Monday 7th March 2005
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Frankham says the company is sound, performing well and is currently on track to meet or exceed it operating budget expectations for the year to March 31, 2005, which is an operating result in line with last year. He advises shareholders to wait for an independent valuation of the company, commissioned from Grant Samuel and Associates Ltd, and expected before the end of the month.
Frankham defends the company's performance and management, and says a number of initiatives are being considered to resolve the issue of potential conflicts of interest at Board level.
He says it is unfortunate and unhelpful that the recent Masthead Ltd bid for 90% of the company has involved cristicism of the company's performance and of Board issues relating to potential conflict of interest in respect of Masthead representatives on the Vertex board who are also associated with rival company Alto Plastics Ltd
"It is important that shareholders have accurate information on these matters, all of which are capable of causing an unjustifiable loss of confidence in the company, and a weakening in perceptions of the share value," says Frankham.
"In my view, Vertex is a sound company with good prospects. Since my appointment as an independent chairman late last year I have met many of the staff, and visited the company's various manufacturing units. Vertex is a well managed and competitive company, with many innovative products and a strong marketing focus.
"This is despite very large increases in raw material costs and the adverse impact of the value of the kiwi dollar in its export business. Abnormal costs flowing from the litigation and related matters will have an impact on net profit after tax for the year but this is not expected to be other than a "one off" and should have no impact on earnings into the future.
"The company is ably led by managing director Paddy Boyle, who is experienced in the industry and has held this position since Vertex became a public company in 2002.
"From my involvement to date I can confirm the complimentary expressions out of confidence in his ability to lead the company, made by George Gould in the annual report last year when he was chairman of the company.
"I am satisfied that Paddy Boyle and independent director Sandy Maier have been motivated by their concerns for the best interests of the company and the shareholders when they raised concerns about the issue of potential conflict of interest subsequent to Masthead acquiring its shareholding and gaining board representation.
"The chief financial officer, George Clark, resigned recently (before the Masthead bid) after 20 years of service to take up a career opportunity presented to him in November. He is most concerned at recent public statements linking his departure with the company's governance issues, and has asked me to make it clear that they had no bearing on his resignation whatsoever. The Board thanks Mr Clark for his long and competent service and wishes him well in the future."
Frankham said he will write to shareholders early next week, recommending they do nothing until the Grant Samuel valuation has been received, and the independent directors have had the opportunity of reviewing it and giving their considered advice.
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