Conviviality

Press Release 103 – Joint Press Release from UKSA and ShareSoc

Conviviality

• Asset managers need to think again why they missed the warning signs.
• Shares in the wholesaler and distributor are now suspended as it considers the anticipated impact on its funding position of £30m due to HMRC. This business has looked questionable since an abrupt change of strategy several years ago. The facts were there for all to see.
• Manifest spotted problems.
• Despite this, shareholders approved the latest annual accounts – they voted 100% in favour, although only 72.81% voted. 2.85% voted against the reappointment of the Chairman, but there was no vote on remuneration and generally no signs of shareholder dissent.
• These are important questions as a company previously worth £680m is now suspended, and it may go into administration and shareholders may lose all their money.

Cliff Weight, ShareSoc Director commented “The shareholders who voted this through, need to review and find out why they missed the warning signs. Did they, lemming-like, follow ISS advice and not look at Manifest’s concerns? I think they need to allocate more resources to corporate governance and engaging with the companies they invest in.”

He added, “The FCA and FRC need to look at this”.

Background
At 30 June 2017, the Company had been notified of the following interests of over 3% of the issued unused share capital:

Conviviality
River & Mercantile Asset Management
Octopus Investments Limited
Premier Asset Management
AXA SA
Hargreave Hale Ltd Stockbrokers
Miton Group plc (*see note)
Close Brothers Group
Unicorn Asset Management Limited
Jupiter Investment Management Holdings
Janus Henderson Group plc

The rapid drop in the share price may be grounds for the FCA investigating whether the company had disclosed relevant information in a timely manner to the market. There may also be questions about whether recent accounts have been a true and fair reflection of the business. The FRC should investigate this.
Further commentary and information is in the ShareSoc blog https://www.sharesoc.org/blog/corporate-governance/conviviality/

*Note: Miton no longer hold Conviviality and steadily reduced its clients holdings over recent quarters, and had only relatively modest holdings when the problems came to light.