–
1,299
–
(425)
(15,906)
Total equity
63,627
–
2,293
–
590
66,510
Page 166
Correction of prior period errors
1 Mar 2020
Reported
a) Merger
reserve
b) NAVES
c) RCF
d) Con-
solidation
errors
1 Mar 2020
Restated
Non-current assets
114,699
114,699
Trade and other receivables
39,541
39,541
Financial assets
–
–
Derivative financial
instruments
–
–
Cash and cash equivalents
28,749
28,749
Assets held for sale
–
–
68,290
–
–
–
–
68,290
Total assets
182,989
182,989
Current liabilities
Derivative financial
instruments
(527)
90
–
(437)
Short-term borrowings
(48,758)
–
23,642
–
(25,116)
–
Convertible loan notes
(4,340)
–
(104)
–
–
(4,444)
Deferred consideration
payable
(600)
–
423
–
–
(177)
Other current liabilities
(49,566)
–
–
–
822
(48,744)
(103,791)
–
409
23,642
822
(78,918)
Non-current liabilities
Derivative financial
instruments
–
–
(4)
–
–
(4)
Convertible loan notes
(2,398)
–
(241)
–
–
(2,639)
Deferred consideration
payable
(3,031)
–
738
–
–
(2,293)
Other non-current liabilities
(16,283)
–
–
(23,642)
–
(39,925)
(21,712)
–
493
(23,642)
–
(44,861)
Total liabilities
(125,503)
–
902
–
822
(123,779)
Total assets less total
liabilities
57,486
–
902
–
822
59,210
–
Equity
–
Share capital
3,167
–
–
–
–
3,167
Share premium
55,805
(3,295)
–
–
–
52,510
Shares to be issued
(2,498)
–
–
–
–
(2,498)
Other reserves
22,279
3,295
–
–
288
25,862
Retained earnings
(21,267)
–
902
–
534
(19,831)
Total equity
57,486
–
902
–
822
59,210
Page 167
Company Balance Sheet
As at 28 February 2022
Note
As at
28 Feb
2022
£’000
As at
28 Feb 2021
Restated
£’000
As at
1 Mar 2020
Restated
£’000
Assets
Non-current assets
Intangible assets
5
627
539
632
Property, plant and equipment
6
3,891
5,670
7,559
Investments
8
108,389
106,228
104,436
Investment in associate
9
–
3,247
7,000
Deferred tax assets
10
179
584
1,273
Other long-term receivables
11
38,775
26,969
34,795
151,861
143,237
155,695
Current assets
Other receivables
12
10,800
10,155
10,772
Cash and cash equivalents
13
700
634
26
11,500
10,789
10,798
Total assets
163,361
154,026
166,493
Liabilities
Current liabilities
Other payables
14
45,298
40,488
16,588
Short-term borrowings
–
–
25,116
Deferred consideration payable
–
–
589
Convertible loan notes
16
1,416
4,461
4,444
46,714
44,949
46,737
Non-current liabilities
Other payables
14
570
–
–
Long-term borrowings
15
27,305
29,386
33,432
Convertible loan notes
16
3,271
3,640
4,448
Derivative liabilities
16
85
139
25
Provisions
17
541
541
541
31,772
33,706
38,446
Total liabilities
78,486
78,655
85,183
Total assets less total liabilities
84,875
75,371
81,310
Equity
Share capital
18
3,221
3,174
3,167
Share premium
18
53,030
52,510
52,510
ESOP reserve
19
(6,771)
(1,362)
(2,498)
Other reserves
20
23,762
23,762
25,037
Retained earnings/(deficit)
11,633
(2,713)
3,094
Total equity
84,875
75,371
81,310
In accordance with the exemptions allowed by Section 408 of the Companies Act 2006, the Company has not
presented its own profit and loss account. A profit of £15,220,000 (2021 restated: loss of £6,899,000) has been
dealt with in the Financial Statements of the Company. The prior year Financial Statements have been adjusted to
correct an error in respect of the accounting for the purchase of Naves and some misclassifications on the Balance
Sheet (see Note 23 for further detail).
The accompanying notes on pages 169 to 184 form an integral part of these Financial Statements.
The Financial Statements of Braemar Shipping Services Plc on pages 167 to 184 were approved by the board of
directors on 28 August 2022 and were signed on its behalf by:
James Gundy
Group Chief Executive Officer
Nicholas Stone
Chief Financial Officer
Registered number: 02286034
Page 168
Company Statement of Changes in Total Equity
For the year ended 28 February 2022
Note
Share
capital
£’000
Share
premium
£’000
ESOP
reserve
£’000
Other
reserves
£’000
Retained
earnings
£’000
Total
equity
£’000
At 1 March 2020
3,167
55,805
(2,498)
21,742
2,221
80,43
7
Prior period adjustment
23
–
(3,295)
–
3,295
873
873
Restated balances at 1 March 2020
3,167
52,510
(2,498)
25,037
3,094
81,310
Loss for the year (restated)
23
–
–
–
–
(6,899)
(6,899
)
Impairment of Naves preference
shares
20
–
–
–
(1,275)
1,275
–
Issue of shares
18
7
–
–
–
(7)
–
Own shares acquired
19
–
–
(860)
–
–
(860)
Issue of shares held by ESOP
19
–
–
1,996
–
(1,996)
–
Share-based payments
–
–
–
–
1,820
1,820
Transactions with owners
7
–
1,136
–
(183)
960
At 28 February 2021
3,174
52,510
(1,362)
23,762
(2,713)
75,371
Profit for the year
–
–
–
–
15,220
15,220
Dividends paid
–
–
–
–
(2,109)
(2,109)
Issue of shares
18
47
520
(25)
–
–
542
Own shares acquired
19
–
–
(7,043)
–
–
(7,043
)
Issue of shares held by ESOP
19
–
–
1,659
–
(1,659)
–
Share-based payments
–
–
–
–
2,894
2,894
Transactions with owners
47
520
(5,409)
–
(874)
(5,716)
At 28 February 2022
3,221
53,030
(6,771)
23,762
11,633
84,87
5
The accompanying notes on pages 169 to 184 form an integral part of these Financial Statements.
Page 169
Notes to the Company Financial Statements
General information
The separate Financial Statements of Braemar Shipping Services Plc for the year ended 28 February 2022 were
authorised for issue in accordance with a resolution of the directors on 28 August 2022. Braemar Shipping Services
Plc is a public limited company incorporated in England and Wales, and its principal activity is a holding company
for the shipbroking business.
The term “Company” refers to Braemar Shipping Services Plc.
1. Significant accounting policies
a. Basis of preparation
The Company Financial Statements have been prepared in accordance with United Kingdom Generally
Accepted Practice, including Financial Reporting Standard 101 Reduced Disclosure Framework (United
Kingdom Generally Accepted Accounting Practice). No Income Statement is presented for Braemar
Shipping Services Plc as provided by Section 408 of the Companies Act 2006.
The Financial Statements have been prepared under the historic cost convention except for items
measured at fair value as set out in the accounting policies below and have been prepared on a going
concern basis.
The Company Financial Statements are presented in Sterling and all values are rounded to the nearest
thousand Sterling (£’000) except where otherwise indicated.
FRS 101
The Financial Statements of the Company have been prepared in accordance with FRS 101 Reduced
Disclosure Framework. The Company has applied the exemptions available under FRS 101 in respect of the
following disclosures:
• a Cash Flow Statement and related notes; and
• disclosures in respect of transactions with wholly owned subsidiaries.
As the Consolidated Financial Statements of the Group on pages 92 to 166 include the equivalent
disclosures, the Company has also taken the exemptions under FRS 101 available in respect of the following
disclosures:
• IFRS 2 “Share-based Payment” in respect of Group settled share-based payments;
• certain disclosures required by IFRS 13 “Fair Value Measurement” and the disclosures required by IFRS 7
“Financial Instrument Disclosures”; and
• the requirements in IAS 24 “Related Party Disclosures” to disclose related party transactions entered into
between two or more members of a group, provided that any subsidiary which is a party to the
transaction is wholly owned by such a member, and the exemption to disclose key management
compensation.
b. Going concern
The Company Financial Statements have been prepared on a going concern basis. In reaching this
conclusion regarding the going concern assumption, the directors considered cash flow forecasts for a
period of greater than twelve months from the date of signing of these Financial Statements. The going
concern assumption for the Company is considered together with the going concern assumption for the
Group, see Note 1 in the Consolidated Financial Statements for more detail.
c. Use of estimates and critical judgements
The preparation of the Company’s Financial Statements requires management to make judgements,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities,
and the disclosure of contingent liabilities, at the reporting date. Estimates and judgements are continually
evaluated based on historical experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. In the future, actual experience may differ from these
estimates and assumptions.
The following are key areas where the Company makes significant estimates and judgements:
Page 170
Estimates
Estimates regarding (i) the fair value of Cory Brothers deferred receivable and (ii) share option vesting are
described in the notes to the Consolidated Financial Statements on pages 100-101.
Preference share assets
The Company holds investments in preference shares issued by a subsidiary at fair value through profit and
loss. The preference shares are not traded in any market and there are no similar assets in quoted markets.
Therefore, the Company performs valuation of the present value of future cash flows using unobservable
(“Level 3”) inputs. The Company develops unobservable inputs using the best information available in the
circumstances, which include the Group’s forecasts of cash flows for the underlying Finance businesses of
the holding company issuing the preference shares using a risk-adjusted discount rate. See also accounting
policies Note 1 (d).
The key estimates are therefore the selection of suitable discount rates and the estimation of future growth
rates which vary between cash-generating units depending on the specific risks and the anticipated
economic and market conditions related to each cash-generating unit. This discount rates and growth rates
are consistent with those applied to the same business in the Group’s assessment of the impairment of
goodwill (see Note 12 in the Consolidated Financial Statements for a description of the approach used by
management to determine these key values).
Judgements
Investments in subsidiaries
The Company recognises provisions for impairment of investments in subsidiaries based on management’s
judgement of whether or not there is an indication of impairment at the Balance Sheet date. A judgement is
made based on the net assets, cash balance and future trading performance of the subsidiary.
Provision for fair value loss on preference share assets
The provision for fair value loss on preference share assets represents management’s best estimate at the
Balance Sheet date. The Company holds investments in preference shares issued by a subsidiary at fair
value through profit and loss and recognised as amounts due from subsidiaries receivable after more than
one year. The preference shares are not traded in any market and there are no similar assets in quoted
markets. Therefore the Company performs valuation of the present value of future cash flows using
unobservable (“Level 3”) inputs. The Company develops unobservable inputs using the best information
available in the circumstances, which include the Group’s forecasts of cash flows for the underlying Finance
businesses of the holding company issuing the preference shares using a risk-adjusted discount rate.
The key estimates are therefore the selection of suitable discount rates and the estimation of future growth
rates which vary between cash-generating units depending on the specific risks and the anticipated
economic and market conditions related to each cash-generating unit. The discount rates and growth rates
are consistent with those applied to the same business in the Group’s assessment of the impairment of
goodwill. See Note 11 for further details.
Provision for impairment of amounts due from subsidiaries
The provision for impairment of amounts due from subsidiaries represents management’s best estimate at
the Balance Sheet date. A number of judgements are made in the calculation of the provision, primarily
based on the net assets, cash balance and future trading performance of the subsidiary.
The application of IFRS 9 “Financial Instruments” results in an additional provision for expected credit losses.
When measuring expected credit losses, the Company uses reasonable and supportable forward-looking
information, which is based on assumptions for the future movement of different economic drivers and how
these drivers will affect each other. Probability of default constitutes a key input in measuring expected
credit losses. Probability of default is an estimate of the likelihood of default over a given time horizon, the
calculation of which includes historical data, assumptions and expectations of future market conditions.
The Company has considered the impact of both COVID and the conflict in the Ukraine on the Financial
Statements at 28 February 2022. However, at 28 February 2022 there was no evidence to suggest that the
Company’s amounts due from subsidiaries may be at a higher risk of becoming credit impaired as a result
of the pandemic or the conflict in the Ukraine. No impairment allowances were made in respect of either
COVID or the conflict in the Ukraine.
Judgements regarding the measurement of right-of-use assets and liabilities are described in the notes to
the Consolidated Financial Statements on pages 98 to 166.
d. Accounting policies
The Company’s accounting policies are the same as the accounting policies of the consolidated Group
described on pages 99 to 109 except for the policy described below.
Page 171
Investments
Investments in subsidiaries, associates and joint ventures are held at cost less accumulated impairment.
Where there is objective evidence that the investment in subsidiaries, associates and joint ventures have
been impaired, the carrying amount of the investment is tested for impairment in the same way as other
non-financial assets.
Investments where the Company has no significant influence are held at fair value, with movements in fair
value recorded in profit and loss.
The Company holds investments in preference shares issued by a subsidiary. The preference shares do not
provide a contractual right to unpaid amounts in the event of a bankruptcy of the issuer and therefore, in the
judgement of the directors, the returns do not meet the conditions of being solely payments of principal and
interest and are required to be held at fair value through profit and loss. The valuation of these shares is
considered in the use of estimate and critical judgements above. The preference shares are recognised as
amounts due from subsidiaries receivable after more than one year.
Merger reserve
The merger reserve arises on transactions where the Company issues shares pursuant to an arrangement
to acquire more than an 90% interest in another company and no share premium is recorded. The amounts
in merger reserve are unrealised profits relating to the corresponding assets acquired by the Company on
the issue of shares. These profits may become realised on the disposal or write down of these assets.
2. Profit for the year
As permitted by Section 408 of the Companies Act 2006 the Company has elected not to present its own
statement of comprehensive income (including the profit and loss account) for the year.
The auditor’s remuneration for audit services to the Company is disclosed in Note 3 to the Consolidated
Financial Statements.
All fees paid to the auditor were charged to operating profit in both years.
3. Staff costs
Staff costs for the Company during the year (including directors) are provided in the table below.
2022
£’000
2021
£’000
Salaries, wages and short-term employee benefits
1,776
1,918
Other pension costs
51
47
Social security costs
214
194
Share-based payments
56
10
2,097
2,169
The numbers above include remuneration and pension entitlements for each director. Details are included in
the Directors’ Remuneration Report on pages 70 to 78.
The average number of full-time employees of the Company was 16 (2021: 13).
4. Dividends
Amounts recognised as distributions to equity holders in the year are detailed in Note 10 to the Consolidated
Financial Statements.
The Company has become aware of an administrative oversight during the year ended 28 February 2022,
whereby the Company did not properly prepare and file unaudited interim accounts at Companies House, as
required by the Companies Act 2006, prior to declaring and paying distributions to shareholders in respect of
the Company’s 1 September 2021 final dividend and 16 December 2021 interim dividend. As a result of this
administrative oversight, the Company did not comply with certain provisions of the Act and, whilst there were
sufficient distributable reserves to make the relevant distributions, they were therefore paid in technical
infringement of the Act. Neither the amount nor payment of the relevant distributions, nor the Company’s prior
Page 172
audited accounts, are affected by this, nor is there any impact on the Company’s financial position either at the
time of payment(s) or now.
The Company has proposed a resolution at its Annual General Meeting on 6 October 2022 which will, if
passed, give the board authority to enter into deeds of release to discharge these parties from any obligation
to repay any amount to the Company in connection with the Relevant Distributions. The Company has not
recorded the potential right to make claims against shareholders as an asset or a contingent asset in its
Financial Statements. The directors of the Company have concluded that any inflow of economic benefits as a
result of such claims is less than probable.
5. Intangible assets
Computer
software
£’000
Total
£’000
Cost
At 28 February 2021
782
782
Additions
272
272
At 28 February 2022
1,054
1,054
Amortisation and impairment
At 28 February 2021
243
243
Charge for the year
184
184
At 28 February 2022
427
427
Net book value at 28 February 2022
627
627
Net book value at 28 February 2021
539
539
At 28 February 2022, the Company had no contractual commitments for the acquisition of computer software
(2021: £nil).
Page 173
6. Property, plant and equipment
Leaseholds
£’000
Computers
£’000
Fixtures and
equipment
£’000
Total
£’000
Cost
At 29 February 2020 and 28 February 2021
9,142
6
222
9,370
Additions at cost
–
214
–
214
Disposals
(154)
(205)
(359)
At 28 February 2022
8,988
220
17
9,225
Accumulated depreciation
At 29 February 2020
1,711
2
98
1,811
Impairment
210
–
–
210
Charge for the year
1,583
1
95
1,679
At 28 February 2021
3,504
3
193
3,700
Charge for the year
1,547
27
27
1,601
Impairment
392
–
–
392
Disposals
(154)
–
(205)
(359)
At 28 February 2022
5,289
30
15
5,334
Net book value at 28 February 2022
3,699
190
2
3,891
Net book value at 28 February 2021
5,638
3
29
5,670
The prior year movement has been represented to show the impairment charge within accumulated
depreciation, there was no impact on net book value.
The leaseholds category includes land and buildings held under finance leases and leasehold improvements.
At 28 February 2022, the Company had no contractual commitments for the acquisition of property, plant and
equipment (2021: £nil).
The impairment charge arose following the assignment of a lease. On 28 March 2022, the Group assigned the
lease for its Bevis Marks premises to Beat Capital. The impairment charge of £392,000 is equal to the
subsequent loss on assignment of this lease, being the lease assignment premium paid plus the net book
value of the ROU asset disposed of less the outstanding lease liability on that lease.
7. Leases
Right-of-use assets
Leaseholds
£’000
Fixtures and
equipment
£’000
Total
£’000
At 29 February 2020
6,963
114
7,077
Amortisation
(1,483)
(91)
(1,574)
Impairment
(210)
–
(210)
Exchange differences
1
–
1
At 28 February 2021
5,271
23
5,294
Amortisation
(1,436)
(23)
(1,459)
Impairment
(392)
–
(392)
At 28 February 2022
3,443
–
3,443
Page 174
Lease liabilities
Leaseholds
£’000
Fixtures and
equipment
£’000
Total
£’000
At 29 February 2020
11,187
250
11,437
Interest expense
297
18
315
Lease payments
(2,556)
(157)
(2,713)
Exchange differences
(2)
–
(2)
At 28 February 2021
8,926
111
9,037
Interest expense
226
15
241
Lease payments
(2,517)
(126)
(2,643)
Exchange differences
(4)
–
(4)
At 28 February 2022
6,631
–
6,631
Lease receivables
Leaseholds
£’000
Fixtures and
equipment
£’000
Total
£’000
At 28 February 2020
2,674
–
2,674
Interest received
71
–
71
Lease payments
(642)
–
(642)
Exchange differences
2
–
2
At 28 February 2021
2,105
–
2,105
Interest received
55
–
55
Lease payments
(642)
–
(642)
Exchange differences
(6)
–
(6)
At 28 February 2022
1,512
–
1,512
There was no short-term lease expense, no short-term lease income and no low value lease expense in the
year (2021: £nil).
Lease liabilities
Up to 3
months
£’000
Between 3
and 12
months
£’000
Between 1
and 2
years
£’000
Between 2
and 5
years
£’000
Over 5
years
£’000
Total
£’000
Unearned
interest
£’000
Net
payable
£’000
At 28 February 2022
654
1,963
2,618
1,669
–
6,904
(273)
6,631
At 28 February 2021
654
1,963
2,617
4,317
–
9,551
(514)
9,037
Lease receivables
Up to 3
months
£’000
Between
3 and 12
months
£’000
Between
1 and 2
years
£’000
Between
2 and 5
years
£’000
Over 5
years
£’000
Total
£’000
Unearned
interest
£’000
Net
receivable
£’000
At 28 February 2022
160
481
642
285
–
1,568
(56)
1,512
At 28 February 2021
160
481
642
932
–
2,215
(110)
2,105
Page 175
8. Investments
Subsidiaries
£’000
Unlisted
investments
£’000
Total
£’000
Cost
At 1 March 2020
113,969
1,500
115,469
Prior period adjustment
(450)
–
(450)
Adjusted opening cost at 1 March 2020
113,519
1,500
115,019
Share-based payments
1,792
–
1,792
At 28 February 2021
115,311
1,500
116,811
Capital contribution to Cory Brothers
3,664
–
3,664
Disposal
(4,462)
–
(4,462)
Share-based payments
2,959
–
2,959
At 28 February 2022
117,472
1,500
118,972
Impairment
At 29 February 2020 and 28 February 2021 and 28 February 2022
10,583
–
10,583
Net book value at 28 February 2022
106,889
1,500
108,389
Net book value at 28 February 2021
104,728
1,500
106,228
The Company recognises investments in subsidiaries at cost less impairment.
The opening balance has been adjusted to correct for an overstatement of £0.5m from an error in accounting
for the acquisition of Naves. This prior period adjustment is explained in detail in Note 23 (b).
The Company invested £3.0m (2021: £1.8m) in the subsidiaries of the Group in respect of share-based
payment charges incurred in the year.
Management have reviewed the Company’s investments in subsidiary undertakings for impairment. The
assets’ recoverable amounts assessed by reference to value in use have been compared to the carrying
values. The value in use has been calculated based upon a discounted cash flow methodology using the most
recent forecasts prepared by management consistent with the goodwill impairment calculations described in
Note 12 to the Consolidated Financial Statements. The value in use models have also been subject to sensitivity
analysis, with assumptions such as zero revenue growth, an increase in the discount rate and a reduction in
underlying operating profit tested, with investments retaining sufficient headroom.
The results of the sensitivity analysis are summarised in the below table and none of the sensitivities give rise to
an impairment.
Change in revenue growth
Change in discount rate
Change in underlying
operating profit
+1%
-1%
+2%
-2%
+20%
-20%
£’000
£’000
£’000
£’000
£’000
£’000
Shipbroking Division
12,975
(12,640)
(52,321)
34,642
29,959
(29,959)
Atlantic Brokers
886
(863)
(2,946)
4,595
2,976
(2,976)
The Company’s principal investment in Naves is held as preference shares, see Note 11 for additional sensitivity
analysis.
Page 176
Disposal of investment in Cory Brothers Shipping Agency limited
On 28 February 2022 the Company sold its investment in Cory Brothers Shipping Agency Limited. A
reconciliation of the derecognition of the investment to the gain on disposal is as follows:
£’000
Disposal proceeds
9,897
Carrying value of investment
(4,449)
Disposal-related costs
(485)
Gain on disposal of Cory Brothers
4,963
The disposal proceeds attributable to the parent company are an 88% share of the Group’s £11.3m disposal
proceeds for the sale of the entire Cory Brothers Group. The disposal proceeds had not been received at year-
end, other receivables includes a £6.5m completion payment which was not received until 2 March 2022 (see
Note 12), long-term receivables includes £4.8m deferred and contingent consideration (see Note 11). The 12%
share of disposal proceeds due to Braemar Holdings (USA) Inc. on a pass-through basis is included in amounts
due to subsidiaries (see Note 14).
Investments with a carrying value of £13,000 relating to Wavespec were also disposed of during the period.
A list of subsidiary undertakings is included in Note 32 of the Consolidated Financial Statements.
The Financial Statements of the principal subsidiary undertakings are prepared to 28 February 2022.
Unlisted investments
The Group’s unlisted investments include 1,000 (2021: 1,000) ordinary £1 shares in London Tanker Broker Panel.
The investment is carried at fair value, being the value of the most recent comparable transaction, which
occurred during the year ended 28 February 2019. There have been no transactions or events in the current or
prior year which would result in an adjustment to the fair value at 28 February 2022.
9. Investment in associate
The Company recognises its investment in AqualisBraemar at cost less impairment. AqualisBraemar is listed on
the Oslo Børs, its principal place of business is Oslo and its registered address is Olav Vs gate 6, 0161, Oslo,
Norway.
£’000
Cost at 29 February 2020
7,000
Disposal
(3,753)
At 28 February 2021
3,247
Disposal
(3,247)
Cost at 28 February 2022
–
On 19 May 2021 the Company fully disposed of its minority shareholding in AqualisBraemar for cash proceeds
of £7,232,000. A reconciliation of the derecognition of the investment to the gain on disposal is as follows:
£’000
Disposal proceeds
7,232
Carrying value of investment
(3,247)
Gain on disposal of AqualisBraemar
3,985
At 28 February 2022 the Group's shareholding was nil which equates to 0% of AqualisBraemar's share capital
and 0% of voting rights (2021: market value of £6.3m, being 10.42% of share capital and 10.42% of voting
rights).
Page 177
10. Deferred tax
The movement in the deferred tax asset
Total
£’000
Balance at 1 March 2021
584
Prior year over provision
191
Movement in opening balance due to change in tax rate
247
Charge for the year
(843)
Balance at 28 February 2022
179
A deferred tax asset of £0.2m (2021: £0.6m) has been recognised as the directors believe that it is probable
that there will be sufficient taxable profits in the future to recover the asset in full.
11. Other long-term receivables
Note
2022
£’000
2021
Restated
£’000
Amounts due from subsidiary undertakings
Preference shares issued by subsidiaries
28,012
28,267
Provision for fair value loss on preference shares
(2,001)
(7,025)
Other amounts due from subsidiary undertakings
7,399
7,413
Provision for impairment of other amounts due from subsidiary undertakings
(257)
(3,157)
Net amounts due from subsidiary undertakings
33,153
25,498
Deferred consideration
3,482
–
Contingent consideration
1,276
–
Finance lease
Finance lease receivables
7
879
1,471
ECL provision for impairment of finance lease receivables
(15)
–
Net finance lease receivables
864
1,471
Other long-term receivables
38,775
26,969
The Company holds investments in preference shares issued by a subsidiary at fair value through profit and
loss and recognised as amounts due from subsidiaries receivable after more than one year. The preference
shares are not traded in any market and there are no similar assets in quoted markets. Therefore the Company
performs valuation of the present value of future cash flows using unobservable (“Level 3”) inputs. The
Company develops unobservable inputs using the best information available in the circumstances, which
include the Group’s forecasts of cash flows for the underlying Finance businesses of the holding company
issuing the preference shares using a risk-adjusted discount rate.
The key estimates are therefore the selection of suitable discount rates and the estimation of future growth
rates which vary between cash-generating units depending on the specific risks and the anticipated economic
and market conditions related to each cash-generating unit. The discount rates and growth rates are
consistent with those applied to the same business in the Group’s assessment of the impairment of goodwill.
See Note 12 in the Consolidated Financial Statements for a description of the approach used by management
to determine these key values.
Page 178
The sensitivity of the valuation of the preference shares to changes in estimates of growth, discount rate and
underlying operating profit is as follows:
Sensitivity analysis
Change in revenue growth
Change in discount rate
Change in underlying
operating profit
+1% p.a.
-1% p.a.
+1% p.a.
-1% p.a.
+5%
-5%
£’000
£’000
£’000
£’000
£’000
£’000
Impact on valuation of preference shares
2,079
(1,992)
(1,945)
2,344
1,496
(1,496)
Note 23 b provides detail of the restatement of the preference shares.
The deferred consideration and the contingent consideration combined represent the sum of the three
earnout payments receivable in respect of the disposal of Cory Brothers. The deferred consideration
comprises the three minimum earnout payments accounted for on an amortised cost basis. The contingent
consideration represents the variable element of the earnout payments which are contingent on the future
gross profit of the newly formed VertomCory agency business, which are recognised at fair value through
profit or loss. Note 14 in the Consolidated Financial Statements provides further detail.
See Note 7 for a maturity analysis which reconciles the long-term finance lease receivables to the
undiscounted lease receipts and unearned finance income.
The prior year amounts due from subsidiary undertakings have been restated with £30.2m being reclassified
from current to non-current. See Note 23 for further detail.
12. Other receivables
2022
£’000
2021
Restated
£’000
Amounts due from subsidiary undertakings
2,294
7,423
Other receivables
7,625
2,012
Finance lease receivables
633
634
Prepayments
248
86
Total
10,800
10,155
Other receivable includes the completion payment of £6.5m for the disposal of Cory Brothers which completed
on 28 February 2022, although the cash was not received until 2 March 2022.
The prior year amounts due from subsidiary undertakings and other receivables have been restated to correct
a misstatement of an intercompany receivable which has been reclassified as non-current and adjusted for the
miscalculation of interest, and also for some Balance Sheet misclassifications between amounts due to or from
subsidiary undertakings and other receivables (see Note 23 for further detail).
The total receivables balance (including long-term receivables) is denominated in the following currencies.
2022
£’000
2021
Restated
£’000
Sterling
21,563
8,857
Euro
28,012
28,267
Total
49,575
37,124
The Company has no trade receivables (2021: £nil). Amounts due from subsidiary undertakings are interest-
free, unsecured and repayable on demand. The Company provides for impairment using a lifetime expected
credit loss provision for amounts due from subsidiary undertakings. At 28 February 2022 amounts due from
subsidiary undertakings of £3.0m (2021: £3.0m) were treated as credit impaired. In the prior year, £0.3m
related to amounts due from the Engineering Division which was disposed of on 31 March 2021.
Page 179
13. Cash and cash equivalents
2022
£’000
2021
£’000
Cash at bank and cash on hand
700
634
Cash and cash equivalents largely comprise bank balances denominated in Sterling, US Dollars, Euros and
other currencies for the purpose of settling current liabilities.
The directors consider that the carrying amounts of these assets approximate to their fair value.
14. Other payables
Current liabilities
2022
£’000
2021
Restated
£’000
Lease liabilities
2,580
2,651
Amounts owed to subsidiary undertakings payable within 1 year
40,780
35,380
Other payables
779
1,672
Accruals
1,159
785
Total
45,298
40,488
Amounts owed to subsidiary undertakings payable within one year are interest-free and unsecured and
repayable on demand.
The prior year amounts due to subsidiary undertakings, other payables and accrual have been restated to
correct errors relating to balance sheet misclassification (see Note 23 for further detail).
Non-current liabilities
2022
£’000
2021
Restated
£’000
Amounts owed to subsidiary undertakings payable after more
than 1 year
570
–
Amounts owed to subsidiary undertakings payable after more than 1 year are a 12% share of the deferred and
contingent receivables due to Braemar Holdings (US) Inc. See Note 11 for further detail.
15. Borrowings
Long-term borrowings
2022
£’000
2021
£’000
Lease liabilities
4,051
6,386
Secured revolving credit facilities
23,254
23,000
Total
27,305
29,386
The revolving credit facility expires in September 2023. Amounts can be rolled on a monthly basis until the
facility expires subject to certain conditions and on that basis the borrowings have been classified as long
term. The revolving credit facility bears interest based on SONIA.
Page 180
16. Convertible loan notes and derivative financial instruments
The Company has issued convertible loan notes as part of the acquisition of Naves Corporate Finance GmbH
(further details of the acquisition are provided in Note 14 to the Consolidated Financial Statements). Convertible
loan notes have been valued at amortised cost with a derivative liability recognised in respect of the conversion
feature.
2022
£’000
2021
Restated
£’000
Issued convertible loan notes maturing within one year
1,416
4,461
Issued convertible loan notes maturing after more than one year
3,271
3,640
Derivative liabilities due after more than one year
85
139
Total
4,772
8,240
The prior year issued convertible loan notes were overstated by £0.9m and were misclassified within amounts
owed to subsidiary undertakings. The balances have been restated. See Note 23.
17. Provisions
The Company holds a dilapidations provision of £0.5m (2021: £0.5m) which is classified as a non-current
liability. There were no additions to the provisions balance nor were there any utilisation of the balance in the
year.
18. Share capital
The Company has one class of ordinary shares which carry no right to fixed income. Note 28 to the
Consolidated Financial Statements provides detail on authorised share capital and movements in issued share
capital.
19. ESOP reserve
An Employee Share Ownership Plan (“ESOP”) was established on 23 January 1995. The ESOP has been set up
to purchase shares in the Company. These shares, once purchased, are held in trust by the Trustee of the
ESOP, SG Kleinwort Hambros Trust Company (CI) Limited, for the benefit of the employees. Additionally, an
Employee Benefit Trust (“EBT”) previously run by ACM Shipping Group plc also holds shares in the Company.
The ESOP and EBT are accounted for within the Company accounts.
The net cost of the shares acquired for the shares held by the ESOP and the EBT are a deduction from
shareholders’ funds and represent a reduction in distributable reserves. Note 29 to the Consolidated Financial
Statements provides detail on the ESOP and the EBT and movements in shares to be issued.
20. Other reserves
Capital
redemption
reserve
£’000
Merger
reserve
£’000
Total
£’000
At 28 February 2021 (reported)
396
21,346
21,742
Prior period adjustment to correct recording of share premium
–
3,295
3,295
Prior period adjustment to carrying amount of preference shares
–
(1,275)
(1,275)
At 28 February 2021 (restated) and 28 February 2022
396
23,366
23,762
The capital redemption reserve arose on previous share buy-backs by the Company.
The merger reserve arises on transactions where the Company issues shares pursuant to an arrangement to
acquire more than an 90% interest in another company and no share premium is recorded. The merger
Page 181
reserve arose principally in 2001 in relation to the acquisitions of Braemar Shipbrokers Limited and Braemar
Tankers Limited. Further additions have arisen in respect of Naves and Atlantic Brokers included in the prior
period adjustment (£1.3m and £2.0m respectively). The amounts in merger reserve are unrealised profits
relating to the corresponding assets acquired by the Company on the issue of shares. These profits may
become realised on the disposal or write down of these assets.
A loss has been recognised in 2021 on the fair value of intragroup preference share assets acquired by the
Company on the acquisition of Naves. This resulted in a realisation of the merger reserve of £1.3m which has
been transferred to retained earnings accordingly. The impairment charge and reserves transfer have been
recognised in the year ended 28 February 2021 and is a prior period adjustment – see Note 23.
21. Contingent liabilities
The Company has contingent liabilities in respect of guarantees entered into on behalf of its subsidiaries in the
normal course of business given as follows:
2022
£’000
2021
£’000
Bank guarantees given to:
HM Revenue and Customs
–
1,410
Third parties (non-cash collateralised)
710
787
Total
710
2,197
The Company and certain of its subsidiaries have provided cross guarantees and fixed and floating rate
charges over their assets to secure their borrowing facilities and other financial instruments.
In the prior year the Group had issued a guarantee of £1.4m to HMRC in respect of VAT, duty and excise which
was collected on imports which was collected by Cory Brothers as part of its trading activity and subsequently
paid to HMRC. As a result of Brexit, HMRC no longer required the guarantee and it was cancelled by the Group
prior to the disposal of Cory Brothers.
From time to time the Company may be engaged in litigation in the ordinary course of business. The Company
carries professional indemnity insurance. There are currently no liabilities expected to have a material adverse
financial impact on the Company’s results or net assets.
The Company has issued guarantees to certain subsidiaries in order to exempt them from audit for the year
ended 28 February 2022. See Note 32 of the Consolidated Financial Statements.
22. Related party transactions
The Company has applied the disclosure exemption of FRS 101 in respect of transactions with wholly owned
subsidiaries.
During the period the Group entered into the following transactions with joint ventures and investments:
FY21/22
FY20/21
Recharges
to/(from)
£’000
Dividends
£’000
Balance
due(to)/
from
£’000
Recharges
to/(from)
£’000
Dividends
£’000
Balance
due(to)/
from
£’000
AqualisBraemar
221
–
282
591
641
179
Recharges to AqualisBraemar consisted primarily of rent, IT services and HR services in accordance with a
transitional services agreement. Included in the net recharge to AqualisBraemar is a fee payable to the Group’s
former Chairman, Ronald Series of £3,750 (2021: £15,000).
A list of the Company’s subsidiary undertakings is provided in Note 32 in the Consolidated Financial
Statements.
Page 182
23. Prior year adjustments
Acquisition related errors
During the year to February 2022, the Group restructured part of the outstanding liabilities due to management
sellers of Naves. In association with this, management took a critical analysis of the historical accounting for the
amounts paid and payable on the Naves acquisition and identified errors in the original and subsequent
accounting.
Computational errors identified affected both the classification and measurement of items in the accounts of
the parent company.
a. Merger reserve
See commentary in respect of the Group restatement of share premium and merger reserve.
Note that the merger reserve is further impacted by the loss on Naves preference shares in another
adjustment, as described below.
b. Naves liabilities
The error to 29 February 2020 was principally due to the over accrual of finance expense earlier periods.
The correction at 29 February 2020 was to reduce liabilities and increase retained earnings by £0.4m.
Finance expense was reduced by £1.0m in the year to 28 February 2021, resulting in a net £0.9 decrease in
liabilities and increase in retained earnings at 28 February 2021. There were also errors in the classification
of amounts payable within one year or after one year which have been corrected with no impact on net
assets.
c. Naves preference shares
The parent company’s principal investment in Naves is held in the form of preference shares issued by a
wholly owned intermediate holding company. The accounting for the Naves preference shares was
reviewed in parallel with the analysis of the accounting for the Naves liabilities, described above. £0.5m of
the investment in preference shares was incorrectly presented as investment in subsidiaries and has been
transferred into the preference share asset.
The preference shares were previously held at amortised cost, however, as the instrument does not provide
the Company with a fixed legal claim in the event of bankruptcy they do not meet the solely payments of
principal and interest requirements to be held at amortised cost and should be held at fair value through
profit and loss. The fair value of the preference shares at 29 February 2020 was £27.1m, resulting in an
increase in retained profits of £0.5m at that date. At 28 February 2021, the fair value was £21.2m, resulting in
a loss of £7.0m compared to the balance previously reported at that date.
Finance income on the preference share asset was also overstated by £1.1m in 2021, resulting in a
cumulative overstatement of the preference share asset of £7.6m at 28 February 2021.
The loss on fair value remeasurement of the preference share asset in 2021 realised £1.3m of profit in the
merger reserve which arose on the Naves acquisition, and accordingly this amount has been transferred
from the merger reserve to retained earnings.
Other prior period adjustments
d. RCF
See commentary in respect of the Group restatement of the RCF.
e. Reclassification
A further classification error has been identified in the presentation of amounts due and from Group
companies in relation to amounts that should have been offset and the classification as either current or
non-current.
There is no impact on profit and loss or earnings per share in either period, as the calculation error only
affected Balance Sheet classifications.
Page 183
The above errors have been corrected by restating each of the affected Financial Statement line items for
the prior periods as follows:
Company Balance Sheet as at 28 February 2021
28 Feb
2021
Reported
a) Merger
reserve
b) Naves
liabilities
c) Naves
preference
shares
d) RCF
e) Class-
ification
28 Feb
2021
Restated
Assets
Non-current assets
Other investments
106,678
–
–
(450)
–
–
106,228
Other non-current
assets
10,040
–
–
–
–
–
10,040
Other long-term
receivables
1,471
–
–
21,242
–
4,256
26,969
118,189
–
–
20,792
–
4,256
143,237
Current assets
Total other receivables
45,854
–
–
(28,442)
–
(7,257)
10,155
Cash
634
–
–
–
–
–
634
46,488
–
–
(28,442)
–
(7,257)
10,789
Total assets
164,677
–
–
(7,650)
–
(3,001)
154,026
Liabilities
Current liabilities
Trade and other
payables
(52,660)
–
9,171
–
–
3,001
(40,488)
Convertible loan notes
–
–
(4,461)
–
–
–
(4,461)
Short-term borrowings
(23,000)
–
–
–
23,000
–
–
(75,660)
–
4,710
–
23,000
3,001
(44,949)
Non-current liabilities
Long-term borrowings
(6,386)
–
–
–
(23,000)
–
(29,386)
Convertible loan notes
–
–
(3,640)
–
–
–
(3,640)
Derivative financial
liabilities
–
–
(139)
–
–
–
(139)
Provisions
(541)
–
–
–
–
–
(541)
(6,927)
–
(3,779)
–
(23,000)
–
(33,706)
Total liabilities
(82,587)
–
931
–
–
3,001
(78,655)
Total assets less total
liabilities
82,090
–
931
(7,650)
–
–
75,371
Equity
Share capital
3,174
–
–
–
–
–
3,174
Share premium
55,805
(3,295)
–
–
–
–
52,510
Shares to be issued
(1,362)
–
–
–
–
–
(1,362)
Other Reserves
21,742
3,295
–
(1,275)
–
–
23,762
Retained earnings
2,731
–
931
(6,375)
–
–
(2,713)
Total equity
82,090
–
931
(7,650)
–
–
75,371
Page 184
Company Balance Sheet as at 28 February 2021
1 March
2020
Reported
a) Merger
reserve
b) Naves
liabilities
c) Naves
assets
d) RCF
e) Reclass-
ification
1 March
2020
Restated
Assets
Non-current assets
Other investments
104,886
–
(450)
–
–
104,436
Preference shares
–
–
–
27,056
–
27,056
Other non-current
assets
18,504
–
–
–
–
–
18,504
Other long-term
receivables
–
–
–
5,699
5,699
123,390
–
–
26,606
–
5,699
155,695
Current assets
Total other receivables
40,812
–
–
(26,104)
–
(3,936)
10,772
Cash
26
–
–
–
–
–
26
40,838
–
–
(26,104)
–
(3,936)
10,798
Total assets
164,228
–
–
502
–
1,763
166,493
Liabilities
Current liabilities
Trade and other
payables
(24,702)
–
4,844
–
–
(1,763)
(21,621)
Short-term borrowings
(49,785)
–
–
–
24,669
–
(25,116)
(74,487)
–
4,844
–
24,669
(1,763)
(46,737)
Non-current liabilities
Long-term borrowings
(8,763)
–
–
–
(24,669)
–
(33,432)
Convertible loan notes
–
–
(4,448)
–
–
–
(4,448)
Derivative financial
liabilities
–
–
(25)
–
–
–
(25)
Provisions
(541)
–
–
–
–
–
(541)
(9,304)
–
(4,473)
–
(24,669)
–
(38,446)
Total liabilities
(83,791)
–
371
–
–
(1,763)
(85,183)
Total assets less total
liabilities
80,437
–
371
502
–
–
81,310
–
–
–
Equity
–
–
–
Share capital
3,167
–
–
–
–
–
3,167
Share premium
55,805
(3,295)
–
–
–
–
52,510
Shares to be issued
(2,498)
–
–
–
–
–
(2,498)
Other Reserves
21,742
3,295
–
–
–
–
25,037
Retained earnings
2,221
–
371
502
–
–
3,094
Total equity
80,437
–
371
502
–
–
81,310
24. Events after the reporting date
There were no adjusting or significant non-adjusting events between the reporting date and the date of
authorisation.
Page 185
Five-year financial summary (unaudited)
Consolidated Income Statement
Continuing operations
12 months to
28 Feb 2022
£’000
12 months to
28 Feb 2021
restated
£’000
12 months to
29 Feb 2020
£’000
12 months to
28 Feb 2019
£’000
12 months to
28 Feb 2018
£’000
Group revenue
101,310
83,695
117,655
117,853
103,043
Other operating expenses
(91,250)
(75,976)
(106,625)
(108,787)
(95,721)
Specific items (net)
(514)
(1,097)
(3,344)
(11,719)
(9,067)
Total operating expenses
(91,764)
(77,073)
(109,969)
(120,506)
(104,788)
Operating profit/(loss)
9,546
6,622
7,686
(2,653)
(1,745)
Gain on revaluation of investment
172
–
–
500
–
Net interest expense
(1,156)
(1,486)
(1,853)
(987)
(643)
Share of associate profit for the period
(19)
–
436
–
–
Profit before taxation
8,543
5,136
6,269
(3,140)
(2,388)
Taxation
(1,839)
(1,574)
46
(1,525)
(474)
Gain/(loss) for the year from discontinued operations
7,215
970
(2,299)
(22,700)
(32)
Profit/(loss) after taxation
13,919
4,532
4,016
(27,365)
(2,894)
Dividends
Interim
610
–
1,564
1,501
1,501
Final proposed
2,254
1,495
–
2,951
2,951
2,864
1,495
1,564
4,452
4,452
Earnings per ordinary share – pence
Basic – underlying from continuing operations
23.06p
15.60p
29.45p
23.32p
19.57p
Diluted – underlying from continuing operations
18.79p
12.91p
26.62p
21.36p
18.06p
Note: The years ended 29 February 2020, 28 February 2019 and 28 February 2018 have not been restated for the
reclassifications of discontinued operations. The year ended 28 February 2021 has been restated for the prior
period adjustment described in Note 34.
Page 186
Five-year financial summary (unaudited)
Consolidated Balance Sheet
As at
28 Feb 2022
£’000
As at
28 Feb 2021
restated
£’000
As at
29 Feb 2020
restated
£’000
As at
28 Feb 2019
£’000
As at
28 Feb 2018
£’000
Assets
Goodwill
79,891
83,955
83,812
83,812
88,961
Other intangible assets
997
2,129
2,411
2,226
3,393
Property, plant and equipment
7,078
9,841
11,928
1,978
3,322
Other investments
1,780
1,962
1,962
1,773
1,356
Investment in associate
724
3,763
7,315
–
–
Financial assets
–
–
1,184
–
–
Derivative financial instruments
8
200
–
–
–
Deferred tax assets
3,713
2,900
3,620
1,640
3,120
Other long-term receivables
5,636
1,888
2,467
264
300
99,827
106,638
114,699
91,693
100,452
Current assets
Trade and other receivables
38,808
34,800
39,541
37,128
52,605
Financial assets
–
746
–
–
–
Derivative financial instruments
54
1,573
–
–
159
Assets held for sale
–
436
–
10,611
2,865
Cash and cash equivalents
13,964
14,111
28,749
24,111
10,437
52,826
51,666
68,290
71,850
66,066
Total assets
152,653
158,304
182,989
163,543
166,518
Liabilities
Current liabilities
Derivative financial instruments
688
–
437
49
–
Trade and other payables
38,629
45,647
47,209
44,887
41,462
Short-term borrowings
–
–
25,116
35,844
12,886
Current tax payable
1,608
1,318
1,334
1,408
1,858
Provisions
486
307
201
90
320
Convertible loan notes
1,416
4,461
4,444
6,339
–
Deferred consideration
–
–
177
600
366
Liabilities directly associated with assets classified as
held for sale
–
125
–
2,797
766
42,827
51,858
78,918
92,014
57,658
Non-current liabilities
Long-term borrowings
28,331
31,634
34,585
–
–
Deferred tax liabilities
–
174
903
930
999
Derivative financial instruments
335
56
–
–
–
Provisions
797
690
765
324
424
Convertible loan notes
2,755
2,681
2,603
4,579
7,364
Deferred consideration
495
882
2,293
5,357
2,977
Pension deficit
2,052
3,819
3,672
1,986
3,437
34,765
39,936
44,861
13,176
15,201
Total liabilities
77,592
91,794
123,779
105,190
72,859
Total assets less total liabilities
75,061
66,510
59,210
58,353
93,659
Equity
Share capital
3,221
3,174
3,167
3,144
3,144
Share premium
53,030
52,510
52,510
55,805
55,805
ESOP reserve
(6,771)
(1,362)
(2,498)
(3,446)
(2,701)
Other reserves
27,124
28,094
25,862
22,857
26,085
Retained earnings
(1,543)
(15,906)
(19,831)
(20,007)
11,326
Total equity
75,061
66,510
59,210
58,353
93,659
Note: The years ended 28 February 2018 and 28 February 2019 have not been restated for the grossing up of cash
and overdrafts. The years ended 28 February 2021 and 29 February 2020 have been adjusted for the effect of the
prior year adjustment described in Note 34.
Page 187
Contact information
Registered office
Braemar Shipping Services Plc
One Strand
Trafalgar Square
London
WC2N 5HR
Company number: 02286034
Telephone: +44 (0)20 3142 4100
Web address:
www.braemar.com
Principal offices
Shipbroking
One Strand
Trafalgar Square
London
WC2N 5HR
80 Robinson Road
#24-01/02
Singapore
068898
432 St. Kilda Road
Melbourne
Victoria 3004
Australia
Corporate Finance
Domstraße 17
20095 Hamburg
Germany
Web address:
www.braemar.com
Page 188
www.braemar.com