Braemar Shipping Services plc
Annual Report 2013
Registered number: 2286034

Shipbroking + Technical + Logistics + Environmental

Our vision is to build a balanced shipping and energy services business with leading positions in key markets across the world.

Collaboration

Our Technical division has harnessed resources in the Middle East to maximise cross selling opportunities out of our office in Dubai.

2013 Review of Operations
01 2013 key highlights
04 Chairman's statement
05 Chief Executive's review
06 Our strategy
08 Review of Operations
14 Corporate social responsibility report
16 Financial review

Governance
18 Board of Directors
19 Report of the Directors
21 Corporate Governance
24 Remuneration Report
30 Independent Auditor's Report to the Members of Braemar Shipping Services plc

Financial statements
31 Consolidated income statement
31 Consolidated statement of comprehensive income
32 Balance sheets
33 Cash flow statements
34 Statements of changes in equity
35 Notes to the consolidated financial statements
61 Five year financial summary

Shareholder information
63 Shareholder information
64 Offices and contacts

Braemar Shipping Services plc Annual Report 2013

2013 highlights

Financial highlights

Revenue

£143.8m

2012: £133.5m

Pre-tax profit

£9.3m

2012: £9.8m

Earnings per share

32.8p

2012: 33.8p

Full year dividend per share

26.0p

2012: 26.0p

Cash at 28 February 2013

£23.3m

2012: £17.5m

Operational highlights

Good performance in Shipbroking in a challenging market

The Technical, Logistics and Environmental divisions now account for over 60% of divisional operating profit (2012: 44%)

88% growth in divisional operating profit from Braemar Technical Services driven by a strong performance in Braemar Offshore

Improved divisional operating profit in the Logistics division with excellent progress in the Ship Agency business

Significant role played by the Environmental division concluding the work on the stricken RENA in New Zealand

Well positioned

The Group is divided into four operating divisions: Shipbroking, Technical, Logistics and Environmental. These work together to offer a unique combination of skills for clients, at any time, anywhere in the world.

We recognise that the needs of our clients are ever-changing and our aim is to provide a skilled and professional workforce to address those needs.

Group figures

The Group has delivered a 7.7% growth in revenue to £143.8m in challenged shipping markets and stable profit after tax.

Profit before tax at £9.3m, held up well due to strong performance in the Technical division and significant contribution from the Environmental division.

A diversified business more resilient to changes in the market – the broking business is driven by freight rates and ship values, while the Technical and Logistics Divisions are driven much more by the volume of trade.

Divisional revenue

Shipbroking
32% — £46.1m
Technical
26% — £36.8m
Logistics
26% — £37.6m
Environmental
16% — £23.4m

Divisional operating profit

Shipbroking
40% — £5.3m
Technical
25% — £3.4m
Logistics
15% — £2.0m
Environmental
20% — £2.7m

Divisional operating profit is defined as operating profit before amortisation of acquisition related intangibles, non-recurring items and unallocated costs and is referred to consistently throughout the Annual Report.

2013 Review of Operations — 01-17
Governance — 18-30
Financial statements — 31-62
Shareholder information — 63-64

Braemar Shipping Services plc Annual Report 2013

We are well positioned to achieve our vision

The Group is well positioned to provide its wide range of services from its international network of offices. The focus is on providing high quality services to ensure that clients' needs are met to the highest standards.

Global offices
69
Number of employees
920

Opportunity
Braemar Offshore has expanded into Thailand in order to both service existing clients and build business relationships.

Go to www.braemarplc.com

Braemar Shipping Services plc Annual Report 2013

Shipbroking

Braemar Seascope has offices across the globe with key hubs in London, Singapore and Australia.

The Braemar Seascope brokers in these locations are specialists in their area of expertise covering the vast majority of shipping sectors. Whether facilitating sale and purchase transactions, or arranging spot or time charters our teams are dedicated to their clients' needs 24 hours a day 365 days a year.

We have continued to invest in the systems that provide unique information to our broking teams allowing them to perform for their clients.

Technical

Braemar Technical Services provides a range of shipping and energy sector related services from a network of offices around the world.

Braemar Technical Services has a wide technical service skill base. This covers loss adjusting for both the shipping and energy markets, marine warranty surveys and consultancy and marine engineering and design skills.

The markets in which we operate are growing. We are investing ahead of this growth and are also benefiting from synergy between business units.

Logistics

Cory Brothers operates in the UK and Singapore.

The skills of the business include freight forwarding and logistics and a leading position in ship agency.

We are able to provide our clients with first class service through the use of bespoke systems which can generate superior management information.

Environmental

Braemar Environmental offers environmental consultancy and crisis management support to both industry and government bodies around the clock and across the globe.

Our experienced teams are trained to respond quickly and effectively to hazardous incidents both at sea and on land.

This division is actively building a presence within the insurance industry.

Operating in key markets

Braemar offices
- Shipbroking
- Technical
- Logistics
- Environmental

Workforce in Europe
55%

Workforce in Asia/Pacific
32%

Workforce in Africa/Middle East
3%

Workforce in America
10%

Container world trade growth over 10 years

Until 2008 growth in Container shipping has been consistent at roughly twice world GDP

Chinese oil use/production

Chinese use of oil continues to outstrip its growth in production requiring more imports.

2013 Review of Operations — 01-17
Governance — 18-30
Financial statements — 31-62
Shareholder information — 63-64

Braemar Shipping Services plc Annual Report 2013

Chairman's statement

Sir Graham Hearne CBE
Chairman

Governance Page 21.

A strong position for balanced growth

We see further growth and opportunity in the years ahead and we remain confident in our strategy to take advantage of the recovery in the shipping markets when it occurs.

Overview

The strategy adopted by your Board of progressive diversification into maritime services has created valuable stability in challenging times. There has been no respite from the downturn in the shipping markets in 2012/13 and although this has had a direct effect on Shipbroking, the division performed well in a challenging market and we feel confident that it is in a strong position to benefit from the recovery when it comes. Many of our other businesses are driven by the volume of shipping and energy-related activity and not by the value of that activity. As a result our Technical, Logistics and Environmental divisions have had a strong year, with increased operating profit from all three divisions. We see further growth and opportunity in the years ahead.

Results

I am pleased to report a robust performance despite the difficult shipping markets. Group revenues grew by 7.7% to £143.8 million (2012: £133.5 million); pre-tax profits were £9.3 million compared with £9.8 million in 2011/12 and basic earnings per share (EPS) were 32.8 pence (2012: 33.8 pence), down 3% on the prior year. The decline in shipbroking profitability has been offset by the growth in other shipping services. The strong balance sheet, with a cash position of £23.3 million (2012: £17.5 million), puts the Group in a good position to deliver on its strategic objectives.

Board and management

2012 was a year marked by significant changes in the Board and management team at Braemar.

Alan Marsh and Quentin Soanes retired from the Board after many years of outstanding service. They were both founder members of Braemar and have been the architects of its success over the past 10 years, Alan as Chief Executive and Quentin as the inspiration behind the development of our shipping services businesses. I am pleased to say that although no longer members of the Board, they remain actively involved with the Group. On behalf of the Board I would like to pay tribute to them for their outstanding contributions over many years.

James Kidwell, who has been Finance Director for the past ten years, was appointed as Chief Executive to succeed Alan Marsh in June 2012. The Board is confident he will provide the Group with the leadership it needs in these challenging times. He will be assisted by Martin Beer who joined the Group as Finance Director in October 2012, after ten years as Finance Director of Uniq plc. Denis Petropoulos who has played a significant role in our Shipbroking business for many years continues as an Executive Director, primarily responsible for the development of our growing businesses in Singapore, China and South East Asia. Sebastian Davenport-Thomas has assumed overall responsibility for all our Shipbroking companies and Quentin Soanes continues, as a consultant, to play an active role in our shipping services businesses. The Board believes this team is well placed to deliver shareholder value in the years ahead.

Dividend

The Directors are recommending for approval, at the Annual General Meeting on 19 June 2013, an unchanged final dividend of 17 pence per ordinary share, to be paid on 24 July 2013 to shareholders on the register at the close of business on 28 June 2013. Together with the 9 pence interim dividend, the Company's dividend for the year will be 26 pence (2012: 26 pence). The dividend is covered 1.5 times by earnings before amortisation of acquisition related intangibles.

Colleagues

On behalf of the Board I would like to pass on my thanks to all those who have worked diligently for Braemar to produce these results. It is the professionalism of the Braemar team around the world that makes a difference for our clients.

Sir Graham Hearne CBE
Chairman
13 May 2013

Braemar Shipping Services plc Annual Report 2013
05

Chief Executive's review

James Kidwell
Chief Executive

Our strategy Page 6.

Board of Directors Page 18.

Trading performance

The Group overall has done well to increase revenues by 7.7% in one of the toughest shipping markets for decades. It is important to understand how that performance breaks down by division.

The Shipbroking division, Braemar Seascope, increased its level of activity during the year achieving more transactions than in the prior year. The value of each transaction is down significantly due to lower ship values, lower freight rates and a smaller proportion of revenue coming from the forward order book. The net result is that Shipbroking revenue fell 6.9% to £46.4 million (2012: £49.8 million). Despite this £3.4 million fall in revenue, we have continued to invest in people and information technology to strengthen the business for the long term, and as a result of a close control of costs we have been able to limit the fall in divisional operating profit* to £1.8 million.

The Technical division, Braemar Technical Services, has had an excellent year increasing revenues by 15.1% to £36.8 million (2012: £32.0 million) and delivering an increased divisional operating profit of £3.4 million (2012: £1.8 million). This improvement in operating profit of 88% has been delivered across all areas of the division but most notably by Braemar Offshore in Asia.

In the Logistics division, Cory Brothers, ship agency revenues grew significantly but were offset by lower project forwarding activity, leaving the overall revenues broadly unchanged at £37.5 million (2012: £37.6 million). The improvement in ship agency revenues has helped deliver an increased divisional operating profit of £2.0 million, £0.1 million ahead of the 2011/12 performance.

Divisional operating profit is defined as operating profit before amortisation of other intangible assets and non-recurring items

The revenue of the Environmental division, Braemar Howells, was £23.4 million (2012: £14.5 million), including £18.9 million (2012: £9.0 million) relating to the RENA project. The divisional operating profit was £2.7 million (2012: £1.9 million).

Strategic development

It is apparent from the results of 2013 that the strategy to develop a more broadly based business has reduced the volatility of the Group's results and the exposure to the shipping cycle. There is potential to develop all our existing divisions through organic growth, business improvement and further acquisitions where the quality of earnings can be maintained.

We have continued to improve the infrastructure to support our global Shipbroking division. We now have 289 staff engaged in shipbroking activity and its support, of which 59% are in the UK with the rest in Singapore, China, Australia, India, USA and Norway. This global coverage is now supported by a single IT infrastructure that is being upgraded in 2013 enabling value-adding information exchange. We also increased our presence in the Far East and have an excellent platform on which to build a larger scale business. Since the end of the financial year we have expanded our geographic reach, acquiring teams in Houston and Oslo.

The recent success of Braemar Technical Services has resulted from the management of each of the individual business units taking advantage of the growth opportunities in the markets in which they operate. The division now employs 351 staff, of which 48% are based in the fast growing Asia Pacific region. While there remains significant growth potential for the individual businesses within Technical, we also believe that the division can be further enhanced by increased collaboration and by efficiencies gained through the integration of certain functions.

The marketplace for Cory Brothers now has a number of global players but also has a significant number of smaller local players. This provides opportunity to build our global presence particularly by expanding the service we offer to our customers with an international spread of businesses. The division employs 228 staff in the UK and Singapore.

The Environmental division has earned a well-deserved reputation for safely dealing with marine catastrophe as well as advising on preventative measures. This is the foundation for establishing Braemar Howells as an international provider of environmental crisis management services.

Outlook

In the short term we are unlikely to see a recovery in the shipping markets. As a result the trends established in the last couple of years in our Shipbroking division are likely to continue. However, we remain confident that the Shipbroking division is well positioned to benefit from any recovery in the shipping markets in the medium term. Braemar Technical Services is exposed to growing markets and we expect further significant growth in the year ahead. Continued progress is also expected from Cory Brothers. The RENA contract finished in February 2013 and, with the reduced activity, the Environmental division is expected to trade at a much reduced level.

Overall the year has started well. We have developed four complementary divisions, the blend of which creates stability in turbulent times. This, combined with a robust balance sheet, puts the Group in a strong position to deliver on its strategic objectives.

James Kidwell
Chief Executive
13 May 2013

Our strategy

Achieving long-term success

Our divisions

Shipbroking

We aim to grow our Shipbroking business by strengthening our position in our core chartering and sale and purchase markets and by developing our services in new regions.

Technical

We aim to grow the business through harnessing the combined skill-sets across the globe and maximising the benefit of the international office network.

Logistics

We aim to grow Cory Brothers' coverage and develop our logistics capabilities through increasing our client network and geographic footprint.

Environmental

We aim to extend our core business beyond the UK, grow our customer base and establish Braemar Howells as an international provider of environmental crisis management services especially with the insurance community.

Creating a diversified business

Revenue (£m)

2001	2003	2005
Braemar Shipbrokers and Seascope
Shipping Holdings PLC merge, forming Braemar Seascope Group PLC.

Braemar Tankers acquired later in the year. | Purchase of Cory Brothers Shipping Agency. | Purchase of Seawise Australia. |

Building strength

Our Shipbroking bespoke research enables our clients to ensure that strategic decisions are based upon the clearest knowledge and excellence of judgement.

Technical, Logistics and Environmental

Braemar Shipping Services plc Annual Report 2013

Our client base	Drivers	KPIs
Braemar Seascope's client base is diverse and international. It includes major shipowners, operators, shipyards, energy companies, miners, banks and other financial institutions. In recent years the emergence of major players in the Far East has shaped the market.	The business is driven by the number of ship transactions that we conclude and the value of those transactions. Over a long period the volume of total global trade has been increasing and therefore so has the volume of deals. The value of trades varies with the supply and demand for ships relative to the amount of trade. Almost all business is denominated in US dollars.	Global GDP growth is a key indicator for the growth of seaborne trade. The Baltic Indices track the value of a number of key commodity shipping rates. The balance between available tonnage and trade requirement is a key indicator of values and rates.
The client base in Braemar Technical Services is similarly diverse but includes many overlapping sectors. Energy companies, insurers and P&I Clubs are the largest clients in this sector.	The more offshore and marine activity the higher requirement for our services. Drivers include: new investment projects including exploration activity, rig installations, newbuilding activity and ordering.	As with Shipbroking, growth in global GDP is an indicator of increased shipping and marine activity. Higher oil prices may also drive more exploration and rig activity. The number of rig moves is a direct indicator for our Braemar Offshore business.
Cory Brothers' clients include many in common with shipbroking in the ship operations and energy sectors. In addition, we provide services to major multinationals looking for logistic solutions.	The rate of growth in global trade, the frequency of port calls and the level of capacity utilisation, all drive the performance of the business.	The number of container movements is a key indicator of logistics activity. The ship agency business is best tracked based on port calls by ships.
The client base is currently limited to a small number of UK institutions and certain oil companies and insurance clubs. The Group connections provide opportunity to expand this base.	The high level of revenues in recent years have been significant events driven. The core business is driven by the increasing level of environmental and safety regulation, legislation and government training requirements.	Legislative changes and the number of environmentally sensitive events.

2006
Purchase of DV Howells – now renamed Braemar Howells.

2007
Change of name to Braemar Shipping Services PLC.

Purchase of Falconer Bryan now Braemar Technical Services Offshore, part of Braemar Technical Services.

2008
Purchase of Steege Kingston now Braemar Technical Services Adjusting, part of Braemar Technical Services.

2011
Purchase of BMT Marine and Offshore Surveys – renamed Braemar Technical Services (Incorporating The Salvage Association).

Purchase of Casbarian Engineering Inc – now renamed Braemar Casbarian Inc.

2013 Review of Operations — 01-17
Governance — 18-30
Financial statements — 31-62
Shareholder information — 63-64

Review of Operations

Shipbroking – Braemar Seascope

Braemar Seascope's brokers use their close understanding of the workings of the markets to ensure their clients meet market challenges head-on and with confidence.

Revenue	Divisional operating profit
-7%	-25%
£46.4m	£5.3m

Offices

London
Singapore
Aberdeen
Beijing
Delhi
Genoa
Houston
Melbourne
Mumbai
Oslo
Perth
Shanghai

Services

Tanker chartering – crude oil, clean products, LPG, LNG, chemicals
Dry bulk chartering
Ship valuations
LNG consultancy
Offshore chartering
Containers chartering
Sale and purchase – second-hand, newbuilding, demolition
Europe – 60%
Asia Pacific – 28%
Australia – 12%

Employee by location

289 employees

Dry Bulk fleet dynamics 2003 to 2012

There is now an increase in the rate of deletions from the fleet which will impact the level of overcapacity

Source: Braemar Research

Tanker fleet dynamics 2003 to 2012

The last year has seen the oversupply level off in the tanker market

Source: Braemar Research

Braemar Seascope has performed well in a challenging marketplace. Revenue fell by £3.4 million to £46.4 million, which reflects a £6 million lower forward order book brought forward into 2012/13 compared with that brought in to 2011/12, together with lower rates, offset by significantly increased spot activity and a 2.5% average strengthening of the US dollar. The shipping market continues to be affected by overcapacity, with deliveries of new ships still out-stripping the scrapping of old tonnage. Over the year, surplus capacity has increased and freight rates have weakened further in the major tanker and dry bulk markets.

The oversupply will correct in time due to a reduced propensity to order new ships and an increase in scrapping. This is a trend which is accentuated by the shortage of available bank finance.

As we come in to 2013/14 we estimate the forward order book deliverable over the next twelve months to be £11 million, compared with £19 million last year. This reflects the weakness of the newbuilding market and the relatively low volume of new time-charter business. As a result there is significantly increased activity in the spot market where we have strong teams.

Dry Bulk

Growth in dry bulk seaborne trade continues its slow but steady recovery. For the calendar year 2012 it increased by 4.4% compared with 4.3% in 2011; we expect this improving trend will continue into 2013. The rate of growth is affected by the pace of industrialisation and urbanisation of the emerging economies and the price of global commodities, which have both acted to maintain the rate of growth in the past few years. However, the total amount of trade is still smaller than anticipated before the recession, while bulk carriers that were ordered to meet those higher anticipated levels of demand continue to be delivered. In the year to December 2012 the bulk carrier fleet grew by 10%, after 13% growth in 2011 and is expected to reduce to 8% in 2013.

This overcapacity in the fleet has driven down freight rates. Against this backdrop our offices in Asia and Australia performed well, benefiting from a greater focus on the shift of trade to the East.

Deep Sea Tankers

The freight market for crude tankers is at its lowest point and the product tanker market is fluctuating around break-even levels. Spot market rates, as measured by the Baltic Dirty and Clean Indices, displayed their usual seasonality with a weak second and third quarter followed by a fourth quarter rally. This rally was lower than anticipated and insufficient in 2012 for many owners to cover their costs for the year. The pattern of trade is changing with increased energy self-sufficiency of the US and rising consumption of crude oil in the Far East, which is increasingly being served by new refineries in the region resulting in an increase in seaborne distribution of refined products. The market remains oversupplied and this is now being added to by selective ordering of new technology tankers, which will be more economical to run and have reduced environmental impact.

The majority of business is being concluded on a spot basis, where we have increased our volumes and are well placed to continue servicing this marketplace.

Braemar Shipping Services plc Annual Report 2013

Our offshore brokers continue to hold a leading position in supply boat chartering.

Container fleet dynamics 2003 to 2012

Surplus capacity continues to increase although the level of deletions is rising

Source: Braemar Research

Specialised Tankers

We are represented in Chemicals, Petrochemicals, LPG and LNG. These markets require specialist skills and knowledge at all levels. There is enthusiasm for the longer-term potential for these markets which has created a certain amount of oversupply in a number of niches. As with other markets we have seen an increasing tendency to more spot transactions, although we have recently signed up two longer-term deals in areas of changing vessel technology requirements. We have recently arranged 15 year shipping coverage for a number of gas carriers, which are designed and built specifically for the carriage of ethane from the US to Europe, a direct result of the US shale gas development. We have also concluded long-term time charters for two specially built dual-fuel vessels that will comply with the new emission requirements for European waters.

Offshore

As exploration and production in the offshore sector continues to grow both through greater recovery procedures from existing wells and deeper water drilling, the demand for supply vessels has been strong. We have expanded our coverage in this area over recent years and while the North Sea market remains prolific, we have also concluded significant business in Latin America, Asia and East Africa.

Our offshore desks in the UK and Asia have performed well and with the continued growth in offshore exploration and production this strong performance should be maintained. We continue to look for opportunities to expand our presence in this growing and important sector.

Containers

The globalisation of trade has meant that seaborne container trade has historically increased at a little over twice the rate of global GDP growth. This relationship has recently been tested and in 2012 the growth in container trade was only equivalent to global GDP growth. As a result, the long-term growth in container trade has been more than covered by the long-term growth of the container fleet. We estimate that at the end of calendar year 2012 there was 36% overcapacity, up from 34% in 2011, and as a result average time charter rates fell significantly year on year.

Looking forward annualised world GDP growth is expected to remain steady at 3.5% and with the balance of orders and scrappings difficult to predict we anticipate any recovery in the container market being more than 12 months away. We added to our team during the year and now have a strong team across London and Singapore.

Sale and Purchase

We successfully delivered all the deals in our newbuilding forward order book for the year but new ordering during the year in general has been thin. There has been activity in the newbuilding market but due to the already over ordered market the number of transactions has been limited. The new year has started positively with a number of transactions already concluded.

The second-hand market for both bulkers and tankers has been very challenging, with prices continuing to fall and availability of finance tending to limit the size of deal. Against this background we have performed well, increasing the number of transactions during the year by more than two thirds on the prior year. However, the commissions achieved reflected the lower prices and the smaller average tonnage of transactions.

Not surprisingly demolition of older tonnage is growing and our Demolition team sent 80% more ships for demolition this year as compared with last year. It is worth noting that the average age of vessels being demolished is getting slightly younger which will hopefully contribute to improved market conditions.

Our brokers are supported by dedicated research staff.

Braemar Shipping Services plc Annual Report 2013

Technical – Braemar Technical Services

Braemar Technical Services provides energy loss adjusting, surveying, marine engineering and consultancy services. Its offices are located throughout the world providing marine and energy technical expertise ensuring we exceed our customers' expectations.

Revenue

+15%
£36.8m

Divisional operating profit

+88%
£3.4m

Offices

Abu Dhabi
Accra
Bangkok
Calgary
Cape Town
Dubai
Houston
Jakarta
Kuala Lumpur
London
Malta
Miami
Mumbai
New Orleans
New York
Perth
Rio de Janeiro
Shanghai
Shenzhen
Singapore
Tianjin
Tokyo
Trinidad
Varna
Vung Tau

Employees by location

351 employees

Europe – 21%
Americas – 25%
Asia Pacific – 48%
Africa/Middle East – 6%

Services

Warranty services
Energy loss adjusting
Marine engineering, structural engineering and naval architecture
Marine consultancy
Vessel and condition surveys
Marine casualty investigations
Ship construction supervision
Failure mode and effect analysis
Marine cargo surveys
DP Audits
Shipyard risk assessments
Towage approvals
Claims, dispute and litigation support

Employees by location

351 employees

Europe – 21%
Americas – 25%
Asia Pacific – 48%
Africa/Middle East – 6%

No. of rigs and platforms deployed in the Far East

Braemar Technical Services has had an excellent year with sales growing by 15%. Approximately one fifth of this growth is the full year impact of the acquisition of Braemar SA and Braemar Casbarian, with the majority of the rest of the growth coming from Braemar Offshore. This growth combined with a focus on cost-control across all the businesses, has resulted in a near doubling of divisional operating profit to £3.4 million. The cross-fertilisation between businesses has started to bear fruit. This year we have seen co-operation on project bidding and delivery, passing on of work and internal subcontracting of resource. We expect this co-operation to increase over the coming years and to also gain benefit from greater back-office synergies.

Braemar Offshore

Braemar Offshore has won a number of contracts to provide marine warranty surveys for long-term offshore energy contracts in the Asia Pacific region. These combined with the on-going vibrancy of the sector have helped deliver an 18% growth in revenue. With the opening of an office in Thailand, the business now has a presence in eight Asia Pacific countries. Staff numbers grew by 13% during the year to 140, mostly through growth in Indonesia, Malaysia, China and the new office in Thailand. The market for Offshore engineering support continues to be strong and we are well placed to grow our share of that market.

Our surveyors ensure that complex operations are safely conducted.

Go to www.braemar.com

2013 Review of Operations — 01-17
Governance — 18-30
Financial statements — 31-62
Shareholder information — 63-64

New LNG production 2013-2022

There is significant growth predicted in LNG where Braemar Engineering has world leading skills.

Braemar Adjusting

Braemar Adjusting provides specialist insurance loss adjusting and consulting services to the upstream energy, downstream energy, power and mining sectors. A total of 47 staff are employed from a series of strategically located offices including: Calgary, Houston, Rio de Janeiro, Singapore and London. Further expansion is planned with the opening of a Dubai office in April 2013, to serve the Middle East and African region. The business has had a year of transition in 2012, which included both the implementation of a new management structure and the sale of non-core Mexican and Latin American operations. Despite these changes the performance of the business was stable and profitability improved. The implemented management changes are already delivering the desired benefits with each of our core offices holding a strong market position and a renewed focus on recruitment, training and succession planning, driving the business forward.

Braemar (incorporating the Salvage Association) – Braemar SA

The principal activities of Braemar SA include the provision of hull and machinery damage surveys, loss prevention services and expert marine consultancy services on behalf of underwriters, owners, P&I Clubs and marine lawyers. Braemar SA operates from a network of offices located around the world and coordinated through five regional hub offices. Revenue in the year was 8% up on the previous year reflecting the full year impact of the acquired business in May 2011. Instruction levels for Braemar SA's core service of hull and machinery damage surveys were below prior year levels reflecting general market trends. However, Braemar SA saw an increase in the level of work undertaken for P&I Clubs and marine lawyers. In addition to making increased use of the resources across the wider Technical division within the year, Braemar SA established new bases in Manila and Seattle and continued a recruitment programme to deliver further growth and succession planning.

Our adjusters are well equipped to provide expert advice to clients.

Braemar Engineering

The core skills of Braemar Engineering are in the design, plan approval and site supervision for ocean going vessels carrying liquids in bulk and the review and assessment of offshore dynamic positioning systems. These skills have been extended to the conceptual design and obtaining of permits for Liquefied Natural Gas (LNG) shore based facilities. In the context of LNG carrier design and construction supervision, Braemar Engineering is a world leader. The LNG and offshore markets are growing and this is presenting more opportunities for independent consultancies to get involved in the process. We have recently won an important new contract that will add significantly to revenue over three years, starting in the second half of 2013/14. The prospects for this business are enhanced by the increasing demand for LNG as a more environmentally friendly and globally recognised energy source.

Braemar Casbarian

The business, acquired in July 2011, provides skilled engineering design, modification and certification services to the offshore industry in the Gulf of Mexico from offices in Houston and New Orleans. The flow of work in this area has been below our expectations, partly as a result of the slow pace of recovery after the Deepwater Horizon incident. We are strengthening our business development resources and have reduced the cost base of the business.

Training of our staff and clients' staff is an integral part of our business.

Braemar Shipping Services plc Annual Report 2013
11

Review of Operations
continued

Logistics – Cory Brothers

Cory Brothers Shipping Agency provides ship agency, freight forwarding and logistics services within the UK and Singapore. Cory have extensive industry experience and maintain a worldwide reputation for customer care and insistence on the highest standards. An in-depth knowledge of client requirements across the division ensures the delivery of a first-class service.

Revenue

+0%

£37.5m

Divisional operating profit

+6%

£2.0m

Offices

Tilbury
Felixstowe
Bebington
Billingham
Bristol
Cardiff
Edinburgh
Falmouth
Grangemouth
Hull
Immingham
Invergordon
Ipswich
Isle of Grain
Milford Haven
Newport
Sheerness
Singapore
Southampton
Teesport

Services

Ship and liner agency
Ship-to-ship transfers
Hub agency
Customs clearance
Supply chain management
Freight forwarding
Worldwide consolidation
Project cargoes
Cruise ship support
Recycling

Employees by location

228
employees

Europe – 95%
Asia Pacific – 5%

UK Container movements 2011 to 2012

Our expert staff ensure that port calls are managed efficiently.

Cory Brothers revenue at £37.5 million was in line with the prior year. The efforts of the management in the Ship Agency business have been rewarded with significant growth in revenue but this was offset by the effect of market conditions on Forwarding and Logistics. Operating profit grew by £0.1 million to £2.0 million, thanks to the strong progress in Ship Agency. The progress being made in Ship Agency should continue and we anticipate some recovery in Forwarding and Logistics.

Ship Agency

Our Ship Agency business services UK ports, the port of Singapore (covering the Far East region) and some global agency business covering Europe, South America and West Africa. During 2012/13 the business made some significant steps forward; firstly in April 2012, gaining a key contract for Agency work at Grangemouth and Finnart, and secondly in October 2012, starting a Hub Agency contract for a new client servicing ports across Europe. Under this Hub Agency we manage the in-port services and also provide our client with key management information and access to cost savings. Building on this success we anticipate significant growth in ship numbers in the year ahead and further expansion when appropriate. In order to support this staff numbers have grown by 8% to 115.

Forwarding and Logistics

The performance in the year was slightly lower (revenue down 3%) when compared with a strong 2011/12, which included a number of large one-off contracts such as the transhipment of a Sheffield steel mill to India. In addition, some of our core business was affected negatively by the Olympics as our customers focused on service provision to the Olympics as opposed to export trade. Aside from these one-off items the underlying business performed well and has started 2013/14 encouragingly.

Go to www.cory.co.uk

Braemar Shipping Services plc Annual Report 2013

Braemar Shipping Services plc Annual Report 2013
13

Environmental – Braemar Howells

Braemar Howells offers support to both industry and government bodies around the clock and across the globe. Their experienced teams are trained to respond quickly and effectively to hazardous incidents both at sea and offshore.

Revenue	Divisional operating profit
+61%	+44%
£23.4m	£2.7m
Offices
+ Barnsley	+ Lagos
+ Belfast	+ Liverpool
+ Bristol	+ Luanda
+ Didcot	+ Perth
+ Dundee	+ Truro
+ Harlow
Services	Employees by location
+ Pollution control
+ Incident response
+ Salvage services
+ Marine and port services
+ Accredited training and environmental consultancy	52 employees
+ Crisis management and emergency response advisers
+ Industrial services and tank cleaning technologies	1. Europe – 92%
+ MARPOL waste reception facilities	2. Africa/Middle East – 8%
+ Airport services
+ Forensic science services
+ Response facility management

Braemar Howells was able to minimise the impact on the sensitive New Zealand coast by safely removing containers from the stricken vessel RENA.

This is the second year that Braemar has been extensively involved in the location, recovery and safe handling of distressed cargo containers from the RENA, which grounded off the North Island of New Zealand in October 2011. As a result of this the Division's revenue increased for the third year running to £23.4 million (2011/12: £14.5 million) and likewise operating profit increased to £2.7 million (2011/12: £1.9 million).

The division's core skill is its 24/7 availability to respond to transportation incidents (maritime, aviation, rail and road) that require its specialist skills to coordinate and implement a structured response, in order to minimise the environmental damage in otherwise uncontrolled disaster situations. In the UK the industrial services operations provides innovative tank cleaning and environmental waste reduction measures, alongside its 65 years of incident response provision for clients including government agencies, UK ports and Network Rail. The consultancy arm of the division continues to grow overseas, in particular in West and central Africa.

Our work on RENA has now been completed successfully. Without such major incidents the revenue of the division will revert to an underlying level of revenue of circa £5 million.

Recognised as being an industry leader in hazardous working environments, Braemar Howells has gained its 10th International safety award. This has been demonstrated by working 330,000 man hours accident free on the RENA.

Braemar Howells has considerable expertise in land remediation.

Go to www.braemarhowells.com

Braemar Shipping Services plc Annual Report 2013

Corporate social responsibility report

I am pleased to be able to present to you a summary of how our Group operates in the wider context of its stakeholders. The Group takes its social responsibility seriously and has a programme of regular reviews of CSR matters. Some of the highlights from the report are:

the excellent health and safety record throughout the Group;
our focus on support for and training of young people who can develop to make a contribution to the maritime community; and
the progress made in monitoring our greenhouse gas emissions across the Group.

Environment

As a services based organisation, we are not heavy producers of greenhouse gases but we are conscious that efforts need to be made to minimise and monitor these emissions. An assessment has been made of the quantities of greenhouse gases produced through use of electricity and gas in offices as well as car usage during work times. The work done this year will form the baseline for assessing any targets for emissions in the future and for benchmarking against similar organisations as well as for future reporting to our stakeholders.

James Kidwell

Chief Executive

Two Group companies have achieved ISO14000 accreditation, a standard for environmental management and are rightly proud that this demonstrates a commitment to minimising any negative impact on the environment.

Through our increasing use of video conferencing across the Group we are endeavouring to avoid unnecessary air travel.

Staff in the London office are provided with secure bicycle parking facilities to encourage this means of transport where possible.

Cory Brothers agency team added their support to the explorers undertaking The Coldest Journey, the first ever attempt to cross the Antarctic in Winter. Cory acted as the agent for their vessel the S.A. AGULHAS as she took expedition members and equipment to Antarctica.

Our strategy Page 6.

Braemar Shipping Services plc Annual Report 2013

Health & Safety

The Group takes the health and safety of all staff and contractors extremely seriously and is pleased to report another year of no lost time accidents. This is in the context of over 300,000 man hours work done on the RENA which exposed staff and subcontractors to additional health and safety risks, which were managed and controlled to avoid accidents.

We recognise that staff in our Environmental, Logistics and Technical Divisions operate in high risk environments and each of these divisions employs full time, professional health and safety staff specialised in their respective areas of business.

Both Braemar Howells and Cory Brothers in the UK have accreditation to ISO BS OHSAS 18001 occupational health and safety management standard.

Our disciplined approach ensures that risks to which staff and contractors are exposed, are reduced to the minimum possible without:

causing harm to staff, clients and third parties;
damaging assets and thereby causing consequential business/financial loss;
adversely affecting the environment; and
damaging Group companies' reputations.

Our experienced warranty surveyors oversee complex and challenging operations offshore such as this movement of a 15,000 ton jacket.

Community

The Group continues to provide support for young people who wish to embark upon a career in the maritime industries through support for students at universities studying maritime courses, guest lecturing at universities and support for a dedicated maritime studies teacher at a London secondary school. We believe that training future generations for a career in the maritime industry is vital.

This year, our shipbrokers took part in an innovative 'trading day' to raise awareness for the OSCAR campaign, a charity for which £500,000 has been raised towards creating a truly world-class Clinical Investigations Unit on the Seas and Oceans' themed floor of Great Ormond Street Hospital.

The Group supports youth sporting activity in a variety of ways, including support for schoolboy cricket in England.

Human Resources

Throughout the Braemar Group, our relationship with our employees underpins everything that we do. Having a workforce that is motivated, skilled, engaged and above all safe is key to our success and ensures that all of our staff are empowered to achieve and realise their potential.

The involvement of employees in the Group's performance is encouraged where appropriate through participation in the annual discretionary bonus and share option schemes including both UK and International Save As You Earn schemes.

The Group is dedicated to providing a fair and professional workplace for all of its employees and has a range of policies covering issues such as equal opportunities, bullying, harassment and whistleblowing to support this commitment.

The Group is committed to ensuring high standards in its employment policies throughout the Group. The Group aims to provide equal opportunities for all employees so that they can work without discrimination on the grounds of race, religious or political beliefs, marital status, age, gender, sexual orientation or disability. The Group does not tolerate harassment of any kind in the workplace. The Group gives full and fair consideration to applications for employment from persons with a disability. If any employee were to become disabled while in employment of a Group company, it is the Group's policy to make every effort to find continuing employment and arrange appropriate training for that employee, where possible.

Financial review

Martin Beer
Group Finance Director

Financial statements Page 31.

Summary Income Statement	2013 £'000	2012 £'000	2011 £'000
Revenue	143,774	133,474	126,135
Cost of Sales	(43,867)	(36,922)	(29,897)
Operating costs	(86,435)	(83,853)	(79,109)
Divisional operating profit	13,472	12,699	17,129
Unallocated costs	(2,951)	(1,953)	(2,635)
Non-recurring items	–	69	–
Amortisation of other intangible assets	(1,538)	(1,458)	(1,565)
Operating profit	8,983	9,357	12,929

Overview

The operating profit margin in the Shipbroking division has fallen in the last two years as a result of the weaker shipping market which has affected the ship values and freight rates on which we earn our commission. However, the profitability in each of the Technical, Logistics and Environmental divisions has improved over the same period and has helped offset this fall. In 2012/13, these three divisions accounted for 60% of the Group's divisional operating profit (2012: 44%).

Direct and operating costs

Cost of sales increased by 19% in the year. However, this is attributable to the work carried out by the Environmental division on the RENA.

Operating costs excluding amortisation of other intangible assets in 2012/13 have increased by £3.6 million compared with last year. The majority of this increase has arisen in the Technical division which includes a full year's costs in relation to Braemar Salvage Association (acquired in May 2011) and Braemar Casbarian (acquired in July 2011). We have carefully balanced controlling operating costs in the year with the necessary cost of investing in high quality staff.

A significant proportion of the rise in unallocated costs reflects the Board and management changes during the year and these will reduce in 2013/14.

Balance sheet

Net assets at 28 February 2013 were £69.8 million (2012: £66.8 million). There has been an improvement in the composition of the balance sheet as a result of trade receivables being converted into cash. Some of this positive effect is as a result of collecting approximately £2.2 million of debtors, which existed at the end of last year when work on the RENA was in full flow. Net working capital has reduced from £10.0 million at 29 February 2012 to £8.4 million at 28 February 2013.

The value of intangible assets arising from acquisitions in previous years has now reduced to less than £1.0 million as these assets have been amortised over their estimated useful life. As a result the amortisation charge in respect of these assets will reduce by approximately £1.0 million in 2013/14.

Shipbroking	2013 £'000	2012 £'000	2011 £'000
Revenue	46,362	49,813	61,646
Divisional operating profit	5,348	7,121	14,309
Operating profit margin	11.5%	14.3%	23.2%
Employee numbers	289	299	288
Technical	2013 £'000	2012 £'000	2011 £'000
---	---	---	---
Revenue	36,778	31,954	22,621
Divisional operating profit	3,437	1,833	1,319
Operating profit margin	9.3%	5.7%	5.8%
Employee numbers	351	340	222
Logistics	2013 £'000	2012 £'000	2011 £'000
---	---	---	---
Revenue	37,495	37,630	35,119
Divisional operating profit	2,006	1,888	1,230
Operating profit margin	5.4%	5.0%	3.5%
Employee numbers	228	228	232
Environmental	2013 £'000	2012 £'000	2011 £'000
---	---	---	---
Revenue	23,399	14,529	6,749
Divisional operating profit	2,681	1,857	271
Operating profit margin	11.5%	12.8%	4.0%
Employee numbers	52	52	60

Braemar Shipping Services plc Annual Report 2013

Cash flow and Treasury management

The Group continues to be strongly cash positive and at 28 February 2013 had cash of £23.3 million (29 February 2012: £17.5 million) and no debt. We generated £15.0 million cash from operating activities in the year compared to just £5.0 million last year. This positive impact has arisen from a reduction in trade debtors and lower bonus payments.

The increase to the cash balance was generated predominantly in the second half of the year. This follows the normal cycle for the Group because the cash balance at the start of the year will be used in the first half to pay the final dividend to shareholders, as well as staff bonuses for which provision has been made in these financial statements. The Group has incurred £1.3 million on capital expenditure which includes £0.6 million investment in the Group's IT infrastructure.

Foreign exchange

For most of the year the US dollar exchange rate relative to sterling was relatively stable and the average rate of exchange for US dollar-denominated shipbroking earnings was $1.56/£ (2012: $1.60/£). In February 2013 the US dollar to sterling exchange rate moved more significantly to finish the year at a rate of conversion of $1.52/£ (29 February 2012: $1.60/£). At 28 February 2013 the Group held forward currency contracts to sell US$9.0 million at an average rate of $1.54/£.

During the year, the Group has updated its hedging policy to reduce its major currency exposure. The Group has forward cover for major currency exposure, based on expected receipts from contracted revenue, which approximates to 50% of the next nine months of revenue and is generally only material for the US dollar. The new policy will also reduce the translation exposure as significant currency reserves will be converted back to sterling on a regular basis.

Shipbroking revenues, denominated in US$, remain exposed to the US$/£ exchange rate in the long term.

Taxation

The Group's effective tax rate in 2012/13 was 26.3% (2012: 29.5%). The rate is higher than the UK standard rate of corporation tax of 24% mainly due to disallowed expenses. The fall in the effective rate in comparison to last year is a result of the reduction to the UK standard rate of tax from 26% to 24% and the mix of overseas profits. The further reductions from 24% to 23% in 2013/14 together with the two further cuts to 20% by April 2015 that were announced on 20 March 2013 are expected to reduce the rate in future years.

Risks and uncertainties

Market risk

The markets in which the Group operates are influenced by many factors some of which are on-going by nature (e.g. economic factors such as world trade and the demand for commodities) and others of which are one-off (e.g. geo-political events and extreme weather). The Group seeks to mitigate its exposure to any one driver or event by maintaining a presence in most bulk shipping markets and by investing in a variety of shipping and energy services businesses.

Reputational risks

We view the Group's reputation with existing and potential clients, staff and other business partners as critical to the on-going success of the Group. Management seeks to ensure that staff are properly managed, trained and informed so that they can provide a high quality service to clients. The Group also seeks to adhere to all applicable laws, regulations and ethical standards.

Operational risks

The key operational risks are:

departure of key teams or staff which is managed through staff contracts and long and short-term incentive arrangements and the monitoring of market practice;
staff errors and/or omissions, for which the Group carries separate professional indemnity insurance;
the failure of financial controls which is monitored by management reporting and oversight and other checks including internal audit; and
the failure of support services such as communications systems and public utilities for which the Group maintains business continuity plans and back-up procedures.

Foreign exchange risk

A large proportion of the Group's income is earned in US dollars and therefore changes in the US dollar rate of exchange relative to the currencies in the countries where the Group operates (principally the pound sterling) can have an effect on the reported results and net assets. The Group has a policy of hedging some of this exposure as explained above.

Liquidity risk

The Group maintains an overdraft facility of £8.0 million with the Group's principal relationship bank, the Royal Bank of Scotland plc. The Group reviews the institutions with whom cash resources are held and has funded its operations from internal resources.

Credit risk

The Group is exposed to risk of non-payment by a trade debtor including the concentration of credit risk within market sectors. We consider the risk to be reduced due to the breadth and diversity of the Group's customer base. Management monitors the level of outstanding trade receivables regularly following up to ensure appropriate steps are being taken to collect debts on a timely basis.

A review of risks affecting all areas of the Group is prepared for consideration annually by the Audit Committee and appropriate actions are taken to address the risks identified.

Martin Beer ACA

Group Finance Director

13 May 2013

2013 Review of Operations — 01-17

Governance — 18-30

Financial statements — 31-62

Shareholder information — 63-64

Board of Directors

Non-executive Directors

Sir Graham Hearne CBE (75)
Chairman.

Committee memberships: None.

Background and relevant experience: Qualified solicitor, formerly Chairman of Enterprise Oil plc and Catlin plc.

Current external appointments: Non-executive Director of Rowan Companies plc and Bumi plc and Genel Energy plc.

John Denholm CA (56)
Non-executive Director.

Committee memberships: Chairman of the Remuneration Committee, member of the Audit and Nominations Committees.

Background and relevant experience: A Chartered Accountant, currently Chairman and Chief Executive of J&J Denholm Limited.

Current external appointments: J&J Denholm Limited, Anglo Eastern Management Limited, Hadley Shipping Group Limited, Chamber of Shipping Limited and a member of the Executive Committee and President designate of the Baltic International Maritime Council.

Alastair Farley (67)
Non-executive Director and Senior Independent Director.

Committee memberships: Chairman of the Audit Committee, member of Nominations and Remuneration Committees.

Background and relevant experience: Qualified solicitor and a founding partner of Watson, Farley & Williams LLP, a firm of international lawyers, and senior partner from 1982-1999. He remains a senior adviser there. Formerly a non-executive Director and Chairman of the Audit Committee of Close Brothers Group plc.

Current external appointments: Chairman of Seaguard Offshore Group, Director of Nautilus Holdings Limited, Gyroscopic Fund Limited and senior adviser to Chandris Group.

David Moorhouse CBE, FNI (66)
Non-executive Director.

Committee memberships: Chairman of the Nominations Committee, member of the Audit and Remuneration Committees.

Background and relevant experience: Former Executive Chairman of Lloyd's Register, former Chairman and Chief Executive of the Process Division of the Kvaerner Group, former Board Member and Deputy Chairman of the Department for Trade and Industry's Offshore Supplies Office and a life member of the UK's Foundation for Science and Technology.

Current external appointments: Trafalgar House Trustees Limited, Chairman of Maritime London, trustee of the National Maritime Museum and Director of OAO Sovcomflot.

Executive Directors

James Kidwell FCA (51)
Chief Executive

Background and relevant experience: Chartered Accountant. Formerly Finance Director of Boosey & Hawkes Music Publishers Limited and Group Financial Controller of Carlton Communications plc. Finance Director of Braemar Shipping Services plc from 2002 until his appointment as Chief Executive in June 2012.

Current external appointments: None.

Denis Petropoulos (56)
Executive Director with responsibility for tanker chartering and development in Singapore where he is now based.

Background and relevant experience: Established Braemar Tankers in 1986.

Current external appointments: Member of Intertanko's Associate Members Committee.

Martin Beer ACA (50)
Group Finance Director

Background and relevant experience: Chartered Accountant. Formerly Finance Director of Unigate Dairies Ltd and from 2002 Group Finance Director of Uniq plc.

Current external appointments: None.

1. 1. 1. 1. 7.

Braemar Shipping Services plc Annual Report 2013

Report of the Directors

for the year ended 28 February 2013

The Directors submit their report and the audited accounts for Braemar Shipping Services plc, registered number 2286034, for the year ended 28 February 2013, which were approved by the Board on 13 May 2013.

Principal activities and review of business

The Company operates through a number of subsidiaries and joint ventures. A review of the Group's activities including principal risks and uncertainties, business drivers, key performance indicators and future prospects is contained in the Chief Executive's review of the business on pages 5 to 13, the Corporate social responsibility report on pages 14 and 15, the Financial review on pages 16 and 17 and the Corporate Governance statement on pages 21 to 23.

Results and dividends

The Group profit before taxation for the year amounted to £9.3 million (2012: £9.8 million). Details of the results are set out in the consolidated income statement on page 31 and in the related notes. Details of dividends paid during the period are set out in note 9 to the Accounts. The Directors are recommending the payment of a final dividend of 17 pence per share on 24 July 2013 to shareholders on the register at the close of business on 28 June 2013.

Share capital

During the year ended 28 February 2013 the Company issued 52,295 new shares pursuant to the exercise of employee share options.

At 28 February 2013 the total issued ordinary share capital was 21,652,157 shares of 10 pence each. All of the Company's shares are fully paid up and quoted on the London Stock Exchange Plc's Official List. The rights and obligations attaching to the Company's ordinary shares as well as the powers of the Company's Directors, are set out in the Company's Articles of Association, copies of which can be obtained from Companies House, or by writing to the Company Secretary. There are no restrictions on the voting rights attaching to or the transfer of the Company's issued ordinary shares.

No person holds securities in the Company carrying special rights with regard to control of the Company. The Company is not aware of any agreements between holders of securities that may result in restrictions in the transfer of securities or voting rights. The Company's Articles of Association may be amended by special resolution of the Company's shareholders. There are a number of agreements that take effect, alter or terminate upon a change of control of the Company, such as commercial contracts and joint venture agreements. None is considered to be significant in terms of their potential impact on the business of the Group as a whole.

At the forthcoming Annual General Meeting, shareholders will be asked to consider a renewal of the Directors' authority to allot shares. Details are contained in the Notice of the Annual General Meeting.

Purchase of own ordinary shares

The Directors are authorised to make market purchases of the Company's ordinary shares under an authority granted by the Annual General Meeting held on 20 June 2012. No purchases were made under this authority during the year. In accordance with ABI Investor Protection Guidelines, the maximum number of ordinary shares which may be acquired is 10% or less of the Company's issued ordinary shares as at 13 May 2013.

The Directors will seek the renewal of this authority at the 2013 Annual General Meeting in Resolution 10 in accordance with the Company's Articles of Association. The Directors have no immediate intention of exercising the authority but they will keep the matter under review. Purchases will only be made if they result in an expected increase in earnings per share and will take into account other available investment opportunities, appropriate gearing levels and the overall position of the Company. Any shares purchased in accordance with this authority will subsequently be cancelled. The total number of options to subscribe for shares that were outstanding as at 13 May 2013 was 456,748, being 2.1% of the issued share capital. If the authority to purchase shares is used in full, the proportion of issued share capital represented by this number of options would amount to 2.3%.

Directors and their interests

The Directors of the Company during the year and at the date of this report are shown on page 18. The Directors' beneficial interests, including family interests in the shares of the Company at 28 February 2013, were as follows:

	28 February 2013	29 February 2012
Martin Beer	-	-
John Denholm	7,000	7,000
Alastair Farley	13,366	13,336
Sir Graham Hearne CBE	2,500	2,500
James Kidwell	111,304	107,791
David Moorhouse CBE	-	-
Denis Petropoulos	598,191	591,525

Directors' interests in share options are set out on page 29. The Directors, in common with other employees of the Group also have an interest in 764,626 (2012: 877,709) ordinary 10 pence shares held by Kleinwort Benson (Channel Islands) Limited on behalf of the Employee Share Ownership Plan.

The Directors held no material interest in any contract of significance entered into by the Company or its subsidiaries during the period. There have been no changes in Directors' interests between 28 February 2013 and 13 May 2013.

During the year, the Group maintained cover for its Directors and officers and those of its subsidiary companies under a Directors' and officers' liability insurance policy, as permitted by the Companies Act 2006.

Substantial shareholdings

Group employees and the Employee Share Ownership Plan own approximately 25% of the shares in the Group.

At 28 February 2013, the Directors have been notified or are aware of the following persons who directly or indirectly are interested in 3% or more of the issued ordinary share capital of the Company.

Majedie Asset Management	6.38%
Alan Marsh	5.72%
Quentin Soanes	5.57%
BlackRock Investment Management	3.48%

As far as the Company is aware there are no other persons with significant direct or indirect holdings in the Company.

Braemar Shipping Services plc Annual Report 2013

Report of the Directors

for the year ended 28 February 2013

continued

Information provided to the Company pursuant to the Financial Services Authority's (FSA) Disclosure and Transparency Rules (DTRs) is published on a Regulatory Information Service and the Company's website.

Payments to suppliers

Group companies are responsible for agreeing the terms and conditions under which business transactions with their suppliers are conducted. It is Group policy that payments to suppliers are made in accordance with these terms, provided that the supplier is also complying with all relevant terms and conditions. The Company has no trade creditors (see note 21).

Employee relations

Information on employee relations is set out in the Corporate social responsibility report on pages 14 and 15.

Donations

During the year the Group made charitable donations amounting to £43,653 (2012: £43,882) to a range of different charities. No political donations were made during the period.

Financial instruments

The Group's financial risk management objectives and policies are set out in the Corporate Governance statement on page 23 and in the Financial review on page 17.

The Group's statement on Corporate Governance can be found on pages 21 to 23 and forms part of this Directors' report and is incorporated into it by cross-reference.

Statement of Directors' responsibilities

The Directors are responsible for preparing the Annual Report and the Group and Parent Company financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the Parent Company financial statements on the same basis.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and of their profit or loss for that period. In preparing each of the Group and Parent Company financial statements, the Directors are required to:

select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether they have been prepared in accordance with IFRSs as adopted by the EU; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Parent Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed on page 18 confirm that, to the best of their knowledge:

the Group and Company financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group and the Company; and
the Chief Executive's strategic review and review of operations and the Financial review include a fair review of the development and performance of the business and the position of the Group and the Company, together with a description of the principal risks and uncertainties that it faces.

In the case of each of the persons who are Directors at the time when the report is approved, the following applies:

(a) so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware; and
(b) he has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Our auditors, KPMG Audit Plc have instigated an orderly wind down of their business. The Board has decided to put KPMG LLP forward to be appointed as auditors and a resolution concerning their appointment will be put to the forthcoming Annual General Meeting of the Company. A resolution will also be proposed authorising the Directors to determine the auditors' remuneration.

Annual General Meeting

The 2013 Annual General Meeting of the Company will be held at 12 noon on 19 June 2013 at Oak Room 3, The Lancaster London, Lancaster Terrace, London W2 2TY. A separate document accompanying the Annual Report and Accounts contains the Notice convening the Annual General Meeting and a description of the business to be conducted thereat.

By Order of the Board

Laura Bugden ACIS

Company Secretary

13 May 2013

Braemar Shipping Services plc Annual Report 2013

Corporate Governance

for the year ended 28 February 2013

Braemar Shipping Services plc is committed to ensuring high standards of Corporate Governance. This statement together with the Remuneration Report on pages 24 to 29 describes how the Company has applied the principles of good Corporate Governance during the year ended 28 February 2013.

The Board endorses the main principles and provisions set out in the UK Corporate Governance Code issued by the Financial Reporting Council in May 2011 ("the Code"). The Board believes that the Company has been compliant with the Code throughout the year.

The Board

The Board is responsible to shareholders for the effective direction and control of the Group and it aims to provide entrepreneurial leadership within a framework of prudent and effective controls, enabling risks to be assessed and managed.

The Board currently comprises the Chairman, three independent non-executive Directors and three executive Directors. John Denholm has served on the Board for 11 years. The Board considers that he remains wholly independent in character and judgement, with no relationships or circumstances that are otherwise likely to affect or appear to affect his judgement. He has brought to the Board wide knowledge and experience of the shipping and related industries which provide the Board with valuable insights which cannot easily be replicated. For these reasons, the Board is satisfied that his long service is not an impediment to his continuing in his present role. During the year, Alan Marsh and Quentin Soanes retired from the Board. James Kidwell was promoted from Group Finance Director to Chief Executive in June 2012 and Martin Beer joined the Board in October 2012 as Group Finance Director. The Board believes that its current composition is appropriate having regard to the Company's size and activities.

The non-executive Directors, none of whom has fulfilled an executive role within the Company, are appointed for an initial three-year term serving under letters of engagement, which contain a formal one-month notice period. Sir Graham Hearne chairs the Board and is not a member of any of the Board's sub-committees. Alastair Farley is the senior independent non-executive Director and he chairs the Audit Committee; John Denholm chairs the Remuneration Committee and David Moorhouse CBE chairs the Nominations Committee.

The executive Directors are engaged under service agreements which can be terminated on 12 months' notice. There are no contractual provisions providing for termination payments in any executive Directors' service agreement.

The Board met seven times during the year and the attendance by the Directors is set out overleaf. Board meetings include reviews of financial and business performance and consideration and monitoring of business risks and opportunities. The following matters are specifically reserved for the Board's consideration and approval:

Group strategy;
the Group budget;
major capital expenditure, disposals or leasing arrangements;
choice of key corporate advisers;
acquisitions and disposals;
Group financial and treasury policy including dividends and borrowing;
establishing Board committees and setting their terms of reference; and
internal control arrangements.

On a periodic basis, the Board receives reports on its activities from the senior management of a subsidiary company or a head of department. The Group has also undertaken a strategy process involving the Board and some senior divisional managers. All Directors are provided with appropriate and timely information and are properly briefed on Board matters. In the furtherance of his duties any Director may take independent professional advice or receive training, if necessary, at the Company's expense.

During the year, the Board and its committees conducted a review of the effectiveness of their operations. The review process was led by a non-executive Director and entailed each Director completing an assessment questionnaire, the results of which were recognised for consideration by the Board. The Chairman and non-executive Directors meet without the presence of executive Directors from time to time and the senior independent non-executive Director held a meeting with the Chairman to consider his effectiveness as Chairman.

Under the Company's Articles of Association, Directors should submit themselves for re-election every three years. The Director retiring by rotation at the Annual General Meeting and offering himself for re-election is Denis Petropoulos. Martin Beer was appointed to the Board in October 2012 as Group Finance Director and offers himself for election. The Nominations Committee and the Board all unanimously support these elections. Biographical information on the Directors can be found on page 18 of this Annual Report.

Relations with shareholders

The Board recognises the importance of maintaining good communications with both institutional and private shareholders. For several years the Group has pursued an active investor relations programme conducted primarily through regular meetings of the Chief Executive and Executive Directors with existing and potential institutional investors following both the interim and preliminary announcements of the results of the Group. Any particular matters such as amendments to the performance criteria under the LTIP are communicated by letter as required. Feedback on shareholder meetings is provided via the Group's corporate stockbroker or public relations adviser. Corporate announcements are also made available on the Group's website.

The Board exercises care to ensure that all information, including that which is potentially price-sensitive, is released to all shareholders at the same time in accordance with applicable legal and regulatory requirements.

The Company encourages attendance at its Annual General Meeting where each resolution is separately put to the meeting and where the Chairman and/or Chief Executive makes a statement on the current year's performance to date and the near-term financial outlook.

Braemar Shipping Services plc Annual Report 2013

Corporate Governance

for the year ended 28 February 2013

continued

The Board

The number of meetings of the full Board and the attendance of those meetings by each member is set out below:

Number of scheduled meetings in 2012/13: 7	Attended
Non-executive Directors
Sir Graham Hearne CBE	7/7
John Denholm	7/7
David Moorhouse CBE	7/7
Alastair Farley	7/7
Executive Directors
Martin Beer(1)	2/3
James Kidwell	7/7
Denis Petropoulos	7/7
Alan Marsh(2)	3/3
Quentin Soanes(3)	2/3

(1) Martin Beer was appointed to the Board on 15 October 2012
(2) Alan Marsh resigned from the Board on 31 July 2012
(3) Quentin Soanes resigned from the Board on 31 July 2012

Board Committees

Each of the Board committees comprises solely non-executive Directors. The composition and responsibilities for the Audit, Remuneration and Nominations Committee are as follows:

Audit Committee

Number of scheduled meetings in 2012/13: 3	Attended
John Denholm	3/3
David Moorhouse CBE	3/3
Alastair Farley	3/3

Non-executive Directors: Alastair Farley (Chairman), John Denholm and David Moorhouse CBE.

Although the Board as a whole has a statutory responsibility for the preparation and publication of the Company's accounts, the Audit Committee reports to the Board and takes responsibility for the following matters:

review of the internal control procedures and risk assessment process;
planning with the external auditors the half-year review and full-year audit programme including agreement with the external auditors of the nature and scope of the audit, together with the level of the audit fee set in the context of the overall audit plan;
reviewing with the external auditors their audit findings and responses to the matters raised, including any issues or reservations the auditors may have;
reviewing the half-year and annual financial statements before they are submitted to the Board and considering the adequacy and appropriateness of disclosures;
setting the policy on the appointment of the external auditors for the supply of non-audit services having regard to the level of fees for both audit and non-audit work;
reviewing the operations of internal audit; and
reviewing the insurance arrangements for the Group.

The Audit Committee places emphasis on the cost-effectiveness, independence and objectivity of the audit function. Company policy is that fees paid to auditors for non-audit services do not exceed audit fees unless such non-audit services are reviewed and approved by the Audit Committee. The Audit Committee reviews the independence and performance of the auditors on an annual basis. The audit was last tendered three years ago and resulted in a change of audit firm.

During the year, the Audit Committee has reviewed the key risks that affect the Group, as explained under the section on Risk management and internal control. In connection with this, the Audit Committee is overseeing the development of the internal audit agenda which provides assurance to the Committee that the financial controls which exist in the Group are effective at mitigating the risks it is exposed to. The Audit Committee has reviewed and approved the fees paid to the auditors at the meeting held prior to the end of the financial year and in addition to the formal Committee meetings held, the Chairman of the Audit Committee meets with the Group audit partner. John Denholm also has relevant and recent financial experience and is a chartered accountant.

Nominations Committee

Number of scheduled meetings in 2012/13: 2	Attended
John Denholm	2/2
David Moorhouse CBE	2/2
Alastair Farley	2/2

Non-executive Directors: David Moorhouse CBE (Chairman), John Denholm and Alastair Farley.

The Nominations Committee considers the balance of skills, experience and diversity of the Board membership and makes recommendations to the Board on the appointment of new Directors. For each new appointment the Nominations Committee considers, amongst other things, the appropriateness of the qualifications and experience of the candidate for the role to be fulfilled and their availability to devote time to the job. Details of the Directors' other professional commitments are set out in the biographical details on page 18.

During the year, the Nominations Committee recommended the appointment of a new Chief Executive Officer and a new Group Finance Director and to assist in the recruitment employed the services of external consultants in respect of both appointments.

The Nominations Committee also reviews the appointment of non-executive Directors at the expiration of their three-year service letter of engagement.

Braemar Shipping Services plc Annual Report 2013

Remuneration Committee

Number of scheduled meetings in 2012/13: 5	Attended
John Denholm	5/5
David Moorhouse CBE	5/5
Alastair Farley	5/5

Non-executive Directors: John Denholm (Chairman), David Moorhouse CBE and Alastair Farley. A report of the Remuneration Committee is set out on pages 24 to 29.

Ethical conduct and anti-bribery measures

The Group is committed to undertaking business to the highest standards and has very clear ethical guidelines which are issued to all Group companies in both English and local languages where appropriate. The compliance with these ethical guidelines is monitored by the Audit Committee, and through the Group's internal procedures. The Group has a total prohibition on the payments of any kind of bribes and this is monitored closely through both internal and external auditing. A programme of internal training is in place to ensure that Group staff are aware of these policies and understand how they relate to Group business.

Risk management and internal control

The Directors acknowledge the requirements of the Code and seek to review all aspects of risk management in relation to each part of the Group. The Directors acknowledge their responsibility for the implementation and effectiveness of the Group's system of internal controls in accordance with the Turnbull guidance. These are designed to identify and manage the particular risks to which the Group is exposed. By their very nature these controls can only provide reasonable but not absolute assurance against material misstatement or loss. The effectiveness of the system of internal controls has been reviewed by the Audit Committee during the year and action taken to strengthen the controls if necessary.

Risk management

A summary of key risks and internal controls is prepared for consideration at the Audit Committee on an annual basis. These processes to monitor risk have been in place throughout the year and up to the date of approval of the Annual Report. The major risks are detailed in the Financial Review. The Company also holds professional indemnity insurance to an amount considered adequate for its size and potential exposure.

A Group budget is prepared annually and approved by the Board. The performances of the Group and the individual operating units are monitored against budget throughout the year and significant variances are investigated. Regular re-forecasts for the remainder of the financial year are prepared during the year.

An internal system of checks and authorisations is operated and independent audits are conducted in relation to the ISO 9001:2000 certification which Braemar Seascope Limited, Cory Brothers Shipping Agency Limited, Braemar Howells Limited and Braemar Technical Services (Engineering) Ltd and Braemar Technical Services (Offshore) all undertake.

There is also an internal whistleblowing procedure through which any member of staff may raise, in confidence, any concerns they may have about the way the Group is run or business is conducted.

The Board monitors treasury activity through regular reporting by the Finance Director. The Group does not enter into speculative transactions.

Internal audit

The Group's internal audit function is a peer review process, whereby senior financial managers from within the business conduct audits of non-related areas of the Group's activities. The programme is co-ordinated by the Group Financial Controller who presents the Group internal audit plan and reports to the Audit Committee. This person is responsible for ensuring that the internal audit programme is met and recommendations are actioned. The Directors have reviewed the effectiveness of the Group's system of internal control throughout the year.

Accountability and audit

A statement of the Directors' responsibilities for preparing the financial statements is included in the Report of the Directors on page 20. This Corporate Governance report forms part of the Directors' report on pages 19 and 20.

Going concern

After making enquiries, the Directors have a reasonable expectation that the Company and Group have adequate resources to continue to trade for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts.

Remuneration Report

for the year ended 28 February 2013

24 Braemar Shipping Services plc Annual Report 2013

John Denholm
Chairman, Remuneration Committee

Introduction from the Chairman of the Remuneration Committee

This report has been prepared in two parts, a report on our Remuneration Policy which includes, in a tabular format, the key elements of the Directors' remuneration packages and an Implementation Report which sets out how our policy is operated. The report is otherwise prepared in accordance with Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. The Board commends this report to you in an advisory vote.

During the year, a new Chief Executive and Finance Director were appointed and the Committee took the opportunity to undertake a review of Board remuneration in the Group. We have taken the advice of external consultants, Deloitte LLP, whose role is described further in the report, and have made the following changes to our remuneration policy:

LTIP targets have been adjusted;
a cap on executive bonuses has been introduced;
executive Directors are now required to take one third of their bonus in deferred shares;
a malus provision has been introduced; and
executive Directors are required to build up a shareholding in the Group equivalent to one year's salary.

The Committee considered the remuneration of the newly appointed Chief Executive and Finance Director independently of that of their predecessors and has set appropriate remuneration for both positions in accordance with the policy that is laid out here.

We have continued to look at how the remuneration of staff can be tailored to ensure retention of staff, achievement of targets and the alignment of the interests of the management with that of the shareholders.

The Committee considers that its policy on remuneration meets the needs of the Group in the balance between employees and shareholders and recommends the policy to the shareholders.

John Denholm
Chairman, Remuneration Committee

Remuneration policy

The responsibilities of the Remuneration Committee are:

to determine on behalf of the Board and shareholders the Group's overall policy for executive remuneration;
to determine individual remuneration packages for each of the executive Directors of the Company, including their base salary and all performance-related elements including bonus arrangements, profit share schemes, equity participation schemes, other long-term incentive schemes, pension and other benefits;
to review the introduction and to determine the terms of all bonus, profit share or equity participation schemes or any other schemes intended to reward and incentivise employees of the Group and to review the participation of the executive Directors and senior executives in such schemes, including the award of any bonuses and the grant of rights or options thereunder; and
to maintain an overview of policy in relation to the remuneration and conditions of service of other senior executives within the Group.

In discharging these responsibilities the Remuneration Committee may call for information and advice from advisers inside and outside the Group. During 2012/13, the Remuneration Committee took advice from external consultants, Deloitte LLP, who provided no other services to the Group during the financial year.

The table below sets out how the key elements of remuneration are operated:

	Purpose and link to strategy	Operation	Opportunity	Performance metrics	Changes in year	Page
Base salary	Help recruit and retain employees.
Reflects individual experience and role.	Reviewed annually and fixed for 12 months commencing 1 March.
Decision influenced by:
– The individual performance of the executive
– The performance of the Group as a whole
– The policy concerning remuneration of employees across the Group
– Comparable arrangements of other companies of similar size and complexity	Salary increases are set according to the operation of the policy.	None.	Following the appointment of a new Chief Executive and Finance Director, salaries for these posts were reduced for the new incumbents.	26
Benefits	Help recruit and retain employees.	Directors are entitled to healthcare, life assurance and income protection insurance.	Full cost of UK benefits is approximately £13,500.	None.	None.	26
Annual bonus	Rewards the achievement of annual financial and strategic business targets and delivery of personal objectives.
Deferred element encourages long-term shareholding and discourages excessive risk taking.	Targets are renewed annually and are aligned to earnings per share.
Bonus level is determined by the Committee after the year end, based on performance against targets.
One third of any bonus earned is awarded in deferred shares vesting after three years and is subject to malus, but not forfeiture.	Maximum 100% of salary.	The majority of the bonus is based on achievement of a challenging earnings per share target which is set by the Remuneration Committee.	No change has been made to measures or weighting.
A new requirement that one third of the bonus is taken in deferred shares was introduced during the year.	26
LTIP	Incentivises Directors to achieve returns for shareholders over a longer time frame.	LTIP was approved by shareholders on 21 June 2006.
Awards of conditional shares are made at the discretion of the Remuneration Committee with vesting dependent on the achievement of performance conditions over the three subsequent years.	Each award is subject to a maximum 100% of salary.	Awards vest at end of three year performance period based on a challenging EPS target to ensure that performance is aligned with shareholder interests.
25% vests at threshold, rising to 100% for stretching performance exceeding the set threshold by a specified margin.	Revised targets introduced which are no longer aligned to the UK RPI. Threshold vesting occurs if the average adjusted EPS increases by 5% per annum rising to 100% vesting if there is 13% increase.	29
Pension	Rewards sustained contribution.	The Group operates a defined contribution pension scheme. Salary in lieu of pension contributions is available.	New executives receive 15% base salary (they contribute 5%).	None.	None.	26

Braemar Shipping Services plc Annual Report 2013

Remuneration Report

for the year ended 28 February 2013

continued

Contracts of service

The Company's policy on executive Directors' service contracts is that they should be rolling contracts terminable on no more than 12 months' notice by either party. The non-executive Directors do not have service contracts but serve under letters of engagement. The policy on the terms that the non-executive Directors serve under is that they are appointed for an initial fixed three-year term renewable by mutual consent, but terminable by either party on one month's notice. In the event of early termination of service contracts (or letters of engagement as applicable), each Director is entitled to payment in lieu of notice equal to their basic salary (or fee as applicable) and contractual benefits for the notice period as set out below. The policy on termination payments to Directors is that there is no entitlement to any such payment.

Details of Directors' service contracts/letters of engagement (as applicable) are as follows:

	Date of Contract/Letter	Unexpired term	Notice period
Executive
James Kidwell	20 June 2012	12 months	12 months
Martin Beer	25 September 2012	12 months	12 months
Denis Petropoulos	1 January 2011	12 months	12 months
Non-executive
Sir Graham Hearne CBE	24 June 2012	4 months	1 month
John Denholm	30 April 2012	2 months	1 month
Alastair Farley	11 January 2011	11 months	1 month
David Moorhouse CBE	30 April 2012	26 months	1 month

Non-executive Directors

The remuneration of the non-executive Directors is determined by the Board with reference to comparable organisations and roles.

Implementation report

During the year, the Remuneration Committee engaged the services of Deloitte LLP to advise on the structure of the executive Directors' remuneration having regard to the Group's size and type of business. Their report made recommendations which were designed to improve the Group's remuneration policy and ensure that, where appropriate:

best practice is followed and
appropriate structure was in place in setting performance targets.

In particular, the LTIP vesting thresholds were considered by Deloitte to be out of line with best practice and the relationship of LTIP performance to RPI was deemed to have no relevance to the Group's overall business. The Committee has implemented changes to both its policy and the implementation of that policy as a result of this advice and those changes are described in the appropriate section of this report.

Directors' emoluments (audited)

For the year ended 28 February 2013 the individual emoluments by Director are as follows:

	Salary/Fee £	Performance-related bonus £	Benefits £	Pension £	Aggregate emoluments year ended 28 February 2013 £	Aggregate emoluments year ended 29 February 2012 £
Executive Directors
James Kidwell	276,666	212,944(4)	3,027	50,000	542,637	393,634
Martin Beer(3)	90,850	56,977(4)	-	-	147,827	-
Alan Marsh(1)	179,166	175,000(5)	2,235	-	356,401	550,457
Denis Petropoulos	202,706	151,939(4)	69,598(6)	30,000	454,243	454,053
Quentin Soanes(2)	108,334	75,000(5)	1,156	-	184,490	410,873
Non-executive Directors
Sir Graham Hearne CBE	75,000	-	-	-	75,000	75,000
John Denholm	38,750	-	-	-	38,750	35,000
Alastair Farley	38,750	-	-	-	38,750	31,667
David Moorhouse CBE	38,750	-	-	-	38,750	35,000
	1,048,972	671,860	120,201	80,000	1,876,848	2,013,146

(1) Retired 31 July 2012.
(2) Retired 31 July 2012.
(3) Appointed 15 October 2012.
(4) One third of bonus paid in deferred shares which vest in three years.
(5) Bonus related to period of service as a Director.
(6) Includes a housing allowance whilst based in Singapore.

Braemar Shipping Services plc Annual Report 2013

Performance graph

Braemar Shipping Services' total shareholder return and FTSE All Share index's performance over the last 5 years rebased to 100.

Annual bonus

The Remuneration Committee believes that a significant proportion of the executive Directors' overall remuneration package should be an annual bonus based on the performance of the Group, in order to provide an incentive to management and to align their interests with those of the shareholders. The bonus policy rewards executive Directors based on achieving earnings per share in excess of a hurdle figure. This excess is then applied to a weighting selected for each participant. The hurdle figure for the year ended 28 February 2013 was 21.27 pence giving an excess of 11.51 pence. The hurdle was unchanged from the previous year. As in prior years, in determining the hurdle figure, the Remuneration Committee took into account factors such as the relative strength and cyclical nature of the shipping markets and their influence on the base hurdle figure, the relative importance of less cyclical non-broking businesses and the general rate of inflation. This policy was established some years ago and has been reviewed regularly to ensure it remains appropriate.

During the year, the Committee introduced a requirement that one third of executive Directors bonuses should be awarded in deferred shares and that such award would be subject to a malus provision which allows the Committee to reduce the number of unvested deferred shares in certain circumstances which include material misstatement of the Company's audited results, a material failure of risk management by the Company or a relevant business unit or serious reputational damage to the Company or a relevant business unit as a result of the participant's misconduct or otherwise. The awards of deferred shares are not otherwise subject to forfeiture.

Where an executive Director has specific responsibilities for a subsidiary company or section of the Group, the Remuneration Committee believes it appropriate that an element of the executive Director's annual bonus may be determined by reference to that responsibility.

In the year to 28 February 2013 one third of executive Directors' bonuses were paid in deferred shares which they will receive in three years' time providing they remain employed by the Group.

The performance-related element of the executive Directors' remuneration for the past two years is as follows:

	2013	2012
James Kidwell	39%	28%
Martin Beer	38%	N/A
Denis Petropoulos	33%	33%

The annual bonus is not pensionable.

Pensions

The Group's trading subsidiaries operate a number of defined contribution pension schemes or make other similar arrangements for individual members as appropriate. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and the various individual employees' retirement plans.

The principal scheme in the UK is the Braemar Seascope Pension Scheme which is a Company-sponsored money purchase scheme. The scheme is administered by trustees and an indemnity in relation to their services as a trustee is given by the sponsoring company.

The executive Directors are entitled to membership of the principal scheme on the same basis as all employees, whose Company contributions vary from 4% to 15%.

Martin Beer does not receive a pension contribution and James Kidwell ceased receiving a contribution at the end of the year.

Deferred Bonus Plan

The Group operates the Braemar Seascope Group PLC Deferred Bonus Plan ("the DBP") whereby part of the annual performance-related bonus can be delivered in the form of awards over ordinary shares in the Company, on a discretionary basis, to staff including executive Directors ("Awards"). The value of shares over which an Award may be granted to an individual cannot exceed the value of the individual's annual performance-related bonus.

Remuneration Report

for the year ended 28 February 2013
continued

Under the DBP, the shares subject to the Awards are held in an employee trust for three years and are released to the participants (so that the participants become absolutely entitled to the shares) at the end of that period provided that the participants remain in employment with the Group at that time (or have ceased to be employed in certain specified circumstances).

In the financial year commencing 1 March 2010 and in subsequent financial years, the Remuneration Committee operated the DBP in conjunction with the Braemar Shipping Services plc 2010 Company Share Option Plan (the "2010 CSOP") to enable UK tax resident individuals to benefit, to the maximum extent possible, from the growth in value of the shares subject to the Awards in a tax-efficient manner.

When Awards are granted under the terms of the DBP, a corresponding option will be granted to each UK tax resident participant under the terms of the 2010 CSOP ("Option"). The maximum value of the shares (at grant) subject to each participant's Option will be £30,000. The Options will vest on the same terms as and on the same date as the corresponding Awards granted under the DBP and, accordingly, vesting of the Options will not be subject to the satisfaction of performance conditions and the Options must be exercised within two days following the vesting date. On exercise of an Option the participant will be required to pay an exercise price per share equal to the market value of such a share on the date of grant of the Option. The maximum amount payable by any individual on exercise of an Option in full will be £30,000. Options which are granted under the 2010 CSOP in conjunction with the DBP will be satisfied by the transfer of existing shares held in an employee trust.

Unlike awards granted under the DBP, provided that the Options are exercised more than three years after the date of grant (or within three years on the cessation of employment in special circumstances), no income tax or employees' or employer's National Insurance contributions will be payable, on exercise, on the growth in value of the shares subject to the Options. The growth in value of the shares from the date of grant may be subject to capital gains tax on a subsequent disposal of the shares.

The number of shares in respect of which the Awards granted under the DBP will vest will be reduced to take account of the value, as at vesting, of the Options linked to the relevant Awards (being the amount by which the total market value of the shares on vesting of the Options exceeds the total exercise price of the Options). In addition, the number of shares in respect of which each Option will vest will be reduced in the event that the value, as at vesting, of the Option exceeds the value, as at vesting, of the corresponding Award. (In those latter circumstances, the number of shares in respect of which the Award will vest will be reduced to zero.)

At 28 February 2013 unvested Awards over a total of 461,229 shares were outstanding under the DBP (2012: 342,356). In respect of the year to 28 February 2013, awards over 280,623 shares were made (inclusive of Awards over 190,582 shares which were also the subject of corresponding Non-Performance Options under the 2010 CSOP).

Share options

The Company operates two all-employee save-as-you-earn option schemes called the Braemar Seascope Group PLC 2003 Savings-Related Share Option Scheme ("the SAYE Scheme") and the Braemar Shipping Services plc 2008 International Savings-Related Share Option Scheme ("the International SAYE Scheme"). No option may be granted under either scheme which would result in the total number of shares issued or remaining issuable under all of the schemes (or any other Group share schemes), in the ten-year period ending on the date of grant of the option, exceeding 10% of the Company's issued share capital (calculated at the date of grant of the relevant option).

The SAYE Scheme

Under the SAYE Scheme, options may be granted to UK employees (including executive Directors) to acquire a number of shares at a future date at a price that is up to 20% below the share price at the time the option is granted. The grant of the option is linked to a contract to make monthly savings to enable the employee to build up the amount required to fund the option exercise price. Exercise of options granted under the SAYE scheme is not subject to the achievement of a performance target. This scheme operates within UK tax legislation. The SAYE Scheme was first launched in July 2003 and options have been granted annually since then. No options were granted under this scheme during the year to 28 February 2013.

All UK employees who participate in the SAYE Scheme are entitled to do so on the same terms. The rules of the SAYE Scheme (which are approved by HM Revenue and Customs) do not permit performance conditions to be applied to the options.

The Remuneration Committee believes the SAYE Scheme, which offers staff a tax effective way of saving money and acquiring an equity interest in the Company, both helps attract and retain staff and aligns the interests of staff and shareholders.

As at 28 February 2013, there were options outstanding over 322,925 shares under the SAYE Scheme (2012: 420,716 shares) of which options over 3,321 shares were held by an executive Director (2012: 14,850 shares).

The International SAYE Scheme

In 2009 the Company established the International SAYE Scheme to enable share options to be granted to its employees resident in Australia and Singapore. The International SAYE Scheme closely resembles the SAYE Scheme (as described above) in its operation. Options over 133,881 shares under the SAYE Scheme were granted on 1 August 2012. These options were granted at a 20% discount to the prevailing market price. As at 28 February 2013, there were options outstanding over 133,823 shares under the International SAYE Scheme (2012: 19,490 shares) of which 3,308 shares were held by an executive Director (2012: nil shares).

Long-term Incentive Plan

The Company established the LTIP in 2006. Participation in the LTIP is intended to be limited to executive Directors and senior managers of the Group. On 30 October 2012 awards were made under the LTIP in the following amounts to the executive Directors:

James Kidwell	75,000
Martin Beer	55,000
Total	130,000

The LTIP is designed to deliver benefits to participants in the form of either an option to subscribe for shares at nominal value or a conditional right to receive shares at nil cost. The awards will normally vest over a period of three years, provided there has been sustained and significant improvement in the Group's financial performance over the corresponding period. No award

Braemar Shipping Services plc Annual Report 2013

may be granted under the LTIP which would result in the total number of shares issued or remaining issuable under the LTIP (or any other Group share schemes) in the ten-year period ending on the date of grant of the award exceeding 10% of the Company's issued share capital (calculated at the date of grant of the relevant award). To date, vested LTIP awards have been satisfied with shares purchased on market by the Company's ESOP. The Remuneration Committee intends to satisfy future vested awards in the same manner and the ESOP has acquired shares to meet the expected exposure.

No individual may receive an award of shares with a market value (at grant) which exceeds 100% of salary in any financial year.

During the year, the Remuneration Committee considered the performance criteria applied to LTIP awards and obtained external advice on the matter. The performance condition applied to the awards remains based on the Group's earnings per share over a period of three years – a condition chosen to align the interests of the Directors and shareholders by measuring sustained performance over the longer term, but no longer include a reference to RPI. The awards will vest as to 25% of the shares if the Group's average adjusted earnings per share has increased by 5% per annum and will vest as to 100% of the shares if the Group's average adjusted earnings per share has increased by 13% per annum and will vest as to between 25% and 100% of the shares on a sliding scale if the Group's average adjusted earnings per share has increased by more than 5% but less than 13%. Providing the performance condition has been met, the awards will vest in three tranches: one third on each of the third, fourth and fifth anniversaries of the date of grant of the awards.

The table showing the Directors' share incentives is set out below:

Directors' share incentives (audited)

The numbers of ordinary shares subject to options held by Directors, who served at any time during the year, granted under the SAYE Scheme and the LTIP are set out below:

		Date of Grant	Number at 1 March 2012	Exercised	Lapsed	Granted	Number at 28 February 2013	Exercise price (pence)	Date options exercisable	Date options expire
James Kidwell	SAYE	1 Feb 12	3,321	-	-	-	3,321	271	1 Feb 15	1 July 15
	LTIP	11 May 07	6,666	6,666	-	-	-	-	11 May 10	11 May 17
	LTIP	7 May 10(1)	40,000	-	40,000	-	-	-	7 May 13	7 May 20
	LTIP	17 May 11	45,000	-	-	-	45,000	-	17 May 14	17 May 21
	LTIP	30 Oct 12	-	-	-	75,000	75,000	-	30 Oct 15	30 Oct 22
Martin Beer	LTIP	30 Oct 12	-	-	-	55,000	55,000	-	30 Oct 15	30 Oct 22
Alan Marsh	SAYE	1 Feb 12	3,321	-	-	-	3,321	271	1 Feb 15	1 July 15
	LTIP	11 May 07	6,666	6,666	-	-	-	-	11 May 10	11 May 17
	LTIP	7 May 10(1)	75,000	-	75,000	-	-	-	7 May 13	7 May 20
	LTIP	17 May 11	97,436	-	-	-	97,436	-	17 May 14	17 May 21
Denis Petropoulos	SAYE	1 Feb 09	4,887	4,887	-	-	-	196.4	1 Feb 12	1 July 12
	SAYE	1 Aug 12	-	-	-	3,308	3,308	272.9	1 Aug 15	1 Jan 16
	LTIP	11 May 07	6,666	6,666	-	-	-	-	11 May 10	11 May 17
	LTIP	7 May 10(1)	33,644	-	33,644	-	-	-	7 May 13	7 May 20
	LTIP	17 May 11	42,735	-	-	-	42,735	-	17 May 14	17 May 21
Quentin Soanes	SAYE	1 Feb 12	3,321	830	2,491	-	-	271	1 Feb 15	1 July 15
	LTIP	11 May 07	6,666	6,666	-	-	-	-	11 May 10	11 May 17
	LTIP	7 May 10(2)	47,500	-	47,500	-	-	-	7 May 13	7 May 20
	LTIP	17 May 11(2)	55,556	-	55,556	-	-	-	17 May 14	17 May 21

(1) The award granted in May 2010 will not vest as the performance criteria have not been met.
(2) Quentin Soanes is no longer an employee of the Group and the LTIP awards lapsed upon termination of employment.

No consideration was payable on the grant of any of the outstanding options held by Directors during the year ending 28 February 2013. The performance conditions applying to the outstanding awards held by Directors under the LTIP are set out in the description of the LTIP above. No performance targets apply to the outstanding options held by Directors under the SAYE Scheme. The market price on the date of maturity on 13 May 2012 of the Directors' LTIP awards was 349.5 pence giving a value of £23,298 for each Director on vesting. The market price on 23 March 2012 was 387 pence giving a gain of £9,316 on exercise of the 2009 SAYE options for Denis Petropoulos. The market price on 8 January 2013 was 365 pence giving a gain of £730 on the exercise of the 2012 SAYE options for Quentin Soanes.

The closing mid-market share price on 28 February 2013 was 385 pence and the range of closing prices during the year ended 28 February 2013 was 287 pence to 415 pence.

No other Director who served during the year held any share options. Directors' interests are set out on page 19.

Non-executive Directors are not permitted to participate in the 1997 Scheme, the SAYE scheme, the 2010 CSOP or the LTIP.

John Denholm
Chairman, Remuneration Committee
13 May 2013

Braemar Shipping Services plc Annual Report 2013

Independent Auditor's Report to the Members of Braemar Shipping Services plc

We have audited the financial statements of Braemar Shipping Services plc for the year ended 28 February 2013 set out on pages 31 to 60 which comprise the Group Income Statement, the Group Statement of Comprehensive Income, the Group and Parent Company Balance Sheets, the Group and Parent Company Cash Flow Statements, the Group and Parent Company Statements of Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the EU and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors' Responsibilities Statement set out on page 20, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements

In our opinion:

the financial statements give a true and fair view of the state of the Group's and of the parent company's affairs as at 28 February 2013 and of the Group's profit for the year then ended;
the financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;
the parent Company financial statements have been properly prepared in accordance with IFRS as adopted by the EU and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006;
the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
information given in the Corporate Governance Statement set out on pages 21 to 23 with respect to internal control and risk management systems in relation to financial reporting processes and about share capital structures is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit; or
a Corporate Governance Statement has not been prepared by the company.

Under the Listing Rules we are required to review:

the Directors' statement, set out on page 23, in relation to going concern;
the part of the Corporate Governance Statement on pages 21 to 23 relating to the company's compliance with the nine provisions of the UK Corporate Governance Code specified for our review; and
certain elements of the report to shareholders by the Board on directors' remuneration.

John Luke (Senior Statutory Auditor)

for and on behalf of KPMG Audit Plc, Statutory Auditor Chartered Accountants

15 Canada, Square, London, E14 5GL

13 May 2013

Braemar Shipping Services plc Annual Report 2013

Consolidated income statement

for the year ended 28 February 2013

| Continuing operations | Notes | 28 Feb 2013
£'000 | 29 Feb 2012
£'000 |
| --- | --- | --- | --- |
| Revenue | 2 | 143,774 | 133,474 |
| Cost of sales | | (43,867) | (36,922) |
| | | 99,907 | 96,552 |
| Operating costs | | | |
| Operating costs excluding amortisation of other intangible assets | | (89,386) | (85,806) |
| Non-recurring income and expense | 3 | - | 69 |
| Amortisation of other intangible assets | 13 | (1,538) | (1,458) |
| | | (90,924) | (87,195) |
| Operating profit | 2,4 | 8,983 | 9,357 |
| Finance income | 7 | 296 | 213 |
| Finance costs | 7 | (45) | (32) |
| Share of profit from joint ventures | 15 | 62 | 252 |
| Profit before taxation | | 9,296 | 9,790 |
| Taxation | 8 | (2,447) | (2,888) |
| Profit for the year | | 6,849 | 6,902 |
| Attributable to: | | | |
| Ordinary shareholders | | 6,824 | 6,841 |
| Non-controlling interest | | 25 | 61 |
| Profit for the year | | 6,849 | 6,902 |
| Earnings per ordinary share | 10 | | |
| Basic – profit for the year | | 32.78p | 33.84p |
| Diluted – profit for the year | | 31.72p | 32.53p |

Consolidated statement of comprehensive income

for the year ended 28 February 2013

| | Notes | 28 Feb 2013
£'000 | 29 Feb 2012
£'000 |
| --- | --- | --- | --- |
| Profit for the year | | 6,849 | 6,902 |
| Other comprehensive income/(expense) | | | |
| Foreign exchange differences on retranslation of foreign operations | | 1,131 | 341 |
| Cash flow hedges – net of tax | 25 | (165) | (70) |
| Total comprehensive income for the year | | 7,815 | 7,173 |
| Attributable to: | | | |
| Equity holders of the parent | | 7,790 | 7,112 |
| Non-controlling interest | | 25 | 61 |
| Total comprehensive income for the year | | 7,815 | 7,173 |

The notes on pages 35 to 60 form an integral part of these consolidated financial statements

Braemar Shipping Services plc Annual Report 2013

Balance sheets
as at 28 February 2013
Company number 2286034

Assets	Notes	Group		Company
		As at 28 Feb 2013 £'000	As at 29 Feb 2012 £'000	As at 28 Feb 2013 £'000	As at 29 Feb 2012 £'000
Non-current assets
Goodwill	12	30,547	30,416	-	-
Intangible assets	13	1,524	2,630	-	-
Property, plant and equipment	14	6,165	6,257	-	-
Investments	15	1,796	1,895	52,714	52,053
Deferred tax assets	8	1,021	1,665	-	-
Other long-term receivables	16	261	233	36	39
		41,314	43,096	52,750	52,092
Current assets
Trade and other receivables	17	44,621	46,973	2,712	2,387
Derivative financial instruments	18	-	136	-	-
Restricted cash	19	339	335	-	-
Cash and cash equivalents	20	23,277	17,467	38	307
		68,237	64,911	2,750	2,694
Total assets		109,551	108,007	55,500	54,786
Liabilities
Current liabilities
Derivative financial instruments	18	94	7	-	-
Trade and other payables	21	36,249	36,953	1,546	1,010
Current tax payable		1,638	1,674	-	-
Provisions	22	413	345	-	-
Client monies held as escrow agent	19	339	335	-	-
		38,733	39,314	1,546	1,010
Non-current liabilities
Deferred tax liabilities	8	612	1,130	-	-
Trade and other payables	21	-	400	-	-
Provisions	22	363	325	-	-
		975	1,855	-	-
Total liabilities		39,708	41,169	1,546	1,010
Net assets		69,843	66,838	53,954	53,776
Equity
Share capital	23	2,165	2,160	2,165	2,160
Share premium		12,150	12,018	12,150	12,018
Shares to be issued	24	(3,309)	(3,695)	(3,309)	(3,695)
Other reserves	25	27,630	26,664	21,742	21,742
Retained earnings		30,962	29,471	21,206	21,551
Group shareholders' equity		69,598	66,618	53,954	53,776
Non-controlling interest	26	245	220	-	-
Total equity		69,843	66,838	53,954	53,776

The accounts on pages 31 to 60 were approved by the Board of Directors on 13 May 2013 and were signed on its behalf by:

Sir Graham Hearne Martin Beer ACA
Chairman Finance Director

The notes on pages 35 to 60 form part of these accounts

Braemar Shipping Services plc Annual Report 2013

Cash flow statements

for the year ended 28 February 2013

	Notes	Group		Company
		28 Feb 2013 £'000	29 Feb 2012 £'000	28 Feb 2013 £'000	29 Feb 2012 £'000
Cash flows from operating activities
Cash generated from operations	27	14,996	5,034	4,997	5,711
Interest received		296	213	-	-
Interest paid		(45)	(32)	(35)	(52)
Tax paid		(3,625)	(3,858)	-	-
Net cash generated from operating activities		11,622	1,357	4,962	5,659
Cash flows from investing activities
Dividends from joint ventures		189	74	189	74
Acquisition of businesses, net of cash acquired	28	(279)	(3,106)	-	-
Purchase of property, plant and equipment and computer software		(1,253)	(1,050)	-	-
Proceeds from sale of property, plant and equipment		83	-	-	-
Other long-term assets		(28)	5	3	15
Net cash used in investing activities		(1,288)	(4,077)	192	89
Cash flows from financing activities
Proceeds from issue of ordinary shares		137	991	137	991
Dividends paid	9	(5,412)	(5,233)	(5,412)	(5,233)
Purchase of own shares		(148)	(1,222)	(148)	(1,222)
Net cash used in financing activities		(5,423)	(5,464)	(5,423)	(5,464)
Increase/(decrease) in cash and cash equivalents		4,911	(8,184)	(269)	284
Cash and cash equivalents at beginning of the period		17,467	25,634	307	23
Foreign exchange differences		899	17	-	-
Cash and cash equivalents at end of the period		23,277	17,467	38	307

Braemar Shipping Services plc Annual Report 2013

Statements of changes in equity

for the year ended 28 February 2013

Group	Share capital £'000	Share premium £'000	Shares to be issued £'000	Other reserves £'000	Retained earnings £'000	Total £'000	Non-controlling interest £'000	Total equity £'000
At 1 March 2011	2,110	11,077	(3,275)	26,323	28,424	64,659	159	64,818
Profit for the year	–	–	–	–	6,841	6,841	61	6,902
Foreign exchange differences	–	–	–	411	(70)	341	–	341
Cash flow hedges net of tax	–	–	–	(70)	–	(70)	–	(70)
Total recognised income in the year	–	–	–	341	6,771	7,112	61	7,173
Dividends paid	–	–	–	–	(5,233)	(5,233)	–	(5,233)
Issue of shares	50	941	–	–	–	991	–	991
Purchase of shares	–	–	(1,222)	–	–	(1,222)	–	(1,222)
ESOP shares allocated	–	–	802	–	(802)	–	–	–
Credit in respect of share option schemes	–	–	–	–	513	513	–	513
Deferred tax on items taken to equity	–	–	–	–	(202)	(202)	–	(202)
At 29 February 2012	2,160	12,018	(3,695)	26,664	29,471	66,618	220	66,838
Profit for the year	–	–	–	–	6,824	6,824	25	6,849
Foreign exchange differences	–	–	–	1,131	–	1,131	–	1,131
Cash flow hedges net of tax	–	–	–	(165)	–	(165)	–	(165)
Total recognised income in the year	–	–	–	966	6,824	7,790	25	7,815
Dividends paid	–	–	–	–	(5,412)	(5,412)	–	(5,412)
Issue of shares	5	132	–	–	–	137	–	137
Purchase of shares	–	–	(148)	–	–	(148)	–	(148)
ESOP shares allocated	–	–	534	–	(534)	–	–	–
Credit in respect of share option schemes	–	–	–	–	678	678	–	678
Deferred tax on items taken to equity	–	–	–	–	(65)	(65)	–	(65)
At 28 February 2013	2,165	12,150	(3,309)	27,630	30,962	69,598	245	69,843
Company	Share capital £'000	Share premium £'000	Shares to be issued £'000	Other reserves £'000	Retained earnings £'000	Total £'000
---	---	---	---	---	---	---
At 1 March 2011	2,110	11,077	(3,275)	21,742	20,882	52,536
Profit for the year	–	–	–	–	6,191	6,191
Dividends paid	–	–	–	–	(5,233)	(5,233)
Issue of shares	50	941	–	–	–	991
Purchase of shares	–	–	(1,222)	–	–	(1,222)
ESOP shares allocated	–	–	802	–	(802)	–
Credit in respect of share option schemes	–	–	–	–	513	513
At 29 February 2012	2,160	12,018	(3,695)	21,742	21,551	53,776
Profit for the year	–	–	–	–	4,940	4,940
Dividends paid	–	–	–	–	(5,412)	(5,412)
Issue of shares	5	132	–	–	–	137
Purchase of shares	–	–	(148)	–	–	(148)
ESOP shares allocated	–	–	534	–	(534)	–
Credit in respect of share option schemes	–	–	–	–	661	661
At 28 February 2013	2,165	12,150	(3,309)	21,742	21,206	53,954

Braemar Shipping Services plc Annual Report 2013

Notes to the consolidated financial statements

General information

Group and Company financial statements of Braemar Shipping Services plc for the year ended 28 February 2013 were authorised for issue in accordance with a resolution of the Directors on 13 May 2012. Braemar Shipping Services plc is a Public Limited Company incorporated in England and Wales.

The term "Company" refers to Braemar Shipping Services plc and "Group" refers to the Company and all its subsidiary undertakings, joint ventures and of the employee share ownership plan trust.

1 Accounting policies

a) Basis of preparation and forward-looking statements

The financial statements of the Group and the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations as adopted by the European Union and in accordance with the provisions of the Companies Act 2006. No income statement is presented for Braemar Shipping Services plc as provided by section 408 of the Companies Act 2006.

The Directors have a reasonable expectation that the Company and Group have adequate resources to continue to trade for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

The financial statements have been prepared under the historic cost convention except for the derivative financial instruments, which are measured at fair value.

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

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

New and amended standards adopted by the Group

There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning 1 March 2012 that have had a material impact on the Group.

New standards, amendments and interpretations issued but not effective for the financial year beginning 1 March 2013 and not early adopted

IAS 1, 'Financial statement presentation' regarding other comprehensive income. The effective date is for annual periods beginning on or after 1 July 2012. The main change resulting from these amendments is a requirement for entities to group items presented in Other Comprehensive Income (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The amendments do not address which items are presented in OCI.

IFRS 9, 'Financial instruments', addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 was issued in November 2009 and October 2010. It replaces the parts of IAS 39 that relate to the

classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity's business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity's own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The Group is yet to assess IFRS 9's full impact and intends to adopt IFRS 9 no later than the accounting period beginning on or after 1 January 2015, subject to endorsement by the EU.

IFRS 10, 'Consolidated financial statements' builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. The Group intends to adopt IFRS 10 for the accounting period beginning on 1 March 2013.

IFRS 11 'Joint Arrangements' is applicable for 2013. The IFRS establishes principles for financial reporting by parties to a joint arrangement. It is concerned principally with both the structure of the arrangement and that an entity had a choice of accounting treatment for interests in jointly controlled entities. IFRS 11 requires that joint arrangements be accounted for using the equity method. The Group intends to adopt IFRS 11 for the accounting period beginning on 1 March 2013.

IFRS 12, 'Disclosures of interests in other entities' includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The Group intends to adopt IFRS 12 for the accounting period beginning on 1 March 2013.

IFRS 13, 'Fair value measurement', aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP. The effective date is for annual reports beginning on or after 1 January 2013.

The Group is assessing the changes from these new standards, but does not expect a material impact.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

The principal accounting policies adopted in the preparation of these financial statements are set out below.

b) Basis of consolidation

The consolidated financial statements incorporate the accounts of the Group and the Company made up to 28 February each year or 29 February in a leap year.

Braemar Shipping Services plc Annual Report 2013

Notes to the consolidated financial statements continued

1 Accounting policies continued

b) Basis of consolidation continued

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

The interest of non-controlling interests is stated at the non-controlling interests' proportion of the value of the assets and liabilities recognised and is presented separately within total equity in the consolidated balance sheet.

Investments in joint ventures and associates and where the Group has significant influence are equity accounted and carried in the balance sheet at cost plus post-acquisition changes in the Group's share of net assets of the associate or joint venture, less any impairment in value. The income statement reflects the Group's share of the post-tax result of the joint venture or associate.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

c) Use of estimates and critical judgements

The preparation of financial statements in conformity with IFRSs as endorsed by the EU requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

A key judgement, not involving estimation, which the Group makes applies to its approach to revenue recognition particularly in respect of the assessments made regarding the appropriate timing of recognition of revenue.

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

Impairment of goodwill and other intangibles assets: Goodwill is tested for impairment on an annual basis. However, the Group will also test for impairment at other times if there is an indication that an impairment may exist. Before carrying out a detailed review, the Directors will first make a judgement as to whether the impact is significant enough to perform a detailed calculation, taking into account their knowledge of the specific business unit and their experience of the market. Some of the critical assumptions applied when carrying out an impairment review are set out in note 12;
Provision for impairment of trade receivables: On-going judgements are required in assessing the appropriate level of impairment provision taking into account the age of the receivables and risk of the amounts not being recovered (see note 17);
Intangible assets: Following the acquisition of a business, the Group carries out a review to assess the fair value of the identifiable assets and liabilities acquired. This will include applying a level of judgement to understand any premium paid for a business represents as well as then carrying out a detailed calculation. The Directors will also apply their judgement again to assess the useful economic life of any intangible assets (see note 13).

d) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the Company and the revenue can be reliably measured.

Revenue of the Group consists of:

i) Shipbroking – income comprises commission arising from tanker and dry cargo charter broking, sale and purchase broking, offshore broking and consultancy and valuation fees. The Group acts as a broker for several types of shipping transaction, each of which gives rise to an entitlement to commission. For single voyage chartering, the contractual terms are governed by a standard charterparty contract in which the broker's commission is earned and recognised when the cargo has been loaded or discharged according to the contractual terms; for time charters the commission is specified in the hire agreement and is earned and recognised over the term of the charter simultaneously with the hire payments being made; in the case of second hand sale and purchase contracts, the broker's commission is earned and recognised when the principals in the transaction complete on the sale/purchase and the title of the vessel passes from the seller to the buyer; with regard to newbuilding contracts, the commission is recognised when contractual stage payments are made by the purchaser of a vessel to a shipyard which in turn reflects the performance of services over the contract. Finally, for income derived from providing ship and fleet valuations, the Group recognises income when a valuation certificate is provided to the client and the service is invoiced.

ii) Technical – fee income comprises fees for the supply of technical and energy loss adjusting services. Income from technical services is recognised on a time incurred and recoverable expenses basis net of provisions.

iii) Logistics – agency income is recognised at the point when the ship sails from the port. Forwarding and logistics income is recognised when the ship departs. Where the Group acts as a principal rather than as agent, the revenue and costs are shown gross.

iv) Environmental – revenue from environmental services is recognised at the contractual rates, as labour hours are delivered and direct expenses incurred.

Other income of the Company consists of dividends from investments. Dividend income from investments is recognised when the shareholders' legal rights to receive payment have been established.

Braemar Shipping Services plc Annual Report 2013

e) Foreign currencies

The functional currency of the Group is pounds sterling. Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currency are recognised in the income statement.

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

Assets and liabilities of overseas subsidiaries, branches and associates are translated from their functional currency into pounds sterling at the exchange rates ruling at the balance sheet date. Trading results are translated at the average rates for the period. Exchange differences arising on the consolidation of the net assets of overseas subsidiaries are dealt with through the foreign currency translation reserve (see note 25), whilst those arising from trading transactions are dealt with in the income statement. On disposal of a business, the cumulative exchange differences previously recognised in the foreign currency translation reserve relating to that business are transferred to the income statement as part of the gain or loss on disposal.

f) Taxation

The taxation expense represents the sum of the tax currently payable and deferred tax.

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

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

g) Goodwill

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

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

h) Intangible assets

i) Computer software

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

ii) Other intangible assets

Intangible assets acquired as part of a business combination are stated in the balance sheet at their fair value at the date of acquisition less accumulated amortisation and any provisions for impairment. The amortisation of the carrying value of the capitalised forward order book and customer relationships is charged to the income statement over an estimated useful life of two to ten years. The carrying values of intangible assets are reviewed for impairment at least annually or when there is an indication that they may be impaired.

i) Property, plant and equipment

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

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

Motor vehicles – three years
Computers – four years
Fixtures and equipment – four years

j) Investments

Investments in associates and joint ventures where the Group has significant influence are accounted for under the equity method of accounting in the financial statements.

Investments where the Group has no significant influence are held at fair value.

Investments in the Company are shown at cost less impairment.

k) Impairment

The carrying amount of the Group's assets other than financial assets within the scope of IAS 39 and deferred tax assets, are reviewed each balance sheet date to determine whether there is an indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. The recoverable amount is determined based on value in use calculations, which requires the use of estimates. An impairment loss is recognised in the income statement whenever the carrying amount of the assets exceeds its recoverable amount.

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

Braemar Shipping Services plc Annual Report 2013

Notes to the consolidated financial statements continued

1 Accounting policies continued

i) Derivative financial instruments and hedging

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

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

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

m) Trade and other receivables

Trade and other receivables are recognised and carried at the lower of their original value and recoverable amount. Provision is made where there is evidence that the balances will not be recovered in full.

n) Cash and cash equivalents

Cash and short-term deposits included in the balance sheet comprise cash in hand and short-term deposits with an original maturity of three months or less.

Cash and cash equivalents included in the cash flow statement include cash and short-term deposits, net of bank overdrafts.

Restricted cash comprises cash balances where the Group is holding cash as escrow agent for certain clients, pending completion of transactions in which the Group acted as broker. The amounts are held in designated accounts and any interest earned is due to the clients.

o) Provisions

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

p) Share-based payments

The fair value at the date of grant of share-based remuneration, principally share options, is calculated using a binomial pricing model and charged to the income statement on a straight line basis over the vesting period of the award. The charge to the income statement takes account of the estimated number of shares that will vest. All share-based remuneration is equity settled. The balance sheet entry is included in reserves. Shares issued in respect of the deferred bonus plan are valued at the market value on the date the shares are purchased.

The Company reflects the fair value of the share-based payments as an investment in its subsidiaries.

q) Commissions payable

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

r) Pension scheme arrangements

The Group operates several defined contribution pension schemes. The assets of the schemes are held separately from those of the Group within independently administered funds. The pension cost charge represents contributions payable by the Group to the fund.

s) Leasing

Operating leases are charged to the income statement as an expense on a straight-line basis over the lease term. Operating lease income is recognised in the income statement as it is earned.

t) Segmental analysis

The Group's segmental analysis is based on its four business segments: Shipbroking, Technical, Logistics and Environmental. This is consistent with the way the Group manages itself and with the format of the Group's internal financial reporting.

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

2 Segmental information

a) Business segments

Management has determined the operating segments for the Group based on the reports reviewed by the Chief Operating Decision Maker to make strategic decisions. The Chief Operating Decision Maker is the Board of Directors.

The Board consider the business from both a service line and geographical perspective. A description of each of the lines of service is provided on page 7.

For management purposes, the Group is currently organised into four operating divisions – Shipbroking, Technical, Logistics and Environmental. These divisions are the basis on which the Group reports its segment information. The reportable segments are derived from an aggregation of operating segments. Unallocated costs relate to Board costs and other costs associated with the Group's listing on the London Stock Exchange.

The segment information provided to the Board for reportable segments for the year ended 28 February 2013 is as follows:

| 2013 | Shipbroking
£'000 | Technical
£'000 | Logistics
£'000 | Environmental
£'000 | Inter-division
£'000 | Total
£'000 |
| --- | --- | --- | --- | --- | --- | --- |
| Revenue | 46,362 | 36,778 | 37,495 | 23,399 | (260) | 143,774 |
| Divisional operating profit | 5,348 | 3,437 | 2,006 | 2,681 | – | 13,472 |
| Amortisation of other intangible assets | (709) | (684) | (145) | – | – | (1,538) |
| Segment result | 4,639 | 2,753 | 1,861 | 2,681 | – | 11,934 |
| Unallocated costs | | | | | | (2,951) |
| Operating profit | | | | | | 8,983 |
| Finance income – net | | | | | | 251 |
| Share of profit from joint ventures | | | | | | 62 |
| Profit before taxation | | | | | | 9,296 |
| Taxation | | | | | | (2,447) |
| Profit for the period attributable to shareholders from continuing operations | | | | | | 6,849 |
| Capital additions | 1,219 | 261 | 46 | 193 | | 1,719 |
| Depreciation of property, plant and equipment and amortisation of computer software | 559 | 343 | 182 | 154 | | 1,238 |
| Segment operating assets | 39,937 | 25,800 | 14,094 | 2,206 | | 82,037 |
| Segment operating liabilities | (13,945) | (4,576) | (16,899) | (1,699) | | (37,119) |

2012

Revenue	49,813	31,954	37,630	14,529	(452)	133,474
Divisional operating profit	7,121	1,833	1,888	1,857	–	12,699
Amortisation of other intangible assets	(531)	(838)	(87)	(2)	–	(1,458)
Non-recurring income and expense	(354)	423	–	–	–	69
Segment result	6,236	1,418	1,801	1,855	–	11,310
Unallocated costs						(1,953)
Operating profit						9,357
Finance income – net						181
Share of profit from joint ventures						252
Profit before taxation						9,790
Taxation						(2,888)
Profit for the period attributable to shareholders from continuing operations						6,902
Capital additions	650	1,574	164	30	–	2,418
Depreciation of property, plant and equipment and amortisation of computer software	559	322	206	162	–	1,249
Segment operating assets	42,334	25,051	13,575	5,685	–	86,645
Segment operating liabilities	(15,038)	(4,486)	(14,031)	(4,475)	–	(38,030)

Divisional operating profit is defined as operating profit before amortisation of acquisition related intangibles, non-recurring items and unallocated costs.

Sales between business segments are carried out at an arm's-length basis.

Capital expenditure comprises additions to property, plant and equipment, goodwill and other intangibles including additions resulting from business acquisitions.

Braemar Shipping Services plc Annual Report 2013

Notes to the consolidated financial statements continued

2 Segmental information continued

Segment assets consist primarily of intangible assets (including goodwill), property, plant and equipment, receivables and other assets. Receivables for taxes, cash and cash equivalents and investments have been excluded. Segment liabilities relate to the operating activities and exclude liabilities for taxes.

b) Geographical segment – by origin

The Group manages its business segments on a global basis. The operation's main geographical area is the United Kingdom. The United Kingdom is the home country of the parent. The geographical regions in which it now reports are shown below.

	Revenue		Capital additions		Non-current assets
	2013	2012	2013	2012	2013	2012
	£'000	£'000	£'000	£'000	£'000	£'000
United Kingdom	97,142	90,849	1,482	1,521	29,904	30,579
Singapore	16,123	14,193	70	266	3,892	4,025
Other Asia	10,387	11,098	94	60	523	514
Australia	6,587	5,971	34	83	3,997	3,792
Rest of the World	13,535	11,363	39	488	181	626
	143,774	133,474	1,719	2,418	38,497	39,536

c) Revenue analysis

All revenue arises from the rendering of services.

There is no one customer that contributes greater than 10% of Group revenue.

3 Non-recurring income and expense

During the year ended 29 February 2012, the Group incurred net £69,000 non-recurring income relating to acquisitions of:

BMT Marine and Offshore Services Limited (£856,000 credit);
Braemar Casbarian Inc (£108,000 debit);
Costs associated with closing the business of Braemar Futures Limited (£354,000 debit); and
Disposing of Braemar Steege de Mexico (£325,000 debit).

Braemar Shipping Services plc Annual Report 2013

4 Operating profit

Operating profits from continuing operations represent the results from operations before share of profits of joint ventures, finance income, finance costs and taxation.

This is stated after charging/(crediting):

| | Notes | 2013
£'000 | 2012
£'000 |
| --- | --- | --- | --- |
| Cost of sales | | | |
| Freight and haulage | | 24,432 | 24,587 |
| Payments to sub-contractors | | 2,578 | 3,880 |
| Materials and other costs | | 16,857 | 8,455 |
| | | 43,867 | 36,922 |
| Staff costs | 5 | 66,817 | 64,389 |
| Depreciation of property, plant and equipment | 14 | 1,051 | 990 |
| Amortisation of computer software | 13 | 187 | 259 |
| Amortisation of other intangible assets | 13 | 1,538 | 1,458 |
| Impairment of goodwill and other intangible assets(1) | 12,13 | 396 | - |
| Operating lease rentals: | | | |
| - Land and buildings | | 2,556 | 2,344 |
| - Other | | 288 | 215 |
| (Profit)/loss on sale of tangible assets | | (37) | 118 |
| Net movements in bad debt provisions | | 234 | 821 |
| Auditors' remuneration | 6 | 430 | 422 |
| Net foreign exchange losses/(gains) and financial instruments | | 185 | (120) |

(1) In addition to the impairment charge in the year relating to Braemar Casbarian Inc, the deferred consideration liability of £422,000 relating to the estimated remaining consideration for that business was released to the income statement (see note 21).

5 Staff costs

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

| | Notes | 2013
£'000 | 2012
£'000 |
| --- | --- | --- | --- |
| Salaries, wages and short-term employee benefits | | 58,694 | 55,949 |
| Other pension costs | 29 | 2,758 | 2,857 |
| Social security costs | | 4,686 | 5,070 |
| Share based payments | 23 | 679 | 513 |
| | | 66,817 | 64,389 |

No staff costs were incurred by the Company.

The numbers above include remuneration and pension entitlements for each Director. Details are included in the Remuneration Report on page 26.

b) Average number of full time employees

| | 2013
Number | 2012
Number |
| --- | --- | --- |
| Shipbroking | 288 | 297 |
| Technical | 350 | 339 |
| Logistics | 227 | 227 |
| Environmental | 51 | 51 |
| Central | 4 | 5 |
| | 920 | 919 |

The Company had no employees. The Directors' remuneration is borne by Braemar Seascope Limited and Braemar Seascope Pte Limited.

Notes to the consolidated financial statements continued

5 Staff costs continued

c) 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 page 26. Key management represents the Directors of the Company.

| | 2013
£'000 | 2012
£'000 |
| --- | --- | --- |
| Salaries, short-term employee benefits and fees | 1,841 | 3,125 |
| Post-employment benefits | 80 | 115 |
| Share-based payments | 82 | 120 |
| | 2,003 | 3,360 |
| Number of key employees | 9 | 11 |

Retirement benefits are accruing to two key management personnel (2012: 3) in respect of defined contribution pension scheme.

6 Auditors' remuneration

A more detailed analysis of auditors' services is given below:

| | 2013
£'000 | 2012
£'000 |
| --- | --- | --- |
| Audit services | | |
| - Fees payable to the Company auditor for audit of the Company and Group financial statements | 70 | 70 |
| Fees payable to the Group's auditor and its associates for other services: | | |
| - The audit of the Group's subsidiaries pursuant to legislation | 231 | 223 |
| - Other services pursuant to legislation | 20 | 20 |
| - Other assurance services | 14 | - |
| - Tax compliance services | 63 | 44 |
| - Tax advisory services | 32 | 41 |
| - Other services relating to corporate finance transactions | - | 24 |
| | 430 | 422 |

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

7 Finance income – net

| | 2013
£'000 | 2012
£'000 |
| --- | --- | --- |
| Finance income: | | |
| - Interest on bank deposits | 296 | 213 |
| Total finance income | 296 | 213 |
| Finance costs: | | |
| - Interest payable on overdrafts | (45) | (32) |
| Total finance costs | (45) | (32) |
| Finance income/(costs) – net | 251 | 181 |

Braemar Shipping Services plc Annual Report 2013

8 Taxation
a) Analysis of charge in year

| | 2013
£'000 | 2012
£'000 |
| --- | --- | --- |
| Current tax | | |
| UK corporation tax charged to the income statement | 1,020 | 2,022 |
| UK adjustment in respect of previous years | (143) | 56 |
| Overseas tax on profits in the year | 1,847 | 1,407 |
| Overseas adjustment in respect of previous years | 52 | 8 |
| Total current tax | 2,776 | 3,493 |
| Deferred tax | | |
| UK current year origination and reversal of timing differences | (256) | (235) |
| UK adjustment in respect of previous years | 94 | 57 |
| Overseas current year origination and reversal of timing differences | (145) | (453) |
| Overseas adjustment in respect of previous years | (6) | 52 |
| Effect of change of tax rate | (16) | (26) |
| Total deferred tax | (329) | (605) |
| Taxation | 2,447 | 2,888 |
| Reconciliation between expected and actual tax charge | 2013
£'000 | 2012
£'000 |
| Profit before tax | 9,296 | 9,790 |
| Profit before tax at standard rate of UK corporation tax of 24% (2012: 26%) | 2,231 | 2,545 |
| Expenses not deductible for tax purposes | 418 | 542 |
| Non-taxable income | (135) | (81) |
| Tax calculated at domestic rates applicable to profits in overseas subsidiaries | (38) | (196) |
| Joint venture income not subject to UK tax | (10) | (69) |
| Prior year adjustments | (3) | 173 |
| Effect of change of tax rate | (16) | (26) |
| Total tax charge for the year | 2,447 | 2,888 |
| Tax on items charged to equity | 2013
£'000 | 2012
£'000 |
| Current tax debit/(credit) on exercised share options | 49 | (63) |
| Deferred tax credit on share options | 32 | 256 |
| Deferred tax credit on cash flow hedges | (54) | (26) |
| Effect of change of tax rate | (16) | 5 |
| Tax credit in the statement of changes in equity | 11 | 172 |
| Analysis of the deferred tax asset | As at
28 Feb 2013
£'000 | As at
29 Feb 2012
£'000 |
| Accelerated capital allowances
(includes £203,000 (2012: £162,000) of overseas accelerated capital allowances) | 352 | 410 |
| Short-term timing differences
(includes £121,000 (2012: £129,000) of overseas short-term timing differences) | 669 | 1,255 |
| | 1,021 | 1,665 |
| The movement in the deferred tax asset | 2013
£'000 | 2012
£'000 |
| Balance at beginning of year | 1,665 | 1,797 |
| Reclassification | (351) | (232) |
| Disposal | - | (94) |
| Movement to income statement | (315) | 463 |
| Movement to reserves | (13) | (259) |
| Exchange differences | 35 | (10) |
| Balance at end of year | 1,021 | 1,665 |

Braemar Shipping Services plc Annual Report 2013

Notes to the consolidated financial statements continued

8 Taxation continued

A deferred tax asset of £1,021,000 (2012: £1,665,000) 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.

The closing deferred tax asset includes £58,000 (2012: £51,000) expected to reverse within the next 12 months of the balance sheet date.

b) Deferred tax liability

| Analysis of the deferred tax liabilities | As at 28 Feb 2013
£'000 | As at 29 Feb 2012
£'000 |
| --- | --- | --- |
| Short-term timing differences | (612) | (1,130) |
| | (612) | (1,130) |
| | 2013
£'000 | 2012
£'000 |
| The movement in the deferred tax liabilities | | |
| Balance at beginning of year | (1,130) | (1,271) |
| Acquisitions (see note 28) | (108) | – |
| Movement to income statement | 644 | 142 |
| Movement to reserves | 51 | 24 |
| Exchange differences | (69) | (25) |
| Balance at end of year | (612) | (1,130) |

The closing deferred tax liability includes £74,000 (2012: £331,000) expected to reverse within the next 12 months of the balance sheet date.

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 and interests in joint ventures, for which a deferred tax liability has not been recognised is approximately £4.6 million (2012: £2.9 million).

The 2013 Budget on 20 March 2013 announced that the UK corporation tax rate will reduce to 20% by 2015. It has not yet been possible to quantify the full anticipated effect of the announced further rate reductions, although this will reduce the Group's future current tax charge accordingly and further reduce the deferred tax asset and liability at 28 February 2013 (which has been calculated based on the rate of 23% substantively enacted at the balance sheet date).

9 Dividends

Amounts recognised as distributions to equity holders in the year:

| | 2013
£'000 | 2012
£'000 |
| --- | --- | --- |
| Ordinary shares of 10 pence each | | |
| Final of 17.0 pence per share for the year ended 29 February 2012 (2011: 17.0 pence per share) | 3,542 | 3,421 |
| Interim of 9.0 pence per share paid (2011: 9.0 pence per share) | 1,870 | 1,812 |
| | 5,412 | 5,233 |

In addition, the Directors are proposing a final dividend in respect of the financial year ended 28 February 2013 of 17.0 pence per share which will absorb an estimated £3.6 million of shareholders' funds. It will be paid on 24 July 2013 to shareholders who are on the register of members on 28 June 2013. The proposed final dividend is subject to approval by the shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

The right to receive dividends on the shares held in the ESOP has been waived (see note 24). The dividend saving through the waiver is £207,000 (2012: £253,000).

Braemar Shipping Services plc Annual Report 2013

10 Earnings per share

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, excluding 764,626 ordinary shares held by the Employee Share Ownership Plan (2012: 877,709 shares) which are treated as cancelled.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive ordinary shares. The Group has one class of potential dilutive ordinary shares being those options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year.

| | 2013
£'000 | 2012
£'000 |
| --- | --- | --- |
| Profit for the period attributable to shareholders | 6,824 | 6,841 |
| | pence | pence |
| Basic earnings per share | 32.78 | 33.84 |
| Effect of dilutive share options | (1.06) | (1.31) |
| Diluted earnings per share | 31.72 | 32.53 |
| | Shares | Shares |
| Weighted average number of ordinary shares | 20,815,282 | 20,214,713 |
| Effect of dilutive share options | 695,456 | 817,611 |
| Diluted weighted average number of ordinary shares | 21,510,738 | 21,032,324 |

11 Profit for the financial year

In accordance with the exemptions allowed by section 408 of the Companies Act 2006, the Company has not presented its own profit and loss account. A profit of £4,940,000 (2012: profit of £6,191,000) has been dealt with in the accounts of the Company.

12 Goodwill

Group	£'000
Cost
At 1 March 2011	37,699
Adjustment to previously reported goodwill	42
Additions	241
Disposals	(53)
Exchange adjustments	180
At 29 February 2012	38,109
Exchange adjustments	392
At 28 February 2013	38,501
Accumulated impairment
At 1 March 2011 and 29 February 2012	7,693
Impairment	255
Exchange adjustments	6
At 28 February 2013	7,954
Net book value at 28 February 2013	30,547
Net book value at 29 February 2012	30,416

During the year the Group charged £255,000 in relation to the impairment of all goodwill associated with the acquisition of Braemar Casbarian Inc due to its lower than expected level of performance. An associated intangible asset has been impaired by £142,000 (note 13). Deferred contingent consideration of £422,000 associated with the acquisition is no longer expected to be paid (note 21).

2013 Review of Operations — 01-17
Governance — 18-30
Financial statements — 31-62
Shareholder information — 63-64

Notes to the consolidated financial statements continued

12 Goodwill continued

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

| | 2013
£'000 | 2012
£'000 |
| --- | --- | --- |
| Shipbroking | 22,282 | 22,090 |
| Braemar Technical Services (Engineering) Limited | 204 | 204 |
| Cory Brothers group | 3,225 | 3,225 |
| Braemar Offshore Pte Limited | 3,076 | 2,901 |
| Braemar Technical Services Holdings Limited | 1,623 | 1,624 |
| Cory Brothers Singapore | 137 | 125 |
| Braemar Casbarian Inc | – | 247 |
| | 30,547 | 30,416 |

These cash-generating units represent the lowest level within the Group at which goodwill is monitored for internal management purposes. Goodwill denominated in foreign currencies is re-valued at the balance sheet date.

All recoverable amounts were measured based on value in use. The forecast cash flows were based on the approved annual budget for the next financial year and management projections for the following four years which are based on estimated conservative growth rates for revenue and costs. Management believe any improvements in the cash flow are achievable. Cash flows have been used over a period of five years as management believes this reflects a reasonable time horizon for management to monitor the trends in the business. After five years a terminal value is calculated using a long-term growth rate of 2.0% (2012: 2.0%). The cash flows were discounted using a pre-tax discount rate of 10.5% (2012: 10.8%) for UK based operations and 10.5% to 12.5% (2012: 10.8% to 12.8%) for overseas based operations.

Sensitivity to impairment

To test the sensitivity of the results of the impairment review, the calculations have been re-performed assuming a long-term growth rate of nil%. The results showed that there was still no indication of impairment.

13 Intangible assets

| Group | Computer software
£'000 | Other intangible assets
£'000 | Total
£'000 |
| --- | --- | --- | --- |
| Cost | | | |
| At 1 March 2011 | – | 7,919 | 7,919 |
| Additions | 706 | 880 | 1,586 |
| Disposals | – | (74) | (74) |
| Exchange adjustments | – | 168 | 168 |
| At 29 February 2012 | 706 | 8,893 | 9,599 |
| Additions | 296 | 467 | 763 |
| Exchange adjustments | – | (12) | (12) |
| At 28 February 2013 | 1,002 | 9,348 | 10,350 |
| Amortisation | | | |
| At 1 March 2011 | – | 5,142 | 5,142 |
| Charge for the year | 259 | 1,458 | 1,717 |
| Disposals | – | (59) | (59) |
| Exchange adjustments | – | 169 | 169 |
| At 29 February 2012 | 259 | 6,710 | 6,969 |
| Charge for the year | 187 | 1,538 | 1,725 |
| Impairment | – | 141 | 141 |
| Exchange adjustments | 12 | (21) | (9) |
| At 28 February 2013 | 458 | 8,368 | 8,826 |
| Net book value at 28 February 2013 | 544 | 980 | 1,524 |
| Net book value at 29 February 2012 | 447 | 2,183 | 2,630 |

Braemar Shipping Services plc Annual Report 2013

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

The Company has no intangible assets.

14 Property, plant and equipment

Group	Long leasehold £'000	Short leasehold £'000	Computers £'000	Fixtures and equipment £'000	Motor vehicles £'000	Total £'000
Cost or fair value
At 1 March 2011	5,318	355	3,094	3,162	563	12,492
Additions at cost	79	–	208	20	37	344
Acquisitions	–	–	83	88	34	205
Disposals	(9)	–	(213)	(140)	(75)	(437)
Exchange differences	14	–	15	5	(3)	31
At 29 February 2012	5,402	355	3,187	3,135	556	12,635
Additions at cost	300	–	278	260	118	956
Disposals	–	–	(40)	(3)	(65)	(108)
Exchange differences	28	–	58	55	1	142
At 28 February 2013	5,730	355	3,483	3,447	610	13,625
Accumulated depreciation
At 1 March 2011	1,021	167	2,235	1,879	377	5,679
Charge for the year	246	31	413	219	81	990
Disposals	(4)	–	(170)	(96)	(49)	(319)
Exchange differences	1	–	9	7	11	28
At 29 February 2012	1,264	198	2,487	2,009	420	6,378
Charge for the year	266	28	327	339	91	1,051
Disposals	–	–	(7)	(2)	(53)	(62)
Exchange differences	9	–	48	36	–	93
At 28 February 2013	1,539	226	2,855	2,382	458	7,460
Net book value at 28 February 2013	4,191	129	628	1,065	152	6,165
Net book value at 29 February 2012	4,138	157	700	1,126	136	6,257

At 28 February 2013, the Group had no contractual commitments for the acquisition of property, plant and equipment (2012: nil).

The Company has no property, plant and equipment.

Braemar Shipping Services plc Annual Report 2013

Notes to the consolidated financial statements continued

15 Investments

Group	Joint ventures £'000	Unlisted investments £'000	Total £'000
Goodwill	340	–	340
Share of net assets/cost	542	812	1,354
At 1 March 2011	882	812	1,694
Exchange differences	23	–	23
Dividends received	(74)	–	(74)
Share of joint ventures profits retained	252	–	252
Goodwill	340	–	340
Share of net assets/cost	743	812	1,555
At 29 February 2012	1,083	812	1,895
Exchange differences	26	7	33
Dividends received	(189)	–	(189)
Disposals	–	(5)	(5)
Share of joint ventures profits retained	62	–	62
– Goodwill	340	–	340
Share of net assets/cost	642	814	1,456
At 28 February 2013
---	---	---	---
Company	Subsidiaries £'000	Joint venture undertakings £'000	Unlisted investments £'000
Cost
At 1 March 2011	2,387	412	560
Share-based payments	531	–	–
At 29 February 2012	52,918	412	560
Share-based payments	661	–	–
At 28 February 2013	53,579	412	560
Impairment
At 1 March 2011, 29 February 2012 and 28 February 2013	1,837	–	–
Net book value at 28 February 2013	51,742	412	560
Net book value at 29 February 2012	51,081	412	560

The Company invested £661,000 (2012: £531,000) in the subsidiaries of the Group in respect of share-based payment charges incurred in the year (see note 23).

A list of principal operating subsidiary and joint venture undertakings is as follows:

Braemar Shipping Services plc Annual Report 2013

2013 Review of Operations — 01-17
Governance — 18-30
Financial statements — 31-62
Shareholder information — 63-64

a) Subsidiaries

Particulars of principal subsidiary undertakings are as follows:

Name of company	Country	Principal activity	Percentage of ordinary shares directly owned	Percentage of ordinary shares indirectly owned
Braemar Seascope Limited	England & Wales	Shipbroking		100
Braemar Seascope Valuations Limited	England & Wales	Valuations		100
Braemar Seascope Pty Limited	Australia	Shipbroking	100
Braemar Seascope Pte Limited	Singapore	Shipbroking	100
Braemar Seascope India Private Limited	India	Shipbroking		100
Cory Brothers Shipping Agency Limited	England & Wales	Ship agents	100
Fred. Olsen Freight Limited	England & Wales	Ship agents		80
Braemar Technical Services (Engineering) Limited	England & Wales	Marine consultants	100
Braemar Technical Services Limited	England & Wales	Marine consultants		100
Braemar Technical Services Holdings Pte Limited	Nevis	Marine consultants	100
Braemar Technical Services Offshore Pte Limited	Singapore	Marine consultants		100
Braemar Technical Services Engineering Pte Limited	Singapore	Energy consultants		100
Braemar Technical Services Offshore Sdn Bhd	Malaysia	Marine consultants		49
PT Braemar Technical Services Offshore	Indonesia	Marine consultants		100
Braemar Technical Services Offshore Vietnam Co Limited	Vietnam	Marine consultants		100
Braemar Technical Services Holdings Limited	England & Wales	Energy loss adjuster	100
Braemar Technical Services (Adjusting) Limited	England & Wales	Energy loss adjuster		100
Braemar Technical Services (USA) Limited	United States	Energy loss adjuster		100
Braemar Technical Services (Adjusting) Pte Limited	Singapore	Energy loss adjuster		100
Braemar Technical Services (Canada) Limited	Canada	Energy loss adjuster		100
Braemar Howells Limited	England & Wales	Environmental services	100
Braemar Casbarian Inc	United States	Marine consultants		100

All the above subsidiaries were owned at 28 February 2013 and 29 February 2012.

The financial statements of the principal subsidiary undertakings are prepared to 28 February 2013 except for PT Braemar Technical Services Offshore and Braemar Technical Services Offshore Vietnam Co Limited for which, as permitted under IAS 27, the results to 31 December 2012 have been consolidated on the basis that the results to 28 February 2013 would not be materially different.

b) Joint ventures

Particulars of the joint venture companies which have been equity accounted are as follows:

Name of company	Country	Principal activity	Percentage of ordinary shares owned	Accounting reference date
Braemar Quincannon Ltd	England & Wales	Shipbroking	50%	28 February
Braemar Quincannon Pte Limited	Singapore	Shipbroking	50%	31 December

The share capital of Braemar Quincannon Pte Limited is owned by the Company. All other joint ventures are indirectly owned by the Group.

Braemar Shipping Services plc Annual Report 2013
49

Notes to the consolidated financial statements continued

15 Investments continued

In relation to the Group's interest in joint ventures, the Group's share of the assets, liabilities, income and expenses are shown below:

	2013	2012
	£'000	£'000
Current assets	986	1,378
Non-current assets	34	47
Current liabilities	(378)	(683)
	642	742
Income	1,434	1,750
Expenses	(1,379)	(1,419)
	55	331
Taxation	7	(79)
Share of post tax results	62	252

The joint ventures have no significant contingent liabilities to which the Group is exposed.

c) Unlisted investments

The Group's unlisted shares principally include 1,000 (16.7%) ordinary £1 shares in London Tankers Brokers Panel and 7,500 ordinary £1 shares London Ship Valuation Panel. These have been treated as available for sale investments and not equity accounted, as the Company does not have significant influence as all investors in these companies have equivalent proportional influence. Since the fair value of the investment cannot be reliably measured as the shares are not quoted on a market, it has been held at cost.

16 Other long-term receivables

Other receivables of £261,000 (2012: £233,000) comprised £36,000 (2012: £39,000) in respect of non-interest bearing loans to 7 (2012: 7) employees in the Shipbroking division repayable over three years and £225,000 (2012: £194,000) in respect of security deposits with landlords and other service providers in the Technical division.

17 Trade and other receivables

	Group		Company
	2013 £'000	2012 £'000	2013 £'000	2012 £'000
Trade receivables	33,729	37,530	-	-
Provision for impairment of trade receivables	(3,131)	(3,789)	-	-
	30,598	33,741	-	-
Amounts due from subsidiary undertakings	-	-	2,055	1,709
Other receivables	3,522	3,521	612	645
Corporation tax recoverable	1,081	-	-	-
Accrued income	7,943	8,354	-	-
Prepayments	1,477	1,357	45	33
	44,621	46,973	2,712	2,387

The total receivables balance is denominated in the following currencies:

	Group		Company
	2013 £'000	2012 £'000	2013 £'000	2012 £'000
US dollars	18,087	18,805	-	-
Pounds sterling	16,764	16,059	2,712	2,387
Other	9,770	12,109	-	-
	44,621	46,973	2,712	2,387

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

Terms associated with the settlement of the Group's trade receivables vary across the Group but in general are settled in less than 90 days. As at 28 February 2013 trade receivables of £3,074,000 (2012: £3,549,000) which were over 12 months old were treated as impaired and have been provided for. Amounts over 12 months old at 28 February 2013 have not been provided for if they have been recovered since that date. In addition, a provision of £57,000 (2012: £240,000) has been made for specific trade receivables less than 12 months overdue.

Braemar Shipping Services plc Annual Report 2013

The ageing profile of trade receivables as at 28 February 2013 is as follows:

	Group
	2013	2012
	£'000	£'000
Up to 3 months	24,437	26,210
3 to 6 months	3,179	4,023
6 to 12 months	2,594	2,831
Over 12 months	3,519	4,466
Total	33,729	37,530

The Company has no trade receivables (2012: £nil).

Movements on the Group provision for impairment of trade receivables were as follows:

	2013	2012
	£'000	£'000
At 1 March	3,789	2,640
Provision for receivables impairment	675	1,641
Receivables written off during the year as uncollectable	(891)	(359)
Acquisitions	-	687
Amounts previously impaired collected in period	(500)	(859)
Exchange differences	59	39
At 29/28 February	3,131	3,789

The other classes within trade and other receivables do not contain impaired assets with the exception of accrued income. At 28 February 2013, the provision for amounts greater than 12 months old was £542,000 (2012: £210,000).

18 Derivative and other financial instruments

a) Currency risk

The Group's currency risk exposure arises as a result of the majority of its Shipbroking earnings being denominated in US dollars while the majority of its costs are denominated in pounds sterling and from the carrying values of its overseas subsidiaries being denominated in foreign currencies. The Group manages the exposure to currency variations by spot and forward currency sales and other derivative currency contracts.

At 28 February 2013 the Group held forward currency contracts to sell US$9.0 million at an average rate of $1.54/£.

At 29 February 2012 the Group held forward currency contracts to sell US$6.0 million at an average rate of $1.55/£ and variable forward rate windows to sell US$1.0 million per month for 12 months with upper and lower limits of $1.531 – $1.700 and for $1.0 million per month at limits of $1.511 – $1.600 for the first six months of the year ended 28 February 2013.

The fair value/carrying value of the derivative financial instruments of the Group are as follows:

	2013		2012
	Book value £'000	Fair value £'000	Book value £'000	Fair value £'000
Forward currency contracts
Assets	-	-	136	136
Liabilities	(94)	(94)	-	-
Forward currency options
Assets	-	-	-	-
Liabilities	-	-	(7)	(7)

The net fair value of forward currency contracts that are designated and effective as cash flow hedges amount to a £94,000 liability (2012: £136,000 asset) which has been deferred in equity.

Amounts of £136,000 have been credited (2012: £236,000) to the income statement in respect of forward contracts which have matured in the period.

The fair value of financial instruments is based on prices quoted by the counterparty (level 2) at the balance sheet date.

Excluding the effect of hedging, the effect on equity and profit before tax if the US dollar strengthened by 10% against sterling, with all other variables being equal, is approximately £2.7 million favourable (2012: £2.6 million). If the US dollar weakened against sterling by 10%, the effect is approximately £2.2 million adverse (2012: £2.2 million).

Braemar Shipping Services plc Annual Report 2013

Notes to the consolidated financial statements continued

18 Derivative and other financial instruments continued

b) Interest rate risk

The Group minimises its exposure to interest rate risk by pooling sterling cash balances across the UK Group.

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

| Group | 2013
Within one year
£'000 | 2012
Within one year
£'000 |
| --- | --- | --- |
| Floating rate: | | |
| Cash and cash equivalents (see note 20) | 23,277 | 17,467 |
| Company | 2013
Within one year
£'000 | 2012
Within one year
£'000 |
| Floating rate: | | |
| Cash and cash equivalents (see note 20) | 38 | 307 |

Cash balances are generally held on overnight deposits at floating rates depending on cash requirements and the prevailing market rates for the amount of funds deposited.

The other financial instruments of the Group are non-interest bearing.

The effect on equity and profit before tax of a 1% increase in the interest rate, all other variables being equal, is approximately £0.2 million (2012: £0.2 million).

c) Banking facilities

At 28 February 2013, the Group had an overdraft facility for £8.0 million (2012: £8.0 million). At 28 February 2013 none of the facility had been drawn (2012: £nil). The Company and its subsidiaries have provided cross guarantees and fixed and floating rate charges over their assets to secure the above overdraft facility.

d) Credit risk

There are no significant concentrations within the Group or Company.

Concentrations of credit risk with respect to trade receivables are limited due to the diversity of the Group's customer base. The Directors believe there is no further credit risk provision required in excess of normal provisions for doubtful receivables, estimated by the Group's management based on prior experience and their assessment of the current economic environment. The Group seeks to trade only with creditworthy parties and carries out credit checks where appropriate. The maximum exposure is the carrying amount as disclosed in note 17.

e) Capital management

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. The Group considers its capital as consisting of ordinary shares and retained earnings. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

The Group has a policy of maintaining positive cash balances with additional headroom if required through an overdraft facility. This provides cover against the highly cyclical nature of the shipping industry and sufficient cash resources to take advantage of opportunities to acquire businesses that complement the overall strategy of the Group.

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

No changes were made in the objectives, policies or processes during the years ended 28 February 2013 and 29 February 2012.

19 Restricted cash

At 28 February 2013, the Group held £0.3 million restricted cash balances (2012: £0.3 million). Restricted cash comprises cash balances where the Group is holding cash as escrow agent for certain clients, pending completion of transactions in which the Group acted as broker and where the Group is holding payments due to clients on behalf of an insurer. The amounts are held in designated accounts and any interest earned is due to the clients. Restricted cash is denominated in US dollars. A corresponding liability is recorded on the balance sheet as client monies held as escrow agent.

Braemar Shipping Services plc Annual Report 2013

20 Cash and cash equivalents

Cash and cash equivalents comprise £23.3 million held by the Group (2012: £17.5 million) and £38,000 held by the Company (2012: £307,000).

The carrying amount of these assets approximates to their fair value.

21 Trade and other payables

Current liabilities	Group		Company
	2013 £'000	2012 £'000	2013 £'000	2012 £'000
Trade payables	18,184	18,731	-	-
Amounts owed to subsidiary undertakings	-	-	1,127	1,005
Other taxation and social security	1,216	1,151	-	-
Deferred consideration	299	268	-	-
Other payables	1,222	1,512	17	5
Other accruals and deferred income	15,328	15,291	402	-
	36,249	36,953	1,546	1,010

The average credit period taken for trade payables is 35 days (2012: 32 days). The Directors consider that the carrying amounts of trade payables approximate to their fair value.

The deferred consideration liability represents £79,000 in respect of Orca Limited (see Note 28); £47,000 in respect of Cagnoil Limited (acquired in March 2009) and £173,000 in respect of Fred. Olsen Freight Limited ("FOFL") (acquired in December 2007).

The amount in relation to FOFL comprises two amounts. The first amount of £389,000 is the expected exercise price of the option to acquire the remaining 20% of FOFL (see note 30). The second element is an amount of £216,000 which reduces this liability from £389,000 to £173,000 and represents an overpayment for the original 80% of FOFL. The consideration for the 80% of the business was paid in instalments and calculated with reference to the profits made in the first three years following the acquisition. The value of the initial payments was calculated by making an estimate of the profits expected for the first three years of ownership. However, by the time of the final instalment at the end of the three year period, the total profits made in that period were lower than expected to the extent that the sum of the first 2 instalments exceeded the value of the final total consideration. Instead of immediately recovering this overpayment, the terms of the agreement specified that any overpayment should then be offset against future payments for the remaining 20%. The two amounts have been combined such that overall the liability in respect of FOFL is £173,000.

The amounts included in current liabilities are expected to be settled in less than 12 months.

	Group		Company
Non-current liabilities	2013 £'000	2012 £'000	2013 £'000	2012 £'000
Deferred consideration	-	400	-	-

At 29 February 2012, deferred consideration due after more than one year represented the estimated remaining consideration in respect of the acquisition of the business and certain assets of Casbarian Engineering Associates Inc. In the year ending 28 February 2013 this amount, which is denominated in US dollars, has been revalued to £422,000 and released to the income statement as the performance criteria for the business are no longer expected to be met with the result that no further payment will be made for the business.

22 Provisions

	Employee entitlements £'000
At 1 March 2012	670
Provided in the year	234
Utilised in the year	(128)
At 28 February 2013	776

Employee entitlements relate to statutory long service leave in Braemar Seascope Pty Limited and the Braemar Offshore companies.

Braemar Shipping Services plc Annual Report 2013

Notes to the consolidated financial statements continued

22 Provisions continued

The maturity profile of the provisions is as follows:

	2013	2012
	£'000	£'000
Within one year	413	345
Current liabilities	413	345
Between one and two years	62	62
Between two and three years	301	263
Non-current liabilities	363	325
Total provisions	776	670

The Company has no provisions.

23 Share Capital

| Group and Company | 2013
Number | 2012
Number | 2013
£'000 | 2012
£'000 |
| --- | --- | --- | --- | --- |
| a) Authorised
Ordinary shares of 10 pence each | 34,903,000 | 34,903,000 | 3,490 | 3,490 |
| | 2013
Number | 2012
Number | 2013
£'000 | 2012
£'000 |
| b) Issued
Fully paid ordinary shares of 10 pence each | | | | |
| As at start of year | 21,599,862 | 21,096,108 | 2,160 | 2,110 |
| Shares issued and fully paid | 52,295 | 503,754 | 5 | 50 |
| As at end of year | 21,652,157 | 21,599,862 | 2,165 | 2,160 |

During the year ended 28 February 2013, 2,000 shares were issued at 245.0 pence as part of the 1997 Executive Scheme. A further 26,389 shares were issued at 196.4 pence, 21,195 shares were issued at 353.20 pence and 2,711 shares were issued at 271.0 pence as part of the Save As You Earn ("SAYE") Scheme. No shares remained unpaid at 28 February 2013.

During the year ended 29 February 2012, 5,000 shares were issued at 245.0 pence as part of the 1997 Executive Scheme. A further 446,335 shares were issued at 196.4 pence, 28 shares were issued at 353.20 pence as part of the Save As You Earn ("SAYE") Scheme and 52,391 shares were issued at 196.4 pence in respect of the International SAYE Scheme. No shares remained unpaid at 29 February 2012.

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

c) Capital redemption reserve

| Group and Company | 2013
£'000 | 2012
£'000 |
| --- | --- | --- |
| Beginning and end of year | 396 | 396 |

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

d) Share-based payments

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

The total charge for the year relating to all employee share-based payment plans was £679,000 (2012: £513,000) with a further £90,000 (2012: £39,000) incurred in respect of national insurance contributions, all of which related to equity-settled share-based payment transactions. At 28 February 2013, £90,000 (2012: £47,000) relating to national insurance contributions has been accrued in current liabilities but remains unsettled.

i. Share options

Braemar Shipping Services plc Annual Report 2013

The Company also operates the Braemar Shipping Services 2010 Executive Options Scheme ("the 2010 CSOP") under which options are granted by the Remuneration Committee. The schemes are open to all UK employees and executive Directors and the exercise price of the options granted were at the market price at date of grant. The 2010 CSOP provides for the grant of two types of option – "Non-performance options" and "Performance options". "Non-performance options" are granted to employees only in conjunction with the grant to such employees of an award under the Deferred Bonus Plan (see ii.). Unlike the "Performance Options", the vesting and exercise of "Non-performance options" will not be subject to the satisfaction of performance conditions (although exercise will be dependent on continuous employment within the Group). During the year to 28 February 2013, 190,582 "Non-performance options" and 90,041 "Performance options" were granted under the CSOP (2012: 31,000 "Non-performance options" and no "Performance options").

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

Share scheme	Year option granted	Number at 1 March 2012	Granted	Exercised	Lapsed	Number at 28 February 2013	Exercise price (pence)	Exercisable between
1997 Executive Scheme	2003	2,000	-	(2,000)	-	-	181.5	2006-2013
		2,000	-	(2,000)	-	-
SAYE	2009	26,389	-	(21,195)	-	-	196.4	2011-2012
	2010	36,861	-	(21,195)	(9,763)	5,903	353.2	2012-2013
	2011	33,717	-	-	(17,108)	16,609	426.4	2013-2014
	2012	343,239	-	(2,711)	(35,542)	304,986	271.0	2014-2015
	2012	-	133,881	-	(4,631)	129,250	272.9	2015-2016
		440,206	133,881	(50,295)	(67,044)	456,748
		442,206	133,881	(52,295)	(67,044)	456,748

Share options granted in 2003 under the 1997 Executive Scheme were subject to a performance condition that the growth in the Company's average adjusted earnings per share (EPS) over a period of no less than three financial years must exceed the growth in the retail price index (RPI) over the corresponding period by no less than 3% per annum compounded. If the performance condition was not satisfied at that point, no retesting of the performance condition was permitted in subsequent financial years until the option lapses. The base measurement period for the remaining options was the average of the EPS (as published in the Group's Annual Report and Accounts) for the three financial years immediately preceding the grant of the relevant option. Exercise of an option was subject to continued employment.

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

	SAYE	SAYE
Grant date	01 Aug 12	30 Nov 11
Share price at grant date	344.40p	325.50p
Exercise price	272.90p	271.00p
Number of employees	54	178
Shares under option	133,881	351,076
Vesting period (years)	3.0	3.0
Expected volatility	34.38%	47.98%
Option life (years)	3.5	3.5
Risk free rate	2.33%	2.84%
Expected dividends expressed as a dividend yield	5.00%	5.00%
Possibility of ceasing employment before vesting	5.00%	5.00%
Expectation of meeting performance criteria	100.00%	100.00%
Fair value per option	69.95p	75.50p

The expected volatility is based on historical volatility over the last four years. The risk-free rate of return is based on LIBOR.

Braemar Shipping Services plc Annual Report 2013

Notes to the consolidated financial statements continued

23 Share Capital continued

A reconciliation of option movements during the year is shown below:

	2013		2012
	Number	Weighted average exercise price	Number	Weighted average exercise price
Outstanding at 1 March	442,206	284.84p	695,311	229.59p
Granted	133,881	272.90p	351,076	271.00p
Exercised	(52,295)	263.25p	(503,754)	196.90p
Lapsed	(67,044)	322.76p	(100,427)	295.04p
Outstanding at 28/29 February	456,748	278.25p	442,206	284.84p
Exercisable at 28/29 February	5,903	353.20p	28,389	195.35p
			2013	2012
			Contractual	Contractual
Weighted average remaining life (years)			2.2	2.6

The weighted average share price for share options exercised in the year is 369.18 pence (2012: 379.87 pence).

ii. Deferred bonus plan

In 2005 the Company put in place a Deferred Bonus Plan ("the Plan") whereby part of the annual performance-related bonus is delivered in shares, on a discretionary basis, to staff including executive Directors. Under the Plan the shares are bought and held in an employee trust for three years after which the employee beneficiary will become absolutely entitled to the shares provided they remain in employment. Shares are valued at fair value at the date of grant.

During the year ended 28 February 2013, 69,425 shares at a value of £258,000 that were awarded to employees in May 2009 as part of the Plan were delivered to them in May 2012 following the three-year vesting period. In addition, 50,000 shares at a value of £183,000 that were awarded to employees in October 2009 were delivered to them in October 2012 following the three-year vesting period. Awards over 280,623 shares were made to employees during the year and a total of 41,075 share awards lapsed.

During the year ended 29 February 2012, 27,775 shares at a value of £124,000 that were awarded to employees in May 2008 as part of the Plan were delivered to them in May 2011 following the three-year vesting period. In addition, 165,000 shares at a value of £545,000 that were awarded to employees in December 2008 were delivered to them in December 2011 following the three-year vesting period. Awards over 31,000 shares were made to employees during the year.

As at 28 February 2013, 461,229 deferred shares had been awarded to employees (2012: 339,856) but not yet vested.

iii. Long-term incentive plan ("LTIP")

The Company established an LTIP in 2006. LTIP awards take the form of a conditional right to receive shares at nil cost. The awards normally vest over three years and are subject to a performance condition based on earnings per share (EPS). If EPS has increased by RPI plus 4%, the awards vest up to 50% and if EPS has increased by 10% they vest up to 100% with a sliding scale in between.

In May 2012, the final 26,664 shares out of the 80,000 shares awarded in May 2007 were delivered to the executive Directors of Braemar Shipping Services plc, at a value of £93,000 on the date of delivery. In October 2012, LTIP awards over 130,000 shares were made to two executive Directors in addition to the 280,727 awards made in May 2011 and the 196,144 LTIP awards made in June 2010.

24 Shares to be issued

Group and Company	£'000
At 1 March 2011	3,275
Share capital acquired in the year	1,222
ESOP shares allocated	(802)
At 29 February 2012	3,695
Share capital acquired in the year	148
ESOP shares allocated	(534)
At 28 February 2013	3,309

Shares to be issued are a deduction from shareholders' funds and represent a reduction in distributable reserves.

Braemar Shipping Services plc Annual Report 2013

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 on trust by the Trustee of the ESOP, Kleinwort Benson (Channel Islands) Limited, for the benefit of the employees. As at 28 February 2013, the ESOP held 764,626 (2012: 877,709) ordinary shares of 10 pence each at a total cost of £3,309,000 (2012: £3,695,000) including stamp duty associated with the purchase. The funding of the purchase has been provided by the Company in the form of an interest-free loan and the Trustees have contracted with the Company to waive the ESOP's right to receive dividends. The fees charged by the Trustees for the operation of the ESOP are paid by the Company and charged to the income statement as they fall due. The shares owned by the ESOP had a market value at 28 February 2013 of £2,944,728 (2012: £3,379,180). The distribution of these shares is determined by the Remuneration Committee and of the 764,626 held, 591,229 shares which are expected to vest had been allocated at 28 February 2013 (2012: 843,391). 146,089 shares (2012: 248,193) have been released to employees during the year (see note 23).

25 Other reserves

	Capital redemption reserve £'000	Merger reserve £'000	Deferred consideration reserve £'000	Translation reserve £'000	Hedging reserve £'000	Total £'000
Group
At 1 March 2011	396	21,346	(389)	4,798	172	26,323
Cash flow hedges
- Transfer to net profit	-	-	-	-	(236)	(236)
- Fair value losses in the period	-	-	-	-	136	136
Exchange differences	-	-	-	411	-	411
Deferred tax on items taken to equity	-	-	-	-	30	30
At 29 February 2012	396	21,346	(389)	5,209	102	26,664
Cash flow hedges
- Transfer to net profit	-	-	-	-	(136)	(136)
- Fair value losses in the period	-	-	-	-	(83)	(83)
Exchange differences	-	-	-	1,131	-	1,131
Deferred tax on items taken to equity	-	-	-	-	54	54
At 28 February 2013	396	21,346	(389)	6,340	(63)	27,630
				Capital redemption reserve £'000	Merger reserve £'000	Total £'000
Company
At 1 March 2011, 29 February 2012 and 28 February 2013				396	21,346	21,742

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 £83,000 liability (2012: £136,000 asset). A deferred tax asset of £20,000 (2012: £34,000 liability) is attributable to these transactions.

The translation reserve contains all foreign exchange differences arising from the translation of the Group's net investment in overseas subsidiaries and joint ventures.

The deferred consideration reserve contains the estimated cost of acquiring the remaining 20% of Fred. Olsen Freight Limited (see note 30) which is held under option.

The merger reserve arose principally in 2001 in relation to acquisitions of Braemar Shipbrokers and Braemar Tankers.

26 Non-controlling interest

	Group £'000
At 1 March 2011	159
Profit for the period attributable to shareholders for the year	61
At 29 February 2012	220
Profit for the period attributable to shareholders for the year	25
At 28 February 2013	245

The minority interest represents 20% of Fred. Olsen Freight Limited acquired on 24 December 2007 which is not owned by the Group.

Braemar Shipping Services plc Annual Report 2013

Notes to the consolidated financial statements continued

27 Cash generated from operations

	Group		Company
	2013 £'000	2012 £'000	2013 £'000	2012 £'000
Profit before tax for the year from continuing operations	9,296	9,790	4,264	6,069
Adjustments for:
- Depreciation of property, plant and equipment	1,051	990	-	-
- Amortisation of computer software	187	259	-	-
- Amortisation of other intangible assets	1,538	1,458	-	-
- Loss/(profit) on sale of property plant and equipment	(37)	118	-	-
- Non recurring income and expense from acquisition and disposal of businesses	-	(423)	-	-
- Finance income	(296)	(213)	-	-
- Finance expense	45	32	35	52
- Share of profit of joint ventures	(62)	(252)	-	-
- Share based payments	679	513	-	-
- Net foreign exchange gains and financial instruments	(185)	(120)	-	-
Changes in working capital:
- Trade and other receivables	3,458	(3,305)	161	(153)
- Trade and other payables	(769)	(3,985)	537	(257)
- Provisions	91	172	-	-
Cash generated from operations	14,996	5,034	4,997	5,711

28 Business combinations

On 30 April 2012 the Group acquired 100% of the share capital of Orca Shipping Limited for a total cash consideration of £820,000. Initial consideration paid was £741,000 satisfied by cash from existing resources. Deferred consideration of £79,000 is payable within the next year and will be settled wholly in cash.

The acquired business contributed revenues and a net profit before amortisation of £81,000 for the period from acquisition to 28 February 2013.

Details of net assets acquired are set out below. The fair value of the intangible assets relates to the value of the forward order book acquired and customer relationships.

	Acquired's carrying amount £'000	Fair value adjustments £'000	Provisional Fair value £'000
Cash and cash equivalents	509	-	509
Intangible assets	-	468	468
Receivables	36	-	36
Payables	(25)	-	(25)
Current tax liability	(60)	-	(60)
Deferred tax liability	-	(108)	(108)
Net assets acquired by the Group	460	360	820
Purchase consideration
- cash paid			741
- deferred consideration			79
Total consideration			820
Outflow of cash to acquire the business, net of cash acquired:
- cash consideration			741
- cash and cash equivalents in subsidiary acquired			(509)
Cash outflow on acquisition			232

In addition, an amount of £47,000 was incurred in the year in respect of the acquisition of Cagnoil Limited from a previous period.

Braemar Shipping Services plc Annual Report 2013

Braemar Shipping Services plc Annual Report 2013
59

29 Pensions

The Group participates in a number of defined contribution schemes. Contributions of £2,758,000 (2012: £2,857,000) were paid in the year and contributions of £114,000 were due to these schemes at 28 February 2013 (2012: £105,000).

30 Financial commitments

a) Operating lease commitments

Future minimum rentals payable under non-cancellable operating leases as at 29/28 February are as follows:

2013	Land and buildings			Other
	Lease minimum payments £'000	Sub-lease income £'000	Net minimum lease repayments £'000
Within one year	1,918	(335)	1,583	196
Between one and five years	4,589	(567)	4,022	353
Over five years	1,383	-	1,383	-
	7,890	(902)	6,988	549
2012	Land and buildings			Other
	Lease minimum payments £'000	Sub-lease income £'000	Net minimum lease repayments £'000
Within one year	2,049	(343)	1,706	201
Between one and five years	4,838	(928)	3,910	385
Over five years	1,556	-	1,556	-
	8,443	(1,271)	7,172	586

The Group leases various offices and a warehouse under non-cancellable operating lease agreements. The leases have various terms, escalation clauses and renewal rights.

The Group also leases plant and machinery under non-cancellable operating lease agreements.

There were no commitments under operating leases in the Company.

b) Other commitments

On completion of the acquisition of 80% of Fred. Olsen Freight Limited on 27 December 2007, the Group entered into a put and call option agreement to acquire the remaining 20% of the share capital of Fred. Olsen Freight Limited. The terms of the put option provide that the Group could be required to purchase the remaining portion of the business at any time up until 24 December 2015 and the call option allows the Group to exercise its right in any event on 24 December 2015 if the option has not been exercised by the vendors prior to this date. The value of the deferred consideration at 28 February 2013 was £389,000 (2012: £389,000) and is based on current forecasts. It is included in deferred consideration in current liabilities (note 21), although the exact payment may take place at any time over the period to 2015. The call option has not been reflected in the financial statements as it is assessed to have nil value.

31 Contingent liabilities

The Company has given a guarantee to HM Revenue and Customs in respect of duty deferment in the amount of £1.5 million (2012: £2.0 million). Further guarantees to HM Revenue and Customs and third parties total £0.7 million (2012: £0.8 million). In addition, the Company and its subsidiaries have provided cross guarantees and fixed and floating rate charges over their assets to secure the above overdraft facility (see note 18).

32 Related party transactions

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

Group	2013			2012
	Recharges to/(from) £'000	Dividends £'000	Balance due from £'000	Recharges to/(from) £'000	Dividends £'000	Balance due from £'000
Braemar Quincannon Limited	6	-	57	3	-	51
Braemar Quincannon Pte Limited	(189)	189	5	(102)	74	5
London Tankers Broker Panel	301	-	-	261	-	-
London Central Cruise Moorings	15	-	-	15	-	-

All recharges to related parties are carried out on an arm's-length basis.

Notes to the consolidated financial statements continued

32 Related party transactions continued

Alan Marsh stepped down as a Director on 31 July 2012 and continues to be employed by the Company as a sale and purchase broker. Subsequently he received total remuneration of £88,000, and his notice period remains unchanged at 6 months.

Quentin Soanes stepped down as a Director on 31 July 2012 and ceased employment with the Company on 30 September 2012. Subsequently he has provided services as a consultant to the Technical, Logistics and Environmental businesses. In accordance with a consultancy agreement fees of £825,000 (including a performance related incentive payment of £655,000) have been charged. The performance related incentive payment was made after the end of the year.

During the year ended 28 February 2006, the Company received an assessment for corporation tax and interest totalling £2.2 million which is recoverable under the indemnity and which is currently being appealed. Following receipt of the assessment the Company received funds of £1.6 million from the vendors which were paid to the Inland Revenue in order to prevent interest accruing. Such funds would become repayable to the vendors in the event that the appeal is successful. £0.6 million (2010: £0.6 million) remains outstanding pending the appeal result. The Company does not expect to incur any cost in respect of this assessment or these contingent liabilities. Under the Merger Agreement dated 7 March 2001 between the Company and Braemar Shipbrokers Ltd, the vendors gave a joint and several indemnity to the Company for any warranty and tax indemnity claims up to an aggregate of £10 million. The former Chief Executive, Alan Marsh, and a former plc Director of the Company, Quentin Soanes are Braemar Shipbrokers vendors.

Key management compensation is disclosed in note 5.

During the year the Company entered into the following transactions with subsidiaries and joint ventures:

Company	2013			2012
	Recharges to/(from) £'000	Dividends £'000	Balance due from/(to) £'000	Recharges to/(from) £'000	Dividends £'000	Balance due to/(from) £'000
Braemar Shipbrokers Limited	-	2,600	(589)	-	2,561	(589)
Braemar Seascope Limited	673	-	698	251	-	466
Braemar Technical Services (Engineering) Limited	19	-	1,262	-	-	1,243
Braemar Technical Services (Adjusting) Limited	56	-	56
Cory Brothers Shipping Agency Limited	(2)	1,500	(7)	(2)	1,500	(7)
Braemar Howells Limited	-	2,500	(6)	-	1,000	-
Cagnoil Limited	39	-	39
Braemar Seascope Pty Limited	-	129	-	-	565	-
Braemar Falconer Pte Limited	-	-	-	-	818	-
Braemar Quincannon Pte Limited	-	189	-	-	74	-
Portabella Limited	-	-	(525)	-	-	(525)

60 Braemar Shipping Services plc Annual Report 2013

Five year financial summary

Consolidated income statement

Continuing operations	12 Months to 28 February 2009 £'000	12 Months to 28 February 2010 £'000	12 Months to 28 February 2011 £'000	12 Months to 29 February 2012 £'000	12 Months to 28 February 2013 £'000
Group revenue	127,144	119,024	126,135	133,474	143,774
Other operating expenses	(110,383)	(104,644)	(111,641)	(122,728)	(133,253)
Non-recurring income and expense	–	–	–	69	–
Amortisation of other intangible assets	(1,074)	(1,480)	(1,565)	(1,458)	(1,538)
Total operating expenses	(111,457)	(106,124)	(113,206)	(124,117)	(134,791)
Operating profit	15,687	12,900	12,929	9,357	8,983
Interest income – net	291	191	163	181	251
Share of profit from joint ventures	246	400	103	252	62
Profit before taxation	16,224	13,491	13,195	9,790	9,296
Taxation	(4,704)	(3,806)	(3,378)	(2,888)	(2,447)
Profit after taxation	11,520	9,685	9,817	6,902	6,849
Dividends
Interim	1,721	1,767	1,817	1,812	1,870
Final proposed	3,121	3,283	3,421	3,523	3,551
	4,842	5,050	5,238	5,335	5,421
Earnings per ordinary share – pence
Basic	56.70p	47.93p	48.41p	33.84p	32.78p
Diluted	55.72p	47.26p	47.43p	32.53p	31.72p

Braemar Shipping Services plc Annual Report 2013

Five year financial summary

Consolidated balance sheet

	As at 28 Feb 2009 £'000	As at 28 Feb 2010 £'000	As at 28 Feb 2011 £'000	As at 29 Feb 2012 £'000	As at 28 Feb 2013 £'000
Assets
Goodwill	28,137	28,740	30,006	30,416	30,547
Other intangible assets	3,921	4,247	2,777	2,630	1,524
Property, plant and equipment	6,189	6,510	6,813	6,257	6,165
Investments	2,344	1,485	1,694	1,895	1,796
Deferred tax assets	810	1,208	1,797	1,665	1,021
Other receivables	176	169	238	233	261
	41,577	42,359	43,325	43,096	41,314
Current assets
Trade and other receivables	38,055	36,918	40,741	46,973	44,621
Derivative financial instruments	160	-	314	136	-
Restricted cash	-	5,521	-	335	339
Cash and cash equivalents	25,194	27,930	25,634	17,467	23,277
	63,409	70,369	66,689	64,911	68,237
Total assets	104,986	112,728	110,014	108,007	109,551
Liabilities
Current liabilities
Derivative financial instruments	649	571	-	7	94
Trade and other payables	46,221	41,706	41,062	36,953	36,249
Current tax payable	2,689	3,346	2,379	1,674	1,638
Provisions	88	288	267	345	413
Client monies held as escrow agent	-	5,521	-	335	339
	49,647	51,432	43,708	39,314	38,733
Non-current liabilities
Deferred tax liabilities	2,255	2,001	1,271	1,130	612
Trade and other payables	-	-	-	400	-
Provisions	137	168	217	325	363
	2,392	2,169	1,488	1,855	975
Total liabilities	52,039	53,601	45,196	41,169	39,708
Total assets less total liabilities	52,947	59,127	64,818	66,838	69,843
Equity
Share capital	2,104	2,108	2,110	2,160	2,165
Share premium	10,920	11,014	11,077	12,018	12,150
Shares to be issued	(3,479)	(3,198)	(3,275)	(3,695)	(3,309)
Other reserves	25,020	25,525	26,323	26,664	27,630
Retained earnings	18,268	23,534	28,424	29,471	30,962
	52,833	58,983	64,659	66,618	69,598
Minority interest	114	144	159	220	245
Total equity	52,947	59,127	64,818	66,838	69,843

Braemar Shipping Services plc Annual Report 2013

Braemar Shipping Services plc Annual Report 2013
63

Shareholder information

Office

Braemar Shipping Services plc
35 Cosway Street
London
NW1 5BT
Company number: 2286034

Registrars

Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire
HD8 0LA
Telephone: 0870 162 3100

Corporate stockbroker

Westhouse Securities
1 Angel Court
London
EC2R 7HJ

Public relations

Pelham Bell Pottinger
5th Floor Holborn Gate
330 High Holborn
London
WC1V 7QD

Legal advisor

Nabarro
Lacon House
84 Theobald's Road
London
WC1X 8RW

Bankers

The Royal Bank of Scotland plc
Shipping Business Centre
4th Floor
1 Prince's Street
London
EC2R 8PB

Independent auditors

KPMG Audit Plc
15 Canada Square
London
E14 5GL

Timetable

AGM: 19 June 2013
Ex dividend date for 2012/13 final dividend: 26 June 2013
2012/13 Final dividend record date: 28 June 2013
2012/13 Final dividend payment date: 24 July 2013
2013/14 Interim results announcement: Late October 2013

Braemar Shipping Services plc Annual Report 2013

Offices and contacts

Shipbroking

Businesses:
Braemar Seascope

Principal Offices:
35 Cosway Street
London
NW1 5BT
Great Eastern Centre
1 Pickering Street – #8/01
Singapore 048659

Other office UK:
Aberdeen

Other offices overseas:
Perth, Australia
Melbourne, Australia
Shanghai, China
Beijing, China
New Delhi, India
Mumbai, India
Genoa, Italy
Oslo, Norway
Houston, USA

Web address:
www.braemarseascope.com

Technical

Businesses:
Braemar Offshore
Braemar Adjusting
Braemar Engineering
Braemar SA
Braemar Casbarian

Principal Offices:
Great Eastern Centre
1 Pickering Street – #8/01
Singapore 048659
10000 Memorial Drive,
Suite 150
Houston, TX77024
Marlow House
1A Lloyd's Avenue
London
EC2N 3AL
11-13 Crosswall
London
EC3N 2JY
Fullbridge Mill
Fullbridge
Maldon
Essex CM9 4LE

Other offices overseas:
Calgary, Canada
Miami, USA
Rio de Janeiro, Brazil
Jakarta, Indonesia
Kuala Lumpur, Malaysia
Mumbai, India
Perth, Australia
Shanghai, China
Shenzen, China
Tianjin, China
Vung Tau, Vietnam
Varna, Bulgaria
Accra, Ghana
Cape Town, South Africa
New York, USA
Tokyo, Japan
Trinidad & Tobago
New Orleans, USA
Abu Dhabi, UAE
Dubai, UAE
Bangkok, Thailand

Web address:
www.braemarseascope.com

2013 Review of Operations — 01-17
Governance — 18-30
Financial statements — 31-62
Shareholder information — 63-64

Logistics

Businesses:

Cory Brothers Shipping Agency
Cory Logistics

Principal Offices:

Cory House
21 Berth
Tilbury Docks
Essex RM18 7JT
Cory House
Haven Exchange
Felixstowe
Suffolk IP11 2QX
Great Eastern Centre
1 Pickering Street – #8/01
Singapore 048659

Other offices UK:

Bebington
Billingham
Bristol
Cardiff
Edinburgh
Falmouth
Grangemouth
Hull
Immingham
Invergordon
Ipswich
Isle of Grain
Milford Haven
Newport
Sheerness Docks
Southampton
Teesport

Web address:

www.cory.co.uk

Environmental

Businesses:

Braemar Howells

Principal Offices:

The Docks
Milford Haven
Pembrokeshire SA73 3AQ
Lower Quay
Newham Road
Tururo
Cornwall TR1 2SU

Other offices UK:

Barnsley
Bristol
Didcot
Dundee
Harlow
Liverpool

Other offices overseas:

Lagos, Nigeria
Luanda, Angola
Perth, Australia

Web address:

www.braemarhowells.com

This annual report is printed on FSC certified material. This product is biodegradable, 100% recyclable and elemental chlorine free. Vegetable based inks were used during production.

Both the paper mill and printer involved in the production support the growth of responsible forest management and are both accredited to ISO 14001 which specifies a process for continuous environmental improvement.

Designed and produced by Carnegie Orr
+44 (0)20 7610 6140.
www.carnegieorr.com

Braemar Shipping Services plc
35 Cosway Street
London NW1 5BT
United Kingdom
Telephone: +44 (0) 20 7535 2650
Braemar Shipping Services plc Annual Report 2013
www.braemarplc.com

AI assistant

BRAEMAR PLC — Annual Report 2013

4770_10-k_2013-02-28_01c034aa-290d-4130-b101-6a8e730c174c.pdf

Collaboration

Contents

2013 highlights

Financial highlights

Operational highlights

Well positioned

Group figures

Divisional revenue

Divisional operating profit

Shipbroking

Technical

Logistics

Environmental

Operating in key markets

Container world trade growth over 10 years

Chinese oil use/production

Chairman's statement

A strong position for balanced growth

Overview

Results

Board and management

Dividend

Colleagues

Chief Executive's review

Trading performance

Strategic development

Outlook

Achieving long-term success

Our divisions

Shipbroking

Technical

Logistics

Environmental

Creating a diversified business

Building strength

Review of Operations

Shipbroking – Braemar Seascope

Offices

Services

Employee by location

Dry Bulk fleet dynamics 2003 to 2012

Tanker fleet dynamics 2003 to 2012

Dry Bulk

Deep Sea Tankers

Container fleet dynamics 2003 to 2012

Specialised Tankers

Offshore

Containers

Sale and Purchase

Technical – Braemar Technical Services

Revenue

Divisional operating profit

Offices

Employees by location

Services

Employees by location

No. of rigs and platforms deployed in the Far East

Braemar Offshore

New LNG production 2013-2022

Braemar Adjusting

Braemar (incorporating the Salvage Association) – Braemar SA

Braemar Engineering

Braemar Casbarian

Logistics – Cory Brothers

Revenue

Divisional operating profit

Offices

Services

Employees by location

UK Container movements 2011 to 2012

Ship Agency

Forwarding and Logistics

Environmental – Braemar Howells

Corporate social responsibility report

Environment

James Kidwell

Cory Brothers agency team added their support to the explorers undertaking The Coldest Journey, the first ever attempt to cross the Antarctic in Winter. Cory acted as the agent for their vessel the S.A. AGULHAS as she took expedition members and equipment to Antarctica.

BRAEMAR PLC Annual Report 2013