Endeavour Beverages Pty Ltd, better known as Endeavour Brewing Co, has announced a major overhaul of its board, with the two remaining founders removed as company directors.

In a Melbourne Cup Day email to shareholders, the company announced Daniel Hastings and Andrew Stewart had been removed as directors of the company late last month, following the departure of co-founder and former executive chairman Ben Kooyman in May.

Director and company secretary Ken Bromley advised shareholders that the changes were “not undertaken lightly”.

“But to provide additional governance, oversight and support to the Company, and to protect the interests of all the Company’s shareholders,” the email said.

New board

The new board includes Bromley as well as fellow shareholder Olivia Cartwright. Bromley is a Fellow Member of Institute of Chartered Accountants in Australia and New Zealand and a Fellow Member of Taxation Institute of Australia.

Until retiring in 2019, was a Registered Company Auditor, Registered Tax Agent and Registered Superannuation Fund Auditor principal of his own accounting firm, Bromley’s.

Olivia Cartwright, who works in Hong Kong, has 20 years’ experience as a financial professional specialising in Australian and Asian equities and has spent most of her career with JPMorgan as an Executive Director focused on Australian equities with 12 of those years based in Hong Kong.

The third new director, David Masters, is also a director of nomineedirector.com.au. The company’s website says it works with businesses to streamline corporate governance and compliance obligations to ensure companies operate in accordance with Australian and New Zealand regulators.

An immediate and thorough review

In his email to shareholders, Bromley advised that the new board plans to conduct an “immediate and thorough Business Review of the operations and financial position of the Company, its subsidiaries, and joint ventures, with the assistance of independent, paid third-party advisers.”

“The board will also be meeting key stakeholders over the coming weeks and has already started this task,” he said.

The announcement did not say whether the founders, who according to company documents remain significant shareholders, will continue to be involved in the business.

The company has not responded to several requests for comment since the change of directors notices were filed with ASIC in October.

Equity crowdfund turnaround

The board move comes after the business, which recently celebrated its 10th birthday, announced a $593,797 loss for the 2018-19 financial year. The loss came just seven months after the company’s crowdfunding prospectus reported it was running at a profit of more than $100,000.

In late 2018 the company underwent the equity crowdfunding campaign, raising $558,100 from 550 investors. The raise was well short of its full target of $2.3 million.

The subsequent loss was reported for the period prior to the current COVID pandemic and the resulting closure of the company’s Sydney taproom. The annual financial report advising the loss was lodged seven months after its 31st October deadline.

When the company communicated the loss to shareholders in August, it indicated that the results were as a result of a poor trading period that occurred after the crowdfunding period, but did not provide details. Statements to shareholders raise questions about the accuracy of the information provided to potential investors in the prospectus.

“After the crowdfunding capital raise at the start of 2019, the business suffered a poor trading period and reported a significant financial loss,” an August 2020 email explained.

“This continued into the 2020 financial year, and the full extent of this, unfortunately, was not discovered initially until January 2020, following which a full financial review was conducted through into March.

“After a period of poor management and material non-disclosure of key matters to the board, the board has made critical changes at both management and board level.”

This email predated the latest board changes.

The company is yet to report its full-year 2019-20 results to ASIC.

‘Three wine-loving mates

The departure of the three founders represents additional challenges for a brand that launched as a contract brewer in August 2010, describing its story was one of “3 blokes having a go”.

With the business still largely operating as a contract brewing business, despite operating a Sydney brewery and taproom as a 50:50 joint venture with Apple Jack hospitality, it has struggled to enunciate a clear brand promise.

Over its life, the brand has focused heavily on the story of the three founders and the ’35 friends’ who invested in their dreams of making ‘beer as flavoursome as wine’.

Despite the three founders being the face of the equity crowdfund, Andy Stewart, who ran the company for the first three years, has resided in the United States for several years, while Hastings, who lives on Queensland’s Sunshine Coast, said he has been in and out of the company over its life as well.

Disclosure: The author bought two shares in Endeavour Beverages Pty Ltd during the equity crowd funding process and owns 0.00001197% of the company being reported on.