Finance chief quits troubled Merrydown
Tuesday 19 August 1997
The management shake-out comes after disappointing results caused by plummeting sales of Two Dogs Lemonade in the wake of the public outcry about alcopops. However, chairman and chief executive Richard Pudgey has so far survived the group restructuring.
Stephen Burke, Merrydown's finance director since April 1994, has left the company with immediate effect, and will be replaced by his deputy, Michael Dinnis, the company said yesterday. Sales director Alan Rutherford left earlier this summer and will not be replaced.
Mr Burke, is expected to receive a pay-off of around pounds 150,000, based on a two-year contract and a basic salary of pounds 54,950 and a remuneration package of pounds 88,365 according to the last accounts. An auditor by training, he was formerly group acquisitions manager at Dunhill Holdings. He had no immediate plans for the future, a spokesman for the company said.
Company sales fell by 5 per cent and profits more than halved to just pounds 820,000 in the year to the end of March, even worse than the market had expected following a profit warning earlier in the year. When the results were announced last month the company admitted that the board was top- heavy for a company with a market capitalisation of little more than pounds 5m, and announced its intention of reducing administrative costs by up to pounds 1.5m.
But the City had openly speculated that 55-year-old Richard Purdey would himself be a casualty, and that he would either retire or became a non- executive chairman, passing executive control to the managing director.
The company has been a victim of the price war between the larger UK cider makers and the failure of Two Dogs, which pioneered the craze for alcopops two years ago, and helped to generate profits of just over pounds 2m in the year to March 1996. The popularity of alcopops has waned in recent months and several supermarket groups have withdrawn it from their shelves.
Merrydown still makes Two Dogs, but the marketing and distribution was transferred to Scottish Courage in April. Scottish Courage will also provide the marketing and advertising spend. Merrydown's shares edged up 0.5p to 60.5p yesterday.
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