LOVE Hemp’s shareholders have overwhelmingly voted against ousting the company’s Chairman Andrew Male, slashing the boards’ remuneration and halting all marketing spend.
While the controversial resolutions ultimately came to nothing, the ordeal is understood to have cost the company thousands, weighing on its share price as it continues to prepare for an uplisting to the London Stock Exchange (LSE).
It came just days after the release of Love Hemp’s interim results revealing a dramatic drop in revenues, a decline it attributed to “repositioning product line and brand away from discounting.”
Love Hemp held the General Meeting on April 1 after Pershing wrote the company on February 11 to request a vote on five resolutions.
Pershing is the Nominee for one of the company’s largest shareholders, understood to represent around 7% of its shares.
Mr Male told BusinessCann the shareholder proposed the resolutions to address concerns regarding ‘the approach the company had taken and their unrealistic views of the company’s trajectory’.
While no specifics were given, the resolutions shed some light on where the shareholder felt the company had taken missteps.
|Resolutions||Votes For (% of Shares)||Votes Against (% of Shares)|
|To remove Andrew Male from office as Chairman||4.73%||95.27%|
|Reduce any board members’ salaries by 75%||3.97%||96.03%|
|Conduct a strategic review and put the Company up for sale||1.52%||98.48%|
|Review the financial history of the Company||3.54%||96.46%|
|Operate the Company self-sufficiently and halt all marketing spend||1.50%||98.50%|
Despite the bluster, which Mr Male says “resulted in three months of work and has cost the Company a significant sum”, not one of the resolutions received support of more than 5%.
Furthermore, it is understood that the shareholder in question did not attend the meeting or submit votes by proxy.
“All resolutions were strongly voted against, highlighting the support of our current shareholder base. I look forward to re-focusing our efforts on moving forward with our growth strategy and the upcoming listing on the Main Market of the London Stock Exchange.
“The meeting was called to address concerns that the shareholder had on the approach the Company had taken and their unrealistic views of the Company’s trajectory.
“The entire sector has dropped in share value and performance by approximately 74% over the past 12 months and our share price has also suffered as a result.
“Whilst this is unfortunate, I am pleased with the progress that Love Hemp has made, and how we have fostered strong partnerships with key individuals and distribution partners to further the reach and visibility of the brand.”
Falling Revenues and Growing Losses
Though Love Hemp’s board will no longer have to contemplate pay cuts, new hires and strategy changes, they will still have to contend with a ‘disappointing’ financial performance in the six months to December 31 2021.
According to Love Hemp’s interim results, released on March 31 2022, the company’s revenues dropped nearly 30% year-on-year to £1.7m.
Alongside this the brand reported a similarly dramatic jump in net losses, rising from £1.15m in the second half of 2020 to £5.12m in the same period a year later.
The company says this performance ‘reflects the planned and significant investment Love Hemp has made in marketing and brand building’.
Gross margins also more than halved for the period year-on-year, dropping from 48% in 2020 to just 20% in 2021.
Mr Male said in the company’s financial statement that a “gross margin of 20% is an unacceptable financial performance for the group and is currently subject to a detailed review by the Board of the sales channels, pricing, promotional activities and the cost of sales associated with each product and sales channel.”
This ‘unacceptable’ performance was reportedly due to a number of one time events, including bad debts of £100,000, and surplus inventory carrying over into January 2022 estimated to be worth around £150,000.
Without these one-off costs, the company says a ‘more realistic ratio’ of gross profits would be around 29%.