REG - Braemar PLC - Interim Results
06/11/2024 07:00
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RNS Number : 0727L Braemar PLC 06 November 2024
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.
6 November 2024
BRAEMAR PLC
("Braemar", the "Company" and together with its subsidiaries the "Group")
UNAUDITED HALF YEAR RESULTS
For the six months ended 31 August 2024
Strengthening and diversifying to build further resilience
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 six months ended 31 August 2024 ("HY25"
or the "Period").
The business performed well in the first half of the year, with the strength
of Braemar's diversification, resilience, and operational scale, built over
the last three years, in evidence. Solid growth in the Investment and Risk
Advisory segments more than offset a weaker Chartering segment, helping to
drive overall Group performance and deliver HY25 revenue 60% higher than HY22
when the strategy was implemented.
Braemar remains on track to meet its stated objective of doubling FY21's
underlying operating profit on a sustainable basis and is on course to meet
market expectations1 for FY25.
Increased interim dividend
The board continues to view the future of the business with confidence and is
pleased to declare an interim dividend of 4.5 pence per share(3), a 13%
increase on HY24 (HY24: 4.0 pence), and in line with the Group's progressive
dividend policy.
Financials
Underlying(2) Statutory
( ) HY25 HY24 % change HY25 HY24 % change
Revenue £76.0m £74.9m 1% £76.0m £74.9m 1%
Operating profit £7.3m £6.7m 9% £4.6m £2.2m 108%
Profit before tax £6.2m £6.0m 3% £3.6m £1.9m 89%
Profit after tax £4.6m £5.1m (10%) £2.1m £1.6m 37%
Underlying earnings per share (basic) 14.55p 17.43p (17%) 6.83p 5.37p 27%
Dividend per share 4.5p 4.0p 13% 4.5p 4.0p 13%
Net cash £3.3m £3.1m 5% £3.3m £3.1m 5%
Financial highlights
· Revenue up 1% year on year (or 3% on a USD basis) to £76.0
million
· Underlying operating profit(2) up 9% to £7.3 million (HY24:
£6.7 million), with operational leverage now evident
· Underlying operating profit of £7.9 million (HY24: £7.6
million) after adjusting for acquisition-related expenditure
· Net cash position of £3.3 million at 31 August 2024 (HY24: £3.1
million and FY24: £1.0 million)
· Interim dividend increased to 4.5 pence per share (HY24: 4.0
pence), reflecting a solid financial performance and the board's confidence in
the outlook for the Group
Operational highlights
· Increase in revenue driven by the Investment and Risk Advisory segments
more than offset a weaker Chartering segment
· Strong forward order book of $80.9 million at 31 August 2024 (29
February 2024: $82.6 million; 31 August 2023: $67.2 million)
· Average revenue per head remains strong at £181,000 (HY24:
£184,000), $227,000 (HY24: $228,000)
· Increase in average commissions per fixture offset lower fixture
numbers overall, reflecting increased voyage times due to geo-political events
impacting fleet availability
· South Korea office opened during the Period, the Group now has 17
offices globally
Outlook
· Market conditions remain healthy
· Forward order book continues to be strong, $85.8 million as at 30
September 2024
· The diversification across shipbroking and the growing securities
business is delivering a more balanced business with sustainable revenue
· Opportunities exist for both organic and inorganic growth with a
number of complementary opportunities being considered, and the executive team
remains focused on further executing the Group's growth strategy
· The Group is on track to meet FY25 market expectations(1)
James Gundy, Group Chief Executive Officer, said:
"I am delighted with the Group's performance for the first half of FY25. Our
strategy has been to build a business that can deliver sustainable profits
through a more balanced and diversified shipbroking and securities offering,
and this is now evident. Our performance in the first half illustrates the
benefits from this strategy. The acquisitions made in FY23 are performing well
and we have an increasingly diversified revenue mix, achieving an increase in
total revenue. As we continue to scale, we remain focused on cost control and
efficiencies, which combined with our increased revenues achieved an
underlying operating profit of £7.3m, an increase of 9% (HY24: £6.7
million), £7.9 million before acquisition related items (HY24: £7.6
million), showing that operational leverage is coming through.
"The outlook for the shipping industry remains positive with exciting
opportunities for further organic and inorganic growth. Our growing scale,
expertise and infrastructure places Braemar in a strong position to attract
talented individuals and businesses as we continue to successfully execute our
growth plans."
(1) Consensus at the time of this announcement: Revenue £152.7 million (£150.8
million - £154.7 million), Underlying operating profit (before
acquisition-related expenditure) £17.8 million (£17.4 million to £18.4
million)
(2) Underlying results measures are before specific items, including acquisition
and disposal-related charges and profit/loss from discontinued operations (see
Note 5)
(3) The interim dividend will be paid on 13 January 2025 to shareholders on the
register at the close of business on 22 November 2024, with a corresponding
ex-dividend date of 21 November 2024. The last date for Dividend Reinvestment
Plan elections will be 18 December 2024
Results presentations
A presentation for analysts will be held today at 10.30 a.m. at Burson
Buchanan's offices at 107 Cheapside, London, EC2V 6DN. Please contact the team
at Burson Buchanan via braemar@buchanan.uk.com
(mailto:braemar@buchanan.uk.com) for further details.
A copy of the presentation and meeting recording will be made available on the
Investor Relations section of Braemar's website later today:
https://braemar.com/investors/ (https://braemar.com/investors/) . The Company
is also hosting an online investor presentation for retail investors with
Q&A on Friday, 8 November 2024, commencing at 1.00 p.m. To participate,
please register with PI World at https://bit.ly/BMS_H125_results_webinar
(https://url.uk.m.mimecastprotect.com/s/Q8qOCRgwECP0G77t9fjF1afJJ?domain=bit.ly)
.
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
Burson Buchanan
Charles Ryland / Stephanie Whitmore / Jack Devoy / Abby Gilchrist Tel +44 (0) 20 7466 5000
Canaccord Genuity
Adam James / Harry Rees Tel +44 (0) 20 7523 8000
About Braemar Plc
Braemar provides expert advice in shipping investment, chartering, and risk
management to enable its clients to secure sustainable returns and mitigate
risk in the volatile world of shipping. 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.
Braemar joined the Official List of the London Stock Exchange in November 1997
and trades under the symbol BMS.
For more information, including our investor presentation,
visit www.braemar.com (http://www.braemar.com/) and follow Braemar on
LinkedIn (https://www.linkedin.com/company/braemar-ltd) .
Reconciliation of underlying profit before tax to reported profit before tax
for the Period
HY25 HY24
£m £m
Underlying operating profit 7.3 6.7
Specific items (2.7) (4.5)
Reported operating profit 4.6 2.2
Alternative Performance Measures ("APMs")
Braemar uses APMs as key financial indicators to assess the underlying
performance of the Group. Management considers the APMs used by the Group to
better reflect business performance and provide 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 Operating and 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
The Group's performance for the first six months of the year clearly
illustrates that our growth strategy, building more diversified revenue in
shipbroking and securities, has built a resilient and sustainable business
with improved revenue and operating profit. The Group is well positioned for
further growth through making key hires and strategic acquisitions, further
enhancing resilience and sustainable performance.
Revenue at £76 million was slightly above the prior year, with a strong
performance from Investment Advisory more than offsetting weaker Chartering
revenue, whilst our Risk Advisory segment has continued its growth, increasing
its revenue by 16% from the same period last year.
Costs remain well controlled, and overall underlying operating profit at £7.3
million was £0.6 million (9%) higher than the same period last year. After
adjusting for acquisition related items, underlying operating profit was £7.9
million (HY24: £7.6 million).
In 2022, the Group made a commitment to double its FY21 underlying profit by
FY25. The Group achieved this in FY23 as well as in FY24 and is on course for
FY25. This reflects the improved quality of the business as well as the hard
work and dedication of everyone at Braemar and their commitment to our
clients; I would like to take this opportunity to thank all of our people.
The outlook for Braemar and shipping markets remains positive. As a result of
the strong underlying financial performance in the Period and the positive
outlook, I am delighted that the board has declared an interim dividend of 4.5
pence per share. This will be paid on 13 January 2025 to all shareholders on
the register at the close of business on 22 November 2024. The last date for
Dividend Reinvestment Plan ("DRIP") elections will be 18 December 2024. The
DRIP is provided by Equiniti Financial Services Limited. The DRIP enables the
Company's shareholders to elect to have their cash dividend payments used to
purchase the Company's shares. More information can be found at
www.shareview.co.uk/info/drip
(https://protect-eu.mimecast.com/s/5b2ACoY7wtkpQ7mTVRfzr?domain=shareview.co.uk)
.
Nigel Payne
Chairman
CHIEF EXECUTIVE OFFICER'S STATEMENT
This robust performance shows the importance of building a more diversified
offering by product and geography, allowing Braemar to be well positioned to
deliver sustainable revenue and profit growth.
The acquisitions made in FY23 performed well and continue to realise the
benefits of being part of the Group. Additionally, our Risk Advisory segment
increased its revenue by 16% from the prior year. We have continued to focus
on building a platform for growth, ensuring that as we grow revenue through
hiring and further acquisitions, we see the operational leverage come through
to growing our profits.
We now have offices in seventeen countries following the opening of our South
Korea office in May 2024 with plans for further geographical expansion. In
addition, there continue to be opportunities to acquire additional businesses
that complement our strategy. We nevertheless remain disciplined in our
approach, ensuring that any acquisitions are complementary and enhance our
existing business.
During this Period, geo-political events have continued to impact the shipping
industry, leading to longer voyage times. These factors are further impacting
the available global fleet which has increased average commissions per fixture
but resulted in a reduced number of fixtures in the Period. Braemar takes
compliance with all laws and regulations very seriously and is committed to
carrying out the appropriate due diligence and checks on its clients and
transactions.
With global trade remaining strong, an ageing fleet and limited capacity in
the yards for newbuilding, the outlook for the shipping industry remains
positive, and we have a clear strategy to continue our growth trajectory.
I am very proud of how we have reshaped the business over the last three
years, and we look to the future with confidence.
James Gundy
Group Chief Executive Officer
OPERATING AND FINANCIAL REVIEW
As a result of the streamlined business and focus on our core Shipbroking
activities, as in the prior year, the Group is presenting three business
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
Revenue HY25 HY24
£m £m Change
%
Chartering 49.8 52.6 (5%)
Investment Advisory 14.7 12.4 19%
Risk Advisory 11.5 9.9 16%
Total in Sterling £76.0 £74.9 1%
Total in US dollars $95.1 $92.6 3%
Chartering performance in the Period showed resilience despite being weaker
than the prior period, primarily driven by less Deep Sea Tanker activity
although this was partly offset by a strong performance from the Offshore
desk.
Investment Advisory achieved a stronger performance, driven by Sale &
Purchase, whilst Corporate Finance remained quiet with fewer significant
mandates completing in the Period. This revenue can be lumpier and the
pipeline for H2 looks promising.
Risk Advisory continued to grow, as we organically expanded our offering to
meet the risk management and trading requirements of our clients.
As at 30 September 2024, the forward order book totalled $85.8 million,
compared with US$82.6m as at 29 February 2024. This represents an increase of
$3.2 million in the seven months to 30 September 2024.
Most of the Group's revenue is in US dollar. US dollar revenue grew by 3%,
whilst reported GBP revenue increased by 1%, reflecting the weakening of the
US dollar in the Period.
SEGMENTAL PERFORMANCE
CHARTERING
HY25 HY24 Change %
£m £m
Revenue 49.8 52.6 (5%)
Underlying operating profit 6.1 6.4 (4%)
Tankers
Revenue from Deep Sea Tankers in HY25 was £25.7 million, 10% lower due to a
reduced level of projects revenue and decreased fixtures compared with HY24.
Fixture numbers were impacted by longer voyage times due to ongoing
geo-political events impacting fleet availability. The acquisitions of
businesses in the USA and Spain continued to perform strongly. Overall, tanker
rates remained relatively robust, and this is expected to continue.
Revenue for Specialised Tankers in HY25 was £9.1million, £0.2 million lower
than the prior year. However, the international reach of the desk continued to
grow, and rates remained strong, with higher average commission per fixture
driven by longer voyages offsetting reduced fixture numbers.
Offshore Energy Services
Revenue for Offshore Energy Services was £4.4 million, a 16% improvement on
HY24 driven both by strong oil and gas sectors, as well as the continuing
growth in the renewables sector and constrained supply of vessels.
Dry Cargo
Revenue for Dry Cargo was £10.6 million, a 3% decrease on prior year. Rates
improved slightly during the Period; however, this was offset by a reduction
in fixture numbers driven by a lower number of brokers on the Handy and
Panamax desks.
With the lower revenue, underlying operating profit was £6.1 million, £0.3
million (4%) lower than the previous period.
INVESTMENT ADVISORY
H1 FY24 H1 FY23 Change %
£m £m
Revenue 14.7 12.4 19%
Underlying operating profit 2.4 1.7 44%
Sale and Purchase
Total revenue for Sale and Purchase in HY25 was £14.0 million, a 25% increase
on the prior period. During the Period, second-hand asset values continued to
be strong across all vessel types and newbuilding interest remained high with
limited newbuilding slots available. Given the high asset values, and demand,
activity in the demolition space continued to be weaker.
Corporate Finance
Total revenue for Corporate Finance in HY25 was £0.7 million, a decrease of
40% on prior year, with no significant mandates completing in the Period. This
revenue tends to be lumpier in nature and the business continues to work on
several transactions that are planned to complete in the second half of the
year. As a result, performance is expected to improve in H2.
The improved underlying operating profit in the Investment Advisory segment
reflects the improved revenue performance and operational leverage.
RISK ADVISORY
HY25 HY24 Change %
£m £m
Revenue 11.5 9.9 16%
Underlying operating profit 1.5 1.4 12%
Securities
Revenue for Securities was £11.5 million, a 16% increase on HY24 as the
division continued to grow.
The Dry FFA desk performed well with strong underlying market conditions and
heightened interest from financial participants. Ongoing geopolitical tensions
continue to create market uncertainty, underscoring the need for our clients
to hedge their market exposure. In addition, the industry leading market
platform, Braemarscreen.com, has continued to gain new users and business.
The Natural Gas desk is now in its second year and has continued to grow,
working with clients to manage their risk exposure.
The Tanker FFA desk also grew year on year as geopolitical factors continued
to bring volatility to the market.
Operating profit at £1.5 million, was £0.1 million higher than the previous
period as the segment continues to invest for future growth.
Other operating
costs
Central costs HY25 HY24 Change %
£m £m
Central costs 2.8 2.7 2%
Central costs were up 2% in the Period as the Group continued to balance a
continued focus on cost control and efficiencies whilst also selectively
investing to support future growth.
Specific items
HY25 HY24
£m £m
Operating costs 0.4 1.9
Acquisition related items 2.3 2.6
Other items (0.1) (0.4)
The Group has separately identified certain items that are not part of the
underlying trading of the Group. These specific items are material in both
size and/or nature and the directors believe that they may distort the
understanding of the underlying performance of the business. Specific items
included within operating costs mainly relate to the impairment of a
right-of-use asset relating to an unused portion of the Group's leased office
space following the termination of the related subleases.
Acquisition related costs are primarily employment costs relating to the
treatment of the consideration for the acquisition of Southport Maritime Inc.
(USA) and post contractual costs relating to the Madrid team. Other items
include a gain on the revaluation of the embedded derivatives and a foreign
exchange gain relating to the convertible loan notes issued on the acquisition
of the Naves business. For further details see Note 5.
Foreign exchange
The majority of the Group's revenue is earned in US dollar. The US dollar
exchange rate relative to Sterling weakened from US$1.26:£1 at 29 February
2024 to US$1.31:£1 at 31 August 2024.
At 31 August 2024, the Group held forward currency contracts to sell US$110.9
million at an average rate of US$1.26/£1.
The Group also has material liabilities in Euros and the Euro rate weakened
slightly against Sterling from €1.17:£1 at 29 February 2024 to €1.18:£1
at 31 August 2024.
Balance sheet
Net assets at 31 August 2024 were £85.0 million (29 February 2024: £79.6
million). A review aimed at identifying evidence of impairment of intangible
assets was carried out and no such impairment was identified.
Long-term receivables decreased by £2.9 million to £1.7 million (29 February
2024: £4.6 million), due to contingent consideration and joining incentives
moving to current other receivables.
Trade and other receivables increased by £3.7 million to £41.5 million (29
February 2024: £37.7 million), reflecting higher receivables from the Sale
& Purchase desk.
The pension surplus increased by £0.4 million to £1.8 million during the
Period (29 February 2024: £1.4 million) largely due to a reduction in the
applicable tax rate, from 35% to 25%.
Shares held in the Group's Employee Share Ownership Plan ("ESOP") decreased by
£3.6 million from £7.1 million at 29 February 2024 to £3.5 million at 31
August 2024, due to shares allocated by the ESOP.
Borrowings and cash
At 31 August 2024, the Group held cash of £26.0 million (28 February 2024:
£28.0 million). The decrease in cash was largely attributable to the payment
of dividends in the Period.
The Group continued to pay down debt and the net cash position was cash of
£3.3 million compared with £1.0 million at 29 February 2024.
The Group continues to hold a revolving credit facility with HSBC ("RCF"). The
RCF limit totals £40.0 million with £30.0 million available immediately
(£22.7 million drawn down at 31 August 2024) and an accordion limit of £10.0
million. Drawdown of the accordion facility is subject to additional credit
approval. The facility was due to expire in November 2025, however, the Group
exercised the option to extend the facility for a further two years to
November 2027, which was approved in the Period.
The operating cash flows of the Group exhibit seasonality with higher bonus
payments occurring 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
The board remains committed to its progressive dividend policy and an
increased interim dividend of 4.5 pence (HY24: 4.0 pence) has been declared
for the Period, which will be paid on 13 January 2025, reflecting strong
financial performance and the board's confidence in the outlook for the
Company.
Taxation
The total tax charge of £1.4 million consists of a current tax charge of
£1.2 million and a deferred tax charge of £0.2 million. The total tax charge
of £0.3m for the comparative period comprises a current tax charge of £0.8
million and a deferred tax credit of £0.5 million.
Current tax is charged at 22.54% on underlying profits for the six months
ended 31 August 2024 (HY24: 23.5%) 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 lower than the standard rate applicable due
to the impact of a lower rate in Singapore.
At 31 August 2024, the Group recognised a deferred tax asset of £2.5 million
(29 February 2024: £3.0 million) and deferred tax liability of £nil (29
February 2024: £nil). The reduction in the deferred tax asset is as a result
of the valuation of outstanding share awards and the movement in the
mark-to-market gain of the Group's forward currency contracts at 31 August
2024. As a result of the movements on deferred tax, a charge of £0.2m was
recognised in the income statement, with the balance of the movement
recognised in equity. Deferred tax assets arise primarily in the UK, the
deferred tax credit is based on 25.0% for the six months ended 31 August 2024
(HY24: 25.0%) 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.
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 43 to 49
of the 2024 Annual Report and Accounts are also applicable for the Period of
six months to 31 August 2024. These include risks associated with sanctions
and trade restrictions, integration risk, loss of key personnel and weak
organisational culture, compliance with laws and regulations, currency
fluctuations, cybercrime and data security, disruptive technology, environment
and climate change and geopolitical and macroeconomic risks.
The directors continue to monitor the risks associated with the conflicts in
Ukraine and the Middle East. The Group's compliance with sanctions related to
the conflict in 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
Six months ended 31 Aug 2024 Six months ended 31 Aug 2023
Notes Underlying £'000 Specific items Total Underlying Specific Total
£'000 £'000 £'000 items £'000
£'000
Revenue 4 75,990 - 75,990 74,929 - 74,929
Operating expense:
Operating costs 5 (68,032) (417) (68,449) (67,355) (1,903) (69,258)
Acquisition-related expenditure 5 (628) (2,308) (2,936) (862) (2,597) (3,459)
Total operating expense (68,660) (2,725) (71,385) (68,217) (4,500) (72,717)
Operating profit/(loss) 7,330 (2,725) 4,605 6,712 (4,500) 2,212
Share of associate gain for the period 10 - - - 1 - 1
Finance income 5 301 87 388 552 391 943
Finance costs (1,424) - (1,424) (1,265) - (1,265)
Profit/(loss) before taxation 6,207 (2,638) 3,569 6,000 (4,109) 1,891
Taxation 6 (1,638) 214 (1,424) (923) 597 (326)
Profit/(loss) attributable to equity shareholders of the Company 4,569 (2,424) 2,145 5,077 (3,512) 1,565
Earnings per ordinary share
Basic 7 14.55p 6.83p 17.43p 5.37p
Diluted 7 12.79p 6.01p 14.15p 4.36p
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 August 2024
Notes Unaudited Unaudited
31 Aug 2023
31 Aug 2024 £'000
£'000
Profit for the period 2,145 1,565
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
- Actuarial gain on employee benefit schemes - net of tax 15 312 556
Items that are or may be reclassified to profit or loss:
- Foreign exchange losses on retranslation of foreign operations 19 (1,165) (1,873)
- Investment hedge gain 19 144 262
- Cash flow hedging gain - net of tax 19 1,705 2,077
Other comprehensive income 996 1,022
Total comprehensive income attributable to equity shareholders of the Company 3,141 2,587
Condensed Consolidated Balance Sheet
Note Unaudited Audited
(restated)
As at As at
31 Aug 2024 29 Feb 2024
£'000 £'000
Assets
Non-current assets
Goodwill 71,293 71,337
Other intangible assets 2,819 3,185
Property, plant and equipment 9 5,143 5,582
Other investments 14 1,633 1,633
Investment in associate 10 713 713
Derivative financial instruments 14 411 249
Deferred tax assets 2,524 2,979
Pension surplus 15 1,781 1,414
Other long-term receivables 11 1,654 4,589
87,971 91,681
Current assets
Trade and other receivables 12 41,465 37,730
Derivative financial instruments 14 3,182 1,287
Current tax receivable 1,972 2,925
Cash and cash equivalents 26,033 27,951
72,652 69,893
Total assets 160,623 161,574
Liabilities
Current liabilities
Derivative financial instruments 14 104 315
Trade and other payables 43,461 43,611
Current tax payable 347 1,625
Provisions 16 2,953 3,080
Convertible loan notes 13 3,001 2,978
49,866 51,609
Non-current liabilities
Long-term borrowings 25,172 29,819
Deferred tax liabilities 8 8
Derivative financial instruments 14 - 43
Other long-term payables 401 416
Provisions 16 187 58
25,768 30,344
Total liabilities 75,634 81,953
Total assets less total liabilities 84,989 79,621
Equity
Share capital 17 3,292 3,292
ESOP reserve 18 (3,509) (7,140)
Other reserves 19 9,049 8,365
Retained earnings 76,157 75,104
Total equity 84,989 79,621
By order of the board
James Gundy Grant Foley
Group Chief Executive Officer Group Chief Financial Officer
5 November 2024
Condensed Consolidated Cash Flow Statement
For the six months ended 31 August 2024
Notes Unaudited Unaudited
31 Aug 2024 31 Aug 2023
£'000 £'000
Profit before tax 3,569 1,891
Adjustment for non-cash transactions included in profit before tax
Depreciation and amortisation charges 1,844 1,867
Impairment of ROU asset 5 377 -
Share of loss/(gain) of associate - (1)
Share-based-payment charge 3,075 3,802
Fair value loss on financial instruments charged to profit or loss 14 - 66
Net finance cost 1,036 322
Foreign exchange differences (115) 343
Cash settlement of share based payment
Operating payments adjustment
Cash settlement of share-based payment (163) (52)
Contribution to defined benefit scheme - (37)
Operating cash flow before changes in working capital 9,623 8,201
(Increase)/decrease in receivables (3,242) 6,082
Increase/(decrease) in payables 484 (8,921)
Increase/(decrease) in provisions 24 (83)
Cash flows from operating activities 6,889 5,279
Interest received 269 235
Interest paid (1,401) (1,219)
Tax paid (1,603) (4,418)
Net cash generated from/(used in) operating activities 4,154 (123)
Cash flows from investing activities
Purchase of property, plant and equipment (289) (366)
Purchase of other intangible assets (5) (12)
Proceeds from disposal of Cory Brothers 14 1,666 1,397
Principal received on finance lease receivables 240 310
Net cash generated from investing activities 1,612 1,329
Notes Unaudited Unaudited
31 Aug 2024 31 Aug 2023
£'000 £'000
Cash flows from financing activities
Repayment of borrowings (4,000) (4,098)
Proceeds from borrowings - 2,500
Repayment of principal under lease liabilities (1,983) (1,576)
Cash proceeds on release of shares from ESOP 513 -
Dividends paid (1,222) -
Purchase of own shares (367) (1,931)
Net cash used in financing activities (7,059) (5,105)
Decrease in cash and cash equivalents (1,293) (3,899)
Cash and cash equivalents at beginning of the period 27,951 34,735
Foreign exchange loss (625) (1,785)
Cash and cash equivalents at end of the period 26,033 29,051
Condensed Statement of Changes in Total Equity
Note Share Share ESOP reserve Other Retained earnings Total
capital premium £'000 reserves £'000 equity
£'000 £'000 £'000 £'000
At 1 March 2023 (Audited) 3,292 53,796 (10,607) 28,819 1,381 76,681
Profit for the period - - - - 1,565 1,565
Actuarial gain on employee benefits schemes - net of tax - - - - 556 556
Foreign exchange loss arising on translation of foreign operations - - - (1,873) - (1,873)
Foreign exchange gain on net investment hedge - - - 262 - 262
Gain on cash flow hedges - net of tax - - - 2,077 - 2,077
Other comprehensive income - - - 466 556 1,022
Total comprehensive income - - - 466 2,121 2,587
Tax expense on share awards - (638) (638)
Capital reduction 8 - (53,796) - (20,151) 73,947 -
Acquisition of own shares 18 - - (1,931) - - (1,931)
ESOP shares allocated 18 - - 21 - (21) -
Cash paid for share-based payments - - - - (52) (52)
Share-based payments - - - - 3,802 3,802
Transactions with owners - (53,796) (1,910) (20,151) 77,038 1,181
At 31 August 2023 (Unaudited) 3,292 - (12,517) 9,134 80,540 80,449
At 1 March 2024 (Audited) 3,292 - (7,140) 8,365 75,104 79,621
Profit for the period - - - - 2,145 2,145
Actuarial gain on employee benefits schemes - net of tax - - - - 312 312
Foreign exchange loss arising on translation of foreign operations - - - (1,165) - (1,165)
Foreign exchange gain on net investment hedge - - - 144 - 144
Gain on cash flow hedges - net of tax - - - 1,705 - 1,705
Other comprehensive income - - - 684 312 996
Total comprehensive income - - - 684 2,457 3,141
Tax income on share awards - - - - 391 391
Dividends paid 8 - - - - (1,222) (1,222)
Acquisition of own shares 18 - - (367) - - (367)
ESOP shares allocated 18 - - 3,477 - (3,144) 333
Winding up of EBT 18 - - 521 - (341) 180
Cash paid for share-based payments - - - - (163) (163)
Share-based payments - - - - 3,075 3,075
Transactions with owners - - 3,631 - (1,404) 2,227
At 31 August 2024 (Unaudited) 3,292 - (3,509) 9,049 76,157 84,989
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. These interim condensed consolidated financial
statements for the six months ended 31 August 2024 comprise the Company and
its subsidiaries (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 5 November 2024.
2 Basis of preparation and statement of compliance
The interim condensed consolidated financial statements for the six months
ended 31 August 2024 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.
These interim accounts and comparative figures for the half year ended 31
August 2023 and year ended 29 February 2024 do not constitute statutory
accounts for the purpose of section 434 of the Companies Act 2006. The
auditors have reported on the 2024 accounts, and these have been filed with
the Registrar of Companies; their report was unqualified, did not include a
reference to any matters to which the auditors drew attention by way of
emphasis, and did not contain a statement under section 498(2) or (3) of the
Companies Act 2006. The half year accounts as at and for the half years ending
31 August presented in these condensed consolidated interim financial
statements have been reviewed in accordance with International Standard on
Review Engagements (UK and Ireland) 2410 but have not been audited.
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 29 February 2024, which were prepared in accordance with UK-adopted
international accounting standards and in conformity with the requirements of
the Companies Act 2006.
Going concern
These 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 conflicts in Ukraine and the Middle East, as well as the
possibility of a global recession. The directors have considered the trading
and cash flows over the first six months of the year which have been good
across the Group's business, and the Group has benefitted from the volatility
in the shipping markets. 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 and Investment Advisory segment.
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 period, 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 29 February 2024, 31 May 2024 and 31
August 2024 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 31 August 2024 the Group's net cash was £3.3 million (29 February 2024:
£1.0 million) with available headroom in the £30.0 million RCF of £6.9
million (at 29 February 2024: £2.8 million) (net cash is calculated as 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 performance 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 annual
consolidated financial statements as at and for the year ended 29 February
2024, except as described below, and should be read in conjunction with the
2024 Annual Report.
Amendments to IFRS Accounting Standards
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 period 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
£2.3m of Convertible Loan Notes previously classified as non-current, to be
classified as current liabilities. 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 condensed half-yearly
financial statements.
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 29 February 2024.
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.
4 Segmental information and revenue
a) Business segments
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. 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 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 specific items as set out in Note 5.
The segmental information provided to the board for reportable segments for
the six months ended 31 August 2024 is as follows:
Revenue Operating profit/(loss)
Six months ended Six months ended Six months ended Six months ended
31 Aug 2024
31 Aug 2023
31 Aug 2024
31 Aug 2023
£'000
£'000
£'000
£'000
Chartering 49,765 52,567 6,142 6,385
Investment advisory 14,751 12,445 2,396 1,663
Risk advisory 11,474 9,917 1,545 1,379
Trading segments revenue and operating profit 75,990 74,929 10,083 9,427
Central costs (2,753) (2,715)
Underlying operating profit 7,330 6,712
Specific items included in operating expenses (2,725) (4,500)
Operating profit 4,605 2,212
Share of associate's profit/(loss) for period - 1
Net finance expense (1,036) (322)
Profit before taxation 3,569 1,891
Geographical segment - by origin
The Group manages its business segments on a global basis. The Group's main
geographical area of operation 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 2024
31 Aug 2023
£'000
£'000
United Kingdom 41,311 37,777
Singapore 9,100 11,102
United States 11,165 10,358
Australia 4,938 4,412
Switzerland 1,025 4,027
Germany 507 363
Rest of the World 7,944 6,890
Total 75,990 74,929
b) 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.
Revenue
Six months ended Six months ended
31 Aug 2024
31 Aug 2023
£'000
£'000
Chartering
Deep Sea Tankers (incl. Projects) 25,660 28,513
Specialised Tankers & Gas 9,090 9,256
Dry Cargo 10,649 11,025
Offshore 4,366 3,773
Chartering sub-total 49,765 52,567
Shipping Investment Advisory
S&P 14,063 11,291
Corporate Finance 688 1,154
Shipping Investment Advisory sub-total 14,751 12,445
Shipping Risk Advisory
Securities (incl. GFI) 11,474 9,917
Shipping Risk Advisory sub-total 11,474 9,917
Total revenue 75,990 74,929
There is no single customer that makes up more than 10% of the Group's
revenues.
5 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. Further details of
the specific items as disclosed in the Group's Condensed Consolidated Income
Statement are set out below.
Six months ended Six months ended
31 Aug 2024
31 Aug 2023
£'000
£'000
Operating costs
- Impairment of ROU asset (377) -
- Investigation costs (40) (1,442)
- Board change costs - (232)
- Unlawful dividend rectification - (229)
(417) (1,903)
Acquisition-related items
- Madrid post-contractual obligation (232) (521)
- Amortisation of acquired intangible assets (210) (289)
- Consideration treated as an employee expense (1,866) (1,787)
(2,308) (2,597)
Other items
Finance income - Interest income on deferred consideration - 68
Finance income - Gain on Naves derivative liability and foreign exchange gain 87 323
87 391
Total (2,638) (4,109)
Operating costs
Impairment of ROU asset
During the period, 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 sub-let a segregated portion of the office space, but
has been unable to sub-let the office space for the period of the lease
extension. The Group does not use the previously sub-let space and believes it
unlikely it will be sub-let for the period of the extension. As a result, the
Group has recognised an impairment charge in relation to the portion of the
right-of-use asset relating to this 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 £1.4 million in the six months to August 2023 with a residual cost of
£40,000 in the six months to 31 August 2024, which the Group does not
consider reflects the trading of the business in the period and as a result is
treated as a specific item.
Board change costs
In the prior period, 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 cost incurred of £0.2 million is not considered part of the
trading performance of the business and so is treated as a specific item.
Unlawful dividend rectification
In the prior period, 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.
The tax income on specific items including within other operating costs was
£0.1 million (2023: £0.5 million)
Acquisition-related items
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 for a post-contractual payment to the
employees, which was fully vested on signing the contracts and subject to
ongoing adjustments.
- An upfront cash payment of £1.3 million with a further payment
of £1.3 million paid 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 clawback 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 but are disclosed
as acquisition-related expenditure given their materiality and will be
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.
Amortisation of acquired intangible assets
An amount of £0.2 million (2023: £0.3 million) relates to the amortisation
of acquired intangible assets, primarily in relation to intangible assets
recognised as a result of the acquisition of Southport Maritime Inc.
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 related to amounts linked to ongoing
employee service in connection with the acquisition of Southport £1.9 million
(2023: £1.8 million) in the six months to August 2024. The period of required
employee service is three years from the acquisition date.
The tax income on acquisition-related items was £nil (2023: £nil)
Other specific items
Interest income on deferred consideration
The unwinding of the discounting of the deferred receivable in respect of the
Cory Brothers disposal contributed interest income of £68,000 in the prior
period. Given the continued reduction in this amount, the Group has no longer
treated this amount as a specific item.
Gain on Naves derivative liability and foreign exchange gain
The gain of £0.1 million (2023: £0.3m) in relation to Naves related foreign
exchange on convertible loan note liabilities and fair value gain on the
linked derivative is included as a specific item as it relates to the
acquisition of Naves and is not related to trading.
The tax income on Other specific items was £0.1million (2023: £0.1 million)
6 Taxation
The total tax charge of £1.4 million consists of a current tax charge of
£1.2 million and a deferred tax charge of £0.2 million. The total tax charge
of £0.3 million for the comparative period comprises a current tax charge of
£0.8 million and a deferred tax credit of £0.5 million.
Current tax is charged at 22.54% on underlying profits for the six months
ended 31 August 2024 (2023: 23.5%) 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 lower than the standard rate applicable due
to the impact of a lower rate in Singapore.
At 31 August 2024, the Group recognised a deferred tax asset of £2.5 million
(29 February 2024: £3 million) and deferred tax liability of £nil (29
February 2024: £nil). The reduction in the deferred tax asset is a result of
the valuation of outstanding share awards and the movement in the
mark-to-market gain of the Group's forward currency contracts at 31 August
2024. As a result of the movements on deferred tax, a charge of £0.2 million
was recognised in the income statement, with the balance of the movement
recognised in equity. Deferred tax assets arise primarily in the UK, the
deferred tax credit is based on 25.0% for the six months ended 31 August 2024
(2023: 25.0%) 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.
The Group is not within the scope of the OECD Pillar two model rules. Pillar
two applies to multinational groups with consolidated revenue over €750
million.
7 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. At 31 August 2024 1,250,717 ordinary shares were
held by the Employee Share Ownership Plan ("ESOP") which are not treated as
outstanding for the purpose of calculating earnings per share (29 February
2024: 2,303,211 held by the ESOP and 62,290 shares held by the ACM Employee
Benefit Trust).
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 potential 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 period, and convertible loan
notes issued in respect of the Naves acquisition.
Total operations Six months ended Six months ended
31 Aug 2024
31 Aug 2023
£'000
£'000
Profit for the year attributable to shareholders 2,145 1,565
Pence Pence
Basic earnings per share 6.83 5.37
Effect of dilutive potential ordinary shares (0.82) (1.01)
Diluted earnings per share 6.01 4.36
Underlying operations Six months ended Six months ended
31 Aug 2024
31 Aug 2023
£'000
£'000
Underlying profit for the year attributable to shareholders 4,569 5,077
Pence Pence
Basic earnings per share 14.55 17.43
Effect of dilutive potential ordinary shares (1.76) (3.28)
Diluted earnings per share 12.79 14.15
A reconciliation by class of instrument in relation to dilutive potential
ordinary shares and their impact on earnings is set out below:
Six months ended Six months ended
31 Aug 2024
31 Aug 2023
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 31,412,468 4,569 2,145 29,132,957 5,077 1,565
Employee share awards 4,299,483 - - 6,749,611 - -
Used in diluted earnings per share 35,711,951 4,569 2,145 35,882,568 5,077 1,565
8 Dividends
The board has declared an interim dividend of 4.5 pence per share (2024: 4.0
pence per share), to be paid on 13 January 2025.
9 Property, plant and equipment
During the period the Group recognised a £1.4 million increase in
right-of-use assets and lease liabilities accounted for under IFRS 16,
primarily in relation to a single office. Due to a portion of the office which
is not used by the Group and is not expected to be sub-let, the Group also
recognised an impairment charge of £0.4 million in relation to the
right-of-use asset.
10 Investment in associate
Zuma Labs Limited
At 31 August 2024 the Group held 2,500 ordinary shares in Zuma Labs Limited
("Zuma") being 20% of Zuma's share capital (at 29 February 2024: 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 128
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, 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.
11 Other long-term receivables
31 Aug 2024 29 Feb 2024
£'000
£'000
Deferred consideration - non-current - 1,304
Contingent consideration - non-current - 532
Security deposits 310 304
Prepayments 1,344 2,449
1,654 4,589
At 29 February 2024,deferred consideration of £1.3 million and contingent
consideration of £0.5 million related to the non-current earn-out payments
receivable in respect of the disposal of Cory Brothers in 2022.
Prepayments includes an asset of £1.3 million (29 February 2024: £2.4
million) which is the non-current element of the clawback provision on joining
incentives paid to certain employees. The receivable is amortised over the
clawback period.
12 Trade and other receivables
31 Aug 2024 29 Feb 2024
£'000
£'000
Trade receivables 28,449 26,964
Provision for impairment of trade receivables (2,747) (2,837)
Net trade receivables 25,702 24,127
Deferred consideration - current 1,320 1,316
Contingent consideration - current 548 550
Other receivables 5,069 3,949
Finance lease receivables - 240
Contract assets 2,062 1,517
Prepayments 6,764 6,031
Total 41,465 37,730
Included in other receivables in all periods are security deposits, VAT and
other sales tax receivables and employee loans.
Deferred consideration of £1.3 million and contingent consideration of £0.5
million relate to the earn-out payments receivable in respect of the disposal
of Cory Brothers in 2022.
The directors consider that the carrying amounts of trade receivables
approximate their fair value.
The provision for impairment of trade receivables consists of a lifetime
expected loss provision and any specific provisions. At 31 August 2024 the
lifetime expected loss provision for trade receivables and contract assets was
£0.6 million (29 February 2024: £0.6 million). The expected credit loss
rates applied at 31 August 2024 are consistent with those applied at 29
February 2024. The specific provisions against trade receivables as at 31
August 2024 were £2.1 million (29 February 2024: £2.2 million).
13 Convertible Loan Notes
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 acquisition agreement provided deferred amounts that would be payable to
management sellers, conditional on their ongoing service in the business.
Following the issuance of new convertible loan notes in the prior year, at 31
August 2024 no amounts are subject to future service conditions.
The following table shows amounts in the Group balance sheet relating to the
convertible loan notes issued on the acquisition of Naves.
As at As at
31 Aug 2024 29 Feb 2024
(restated(1))
£'000 £'000
Current liabilities:
Convertible loan notes 3,001 2,978
Derivatives 104 140
Total 3,105 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 in Note 3.
The movement in the Naves-related balances in the Group Balance Sheet during
the period is explained by the items below:
£'000
Total Naves-related balances at 1 March 2024 3,118
Interest expense 120
Derivative fair value gain (37)
Cash paid (46)
Foreign exchange gain (50)
Total Naves-related balances at 31 August 2024 3,105
As at 31 August 2024, there are two further payments of principal required,
with the final payment being in the full year ended 28 February 2026.
14 Financial instruments
There have been no substantive changes in the Group's exposure to financial
instrument risk, its objectives, policies, and other processes for managing
those risks or the methods used to measure them from previous periods. The
Group continues to apply hedge accounting to derivative financial instruments
that meet the criteria set out in IFRS 9.
a) Financial instruments
i) Principal financial instruments
The principal financial instruments used by the Group, from which financial
instrument risk arises, are as follows:
- trade and other receivables;
- cash and cash equivalents;
- deferred consideration receivable;
- contingent consideration receivable;
- unlisted investments;
- trade and other payables;
- revolving credit facility;
- lease liabilities;
- derivative financial instruments; 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 2024
£'000
Financial assets
Unlisted investments - - 1,633 1,633
Contingent consideration receivable - - 548 548
Derivative contracts - 3,593 - 3,593
Total - 3,593 2,181 5,774
Financial liabilities
Embedded derivative - - 104 104
Total - - 104 104
Level 1 Level 2 Level 3 As at
£'000 £'000 £'000 29 Feb 2024
£'000
Financial assets
Unlisted investments - - 1,633 1,633
Contingent consideration receivable - - 1,082 1,082
Derivative contracts - 1,536 - 1,536
Total - 1,536 2,715 4,251
Financial liabilities
Derivative contracts - 218 - 218
Embedded derivative - - 140 140
Total - 218 140 358
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 investments primarily relate to the Group's investment in the
London Tanker Brokers' Panel. the Group has valued the investment 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 16.4%; and
- expected income from the investment.
An increase in the discount rate of 2% would result in an increased fair value
loss of £0.1 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 is therefore classified as Level 3. The contingent
consideration receivable relates to the disposal of the Logistics Division in
2022. The SPA provides for a minimum guaranteed amount; 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
5.19%. The valuation is most sensitive to the expectation of future
profitability. During the period, the Group received £1.9 million in relation
to the second deferred and contingent consideration payment. In the Cash Flow
Statement, £1.7 million is allocated to investing activities, £0.1 million
relates to interest received and £0.1m is included in operating activities in
relation to the gains made on the revaluation of the contingent portion of the
consideration receivable.
Forward currency contracts
The fair value of the forward currency contracts is determined from the
present value of future cash flows based on the forward exchange rates at the
balance sheet date and have therefore been classified as Level 2 in the fair
value hierarchy.
The Group manages its exposure to US Dollar currency variations by spot and
forward currency sales and other derivative currency contracts. The following
table shows the notional values and average rates of forward contracts held at
the balance sheet date.
Notional Value Weighted average exchange rate Net balance sheet carrying value
US $'000 £/$ £'000
At 31 August 2024 110,950 1.26 3,593
At 29 February 2024 118,950 1.25 1,318
A gain of £0.9 million (2024: £2.2 million gain) has been recognised in the
condensed consolidated Income Statement in respect of forward contracts which
have matured in the period.
The maturity analysis of forward currency contracts is provided below:
31 Aug 2024 29 Feb 2024
£'000
£'000
Assets
Forward currency contracts maturing within 12 to 24 months 411 249
Forward currency contracts maturing within 12 months 3,182 1,287
Total assets 3,593 1,536
Liabilities
Forward currency contracts maturing within 12 to 24 months - (43)
Forward currency contracts maturing within 12 months - (175)
Total liabilities - (218)
Embedded derivative
The convertible loan notes 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 to be 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, which the valuation is most sensitive to, and the sterling to euro
exchange rate. The fair value has been determined using the Black-Scholes
valuation model. During the period, an unrealised gain of £36,000 (2023:
£0.3 million) was recognised in finance income in the Income Statement.
Valuation processes
Generally, the Group uses external specialists to value 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.
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 cost. 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 2024 29 Feb 2024
£'000
£'000
Cash and cash equivalents 26,033 27,951
Deferred consideration receivable 1,320 2,620
Trade and other receivables 34,153 30,159
Total 61,506 60,730
Financial liabilities 31 Aug 2024 29 Feb 2024
£'000
£'000
Trade and other payables 6,951 4,851
Convertible loan notes 3,001 2,978
Loans and borrowings 22,751 26,966
Total 32,703 34,795
At 31 August 2024, trade and other payables of £43.5 million (at 29 February
2024: £43.6 million) were recognised on the Balance Sheet, which included
employee related payables of £34.5 million (at 29 February 2024: £36.6
million) which are not financial liabilities, and lease liabilities of £1.7
million (at 29 February 2024: £1.9 million) are not included in the table
above.
15 Pension surplus
31 Aug 24 29 Feb 24
£'000 £'000
Present value of funded obligations 10,741 10,609
Fair value of scheme assets, net of tax (12,522) (12,023)
Total surplus of defined benefit pension scheme (1,781) (1,414)
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.
The following table sets out the sensitivity of the net defined pension
surplus to changes in key estimates.
Change in assumption Approximate increase in liabilities
£'000
Interest rate reduced by 0.5% pa 967
Inflation assumption increased by 0.5% p.a. 634
Increase in life expectancy of 1 year for each member 269
16 Provisions
Dilapidations Uncertain commission obligation Other Total
£'000
£'000
£'000
£'000
At 29 February 2024 605 2,094 439 3,138
Provided in the year 274 - - 274
Utilised in the year - - (79) (79)
Reversal of provision in the year - (88) - (88)
Exchange differences (6) (85) (14) (105)
At 31 August 2024 873 1,921 346 3,140
Current 686 1,921 346 2,953
Non-current 187 - - 187
At 31 August 2024 873 1,921 346 3,140
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 £0.3 million are included in other, which relate to
statutory long service leave in Braemar ACM Shipbroking Pty Limited. This is
based on the principle that each Australian employee is entitled to 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.
The uncertain commission obligation relates to an historical unsettled
commission payable which was recorded in 2017 upon completion of a contract
originated in 2013. 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 obligation at the balance sheet date, taking into
account the risks and uncertainties surrounding the obligations, including
interpretation of specific laws and likelihood of settlement.
17 Share capital and Share premium
Number of shares Ordinary shares Share premium
(thousands) £'000 £'000
At 1 March 2023 32,925 3,292 53,796
Capital reduction - - (53,796)
At 31 August 2023, 29 February 2024 and 31 August 2024 32,925 3,292 -
No ordinary shares have been issued in the six months to 31 August 2024.
18 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
held shares in the Company. During the period, 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 by the ESOP. Shares allocated by the ESOP to
satisfy share awards issued by the Group are transferred to retained earnings
at cost on a FIFO basis.
£'000
At 1 March 2023 10,607
Shares acquired by the ESOP 1,931
ESOP shares allocated (21)
At 31 August 2023 12,517
Shares acquired by the ESOP 4,194
ESOP shares allocated (9,571)
At 29 February 2024 7,140
Shares acquired by the ESOP 367
Winding up of EBT shares (521)
ESOP shares allocated (3,477)
At 31 August 2024 3,509
( )
As at 31 August 2024 the ESOP held 1,250,717 (29 February 2024: 2,303,211)
ordinary shares of 10 pence. In addition, at 29 February 2024 the ACM EBT held
62,290 ordinary shares of 10 pence each, which were sold during the period.
19 Other reserves
Note Capital Merger Foreign Hedging Total
redemption reserve currency reserve £'000
reserve £'000 translation £'000
£'000 reserve
£'000
At 1 March 2023 396 24,641 4,024 (242) 28,819
Cash flow hedges:
- Transfer to income statement - - - (1,074) (1,074)
- Fair value gains in the period - - - 3,843 3,843
Capital reduction (396) (19,755) - - (20,151)
Foreign exchange gain on net investment hedge - - 262 - 262
Foreign exchange loss arising on translation of foreign operations - - (1,873) - (1,873)
Deferred tax on items taken to equity - - - (692) (692)
At 31 August 2023 - 4,886 2,413 1,835 9,134
Cash flow hedges:
- Transfer to income statement - - - (1,157) (1,157)
- Fair value gains in the period - - - 29 29
Foreign exchange loss on net investment hedge - - (13) - (13)
Foreign exchange gain arising on translation of foreign operations - - 90 - 90
Deferred tax on items taken to equity - - - 282 282
At 29 February 2024 - 4,886 2,490 989 8,365
Cash flow hedges:
- Transfer to income statement - - - (854) (854)
- Fair value gains in the period - - - 3,128 3,128
Foreign exchange gain on net investment hedge - - 144 - 144
Foreign exchange loss arising on translation of foreign operations - - (1,165) - (1,165)
Deferred tax on items taken to equity - - - (569) (569)
At 31 August 2024 - 4,886 1,469 2,694 9,049
All other reserves are attributable to the equity holders of the parent
company.
20 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.
21 Related party transactions
The Group's related parties are unchanged from those reported in the full year
financial statements for the year ended 29 February 2024. There have been no
significant related party transactions in the six months ended 31 August 2024.
For further information about the Group's related parties, please refer to the
Group's Annual Report 2024.
22 Events after the reporting date
There were no significant non-adjusting events between the reporting date and
the date these condensed interim financial statements were authorised for
issue.
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 Grant Foley
Group Chief Executive Officer Group Chief Financial Officer
5 November 2024
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 set of financial statements in the half-yearly
financial report for the six months ended 31 August 2024 is not prepared, in
all material respects, in accordance with UK adopted International Accounting
Standard 34 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 set of financial
statements in the half-yearly financial report for the six months ended 31
August 2024 which comprises the Condensed Consolidated Income Statement,
Condensed Consolidated Cash Flow Statement, Condensed Statement of Changes in
Equity, Condensed Consolidated Balance Sheet and Unaudited Notes to Financial
Statements.
Basis for conclusion
We conducted our review in accordance with Revised International Standard on
Review Engagements (UK) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410
(Revised)"). 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 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 (Revised), 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 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, UK
5 November 2024
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
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