FY25 Final Results

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29 May 2025

BRAEMAR PLC

("Braemar", the "Company" and together with its subsidiaries the "Group")

Audited Final Results for the year ended 28 February 2025

Strategy underpinning solid performance and confidence in new medium-term growth targets

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 year ended 28 February 2025 ("FY25" or the "Period").

James Gundy, Group Chief Executive Officer, commented:

"Our solid overall performance shows our strategy is working. As market conditions became more challenging in the second half, we have seen the benefits of the work we have done in recent years to build a business with a more diversified revenue base. This underpins our confidence in producing sustainable returns through the shipping cycle and our future growth targets.

Strong performances in our Investment Advisory and Risk Advisory segments partially offset the fall in Chartering revenues, helping generate underlying operating profits (before acquisition related costs) of £16.7 million, 88% higher than FY21 when we last set our medium-term targets.

We continue to develop our growth platform, by driving our three key strategic pillars of operational excellence, diversification and consolidation. To this end, we made further investments in our teams and infrastructure while maintaining strict discipline with a clear focus on shareholder value when evaluating opportunities. This included the launch of a new office in South Korea and a Container Chartering desk; shortly after year end, we obtained regulatory approval for our Securities business to operate a UK Organised Trading Facility (UK OTF).

Looking ahead, amid current market challenges comes opportunity. While there is clearly short-term uncertainty around the global economic outlook and currency volatility, I believe that this will present us with further opportunities to hire talent, make strategically suitable acquisitions and grow our market share. The medium to long-term fundamentals continue to look favourable and we will seize the opportunity to make investments that will drive shareholder value.

Our updated strategic framework (as set out below in the Chairman's statement) clearly lays out how we plan to grow the business, and I look forward to working with my talented colleagues to achieve these ambitious but achievable targets".

RESULTS HIGHLIGHTS

Financial performance

* Underlying results measures above are before specific items, including some acquisition-related charges and internal independent investigation costs.

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· Robust financial performance

· Balance sheet remains strong

· Delivering resilience through diversification

Final Dividend

The board will recommend a final dividend for the year ended 28 February 2025 of 2.5 pence for approval by shareholders at the Company's Annual General Meeting to be held on 2 July 2025. Subject to shareholder approval, the final dividend will be paid on 8 September 2025 to shareholders who are on the register at the close of business on 1 August 2025, with a corresponding ex-dividend date of 31 July 2025. The last date for Dividend Reinvestment Plan ("DRIP") elections will be 15 August 2025.

Current trading and outlook

New growth targets for FY30

Board

In recognition of his role now encompassing a wider remit, the board is delighted to announce that Group Chief Financial Officer, Grant Foley, will be promoted to Group Chief Financial and Operating Officer with effect from 1 June 2025.

Analyst Presentation

Management will host a briefing for analysts at 09.30 BST today at Braemar's offices at One Strand, Trafalgar Square, London, WC2N 5HR. For further details, please contact the team at Houston via [email protected].

Investor Webcast

Braemar will also host a webcast via the Investor Meet Company platform later today, commencing at 14:00 BST. The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via the Investor Meet Company dashboard up until 09:00 BST this morning, or at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet BRAEMAR PLC via: https://www.investormeetcompany.com/braemar-plc/register-investor

The 2025 Annual Report and Accounts will be available on the Company's website (www.braemar.com) shortly.

For further information, contact:

Chairman's Statement

I am pleased to report a solid financial performance for the Group this year. The results demonstrate the benefits of the extensive work we have done since launching our strategy in FY21, building a broader and more resilient business able to generate shareholder returns across the shipping cycle.

Braemar is a global business, with 411 dedicated staff members working for the Group across 18 offices in 13 countries. During the year, the geopolitical backdrop around the world became more challenging, particularly in the second half where global charter rates have historically been stronger than the first half. This resulted in our teams having to deal with an uncertain environment and increased regulation, particularly as a consequence of conflicts and a complex sanctions regime. Nevertheless, using our depth and reach of relevant data, our industry technology and insight, Braemar staff have successfully supported our clients to achieve their goals.

Despite these challenges, as we look ahead, we remain confident in our growth strategy and will continue to build an increasingly more resilient business. We are well placed to deal with the global challenges and uncertainty that we face, and to capitalise on opportunities to scale our operations in the years ahead. This underpins our confidence in achieving our growth targets for FY30 outlined in our new strategic framework.

Results for the year

Revenue for the year at £141.9 million (FY24: £152.8 million), was 7% lower than the prior year due a weaker performance from Chartering as global charter rates, notably in the Tanker and Dry Cargo markets, came under pressure, particularly in the second half of the financial year. Underlying operating profit was £15.6 million, £1 million lower than FY24 with the lower revenue partially offset by lower operating costs, with costs continuing to be well controlled.

Reported profit before tax at £9.2 million was £1.7 million higher than the prior year, due to lower specific non-recurring costs, in particular the costs of the independent internal investigation in FY24 (£2.6 million). Underlying earnings per share were 31.30p (FY24: 36.62p) and reported earnings per share 19.41p (FY24: 15.65p).

As at 28 February 2025, the Group had a small net debt position of £2.5 million, due to minor temporary adverse working capital movements immediately prior to year end. As expected, the Group returned to a positive net cash position in early March 2025.

We continued to strengthen our teams over the course of the year and were delighted to welcome a number of new colleagues into the Group, as we invested further in our platform for growth by adding to our broking and operational teams.

Board

In March 2025, Tristram Simmonds, Group Chief Operating Officer, left the Group. Tristram joined the business following the acquisition of Atlantic Brokers in 2018, and on behalf of the board I would like to thank him for his service and contribution to the Group.

In recognition of his role now encompassing a wider remit, I am delighted to announce that Group Chief Financial Officer Grant Foley will be promoted to Group Chief Financial and Operating Officer with effect from 1 June 2025. Grant leads all support functions as well as Braemar's Securities business (subject to regulatory approval) and has made a significant positive impact on the Group since joining in August 2023. I am confident that our executive team will continue to execute our growth strategy effectively and I look forward to working with my colleagues in the coming year.

Strategy

We remain committed to delivering on our strategic vision to position Braemar as a trusted broker of choice to the global shipping and energy markets. A key part of that growth strategy is to further strengthen our business lines through investment in our high calibre teams and making complementary acquisitions.

However, during the financial year we saw a set of circumstances that made this particularly difficult to execute.

Firstly, the economics of talent investment. Similar to the talent economics that we saw in the professional services industry post COVID-19, at times during the year, the cost of talent investment in our industry reached levels that we regarded as uneconomic. We therefore intentionally chose not to participate in investment during these periods, preferring to retain staff and maintain a disciplined approach to ensure that we can generate sustainable returns for shareholders. I am pleased to note that the economics of talent investment have now stabilised to what we regard as more attractive levels and we are not burdened with uneconomic decisions which could have been made had we chosen to participate.

Secondly, the impact of the UK stock market's performance on our ability to execute on transactions. According to Calastone data, over the last 12 months there has been just one month of positive inflow of funds to UK equities in the year and, indeed, for the quarter ending 31 March 2025, £3.48 billion was withdrawn from the UK market, making it the worst quarter on record. The impact of this is that UK equity market liquidity has generally been compromised, and we have suffered from an undervalued share price, creating a significant difference in public and private market valuations and impacting our ability to execute transactions that would be accretive for our shareholders. Once these harmonise, we are well placed to execute on our M&A strategy.

Despite the above challenges, we continue to see significant growth opportunities, organically in a more stable talent market and inorganically as other industry players see the benefits from leveraging scale.

As we look ahead over the next five years, the board is pleased to today announce an updated strategic framework. This sets out our near-term and medium-term growth targets, built around clear strategic pillars to deliver our ambition to become a trusted broker of choice to the shipping and energy markets with annual revenues of at least £200 million by FY30.

Capital Allocation Framework

In support of the newly launched strategic framework, the board today provides an update on our intentions for future uses of cash generated from operations. The Group's updated Capital Allocation Framework reflects a balance between growth investment and returning cash to investors.

First, we will continue to invest in talent to grow the business, while remaining focused on driving efficiencies and improved margins.

Second, we will continue to look for acquisitions that allow the Group to accelerate its growth and meet our strict value enhancing criteria.

Third, we will return capital to shareholders through dividends and share buybacks, as we grow the business.

Dividend

Since 2021, the Company has operated a progressive dividend policy, and the business has grown underlying operating profits substantially from £8.9 million in FY21 to £15.6 million this year. Total dividends have grown by 160% from 5.0 pence per share in FY21 to 13.0 pence per share in FY24. Despite this, our share price has remained broadly unchanged. In short, our progressive dividend policy, despite the yield being increasingly attractive, has not generated increased equity value to shareholders.

With this in mind, while the Company will continue to pay a dividend in line with our updated Capital Allocation Framework, it will reduce the dividend to a level that the board believes remains attractive and will use surplus capital to purchase (and then cancel) its own Company shares. For this year, cash saved from a reduced dividend will support a share buyback programme of up to £2 million. Reflecting this, the board will recommend a final dividend for the year ended 28 February 2025 of 2.5 pence for approval by shareholders at the Company's Annual General Meeting to be held on 2 July 2025.

This final dividend, together with the interim dividend of 4.5 pence already paid on 13 January 2025, represents a total dividend for the year of 7 pence. The final dividend will be paid on 8 September 2025 to shareholders who are on the register at the close of business on 1 August 2025, with a corresponding ex-dividend date of 31 July2025. The last date for Dividend Reinvestment Plan ("DRIP") elections will be 15 August 2025.

Our people

Braemar's assets are its people, and we have continued to invest in our teams throughout the year, opening a new office in South Korea and establishing presences in Connecticut (USA) and Monaco as well as building out existing desks. We have remained focused on maintaining Braemar as an attractive place to work, retaining existing talent and hiring where it makes economic sense to do so, benefiting all stakeholders.

Once again, I have been impressed by the commitment and resilience of our staff and on behalf of the board I would like to take this opportunity to thank our people for their dedication, hard work and focus.

Outlook

We have produced a solid financial performance this year that demonstrates our strategy is delivering. We will continue to execute our strategy, focusing on operational excellence, diversification across our business and acquisition opportunities.

Today, the global economy faces a number of challenges, including ongoing conflicts, a potential tariff-driven trade war and more volatile foreign currency markets. These are likely to have some short-term impact as charterers and owners adjust and manage an uncertain environment. Shipping has always adapted to change with new trade patterns and routes, and we believe that this will be no different.

Reflecting the wider geo-political uncertainty, chartering activity for the start of the new financial year has been weaker than the same period last year, while Investment and Risk Advisory are at similar levels. The forward order book remains strong and there are early signs of some improvement in Chartering revenues.

The board remains confident in the long-term prospects for the Group. The opportunity to significantly grow the business remains compelling and this market dynamic will likely provide additional opportunities for non-organic growth. With a clear strategy and strong platform to support this we are focused on generating revenue of at least £200 million with underlying operating profit margins of over 15% by FY30. 

Nigel Payne

Chairman

28 May 2025

Group Chief Executive Officer's Statement

I am pleased to announce that despite weaker chartering conditions in the second half we have produced another solid financial performance.

In 2021, we laid out our strategic objective to build a more resilient business that could deliver sustainable profits through the shipping cycle. I am pleased to report underlying operating profit (before acquisition-related items) of £16.7 million for FY25, 88% higher than FY21 (£8.9 million) and achieved through the strategic focus of building a more diversified revenue mix.

The deep knowledge and understanding across our teams has come to the fore as the markets we operate in have become increasingly complex during the year. Our clients have relied heavily on our expertise to navigate the challenges posed by ongoing conflicts and trade tensions, and global fleets continued to age with newbuild capacity remaining restricted.

The 'Dark Fleet' of vessels moving sanctioned oil continued to grow in the year and is now estimated to comprise 1,400 vessels. At the same time, the sanctions regime has increased in its complexity. We have continued to invest in our compliance function throughout the year, increasing headcount and using the latest technology to further improve our systems and processes.

Robust performance

Group revenue for the year at £141.9 million, was £10.9 million lower than the prior year primarily driven by weaker Chartering revenue being partially offset by a stronger Investment Advisory performance with Risk Advisory broadly unchanged.

Chartering revenues were weaker, driven by lower revenues in Tankers and Dry Cargo, particularly in the second half. This was partially offset by a strong performance from Sale & Purchase with increases in newbuilding and second-hand transactions.

Costs continued to be well controlled, with underlying operating costs of £124.1 million, £9.9 million lower than the prior year, primarily due to lower staff bonus costs in the year.

Revenue per head at £345,000 (FY24: £373,000) remained strong by industry standards, although lower than the prior year due to the weaker revenue performance.

Investing

We have continued to invest throughout the year, opening our new office in South Korea and establishing presences in Connecticut (USA) and Monaco, obtaining our Organised Trading Facility licence in the UK shortly after the year end, applying for our European Organised Trading Facility, and hiring talented individuals in a highly competitive market for talent.

We have also completed an upgrade of IT systems and continued to invest in our support functions to ensure that we are well set to support the growth of the business in an increasingly complex environment.

During the year, we evaluated a number of potential acquisition opportunities. Market consolidation is an important part of our strategy; however, we remain patient and well-disciplined to ensure that we execute on the right transactions for the Group both financially and strategically.

Strategy

Our strategy remains broadly unchanged; however, we are pleased today to be announcing the launch of a more detailed strategic framework. This framework articulates our growth ambition for the next five years, provides further detail on the strategic areas of focus through which we will continue to drive growth, and provides detail on the output and targets against which we will measure our performance in the coming years, as we seek to grow revenues to at least £200 million by FY30.

There are three pillars to this framework

1. Diversification

2. Consolidation

3. Operational excellence

Within this framework we have clearly defined objectives in the short and medium term that will drive our progress.

Environmental, Social & Governance

Braemar has a clear ESG framework in place, with ongoing initiatives designed to reduce environmental impact, protect fragile ecosystems and create a more diverse, representative workforce.

As a Group, we are committed to minimising our environmental impact and continuing to make progress in our efforts to facilitate climate-smart shipping. We have also committed to a series of future initiatives to support our ESG aims and remain on track to achieve our goals in the 2025 calendar year.

Although shipping remains an efficient form of transport, we are well placed to advise our clients on how they can reduce the environmental impact that their vessels and charters have.

We have continued to hire from a broad range of backgrounds and cultures and with offices in 13 countries, Braemar has a diverse and talented workforce.

Once again, I am very proud of the work that has been done across all of our offices to support a number of charities and good causes, making a positive impact to many.

Outlook

The strategy of diversifying the Group's revenues across Shipbroking and Securities has delivered a robust performance for the year. Through our newly articulated strategic framework and priorities, we will continue to build upon this.

We enter FY26 with a strong forward order book of $82.2 million, broadly unchanged from the prior year. However, although recent years have also been characterised by an uncertain geopolitical backdrop, FY26 has the added complexities of potential tariffs, trade wars, a weaker US dollar and an increasingly complex sanctions regime. Underlying operating profit (before acquisition-related items) for FY26 is now expected to be in the range of £13 million to £14 million.

We remain focused on building a business that can deliver shareholder value throughout the shipping cycle and our strategic framework provides clear direction and a roadmap to get the Group to £200 million of revenue by FY30.

While the short-term outlook in our markets is uncertain, I am very excited about the opportunities that the Group has across all areas of the business to grow revenues, profit and cash generation.

I would like to take this opportunity to thank our colleagues for their hard work and dedication, as well as our clients and partners for their ongoing support.

James Gundy

Group Chief Executive Officer

28 May 2025

Financial Review

The Group delivered a solid financial performance for FY25. While the first-half performance showed an improvement on the prior year, the second-half was significantly weaker. The typical increase in rates usually seen in the second-half did not materialise with Tanker rates actually weakening. This was partially offset by a stronger performance from Investment Advisory.

Underlying profit before tax at £13.4 million was £1.2 million lower than the prior year, due to the weaker revenue performance and subsequently lower bonus costs.

At the year end, the Group had a net debt position of £2.5 million due to adverse temporary working capital movements, however this returned to a net cash position swiftly after year end.

Reflecting the Group's updated Capital Allocation Framework, the Group has revised its dividend policy, and the board is recommending a final dividend of 2.5 pence, making the full-year dividend 7 pence, a decrease of 46% on the prior year (FY24: 13 pence). The cash saved from the lower dividend will be used to support a share buyback programme of up to £2 million, maintaining total shareholder returns.

Summary Income Statement FY25

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Revenue

Revenue from continuing operations was 7% lower than the prior year. Chartering revenues were 14% lower at £89.4 million (FY24: £103.9 million), primarily due to weaker Tanker and Dry Cargo rates, particularly in the second half. Investment Advisory revenues were £30.2 million (FY24: £25.7 million), an increase of 17% with a strong performance from Sale & Purchase. Risk Advisory was slightly lower at £22.3 million (FY24: £23.1 million).

The majority of the Group's revenue is earned in US dollars and the exchange rate moved from a low of $1.22/£1 to a high of $1.34/£1 during the year. Total USD revenues at $179 million were lower than the prior year (FY24: $189 million).

At 28 February 2025, the Group held forward currency contracts to sell $116 million at an average rate of US$1.26/£1.

Operating costs

Operating costs at £124.1 million were £9.9 million lower than the prior year (FY24: £134.0 million). Staff costs were £9.9 million lower than the prior year, offset by ongoing investment in IT and increased professional fees including in relation to establishing the UK Organised Trade Facility to drive further growth in Risk Advisory.

Central costs

Central costs increased by 10% to £5.6 million (FY24: £5.0 million), primarily due to increased investment in staff and office costs.

Specific items

Alternative performance measures ("APMs")

Braemar uses APMs as key financial indicators to assess the performance of the Group. Management considers that the APMs used by the Group help to provide an alternate assessment of business performance, by excluding items which management does not believe relate to business performance in the period 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.

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. Details of these items can be found in Note 2.2 to these Financial Statements.

Acquisition-related expenditure includes £3.6 million in relation to the acquisition of Southport Maritime Inc. (FY24: £3.6 million) and £0.7 million (FY24: £nil) within other operating costs that relates to the impairment of a right-of-use lease asset.

Net finance costs

Net finance costs for the year increased by £0.5 million to £2.0 million (FY24: £1.5 million). Interest payable on the Group's revolving credit facility reduced slightly to £2.2 million from £2.4 million as the Group maintained a lower average drawdown through the year. This was offset by finance income decreasing by £0.5 million due to a £0.3 million gain on derivative contracts in the prior year.

Balance sheet

Net assets at 28 February 2025 were £84.2 million an increase of £4.5 million from the prior year (FY24: £79.6 million). The year saw an overall decrease in total assets of £4.2 million, primarily due to an increase in trade and other receivables (£3.2 million) offset by a reduction in cash (£7.5 million).

Total liabilities decreased by £8.7 million, due to lower trade and other payables, primarily due to a lower bonus accrual at the year-end, given the weaker revenue performance.

Borrowings and cash

At the Balance Sheet date, the Group had a revolving credit facility with HSBC of £30.0 million. The facility also provides access to a global cash pooling facility in the UK, USA, Germany and Singapore, which enables efficient management of liquidity between its main regional hubs. At the end of the year, the Group had net debt of £2.5 million (FY24: £1.0 million net cash), lower than the previous year due to lower cash receipts towards the end of the financial year.

Retirement benefits

The Group has a defined benefit pension scheme, which was closed to new members during FY16. The scheme has a surplus of £2.5 million (FY24: surplus £1.4 million), which is recorded on the Balance Sheet as at 28 February 2025. The most recent funding valuation was carried out as at March 2023 and showed a surplus of £0.3 million.

Taxation

The Group's underlying effective tax rate in FY25 was a charge of 27% (FY24: 26%), slightly higher than the UK corporation tax rate, reflecting the international operations of the Group.

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 year, the Company requested that SG Kleinwort Hambros Trust Company (CI) Ltd, as Trustee of the Company's ESOP Trust, purchase shares in Braemar Plc. During the year, a total of 880,344 shares in the Company were purchased by the Trustee and 1,600,095 shares were released; as a result, at 28 February 2025, the ESOP held 1,583,460 shares (FY24: 2,303,211 shares). The total cash outflow as a result of these share purchases was £2.4 million (FY24: £6.1 million).

Dividend

The directors are recommending for approval at the AGM on 2 July 2025, a final dividend of 2.5 pence per share, to be paid on 8 September 2025. The total dividend of 7.0 pence for the year is covered 4.4 times by the underlying earnings per share from operations of 31.30 pence. The total cash outflow in respect of dividends paid during the year ended 28 February 2025 was £5.5 million (FY24: £2.4 million).

Going concern

With the trading cash flows generated during the year, the Group remains in a robust liquidity position. The Group will maintain its prudent approach to working capital forecasting and credit controls. The Group's revolving credit facility was renewed during the financial year, extending the term to November 2027 and provides the seasonal working capital that is required. Accordingly, the accounts have been prepared on a going concern basis.

Grant Foley

Group Chief Financial Officer

28 May 2025

Operating Review

Market Review and Outlook

While many shipping markets continued to perform well during the first half of FY25, rates weakened in the second half of the financial year. The usual Tanker rate increase in the fourth quarter did not materialise leading to softer rates at the start of the 2025 calendar year. Chartering's Offshore market continued to perform well and Investment Advisory saw robust results, with strong performances across both newbuilding and second-hand.

Geopolitical events, sanctions and tariffs are creating some uncertainty and may have a short-term impact, but we remain confident in the medium-term outlook for shipping as it adapts to these challenges.

The global fleet continues to grow but at a slower pace. Reduced shipyard capacity and market uncertainty have resulted in a slowdown in new ship deliveries and shipowners are extending the economic lifespan of older ships resulting in an ageing fleet. Once the uncertainty starts to recede, we believe that we will start to see activity increase once again.

We now present a summary of our three business segments: Chartering, Investment Advisory and Risk Advisory

CHARTERING

Chartering's revenue decreased by 14% to £89.4 million from £103.9 million in FY24, representing 63% of Braemar's total revenue.

Tankers - £42.9 million (FY24: £54.7 million)

Tanker revenues were 21% lower than prior year with freight markets easing during 2024. With reduced seasonal demand in the fourth quarter particularly from weaker Chinese imports, there was a reduction in crude tanker earnings in the second half of the year. While the weakening of refining margins throughout the year impacted the product tanker market. The sanctioning by western governments of tankers involved in Russian and Iranian trades helped tighten tanker supply towards the end the year, partly offsetting the earnings reduction for crude tankers. The 'Dark Fleet' has continued to extend the economic lifespan of older tankers and during 2024 shipbuilders delivered the fewest new tankers so far this century.

Dry Cargo - £21.0 million (FY24: £22.1 million)

Dry cargo revenues decreased by 5% to £21 million. Although dry bulk carrier earnings began the 2025 financial year strongly, all four main bulker sizes experienced a slowdown by year-end. Easing of the Panama Canal restrictions, muted seasonal demand in the fourth quarter especially from China and ongoing fleet growth, all put downward pressure on rates. For the first time since 2008, the fourth quarter was the lowest of the year for Capesize time charter at $18,301/day compared with $28,128/day in the same quarter a year earlier. Vessel earnings in the smallest dry bulk carrier sizes showed the most resilience, although even the Handysize underperformed the prior year towards the end of the year hitting its lowest point in February since 2020.

Offshore Energy Services - £9.0 million (FY24: £7.9 million)

Offshore revenues grew to £9.0 million in the year, up 14% from the prior year. Investment in new offshore energy projects has boosted marine activity. Supply constraints drove rate improvements during the year, particularly for longer-term fixtures. Additionally, an increase in offshore sale and purchase activity, along with growing interest in newbuildings, has bolstered this year's performance. The desk's forward book has expanded further and remains strong, with a positive outlook ahead.

Specialised Tankers - £16.5 million (FY24: £19.2 million)

*LNG and LPG & Petrochemicals are subsets of Specialised Tankers

Specialised Tankers revenue decreased to £16.5 million, 14% lower than the prior year. The specialised market faced uncertainty driven by geopolitical instability, shifting trade routes, and energy transitions. Ageing fleets and high newbuild costs should limit oversupply and support freight rates, but demand remains unpredictable. Earnings softened across all major chemical tanker segments and this trend continued into Q1 2025, though rates remain significantly above pre-COVID levels. A number of key hires were made across our five locations.

LNG

Record levels of newbuild LNG carriers were delivered during the year, despite ongoing delays in key infrastructure projects to increase LNG production capacity. The influx of new tonnage coupled with limited demand growth exerted downward pressure on spot rates. With shipyards operating at full capacity and lead times for new orders stretching out to 2029, newbuild prices remained at historically high levels. Owners continued to face the challenge of securing new tonnage in the short-term to meet the anticipated increase in demand once delayed LNG production projects come online.

LPG & Petrochemicals

The LPG and Petrochemical desk performed well over the last 12 months, bolstered by our product broking section. The desk has had success in securing new accounts and has invested in further talent hires to support future growth. The gas market had a strong year, especially in Chartering, with increased demand for larger vessels due to projected growth in LPG, Ethane, and Ammonia exports. U.S. petrochemical exports boosted employment in the sector and kept shipping markets tight. However, the smaller LPG and petrochemical market was less active compared to the previous year, with fewer available vessels due to aging fleets, although freight rates remained strong.

INVESTMENT ADVISORY

Investment Advisory's revenue increased by 17% to £30.2 million (FY24: £25.7 million), representing 21% of the Group's revenue.

Corporate Finance - £2.3 million (FY24: £2.2 million)

Corporate Finance revenues at £2.3 million increased marginally from the previous financial year. Once again, the year was characterised by shipowners having significant equity with less reliance on sourcing debt financing, especially for second-hand tonnage. However, several financings were arranged, especially for Asian, European and Middle Eastern clients whereby the debt capital was sourced predominantly from APAC-based lenders. Continued competition among maritime financiers combined with decreasing overall interest rates has started to create more activity, in particular for newbuilding projects.

In relation to M&A business, Corporate Finance was able to successfully expand into non-maritime sectors like real estate and industrial production.

Sale & Purchase - £27.9 million (FY23: £23.5 million)

Sale & Purchase performed strongly with revenue increasing by 18% to £27.9 million. Second hand activity was split across tankers, bulkers and containers with strong asset values and a high volume of transactions contributing to a strong year. This strength was driven by favourable charter market conditions and a preference by some owners to supplement fleet renewal plans with second hand ships, given the long lead times and higher costs associated with newbuilds. The newbuilding order book continued to grow throughout the year, with orders placed in China, Korea and Japan across various segments. The strong newbuild market reflected a mix of environmental compliance pressure, limited yard space, strong second-hand prices, and future demand expectations, all encouraging shipowners to invest in new tonnage despite higher costs and extended delivery timelines.

Towards the end of the year, uncertainties around tariff policy and rules on American port calls, has caused many clients to pause investment projects, with the Container markets being hit harder than other sectors and Tankers and Bulkers seemingly less affected.

RISK ADVISORY (SECURITIES)

Risk Advisory's revenue decreased by 3% to £22.3 million (FY24: £23.1 million), representing 16% of total revenue. Braemar's Securities business consists of four derivatives markets: Dry Cargo FFA, Coal, Natural Gas, Oil, and Tanker FFA.

Dry Cargo Derivatives

Despite weaker-than-expected demand growth, slower global economic expansion, and elevated inventory levels, persistent geopolitical tensions have helped sustain average freight rates throughout the sector. Despite the reduction in trade volumes, the desk has experienced growth in its client base and a rising interest in its proprietary pricing platform, braemarscreen.com, leading to an increase in overall market share.

Coal

Once again, the Coal desk maintained its position as the leading provider of brokering services to the European-delivered ARA market, which is used to benchmark the key API2 instrument, the most traded coal futures contract globally.

Natural Gas Derivatives

The Gas market has experienced another volatile year, driven by geopolitical tensions. The performance of the Natural Gas desk has been consistent with last year, with a focus on building out the regulatory foundations in order to expand into both new markets and new geographies. Having obtained a UK FCA approved Organised Trading Facility (OTF) licence shortly after the year-end and with work already in progress to secure a European OTF, the desk is well positioned to grow in the coming years.

Oil Derivatives

Geopolitical tensions continued to drive crude and oil product markets. Fuel oil derivatives trading remained focused on Asia, though the team grew its market share in Europe. The customer base has expanded beyond shipping-related hedging to include banks, refiners, trading firms, and hedge funds.

Tanker Derivatives

The Tanker FFA market continued to be volatile yet again throughout the year. Volumes were up 8.5% across FFA routes. The ongoing geopolitical tensions, spanning from Russia-Ukraine to Israel-Gaza and the Trump presidency mean that continued growth and volatility is expected for the remainder of 2025. The Braemar FFA desk is a joint venture with GFI and remains the leading global facilitator in wet freight and LPG FFAs and we will continue to ensure we remain at the forefront of market opportunity as it arises.

Risk management

Effective risk management forms an integral part of how we operate. It is essential for delivering our strategic objectives as well as protecting our relationships and reputation.

The Group's risk management framework

Risk awareness is a key element of Braemar's organisational culture at all levels and is key in managing risks to our business, helping to ensure the process of risk identification, assessment and response is embedded within daily operational and functional activities across the Group.

The board is responsible for managing the Group's risks, overseeing the internal control framework, and determining the nature and extent of the principal risks the Group is willing to take to achieve its long-term objectives. The Group's risk management and internal control frameworks are continually monitored and reviewed by the board and the Audit &Risk Committee, with support from the Risk Committee. The board is committed to maintaining the highest standards of conduct in all aspects of its business, but in considering the other matters set out in Section 172 of the Companies Act 2006, the directors are mindful that the approach must be balanced with both employee interests and the Group's need to foster business relationships. Group policies and procedures have been designed to ensure that the level of risk to which the Group is exposed is consistent with the Group's risk appetite and aligned with the Group's long-term strategy.

Reporting to the Chair of the Audit &Risk Committee and administratively to the Chief Financial Officer, the Head of Internal Audit and Risk leads the Internal Audit and Risk Management function.

Risk management process

The Group's Risk Management framework incorporates both bottom-up and top-down identification, evaluation, and management of risks. Within our framework:

· senior management has initial responsibility for identifying, monitoring, and updating business risks; while

· the management teams of group IT, HR, Legal, Compliance and Finance assess their respective functions for operational and functional risks not identified by senior management.

The Group's risk management framework is managed via an online system which is accessible to the senior management team and operational and functional management teams globally. The system's functionality has allowed for enhanced monitoring and reporting automation. The system allows for:

· Group-wide real-time updating,

· Distribution and completion of periodic internal control self-assessment surveys,

· Ongoing monitoring of risks and mitigation activities at Group, operational, and functional levels, and

· Risk management reporting at Group, regional, and company location levels.

The Group's risk management framework considers both the likelihood and the impact of identified risks materialising. Risks are mitigated, where possible, by the implementation of control activities, which are evaluated as part of the risk-based internal audit plan to determine their effectiveness in mitigating or reducing risk to acceptable levels.

All identified risks are aggregated and reviewed to assess their impact on the Group's strategic objectives and the resources required to manage them effectively. Principal risks are aggregated together with associated issues or areas of uncertainty. Inherent risks can be significant, but our control processes and management actions reduce the risk level.

The risk management process evaluates the timescale over which new or emerging risks may occur. The risk management process also considers the potential impact and likelihood of risks, as well as the timescale over which risks may occur. The outcome of this process is then reviewed with further consideration and assessment provided by the Risk Committee, the Audit &Risk Committee, and the board.

Oversight and evaluation of the effectiveness of Braemar's risk management framework is led by the Group Chief Financial Officer, supported by the Risk Committee whose membership includes the Company Secretary, Head of Internal Audit and Risk and Head of Compliance, and representatives of other functions and locations of the business. The Risk Committee monitors risks regularly, taking into consideration the appetite, tolerance, and potential impact for specific risks on the Group.

Principal risks

The principal risks which may impact the Group's ability to execute its strategic objectives have remained unchanged since 2024. The risks that follow, while not exhaustive, are those principal risks which we believe could have the greatest impact on our business and have been discussed at meetings of the board, the Risk Committee and the Audit &Risk Committee. The board reviews these risks in the knowledge that currently unknown, non-existent or immaterial risks could turn out to be significant in the future and confirms that a robust assessment has been performed. The Audit & Risk Committee reviews and approves the principal risks and any related mitigation plans.

In today's increasingly complex and volatile global environment, Braemar recognises the heightened risks and uncertainties that impact its operations. Geopolitical and economic uncertainty, economic fluctuations, and an evolving regulatory landscape contributes to a challenging risk management landscape. We remain committed to proactively identifying, assessing, and mitigating these risks to ensure the resilience and sustainability of our business.

Risk mitigation

As part of our risk management process, the Group takes various measures to mitigate risk throughout the year. These measures include:

The directors have carried out an assessment of the principal and emerging risks facing the Group. The most significant risks to which the board considers the Group is exposed, based on the evaluation process described in the Group's risk management framework are set out below.

Internal audit

The Group's internal audit function is monitored and reviewed by the Audit & Risk Committee, to ensure that the Group's risk management and internal control processes are working effectively. A detailed description of the Group's internal audit function can be found on page 59 of the Annual Report.

Going concern

The Group generated net cash from operating activities of £5.9 million in the year, above the £5.2 million in the prior year. Although the business had a modest net debt position at the end of the year of £2.5 million (FY24: £1.0 million net cash), due to the timing of certain working capital items. Given the ongoing geopolitical uncertainty, the Group has started the year slower than the prior year, however, the fundamentals of the business and industry remain strong and the directors believe that the Group is well positioned to manage its risks going forward.

A more detailed analysis of the risks facing the business is outlined in Note 1. The analysis concludes that there is no material uncertainty relating to going concern, based on cash flow forecast for a 15-month period from the signing of these accounts to 31 August 2026. The directors have a reasonable expectation that the Company and Group have adequate resources to continue to trade for at least twelve months from the date of the approval of these Financial Statements and for this reason they continue to adopt the going concern basis in preparing the Financial Statements.

Viability statement

In accordance with the UK Corporate Governance Code, the directors have assessed the prospects of the Group over a period of four years, which they believe is an appropriate period based on the Group's current financial position, banking facilities, budgets and forecasts, strategy, principal risks, and exposure to potentially volatile market forces.

In recent years, during the COVID pandemic and delayed publication of the FY23 annual report and accounts, the Group's bankers, HSBC, have been highly supportive. The Group met all of its financial covenant tests during the year and is confident that it will continue to do so.

The facilities with HSBC expire in November 2027, and more detail can be found in Note 1 to the Financial Statements. The viability assessment has been carried out over a four-year period from the balance sheet date to 28 February 2029, by which time new banking facilities will need to have been concluded. It therefore assumes that similar banking facilities will be made available to the Group for the whole of this time. The directors' assessment considers those current facility terms and includes a review of the financial impact of significant adverse scenarios.

In generating those scenarios, consideration was also given to the following risks to the business that have been identified in the Annual Report as new or increasing:

Competition risk and market consolidation

Competition in the shipping industry is becoming increasingly intense, and there is a growing trend towards market consolidation, as companies seek to gain scale and reduce costs. Loss of established brokers could impact revenues. Increasing consolidation could impact the Group's M&A strategy for growth. Quarterly horizon-scanning exercises are conducted by the leadership team to assess emerging trends in the market and identify areas of the business that could be targeted by competitors.

Cybercrime and data security

Cybercrime could result in loss of business assets or disruption to the Group's IT systems and its business. Lack of appropriate data security could result in loss of data. Loss of service and associated loss of revenue. Reputational damage. Potential for material losses due to fraud or phishing. To address the persistent threat of cyber-attacks, and to enhance security measures already in place, Braemar has developed a two-year Security & Resilience Strategy with Board level approval. Implementing a robust set of risk controls through adoption of the National Institute of Standards & Technology (NIST) Cyber Security Framework and ISO 27001 Standard. Our Security Operations Centre (SOC) supports the wider cyber security control environment, providing 24x7 monitoring.

Geopolitical and macroeconomic

Braemar's businesses are reliant on global trade flows and as such may be negatively impacted by geopolitical and/or macroeconomic issues. A downturn in the world economy could affect transaction volumes, resulting in reduced revenue. Changes in shipping rates and/or changes in the demand or pricing of commodities could affect global supply activity. Political change, ongoing regional conflicts, increased trade tensions, the uncertainty in US tariffs and sanctions have heightened geopolitical and macroeconomic risks.

Currency fluctuations

The Group is exposed to foreign exchange risk because a large proportion of its revenue is generated in US dollars while its cost base is in multiple currencies. The increase in risk is driven by heightened geopolitical volatility.

People and Culture

Braemar is a people-based business and people are vital to its success. Inadequate policies and reward structures could incentivise negative behaviors, create internal conflict, lead to reputational damage, and contribute to failure in attracting and /or retaining skilled personnel.

Revenue was chosen as the main variable in generating the adverse scenarios as there are no costs of sale within the business and the remaining costs are largely fixed or made up of bonus pools which will vary in line with the levels of revenue. Set against those falls in revenue is the likely effectiveness of potential mitigations that are reasonably believed to be available to the Group over this period.

In considering these potential mitigations, the board was mindful of its duties under Section 172 of the Companies Act 2006 and considered the potentially competing interests of different stakeholder groups and the potential long-term consequences of the actions, including the use of funds for employee remuneration (and the role this plays in the retention of staff), paying dividends, making investments and repaying debt.

The assessment involves the production of cash flow forecasts designed to assess the ability of the Group to operate both within the banking facility covenants and liquidity headroom. The main downside sensitivities used were annual revenue reductions of 7.5% and 15% (both excluding forward order book) from May 2025 to July 2026 and stabilised thereafter. Under the 7.5% case the board concluded that with only very minor cost-saving or cash management mitigations available to it, the Group could continue to operate under the current banking facilities over the period. Under the 15% case certain additional cost saving and cash mitigation actions were required to allow the Group to continue to operate within the current banking facilities, all of which were within the board's control.

The assessment also incorporated a "reverse stress test" which was designed to identify scenarios under which the Group's banking facilities would be inadequate to continue as a going concern despite using all the mitigating options available. The result of this test shows that all available mitigations would be exhausted, and facilities breached if there was approximately a 32% (excluding forward order book) decrease in forecast revenue from May 2025 through to July 2026.

The directors have concluded that whilst future outcomes cannot be guaranteed or predicted with certainty the revenue and operating margin scenarios that would lead to such a failure are highly unlikely. They also noted that the facility headroom in terms of liquidity remained adequate even under the reverse stress test conditions and that it was the leverage covenant which would be breached if revenue fell by more than 32% (excluding forward order book) and then only during 2026.

There is no evidence indicating that revenues will fall to levels indicated in this test and that the likelihood is therefore remote and that there is therefore no material uncertainty in this regard, nor any impact on the basis of preparation of the Financial Statements. There is also a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the next four financial years.

Consolidated Income Statement

For the year ended 28 February 2025

Consolidated Statement of Comprehensive Income

For the year ended 28 February 2025

Consolidated Balance Sheet

As at 28 February 2025

Registered number: 02286034

Consolidated Cash Flow Statement

For the year ended 28 February 2025

1 In the prior year, tax received of £0.6 million was offset against tax paid and presented as a net amount of £6.5 million. Due to an increase in the amount of tax refunded in the current year, tax paid and tax received have been presented separately in the current year, and the prior year presentation has been similarly updated to aid comparability.

Consolidated Statement of Changes in Total Equity

For the year ended 28 February 2025

Notes to the Financial Statements

General information

Braemar plc (the "Company") is a public company limited by shares incorporated in the United Kingdom under the Companies Act. The Company is registered in England and Wales and its registered address is 1 Strand, Trafalgar Square, London, United Kingdom, WC2N 5HR. The consolidated Financial Statements of the Company as at and for the year ended 28 February 2025 comprise the Company and its subsidiaries (together referred to as the "Group").

The Group Financial Statements of Braemar Plc for the year ended 28 February 2025 were authorised for issue in accordance with a resolution of the directors on 28 May 2025.

1 Basis of preparation

1.1 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 2025 or 29 February 2024 but is derived from those accounts. Statutory accounts for 2024 have been delivered to the registrar of companies, and those for 2025 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.

The consolidated Financial Statements incorporate the Financial Statements of Braemar Plc and all its subsidiaries made up to 28 February each year or 29 February in a leap year.

Subsidiaries are entities that are controlled by the Group. Control exists when the Group has the rights to variable returns from its involvement with an entity and has the ability to affect those returns through its power over the entity. The results of subsidiaries sold or acquired during the year are included in the accounts up to, or from, the date that control exists. All intercompany balances and transactions have been eliminated in full.

Certain statements in this Annual Report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it gives 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.

The Group Financial Statements are presented in sterling and all values are rounded to the nearest thousand sterling (£'000) except where otherwise indicated.

New standards, amendments and interpretations effective for the financial year beginning 1 March 2024

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 year, the Group has applied "Classification of Liabilities as Current or Non-current and Non-current liabilities with covenants - Amendments to IAS 1". The amendments clarified that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the entity's expectations or events after the reporting date.

The amendments also clarify what IAS 1 means when it refers to the 'settlement' of a liability. Terms of a liability that could, at the option of the counterparty, result in its settlement by the transfer of the entity's own equity instrument can only be ignored for the purpose of classifying the liability as current or non-current if the entity classifies the option as an equity instrument. However, conversion options that are classified as a liability must be considered when determining the current/non-current classification.

Under the Group's previous accounting policy, a financial liability with an equity conversion feature was classified as current or non-current disregarding the impact of the equity conversion option. The Group's accounting policy has now changed such that equity conversion options which are not accounted for as an equity instrument separately from the liability component of a compound financial instrument, are taken into account in determining the classification of a liability as current or non-current. The impact of the change in accounting policy at February 2024 is to reclassify £2.3 million of Convertible Loan Notes previously classified as non-current, to be classified as current liabilities (February 2023 £2.3 million). There has been no impact to profit or loss, cash flows or retained earnings as a result of the change in accounting policy.

Other than this, the adoption of the above has not had any material impact on the amounts reported or the disclosures in these Financial Statements.

New standards, amendments and interpretations issued but not yet effective for the financial year beginning 1 March 2024 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 in future periods and have not been early adopted by the Group:

- Amendments to IAS 21 "The Effects of Changes in Foreign Exchange Rates" titled Lack of Exchangeability

- IFRS 18 "Presentation and Disclosures in Financial Statements"

- IFRS 19 "Subsidiaries without Public Accountability: Disclosures"

IFRS 18 introduces new requirements to:

· present specified categories and defined subtotals in the statement of profit or loss

· provide disclosures on management-defined performance measures ("MPMs") in the notes to the financial statements

· improve aggregation and disaggregation.

Except for IFRS 18, 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.

1.2 Going concern

The Group 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 2026 which is more than twelve months from the date of signing of these Financial Statements.

A set of cash flow forecasts ("the base case") have been prepared by management to cover the going concern period and reviewed 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. In putting together these forecasts, particular attention was paid to the following factors:

· Expected market demand, the impact on market rates and the Group's forward order book.

· The Group's compliance with sanctions put in place as a result of the conflict in the Ukraine has meant additional work reviewing compliance obligations on a regular basis as the laws have been amended but did not have a material effect on trading in FY25, nor is it expected to have an impact in FY26.

· The level of likely cost inflation, particularly around salaries.

· Adverse movement in foreign exchange rates, particularly USD that can have an impact on revenues. The Group has a hedging programme in place to partially mitigate this impact.

· The impact that trade tariffs and a potential trade war could have on performance.

· Geopolitical tensions can cause volatility in shipping markets, but, if anything, that uncertainty can give rise to additional opportunities for the business to support the industry and clients further. There is therefore no expectation that the current global political tensions will have an adverse impact on trading in FY26.

· 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 considered trading performance during the current year and have concluded that none of these factors are currently likely to have a significantly adverse impact on the Group's future cash flows.

At 28 February 2025 the Group had net debt of £2.5 million (2024: £1.0 million net cash). As at 30 April 2025 the Group had net bank cash of £4.6 million.

The Group's revolving credit facility ("RCF") is for £30.0 million plus an accordion limit of £10.0 million and had an initial termination date of November 2025. During the year, the Group exercised an option to extend the facility by two years which was approved by the lender, extending the term to November 2027. Drawdown of the accordion facility is subject to additional credit approval. The RCF agreement has an EBITDA leverage covenant of 2.5x and a minimum interest cover of 4x. At 31 May 2024, 31 August 2024, 30 November 2024 and 28 February 2025 the Group met all financial covenant tests In addition, there is a further requirement to provide HSBC with the Group's audited financial statements within six months of the year-end.

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, including a number of downside sensitivities on budgeted revenue, including a reverse stress test scenario. The directors consider revenue as the key assumption in the Group's budget. The cost base is largely fixed or made up of discretionary bonuses, which are directly linked to profitability. Based on two flex scenarios; a revenue decrease of 7.5% and a revenue decrease of 15% (both excluding forward order book) from the base case, only very minor 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 budgeted 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 32% (excluding forward order book) in budgeted revenue from the base case assumptions from May 2025 through to July 2026. In light of current trading, forecasts and the Group's performance over FY25, the directors assessed this downturn in revenue and concluded the likelihood of such a reduction remote, especially in the light of the forward order book of $82.2 million at the end of February 2025 ($31 million of which is for the financial year ending February 2026), such that it does not impact the basis of preparation of the Financial Statements and there is no material uncertainty in this regard.

1.3 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. Key estimates are those that the Group has made in the process of applying the Group's accounting policies and that have a significant risk of resulting in material adjustments to the carrying amounts of assets and liabilities within the next financial year. Critical judgements are those that the Group makes, apart from those involving estimations, that the directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the Financial Statements.

The following table provides a summary of the Group's key estimates and critical judgements, along with the location of more detailed information relating to those judgements.

There have been no material transactions in the current or prior year requiring significant judgement to be applied, and as a result, acquisition accounting for business combinations is no longer considered by the Group to be a significant estimate or judgement.

Climate‐related risks and opportunities

Management has 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 does not consider that climate‐related risks have a material impact on any key judgements, estimates or assumptions in the consolidated Financial Statements.

In the prior year, 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 the Environment and Climate Change risk resulted in its inclusion as a Group Principal Risk.

 1.4 Material accounting policies

The accounting policies applied by the Group in relation to specific transactions and balances are disclosed in the note to which they relate. The following section includes those accounting policies which apply pervasively across the Financial Statements and to avoid repetition are disclosed in this note.

Business combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:

- fair values of the assets acquired;

- liabilities incurred to the former owners of the acquired business;

- equity interests issued by the Group;

- fair value of any asset or liability resulting from a contingent consideration arrangement; and

- fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest's proportionate share of the acquired entity's net identifiable assets.

Acquisition-related costs are expensed as incurred.

The excess of the consideration transferred; amount of any non-controlling interest in the acquired entity; and acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a gain on purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value, with changes in fair value recognised in profit or loss.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss.

Due to the nature of the Group's business, amounts paid or shares issued to sellers are often linked to their continued employment. An assessment is performed to determine whether the amounts are part of the exchange for the acquiree, or should be treated as a transaction separate from the business combination. Transactions that are separate from the business combination are accounted for in accordance with the relevant IFRSs which generally results in the amounts being treated as a post-combination remuneration expense.

Foreign currencies

Transactions and balances

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 currencies are recognised in the Income Statement.

In order to hedge its exposure to certain foreign exchange risks, the Group enters into derivative financial instrument contracts, mainly forward foreign currency exchange contracts which are designated as cash flow hedges (see Note 4.4). For a qualifying hedge relationship, the fair value gain or loss on the hedging instrument is recognised as part of revenue when the underlying transaction is recognised in accordance with the Group's revenue recognition policy.

Translation to presentation currency

The presentational currency of the Group is sterling. 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 recognised through other comprehensive income ("OCI") in the foreign currency translation reserve (see Note 6.4).

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. The Group finances overseas investments partly through the use of foreign currency borrowings in order to provide a net investment hedge over the foreign currency risk that arises on translation of its foreign currency subsidiaries. For effective hedge relationships, the gain or loss on the hedging instrument is recognised in equity through other comprehensive income.

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 for impairment as described below. If any indication of impairment exists, 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.

Goodwill is reviewed for impairment at least annually. Impairments are recognised immediately in the Income Statement. Goodwill is allocated to cash-generating units for the purposes of impairment testing.

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. The carrying values of other intangible assets are reviewed for impairment at least annually or when there is an indication that they may be impaired.

Right-of-use assets are reviewed for impairment to account for any loss when events or changes in circumstances indicate the carrying value may not be fully recoverable.

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.

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.

Contingent assets

Contingent assets are not recognised but are disclosed where an inflow of economic benefits is probable.

2 Performance-related information

Revenue recognition

Revenue is recognised in accordance with satisfaction of performance obligations. Revenue of the Group consists of:

i) Chartering desks - 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; and

- 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.

ii) Risk Advisory desks 

Securities:

- for income derived from commodity broking, the commission is recognised when a binding contractual arrangement is entered into between the two parties, at which point, the Group has fulfilled its performance obligation.

iii) Investment Advisory 

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 allow customers to benefit from services when required, and as such, are generally recognised in the month of invoice. Success fees are recognised at the point when the performance obligations of the particular engagement are fulfilled.

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; and

- 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.

Dividend income from investments is recognised when the right to receive payment is established.

2.1 Business segments

Based on the way in which information is presented to the Group's Chief Operating Decision Maker, the Group's operating segments are Chartering, Investment Advisory and Risk Advisory. The Chief Operating Decision Maker is considered to be the Group's board of directors. These three segments are managed separately on the basis of the nature of the services offered to clients and differences in the regulatory environment applicable to each segment.

The table below shows the make-up of the Group's segments by underlying component.

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 segmental analysis is consistent with the way the Group manages itself and with the format of the Group's internal financial reporting. 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. The Group's main geographic markets comprise the UK, Singapore, the US, Australia, Switzerland, Germany and the Rest of the World. The Group's geographical markets are determined by the location of the Group's assets and operations.

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, including restructuring costs, gain/loss on disposal of investments and acquisition and disposal-related items.

The segmental information provided to the board for reportable segments for the year ended 28 February 2025 is as follows:

Geographical segment - by origin of invoice

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 origin of invoice is set out below:

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.

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 which are for a duration longer than twelve months and where the Group has outstanding performance obligations on which revenue has not yet been recognised at the Balance Sheet date. The amount of revenue that will be recognised in future periods on these contracts when those remaining performance obligations are satisfied is set out below:

Forward order book

2.2 Specific items

Specific items are significant items considered material in size or nature (including acquisition and disposal-related gains and losses) as well as items which are not considered to be part of the trading performance of the business in the current year. These are disclosed separately to enable a full understanding of the Group's ongoing financial performance, but may not be comparable with disclosures provided by other companies. The Group's adjusted performance measures are reviewed by the Group's Chief Operating Decision Maker and are used as the basis to determine the discretionary bonus pools and measure earnings per share performance related to targets for awards under the Group's Long Term Incentive Plan.

Other operating income

In the current year, other operating income includes the fair value gain of £0.1 million (2024: £0.1 million loss) on the revaluation of the Group's investment in London Tanker Brokers' Panel. Consistent with the previous fair value movements being included as a specific item, the Group has treated the current year gain as a specific item as it does not relate to the trading performance of the business in the year.

Revaluation of the contingent receivable due in respect of the Cory Brothers disposal resulted in a gain of £0.1 million (2024: £0.1 million gain). See Note 4.9 for further details.

The tax charge on specific items included within other operating income was £nil (2024: £nil).

Operating costs

Impairment of ROU asset

During the year, 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 sublet a segregated portion of the office space, but does not expect to be able to sublet the office space for the full period of the lease extension. As a result, the Group recognised an impairment charge in relation to the portion of the right-of-use asset relating to the 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 £2.6 million in the year to 29 February 2024 which the Group does not consider reflects the trading of the business in the year and as a result is treated as a specific item. A smaller residual amount of £0.2m in relation to ongoing legal support has been incurred in the current year. No significant further costs are expected in FY26.

Board change costs

In the prior year, 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 costs incurred of £0.2 million are not considered part of the trading performance of the business and so are treated as specific items.

Unlawful dividend rectification

In the prior year, following the identification of the payment of historic unlawful dividends, the Group incurred costs of £0.2 million in relation to their rectification, which are not expected to recur, are not considered part of the trading performance of the business and so are treated as specific items.

Loss on investment measured at fair value through profit or loss

In the prior year, operating costs includes the fair value loss on the revaluation of the Group's investment in London Tanker Brokers' Panel. Consistent with the previous revaluation gain being included as a specific item, the Group has treated the loss as a specific item as it does not relate to the trading performance of the business in the year.

The tax income on specific items included within operating costs was £0.2 million (2024: £0.7million).

Acquisition-related items

Consideration treated as an employment expense

Following the acquisition of Southport Maritime Inc. in December 2022, due to the requirement for ongoing employee service, the upfront cash payment of £6.0 million and IFRS 2 charge related to share awards made to the sellers and existing employees of Southport are treated as a post-combination remuneration expense. The total expense for the year related to amounts linked to ongoing employee service in connection with the acquisition of Southport was £3.6 million (2024: £3.6 million). The period of required employee service is three years from the acquisition date.

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 of £0.3 million for a post-contractual payment to the employees, which was fully vested on signing the contracts.

- An upfront cash payment of £1.3 million with a further payment of £1.3 million made in December 2023.

- Share awards to a total value of £1.1 million which vest evenly in one, two and three years from December 2022

The upfront payments and share awards have a claw back 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 as they relate to the recruitment of brokers and not a business combination, but are disclosed as acquisition-related expenditure given their size and are 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. The Group recognised a gain of £0.3 million during the year in relation to this obligation (2024: £0.4 million charge).

Amortisation of acquired intangible assets

An amount of £0.4 million (2024: £0.4 million) relates to the amortisation of acquired intangible assets, primarily in relation to intangible assets recognised as a result of the acquisition of Southport Inc in FY23.

The tax income on acquisition-related items was £0.1 million (2024: £0.1 million). The tax effect of expenses not deductible for tax was £0.8 million (2024: £1 million).

Other items

Foreign exchange and derivative movement on Naves liability

The foreign exchange gain and fair value gain on the Naves-related liabilities and derivative of £0.2 million (2024: £0.3 million) is included as a specific item as it relates to the acquisition of Naves and is not related to trading. 

Cory Brothers earnout deferred consideration receivable

Due to its decreasing size, the unwinding of the discounting of the deferred receivable due in respect of the Cory Brothers disposal is no longer treated as a specific item (2024: £0.1 million). See Note 4.9 for further information.

The tax credit on specific items included within other items was £0.2 million (2024: £nil). The tax effect of income not taxable was £0.2 million.

2.3 Operating profit

Operating profit represents the results from operations before finance income and costs, share of profit/(loss) in associate and taxation.

This is stated after charging/(crediting):