Proposed De-Listing from AIM
23 January 2009 - 6:01PM
UK Regulatory
TIDMRET
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OF SUCH JURISDICTION
Retec Digital PLC
("Retec" or "the Company")
Proposed De-Listing from AIM of the London Stock Exchange
The Company today announces that it is proposing to cancel the admission to
trading on AIM of its Ordinary Shares.
Reasons for the De-Listing
The Directors have been considering for some time the merits or otherwise of
the Company's Ordinary Shares continuing to trade on AIM. The following factors
were taken into account during their review:
* the Group has grown organically and from targeted acquisitions during the
last three years and yet the market capitalisation of the Company is lower
than when it came to market in September 2006;
* Retec Digital, like most other small listed companies, suffers from a lack
of liquidity for its shares and, in practical terms, a small free float and
market capitalisation, which reduces demand. This low liquidity is coupled
with the high costs associated with our listing on AIM (approximately GBP
150,000 per annum);
* the current economic turmoil has led to significant falls in the values of
global stock markets, from which Retec Digital is not immune. The stock
market tends to operate on a short term investment horizon which has little
basis in the underlying fundamentals of a business such as Retec Digital.
The susceptibility of the share price to the wider general equity market
conditions is not to the benefit of the business and in particular hampers
the Group's ability to raise funds and continue its targeted acquisition
strategy; and
* in the opinion of the Directors, the most likely exit route for
Shareholders will be via a trade sale within the next two to three years as
the visibility of the business grows amongst potential acquirers. The
Directors believe that the proceeds from a potential trade sale will be
maximised without reference to an underperforming share price.
The Directors strongly believe that for the reasons referred to above, the
Company should seek the cancellation of the admission of its Ordinary Shares to
trading on AIM.
Current trading
On 28 October 2008, the Group announced its preliminary results for the year
ended 30 June 2008 which were prepared in accordance with the International
Financial Reporting Standards. On this basis, the Group showed an operating
profit from continuing activities before amortisation of intangibles and share
based payments of GBP22,000 (2007: loss of GBP424,000) and an overall loss of GBP
288,000 compared to a loss of GBP996,000 in the previous year. Turnover for the
Group was up from GBP4.1 million in 2007 to GBP6.2 million in 2008 as the business
continued to expand both organically and through further execution of the
Group's targeted acquisition strategy.
As the financial year ending 30 June 2009 has progressed, the rate of organic
growth of the Group has slowed. The Directors believe the slow down is
attributable to the impact of the well documented recession within the United
Kingdom and its effects on the retail sector in particular. However, in
response to the economic environment, the Group has sought targeted
acquisitions that can be integrated easily with the Group's existing
capabilities and in some cases adding new recurring revenue streams. The Group
has also sought to reduce overheads, including the saving arising from the
De-Listing. Given changes already implemented within the Group, the Directors
remain cautiously optimistic about the next 12 to 18 months.
Strategy
The principal business of the Company remains the provision of innovative
customer communication solutions and self service devices for consumers in a
retail environment. The Group is aimed at building a business capable of
servicing the communication, marketing and fulfilment needs of its customers,
whether in designing or creating new applications, or in building and
maintaining the physical installations in a customer location. To achieve this,
the Board has sought growth both organically and by targeted acquisition.
The acquisitions made by the Company to date include a maintenance and
installation business, Media 4 UK Limited, a multi-media creative business,
Liquid Digital Limited ("Liquid"), a design-led communications agency, ODD
London Limited ("ODD"), and a contract to supply photo booths to Wm Morrison
Supermarkets plc. The Directors believe that all of these acquired services and
capabilities are key components in being able to deliver a turn-key service and
not only do these businesses bring capabilities but also access to new
retailers and leading brands.
To date the Group has been focussed on serving leading retail customers within
the United Kingdom including Sainsbury's, Tesco, Wm Morrison, Argos and Boots.
The Directors believe however, that the Group's products and services are
applicable to a wide variety of major industries and across international
boundaries.
Following the De-Listing, it is the intention of the Board to continue to
operate the Group's business in the same manner, and with the same objectives
and strategy, as at present. The Directors intend however to seek to sell the
Group via a trade sale within the next two to three years post the De-Listing
to realise value for Shareholders, as in the opinion of the Directors this is
the most likely way for Shareholders to maximise value in the medium term.
De-Listing
Rule 41 of the AIM Rules requires an AIM company which wishes the London Stock
Exchange to cancel admission of its Ordinary Shares to trading on AIM to notify
such intended cancellation and separately inform the London Stock Exchange of
its preferred cancellation date at least twenty business days prior to such
date. The cancellation is conditional upon the consent of not less than 75 per
cent. of votes cast by Shareholders given at the EGM.
The Notice of EGM contains a special resolution which proposes that the
Company's admission to trading on AIM is cancelled.
Subject to the requisite Shareholder approval, the De-Listing is expected to be
effective from 7.00 am on 23 February 2009.
Following the De-Listing
The Directors are aware that Shareholders may still wish to acquire or dispose
of Ordinary Shares. The Directors intend to make available a new matched
bargain service via J P Jenkins Limited, a trading division of IAF Securities
Limited. Further details of this and other matters affecting Shareholders will
be made available by the Company on the Company's website at
www.retecdigital.com and directly by letter or e-mail where appropriate.
Shareholders should note that following the De-Listing the Company will remain
subject to the provisions of The City Code on Takeovers and Mergers, on the
basis set out in those provisions.
Extraordinary General Meeting
An Extraordinary General Meeting is being convened to be held at the offices of
Edwin Coe LLP, 2 Stone Buildings, Lincoln's Inn, London WC2A 3TH, on 10
February 2009 at 11.00 am, at which a resolution which seeks Shareholder
approval for the cancellation of the admission to trading on AIM will be
proposed. To be effective the resolution must be passed on a show of hands or
on a poll by at least 75 per cent. of those Shareholders present in person or
(being a corporation) present by a duly authorised representative or by proxy
and voting at the Extraordinary General Meeting.
If this resolution is passed by Shareholders at the EGM then it is anticipated
that the cancellation of the admission to trading on AIM of the Ordinary Shares
will become effective from 7.00 am on 23 February 2009.
Circular
A circular has today been posted to Shareholders with a Notice of Extraordinary
General Meeting to approve the De-listing.
For further information please contact:
Retec Digital plc 01455 222260
John Cole, Chief Executive
Charles McKay, Finance Director
Hogarth Partnership Ltd 020 7357 9477
Fiona Noblet / Ian Payne
Charles Stanley Securities - NOMAD and broker 020 7149 6000
Mark Taylor / Ben Johnston / Adam Sumner
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Publication date of the circular posted to 23 January 2009
Shareholders
Latest time and date for receipt of Forms of 11.00 am on 8 February 2009
Proxy for the Extraordinary General Meeting
Extraordinary General Meeting 11.00 am on 10 February 2009
Cancellation of admission to trading on AIM with effect from 7.00 am on
of the Ordinary Shares 23 February 2009
The following definitions apply throughout this announcement, unless the
context otherwise requires:
"AIM" AIM, the market operated by London Stock Exchange
"AIM Rules" the rules governing the admission to, and the
operation of, AIM as published by the London Stock
Exchange from time to time
"Company" or "Retec Retec Digital PLC
Digital"
"De-Listing" the proposed cancellation of admission to trading on
AIM of the Ordinary Shares
"Directors" or "Board" the Directors of the Company
"Extraordinary General the extraordinary general meeting of the Company
Meeting" or "EGM" (including any adjournment thereof), notice of which
is set out at the end of the circular posted to
Shareholders
"Group" the Company and its subsidiary undertakings
"International Financial the International Financial Reporting Standards as
Reporting Standards" adopted for use in the European Union
"London Stock Exchange" London Stock Exchange plc
"Notice of EGM" the notice of Extraordinary General Meeting which is
set out at the end of the circular posted to
Shareholders
"Ordinary Shares" fully paid ordinary shares in the capital of the
Company which have a nominal value of 0.5 pence each,
and "Ordinary Share" means any one of them
"Shareholders" the holders of Ordinary Shares and "Shareholder" means
any one of them
END
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