REG - Braemar PLC - FY25 Final Results
29/05/2025 07:00
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RNS Number : 5028K Braemar PLC 29 May 2025
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29 May 2025
BRAEMAR PLC
("Braemar", the "Company" and together with its subsidiaries the "Group")
Audited Final Results for the year ended 28 February 2025
Strategy underpinning solid performance and confidence in new medium-term
growth targets
Braemar Plc (LSE: BMS), a leading provider of expert investment, chartering
and risk management advice to the shipping and energy markets, announces its
unaudited half‐year results for the year ended 28 February 2025 ("FY25" or
the "Period").
James Gundy, Group Chief Executive Officer, commented:
"Our solid overall performance shows our strategy is working. As market
conditions became more challenging in the second half, we have seen the
benefits of the work we have done in recent years to build a business with a
more diversified revenue base. This underpins our confidence in producing
sustainable returns through the shipping cycle and our future growth targets.
Strong performances in our Investment Advisory and Risk Advisory segments
partially offset the fall in Chartering revenues, helping generate underlying
operating profits (before acquisition related costs) of £16.7 million, 88%
higher than FY21 when we last set our medium-term targets.
We continue to develop our growth platform, by driving our three key strategic
pillars of operational excellence, diversification and consolidation. To this
end, we made further investments in our teams and infrastructure while
maintaining strict discipline with a clear focus on shareholder value when
evaluating opportunities. This included the launch of a new office in South
Korea and a Container Chartering desk; shortly after year end, we obtained
regulatory approval for our Securities business to operate a UK Organised
Trading Facility (UK OTF).
Looking ahead, amid current market challenges comes opportunity. While there
is clearly short-term uncertainty around the global economic outlook and
currency volatility, I believe that this will present us with further
opportunities to hire talent, make strategically suitable acquisitions and
grow our market share. The medium to long-term fundamentals continue to look
favourable and we will seize the opportunity to make investments that will
drive shareholder value.
Our updated strategic framework (as set out below in the Chairman's statement)
clearly lays out how we plan to grow the business, and I look forward to
working with my talented colleagues to achieve these ambitious but achievable
targets".
RESULTS HIGHLIGHTS
Financial performance
Underlying results* Statutory results
FY25 FY24 % change FY25 FY24 % change
Revenue £141.9m £152.8m -7% £141.9m £152.8m -7%
Operating profit (before acquisition-related expenditure) £16.7m £18.1m -7% £16.0m £15.0m 7%
Operating profit £15.6m £16.5m -6% £11.2m £9.0m 24%
Profit before tax £13.4m £14.6m -8% £9.2m £7.5m 23%
Profit after tax £9.8m £10.8m -9% £6.1m £4.6m 32%
Underlying earnings per share (basic) 31.30p 36.62p -15% 19.41p 15.65p 24%
Total dividend per share 7.0p 13.0p -46% 7.0p 13.0p -46%
Net cash/(debt) £ (2.5m) £1.0m nm £ (2.5m) £1.0m nm
* Underlying results measures above are before specific items, including some
acquisition-related charges and internal independent investigation costs.
· Robust financial performance
o Revenue of £141.9 million, 7% below the prior year due to lower revenue from
Chartering in the second half partially offset by a strong performance from
Investment Advisory, demonstrating the benefits of the Group's diversified
business model
o Underlying operating profit (before acquisition-related expenditure) of £16.7
million (FY24: £18.1 million)
o Underlying operating profit of £15.6 million, a decrease of 6%, with costs
continuing to be well controlled
o Reported profit before tax of £9.2 million, (FY24: £7.5 million), with lower
underlying operating profit offset by lower specific items than the prior year
· Balance sheet remains strong
o Net debt position of £2.5 million at 28 February 2025, swiftly turning to a
positive net cash position at the start of the new financial year after timing
of certain working capital items
o Total dividends for the year of 7.0 pence per share (FY24: 13.0 pence), with a
final dividend of 2.5 pence per share proposed, in line with updated Capital
Allocation Framework (as set out below in the Chairman's statement and the
financial review)
o Intention to commence an on-market share buyback programme of up to £2.0
million, reflecting the board's belief that the Company's share price
undervalues the business and confidence in the cash generation capabilities of
the Group, also providing a positive enhancement to future EPS. Total
shareholder returns maintained.
Operational highlights
· Delivering resilience through diversification
o Average revenue per head remained strong at £345,000, 8% down on the prior
year reflecting the weaker market conditions in the second half
o New office opened in South Korea and Container Chartering desk launched
o UK OTF approved in May 2025 to support further growth in Risk Advisory
o Acquisition pipeline is strong
Final Dividend
The board will recommend a final dividend for the year ended 28 February 2025
of 2.5 pence for approval by shareholders at the Company's Annual General
Meeting to be held on 2 July 2025. Subject to shareholder approval, the final
dividend will be paid on 8 September 2025 to shareholders who are on the
register at the close of business on 1 August 2025, with a corresponding
ex-dividend date of 31 July 2025. The last date for Dividend Reinvestment Plan
("DRIP") elections will be 15 August 2025.
Current trading and outlook
· Strong forward order book maintained, standing at $82.2 million as at 28
February 2025 (FY24: $82.6 million),
· Tanker rates are recovering from the lows in H2 although macro conditions
remain weaker at the start to the year given increased geopolitical
uncertainty and a weaker USD. Underlying operating profit (before
acquisition-related items) for FY26 is now expected to be in the range of £13
million to £14 million
· Despite short-term uncertainty, market fundamentals remain strong and the
business is well placed to take advantage of opportunities that present
themselves
New growth targets for FY30
· Launch of updated strategic framework, with operational targets for FY26 and
financial targets for FY30, to support delivery of our ongoing growth strategy
by driving operational excellence, diversification and consolidation
· FY26 output: hiring 10 new brokers; expanding into one new jurisdiction;
globalising tanker operations; and completing one M&A transaction
· FY30 output: £200m of Group revenues; £30m Risk Advisory revenues; 15%
underlying operating profit margin; and net debt maintained below 1.5x EBITDA
through all years
Board
In recognition of his role now encompassing a wider remit, the board is
delighted to announce that Group Chief Financial Officer, Grant Foley, will be
promoted to Group Chief Financial and Operating Officer with effect from 1
June 2025.
Analyst Presentation
Management will host a briefing for analysts at 09.30 BST today
at Braemar's offices at One Strand, Trafalgar Square, London, WC2N 5HR. For
further details, please contact the team at Houston
via braemar@houston.co.uk.
Investor Webcast
Braemar will also host a webcast via the Investor Meet Company platform later
today, commencing at 14:00 BST. The presentation is open to all existing and
potential shareholders. Questions can be submitted pre-event via the Investor
Meet Company dashboard up until 09:00 BST this morning, or at any time during
the live presentation.
Investors can sign up to Investor Meet Company for free and add to meet
BRAEMAR
PLC via: https://www.investormeetcompany.com/braemar-plc/register-investor
(https://www.investormeetcompany.com/braemar-plc/register-investor)
The 2025 Annual Report and Accounts will be available on the Company's website
(www.braemar.com (http://www.braemar.com) ) shortly.
For further information, contact:
Braemar Plc
James Gundy, Group Chief Executive Officer Tel +44 (0) 20 3142 4100
Grant Foley, Group Chief Financial Officer
Rebecca-Joy Wekwete, Company Secretary
Houston
Kate Hoare / Charlie Barker / Ben Robinson Tel +44 (0) 20 4529 0549
Canaccord Genuity
Adam James / Harry Rees Tel +44 (0) 20 7523 8000
Chairman's Statement
I am pleased to report a solid financial performance for the Group this year.
The results demonstrate the benefits of the extensive work we have done since
launching our strategy in FY21, building a broader and more resilient business
able to generate shareholder returns across the shipping cycle.
Braemar is a global business, with 411 dedicated staff members working for the
Group across 18 offices in 13 countries. During the year, the geopolitical
backdrop around the world became more challenging, particularly in the second
half where global charter rates have historically been stronger than the first
half. This resulted in our teams having to deal with an uncertain environment
and increased regulation, particularly as a consequence of conflicts and a
complex sanctions regime. Nevertheless, using our depth and reach of relevant
data, our industry technology and insight, Braemar staff have successfully
supported our clients to achieve their goals.
Despite these challenges, as we look ahead, we remain confident in our growth
strategy and will continue to build an increasingly more resilient business.
We are well placed to deal with the global challenges and uncertainty that we
face, and to capitalise on opportunities to scale our operations in the years
ahead. This underpins our confidence in achieving our growth targets for
FY30 outlined in our new strategic framework.
Results for the year
Revenue for the year at £141.9 million (FY24: £152.8 million), was 7% lower
than the prior year due a weaker performance from Chartering as global charter
rates, notably in the Tanker and Dry Cargo markets, came under pressure,
particularly in the second half of the financial year. Underlying operating
profit was £15.6 million, £1 million lower than FY24 with the lower revenue
partially offset by lower operating costs, with costs continuing to be well
controlled.
Reported profit before tax at £9.2 million was £1.7 million higher than the
prior year, due to lower specific non-recurring costs, in particular the costs
of the independent internal investigation in FY24 (£2.6 million). Underlying
earnings per share were 31.30p (FY24: 36.62p) and reported earnings per share
19.41p (FY24: 15.65p).
As at 28 February 2025, the Group had a small net debt position of £2.5
million, due to minor temporary adverse working capital movements immediately
prior to year end. As expected, the Group returned to a positive net cash
position in early March 2025.
We continued to strengthen our teams over the course of the year and were
delighted to welcome a number of new colleagues into the Group, as we invested
further in our platform for growth by adding to our broking and operational
teams.
Board
In March 2025, Tristram Simmonds, Group Chief Operating Officer, left the
Group. Tristram joined the business following the acquisition of Atlantic
Brokers in 2018, and on behalf of the board I would like to thank him for his
service and contribution to the Group.
In recognition of his role now encompassing a wider remit, I am delighted to
announce that Group Chief Financial Officer Grant Foley will be promoted to
Group Chief Financial and Operating Officer with effect from 1 June 2025.
Grant leads all support functions as well as Braemar's Securities business
(subject to regulatory approval) and has made a significant positive impact on
the Group since joining in August 2023. I am confident that our executive team
will continue to execute our growth strategy effectively and I look forward to
working with my colleagues in the coming year.
Strategy
We remain committed to delivering on our strategic vision to position Braemar
as a trusted broker of choice to the global shipping and energy markets. A key
part of that growth strategy is to further strengthen our business lines
through investment in our high calibre teams and making complementary
acquisitions.
However, during the financial year we saw a set of circumstances that made
this particularly difficult to execute.
Firstly, the economics of talent investment. Similar to the talent economics
that we saw in the professional services industry post COVID-19, at times
during the year, the cost of talent investment in our industry reached levels
that we regarded as uneconomic. We therefore intentionally chose not to
participate in investment during these periods, preferring to retain staff and
maintain a disciplined approach to ensure that we can generate sustainable
returns for shareholders. I am pleased to note that the economics of talent
investment have now stabilised to what we regard as more attractive levels and
we are not burdened with uneconomic decisions which could have been made had
we chosen to participate.
Secondly, the impact of the UK stock market's performance on our ability to
execute on transactions. According to Calastone data, over the last 12 months
there has been just one month of positive inflow of funds to UK equities in
the year and, indeed, for the quarter ending 31 March 2025, £3.48 billion was
withdrawn from the UK market, making it the worst quarter on record. The
impact of this is that UK equity market liquidity has generally been
compromised, and we have suffered from an undervalued share price, creating a
significant difference in public and private market valuations and impacting
our ability to execute transactions that would be accretive for our
shareholders. Once these harmonise, we are well placed to execute on our
M&A strategy.
Despite the above challenges, we continue to see significant growth
opportunities, organically in a more stable talent market and inorganically as
other industry players see the benefits from leveraging scale.
As we look ahead over the next five years, the board is pleased to today
announce an updated strategic framework. This sets out our near-term and
medium-term growth targets, built around clear strategic pillars to deliver
our ambition to become a trusted broker of choice to the shipping and energy
markets with annual revenues of at least £200 million by FY30.
Capital Allocation Framework
In support of the newly launched strategic framework, the board today provides
an update on our intentions for future uses of cash generated from operations.
The Group's updated Capital Allocation Framework reflects a balance between
growth investment and returning cash to investors.
First, we will continue to invest in talent to grow the business, while
remaining focused on driving efficiencies and improved margins.
Second, we will continue to look for acquisitions that allow the Group to
accelerate its growth and meet our strict value enhancing criteria.
Third, we will return capital to shareholders through dividends and share
buybacks, as we grow the business.
Dividend
Since 2021, the Company has operated a progressive dividend policy, and the
business has grown underlying operating profits substantially from £8.9
million in FY21 to £15.6 million this year. Total dividends have grown by
160% from 5.0 pence per share in FY21 to 13.0 pence per share in FY24. Despite
this, our share price has remained broadly unchanged. In short, our
progressive dividend policy, despite the yield being increasingly attractive,
has not generated increased equity value to shareholders.
With this in mind, while the Company will continue to pay a dividend in line
with our updated Capital Allocation Framework, it will reduce the dividend to
a level that the board believes remains attractive and will use surplus
capital to purchase (and then cancel) its own Company shares. For this year,
cash saved from a reduced dividend will support a share buyback programme of
up to £2 million. Reflecting this, the board will recommend a final dividend
for the year ended 28 February 2025 of 2.5 pence for approval by shareholders
at the Company's Annual General Meeting to be held on 2 July 2025.
This final dividend, together with the interim dividend of 4.5 pence already
paid on 13 January 2025, represents a total dividend for the year of 7 pence.
The final dividend will be paid on 8 September 2025 to shareholders who are on
the register at the close of business on 1 August 2025, with a corresponding
ex-dividend date of 31 July2025. The last date for Dividend Reinvestment Plan
("DRIP") elections will be 15 August 2025.
Our people
Braemar's assets are its people, and we have continued to invest in our teams
throughout the year, opening a new office in South Korea and establishing
presences in Connecticut (USA) and Monaco as well as building out existing
desks. We have remained focused on maintaining Braemar as an attractive place
to work, retaining existing talent and hiring where it makes economic sense to
do so, benefiting all stakeholders.
Once again, I have been impressed by the commitment and resilience of our
staff and on behalf of the board I would like to take this opportunity to
thank our people for their dedication, hard work and focus.
Outlook
We have produced a solid financial performance this year that demonstrates our
strategy is delivering. We will continue to execute our strategy, focusing on
operational excellence, diversification across our business and acquisition
opportunities.
Today, the global economy faces a number of challenges, including ongoing
conflicts, a potential tariff-driven trade war and more volatile foreign
currency markets. These are likely to have some short-term impact as
charterers and owners adjust and manage an uncertain environment. Shipping has
always adapted to change with new trade patterns and routes, and we believe
that this will be no different.
Reflecting the wider geo-political uncertainty, chartering activity for the
start of the new financial year has been weaker than the same period last
year, while Investment and Risk Advisory are at similar levels. The forward
order book remains strong and there are early signs of some improvement in
Chartering revenues.
The board remains confident in the long-term prospects for the Group. The
opportunity to significantly grow the business remains compelling and this
market dynamic will likely provide additional opportunities for non-organic
growth. With a clear strategy and strong platform to support this we are
focused on generating revenue of at least £200 million with underlying
operating profit margins of over 15% by FY30.
Nigel Payne
Chairman
28 May 2025
Group Chief Executive Officer's Statement
I am pleased to announce that despite weaker chartering conditions in the
second half we have produced another solid financial performance.
In 2021, we laid out our strategic objective to build a more resilient
business that could deliver sustainable profits through the shipping cycle. I
am pleased to report underlying operating profit (before acquisition-related
items) of £16.7 million for FY25, 88% higher than FY21 (£8.9 million) and
achieved through the strategic focus of building a more diversified revenue
mix.
The deep knowledge and understanding across our teams has come to the fore as
the markets we operate in have become increasingly complex during the year.
Our clients have relied heavily on our expertise to navigate the challenges
posed by ongoing conflicts and trade tensions, and global fleets continued to
age with newbuild capacity remaining restricted.
The 'Dark Fleet' of vessels moving sanctioned oil continued to grow in the
year and is now estimated to comprise 1,400 vessels. At the same time, the
sanctions regime has increased in its complexity. We have continued to invest
in our compliance function throughout the year, increasing headcount and using
the latest technology to further improve our systems and processes.
Robust performance
Group revenue for the year at £141.9 million, was £10.9 million lower than
the prior year primarily driven by weaker Chartering revenue being partially
offset by a stronger Investment Advisory performance with Risk Advisory
broadly unchanged.
Chartering revenues were weaker, driven by lower revenues in Tankers and Dry
Cargo, particularly in the second half. This was partially offset by a strong
performance from Sale & Purchase with increases in newbuilding and
second-hand transactions.
Costs continued to be well controlled, with underlying operating costs of
£124.1 million, £9.9 million lower than the prior year, primarily due to
lower staff bonus costs in the year.
Revenue per head at £345,000 (FY24: £373,000) remained strong by industry
standards, although lower than the prior year due to the weaker revenue
performance.
Investing
We have continued to invest throughout the year, opening our new office in
South Korea and establishing presences in Connecticut (USA) and Monaco,
obtaining our Organised Trading Facility licence in the UK shortly after the
year end, applying for our European Organised Trading Facility, and hiring
talented individuals in a highly competitive market for talent.
We have also completed an upgrade of IT systems and continued to invest in our
support functions to ensure that we are well set to support the growth of the
business in an increasingly complex environment.
During the year, we evaluated a number of potential acquisition opportunities.
Market consolidation is an important part of our strategy; however, we remain
patient and well-disciplined to ensure that we execute on the right
transactions for the Group both financially and strategically.
Strategy
Our strategy remains broadly unchanged; however, we are pleased today to be
announcing the launch of a more detailed strategic framework. This framework
articulates our growth ambition for the next five years, provides further
detail on the strategic areas of focus through which we will continue to drive
growth, and provides detail on the output and targets against which we will
measure our performance in the coming years, as we seek to grow revenues to at
least £200 million by FY30.
There are three pillars to this framework
1. Diversification
2. Consolidation
3. Operational excellence
Within this framework we have clearly defined objectives in the short and
medium term that will drive our progress.
Environmental, Social & Governance
Braemar has a clear ESG framework in place, with ongoing initiatives designed
to reduce environmental impact, protect fragile ecosystems and create a more
diverse, representative workforce.
As a Group, we are committed to minimising our environmental impact and
continuing to make progress in our efforts to facilitate climate-smart
shipping. We have also committed to a series of future initiatives to support
our ESG aims and remain on track to achieve our goals in the 2025 calendar
year.
Although shipping remains an efficient form of transport, we are well placed
to advise our clients on how they can reduce the environmental impact that
their vessels and charters have.
We have continued to hire from a broad range of backgrounds and cultures and
with offices in 13 countries, Braemar has a diverse and talented workforce.
Once again, I am very proud of the work that has been done across all of our
offices to support a number of charities and good causes, making a positive
impact to many.
Outlook
The strategy of diversifying the Group's revenues across Shipbroking and
Securities has delivered a robust performance for the year. Through our newly
articulated strategic framework and priorities, we will continue to build upon
this.
We enter FY26 with a strong forward order book of $82.2 million, broadly
unchanged from the prior year. However, although recent years have also been
characterised by an uncertain geopolitical backdrop, FY26 has the added
complexities of potential tariffs, trade wars, a weaker US dollar and an
increasingly complex sanctions regime. Underlying operating profit (before
acquisition-related items) for FY26 is now expected to be in the range of £13
million to £14 million.
We remain focused on building a business that can deliver shareholder value
throughout the shipping cycle and our strategic framework provides clear
direction and a roadmap to get the Group to £200 million of revenue by FY30.
While the short-term outlook in our markets is uncertain, I am very excited
about the opportunities that the Group has across all areas of the business to
grow revenues, profit and cash generation.
I would like to take this opportunity to thank our colleagues for their hard
work and dedication, as well as our clients and partners for their ongoing
support.
James Gundy
Group Chief Executive Officer
28 May 2025
Financial Review
The Group delivered a solid financial performance for FY25. While the
first-half performance showed an improvement on the prior year, the
second-half was significantly weaker. The typical increase in rates usually
seen in the second-half did not materialise with Tanker rates actually
weakening. This was partially offset by a stronger performance from Investment
Advisory.
Underlying profit before tax at £13.4 million was £1.2 million lower than
the prior year, due to the weaker revenue performance and subsequently lower
bonus costs.
At the year end, the Group had a net debt position of £2.5 million due to
adverse temporary working capital movements, however this returned to a net
cash position swiftly after year end.
Reflecting the Group's updated Capital Allocation Framework, the Group has
revised its dividend policy, and the board is recommending a final dividend of
2.5 pence, making the full-year dividend 7 pence, a decrease of 46% on the
prior year (FY24: 13 pence). The cash saved from the lower dividend will be
used to support a share buyback programme of up to £2 million, maintaining
total shareholder returns.
Summary Income Statement FY25
· Underlying operating profit £15.6 million (FY24: £16.5 million).
· Underlying operating profit (before acquisition-related expenditure) £16.7
million (FY24: £18.1 million).
· Underlying profit before tax £13.4 million (FY24: £14.6 million)
· Statutory operating profit £11.2 million (FY24: £9.0 million).
· Statutory profit before tax £9.2 million (FY24: £7.5 million).
Underlying Statutory
FY25 FY24 % inc/(dec) FY25 FY24 % inc/(dec)
£'000
£'000
£'000
£'000
Revenue 141,860 152,751 (7)% 141,860 152,751 (7)%
Operating profit 15,597 16,548 (6)% 11,173 9,044 24%
Profit before tax 13,433 14,608 (8)% 9,222 7,523 23%
Profit after tax 9,840 10,820 (9)% 6,102 4,624 32%
Earnings per share 31.30p 36.62p (15)% 19.41p 15.65p 24%
Revenue
Revenue from continuing operations was 7% lower than the prior year.
Chartering revenues were 14% lower at £89.4 million (FY24: £103.9 million),
primarily due to weaker Tanker and Dry Cargo rates, particularly in the second
half. Investment Advisory revenues were £30.2 million (FY24: £25.7 million),
an increase of 17% with a strong performance from Sale & Purchase. Risk
Advisory was slightly lower at £22.3 million (FY24: £23.1 million).
The majority of the Group's revenue is earned in US dollars and the exchange
rate moved from a low of $1.22/£1 to a high of $1.34/£1 during the year.
Total USD revenues at $179 million were lower than the prior year (FY24: $189
million).
At 28 February 2025, the Group held forward currency contracts to sell $116
million at an average rate of US$1.26/£1.
Operating costs
Operating costs at £124.1 million were £9.9 million lower than the prior
year (FY24: £134.0 million). Staff costs were £9.9 million lower than the
prior year, offset by ongoing investment in IT and increased professional fees
including in relation to establishing the UK Organised Trade Facility to drive
further growth in Risk Advisory.
Central costs
Central costs increased by 10% to £5.6 million (FY24: £5.0 million),
primarily due to increased investment in staff and office costs.
Specific items
Alternative performance measures ("APMs")
Braemar uses APMs as key financial indicators to assess the performance of the
Group. Management considers that the APMs used by the Group help to provide an
alternate assessment of business performance, by excluding items which
management does not believe relate to business performance in the period 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.
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. Details of these items can be
found in Note 2.2 to these Financial Statements.
FY25 FY24
£'000 £'000
Underlying operating profit before specific items 15,597 16,548
Specific items - Acquisition-related expenditure (3,711) (4,405)
Specific items - Other operating costs (928) (3,182)
Specific items - Other operating income 215 83
Operating profit 11,173 9,044
Acquisition-related expenditure includes £3.6 million in relation to the
acquisition of Southport Maritime Inc. (FY24: £3.6 million) and £0.7 million
(FY24: £nil) within other operating costs that relates to the impairment of a
right-of-use lease asset.
Net finance costs
Net finance costs for the year increased by £0.5 million to £2.0 million
(FY24: £1.5 million). Interest payable on the Group's revolving credit
facility reduced slightly to £2.2 million from £2.4 million as the Group
maintained a lower average drawdown through the year. This was offset by
finance income decreasing by £0.5 million due to a £0.3 million gain on
derivative contracts in the prior year.
Balance sheet
Net assets at 28 February 2025 were £84.2 million an increase of £4.5
million from the prior year (FY24: £79.6 million). The year saw an overall
decrease in total assets of £4.2 million, primarily due to an increase in
trade and other receivables (£3.2 million) offset by a reduction in cash
(£7.5 million).
Total liabilities decreased by £8.7 million, due to lower trade and other
payables, primarily due to a lower bonus accrual at the year-end, given the
weaker revenue performance.
Borrowings and cash
At the Balance Sheet date, the Group had a revolving credit facility with HSBC
of £30.0 million. The facility also provides access to a global cash pooling
facility in the UK, USA, Germany and Singapore, which enables efficient
management of liquidity between its main regional hubs. At the end of the
year, the Group had net debt of £2.5 million (FY24: £1.0 million net cash),
lower than the previous year due to lower cash receipts towards the end of the
financial year.
Retirement benefits
The Group has a defined benefit pension scheme, which was closed to new
members during FY16. The scheme has a surplus of £2.5 million (FY24: surplus
£1.4 million), which is recorded on the Balance Sheet as at 28 February 2025.
The most recent funding valuation was carried out as at March 2023 and showed
a surplus of £0.3 million.
Taxation
The Group's underlying effective tax rate in FY25 was a charge of 27% (FY24:
26%), slightly higher than the UK corporation tax rate, reflecting the
international operations of the Group.
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 year, the Company requested that SG Kleinwort Hambros Trust Company
(CI) Ltd, as Trustee of the Company's ESOP Trust, purchase shares in Braemar
Plc. During the year, a total of 880,344 shares in the Company were purchased
by the Trustee and 1,600,095 shares were released; as a result, at 28 February
2025, the ESOP held 1,583,460 shares (FY24: 2,303,211 shares). The total cash
outflow as a result of these share purchases was £2.4 million (FY24: £6.1
million).
Dividend
The directors are recommending for approval at the AGM on 2 July 2025, a final
dividend of 2.5 pence per share, to be paid on 8 September 2025. The total
dividend of 7.0 pence for the year is covered 4.4 times by the underlying
earnings per share from operations of 31.30 pence. The total cash outflow in
respect of dividends paid during the year ended 28 February 2025 was £5.5
million (FY24: £2.4 million).
Going concern
With the trading cash flows generated during the year, the Group remains in a
robust liquidity position. The Group will maintain its prudent approach to
working capital forecasting and credit controls. The Group's revolving credit
facility was renewed during the financial year, extending the term to November
2027 and provides the seasonal working capital that is required. Accordingly,
the accounts have been prepared on a going concern basis.
Grant Foley
Group Chief Financial Officer
28 May 2025
Operating Review
Market Review and Outlook
While many shipping markets continued to perform well during the first half of
FY25, rates weakened in the second half of the financial year. The usual
Tanker rate increase in the fourth quarter did not materialise leading to
softer rates at the start of the 2025 calendar year. Chartering's Offshore
market continued to perform well and Investment Advisory saw robust results,
with strong performances across both newbuilding and second-hand.
Geopolitical events, sanctions and tariffs are creating some uncertainty and
may have a short-term impact, but we remain confident in the medium-term
outlook for shipping as it adapts to these challenges.
The global fleet continues to grow but at a slower pace. Reduced shipyard
capacity and market uncertainty have resulted in a slowdown in new ship
deliveries and shipowners are extending the economic lifespan of older ships
resulting in an ageing fleet. Once the uncertainty starts to recede, we
believe that we will start to see activity increase once again.
We now present a summary of our three business segments: Chartering,
Investment Advisory and Risk Advisory
CHARTERING
Chartering's revenue decreased by 14% to £89.4 million from £103.9 million
in FY24, representing 63% of Braemar's total revenue.
Tankers - £42.9 million (FY24: £54.7 million)
Tanker revenues were 21% lower than prior year with freight markets easing
during 2024. With reduced seasonal demand in the fourth quarter particularly
from weaker Chinese imports, there was a reduction in crude tanker earnings in
the second half of the year. While the weakening of refining margins
throughout the year impacted the product tanker market. The sanctioning by
western governments of tankers involved in Russian and Iranian trades helped
tighten tanker supply towards the end the year, partly offsetting the earnings
reduction for crude tankers. The 'Dark Fleet' has continued to extend the
economic lifespan of older tankers and during 2024 shipbuilders delivered the
fewest new tankers so far this century.
Dry Cargo - £21.0 million (FY24: £22.1 million)
Dry cargo revenues decreased by 5% to £21 million. Although dry bulk carrier
earnings began the 2025 financial year strongly, all four main bulker sizes
experienced a slowdown by year-end. Easing of the Panama Canal restrictions,
muted seasonal demand in the fourth quarter especially from China and ongoing
fleet growth, all put downward pressure on rates. For the first time since
2008, the fourth quarter was the lowest of the year for Capesize time charter
at $18,301/day compared with $28,128/day in the same quarter a year earlier.
Vessel earnings in the smallest dry bulk carrier sizes showed the most
resilience, although even the Handysize underperformed the prior year towards
the end of the year hitting its lowest point in February since 2020.
Offshore Energy Services - £9.0 million (FY24: £7.9 million)
Offshore revenues grew to £9.0 million in the year, up 14% from the prior
year. Investment in new offshore energy projects has boosted marine activity.
Supply constraints drove rate improvements during the year, particularly for
longer-term fixtures. Additionally, an increase in offshore sale and purchase
activity, along with growing interest in newbuildings, has bolstered this
year's performance. The desk's forward book has expanded further and remains
strong, with a positive outlook ahead.
Specialised Tankers - £16.5 million (FY24: £19.2 million)
*LNG and LPG & Petrochemicals are subsets of Specialised Tankers
Specialised Tankers revenue decreased to £16.5 million, 14% lower than the
prior year. The specialised market faced uncertainty driven by geopolitical
instability, shifting trade routes, and energy transitions. Ageing fleets and
high newbuild costs should limit oversupply and support freight rates, but
demand remains unpredictable. Earnings softened across all major chemical
tanker segments and this trend continued into Q1 2025, though rates remain
significantly above pre-COVID levels. A number of key hires were made across
our five locations.
LNG
Record levels of newbuild LNG carriers were delivered during the year, despite
ongoing delays in key infrastructure projects to increase LNG production
capacity. The influx of new tonnage coupled with limited demand growth exerted
downward pressure on spot rates. With shipyards operating at full capacity and
lead times for new orders stretching out to 2029, newbuild prices remained at
historically high levels. Owners continued to face the challenge of securing
new tonnage in the short-term to meet the anticipated increase in demand once
delayed LNG production projects come online.
LPG & Petrochemicals
The LPG and Petrochemical desk performed well over the last 12 months,
bolstered by our product broking section. The desk has had success in securing
new accounts and has invested in further talent hires to support future
growth. The gas market had a strong year, especially in Chartering, with
increased demand for larger vessels due to projected growth in LPG, Ethane,
and Ammonia exports. U.S. petrochemical exports boosted employment in the
sector and kept shipping markets tight. However, the smaller LPG and
petrochemical market was less active compared to the previous year, with fewer
available vessels due to aging fleets, although freight rates remained strong.
INVESTMENT ADVISORY
Investment Advisory's revenue increased by 17% to £30.2 million (FY24: £25.7
million), representing 21% of the Group's revenue.
Corporate Finance - £2.3 million (FY24: £2.2 million)
Corporate Finance revenues at £2.3 million increased marginally from the
previous financial year. Once again, the year was characterised by shipowners
having significant equity with less reliance on sourcing debt financing,
especially for second-hand tonnage. However, several financings were arranged,
especially for Asian, European and Middle Eastern clients whereby the debt
capital was sourced predominantly from APAC-based lenders. Continued
competition among maritime financiers combined with decreasing overall
interest rates has started to create more activity, in particular for
newbuilding projects.
In relation to M&A business, Corporate Finance was able to successfully
expand into non-maritime sectors like real estate and industrial production.
Sale & Purchase - £27.9 million (FY23: £23.5 million)
Sale & Purchase performed strongly with revenue increasing by 18% to
£27.9 million. Second hand activity was split across tankers, bulkers and
containers with strong asset values and a high volume of transactions
contributing to a strong year. This strength was driven by favourable charter
market conditions and a preference by some owners to supplement fleet renewal
plans with second hand ships, given the long lead times and higher costs
associated with newbuilds. The newbuilding order book continued to grow
throughout the year, with orders placed in China, Korea and Japan across
various segments. The strong newbuild market reflected a mix of environmental
compliance pressure, limited yard space, strong second-hand prices, and future
demand expectations, all encouraging shipowners to invest in new tonnage
despite higher costs and extended delivery timelines.
Towards the end of the year, uncertainties around tariff policy and rules on
American port calls, has caused many clients to pause investment projects,
with the Container markets being hit harder than other sectors and Tankers and
Bulkers seemingly less affected.
RISK ADVISORY (SECURITIES)
Risk Advisory's revenue decreased by 3% to £22.3 million (FY24: £23.1
million), representing 16% of total revenue. Braemar's Securities business
consists of four derivatives markets: Dry Cargo FFA, Coal, Natural Gas, Oil,
and Tanker FFA.
Dry Cargo Derivatives
Despite weaker-than-expected demand growth, slower global economic expansion,
and elevated inventory levels, persistent geopolitical tensions have helped
sustain average freight rates throughout the sector. Despite the reduction in
trade volumes, the desk has experienced growth in its client base and a rising
interest in its proprietary pricing platform, braemarscreen.com, leading to an
increase in overall market share.
Coal
Once again, the Coal desk maintained its position as the leading provider of
brokering services to the European-delivered ARA market, which is used to
benchmark the key API2 instrument, the most traded coal futures contract
globally.
Natural Gas Derivatives
The Gas market has experienced another volatile year, driven by geopolitical
tensions. The performance of the Natural Gas desk has been consistent with
last year, with a focus on building out the regulatory foundations in order to
expand into both new markets and new geographies. Having obtained a UK FCA
approved Organised Trading Facility (OTF) licence shortly after the year-end
and with work already in progress to secure a European OTF, the desk is well
positioned to grow in the coming years.
Oil Derivatives
Geopolitical tensions continued to drive crude and oil product markets. Fuel
oil derivatives trading remained focused on Asia, though the team grew its
market share in Europe. The customer base has expanded beyond shipping-related
hedging to include banks, refiners, trading firms, and hedge funds.
Tanker Derivatives
The Tanker FFA market continued to be volatile yet again throughout the year.
Volumes were up 8.5% across FFA routes. The ongoing geopolitical tensions,
spanning from Russia-Ukraine to Israel-Gaza and the Trump presidency mean that
continued growth and volatility is expected for the remainder of 2025. The
Braemar FFA desk is a joint venture with GFI and remains the leading global
facilitator in wet freight and LPG FFAs and we will continue to ensure we
remain at the forefront of market opportunity as it arises.
Principal Risks and Uncertainties for the year ended 28 February 2025
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 risks, overseeing the
internal control framework, and determining the nature and extent of the
principal risks the Group 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 &Risk
Committee, with support from the Risk Committee. The board is committed to
maintaining 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.
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.
Reporting to the Chair of the Audit &Risk Committee and administratively
to the Chief Financial Officer, the Head of Internal Audit and Risk leads the
Internal Audit and Risk Management function.
Risk management process
The Group's Risk Management framework incorporates both bottom-up and top-down
identification, evaluation, and management of risks. Within our framework:
· senior management has initial responsibility for identifying,
monitoring, and updating business risks; while
· the management teams of group IT, HR, Legal, Compliance and Finance
assess their respective functions for operational and functional risks not
identified by senior management.
The Group's risk management framework is managed via an online system which is
accessible to the senior management team and operational and functional
management teams globally. The system's functionality has allowed for enhanced
monitoring and reporting automation. The 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 mitigated, where possible,
by the implementation of control activities, which are evaluated as part of
the risk-based internal audit plan 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. Principal risks are aggregated together with associated issues or
areas of uncertainty. Inherent 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 over which risks may
occur. The outcome of this process is then reviewed with further consideration
and assessment provided by the Risk Committee, the Audit &Risk Committee,
and the board.
Oversight and evaluation of the effectiveness of Braemar's risk management
framework is led by the Group Chief Financial Officer, supported by the Risk
Committee whose membership includes the Company Secretary, Head of Internal
Audit and Risk and Head of Compliance, and representatives of other functions
and locations of the business. The Risk Committee monitors risks regularly,
taking into consideration the appetite, tolerance, and potential impact for
specific risks on the Group.
Principal risks
The principal risks which may impact the Group's ability to execute its
strategic objectives have remained unchanged since 2024. The risks that
follow, while not exhaustive, are those principal risks which we believe could
have the greatest impact on our business and have been discussed at meetings
of the board, the Risk Committee and the Audit &Risk Committee. The board
reviews these risks in the knowledge that currently unknown, non-existent or
immaterial risks could turn out to be significant in the future and confirms
that a robust assessment has been performed. The Audit & Risk Committee
reviews and approves the principal risks and any related mitigation plans.
In today's increasingly complex and volatile global environment, Braemar
recognises the heightened risks and uncertainties that impact its operations.
Geopolitical and economic uncertainty, economic fluctuations, and an evolving
regulatory landscape contributes to a challenging risk management landscape.
We remain committed to proactively identifying, assessing, and mitigating
these risks to ensure the resilience and sustainability of our business.
Risk mitigation
As part of our risk management process, the Group takes various measures to
mitigate risk throughout the year. These measures include:
· 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 training completion rates.
· A signature authorisation and delegation of authority policy, complemented by
independent assurance activities
· Usage of common finance, HR and operations systems across the Group supported
by our IT team.
· 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 Group
Chief Financial Officer.
· Ongoing monitoring of contractual risk by the Group Legal team.
· Operation of the Group's whistleblowing procedure.
· Maintenance of appropriate insurance cover.
· Continued investment in information technology and cyber security to
strengthen security policies, technical and operational controls, skilled
resources and up-to-date training dedicated to the prevention of cybercrime.
· Compliance systems and processes used to manage the risk of financial crime
and sanctions breaches in an increasingly complex environment
· Regular functional reporting of existing department risks, emerging risks and
the status of ongoing mitigation measures
Principal risks
The directors have carried out an assessment of the principal and emerging
risks facing the Group. 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 below.
Risk Summary of impact Mitigating control and management actions Net risk change
Competition risk and market consolidation Loss of established brokers could · Maintain a geographically diverse and balanced shipbroking and ↑
securities offering to prevent overreliance on a single supplier, location or
impact revenues. Increasing revenue stream.
Competition in the shipping industry is becoming increasingly intense, and consolidation could impact the · Quarterly horizon-scanning exercises are conducted by the leadership
there is a growing trend towards market consolidation, and hiring established
team to assess emerging trends in the market and identify areas of the
brokers as companies seek to gain scale and reduce costs. Group's M&A strategy for growth. business that could be targeted by competitors.
Cybercrime/data security Loss of service and associated loss of revenue. · Developed a two-year Security & Resilience Strategy with -
board-level approval. Implementation of a robust set of risk controls through
adoption of the National Institute of Standards & Technology ("NIST")
Cyber Security Framework and ISO 27001 Standard.
Cybercrime could result in loss of business assets or disruption to the Reputational damage.
Group's IT systems and its business. Lack of appropriate data security could
· IT processes prioritise cyber security through regular penetration
result in loss of data. testing, endpoint protection, firewalls, a trusted third-party
software-defined wide area networking ("SD-WAN") solution, software patching,
Potential for material losses due to fraud or phishing. frequent complex password changes, MFA, strict access control procedures, and
tested IT Disaster Recovery Plans.
· Outsourced Security Operations Centre ("SOC") supporting the wider
cyber security control environment by providing 24x7 monitoring, enhanced
threat detection and response capabilities, reduced incident impact through
continuous monitoring, ensuring faster remediation by centralising security
operations. Cyber due diligence for third-party risk to evaluate the security
posture of vendors and identify vulnerabilities, prevent unauthorised access,
and mitigate exposure to cybercrime through external attack vendors.
Geopolitical and macroeconomic A downturn in the world economy could affect transaction volumes, resulting in · Diversification on a sector and geographic basis reduces dependency ↑
reduced revenue. on individual business areas.
· Monthly performance review of each business area in each region to
Braemar's businesses are reliant on global trade flows and may be negatively
ensure the Group is appropriately resourced across its activities and
impacted by geopolitical and/or macroeconomic issues, such as changes in crude Changes in shipping rates and/or changes in the demand or pricing of geographies.
oil price, restrictions in global trade due to pandemics sanctions, and commodities could affect global supply activity.
changes in supply and demand.
· Ongoing management of costs based on current and reasonably
foreseeable market conditions. The brokers' bonus is based on profits and is
therefore responsive to market swings.
Note:
· Enhanced KYC procedures and ongoing monitoring of compliance with
The continued conflict between Russia and Ukraine together with the governance policies, sanctions, and other legal / regulatory requirements
fast-changing global sanctions regime has increased the potential impact of across the Group to help ensure laws and regulations are not breached.
risks associated with both geopolitical and/or macroeconomic issues and
compliance with relevant laws and regulations. · The diverse service offering, led by experts in their fields, means
the Group is in the best position to find new opportunities in volatile market
conditions and able to take advantage of market turnarounds.
Political change, ongoing regional conflicts, increased trade tensions, the
uncertainty in US tariffs and sanctions have heightened geopolitical and
macroeconomic risks. These developments can lead to increased volatility in
international markets, affecting trade relationships, investment decisions,
and economic stability worldwide.
Compliance with laws and regulations Legal and regulatory breaches could result in fines, and sanctions being · Group-wide training programme, to help ensure employee awareness -
imposed on our business, and the loss of Braemar's ability to continue of, and compliance with, all relevant legal and regulatory obligations:
operating.
· Braemar corporate governance framework;
Braemar generates revenues from a global business that exposes the Group to
risks associated with legal and regulatory requirements.
· Braemar risk management methodology;
Failure to meet all reporting obligations could lead to reputational damage
which could then lead to loss of revenue and staff. · Compliance with our policies, including our AML/KYC policies'
(enhanced) customer due diligence requirements; and
· Enhanced KYC procedures and ongoing monitoring of compliance with
The associated risk relating to the increasingly complex and fast-moving governance policies and legal/regulatory requirements across the Group to help
sanctions regime is identified as a separate standalone principal risk, ensure requirements are not breached.
'Sanctions and trade restrictions'.
· A global network of legal advisers is used for expert advice on
complex and/or regional matters, where applicable.
· For the Securities business, lexicons and transcripts from
communication monitoring solutions are regularly reviewed to detect any
potential inappropriateness or wrongdoing.
· Gifts received and issued are recorded on a Gifts Register which
is reviewed by the Compliance function against tiered approval thresholds.
Currency fluctuations A change in exchange rates could result in a financial gain or loss. · The Group hedges in accordance with the Hedging Strategy. Forward ↑
currency (US$) contracts are entered into to mitigate the risk of adverse
currency movements.
The Group is exposed to foreign exchange risk because a large proportion of · Hedging performance is regularly reported into the Executive
its revenue is generated in US dollars while its cost base is in multiple Committee, board and other relevant governance structures.
currencies.
The increase in risk is driven by heightened geopolitical volatility
Disruptive technology Relationships could be devalued and replaced by disruptive technology · Investment in technology through partnering with best-in-class ↑
platforms, resulting in increased competition, consequent price reductions, providers, such as Zuma Labs.
and loss of revenue.
· Quarterly horizon-scanning exercises are conducted by the leadership
Shipbroking is still largely a business that is transacted via personal team which aim to identify emerging trends and disruptive forces in this area
relationships dependent on quality service. Hence the risk of technological while monitoring the competitive landscape.
change (including artificial intelligence), disintermediation and increased
customer demands for enhanced technological offerings could render aspects of
our current services obsolete, potentially resulting in loss of customers.
Environment and climate change The Groups profitability and liquidity could be negatively impacted if · Investment in the offshore renewables market and technology to allow -
customers are lost as a result of our not keeping pace with our peers and the Group and its clients to offset carbon emissions.
industry best practice.
· Ongoing development and ESG strategy which allows the Group to
Seaborne transportation is estimated to create approximately 3% of the world's monitor and report on environmental and climate-related risks.
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 Non-compliance with regulations or disclosure requirements could result in
process could result in loss of revenue for Braemar and its customers and
counterparties 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.
Integration risk Inefficiencies and/or reduced expected synergies realised after integrating · Performance of new business is monitored through regular dialogue
new acquisitions into the Group and aligning them with the respective Group with relevant business leaders.
strategies.
· Focus on alignment of systems, processes and teams to optimise
Braemar's shipbroking-focused growth strategy makes use of strategic hires and efficiencies and support synergy realisation
acquisitions to increase the size of the business.
· Compliance and legal mechanisms are in place to ensure the purchase
Integrating and aligning any new acquisition with the Group poses various meets any relevant regulatory requirements and the target company aligns
challenges from an operational and financial perspective. appropriately with the relevant Group values.
· Prioritisation of identified growth opportunities to ensure resources
are appropriately allocated to opportunities with the best potential return on
investment.
People and Culture Employee relations claims / litigation / tribunals attribute to negative · Review of HR policies, to ensure behavioural expectations and ↑
behaviours or actions, increases the potential for reputational damage because employment practices for managers and employees are clearly defined.
of negative publicity in the public domain.
· Ongoing development of a culture of engagement and professional
Braemar is a people-based business and people are vital to its success. development, including implementation of performance management objectives,
clearly defined pathways for career progression, and succession planning at
Loss of key staff could result in reduced revenue. senior management levels.
Inadequate policies and reward structures could incentivise negative · Annual review of compensation with external benchmarking helps to
behaviours, create internal conflict, lead to reputational damage, and
ensure remuneration packages continue to be appropriate and competitive.
contribute to failure in attracting and /or retaining skilled personnel. Strategic growth objectives may not be achieved if Braemar fails to attract
and retain valued employees l.
Failure to adapt to, or align with, market expectations, including the
offering of 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.
Sanctions and trade restrictions Conducting business with sanctioned entities, through sanctioned regions and · KYC procedures performed by the Group Compliance teams with support -
facilitating transport of sanctioned goods will lead to non-compliance with from the Legal team and Braemar's global network of legal advisers.
sanctioned regimes resulting in financial penalties/fines and reputational
damage. · Through strategic and targeted recruitment, increasing our in-house
Braemar operates in a global landscape of international and financial
KYC and sanctions-monitoring capabilities enhances our ability to navigate the
sanctions with a variety of associated compliance requirements. intricate landscape of sanctions regulations and mitigate associated risks
within our business operations.
Note:
· Technology solutions used to optimise the efficiency of sanctions
Increased scrutiny from regulatory bodies and rising geopolitical and screening performed.
macroeconomic issues, including the continued Russia/Ukraine and conflict, has
increased the potential impact of risks associated with breaches of sanctions · External assurance providers performing internal audit reviews over
and trade restriction requirements. the sanctions process and validating the implementation of recommendations
previously raised to management.
· Targeted training programme aimed at management and senior desk heads
to further raise awareness of, and compliance with, all relevant legal and
regulatory obligations.
Internal audit
The Group's internal audit function is monitored and reviewed by the Audit
& Risk Committee, to ensure that the Group's risk management and internal
control processes are working effectively. A detailed description of the
Group's internal audit function can be found on page 59 of the Annual Report.
Going concern
The Group generated net cash from operating activities of £5.9 million in the
year, above the £5.2 million in the prior year. Although the business had a
modest net debt position at the end of the year of £2.5 million (FY24: £1.0
million net cash), due to the timing of certain working capital items. Given
the ongoing geopolitical uncertainty, the Group has started the year slower
than the prior year, however, the fundamentals of the business and industry
remain strong and the directors believe that the Group is well positioned to
manage its risks going forward.
A more detailed analysis of the risks facing the business is outlined in Note
1. The analysis concludes that there is no material uncertainty relating to
going concern, based on cash flow forecast for a 15-month period from the
signing of these accounts to 31 August 2026. The directors have a reasonable
expectation that the Company and Group have adequate resources to continue to
trade for at least 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 four years, which they
believe is an appropriate period based on the Group's current financial
position, banking facilities, budgets and forecasts, strategy, principal
risks, and exposure to potentially volatile market forces.
In recent years, during the COVID pandemic and delayed publication of the FY23
annual report and accounts, the Group's bankers, HSBC, have been highly
supportive. The Group met all of its financial covenant tests during the year
and is confident that it will continue to do so.
The facilities with HSBC expire in November 2027, and more detail can be found
in Note 1 to the Financial Statements. The viability assessment has been
carried out over a four-year period from the balance sheet date to 28 February
2029, by which time new banking facilities will need to have been concluded.
It therefore assumes that similar banking facilities will be made available to
the Group for the whole of this time. 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 following
risks to the business that have been identified in the Annual Report as new or
increasing:
Competition risk and market consolidation
Competition in the shipping industry is becoming increasingly intense, and
there is a growing trend towards market consolidation, as companies seek to
gain scale and reduce costs. Loss of established brokers could impact
revenues. Increasing consolidation could impact the Group's M&A strategy
for growth. Quarterly horizon-scanning exercises are conducted by the
leadership team to assess emerging trends in the market and identify areas of
the business that could be targeted by competitors.
Cybercrime and 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 material losses due to fraud or phishing.
To address the persistent threat of cyber-attacks, and to enhance security
measures already in place, Braemar has developed a two-year Security &
Resilience Strategy with Board level approval. Implementing a robust set of
risk controls through adoption of the National Institute of Standards &
Technology (NIST) Cyber Security Framework and ISO 27001 Standard. Our
Security Operations Centre (SOC) supports the wider cyber security control
environment, providing 24x7 monitoring.
Geopolitical and macroeconomic
Braemar's businesses are reliant on global trade flows and as such may be
negatively impacted by geopolitical and/or macroeconomic issues. 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 global supply activity. Political change, ongoing
regional conflicts, increased trade tensions, the uncertainty in US tariffs
and sanctions have heightened geopolitical and macroeconomic risks.
Currency fluctuations
The Group is exposed to foreign exchange risk because a large proportion of
its revenue is generated in US dollars while its cost base is in multiple
currencies. The increase in risk is driven by heightened geopolitical
volatility.
People and Culture
Braemar is a people-based business and people are vital to its success.
Inadequate policies and reward structures could incentivise negative
behaviors, create internal conflict, lead to reputational damage, and
contribute to failure in attracting and /or retaining skilled personnel.
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 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% (both excluding forward order book)
from May 2025 to July 2026 and stabilised thereafter. Under the 7.5% case the
board concluded that with only very minor cost-saving or cash management
mitigations available to it, the Group could continue to operate under the
current banking facilities over the period. Under the 15% case certain
additional cost saving and cash mitigation actions were required to allow the
Group to continue to operate within the current banking facilities, all of
which were within the board's control.
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
approximately a 32% (excluding forward order book) decrease in forecast
revenue from May 2025 through to July 2026.
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. 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 32% (excluding forward order
book) and then only during 2026.
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 on the basis
of 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 four financial years.
Consolidated Income Statement
For the year ended 28 February 2025
28 Feb 2025 29 Feb 2024
Notes Underlying £'000 Specific items Total Underlying £'000 Specific items Total
£'000
£'000
£'000
£'000
Revenue 2.1 141,860 - 141,860 152,751 - 152,751
Other operating income 2.2 - 215 215 - 83 83
Operating expense:
Operating costs 2.3, 2.2 (124,090) (928) (125,018) (134,004) (3,182) (137,186)
Acquisition-related expenditure 2.2 (1,134) (3,711) (4,845) (1,502) (4,405) (5,907)
Impairment of financial assets 2.3 (1,039) - (1,039) (697) - (697)
Total operating expense (126,263) (4,639) (130,902) (136,203) (7,587) (143,790)
Operating profit/(loss) 15,597 (4,424) 11,173 16,548 (7,504) 9,044
Share of associate profit/(loss) for the year 3.4 - - - 12 - 12
Finance income 2.5, 2.2 553 213 766 871 419 1,290
Finance costs 2.5, 2.2 (2,717) - (2,717) (2,823) - (2,823)
Profit/(loss) before tax 13,433 (4,211) 9,222 14,608 (7,085) 7,523
Taxation 2.7 (3,593) 473 (3,120) (3,788) 889 (2,899)
Profit/(loss) for the year 9,840 (3,738) 6,102 10,820 (6,196) 4,624
Profit/(loss) attributable to equity shareholders of the Company 9,840 (3,738) 6,102 10,820 (6,196) 4,624
Underlying Total Underlying Total
Earnings per ordinary share
Basic 2.8 31.30p 19.41p 36.62p 15.65p
Diluted 2.8 26.74p 16.58p 29.96p 12.80p
Consolidated Statement of Comprehensive Income
For the year ended 28 February 2025
Notes 28 Feb 2025 29 Feb 2024
£'000
£'000
Profit for the year 6,102 4,624
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
- Actuarial gain on employee benefit schemes - net of tax 5.1 1,025 173
Items that may be reclassified to profit or loss:
- Foreign exchange differences on retranslation of foreign operations 6.4 295 (1,783)
- Net investment hedge 6.4 (19) 249
- Cash flow hedges - net of tax 6.4 (1,201) 1,231
Other comprehensive income/(expense) 100 (130)
Total comprehensive income attributable to owners of the parent 6,202 4,494
Consolidated Balance Sheet
As at 28 February 2025
Notes As at As at As at
28 Feb 2025
29 Feb 2024
1 Mar 2023
£'000
£'000
£'000
(restated) (restated)
Assets
Non-current assets
Goodwill 3.1 71,243 71,337 71,407
Other intangible assets 3.2 2,608 3,185 3,980
Property, plant and equipment 3.5, 3.6 10,135 5,582 5,320
Other investments 3.3 1,720 1,633 1,780
Investment in associate 3.4 713 713 701
Derivative financial instruments 4.4 205 249 30
Deferred tax assets 2.7 3,368 2,979 4,794
Pension surplus 5.1 2,548 1,414 1,120
Other long-term receivables 4.1 1,768 4,589 8,554
94,308 91,681 97,686
Current assets
Trade and other receivables 4.2 40,887 37,730 43,323
Derivative financial instruments 4.4 192 1,287 1,224
Current tax receivable 2.7 1,554 2,925 973
Cash and cash equivalents 4.5 20,477 27,951 34,735
63,110 69,893 80,255
Total assets 157,418 161,574 177,941
Liabilities
Current liabilities
Derivative financial instruments 4.4 592 315 1,447
Trade and other payables 4.3 34,732 43,611 57,310
Current tax payable 2.7 1,659 1,625 4,141
Provisions 7.1 2,433 3,080 2,575
Convertible loan notes 4.7 2,401 2,978 3,001
41,817 51,609 68,474
Non-current liabilities
Long-term liabilities 4.6 29,448 29,819 29,919
Deferred tax liabilities 2.7 358 8 344
Derivative financial instruments 4.4 116 43 697
Trade and other payables 498 416 542
Provisions 7.1 1,026 58 734
Convertible loan notes 4.7 - - 550
31,446 30,344 32,786
Total liabilities 73,263 81,953 101,260
Total assets less total liabilities 84,155 79,621 76,681
Equity
Share capital 6.1 3,292 3,292 3,292
Share premium 6.1 - - 53,796
ESOP reserve 6.3 (4334) (7,140) (10,607)
Other reserves 6.4 7,440 8,365 28,819
Retained earnings 77,757 75,104 1,381
Total equity 84,155 79,621 76,681
Registered number: 02286034
Consolidated Cash Flow Statement
For the year ended 28 February 2025
Notes 28 Feb 2025 29 Feb 2024
£'000
£'000
Profit before tax 9,222 7,523
Adjustment for:
Depreciation and amortisation charges 3.2, 3.5 3,812 3,805
Impairment of ROU asset 3.6 743 -
Share scheme charges 2.2 5,563 6,442
Loss on disposal of property, plant and equipment 3 -
Net foreign exchange loss/(gain) with no cash impact 232 497
Gain relating to disposal of Cory Brothers 2.2 (128) (83)
Fair value loss on unlisted investments 2.2 (87) 147
Net finance cost 2.5 1,951 1,533
Share of (profit)/loss in associate from continuing and discontinued 3.4 - (12)
operations
Fair value movement on financial instruments charged to profit or loss - 89
Operating cash flows not included in profit:
Cash settlement of share-based payment (163) (52)
Contribution to defined benefit scheme 5.1 - (37)
Operating cash flow before changes in working capital 21,148 19,852
(Increase)/decrease in receivables (2,153) 6,252
Decrease in payables (9,854) (12,142)
Increase/(decrease) in provisions 5 (138)
Cash flows from operating activities 9,146 13,824
Interest received 427 508
Interest paid (2,610) (2,677)
Tax paid(1) (3,028) (7,103)
Tax received(1) 2,006 630
Net cash generated from operating activities 5,941 5,182
(1) In the prior year, tax received of £0.6 million was offset against tax
paid and presented as a net amount of £6.5 million. Due to an increase in the
amount of tax refunded in the current year, tax paid and tax received have
been presented separately in the current year, and the prior year presentation
has been similarly updated to aid comparability.
Cash flows from investing activities
Purchase of property, plant and equipment 3.5 (615) (503)
Purchase of other intangible assets 3.2 - (32)
Proceeds related to disposal of Cory Brothers 4.9 1,666 1,397
Principal received on finance lease receivables 3.6 240 626
Net cash generated from investing activities 1,291 1,488
-
Cash flows from financing activities -
Repayment of RCF loan facility (4,000) (5,098)
Proceeds from RCF loan facility - 4,500
Repayment of principal under lease liabilities 3.6 (3,106) (3,143)
Cash proceeds on exercise of share awards settled by release of shares from 514 826
ESOP
Dividends paid 6.2 (5,497) (2,440)
Purchase of own shares 6.3 (2,376) (6,125)
Settlement of convertible loan notes 4.7 (584) (598)
Net cash used in financing activities (15,049) (12,078)
(Decrease)/increase in cash and cash equivalents (7,817) (5,408)
Cash and cash equivalents at beginning of the year 4.5 27,951 34,735
Foreign exchange differences 343 (1,376)
Cash and cash equivalents at the end of the year 4.5 20,477 27,951
Consolidated Statement of Changes in Total Equity
For the year ended 28 February 2025
Notes Share Share ESOP reserve Other Retained (deficit)/ earnings Total
capital
premium
£'000
reserves
£'000
equity
£'000
£'000
£'000
£'000
At 1 March 2023 3,292 53,796 (10,607) 28,819 1,381 76,681
Profit for the year - - - - 4,624 4,624
Actuarial gain on employee benefits schemes - net of tax - - - - 173 173
Foreign exchange differences - - - (1,783) - (1,783)
Net investment hedge - - - 249 - 249
Cash flow hedges - net of tax - - - 1,231 - 1,231
Other comprehensive income - - - (303) 173 (130)
Total comprehensive income - - - (303) 4,797 4,494
Tax on share awards 2.7 - - - - (205) (205)
Dividends 6.2 - - - - (2,440) (2,440)
Capital reduction (53,796) (20,151) 73,947 -
Acquisition of own shares 6.4 - - (6,125) - - (6,125)
ESOP shares allocated 6.3 - - 9,592 - (8,766) 826
Cash paid for share-based payments 6.3 - - - - (52) (52)
Share-based payments 5.2 - - - - 6,442 6,442
- (53,796) 3,467 (20,151) 68,926 (1,554)
At 29 February 2024 3,292 - (7,140) 8,365 75,104 79,621
Profit for the year - - - - 6,102 6,102
Actuarial gain on employee benefits schemes - net of tax - - - - 1,025 1,025
Foreign exchange differences - - - 295 - 295
Net investment hedge - - - (19) - (19)
Cash flow hedges - net of tax - - - (1,201) - (1,201)
Other comprehensive income - - - (925) 1,025 100
Total comprehensive income - - - (925) 7,127 6,202
Tax on share awards 2.7 - - - - 291 291
Dividends 6.2 - - - - (5,497) (5,497)
Acquisition of own shares 6.3 - - (2,376) - - (2,376)
ESOP shares allocated 6.3 - - 4,661 - (4,327) 334
Disposal of EBT shares - - 521 - (341) 180
Cash paid for share-based payments 5.2 - - - - (163) (163)
Share-based payments 5.2 - - - - 5,563 5,563
- - 2,806 - (4,474) (1,668)
At 28 February 2025 3,292 - (4,334) 7,440 77,757 84,155
Notes to the Financial Statements
General information
Braemar plc (the "Company") is a public company limited by shares incorporated
in the United Kingdom under the Companies Act. The Company is registered in
England and Wales and its registered address is 1 Strand, Trafalgar Square,
London, United Kingdom, WC2N 5HR. The consolidated Financial Statements of the
Company as at and for the year ended 28 February 2025 comprise the Company and
its subsidiaries (together referred to as the "Group").
The Group Financial Statements of Braemar Plc for the year ended 28 February
2025 were authorised for issue in accordance with a resolution of the
directors on 28 May 2025.
1 Basis of preparation
1.1 Basis of preparation and forward-looking statements
The financial information set out above does not constitute the Group's
statutory accounts for the years ended 28 February 2025 or 29 February 2024
but is derived from those accounts. Statutory accounts for 2024 have been
delivered to the registrar of companies, and those for 2025 will be delivered
in due course. The auditor has reported on those accounts; their reports were
(i) unqualified; (ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their report; and
(iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
The financial information included in this preliminary announcement has 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 Group expects to distribute full accounts
that comply with UK-adopted international accounting standards and with the
requirements 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.
The consolidated Financial Statements incorporate the Financial Statements of
Braemar Plc and all its subsidiaries made up to 28 February each year or 29
February in a leap year.
Subsidiaries are entities that are controlled by the Group. Control exists
when the Group has the rights to variable returns from its involvement with an
entity and has the ability to affect those returns through its power over the
entity. The results of subsidiaries sold or acquired during the year are
included in the accounts up to, or from, the date that control exists. All
intercompany balances and transactions have been eliminated in full.
Certain statements in this Annual Report are forward-looking. Although the
Group believes that the expectations reflected in these forward-looking
statements are reasonable, it gives 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.
The Group Financial Statements are presented in sterling and all values are
rounded to the nearest thousand sterling (£'000) except where otherwise
indicated.
New standards, amendments and interpretations effective for the financial year
beginning 1 March 2024
The following amendments to IFRS Accounting Standards have been applied for
the first time by the Group:
• Amendments to IAS 1 "Classification of Liabilities as Current or
Non-Current"
• Amendments to IAS 1 "Non-current Liabilities with Covenants"
• Amendments to IFRS 16 "Lease Liability in a Sale and Leaseback
(Amendments)"
• Amendments to IFRS 7 and "IAS 7 Supplier Finance Arrangements"
During the year, the Group has applied "Classification of Liabilities as
Current or Non-current and Non-current liabilities with covenants - Amendments
to IAS 1". The amendments clarified that liabilities are classified as either
current or non-current, depending on the rights that exist at the end of the
reporting period. Classification is unaffected by the entity's expectations or
events after the reporting date.
The amendments also clarify what IAS 1 means when it refers to the
'settlement' of a liability. Terms of a liability that could, at the option of
the counterparty, result in its settlement by the transfer of the entity's own
equity instrument can only be ignored for the purpose of classifying the
liability as current or non-current if the entity classifies the option as an
equity instrument. However, conversion options that are classified as a
liability must be considered when determining the current/non-current
classification.
Under the Group's previous accounting policy, a financial liability with an
equity conversion feature was classified as current or non-current
disregarding the impact of the equity conversion option. The Group's
accounting policy has now changed such that equity conversion options which
are not accounted for as an equity instrument separately from the liability
component of a compound financial instrument, are taken into account in
determining the classification of a liability as current or non-current. The
impact of the change in accounting policy at February 2024 is to reclassify
£2.3 million of Convertible Loan Notes previously classified as non-current,
to be classified as current liabilities (February 2023 £2.3 million). There
has been no impact to profit or loss, cash flows or retained earnings as a
result of the change in accounting policy.
Other than this, the adoption of the above has not had any material impact on
the amounts reported or the disclosures in these Financial Statements.
New standards, amendments and interpretations issued but not yet effective for
the financial year beginning 1 March 2024 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 in future periods and have not been
early adopted by the Group:
- Amendments to IAS 21 "The Effects of Changes in Foreign Exchange
Rates" titled Lack of Exchangeability
- IFRS 18 "Presentation and Disclosures in Financial Statements"
- IFRS 19 "Subsidiaries without Public Accountability: Disclosures"
IFRS 18 introduces new requirements to:
· present specified categories and defined subtotals in the
statement of profit or loss
· provide disclosures on management-defined performance measures
("MPMs") in the notes to the financial statements
· improve aggregation and disaggregation.
Except for IFRS 18, 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.
1.2 Going concern
The Group 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 2026 which is more than twelve
months from the date of signing of these Financial Statements.
A set of cash flow forecasts ("the base case") have been prepared by
management to cover the going concern period and reviewed 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. In
putting together these forecasts, particular attention was paid to the
following factors:
· Expected market demand, the impact on market rates and the
Group's forward order book.
· The Group's compliance with sanctions put in place as a result of
the conflict in the Ukraine has meant additional work reviewing compliance
obligations on a regular basis as the laws have been amended but did not have
a material effect on trading in FY25, nor is it expected to have an impact in
FY26.
· The level of likely cost inflation, particularly around salaries.
· Adverse movement in foreign exchange rates, particularly USD that
can have an impact on revenues. The Group has a hedging programme in place to
partially mitigate this impact.
· The impact that trade tariffs and a potential trade war could
have on performance.
· Geopolitical tensions can cause volatility in shipping markets,
but, if anything, that uncertainty can give rise to additional opportunities
for the business to support the industry and clients further. There is
therefore no expectation that the current global political tensions will have
an adverse impact on trading in FY26.
· 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 considered trading performance during the current year and
have concluded that none of these factors are currently likely to have a
significantly adverse impact on the Group's future cash flows.
At 28 February 2025 the Group had net debt of £2.5 million (2024: £1.0
million net cash). As at 30 April 2025 the Group had net bank cash of £4.6
million.
Notes 30 April 2025 28 Feb 2025 29 Feb 2024
£m
£m
£m
Secured revolving credit facilities 4.6 (21.8) (22.9) (27.0)
Cash 4.5 26.4 20.4 28.0
Net cash/(debt) 4.6 (2.5) 1.0
The Group's revolving credit facility ("RCF") is for £30.0 million plus an
accordion limit of £10.0 million and had an initial termination date of
November 2025. During the year, the Group exercised an option to extend the
facility by two years which was approved by the lender, extending the term to
November 2027. Drawdown of the accordion facility is subject to additional
credit approval. The RCF agreement has an EBITDA leverage covenant of 2.5x and
a minimum interest cover of 4x. At 31 May 2024, 31 August 2024, 30 November
2024 and 28 February 2025 the Group met all financial covenant tests In
addition, there is a further requirement to provide HSBC with the Group's
audited financial statements within six months of the year-end.
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, including
a number of downside sensitivities on budgeted revenue, including a reverse
stress test scenario. The directors consider revenue as the key assumption in
the Group's budget. The cost base is largely fixed or made up of discretionary
bonuses, which are directly linked to profitability. Based on two flex
scenarios; a revenue decrease of 7.5% and a revenue decrease of 15% (both
excluding forward order book) from the base case, only very minor 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 budgeted
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 32% (excluding forward
order book) in budgeted revenue from the base case assumptions from May 2025
through to July 2026. In light of current trading, forecasts and the Group's
performance over FY25, the directors assessed this downturn in revenue and
concluded the likelihood of such a reduction remote, especially in the light
of the forward order book of $82.2 million at the end of February 2025 ($31
million of which is for the financial year ending February 2026), such that it
does not impact the basis of preparation of the Financial Statements and there
is no material uncertainty in this regard.
1.3 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. Key estimates are those that the Group has made in
the process of applying the Group's accounting policies and that have a
significant risk of resulting in material adjustments to the carrying amounts
of assets and liabilities within the next financial year. Critical judgements
are those that the Group makes, apart from those involving estimations, that
the directors have made in the process of applying the Group's accounting
policies and that have the most significant effect on the amounts recognised
in the Financial Statements.
The following table provides a summary of the Group's key estimates and
critical judgements, along with the location of more detailed information
relating to those judgements.
Judgement applied to Judgements excluding estimates Estimates Location of further information
Revenue recognition Yes Note 2a - Revenue Recognition
Classification and recognition of specific items Yes Note 2.2 - Specific items
Impairment of goodwill Yes Note 3.1 - Goodwill
Lease term Yes Note 3.6 - Leases
Provision for impairment of trade receivables and contract assets Yes Note 4.2 - Trade and other receivables
Recoverability and valuation of defined benefit pension scheme Yes Yes Note 5.1 - Long-term employee benefits
Share option vesting Yes Note 5.2- Share-based payments
Uncertain commission obligations Yes Note 7.1 - Provisions
There have been no material transactions in the current or prior year
requiring significant judgement to be applied, and as a result, acquisition
accounting for business combinations is no longer considered by the Group to
be a significant estimate or judgement.
Climate‐related risks and opportunities
Management has 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 does not consider that
climate‐related risks have a material impact on any key judgements,
estimates or assumptions in the consolidated Financial Statements.
In the prior year, 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 the Environment and Climate Change risk resulted in its inclusion as
a Group Principal Risk.
1.4 Material accounting policies
The accounting policies applied by the Group in relation to specific
transactions and balances are disclosed in the note to which they relate. The
following section includes those accounting policies which apply pervasively
across the Financial Statements and to avoid repetition are disclosed in this
note.
Business combinations
The acquisition method of accounting is used to account for all business
combinations, regardless of whether equity instruments or other assets are
acquired. The consideration transferred for the acquisition of a subsidiary
comprises the:
- fair values of the assets acquired;
- liabilities incurred to the former owners of the acquired
business;
- equity interests issued by the Group;
- fair value of any asset or liability resulting from a contingent
consideration arrangement; and
- fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are, with limited exceptions, measured
initially at their fair values at the acquisition date. The Group recognises
any non-controlling interest in the acquired entity on an
acquisition-by-acquisition basis either at fair value or at the
non-controlling interest's proportionate share of the acquired entity's net
identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred; amount of any non-controlling
interest in the acquired entity; and acquisition-date fair value of any
previous equity interest in the acquired entity over the fair value of the net
identifiable assets acquired is recorded as goodwill. If those amounts are
less than the fair value of the net identifiable assets of the business
acquired, the difference is recognised directly in profit or loss as a gain on
purchase.
Where settlement of any part of cash consideration is deferred, the amounts
payable in the future are discounted to their present value as at the date of
exchange. The discount rate used is the entity's incremental borrowing rate,
being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial
liability. Amounts classified as a financial liability are subsequently
remeasured to fair value, with changes in fair value recognised in profit or
loss.
If the business combination is achieved in stages, the acquisition date
carrying value of the acquirer's previously held equity interest in the
acquiree is remeasured to fair value at the acquisition date. Any gains or
losses arising from such remeasurement are recognised in profit or loss.
Due to the nature of the Group's business, amounts paid or shares issued to
sellers are often linked to their continued employment. An assessment is
performed to determine whether the amounts are part of the exchange for the
acquiree, or should be treated as a transaction separate from the business
combination. Transactions that are separate from the business combination are
accounted for in accordance with the relevant IFRSs which generally results in
the amounts being treated as a post-combination remuneration expense.
Foreign currencies
Transactions and balances
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 currencies are recognised in the Income Statement.
In order to hedge its exposure to certain foreign exchange risks, the Group
enters into derivative financial instrument contracts, mainly forward foreign
currency exchange contracts which are designated as cash flow hedges (see Note
4.4). For a qualifying hedge relationship, the fair value gain or loss on the
hedging instrument is recognised as part of revenue when the underlying
transaction is recognised in accordance with the Group's revenue recognition
policy.
Translation to presentation currency
The presentational currency of the Group is sterling. 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 recognised through other comprehensive income
("OCI") in the foreign currency translation reserve (see Note 6.4).
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. The Group finances overseas investments partly through the use of
foreign currency borrowings in order to provide a net investment hedge over
the foreign currency risk that arises on translation of its foreign currency
subsidiaries. For effective hedge relationships, the gain or loss on the
hedging instrument is recognised in equity through other comprehensive income.
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 for impairment as
described below. If any indication of impairment exists, 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.
Goodwill is reviewed for impairment at least annually. Impairments are
recognised immediately in the Income Statement. Goodwill is allocated to
cash-generating units for the purposes of impairment testing.
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. The carrying values of other
intangible assets are reviewed for impairment at least annually or when there
is an indication that they may be impaired.
Right-of-use assets are reviewed for impairment to account for any loss when
events or changes in circumstances indicate the carrying value may not be
fully recoverable.
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.
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.
Contingent assets
Contingent assets are not recognised but are disclosed where an inflow of
economic benefits is probable.
2 Performance-related information
Revenue recognition
Key judgement
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 Chartering, in relation to single voyages, the Group has defined the
performance obligation to be satisfied at the point in time where the
negotiated contract between counterparties has been successfully completed,
being the discharge of cargoes, 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 over a time
period, or at a different point in time. For time charters, the performance
obligation is to provide operational support and act on behalf of the
principal over the course of hire. As a result, the Group believes the
performance obligation is satisfied over the period of hire and revenue is
recognised accordingly.
Revenue is recognised in accordance with satisfaction of performance
obligations. Revenue of the Group consists of:
i) Chartering desks - 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; and
- 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.
ii) Risk Advisory desks
Securities:
- for income derived from commodity broking, the commission is
recognised when a binding contractual arrangement is entered into between the
two parties, at which point, the Group has fulfilled its performance
obligation.
iii) Investment Advisory
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
allow customers to benefit from services when required, and as such, are
generally recognised in the month of invoice. Success fees are recognised at
the point when the performance obligations of the particular engagement are
fulfilled.
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; and
- 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.
Dividend income from investments is recognised when the right to receive
payment is established.
2.1 Business segments
Based on the way in which information is presented to the Group's Chief
Operating Decision Maker, the Group's operating segments are Chartering,
Investment Advisory and Risk Advisory. The Chief Operating Decision Maker is
considered to be the Group's board of directors. These three segments are
managed separately on the basis of the nature of the services offered to
clients and differences in the regulatory environment applicable to each
segment.
The table below shows the make-up of the Group's segments by underlying
component.
Segment Chartering
Component Deep Sea Tankers
Specialised Tankers
Offshore
Dry Cargo
Segment Investment Advisory
Component Corporate Finance
Sale and Purchase
Segment Risk Advisory
Component Securities
Each of Chartering, Investment Advisory and Risk Advisory are managed
separately, and the nature of the services offered to clients is distinct
between the segments. The Chartering segment includes the Group's shipbroking
business, Risk Advisory includes the Group's regulated securities business and
Investment Advisory focuses on transactional services.
The segmental analysis is consistent with the way the Group manages itself and
with the format of the Group's internal financial reporting. The board
considers the business from both service line and geographic perspectives. A
description of each of the lines of service is provided in the Operating and
Financial Review. The Group's main geographic markets comprise the UK,
Singapore, the US, Australia, Switzerland, Germany and the Rest of the World.
The Group's geographical markets are determined by the location of the Group's
assets and operations.
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 specific items, including restructuring costs, gain/loss on
disposal of investments and acquisition and disposal-related items.
The segmental information provided to the board for reportable segments for
the year ended 28 February 2025 is as follows:
Revenue Operating profit
2025 2024 2025 2024
£'000
£'000
£'000
£'000
Chartering 89,352 103,945 11,552 13,630
Investment Advisory 30,167 25,696 6,107 3,872
Risk Advisory 22,341 23,110 3,493 4,086
Trading segments revenue/results 141,860 152,751 21,152 21,588
Central costs (5,555) (5,040)
Underlying operating profit 15,597 16,548
Specific items included in operating profit (4,424) (7,504)
Operating profit 11,173 9,044
Share of associate's profit/(loss) for the year - 12
Net finance expense (1,951) (1,533)
Profit before taxation 9,222 7,523
Geographical segment - by origin of invoice
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 origin of invoice is set out below:
Revenue
2025 2024
£'000
£'000
United Kingdom 77,294 81,088
Singapore 18,404 19,885
Australia 10,220 9,556
Switzerland 1,781 5,863
United States 19,441 20,479
Germany 1,646 1,287
Rest of the World 13,074 14,593
Total 141,860 152,751
Revenue analysis
The Group disaggregates revenue in line with the segmental information
presented above and also by desk. Revenue analysed by desk is provided below.
2025 2024
£'000
£'000
Tankers 42,928 54,656
Specialised Tankers 16,487 19,239
Dry Cargo 20,954 22,139
Offshore 8,983 7,911
Chartering total 89,352 103,945
Sales and Purchase 27,895 23,543
Corporate Finance 2,272 2,153
Investment Advisory total 30,167 25,696
Securities 22,341 23,110
Risk Advisory total 22,341 23,110
Total continuing operations 141,860 152,751
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 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 at the Balance Sheet date. The
amount of revenue that will be recognised in future periods on these contracts
when those remaining performance obligations are satisfied is set out below:
Forward order book
2025 Within 1-2 years £'000 More than2 years Total
12 months
£'000
£'000
£'000
Chartering 17,869 6,012 6,954 30,835
Sales and Purchase 13,292 10,875 10,297 34,464
Total 31,161 16,887 17,251 65,299
2024 Within 1-2 years More than Total
12 months
£'000
2 years
£'000
£'000
£'000
Chartering 18,686 4,904 8,925 32,515
Sales and Purchase 11,562 9,567 11,683 32,812
Total 30,248 14,471 20,608 65,327
2.2 Specific items
Specific items are significant items considered material in size or nature
(including acquisition and disposal-related gains and losses) as well as items
which are not considered to be part of the trading performance of the business
in the current year. These are disclosed separately to enable a full
understanding of the Group's ongoing financial performance, but may not be
comparable with disclosures provided by other companies. The Group's adjusted
performance measures are reviewed by the Group's Chief Operating Decision
Maker and are used as the basis to determine the discretionary bonus pools and
measure earnings per share performance related to targets for awards under the
Group's Long Term Incentive Plan.
Key judgement
Classification and recognition of specific items
In reporting financial information, the Group presents Alternative Performance
Measures ("APMs") which are not defined or specified under the requirements of
International Financial Reporting Standards ("IFRS"). The Group believes that
these APMs, which are not considered to be a substitute for or superior to
IFRS measures, provide stakeholders with additional helpful information and
enable an alternative comparison of performance over time.
The Group excludes specific items from its underlying earnings measures.
Management judgement is required as to which 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. Further details
of the Group's specific items are included in the note below.
2025 2024
£'000
£'000
Other operating income:
- Gain on investment measured at fair value through profit or loss 87 -
- Gain on revaluation of Cory contingent consideration receivable 128 83
215 83
Operating costs:
- Impairment of ROU asset (743) -
- Investigation costs (185) (2,616)
- Board change costs - (190)
- Unlawful dividend rectification - (229)
- Loss on investment measured at fair value through profit or loss - (147)
(928) (3,182)
Acquisition-related items:
- Consideration treated as an employment expense (3,580) (3,580)
- Madrid post-contractual obligation 281 (376)
- Amortisation of acquired intangible assets (412) (449)
(3,711) (4,405)
Other items:
- Finance income - foreign exchange and derivative gain on Naves liability 213 333
- Finance income - Cory Brothers earnout deferred consideration receivable - 86
213 419
Total (4,211) (7,085)
Other operating income
In the current year, other operating income includes the fair value gain of
£0.1 million (2024: £0.1 million loss) on the revaluation of the Group's
investment in London Tanker Brokers' Panel. Consistent with the previous fair
value movements being included as a specific item, the Group has treated the
current year gain as a specific item as it does not relate to the trading
performance of the business in the year.
Revaluation of the contingent receivable due in respect of the Cory Brothers
disposal resulted in a gain of £0.1 million (2024: £0.1 million gain). See
Note 4.9 for further details.
The tax charge on specific items included within other operating income was
£nil (2024: £nil).
Operating costs
Impairment of ROU asset
During the year, the Group recognised an extension to a lease of office space
with a corresponding increase in right-of-use asset and lease liability. The
Group had previously sublet a segregated portion of the office space, but does
not expect to be able to sublet the office space for the full period of the
lease extension. As a result, the Group recognised an impairment charge in
relation to the portion of the right-of-use asset relating to the unused
office space. As this cost does not relate to the performance of the business,
it is treated as a specific item.
Investigation costs
During the preparation of the 2023 Annual Report, the board instigated an
investigation into a transaction which originated in 2013 and involved
payments being made through to 2017. The investigation engaged multiple
external specialist firms and resulted in a significant cost to the business
of £2.6 million in the year to 29 February 2024 which the Group does not
consider reflects the trading of the business in the year and as a result is
treated as a specific item. A smaller residual amount of £0.2m in relation to
ongoing legal support has been incurred in the current year. No significant
further costs are expected in FY26.
Board change costs
In the prior year, the Group appointed a new Chief Financial Officer with
effect from 1 August 2023 to replace Nick Stone who left on 31 July 2023. The
recruitment costs incurred of £0.2 million are not considered part of the
trading performance of the business and so are treated as specific items.
Unlawful dividend rectification
In the prior year, following the identification of the payment of historic
unlawful dividends, the Group incurred costs of £0.2 million in relation to
their rectification, which are not expected to recur, are not considered part
of the trading performance of the business and so are treated as specific
items.
Loss on investment measured at fair value through profit or loss
In the prior year, operating costs includes the fair value loss on the
revaluation of the Group's investment in London Tanker Brokers' Panel.
Consistent with the previous revaluation gain being included as a specific
item, the Group has treated the loss as a specific item as it does not relate
to the trading performance of the business in the year.
The tax income on specific items included within operating costs was £0.2
million (2024: £0.7million).
Acquisition-related items
Consideration treated as an employment expense
Following the acquisition of Southport Maritime Inc. in December 2022, due to
the requirement for ongoing employee service, the upfront cash payment of
£6.0 million and IFRS 2 charge related to share awards made to the sellers
and existing employees of Southport are treated as a post-combination
remuneration expense. The total expense for the year related to amounts linked
to ongoing employee service in connection with the acquisition of Southport
was £3.6 million (2024: £3.6 million). The period of required employee
service is three years from the acquisition date.
Madrid post-contractual obligation
As a result of the recruitment of a team of brokers based in Madrid, service
agreements were entered into with employees. The recruitment of the broker
team in Madrid included the following key elements:
- The Group assumed a liability of £0.3 million for a
post-contractual payment to the employees, which was fully vested on signing
the contracts.
- An upfront cash payment of £1.3 million with a further payment
of £1.3 million made in December 2023.
- Share awards to a total value of £1.1 million which vest evenly
in one, two and three years from December 2022
The upfront payments and share awards have a claw back mechanism which is
linked to the continued employment of the brokers over a three-year period
from December 2022. The costs associated with the upfront payments and share
awards are not considered by the Group to be specific items as they relate to
the recruitment of brokers and not a business combination, but are disclosed
as acquisition-related expenditure given their size and are amortised over
three years to December 2025. In addition, certain brokers are entitled to a
payment on termination in return for a non-compete obligation. The cost
related to the post-contractual payment obligation is treated as a specific
item because there is no requirement to provide service. The Group recognised
a gain of £0.3 million during the year in relation to this obligation (2024:
£0.4 million charge).
Amortisation of acquired intangible assets
An amount of £0.4 million (2024: £0.4 million) relates to the amortisation
of acquired intangible assets, primarily in relation to intangible assets
recognised as a result of the acquisition of Southport Inc in FY23.
The tax income on acquisition-related items was £0.1 million (2024: £0.1
million). The tax effect of expenses not deductible for tax was £0.8 million
(2024: £1 million).
Other items
Foreign exchange and derivative movement on Naves liability
The foreign exchange gain and fair value gain on the Naves-related liabilities
and derivative of £0.2 million (2024: £0.3 million) is included as a
specific item as it relates to the acquisition of Naves and is not related to
trading.
Cory Brothers earnout deferred consideration receivable
Due to its decreasing size, the unwinding of the discounting of the deferred
receivable due in respect of the Cory Brothers disposal is no longer treated
as a specific item (2024: £0.1 million). See Note 4.9 for further
information.
The tax credit on specific items included within other items was £0.2 million
(2024: £nil). The tax effect of income not taxable was £0.2 million.
2.3 Operating profit
Operating profit represents the results from operations before finance income
and costs, share of profit/(loss) in associate and taxation.
This is stated after charging/(crediting):
Notes 2025 2024
£'000
£'000
Staff costs 2.4 98,424 109,557
Other staff costs - acquisition related 2.4 4,453 3,239
Depreciation of property, plant and equipment 3.5 3,227 3,127
Amortisation of computer software intangible assets 3.2 173 229
Impairment of financial assets 4.2 1,039 697
Auditor's remuneration 2.6 1,354 1,794
Other professional costs 3,860 5,627
Office costs 2,166 2,145
IT and communication costs 4,411 4,175
Insurance 1,463 1,083
Net foreign exchange losses 857 1,118
2.4 Staff costs
a) Staff costs for the Group during the year (including directors)
Notes 2025 2024
£'000
£'000
(restated)
Salaries, wages and short-term employee benefits(2) 84,456 93,644
Other staff costs - acquisition related(1) 2.2 4,453 3,239
Other pension costs 5.1 1,967 2,247
Social security costs(2) 6,438 7,224
Share-based payments 6.3 5,563 6,442
Total 102,877 112,796
(1) The acquisition related staff costs relate to upfront cash payments made
in connection with the acquisition of Southport Maritime Inc. and the upfront
payments made on the acquisition of Madrid Shipping Advisors SL, which are
both treated as a remuneration expense. For further details on the upfront
payments, see Note 2.2.
(2) The FY24 amounts in relation to salaries, wages and short-term employee
benefits and social security costs have been restated to move £3.8 million of
social security costs previously included within salaries, wages and
short-term employee benefits to be included in the social security costs line
item.
The numbers above include remuneration and pension entitlements for each
director.
b) Average number of employees
2025 2024
number
number
Chartering 248 266
Risk Advisory 33 31
Investment Advisory 55 49
Central 75 63
Total 411 409
c) Key management compensation
The remuneration of key management, which the Group considers to be the
directors, is set out below.
2025 2024
£'000
£'000
Salaries, short-term employee benefits and fees 1,187 4,954
Other pension costs 59 85
Termination benefits - 131
Share-based payments 349 548
Total 1,595 5,718
Pension costs relate to contributions made to a defined contribution pension
scheme on behalf of three (2024: four) members of key management.
2.5 Finance income and costs
The tables below provide a breakdown of the key components of finance income
and finance costs.
Note 2025 2024
£'000
£'000
Finance income:
- Interest on bank deposits 4.5 358 464
- Interest on lease receivables 3.6 1 16
- Interest income on the net defined benefit asset 5.1 109 85
- Gain on derivative instruments not eligible for hedge accounting 4.4 - 273
- Foreign exchange gain on non-GBP denominated credit facilities 4.6 46 33
- Gain on Naves related derivative instruments and liability 4.7 213 333
- Interest on of Cory earnout deferred consideration receivable 4.4 39 86
Total finance income 766 1,290
Finance costs:
- Interest payable on revolving credit and overdraft facilities 4.6 (2,240) (2,407)
- Interest payable on convertible loan notes 4.7 (201) (227)
Subtotal finance costs before interest on lease liabilities (2,441) (2,634)
- Interest on lease liabilities 3.6 (276) (189)
Total finance costs (2,717) (2,823)
Finance costs - net (1,951) (1,533)
2.6 Auditor's remuneration
A more detailed analysis of the auditor's services is provided below:
2025 2024
£'000
£'000
Audit services:
- Fees payable to the Company's auditor for the audit of the Company's 702 625
Financial Statements
Fees payable to the Group's auditor and its associates for other services:
- The audit of the Group's subsidiaries pursuant to legislation 521 1,029
- Other services - interim review and reporting accountant services 131 140
1,354 1,794
All fees paid to the auditor were charged to operating profit in both years.
Included in the FY24 audit fees disclosed above is an amount of £0.4 million
in relation to incremental audit cost related to the investigation work
undertaken. See Note 2.2 for further detail.
2.7 Taxation
The taxation expense represents the sum of the current and deferred tax.
Tax currently payable is based on taxable profit for the year. Taxable profit
differs from 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.
Deferred income tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated Financial Statements. However,
deferred tax liabilities are not recognised if they arise from the initial
recognition of goodwill. Deferred income tax is also not accounted for if it
arises from the initial recognition of an asset or liability in a transaction
other than a business combination that, at the time of the transaction,
affects neither accounting nor taxable profit or loss and does not give rise
to equal taxable and deductible temporary differences. Deferred income tax is
determined using tax rates (and laws) that have been enacted or substantively
enacted by the end of the reporting period and are expected to apply when the
related deferred income tax asset is realised, or the deferred income tax
liability is settled. Deferred tax assets and liabilities are offset where
there is a legally enforceable right to offset current tax assets and
liabilities and where the deferred tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are offset where the entity
has a legally enforceable right to offset and intends either to settle on a
net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax are recognised in the Income Statement, except to the
extent that it relates to items recognised in other comprehensive income or
directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
Analysis of charge in year
2025 2024
£'000
£'000
Current tax
UK corporation tax charged to the Income Statement 831 1,015
UK adjustment in respect of previous years (6) (340)
Overseas tax on profits in the year 1,810 2,668
Overseas adjustment in respect of previous years 33 (425)
Total current tax 2,668 2,918
Deferred tax
UK current year origination and reversal of temporary differences 269 (97)
Due to change in rate of tax - (2)
UK adjustment in respect of previous years - (28)
Overseas current year origination and reversal of temporary differences 183 110
Overseas adjustment in respect of previous years - (2)
Total deferred tax 452 (19)
Taxation 3,120 2,899
Reconciliation between expected and actual tax charge 2025 2024
£'000
£'000
Profit before tax from continuing operations 9,222 7,523
Profit before tax at standard rate of UK corporation tax of 25% (2024: 24.49%) 2,305 1,842
Utilisation of deferred tax asset at lower effective tax rate - (2)
Net expenses not deductible for tax purposes 1,649 1,827
Utilisation of previously unrecognised losses (33) (36)
(Losses)/profit on overseas branch (241) 115
Tax calculated at domestic rates applicable to profits in overseas (696) (565)
subsidiaries
Share scheme movements 98 446
Unrecognised deferred tax on losses(1) 11 67
Prior year adjustments(1) 27 (795)
Total tax charge for the year 3,120 2,899
(1) The Group has £0.2 million of unrecognised deferred tax asset relating to
£0.8 million of losses. The expiry date of operating losses carried forward
is dependent upon the law of the various territories in which losses arise. As
at 28 February 2025 the losses have no expiry.
Included within the total tax charge is £0.5 million credit (2024: £0.8
million) in respect of specific items disclosed separately on the face of the
Income Statement. See Note 2.2.
The Group's future tax charge will be sensitive to the geographic mix of
profits earned, the tax rates in force and changes to the tax rules in
jurisdictions that the Group operates in.
Amounts recognised in OCI
2025 2024
£'000
£'000
Items that will not be reclassified to profit or loss
Actuarial gain in respect of defined benefit pension scheme 1,025 173
Sub-total 1,025 173
Items that will be reclassified to profit or loss
Cash flow hedge (1,601) 1,641
Deferred tax charge on cash flow hedge 400 (410)
Sub-total (1,201) 1,231
Total tax recognised in OCI 400 (410)
Total amounts recognised in OCI (176) 1,404
Within the UK current year origination and reversal of temporary differences
there is no amount (2024: £nil) in respect of deferred tax on the actuarial
gain on the Group's defined benefit pension scheme.
Deferred tax asset
Deferred tax asset
Accelerated capital allowances Trading losses Other provisions Employee benefits
Bonuses Total
At 1 March 2023 - - 1,423 621 2,750 4,794
(Charge)/credit to Income Statement 86 215 (502) (116) - (317)
Charge to other comprehensive income - - - (410) - (410)
Charge to equity - - - - (1,047) (1,047)
Exchange translation differences - - (66) 25 - (41)
At 29 February 2024 86 215 855 120 1,703 2,979
(Charge)/credit to Income Statement (42) 108 (122) 148 (194) (102)
(Charge)/credit to other comprehensive income - - - 400 - 400
(Charge)/credit to equity - - - - 133 133
Exchange translation differences - (10) (15) (17) - (42)
At 28 February 2025 44 313 718 651 1,642 3,368
Deferred tax liability
Analysis of the deferred tax liabilities As at As at
28 Feb 2025 29 Feb 2024
£'000 £'000
Temporary differences (358) (8)
Balance at end of year (358) (8)
The movement in the deferred tax liability As at As at
28 Feb 2025 29 Feb 2024
£'000 £'000
Balance at beginning of year (8) (344)
Current year origination and reversal of temporary differences (350) 336
Balance at end of year (358) (8)
The movement in the net deferred tax asset
2025 2024
£'000
£'000
Balance at beginning of year 2,971 4,450
Movement to Income Statement:
Adjustments in respect of prior years - 30
Arising on bonuses (535) (502)
Arising on other 83 491
Total movement to Income Statement (452) 19
Movement to other comprehensive income:
Related deferred tax asset 400 (410)
Exchange translation differences (42) (41)
Movement to equity 133 (1,047)
Total movement to equity and other comprehensive income 491 (1,498)
Balance at end of year 3,010 2,971
A deferred net tax asset of £3.0 million (2024: £3.0 million) 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.
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 £nil (2024: £nil).
2.8 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 ordinary shares held by the Employee
Share Ownership Plan and ordinary shares held by the ACM Employee Benefit
Trust which are not treated as outstanding.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares. The Group has dilutive ordinary shares, being those options granted to
employees where the expected consideration is less than the average market
price of the Company's ordinary shares during the period that they are
outstanding, and convertible loan notes issued in respect of the acquisition
of Naves.
Total operations 2025 2024
£'000 £'000
Profit for the year attributable to shareholders 6,102 4,624
Pence Pence
Basic earnings per share 19.41 15.65
Effect of dilutive share options (2.83) (2.85)
Diluted earnings per share 16.58 12.80
Underlying operations 2025 2025
£'000 £'000
Underlying profit for the year attributable to shareholders 9,840 10,820
Pence Pence
Basic earnings per share 31.30 36.62
Effect of dilutive share options (4.56) (6.66)
Diluted earnings per share 26.74 29.96
A reconciliation by class of instrument in relation to potential dilutive
ordinary shares and their impact on earnings is set out below:
2025 2024
Weighted average number of shares Underlying earnings Statutory earnings Weighted average number of shares Underlying earnings Statutory earnings
£'000 £'000 £'000 £'000
Used in basic earnings per share 31,435,065 9,840 6,102 29,547,810 10,820 4,624
RSP, DBP and LTIP 5,361,377 - - 6,565,016 - -
Convertible loan notes - - - - - -
Used in diluted earnings per share 36,796,442 9,840 6,102 36,112,826 10,820 4,624
3 Balance sheet non-current assets
3.1 Goodwill
Business combinations are accounted for using the acquisition method. The
goodwill recognised as an asset by the Group is stated at cost less any
accumulated impairment losses.
On the acquisition of a business, fair values are attributed to the net assets
(including any identifiable intangible assets) acquired. The excess of the
consideration transferred, any non-controlling interest recognised and the
fair value of any previous equity interest in the acquired entity over the
fair value of net identifiable assets acquired is recorded as goodwill.
Acquisition-related costs are recognised in the Income Statement as incurred
in accordance with IFRS 3.
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 as a gain on purchase.
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.
Key estimate
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
units. 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.
As part of determining the value in use of each CGU group, Management has
considered the potential impact of climate change on the business performance
over the next five years, and the terminal growth rates. While there is
considerable uncertainty relating to the longer term and quantifying the
impact on a range of outcomes, management considers that environmental-related
incremental costs are expected to have a relatively low impact. Recognising
that there are extreme but unlikely scenarios, the Group considers that while
exposed to physical risks associated with climate change (such as flooding,
heatwaves, sea level rises and increased precipitation) the estimated impact
of these on the Group is not deemed material. In addition, the Group is
exposed to transitional risks which might arise, for example, from government
policy, customer expectations, material costs and increased stakeholder
concern. The transitional risks could result in financial impacts such as
higher environmentally focused levies (e.g. carbon pricing). While the Group
is exposed to the potential financial impacts associated with transitional
risks, based on information currently available, these are not deemed to have
a significant impact.
The key assumptions and the sensitivity of them to the carrying values are
provided in the note below.
£'000
Cost
At 28 February 2023 88,116
Exchange adjustments (300)
At 29 February 2024 87,816
Exchange adjustments (409)
At 28 February 2025 87,407
Accumulated impairment
At 28 February 2023 16,709
Exchange adjustments (230)
At 29 February 2024 16,479
Exchange adjustments (315)
At 28 February 2025 16,164
Net book value at 28 February 2025 71,243
Net book value at 29 February 2024 71,337
All goodwill is allocated to cash-generating units. The allocation of goodwill
to groups of cash-generating units is as follows:
2025 2024
£'000 £'000
Chartering 68,696 68,696
Corporate Finance (part of Investment Advisory segment) 2,547 2,641
71,243 71,337
These groups of 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 Corporate Finance Division which is denominated in euros.
Goodwill denominated in foreign currencies is revalued at the Balance Sheet
date. The exchange adjustment for the year ended 28 February 2025 was a loss
of £0.1 million (2024: loss of £0.1 million).
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 key assumptions on which the value-in-use calculations are based relate to
(i) business performance over the next five years, (ii) long-term growth rates
beyond 2030 and (iii) discount rates applied.
i) Business performance over the next five years -
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. The
assumptions behind these projections are consistent with the viability
statement. 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.
ii) Long-term growth rates - This is the average
growth rate used to extrapolate cash flows beyond the budget period.
iii) Discount rates - The post-tax discount rate was
determined based on a weighted average cost of capital ("WACC") and adjusted
for CGU-specific risk factors specific to the CGU group.
The effect on cash flows of climate change was considered but assessed to have
no material impact at this time. Management does not believe that
climate-related risks nor the potential impact of climate change on the
Group's operations would materially affect the recoverability of goodwill in
either of the cash-generating units.
The results of the impairment tests are as follows:
a) Chartering
The key assumptions and resulting net present values are as follows:
Chartering 2025 2024
Post-tax discount rate 11.36% 11.86%
Equivalent pre-tax discount rate 11.82% 12.40%
Revenue (decline)/growth in year 1 (1.6)% 0.0%
Average revenue growth rate years 2-5 3.0% 3.0%
Operating profit margin years 1-5 11.4% - 12.1% 13.8% - 14.4%
Long-term growth rate 1.7% 1.7%
At 28 February 2025, the net present value of the Chartering segment 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) Corporate Finance
Revenues for the Corporate Finance Division are challenging to forecast
because of the highly variable nature of success fees. Management forecasts
over the five-year forecast period consider recent performance and reflect
management's best estimate of success fee taken into account of volatility of
the success fee. Growth rates used in the value-in-use test reflect this
variability and were based on the best estimate of Management.
Corporate Finance 2025 2024
Post-tax discount rate 13.19% 13.84%
Equivalent pre-tax discount rate 13.69% 14.45%
Revenue growth in year 1(1) 9.4% 29.0%
Average revenue growth rate years 2-5 5.0% 5.0%
Operating profit margin years 1-5 21.3% - 24.2% 12.3% - 15.9%
Long-term growth rate 1.7% 1.7%
(1) Year-on-year growth in the prior year in relation to year 1 was 29%, which
reflected recovery of revenue after lower than historically achieved
performance in FY24.
Sensitivity to impairment for Corporate Finance
To test the sensitivity of the results of the impairment review, the
calculations have been re-performed, flexing the three key assumptions:
- revenue growth rate from years 2 to 5;
- post-tax discount rate; and
- revenue outperforms or underperforms forecast in year 1 with
subsequent revenue growth in line with the above assumptions in years 2 to 5.
The recoverable amount of the Group's goodwill relating to Corporate Finance
exceeds its carrying value by £2.0 million. The below table presents the net
variance in the calculated value in use of Corporate Finance under each
scenario:
Change in revenue growth Change in post-tax discount rate Year 1 revenue outperforms or underperforms forecast
+1% -1% +2% -2% +15% -15%
£'000 £'000 £'000 £'000 £'000 £'000
Corporate Finance 310 (302) (663) 944 1,391 (1,391)
Further, the break-even points of the impairment review which would result in
an impairment when flexing these three key assumptions are as below:
Change in assumption Increase/(decrease)
Revenue growth rate from year 2 to 5 (7.4%)
Post-tax discount rate 9.8%
Revenue underperforms forecast in year 1 (22.1%)
While the break-even disclosure above relates to specific discrete inputs to
management's value-in-use calculation, a combination of smaller changes in
assumptions results in larger reductions of the value-in-use. For example, if
0% revenue growth was assumed in year 1 along with revenue growth in years 2
to 5 reduced to 1%, while maintaining a terminal growth rate, this would
result in an impairment.
3.2 Other 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.
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 provision for impairment. The amortisation of the
carrying value of the capitalised customer relationships is charged to the
Income Statement over an estimated useful life, which is up to twelve years.
The amortisation in respect of capitalised brand assets is expensed to the
Income Statement over an estimated useful life, which is between three and
twelve years.
Computer Other Total
software
intangible
£'000
assets £'000
£'000
Cost
At 28 February 2023 (restated) (1) 3,609 4,618 8,227
Additions 32 - 32
Disposals - (245) (245)
Exchange rate adjustments (3) (171) (174)
At 29 February 2024 3,638 4,202 7,840
Disposals (2) (45) 293 248
Exchange rate adjustments (4) 15 11
At 28 February 2025 3,589 4,510 8,099
Amortisation
At 28 February 2023 (restated) (1) 3,113 1,134 4,247
Charge for the year 229 449 678
Disposal - (245) (245)
Exchange adjustments (1) (24) (25)
At 29 February 2024 3,341 1,314 4,655
Charge for the year 173 412 585
Disposal(2) (44) 293 249
Exchange adjustments (3) 5 2
At 28 February 2025 3,467 2,024 5,491
Net book value at 28 February 2025 122 2,486 2,608
Net book value at 29 February 2024 297 2,888 3,185
(1) Following a review of the gross cost and gross accumulated amortisation
and impairment amounts, the Group has restated the opening gross cost and
gross amortisation and impairment amount to decrease both by £2.0 million in
relation to disposals in prior years. There is no impact on the Group's Income
Statement or movements reported in the current or prior year.
(2) The positive amount in the disposal line relates to an immaterial
correction of an amount of £0.3 million incorrectly disclosed as a disposal
in the prior year.
Other intangible assets brought forward from the prior year relate to forward
books of income acquired in acquisitions which are amortised over the period
that the income is recognised; customer relationships which are amortised over
a period of up to twelve years; and brand which is amortised over a period of
up to ten years.
At 28 February 2025, the Group had no contractual commitments for the
acquisition of computer software or other intangible assets (2024: £nil).
3.3 Investments
In accordance with IFRS 9, the Group's investments in unlisted equity
investments are measured at fair value through profit or loss as the Group has
not elected to recognise fair value gains and losses through other
comprehensive income.
2025 2024
£'000 £'000
Unlisted investments 1,720 1,633
Movement in unlisted investments £'000 £'000
Opening balance 1,633 1,780
Fair value gain/(loss) 87 (147)
Closing balance 1,720 1,633
A list of subsidiary undertakings is included in Note 7.3. The Financial
Statements of the principal subsidiary undertakings are prepared to 28
February 2025.
The Group's unlisted investments include 1,000 (2024: 1,000) ordinary £1
shares in London Tanker Brokers' Panel Limited. The investment is carried at
fair value of £1.4 million, see Note 4.4 for further details.
3.4 Investment in associate
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.
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 purchase is recognised in the Income
Statement and the carrying value of the investment in the Consolidated Balance
Sheet is increased.
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 29 February with
adjustments made for any significant transactions or events.
Investments where the Group has no significant influence are held at fair
value, with movements in fair value recorded in profit and loss.
Zuma Labs Limited
Zuma Labs Limited is a private company incorporated in England and Wales and
its registered address is Kemp House, 128 City Road, London, United Kingdom,
EC1V 2NX. Zuma Labs Limited has one share class and each share carries one
vote.
At 28 February 2025, 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
(2024: 2,500 shares, 20% of share capital and 20% of voting rights). The Group
has representation on the board of Zuma Labs Limited, and, 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 the Group's share of the net fair value of Zuma Labs Limited's
identifiable assets and liabilities is 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 with the latest statutory accounts available being for the year ended 31
March 2024. Management accounts up to 28 February 2025 have been made
available, so for practical reasons Zuma Labs Limited's management accounts
for the period ended 28 February 2025 have been used for the purposes of the
Group's full-year reporting at 28 February. Zuma Labs Limited will prepare
its next set of Financial Statements for the year ended 31 March 2025. At
28 February 2025 Zuma Labs Limited had no contingent liabilities.
There are no indicators that the carrying value of the Group's investment in
Zuma Labs Limited at 28 February 2025 is impaired.
The movements in the investment in the associate are provided below.
Zuma
£'000
At 28 February 2023 701
Share of loss in associate 12
At 29 February 2024 713
Share of profit in associate -
At 28 February 2025 713
3.5 Property, plant and equipment
Property, plant and equipment are shown at historical cost less accumulated
depreciation and any provision for impairment. Included in each category are
right-of-use assets where the Group is a lessee. Land and buildings primarily
includes right-of-use assets and leasehold improvements.
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:
Land and buildings
- over the lease term
Computer equipment - four years
Fixtures and equipment - four years or the lease term for
right-of-use assets
Land and buildings Computers Fixtures and Total
£'000
£'000
equipment
£'000
£'000
Cost
At 28 February 2023 13,232 2,010 2,011 17,253
Additions at cost 3,052 240 281 3,573
Disposals (3) (101) (45) (149)
Exchange differences (279) (28) (55) (362)
At 29 February 2024 16,002 2,121 2,192 20,315
Additions at cost 8,048 427 60 8,535
Disposals (160) (154) (55) (369)
Exchange differences 13 (3) (6) 4
At 28 February 2025 23,903 2,391 2,191 28,485
Accumulated depreciation and impairment
At 28 February 2023 9,058 1,406 1,469 11,933
Charge for the year 2,662 246 219 3,127
Reclassification (6) - 6 -
Disposals (3) (91) (45) (139)
Exchange differences (126) (21) (41) (188)
At 29 February 2024 11,585 1,540 1,608 14,733
Charge for the year 2,653 361 213 3,227
Disposals (159) (150) (55) (364)
Impairment 743 - - 743
Exchange differences 20 (5) (4) 11
At 28 February 2025 14,842 1,746 1,762 18,350
Net book value at 28 February 2025 9,061 645 429 10,135
Net book value at 29 February 2024 4,417 581 584 5,582
At 28 February 2025, the Group had no contractual commitments for the
acquisition of property, plant and equipment (2024: £nil).
3.6 Leases
Key estimate
Lease term
The Group determines the lease term as the non-cancellable period 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 also considers the local legal framework when making an assessment of
its ability to continue to occupy premises. 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.
During the year, the Group increased its right-of-use assets and corresponding
lease liabilities by £7.6 million, primarily relating to its continued use of
office space, reflecting its best estimate of the of the lease terms.
Undiscounted potential future cash outflows of £8.1 million have not been
included in the lease liability because it is not reasonably certain that the
leases will be extended (or not terminated).
The Group as a lessee
The Group has various lease arrangements for properties, and other
equipment. At inception of a lease contract, the Group 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 Group
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 on a
straight-line basis.
A right-of-use asset is capitalised on the Balance Sheet at cost, comprising
the amount of the initial measurement of the lease liability and 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.
The lease liability is initially measured at the present value of future lease
payments. Interest expense is charged to the Consolidated Income Statement
over the lease period so as to produce a constant periodic rate of interest on
the remaining balance of the liability. The lease payments are discounted
using the interest rate implicit in the lease. If that rate cannot be
determined, the lessee's incremental borrowing rate is used, being the rate
that the lessee would have to pay to borrow the funds necessary to obtain an
asset of similar value in a similar economic environment with similar terms
and conditions. Generally, the interest rate implicit in the lease is not
readily determinable, as such the incremental borrowing rate is used to
discount future lease payments.
For the Group, lease payments generally comprise the following:
− Fixed payments, less any lease incentives receivable;
− Variable payments that are based on an index or rate; and
− Payments to be made under extension options which are reasonably certain
to be exercised.
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. When an adjustment to lease payments based on an index takes
effect, the liability is remeasured with a corresponding adjustment to the
right-of-use asset.
Contracts entered into by the Group have a wide range of terms and conditions
but generally do not impose any additional covenants. Several of the Group's
contracts include indexation adjustments to lease payments in future periods
which are not reflected in the measurement of the lease liabilities at 28
February 2025. Many of the contracts entered into by the Group include
extension or termination options which provide the Group with additional
operational flexibility. If the Group considers it reasonably certain that an
extension option will be exercised or a termination option not exercised, the
additional period is included in the lease term.
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.
The Group as a lessor
The Group classifies leases as either operating or finance leases based on the
substance of the arrangement. At commencement of a finance lease, a receivable
is recognised at an amount equal to the Group's net investment in the lease.
Finance income is recognised reflecting a constant periodic rate of return on
the net investment in the lease. Lease payments from operating leases are
recognised as income on a straight-line basis.
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 term.
Land and buildings Fixtures and Total
£'000
equipment
£'000
£'000
At 28 February 2023 3,585 54 3,639
Additions 2,898 172 3,070
Reclassification 6 (6) -
Depreciation (2,249) (71) (2,320)
Exchange differences (145) (1) (146)
At 29 February 2024 4,095 148 4,243
Additions 7,570 38 7,608
Depreciation (2,407) (81) (2,488)
Impairment (743) - (743)
Disposals (2) - (2)
Exchange differences (7) (1) (8)
At 28 February 2025 8,506 104 8,610
Lease liabilities
Total
£'000
At 28 February 2023 5,027
Additions 3,021
Interest expense 189
Lease payments (3,332)
Exchange differences (127)
At 29 February 2024 4,778
Additions 7,608
Interest expense 276
Lease payments (3,382)
Exchange differences (35)
At 28 February 2025 9,245
The total cash outflow for leases is £3,382,000 (2024: £3,332,000), of which
£276,000 (2024: £189,000) represents payment of interest.
Contractual payments by maturity are provided in Note 4.4 (f).
During the year, the financial effect of revising lease terms arising from the
effect of exercising extension and termination options was £nil (2024:
increase of £375,000) in the recognised lease liabilities. As at 28 February
2025, undiscounted potential future cash outflows of £8.1 million (2024:
£2.9 million) have not been included in the lease liability because it is not
reasonably certain that the leases will be extended (or not terminated).
Lease receivables
Gross Provision Net
£'000
£'000
£'000
At 28 February 2023 866 (12) 854
Interest income 16 - 16
Lease payments (642) - (642)
Movement in provision - 12 12
At 29 February 2024 240 - 240
Interest income 1 - 1
Lease payments (241) - (241)
At 28 February 2025 - - -
2025 2024
£'000 £'000
Short-term lease expense (232) (222)
Short-term lease income 128 102
4 Balance sheet - Operating assets and liabilities
4.1 Other long-term receivables
For the accounting policy and further details on deferred and contingent
consideration receivable, see Note 4.9. The accounting policy for finance
lease receivables is set out in Note 3.6.
2025 2024
£'000 £'000
Deferred consideration - 1,304
Contingent consideration - 532
Security deposits 360 304
Prepayments 1,408 2,449
1,768 4,589
In FY24, deferred consideration of £1.3 million and contingent consideration
of £0.5 million relates to the earnout payments receivable in respect of the
disposal of Cory Brothers; further detail is provided in Note 4.9. Prepayments
includes the non-current element of the claw-back provision on joining and
retention incentives paid to certain employees. The receivable is amortised
over the claw-back period, and therefore is expected to be recovered in
greater than twelve months.
4.2 Trade and other receivables
Trade receivables and contract assets
Trade receivables and contract assets are initially recognised at fair value
(less transaction costs) and subsequently measured at amortised cost.
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 contract assets.
Specific provision for impairment is made where there is evidence that the
balances will not be recovered in full. An impairment provision for expected
credit losses is made for trade receivables and contract assets 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 are
determined based on historical credit loss experience as well as
forward-looking information. Impairment 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.
Other items
For the accounting policy and further details on deferred and contingent
consideration receivable, see Note 4.9. The accounting policy for finance
lease receivables is set out in Note 3.6.
Key estimate
Provision for impairment of trade receivables and contract assets
Trade receivables and contract assets are amounts due from customers in the
ordinary course of business. Trade receivables and contract assets 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 contract assets
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.
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. The expected loss rates applied to receivables are provided in
this note.
2025 2024
£'000 £'000
Trade receivables 28,871 26,964
Provision for impairment of trade receivables (3,433) (2,837)
Net trade receivables 25,438 24,127
Deferred consideration 1,336 1,316
Contingent consideration 654 550
Other receivables 5,078 3,949
Finance lease receivables - 240
Contract assets 1,270 1,517
Prepayments 7,111 6,031
Total 40,887 37,730
Deferred consideration and contingent consideration relate to the earnout
payments receivable in respect of the disposal of Cory Brothers; further
detail is provided in Note 4.9.
Included in other receivables in both years are VAT and other sales tax
receivables and employee loans. In the prior year, security deposits are also
included.
Prepayments includes an asset of £2.2 million (2024: £3.5 million) in
respect of the current portion of the claw-back provision on joining
incentives paid to certain employees which are being charged to the Income
Statement in accordance with the claw-back provisions of the underlying
contracts. The receivable is amortised over the claw-back period.
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.
The total receivables balance is denominated in the following currencies:
2025 2024
£'000 £'000
US dollars 31,359 28,690
Sterling 6,632 6,675
Other 2,896 2,365
Total 40,887 37,730
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 2025, trade receivables of £2.3 million (2024: £2.3
million) which were over twelve months old were treated as credit impaired and
have been provided for. No provision (2024: £nil) has been made for specific
trade receivables which are less than twelve 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. Trade receivables and
contract assets are written off where there is no reasonable expectation of
recovery. Indicators that there is no reasonable expectation of recovery
include, amongst others, the failure of a debtor to engage in a repayment plan
with the Group, and a failure to make contractual payments for a period of
greater than 365 days past due.
The ageing profile of trade receivables and the lifetime expected credit loss
for provisions and contract assets is as follows:
2025 Trade Expected loss rate Group Total provision for impairment
receivables
% provision ECL of trade receivables
£'000
£'000 provision £'000
£'000
Up to 3 months 20,138 0.018 - 365 365
3 to 6 months 2,787 0.020 - 56 56
6 to 12 months 3,002 0.050 - 150 150
Over 12 months 2,944 0.968 2,849 - 2,849
Trade receivables 28,871 0.118 2,849 571 3,420
Contract assets 1,270 0.010 - 13 13
Total 30,141 0.114 2,849 584 3,433
2024 Trade Expected loss rate Group Total provision for impairment
receivables
% provision ECL of trade receivables
£'000
£'000 provision £'000
£'000
Up to 3 months 18,685 0.015 - 282 282
3 to 6 months 3,922 0.024 - 96 96
6 to 12 months 1,905 0.052 - 98 98
Over 12 months 2,452 0.954 2,286 53 2,339
Trade receivables 26,964 0.104 2,286 529 2,815
Contract assets 1,517 0.014 - 22 22
Total 28,481 0.100 2,286 551 2,837
Movements on the provision for impairment of trade receivables and contract
assets were as follows:
2025 2024
£'000 £'000
At 1 March 2,837 3,725
Impairment charge 1,039 697
Receivables written off during the year as uncollectible (443) (1,585)
At 28/29 February 3,433 2,837
Amounts receivable written off in the year relate to previously fully provided
for amounts.
Contract assets
The Group's contract assets related to accrued income which has not yet been
invoiced at the Balance Sheet date. Significant changes in contract assets
during the period are analysed as follows:
2024
2025 £'000
£'000
At 1 March 1,517 3,388
Contract assets converted to receivables on completion (1,434) (3,292)
Contract assets arising on new contracts in-year 1,187 1,421
At 28/29 February 1,270 1,517
4.3 Trade and other payables
Commissions payable to co-brokers are recognised in trade payables due within
one year on the earlier of the date of invoicing or the date of receipt of
cash. The accounting policy for lease liabilities is set out in Note 3.6.
Current liabilities 2025 2024
£'000 £'000
Trade payables 3,646 2,214
Lease liabilities 2,733 1,925
Other taxation and social security 374 560
Other payables 1,375 1,974
Contract liabilities 533 334
Accruals 26,071 36,604
Total 34,732 43,611
Accruals primarily includes accrued bonuses and other general accruals.
The directors consider that the carrying amounts of trade payables approximate
to their fair value.
4.4 Financial instruments and risk management
The Group is exposed through its operations to the following financial risks:
- Currency risk;
- Interest rate risk;
- Credit risk; and
- 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 other processes for managing
those risks or the methods used to measure them from previous periods.
Financial instruments
i) Principal financial instruments
The principal financial instruments used by the Group, from which financial
risks arise, are as follows:
- Trade and other receivables;
- Cash and cash equivalents;
- Deferred consideration receivable;
- Contingent consideration receivable;
- Unlisted investments;
- Trade and other payables;
- Revolving credit facility;
- Lease liabilities; and
- Derivative financial instruments.
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 Level 2 Level 3 As at
£'000 £'000 £'000 28 Feb 2025
£'000
Financial assets:
Unlisted investment - - 1,720 1,720
Contingent consideration receivable - - 654 654
Derivative contracts(1) - 397 - 397
Total - 397 2,374 2,771
Financial liabilities:
Derivative contracts(1) - 679 - 679
Embedded derivative - - 29 29
Total - 679 29 708
Level 1 Level 2 Level 3 As at
£'000 £'000 £'000 29 Feb 2024
£'000
Financial assets:
Unlisted investment - - 1,633 1,633
Contingent consideration receivable - - 1,082 1,082
Derivative contracts(1) - 1,536 - 1,536
Total - 1,536 2,715 4,251
Financial liabilities:
Derivative contracts(1) - 218 - 218
Embedded derivative - - 140 140
Total - 218 140 358
(1)Currency forwards with a fair value of £0.2 million (2024: £1.3 million)
maturing within twelve months have been shown as current assets. Currency
forwards with a fair value of £0.2 million (2024: £0.2 million) maturing in
greater than twelve months of the Balance Sheet date have been shown as
non-current assets. Liabilities include currency forwards with a fair value of
£0.6 million (2024: £0.2 million) maturing within twelve months shown as
current liabilities and currency forwards with a fair value of £0.1 million
(2024: £0.0 million) maturing in greater than twelve months of the Balance
Sheet date shown as non-current liabilities.
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.
Valuation processes
The Group's finance team and Group Chief Financial Officer are responsible for
fair value measurement of financial instruments and makes the decision as to
the valuation technique to be applied, along with the level of external
support required. The Group uses external specialists to value some of the
financial instruments included within Level 3 of the fair value hierarchy. The
results of those valuations are reviewed at each reporting date within the
finance team.
The following table provides a reconciliation of movements in Level 3
financial assets during the year:
Contingent consideration receivable Unlisted investments
£'000 £'000
Fair value at 28 Feb 2023 1,407 -
Transfer into Level 3 - 1,780
Unrealised fair value gain/(loss) recognised in operating costs 83 (147)
Cash settlement (408) -
Fair value at 29 Feb 2024 1,082 1,633
Unrealised fair value gain/(loss) recognised in operating costs 128 87
Cash settlement (556) -
Fair value at 28 Feb 2025 654 1,720
Unlisted investments
The unlisted investment primarily relates to the Group's investment in the
London Tanker Brokers' Panel, see Note 3.3. In FY23, the investment was
carried at fair value, based on the value of the most recent comparable
transaction and was therefore classified as Level 2 in the fair value
hierarchy. Due to the time which has passed since the most recent comparable
market transaction, the Group has valued the investment in the current year
based on an income approach which has resulted in the fair value being deemed
to be in Level 3 of the fair value hierarchy. The Group's policy is that the
beginning of the financial year is considered the date of transfer between
levels in the fair value hierarchy. The significant unobservable inputs into
the valuation are:
- a discount rate of 16.0% (2024: 16.4%); and
- expected income from the investment.
An increase in the discount rate of 2% would result in an increased fair value
loss of £0.2 million recognised in the Income Statement, while a decrease in
the discount rate of 2% would result in a gain of £0.2 million recognised in
the Income Statement. A 10% increase/decrease in expected income would result
in a £0.1 million gain/loss.
Contingent consideration receivable
The fair value of the contingent consideration receivable includes
unobservable inputs and are therefore classified as Level 3. The contingent
consideration receivable relates to the disposal of the Logistics Division
whereby the Group 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 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 5.51% (2024: 5.29%). The discount rate takes into account the
credit risk of Vertom Agencies BV. See Note 4.9 for further details.
Derivative contracts
Contracts with derivative counterparties are based on ISDA Master Agreements.
Under the terms of these arrangements, only in certain situations will the net
amounts owing/receivable to a single counterparty be considered outstanding.
The Group does not have the present legal ability to set off these amounts and
so they are not offset in the Balance Sheet. Of the derivative assets and
derivative liabilities recognised in the Balance Sheet, an amount of £0.4
million (2024: £0.2 million) would be set off under enforceable master
netting agreements.
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.
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. The 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 a
Black-Scholes valuation model.
A gain of £111,000 (2024: £244,000 gain) has been recognised in the Income
Statement in respect of the fair value movement of the embedded derivative
from 1 March 2024 to 28 February 2025.
Financial instruments not measured at fair value
The Group's financial assets and liabilities that are not measured at fair
value are measured at amortised cost. Due to their short-term nature or
frequent repricing, the carrying value of these financial instruments
approximates their fair value. Their carrying values are as follows:
Financial assets 2025 2024
£'000 £'000
Cash and cash equivalents 20,477 27,951
Deferred consideration receivable 1,336 2,620
Trade and other receivables 32,237 30,159
Total 54,050 60,730
Financial liabilities 2025 2024
£'000 £'000
Trade and other payables 6,095 4,851
Convertible loan notes 2,401 2,978
Long-term borrowings 22,936 26,966
Total 31,432 34,795
Deferred consideration receivable
The initial fair value of the deferred consideration receivable was determined
by discounting the guaranteed minimum amounts as per the SPA to present value
using a discount rate of 2.39% and it is subsequently measured at amortised
cost.
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 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 its transactional exposures to foreign currency risks using
forward exchange contracts and currency options. The Group is primarily
exposed to fluctuations in US dollar to sterling exchange rates on foreign
currency sales and hedges a proportion of those expected cash flows out to 17
months. The principal source of hedge ineffectiveness is the risk of changes
in timing of the forecast transaction or that they do not occur, which is
addressed by only hedging a proportion of future foreign currency sales. There
were no hedged transactions forecast in the current year which did not occur
(2024: £nil).
The Group's results, which are reported in sterling, are exposed to changes in
foreign currency exchange rates across a number of different currencies with
the most significant exposures relating to the US dollar. The Group is exposed
to the underlying translational movements which remain outside the control of
the Group. The Group's translational exposures to foreign currency risks
relate to both the translation of income and expenses and net assets of
overseas subsidiaries which are converted into sterling on consolidation. The
Group finances overseas investments partly through the use of foreign currency
borrowings in order to provide a net investment hedge over the foreign
currency risk that arises on translation of its foreign currency
subsidiaries.
The Group continues to apply hedge accounting to hedging instruments that meet
the criteria set out in IFRS 9.
Hedge accounting
Derivatives are initially recognised at fair value and are subsequently
remeasured at their fair value at each Balance Sheet date with gains and
losses recognised immediately in the Income Statement unless hedge accounting
is applied. 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 within finance costs or income.
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 concluded that the relationship can no longer be expected to
remain highly effective in achieving its objective, the hedge relationship is
terminated.
The fair value of derivative contracts is based either directly or indirectly
on market prices at the Balance Sheet date.
Financial assets and liabilities are classified in accordance with the fair
value hierarchy specified by IFRS 13. See Note 4.4.
Cash flow hedge accounting
Cash flow hedges are used to hedge the variability in cash flows of highly
probable forecast transactions caused by changes in foreign currency exchange
rates and interest rates. Where a derivative financial instrument is
designated in a cash flow hedge relationship with a highly probable forecast
transaction, the effective part of any change in fair value arising is
deferred in the cash flow hedging reserve within equity, via the Statement of
Comprehensive Income. The Group designates a portion, being the first US
dollar amounts in a particular period, of forecast revenue transactions in
cash flow hedges and reports any gain or loss as part of revenue when the
revenue is recognised. The gain or loss relating to the ineffective part is
recognised in the Income Statement within net finance expense. Amounts
deferred in the cash flow hedging reserve are reclassified to the Income
Statement in the periods when the hedged item is recognised in the Income
Statement.
If a hedging instrument expires or is sold 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. If the hedged transaction is no longer expected to take
place, the cumulative unrealised gain or loss recognised in equity is
recognised immediately in the Income Statement.
The critical terms of the hedging instruments match the hedged transactions in
relation to currency, timing and amounts, meaning there is a clear economic
relationship between the hedging instrument and hedged item as required under
IFRS 9. Thereby, management qualitatively demonstrates that the hedging
instrument and the hedged items will move equally in the opposite direction.
A gain of £1,500,000 (2024: £2,231,000 gain) in relation to effective hedges
has been recognised in the Income Statement in respect of derivative contracts
which have matured in the period. No ineffectiveness in relation to hedge
accounting has been recognised in the period.
Forward currency contracts 2025 2024
Carrying amount of asset £ 397,427 £1,535,990
Carrying amount of liability £ (679,140) £(217,622)
Total notional amount US $115,650,000 US $118,950,000
Maturity dates March 2025 to September 2026 March 2024 to July 2025
Hedge ratio 1:1 1:1
Change in fair value of outstanding hedging instruments since inception of the £ (281,714) £1,318,368
hedge
Change in value of hedged item used to determine hedge ineffectiveness £ 281,714 £(1,318,368)
Weighted average strike rate for outstanding hedging instruments 1.26 1.25
Net investment hedge accounting
The Group uses its US dollar denominated borrowings as a hedge against the
translation exposure on the Group's net investment in overseas companies. The
Group designates the spot rate of the loans as the hedging instrument. There
was no ineffectiveness to be recognised on hedges of net investments in
foreign operations. Where the hedge is fully effective at hedging the
variability in the net assets of such companies caused by changes in exchange
rates, the changes in value of the borrowings are recognised in the
translation reserve within equity, via the Statement of Comprehensive Income.
The ineffective part of any change in value caused by changes in exchange
rates is recognised in the Income Statement within finance income or costs.
The effective portion will be recycled into the Income Statement on the sale
of the foreign operation.
The table below provides further information on the Group's net investment
hedging relationships:
2025 2024
£'000 £'000
Hedge ratio 1:1 1:1
Change in value of hedging instruments due to foreign currency movements since (19) 249
1 March
Change in value of the hedged item used to determine hedge effectiveness 19 (249)
The balances and movements into and out of the foreign currency translation
reserve are shown in the Consolidated Statement of Comprehensive Income and
the Consolidated Statement of Changes in Equity respectively. The amount in
the foreign currency translation reserve in relation to hedge accounting is a
gain of £0.1 million (2024: £0.1 million gain) and is split as follows:
- continuing net investment hedges gain of £0.1 million (2024:
£0.1 million gain); and
- hedging relationships for which hedge accounting is no longer
applied, £nil (2024: £nil).
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% +10% strengthening £'000 -10%
weakening weakening
£'000 £'000
28 February 2025
US dollars 1,247 (1,020) (6,762) 5,533
Euros 255 (209) 255 (209)
Total 1,502 (1,229) (6,507) 5,324
29 February 2024
US dollars 1,621 (1,621) (9,474) 7,100
Euros 40 (40) 40 (40)
Total 1,661 (1,661) (9,434) 7,060
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 entities.
The Group has not entered into any financial instruments to fix or hedge the
interest rates applied to its bank borrowings and overdrafts.
The following table sets out the carrying amount, by maturity, of the Group's
financial instruments which are exposed to interest rate risk:
Note 2025 2024
£'000 £'000
Floating rate:
Within one year
Cash and cash equivalents 4.5 20,472 27,941
Long-term borrowings 4.6 (23,210) (27,237)
(2,738) 704
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 2025
Cash and cash equivalents 251 (251) 251 (251)
Long-term borrowings (233) 233 (233) 233
Total 18 (18) 18 (18)
29 February 2024
Cash and cash equivalents 308 (308) 308 (308)
Long-term borrowings (266) 266 (266) 266
Total 42 (42) 42 (42)
Credit risk
The maximum exposure to credit risk at the end of the reporting period is the
carrying amount of each class of financial assets. 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 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 4.4.
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 receives
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.
The following table sets out the undiscounted contractual amounts due, in
relation to the Group's financial liabilities which exposes the Group to
liquidity risk:
At 28 February 2025 Up to Between Between Between Over Total Total
3 months
3 and
1 and
2 and
5 years
contractual
carrying
12 months
2 years
5 years
amount
amount
£'000
£'000
£'000 £'000 £'000 £'000 £'000
Trade and other payables 5,750 364 - - - 6,114 6,095
Loans and borrowings 367 1,102 1,469 24,228 - 27,166 22,936
Lease liabilities 761 2,362 3,371 3,589 6 10,089 9,245
Convertible loan notes 36 2,454 - - - 2,490 2,401
Total 6,914 6,282 4,840 27,817 6 45,859 40,677
Forward currency contracts 679
Gross outflows 7,348 46,032 25,618 - - 78,998
Gross inflows (7,288) (45,474) (25,715) - - (78,477)
Net outflow from derivative contracts 60 558 (97) - - 521
At 29 February 2024 Up to Between Between Between Over Total Total
3 months
3 and
1 and
2 and
5 years
contractual
carrying
12 months
2 years
5 years
amount
amount
£'000
£'000
£'000 £'000 £'000 £'000 £'000
Trade and other payables 4,245 606 - - - 4,851 4,851
Loans and borrowings 487 1,460 28,586 - - 30,533 26,966
Lease liabilities 846 1,253 1,013 2,062 44 5,218 4,778
Convertible loan notes 46 47 3,190 - - 3,283 2,978
Total 5,624 3,366 32,789 2,062 44 43,885 39,573
Forward currency contracts 218
Gross outflows 1,779 7,946 1,818 - - 11,543
Gross inflows (1,769) (7,784) (1,775) - - (11,328)
Net outflow from derivative contracts 10 162 43 - - 215
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.
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 2025 and 29 February 2024.
4.5 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.
2025 2024
£'000 £'000
Cash at bank and cash in hand 20,477 27,951
Total 20,477 27,951
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 £6.0 million (2024: £4.6 million) 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.
4.6 Long-term liabilities
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.
Modification of terms of financial liabilities
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.
2025 2024
£'000 £'000
Long-term borrowings
Secured revolving credit facilities 22,936 26,966
Lease liabilities 6,512 2,853
Total 29,448 29,819
The Group's revolving credit facility ("RCF") is for £30.0 million plus an
accordion limit of £10.0 million and had an initial termination date of
November 2025. During the year, the Group exercised an option to extend the
facility by two years which was approved by the lender, extending the term to
November 2027. Drawdown of the accordion facility is subject to additional
credit approval. The RCF agreement has an EBITDA leverage covenant of 2.5x and
a minimum interest cover of 4x. At 31 May 2024, 31 August 2024, 30 November
2024 and 28 February 2025, the Group met all financial covenant tests. 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
non-current. The amounts drawn under the RCF bear interest based on SONIA,
SOFR and EURIBOR from amounts drawn in sterling, US dollars and euros
respectively, plus a credit margin dependent on the Group's leverage ratio. As
at 28 February 2025, the Group's net debt was £2.5 million (29 February 2024:
£1.0 million net cash) with available headroom in the £30.0 million RCF of
£6.8 million (at 29 February 2024: £2.8 million) (net cash is calculated as
cash less secured RCF). All revolving credit facilities are drawn by Braemar
Plc.
The directors consider that the fair value of the revolving credit facility
liability is equivalent to its carrying amount.
4.7 Convertible loan notes
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 is
recognised as a euro liability initially recognised at fair value and
prospectively accounted for applying the effective interest rate method. As
the loan notes are denominated in euros, the conversion feature does not meet
the definition of an equity instrument. As a result, it is treated as a
separated embedded derivative and is 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.
In September 2017, the Group acquired the entire share capital of Naves
Corporate Finance GmbH ("Naves"). Naves is 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 acquisition agreement provided for consideration of £16.0 million
(€18.4 million) payable as follows:
i) at completion in cash of £7.3 million (€8.3 million), in
shares of £1.3 million (€1.5 million) and in convertible loan notes of
£6.4 million (€7.4 million); and
ii) deferred consideration in cash of £0.5 million (€0.6 million)
and convertible loan notes of £0.5 million (€0.6 million), payable in
instalments over the three years after the acquisition.
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:
i) deferred cash of £1.3 million (€1.5 million) and deferred
convertible loan notes of £4.3 million (€4.9 million) 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 £9.4 million (€11.0
million) 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 £4.6 million (€5.3 million).
Following the issuance of new convertible loan notes in the prior year, at 28
February 2025 no amounts are subject to future service conditions.
Convertible instruments
The Group issued convertible loan notes in connection with its acquisition of
Naves in September 2017.
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.
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 £43.9 million (€50.0 million) is
reflected in the audited Financial Statements of the Group.
The embedded derivatives within the convertible loan notes are valued using
Level 3 hierarchy techniques under IFRS 13. See Note 4.4.
The total value of convertible loan note liabilities, including linked
derivatives, is £2.4 million (2024: £3.1 million). The following table
shows amounts in the Group balance sheet relating to the convertible loan
notes issued on the acquisition of Naves.
2025 2024
Represented in the Group Balance Sheet £'000 £'000
(restated(1))
Current liabilities:
Convertible loan notes 2,401 2,978
Derivatives 29 140
2,430 3,118
(1) Restatement for the adoption of 'Classification of Liabilities as Current
or Non-current and Non-current liabilities with covenants - Amendments to IAS
1'. For further details, see Note 1.1.
The movement in the Naves-related balances in the Group Balance Sheet during
the year is explained by the items below:
2025 2024
£'000 £'000
Total Naves-related balances at start of year 3,118 3,935
Finance expense 201 227
Derivative (gain)/loss (111) (244)
Foreign exchange movements (102) (89)
Cash paid (676) (711)
Total movements (688) (817)
Total Naves-related balances at year-end 2,430 3,118
The current year cash paid includes interest of £0.1 million (2024: £0.1
million).
The loan notes have the following maturities:
Accounting value Nominal value
2025 2024 2025 2024
£'000 £'000 €'000 €'000
Due at the reporting date
30-Sep-24 - 568 - 699
30-Sep-25 2,401 2,410 2,929 2,929
2,401 2,978 2,929 3,628
Derivatives thereon 29 140
Total liabilities on loan notes 2,430 3,118
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.
4.8 Reconciliation of liabilities from financing activities
RCF Convertible loan notes Lease Total
borrowings
liabilities
£'000
£'000 £'000
£'000
At 1 March 2024 26,966 2,978 4,778 34,722
Cash flows (4,000) (584) (3,106) (7,690)
Non-cash flows:
- Interest accruing in the period 121 109 - 230
- Fees paid reported as operating cash flows (123) - - (123)
- New leases - - 7,608 7,608
- Effects of foreign exchange (28) (102) (35) (165)
At 28 February 2025 22,936 2,401 9,245 34,582
Current portion - 2,401 2,733 5,134
RCF Convertible loan notes Lease Total
borrowings
liabilities
£'000
£'000 £'000
£'000
At 1 March 2023 27,815 3,551 5,027 36,393
Cash flows (598) (598) (3,143) (4,339)
Non-cash flows:
- Interest accruing in the period 153 114 - 267
- Fees paid reported as operating cash flows (122) - - (122)
- New leases - - 3,021 3,021
- Effects of foreign exchange (282) (89) (127) (498)
At 29 February 2024 26,966 2,978 4,778 34,722
Current portion - 632 1,925 2,557
4.9 Deferred and contingent consideration receivable
Contingent consideration receivable is initially recognised at fair value and
is subsequently remeasured at its fair value at each Balance Sheet date. The
resulting gain or loss is recognised immediately in the Income Statement.
Contingent consideration receivable is classified as Level 3 in accordance
with the fair value hierarchy specified by IFRS 13. Deferred consideration is
initially measured at its fair value and subsequently measured at amortised
cost less provision for impairment.
On 28 February 2022, the Group sold Cory Brothers to Vertom Agencies BV for
maximum consideration of £15.5 million. Initial cash proceeds of £6.5
million 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
twelve-month earnout periods. The remaining "earnout" payments are subject to
a minimum of £1.3 million and a combined maximum of £3.2 million.
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. 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 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. Contingent consideration receivable is initially recognised at fair
value and subsequently measures at fair value through profit and loss.
The fair value of the contingent consideration is calculated using the
forecast gross profit for the combined VertomCory business for each earnout
period, applying the agreed percentage, deducting the minimum payment and
discounting the forecast contingent cashflows. The valuation of the
contingent consideration involves two 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 5.51% (2024:
5.45%) was used to calculate the net present value; this was based on the
credit risk of Vertom Agencies BV.
Fair value of Cory Brothers deferred and contingent consideration receivable
The agreed minimum earnout payment is presented as deferred consideration and
measured at amortised cost, using a discount rate of 2.39% determined on
initial measurement. The uncertain element of each earnout payment is
measured at fair value through profit or loss and presented as contingent
consideration.
Deferred and contingent consideration are included in other long-term
receivables (see Note 4.1) and current other receivables (see Note 4.2). The
amortised cost of the deferred consideration is £1.3 million (2024: £2.6
million). The fair value of the contingent consideration is £0.7 million
(2024: £1.1 million).
During the year, the Group received £1.8 million (2024: £1.5 million) which
is included in the Group Cash Flow Statement with £1.7 million (2024: £1.4
million) allocated to investing activities and £0.1 million (2024: £0.1
million) to interest received in relation to the deferred consideration
payment.
5 Employee remuneration schemes
5.1 Long-term employee benefits
Key estimate
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 at each reporting date.
The Company is aware of a UK High Court legal ruling in June 2023 between
Virgin Media Limited and NTL Pension Trustees II Limited, which decided that
certain historical rule amendments were invalid if they were not accompanied
by actuarial certifications. The ruling was subject to appeal and in July 2024
the Court of Appeal confirmed the UK High Court legal ruling from 2023. The
Company, together with the pension scheme trustees, is in the process of
assessing the possible impact of this ruling. As it is not possible at
present to estimate the impact, if any, from the ruling, no adjustments have
been made to the defined benefit asset recognised in the Financial Statements.
Critical judgement
Recoverability of defined benefit pension scheme net asset
The free-standing tax charge on the net pension asset reduced from 35% at 29
February 2024 to 25% from 6 April 2024. This measure was substantively enacted
on 11 March 2024 resulting in an increase to the present value of the defined
benefit asset, along with an increase in the discount rate from 5.0% at 29
February 2024 to 5.3% at 28 February 2025. The UK defined benefit scheme
continues to be in an actuarial surplus position at 28 February 2025 (measured
on an IAS 19 "Employee Benefits" basis) of £2.5 million (29 February 2024:
£1.4 million). The surplus has been recognised on the basis that the Group
has an unconditional right to a refund, assuming the gradual settlement of
Scheme liabilities over time until all members have left the Scheme. The
surplus will be subject to a tax charge on its recovery which the Group does
not believe meets the definition of an income tax under IAS 12, and, as a
result, the surplus has been presented net of the expected taxes payable of
£0.9 million (2024: £0.8 million), at a rate of 25% (2024: 35%).
The Group has the following long-term employee benefits:
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 operates 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 asset or liability 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 net of tax, excluding
interest, are recognised in the period in which they arise within the
Statement of Comprehensive Income.
When the defined benefit plan is in a surplus, the asset is recognised at the
lower of the surplus and the asset ceiling, less any associated costs, such as
taxes payable.
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.
The Group operates a defined benefit scheme in the UK. A full actuarial
valuation was carried out as at 31 March 2023 and updated by the IAS 19
valuation as at 28 February 2025. All valuations have been carried out by a
qualified independent actuary.
The Group's obligations in respect of the funded defined benefit scheme at 28
February 2025 were as follows:
2025 2024
£'000 £'000
Present value of funded obligations 9,904 10,609
Fair value of scheme assets, net of tax (12,452) (12,023)
Total surplus of defined benefit pension scheme (2,548) (1,414)
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 trust assets and
the day-to-day administration of benefits.
Under the Scheme, employees are entitled to annual pensions on retirement at
age 60 of 1/60th 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 subject to an
earnings cap. Other benefits are payable, for example those provided on death.
The scheme was closed to future accrual and 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 50% of the liabilities are
attributable to deferred pensions for current and former employees, with the
remaining 50% 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 14 years
(2024: 15 years).
Funding implications
UK legislation requires that pension schemes are funded prudently. The most
recent funding valuation of the Scheme was carried out by a qualified actuary
as at 31 March 2023 and showed a surplus of £0.3 million.
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
An increase in corporate bond yields will decrease the value placed on the
Scheme's liabilities for accounting purposes, although this will be partially
offset by a decrease in the value of the Scheme's bond holdings.
Inflation risk
A 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
scheme 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.
The principal assumptions used for updating the latest valuation of the Scheme
were:
2025 2024
(% p.a.) (% p.a.)
Discount rate 5.3 5.0
CPI inflation 2.6 2.6
Pension and deferred pension increases:
CPI capped at 2.5% p.a. 2.3 2.1
CPI capped at 5.0% p.a. 2.6 3.0
2025 2024
Years Years
Life expectancy from age 60 for:
Current 60-year-old male 25.6 25.6
Current 60-year-old female 28.1 28.0
Post-retirement mortality S2 PXA, CMI 2023/2022 (min 1.25%)
Early retirement No allowance for early retirement
Withdrawals from active service No allowance
Cash commutation 80% of members assumed to take maximum lump sum (2024: 80%)
All members are assumed to retire at age 60.
The Scheme's assets are split by type of asset in the following table.
Scheme assets 2025 2024
£'000 £'000
Scheme assets are comprised as follows:
UK equities - 359
Overseas equities 1,387 4,387
High yield debt 45 986
Cash 395 1,031
Inflation-linked bonds 1,057 1,142
Corporate bonds 2,187 2,793
Government bonds 728 1,726
Diversified growth funds 7,503 360
Total 13,302 12,784
The Pension Scheme assets do not include any ordinary shares issued by the
Company. All assets are held through pooled investment vehicles.
Expense recognised in the Income Statement (included in operating costs) 2025 2024
£'000 £'000
Interest income on net asset/liability (109) (85)
Income recognised in Income Statement (109) (85)
Remeasurements in other comprehensive expense:
(Gain)/loss on assets in excess of that recognised in net interest (277) (201)
Actuarial gains due to changes in financial assumptions (693) (179)
Actuarial loss/(gain) due to changes in demographic assumptions 27 127
Actuarial (gain)/loss due to liability experience (171) (77)
Expected tax charge on recovery of assets 89 157
Gain recognised in other comprehensive income (1,025) (173)
Total amount recognised in Income Statement and other comprehensive expense (1,134) (258)
Changes to the present value of the defined benefit obligation are analysed as
follows:
2025 2024
£'000 £'000
Opening defined benefit obligation 10,609 10,558
Interest expense 530 517
Actuarial gains due to changes in financial assumptions (693) (179)
Actuarial loss/(gain) due to changes in demographic assumptions 27 127
Actuarial (gain)/loss due to liability experience (171) (76)
Net benefit payments from scheme (398) (338)
Closing value at 28 February (2024: 29 February) 9,904 10,609
Changes in the fair value of plan assets are analysed as follows:
2025 2024
£'000 £'000
Opening fair value at 1 March 12,023 11,678
Interest income 639 602
Fair value gain/(loss) on assets 277 201
Contributions by employers - 37
Net benefit payments from scheme (398) (338)
Expected tax charge on recovery of assets (89) (157)
Closing value at 28 February (2024: 29 February) 12,452 12,023
The Group does not expect to make any contributions to the scheme in the next
twelve months.
Actual return on Scheme assets 2025 2024
£'000 £'000
Interest income on plan assets 639 602
Remeasurement gain/(loss) on assets 277 201
Actual return on assets 916 803
Sensitivity analysis
The table below illustrates the sensitivity of the Scheme liabilities at 28
February 2025 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. 9.0 891
Inflation assumption increased by 0.5% p.a.(1) 5.9 584
Increase in life expectancy of one year for all members reaching 60 2.5 248
(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.
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
£1,967,000 (2024: £2,247,000) which was in respect of continuing operations.
Contributions of £190,000 were due to these schemes at 28 February 2025
(2024: £180,000).
The assets of these schemes are held separately from those of the Group in
funds under the control of the Trustees.
5.2 Share-based payments
The Group operates a number of equity-settled share-based payment schemes.
No awards may be granted under the schemes set out below 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).
All of the Group's share schemes are accounted for as equity-settled
share-based payments because they only entitle the employee to receive equity
instrument issued by the Parent Company. 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. Occasionally the Group, at its discretion, might repurchase vested
equity instruments. In accordance with IFRS 2, such payments to employees are
accounted for as a deduction from equity, except to the extent the payment
exceeds the fair value of the equity instruments repurchased.
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 6.3 provides detail on the ESOP and the EBT and
movements in shares to be issued.
Key estimate
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 the Income Statement such that
the cumulative expense reflects the revised estimate, with a corresponding
adjustment to reserves.
A 5% decrease in the forfeiture assumption during FY25 would result in an
additional charge of £0.5 million (2024: £0.5 million) to the Income
Statement, while a 5% increase in the forfeiture assumption during FY25 would
result in a reduced charge of £0.7 million (2024: £0.6 million). While the
Group believes that a change in estimate of 5% or greater for all awards in
any one year is unlikely, due to the fact that the value of awards are not
uniform between employees, the Group believes that there is a significant risk
that a revision to the forfeiture estimate could result in a material impact
to the Income Statement in the next financial year depending on the profile of
leavers.
Deferred Bonus Plan ("DBP")
The Company adopted a Deferred Bonus Plan in May 2020 (the "2020 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 "2020 CSOP"). Where an employee
receives a linked award under the 2020 DBP, if the Company's share price rises
over the vesting period, the 2020 CSOP award can be exercised with the value
of shares delivered on the vesting of the 2020 DBP award being reduced by the
exercise gain on the 2020 CSOP award. Awards under the 2020 DBP and the 2020
CSOP may be settled by the issue of new shares of by way of transfer of shares
from the ESOP. Historical 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.
The number of awards granted under the Deferred Bonus Plan each year is
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 and is
subject to continued employment. Awards made to new joiners are expensed
over the period from date of joining to date of vesting. Their fair value is
estimated based on the share price at the time of grant less the expected
dividend to be paid during the vesting period. The number of awards which are
expected to vest is estimated by management based on levels of expected
forfeitures.
Restricted Share Plan ("RSP")
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. Their fair value is
estimated based on the share price at the time of grant less the expected
dividend to be paid during the vesting period. The number of awards which are
expected to vest is estimated by management based on levels of expected
forfeitures.
Long Term Incentive Plan ("LTIP")
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 typically subject to a performance condition such as earnings
per share ("EPS") or Total Shareholder Return ("TSR"), a market-based
condition.
The fair value of awards with the EPS condition are non-market conditions and
their fair value is estimated based on the share price at the time of grant
less the expected dividend to be paid during the vesting period. The fair
value of awards containing market conditions is determined using Monte Carlo
simulation models. The number of awards which are expected to vest is
estimated by management based on levels of expected forfeitures and the
expected outcome of the EPS condition. For awards subject to market
conditions, no adjustment is made to reflect the likelihood of the market
condition being met nor the actual number of awards which lapse as a result of
the condition not being met.
The Company operates a variety of share-based payment schemes which are listed
below.
a) Deferred Bonus Plan
Details of the share awards in issue and the movements in the year are given
below:
Share scheme Number at Granted Exercised Forfeited Number at Exercise price (pence) Exercisable
1 March 28 February
2024 2025
Jun-21 1,112,889 - (1,035,102) (72,608) 5,179 nil June 2024
Nov-21 239,415 - (225,607) (13,808) - nil November 2024
Sep-22 879,844 - - (111,210) 768,634 nil June 2025
Jan-23 347,718 - - (6,175) 341,543 nil June 2025
Feb-23 121,944 - - - 121,944 nil June 2025
Dec-23 1,647,204 259,240 - (282,073) 1,624,371 nil July 2026
Jul-24 - 2,066,840 - (15,111) 2,051,729 nil July 2027
Total 4,349,014 2,326,080 (1,260,709) (500,985) 4,913,400
The weighted average share price on exercise for awards exercised during the
year was £2.89 (2024: £2.82). The weighted average share price at grant date
for awards granted during the year was £2.97 (2024: £2.75).
Under the 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 2025, the ESOP held 1,583,460 ordinary shares
(2024: 2,303,211). 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.
b) Restricted Share Plan
Details of the RSP share awards in issue and the movements in the year are
given below:
Share scheme Number at Granted Exercised Lapsed Number at Exercisable
1 March 28 February between
2024 2025
July 2014 6,250 - (6,250) - - Jul 17 - Jul 24
August 2015 12,500 - (12,500) - - Aug 18 - Aug 25
Total 18,750 - (18,750) - -
The weighted average share price on exercise for awards exercised during the
year was £2.98 (2024: £2.71).
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 is 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.
c) 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 segmental operating profit.
Details of the LTIP share awards in issue and the movements in the year are
given below:
Share scheme Number at Granted Exercised Lapsed Number at Exercisable
1 March 28 February between
2024 Forfeited 2025
LTIP 2018 33,294 - (33,294) - - - May 23 - Oct 28
LTIP 2019 166,200 - (166,200) - - - Jul 24 - Jul 29
LTIP 2020 375,000 - - - - 375,000 Jul 25 - Jul 30
LTIP 2021 300,884 - - (300,884) - - Jun 26 - Jun 31
LTIP 2022 (granted FY23) 545,848 - - - (51,903) 493,945 Jul 27 - Jul 32
LTIP 2023 369,958 - - - - 369,958 Dec 28 - Dec 33
LTIP 2024 394,560 - - - 394,560 Jul 29 - Jul 34
Total 1,791,184 394,560 (199,494) (300,884) (51,903) 1,633,463
The weighted average share price at grant date for awards granted during the
year was £2.97 (2024: £2.75). The weighted average share price on exercise
for awards exercised during the year was £2.46 (2024: None exercised)
The fair value of the LTIP 2021 award which has a TSR-based vesting condition
has been calculated using a Monte Carlo simulation. The fair value of the
other LTIPs is determined based on 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 is recognised as an expense over the period from the
date of grant to the vesting date. The awards are satisfied by the issue of
new shares.
d) Other share-based payments
On 5 December 2022, 253,434 shares were awarded as a joining incentive to
certain employees of Madrid Shipping Advisors SL and on 16 December 2022,
1,016,121 shares were issued to the former owners of Southport as part of the
acquisition. In addition, on the acquisition of Southport, a further 872,821
shares were awarded to key employees of Southport. The fair value of the
awards is determined based on the share price at the time of grant less the
expected dividend to be paid during the three-year vesting period calculated
using the market consensus dividend yield.
The value of the awards is recognised as an expense over the period from the
date of grant to the vesting date. The Southport Maritime Inc. awards will be
satisfied by the issue of new shares.
Share award Number at Granted Exercised Lapsed Number at Vesting
1 March 28 February
2024 Forfeited 2025
Southport Maritime Inc. 1,888,942 - - - - 1,888,942 Dec 25
Madrid Shipping Advisors SL 253,434 - (168,956) - - 84,478 Dec 23 - Dec 25
6 Share capital and other reserves
6.1 Share capital
Ordinary shares Ordinary shares
2025 2024 2025 2024
Number Number £'000 £'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
2025 2024 2025 2024 2025 2024
Number Number £'000 £'000 £'000 £'000
b) Issued
Fully paid ordinary shares of 10 pence each
As at start of year 32,924,877 32,924,877 3,292 3,292 - 53,796
Capital reduction - - - - - (53,796)
As at end of year 32,924,877 32,924,877 3,292 3,292 - -
No shares remained unpaid at 28 February 2025 or 29 February 2024. The Company
has one class of ordinary shares which carry no right to fixed income.
6.2 Dividends
Amounts recognised as distributions to equity holders in the year:
2025 2024
£'000 £'000
Ordinary shares of 10 pence each
Final dividend of 9.0 pence per share for the year ended 29 February 2024 paid 2,862 2,440
on 9 September 2024 (2024: 8.0 pence per share paid on 9 February 2024)
Interim dividend of 4.0 pence per share paid on 2 April 2024 1,222 -
Interim dividend of 4.5 pence per share paid on 13 January 2025 1,413 -
5,497 2,440
The right to receive dividends on the shares held in the ESOP has been waived
(see Note 6.3). The dividend saving through the waiver is £0.1 million
(2024: £0.2 million).
For the year ended 28 February 2025, a final ordinary dividend of 2.5 pence
per share has been proposed totalling £0.8 million.
6.3 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. During the year, the Group completed the
process of winding up the EBT with the shares held being sold in the market.
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 trust by the ESOP. Shares allocated by the ESOP
to satisfy share awards issued by the Group are released at cost on a first in
first out basis.
£'000
At 28 February 2023 10,607
Shares acquired by the ESOP 6,125
ESOP shares allocated (9,592)
At 29 February 2024 7,140
Disposal of EBT shares (521)
Shares acquired by the ESOP 2,376
ESOP shares allocated (4,661)
At 28 February 2025 4,334
As at 28 February 2025, the ESOP held 1,583,460 (2024: 2,303,211) 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.
As part of the acquisition of ACM Shipping Group plc in July 2014, the Company
issued 125,621 shares into an Employee Benefit Trust ("EBT") previously run by
ACM Shipping Group plc. At 29 February 2024, the ACM EBT held 62,290 ordinary
shares of 10 pence each, which were sold during the period.
The total cost to the Company of shares held in the ESOP at 28 February 2025
was £4.3 million (2024: £7.1 million) including stamp duty associated with
the purchases. The shares owned by the ESOP had a market value at 28 February
2025 of £4.2million (2024: £6.3 million). The distribution of these shares
is determined by the Remuneration Committee.
1,600,095 shares (2024: 3,440,115) have been released to employees during the
year. The shares acquired by the ESOP during the year had an aggregate cost
of £2.4 million (2024: £6.1 million).
6.4 Other reserves
Capital Merger Foreign Hedging Total
redemption
reserve
currency
reserve
£'000
reserve
£'000
translation
£'000
£'000
reserve
£'000
At 28 February 2023 396 24,641 4,024 (242) 28,819
Cash flow hedges:
- Transfer to income statement - - - (2,231) (2,231)
- Fair value gain/losses in the period - - - 3,872 3,872
Investment hedge - - 249 - 249
Exchange differences - - (1,783) - (1,783)
Capital reduction (396) (19,755) - - (20,151)
Deferred tax on items taken to equity - - - (410) (410)
At 29 February 2024 - 4,886 2,490 989 8,365
Cash flow hedges:
- Transfer to income statement - - - (1,500) (1,500)
- Fair value gain/losses in the period - - - (101) (101)
Investment hedge - - (19) - (19)
Exchange differences - - 295 - 295
Deferred tax on items taken to equity - - - 400 400
At 28 February 2025 - 4,886 2,766 (212) 7,440
The capital redemption reserve arose on previous share buy-backs by the
Company. The merger reserve arose on transactions where the Company issued
shares pursuant to an arrangement to acquire more than a 90% interest in
another company and no share premium was 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. The amounts in the 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. Following the Capital Reduction in
FY24 (see Note 6.2), the merger reserve was reduced by £19.8 million and the
capital redemption reserve was reduced to £nil.
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 £0.3 million liability (2024:
£1.3 million asset). The deferred tax movement recognised in equity in the
year was a gain of £0.4 million (2024: £0.4 million loss).
7 Other supporting notes
7.1 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.
Key estimate
Uncertain commission obligations
In June 2023, the board commissioned an independent internal investigation
into an historical transaction originating in 2013. The investigation was
overseen by an Investigation Committee chaired by the Group's non-executive
Chairman and was conducted by an independent specialist forensic accounting
firm, and independent external counsel. The investigation was comprehensive
and complex and ultimately encompassed several transactions between 2006 and
2013 which required further investigation.
As a result of the investigation, the Group recognised a provision of £2.0
million in relation to the uncertain obligations connected to a number of the
transactions and commission obligations identified as part of the
investigation. Of the £2.0 million, £1.7 million relates to an historical
unsettled commission payable which was recorded in 2017 upon completion of the
relevant contracts which originated in 2013. This balance was reclassified
from trade payables to provisions in a prior year. During the prior year,
£0.2 million was added to the provision following the return of previously
paid amounts connected to the uncertain commission obligation and a further
adjustment to reduce the provision by £0.1 million was made in the current
year. While the board cannot forecast with certainty final outcomes in respect
of these obligations, based on the Group's current information, the amount
recognised is the current best estimate of the amount required to settle the
obligations at the Balance Sheet date, taking into account the risks and
uncertainties surrounding the obligations, including interpretation of
specific laws and the likelihood of settlement.
As the ultimate potential obligations and outcomes are uncertain in relation
to the transactions subject to the internal investigation, there remains a
risk that the final outcomes could materially impact the recognised balance
within the next or in future financial years. It is impracticable to provide
sensitivity estimates of potential downside variances at this time.
Dilapidations Uncertain commission obligation Other Total
£'000
£'000
£'000
£'000
At 28 February 2023 592 1,964 753 3,309
Provided in the year 20 - - 20
Provision added in year - 209 - 209
Utilised in the year - - (134) (134)
Reversal of provision in the year - - (154) (154)
Exchange differences (7) (79) (26) (112)
At 29 February 2024 605 2,094 439 3,138
Provided in the year 455 - 164 619
Utilised in the year - - (208) (208)
Reversal of provision in the year - (88) - (88)
Exchange differences 2 (3) (1) (2)
At 28 February 2025 1,062 2,003 394 3,459
Current 36 2,003 394 2,433
Non-current 1,026 - - 1,026
At 28 February 2025 1,062 2,003 394 3,459
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 of £0.4 million is included in other, which relate to
statutory long service leave in Braemar Shipbroking Pty Limited. This is based
on the principle 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.
7.2 Contingent liabilities
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.
7.3 Related party transactions
During the period, the Group entered into the following transactions with
joint ventures and investments:
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.
7.4 Events after the reporting date
A proposed final dividend for the year ended 28 February 2025 of 2.5 pence per
share, totalling £0.8 million, has been recommended by the directors. This is
subject to shareholder approval. There were no other adjusting or significant
non-adjusting events between the reporting date and the date these Financial
Statements were authorised for issue.
Five-year financial summary (unaudited)
Consolidated Income Statement
Continuing operations 12 months to 12 months to 12 months to 12 months to 12 months to
28 Feb 2025
29 Feb 2024
£'000
£'000 28 Feb 2023 28 Feb 2022 28 Feb2021
£'000
£'000
£'000
Group revenue 141,860 152,751 152,911 101,310 83,695
Other operating expenses (126,263) (136,203) (132,836) (91,250) (75,976)
Specific items (net) (4,424) (7,504) (8,406) (514) (1,097)
Total operating expenses, net of other incomes (130,687) (143,707) (141,242) (91,764) (77,073)
Operating profit/(loss) 11,173 9,044 11,669 9,546 6,622
Gain on revaluation of investment - - - 172 -
Net interest expense (1,951) (1,533) (2,195) (1,156) (1,486)
Share of associate profit for the period - 12 (23) (19) -
Profit before taxation 9,222 7,523 9,451 8,543 5,136
Taxation (3,120) (2,899) (4,855) (1,839) (1,574)
Gain/(loss) for the year from discontinued operations - - - 7,215 970
Profit/(loss) after taxation 6,102 4,624 4,596 13,919 4,532
Dividends
Interim 1,413 1,222 1,172 610 -
Final proposed 784 2,862 2,440 2,254 1,495
2,197 4,084 3,612 2,864 1,495
Earnings per ordinary share - pence
Basic - underlying from continuing operations 31.30p 36.62p 46.22p 23.06p 15.60p
Diluted - underlying from continuing operations 26.74p 29.96p 38.52p 18.79p 12.91p
Five-year financial summary (unaudited)
Consolidated Balance Sheet
As at As at As at As at As at
28 Feb 2025
29 Feb 2024
£'000
£'000 28 Feb 2023 28 Feb 2022 28 Feb 2021
(restated)
£'000
£'000
£'000
(restated)
Assets
Non-current assets
Goodwill 71,243 71,337 71,407 79,891 83,955
Other intangible assets 2,608 3,185 3,980 997 2,129
Property, plant and equipment 10,135 5,582 5,320 7,078 9,841
Other investments 1,720 1,633 1,780 1,780 1,962
Investment in associate 713 713 701 724 3,763
Derivative financial instruments 205 249 30 8 200
Deferred tax assets 3,368 2,979 4,794 3,713 2,900
Pension surplus 2,548 1,414 1,120 - -
Other long-term receivables 1,768 4,589 8,554 5,636 1,888
94,308 91,681 97,686 99,827 106,638
Current assets
Trade and other receivables 40,887 37,730 43,323 35,792 33,416
Financial assets - - - - 746
Derivative financial instruments 192 1,287 1,224 54 1,573
Current tax receivable 1,554 2,925 973 - -
Assets held for sale - - - - 436
Cash and cash equivalents 20,477 27,951 34,735 13,964 14,111
63,110 69,893 80,255 49,810 50,282
Total assets 157,418 161,574 177,941 149,637 156,920
Liabilities
Current liabilities
Derivative financial instruments 592 315 1,447 688 -
Trade and other payables 34,732 43,611 57,310 39,183 47,833
Current tax payable 1,659 1,625 4,141 1,608 1,318
Provisions 2,433 3,080 2,575 486 307
Convertible loan notes 2,401 2,978 3,001 1,416 4,461
Liabilities directly associated with assets classified as held for sale - - - - 125
41,817 51,609 68,474 43,381 54,044
Non-current liabilities
Long-term borrowings 29,448 29,819 29,919 28,331 31,634
Deferred tax liabilities 358 8 344 - 174
Derivative financial instruments 116 43 697 335 56
Trade and other payables 1,026 58 542 - -
Provisions 498 416 734 797 690
Convertible loan notes - - 550 2,755 2,681
Deferred consideration - - - 495 882
Pension deficit - - - 2,052 3,819
31,446 30,344 32,786 34,765 39,936
Total liabilities 73,263 81,953 101,260 78,146 93,980
Total assets less total liabilities 84,155 79,621 76,681 71,491 62,940
Equity
Share capital 3,292 3,292 3,292 3,221 3,174
Share premium - - 53,796 53,030 52,510
ESOP reserve (4,334) (7,140) (10,607) (6,771) (1,362)
Other reserves 7,440 8,365 28,819 26,130 27,100
Retained earnings 77,757 75,104 1,381 (4,119) (18,482)
Total equity 84,155 79,621 76,681 71,491 62,940
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