SINGAPORE - Signs of discord between Nobel Design Holdings' management and some shareholders have surfaced over issues of dividend payout and the impact of boardroom conflicts.
Murmurs of discontent come as the mainboard-listed interior design and property firm heads into its annual general meeting (AGM) next week.
The AGM, to be held on April 28, is expected to be a lively session where some shareholders plan to speak up on Nobel's declaration of a dividend per share of 0.65 cent for the financial year ended Dec 31 last year.
Investors whom The Straits Times spoke to, such as shareholder activist Mano Sabnani, said they will make their voices heard on what they regard as an exceedingly low dividend.
"The company has declared earnings per share of 11.216 cents for the year - a dividend of 0.65 cent per share will be just less than 6 per cent of that, when the market rate is around 30 per cent. At this rate, the company is doing its shareholders a disservice," Mr Sabnani said.
Nobel announced a 16.14 per cent year-on-year increase in full-year net profit to $22.07 million last year, while cash and equivalents rose 10.84 per cent to $76.79 million.
The final dividend increased 8.3 per cent in the period, from 2013's 0.6 cent to 0.65 cent for last year.
Another shareholder, a 66-year-old retiree who wanted to be known only as Mr Tan, is also unhappy with the payout.
"The company is performing well, but they are not paying us the right dividend. The rate should be 30 to 40 per cent of earnings per share at least, which would be three to four cents. Instead we get just slightly more than half a cent."
Responding to The Straits Times' query, a Nobel spokesman said: "We believe that our investors invest in us because we actively recycle our capital in order to grow the business, and not because we are a high-yielding dividend stock.
"In our property business, a strong balance sheet is important in order to take on new development projects with the associated development risks.
A healthy balance sheet will also enable us to have stronger holding power in the event of a property down cycle."
But Mr Bert Choong, Nobel's non-executive director, founder and former chief executive, said the investors' concerns are valid.
"I think the shareholders know the market norm, and I hope more will attend the AGM next week to seek clarifications on dividend policies, director fees, and the board's efforts to improve transparency on reporting and governance.
"I am also seeking the support of shareholders to be re-elected as Nobel's non-executive director.
The odds will be against me, but I am the company's founding partner, and my contacts and experience will continue to benefit Nobel and its shareholders," he said.
He elaborated on this in an open letter to shareholders published in The Business Times yesterday.
He said his vision, when he set up the business in 1982, was to make it a market leader for interior design and furniture in Singapore and the region.
Mr Choong believes his presence will help the firm improve its corporate governance practices. He said he aims to push for improved returns for shareholders as well as a higher level of transparency on corporate matters.
His comments may further strain his already-troubled relationship with the firm's management.
The two parties are embroiled in a legal spat, after Mr Choong filed a defamation lawsuit earlier this month against key management figures at Nobel, including chief executive Terence Goon.
The move was in response to Nobel's announcement on the Singapore Exchange in October that Mr Choong may be in breach of his fiduciary duties for allegedly failing to disclose that his wife and son had set up a rival firm in Kuala Lumpur in February last year.
In February this year, Mr Choong refused to sign off on Nobel's full-year results announcement, saying he had not been given sufficient information.
These differences illustrate what could be a power struggle in the boardroom, a situation that Mr Sabnani believes is detrimental to the company's future.
"I would like to see the management resolving this drama quickly by making up with Mr Choong, who should also be successfully re-elected, as company founders are usually given lifetime positions on the boards," he said.
The company hopes for a quick and amicable resolution to the situation, the Nobel spokesman said, adding that shareholders are welcome to speak their minds with their votes. "We will leave it to our shareholders to decide and vote accordingly at the upcoming AGM."
This article was first published on April 24, 2015.
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