REG - CEPS PLC - Proposed Share Capital Reduction and Notice of AGM

CepsAnnouncement

01/03/2024 07:00

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RNS Number : 0245F  CEPS PLC  01 March 2024

1 March 2024

CEPS PLC

 ("CEPS" or the "Company")

 

Proposed Share Capital Reduction

Proposed Cancellation of the Share Premium Account

and

Notice of General Meeting

 

CEPS announces that later today it will post a circular (the "Circular") to
shareholders, incorporating a notice of a general meeting (the "General
Meeting"), regarding a proposed capital reduction.  The General Meeting will
be held at 11.00 am on 20 March 2024 at 11 Laura Place, Bath BA2 4BL.

The proposed share capital reduction and cancellation of the share capital
account, if approved by shareholders and subsequently by the Court, will
significantly reduce the historic deficit on the profit and loss account, and
help create distributable reserves, in the future, to enable the Company to
pay shareholders dividends or to be used for other valid corporate purposes,
such as purchases of its own shares.  However, in the immediate future the
Company has no plans to pay a dividend or to purchase its own shares, but the
Directors believe that it is appropriate to restructure the balance sheet to
permit them to do so should such plans be crystallised in the future.

The process comprises of the reduction of the entire amount standing to the
credit of the Company's share capital account (the "Share Capital Reduction")
and the nominal value of each ordinary share in issue will be reduced by
£0.097 on each issued ordinary share of £0.10, therefore reducing the
nominal value of each ordinary shares to £0.003.

Following the implementation of the Share Capital Reduction, there will be no
change in the number of ordinary shares in issue.

The Share Capital Reduction is conditional upon the passing of the special
resolution set out in the notice of General Meeting by the Company's
shareholders, as well as approval being obtained in the Court (the "Court").
It is expected that the final hearing of the application will take place on 30
April 2024.

If the Court makes the appropriate order, the Share Capital Reduction will
become effective when the order has been registered by the Registrar of
Companies which is expected to take place by 2 May 2024, depending on
processing times at Companies House.

It is expected that the Share Capital Reduction, if approved by shareholders
and subsequently the Court, will put the Company in a position to pay
dividends more quickly than it would have done had it not requested
Shareholder approval to the Share Capital Reduction.  This is subject to the
Company continuing to generate profits in the near term and, therefore,
eliminating the remaining historic deficit over time.

The Letter from the Chairman of CEPS as set out in the Circular is appended to
this announcement along with the defined terms used therein.

 

 

 

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 (which forms part of domestic UK law pursuant to the
European Union (Withdrawal) Act 2018).

 

The Directors of the Company accept responsibility for the content of this
announcement.

Enquiries

 

CEPS PLC

Vivien Langford, Group Finance Director

+44 1225 483030

 

Cairn Financial Advisers LLP

James Caithie / Sandy Jamieson / Emily Staples

+44 20 7213 0880

 

Caution regarding forward looking statements

 

Certain statements in this announcement, are, or may be deemed to be, forward
looking statements.  Forward looking statements are identified by their use
of terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect",
''will'' or the negative of those, variations or comparable expressions,
including references to assumptions.  These forward-looking statements are
not based on historical facts but rather on the Directors' current
expectations and assumptions regarding the Company's future growth, results of
operations, performance, future capital and other expenditures (including the
amount, nature and sources of funding thereof), competitive advantages,
business prospects and opportunities.  Such forward looking statements
reflect the Directors' current beliefs and assumptions and are based on
information currently available to the Directors.

 

 

LETTER FROM THE CHAIRMAN OF THE COMPANY

Introduction

The purpose of the Circular is to explain the details of and reasons for the
proposed share capital reduction and proposed cancellation of the share
premium account (together referred to as the "Share Capital Reduction") that
the Directors are proposing to undertake. To be implemented, the Share Capital
Reduction requires the approval of Shareholders in a general meeting.
Accordingly, at the end of the Circular, is a notice convening a general
meeting of the Company to consider, and if thought fit, to approve the Share
Capital Reduction.

 

Background to and reasons for the Share Capital Reduction

The Board is recommending the Share Capital Reduction in order to
significantly reduce the historic deficit on the profit and loss account, and
to help to create distributable reserves, in the future, to enable the Company
to pay Shareholders dividends or to be used for other valid corporate
purposes, such as purchases of its own shares. While the Company has no
immediate plans to pay a dividend or to purchase its own shares, the Directors
believe that it is appropriate to restructure the balance sheet to permit them
to do so should such plans be crystallised in the future. The unaudited
interim results published for the six month period ended 30 June 2023, showed
the Company's Group was profitable and cash generative, and as such, it hopes
to be in a position to build up additional profits in the medium term for
which it may not have a requirement and which can be used to eliminate the
remaining historic deficit on the profit and loss account, following
completion of the Share Capital Reduction.

 

As at the date of the Circular, the balance standing to the credit of the
Share Premium Account is £7,017,042.41. It is proposed that the Share Premium
Account be reduced in its entirety through the Share Capital Reduction and the
nominal value of each ordinary share in issue is reduced by £0.097 on each
issued ordinary share of £0.10 therefore reducing the nominal value of each
ordinary shares to £0.003. Following the implementation of the Share Capital
Reduction, there will be no change in the number of ordinary shares in issue.

 

If approved by Shareholders, and subsequently confirmed by the Court in the
terms proposed by the Board, the effect of the  Share Capital Reduction will
be to release all of the amount standing to the credit of the Share Premium
Account following the Share Capital Reduction so that £7,017,042.41 is
credited to the distributable reserves of the Company reducing the historic
deficit on the profit and loss account from £9,505,173.53 (as at 31 December
2023 based on unaudited unconsolidated figures) to £2,488,131.12. The
historic deficit on the profit and loss account will be further reduced by the
reduction in nominal value from £0.10 per Existing Ordinary Share to £0.003
per New Ordinary Share as part of the Share Capital Reduction making a further
£2,037,000 available to the Company as set out below, taking the historic
deficit to £451,131.12 (based on the unaudited unconsolidated figures as at
31 December 2023). Implementation of the Share Capital Reduction is subject to
a number of criteria and legal processes which are explained further below.

 

Share premium is treated as part of the capital of the Company and arises on
the issue by the Company of shares at a premium to their nominal value. The
premium element is credited to the Share Premium Account. The Company is
generally precluded from the payment of any dividends or other distributions
or the redemption or buyback of its issued shares in the absence of sufficient
distributable reserves, and the Share Premium Account can be applied by the
Company only for limited purposes.

 

In particular, the Share Premium Account is a non-distributable capital
reserve and the Company's ability to use any amount credited to that reserve
is limited by the Act. However, with the approval of its Shareholders by way
of a special Resolution and subsequent confirmation by the Court, a Company
may reduce or cancel its Share Premium Account and, in certain circumstances,
either return all or part of the sum arising to Shareholders as a return of
capital, or credit some or all of such sum arising to its profit and loss
account. To the extent that the release of such a sum from a Share Premium
Account creates or increases a credit on the profit and loss account, that sum
represents distributable reserves of the Company.

 

Given that the sum standing to the Share Premium Account of the Company
following the Share Capital Reduction is insufficient to eliminate the deficit
on the Company's profit and loss account in its entirety, the Company will not
be in a position to pay dividends immediately following the Share Capital
Reduction. However, if the Company continues to generate profits in the near
term, the remaining historic deficit will be eliminated over time, putting the
Company in a position to pay dividends more quickly than it would, had it not
requested Shareholder approval to the Share Capital Reduction.

 

Other than the change in nominal value, the New Ordinary Shares will have the
same rights as the Existing Ordinary Shares including voting, dividend and
other rights.

 

Given that there will be no change in the number of ordinary shares in issue
post the Share Capital Reduction, it is not anticipated that the market price
of the New Ordinary Shares immediately following the Share Capital Reduction
will differ from the market price of the Existing Ordinary Shares immediately
prior to the Share Capital Reduction.

 

 

                           Issued

                           No. of shares  Nominal amount
 At present:
 Existing Ordinary Shares  21,000,000     £2,100,000

 Proposed:
 New Ordinary Shares       21,000,000     £63,000

 

If a special resolution to reduce the Company's share capital is passed by
Shareholders, the Company will then seek the confirmation of the Court to the
Share Capital Reduction. It is expected that the final hearing of the
application will take place on 30 April 2024.

 

The Court will only sanction resolutions for the reduction of a Company's
share capital if it is satisfied that this will not prejudice the interests of
the creditors. The Company and the Directors will take such steps to satisfy
the Court in this regard as they consider appropriate. If the Court makes the
appropriate order, the Share Capital Reduction will become effective when the
order has been registered by the Registrar of Companies which is expected to
take place by 2 May 2024, depending on processing times at Companies House.

 

The Board has undertaken a thorough and extensive review of the Company's
liabilities (including prospective and contingent liabilities) and considers,
as at the date of the Circular, that the Company will be able to satisfy the
Court that, as at the date on which the Court Order relating to the Share
Capital Reduction and the statement of capital in respect of the Share Capital
Reduction have both been registered by the Registrar of Companies at Companies
House, the Company's creditors will not be prejudiced and/or will be
sufficiently protected to the satisfaction of the Court.

 

The Share Capital Reduction will not involve any distribution or repayment of
capital and will not reduce the underlying net assets of the Company.

 

The Board reserves the right to abandon or discontinue (in whole or in part)
the Share Capital Reduction and the application to the Court in the event that
the Board considers that the terms on which the Share Capital Reduction would
be (or would be likely to be) confirmed by the Court would not be in the best
interests of the Company and/or the Shareholders as a whole.

 

The Board proposes that the Resolution is passed approving these steps in
order to reduce the share capital of the Company.

 

The overall effect of the Share Capital Reduction will be to reduce the
nominal value from £0.10 per Existing Ordinary Share to £0.003 per New
Ordinary Share (making £2,037,000.00 available to the Company), to reduce the
Share Premium Account to nil (making £7,017,042.41 available to the Company),
and as a result of both of these steps shall reduce the deficit on the
Company's profit and loss account from £9,505,173.53 (based on the unaudited
unconsolidated figures as at 31 December 2023) to £451,131.12, while
maintaining the number of ordinary shares in issue at 21 million.

 

Overseas Shareholders

The implications of the Share Capital Reduction on Overseas Shareholders may
be affected by the laws of their respective jurisdictions. Overseas
Shareholders should inform themselves about and observe all applicable legal
requirements in such jurisdictions. It is the responsibility of Overseas
Shareholders to satisfy themselves as to the full observance of the laws of
each relevant jurisdiction in connection with the Share Capital Reduction,
including the obtaining of any governmental, exchange control or other
consents which may be required, compliance with other necessary formalities
which are required to be observed and/or the payment of any taxes due in each
jurisdiction. Overseas Shareholders who are in any doubt about their position
should consult their professional advisers in the relevant territory.

 

Taxation

The Directors have been advised that for the purposes of UK taxation of
chargeable gains, the receipt of the New Ordinary Shares arising from the
Share Capital Reduction will result from a reorganisation of the share capital
of the Company. Accordingly, a Shareholder should not be treated as making a
disposal of all or part of his holding of Existing Ordinary Shares by reason
of the Share Capital Reduction.

 

General Meeting

Your attention is drawn to the notice convening the General Meeting of the
Company, set out at the end of the Circular, to be held at 11.00 a.m. on 20
March 2024. At the General Meeting the following Resolution will be proposed:

 

1.     a special resolution to approve the Share Capital Reduction.

 

 

Action to be taken

You will find enclosed with the Circular a Form of Proxy in respect of the
General Meeting. Whether or not you propose to attend the General Meeting in
person, you are asked to complete the Form of Proxy and return it to the
Company's registrars, Share Registrars Limited, of 3 The Millenium Centre,
Crosby Way, Farnham, Surrey GU9 7XX, so as to arrive as soon as possible, but
in any event, so as not to be received any later than 11.00 a.m. on 18 March
2024. Completion and return of the Form of Proxy will not preclude you from
attending and voting at the General Meeting in person if you wish.

 

Recommendation

 

The Directors unanimously consider that the Share Capital Reduction is in the
best interests of the Company and the Shareholders as a whole.

 

Accordingly, your Directors unanimously recommend that you vote in favour of
the Resolution to be proposed at the General Meeting, as they intend to do in
respect of their own beneficial holdings which, in aggregate, amount to
6,709,000 Existing Ordinary Shares, representing approximately 31.95 per cent.
of the Company's existing issued ordinary share capital.

 

 

Yours faithfully,

 

 

 

David Horner

Chairman

 

 

DEFINITIONS

 Act                       the Companies Act 2006, as amended from time to time

 AIM                       AIM, a market of that name operated by the London Stock Exchange

 AIM Rules                 AIM Rules for Companies, as issued by the London Stock Exchange

 Board or Directors        the directors of the Company

 Circular                  the document to be sent to Shareholders on 1 March 2024

 Company or CEPS           CEPS PLC

 Company's Group           means CEPS, any subsidiary or any holding company, from time to time, of CEPS
 Court                     His Majesty's High Court of Justice in England

 Existing Ordinary Shares  ordinary shares of £0.10 each in the capital of the Company prior to the
                           Share Capital Reduction

 Form of Proxy             the form of proxy for use, by Shareholders, at the GM

 General Meeting or GM     the general meeting of the Company convened for 11.00 a.m. on 20 March 2024,
                           the notice of which will be sent to Shareholders today

 London Stock Exchange     London Stock Exchange Group Plc

 New Ordinary Shares       ordinary shares of £0.003 each in the capital of the Company resulting from
                           the Share Capital Reduction

 Overseas Shareholders     Shareholders who are citizens or nationals of, or who are resident in,
                           jurisdictions outside of the United Kingdom

 Registrars                Share Registrars Limited, the Company's registrars

 Resolution                the special resolution to be proposed at the General Meeting as set out in the
                           Notice of General Meeting

 Share Capital Reduction   the proposed reduction of the nominal value of Company's issued share capital
                           and the cancellation of the share premium account as set out in the Circular

 Share Premium Account     the share premium account of the Company to be reduced to nil as set out in
                           the Circular.

 Shareholders              holders of Existing Ordinary Shares and, on the Share Capital Reduction taking
                           effect, holders of New Ordinary Shares

 UK or United Kingdom      the United Kingdom of Great Britain and Northern Ireland

 

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