London-listed shipbroker Braemar has revealed it is examining more legacy transactions as part of a probe that caused its shares to be suspended in July.
In a trading update, the company said it is nearing the end of an investigation that meant it could not publish its financial results for the year ending in February.
In June, Braemar had said it was looking at one £3m ($3.93m) deal from 2013, for which payments were being made up to 2017.
The company said on Friday that it was “focused on a small number of transactions which were carried out between 2006 to 2013”.
The investigation has been conducted by FRP, an independent specialist firm, and overseen by a committee chaired by group chairman Nigel Payne.
The company said the process has been “thorough and complex, but is now nearing completion”.
Braemar had been due to publish its results by 30 June.
But the outcome of the investigation is not expected to affect profit.
The board said it expects previous guidance for the financial year to remain unchanged, with record revenue and underlying earnings achieved.
Revenue is expected to be at least £150m, up from £101.3m the year before, with underlying operating profit expected to be not less than £20m, versus £10.1m.
Net cash stood at £6.9m at the end of the year.
Working through conclusions
“The board is presently working through the conclusions of the investigation and any resulting amendments to the group’s accounts for prior periods,” Braemar said.
Results are now expected in October, when a restoration of share trading will be requested.
Further details are promised about the deals at that same time.
Total dividends for the year will be £0.12 per share — a 33% increase from the previous year.
Chief executive James Gundy thanked shareholders and his team for their patience and understanding during the investigation.
“We continue to deliver on our strategy, and I am delighted with the performance of the business and the strong start to this year,” he said.
“I am also pleased that the investigation, which has been time-consuming and complex, is now coming to an end and the business has shown considerable resilience throughout this period, which makes me incredibly proud.”
In the trading update on Friday, the company said it continues to trade well in the current financial year ending February 2024.
It is on track to deliver underlying operating profit, excluding foreign exchange movements, of about £18m, which is in line with market consensus.
Underlying operating profit, again excluding foreign exchange movements, for the first half of the year is expected to be at least £7m.
“The board’s strategy of growing scale and market breadth with increased diversification and global reach continues to deliver strong results,” Braemar said.
Revenue for the first six months of the financial year is moderately higher than the same period last year, against a backdrop of significantly lower shipping rates in certain sectors, the company added.
Confident in the outlook
“The board remains confident in the outlook for the second half, with the group’s total forward order book being 21% higher than the same period last year,” Braemar said.
The group’s shares were suspended on 3 July at the company’s request.
The stock closed at £2.33 ($3.05) on the last day before the suspension, 16% down from £2.79 before the announcement in June.
The share had gone as low as £2.20 on 26 June, the day it announced the deal investigation. Braemar was trading at £2.42 a year previously.
The company was under the leadership of chief executive James Kidwell in 2013. He retired in 2019.
Braemar finance chief Nick Stone resigned on 20 June after four years. He left at the end of July and was replaced by Grant Foley.
“The board is not presently comfortable with the manner in which the transaction has been historically represented and the remaining liability recorded in the company’s balance sheet,” Braemar said on 26 June.
