City briefs: AO World launches ambitious incentive plan; digital security business locks in revenue growth from acquisition
AO World has launched a long-term incentive plan for its employees to support the online retailer’s high growth strategy.
However the scheme does require huge growth over the next 5-7 years.
It will share 10% of the value created above a market value of £2.5bn.
Although the company’s share price has spiked in recent weeks, the company’s current value is below £800m and has never gone above its £1.2bn valuation when it went public in 2014.
The one-off all-employee incentive plan, called the AO Value Creation Plan, is the result of a review of the remuneration structure at the company.
It said the rewards will be shared between all AO employees, with the “overwhelming majority” to be distributed to employees. Awards to Executive Directors will be capped at £20m, but that would require a market cap of £4.5bn by March 2025 that is then sustained for at least two more years.
AO founder and chief executive, John Roberts, said: “The decision to create an opportunity for every AO employee to receive a meaningful reward for the value they create is one that I’m proud to tell my mum about.”
Roberts has committed to donate 100% of any reward he receives under the plan to help disadvantaged young people in the UK.
On Friday TheBusinessDesk.com revealed his personal stake in AO World had increased in value by more than £100m since April.
Shares in the company have soared since lockdown, trebling in value. Last night’s close of 165p valued the company at £780m.
Ido Erlichman
Kape’s chief executive believes the digital security business “has never been better positioned to grow” after revealing revenues had doubled in the first half of 2020.
Sales reached $59.0m while profits, as measured by adjusted EBITDA, increased faster – up 180% to $16.1m.
The jump was boosted by the purchase of VPN provider Private Internet Access (PIA) last December for $95.5m.
Ido Erlichman said: “This performance is underpinned by the rapid and successful integration of PIA, our continued dedication to product development, and the increased awareness and relevancy of our products worldwide.”
Kape benefitted from higher demand for its privacy-based software solutions due to increased remote working and a full six months of contribution from PIA.
Erlichman added: “We believe Kape has never been better positioned to grow as we seek to further broaden our global reach. Our continued investment in our talent and products is placing Kape at the forefront of the expanding digital privacy and security ecosystem.”
Kape said it has a “high degree of confidence” that the group will deliver revenues of between $120-$123m and adjusted EBITDA of between $35-$38m in 2020.
The AIM-listed business’s share price more than doubled last winter, jumping from below 80p in mid-November to reach 200p three months later. It quickly recovered from the market’s sharp fall ahead of lockdown and closed last night at 194p, which values the business at £300m.
In March Kape entered into an agreement with Bank of Ireland, Barclays Bank and Citi Commercial Bank, to provide senior secured term and revolving credit facilities of up to $70m.
