REG - Braemar Shipping - Annual Report and Notice of General Meeting
07/06/2019 17:20
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Braemar Shipping Services PLC
07 June 2019
BRAEMAR SHIPPING SERVICES PLC
("Braemar", the "Company" or the "Group")
7 June 2019
Annual Report and Notice of General Meeting
Braemar Shipping Services plc (LSE: BMS), a leading international provider of
broking, financial, consultancy, technical and logistics services to
the shipping, marine, energy, offshore and insurance industries, today
announces that it has published its Annual Report and Accounts for the year
ended 28 February 2019 ("Annual Report"), together with the Notice of Annual
General Meeting ("AGM").
The AGM will be held at the offices of Buchanan Communications, 107 Cheapside,
London EC2V 6DN at 2 pm on Wednesday 3 July 2019.
The Annual Report and AGM Notice will be available on the Company's website
(www.braemar.com (http://www.braemar.com/) ) and, together with the Form of
Proxy for the AGM, will be submitted to the National Storage Mechanism and
will shortly be available for inspection at: www.morningstar.co.uk/uk/nsm
(http://www.morningstar.co.uk/uk/nsm) . Copies of these documents have also
been posted today to those of the Company's shareholders that have elected to
continue to receive hard copies.
Appendix
This appendix sets out the disclosures that the Company is required to make to
comply with Disclosure and Transparency Rule (DTR) 6.3.5R, namely: the
principal risks and uncertainties facing the Company; the directors'
responsibility statement made in respect of certain sections of the Annual
Report; and a statement regarding related party transactions. This
information has been extracted from the Annual Report in unedited text and is
not a substitute for reading the full Annual Report.
Page references and note references below refer to page numbers and numbers of
notes to the accounts in the 2019 Annual Report.
Legal Entity Identifier: 213800EV6IKTTHJ83C19
Principal risks and uncertainties
COMPREHENSIVE APPROACH TO RISK MANAGEMENT
Effective risk management forms an integral part of how we operate. It is
essential for delivering our strategic objectives as well as protecting our
relationships and reputation.
The Directors have carried out a thorough assessment of the risks that the
Group faces. The management and reporting of these risks enable the Audit
Committee to review their nature and extent. The risk monitoring process has
been in place throughout the year and up to the date of approval of the Annual
Report.
Risk management process
During the year the Group implemented a digital risk management framework
solution. The principles of this system were fundamentally the same as the
Group's existing risk management framework, but with the added advantage of
acting as a central storage facility that allows for real- time updates and
continuous monitoring of risks.
Our approach to risk management incorporates both bottom-up and topdown review
of the identification, evaluation and management of risks. Within the risk
management framework, initial responsibility for identifying, monitoring and
updating risks is delegated to individuals in the divisional management teams.
At Group level, key specialist personnel covering areas such as IT, HR, legal
and finance consider risks to our strategic objectives which are not addressed
in the divisions. The results of this risk framework form the basis of the
risks identified on pages 35-37.
The Group takes various measures to mitigate risk; the key steps in the risk
management process undertaken during the year include:
· Maintaining appropriate insurance cover.
· The Group budget which is prepared annually and approved by the
Board.
· Regular financial reforecasts prepared and approved by the Board.
· Monitoring the performance of the Group and the individual businesses
against budget and reforecasts throughout the year including investigation of
significant variances.
· An internal system of checks and authorisations and independent
audits which are conducted in relation to the ISO 9001:2000 certification held
in the Logistics and Technical divisions.
· Operation of the Group's whistleblowing procedure.
· Treasury management activity which is regularly reported to the Board
by the Finance Director. Note that the Group does not enter into speculative
treasury transactions.
· Using common Group systems covering accounting, HR and operations
supported by a global IT team.
· Monitoring contractual risk by Group General Counsel.
· Succession planning and strategic recruitment supported by the Group
HR team.
The Group's risk management framework uses a matrix approach to determine both
the likelihood and the impact of identified risks. The matrix produces a score
which is used to evaluate collectively the extent of all risks within a
similar categorisation or certain profile, and to illustrate the effectiveness
of our mitigation of a single risk by capturing the gross and current (net of
mitigation controls) score of each individual risk.
All identified risks are aggregated and reviewed to assess their impact on the
Group's strategic objectives and the resources required to manage them
effectively. Principal risks are aggregated together with associated issues or
areas of uncertainty. The extent of controls and mitigation as well as the
potential for a material effect on the market value of the Group are then
assessed. By definition, unmitigated risks can be significant, but our control
processes and management actions reduce the risk level.
The divisional management teams as well as Group management (which includes
the Chief Executive, Finance Director and General Counsel) monitor risks
regularly and considers the appetite and tolerance for them in the light of
their potential impact on the Group.
Principal risks
Description of risk Summary of impact Mitigating control and management actions Assessed risk level and change
Macroeconomic changes A downturn in the world economy The Group's strategy of diversification Increased
could result in reduced transaction on a sector and geographic basis.
All of our businesses are subject to the volumes and lower revenue. Ongoing management of costs based
impact of macroeconomic changes, Changes in shipping rates and/or on current and reasonably foreseeable
such as changes in the crude oil price, changes in the demand or pricing market conditions.
restrictions in global trade or changes of commodities could affect Continued monitoring to ensure
in supply and demand. supply activity. that appropriately structured teams
are located across all divisions
Divisions: S F L E and geographies.
Financial liquidity All divisions have seen changes Continued working capital management No change
in business and working capital and monitoring across the Group.
The Group requires a significant requirements. Senior management intervention to
amount of working capital. Certain Debt collection is critical across assist in recovery of problematic debtors.
revenue streams can have a long lead the Group. Maintenance of Group treasury
time to convert to cash. Such delays All borrowing facilities are with management controls to monitor cash
could cause liquidity problems for one UK financial institution, whilst positions worldwide and coordination of
the Group. significant amounts of funds are held cash repatriations to the Group.
outside the UK in other institutions. Continuing the consolidation of banking
Divisions: S F L E Ongoing repatriation of funds to the relationships and the implementation of
UK to enable the Group to operate global pooling capabilities.
within its banking covenants.
Management Business value and earnings Continue development of career path Decreased
Capability could be reduced if key executives and succession planning for all senior
are not available to manage management positions.
Insufficient senior management business opportunities. Continuation of career path and
bandwidth (quality and quantity) succession planning to ensure suitable
could lead to poor execution of the management structures are maintained
Group's strategic objectives or lost across the Group.
business opportunities. Maintain competitive remuneration
packages, including use of deferred
Divisions: S F L E equity awards.
Corporate skillsets If key staff leave the Group, they Continue development of career path No change
are likely to take "their" business and succession planning for all staff.
Failure to attract and retain skilled people could result in loss of key with them, resulting in a loss to Maintain competitive remuneration
client relationships or failure to cultivate new client relationships.
the Group. packages, including use of deferred
If new staff are not attracted to the equity awards.
Divisions: S F L E
Group, then rate of growth may
be limited.
Financial capacity Without sufficient financial resources the Group cannot execute all of the Ensure that all divisional growth Increased
growth opportunities that may
opportunities and strategies are regularly communicated to
be available.
Inadequate financial capacity to senior management.
execute the Group's strategic Complete strategic resource analysis
objectives. of all identified growth opportunities to ensure that resources are allocated
to opportunities with the best return.
Divisions: S F L E
Technological changes Relationships could be devalued and Continue to develop and promote the Increased
replaced by disruptive technology Braemar corporate brand and values.
The threat of technological change platforms, resulting in increased Continue to recruit and retain talented
could render aspects of our current competition and consequent and experienced staff.
services obsolete. price reductions. Developing our own technological
expertise and strategy.
Divisions: S E Seeking appropriate acquisition
opportunities.
Engaging with external consultants to
assess market developments.
Currency fluctuations The Group is exposed to fluctuations Monitor foreign exchange movements. No change
in the value of US dollars. Implement the Group's hedging strategy
A large proportion of the Group's over a rolling twelve-month period.
revenue is generated in US
dollars while the cost base is
in multiple currencies.
Divisions: S E
Remuneration Business value and earnings could Continue to maintain appropriate and No change
be reduced. competitive remuneration packages.
Implementation of inappropriate
incentive and reward structures
could incentivise negative behaviours,
such as short-termism, or create
internal conflict.
Divisions: S
Communication Internal and external relationships Continue to develop and prioritise No change
could be damaged. cross-divisional communication and
Poor communication within the Contract management and business business development opportunities.
Group could impede the execution of development opportunities could
the Group's strategic objectives. be damaged.
Divisions: S F L E
Legal and Reputational damage to the Braemar Monitor and report on legal and No change
regulatory impact brand at Group or divisional level. regulatory compliance across
the Group.
Legal or regulatory breaches could Train all staff to be aware of legal
result in fines and sanctions or, in the and regulatory obligations.
worst case, loss of ability to operate. Maintain adequate levels of
Examples could include noncompliance insurance cover.
with the Bribery Act or
Modern Slavery Act on inadvertently
dealing with sanctioned individuals
or entities.
Divisions: S F L E
Cyber crime Loss of service and associated loss Implement robust security measures Increased
of revenue. to prevent cyber crime.
Cyber crime could result in disruption Reputational damage. Maintain archiving solutions so data
to the Group's IT systems. Potential for loss of cash due to lost in the event of a breach can be
fraud or phishing. recovered quickly and efficiently.
Divisions: S F L E Key information retained in multiple
systems and locations.
S = Shipbroking, F = Financial, L = Logistics, E = Engineering
Responsibility statement of the directors in respect of the annual financial
report
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the company and the
undertakings included in the consolidation taken as a whole; and
· the strategic report and directors' report includes a fair review of
the development and performance of the business and the position of the issuer
and the undertakings included in the consolidation taken as a whole, together
with a description of the principal risks and uncertainties that they face.
We consider the annual report and accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the group's position and performance, business model
and strategy.
Related party transactions
During the period the Group entered into the following transactions with joint
ventures and investments:
2019 2018
Group Recharges to/(from) £'000 Dividends Balance due from £'000 Recharges to/(from) £'000 Dividends Balance due from £'000
£'000 £'000
London Tanker Broker Panel 330 - - 325 - -
All recharges to related parties are carried out on an arm's-length basis.
Key management compensation is disclosed in Note 4.
Following the acquisition of NAVES Corporate Finance GmbH in the year, the
Group has an additional related party, Risorto GmbH, which is controlled by
its management. The amount charged by Risorto GmbH in the year to the Group
was €0.6 million (2018: €0.8 million) and the amount charged to Risorto
GmbH in the year was less than €0.1 million (2018: less than €0.1
million). The balance owing to Risorto GmbH as at 28 February 2019 was €nil
(2018: €0.7 million).
The Company has applied the disclosure exemption of FRS 101 in respect of
transactions with wholly owned subsidiaries. The Company did not enter into
any related party transactions aside from those with wholly owned
subsidiaries.
Key management compensation
The remuneration of key management is set out below. Further information about
the remuneration of individual Directors is provided in the Directors'
Remuneration Report on pages 52 to 56. Key management represents the Group
Board of Directors of the Company.
2019 2018
£'000 £'000
Salaries, short-term employee benefits and fees 672 862
Other pension costs 64 86
Share-based payments 33 -
One-off costs related to board changes 759 -
1,528 948
Number of key employees 5 7
Retirement benefits are accruing to one (2018: one) member of key management
in respect of a defined contribution pension scheme.
For further information contact:
Braemar Shipping Services plc
James Kidwell, Chief
Executive
Tel +44 (0) 20 3142 4100
Nick Stone, Finance Director
Peter Mason, Company Secretary
Shore Capital
Robert Finlay / Antonio Bossi / Henry
Willcocks
Tel +44 (0) 20 7601 6100
Buchanan
Charles Ryland / Stephanie Watson / Matilda Abraham
Tel +44 (0) 20 7466 5000
About Braemar Shipping Services plc
Braemar Shipping Services plc is a leading international provider of knowledge
and skill-based services to the shipping, marine, energy, offshore and
insurance industries. Founded in 1972, Braemar employs approximately 750
people in more than 60 locations (although this will fall by approximately 250
people and 30 locations following the disposal of the Technical business
units) worldwide across its Shipbroking, Financial, Logistics and Engineering
divisions.
Braemar joined the Official List of the London Stock Exchange in November 1997
and trades under the symbol BMS.
For more information, visit www.braemar.com (http://www.braemar.com)
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