28th Jan 2019 09:57
LONDON (Alliance News) - Stock Spirits Group PLC expressed support on Monday for two senior board members as shareholder Western Gate Private Investments Ltd tries to get them removed, accusing the company of poor strategy and a failure to make mergers and acquisitions last year.
Western Gate, which owns 10% of the company, wants Non-Executive Chair David Moloney and Senior Independent Director John Nicolson to be removed from the board.
This is not the first time Western Gate has demanded changes at the drinks company. In May 2016, the company successfully removed former chief executive Chris Heath and got two directors appointed.
"Following significant shareholder value destruction at Stock Spirits as a result of poor financial performance and lost market share since its IPO, Western Gate successfully requisitioned for the removal of the CEO and the appointment of two new independent non-executive directors to provide the board with a fresh perspective and relevant experience in May 2016," said the investor.
"Changes achieved as a result of Western Gate's campaign in 2016 have driven an improved operational performance and good cash generation. However, shareholders continue to suffer from the board's (led by David Maloney) lack of clear growth strategy with no M&A completed in 2018 and weak total shareholder return."
In its own statement Stock Spirits said: "Both David Maloney and John Nicolson continue to have the unanimous support of their colleagues on the board and have been instrumental in helping to restore stability to Stock Spirits.
"We have made it clear M&A is an integral part of our growth strategy, and we continue to assess a range of opportunities in order to enhance shareholder value," it continued.
"The proposed final dividend represents a continuation of our progressive dividend policy, while also allowing us to retain a strong balance sheet in order to carry out M&A activity. More broadly, we believe our recent financial results in December clearly demonstrate the refreshed strategy is working.
"In our core market of Poland we have now delivered 20 consecutive months of profitable year-on-year market share growth," Stock Spirits concluded.
Western Gate also said the board is suffering from a lack of diversity and is not properly evaluated, with internal evaluations carried out by the Company Secretary Sally Kenward.
According to Stock Spirits' website, of its nine board members, two are women, Non-Executive Director Kate Allum and Kenward.
At the upcoming annual general meeting on February 14, Western Gate will be opposing Moloney and Nicolson's re-elections and urged fellow shareholders to do the same.
Western Gate added: "Stock Spirits needs to be run for the company, its owners, not its managers. The board, led by the Chair David Maloney continues to treat corporate governance as a box-ticking exercise whilst ignoring shareholders and over-seeing a culture of group think.
"In short, a vote against David Maloney and John Nicolson is a vote for higher cash returns and a more shareholder friendly board focused on delivering a credible growth strategy," it continued.
"Indeed, a large protest vote against these directors should be taken as a mandate from shareholders for much needed change."
Stock Spirit shares were 0.5% higher on Monday morning at 218.00 pence each. The stock is down almost 30% in the past year.
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