McBride shareholders revolt over stock allotment

Manchester-based household products firm McBride plc narrowly escaped a revolt by some shareholders over “directors’ authority to allot shares” at its AGM on Wednesday.

McBride said 49.63% of votes were cast against Resolution 13 (Directors’ Authority to Allot Shares).

McBride is one of Europe’s largest manufacturers and suppliers of private label and contract manufactured products for the domestic household and professional cleaning and hygiene markets.

The firm’s website said that as of June 21, McBride’s biggest shareholder was activist hedge fund Teleios Capital Partners with 24.9%. Duke University Management Company (DUMAC) owned 17.65% and Zama Capital Advisors owned 11.06%.

“While the majority of the resolutions were passed with majorities in excess of 99%, the board notes that Resolution 13 (Directors’ Authority to Allot Shares) passed with a majority of less than 80% (receiving votes in favour of 50.37%),” said McBride.

The voting outcome was primarily the result of two shareholders, each with a significant holding, voting against this resolution.

“The views of all shareholders are important to the board. The board will continue its ongoing dialogue with these shareholders and consult as appropriate to fully understand their concerns in relation to this resolution.

However, the board notes that the level of allotment authority continues to be supported by the majority of our shareholders and is in line with the Investment Association’s share capital management guidelines applicable to UK listed companies.

In accordance with provision 4 of the 2018 UK Corporate Governance Code, the board will provide an update on these engagements within six months of the AGM.”

McBride also published a trading update and its shares fell about 6%.

The update said: “In the year to date, McBride has continued to trade in-line with our expectations despite uncertainty in the political and macro-economic environment.

“The company is making solid progress with its strategic initiatives as identified in project compass and has significantly improved customer service levels following the appointment of a new group logistics director.

“The group is focused on executing its volume and revenue plans with the combination of new wins and private label share growth overall meaning our factories remain busy, despite the overall market for household products being lower year on year.

“For the first four months of the year, revenues are 29% higher than the same period last year.

“Whilst the cost of most raw material groups is steadying, input costs for certain raw materials have continued to climb to all-time highs.

“Strong control of our cost base has balanced these higher costs in the early part of the year such that the group has traded in-line with our expectations.

“Our funding situation has stabilised after the recent successful refinancing, with month end liquidity at an average of c.£61m in the first four months of the financial year.

“Supplies of certain raw material and packaging items remain tight and additionally energy concerns as we head into the winter are driving input prices further upwards and production of certain key materials downwards.

“Consequently, the group is continuing to seek mitigations with customers either through further price increases or product engineering with the size of the required margin recovery widely varying between product families.”