TIDMVCP
RNS Number : 9799W
Victoria PLC
01 February 2013
1 February 2013
Victoria PLC
('Victoria,' the 'Company,' or the 'Group')
Proposed Contract with a Director
At the time of the appointment of the current Board on 3 October
2012, the Victoria Directors made it clear that they wished to
directly link the performance and reward of key personnel to the
creation of wealth for shareholders. This link has been encouraged,
and is supported, by a significant number of private and
institutional shareholders who supported the appointment of the
Board. The Directors indicated that they would work with the
Company's advisers to design an appropriate value creation
structure that is completely transparent and totally aligned to the
creation of wealth for all shareholders.
Following discussions with the Company's professional advisers,
the Company proposes to enter into a contract for differences (the
"Contract") with Mr Geoff Wilding. The Contract is intended to
ensure that Mr Wilding is encouraged to generate significant value
for all shareholders and is structured so that he will only benefit
financially from the Contract after shareholders have received a
substantial, near term return from their shareholdings.
Furthermore, to participate in the value creation structure, Mr
Wilding is required to pay a non-refundable premium of GBP20,000 to
the Company as a condition of entering into the Contract, which is
intended to reflect the market value of the Contract, and he is
exposed to the risk of being required to make a further payment to
the Company of up to GBP100,000 under the Contract in certain
circumstances if shareholder value (as defined in the Contract) is
depleted.
A circular (the "Circular") containing full details of the
proposal and the Contract, which is subject to the approval of
shareholders, is being posted to shareholders today and will be
available on the Company's website. The following paragraphs
contain some of the details contained in the Circular:
The Board's Strategy
The Board's strategy for the Company has the following key
objectives:
Growth. The Board's strategy is to grow the Company - both in
the UK and Australia. No strategic
opportunity is being ruled in or out. In particular, strong
opportunities exist in Australia where Mr Wilding's knowledge and
expertise will be especially helpful.
Productivity improvement. Based on comparative analysis, the
Board believes there are significant
opportunities to improve productivity in some parts of the
business.
New opportunities. The board understands where the high growth
opportunities are in the markets
in which Victoria operates and where Victoria is missing out.
The Board plans to reposition Victoria to take advantage of these
high growth areas.
Dispose of non-core and underperforming assets. Certain low
yield and/or non-core assets will
be sold to free up capital to invest into more productive
opportunities and improve returns to shareholders.
Working capital management. The Directors consider that Victoria
has too much of its resources
tied up in working capital. The Directors have already taken
action to improve the Company's
management of working capital.
The Directors believe that adopting this strategy and achieving
the objectives which emerge from it will maximise the creation of
value for all Shareholders.
Current Trading
Since their appointment to the Board in October, it has become
apparent to the Directors that Victoria is facing some real
challenges. The Group is experiencing strong economic headwinds in
each of its major markets, has a cost structure that is too high
for its current level of business, limited competition advantages,
excessive debt levels in the UK, surplus production capability (in
a sector with abundant surplus production capacity) and a
considerable over supply of stock in the UK. These issues are
reflected in the disappointing results for the 26 weeks ended 29
September 2012 announced in November. However, Victoria is well
known for producing superb quality carpets, has an enviable
reputation for service, and employs some talented and committed
people. Since their appointment, the Directors have begun to build
on these foundations to address the key issues facing the
business.
The Contract
Following discussions with the Company's professional advisers,
the Board believes that the proposed
Contract is an appropriate way of aligning the interests of Mr
Wilding, as the key executive responsible for putting the Company's
strategy into effect and achieving the key objectives which emerge
from the strategy, with the interest of all shareholders. A
significant number of shareholders have expressed to the Board a
desire to see shareholder value and returns generated in the near
term. The proposed Contract reflects these wishes and requires
substantial returns to be made to shareholders in the next two
years before the Contract has any value to Mr Wilding.
At least GBP3 per Share must be returned to shareholders within
the next two years before any value can accrue to Mr Wilding under
the Contract. Victoria's share price has exceeded GBP3 per share
for only a short period (between December 2011 and April 2012) over
the past five years and for much of that period (January to March
2012) the Company was in a formal sale process. That process did
not result in any offer being made for the Group. If at least GBP3
per share is returned to shareholders within the next two years, Mr
Wilding will begin to accrue value under the Contract and will be
entitled to a share of additional shareholder value, the quantum of
which is determined by reference to the amount by which total
shareholder value exceeds a hurdle, subject to overall caps on the
quantum of the payment. Full details of this formula and how Mr
Wilding's value is determined are contained in the Circular. Since
Mr Wilding's share of further shareholder value increases as more
value is created for shareholders, and given the investment
required to be made by him in the Contract and the risk of loss,
his interests are directly aligned with shareholders. The Board
believes that in creating this direct and transparent link between
the value of the Contract and shareholder value, shareholders stand
to benefit most from Mr Wilding's relevant experience, commitment
and skills.
The Contract will comprise a related party transaction for the
purposes of the AIM Rules. Neither Mr Wilding, who is interested in
the proposed Contract as a party to it, nor Alexander Anton, who
may benefit under the Contract by personal arrangement with Mr
Wilding, has participated in the board's consideration of the
proposed contract. Mr Andrew Harrison, as the sole independent
Director, having consulted with Seymour Pierce Limited, the
Company's nominated adviser, considers that the terms of the
Contract are fair and reasonable insofar as its shareholders are
concerned.
General Meeting
Approval is being sought for the Company to enter into the
Contract. A General Meeting is being convened for 10.00 a.m. on 20
February 2013 for this purpose.
- Ends -
For more information contact:
Victoria PLC
Geoff Wilding +44 (0) 1562 749 300
Seymour Pierce
Guy Peters (Corporate finance)
Tom Sheldon (Corporate finance)
Richard Redmayne (Corporate broking)
Jacqui Briscoe (Corporate broking) +44 (0) 20 7107 8000
MHP
Nick Denton
Vicky Watkins +44 (0) 20 3128 8100
This information is provided by RNS
The company news service from the London Stock Exchange
END
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