Preliminary Results

RNS Number : 4699X

Braemar Shipping Services PLC

30 August 2022

 

 THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU NO. 596/2014) WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN

30 August 2022

BRAEMAR SHIPPING SERVICES PLC

("Braemar", the "Company" or the "Group")

Preliminary Results for the year ended 28 February 2022

Strong trading performance, balance sheet built for growth, and achievement of key strategic objectives.

Braemar Shipping Services Plc (LSE: BMS), a leading international shipbroker and provider of expert advice in shipping investment, chartering, and risk management, today announces its preliminary results for the year ended 28 February 2022.

The board is delighted with the performance of the business for the financial year and looks to the future with confidence.

STRONG TRADING RESULTS AND SUCCESSFUL EXECUTION OF STRATEGIC CHANGE

· 21% increase in revenue from continuing operations to £101.3m (2021: £83.7m**)

· 31% increase in underlying operating profit* to £10.1m (2021: £7.7m**)

· 15% increase in the forward order book to US$50.0m (2021: US$43.4m)

· Cashflow from operating activities in the year increased by 61% to £20.5m (2021: £12.7m)

· Reported profit after tax for the year up 209% to £13.9m (2021: £4.5m)

· Balance sheet strengthened. EBITDA to net bank debt ratio reduced by 27% to 0.96x (2021: 1.32x), w ell below the board's target net debt to EBITDA ratio of 1.5x.

· Net bank debt reduction of £17.2m from 29 February 2020 to 2 March 2022 following receipt of funds from Cory Brothers disposal

· Successful refocus on core Shipbroking and Corporate Finance business

· Investment in people, offices, and technology is reaping rewards

· Disposal of non-core investments in AqualisBraemar LOC ("AqualisBraemar"), Cory Brothers, and Wavespec completed

· Underlying earnings per share increased by 100%

· Final dividend of 7.0p per share recommended to reflect the strong cashflow and confidence in the business. Total dividend for the year of 9.0p per share (2021: 5.0p)

· Braemar has also announced separately today that trading during the first five months of the current financial year has been very strong and also benefitted significantly from the strength of the US Dollar. As a result, the outturn for the current financial year is expected to be well ahead of the board's previous expectations with underlying operating profit expected to be not less than £20.0m.

FINANCIAL HIGHLIGHTS

	Underlying results*		Reported results
Profit, EPS, and Dividend	FY21/22	FY20/21**	FY21/22	FY20/21**
	£m	£m	£m	£m
Revenue	101.3	83.7	101.3	83.7
Operating profit	10.1	7.7	9.5	6.6
Profit for the year from continuing operations after tax	7.0	4.9	6.7	3.6
Total profit for the year	8.5	4.4	13.9	4.5
Basic earnings per share	27.95	13.96	45.56	14.45
Full year dividend per share	9.0p	5.0p	9.0p	5.0p
Net bank debt	9.3	8.9	9.3	8.9

* Underlying results measures above are before non-recurring specific items, including acquisition and disposal-related charges and profit/loss from discontinued operations.

** Reported results are from continuing operations only, comparatives have been adjusted to remove discontinued operations.

SUCCESSFUL EXECUTION OF STRATEGIC CHANGE

In the year ended 28 February 2022 the board has executed several transactions that have simplified the Group's operations and launched a new growth strategy centred on Shipbroking and Corporate Finance.

One of our core ambitions is to double the size of the business through strategic hires and acquisitions in our refocused areas of business. We remain confident that this can be achieved within a sensible timeline. We believe that scale has become increasingly important within our industry to service the needs of our clients; to provide the Group with enhanced geographical and product diversification; to reduce the impact of cyclical markets; and to create further cost efficiencies. Our substantial market share at a time of buoyant shipping markets, combined with our large forward order book, and a strong balance sheet leave us well-positioned to grow at an accelerated pace.

OUTLOOK

We have seen strong trading at the start of this financial year, and activity has been particularly high in the derivatives, sale and purchase, and corporate finance markets. The simplification of our business and our ambitious strategy to double our annual underlying operating profit is yielding strong trading results.

Our team has seen elevated numbers of newbuilding orders, principally in the container and gas carrier sectors. As a result, capacity at many shipyards is now unavailable well into 2025. For shipowners in other sectors this is making it challenging for them to renew their fleets and they're turning instead to the second-hand market. These dual factors have created significant opportunities for our Sale and Purchase desk, and they have capitalised on them. Over the next couple of years, these factors are likely to prove positive for our chartering desks too, as reduced ability to replace retiring ships is expected to constrict vessel supply and consequently create a higher floor on future charter rates.

We believe our ability to seize the opportunities available over the last year and maintain our high levels of activity are due to our investments in people, technology, and new offices. I look forward to another strong year of trading as these benefits continue to compound.

James Gundy, Group Chief Executive Officer of Braemar, commenting on the Group's results for the year, said:

"I am extremely proud of the performance of the Group in my first full year as Group Chief Executive Officer. The strong trading results are testament to the hard work and dedication of our team and to our clear and focused strategy, delivered by a united new board and management team. Our achievements this year have been a huge collaborative effort, and our team spirit positions us well for future growth."

Results briefing

A presentation for analysts will be held at 10.30am today via conference call. Please contact the team at Buchanan for details on [e-mail] .

A copy of the presentation and call recording will be made available on the Investor Relations section of Braemar's website after noon today: https://braemar.com/investors/ .

For further information, contact:

Braemar Shipping Services Plc
James Gundy, Group Chief Executive Officer		Tel [phone]
Nick Stone, Chief Financial Officer
Investec Bank plc
Gary Clarence / Harry Hargreaves / Alice King		Tel [phone]
Cenkos Securities plc Ben Jeynes / Max Gould (Corporate Finance) Alex Pollen / Leif Powis (Sales)		Tel [phone]
Buchanan
Charles Ryland / Stephanie Whitmore / Jack Devoy		Tel [phone]

Notes to Editors:

About Braemar Shipping Services Plc

Braemar provides expert advice in shipping investment, chartering, and risk management to enable its clients to secure sustainable returns and mitigate risk in the volatile world of shipping. Our experienced brokers work in tandem with specialist professionals to form teams tailored to our customers' needs, and provide an integrated service supported by a collaborative culture.

Braemar joined the Official List of the London Stock Exchange in November 1997 and trades under the symbol BMS.

For more information, including our investor presentation, visit  www.braemar.com and follow Braemar on LinkedIn

Reconciliation of underlying profit before tax to reported profit after tax for the period

	2022	2021
	£m	£m
Underlying operating profit	10.1	7.7
Specific items	(0.6)	(1.1)
Net finance costs	(1.0)	(1.5)
Profit before taxation	8.5	5.1
Taxation	(1.8)	(1.6)
Discontinued operations*	7.2	1.0
Reported profit after tax	13.9	4.5

*Discontinued operations include Cory Brothers, Wavespec and the non-core investment in AqualisBraemar - all of which have been disposed of in the period

Alternative Performance Measures ("APM"s)

Braemar uses APMs as key financial indicators to assess the underlying performance of the Group.  Management considers the APMs used by the Group to better reflect business performance and provide more useful information to investors and other interested parties. Our APMs include underlying operating profit, underlying profit before tax, underlying earnings per share and net debt. Explanations of these terms and their calculation are shown in the summary above and in detail in our Financial Review.

This document contains forward-looking statements, including statements regarding the intentions, beliefs or current expectations of our Directors, officers and employees concerning, among other things, the Group's results of operations, financial condition, liquidity, prospects, growth, strategies and the business. These statements are based on current expectations and assumptions and only relate to the date on which they are made. They should be treated with caution due to the inherent risks, uncertainties and assumptions underlying any such forward-looking information. The Group cautions investors that a number of factors, including matters referred to in this document, could cause actual results to differ materially from those expressed or implied in any forward-looking statement, including general business and economic conditions globally, industry trends, competition, changes in government and other regulation and policy, interest rates and currency fluctuations, and political and economic uncertainty (including as a result of global pandemics).  Neither the Group, nor any of the Directors, officers or employees, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. Undue reliance should not be placed on these forward-looking statements. Other than in accordance with our legal and regulatory obligations, the Group undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise

Chairman's Statement

I am delighted to have been appointed as Chairman of the board in May 2021 with a remit to help the Group's new management team simplify its operations and develop an ambitious growth strategy centred around Shipbroking.

I am pleased to report that during the year, in addition to successfully navigating the challenges of the global pandemic, the Group has completed all the key strategic steps required to simplify its operations and provided the framework to further expand the business.

In addition to maintaining a first class service to its clients, during the year the board has put in place a clear and focused strategy; increased the scale of the business; disposed of non-core assets and businesses; delivered a strong trading performance exceeding the board's expectations; reduced net debt (including £6.5m of Cory Brothers disposal proceeds received on 2 March 2022) to £2.8m (2021: £8.9m) and restored the payment of and interim and final dividends to shareholders.

Strong trading results

The Group traded well throughout the financial year, because of increasing the scale of its Shipbroking operations as well as generally favourable market conditions. Revenue from continuing operations increased by 21% to £101.3m (2021: £83.7m) and operating profit from continuing operations increased by 31% to £10.1m (2021: £7.7m), ahead of the board's previously upgraded expectations. Reported profit after tax increased by 209% to £13.9m (2021: £4.5m), reflecting the strong underlying trading, combined with a profit of £4.1m on the disposal of Cory Brothers and a profit of £3.4m on the disposal of the Group's investment in AqualisBraemar.

Underlying earnings per share increased by 100% to 27.95p (2021: 13.96p). Reported earnings per share, which amongst other things includes the benefit of the sale of the non-core investment in AqualisBraemar and the disposal of Cory Brothers, increased by 215% to 45.56p, (2021: 14.45p).

Well-covered dividend

Mindful of the importance of dividends to shareholders and reflecting the strong cash generation of the Group's Shipbroking business, the board has decided to supplement its growth strategy with a progressive dividend policy, subject to financial performance. 

The board will recommend a well-covered final dividend for the current financial year of 7.0p per share for approval by shareholders at its reconvened AGM which will be held on 6 October 2022. This is in addition to the interim dividend of 2.0p per share in respect of the 6 months to 31 August 2021 which was paid on 16 December 2021, yielding a total dividend for the year of 9.0p per share (2021: 5.0p).

The final dividend will be paid on 14 October 2022 to shareholders who are on the register at the close of business on 9 September 2022, with a corresponding ex-dividend date of 8 September 2022.  The last date for Dividend Reinvestment Plan (DRIP) elections will be 23 September 2022.

Delay in publishing results

Over the past year and a half, the new board has made substantial progress in laying the foundations for growth, clarifying Braemar's strategic direction and substantially increasing its profitability. Loss-making business have been closed, ongoing central costs have been reduced, the core Shipbroking business has been expanded, the board has been strengthened, net debt reduced to near zero and dividend payments restored.

However, while we can celebrate the progress that has been made in the business, we must also acknowledge that this year's accounts are being published later than would normally be the case. In summary, this delay has been caused by the auditors and the board reviewing the accuracy of certain foreign exchange and other balance sheet reserve accounts of the business. The foundations of an accelerated growth agenda mandate a solid bedrock of accounting integrity and I regard it as essential that a full check on the integrity of these areas over the past three years has been carried out.  

A very significant workstream was initiated, therefore, re-examining these balance sheet areas over the past three years. In doing so, some errors, largely historic, in accounting for the Naves acquisition, the foreign exchange gain on the AqualisBraemar share disposal and the balance sheet classification of certain other reserves have been identified and corrected. None of these prior year errors impact the underlying profitability of the business that has been previously reported.

The board has now completed this exercise and these areas have been subject to audit to the extent required. I trust that shareholders will fully understand that it was essential that this exercise was done in order that we can move forward with confidence. I would like to take this opportunity to thank the auditors and Braemar's finance team for carrying out this significant piece of work over the past few weeks with unstinting diligence, clarity of focus and sheer effort.

Climate-smart shipping

The Group recognises the importance of climate change generally and specifically the importance of environmental, social and governance factors in our business and in the shipping industry. During the year the Group launched its environmental, people, social and governance framework ("EPSG Framework"). The board has chosen four of the seventeen United Nations Sustainable Development Goals ("SDGs") to underpin its mission to facilitate climate-smart shipping.

The drive for both those owning and chartering ships to operate in a climate-friendly environment continues to develop, and the Group has made good progress in developing responsible climate-smart shipping policies that are fit-for-purpose in this sought-after greener environment.

Board changes

With effect from 1 August 2021, Tristram ("Tris") Simmonds and Elizabeth Gooch MBE were appointed to the board of the Company as Chief Operating Officer (Executive) and Non-Executive Director respectively.

Tris was previously the Managing Director of Braemar Atlantic Securities, the Group's derivative brokerage business. Elizabeth has over 16 years' experience of governance, compliance, and financial reporting of publicly listed companies. Elizabeth has joined the Group's Audit and Nomination Committees and has chaired the Group's Remuneration Committee since Jürgen Breuer stood down from the board on 26 August 2021.

With effect from 1 March 2022, Joanne Lake was appointed to the board of the Company as a Non-Executive Director. Joanne has over 25 years' experience of business development, strategy, and corporate finance in several financial and professional services organisations. Joanne was appointed Audit Committee Chair with effect from 1 April 2022. Joanne joined the Remuneration and Nomination Committees from 1 March 2022. Lesley Watkins resigned from the board with effect from 31 March 2022, and Elizabeth Gooch succeeded Lesley in the role of senior independent director from 1 April 2022.

I am delighted to welcome Tris, Elizabeth, and Joanne to the board. The addition of Tris creates a stronger executive team with the bandwidth and experience needed to deliver the board's growth aspirations to the benefit of all stakeholders of the Group. Both Elizabeth's and Joanne's prior governance, public company, and technology experience in growth-oriented, people-based businesses is highly complementary to the Group's strategy and existing non-executive skill base. I would also like to thank Jürgen and Lesley for their significant contributions to the Group, and I wish them the very best for the future.

Our people

The results for the year are a tribute to the dedication and expertise of our staff. The calibre of our people is central to the high quality of service that we provide to our clients. It is their hard work and creativity that enables Braemar to continue to build its brand and reputation as we develop our business. I would like to thank all our staff for their continuing efforts on behalf of the Group.

Outlook

The present global marketplace is generally characterised today by geopolitical uncertainty, trading sanctions, exchange rate volatility, logistical challenges remaining from the global pandemic, together with inflationary and interest rate pressures.

Notwithstanding these challenges, market conditions in the Shipbroking industry remain favourable, driven both from strong demand and restricted supply. For Braemar, trading during the first five months of the new financial year has been very strong and the Group continues to benefit from the increased scale and breadth of its broking operations in these generally favourable market conditions. As a result expectations for the current financial year are expected to be well ahead of the board's previous expectations.

Compliance with existing sanctions, put in place because of the Russian/Ukraine conflict, is not expected to have any material effect on trading or cashflows in the current financial year nor does the Group have any existing material exposure. The board continues to look to the future with confidence as it sets about delivering on its growth strategy centred on Shipbroking. 

Nigel Payne

Chairman

28 August 2022

Group Chief Executive Officer's Statement

I am extremely proud of our performance in my first full year leading the Group. Before I became CEO, I led Shipbroking at Braemar, and I was previously the CEO of ACM, which merged with Braemar in 2014. That division was always Braemar's driving force, and my vision for the company has long been to take the business back to its basics.

As you'll see below in more detail, we've started to see the results of our focus on Shipbroking and Corporate Finance. We've become a more effective and more dynamic company by trimming the fat, investing in our people and technology, and focusing on what we know works through our wealth of experience.

The strong trading results are testament to the hard work and dedication of our people, and to our clear and focused strategy which has been delivered by a united new board and management team. Under unusual conditions and working from home for much of 2021, our achievements have been a huge team effort and prove we are well positioned for future growth.

Our future success: We have rebuilt the foundations, now we grow

Trading in our Shipbroking business was very strong throughout the year, with revenue and profits significantly ahead of our initial expectations from the previous year. Our performance reflects the core steps we have taken to increase the scale of our Shipbroking activities as well as favourable market conditions.

Examples of where our expanded and diversified business and market conditions combined to increase the Group's profitability include: A volatile and busy Dry Cargo market which helped increase revenue on our expanded physical and securities desks; our global Sale and Purchase team concluding a significantly higher number of transactions within their market; a strong container market volume which augmented the synergies gained from working closely with our Corporate Finance business.

Although Tanker market rates remained supressed throughout the year due to continued pandemic-related weakness for oil demand, the number of transactions we performed increased by more than 21% compared to the previous year. Chartering fixture volumes were up 8% across all desks, securities' revenue increased 60%, and Sale & Purchase volumes grew 59%.

Strengthening the balance sheet

The board has focused this year on reducing the net bank debt of the Group, and I am delighted that we have achieved our objective; a total reduction of £17.2m from 29 February 2020 to 2 March 2022.

Enhancing our cashflow

Cashflow from operating activities in the year increased by 61% to £20.5m (2021: £12.7m). Excluding the initial proceeds of the sale of Cory Brothers, as of 28 February 2022, the Group held cash of £14.0m (2021: £14.1m). The initial consideration of £6.5m from the disposal was received on 2 March and is accounted for as a receivable on the balance sheet date.

Reducing the debt burden

The board previously stated that that it had set a target of achieving a net bank debt to EBITDA ratio sustainably below 1.5 times on average over the seasonal working capital cycle. I am pleased to report that excellent progress has been made towards this goal. Net bank debt at 28 February 2022 was £9.3m (2021: £8.9m) with the ratio falling to 0.96 times for the 12 months to 28 February 2022, down from 1.32 times for the prior year. Including the £6.5m proceeds from Cory Brothers which were received on 2 March 2022, net bank debt reduces to £2.8m and the ratio falls further to 0.60 times.

M oreover, the future earnout consideration that will be received for Cory will almost totally offset the outstanding debt relating to the Naves acquisition, and it means that we enter the new financial year very close to debt-free. When you compare this situation to where we were four years ago, it's like colour versus black and white. A similarly concrete change has been achieved in our reduced exposure to deferred share promises relating to the employee bonus scheme now, and in the future.

The Group's revolving credit facility with our main bankers, HSBC, is due to expire in September 2023. We have already received acceptable indicative terms for an extension and we expect to conclude these discussions well in advance of the current facility end.

Successful execution of strategic changes

While we've achieved plenty during my first complete year in charge, there will be no resting on our laurels. There is too much left to do if we're to achieve our objectives.

I have a strong, experienced team around me led by my CFO, Nick Stone, and COO, Tris Simmonds, and we are executing on our plan that was agreed by the board. We've reduced net debt, invested in our people and technology, and implemented a focused programme of change. This has strengthened the Group compared to where we were recently, and will allow us to continue to grow organically, or through acquisitions.

Disposal of Cory Brothers

The disposal of Cory Brothers was completed on 28 February 2022, the last key step on the execution of Braemar's strategy of focusing on our core Shipbroking business. The all-cash consideration consists of a £6.5m upfront payment with deferred and contingent payments of up to £9.0m over a three-year earnout period. The Group expects to receive £4.8m of the deferred and contingent consideration. The buyers of Cory are a long-term strategic partner of the Group, and we look forward to seeing the new combined VertomCory business thrive. The business combination will provide a strong platform from which to accelerate growth and Braemar will share in the success of the new business via an earnout mechanism.

Braemar Naves consideration restructuring

On 3 June 2021, the Group amicably restructured the deferred consideration owed in relation to its 2017 acquisition of Braemar Naves. The restructuring saw over £2.5m, which was previously due for repayment before the end of December 2022, deferred to be paid no earlier than September 2025. Total liability for the Naves acquisition is now reduced to £4.7m, which is conveniently offset with receipts from the VertomCory transaction.

The development of this division as the Corporate Finance offering of the Group's Shipbroking business has progressed well with many transactions concluded together. The expected synergies with our sale and purchase department are strong and growing, especially in the container market.

Disposal of investment in AqualisBraemar

The Group further strengthened its balance sheet by selling its non-core investment in AqualisBraemar. On 19 May 2021 9,640,621 shares were sold for cash proceeds of £7.2m and on 20 August 2021 1,000,000 warrants vested and the resulting shares were sold for cash proceeds of £0.7m. The investment in AqualisBraemar was the result of the June 2019 disposal of the loss-making Offshore, Adjusting and Marine businesses. Including 9,600,000 shares sold in the year ending 28 February 2021, the Group has realised total cash proceeds of £13.9m in respect of this disposal.

Disposal of Wavespec

The Group completed the disposal of its loss-making Engineering Division, Wavespec on 31 March 2021 . Although no proceeds are expected to be received, the disposal of this engineering business was the final step in disposing of the Group's Technical Division.

Reinvigorating the Braemar brand

The board's strategic development work has included a rebranding initiative . An important part of this was the launch of our new corporate website in June 2022, which clearly positions and communicates the Group's new focus, objectives, and purpose. This was also an ideal time to set out the Group's work regarding compliance, and EPSG. We see many new growth opportunities created by the rapidly developing area of environmental sustainability, and we are positioning the company to capture an outsize share of them.

Our new strategic ambition and direction

Our primary medium-term ambition is, through strategic hires and acquisitions, to double the size of the business, such that our sustainable annual underlying operating profit, regardless of market factors, is twice the £7.7m underlying operating profit restated in 2020-21. It is pleasing to note that we have already achieved a 30% increase over the last year, we've grown our operating margin from 9% to 10%, and we continue to believe that this can be achieved within the four-year timeline we outlined in 2021.

We believe that scale has become increasingly important within our industry to service the needs of our clients. It is also needed to provide us with sufficient geographical and product diversification, reduce the impact of cyclical markets, and create further cost efficiencies. Buoyant shipping markets, a strong market share and a robust forward order book, position us well to grow at an accelerated pace.

The board believes that the delivery of our core strategic ambition requires investment in our business support infrastructure and technology. Together, they will provide essential foundations for growth, as well as ensuring that we can continue to meet the growing demands of our clients. We continue to develop technology solutions that enhance our offering as a broker through, for example, by investing and working in partnership with Zuma Labs, and most recently by partnering with CHOOOSE, a supplier of digital toolkits that enable climate-based solutions for many industries. Through these partnerships we are delivering market-leading digital solutions to the shipping industry and future-proofing our business.

We have an active program for organic expansion, and recent highlights include the establishment of Geneva and Houston offices as we expand into new markets, as well as moving to a larger Dubai office and growing our market leading specialisms. Our Australian Dry Cargo Business in Melbourne and Perth continues to grow, and it remains the dominant broker in its field. Our Singapore office continues to expand and is a key partner with the Singapore Maritime Academy (SMA), providing an approved trainee scheme for young Singaporeans wanting to join the maritime industry.

Our expansion strategy is already paying dividends and there are good indications within the year's trading performance that the investments we are making to increase the breadth, focus, and depth of the Group's Shipbroking activities are starting to deliver growth unrelated to movements in market rates themselves. Notably, amid the volatile Dry Cargo market the Group increased both revenue and market share on the physical and securities desks. The Sale and Purchase desk has concluded a significantly higher number of transactions partially due to the strong container market, as well as through the synergies gained from working closer with the Corporate Finance desk. Tanker market rates remained low, impacted by pandemic related weakness in oil demand. However, Tanker transaction volumes have increased by more than 25% compared to the previous year, aided by strategic hires and growth of the Geneva office within the oil product sector.

To better align shareholder and employee interests and support the growth agenda, the board concluded that it should reduce the overall amount of deferred equity issued annually as part of employee remuneration arrangements. Under the previous scheme, deferred shares were awarded and issued to employed recipients over a three-year vesting period and generally settled by shares purchased in the market. Whilst this scheme will remain unchanged, the amount paid in such deferred shares will be halved with an increase in cash bonuses paid of the same amount for the current and future years. Future years will involve claw back arrangements on the additional cash payments to encourage employees to remain in Braemar's employment. During the year the ESOP acquired 2.7m shares. This reduced the company's exposure, and it ensures that all historic liabilities are now covered.

Outlook

Trading at the start of the new financial year has been strong and I look forward to the remainder of the year with confidence as we continue to reap the benefits of our increased scale and focused strategy.

Over the last year, the advisory and facilitation that Braemar provides to shipowners and charterers have increased our forward order book by 15% to US$50.0m (£37.3m) at the year end compared with US$43.4m (£31.1m) at the beginning of the period. Since the year end, the order book has grown by a further 14% to US$57.1m (£42.6m) at the end of July 2022.

We have seen strong ordering, particularly in the gas carrier and container markets, where there's very high demand for newbuildings, and capacity at many shipyards is now unavailable until 2025 at the earliest. Shipowners in other sectors are therefore finding it hard to renew their fleets and relying upon the second-hand market instead. All these factors have strongly benefitted our Sale and Purchase desk.

In the coming years, these factors are likely to benefit several of our chartering desks as well, because if older ships are retired and there's no ability to replace them it will restrict vessel supply in those sectors and put a higher floor on charter rates. I firmly believe that it is through our investments in our people as well as offices and technology that we have achieved these high levels of activity. I look forward to another strong year of trading as their benefits continue to compound.

The only other point I wanted to raise is that I'm enjoying working with Nigel and the other non-executives. The synergies and their benefit to Braemar are already apparent as we now focus on looking forward, with confidence about what the future holds.

James Gundy

Group Chief Executive Officer

28 August 2022

Operating Review

Introduction

Seaborne trade continues to recover from the global pandemic. Growth in ton-miles and logistical disruption have combined to strengthen freight rates in many markets, which, in turn, has benefitted Braemar.

The Dry Cargo, Gas, and Container sectors have performed particularly strongly. Specialised Tankers has made a slower recovery, and Deep Sea Tankers has recently returned to better rates. The resurgent interest in the shipping industry from both a lending and equity investment point of view has meant the Corporate Finance desk has also performed well. As a result, we have grown our revenue and volume of fixtures in almost every sector.

The macroeconomic outlook for shipping is broadly favourable to Braemar. Seaborne volumes are expected to continue increasing, and between a combination of high ship recycling prices and shipyard capacity, only Containers and Gas are likely to see major fleet growth in the coming years. Through office expansion, new hires, and the positive momentum in the markets we are well positioned for strong performance in the Dry Cargo and Specialised Tanker markets; to continue to increase our Securities' market share; and well positioned for a full recovery in Deep Sea Tankers.

In April 2022, we created a Digital Transformation Desk and appointed our first Head of Digital Transformation. The desk is working to further integrate digital tools into all areas of the Group to enhance our ability to serve our clients' growing requirements, as well as to make workflows more engaging and efficient for our people.

Shipbroking

	FY21/22 £000	FY20/21 restated £'000
Revenue	94,659	77,727
Underlying operating profit	12,422	10,068

Sale and Purchase

Sale and Purchase activity has been exceptionally strong throughout the financial year ending 28 February 2022, which has driven a major increase in our revenues, and the desk has made several strategic new hires who are already making good contributions. Strong spot and time charter markets in the Dry and Container sectors since 2020 have lifted asset values to long-term highs. Consequently, asset value and transaction growth continued in the Containership sector for the second consecutive year, as charter rates and asset values grew to exceptional highs and fed into enhanced revenue for the desk.

Containerships and LNG carriers are dominating the newbuild orderbook, but in other sectors newbuilding ordering activity has been suppressed by a lack of space in shipyards, rising labour and material costs, and a lack of clarity regarding what fuels and technologies to adopt to ensure regulatory compliance. Owners have therefore focused their investment on second-hand units, which has resulted in one of the busiest periods of asset play in recent memory, which Braemar has profited from through our superior ability to connect buyers and sellers. We expect second-hand activity and prices to remain elevated for the dry cargo and container sectors. Due to the lack of newbuilding capacity, even in a weak tanker market we are still seeing an increase in second-hand values in this sector. On top of that we are seeing one of the strongest ship recycling markets, which has been to the advantage of our Demolition team. 

With interest rates close to historic lows and a consensus that the worst of the COVID pandemic is behind us, there was a lot of liquidity in the capital markets this year. Improving markets also enabled restructurings in Multipurpose/Heavylift and Offshore, for example, to be completed after years of preparation, all of which also benefited Braemar's Corporate Finance desk.

Sale and Purchase's revenue increased by 31% from £15.0m in FY20/21 to £19.6m in FY21/22 and represented 19% of Braemar's total revenue. Fixture volumes increased by 59% compared to the previous year.

Deep Sea Tankers

Tanker markets have weakened throughout the financial year as successive waves of COVID related restrictions have reduced global oil demand, particularly for diesel and jet fuel. A large 'shadow' fleet of tankers moving sanctioned Iranian and Venezuelan crude oil has provided employment for vessels that would otherwise have been sold to ship recyclers for their steel, and reduced employment for other vessels. Despite these hindrances, the desk has achieved fixture growth that's a fifth better the preceding financial year. Russia's actions in Ukraine threaten to withdraw crude supply from the already undersupplied market. A global stock build, once oil prices have eased, is likely to support tanker trades, and the desk is well positioned for when this occurs.

Deep Sea Tankers' revenue decreased by 32% from £26.3m in FY20/21 to £17.8m in FY21/22 and represented 18% of Braemar's total revenue. Although revenue decreased due to weak markets, fixture volumes were up 21% compared to the previous year.

Specialised Tankers and Gas

The Specialised Tankers and Gas market is diverse, and it includes very different types of vessels servicing the unique needs of the oil products, LPG, petrochemicals, and LNG markets - to take only four examples that Braemar services.

The return of activity from oil products' end users as COVID vaccinations were rolled out as well as a sizeable percentage of ships reaching their maximum trading age caused the global fleet's availability to tighten towards the end of 2021. This has continued into 2022 to Braemar's advantage as charter rates have remained robust. The Chemical market struggled at the start of the financial year with a combination of lower volumes, higher bunker prices, and increased competition from swing tonnage. It took until Q4 2021 for a significant increase in tanker earnings to occur, and Braemar has realised good gains as this upturn continued into 2022. There is cautious optimism about the sector's potential over the next 12 months, and that is expected to create further growth for the desk. Braemar's decision to invest in our Geneva office is already showing dividends, with substantial new business growth already from its recent hires, and the expectations that the compound benefits of this expansion will reap larger dividends in the new financial year.

Total demand is growing across the gas markets, and production is expected to continue to grow in tandem, which has combined to improve the desk's margins. A substantial number of larger capacity ships are set to be delivered in the next few years and it is hoped that the cumulative demand growth of these products will be able to absorb these newbuilds. However, there is a continued lack of newbuilding orders in smaller sectors as well as further owner consolidation. Braemar's Gas desk has substantially increased its spot and period business over the last year for petrochemicals and larger LPG, and it continues to diversify its client base. The desk has also increased its forward physical freight agreements, which has provided Braemar with increased liquidity for future spot business.

In previous years, relatively stable LNG delivered prices averaged at around $7-12 per MMBtu with seasonal fluctuations of between $5-6, has given way to highs of almost $70 this year and rapid fluctuations of $20-30 almost over 24hr periods. Consequently, Braemar is seeing huge interest in LNG shipping, as charterers are being forced to take longer term charters to mitigate these commodity price swings which has soaked up almost all available tonnage. Braemar has benefited from the high price for LNG as it has led to an increase of newbuild orders. On the chartering side, Braemar has recently achieved two 7-10-year charters, and several multi-month charters as customers work to secure their long-term security of supply. The long-term revenue for Braemar's LNG desk has almost doubled over the last 12 months, and it is optimistic about the prospects for the sector over the next year .

Specialised Tankers' and Gas revenue increased by 6% from £10.9m in FY20/21 to £11.6m in FY21/22 and represented 11% of Braemar's total revenue. Fixture volumes increased by 12% compared to the previous year.

Dry Cargo

Dry freight markets rose strongly during the first half of the financial year, reaching highs not seen since before the financial crisis in 2008, and we have realised substantial gains from its advisory and facilitation. COVID-related port congestion coupled with resurgent demand for raw materials, particularly in China, resulted in a significant tightening in the supply and demand balance, and consequently higher rates from which Braemar has profited. While Russia's invasion of Ukraine is likely to dent economic growth, we expect dry cargo demand to be supported by Chinese growth when COVID restrictions are fully eased. Thanks to sanctions and the loss of Ukraine's port facilities, the loss of Russian coal and grain exports to Europe will need to be replaced from further afield. The resulting reshuffling of global trades is likely to increase the average length of haul, supporting dry cargo freight rates in the short-term and the profitability of this desk.

Dry Cargo's revenue increased by 95% from £15.3m in FY20/21 to £29.8 in FY21/22 and represented 29% of Braemar's total revenue. Fixture volumes were marginally lower than the previous year.  

Offshore and Renewables

A combination of high oil and gas prices, political pressure for low carbon energies, and an increase in total demand has created some of the brightest prospects for the offshore energy markets and the Offshore desk in many years. Activity in traditional and new energy sectors will prove beneficial for almost all vessel classes, as well as providing a welcome relief from the low demand and massive overcapacity that has inhibited the sector over much of the last decade. Braemar's Offshore Energy Services desk achieved 30% more business in 2021-22 compared to the previous 12 months, and in collaboration with other desks beat off stiff competition to be awarded a seven-year framework agreement with the UK's Ministry of Defence. Driven by end user pressure, progressive environmental regulation, and cost declines there is significant worldwide demand for offshore wind projects and clean energy more broadly that is likely to remain elevated for several years. To capitalise on this trend, Offshore has doubled its number of Renewables brokers, and recently became the first major shipbroker to hire a dedicated Renewables broker on the east coast of the USA.

Offshore and Renewables' revenue increased by 41% from £2.7m in FY20/21 to £3.8m in FY21/22 and represented 4% of Braemar's total revenue. Fixture volumes increased by 43% compared to the previous year.

Securities

High volatility over the course of the last 12 months has helped to drive overall market volumes higher. Braemar has been able to capture an increasingly large proportion of trading volumes, growing our market share considerably. Major concerns about European energy security led to exponential moves in dry FFAs. After several years of depressed values on dry cargo, 2021 finally achieved levels not seen for over a decade, with the Capesize index peaking in early October at $86,593. Over the following six months, supply disruptions and seasonality saw the same index approach $5,000, but positive 2H22 expectations have kept the forward curve in a steep contango, with deferred contracts trading at large premiums. (Coal FFA)

Braemar's dry FFA desk has grown substantially during this period, catering to the needs of investors who wish to speculate on price moves as well as those who need high performance tools to manage their risk exposure. Braemar's partnership with Zuma and the popularity of Braemar Screen is bringing clear, sustainable benefits to the business despite only being developed less than three years ago. The Braemar FFA desk is one of the few desks in the market that has an active trading platform, which has helped us to substantially increase our market share. The prospects for further growth are good, and the desk will continue to focus on developing digital, data-led solutions for its client base. Revenue growth for 2021 versus 2022 was nearly 4.5x, and market share more than doubled over the same period. (Dry FFA)

The lack of global oil demand caused by COVID has dragged rates on the largest ships to the floor and kept them there since Q3 2020. The decline was only stopped by Russia's invasion of Ukraine, which caused major volatility. Ultimately, that is what all forward curves have been missing for some time, and so liquidity wasn't far behind. Our desk was well positioned as this disruption occurred. Market volumes in March 2022 were only surpassed by November 2021 in the last 12 months. This was largely due to an exciting aspect of FFAs in the last year: traders covering their positions much further into the future. The desk has seen good volume out to 2025, and this has enabled it to provide our clients with the opportunity to capably manage their shipping exposure for up to almost four years. This is the first time that the market has seen open interest extending that far, and it puts the desk and the whole market in a very strong position moving forward. This desk is a joint venture between Braemar and GFI. (Wet FFA)

Securities' revenue increased by 60% from £7.5m in FY20/21 to £12.0m in FY21/22 and represented 12% of Braemar's total revenue.

Financial

	FY21/22 £000	FY20/21 restated £'000
Revenue	6,651	5,968
Underlying operating profit	1,798	1,034

Braemar's Corporate Finance desk (formerly 'Braemar Naves') is continuing to benefit from its extensive restructuring experience and relationships in two ways. Firstly, several large international restructuring mandates were completed after years of preparation in the financial year ending February 2022 as well as in Q1/2022. Such restructuring mandates involved accompanying capital raising activities in the Offshore, Multipurpose and Heavylift segments. Secondly, the strong recovery in the Container and Multipurpose market enabled us to support our clients to refinance loans - many of which Braemar's Corporate Finance desk had helped to restructure in preceding years. The desk diversified its market presence, and it worked with several large Container lines for the first time. The successful cooperation and combination of expertise with Braemar's Sale and Purchase desk was a key driver of this success. In expectation that the worst is behind in the passenger shipping markets, cruise companies, lenders and investors have started to request Braemar's support to find solutions to financial problems that were caused by the COVID pandemic. Investor appetite is returning in this segment, and expectations are to complete a number of similar assignments in the coming year. Corporate Finance's revenue increased by 12% from £6.0m in FY20/21 to £6.7m in FY21/22 and represented 7% of Braemar's total revenue.

Logistics

	FY21/22 £000	FY20/21 £'000
Revenue	45,215	28,083
Underlying operating profit	2,456	1,191

Cory Brothers, the Group's Logistics business was sold to Vertom on 28 February 2022 and consequently the results for the current and prior year are presented as discontinued operations. Cory Brothers had an extremely strong year, particularly from its Freight Forwarding activities. The pressure on container space and Brexit-related import/export complexities led to a greater demand for services. Challenges were faced in the UK Agency business, particularly due to the loss of a key contract which will impact revenue in FY22/23.

Revenue increased by 61% from £28.1m in FY20/21 to £45.2m in FY21/22 as this revenue is presented within discontinued operations it does not form part of Braemar's total revenue.

The board took the decision to sell Cory Brothers to Vertom, a long-term strategic partner of the business because they believe scale and management expertise are key to the long-term success of the business. This will be better achieved under the new ownership, whilst Braemar has tightened its balance sheet because of the transaction and is better placed to grow its core Shipbroking business. The board look forward to seeing Cory Brothers thrive under its new ownership, and Braemar has retained upside potential in the future performance of the business from the three-year earnout mechanism.

Conclusion

Over the last 12 months there has been stimulus from almost every government, and huge vaccination progress has released pent-up consumer demand in ways that are likely to benefit shipping for at least the next year. Outside of the tanker market, almost every sector has achieved profitability levels that have not been seen in many years. Moreover, the logistical bottlenecks which continue to exist around the world have balanced the fleet expansion. Consequently, we are predicting another year of strong rates across almost every sector. Thanks to our strong investments in our people, technology, and growing our geographical footprint we are well positioned to secure an outsize share of opportunities available in those markets.

We have realised total revenue growth of 21% across all our Shipbroking and Corporate Finance desks over the last year, and in the growing and evolving markets in 2022-23, we are optimistic about seeing further return on our investments and continuing to grow both revenues and fixtures.

Financial review

A strong trading performance and the successful execution of our strategic objectives

"This excellent performance reflects the investments we have made to increase the breadth, focus, and depth of the Group's core Shipbroking activities." Nick Stone, Chief Financial Officer

Summary income statement 2022

The strong trading and higher revenues have meant that all our profit measures have increased significantly

· Statutory operating profit over the last year increased by 44% to £9.5m (2021 restated*:£6.6m);

· Underlying operating profit increased by 31% to £10.1m (2021 restated*:£7.7m);

· Statutory reported profits for the year were up 209% to £13.9m (2021 restated*: 4.5m).

The final measure benefitted from the Group's strong underlying trading, as well as the profits on disposal of non-core assets and businesses.

	2022   £'000	2021 Restated* £'000	% Inc/(Dec)
Revenue	101,310	83,695	21%
Operating costs	(87,090)	(72,593)	20%
Central costs	(4,160)	(3,383)	23%
Underlying operating profit before specific items	10,060	7,719	30%
Specific items - Acquisition and disposal-related expenditure	(122)	(835)	(85%)
Specific items - Other operating costs	(392)	(262)	50%
Operating profit	9,546	6,622	44%
Share of associate loss	(19)	-	100%
Net finance costs	(984)	(1,486)	(34%)
Taxation	(1,839)	(1,574)	17%
Profit after tax from continuing operations	6,704	3,562	88%
Discontinued operations - underlying	1,493	(513)	391%
Discontinued operations - specific	5,722	1,483	286%
Profit attributable to equity shareholders of the Company	13,919	4,532	209%

* The year ended 28 February 2021 has been restated for the presentation of Cory Brothers and AqualisBraemar as discontinued operations and a prior period adjustment as disclosed in Note 34 of the Financial Statements.

Continuing operations

Revenue

Revenue from continuing operations grew by 21% from £83.7m to £101.3m.  As seaborne trade recovered from the COVID pandemic and logistical disruption strengthened freight rates, revenue and fixture volumes across almost every Shipbroking desk increased. Total revenue also increased on the Corporate Finance Desk and due to the completion of several large mandates and there was a consequent increase in success fees compared to retainer income.

Operating costs

Due to the substantial increase in revenue there was a corresponding increase in profit-related bonuses paid to the brokers responsible for generating them which was the main contributor to the increase in operating costs. The increase in the percentage of cash bonuses paid on last year's profits, as noted in the CEO report, also contributed to this increase. Cash bonuses are charged in the year in which they are earnt whereas deferred share bonuses, which were reduced at the same time, are charged over multiple years. Future years will see a consequent reduction in deferred share charges as a result.

As COVID restrictions were eased during 2021, travelling and entertaining expenditure increased as the Group's brokers re-engaged with charterers and ship owners. In the prior year, £0.9m of Singaporean and Australian Government grants were netted off against staff costs, these grants were received by the Group for retaining employees during the COVID pandemic. No such grants were received in the current year. As a result of all these factors, operating costs increased by 20% from £72.6m to £87.1m.

Central costs

Central costs increased in total by 23% from £3.4m to £4.2m. This was the result of various changes to the Group's board as well as additional one-off professional fees associated with the delayed year end audit process and a one-off impact of £0.5m of costs related to an office building that was vacated by a sub-tenant during the year. The office lease was assigned to a new tenant in March 2022 and that cost will not re-occur in FY22/23. Therefore on an ongoing basis central costs were reduced during the year.

Net finance costs

Net finance costs for the year decreased by 34% to £1.0m (2021: £1.5m). The cost has three elements: the revolving credit facility provided by HSBC which provides the seasonal working capital needed by the business as well the core indebtedness; the convertible loan notes associated with the acquisition of Braemar Naves; and the interest charge associated with right-of-use assets under IFRS 16. The reduction in cost follows the reduction seen in net debt in the business, as well as the ongoing repayment of the convertible loan notes.

Included within the net finance costs is a credit of £0.2m. This is in respect of the accounting for the restructuring of deferred consideration owed in relation to the acquisition of Braemar Naves. In the prior year £0.4m was charged to finance costs in respect of interest payable on tranches of the revolving credit facility that was used to fund the acquisition of Braemar Naves. This is no longer considered specific, and in the current year all interest payable is included in underlying finance costs.

Prior period adjustments

As mentioned in the Chairman's Statement, a thorough review of the historic accounting for several corporate transactions and the classification of various reserve balances was carried out as part of the year end audit process. The process was prompted by the errors identified in the accounting for the 2017 Naves acquisition and was extended to incorporate a detailed review of other transactions and consolidation adjustments. The results of the process are described in detail in Note 34 to the financial statements. 

Specific Items and Discontinued Operations

During the year the board has successfully executed several transactions with the aim of simplifying the Group's operations to concentrate on a new growth strategy centred around Shipbroking.

Items that are not considered to be part of the ongoing trade of the Group have been presented as specific. These items are material in both size and/or nature and we believe may distort understanding of the underlying performance of the business if not identified separately.

The financial results of Wavespec, AqualisBraemar and Cory Brothers which were disposed of during the year have been presented as discontinued operations.

Specific items

Acquisition-related expenditure - Braemar Naves

There were £0.1m (2021 restated: £0.6m) of acquisition-related charges during the year for the acquisition of NAVES Corporate Finance GmbH in 2017. This charge includes £0.2m elements of post-acquisition consideration payable to the sellers; £0.1m of interest charges; and an FX gain of £0.2m on conversion of Euro denominated acquisition liabilities to GBP.

Other Operating Costs - Lease Assignment

On 28 March 2022 the assignment of the office referred to above was completed. The lease was impaired to reflect the commercial terms of the assignment at 28 February 2022. A charge of £0.4m was recognised as a specific item in other operating costs. This compares to a prior year charge of £0.3m in respect of the sublet of the same office.

Braemar Naves consideration restructuring

On 3 June 2021, a restructuring of the deferred consideration owed in relation to its 2017 acquisition of Braemar Naves was agreed. This restructuring will see the deferral of more than £2.5m (€2.9m) that was previously due for repayment before the end of December 2022 paid no earlier than September 2025.  In addition, a further amount of approximately £0.7m (€0.75m) is to be satisfied by the issue of new ordinary shares in the capital of the Company in three tranches. The first two tranches were completed during the year, and the third is due in December 2022. At 28 February 2022 the total principal amount outstanding was £5.0m (€6.0m).

At 28 February 2022 the net present value of the outstanding liabilities was £4.9m (2021 restated: £8.1m).

As a result of the rescheduling, the model that had been used to generate the accounting entries for the acquisition since it was made in 2017 was reviewed to determine the amendments needed. That review identified certain computational errors. In particular the calculation of amounts in relation to the outstanding deferred consideration arising from the acquisition and the consequent entity accounting eliminations on consolidation were incorrect. The error resulted in an overstatement of liabilities at February 2021 and February 2020, and an overstatement of charges in other comprehensive income in 2021. There is no impact on profit and loss or earnings per share in either period. Further details of the restatement can be found in Note 34 of the Financial Statements.

Discontinued operations

A total of £7.2m has been recognised from discontinued operations, as can be seen in the table below. £1.5m relates to the underlying trading results of Cory Brothers and Wavespec prior to the disposal, as well as the Group's share of AqualisBraemar's results to 19 May 2021. £5.7m relates to the specific profits and losses on the disposal transactions.

	Underlying £'000	Specific £'000	Total £'000
Cory Brothers	1,563	4,134	5,697
AqualisBraemar	76	3,375	3,451
Wavespec	(146)	(1,787)	(1,933)
Total	1,493	5,722	7,215

Disposal of Cory Brothers

On 28 February 2022, the planned disposal of Cory Brothers, its Logistics Division, to Vertom was completed, total consideration will range between £10.25m and £15.5m. The consideration comprises initial cash proceeds of £6.5m, together with three further deferred and contingent payments based on the percentage of the gross profit of the newly formed VertomCory business for a three-year earnout period ending on 31 December 2024. The three earnout payments combined will be a minimum of £3.75m and a maximum of £9.0m.  The fair value of the expected earnout consideration at 28 February 2022 is estimated to be £4.8m. The consideration from the disposal will be used to reduce net debt and strengthen the balance sheet in furtherance of the Group's growth strategy. The trading result for Cory Brothers up to the point of disposal was a profit of £2.4m, although this is drawn before amortisation and depreciation charges of £0.3m which were reversed upon the assets being held for sale. After costs of disposal and recycling of foreign exchange, the Group realised a profit on disposal of £4.1m.

Disposal of Investment in AqualisBraemar

On 19 May 2021, the Group sold 9,640,621 shares of its non-core investment in AqualisBraemar for cash proceeds of £7.2m. On 20 August 2021, 1,000,000 warrants vested and were exercised, and the remaining warrants lapsed. The resulting shares were sold for additional cash proceeds of £0.7m on 31 August 2021. After legal costs and recycling of foreign exchange, the Group realised a total profit of £3.4m on these disposal transactions.

As part of the exercise to re-examine and balance sheet reserves balances, it was identified that the amount recycled from other comprehensive income from the foreign exchange translation reserve in the previous year and reported as gain of £0.5m was misstated and should have been a loss of £0.5m. The gain on disposal that arose from the partial sale in the year to 28 February 2021 is therefore restated as described in Note 34 to the accounts.

On 19 May 2021 the Group's interest in AqualisBraemar was limited to its holding of 6,523,977 performance-based warrants. Consequently, the Group ceased to equity account for its interest in AqualisBraemar. The Group's share of profits in AqualisBraemar up to 19 May 2021 was £0.1m.

Disposal of Wavespec

On 31 March 2021, the Group completed the disposal of its loss-making Engineering Division, Wavespec, for a maximum consideration of £2.6m. The consideration was intended to be satisfied by the issuance of a promissory note with a maturity date of 31 March 2026. The recognised fair value of the consideration of £2.4m was based on the net present value of the promissory note and this resulted in a profit on disposal of £0.6m. However, as at 28 February 2022 , the buyer had not delivered on its obligations to secure the promissory note and the board took a view that the promissory note was unlikely to be honoured, and that consequently the consideration has been credit impaired. The total loss for the year from Wavespec was £1.9m. This consisted of a trading loss of £0.1m, a gain on disposal of £0.6m and a credit impairment of charge of £2.4m.

Balance sheet

Net assets at 28 February 2022 were £75.1m (2021 restated: £66.5m). The year saw a decrease in gross trade receivables to £25.0m from £27.3m at the previous year-end due to the disposal of Cory Brothers, partially offset by the growth in debtors in Shipbroking and Financial due to the strong revenue growth in the period. The proportion of trade receivables provided against was broadly in line with the previous year. A receivable of £6.5m is included in other receivables in respect of the VertomCory completion proceeds received on 2 March 2022. A receivable of £4.8m is included in other long-term receivables in respect of the VertomCory deferred and contingent consideration.

Capital expenditure

Total capital expenditure was £2.3m (2021: £2.3m). The most significant item of capital expenditure relates to the treatment of office leases under IFRS 16 whereby the lease is treated as an asset addition. These lease additions totalled £1.0m in the year (2021: £1.2m) and do not relate to cash payments in the year. The balance relates to capitalised expenditure on computer software of £0.6m (2021: £0.6m) and other expenditure on fixtures and fittings and leasehold improvements of £0.7m (2021: £0.5m). 

Borrowings and cash

At the balance sheet date, the Group had a revolving credit facility with HSBC of £30.0m. The facility also provides access to a global cash pooling facility in the UK, Germany and Singapore which enables efficient management of liquidity between its main regional hubs. The Group operates a pooling arrangement for cash management purposes and at the end of the year the Group had net debt across those pools of £9.3m (2021: £8.9m). Including the £6.5m proceeds from Cory Brothers which were received on 2 March 2022, net bank debt reduces to £2.8m. The Group's revolving credit facility ("RCF") liability was previously reported as a short-term liability. However, a review of the facility agreement has confirmed that the lender is obliged to continue the facility for a period greater than 12 months from the respective reporting date. The liability has therefore been restated as a non-current liability at 29 February 2020 and 28 February 2021.

Retirement benefits

The Group has a defined benefit pension scheme which was closed to new members during the 2015/16 financial year. The scheme has a net liability of £2.1m (2021: £3.8m), which is recorded on the balance sheet at 28 February 2022. The agreed annual scheme-specific funding since the triennial valuation as at March 2014 was a cash contribution of £0.5m. The latest triennial funding valuation as at March 2020 was carried out during the year and the result was an unchanged annual employer cash contribution of 0.5m, which was agreed with the trustees and is being paid in monthly instalments.

Foreign exchange

The US dollar exchange rate has moved from US$1.39/£1 at the start of the year to US$1.34/£1 at the end of the year. A significant proportion of the Group's revenue is earned in US dollars. To protect the future sterling value of those revenues, at 28 February 2022, the Group held forward currency contracts to sell US$53.8m at an average rate of US$1.37/£1.

An error in allocating amounts between the translation reserve and hedging reserve has been identified. These reserves are both presented within other reserves in the primary statements as detailed in Note 30. The hedging reserve was understated and the translation reserve overstated by £0.5m at 29 February 2020. At 28 February 2021, the hedging reserve was understated and the translation reserve overstated by £0.6m. These errors have been corrected in the restated balance sheets at 28 February 2020 and 28 February 2021.

Taxation

The Group's underlying effective tax rate in relation to continuing operations in FY21/22 was a charge of 21.2% (2021: charge of 31.4%) which is broadly in line with the UK tax rate in the current year. The tax charge on discontinued operations was £0.8m (2021: £0.2m).

Alternative profit measures ("APMs")

Braemar uses APMs as key financial indicators to assess the underlying performance of the Group. Management considers the APMs used by the Group to better reflect business performance and provide useful information to investors and other interested parties. We have separated the impact of individually material capital transactions, such as acquisitions and disposals, from ongoing trading activity to allow a focus on ongoing operational performance. Our APMs include underlying operating profit and underlying earnings per share. Our prior year APMs have been restated to reflect the reclassification of discontinued operations noted above.

Capital management

The Group manages its capital structure and adjusts it in response to changes in economic conditions and its capital needs. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares and debt instruments. The Group has a policy of maintaining positive cash balances whenever possible, which can be supported by short-term use of its revolving credit facility. This is drawn down as required to provide cover against the peaks and troughs in our working capital requirements.

ESOP Trust

During the previous year the Company requested that SG Kleinwort Hambros Trust Company (CI) Ltd, as Trustee of the Company's ESOP Trust, purchase shares in Braemar Shipping Services Plc. During the year a total of 2,740,164 shares in the Company were purchased by the Trustee and 596,398 shares were released; as a result, at 28 February 2022, the ESOP held 2,669,603 shares (2021: 525,837 shares). The total cash outflow as a result of these share purchases was £6.3m (2021: £0.9m). Subsequent to the year end the ESOP purchased a further 1,670,000 shares. As at 10 August 2022 the ESOP held 4,339,603 shares and now contains sufficient shares as are expected to be needed to cover all current share awards as described in Notes 28 and 29 of the financial statements.

Dividend

The Directors are recommending for approval at the reconvened AGM on 6 October 2022 a final dividend of 7.0p per share. The interim dividend of 2.0p per share in respect of the 6 months to 31 August 2021 was paid on 16 December 2021. The total dividend of 9.0p for the year is covered 3.1 times by the underlying earnings per share from continuing operations of 27.95p. The total cash outflow in respect of dividends paid during the year ended 28 February 2022 was £2.1m (2021: £nil).

Going concern

Particular care has been taken in preparing these accounts to the going concern review and viability statement due to the ongoing geopolitical impacts on global trade. The Group's compliance with sanctions put in place because of the Russian/Ukraine conflict is not expected to have any material effect on trading in the current financial year nor does the Group have any existing material exposure. The strong cash flows exhibited during the year and the Cory Brothers cash consideration received on 2 March 2022 have meant that the Group is in a much stronger position than at the previous year-end. Nevertheless, careful and frequent monitoring of cash forecasts and client payments will be maintained to ensure this situation continues. The Group's revolving credit facility is due to expire in September 2023, however the Group has already received acceptable indicative terms for an extension and expects discussions to be concluded well in advance of the expiration of the current facility.

Nick Stone

Chief Financial Officer

28 August 2022

Consolidated Income Statement

For the year ended 28 February 2022

		28 Feb 2022			28 Feb 2021 (Restated)
Continuing operations	Notes	Underlying £'000	Specific items £'000	Total £'000	Underlying £'000	Specific items £'000	Total £'000
Revenue	2	101,310	-	101,310	83,695	-	83,695
Operating expense:
Operating costs	3 , 8	(91,250)	(392)	(91,642)	(75,976)	(262)	(76,238)
Acquisition-related expenditure	8	-	(122)	(122)	-	(835)	(835)
Total operating expense		(91,250)	(514)	(91,764)	(75,976)	(1,097)	(77,073)
Operating profit/(loss)		10,060	(514)	9,546	7,719	(1,097)	6,622
Share of associate loss for the period	19	(19)	-	(19)	-	-	-
Finance income	6	81	172	253	156	-	156
Finance costs	6	(1,237)	-	(1,237)	(1,210)	(432)	(1,642)
Profit/(loss) before taxation		8,885	(342)	8,543	6,665	(1,529)	5,136
Taxation	7	(1,839)	-	(1,839)	(1,772)	198	(1,574)
Profit from continuing operations		7,046	(342)	6,704	4,893	(1,331)	3,562
Profit/(loss) net of tax from discontinued operations	9	1,493	5,722	7,215	(513)	1,483	970
Profit attributable to equity shareholders of the Company		8,539	5,380	13,919	4,380	152	4,532
Total
Earnings per ordinary share
Basic	11	27.95p		45.56p	13.96p		14.45p
Diluted	11	22.78p		37.13p	11.55p		11.95p
Continuing operations
Earnings per ordinary share
Basic	11	23.06p		21.94p	15.60p		11.36p
Diluted	11	18.79p		17.88p	12.91p		9.40p

The year ended 28 February 2021 has been restated for prior period adjustments (see Note 34 )  and the presentation of Cory Brothers and AqualisBraemar as discontinued operations (See Note 9 ).  As all of the Group's costs of sales relate only to discontinued operations, neither cost of sales nor gross profit is presented on the face of the income statement in respect of continuing operations.

The accompanying notes form an integral part of these Financial Statements.

Consolidated Statement of Comprehensive Income

For the year ended 28 February 2022

	Notes	28 Feb 2022 £'000	28 Feb 2021 Restated £'000
Profit for the year		13,919	4,532
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
-  Actuarial gain/(loss) on employee benefit schemes - net of tax		1,318	(424)
Items that are or may be reclassified to profit or loss:
-  Foreign exchange differences on retranslation of foreign operations		538	719
-  Cash flow hedges - net of tax	30	(1,968)	1,790
Other comprehensive income from continuing operations		(112)	2,085
Discontinued operations
-  Share of other comprehensive income/(expense) of associates		52	312
-  Foreign exchange differences on revaluation of investment		-	(1,060)
-  Recycling of foreign exchange reserve*	9 , 19	408	471
Other comprehensive expense from discontinued operations		460	(277)
Total comprehensive income attributable to equity shareholders of the Company		14,267	6,340

The year ended 28 February 2021 has been restated for the presentation of Cory Brothers and AqualisBraemar as discontinued operations (See Note 9 ) and for a prior period adjustment (see Note 34).

* The recycling of foreign exchange reserve relates to the disposals of Cory Brothers and AqualisBraemar (2021: Dilution and partial disposal of AqualisBraemar). See Note 9 and Note  19 .

The accompanying notes form an integral part of these Financial Statements.

Consolidated Balance Sheet

As at 28 February 2022

	Note	As at 28 Feb 2022 £'000	Restated As at 28 Feb 2021 £'000	Restated As at 1 Mar 2020 £'000
Assets
Non-current assets
Goodwill	12	79,891	83,955	83,812
Other intangible assets	13	997	2,129	2,411
Property, plant and equipment	16	7,078	9,841	11,928
Other investments	18	1,780	1,962	1,962
Investment in associate	19	724	3,763	7,315
Financial assets	22	-	-	1,184
Derivative financial instruments	22	8	200	-
Deferred tax assets	7	3,713	2,900	3,620
Other long-term receivables	20	5,636	1,888	2,467
		99,827	106,638	114,699
Current assets
Trade and other receivables	21	38,808	34,800	39,541
Financial assets	22	-	746	-
Derivative financial instruments	22	54	1,573	-
Cash and cash equivalents	23	13,964	14,111	28,749
Assets held for sale	9	-	436	-
		52,826	51,666	68,290
Total assets		152,653	158,304	182,989
Liabilities
Current liabilities
Derivative financial instruments	22	688	-	437
Trade and other payables	24	38,629	45,647	47,209
Short-term borrowings	25	-	-	25,116
Current tax payable		1,608	1,318	1,334
Provisions	26	486	307	201
Convertible loan notes	25 , 34	1,416	4,461	4,444
Deferred consideration	25 , 34	-	-	177
Liabilities directly associated with assets classified as held for sale	9	-	125	-
		42,827	51,858	78,918
Non-current liabilities
Long-term borrowings	25	28,331	31,634	34,585
Deferred tax liabilities	7	-	174	903
Derivative financial instruments	22	335	56	4
Provisions	26	797	690	765
Convertible loan notes	25 , 34	2,755	2,681	2,639
Deferred consideration	25 , 34	495	882	2,293
Pension deficit	27	2,052	3,819	3,672
		34,765	39,936	44,861
Total liabilities		77,592	91,794	123,779
Total assets less total liabilities		75,061	66,510	59,210
Equity
Share capital	28	3,221	3,174	3,167
Share premium	28	53,030	52,510	52,510
ESOP reserve	29	(6,771)	(1,362)	(2,498)
Other reserves	30	27,124	28,094	25,862
Retained earnings		(1,543)	(15,906)	(19,831)
Total equity		75,061	66,510	59,210

The balance sheets as at 28 February 2020 and 28 February 2021 have been restated for a prior period adjustment, see Note 34 for more detail.

The Financial Statements were approved by the board of directors on 28 August 2022 and were signed on its behalf by:

James Gundy  Nicholas Stone

Group Chief Executive Officer  Chief Financial Officer  Registered number: 02286034

Consolidated Cash Flow Statement

For the year ended 28 February 2022

	Notes	28 Feb 2022  '000	28 Feb 2021  restated  '000
Profit before tax from continuing operations		8,543	5,136
Profit before tax from discontinued operations	9	8,081	1,196
Adjustment for non-cash transactions included in profit before tax
Depreciation and amortisation charges	13 , 16	3,483	3,702
Loss on disposal of fixed assets		10	78
Share of profit in associate from continuing and discontinued operations	19	(56)	(346)
Share scheme charges		2,894	1,820
Net foreign exchange gains of financial instruments		-	334
Net finance cost		984	1,485
Fair value loss on warrants	8	-	438
Rights issue gain on shareholding in AqualisBraemar	8	-	(826)
Gain on disposal of shares in AqualisBraemar	8 , 9	(3,375)	(1,758)
Gain on disposal of Cory Brothers	8 , 9	(4,134)	-
Gain on disposal of Wavespec	8 , 9	(594)	-
Loss on impairment of Wavespec receivable	8 , 9	2,381	-
Impairment of right-of-use asset	8	392	210
Impairment of assets held for sale	9	-	432
Adjustment for cash items in other comprehensive income/expense
Contribution to defined benefit scheme	27	(450)	(450)
Operating cash flow before changes in working capital		18,159	11,451
(Increase)/decrease in receivables		(9,209)	5,132
Increase/(decrease) in payables		14,203	(1,894)
Increase in provisions		285	31
Cash flows from operating activities		23,438	14,720
Interest received	6	112	84
Interest paid	6	(592)	(1,274)
Tax paid		(2,161)	(822)
Net cash generated from operating activities		20,797	12,708
Cash flows from investing activities
Purchase of property, plant and equipment	13 , 16	(652)	(502)
Purchase of other intangible assets	13	(515)	(643)
Investment in associate	19	(326)	(418)
Dividend received from associate	19	-	641
Disposal of Cory Brothers, net of cash disposed	9 , 14	(12,353)	-
Disposal of Wavespec, net of cash disposed	9	(53)	-
Proceeds from disposal of investment in associate	19	7,232	5,983
Principal received on finance lease receivables	17	799	804
Net cash generated from/(used in) investing activities		(5,868)	5,865

Cash flows from financing activities
Proceeds from borrowings		292	11,333
Repayment of principal under lease liabilities	17	(3,950)	(3,928)
Repayment of revolving credit facility		-	(11,975)
Repayment of overdraft facilities		-	(25,116)
Dividends paid	10	(2,109)	-
Purchase of own shares		(7,043)	(860)
Settlement of convertible loan notes	5	(2,596)	(1,901)
Net cash used in financing activities		(15,406)	(32,447)
Decrease in cash and cash equivalents		(477)	(13,874)
Cash and cash equivalents at beginning of the period	23	14,164	28,749
Foreign exchange differences		277	(711)
Cash and cash equivalents at end of the period	23	13,964	14,164
	Notes	28 Feb 2022 £'000	28 Feb 2021  restated  '000
Cash and cash equivalents (continuing operations)		13,964	14,111
Cash and cash equivalents (included in assets held for sale)		-	53
Total cash and cash equivalents at end of the period		13,964	14,164

The year ended 28 February 2021 has been restated for the presentation of Cory Brothers and AqualisBraemar as discontinued operations and the impact of prior year adjustments described in Note 34 .

The accompanying notes form an integral part of these Financial Statements.

Statements of Changes in Total Equity

For the year ended 28 February 2022

Group	Note	Share capital £'000	Share premium £'000	ESOP reserve £'000	Other reserves £'000	Retained earnings £'000	Total equity £'000
At 28 February 2020		3,167	55,805	(2,498)	22,279	(21,267)	57,486
Restatement	34	-	(3,295)	-	3,583	1,436	1,724
At 28 February 2020 (restated)		3,167	52,510	(2,498)	25,862	(19,831)	59,210
Profit for the year (restated)		-	-	-	-	4,532	4,532
Actuarial loss on employee benefits schemes - net of tax		-	-	-	-	(424)	(424)
Foreign exchange differences (restated)		-	-	-	719	-	719
Cash flow hedges - net of tax		-	-	-	1,790	-	1,790
Other comprehensive expense from discontinued operations		-	-	-	(277)	-	(277)
Other comprehensive expense		-	-	-	2,232	(424)	1,807
Total comprehensive income (restated)					2,232	4,108	6,340
Shares issued		7	-	-	-	(7)	-
Acquisition of own shares		-	-	(860)	-	-	(860)
ESOP shares allocated		-	-	1,996	-	(1,996)	-
Share-based payments		-	-	-	-	1,820	1,820
Transactions with owners		7	-	1,136	-	(183)	960
At 28 February 2021 (restated)		3,174	52,510	(1,362)	28,094	(15,906)	66,510
Profit for the year		-	-	-	-	13,919	13,919
Actuarial loss on employee benefits schemes - net of tax		-	-	-	-	1,318	1,318
Foreign exchange differences		-	-	-	538	-	538
Cash flow hedges - net of tax		-	-	-	(1,968)	-	(1,968)
Other comprehensive expense from discontinued operations		-	-	-	460	-	460
Other comprehensive expense		-	-	-	(970)	1,318	348
Total comprehensive income		-	-	-	(970)	15,237	14,267
Dividends	10	-	-	-	-	(2,109)	(2,109)
Shares issued	28 , 29	47	520	(25)	-	-	542
Acquisition of own shares		-	-	(7,043)	-	-	(7,043)
ESOP shares allocated		-	-	1,659	-	(1,659)	-
Share-based payments	28	-	-	-	-	2,894	2,894
Transactions with owners		47	520	(5,409)	-	(874)	(5,716)
At 28 February 2022		3,221	53,030	(6,771)	27,124	(1,543)	75,061

The accompanying notes form an integral part of these Financial Statements.

Notes to the Financial Statements

General information

The Group Financial Statements of Braemar Shipping Services Plc for the year ended 28 February 2022 were authorised for issue in accordance with a resolution of the directors on 28 August 2022. Braemar Shipping Services Plc is a public limited company incorporated in England and Wales.

The term "Company" refers to Braemar Shipping Services Plc and "Group" refers to the Company and all its subsidiary undertakings and the Employee Share Ownership Plan trust.

1  Accounting policies

a)  Basis of preparation and forward-looking statements

The financial information set out above does not constitute the Group's statutory accounts for the years ended 28 February 2022 or 28 February 2021 but is derived from those accounts.  Statutory accounts for 2021 have been delivered to the registrar of companies, and those for 2022 will be delivered in due course.  The auditor has reported on those accounts; their reports were (i) unqualified; (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The financial information included in this preliminary announcement has been prepared in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The Group expects to distribute full accounts that comply with UK-adopted international accounting standards and with the requirements of the Companies Act 2006.The Financial Statements have been prepared under the historic cost convention except for items measured at fair value as set out in the accounting policies below.

Certain statements in this Annual Report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. These forward-looking statements involve risks and uncertainties, so actual results may differ materially from those expressed or implied by these forward-looking statements. We undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

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

On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted international accounting standards, with future changes being subject to endorsement by the UK Endorsement Board. The Group transitioned to UK-adopted international accounting standards in its Consolidated Financial Statements on 1 March 2021. There was no impact or changes in accounting policies from the transition.

New standards, amendments and interpretations effective for the financial year beginning 1 March 2021

There were no new standards or amendments (including the amendments to IFRS 9, IAS 39, IFRS 7 IFRS 4 and IFRS 16 in respect of Interest rate benchmark reform IBOR "phase2") that were adopted in the annual Financial Statements for the year ended 28 February 2022 which had a significant effect on the Group.

New standards, amendments and interpretations issued but not yet effective for the financial year beginning 1 March 2021 and not early adopted

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early.

The following amendments are effective for the period beginning 1 March 2022:

-  Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37);

-  Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);

-  Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and

-  References to Conceptual Framework (Amendments to IFRS 3).

The following amendments are effective for the period beginning 1 March 2023:

-  Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);

-  Definition of Accounting Estimates (Amendments to IAS 8); and

-  Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).

The adoption of these standards and amendments is not expected to have a material impact on the Financial Statements of the Group in future periods.

In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether liabilities are classified as current or non-current. These amendments clarify that current or non-current classification is based on whether an entity has a right at the end of the reporting period to defer settlement of the liability for at least 12 months after the reporting period. The amendments also clarify that "settlement" includes the transfer of cash, goods, services, or equity instruments unless the obligation to transfer equity instruments arises from a conversion feature classified as an equity instrument separately from the liability component of a compound financial instrument. The amendments were originally effective for Annual Reporting periods beginning on or after 1 January 2022. However, in May 2020, the effective date was deferred to Annual Reporting periods beginning on or after 1 January 2023.

The Group is currently assessing the impact of these new accounting standards and amendments. The Group does not believe that the amendments to IAS 1 will have a significant impact on the classification of liabilities.

b)  Going concern

The Group and Company Financial Statements have been prepared on a going concern basis. In reaching this conclusion regarding the going concern assumption, the directors considered cash flow forecasts to 31 August 2023 which is 12 months from the date of signing of these Financial Statements and coincides with the expiry of the Group's current bank facilities with HSBC.

A set of cash flow forecasts ('the base case') have been prepared by the directors based on revenue and cost forecasts considered reasonable in the light of work done on budgets for the current year and the current shipping markets. Uncertainties related to the conflict in the Ukraine,  around forecasting success fees in the Naves business, the need to continue purchasing shares for the employee trust, COVID and climate change and note the following:

• The Group's compliance with sanctions put in place as a result of the conflict in the Ukraine is not expected to have any material effect on trading FY22/23 nor does the Group have any existing material exposure.

• Forecasting success fee revenue involves uncertainties in terms of both timing and actual closure of transactions but current levels of transaction activity in the industry suggests that there won't be a significant decline in the going concern period and indeed one large transaction has already closed this year.

• The ESOP now contains sufficient shares as are expected to be needed to cover all current share awards that have not yet vested as described in Notes 28 and 29 to these accounts. This is on the assumption that the majority of recipients elect to sell sufficient shares back to the trust immediately in order to settle their tax liability as they have done in the past.

• The effects of COVID are nothing like those that were the case in the previous two years, despite some disruptions still prevalent, particularly in Asia. However, these are not expected to have a material impact on trading in the going concern period.

• The impact of climate change is not expected to have any material impact on the business in the short-term and indeed could lead to additional opportunities.

The directors have concluded therefore that none of these factors are likely to have a significantly adverse impact on the Group's future cash flows.

The Group's balance sheet has been strengthened significantly due to the strong trading and disposals of non-core assets during the year. As at 28 February 2022 the Group's net bank debt was £9.3m with available headroom in the £30.0m revolving credit facility ("RCF") of £6.7m but following receipt of the initial consideration from the sale of Cory Brothers on 2 March 2022 that net bank debt had reduced to £2.8m. As at 31 July 2022 the Group had net bank debt of £7.1m with available headroom in the RCF of £5.7m and cash balances of £17.2m. Employee bonuses are paid in May each year and bank debt tends to be at a high point following those bonus payments and associated payroll taxes.

	Notes	31 July 2022 £m	28 Feb 2022 £m
Secured revolving credit facilities	25	(24.3)	(23.3)
Cash	23	17.2	14.0
Net debt		(7.1)	(9.3)

The RCF has a number of financial covenant tests that must be adhered to. At the start of the year the financial covenant relating to debt to 12 months rolling EBITDA was 3.5x after May 2022 the covenant was reduced to 3x until the facility expires in September 2023.  At 31 May 2022 and for the year ended 28 February 2022 the Group met all financial covenant tests. During FY21/22 the directors have discussed the extension of the RCF with the Group's main bankers, HSBC, and have received acceptable indicative terms for such an extension.  It is intended that these discussions will be concluded well in advance of the expiry of the current facility.

The cash flow forecasts in the base case assessed the ability of the Group to operate both within the banking covenants and the facility headroom, and included a number of downside sensitivities on the budgeted revenue, including a reverse stress test scenario. The directors consider revenue as the key assumption in the Group's forecasts. The remaining costs are largely fixed or made up of discretionary bonuses, predominately within the Shipbroking Division and which are directly linked to profitability.  Based on two flex scenarios; a revenue decrease of 7.5% and a revenue decrease of 15% from the base case no mitigations were necessary to meet banking covenants.

A reverse stress test was also performed to ascertain the point at which the covenants would be breached in respect of the key assumption of forecast revenue decline. This test indicated that the business, alongside certain mitigating actions which are fully in control of the directors, would be capable of withstanding a reduction of approximately 41% in budgeted revenue from the base case assumptions from September 2022 through to August 2023. In light of current trading, forecasts and the Group's performance over FY21/22 the directors having assessed this downturn in revenue and concluded the likelihood of such a reduction to be remote, such that it does not impact the basis of preparation of the Financial Statements and there is no material uncertainty in this regard.

c)  Basis of consolidation

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

The results of subsidiaries are consolidated using the purchase method of accounting, from the date on which control of the net assets and operation of the acquired company are effectively transferred to the Group. Similarly, the results of subsidiaries divested cease to be consolidated from the date on which control of the net assets and operations are transferred out of the Group.

All intercompany balances and transactions have been eliminated in full.

d)  Use of estimates and critical judgements

The preparation of the Group's Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.

The following are key areas where the Group typically makes judgements involving estimates:

Estimates

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Impairment of goodwill

Goodwill is tested for impairment on an annual basis, and the Group will also test for impairment at other times if there is an indication that an impairment may exist.  Determining whether goodwill is impaired requires an estimation of the value-in-use of the cash-generating units to which these assets have been allocated.  The value-in-use calculation estimates the present value of future cash flows expected to arise for the cash-generating unit. The key estimates are therefore the selection of suitable discount rates and the estimation of future growth rates which vary between cash-generating units depending on the specific risks and the anticipated economic and market conditions related to each cash generating unit (see Note 12 for a description of the approach used by management to determine these key values).  Climate change risk has been taken into account in determining the underlying inputs used in calculations used for impairment reviews and is not considered to have a material impact on the value in use calculations.

Fair value of Cory Brothers deferred and contingent consideration receivable

On 28 February 2022 the Company sold Cory Brothers to Vertom Agencies BV for maximum consideration of £15.5m. Initial cash proceeds of £6.5m were received on completion of the transaction, and three contractual "earn-out" payments will be made, being an agreed percentage of the future gross profits of the combined VertomCory business over three subsequent earn out periods.  Each of the three earn-out payments are subject to minimum and maximum amounts which are specified in the share purchase agreement. 

The minimum earnout consideration has been classified as deferred consideration receivable. The minimum amount is specified in the SPA and is therefore not an estimate, however an estimate of a discount rate is necessary to discount the deferred consideration receivable to fair value. A discount rate of 2.39% was used to calculate the net present value, this was based on the credit risk of Vertom Agencies BV following a credit check performed by management. Deferred consideration receivable is initially recognised at fair value and subsequently measured at amortised cost. The current estimate of the fair value of the deferred consideration receivable is £3.6m

The balance of the earnout consideration, up to the maximum specified in the SPA has been classified as contingent consideration receivable because it is contingent on the future profitability of the combined business. The fair value of the contingent consideration receivable involves two critical estimates; the future profitability of the combined business and the discount rate used to calculate the net present value. The future profitability forecasts are based on a business plan prepared by the combined VertomCory business and was reviewed by management as part of the financial due diligence process. The discount rate used to calculate the net present value was also 2.39%. Contingent consideration receivable is initially recognised at fair value and subsequently measures at fair value through profit and loss.

See Note 9 for further details, including a sensitivity analysis of the contingent consideration receivable to the discount rate and the assumptions of future profitability.

Recoverability of deferred tax assets

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. See Note 7 .

Share option vesting

The fair value determined at the grant date of the equity-settled share-based payments is typically expensed on a straight-line basis over the vesting period, based on the Group's estimate of the number of equity instruments that will eventually vest.  At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves. See Note 28 .

Provision for impairment of trade receivables and accrued income

Trade receivables and accrued income are amounts due from customers in the ordinary course of business. Trade receivables and accrued income are classified as current assets if collection is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current assets.

The provision for impairment of trade receivables and accrued income represents management's best estimate at the Balance Sheet date. A number of judgements are made in the calculation of the provision, primarily the age of the invoice, the existence of any disputes, recent historical payment patterns and the debtor's financial position.

The application of IFRS 9 "Financial Instruments" results in an additional provision for expected credit losses. When measuring expected credit losses, the Group uses reasonable and supportable forward-looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other. Probability of default constitutes a key input in measuring expected credit losses. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future market conditions. See Note 20.

The Group has considered the impact of both COVID and the conflict in the Ukraine on the Financial Statements at 28 February 2022. However, at 28 February 2022 there was no evidence to suggest that the Group's trade receivables may be at a higher risk of becoming credit impaired as a result of COVID or the conflict in the Ukraine. No impairment allowances were made in respect of either COVID or the conflict in the Ukraine.

Valuation of defined benefit pension scheme

The Group uses an independent actuary to provide annual valuations of the defined benefit pension scheme. The actuary uses a number of estimates in respect of the scheme membership, the valuation of assets and assumptions regarding discount rates, inflation rates and mortality rates. The membership details are provided by an independent trustee while the valuation of assets is verified by an independent fund manager. The discount rates, inflation rates and mortality rates are reviewed by management for reasonability. See Note 27 .

Judgements

Naves prior year adjustment

For details of judgements made relating to the prior year adjustment, see Note 34.

Wavespec

Fair value of consideration

In the year ended 28 February 2022, the sale of Wavespec, the Group's Engineering Division, completed for a maximum consideration of £2.6m. The fair value of the consideration is a critical accounting judgement.

The consideration was due to be satisfied by the issuance of a promissory note with a maturity date of 31 March 2026. The fair value of the consideration was based on the net present value of the promissory note (£2.4m). A discount rate of 2.11% was used to calculate the net present value. The discount rate was made up of two elements, the first being a 5 year BBB+ bond yield of 1.51%, the second being a premium for lack of marketability at 0.60%. A 5 year BBB+ bond yield was used because it matches the maturity of the promissory note and reflects the credit rating of the bank that was expected to provide the letter of credit.

Impairment

As at 28 February 2022, the buyer had not delivered on its obligations to secure the promissory note and therefore management have made a judgement that the promissory note is unlikely to be honoured and consequently the fair value of the consideration is impaired and a credit loss of £2.4m has been recorded within discontinued operations.

Measurement of right-of-use assets and liabilities

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any period covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Group has several lease contracts that include extension and termination options. Management applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for the Group to exercise either the renewal or termination option. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate the lease.  See Note 17 .

Revenue recognition

IFRS 15 "Revenue from Contracts with Customers" requires judgement to determine whether revenue is recognised at a "point in time" or "over time" as well as determining the transfer of control for when performance obligations are satisfied.

For Shipbroking, the Group has defined the performance obligation to be the point in time where the negotiated contract between counterparties has been successfully completed, and therefore revenue is recognised at this point in time. This is a critical judgement since revenue recognition would differ if the performance obligations were deemed to be satisfied at a different point in time.

Classification and recognition of specific items

The Group excludes specific items from its underlying earnings measure. The directors believe that such additional performance measures can provide the users of the Financial Statements with a better understanding of the Group's underlying financial performance, if properly used. Management judgement is required as to what items qualify for this classification. There can also be judgement as to the point at which costs should be recognised and the amount to record to ensure that the understanding of the underlying performance is not distorted. Specific items include the results from discontinued operations. See Note 8 .

Climate ‐ related risks and opportunities

Management have considered the impact of climate related risks in respect of impairment of goodwill, recoverability of receivables and the recoverability of deferred tax assets in particular and do not consider that climate ‐ related risks have a material impact on any key judgements, estimates or assumptions in the consolidated financial statements.

During FY21/22 climate change was assessed as part of ongoing discussions of key and emerging risks for the Group and the shipping and energy sectors within which it operates. Consideration of the potential short to medium-term impact of Environment and Climate Change risk resulted in its inclusion as a Group Principal Risk this year.

e)  Revenue recognition

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

i)  Shipbroking desks - income comprises commission arising from tanker and dry cargo charter broking, sale and purchase broking, offshore broking and consultancy, valuation fees and fees relating to the facilitation of commodity and commodity derivatives. The Group acts as a broker for several types of shipping transactions, each of which gives rise to an entitlement to commission:

Deep sea tankers, specialised tankers and gas, dry cargo and offshore:

-  for single voyage chartering, the contractual terms are governed by a standard charterparty contract in which the broker's performance obligation is satisfied when the cargo has been discharged according to the contractual terms;

-  for time charters, the commission is specified in the hire agreement and the performance obligation is spread over the term of the charter at specified intervals in accordance with the charter party terms;

Sale and purchase:

-  in the case of second-hand sale and purchase contracts, the broker's performance obligation is satisfied when the principals in the transaction complete on the sale/purchase and the title of the vessel passes from the seller to the buyer;

-  with regard to newbuilding contracts, the commission is recognised when contractual stage payments are made by the purchaser of a vessel to a shipyard which in turn reflects the performance of services over the life of the contract;

-  for income derived from providing ship and fleet valuations, the Group recognises income when a valuation certificate is provided to the client and the service is invoiced; and

Securities:

-  for income derived from commodity broking, the commission is recognised when the services have been performed.

ii)  Financial - income comprises retainer fees and success fees generated by corporate finance related activities. Revenue is recognised in accordance with the terms agreed in individual client terms of engagement. Recurring monthly retainers are recognised in the month of invoice and success fees are recognised at the point when the performance obligations of the particular engagement are fulfilled.

iii)  Logistics - the performance obligation for agency income is satisfied at the point in time when the vessel sails from the port. For forwarding and logistics income the performance obligation is satisfied when the goods depart from their load location. Where the Group acts as a principal rather than as agent, the revenue and costs are shown gross.

At the Balance Sheet date, there may be amounts where invoices have not been raised but performance obligations have been satisfied, and these are recognised as accrued income. The movement in the asset between years is due to the invoicing of all prior year assets and the accrual of amounts relating to the current year.

Dividend income from investments is recognised when the shareholders' legal rights to receive payment have been established with certainty.

f)  Government grants

Government grants are netted against the cost incurred by the Group. When retention of a government grant is dependent on the Group satisfying certain criteria, it is initially recognised as deferred income and released to the Income Statement once the criteria for retention have been satisfied. See Note 3 .

g)  Foreign currencies

The presentational currency of the Group is Sterling. Transactions in currencies other than Sterling are recorded at the rates of exchange prevailing on the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currency are recognised in the Income Statement.

In order to hedge its exposure to certain foreign exchange risks, the Group enters into derivative financial instruments contracts, mainly forward contracts and other derivative currency contracts (see Note 1 (p)).

Assets and liabilities of overseas subsidiaries, branches and associates are translated from their functional currency into Sterling at the exchange rates ruling at the Balance Sheet date. Trading results are translated at the average rates for the period. Exchange differences arising on the consolidation of the net assets of overseas subsidiaries are dealt with through the foreign currency translation reserve (see Note 30), whilst those arising from trading transactions are dealt with in the Income Statement. On disposal of a business, the cumulative exchange differences previously recognised in the foreign currency translation reserve relating to that business are transferred to the Income Statement as part of the gain or loss on disposal.

h)  Taxation

The taxation expense represents the sum of the current and deferred tax.

The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the Income Statement because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group and Company's liability for current tax is calculated using rates that have been enacted or substantively enacted by the Balance Sheet date.

Full provision is made for deferred taxation on all taxable temporary differences. Deferred tax assets and liabilities are recognised separately on the Balance Sheet. Deferred tax assets are recognised only to the extent that they are expected to be recoverable. Deferred taxation is recognised in the Income Statement unless it relates to taxable transactions taken directly to equity, in which case the deferred tax is also recognised in equity. The deferred tax is released to the Income Statement at the same time as the taxable transaction is recognised in the Income Statement. Deferred taxation on unremitted overseas earnings is provided for to the extent a tax charge is foreseeable.

i)  Goodwill

Business combinations are accounted for using the purchase method.

On the acquisition of a business, fair values are attributed to the net assets (including any identifiable intangible assets) acquired. Goodwill arises where the fair value of the consideration given exceeds the fair value of the net assets acquired. Goodwill is recognised as an asset and is reviewed for impairment at least annually. Impairments are recognised immediately in operating costs in the Income Statement. Goodwill is allocated to cash-generating units for the purposes of impairment testing. On the disposal of a business, goodwill relating to that business remaining on the Balance Sheet is included in the determination of the profit or loss on disposal. As permitted by IFRS 1, goodwill on acquisitions arising prior to 1 March 2004 has been retained at prior amounts and is tested annually for impairment.

In relation to acquisitions where the fair value of assets acquired exceeds the fair value of the consideration, the excess fair value is recognised immediately in the Income Statement.

j)  Intangible assets

Computer software

The Group capitalises computer software at cost. It is amortised on a straight-line basis over its estimated useful life of up to four years. The carrying value of intangible assets with a finite life is reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Development costs

The Group capitalises internally generated development costs when it is able to demonstrate:

-  the technical feasibility of completing the intangible asset so that it is subsequently available for use;

-  that there is a clear intention that the intangible asset would be completed and then used;

-  that it is able to use the intangible asset;

-  that future economic benefits are probable;

-  that there are adequate technical, financial and other resources to complete the development and to use the asset; and the expenditure attributable to the intangible asset during its development can be reliably measured.

The Group amortises development on a straight ‑ line basis over its estimated useful economic life of up to 3 years. See Note  13 .

Research costs are expensed as incurred.

Other intangible assets

Intangible assets acquired as part of a business combination are stated in the Balance Sheet at their fair value at the date of acquisition less accumulated amortisation and any provisions for impairment. The amortisation of the carrying value of the capitalised forward order book and customer relationships is charged to the Income Statement over an estimated useful life of the lesser of two to ten years or when based on historical attrition rates. The amortisation in respect of capitalised brand assets is expensed to the Income Statement over an estimated useful life of three years.

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

k)  Property, plant and equipment

Property, plant and equipment are shown at historical cost less accumulated depreciation and any impairment value.

Depreciation is provided at rates calculated to write off the cost, less estimated residual value of each asset, on a straight-line basis over its expected useful life as follows (except for long and short leasehold interests which are written off against the remaining period of the lease):

Motor vehicles  - three years

Computers  - four years

Fixtures and equipment - four years

l)  Leases

The Company has various lease arrangements for properties, and other equipment.  At inception of a lease contract, the Company assesses whether the contract conveys the right to control the use of an identified asset for a certain period of time and whether it obtains substantially all the economic benefits from the use of that asset, in exchange for consideration. The Company recognises a lease liability and a corresponding right-of-use asset with respect to all lease arrangements in which it is a lessee, except low-value leases and short-term leases of 12 months or less, costs for which are recognised as an operating expense within the income statement as they are incurred.

A right-of-use asset is capitalised on the balance sheet at cost which comprises the present value of future lease payments determined at the inception of the lease adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred in addition to an estimate of costs to remove or restore the underlying asset. Where a lease incentive is receivable, the amount is offset against the right-of-use asset at inception. Right-of-use assets are depreciated using the straight-line method over the shorter of the estimated life of the asset or the lease term and are reviewed for impairment to account for any loss when events or changes in circumstances indicate the carrying value may not be fully recoverable.

The lease liability is initially measured at amortised cost using the effective interest rate method to calculate the present value of future lease payments and is subsequently increased by the associated interest cost and decreased by lease payments made. The effective interest rate is based on estimates of relevant incremental borrowing costs. Lease payments made are apportioned between an interest charge and a capital repayment amount which are disclosed within the financing activities and the operating activities sections of the consolidated statement of cash flows respectively. Lease payments comprise fixed lease rental payments only, with the exception of property leases for which the associated fixed service charge is also included. Lease liabilities are classified between current and non-current on the balance sheet.

The lease term comprises the non-cancellable period in addition to the determination of the enforceable period which is covered by an option to extend the lease, where it is reasonably certain that the option will be exercised.

A modification to a lease which changes the lease payment amount (e.g. due to a renegotiation or market rent review) or amends the term of the lease, results in a reassessment of the lease liability with a corresponding adjustment to the right-of-use asset.

m)  Investments

Investments in associates and joint ventures where the Group has joint control or significant influence are accounted for under the equity method. Investments in associates are initially recognised in the Consolidated Balance Sheet at cost. Subsequently associates are accounted for under the equity method, where the Group's share of post-acquisition profits and losses and other comprehensive income is recognised in the Income Statement and Statement of Comprehensive Income.

Profits and losses arising on transactions between the Group and its associates are recognised only to the extent of unrelated investors' interests in the associate. The investor's share in the associate's profits and losses arising from these transactions is eliminated against the carrying value of the associate.

Where the Group's share of the associate's identifiable net assets is greater than the cost of investment, a gain on bargain purchase is recognised in the Income Statement and the carrying value of the investment in the Consolidated Balance Sheet is increased.

When the Group's investment in associates or joint ventures is diluted the Group recognises a profit or loss on the book value of the investment that is derecognised along with any recycling of foreign exchange previously recognised in other comprehensive income. On a rights issue the Group remeasures its share of net assets and recognises a corresponding gain.

When the Group disposes of shares in associates or joint ventures the Group recognises a profit or loss on disposal based on the net proceeds less the weighted average cost of the shares disposed of. On disposal the Group reclassifies foreign exchange amounts previously recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets or liabilities.

The most recent Financial Statements of an associate are used for accounting purposes unless it is impractical to do so. Where the Group and an associate have non-coterminous reporting dates the associate's full-year accounts will be used for the purposes of the Group's reporting at 28 February with adjustments made for any significant transactions or events.

Where there is objective evidence that the investment in an associate has been impaired, the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.

Investments where the Group has no significant influence are held at fair value, with movements in fair value recorded in profit and loss.

n)  Impairment

The carrying amount of the Group's assets, other than financial assets within the scope of IFRS 9 and deferred tax assets, are reviewed at each Balance Sheet date to determine whether there is an indication of impairment. If any such indication exists, or annually for goodwill, the asset's recoverable amount is estimated. The recoverable amount is determined based on the higher of value-in-use calculations and fair value less costs to sell, which requires the use of estimates. An impairment loss is recognised in the Income Statement whenever the carrying amount of the assets exceeds its recoverable amount.

Where an impairment loss subsequently reverses, the carrying amount of the assets, with the exception of goodwill, is increased to the revised estimate of its recoverable amount. This cannot exceed the carrying amount prior to the impairment charge. An impairment recognised in the Income Statement in respect of goodwill is not subsequently reversed.

o)  Deferred and contingent consideration receivables

Contingent consideration receivables are initially recognised at fair value and are subsequently remeasured at their fair value at each Balance Sheet date.  The resulting gain or loss is recognised immediately in the income statement.  Contingent consideration receivables are classified as level 3 in accordance with the fair value hierarchy specified by IFRS 13. See Notes 14 and 22 .

p)  Derivative financial instruments and hedging

Derivatives are initially recognised at fair value and are subsequently remeasured at their fair value at each Balance Sheet date. Recognition of the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if it is, the nature of the item being hedged. Changes in the fair value of derivatives that do not qualify for hedge accounting are recognised immediately in the Income Statement. The Group designates derivatives that qualify for hedge accounting as a cash flow hedge where there is a high probability of the forecast transactions arising. The Group has applied the IFRS 9 hedge accounting model since 1 March 2020.  The effective portion of changes in the fair value of these derivatives is recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately in the Income Statement. Amounts accumulated in equity are recycled to the Income Statement at the same time as the gains or losses on the hedged items. When a forecast transaction is no longer expected to occur, the cumulative gains or losses that were reported in equity are immediately transferred to the Income Statement.

To qualify for hedge accounting, the terms of the hedge must be clearly documented at inception and there must be an expectation that the derivative will be highly effective in offsetting changes in the cash flow of the hedged risk. Hedge effectiveness is tested throughout the life of the hedge and if at any point it is concluded that the relationship can no longer be expected to remain highly effective in achieving its objective, the hedge relationship is terminated.

The hedging instruments and the hedged transactions offset each other in currency terms and in amounts, meaning there is a clear economic relationship between the hedging instrument and hedged item as required under IFRS 9. Thereby, management qualitatively demonstrate that the hedging instrument and the hedged items will move equally in the opposite direction. Additionally, the credit rating of the counterparty to the derivatives is high, so the effect of credit risk is considered as neither material nor dominant in the economic relationship.

When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in accordance with the above policy when the transaction occurs.

The fair value of forward foreign exchange contracts is based either directly (i.e. as prices) or indirectly (i.e. derived from prices) at the Balance Sheet date.

Financial assets are initially recognised at fair value and are subsequently measured at fair value through profit or loss at each Balance Sheet date.

Financial assets and liabilities are classified in accordance with the fair value hierarchy specified by IFRS 13. See Note 21.

q)  Trade receivables and accrued income

Trade receivables and accrued income are recognised and carried at the lower of their original value less impairment. Specific provision is made where there is evidence that the balances will not be recovered in full. A provision for expected credit losses is made for trade receivables and accrued income using the simplified approach. A provision matrix is used to calculate an expected credit loss as a percentage of carrying value by age. The percentages were determined based on historical credit loss experience as well as forward-looking information. Expected credit loss provisions are made for other receivables based on lifetime expected credit losses using a model that considers forward-looking information and significant increases in credit risk.

Trade and other receivables are non-interest bearing and generally on terms payable within 30 to 90 days.

r)  Cash and cash equivalents

Cash and cash equivalents included in the Balance Sheet comprise cash in hand, short-term deposits with an original maturity of three months or less and restricted cash.

Cash and cash equivalents included in the Cash Flow Statement include cash and short-term deposits. Bank overdrafts are included in the Balance Sheet within short-term borrowings.

s)  Provisions

Provisions are recognised when the Group has a present obligation (legal or otherwise) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If material, the provisions are discounted using an appropriate current post-tax interest rate.

Short-term provisions for long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.

The provision for long service leave not expected to be settled within 12 months of the reporting date is measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

t)  Share-based payments

The Group operates a number of equity-settled share-based payment schemes.

During the year the Company operated employee save-as-you-earn option schemes called the Braemar Shipping Services Plc Savings-Related Share Option Scheme 2014 (the "SAYE Scheme") and the Braemar Shipping Services Plc International Savings-Related Share Option Scheme 2019 (the "International SAYE Scheme"). No option may be granted under either scheme which would result in the total number of shares issued or remaining issuable under all of the schemes (or any other Group share schemes), in the ten-year period ending on the date of grant of the option, exceeding 10% of the Company's issued share capital (calculated at the date of grant of the relevant option). Options are granted at up to a 20% discount to the prevailing market price.

In 2005 the Company put in place a Deferred Bonus Plan (the "Plan") whereby part of the annual performance-related bonus is delivered in shares, on a discretionary basis, to staff including executive directors. Under the Plan the shares are bought and held in an employee trust ("ESOP") until vesting, which will normally occur after three years from the date of grant, subject to the employee beneficiary remaining in employment with the Group, at which time the award will be settled by the transfer of shares to the beneficiary. Shares are valued at fair value at the date of grant.

The Company adopted a new Deferred Bonus Plan in May 2020 (the "New DBP"), pursuant to which future discretionary bonus awards will be granted to staff including executive directors. Awards under the New DBP may be linked to an option granted under the new Braemar Company Share Option Plan 2020, which was also adopted by the Company in May 2020 (the "New CSOP"). Where an employee receives a linked award under the New DBP, where the Company's share price rises over the vesting period, the New CSOP award can be exercised with the value of shares delivered on the vesting of the New DBP award being reduced by the exercise gain on the New CSOP award. Awards under the New DBP and the New CSOP may be settled by the issue of new shares of by way of transfer of shares from the ESOP. Historic practice has been to settle via the transfer of shares from the ESOP and it is the current intention to continue to operate in this manner.

During the year ended 28 February 2015, the Company established a Restricted Share Plan ("RSP"). This scheme was set up to grant awards to certain key staff to try to retain them following the merger between Braemar and ACM Shipping Group Plc, but it can also be used where the Remuneration Committee considers it necessary to secure the recruitment of a particular individual. Executive directors of the Company are not eligible to participate in the RSP. RSP awards are made in the form of a nil cost option and there are no performance criteria other than continued employment.

The Company also operates an LTIP, which was approved by shareholders and adopted in 2014. LTIP awards under this plan take the form of a conditional right to receive shares at nil cost. The awards normally vest over three years and are subject to a performance condition such as earnings per share ("EPS").

Share options granted under the Save as you earn schemes are valued using a binomial pricing model.  All other share awards are nil cost options and their fair value is approximated to the share price at the time of grant less the expected dividend to be paid during the vesting period.

The value of awards granted under the Deferred Bonus Plan each year are related to the profits generated in the previous year. The cost of the award is therefore expensed from the beginning of that profit period until the vesting date which is usually 3 years after the date of award.  Awards made to new joiners are expensed over the period from date of joining to date of vesting.  The quantum of the charge made for each set of awards is calculated on the value of the shares granted, reduced by the expected attrition rate.

The Group may provide a net settlement feature, whereby it withholds the number of equity instruments equal to the monetary value of the employee's tax obligation arising from the exercise (or vesting) of the award if the total number of shares that otherwise would have been issued to the employee.  The Group has no contractual obligation to provide a net settlement option, and therefore the award is still accounted for as an equity settled award in full and the value of the shares foregone by the employee is accounted for as a deduction from equity.

An Employee Share Ownership Plan ("ESOP") was established on 23 January 1995.  The ESOP has been set up to purchase shares in the Company. These shares, once purchased, are held in trust by the Trustee of the ESOP, SG Kleinwort Hambros Trust Company (CI) Limited, for the benefit of the employees.  Additionally, an Employee Benefit Trust ("EBT") previously run by ACM Shipping Group plc also holds shares in the Company.  The ESOP and EBT are accounted for within the Company accounts.

The net cost of the shares acquired for the shares held by the ESOP and the EBT are a deduction from shareholders' funds and represent a reduction in distributable reserves.  Note 29 provides detail on the ESOP and the EBT and movements in shares to be issued.

u)  Commissions payable

Commissions payable to co-brokers are recognised in trade payables due within one year on the earlier of the date of invoicing or the date of receipt of cash.

v)  Long-term employee benefits

The Group has the following long-term employee benefits:

i)  Defined contribution schemes

The Group operates a number of defined contribution schemes. Pension costs charged against profits in respect of these schemes represent the amount of the contributions payable to the schemes in respect of the accounting period. The assets of the schemes are held separately from those of the Group within independently administered funds. The Group has no further payment obligations once the contributions have been paid.

ii)  Defined benefit schemes

The Group holds a defined benefit scheme, the ACM Staff Pension Scheme, with assets held separately from the Group. The cost of providing benefits under the scheme is determined using the projected unit credit actuarial valuation method which measures the liability based on service completed and allowing for projected future salary increases and discounted at an appropriate rate.

The current service cost, which is the increase in the present value of the retirement benefit obligation resulting from employee service in the current year, and gains and losses on settlements and curtailments, are included within operating profit in the Income Statement. The unwinding of the discount rate on the scheme liabilities which is shown as a net finance cost and past service costs are presented and recognised immediately in the Income Statement.

The pension liabilities recognised on the Balance Sheet in respect of this scheme represents the difference between the present value of the Group's obligations under the scheme and the fair value of the scheme's assets. Actuarial gains or losses and return on plan assets excluding interest are recognised in the period in which they arise within the Statement of Comprehensive Income.

iii)  Other long-term benefits

The current service cost of other long-term benefits resulting from employee services in the current year is included within the Income Statement. The unwinding of any discounting on the liabilities is shown in net finance costs.

w)  Borrowings and loan notes

Arrangement costs for loan facilities are capitalised and amortised over the life of the debt at a constant rate.

Finance costs are charged to the Income Statement, based on the effective interest rate of the associated external borrowings and debt instruments.

The convertible loan notes are considered to be a financial liability host with an embedded derivative convertible feature which is required to be separated from the host. The Group has an accounting choice to record the instrument in its entirety at fair value through profit and loss but has not chosen to apply this treatment. Instead, the financial liability host will be recognised as a Euro liability initially recognised at fair value and prospectively accounted for applying the effective interest rate method. The derivative conversion feature will be recognised at fair value through profit and loss. Where there are conversion options that can be exercised within one year the liability is recognised as current.

Modification of terms of financial liability

When the terms of an existing financial liability are modified, management will consider both quantitative and qualitative factors to assess whether the modification is substantial. In the case that the modification of the terms of existing financial liability is considered to be substantial, the modification shall be accounted for as an extinguishment of that financial liability and the recognition of a new financial liability.  If the modification is not considered substantial, then the existing financial liability is remeasured in accordance with its original classification and any gain or loss is recognised immediately in the Income Statement.

x)  Segmental analysis

The Group's segmental analysis previously recognised four segments, being the Shipbroking, Financial, Logistics and Engineering Divisions. Two business segments have been disposed of during the year, the Logistics Division (Cory Brothers) and the Engineering Division (Wavespec). The prior year comparatives have been restated for the presentation of Cory Brothers as discontinued operations together with Wavespec.  The restated segmental analysis is based on its two continuing business segments: the Shipbroking and Financial Divisions. The segmental analysis is consistent with the way the Group manages itself and with the format of the Group's internal financial reporting.

The second analysis is presented according to the geographic markets, comprising the UK, Singapore, the US, Australia, Germany and the Rest of the World. The Group's geographical segments are determined by the location of the Group's assets and operations.

y)  Specific items

Specific items are significant items considered material in size or nature, including acquisition and disposal-related gains and losses. These are disclosed separately to enable a full understanding of the Group's ongoing financial performance.

z)  Non-current assets held for sale and discontinued operations

A non-current asset or a group of assets, such as a disposal group, is classified as held for sale if its carrying amount will be recovered principally through sale rather than through continuing use, it is available for immediate sale and sale is highly probable within one year.

On initial classification as held for sale, non-current assets and disposal groups are measured at the lower of previous carrying amount and fair value less costs to sell with any adjustments taken to profit or loss.

A discontinued operation is a component of the Group's business that represents a separate line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative Income Statement is restated as if the operation has been discontinued from the start of the comparative period.

aa)  Contingent assets

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

2  Segmental information and revenue

a)  Business segments

Following the disposal of the Engineering and Logistics Divisions during the period, there are now two operating segments within the Group, which each provide different services to the shipping industry, being Shipbroking and Financial.  They are managed separately because each business requires different technology and resources to deliver its strategy. The reports reviewed by the Chief Operating Decision Maker to make strategic decisions are disaggregated by Division. The Chief Operating Decision Maker is the Group's board of directors.  The Logistics and Engineering Divisions were disposed of during the year and have been presented as discontinued operations.

The board considers the business from both service line and geographic perspectives.

Central costs relate to board costs and other costs associated with the Group's listing on the London Stock Exchange. All segments meet the quantitative thresholds required by IFRS 8 as reportable segments.

Underlying operating profit is defined as operating profit for continuing activities before restructuring costs, gain on disposal of investment and acquisition and disposal-related items.

Sales between and within business segments are carried out on an arm's-length basis.

The segmental information provided to the board for reportable segments for the year ended 28 February 2022 is as follows:

	Revenue		Operating profit/(loss)
	2022   £'000	2021 Restated* £'000	2022   £'000	2021 Restated* £'000
Shipbroking	94,659	77,727	12,422	10,068
Financial	6,651	5,968	1,798	1,034
Trading segments revenue/results	101,310	83,695	14,220	11,102
Central costs			(4,160)	(3,383)
Underlying operating profit			10,060	7,719
Specific items included in operating expenses			(514)	(1,097)
Operating profit			9,546	6,622
Share of associate's loss for period			(19)	-
Net finance expense			(984)	(1,486)
Profit before taxation			8,543	5,136

* The year ended 28 February 2021 has been restated for the presentation of Cory Brothers and AqualisBraemar as discontinued operations and prior period errors. See Note 9 and Note 34.

Geographical segment - by origin

The Group manages its business segments on a global basis. The operation's main geographical area and also the home country of the Company is the United Kingdom.

Geographical information determined by location of customers is set out below:

	Revenue			Non-current assets
		2022 £'000	2021 Restated £'000		2022 £'000	2021 Restated £'000
United Kingdom		54,524	51,664		68,122	67,804
Singapore		19,423	13,691		949	1,275
United States		972	663		262	28
Australia		12,565	7,159		334	303
Germany		2,488	3,585		25,592	25,640
Rest of the World		11,338	6,933		855	1,042
Continuing operations		101,310	83,695		96,114	96,092
Discontinued operations		45,215	28,083		-	7,646
Total		146,525	111,778		96,114	103,738

b)  Revenue analysis

The Group disaggregates revenue into Shipbroking and Financial in line with the segmental information presented above and also by desk. Revenue analysed by desk is provided  below.

			2022 £'000	2021 Restated £'000
Tankers			17,837	26,251
Specialised Tankers			11,622	10,949
Dry Cargo			29,789	15,230
S&P			19,646	15,019
Offshore			3,776	2,728
Securities			11,989	7,550
Shipbroking			94,659	77,727
Financial			6,651	5,968
Total continuing operations			101,310	83,695

All revenue arises from the rendering of services. There is no single customer that contributes greater than 10% of the Group's revenue.

Remaining performance obligations

The Group enters into some contracts, primarily in Shipbroking which are for a duration longer than 12 months and where the Group has outstanding performance obligations on which revenue has not yet been recognised. The amount of revenue that will be recognised in future periods on these contracts when those remaining performance obligations will be satisfied is set out below:

Forward order book

202 2	Within 12 months £'000	1-2 years £'000	More than 2 years £'000	Total £'000
Sale and purchase	6,584	1,832	924	9,340
Chartering	15,724	3,211	9,057	27,992
Total	22,308	5,043	9,981	37,332

2021	Within 12 months £'000	1-2 years £'000	More than 2 years £'000	Total £'000
Sale and purchase	3,594	1,337	290	5,221
Chartering	13,994	4,483	7,385	25,862
Total	17,588	5,820	7,675	31,083

3  Operating profit from continuing operations

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

This is stated after charging/(crediting):

	Notes	2022 £'000	2021  Restated £'000
Staff costs	4	75,814	60,783
Depreciation of property, plant and equipment	16	2,834	2,894
Amortisation of intangibles	13	262	313
Bad debt charge/(credit)	21	747	(170)
Auditor's remuneration	5	960	793
Other professional costs		2,782	2,028
Office costs		1,600	875
IT and communication costs		2,507	2,144
Insurance		875	700
Net foreign exchange (gains)/losses		(432)	76
Specific items included in operating profit (see Note 8 )		(514)	(1,097)

Staff costs are stated after netting off grants totalling £0.1m (2021: £0.8m) against staff costs for continuing operation detailed in Note 4 . The grants were received from both the Singaporean Government and the Australian Government during COVID. All criteria for the retention of both grants have been satisfied and therefore the full amount has been recognised in the Income Statement.

4  Staff costs

a)  Staff costs for the Group during the year (including directors)

	Notes	2022 £'000	2021 Restated £'000
Salaries, wages and short-term employee benefits		68,043	55,282
Other pension costs	27	1,613	1,514
Social security costs		3,347	3,009
Share-based payments	28	2,951	1,788
Continuing operations		75,954	61,593
Discontinued operations		8,344	8,384
Total		84,298	69,977

The prior period numbers have been restated to present Cory Brothers and AqualisBraemar within discontinued operations.  The numbers above include remuneration and pension entitlements for each director.

b)  Average number of full-time employees

	2022 number	2021 Restated number
Shipbroking	322	323
Financial	22	23
Central	18	13
Continuing operations	362	359
Discontinued operations	190	178
Total	552	537

The directors' remuneration is borne by Braemar Shipping Services Plc.

c)  Key management compensation

The remuneration of key management is set out below. Key management represents the board of the Company.

	2022 £'000	2021 £'000
Salaries, short-term employee benefits and fees	3,484	3,410
Other pension costs	41	68
Share-based payments	521	71
Total	4,046	3,549

Retirement benefits are accruing to three (2021: three) members of key management in respect of a defined contribution pension scheme.

5  Auditor's remuneration

A more detailed analysis of the auditor's services is given below:

	2022 £'000	2021 £'000
Audit services
- Fees payable to the Company's auditor for audit of the Company and Group Financial Statements	540	288
Fees payable to the Group's auditor and its associates for other services:
- The audit of the Group's subsidiaries pursuant to legislation	334	435
- Other service - interim review	86	70
	960	793

All fees paid to the auditor were charged to operating profit in both years.

6  Finance income and costs

	Note	2022 £'000	2021 Restated £'000
Finance income:
- Gain on modification of deferred consideration	8	172	-
- Interest on bank deposits		9	70
- Interest on IFRS 16 lease receivables		72	86
Total finance income		253	156
Finance costs:
- Interest payable on rolling credit and pooled overdraft facilities		(758)	(912)
- Interest payable on pooled overdraft facilities		(98)	(107)
- Interest payable on convertible loan notes		(52)	(214)
Subtotal finance costs before IFRS 16 lease liabilities		(908)	(1,233)
- Interest on IFRS 16 lease liabilities		(329)	(409)
Total finance costs		(1,237)	(1,642)
Finance costs - net (continuing operations only)		(984)	(1,486)

The finance costs for the prior year have been restated (see Note 34 ), and the analysis of the finance income and expenses has been amended.

7  Taxation

a)  Analysis of charge in year

	2022 £'000	2021 Restated £'000
Current tax
UK corporation tax charged to the Income Statement	-	-
UK adjustment in respect of previous years	335	355
Overseas tax on profits in the year	3,432	2,003
Overseas adjustment in respect of previous years	(517)	(136)
Total current tax	3,250	2,222
Deferred tax
UK current year origination and reversal of temporary differences	377	(909)
Due to change in rate of tax	(473)	(96)
UK adjustment in respect of previous years	(41)	573
Overseas current year origination and reversal of temporary differences	(95)	(385)
Overseas adjustment in respect of previous years	(313)	3 95
Total deferred tax	(545)	(422)
Taxation	2,705	1,800
Taxation on continuing operations	1,839	1,574
Taxation on discontinued operations	866	226
Taxation	2,705	1,800

Included within the UK current year origination and reversal of temporary differences is a credit of £348,000 (2021: £100,000 debit on actuarial gain) in respect of deferred tax on the actuarial loss on the Group's defined benefit pension scheme.

Reconciliation between expected and actual tax charge	2022 £'000	2021 Restated £'000
Profit before tax from continuing operations	8,543	5,136
Profit before tax at standard rate of UK corporation tax of 19% (2021: 19%)	1,623	976
Utilisation of deferred tax asset at lower effective tax rate	69	(185)
Net expenses not deductible for tax purposes	843	202
Utilisation of previously unrecognised losses	(478)	(73)
Tax on overseas branch	234	-
Tax calculated at domestic rates applicable to profits in overseas subsidiaries	392	292
Other differences leading to a (decrease)/increase in tax	4	-
Temporary differences*	93	(1,187)
Prior year adjustments**	(941)	1,549
Total tax charge for the year	1,839	1,574

*Included within temporary differences are movements related to share options, cash flow hedges and IFRS 16.

** Included within Prior year adjustments is release of overprovided corporation tax creditor of £0.8m in respect of Singapore following a tax rate change from 17.0% to 10.5%.

The year ended 28 February 2021 has been restated for the presentation of Cory Brothers and AqualisBraemar as discontinued operations. Included within the total tax charge is £0.5m (2021: £0.2m) in respect of specific items disclosed separately on the face of the Income Statement. See Note 8.

A tax charge of £0.3m (2021: £nil) is included in the results for discontinued operations as a result of the trading loss contained therein (see Note 9). This tax charge arose mainly as a result of the trading profits of Cory Brothers.

Reconciliation between expected and actual tax charge	2022 £'000	2021 Restated £'000
Profit before tax from discontinued operations	8,081	1,196
Profit before tax at standard rate of UK corporation tax of 19% (2021: 19%)	1,535	227
Due to change in rate of tax	6	23
(Net gains)/net expenses not (taxable)/deductible for tax purposes	(1,098)	882
Utilisation of losses	(74)	(177)
Other differences leading to (decrease)/increase in tax	3	-
Temporary differences*	88	(367)
Other prior year adjustments	406	(362)
Total tax charge/(credit) for the year	866	226

b)  Amounts recognised in OCI

	2022 £'000	2021 Restated £'000
Items that will not be reclassified to profit or loss
Actuarial gain/(loss) in respect of defined benefit pension scheme	1,391	(524)
Deferred tax asset on defined benefit pension scheme	(348)	100
Movement in opening balance due to change in rate of tax	275	-
Sub-total	(73)	100
		-
Total	1,318	(424)
Items that will be reclassified to profit or loss
Cash flow hedge	(2,482)	2,210
Deferred tax liability on cash flow hedge	620	(420)
Movement in opening balance of tax due to change in rate of tax	(106)	-
Sub-total	514	(420)
Total	(1,968)	1,790
Total tax recognised in OCI	441	(320)
Total amounts recognised in OCI	(650)	1,366

c)  Deferred tax asset

Deferred Tax )/Asset
	Accelerated Capital Allowances	Trading Losses	Other provisions	Employee Benefits	Total
At 1 March 2020	573	316	2,331	400	3,620
(Charge)/Credit to Statement of Total Comprehensive income	(493)	430	(1,255)	918	(400)
Credit to equity	-	-	(320)	-	(320)
At 28 February 2021	80	746	756	1,318	2,900
Charge to Statement of Total Comprehensive income	(128)	(498)	428	569	371
Charge to equity	-	-	442	-	442
Balance at end of year	(48)	248	1,626	1,887	3,713

The movement in the deferred tax asset	2022 £'000	2021 Restated £'000
Balance at beginning of year	2,900	3,620
Movement to Income Statement
Adjustments in respect of prior years	180	(968)
Movement in opening balance due to change in rate of tax 25%/19%	472	200
Arising on pension costs	(94)	28
Arising on other	(187)	340
Total movement to Income Statement	371	(400)
Movement to equity and other comprehensive income
Movement in opening balance due to change in rate of tax 25%/19%	169	-
Related deferred tax asset	273	(320)
Total movement to equity and other comprehensive income	442	(320)
Balance at end of year	3,713	2,900

A deferred tax asset of £3.7m (2021: £2.9m) has been recognised as the directors believe that it is probable that there will be sufficient taxable profits in the future to recover the asset in full.

d)  Deferred tax liability

Analysis of the deferred tax liabilities	As at 28 Feb 2022 £'000	As at 29 Feb 2021 £'000
Temporary differences	-	(174)
Balance at end of year	-	(174)

The movement in the deferred tax liability	As at 28 Feb 2022 £'000	As at 28 Feb 2021 £'000
Balance at beginning of year	(174)	(903)
Movement in opening balance due to change in rate of tax	-	(104)
Adjustment in respect of previous years	174
Movement to Income Statement	-	833
Balance at end of year	-	(174)

No deferred tax has been provided in respect of temporary differences associated with investments in subsidiaries and interests in joint ventures where the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future. The aggregate amount of temporary differences associated with investments in subsidiaries, for which a deferred tax liability has not been recognised, is approximately £0.1m (2021: £0.1m).

8  Specific items

The following is a summary of specific items incurred. Each item meet the definition of specific items detailed in Note 1 y) , and has an impact on the reported results for the year that is considered material either by size or nature and is not expected to be incurred on an ongoing basis and, as such, will not form part of the underlying profit in future years.

	2022 £'000	2021 Restated £'000
Other operating costs
Impairment of ROU assets	(392)	(210)
(Loss)/profit on sublet of office	-	(52)
	(392)	(262)
Acquisition-related items
- Acquisition of Naves Corporate Finance GmbH	(122)	(552)
- Naves tax reimbursement	-	115
- Acquisition of ACM Shipping Group plc	-	(115)
- Acquisition of Atlantic Brokers Holdings Limited	-	(283)
	(122)	(835)
Discontinued operations
- Wavespec	(1,787)	(754)
- Cory Brothers	4,134	-
- AqualisBraemar	3,375	2,237
	5,722	1,483
Other items
Finance income - credit on modification of deferred consideration	172	-
Finance costs	-	(432)
Taxation	-	198
Total	5,380	152

Other operating costs

In the year, a loss of £0.4m was recognised in other operating costs arising from the impairment to a right-of-use asset in respect of a London office which was vacated by AqualisBraemar LOC ASA (see Note 16 for more details).  In the prior year there was an impairment charge of £0.3m, of which £0.2m arose on the same London office and £0.1m loss on disposal in respect of the Group subletting a portion of its Singapore office space to AqualisBraemar LOC ASA.

Acquisition-related items

The Group incurred total costs of £0.1m (2021 restated: £0.8m) in respect of acquisition-related items.

Expenditure of £0.1m (2021: £0.6m) is directly linked to the acquisition of Naves Corporate Finance GmbH. This includes charges of £0.1m (2021: 0.1m) related to foreign exchange translation of Euro liabilities The prior year expenditure linked to the acquisition of Naves Corporate Finance GmbH also included charges of £0.3m in respect of interest and £0.4m of post-acquisition remuneration payable to certain vendors under the terms of the acquisition agreement., and a credit of £0.1m which was included in respect of a reimbursement from the sellers of certain expenses incurred by the Financial Division prior to acquisition.

In the prior year, expenditure of £0.1m was incurred in relation to the restricted share plan implemented to retain key staff following the merger between Braemar Shipping Services Plc and ACM Shipping Plc. The restricted share plan expired in July 2020 and no further amounts were charged to the income statement.

Also in the prior year expenditure of £0.3m was directly linked to the acquisition of Atlantic Brokers Holdings Limited in respect of incentive payments to working sellers. The cash payment was made in the year to 28 February 2018 but was subject to clawback provisions if the working sellers were to leave employment of the Group before 28 February 2021. The cost was charged to the income statement over the clawback period and no further amounts were charged to the income statement after 28 February 2021.

Discontinued operations

The Group recognised a net gain of £5.7m on the disposal of discontinued operations (2021: £1.5m).

Gains on the disposal of Cory Brothers, AqualisBraemar and Wavespec of £4.1m, £3.4m and £0.6m respectively, were offset by an impairment charge of £2.4m on the consideration due in respect of Wavespec. See Note 9 .

Other specific items

On 3 June 2021 the Group completed a restructuring of the deferred consideration amounts in relation to the acquisition of Naves. This resulted in a gain on modification of £0.2m which is classified as specific finance income (see Note 14 ).

In the prior year £0.4m of interest charges related to the Group's revolving credit facility were included in finance costs. These charges relate to interest payable on tranches of the revolving credit facility that were used to fund the acquisition of Naves Corporate Finance GmbH.  This interest charge is not considered to be a specific item in the current year.

In the prior year, a tax credit of £0.2m was recognised in respect of specific items which are allowable for UK corporation tax purposes.

9  Discontinued operations

During the year the Group has sold its Engineering Division, Wavespec, its Logistics Division, Cory Brothers, and its entire shareholding in AqualisBraemar.

a) Post-tax profit / loss related to discontinued operations

		2022			2021 Restated
		Underlying £'000	Specific £'000	Total  '000	Underlying £'000	Specific £'000	Total  '000
Wavespec		(146)	(1,787)	(1,933)	(1,706)	(754)	(2,460)
Cory Brothers		1,563	4,134	5,697	938	-	938
AqualisBraemar		76	3,375	3,451	255	2,237	2,492
Profit / (loss)		1,493	5,722	7,215	(513)	1,483	970

Wavespec

On 31 March 2021, the Group completed the sale of Wavespec, which was classified as held for sale at 28 February 2021. A gain of £0.6m was recognised on disposal. The sale was for maximum consideration of £2.6m which was expected to be satisfied by the issuance of a promissory note with a maturity date of 31 March 2026. The disposal agreement contained an obligation for the buyer to secure the note by providing a standby letter of credit issued by an international bank with an acceptable credit rating. Should they fail to deliver such a letter of credit, the Group could elect to receive a sum of cash of £0.5m from the buyer with the balance of the note of £2.1m remaining unsecured. The fair value of the consideration was £2.4m (see Note 14 for details of assessment of discount rate). At 28 February 2022, the buyer had not delivered a secured letter of credit nor had the cash sum of £0.5m been received. Management believe that the consideration (fair value of £2.4m) is unlikely to be received and consequently has been provided in full (charge of £2.4m).

	Year ended 28 Feb 2022 £'000	Year ended 28 Feb 2021 £'000
Underlying
Revenue	15	1,661
Costs	(161)	(3,367)
Trading loss before tax	(146)	(1,706)
Taxation	-	-
Underlying loss for the year from Wavespec	(146)	(1,706)
Specific items
Impairment to fair value and other disposal costs	(7)	(754)
Gain on disposal	594	-
Credit impairment charge	(2,374)	-
Loss from specific items	(1,787)	(754)
Loss for the year from Wavespec	(1,933)	(2,460)

No taxation arises in relation to this discontinued operation as Wavespec was loss making.

A reconciliation of the derecognition of the Wavespec assets held for sale to gain on disposal is as follows:

		£'000
Intangibles		90
Property plant and equipment		1
Cash		53
Trade and other receivables		292
Trade and other payables		(271)
Net assets held for sale disposed of		165

		£'000
Disposal proceeds		2,374
Net assets disposed of		(165)
Loan waiver		(1,006)
Disposal related costs		(609)
Gain on disposal of Wavespec		594

Intercompany loans totalling £1.0m were owed to the Group from Wavespec were waived on disposal.

There were no cash proceeds from disposal in the period.

Cory Brothers

On 28 February 2022 the Company sold Cory Brothers to Vertom Agencies BV for a maximum consideration of £15.5 million. 

Although legal completion occurred on 28 February 2022, the initial cash proceeds of £6.5 million were not received till post year-end and are presented within trade and other receivables at the year end (see Note 21 ).

In addition, three further cash payments are due based on a percentage of the gross profit of the combined VertomCory business. Each of the three earnout payments is subject to a minimum and a maximum. The minimum aggregate earnout payment is £3.75 million and the maximum aggregate earnout payment is £9.0 million.  The current estimate of the fair value of the deferred and contingent consideration is £4.8 million, which is presented within long-term receivables (more detail on the calculation of the deferred consideration is included in Note 14 ).

The profit on disposal including foreign exchange recycling totalled £4.2m.

	Year ended 28 Feb 2022 £'000	Year ended 28 Feb 2021 £'000
Underlying
Revenue	45,215	28,083
Costs	(42,759)	(26,892)
Trading profit before tax	2,456	1,191
Finance income	9	14
Finance expense	(36)	(41)
Profit before taxation	2,429	1,164
Taxation	(866)	(226)
Underlying profit from Cory Brothers	1,563	938
Specific items
Gain on disposal	4,134	-
Total profit from Cory Brothers	5,697	938

A reconciliation of the derecognition of the Cory Brothers assets held for sale to gain on disposal is as follows:

		£'000
Goodwill		3,645
Intangibles		1,190
Property plant and equipment		1,220
Investments		119
Cash		12,353
Trade and other receivables		15,110
Trade and other payables		(27,042)
Net assets held for sale disposed of		6,595

		£'000
Disposal proceeds		11,258
Net assets disposed of		(6,595)
Disposal related costs		(492)
FX recycling		(37)
Gain on disposal of Cory Brothers		4,134

The disposal proceeds of £11.3 million are included on the Balance Sheet as follows:

-  £6.5m of completion cash proceeds recognised in current other receivables, see Note 21. The cash was received on 2 March 2022.

-  £3.6m of deferred consideration recognised in non-current other receivables, see Note 20. Deferred consideration receivable comprises of the minimum earnout consideration due to the Group as per the SPA and is not contingent on the future performance of the VertomCory business.

-  £1.2m of contingent consideration recognised in non-current other receivables, see Note 20. Contingent consideration receivable represents the balance of the earnout consideration above the guaranteed minimum and up to a maximum specified in the SPA which is contingent on the future gross profits of the VertomCory business.

A sensitivity analysis of the contingent consideration to changes in the gross profits and discount rate is provided in Note 14 .

AqualisBraemar

The Group recognised its minority shareholding in AqualisBraemar as an investment in associate until its disposal on 19 May 2021.

The Group's share of profit of associate and the profit on disposal including foreign exchange recycling totalled £3.5m, the disposal of 9,600,000 shares in AqualisBraemar LOC ASA in the preceding year gave rise to a gain of £1.8m (see Note 19 ). In the prior year the Group recognised a gain of £0.8m on a rights issue from AqualisBraemar LOC ASA and a loss of £0.4m on the fair value movement of warrants to acquire further shares in AqualisBraemar. There was a matching gain recognised in the financial statements of AqualisBraemar, and the Group's share of this gain was £0.1m and is also presented within specific items.

	Year ended 28 Feb 2022 £'000	Year ended 28 Feb 2021 £'000
Underlying
Share of associate profit for the period - trading	76	255
Specific items
Gain on rights issue	-	826
Share of associate profit for the period - fair value movement in warrants	-	91
Movement in fair value on warrants	-	(438)
Profit on disposal	3,375	1,758
Profit from specific items	3,375	2,237
Total profit for the period from AqualisBraemar	3,451	2,492

b)  Earnings per share in respect of discontinued operations

The basic and diluted earnings per share in respect of discontinued operations were as follows:

	Year ended 28 Feb 2022	Year ended 28 Feb 2021
Basic earnings per share	23.62p	3.09p
Diluted earnings per share	19.24p	2.56p

c)  Cash flows in respect of discontinued operations

During the year the discontinued operations had net operating cash inflows of £7.3m (2021: net operating cash outflows of £4.3m). There were net cash outflows of £4.7.m (2021: nil) relating to investing activities, which includes the £7.2m proceeds from the sale of AqualisBraemar shares less the combined cash of £12.4m held within Wavespec and Cory Brothers at the time of their disposal.  No cash proceeds were received in the period in respect of the disposal of either Wavespec or Cory Brothers.

d)  Assets and liabilities held for sale

The major classes of assets and liabilities comprising the operations held for sale are as follows:

	Year ended 28 Feb 2022 £'000	Year ended  28 Feb 2021 £'000
Intangibles	-	90
Property plant and equipment	-	1
Cash	-	53
Trade and other receivables	-	292
Assets held for sale	-	436
Trade and other payables	-	(125)
Liabilities directly associated with assets classified as held for sale	-	(125)
Net assets of discontinued operations	-	311

All assets and liabilities held for sale at 28 February 2021 related to Wavespec. An impairment to fair value less costs to sell of £432,000 was pro-rated across intangibles and property, plant and equipment at 28 February 2021.

10  Dividends

Amounts recognised as distributions to equity holders in the year:

	2022 £'000	2021 £'000
Ordinary shares of 10 pence each
Final dividend of 5.0 pence per share for the year ended 28 February 2021 (2020: nil)	1,499	-
Interim dividend of 2.0 pence per share (2021: nil)	610	-
	2,109	-

The dividends paid by the Group during the year ended 28 February 2022 totalled £2.1 million (7.0 pence per share) which comprised a final dividend in respect of the year ended 28 February 2021 of £1.5 million (5.0 pence per share) paid on 1 September 2021 and an interim dividend for the year ended 28 February 2022 of £0.6 million (2.0 pence per share) paid on 16 December 2021.  The right to receive dividends on the shares held in the ESOP has been waived (see note 29 ).  The dividend saving through the waiver is £0.1m (2021: nil).  No dividends were paid by the Group during the year ended 28 February 2021.

The Company has become aware of an administrative oversight during the year ended 28 February 2022, whereby the Company did not properly prepare and file unaudited interim accounts at Companies House, as required by the Companies Act 2006, prior to declaring and paying distributions to shareholders in respect of the Company's 1 September 2021 final dividend and 16 December 2021 interim dividend. As a result of this administrative oversight, the Company did not comply with certain provisions of the Act and, whilst there were sufficient distributable reserves to make the relevant distributions, they were therefore paid in technical infringement of the Act. Neither the amount nor payment of the relevant distributions, nor the Company's prior audited accounts, are affected by this, nor is there any impact on the Company's financial position either at the time of payment(s) or now.

The Company has proposed a resolution to be considered when the Annual General Meeting re-convenes on 6 October 2022 which will, if passed, give the board authority to enter into deeds of release to discharge these parties from any obligation to repay any amount to the Company in connection with the Relevant Distributions. The Company has not recorded the potential right to make claims against shareholders as an asset or a contingent asset in its financial statements. The directors of the Company have concluded that any inflow of economic benefits as a result of such claims is less than probable.

For the year ended 28 February 2022, a final ordinary dividend of 7.0 pence per share has been proposed totalling £2.3 million.

11  Earnings per share

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, excluding 2,731,893 ordinary shares held by the Employee Share Ownership Plan (2021: 588,127 shares) which are treated as cancelled.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive ordinary shares. The Group has one class of dilutive ordinary shares, being those options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year. The Group has other potential dilutive ordinary shares, including convertible loan notes, however these are not currently dilutive because the exercise price is less than the Group's current share price.

Total operations	2022 £'000	2021 Restated £'000
Profit for the year attributable to shareholders	13,919	4,532

	Pence	pence
Basic earnings per share	45.56	14.45
Effect of dilutive share options	(8.43)	(2.50)
Diluted earnings per share	37.13	11.95

Underlying operations	2022 £'000	2021 Restated £'000
Underlying profit for the year attributable to shareholders	8,539	4,380

	pence	pence
Basic earnings per share	27.95	13.96
Effect of dilutive share options	(5.17)	(2.41)
Diluted earnings per share	22.78	11.55

Underlying continuing operations	2022 £'000	2021 Restated £'000
Underlying profit for the year from continuing operations	7,046	4,893

	pence	pence
Basic earnings per share	23.06	15.60
Effect of dilutive share options	(4.27)	(2.69)
Diluted earnings per share	18.79	12.91

Continuing operations	2022 £'000	2021 Restated £'000
Profit from continuing operations for the year attributable to shareholders	6,704	3,562

	pence	pence
Basic earnings per share	21.94	11.36
Effect of dilutive share options	(4.06)	(1.96)
Diluted earnings per share	17.88	9.40

The weighted average number of shares used in basic earnings per share is 30,552,532 (2021: 31,366,379).

The weighted average number of shares used in the diluted earnings per share is 37,490,784 (2021: 37,914,547) after adjusting for the effect of 6,938,253 (2021: 6,548,168) dilutive share options.

12  Goodwill

	£'000
Cost
At 29 February 2020	91,471
Exchange adjustments	143
At 28 February 2021	91,614
Disposal of Cory Brothers	(3,645)
Exchange adjustments	(419)
At 28 February 2022	87,550
Accumulated impairment
At 28 February 2022 and 28 February 2021	7,659
Net book value at 28 February 2022	79,891
Net book value at 28 February 2021	83,955

All goodwill is allocated to cash-generating units. The allocation of goodwill to cash-generating units is as follows:

	2022 £'000	2021 £'000
Shipbroking	68,696	68,696
Financial	11,195	11,614
Logistics	-	3,645
	79,891	83,955

These cash-generating units represent the lowest level within the Group at which goodwill is monitored for internal management purposes.

All goodwill is denominated in the Group's reporting currency, with the exception of the Financial Division which is denominated in Euros. Goodwill denominated in foreign currencies is revalued at the Balance Sheet date. The exchange adjustment at 28 February 2022 was a loss of £419,000 (2021: gain of 143,000).

The Logistics Division, Cory Brothers, was disposed of on 28 February 2022, the goodwill previously held in respect of this cash-generating unit was therefore disposed of. See Note 9.

The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined based on value-in-use calculations. The use of this method requires the estimation of future cash flows and the determination of a discount rate in order to calculate the present value of the cash flows. The results of the impairment tests are as follows:

a) Shipbroking

The post-tax discount rate was determined from the post-tax weighted average cost of capital calculation which was not based on an entity-specific capital structure.

The estimated cash flows were based on the approved annual budget for the next financial year and projections for the following four years which are based on management's estimates of revenue growth and cost inflation which reflect past experience and management's expectation of future events given the specific risks and economic and market conditions of each cash-generating unit. Cash flows have been used over a period of five years as management believes this reflects a reasonable time horizon for management to monitor the trends in the business. After five years a terminal value is calculated using a long-term growth rate of 1.7% (2021: 1.0%) Revenue growth rates have increased year on year for Shipbroking reflecting increased inflation.  The key assumptions and resulting net present values are as follows:

Shipbroking	2022	2021
Post-tax discount rate	10.87%	9.10%
Equivalent pre-tax discount rate	13.19%	10.76%
Average revenue growth rate	5.0%	3.0%
Operating profit margin years 2-5	12.5 - 16.1%	11.2 - 21.9%

At 28 February 2022, the net present value of the Shipbroking Division is significantly higher than the carrying value of the goodwill in respect of this cash-generating unit. At the Balance Sheet date, management concluded that there were no reasonably possible changes in the key assumptions used in the impairment review that would reduce headroom to nil or result in an impairment.

b) Financial

The post-tax discount rate for the Financial Division includes an additional premium of 1.5% to reflect the Group's risk assessment of this cash-generating unit, for which revenues are harder to forecast than in the rest of the Group.

The estimated cash flows were based on the approved annual budget for the next financial year and projections for the following four years which are based on management's estimates of revenue growth and cost inflation which reflect past experience and management's expectation of future events given the specific risks and economic and market conditions of each cash-generating unit. Cash flows have been used over a period of five years as management believes this reflects a reasonable time horizon for management to monitor the trends in the business. After five years a terminal value is calculated using a long-term growth rate of 1.7% (2021: 0.6%).  Revenues for the Financial Division are challenging to forecast because of the highly variable nature of this revenue stream.  Growth rates used in the value in use tests reflect this variability and were based on the best estimates of the senior management team in Financial. There is expected to be one year in the following four where there is a decline in performance during which time future deals will be entered into to secure the following years as well as one exceptional and one average year of performance.

Financial	2022	2021
Post-tax discount rate	12.37%	10.60%
Equivalent pre-tax discount rate	15.01%	14.94%
Average revenue growth rate	8.0%	3.5%
Operating profit margin years 2-5	34.5% - 45.6%	23.1 - 25.8%

Sensitivity to impairment

The tests performed indicated aggregate headroom over the carrying value of the goodwill in both cash-generating units. To test the sensitivity of the results of the impairment review, the calculations have been re-performed, flexing the three key assumptions:

-  revenue growth;

-  post-tax discount rate; and

-  underlying operating profit

			Change in revenue growth		Change in discount rate		Change in underlying operating profit
			+1%	-1%	+1%	-1%	+5%	-5%
			£'000	£'000	£'000	£'000	£'000	£'000
Shipbroking			12,339	(12,275)	(16,026)	16,022	7,854	(7,125)
Financial			2,079	(1,992)	(1,945)	2,344	1,496	(1,496)

The results showed that in all scenarios the net present values of the cash-generating units were still in excess of the carrying value in all stressed scenarios and therefore there was no indication of impairment.  The breakeven point, i.e. the point where the headroom over the carrying value is zero is reached by a reduction in average revenue growth rate of 4.0% / 6.4% for Shipbroking and Financial Divisions respectively and by increasing the pre-tax discount rate by +12.8% for Shipbroking and +3.8% for Financial.

Management does not believe that climate-related risks or the potential impact of climate change on the Group's operations would affect the recoverability of goodwill in either of the cash-generating units (see Note 1 d) .

13  Other intangible assets

	Computer  software £'000	Research and development £'000	Other  intangible assets £'000	Total £'000
Cost
At 29 February 2020	5,805	836	11,005	17,646
Additions	643	-	-	643
Reclassified as held for sale	(28)	(836)	-	(864)
At 28 February 2021	6,420	-	11,005	17,425
Additions	515	-	-	515
Disposal of Cory Brothers	(1,344)	-	(1,480)	(2,824)
Exchange rate adjustments	(5)	-	-	(5)
At 28 February 2022	5,586	-	9,525	15,111
Amortisation
At 29 February 2020	4,379	224	10,632	15,235
Charge for the year	404	-	-	404
Reclassified as held for sale	(14)	(224)	(111)	(349)
Exchange adjustments	6	-	-	6
At 28 February 2021	4,775	-	10,521	15,296
Charge for the year	346	-	107	453
Disposal of Cory Brothers	(275)	-	(1,359)	(1,634)
Exchange adjustments	(1)	-	-	(1)
At 28 February 2022	4,845	-	9,269	14,114
Net book value at 28 February 2022	741	-	256	997
Net book value at 28 February 2021	1,645	-	484	2,129

Other intangible assets brought forward from the prior year relate to forward books of income acquired in acquisitions which are being amortised over the period that the income is being recognised; customer relationships which are amortised over a period of five years; and brand which is being amortised over ten years.

At 28 February 2022, the Group had no contractual commitments for the acquisition of computer software (2021: £nil).

14  Deferred and contingent consideration receivable

Fair value of Cory Brothers deferred and contingent consideration receivable

On 28 February 2022 the Company sold Cory Brothers to Vertom Agencies BV for maximum consideration of £15.5m. Initial cash proceeds of £6.5m were received on completion of the transaction, three further cash payments are due contingent on an agreed percentage of future gross profit of the combined VertomCory business. These "earnout" payments are subject to a combined minimum of £3.75m and a combined maximum of £9.0m.

The completion payment of £6.5m is included in trade and other receivables (see Note 21 ).

Each agreed minimum earnout payment is presented as deferred consideration recognised at amortised cost, using a discount rate of 2.39%.  The uncertain element of each earnout payments is recognised at fair value through profit or loss and presented as contingent consideration.  The fair value is calculated using the forecast gross profit for the combined VertomCory business for each earnout period, applying the agreed percentage and discounting the forecast cashflow using the discount rate of 2.39%.  Deferred and contingent consideration are included in other long-term receivables (see Note 20 ).

The current estimate of the fair value of the deferred consideration is £4.8m. The fair value of the contingent consideration involves two critical estimates; the future profitability of the combined business and the discount rate used to calculate the net present value. The future profitability forecasts are based on a business plan prepared by the combined VertomCory business and was reviewed by management as part of the financial due diligence process. A discount rate of 2.39% was used to calculate the net present value, this was based on the credit risk of Vertom Agencies BV following a credit check performed by management.

Sensitivity analysis

Management have considered the sensitivity of the contingent consideration receivable to both changes in the estimate of future profitability of the VertomCory agency business, and the discount rate selected.

					Sensitivity to the estimate of future gross profits of the VertomCory agency business			Sensitivity to change in the discount rate selected
	Carrying value as at 28 February 2022	Discounted value as at 28 February 2022		Decrease by 10%		Increase by 10%	Decrease by 1% p.a.		Increase by 1% p.a.
	£'000s	£'000s		£'000s		£'000s	£'000s		£'000s
Payment due on 31 May 2023	336	326		(139)		140	4		(4)
Payment due on 31 May 2024	433	411		(167)		166	9		(9)
Payment due on 31 May 2025	507	469		(169)		170	16		(14)
Total	1,276	1,206		(475)		476	29		(27)

The 10% increase/decrease in future gross profits of the VertomCory agency business considered in the sensitivity analysis is selected to reflect a reasonably likely variation in outcomes, which lie within range covered by the minimum and maximum earnout thresholds.  The change in discount rate considered reflects the observed range of three-year GBP corporate bond rates with similar credit risk.

15  Deferred consideration payable

Acquisition of Naves Corporate Finance GmbH

In September 2017, the Group acquired the entire share capital of Naves Corporate Finance GmbH ("Naves"). Naves was an established and successful business, headquartered in Hamburg, Germany, which advises national and international clients on corporate finance related to the maritime industry including restructuring advisory, corporate finance advisory, M&A, asset brokerage, interim/pre-insolvency management and financial asset management including loan servicing.

The accounting values for the deferred consideration and associated payments to management sellers are set out in Note 25. These amounts are subject to a prior period adjustment set out in Note 34.

The acquisition agreement provided for consideration of £16.0m (€18.4m) payable as follows:

i)  at completion in cash £7.3m (€8.3m), in shares £1.3m (€1.5m) and in convertible loan notes £6.4m (€7.4m); and

ii)  deferred consideration in cash of £0.5m (€0.6m) and convertible loan notes of £0.5m (€0.6m), payable in instalments over the three years after the acquisition.

No consideration was contingent consideration. As at 28 February 2022, there is nil outstanding deferred consideration (2021:nil) to non-management sellers.

The acquisition agreement also provided deferred amounts that would be payable to management sellers, conditional on their ongoing service in the business. IFRS 3 states that amounts paid to former owners which are conditional on ongoing service are for the benefit of the acquirer and not for the benefit of former owners. Consideration linked to the ongoing service of former owners is treated as remuneration for post-combination services and classified as acquisition-related expenditure under specific items in the Income Statement.

The deferred amounts payable to management sellers comprised:

i)  deferred cash of £1.3m (€1.5m) and deferred convertible loan notes of £4.3m (€4.9m) conditional only on the individual management seller's continued service payable in instalments over the five years after the acquisition; and

ii)  deferred convertible loan notes of up to £9.4m (€11.0m) conditional on the individual management seller's continued service and the post-acquisition Naves' EBIT in the three years post-acquisition. By February 2021, there was no contingency remaining and the total amount paid was £4.6m (€5.3m).

At February 2022 £0.5m (2021: £1.0m) of amounts to management sellers were subject to future service conditions, of which £0.5m (2021: £0.9m) had been accrued.  This accrual is presented within deferred consideration.

The tables below relate the amounts payable under the sale and purchase agreement to the values reflected in the balance sheets of the group and parent company.  The comparative values have been restated, and further details of the restatement are provided in Note 34 .

Nominal value of NAVES deferred consideration		2022		2022		2021		2021
(All denominated in Euros)		£'000		€'000		£'000		€'000
		Historical*				Historical*
Amounts paid on acquisition
Convertible loan notes settled in cash at maturity		6,430		7,400		6,430		7,400
Shares		1,308		1,505		1,308		1,505
Cash		7,172		8,254		7,172		8,254
Total consideration paid on acquisition		14,910		17,159		14,910		17,159
Settled deferred consideration
Deferred cash settled		549		632		549		632
Convertible loan notes settled in cash at maturity		359		421		183		211
Deferred consideration settled		908		1,053		732		843
Deferred consideration convertible loan notes on balance sheet		191		211		367		421
Total deferred consideration		1,099		1,264		1,099		1,264
Total consideration for the business combination		16,009		18,423		16,009		18,423
						2021		2021
						£'000*		€'000
						Historical*
Variable amounts paid and payable for post-acquisition services						4,636		5,328
Fixed amounts paid and payable for post-acquisition services						5,614		6,431
Total amounts paid and payable for post-acquisition services						10,250		11,759
Total consideration for the business combination						16,009		18,423
Total due under the NAVES acquisition agreement						26,259		30,182
Potential variable payments not incurred								5,672
Working capital adjustment on acquisition								(854)
Maximum consideration disclosed in shareholder circular								35,000

*Pounds sterling values are presented at the period end closing rate.

Post-acquisition remuneration of £0.2m associated with the acquisition were incurred during the year ended 28 February 2022 (2021: £0.2m) and have been classified as acquisition-related expenditure under specific items in the Income Statement. See Note 8 .

Acquisition of Atlantic Brokers Holdings Ltd

In February 2018 the Group acquired the entire share capital of Atlantic Brokers Holdings Ltd, the holding company for Atlantic Brokers Ltd (together, "Atlantic").

The cash payment was made in the year to 28 February 2018 but was subject to clawback provisions if the working sellers were to leave employment of the Group before 28 February 2021. The cost was charged to the income statement over the clawback period and no further amounts were charged to the income statement after 28 February 2021.

16  Property, plant and equipment

	Leaseholds £'000	Computers £'000	Fixtures and equipment £'000	Total £'000
Cost or fair value
At 29 February 2020	13,818	1,082	2,414	17,314
Additions at cost	1,232	237	260	1,729
Disposals	(784)	(75)	(153)	(1,012)
Reclassification to assets held for sale (Wavespec)	(65)	(385)	(170)	(620)
Exchange differences	107	-	33	140
At 28 February 2021	14,308	859	2,384	17,551
Additions at cost	1,087	315	337	1,739
Disposals	(244)	-	(631)	(875)
Disposal of Cory Brothers	(1,294)	(416)	(478)	(2,188)
Exchange differences	75	6	42	123
At 28 February 2022	13,932	764	1,654	16,350
Accumulated depreciation
At 29 February 2020	2,742	701	1,943	5,386
Charge for the year	2,886	94	318	3,298
Disposals	(397)	(75)	(153)	(625)
Impairment	210	-	-	210
Reclassification to assets held for sale (Wavespec)	(63)	(379)	(170)	(612)
Exchange differences	-	11	42	53
At 28 February 2021	5,378	352	1,980	7,710
Charge for the year	2,663	148	220	3,031
Disposals	(244)	-	(620)	(864)
Impairment	392	-	-	392
Disposal of Cory Brothers	(490)	(300)	(178)	(968)
Exchange differences	(65)	26	10	(29)
At 28 February 2022	7,634	226	1,412	9,272
Net book value at 28 February 2022	6,298	538	242	7,078
Net book value at 28 February 2021	8,930	507	404	9,841

The prior period movement table has been represented to include impairment within accumulated depreciation instead of cost. 

On 28 March 2022, the Group assigned the lease for its Bevis Marks premises to Beat Capital.  The impairment charge of £392,000 is equal to the subsequent loss on assignment of this lease, being the lease assignment premium paid plus the net book value of the ROU asset disposed of less the outstanding lease liability.  At 28 February 2022, the Group had no contractual commitments for the acquisition of property, plant and equipment (2021: nil).

17  Leases

Right-of-use assets

The group leases a number of properties in the jurisdictions from which it operates. In some jurisdictions it is customary for lease contracts to provide for payments to increase each year by inflation and in other property leases the periodic rent is fixed over the lease term. The group also leases certain items of plant and equipment which are typically motor vehicles.  These contracts normally comprise only fixed payments over the lease terms.

	Leaseholds £'000	Fixtures and equipment £'000	Total £'000
At 1 March 2020	9,219	267	9,486
Additions	1,148	37	1,185
Amortisation	(2,494)	(178)	(2,672)
Impairment	(210)	-	(210)
Disposals	(361)	-	(361)
Exchange differences	5	12	17
At 28 February 2021	7,307	138	7,445
Additions	1,036	11	1,047
Amortisation	(2,079)	(77)	(2,155)
Impairment	(392)	-	(392)
Disposals	-	(10)	(10)
Disposal of Cory Brothers	(856)	(51)	(907)
Exchange differences	166	-	166
At 28 February 2022	5,182	11	5,194

Details on the impairment charge of £0.4m are provided in Note 16 .

Lease liabilities

			Total £'000
At 1 March 2020			14,777
Additions			1,185
Interest expense			409
Lease payments			(3,928)
Exchange differences			111
At 28 February 2021			12,554
Additions			814
Interest expense			329
Lease payments			(3,950)
Disposal of Cory Brothers			(1,243)
Exchange differences			1
At 28 February 2022			8,505

Lease receivables

			Total £'000
At 1 March 2020			3,214
Additions			324
Interest income			86
Lease payments			(804)
Exchange differences			7
At 28 February 2021			2,827
Additions			-
Disposal			(236)
Interest income			72
Lease payments			(870)
Disposal of Cory Brothers			(272)
Exchange differences			(9)
At 28 February 2022			1,512

	2022 £'000	2021 £'000
Short-term lease expense	234	282
Short-term lease income	73	73
Low value lease expense	-	-

Lease liabilities

	Within 1 year £'000	1 to 2 Years £'000	2 to 5 years £'000	More than 5 years £'000	Total £'000	Uncharged interest £'000	Net payable £'000
At 28 February 2022	3,431	3,197	2,131	16	8,775	(270)	8,505
At 28 February 2021	3,969	3,431	5,000	623	13,023	(479)	12,544

Lease receivables

	Within 1 year £'000	1 to 2 Years £'000	2 to 5 years £'000	More than 5 years £'000	Total £'000	Unearned interest £'000	Net receivable £'000
At 28 February 2022	642	642	284	-	1,568	(56)	1,512
At 28 February 2021	939	939	1,189	-	3,067	(240)	2,827

18  Investments

	2022 £'000	2021 £'000
Unlisted investments	1,780	1,962

The Group recognises unlisted investments at fair value through profit or loss.

Movement in unlisted investments			Total £'000
At 1 March 2020, and 28 February 2021			1,962
Disposal			(182)
At 28 February 2022			1,780

A list of subsidiary undertakings is included in Note 32 .

The Financial Statements of the principal subsidiary undertakings are prepared to 28 February 2022.

Unlisted investments

The Group's unlisted investments include 1,000 (2021: 1,000) ordinary £1 shares in London Tanker Broker Panel Limited. The investment is carried at fair value of £1.5m, being the value of the most recent comparable transaction, which occurred during the year ended 28 February 2019. There have been no transactions or events in the current or prior year which would result in an adjustment to the fair value at 28 February 2022.

19  Investment in associate

Zuma Labs Limited

On 29 October 2020 the Group subscribed for 1,000 ordinary shares in Zuma Labs Limited. Zuma Labs Limited is a private company incorporated in England and Wales and its registered address is Kemp House, 160 City Road, London, United Kingdom, EC1V 2NX. Zuma Labs Limited has one share class and each share carries one vote.

During the period, in accordance with the shareholders' agreement, three further subscriptions for shares were made totalling of $0.5m (£0.3m), increasing Braemar's shareholding increased by 1,125 shares.

At 28 February 2022 the Group's shareholding was 2,500 shares, which equates to 20.0% of Zuma Labs Limited's share capital and 20.0% of voting rights (2021: 1,375 shares, 12.1% of share capital and 12.1% of voting rights). The Group has representation on the board of Zuma Labs Limited, as a result, the Group considers that it has the power to exercise significant influence in Zuma Labs Limited and the investment in it has been accounted for using the equity method.

A purchase price allocation exercise was undertaken to measure the fair value of the net assets on the date at which Zuma Labs Limited became an associate, and also at each date at which further shares were subscribed for. Based on the purchase price allocation exercise, the difference between the cost of the investment and Braemar's share of the net fair value of Zuma Labs Limited's identifiable assets and liabilities will be accounted for as goodwill. Amortisation of that goodwill is not permitted.

IAS 28 requires the most recent Financial Statements of an associate are used for accounting purposes, and that coterminous information should be used unless it is impractical to do so. Zuma Labs Limited has a year end of 31 March and for practical reasons Zuma Labs Limited's management accounts for the 15 months ended 28 February 2022 will be used for the purposes of the Group's full-year reporting at 28 February with adjustments made for any significant transactions and events.  Zuma Labs Limited will prepare its next set of Financial Statements for the year ended 31 March 2022.  At 28 February 2022 Zuma Labs Limited had no contingent liabilities.

The summarised financial information of Zuma Labs Limited for the period ended 28 February 2022 is as follows. These figures are taken from the management accounts of Zuma Labs Limited, adjusted for any fair value adjustments but before any intercompany eliminations.

	28 Feb 22 £'000
Balance Sheet
Current assets	283
Non-current assets	359
Current liabilities	(45)
Net assets (100%)	597
Group share of net assets (20%)	119
Income Statement
Revenues	-
Post-tax profit	(130)
Total comprehensive income	(19)

Management have reviewed the carrying value of the investment in Zuma Labs Limited at 28 February 2022 and do not consider this to be impaired.

AqualisBraemar

On 21 June 2019 the Group recognised an investment in associate as a result of the divestment of the Offshore, Marine and Adjusting product lines in return for a significant shareholding in AqualisBraemar LOC ASA.  AqualisBraemar LOC ASA is listed on the Oslo Børs, its principal place of business is Oslo and its registered address is Olav Vs gate 6, 0161, Oslo, Norway. AqualisBraemar LOC ASA has one share class and each share carries one vote.

On 28 January 2021 the Group sold 9,600,000 shares and on 19 May 2021 the Group sold its entire remaining shareholding in AqualisBraemar LOC ASA, see Note 9 .  The Group was entitled to representation on the board of AqualisBraemar LOC for as long as the Group's shareholding remains more than 10.0%. Based on this the Group consider that it had the power to exercise significant influence for the year ended 28 February 2021, and until it sold its shareholding on 19 May 2021. At that point significant influence was lost, the Group ceased to equity account for AqualisBraemar and the Group's interest in AqualisBraemar was limited to its holding of 6,523,977 performance-based warrants which were accounted for as a financial asset at fair value.

On 20 August 2021, 1,000,000 of the 6,523,977 warrants vested with the remainder lapsing. A loss on vesting of £2,000 was recognised in specific items. The shares received were subsequently sold on 31 August 2021 crystallising a further loss of £4,000.

At 28 February 2022 the Group's shareholding was nil which equates to 0% of AqualisBraemar's share capital and 0% of voting rights (2021: market value of £6.3m, being 10.42% of share capital and 10.42% of voting rights).

The results of AqualisBraemar are presented within discontinued operations.

The movements in the investment in associates are provided below.

	Zuma £'000	AqualisBraemar £'000	Total £'000
At 1 March 2020	-	7,315	7,315
Cost of investment	418	-	418
Share of profit in associate - underlying	-	255	255
Share of profit in associate - specific	-	91	91
Share of associate's other comprehensive income	-	312	312
Dividends received	-	(641)	(641)
Gain on rights issue	-	826	826
Book value of 9,600,000 shares disposed	-	(3,753)	(3,753)
Foreign exchange movements	-	(1,060)	(1,060)
At 29 February 2021	418	3,345	3,763
Book value of 450 shares acquired	326	-	326
Share of profit in associate - underlying	(20)	76	56
Share of associate's other comprehensive income	-	52	52
Book value of 9,640,621 shares disposed	-	(3,473)	(3,473)
At 28 February 2022	724	-	724

A reconciliation of the book value of the AqualisBraemar shares disposed of to the profit on disposal in Note 9 is as follows:

	19 May 2021	28 Jan 2021
Number of shares sold	9,640,621	9,600,000
Share price NOK	9.00	7.50
	NOK'000	NOK'000
Gross disposal proceeds	86,776	72,000
Broker's commission at 1.5% / 2%	(1,301)	(1,440)
Net disposal proceeds	85,475	70,560
	£'000	£'000
Net disposal proceeds	7,232	5,982
Book value of shares sold	(3,473)	(3,753)
Legal costs	(13)	-
Recycle of amounts in other comprehensive income	(371)	(471)
Profit on disposal	3,375	1,758

20  Other long-term receivables

		Note	2022 £'000	2021 £'000
Other long-term receivables
Deferred consideration		9	3,482	-
Contingent consideration		9	1,276	-
Security deposits			17	34
Finance lease receivables		17	861	1,854
			5,636	1,888

Deferred consideration of £3.6 and contingent consideration of £1.2m relates to the earn-out payments receivable in respect of the disposal of Cory Brothers, further detail is provided in Note 14.

See Note 17 for a maturity analysis which reconciles the long-term finance lease receivables to the undiscounted lease receipts and unearned finance income.

21  Trade and other receivables

	2022 £'000	2021 £'000
Trade receivables	24,970	27,266
Provision for impairment of trade receivables	(3,159)	(2,858)
Net trade receivables	21,811	24,408
Other receivables	13,314	5,567
Finance lease receivables	633	974
Accrued income	1,965	2,570
Prepayments	1,085	1,281
Total	38,808	34,800

Included in other receivables at 28 February 2022 is £6.5 million of completion proceeds relating to the disposal of Cory Brothers. The cash was due on completion of the transaction but was not received into the Group's bank account until 2 March 2022. Also included in other receivables in both years are security deposits, VAT and other sales tax receivables, employee loans and capitalised sign-on bonuses which are being charged to the Income Statement in accordance with the clawback provisions of the underlying contracts.

The total receivables balance is denominated in the following currencies:

	2022 £'000	2021 £'000
US Dollars	23,099	17,804
Sterling	14,451	13,792
Other	1,258	3,204
Total	38,808	34,800

The directors consider that the carrying amounts of trade receivables approximate to their fair value.

Trade receivables are non-interest bearing and are generally on terms payable within 30-90 days; terms associated with the settlement of the Group's trade receivables vary across the Group. Specific debts are provided for where recovery is deemed uncertain, which will be assessed on a case-by-case basis whenever debts are older than the due date, but always when debts are older than usual for the industry in which each business in the Group operates.

As at 28 February 2022, trade receivables of £1,251,000 (2021: £613,000) which were over 24 months old were treated as credit impaired and have been provided for and trade receivables of £757,000 (2021: £613,000) which were between 12 months old and 24 months old were treated as impaired and have been provided for. A provision of £396,000 (2021: £477,000) has been made for specific trade receivables which are less than 12 months overdue.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit risk and ageing. The contract assets have similar risk characteristics to the trade receivables for similar types of contracts.

The expected loss rates are based on the Group's historical credit losses and rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Group's customers.

The ageing profile of trade receivables and the lifetime expected credit loss for provisions and contract assets is as follows:

2022	Trade receivables £'000	Expected loss rate %	Group provision £'000	ECL provision £'000	Total provision for impairment of trade receivables £'000
Up to 3 months	14,562	0.015	100	210	310
3 to 6 months	3,952	0.020	100	77	177
6 to 12 months	4,036	0.051	196	196	392
Over 12 months	2,420	0.591	2,008	243	2,251
Trade receivables	24,970	0.096	2,404	726	3,130
Accrued income	1,965	0.015	-	29	29
Total	26,935	0.028	2,404	755	3,159

2021	Trade receivables £'000	Expected loss rate %	Group provision £'000	ECL provision £'000	Total provision for impairment of trade receivables £'000
Up to 3 months	19,668	0.014	110	275	385
3 to 6 months	2,794	0.022	134	61	195
6 to 12 months	2,906	0.046	233	135	368
Over 12 months	1,898	0.154	1,579	293	1,872
Trade receivables	27,266	0.028	2,056	764	2,820
Accrued income	2,570	0.015	-	38	38
Total	29,836	0.027	2,056	802	2,858

Movements on the provision for impairment of trade receivables and accrued income were as follows:

	2022 £'000	2021 £'000
At 1 March	2,858	3,405
Bad debt charge/(credit)	747	(170)
Receivables written off during the year as uncollectible	(204)	(360)
Transferred on disposal	(242)	-
Reclassified as held for sale	-	(17)
At 28 February	3,159	2,858

22  Financial instruments and risk management

The Group is exposed through its operations to the following financial risks:

-  Currency risk

-  Interest rate risk

-  Credit risk

-  Liquidity risk

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout the Financial Statements.

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

a)  Financial instruments

i)  Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

-  Trade and other receivables

-  Cash and cash equivalents

-  Deferred consideration receivable

-  Contingent receivable

-  Unlisted investments

-  Warrants

-  Trade and other payables

-  Bank overdrafts

-  Revolving credit facility

-  Lease liabilities

-  Forward currency contracts

-  Deferred and contingent consideration

ii) Financial instruments by category

Financial instruments measured at fair value

The Group's financial assets and liabilities measured at fair value through profit and loss, including their fair value hierarchy, are as follows. Fair value is the amount at which a financial instrument could be exchanged in an arm's length transaction, other than in a forced or liquidated sale.

	Level 1 £'000	Level 2 £'000	Level 3 £'000	As at 28 Feb 2022 £'000
Financial assets
Unlisted investments	-	1,500	-	1,500
Contingent consideration receivable	-	-	1,276	1,276
Forward currency contracts*	-	62	-	62
Total	-	1,562	1,276	2,838
Financial liabilities
Forward currency contracts*	-	772	-	772
Embedded derivative	-	-	251	251
Total	-	772	251	1,023

*At 28 February 2022, currency forwards with a fair value of £54,000 maturing within 12 months have been shown as current assets. Currency forwards with a fair value of £8,000 maturing within 12 to 18 months of the Balance Sheet date have been shown as non-current assets. Liabilities include currency forwards with a fair value of £688,000 maturing within 12 months shown as current liabilities and currency forwards with a fair value of £84,000 maturing within 12 to 18 months of the Balance Sheet date shown as non-current liabilities.

	Level 1 £'000	Level 2 £'000	Level 3 £'000	As at 28 Feb 2021 £'000
Financial assets
Unlisted investments	-	1,500	-	1,500
Forward currency contracts**	-	1,773	-	1,773
Warrants	-	-	746	746
Total	-	3,273	746	4,019
Financial liabilities
Embedded derivative (restated)	-	-	56	56
Total	-	-	56	56

**At 28 February 2021, currency forwards with a fair value of £1,573,000 maturing within 12 months have been shown as current assets. Currency forwards with a fair value of £200,000 maturing within 12 to 18 months of the Balance Sheet date have been shown as non-current assets.

Fair value hierarchy

The level in the fair value hierarchy within which the financial asset or liability is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement.

Financial assets and liabilities are classified in their entirety into one of three levels:

-  Level 1:  Quoted prices (unadjusted) in active markets for identical assets or liabilities.

-  Level 2:  Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

-  Level 3:  Inputs for the asset or liability that are not based on observable market data.

Unlisted investment

The unlisted investment relates to the Group's investment in the London Tanker Broker Panel, see Note 17. The investment is carried at fair value, being the value of the most recent comparable transaction and is therefore classified as Level 2 in the fair value hierarchy.

There was no movement in the fair value of the unlisted investment.

Deferred and contingent consideration receivable

The fair value of the deferred and contingent consideration receivable includes unobservable inputs and are therefore classified as Level 3.  The deferred and contingent consideration receivable relates to the disposal of the Logistics Division whereby Braemar is entitled to three future cash payments. The SPA provides for a minimum guaranteed amount in each of the three years, this amount has been classified as deferred consideration. The fair value of the deferred consideration has been determined by discounting the guaranteed minimum amounts as per the SPA to present value using a discount rate of 2.39%. The balance of the earnout consideration is contingent on the future performance of the combined business up to a maximum specified in the SPA, this has been classified as contingent consideration. The fair value of the contingent consideration has been calculated by reference to management's expectation of the future profitability of the combined business and discounted to present value using a discount rate of 2.39%. The discount rate of 2.39% was based on the credit risk of Vertom Agencies BV assessed by a third party credit agency. See Note 9 for further details and a sensitivity analysis on the contingent element.

Forward currency contracts

The fair value of the forward currency contracts are based on prices quoted by the counterparty within these contracts versus the market rate at the Balance Sheet date and have therefore been classified as Level 2 in the fair value hierarchy. See the currency risk section for further details.

Warrants

At 28 February 2021 the warrants were valued at £0.7m. The fair value of the warrants includes unobservable inputs and are therefore classified as Level 3. The key assumptions underpinning the fair value of the warrants relate to the future expected share price of AqualisBraemar LOC ASA, the GBP:NOK and GBP:US$ exchange rate and the future performance of both AqualisBraemar as a whole, and of the former Braemar Marine and Adjusting product lines. The fair value has been determined using the Black-Scholes valuation model. The inputs in the Black-Scholes valuation model are:

-  the share price of AqualisBraemar LOC ASA  NOK 4.03

-  the exercise price of the option  NOK 0.01

-  the length of the exercise period   3 months

-  the compound risk-free interest rate 

-  the annualised standard deviation 

On 20 August 2021, the warrants vested and a loss of £2,000 was recognised. There were no movements in the fair value of the warrants between 28 February 2021 and 20 August 2021.

Embedded derivative

The convertible loan note instruments issued on the acquisition of Naves contain an embedded derivative, being a Euro liability of principal and interest. The equity value of the underlying derivative is not considered closely related to the debt host, therefore the loan note is considered to be a financial liability host with an embedded derivative convertible feature which is required to be separated from the host. The fair value of the embedded derivative includes unobservable inputs and is therefore classified as Level 3. They key assumptions underpinning the fair value of the embedded derivative relate to the expected future share price of the Group and the GBP:EUR exchange rate. The fair value has been determined using the Black-Scholes valuation model.

A gain of £97,000 has been recognised in the Income Statement in respect of the fair value movement of the embedded derivative from 1 March 2021 to 28 February 2022 (2021 (restated): loss of £52,000).

Financial instruments not measured at fair value

The Group's financial assets and liabilities that are not measured at fair value are held at amortised costs. Due to their short-term nature, the carrying value of these financial instruments approximates their fair value. Their carrying values are as follows:

Financial assets	2022   £'000	2021 restated £'000
Cash and cash equivalents	13,964	14,111
Deferred consideration receivable	3,482	-
Trade and other receivables	38,601	35,407
Total	56,047	49,518

Financial liabilities	2022 £'000	2021 £'000
Trade and other payables	7,779	26,414
Deferred and contingent consideration	4,666	8,370
Lease liabilities	8,506	12,554
Loans and borrowings	23,254	23,000
Total	44,205	70,338

b)  Currency risk

Currency risk arises when Group entities enter into transactions denominated in a currency other than their functional currency. The Group's policy is, where possible, to allow Group entities to settle liabilities denominated in their functional currency with the cash generated from operations in that currency. The Group's currency risk exposure arises mainly as a result of the majority of its Shipbroking earnings being denominated in US Dollars while the majority of its costs are denominated in Sterling. There is also some currency exposure related to convertible loan notes and deferred consideration denominated in Euros and from the carrying values of its overseas subsidiaries being denominated in foreign currencies.

The Group manages the exposure to US Dollar currency variations by spot and forward currency sales and other derivative currency contracts, including participating hedging arrangements.

At 28 February 2022 the Group held forward currency contracts to sell US$53.8m at an average rate of US$1.370/£1.

At 28 February 2021 the Group held forward currency contracts to sell US$48.8m at an average rate of US$1.328/£1.

The net fair value of forward currency contracts that are designated and effective as cash flow hedges amount to a £709,000 liability (2021: £1,773,000 asset) which has been deferred in equity.

Amounts of £1,613,000 have been credited (2021: £84,000 credited) to the Income Statement in respect of forward contracts which have matured in the period.

Excluding the effect of hedging, the effect on equity and profit before tax if the US Dollar or the Euro strengthened/(weakened) by 10% against Sterling, with all other variables being equal, is as follows:

	Profit or loss		Equity, net of tax
	+10% strengthening £'000	-10% weakening £'000	+10% strengthening £'000	-10% weakening £'000
28 February 2022
US Dollars	2,697	(2,697)	2,185	(2,185)
Euros	(111)	111	(90)	90
Total	2,586	(2,586)	2,095	(2,095)
28 February 2021
US Dollars	2,141	(2,141)	1,734	(1,734)
Euros	819	(819)	663	(663)
Total	2,960	(2,960)	2,397	(2,397)

c)  Interest rate risk

The Group is exposed to interest rate risk from borrowings at floating rates. The Group minimises its short-term exposure to interest rate risk on its cash and cash equivalents by pooling cash balances across the Group's hubs.

The Group has not entered into any financial instruments to fix or hedge the interest rates applied to its bank borrowings and overdrafts.

The following table sets out the carrying amount, by maturity, of the Group's financial instruments which are exposed to interest rate risk:

	Notes	2022 £'000	2021 £'000
Floating rate:
Within one year
Cash and cash equivalents	23	13,964	14,111
Secured rolling credit facilities and other borrowings	25	(23,254)	(23,000)
		(9,290)	(8,889)

Cash balances are generally held on overnight deposits at floating rates depending on cash requirements and the prevailing market rates for the amount of funds deposited. The other financial instruments of the Group are non-interest bearing.

The effect on equity and profit before tax of a 1% increase/(decrease) in the interest rate, all other variables being equal, is as follows:

	Profit or loss		Equity, net of tax
	+1% increase £'000	-1% decrease £'000	+1% increase £'000	-1% decrease £'000
28 February 2022
Cash and cash equivalents	63	(63)	51	(50)
RCF and overdrafts	(104)	104	(84)	84
Total	(41)	41	(33)	34
28 February 2021
Cash and cash equivalents	7	(6)	5	(5)
RCF and overdrafts	(11)	10	(9)	8
Total	(4)	4	(4)	3

d)  Credit risk

Concentrations of credit risk with respect to trade receivables are limited due to the diversity of the Group's customer base. The directors believe there is no further credit risk provision required in excess of normal provisions for doubtful receivables, estimated by the Group's management based on prior experience and their assessment of the current economic environment. The Group seeks to trade only with creditworthy parties and carries out credit checks where appropriate. The maximum exposure is the carrying amount as disclosed in Note 21 .

e)  Liquidity risk

Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. Management receive rolling 13-week cash flow projections on a weekly basis to ensure the Group has sufficient liquidity.

The board receives rolling 12-month cash flow projections on a monthly basis as well as information regarding cash balances. At the end of the financial year, these projections indicated that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances.

The following table sets out the carrying amount, by maturity, of the Group's financial instruments which are exposed to liquidity risk:

At 28 February 2022	Up to  3 months £'000	Between  3 and  12 months £'000	Between  1 and 2 years £'000	Between 2 and  5 years £'000	Over 5 years £'000
Trade and other payables	5,649	2,130	-	-	-
Loans and borrowings	-	-	23,254	-	-
Lease liabilities	864	2,567	3,197	2,131	16
Deferred and contingent consideration	-	1,450	1,654	1,562	-
Total	6,513	6,147	28,105	3,693	16
Forward currency contracts
Gross outflows	11,204	18,748	6,498	-	-
Gross inflows	(11,034)	(18,231)	(6,414)	-	-
Net outflow from forward currency contract	170	517	84	-	-

At 28 February 2021	Up to  3 months £'000	Between  3 and  12 months £'000	Between  1 and 2 years £'000	Between 2 and  5 years £'000	Over 5 years £'000
Trade and other payables	12,048	14,366	-	-	-
Loans and borrowings	146	438	23,341	-	-
Lease liabilities	992	2,977	3,431	5,000	623
Deferred and contingent consideration	-	2,596	1,450	3,926	-
Total	13,186	20,377	28,222	8,926	623
Forward currency contracts
Gross outflows	11,040	18,066	5,879	-	-
Gross inflows	(11,557)	(19,164)	(6,031)	-	-
Net inflow from forward currency contract	(517)	(1,098)	(152)	-	-

Loans and borrowings have been represented to show the expected interest payments payable on the revolving credit facility in addition to the repayment of the loan.  The presentation of future cash flows arising from forward currency contracts has been represented for the prior year to show grossed up cash inflows and outflows in addition to the net flow position.

f)  Capital management

The Group manages its capital structure so as to maintain investor and market confidence and to provide returns to shareholders that will support the future development of the business. The Group makes adjustments to the capital structure if required in response to changes in economic conditions. The Group considers its capital as consisting of ordinary shares and retained earnings. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

The Group has a policy of maintaining positive cash balances and also has a revolving credit facility which it draws down as required to provide cover against the cyclical nature of the shipping industry.

The board monitors underlying business performance to determine the ongoing use of capital, namely executive and staff incentive schemes (and whether to fund this through cash or share incentives); acquisition appraisals ahead of potential business combinations; investment in property, plant and equipment; and the level of dividends.

No changes were made in the objectives, policies or processes during the years ended 28 February 2022 and 28 February 2021.

g)  Reconciliation of financing cash flows

	Non-current  loans and  borrowings £'000	Non-current  deferred consideration £'000	Non-current  lease  liabilities £'000	Current loans  and  borrowings £'000	Current  Deferred consideration £'000	Current lease liabilities £'000	Total £'000
At 1 March 2021	1,217	3,358	8,634	28,130	608	3,920	45,867
Prior period adjustment (see Note 34	24,464	(2,476)	-	(23,669)	(608)	-	(2,289)
Restated at 1 March 2021	25,681	882	8,634	4,461	-	3,920	43,578
Cash flows	(362)	-	-	(2,593)	-	(3,950)	(6,905)
Non-cash flows:
- Shares issued	-	-	-	(541)	-	-	(541)
- Derivatives issued	(293)	-	-	-	-	-	(293)
- Interest accruing in the period	537	238	329	134	-	-	1,238
- Lease adjustment	-	-	814	-	-	-	814
- Amounts reclassified from non-current to current	(95)	-	(3,947)	95	-	3,947	-
- Amounts reclassified from deferred consideration to loans	625	(625)	-	-	-	-	-
- Cory Brothers disposal	-	-	(753)	-	-	(490)	(1,243)
- Effects of foreign exchange	(84)	-	-	(140)	-	2	(222)
At 28 February 2022	26,009	495	5,077	1,416	-	3,429	36,426

	Non-current  loans and  borrowings £'000	Non-current  deferred consideration £'000	Non-current  lease  liabilities £'000	Current loans  and  borrowings £'000	Current  Deferred consideration £'000	Current lease liabilities £'000	Total £'000
At 1 March 2020	2,398	3,031	10,943	53,098	600	3,834	73,904
Prior period adjustment	23,883	(738)	-	(23,538)	(423)	-	(816)
Restated at 1 March 2020	26,281	2,293	10,943	29,560	177	3,834	73,088
Cash flows	(1,554)	-	-	(27,153)	(177)	(3,928)	(32,812)
Non-cash flows:
- Interest accruing in the period	1,028	-	409	240	-	-	1,677
- Lease adjustment	-	-	1,185	-	-	-	1,185
- Amounts reclassified from non-current to current	(1,697)	-	(3,970)	1,697	-	3,970	-
- Amounts reclassified from deferred consideration to loans	1,553	(1,553)	-	-	-	-	-
- Retention accrual net charge	-	142	-	-	-	-	142
- Effects of foreign exchange	70	-	67	117	-	44	298
At 28 February 2021	25,681	882	8,634	4,461	-	3,920	43,578

23  Cash and cash equivalents

	2022 £'000	2021 £'000
Cash at bank and cash on hand	13,964	14,111
Cash held for sale (Wavespec - see Note 9 d)	-	53
Total	13,964	14,164

Cash and cash equivalents largely comprise bank balances denominated in Sterling, US Dollars, Euros and other currencies for the purpose of settling current liabilities.

Cash includes an amount of £2.9m (2021: £1.4m) held in the bank accounts of regulated entities where there is a requirement to hold a certain amount of cash at any one time in order to cover future obligations. No charge or other restriction of use is held over this cash.

The directors consider that the carrying amounts of these assets approximate to their fair value.

24  Trade and other payables

Current liabilities	2022 £'000	2021 £'000
Trade payables	3,397	21,285
Lease liabilities	3,429	3,920
Other taxation and social security	721	988
Other payables	-	42
Accruals	31,082	19,412
Total	38,629	45,647

Accruals includes accrued bonuses and other general accruals. 

The average credit period taken for trade payables is 102 days (2021: 77 days). The directors consider that the carrying amounts of trade payables approximate to their fair value.

25  Borrowings

	2022 £'000	2021 £'000
Long-term borrowings
Secured revolving credit facilities	23,254	23,000
Lease liabilities	5,077	8,634
Total	28,331	31,634

The revolving credit facility expires in September 2023. Amounts can be rolled on a monthly basis until the facility expires subject to certain conditions and on that basis the borrowings have been classified as long-term.  The revolving credit facility bears interest based on SONIA.

All revolving credit facilities are drawn within Braemar Shipping Services Plc and appear in the accounts of the Company. During the period, the revolving credit facility has been renegotiated so that SONIA replaced LIBOR and EURIBOR as the applicable interest rate.  The applicable interest rate is between 2.25-3.25% dependent on net leverage.  The change has not had a material impact on the financial statements.  See Note 22 for details of the Group's cash pooling arrangements and the net overdraft available to the Group.

The directors consider that the fair value of the revolving credit facility liability and the fair value of the long-term lease liabilities are equivalent to the carrying amount.

Convertible instruments

The Group issues convertible loan notes in connection with its acquisition of Naves in September 2017.

These convertible loan note instruments are unsecured, unlisted and non-transferable. The notes are Euro denominated and carry a 3% per annum coupon. Each tranche is redeemable on or after two years from the date of issue by the Group or by the individual holder. The conversion prices were fixed at 390.3 pence for management sellers and 450.3 pence for non-management sellers.

The convertible loan note instruments carry certain accelerated conversion rights in the event of default on financial commitments associated with the instruments or business distress within the Group. The loan notes shall automatically convert or be redeemed in the event that any person or persons acting in concert hold more than 50% of the issued share capital of the Group or an impairment charge in excess of £42.8m (€50.0m) is reflected in the audited Financial Statements of the Group.

The convertible loan notes and financial derivatives are valued using level 3 hierarchy techniques under IFRS 13. See Note 21.

The total value of convertible loan note liability is £4.9m (2021: £8.1m).

Reconciliation of nominal amounts paid and payable to balance sheet amounts

	2022	2022	2021	2021
	£'000	€'000	£'000	€'000
	Closing rate		Closing rate
			Restated
Deferred consideration convertible loan notes on balance sheet	176	211	366	421
Total amounts paid and payable for post-acquisition services	10,415	12,458	10,218	11,759
Of which	-		-
Settled in cash	(3,078)	(3,682)	(1,276)	(1,468)
Settled in shares	(522)	(625)	-	-
Settled in convertible loan notes settled in cash at maturity	(1,987)	(2,377)	(1,032)	(1,188)
Nominal value of Naves-related liabilities outstanding	5,004	5,985	8,276	9,524
Effect of discounting and separation of derivatives	(232)		(36)
Total carrying amount in parent company accounts	4,772		8,240
Effect of measurement differences and remaining service conditions	145		(160)
Total carrying amount in consolidated accounts	4,917		8,080

	2022				2021
Represented in the consolidated balance sheet by:	£'000				£'000
Current liabilities
Convertible loan notes	1,416				4,461
Non-current liabilities
Convertible loan notes	2,755				2,681
Accrued employee costs	495				882
Derivatives	251				56
	3,501				3,619
	4,917				8,080
	2022				2021
Represented in the parent company balance sheet by:	£'000				£'000
Current liabilities
Convertible loan notes	1,416				4,461
Non-current liabilities
Convertible loan notes	3,271				3,640
Derivatives	85				139
	3,356				3,779
	4,772			8,240

The movement in the Naves-related balances in the Group balance sheet during the year is explained by the items below:

	2022	2021
	£'000	£'000
Total NAVES-related balances at start of year	8,080	9,557
Finance expense	130	303
Post-acquisition remuneration	238	141
Foreign exchange movements	(225)	186
Renegotiation gain	(172)
Cash paid	(2,593)	(2,107)
Equity issued	(541)
Total movements	(3,163)	(1,477)
Total NAVES-related balances at year end	4,917	8,080

The loan notes have the following maturities:
			Accounting value			Nominal value
			2022		2021	2022	2021
			£'000		£'000	€'000	€'000
Due at the reporting date			-		3,206	-	3,667
30-Sep-21			-		1,238	-	1,399
31-Dec-21			-		1,352	-	1,539
30-Sep-22			1,184		1,238	1,399	1,399
31-Dec-22			215		108	-	122
30-Sep-23			592		not yet earned	699	699
30-Sep-24			not yet earned		not yet earned	699	699
30-Sep-25			2,180		-	2,929	-
			4,171		7,142	5,726	9,524
Derivatives thereon			251		56
Accrual for notes subject to future service			495		882
Total liabilities on loan notes			4,917		8,080

Note that current liabilities in respect of the loan notes differs from the amounts shown above maturing within one year due to interest payable within one year on non-current loans and the outstanding current liability to deliver cash and shares in respect of matured loan notes.

Where loan notes are subject to future service conditions, they are accrued as an employee expense over the relevant service period. At the end of the service period they are recognised as financial instruments. The nominal value of loan notes subject to future service are included in the maturity analysis above but are not included in the group's financial liabilities. The accrual in respect of these items was £0.5m at 28 February 2022 (2021: £0.8m).

Renegotiation of amounts payable to management sellers

On 3 June 2021 the Group reached an agreement with two of Braemar Naves' Managing directors, Axel Siepmann and Mark Kuchenbecker, and their connected parties, to restructure certain convertible loan notes owed by the Group. These loan notes arose on variable consideration for post-acquisition services arising from the 2017 Naves acquisition. At the time of the renegotiation there were no contingencies or further service obligations outstanding in respect of any of these amounts.

A total of £2.5m (€2.9m) which was previously due to mature before the end of December 2022 has been deferred to mature no earlier than September 2025. In addition, a further amount of £0.7m (€0.75m) was agreed to be satisfied by the issue of Braemar shares in three tranches. The first two tranches, totalling £0.6m (€0.6m) were issued in September and December 2021 with the remaining tranche of £0.1m (€0.1m) to be issued in December 2022. As part of the modification the Group has also agreed to increase the interest rate on certain convertible loan notes, to the extent that they are still outstanding, to five per cent per annum from September 2025 from the 3% payable until that date.

A credit of £0.2m has been recognised in respect of the accounting for the modification and classified in finance income under specific items in the Income Statement. See Note 8 .

26  Provisions

	Dilapidations £'000	Employee  entitlements £'000	Total £'000
At 29 February 2020	570	396	966
Provided in the year	105	9	114
Utilised in the year	-	(83)	(83)
At 28 February 2021	675	322	997
Provided in the year	7	279	286
At 28 February 2022	682	601	1,283
Current	-	486	486
Non-current	682	115	797
At 28 February 2022	682	601	1,283

Dilapidations relate to future obligations to make good certain office premises upon expiration of the lease term. The provision is calculated with reference to the location and square footage of the office.

Employee entitlements relate to statutory long service leave in Braemar ACM Shipbroking Pty Limited. This is based on the principal that each Australian employee is entitled to eight weeks of leave over and above any annual leave on completion of ten years' continuous service. The provision is calculated with reference to the number of employees who have at least seven years of continuous service.

27  Retirement benefit schemes

The Company operates a defined benefit scheme in the UK. A full actuarial valuation was carried out as at 31 March 2020 and updated by the IAS19 as at 28 February 2022. All valuations were carried out by a qualified independent actuary.

The Group's obligations in respect of the funded defined benefit scheme at 28 February 2022 were as follows:

	2022 £'000	2021 £'000
Present value of funded obligations	15,156	16,174
Fair value of scheme assets	(13,104)	(12,355)
Total deficit of defined benefit pension scheme	2,052	3,819

Funded defined benefit scheme

The Group sponsors a funded defined benefit scheme (The ACM Staff Pension Scheme) for qualifying UK employees. The Scheme is administered by a separate board of trustees which is legally separate from the Group. The Trustees are composed of representatives of both the employer and employees. The Trustees are required by law to act in the interest of all relevant beneficiaries and are responsible for the investment policy with regard to the assets plus the day-to-day administration of the benefits.

Under the Scheme, employees are entitled to annual pensions on retirement at age 60 of one-sixtieth of final pensionable salary for each year of service. Pensionable salary is defined as basic salary plus the average of the previous three years' bonuses (capped at three times basic salary). Pensionable salaries for members who joined after 1 June 1989 are also restricted to an earnings cap. Other benefits are payable, for example those provided on death.

From 1 February 2016, post-retirement benefits are provided to these employees through a separate defined contribution arrangement.

Profile of the Scheme

The defined benefit obligation includes benefits for current employees, former employees and current pensioners. Broadly, around 62% of the liabilities are attributable to deferred pensions for current and former employees, with the remaining 38% to current pensioners.

The Scheme duration is an indicator of the weighted average time until benefit payments are made. For the Scheme as a whole, the duration is around 18.7 years.

Funding implications

UK legislation requires that pension schemes are funded prudently. The last funding valuation of the Scheme was carried out by a qualified actuary as at 31 March 2020 and showed a deficit of £1.5 million. As a result, the Company has been paying deficit contributions of £450,000 p.a. since 1 April 2020 which, along with investment returns from return-seeking assets, are expected to make good this shortfall by 31 January 2023.

Risks associated with the Scheme

The Scheme exposes the Group to a number of risks, the most significant of which are:

Asset volatility

The liabilities are calculated using a discount rate set with reference to corporate bond yields; if assets underperform this yield, this will create a deficit. The Scheme holds a significant proportion of growth assets which, though expected to outperform corporate bonds in the long-term, create volatility and risk in the short-term. The allocation to growth assets is monitored to ensure it remains appropriate given the Scheme's long-term objectives.

Changes in bond yields

A decrease in corporate bond yields will increase the value placed on the Scheme's liabilities for accounting purposes, although this will be partially offset by an increase in the value of the Scheme's bond holdings.

Inflation risk

AA significant proportion of the Scheme's benefit obligations are linked to inflation and higher inflation will lead to higher liabilities (although, in most cases, caps on the level of inflationary increases are in place to protect against extreme inflation). The majority of the assets are either unaffected by or only loosely correlated with inflation, meaning that an increase in inflation will also increase the deficit.

Life expectancy

The majority of the Scheme's obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the liabilities.

The Company and Trustees have agreed a long-term strategy for reducing investment risk as and when appropriate. This includes moving assets to match pensioner liabilities when members reach retirement.

The Trustees insure certain benefits payable on death before retirement.

A contingent liability exists in relation to the equalisation of Guaranteed Minimum Pension ("GMP"). The UK Government intends to implement legislation which could result in an increase in the value of GMP for males. This would increase the defined benefit obligation of the plan. We have made an estimate of the impact of this based on our current understanding and it will increase the liabilities by 0.36%.

The principal assumptions used for updating the latest valuation of the Scheme were:

	2022 (% p.a.)	2021 (% p.a.)
Discount rate	2.65	1.9
CPI inflation	3.1	2.0
Pension increases:
CPI capped at 2.5% p.a.	2.1	2.1
CPI capped at 5.0% p.a.	3.2	2.8
Deferred pension increases:
CPI capped at 2.5% p.a.	2.1	2.1
CPI capped at 5.0% p.a.	3.2	2.8

		2022 Years	2021 Years
Life expectancy from age 60 for:
Current 60-year-old male		27.5	27.9
Current 60-year-old female		28.7	29.1
Pre-retirement mortality		-	-
Post-retirement mortality	S2 Light Tables, CMI 2020 (min 1.25%)
Early retirement	33% of members retire at age 55, with the remainder retiring at age 60
Withdrawals from active service	No allowance
Cash commutation	25% of the member's pension is commuted

Under early retirement it is assumed that 33% of members will retire at age 55, with the remainder retiring at age 60.

Scheme assets	2022 £'000	2021 £'000
Scheme assets are comprised as follows:
UK equities	366	128
Overseas equities	4,391	3,926
Unquoted equities	57	352
Absolute return	315	200
High yield debt	325	303
Cash	322	350
Inflation-linked bonds	4,354	4,217
Corporate bonds	1,547	1,328
Government bonds	234	422
Other	1,193	1,129
Total	13,104	12,355

Expense recognised in the Income Statement (included in operating costs)	2022 £'000	2021 £'000
Current service cost	-	-
Curtailment credit	-	-
Interest on net liability	73	73
Expense recognised in Income Statement	73	73
Remeasurements in other comprehensive expense:
Return on assets in excess of that recognised in net interest	(316)	(801)
Actuarial losses due to changes in financial assumptions	(2,174)	1,597
Actuarial losses due to changes in demographic assumptions	(268)	29
Actuarial gains due to liability experience	1,368	(301)
Amount recognised in other comprehensive expense	(1,390)	524
Total amount recognised in Income Statement and other comprehensive expense	(1,317)	597

Changes to the present value of the defined benefit obligation are analysed as follows:

	2022 £'000	2021 £'000
Opening defined benefit obligation	16,174	16,004
Past service cost	-	-
Interest expense	307	320
Contributions by participants	-	-
Actuarial losses on liabilities	(1,074)	1,325
Net benefit payments from scheme	(251)	(1,475)
Closing value at 28 February	15,156	16,174

Changes in the fair value of plan assets are analysed as follows:

	2022 £'000	2021 £'000
Opening fair value at 1 March	12,355	12,332
Expected return on assets	235	247
Actuarial gains on liabilities	316	801
Contributions by employers	450	450
Contributions by participants	-	-
Net benefit payments from scheme	(252)	(1,475)
Closing value at 28 February	13,104	12,355

The Group expects to contribute £412,500 to its defined benefit pension scheme in the next 12 months (2021: £450,000).

Actual return on Scheme assets	2022 £'000	2021 £'000
Expected return on assets	235	247
Remeasurement gain on assets	316	801
Actual return on assets	551	1,048

Sensitivity analysis

The table below illustrates the sensitivity of the Scheme liabilities at 28 February 2022 to changes in the principal assumptions. The sensitivities assume that all other assumptions remain unchanged and the calculations are approximate (full calculations could lead to a different result).

Change in assumption	Approximate increase in liabilities %	Approximate increase in liabilities £'000
Interest rate reduced by 0.5% p.a.	11.2	1,697
Inflation assumption reduced by 0.5% p.a.*	7.2	1,091
Increase in life expectancy of one year for all members reaching 60	2.2	333

*  The inflation assumption sensitivity applies to both the assumed rate of increase in the CPI and the RPI, and includes the impact on the rate of increases to pensions, both before and after retirement.

Defined contribution schemes

There are a number of defined contribution schemes in the Group, the principal scheme being the Braemar Pension Scheme, which is open to all UK employees. Cash contributions paid into the defined contribution schemes are accounted for as an Income Statement expense as they are incurred. The total charge for the year in respect of this and other defined contribution schemes amounted to £1,234,000 (2021: £1,280,000) of which £915,000 (2021: £893,000) was in respect of continuing operations.

Contributions of £99,000 were due to these schemes at 28 February 2022 (2021: £97,000).

The assets of these schemes are held separately from those of the Group in funds under the control of the Trustees.

28  Share capital

	Ordinary shares		Ordinary shares
	2022 Number	2021 Number	2022 £'000	2021 £'000
a)  Authorised
Ordinary shares of 10 pence each	34,903,000	34,903,000	3,490	3,490

	Ordinary shares		Ordinary shares		Share premium
	2022 Number	2021 Number	2022 £'000	2021 £'000	2022 £'000	2021 (restated) £'000
b)  Issued
Fully paid ordinary shares of 10 pence each
As at start of year	31,731,218	31,673,829	3,174	3,167	52,510	52,510
Shares issued and fully paid (see below)	474,372	57,389	47	7	520	-
As at end of year	32,205,590	31,731,218	3,221	3,174	53,030	52,510

Share premium has been restated (see Note 34 ) reducing by £3.3m to £52.5m at 29 February 2020 and 28 February 2021.

227,281 shares were issued to the Group's ESOP to satisfy share awards under the Company Share Option Plan. In addition, 204,944 shares were issued to settle part of the deferred consideration payable in respect of the acquisition of Naves during the year ended 28 February 2022.

During the year ended 28 February 2022, no shares were issued as part of the restricted share plan scheme (2021: 57,389 shares were issued at nil cost).

No shares were issued in the year as part of the Save As You Earn ("SAYE") Scheme. No shares remained unpaid at 28 February 2022 or 28 February 2021.

The Company has one class of ordinary shares which carry no right to fixed income.

c)  Share-based payments

The Company operates a variety of share-based payment schemes which are listed below.

i)  Share options

The Company operates an employee save-as-you-earn option scheme called the Braemar Shipping Services Plc Savings-Related Share Option Scheme 2014 ("SAYE") and the Braemar Shipping Services Plc International Savings-Related Share Option Scheme 2019 (the "International SAYE Scheme"). No option may be granted under any scheme which would result in the total number of shares issued or remaining issuable under all of the schemes (or any other Group share schemes), in the ten-year period ending on the date of grant of the option, exceeding 10% of the Company's issued share capital (calculated at the date of grant of the relevant option). Options are granted at a 20% discount to the prevailing market price.

Details of the share options in issue and the movements in the year are given below:

Share scheme	Year option granted	Number at 1 March 2021	Granted	Exercised	Lapsed	Number at 28 February 2022	Exercise price (pence)	Exercisable between
SAYE	2019	413,771	-	-	-	413,771	160.0	2022-2023

Options are valued using a binomial pricing model. The fair value per option granted and the assumptions used in the calculation at the date of grant were as follows:

		SAYE 2019
Grant date		5 Jul 2019
Share price at grant date		199.67p
Exercise price		160.0p
Number of employees		164
Shares under option		656,070
Vesting period (years)		3.0
Expected volatility		30.49%
Option life (years)		3.5
Risk-free rate		0.35%
Expected dividends expressed as a dividend yield		7.51%
Possibility of ceasing employment before vesting		9.62%
Expectation of meeting performance criteria		100.00%
Fair value per option		33.62p

The expected volatility is based on historical volatility of the Company's shares as traded on the London Stock Exchange. The risk-free rate of return is based on LIBOR.

The value of the awards are expensed over the period from the date of grant to the vesting date.

No options were exercised in the current year or the prior year.

ii) Deferred Bonus Plan

In 2005, the Company put in place a Deferred Bonus Plan (the "Plan") whereby part of the annual performance-related bonus is delivered in shares, on a discretionary basis, to staff including executive directors.

The provisional value of the Deferred Bonus Plan for a given financial year is set in the budgeting process preceding the financial year, and this value is expensed over the period from provisional determination until vesting.  Once the actual performance for the financial year is known the rate of accrual is corrected accordingly.

Vesting normally occurs three years from the date of grant, subject to the employee beneficiary remaining in employment with the Group, at which time the award will be settled by the transfer of shares to the beneficiary. 

The Company adopted a new Deferred Bonus Plan in May 2020 (the "New DBP"), pursuant to which subsequent discretionary bonus awards will be granted to staff including executive directors. Awards under the New DBP may be linked to an option granted under the new Braemar Company Share Option Plan 2020, which was also adopted by the Company in May 2020 (the "New CSOP"). Where an employee receives a linked award under the New DBP, where the Company's share price rises over the vesting period, the New CSOP award can be exercised with the value of shares delivered on the vesting of the New DBP award being reduced by the exercise gain on the New CSOP award. Awards under the New DBP and the New CSOP will continue to be settled via the transfer of shares from the ESOP and not through new issue.

Details of the share awards in issue and the movements in the year are given below:

Share scheme	Number at 1 March 2021	Granted	Exercised	Lapsed	Number at 28 February 2022	Exercise price (pence)	Exercisable
September 2017	20,000	-	-	(20,000)	-	nil	Sep 2020
June 2018	901,070	-	(837,081)	(30,602)	33,387	nil	Jun 2021
June 2019	1,636,422	-	-	(30,000)	1,606,422	nil	Jun 2022
July 2020	3,299,322	-	-	(131,467)	3,167,855	nil	Jul 2022
November 2020	315,975	-	-	-	315,975	nil	Nov 2023
June 2021	-	1,378,586	-	(50,050)	1,328,536	nil	Jun 2024
Deferred Bonus Plan	6,172,789	1,378,586	(837,081)	(262,119)	6,462,175	nil

The weighted average share price on exercise for awards exercised during the year was £2.77 (2021: £1.40). The weighted average share price at grant date for awards granted during the year was £3.03 (2021: £1.23).

The Company also grants certain awards under the Deferred Bonus Plan to attract and retain key staff hires. No options were granted in the financial year.

Under both the Plan and the New DBP, sufficient shares to satisfy each award are bought over the course of the vesting period, and held in an employee trust ("ESOP") until vesting.  As at 28 February 2022, the ESOP held 2,669,603 ordinary shares (2021: 525,837).  The ESOP holding is in line with expectations of how many shares will be needed to satisfy the current awards under this scheme. This amount is net of expected lapses in the scheme and the fact that recipients typically forego sufficient shares in order to satisfy the associated tax liability that arises on their vesting.

iii) Restricted Share Plan

During the year ended 28 February 2015, the Company established a Restricted Share Plan ("RSP"). This scheme was set up and awarded to employees to retain key staff following the merger between Braemar Shipping Services Plc and ACM Shipping plc, but it can also be used where the Remuneration Committee considers it necessary to secure the recruitment of a particular individual. Executive directors of the Company are not eligible to participate in the RSP. RSP awards are made in the form of a nil cost option and there are no performance criteria other than continued employment.

During the year ended 28 February 2015 the Company issued 1,409,000 RSP awards, of which 50% will vest after three years and 25% after each of the fourth and fifth years provided the individuals remain employed by the Group.

During the year ended 29 February 2016 a further 315,000 RSP awards were granted, of which 50% will vest after three years and 25% after each of the fourth and fifth years provided the individuals remain employed by the Group.

During the year ended 28 February 2018 a further 77,120 RSP awards were granted, of which 50% will vest after three years and 25% after each of the fourth and fifth years provided the individuals remain employed by the Group.

During the year ended 28 February 2019 a further 144,000 RSP awards were granted, of which 100% will vest after three years provided the individuals remain employed by the Group.

Details of the RSP share awards in issue and the movements in the year are given below:

Share scheme	Number at 1 March 2021	Granted	Exercised	Lapsed	Number at 28 February 2022	Exercisable between
July 2014	13,750	-	-	-	13,750	Jul 17 - Jul 24
Aug 2015	18,750	-	(6,250)	-	12,500	Aug 18 - Aug 25
March 2016	12,500	-	(12,500)	-	-	Mar 22 - Mar 26
May 2017	38,560	-	(38,560)	-	-	May 20 - May 27
July 2018	36,320	-	-	-	36,320	Jul 21 - Jul 28
Feb 2019	144,000	-	-	-	144,000	Feb 22 - Feb 29
Restricted Share Plan	263,880	-	(57,310)	-	206,570

The weighted average share price on exercise for awards exercised during the year was £2.81 (2021: £1.24).

The fair value of the nil cost options is approximated to the share price at the time of grant less the expected dividend to be paid during the vesting period.

The value of the awards are expensed over the period from the date of grant to the vesting date or if used as a recruitment incentive, from the date of joining to the vesting date.  The awards are satisfied by the issue of new shares.

iv) Long-Term Incentive Plan ("LTIP")

The Company also has LTIP awards, which allow for the form of a conditional right to receive shares at nil cost. The awards normally vest over three years and are subject to various performance conditions based on earnings per share ("EPS") or divisional operating profit.

In June 2018, awards of 527,464 shares were made to one executive director and three senior members of management.

In June 2019, awards of 394,735 shares were made to one executive director and three senior members of management.

In June 2020, awards of 506,250 shares were made to one executive director and three senior members of management.

Details of the LTIP share awards in issue and the movements in the year are given below:

Share scheme	Number at 1 March 2021	Granted	Exercised	Lapsed	Number at 28 February 2022	Exercisable between
LTIP 2018	150,537	-	-	(117,243)	33,294	Nov 21 - Jun 28
LTIP 2019	394,735	-	-	-	394,735	Dec 21 - Dec29
LTIP 2020	506,250	-	-	-	506,250	Aug 23 - Jun30
Long-Term Incentive Plan	1,051,522	-	-	(117,243)	934,279

The weighted average share price at grant date for awards granted during the prior year was £1.23.

The fair value of the nil cost options is approximated to the share price at the time of grant less the expected dividend to be paid during the vesting period calculated using the market consensus dividend yield.

The value of the awards are expensed over the period from the date of grant to the vesting date.  The awards are satisfied by the issue of new shares.

Movement in share-based payment reserve

Movement in share-based payment reserve			Total £'000
Share-based payment expense
- Continuing operations			2,951
- Discontinued operations			58
Total charge to income statement			3,009
Transfer to accruals			(115)
			2,894
Awards vesting			(1,659)
Net movement in share-based payment reserve for year ended 28 February 2022			1,235

The share-based payment reserve is presented within retained earnings

29  ESOP reserve

An Employee Share Ownership Plan ("ESOP") was established on 23 January 1995. The ESOP has been set up to purchase shares in the Company. These shares, once purchased, are held in trust by the Trustee of the ESOP, SG Kleinwort Hambros Trust Company (CI) Limited, for the benefit of the employees.  Additionally, an Employee Benefit Trust ("EBT") previously run by ACM Shipping Group plc also holds shares in the Company.  The ESOP and EBT are accounted for within the Company accounts.

The ESOP reserve represents a deduction from shareholders' funds and a reduction in distributable reserves The deduction equals the net purchase cost of the shares held in by the ESOP.  Shares allocated by the ESOP to satisfy share awards issued by the group are released at cost on a FIFO basis.

Group and Company	£'000
At 29 February 2020	2,498
Shares acquired by the ESOP	860
ESOP shares allocated	(1,996)
At 28 February 2021	1,362
New shares fully paid up and issued to the ESOP	25
Shares acquired by the ESOP	7,043
ESOP shares allocated	(1,659)
At 28 February 2022	6,771

As at 28 February 2022, the ESOP held 2,669,603 (2021: 525,837) ordinary shares of 10 pence each. The funding of the purchase has been provided by the Company in the form of a gift and the Trustees have contracted with the Company to waive the ESOP's right to receive dividends. The fees charged by the Trustees for the operation of the ESOP are paid by the Company and charged to the Income Statement as they fall due. Since the year end a further 1,670,000 shares have been acquired by the Trustees making the total in the ESOP currently 4,339,603.

As part of the acquisition of ACM Shipping Group plc in July 2014, the Company issued 125,621 shares into an Employee Trust ("EBT") previously run by ACM Shipping Group plc. As at 28 February 2022, the EBT held 62,290 (2021: 62,290) ordinary shares of 10 pence each.

The total cost to the Company of shares and cash held in the ESOP and EBT at 28 February 2022 was £6,771,000 (2021: £1,362,000) including stamp duty associated with the purchase. The shares owned by the ESOP and EBT had a market value at 28 February 2022 of £6,420,395 (2021: 1,305,642). The distribution of these shares is determined by the Remuneration Committee.

596,398 shares (2021: 362,563) have been released to employees during the year.  The shares acquired by the ESOP had an aggregate cost of £7.0m, of which £6.3m was settled in cash whilst share awards with a market value were £0.7m were forfeited by employees to the ESOP to cover the tax charge arising on the gross awards which were subsequently settled by the Group.

30  Other reserves

Restated	Note	Capital  redemption  reserve £'000	Merger  reserve  '000	Foreign currency translation reserve £'000	Hedging reserve £'000	Total £'000
At 28 February 2020		396	21,346	1,385	(848)	22,279
Restatement		-	3,295	(205)	493	3,583
At 28 February 2020 (restated)		396	24,641	1,180	(355)	25,862
Cash flow hedges
- Transfer to net profit		-	-	-	292	292
- Fair value losses in the period		-	-	-	1,918	1,918
Exchange differences		-	-	442	-	442
Deferred tax on items taken to equity		-	-	-	(420)	(420)
At 28 February 2021		396	24,641	1,622	1,435	28,094
Cash flow hedges
- Transfer to net profit		-	-	-	(1,613)	(1,613)
- Fair value gain/losses in the period		-	-	-	(869)	(869)
Exchange differences		-	-	998	-	998
Deferred tax on items taken to equity		-	-	-	514	514
At 28 February 2022		396	24,641	2,620	(533)	27,124

The capital redemption reserve arose on previous share buy-backs by the Company.

The merger reserve arises on transactions where the Company issues shares pursuant to an arrangement to acquire more than an 90% interest in another company and no share premium is recorded. The merger reserve arose principally in 2001 in relation to the acquisitions of Braemar Shipbrokers Limited and Braemar Tankers Limited.  Further additions have arisen in respect of Naves and Atlantic Brokers included in the prior period adjustment (£1.3m and £2.0m respectively). The amounts in merger reserve are unrealised profits relating to the corresponding assets acquired by the Company on the issue of shares. These profits may become realised on the disposal or write down of these assets.

The hedging reserve comprises the effective portion of the cumulative net change in fair value of cash flow hedging instruments relating to hedged transactions that have not yet occurred of £710,000 liability (2021: £1,773,000 asset). An increase in of £514,000 in the deferred tax asset (2021: 420,000 decrease) is attributable to these transactions.

A correction to the merger reserve has been transferred from share premium has been recognised as a prior period adjustment - see Note 34.

A correction to the hedging reserve and retained earnings in respect of consolidation errors has been recognised as a prior period adjustment - see Note 34.

31  Contingent liabilities

The Group has contingent liabilities in respect of guarantees entered into in the normal course of business given as follows:

	2022 £'000	2021 £'000
Bank guarantees given to:
HM Revenue and Customs	-	1,410
Third parties (non-cash collateralised)	837	787
Total	837	2,197

In the prior year the Group had issued a guarantee of £1.4m to HMRC in respect of VAT, duty and excise which was collected on imports which was collected by Cory Brothers as part of its trading activity and subsequently paid to HMRC. As a result of Brexit, HMRC no longer required the guarantee and it was cancelled by the Group prior to the disposal of Cory Brothers.

In addition, the Company and certain of its subsidiaries have provided cross guarantees and fixed and floating rate charges over their assets to secure their borrowing facilities and other financial instruments (see Note 22 ).

From time to time the Group may be engaged in litigation in the ordinary course of business. The Group carries professional indemnity insurance. There are currently no liabilities expected to have a material adverse financial impact on the Group's consolidated results or net assets.

32  Related party transactions

During the period the Group entered into the following transactions with joint ventures and investments:

	2022			2021
Group	Recharges to/(from) £'000	Dividends £'000	Balance due(to)/ from £'000	Recharges to/(from) £'000	Dividends £'000	Balance due(to)/ from £'000
London Tanker Broker Panel	324	-	-	310	-	-
AqualisBraemar LOC ASA	221	-	282	610	641	240
Risorto GmbH	(453)	-	(31)	(865)	-	(33)
Worldscale	84	-	-	60	-	-

London Tanker Broker Panel

Recharges to London Tanker Broker Panel consist of a monthly fee payable to the Group for the provision of data.

AqualisBraemar LOC ASA

Recharges to AqualisBraemar LOC ASA consisted primarily of rent, IT services and HR services in accordance with a transitional services agreement. Included in the net recharge to AqualisBraemar LOC ASA is a fee payable to the Group's former Chairman, Ronald Series of £3,750 (2021: £15,000).

In the prior year, the Group received £641,000 of dividends from AqualisBraemar LOC ASA which were credited to cost of investment. See Note 19 .

A loss of £262,000 was recognised in the prior year in respect of the Group subletting a portion of its Singapore office space to AqualisBraemar LOC ASA, and an impairment to a right-of-use asset in respect of a London office which will be vacated by AqualisBraemar LOC ASA. See Note 8 .

The balance due from AqualisBraemar LOC ASA is unsecured, interest-free and immediately repayable.

Risorto GmbH

Risorto GmbH is owned and controlled by the management of Braemar Naves Corporate Finance GmbH. The amount charged by Risorto GmbH in the year to the Group for management fees was €0.5m (2021: €0.7m). The balance owing to Risorto GmbH as at 28 February 2022 was less than €0.1m (2021: less than €0.1m).

Worldscale Association Limited

Management consider that Worldscale Association Limited is a related party because Nico Borkmann, a senior employee in the Braemar Group is one of its directors.  Recharges to Worldscale consist of a monthly fee payable to the Group for the provision of data.

Key management compensation is disclosed in Note 4 .

Transactions with wholly owned subsidiaries

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this Note.

Unless otherwise indicated, all shareholdings owned directly or indirectly by the Company represent 100% of the issued share capital of the subsidiary and the share capital comprises ordinary shares. All entities primarily operate in their country of incorporation.

Subsidiaries

Direct holdings of the Company as at 28 February 2022:

Incorporated in England & Wales One Strand, Trafalgar Square, London WC2N 5HR	Principal activity	Registration number
Braemar ACM Group Limited*	Holding company	05990315
Braemar Atlantic Securities Holdings Limited*	Holding company	10010995
Braemar Financial Holdings Limited*	Holding company	10917096
Braemar Shipbrokers Limited*	Shipbroking	01674710
Seascope Capital Services Limited	Dormant	03592796
GFL (UK) Limited	Dormant	02360525
Braemar Developments Limited*	Dormant	02186790
Braemar Tankers Limited	Dormant	02001027

Incorporated in the US 2800 North Loop West, Suite 900, Houston, Texas 77092, US	Principal activity	Registration number
Braemar Holdings (USA) Inc	Holding company	FEIN 81-1568938

Indirect holdings of the Company as at 28 February 2021:

Incorporated in England & Wales One Strand, Trafalgar Square, London WC2N 5HR	Principal activity	Registration number
Braemar ACM Shipbroking Group Limited*	Holding company	01611096
Braemar ACM Shipbroking Limited	Shipbroking	01020997
Braemar ACM Shipbroking (Dry Cargo) Limited*	Shipbroking	07223509
A.C.M. Shipping USA Limited*	Shipbroking	08391132
Braemar ACM Valuations Limited*	Valuations	03439765
Braemar Atlantic Securities Limited	Futures broker	07899358
Braemar Naves Corporate Finance Limited*	Corporate finance	02710842
Cagnoil Limited^	Dormant	05696624
Orca Shipping Limited^	Dormant	07067104
ACM Shipping EBT Limited^	Dormant	05747447
ACM Shipping CIS Limited	Dormant	06934055
Braemar Maritime Limited	Dormant	03321899
Braemar Burness Maritime Limited	Dormant	03674230
Burness Marine (Gas) Limited	Dormant	01081837
Burness Marine (Tankers) Limited^	Dormant	02367038
Braemar Chartering Limited^	Dormant	01912501
Braemar Pension Trustees Limited	Dormant	05502209

Incorporated in Germany Domstrasse 17, 20095 Hamburg, Germany	Principal activity	Registration number
Braemar Naves Corporate Finance GmbH	Corporate finance	HRB 114161
Braemar Financial Holdings Germany GmbH	Holding company	HRB 146089

Incorporated in United Arab Emirates
One JLT 06-55 One JLT, Plot No. Dmcc-Ez1-1ab, Jumeirah Lakes Towers, Dubai, UAE	Principal activity	Registration number
Braemar ACM Shipbroking DMCC	Shipbroking	DMCC-749556
Incorporated in the US 2800 North Loop West, Suite 900, Houston, Texas 77092, US	Principal activity	Registration number
Braemar ACM Shipbroking (USA) Inc	Shipbroking	46-2641490
Braemar Technical Services (USA) Inc	Energy loss adjuster	76-0036958

24 Grassy Plain Street - Ste 4, Bethel, CT 06801-1700 US	Principal activity	Registration number
Braemar ACM Shipbroking LLP	Shipbroking	1099337
Incorporated in Singapore 80 Robinson Rd, #24-01/02, Singapore 068898	Principal activity	Registration number
Braemar ACM Shipbroking Pte Limited	Shipbroking	200602547M
Braemar Naves Pte Limited	Corporate finance	201834760K
Incorporated in Australia Level 5, 432 St Kilda Road, Melbourne, Victoria 3004, Australia	Principal activity	Registration number
Braemar ACM Shipbroking Pty Limited	Shipbroking	ACN 000862 993
		ABN 35 000 862 993
Incorporated in other overseas countries Piazza 2 Giugno No 14, 54033 Carrara, Italy	Principal activity	Registration number
Braemar Seascope Italia SRL	Shipbroking	01268770458

Suite 2009, Building C Luneng International Center, No.211, GuoYoa Road, Pudong District, Shanghai, 200126	Principal activity	Registration number
Braemar Seascope (Shanghai) Limited	Shipbroking	913100005588064761
2nd Floor, Building No. 22, Pushp Vihar, Commercial Complex, Madangir, New Delhi - 110 062	Principal activity	Registration number
Braemar ACM Shipbroking India Private Limited (50% owned)	Shipbroking	U63090DL2003PTC120247
Office No. 1004, 10th Floor, Dalamal House, 206-Jamanalal Bajaj Road, Nariman Point, Mumbai-400021, India	Principal activity	Registration number
ACM Shipping India Limited	Shipbroking	U93090MH2006FLC164019

Subsidiaries marked with an asterisk (*) are exempt from the requirements of the Companies Act 2006 relating to the audit of individual accounts by virtue of section 479A of the Companies Act 2006 for the financial year ended 28 February 2022. The Company has provided a guarantee of all outstanding liabilities to which these subsidiaries were subject as at 28 February 2022 in accordance with section 479C of the Companies Act 2006.

Applications to voluntarily strike off subsidiaries marked ^ were in progress subsequent to the year end.

33  Events after the reporting date

There were no adjusting or significant non-adjusting events between the reporting date and the date these Financial Statements were authorised.

34  Prior period adjustments

The prior periods have been restated to reflect discontinued operations and corrected errors as described below.

During the year ended 28 February 2021, the group restructured part of the outstanding liabilities due to management sellers of Naves. This exercise identified that the carrying amount of the future obligations in the group balance sheet exceeded the nominal value of consideration to be paid and prompted a review of the accounting for the Naves consideration in full and of certain other corporate acquisition and disposal transactions in recent years.

The review took a critical analysis of the historical accounting for the amounts paid and payable on the Naves acquisition, including the issue of shares, and identified a number of errors. In order to address these errors, accounting analysis was reviewed and new calculations were performed from the original acquisition in September 2017 to date. The review also examined the classification of certain reserves on the balance sheet and identified certain other misstatements that have been corrected in these accounts.

The adjustments identified are as follows:

a)  Merger reserve on the Naves and Atlantic acquisitions

Share premium had been incorrectly recognised on both the Naves and Atlantic acquisitions in the year to 28 February 2018. The requirement to record share premium does not apply where shares are issued in pursuance of an arrangement to acquire more than 90% of the equity in another company. Accordingly, no share premium should have been recorded and the premium on the issue of shares should have been recorded as a merger reserve. The amount restated from share premium to merger reserve in respect of Naves is £1.3m, and £2.0m in respect of Atlantic Brokers.

b)  Naves

The net measurement error to 29 February 2020 was principally due to to a mathematical error resulting in the overstatement the amounts due to management sellers accrued earlier periods. The correction in the consolidated accounts at 29 February 2020 has been to reduce liabilities and increase retained earnings by £0.9m.

In the year to 28 February 2021, a remeasurement of the outstanding loan note liabilities identified an overstatement of £2.3m on the balance sheet at year end.  Included within this error was an incorrect charge to the translation reserve, to the amount of £1.0m which has now been reversed. 

The balance of the overstatement related to charges to the income statement including net operating expense in FY20/21 has been reduced by £0.4m.  This was as a result of an incorrect allocation of liabilities between those subject to future service conditions and those with no service conditions, these have now been corrected.

c)  RCF

The Group's revolving credit facility ("RCF") liability was previously incorrectly reported as a short-term liability. The lender is obliged to continue the facility for a period greater than 12 months from the respective reporting date, the facility end date is 31 August 2023. The liability has therefore been restated as a non-current liability at 29 February 2020 and 28 February 2021.

d)  Consolidation errors

The historical review of the financial reporting systems identified certain errors in the group's accounting practices for the elimination of intercompany balances and movements on the foreign exchange translation reserve.

These errors resulted in the overstatement of current liabilities at 29 February 2020 of £0.8m and 28 February 2021 of £0.6m.

An amount of £1m was identified in foreign exchange reserve which should have been recycled through profit and loss relating to the dilution of the investment in Aqualis Braemar in 2021 and has been restated in profit and loss for that year. An amount of £0.5m at 1 March 2020 was identified as being a misallocation between the Hedging reserve and the Translation reserve and has been corrected in the opening balance sheet. Further smaller errors have been identified as misallocations from retained earnings in both the balance sheets at 1 March 2020 and 28 February 2021. The total impact of these errors resulted in an increase in net assets of £0.8m at 1 March 2020 and £0.6m at 28 February 2021.

Discontinued operations

The Group disposed of its controlling interest in AqualisBraemar on 19 May 2021 and completed its disposal of its Logistics Division, Cory Brothers, on 2 March 2022. AqualisBraemar and the Logistics Division have therefore been presented as discontinued operations in the current and prior period income statement with no impact on net income.

The impact of these adjustments on the financial statements is set out in the schedules below:

		Correction of prior period errors
	28 February 2021 Reported		a) Merger reserve	b) Naves	c) RCF	d) Consolidation errors	28 February 2021 Corrected		Discontinued operations	28 February 2021 Restated
Consolidated Income Statement
Revenue	111,778		-	-	-	-	111,778		(28,083)	83,695
Cost of sales	(17,000)		-	-	-	-	(17,000)		17,000	0
Gross profit	94,778		-	-	-	-	94,778		(11,083)	83,695
Operating Expense	-		-	-	-	-	-		-	-
Other operating costs - underlying	(85,868)		-	-	-	-	(85,868)		9,892	(75,976)
Other operating costs - specific	(262)		-	-	-		(262)			(262)
Acquisition related income/(expenditure)	1,873		-	397	-	-	2,270		(3,105)	(835)
	(84,257)		-	397	-	-	(83,860)		6,787	(77,073)
Operating profit/(loss) - underlying	8,910						8,910		(1,191)	7,719
Operating profit/(loss) - specific items	1,611			397		-	2,008		(3,105)	(1,097)
Operating profit/(loss)	10,521		-	397	-	-	10,918		(4,296)	6,622
Share of associate profit for the period - underlying	255		-	-	-	-	255		(255)	-
Share of associate profit for the period - specific items	91		-	-	-	-	91		(91)	-
Finance income - underlying	170		-	-	-	-	170		(14)	156
Finance income - specific items	-		-	-	-	-	-		-	-
Finance expense - underlying	(1,250)		-	-	-	-	(1,250)		41	(1,209)
Finance expense - specific items	(432)		-	-	-	-	(432)		-	(432)
Profit/(loss) before taxation - underlying	8,085		-	-	-	-	8,085		(1,419)	6,665
Profit/(loss) before taxation - specific items	1,270		-	397	-	-	1,667		(3,196)	(1,529)
Profit/(loss) before taxation - total	9,355		-	397	-	-	9,752		(4,615)	5,136
Taxation - underlying	(1,999)		-	-	-	-	(1,999)		227	(1,772)
Taxation - specific items	198		-	-	-	-	198		-	198
Taxation	(1,801)		-	-	-	-	(1,801)		227	(1,574)
Profit/(loss) for the year from continuing operations - underlying	6,086		-		-	-	6,086		(1,193)	4,894
Profit/(loss) for the year from continuing operations - specific items	1,468		-	397	-	-	1,865		(3,196)	(1,331)
Profit/(loss) for the year from continuing operations	7,554		-	397	-	-	7,951		(4,389)	3,563
Profit/(loss) for the year from discontinued operations - underlying	(1,706)		-	-	-	-	(1,706)		1,163	(513)
Profit/(loss) for the year from discontinued operations - specific items	(754)		-	-	-	(959)	(1,713)		3,196	1,483
Profit/(loss) for the year from discontinued operations	(2,460)		-	-	-	(959)	(3,419)		4,389	970
Profit/(loss) for the year - underlying	4,380		-	-	-	-	4,380		-	4,380
Profit/(loss) for the year - specific	714		-	397	-	(959)	152		-	152
Profit/(loss) for the year	5,094		-	397	-	(959)	4,532		-	4,532

		Correction of prior period errors
	28 February 2021 Reported	a) Merger reserve	b) Naves	c) RCF	d) Consolidation errors	28 February 2021 Corrected	Discontinued operations	28 February 2021 Restated
Consolidated Statement of Comprehensive Income						-		-
						-		-
Profit for the year	5,094	-	397	-	(959)	4,532	-	4,532
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss	-	-	-	-	-	-	-	-
Actuarial loss on employee benefit schemes - net of tax	(424)	-	-	-	-	(424)	-	(424)
Items that are or may be reclassified to profit or loss	-	-	-	-	-	-	-	-
Foreign exchange differences on retranslation of foreign operations	(715)	-	994	-	(308)	(29)	748	719
Recycling of foreign exchange reserve	(488)	-	-	-	959	471	(471)	-
Cash flow hedges - net of tax	2,126	-	-	-	(336)	1,790	-	1,790
Other comprehensive income from continuing operations	499	-	994	-	314	1,808	277	2,085
Share of other comprehensive income/(expense) of associates	-	-	-	-	-	-	312	312
Foreign exchange differences on revaluation of investment	-	-	-	-	-	-	(1,060)	(1,060)
Recycling of foreign exchange reserve (DiscOps)	-	-	-	-	-	-	471	471
Other comprehensive expense from Discontinued operations	-	-	-	-	-	-	(277)	(277)
Total comprehensive income for the year attributable to	5,593	-	1,391	-	(644)	6,340	-	6,340

		Correction of prior period errors
	28 February 2021 Reported		a) Merger reserve	b) Naves	c) RCF	d) Consolidation errors	28 February 2021 Restated
Non-current assets	106,638						106,638
Trade and other receivables	34,800						34,800
Financial asstes	746						746
Derivative financial instruments	1,573						1,573
Cash and cash equivalents	14,111						14,111
Assets held for sale	436						436
	51,666		-	-	-	-	51,666
Total assets	158,304		-	-	-	-	158,304
Current liabilities							-
Derivative financial instruments	(60)		-	60	-	-	-
							-
Short-term borrowings	(23,000)		-	-	23,000	-	-
							-
Convertible loan notes	(5,130)		-	669	-	-	(4,461)
Deferred consideration payable	(608)		-	608	-	-	-
Other current liabilities	(47,987)		-	-	-	590	(47,397)
	(76,785)		-	1,337	23,000	590	(51,858)
Non-current liabilities
Derivative financial instruments	-		-	(56)	-	-	(56)
Convertible loan notes	(1,217)		-	(1,464)	-	-	(2,681)
Deferred consideration payable	(3,358)		-	2,476	-	-	(882)
Other non-current liabilities	(13,317)		-	-	(23,000)	-	( 36 ,317)
	(17,892)		-	956	(23,000)	-	(39,936)
Total liabilities	(94,677)		-	2,293	-	590	(91,794)
Total assets less total liabilities	63,627		-	2,293	-	590	66,510
Equity	-
Share capital	3,174		-	-	-	-	3,174
Share premium	55,805		(3,295)	-	-	-	52,510
Shares to be issued	(1,362)		-	-	-	-	(1,362)
Other reserves	22,790		3,295	994	-	1,015	28,094
Retained earnings	(16,780)		-	1,299	-	(425)	(15,906)
Total equity	63,627		-	2,293	-	590	66,510

		Correction of prior period errors
	1 March 2020 Reported		a) Merger reserve	b) NAVES	c) RCF	d) Consolidation errors	1 March 2020 Restated
Non-current assets	114,699						114,699
Trade and other receivables	39,541						39,541
Financial assets	-						-
Derivative financial instruments	-						-
Cash and cash equivalents	28,749						28,749
Assets held for sale	-						-
	68,290		-	-	-	-	68,290
Total assets	182,989						182,989
Current liabilities
Derivative financial instruments	(527)			90		-	(437)
Short-term borrowings	(48,758)			-	23,642	-	(25,116)
							-
Convertible loan notes	(4,340)		-	(104)	-	-	(4,444)
Deferred consideration payable	(600)		-	423	-	-	(177)
Other current liabilities	(49,566)		-	-	-	822	(48,744)
	(103,791)		-	409	23,642	822	(78,918)
Non-current liabilities
Derivative financial instruments	-		-	(4)	-	-	(4)
Convertible loan notes	(2,398)		-	(241)	-	-	(2,639)
Deferred consideration payable	(3,031)		-	738	-	-	(2,293)
Other non-current liabilities	(16,283)		-	-	(23,642)	-	( 39,925 )
	(21,712)		-	493	(23,642)	-	(44,861)
Total liabilities	(125,503)		-	902	-	822	(123,779)
Total assets less total liabilities	57,486		-	902	-	822	59,210
							-
Equity							-
Share capital	3,167		-	-	-	-	3,167
Share premium	55,805		(3,295)	-	-	-	52,510
Shares to be issued	(2,498)		-	-	-	-	(2,498)
Other reserves	22,279		3,295	-	-	288	25,862
Retained earnings	(21,267)		-	902	-	534	(19,831)
Total equity	57,486		-	902	-	822	59,210

Company Balance Sheet

As at 28 February 2022

	Note	As at 28 Feb 2022 £'000	As at 28 Feb 2021 Restated £'000	As at 1 March 2020 Restated £'000
Assets
Non-current assets
Intangible assets	5	627	539	632
Property, plant and equipment	6	3,891	5,670	7,559
Investments	8	108,389	106,228	104,436
Investment in associate	9	-	3,247	7,000
Deferred tax assets	10	179	584	1,273
Other long-term receivables	11	38,775	26,969	34,795
		151,861	143,237	155,695
Current assets
Other receivables	12	10,800	10,155	10,772
Cash and cash equivalents	13	700	634	26
		11,500	10,789	10,798
Total assets		163,361	154,026	166,493
Liabilities
Current liabilities
Other payables	14	45,298	40,488	16,588
Short-term borrowings		-	-	25,116
Deferred consideration payable		-	-	589
Convertible loan notes	16	1,416	4,461	4,444
		46,714	44,949	46,737
Non-current liabilities
Other payables	14	570	-	-
Long-term borrowings	15	27,305	29,386	33,432
Convertible loan notes	16	3,271	3,640	4,448
Derivative liabilities	16	85	139	25
Provisions	17	541	541	541
		31,772	33,706	38,446
Total liabilities		78,486	78,655	85,183
Total assets less total liabilities		84,875	75,371	81,310
Equity
Share capital	18	3,221	3,174	3,167
Share premium	18	53,030	52,510	52,510
ESOP reserve	19	(6,771)	(1,362)	(2,498)
Other reserves	20	23,762	23,762	25,037
Retained earnings/(deficit)		11,633	(2,713)	3,094
Total equity		84,875	75,371	81,310

In accordance with the exemptions allowed by Section 408 of the Companies Act 2006, the Company has not presented its own profit and loss account. A profit of £15,220,000 (2021 restated: loss of £6,899,000) has been dealt with in the Financial Statements of the Company.  The prior year Financial Statements have been adjusted to correct an error in respect of the accounting for the purchase of Naves and some misclassifications on the balance sheet (see Note 23 for further detail).

The accompanying notes form an integral part of these Financial Statements.

The Financial Statements of Braemar Shipping Services plc were approved by the board of directors on 28 August 2022 and were signed on its behalf by:

James Gundy  Nicholas Stone

Group Chief Executive Officer  Chief Financial Officer  Registered number: 02286034

Company Statement of Changes in Total Equity

For the year ended 28 February 2022

	Note	Share capital £'000	Share premium £'000	ESOP reserve £'000	Other reserves £'000	Retained earnings £'000	Total equity £'000
At 1 March 2020		3,167	55,805	(2,498)	21,742	2,221	80,437
Prior period adjustment	23	-	(3,295)	-	3,295	873	873
Restated balances at 1 March 2020		3,167	52,510	(2,498)	25,037	3,094	81,310
Loss for the year (restated)	23	-	-	-	-	(6,899)	(6,899)
Impairment of Naves preference shares	20	-	-	-	(1,275)	1,275	-
Issue of shares	18	7	-	-	-	(7)	-
Own shares acquired	19	-	-	(860)	-	-	(860)
Issue of shares held by ESOP	19	-	-	1,996	-	(1,996)	-
Share-based payments		-	-	-	-	1,820	1,820
Transactions with owners		7	-	1,136	-	(183)	960
At 28 February 2021		3,174	52,510	(1,362)	23,762	(2,713)	75,371
Profit for the year		-	-	-	-	15,220	15,220
Dividends paid		-	-	-	-	(2,109)	(2,109)
Issue of shares	18	47	520	(25)	-	-	542
Own shares acquired	19	-	-	(7,043)	-	-	(7,043)
Issue of shares held by ESOP	19	-	-	1,659	-	(1,659)	-
Share-based payments		-	-	-	-	2,894	2,894
Transactions with owners		47	520	(5,409)	-	(874)	(5,716)
At 28 February 2022		3,221	53,030	(6,771)	23,762	11,633	84,875

The accompanying notes form an integral part of these Financial Statements.

Notes to the Company Financial Statements

General information

The separate Financial Statements of Braemar Shipping Services Plc for the year ended 28 February 2022 were authorised for issue in accordance with a resolution of the directors on 28 August 2022. Braemar Shipping Services Plc is a public limited company incorporated in England and Wales, and its principal activity is a holding company for the shipbroking business.

The term "Company" refers to Braemar Shipping Services Plc.

1  Significant accounting policies

a)  Basis of preparation

The financial information set out above does not constitute the Company's statutory accounts for the years ended 28 February 2022 or 28 February 2021 but is derived from those accounts.  Statutory accounts for 2021 have been delivered to the registrar of companies, and those for 2022 will be delivered in due course.  The auditor has reported on those accounts; their reports were (i) unqualified; (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The financial information included in this preliminary announcement has been prepared in accordance with United Kingdom Generally Accepted Practice, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice). No Income Statement is presented for Braemar Shipping Services Plc as provided by Section 408 of the Companies Act 2006.

The Financial Statements have been prepared under the historic cost convention except for items measured at fair value as set out in the accounting policies below and have been prepared on a going concern basis.

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

FRS 101

The Financial Statements of the Company have been prepared in accordance with FRS 101 Reduced Disclosure Framework. The Company has applied the exemptions available under FRS 101 in respect of the following disclosures:

-  a Cash Flow Statement and related notes; and

-  disclosures in respect of transactions with wholly owned subsidiaries.

As the consolidated Financial Statements of the Group include the equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in respect of the following disclosures:

-  IFRS 2 "Share-based Payment" in respect of Group settled share-based payments;

-  certain disclosures required by IFRS 13 "Fair Value Measurement" and the disclosures required by IFRS 7 "Financial Instrument Disclosures"; and

-  the requirements in IAS 24 "Related Party Disclosures" to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member, and the exemption to disclose key management compensation.

b)  Going concern

The Company Financial Statements have been prepared on a going concern basis. In reaching this conclusion regarding the going concern assumption, the directors considered cash flow forecasts for a period of greater than 12 months from the date of signing of these Financial Statements.  The going concern assumption for the Company is considered together with the going concern assumption for the Group, see Note 1 in the Consolidated Financial Statements for more detail.

c)  Use of estimates and critical judgements

The preparation of the Company's Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date.  Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.  In the future, actual experience may differ from these estimates and assumptions.

The following are key areas where the Company makes significant estimates and judgements:

Estimates

Estimates regarding (i) the fairvalue of Cory Brothers deferred receivable and (ii) share option vesting are described in the notes to the Consolidated Financial Statements.

Preference share assets

The Company holds investments in preference shares issued by a subsidiary at fair value through profit and loss. The preference shares are not traded in any market and there are no similar assets in quoted markets.  Therefore, the Company performs valuation of the present value of future cashflows using unobservable ("Level 3") inputs. The Company develops unobservable inputs using the best information available in the circumstances, which include the Group's forecasts of cash flows for the underlying Finance businesses of the holding company issuing the preference shares using a risk-adjusted discount rate. See also accounting policies Note 1 (d).

The key estimates are therefore the selection of suitable discount rates and the estimation of future growth rates which vary between cash-generating units depending on the specific risks and the anticipated economic and market conditions related to each cash generating unit. This discount rates and growth rates are consistent with those applied to the same business in the group's assessment of the impairment of goodwill (see Note 12 in the Consolidated Financial Statements for a description of the approach used by management to determine these key values). 

Judgements

Investments in subsidiaries

The Company recognises provisions for impairment of investments in subsidiaries based on management's judgement of whether or not there is an indication of impairment at the Balance Sheet date.  A judgement is made based on the net assets, cash balance and future trading performance of the subsidiary.

Provision for impairment of preference share assets

The provision for impairment of preference share assets represents management's best estimate at the Balance Sheet date. The Company holds investments in preference shares issued by a subsidiary at fair value through profit and loss and recognised as amounts due from subsidiaries receivable after more than one year. The preference shares are not traded in any market and there are no similar assets in quoted markets. Therefore the Company performs valuation of the present value of future cashflows using unobservable ("Level 3") inputs. The Company develops unobservable inputs using the best information available in the circumstances, which include the Group's forecasts of cash flows for the underlying Finance businesses of the holding company issuing the preference shares using a risk-adjusted discount rate.

The key estimates are therefore the selection of suitable discount rates and the estimation of future growth rates which vary between cash-generating units depending on the specific risks and the anticipated economic and market conditions related to each cash generating unit. The discount rates and growth rates are consistent with those applied to the same business in the Group's assessment of the impairment of goodwill. See Note 11 for further details.

Provision for impairment of amounts due from subsidiaries

The provision for impairment of amounts due from subsidiaries represents management's best estimate at the Balance Sheet date.  A number of judgements are made in the calculation of the provision, primarily based on the net assets, cash balance and future trading performance of the subsidiary.

The application of IFRS 9 "Financial Instruments" results in an additional provision for expected credit losses.  When measuring expected credit losses, the Company uses reasonable and supportable forward-looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other.  Probability of default constitutes a key input in measuring expected credit losses. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future market conditions.

The Company has considered the impact of both COVID and the conflict in the Ukraine on the Financial Statements at 28 February 2022.  However, at 28 February 2022 there was no evidence to suggest that the Company's amounts due from subsidiaries may be at a higher risk of becoming credit impaired as a result of the pandemic or the conflict in the Ukraine.  No impairment allowances were made in respect of either COVID or the conflict in the Ukraine.

Judgements regarding the measurement of right-of-use assets and liabilities are described in the notes to the Consolidated Financial Statements.

d)  Accounting policies

The Company's accounting policies are the same as the accounting policies of the consolidated Group except for the policy described below.

Investments

Investments in subsidiaries, associates and joint ventures are held at cost less accumulated impairment.  Where there is objective evidence that the investment in subsidiaries, associates and joint ventures have been impaired, the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.

Investments where the Company has no significant influence are held at fair value, with movements in fair value recorded in profit and loss.

The Company holds investments in preference shares issued by a subsidiary. The preference shares do not provide a contractual right to unpaid amounts in the event of a bankruptcy of the issuer and therefore, in the judgement of the directors, the returns do not meet the conditions of being solely payments of principal and interest and are required to be held at fair value through profit and loss. The valuation of these shares is considered in the use of estimate and critical judgements above.  The preference shares are recognised as amounts due from subsidiaries receivable after more than one year.

Merger reserve

The merger reserve arises on transactions where the Company issues shares pursuant to an arrangement to acquire more than an 90% interest in another company and no share premium is recorded.  The amounts in merger reserve are unrealised profits relating to the corresponding assets acquired by the Company on the issue of shares. These profits may become realised on the disposal or write down of these assets.

2  Profit for the year

As permitted by Section 408 of the Companies Act 2006 the Company has elected not to present its own statement of comprehensive income (including the profit and loss account) for the year.

The auditor's remuneration for audit services to the Company is disclosed in Note 3 to the Consolidated Financial Statements.

All fees paid to the auditor were charged to operating profit in both years.

3  Staff costs

Staff costs for the Company during the year (including directors) are provided in the table below.

		2022 £'000	2021 £'000
Salaries, wages and short-term employee benefits		1,776	1,918
Other pension costs		51	47
Social security costs		214	194
Share-based payments		56	10
		2,097	2,169

The numbers above include remuneration and pension entitlements for each director.

The average number of full-time employees of the Company was 16 (2021: 13)

4  Dividends

Amounts recognised as distributions to equity holders in the year are detailed in Note 10 to the Consolidated Financial Statements.

The Company has become aware of an administrative oversight during the year ended 28 February 2022, whereby the Company did not properly prepare and file unaudited interim accounts at Companies House, as required by the Companies Act 2006, prior to declaring and paying distributions to shareholders in respect of the Company's 1 September 2021 final dividend and 16 December 2021 interim dividend. As a result of this administrative oversight, the Company did not comply with certain provisions of the Act and, whilst there were sufficient distributable reserves to make the relevant distributions, they were therefore paid in technical infringement of the Act. Neither the amount nor payment of the relevant distributions, nor the Company's prior audited accounts, are affected by this, nor is there any impact on the Company's financial position either at the time of payment(s) or now.

The Company has proposed a resolution at its Annual General Meeting on 6 October 2022 which will, if passed, give the board authority to enter into deeds of release to discharge these parties from any obligation to repay any amount to the Company in connection with the Relevant Distributions. The Company has not recorded the potential right to make claims against shareholders as an asset or a contingent asset in its financial statements. The directors of the Company have concluded that any inflow of economic benefits as a result of such claims is less than probable.

5  Intangible assets

	Computer software £'000	Total £'000
Cost
At 28 February 2021	782	782
Additions	272	272
At 28 February 2022	1,054	1,054
Amortisation and impairment
At 28 February 2021	243	243
Charge for the year	184	184
At 28 February 2022	427	427
Net book value at 28 February 2022	627	627
Net book value at 28 February 2021	539	539

At 28 February 2022, the Company had no contractual commitments for the acquisition of computer software (2021: £nil).

6  Property, plant and equipment

	Leaseholds £'000	Computers £'000	Fixtures and equipment £'000	Total £'000
Cost
At 29 February 2020 and 28 February 2021	9,142	6	222	9,370
Additions at cost	-	214	-	214
Disposals	(154)		(205)	(359)
At 28 February 2022	8,988	220	17	9,225
Accumulated depreciation
At 29 February 2020	1,711	2	98	1,811
Impairment	210	-	-	210
Charge for the year	1,583	1	95	1,679
At 28 February 2021	3,504	3	193	3,700
Charge for the year	1,547	27	27	1,601
Impairment	392	-	-	392
Disposals	(154)	-	(205)	(359)
At 28 February 2022	5,289	30	15	5,334
Net book value at 28 February 2022	3,699	190	2	3,891
Net book value at 28 February 2021	5,638	3	29	5,670

The prior year movement has been represented to show the impairment charge within accumulated depreciation, there was no impact on net book value.

The leaseholds category includes land and buildings held under finance leases and leasehold improvements.  At 28 February 2022, the Company had no contractual commitments for the acquisition of property, plant and equipment (2021: £nil).

The impairment charge arose following the assignment of a lease. On 28 March 2022, the Group assigned the lease for its Bevis Marks premises to Beat Capital.  The impairment charge of £392,000 is equal to the subsequent loss on assignment of this lease, being the lease assignment premium paid plus the net book value of the ROU asset disposed of less the outstanding lease liability on that lease.

7  Leases

Right-of-use assets

	Leaseholds £'000	Fixtures and equipment £'000	Total £'000
At 29 February 2020	6,963	114	7,077
Amortisation	(1,483)	(91)	(1,574)
Impairment	(210)	-	(210)
Exchange differences	1	-	1
At 28 February 2021	5,271	23	5,294
Amortisation	(1,436)	(23)	(1,459)
Impairment	(392)	-	(392)
At 28 February 2022	3,443	-	3,443

Lease liabilities

	Leaseholds £'000	Fixtures and equipment £'000	Total £'000
At 29 February 2020	11,187	250	11,437
Interest expense	297	18	315
Lease payments	(2,556)	(157)	(2,713)
Exchange differences	(2)	-	(2)
At 28 February 2021	8,926	111	9,037
Interest expense	226	15	241
Lease payments	(2,517)	(126)	(2,643)
Exchange differences	(4)	-	(4)
At 28 February 2022	6,631	-	6,631

Lease receivables

	Leaseholds £'000	Fixtures and equipment £'000	Total £'000
At 28 February 2020	2,674	-	2,674
Interest received	71	-	71
Lease payments	(642)	-	(642)
Exchange differences	2	-	2
At 28 February 2021	2,105	-	2,105
Interest received	55	-	55
Lease payments	(642)	-	(642)
Exchange differences	(6)	-	(6)
At 28 February 2022	1,512	-	1,512

There was no short-term lease expense, no short-term lease income and no low value lease expense in the year (2021: £nil).

Lease liabilities

		Up to 3 months £'000	Between 3  and 12  months £'000	Between 1  and 2 years £'000	Between 2  and 5 years £'000	Over 5 years £'000	Total £'000	Unearned interest £'000	Net payable £'000
At 28 February 2022		654	1,963	2,618	1,669	-	6,904	(273)	6,631
At 28 February 2021		654	1,963	2,617	4,317	-	9,551	(514)	9,037

Lease receivables

		Up to 3 months £'000	Between 3  and 12  months £'000	Between 1  and 2 years £'000	Between 2  and 5 years £'000	Over 5 years £'000	Total £'000	Unearned interest £'000	Net receivable £'000
At 28 February 2022		160	481	642	285	-	1,568	(56)	1,512
At 28 February 2021		160	481	642	932	-	2,215	(110)	2,105

8  Investments

	Subsidiaries £'000	Unlisted  investments  '000	Total £'000
Cost
At 1 March 2020	113,969	1,500	115,469
Prior period adjustment	(450)	-	(450)
Adjusted opening cost at 1 March 2020	113,519	1,500	115,019
Share-based payments	1,792	-	1,792
At 28 February 2021	115,311	1,500	116,811
Capital contribution to Cory Brothers	3,664	-	3,664
Disposal	(4,462)	-	(4,462)
Share-based payments	2,959	-	2,959
At 28 February 2022	117,472	1,500	118,972
Impairment
At 29 February 2020 and 28 February 2021 and 28 February 2022	10,583	-	10,583
Net book value at 28 February 2022	106,889	1,500	108,389
Net book value at 28 February 2021	104,728	1,500	106,228

The Company recognises investments in subsidiaries at cost less impairment.

The opening balance has been adjusted to correct for an overstatement of £0.5m from an error in accounting for the acquisition of Naves.  This prior period adjustment is explained in detail in Note 23 (b).

The Company invested £3.0m (2021: £1.8m) in the subsidiaries of the Group in respect of share-based payment charges incurred in the year. 

Management have reviewed the Company's investments in subsidiary undertakings for impairment.  The assets' recoverable amounts assessed by reference to value in use have been compared to the carrying values.  The value in use has been calculated based upon a discounted cash flow methodology using the most recent forecasts prepared by management consistent with the goodwill impairment calculations described in Note 12 to the Consolidated Financial Statements.  The value in use models have also been subject to sensitivity analysis, with assumptions such as zero revenue growth, an increase in the discount rate and a reduction in underlying operating profit tested, with investments retaining sufficient headroom.  

The results of the sensitivity analysis are summarised in the below table and n one of the sensitivities give rise to an impairment.

			Change in revenue growth		Change in discount rate		Change in underlying operating profit
			+1%	-1%	+2%	-2%	+20%	-20%
			£'000	£'000	£'000	£'000	£'000	£'000
Shipbroking Division			12,975	(12,640)	(52,321)	34,642	29,959	(29,959)
Atlantic Brokers			886	(863)	(2,946)	4,595	2,976	(2,976)

The company's principal investment in Naves is held as preference shares, - see Note 11 for additional sensitivity analysis.

Disposal of investment in Cory Brothers Shipping Agency limited

On 28 February 2022 the Company sold its investment in Cory Brothers Shipping Agency Limited.  A reconciliation of the derecognition of the investment to the gain on disposal is as follows:

	£'000
Disposal proceeds	9,897
Carrying value of investment	(4,449)
Disposal-related costs	(485)
Gain on disposal of Cory Brothers	4,963

The disposal proceeds attributable to the parent company are an 88% share of the Group's £11.3m disposal proceeds for the sale of the entire Cory Brothers Group.  The disposal proceeds had not been received at year end, other receivables includes a £6.5m completion payment which was not received until 2 March 2022 (see Note 12 ), long-term receivables includes £4.8m deferred and contingent consideration (see Note 11 ).  The 12% share of disposal proceeds due to Braemar Holdings (USA) Inc. on a pass-through basis is included in amounts due to subsidiaries (see Note 14 ).

Investments with a carrying value of £13,000 relating to Wavespec were also disposed of during the period.

A list of subsidiary undertakings is included in Note 32 of the Consolidated Financial Statements.

The Financial Statements of the principal subsidiary undertakings are prepared to 28 February 2022.

Unlisted investments

The Group's unlisted investments include 1,000 (2021: 1,000) ordinary £1 shares in London Tanker Broker Panel. The investment is carried at fair value, being the value of the most recent comparable transaction, which occurred during the year ended 28 February 2019.  There have been no transactions or events in the current or prior year which would result in an adjustment to the fair value at 28 February 2022.

9  Investment in associate

The Company recognises its investment in AqualisBraemar LOC ASA at cost less impairment.  AqualisBraemar LOC ASA is listed on the Oslo Børs, its principal place of business is Oslo and its registered address is Olav Vs gate 6, 0161, Oslo, Norway.

	£'000
Cost at 29 February 2020	7,000
Disposal	(3,753)
At 28 February 2021	3,247
Disposal	(3,247)
Cost at 28 February 2022	-

On 19 May 2021 the Company fully disposed of its minority shareholding in AqualisBraemar for cash proceeds of £7,232,000. A reconciliation of the derecognition of the investment to the gain on disposal is as follows:

	£'000
Disposal proceeds	7,232
Carrying value of investment	(3,247)
Gain on disposal of AqualisBraemar	3,985

At 28 February 2022 the Group's shareholding was nil which equates to 0% of AqualisBraemar's share capital and 0% of voting rights (2021: market value of £6.3m, being 10.42% of share capital and 10.42% of voting rights).

10  Deferred tax

The movement in the deferred tax asset				Total £'000
Balance at 1 March 2021				584
Prior year over provision				191
Movement in opening balance due to change in tax rate				247
Charge for the year				(843)
Balance at 28 February 2022				179

A deferred tax asset of £0.2m (2021: £0.6m) has been recognised as the directors believe that it is probable that there will be sufficient taxable profits in the future to recover the asset in full.

11  Other long-term receivables

		Note	2022 £'000	2021 Restated £'000
Amounts due from subsidiary undertakings
Preference shares issued by subsidiaries			28,012	28,267
Provision for impairment of preference shares			(2,001)	(7,025)
Other amounts due from subsidiary undertakings			7,399	7,413
Provision for impairment of other amounts due from subsidiary undertakings			(257)	(3,157)
Net amounts due from subsidiary undertakings			33,153	25,498
Deferred consideration			3,482	-
Contingent consideration			1,276	-
Finance lease
	Finance lease receivables	7	879	1,471
	ECL provision for impairment of finance lease receivables		(15)	-
Net finance lease receivables			864	1,471
Other long-term receivables			38,775	26,969

The Company holds investments in preference shares issued by a subsidiary at fair value through profit and loss and recognised as amounts due from subsidiaries receivable after more than one year. The preference shares are not traded in any market and there are no similar assets in quoted markets. Therefore the Company performs valuation of the present value of future cashflows using unobservable ("Level 3") inputs. The Company develops unobservable inputs using the best information available in the circumstances, which include the Group's forecasts of cash flows for the underlying Finance businesses of the holding company issuing the preference shares using a risk-adjusted discount rate.

The key estimates are therefore the selection of suitable discount rates and the estimation of future growth rates which vary between cash-generating units depending on the specific risks and the anticipated economic and market conditions related to each cash generating unit. The discount rates and growth rates are consistent with those applied to the same business in the Group's assessment of the impairment of goodwill. See Note 12 in the Consolidated Financial Statements for a description of the approach used by management to determine these key values.

The sensitivity of the valuation of the preference shares to changes in estimates of growth, discount rate and underlying operating profit is as follows:

Sensitivity analysis	Change in revenue growth		Change in discount rate		Change in underlying operating profit
	+1% p.a.	-1% p.a.	+1% p.a.	-1% p.a.	+5%	-5%
	£'000	£'000	£'000	£'000	£'000	£'000
Impact on valuation of preference shares	2,079	(1,992)	(1,945)	2,344	1,496	(1,496)

Note 23 b provides detail of the restatement of the preference shares.

The deferred consideration and the contingent consideration combined represent the sum of the three earnout payments receivable in respect of the disposal of Cory Brothers.  The deferred consideration comprises the three minimum earnout payments accounted for on an amortised cost basis.  The contingent consideration represents the variable element of the earnout payments which are contingent on the future gross profit of the newly formed VertomCory agency business, which are recognised at fair value through profit or loss. Note 14  in the Consolidated Financial Statements provides further detail.

See Note 7 for a maturity analysis which reconciles the long-term finance lease receivables to the undiscounted lease receipts and unearned finance income.

The prior year amounts due from subsidiary undertakings have been restated with £30.2m being reclassified from current to non-current. See Note 23 for further detail.

12  Other receivables

	2022 £'000	2021 Restated £'000
Amounts due from subsidiary undertakings	2,294	7,423
Other receivables	7,625	2,012
Finance lease receivables	633	634
Prepayments	248	86
Total	10,800	10,155

Other receivable includes the completion payment of £6.5 million for the disposal of Cory Brothers which completed on 28 February 2022, although the cash was not received until 2 March 2022.

The prior year amounts due from subsidiary undertakings and other receivables have been restated to correct a misstatement of an intercompany receivable which has been reclassified as non-current and adjusted for the mis-calculation of interest, and also for some balance sheet mis-classifications between amounts due to or from subsidiary undertakings and other receivables (see Note 23 for further detail).

The total receivables balance (including long-term receivables) is denominated in the following currencies.

	2022 £'000	2021 Restated £'000
Sterling	21,563	8,857
Euro	28,012	28,267
Total	49,575	37,124

The Company has no trade receivables (2021: £nil). Amounts due from subsidiary undertakings are interest-free, unsecured and repayable on demand. The Company provides for impairment using a lifetime expected credit loss provision for amounts due from subsidiary undertakings.  At 28 February 2022 amounts due from subsidiary undertakings of £3.0m (2021: £3.0m) were treated as credit impaired.  In the prior year £0.3m amounts related to amounts due from the Engineering Division which was disposed of on 31 March 2021.

13  Cash and cash equivalents

	2022 £'000	2021 £'000
Cash at bank and cash on hand	700	634

Cash and cash equivalents largely comprise bank balances denominated in Sterling, US Dollars, Euros and other currencies for the purpose of settling current liabilities.

The directors consider that the carrying amounts of these assets approximate to their fair value.

14  Other payables

Current liabilities	2022 £'000	2021 Restated £'000
Lease liabilities	2,580	2,651
Amounts owed to subsidiary undertakings payable within 1 year	40,780	35,380
Other payables	779	1,672
Accruals	1,159	785
Total	45,298	40,488

Amounts owed to subsidiary undertakings payable within 1 year are interest-free and unsecured and repayable on demand.

The prior year amounts due to subsidiary undertakings, other payables and accrual have been restated to correct errors relating to balance sheet mis-classification (see Note 23 for further detail). Non-current liabilities	2022 £'000	2021 Restated £'000
Amounts owed to subsidiary undertakings payable after more than 1 year	570	-

Amounts owed to subsidiary undertakings payable after more than 1 year are a 12% share of the deferred and contingent receivables due to Braemar Holdings (US) Inc.  See Note 11 for further detail.

15  Borrowings

Long-term borrowings	2022 £'000	2021 £'000
Lease liabilities	4,051	6,386
Secured revolving credit facilities	23,254	23,000
Total	27,305	29,386

The revolving credit facility expires in September 2023. Amounts can be rolled on a monthly basis until the facility expires subject to certain conditions and on that basis the borrowings have been classified as long-term.  The revolving credit facility bears interest based on SONIA.

16  Convertible loan notes and derivative financial instruments

The Company has issued convertible loan notes as part of the acquisition of Naves Corporate Finance GmbH (further details of the acquisition are provided in Note 14 to the Consolidated Financial Statements).  Convertible loan notes have been valued at amortised cost with a derivative liability recognised in respect of the conversion feature.

	2022 £'000	2021 Restated £'000
Issued convertible loan notes maturing within one year	1,416	4,461
Issued convertible loan notes maturing after more than one year	3,271	3,640
Derivative liabilities due after more than one year	85	139
Total	4,772	8,240

The prior year issued convertible loan notes were overstated by £0.9m and were misclassified within amounts owed to subsidiary undertakings.  The balances have been restated. See Note 23 .

17  Provisions

The Company holds a dilapidations provision of £0.5m (2021: £0.5m) which is classified as a non-current liability.  There were no additions to the provisions balance nor were there any utilisation of the balance in the year.

18  Share capital

The Company has one class of ordinary shares which carry no right to fixed income.  Note 28 to the Consolidated Financial Statements provides detail on authorised share capital and movements in issued share capital.

19  ESOP reserve

An Employee Share Ownership Plan ("ESOP") was established on 23 January 1995.  The ESOP has been set up to purchase shares in the Company. These shares, once purchased, are held in trust by the Trustee of the ESOP, SG Kleinwort Hambros Trust Company (CI) Limited, for the benefit of the employees.  Additionally, an Employee Benefit Trust ("EBT") previously run by ACM Shipping Group plc also holds shares in the Company.  The ESOP and EBT are accounted for within the Company accounts.

The net cost of the shares acquired for the shares held by the ESOP and the EBT are a deduction from shareholders' funds and represent a reduction in distributable reserves.  Note 29 to the Consolidated Financial Statements provides detail on the ESOP and the EBT and movements in shares to be issued.

20  Other reserves

	Capital  redemption  reserve £'000	Merger  reserve  '000	Total £'000
At 28 February 2021 (reported)	396	21,346	21,742
Prior period adjustment to correct recording of share premium	-	3,295	3,295
Prior period adjustment to carrying amount of preference shares	-	(1,275)	(1,275)
At 28 February 2021 (restated) and 28 February 2022	396	23,366	23,762

The capital redemption reserve arose on previous share buy-backs by the Company.

The merger reserve arises on transactions where the Company issues shares pursuant to an arrangement to acquire more than an 90% interest in another company and no share premium is recorded. The merger reserve arose principally in 2001 in relation to the acquisitions of Braemar Shipbrokers Limited and Braemar Tankers Limited.  Further additions have arisen in respect of Naves and Atlantic Brokers included in the prior period adjustment (£1.3m and £2.0m respectively). The amounts in merger reserve are unrealised profits relating to the corresponding assets acquired by the Company on the issue of shares. These profits may become realised on the disposal or write down of these assets.

A loss has been recognised in 2021 on the fair value of intragroup preference share assets acquired by the Company on the acquisition of Naves.  This resulted in a realisation of the merger reserve of £1.3m which has been transferred to retained earnings accordingly.  The impairment charge and reserves transfer have been recognised in the year ended 28 February 2021 and is a prior period adjustment - see Note 23 .

21  Contingent liabilities

The Company has contingent liabilities in respect of guarantees entered into on behalf of its subsidiaries in the normal course of business given as follows:

	2022 £'000	2021 £'000
Bank guarantees given to:
HM Revenue and Customs	-	1,410
Third parties (non-cash collateralised)	710	787
Total	710	2,197

The Company and certain of its subsidiaries have provided cross guarantees and fixed and floating rate charges over their assets to secure their borrowing facilities and other financial instruments.

In the prior year the Group had issued a guarantee of £1.4m to HMRC in respect of VAT, duty and excise which was collected on imports which was collected by Cory Brothers as part of its trading activity and subsequently paid to HMRC.  As a result of Brexit, HMRC no longer required the guarantee and it was cancelled by the Group prior to the disposal of Cory Brothers.

From time to time the Company may be engaged in litigation in the ordinary course of business.  The Company carries professional indemnity insurance.  There are currently no liabilities expected to have a material adverse financial impact on the Company's results or net assets.

The Company has issued guarantees to certain subsidiaries in order to exempt them from audit for the year ended 28 February 2022. See Note 32 of the consolidated financial statements.

22  Related party transactions

The Company has applied the disclosure exemption of FRS 101 in respect of transactions with wholly owned subsidiaries.

During the period the Group entered into the following transactions with joint ventures and investments:

	2021/22			2020/21
	Recharges to/(from) £'000	Dividends £'000	Balance due(to)/ from £'000	Recharges to/(from) £'000	Dividends £'000	Balance due(to)/ from £'000
AqualisBraemar LOC ASA	221	-	282	591	641	179

Recharges to AqualisBraemar LOC ASA consisted primarily of rent, IT services and HR services in accordance with a transitional services agreement. Included in the net recharge to AqualisBraemar LOC ASA is a fee payable to the Group's former Chairman, Ronald Series of £3,750 (2021: £15,000).

A list of the Company's subsidiary undertakings is provided in Note 32 in the Consolidated Financial Statements.

23  Prior year adjustments

Acquisition related errors

During the year to February 2022, the group restructured part of the outstanding liabilities due to management sellers of Naves. In association with this, management took a critical analysis of the historical accounting for the amounts paid and payable on the Naves acquisition and identified errors in the original and subsequent accounting.

Computational errors identified affected both the classification and measurement of items in the accounts of the parent company.

a)  Merger reserve

See commentary in respect of the Group restatement of share premium and merger reserve.

Note that the merger reserve is further impacted by the loss on Naves preference shares in another adjustment, as described below.

b)  Naves liabilities

The error to 29 February 2020 was principally due to the over accrual of finance expense earlier periods.  The correction at 29 February 2020 was to reduce liabilities and increase retained earnings by £0.4m. Finance expense was reduced by £1.0m in the year to 28 February 2021, resulting in a net £0.9 decrease in liabilities and increase in retained earnings at 28 February 2021.  There were also errors in the classification of amounts payable within one year or after one year which have been corrected with no impact on net assets.

c)  Naves preference shares

The parent company's principal investment in Naves is held in the form of preference shares issued by a wholly-owned intermediate holding company. The accounting for the Naves preference shares was reviewed in parallel with the analysis of the accounting for the Naves liabilities, described above.£0.5m of the investment in preference shares was incorrectly presented as investment in subsidiaries and has been transferred into the preference share asset.

The preference shares were previously held at amortised cost, however, as the instrument does not provide the Company with a fixed legal claim in the event of bankruptcy they do not meet the solely payments of principal and interest requirements to be held at amortised cost and should be held at fair value through profit and loss. The fair value of the preference shares at 29 February 2020 was £27.1m, resulting in an increase in retained profits of £0.5m at that date. At 28 February 2021, the fair value was £21.2m, resulting in a loss of £7.0m compared to the balance previously reported at that date.

Finance income on the preference share asset was also over stated by £1.1m in 2021, resulting in a cumulative overstatement of the preference share asset of £7.6m at 28 February 2021.

The loss on fair value remeasurement of the preference share asset in 2021 realised £1.3m of profit in the merger reserve which arose on the Naves acquisition, and accordingly this amount has been transferred from the merger reserve to retained earnings.

Other prior period adjustments

d)  RCF

See commentary in respect of the Group restatement of the RCF.

e)  Re-classification

A further classification error has been identified in the presentation of amounts due and from group companies in relation to amounts that should have been offset and the classification as either current or non-current.

There is no impact on profit and loss or earnings per share in either period, as the calculation error only affected balance sheet classifications. 

The above errors have been corrected by restating each of the affected financial statement line items for the prior periods as follows:

Company balance sheet as at 28 February 2021
	28 February 2021 Reported	a) Merger reserve	b) Naves liabilities		c) Naves preference shares		d) RCF	e) Classification		28 February 2021 Restated
Assets
Non-current assets
Other investments	106,678	-	-		(450)		-	-		106,228
Other non-current assets	10,040	-	-		-		-	-		10,040
Other long-term receivables	1,471	-	-		21,242		-	4,256		26,969
	118,189	-	-		20,792		-	4,256		143,237
Current assets
Total other receivables	45,854	-	-		(28,442)		-	(7,257)		10,155
Cash	634	-	-		-		-	-		634
	46,488	-	-		(28,442)		-	(7,257)		10,789
Total assets	164,677	-	-		(7,650)		-	(3,001)		154,026
Liabilities
Current liabilities
Trade and other payables	(52,660)	-	9,171		-		-	3,001		(40,488)
Convertible loan notes	-	-	(4,461)		-		-	-		(4,461)
Short-term borrowings	(23,000)	-	-		-		23,000	-		-
	(75,660)	-	4,710		-		23,000	3,001		(44,949)
Non-current liabilities
Long-term borrowings	(6,386)	-	-		-		(23,000)	-		(29,386)
Convertible loan notes	-	-	(3,640)		-		-	-		(3,640)
Derivative financial liabilities	-	-	(139)		-		-	-		(139)
Provisions	(541)	-	-		-		-	-		(541)
	(6,927)	-	(3,779)		-		(23,000)	-		(33,706)
Total liabilities	(82,587)	-	931		-		-	3,001		(78,655)
Total assets less total liabilities	82,090	-	931		(7,650)		-	-		75,371
Equity
Share capital	3,174	-	-		-		-	-		3,174
Share premium	55,805	(3,295)	-		-		-	-		52,510
Shares to be issued	(1,362)	-	-		-		-	-		(1,362)
Other Reserves	21,742	3,295	-		(1,275)		-	-		23,762
Retained earnings	2,731	-	931		(6,375)		-	-		(2,713)
Total equity	82,090	-	931		(7,650)		-	-		75,371

Company balance sheet as at 28 February 2021
	1 March 2020 Reported	a) Merger reserve	b) NAVES liabilities	c) NAVES assets	d) RCF	e) Reclassification	1 March 2020 Restated
Assets
Non-current assets
Other investments	104,886	-		(450)	-	-	104,436
Preference shares	-	-	-	27,056	-		27,056
Other non-current assets	18,504	-	-	-	-	-	18,504
Other long-term receivables		-	-		-	5,699	5,699
	123,390	-	-	26,606	-	5,699	155,695
Current assets
Total other receivables	40,812	-	-	(26,104)	-	(3,936)	10,772
Cash	26	-	-	-	-	-	26
	40,838	-	-	(26,104)	-	(3,936)	10,798
Total assets	164,228	-	-	502	-	1,763	166,493
Liabilities
Current liabilities
Trade and other payables	(24,702)	-	4,844	-	-	(1,763)	(21,621)
Short-term borrowings	(49,785)	-	-	-	24,669	-	(25,116)
	(74,487)	-	4,844	-	24,669	(1,763)	(46,737)
Non-current liabilities
Long-term borrowings	(8,763)	-	-	-	(24,669)	-	(33,432)
Convertible loan notes	-	-	(4,448)	-	-	-	(4,448)
Derivative financial liabilities	-	-	(25)	-	-	-	(25)
Provisions	(541)	-	-	-	-	-	(541)
	(9,304)	-	(4,473)	-	(24,669)	-	(38,446)
Total liabilities	(83,791)	-	371	-	-	(1,763)	(85,183)
Total assets less total liabilities	80,437	-	371	502	-	-	81,310
			-	-			-
Equity			-	-			-
Share capital	3,167	-	-	-	-	-	3,167
Share premium	55,805	(3,295)	-	-	-	-	52,510
Shares to be issued	(2,498)	-	-	-	-	-	(2,498)
Other Reserves	21,742	3,295	-	-	-	-	25,037
Retained earnings	2,221	-	371	502	-	-	3,094
Total equity	80,437	-	371	502	-	-	81,310

24  Events after the reporting date

There were no adjusting or significant non-adjusting events between the reporting date and the date of authorisation.

 

END

 

 

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