REG - Braemar PLC - Interim Results
15/11/2022 07:00
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RNS Number : 3693G Braemar PLC 15 November 2022
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE
INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU NO.
596/2014) WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL)
ACT 2018. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION
IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN
15 November 2022
BRAEMAR PLC
("Braemar", the "Company" or the "Group")
Unaudited interim results for the six months ended 31 August 2022
Continued strong trading, materially ahead of original expectations
Braemar Plc (LSE: BMS), a provider of expert investment, chartering, and risk
management advice to the shipping and energy markets, today announces its
unaudited half‐year results for the six months ended 31 August 2022.
Braemar continues to benefit from the increased scale and breadth of its
broking operations which have achieved significantly higher trading activity
and transaction volumes during the period.
HIGHLIGHTS
· Continued execution of our Shipbroking-focused growth strategy.
· Operational gearing contributes to 95% increase in underlying
operating profit on 46% revenue growth.
· Financial results materially ahead of expectations at the start of
the year.
· 46% increase in reported revenue to £69.4m (H1 FY21/22: £47.4m),
with an estimated 36% growth when measured in constant currency.
· 95% increase in underlying operating profit to £10.9m (H1 FY21/22:
£5.6m), including an estimated benefit of £3m from favourable foreign
exchange rates.
· Operational cash flow up 220% to £12.3m (H1 FY21/22: £3.8m).
· Balance sheet strengthened - net cash at bank position of £1.8m at
31 August 2022 compared to net bank debt* of £9.3m at 28 February 2022.
· Interim dividend of 4.0 pence per share (2021: 2.0p) declared to
reflect strong cashflow and confidence in the business.
FINANICAL HIGHLIGHTS
Revenue H1 FY22/23 H1 FY21/22 Change
£m £m %
Investment advisory 16.3m 15.0m 9%
Chartering 44.9m 26.8m 68%
Risk advisory 8.2m 5.6m 46%
Total in Sterling £69.4m £47.4m 46%
Total in US Dollars $88.1m $65.0m 36%
Profit, EPS & Dividend Underlying results** Reported results***
H1 FY22/23 H1 FY21/22 H1 FY22/23 H1 FY21/22
£m £m £m £m
Operating profit 10.9m 5.6m 10.5m 5.4m
Profit before tax 10.5m 4.9m 10.1m 4.8m
Earnings per share 31.8p 17.6p 30.2p 22.3p
Dividend per share 4.0p 2.0p 4.0p 2.0p
* Net bank debt includes cash and the Group's revolving credit facility but
excludes acquisition liabilities and IFRS 16 lease liabilities.
** Underlying results measures above are before non‐recurring specific
items, including acquisition and disposal‐related charges and profit/loss
from discontinued operations.
*** Reported results are from continuing operations only, comparatives have
been re‐presented in relation to prior period adjustments. See Note 21.
OUTLOOK
The outlook for the Group remains very positive and the board looks forward to
the second half of the year with a high degree of confidence in the ongoing
execution of its growth strategy. The simplification of the business means
that we can focus on supporting our clients through our strengths and
experience. Despite the macro-economic backdrop, Braemar's growing scale
provides diversification across the shipping industry, and we are well set up
for continued investment to deliver growth throughout the business cycle.
James Gundy said:
"It's clear that we've unlocked great potential through our growth strategy,
are delivering the performance that I promised our shareholders on my
appointment in January 2021 and are well on track to double our profits by
2024. Our growing scale and sectoral diversification means we are also set for
strong performance throughout the business cycle."
Results briefing
A presentation for analysts will be held at 10.30am today via conference call.
Please contact the team at Buchanan for details on braemar@buchanan.uk.com
(mailto:braemar@buchanan.uk.com) .
A copy of the presentation and call recording will be made available on the
Investor Relations section of Braemar's website after noon today:
https://braemar.com/investors/ (https://braemar.com/investors/) .
For further information, contact:
Braemar Plc
James Gundy, Group Chief Executive Officer Tel +44 (0) 20 3142 4100
Nick Stone, Chief Financial Officer
Investec Bank plc
Gary Clarence / Harry Hargreaves / Alice King Tel +44 (0) 20 7597 5970
Cenkos Securities plc
Ben Jeynes / Max Gould (Corporate Finance) Tel +44 (0) 20 7397 8900
Alex Pollen / Leif Powis (Sales)
Buchanan
Charles Ryland / Jamie Hooper / Jack Devoy Tel +44 (0) 20 7466 5000
Notes to Editors:
About Braemar Plc
Braemar provides expert advice in investment, chartering, and risk management
to enable its clients to secure sustainable returns and mitigate risk in the
volatile world of shipping and energy. Our experienced brokers work in tandem
with specialist professionals to form teams tailored to our customers' needs,
and provide an integrated service supported by a collaborative culture.
For more information, including our investor presentation, please
visit www.braemar.com (http://www.braemar.com/) and follow Braemar
on LinkedIn (https://www.linkedin.com/company/braemar-ltd/) .
Reconciliation of underlying operating profit to reported operating profit
H1 FY22/23 H1 FY21/22 (restated)
£m £m
Underlying operating profit 10.9 5.6
Specific items (0.4) (0.2)
Reported operating profit 10.5 5.4
Alternative Performance Measures ("APM"s)
Braemar uses APMs as key financial indicators to assess the underlying
performance of the Group. Management considers the APMs used by the Group to
better reflect business performance and provide more useful information to
investors and other interested parties. Our APMs include underlying operating
profit, underlying profit before tax, underlying earnings per share and net
debt. Explanations of these terms and their calculation are shown in the
summary above and in detail in our Financial Review.
This document contains forward-looking statements, including statements
regarding the intentions, beliefs or current expectations of our directors,
officers and employees concerning, among other things, the Group's results of
operations, financial condition, liquidity, prospects, growth, strategies and
the business. These statements are based on current expectations and
assumptions and only relate to the date on which they are made. They should be
treated with caution due to the inherent risks, uncertainties and assumptions
underlying any such forward-looking information. The Group cautions investors
that a number of factors, including matters referred to in this document,
could cause actual results to differ materially from those expressed or
implied in any forward-looking statement, including general business and
economic conditions globally, industry trends, competition, changes in
government and other regulation and policy, interest rates and currency
fluctuations, and political and economic uncertainty (including as a result of
global pandemics). Neither the Group, nor any of the directors, officers or
employees, provides any representation, assurance or guarantee that the
occurrence of the events expressed or implied in any forward-looking
statements in this document will actually occur. Undue reliance should not be
placed on these forward-looking statements. Other than in accordance with our
legal and regulatory obligations, the Group undertakes no obligation to
publicly update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise.
CHAIRMAN'S STATEMENT
I'm delighted by the performance of the Group in the first six months of the
new financial year, a period in which we have continued to execute our
Shipbroking-focused growth strategy, whilst also delivering financial results
materially above our expectations at the start of the year.
During the previous financial year, the board successfully streamlined the
business: loss making operations were closed, non-core assets sold and net
debt materially reduced. Braemar was able, as a result, to start the new
financial year in a much better financial and operating position than it has
been able to for some while. The Group is now a sectorally diverse, resilient
business focused entirely on its core competency and without the baggage of
the past. With 14 offices across the globe, operating in 11 countries and
covering all of the major shipping markets, the business is lean, focused,
well-insulated from market movements in any one specific market sector,
geography, or economy, and is starting to benefit from the operational gearing
from its growing scale.
It is the combination of our clear focus, increased scale and streamlined
business, operating within our diverse and resilient business model against a
global economic backdrop of inflation, geopolitical tension and rising
negative sentiment that has yielded such strong financial results. For the six
months ended 31 August 2022, revenue increased by 46% to £69.4m (2021:
£47.4m). Of the 46%, an estimated 36% was due to increased revenue in
constant currency terms and an estimated 10% was due to exchange rate
movements between the US Dollar and Sterling. Underlying operating profit
increased by 95% to £10.9m (2021: £5.6m) and underlying basic earnings per
share increased by 81% to 31.8p (2021 restated: 17.6p). The Group's balance
sheet is also now a source of financial strength allowing us to position
ourselves for the strategic growth opportunities that lie ahead.
The outlook for the Group remains very positive. The business continues to
increase scale and shipping markets continue to show favourable demand and
supply dynamics. The board therefore looks to the future with a high degree of
confidence. As a result of the strong financial performance and confident
outlook, I am delighted that the board has declared an interim dividend of
4.0p pence per share for the half year. The dividend will be paid on 4 January
2023 for all shares on the register at 25 November 2022.
None of this success, of course, can be achieved without the hard work and
dedication of the outstanding staff at Braemar and I would like to take this
opportunity to thank every member of our team for their hard work, dedication,
and commitment to the business. The drive, focus, and enthusiasm of our staff
are huge contributors to our success, and they provide me with continued
optimism for Braemar's performance for the remainder of the financial year and
beyond.
CHIEF EXECUTIVE OFFICER'S STATEMENT
Trading has exceeded expectations once again and I am exceptionally pleased
with our performance over the last six months. It is clear that we are poised
for further growth through our strategy which is now focused on Shipbroking
and Corporate Finance.
Our performance was built upon the foundations of our strong FY21/22, and we
are delivering the strategy which I promised to our shareholders upon my
appointment in January 2021. We are well on track to double our profits by
2024, and it's clear that streamlining the business has made us more efficient
and has enabled us to move into a net cash position with the bank.
We are seeing positive returns by simplifying the business and investing in
our people, technology, and in our geographical reach. Braemar's growing scale
provides diversification across the shipping industry, and we are set up for
strong performance throughout the business cycle.
The results we're announcing today are a glowing endorsement of the calibre of
our team in each of our 14 offices around the world. This could not have been
achieved without their hard work and enthusiasm, and I look forward with
confidence to the second half of our financial year.
OPERATING AND FINANCIAL REVIEW
As a result of the streamlined business, the disposal of Cory Brothers last
year and focus on our core Shipbroking activities the Group is presenting
segmental information based on a new set of reportable segments; Investment
advisory, Chartering and Risk advisory:
Investment advisory Sale and Purchase
Corporate Finance
Chartering Deep Sea Tankers
Specialised Tankers
Offshore
Dry Cargo
Risk advisory Securities
The Group will no longer report by the previously recognised divisional
segments. See Note 4.
Investment advisory, Chartering, and Risk advisory have shown revenue growth
in the period with Chartering and Risk Advisory performing particularly
strongly. There was a positive impact of foreign exchange rates on these
results. The strength of the US Dollar and weakness in Sterling has meant that
revenues have grown by a higher percentage than they would have in constant
currency as can be seen from the estimates below:
H1 FY22/23 H1 FY21/22 Change %
m m
Group Revenue reported in US Dollars $88.1m $65.0m 36%
Group Revenue reported in Sterling £69.4m £47.4m 46%
Revenue has risen in Sale and Purchase and on all Chartering desks, and it has
been particularly strong in Deep Sea and Specialised Tankers and Dry Cargo.
Fixture volumes increased in Deep Sea Tankers by 7%, in Specialised Tankers by
47%, in Dry Cargo by 1%, and in Offshore by 22%.
As at 31 August 2022, the total forward order book totalled US$55.5m, compared
to US$50.0m at 28 February 2022. This represents an increase of $5.5m in the
six months to 31 August 2022 and approximately US$21.1m of this will be
delivered in the second half of this financial year.
Investment advisory
H1 FY22/23 H1 FY21/22 Change %
£m £m
Revenue 16.3m 15.0m 9%
Underlying operating profit 3.7m 4.2m -12%
Sale and Purchase
Total revenue for Sale and Purchase in H1 FY22/23 is £13.5m, a 36% gain on H1
FY21/22. Sale and Purchase deal flow continues to be strong on the back of
asset plays, fleet renewal considerations, and other individual shipowner
strategies. Buyers are slowly adjusting to the new pricing norms, and for
newbuildings the biggest issue going forward is finding the right berth space.
The desk is receiving strong enquiries from the LNG, PCTC (Pure Car and Truck
Carrier), MPP (Multipurpose), and HL (Heavylift) segments with positive
sentiment growing in the Crude and Chemical Tanker sectors.
Container spot markets have seen a downward correction from all-time highs
experienced in September 2021. Liner company sentiment has switched to caution
and as a result, the container charter market has mirrored the downward
correction in earnings.
Corporate Finance
Total revenue for Corporate Finance in H1 FY22/23 is £2.9m, a decrease of 45%
on H1 FY21/22. The nature of success fees in the corporate finance business
means that revenue subject to project success and timing of completion is not
earned evenly over the financial year. Current activity points towards the
potential for increased income in the second half of the year. The adverse
variance in underlying operating profit in the Investment advisory segment is
the result of the Corporate Finance business where underlying operating profit
was decreased by £0.9m (56%) compared to H1FY21/22.
Chartering
H1 FY22/23 H1 FY21/22 Change %
£m £m
Revenue 44.9m 26.8m 68%
Underlying operating profit 6.9m 2.5m 176%
Tankers
Revenue for Deep Sea Tankers in H1 FY22/23 is £17.0m, a 93% increase on H1
FY22/23. Sanctions and related volatility have been the main drivers in the
Deep Sea Tanker markets, and these factors have led to changes in oil flows
and increased ton miles considerably. In response, charterers have sought time
charter cover and demonstrated further appetite to commit for longer periods;
a development that has been strengthened further by the limited forward order
book and impending environmental regulation changes. The outlook continues to
be favourable, and we expect rates to continue to remain consistent over the
coming months.
Clean Tanker markets, particularly in the Middle East and Far East, are seeing
multi-year highs thanks to increased demand, and the growth in ton miles due
to sanctions on Russia.
Revenue for Specialised Tankers in H1 FY22/23 is £8.1m, a 59% improvement on
H1 FY21/22. Specialised Tankers has benefitted from an increased market and
geographical reach. Consistent product freights have boosted European small
tankers and global chemicals as swing tonnage exits, they are providing a
further boost for the next six months, chemical ton-miles are increasing at
the same time as the tonnage supply is diminishing.
Offshore Energy Services
Revenue for Offshore Energy Services is £2.2m, a 10% enhancement on H1
FY21/22. The Oil & Gas and Renewables markets are thriving, and the
Offshore Energy Services desk has experienced a continual increase in activity
and revenue since the beginning of the financial year. Engineering,
Procurement, and Construction (EPC) spending is estimated to be more than $70b
for 2022, and it's estimated that offshore wind will see 189.1GW of capacity
sanctioned over the next five years. Consequently, chartering demand will
remain high for the foreseeable future. Charter rates are likely to continue
increasing thanks to a dearth of newbuilding orders over the last seven years,
which has, in turn, led to more activity and higher asset prices in the
second-hand sale and purchase market.
Dry Cargo
Revenue for Dry Cargo is £17.6m, a 61% increase on H1 FY21/22. In the first
half of the financial year, despite a post-Covid reduction in congestion
increasing vessel supply, and the conflict between Russia and Ukraine reducing
cargo supply, Dry Cargo has managed to maintain and in certain areas increase
fixing volumes. Its client base has also grown slightly as several new
companies pushed into bulk trades rather than containers. There is a limited
newbuilding orderbook, especially in the Handysize fleet, and consequently the
market looks positive over the next two to three years.
Risk advisory
H1 FY22/23 H1 FY21/22 Change %
£m £m
Revenue 8.2m 5.6m 46%
Underlying operating profit 1.5m 1.0m 50%
Securities
Revenue for Securities is £8.2m, a 46% rise on H1 FY21/22. Dry Cargo and Wet
Cargo FFAs have continued to grow their revenue and market share over the last
six months.
In Dry Cargo, the quarantine restrictions that helped create inefficiency and
therefore higher prices have loosened, but the market has proved robust, and
volumes have remained high. Further developments to the capabilities of the
Braemar Screen have proved popular in the market, making it the leading
destination in the market for pricing, data, and charting. In Wet Cargo,
supply and demand has tightened and revenue has remained strong.
Following the period end, the Group diversified its Securities offering
further with the launch of a Natural Gas desk which compliments the existing
offering and adds more scale. It will also offer synergies with existing
broking desks and will serve an overlapping client base.
Impact of foreign exchange rates
The US Dollar exchange rate relative to Sterling strengthened in the 6-month
period from US$1.34: £1 at 1 March 2022 to US$1.16: £1 at 31 August 2022,
this also compared to the position at 31 August 2021 when the closing rate was
US$1.38: £1. Given the revenues generated in US Dollars the Group has in
place a hedging strategy, owing to the US Dollar volatility in the most recent
period and the growth in revenues the board took a decision in August 2022 to
increase the volume of hedging activity and acquired further coverage based on
a spot exchange rate of $1.17. At the balance sheet date, total hedge cover
was in place of $130.0m (£53.8m) at an average rate of $1.22 ($1.37)
To illustrate the impact of the US Dollar strengthening compared to the prior
period, if all revenue was reported in US dollars and translated using the
closing rates for the respective periods, of the 46% increase in revenue for
the H1 22/23 period compared to H1 21/22, 10%, or £4.7m is estimated to be
derived from the movement between the US Dollar and Sterling. In addition,
the £4.7m is after deducting £2.1m of unfavourable movements on realised
hedging transaction caused by the strengthening of the US dollar.
In addition to the increase in revenues the Group's underlying operating
profit for H1 FY22/23 of £10.5m included gains on foreign exchange of £2.0m
from the translation of non-sterling trading assets (H1 FY21/22: gains on
foreign exchange of £0.3m) offset by an unrealised loss on a further hedging
instrument that is ineffective for hedge accounting purposes of £0.8m.
The overall impact on underlying operating profits caused by movement in
foreign exchange rates is estimated to be an increase of approximately £3.0m,
this is after deducting certain other operating costs and the increased bonus
provision relating to the above gains in revenue.
Other operating
costs
Central costs H1 2022/23 H1 2021/22 Change %
£m £m
Central costs 1.2m 2.1m -43%
Central costs were down 43% compared to the previous period. Of the total
foreign exchange gains of £2m mentioned above, £1.5m is reported in central
costs. When that gain is excluded, then central costs would have increased by
£0.6m compared to the prior period, mainly due to additional professional
fees.
Specific items H1 2022/23 H1 2021/22 Change %
£m £m
Acquisition and disposal-related charges
0.4m 0.1m 300%
The Group has separately identified certain items that are not part of the
underlying trade of the Group. These specific items are material in both size
and/or nature and the Directors believe they may distort understanding of the
underlying performance of the business. Expenditure of £0.4m (2021: £0.1m)
is directly linked to the acquisition of NAVES Corporate Finance GmbH and
relates to amounts due to management sellers on condition of their ongoing
service to the Group. See Note 5.
Balance sheet
Net assets at 31 August 2022 were £83.2m (28 February 2022: £75.1m). A
review aimed at identifying evidence of impairment of intangible assets was
carried out and no such impairment was identified.
Trade and other receivables increased by £0.1m to £38.9m (28 February 2022
£38.8m) and provisions for impairment of trade receivable remain broadly
consistent with 28 February 2022. Amounts totalling £4.8m are included in
respect of the expected deferred and contingent consideration receivable for
the disposal of Cory Brothers on 28 February 2022. £1.4m is due in May 2023
and is presented as current, £3.4m is due in May 2023 and May 2024 and is
presented as non-current. There has been no change to the expected contingent
consideration and the unwinding of the discounting has been credited to
finance costs.
The pension deficit has decreased by £1.9m to £0.2m during the period (28
February 2022: £2.1m). An actuarial valuation at 31 August 2022 resulted in a
surplus but the Group does not have the right to recognise this as an asset.
The liability at 31 August 2022 represents the present value of the future
payments that the Group has agreed to make to the scheme.
Shares held in the Group's Employee Share Ownership Plan ('ESOP') has
increased by £0.3m from £6.8m at 28 February 2022 to £7.1m at 31 August
2022 due to additional shares purchased by the ESOP, net of those released to
satisfy vesting awards.
Borrowings and cash
At 31 August 2022, the Group held cash of £24.1m (28 February 2022:
£14.0m). The increase in cash is largely attributable to the strong trading
in the first half of the year and £6.5m of proceeds from the sale of Cory
Brothers that was received on 2 March 2022.
The Group has continued to pay down debt and the net bank position was cash of
£1.8m compared to net debt of £9.3m at 28 February 2022. Net debt, including
acquisition liabilities but excluding IFRS 16 lease liabilities, was £3.1m at
31 August 2022 compared with net debt of £13.9m at 28 February 2022.
Post period end, on 8 November 2022, the Group entered into a new revolving
credit facility with HSBC ("RCF"), subject only to certain Group subsidiaries
executing additional security documentation as a condition subsequent to the
agreement. The RCF facility limit is similar to the previous facility that was
due to expire in September 2023 and totals £40.0m with £30.0m available
immediately and an accordion limit of £10.0m. Drawdown of the accordion
facility is subject to additional credit approval. The facility is for a
three-year initial duration but at the Group's option this can be extended by
one year on each of the first and second anniversaries of its completion.
Therefore, the maximum possible duration is five years.
The RCF has a number of covenants, in particular the ratio of debt to rolling
12-month EBITDA with a limit of 2.5x. The Group also has access to global cash
management arrangements, notably in our regional hubs of UK,
Germany and Singapore.
The operating cash flows of the Group exhibit seasonality in that the majority
bonus payments occur in the first half of the financial year and it is
therefore normal for the second half of the year to generate more cash.
Dividend
A final FY21/22 dividend of 7p per ordinary share was proposed in the period
and paid on 14 October 2022 following approval at the AGM on 6 October 2022,
making a total of 9p for the year following 2p paid at the interim.
An interim dividend for the current year of 4p per ordinary share has been
declared and will be paid on 4 January 2023 to shareholders on the register on
25 November 2022.
Taxation
The tax charge of £1.5m (2021: £0.5m) comprises a current tax charge of
£2.1m and a deferred tax credit of £0.6m.
Current tax is charged at 20.2% (2021 restated: 9.8%) representing the best
estimate of the annual effective tax rate, applied to the taxable profits of
the interim period. In the current period the annual effective tax rate is
broadly in line with the standard rate of UK corporation tax. The impact of
higher corporation tax rates in Australia, Germany and the US is broadly
offset by the impact of a lower rate in Singapore. The rate is lower in the
prior period due to utilisation of losses.
At 31 August 2022, the Group has recognised a deferred tax asset of £7.3m (28
February 2022 £3.7m). The increase is attributable to the increase in the
mark-to-market loss of the Group's forward currency contracts at 31 August
2022 as well as the valuation of outstanding share awards. This has resulted
in a £0.6m deferred tax credit in the income statement, with the balance of
the movement recognised in equity. The deferred tax asset arises primarily in
the UK and is provided at 25.0% (2021: 25.0%) except where temporary
differences are expected to reverse before 1 April 2023 where 19.0% is used.
The directors believe it is probable that there will be sufficient taxable
profits in the future to recover the deferred tax asset in full.
Principal risks
The Directors consider that the principal risks and uncertainties which could
have a material effect on the Group's performance identified on pages 42 to 44
of the Annual Report 2022 are also applicable for a period of six months from
31 August 2022. These include risks associated with change management,
compliance with laws and regulations, currency fluctuations, cybercrime and
data security, disruptive technology, environment and climate change,
financial capacity, geopolitical and macroeconomic changes, major business
disruption and failure to attract and retain skilled individuals.
The Directors continue to monitor the risks associated with the conflict in
the Ukraine. The Group's compliance with sanctions put in place because of the
conflict in the Ukraine is not expected to have any material effect on trading
in the current financial year nor does the Group have any existing material
exposure.
Going concern
Following a detailed review, no material uncertainty has been identified and
the interim condensed consolidated financial statements have been prepared on
a going concern basis. See Note 2.
Condensed Consolidated Income Statement
Unaudited Unaudited
Restated
Six months ended 31 Aug 2022 Six months ended 31 Aug 2021
Continuing operations Notes Underlying £'000 Specific items Total Underlying Specific Total
£'000 £'000 £'000 items £'000
£'000
Revenue 4 69,439 - 69,439 47,410 - 47,410
Operating expense:
Operating costs (58,540) - (58,540) (41,809) - (41,809)
Acquisition-related expenditure - (377) (377) - (153) (153)
Total operating expense (58,540) (377) (58,917) (41,809) (153) (41,962)
Operating profit/(loss) 10,899 (377) 10,522 5,601 (153) 5,448
Share of associate loss for the period 10 (14) - (14) (29) - (29)
Finance income 99 - 99 40 172 212
Finance costs (456) (83) (539) (683) (131) (814)
Profit/(loss) before taxation 10,528 (460) 10,068 4,929 (112) 4,817
Taxation (1,473) - (1,473) (483) - (483)
Profit/(loss) from continuing operations 9,055 (460) 8,595 4,446 (112) 4,334
Profit net of tax from discontinued operations 6 - - - 1,038 1,588 2,626
Profit/(loss) attributable to equity shareholders of the Company 9,055 (460) 8,595 5,484 1,476 6,960
Total
Earnings per ordinary share
Basic 8 31.84p 30.22p 17.60p 22.34p
Diluted 8 24.36p 23.33p 14.45p 18.34p
Continuing operations
Earnings per ordinary share
Basic 8 31.84p 30.22p 14.27p 13.91p
Diluted 8 24.36p 23.33p 11.19p 11.19p
The six months ended 31 August 2021 has been restated for prior period
adjustments and a change in presentation as detailed in Note 21.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 August 2022
Notes 31 Aug 2022 Restated
£'000 31 Aug 2021
£'000
Profit for the year 8,595 6,960
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
- Actuarial gain/(loss) on employee benefit schemes - net of tax 1,235 (978)
Items that are or may be reclassified to profit or loss:
- Foreign exchange gains on retranslation of foreign operations 17 2,417 517
- Cash flow hedging loss - net of tax 17 (3,272) (532)
Other comprehensive income/(expense) from continuing operations 380 (993)
Discontinued operations
- Share of other comprehensive income of associates - 52
- Recycling of foreign exchange reserve* - 373
Other comprehensive income from discontinued operations - 425
Total comprehensive income attributable to equity shareholders of the Company 8,975 6,392
The six months ended 31 August 2021 has been restated for the impact of prior
period adjustments. See Note 21.
* The recycling of foreign exchange reserve relates to the disposal of
AqualisBraemar. See Note 6.
Condensed Consolidated Balance Sheet
Note Unaudited Audited
As at As at
31 Aug 2022 28 Feb 2022
£'000 £'000
Assets
Non-current assets
Goodwill 80,233 79,891
Other intangible assets 1,085 997
Property, plant and equipment 5,576 7,078
Other investments 1,780 1,780
Investment in associate 10 710 724
Derivative financial instruments 14 - 8
Deferred tax assets 7,254 3,713
Other long-term receivables 11 3,983 5,636
100,621 99,827
Current assets
Trade and other receivables 12 38,888 38,808
Derivative financial instruments 14 - 54
Cash and cash equivalents 24,058 13,964
62,946 52,826
Total assets 163,567 152,653
Liabilities
Current liabilities
Derivative financial instruments 14 4,989 688
Trade and other payables 41,522 38,629
Current tax payable 988 1,608
Provisions 293 486
Convertible loan notes 13 1,561 1,416
49,353 42,827
Non-current liabilities
Long-term borrowings 25,084 28,331
Derivative financial instruments 14 1,266 335
Provisions 1,088 797
Convertible loan notes 13 2,814 2,755
Deferred consideration 13 593 495
Pension deficit 3 186 2,052
31,031 34,765
Total liabilities 80,384 77,592
Total assets less total liabilities 83,183 75,061
Equity
Share capital 15 3,247 3,221
Share premium 15 53,030 53,030
ESOP reserve 16 (7,093) (6,771)
Other reserves 17 26,269 27,124
Retained earnings 7,730 (1,543)
Total equity 83,183 75,061
Condensed Consolidated Cash Flow Statement
For the six months ended 31 August 2022
Notes 31 Aug 2022 31 Aug 2021
restated
£'000 £'000
Profit before tax from continuing operations 10,068 4,817
Profit before tax from discontinued operations - 2,853
Adjustment for non-cash transactions included in profit before tax
Depreciation and amortisation charges 1,545 1,825
Loss on disposal of fixed assets 134 -
Share of loss/(profit) in associate from continuing and discontinued 14 (47)
operations
Share scheme charges 1,770 1,492
Fair value movement on financial instruments charged to profit or loss 14 799 -
Net finance cost 440 602
Credit on modification of deferred consideration - (172)
Gain on disposal of shares in AqualisBraemar 6 - (3,375)
Gain on disposal of Wavespec 6 - (587)
Loss on impairment of Wavespec receivable 6 - 2,374
Adjustment for cash items not included in profit before tax
Contribution to defined benefit scheme (225) (198)
Operating cash flow before changes in working capital 14,545 9,584
Increase in receivables (5,226) (7,645)
Increase in payables 2,919 1,582
Increase in provisions 98 328
Cash flows from operating activities 12,336 3,849
Interest received 21 40
Interest paid (305) (665)
Tax paid (2,159) (980)
Net cash generated from operating activities 9,893 2,244
Cash flows from investing activities
Purchase of property, plant and equipment (187) (346)
Purchase of other intangible assets (300) (528)
Investment in associate 10 - (217)
Proceeds from disposal of Cory Brothers 6 6,500 -
Proceeds from disposal of Wavespec, net of cash disposed - (53)
Proceeds from disposal of investment in associate 10 - 7,232
Principal received on finance lease receivables 300 450
Net cash generated from investing activities 6,313 6,538
Notes 31 Aug 2022 31 Aug 2021
restated
£'000 £'000
Cash flows from financing activities
(Repayment) / proceeds from borrowings (1,000) 2,000
Repayment of principal under lease liabilities (2,195) (1,971)
Purchase of own shares (4,884) (4,152)
Settlement of convertible loan notes 13 - (1,198)
Net cash used in financing activities (8,079) (5,321)
Increase in cash and cash equivalents 8,127 3,461
Cash and cash equivalents at beginning of the period 13,964 14,164
Foreign exchange differences 1,967 (579)
Cash and cash equivalents at end of the period 24,058 17,046
31 Aug 2022 31 Aug 2021
restated
£'000 £'000
Cash and cash equivalents (continuing operations) 24,058 9,111
Cash and cash equivalents (included in assets held for sale) - 7,935
Total cash and cash equivalents at end of the period 24,058 17,046
The six months ended 31 August 2021 has been restated for the impact of prior
year adjustments. See Note 21.
Condensed Statement of Changes in Total Equity
Group Note Share Share ESOP reserve Other Retained earnings Total
capital premium £'000 reserves £'000 equity
£'000 £'000 £'000 £'000
At 28 February 2021 (restated) 21 3,174 52,510 (1,362) 28,094 (15,906) 66,510
Profit for the period (restated) 21 - - - - 6,960 6,960
Actuarial loss on employee benefits schemes - net of tax - - - - (978) (978)
Foreign exchange differences arising on translation of foreign operations - - - 942 - 942
(restated)
Cash flow hedges - net of tax - - - (532) - (532)
Other comprehensive expense - - - 410 (978) (568)
Total comprehensive income (restated) 21 410 5,982 6,392
Dividends 9 - - - - (1,482) (1,482)
Shares issued 15 25 - (25) - - -
Acquisition of own shares 16 - - (4,152) - - (4,152)
ESOP shares allocated 16 - - 1,659 - (1,659) -
Share-based payments - - - - 1,492 1,492
Transactions with owners 25 - (2,518) - (1,649) (4,142)
At 31 August 2021 (restated) 3,199 52,510 (3,880) 28,504 (11,573) 68,760
At 28 February 2022 3,221 53,030 (6,771) 27,124 (1,543) 75,061
Profit for the period - - - - 8,595 8,595
Actuarial gain on employee benefits schemes - net of tax - - - - 1,235 1,235
Foreign exchange differences arising on translation of foreign operations - - - 2,417 - 2,417
Cash flow hedges - net of tax - - - (3,272) - (3,272)
Other comprehensive expense - - - (855) 1,235 380
Total comprehensive income - - - (855) 9,830 8,975
Tax credit taken to equity - - - - 2,261 2,261
Shares issued 15 26 - - - (26) -
Acquisition of own shares 16 - - (4,884) - - (4,884)
ESOP shares allocated 16 - - 4,562 - (4,562) -
Share-based payments - - - - 1,770 1,770
Transactions with owners 26 - (322) - (557) (853)
At 31 August 2022 3,247 53,030 (7,093) 26,269 7,730 83,183
Notes to the Condensed Consolidated Financial Statements (unaudited)
1 General information
Braemar Plc (the "Company") is a public limited company incorporated and
domiciled in England and Wales. The interim condensed consolidated financial
statements for the six months ended 31 August 2022 comprise the Company, its
subsidiaries and the employee share ownership trust (together referred to as
the "Group"). The address of the Company's registered office is One Strand,
Trafalgar Square, London, WC2N 5HR, United Kingdom. The interim condensed
consolidated financial statements of the Group were authorised for issue in
accordance with a resolution of the directors on 14 November 2022.
2 Basis of preparation and statement of compliance
The interim condensed consolidated financial statements for the six months
ended 31 August 2022 have been prepared in accordance with the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority and with
IAS 34, "Interim Financial Reporting", and also in accordance with the
measurement and recognition principles of UK adopted international accounting
standards. They do not constitute statutory financial statements.
The interim condensed consolidated financial statements do not include all the
information and disclosures required in the annual financial statements and
should be read in conjunction with the Group's Annual Report for the year
ended 28 February 2022, which were prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006 and in accordance with UK-adopted international accounting standards.
The interim condensed consolidated financial statements have been prepared on
a going concern basis with a reasonable expectation that the Group has
adequate resources to continue in operational existence for at least 12 months
from the date of signing of the interim condensed consolidated financial
statements. In reaching this conclusion the directors considered cash flow
forecasts that have been prepared in the light of current trading, the
continued impact of conflict in the Ukraine and the possibility of a global
recession. The directors have considered the trading and cash flows over the
first six months of the year which has been good across the Group's business
and has benefitted from the volatility in the shipping markets caused by the
Ukraine conflict. The directors consider that the breadth of the Group's
business model and the diversity of the broking operation and the markets in
which the Group now operates, have insulated the business well from cycles in
any one shipping market. The directors have also considered forward-looking
market data in respect of the shipping market. This includes the forward order
book within the Chartering segment, and the potential within the Investment
advisory segment.
The Group has recently completed the execution of a new revolving credit
facility ('RCF') with its main bankers, HSBC subject to certain Group
subsidiaries signing up to the facility as guarantors as a condition
subsequent to the agreement. The new RCF is for £30.0 million plus an
accordion limit of £10.0 million. Drawdown of the accordion facility is
subject to additional credit approval. The facility terms are very similar to
the old RCF that it has replaced that was due to expire in September 2023. It
has an EBITDA leverage covenant of 2.5x and a minimum interest cover of 4x.
At 31 August 2022, 31 May 2022 and 28 February 2022 the Group met all
financial covenant tests. As at 31 August 2022 the Group's net cash at bank*
was £1.8m with available headroom in the £30.0m RCF of £7.7m. (*Net cash at
bank debt is calculated as net cash less secured RCF).
The Group has updated its expected revenue, cost and cash forecasts in the
light of the positive trading over the first half of the current financial
year and assessed the ability of the Group to operate both within the facility
covenants and the facility headroom. A number of downside sensitivities were
tested including reverse stress scenarios. The results of this exercise showed
that the Group could withstand revenue reductions of 35% before it was
forecast that covenants would be breached or liquidity insufficient, after
taking into account reasonable cost mitigations and other cash management
measures within the control of the Group.
The directors have considered these revenue downside sensitivities and in the
light of the revenue growth seen in the period and the prospects for the
second half of the year have concluded that it would be remote that revenues
would be impacted to this extent over the assessed going concern period,
The directors consider revenue as the key assumption in the Group's forecasts
as the operating costs are largely fixed or made up of discretionary bonuses
which are directly linked to profitability.
To date the current geo-political instability and global trade interruption
has not had a significant impact on the business but there remains uncertainty
over the current outlook. However, the directors are comfortable that under
the scenarios run, the Group could withstand a decline in revenue as described
and continue to operate within the available banking facilities.
Accordingly, the Group continues to adopt the going concern basis in preparing
the condensed consolidated financial statements.
Forward-looking statements
Certain statements in this interim report are forward-looking. Although the
Group believes that the expectations reflected in these forward-looking
statements are reasonable, we can give no assurance that these expectations
will prove to be correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements. We undertake no obligation to
update any forward-looking statements whether as a result of new information,
future events or otherwise.
3 Accounting policies
The Group has applied the same accounting policies and methods of computation
in its interim condensed consolidated financial statements as in its
consolidated financial statements as at and for the year ended 28 February
2022, except as described below, and should be read in conjunction with the
2022 Annual Report.
No new standards or amendments effective for reporting periods beginning on or
after 1 March 2022 had an impact on the interim condensed consolidated
financial statements for the period ended 31 August 2022.
Defined benefit pension
The Group uses an independent actuary to provide valuations of the defined
benefit pension scheme. The actuary uses a number of estimates in respect of
the scheme membership, the valuation of assets and assumptions regarding
discount rates, inflation rates and mortality rates. The membership details
are provided by an independent trustee while the valuation of assets is
verified by an independent fund manager. The discount rates, inflation rates
and mortality rates are reviewed by management for reasonableness.
If the actuarial valuation results in a deficit, the Group recognises the
deficit in full. When the actuarial valuation results in a surplus, the net
present value of the minimum payments is recognised as a liability unless, and
to the extent that, management assess that the payments will give rise to
future economic benefits.
Taxation
Taxation is recognised in the interim period based on the best estimate of the
weighted average annual income tax rate expected for the full financial year.
Amounts accrued for income tax expense in one interim period may have to be
adjusted in the subsequent interim period of that financial year if the
estimate of the annual income tax rate changes.
Accounting estimates and critical judgements
The preparation of interim financial statements in conformity with IFRSs
requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expenses. Actual results may differ from these
estimates.
In preparing these interim condensed consolidated financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were consistent with
those that applied to the consolidated financial statements as at and for the
year ended 28 February 2022, except as described below:
Valuation of defined benefit pension scheme
The independent actuarial valuations of the Group's defined benefit pension
scheme was a surplus of £0.9m. Management have made a judgement that at 31
August 2022, despite the actuarial valuation surplus, a liability of £0.2m in
respect of minimum future payments should be recognised.
Seasonality
The Group's operating cash flows exhibit seasonality in that the majority of
bonus payments occur in the first half of the financial year. The Group's
revenues are not subject to significant seasonal variation, with the
historical exception of the Deep-sea Tankers desk which has generated stronger
revenues during the Northern hemisphere winter months.
4 Segmental information and revenue
a) Business segments
Following the simplification of the Group's activities and the way in which
information is now 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. Previously the Group's
operating segments were based on a Divisional structure of Shipbroking and
Financial. The Logistics and Engineering Divisions were sold in the prior year
and are presented as discontinued operations in the comparative period.
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.
Central costs relate to board costs and other costs associated with the
Group's listing on the London Stock Exchange. All segments meet the
quantitative thresholds required by IFRS 8 as reportable segments.
Underlying operating profit is defined as operating profit for continuing
activities before restructuring costs, gain on disposal of investment and
acquisition and disposal-related items.
The segmental information provided to the board for reportable segments for
the six months ended 31 August 2022 is as follows:
Revenue Operating profit/(loss)
Six months ended Restated Six months ended Restated
31 Aug 2022
Six months ended
31 Aug 2022
Six months ended
£'000
31 Aug 2021
£'000
31 Aug 2021
£'000
£'000
Chartering 44,892 26,775 6,931 2,503
Investment advisory 16,325 15,061 3,719 4,200
Risk advisory 8,222 5,574 1,457 954
Trading segments revenue/results 69,439 47,410 12,107 7,657
Central costs (1,208) (2,056)
Underlying operating profit 10,899 5,601
Specific items included in operating expenses (377) (153)
Operating profit 10,522 5,448
Share of associate's loss for period (14) (29)
Net finance expense (440) (602)
Profit before taxation 10,068 4,817
* The six months ended 31 August 2021 has been restated for prior period
errors and to reflect the new segment reporting format. See Note 21.
Geographical segment - by origin
The Group manages its business segments on a global basis. The operation's
main geographical area and also the home country of the Company is the United
Kingdom.
Geographical information determined by location of customers is set out below:
Revenue
Six months ended Six months ended
31 Aug 2022
31 Aug 2021
£'000
£'000
United Kingdom 36,061 27,630
Singapore 13,251 9,386
United States 1,167 276
Australia 8,579 5,001
Germany 1,646 1,124
Rest of the World 8,735 3,993
Continuing operations 69,439 47,410
Discontinued operations - 21,281
Total 69,439 68,691
b) Major customers
There is no single client that makes up more than 10% of the Group's revenues.
5 Specific items
The following is a summary of specific items incurred. Each item has an impact
on the reported results for the year that is considered material either by
size or nature and is not expected to be incurred on an ongoing basis and, as
such, will not form part of the underlying profit in future years.
Six months ended Restated
31 Aug 2022
Six months ended
£'000
31 Aug 2021
£'000
Acquisition-related items
- Acquisition of Naves Corporate Finance GmbH (377) (153)
Discontinued operations
- Wavespec - (1,787)
- AqualisBraemar - 3,375
- 1,588
Other items
Finance income - credit on modification of deferred consideration - 172
Finance costs (83) (131)
Total (460) 1,476
A correction to the specific items for the six months ended 31 August 2021 has
been recognised as a prior period adjustment. See Note 21.
Acquisition-related items
The Group incurred total costs of £0.4m (2021 restated: £0.2m) directly
linked to the acquisition of Naves Corporate Finance GmbH, being £0.1m due to
management sellers conditional on their ongoing service to the group (2021
restated: £0.2m), a £0.1m charge on remeasurement of the fair value of
derivative liabilities on the restructured liabilities due to management
sellers, and exchange losses on acquisition liabilities of £0.2m.
Discontinued operations
In the prior period, the Group recognised a net gain of £1.6m on the disposal
of discontinued operations.
The disposal of Wavespec produced a net loss of £1.8m, whilst the disposal of
AqualisBraemar generated a gain of £3.4m, more detail is provided in Note
6.
Other specific items
On 3 June 2021 the Group completed a restructuring of the deferred
consideration amounts in relation to the acquisition of Naves Corporate
Finance GmbH. This resulted in a gain on modification of £0.17m which is
classified as specific finance income.
There was a further finance cost being interest accruing on the loan notes
related to the acquisition of Naves of £0.08m (2021: £0.13m).
6 Discontinued operations
In the year ended 28 February 2022, the Group sold its Engineering Division,
Wavespec, its Logistics Division, Cory Brothers, and its entire shareholding
in AqualisBraemar. The results of these three businesses have therefore been
recognised as discontinued operations through the reporting periods.
a) Post-tax profit related to discontinued operations
Six months ended Restated
31 Aug 2022
Six months ended
31 Aug 2021
Underlying Specific Total Underlying Specific Total
£'000 £'000 £'000 £'000 £'000 £'000
Wavespec - - - (146) (1,787) (1,933)
Cory Brothers - - - 1,108 - 1,108
AqualisBraemar - - - 76 3,375 3,451
Profit - - - 1,038 1,588 2,626
Wavespec
On 31 March 2021, the Group completed the sale of Wavespec. A net loss on
disposal of £1.8m consisted of the accounting gain of £0.6m recognised on
disposal less a subsequent impairment of £2.4m of the disposal proceeds
receivable.
Cory Brothers
At 31 August 2021, following the Group's decision to dispose of Cory Brothers,
the results of Cory Brothers for the six months ended 31 August 2021 were
recognised as discontinued operations.
On 28 February 2022 the Company sold Cory Brothers to Vertom Agencies BV for a
maximum consideration of £15.5m.
The initial cash proceeds of £6.5m were received in March 2022, and three
further cash payments are due based on a percentage of the gross profit of the
combined VertomCory business. Each of the three earnout payments is subject to
a minimum and a maximum. The minimum aggregate earnout payment is £3.75m and
the maximum aggregate earnout payment is £9.0m. The minimum payment has
been recognised as deferred consideration recognised at amortised cost, using
a discount of 2.39%. The uncertain element of each earnout payment is
recognised at fair value through profit or loss and presented as contingent
consideration. The fair value is calculated using the forecast gross profit
for the combined VertomCory business for each earnout period, applying the
agreed percentage and discounting the forecast cashflow using the discount
rate of 2.39%.
The current estimate of the fair value of the deferred and contingent
consideration is £4.8m, of which £3.4 million is presented within long-term
receivables and £1.4m in current receivables. There has been no change to
the expected contingent consideration, and the unwinding of the discounts has
been credited to finance costs.
AqualisBraemar
The Group recognised its minority shareholding in AqualisBraemar as an
investment in associate until its disposal on 19 May 2021. The Group's
share of profit of associate and the profit on disposal including foreign
exchange recycling totalled £3.5m. See Note 10.
b) Cash flows in respect of discontinued operations
During the period there were no operating cash inflows from discontinued
operations (2021: £0.6m). There were net cash inflows from investing
activities of £6.5.m being the initial proceeds from the disposal of Cory
Brothers (2021: £7.2m proceeds from the sale of AqualisBraemar shares less
£0.1m cash disposed of with Wavespec), and there were no cash flows relating
to financing activities.
7 Taxation
The total tax charge of £1.5 million consists of a current tax charge of
£2.1 million and a deferred tax credit of £0.6 million. The total tax charge
of £0.5m for the comparative period comprises a current tax charge of £0.8m
and a deferred tax credit of £0.3m.
Current tax is charged at 20.2% for the six months ended 31 August 2022 (2021
restated: 9.8%) representing the best estimate of the average annual effective
tax rate expected to apply for the full year, applied to the pre-tax income of
the six-month period. The annual effective tax rate in the current period is
broadly in line with the standard rate of UK corporation tax. The impact of
higher corporation tax rates in Australia and Germany and the US is broadly
offset by the impact of a lower rate in Singapore. The annual effective tax
rate in the prior period is lower due to the utilisation of losses.
Deferred tax assets arise primarily in the UK, the deferred tax credit is
based on 25.0% for the six months ended 31 August 2022 (2021: 25.0%) except
where temporary differences are expected to reverse before 1 April 2023, in
which case deferred tax is based on 19.0%. The amount of deferred tax is based
on the expected manner of realisation of the carrying amount of assets and
liabilities. The directors believe it is probable that there will be
sufficient taxable profits in the future to recover the deferred tax assets in
full.
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 3,577,830 ordinary shares held by the
Employee Share Ownership Plan and 62,290 ordinary shares held by the ACM
Employee Benefit Trust which are treated as cancelled (28 February 2022:
2,669,603 and 62,290 shares respectively).
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive ordinary shares.
The Group has dilutive ordinary shares, being those options granted to
employees where the exercise price is less than the average market price of
the Company's ordinary shares during the year, and convertible loan notes
issued in respect of the Naves.
Total operations Six months ended Restated
31 Aug 2022
Six months ended
£'000
31 Aug 2021
£'000
Profit for the year attributable to shareholders 8,595 6,960
Pence pence
Basic earnings per share 30.22 22.34
Effect of dilutive share options (6.89) (4.54)
Diluted earnings per share 23.33 17.80
Underlying operations Six months ended Restated
31 Aug 2022
Six months ended
£'000
31 Aug 2021
£'000
Underlying profit for the year attributable to shareholders 9,055 5,484
pence pence
Basic earnings per share 31.84 17.60
Effect of dilutive share options (7.48) (3.80)
Diluted earnings per share 24.36 13.80
Underlying continuing operations Six months ended Restated
31 Aug 2022
£'000 Six months ended
31 Aug 2021
£'000
Underlying profit for the year from continuing operations 9,055 4,446
pence pence
Basic earnings per share 31.84 14.27
Effect of dilutive share options (7.48) (3.08)
Diluted earnings per share 24.36 11.19
Continuing operations Six months ended Restated
31 Aug 2022
Six months ended
£'000
31 Aug 2021
£'000
Profit from continuing operations for the year attributable to shareholders 8,595 4,334
pence pence
Basic earnings per share 30.22 13.91
Effect of dilutive share options (6.89) (2.72)
Diluted earnings per share 23.33 11.19
The weighted average number of shares used in basic earnings per share is
28,439,984 (2021: 31,161,213).
The weighted average number of shares used in the diluted earnings per share
is 37,168,377 (2021: 39,744,362) after adjusting for the effect of 8,728,393
(2021: 8,583,149) dilutive share options and convertible loan notes.
Where any potential ordinary shares would have the effect of increasing
earnings per share, they have not been treated as dilutive.
9 Dividends
On 28 August 2022 the directors recommended a dividend of 7p per share for
approval at the AGM for the financial year ended 28 February 2022. On 6
October 2022 the dividend of 7p per share was approved and was paid on 14
October 2022.
On 1 September 2021, a final dividend of 5p per share in respect of the
financial year ended 28 February 2021 was paid and an interim dividend for the
year ended 28 February 2022 of 2p per share was paid on 16 December 2021.
The board has declared an interim dividend of 4p per share, as a result of the
trading in the first half of this year, to be paid on 4 January 2023 (H1
2021: 2p).
As noted in the 2022 Annual Report, certain dividends paid in 2021 were made
in technical infringement of the Companies Act 2006, prior to declaring and
paying distributions to shareholders in respect of the Company's 1 September
2021 final dividend and 16 December 2021 interim dividend.
A resolution was passed at the Annual General Meeting re-convened on 6 October
2022 which gave the board authority to enter into deeds of release to
discharge these parties from any obligation to repay any amount to the Company
in connection with the Relevant Distributions. The Company has not recorded
the potential right to make claims against shareholders as an asset or a
contingent asset at 31 August 2022. The directors of the Company have
concluded that any inflow of economic benefits as a result of such claims was
less than probable at that date.
10 Investment in associate
The movements in the investment in associates are provided below.
Zuma AqualisBraemar Total
£'000 £'000 £'000
At 1 March 2021 418 3,345 3,763
Book value of 1,125 shares acquired 217 - 217
Share of profit/(loss) in associate - underlying (29) 76 47
Share of associate's other comprehensive income - 52 52
Book value of 9,640,621 shares disposed - (3,473) (3,473)
At 31 August 2021 606 - 606
Book value of 375 shares acquired 109 - 109
Share of profit in associate - underlying 9 - 9
At 28 February 2022 724 - 724
Share of loss in associate - underlying (14) - (14)
At 31 August 2022 710 - 710
Zuma Labs Limited
At 31 August 2022 the Group held 2,500 ordinary shares in Zuma Labs Limited
being 20% of Zuma's share capital (At 28 February 2022: 2,500 ordinary
shares being 20% of share capital). Zuma Labs Limited is a private company
incorporated in England and Wales and its registered address is Kemp House,
160 City Road, London, United Kingdom, EC1V 2NX. Zuma Labs Limited has one
share class and each share carries one vote.
The Group has representation on the board of Zuma Labs Limited, as a result,
the Group considers that it has the power to exercise significant influence in
Zuma Labs Limited and the investment in it has been accounted for using the
equity method.
AqualisBraemar
At 1 March 2021 the group held 9,640,621 shares shareholding in AqualisBraemar
LOC ASA which it recognised as an investment in an associate. AqualisBraemar
LOC ASA is listed on the Oslo Børs, its principal place of business is Oslo
and its registered address is Olav Vs gate 6, 0161, Oslo, Norway.
AqualisBraemar LOC ASA has one share class and each share carries one vote.
On 19 May 2021 the Group sold its entire remaining shareholding in
AqualisBraemar LOC ASA, see Note 6. At that point significant influence
was lost, and the Group ceased to equity account for AqualisBraemar.
The net disposal proceeds were £7.2m, and the profit on disposal was
£3.4m. The results of AqualisBraemar are presented within discontinued
operations.
11 Other long-term receivables
31 Aug 2022 28 Feb 2022
£'000
£'000
Other long-term receivables
Deferred consideration 2,441 3,482
Contingent consideration 960 1,276
Security deposits 18 17
Finance lease receivables 564 861
3,983 5,636
Deferred consideration of £2.4 and contingent consideration of £1.0m relates
to the non-current earn-out payments receivable in respect of the disposal of
Cory Brothers, further detail is provided in Note 6.
12 Trade and other receivables
31 Aug 2022 28 Feb 2022
£'000
£'000
Trade receivables 30,050 24,970
Provision for impairment of trade receivables (3,331) (3,159)
Net trade receivables 26,719 21,811
Deferred consideration 1,084 -
Contingent consideration 330 -
Other receivables 5,321 13,314
Finance lease receivables 633 633
Accrued income 2,940 1,965
Prepayments 1,861 1,085
Total 38,888 38,808
Included in other receivables in all periods are security deposits, VAT and
other sales tax receivables and employee loans. The balance at 28 February
2022 also includes the initial amount receivable for the disposal of Cory
Brothers of £6.5m which was received during the current period.
Deferred consideration of £1.1m and contingent consideration of £0.3m
relates to the current element of earn-out payments receivable in respect of
the disposal of Cory Brothers.
The directors consider that the carrying amounts of trade receivables
approximate to their fair value.
The provision for impairment of trade receivables consists of lifetime
expected loss provision and specific provision. At 31 August 2022 the
lifetime expected loss provision for trade receivables and contract assets is
£0.8m (six months ended 28 February 2022: £0.7m). The expected credit loss
rates applied at 31 August 2022 are consistent with those applied at 28
February 2022. The specific provision on trade receivable as at 31 August 2022
is at £2.5m (six months ended 28 February 2022: £2.5m).
13 Deferred consideration payable
Acquisition of Naves Corporate Finance GmbH
In September 2017, the Group acquired the entire share capital of Naves
Corporate Finance GmbH ("Naves"). Naves was an established and successful
business, headquartered in Hamburg, Germany, which advises national and
international clients on corporate finance related to the maritime industry
including restructuring advisory, corporate finance advisory, M&A, asset
brokerage, interim/pre-insolvency management and financial asset management
including loan servicing.
The accounting values for the deferred consideration and associated payments
to management sellers are subject to a prior period adjustment set out in Note
21.
The acquisition agreement provided for consideration of £16.0m (€18.4m)
payable as follows:
i) at completion in cash £7.3m (€8.3m), in shares £1.3m
(€1.5m) and in convertible loan notes £6.4m (€7.4m); and
ii) deferred consideration in cash of £0.5m (€0.6m) and
convertible loan notes of £0.5m (€0.6m), payable in instalments over the
three years after the acquisition.
No consideration was contingent consideration. As at six months ended 31
August 2022, there is nil outstanding deferred consideration (2021:nil) to
non-management sellers.
The acquisition agreement also provided deferred amounts that would be payable
to management sellers, conditional on their ongoing service in the business.
IFRS 3 states that amounts paid to former owners which are conditional on
ongoing service are for the benefit of the acquirer and not for the benefit of
former owners. Consideration linked to the ongoing service of former owners is
treated as remuneration for post-combination services and classified as
acquisition-related expenditure under specific items in the Income Statement.
The deferred amounts payable to management sellers comprised:
i) deferred cash of £1.3m (€1.5m) and deferred convertible loan
notes of £4.3m (€4.9m) conditional only on the individual management
seller's continued service payable in instalments over the five years after
the acquisition; and
ii) deferred convertible loan notes of up to £9.4m (€11.0m)
conditional on the individual management seller's continued service and the
post-acquisition Naves' EBIT in the three years post-acquisition. By February
2021, there was no contingency remaining and the total amount paid was £4.6m
(€5.3m).The settlement of the vested contingent payments was restructured in
June 2021.
At February 2022 £0.5m (2021: £1.0m) of amounts payable in the future to
management sellers were subject to future service conditions, of which £0.5m
(2021: £0.9m) had been accrued. This accrual is presented within deferred
consideration.
As at As at
31 Aug 2022 28 Feb 2022
£'000 £'000
Current
Issued convertible loan notes 1,561 1,416
Deferred cash - -
1,561 1,416
Non-current
Issued convertible loan notes 2,814 2,755
Accrued retention convertible loan notes 593 495
3,407 3,250
Total 4,968 4,666
£'000
Total Naves liabilities at 28 February 2021 4,666
Service cost 71
Interest 83
Foreign exchange 148
Total Naves liabilities at 28 February 2022 4,968
Post-acquisition remuneration of £0.1m associated with the acquisition were
incurred during the six months ended 31 August 2022 (2021: £0.2m) and have
been classified as acquisition-related expenditure under specific items in the
Income Statement. See Note 5.
14 Financial instruments
The board has modified its currency hedging strategy to address the increased
volatility in currency markets. There have been no other 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.
Amidst a period of increased currency risk the board has modified its hedging
strategy, increasing both the proportion of future cash flows that it seeks to
hedge and opting to hedge forecast US Dollar cash flows out to 21 months
rather than 18 months. The Group is using a wider range of instruments to
transact the new strategy, including forward foreign exchange contracts and
currency options which are discussed below. The Group continues to apply
hedge accounting to hedge instruments that meet the criteria set out in IFRS
9.
c) Financial instruments
i) Principal financial instruments
The principal financial instruments used by the Group, from which financial
instrument risk arises, are as follows:
- trade and other receivables;
- cash and cash equivalents;
- deferred consideration receivable;
- contingent consideration receivable;
- unlisted investments;
- trade and other payables;
- bank overdrafts;
- revolving credit facility;
- lease liabilities;
- forward currency contracts;
- currency options;
- deferred consideration; and
- convertible loan notes.
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 31 Aug 2022
£'000
Financial assets
Unlisted investments - 1,500 - 1,500
Contingent consideration receivable - - 1,290 1,290
Total - 1,500 1,290 2,790
Financial liabilities
Forward currency contracts - 4,760 - 4,760
Options - 1,113 - 1,113
Embedded derivative - - 382 382
Total - 5,873 382 6,255
Level 1 Level 2 Level 3 As at
£'000 £'000 £'000 28 Feb 2022
£'000
Financial assets
Unlisted investments - 1,500 - 1,500
Contingent consideration receivable - - 1,276 1,276
Forward currency contracts - 62 - 62
Total - 1,562 1,276 2,838
Financial liabilities
Forward currency contracts - 772 - 772
Embedded derivative - - 251 251
Total - 772 251 1,023
Fair value hierarchy
The level in the fair value hierarchy within which the financial asset or
liability is categorised is determined on the basis of the lowest level input
that is significant to the fair value measurement.
Financial assets and liabilities are classified in their entirety into one of
three levels:
- Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
- Level 2: Inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly or
indirectly.
- Level 3: Inputs for the asset or liability that are not based
on observable market data.
Unlisted investment
The unlisted investment relates to the Group's investment in the London Tanker
Broker Panel. The investment is carried at fair value, being the value of the
most recent comparable transaction and is therefore classified as Level 2 in
the fair value hierarchy.
There was no movement in the fair value of the unlisted investment.
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 Braemar is entitled to three future cash payments. The SPA provides
for a minimum guaranteed amount in each of the three years, this amount has
been classified as deferred consideration. The balance of the earnout
consideration is contingent on the future performance of the combined business
up to a maximum specified in the SPA, this has been classified as contingent
consideration. The fair value of the contingent consideration has been
calculated by reference to management's expectation of the future
profitability of the combined business and discounted to present value using a
discount rate of 2.39%. The discount rate of 2.39% was based on the credit
risk of Vertom Agencies BV assessed by a third-party credit agency.
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.
The Group manages the exposure to US Dollar currency variations by spot and
forward currency sales and other derivative currency contracts.
At 31 August 2022 the Group held forward currency contracts to sell $108.7
million at an average rate of $1.23/£1.
At 28 February 2022 the Group held forward currency contracts to sell $53.8
million at an average rate of $1.37/£1.
The net fair value of forward currency contracts that are designated and
effective as cash flow hedges amount to a £4.8m liability (28 February 2022:
£0.7m liability).
Amounts of £2.0m have been charged (31 August 2021: £0.6m) to the condensed
consolidated Income Statement in respect of forward contracts which have
matured in the period.
Currency options
The fair value of the currency options 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.
At 31 August 2022 the Group entered into currency options featuring a "cap and
collar" feature. The net fair value of these options, that are designated as
effective cash flow hedges, amounts to a £0.3m liability (28 February 2022:
£nil liability). The intrinsic value of the options is designated as a
cashflow hedge. The time value of the options is deferred in equity as a cost
of hedging, and released to profit and loss upon recognition of the hedged
item.
The Group also entered into a currency option which is not designated as
effective cash flow hedges with a fair value of a £0.8m liability
(28 February 2022: £nil liability). The £0.8m movement in fair value
in the period was charged to the income statement (2021: £nil).
The maturity analysis of forward currency contracts and currency options is
provided below:
31 Aug 2022 28 Feb 2022
£'000
£'000
Assets
Forward currency contracts maturing within 12 to 18 months - 8
Forward currency contracts maturing within 12 months - 54
Total assets - 62
Liabilities
Forward currency contracts maturing within 12 to 18 months (463) (84)
Options maturing within 12 to 18 months (799) -
Forward currency contracts maturing within 12 months (4,297) (688)
Options maturing within 12 months (314) -
Total liabilities (5,873) (772)
Embedded derivative
The convertible loan note instruments issued on the acquisition of Naves
contain an embedded derivative, being a Euro liability of principal and
interest. The equity value of the underlying derivative is not considered
closely related to the debt host, therefore the loan note is considered to be
a financial liability host with an embedded derivative convertible feature
which is required to be separated from the host. The fair value of the
embedded derivative includes unobservable inputs and is therefore classified
as Level 3. They key assumptions underpinning the fair value of the embedded
derivative relate to the expected future share price of the Group and the
Sterling to Euro exchange rate. The fair value has been determined using the
Black-Scholes valuation model.
Financial instruments not measured at fair value
The Group's financial assets and liabilities that are not measured at fair
value are held at amortised costs. Due to their short-term nature, the
carrying value of these financial instruments approximates their fair value.
Their carrying values are as follows:
Financial assets 31 Aug 2022 28 Feb 2022
£'000
£'000
Cash and cash equivalents 24,058 13,964
Deferred consideration receivable 3,525 3,482
Trade and other receivables 36,194 38,252
Total 63,777 55,698
Financial liabilities 31 Aug 2022 28 Feb 2022
£'000
£'000
Trade and other payables 6,297 7,779
Deferred and contingent consideration 4,968 4,666
Lease liabilities 5,791 8,506
Loans and borrowings 22,254 23,254
Total 39,310 44,205
At 31 August 2022, trade and other payables of £41.5m (2021: £38.6m were
recognised on the balance sheet, which included a bonus accrual of £28.6m
(2021: £15.1m) and deferred income of £0.2m (2021: £0.1m), which are not
financial liabilities, and are not included in the table above.
15 Share capital
Number of shares Ordinary shares Share premium Total
(thousands) £'000 £'000 £'000
At 1 March 2021 31,731 3,174 52,510 55,684
Issue of shares 264 25 - 25
At 31 August 2021 31,995 3,199 52,510 55,709
Issue of shares 211 22 520 542
At 28 February 2022 32,206 3,221 53,030 56,251
Issue of shares 260 26 - 26
At 31 August 2022 32,466 3,247 53,030 56,277
In the six months ended 31 August 2022 the total number of ordinary shares of
10 pence each in issue has increased from 32,205,590 to 32,465,878.
16 ESOP reserve
An Employee Share Ownership Plan ("ESOP") was established on 23 January 1995.
The ESOP has been set up to purchase shares in the Company. These shares, once
purchased, are held in trust by the Trustee of the ESOP, SG Kleinwort Hambros
Trust Company (CI) Limited, for the benefit of the employees. Additionally,
an Employee Benefit Trust ("EBT") previously run by ACM Shipping Group plc
also holds shares in the Company. The ESOP and EBT are accounted for within
the Company accounts.
The ESOP reserve represents a deduction from shareholders' funds and a
reduction in distributable reserves The deduction equals the net purchase cost
of the shares held in by the ESOP. Shares allocated by the ESOP to satisfy
share awards issued by the group are released at cost on a FIFO basis.
Group and Company £'000
At 1 March 2021 1,362
New shares fully paid up and issued to the ESOP 25
Shares acquired by the ESOP 4,152
ESOP shares allocated (1,659)
At 31 August 2021 3,880
Shares acquired by the ESOP 2,891
At 28 February 2022 6,771
Shares acquired by the ESOP 4,884
ESOP shares allocated (4,562)
At 31 August 2022 7,093
As at six months ended 31 August 2022, the ESOP held 3,577,830 (2021:
1,309,839) ordinary shares of 10 pence each and the ACM EBT held 62,290 (2021:
62,290) ordinary shares of 10 pence each.
17 Other reserves
Restated Note Capital Merger Foreign Hedging Total
redemption reserve currency reserve £'000
reserve £'000 translation £'000
£'000 reserve
£'000
At 28 February 2021 (restated) 21 396 24,641 1,622 1,435 28,094
Cash flow hedges
- Transfer to net profit - - - (1,084) (1,084)
- Fair value losses in the period - - - (276) (276)
Exchange differences - - 942 - 942
Deferred tax on items taken to other comprehensive income - - - 828 828
At 31 August 2021 396 24,641 2,564 903 28,504
Cash flow hedges
- Transfer to net profit - - - (1,043) (1,043)
- Fair value losses in the period - - - (79) (79)
Exchange differences - - 56 - 56
Deferred tax on items taken to other comprehensive income - - - (314) (314)
At 28 February 2022 396 24,641 2,620 (533) 27,124
Cash flow hedges
- Transfer to net profit - - - 2,152 2,152
- Fair value losses in the period - - - (6,515) (6,515)
Exchange differences - - 2,417 - 2,417
Deferred tax on items taken to other comprehensive income - - - 1,091 1,091
At 31 August 2022 396 24,641 5,037 (3,805) 26,269
All other reserves are attributable to the equity holders of the parent
company.
A correction to the merger reserve has been transferred from share premium has
been recognised as a prior period adjustment. See Note 21.
A correction to the hedging reserve and retained earnings in respect of
consolidation errors has been recognised as a prior period adjustment. See
Note 21.
18 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 contingent liabilities expected to have a material adverse
financial impact on the Group's consolidated results or net assets.
19 Related party transactions
The Group's related parties are unchanged from six months ended 31 August
2021. There has been no significant related party transaction in the six
months ended 31 August 2022. For further information about the Group's related
parties, please refer to the Group's Annual Report 2022.
20 Events after the reporting date
During October 2022, the Group formed a new Natural Gas desk through the
recruitment of a 10-strong team. The new desk will primarily broke EU gas, UK
National Balancing Point (NBP) gas, and LNG, as well as European Union carbon
allowances (EUAs).
There were no other adjusting or significant non-adjusting events between the
reporting date and the date these condensed financial statements were
authorised.
21 Prior period adjustments and change in presentation
As reported in the annual report for the year ended 28 February 2022 the Group
identified a number of prior year adjustments to opening reserves and the
prior year consolidated income statement, consolidated statement of
comprehensive income and consolidated cash flow statement. As part of the
annual report preparation the Group also identified corrections to certain
disposals completed in the 6 months to 31 August 2021.
The Group has considered these errors identified and reflected the impact of
in a restatement of the opening reserves and results / cashflows for the 6
months to 31 August 2021. The impacts of the restatement are summarised as
follows:
Opening reserves
As reported in the annual report for the year ended 28 February 2022 the
opening reserves were restated as below, further details are contained within
the annual report.
Group Share Share ESOP reserve Other Retained earnings Total
capital premium £'000 reserves £'000 equity
£'000 £'000 £'000 £'000
At 28 February 2021 (reported) 3,174 55,805 (1,362) 22,790 (16,780) 63,627
Correction of merger reserve - (3,295) - 3,295 - -
Correction of Naves acquisition accounting - - - 994 1,299 2,293
Correction of other consolidation errors - - - 1,015 (425) 590
At 28 February 2021 (restated) 3,174 52,510 (1,362) 28,094 (15,906) 66,510
Condensed consolidated income statement and condensed consolidated statement
of other comprehensive income
As identified and corrected in the annual report for the year ended 28
February 2022 historic errors were identified in the accounting for the Naves
transaction and consideration payable to management - further details of this
are included in the annual report. A consequential impact of this error
meant that the profit for the 6-month period to 31 August 2021 was overstated
by £2.4m. The condensed consolidated income statement has therefore been
restated to reduce profit before tax by £2.4m, the material element of this
being a reduction in the gain on modification previously recorded of £2.4m to
£0.2m.
In addition, the annual report for the year ended 28 February 2022 corrected
the disposal accounting for Wavespec and Aqualis Braemar, this had been
incorrectly accounted for in the 6-month period to 31 August 2021 (further
details of the final accounting are included in the annual report). The impact
of the adjustments to the disposal accounting results in a reduction in profit
from discontinued operations of £2.0m, with an opposite impact on other
comprehensive income in respect of foreign exchange differences arising on
translation of foreign operations.
The Group also reclassified £0.9m from cost of sales to operating costs to
align with the revised presentation in the annual report for the year ended 28
February 2022.
The cumulative impact of the adjustments was to:
· Increase continuing profit before tax from underlying operations
by £0.012m to £4.9m;
· Reduce continuing profit before tax by £2.4m to £4.8m;
· Reduce total profit after tax by £4.4m to £7.0m; and
· Increase in other comprehensive income of £2.0m.
Condensed consolidated statement of cash flows
The above adjustments also impacted the cash flow statement for the 6-month
period ended 31 August 2021, whilst there was no impact on the closing cash
position the following adjustments arose:
· Decrease in operating cash flow before changes in working capital
of £0.9m to £9.6m; and
· Decrease in net cash generated from operating activities of
£0.031m with an opposite movement in net cash used in financing activities.
Statement of directors' responsibilities
We confirm that to the best of our knowledge:
· the condensed set of financial statements has been prepared in
accordance with UK-adopted IAS 34 Interim Financial Reporting; and
· the interim management report includes a fair review of the
information required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being
an indication of important events that have occurred during the first six
months of the financial year and their impact on the condensed set of
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so.
By order of the board
James Gundy Nick Stone
Group Chief Executive Officer Chief Financial Officer
14 November 2022
INDEPENDENT REVIEW REPORT TO Braemar plc
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed consolidated set of financial statements in the
half-yearly financial report for the six months ended 31 August 2022 is not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34 "Interim Financial Reporting" and the
Disclosure Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
We have been engaged by the Company to review the condensed consolidated set
of financial statements in the half-yearly financial report for the six months
ended 31 August 2022 which comprises Condensed Consolidated Statement of
Comprehensive Income, Condensed Consolidated Balance Sheet, Condensed
Consolidated Cash Flow Statement, Condensed Consolidated Statement of Changes
in Equity, and the Unaudited Notes to the Financial Statements.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed consolidated set of financial statements included in this
half-yearly financial report has been prepared in accordance with UK adopted
International Accounting Standard 34, "Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the group to
cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed consolidated set of financial statement
in the half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority and for
no other purpose. No person is entitled to rely on this report unless such a
person is a person entitled to rely upon this report by virtue of and for the
purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility
for this report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
London
14 November 2022
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127)
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