TIDMVANL
RNS Number : 3586Y
Van Elle Holdings PLC
05 December 2017
5 December 2017
Van Elle Holdings plc
("Van Elle" or the "Group")
BOARD RESPONSE TO THE ELLIS STATEMENT
1. Introduction
On 27 November 2017, your Board received notice that, pursuant
to section 314 of the Companies Act 2006, Mr Michael Ellis (holding
greater than 5% of the total voting rights in the Company) wished
to exercise his right to request the Company to issue to
Shareholders, on his behalf, a statement with regard to the Ellis
Resolutions (the "Ellis Statement"). In fulfilment of the Company's
obligations under the Companies Act 2006, the Ellis Statement was
set out in a circular sent to Shareholders on 29 November 2017.
2. The Board response to the Ellis Statement
In the circular dated 29 November 2017, the Board stated that it
did not consider that any points raised in the Ellis Statement
called into question the views it had previously expressed in the
circular sent to Shareholders on 22 November 2017, within which the
Board unanimously and strongly recommended that Shareholders VOTE
AGAINST the Ellis Resolutions.
The Board's position remains unchanged and it now makes the
following comments in response to the Ellis Statement:
Increased risk that Mr Ellis exerts significant influence over
the conduct of the Board
In the Board's opinion, the Ellis Statement reinforces its
previous concerns that the Ellis Resolutions serve to promote the
interests of Mr Ellis and his family (the "Ellis Family"), not
necessarily to the benefit of the Company and its other
Shareholders, and that it is his intention that the Ellis Family
exert significant influence over the conduct of the Board in the
future.
The Ellis Statement, while vague as to the exact roles Mr Ellis
and his son-in-law, Thomas Lindup, would have on the Board, makes
it clear they would hold executive positions within a reduced Board
containing only two independent non-executive directors. In
addition, the Board notes with concern that Mr Ellis has already
secured indications from three additional unnamed non-executive
directors to join the Board, presumably once he has secured his own
election through the Ellis Resolutions. This board of eight
directors, envisaged by Mr Ellis, would include himself, his
son-in-law and the three unnamed non-executive directors selected
by Mr Ellis without an independent Board selection process. The
Board believes this board composition could allow the Ellis Family
to exert significant influence over the conduct of the Board in the
future.
In the Board's view, this again demonstrates that Mr Ellis has
failed to accept that Van Elle is no longer a private family
business in which he has majority control.
Van Elle is growing and its prospects remain good
In the Ellis Statement, Mr Ellis expresses his view that the
Group is going backwards.
The Board does not accept this view.
As previously stated in the circular dated 22 November 2017, Van
Elle reported record revenue and underlying* operating profit for
the year ended 30 April 2017, with growth reported across all four
divisions. This growth in the Group's trading performance has
continued with the Board anticipating it will report revenues of
approximately GBP53 million (H1 2016: GBP43.1 million) and
underlying* profit before tax increasing by approximately 15% for
the six months ended 31 October 2017.
Mr Ellis also seeks to cast doubts on the ability of the Company
to forecast its future trading performance. The Board does not
understand Mr Ellis' concerns in this regard as its internal
financial reporting procedures and budgeting process have been in
place since the date of Admission, when Mr Ellis was chairman of
the Company.
On 22 November 2017, Van Elle published its half-year trading
update which included the following statement regarding the Board's
expectations for the current financial year:
"The Group has a seasonal weighting towards a stronger second
half and the Board expects this will be the case again in the
current year. As the Group enters H2, enquiry levels are
encouraging and the current order book as at November remains
strong. The Board continues to monitor market conditions closely
and whilst mindful that the Group is subject to clients' decisions
regarding contract call-off timing, its expectations for the full
year remain unchanged."
* Stated before share-based payments and exceptional costs.
Staff morale at Van Elle is good
Mr Ellis has sought to portray staff morale at Van Elle as being
low due to management's failure to recognise the importance of its
staff and to treat them accordingly.
The Board refutes this representation completely.
The Company actively engages with staff across the Group and
this continued successful focus on staff engagement and well-being
was formally recognised in May this year when Van Elle was upgraded
to a Silver "Investors in People" accreditation. This award
represents an improvement on the Group's previous Standard
accreditation achieved in 2013.
While inevitably staff will leave the Group from time to time,
the level of voluntary staff leavers at Van Elle improved from 13%
in calendar year 2016 to 10% in the current calendar year and
stands testament to the inaccuracy of Mr Ellis' representation.
In the Ellis Statement, Mr Ellis states that "VNL had the best
employees in the sector". The Board strongly disagrees with Mr
Ellis, believing instead that Van Elle continues to have the best
employees, and considers it damaging to the Company and
disrespectful to its workforce for him to suggest otherwise. Your
Board continues to view the actions of Mr Ellis as causing
unnecessary and unhelpful ongoing disturbance within the Group's
senior management and the wider workforce.
Mr Ellis' actions could adversely impact the proper succession
process for Chief Executive Officer
As reported on 22 November 2017, the Board has initiated a
formal process to identify the best possible successor to Mr Jon
Fenton as Chief Executive Officer.
The Board remains focussed on ensuring that this succession
process is conducted in the best interests of all stakeholders,
without impacting the Group's business. The Board is concerned that
the uncertainty caused by the Ellis Resolutions and the intended
board composition envisaged by Mr Ellis, including himself, his
son-in-law and the three unnamed non-executive directors selected
by Mr Ellis, will deter potential candidates from coming forward
and risks de-stabilising the Group.
Delivering the Group's acquisition strategy
The Ellis Statement highlights that the Company has not yet
undertaken an acquisition and that Mr Ellis seemingly remains
anxious we spend the net proceeds raised at the time of
Admission.
The Board re-iterates again its intention to make selective
acquisitions to complement its organic growth plans and has
investigated a number of potential targets. However, your Board
remains disciplined in its approach and focused on ensuring it
makes the right acquisitions at the right value and at the right
time.
In summary, the Board remains disappointed by Mr Ellis'
behaviour and considers his actions to be both disruptive and
damaging to the Company, its Shareholders and its stakeholders.
Moreover, the Ellis Statement reinforces the Board's previously
expressed concern that the Ellis Resolutions serve to promote the
interests of Mr Ellis and his family, not necessarily to the
benefit of the Company and its other Shareholders, and yet again
demonstrate the failure by Mr Ellis to acknowledge that the Company
is no longer a private family business in which he has majority
control.
3. Board recommendation
The Board unanimously recommends that Shareholders VOTE AGAINST
all of the Ellis Resolutions to be proposed at the General Meeting
for the following reasons:
-- the Company's strategy remains unchanged with the Board working to deliver this strategy;
-- the Company delivered profit growth in FY2017 and the Board's expectations for FY2018 are
unchanged;
-- the Board is actively engaged in an independent process to
identify a new Chief Executive Officer;
-- the Ellis Resolutions would significantly weaken the
independence of the Board and the overall level of corporate
governance within the Company; and
-- IF NOT VOTED DOWN, once on the Board, it would appear Mr
Ellis intends to appoint additional non-executive directors
selected by himself which could allow him and his family to exert
significant influence over the conduct of the Board in the
future.
It is very clear to the Board that Mr Ellis still fails to
accept that Van Elle is no longer his private family business.
ACCORDINGLY, THE BOARD UNANIMOUSLY AND STRONGLY RECOMMENDS THAT
SHAREHOLDERS VOTE AGAINST THE ELLIS RESOLUTIONS.
Enquiries:
Instinctif Partners (Financial
Public Relations) 020 7457 2020
Mark Garraway
James Gray
Rosie Driscoll
Peel Hunt LLP (Nominated Adviser
and corporate broker) 020 7418 8900
Charles Batten
Mike Bell
Justin Jones
Market Abuse Regulation
The information contained within this announcement is deemed by
Van Elle to constitute inside information as stipulated under the
Market Abuse Regulation. Upon the publication of this announcement
via a regulatory information service, this inside information is
now considered to be in the public domain.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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