TIDMEKT
RNS Number : 7235C
Elektron Technology PLC
30 June 2016
Elektron Technology plc
("Elektron" or the "Company")
2016 Annual Report and Financial Statements and proposed Long
Term Incentive Plan
Elektron announces that it has today published its annual report
and financial statements for the year ended 31 January 2016
("Annual Report"). The Company also announces that its Annual
General Meeting ("AGM") will be held at 11.30am on Thursday 28 July
2016 at Madingley Hall, Madingley, Cambridge, CB23 8AQ. Both the
Annual Report and the Notice of Annual General Meeting (the
"Notice") will be posted to shareholders today and are available on
the Company's website www.elektron-technology.com.
The Remuneration Report in the Annual Report contains details of
a new Long term Incentive Plan ('NLTIP') which will replace the
existing Joint Ownership Share Plan ('JSOP').
The Remuneration Committee has sought to replace the JSOP with
the NLTIP by building on the previous scheme and enhancing it. The
NLTIP (developed in close consultation with the largest
shareholders) more closely aligns the interests of management with
those of all shareholders. The focus is on total cash generation
and total shareholder return over a three-year period. The NLTIP is
limited to John Wilson and Andy Weatherstone who do not currently
have significant shareholdings in the Company. The old LTIP (i.e.
JSOP) awards will be unwound.
These arrangements have the support of over 51.1% of
shareholders. A summary of the proposals is as follows:
Unwind of the JSOP
The existing JSOP awards take the form of interests in shares
(including voting rights) in the Company that are jointly owned by
the trustee (the 'Trustee') of the Elektron Technology 2012
Employee Benefit Trust ('EBT') and the relevant participant. The
participants were also granted stock appreciation rights which are
linked to their joint ownership interests. Keith Daley and John
Wilson invested approximately GBP65,000 in aggregate to acquire
their joint ownership interest.
The JSOP awards, which, if unexercised, were scheduled to unwind
in 2022, will be unwound with the agreement of the Trustee and all
of the participants. The Trustee will be requested to purchase all
the joint ownership interests held by each participant for a
consideration of one ordinary share in the Company for every four
jointly held shares held by the participant, subject to an external
valuation. The linked stock appreciation rights will also lapse. As
a result of these transactions Keith Daley and John Wilson will
receive 1,180,500 and 980,500 shares respectively.
Purchase of shares from the EBT
Keith Daley, John Wilson, one other shareholder and the Trustee
of the EBT are currently considered to be in a concert party under
Rule 9 of the Takeover Panel Rules. This limits their individual
ability to freely purchase shares in the open market but not from
other concert party members. The Remuneration Committee considers
it is desirable that Directors are able demonstrate their belief in
the Company by buying shares from time to time. Accordingly, it is
proposed that Keith Daley and John Wilson be permitted to acquire
from the Trustee at any time, at the higher of the mid-market price
at close of business on the immediately preceding dealing day or 5
pence, a maximum of 3,541,500 shares and 2,941,500 shares
respectively.
The Trustee currently holds 15,075,650 shares. Following the
unwind of the JSOP, 12,683,650 shares will remain outstanding, of
which 6,483,000 will be available for Keith Daley and John Wilson
to acquire in this way.
New LTIP
John Wilson and Andy Weatherstone will each receive awards
equivalent to 5m and 2.5m Elektron Technology plc shares
respectively. Each will only benefit to the extent that the share
price exceeds 10 pence, and the awards will vest after the
financial year 31 January 2019 (the Performance End Period) if the
following performance hurdles are met:
a) the consolidated cash balances exceed GBP8m after adding back
any cash distributions paid to shareholders and deducting all
consolidated Group financial liabilities and any net working
capital liabilities per the audited accounts; and
b) the share price (plus any cumulative cash distribution paid
to shareholders before the Performance End Period) is (i) greater
than 15 pence but less than 17.5 pence (in which case 75% of the
allocation vests), (ii) greater than 17.5 pence but less than 20
pence (in which case 85% of the allocation vests), and (iii)
greater than 20 pence (in which case 100% of the allocation vests).
The share price for these purposes will be a 90-day volume weighted
average measured from the date the audited accounts for the
Performance End Period are announced.
Vesting will be triggered earlier (irrespective of condition (a)
above being met) if cumulative cash distributions have been made to
shareholders before the end of the Performance End Period equal to
the hurdles mentioned in (b) above (i.e. if there are cumulative
cash distributions totalling 15p per share, then 75% of the award
vests etc.).
Awards will also vest early in the case of certain corporate
transactions, including a takeover of the Company.
The major differences between the NLTIP and old JSOP are as
follows:
-- The participants in the NLTIP (unlike the JSOP) will have no
voting rights in Elektron Technology plc until the awards vest and
the participants receive Company shares.
-- Keith Daley will not participate and Andy Weatherstone will
participate. The reverse was the case with the JSOP.
-- The NLTIP contains two vesting criteria (including a cash
hurdle) whereas the JSOP was based on a single target price.
-- Under the NLTIP the participants will only benefit to the
extent that the share price exceeds 10 pence (being a 90% increase
in the share price at the date at the date the Annual Report was
approved). Under the JSOP scheme, including the stock appreciation
rights, the entire award was capable of vesting if a single target
price of 17.8 pence (if adjusted to take account of the 2014
placing) was met.
The awards will be structured under a tax-advantaged Employee
Shareholder Shares (ESS) scheme where shares in Elektron Technology
UK Limited (ETUK), a wholly owned subsidiary, will be issued to
each of John Wilson and Andy Weatherstone. If the performance
hurdles are met, the participants can put vested ETUK shares to the
Company or Trustee for an amount determined by reference to the sum
of (i) any cumulative cash distributions made by the Company to the
Performance Period End plus (ii) the 90 day volume weighted
Elektron Technology plc share price immediately prior to the date
of exercise of the put less (iii) the 10p hurdle. Such amount can
be paid in Company shares (or in cash if so determined by the
Remuneration Committee). If the performance hurdles are not met the
ETUK shares will be acquired by the Company at no cost. Any Company
shares received by participants must be retained until 31 January
2021 (subject to an ability to sell sufficient Company shares to
cover any tax liabilities arising from the award).
The awards will be forfeited if the participant ceases
employment before the end of the Performance End Period other than
for agreed good leaver reasons. Malus and clawback provisions also
apply. In the event of sale of all or substantially all of assets
or 75% of the shares in the Company the awards will vest in full
noting the participants will only benefit from any increase in
value over 10 pence per share.
Shareholders will be asked to approve the remuneration report in
the Company's Annual Report at the forthcoming AGM. This vote is
advisory and the Directors' entitlement to receive remuneration is
not conditional on it. In the event that the advisory vote is not
carried the Remuneration Committee will consult with shareholders
before implementing any changes to Directors' remuneration.
Related Party Opinion
The unwind of Keith Daley's and John Wilson's interests in the
JSOP, Keith Daley's and John Wilson's award of options to purchase
shares from the EBT and John Wilson's award under the NLTIP are
related party transactions under the AIM Rules. The independent
directors, having consulted with the Company's nominated adviser,
finnCap, consider that each of the unwind of Keith Daley's and John
Wilson's interests in the JSOP, Keith Daley's and John Wilson's
award of options to purchase shares from the EBT and John Wilson's
award under the NLTIP are each fair and reasonable insofar as the
Company's shareholders are concerned.
For further information:
+44 (0) 1223 371
Elektron Technology www.elektron-technology.com 000
Peter Welch -Non Executive Director
(Chair of Remuneration Committee)
Martin Reeves - Company Secretary
+44 (0)20 7220
finnCap 0500
Ed Frisby/Scott Mathieson (Corporate
Finance)
Malar Velaigam (Corporate Broking)
Notes to Editors
Elektron conceives designs and markets innovative engineered
products and services for businesses at its technology hub in
Cambridge. It has a multi skilled team of engineers and product
line specialists focused on the opportunities created by disruptive
global trends in the following areas:
-- Demand for ubiquitous power and data: Bulgin
-- Internet of Things, cloud computing and mobile devices:
enabling automation and management of a new wave of business
processes: Checkit
-- Growth in high precision manufacture: Queensgate
-- Healthcare for the ageing population: Elektron Technology Ophthalmic
In addition, Elektron owns a portfolio of well-established
products and brands which provide customer access and feedback.
Elektron Technology is headquartered in Cambridge and its shares
are admitted to trading on the AIM market of the London Stock
Exchange.
The company news service from the London Stock Exchange
END
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