TIDMTWE
RNS Number : 9223Q
Twenty PLC
27 October 2011
TWENTY PLC
(AIM: TWE)
Proposed sale of TwentyCi, Moveme and Holdings, cancellation of
Admission of Ordinary Shares to trading on AIM, Re-registration as
a Private Limited Company
The Company announces that it is seeking Shareholder approval of
the sale of the entire issued share capital of each of TwentyCi
Limited (the holding company of the TwentyCi Subsidiaries), The
Moving Service Limited and TwentyCi Holdings Limited to the
Purchaser, to cancel the admission of the Ordinary Shares to
trading on AIM; and to re-register the Company as a private limited
company following the Cancellation.
1. Introduction
As set out in the Company's final results for the year ended
31st December 2010 announced on 30th June 2011 ("2010 Results"),
trading performance for the full year reported a loss of GBP6.34m.
Following the sale of DFPP, the loss on continuing operations was
GBP6.7m, compared to the previous year's loss of GBP1.72m. Despite
restructuring the business during the reported period, the revenues
generated from the sale of data had a disappointing start and
delivered well below the Board's expectations. Trading conditions
remain very challenging in 2011 due to a combination of the current
economic climate and slower than expected progress on the newly
formed TwentyData business. The Directors have concluded that in
light of the progress of the Group's business, the Company lacks a
critical mass to sustain the costs associated with being an AIM
company and the Board has concluded that it is no longer viable to
maintain the AIM Admission.
As a consequence, the Board decided that serious consideration
must be given to evaluating a number of strategic options and the
Independent Directors have concluded that it would be in the best
interests of Shareholders to sell TwentyCi, Moveme and Holdings to
the Purchaser (a company controlled by the Related Parties). Robert
Unsworth and Mark Patron, the Independent Directors, have
represented the Board in negotiations with the Purchaser in
relation to the Disposals.
Consequently, the Company has today entered into a conditional
agreement for, and is seeking Shareholder approval of, the sale of
the entire issued share capital of each of TwentyCi Limited (the
holding company of the TwentyCi Subsidiaries), The Moving Service
Limited and TwentyCi Holdings Limited to the Purchaser for an
initial consideration of GBP1 ("Initial Consideration") plus
potential additional consideration equal to 12.5 per cent. of the
amount by which the aggregate proceeds received on any further
share sale, business sale or listing of TwentyCi and/or Moveme
and/or Holdings in the 24 month period following the Disposals
exceeds GBP1,000,000 subject to certain adjustments ("Additional
Consideration"). Any Additional Consideration that may become
payable under the terms of the Sale Agreement will be subject to
adjustments. In addition, owing to the net liabilities of the
businesses to be disposed of, the Company has agreed to pay to the
Purchaser the sum of GBP112,500 on 3rd January 2012 to contribute
to its working capital requirements, subject to certain terms and
conditions.
As part of the proposals the Company is seeking Shareholder
approval to cancel the admission of the Ordinary Shares to trading
on AIM; and it is seeking Shareholder approval to re-register the
Company as a private limited company following the
Cancellation.
A circular which sets out the background to and reasons for, and
provides further details of, the proposed Disposals, Cancellation
and Re-registration will be posted to shareholders today. The
Circular will explain why the Directors consider the Cancellation
and the Re-registration to be in the best interests of the Company
and Shareholders as a whole and why the Independent Directors
consider the Disposals to be in the best interests of the Company
and the Shareholders as a whole.
In accordance with the AIM Rules:
-- the Disposals are a Related Party transaction under Rule 13
of the AIM Rules;
-- the Disposals are a disposal resulting in a fundamental
change of the Company's business for the purpose of AIM Rule 15 and
are therefore conditional on the consent of more than 50 per cent.
of the votes cast by Shareholders at a general meeting; and
-- the Cancellation is conditional on the consent of not less
than 75 per cent. of the votes cast by Shareholders at a general
meeting.
Under the 2006 Act:
-- the Disposals are a 'substantial property transaction' and
therefore require the approval of more than 50 per cent of the
votes cast by Shareholders at a general meeting; and
-- the Re-registration requires the approval of not less than 75
per cent. of the votes cast by Shareholders at a general
meeting.
The approval of Shareholders to the Resolutions to implement the
Proposals is therefore being sought at the General Meeting to be
held at 2.00 p.m. on 14th November 2011.
Shareholders should note that the Proposals are being presented
as a package and therefore none of the Proposals will proceed
unless all of the Proposals are approved at the General Meeting and
the Sale Agreement becomes unconditional in accordance with its
terms.
2. Background to and reasons for the proposed Disposals
In May 2010 the Company disposed of its customer interaction and
outsourcing business through the sale of DFPP (the then holding
company for Dataforce Interact Limited) for a total consideration
of GBP7.69m, of which GBP6.19m was received on completion, allowing
all bank and other indebtedness to be repaid in full and to provide
additional working capital for the Group. The deferred
consideration was originally agreed at GBP2.95m, but it was
subsequently re-negotiated to GBP1.5m, payable in instalments over
the period to 31st December 2012. As at today the sum of GBP642,857
of this deferred consideration has been paid to the Company, the
balance of GBP857,143 is payable in quarterly instalments up to
31st December 2012.
The Group's remaining businesses are both much smaller than
Dataforce Interact Limited and comprise a data analytics and
hosting business branded 'TwentyCi' carried on by TwentyCi, a web
business branded 'TwentyWeb' carried on by TwentyCi and a start up
data business branded 'TwentyData' carried on by Moveme. Twenty
acquired Holdings in April 2006. Holdings was a former intermediate
trading company within the Group and does not trade.
Our product strategy has been to focus on the faster growing
Customer Intelligence, Data, Database Development and E-commerce
product segments, but the 2010 Results were disappointing as
progress has been much slower than expected.
The following segment results have been extracted from the
audited accounts of the Company for the year ended 31st December
2010 and the unaudited interim accounts for the six months ended
30th June 2011:
Period ended: 31 December 2010 30 June 2011
Year 6 months
----------------
Sales Loss before Sales Loss before
unallocated unallocated
corporate expenses corporate
expenses
GBP000 GBP000 GBP000 GBP000
TwentyCi data
analytics and
hosting 2,049 (248) 759 (63)
TwentyData 573 (676) 108 (296)
TwentyWeb 536 33 270 (89)
3,158 (891) 1,137 (448)
------- -------------------- ------- -------------
As set out in the announcement of the 2010 Results and the
interim results for the six months ended 30th June 2011, trading
conditions remain very challenging in 2011 due to a combination of
the current economic climate and slower than expected progress on
the newly formed TwentyData Business. The announcement of the 2010
Results also stated that the Board was exploring a number of
strategic options.
.
The Independent Directors have explored a number of options to
segregate the receipt of the Deferred DFP Consideration due to the
Company from the rest of the Group and they have concluded that,
given the need to preserve cash by conducting a sale quickly, it
would be in the best interests of Shareholders to dispose of
TwentyCi, Moveme and Holdings.
The Initial Consideration is payable in cash at Disposal
Completion. Any Additional Consideration that may become due to the
Company under the terms of the Sale Agreement is also payable to
the Company in cash within 5 business days of such consideration
being received. The Additional Consideration will be reduced: (i)
in the case of a share sale or business sale, by the amount of any
indebtedness of the Purchaser's Group and the amount of any capital
gains tax or corporation tax liability (including any degrouping
charge) of the Purchaser's Group that the Purchaser can reasonably
show as being payable by a member of the Purchaser's Group as a
result of any such share sale or business sale; and (ii) by the
amount of sums subscribed by investors in the Purchaser's Group
after Disposal Completion. In addition, owing to the net
liabilities of the businesses to be disposed of, the Company has
agreed to pay to the Purchaser the sum of GBP112,500 to contribute
to its working capital requirements. The Company has agreed to pay
this sum on 3rd January 2012, subject to certain terms and
conditions.
The Company will waive the inter-company debt owed by TwentyCi
and Moveme to the Company in the sum of GBP561,050. TwentyCi,
Moveme, Holdings and the TwentyCi Subsidiaries will also waive any
debt that may be owed by the Company to any of them.
The sale of TwentyCi and Moveme will give rise to a de-grouping
charge as there will be a deemed disposal of goodwill. To the
extent that this goodwill was created or acquired before 1st April
2002 the de-grouping charge will arise on the Company by
supplementing any chargeable gain on the sale of the shares in
TwentyCi and Moveme. If the substantial shareholding exemption from
chargeable gains is available to the Company in connection with the
Disposals this exemption should also apply to any chargeable gain
on the deemed disposal of the goodwill.
Under the Sale Agreement the Purchaser has agreed to pay to the
Company an amount equal to any PAYE and National Insurance
liabilities of the Company in relation to payments made to the
Related Parties. As part of the Disposals, Grant Newton and Ian
Lancaster will resign as directors and employees of the Company and
enter into compromise agreements with the Company. The compromise
agreements provide that in the event that the Purchaser fails to
comply with its obligations to make such payments the Related
Parties will make such payments to the Company.
The net liabilities to be disposed of, based on the unaudited
interim accounts at 30 June 2011, amounted to approximately
GBP400,000, excluding the further payment to the Purchaser of
GBP112,500 on 3(rd) January 2012.
The effect of the Disposals on the Company will be to divest the
Company of substantially all of its trading business, activities
and assets.
The Company's estimated net assets, immediately following
Disposal Completion, and assuming receipt of the full amount of the
Deferred DFP Consideration, will be approximately GBP700,000,
before administrative costs to be incurred prior to the Company
entering members' voluntary liquidation. As noted above, as at
today the sum of GBP642,857 of the Deferred DFP Consideration has
been paid to the Company. The balance of GBP857,143 is payable in
equal quarterly instalments on 31st December 2011, 31st March 2012,
30th June 2012, 30th September 2012 and 31st December 2012. The
purchaser of DFPP is entitled to set off the sum of GBP88,000 owed
to it by the Company against the 31st December 2012 instalment of
the Deferred DFP Consideration.
The estimate of net assets above do not include the benefit of
certain research and development tax credit claims for the years
ended 31st December 2009 and 2010 potentially available to TwentyCi
and certain of the TwentyCi Subsidiaries. The Purchaser has agreed
to use all reasonable endeavours to recover such tax credits and,
if recovered, to pay 85 per cent. of such sums to the Company.
It is also a condition of the Sale Agreement that the cash
balances of the Company as at 5.30 p.m. on the date of the General
Meeting and after deducting all cash commitments of the Company as
at that time, is not less than GBP122,728. This condition may be
waived in whole or in part by the Company.
It is the current intention of the Independent Directors to
recommend that, after 31st December 2012, once the final payment of
the Deferred DFP Consideration has been received, along with any
Additional Consideration that may become due to the Company under
the terms of the Sale Agreement, the remaining assets of the
Company are distributed by way of a members' voluntary liquidation.
In the interim period and, assuming the resolution to re-register
the Company as a private limited company is passed at the General
Meeting, the Company may be able to effect a capital reduction in
order to create distributable reserves and return value to
Shareholders should the Independent Directors elect to do so. The
procedure involved in effecting a capital reduction for a private
limited company is simpler and more cost effective than that which
applies to a public limited company (which involves a court
process).
Further administrative costs will be incurred by the Company
prior to it entering into members' voluntary liquidation, including
directors' remuneration as described below.
As noted above, Grant Newton and Ian Lancaster will resign as
directors and employees of the Company at Disposal Completion.
Following Disposal Completion the Board will comprise Mark Patron
and Robert Unsworth, the two Independent Directors. Mark Patron
will be paid a director's fee of GBP20,000 per annum and Consensus
Business Group (who provide the services of Robert Unsworth as a
director of the Company) will be paid a director's fee of GBP20,000
per annum.
3. Background to and reasons for the proposed Cancellation
Following the Disposals, the Company will have disposed of
substantially all of its trading business, activities and assets.
The Directors have therefore concluded that it would be in the best
interests of Shareholders to cancel the AIM Admission if the
Disposals are approved by Shareholders at the General Meeting and
the Sale Agreement becomes unconditional in accordance with its
terms. This would save the Company the costs associated with
maintaining the AIM Admission which include fees paid to the
Company's nominated adviser and broker and registrars, annual fees
paid to the London Stock Exchange plc, costs relating to regulatory
announcements and additional fees of accountants and lawyers
engaged to provide accountancy, legal or other services in
connection with maintaining the AIM Admission. The Company
estimates that if the Cancellation takes place the Group will, as a
result, save up to approximately GBP50,000 per annum.
In addition to the direct and indirect costs involved in
maintaining the AIM Admission, the Board consider few benefits
accrue to the Company or Shareholders from the AIM Admission and in
particular:
-- save for consideration shares issued to vendors of companies
in connection with acquisitions, the Company has rarely utilised
AIM to raise equity capital for its expansion and has no plans to
do so given current trading; and
-- the Board considers that the Company will not attract any new
institutional investors or analyst interest in the secondary
market.
Following the Cancellation, although the Ordinary Shares will
remain transferable, they will no longer be capable of being traded
on AIM and no other trading facility will be available to enable
the trading of the Ordinary Shares.
Following the Cancellation transfers of Ordinary Shares may be
effected in accordance with the provisions of the Company's
articles of association concerning off-market transfers of shares
in certificated form. In summary, to effect a transfer of Ordinary
Shares following the Cancellation, the registered holder of the
shares must duly execute a stock transfer form and send the
original stamped (to the extent stamp duty is payable thereon),
duly executed stock transfer form, together with the relevant share
certificate (if any) for such transferred holding, to the Company's
registered office.
In accordance with AIM Rule 41, the Cancellation is conditional
on the consent of not less than 75 per cent. of the votes cast by
Shareholders at a general meeting. Such consent will be sought
through Resolution 2. Assuming Resolution 2 is passed and the Sale
Agreement becomes unconditional in accordance with its terms, the
Cancellation is expected to take effect from 7.00 a.m. on 28th
November 2011.
4. Reason for the proposed Re-registration
The main advantage to the Company of re-registering as a private
limited company is that it will be able to effect a capital
reduction in the future in order to create distributable reserves
and return value to Shareholders should the Board elect to make an
interim distribution to Shareholders. As noted above, the procedure
involved in effecting a capital reduction for a private limited
company is simpler and more cost effective than that which applies
to a public limited
company (which involves a court process).
Assuming the resolution to approve the Re-registration is
passed, the Company, as a private limited company, will not be
required to hold annual general meetings. However, the Independent
Directors intend that, following completion of the Proposals, the
Company will continue to hold annual general meetings.
Under the 2006 Act, as part of the Re-registration the Company
is required to make such changes to its name and to its articles of
association as are required in connection with the Company becoming
a private company limited by shares.
A resolution will therefore be proposed to adopt new articles of
association to make, inter alia, the following changes:
-- change the name of the Company to Witan Gate Limited; and
-- delete references to uncertificated securities.
The Re-registration also requires the consent of not less than
75 per cent. of the votes cast by Shareholders at a general
meeting.
5. General Meeting
Implementation of the Proposals requires the approval of
Shareholders at a general meeting to be held at 9-13 St. Andrew
Street, London EC4A 3AF at 2.00 p.m. on 14th November 2011 where
the following resolutions will be proposed:
1. Resolution 1 - an ordinary resolution to approve the
Disposals for the purposes of AIM Rule 15 and section 190 of the
2006 Act, on the terms and subject to the conditions set out in the
Sale Agreement;
2. Resolution 2 - a special resolution to approve the
cancellation of the AIM Admission (subject to the passing of
Resolution 1 and to the Sale Agreement becoming unconditional in
accordance with its terms);
3. Resolution 3 - a special resolution to approve the
re-registration of the Company under the name Witan Gate Limited
(subject to the passing of Resolution 2 and to the Sale Agreement
becoming unconditional in accordance with its terms); and
4. Resolution 4 - a special resolution to adopt new articles of
association in place of the existing articles of association
(subject to the passing of Resolution 3 and to the Sale Agreement
becoming unconditional in accordance with its terms).
Resolution 1 is proposed as an ordinary resolution and must be
passed by more than 50 per cent. of the votes cast by Shareholders
at the General Meeting. Resolutions 2, 3 and 4 are proposed as
special resolutions which mean they must be approved by not less
than 75 per cent. of votes cast by Shareholders at the General
Meeting.
6. Recommendations
The Disposals
Neither of the Related Parties has taken part in any decision by
the Board to approve or enter into the Sale Agreement, on the basis
that they are directors and shareholders of the Purchaser and are
therefore 'related parties' for the purposes of the AIM Rules.
The Independent Directors consider the Disposals to be in the
best interests of the Company and Shareholders as a whole. The
Independent Directors consider, having consulted with Daniel
Stewart, that the Disposals are fair and reasonable insofar as
Shareholders are concerned. In giving its advice Daniel Stewart has
relied on the Independent Directors' commercial assessments.
The Cancellation and The Re-registration
The Board considers the Cancellation and the Re-registration to
be in the best interests of the Company and Shareholders as a
whole. The Board, having consulted with Daniel Stewart, also
consider the Cancellation to be fair and reasonable insofar as
Shareholders are concerned. In giving its advice Daniel Stewart has
relied on the Board's commercial assessment.
Enquiries:
Twenty Plc Tel: 07810 640888
Mark Patron, Non-Executive Chairman
www.twentyplc.com
Daniel Stewart & Company plc Tel: 020 7776 6550
Paul Shackleton
DEFINITIONS
"2006 Act" the Companies Act 2006;
"AIM" AIM, a market operated by the London Stock Exchange
plc;
"AIM Admission" the admission of the Ordinary Shares to trading
on AIM;
"AIM Rules" the AIM rules for companies published by the London
Stock Exchange plc from time to time;
"Board" or "Directors" the directors of the Company;
"Business Day" any day other than a Saturday, Sunday or public
holiday on which banks are
open in the City of London for the transaction of general
commercial business;
"Cancellation" the cancellation of the AIM Admission;
"Company" or "Twenty" Twenty plc;
"Daniel Stewart" Daniel Stewart & Company plc, the Company's
Nominated Adviser and Broker;
"Deferred DFP Consideration" the deferred consideration due to
the Company in respect of the sale by the Company in May 2010 of
DFPP, the outstanding amount of which, at the date of this
announcement, is the sum of GBP857,143;
"DFPP" DF Property Portfolio Limited (registered number
01025092), a former
subsidiary of the Company;
"Disposal Completion" completion of the Disposals pursuant to
the Sale Agreement;
"Disposals" the disposal of the entire issued share capital of
TwentyCi, Moveme and Holdings on the terms and subject to the
conditions set out in the Sale Agreement;
"General Meeting" the General Meeting of the Company convened
for 2.00 p.m. on 14th November 2011 by the Notice and any
adjournment thereof;
"Group" the Company and its subsidiaries from time to time;
"Holdings" TwentyCi Holdings Limited, a subsidiary of the
Company incorporated and registered in England and Wales with
number 03946301;
"Independent Directors" Mark Patron and Robert Unsworth;
"Moveme" The Moving Service Limited, a subsidiary of the Company
incorporated and registered in England and Wales with number
05672869;
"Notice" the notice of the General Meeting;
"Ordinary Shares" ordinary shares of 0.1 pence nominal value
each in the capital of the Company;
"Proposals" the Disposals, the Cancellation and the
Re-registration as described in this document;
"Proxy Form" the form of proxy enclosed with this document for
use at the General Meeting or any adjournment thereof;
"Purchaser" RB138 Limited, a company incorporated in England and
Wales with registered number 07762646;
"Purchaser's Group" the Purchaser and its subsidiaries from time
to time following Disposal Completion;
"Related Parties" Ian Lancaster and Grant Newton, both Directors
of Twenty;
"Re-registration" the re-registration of the Company as a
private limited company;
"Resolutions" the resolutions to be proposed at the General
Meeting, and a reference to a "Resolution" shall be construed
accordingly;
"Sale Agreement" the conditional agreement dated 27th October
2011 made between the Company and the Purchaser relating to the
Disposals;
"Shareholders" holders of Ordinary Shares;
"TwentyCi" TwentyCi Limited, a subsidiary of the Company
incorporated and registered in England and Wales with number
06943607;
"TwentyCi Subsidiaries" each of: Twenty Web Limited (registered
number 04432155); Emaginating Limited (registered number 05020371);
TwentyCi Central Services Limited (registered number 06943656) and
the following dormant companies:
Twenty Online Limited (registered number 02713950); Mailforce
Limited (registered number 04180985); Dataforce Systems Limited
(registered number 02766537); Dataforce Limited (registered number
04149517) and The Customer Management Company Limited (registered
number 03532549); and
"TwentyData Business" the home mover data business branded
'TwentyData' carried on by Moveme.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCDBBDGGSDBGBL
Twenty Plc (LSE:TWE)
Historical Stock Chart
From Oct 2024 to Nov 2024
Twenty Plc (LSE:TWE)
Historical Stock Chart
From Nov 2023 to Nov 2024
