Whatever has or has not been occurring, the lack of timely and effective investor and market communication is clearly a significant issue.
The Shareholder Communications Strategy in ESH's Corporate Governance Plan (Corporate Governance Plan (mogul.gg)) states that "the Board of the Company aims to ensure that the shareholders are informed of all major developments affecting the Company’s state of affairs" and that this will be achieved through various means (annual report, semi-annual report, disclosures and announcements to ASX, notices and and explanatory statements of AGMs and GMs etc.).
It also states that any "Shareholders queries should be referred to the Company Secretary in the first instance" and "any significant comments or concerns will be conveyed to the Board and relevant senior executives". No commitment is given to providing a response which is of course not surprising.
The lack of communication from the Board seems to imply that there have been no major developments. The lack of communication for such an extended period creates uncertainty and erodes investor and market confidence in the Board and executive. This is reflected in the slightly more than 70% erosion of SP value over the past twelve months and the declining SP trend over the past four years at a rate of almost -16.5% per annum. This cannot be reasonably attributed to COVID which should have presented an opportunity.
Schedule 2 of the Corporate Governance Plan outlines the Corporate Code of Conduct. Section 2.2(a) states that "our primary objective is to deliver maximum shareholder value through profitable growth and the development of a stable and sustainable business whilst acting lawfully, ethically and responsibly". Is the current or proposed strategy achieving this objective or is it perhaps not possible to answer this question due to the lack of timely and effective communication? Certainly the current and declining trend SP would suggest not so what steps are the Board taking to address this?
Schedule 2, Section 17 - Responsibilities to Investors states "the Company strives for full, fair and accurate disclosure of financial and other information on a timely basis". Is ESH meeting their obligations?
I have focussed on the communications aspects of this document. There are a number of other areas that warrant review.
ESH has potential however there are some fundamentals it needs to get right and timely and effective communications with key stakeholders is among them.
Individual opinion only. DYOR.
ESH Price at posting:
0.6¢ Sentiment: None Disclosure: Held
