EOA Regional Network Meeting

06 December 2017

Scottish Enterprise, East Kilbride

Agenda

• Introductions

• EOA Update

• Group discussion – positives & challenges of EO

• ‘Warts n All’ – Novograf & Clansman Dynamics

• Lunch

• Open Space - your EO questions

EOA Update

• EOA Conference

• EO Hub

Group Discussions

The positives & challenges of employee ownership

Feedback your notes

Clansman Dynamics

Employee Ownership – ‘Warts n All’

The positives and challenges

of employee ownership

• Who we are

• What prompted us to explore EO

• What structure did we go for

• What do we make.

• Day one ! Status Quo

• Honeymoon period

• Lovers tiff

• Seven year itch.

• Keeping up the enthusiasm

– Pizza meetings

– News letters

– Team building

• But what really works ?

– Talking

• Where are we now.

Novograf

Employee Ownership – ‘Warts n All’

The positives and challenges

of employee ownership

Our Employee

Ownership Journey

Established in 1986, Novograf is a UK-wide Brand

Realization company based in East Kilbride in

Glasgow’s south west.

John Clark Novograf Chairman

(& former MD)

30+ Years of Progress

• 1986 – Novograf started wrapping lorries

for key retailers.

• 1987 We started developing revolutionary

PVC-free products.

• We progressed to supplying materials for

the insides of shops, which delivered steady

growth for 20 years.

• The last 10 years have seen Novograf become a

total service supplier delivering Brand Realization

to the retail, hospitality, commercial and transport

sectors.

Novograf

Brand Realization

is the high speed,

low cost way to

transform an

estate’s look &

feel.

Why we chose the EOT path

• Early 2015, the Directors started thinking

about exit strategies & succession planning

• We were faced with four options:

1. Trade Sale

2. Management Buyout

3. Family Succession

4. Something we heard about called

Employee Ownership

• Mid 2015 we spoke with Scottish Enterprise and

started quietly visiting companies who had taken

the employee ownership option

Employee Owned

Companies We Visited

We are grateful for the time shared with us

during our discovery phase….

• Clansman Dynamics

• Stewart-Buchanan Gauges

• Scott & Fyfe

• Galloway & MacLeod

• Page Park

• Sutcliffe Play

There is a growing network of companies willing

to share their experiences

What model did we choose?

• 100% of shares transferred to Employee

Trust on Day One.

• 20% of shares made available for Employees

to own. Free shares were awarded to employees

based upon Length of Service.

• Employee Director elected to Novograf

Company Board.

• Employee Directors appointed to Novograf

Trustees Board.

• Controls are in place for exiting shareholders.

• Management run the company – Capex decisions,

Remuneration levels, Redundancies etc.

The Transition to an EOT

Phase One

• All employee meeting held under the banner

‘A Time For Change’

• 22 December 2015 the employees were

informed that they will own the company

within 12 months and that a new MD

was being sought

• We wrote to the CEOs, MDs and main contacts

of all our customers and suppliers to make sure

they were ‘on board’ with the transition

The Transition to an EOT

Phase Two

• An employee election was held to form

a five person transition team

• The Transition Team held elections among

employees for an Employee Director and

two Employee Trustees

• We advertised for a new MD and involved

the Transition Team and Management Team

in the interviews.

• Valuation was agreed with HMRC

• Consents – we formulated “can & can’t do’s” for the

Company

going forward

What happened next?

• December 2016 we completed EOT

transition and transferred 100% of shares

to the Employee Ownership Trust

• January 2017 issued each employee with

a memento of their new ‘owner’ status.

• April 2017 Jennifer Riddell-Dillet came

on board as MD

• Established an Employee Engagement Team

• Increased our sales by around 20% and our staff

numbers by 10%

• 21 June 2017 held our first AGM where we issued

free shares allocated according to number of years

served

• Set up a SIP to enable employees to purchase a limited

number of shares in the future

One Year On - Observations

• Was the choice of E.O. right for us?

• In hindsight, would we change anything?

: Easier access to affordable finance

: Better training for Employee Directors

: Spend more time on the setting up of our

Employee Engagement Team.

• So far - a very positive experience overall

Thanks for the Support

• Glen Dott, Co-operative Development Scotland

• Ewan Hall, Baxendale

• Carole Leslie, Ownership Associates

www.novograf.co.uk

Lunch

Open Space

Thank you for attending

Our next meeting is tbc!!!