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JD Wetherspoon Results and Directors Reappointed at Edge Performance VCT

JD Wetherspoon (JDW) published their results for the year on Friday (13/9/2019). The revenue figures were very positive with like-for-like sales up 6.8%, overall revenue up 7.4% and earnings up 9.2% (after exceptional items).

There was an extensive diatribe from Executive Chairman and founder Tim Martin on two issues: 1) Brexit and 2) Corporate Governance standards.

Mr Martin’s stance on Brexit is well known. He is a Brexit party supporter and sees no problem with a “hard” Brexit. He says “Elite remainers are ignoring the big picture regarding lower input costs and more democracy, and are mistakenly concentrating on assumed short-term problems, such as delays at Channel ports”.

On corporate governance he dislikes the requirement for non-executive directors to step down after nine years. He says his company’s stance “is that experience is extremely important and the so-called nine-year rule is perverse and counterproductive”. He has a number of other complaints about the UK Corporate Governance standards. It looks like there may be a battle on some of these issues at the forthcoming AGM.

I agree with Tim Martin on Brexit but not altogether on corporate governance. I don’t like directors serving for more than 9 years simply from past experience of directors becoming stale and sycophantic over time. But he is right to criticise the “excessive focus on achieving financial or other targets”.

It’s well worth reading the announcement, but this is clearly one of those companies where shareholders have to have faith in the leadership of Tim Martin.

I do not hold the shares, but not for any prejudice against Mr Martin.

At the Edge Performance VCT (EDGH and EDGI) the sole remaining director Terry Back has reappointed two of the directors removed by votes at the recent AGM. This I consider most atrocious behaviour. The last time I saw this happen was at the bun fight over the future of Victoria (VCP) and that was soon overturned and a new board put in place.

It is of course essential to have more than one director in a public company because of the listing rules and for other reasons. It can of course be difficult to recruit new directors at short notice, particularly when a company is in difficulties. Potential directors fear they are at reputational risk. But reappointing directors removed by a vote of shareholders is simply not acceptable. Shareholders have a strong interest in improving matters so it should not be impossible to find some volunteers. I have suggested that ShareSoc line up some nominees to put the board on the spot. Investors need some new independent directors, not the same old guard.

As I said in this previous blog post: https://roliscon.blog/2019/09/02/edge-performance-vct-sorted/, I have long considered this VCT to be a basket case of the first order. The situation should not be allowed to continue.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

One comment
  1. marben100 15th September 2019 at 12:37 pm

    Much as commenting on Tim Martin’s misleading remarks goes against my instincts to avoid causing upset and get into fruitless argument, I cannot let his remarks go unchallenged.

    Firstly, it is ludicrous to talk about “Elite remainers” (in an effort to appeal to “working class” voters) when the leaders of the leave campaign are mostly wealthy themselves. Who could be more “elite establishment” than the likes of Jacob Rees Mogg, Boris Johnson, and Martin himself is a wealthy CEO. Farage was a private school educated commodities trader. The financial backers of the leave campaign (such as Arron Banks and Richard Tice) could also be fairly described as “wealthy elites” themselves. Let alone the billionaire newspaper proprietors backing the campaign.

    Martin is right that remain campaigners should not be focusing on short-term issues, in the event of a no deal Brexit (though I find these potential impacts pretty worrying). What has always concerned me more and is a key reason for my opposition to Brexit, is that UK businesses will not be able to trade with the EU unless they comply with EU regulations (or the EU agrees that UK regulations are sufficiently similar to EU ones). If we wish to continue trading with the EU (by far our largest trading partner) we will be in the situation Johnson has described as “vassalage”: a rule taker and not a rule maker, whereas our membership of the EU offers the UK a say in the creation of EU regulations and policies. Tariffs are a secondary issue.

    The same problems we are currently seeing with reaching agreement on the Eire/Northern Ireland border will be found, for the whole of the UK, when we attempt to negotiate a FTA after departing the EU. These negotiations are likely to consume government and disrupt business for many years to come, with each side blaming the other for the consequences.

    Mark Bentley

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