TIDMSVCA
RNS Number : 8903N
Servoca PLC
14 May 2018
This announcement contains inside information
Servoca plc
("Servoca", the "Company" or the "Group")
Proposed cancellation of admission to trading on AIM
Servoca, the AIM listed specialist outsourcing and recruitment
solutions provider, announces that it is proposing to cancel the
admission to trading on AIM of its Ordinary Shares.
A circular will shortly be published and sent to all
Shareholders setting out further details of the Delisting and the
implications for Shareholders. The Circular will also contain a
notice convening a general meeting which is to be held at Audrey
House, 16-20 Ely Place, London EC1N 6SN at 11:30 a.m. UK time on 11
June 2018 at which the approval of Shareholders of the Delisting
will be sought. In the event that Shareholders approve the
Delisting it is anticipated that trading in the Ordinary Shares on
AIM will cease at close of business on 18 June 2018 and
cancellation of admission to trading on AIM of the Ordinary Shares
will become effective at 7:00 a.m. UK time on 19 June 2018.
Attached below are extracts from the Chairman's letter contained
in the Circular.
For further information, please visit www.servoca.com or
contact:
Enquiries
Servoca
Andy Church
Chris Hinton 020 7747 3030
N+1 Singer
Alex Price 020 7496 3000
Newgate Threadneedle
Bob Huxford 020 7653 9850
Background to the Cancellation
The Directors believe that, for at least the period of 12 months
preceding the date of this document, the performance of the
Company's share price has been disappointing. The Directors believe
that the improved financial performance of the Group, the
underlying stability of the markets in which it operates and the
strength of the Company's management team have not been adequately
reflected in the value attributed by the public market to the
Company's Ordinary Shares.
The current trading value attributed to the Ordinary Shares has
led the Directors to question whether the retention of an AIM
listing remains in the best interests of the Company.
The Directors believe that there are multiple reasons for this
under-valuation but, with over 80 per cent of the Ordinary Shares
held by current or immediately past members of the Board and their
connected parties, specifically include a severe lack of liquidity.
This is evidenced by the fact that less than 10% of the Ordinary
Shares have been traded in the last two years.
Through its share buyback programme, which commenced in October
2013, the Company has purchased an aggregate of 3,921,868 Ordinary
Shares at a cost of GBP928,000 in circumstances where there was no
alternative buyer in the market. Approximately two thirds of these
shares were purchased in the last two years. Without this support,
the Directors believe the trading price of the Ordinary Shares
would have reduced further and faster since, during this period,
the Company has been the major purchaser of shares in the public
market place. The Company sought to address this issue by
appointing a new broker and nominated advisor to find new buyers of
the Company's shares. However, this action has not, to date,
resulted in any material change in the number of prospective buyers
of the shares. The Directors do not believe this position is
sustainable.
In the likely event that the Ordinary Shares remain
under-valued, the Directors do not therefore believe it would be in
the Company's or the Shareholders' best interests to issue
additional Ordinary Shares to fund future growth or as
consideration for acquisitions. The Board consider these are among
the principal benefits of maintaining the listing on AIM.
In addition to the above, the Directors also believe that the
costs of remaining listed on AIM could be better spent within the
business. The cost involved with being a compliant Company from a
regulatory perspective and with maintaining the Company's admission
to trading are, in the Directors' opinion, disproportionate to the
current benefits to the Company.
The Directors believe that the Delisting will, accordingly,
reduce the Company's recurring administrative costs by
approximately GBP150,000 per annum and that this, together with the
cessation of the share buyback programme, will allow the
substantial amount of such expenses to be better spent in running
and growing the business in a private capacity.
After careful consideration of the matters laid out above, the
Directors have therefore concluded that the commercial
disadvantages of maintaining a listing outweigh the potential
benefits. It is therefore no longer in the Company's or its
Shareholders' best interests to maintain the admission to trading
on AIM of the Shares.
Current trading
The Board confirms that underlying trading at the half-year
remained consistent with internal expectations with revenues and
Adjusted Profit Before Tax in line with prior year. The Board
remains of the view that the Group's balanced and diversified
portfolio will continue to provide growth opportunities.
Process for Delisting
In accordance with Rule 41 of the AIM Rules, the Company has
notified the London Stock Exchange of the intention to delist,
subject to Shareholder approval, giving twenty business days'
notice. Under the AIM Rules, it is a requirement that the Delisting
is approved by not less than 75 per cent of votes cast by
Shareholders (in person or by proxy) at the General Meeting.
Subject to the Resolution approving the Delisting being passed at
the General Meeting, it is anticipated that trading in the Ordinary
Shares on AIM will cease at the close of business on 18 June 2018
with the Delisting taking effect at 7.00 a.m. on 19 June 2018.
Upon the Delisting becoming effective, N+1 Singer will cease to
be nominated adviser and broker to the Company and the Company will
no longer be required to comply with the rules and corporate
governance requirements to which companies admitted to trading on
AIM are subject, including the AIM Rules.
Irrevocable undertakings
Certain Shareholders have each irrevocably undertaken to
exercise (or procure the exercise of) the voting rights in respect
their respective interests in 97,654,229 Ordinary Shares in
aggregate (representing 80.28 per cent of the Ordinary Shares in
issue with voting rights) in favour of the Resolution to be
proposed at the General Meeting. A table of such Shareholders is
set out below:
Shareholder Number of Ordinary Percentage of issued
Shares share capital with
voting rights
Hawk Investment Holdings
Limited 31,862,481 26.19
Groundlinks Limited 16,966,162 13.95
Seraffina Holdings Limited 16,054,659 13.20
Retro Grand Limited 12,540,000 10.31
Southwind Limited 1,350,000 1.11
Hawk Pension Fund Limited 545,000 0.45
Andrew Church 6,889,413 5.66
Emma Caplan 6,551,514 5.39
John Foley 4,895,000 4.02
Total 97,654,229 80.28
Principal effects of the Cancellation
Following the Cancellation of trading in the Company's shares on
AIM, the Ordinary Shares will not be traded on any public market
and the CREST facility will be cancelled. Consequently, there can
be no guarantee that a Shareholder will be able to purchase or sell
Ordinary Shares. However, as mentioned under the "Dealing and
settlement arrangements" section below, the Directors intend to use
their reasonable endeavours to put in place a process that will
match any Shareholders who wish to sell their holdings with
potential buyers.
It is possible that following publication of this document, the
liquidity and marketability of the Ordinary Shares may be
significantly reduced and the value of such shares may be adversely
affected as a consequence.
Although the Ordinary Shares will remain transferable they will
cease to be transferable through CREST. Those shareholders who
currently hold Ordinary Shares in uncertificated form in CREST
will, following the Delisting becoming effective, be sent a share
certificate for those Ordinary Shares which were previously held in
uncertificated form and such share certificates will be despatched
by the end of June 2018.
The Company will not be subject to the AIM Rules and,
accordingly, it will not (amongst other things) be required to
retain a nominated adviser or to comply with the requirements of
AIM in relation to annual accounts and half-yearly reports, the
disclosure of price sensitive information or the disclosure of
information on corporate transactions.
Shareholders should note that that Takeover Code will continue
to apply to the Company following the Cancellation.
Following the Cancellation, Hawk Investment Holdings Limited and
related parties will (through holdings in Hawk Investment Holdings
Limited, Groundlinks Limited, Seraffina Holdings Limited and Retro
Grand Limited) together hold, in aggregate, Ordinary Shares
representing 63.64 per cent. of the issued voting ordinary share
capital of the Company and, as such, will be able to exercise
significant influence over matters requiring Shareholder
approval.
All of the current Board members will remain in place following
Cancellation.
Dealing and settlement arrangements
The Directors are aware that Shareholders may wish to acquire or
dispose of shares in the Company following the Delisting.
Accordingly, the Board intends to put in place an internal process
that will allow Shareholders or persons wishing to acquire or sell
Ordinary Shares to leave an indication that they are prepared to
buy or sell at an agreed price. The Company will then use its
reasonable endeavours to contact those parties that are willing to
buy and sell in order that they may discuss effecting the
bargain.
Once such a procedure has been put in place details will be made
available to Shareholders on the Company's website
(www.servoca.com). It is expected that this will take place shortly
after the Cancellation.
Transfers of interests in shares in certificated form should be
sent to the Company's registrars, Link Asset Services, 34 Beckenham
Road, Beckenham, BR3 4TU. Existing share certificates remain
valid.
If Shareholders wish to buy or sell Ordinary Shares on AIM they
must do so prior to the Cancellation becoming effective. As noted
above, in the event that Shareholders approve the Cancellation, it
is anticipated that the last day of dealings in the Ordinary Shares
on AIM will be 18 June 2018 and that the effective date of the
Cancellation will be 19 June 2018.
Recommendation
For the reasons set out above, the Directors believe that the
Delisting is the best interests of the Company and of Shareholders
as a whole. Accordingly, the Directors unanimously recommend
Shareholders to vote in favour of the Resolution.
Definitions
"Admission" the admission of the Ordinary Shares to
trading on AIM
"Act" the Companies Act 2006, as amended
"Adjusted Profit Before profit before taxation, amortisation, share
Tax" based payments, contingent consideration
payments and other exceptional charges
"AIM" the AIM Market operated by the London Stock
Exchange
"AIM Rules" the AIM Rules for companies admitted to
trading on AIM published by the London Stock
Exchange, as amended from time to time
"Cancellation" or the proposed cancellation of the Company's
"Delisting" Ordinary Shares from trading on AIM subject
to the passing of the Resolution at the
General Meeting
"Circular" the circular to be sent to Shareholders
and including the notice of General Meeting
"CREST" the relevant system (as defined on the Regulations)
in respect of which Euroclear UK & Ireland
Limited is the Operator (as defined in the
Regulations)
"Directors" or "Board" the directors of the Company
"Form of Proxy" the form of proxy for use in connection
with the General Meeting
"General Meeting" the general meeting of the Company to be
convened for 11:30 a.m. on 11 June 2018
"Group" Servoca and its subsidiaries
"London Stock Exchange" London Stock Exchange plc
"N+1 Singer" Nplus1 Singer Advisory LLP
"Ordinary Shares" ordinary shares of 1 penny each in the capital
of the Company
"Regulations" the Uncertificated Securities Regulations
2001 (SI 2001 No. 3755), as amended from
time to time
"Resolution" the resolution set out in the notice of
General Meeting
"Servoca" Servoca plc
"Shareholders" the holders of the Ordinary Shares
"Takeover Code" the City Code on Takeovers and Mergers
Expected timetable of principal events
Circular and Form of Proxy posted to Shareholders 14 May 2018
Latest time and date for receipt of completed 11:30 a.m. on 7
Forms of Proxy to be valid for the General June 2018
Meeting of the Company
Date and time of General Meeting 11:30 a.m. on 11
June 2018
Expected last day for dealings in the Ordinary 18 June 2018
Shares on AIM*
Cancellation of admission of the Ordinary 07:00 a.m. on 19
Shares to trading on AIM* June 2018
*Assumes that the Resolution to approve the Cancellation is
passed by the appropriate majority at the General Meeting.
Dates set out against events that are expected to occur after
the date of the General Meeting assume that the General Meeting is
not adjourned and that the Resolution is passed at the General
Meeting.
Each of the times and dates above is subject to change. If any
of the above times and/or dates change, the revised times and/or
dates will be notified to Shareholders by announcement on a
Regulatory Information Service.
References to time in this announcement relate to London time
unless otherwise stated.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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May 14, 2018 02:00 ET (06:00 GMT)
Servoca (LSE:SVCA)
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