PUBLICATION OF CIRCULAR AND NOTICE OF GM

RNS Number : 4408A

Filtronic PLC

28 September 2015

 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN OR THE UNITED STATES OR ANY SUCH JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION IS PROHIBITED

28 September 2015

Publication of Circular and Notice of General Meeting relating to Proposed Delisting from Official List and Admission to AIM, Proposed Capital Reorganisation and amendment to Articles of Association, and Proposed Placing of 90,000,000 Placing Shares at 5.0 pence per Placing Share

On 27 August 2015, the Company announced a conditional placing of 90,000,000 New Ordinary Shares (the "Placing Shares") at 5.0 pence per Ordinary Share (the "Placing Price") (the "Placing") to raise £4.5 million before expenses. The Company also announced proposals to cancel the listing of the Company's Existing Ordinary Shares from the Main Market and to apply for admission for the New Ordinary Shares and the Placing Shares to trading on AIM, and to reorganise the Company's share capital and to amend the articles of association (the "Proposals").

The Company is pleased to announce that a circular to shareholders relating to the Placing and the Proposals (the "Circular") has been published today. The Circular will be available for viewing on the Company's website (http://www.filtronic.com/).

The Circular contains a notice convening a general meeting of the Company to be held at the offices of Panmure Gordon (UK) Limited at 1 New Change, London EC4M 9AF on 15 October 2015 at 12 noon (the "General Meeting").

In accordance with Listing Rule 9.6.1R, a copy of the Circular and the accompanying form of proxy have been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM. In addition, the Circular will be available for inspection at the offices of the Company, Filtronic House, 3 Airport West, Lancaster Way, Yeadon, West Yorkshire LS19 7ZA during usual business hours on any weekday (excluding Saturdays, Sundays and public holidays) up to and including 15 October 2015 and at the General Meeting to be held on that day.

Updated timetable

The timetable has been updated as follows:

References in this announcement to time are to London time, unless specified otherwise.

Announcement of preliminary results for the year ended 31 May 2015	7.00 a.m. on 28 September 2015
Publication of the Circular	28 September 2015
Latest time and date for receipt of completed Forms of Proxy	12 noon on 13 October 2015
General Meeting	12 noon on 15 October 2015
Publication of Schedule One announcement	16 October 2015
Last day of dealings in the Existing Ordinary Shares on the Main Market	13 November 2015
Cancellation of listing of the Existing Ordinary Shares on the Official List	8.00 a.m. on 16 November 2015
Admission and commencement of dealings in the New Ordinary Shares (including the Placing Shares) on AIM	8.00 a.m. on 16 November 2015
CREST accounts credited with Placing Shares in uncertificated form	As soon as practicable after 8.00 a.m. on 16 November 2015
Dispatch of definitive share certificates in respect of the Placing Shares to be issued in certificated form	by 27 November 2015

For further information please contact:

 

Filtronic plc	Tel. [phone]
Rob Smith (CEO)	Mob. [phone]
Howard Ford (Chairman)
Panmure Gordon (UK) Limited	Tel. [phone]
Dominic Morley / Alina Vaskina (Corporate Finance) Erik Anderson / Tom Salvesen (Corporate Broking)
Walbrook PR Limited	Tel. [phone]
Paul Cornelius	Mob. [phone] or [e-mail]

Proposed Delisting from Official List and Admission to AIM

Proposed Capital Reorganisation and amendment to Articles of Association

Proposed Placing of 90,000,000 Placing Shares at 5.0 pence per Placing Share

and

Notice of General Meeting

Introduction

The Company announced on 27 August 2015 that it is proposing to raise, in aggregate, £4.5 million (before expenses) by way of a placing of 90,000,000 Placing Shares at a price of 5.0 pence per Placing Share. The Placing Price represents a 35.5 per cent. discount to the middle market closing price of 7.75 pence per Ordinary Share on 26 August 2015 (being the Business Day immediately prior to the issue of the Announcement).

In conjunction with the Placing, which itself is conditional upon Shareholder approval as set out below, the Board is seeking Shareholder approval to cancel the listing of the Existing Ordinary Shares on the premium segment of the Official List and to cancel trading of the Existing Ordinary Shares on the Main Market. It is intended that the Company applies for admission of its entire issued share capital (including the Placing Shares) to trading on AIM, to take effect simultaneously with the Delisting.

The Board is also seeking Shareholder approval for the terms of the Placing and to reorganise the Company's share capital by reducing the nominal value attaching to the Existing Ordinary Shares in a way which does not affect their economic value. The Capital Reorganisation will maximise the Company's flexibility to issue shares in the future and, to be effected, will require Shareholder approval to adopt new articles of association. It is also proposed to make minor, non-material administrative and definitional changes to the articles of association appropriate for a company whose shares are admitted to AIM. In addition, as the Placing Price represents a discount of greater than 10 per cent. to the middle market closing price of 7.75 pence per Ordinary Share on 26 August 2015 (being the Business Day immediately prior to the Announcement), in accordance with Listing Rule 9.5.10, the Board will also be seeking Shareholder approval of the terms of the Placing at the discount set out above.

Background to the Placing and use of proceeds

As announced on 5 August 2015, following the successful trialling in the spring of 2015 of Filtronic's advanced integrated antenna products by a major US operator, the Company received its first production tooling orders in early August 2015 from a major telecoms industry original equipment manufacturer ("OEM") for Ultra Wide Band integrated antennas. It is anticipated that further production orders will follow the completion of the tooling orders. The Group is developing an advanced integrated antenna product for this OEM and in parallel is developing generic antennae products with a wider application and with an anticipated broader market appeal.

Additionally, the Broadband business has demonstrated that its latest generation E-band transceiver operates as "best in class", at greater than 4Gbps at 256 QAM, resulting in the Broadband business receiving initial production orders from a major OEM for this product.

The net proceeds of the Placing will be used to finance the Group's working capital requirements as it moves from new product introduction to volume production.

In particular, the net proceeds of the Placing will be used to:

·    Complete the qualification processes and production ramp up and sale of the new advanced integrated antenna products and E-band Transceiver products; and

·     Improve the marketing of Filtronic's technologies, products and expertise through active promotion and improved distribution arrangements to improve the Group's sales prospects.

Reasons for the proposed Cancellation and Admission

The Board has undertaken a review in order to determine the most appropriate trading platform for the Company's Ordinary Shares. The Board has considered carefully the proposed Move to AIM and believes that it is in the best interests of the Company and its Shareholders as a whole for the following reasons:

·     AIM is a market appropriate for a company of Filtronic's size, and is a market which should help attract new investors, providing a platform to promote the Company and trading in its shares;

·    AIM offers greater flexibility with regard to potential future corporate transactions and should enable the Company to agree and execute certain transactions more quickly and cost effectively than a company on the Official List. In particular, once on AIM, the Company would have the ability to raise equity finance from Institutional investors without the need to produce a prospectus;

·    companies whose shares trade on AIM are deemed to be unlisted for the purposes of certain areas of UK taxation. Following the Move to AIM, individuals who hold Ordinary Shares may, in certain circumstances, therefore be eligible for certain tax benefits. Shareholders and prospective investors should consult their own professional advisers on whether an investment in an AIM security is suitable for them, or whether a tax benefit referred to above may be available to them;

·     the Directors believe that being admitted to AIM should make the Company's shares more attractive to some retail investors, thereby potentially increasing liquidity;

·     the Move to AIM will enable the Company to complete the Placing; and

·     AIM should simplify certain administrative and regulatory requirements applicable to the Company.

Details of the Cancellation and Admission

In order to effect the Move to AIM, the Company will require, inter alia, Shareholder approval of the Cancellation and Admission Resolution at the General Meeting to be held at the offices of Panmure Gordon at 1 New Change, London EC4M 9AF at 12 noon on 15 October 2015. The Notice of General Meeting sets out the terms of the Cancellation and Admission Resolution, with the Cancellation and Admission Resolution proposed at the General Meeting as a special resolution. In accordance with the Listing Rules, the Cancellation and Admission Resolution is subject to approval being obtained from not less than 75 per cent. of all Shareholders voting in person or by proxy. If the requisite percentage of Shareholders does not approve the Cancellation and Admission Resolution, the Company's Ordinary Shares will continue to be admitted to the premium segment of the Official List and to trading on the main market for listed securities of the London Stock Exchange.

As the Company's Ordinary Shares have been listed on the Official List, for a significant period, the AIM Rules do not require an admission document to be published by the Company in connection with Admission. However, subject to the passing of the Cancellation and Admission Resolution at the General Meeting, the Company will publish an announcement which complies with the requirements of Schedule One to the AIM Rules for Companies, comprising information required to be disclosed by companies transferring their

securities from the Official List, as an AIM Designated Market, to AIM.

Assuming the Cancellation and Admission Resolution is passed, the Company will apply to cancel the listing of its Existing Ordinary Shares on the Official List and to trading on the Main Market. It is intended that the transfer to AIM will take place simultaneously with the Cancellation. It is expected that the last day of dealings in the Existing Ordinary Shares on the Main Market will be 13 November 2015 and that the Cancellation will take effect at 8.00 a.m. on 16 November 2015, being not less than 20 Business Days from the passing of the Cancellation and Admission Resolution.

Current trading and prospects

Subsequent to the publication of the interim results on 29 January 2015, the Company reported on a number of setbacks in both the Wireless business and in the Broadband business.

As announced on 3 March 2015, the revenues from the Wireless business were delayed primarily due to customer order postponements. As a result, the Board set in train a series of cost-saving measures involving redundancies both in the UK and overseas. On 8 June 2015, the Company announced that these cost saving measures achieved an annualised reduction in operating expenditure of approximately £2.0 million for the Group. This saving was achieved through the closure of its offices in California and reduction of headcount in the Wireless and Broadband business as well as in its head office function. On 5 August 2015, the Company announced that it had resolved issues encountered in the development of the integrated antenna product following a number of tests by its customer and by a major US operator. Furthermore, the Wireless business had received production tooling orders totalling $265,000 from its customer, a major telecoms industry OEM for Ultra Wide Band integrated antennas.

The Broadband business, which has been adversely affected by the curtailment of orders from customers selling to Russia, continued to focus on developing proprietary E-band transceiver modules for Mobile Telecommunications backhaul applications and on providing build to print services to related markets. Filtronic has received orders from a major OEM for its latest generation E-band transceiver, Orpheus, which has demonstrated to operate at a best in class >4Gbps at 256QAM, as was announced on 5 August 2015. Filtronic Broadband was also selected to manufacture, on a build to print basis, E-band transceivers based on an alternate chipset.

Filtronic designs and manufactures equipment for the mobile telecommunications market where the long term trends continue to indicate increasing demand. The Group is focused on the development of a number of new products to meet the needs of its OEM customers. These products range from filters, tower mounted amplifiers, combiners to ultra wide band integrated antennas in its Wireless Business and E-band transceivers in its Broadband Business. Despite the technical issues which affected the pace of development of the advanced integrated antenna product (which have since been resolved), both the integrated antenna and the E-band transceiver products are entering early stage of production (either production tooling, initial orders or early stage mass production. Customer projections for these product lines over the next 12 to 18 months show a healthy level of demand.

As announced on 14 September 2015, the Company's wholly owned subsidiary, Filtronic Wireless, Inc ("FWI") has entered into a sales invoice finance agreement with Faunus Group International, Inc, pursuant to which FWI may draw down up to a maximum of $3.5 million. This new sales invoice finance agreement is in addition to the £2.0 million sales invoice discounting facility provided by Barclays Bank plc to the Company's UK subsidiaries.

The Company has also, on 28 September 2015, announced its unaudited preliminary results for the year ended 31 May 2015.

Since March of this year, the Board has also been evaluating measures to strengthen the Company's balance sheet to establish a firm platform for both businesses in order to deliver the growth that the Board anticipates. The passing of the Resolutions and the receipt of the Placing proceeds will provide the best foundation for that stable platform that Board considers is key to delivering on that anticipated growth.

Further details of the Placing

The Company is proposing to raise, in aggregate, £4.5 million (before expenses) by way of a placing of 90,000,000 New Ordinary Shares at the Placing Price with Placees. The Placing Shares represent 84.2 per cent. of the issued share capital of the Company as at 26 August 2015 (being the Business Day immediately prior to the publication of the Announcement) and will, on Admission, represent approximately 45.7 per cent. of the enlarged issued share capital of the Company.

The Placing Price represents a discount of 35.5 per cent. to the middle market closing price of 7.75 pence per Ordinary Share as at 26 August 2015 (being the Business Day immediately prior to the publication of the Announcement). As the Placing Price represents a discount of greater than 10 per cent. to the middle market closing price of 7.75 pence per Ordinary Share on 26 August 2015 (being the Business Day immediately prior to the Announcement), in accordance with Listing Rule 9.5.10R(3) the Board will be seeking Shareholder approval of the terms of the Placing at that discount.

In order to accommodate potential demand from all Shareholders, the Board is intending to offer up to 20,000,000 New Ordinary Shares (the "Open Offer Shares") at the Placing Price by way of a non-underwritten open offer to eligible shareholders of the Company to raise up to a further £1 million before expenses (the "Open Offer") following Admission to AIM. The launch of the proposed Open Offer shall be subject to, inter alia, completion of the Placing and the Proposals, customary documentation, regulatory approval and publication of a circular to shareholders. If undertaken, the Open Offer would be made so as to enable all eligible Shareholders (and including for these purposes certain overseas Shareholders) to subscribe for Open Offer Shares at the Placing Price on a pro rata basis to their holdings on the record date and with the option for increasing their allocation pursuant to an excess application facility. Should the Board decide to proceed with the Open Offer, an announcement shall be made on a Regulatory Information Service in due course.

In connection with the Placing, the Company has entered into the Placing Agreement pursuant to which Panmure Gordon has agreed, in accordance with the terms of the Placing Agreement, to use reasonable endeavours to place the Placing Shares with Placees. The Placing Agreement contains customary warranties given by the Company to Panmure Gordon as to matters relating to the Group and its business and a customary indemnity given by the Company to Panmure Gordon in respect of liabilities arising out of or in connection with the Placing. Panmure Gordon is entitled to terminate the Placing Agreement in certain limited circumstances prior to Admission including circumstances where any of the warranties are found not to be true or accurate (or are misleading) in any material respect.

As part of the Placing, Aberforth Partners LLP and Legal and General Investment Management Ltd have subscribed for 22,029,000 and 15,804,000 Placing Shares respectively. Immediately following Admission, their holdings are expected to respectively represent 24.48 per cent. and 17.56 per cent. of the enlarged issued ordinary share capital of the Company.

The Placing is conditional, inter alia, on:

·     the passing of the Resolutions;

·     the conditions in the Placing Agreement being satisfied or (if applicable) waived and the Placing Agreement not having been terminated in accordance with its terms prior to Admission; and

·     Admission becoming effective by no later than 8.00 a.m. on 16 November 2015 (or such later time and/or date, being no later than 8.00 a.m. on 19 November 2015, as the Company and Panmure Gordon may agree).

The Placing Shares will be issued credited as fully paid and will rank pari passu in all respects with the New Ordinary Shares. The Placing Shares have not been made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.

Application will be made to the London Stock Exchange for the New Ordinary Shares (including the Placing Shares) to be admitted to trading on AIM. On the assumption that, inter alia, the Resolutions are passed, it is expected that Admission will become effective on or around 16 November 2015.

The Placing will result in a dilution of the proportionate holdings of existing Shareholders who do not participate in the Placing; approximately 45.7 per cent. of the Enlarged Share Capital will be represented by the Placing Shares upon completion of the Placing. The Placing is not underwritten.

Related Party Transaction

Aberforth Partners LLP and Legal and General Investment Management Ltd are related parties of the Company for the purposes of the Listing Rules as they have existing shareholdings in the Company that are greater than 10 per cent.

It is proposed that Aberforth Partners LLP and Legal and General Investment Management Ltd will participate in the Placing pro rata to their existing shareholdings in respect of 22,029,000 and 15,804,000 Placing Shares, respectively. Therefore, pursuant to the Listing Rules, the proposed participation by Aberforth Partners LLP and Legal and General Investment Management Ltd in the Placing will require the approval of the Independent Shareholders, pursuant to Resolution 5. Aberforth Partners LLP and Legal and General Investment Management Ltd will abstain, and will take all reasonable steps to ensure that their associates (as defined in the Listing Rules) will abstain, from voting at the General Meeting in relation to Resolution 5.

In the period of 12 months ending 26 August 2015 (being the Business Day immediately prior to publication of the Announcement), Aberforth Partners LLP and Legal and General Investment Management Ltd both participated in a placing of shares by the Company announced on 2 November 2014. Aberforth Partners LLP subscribed for 2,283,919 placing shares at a total value of £502,462.18 and Legal and General Investment Management Ltd subscribed for 1,706,200 placing shares at a total value of £375,364.00. Both of these transactions were smaller related party transactions (as defined in the Listing Rules) and have been aggregated with the proposed participation of Aberforth Partners LLP and Legal and General Investment Management Ltd in the Placing.

The Board, having been so advised by a sponsor, Panmure Gordon, considers the terms of the Related Party Transaction to be fair and reasonable in so far as the Shareholders are concerned.

Capital Reorganisation

Under the 2006 Act, the issue of the Existing Ordinary Shares at less than their nominal value is prohibited. The Board considers that it is in the best interests of Shareholders as a whole that the Company organises its share capital to maximise its flexibility to issue New Ordinary Shares, including the Placing Shares. The Board therefore proposes to reduce the existing 10 pence nominal value of the Existing Ordinary Shares by sub-dividing each Existing Ordinary Share into one New Ordinary Share of 0.1 pence each and 1 Deferred Share of 9.9 pence each. The proposed Capital Reorganisation will not change the number of Ordinary Shares in issue and is not expected to affect the trading price of the Ordinary Shares.

The Deferred Shares will not entitle holders to receive notice of or attend and vote at any general meeting of the Company or to receive a dividend or other distribution or to participate in any return of capital on a winding up (other than the nominal amount paid on such shares following a very substantial distribution to the holders of New Ordinary Shares). Accordingly, the Deferred Shares will, for all practical purposes, be valueless and it is the Board's intention that, at an appropriate time, the Company will repurchase the Deferred Shares or cancel or otherwise seek the surrender of the Deferred Shares, using such Companies Act compliant means as the Board may at such time determine.

The Deferred Shares will not be admitted to trading on any stock exchange.

The rights attached to the New Ordinary Shares will be identical in all respects to those of the Existing Ordinary Shares. The Capital Reorganisation will not affect the voting or other rights of holders of Existing Ordinary Shares who receive New Ordinary Shares.

No new share certificates representing the New Ordinary Shares will be sent to Shareholders

who hold Existing Ordinary Shares in certificated form. Accordingly, share certificates for the Existing Ordinary Shares will remain valid, and will only be replaced by share certificates for New Ordinary Shares when the old share certificates are surrendered for cancellation following the transfer, transmission or other disposal of New Ordinary Shares. No share certificates will be issued, or CREST accounts credited, in relation to the Deferred Shares.

Resolution 2 in the Notice of General Meeting set out in at the end of the Circular is to give effect to the proposed Capital Reorganisation (and to the adoption of the New Articles, referred to below) and is conditional on the passing of the Cancellation and Admission Resolution.

Adoption of New Articles

The Board is asking Shareholders to approve the adoption by the Company of the New Articles with effect from (immediately prior to) Admission primarily for the purposes of including the rights and restrictions attaching to the Deferred Shares as set out in paragraph 11 of the Chairman's Letter contained in the Circular and of effecting minor, non-material administrative and definitional changes appropriate for a company whose shares are admitted to trading on AIM.

Board Changes

The Board considers that the current structure of the Board would benefit from simplification following the Move to AIM, by effecting a reduction in the number of non-executive directors. Graham Meek and Howard Ford have each informed the Company that they therefore do not intend to stand for re-election as non-executive directors at the forthcoming Annual General Meeting on 27 November 2015. The Board would like to thank the retiring non-executive directors for their contributions to the Board and to the Company, and to wish them well for the future. Following the departure of Howard Ford, Reg Gott has agreed to replace him as Chairman. The Board intends in due course to appoint a separate finance director, to enable Rob Smith to focus solely on his role as chief executive officer.

Following the changes to the Board as described above, the Board will therefore be constituted as follows:

·     Reg Gott, Non-executive Chairman

·     Rob Smith, Chief Executive Officer and Chief Finance Officer

·     Michael Roller, Non-Executive Director

Reg Gott was appointed to the Board on 13 July 2006. Notwithstanding the fact that he has served on the Board for more than nine years, the Board continues to believe that Mr Gott is independent in character and judgement and, therefore, an independent director for the purposes of the UK Corporate Governance Code.

General Meeting

Set out at the end of the Circular is a notice convening the General Meeting of the Company to be held at 12 noon on 15 October 2015 at the offices of Panmure Gordon at 1 New Change, London EC4M 9AF at which the Resolutions will be proposed:

Resolution 1 - as a special resolution to (i) cancel the admission of the Ordinary Shares to the premium segment of the Official List and to trading on the Main Market and (ii) to apply for admission of the Ordinary Shares to trading on AIM;

Resolution 2 - as a special resolution to: (a) approve the Capital Reorganisation with effect from immediately prior to Admission and (b) adopt the New Articles as the articles of association of the Company. This Resolution is conditional on the passing of Resolution 1;

Resolution 3 - as an ordinary resolution to authorise the Directors to allot the 90,000,000 Placing Shares in the Company in connection with the Placing (representing approximately 84.2 per cent. of the total issued ordinary share capital of the Company as at 25 September 2015, being the latest practicable date prior to the publication of the Circular and representing approximately 45.7 per cent. of the Enlarged Share Capital). This authority will expire on 31 December 2015 (unless previously revoked or varied by the Company in general meeting). This resolution is conditional on the passing of Resolutions 1 and 2;

Resolution 4 - as a special resolution to disapply statutory shareholder pre-emption rights in relation to the issue of the 90,000,000 Placing Shares for cash pursuant to the Placing. This resolution is conditional on the passing of Resolutions 1, 2 and 3.

As required by the 2006 Act when proposing a special resolution to disapply pre-emption rights, the Directors hereby confirm that:

·     the amount to be paid to the Company in respect of each New Ordinary Share to be allotted pursuant to the Placing is 5.00 pence (before expenses);

·     the number of New Ordinary Shares to be issued pursuant to the Placing is 90,000,000;

·     the Placing Price represents, in the Board's view, the best price achievable by the Company given its funding requirements and the current overall market conditions for fundraisings; and

·     the Directors are recommending that Shareholders disapply pre-emption rights (in the terms set out in the resolution) in order to permit the Placing to be effected on a timely basis and to avoid the timetabling, and uncertainty of funding, issues associated with effecting a pre-emptive offer.

Resolution 5 - an ordinary resolution of Independent Shareholders to approve the related party transactions arising from the participation of Aberforth Partners LLP and Legal and General Investment Management Ltd in the Placing. This resolution is conditional on the passing of Resolutions 1, 2, 3 and 4.

Resolution 6- an ordinary resolution of Shareholders to approve the Placing being effected at the Placing Price, which represents a greater than 10 per cent. discount to the middle market closing price of 7.75 pence per Ordinary Share on 26 August 2015 (being the Business Day immediately prior to the Announcement), such approval being required, in accordance with Listing Rule 9.5.10R(3).

Importance of the vote

The Company is of the opinion, that, taking into account the Proposals (including the net proceeds of the Placing receivable by the Company), the working capital of the Group is sufficient for its present requirements, that is, for at least the period of 12 months from the date of the Circular.

Shareholders should note that, unless all of the Resolutions are passed by Shareholders at the General Meeting, none of the Proposals can be implemented, with the result that the Placing will not occur and the Company will not receive the Placing proceeds.

In the event that all of the Resolutions are passed by Shareholders at the General Meeting, but the 90,000,000 Placing Shares are not admitted to trading on AIM, the Placing will not occur and the Company will not receive the Placing proceeds.

In those circumstances, the Company would not have sufficient working capital to be able to trade as a going concern (with the shortfall in working capital for the period of 12 months from the date of the Circular being approximately £3.4 million) and it is highly likely that the Directors would need (in order to fulfil their duties to the Company's creditors (and to other applicable stakeholders)) to place the Company into administration forthwith (or as soon as is practicable) following the General Meeting. It is not anticipated that there would be any return to Shareholders from such an administration.

In light of the above, the Directors believe that the Proposals are in the best interests of the Company and of the Shareholders as a whole and that it is important that Shareholders vote in favour of the Resolutions, so that the Proposals can be implemented and the net proceeds of the Placing received by the Company.

Recommendation

The Board believes that the Proposals are in the best interests of the Company and of Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolutions set out in the Notice of General Meeting, as the Directors intend to do in respect of their own beneficial holdings amounting to, in aggregate, 475,640 Ordinary Shares representing approximately 0.45 per cent. of the total voting rights as at 25 September 2015, being the latest practicable date prior to the publication of the Circular.

Shareholders should note that, unless all the Resolutions are passed by Shareholders at the General Meeting, none of the Proposals will be implemented. In such circumstances Admission and the Placing will not occur, the Company will remain trading on the Main Market and the consequences summarised in the "Importance of the vote" section of paragraph 16 of this Chairman's Letter contained in the Circular will become applicable. In the light of this, the Directors believe that it is important that Shareholders vote in favour of the Resolutions, so that the Proposals can be implemented.

DEFINITIONS

The following definitions and technical terms apply throughout this announcement, unless the context otherwise requires:

"2006 Act" or "Companies Act"	the Companies Act 2006
"Admission"	the admission of the entire issued ordinary share capital of the Company (comprising the New Ordinary Shares and the Placing Shares) to trading on AIM in accordance with the AIM Rules for Companies
"AIM"	the AIM market operated by the London Stock Exchange
"AIM Designated Market"	a market whose name appears on the latest publication by the London Stock Exchange of the document entitled "The AIM Designated Market Route" and which includes the Official List
"AIM Rules"	the AIM Rules for Companies and the AIM Rules for Nominated Advisers
"AIM Rules for Companies"	the rules which set out the obligations and responsibilities in relation to companies whose shares are admitted to AIM as published by the London Stock Exchange from time to time
"AIM Rules for Nominated Advisers"	the rules which set out the eligibility, obligations and certain disciplinary matters in relation to nominated advisers as published by the London Stock Exchange from time to time
"Announcement"	means the announcement by the Company dated 27 August 2015 in respect of the proposed Delisting, Placing, Capital Reorganisation and Admission
"Business Day"	any day on which the London Stock Exchange is open for the transaction of business
"Cancellation" or "Delisting"	the proposed cancellation of the listing of the Existing Ordinary Shares on the Official List and from trading on the Main Market
"Cancellation and Admission Resolution"	resolution 1 set out in the Notice of General Meeting to approve the Cancellation and Admission
"Capital Reorganisation"	the proposed sub-division and reclassification of the Existing Ordinary Shares into New Ordinary Shares and Deferred Shares, further details of which are set out in paragraph 11 of the letter from the Chairman contained in the Circular
"Deferred Shares"	the new deferred shares of 9.9 pence each in the capital of the Company created pursuant to the Capital Reorganisation
"Directors" or "Board"	the existing directors of the Company, whose names are set out on page 10 of the Circular
"Existing Ordinary Shares"	ordinary shares of 10 pence each in the capital of the Company
"FCA"	the Financial Conduct Authority
"FSMA"	the Financial Services and Markets Act 2000, as amended from time to time
"General Meeting"	the general meeting of the Company convened for 12 noon  on 15 October 2015 at the offices of Panmure Gordon at 1 New Change, London EC4M 9AF by the Notice of General Meeting
"Group"	the Company and its subsidiaries
"Independent Shareholders"	all of the Shareholders other than Aberforth Partners LLP and Legal and General Investment Management Ltd
"Listing Rules"	the listing rules and regulations published by the UKLA acting under Part VI of FSMA as amended from time to time
"London Stock Exchange"	London Stock Exchange plc
"Main Market"	the London Stock Exchange's main market for listed securities
"Move to AIM"	the Cancellation and Admission
"New Articles"	the new articles of association proposed to be adopted by the Company pursuant to Resolution 2, further details of which are contained in the Circular
"New Ordinary Shares"	the ordinary shares of 0.1 pence each in the capital of the Company following the sub-division of the Existing Ordinary Shares pursuant to the Capital Reorganisation
"Nominated Adviser"	nominated adviser, as required by the AIM Rules
"Notice of General Meeting"	the notice of General Meeting set out at the end of the Circular
"Official List"	the list maintained by the UKLA in accordance with section 74(1) of FSMA for the purposes of Part VI of FSMA
"Ordinary Shares"	the Existing Ordinary Shares or, following the Capital Reorganisation, the New Ordinary Shares, as the context requires
"Panmure Gordon"	Panmure Gordon (UK) Limited, the Company's financial adviser and broker and proposed nominated adviser and broker to the Company from Admission
"Placing"	the proposed placing by Panmure Gordon on behalf of the Company of the Placing Shares
"Placing Agreement"	the agreement between the Company and Panmure Gordon dated 27 August 2015 in relation to the Placing
"Placing Price"	the price of 5.0 pence per Placing Share
"Placing Shares"	90,000,000 New Ordinary Shares conditionally placed pursuant to the Placing with investors that will be allotted pursuant to the Placing, subject to (inter alia) the passing of the Resolutions and the Move to AIM
"Proposals"	the Move to AIM, the Capital Reorganisation (and adoption of the New Articles) and the Placing
"Related Party Transaction"	the proposed participation in the Placing by Aberforth Partners LLP and Legal and General Investment Management Ltd, both substantial shareholders (as defined in Listing Rule 11.1.4A) of the Company, as described in paragraph 10 of the letter from the Chairman contained in the Circular
"Regulation S"	Regulation S under the Securities Act
"Resolutions"	the resolutions set out in the Notice of General Meeting
"Securities Act"	the United States Securities Act of 1933, as amended
"Shareholder"	a holder of Ordinary Shares from time to time
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland
"UKLA"	the FCA, acting in its capacity as the competent authority for the purposes of Part VI of FSMA
"UK Corporate Governance Code"	the UK Corporate Governance Code published by the Financial Reporting Council, as in force from time to time

IMPORTANT INFORMATION

This announcement has been issued by, and is the sole responsibility of, the Company. This announcement is for information only and does not constitute or form part of an offer or invitation to underwrite, subscribe for or otherwise acquire or dispose of any securities or investment advice in any jurisdiction.

THIS ANNOUNCEMENT IS NOT INTENDED, AND SHOULD NOT BE CONSTRUED, AS AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION. SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION. THE PLACING SHARES DESCRIBED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE LAWS OF ANY STATE OF THE UNITED STATES OR ANY JURISDICTION THEREOF, AND MAY NOT BE OFFERED, SOLD, RE-SOLD, TRANSFERRED OR DELIVERED, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, ABSENT REGISTRATION OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION IN THE UNITED STATES.

The distribution of this announcement and the Placing of the Placing Shares as set out in this announcement in certain jurisdictions may be restricted by law. No action has been taken that would permit an offering of such shares or possession or distribution of this announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by the Company to inform themselves about, and to observe, such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements are based on the Company's current expectations and projections about future events and can be identified by the use of a date in the future or forward-looking terminology, including, but not limited to, the terms "may", "believes", "estimates", "plans", "aims", "targets", "projects", "anticipates", "expects", "intends", "will", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts and include statements regarding the Company's intentions, beliefs or current expectations. They are not guarantees of future performance. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements. Any forward-looking statements in this announcement reflect the Company's view with respect to future events as at the date of this announcement and are subject to risks relating to future events and the Company's operations, results of operations, financial condition, growth, strategy, liquidity and the industry in which the Company operates. No assurances can be given that the forward-looking statements in this announcement will be realised. Neither the Company nor Panmure Gordon (UK) Limited ("Panmure Gordon") undertake any obligation, nor do they intend, to revise or update any forward-looking statements in this announcement to reflect events or circumstances after the date of this announcement (except, in the case of the Company, to the extent required by the FCA, the London Stock Exchange or by applicable law, the Listing Rules, the AIM Rules for Company or the Disclosure Rules and Transparency Rules). None of the future projections, expectations, estimates or prospects in this announcement should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct or exhaustive or, in the case of the assumptions, fully stated in the announcement. As a result of these risks, uncertainties and assumptions, prospective investors should not place undue reliance on these forward-looking statements as a prediction of actual results or otherwise. Forward-looking statements in this announcement are current only as of the date on which such statements are made.

Panmure Gordon, which is regulated in the United Kingdom by the FCA, is acting solely for the Company in relation to the Placing and nobody else and will not be responsible to anyone other than the Company for providing the protections afforded to the clients of Panmure Gordon nor for providing advice in relation to the Placing or any other matter referred to in this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed upon Panmure Gordon by the Financial Services and Markets Act 2000 or the regulatory regime established thereunder, Panmure Gordon does not accept any responsibility whatsoever or make any representation or warranty, express or implied, concerning the contents of this announcement, including its accuracy, completeness or verification, or concerning any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Placing Shares or the Placing and nothing in this announcement is, or shall be relied upon as, a warranty or representation, express or implied, in this respect, whether as to the past or future. Panmure Gordon its affiliates and its and their respective directors, employees and advisers accordingly disclaim, to the fullest extent permitted by law, all and any responsibility and liability whether arising in tort, contract or otherwise (save as referred to herein) which any of them might otherwise have in respect of this announcement or any such statement.

Any indication in this announcement of the price at which Placing Shares have been bought or sold in the past cannot be relied upon as a guide to future performance. No statement in this announcement is intended to be a profit forecast and no statement in this announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company. The price of Placing Shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the Placing Shares.

The Placing Shares to be issued pursuant to the Placing will not be admitted to trading on any stock exchange other than AIM.

Neither the content of the Company's website (or any other website) nor any website accessible by hyperlinks to the Company's website is incorporated in, or forms part of, this announcement.

ENDS

 

END

 

 

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