Proposed Cancellation


 

TIDMTTH 
 
RNS Number : 8532T 
Top Ten Holdings PLC 
15 June 2009 
 

Top Ten Holdings Plc 
("Top Ten" or the "Company") 
 
 
Proposed cancellation of trading of securities on AIM 
 
 
Further to the announcement of 22 April of the Company's intention to seek the 
cancellation of trading on AIM of its ordinary shares ("Cancellation"), Top Ten 
has today posted to its shareholders a circular convening a general meeting of 
the Company at which a resolution will be proposed to effect the Cancellation 
("General Meeting"). 
 
 
Background to and reasons for the Cancellation 
 
 
On 24 November 2008, the Company announced its interim results for the six 
months to 28 September 2008 which showed an operating profit of GBP0.07 million 
(after reorganisation costs of GBP0.3 million), a pre-tax loss of GBP1.36 
million (after finance costs of GBP1.43 million) and debt of GBP28.4 million. 
 
 
In November 2008 current trading remained unpredictable in difficult market 
conditions and it was considered unlikely that the Company would see any marked 
improvement in trading until the economy picked up and customers had more 
disposable income. The level of bank debt at GBP28.4 million was not considered 
to be sustainable and the Company had breached its loan covenants in June and 
September 2008 but the Company reported that it was holding constructive 
discussions with its bankers about how best to address the position. 
 
 
Given the above, and as part of the overall restructuring of the Company, the 
directors of Top Ten ("Directors") have determined that the Cancellation is in 
the interests of the Company for the following reasons: 
 
 
- As at the close of business on 12 June 2009 the Company had a market 
capitalisation of approximately GBP220,000; 
- Trading volumes in the Company's ordinary shares are very low - median daily 
volume on AIM over the two years to 21 April 2009, the last trading day prior to 
the announcement of the intention to seek cancellation, was 984 ordinary shares 
per day (approximately 0.004 per cent. of the current issued share capital). In 
the same period there were 209 trading days when no ordinary shares were traded 
on AIM; 
- the costs associated with maintaining trading on AIM (estimated at more than 
GBP130,000 per annum) are considered to be too high in relation to the benefits 
of trading on AIM and the Directors believe that these could be better utilised 
in running the business; and 
- the management time, legal and regulatory burden associated with maintaining 
the Company's trading on AIM is disproportionate to the benefit to the Company. 
 
 
 
 
Current Trading 
 
 
The audited results for the year to 31 March 2009 are expected to be posted to 
shareholders in August 2009. 
 
 
The unaudited management accounts for the year to 31 March 2009 show sales of 
GBP22.3 million (2008: GBP25.8 million); operating loss before non recurring 
costs of GBP0.3 million (2008 profit: GBP1.6 million); an operating loss after 
non recurring costs of GBP12.2 million (2008: GBP6.1 million) and a loss before 
tax of GBP15.1 million (2008: GBP8.9 million). 
 
 
The Directors believe that further restructuring of the business and the removal 
of unprofitable sites is necessary in order to reduce costs. In March 2009 the 
Company announced the closure of its site in Leeds and, in April 2009, the site 
in Fleetwood. 
 
 
 
 
VAT 
 
 
On 22 April 2009 as part of the Budget, the Chancellor announced that the 
Government proposed the abolition of VAT on bingo to bring it into line with the 
rest of the gaming industry. However, the rate of Bingo Duty was increased to 22 
per cent. (compared to 15 per cent. in betting shops) which the Company 
forecasts will result in approximately GBP680,000 in additional costs. 
 
 
The Company had previously made VAT refund claims totalling approximately GBP8 
million which splits into Fruit Machine income (GBP2.6 million) and Bingo income 
(GBP5.4 million). In addition as a result of the judgment in the Conde Nast 
case, the amount which the Company can claim has been extended and further 
claims have been made for an additional GBP5.2 million. The result of a recent 
VAT tribunal case between HMRC and another bingo operator confirms the Company's 
position regarding mechanised cash bingo and provides support to the position 
adopted on participation fees. However HMRC appealed the result of the tribunal 
and the case was heard in the High Court in March 2009 where the HMRC appeal was 
rejected. The Company should therefore receive a net payment of GBP2.7 million 
within 4 months and is in a stronger position to pursue the other claims. 
 
 
 
 
Dealings Following Cancellation 
 
 
The principal effects Cancellation would have on shareholders are: 
-there would no longer be a formal market mechanism enabling shareholders to 
trade their ordinary shares through the market and the CREST facility will be 
cancelled. Shareholders who currently hold ordinary shares in uncertificated 
form will receive share certificates in due course following the cancellation 
taking effect.  While the ordinary shares will remain freely transferable, they 
may be more difficult to sell compared to shares of companies admitted to 
trading on a public market.  It may also be more difficult for shareholders to 
determine the market value of their interests in the Company at any given time; 
-the Company would not be bound to announce material events, nor to announce 
interim or final results; 
-the Company would no longer be required to comply with any of the corporate 
governance requirements applicable to companies whose shares are admitted to 
trading on AIM; 
-the Company will no longer be subject to the Disclosure Rules and Transparency 
Rules of the Financial Services Authority and, inter alia, will no longer be 
required to disclose major shareholdings in the Company; 
-the Company will no longer be subject to the AIM Rules and shareholders will 
therefore no longer be afforded the protections given by the AIM Rules.  Such 
protections include the requirement to be notified of certain events including, 
amongst other things, substantial transactions and related party transactions 
and the requirement to obtain shareholder approval for reverse takeovers (the 
size of which results in a 100 per cent. threshold being reached under any one 
of the AIM class tests) and fundamental changes in the Company's business.  The 
Company will however remain subject to English company law, which mandates 
shareholder approval for certain matters; and 
-the Cancellation may have either positive or negative taxation consequences for 
shareholders. Shareholders who are in any doubt about their tax position should 
consult their own professional independent adviser immediately. 
The Directors are aware that shareholders may still wish to acquire or dispose 
of ordinary shares following Cancellation.  The Directors intend to make 
available a new matched bargain service.  Under this facility, shareholders or 
persons wishing to acquire ordinary shares will be able to leave an indication 
with the matched bargain settlement facility provider that they are prepared to 
buy or sell at an agreed price.  In the event that the matched bargain 
settlement facility provider is able to match that order with an opposite sell 
or buy instruction,  the matched bargain settlement facility provider will 
contact both parties and then effect the order. Shareholders will need to have 
their own broker and will need to register with the matched bargain settlement 
facility provider as a new client.  This can take some time to process and 
therefore shareholders who consider they are likely to avail themselves of this 
facility are encouraged to commence it at the earliest opportunity.  The contact 
details of the matched bargain settlement facility provider, once arranged, will 
be made available to shareholders on the Company's website at 
www.toptenbingo.com. Shareholders should note that following the Cancellation 
the Company will remain subject to the provisions of the City Code, on the basis 
set out in those provisions. 
 
 
 
 
Expected Timetable Of Events Leading To The Cancellation 
 
 
+----------------------------------------------+---------------------+-------------+ 
| Posting of circular containing notice convening the General        | 15 June     | 
| Meeting                                                            | 2009        | 
+--------------------------------------------------------------------+-------------+ 
| Latest time and date for receipt of form of  | 11.00 a.m. on 14 July 2009        | 
| proxy                                        |                                   | 
+----------------------------------------------+-----------------------------------+ 
| General Meeting                              | 11.00 a.m. on 16 July 2009        | 
+----------------------------------------------+-----------------------------------+ 
| Last day for dealings in Ordinary Shares on AIM                    | 22 July     | 
|                                                                    | 2009        | 
+--------------------------------------------------------------------+-------------+ 
| Cancellation of trading on AIM               | 7.00 a.m. on 23 July 2009         | 
+----------------------------------------------+---------------------+-------------+ 
 
 
 
 
Irrevocable Undertakings 
 
 
The Company has received irrevocable undertakings to vote in favour of the 
resolution to be proposed at the General Meeting from all of the Directors in 
relation to their holdings of ordinary shares and the holdings of their families 
and related companies and trusts for an aggregate 11,047,500 ordinary shares 
representing approximately 43.3 per cent. of the issued share capital of the 
Company. 
 
 
 
 
For Further Information 
 
 
+------------------------------------+------------------------------------+ 
| Top Ten Holdings Plc               | 01727 850793                       | 
+------------------------------------+------------------------------------+ 
| Sir Aubrey Brocklebank, Chairman   |                                    | 
+------------------------------------+------------------------------------+ 
| Graham Kerr, Chief Executive       |                                    | 
+------------------------------------+------------------------------------+ 
|                                    |                                    | 
+------------------------------------+------------------------------------+ 
| Astaire Securities Plc             | 020 7448 4400                      | 
+------------------------------------+------------------------------------+ 
| William Vandyk                     |                                    | 
+------------------------------------+------------------------------------+ 
|                                    |                                    | 
+------------------------------------+------------------------------------+ 
| Greycoat Communications            | 020 7960 6007                      | 
+------------------------------------+------------------------------------+ 
| Andrew Marshall                    |                                    | 
+------------------------------------+------------------------------------+ 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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