Stock Spirits shareholder calls for chairman’s removal

Shareholder Western Gate has called for the removal of Stock Spirits’ chairman and senior independent director over concerns regarding “significant shareholder value destruction”.

David Maloney, chairman of Stock Spirits

Western Gate – which owns a 10% stake in Stock Spirits, making it the company’s biggest shareholder – has said it will vote against the re-election of chairman David Maloney and senior independent director John Nicolson at the upcoming AGM (annual general meeting).

The investor argued that the board needs a “new culture” as a result of “poor financial performance” and “lost market share” since Stock Spirits launched its IPO.

Western Gate has outlined its main concerns, which include Stock Spirits’ “failure” to articulate and execute a credible growth strategy with limited M&A (mergers and acquisitions); a low cash return to shareholders among its peers; a continued underperforming share price down 18%, and a “pitiful” TSR (total shareholder return) down 16% from the start of January 2018 to date; plus a “slow and inadequate” recovery of market share in Poland, and declining market share in Italy and the Czech Republic.

Western Gate has spoken out before when Stock Spirits published a “satisfactory” start to its 2017 trading year. The company said there was “no evidence” of a turnaround at Stock Spirits and claimed shareholders had not been fully briefed about the strategy to deliver growth.

A spokesperson for Western Gate said: “Stock Spirits needs to be run for the company, its owners, not its managers. The board, led by the chairman, David Maloney, continues to treat corporate governance as a box-ticking exercise whilst ignoring shareholders and overseeing 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.

“Indeed, a large protest vote against these directors should be taken as a mandate from shareholders for much needed change.”

Stock Spirits ‘supports’ chair

Stock Spirits responded to Western Gate’s comments this morning, and said Maloney and Nicolson have the “unanimous support” of their fellow board members.

In December last year, Stock Spirits reported a revenue increase of 8.7% to €282.4 million (US$320.1m) for 2018, bolstered by “solid” growth in Poland.

The spirits and liqueurs producer reported pro-forma 12-month results to account for a move in its financial year to end in September.

The results showed revenue in Poland was up 55% to €152.6m (US$173m), while revenue in the Czech Republic grew 25% to €73.2m (US$83m).

A statement released by 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 that 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.

“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 that our recent financial results in December clearly demonstrate that the refreshed strategy is working. In our core marketplace of Poland we have now delivered 20 consecutive months of profitable year on year market share growth.”

Western Gate, headed by entrepreneur Luis Amaral, previously lobbied for the removal of Stock Spirits’ CEO Chris Heath, leading to his early retirement in 2016. Mirek Stachowicz was named CEO of the firm later that year.