REG - Braemar Shipping - Preliminary Results
30/08/2022 07:15
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RNS Number : 4699X Braemar Shipping Services PLC 30 August 2022
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30 August 2022
BRAEMAR SHIPPING SERVICES PLC
("Braemar", the "Company" or the "Group")
Preliminary Results for the year ended 28 February 2022
Strong trading performance, balance sheet built for growth, and achievement of
key strategic objectives.
Braemar Shipping Services Plc (LSE: BMS), a leading international shipbroker
and provider of expert advice in shipping investment, chartering, and risk
management, today announces its preliminary results for the year ended 28
February 2022.
The board is delighted with the performance of the business for the financial
year and looks to the future with confidence.
STRONG TRADING RESULTS AND SUCCESSFUL EXECUTION OF STRATEGIC CHANGE
· 21% increase in revenue from continuing operations to £101.3m (2021:
£83.7m**)
· 31% increase in underlying operating profit* to £10.1m (2021:
£7.7m**)
· 15% increase in the forward order book to US$50.0m (2021: US$43.4m)
· Cashflow from operating activities in the year increased by 61% to
£20.5m (2021: £12.7m)
· Reported profit after tax for the year up 209% to £13.9m (2021:
£4.5m)
· Balance sheet strengthened. EBITDA to net bank debt ratio reduced by
27% to 0.96x (2021: 1.32x), well below the board's target net debt to EBITDA
ratio of 1.5x.
· Net bank debt reduction of £17.2m from 29 February 2020 to 2 March
2022 following receipt of funds from Cory Brothers disposal
· Successful refocus on core Shipbroking and Corporate Finance business
· Investment in people, offices, and technology is reaping rewards
· Disposal of non-core investments in AqualisBraemar LOC
("AqualisBraemar"), Cory Brothers, and Wavespec completed
· Underlying earnings per share increased by 100%
· Final dividend of 7.0p per share recommended to reflect the strong
cashflow and confidence in the business. Total dividend for the year of 9.0p
per share (2021: 5.0p)
· Braemar has also announced separately today that trading during the
first five months of the current financial year has been very strong and also
benefitted significantly from the strength of the US Dollar. As a result, the
outturn for the current financial year is expected to be well ahead of the
board's previous expectations with underlying operating profit expected to be
not less than £20.0m.
FINANCIAL HIGHLIGHTS
Underlying results* Reported results
Profit, EPS, and Dividend FY21/22 FY20/21** FY21/22 FY20/21**
£m £m £m £m
Revenue 101.3 83.7 101.3 83.7
Operating profit 10.1 7.7 9.5 6.6
Profit for the year from continuing operations after tax 7.0 4.9 6.7 3.6
Total profit for the year 8.5 4.4 13.9 4.5
Basic earnings per share 27.95 13.96 45.56 14.45
Full year dividend per share 9.0p 5.0p 9.0p 5.0p
Net bank debt 9.3 8.9 9.3 8.9
* Underlying results measures above are before non-recurring specific items,
including acquisition and disposal-related charges and profit/loss from
discontinued operations.
** Reported results are from continuing operations only, comparatives have
been adjusted to remove discontinued operations.
SUCCESSFUL EXECUTION OF STRATEGIC CHANGE
In the year ended 28 February 2022 the board has executed several transactions
that have simplified the Group's operations and launched a new growth strategy
centred on Shipbroking and Corporate Finance.
One of our core ambitions is to double the size of the business through
strategic hires and acquisitions in our refocused areas of business. We remain
confident that this can be achieved within a sensible timeline. We believe
that scale has become increasingly important within our industry to service
the needs of our clients; to provide the Group with enhanced geographical and
product diversification; to reduce the impact of cyclical markets; and to
create further cost efficiencies. Our substantial market share at a time of
buoyant shipping markets, combined with our large forward order book, and a
strong balance sheet leave us well-positioned to grow at an accelerated pace.
OUTLOOK
We have seen strong trading at the start of this financial year, and activity
has been particularly high in the derivatives, sale and purchase, and
corporate finance markets. The simplification of our business and our
ambitious strategy to double our annual underlying operating profit is
yielding strong trading results.
Our team has seen elevated numbers of newbuilding orders, principally in the
container and gas carrier sectors. As a result, capacity at many shipyards is
now unavailable well into 2025. For shipowners in other sectors this is making
it challenging for them to renew their fleets and they're turning instead to
the second-hand market. These dual factors have created significant
opportunities for our Sale and Purchase desk, and they have capitalised on
them. Over the next couple of years, these factors are likely to prove
positive for our chartering desks too, as reduced ability to replace retiring
ships is expected to constrict vessel supply and consequently create a higher
floor on future charter rates.
We believe our ability to seize the opportunities available over the last year
and maintain our high levels of activity are due to our investments in people,
technology, and new offices. I look forward to another strong year of trading
as these benefits continue to compound.
James Gundy, Group Chief Executive Officer of Braemar, commenting on the
Group's results for the year, said:
"I am extremely proud of the performance of the Group in my first full year as
Group Chief Executive Officer. The strong trading results are testament to the
hard work and dedication of our team and to our clear and focused strategy,
delivered by a united new board and management team. Our achievements this
year have been a huge collaborative effort, and our team spirit positions us
well for future growth."
Results briefing
A presentation for analysts will be held at 10.30am today via conference call.
Please contact the team at Buchanan for details on braemar@buchanan.uk.com
(mailto:braemar@buchanan.uk.com) .
A copy of the presentation and call recording will be made available on the
Investor Relations section of Braemar's website after noon today:
https://braemar.com/investors/ (https://braemar.com/investors/) .
For further information, contact:
Braemar Shipping Services Plc
James Gundy, Group Chief Executive Officer Tel +44 (0) 20 3142 4100
Nick Stone, Chief Financial Officer
Investec Bank plc
Gary Clarence / Harry Hargreaves / Alice King Tel +44 (0) 20 7597 5970
Cenkos Securities plc
Ben Jeynes / Max Gould (Corporate Finance) Tel +44 (0) 20 7397 8900
Alex Pollen / Leif Powis (Sales)
Buchanan
Charles Ryland / Stephanie Whitmore / Jack Devoy Tel +44 (0) 20 7466 5000
Notes to Editors:
About Braemar Shipping Services 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 after tax
for the period
2022 2021
£m £m
Underlying operating profit 10.1 7.7
Specific items (0.6) (1.1)
Net finance costs (1.0) (1.5)
Profit before taxation 8.5 5.1
Taxation (1.8) (1.6)
Discontinued operations* 7.2 1.0
Reported profit after tax 13.9 4.5
*Discontinued operations include Cory Brothers, Wavespec and the non-core
investment in AqualisBraemar - all of which have been disposed of in the
period
Alternative Performance Measures ("APM"s)
Braemar uses APMs as key financial indicators to assess the underlying
performance of the Group. Management considers the APMs used by the Group to
better reflect business performance and provide more useful information to
investors and other interested parties. Our APMs include underlying operating
profit, underlying profit before tax, underlying earnings per share and net
debt. Explanations of these terms and their calculation are shown in the
summary above and in detail in our Financial Review.
This document contains forward-looking statements, including statements
regarding the intentions, beliefs or current expectations of our Directors,
officers and employees concerning, among other things, the Group's results of
operations, financial condition, liquidity, prospects, growth, strategies and
the business. These statements are based on current expectations and
assumptions and only relate to the date on which they are made. They should be
treated with caution due to the inherent risks, uncertainties and assumptions
underlying any such forward-looking information. The Group cautions investors
that a number of factors, including matters referred to in this document,
could cause actual results to differ materially from those expressed or
implied in any forward-looking statement, including general business and
economic conditions globally, industry trends, competition, changes in
government and other regulation and policy, interest rates and currency
fluctuations, and political and economic uncertainty (including as a result of
global pandemics). Neither the Group, nor any of the Directors, officers or
employees, provides any representation, assurance or guarantee that the
occurrence of the events expressed or implied in any forward-looking
statements in this document will actually occur. Undue reliance should not be
placed on these forward-looking statements. Other than in accordance with our
legal and regulatory obligations, the Group undertakes no obligation to
publicly update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise
Chairman's Statement
I am delighted to have been appointed as Chairman of the board in May 2021
with a remit to help the Group's new management team simplify its operations
and develop an ambitious growth strategy centred around Shipbroking.
I am pleased to report that during the year, in addition to successfully
navigating the challenges of the global pandemic, the Group has completed all
the key strategic steps required to simplify its operations and provided the
framework to further expand the business.
In addition to maintaining a first class service to its clients, during the
year the board has put in place a clear and focused strategy; increased the
scale of the business; disposed of non-core assets and businesses; delivered a
strong trading performance exceeding the board's expectations; reduced net
debt (including £6.5m of Cory Brothers disposal proceeds received on 2 March
2022) to £2.8m (2021: £8.9m) and restored the payment of and interim and
final dividends to shareholders.
Strong trading results
The Group traded well throughout the financial year, because of increasing the
scale of its Shipbroking operations as well as generally favourable market
conditions. Revenue from continuing operations increased by 21% to £101.3m
(2021: £83.7m) and operating profit from continuing operations increased by
31% to £10.1m (2021: £7.7m), ahead of the board's previously upgraded
expectations. Reported profit after tax increased by 209% to £13.9m (2021:
£4.5m), reflecting the strong underlying trading, combined with a profit of
£4.1m on the disposal of Cory Brothers and a profit of £3.4m on the disposal
of the Group's investment in AqualisBraemar.
Underlying earnings per share increased by 100% to 27.95p (2021: 13.96p).
Reported earnings per share, which amongst other things includes the benefit
of the sale of the non-core investment in AqualisBraemar and the disposal of
Cory Brothers, increased by 215% to 45.56p, (2021: 14.45p).
Well-covered dividend
Mindful of the importance of dividends to shareholders and reflecting the
strong cash generation of the Group's Shipbroking business, the board has
decided to supplement its growth strategy with a progressive dividend policy,
subject to financial performance.
The board will recommend a well-covered final dividend for the current
financial year of 7.0p per share for approval by shareholders at its
reconvened AGM which will be held on 6 October 2022. This is in addition to
the interim dividend of 2.0p per share in respect of the 6 months to 31 August
2021 which was paid on 16 December 2021, yielding a total dividend for the
year of 9.0p per share (2021: 5.0p).
The final dividend will be paid on 14 October 2022 to shareholders who are on
the register at the close of business on 9 September 2022, with a
corresponding ex-dividend date of 8 September 2022. The last date for
Dividend Reinvestment Plan (DRIP) elections will be 23 September 2022.
Delay in publishing results
Over the past year and a half, the new board has made substantial progress in
laying the foundations for growth, clarifying Braemar's strategic direction
and substantially increasing its profitability. Loss-making business have been
closed, ongoing central costs have been reduced, the core Shipbroking business
has been expanded, the board has been strengthened, net debt reduced to near
zero and dividend payments restored.
However, while we can celebrate the progress that has been made in the
business, we must also acknowledge that this year's accounts are being
published later than would normally be the case. In summary, this delay has
been caused by the auditors and the board reviewing the accuracy of certain
foreign exchange and other balance sheet reserve accounts of the business. The
foundations of an accelerated growth agenda mandate a solid bedrock of
accounting integrity and I regard it as essential that a full check on the
integrity of these areas over the past three years has been carried out.
A very significant workstream was initiated, therefore, re-examining these
balance sheet areas over the past three years. In doing so, some errors,
largely historic, in accounting for the Naves acquisition, the foreign
exchange gain on the AqualisBraemar share disposal and the balance sheet
classification of certain other reserves have been identified and corrected.
None of these prior year errors impact the underlying profitability of the
business that has been previously reported.
The board has now completed this exercise and these areas have been subject to
audit to the extent required. I trust that shareholders will fully understand
that it was essential that this exercise was done in order that we can move
forward with confidence. I would like to take this opportunity to thank the
auditors and Braemar's finance team for carrying out this significant piece of
work over the past few weeks with unstinting diligence, clarity of focus and
sheer effort.
Climate-smart shipping
The Group recognises the importance of climate change generally and
specifically the importance of environmental, social and governance factors in
our business and in the shipping industry. During the year the Group launched
its environmental, people, social and governance framework ("EPSG Framework").
The board has chosen four of the seventeen United Nations Sustainable
Development Goals ("SDGs") to underpin its mission to facilitate climate-smart
shipping.
The drive for both those owning and chartering ships to operate in a
climate-friendly environment continues to develop, and the Group has made good
progress in developing responsible climate-smart shipping policies that are
fit-for-purpose in this sought-after greener environment.
Board changes
With effect from 1 August 2021, Tristram ("Tris") Simmonds and Elizabeth Gooch
MBE were appointed to the board of the Company as Chief Operating Officer
(Executive) and Non-Executive Director respectively.
Tris was previously the Managing Director of Braemar Atlantic Securities, the
Group's derivative brokerage business. Elizabeth has over 16 years' experience
of governance, compliance, and financial reporting of publicly listed
companies. Elizabeth has joined the Group's Audit and Nomination Committees
and has chaired the Group's Remuneration Committee since Jürgen Breuer stood
down from the board on 26 August 2021.
With effect from 1 March 2022, Joanne Lake was appointed to the board of the
Company as a Non-Executive Director. Joanne has over 25 years' experience of
business development, strategy, and corporate finance in several financial and
professional services organisations. Joanne was appointed Audit Committee
Chair with effect from 1 April 2022. Joanne joined the Remuneration and
Nomination Committees from 1 March 2022. Lesley Watkins resigned from the
board with effect from 31 March 2022, and Elizabeth Gooch succeeded Lesley in
the role of senior independent director from 1 April 2022.
I am delighted to welcome Tris, Elizabeth, and Joanne to the board. The
addition of Tris creates a stronger executive team with the bandwidth and
experience needed to deliver the board's growth aspirations to the benefit of
all stakeholders of the Group. Both Elizabeth's and Joanne's prior governance,
public company, and technology experience in growth-oriented, people-based
businesses is highly complementary to the Group's strategy and existing
non-executive skill base. I would also like to thank Jürgen and Lesley for
their significant contributions to the Group, and I wish them the very best
for the future.
Our people
The results for the year are a tribute to the dedication and expertise of our
staff. The calibre of our people is central to the high quality of service
that we provide to our clients. It is their hard work and creativity that
enables Braemar to continue to build its brand and reputation as we develop
our business. I would like to thank all our staff for their continuing efforts
on behalf of the Group.
Outlook
The present global marketplace is generally characterised today by
geopolitical uncertainty, trading sanctions, exchange rate volatility,
logistical challenges remaining from the global pandemic, together with
inflationary and interest rate pressures.
Notwithstanding these challenges, market conditions in the Shipbroking
industry remain favourable, driven both from strong demand and restricted
supply. For Braemar, trading during the first five months of the new financial
year has been very strong and the Group continues to benefit from the
increased scale and breadth of its broking operations in these generally
favourable market conditions. As a result expectations for the current
financial year are expected to be well ahead of the board's previous
expectations.
Compliance with existing sanctions, put in place because of the
Russian/Ukraine conflict, is not expected to have any material effect on
trading or cashflows in the current financial year nor does the Group have any
existing material exposure. The board continues to look to the future with
confidence as it sets about delivering on its growth strategy centred on
Shipbroking.
Nigel Payne
Chairman
28 August 2022
Group Chief Executive Officer's Statement
I am extremely proud of our performance in my first full year leading the
Group. Before I became CEO, I led Shipbroking at Braemar, and I was previously
the CEO of ACM, which merged with Braemar in 2014. That division was always
Braemar's driving force, and my vision for the company has long been to take
the business back to its basics.
As you'll see below in more detail, we've started to see the results of our
focus on Shipbroking and Corporate Finance. We've become a more effective and
more dynamic company by trimming the fat, investing in our people and
technology, and focusing on what we know works through our wealth of
experience.
The strong trading results are testament to the hard work and dedication of
our people, and to our clear and focused strategy which has been delivered by
a united new board and management team. Under unusual conditions and working
from home for much of 2021, our achievements have been a huge team effort and
prove we are well positioned for future growth.
Our future success: We have rebuilt the foundations, now we grow
Trading in our Shipbroking business was very strong throughout the year, with
revenue and profits significantly ahead of our initial expectations from the
previous year. Our performance reflects the core steps we have taken to
increase the scale of our Shipbroking activities as well as favourable market
conditions.
Examples of where our expanded and diversified business and market conditions
combined to increase the Group's profitability include: A volatile and busy
Dry Cargo market which helped increase revenue on our expanded physical and
securities desks; our global Sale and Purchase team concluding a significantly
higher number of transactions within their market; a strong container market
volume which augmented the synergies gained from working closely with our
Corporate Finance business.
Although Tanker market rates remained supressed throughout the year due to
continued pandemic-related weakness for oil demand, the number of transactions
we performed increased by more than 21% compared to the previous year.
Chartering fixture volumes were up 8% across all desks, securities' revenue
increased 60%, and Sale & Purchase volumes grew 59%.
Strengthening the balance sheet
The board has focused this year on reducing the net bank debt of the Group,
and I am delighted that we have achieved our objective; a total reduction of
£17.2m from 29 February 2020 to 2 March 2022.
Enhancing our cashflow
Cashflow from operating activities in the year increased by 61% to £20.5m
(2021: £12.7m). Excluding the initial proceeds of the sale of Cory Brothers,
as of 28 February 2022, the Group held cash of £14.0m (2021: £14.1m). The
initial consideration of £6.5m from the disposal was received on 2 March and
is accounted for as a receivable on the balance sheet date.
Reducing the debt burden
The board previously stated that that it had set a target of achieving a net
bank debt to EBITDA ratio sustainably below 1.5 times on average over the
seasonal working capital cycle. I am pleased to report that excellent progress
has been made towards this goal. Net bank debt at 28 February 2022 was £9.3m
(2021: £8.9m) with the ratio falling to 0.96 times for the 12 months to 28
February 2022, down from 1.32 times for the prior year. Including the £6.5m
proceeds from Cory Brothers which were received on 2 March 2022, net bank debt
reduces to £2.8m and the ratio falls further to 0.60 times.
Moreover, the future earnout consideration that will be received for Cory will
almost totally offset the outstanding debt relating to the Naves acquisition,
and it means that we enter the new financial year very close to debt-free.
When you compare this situation to where we were four years ago, it's like
colour versus black and white. A similarly concrete change has been achieved
in our reduced exposure to deferred share promises relating to the employee
bonus scheme now, and in the future.
The Group's revolving credit facility with our main bankers, HSBC, is due to
expire in September 2023. We have already received acceptable indicative terms
for an extension and we expect to conclude these discussions well in advance
of the current facility end.
Successful execution of strategic changes
While we've achieved plenty during my first complete year in charge, there
will be no resting on our laurels. There is too much left to do if we're to
achieve our objectives.
I have a strong, experienced team around me led by my CFO, Nick Stone, and
COO, Tris Simmonds, and we are executing on our plan that was agreed by the
board. We've reduced net debt, invested in our people and technology, and
implemented a focused programme of change. This has strengthened the Group
compared to where we were recently, and will allow us to continue to grow
organically, or through acquisitions.
Disposal of Cory Brothers
The disposal of Cory Brothers was completed on 28 February 2022, the last key
step on the execution of Braemar's strategy of focusing on our core
Shipbroking business. The all-cash consideration consists of a £6.5m upfront
payment with deferred and contingent payments of up to £9.0m over a
three-year earnout period. The Group expects to receive £4.8m of the deferred
and contingent consideration. The buyers of Cory are a long-term strategic
partner of the Group, and we look forward to seeing the new combined
VertomCory business thrive. The business combination will provide a strong
platform from which to accelerate growth and Braemar will share in the success
of the new business via an earnout mechanism.
Braemar Naves consideration restructuring
On 3 June 2021, the Group amicably restructured the deferred consideration
owed in relation to its 2017 acquisition of Braemar Naves. The restructuring
saw over £2.5m, which was previously due for repayment before the end of
December 2022, deferred to be paid no earlier than September 2025. Total
liability for the Naves acquisition is now reduced to £4.7m, which is
conveniently offset with receipts from the VertomCory transaction.
The development of this division as the Corporate Finance offering of the
Group's Shipbroking business has progressed well with many transactions
concluded together. The expected synergies with our sale and purchase
department are strong and growing, especially in the container market.
Disposal of investment in AqualisBraemar
The Group further strengthened its balance sheet by selling its non-core
investment in AqualisBraemar. On 19 May 2021 9,640,621 shares were sold for
cash proceeds of £7.2m and on 20 August 2021 1,000,000 warrants vested and
the resulting shares were sold for cash proceeds of £0.7m. The investment in
AqualisBraemar was the result of the June 2019 disposal of the loss-making
Offshore, Adjusting and Marine businesses. Including 9,600,000 shares sold in
the year ending 28 February 2021, the Group has realised total cash proceeds
of £13.9m in respect of this disposal.
Disposal of Wavespec
The Group completed the disposal of its loss-making Engineering Division,
Wavespec on 31 March 2021. Although no proceeds are expected to be received,
the disposal of this engineering business was the final step in disposing of
the Group's Technical Division.
Reinvigorating the Braemar brand
The board's strategic development work has included a rebranding initiative.
An important part of this was the launch of our new corporate website in June
2022, which clearly positions and communicates the Group's new focus,
objectives, and purpose. This was also an ideal time to set out the Group's
work regarding compliance, and EPSG. We see many new growth opportunities
created by the rapidly developing area of environmental sustainability, and we
are positioning the company to capture an outsize share of them.
Our new strategic ambition and direction
Our primary medium-term ambition is, through strategic hires and acquisitions,
to double the size of the business, such that our sustainable annual
underlying operating profit, regardless of market factors, is twice the £7.7m
underlying operating profit restated in 2020-21. It is pleasing to note that
we have already achieved a 30% increase over the last year, we've grown our
operating margin from 9% to 10%, and we continue to believe that this can be
achieved within the four-year timeline we outlined in 2021.
We believe that scale has become increasingly important within our industry to
service the needs of our clients. It is also needed to provide us with
sufficient geographical and product diversification, reduce the impact of
cyclical markets, and create further cost efficiencies. Buoyant shipping
markets, a strong market share and a robust forward order book, position us
well to grow at an accelerated pace.
The board believes that the delivery of our core strategic ambition requires
investment in our business support infrastructure and technology. Together,
they will provide essential foundations for growth, as well as ensuring that
we can continue to meet the growing demands of our clients. We continue to
develop technology solutions that enhance our offering as a broker through,
for example, by investing and working in partnership with Zuma Labs, and most
recently by partnering with CHOOOSE, a supplier of digital toolkits that
enable climate-based solutions for many industries. Through these partnerships
we are delivering market-leading digital solutions to the shipping industry
and future-proofing our business.
We have an active program for organic expansion, and recent highlights include
the establishment of Geneva and Houston offices as we expand into new markets,
as well as moving to a larger Dubai office and growing our market leading
specialisms. Our Australian Dry Cargo Business in Melbourne and Perth
continues to grow, and it remains the dominant broker in its field. Our
Singapore office continues to expand and is a key partner with the Singapore
Maritime Academy (SMA), providing an approved trainee scheme for young
Singaporeans wanting to join the maritime industry.
Our expansion strategy is already paying dividends and there are good
indications within the year's trading performance that the investments we are
making to increase the breadth, focus, and depth of the Group's Shipbroking
activities are starting to deliver growth unrelated to movements in market
rates themselves. Notably, amid the volatile Dry Cargo market the Group
increased both revenue and market share on the physical and securities desks.
The Sale and Purchase desk has concluded a significantly higher number of
transactions partially due to the strong container market, as well as through
the synergies gained from working closer with the Corporate Finance desk.
Tanker market rates remained low, impacted by pandemic related weakness in oil
demand. However, Tanker transaction volumes have increased by more than 25%
compared to the previous year, aided by strategic hires and growth of the
Geneva office within the oil product sector.
To better align shareholder and employee interests and support the growth
agenda, the board concluded that it should reduce the overall amount of
deferred equity issued annually as part of employee remuneration arrangements.
Under the previous scheme, deferred shares were awarded and issued to employed
recipients over a three-year vesting period and generally settled by shares
purchased in the market. Whilst this scheme will remain unchanged, the amount
paid in such deferred shares will be halved with an increase in cash bonuses
paid of the same amount for the current and future years. Future years will
involve claw back arrangements on the additional cash payments to encourage
employees to remain in Braemar's employment. During the year the ESOP acquired
2.7m shares. This reduced the company's exposure, and it ensures that all
historic liabilities are now covered.
Outlook
Trading at the start of the new financial year has been strong and I look
forward to the remainder of the year with confidence as we continue to reap
the benefits of our increased scale and focused strategy.
Over the last year, the advisory and facilitation that Braemar provides to
shipowners and charterers have increased our forward order book by 15% to
US$50.0m (£37.3m) at the year end compared with US$43.4m (£31.1m) at the
beginning of the period. Since the year end, the order book has grown by a
further 14% to US$57.1m (£42.6m) at the end of July 2022.
We have seen strong ordering, particularly in the gas carrier and container
markets, where there's very high demand for newbuildings, and capacity at many
shipyards is now unavailable until 2025 at the earliest. Shipowners in other
sectors are therefore finding it hard to renew their fleets and relying upon
the second-hand market instead. All these factors have strongly benefitted our
Sale and Purchase desk.
In the coming years, these factors are likely to benefit several of our
chartering desks as well, because if older ships are retired and there's no
ability to replace them it will restrict vessel supply in those sectors and
put a higher floor on charter rates. I firmly believe that it is through our
investments in our people as well as offices and technology that we have
achieved these high levels of activity. I look forward to another strong year
of trading as their benefits continue to compound.
The only other point I wanted to raise is that I'm enjoying working with Nigel
and the other non-executives. The synergies and their benefit to Braemar are
already apparent as we now focus on looking forward, with confidence about
what the future holds.
James Gundy
Group Chief Executive Officer
28 August 2022
Operating Review
Introduction
Seaborne trade continues to recover from the global pandemic. Growth in
ton-miles and logistical disruption have combined to strengthen freight rates
in many markets, which, in turn, has benefitted Braemar.
The Dry Cargo, Gas, and Container sectors have performed particularly
strongly. Specialised Tankers has made a slower recovery, and Deep Sea Tankers
has recently returned to better rates. The resurgent interest in the shipping
industry from both a lending and equity investment point of view has meant the
Corporate Finance desk has also performed well. As a result, we have grown our
revenue and volume of fixtures in almost every sector.
The macroeconomic outlook for shipping is broadly favourable to Braemar.
Seaborne volumes are expected to continue increasing, and between a
combination of high ship recycling prices and shipyard capacity, only
Containers and Gas are likely to see major fleet growth in the coming years.
Through office expansion, new hires, and the positive momentum in the markets
we are well positioned for strong performance in the Dry Cargo and Specialised
Tanker markets; to continue to increase our Securities' market share; and well
positioned for a full recovery in Deep Sea Tankers.
In April 2022, we created a Digital Transformation Desk and appointed our
first Head of Digital Transformation. The desk is working to further integrate
digital tools into all areas of the Group to enhance our ability to serve our
clients' growing requirements, as well as to make workflows more engaging and
efficient for our people.
Shipbroking
FY21/22 FY20/21 restated
£000 £'000
Revenue 94,659 77,727
Underlying operating profit 12,422 10,068
Sale and Purchase
Sale and Purchase activity has been exceptionally strong throughout the
financial year ending 28 February 2022, which has driven a major increase in
our revenues, and the desk has made several strategic new hires who are
already making good contributions. Strong spot and time charter markets in the
Dry and Container sectors since 2020 have lifted asset values to long-term
highs. Consequently, asset value and transaction growth continued in the
Containership sector for the second consecutive year, as charter rates and
asset values grew to exceptional highs and fed into enhanced revenue for the
desk.
Containerships and LNG carriers are dominating the newbuild orderbook, but in
other sectors newbuilding ordering activity has been suppressed by a lack of
space in shipyards, rising labour and material costs, and a lack of clarity
regarding what fuels and technologies to adopt to ensure regulatory
compliance. Owners have therefore focused their investment on second-hand
units, which has resulted in one of the busiest periods of asset play in
recent memory, which Braemar has profited from through our superior ability to
connect buyers and sellers. We expect second-hand activity and prices to
remain elevated for the dry cargo and container sectors. Due to the lack of
newbuilding capacity, even in a weak tanker market we are still seeing an
increase in second-hand values in this sector. On top of that we are seeing
one of the strongest ship recycling markets, which has been to the advantage
of our Demolition team.
With interest rates close to historic lows and a consensus that the worst of
the COVID pandemic is behind us, there was a lot of liquidity in the capital
markets this year. Improving markets also enabled restructurings in
Multipurpose/Heavylift and Offshore, for example, to be completed after years
of preparation, all of which also benefited Braemar's Corporate Finance desk.
Sale and Purchase's revenue increased by 31% from £15.0m in FY20/21 to
£19.6m in FY21/22 and represented 19% of Braemar's total revenue. Fixture
volumes increased by 59% compared to the previous year.
Deep Sea Tankers
Tanker markets have weakened throughout the financial year as successive waves
of COVID related restrictions have reduced global oil demand, particularly for
diesel and jet fuel. A large 'shadow' fleet of tankers moving sanctioned
Iranian and Venezuelan crude oil has provided employment for vessels that
would otherwise have been sold to ship recyclers for their steel, and reduced
employment for other vessels. Despite these hindrances, the desk has achieved
fixture growth that's a fifth better the preceding financial year. Russia's
actions in Ukraine threaten to withdraw crude supply from the already
undersupplied market. A global stock build, once oil prices have eased, is
likely to support tanker trades, and the desk is well positioned for when this
occurs.
Deep Sea Tankers' revenue decreased by 32% from £26.3m in FY20/21 to £17.8m
in FY21/22 and represented 18% of Braemar's total revenue. Although revenue
decreased due to weak markets, fixture volumes were up 21% compared to the
previous year.
Specialised Tankers and Gas
The Specialised Tankers and Gas market is diverse, and it includes very
different types of vessels servicing the unique needs of the oil products,
LPG, petrochemicals, and LNG markets - to take only four examples that Braemar
services.
The return of activity from oil products' end users as COVID vaccinations were
rolled out as well as a sizeable percentage of ships reaching their maximum
trading age caused the global fleet's availability to tighten towards the end
of 2021. This has continued into 2022 to Braemar's advantage as charter rates
have remained robust. The Chemical market struggled at the start of the
financial year with a combination of lower volumes, higher bunker prices, and
increased competition from swing tonnage. It took until Q4 2021 for a
significant increase in tanker earnings to occur, and Braemar has realised
good gains as this upturn continued into 2022. There is cautious optimism
about the sector's potential over the next 12 months, and that is expected to
create further growth for the desk. Braemar's decision to invest in our Geneva
office is already showing dividends, with substantial new business growth
already from its recent hires, and the expectations that the compound benefits
of this expansion will reap larger dividends in the new financial year.
Total demand is growing across the gas markets, and production is expected to
continue to grow in tandem, which has combined to improve the desk's margins.
A substantial number of larger capacity ships are set to be delivered in the
next few years and it is hoped that the cumulative demand growth of these
products will be able to absorb these newbuilds. However, there is a continued
lack of newbuilding orders in smaller sectors as well as further owner
consolidation. Braemar's Gas desk has substantially increased its spot and
period business over the last year for petrochemicals and larger LPG, and it
continues to diversify its client base. The desk has also increased its
forward physical freight agreements, which has provided Braemar with increased
liquidity for future spot business.
In previous years, relatively stable LNG delivered prices averaged at around
$7-12 per MMBtu with seasonal fluctuations of between $5-6, has given way to
highs of almost $70 this year and rapid fluctuations of $20-30 almost over
24hr periods. Consequently, Braemar is seeing huge interest in LNG shipping,
as charterers are being forced to take longer term charters to mitigate these
commodity price swings which has soaked up almost all available tonnage.
Braemar has benefited from the high price for LNG as it has led to an increase
of newbuild orders. On the chartering side, Braemar has recently achieved two
7-10-year charters, and several multi-month charters as customers work to
secure their long-term security of supply. The long-term revenue for Braemar's
LNG desk has almost doubled over the last 12 months, and it is optimistic
about the prospects for the sector over the next year.
Specialised Tankers' and Gas revenue increased by 6% from £10.9m in FY20/21
to £11.6m in FY21/22 and represented 11% of Braemar's total revenue. Fixture
volumes increased by 12% compared to the previous year.
Dry Cargo
Dry freight markets rose strongly during the first half of the financial year,
reaching highs not seen since before the financial crisis in 2008, and we have
realised substantial gains from its advisory and facilitation. COVID-related
port congestion coupled with resurgent demand for raw materials, particularly
in China, resulted in a significant tightening in the supply and demand
balance, and consequently higher rates from which Braemar has profited. While
Russia's invasion of Ukraine is likely to dent economic growth, we expect dry
cargo demand to be supported by Chinese growth when COVID restrictions are
fully eased. Thanks to sanctions and the loss of Ukraine's port facilities,
the loss of Russian coal and grain exports to Europe will need to be replaced
from further afield. The resulting reshuffling of global trades is likely to
increase the average length of haul, supporting dry cargo freight rates in the
short-term and the profitability of this desk.
Dry Cargo's revenue increased by 95% from £15.3m in FY20/21 to £29.8 in
FY21/22 and represented 29% of Braemar's total revenue. Fixture volumes were
marginally lower than the previous year.
Offshore and Renewables
A combination of high oil and gas prices, political pressure for low carbon
energies, and an increase in total demand has created some of the brightest
prospects for the offshore energy markets and the Offshore desk in many years.
Activity in traditional and new energy sectors will prove beneficial for
almost all vessel classes, as well as providing a welcome relief from the low
demand and massive overcapacity that has inhibited the sector over much of the
last decade. Braemar's Offshore Energy Services desk achieved 30% more
business in 2021-22 compared to the previous 12 months, and in collaboration
with other desks beat off stiff competition to be awarded a seven-year
framework agreement with the UK's Ministry of Defence. Driven by end user
pressure, progressive environmental regulation, and cost declines there is
significant worldwide demand for offshore wind projects and clean energy more
broadly that is likely to remain elevated for several years. To capitalise on
this trend, Offshore has doubled its number of Renewables brokers, and
recently became the first major shipbroker to hire a dedicated Renewables
broker on the east coast of the USA.
Offshore and Renewables' revenue increased by 41% from £2.7m in FY20/21 to
£3.8m in FY21/22 and represented 4% of Braemar's total revenue. Fixture
volumes increased by 43% compared to the previous year.
Securities
High volatility over the course of the last 12 months has helped to drive
overall market volumes higher. Braemar has been able to capture an
increasingly large proportion of trading volumes, growing our market share
considerably. Major concerns about European energy security led to exponential
moves in dry FFAs. After several years of depressed values on dry cargo, 2021
finally achieved levels not seen for over a decade, with the Capesize index
peaking in early October at $86,593. Over the following six months, supply
disruptions and seasonality saw the same index approach $5,000, but positive
2H22 expectations have kept the forward curve in a steep contango, with
deferred contracts trading at large premiums. (Coal FFA)
Braemar's dry FFA desk has grown substantially during this period, catering to
the needs of investors who wish to speculate on price moves as well as those
who need high performance tools to manage their risk exposure. Braemar's
partnership with Zuma and the popularity of Braemar Screen is bringing clear,
sustainable benefits to the business despite only being developed less than
three years ago. The Braemar FFA desk is one of the few desks in the market
that has an active trading platform, which has helped us to substantially
increase our market share. The prospects for further growth are good, and the
desk will continue to focus on developing digital, data-led solutions for its
client base. Revenue growth for 2021 versus 2022 was nearly 4.5x, and market
share more than doubled over the same period. (Dry FFA)
The lack of global oil demand caused by COVID has dragged rates on the largest
ships to the floor and kept them there since Q3 2020. The decline was only
stopped by Russia's invasion of Ukraine, which caused major volatility.
Ultimately, that is what all forward curves have been missing for some time,
and so liquidity wasn't far behind. Our desk was well positioned as this
disruption occurred. Market volumes in March 2022 were only surpassed by
November 2021 in the last 12 months. This was largely due to an exciting
aspect of FFAs in the last year: traders covering their positions much further
into the future. The desk has seen good volume out to 2025, and this has
enabled it to provide our clients with the opportunity to capably manage their
shipping exposure for up to almost four years. This is the first time that the
market has seen open interest extending that far, and it puts the desk and the
whole market in a very strong position moving forward. This desk is a joint
venture between Braemar and GFI. (Wet FFA)
Securities' revenue increased by 60% from £7.5m in FY20/21 to £12.0m in
FY21/22 and represented 12% of Braemar's total revenue.
Financial
FY21/22 FY20/21 restated
£000 £'000
Revenue 6,651 5,968
Underlying operating profit 1,798 1,034
Braemar's Corporate Finance desk (formerly 'Braemar Naves') is continuing to
benefit from its extensive restructuring experience and relationships in two
ways. Firstly, several large international restructuring mandates were
completed after years of preparation in the financial year ending February
2022 as well as in Q1/2022. Such restructuring mandates involved accompanying
capital raising activities in the Offshore, Multipurpose and Heavylift
segments. Secondly, the strong recovery in the Container and Multipurpose
market enabled us to support our clients to refinance loans - many of which
Braemar's Corporate Finance desk had helped to restructure in preceding years.
The desk diversified its market presence, and it worked with several large
Container lines for the first time. The successful cooperation and combination
of expertise with Braemar's Sale and Purchase desk was a key driver of this
success. In expectation that the worst is behind in the passenger shipping
markets, cruise companies, lenders and investors have started to request
Braemar's support to find solutions to financial problems that were caused by
the COVID pandemic. Investor appetite is returning in this segment, and
expectations are to complete a number of similar assignments in the coming
year. Corporate Finance's revenue increased by 12% from £6.0m in FY20/21 to
£6.7m in FY21/22 and represented 7% of Braemar's total revenue.
Logistics
FY21/22 FY20/21
£000 £'000
Revenue 45,215 28,083
Underlying operating profit 2,456 1,191
Cory Brothers, the Group's Logistics business was sold to Vertom on 28
February 2022 and consequently the results for the current and prior year are
presented as discontinued operations. Cory Brothers had an extremely strong
year, particularly from its Freight Forwarding activities. The pressure on
container space and Brexit-related import/export complexities led to a greater
demand for services. Challenges were faced in the UK Agency business,
particularly due to the loss of a key contract which will impact revenue in
FY22/23.
Revenue increased by 61% from £28.1m in FY20/21 to £45.2m in FY21/22 as this
revenue is presented within discontinued operations it does not form part of
Braemar's total revenue.
The board took the decision to sell Cory Brothers to Vertom, a long-term
strategic partner of the business because they believe scale and management
expertise are key to the long-term success of the business. This will be
better achieved under the new ownership, whilst Braemar has tightened its
balance sheet because of the transaction and is better placed to grow its core
Shipbroking business. The board look forward to seeing Cory Brothers thrive
under its new ownership, and Braemar has retained upside potential in the
future performance of the business from the three-year earnout mechanism.
Conclusion
Over the last 12 months there has been stimulus from almost every government,
and huge vaccination progress has released pent-up consumer demand in ways
that are likely to benefit shipping for at least the next year. Outside of the
tanker market, almost every sector has achieved profitability levels that have
not been seen in many years. Moreover, the logistical bottlenecks which
continue to exist around the world have balanced the fleet expansion.
Consequently, we are predicting another year of strong rates across almost
every sector. Thanks to our strong investments in our people, technology, and
growing our geographical footprint we are well positioned to secure an outsize
share of opportunities available in those markets.
We have realised total revenue growth of 21% across all our Shipbroking and
Corporate Finance desks over the last year, and in the growing and evolving
markets in 2022-23, we are optimistic about seeing further return on our
investments and continuing to grow both revenues and fixtures.
Financial review
A strong trading performance and the successful execution of our strategic
objectives
"This excellent performance reflects the investments we have made to increase
the breadth, focus, and depth of the Group's core Shipbroking activities."
Nick Stone, Chief Financial Officer
Summary income statement 2022
The strong trading and higher revenues have meant that all our profit measures
have increased significantly
· Statutory operating profit over the last year increased by 44% to
£9.5m (2021 restated*:£6.6m);
· Underlying operating profit increased by 31% to £10.1m (2021
restated*:£7.7m);
· Statutory reported profits for the year were up 209% to £13.9m
(2021 restated*: £4.5m).
The final measure benefitted from the Group's strong underlying trading, as
well as the profits on disposal of non-core assets and businesses.
2022 2021
Restated*
£'000
£'000
% Inc/(Dec)
Revenue 101,310 83,695 21%
Operating costs (87,090) (72,593) 20%
Central costs (4,160) (3,383) 23%
Underlying operating profit before specific items 10,060 7,719 30%
Specific items - Acquisition and disposal-related expenditure (122) (835) (85%)
Specific items - Other operating costs (392) (262) 50%
Operating profit 9,546 6,622 44%
Share of associate loss (19) - 100%
Net finance costs (984) (1,486) (34%)
Taxation (1,839) (1,574) 17%
Profit after tax from continuing operations 6,704 3,562 88%
Discontinued operations - underlying 1,493 (513) 391%
Discontinued operations - specific 5,722 1,483 286%
Profit attributable to equity shareholders of the Company 13,919 4,532 209%
* The year ended 28 February 2021 has been restated for the presentation of
Cory Brothers and AqualisBraemar as discontinued operations and a prior period
adjustment as disclosed in Note 34 of the Financial Statements.
Continuing operations
Revenue
Revenue from continuing operations grew by 21% from £83.7m to £101.3m. As
seaborne trade recovered from the COVID pandemic and logistical disruption
strengthened freight rates, revenue and fixture volumes across almost every
Shipbroking desk increased. Total revenue also increased on the Corporate
Finance Desk and due to the completion of several large mandates and there was
a consequent increase in success fees compared to retainer income.
Operating costs
Due to the substantial increase in revenue there was a corresponding increase
in profit-related bonuses paid to the brokers responsible for generating them
which was the main contributor to the increase in operating costs. The
increase in the percentage of cash bonuses paid on last year's profits, as
noted in the CEO report, also contributed to this increase. Cash bonuses are
charged in the year in which they are earnt whereas deferred share bonuses,
which were reduced at the same time, are charged over multiple years. Future
years will see a consequent reduction in deferred share charges as a result.
As COVID restrictions were eased during 2021, travelling and entertaining
expenditure increased as the Group's brokers re-engaged with charterers and
ship owners. In the prior year, £0.9m of Singaporean and Australian
Government grants were netted off against staff costs, these grants were
received by the Group for retaining employees during the COVID pandemic. No
such grants were received in the current year. As a result of all these
factors, operating costs increased by 20% from £72.6m to £87.1m.
Central costs
Central costs increased in total by 23% from £3.4m to £4.2m. This was the
result of various changes to the Group's board as well as additional one-off
professional fees associated with the delayed year end audit process and a
one-off impact of £0.5m of costs related to an office building that was
vacated by a sub-tenant during the year. The office lease was assigned to a
new tenant in March 2022 and that cost will not re-occur in
FY22/23. Therefore on an ongoing basis central costs were reduced during the
year.
Net finance costs
Net finance costs for the year decreased by 34% to £1.0m (2021: £1.5m). The
cost has three elements: the revolving credit facility provided by HSBC which
provides the seasonal working capital needed by the business as well the core
indebtedness; the convertible loan notes associated with the acquisition of
Braemar Naves; and the interest charge associated with right-of-use assets
under IFRS 16. The reduction in cost follows the reduction seen in net debt in
the business, as well as the ongoing repayment of the convertible loan notes.
Included within the net finance costs is a credit of £0.2m. This is in
respect of the accounting for the restructuring of deferred consideration owed
in relation to the acquisition of Braemar Naves. In the prior year £0.4m was
charged to finance costs in respect of interest payable on tranches of the
revolving credit facility that was used to fund the acquisition of Braemar
Naves. This is no longer considered specific, and in the current year all
interest payable is included in underlying finance costs.
Prior period adjustments
As mentioned in the Chairman's Statement, a thorough review of the historic
accounting for several corporate transactions and the classification of
various reserve balances was carried out as part of the year end audit
process. The process was prompted by the errors identified in the accounting
for the 2017 Naves acquisition and was extended to incorporate a detailed
review of other transactions and consolidation adjustments. The results of the
process are described in detail in Note 34 to the financial statements.
Specific Items and Discontinued Operations
During the year the board has successfully executed several transactions with
the aim of simplifying the Group's operations to concentrate on a new growth
strategy centred around Shipbroking.
Items that are not considered to be part of the ongoing trade of the Group
have been presented as specific. These items are material in both size and/or
nature and we believe may distort understanding of the underlying performance
of the business if not identified separately.
The financial results of Wavespec, AqualisBraemar and Cory Brothers which were
disposed of during the year have been presented as discontinued operations.
Specific items
Acquisition-related expenditure - Braemar Naves
There were £0.1m (2021 restated: £0.6m) of acquisition-related charges
during the year for the acquisition of NAVES Corporate Finance GmbH in 2017.
This charge includes £0.2m elements of post-acquisition consideration payable
to the sellers; £0.1m of interest charges; and an FX gain of £0.2m on
conversion of Euro denominated acquisition liabilities to GBP.
Other Operating Costs - Lease Assignment
On 28 March 2022 the assignment of the office referred to above was completed.
The lease was impaired to reflect the commercial terms of the assignment at 28
February 2022. A charge of £0.4m was recognised as a specific item in other
operating costs. This compares to a prior year charge of £0.3m in respect of
the sublet of the same office.
Braemar Naves consideration restructuring
On 3 June 2021, a restructuring of the deferred consideration owed in relation
to its 2017 acquisition of Braemar Naves was agreed. This restructuring will
see the deferral of more than £2.5m (€2.9m) that was previously due for
repayment before the end of December 2022 paid no earlier than September
2025. In addition, a further amount of approximately £0.7m (€0.75m) is to
be satisfied by the issue of new ordinary shares in the capital of the Company
in three tranches. The first two tranches were completed during the year, and
the third is due in December 2022. At 28 February 2022 the total principal
amount outstanding was £5.0m (€6.0m).
At 28 February 2022 the net present value of the outstanding liabilities was
£4.9m (2021 restated: £8.1m).
As a result of the rescheduling, the model that had been used to generate the
accounting entries for the acquisition since it was made in 2017 was reviewed
to determine the amendments needed. That review identified certain
computational errors. In particular the calculation of amounts in relation to
the outstanding deferred consideration arising from the acquisition and the
consequent entity accounting eliminations on consolidation were incorrect. The
error resulted in an overstatement of liabilities at February 2021 and
February 2020, and an overstatement of charges in other comprehensive income
in 2021. There is no impact on profit and loss or earnings per share in either
period. Further details of the restatement can be found in Note 34 of the
Financial Statements.
Discontinued operations
A total of £7.2m has been recognised from discontinued operations, as can be
seen in the table below. £1.5m relates to the underlying trading results of
Cory Brothers and Wavespec prior to the disposal, as well as the Group's share
of AqualisBraemar's results to 19 May 2021. £5.7m relates to the specific
profits and losses on the disposal transactions.
Underlying Specific Total
£'000 £'000 £'000
Cory Brothers 1,563 4,134 5,697
AqualisBraemar 76 3,375 3,451
Wavespec (146) (1,787) (1,933)
Total 1,493 5,722 7,215
Disposal of Cory Brothers
On 28 February 2022, the planned disposal of Cory Brothers, its Logistics
Division, to Vertom was completed, total consideration will range between
£10.25m and £15.5m. The consideration comprises initial cash proceeds of
£6.5m, together with three further deferred and contingent payments based on
the percentage of the gross profit of the newly formed VertomCory business for
a three-year earnout period ending on 31 December 2024. The three earnout
payments combined will be a minimum of £3.75m and a maximum of £9.0m. The
fair value of the expected earnout consideration at 28 February 2022 is
estimated to be £4.8m. The consideration from the disposal will be used to
reduce net debt and strengthen the balance sheet in furtherance of the Group's
growth strategy. The trading result for Cory Brothers up to the point of
disposal was a profit of £2.4m, although this is drawn before amortisation
and depreciation charges of £0.3m which were reversed upon the assets being
held for sale. After costs of disposal and recycling of foreign exchange, the
Group realised a profit on disposal of £4.1m.
Disposal of Investment in AqualisBraemar
On 19 May 2021, the Group sold 9,640,621 shares of its non-core investment in
AqualisBraemar for cash proceeds of £7.2m. On 20 August 2021, 1,000,000
warrants vested and were exercised, and the remaining warrants lapsed. The
resulting shares were sold for additional cash proceeds of £0.7m on 31 August
2021. After legal costs and recycling of foreign exchange, the Group realised
a total profit of £3.4m on these disposal transactions.
As part of the exercise to re-examine and balance sheet reserves balances, it
was identified that the amount recycled from other comprehensive income from
the foreign exchange translation reserve in the previous year and reported as
gain of £0.5m was misstated and should have been a loss of £0.5m. The gain
on disposal that arose from the partial sale in the year to 28 February 2021
is therefore restated as described in Note 34 to the accounts.
On 19 May 2021 the Group's interest in AqualisBraemar was limited to its
holding of 6,523,977 performance-based warrants. Consequently, the Group
ceased to equity account for its interest in AqualisBraemar. The Group's share
of profits in AqualisBraemar up to 19 May 2021 was £0.1m.
Disposal of Wavespec
On 31 March 2021, the Group completed the disposal of its loss-making
Engineering Division, Wavespec, for a maximum consideration of £2.6m. The
consideration was intended to be satisfied by the issuance of a promissory
note with a maturity date of 31 March 2026. The recognised fair value of the
consideration of £2.4m was based on the net present value of the promissory
note and this resulted in a profit on disposal of £0.6m. However, as at 28
February 2022, the buyer had not delivered on its obligations to secure the
promissory note and the board took a view that the promissory note was
unlikely to be honoured, and that consequently the consideration has been
credit impaired. The total loss for the year from Wavespec was £1.9m. This
consisted of a trading loss of £0.1m, a gain on disposal of £0.6m and a
credit impairment of charge of £2.4m.
Balance sheet
Net assets at 28 February 2022 were £75.1m (2021 restated: £66.5m). The year
saw a decrease in gross trade receivables to £25.0m from £27.3m at the
previous year-end due to the disposal of Cory Brothers, partially offset by
the growth in debtors in Shipbroking and Financial due to the strong revenue
growth in the period. The proportion of trade receivables provided against was
broadly in line with the previous year. A receivable of £6.5m is included in
other receivables in respect of the VertomCory completion proceeds received on
2 March 2022. A receivable of £4.8m is included in other long-term
receivables in respect of the VertomCory deferred and contingent
consideration.
Capital expenditure
Total capital expenditure was £2.3m (2021: £2.3m). The most significant item
of capital expenditure relates to the treatment of office leases under IFRS 16
whereby the lease is treated as an asset addition. These lease additions
totalled £1.0m in the year (2021: £1.2m) and do not relate to cash payments
in the year. The balance relates to capitalised expenditure on computer
software of £0.6m (2021: £0.6m) and other expenditure on fixtures and
fittings and leasehold improvements of £0.7m (2021: £0.5m).
Borrowings and cash
At the balance sheet date, the Group had a revolving credit facility with HSBC
of £30.0m. The facility also provides access to a global cash pooling
facility in the UK, Germany and Singapore which enables efficient management
of liquidity between its main regional hubs. The Group operates a pooling
arrangement for cash management purposes and at the end of the year the Group
had net debt across those pools of £9.3m (2021: £8.9m). Including the £6.5m
proceeds from Cory Brothers which were received on 2 March 2022, net bank debt
reduces to £2.8m. The Group's revolving credit facility ("RCF") liability was
previously reported as a short-term liability. However, a review of the
facility agreement has confirmed that the lender is obliged to continue the
facility for a period greater than 12 months from the respective reporting
date. The liability has therefore been restated as a non-current liability at
29 February 2020 and 28 February 2021.
Retirement benefits
The Group has a defined benefit pension scheme which was closed to new
members during the 2015/16 financial year. The scheme has a net liability of
£2.1m (2021: £3.8m), which is recorded on the balance sheet at 28 February
2022. The agreed annual scheme-specific funding since the triennial valuation
as at March 2014 was a cash contribution of £0.5m. The latest triennial
funding valuation as at March 2020 was carried out during the year and the
result was an unchanged annual employer cash contribution of £0.5m, which
was agreed with the trustees and is being paid in monthly instalments.
Foreign exchange
The US dollar exchange rate has moved from US$1.39/£1 at the start of the
year to US$1.34/£1 at the end of the year. A significant proportion of the
Group's revenue is earned in US dollars. To protect the future sterling value
of those revenues, at 28 February 2022, the Group held forward currency
contracts to sell US$53.8m at an average rate of US$1.37/£1.
An error in allocating amounts between the translation reserve and hedging
reserve has been identified. These reserves are both presented within other
reserves in the primary statements as detailed in Note 30. The hedging reserve
was understated and the translation reserve overstated by £0.5m at 29
February 2020. At 28 February 2021, the hedging reserve was understated and
the translation reserve overstated by £0.6m. These errors have been corrected
in the restated balance sheets at 28 February 2020 and 28 February 2021.
Taxation
The Group's underlying effective tax rate in relation to continuing
operations in FY21/22 was a charge of 21.2% (2021: charge of 31.4%) which is
broadly in line with the UK tax rate in the current year. The tax charge on
discontinued operations was £0.8m (2021: £0.2m).
Alternative profit measures ("APMs")
Braemar uses APMs as key financial indicators to assess the underlying
performance of the Group. Management considers the APMs used by the Group to
better reflect business performance and provide useful information to
investors and other interested parties. We have separated the impact of
individually material capital transactions, such as acquisitions
and disposals, from ongoing trading activity to allow a focus on ongoing
operational performance. Our APMs include underlying operating profit and
underlying earnings per share. Our prior year APMs have been restated to
reflect the reclassification of discontinued operations noted above.
Capital management
The Group manages its capital structure and adjusts it in response to changes
in economic conditions and its capital needs. To maintain or adjust the
capital structure, the Group may adjust the dividend payment to shareholders,
return capital to shareholders or issue new shares and debt instruments. The
Group has a policy of maintaining positive cash balances whenever possible,
which can be supported by short-term use of its revolving credit facility.
This is drawn down as required to provide cover against the peaks and troughs
in our working capital requirements.
ESOP Trust
During the previous year the Company requested that SG Kleinwort Hambros Trust
Company (CI) Ltd, as Trustee of the Company's ESOP Trust, purchase shares in
Braemar Shipping Services Plc. During the year a total of 2,740,164 shares in
the Company were purchased by the Trustee and 596,398 shares were released; as
a result, at 28 February 2022, the ESOP held 2,669,603 shares (2021: 525,837
shares). The total cash outflow as a result of these share purchases was
£6.3m (2021: £0.9m). Subsequent to the year end the ESOP purchased a further
1,670,000 shares. As at 10 August 2022 the ESOP held 4,339,603 shares and now
contains sufficient shares as are expected to be needed to cover all current
share awards as described in Notes 28 and 29 of the financial statements.
Dividend
The Directors are recommending for approval at the reconvened AGM on 6 October
2022 a final dividend of 7.0p per share. The interim dividend of 2.0p per
share in respect of the 6 months to 31 August 2021 was paid on 16 December
2021. The total dividend of 9.0p for the year is covered 3.1 times by the
underlying earnings per share from continuing operations of 27.95p. The total
cash outflow in respect of dividends paid during the year ended 28 February
2022 was £2.1m (2021: £nil).
Going concern
Particular care has been taken in preparing these accounts to the going
concern review and viability statement due to the ongoing geopolitical impacts
on global trade. The Group's compliance with sanctions put in place because of
the Russian/Ukraine conflict is not expected to have any material effect on
trading in the current financial year nor does the Group have any existing
material exposure. The strong cash flows exhibited during the year and the
Cory Brothers cash consideration received on 2 March 2022 have meant that the
Group is in a much stronger position than at the previous year-end.
Nevertheless, careful and frequent monitoring of cash forecasts and
client payments will be maintained to ensure this situation continues. The
Group's revolving credit facility is due to expire in September 2023, however
the Group has already received acceptable indicative terms for an extension
and expects discussions to be concluded well in advance of the expiration of
the current facility.
Nick Stone
Chief Financial Officer
28 August 2022
Consolidated Income Statement
For the year ended 28 February 2022
28 Feb 2022 28 Feb 2021 (Restated)
Continuing operations Notes Underlying £'000 Specific items Total Underlying Specific Total
£'000
£'000
£'000
items
£'000
£'000
Revenue 2 101,310 - 101,310 83,695 - 83,695
Operating expense:
Operating costs 3,8 (91,250) (392) (91,642) (75,976) (262) (76,238)
Acquisition-related expenditure 8 - (122) (122) - (835) (835)
Total operating expense (91,250) (514) (91,764) (75,976) (1,097) (77,073)
Operating profit/(loss) 10,060 (514) 9,546 7,719 (1,097) 6,622
Share of associate loss for the period 19 (19) - (19) - - -
Finance income 6 81 172 253 156 - 156
Finance costs 6 (1,237) - (1,237) (1,210) (432) (1,642)
Profit/(loss) before taxation 8,885 (342) 8,543 6,665 (1,529) 5,136
Taxation 7 (1,839) - (1,839) (1,772) 198 (1,574)
Profit from continuing operations 7,046 (342) 6,704 4,893 (1,331) 3,562
Profit/(loss) net of tax from discontinued operations 9 1,493 5,722 7,215 (513) 1,483 970
Profit attributable to equity shareholders of the Company 8,539 5,380 13,919 4,380 152 4,532
Total
Earnings per ordinary share
Basic 11 27.95p 45.56p 13.96p 14.45p
Diluted 11 22.78p 37.13p 11.55p 11.95p
Continuing operations
Earnings per ordinary share
Basic 11 23.06p 21.94p 15.60p 11.36p
Diluted 11 18.79p 17.88p 12.91p 9.40p
The year ended 28 February 2021 has been restated for prior period adjustments
(see Note 34) and the presentation of Cory Brothers and AqualisBraemar as
discontinued operations (See Note 9). As all of the Group's costs of sales
relate only to discontinued operations, neither cost of sales nor gross profit
is presented on the face of the income statement in respect of continuing
operations.
The accompanying notes form an integral part of these Financial Statements.
Consolidated Statement of Comprehensive Income
For the year ended 28 February 2022
Notes 28 Feb 2022 28 Feb 2021
£'000
Restated
£'000
Profit for the year 13,919 4,532
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
- Actuarial gain/(loss) on employee benefit schemes - net of tax 1,318 (424)
Items that are or may be reclassified to profit or loss:
- Foreign exchange differences on retranslation of foreign operations 538 719
- Cash flow hedges - net of tax 30 (1,968) 1,790
Other comprehensive income from continuing operations (112) 2,085
Discontinued operations
- Share of other comprehensive income/(expense) of associates 52 312
- Foreign exchange differences on revaluation of investment - (1,060)
- Recycling of foreign exchange reserve* 9, 19 408 471
Other comprehensive expense from discontinued operations 460 (277)
Total comprehensive income attributable to equity shareholders of the Company 14,267 6,340
The year ended 28 February 2021 has been restated for the presentation of Cory
Brothers and AqualisBraemar as discontinued operations (See Note 9) and for a
prior period adjustment (see Note 34).
* The recycling of foreign exchange reserve relates to the disposals of Cory
Brothers and AqualisBraemar (2021: Dilution and partial disposal of
AqualisBraemar). See Note 9 and Note 19.
The accompanying notes form an integral part of these Financial Statements.
Consolidated Balance Sheet
As at 28 February 2022
Note As at Restated Restated
28 Feb 2022
As at
As at
£'000
28 Feb 2021
1 Mar 2020
£'000
£'000
Assets
Non-current assets
Goodwill 12 79,891 83,955 83,812
Other intangible assets 13 997 2,129 2,411
Property, plant and equipment 16 7,078 9,841 11,928
Other investments 18 1,780 1,962 1,962
Investment in associate 19 724 3,763 7,315
Financial assets 22 - - 1,184
Derivative financial instruments 22 8 200 -
Deferred tax assets 7 3,713 2,900 3,620
Other long-term receivables 20 5,636 1,888 2,467
99,827 106,638 114,699
Current assets
Trade and other receivables 21 38,808 34,800 39,541
Financial assets 22 - 746 -
Derivative financial instruments 22 54 1,573 -
Cash and cash equivalents 23 13,964 14,111 28,749
Assets held for sale 9 - 436 -
52,826 51,666 68,290
Total assets 152,653 158,304 182,989
Liabilities
Current liabilities
Derivative financial instruments 22 688 - 437
Trade and other payables 24 38,629 45,647 47,209
Short-term borrowings 25 - - 25,116
Current tax payable 1,608 1,318 1,334
Provisions 26 486 307 201
Convertible loan notes 25, 34 1,416 4,461 4,444
Deferred consideration 25, 34 - - 177
Liabilities directly associated with assets classified as held for sale 9 - 125 -
42,827 51,858 78,918
Non-current liabilities
Long-term borrowings 25 28,331 31,634 34,585
Deferred tax liabilities 7 - 174 903
Derivative financial instruments 22 335 56 4
Provisions 26 797 690 765
Convertible loan notes 25, 34 2,755 2,681 2,639
Deferred consideration 25, 34 495 882 2,293
Pension deficit 27 2,052 3,819 3,672
34,765 39,936 44,861
Total liabilities 77,592 91,794 123,779
Total assets less total liabilities 75,061 66,510 59,210
Equity
Share capital 28 3,221 3,174 3,167
Share premium 28 53,030 52,510 52,510
ESOP reserve 29 (6,771) (1,362) (2,498)
Other reserves 30 27,124 28,094 25,862
Retained earnings (1,543) (15,906) (19,831)
Total equity 75,061 66,510 59,210
The balance sheets as at 28 February 2020 and 28 February 2021 have been
restated for a prior period adjustment, see Note 34 for more detail.
The Financial Statements were approved by the board of directors on 28 August
2022 and were signed on its behalf by:
James
Gundy
Nicholas Stone
Group Chief Executive Officer Chief Financial
Officer
Registered number: 02286034
Consolidated Cash Flow Statement
For the year ended 28 February 2022
Notes 28 Feb 2022 28 Feb 2021
restated
£'000
£'000
Profit before tax from continuing operations 8,543 5,136
Profit before tax from discontinued operations 9 8,081 1,196
Adjustment for non-cash transactions included in profit before tax
Depreciation and amortisation charges 13, 16 3,483 3,702
Loss on disposal of fixed assets 10 78
Share of profit in associate from continuing and discontinued operations 19 (56) (346)
Share scheme charges 2,894 1,820
Net foreign exchange gains of financial instruments - 334
Net finance cost 984 1,485
Fair value loss on warrants 8 - 438
Rights issue gain on shareholding in AqualisBraemar 8 - (826)
Gain on disposal of shares in AqualisBraemar 8, 9 (3,375) (1,758)
Gain on disposal of Cory Brothers 8, 9 (4,134) -
Gain on disposal of Wavespec 8, 9 (594) -
Loss on impairment of Wavespec receivable 8, 9 2,381 -
Impairment of right-of-use asset 8 392 210
Impairment of assets held for sale 9 - 432
Adjustment for cash items in other comprehensive income/expense
Contribution to defined benefit scheme 27 (450) (450)
Operating cash flow before changes in working capital 18,159 11,451
(Increase)/decrease in receivables (9,209) 5,132
Increase/(decrease) in payables 14,203 (1,894)
Increase in provisions 285 31
Cash flows from operating activities 23,438 14,720
Interest received 6 112 84
Interest paid 6 (592) (1,274)
Tax paid (2,161) (822)
Net cash generated from operating activities 20,797 12,708
Cash flows from investing activities
Purchase of property, plant and equipment 13, 16 (652) (502)
Purchase of other intangible assets 13 (515) (643)
Investment in associate 19 (326) (418)
Dividend received from associate 19 - 641
Disposal of Cory Brothers, net of cash disposed 9, 14 (12,353) -
Disposal of Wavespec, net of cash disposed 9 (53) -
Proceeds from disposal of investment in associate 19 7,232 5,983
Principal received on finance lease receivables 17 799 804
Net cash generated from/(used in) investing activities (5,868) 5,865
Cash flows from financing activities
Proceeds from borrowings 292 11,333
Repayment of principal under lease liabilities 17 (3,950) (3,928)
Repayment of revolving credit facility - (11,975)
Repayment of overdraft facilities - (25,116)
Dividends paid 10 (2,109) -
Purchase of own shares (7,043) (860)
Settlement of convertible loan notes 5 (2,596) (1,901)
Net cash used in financing activities (15,406) (32,447)
Decrease in cash and cash equivalents (477) (13,874)
Cash and cash equivalents at beginning of the period 23 14,164 28,749
Foreign exchange differences 277 (711)
Cash and cash equivalents at end of the period 23 13,964 14,164
Notes 28 Feb 2022 28 Feb 2021
restated
£'000
£'000
Cash and cash equivalents (continuing operations) 13,964 14,111
Cash and cash equivalents (included in assets held for sale) - 53
Total cash and cash equivalents at end of the period 13,964 14,164
The year ended 28 February 2021 has been restated for the presentation of Cory
Brothers and AqualisBraemar as discontinued operations and the impact of prior
year adjustments described in Note 34.
The accompanying notes form an integral part of these Financial Statements.
Statements of Changes in Total Equity
For the year ended 28 February 2022
Group Note Share Share ESOP reserve Other Retained earnings Total
capital
premium
£'000
reserves
£'000
equity
£'000
£'000
£'000
£'000
At 28 February 2020 3,167 55,805 (2,498) 22,279 (21,267) 57,486
Restatement 34 - (3,295) - 3,583 1,436 1,724
At 28 February 2020 (restated) 3,167 52,510 (2,498) 25,862 (19,831) 59,210
Profit for the year (restated) - - - - 4,532 4,532
Actuarial loss on employee benefits schemes - net of tax - - - - (424) (424)
Foreign exchange differences (restated) - - - 719 - 719
Cash flow hedges - net of tax - - - 1,790 - 1,790
Other comprehensive expense from discontinued operations - - - (277) - (277)
Other comprehensive expense - - - 2,232 (424) 1,807
Total comprehensive income (restated) 2,232 4,108 6,340
Shares issued 7 - - - (7) -
Acquisition of own shares - - (860) - - (860)
ESOP shares allocated - - 1,996 - (1,996) -
Share-based payments - - - - 1,820 1,820
Transactions with owners 7 - 1,136 - (183) 960
At 28 February 2021 (restated) 3,174 52,510 (1,362) 28,094 (15,906) 66,510
Profit for the year - - - - 13,919 13,919
Actuarial loss on employee benefits schemes - net of tax - - - - 1,318 1,318
Foreign exchange differences - - - 538 - 538
Cash flow hedges - net of tax - - - (1,968) - (1,968)
Other comprehensive expense from discontinued operations - - - 460 - 460
Other comprehensive expense - - - (970) 1,318 348
Total comprehensive income - - - (970) 15,237 14,267
Dividends 10 - - - - (2,109) (2,109)
Shares issued 28, 29 47 520 (25) - - 542
Acquisition of own shares - - (7,043) - - (7,043)
ESOP shares allocated - - 1,659 - (1,659) -
Share-based payments 28 - - - - 2,894 2,894
Transactions with owners 47 520 (5,409) - (874) (5,716)
At 28 February 2022 3,221 53,030 (6,771) 27,124 (1,543) 75,061
The accompanying notes form an integral part of these Financial Statements.
Notes to the Financial Statements
General information
The Group Financial Statements of Braemar Shipping Services Plc for the year
ended 28 February 2022 were authorised for issue in accordance with a
resolution of the directors on 28 August 2022. Braemar Shipping Services Plc
is a public limited company incorporated in England and Wales.
The term "Company" refers to Braemar Shipping Services Plc and "Group" refers
to the Company and all its subsidiary undertakings and the Employee Share
Ownership Plan trust.
1 Accounting policies
a) Basis of preparation and forward-looking statements
The financial information set out above does not constitute the Group's
statutory accounts for the years ended 28 February 2022 or 28 February 2021
but is derived from those accounts. Statutory accounts for 2021 have been
delivered to the registrar of companies, and those for 2022 will be delivered
in due course. The auditor has reported on those accounts; their reports
were (i) unqualified; (ii) did not include a reference to any matters to which
the auditor drew attention by way of emphasis without qualifying their report;
and (iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
The financial information included in this preliminary announcement has been
prepared in accordance with UK-adopted international accounting standards and
with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards. The Group expects to distribute full accounts
that comply with UK-adopted international accounting standards and with the
requirements of the Companies Act 2006.The Financial Statements have been
prepared under the historic cost convention except for items measured at fair
value as set out in the accounting policies below.
Certain statements in this Annual Report are forward-looking. Although the
Group believes that the expectations reflected in these forward-looking
statements are reasonable, we can give no assurance that these expectations
will prove to have been correct. These forward-looking statements involve
risks and uncertainties, so actual results may differ materially from those
expressed or implied by these forward-looking statements. We undertake no
obligation to update any forward-looking statements whether as a result of new
information, future events or otherwise.
The Group Financial Statements are presented in Sterling and all values are
rounded to the nearest thousand Sterling (£'000) except where otherwise
indicated.
On 31 December 2020, IFRS as adopted by the European Union at that date was
brought into UK law and became UK-adopted international accounting standards,
with future changes being subject to endorsement by the UK Endorsement Board.
The Group transitioned to UK-adopted international accounting standards in its
Consolidated Financial Statements on 1 March 2021. There was no impact or
changes in accounting policies from the transition.
New standards, amendments and interpretations effective for the financial year
beginning 1 March 2021
There were no new standards or amendments (including the amendments to IFRS 9,
IAS 39, IFRS 7 IFRS 4 and IFRS 16 in respect of Interest rate benchmark reform
IBOR "phase2") that were adopted in the annual Financial Statements for the
year ended 28 February 2022 which had a significant effect on the Group.
New standards, amendments and interpretations issued but not yet effective for
the financial year beginning 1 March 2021 and not early adopted
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning 1 March 2022:
- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to
IAS 37);
- Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16);
- Annual Improvements to IFRS Standards 2018-2020 (Amendments to
IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
- References to Conceptual Framework (Amendments to IFRS 3).
The following amendments are effective for the period beginning 1 March 2023:
- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2);
- Definition of Accounting Estimates (Amendments to IAS 8); and
- Deferred Tax Related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12).
The adoption of these standards and amendments is not expected to have a
material impact on the Financial Statements of the Group in future periods.
In January 2020, the IASB issued amendments to IAS 1, which clarify the
criteria used to determine whether liabilities are classified as current or
non-current. These amendments clarify that current or non-current
classification is based on whether an entity has a right at the end of the
reporting period to defer settlement of the liability for at least 12 months
after the reporting period. The amendments also clarify that "settlement"
includes the transfer of cash, goods, services, or equity instruments unless
the obligation to transfer equity instruments arises from a conversion feature
classified as an equity instrument separately from the liability component of
a compound financial instrument. The amendments were originally effective for
Annual Reporting periods beginning on or after 1 January 2022. However, in May
2020, the effective date was deferred to Annual Reporting periods beginning
on or after 1 January 2023.
The Group is currently assessing the impact of these new accounting standards
and amendments. The Group does not believe that the amendments to IAS 1 will
have a significant impact on the classification of liabilities.
b) Going concern
The Group and Company Financial Statements have been prepared on a going
concern basis. In reaching this conclusion regarding the going concern
assumption, the directors considered cash flow forecasts to 31 August 2023
which is 12 months from the date of signing of these Financial Statements and
coincides with the expiry of the Group's current bank facilities with HSBC.
A set of cash flow forecasts ('the base case') have been prepared by the
directors based on revenue and cost forecasts considered reasonable in the
light of work done on budgets for the current year and the current shipping
markets. Uncertainties related to the conflict in the Ukraine, around
forecasting success fees in the Naves business, the need to continue
purchasing shares for the employee trust, COVID and climate change and note
the following:
• The Group's compliance with sanctions put in place as a result
of the conflict in the Ukraine is not expected to have any material effect on
trading FY22/23 nor does the Group have any existing material exposure.
• Forecasting success fee revenue involves uncertainties in terms
of both timing and actual closure of transactions but current levels of
transaction activity in the industry suggests that there won't be a
significant decline in the going concern period and indeed one large
transaction has already closed this year.
• The ESOP now contains sufficient shares as are expected to be
needed to cover all current share awards that have not yet vested as described
in Notes 28 and 29 to these accounts. This is on the assumption that the
majority of recipients elect to sell sufficient shares back to the trust
immediately in order to settle their tax liability as they have done in the
past.
• The effects of COVID are nothing like those that were the case
in the previous two years, despite some disruptions still prevalent,
particularly in Asia. However, these are not expected to have a material
impact on trading in the going concern period.
• The impact of climate change is not expected to have any
material impact on the business in the short-term and indeed could lead to
additional opportunities.
The directors have concluded therefore that none of these factors are likely
to have a significantly adverse impact on the Group's future cash flows.
The Group's balance sheet has been strengthened significantly due to the
strong trading and disposals of non-core assets during the year. As at 28
February 2022 the Group's net bank debt was £9.3m with available headroom in
the £30.0m revolving credit facility ("RCF") of £6.7m but following receipt
of the initial consideration from the sale of Cory Brothers on 2 March 2022
that net bank debt had reduced to £2.8m. As at 31 July 2022 the Group had net
bank debt of £7.1m with available headroom in the RCF of £5.7m and cash
balances of £17.2m. Employee bonuses are paid in May each year and bank debt
tends to be at a high point following those bonus payments and associated
payroll taxes.
Notes 31 July 2022 28 Feb 2022 £m
£m
Secured revolving credit facilities 25 (24.3) (23.3)
Cash 23 17.2 14.0
Net debt (7.1) (9.3)
The RCF has a number of financial covenant tests that must be adhered to. At
the start of the year the financial covenant relating to debt to 12 months
rolling EBITDA was 3.5x after May 2022 the covenant was reduced to 3x until
the facility expires in September 2023. At 31 May 2022 and for the year
ended 28 February 2022 the Group met all financial covenant tests. During
FY21/22 the directors have discussed the extension of the RCF with the Group's
main bankers, HSBC, and have received acceptable indicative terms for such an
extension. It is intended that these discussions will be concluded well in
advance of the expiry of the current facility.
The cash flow forecasts in the base case assessed the ability of the Group to
operate both within the banking covenants and the facility headroom, and
included a number of downside sensitivities on the budgeted revenue, including
a reverse stress test scenario. The directors consider revenue as the key
assumption in the Group's forecasts. The remaining costs are largely fixed or
made up of discretionary bonuses, predominately within the Shipbroking
Division and which are directly linked to profitability. Based on two flex
scenarios; a revenue decrease of 7.5% and a revenue decrease of 15% from the
base case no mitigations were necessary to meet banking covenants.
A reverse stress test was also performed to ascertain the point at which the
covenants would be breached in respect of the key assumption of forecast
revenue decline. This test indicated that the business, alongside certain
mitigating actions which are fully in control of the directors, would be
capable of withstanding a reduction of approximately 41% in budgeted revenue
from the base case assumptions from September 2022 through to August 2023. In
light of current trading, forecasts and the Group's performance over FY21/22
the directors having assessed this downturn in revenue and concluded the
likelihood of such a reduction to be remote, such that it does not impact the
basis of preparation of the Financial Statements and there is no material
uncertainty in this regard.
c) Basis of consolidation
The consolidated Financial Statements incorporate the Financial Statements of
the Braemar Shipping Services Plc and all its subsidiaries made up to
28 February each year or 29 February in a leap year.
The results of subsidiaries are consolidated using the purchase method of
accounting, from the date on which control of the net assets and operation of
the acquired company are effectively transferred to the Group. Similarly, the
results of subsidiaries divested cease to be consolidated from the date on
which control of the net assets and operations are transferred out of the
Group.
All intercompany balances and transactions have been eliminated in full.
d) Use of estimates and critical judgements
The preparation of the Group's Financial Statements requires management to
make judgements, estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and the disclosure of contingent
liabilities, at the reporting date. Estimates and judgements are continually
evaluated based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from these
estimates and assumptions.
The following are key areas where the Group typically makes judgements
involving estimates:
Estimates
The key assumptions concerning the future, and other key sources of estimation
uncertainty at the balance sheet date, that may have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are discussed below.
Impairment of goodwill
Goodwill is tested for impairment on an annual basis, and the Group will also
test for impairment at other times if there is an indication that an
impairment may exist. Determining whether goodwill is impaired requires an
estimation of the value-in-use of the cash-generating units to which these
assets have been allocated. The value-in-use calculation estimates the
present value of future cash flows expected to arise for the cash-generating
unit. The key estimates are therefore the selection of suitable discount rates
and the estimation of future growth rates which vary between cash-generating
units depending on the specific risks and the anticipated economic and market
conditions related to each cash generating unit (see Note 12 for a description
of the approach used by management to determine these key values). Climate
change risk has been taken into account in determining the underlying inputs
used in calculations used for impairment reviews and is not considered to have
a material impact on the value in use calculations.
Fair value of Cory Brothers deferred and contingent consideration receivable
On 28 February 2022 the Company sold Cory Brothers to Vertom Agencies BV for
maximum consideration of £15.5m. Initial cash proceeds of £6.5m were
received on completion of the transaction, and three contractual "earn-out"
payments will be made, being an agreed percentage of the future gross profits
of the combined VertomCory business over three subsequent earn out periods.
Each of the three earn-out payments are subject to minimum and maximum amounts
which are specified in the share purchase agreement.
The minimum earnout consideration has been classified as deferred
consideration receivable. The minimum amount is specified in the SPA and is
therefore not an estimate, however an estimate of a discount rate is necessary
to discount the deferred consideration receivable to fair value. A discount
rate of 2.39% was used to calculate the net present value, this was based on
the credit risk of Vertom Agencies BV following a credit check performed by
management. Deferred consideration receivable is initially recognised at fair
value and subsequently measured at amortised cost. The current estimate of the
fair value of the deferred consideration receivable is £3.6m
The balance of the earnout consideration, up to the maximum specified in the
SPA has been classified as contingent consideration receivable because it is
contingent on the future profitability of the combined business. The fair
value of the contingent consideration receivable involves two critical
estimates; the future profitability of the combined business and the discount
rate used to calculate the net present value. The future profitability
forecasts are based on a business plan prepared by the combined VertomCory
business and was reviewed by management as part of the financial due diligence
process. The discount rate used to calculate the net present value was also
2.39%. Contingent consideration receivable is initially recognised at fair
value and subsequently measures at fair value through profit and loss.
See Note 9 for further details, including a sensitivity analysis of the
contingent consideration receivable to the discount rate and the assumptions
of future profitability.
Recoverability of deferred tax assets
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered. See Note 7.
Share option vesting
The fair value determined at the grant date of the equity-settled share-based
payments is typically expensed on a straight-line basis over the vesting
period, based on the Group's estimate of the number of equity instruments that
will eventually vest. At each reporting date, the Group revises its estimate
of the number of equity instruments expected to vest as a result of the effect
of non-market based vesting conditions. The impact of the revision of the
original estimates, if any, is recognised in profit or loss such that the
cumulative expense reflects the revised estimate, with a corresponding
adjustment to reserves. See Note 28.
Provision for impairment of trade receivables and accrued income
Trade receivables and accrued income are amounts due from customers in the
ordinary course of business. Trade receivables and accrued income are
classified as current assets if collection is due within one year or less (or
in the normal operating cycle of the business if longer). If not, they are
presented as non-current assets.
The provision for impairment of trade receivables and accrued income
represents management's best estimate at the Balance Sheet date. A number of
judgements are made in the calculation of the provision, primarily the age of
the invoice, the existence of any disputes, recent historical payment patterns
and the debtor's financial position.
The application of IFRS 9 "Financial Instruments" results in an additional
provision for expected credit losses. When measuring expected credit losses,
the Group uses reasonable and supportable forward-looking information, which
is based on assumptions for the future movement of different economic drivers
and how these drivers will affect each other. Probability of default
constitutes a key input in measuring expected credit losses. Probability of
default is an estimate of the likelihood of default over a given time horizon,
the calculation of which includes historical data, assumptions and
expectations of future market conditions. See Note 20.
The Group has considered the impact of both COVID and the conflict in the
Ukraine on the Financial Statements at 28 February 2022. However, at
28 February 2022 there was no evidence to suggest that the Group's trade
receivables may be at a higher risk of becoming credit impaired as a result of
COVID or the conflict in the Ukraine. No impairment allowances were made in
respect of either COVID or the conflict in the Ukraine.
Valuation of defined benefit pension scheme
The Group uses an independent actuary to provide annual valuations of the
defined benefit pension scheme. The actuary uses a number of estimates in
respect of the scheme membership, the valuation of assets and assumptions
regarding discount rates, inflation rates and mortality rates. The membership
details are provided by an independent trustee while the valuation of assets
is verified by an independent fund manager. The discount rates, inflation
rates and mortality rates are reviewed by management for reasonability. See
Note 27.
Judgements
Naves prior year adjustment
For details of judgements made relating to the prior year adjustment, see Note
34.
Wavespec
Fair value of consideration
In the year ended 28 February 2022, the sale of Wavespec, the Group's
Engineering Division, completed for a maximum consideration of £2.6m. The
fair value of the consideration is a critical accounting judgement.
The consideration was due to be satisfied by the issuance of a promissory note
with a maturity date of 31 March 2026. The fair value of the consideration
was based on the net present value of the promissory note (£2.4m). A discount
rate of 2.11% was used to calculate the net present value. The discount rate
was made up of two elements, the first being a 5 year BBB+ bond yield of
1.51%, the second being a premium for lack of marketability at 0.60%. A 5 year
BBB+ bond yield was used because it matches the maturity of the promissory
note and reflects the credit rating of the bank that was expected to provide
the letter of credit.
Impairment
As at 28 February 2022, the buyer had not delivered on its obligations to
secure the promissory note and therefore management have made a judgement that
the promissory note is unlikely to be honoured and consequently the fair value
of the consideration is impaired and a credit loss of £2.4m has been recorded
within discontinued operations.
Measurement of right-of-use assets and liabilities
The Group determines the lease term as the non-cancellable term of the lease,
together with any periods covered by an option to extend the lease if it is
reasonably certain to be exercised, or any period covered by an option to
terminate the lease, if it is reasonably certain not to be exercised. The
Group has several lease contracts that include extension and termination
options. Management applies judgement in evaluating whether it is reasonably
certain whether or not to exercise the option to renew or terminate the lease.
That is, it considers all relevant factors that create an economic incentive
for the Group to exercise either the renewal or termination option. After the
commencement date, the Group reassesses the lease term if there is a
significant event or change in circumstances that is within its control and
affects its ability to exercise or not to exercise the option to renew or to
terminate the lease. See Note 17.
Revenue recognition
IFRS 15 "Revenue from Contracts with Customers" requires judgement to
determine whether revenue is recognised at a "point in time" or "over time"
as well as determining the transfer of control for when performance
obligations are satisfied.
For Shipbroking, the Group has defined the performance obligation to be the
point in time where the negotiated contract between counterparties has been
successfully completed, and therefore revenue is recognised at this point in
time. This is a critical judgement since revenue recognition would differ if
the performance obligations were deemed to be satisfied at a different point
in time.
Classification and recognition of specific items
The Group excludes specific items from its underlying earnings measure. The
directors believe that such additional performance measures can provide the
users of the Financial Statements with a better understanding of the Group's
underlying financial performance, if properly used. Management judgement is
required as to what items qualify for this classification. There can also be
judgement as to the point at which costs should be recognised and the amount
to record to ensure that the understanding of the underlying performance is
not distorted. Specific items include the results from discontinued
operations. See Note 8.
Climate‐related risks and opportunities
Management have considered the impact of climate related risks in respect of
impairment of goodwill, recoverability of receivables and the recoverability
of deferred tax assets in particular and do not consider that
climate‐related risks have a material impact on any key judgements,
estimates or assumptions in the consolidated financial statements.
During FY21/22 climate change was assessed as part of ongoing discussions of
key and emerging risks for the Group and the shipping and energy sectors
within which it operates. Consideration of the potential short to medium-term
impact of Environment and Climate Change risk resulted in its inclusion as a
Group Principal Risk this year.
e) Revenue recognition
Revenue is recognised in accordance with satisfaction of performance
obligations. Revenue of the Group consists of:
i) Shipbroking desks - income comprises commission arising from tanker
and dry cargo charter broking, sale and purchase broking, offshore broking and
consultancy, valuation fees and fees relating to the facilitation of commodity
and commodity derivatives. The Group acts as a broker for several types of
shipping transactions, each of which gives rise to an entitlement to
commission:
Deep sea tankers, specialised tankers and gas, dry cargo and offshore:
- for single voyage chartering, the contractual terms are governed
by a standard charterparty contract in which the broker's performance
obligation is satisfied when the cargo has been discharged according to the
contractual terms;
- for time charters, the commission is specified in the hire
agreement and the performance obligation is spread over the term of the
charter at specified intervals in accordance with the charter party terms;
Sale and purchase:
- in the case of second-hand sale and purchase contracts, the
broker's performance obligation is satisfied when the principals in the
transaction complete on the sale/purchase and the title of the vessel passes
from the seller to the buyer;
- with regard to newbuilding contracts, the commission is recognised
when contractual stage payments are made by the purchaser of a vessel to a
shipyard which in turn reflects the performance of services over the life of
the contract;
- for income derived from providing ship and fleet valuations, the
Group recognises income when a valuation certificate is provided to the client
and the service is invoiced; and
Securities:
- for income derived from commodity broking, the commission is
recognised when the services have been performed.
ii) Financial - income comprises retainer fees and success fees
generated by corporate finance related activities. Revenue is recognised in
accordance with the terms agreed in individual client terms of engagement.
Recurring monthly retainers are recognised in the month of invoice and success
fees are recognised at the point when the performance obligations of the
particular engagement are fulfilled.
iii) Logistics - the performance obligation for agency income is satisfied
at the point in time when the vessel sails from the port. For forwarding and
logistics income the performance obligation is satisfied when the goods depart
from their load location. Where the Group acts as a principal rather than as
agent, the revenue and costs are shown gross.
At the Balance Sheet date, there may be amounts where invoices have not been
raised but performance obligations have been satisfied, and these are
recognised as accrued income. The movement in the asset between years is due
to the invoicing of all prior year assets and the accrual of amounts relating
to the current year.
Dividend income from investments is recognised when the shareholders' legal
rights to receive payment have been established with certainty.
f) Government grants
Government grants are netted against the cost incurred by the Group. When
retention of a government grant is dependent on the Group satisfying certain
criteria, it is initially recognised as deferred income and released to the
Income Statement once the criteria for retention have been satisfied. See Note
3.
g) Foreign currencies
The presentational currency of the Group is Sterling. Transactions in
currencies other than Sterling are recorded at the rates of exchange
prevailing on the date of the transaction. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in
foreign currency are recognised in the Income Statement.
In order to hedge its exposure to certain foreign exchange risks, the Group
enters into derivative financial instruments contracts, mainly forward
contracts and other derivative currency contracts (see Note 1(p)).
Assets and liabilities of overseas subsidiaries, branches and associates are
translated from their functional currency into Sterling at the exchange rates
ruling at the Balance Sheet date. Trading results are translated at the
average rates for the period. Exchange differences arising on the
consolidation of the net assets of overseas subsidiaries are dealt with
through the foreign currency translation reserve (see Note 30), whilst those
arising from trading transactions are dealt with in the Income Statement. On
disposal of a business, the cumulative exchange differences previously
recognised in the foreign currency translation reserve relating to that
business are transferred to the Income Statement as part of the gain or loss
on disposal.
h) Taxation
The taxation expense represents the sum of the current and deferred tax.
The tax currently payable is based on taxable profit for the period. Taxable
profit differs from net profit as reported in the Income Statement because it
excludes items of income and expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group and Company's liability for current tax is calculated using rates that
have been enacted or substantively enacted by the Balance Sheet date.
Full provision is made for deferred taxation on all taxable temporary
differences. Deferred tax assets and liabilities are recognised separately on
the Balance Sheet. Deferred tax assets are recognised only to the extent that
they are expected to be recoverable. Deferred taxation is recognised in the
Income Statement unless it relates to taxable transactions taken directly to
equity, in which case the deferred tax is also recognised in equity. The
deferred tax is released to the Income Statement at the same time as the
taxable transaction is recognised in the Income Statement. Deferred taxation
on unremitted overseas earnings is provided for to the extent a tax charge is
foreseeable.
i) Goodwill
Business combinations are accounted for using the purchase method.
On the acquisition of a business, fair values are attributed to the net assets
(including any identifiable intangible assets) acquired. Goodwill arises where
the fair value of the consideration given exceeds the fair value of the net
assets acquired. Goodwill is recognised as an asset and is reviewed for
impairment at least annually. Impairments are recognised immediately in
operating costs in the Income Statement. Goodwill is allocated to
cash-generating units for the purposes of impairment testing. On the disposal
of a business, goodwill relating to that business remaining on the Balance
Sheet is included in the determination of the profit or loss on disposal. As
permitted by IFRS 1, goodwill on acquisitions arising prior to 1 March 2004
has been retained at prior amounts and is tested annually for impairment.
In relation to acquisitions where the fair value of assets acquired exceeds
the fair value of the consideration, the excess fair value is recognised
immediately in the Income Statement.
j) Intangible assets
Computer software
The Group capitalises computer software at cost. It is amortised on a
straight-line basis over its estimated useful life of up to four years. The
carrying value of intangible assets with a finite life is reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying value may not be recoverable.
Development costs
The Group capitalises internally generated development costs when it is able
to demonstrate:
- the technical feasibility of completing the intangible asset so
that it is subsequently available for use;
- that there is a clear intention that the intangible asset would be
completed and then used;
- that it is able to use the intangible asset;
- that future economic benefits are probable;
- that there are adequate technical, financial and other resources
to complete the development and to use the asset; and the expenditure
attributable to the intangible asset during its development can be reliably
measured.
The Group amortises development on a straight‑line basis over its estimated
useful economic life of up to 3 years. See Note 13.
Research costs are expensed as incurred.
Other intangible assets
Intangible assets acquired as part of a business combination are stated in the
Balance Sheet at their fair value at the date of acquisition less accumulated
amortisation and any provisions for impairment. The amortisation of the
carrying value of the capitalised forward order book and customer
relationships is charged to the Income Statement over an estimated useful life
of the lesser of two to ten years or when based on historical attrition rates.
The amortisation in respect of capitalised brand assets is expensed to the
Income Statement over an estimated useful life of three years.
The carrying values of intangible assets are reviewed for impairment at least
annually or when there is an indication that they may be impaired.
k) Property, plant and equipment
Property, plant and equipment are shown at historical cost less accumulated
depreciation and any impairment value.
Depreciation is provided at rates calculated to write off the cost, less
estimated residual value of each asset, on a straight-line basis over its
expected useful life as follows (except for long and short leasehold interests
which are written off against the remaining period of the lease):
Motor vehicles - three years
Computers - four years
Fixtures and equipment - four years
l) Leases
The Company has various lease arrangements for properties, and other
equipment. At inception of a lease contract, the Company assesses whether
the contract conveys the right to control the use of an identified asset for a
certain period of time and whether it obtains substantially all the economic
benefits from the use of that asset, in exchange for consideration. The
Company recognises a lease liability and a corresponding right-of-use asset
with respect to all lease arrangements in which it is a lessee, except
low-value leases and short-term leases of 12 months or less, costs for which
are recognised as an operating expense within the income statement as they are
incurred.
A right-of-use asset is capitalised on the balance sheet at cost which
comprises the present value of future lease payments determined at the
inception of the lease adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred in addition to an
estimate of costs to remove or restore the underlying asset. Where a lease
incentive is receivable, the amount is offset against the right-of-use asset
at inception. Right-of-use assets are depreciated using the straight-line
method over the shorter of the estimated life of the asset or the lease term
and are reviewed for impairment to account for any loss when events or changes
in circumstances indicate the carrying value may not be fully recoverable.
The lease liability is initially measured at amortised cost using the
effective interest rate method to calculate the present value of future lease
payments and is subsequently increased by the associated interest cost and
decreased by lease payments made. The effective interest rate is based on
estimates of relevant incremental borrowing costs. Lease payments made are
apportioned between an interest charge and a capital repayment amount which
are disclosed within the financing activities and the operating activities
sections of the consolidated statement of cash flows respectively. Lease
payments comprise fixed lease rental payments only, with the exception of
property leases for which the associated fixed service charge is also
included. Lease liabilities are classified between current and non-current on
the balance sheet.
The lease term comprises the non-cancellable period in addition to the
determination of the enforceable period which is covered by an option to
extend the lease, where it is reasonably certain that the option will be
exercised.
A modification to a lease which changes the lease payment amount (e.g. due to
a renegotiation or market rent review) or amends the term of the lease,
results in a reassessment of the lease liability with a corresponding
adjustment to the right-of-use asset.
m) Investments
Investments in associates and joint ventures where the Group has joint control
or significant influence are accounted for under the equity method.
Investments in associates are initially recognised in the Consolidated Balance
Sheet at cost. Subsequently associates are accounted for under the equity
method, where the Group's share of post-acquisition profits and losses and
other comprehensive income is recognised in the Income Statement and Statement
of Comprehensive Income.
Profits and losses arising on transactions between the Group and its
associates are recognised only to the extent of unrelated investors' interests
in the associate. The investor's share in the associate's profits and losses
arising from these transactions is eliminated against the carrying value of
the associate.
Where the Group's share of the associate's identifiable net assets is greater
than the cost of investment, a gain on bargain purchase is recognised in the
Income Statement and the carrying value of the investment in the Consolidated
Balance Sheet is increased.
When the Group's investment in associates or joint ventures is diluted the
Group recognises a profit or loss on the book value of the investment that is
derecognised along with any recycling of foreign exchange previously
recognised in other comprehensive income. On a rights issue the Group
remeasures its share of net assets and recognises a corresponding gain.
When the Group disposes of shares in associates or joint ventures the Group
recognises a profit or loss on disposal based on the net proceeds less the
weighted average cost of the shares disposed of. On disposal the Group
reclassifies foreign exchange amounts previously recognised in other
comprehensive income relating to that reduction in ownership interest if that
gain or loss would be required to be reclassified to profit or loss on the
disposal of the related assets or liabilities.
The most recent Financial Statements of an associate are used for accounting
purposes unless it is impractical to do so. Where the Group and an associate
have non-coterminous reporting dates the associate's full-year accounts will
be used for the purposes of the Group's reporting at 28 February with
adjustments made for any significant transactions or events.
Where there is objective evidence that the investment in an associate has been
impaired, the carrying amount of the investment is tested for impairment in
the same way as other non-financial assets.
Investments where the Group has no significant influence are held at fair
value, with movements in fair value recorded in profit and loss.
n) Impairment
The carrying amount of the Group's assets, other than financial assets within
the scope of IFRS 9 and deferred tax assets, are reviewed at each Balance
Sheet date to determine whether there is an indication of impairment. If any
such indication exists, or annually for goodwill, the asset's recoverable
amount is estimated. The recoverable amount is determined based on the higher
of value-in-use calculations and fair value less costs to sell, which requires
the use of estimates. An impairment loss is recognised in the Income
Statement whenever the carrying amount of the assets exceeds its recoverable
amount.
Where an impairment loss subsequently reverses, the carrying amount of the
assets, with the exception of goodwill, is increased to the revised estimate
of its recoverable amount. This cannot exceed the carrying amount prior to the
impairment charge. An impairment recognised in the Income Statement in respect
of goodwill is not subsequently reversed.
o) Deferred and contingent consideration receivables
Contingent consideration receivables are initially recognised at fair value
and are subsequently remeasured at their fair value at each Balance Sheet
date. The resulting gain or loss is recognised immediately in the income
statement. Contingent consideration receivables are classified as level 3 in
accordance with the fair value hierarchy specified by IFRS 13. See Notes 14
and 22.
p) Derivative financial instruments and hedging
Derivatives are initially recognised at fair value and are subsequently
remeasured at their fair value at each Balance Sheet date. Recognition of the
resulting gain or loss depends on whether the derivative is designated as a
hedging instrument and, if it is, the nature of the item being hedged. Changes
in the fair value of derivatives that do not qualify for hedge accounting are
recognised immediately in the Income Statement. The Group designates
derivatives that qualify for hedge accounting as a cash flow hedge where there
is a high probability of the forecast transactions arising. The Group has
applied the IFRS 9 hedge accounting model since 1 March 2020. The effective
portion of changes in the fair value of these derivatives is recognised in
equity. The gain or loss relating to the ineffective portion is recognised
immediately in the Income Statement. Amounts accumulated in equity are
recycled to the Income Statement at the same time as the gains or losses on
the hedged items. When a forecast transaction is no longer expected to occur,
the cumulative gains or losses that were reported in equity are immediately
transferred to the Income Statement.
To qualify for hedge accounting, the terms of the hedge must be clearly
documented at inception and there must be an expectation that the derivative
will be highly effective in offsetting changes in the cash flow of the hedged
risk. Hedge effectiveness is tested throughout the life of the hedge and if at
any point it is concluded that the relationship can no longer be expected to
remain highly effective in achieving its objective, the hedge relationship is
terminated.
The hedging instruments and the hedged transactions offset each other in
currency terms and in amounts, meaning there is a clear economic relationship
between the hedging instrument and hedged item as required under IFRS 9.
Thereby, management qualitatively demonstrate that the hedging instrument and
the hedged items will move equally in the opposite direction. Additionally,
the credit rating of the counterparty to the derivatives is high, so the
effect of credit risk is considered as neither material nor dominant in the
economic relationship.
When a hedging instrument expires or is sold, terminated or exercised, or the
entity revokes designation of the hedge relationship but the hedged forecast
transaction is still expected to occur, the cumulative gain or loss at that
point remains in equity and is recognised in accordance with the above policy
when the transaction occurs.
The fair value of forward foreign exchange contracts is based either directly
(i.e. as prices) or indirectly (i.e. derived from prices) at the Balance Sheet
date.
Financial assets are initially recognised at fair value and are subsequently
measured at fair value through profit or loss at each Balance Sheet date.
Financial assets and liabilities are classified in accordance with the fair
value hierarchy specified by IFRS 13. See Note 21.
q) Trade receivables and accrued income
Trade receivables and accrued income are recognised and carried at the lower
of their original value less impairment. Specific provision is made where
there is evidence that the balances will not be recovered in full. A provision
for expected credit losses is made for trade receivables and accrued income
using the simplified approach. A provision matrix is used to calculate an
expected credit loss as a percentage of carrying value by age. The percentages
were determined based on historical credit loss experience as well as
forward-looking information. Expected credit loss provisions are made for
other receivables based on lifetime expected credit losses using a model that
considers forward-looking information and significant increases in credit
risk.
Trade and other receivables are non-interest bearing and generally on terms
payable within 30 to 90 days.
r) Cash and cash equivalents
Cash and cash equivalents included in the Balance Sheet comprise cash in hand,
short-term deposits with an original maturity of three months or less and
restricted cash.
Cash and cash equivalents included in the Cash Flow Statement include cash and
short-term deposits. Bank overdrafts are included in the Balance Sheet within
short-term borrowings.
s) Provisions
Provisions are recognised when the Group has a present obligation (legal or
otherwise) as a result of a past event and it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation. If material, the provisions are discounted using an appropriate
current post-tax interest rate.
Short-term provisions for long service leave expected to be settled wholly
within 12 months of the reporting date are measured at the amounts expected to
be paid when the liabilities are settled.
The provision for long service leave not expected to be settled within 12
months of the reporting date is measured at the present value of expected
future payments to be made in respect of services provided by employees up to
the reporting date. Consideration is given to expected future wage and salary
levels, experience of employee departures and periods of service. Expected
future payments are discounted using market yields at the reporting date on
corporate bonds with terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
t) Share-based payments
The Group operates a number of equity-settled share-based payment schemes.
During the year the Company operated employee save-as-you-earn option schemes
called the Braemar Shipping Services Plc Savings-Related Share Option Scheme
2014 (the "SAYE Scheme") and the Braemar Shipping Services Plc International
Savings-Related Share Option Scheme 2019 (the "International SAYE Scheme"). No
option may be granted under either scheme which would result in the total
number of shares issued or remaining issuable under all of the schemes (or any
other Group share schemes), in the ten-year period ending on the date of grant
of the option, exceeding 10% of the Company's issued share capital (calculated
at the date of grant of the relevant option). Options are granted at up to a
20% discount to the prevailing market price.
In 2005 the Company put in place a Deferred Bonus Plan (the "Plan") whereby
part of the annual performance-related bonus is delivered in shares, on a
discretionary basis, to staff including executive directors. Under the Plan
the shares are bought and held in an employee trust ("ESOP") until vesting,
which will normally occur after three years from the date of grant, subject to
the employee beneficiary remaining in employment with the Group, at which time
the award will be settled by the transfer of shares to the beneficiary.
Shares are valued at fair value at the date of grant.
The Company adopted a new Deferred Bonus Plan in May 2020 (the "New DBP"),
pursuant to which future discretionary bonus awards will be granted to staff
including executive directors. Awards under the New DBP may be linked to an
option granted under the new Braemar Company Share Option Plan 2020, which was
also adopted by the Company in May 2020 (the "New CSOP"). Where an employee
receives a linked award under the New DBP, where the Company's share price
rises over the vesting period, the New CSOP award can be exercised with the
value of shares delivered on the vesting of the New DBP award being reduced by
the exercise gain on the New CSOP award. Awards under the New DBP and the New
CSOP may be settled by the issue of new shares of by way of transfer of shares
from the ESOP. Historic practice has been to settle via the transfer of shares
from the ESOP and it is the current intention to continue to operate in this
manner.
During the year ended 28 February 2015, the Company established a Restricted
Share Plan ("RSP"). This scheme was set up to grant awards to certain key
staff to try to retain them following the merger between Braemar and ACM
Shipping Group Plc, but it can also be used where the Remuneration Committee
considers it necessary to secure the recruitment of a particular individual.
Executive directors of the Company are not eligible to participate in the RSP.
RSP awards are made in the form of a nil cost option and there are no
performance criteria other than continued employment.
The Company also operates an LTIP, which was approved by shareholders and
adopted in 2014. LTIP awards under this plan take the form of a conditional
right to receive shares at nil cost. The awards normally vest over three years
and are subject to a performance condition such as earnings per share
("EPS").
Share options granted under the Save as you earn schemes are valued using a
binomial pricing model. All other share awards are nil cost options and
their fair value is approximated to the share price at the time of grant less
the expected dividend to be paid during the vesting period.
The value of awards granted under the Deferred Bonus Plan each year are
related to the profits generated in the previous year. The cost of the award
is therefore expensed from the beginning of that profit period until the
vesting date which is usually 3 years after the date of award. Awards made
to new joiners are expensed over the period from date of joining to date of
vesting. The quantum of the charge made for each set of awards is calculated
on the value of the shares granted, reduced by the expected attrition rate.
The Group may provide a net settlement feature, whereby it withholds the
number of equity instruments equal to the monetary value of the employee's tax
obligation arising from the exercise (or vesting) of the award if the total
number of shares that otherwise would have been issued to the employee. The
Group has no contractual obligation to provide a net settlement option, and
therefore the award is still accounted for as an equity settled award in full
and the value of the shares foregone by the employee is accounted for as a
deduction from equity.
An Employee Share Ownership Plan ("ESOP") was established on 23 January
1995. The ESOP has been set up to purchase shares in the Company. These
shares, once purchased, are held in trust by the Trustee of the ESOP, SG
Kleinwort Hambros Trust Company (CI) Limited, for the benefit of the
employees. Additionally, an Employee Benefit Trust ("EBT") previously run by
ACM Shipping Group plc also holds shares in the Company. The ESOP and EBT
are accounted for within the Company accounts.
The net cost of the shares acquired for the shares held by the ESOP and the
EBT are a deduction from shareholders' funds and represent a reduction in
distributable reserves. Note 29 provides detail on the ESOP and the EBT and
movements in shares to be issued.
u) Commissions payable
Commissions payable to co-brokers are recognised in trade payables due within
one year on the earlier of the date of invoicing or the date of receipt of
cash.
v) Long-term employee benefits
The Group has the following long-term employee benefits:
i) Defined contribution schemes
The Group operates a number of defined contribution schemes. Pension costs
charged against profits in respect of these schemes represent the amount of
the contributions payable to the schemes in respect of the accounting period.
The assets of the schemes are held separately from those of the Group within
independently administered funds. The Group has no further payment obligations
once the contributions have been paid.
ii) Defined benefit schemes
The Group holds a defined benefit scheme, the ACM Staff Pension Scheme, with
assets held separately from the Group. The cost of providing benefits under
the scheme is determined using the projected unit credit actuarial valuation
method which measures the liability based on service completed and allowing
for projected future salary increases and discounted at an appropriate rate.
The current service cost, which is the increase in the present value of the
retirement benefit obligation resulting from employee service in the current
year, and gains and losses on settlements and curtailments, are included
within operating profit in the Income Statement. The unwinding of the discount
rate on the scheme liabilities which is shown as a net finance cost and past
service costs are presented and recognised immediately in the Income
Statement.
The pension liabilities recognised on the Balance Sheet in respect of this
scheme represents the difference between the present value of the Group's
obligations under the scheme and the fair value of the scheme's assets.
Actuarial gains or losses and return on plan assets excluding interest are
recognised in the period in which they arise within the Statement
of Comprehensive Income.
iii) Other long-term benefits
The current service cost of other long-term benefits resulting from employee
services in the current year is included within the Income Statement. The
unwinding of any discounting on the liabilities is shown in net finance costs.
w) Borrowings and loan notes
Arrangement costs for loan facilities are capitalised and amortised over the
life of the debt at a constant rate.
Finance costs are charged to the Income Statement, based on the effective
interest rate of the associated external borrowings and debt instruments.
The convertible loan notes are considered to be a financial liability host
with an embedded derivative convertible feature which is required to be
separated from the host. The Group has an accounting choice to record the
instrument in its entirety at fair value through profit and loss but has not
chosen to apply this treatment. Instead, the financial liability host will be
recognised as a Euro liability initially recognised at fair value and
prospectively accounted for applying the effective interest rate method. The
derivative conversion feature will be recognised at fair value through profit
and loss. Where there are conversion options that can be exercised within one
year the liability is recognised as current.
Modification of terms of financial liability
When the terms of an existing financial liability are modified, management
will consider both quantitative and qualitative factors to assess whether the
modification is substantial. In the case that the modification of the terms of
existing financial liability is considered to be substantial, the modification
shall be accounted for as an extinguishment of that financial liability and
the recognition of a new financial liability. If the modification is not
considered substantial, then the existing financial liability is remeasured in
accordance with its original classification and any gain or loss is recognised
immediately in the Income Statement.
x) Segmental analysis
The Group's segmental analysis previously recognised four segments, being the
Shipbroking, Financial, Logistics and Engineering Divisions. Two business
segments have been disposed of during the year, the Logistics Division (Cory
Brothers) and the Engineering Division (Wavespec). The prior year
comparatives have been restated for the presentation of Cory Brothers as
discontinued operations together with Wavespec. The restated segmental
analysis is based on its two continuing business segments: the Shipbroking and
Financial Divisions. The segmental analysis is consistent with the way the
Group manages itself and with the format of the Group's internal financial
reporting.
The second analysis is presented according to the geographic markets,
comprising the UK, Singapore, the US, Australia, Germany and the Rest of the
World. The Group's geographical segments are determined by the location of the
Group's assets and operations.
y) Specific items
Specific items are significant items considered material in size or nature,
including acquisition and disposal-related gains and losses. These are
disclosed separately to enable a full understanding of the Group's ongoing
financial performance.
z) Non-current assets held for sale and discontinued operations
A non-current asset or a group of assets, such as a disposal group, is
classified as held for sale if its carrying amount will be recovered
principally through sale rather than through continuing use, it is available
for immediate sale and sale is highly probable within one year.
On initial classification as held for sale, non-current assets and disposal
groups are measured at the lower of previous carrying amount and fair value
less costs to sell with any adjustments taken to profit or loss.
A discontinued operation is a component of the Group's business that
represents a separate line of business or geographical area of operations that
has been disposed of or is held for sale, or is a subsidiary acquired
exclusively with a view to resale. Classification as a discontinued operation
occurs upon disposal or when the operation meets the criteria to be classified
as held for sale, if earlier. When an operation is classified as a
discontinued operation, the comparative Income Statement is restated as if
the operation has been discontinued from the start of the comparative period.
aa) Contingent assets (javascript%3A;)
Contingent assets are not recognised but are disclosed where an inflow of
economic benefits is probable.
2 Segmental information and revenue
a) Business segments
Following the disposal of the Engineering and Logistics Divisions during the
period, there are now two operating segments within the Group, which each
provide different services to the shipping industry, being Shipbroking and
Financial. They are managed separately because each business requires
different technology and resources to deliver its strategy. The reports
reviewed by the Chief Operating Decision Maker to make strategic decisions are
disaggregated by Division. The Chief Operating Decision Maker is the Group's
board of directors. The Logistics and Engineering Divisions were disposed of
during the year and have been presented as discontinued operations.
The board considers the business from both service line and geographic
perspectives.
Central costs relate to board costs and other costs associated with the
Group's listing on the London Stock Exchange. All segments meet the
quantitative thresholds required by IFRS 8 as reportable segments.
Underlying operating profit is defined as operating profit for continuing
activities before restructuring costs, gain on disposal of investment and
acquisition and disposal-related items.
Sales between and within business segments are carried out on an arm's-length
basis.
The segmental information provided to the board for reportable segments for
the year ended 28 February 2022 is as follows:
Revenue Operating profit/(loss)
2022 2021 2022 2021
Restated*
Restated*
£'000
£'000
£'000
£'000
Shipbroking 94,659 77,727 12,422 10,068
Financial 6,651 5,968 1,798 1,034
Trading segments revenue/results 101,310 83,695 14,220 11,102
Central costs (4,160) (3,383)
Underlying operating profit 10,060 7,719
Specific items included in operating expenses (514) (1,097)
Operating profit 9,546 6,622
Share of associate's loss for period (19) -
Net finance expense (984) (1,486)
Profit before taxation 8,543 5,136
* The year ended 28 February 2021 has been restated for the presentation of
Cory Brothers and AqualisBraemar as discontinued operations and prior period
errors. See Note 9 and Note 34.
Geographical segment - by origin
The Group manages its business segments on a global basis. The operation's
main geographical area and also the home country of the Company is the United
Kingdom.
Geographical information determined by location of customers is set out below:
Revenue Non-current assets
2022 2021 2022 2021
Restated
Restated
£'000
£'000
£'000
£'000
United Kingdom 54,524 51,664 68,122 67,804
Singapore 19,423 13,691 949 1,275
United States 972 663 262 28
Australia 12,565 7,159 334 303
Germany 2,488 3,585 25,592 25,640
Rest of the World 11,338 6,933 855 1,042
Continuing operations 101,310 83,695 96,114 96,092
Discontinued operations 45,215 28,083 - 7,646
Total 146,525 111,778 96,114 103,738
b) Revenue analysis
The Group disaggregates revenue into Shipbroking and Financial in line with
the segmental information presented above and also by desk. Revenue analysed
by desk is provided below.
2022 2021
Restated
£'000
£'000
Tankers 17,837 26,251
Specialised Tankers 11,622 10,949
Dry Cargo 29,789 15,230
S&P 19,646 15,019
Offshore 3,776 2,728
Securities 11,989 7,550
Shipbroking 94,659 77,727
Financial 6,651 5,968
Total continuing operations 101,310 83,695
All revenue arises from the rendering of services. There is no single customer
that contributes greater than 10% of the Group's revenue.
Remaining performance obligations
The Group enters into some contracts, primarily in Shipbroking which are for a
duration longer than 12 months and where the Group has outstanding performance
obligations on which revenue has not yet been recognised. The amount of
revenue that will be recognised in future periods on these contracts when
those remaining performance obligations will be satisfied is set out below:
Forward order book
2022 Within 1-2 years £'000 More than Total
12 months
2 years
£'000
£'000
£'000
Sale and purchase 6,584 1,832 924 9,340
Chartering 15,724 3,211 9,057 27,992
Total 22,308 5,043 9,981 37,332
2021 Within 1-2 years More than Total
12 months
£'000
2 years
£'000
£'000
£'000
Sale and purchase 3,594 1,337 290 5,221
Chartering 13,994 4,483 7,385 25,862
Total 17,588 5,820 7,675 31,083
3 Operating profit from continuing operations
Operating profit represents the results from operations before finance income
and costs, share of profit/(loss) in associate, taxation and discontinued
operations.
This is stated after charging/(crediting):
Notes 2022 2021
Restated
£'000
£'000
Staff costs 4 75,814 60,783
Depreciation of property, plant and equipment 16 2,834 2,894
Amortisation of intangibles 13 262 313
Bad debt charge/(credit) 21 747 (170)
Auditor's remuneration 5 960 793
Other professional costs 2,782 2,028
Office costs 1,600 875
IT and communication costs 2,507 2,144
Insurance 875 700
Net foreign exchange (gains)/losses (432) 76
Specific items included in operating profit (see Note 8) (514) (1,097)
Staff costs are stated after netting off grants totalling £0.1m (2021:
£0.8m) against staff costs for continuing operation detailed in Note 4. The
grants were received from both the Singaporean Government and the Australian
Government during COVID. All criteria for the retention of both grants have
been satisfied and therefore the full amount has been recognised in the Income
Statement.
4 Staff costs
a) Staff costs for the Group during the year (including directors)
Notes 2022 2021
Restated
£'000
£'000
Salaries, wages and short-term employee benefits 68,043 55,282
Other pension costs 27 1,613 1,514
Social security costs 3,347 3,009
Share-based payments 28 2,951 1,788
Continuing operations 75,954 61,593
Discontinued operations 8,344 8,384
Total 84,298 69,977
The prior period numbers have been restated to present Cory Brothers and
AqualisBraemar within discontinued operations. The numbers above include
remuneration and pension entitlements for each director.
b) Average number of full-time employees
2022 2021
Restated
number
number
Shipbroking 322 323
Financial 22 23
Central 18 13
Continuing operations 362 359
Discontinued operations 190 178
Total 552 537
The directors' remuneration is borne by Braemar Shipping Services Plc.
c) Key management compensation
The remuneration of key management is set out below. Key management represents
the board of the Company.
2022 2021
£'000
£'000
Salaries, short-term employee benefits and fees 3,484 3,410
Other pension costs 41 68
Share-based payments 521 71
Total 4,046 3,549
Retirement benefits are accruing to three (2021: three) members of key
management in respect of a defined contribution pension scheme.
5 Auditor's remuneration
A more detailed analysis of the auditor's services is given below:
2022 2021
£'000
£'000
Audit services
- Fees payable to the Company's auditor for audit of the Company and Group 540 288
Financial Statements
Fees payable to the Group's auditor and its associates for other services:
- The audit of the Group's subsidiaries pursuant to legislation 334 435
- Other service - interim review 86 70
960 793
All fees paid to the auditor were charged to operating profit in both years.
6 Finance income and costs
Note 2022 2021
Restated
£'000
£'000
Finance income:
- Gain on modification of deferred consideration 8 172 -
- Interest on bank deposits 9 70
- Interest on IFRS 16 lease receivables 72 86
Total finance income 253 156
Finance costs:
- Interest payable on rolling credit and pooled overdraft facilities (758) (912)
- Interest payable on pooled overdraft facilities (98) (107)
- Interest payable on convertible loan notes (52) (214)
Subtotal finance costs before IFRS 16 lease liabilities (908) (1,233)
- Interest on IFRS 16 lease liabilities (329) (409)
Total finance costs (1,237) (1,642)
Finance costs - net (continuing operations only) (984) (1,486)
The finance costs for the prior year have been restated (see Note 34), and the
analysis of the finance income and expenses has been amended.
7 Taxation
a) Analysis of charge in year
2022 2021
Restated
£'000
£'000
Current tax
UK corporation tax charged to the Income Statement - -
UK adjustment in respect of previous years 335 355
Overseas tax on profits in the year 3,432 2,003
Overseas adjustment in respect of previous years (517) (136)
Total current tax 3,250 2,222
Deferred tax
UK current year origination and reversal of temporary differences 377 (909)
Due to change in rate of tax (473) (96)
UK adjustment in respect of previous years (41) 573
Overseas current year origination and reversal of temporary differences (95) (385)
Overseas adjustment in respect of previous years (313) 395
Total deferred tax (545) (422)
Taxation 2,705 1,800
Taxation on continuing operations 1,839 1,574
Taxation on discontinued operations 866 226
Taxation 2,705 1,800
Included within the UK current year origination and reversal of temporary
differences is a credit of £348,000 (2021: £100,000 debit on actuarial gain)
in respect of deferred tax on the actuarial loss on the Group's defined
benefit pension scheme.
Reconciliation between expected and actual tax charge 2022 2021
£'000
Restated
£'000
Profit before tax from continuing operations 8,543 5,136
Profit before tax at standard rate of UK corporation tax of 19% (2021: 19%) 1,623 976
Utilisation of deferred tax asset at lower effective tax rate 69 (185)
Net expenses not deductible for tax purposes 843 202
Utilisation of previously unrecognised losses (478) (73)
Tax on overseas branch 234 -
Tax calculated at domestic rates applicable to profits in overseas 392 292
subsidiaries
Other differences leading to a (decrease)/increase in tax 4 -
Temporary differences* 93 (1,187)
Prior year adjustments** (941) 1,549
Total tax charge for the year 1,839 1,574
*Included within temporary differences are movements related to share options,
cash flow hedges and IFRS 16.
** Included within Prior year adjustments is release of overprovided
corporation tax creditor of £0.8m in respect of Singapore following a tax
rate change from 17.0% to 10.5%.
The year ended 28 February 2021 has been restated for the presentation of Cory
Brothers and AqualisBraemar as discontinued operations. Included within the
total tax charge is £0.5m (2021: £0.2m) in respect of specific items
disclosed separately on the face of the Income Statement. See Note 8.
A tax charge of £0.3m (2021: £nil) is included in the results for
discontinued operations as a result of the trading loss contained therein (see
Note 9). This tax charge arose mainly as a result of the trading profits of
Cory Brothers.
Reconciliation between expected and actual tax charge 2022
£'000
2021
Restated
£'000
Profit before tax from discontinued operations 8,081 1,196
Profit before tax at standard rate of UK corporation tax of 19% (2021: 19%) 1,535 227
Due to change in rate of tax 6 23
(Net gains)/net expenses not (taxable)/deductible for tax purposes (1,098) 882
Utilisation of losses (74) (177)
Other differences leading to (decrease)/increase in tax 3 -
Temporary differences* 88 (367)
Other prior year adjustments 406 (362)
Total tax charge/(credit) for the year 866 226
b) Amounts recognised in OCI
2022 2021
Restated
£'000
£'000
Items that will not be reclassified to profit or loss
Actuarial gain/(loss) in respect of defined benefit pension scheme 1,391 (524)
Deferred tax asset on defined benefit pension scheme (348) 100
Movement in opening balance due to change in rate of tax 275 -
Sub-total (73) 100
-
Total 1,318 (424)
Items that will be reclassified to profit or loss
Cash flow hedge (2,482) 2,210
Deferred tax liability on cash flow hedge 620 (420)
Movement in opening balance of tax due to change in rate of tax (106) -
Sub-total 514 (420)
Total (1,968) 1,790
Total tax recognised in OCI 441 (320)
Total amounts recognised in OCI (650) 1,366
c) Deferred tax asset
Deferred Tax )/Asset
Accelerated Capital Allowances Trading Losses Other provisions Employee Benefits
Total
At 1 March 2020 573 316 2,331 400 3,620
(Charge)/Credit to Statement of Total Comprehensive income (493) 430 (1,255) 918 (400)
Credit to equity - - (320) - (320)
At 28 February 2021 80 746 756 1,318 2,900
Charge to Statement of Total Comprehensive income (128) (498) 428 569 371
Charge to equity - - 442 - 442
Balance at end of year (48) 248 1,626 1,887 3,713
The movement in the deferred tax asset 2022 2021
£'000
Restated
£'000
Balance at beginning of year 2,900 3,620
Movement to Income Statement
Adjustments in respect of prior years 180 (968)
Movement in opening balance due to change in rate of tax 25%/19% 472 200
Arising on pension costs (94) 28
Arising on other (187) 340
Total movement to Income Statement 371 (400)
Movement to equity and other comprehensive income
Movement in opening balance due to change in rate of tax 25%/19% 169 -
Related deferred tax asset 273 (320)
Total movement to equity and other comprehensive income 442 (320)
Balance at end of year 3,713 2,900
A deferred tax asset of £3.7m (2021: £2.9m) has been recognised as the
directors believe that it is probable that there will be sufficient taxable
profits in the future to recover the asset in full.
d) Deferred tax liability
Analysis of the deferred tax liabilities As at As at
28 Feb 2022 29 Feb 2021
£'000 £'000
Temporary differences - (174)
Balance at end of year - (174)
The movement in the deferred tax liability As at As at
28 Feb 2022 28 Feb 2021
£'000 £'000
Balance at beginning of year (174) (903)
Movement in opening balance due to change in rate of tax - (104)
Adjustment in respect of previous years 174
Movement to Income Statement - 833
Balance at end of year - (174)
No deferred tax has been provided in respect of temporary differences
associated with investments in subsidiaries and interests in joint ventures
where the Group is in a position to control the timing of the reversal of the
temporary differences and it is probable that such differences will not
reverse in the foreseeable future. The aggregate amount of temporary
differences associated with investments in subsidiaries, for which a deferred
tax liability has not been recognised, is approximately £0.1m (2021: £0.1m).
8 Specific items
The following is a summary of specific items incurred. Each item meet the
definition of specific items detailed in Note 1y), and has an impact on the
reported results for the year that is considered material either by size or
nature and is not expected to be incurred on an ongoing basis and, as such,
will not form part of the underlying profit in future years.
2022 2021
Restated
£'000
£'000
Other operating costs
Impairment of ROU assets (392) (210)
(Loss)/profit on sublet of office - (52)
(392) (262)
Acquisition-related items
- Acquisition of Naves Corporate Finance GmbH (122) (552)
- Naves tax reimbursement - 115
- Acquisition of ACM Shipping Group plc - (115)
- Acquisition of Atlantic Brokers Holdings Limited - (283)
(122) (835)
Discontinued operations
- Wavespec (1,787) (754)
- Cory Brothers 4,134 -
- AqualisBraemar 3,375 2,237
5,722 1,483
Other items
Finance income - credit on modification of deferred consideration 172 -
Finance costs - (432)
Taxation - 198
Total 5,380 152
Other operating costs
In the year, a loss of £0.4m was recognised in other operating costs arising
from the impairment to a right-of-use asset in respect of a London office
which was vacated by AqualisBraemar LOC ASA (see Note 16 for more details).
In the prior year there was an impairment charge of £0.3m, of which £0.2m
arose on the same London office and £0.1m loss on disposal in respect of the
Group subletting a portion of its Singapore office space to AqualisBraemar LOC
ASA.
Acquisition-related items
The Group incurred total costs of £0.1m (2021 restated: £0.8m) in respect of
acquisition-related items.
Expenditure of £0.1m (2021: £0.6m) is directly linked to the acquisition of
Naves Corporate Finance GmbH. This includes charges of £0.1m (2021: £0.1m)
related to foreign exchange translation of Euro liabilities The prior year
expenditure linked to the acquisition of Naves Corporate Finance GmbH also
included charges of £0.3m in respect of interest and £0.4m of
post-acquisition remuneration payable to certain vendors under the terms of
the acquisition agreement., and a credit of £0.1m which was included in
respect of a reimbursement from the sellers of certain expenses incurred by
the Financial Division prior to acquisition.
In the prior year, expenditure of £0.1m was incurred in relation to the
restricted share plan implemented to retain key staff following the merger
between Braemar Shipping Services Plc and ACM Shipping Plc. The restricted
share plan expired in July 2020 and no further amounts were charged to the
income statement.
Also in the prior year expenditure of £0.3m was directly linked to the
acquisition of Atlantic Brokers Holdings Limited in respect of incentive
payments to working sellers. The cash payment was made in the year to 28
February 2018 but was subject to clawback provisions if the working sellers
were to leave employment of the Group before 28 February 2021. The cost was
charged to the income statement over the clawback period and no further
amounts were charged to the income statement after 28 February 2021.
Discontinued operations
The Group recognised a net gain of £5.7m on the disposal of discontinued
operations (2021: £1.5m).
Gains on the disposal of Cory Brothers, AqualisBraemar and Wavespec of £4.1m,
£3.4m and £0.6m respectively, were offset by an impairment charge of £2.4m
on the consideration due in respect of Wavespec. See Note 9.
Other specific items
On 3 June 2021 the Group completed a restructuring of the deferred
consideration amounts in relation to the acquisition of Naves. This resulted
in a gain on modification of £0.2m which is classified as specific finance
income (see Note 14).
In the prior year £0.4m of interest charges related to the Group's revolving
credit facility were included in finance costs. These charges relate to
interest payable on tranches of the revolving credit facility that were used
to fund the acquisition of Naves Corporate Finance GmbH. This interest
charge is not considered to be a specific item in the current year.
In the prior year, a tax credit of £0.2m was recognised in respect of
specific items which are allowable for UK corporation tax purposes.
9 Discontinued operations
During the year the Group has sold its Engineering Division, Wavespec, its
Logistics Division, Cory Brothers, and its entire shareholding in
AqualisBraemar.
a) Post-tax profit / loss related to discontinued operations
2022 2021
Restated
Underlying Specific Total Underlying Specific Total
£'000
£'000
£'000
£'000
£'000
£'000
Wavespec (146) (1,787) (1,933) (1,706) (754) (2,460)
Cory Brothers 1,563 4,134 5,697 938 - 938
AqualisBraemar 76 3,375 3,451 255 2,237 2,492
Profit / (loss) 1,493 5,722 7,215 (513) 1,483 970
Wavespec
On 31 March 2021, the Group completed the sale of Wavespec, which was
classified as held for sale at 28 February 2021. A gain of £0.6m was
recognised on disposal. The sale was for maximum consideration of £2.6m which
was expected to be satisfied by the issuance of a promissory note with a
maturity date of 31 March 2026. The disposal agreement contained an obligation
for the buyer to secure the note by providing a standby letter of credit
issued by an international bank with an acceptable credit rating. Should they
fail to deliver such a letter of credit, the Group could elect to receive a
sum of cash of £0.5m from the buyer with the balance of the note of £2.1m
remaining unsecured. The fair value of the consideration was £2.4m (see Note
14 for details of assessment of discount rate). At 28 February 2022, the buyer
had not delivered a secured letter of credit nor had the cash sum of £0.5m
been received. Management believe that the consideration (fair value of
£2.4m) is unlikely to be received and consequently has been provided in full
(charge of £2.4m).
Year ended Year ended
28 Feb 2022
28 Feb 2021
£'000
£'000
Underlying
Revenue 15 1,661
Costs (161) (3,367)
Trading loss before tax (146) (1,706)
Taxation - -
Underlying loss for the year from Wavespec (146) (1,706)
Specific items
Impairment to fair value and other disposal costs (7) (754)
Gain on disposal 594 -
Credit impairment charge (2,374) -
Loss from specific items (1,787) (754)
Loss for the year from Wavespec (1,933) (2,460)
No taxation arises in relation to this discontinued operation as Wavespec was
loss making.
A reconciliation of the derecognition of the Wavespec assets held for sale to
gain on disposal is as follows:
£'000
Intangibles 90
Property plant and equipment 1
Cash 53
Trade and other receivables 292
Trade and other payables (271)
Net assets held for sale disposed of 165
£'000
Disposal proceeds 2,374
Net assets disposed of (165)
Loan waiver (1,006)
Disposal related costs (609)
Gain on disposal of Wavespec 594
Intercompany loans totalling £1.0m were owed to the Group from Wavespec were
waived on disposal.
There were no cash proceeds from disposal in the period.
Cory Brothers
On 28 February 2022 the Company sold Cory Brothers to Vertom Agencies BV for a
maximum consideration of £15.5 million.
Although legal completion occurred on 28 February 2022, the initial cash
proceeds of £6.5 million were not received till post year-end and are
presented within trade and other receivables at the year end (see Note 21).
In addition, three further cash payments are due based on a percentage of the
gross profit of the combined VertomCory business. Each of the three earnout
payments is subject to a minimum and a maximum. The minimum aggregate earnout
payment is £3.75 million and the maximum aggregate earnout payment is £9.0
million. The current estimate of the fair value of the deferred and
contingent consideration is £4.8 million, which is presented within long-term
receivables (more detail on the calculation of the deferred consideration is
included in Note 14).
The profit on disposal including foreign exchange recycling totalled £4.2m.
Year ended Year ended
28 Feb 2022
28 Feb 2021
£'000
£'000
Underlying
Revenue 45,215 28,083
Costs (42,759) (26,892)
Trading profit before tax 2,456 1,191
Finance income 9 14
Finance expense (36) (41)
Profit before taxation 2,429 1,164
Taxation (866) (226)
Underlying profit from Cory Brothers 1,563 938
Specific items
Gain on disposal 4,134 -
Total profit from Cory Brothers 5,697 938
A reconciliation of the derecognition of the Cory Brothers assets held for
sale to gain on disposal is as follows:
£'000
Goodwill 3,645
Intangibles 1,190
Property plant and equipment 1,220
Investments 119
Cash 12,353
Trade and other receivables 15,110
Trade and other payables (27,042)
Net assets held for sale disposed of 6,595
£'000
Disposal proceeds 11,258
Net assets disposed of (6,595)
Disposal related costs (492)
FX recycling (37)
Gain on disposal of Cory Brothers 4,134
The disposal proceeds of £11.3 million are included on the Balance Sheet as
follows:
- £6.5m of completion cash proceeds recognised in current other
receivables, see Note 21. The cash was received on 2 March 2022.
- £3.6m of deferred consideration recognised in non-current other
receivables, see Note 20. Deferred consideration receivable comprises of the
minimum earnout consideration due to the Group as per the SPA and is not
contingent on the future performance of the VertomCory business.
- £1.2m of contingent consideration recognised in non-current other
receivables, see Note 20. Contingent consideration receivable represents the
balance of the earnout consideration above the guaranteed minimum and up to a
maximum specified in the SPA which is contingent on the future gross profits
of the VertomCory business.
A sensitivity analysis of the contingent consideration to changes in the gross
profits and discount rate is provided in Note 14.
AqualisBraemar
The Group recognised its minority shareholding in AqualisBraemar as an
investment in associate until its disposal on 19 May 2021.
The Group's share of profit of associate and the profit on disposal including
foreign exchange recycling totalled £3.5m, the disposal of 9,600,000 shares
in AqualisBraemar LOC ASA in the preceding year gave rise to a gain of £1.8m
(see Note 19). In the prior year the Group recognised a gain of £0.8m on a
rights issue from AqualisBraemar LOC ASA and a loss of £0.4m on the fair
value movement of warrants to acquire further shares in AqualisBraemar. There
was a matching gain recognised in the financial statements of AqualisBraemar,
and the Group's share of this gain was £0.1m and is also presented within
specific items.
Year ended Year ended
28 Feb 2022
28 Feb 2021
£'000
£'000
Underlying
Share of associate profit for the period - trading 76 255
Specific items
Gain on rights issue - 826
Share of associate profit for the period - fair value movement in warrants - 91
Movement in fair value on warrants - (438)
Profit on disposal 3,375 1,758
Profit from specific items 3,375 2,237
Total profit for the period from AqualisBraemar 3,451 2,492
b) Earnings per share in respect of discontinued operations
The basic and diluted earnings per share in respect of discontinued operations
were as follows:
Year ended Year ended
28 Feb 2022 28 Feb 2021
Basic earnings per share 23.62p 3.09p
Diluted earnings per share 19.24p 2.56p
c) Cash flows in respect of discontinued operations
During the year the discontinued operations had net operating cash inflows of
£7.3m (2021: net operating cash outflows of £4.3m). There were net cash
outflows of £4.7.m (2021: nil) relating to investing activities, which
includes the £7.2m proceeds from the sale of AqualisBraemar shares less the
combined cash of £12.4m held within Wavespec and Cory Brothers at the time of
their disposal. No cash proceeds were received in the period in respect of
the disposal of either Wavespec or Cory Brothers.
d) Assets and liabilities held for sale
The major classes of assets and liabilities comprising the operations held for
sale are as follows:
Year ended Year ended
28 Feb 2022 £'000
28 Feb 2021 £'000
Intangibles - 90
Property plant and equipment - 1
Cash - 53
Trade and other receivables - 292
Assets held for sale - 436
Trade and other payables - (125)
Liabilities directly associated with assets classified as held for sale - (125)
Net assets of discontinued operations - 311
All assets and liabilities held for sale at 28 February 2021 related to
Wavespec. An impairment to fair value less costs to sell of £432,000 was
pro-rated across intangibles and property, plant and equipment at
28 February 2021.
10 Dividends
Amounts recognised as distributions to equity holders in the year:
2022 2021
£'000 £'000
Ordinary shares of 10 pence each
Final dividend of 5.0 pence per share for the year ended 28 February 2021 1,499 -
(2020: nil)
Interim dividend of 2.0 pence per share (2021: nil) 610 -
2,109 -
The dividends paid by the Group during the year ended 28 February 2022
totalled £2.1 million (7.0 pence per share) which comprised a final dividend
in respect of the year ended 28 February 2021 of £1.5 million (5.0 pence per
share) paid on 1 September 2021 and an interim dividend for the year ended 28
February 2022 of £0.6 million (2.0 pence per share) paid on 16 December
2021. The right to receive dividends on the shares held in the ESOP has been
waived (see note 29). The dividend saving through the waiver is £0.1m
(2021: £nil). No dividends were paid by the Group during the year ended 28
February 2021.
The Company has become aware of an administrative oversight during the year
ended 28 February 2022, whereby the Company did not properly prepare and file
unaudited interim accounts at Companies House, as required by the Companies
Act 2006, prior to declaring and paying distributions to shareholders in
respect of the Company's 1 September 2021 final dividend and 16 December 2021
interim dividend. As a result of this administrative oversight, the Company
did not comply with certain provisions of the Act and, whilst there were
sufficient distributable reserves to make the relevant distributions, they
were therefore paid in technical infringement of the Act. Neither the amount
nor payment of the relevant distributions, nor the Company's prior audited
accounts, are affected by this, nor is there any impact on the Company's
financial position either at the time of payment(s) or now.
The Company has proposed a resolution to be considered when the Annual General
Meeting re-convenes on 6 October 2022 which will, if passed, give the board
authority to enter into deeds of release to discharge these parties from any
obligation to repay any amount to the Company in connection with the Relevant
Distributions. The Company has not recorded the potential right to make claims
against shareholders as an asset or a contingent asset in its financial
statements. The directors of the Company have concluded that any inflow of
economic benefits as a result of such claims is less than probable.
For the year ended 28 February 2022, a final ordinary dividend of 7.0 pence
per share has been proposed totalling £2.3 million.
11 Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year, excluding 2,731,893 ordinary shares held by the
Employee Share Ownership Plan (2021: 588,127 shares) which are treated as
cancelled.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive ordinary shares.
The Group has one class of dilutive ordinary shares, being those options
granted to employees where the exercise price is less than the average market
price of the Company's ordinary shares during the year. The Group has other
potential dilutive ordinary shares, including convertible loan notes, however
these are not currently dilutive because the exercise price is less than the
Group's current share price.
Total operations 2022 2021
Restated
£'000 £'000
Profit for the year attributable to shareholders 13,919 4,532
Pence pence
Basic earnings per share 45.56 14.45
Effect of dilutive share options (8.43) (2.50)
Diluted earnings per share 37.13 11.95
Underlying operations 2022 2021
Restated
£'000 £'000
Underlying profit for the year attributable to shareholders 8,539 4,380
pence pence
Basic earnings per share 27.95 13.96
Effect of dilutive share options (5.17) (2.41)
Diluted earnings per share 22.78 11.55
Underlying continuing operations 2022 2021
Restated
£'000 £'000
Underlying profit for the year from continuing operations 7,046 4,893
pence pence
Basic earnings per share 23.06 15.60
Effect of dilutive share options (4.27) (2.69)
Diluted earnings per share 18.79 12.91
Continuing operations 2022 2021
Restated
£'000 £'000
Profit from continuing operations for the year attributable to shareholders 6,704 3,562
pence pence
Basic earnings per share 21.94 11.36
Effect of dilutive share options (4.06) (1.96)
Diluted earnings per share 17.88 9.40
The weighted average number of shares used in basic earnings per share is
30,552,532 (2021: 31,366,379).
The weighted average number of shares used in the diluted earnings per share
is 37,490,784 (2021: 37,914,547) after adjusting for the effect of 6,938,253
(2021: 6,548,168) dilutive share options.
12 Goodwill
£'000
Cost
At 29 February 2020 91,471
Exchange adjustments 143
At 28 February 2021 91,614
Disposal of Cory Brothers (3,645)
Exchange adjustments (419)
At 28 February 2022 87,550
Accumulated impairment
At 28 February 2022 and 28 February 2021 7,659
Net book value at 28 February 2022 79,891
Net book value at 28 February 2021 83,955
All goodwill is allocated to cash-generating units. The allocation of goodwill
to cash-generating units is as follows:
2022 2021
£'000 £'000
Shipbroking 68,696 68,696
Financial 11,195 11,614
Logistics - 3,645
79,891 83,955
These cash-generating units represent the lowest level within the Group at
which goodwill is monitored for internal management purposes.
All goodwill is denominated in the Group's reporting currency, with the
exception of the Financial Division which is denominated in Euros. Goodwill
denominated in foreign currencies is revalued at the Balance Sheet date. The
exchange adjustment at 28 February 2022 was a loss of £419,000
(2021: gain of £143,000).
The Logistics Division, Cory Brothers, was disposed of on 28 February 2022,
the goodwill previously held in respect of this cash-generating unit was
therefore disposed of. See Note 9.
The Group is required to test, on an annual basis, whether goodwill has
suffered any impairment. The recoverable amount is determined based on
value-in-use calculations. The use of this method requires the estimation of
future cash flows and the determination of a discount rate in order to
calculate the present value of the cash flows. The results of the impairment
tests are as follows:
a) Shipbroking
The post-tax discount rate was determined from the post-tax weighted average
cost of capital calculation which was not based on an entity-specific capital
structure.
The estimated cash flows were based on the approved annual budget for the next
financial year and projections for the following four years which are based on
management's estimates of revenue growth and cost inflation which reflect past
experience and management's expectation of future events given the specific
risks and economic and market conditions of each cash-generating unit. Cash
flows have been used over a period of five years as management believes this
reflects a reasonable time horizon for management to monitor the trends in the
business. After five years a terminal value is calculated using a long-term
growth rate of 1.7% (2021: 1.0%) Revenue growth rates have increased year on
year for Shipbroking reflecting increased inflation. The key assumptions
and resulting net present values are as follows:
Shipbroking 2022 2021
Post-tax discount rate 10.87% 9.10%
Equivalent pre-tax discount rate 13.19% 10.76%
Average revenue growth rate 5.0% 3.0%
Operating profit margin years 2-5 12.5 - 16.1% 11.2 - 21.9%
At 28 February 2022, the net present value of the Shipbroking Division is
significantly higher than the carrying value of the goodwill in respect of
this cash-generating unit. At the Balance Sheet date, management concluded
that there were no reasonably possible changes in the key assumptions used in
the impairment review that would reduce headroom to nil or result in an
impairment.
b) Financial
The post-tax discount rate for the Financial Division includes an additional
premium of 1.5% to reflect the Group's risk assessment of this cash-generating
unit, for which revenues are harder to forecast than in the rest of the Group.
The estimated cash flows were based on the approved annual budget for the next
financial year and projections for the following four years which are based on
management's estimates of revenue growth and cost inflation which reflect past
experience and management's expectation of future events given the specific
risks and economic and market conditions of each cash-generating unit. Cash
flows have been used over a period of five years as management believes this
reflects a reasonable time horizon for management to monitor the trends in the
business. After five years a terminal value is calculated using a long-term
growth rate of 1.7% (2021: 0.6%). Revenues for the Financial Division are
challenging to forecast because of the highly variable nature of this revenue
stream. Growth rates used in the value in use tests reflect this variability
and were based on the best estimates of the senior management team in
Financial. There is expected to be one year in the following four where there
is a decline in performance during which time future deals will be entered
into to secure the following years as well as one exceptional and one average
year of performance.
Financial 2022 2021
Post-tax discount rate 12.37% 10.60%
Equivalent pre-tax discount rate 15.01% 14.94%
Average revenue growth rate 8.0% 3.5%
Operating profit margin years 2-5 34.5% - 45.6% 23.1 - 25.8%
Sensitivity to impairment
The tests performed indicated aggregate headroom over the carrying value of
the goodwill in both cash-generating units. To test the sensitivity of the
results of the impairment review, the calculations have been re-performed,
flexing the three key assumptions:
- revenue growth;
- post-tax discount rate; and
- underlying operating profit
Change in revenue growth Change in discount rate Change in underlying operating profit
+1% -1% +1% -1% +5% -5%
£'000 £'000 £'000 £'000 £'000 £'000
Shipbroking 12,339 (12,275) (16,026) 16,022 7,854 (7,125)
Financial 2,079 (1,992) (1,945) 2,344 1,496 (1,496)
The results showed that in all scenarios the net present values of the
cash-generating units were still in excess of the carrying value in all
stressed scenarios and therefore there was no indication of impairment. The
breakeven point, i.e. the point where the headroom over the carrying value is
zero is reached by a reduction in average revenue growth rate of 4.0% / 6.4%
for Shipbroking and Financial Divisions respectively and by increasing the
pre-tax discount rate by +12.8% for Shipbroking and +3.8% for Financial.
Management does not believe that climate-related risks or the potential impact
of climate change on the Group's operations would affect the recoverability of
goodwill in either of the cash-generating units (see Note 1d).
13 Other intangible assets
Computer Research and Other Total
software
development
intangible
£'000
£'000
assets £'000
£'000
Cost
At 29 February 2020 5,805 836 11,005 17,646
Additions 643 - - 643
Reclassified as held for sale (28) (836) - (864)
At 28 February 2021 6,420 - 11,005 17,425
Additions 515 - - 515
Disposal of Cory Brothers (1,344) - (1,480) (2,824)
Exchange rate adjustments (5) - - (5)
At 28 February 2022 5,586 - 9,525 15,111
Amortisation
At 29 February 2020 4,379 224 10,632 15,235
Charge for the year 404 - - 404
Reclassified as held for sale (14) (224) (111) (349)
Exchange adjustments 6 - - 6
At 28 February 2021 4,775 - 10,521 15,296
Charge for the year 346 - 107 453
Disposal of Cory Brothers (275) - (1,359) (1,634)
Exchange adjustments (1) - - (1)
At 28 February 2022 4,845 - 9,269 14,114
Net book value at 28 February 2022 741 - 256 997
Net book value at 28 February 2021 1,645 - 484 2,129
Other intangible assets brought forward from the prior year relate to forward
books of income acquired in acquisitions which are being amortised over the
period that the income is being recognised; customer relationships which are
amortised over a period of five years; and brand which is being amortised
over ten years.
At 28 February 2022, the Group had no contractual commitments for the
acquisition of computer software (2021: £nil).
14 Deferred and contingent consideration receivable
Fair value of Cory Brothers deferred and contingent consideration receivable
On 28 February 2022 the Company sold Cory Brothers to Vertom Agencies BV for
maximum consideration of £15.5m. Initial cash proceeds of £6.5m were
received on completion of the transaction, three further cash payments are due
contingent on an agreed percentage of future gross profit of the combined
VertomCory business. These "earnout" payments are subject to a combined
minimum of £3.75m and a combined maximum of £9.0m.
The completion payment of £6.5m is included in trade and other receivables
(see Note 21).
Each agreed minimum earnout payment is presented as deferred consideration
recognised at amortised cost, using a discount rate of 2.39%. The uncertain
element of each earnout payments is recognised at fair value through profit or
loss and presented as contingent consideration. The fair value is calculated
using the forecast gross profit for the combined VertomCory business for each
earnout period, applying the agreed percentage and discounting the forecast
cashflow using the discount rate of 2.39%. Deferred and contingent
consideration are included in other long-term receivables (see Note 20).
The current estimate of the fair value of the deferred consideration is
£4.8m. The fair value of the contingent consideration involves two critical
estimates; the future profitability of the combined business and the discount
rate used to calculate the net present value. The future profitability
forecasts are based on a business plan prepared by the combined VertomCory
business and was reviewed by management as part of the financial due diligence
process. A discount rate of 2.39% was used to calculate the net present value,
this was based on the credit risk of Vertom Agencies BV following a credit
check performed by management.
Sensitivity analysis
Management have considered the sensitivity of the contingent consideration
receivable to both changes in the estimate of future profitability of the
VertomCory agency business, and the discount rate selected.
Sensitivity to the estimate of future gross profits of the VertomCory agency Sensitivity to change in the discount rate selected
business
Carrying value as at 28 February 2022 Discounted value as at 28 February 2022 Decrease by 10% Increase by 10% Decrease by 1% p.a. Increase by 1% p.a.
£'000s £'000s £'000s £'000s £'000s £'000s
Payment due on 31 May 2023 336 326 (139) 140 4 (4)
Payment due on 31 May 2024 433 411 (167) 166 9 (9)
Payment due on 31 May 2025 507 469 (169) 170 16 (14)
Total 1,276 1,206 (475) 476 29 (27)
The 10% increase/decrease in future gross profits of the VertomCory agency
business considered in the sensitivity analysis is selected to reflect a
reasonably likely variation in outcomes, which lie within range covered by the
minimum and maximum earnout thresholds. The change in discount rate
considered reflects the observed range of three-year GBP corporate bond rates
with similar credit risk.
15 Deferred consideration payable
Acquisition of Naves Corporate Finance GmbH
In September 2017, the Group acquired the entire share capital of Naves
Corporate Finance GmbH ("Naves"). Naves was an established and successful
business, headquartered in Hamburg, Germany, which advises national and
international clients on corporate finance related to the maritime industry
including restructuring advisory, corporate finance advisory, M&A, asset
brokerage, interim/pre-insolvency management and financial asset management
including loan servicing.
The accounting values for the deferred consideration and associated payments
to management sellers are set out in Note 25. These amounts are subject to a
prior period adjustment set out in Note 34.
The acquisition agreement provided for consideration of £16.0m (€18.4m)
payable as follows:
i) at completion in cash £7.3m (€8.3m), in shares £1.3m (€1.5m)
and in convertible loan notes £6.4m (€7.4m); and
ii) deferred consideration in cash of £0.5m (€0.6m) and convertible
loan notes of £0.5m (€0.6m), payable in instalments over the three years
after the acquisition.
No consideration was contingent consideration. As at 28 February 2022, there
is nil outstanding deferred consideration (2021:nil) to non-management
sellers.
The acquisition agreement also provided deferred amounts that would be payable
to management sellers, conditional on their ongoing service in the business.
IFRS 3 states that amounts paid to former owners which are conditional on
ongoing service are for the benefit of the acquirer and not for the benefit of
former owners. Consideration linked to the ongoing service of former owners is
treated as remuneration for post-combination services and classified as
acquisition-related expenditure under specific items in the Income Statement.
The deferred amounts payable to management sellers comprised:
i) deferred cash of £1.3m (€1.5m) and deferred convertible loan
notes of £4.3m (€4.9m) conditional only on the individual management
seller's continued service payable in instalments over the five years after
the acquisition; and
ii) deferred convertible loan notes of up to £9.4m (€11.0m)
conditional on the individual management seller's continued service and the
post-acquisition Naves' EBIT in the three years post-acquisition. By February
2021, there was no contingency remaining and the total amount paid was £4.6m
(€5.3m).
At February 2022 £0.5m (2021: £1.0m) of amounts to management sellers were
subject to future service conditions, of which £0.5m (2021: £0.9m) had been
accrued. This accrual is presented within deferred consideration.
The tables below relate the amounts payable under the sale and purchase
agreement to the values reflected in the balance sheets of the group and
parent company. The comparative values have been restated, and further
details of the restatement are provided in Note 34.
2022 2022 2021 2021
Nominal value of NAVES deferred consideration
(All denominated in Euros) £'000 €'000 £'000 €'000
Historical* Historical*
Amounts paid on acquisition
Convertible loan notes settled in cash at maturity 6,430 7,400 6,430 7,400
Shares 1,308 1,505 1,308 1,505
Cash 7,172 8,254 7,172 8,254
Total consideration paid on acquisition 14,910 17,159 14,910 17,159
Settled deferred consideration
Deferred cash settled 549 632 549 632
Convertible loan notes settled in cash at maturity 359 421 183 211
Deferred consideration settled 908 1,053 732 843
Deferred consideration convertible loan notes on balance sheet 191 211 367 421
Total deferred consideration 1,099 1,264 1,099 1,264
Total consideration for the business combination 16,009 18,423 16,009 18,423
2021 2021
£'000* €'000
Historical*
Variable amounts paid and payable for post-acquisition services 4,636 5,328
Fixed amounts paid and payable for post-acquisition services 5,614 6,431
Total amounts paid and payable for post-acquisition services 10,250 11,759
Total consideration for the business combination 16,009 18,423
Total due under the NAVES acquisition agreement 26,259 30,182
Potential variable payments not incurred 5,672
Working capital adjustment on acquisition (854)
Maximum consideration disclosed in shareholder circular 35,000
*Pounds sterling values are presented at the period end closing rate.
Post-acquisition remuneration of £0.2m associated with the acquisition were
incurred during the year ended 28 February 2022 (2021: £0.2m) and have been
classified as acquisition-related expenditure under specific items in the
Income Statement. See Note 8.
Acquisition of Atlantic Brokers Holdings Ltd
In February 2018 the Group acquired the entire share capital of Atlantic
Brokers Holdings Ltd, the holding company for Atlantic Brokers Ltd (together,
"Atlantic").
The cash payment was made in the year to 28 February 2018 but was subject to
clawback provisions if the working sellers were to leave employment of the
Group before 28 February 2021. The cost was charged to the income statement
over the clawback period and no further amounts were charged to the income
statement after 28 February 2021.
16 Property, plant and equipment
Leaseholds Computers Fixtures and Total
£'000
£'000
equipment
£'000
£'000
Cost or fair value
At 29 February 2020 13,818 1,082 2,414 17,314
Additions at cost 1,232 237 260 1,729
Disposals (784) (75) (153) (1,012)
Reclassification to assets held for sale (Wavespec) (65) (385) (170) (620)
Exchange differences 107 - 33 140
At 28 February 2021 14,308 859 2,384 17,551
Additions at cost 1,087 315 337 1,739
Disposals (244) - (631) (875)
Disposal of Cory Brothers (1,294) (416) (478) (2,188)
Exchange differences 75 6 42 123
At 28 February 2022 13,932 764 1,654 16,350
Accumulated depreciation
At 29 February 2020 2,742 701 1,943 5,386
Charge for the year 2,886 94 318 3,298
Disposals (397) (75) (153) (625)
Impairment 210 - - 210
Reclassification to assets held for sale (Wavespec) (63) (379) (170) (612)
Exchange differences - 11 42 53
At 28 February 2021 5,378 352 1,980 7,710
Charge for the year 2,663 148 220 3,031
Disposals (244) - (620) (864)
Impairment 392 - - 392
Disposal of Cory Brothers (490) (300) (178) (968)
Exchange differences (65) 26 10 (29)
At 28 February 2022 7,634 226 1,412 9,272
Net book value at 28 February 2022 6,298 538 242 7,078
Net book value at 28 February 2021 8,930 507 404 9,841
The prior period movement table has been represented to include impairment
within accumulated depreciation instead of cost.
On 28 March 2022, the Group assigned the lease for its Bevis Marks premises to
Beat Capital. The impairment charge of £392,000 is equal to the subsequent
loss on assignment of this lease, being the lease assignment premium paid plus
the net book value of the ROU asset disposed of less the outstanding lease
liability. At 28 February 2022, the Group had no contractual commitments for
the acquisition of property, plant and equipment (2021: £nil).
17 Leases
Right-of-use assets
The group leases a number of properties in the jurisdictions from which it
operates. In some jurisdictions it is customary for lease contracts to provide
for payments to increase each year by inflation and in other property leases
the periodic rent is fixed over the lease term. The group also leases certain
items of plant and equipment which are typically motor vehicles. These
contracts normally comprise only fixed payments over the lease terms.
Leaseholds Fixtures and Total
£'000
equipment
£'000
£'000
At 1 March 2020 9,219 267 9,486
Additions 1,148 37 1,185
Amortisation (2,494) (178) (2,672)
Impairment (210) - (210)
Disposals (361) - (361)
Exchange differences 5 12 17
At 28 February 2021 7,307 138 7,445
Additions 1,036 11 1,047
Amortisation (2,079) (77) (2,155)
Impairment (392) - (392)
Disposals - (10) (10)
Disposal of Cory Brothers (856) (51) (907)
Exchange differences 166 - 166
At 28 February 2022 5,182 11 5,194
Details on the impairment charge of £0.4m are provided in Note 16.
Lease liabilities
Total
£'000
At 1 March 2020 14,777
Additions 1,185
Interest expense 409
Lease payments (3,928)
Exchange differences 111
At 28 February 2021 12,554
Additions 814
Interest expense 329
Lease payments (3,950)
Disposal of Cory Brothers (1,243)
Exchange differences 1
At 28 February 2022 8,505
Lease receivables
Total
£'000
At 1 March 2020 3,214
Additions 324
Interest income 86
Lease payments (804)
Exchange differences 7
At 28 February 2021 2,827
Additions -
Disposal (236)
Interest income 72
Lease payments (870)
Disposal of Cory Brothers (272)
Exchange differences (9)
At 28 February 2022 1,512
2022 2021
£'000 £'000
Short-term lease expense 234 282
Short-term lease income 73 73
Low value lease expense - -
Lease liabilities
Within 1 to 2 2 to 5 More than Total Uncharged Net
1 year
Years
5 years
£'000
interest
payable
£'000
£'000 years
£'000
£'000
£'000
£'000
At 28 February 2022 3,431 3,197 2,131 16 8,775 (270) 8,505
At 28 February 2021 3,969 3,431 5,000 623 13,023 (479) 12,544
Lease receivables
Within 1 to 2 2 to 5 More than Total Unearned Net
1 year
Years
5 years
£'000
interest
receivable
£'000
£'000 years
£'000
£'000
£'000
£'000
At 28 February 2022 642 642 284 - 1,568 (56) 1,512
At 28 February 2021 939 939 1,189 - 3,067 (240) 2,827
18 Investments
2022 2021
£'000 £'000
Unlisted investments 1,780 1,962
The Group recognises unlisted investments at fair value through profit or
loss.
Movement in unlisted investments Total
£'000
At 1 March 2020, and 28 February 2021 1,962
Disposal (182)
At 28 February 2022 1,780
A list of subsidiary undertakings is included in Note 32.
The Financial Statements of the principal subsidiary undertakings are prepared
to 28 February 2022.
Unlisted investments
The Group's unlisted investments include 1,000 (2021: 1,000) ordinary £1
shares in London Tanker Broker Panel Limited. The investment is carried at
fair value of £1.5m, being the value of the most recent comparable
transaction, which occurred during the year ended 28 February 2019. There have
been no transactions or events in the current or prior year which would result
in an adjustment to the fair value at 28 February 2022.
19 Investment in associate
Zuma Labs Limited
On 29 October 2020 the Group subscribed for 1,000 ordinary shares in Zuma Labs
Limited. Zuma Labs Limited is a private company incorporated in England and
Wales and its registered address is Kemp House, 160 City Road, London, United
Kingdom, EC1V 2NX. Zuma Labs Limited has one share class and each share
carries one vote.
During the period, in accordance with the shareholders' agreement, three
further subscriptions for shares were made totalling of $0.5m (£0.3m),
increasing Braemar's shareholding increased by 1,125 shares.
At 28 February 2022 the Group's shareholding was 2,500 shares, which equates
to 20.0% of Zuma Labs Limited's share capital and 20.0% of voting rights
(2021: 1,375 shares, 12.1% of share capital and 12.1% of voting rights). The
Group has representation on the board of Zuma Labs Limited, as a result, the
Group considers that it has the power to exercise significant influence in
Zuma Labs Limited and the investment in it has been accounted for using the
equity method.
A purchase price allocation exercise was undertaken to measure the fair value
of the net assets on the date at which Zuma Labs Limited became an associate,
and also at each date at which further shares were subscribed for. Based on
the purchase price allocation exercise, the difference between the cost of the
investment and Braemar's share of the net fair value of Zuma Labs Limited's
identifiable assets and liabilities will be accounted for as goodwill.
Amortisation of that goodwill is not permitted.
IAS 28 requires the most recent Financial Statements of an associate are used
for accounting purposes, and that coterminous information should be used
unless it is impractical to do so. Zuma Labs Limited has a year end of 31
March and for practical reasons Zuma Labs Limited's management accounts for
the 15 months ended 28 February 2022 will be used for the purposes of the
Group's full-year reporting at 28 February with adjustments made for any
significant transactions and events. Zuma Labs Limited will prepare its next
set of Financial Statements for the year ended 31 March 2022. At 28
February 2022 Zuma Labs Limited had no contingent liabilities.
The summarised financial information of Zuma Labs Limited for the period ended
28 February 2022 is as follows. These figures are taken from the management
accounts of Zuma Labs Limited, adjusted for any fair value adjustments but
before any intercompany eliminations.
28 Feb 22
£'000
Balance Sheet
Current assets 283
Non-current assets 359
Current liabilities (45)
Net assets (100%) 597
Group share of net assets (20%) 119
Income Statement
Revenues -
Post-tax profit (130)
Total comprehensive income (19)
Management have reviewed the carrying value of the investment in Zuma Labs
Limited at 28 February 2022 and do not consider this to be impaired.
AqualisBraemar
On 21 June 2019 the Group recognised an investment in associate as a result of
the divestment of the Offshore, Marine and Adjusting product lines in return
for a significant shareholding in AqualisBraemar LOC ASA. AqualisBraemar LOC
ASA is listed on the Oslo Børs, its principal place of business is Oslo and
its registered address is Olav Vs gate 6, 0161, Oslo, Norway. AqualisBraemar
LOC ASA has one share class and each share carries one vote.
On 28 January 2021 the Group sold 9,600,000 shares and on 19 May 2021 the
Group sold its entire remaining shareholding in AqualisBraemar LOC ASA, see
Note 9. The Group was entitled to representation on the board of
AqualisBraemar LOC for as long as the Group's shareholding remains more than
10.0%. Based on this the Group consider that it had the power to exercise
significant influence for the year ended 28 February 2021, and until it sold
its shareholding on 19 May 2021. At that point significant influence was lost,
the Group ceased to equity account for AqualisBraemar and the Group's interest
in AqualisBraemar was limited to its holding of 6,523,977 performance-based
warrants which were accounted for as a financial asset at fair value.
On 20 August 2021, 1,000,000 of the 6,523,977 warrants vested with the
remainder lapsing. A loss on vesting of £2,000 was recognised in specific
items. The shares received were subsequently sold on 31 August 2021
crystallising a further loss of £4,000.
At 28 February 2022 the Group's shareholding was nil which equates to 0% of
AqualisBraemar's share capital and 0% of voting rights (2021: market value of
£6.3m, being 10.42% of share capital and 10.42% of voting rights).
The results of AqualisBraemar are presented within discontinued operations.
The movements in the investment in associates are provided below.
Zuma AqualisBraemar Total
£'000 £'000 £'000
At 1 March 2020 - 7,315 7,315
Cost of investment 418 - 418
Share of profit in associate - underlying - 255 255
Share of profit in associate - specific - 91 91
Share of associate's other comprehensive income - 312 312
Dividends received - (641) (641)
Gain on rights issue - 826 826
Book value of 9,600,000 shares disposed - (3,753) (3,753)
Foreign exchange movements - (1,060) (1,060)
At 29 February 2021 418 3,345 3,763
Book value of 450 shares acquired 326 - 326
Share of profit in associate - underlying (20) 76 56
Share of associate's other comprehensive income - 52 52
Book value of 9,640,621 shares disposed - (3,473) (3,473)
At 28 February 2022 724 - 724
A reconciliation of the book value of the AqualisBraemar shares disposed of to
the profit on disposal in Note 9 is as follows:
19 May 2021 28 Jan 2021
Number of shares sold 9,640,621 9,600,000
Share price NOK 9.00 7.50
NOK'000 NOK'000
Gross disposal proceeds 86,776 72,000
Broker's commission at 1.5% / 2% (1,301) (1,440)
Net disposal proceeds 85,475 70,560
£'000 £'000
Net disposal proceeds 7,232 5,982
Book value of shares sold (3,473) (3,753)
Legal costs (13) -
Recycle of amounts in other comprehensive income (371) (471)
Profit on disposal 3,375 1,758
20 Other long-term receivables
Note 2022 2021
£'000 £'000
Other long-term receivables
Deferred consideration 9 3,482 -
Contingent consideration 9 1,276 -
Security deposits 17 34
Finance lease receivables 17 861 1,854
5,636 1,888
Deferred consideration of £3.6 and contingent consideration of £1.2m relates
to the earn-out payments receivable in respect of the disposal of Cory
Brothers, further detail is provided in Note 14.
See Note 17 for a maturity analysis which reconciles the long-term finance
lease receivables to the undiscounted lease receipts and unearned finance
income.
21 Trade and other receivables
2022 2021
£'000 £'000
Trade receivables 24,970 27,266
Provision for impairment of trade receivables (3,159) (2,858)
Net trade receivables 21,811 24,408
Other receivables 13,314 5,567
Finance lease receivables 633 974
Accrued income 1,965 2,570
Prepayments 1,085 1,281
Total 38,808 34,800
Included in other receivables at 28 February 2022 is £6.5 million of
completion proceeds relating to the disposal of Cory Brothers. The cash was
due on completion of the transaction but was not received into the Group's
bank account until 2 March 2022. Also included in other receivables in both
years are security deposits, VAT and other sales tax receivables, employee
loans and capitalised sign-on bonuses which are being charged to the Income
Statement in accordance with the clawback provisions of the underlying
contracts.
The total receivables balance is denominated in the following currencies:
2022 2021
£'000 £'000
US Dollars 23,099 17,804
Sterling 14,451 13,792
Other 1,258 3,204
Total 38,808 34,800
The directors consider that the carrying amounts of trade receivables
approximate to their fair value.
Trade receivables are non-interest bearing and are generally on terms payable
within 30-90 days; terms associated with the settlement of the Group's trade
receivables vary across the Group. Specific debts are provided for where
recovery is deemed uncertain, which will be assessed on a case-by-case basis
whenever debts are older than the due date, but always when debts are older
than usual for the industry in which each business in the Group operates.
As at 28 February 2022, trade receivables of £1,251,000 (2021: £613,000)
which were over 24 months old were treated as credit impaired and have been
provided for and trade receivables of £757,000 (2021: £613,000) which were
between 12 months old and 24 months old were treated as impaired and have
been provided for. A provision of £396,000 (2021: £477,000) has been made
for specific trade receivables which are less than 12 months overdue.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses using a lifetime expected credit loss provision for trade receivables
and contract assets. To measure expected credit losses on a collective basis,
trade receivables and contract assets are grouped based on similar credit risk
and ageing. The contract assets have similar risk characteristics to the trade
receivables for similar types of contracts.
The expected loss rates are based on the Group's historical credit losses and
rates are then adjusted for current and forward-looking information on
macroeconomic factors affecting the Group's customers.
The ageing profile of trade receivables and the lifetime expected credit loss
for provisions and contract assets is as follows:
2022 Trade Expected loss rate Group Total provision for impairment
receivables
% provision ECL of trade receivables
£'000
£'000 provision £'000
£'000
Up to 3 months 14,562 0.015 100 210 310
3 to 6 months 3,952 0.020 100 77 177
6 to 12 months 4,036 0.051 196 196 392
Over 12 months 2,420 0.591 2,008 243 2,251
Trade receivables 24,970 0.096 2,404 726 3,130
Accrued income 1,965 0.015 - 29 29
Total 26,935 0.028 2,404 755 3,159
2021 Trade Expected loss rate Group Total provision for impairment
receivables
% provision ECL of trade receivables
£'000
£'000 provision £'000
£'000
Up to 3 months 19,668 0.014 110 275 385
3 to 6 months 2,794 0.022 134 61 195
6 to 12 months 2,906 0.046 233 135 368
Over 12 months 1,898 0.154 1,579 293 1,872
Trade receivables 27,266 0.028 2,056 764 2,820
Accrued income 2,570 0.015 - 38 38
Total 29,836 0.027 2,056 802 2,858
Movements on the provision for impairment of trade receivables and accrued
income were as follows:
2022 2021
£'000 £'000
At 1 March 2,858 3,405
Bad debt charge/(credit) 747 (170)
Receivables written off during the year as uncollectible (204) (360)
Transferred on disposal (242) -
Reclassified as held for sale - (17)
At 28 February 3,159 2,858
22 Financial instruments and risk management
The Group is exposed through its operations to the following financial risks:
- Currency risk
- Interest rate risk
- Credit risk
- Liquidity risk
In common with all other businesses, the Group is exposed to risks that arise
from its use of financial instruments. This note describes the Group's
objectives, policies and processes for managing those risks and the methods
used to measure them. Further quantitative information in respect of these
risks is presented throughout the Financial Statements.
There have been no substantive changes in the Group's exposure to financial
instrument risks, its objectives, policies and processes for managing those
risks or the methods used to measure them from previous periods unless
otherwise stated in this note.
a) Financial instruments
i) Principal financial instruments
The principal financial instruments used by the Group, from which financial
instrument risk arises, are as follows:
- Trade and other receivables
- Cash and cash equivalents
- Deferred consideration receivable
- Contingent receivable
- Unlisted investments
- Warrants
- Trade and other payables
- Bank overdrafts
- Revolving credit facility
- Lease liabilities
- Forward currency contracts
- Deferred and contingent consideration
ii) Financial instruments by category
Financial instruments measured at fair value
The Group's financial assets and liabilities measured at fair value through
profit and loss, including their fair value hierarchy, are as follows. Fair
value is the amount at which a financial instrument could be exchanged in an
arm's length transaction, other than in a forced or liquidated sale.
Level 1 Level 2 Level 3 As at
£'000 £'000 £'000 28 Feb 2022
£'000
Financial assets
Unlisted investments - 1,500 - 1,500
Contingent consideration receivable - - 1,276 1,276
Forward currency contracts* - 62 - 62
Total - 1,562 1,276 2,838
Financial liabilities
Forward currency contracts* - 772 - 772
Embedded derivative - - 251 251
Total - 772 251 1,023
*At 28 February 2022, currency forwards with a fair value of £54,000 maturing
within 12 months have been shown as current assets. Currency forwards with a
fair value of £8,000 maturing within 12 to 18 months of the Balance Sheet
date have been shown as non-current assets. Liabilities include currency
forwards with a fair value of £688,000 maturing within 12 months shown as
current liabilities and currency forwards with a fair value of £84,000
maturing within 12 to 18 months of the Balance Sheet date shown as non-current
liabilities.
Level 1 Level 2 Level 3 As at
£'000 £'000 £'000 28 Feb 2021
£'000
Financial assets
Unlisted investments - 1,500 - 1,500
Forward currency contracts** - 1,773 - 1,773
Warrants - - 746 746
Total - 3,273 746 4,019
Financial liabilities
Embedded derivative (restated) - - 56 56
Total - - 56 56
**At 28 February 2021, currency forwards with a fair value of £1,573,000
maturing within 12 months have been shown as current assets. Currency forwards
with a fair value of £200,000 maturing within 12 to 18 months of the Balance
Sheet date have been shown as non-current assets.
Fair value hierarchy
The level in the fair value hierarchy within which the financial asset or
liability is categorised is determined on the basis of the lowest level input
that is significant to the fair value measurement.
Financial assets and liabilities are classified in their entirety into one of
three levels:
- Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
- Level 2: Inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly or indirectly.
- Level 3: Inputs for the asset or liability that are not based on
observable market data.
Unlisted investment
The unlisted investment relates to the Group's investment in the London Tanker
Broker Panel, see Note 17. The investment is carried at fair value, being the
value of the most recent comparable transaction and is therefore classified as
Level 2 in the fair value hierarchy.
There was no movement in the fair value of the unlisted investment.
Deferred and contingent consideration receivable
The fair value of the deferred and contingent consideration receivable
includes unobservable inputs and are therefore classified as Level 3. The
deferred and contingent consideration receivable relates to the disposal of
the Logistics Division whereby Braemar is entitled to three future cash
payments. The SPA provides for a minimum guaranteed amount in each of the
three years, this amount has been classified as deferred consideration. The
fair value of the deferred consideration has been determined by discounting
the guaranteed minimum amounts as per the SPA to present value using a
discount rate of 2.39%. The balance of the earnout consideration is contingent
on the future performance of the combined business up to a maximum specified
in the SPA, this has been classified as contingent consideration. The fair
value of the contingent consideration has been calculated by reference to
management's expectation of the future profitability of the combined business
and discounted to present value using a discount rate of 2.39%. The discount
rate of 2.39% was based on the credit risk of Vertom Agencies BV assessed by a
third party credit agency. See Note 9 for further details and a sensitivity
analysis on the contingent element.
Forward currency contracts
The fair value of the forward currency contracts are based on prices quoted by
the counterparty within these contracts versus the market rate at the Balance
Sheet date and have therefore been classified as Level 2 in the fair value
hierarchy. See the currency risk section for further details.
Warrants
At 28 February 2021 the warrants were valued at £0.7m. The fair value of the
warrants includes unobservable inputs and are therefore classified as Level 3.
The key assumptions underpinning the fair value of the warrants relate to the
future expected share price of AqualisBraemar LOC ASA, the GBP:NOK and GBP:US$
exchange rate and the future performance of both AqualisBraemar as a whole,
and of the former Braemar Marine and Adjusting product lines. The fair value
has been determined using the Black-Scholes valuation model. The inputs in the
Black-Scholes valuation model are:
- the share price of AqualisBraemar LOC ASA NOK 4.03
- the exercise price of the
option NOK 0.01
- the length of the exercise period
3 months
- the compound risk-free interest
rate
- the annualised standard
deviation
On 20 August 2021, the warrants vested and a loss of £2,000 was recognised.
There were no movements in the fair value of the warrants between 28 February
2021 and 20 August 2021.
Embedded derivative
The convertible loan note instruments issued on the acquisition of Naves
contain an embedded derivative, being a Euro liability of principal and
interest. The equity value of the underlying derivative is not considered
closely related to the debt host, therefore the loan note is considered to be
a financial liability host with an embedded derivative convertible feature
which is required to be separated from the host. The fair value of the
embedded derivative includes unobservable inputs and is therefore classified
as Level 3. They key assumptions underpinning the fair value of the embedded
derivative relate to the expected future share price of the Group and the
GBP:EUR exchange rate. The fair value has been determined using the
Black-Scholes valuation model.
A gain of £97,000 has been recognised in the Income Statement in respect of
the fair value movement of the embedded derivative from 1 March 2021 to
28 February 2022 (2021 (restated): loss of £52,000).
Financial instruments not measured at fair value
The Group's financial assets and liabilities that are not measured at fair
value are held at amortised costs. Due to their short-term nature, the
carrying value of these financial instruments approximates their fair value.
Their carrying values are as follows:
Financial assets 2022 2021
restated
£'000
£'000
Cash and cash equivalents 13,964 14,111
Deferred consideration receivable 3,482 -
Trade and other receivables 38,601 35,407
Total 56,047 49,518
Financial liabilities 2022 2021
£'000 £'000
Trade and other payables 7,779 26,414
Deferred and contingent consideration 4,666 8,370
Lease liabilities 8,506 12,554
Loans and borrowings 23,254 23,000
Total 44,205 70,338
b) Currency risk
Currency risk arises when Group entities enter into transactions denominated
in a currency other than their functional currency. The Group's policy is,
where possible, to allow Group entities to settle liabilities denominated in
their functional currency with the cash generated from operations in that
currency. The Group's currency risk exposure arises mainly as a result of the
majority of its Shipbroking earnings being denominated in US Dollars while the
majority of its costs are denominated in Sterling. There is also some currency
exposure related to convertible loan notes and deferred consideration
denominated in Euros and from the carrying values of its overseas subsidiaries
being denominated in foreign currencies.
The Group manages the exposure to US Dollar currency variations by spot and
forward currency sales and other derivative currency contracts, including
participating hedging arrangements.
At 28 February 2022 the Group held forward currency contracts to sell US$53.8m
at an average rate of US$1.370/£1.
At 28 February 2021 the Group held forward currency contracts to sell US$48.8m
at an average rate of US$1.328/£1.
The net fair value of forward currency contracts that are designated and
effective as cash flow hedges amount to a £709,000 liability (2021:
£1,773,000 asset) which has been deferred in equity.
Amounts of £1,613,000 have been credited (2021: £84,000 credited) to the
Income Statement in respect of forward contracts which have matured in the
period.
Excluding the effect of hedging, the effect on equity and profit before tax if
the US Dollar or the Euro strengthened/(weakened) by 10% against Sterling,
with all other variables being equal, is as follows:
Profit or loss Equity, net of tax
+10% strengthening £'000 -10% +10% strengthening £'000 -10%
weakening weakening
£'000 £'000
28 February 2022
US Dollars 2,697 (2,697) 2,185 (2,185)
Euros (111) 111 (90) 90
Total 2,586 (2,586) 2,095 (2,095)
28 February 2021
US Dollars 2,141 (2,141) 1,734 (1,734)
Euros 819 (819) 663 (663)
Total 2,960 (2,960) 2,397 (2,397)
c) Interest rate risk
The Group is exposed to interest rate risk from borrowings at floating rates.
The Group minimises its short-term exposure to interest rate risk on its cash
and cash equivalents by pooling cash balances across the Group's hubs.
The Group has not entered into any financial instruments to fix or hedge the
interest rates applied to its bank borrowings and overdrafts.
The following table sets out the carrying amount, by maturity, of the Group's
financial instruments which are exposed to interest rate risk:
Notes 2022 2021
£'000 £'000
Floating rate:
Within one year
Cash and cash equivalents 23 13,964 14,111
Secured rolling credit facilities and other borrowings 25 (23,254) (23,000)
(9,290) (8,889)
Cash balances are generally held on overnight deposits at floating rates
depending on cash requirements and the prevailing market rates for the amount
of funds deposited. The other financial instruments of the Group are
non-interest bearing.
The effect on equity and profit before tax of a 1% increase/(decrease) in the
interest rate, all other variables being equal, is as follows:
Profit or loss Equity, net of tax
+1% increase £'000 -1% decrease £'000 +1% increase £'000 -1% decrease £'000
28 February 2022
Cash and cash equivalents 63 (63) 51 (50)
RCF and overdrafts (104) 104 (84) 84
Total (41) 41 (33) 34
28 February 2021
Cash and cash equivalents 7 (6) 5 (5)
RCF and overdrafts (11) 10 (9) 8
Total (4) 4 (4) 3
d) Credit risk
Concentrations of credit risk with respect to trade receivables are limited
due to the diversity of the Group's customer base. The directors believe there
is no further credit risk provision required in excess of normal provisions
for doubtful receivables, estimated by the Group's management based on prior
experience and their assessment of the current economic environment. The Group
seeks to trade only with creditworthy parties and carries out credit checks
where appropriate. The maximum exposure is the carrying amount as disclosed in
Note 21.
e) Liquidity risk
Liquidity risk arises from the Group's management of working capital and the
finance charges and principal repayments on its debt instruments. It is the
risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due.
The Group's policy is to ensure that it will always have sufficient cash to
allow it to meet its liabilities when they become due. Management receive
rolling 13-week cash flow projections on a weekly basis to ensure the Group
has sufficient liquidity.
The board receives rolling 12-month cash flow projections on a monthly basis
as well as information regarding cash balances. At the end of the financial
year, these projections indicated that the Group expected to have sufficient
liquid resources to meet its obligations under all reasonably expected
circumstances.
The following table sets out the carrying amount, by maturity, of the Group's
financial instruments which are exposed to liquidity risk:
At 28 February 2022 Up to Between Between Between Over
3 months
3 and
1 and
2 and
12 months
2 years
5 years 5 years
£'000
£'000 £'000 £'000 £'000
Trade and other payables 5,649 2,130 - - -
Loans and borrowings - - 23,254 - -
Lease liabilities 864 2,567 3,197 2,131 16
Deferred and contingent consideration - 1,450 1,654 1,562 -
Total 6,513 6,147 28,105 3,693 16
Forward currency contracts
Gross outflows 11,204 18,748 6,498 - -
Gross inflows (11,034) (18,231) (6,414) - -
Net outflow from forward currency contract 170 517 84 - -
At 28 February 2021 Up to Between Between Between Over
3 months
3 and
1 and
2 and
12 months
2 years
5 years 5 years
£'000
£'000 £'000 £'000 £'000
Trade and other payables 12,048 14,366 - - -
Loans and borrowings 146 438 23,341 - -
Lease liabilities 992 2,977 3,431 5,000 623
Deferred and contingent consideration - 2,596 1,450 3,926 -
Total 13,186 20,377 28,222 8,926 623
Forward currency contracts
Gross outflows 11,040 18,066 5,879 - -
Gross inflows (11,557) (19,164) (6,031) - -
Net inflow from forward currency contract (517) (1,098) (152) - -
Loans and borrowings have been represented to show the expected interest
payments payable on the revolving credit facility in addition to the repayment
of the loan. The presentation of future cash flows arising from forward
currency contracts has been represented for the prior year to show grossed up
cash inflows and outflows in addition to the net flow position.
f) Capital management
The Group manages its capital structure so as to maintain investor and market
confidence and to provide returns to shareholders that will support the future
development of the business. The Group makes adjustments to the capital
structure if required in response to changes in economic conditions. The Group
considers its capital as consisting of ordinary shares and retained earnings.
To maintain or adjust the capital structure, the Group may adjust the dividend
payment to shareholders, return capital to shareholders or issue new shares.
The Group has a policy of maintaining positive cash balances and also has a
revolving credit facility which it draws down as required to provide cover
against the cyclical nature of the shipping industry.
The board monitors underlying business performance to determine the ongoing
use of capital, namely executive and staff incentive schemes (and whether to
fund this through cash or share incentives); acquisition appraisals ahead of
potential business combinations; investment in property, plant and equipment;
and the level of dividends.
No changes were made in the objectives, policies or processes during the years
ended 28 February 2022 and 28 February 2021.
g) Reconciliation of financing cash flows
Non-current Non-current Non-current Current loans Current Current lease liabilities Total
deferred
lease
loans and
consideration
liabilities and Deferred £'000 £'000
borrowings
£'000
consideration
£'000 borrowings
£'000
£'000
£'000
At 1 March 2021 1,217 3,358 8,634 28,130 608 3,920 45,867
Prior period adjustment (see Note 34 24,464 (2,476) - (23,669) (608) - (2,289)
Restated at 1 March 2021 25,681 882 8,634 4,461 - 3,920 43,578
Cash flows (362) - - (2,593) - (3,950) (6,905)
Non-cash flows:
- Shares issued - - - (541) - - (541)
- Derivatives issued (293) - - - - - (293)
- Interest accruing in the period 537 238 329 134 - - 1,238
- Lease adjustment - - 814 - - - 814
- Amounts reclassified from non-current to current (95) - (3,947) 95 - 3,947 -
- Amounts reclassified from deferred consideration to loans 625 (625) - - - - -
- Cory Brothers disposal - - (753) - - (490) (1,243)
- Effects of foreign exchange (84) - - (140) - 2 (222)
At 28 February 2022 26,009 495 5,077 1,416 - 3,429 36,426
Non-current Non-current Non-current Current loans Current Current lease liabilities Total
deferred
lease
loans and
consideration
liabilities and Deferred £'000 £'000
borrowings
£'000
consideration
£'000 borrowings
£'000
£'000
£'000
At 1 March 2020 2,398 3,031 10,943 53,098 600 3,834 73,904
Prior period adjustment 23,883 (738) - (23,538) (423) - (816)
Restated at 1 March 2020 26,281 2,293 10,943 29,560 177 3,834 73,088
Cash flows (1,554) - - (27,153) (177) (3,928) (32,812)
Non-cash flows:
- Interest accruing in the period 1,028 - 409 240 - - 1,677
- Lease adjustment - - 1,185 - - - 1,185
- Amounts reclassified from non-current to current (1,697) - (3,970) 1,697 - 3,970 -
- Amounts reclassified from deferred consideration to loans 1,553 (1,553) - - - - -
- Retention accrual net charge - 142 - - - - 142
- Effects of foreign exchange 70 - 67 117 - 44 298
At 28 February 2021 25,681 882 8,634 4,461 - 3,920 43,578
23 Cash and cash equivalents
2022 2021
£'000 £'000
Cash at bank and cash on hand 13,964 14,111
Cash held for sale (Wavespec - see Note 9d) - 53
Total 13,964 14,164
Cash and cash equivalents largely comprise bank balances denominated in
Sterling, US Dollars, Euros and other currencies for the purpose of settling
current liabilities.
Cash includes an amount of £2.9m (2021: £1.4m) held in the bank accounts of
regulated entities where there is a requirement to hold a certain amount of
cash at any one time in order to cover future obligations. No charge or other
restriction of use is held over this cash.
The directors consider that the carrying amounts of these assets approximate
to their fair value.
24 Trade and other payables
Current liabilities 2022 2021
£'000 £'000
Trade payables 3,397 21,285
Lease liabilities 3,429 3,920
Other taxation and social security 721 988
Other payables - 42
Accruals 31,082 19,412
Total 38,629 45,647
Accruals includes accrued bonuses and other general accruals.
The average credit period taken for trade payables is 102 days (2021: 77
days). The directors consider that the carrying amounts of trade payables
approximate to their fair value.
25 Borrowings
2022 2021
£'000 £'000
Long-term borrowings
Secured revolving credit facilities 23,254 23,000
Lease liabilities 5,077 8,634
Total 28,331 31,634
The revolving credit facility expires in September 2023. Amounts can be rolled
on a monthly basis until the facility expires subject to certain conditions
and on that basis the borrowings have been classified as long-term. The
revolving credit facility bears interest based on SONIA.
All revolving credit facilities are drawn within Braemar Shipping Services Plc
and appear in the accounts of the Company. During the period, the revolving
credit facility has been renegotiated so that SONIA replaced LIBOR and EURIBOR
as the applicable interest rate. The applicable interest rate is between
2.25-3.25% dependent on net leverage. The change has not had a material
impact on the financial statements. See Note 22 for details of the Group's
cash pooling arrangements and the net overdraft available to the Group.
The directors consider that the fair value of the revolving credit facility
liability and the fair value of the long-term lease liabilities are equivalent
to the carrying amount.
Convertible instruments
The Group issues convertible loan notes in connection with its acquisition of
Naves in September 2017.
These convertible loan note instruments are unsecured, unlisted and
non-transferable. The notes are Euro denominated and carry a 3% per annum
coupon. Each tranche is redeemable on or after two years from the date of
issue by the Group or by the individual holder. The conversion prices were
fixed at 390.3 pence for management sellers and 450.3 pence for non-management
sellers.
The convertible loan note instruments carry certain accelerated conversion
rights in the event of default on financial commitments associated with the
instruments or business distress within the Group. The loan notes shall
automatically convert or be redeemed in the event that any person or persons
acting in concert hold more than 50% of the issued share capital of the Group
or an impairment charge in excess of £42.8m (€50.0m) is reflected in the
audited Financial Statements of the Group.
The convertible loan notes and financial derivatives are valued using level 3
hierarchy techniques under IFRS 13. See Note 21.
The total value of convertible loan note liability is £4.9m (2021: £8.1m).
Reconciliation of nominal amounts paid and payable to balance sheet amounts
2022 2022 2021 2021
£'000 €'000 £'000 €'000
Closing rate Closing rate
Restated
Deferred consideration convertible loan notes on balance sheet 176 211 366 421
Total amounts paid and payable for post-acquisition services 10,415 12,458 10,218 11,759
Of which - -
Settled in cash (3,078) (3,682) (1,276) (1,468)
Settled in shares (522) (625) - -
Settled in convertible loan notes settled in cash at maturity (1,987) (2,377) (1,032) (1,188)
Nominal value of Naves-related liabilities outstanding 5,004 5,985 8,276 9,524
Effect of discounting and separation of derivatives (232) (36)
Total carrying amount in parent company accounts 4,772 8,240
Effect of measurement differences and remaining service conditions 145 (160)
Total carrying amount in consolidated accounts 4,917 8,080
2022 2021
Represented in the consolidated balance sheet by: £'000 £'000
Current liabilities
Convertible loan notes 1,416 4,461
Non-current liabilities
Convertible loan notes 2,755 2,681
Accrued employee costs 495 882
Derivatives 251 56
3,501 3,619
4,917 8,080
2022 2021
Represented in the parent company balance sheet by: £'000 £'000
Current liabilities
Convertible loan notes 1,416 4,461
Non-current liabilities
Convertible loan notes 3,271 3,640
Derivatives 85 139
3,356 3,779
4,772 8,240
The movement in the Naves-related balances in the Group balance sheet during
the year is explained by the items below:
2022 2021
£'000 £'000
Total NAVES-related balances at start of year 8,080 9,557
Finance expense 130 303
Post-acquisition remuneration 238 141
Foreign exchange movements (225) 186
Renegotiation gain (172)
Cash paid (2,593) (2,107)
Equity issued (541)
Total movements (3,163) (1,477)
Total NAVES-related balances at year end 4,917 8,080
The loan notes have the following maturities:
Accounting value Nominal value
2022 2021 2022 2021
£'000 £'000 €'000 €'000
Due at the reporting date - 3,206 - 3,667
30-Sep-21 - 1,238 - 1,399
31-Dec-21 - 1,352 - 1,539
30-Sep-22 1,184 1,238 1,399 1,399
31-Dec-22 215 108 - 122
30-Sep-23 592 not yet earned 699 699
30-Sep-24 not yet earned not yet earned 699 699
30-Sep-25 2,180 - 2,929 -
4,171 7,142 5,726 9,524
Derivatives thereon 251 56
Accrual for notes subject to future service 495 882
Total liabilities on loan notes 4,917 8,080
Note that current liabilities in respect of the loan notes differs from the
amounts shown above maturing within one year due to interest payable within
one year on non-current loans and the outstanding current liability to deliver
cash and shares in respect of matured loan notes.
Where loan notes are subject to future service conditions, they are accrued as
an employee expense over the relevant service period. At the end of the
service period they are recognised as financial instruments. The nominal value
of loan notes subject to future service are included in the maturity analysis
above but are not included in the group's financial liabilities. The accrual
in respect of these items was £0.5m at 28 February 2022 (2021: £0.8m).
Renegotiation of amounts payable to management sellers
On 3 June 2021 the Group reached an agreement with two of Braemar Naves'
Managing directors, Axel Siepmann and Mark Kuchenbecker, and their connected
parties, to restructure certain convertible loan notes owed by the Group.
These loan notes arose on variable consideration for post-acquisition services
arising from the 2017 Naves acquisition. At the time of the renegotiation
there were no contingencies or further service obligations outstanding in
respect of any of these amounts.
A total of £2.5m (€2.9m) which was previously due to mature before the end
of December 2022 has been deferred to mature no earlier than September 2025.
In addition, a further amount of £0.7m (€0.75m) was agreed to be satisfied
by the issue of Braemar shares in three tranches. The first two tranches,
totalling £0.6m (€0.6m) were issued in September and December 2021 with the
remaining tranche of £0.1m (€0.1m) to be issued in December 2022. As part
of the modification the Group has also agreed to increase the interest rate on
certain convertible loan notes, to the extent that they are still outstanding,
to five per cent per annum from September 2025 from the 3% payable until that
date.
A credit of £0.2m has been recognised in respect of the accounting for the
modification and classified in finance income under specific items in the
Income Statement. See Note 8.
26 Provisions
Dilapidations Employee Total
£'000
entitlements
£'000
£'000
At 29 February 2020 570 396 966
Provided in the year 105 9 114
Utilised in the year - (83) (83)
At 28 February 2021 675 322 997
Provided in the year 7 279 286
At 28 February 2022 682 601 1,283
Current - 486 486
Non-current 682 115 797
At 28 February 2022 682 601 1,283
Dilapidations relate to future obligations to make good certain office
premises upon expiration of the lease term. The provision is calculated with
reference to the location and square footage of the office.
Employee entitlements relate to statutory long service leave in Braemar ACM
Shipbroking Pty Limited. This is based on the principal that each Australian
employee is entitled to eight weeks of leave over and above any annual leave
on completion of ten years' continuous service. The provision is calculated
with reference to the number of employees who have at least seven years of
continuous service.
27 Retirement benefit schemes
The Company operates a defined benefit scheme in the UK. A full actuarial
valuation was carried out as at 31 March 2020 and updated by the IAS19 as at
28 February 2022. All valuations were carried out by a qualified independent
actuary.
The Group's obligations in respect of the funded defined benefit scheme at 28
February 2022 were as follows:
2022 2021
£'000 £'000
Present value of funded obligations 15,156 16,174
Fair value of scheme assets (13,104) (12,355)
Total deficit of defined benefit pension scheme 2,052 3,819
Funded defined benefit scheme
The Group sponsors a funded defined benefit scheme (The ACM Staff Pension
Scheme) for qualifying UK employees. The Scheme is administered by a separate
board of trustees which is legally separate from the Group. The Trustees are
composed of representatives of both the employer and employees. The Trustees
are required by law to act in the interest of all relevant beneficiaries and
are responsible for the investment policy with regard to the assets plus the
day-to-day administration of the benefits.
Under the Scheme, employees are entitled to annual pensions on retirement at
age 60 of one-sixtieth of final pensionable salary for each year of service.
Pensionable salary is defined as basic salary plus the average of the previous
three years' bonuses (capped at three times basic salary). Pensionable
salaries for members who joined after 1 June 1989 are also restricted to an
earnings cap. Other benefits are payable, for example those provided on death.
From 1 February 2016, post-retirement benefits are provided to these employees
through a separate defined contribution arrangement.
Profile of the Scheme
The defined benefit obligation includes benefits for current employees, former
employees and current pensioners. Broadly, around 62% of the liabilities are
attributable to deferred pensions for current and former employees, with the
remaining 38% to current pensioners.
The Scheme duration is an indicator of the weighted average time until benefit
payments are made. For the Scheme as a whole, the duration is around 18.7
years.
Funding implications
UK legislation requires that pension schemes are funded prudently. The last
funding valuation of the Scheme was carried out by a qualified actuary as at
31 March 2020 and showed a deficit of £1.5 million. As a result, the Company
has been paying deficit contributions of £450,000 p.a. since 1 April 2020
which, along with investment returns from return-seeking assets, are expected
to make good this shortfall by 31 January 2023.
Risks associated with the Scheme
The Scheme exposes the Group to a number of risks, the most significant of
which are:
Asset volatility
The liabilities are calculated using a discount rate set with reference to
corporate bond yields; if assets underperform this yield, this will create a
deficit. The Scheme holds a significant proportion of growth assets which,
though expected to outperform corporate bonds in the long-term, create
volatility and risk in the short-term. The allocation to growth assets is
monitored to ensure it remains appropriate given the Scheme's long-term
objectives.
Changes in bond yields
A decrease in corporate bond yields will increase the value placed on the
Scheme's liabilities for accounting purposes, although this will be partially
offset by an increase in the value of the Scheme's bond holdings.
Inflation risk
AA significant proportion of the Scheme's benefit obligations are linked to
inflation and higher inflation will lead to higher liabilities (although, in
most cases, caps on the level of inflationary increases are in place to
protect against extreme inflation). The majority of the assets are either
unaffected by or only loosely correlated with inflation, meaning that an
increase in inflation will also increase the deficit.
Life expectancy
The majority of the Scheme's obligations are to provide benefits for the life
of the member, so increases in life expectancy will result in an increase in
the liabilities.
The Company and Trustees have agreed a long-term strategy for reducing
investment risk as and when appropriate. This includes moving assets to match
pensioner liabilities when members reach retirement.
The Trustees insure certain benefits payable on death before retirement.
A contingent liability exists in relation to the equalisation of Guaranteed
Minimum Pension ("GMP"). The UK Government intends to implement legislation
which could result in an increase in the value of GMP for males. This would
increase the defined benefit obligation of the plan. We have made an estimate
of the impact of this based on our current understanding and it will increase
the liabilities by 0.36%.
The principal assumptions used for updating the latest valuation of the Scheme
were:
2022 2021
(% p.a.) (% p.a.)
Discount rate 2.65 1.9
CPI inflation 3.1 2.0
Pension increases:
CPI capped at 2.5% p.a. 2.1 2.1
CPI capped at 5.0% p.a. 3.2 2.8
Deferred pension increases:
CPI capped at 2.5% p.a. 2.1 2.1
CPI capped at 5.0% p.a. 3.2 2.8
2022 2021
Years Years
Life expectancy from age 60 for:
Current 60-year-old male 27.5 27.9
Current 60-year-old female 28.7 29.1
Pre-retirement mortality - -
Post-retirement mortality S2 Light Tables, CMI 2020 (min 1.25%)
Early retirement 33% of members retire at age 55, with the remainder retiring at age 60
Withdrawals from active service No allowance
Cash commutation 25% of the member's pension is commuted
Under early retirement it is assumed that 33% of members will retire at age
55, with the remainder retiring at age 60.
Scheme assets 2022 2021
£'000 £'000
Scheme assets are comprised as follows:
UK equities 366 128
Overseas equities 4,391 3,926
Unquoted equities 57 352
Absolute return 315 200
High yield debt 325 303
Cash 322 350
Inflation-linked bonds 4,354 4,217
Corporate bonds 1,547 1,328
Government bonds 234 422
Other 1,193 1,129
Total 13,104 12,355
Expense recognised in the Income Statement (included in operating costs) 2022 2021
£'000 £'000
Current service cost - -
Curtailment credit - -
Interest on net liability 73 73
Expense recognised in Income Statement 73 73
Remeasurements in other comprehensive expense:
Return on assets in excess of that recognised in net interest (316) (801)
Actuarial losses due to changes in financial assumptions (2,174) 1,597
Actuarial losses due to changes in demographic assumptions (268) 29
Actuarial gains due to liability experience 1,368 (301)
Amount recognised in other comprehensive expense (1,390) 524
Total amount recognised in Income Statement and other comprehensive expense (1,317) 597
Changes to the present value of the defined benefit obligation are analysed as
follows:
2022 2021
£'000 £'000
Opening defined benefit obligation 16,174 16,004
Past service cost - -
Interest expense 307 320
Contributions by participants - -
Actuarial losses on liabilities (1,074) 1,325
Net benefit payments from scheme (251) (1,475)
Closing value at 28 February 15,156 16,174
Changes in the fair value of plan assets are analysed as follows:
2022 2021
£'000 £'000
Opening fair value at 1 March 12,355 12,332
Expected return on assets 235 247
Actuarial gains on liabilities 316 801
Contributions by employers 450 450
Contributions by participants - -
Net benefit payments from scheme (252) (1,475)
Closing value at 28 February 13,104 12,355
The Group expects to contribute £412,500 to its defined benefit pension
scheme in the next 12 months (2021: £450,000).
Actual return on Scheme assets 2022 2021
£'000 £'000
Expected return on assets 235 247
Remeasurement gain on assets 316 801
Actual return on assets 551 1,048
Sensitivity analysis
The table below illustrates the sensitivity of the Scheme liabilities at 28
February 2022 to changes in the principal assumptions. The sensitivities
assume that all other assumptions remain unchanged and the calculations are
approximate (full calculations could lead to a different result).
Change in assumption Approximate increase in liabilities Approximate increase in liabilities
%
£'000
Interest rate reduced by 0.5% p.a. 11.2 1,697
Inflation assumption reduced by 0.5% p.a.* 7.2 1,091
Increase in life expectancy of one year for all members reaching 60 2.2 333
* The inflation assumption sensitivity applies to
both the assumed rate of increase in the CPI and the RPI, and includes the
impact on the rate of increases to pensions, both before and after retirement.
Defined contribution schemes
There are a number of defined contribution schemes in the Group, the principal
scheme being the Braemar Pension Scheme, which is open to all UK employees.
Cash contributions paid into the defined contribution schemes are accounted
for as an Income Statement expense as they are incurred. The total charge for
the year in respect of this and other defined contribution schemes amounted to
£1,234,000 (2021: £1,280,000) of which £915,000 (2021: £893,000) was in
respect of continuing operations.
Contributions of £99,000 were due to these schemes at 28 February 2022 (2021:
£97,000).
The assets of these schemes are held separately from those of the Group in
funds under the control of the Trustees.
28 Share capital
Ordinary shares Ordinary shares
2022 2021 2022 2021
Number Number £'000 £'000
a) Authorised
Ordinary shares of 10 pence each 34,903,000 34,903,000 3,490 3,490
Ordinary shares Ordinary shares Share premium
2022 2021 2022 2021 2022 2021
(restated)
Number £'000 £'000 £'000
£'000
Number
b) Issued
Fully paid ordinary shares of 10 pence each
As at start of year 31,731,218 31,673,829 3,174 3,167 52,510 52,510
Shares issued and fully paid (see below) 474,372 57,389 47 7 520 -
As at end of year 32,205,590 31,731,218 3,221 3,174 53,030 52,510
Share premium has been restated (see Note 34) reducing by £3.3m to £52.5m at
29 February 2020 and 28 February 2021.
227,281 shares were issued to the Group's ESOP to satisfy share awards under
the Company Share Option Plan. In addition, 204,944 shares were issued to
settle part of the deferred consideration payable in respect of the
acquisition of Naves during the year ended 28 February 2022.
During the year ended 28 February 2022, no shares were issued as part of the
restricted share plan scheme (2021: 57,389 shares were issued at nil cost).
No shares were issued in the year as part of the Save As You Earn ("SAYE")
Scheme. No shares remained unpaid at 28 February 2022 or 28 February 2021.
The Company has one class of ordinary shares which carry no right to fixed
income.
c) Share-based payments
The Company operates a variety of share-based payment schemes which are listed
below.
i) Share options
The Company operates an employee save-as-you-earn option scheme called the
Braemar Shipping Services Plc Savings-Related Share Option Scheme 2014
("SAYE") and the Braemar Shipping Services Plc International Savings-Related
Share Option Scheme 2019 (the "International SAYE Scheme"). No option may be
granted under any scheme which would result in the total number of shares
issued or remaining issuable under all of the schemes (or any other Group
share schemes), in the ten-year period ending on the date of grant of the
option, exceeding 10% of the Company's issued share capital (calculated at the
date of grant of the relevant option). Options are granted at a 20% discount
to the prevailing market price.
Details of the share options in issue and the movements in the year are given
below:
Share scheme Year option granted Number at 1 March 2021 Granted Exercised Lapsed Number at Exercise price (pence) Exercisable between
28 February 2022
SAYE 2019 413,771 - - - 413,771 160.0 2022-2023
Options are valued using a binomial pricing model. The fair value per option
granted and the assumptions used in the calculation at the date of grant were
as follows:
SAYE 2019
Grant date 5 Jul 2019
Share price at grant date 199.67p
Exercise price 160.0p
Number of employees 164
Shares under option 656,070
Vesting period (years) 3.0
Expected volatility 30.49%
Option life (years) 3.5
Risk-free rate 0.35%
Expected dividends expressed as a dividend yield 7.51%
Possibility of ceasing employment before vesting 9.62%
Expectation of meeting performance criteria 100.00%
Fair value per option 33.62p
The expected volatility is based on historical volatility of the Company's
shares as traded on the London Stock Exchange. The risk-free rate of return is
based on LIBOR.
The value of the awards are expensed over the period from the date of grant to
the vesting date.
No options were exercised in the current year or the prior year.
ii) Deferred Bonus Plan
In 2005, the Company put in place a Deferred Bonus Plan (the "Plan") whereby
part of the annual performance-related bonus is delivered in shares, on a
discretionary basis, to staff including executive directors.
The provisional value of the Deferred Bonus Plan for a given financial year is
set in the budgeting process preceding the financial year, and this value is
expensed over the period from provisional determination until vesting. Once
the actual performance for the financial year is known the rate of accrual is
corrected accordingly.
Vesting normally occurs three years from the date of grant, subject to the
employee beneficiary remaining in employment with the Group, at which time the
award will be settled by the transfer of shares to the beneficiary.
The Company adopted a new Deferred Bonus Plan in May 2020 (the "New DBP"),
pursuant to which subsequent discretionary bonus awards will be granted to
staff including executive directors. Awards under the New DBP may be linked to
an option granted under the new Braemar Company Share Option Plan 2020, which
was also adopted by the Company in May 2020 (the "New CSOP"). Where an
employee receives a linked award under the New DBP, where the Company's share
price rises over the vesting period, the New CSOP award can be exercised with
the value of shares delivered on the vesting of the New DBP award being
reduced by the exercise gain on the New CSOP award. Awards under the New DBP
and the New CSOP will continue to be settled via the transfer of shares from
the ESOP and not through new issue.
Details of the share awards in issue and the movements in the year are given
below:
Share scheme Number at Granted Exercised Lapsed Number at Exercise price (pence) Exercisable
1 March 28 February
2021 2022
September 2017 20,000 - - (20,000) - nil Sep 2020
June 2018 901,070 - (837,081) (30,602) 33,387 nil Jun 2021
June 2019 1,636,422 - - (30,000) 1,606,422 nil Jun 2022
July 2020 3,299,322 - - (131,467) 3,167,855 nil Jul 2022
November 2020 315,975 - - - 315,975 nil Nov 2023
June 2021 - 1,378,586 - (50,050) 1,328,536 nil Jun 2024
Deferred Bonus Plan 6,172,789 1,378,586 (837,081) (262,119) 6,462,175 nil
The weighted average share price on exercise for awards exercised during the
year was £2.77 (2021: £1.40). The weighted average share price at grant date
for awards granted during the year was £3.03 (2021: £1.23).
The Company also grants certain awards under the Deferred Bonus Plan to
attract and retain key staff hires. No options were granted in the financial
year.
Under both the Plan and the New DBP, sufficient shares to satisfy each award
are bought over the course of the vesting period, and held in an employee
trust ("ESOP") until vesting. As at 28 February 2022, the ESOP held
2,669,603 ordinary shares (2021: 525,837). The ESOP holding is in line with
expectations of how many shares will be needed to satisfy the current awards
under this scheme. This amount is net of expected lapses in the scheme and the
fact that recipients typically forego sufficient shares in order to satisfy
the associated tax liability that arises on their vesting.
iii) Restricted Share Plan
During the year ended 28 February 2015, the Company established a Restricted
Share Plan ("RSP"). This scheme was set up and awarded to employees to retain
key staff following the merger between Braemar Shipping Services Plc and ACM
Shipping plc, but it can also be used where the Remuneration Committee
considers it necessary to secure the recruitment of a particular individual.
Executive directors of the Company are not eligible to participate in the RSP.
RSP awards are made in the form of a nil cost option and there are no
performance criteria other than continued employment.
During the year ended 28 February 2015 the Company issued 1,409,000 RSP
awards, of which 50% will vest after three years and 25% after each of the
fourth and fifth years provided the individuals remain employed by the Group.
During the year ended 29 February 2016 a further 315,000 RSP awards were
granted, of which 50% will vest after three years and 25% after each of the
fourth and fifth years provided the individuals remain employed by the Group.
During the year ended 28 February 2018 a further 77,120 RSP awards were
granted, of which 50% will vest after three years and 25% after each of the
fourth and fifth years provided the individuals remain employed by the Group.
During the year ended 28 February 2019 a further 144,000 RSP awards were
granted, of which 100% will vest after three years provided the individuals
remain employed by the Group.
Details of the RSP share awards in issue and the movements in the year are
given below:
Share scheme Number at Granted Exercised Lapsed Number at Exercisable
1 March 28 February between
2021 2022
July 2014 13,750 - - - 13,750 Jul 17 - Jul 24
Aug 2015 18,750 - (6,250) - 12,500 Aug 18 - Aug 25
March 2016 12,500 - (12,500) - - Mar 22 - Mar 26
May 2017 38,560 - (38,560) - - May 20 - May 27
July 2018 36,320 - - - 36,320 Jul 21 - Jul 28
Feb 2019 144,000 - - - 144,000 Feb 22 - Feb 29
Restricted Share Plan 263,880 - (57,310) - 206,570
The weighted average share price on exercise for awards exercised during the
year was £2.81 (2021: £1.24).
The fair value of the nil cost options is approximated to the share price at
the time of grant less the expected dividend to be paid during the vesting
period.
The value of the awards are expensed over the period from the date of grant to
the vesting date or if used as a recruitment incentive, from the date of
joining to the vesting date. The awards are satisfied by the issue of new
shares.
iv) Long-Term Incentive Plan ("LTIP")
The Company also has LTIP awards, which allow for the form of a conditional
right to receive shares at nil cost. The awards normally vest over three years
and are subject to various performance conditions based on earnings per share
("EPS") or divisional operating profit.
In June 2018, awards of 527,464 shares were made to one executive director and
three senior members of management.
In June 2019, awards of 394,735 shares were made to one executive director and
three senior members of management.
In June 2020, awards of 506,250 shares were made to one executive director and
three senior members of management.
Details of the LTIP share awards in issue and the movements in the year are
given below:
Share scheme Number at Granted Exercised Lapsed Number at Exercisable
1 March 28 February between
2021 2022
LTIP 2018 150,537 - - (117,243) 33,294 Nov 21 - Jun 28
LTIP 2019 394,735 - - - 394,735 Dec 21 - Dec29
LTIP 2020 506,250 - - - 506,250 Aug 23 - Jun30
Long-Term Incentive Plan 1,051,522 - - (117,243) 934,279
The weighted average share price at grant date for awards granted during the
prior year was £1.23.
The fair value of the nil cost options is approximated to the share price at
the time of grant less the expected dividend to be paid during the vesting
period calculated using the market consensus dividend yield.
The value of the awards are expensed over the period from the date of grant to
the vesting date. The awards are satisfied by the issue of new shares.
Movement in share-based payment reserve
Movement in share-based payment reserve Total
£'000
Share-based payment expense
- Continuing operations 2,951
- Discontinued operations 58
Total charge to income statement 3,009
Transfer to accruals (115)
2,894
Awards vesting (1,659)
Net movement in share-based payment reserve for year ended 28 February 2022 1,235
The share-based payment reserve is presented within retained earnings
29 ESOP reserve
An Employee Share Ownership Plan ("ESOP") was established on 23 January 1995.
The ESOP has been set up to purchase shares in the Company. These shares, once
purchased, are held in trust by the Trustee of the ESOP, SG Kleinwort Hambros
Trust Company (CI) Limited, for the benefit of the employees. Additionally,
an Employee Benefit Trust ("EBT") previously run by ACM Shipping Group plc
also holds shares in the Company. The ESOP and EBT are accounted for within
the Company accounts.
The ESOP reserve represents a deduction from shareholders' funds and a
reduction in distributable reserves The deduction equals the net purchase cost
of the shares held in by the ESOP. Shares allocated by the ESOP to satisfy
share awards issued by the group are released at cost on a FIFO basis.
Group and Company £'000
At 29 February 2020 2,498
Shares acquired by the ESOP 860
ESOP shares allocated (1,996)
At 28 February 2021 1,362
New shares fully paid up and issued to the ESOP 25
Shares acquired by the ESOP 7,043
ESOP shares allocated (1,659)
At 28 February 2022 6,771
As at 28 February 2022, the ESOP held 2,669,603 (2021: 525,837) ordinary
shares of 10 pence each. The funding of the purchase has been provided by the
Company in the form of a gift and the Trustees have contracted with the
Company to waive the ESOP's right to receive dividends. The fees charged by
the Trustees for the operation of the ESOP are paid by the Company and charged
to the Income Statement as they fall due. Since the year end a further
1,670,000 shares have been acquired by the Trustees making the total in the
ESOP currently 4,339,603.
As part of the acquisition of ACM Shipping Group plc in July 2014, the Company
issued 125,621 shares into an Employee Trust ("EBT") previously run by ACM
Shipping Group plc. As at 28 February 2022, the EBT held 62,290 (2021: 62,290)
ordinary shares of 10 pence each.
The total cost to the Company of shares and cash held in the ESOP and EBT at
28 February 2022 was £6,771,000 (2021: £1,362,000) including stamp duty
associated with the purchase. The shares owned by the ESOP and EBT had a
market value at 28 February 2022 of £6,420,395 (2021: £1,305,642). The
distribution of these shares is determined by the Remuneration Committee.
596,398 shares (2021: 362,563) have been released to employees during the
year. The shares acquired by the ESOP had an aggregate cost of £7.0m, of
which £6.3m was settled in cash whilst share awards with a market value were
£0.7m were forfeited by employees to the ESOP to cover the tax charge arising
on the gross awards which were subsequently settled by the Group.
30 Other reserves
Restated Note Capital Merger Foreign Hedging Total
redemption
reserve
currency
reserve
£'000
reserve
£'000
translation
£'000
£'000
reserve
£'000
At 28 February 2020 396 21,346 1,385 (848) 22,279
Restatement - 3,295 (205) 493 3,583
At 28 February 2020 (restated) 396 24,641 1,180 (355) 25,862
Cash flow hedges
- Transfer to net profit - - - 292 292
- Fair value losses in the period - - - 1,918 1,918
Exchange differences - - 442 - 442
Deferred tax on items taken to equity - - - (420) (420)
At 28 February 2021 396 24,641 1,622 1,435 28,094
Cash flow hedges
- Transfer to net profit - - - (1,613) (1,613)
- Fair value gain/losses in the period - - - (869) (869)
Exchange differences - - 998 - 998
Deferred tax on items taken to equity - - - 514 514
At 28 February 2022 396 24,641 2,620 (533) 27,124
The capital redemption reserve arose on previous share buy-backs by the
Company.
The merger reserve arises on transactions where the Company issues shares
pursuant to an arrangement to acquire more than an 90% interest in another
company and no share premium is recorded. The merger reserve arose principally
in 2001 in relation to the acquisitions of Braemar Shipbrokers Limited and
Braemar Tankers Limited. Further additions have arisen in respect of Naves
and Atlantic Brokers included in the prior period adjustment (£1.3m and
£2.0m respectively). The amounts in merger reserve are unrealised profits
relating to the corresponding assets acquired by the Company on the issue of
shares. These profits may become realised on the disposal or write down of
these assets.
The hedging reserve comprises the effective portion of the cumulative net
change in fair value of cash flow hedging instruments relating to hedged
transactions that have not yet occurred of £710,000 liability (2021:
£1,773,000 asset). An increase in of £514,000 in the deferred tax asset
(2021: £420,000 decrease) is attributable to these transactions.
A correction to the merger reserve has been transferred from share premium has
been recognised as a prior period adjustment - see Note 34.
A correction to the hedging reserve and retained earnings in respect of
consolidation errors has been recognised as a prior period adjustment - see
Note 34.
31 Contingent liabilities
The Group has contingent liabilities in respect of guarantees entered into in
the normal course of business given as follows:
2022 2021
£'000 £'000
Bank guarantees given to:
HM Revenue and Customs - 1,410
Third parties (non-cash collateralised) 837 787
Total 837 2,197
In the prior year the Group had issued a guarantee of £1.4m to HMRC in
respect of VAT, duty and excise which was collected on imports which was
collected by Cory Brothers as part of its trading activity and subsequently
paid to HMRC. As a result of Brexit, HMRC no longer required the guarantee and
it was cancelled by the Group prior to the disposal of Cory Brothers.
In addition, the Company and certain of its subsidiaries have provided cross
guarantees and fixed and floating rate charges over their assets to secure
their borrowing facilities and other financial instruments (see Note 22).
From time to time the Group may be engaged in litigation in the ordinary
course of business. The Group carries professional indemnity insurance. There
are currently no liabilities expected to have a material adverse financial
impact on the Group's consolidated results or net assets.
32 Related party transactions
During the period the Group entered into the following transactions with joint
ventures and investments:
2022 2021
Group Recharges Dividends Balance Recharges Dividends Balance
to/(from)
£'000
due(to)/ from
to/(from)
£'000
due(to)/ from
£'000
£'000
£'000
£'000
London Tanker Broker Panel 324 - - 310 - -
AqualisBraemar LOC ASA 221 - 282 610 641 240
Risorto GmbH (453) - (31) (865) - (33)
Worldscale 84 - - 60 - -
London Tanker Broker Panel
Recharges to London Tanker Broker Panel consist of a monthly fee payable to
the Group for the provision of data.
AqualisBraemar LOC ASA
Recharges to AqualisBraemar LOC ASA consisted primarily of rent, IT services
and HR services in accordance with a transitional services agreement. Included
in the net recharge to AqualisBraemar LOC ASA is a fee payable to the Group's
former Chairman, Ronald Series of £3,750 (2021: £15,000).
In the prior year, the Group received £641,000 of dividends from
AqualisBraemar LOC ASA which were credited to cost of investment. See Note
19.
A loss of £262,000 was recognised in the prior year in respect of the Group
subletting a portion of its Singapore office space to AqualisBraemar LOC ASA,
and an impairment to a right-of-use asset in respect of a London office which
will be vacated by AqualisBraemar LOC ASA. See Note 8.
The balance due from AqualisBraemar LOC ASA is unsecured, interest-free and
immediately repayable.
Risorto GmbH
Risorto GmbH is owned and controlled by the management of Braemar Naves
Corporate Finance GmbH. The amount charged by Risorto GmbH in the year to the
Group for management fees was €0.5m (2021: €0.7m). The balance owing to
Risorto GmbH as at 28 February 2022 was less than €0.1m (2021: less than
€0.1m).
Worldscale Association Limited
Management consider that Worldscale Association Limited is a related party
because Nico Borkmann, a senior employee in the Braemar Group is one of its
directors. Recharges to Worldscale consist of a monthly fee payable to the
Group for the provision of data.
Key management compensation is disclosed in Note 4.
Transactions with wholly owned subsidiaries
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
Note.
Unless otherwise indicated, all shareholdings owned directly or indirectly by
the Company represent 100% of the issued share capital of the subsidiary and
the share capital comprises ordinary shares. All entities primarily operate in
their country of incorporation.
Subsidiaries
Direct holdings of the Company as at 28 February 2022:
Incorporated in England & Wales Principal activity Registration number
One Strand, Trafalgar Square, London WC2N 5HR
Braemar ACM Group Limited* Holding company 05990315
Braemar Atlantic Securities Holdings Limited* Holding company 10010995
Braemar Financial Holdings Limited* Holding company 10917096
Braemar Shipbrokers Limited* Shipbroking 01674710
Seascope Capital Services Limited Dormant 03592796
GFL (UK) Limited Dormant 02360525
Braemar Developments Limited* Dormant 02186790
Braemar Tankers Limited Dormant 02001027
Incorporated in the US Principal activity Registration number
2800 North Loop West, Suite 900, Houston, Texas 77092, US
Braemar Holdings (USA) Inc Holding company FEIN 81-1568938
Indirect holdings of the Company as at 28 February 2021:
Incorporated in England & Wales Principal activity Registration number
One Strand, Trafalgar Square, London WC2N 5HR
Braemar ACM Shipbroking Group Limited* Holding company 01611096
Braemar ACM Shipbroking Limited Shipbroking 01020997
Braemar ACM Shipbroking (Dry Cargo) Limited* Shipbroking 07223509
A.C.M. Shipping USA Limited* Shipbroking 08391132
Braemar ACM Valuations Limited* Valuations 03439765
Braemar Atlantic Securities Limited Futures broker 07899358
Braemar Naves Corporate Finance Limited* Corporate finance 02710842
Cagnoil Limited^ Dormant 05696624
Orca Shipping Limited^ Dormant 07067104
ACM Shipping EBT Limited^ Dormant 05747447
ACM Shipping CIS Limited Dormant 06934055
Braemar Maritime Limited Dormant 03321899
Braemar Burness Maritime Limited Dormant 03674230
Burness Marine (Gas) Limited Dormant 01081837
Burness Marine (Tankers) Limited^ Dormant 02367038
Braemar Chartering Limited^ Dormant 01912501
Braemar Pension Trustees Limited Dormant 05502209
Incorporated in Germany Principal activity Registration number
Domstrasse 17, 20095 Hamburg, Germany
Braemar Naves Corporate Finance GmbH Corporate finance HRB 114161
Braemar Financial Holdings Germany GmbH Holding company HRB 146089
Incorporated in United Arab Emirates
One JLT 06-55 One JLT, Plot No. Dmcc-Ez1-1ab, Jumeirah Lakes Towers, Dubai, Principal activity Registration number
UAE
Braemar ACM Shipbroking DMCC Shipbroking DMCC-749556
Incorporated in the US Principal activity Registration number
2800 North Loop West, Suite 900, Houston, Texas 77092, US
Braemar ACM Shipbroking (USA) Inc Shipbroking 46-2641490
Braemar Technical Services (USA) Inc Energy loss adjuster 76-0036958
24 Grassy Plain Street - Ste 4, Bethel, CT 06801-1700 US Principal activity Registration number
Braemar ACM Shipbroking LLP Shipbroking 1099337
Incorporated in Singapore Principal activity Registration number
80 Robinson Rd, #24-01/02, Singapore 068898
Braemar ACM Shipbroking Pte Limited Shipbroking 200602547M
Braemar Naves Pte Limited Corporate finance 201834760K
Incorporated in Australia Principal activity Registration number
Level 5, 432 St Kilda Road, Melbourne, Victoria 3004, Australia
Braemar ACM Shipbroking Pty Limited Shipbroking ACN 000862 993
ABN 35 000 862 993
Incorporated in other overseas countries Principal activity Registration number
Piazza 2 Giugno No 14, 54033 Carrara, Italy
Braemar Seascope Italia SRL Shipbroking 01268770458
Suite 2009, Building C Luneng International Center, Principal activity Registration number
No.211, GuoYoa Road, Pudong District, Shanghai, 200126
Braemar Seascope (Shanghai) Limited Shipbroking 913100005588064761
2nd Floor, Building No. 22, Pushp Vihar, Commercial Complex, Principal activity Registration number
Madangir, New Delhi - 110 062
Braemar ACM Shipbroking India Private Limited (50% owned) Shipbroking U63090DL2003PTC120247
Office No. 1004, 10th Floor, Dalamal House, 206-Jamanalal Bajaj Road, Nariman Principal activity Registration number
Point, Mumbai-400021, India
ACM Shipping India Limited Shipbroking U93090MH2006FLC164019
Subsidiaries marked with an asterisk (*) are exempt from the requirements of
the Companies Act 2006 relating to the audit of individual accounts by virtue
of section 479A of the Companies Act 2006 for the financial year ended 28
February 2022. The Company has provided a guarantee of all outstanding
liabilities to which these subsidiaries were subject as at 28 February 2022 in
accordance with section 479C of the Companies Act 2006.
Applications to voluntarily strike off subsidiaries marked ^ were in progress
subsequent to the year end.
33 Events after the reporting date
There were no adjusting or significant non-adjusting events between the
reporting date and the date these Financial Statements were authorised.
34 Prior period adjustments
The prior periods have been restated to reflect discontinued operations and
corrected errors as described below.
During the year ended 28 February 2021, the group restructured part of the
outstanding liabilities due to management sellers of Naves. This exercise
identified that the carrying amount of the future obligations in the group
balance sheet exceeded the nominal value of consideration to be paid and
prompted a review of the accounting for the Naves consideration in full and of
certain other corporate acquisition and disposal transactions in recent years.
The review took a critical analysis of the historical accounting for the
amounts paid and payable on the Naves acquisition, including the issue of
shares, and identified a number of errors. In order to address these errors,
accounting analysis was reviewed and new calculations were performed from the
original acquisition in September 2017 to date. The review also examined the
classification of certain reserves on the balance sheet and identified certain
other misstatements that have been corrected in these accounts.
The adjustments identified are as follows:
a) Merger reserve on the Naves and Atlantic acquisitions
Share premium had been incorrectly recognised on both the Naves and Atlantic
acquisitions in the year to 28 February 2018. The requirement to record share
premium does not apply where shares are issued in pursuance of an arrangement
to acquire more than 90% of the equity in another company. Accordingly, no
share premium should have been recorded and the premium on the issue of shares
should have been recorded as a merger reserve. The amount restated from share
premium to merger reserve in respect of Naves is £1.3m, and £2.0m in respect
of Atlantic Brokers.
b) Naves
The net measurement error to 29 February 2020 was principally due to to a
mathematical error resulting in the overstatement the amounts due to
management sellers accrued earlier periods. The correction in the consolidated
accounts at 29 February 2020 has been to reduce liabilities and increase
retained earnings by £0.9m.
In the year to 28 February 2021, a remeasurement of the outstanding loan note
liabilities identified an overstatement of £2.3m on the balance sheet at year
end. Included within this error was an incorrect charge to the translation
reserve, to the amount of £1.0m which has now been reversed.
The balance of the overstatement related to charges to the income statement
including net operating expense in FY20/21 has been reduced by £0.4m. This
was as a result of an incorrect allocation of liabilities between those
subject to future service conditions and those with no service conditions,
these have now been corrected.
c) RCF
The Group's revolving credit facility ("RCF") liability was previously
incorrectly reported as a short-term liability. The lender is obliged to
continue the facility for a period greater than 12 months from the respective
reporting date, the facility end date is 31 August 2023. The liability has
therefore been restated as a non-current liability at 29 February 2020 and 28
February 2021.
d) Consolidation errors
The historical review of the financial reporting systems identified certain
errors in the group's accounting practices for the elimination of intercompany
balances and movements on the foreign exchange translation reserve.
These errors resulted in the overstatement of current liabilities at 29
February 2020 of £0.8m and 28 February 2021 of £0.6m.
An amount of £1m was identified in foreign exchange reserve which should have
been recycled through profit and loss relating to the dilution of the
investment in Aqualis Braemar in 2021 and has been restated in profit and loss
for that year. An amount of £0.5m at 1 March 2020 was identified as being a
misallocation between the Hedging reserve and the Translation reserve and has
been corrected in the opening balance sheet. Further smaller errors have been
identified as misallocations from retained earnings in both the balance sheets
at 1 March 2020 and 28 February 2021. The total impact of these errors
resulted in an increase in net assets of £0.8m at 1 March 2020 and £0.6m at
28 February 2021.
Discontinued operations
The Group disposed of its controlling interest in AqualisBraemar on 19 May
2021 and completed its disposal of its Logistics Division, Cory Brothers, on 2
March 2022. AqualisBraemar and the Logistics Division have therefore been
presented as discontinued operations in the current and prior period income
statement with no impact on net income.
The impact of these adjustments on the financial statements is set out in the
schedules below:
Correction of prior period errors
28 February 2021 Reported a) Merger reserve b) Naves c) RCF d) Consolidation errors 28 February 2021 Discontinued operations 28 February 2021
Corrected
Restated
Consolidated Income Statement
Revenue 111,778 - - - - 111,778 (28,083) 83,695
Cost of sales (17,000) - - - - (17,000) 17,000 0
Gross profit 94,778 - - - - 94,778 (11,083) 83,695
Operating Expense - - - - - - - -
Other operating costs - underlying (85,868) - - - - (85,868) 9,892 (75,976)
Other operating costs - specific (262) - - - (262) (262)
Acquisition related income/(expenditure) 1,873 - 397 - - 2,270 (3,105) (835)
(84,257) - 397 - - (83,860) 6,787 (77,073)
Operating profit/(loss) - underlying 8,910 8,910 (1,191) 7,719
Operating profit/(loss) - specific items 1,611 397 - 2,008 (3,105) (1,097)
Operating profit/(loss) 10,521 - 397 - - 10,918 (4,296) 6,622
Share of associate profit for the period - underlying 255 - - - - 255 (255) -
Share of associate profit for the period - specific items 91 - - - - 91 (91) -
Finance income - underlying 170 - - - - 170 (14) 156
Finance income - specific items - - - - - - - -
Finance expense - underlying (1,250) - - - - (1,250) 41 (1,209)
Finance expense - specific items (432) - - - - (432) - (432)
Profit/(loss) before taxation - underlying 8,085 - - - - 8,085 (1,419) 6,665
Profit/(loss) before taxation - specific items 1,270 - 397 - - 1,667 (3,196) (1,529)
Profit/(loss) before taxation - total 9,355 - 397 - - 9,752 (4,615) 5,136
Taxation - underlying (1,999) - - - - (1,999) 227 (1,772)
Taxation - specific items 198 - - - - 198 - 198
Taxation (1,801) - - - - (1,801) 227 (1,574)
Profit/(loss) for the year from continuing operations - underlying 6,086 - - - 6,086 (1,193) 4,894
Profit/(loss) for the year from continuing operations - specific items 1,468 - 397 - - 1,865 (3,196) (1,331)
Profit/(loss) for the year from continuing operations 7,554 - 397 - - 7,951 (4,389) 3,563
Profit/(loss) for the year from discontinued operations - underlying (1,706) - - - - (1,706) 1,163 (513)
Profit/(loss) for the year from discontinued operations - specific items (754) - - - (959) (1,713) 3,196 1,483
Profit/(loss) for the year from discontinued operations (2,460) - - - (959) (3,419) 4,389 970
Profit/(loss) for the year - underlying 4,380 - - - - 4,380 - 4,380
Profit/(loss) for the year - specific 714 - 397 - (959) 152 - 152
Profit/(loss) for the year 5,094 - 397 - (959) 4,532 - 4,532
Correction of prior period errors
28 February 2021 a) Merger reserve b) Naves c) RCF d) Consolidation errors 28 February 2021 Discontinued 28 February 2021
Reported
Corrected
operations
Restated
Consolidated Statement of Comprehensive Income - -
- -
Profit for the year 5,094 - 397 - (959) 4,532 - 4,532
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss - - - - - - - -
Actuarial loss on employee benefit schemes - net of tax (424) - - - - (424) - (424)
Items that are or may be reclassified to profit or loss - - - - - - - -
Foreign exchange differences on retranslation of foreign operations (715) - 994 - (308) (29) 748 719
Recycling of foreign exchange reserve (488) - - - 959 471 (471) -
Cash flow hedges - net of tax 2,126 - - - (336) 1,790 - 1,790
Other comprehensive income from continuing operations 499 - 994 - 314 1,808 277 2,085
Share of other comprehensive income/(expense) of associates - - - - - - 312 312
Foreign exchange differences on revaluation of investment - - - - - - (1,060) (1,060)
Recycling of foreign exchange reserve (DiscOps) - - - - - - 471 471
Other comprehensive expense from Discontinued operations - - - - - - (277) (277)
Total comprehensive income for the year attributable to 5,593 - 1,391 - (644) 6,340 - 6,340
Correction of prior period errors
28 February 2021 Reported a) Merger reserve b) Naves c) RCF d) Consolidation errors 28 February 2021
Restated
Non-current assets 106,638 106,638
Trade and other receivables 34,800 34,800
Financial asstes 746 746
Derivative financial instruments 1,573 1,573
Cash and cash equivalents 14,111 14,111
Assets held for sale 436 436
51,666 - - - - 51,666
Total assets 158,304 - - - - 158,304
Current liabilities -
Derivative financial instruments (60) - 60 - - -
-
Short-term borrowings (23,000) - - 23,000 - -
-
Convertible loan notes (5,130) - 669 - - (4,461)
Deferred consideration payable (608) - 608 - - -
Other current liabilities (47,987) - - - 590 (47,397)
(76,785) - 1,337 23,000 590 (51,858)
Non-current liabilities
Derivative financial instruments - - (56) - - (56)
Convertible loan notes (1,217) - (1,464) - - (2,681)
Deferred consideration payable (3,358) - 2,476 - - (882)
Other non-current liabilities (13,317) - - (23,000) - (36,317)
(17,892) - 956 (23,000) - (39,936)
Total liabilities (94,677) - 2,293 - 590 (91,794)
Total assets less total liabilities 63,627 - 2,293 - 590 66,510
Equity -
Share capital 3,174 - - - - 3,174
Share premium 55,805 (3,295) - - - 52,510
Shares to be issued (1,362) - - - - (1,362)
Other reserves 22,790 3,295 994 - 1,015 28,094
Retained earnings (16,780) - 1,299 - (425) (15,906)
Total equity 63,627 - 2,293 - 590 66,510
Correction of prior period errors
1 March 2020 Reported a) Merger reserve b) NAVES c) RCF d) Consolidation errors 1 March 2020 Restated
Non-current assets 114,699 114,699
Trade and other receivables 39,541 39,541
Financial assets - -
Derivative financial instruments - -
Cash and cash equivalents 28,749 28,749
Assets held for sale - -
68,290 - - - - 68,290
Total assets 182,989 182,989
Current liabilities
Derivative financial instruments (527) 90 - (437)
Short-term borrowings (48,758) - 23,642 - (25,116)
-
Convertible loan notes (4,340) - (104) - - (4,444)
Deferred consideration payable (600) - 423 - - (177)
Other current liabilities (49,566) - - - 822 (48,744)
(103,791) - 409 23,642 822 (78,918)
Non-current liabilities
Derivative financial instruments - - (4) - - (4)
Convertible loan notes (2,398) - (241) - - (2,639)
Deferred consideration payable (3,031) - 738 - - (2,293)
Other non-current liabilities (16,283) - - (23,642) - (39,925)
(21,712) - 493 (23,642) - (44,861)
Total liabilities (125,503) - 902 - 822 (123,779)
Total assets less total liabilities 57,486 - 902 - 822 59,210
-
Equity -
Share capital 3,167 - - - - 3,167
Share premium 55,805 (3,295) - - - 52,510
Shares to be issued (2,498) - - - - (2,498)
Other reserves 22,279 3,295 - - 288 25,862
Retained earnings (21,267) - 902 - 534 (19,831)
Total equity 57,486 - 902 - 822 59,210
Company Balance Sheet
As at 28 February 2022
Note As at As at As at
28 Feb 2022
28 Feb 2021
Restated 1 March 2020
£'000
£'000
Restated
£'000
Assets
Non-current assets
Intangible assets 5 627 539 632
Property, plant and equipment 6 3,891 5,670 7,559
Investments 8 108,389 106,228 104,436
Investment in associate 9 - 3,247 7,000
Deferred tax assets 10 179 584 1,273
Other long-term receivables 11 38,775 26,969 34,795
151,861 143,237 155,695
Current assets
Other receivables 12 10,800 10,155 10,772
Cash and cash equivalents 13 700 634 26
11,500 10,789 10,798
Total assets 163,361 154,026 166,493
Liabilities
Current liabilities
Other payables 14 45,298 40,488 16,588
Short-term borrowings - - 25,116
Deferred consideration payable - - 589
Convertible loan notes 16 1,416 4,461 4,444
46,714 44,949 46,737
Non-current liabilities
Other payables 14 570 - -
Long-term borrowings 15 27,305 29,386 33,432
Convertible loan notes 16 3,271 3,640 4,448
Derivative liabilities 16 85 139 25
Provisions 17 541 541 541
31,772 33,706 38,446
Total liabilities 78,486 78,655 85,183
Total assets less total liabilities 84,875 75,371 81,310
Equity
Share capital 18 3,221 3,174 3,167
Share premium 18 53,030 52,510 52,510
ESOP reserve 19 (6,771) (1,362) (2,498)
Other reserves 20 23,762 23,762 25,037
Retained earnings/(deficit) 11,633 (2,713) 3,094
Total equity 84,875 75,371 81,310
In accordance with the exemptions allowed by Section 408 of the Companies Act
2006, the Company has not presented its own profit and loss account. A profit
of £15,220,000 (2021 restated: loss of £6,899,000) has been dealt with in
the Financial Statements of the Company. The prior year Financial Statements
have been adjusted to correct an error in respect of the accounting for the
purchase of Naves and some misclassifications on the balance sheet (see Note
23 for further detail).
The accompanying notes form an integral part of these Financial Statements.
The Financial Statements of Braemar Shipping Services plc were approved by the
board of directors on 28 August 2022 and were signed on its behalf by:
James
Gundy
Nicholas Stone
Group Chief Executive Officer Chief Financial
Officer
Registered number: 02286034
Company Statement of Changes in Total Equity
For the year ended 28 February 2022
Note Share Share ESOP reserve Other Retained earnings Total
capital
premium
£'000
reserves
£'000
equity
£'000
£'000
£'000
£'000
At 1 March 2020 3,167 55,805 (2,498) 21,742 2,221 80,437
Prior period adjustment 23 - (3,295) - 3,295 873 873
Restated balances at 1 March 2020 3,167 52,510 (2,498) 25,037 3,094 81,310
Loss for the year (restated) 23 - - - - (6,899) (6,899)
Impairment of Naves preference shares 20 - - - (1,275) 1,275 -
Issue of shares 18 7 - - - (7) -
Own shares acquired 19 - - (860) - - (860)
Issue of shares held by ESOP 19 - - 1,996 - (1,996) -
Share-based payments - - - - 1,820 1,820
Transactions with owners 7 - 1,136 - (183) 960
At 28 February 2021 3,174 52,510 (1,362) 23,762 (2,713) 75,371
Profit for the year - - - - 15,220 15,220
Dividends paid - - - - (2,109) (2,109)
Issue of shares 18 47 520 (25) - - 542
Own shares acquired 19 - - (7,043) - - (7,043)
Issue of shares held by ESOP 19 - - 1,659 - (1,659) -
Share-based payments - - - - 2,894 2,894
Transactions with owners 47 520 (5,409) - (874) (5,716)
At 28 February 2022 3,221 53,030 (6,771) 23,762 11,633 84,875
The accompanying notes form an integral part of these Financial Statements.
Notes to the Company Financial Statements
General information
The separate Financial Statements of Braemar Shipping Services Plc for the
year ended 28 February 2022 were authorised for issue in accordance with a
resolution of the directors on 28 August 2022. Braemar Shipping Services Plc
is a public limited company incorporated in England and Wales, and its
principal activity is a holding company for the shipbroking business.
The term "Company" refers to Braemar Shipping Services Plc.
1 Significant accounting policies
a) Basis of preparation
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 28 February 2022 or 28 February 2021
but is derived from those accounts. Statutory accounts for 2021 have been
delivered to the registrar of companies, and those for 2022 will be delivered
in due course. The auditor has reported on those accounts; their reports
were (i) unqualified; (ii) did not include a reference to any matters to which
the auditor drew attention by way of emphasis without qualifying their report;
and (iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
The financial information included in this preliminary announcement has been
prepared in accordance with United Kingdom Generally Accepted Practice,
including Financial Reporting Standard 101 Reduced Disclosure Framework
(United Kingdom Generally Accepted Accounting Practice). No Income Statement
is presented for Braemar Shipping Services Plc as provided by Section 408 of
the Companies Act 2006.
The Financial Statements have been prepared under the historic cost convention
except for items measured at fair value as set out in the accounting policies
below and have been prepared on a going concern basis.
The Company Financial Statements are presented in Sterling and all values are
rounded to the nearest thousand Sterling (£'000) except where otherwise
indicated.
FRS 101
The Financial Statements of the Company have been prepared in accordance with
FRS 101 Reduced Disclosure Framework. The Company has applied the exemptions
available under FRS 101 in respect of the following disclosures:
- a Cash Flow Statement and related notes; and
- disclosures in respect of transactions with wholly owned
subsidiaries.
As the consolidated Financial Statements of the Group include the equivalent
disclosures, the Company has also taken the exemptions under FRS 101 available
in respect of the following disclosures:
- IFRS 2 "Share-based Payment" in respect of Group settled
share-based payments;
- certain disclosures required by IFRS 13 "Fair Value Measurement"
and the disclosures required by IFRS 7 "Financial Instrument Disclosures"; and
- the requirements in IAS 24 "Related Party Disclosures" to disclose
related party transactions entered into between two or more members of a
group, provided that any subsidiary which is a party to the transaction is
wholly owned by such a member, and the exemption to disclose key management
compensation.
b) Going concern
The Company Financial Statements have been prepared on a going concern basis.
In reaching this conclusion regarding the going concern assumption, the
directors considered cash flow forecasts for a period of greater than 12
months from the date of signing of these Financial Statements. The going
concern assumption for the Company is considered together with the going
concern assumption for the Group, see Note 1 in the Consolidated Financial
Statements for more detail.
c) Use of estimates and critical judgements
The preparation of the Company's Financial Statements requires management to
make judgements, estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and the disclosure of contingent
liabilities, at the reporting date. Estimates and judgements are continually
evaluated based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from these
estimates and assumptions.
The following are key areas where the Company makes significant estimates and
judgements:
Estimates
Estimates regarding (i) the fair value of Cory Brothers deferred receivable
and (ii) share option vesting are described in the notes to the Consolidated
Financial Statements.
Preference share assets
The Company holds investments in preference shares issued by a subsidiary at
fair value through profit and loss. The preference shares are not traded in
any market and there are no similar assets in quoted markets. Therefore, the
Company performs valuation of the present value of future cashflows using
unobservable ("Level 3") inputs. The Company develops unobservable inputs
using the best information available in the circumstances, which include the
Group's forecasts of cash flows for the underlying Finance businesses of the
holding company issuing the preference shares using a risk-adjusted discount
rate. See also accounting policies Note 1 (d).
The key estimates are therefore the selection of suitable discount rates and
the estimation of future growth rates which vary between cash-generating units
depending on the specific risks and the anticipated economic and market
conditions related to each cash generating unit. This discount rates and
growth rates are consistent with those applied to the same business in the
group's assessment of the impairment of goodwill (see Note 12 in the
Consolidated Financial Statements for a description of the approach used by
management to determine these key values).
Judgements
Investments in subsidiaries
The Company recognises provisions for impairment of investments in
subsidiaries based on management's judgement of whether or not there is an
indication of impairment at the Balance Sheet date. A judgement is made
based on the net assets, cash balance and future trading performance of the
subsidiary.
Provision for impairment of preference share assets
The provision for impairment of preference share assets represents
management's best estimate at the Balance Sheet date. The Company holds
investments in preference shares issued by a subsidiary at fair value through
profit and loss and recognised as amounts due from subsidiaries receivable
after more than one year. The preference shares are not traded in any market
and there are no similar assets in quoted markets. Therefore the Company
performs valuation of the present value of future cashflows using unobservable
("Level 3") inputs. The Company develops unobservable inputs using the best
information available in the circumstances, which include the Group's
forecasts of cash flows for the underlying Finance businesses of the holding
company issuing the preference shares using a risk-adjusted discount rate.
The key estimates are therefore the selection of suitable discount rates and
the estimation of future growth rates which vary between cash-generating units
depending on the specific risks and the anticipated economic and market
conditions related to each cash generating unit. The discount rates and growth
rates are consistent with those applied to the same business in the Group's
assessment of the impairment of goodwill. See Note 11 for further details.
Provision for impairment of amounts due from subsidiaries
The provision for impairment of amounts due from subsidiaries represents
management's best estimate at the Balance Sheet date. A number of judgements
are made in the calculation of the provision, primarily based on the net
assets, cash balance and future trading performance of the subsidiary.
The application of IFRS 9 "Financial Instruments" results in an additional
provision for expected credit losses. When measuring expected credit losses,
the Company uses reasonable and supportable forward-looking information, which
is based on assumptions for the future movement of different economic drivers
and how these drivers will affect each other. Probability of default
constitutes a key input in measuring expected credit losses. Probability of
default is an estimate of the likelihood of default over a given time horizon,
the calculation of which includes historical data, assumptions and
expectations of future market conditions.
The Company has considered the impact of both COVID and the conflict in the
Ukraine on the Financial Statements at 28 February 2022. However, at 28
February 2022 there was no evidence to suggest that the Company's amounts due
from subsidiaries may be at a higher risk of becoming credit impaired as a
result of the pandemic or the conflict in the Ukraine. No impairment
allowances were made in respect of either COVID or the conflict in the
Ukraine.
Judgements regarding the measurement of right-of-use assets and liabilities
are described in the notes to the Consolidated Financial Statements.
d) Accounting policies
The Company's accounting policies are the same as the accounting policies of
the consolidated Group except for the policy described below.
Investments
Investments in subsidiaries, associates and joint ventures are held at cost
less accumulated impairment. Where there is objective evidence that the
investment in subsidiaries, associates and joint ventures have been impaired,
the carrying amount of the investment is tested for impairment in the same way
as other non-financial assets.
Investments where the Company has no significant influence are held at fair
value, with movements in fair value recorded in profit and loss.
The Company holds investments in preference shares issued by a subsidiary. The
preference shares do not provide a contractual right to unpaid amounts in the
event of a bankruptcy of the issuer and therefore, in the judgement of the
directors, the returns do not meet the conditions of being solely payments of
principal and interest and are required to be held at fair value through
profit and loss. The valuation of these shares is considered in the use of
estimate and critical judgements above. The preference shares are recognised
as amounts due from subsidiaries receivable after more than one year.
Merger reserve
The merger reserve arises on transactions where the Company issues shares
pursuant to an arrangement to acquire more than an 90% interest in another
company and no share premium is recorded. The amounts in merger reserve are
unrealised profits relating to the corresponding assets acquired by the
Company on the issue of shares. These profits may become realised on the
disposal or write down of these assets.
2 Profit for the year
As permitted by Section 408 of the Companies Act 2006 the Company has elected
not to present its own statement of comprehensive income (including the profit
and loss account) for the year.
The auditor's remuneration for audit services to the Company is disclosed in
Note 3 to the Consolidated Financial Statements.
All fees paid to the auditor were charged to operating profit in both years.
3 Staff costs
Staff costs for the Company during the year (including directors) are provided
in the table below.
2022 2021
£'000
£'000
Salaries, wages and short-term employee benefits 1,776 1,918
Other pension costs 51 47
Social security costs 214 194
Share-based payments 56 10
2,097 2,169
The numbers above include remuneration and pension entitlements for each
director.
The average number of full-time employees of the Company was 16 (2021: 13)
4 Dividends
Amounts recognised as distributions to equity holders in the year are detailed
in Note 10 to the Consolidated Financial Statements.
The Company has become aware of an administrative oversight during the year
ended 28 February 2022, whereby the Company did not properly prepare and file
unaudited interim accounts at Companies House, as required by the Companies
Act 2006, prior to declaring and paying distributions to shareholders in
respect of the Company's 1 September 2021 final dividend and 16 December 2021
interim dividend. As a result of this administrative oversight, the Company
did not comply with certain provisions of the Act and, whilst there were
sufficient distributable reserves to make the relevant distributions, they
were therefore paid in technical infringement of the Act. Neither the amount
nor payment of the relevant distributions, nor the Company's prior audited
accounts, are affected by this, nor is there any impact on the Company's
financial position either at the time of payment(s) or now.
The Company has proposed a resolution at its Annual General Meeting on 6
October 2022 which will, if passed, give the board authority to enter into
deeds of release to discharge these parties from any obligation to repay any
amount to the Company in connection with the Relevant Distributions. The
Company has not recorded the potential right to make claims against
shareholders as an asset or a contingent asset in its financial statements.
The directors of the Company have concluded that any inflow of economic
benefits as a result of such claims is less than probable.
5 Intangible assets
Computer Total
software
£'000
£'000
Cost
At 28 February 2021 782 782
Additions 272 272
At 28 February 2022 1,054 1,054
Amortisation and impairment
At 28 February 2021 243 243
Charge for the year 184 184
At 28 February 2022 427 427
Net book value at 28 February 2022 627 627
Net book value at 28 February 2021 539 539
At 28 February 2022, the Company had no contractual commitments for the
acquisition of computer software (2021: £nil).
6 Property, plant and equipment
Leaseholds Computers Fixtures and Total
£'000
£'000
equipment
£'000
£'000
Cost
At 29 February 2020 and 28 February 2021 9,142 6 222 9,370
Additions at cost - 214 - 214
Disposals (154) (205) (359)
At 28 February 2022 8,988 220 17 9,225
Accumulated depreciation
At 29 February 2020 1,711 2 98 1,811
Impairment 210 - - 210
Charge for the year 1,583 1 95 1,679
At 28 February 2021 3,504 3 193 3,700
Charge for the year 1,547 27 27 1,601
Impairment 392 - - 392
Disposals (154) - (205) (359)
At 28 February 2022 5,289 30 15 5,334
Net book value at 28 February 2022 3,699 190 2 3,891
Net book value at 28 February 2021 5,638 3 29 5,670
The prior year movement has been represented to show the impairment charge
within accumulated depreciation, there was no impact on net book value.
The leaseholds category includes land and buildings held under finance leases
and leasehold improvements. At 28 February 2022, the Company had no
contractual commitments for the acquisition of property, plant and equipment
(2021: £nil).
The impairment charge arose following the assignment of a lease. On 28 March
2022, the Group assigned the lease for its Bevis Marks premises to Beat
Capital. The impairment charge of £392,000 is equal to the subsequent loss
on assignment of this lease, being the lease assignment premium paid plus the
net book value of the ROU asset disposed of less the outstanding lease
liability on that lease.
7 Leases
Right-of-use assets
Leaseholds Fixtures and Total
£'000
equipment
£'000
£'000
At 29 February 2020 6,963 114 7,077
Amortisation (1,483) (91) (1,574)
Impairment (210) - (210)
Exchange differences 1 - 1
At 28 February 2021 5,271 23 5,294
Amortisation (1,436) (23) (1,459)
Impairment (392) - (392)
At 28 February 2022 3,443 - 3,443
Lease liabilities
Leaseholds Fixtures and Total
£'000
equipment
£'000
£'000
At 29 February 2020 11,187 250 11,437
Interest expense 297 18 315
Lease payments (2,556) (157) (2,713)
Exchange differences (2) - (2)
At 28 February 2021 8,926 111 9,037
Interest expense 226 15 241
Lease payments (2,517) (126) (2,643)
Exchange differences (4) - (4)
At 28 February 2022 6,631 - 6,631
Lease receivables
Leaseholds Fixtures and Total
£'000
equipment
£'000
£'000
At 28 February 2020 2,674 - 2,674
Interest received 71 - 71
Lease payments (642) - (642)
Exchange differences 2 - 2
At 28 February 2021 2,105 - 2,105
Interest received 55 - 55
Lease payments (642) - (642)
Exchange differences (6) - (6)
At 28 February 2022 1,512 - 1,512
There was no short-term lease expense, no short-term lease income and no low
value lease expense in the year (2021: £nil).
Lease liabilities
Up to 3 months Between 3 Between 1 Between 2 Over 5 years Total Unearned interest £'000 Net payable £'000
and 12
and 2 years
and 5 years
£'000
£'000
months
£'000
£'000 £'000
£'000
At 28 February 2022 654 1,963 2,618 1,669 - 6,904 (273) 6,631
At 28 February 2021 654 1,963 2,617 4,317 - 9,551 (514) 9,037
Lease receivables
Up to 3 months Between 3 Between 1 Between 2 Over 5 years Total Unearned interest £'000 Net receivable
and 12
and 2 years
and 5 years
£'000
£'000
months
£'000
£'000 £'000 £'000
£'000
At 28 February 2022 160 481 642 285 - 1,568 (56) 1,512
At 28 February 2021 160 481 642 932 - 2,215 (110) 2,105
8 Investments
Subsidiaries Unlisted Total
£'000
investments
£'000
£'000
Cost
At 1 March 2020 113,969 1,500 115,469
Prior period adjustment (450) - (450)
Adjusted opening cost at 1 March 2020 113,519 1,500 115,019
Share-based payments 1,792 - 1,792
At 28 February 2021 115,311 1,500 116,811
Capital contribution to Cory Brothers 3,664 - 3,664
Disposal (4,462) - (4,462)
Share-based payments 2,959 - 2,959
At 28 February 2022 117,472 1,500 118,972
Impairment
At 29 February 2020 and 28 February 2021 and 28 February 2022 10,583 - 10,583
Net book value at 28 February 2022 106,889 1,500 108,389
Net book value at 28 February 2021 104,728 1,500 106,228
The Company recognises investments in subsidiaries at cost less impairment.
The opening balance has been adjusted to correct for an overstatement of
£0.5m from an error in accounting for the acquisition of Naves. This prior
period adjustment is explained in detail in Note 23 (b).
The Company invested £3.0m (2021: £1.8m) in the subsidiaries of the Group in
respect of share-based payment charges incurred in the year.
Management have reviewed the Company's investments in subsidiary undertakings
for impairment. The assets' recoverable amounts assessed by reference to
value in use have been compared to the carrying values. The value in use has
been calculated based upon a discounted cash flow methodology using the most
recent forecasts prepared by management consistent with the goodwill
impairment calculations described in Note 12 to the Consolidated Financial
Statements. The value in use models have also been subject to sensitivity
analysis, with assumptions such as zero revenue growth, an increase in the
discount rate and a reduction in underlying operating profit tested, with
investments retaining sufficient headroom.
The results of the sensitivity analysis are summarised in the below table and
none of the sensitivities give rise to an impairment.
Change in revenue growth Change in discount rate Change in underlying operating profit
+1% -1% +2% -2% +20% -20%
£'000 £'000 £'000 £'000 £'000 £'000
Shipbroking Division 12,975 (12,640) (52,321) 34,642 29,959 (29,959)
Atlantic Brokers 886 (863) (2,946) 4,595 2,976 (2,976)
The company's principal investment in Naves is held as preference shares, -
see Note 11 for additional sensitivity analysis.
Disposal of investment in Cory Brothers Shipping Agency limited
On 28 February 2022 the Company sold its investment in Cory Brothers Shipping
Agency Limited. A reconciliation of the derecognition of the investment to
the gain on disposal is as follows:
£'000
Disposal proceeds 9,897
Carrying value of investment (4,449)
Disposal-related costs (485)
Gain on disposal of Cory Brothers 4,963
The disposal proceeds attributable to the parent company are an 88% share of
the Group's £11.3m disposal proceeds for the sale of the entire Cory Brothers
Group. The disposal proceeds had not been received at year end, other
receivables includes a £6.5m completion payment which was not received until
2 March 2022 (see Note 12), long-term receivables includes £4.8m deferred and
contingent consideration (see Note 11). The 12% share of disposal proceeds
due to Braemar Holdings (USA) Inc. on a pass-through basis is included in
amounts due to subsidiaries (see Note 14).
Investments with a carrying value of £13,000 relating to Wavespec were also
disposed of during the period.
A list of subsidiary undertakings is included in Note 32 of the Consolidated
Financial Statements.
The Financial Statements of the principal subsidiary undertakings are prepared
to 28 February 2022.
Unlisted investments
The Group's unlisted investments include 1,000 (2021: 1,000) ordinary £1
shares in London Tanker Broker Panel. The investment is carried at fair value,
being the value of the most recent comparable transaction, which occurred
during the year ended 28 February 2019. There have been no transactions or
events in the current or prior year which would result in an adjustment to the
fair value at 28 February 2022.
9 Investment in associate
The Company recognises its investment in AqualisBraemar LOC ASA at cost less
impairment. AqualisBraemar LOC ASA is listed on the Oslo Børs, its
principal place of business is Oslo and its registered address is Olav Vs gate
6, 0161, Oslo, Norway.
£'000
Cost at 29 February 2020 7,000
Disposal (3,753)
At 28 February 2021 3,247
Disposal (3,247)
Cost at 28 February 2022 -
On 19 May 2021 the Company fully disposed of its minority shareholding in
AqualisBraemar for cash proceeds of £7,232,000. A reconciliation of the
derecognition of the investment to the gain on disposal is as follows:
£'000
Disposal proceeds 7,232
Carrying value of investment (3,247)
Gain on disposal of AqualisBraemar 3,985
At 28 February 2022 the Group's shareholding was nil which equates to 0% of
AqualisBraemar's share capital and 0% of voting rights (2021: market value of
£6.3m, being 10.42% of share capital and 10.42% of voting rights).
10 Deferred tax
The movement in the deferred tax asset Total
£'000
Balance at 1 March 2021 584
Prior year over provision 191
Movement in opening balance due to change in tax rate 247
Charge for the year (843)
Balance at 28 February 2022 179
A deferred tax asset of £0.2m (2021: £0.6m) has been recognised as the
directors believe that it is probable that there will be sufficient taxable
profits in the future to recover the asset in full.
11 Other long-term receivables
Note 2022 2021
Restated
£'000
£'000
Amounts due from subsidiary undertakings
Preference shares issued by subsidiaries 28,012 28,267
Provision for impairment of preference shares (2,001) (7,025)
Other amounts due from subsidiary undertakings 7,399 7,413
Provision for impairment of other amounts due from subsidiary undertakings (257) (3,157)
Net amounts due from subsidiary undertakings 33,153 25,498
Deferred consideration 3,482 -
Contingent consideration 1,276 -
Finance lease
Finance lease receivables 7 879 1,471
ECL provision for impairment of finance lease receivables (15) -
Net finance lease receivables 864 1,471
Other long-term receivables 38,775 26,969
The Company holds investments in preference shares issued by a subsidiary at
fair value through profit and loss and recognised as amounts due from
subsidiaries receivable after more than one year. The preference shares are
not traded in any market and there are no similar assets in quoted markets.
Therefore the Company performs valuation of the present value of future
cashflows using unobservable ("Level 3") inputs. The Company develops
unobservable inputs using the best information available in the circumstances,
which include the Group's forecasts of cash flows for the underlying Finance
businesses of the holding company issuing the preference shares using a
risk-adjusted discount rate.
The key estimates are therefore the selection of suitable discount rates and
the estimation of future growth rates which vary between cash-generating units
depending on the specific risks and the anticipated economic and market
conditions related to each cash generating unit. The discount rates and growth
rates are consistent with those applied to the same business in the Group's
assessment of the impairment of goodwill. See Note 12 in the Consolidated
Financial Statements for a description of the approach used by management to
determine these key values.
The sensitivity of the valuation of the preference shares to changes in
estimates of growth, discount rate and underlying operating profit is as
follows:
Sensitivity analysis Change in revenue growth Change in discount rate Change in underlying operating profit
+1% p.a. -1% p.a. +1% p.a. -1% p.a. +5% -5%
£'000 £'000 £'000 £'000 £'000 £'000
Impact on valuation of preference shares 2,079 (1,992) (1,945) 2,344 1,496 (1,496)
Note 23 b provides detail of the restatement of the preference shares.
The deferred consideration and the contingent consideration combined represent
the sum of the three earnout payments receivable in respect of the disposal of
Cory Brothers. The deferred consideration comprises the three minimum
earnout payments accounted for on an amortised cost basis. The contingent
consideration represents the variable element of the earnout payments which
are contingent on the future gross profit of the newly formed VertomCory
agency business, which are recognised at fair value through profit or loss.
Note 14 in the Consolidated Financial Statements provides further detail.
See Note 7 for a maturity analysis which reconciles the long-term finance
lease receivables to the undiscounted lease receipts and unearned finance
income.
The prior year amounts due from subsidiary undertakings have been restated
with £30.2m being reclassified from current to non-current. See Note 23 for
further detail.
12 Other receivables
2022 2021
Restated
£'000
£'000
Amounts due from subsidiary undertakings 2,294 7,423
Other receivables 7,625 2,012
Finance lease receivables 633 634
Prepayments 248 86
Total 10,800 10,155
Other receivable includes the completion payment of £6.5 million for the
disposal of Cory Brothers which completed on 28 February 2022, although the
cash was not received until 2 March 2022.
The prior year amounts due from subsidiary undertakings and other receivables
have been restated to correct a misstatement of an intercompany receivable
which has been reclassified as non-current and adjusted for the
mis-calculation of interest, and also for some balance sheet
mis-classifications between amounts due to or from subsidiary undertakings and
other receivables (see Note 23 for further detail).
The total receivables balance (including long-term receivables) is denominated
in the following currencies.
2022 2021
Restated
£'000
£'000
Sterling 21,563 8,857
Euro 28,012 28,267
Total 49,575 37,124
The Company has no trade receivables (2021: £nil). Amounts due from
subsidiary undertakings are interest-free, unsecured and repayable on demand.
The Company provides for impairment using a lifetime expected credit loss
provision for amounts due from subsidiary undertakings. At
28 February 2022 amounts due from subsidiary undertakings of £3.0m (2021:
£3.0m) were treated as credit impaired. In the prior year £0.3m amounts
related to amounts due from the Engineering Division which was disposed of on
31 March 2021.
13 Cash and cash equivalents
2022 2021
£'000 £'000
Cash at bank and cash on hand 700 634
Cash and cash equivalents largely comprise bank balances denominated in
Sterling, US Dollars, Euros and other currencies for the purpose of settling
current liabilities.
The directors consider that the carrying amounts of these assets approximate
to their fair value.
14 Other payables
Current liabilities 2022 2021
Restated
£'000
£'000
Lease liabilities 2,580 2,651
Amounts owed to subsidiary undertakings payable within 1 year 40,780 35,380
Other payables 779 1,672
Accruals 1,159 785
Total 45,298 40,488
Amounts owed to subsidiary undertakings payable within 1 year are
interest-free and unsecured and repayable on demand.
The prior year amounts due to subsidiary undertakings, other payables and 2022 2021
accrual have been restated to correct errors relating to balance sheet
Restated
mis-classification (see Note 23 for further detail).
£'000
£'000
Non-current liabilities
Amounts owed to subsidiary undertakings payable after more than 1 year 570 -
Amounts owed to subsidiary undertakings payable after more than 1 year are a
12% share of the deferred and contingent receivables due to Braemar Holdings
(US) Inc. See Note 11 for further detail.
15 Borrowings
Long-term borrowings 2022 2021
£'000 £'000
Lease liabilities 4,051 6,386
Secured revolving credit facilities 23,254 23,000
Total 27,305 29,386
The revolving credit facility expires in September 2023. Amounts can be rolled
on a monthly basis until the facility expires subject to certain conditions
and on that basis the borrowings have been classified as long-term.
The revolving credit facility bears interest based on SONIA.
16 Convertible loan notes and derivative financial instruments
The Company has issued convertible loan notes as part of the acquisition of
Naves Corporate Finance GmbH (further details of the acquisition are provided
in Note 14 to the Consolidated Financial Statements). Convertible loan notes
have been valued at amortised cost with a derivative liability recognised in
respect of the conversion feature.
2022 2021
Restated
£'000
£'000
Issued convertible loan notes maturing within one year 1,416 4,461
Issued convertible loan notes maturing after more than one year 3,271 3,640
Derivative liabilities due after more than one year 85 139
Total 4,772 8,240
The prior year issued convertible loan notes were overstated by £0.9m and
were misclassified within amounts owed to subsidiary undertakings. The
balances have been restated. See Note 23.
17 Provisions
The Company holds a dilapidations provision of £0.5m (2021: £0.5m) which is
classified as a non-current liability. There were no additions to the
provisions balance nor were there any utilisation of the balance in the year.
18 Share capital
The Company has one class of ordinary shares which carry no right to fixed
income. Note 28 to the Consolidated Financial Statements provides detail on
authorised share capital and movements in issued share capital.
19 ESOP reserve
An Employee Share Ownership Plan ("ESOP") was established on 23 January
1995. The ESOP has been set up to purchase shares in the Company. These
shares, once purchased, are held in trust by the Trustee of the ESOP, SG
Kleinwort Hambros Trust Company (CI) Limited, for the benefit of the
employees. Additionally, an Employee Benefit Trust ("EBT") previously run by
ACM Shipping Group plc also holds shares in the Company. The ESOP and EBT
are accounted for within the Company accounts.
The net cost of the shares acquired for the shares held by the ESOP and the
EBT are a deduction from shareholders' funds and represent a reduction in
distributable reserves. Note 29 to the Consolidated Financial Statements
provides detail on the ESOP and the EBT and movements in shares to be issued.
20 Other reserves
Capital Merger Total
redemption
reserve
£'000
reserve
£'000
£'000
At 28 February 2021 (reported) 396 21,346 21,742
Prior period adjustment to correct recording of share premium - 3,295 3,295
Prior period adjustment to carrying amount of preference shares - (1,275) (1,275)
At 28 February 2021 (restated) and 28 February 2022 396 23,366 23,762
The capital redemption reserve arose on previous share buy-backs by the
Company.
The merger reserve arises on transactions where the Company issues shares
pursuant to an arrangement to acquire more than an 90% interest in another
company and no share premium is recorded. The merger reserve arose principally
in 2001 in relation to the acquisitions of Braemar Shipbrokers Limited and
Braemar Tankers Limited. Further additions have arisen in respect of Naves
and Atlantic Brokers included in the prior period adjustment (£1.3m and
£2.0m respectively). The amounts in merger reserve are unrealised profits
relating to the corresponding assets acquired by the Company on the issue of
shares. These profits may become realised on the disposal or write down of
these assets.
A loss has been recognised in 2021 on the fair value of intragroup preference
share assets acquired by the Company on the acquisition of Naves. This
resulted in a realisation of the merger reserve of £1.3m which has been
transferred to retained earnings accordingly. The impairment charge and
reserves transfer have been recognised in the year ended 28 February 2021 and
is a prior period adjustment - see Note 23.
21 Contingent liabilities
The Company has contingent liabilities in respect of guarantees entered into
on behalf of its subsidiaries in the normal course of business given as
follows:
2022 2021
£'000 £'000
Bank guarantees given to:
HM Revenue and Customs - 1,410
Third parties (non-cash collateralised) 710 787
Total 710 2,197
The Company and certain of its subsidiaries have provided cross guarantees and
fixed and floating rate charges over their assets to secure their borrowing
facilities and other financial instruments.
In the prior year the Group had issued a guarantee of £1.4m to HMRC in
respect of VAT, duty and excise which was collected on imports which was
collected by Cory Brothers as part of its trading activity and subsequently
paid to HMRC. As a result of Brexit, HMRC no longer required the guarantee
and it was cancelled by the Group prior to the disposal of Cory Brothers.
From time to time the Company may be engaged in litigation in the ordinary
course of business. The Company carries professional indemnity insurance.
There are currently no liabilities expected to have a material adverse
financial impact on the Company's results or net assets.
The Company has issued guarantees to certain subsidiaries in order to exempt
them from audit for the year ended 28 February 2022. See Note 32 of the
consolidated financial statements.
22 Related party transactions
The Company has applied the disclosure exemption of FRS 101 in respect of
transactions with wholly owned subsidiaries.
During the period the Group entered into the following transactions with joint
ventures and investments:
2021/22 2020/21
Recharges Dividends Balance Recharges Dividends Balance
to/(from)
£'000
due(to)/ from
to/(from)
£'000
due(to)/ from
£'000
£'000
£'000
£'000
AqualisBraemar LOC ASA 221 - 282 591 641 179
Recharges to AqualisBraemar LOC ASA consisted primarily of rent, IT services
and HR services in accordance with a transitional services agreement. Included
in the net recharge to AqualisBraemar LOC ASA is a fee payable to the Group's
former Chairman, Ronald Series of £3,750 (2021: £15,000).
A list of the Company's subsidiary undertakings is provided in Note 32 in the
Consolidated Financial Statements.
23 Prior year adjustments
Acquisition related errors
During the year to February 2022, the group restructured part of the
outstanding liabilities due to management sellers of Naves. In association
with this, management took a critical analysis of the historical accounting
for the amounts paid and payable on the Naves acquisition and identified
errors in the original and subsequent accounting.
Computational errors identified affected both the classification and
measurement of items in the accounts of the parent company.
a) Merger reserve
See commentary in respect of the Group restatement of share premium and merger
reserve.
Note that the merger reserve is further impacted by the loss on Naves
preference shares in another adjustment, as described below.
b) Naves liabilities
The error to 29 February 2020 was principally due to the over accrual of
finance expense earlier periods. The correction at 29 February 2020 was to
reduce liabilities and increase retained earnings by £0.4m. Finance expense
was reduced by £1.0m in the year to 28 February 2021, resulting in a net
£0.9 decrease in liabilities and increase in retained earnings at 28 February
2021. There were also errors in the classification of amounts payable within
one year or after one year which have been corrected with no impact on net
assets.
c) Naves preference shares
The parent company's principal investment in Naves is held in the form of
preference shares issued by a wholly-owned intermediate holding company. The
accounting for the Naves preference shares was reviewed in parallel with the
analysis of the accounting for the Naves liabilities, described above.£0.5m
of the investment in preference shares was incorrectly presented as investment
in subsidiaries and has been transferred into the preference share asset.
The preference shares were previously held at amortised cost, however, as the
instrument does not provide the Company with a fixed legal claim in the event
of bankruptcy they do not meet the solely payments of principal and interest
requirements to be held at amortised cost and should be held at fair value
through profit and loss. The fair value of the preference shares at 29
February 2020 was £27.1m, resulting in an increase in retained profits of
£0.5m at that date. At 28 February 2021, the fair value was £21.2m,
resulting in a loss of £7.0m compared to the balance previously reported at
that date.
Finance income on the preference share asset was also over stated by £1.1m in
2021, resulting in a cumulative overstatement of the preference share asset of
£7.6m at 28 February 2021.
The loss on fair value remeasurement of the preference share asset in 2021
realised £1.3m of profit in the merger reserve which arose on the Naves
acquisition, and accordingly this amount has been transferred from the merger
reserve to retained earnings.
Other prior period adjustments
d) RCF
See commentary in respect of the Group restatement of the RCF.
e) Re-classification
A further classification error has been identified in the presentation of
amounts due and from group companies in relation to amounts that should have
been offset and the classification as either current or non-current.
There is no impact on profit and loss or earnings per share in either period,
as the calculation error only affected balance sheet classifications.
The above errors have been corrected by restating each of the affected
financial statement line items for the prior periods as follows:
Company balance sheet as at 28 February 2021
28 February 2021 Reported a) Merger reserve b) Naves liabilities c) Naves preference shares d) RCF e) Classification 28 February 2021
Restated
Assets
Non-current assets
Other investments 106,678 - - (450) - - 106,228
Other non-current assets 10,040 - - - - - 10,040
Other long-term receivables 1,471 - - 21,242 - 4,256 26,969
118,189 - - 20,792 - 4,256 143,237
Current assets
Total other receivables 45,854 - - (28,442) - (7,257) 10,155
Cash 634 - - - - - 634
46,488 - - (28,442) - (7,257) 10,789
Total assets 164,677 - - (7,650) - (3,001) 154,026
Liabilities
Current liabilities
Trade and other payables (52,660) - 9,171 - - 3,001 (40,488)
Convertible loan notes - - (4,461) - - - (4,461)
Short-term borrowings (23,000) - - - 23,000 - -
(75,660) - 4,710 - 23,000 3,001 (44,949)
Non-current liabilities
Long-term borrowings (6,386) - - - (23,000) - (29,386)
Convertible loan notes - - (3,640) - - - (3,640)
Derivative financial liabilities - - (139) - - - (139)
Provisions (541) - - - - - (541)
(6,927) - (3,779) - (23,000) - (33,706)
Total liabilities (82,587) - 931 - - 3,001 (78,655)
Total assets less total liabilities 82,090 - 931 (7,650) - - 75,371
Equity
Share capital 3,174 - - - - - 3,174
Share premium 55,805 (3,295) - - - - 52,510
Shares to be issued (1,362) - - - - - (1,362)
Other Reserves 21,742 3,295 - (1,275) - - 23,762
Retained earnings 2,731 - 931 (6,375) - - (2,713)
Total equity 82,090 - 931 (7,650) - - 75,371
Company balance sheet as at 28 February 2021
1 March 2020 Reported a) Merger reserve b) NAVES liabilities c) NAVES assets d) RCF e) Reclassification 1 March 2020 Restated
Assets
Non-current assets
Other investments 104,886 - (450) - - 104,436
Preference shares - - - 27,056 - 27,056
Other non-current assets 18,504 - - - - - 18,504
Other long-term receivables - - - 5,699 5,699
123,390 - - 26,606 - 5,699 155,695
Current assets
Total other receivables 40,812 - - (26,104) - (3,936) 10,772
Cash 26 - - - - - 26
40,838 - - (26,104) - (3,936) 10,798
Total assets 164,228 - - 502 - 1,763 166,493
Liabilities
Current liabilities
Trade and other payables (24,702) - 4,844 - - (1,763) (21,621)
Short-term borrowings (49,785) - - - 24,669 - (25,116)
(74,487) - 4,844 - 24,669 (1,763) (46,737)
Non-current liabilities
Long-term borrowings (8,763) - - - (24,669) - (33,432)
Convertible loan notes - - (4,448) - - - (4,448)
Derivative financial liabilities - - (25) - - - (25)
Provisions (541) - - - - - (541)
(9,304) - (4,473) - (24,669) - (38,446)
Total liabilities (83,791) - 371 - - (1,763) (85,183)
Total assets less total liabilities 80,437 - 371 502 - - 81,310
- - -
Equity - - -
Share capital 3,167 - - - - - 3,167
Share premium 55,805 (3,295) - - - - 52,510
Shares to be issued (2,498) - - - - - (2,498)
Other Reserves 21,742 3,295 - - - - 25,037
Retained earnings 2,221 - 371 502 - - 3,094
Total equity 80,437 - 371 502 - - 81,310
24 Events after the reporting date
There were no adjusting or significant non-adjusting events between the
reporting date and the date of authorisation.
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