REG - TheWorks.co.uk PLC - Proposed Delisting, Admission to AIM, Notice of GM

Works co ukAnnouncement

19/03/2024 11:15

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RNS Number : 4333H  TheWorks.co.uk PLC  19 March 2024

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR
FROM THE UNITED STATES OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
EU REGULATION 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF
THE EUROPEAN UNION (WITHDRAWAL) ACT 2018

 

19 March 2024

TheWorks.co.uk plc

("The Works", the "Company" or the "Group")

 

Proposed cancellation of Ordinary Shares from the Official List, proposed
application for admission to trading on AIM and Notice of General Meeting

Intention to move to AIM

The Board of The Works announces that it is proposing to cancel admission of
the Company's Ordinary Shares to the premium segment of the Official List and
to cease trading on the London Stock Exchange's Main Market for listed
securities ("Main Market") ("Delisting") and apply for the admission of the
Company's Ordinary Shares to trading on AIM ("AIM Admission").

The Company listed on the London Stock Exchange on 19 July 2018. The Directors
have carefully considered whether the continued admission of its Ordinary
Shares to listing on the premium segment of the Official List and to trading
of its Ordinary Shares on the Main Market is in the best interests of
Shareholders. The Directors have concluded that AIM is a more appropriate
market for The Works for the reasons set out under the heading "Background to
and reasons for the Delisting and AIM Admission" in Appendix II to this
announcement.

Carolyn Bradley, Chair of The Works, said: "Our proposed move to AIM follows
months of careful consideration. We believe AIM to be a more appropriate
market for The Works, partly due to our current size but also because of the
efficiencies to be gained when compared to the Main Market's increasing cost
and regulatory requirements. Many of our major shareholders are supportive of
the move and we are optimistic that the expected cost savings and access to
alternative groups of investors should help to increase shareholder value."

Shareholder circular, Listing Rule requirements and General Meeting

A circular to Shareholders (the "Circular") is expected to be posted later
today containing details of the proposed Cancellation and Admission.

Under the Listing Rules, the Delisting requires the prior approval of a
resolution (the "Resolution") by Shareholders in a General Meeting, passed by
not less than 75 per cent. of those Shareholders who vote in person or by
proxy. If approved by Shareholders, it is anticipated that the effective date
of the Delisting and AIM Admission will be 3 May 2024, being not less than 20
business days from the passing of the Resolution.

The Circular contains a notice convening a General Meeting of Shareholders to
be held at the offices of Squire Patton Boggs (UK) LLP at 60 London Wall,
London, EC2M 5TQ at 9.30 a.m. on 4 April 2024 at which the Resolution will be
proposed as a special resolution to approve the Delisting and AIM Admission.

The Circular will be made available shortly on the Company's website at
https://corporate.theworks.co.uk/investors/
(https://corporate.theworks.co.uk/investors/) and will be submitted to the
National Storage Mechanism where it will shortly be available to view at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .

 

FY24 year-end date

The Directors announce that the Company's current financial year ("FY24")
will, as is permitted under the Companies Act, be extended by one week. The
FY24 annual report and accounts for the Group will therefore be drawn up for
the 53-week period ending 5 May 2024. The Company's accounting reference date
will remain 30 April.

Working capital statement required by the AIM Rules

As part of the AIM Admission, the AIM Rules for Companies ("AIM Rules")
require a statement that the Directors have no reason to believe that the
working capital available to the Group will be insufficient for at least
twelve months from AIM Admission. The Directors are pleased to confirm that
HSBC Bank UK plc ("HSBC") has agreed to re-set the fixed charge covenant under
the Group's banking facility with HSBC with effect from AIM Admission, thereby
creating (as explained in further detail in Appendix II to this announcement)
additional headroom in the downside case scenario and further supporting the
basis on which the Directors can make the working capital statement in the
required form in the Schedule One Announcement.

 Enquiries:

 TheWorks.co.uk plc

 Gavin Peck, CEO                             via Sanctuary Counsel

 Rosie Fordham, CFO

 Singer Capital Markets (Nomad and Broker)

 Peter Steel                                 020 7496 3000

 Alaina Wong

 Jalini Kalaravy

 Sanctuary Counsel (PR Adviser)

 Ben Ullmann                                 020 7340 0395

 Rachel Miller                               theworks@sanctuarycounsel.com

 Kitty Ryder

 

 

Appendix I - Expected Timetable of Key Events

 Publication of the Circular                                                19 March 2024
 Latest time and date for receipt of completed Forms of Proxy               9.30 a.m. on 2 April 2024
 Record time and date for entitlement to vote at the General Meeting        6.30 p.m. on 2 April 2024
 Time and date of General Meeting                                           9.30 a.m. on 4 April 2024
 Publication of Schedule One Announcement                                   4 April 2024
 Last day of dealings in the Ordinary Shares on the Main Market             2 May 2024
 Cancellation of the listing of the Ordinary Shares from the Official List  8.00 a.m. on 3 May 2024
 becomes effective
 Admission of, and commencement of dealings in, the Ordinary Shares on AIM  8.00.m. on 3 May 2024

 

Notes:

If any of the above times and/or dates change, the revised times and/or dates
will be notified to Shareholders by way of an announcement on a Regulatory
Information Service. References in this document to time are to London time,
unless specified otherwise.

 

Appendix II - Extracts from the Circular

INTRODUCTION

The Company announced on 19 March 2024 proposals to apply for the admission of
its Ordinary Shares to trading on AIM under AIM's streamlined admission
process for companies that have had their securities traded on the Official
List, known as the "AIM Designated Market" route. The Company also announced
its intention to cancel the admission of the Ordinary Shares to listing on the
Official List (premium segment) and to trading on the London Stock Exchange's
main market for listed securities, such Delisting and AIM Admission to take
effect simultaneously.

The Directors believe that AIM provides a regulatory regime which is more
appropriate to the Company's current size and structure. Subject to, amongst
other things, the Resolution being passed at the General Meeting, it is
anticipated that the effective date of the Delisting and AIM Admission will be
3 May 2024, and that the Ordinary Shares will be admitted to trading on AIM on
or around 8.00 a.m. on 3 May 2024.

As the Ordinary Shares have been listed on the premium segment of the Official
List for more than 18 months, the Company is not required to publish an
admission document in connection with AIM Admission. However, the Company
will, subject to the passing of the Resolution at the General Meeting, publish
an announcement which complies with the requirements of Schedule One to the
AIM Rules comprising information required to be disclosed by companies
transferring their securities from the Official List to AIM via the AIM
Designated Market route.

The Listing Rules require that where a company does not have a 'controlling
shareholder' (as such term is defined in the Listing Rules), which is
applicable in the Company's case, and it wishes to cancel its listing on the
Official List then it must seek the approval of not less than 75 per cent. of
its shareholders in a general meeting voting in person or by
proxy. Accordingly, a special resolution is being proposed at the General
Meeting to authorise the Board to cancel the listing of the Ordinary Shares on
the Official List and to remove such Ordinary Shares from trading on the Main
Market and to apply for admission of the Ordinary Shares to trading on AIM.

The General Meeting is to be held at the offices of Squire Patton Boggs (UK)
LLP at 60 London Wall, London EC2M 5TQ at 9.30 a.m. on 4 April 2024 for the
purpose of seeking such approval. A notice convening the General Meeting, at
which the Resolution will be proposed, is set out at the end of the Circular.

Singer Capital Markets Advisory LLP is acting as financial adviser in
connection with the Delisting and as nominated adviser in connection with AIM
Admission.

BACKGROUND TO AND REASONS FOR THE DELISTING AND AIM ADMISSION

The Company listed on the London Stock Exchange on 19 July 2018. The Directors
have carefully considered whether the continued listing on the Official List
and on the Main Market is in the best interests of Shareholders. The Directors
have concluded that AIM is a more appropriate market for The Works for the
following reasons:

·              the cost and regulatory requirements of the Main
Market have become progressively higher in recent years and are now
disproportionately burdensome for a business the size of The Works, and the
Directors do not feel there is any benefit to the Company remaining on the
Main Market. For example, with its low market capitalisation, the Company does
not benefit from its Ordinary Shares being included in index tracker funds,
nor does the Company expect to benefit from such inclusion of its Ordinary
Shares in the near future;

·              a move to AIM is expected to deliver a
significant cost saving, for example, in reduced audit fees as, on AIM, The
Works would no longer be classified a "Public Interest Entity" and the Company
could look to a broader range of firms to undertake the audit. There are no
practical disadvantages which the Board has identified, and the Directors are
optimistic that the expected savings will increase value for Shareholders;

·              AIM was launched in 1995 as the London Stock
Exchange's market specifically designed for smaller companies, with a more
appropriate regulatory regime, and has an established reputation with
investors and is an internationally recognised market;

 

·              companies whose shares trade on AIM are deemed to
be unlisted for the purposes of certain areas of UK taxation, including
possibly being eligible for relief from inheritance tax. Furthermore, stamp
duty is not payable on the transfer of shares that are traded on AIM and not
listed on any other market;

·              in addition to existing institutional investors,
given the possible tax benefits, admission to trading on AIM could make the
Company's shares more attractive to AIM specific funds, such as funds
investing in AIM companies that qualify for IHT Business Property Relief;

·              given the possible tax benefits mentioned above,
the Board believes that the Ordinary Shares may also appeal to certain retail
investors where, since 2013, shares traded on AIM can also be held in
Individual Saving Accounts (ISAs); and

·              whilst the Directors have no plans to undertake
corporate transactions in the foreseeable future, in the event that such
transactions are undertaken AIM currently offers greater flexibility, enabling
the Company to agree and execute certain transactions, such as fundraisings,
acquisitions and disposals, more quickly and cost effectively than a company
on the Official List.

Further details of the consequences of the Delisting and AIM Admission are set
out in Part II (Information on Delisting and AIM Admission) of the Circular.

Shareholders should note that following the Delisting becoming effective:

·              the regulatory regime which applies solely to
companies, such as the Company, with shares admitted to the premium segment of
the Official List and to trading on the London Stock Exchange's Main Market
for listed securities will no longer apply, including the requirement for
shareholder approval under the Listing Rules to approve transactions above a
certain size not in the ordinary course of business or with related parties.
Further details regarding certain aspects of the regulatory regime that would
no longer apply to such transactions are provided in Part II (Information on
Delisting and AIM Admission) of the Circular; and

·              the Delisting may have implications for
Shareholders holding Ordinary Shares in a Self-Invested Personal Pension
("SIPP"). For example, shares in unlisted companies (which includes companies
whose shares are admitted to trading on AIM) may not qualify for certain SIPPs
under the terms of that SIPP. If in any doubt, Shareholders should consult
with their SIPP provider immediately. Following AIM Admission, the Company
will be categorised for these purposes as unlisted.

INTERIM RESULTS

On 18 January 2024, the Company announced its unaudited interim results for
the 26 weeks ended 29 October 2023 and a trading update for the 11 weeks ended
14 January 2024 ("Interim Results Announcement"). The full text of the Interim
Results Announcement can be found the Company's website at
https://corporate.theworks.co.uk/investors/results-reports-and-presentations/
(https://corporate.theworks.co.uk/investors/results-reports-and-presentations/)
.

In the Interim Results Announcement Gavin Peck, Chief Executive Officer of The
Works, commented:

"Market conditions have been persistently challenging, putting pressure on our
sales and profit performance in the first half and throughout the festive
period. It is clear that many families celebrated Christmas on tighter budgets
this year, and whilst we offered excellent value, we were not immune to this
reduced spend. I am proud of the way that our colleagues have rallied together
to deliver for customers during these challenging times.

We have started the new calendar year on an improved sales trajectory, with a
strengthened leadership team to drive forward our strategy and exciting Easter
and summer toy ranges due to land later this year. However, we are also
mindful of external challenges, including recent supply chain disruption in
the Red Sea.

Our focus for the remainder of the year will be on cost reduction, rebuilding
margin and profitability, and conserving cash. It is necessary to take this
action now to stabilise the profitability of the business during this
challenging period, however we remain confident that our "Better, not just
Bigger" strategy is the right direction for the business and will enable a
return to sustainable growth in the long term."

 

WORKING CAPITAL STATEMENT REQUIRED BY THE AIM RULES

As part of the AIM Admission, the AIM Rules require a statement that the
Directors have no reason to believe that the working capital available to the
Group will be insufficient for at least twelve months from AIM Admission. The
statement is required to be included in the Company's Schedule One
Announcement.

Note 1(b) to the Interim Results Announcement ("Note 1(b)") explained the
basis of preparation of the interim financial statements on a going concern
basis. The narrative included a description of the cash flow forecasting
(referred to as the 'base case' scenario) that had been undertaken by the
Company in support of the Directors' conclusion that the going concern basis
at the time of the Interim Results Announcement remained appropriate. In
addition, a 'severe but plausible' 'downside case' sensitivity was prepared to
support the Directors' conclusion regarding going concern, by stress testing
the base case scenario to indicate the financial headroom resulting from
applying more pessimistic assumptions.

As described in Note 1(b), under the downside case scenario, (i) the Group
would expect to make routine operational use of its bank facility with HSBC
each year as stock levels are increased prior to peak sales occurring; (ii)
the bank facility financial covenants would expect to be complied with during
the period under review; and (iii) the business would continue to have
adequate resources to continue in operation. Under the downside case scenario,
the fixed charge covenant headroom at the quarterly testing points falling
within the going concern period was, however, described as limited and, as
such, reasonably plausible scenarios could arise in which this headroom could
be eroded and create a borrowing requirement. If such a borrowing requirement
arose when the financial covenants were not complied with, there was a risk
that the Group would not be able to utilise its borrowing facilities if
required.

The Directors are pleased to confirm that HSBC has agreed to re-set the fixed
charge covenant with effect from AIM Admission, thereby creating additional
headroom in the downside case scenario and further supporting the basis on
which the Directors can make the working capital statement in the required
form in the Schedule One Announcement.

DELISTING AND AIM ADMISSION

A summary of the key implications for Shareholders of the Company's proposed
move to AIM is set out at Part II (Information on Delisting and AIM Admission)
of the Circular. In order to effect the Move to AIM, the Company will require,
amongst other things, Shareholder approval of the Resolution at the General
Meeting. The Resolution, which is set out in the Notice of General Meeting at
the end of the Circular, will authorise the Board to cancel the listing of the
Ordinary Shares on the Official List, remove such Ordinary Shares from trading
on the Main Market and to apply for admission of the Ordinary Shares to
trading on AIM.

Conditional on the Resolution having been approved by Shareholders at the
General Meeting, the Company will apply to cancel the listing of the Ordinary
Shares on the Official List and their admission to trading on the Main Market.
The Company will also give 20 Business Days' notice to the London Stock
Exchange of its intention to seek AIM Admission under AIM's streamlined
admission process for companies that have had their securities traded on the
Official List via the "AIM Designated Market" route.

It is currently anticipated that, subject to the passing of the Resolution:

·              the last day of dealing in the Ordinary Shares on
the Main Market will be Thursday 2 May 2024;

·              cancellation of the listing of Ordinary Shares on
the Official List will take effect at 8.00 a.m. on Friday 3 May 2024, being
not less than 20 Business Days from the date of the General Meeting; and

·              AIM Admission will take place, and trading in the
Ordinary Shares will commence on AIM, at 8.00 a.m. on Friday 3 May 2024.

Following the Delisting and AIM Admission, Ordinary Shares that are held in
uncertificated form will continue to be held and dealt through CREST. Share
certificates representing those Ordinary Shares held in certificated form will
continue to be valid and no new Ordinary Share certificates will be issued.

CORPORATE GOVERNANCE

Since listing on the Main Market in 2018, The Works has been subject to the UK
Corporate Governance Code published by the Financial Reporting Council
applicable to all companies with a premium listing on the Official List.
Compliance with the UK Corporate Governance Code is not mandatory for
companies whose shares are admitted to trading on AIM.

AIM-quoted companies are required to state which corporate governance code
they will follow from admission and how they will comply with such code and to
explain reasons for any non-compliance. The Directors acknowledge the
importance of high standards of corporate governance and are committed to
continuing to update policies and procedures to strive for best practices in
governance affairs. The Directors have considered the corporate governance and
procedures that would be appropriate for the Company following AIM Admission,
taking into account the Company's size and structure and following AIM
Admission. If AIM Admission occurs, the Company will, as a minimum, comply
with the QCA Governance Code and, in addition, will retain much of the
additional governance arrangements currently in place to meet its requirements
to comply with the UK Corporate Governance Code, as the Board deems
appropriate and commensurate with the Company's size and structure.

GENERAL MEETING

The Delisting and AIM Admission is conditional on, amongst other things, the
passing of the Resolution at the General Meeting.

The Circular contains a notice convening a General Meeting of Shareholders to
be held at the offices of Squire Patton Boggs (UK) LLP at 60 London Wall,
London EC2M 5TQ at 9.30 a.m. on 4 April 2024 at which the Resolution will be
proposed as a special resolution to approve the Delisting and AIM Admission.

 

ACTION TO BE TAKEN

Whether or not you intend to attend the General Meeting in person, you are
requested to complete and submit a proxy appointment in accordance with the
notes to the Notice of General Meeting. Forms of Proxy for use at the General
Meeting should be completed and returned to the Company's Registrar, Equiniti
Limited, Aspect House, Spencer Road, Lancing BN99 6DA as soon as possible and,
in any event, so as to arrive by no later than 9.30 a.m. on 2 April 2024 (or,
if the General Meeting is adjourned, not later than 48 hours (excluding
non-working days) before the time fixed for the holding of the adjourned
meeting).

Shareholders can exercise their votes by submitting their Proxy Form by post
or electronically as soon as possible. Shareholders can vote electronically at
www.sharevote.co.uk (http://www.sharevote.co.uk) using the relevant reference
numbers printed on the Form of Proxy. Alternatively, Shareholders who have
already registered with the Registrar's online portfolio service, Shareview,
can submit their proxy electronically at www.shareview.co.uk
(http://www.shareview.co.uk) .

IRREVOCABLE UNDERTAKINGS

The Company has received irrevocable undertakings to vote in favour of the
Resolution to be proposed at the General Meeting from those Directors who hold
Ordinary Shares amounting, in aggregate, to 1,215,096 Ordinary Shares and
representing approximately 1.94 per cent. of the Company's issued share
capital as at the close of business on 18 March 2024 (being the latest
practicable date prior to publication of this announcement).

In addition, the Company has received an irrevocable undertaking to vote in
favour of the Resolution to be proposed at the General Meeting from Kelso
Group Holdings plc in respect of its holding of 3,745,000 Ordinary Shares and
representing approximately 5.99 per cent. of the Company's issued share
capital as at the close of business on 18 March 2024 (being the latest
practicable date prior to publication of this announcement).

Accordingly, the Company has received irrevocable undertakings to vote in
favour of the Resolution to be proposed at the General Meeting in respect of,
in aggregate, to 4,960,096 Ordinary Shares and representing approximately 7.93
per cent. of the Company's issued share capital as at the close of business on
18 March 2024 (being the latest practicable date prior to publication of this
announcement).

RECOMMENDATION

The Board considers that transferring the trading in Ordinary Shares from the
Main Market to AIM via the AIM Designated Market route is, in the Board's
opinion, in the best interests of Shareholders as a whole. Accordingly, the
Board unanimously recommends that you vote in favour of the Resolution to be
proposed at the General Meeting, as those Directors who hold Ordinary Shares
have irrevocably undertaken to do in respect of their own individual
beneficial holdings amounting, in aggregate, to 1,215,096 Ordinary Shares and
representing approximately 1.94 per cent. of the Company's issued share
capital as at the close of business on 18 March 2024 (being the latest
practicable date prior to publication of the Circular).

IMPORTANT INFORMATION

Unless otherwise stated, capitalised terms in this announcement have the same
meaning as in the Circular.

Forward-looking statements

This document contains forward-looking statements which are based on the
beliefs, expectations and assumptions of the Directors and other members of
senior management about the Company's business. All statements other than
statements of historical fact included in this document may be forward-looking
statements. Generally, words such as "will", "may", "should", "could",
"estimates", "continue", "believes", "expects", "aims", "targets", "projects",
"intends", "anticipates", "plans", "prepares", "seeks" or, in each case, their
negative or other variations or similar or comparable expressions identify
forward-looking statements.

These forward-looking statements are not guarantees of future performance, and
there can be no assurance that the expectations reflected in such
forward-looking statements will prove to have been correct. Rather, they are
based on the current beliefs, expectations and assumptions and involve known
and unknown risks, uncertainties and other factors, many of which are outside
the control of the Company and are difficult to predict, that may cause actual
results, performance, plans, objectives, achievements or events to differ
materially from those express or implied in such forward-looking statements.
Undue reliance should, therefore, not be placed on such forward-looking
statements.

New factors will emerge in the future, and it is not possible to predict which
factors they will be. In addition, the impact of each factor on the Company's
business or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those described in any
forward-looking statement or statements cannot be assessed, and no assurance
can therefore be provided that assumptions will prove correct or that
expectations and beliefs will be achieved.

Any forward-looking statement contained in this document based on past or
current trends and/or activities of the Company should not be taken as a
representation that such trends or activities will continue in the future. No
statement in this document is intended to be a profit forecast or to imply
that the earnings of the Company for the current year or future years will
match or exceed historical or published earnings of the Company.

Each forward-looking statement speaks only as at the date of this document and
is not intended to give any assurance as to future results. The Company and/or
its Directors expressly disclaim any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements contained
in this document as a result of new information, future events or other
information, except to the extent required by the Listing Rules, the
Disclosure Guidance and Transparency Rules, the rules of the London Stock
Exchange or by applicable law.

 

 

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