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Draft – 2023 AGM Minutes

For Approval by the Members at the 2024 AGM

Minutes of the AGM held at The Victoria Hotel, Beeston on Saturday, 17 June 2023, as approved by the Committee on 27 September 2023 and subject to approval by the Members at the 2024 AGM.

Present: 52 Club Members; the Committee (all 10 members present); Allens, the Club’s administrators; Hadfield’s, the Club’s independent examiner/reporting accountants; the Company Secretary.

1) Chairman’s welcome – The Chairman opened proceedings by reflecting on what had been on many levels a challenging, disappointing, and upsetting year.

Members leaving the Club considerably out-numbered those joining, with many of those former, sadly, either passing away or citing a need for cash as their reason for doing so.

Close to home, two Committee and CAMRA stalwarts, Sean Murphy and Chris Excell, had died in office during the year, along with longstanding reporting accountant and friend to the Club, Mike Hadfield. The Chairman asked those assembled to raise a glass to the memory of all those no longer with us.

The message from our industry was mixed, with cask ale brewers still reporting production well down on pre-Covid levels and an increasing number entering insolvency proceedings (according to The Caterer, 45 in the year to March 2023, compared to 15 the previous year), but with certain city centre/tourist-type pubs apparently bucking the trend and reporting back positively.

On a brighter note, our own unit value, although well down from its December 2019 peak, is hopefully now stabilising. Dividend income seems to be behaving similarly, but remains at less than half that of 2020.

A ‘returns’ comparison with the Charities Investment Fund from January 2000 to May 2023, a benchmark for many, showed that the Club had marginally underperformed in sharp contrast to the Club’s return of 3.6x from January 2000 to December 2019, compared to the Fund’s return of 2.1x over the same period. This clearly demonstrated the devastating effect Covid-19 and the lockdowns had had on our industry and share price performance.

The Chairman then outlined the events at Black Sheep (‘BSB’ or ‘the company’) that lead to its collapse into administration post year-end, as far as the Club knew them.

The company appointed Teneo as Administrators on 23 May and was subsequently sold (trade and assets) to investment firm Breal Capital (further and better particulars of which could be found in Teneo’s report on the Companies House website, as well as on our own).

The Chairman gave a short history of the Club’s involvement with the company, its operating model (considered sound enough prior to the impact of Covid), its subsequent attempts to diversify away from that model, its lengthy, but ultimately failed, attempts to refinance in order to achieve the diversification etc.

Regular soundings of the Directors as to (then) current performance, plus analysis of trading results as they became available, had all painted a picture of a company trying to deal with the aftershock of Covid (hardly alone in that regard) but handicapped by too much debt on its balance sheet.

The Directors’ decision to offer the company for sale, brought about it seems by action from HMRC and inaction by one of its banks, was a surprise to the Committee and the ultimate result of that process, a ‘Pre-Pack’ asset sale with no return to ordinary shareholders, a major disappointment.

There is no indication of having been deliberately lied to, albeit an unpleasant aftertaste that the whole truth may have been withheld or otherwise washed. Consequently, there is no a priori reason, at this point in time, to believe that the Club has any specific redress against the Directors.

It is thought that legal action is being considered by at least one other large shareholder who had further invested recently, as well as by a de minimis shareholder who has been something of an ‘activist’ over the past couple of years. Both actions seem to have an element of wishful thinking about them at the moment, but CMIC will, of course, carefully consider any approach from either or both of the parties.

The Chairman then invited questions from the floor on the subject of BSB. One member asked why the Committee had appeared to do nothing about the activist’s open letters over the course of the previous 5+ years, why Club members had been given no indication of things going wrong at BSB over this period and, most importantly, why the Committee had made further investments into BSB at a time when they knew things were or were capable of going awry – put simply, the Committee surely has a duty to the members to express its concerns to them as they arise?

The Chairman, supported by another Committee member, endeavoured to explain that, at the last time significant funds were invested, the Committee was fundamentally happy with the company’s performance (that major investment was to assist with the installation of the new canning and bottling line in September 2019, just before the pandemic).

With no seat on the Board or access to management accounts, it is difficult to know what more could have been done here; as with most other investees, the Committee attended all the company’s AGMs and sought to engage at all times with its Directors.

Another member then pointed out that under the Club’s rules each CMIC member delegates authority up to the Committee to act on their behalf, and that nothing would have been served by weekly updates, even had they been merited in the first place – the Club’s members had been let down not by the Committee but by BSB’s Directors.

Another member, who had visited North Yorkshire recently, pointed out that with quality product seemingly available on every corner, as well as the company’s ubiquitous (and agreeable) marketing campaign, the world and his wife would have been surprised to learn that it had gotten itself into trading difficulties! Yet another member suggested that the Committee’s promulgation of negative messages to Club members about the company, had they been merited, might well have been considered compromising, or worse, given its status as a plc.

2) Approval of minutes of 2022 AGM – These were approved and seconded from the floor.

3) Election of Committee 2023-2024 – There being no new nominations, the re-election of the three retiring Committee members was proposed and seconded from the floor.

4) Members’ questions and observations – These were largely taken at 2) above. A member returning to the floor pointed out that even with the BSB write-off the fund value at May 2023 was greater than it was at March 2023, so things weren’t that bad. Another member returning to the floor enquired whether any other investees were currently causing the Committee undue concern. The Chairman responded in the negative, but did refer to the recent, widely publicised events at Brains.

5) Approval of Accounts for ye 31 March 2023 – These were proposed and seconded from the floor – no questions.

6) Appointment of Reporting Accountants for 2023-2024 – Proposed and seconded from the floor.

7) Proposed rule change Resolution – A member queried from the floor whether we had consulted CAMRA about proceeding with this membership relaxation. The answer was ‘no’; CAMRA is always at pains to point out that CMIC is an entirely separate organisation, subject to its own rules etc. The resolution was then passed with a (large) majority show of hands from the floor.

8) Any other business – A member returning to the floor briefly outlined the terms of a proposed motion concerning CMIC, which two individual Club members had hoped to put to CAMRA’s recent (2023) AGM. Sadly, this hadn’t proved possible, but they hoped to repeat the process, successfully, in 2024. The Chairman acknowledged the motives and merits behind the motion but emphasised that it was not Club sponsored. Another member returning to the floor proposed a vote of thanks to all the Committee for their efforts during the year and this was supported volubly.

The Chairman mentioned that his invitation to any member of CAMRA’s National Executive to attend today’s meeting as an observer had been respectfully declined and then expressed his own thanks to all Club members, the Committee for their efforts during this challenging year, also to Allens, Hadfield’s, Linda/Hannah and their team at ‘The Vic’ for the usual excellent spread and, last but not least, Castle Rock Brewery for its overall sponsorship of the day.

Following refreshments, Colin Wilde, the CEO of Castle Rock Brewery (standing in at very short notice for the advertised speaker from Joseph Holt) gave an insightful, impromptu half-an-hour on the trials, tribulations, and opportunities, of being a present-day cask ale brewer-cum-pub operator, followed by an enthusiastically received and enjoyable Q+A session. The Chairman and members thanked Colin in customary fashion.

Nick Metcalfe, Company Secretary, 26 June 2023