Braemar H2 2025 Earnings Report

Braemar EPS Results

• Actual EPS: GBX 31.30
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Braemar Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Braemar Announcement Details

• Quarter: H2 2025
• Date: 5/29/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 29, 2025
• Conference Call Time: 9:00AM ET

Braemar (LON:BMS) provides expert advice in shipping investment, chartering, and risk management to enable its clients to secure sustainable returns and mitigate risk in the volatile world of shipping. Our experienced brokers work in tandem with specialist professionals to form teams tailored to our customers’ needs, and provide an integrated service supported by a collaborative culture. For more information, including our investor presentation, please visit www.braemar.com.

Braemar H2 2025 Earnings Call Transcript

Key Takeaways

• Braemar PLC delivered FY25 revenue of £141.9m, a 7% decline, and underlying PBT of £16.7m down £1.4m, while maintaining a 12% operating margin and briefly holding net debt of £2.5m before returning to cash positive.
• The board reduced the final dividend to 2.5p (from 9p) and launched a £2m share buyback to balance returning capital with funding growth opportunities.
• A weaker tanker market in H2 was partially offset by an 18% increase in its investment advisory division, highlighting the resilience of its diversified revenue mix and underpinning an $82.2m forward order book.
• Braemar unveiled a 5-year strategic framework aiming for £200m revenue and a 15% operating margin by FY30, targeting 10 new brokers, M&A opportunities and enhanced operational excellence.
• Its risk advisory business has grown from £7.5m in FY21 to £22.3m in FY25, secured UK Organized Trading Facility approval and is pursuing an EU OTF license to expand hedging services.

Presentation

[Grant Foley, CFO at Braemar]

Good afternoon and welcome to the Braemar final results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged, and they can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review your questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll, and I would now like to hand you over to CEO James Gundy. Good afternoon to you.

[James Gundy, CEO at Braemar]

Good afternoon. Thank you. Welcome to Braemar's FY25 results presentation. My name is James Gundy, CEO. I'm with Grant Foley, our CFO and CEO. So congratulations on that. Just an introduction about myself. I'm sure some of you don't know who I am. I'll just mention the fact that I've been in the shipbroking space for some 40 years, starting my early years, first 10 years at Clarkson, then moved into a company called ACM. We successfully IPO'd that company in 2006, where I eventually became the CEO of that business. We merged in 2014 with Braemar. I became the CEO of Shipbroking, dropped off the board, put what you could say are difficult modes together.

[James Gundy, CEO at Braemar]

In 2021, I became the CEO of Braemar, and we'll go through the slides and sort of explain a little bit about what we've done in that period and where we are today and where we're going forward. Thank you. Just to start on the first slide, I think the most important factor for me was that coming into Braemar as the CEO was to make sure we built a business that was robust in financial performance. As far as robust and obviously creating resilience, we have implemented all that strategy in the last four years. We believe that we can deliver now further growth as the business moves forward. The financials are strong. Braemar balance sheet is in a good position, tight control costs, Grant's doing a superb job there.

[James Gundy, CEO at Braemar]

The strategy we've relaunched is a five-year strategy, which we're going to framework, which we're going to explain to you later down within the presentation. Yes, there's been some opportunities, some short-term headwinds within the business, but the long-term opportunities still look very favorable from where we are. Now, this is just to show you a little bit from where when I came in in January 2021. I think you can see from the bottom there, it says the revenues are up some 70%. The underlying operating profit is up 88%. This is mainly created by a diversification story and moving away from non-core businesses, which we were involved in before. It allows us less distraction and focus on a diversification story within the shipbroking space. Anything necessarily complements the business.

[James Gundy, CEO at Braemar]

Just on the right-hand side, you can see we've got some 411 people within the business, some 18 offices across the globe, in 13 different countries. I'll pass you across to Grant to give you a bit of the financial performance of the business.

[Grant Foley, CFO at Braemar]

Thank you, James. Just starting with the financial highlights, the group has delivered a solid financial performance for FY2025 with revenue of GBP £141.9 million. Whilst the first half performance showed an improvement on the previous year, the second half was significantly weaker, and that was really driven by lower tanker performance, and we'll talk a bit more about that shortly. This was partially offset by a stronger performance from our investment advisory division, which really reflects the increasing resilience that we've built into the business over recent years. Underlying profit before tax and excluding acquisition-related items was GBP £16.7 million, which was GBP £1.4 million lower than the prior year, really reflecting the weaker revenue performance and subsequently lower bonus costs. However, as a result of the continued tight control on costs, we're pleased to be able to maintain our margin at 12%.

[Grant Foley, CFO at Braemar]

At year-end, the group had a net debt position of GBP £2.5 million, and that was due to some adverse temporary working capital movements, which was primarily lower than expected cash receipts in January and February. That subsequently caught itself up in March, and we swiftly returned to a cash-positive position in the first couple of weeks of March, which is typical of our working capital cycle. We have a strong forward order book. Our forward order book is where we have vessels either for sale in future periods or new builds and time charters. That may maintain that strong forward order book position at $82.2 million. We announced today our new capital allocation framework, which I'll give you more detail on later. We have taken the decision to reduce our final dividend to £2.5 , but we have announced a share buyback program of up to GBP £2 million.

[Grant Foley, CFO at Braemar]

Ultimately, we've ensured that total shareholder returns have been maintained. If we just move on to the income statement, revenues decreased by 7%. As I've mentioned, that was really a chartering business segment where it was impacted by significantly weaker tanker and dry cargo rates in the second half, although offset by investment advisory slightly, which was 18% up. That was really a strong performance for our sales and purchase team. Risk advisory was down slightly, 3%, but underlying operating profit before expenditure-related expenditure was down 7%, with margins maintained at 12%. Our statutory profit at GBP £9.2 million was 23% higher than the previous year, and that was reflecting lower specific costs that we had in the FY2024 numbers. We've focused over recent years on diversifying within shipbroking and securities and building resilience into the business to give that resilience across the shipping cycle.

[Grant Foley, CFO at Braemar]

Chartering revenues, I've said, were down 14%, with GBP 14.5 million due to tanker revenues. Specialized and dry were also down, but we had a very, very strong performance from our offshore desk that was up GBP £1 million to GBP £9 million. I've said these lower chartering revenues were partially offset by a strong performance in investment advisory, which in total was up 18%. Within that, our sale and purchase desk was up 19%. That performed very strongly in both new builds and second-hand. Risk advisory, as I said, broadly unchanged, but this month we received permissions from the FCA to operate a U.K. organized trading facility, which is a venue which allows our securities business to trade additional products. We believe that we're going to see that division return to growth this year on the back of that.

[Grant Foley, CFO at Braemar]

Moving on to operating costs, we continue to maintain a tight control of costs, but we are balancing this with a focus on efficiency and investment. Ultimately, lower revenues led to lower bonus costs during the year, with staff costs reducing by GBP £10.9 million. Professional fees increased, and this was partially due to the proactive investment that we've made in establishing the U.K. organized trading facility to drive further growth in risk, our risk advisory division. Finally, other costs of GBP £1.1 million reflect an increase in bad debts and the investments made in our IT uplift program to improve our data capabilities and drive further efficiencies across the business. Our liquidity position remains good. We had a net debt position at the year-end, although, as I said, we returned to cash positive shortly after in line with our working capital cycle.

[Grant Foley, CFO at Braemar]

If you look at the waterfall on the left, you can see where the cash went during the year. From our starting position of GBP £28 million, we generated GBP £21 million from underlying operations. Working capital movements were a reduction of GBP £10 million. Financing and tax was GBP £3 million outflow, and we paid GBP £5 million in dividends. We continued to purchase shares for our employee share ownership plan, and we reduced our total debt by GBP £8 million as we focused on the efficient use of our cash. If we look at the group KPIs, unfortunately, given the strong first half performance, we did not see the step forward we would have liked to on the prior year, given the more challenging markets that we saw in the second half of the year.

[Grant Foley, CFO at Braemar]

I do think it's encouraging to see the significant growth and resilience that we've built into the business if we look back to FY2021. In FY2021, that's the last time that we set ourselves some medium-term targets, which was to double our underlying profit by FY2025. Whilst revenue was down 7% in the year to GBP £142 million, it was 70% higher than FY2021. Revenue per head 8% lower due to lower revenues, although it continues to be very strong by industry standards at GBP 345,000, 46% higher than FY2021. It's worth remembering this metric is actually based on all staff, not just revenue earners. Operating profit margin maintained at 12%, which is a 3% improvement from FY2021. Our focus on efficiencies and increased productivity will improve this going forward. Our forward order book continues to be strong, as I've mentioned, at $82.2 million.

[Grant Foley, CFO at Braemar]

I've talked about net cash and finally dividends. GBP £2.5 million, final dividend of GBP £0.07 for the full year with a share buyback program launched today of up to GBP £2 million, maintaining shareholder returns. Just coming back to our target, we set our FY2021 target of doubling underlying profit. It's worth remembering that that was achieved in FY2023 and FY2024. In FY2025, we did have that strong first half performance, but then we did see an impact from the rates in the second half. I'll now hand back to James to go through the strategic updating on that.

[James Gundy, CEO at Braemar]

Thank you, Grant. I think what we're trying to sort of show here in the first slide is basically we haven't seen a fall in the second half rates or market or numbers since 2021. That was obviously being in the COVID situation. Normally in the business, we did second half of the year, a higher performance in revenue. That obviously changed this year, which is unsurprising to ourselves and to many. There's obviously a lot of factors and reason for that. A lot to do with what's going on potentially in the U.S. at the moment, but pre-Trump coming to administration. The tanker rate index on the right-hand side is showing you the fact that the market has been exceptionally strong in some parts in 2022, 2023. We saw a dip down, but then since then, we started to see the markets move back up again.

[James Gundy, CEO at Braemar]

We're feeling that the markets going forward for this year are increasing. It's beneficial business there. Now, most of our business is based in $ revenue. There may be some 5% in other currencies like euros or sterling. You can see that that has impacted the numbers in the second half as well, because we've seen dollar sterling move to 1.35 as opposed to where it was the year earlier. The Braemar index gives you an all-ship index of where we are in the cycle. Compared to where we were some 10 years ago, this cycle is still far higher. The outlook, we're still very confident in the outlook for many reasons. I think you'll see in the slides coming forward. I'll explain it from there.

[James Gundy, CEO at Braemar]

On the first slide, it's a global fleet, and that's basically everything you'll see from gas carriers to energy to containers, dry tankers, and other various sectors as well. You see the global fleet has grown in normalness. That's obviously a positive for us as well, because that means more transactions. Braemar is in every sector there is out there on that global fleet. On the second slide, it's showing you the fact that the fleet is aging, needs to be replenished. Normally, we would say what, max 15 years of age would be the cycle life of a ship. That's sort of moving towards 20-year cycle, but the fact is the fleet needs to be rebuilt. You can see from there on the new building program, that's starting to increase.

[James Gundy, CEO at Braemar]

Braemar has increased, and that was obviously bigger than new building sectors, a large part of our new building, of our revenue stream and our forward order book. Looking further ahead, we're taking some graphs from data. The old demand is still increasing. You can see that drive going through there. We can't necessarily dictate how that flow will go because of so many implications in the world today, but the fact is it's still demand is increasing. Now, as far as China, we had a little bit of surprise there during COVID. We thought that we would see a bit more of a bit of after COVID, we'd see a bit more of a return to China. That's been a bit slower, but we can see that the output growth is going forward. It's starting to go.

[James Gundy, CEO at Braemar]

China is obviously a huge part of the shipping business, the demand. The global GDP is obviously, you can see the curve there going forward as well. It is obviously good for shipping. Shipping is a huge indicator of the global GDP. Today we sort of came out with our new strategic framework, and we want to build on some momentum. When I came in in 2021, I mentioned earlier that building a diversified business that was able to protect itself was starting to become very immune from any one sector coming through. My previous CEO was ACM, that was a little bit one-dimensional. It is important to get to a business that is more diversified and sticks to shipbroking. That is one thing we have done within the last four years. I am a great believer in consolidation.

[James Gundy, CEO at Braemar]

Like I explained, the fact that as the business moves more towards a compliant world, that's giving us opportunities to pick up the smaller businesses that are having to sort of look at the idea of having to make them more compliant or move into a bigger shop. That's obviously happening. At the same time, we've probably moved away from some of these consolidations recently in businesses because the timeframe wasn't ready. Now we feel building the strategic framework is the right time for us. Operational excellence, Grant's put that, lots of it in place, has really built a proper framework for us to build in our business. That's all in place, so it'd be easier to drop those businesses into the company. Now, we've obviously put ourselves a target here of GBP 200 million as far as sterling, as far as by FY2030, as far as our revenue.

[James Gundy, CEO at Braemar]

Risk advisory business revenue up by 21 now to 30 million. The underlying operating profit margin for FY 2030 by 15%. Obviously, you see a 1.5 year bar. Now, obviously, on top of those targets, we're sort of putting ourselves at 10 new brokers highs. We're talking quality brokers, proper brokers, and one new area of jurisdiction, globalized tanker operations. We can explain a bit more on that afterwards. One complete complementary transaction within a month.

[Grant Foley, CFO at Braemar]

Thank you. Just picking up on those three pillars, we've already made good progress in a number of areas within this framework, given the strategy that we've had in place over recent years. Just picking up our risk advisory, which is a great example of the success that we've had in diversifying our revenue streams. This segment has been steadily building. In FY2021, we had GBP £7.5 million of revenue. That has increased to GBP £22.3 million in FY2025. These operations comprise tanker and dry cargo forward freight agreements, which allow our clients to hedge their freight positions, coal, natural gas, and oil. Highly complementary to the shipping industry. Importantly, we do not take risk in this business. We provide agency broking services, so there is no balance sheet risk that we take within this division. In FY2026, I did start this year.

[Grant Foley, CFO at Braemar]

I'm pleased to announce, as I said, that we've secured our organized trading facility approval, and that's live. We're already seeing some of our clients trade on that venue. It will allow us to trade additional products as we bring more brokers and opportunities on board. We're also somewhere through the application to establish a European OTF, which will be based in Spain under the CNMV, who are the regulator out there, to trade with more European clients. We're quite excited about the opportunities here.

[Grant Foley, CFO at Braemar]

If we look at consolidation, whilst we haven't completed a transaction this year, we looked at a number of deals during the course of the year, but we have maintained our discipline, and we've focused on shareholder value and deals that would complement our existing business, the Braemar business, as well as the business that we would be acquiring, which is what we've done in the deals that we've done historically. What you can see here, we've used this slide before, but the white space shows how many opportunities there are out there. Whilst we have some short-term headwinds that James talked about in terms of FX and rates, we believe that this market does present us with significant opportunities at the moment as the valuations for those businesses are coming down.

[Grant Foley, CFO at Braemar]

There was probably, it's fair to say, a disconnect between public and private valuations when we've looked at transactions in the past. We see that that'd be becoming closer, and we're well positioned to take advantage of that. As you can see, there are lots of opportunities, not only by desk type, but also by geography that we can take advantage of. Finally, operational excellence is really the focus on building efficiencies in the business and adding value to the business. As we continue to invest in our platform, and what we mean by that is our platform to support a growing business. We have built the finance, the compliance, the IT infrastructure that can support a growing business that will support our growth. If we look at it from an IT perspective, during FY2025, we improved our infrastructure. We modernized it.

[Grant Foley, CFO at Braemar]

We went cloud first, and we unified our global technology stack. We've had a focus on productivity with real-time data feeds and tools that will enhance the broker productivity. We've also had a big focus on performance improvement. We've invested in business intelligence tools to give us a much deeper and faster insight into business performance. While we're looking at processes and we've automated workflows, we're aligning global processes to really drive the efficiencies in the business. When we look at our FY2030 target of 15% operating margin, that's about ensuring that we've got the support functions ready to support the business. As we bring those additional revenues in through organic and inorganic growth, we can drive that margin forward. To finish for me on the capital allocation policy.

[Grant Foley, CFO at Braemar]

We have amended our capital allocation policy today in support of our strategic framework that James outlined. We feel that this reflects a balance between growth investment and returning cash to shareholders. First of all, we will maintain a robust balance sheet with net debt of less than 1.5 times EBITDA. Secondly, we will continue to invest in talent to grow the business, but we will maintain our discipline to ensure that those generate shareholder value and focus on driving efficiencies and improved margins. We will not participate in paying lots and lots of money for hires if they are not going to generate returns and shareholder value. Thirdly, we will continue to have acquisitions that allow the group to accelerate its growth, but they have to meet our strict value enhancing criteria.

[Grant Foley, CFO at Braemar]

We will return excess capital to shareholders through dividends and share buybacks as we continue to grow the business.

[James Gundy, CEO at Braemar]

Thank you. Summary and outlook. I think we can first say it is a robust financial performance, clearly illustrating the importance of diversification, something I very much was clear when I came in four years ago, which enables us to build resilience in the business. The underlying operating profit margin maintained at 12%, return to net cash position shortly after year-end, in line with the usual working capital cycle. Total dividend GBP £0.07, GBP £2 million share buyback announced, total shareholder returns maintained. Outlook. Yes, some short-term headwinds driven by ongoing uncertainty and weak US dollars. Fiscal year 2026 underlying operating profit to be now GBP 13-14 million. Strong forward order book maintained at GBP 82.2 million. Strategic framework launch with short-term and medium-term targets. Market fundamentals remain strong. We continue to be well placed to take advantage of opportunities ahead. Thank you.

[Operator]

Fantastic. James, Grant, thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the top right corner of your screen. While the company takes a few moments to read those questions submitted today, I would like to remind you that the recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via Investor Dashboard. James, Grant, as you can see, we have received a number of questions throughout today's presentation. If I may now come back to you and kindly ask you to read out the questions where appropriate to do so, and I'll pick up from you both at the end. Thank you.

[Grant Foley, CFO at Braemar]

Thank you very much. I'll read the questions. Thank you. First question is, will you be looking at further acquisitions or other M&A?

[James Gundy, CEO at Braemar]

I think we want to sit here first of all and say that we sort of touch base on the fact that we've been patient. There's been quite a few M&A deals come past over our desks and vows, I say. The fact is it's important to make sure we do the right thing that's enhancing for the business. For someone who's been in the business for some 40 years and seen many markets move up and down, it's important to make sure we get that at the right valuation and it's integrated in the business and enhances the business as well. Yes, there are opportunities out there, and yes, we have a good chance that we will do that. We've also outlined the fact that we'll do singular hires, potential test purchases, or potential bigger M&A deals.

[James Gundy, CEO at Braemar]

Yeah, we certainly believe that given that we're seeing a slightly softer market, that there's going to be lots of opportunities for us in this.

[James Gundy, CEO at Braemar]

I think I want to just emphasize on that question as well. I think we did touch base as well that we've built that platform. The business is becoming closer and closer to a regulated business. It's not necessarily there yet, but compliance, this is all a cost factor for smaller businesses. I think that for them, as the clients demand more of this, that it gives us the opportunities to pick up as they start to think this is the right time to move out of that business.

[Grant Foley, CFO at Braemar]

Thank you. Next question. Please, could you explain what is your future dividend policy, given that you've now cut the final dividend to 27.7% of last year's final dividend of GBP £0.09 to GBP £0.025? Would it be a fair assumption that you intend to cut the interim dividend by a similar amount, reflecting it to GBP £0.0125 from GBP £0.045, given that you normally pay one third of the interim dividend and two thirds as a final dividend? I think just I'll take that initially. Just as we think about our capital allocation framework, which I just outlined, we do feel that we are faced with a number of opportunities which will generate long-term shareholder value. That's why we've laid out that clear capital allocation policy.

[Grant Foley, CFO at Braemar]

Of course, we do want to continue to pay an attractive dividend, but we have reduced it, although we have maintained total shareholder returns. I think it's fair to say that the dividend will remain, we will remain a dividend-paying business. £7 for the full year this year, reasonable to think that that will hold at that level. Now, how that cuts between interim and final is up for debate. We haven't thought about that. It could be one third, two thirds, but we haven't fully decided on that yet. Next question. New building had a good FY2025, but you comment that uncertainties around tariffs and U.S. port calls caused many clients to pause investment projects. Would reduced tariffs and fees on U.S. port calls be enough for new building orders to recover, or does it need their removal and certainty that they will not be reinstated?

[James Gundy, CEO at Braemar]

I think from my perspective, I think, look, it's a tall ask to start to sort of move into a situation where you're going to labor a huge tariff on a Chinese-built ship and potentially see the fact that it could be potentially hit targeting certain companies. There's even conversations about Chinese financing as well being attacked as well. If we're just seeing that, but from my talking to the various client base, it doesn't feel yet that it hasn't slowed down necessarily orders in China as they see that. We've seen orders still being placed within China, obviously Korea and Japan as well. At the same time, we're moving into other parts of the business where we're seeing that the alternative fuels, whether that be dual fuel as an LNG or methanol or ammonia. There's that pressure as well to build ships.

[James Gundy, CEO at Braemar]

China has been the large area of building ships. It is difficult to see which way that will go. The fact is, look, we are well placed in that position of those markets. At the same time, the appetite has not totally dwindled on those that are what you call the Chinese-built ships.

[Grant Foley, CFO at Braemar]

I'll add to that as well. We showed that chart earlier which showed new building orders. Over 20% of capacity came out of the new building yards post the GFC. The yards are pretty busy at the moment. There is not a lot of available slots. That chart just to the left of that showed an aging fleet. These vessels are going to have to be replaced. We are going to continue to see reasonable new building activity. Next question. You referenced expanding teams. How are you finding recruitment in what is likely to be a competitive talent market?

[James Gundy, CEO at Braemar]

Yeah, I think I can answer that question. Look, the market has been, as I say, the last three or four years, exceptionally competitive. We have obviously, Grant is very much looking at, we both look to make sure that we see a return of those talents and how we structure that as far as what we would call sign-ons and making sure that we see a return on that investment. We have been shy to get into some form of bidding war because sadly, I have seen rates go down as well as go up and we feel very toppy in the market. At the same time, it is important to sort of promote Braemar as a company that is on multiple different markets and it does help a broker to have that in-base information to obviously supply to the clients.

[Grant Foley, CFO at Braemar]

Yeah. You talked about the cost. Next question. We talked about the cost of talent reaching uneconomic levels. Can you say what parts of the market this was and what sort of organization was paying these uneconomic levels?

[James Gundy, CEO at Braemar]

I mean, yeah, I think you can go to that.

[Grant Foley, CFO at Braemar]

We saw competitors and heard of competitors paying quite significant amounts of money for individuals to join their business. Our view was that they were just uneconomic. This was at a time when, yes, rates were stronger, but as James already said, rates go down as well as up. When we looked at it, it was that you look at those numbers and you're looking at a significant period of time before you get a payback on your investment. That was at a time when rates were strong. As we've seen with weaker rates, you're going to have a significantly longer period. Our focus during that period was not to participate in that bidding war as it was, but to focus on retention, which we've done during that period. We now think that there's being a normalization in that space.

[Grant Foley, CFO at Braemar]

It comes back to the opportunity that we see just short-term headwinds, but we feel it's an opportunity to acquire talented individuals as well.

[James Gundy, CEO at Braemar]

It is very important that when bringing new talent into the company, you're careful of not literally going too far the other way and overpay. As Grant mentioned, this does not become an uncalled sense to do that. The fact is you've also got a large team within the business, and that also can create a rocking wave and it does not work out too well. You have to be very careful of what you do because it can upset internally as well.

[Grant Foley, CFO at Braemar]

Thank you. Next question. What is your take on the China-U.S. trade patterns for shipping? Any best insight?

[James Gundy, CEO at Braemar]

I mean, I think obviously with the tariff, it's still totally not totally clear what's going to happen with the Trump administration because as you can see, I'm sure you're very aware, that is moving around a lot. It has created some uncertainty, as we have mentioned a moment before. Obviously, the U.S. is an exporter of oil as they're obviously huge as far as taking in from China as far as on the container market as well. Look, at the moment we feel that it's going to be interesting times. It also adds into the fact that what's economically making sense is moving all around and what the trade patterns are going to be. At the moment, it's creating a bit of uncertainty, which potentially goes back to where we feel we give some opportunity.

[Grant Foley, CFO at Braemar]

Next question. What will you call what will cause your margin to increase to reach your 2030 target? Is it scale or a change in business mix? Does this require charter rates to increase from these levels to achieve this? Basically, what we're looking at here is really that focus on operational excellence. I've talked about the platform. The investments that we've made to support a growing business, yes, of course, there will be additional cost within that, but it would not be at the rate that we can increase our revenue base as the business grows. We have the technology, the infrastructure to support that growing business. As individuals join us or teams or M&A comes on board, we can use that platform to support those businesses?

[Grant Foley, CFO at Braemar]

Now, what that will do is that will then drive as they come on board and our revenue goes up, then we can retain a good proportion of the profit there. That will start to open up the jaws of the operational leverage in the business and improve our operating margins. Now, what we're saying, we're focused on building a more diverse and resilient business. We are not, there is always going to be a shipping cycle. As you've seen in these numbers and last year's numbers as well, it does not all move the same way. We saw weaker tankers this year. We saw a stronger S&P. Last year, we saw stronger tankers. We saw slightly weaker S&P. The year before, stronger dry cargo. You always get a mix of revenue. That is why it is so important to be diversified across the shipping space.

[Grant Foley, CFO at Braemar]

You are not reliant on one single area of chartering or S&P or whatever it would be. The next question. In cutting the final dividend so substantially, what consideration was given to small private shareholders who rely on their dividend income? Do you want me to start with that?

[James Gundy, CEO at Braemar]

Yeah, start with that.

[Grant Foley, CFO at Braemar]

Yeah. So look, obviously, it's not a decision that was taken lightly. It was debated a lot at the board. We want to create shareholder value. One of the ways you do that is through an improved share price as well as paying dividends. We had a progressive dividend in place. We paid GBP £0.05 in fiscal year 2021. Now, once it went up to GBP £0.13 in fiscal year 2024, share price hasn't really moved much to reflect that progressive dividend. I think the yield went from 3% to 6%. We believe that the yield now is an attractive yield, 3%. Given what we've outlined, we also, and so I was going to say, we've maintained shareholder return.

[Grant Foley, CFO at Braemar]

Given the opportunities that we've outlined, and I hope everyone's heard the opportunities that we've spoken about during this call, we believe that we can drive more medium to longer-term shareholder value through investing that capital in the opportunities that we see, which will, of course, then drive longer-term shareholder value.

[James Gundy, CEO at Braemar]

Yeah. I think just to add to that, obviously, the share price we feel has been undervalued to where the business is based or where the business was some four years ago, what we've done. Just want to emphasize the fact that I'm the largest shareholder within the business. I too was thinking about obviously thinking about the cutting dividends. For me, it's about growing the business. The buyback seemed to be the best alternative option for us and maintaining, as Grant mentioned, the dividend policy and the %. Yeah, I think we've definitely looked at it very carefully before we made that decision.

[Grant Foley, CFO at Braemar]

Thank you, James. Next question. You mentioned regulatory pressure could create exits from some parts of the business. Could you suggest which ones? Just so we're clear, that's not our business. Shipbroking is unregulated. Of course, we have a regulated securities business. That's fully regulated in the jurisdictions that we operate in. What we're saying is the unregulated shipbroking business is becoming more towards a regulated business. That's exactly why we've invested in compliance technology, etc., etc., to ensure that when we're working with owners and charterers, they have the confidence that KYC, AML, all of these checks have been done. Now, if you look at smaller operators, that's an additional cost burden that they would have to bear. We have got that platform to support that. We become attractive because they haven't got to invest in their business.

[Grant Foley, CFO at Braemar]

There could come a team or another business could become part of the Braemar Group and benefit from that platform that we have in place. Just to be clear, that would not be us exiting parts of the business. It would be some parts of our competitors or smaller businesses who would say, "I want to become part of a bigger group because they've got that infrastructure in place and I have not got to pay for it.

[Operator]

That's great. James, Grant, thank you for addressing all those questions from investors today. The company can review your questions submitted today. We'll publish those responses on the Investment Company platform. James, before redirecting investors to provide you with their feedback, which one is particularly important to the company? Could I please ask you for a few closing comments?

[James Gundy, CEO at Braemar]

Yes. Thank you once again for joining us today. We really appreciate it. The most important thing for us to say is that we are pleased with the results this year. It proves the fact the business is resilient. The fact that I think you can see we put a framework in place to build the business even further for the next five years. We have set some good, strong targets. We believe that from the last four years of what we have done to where we are going, we feel we are well placed for that. Thank you very much for that. Obviously, we are always there for additional questions to myself or to Grant. Happy to have that. Always happy to meet more and discuss further information if you need some more. Thank you once again for attending today. Really appreciate it.

[Grant Foley, CFO at Braemar]

Thank you very much.

[Operator]

That's great. James, Grant, thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Braemar, we would like to thank you for attending today's presentation. Good afternoon to you all.

Participants

Executives

• James Gundy, CEO
• Grant Foley, CFO