THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU NO. 596/2014) WHICH IS PART OF
6 November 2024
BRAEMAR PLC
("Braemar", the "Company" and together with its subsidiaries the "Group")
UNAUDITED HALF YEAR RESULTS
For the six months ended 31 August 2024
Strengthening and diversifying to build further resilience
Braemar Plc (LSE: BMS), a leading provider of expert investment, chartering and risk management advice to the shipping and energy markets, announces its unaudited half‐year results for the six months ended 31 August 2024 ("HY25" or the "Period").
The business performed well in the first half of the year, with the strength of Braemar's diversification, resilience, and operational scale, built over the last three years, in evidence. Solid growth in the Investment and Risk Advisory segments more than offset a weaker Chartering segment, helping to drive overall Group performance and deliver HY25 revenue 60% higher than HY22 when the strategy was implemented.
Braemar remains on track to meet its stated objective of doubling FY21's underlying operating profit on a sustainable basis and is on course to meet market expectations1 for FY25.
Increased interim dividend
The board continues to view the future of the business with confidence and is pleased to declare an interim dividend of
Financials
|
|
Underlying2
|
Statutory
|
|||||
|
|
HY25 |
HY24 |
% change |
HY25 |
HY24 |
% change |
|
|
Revenue |
|
|
1% |
|
|
1% |
|
|
Operating profit |
|
|
9% |
|
|
108% |
|
|
Profit before tax |
|
|
3% |
|
|
89% |
|
|
Profit after tax |
|
|
(10%) |
|
|
37% |
|
|
Underlying earnings per share (basic) |
14.55p |
17.43p |
(17%) |
6.83p |
5.37p |
27% |
|
|
Dividend per share |
4.5p |
4.0p |
13% |
4.5p |
4.0p |
13% |
|
|
Net cash |
|
|
5% |
|
|
5% |
|
Financial highlights
· Revenue up 1% year on year (or 3% on a USD basis) to
· Underlying operating profit2 up 9% to
· Underlying operating profit of
· Net cash position of
· Interim dividend increased to
Operational highlights
· Increase in revenue driven by the Investment and Risk Advisory segments more than offset a weaker Chartering segment
· Strong forward order book of
· Average revenue per head remains strong at
· Increase in average commissions per fixture offset lower fixture numbers overall, reflecting increased voyage times due to geo-political events impacting fleet availability
·
Outlook
· Market conditions remain healthy
· Forward order book continues to be strong,
· The diversification across shipbroking and the growing securities business is delivering a more balanced business with sustainable revenue
· Opportunities exist for both organic and inorganic growth with a number of complementary opportunities being considered, and the executive team remains focused on further executing the Group's growth strategy
· The Group is on track to meet FY25 market expectations1
James Gundy, Group Chief Executive Officer, said:
"I am delighted with the Group's performance for the first half of FY25. Our strategy has been to build a business that can deliver sustainable profits through a more balanced and diversified shipbroking and securities offering, and this is now evident. Our performance in the first half illustrates the benefits from this strategy. The acquisitions made in FY23 are performing well and we have an increasingly diversified revenue mix, achieving an increase in total revenue. As we continue to scale, we remain focused on cost control and efficiencies, which combined with our increased revenues achieved an underlying operating profit of
"The outlook for the shipping industry remains positive with exciting opportunities for further organic and inorganic growth. Our growing scale, expertise and infrastructure places Braemar in a strong position to attract talented individuals and businesses as we continue to successfully execute our growth plans."
|
1 |
Consensus at the time of this announcement: Revenue |
|
2 |
Underlying results measures are before specific items, including acquisition and disposal-related charges and profit/loss from discontinued operations (see Note 5) |
|
3 |
The interim dividend will be paid on 13 January 2025 to shareholders on the register at the close of business on 22 November 2024, with a corresponding ex-dividend date of 21 November 2024. The last date for Dividend Reinvestment Plan elections will be 18 December 2024 |
Results presentations
A presentation for analysts will be held today at 10.30 a.m. at Burson Buchanan's offices at 107 Cheapside,
A copy of the presentation and meeting recording will be made available on the Investor Relations section of Braemar's website later today: https://braemar.com/investors/. The Company is also hosting an online investor presentation for retail investors with Q&A on Friday, 8 November 2024, commencing at 1.00 p.m. To participate, please register with PI World at https://bit.ly/BMS_H125_results_webinar.
For further information, contact:
|
Braemar Plc |
|
|
|
|
James Gundy, Group Chief Executive Officer |
Tel +44 (0) 20 3142 4100 |
||
|
Grant Foley, Group Chief Financial Officer |
|
||
|
Rebecca-Joy Wekwete, Company Secretary |
|
||
|
|
|
||
|
Burson Buchanan |
|
||
|
Charles Ryland / Stephanie Whitmore / Jack Devoy / Abby Gilchrist |
Tel +44 (0) 20 7466 5000 |
||
|
|
|
||
|
Canaccord Genuity |
|
||
|
Adam James / Harry Rees
|
Tel +44 (0) 20 7523 8000 |
||
|
|
|
||
About Braemar Plc
Braemar provides expert advice in shipping investment, chartering, and risk management to enable its clients to secure sustainable returns and mitigate risk in the volatile world of shipping. Our experienced brokers work in tandem with specialist professionals to form teams tailored to our customers' needs, and provide an integrated service supported by a collaborative culture.
Braemar joined the Official List of the London Stock Exchange in November 1997 and trades under the symbol BMS.
For more information, including our investor presentation, visit www.braemar.com and follow Braemar on LinkedIn.
Reconciliation of underlying profit before tax to reported profit before tax for the Period
|
|
HY25 £m |
HY24 £m |
|
Underlying operating profit |
7.3 |
6.7 |
|
Specific items |
(2.7) |
(4.5) |
|
Reported operating profit |
4.6 |
2.2 |
Alternative Performance Measures ("APMs")
Braemar uses APMs as key financial indicators to assess the underlying performance of the Group. Management considers the APMs used by the Group to better reflect business performance and provide more useful information to investors and other interested parties. Our APMs include underlying operating profit, underlying profit before tax, underlying earnings per share and net debt. Explanations of these terms and their calculation are shown in the summary above and in detail in our Operating and Financial Review.
This document contains forward-looking statements, including statements regarding the intentions, beliefs or current expectations of our directors, officers and employees concerning, among other things, the Group's results of operations, financial condition, liquidity, prospects, growth, strategies and the business. These statements are based on current expectations and assumptions and only relate to the date on which they are made. They should be treated with caution due to the inherent risks, uncertainties and assumptions underlying any such forward-looking information. The Group cautions investors that a number of factors, including matters referred to in this document, could cause actual results to differ materially from those expressed or implied in any forward-looking statement, including general business and economic conditions globally, industry trends, competition, changes in government and other regulation and policy, interest rates and currency fluctuations, and political and economic uncertainty (including as a result of global pandemics). Neither the Group, nor any of the directors, officers or employees, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. Undue reliance should not be placed on these forward-looking statements. Other than in accordance with our legal and regulatory obligations, the Group undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
CHAIRMAN'S STATEMENT
The Group's performance for the first six months of the year clearly illustrates that our growth strategy, building more diversified revenue in shipbroking and securities, has built a resilient and sustainable business with improved revenue and operating profit. The Group is well positioned for further growth through making key hires and strategic acquisitions, further enhancing resilience and sustainable performance.
Revenue at
Costs remain well controlled, and overall underlying operating profit at
In 2022, the Group made a commitment to double its FY21 underlying profit by FY25. The Group achieved this in FY23 as well as in FY24 and is on course for FY25. This reflects the improved quality of the business as well as the hard work and dedication of everyone at Braemar and their commitment to our clients; I would like to take this opportunity to thank all of our people.
The outlook for Braemar and shipping markets remains positive. As a result of the strong underlying financial performance in the Period and the positive outlook, I am delighted that the board has declared an interim dividend of
Nigel Payne
Chairman
CHIEF EXECUTIVE OFFICER'S STATEMENT
This robust performance shows the importance of building a more diversified offering by product and geography, allowing Braemar to be well positioned to deliver sustainable revenue and profit growth.
The acquisitions made in FY23 performed well and continue to realise the benefits of being part of the Group. Additionally, our Risk Advisory segment increased its revenue by 16% from the prior year. We have continued to focus on building a platform for growth, ensuring that as we grow revenue through hiring and further acquisitions, we see the operational leverage come through to growing our profits.
We now have offices in seventeen countries following the opening of our
During this Period, geo-political events have continued to impact the shipping industry, leading to longer voyage times. These factors are further impacting the available global fleet which has increased average commissions per fixture but resulted in a reduced number of fixtures in the Period. Braemar takes compliance with all laws and regulations very seriously and is committed to carrying out the appropriate due diligence and checks on its clients and transactions.
With global trade remaining strong, an ageing fleet and limited capacity in the yards for newbuilding, the outlook for the shipping industry remains positive, and we have a clear strategy to continue our growth trajectory.
I am very proud of how we have reshaped the business over the last three years, and we look to the future with confidence.
James Gundy
Group Chief Executive Officer
OPERATING AND FINANCIAL REVIEW
As a result of the streamlined business and focus on our core Shipbroking activities, as in the prior year, the Group is presenting three business segments: Investment Advisory, Chartering and Risk Advisory.
|
Investment Advisory |
Sale and Purchase Corporate Finance |
|
Chartering |
Deep Sea Tankers Specialised Tankers Offshore Dry Cargo |
|
Risk Advisory |
Securities |
|
Revenue |
HY25 £m |
HY24 £m |
Change % |
|
Chartering Investment Advisory |
49.8 14.7 |
52.6 12.4 |
(5%) 19% |
|
Risk Advisory |
11.5 |
9.9 |
16% |
|
Total in Sterling |
|
|
1% |
|
Total in US dollars |
|
|
3% |
Chartering performance in the Period showed resilience despite being weaker than the prior period, primarily driven by less Deep Sea Tanker activity although this was partly offset by a strong performance from the Offshore desk.
Investment Advisory achieved a stronger performance, driven by Sale & Purchase, whilst Corporate Finance remained quiet with fewer significant mandates completing in the Period. This revenue can be lumpier and the pipeline for H2 looks promising.
Risk Advisory continued to grow, as we organically expanded our offering to meet the risk management and trading requirements of our clients.
As at 30 September 2024, the forward order book totalled
Most of the Group's revenue is in US dollar. US dollar revenue grew by 3%, whilst reported GBP revenue increased by 1%, reflecting the weakening of the US dollar in the Period.
SEGMENTAL PERFORMANCE
CHARTERING
|
|
HY25 £m |
HY24 £m |
Change % |
|
Revenue |
49.8 |
52.6 |
(5%) |
|
Underlying operating profit |
6.1 |
6.4 |
(4%) |
Tankers
Revenue from Deep Sea Tankers in HY25 was
Revenue for Specialised Tankers in HY25 was
Offshore Energy Services
Revenue for Offshore Energy Services was
Dry Cargo
Revenue for Dry Cargo was
With the lower revenue, underlying operating profit was
INVESTMENT ADVISORY
|
|
H1 FY24 £m |
H1 FY23 £m |
Change % |
|
Revenue |
14.7 |
12.4 |
19% |
|
Underlying operating profit |
2.4 |
1.7 |
44% |
Sale and Purchase
Total revenue for Sale and Purchase in HY25 was
Corporate Finance
Total revenue for Corporate Finance in HY25 was
The improved underlying operating profit in the Investment Advisory segment reflects the improved revenue performance and operational leverage.
RISK ADVISORY
|
|
HY25 £m |
HY24 £m |
Change % |
|
Revenue |
11.5 |
9.9 |
16% |
|
Underlying operating profit |
1.5 |
1.4 |
12% |
Securities
Revenue for Securities was
The Dry FFA desk performed well with strong underlying market conditions and heightened interest from financial participants. Ongoing geopolitical tensions continue to create market uncertainty, underscoring the need for our clients to hedge their market exposure. In addition, the industry leading market platform, Braemarscreen.com, has continued to gain new users and business.
The Natural Gas desk is now in its second year and has continued to grow, working with clients to manage their risk exposure.
The Tanker FFA desk also grew year on year as geopolitical factors continued to bring volatility to the market.
Operating profit at
Other operating costs
|
Central costs |
HY25 £m |
HY24 £m |
Change % |
|
Central costs |
2.8 |
2.7 |
2% |
Central costs were up 2% in the Period as the Group continued to balance a continued focus on cost control and efficiencies whilst also selectively investing to support future growth.
Specific items
|
|
HY25 £m |
HY24 £m |
|
Operating costs |
0.4 |
1.9 |
|
Acquisition related items |
2.3 |
2.6 |
|
Other items |
(0.1) |
(0.4) |
The Group has separately identified certain items that are not part of the underlying trading of the Group. These specific items are material in both size and/or nature and the directors believe that they may distort the understanding of the underlying performance of the business. Specific items included within operating costs mainly relate to the impairment of a right-of-use asset relating to an unused portion of the Group's leased office space following the termination of the related subleases.
Acquisition related costs are primarily employment costs relating to the treatment of the consideration for the acquisition of Southport Maritime Inc. (USA) and post contractual costs relating to the Madrid team. Other items include a gain on the revaluation of the embedded derivatives and a foreign exchange gain relating to the convertible loan notes issued on the acquisition of the Naves business. For further details see Note 5.
Foreign exchange
The majority of the Group's revenue is earned in US dollar. The US dollar exchange rate relative to Sterling weakened from
At 31 August 2024, the Group held forward currency contracts to sell
The Group also has material liabilities in Euros and the Euro rate weakened slightly against Sterling from
Balance sheet
Net assets at 31 August 2024 were
Long-term receivables decreased by
Trade and other receivables increased by
The pension surplus increased by
Shares held in the Group's Employee Share Ownership Plan ("ESOP") decreased by
Borrowings and cash
At 31 August 2024, the Group held cash of
The Group continued to pay down debt and the net cash position was cash of
The Group continues to hold a revolving credit facility with HSBC ("RCF"). The RCF limit totals
The operating cash flows of the Group exhibit seasonality with higher bonus payments occurring in the first half of the financial year and it is therefore normal for the second half of the year to generate more cash.
Dividend
The board remains committed to its progressive dividend policy and an increased interim dividend of
Taxation
The total tax charge of
Current tax is charged at 22.54% on underlying profits for the six months ended 31 August 2024 (HY24: 23.5%) representing the best estimate of the average annual effective tax rate expected to apply for the full year, applied to the pre-tax income of the six-month period. The annual effective tax rate in the current Period is broadly lower than the standard rate applicable due to the impact of a lower rate in Singapore.
At 31 August 2024, the Group recognised a deferred tax asset of
Principal risks
The directors consider that the principal risks and uncertainties which could have a material effect on the Group's performance identified on pages 43 to 49 of the 2024 Annual Report and Accounts are also applicable for the Period of six months to 31 August 2024. These include risks associated with sanctions and trade restrictions, integration risk, loss of key personnel and weak organisational culture, compliance with laws and regulations, currency fluctuations, cybercrime and data security, disruptive technology, environment and climate change and geopolitical and macroeconomic risks.
The directors continue to monitor the risks associated with the conflicts in Ukraine and the Middle East. The Group's compliance with sanctions related to the conflict in Ukraine is not expected to have any material effect on trading in the current financial year nor does the Group have any existing material exposure.
Going concern
Following a detailed review, no material uncertainty has been identified and the interim condensed consolidated financial statements have been prepared on a going concern basis. See Note 2.
Condensed Consolidated Income Statement
|
|
|
Unaudited |
Unaudited |
||||
|
|
Notes |
Underlying £'000 |
Specific items |
Total |
Underlying |
Specific |
Total |
|
Revenue |
4 |
75,990 |
- |
75,990 |
74,929 |
- |
74,929 |
|
Operating expense: |
|
|
|
|
|
|
|
|
Operating costs |
5 |
(68,032) |
(417) |
(68,449) |
(67,355) |
(1,903) |
(69,258) |
|
Acquisition-related expenditure |
5 |
(628) |
(2,308) |
(2,936) |
(862) |
(2,597) |
(3,459) |
|
Total operating expense |
|
(68,660) |
(2,725) |
(71,385) |
(68,217) |
(4,500) |
(72,717) |
|
Operating profit/(loss) |
|
7,330 |
(2,725) |
4,605 |
6,712 |
(4,500) |
2,212 |
|
|
|
|
|
|
|
|
|
|
Share of associate gain for the period |
10 |
- |
- |
- |
1 |
- |
1 |
|
Finance income |
5 |
301 |
87 |
388 |
552 |
391 |
943 |
|
Finance costs |
|
(1,424) |
- |
(1,424) |
(1,265) |
- |
(1,265) |
|
Profit/(loss) before taxation |
|
6,207 |
(2,638) |
3,569 |
6,000 |
(4,109) |
1,891 |
|
Taxation |
6 |
(1,638) |
214 |
(1,424) |
(923) |
597 |
(326) |
|
Profit/(loss) attributable to equity shareholders of the Company |
|
4,569 |
(2,424) |
2,145 |
5,077 |
(3,512) |
1,565 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ordinary share |
|
|
|
|
|
|
|
|
Basic |
7 |
14.55p |
|
6.83p |
17.43p |
|
5.37p |
|
Diluted |
7 |
12.79p |
|
6.01p |
14.15p |
|
4.36p |
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 August 2024
|
|
Notes |
Unaudited 31 Aug 2024 |
Unaudited |
|
Profit for the period |
|
2,145 |
1,565 |
|
Other comprehensive income/(expense) |
|
|
|
|
Items that will not be reclassified to profit or loss: |
|
|
|
|
- Actuarial gain on employee benefit schemes - net of tax |
15 |
312 |
556 |
|
Items that are or may be reclassified to profit or loss: |
|
|
|
|
- Foreign exchange losses on retranslation of foreign operations |
19 |
(1,165) |
(1,873) |
|
- Investment hedge gain |
19 |
144 |
262 |
|
- Cash flow hedging gain - net of tax |
19 |
1,705 |
2,077 |
|
Other comprehensive income |
|
996 |
1,022 |
|
|
|
|
|
|
Total comprehensive income attributable to equity shareholders of the Company |
|
3,141 |
2,587 |
Condensed Consolidated Balance Sheet
|
|
Note |
Unaudited |
Audited |
|
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Goodwill |
|
71,293 |
71,337 |
|
Other intangible assets |
|
2,819 |
3,185 |
|
Property, plant and equipment |
9 |
5,143 |
5,582 |
|
Other investments |
14 |
1,633 |
1,633 |
|
Investment in associate |
10 |
713 |
713 |
|
Derivative financial instruments |
14 |
411 |
249 |
|
Deferred tax assets |
|
2,524 |
2,979 |
|
Pension surplus |
15 |
1,781 |
1,414 |
|
Other long-term receivables |
11 |
1,654 |
4,589 |
|
|
|
87,971 |
91,681 |
|
Current assets |
|
|
|
|
Trade and other receivables |
12 |
41,465 |
37,730 |
|
Derivative financial instruments |
14 |
3,182 |
1,287 |
|
Current tax receivable |
|
1,972 |
2,925 |
|
Cash and cash equivalents |
|
26,033 |
27,951 |
|
|
|
72,652 |
69,893 |
|
Total assets |
|
160,623 |
161,574 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
Derivative financial instruments |
14 |
104 |
315 |
|
Trade and other payables |
|
43,461 |
43,611 |
|
Current tax payable |
|
347 |
1,625 |
|
Provisions |
16 |
2,953 |
3,080 |
|
Convertible loan notes |
13 |
3,001 |
2,978 |
|
|
|
49,866 |
51,609 |
|
Non-current liabilities |
|
|
|
|
Long-term borrowings |
|
25,172 |
29,819 |
|
Deferred tax liabilities |
|
8 |
8 |
|
Derivative financial instruments |
14 |
- |
43 |
|
Other long-term payables |
|
401 |
416 |
|
Provisions |
16 |
187 |
58 |
|
|
|
25,768 |
30,344 |
|
Total liabilities |
|
75,634 |
81,953 |
|
Total assets less total liabilities |
|
84,989 |
79,621 |
|
|
|
|
|
|
Equity |
|
|
|
|
Share capital |
17 |
3,292 |
3,292 |
|
ESOP reserve |
18 |
(3,509) |
(7,140) |
|
Other reserves |
19 |
9,049 |
8,365 |
|
Retained earnings |
|
76,157 |
75,104 |
|
Total equity |
|
84,989 |
79,621 |
By order of the board
|
James Gundy Group Chief Executive Officer
5 November 2024 |
Grant Foley Group Chief Financial Officer
|
Condensed Consolidated Cash Flow Statement
For the six months ended 31 August 2024
|
|
Notes |
Unaudited 31 Aug 2024 |
Unaudited 31 Aug 2023 |
|
Profit before tax |
|
3,569 |
1,891 |
|
Adjustment for non-cash transactions included in profit before tax |
|
|
|
|
Depreciation and amortisation charges |
|
1,844 |
1,867 |
|
Impairment of ROU asset |
5 |
377 |
- |
|
Share of loss/(gain) of associate |
|
- |
(1) |
|
Share-based-payment charge |
|
3,075 |
3,802 |
|
Fair value loss on financial instruments charged to profit or loss |
14 |
- |
66 |
|
Net finance cost |
|
1,036 |
322 |
|
Foreign exchange differences Cash settlement of share based payment |
|
(115) |
343 |
|
Operating payments adjustment |
|
|
|
|
Cash settlement of share-based payment |
|
(163) |
(52) |
|
Contribution to defined benefit scheme |
|
- |
(37) |
|
Operating cash flow before changes in working capital |
|
9,623 |
8,201 |
|
|
|
|
|
|
(Increase)/decrease in receivables |
|
(3,242) |
6,082 |
|
Increase/(decrease) in payables |
|
484 |
(8,921) |
|
Increase/(decrease) in provisions |
|
24 |
(83) |
|
Cash flows from operating activities |
|
6,889 |
5,279 |
|
|
|
|
|
|
Interest received |
|
269 |
235 |
|
Interest paid |
|
(1,401) |
(1,219) |
|
Tax paid |
|
(1,603) |
(4,418) |
|
Net cash generated from/(used in) operating activities |
|
4,154 |
(123) |
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Purchase of property, plant and equipment |
|
(289) |
(366) |
|
Purchase of other intangible assets |
|
(5) |
(12) |
|
Proceeds from disposal of Cory Brothers |
14 |
1,666 |
1,397 |
|
Principal received on finance lease receivables |
|
240 |
310 |
|
Net cash generated from investing activities |
|
1,612 |
1,329 |
|
|
Notes |
Unaudited 31 Aug 2024 |
Unaudited 31 Aug 2023 |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Repayment of borrowings |
|
(4,000) |
(4,098) |
|
Proceeds from borrowings |
|
- |
2,500 |
|
Repayment of principal under lease liabilities |
|
(1,983) |
(1,576) |
|
Cash proceeds on release of shares from ESOP |
|
513 |
- |
|
Dividends paid |
|
(1,222) |
- |
|
Purchase of own shares |
|
(367) |
(1,931) |
|
Net cash used in financing activities |
|
(7,059) |
(5,105) |
|
|
|
|
|
|
Decrease in cash and cash equivalents |
|
(1,293) |
(3,899) |
|
Cash and cash equivalents at beginning of the period |
|
27,951 |
34,735 |
|
Foreign exchange loss |
|
(625) |
(1,785) |
|
Cash and cash equivalents at end of the period |
|
26,033 |
29,051 |
|
|
|
|
|
Condensed Statement of Changes in Total Equity
|
|
Note |
Share |
Share |
ESOP reserve |
Other |
Retained earnings |
Total |
|
At 1 March 2023 (Audited) |
|
3,292 |
53,796 |
(10,607) |
28,819 |
1,381 |
76,681 |
|
Profit for the period |
|
- |
- |
- |
- |
1,565 |
1,565 |
|
Actuarial gain on employee benefits schemes - net of tax |
|
- |
- |
- |
- |
556 |
556 |
|
Foreign exchange loss arising on translation of foreign operations |
|
- |
- |
- |
(1,873) |
- |
(1,873) |
|
Foreign exchange gain on net investment hedge |
|
- |
- |
- |
262 |
- |
262 |
|
Gain on cash flow hedges - net of tax |
|
- |
- |
- |
2,077 |
- |
2,077 |
|
Other comprehensive income |
|
- |
- |
- |
466 |
556 |
1,022 |
|
Total comprehensive income |
|
- |
- |
- |
466 |
2,121 |
2,587 |
|
Tax expense on share awards |
|
|
|
|
- |
(638) |
(638) |
|
Capital reduction |
8 |
- |
(53,796) |
- |
(20,151) |
73,947 |
- |
|
Acquisition of own shares |
18 |
- |
- |
(1,931) |
- |
- |
(1,931) |
|
ESOP shares allocated |
18 |
- |
- |
21 |
- |
(21) |
- |
|
Cash paid for share-based payments |
|
- |
- |
- |
- |
(52) |
(52) |
|
Share-based payments |
|
- |
- |
- |
- |
3,802 |
3,802 |
|
Transactions with owners |
|
- |
(53,796) |
(1,910) |
(20,151) |
77,038 |
1,181 |
|
At 31 August 2023 (Unaudited) |
|
3,292 |
- |
(12,517) |
9,134 |
80,540 |
80,449 |
|
|
|
|
|
|
|
|
|
|
At 1 March 2024 (Audited) |
|
3,292 |
- |
(7,140) |
8,365 |
75,104 |
79,621 |
|
Profit for the period |
|
- |
- |
- |
- |
2,145 |
2,145 |
|
Actuarial gain on employee benefits schemes - net of tax |
|
- |
- |
- |
- |
312 |
312 |
|
Foreign exchange loss arising on translation of foreign operations |
|
- |
- |
- |
(1,165) |
- |
(1,165) |
|
Foreign exchange gain on net investment hedge |
|
- |
- |
- |
144 |
- |
144 |
|
Gain on cash flow hedges - net of tax |
|
- |
- |
- |
1,705 |
- |
1,705 |
|
Other comprehensive income |
|
- |
- |
- |
684 |
312 |
996 |
|
Total comprehensive income |
|
- |
- |
- |
684 |
2,457 |
3,141 |
|
Tax income on share awards |
|
- |
- |
- |
- |
391 |
391 |
|
Dividends paid |
8 |
- |
- |
- |
- |
(1,222) |
(1,222) |
|
Acquisition of own shares |
18 |
- |
- |
(367) |
- |
- |
(367) |
|
ESOP shares allocated |
18 |
- |
- |
3,477 |
- |
(3,144) |
333 |
|
Winding up of EBT |
18 |
- |
- |
521 |
- |
(341) |
180 |
|
Cash paid for share-based payments |
|
- |
- |
- |
- |
(163) |
(163) |
|
Share-based payments |
|
- |
- |
- |
- |
3,075 |
3,075 |
|
Transactions with owners |
|
- |
- |
3,631 |
- |
(1,404) |
2,227 |
|
At 31 August 2024 (Unaudited) |
|
3,292 |
- |
(3,509) |
9,049 |
76,157 |
84,989 |
Notes to the Condensed Consolidated Financial Statements (unaudited)
1 General information
Braemar Plc (the "Company") is a public limited company incorporated and domiciled in England and Wales. These interim condensed consolidated financial statements for the six months ended 31 August 2024 comprise the Company and its subsidiaries (together referred to as the "Group"). The address of the Company's registered office is One Strand, Trafalgar Square, London, WC2N 5HR, United Kingdom. The interim condensed consolidated financial statements of the Group were authorised for issue in accordance with a resolution of the directors on 5 November 2024.
2 Basis of preparation and statement of compliance
The interim condensed consolidated financial statements for the six months ended 31 August 2024 have been prepared in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority and with IAS 34, "Interim Financial Reporting", and also in accordance with the measurement and recognition principles of UK adopted international accounting standards.
These interim accounts and comparative figures for the half year ended 31 August 2023 and year ended 29 February 2024 do not constitute statutory accounts for the purpose of section 434 of the Companies Act 2006. The auditors have reported on the 2024 accounts, and these have been filed with the Registrar of Companies; their report was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis, and did not contain a statement under section 498(2) or (3) of the Companies Act 2006. The half year accounts as at and for the half years ending 31 August presented in these condensed consolidated interim financial statements have been reviewed in accordance with International Standard on Review Engagements (UK and Ireland) 2410 but have not been audited.
The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's Annual Report for the year ended 29 February 2024, which were prepared in accordance with UK-adopted international accounting standards and in conformity with the requirements of the Companies Act 2006.
Going concern
These interim condensed consolidated financial statements have been prepared on a going concern basis with a reasonable expectation that the Group has adequate resources to continue in operational existence for at least 12 months from the date of signing of the interim condensed consolidated financial statements. In reaching this conclusion the directors considered cash flow forecasts that have been prepared in the light of current trading, the continued impact of conflicts in Ukraine and the Middle East, as well as the possibility of a global recession. The directors have considered the trading and cash flows over the first six months of the year which have been good across the Group's business, and the Group has benefitted from the volatility in the shipping markets. The directors consider that the breadth of the Group's business model and the diversity of the broking operation and the markets in which the Group now operates, have insulated the business well from cycles in any one shipping market. The directors have also considered forward-looking market data in respect of the shipping market. This includes the forward order book within the Chartering and Investment Advisory segment.
The Group's revolving credit facility ("RCF") is for
The Group has updated its expected revenue, cost and cash forecasts in the light of the positive trading over the first half of the current financial year and assessed the ability of the Group to operate both within the facility covenants and the facility headroom. A number of downside sensitivities were tested including reverse stress scenarios. The results of this exercise showed that the Group could withstand revenue reductions of 35% before it was forecast that covenants would be breached or liquidity insufficient, after taking into account reasonable cost mitigations and other cash management measures within the control of the Group. The directors have considered these revenue downside sensitivities and in the light of the revenue performance in the period and the prospects for the second half of the year have concluded that it would be remote that revenues would be impacted to this extent over the assessed going concern period.
The directors consider revenue as the key assumption in the Group's forecasts as the operating costs are largely fixed or made up of discretionary bonuses which are directly linked to profitability.
To date the current geo-political instability and global trade interruption has not had a significant impact on the business but there remains uncertainty over the current outlook. However, the directors are comfortable that under the scenarios run, the Group could withstand a decline in revenue as described and continue to operate within the available banking facilities. Accordingly, the Group continues to adopt the going concern basis in preparing the condensed consolidated financial statements.
Forward-looking statements
Certain statements in this interim report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to be correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. We undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
3 Accounting policies
The Group has applied the same accounting policies and methods of computation in its interim condensed consolidated financial statements as in its annual consolidated financial statements as at and for the year ended 29 February 2024, except as described below, and should be read in conjunction with the 2024 Annual Report.
Amendments to IFRS Accounting Standards
The following amendments to IFRS Accounting Standards have been applied for the first time by the Group:
• Amendments to IAS 1 Classification of Liabilities as Current or Non-Current
• Amendments to IAS 1 Non-current Liabilities with Covenants
• Amendments to IFRS 16 Lease Liability in a Sale and Leaseback (Amendments)
• Amendments to IFRS 7 and IAS 7 Supplier Finance Arrangements
During the period the Group has applied 'Classification of Liabilities as Current or Non-current and Non-current liabilities with covenants - Amendments to IAS 1'. The amendments clarified that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the entity's expectations or events after the reporting date.
The amendments also clarify what IAS 1 means when it refers to the 'settlement' of a liability. Terms of a liability that could, at the option of the counterparty, result in its settlement by the transfer of the entity's own equity instrument can only be ignored for the purpose of classifying the liability as current or non-current if the entity classifies the option as an equity instrument. However, conversion options that are classified as a liability must be considered when determining the current/non-current classification.
Under the Group's previous accounting policy, a financial liability with an equity conversion feature was classified as current or non-current disregarding the impact of the equity conversion option. The Group's accounting policy has now changed such that equity conversion options which are not accounted for as an equity instrument separately from the liability component of a compound financial instrument, are taken into account in determining the classification of a liability as current or non-current. The impact of the change in accounting policy at February 2024 is to reclassify
Other than this, the adoption of the above has not had any material impact on the amounts reported or the disclosures in these condensed half-yearly financial statements.
Accounting estimates and critical judgements
The preparation of interim financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
In preparing these interim condensed consolidated financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were consistent with those that applied to the consolidated financial statements as at and for the year ended 29 February 2024.
Seasonality
The Group's operating cash flows exhibit seasonality in that the majority of bonus payments occur in the first half of the financial year. The Group's revenues are not subject to significant seasonal variation.
4 Segmental information and revenue
a) Business segments
The Group's operating segments are Chartering, Investment advisory and Risk advisory. The Chief Operating Decision Maker is considered to be the Group's board of directors. Each of Chartering, Investment Advisory and Risk Advisory are managed separately, and the nature of the services offered to clients is distinct between the segments. The Chartering segment includes the Group's shipbroking business, Risk Advisory includes the Group's regulated securities business and Investment Advisory focuses on transactional services.
The board considers the business from both service line and geographic perspectives. A description of each of the lines of service is provided in the operating and financial review.
Central costs relate to board costs and other costs associated with the Group's listing on the London Stock Exchange. All segments meet the quantitative thresholds required by IFRS 8 as reportable segments.
Underlying operating profit is defined as operating profit for continuing activities before specific items as set out in Note 5.
The segmental information provided to the board for reportable segments for the six months ended 31 August 2024 is as follows:
|
|
Revenue |
Operating profit/(loss) |
||
|
|
|
|
|
|
|
Chartering |
49,765 |
52,567 |
6,142 |
6,385 |
|
Investment advisory |
14,751 |
12,445 |
2,396 |
1,663 |
|
Risk advisory |
11,474 |
9,917 |
1,545 |
1,379 |
|
Trading segments revenue and operating profit |
75,990 |
74,929 |
10,083 |
9,427 |
|
Central costs |
|
|
(2,753) |
(2,715) |
|
Underlying operating profit |
|
|
7,330 |
6,712 |
|
Specific items included in operating expenses |
|
|
(2,725) |
(4,500) |
|
Operating profit |
|
|
4,605 |
2,212 |
|
Share of associate's profit/(loss) for period |
|
|
- |
1 |
|
Net finance expense |
|
|
(1,036) |
(322) |
|
Profit before taxation |
|
|
3,569 |
1,891 |
Geographical segment - by origin
The Group manages its business segments on a global basis. The Group's main geographical area of operation and also the home country of the Company is the United Kingdom.
Geographical information determined by location of customers is set out below:
|
|
Revenue |
|
|
|
Six months ended |
Six months ended |
|
United Kingdom |
41,311 |
37,777 |
|
Singapore |
9,100 |
11,102 |
|
United States |
11,165 |
10,358 |
|
Australia |
4,938 |
4,412 |
|
Switzerland |
1,025 |
4,027 |
|
Germany |
507 |
363 |
|
Rest of the World |
7,944 |
6,890 |
|
Total |
75,990 |
74,929 |
b) Revenue analysis
The Group disaggregates revenue in line with the segmental information presented above, and also by desk. Revenue analysed by desk is provided below.
|
|
Revenue |
|
|
|
Six months ended |
Six months ended |
|
Chartering |
|
|
|
Deep Sea Tankers (incl. Projects) |
25,660 |
28,513 |
|
Specialised Tankers & Gas |
9,090 |
9,256 |
|
Dry Cargo |
10,649 |
11,025 |
|
Offshore |
4,366 |
3,773 |
|
Chartering sub-total |
49,765 |
52,567 |
|
|
|
|
|
Shipping Investment Advisory |
|
|
|
S&P |
14,063 |
11,291 |
|
Corporate Finance |
688 |
1,154 |
|
Shipping Investment Advisory sub-total |
14,751 |
12,445 |
|
|
|
|
|
Shipping Risk Advisory |
|
|
|
Securities (incl. GFI) |
11,474 |
9,917 |
|
Shipping Risk Advisory sub-total |
11,474 |
9,917 |
|
|
|
|
|
Total revenue |
75,990 |
74,929 |
There is no single customer that makes up more than 10% of the Group's revenues.
5 Specific items
In reporting financial information, the Group presents Alternative Performance Measures ("APMs") which are not defined or specified under the requirements of International Financial Reporting Standards ("IFRS"). The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information and enable an alternative comparison of performance over time. Further details of the specific items as disclosed in the Group's Condensed Consolidated Income Statement are set out below.
|
|
|
|
|
|
|
|
|
Operating costs |
|
|
|
- Impairment of ROU asset |
(377) |
- |
|
- Investigation costs |
(40) |
(1,442) |
|
- Board change costs |
- |
(232) |
|
- Unlawful dividend rectification |
- |
(229) |
|
|
(417) |
(1,903) |
|
|
|
|
|
Acquisition-related items |
|
|
|
- Madrid post-contractual obligation |
(232) |
(521) |
|
- Amortisation of acquired intangible assets |
(210) |
(289) |
|
- Consideration treated as an employee expense |
(1,866) |
(1,787) |
|
|
(2,308) |
(2,597) |
|
Other items |
|
|
|
Finance income - Interest income on deferred consideration |
- |
68 |
|
Finance income - Gain on Naves derivative liability and foreign exchange gain |
87 |
323 |
|
|
87 |
391 |
|
|
|
|
|
|
|
|
|
Total |
(2,638) |
(4,109) |
Operating costs
Impairment of ROU asset
During the period, the Group recognised an extension to a lease of office space with a corresponding increase in right-of-use asset and lease liability. The Group had previously sub-let a segregated portion of the office space, but has been unable to sub-let the office space for the period of the lease extension. The Group does not use the previously sub-let space and believes it unlikely it will be sub-let for the period of the extension. As a result, the Group has recognised an impairment charge in relation to the portion of the right-of-use asset relating to this unused office space. As this cost does not relate to the performance of the business, it is treated as a specific item.
Investigation costs
During the preparation of the 2023 Annual Report, the board instigated an investigation into a transaction which originated in 2013 and involved payments being made through to 2017. The investigation engaged multiple external specialist firms and resulted in a significant cost to the business of
Board change costs
In the prior period, the Group appointed a new Chief Financial Officer with effect from 1 August 2023 to replace Nick Stone who left on 31 July 2023. The recruitment cost incurred of
Unlawful dividend rectification
In the prior period, following the identification of the payment of historic unlawful dividends, the Group incurred costs of
The tax income on specific items including within other operating costs was
Acquisition-related items
Madrid post-contractual obligation
As a result of the recruitment of a team of brokers based in Madrid, service agreements were entered into with employees. The recruitment of the broker team in Madrid included the following key elements:
- The Group assumed a liability for a post-contractual payment to the employees, which was fully vested on signing the contracts and subject to ongoing adjustments.
- An upfront cash payment of
- Share awards to a total value of
The upfront payments and share awards have a clawback mechanism which is linked to the continued employment of the brokers over a three-year period from December 2022. The costs associated with the upfront payments and share awards are not considered by the Group to be specific items but are disclosed as acquisition-related expenditure given their materiality and will be amortised over three years to December 2025. In addition, certain brokers are entitled to a payment on termination in return for a non-compete obligation. The cost related to the post-contractual payment obligation is treated as a specific item because there is no requirement to provide service.
Amortisation of acquired intangible assets
An amount of
Consideration treated as an employment expense
Following the acquisition of Southport Maritime Inc. in December 2022, due to the requirement for ongoing employee service, the upfront cash payment of
The tax income on acquisition-related items was £nil (2023: £nil)
Other specific items
Interest income on deferred consideration
The unwinding of the discounting of the deferred receivable in respect of the Cory Brothers disposal contributed interest income of
Gain on Naves derivative liability and foreign exchange gain
The gain of
The tax income on Other specific items was
6 Taxation
The total tax charge of
Current tax is charged at 22.54% on underlying profits for the six months ended 31 August 2024 (2023: 23.5%) representing the best estimate of the average annual effective tax rate expected to apply for the full year, applied to the pre-tax income of the six-month period. The annual effective tax rate in the current period is broadly lower than the standard rate applicable due to the impact of a lower rate in Singapore.
At 31 August 2024, the Group recognised a deferred tax asset of
The Group is not within the scope of the OECD Pillar two model rules. Pillar two applies to multinational groups with consolidated revenue over
7 Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. At 31 August 2024 1,250,717 ordinary shares were held by the Employee Share Ownership Plan ("ESOP") which are not treated as outstanding for the purpose of calculating earnings per share (29 February 2024: 2,303,211 held by the ESOP and 62,290 shares held by the ACM Employee Benefit Trust).
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has dilutive potential ordinary shares, being those options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the period, and convertible loan notes issued in respect of the Naves acquisition.
|
Total operations |
Six months ended |
Six months ended |
|
Profit for the year attributable to shareholders |
2,145 |
1,565 |
|
|
Pence |
Pence |
|
Basic earnings per share |
6.83 |
5.37 |
|
Effect of dilutive potential ordinary shares |
(0.82) |
(1.01) |
|
Diluted earnings per share |
6.01 |
4.36 |
|
Underlying operations |
Six months ended |
Six months ended |
|
Underlying profit for the year attributable to shareholders |
4,569 |
5,077 |
|
|
Pence |
Pence |
|
Basic earnings per share |
14.55 |
17.43 |
|
Effect of dilutive potential ordinary shares |
(1.76) |
(3.28) |
|
Diluted earnings per share |
12.79 |
14.15 |
A reconciliation by class of instrument in relation to dilutive potential ordinary shares and their impact on earnings is set out below:
|
|
Six months ended |
|
Six months ended |
||||
|
|
Weighted average number of shares |
Underlying earnings £'000 |
Statutory earnings £'000 |
|
Weighted average number of shares |
Underlying earnings £'000 |
Statutory earnings £'000 |
|
|
|
|
|
|
|
|
|
|
Used in basic earnings per share |
31,412,468 |
4,569 |
2,145 |
|
29,132,957 |
5,077 |
1,565 |
|
Employee share awards |
4,299,483 |
- |
- |
|
6,749,611 |
- |
- |
|
Used in diluted earnings per share |
35,711,951 |
4,569 |
2,145 |
|
35,882,568 |
5,077 |
1,565 |
8 Dividends
The board has declared an interim dividend of
9 Property, plant and equipment
During the period the Group recognised a
10 Investment in associate
Zuma Labs Limited
At 31 August 2024 the Group held 2,500 ordinary shares in Zuma Labs Limited ("Zuma") being 20% of Zuma's share capital (at 29 February 2024: 2,500 ordinary shares being 20% of share capital). Zuma Labs Limited is a private company incorporated in England and Wales and its registered address is 128 City Road, London, United Kingdom, EC1V 2NX. Zuma Labs Limited has one share class and each share carries one vote.
The Group has representation on the board of Zuma Labs Limited, and as a result, the Group considers that it has the power to exercise significant influence in Zuma Labs Limited and the investment in it has been accounted for using the equity method.
11 Other long-term receivables
|
|
|
|
31 Aug 2024 |
29 Feb 2024 |
|
Deferred consideration - non-current |
|
|
- |
1,304 |
|
Contingent consideration - non-current |
|
|
- |
532 |
|
Security deposits |
|
|
310 |
304 |
|
Prepayments |
|
|
1,344 |
2,449 |
|
|
|
|
1,654 |
4,589 |
At 29 February 2024,deferred consideration of
Prepayments includes an asset of
12 Trade and other receivables
|
|
31 Aug 2024 |
29 Feb 2024 |
|
Trade receivables |
28,449 |
26,964 |
|
Provision for impairment of trade receivables |
(2,747) |
(2,837) |
|
Net trade receivables |
25,702 |
24,127 |
|
Deferred consideration - current |
1,320 |
1,316 |
|
Contingent consideration - current |
548 |
550 |
|
Other receivables |
5,069 |
3,949 |
|
Finance lease receivables |
- |
240 |
|
Contract assets |
2,062 |
1,517 |
|
Prepayments |
6,764 |
6,031 |
|
Total |
41,465 |
37,730 |
Included in other receivables in all periods are security deposits, VAT and other sales tax receivables and employee loans.
Deferred consideration of
The directors consider that the carrying amounts of trade receivables approximate their fair value.
The provision for impairment of trade receivables consists of a lifetime expected loss provision and any specific provisions. At 31 August 2024 the lifetime expected loss provision for trade receivables and contract assets was
13 Convertible Loan Notes
Acquisition of Naves Corporate Finance GmbH
In September 2017, the Group acquired the entire share capital of Naves Corporate Finance GmbH ("Naves"). Naves was an established and successful business, headquartered in Hamburg, Germany, which advises national and international clients on corporate finance related to the maritime industry including restructuring advisory, corporate finance advisory, M&A, asset brokerage, interim/pre-insolvency management and financial asset management including loan servicing.
The acquisition agreement provided deferred amounts that would be payable to management sellers, conditional on their ongoing service in the business. Following the issuance of new convertible loan notes in the prior year, at 31 August 2024 no amounts are subject to future service conditions.
The following table shows amounts in the Group balance sheet relating to the convertible loan notes issued on the acquisition of Naves.
|
|
As at |
As at |
|
|
31 Aug 2024 |
29 Feb 2024 |
|
|
|
(restated1) |
|
|
£'000 |
£'000 |
|
Current liabilities: |
|
|
|
Convertible loan notes |
3,001 |
2,978 |
|
Derivatives |
104 |
140 |
|
Total |
3,105 |
3,118 |
1 Restatement for the adoption of 'Classification of Liabilities as Current or Non-current and Non-current liabilities with covenants - Amendments to IAS 1'. For further details, see in Note 3.
The movement in the Naves-related balances in the Group Balance Sheet during the period is explained by the items below:
|
|
|
£'000 |
|
Total Naves-related balances at 1 March 2024 |
|
3,118 |
|
Interest expense |
|
120 |
|
Derivative fair value gain |
|
(37) |
|
Cash paid |
|
(46) |
|
Foreign exchange gain |
|
(50) |
|
Total Naves-related balances at 31 August 2024 |
|
3,105 |
As at 31 August 2024, there are two further payments of principal required, with the final payment being in the full year ended 28 February 2026.
14 Financial instruments
There have been no substantive changes in the Group's exposure to financial instrument risk, its objectives, policies, and other processes for managing those risks or the methods used to measure them from previous periods. The Group continues to apply hedge accounting to derivative financial instruments that meet the criteria set out in IFRS 9.
a) Financial instruments
i) Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
- trade and other receivables;
- cash and cash equivalents;
- deferred consideration receivable;
- contingent consideration receivable;
- unlisted investments;
- trade and other payables;
- revolving credit facility;
- lease liabilities;
- derivative financial instruments; and
- convertible loan notes.
ii) Financial instruments by category
Financial instruments measured at fair value
The Group's financial assets and liabilities measured at fair value through profit and loss, including their fair value hierarchy, are as follows. Fair value is the amount at which a financial instrument could be exchanged in an arm's length transaction, other than in a forced or liquidated sale.
|
|
Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
As at 31 Aug 2024 £'000 |
|
Financial assets |
|
|
|
|
|
Unlisted investments |
- |
- |
1,633 |
1,633 |
|
Contingent consideration receivable |
- |
- |
548 |
548 |
|
Derivative contracts |
- |
3,593 |
- |
3,593 |
|
Total |
- |
3,593 |
2,181 |
5,774 |
|
Financial liabilities |
|
|
|
|
|
Embedded derivative |
- |
- |
104 |
104 |
|
Total |
- |
- |
104 |
104 |
|
|
Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
As at 29 Feb 2024 £'000 |
|
Financial assets |
|
|
|
|
|
Unlisted investments |
- |
- |
1,633 |
1,633 |
|
Contingent consideration receivable |
- |
- |
1,082 |
1,082 |
|
Derivative contracts |
- |
1,536 |
- |
1,536 |
|
Total |
- |
1,536 |
2,715 |
4,251 |
|
Financial liabilities |
|
|
|
|
|
Derivative contracts |
- |
218 |
- |
218 |
|
Embedded derivative |
- |
- |
140 |
140 |
|
Total |
- |
218 |
140 |
358 |
Fair value hierarchy
The level in the fair value hierarchy within which the financial asset or liability is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement.
Financial assets and liabilities are classified in their entirety into one of three levels:
- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
- Level 3: Inputs for the asset or liability that are not based on observable market data.
Unlisted investment
The unlisted investments primarily relate to the Group's investment in the London Tanker Brokers' Panel. the Group has valued the investment based on an income approach which has resulted in the fair value being deemed to be in Level 3 of the fair value hierarchy. The Group's policy is that the beginning of the financial year is considered the date of transfer between levels in the fair value hierarchy. The significant unobservable inputs into the valuation are:
- a discount rate of 16.4%; and
- expected income from the investment.
An increase in the discount rate of 2% would result in an increased fair value loss of
Contingent consideration receivable
The fair value of the contingent consideration receivable includes unobservable inputs and is therefore classified as Level 3. The contingent consideration receivable relates to the disposal of the Logistics Division in 2022. The SPA provides for a minimum guaranteed amount; this amount has been classified as deferred consideration. The balance of the earnout consideration is contingent on the future performance of the combined business up to a maximum specified in the SPA; this has been classified as contingent consideration.
The fair value of the contingent consideration has been calculated by reference to management's expectation of the future profitability of the combined business and discounted to present value using a discount rate of 5.19%. The valuation is most sensitive to the expectation of future profitability. During the period, the Group received
Forward currency contracts
The fair value of the forward currency contracts is determined from the present value of future cash flows based on the forward exchange rates at the balance sheet date and have therefore been classified as Level 2 in the fair value hierarchy.
The Group manages its exposure to US Dollar currency variations by spot and forward currency sales and other derivative currency contracts. The following table shows the notional values and average rates of forward contracts held at the balance sheet date.
|
|
Notional Value US |