Update on Business and Operations
19/07/2022 07:00
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RNS Number : 8904S Softline Holding PLC 19 July 2022
19 July 2022
Softline Holding plc
("Softline" or the "Company")
Softline plans to proceed with a demerger of its Russian and non-Russian
operations
This announcement contains inside information.
London, 19 July 2022 - Softline (LSE: SFTL), the Cyprus-registered global
digital transformation and cyber security solutions and services provider
today announces its intention to proceed with a demerger of its Russian and
non-Russian operations, subject to all necessary approvals, including
shareholder approval. The announcement follows a review initiated in May 2022
to adjust the group's assets and ownership structure in order to optimise
value for all of its stakeholders.
The review was initiated on the basis that its Russian and non-Russian
businesses increasingly differ in operations, priorities, and go-to-market
strategies. The dynamics in the two different markets have now evolved to such
an extent that following the review of alternative options, the board has
decided to create two independent companies. This will allow the companies to
better serve customers, capitalise on different growth strategies, and
optimize value.
As part of the demerger, the business in the Russian Federation will become
"Softline Russia", and the business outside Russia will become "Softline
Global", although in the future these names will change. Softline Global
intends to retain the company's LSE listing. Following the demerger, the
Softline Russia board and executive team will consider how best to provide
Softline Russia shareholders with liquidity in their shares. The board
believes the two companies will continue to drive digital transformation and
cyber security solutions and services, with deeply experienced leadership
teams and very strong offerings in their respective markets.
Softline remains committed to protecting the interests of all its
stakeholders, including shareholders, employees, customers and vendors:
· Softline believes this course of action is in the best interests of
its shareholders. Ongoing geopolitical events have had a disproportionate
impact on Softline's market value, and the separation of companies is designed
to support a path to a more rational valuation of both companies that reflects
their strong profitable growth and fundamental value.
· The demerger will allow both companies to continue to provide digital
transformation and cyber security solutions and services to existing and new
customers in the geographies where Softline currently operates. There is
significant market opportunity, and the two independent companies will be
better placed to accelerate their growth strategies based on the respective
market dynamics.
· This change will enable employees to benefit from the market-leading
Long-Term Employee Partnership Programmes in both companies, therefore
allowing Softline's newly formed independent entities to attract and retain
talented professionals, and further supporting the owner-operator culture of
both companies.
· The two new independent companies will be in a better position to
execute their go-to-market strategies with all their regional and global
vendor-partners.
The company has embarked on executing the process for demerger and has
appointed a number of third-party advisors. The process is subject to a number
of uncertainties and will likely take some time to execute, but what is
important is that Softline does not believe that the demerger will have an
impact on the core values of the group and on its commitment to customers and
vendor-partners. The company will make further announcements as appropriate in
order to keep all stakeholders duly informed.
In conjunction with the demerger, Softline announces the following leadership
changes which will take effect from 1(st) August 2022:
· Current Chief Operating Officer, Sergey Chernovolenko, will become
Chief Executive Officer of Softline Holdings Plc and will lead the demerger
transition.
· Following the completion of the earlier announced review of strategic
options, Roy Harding, will step down from the role of Chief Executive Officer
of Softline Holdings plc. He will continue to serve on the board of directors
as an executive director, as well as in an operational role responsible for
the integration of strategic acquisitions within Softline Global.
For the two independent companies, the following leadership changes will apply
once separation is completed:
· Sergey will become Chief Executive Officer of the newly formed
Softline Global. Sergey will serve as a member of its board of directors.
Current Chief Executive Officer of Softline International, Hervé Tessler will
take up the new position of President of the newly formed Softline Global.
Current Chief Financial Officer of Softline International, Burak Ozer will
become the Chief Financial Officer of the newly formed Softline Global.
Softline is a leader in the global emerging markets in which it operates, and
the demerger will enable the company to accelerate the execution of its
three-dimensional strategy. Sergey, Hervé and Burak are all resident in the
UK, where the HQ for Softline Global will be located.
· Current Chief Executive Officer of Russia, Vladimir Lavrov will
become the Chief Executive Officer of the newly formed Softline Russia.
Current Chief Financial Officer of Softline Holdings plc, Artem Tarakanov will
become the Chief Financial Officer of the newly formed Softline Russia.
Softline is a leader in the Russian market, and the demerger will enable the
company to continue expanding its market leading position. Both Vladimir and
Artem are based in Moscow where HQ for Softline Russia will be located.
Softline recently announced excellent annual results for FY2021 ending March
31, 2022, with very strong profitable growth including 26% constant currency
turnover growth, and 39% gross profit growth. The company has a very strong
balance sheet and cash position. These results demonstrate that the individual
companies will embark on their independent journeys with a strong foundation,
and with proven execution capabilities of both leadership teams.
Jacques Guers, Chairman of the Board of Directors of Softline Group noted:
"The changes we announced today will create two leading players in their
respective markets, resulting in optimised growth strategies, operations and
shareholder value for both independent companies. Based on the review of
options for amending the group assets and ownership structure, we believe the
proposed demerger is in the best interests of the current company and our
stakeholders, including our shareholders, customers, employees and vendors."
"I would like to thank Roy for successfully leading the company through
unprecedented change in our global market. He has overseen the process of
getting to the right decision for the business to ensure its future success,
and I am thrilled that we will continue to benefit from Roy's deep
international experience in both an operational role and on the board."
"Looking ahead, Sergey and Hervé for Softline Global, and Vladimir for
Softline Russia, with their vast depth of experience, are the right people to
lead each company. Artem and Burak have extensive experience in financial
operations of both the Russian and global businesses which provides a strong
consistent foundation for the future. The changes announced today positions us
very well as we continue to partner with our customers, driving digital
transformation and cyber security solutions and services globally, and will
benefit all stakeholders of both companies."
Roy Harding, Strategic Acquisition Integration, and board member said:
"I am honoured to have been able to successfully lead the company through this
period of complexity and uncertainty, and to have found the right option to
optimise value for our stakeholders. Both companies are very well positioned
for continued success, and I am very pleased that I will continue to play an
active role in Softline Global. I am genuinely excited about the future for
both companies, under the talented leadership teams that will be in place."
Media Contact Investor Relations Contact
Steven Salter
Eve Frayling
eve.frayling@pagefield.co.uk (mailto:eve.frayling@pagefield.co.uk) Global Investor Relations VP
Softline@pagefield.co.uk (mailto:Softline@pagefield.co.uk)
Alexandra Melnikova
Rocio Herraiz
Investor Relations Director
Global Head of Communications
IR@softline.com
Rocio.herraiz@softline.com (mailto:Rocio.herraiz@softline.com)
About Softline
Softline today is a leading global solutions and services provider in digital
transformation and cyber security, with its headquarters in London. The
company enables, facilitates and accelerates the digital transformation of its
customers' businesses, connecting over 150,000 organizations from all
industries with over 6,000 best-in-class IT vendors, and delivering its own
services and solutions. Foundation of Softline's growth is so-called
three-dimensional strategy, which includes geographic, portfolio and sales
channel expansion. This strategy is supported by energetic M&A activity,
so Softline is benefiting from the on-going consolidation of the industry.
Thanks to this strategy, Softline is currently one of the fastest growing
companies in the sector. Softline delivered turnover of US$2.2 billion in
fiscal year 2021. In October 2021, the company conducted a primary listing on
the London stock exchange.
Softline's 8,400 employees work in almost 60 countries throughout Asia, Latin
America, Eastern Europe, Middle East and Africa - markets with significant
growth potential.
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