Daejan – the managers

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Daejan (LSE:DJAN) is completely controlled by the Freshwater family who hold 79.5% of the shares. We small shareholders are at their mercy. It is therefore important we consider whether the dominant shareholders tend to treat other shareholders badly.

The directors

Benzion S E Freshwater, 71, Chairman and Chief Executive

Joined the Board in December 1971 with primary responsibility for the Group’s finances. In July 1976 he was appointed Managing Director and, additionally, became Chairman in July 1980. Remuneration £1.25m.

Solomon I Freshwater, 68, Executive Director

Directs the Group’s operations in the USA and has responsibility for the Group’s UK sales division. He has been a Director of the Company since January 1986. Remuneration £1.25m

Solly B Benaim, 63, NED

Appointed to the Board in January 2017 and is an independent non-executive director. He was formerly Global Head of Real Estate at accountancy firm BDO. Remuneration: £25,000

Mr D Davis, 84, NED

Previously a partner in Cohen Arnold, the Group’s consulting accountants. He relinquished his partnership in 1971 in order to devote more time to his numerous business and other interests. He has been a non-executive Director of the Company since December 1971. Remuneration: £20,000

Mr A M Freshwater, 48, NED

Based in the UK he sits as an arbitrator in complex commercial disputes. He is a potential beneficiary of trusts and a trustee of certain other trusts with substantial holdings of the Company’s equity. He was appointed to the Board as a non-executive director in July 2010.  Remuneration: £20,000

Mr Chaim B Freshwater, 47, NED

Appointed to the Board as a non-executive Director in July 2017. He currently lectures at a London college. He is an actual and a potential beneficiary of trusts and a trustee of certain other trusts with substantial holdings of the Company’s equity.  Remuneration: £20,000.

Mr Raphael E Freshwater, 49, NED

Son of Benzion, he is currently pursuing an academic career and lectures to graduate students. He is an actual and a potential beneficiary of trusts and a trustee of certain other trusts with substantial holdings of the Company’s equity. He was appointed to the Board as a non-executive director in July 2010.  Remuneration: £20,000.

Mr S Srulowitz, 67, NED

Was appointed to the Board in July 2017 and is an independent non-executive director. He is currently the Managing Partner of Sonnenschein, Sherman & Deutsch in New York, a law firm specialising in property law. Remuneration: £20,000.

Related Party Transactions

Day-to-day management of the Daejan Group’s properties and its operations in the UK is mainly carried out by Highdorn Co. Limited and by Freshwater Property Management Limited. These two companies are controlled by the Freshwaters as shareholders and directors.

In their capacity as property managing agents, Highdorn and Freshwater Property Management Limited collect rents and incur direct property expenses on behalf of Daejan.

I really do not understand the need for separate companies controlled by the same directors to do the tasks that Highdorn and FPM do.  Of course, the cynic will say that this convoluted arrangement is designed to rip-off minority shareholders.

But we find that the amounts charged by Highdorn and Freshwater PM are modest: during 2019 £4.9m; during 2018 £6.2m.

Looking at Highdorn’s filing with Companies House I discovered that it made a profit after tax of £0.7m in 2019 and £6m in 2018.

The commission it charged for property management was £7.2m in 2019 and £7.1m in 2018 (some was charged to Centremanor, another company controlled by the Freshwaters – see below. About £0.4m was the cost to other associated companies, therefore fees to non-Group companies were around £1.9m).

Highdorn has a large balance sheet with £24.2m of property and listed investments of £143m (presumably its holding of shares Daejan, originally purchased for £2.5m), thus the family have a significant proportion of their money outside of Daejan.

Freshwater Property Management had a £1m tu


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