FY25 Final Results

596/2014) WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.

BRAEMAR PLC

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

Audited Final Results for the year ended 28 February 2025

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

Braemar Plc (LSE: BMS), a leading provider of expert investment, chartering and risk management advice to the shipping and energy markets, announces its unaudited half‐year results for the year ended 28 February 2025 ("FY25" or the "Period").

James Gundy, Group Chief Executive Officer, commented:

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

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

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

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

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

RESULTS HIGHLIGHTS

Financial performance

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

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Robust financial performance

Final Dividend

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

Current trading and outlook

Board

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

Analyst Presentation

Management will host a briefing for analysts at 09.30 BST today at Braemar's offices at One Strand, Trafalgar Square, London, WC2N 5HR. For further details, please contact the team at Houston via braemar@houston.co.uk.

Investor Webcast

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

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

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

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

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

Results for the year

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

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

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

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

Board

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

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

Strategy

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

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

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

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

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

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

Capital Allocation Framework

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

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

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

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

Dividend

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

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

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

Our people

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

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

Outlook

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

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

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

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

Nigel Payne

Chairman

Group Chief Executive Officer's Statement

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

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

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

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

Robust performance

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

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

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

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

Investing

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

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

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

Strategy

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

There are three pillars to this framework

• Diversification
• Consolidation
• Operational excellence

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

Environmental, Social & Governance

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

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

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

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

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

Outlook

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

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

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

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

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

James Gundy

Group Chief Executive Officer

Financial Review

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

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

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

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

Summary Income Statement FY25

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Revenue

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

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

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

Operating costs

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

Central costs

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

Specific items

Alternative performance measures ("APMs")

Braemar uses APMs as key financial indicators to assess the performance of the Group. Management considers that the APMs used by the Group help to provide an alternate assessment of business performance, by excluding items which management does not believe relate to business performance in the period and provide useful information to investors and other interested parties. We have separated the impact of individually material capital transactions, such as acquisitions and disposals, from ongoing trading activity to allow a focus on ongoing operational performance. Our APMs include underlying operating profit and underlying earnings per share.

Items that are not considered to be part of the ongoing trade of the Group have been presented as specific. These items are material in both size and/or nature and we believe may distort understanding of the underlying performance of the business if not identified separately. Details of these items can be found in Note 2.2 to these Financial Statements.

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

Net finance costs

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

Balance sheet

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

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

Borrowings and cash

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

Retirement benefits

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

Taxation

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

Capital management

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

ESOP Trust

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

Dividend

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

Going concern

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

Grant Foley

Group Chief Financial Officer

Operating Review

Market Review and Outlook

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

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

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

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

CHARTERING

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

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

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

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

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

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

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

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

*LNG and LPG & Petrochemicals are subsets of Specialised Tankers

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

LNG

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

LPG & Petrochemicals

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

INVESTMENT ADVISORY

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

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

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

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

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

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

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

RISK ADVISORY (SECURITIES)

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

Dry Cargo Derivatives

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

Coal

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

Natural Gas Derivatives

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

Oil Derivatives

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

Tanker Derivatives

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

Principal Risks and Uncertainties for the year ended 28 February 2025

Risk management

The Group's risk management framework

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

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

Risk management process

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

• senior management has initial responsibility for identifying, monitoring, and updating business risks; while
• the management teams of group IT, HR, Legal, Compliance and Finance assess their respective functions for operational and functional risks not identified by senior management.
• Group-wide real-time updating,
• Distribution and completion of periodic internal control self-assessment surveys,
• Risk management reporting at Group, regional, and company location levels.

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

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

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

Principal risks

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

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

Risk mitigation

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

Principal risks

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

Internal audit

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

Going concern

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

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

Viability statement

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

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

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

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

Competition risk and market consolidation

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

Cybercrime and data security

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

Geopolitical and macroeconomic

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

Currency fluctuations

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

People and Culture

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

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

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

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

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

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

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

Consolidated Income Statement

For the year ended 28 February 2025

Other comprehensive income/(expense)

Items that will not be reclassified to profit or loss:

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

Cash flows from investing activities

Notes to the Financial Statements

General information

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

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

1 Basis of preparation

1.1 Basis of preparation and forward-looking statements

The financial information set out above does not constitute the Group's statutory accounts for the years ended 28 February 2025 or 29 February 2024 but is derived from those accounts. Statutory accounts for 2024 have been delivered to the registrar of companies, and those for 2025 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified; (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

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

• Amendments to IAS 1 "Classification of Liabilities as Current or Non-Current"
• Amendments to IAS 1 "Non-current Liabilities with Covenants"
• Amendments to IFRS 16 "Lease Liability in a Sale and Leaseback (Amendments)"
• Amendments to IFRS 7 and "IAS 7 Supplier Finance Arrangements"

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

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

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

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

The following amendments are effective in future periods and have not been early adopted by the Group:

• Amendments to IAS 21 "The Effects of Changes in Foreign Exchange Rates" titled Lack of Exchangeability
• IFRS 18 "Presentation and Disclosures in Financial Statements"
• IFRS 19 "Subsidiaries without Public Accountability: Disclosures"

IFRS 18 introduces new requirements to:

• present specified categories and defined subtotals in the statement of profit or loss
• improve aggregation and disaggregation.

Except for IFRS 18, the adoption of these standards and amendments is not expected to have a material impact on the Financial Statements of the Group in future periods.

1.2 Going concern

The Group Financial Statements have been prepared on a going concern basis. In reaching this conclusion regarding the going concern assumption, the directors considered cash flow forecasts to 31 August 2026 which is more than twelve months from the date of signing of these Financial Statements.

A set of cash flow forecasts ("the base case") have been prepared by management to cover the going concern period and reviewed by the directors based on revenue and cost forecasts considered reasonable in the light of work done on budgets for the current year and the current shipping markets. In putting together these forecasts, particular attention was paid to the following factors:

• Expected market demand, the impact on market rates and the Group's forward order book.
• The Group's compliance with sanctions put in place as a result of the conflict in the Ukraine has meant additional work reviewing compliance obligations on a regular basis as the laws have been amended but did not have a material effect on trading in FY25, nor is it expected to have an impact in FY26.
• The level of likely cost inflation, particularly around salaries.
• Adverse movement in foreign exchange rates, particularly USD that can have an impact on revenues. The Group has a hedging programme in place to partially mitigate this impact.
• The impact that trade tariffs and a potential trade war could have on performance.
• Geopolitical tensions can cause volatility in shipping markets, but, if anything, that uncertainty can give rise to additional opportunities for the business to support the industry and clients further. There is therefore no expectation that the current global political tensions will have an adverse impact on trading in FY26.

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

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

The cash flow forecasts in the base case assessed the ability of the Group to operate both within the banking covenants and the facility headroom, including a number of downside sensitivities on budgeted revenue, including a reverse stress test scenario. The directors consider revenue as the key assumption in the Group's budget. The cost base is largely fixed or made up of discretionary bonuses, which are directly linked to profitability. Based on two flex scenarios; a revenue decrease of 7.5% and a revenue decrease of 15% (both excluding forward order book) from the base case, only very minor mitigations were necessary to meet banking covenants.

A reverse stress test was also performed to ascertain the point at which the covenants would be breached in respect of the key assumption of budgeted revenue decline. This test indicated that the business, alongside certain mitigating actions which are fully in control of the directors, would be capable of withstanding a reduction of approximately 32% (excluding forward order book) in budgeted revenue from the base case assumptions from May 2025 through to July 2026. In light of current trading, forecasts and the Group's performance over FY25, the directors assessed this downturn in revenue and concluded the likelihood of such a reduction remote, especially in the light of the forward order book of $82.2 million at the end of February 2025 ($31 million of which is for the financial year ending February 2026), such that it does not impact the basis of preparation of the Financial Statements and there is no material uncertainty in this regard.

1.3 Use of estimates and critical judgements

The preparation of the Group's Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. Key estimates are those that the Group has made in the process of applying the Group's accounting policies and that have a significant risk of resulting in material adjustments to the carrying amounts of assets and liabilities within the next financial year. Critical judgements are those that the Group makes, apart from those involving estimations, that the directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the Financial Statements.

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

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

Climate‐related risks and opportunities

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

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

1.4 Material accounting policies

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

Business combinations

• fair values of the assets acquired;
• liabilities incurred to the former owners of the acquired business;
• equity interests issued by the Group;
• fair value of any asset or liability resulting from a contingent consideration arrangement; and
• fair value of any pre-existing equity interest in the subsidiary.

Acquisition-related costs are expensed as incurred.

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

Foreign currencies

Transactions and balances

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

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

Translation to presentation currency

The presentational currency of the Group is sterling. Assets and liabilities of overseas subsidiaries, branches and associates are translated from their functional currency into sterling at the exchange rates ruling at the Balance Sheet date. Trading results are translated at the average rates for the period. Exchange differences arising on the consolidation of the net assets of overseas subsidiaries are recognised through other comprehensive income ("OCI") in the foreign currency translation reserve (see Note 6.4).

Impairment

Contingent assets

2 Performance-related information

Revenue recognition

Key judgement 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 Chartering, in relation to single voyages, the Group has defined the performance obligation to be satisfied at the point in time where the negotiated contract between counterparties has been successfully completed, being the discharge of cargoes, 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 over a time period, or at a different point in time. For time charters, the performance obligation is to provide operational support and act on behalf of the principal over the course of hire. As a result, the Group believes the performance obligation is satisfied over the period of hire and revenue is recognised accordingly.

Deep Sea Tankers, Specialised Tankers and Gas, Dry Cargo and Offshore:

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

Securities:

Investment Advisory

Financial:

• income comprises retainer fees and success fees generated by corporate finance-related activities. Revenue is recognised in accordance with the terms agreed in individual client terms of engagement. Recurring monthly retainers allow customers to benefit from services when required, and as such, are generally recognised in the month of invoice. Success fees are recognised at the point when the performance obligations of the particular engagement are fulfilled.

Sale and Purchase:

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

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

2.1 Business segments

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

The segmental analysis is consistent with the way the Group manages itself and with the format of the Group's internal financial reporting. The board considers the business from both service line and geographic perspectives. A description of each of the lines of service is provided in the Operating and Financial Review. The Group's main geographic markets comprise the UK, Singapore, the US, Australia, Switzerland, Germany and the Rest of the World. The Group's geographical markets are determined by the location of the Group's assets and operations.

Geographical segment - by origin of invoice

Geographical information determined by origin of invoice is set out below:

Revenue

Remaining performance obligations

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

Forward order book

2.2 Specific items

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

Key judgement Classification and recognition of specific items In reporting financial information, the Group presents Alternative Performance Measures ("APMs") which are not defined or specified under the requirements of International Financial Reporting Standards ("IFRS"). The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information and enable an alternative comparison of performance over time. The Group excludes specific items from its underlying earnings measures. Management judgement is required as to which 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. Further details of the Group's specific items are included in the note below.

Other operating income

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

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

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

Operating costs

Impairment of ROU asset

During the year, the Group recognised an extension to a lease of office space with a corresponding increase in right-of-use asset and lease liability. The Group had previously sublet a segregated portion of the office space, but does not expect to be able to sublet the office space for the full period of the lease extension. As a result, the Group recognised an impairment charge in relation to the portion of the right-of-use asset relating to the unused office space. As this cost does not relate to the performance of the business, it is treated as a specific item.

Investigation costs

During the preparation of the 2023 Annual Report, the board instigated an investigation into a transaction which originated in 2013 and involved payments being made through to 2017. The investigation engaged multiple external specialist firms and resulted in a significant cost to the business of £2.6 million in the year to 29 February 2024 which the Group does not consider reflects the trading of the business in the year and as a result is treated as a specific item. A smaller residual amount of £0.2m in relation to ongoing legal support has been incurred in the current year. No significant further costs are expected in FY26.

Board change costs

In the prior year, the Group appointed a new Chief Financial Officer with effect from 1 August 2023 to replace Nick Stone who left on 31 July 2023. The recruitment costs incurred of £0.2 million are not considered part of the trading performance of the business and so are treated as specific items.

Unlawful dividend rectification

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

Loss on investment measured at fair value through profit or loss

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

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

Acquisition-related items

Consideration treated as an employment expense

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

Madrid post-contractual obligation

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

The upfront payments and share awards have a claw back mechanism which is linked to the continued employment of the brokers over a three-year period from December 2022. The costs associated with the upfront payments and share awards are not considered by the Group to be specific items as they relate to the recruitment of brokers and not a business combination, but are disclosed as acquisition-related expenditure given their size and are amortised over three years to December 2025. In addition, certain brokers are entitled to a payment on termination in return for a non-compete obligation. The cost related to the post-contractual payment obligation is treated as a specific item because there is no requirement to provide service. The Group recognised a gain of £0.3 million during the year in relation to this obligation (2024: £0.4 million charge).

Amortisation of acquired intangible assets

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

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

Other items

Foreign exchange and derivative movement on Naves liability

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

Cory Brothers earnout deferred consideration receivable

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

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

2.3 Operating profit

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

This is stated after charging/(crediting):

2.4 Staff costs

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

1 The acquisition related staff costs relate to upfront cash payments made in connection with the acquisition of Southport Maritime Inc. and the upfront payments made on the acquisition of Madrid Shipping Advisors SL, which are both treated as a remuneration expense. For further details on the upfront payments, see Note 2.2.

2 The FY24 amounts in relation to salaries, wages and short-term employee benefits and social security costs have been restated to move £3.8 million of social security costs previously included within salaries, wages and short-term employee benefits to be included in the social security costs line item.

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

Average number of employees

Pension costs relate to contributions made to a defined contribution pension scheme on behalf of three (2024: four) members of key management.

2.5 Finance income and costs

The tables below provide a breakdown of the key components of finance income and finance costs.

2.6 Auditor's remuneration

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

Audit services:

Fees payable to the Group's auditor and its associates for other services:

All fees paid to the auditor were charged to operating profit in both years. Included in the FY24 audit fees disclosed above is an amount of £0.4 million in relation to incremental audit cost related to the investigation work undertaken. See Note 2.2 for further detail.

2.7 Taxation

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

Tax currently payable is based on taxable profit for the year. Taxable profit differs from 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.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated Financial Statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from the initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax are recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Analysis of charge in year

1 The Group has £0.2 million of unrecognised deferred tax asset relating to £0.8 million of losses. The expiry date of operating losses carried forward is dependent upon the law of the various territories in which losses arise. As at 28 February 2025 the losses have no expiry.

Included within the total tax charge is £0.5 million credit (2024: £0.8 million) in respect of specific items disclosed separately on the face of the Income Statement. See Note 2.2.

The Group's future tax charge will be sensitive to the geographic mix of profits earned, the tax rates in force and changes to the tax rules in jurisdictions that the Group operates in.

Amounts recognised in OCI

Items that will not be reclassified to profit or loss

Within the UK current year origination and reversal of temporary differences there is no amount (2024: £nil) in respect of deferred tax on the actuarial gain on the Group's defined benefit pension scheme.

Deferred tax asset

Deferred tax asset

A deferred net tax asset of £3.0 million (2024: £3.0 million) 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.

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 £nil (2024: £nil).

2.8 Earnings per share

3 Balance sheet non-current assets

3.1 Goodwill

Key estimate 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 units. 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. As part of determining the value in use of each CGU group, Management has considered the potential impact of climate change on the business performance over the next five years, and the terminal growth rates. While there is considerable uncertainty relating to the longer term and quantifying the impact on a range of outcomes, management considers that environmental-related incremental costs are expected to have a relatively low impact. Recognising that there are extreme but unlikely scenarios, the Group considers that while exposed to physical risks associated with climate change (such as flooding, heatwaves, sea level rises and increased precipitation) the estimated impact of these on the Group is not deemed material. In addition, the Group is exposed to transitional risks which might arise, for example, from government policy, customer expectations, material costs and increased stakeholder concern. The transitional risks could result in financial impacts such as higher environmentally focused levies (e.g. carbon pricing). While the Group is exposed to the potential financial impacts associated with transitional risks, based on information currently available, these are not deemed to have a significant impact. The key assumptions and the sensitivity of them to the carrying values are provided in the note below.

£'000

Cost

All goodwill is denominated in the Group's reporting currency, with the exception of the Corporate Finance Division which is denominated in euros. Goodwill denominated in foreign currencies is revalued at the Balance Sheet date. The exchange adjustment for the year ended 28 February 2025 was a loss of £0.1 million (2024: loss of £0.1 million).

i) Business performance over the next five years - 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. The assumptions behind these projections are consistent with the viability statement. 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.

• Long-term growth rates - This is the average growth rate used to extrapolate cash flows beyond the budget period.
• Discount rates - The post-tax discount rate was determined based on a weighted average cost of capital ("WACC") and adjusted for CGU-specific risk factors specific to the CGU group.

The effect on cash flows of climate change was considered but assessed to have no material impact at this time. Management does not believe that climate-related risks nor the potential impact of climate change on the Group's operations would materially affect the recoverability of goodwill in either of the cash-generating units.

The results of the impairment tests are as follows:

Chartering

The key assumptions and resulting net present values are as follows:

At 28 February 2025, the net present value of the Chartering segment 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.

Corporate Finance

Revenues for the Corporate Finance Division are challenging to forecast because of the highly variable nature of success fees. Management forecasts over the five-year forecast period consider recent performance and reflect management's best estimate of success fee taken into account of volatility of the success fee. Growth rates used in the value-in-use test reflect this variability and were based on the best estimate of Management.

1 Year-on-year growth in the prior year in relation to year 1 was 29%, which reflected recovery of revenue after lower than historically achieved performance in FY24.

Sensitivity to impairment for Corporate Finance

• revenue growth rate from years 2 to 5;
• post-tax discount rate; and
• revenue outperforms or underperforms forecast in year 1 with subsequent revenue growth in line with the above assumptions in years 2 to 5.

The recoverable amount of the Group's goodwill relating to Corporate Finance exceeds its carrying value by £2.0 million. The below table presents the net variance in the calculated value in use of Corporate Finance under each scenario:

Further, the break-even points of the impairment review which would result in an impairment when flexing these three key assumptions are as below:

Change in assumption Increase/(decrease)

While the break-even disclosure above relates to specific discrete inputs to management's value-in-use calculation, a combination of smaller changes in assumptions results in larger reductions of the value-in-use. For example, if 0% revenue growth was assumed in year 1 along with revenue growth in years 2 to 5 reduced to 1%, while maintaining a terminal growth rate, this would result in an impairment.

3.2 Other intangible assets

Computer software

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 provision for impairment. The amortisation of the carrying value of the capitalised customer relationships is charged to the Income Statement over an estimated useful life, which is up to twelve years. The amortisation in respect of capitalised brand assets is expensed to the Income Statement over an estimated useful life, which is between three and twelve years.

1 Following a review of the gross cost and gross accumulated amortisation and impairment amounts, the Group has restated the opening gross cost and gross amortisation and impairment amount to decrease both by £2.0 million in relation to disposals in prior years. There is no impact on the Group's Income Statement or movements reported in the current or prior year.

2 The positive amount in the disposal line relates to an immaterial correction of an amount of £0.3 million incorrectly disclosed as a disposal in the prior year.

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

3.3 Investments

In accordance with IFRS 9, the Group's investments in unlisted equity investments are measured at fair value through profit or loss as the Group has not elected to recognise fair value gains and losses through other comprehensive income.

A list of subsidiary undertakings is included in Note 7.3. The Financial Statements of the principal subsidiary undertakings are prepared to 28 February 2025.

The Group's unlisted investments include 1,000 (2024: 1,000) ordinary £1 shares in London Tanker Brokers' Panel Limited. The investment is carried at fair value of £1.4 million, see Note 4.4 for further details.

3.4 Investment in associate

Investments

Zuma Labs Limited

Zuma Labs Limited is a private company incorporated in England and Wales and its registered address is Kemp House, 128 City Road, London, United Kingdom, EC1V 2NX. Zuma Labs Limited has one share class and each share carries one vote.

At 28 February 2025, 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 (2024: 2,500 shares, 20% of share capital and 20% of voting rights). The Group has representation on the board of Zuma Labs Limited, and, as a result, the Group considers that it has the power to exercise significant influence in Zuma Labs Limited and the investment in it has been accounted for using the equity method.

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 the Group's share of the net fair value of Zuma Labs Limited's identifiable assets and liabilities is 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 with the latest statutory accounts available being for the year ended 31 March 2024. Management accounts up to 28 February 2025 have been made available, so for practical reasons Zuma Labs Limited's management accounts for the period ended 28 February 2025 have been used for the purposes of the Group's full-year reporting at 28 February. Zuma Labs Limited will prepare its next set of Financial Statements for the year ended 31 March 2025. At 28 February 2025 Zuma Labs Limited had no contingent liabilities.

There are no indicators that the carrying value of the Group's investment in Zuma Labs Limited at 28 February 2025 is impaired.

The movements in the investment in the associate are provided below.

Zuma £'000

3.5 Property, plant and equipment

Property, plant and equipment are shown at historical cost less accumulated depreciation and any provision for impairment. Included in each category are right-of-use assets where the Group is a lessee. Land and buildings primarily includes right-of-use assets and leasehold improvements.

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:

Land and buildings - over the lease term

Computer equipment - four years

Fixtures and equipment - four years or the lease term for right-of-use assets

At 28 February 2025, the Group had no contractual commitments for the acquisition of property, plant and equipment (2024: £nil).

3.6 Leases

Key estimate Lease term The Group determines the lease term as the non-cancellable period 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 also considers the local legal framework when making an assessment of its ability to continue to occupy premises. 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. During the year, the Group increased its right-of-use assets and corresponding lease liabilities by £7.6 million, primarily relating to its continued use of office space, reflecting its best estimate of the of the lease terms. Undiscounted potential future cash outflows of £8.1 million have not been included in the lease liability because it is not reasonably certain that the leases will be extended (or not terminated).

The Group as a lessee

The Group has various lease arrangements for properties, and other equipment. At inception of a lease contract, the Group 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 Group 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 twelve months or less, costs for which are recognised as an operating expense within the Income Statement on a straight-line basis.

For the Group, lease payments generally comprise the following:

− Fixed payments, less any lease incentives receivable;

− Variable payments that are based on an index or rate; and

− Payments to be made under extension options which are reasonably certain to be exercised.

The Group as a lessor

The Group classifies leases as either operating or finance leases based on the substance of the arrangement. At commencement of a finance lease, a receivable is recognised at an amount equal to the Group's net investment in the lease. Finance income is recognised reflecting a constant periodic rate of return on the net investment in the lease. Lease payments from operating leases are recognised as income on a straight-line basis.

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 term.

The total cash outflow for leases is £3,382,000 (2024: £3,332,000), of which £276,000 (2024: £189,000) represents payment of interest.

Contractual payments by maturity are provided in Note 4.4 (f).

During the year, the financial effect of revising lease terms arising from the effect of exercising extension and termination options was £nil (2024: increase of £375,000) in the recognised lease liabilities. As at 28 February 2025, undiscounted potential future cash outflows of £8.1 million (2024: £2.9 million) have not been included in the lease liability because it is not reasonably certain that the leases will be extended (or not terminated).

Lease receivables

4 Balance sheet - Operating assets and liabilities

4.1 Other long-term receivables

For the accounting policy and further details on deferred and contingent consideration receivable, see Note 4.9. The accounting policy for finance lease receivables is set out in Note 3.6.

In FY24, deferred consideration of £1.3 million and contingent consideration of £0.5 million relates to the earnout payments receivable in respect of the disposal of Cory Brothers; further detail is provided in Note 4.9. Prepayments includes the non-current element of the claw-back provision on joining and retention incentives paid to certain employees. The receivable is amortised over the claw-back period, and therefore is expected to be recovered in greater than twelve months.

4.2 Trade and other receivables

Trade receivables and contract assets

Trade receivables and contract assets are initially recognised at fair value (less transaction costs) and subsequently measured at amortised cost.

Specific provision for impairment is made where there is evidence that the balances will not be recovered in full. An impairment provision for expected credit losses is made for trade receivables and contract assets 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 are determined based on historical credit loss experience as well as forward-looking information. Impairment 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.

Other items

For the accounting policy and further details on deferred and contingent consideration receivable, see Note 4.9. The accounting policy for finance lease receivables is set out in Note 3.6.

Key estimate Provision for impairment of trade receivables and contract assets Trade receivables and contract assets are amounts due from customers in the ordinary course of business. Trade receivables and contract assets 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 contract assets 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. 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. The expected loss rates applied to receivables are provided in this note.

Deferred consideration and contingent consideration relate to the earnout payments receivable in respect of the disposal of Cory Brothers; further detail is provided in Note 4.9.

Included in other receivables in both years are VAT and other sales tax receivables and employee loans. In the prior year, security deposits are also included.

Prepayments includes an asset of £2.2 million (2024: £3.5 million) in respect of the current portion of the claw-back provision on joining incentives paid to certain employees which are being charged to the Income Statement in accordance with the claw-back provisions of the underlying contracts. The receivable is amortised over the claw-back period.

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.

The total receivables balance is denominated in the following currencies:

As at 28 February 2025, trade receivables of £2.3 million (2024: £2.3 million) which were over twelve months old were treated as credit impaired and have been provided for. No provision (2024: £nil) has been made for specific trade receivables which are less than twelve months overdue.

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. Trade receivables and contract assets are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments for a period of greater than 365 days past due.

Movements on the provision for impairment of trade receivables and contract assets were as follows:

Amounts receivable written off in the year relate to previously fully provided for amounts.

Contract assets

4.3 Trade and other payables

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. The accounting policy for lease liabilities is set out in Note 3.6.

Accruals primarily includes accrued bonuses and other general accruals.

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

4.4 Financial instruments and risk management

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

• Currency risk;
• Interest rate risk;
• Credit risk; and
• Liquidity risk.

Financial instruments

• Principal financial instruments
• Trade and other receivables;
• Cash and cash equivalents;
• Deferred consideration receivable;
• Contingent consideration receivable;
• Unlisted investments;
• Trade and other payables;
• Revolving credit facility;
• Lease liabilities; and
• Derivative financial instruments.
• Financial instruments by category

Financial instruments measured at fair value

1Currency forwards with a fair value of £0.2 million (2024: £1.3 million) maturing within twelve months have been shown as current assets. Currency forwards with a fair value of £0.2 million (2024: £0.2 million) maturing in greater than twelve months of the Balance Sheet date have been shown as non-current assets. Liabilities include currency forwards with a fair value of £0.6 million (2024: £0.2 million) maturing within twelve months shown as current liabilities and currency forwards with a fair value of £0.1 million (2024: £0.0 million) maturing in greater than twelve months of the Balance Sheet date shown as non-current liabilities.

Fair value hierarchy

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

Valuation processes

The Group's finance team and Group Chief Financial Officer are responsible for fair value measurement of financial instruments and makes the decision as to the valuation technique to be applied, along with the level of external support required. The Group uses external specialists to value some of the financial instruments included within Level 3 of the fair value hierarchy. The results of those valuations are reviewed at each reporting date within the finance team.

Unlisted investments

The unlisted investment primarily relates to the Group's investment in the London Tanker Brokers' Panel, see Note 3.3. In FY23, the investment was carried at fair value, based on the value of the most recent comparable transaction and was therefore classified as Level 2 in the fair value hierarchy. Due to the time which has passed since the most recent comparable market transaction, the Group has valued the investment in the current year based on an income approach which has resulted in the fair value being deemed to be in Level 3 of the fair value hierarchy. The Group's policy is that the beginning of the financial year is considered the date of transfer between levels in the fair value hierarchy. The significant unobservable inputs into the valuation are:

• a discount rate of 16.0% (2024: 16.4%); and
• expected income from the investment.

Contingent consideration receivable

The fair value of the contingent consideration receivable includes unobservable inputs and are therefore classified as Level 3. The contingent consideration receivable relates to the disposal of the Logistics Division whereby the Group 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 balance of the earnout consideration is contingent on the future performance of the combined business up to a maximum specified in the SPA; this has been classified as contingent consideration. The fair value of the contingent consideration has been calculated by reference to management's expectation of the future profitability of the combined business and discounted to present value using a discount rate of 5.51% (2024: 5.29%). The discount rate takes into account the credit risk of Vertom Agencies BV. See Note 4.9 for further details.

Derivative contracts

Forward currency contracts

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. The 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 a Black-Scholes valuation model.

A gain of £111,000 (2024: £244,000 gain) has been recognised in the Income Statement in respect of the fair value movement of the embedded derivative from 1 March 2024 to 28 February 2025.

Financial instruments not measured at fair value

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

Deferred consideration receivable

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 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 its transactional exposures to foreign currency risks using forward exchange contracts and currency options. The Group is primarily exposed to fluctuations in US dollar to sterling exchange rates on foreign currency sales and hedges a proportion of those expected cash flows out to 17 months. The principal source of hedge ineffectiveness is the risk of changes in timing of the forecast transaction or that they do not occur, which is addressed by only hedging a proportion of future foreign currency sales. There were no hedged transactions forecast in the current year which did not occur (2024: £nil).

Hedge accounting

Derivatives are initially recognised at fair value and are subsequently remeasured at their fair value at each Balance Sheet date with gains and losses recognised immediately in the Income Statement unless hedge accounting is applied. 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 within finance costs or income.

Financial assets and liabilities are classified in accordance with the fair value hierarchy specified by IFRS 13. See Note 4.4.

Cash flow hedge accounting

Cash flow hedges are used to hedge the variability in cash flows of highly probable forecast transactions caused by changes in foreign currency exchange rates and interest rates. Where a derivative financial instrument is designated in a cash flow hedge relationship with a highly probable forecast transaction, the effective part of any change in fair value arising is deferred in the cash flow hedging reserve within equity, via the Statement of Comprehensive Income. The Group designates a portion, being the first US dollar amounts in a particular period, of forecast revenue transactions in cash flow hedges and reports any gain or loss as part of revenue when the revenue is recognised. The gain or loss relating to the ineffective part is recognised in the Income Statement within net finance expense. Amounts deferred in the cash flow hedging reserve are reclassified to the Income Statement in the periods when the hedged item is recognised in the Income Statement.

If a hedging instrument expires or is sold 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. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in equity is recognised immediately in the Income Statement.

A gain of £1,500,000 (2024: £2,231,000 gain) in relation to effective hedges has been recognised in the Income Statement in respect of derivative contracts which have matured in the period. No ineffectiveness in relation to hedge accounting has been recognised in the period.

Net investment hedge accounting

The Group uses its US dollar denominated borrowings as a hedge against the translation exposure on the Group's net investment in overseas companies. The Group designates the spot rate of the loans as the hedging instrument. There was no ineffectiveness to be recognised on hedges of net investments in foreign operations. Where the hedge is fully effective at hedging the variability in the net assets of such companies caused by changes in exchange rates, the changes in value of the borrowings are recognised in the translation reserve within equity, via the Statement of Comprehensive Income. The ineffective part of any change in value caused by changes in exchange rates is recognised in the Income Statement within finance income or costs. The effective portion will be recycled into the Income Statement on the sale of the foreign operation.

The table below provides further information on the Group's net investment hedging relationships:

The balances and movements into and out of the foreign currency translation reserve are shown in the Consolidated Statement of Comprehensive Income and the Consolidated Statement of Changes in Equity respectively. The amount in the foreign currency translation reserve in relation to hedge accounting is a gain of £0.1 million (2024: £0.1 million gain) and is split as follows:

• continuing net investment hedges gain of £0.1 million (2024: £0.1 million gain); and
• hedging relationships for which hedge accounting is no longer applied, £nil (2024: £nil).

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:

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 entities.

Credit risk

The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets. 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 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 4.4.

Liquidity risk

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 receives rolling 13-week cash flow projections on a weekly basis to ensure the Group has sufficient liquidity.

The board receives rolling twelve-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 directors consider that the carrying amounts of these assets approximate to their fair value.

4.6 Long-term liabilities

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.

Modification of terms of financial liabilities

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.

The Group's revolving credit facility ("RCF") is for £30.0 million plus an accordion limit of £10.0 million and had an initial termination date of November 2025. During the year, the Group exercised an option to extend the facility by two years which was approved by the lender, extending the term to November 2027. Drawdown of the accordion facility is subject to additional credit approval. The RCF agreement has an EBITDA leverage covenant of 2.5x and a minimum interest cover of 4x. At 31 May 2024, 31 August 2024, 30 November 2024 and 28 February 2025, the Group met all financial covenant tests. 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 non-current. The amounts drawn under the RCF bear interest based on SONIA, SOFR and EURIBOR from amounts drawn in sterling, US dollars and euros respectively, plus a credit margin dependent on the Group's leverage ratio. As at 28 February 2025, the Group's net debt was £2.5 million (29 February 2024: £1.0 million net cash) with available headroom in the £30.0 million RCF of £6.8 million (at 29 February 2024: £2.8 million) (net cash is calculated as cash less secured RCF). All revolving credit facilities are drawn by Braemar Plc.

4.7 Convertible loan notes

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 is recognised as a euro liability initially recognised at fair value and prospectively accounted for applying the effective interest rate method. As the loan notes are denominated in euros, the conversion feature does not meet the definition of an equity instrument. As a result, it is treated as a separated embedded derivative and is 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.

In September 2017, the Group acquired the entire share capital of Naves Corporate Finance GmbH ("Naves"). Naves is 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.

• at completion in cash of £7.3 million (€8.3 million), in shares of £1.3 million (€1.5 million) and in convertible loan notes of £6.4 million (€7.4 million); and
• deferred consideration in cash of £0.5 million (€0.6 million) and convertible loan notes of £0.5 million (€0.6 million), payable in instalments over the three years after the acquisition.

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:

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

Following the issuance of new convertible loan notes in the prior year, at 28 February 2025 no amounts are subject to future service conditions.

Convertible instruments

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.

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 £43.9 million (€50.0 million) is reflected in the audited Financial Statements of the Group.

The embedded derivatives within the convertible loan notes are valued using Level 3 hierarchy techniques under IFRS 13. See Note 4.4.

The total value of convertible loan note liabilities, including linked derivatives, is £2.4 million (2024: £3.1 million). The following table shows amounts in the Group balance sheet relating to the convertible loan notes issued on the acquisition of Naves.

1 Restatement for the adoption of 'Classification of Liabilities as Current or Non-current and Non-current liabilities with covenants - Amendments to IAS 1'. For further details, see Note 1.1.

The current year cash paid includes interest of £0.1 million (2024: £0.1 million).

The loan notes have the following maturities:

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.

4.8 Reconciliation of liabilities from financing activities

4.9 Deferred and contingent consideration receivable

Contingent consideration receivable is initially recognised at fair value and is subsequently remeasured at its fair value at each Balance Sheet date. The resulting gain or loss is recognised immediately in the Income Statement. Contingent consideration receivable is classified as Level 3 in accordance with the fair value hierarchy specified by IFRS 13. Deferred consideration is initially measured at its fair value and subsequently measured at amortised cost less provision for impairment.

On 28 February 2022, the Group sold Cory Brothers to Vertom Agencies BV for maximum consideration of £15.5 million. Initial cash proceeds of £6.5 million were received on completion of the transaction, and three contractual "earnout" payments will be made, being an agreed percentage of the future gross profits of the combined VertomCory business over three subsequent twelve-month earnout periods. The remaining "earnout" payments are subject to a minimum of £1.3 million and a combined maximum of £3.2 million.

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. 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 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. Contingent consideration receivable is initially recognised at fair value and subsequently measures at fair value through profit and loss.

The fair value of the contingent consideration is calculated using the forecast gross profit for the combined VertomCory business for each earnout period, applying the agreed percentage, deducting the minimum payment and discounting the forecast contingent cashflows. The valuation of the contingent consideration involves two 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 5.51% (2024: 5.45%) was used to calculate the net present value; this was based on the credit risk of Vertom Agencies BV.

Fair value of Cory Brothers deferred and contingent consideration receivable

The agreed minimum earnout payment is presented as deferred consideration and measured at amortised cost, using a discount rate of 2.39% determined on initial measurement. The uncertain element of each earnout payment is measured at fair value through profit or loss and presented as contingent consideration.

Deferred and contingent consideration are included in other long-term receivables (see Note 4.1) and current other receivables (see Note 4.2). The amortised cost of the deferred consideration is £1.3 million (2024: £2.6 million). The fair value of the contingent consideration is £0.7 million (2024: £1.1 million).

During the year, the Group received £1.8 million (2024: £1.5 million) which is included in the Group Cash Flow Statement with £1.7 million (2024: £1.4 million) allocated to investing activities and £0.1 million (2024: £0.1 million) to interest received in relation to the deferred consideration payment.

5 Employee remuneration schemes

5.1 Long-term employee benefits

Key estimate

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 at each reporting date.

The Company is aware of a UK High Court legal ruling in June 2023 between Virgin Media Limited and NTL Pension Trustees II Limited, which decided that certain historical rule amendments were invalid if they were not accompanied by actuarial certifications. The ruling was subject to appeal and in July 2024 the Court of Appeal confirmed the UK High Court legal ruling from 2023. The Company, together with the pension scheme trustees, is in the process of assessing the possible impact of this ruling. As it is not possible at present to estimate the impact, if any, from the ruling, no adjustments have been made to the defined benefit asset recognised in the Financial Statements.

Critical judgement

Recoverability of defined benefit pension scheme net asset

The free-standing tax charge on the net pension asset reduced from 35% at 29 February 2024 to 25% from 6 April 2024. This measure was substantively enacted on 11 March 2024 resulting in an increase to the present value of the defined benefit asset, along with an increase in the discount rate from 5.0% at 29 February 2024 to 5.3% at 28 February 2025. The UK defined benefit scheme continues to be in an actuarial surplus position at 28 February 2025 (measured on an IAS 19 "Employee Benefits" basis) of £2.5 million (29 February 2024: £1.4 million). The surplus has been recognised on the basis that the Group has an unconditional right to a refund, assuming the gradual settlement of Scheme liabilities over time until all members have left the Scheme. The surplus will be subject to a tax charge on its recovery which the Group does not believe meets the definition of an income tax under IAS 12, and, as a result, the surplus has been presented net of the expected taxes payable of £0.9 million (2024: £0.8 million), at a rate of 25% (2024: 35%).

The Group has the following long-term employee benefits:

• Defined contribution schemes
• Defined benefit schemes

The Group operates 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.

Other long-term benefits

Funded defined benefit scheme

The scheme was closed to future accrual and from 1 February 2016, post-retirement benefits are provided to these employees through a separate defined contribution arrangement.

Profile of the Scheme

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 14 years (2024: 15 years).

Funding implications

UK legislation requires that pension schemes are funded prudently. The most recent funding valuation of the Scheme was carried out by a qualified actuary as at 31 March 2023 and showed a surplus of £0.3 million.

Risks associated with the Scheme

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

Asset volatility

Changes in bond yields

Inflation risk

Life expectancy

The Trustees insure certain benefits payable on death before retirement.

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

All members are assumed to retire at age 60.

The Scheme's assets are split by type of asset in the following table.

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

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

The Group does not expect to make any contributions to the scheme in the next twelve months.

1The 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 £1,967,000 (2024: £2,247,000) which was in respect of continuing operations.

Contributions of £190,000 were due to these schemes at 28 February 2025 (2024: £180,000).

5.2 Share-based payments

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

All of the Group's share schemes are accounted for as equity-settled share-based payments because they only entitle the employee to receive equity instrument issued by the Parent Company. 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. Occasionally the Group, at its discretion, might repurchase vested equity instruments. In accordance with IFRS 2, such payments to employees are accounted for as a deduction from equity, except to the extent the payment exceeds the fair value of the equity instruments repurchased.

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 6.3 provides detail on the ESOP and the EBT and movements in shares to be issued.

Key estimate 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 the Income Statement such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves. A 5% decrease in the forfeiture assumption during FY25 would result in an additional charge of £0.5 million (2024: £0.5 million) to the Income Statement, while a 5% increase in the forfeiture assumption during FY25 would result in a reduced charge of £0.7 million (2024: £0.6 million). While the Group believes that a change in estimate of 5% or greater for all awards in any one year is unlikely, due to the fact that the value of awards are not uniform between employees, the Group believes that there is a significant risk that a revision to the forfeiture estimate could result in a material impact to the Income Statement in the next financial year depending on the profile of leavers.

Deferred Bonus Plan ("DBP")

The Company adopted a Deferred Bonus Plan in May 2020 (the "2020 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 "2020 CSOP"). Where an employee receives a linked award under the 2020 DBP, if the Company's share price rises over the vesting period, the 2020 CSOP award can be exercised with the value of shares delivered on the vesting of the 2020 DBP award being reduced by the exercise gain on the 2020 CSOP award. Awards under the 2020 DBP and the 2020 CSOP may be settled by the issue of new shares of by way of transfer of shares from the ESOP. Historical 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.

Restricted Share Plan ("RSP")

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. Their fair value is estimated based on the share price at the time of grant less the expected dividend to be paid during the vesting period. The number of awards which are expected to vest is estimated by management based on levels of expected forfeitures.

Long Term Incentive Plan ("LTIP")

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

Deferred Bonus Plan

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

The weighted average share price on exercise for awards exercised during the year was £2.89 (2024: £2.82). The weighted average share price at grant date for awards granted during the year was £2.97 (2024: £2.75).

Under the 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 2025, the ESOP held 1,583,460 ordinary shares (2024: 2,303,211). 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.

Restricted Share Plan

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

The weighted average share price on exercise for awards exercised during the year was £2.98 (2024: £2.71).

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 is 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.

Long-Term Incentive Plan ("LTIP")

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

The weighted average share price at grant date for awards granted during the year was £2.97 (2024: £2.75). The weighted average share price on exercise for awards exercised during the year was £2.46 (2024: None exercised)

The fair value of the LTIP 2021 award which has a TSR-based vesting condition has been calculated using a Monte Carlo simulation. The fair value of the other LTIPs is determined based on 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.

Other share-based payments

On 5 December 2022, 253,434 shares were awarded as a joining incentive to certain employees of Madrid Shipping Advisors SL and on 16 December 2022, 1,016,121 shares were issued to the former owners of Southport as part of the acquisition. In addition, on the acquisition of Southport, a further 872,821 shares were awarded to key employees of Southport. The fair value of the awards is determined based on the share price at the time of grant less the expected dividend to be paid during the three-year vesting period calculated using the market consensus dividend yield.

The value of the awards is recognised as an expense over the period from the date of grant to the vesting date. The Southport Maritime Inc. awards will be satisfied by the issue of new shares.

No shares remained unpaid at 28 February 2025 or 29 February 2024. The Company has one class of ordinary shares which carry no right to fixed income.

6.2 Dividends

Amounts recognised as distributions to equity holders in the year:

The right to receive dividends on the shares held in the ESOP has been waived (see Note 6.3). The dividend saving through the waiver is £0.1 million (2024: £0.2 million).

6.3 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. During the year, the Group completed the process of winding up the EBT with the shares held being sold in the market.

£'000

As part of the acquisition of ACM Shipping Group plc in July 2014, the Company issued 125,621 shares into an Employee Benefit Trust ("EBT") previously run by ACM Shipping Group plc. At 29 February 2024, the ACM EBT held 62,290 ordinary shares of 10 pence each, which were sold during the period.

The total cost to the Company of shares held in the ESOP at 28 February 2025 was £4.3 million (2024: £7.1 million) including stamp duty associated with the purchases. The shares owned by the ESOP had a market value at 28 February 2025 of £4.2million (2024: £6.3 million). The distribution of these shares is determined by the Remuneration Committee.

1,600,095 shares (2024: 3,440,115) have been released to employees during the year. The shares acquired by the ESOP during the year had an aggregate cost of £2.4 million (2024: £6.1 million).

6.4 Other reserves

The capital redemption reserve arose on previous share buy-backs by the Company. The merger reserve arose on transactions where the Company issued shares pursuant to an arrangement to acquire more than a 90% interest in another company and no share premium was 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. The amounts in the 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. Following the Capital Reduction in FY24 (see Note 6.2), the merger reserve was reduced by £19.8 million and the capital redemption reserve was reduced to £nil.

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 £0.3 million liability (2024: £1.3 million asset). The deferred tax movement recognised in equity in the year was a gain of £0.4 million (2024: £0.4 million loss).

7 Other supporting notes

7.1 Provisions

Short-term provisions for long service leave expected to be settled wholly within twelve 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 twelve 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.

Key estimate Uncertain commission obligations In June 2023, the board commissioned an independent internal investigation into an historical transaction originating in 2013. The investigation was overseen by an Investigation Committee chaired by the Group's non-executive Chairman and was conducted by an independent specialist forensic accounting firm, and independent external counsel. The investigation was comprehensive and complex and ultimately encompassed several transactions between 2006 and 2013 which required further investigation. As a result of the investigation, the Group recognised a provision of £2.0 million in relation to the uncertain obligations connected to a number of the transactions and commission obligations identified as part of the investigation. Of the £2.0 million, £1.7 million relates to an historical unsettled commission payable which was recorded in 2017 upon completion of the relevant contracts which originated in 2013. This balance was reclassified from trade payables to provisions in a prior year. During the prior year, £0.2 million was added to the provision following the return of previously paid amounts connected to the uncertain commission obligation and a further adjustment to reduce the provision by £0.1 million was made in the current year. While the board cannot forecast with certainty final outcomes in respect of these obligations, based on the Group's current information, the amount recognised is the current best estimate of the amount required to settle the obligations at the Balance Sheet date, taking into account the risks and uncertainties surrounding the obligations, including interpretation of specific laws and the likelihood of settlement. As the ultimate potential obligations and outcomes are uncertain in relation to the transactions subject to the internal investigation, there remains a risk that the final outcomes could materially impact the recognised balance within the next or in future financial years. It is impracticable to provide sensitivity estimates of potential downside variances at this time.

Employee entitlements of £0.4 million is included in other, which relate to statutory long service leave in Braemar Shipbroking Pty Limited. This is based on the principle 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.

7.2 Contingent liabilities

7.3 Related party transactions

Transactions with wholly owned subsidiaries

7.4 Events after the reporting date

A proposed final dividend for the year ended 28 February 2025 of 2.5 pence per share, totalling £0.8 million, has been recommended by the directors. This is subject to shareholder approval. There were no other adjusting or significant non-adjusting events between the reporting date and the date these Financial Statements were authorised for issue.

Five-year financial summary (unaudited)

Consolidated Income Statement