Braemar Plc (BMS) Earnings Call Transcript & Summary

Well, thank you. Thanks for coming today for our '23 and first half '24 results. My name is James Gundy, CEO. I have Tris Simmonds, COO; and newly appointed Grant Foley, our CFO. But before going to that, a bit more on that actually sold through. So I think that it's important for you to realize that we now have a full team in place as far as the vision I had. I think with Tristram, the COO, that was always something that I had as a vision going back to when we acquired Atlantic back in 2018. Tristan's knowledge in the securities market was -- is huge from being in GFI days and before that in Spectrum, which I've known for 25 years. And then Grant coming in, and his knowledge in the broking world as well. It's really important that because we sort of -- we can actually work together, understand how it goes and the vision is the same with how we can build the ship broking model, which was definitely the vision I have when I came in as CEO comparable to where Braemar was before that. Because, for me, there's no point talking about the past anymore because that's -- I've been told by my Chairman, please focus forward. Do not look back, although there are some times when I used to get frustrated and angry, but now we are definitely on a projected path to go forward. So thank you, Grant. Yes. So look, I need to explain a little bit here the numbers. I mean, without a doubt, 2023 was a record number. To go back to '22, we were GBP 10 million and here we are surpassing GBP 20 million. So that was massive. Now there were some, obviously, some tailwinds in that with the FX, et cetera, as you'll see. But the fact is it's still an incredible figure for us. Obviously, we increased our dividend by 33% for '23. We strengthened liquidity. We've obviously, for me, personally, debt is something I don't like and personally as well as in the business. So we focused on reducing debt and to enhance the business. And obviously, since then, by reducing the debt, we targeted the growth strategy, which obviously Tris has been instrumental as well with me in doing that. As for the first half of the '24 comparable to the first half of '23, we're up there. But as you can see on the revenue there, it's an increase of 8%. The growth strategy is definitely paying its dividends there of what we've been doing. And interim change, well, at the moment is 4p still maintaining from where we were. But they're obviously progressive as far as where we want to go going forward. Thanks. Strategic update. Now I know most of you understand our business, but I think it's important to explain little bit what we do and what we provide. Obviously, Braemar now covers all the sectors within the ship broking world. And we have a great footprint to even further grow the business and where we want to get to. But the fact is sort of, obviously, as far as the volume and the revenue is, obviously, the most important factor. Just to explain on the commission side. On the smaller ships, it's a 2.5% of the revenue of the freight. On the bigger ships, it gets to 1.25%. And then you also have the S&P side, which is basically predominantly 1% on the transactions. Now for those of you who don't realize or know on the shipbuilding space, it's definitely the bigger ticket deals and the price of the ships we can do saying from recycling ships from maybe $1 million of a commission to anything to north of $250 million of the transaction. So that's the more lumpy tickets. So -- and obviously, as we've grown our security business, you can see here as well how that's increased. But now we're -- obviously, we're concentrating mainly on business that complement the ship broking space. And for that, there's quite a few markets out there. And all the cross desk fertilization is basically helping our clients who are demanding more and more from a singular shop that's creating a consolidation, if we can move forward. Now 2 years on, I think I was very clear in what I said I was going to do and something I've already touched on. But I was very clear when I came in that there is no point running a business if you don't fully understand that business. And for me, it's always been -- I've always been a believer, I believe in leading by example. I'm considering that I'm definitely a old school of the 5 days a week in the office and pushing from the front and leading by example, sort of revenue maker for the business. And I've pushed the desk everywhere I can. But on the top of that, we disposed the noncore businesses. They were lower-margin businesses, and they weren't -- definitely were not enhancing or complement the business to that degree. Focus on the ship broking space, as I've just mentioned, we have acquired business. We said we were going to go and acquire business, and we've done exactly that. We've gone out there, and we've acquired in the States, the Southport Maritime and Madrid, which is both key areas geographically for us that complement the big part of the business. And we've launched nat gas, which is obviously increasing our security presence, which is obviously Tris' interest. Leadership, well, I'll touch base on the 3 of us of how we push. We have included the -- it's completely new Board, just not the execs in the last 2 or 3 years. It's also the nonexecs, it's completely new Board. And in fact, we complement each other. It's great to be part of a team. No one is putting in different directions. There's no different agenda. We all talk continuously about where we want to push this business to, which I think is critical. And I think if I was to say anything, that wasn't necessarily happening in the predecessors. And of course, now I know you're going to be talking a lot about the legacy issues. There's not a lot I can say about that. But I can tell you now that is in the past, and we've moved -- and we can move forward. And it continues. Again, it's a historical transaction dating back to 2006, 2013, old. We had independent investigation committee chaired by nonexecs, as you can see, Nigel Payne, external advisers, they were brought in, FRP. And the outcome of the investigation was completely thorough at every level. And I can assure you as a CEO, I want to double check internally as well as externally that everything had been investigated. So we can now go out and start to sell the story properly without anything coming back to bite us down the line. And looking ahead, obviously, as I said, so we can turn it over. Now as I've said, we had a strategy, and I'd like to think this slide is showing that the strategy is a correct strategy. I mean you can see the revenue numbers. I explained to you, first of all, about the fixtures. So it's important to realize that the deal transactions increase on the revenue. That's all in the slide there. And you can see the growth from '21 to '23, and you can see the first half of '24 versus '22 going up. So as far as I can see, and I'm sure you can see, we've grown the business and we have a massive footprint where we believe we can further grow this business. I think the other key factor is this whole business is consolidating more and more, I feel because -- and the world of compliance is entering into the ship broking space. So we believe that that's going to be another key factor for us to be able to grow our business. Yes. And I think I'm going to pass you on to Grant, who by the way, is doing a fantastic job. I want to emphasize that one more point. Thank you.

Thank you, James. Good morning, everyone. Firstly, I will cover the financial performance for the year ended 28th of February 2023. So starting with the income statement. Revenue was up 51% on the prior previous year at GBP 152.9 million. And we saw strong performances across all sectors. Chartering was up 57%, Investment & Advisory up 40%, and Risk Advisory up 42%. Although the group did benefit from a stronger U.S. dollar, overall fixture volumes at 7,716 was 32% higher than the previous year. Given the increase in revenue, the main driver for the increase in operating expenses was broker costs. And underlying profit at GBP 20.1 million was double the GBP 10.1 million from the previous year. Within the numbers, we did have a number of specific items, including goodwill impairment of GBP 9 million on our Corporate Finance business and acquisition cost of GBP 2 million, which was partly offset by a gain on our purchase of Southport Maritime of GBP 3.6 million. The Corporate Finance business was acquired in 2017. And given the trading outlook were weaker, we took the impairment and recognized that in the 2023 numbers, as I've just mentioned. As a result, statutory profits were GBP 9.5 million, which is 11% higher than the prior year. And underlying earnings per share of 46.22p were 65% higher than the prior year. A final dividend of 8p has been proposed, and that will be discussed at the forthcoming AGM. So total dividends for the year, as James mentioned, 12p, which is an increase of 33% year-on-year. So just looking at our revenue mix in a little more detail. You can see here that revenue grew in all areas of the business with the exception of Corporate Finance. And as we all know, the revenue profile for Corporate Finance is typically more lumpy with fewer mandates in the year. And with that in mind, we reduced our expectations and took the impairment that I just mentioned. However, you can see here that overall, the group has a very well-balanced revenue mix, and this is building resilience through the cycle. And as we continue to expand our global reach, we are generating more revenue from our offices outside of the U.K. With the addition of Southport Maritime in the U.S.A. and Madrid Tanker Desk, we will see revenues from outside of the U.K. continue to grow moving forward. So if we now focus on operating expenses, as I said, of the increase in cost, the majority was due to increased broker costs at GBP 35 million. Of this, GBP 5 million was for new hires and to cover pay rises, GBP 4 million was increase in travel and entertainment, which follow the lower activity that we saw in prior years as a result of COVID and the remainder was bonuses. Professional fees increased by GBP 1.6 million, partly due to increased audit and compliance costs. Share-based payments also increased by GBP 1.6 million. And finally, the increase in other was due to increased IT costs of GBP 1 million, nonbroking travel of GBP 1 million and nonbroking staff cost of GBP 1 million. But importantly, on this slide, you can see that despite the increase in costs, we can now start to see the operational leverage coming through in the business. So we've got operating expenses reducing from 90% of revenue in 2022 to 87% of revenue in 2023. So moving on to liquidity. The strong trading performance has improved the group's liquidity position, and we've moved from a net debt position of GBP 9.3 million at the end of '22 to a positive cash position of GBP 6.9 million at the end of 2023. During the year, we received GBP 6.5 million from our disposal of Cory Brothers, but this was offset by the acquisition costs of Southport Maritime, which was GBP 6 million; and the Madrid Tanker Desk, which cost GBP 1.3 million in 2023. But importantly, this improved liquidity position provides the business with additional liquidity for investments. So finally, looking at the KPIs for 2023. As I said, revenue has improved strongly over the last 3 years with 2023 revenues 51% higher than 2022 and actually 83% higher than 2021. The improvement in revenue has led to improved revenue per head, and based on total average staff numbers at GBP 398,000 for '23, which is 45% higher than the previous year. As I said, as the business continues to grow, we see operational leverage coming through with underlying operating profit margin increasing from 10% to 13% in 2023. I've talked about liquidity. And finally, dividends for the year at 12p or a 33% increase on prior year, as I've said. So now talking about performance for the first 6 months of this year ended 31st of August 2023. Revenue performance has been strong, 8% higher than the same period last year and 5% up in U.S. dollars. Fixture numbers have also been up 8%. During the period, we saw a very strong performance in tankers, offset by weaker dry cargo revenues. Once again, operating expenses were higher due to broker costs as a result of higher revenues as well as the additional operating expenses from the new business. In the prior period, the business had a GBP 2 million foreign exchange translation gain. And this period, it was an GBP 800,000 loss. So we've got a GBP 2.8 million swing year-on-year in these numbers. In addition, the business has incurred GBP 900,000 in relation to the Madrid Tanker team joining the business, and this cost will be amortized over 3 years and is disclosed within acquisition-related expenditure. Now adjusting for these 2 items, you can see the underlying operating profit at GBP 8.4 million is actually GBP 500,000 or 6% lower than the prior year, which is due to the increased operating expenses that we've got in respect to the acquisitions. Underlying profit, as reported is GBP 6.7 million, which is GBP 3.2 million lower than the prior year due to the items I've explained, mainly the FX swing and the Madrid Tanker costs. Specific items of GBP 4.5 million were incurred in the period including GBP 2.6 million in relation to acquisitions and a further GBP 1.4 million in relation to the investigation. And as a result, statutory profit before tax was GBP 1.9 million, which is a decrease of GBP 8.2 million on the prior year. Underlying earnings per share at 17.43p is 45% lower than the prior year, and an interim dividend of 4p is declared. This is unchanged on the prior year. However, importantly, we continue to maintain our progressive dividend policy for the full year. Just looking at our resilient revenue. I think the growing scale and resilience of the business can really be seen on this slide. We saw a very strong performance in tankers which includes the USA acquisition and the Madrid Tanker Desk as well as improved performances in specialized offshore and our growing securities business, but this more than offset a weaker dry cargo market and lower revenue in sales and purchase and Corporate Finance. so that overall, we still grew revenues by 8% on the prior year. The reduction in dry cargo revenues is entirely rate-driven. Our fixture numbers have remained consistent year-on-year, and we've just seen a real drop-off in dry cargo rates, but we are maintaining market share. As I've already said, sale and purchase as well as Corporate Finance do have a lumpier revenue profile, but the pipeline in both businesses does remain strong. Moving on to operating expenses. As I mentioned, with the increased revenue and the hires that we've made, broker costs have increased by GBP 3.6 million. Other costs have increased due to an increased share-based payment charge of GBP 1.2 million and GBP 1 million of costs relating to the new business that we've acquired in ship broking and securities. The group's liquidity position has also improved. We have net cash of GBP 3.1 million, which is GBP 1.3 million higher than the previous year. Now this is lower than the GBP 6.9 million that we reported at the end of February, and that's reflecting the timing of bonus payments. So we typically pay a majority of our bonus payments after the February year-end, and then we build up our cash profile in the second half of the year. Finally, looking at the KPIs. As I said, revenue is up 8% on the prior year. Revenue per head has decreased slightly due to the number of people in the business. Average head count has increased from to 362 to 407 and given the first half of last year. Operating profit margin at 10% is lower than the 16% that we reported in the prior year. However, adjusting for those significant FX swings, that's 11% versus 13%. Importantly, the forward order book continues to strengthen at $67.2 million at the end of August, which is 21% higher than a year earlier. I've said that liquidity, I've talked about liquidity. And as I discussed, a 4p dividend is declared, unchanged on prior year, but just to emphasize, we continue to maintain our progressive dividend policy. I will now hand over to Tris. Thank you.

Thank you. So we talk a lot about growth in the business. And I think it's important for you to understand how we identify those opportunities. which we've tried on this slide to highlight the most important bullet points for us when we're looking at other businesses or desks to hire. And I think sort of just expanding on what's here. We use a calculated timeline for the delivery of profit enhancement. The investment must be accretive to our bottom line within a very short space of time. We're always looking at new product lines, but also ways of enhancing our existing portfolio with new brokers that give us a larger client base. We're looking for scalable additions, both geographical and through product diversification. And we're not just looking at adding to broking teams. We're interested in diversification such as the investment that we did in Zuma Labs 3-plus years ago, which has reaped dividends for various businesses within the -- within our security sector. Moving on to the next slide, please. So on this slide, we basically identified 35 areas in our business. We have then rated our positioning in these spaces. For example, in vertical of tankers, we have a strong offering in the U.K., but we still see good opportunity in the rest of the world. This was very much sort of a key indicator for us that we used in the successful acquisitions of Southport in the Americas and Madrid Shipping Advisors in Spain. We identified these as 2 geographies where we didn't have the coverage that we wanted, and we successfully executed a strategy to improve and grow our overall tanker offering. There are also clear verticals such as derivatives where we see very strong opportunities. We've talked a little bit about the acquisition of the nat gas desk. But we still see this across other geographies in the world as still having very strong opportunities for us now that we have that baseline in place. One point to note is that even where we have a strong market position, opportunities can still arise. For example, dry cargo in London. We've recently, in the last 6 months, acquired a team of 6 Panamax brokers. That was very much an opportunistic acquisition at the time, which it may not have been something that we were thinking about a year ago. But needless to say, it's increased our offering. So you know we have an open mind to those kind of things. The offshore market has presented a much opportunity as a result of the clear transition to renewable energy globally. And just sort of a summary of the whole slide here. We're now confident that across 17 offices, we have a global platform that is scalable for new products and new brokers. Just moving on to the next slide, please. So talking about 2 of the acquisitions that we made. Southport, first of all. It's performing very well ahead of our expectations. The addition means that Braemar is now one of the largest fixing brokers in the U.S. for Afra and Suezmax tankers. That's a new business line for us. Our U.K. and Singapore VLCC desks have enabled Southport to become a very active broker in the U.S.-China VLCC market. This was previously not a feature for them. And it's very much now a key driver of global TC rates. Also, the new and wider information flow from having that business has had direct tangible benefits for all of our other tanker desks globally. Sort of on another note, a byproduct to this is our long-standing JV with GFI on tanker FFAs has definitely seen a big tangible benefit from the information flow from the States. Looking at Madrid Shipping Advisors, likewise, well ahead of our expectations. This has also delivered a new business line to Braemar. The acquisition has allowed us to work with large Spanish refiners and oil companies that were previously very localized in a closed marketplace for us that we can get access to. Since the inception in Braemar, they fixed over 350 ships, which is phenomenal. This is all new business for Braemar. The business like wise, as with Southport, works very closely with our offices, providing more invaluable information flow, which in turn has resulted in an uplift in the number of transactions executed by the whole tanker group. Moving on to the next slide, please. So securities was identified some time ago as a major growth opportunity for Braemar. We have a long-standing JV with GFI that's over 20 years old now, which James actually with the inception of that. I think it was very much a vision of James and the management team in 2018 that securities was a good divestment from ship broking with obvious synergies. I think with the acquisition of Atlantic Brokers, which I previously ran, it gave Braemar a separate platform outside of the GFI JV to establish their own security offering in new products. We feel that we've successfully done that initially from the acquisition of Atlantic, we started to drive a team in 2018. We now have 14 brokers in that space. We've recently hired the 10 natural gas brokers, 2 fuel oil brokers. And in total, we're in excess of 35 derivative brokers. That's an increase of 85% in 3 years. With offices in Dubai and Singapore, we see further opportunity for geographical growth within securities. And we also see an ease to use the products that we have now to spring into other products such as LNG, EU ETS carbon credits and energy options. Just moving on to the next slide. So looking at growth from '25 onward. Ship broking, I think there are a number of significant changes that will challenge the market over the next 5 to 10 years. We see a lack of investment in replacing the world fleet, leading to an aging bulker and tank fleet in particular. We're also seeing a complex transition to green fuels, which is very much underway, but far from clear as to what the chosen fuel source will be. We've seen a lack of investment in New York capacity. And the market is going to have to face various challenges such as the EU ETS coming into effect next year. All of these are good for us as a broker. I think it creates volatility in the space and means that change has to happen. We also talked a little bit about a blending between the regulatory landscape of the regulated business and the unregulated shipping business, which we feel that as a plc with a regulated business, we're well positioned to take advantage of that and provide that security of quality of service to our customers. Just going back briefly to the securities. Now we've covered this a lot. It is a complement to ship broking. We do feel that we have the platform now to expand further in energy and commodities. And we're certainly seeing from the performance of the larger entity, the brokers, not just the ship brokers. But if we're seeing single-digit growth on their results so far this year, they're very much showing double-digit growth within Energy & Commodities for most of them in excess of 25% year-on-year growth in that sector. By expanding our regulatory approvals, we can break more products. We've applied for an OTF license in Spain. That's going to enable us to trade off exchange products. Again, only as an agency business. We don't hold client funds, and we don't execute any business for ourselves. We're not a principal. But it means that, again, we'll be able to deal with more customers in Europe once we have an OTF. Thank you.

Okay. So that basically gives you a rundown of the business and where we are. I think to summarize where we are, and I do appreciate that we're sort of delivering our '23 numbers at the same time as our '24 first half. So -- but just to say that, obviously, we're in line with expectations as far as where we are. The performance, I'm obviously super proud of where we are for '23 numbers, what we did and where we -- how we built the business going forward. We feel we're in a completely very exciting space of how we can continue to build that with the vision we have. I think we've got a great management in place now, as I said earlier, how we can do that. The underlying profit, I mean, Grant mentioned everything, where we are in the numbers now, that all looks as far as I'm, good. Progressive dividend as we have said that, we're maintaining that for sure. Forward order book continues to strengthen. Just so you realize that at least 15% of the forward order book comes into the start of the year, so 1st of March next year. We could say probably 15% of the revenue has already hit the numbers right away. So it makes it little easier for the budgeting. As you say, some being involved in some of the big-ticket deals and the new building side and the long-term deals, and we go out like 15, 20 years from now on our forward order book. So that obviously helps the business massively. We remain positive. I mean I've been in the business since the '80s. I mean I started my first tender years in Clarksons for 10 years. And I'd say when I came to the business, it was pretty depressed. I've never felt, never felt, even in 2008 and '07, it just felt that was a bubble that might burst in those days. Now it just feels there is longevity in this market for so many reasons. And we've seen shipbuilding capacity cut by 25%. We've seen new sectors coming out, taking away what was previously being built. So we're seeing, as Grant and Tris said, with the aging fleet, it just feels so positive. And of course, many analysts in the room, many can -- not many can predict what might happen in what we could say is political nightmare at moment in certain areas. It of course is the reason why freight rates suddenly moved. We've got situations with the Panama Canal that suddenly moved rates from $20,000 to -- on the product market, we hear reported rates of $160,000 a day. So all that benefits the ship broking and what we're doing and being geographically in the States, in the area, we're taking advantage of what's happening in the Panama Canal, whereas we wouldn't have done a year ago because we weren't in that area. So the business is growing, and we see -- we all have this vision where we want to get to. So we feel positive in the next 5 years. I can definitely say that. Right, so you can go forward. And of course, to conclude, I think you can see the numbers again, it just proves the fact that where we are and what we're trying to prove and how we're trying to grow this business whether that being ship broking, in securities. And I think just to reemphasize what Tris said earlier, we're only intended to going in security space to complement what ship broking does because I can tell you now on the trading floor in London, there's 200 on the floor. They talk all the time on different desks of how that -- how one market is moving, why is the futures market moving in the -- we're just seeing, for example, like the cape desk, the cape market has moved from $8,000 to nearly $35,000 a day. So the market is moving all the time. So being with the security desk as well as the physical desk, it helps so much with that desk. So obviously, we're maintaining where we are on the GBP 18 million for '24 numbers. We've put our neck on the line 2 years ago, that we want to double our numbers, which I could sit here and say, look at us, we're clever, we've done it already. But no, we understand that is a sustainable number and that's where our lowest. So we had to build the business, and we have to feel we're slightly immune from one market falling. So for us, and obviously, we're very clearly set about the dividend policy we've been maintaining. So for us, we're feeling very, very positive. And I know I'll sit in front of you and say that the team now in place definitely has a clear vision. That's for sure. Thank you for coming. All right. Open to Q&A. Thank you very much.

Just one question for me, Andy Murphy at Edison. On the matrix picture that you put out, which is always quite interesting, there's some clear and obvious holes in either geographically or by desk where it was all those empty dots you're going to cross all down. I was just wondering whether you could talk a little bit about whether those holes are there because they're very, very difficult to fill or whether they have an almost equal opportunities of being filled as any other hole?

So I mean, for me, I would say that generally, it's about reaching a certain scale, which we're probably at now, where we have the framework in place to expand into those other geographies. I think a lot of them are in other geographies rather than sectors that we're involved in. If you look at something like securities, I think we had to grow our offering in the U.K. first, very much, let's say, the energy products that we're involved in, I think, are more driven by the London space. But I think you have to have that base in place before we start moving into Asia, Middle East. And I mean, the Americas in that sector is one that would be a very big nut to crack for us from London because it's a huge market and you'd essentially be looking at completely new product lines. But yes, I mean, I think that in all of these, some of them are easier to achieve than others. And it's really about how much money and scale the business wants to commit to doing that. So in that respect, it's no different from any other industry or financial services space.

I think just to add to that value, I think there's no doubt about -- we mentioned earlier about the consolidation story within the business and reasons I mentioned earlier regarding the compliance and et cetera, et cetera, et cetera. So some of those holes, we believe, by acquiring businesses we'll fill, which should only complement. So the business will never sit still. There's no way we're here to sit there and say, "Oh, we are not complete in any sector." Because the business evolves and we have to evolve with it. So that makes it interesting, and we have to keep on top of our game the whole time.

Gert Zonneveld, Investec. Just a couple for me. Firstly, on dry cargo, you touched upon it talking about the fact that you managed to keep your fixtures flattish, but there's been a fairly severe rate weakness in that market in the first 6 months. How do you see the second half of the year? You talked about Cape size rates spiking. But do you see any structural reasons to be more optimistic say over the next 12 to 18 months?

Yes. I think down the line, I think I don't -- I guess we had a bit of a vision. Maybe you had a vision as analyst where China might sort of come back out of its COVID situation. I think that was a key factor. I probably felt that China was going to come out with a bang and say, look, we're back out there again and we're going to start trading. That hasn't necessarily happened. That's been potentially creating a bit of a slowdown on the dry cargo market. Obviously, then we had a situation with -- I mean it's interesting to watch how the markets played. I mean, we have one of the biggest FFA desk on the wet side, as we mentioned a big FFA desk on the dry side. It was a complete buy on the tankers and a complete sell on the dry cargo of how it was -- how the markets work after the invasion. I do feel that's going to come back. There's a lot of optimism coming which obviously helps in scrapping what was happening in the market and started clearing out some ships. Lack of shipyard capacity, especially in Korea for the dry cargo ships. So the long-term view is still very strong. I mean, on the situation with cape market rising now. I mean that's probably predominantly down to the fact that the -- in Brazil, the rainy season seems to have been delayed. And for that, we're seeing a lot more outturn on the iron ore side. How long that lasts, but the prompt side, it's definitely very strong. So the optimists going -- the most -- I think you'll see the numbers, I think Grant mentioned earlier, our fixture numbers has increased on the dry cargo side as we grow geographically, which is important. What I'm seeing here saying proud that we had one of our biggest desks that was one of our biggest desks with numbers the year -- the prior year has come off hugely and we still maintained our numbers. That to me shows you we've resilience in the business now, where it's going back to our ACM days and that go back a long way, which is predominantly tankers. When the tanker market fell, we had nothing else to sort of move back to. So scale is important for us.

And then another one on Investment & Advisory. It's always a tricky one because it's quite lumpy. It depends on deals and deal flow. We don't have any visibility in terms of the order book. But you did touch upon the order book saying that it looks very, very promising. Anything you can share with us regarding H2 and how that's performing?

On the as far as the...

Yes, but both for Corporate Finance as well as S&P.

Yes. I mean S&P, we've definitely been involved in some big transactions in the last 2 or 3 months that come. But those are stage payments that you're getting to ship in '27. So the main revenue hit, low, big in stage payments, 10% here, 20% here, the main revenue comes on ships delivers. So that's definitely increasing the forward order book, which obviously is good for going down the line. As far as the finance side, look, I think they've had a tougher time for sure, being a debt restructuring business with I guess building a lot of money. It's not necessarily to do debt restructuring. But they are definitely getting involved in business, and I think we shrunk that business in the fact that we trimmed it and made it more -- protecting ourselves for profitability down the line. But there is things in the pipeline. It's a percentage basis on that business when it comes, and we had some big ones last year, and we hope they still believe in this year as well.

Yes. What we're doing there is concentrate on building the pipeline, build the pipeline and try and get the deals over the line, and the pipeline is strong. Yes.

Robin Byde from Zeus Capital. Just 2 for me, please. Firstly, just on Slide 18, where you split out your H1 revenue mix. The GBP 11.5 million in tankers, can you give us some insights into how much of that was from Southport and Madrid, please? And then secondly, I think you mentioned earlier that you've booked GBP 2.6 million of M&A-related expenses in the first half. Could you talk a bit about what's in that number?

Yes. I mean within the tanker growth that we've seen of that GBP 11.5 million, around about GBP 10 million is coming from our acquisitions, which is important to build out that resilient number. So yes, we're really pleased with the performances of Madrid and the Southport tanker. Sorry, what was your second point?

Yes. Second point, I think you mentioned on an earlier slide to that one, GBP 2.6 million of M&A expenses or exception was booked in H1. I mean that does seem like quite a high number. So could you just explain a bit what's in that?

Yes. So this is just in relation to the acquisition of Southport Maritime. So the way that the deal is structured, the cost associated, that will be amortized over 3 years. So that's just the charge that we see in the first half, and we'll see a similar charge coming through in the second half.

Is that mainly progressional fees or...