Braemar Shipping Regulatory News (BMS)

BRAEMAR SHIPPING SERVICES PLC

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

25 May 2017

Annual Report and Notice of Annual General Meeting

The Company notifies that it has published its Annual Report and Accounts for the year ended 28 February 2017 ("Annual Report"), together with the Notice of Annual General Meeting ("AGM") (together the "Documents"). The AGM will be held at the offices of Buchanan Communications, 107 Cheapside, London EC2V 6DN at 2pm on Thursday 22 June 2017.

Copies of the Documents have been posted to shareholders, who have requested hard copies, and are available on the Company's website www.braemarplc.com. Also, copies of the Documents have been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.morningstar.co.uk/uk/NSM.

The Company announced its preliminary results for the year ended 28 February 2017 on 10 May 2017. The preliminary results announcement included a condensed set of financial statements and extracts from the management report. That information, together with the Appendix to this announcement, which contains additional information which has been extracted from the Annual Report, constitutes the material required for the purposes of compliance with the Disclosure and Transparency Rules and should be read together with the preliminary results announcement, which can be downloaded from the Company's website.

This announcement should be read in conjunction with and is not a substitute for reading the full Annual Report. Page and note references in the appendix below refer to page numbers and notes in the Annual Report.

For further information, contact:

Appendix

The following statement is an extract from the Notes to the Accounts and may be found in full on page 62 of the Annual Report:

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.

Principal risks and uncertainties

The principal risks and uncertainties are set out on pages 26 to 29 of the Annual Report. The full and unedited text relating to these disclosures is set out below:

Key Staff

Description of risk: Succession/reliance on key people in some businesses.

Summary of implication: Business value and earnings could be lost if key people leave.

Control/mitigating actions: Ongoing focus across all businesses on succession to key personnel.

Management actions: Continuation of career path planning carefully managed to ensure it is suitable for the whole Group.

Staff retention

Description of risk: The ability to retain the most important and high-quality staff in the business.

Summary of implication: If the best staff leave, they are likely to take "their" business with them resulting in a loss to the Group.

Control/mitigating actions: Develop a culture of loyalty and growth with a focus on staff development and team motivation. Market competitive remuneration packages. Market competitive bonus structure. Ongoing equity based awards. Staff contractual terms.

Management actions: Continue development of a culture of loyalty/growth as well as maintaining competitive remuneration packages.

Downturn in market conditions

Description of risk: All our businesses are subject to global forces where each market has its own drivers.

Summary of implication: A downturn in the world economy would result in lower activity and lower rates.

Control/mitigating actions: The Group's strategy of diversification on a sector and geographic basis. Ongoing management of cost base based on current and foreseeable market conditions.

Management actions: Continued monitoring to ensure that appropriately structured and costed teams are located across all divisions and geographies. Implement restructuring programmes as required (such as recent actions taken in the Technical division).

Competition

Description of risk: Ongoing risk of increased competition across all our businesses.

Summary of implication: Existing competitors either poaching teams and/or cutting rates. The risk of new market entrants cutting prices in order to win clients and gain market share. The impact on the market that business mergers may have, either in respect of competitors or in respect of clients. Changes in insurance market conditions away from a London market to local instructions.

Control/mitigating actions: Retaining high calibre teams and continuing to provide a high quality service and working environment.

Management actions: Promotion of the Braemar corporate brand, continuing to pursue experienced staff and seeking acquisition opportunities.

Currency Exposure

Description of risk: A considerable amount of our income is earned from US$ denominated transactions, while most of our costs are in GBP, Sing$ and Aus$.

Summary of implication: The Group remains exposed to US$ fluctuation.

Control/mitigating actions: FX movements are monitored and foreign exchange hedging is in place over a rolling twelve-month period.

Management actions: Ongoing application of the Group Treasury Policy. Adapting hedging arrangements to provide more flexibility whilst maintaining appropriate protection against downside risk. Continue to strengthen the link between Group Treasurer and divisional finance teams.

Liquidity risk and control of working capitalDescription of risk: The Group generates profits and maintains a dividend policy. However the profile of profit and cash generation varies over time and across divisions and geographies.

Summary of implication: All divisions have seen changes in business and working capital requirements. Debt collection and our exposure continue to be critical across the Group. All borrowing facilities are with one UK financial institution whilst significant amount of funds held outside UK, mostly in Asia Pacific. On-going repatriation of funds to the UK to enable the Group to operate within its banking covenants.

Control/mitigating actions: Continued working capital monitoring across the Group. Senior management intervention to assist in recovery of debtors. Maintenance of a Treasury management system on a Group-wide basis to monitor cash positions worldwide and co-ordination cash repatriations back to the UK.

Management actions: Continued focus on cash collection in all divisions. Continued operation of the Group Treasury Policy. Regular cash repatriations to reduce Group borrowings and fund dividends. Ongoing implementation of the HSBC global pooling capability in the UK and Singapore.

Reputational risk

Description of risk: Damage to the Braemar corporate brand due to a professional error/mistake. Non-compliance with the Bribery Act & Modern Slavery Act. Inadvertent dealing with sanctioned companies/countries.

Summary of implication: The Braemar brand could be damaged and business lost. Potential impact across the Group through cross-division or geographic contamination following a local error/mistake.

Control/mitigating actions: Ongoing emphasis upon Group compliance and risk. No part of the Group is so significant or remote that senior management are unaware of actions of their staff. Senior management carry out regular site visits. Internal audit visits completed on a regular cycle.

Management actions: Continue close management monitoring of activities of all staff through the internal control framework (Braemar Management Framework) to manage key risks including financial risks, operational risks, legislative risks, reputational risks.

Claims from errors and omissions

Description of risk: All divisions deal with high-value client assets so any error could result in a loss and potentially a significant claim.

Summary of implication: Potential financial loss from a specific error or omission that could lead to legal action and/or loss of reputation.

Control/mitigating actions: Contractual terms and conditions. Review of non-standard contracts. Insurance cover. Staff training.

Management actions: Maintain insurance cover whilst continuing ongoing corporate review to ensure most appropriate and efficient structures and processes are in place.

Loss of IT service

Description of risk: Loss of a critical services and/or data resulting in the business being unable to operate for an extended period of time leading to reputational issues, loss of revenue and inability to pay suppliers and staff.

Summary of implication: Deliberate cyber-attack causing major interruption to IT and communications services. Opportunist attacks that affect the organisation due to poor security or employee awareness, malware or virus attacks.

Control/mitigating actions: Security protection. Disaster recovery Services. Offsite data backups. Security awareness training.

Management actions: Continued improvement in IT systems to improve security, regularly complete penetration testing and strengthen staff awareness of risk.

Cyber crime

Description of risk: Cyber crime resulting in a denial of service or where unauthorised access to Braemar's systems leads to a potential loss of revenue.

Summary of implication: Potential fraud, impact on reputation, loss of services.

Control/mitigating actions: Archiving solutions exist so lost data can be recovered. Personal archives. Key emails and post-deal information retained in multiple systems.

Management actions: Improvement to the mail gateway with a best-of-breed solution. Implementation of a global archiving solution for emails for agreed retention periods.

We have developed our approach to the assessment, management and reporting of risks with a process and governance structure which enables the Audit Committee to review the nature and extent of the identified risks that the Group faces. The risk monitoring process to monitor risk has been in place throughout the year and up to the date of approval of the Annual Report.

Principal risks are aggregated, together with associated issues or areas of uncertainty, the extent of control/mitigation and potential for material effect on the market value of the Group, then assessed. By definition unmitigated risks can be significant but the risk levels fall after taking account of our control processes and management actions. The risks are reviewed to assess their impact on the Group business model and strategy and the resources required to ensure they are managed effectively.

Directors' responsibility statement 

The following statement is an extract from the Report of the Directors contained on page 53 of the Annual Report, and is repeated here solely for the purpose of complying with Disclosure and Transparency Rule 6.3.5. Responsibility is for the full Annual Report not the extracted information presented in this announcement and the preliminary results announcement:

Each of the Directors, whose names and functions are listed on pages 30 and 31 of the Annual Report 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.