Hot Features
Premium
Register to chat with like-minded investors on our interactive forums.
On my way down to Braemar’s (LSE:BMS) AGM on Friday I re-read my newsletters on the company and its latest annual report. I was agitated by the unhealthy tendency to emphasise “underlying” earnings, and for the company to have much higher underlying profits than statutory profits year after year. This was disturbing. I had not met the directors, and so was reserving judgement as I entered the fancy London offices.
It wasn’t until half way through the AGM that it became clear to me why the directors feel the need to play this game of padding the income statement and steering the shareholders’ attention away from all the bad stuff over the last three years or so. It seems that a lot of chickens are coming home to roost. What happened half way through the meeting caused me to sell my shares the moment the meeting ended.
I sold at £2.639. Over the one year holding period I’ve benefitted from 20p of dividends. So on my buying price of £2.848, I lost less than one percent, but I count myself lucky to have got out alive. What I heard at the meeting was truly shocking.
(Previous newsletters on Braemar: 23rd March – 4th April 2017, 15th May 2017, 29th June 2017)
A kick off
To start the meeting we shareholders were blankly told by the chairman that Louise Evans, the FD, will be leaving the company immediately after the AGM. That was it; there was no attempt to explain why. Shareholders were left in the dark. We got a potential explanation later from a shareholder, but the Board just would not tell us. So that was a bad start.
The attack
Quentin Soanes, a co-founder and former MD of Braemar, stood up. He said that he had held back for 3-4 years, but now he had speak. He was furious.
He said the shares have halved in value, while executive costs had risen. The company was over-administered and under-managed.
Worse: there was a steady exit of good people from the company (presumably ex-colleagues he stays in touch with).
The Board had become busy fools.
In 2010 the company had net cash; now it has debt.
Its key assets, its people, were walking.
Since 2014 there had been three acquisitions costing £82m + £24m. Today the company is valued at only £82m; whereas in 2014 it was valued at over £100m.
When Braemar took over ACM it continued to l……
……………To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
