Octagonal PLC Trading and General Update (1512L)
11 January 2021 - 6:00PM
UK Regulatory
TIDMOCT
RNS Number : 1512L
Octagonal PLC
11 January 2021
11 January 2021
Octagonal PLC
(the "Company")
Octagonal PLC trading and general update 31(st) December 2020
for wholly owned subsidiary Global Investment Strategy UK Limited
(GIS)
Further to our update to shareholders on the 24(th) December
2020 and ahead of the General Meeting on the 13(th) January 2021,
the Company is providing the following update.
SEC Complaint
While GIS strongly disagrees with the allegations, including the
Securities and Exchange Commission's (SEC) characterisation of the
relevant conduct engaged in, GIS understands the regulator's desire
to ensure compliance with the Securities Exchange Act. As such, GIS
does not believe it would be beneficial to the business or GIS's
clients to engage in a protracted dispute with the SEC and has
elected to cease the conduct cited by the SEC. As a result, GIS
will no longer carry accounts for, or provide financing services
to, U.S. persons and believes that this action should eliminate any
future concerns the SEC may have regarding whether such conduct
requires registration under Section 15 of the Securities Exchange
Act.
GIS remains in good standing with the FCA so far as the
directors are aware and GIS is committed to maintaining an ongoing
co-operative dialogue with its regulator. Additionally, GIS is in
compliance with all UK capital and liquidity requirements and
continues to maintain a conservative approach to capital and
liquidity management at all times, in line with UK regulatory
requirements. The directors believe that the complaint filed by the
SEC poses no credible risk to GIS's ability to meet all of its
obligations to clients and counterparties.
GIS does not anticipate that the complaint raised by the SEC
will result in any disruption to the service provided to existing
non-U.S. clients.
As a result of these decisions, there will be an impact to
future earnings of the business and GIS's management team is
working closely with clients and advisors to ascertain that impact.
GIS is not yet in a position to quantify the impact on its
business. We do however remain confident that we will be able to
recover lost income through a number of business initiatives that
GIS's management have already put in place.
We are pleased to report that our Hong Kong subsidiary is
attributing positive earnings to the group in the 3(rd) Quarter to
31(st) December 2020 and the board remains optimistic that this
trend will continue throughout 2021. Additionally, we will shortly
commence activity through our London Stock Exchange CREST
membership, attracting domestic clients to our services
platform.
Even with the cessation of certain services, as explained above,
the board remains optimistic of remaining operationally profitable
whilst GIS restores lost earnings. To this end, GIS intends to
retain all of its employees as we ready ourselves for new
challenges.
For the 6 months to 30(th) September2020, GIS reported sales of
GBP4.79m and earnings of GBP2.08m. By way of further update we can
confirm that GIS generated sales in excess of GBP2m for the 3(rd)
Quarter to 31(st) December 2020 (by comparison, revenue for the 3
months to 31(st) December 2019 was GBP1.2m).
De-listing
The board has taken shareholder feedback following our
announcement of 17(th) December 2020 and our circular to
shareholders.
If the resolution to de-list succeeds it remains the intent of
the board to offer to shareholders a scheme to buy back shares from
those shareholders who wish to dispose at a fair market rate. This
will be subject to the business retaining the appropriate level of
regulatory capital and buffers to meet its obligations and
provisions and to satisfying legal requirements enabling companies
to buy back their shares. We would seek to update shareholders
further when the board can make the necessary assessments, but this
would most likely be after the financial year end on 31(st) March
2021 and possibly after audited accounts are filed for GIS.
The board would also seek to maintain a dividend policy which
would be subject to similar legal and regulatory conditions as
above.
The board can also confirm that arrangements are being put in
place to provide a matched bargain facility for the trading of
shares following re-registration of GIS as a private company.
Further details will be provided after the outcome of the General
Meeting.
AIM Suspension
The Company's Ordinary Shares remain suspended on AIM until such
time as the Company can provide greater clarity on the financial
implications of the SEC complaint.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
For further information please visit www.octagonalplc.com or
contact:
Octagonal Plc +44 (0) 20 7048 9400
John Gunn, Chairman
Beaumont Cornish (Nominated Adviser and Broker)
James Biddle / Roland Cornish +44 (0) 20 7628 3396
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