I don’t believe the market should be too concerned that Peter Lehmann Wines Ltd has dropped its half-yearly profit by 86%. There are good reasons why. Firstly, once the major UK-based liquor group Allied Domecq started increasing its shareholdings above 10%, PLW’s international distributors were hardly likely to break out the champagne. Had Allied proven to be successful in its ill-fated attempt to buy the company, it would hardly have maintained existing distributors beyond current contracts. Nobody likes being told their wines will shortly be distributed by others, and naturally, those on the ground in PLW’s various international markets devoted their energies elsewhere. Furthermore, the company’s one-off costs of A$2.794 million associated with the eventual takeover by the Hess Group AG has taken a solid slab out of sales revenue. The company’s fiscal performance will however continue to be hindered by the four hundred-odd remaining independent shareholders outside Hess and the Lehmann family, whose total holdings amount to a meagre 3.63%. Their holdings will continue to drain the company’s resources by at least A$500,000 each year, just to meet the reporting requirements of publicly listed companies.
