TIDMBMS
RNS Number : 4664H
Braemar Shipping Services PLC
03 August 2021
BRAEMAR SHIPPING SERVICES PLC
("Braemar", the "Company" or the "Group")
3 August 2021
Annual Report and Notice of General Meeting
Braemar Shipping Services Plc (LSE: BMS), a leading
international Shipbroker and provider of expert advice in shipping
investment, chartering, risk management and logistics services ,
today announces that it has published its Annual Report and
Accounts for the year ended 28 February 2021 ("Annual Report"),
together with the Notice of Annual General Meeting ("AGM").
The AGM will be held at the offices of finnCap, One Bartholomew
Close, London, EC1A 7BL at 2:00 p.m. on Thursday 26 August 2021.
Whilst the Company is now able to welcome shareholders to the AGM
in person, it also recognises that the COVID-19 pandemic continues
to evolve and notes that it may need to limit attendance at the
AGM, or otherwise make changes to its AGM format, as required, in
order to comply with social distancing or other safety
requirements, including any additional Government guidance or
restrictions. The Company is also asking all shareholders who plan
to attend the AGM in person to pre-register their attendance.
The Company will provide an update on arrangements closer to the
time, if required. Shareholders are responsible for understanding
and complying with the restrictions applicable to their own journey
and should bear in mind that rules may differ between different
parts of the UK.
The Annual Report and AGM Notice will be available on the
Company's website ( www.braemar.com ) and, together with the Form
of Proxy for the AGM, will be submitted to the National Storage
Mechanism and will shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism . Copies of
these documents have also been posted today to those of the
Company's shareholders that have elected to continue to receive
hard copies.
Appendix
This appendix sets out the disclosures that the Company is
required to make to comply with Disclosure and Transparency Rule
(DTR) 6.3.5R, namely: the principal risks and uncertainties facing
the Company; the directors' responsibility statement made in
respect of certain sections of the Annual Report; and a statement
regarding related party transactions. This information has been
extracted from the Annual Report in unedited text and is not a
substitute for reading the full Annual Report.
Page references and note references below refer to page numbers
and numbers of notes to the accounts in the Annual Report.
Legal Entity Identifier: 213800EV6IKTTHJ83C19
Principal risks and uncertainties
APPROACH TO RISK MANAGEMENT
Effective risk management forms an integral part of how we
operate. It is essential for delivering our strategic objectives as
well as protecting our relationships and reputation.
The Group's risk management framework
The Board is responsible for managing the Group's risk,
overseeing the internal control framework and determining the
nature and extent of the principal risks the Company is willing to
take in order to achieve its long-term objectives. The Group's risk
management and internal control framework is continually monitored
and reviewed by the Board and the Audit Committee. The Board is
committed to maintaining a reputation for 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 were mindful that the approach must be balanced with the
interests of the Group's employees and the need to foster the
Group's business relationships. As such, the Group's policies and
procedures are 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, but also to avoid
a disproportionate administrative burden on employees, clients or
counterparties.
Reporting to the Chair of the Audit Committee and the Group COO
and Finance Director, the Group Head of Internal Audit and Group
Risk & Compliance Manager leads the Risk Management, Internal
Controls and Compliance functions.
Risk management process
The Group's Risk Management approach or framework incorporates
both bottom-up and top-down identification, evaluation and
management of risks. Within our framework:
- Divisional management teams have initial responsibility for
identifying, monitoring and updating business risks; while
- Key specialist personnel at Group level review areas such as
IT, HR, Legal and Finance, and consider risks not addressed at
Divisional level.
The Group's Risk Management framework is managed via an online
system/solution which is accessible to Group and Divisional
management teams globally. The system allows for:
- Group-wide real-time updating;
- Ongoing monitoring of risks and mitigation activities at both Group and Division levels; and
- Risk Management reporting at company location, Division, and Group levels.
The Group's risk management framework uses a matrix approach to
determine both the likelihood and the impact of identified risks.
The matrix produces a score which is used to evaluate collectively
the extent of all risks within a similar categorisation or certain
profile, and to illustrate the effectiveness of our mitigation of a
single risk by capturing the gross and current (net of mitigation
controls) score of each individual risk.
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. Key (or Principal) risks are
aggregated together with associated issues or areas of uncertainty.
The extent of controls and mitigation as well as the potential for
a material effect on the market value of the Group are then
assessed. By definition, unmitigated risks can be significant, but
our control processes and management actions reduce the risk
level.
The risk management process also evaluates the timescale over
which emerging risks may occur. For example, climate change has
been identified as an emerging risk for the shipping and energy
sectors within which the Group operates, but its potential impact
on the Group's operations is not expected to be felt sufficiently
soon for it to be identified as its own principal risk at this
time.
The risk management process ranks identified risks (factoring in
their potential impact and likelihood, as well as the timescale in
which they may occur), which are then further considered by the
Risk Committee, the Audit Committee and the Board.
Risk Management is led at Group level by the Group COO and
Finance Director, General Counsel, and the Group Head of Internal
Audit and Group Risk and Compliance Manager. Group risk management
and Divisional management teams monitor risks regularly, taking
into consideration the appetite, tolerance, and potential impact
for specific risks on the Group.
Risk mitigation
The Group takes various measures to mitigate risk. Key steps in
our risk management process throughout the year included:
- Maintenance of appropriate insurance cover.
- Establishment of Group budgets prepared annually and approved by the Board.
- Monitoring the performance of the Group and the individual
businesses against budget and reforecasts throughout the year
including investigation of significant variances.
- An internal system of checks and authorisations and
independent audits which are conducted in relation to the Quality:
ISO 9001 certification held in the Logistics Division.
- Operation of the Group's whistleblowing procedure.
- Treasury management activity regularly reported to the Board
by the Group COO and Finance Director. (Note that the Group does
not enter speculative treasury transactions.)
- Using common Group systems covering accounting, HR and
operations supported by a global IT team.
- Monitoring contractual risk by the Group legal team.
- Succession planning and strategic recruitment supported by the Group HR team.
- Enhancing/strengthening Group Governance Framework, including
review and updating of Group policies.
- Monitoring employee compliance with Group Governance Framework
by Group Head of Internal Audit & Group Risk and Compliance
Manager.
Principal risks
The Directors have carried out an assessment of the principal
and emerging risks facing the Company . 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.
Mitigating control and
Risk Summary of impact management actions
------------------------ -------------------------------- -----------------------------------------------------------
Geopolitical and A downturn in the world The Group's diversification
macroeconomic economy could result on a sector and geographic
Braemar's businesses in reduced transaction basis reduces dependency
may be negatively volumes and lower revenue. on individual business
impacted Changes in shipping rates areas.
by geopolitical and/or and/or changes in the Continued monitoring
macroeconomic issues, demand or pricing of to ensure the Group
such as climate change, commodities could affect is appropriately resourced
changes in the crude supply activity. across its activities
oil price, restrictions and geographies.
in global trade due to Ongoing management of
pandemics such as COVID, costs based on current
sanctions, and changes and reasonably foreseeable
in supply and demand. market conditions.
------------------------ -------------------------------- -----------------------------------------------------------
Change
from 2020
No Change
------------------------ ---------------------------- -----------------------------------------------------------
Currency fluctuations A change in exchange The Board monitors macroeconomic
The Group is exposed rates could result in issues to assess possible
to foreign exchange risk a financial gain or loss. foreign exchange movements.
as a result of a large Forward currency (US$)
proportion of its contracts are entered
revenue into to mitigate the
being generated in US risk of adverse currency
dollars while the cost movements.
base is in multiple
currencies.
------------------------ -------------------------------- -----------------------------------------------------------
Change
from 2020
No Change
------------------------ ---------------------------- -----------------------------------------------------------
Financial capacity Without sufficient financial All identified growth
Limited financial resources the Group cannot opportunities prioritised
capacity execute all of the growth to ensure that resources
could result in the opportunities that may are allocated to opportunities
Group be available. with the best potential
being unable to execute return.
all of its strategic Regular review of debt
objectives. levels and dividend
policy and the extension
of banking facilities.
------------------------ -------------------------------- -----------------------------------------------------------
Change
from 2020
No Change
------------------------ ---------------------------- -----------------------------------------------------------
Financial liquidity The Group could be cash Continued working capital
The Group could constrained resulting management and monitoring
experience in reduced investment, across the Group, with
liquidity problems as headcount, dividends, coordinated resolution
a result of the extended and not achieving its of any liquidity deficits.
lead times certain strategic objectives. Strategic activities
revenue have improved financial
streams require to liquidity, including:
convert * reduction of ownership in AqualisBraemar an
to cash. associated company;
* restructuring/deferral of Braemar NAVES acquisition
payments; and
* deferral of dividend payments while strengthening the
Group's balance sheet.
Ongoing consolidation
of banking relationships
and the implementation
of global pooling capabilities.
Ensure operation of,
and compliance with,
robust credit controls
across the Group, including
adherence to agreed
payment terms.
------------------------ -------------------------------- -----------------------------------------------------------
Change
from 2020
Down
------------------------ ---------------------------- -----------------------------------------------------------
Failure to attract and If key staff leave the Ongoing development
retain personnel Group, they are likely of a culture of engagement
Failure to identify, to take "their" business and professional development,
attract, and retain with them, resulting including career path
skilled in a loss to the Group. and succession planning.
personnel could result If new staff are not Maintenance of competitive
in failure to deliver attracted to the Group, remuneration packages,
business objectives and then rate of growth may including use of deferred
to maintain client be limited. equity awards.
relationships. There has been very little When it is possible
employee attrition during for all employees to
the COVID pandemic which return to working in
could lead to an increased the office, consideration
risk of losing employees will be given to roles
once pandemic restrictions where more flexible
end. working arrangements
would be possible for
those employees who
value flexibility. This
would also allow the
attraction of employees
who live away from existing
Braemar offices.
------------------------ -------------------------------- -----------------------------------------------------------
Change
from 2020
Up
------------------------ ---------------------------- -----------------------------------------------------------
Disruptive technology Relationships could be We have invested in
The risk of devalued and replaced technology, including
technological by disruptive technology in our Logistics business
change, and increased platforms, resulting with ShipTrak+ and through
customer demands for in increased competition Zuma Labs with the Venetian
enhanced technological and consequent price platform being used
offerings could render reductions. in the Shipbroking Division.
aspects of our current We are modernising our
services obsolete, infrastructure to allow
potentially us to get the basics
resulting in loss of right and then focus
customers. on innovation and strategic
direction.
------------------------ -------------------------------- -----------------------------------------------------------
Change
from 2020
No Change
------------------------ ---------------------------- -----------------------------------------------------------
Cultural behaviours Negative behaviours or Regular review of policies
Inadequate policies and actions that result in including Conflict of
reward structures could employee relations Interest Policy and
incentivise negative claims/litigation/tribunals, Employee Handbook, which
behaviours, create giving rise to negative set out behavioural
internal publicity in the public expectations and employment
conflict, and could lead domain which leads to practices for managers
to reputational damage. reputational damage. and employees.
Annual review, with
external benchmarking,
helps to ensure remuneration
packages continue to
be appropriate and competitive.
Managers are aware of
their people management
obligations and protection
of employee well-being,
including ensuring employees
take adequate holiday
and maintain appropriate
working hours.
------------------------ -------------------------------- -----------------------------------------------------------
Change
from 2020
Down
------------------------ ---------------------------- -----------------------------------------------------------
Corporate governance The business may not Regular review of corporate
& change management operate efficiently and governance framework,
Corporate governance effectively, leading management structure,
framework or management to the risk that strategic succession planning
structure ineffective objectives are not achieved, and job mapping, and
in introducing and and resulting in lower responsibilities at
embedding returns. Group and Division levels,
change, managing our Internal and external for (1) continuous improvement
business, and achieving relationships could be and (2) alignment with
the Group's strategic damaged/missed. best practice.
objectives. Business development New training has been
opportunities could be introduced in the last
damaged. year to ensure all employees
are kept updated with
the governance framework
and related policies.
Ongoing monitoring to
ensure employee completion
of annual Group governance
training plans, compliance
with all relevant Group
policies and completion
of Group attestation
requirements.
Oversight role enhances
the effectiveness of
Internal Audit and Compliance
processes, and management
infrastructure change
enhances career path
transparency.
------------------------ -------------------------------- -----------------------------------------------------------
Change
from 2020
No Change
------------------------ ---------------------------- -----------------------------------------------------------
Compliance with laws Breaches could result Ongoing monitoring of
and regulations in fines, sanctions and legal and regulatory
The Group is exposed loss of the ability to compliance across the
to the risk of breaches operate. Group.
of requirements, such Group-wide training
as those included in program to help ensure
the UK Bribery Act, the employee awareness of
Proceeds of Crime Act all relevant legal and
(POCA) 2002 (UK regulatory obligations:
Anti-Money * Braemar Corporate Governance Framework;
Laundering regime), and
Data Protection
legislation. * Braemar Risk Management methodology; and
* compliance with our policies, relevant laws &
regulations.
Ongoing monitoring to
ensure insurance cover
is maintained at adequate
levels.
------------------------ -------------------------------- -----------------------------------------------------------
Change
from 2020
No Change
------------------------ ---------------------------- -----------------------------------------------------------
Cybercrime/data security Loss of service and associated In 2021 H1 we will have
Cybercrime could result loss of revenue. rolled out Security
in loss of business Reputational damage. Operations Centre ("SOC")
assets Potential for loss of as a service using Darktrace
or disruption to the cash due to fraud or technology.
Group's IT systems and phishing. In 2021 H2 we will further
its business. improve our cyber security
position through improved
Lack of appropriate data infrastructure, two-factor
security could result authentication, mobile
in loss of data. device management and
utilising the Microsoft
Advance Threat Protection
Suite. We will also
be improving the visibility
and routing of our traffic
through implementation
of an SD-WAN.
As we continue to roll
out the Microsoft 365
suite of applications,
we will be utilising
SharePoint, which will
give us improved Data
Loss Prevention.
We are also performing
regular penetration
testing on our network
and key systems.
------------------------ -------------------------------- -----------------------------------------------------------
Change
from 2020
Down
------------------------ ---------------------------- -----------------------------------------------------------
Major business The business may be unable During 2021, we are
disruption to operate as effectively performing significant
The risk of disruption as usual resulting in upgrades to our network
to our business due to financial loss. and telecoms estate
a disaster or unplanned in order to provide
events occurring. a more robust, scalable
and resilient platform
to deliver applications
and services globally.
Network and telecoms
upgrades will include
decommissioning on-premise
equipment in Australia
and Singapore and moving
to the cloud, re-architecting
our network with an
SD-WAN and utilising
the Microsoft 365 suite
more efficiently.
Improved monitoring
of our systems in order
to deliver better service.
------------------------ -------------------------------- -----------------------------------------------------------
Change
from 2020
Down
------------------------ ---------------------------- -----------------------------------------------------------
Responsibility statement of the Directors in respect of the
annual financial report
The Directors hereby confirm that to the best of their
knowledge:
- the Financial Statements, prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and in accordance with
international financial reporting standards (IFRSs) adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union and Article 4 of the IAS Regulation, give a true and
fair view of the assets, liabilities, financial position and profit
or loss of the Company and the undertakings included in the
consolidation taken as a whole; and
- the Strategic Report and Directors' Report includes a fair
review of the development and performance of the business and the
position of the Company and the undertakings included in the
consolidation, taken as a whole, together with a description of the
principal risks and uncertainties that they face.
The Directors confirm that they consider this Annual Report,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for the Company's shareholders to assess
the Group's position, performance, business model and strategy.
Related party transactions
During the period the Group entered into the following
transactions with joint ventures and investments:
2020/2021 2019/2020
------------------ ---------- --------- ---------- ----------- ---------- ----------
Balance
Recharges due (to)/ Recharges Balance
to/(from) Dividends from to/(from) Dividends due from
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ---------- --------- ---------- ----------- ---------- ----------
AqualisBraemar
LOC ASA 610 641 240 669 - 175
London Tanker
Broker Panel 310 - - 310 - -
Risorto GmbH (865) - (33) (856) - -
Worldscale 60 - - 70 - -
AqualisBraemar LOC ASA
Recharges to AqualisBraemar LOC ASA consist primarily of rent,
IT services and HR services in accordance with a transitional
services agreement. Included in the net recharge to AqualisBraemar
LOC ASA is a fee payable to the Group's former Chairman, Ronald
Series of GBP15,000 (2020: GBP15,000).
The Group received GBP641,000 of dividends from AqualisBraemar
LOC ASA which have been credited to cost of investment. See Note
18.
A loss of GBP262,000 has been recognised in discontinued
operations in respect of the Group subletting a portion of its
Singapore office space to AqualisBraemar LOC ASA, and an impairment
to a right-of-use asset in respect of a London office which will be
vacated by AqualisBraemar LOC ASA. See Note 8.
The balance due from AqualisBraemar LOC ASA is unsecured,
interest-free and immediately repayable.
London Tanker Broker Panel Limited
Recharges to London Tanker Broker Panel consist of a monthly fee
payable to the Group for the provision of data.
Risorto GmbH
Risorto GmbH is controlled by the management of Braemar Naves
Corporate Finance GmbH. The amount charged by Risorto GmbH in the
year to the Group for management fees was EUR0.7m (2020: EUR1.1m)
and the amount charged to Risorto GmbH in the year was EURnil
(2020: less than EUR0.1m). The balance owing to Risorto GmbH as at
28 February 2021 was less than EUR0.1m (2020: EURnil).
Worldscale Association Limited
Recharges to Worldscale consist of a monthly fee payable to the
Group for the provision of data.
All recharges to related parties are carried out on an
arm's-length basis.
Key management compensation is disclosed in Note 4.
Transactions with wholly owned subsidiaries
The Company has applied the disclosure exemption of FRS 101 in
respect of transactions with wholly owned subsidiaries. The amount
charged to AqualisBraemar LOC ASA by the Company was GBP591,000
(2020: GBP275,000) and the balance due from AqualisBraemar LOC ASA
to the Company at 28 February 2021 was GBP179,000 (2020:
GBP146,000).
Key management compensation
The remuneration of key management is set out below. Further
information about the remuneration of individual Directors is
provided in the Directors' Remuneration Report on pages 52-60. Key
management represents the Board of the Company.
2020
2021 restated
GBP'000 GBP'000
------------------------------------------------ -------- ---------
Salaries, short-term employee benefits and fees 3,410 3,903
Other pension costs 68 128
Share-based payments 71 116
One-off costs related to Board changes - 468
------------------------------------------------ -------- ---------
3,549 4,615
------------------------------------------------ -------- ---------
Retirement benefits are accruing to three (2020 restated: three)
members of key management in respect of a defined contribution
pension scheme. The current year remuneration includes new key
management personnel and to enable comparability, the prior year
disclosure has been restated. This has increased the prior year
total remuneration from GBP1.5m to GBP4.6m. The increases relate to
a GBP2.9m increase in salaries, short-term employee benefits and
fees, GBP0.1m increase in pension costs and GBP0.1m increase in
share-based payments.
For further information, contact:
Braemar Shipping Services
James Gundy, Group Chief Executive Tel +44 (0) 20 3142 4100
Officer
Nick Stone, Chief Financial Officer
Peter Mason, Company Secretary
finnCap
Matt Goode / James Thompson Tel +44 (0) 20 7220 0500
Buchanan
Charles Ryland / Victoria Hayns / Tel +44 (0) 20 7466 5000
Stephanie Watson / Matilda Abraham
Notes to Editors:
About Braemar Shipping Services Plc
Braemar is a leading international Shipbroker and provider of
expert advice in shipping investment, chartering and risk
management. Braemar employs approximately 520 people in 30 offices
worldwide across its Shipbroking, Financial and Logistics
divisions.
Braemar joined the Official List of the London Stock Exchange in
November 1997 and trades under the symbol BMS.
For more information, including our investor presentation, visit
www.braemar.com
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END
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