TIDMVLX
RNS Number : 6517X
Volex PLC
28 November 2017
28 November 2017
Volex plc
(VLX)
Proposed cancellation of Ordinary Shares from the Official List,
Admission to trading on AIM and Notice of General Meeting
As previously contemplated in Volex plc's ("Volex" or the
"Company") interim results announcement on 10 November 2017, the
Board is proposing to cancel admission of the Company's Ordinary
Shares to the premium segment of the Official List and to trading
on the London Stock Exchange's Main Market for listed securities
("Cancellation") and apply for the admission of the Company's
Ordinary Shares to trading on AIM ("Admission"). 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 Cancellation requires the prior
approval of a resolution (the "Resolution") by Shareholders in
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
Cancellation and Admission will be 19 January 2018, 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 Meeting Room 2, The Novotel Reading
Centre, 25b Friar Street, Reading, RG1 1DP on 15 December 2017 at
11.00 a.m. at which the Resolution will be proposed as a special
resolution to approve the Cancellation and Admission.
The Circular will be made available shortly on the Company's
website at www.volex.com/investor-relations and will be submitted
to the National Storage Mechanism where it will shortly be
available to view at www.morningstar.co.uk/uk/nsm.
For further information please contact:
Volex plc Tel: 020 8017
3240
Nat Rothschild, Executive
Chairman
Daren Morris, CFO
Liberum Capital Limited Tel: 0203 100
2222
Steve Pearce
John Fishley
Euan Brown
Unless otherwise stated, capitalised terms in this announcement
have the same meaning as in the Circular.
Appendix 1 - Expected timetable of key events
Publication of the Circular 28 November 2017
Latest time and date for 11.00 a.m. 13
receipt of Forms of Proxy December 2017
Time and date of General 11.00 a.m. 15
Meeting December 2017
Publication of Schedule One 18 December 2017
announcement
Last day of dealings in the 18 January 2018
Ordinary Shares on the Main
Market
Cancellation of the listing 8.00 a.m. 19 January
of the Ordinary Shares from 2018
the Official List effective
Admission of Ordinary Shares 8.00 a.m. 19 January
to trading on AIM effective 2018
Appendix 2 - Extracts from the Circular
Background to and reasons for Cancellation and Admission
As announced in the Company's interim results on 10 November
2017, the Company has made good progress with the restructuring of
its business and operations and is now focussed on ongoing
operational efficiencies and profitable growth.
As part of its strategy to realise value for shareholders the
Board also recognises that opportunities may arise to consolidate
the highly fragmented cable assembly industry through the
acquisition of smaller competitors, and thereby realise savings in
group-wide procurement and more efficient sales and operations. In
addition, Volex's consumer power cord business faces intense
competition from low-cost vertically integrated competitors, and
Volex may benefit from a combination of its business with one of
its competitors, to combine lower cost production with Volex's
global blue-chip customer base.
Given this strategic intent to grow and re-configure the Group,
and the Company's current size and market capitalisation, the Board
has considered whether it is still appropriate for the Ordinary
Shares to be admitted to trading on the Main Market and concluded
that the Company would benefit from the proposed Cancellation and
Admission.
AIM has the benefit of lower transaction costs associated with
corporate actions, lower ongoing annual costs, and simpler
administration and regulatory requirements more appropriate to a
company of Volex's size and ambition.
Additionally, the Cancellation and Admission will offer greater
flexibility to the Company, particularly with regard to corporate
transactions and, should the opportunity arise, will enable the
Company to execute certain transactions more quickly and cost
effectively when compared to the requirements of the Official List.
Should such opportunities arise they could entail significant
additional complexity and larger transaction costs if the Company
were to remain on the Official List. Importantly, AIM will provide
current Shareholders with a continuing market quotation and
represents a market on which they may potentially trade their
Ordinary Shares. AIM will also provide the Company with continuing
access to the public equity capital market should it be appropriate
to obtain funding in the future. Any of these initiatives may
feature in the implementation of the Company's future strategy, and
the Board considers that AIM represents the most appropriate
financial market for the Ordinary Shares as it seeks to create
value for Shareholders.
AIM, which is operated and regulated by the London Stock
Exchange, has an established reputation with investors and analysts
and is an internationally recognised market. It was launched in
June 1995 as the London Stock Exchange's market specifically
designed for smaller companies, with a more flexible regulatory
regime.
If the Cancellation is approved by Shareholders, the Board
intends to operate the Company's business, including its reporting
and governance, in substantially the same manner and with the same
objectives as at present. Thus, the Board sees the Company as being
attractive to specialist institutional investors while the AIM tax
regime, referred to in more detail below, will also make the
Company potentially attractive to AIM specific funds as well as to
retail investors.
For these reasons, the Board considers that it is in the
Company's interests to seek approval to effect the Cancellation.
However, Shareholders should note that following the Cancellation
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 the Circular.
-- The Cancellation might have either positive or negative
taxation consequences for Shareholders. Since 5 August 2013, shares
traded on AIM can be held in ISAs and, with effect from 28 April
2014, stamp duty and stamp duty reserve tax (SDRT) on transfers of
shares listed on AIM has been abolished. Individuals who hold
Ordinary Shares following Admission may, after two years, also be
eligible for certain inheritance tax benefits. Further details on
taxation consequences are provided in the Circular.
-- The Cancellation may have implications for Shareholders
holding Ordinary Shares in a Self-Invested Personal Pension (SIPP).
For example, shares in unlisted companies may not qualify for
certain SIPPs under the terms of that SIPP and, if in any doubt,
Shareholders should consult with their SIPP provider immediately.
Following Admission, the Company will be categorised for these
purposes as unlisted.
Details of the Cancellation and Admission
Conditional upon the Resolution being approved at the General
Meeting, the Company will apply to (i) cancel the listing of the
Ordinary Shares on the Official List and their admission to trading
on the London Stock Exchange's Main Market for listed securities;
and (ii) the London Stock Exchange for the admission of the
Ordinary Shares to trading on AIM. It is anticipated that the last
day of dealings of the Ordinary Shares on the Main Market will be
18 January 2018. Cancellation of the listing of the Ordinary Shares
on the Official List is expected to take effect at 8.00 a.m. on 19
January 2018, being not less than 20 Business Days from the passing
of the Resolution.
Admission is expected to take place and dealings in Ordinary
Shares are expected to commence on AIM at 8.00 a.m. on 19 January
2018.
As the Ordinary Shares have been listed on the Official List for
more than 18 months, the AIM Rules do not require an admission
document to be published by the Company in connection with
Admission. However, subject to the passing of the Resolution at the
General Meeting, the Company will 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, as an AIM
Designated Market, to AIM.
Following Cancellation and 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.
In accordance with the Listing Rules, the Resolution is subject
to approval being obtained from not less than 75 per cent. of all
Shareholders voting in person or by proxy. If the requisite
percentage of Shareholders does not approve the Resolution, the
Ordinary Shares will not be admitted to AIM and will continue to be
admitted to the premium segment of the Official List and to trading
on the Main Market for listed securities of the London Stock
Exchange.
Implications of the transfer to AIM
Following Admission, the Company will be subject to the
regulatory and disciplinary controls of the AIM Rules. AIM is a
market designed primarily for emerging or smaller companies to
which a higher investment risk tends to be attached than to larger
or more established companies. Shareholders should note that the
protections afforded to investors in AIM companies are less
rigorous than those afforded to investors in companies such as a
company listed on the premium segment of the Official List. Under
the AIM Rules, a Nominated Adviser and broker is required to be
engaged by the Company at all times and a Nominated Adviser has
ongoing responsibilities to both the Company and to the London
Stock Exchange. Conditional on Admission, the Company has appointed
Liberum Capital Limited as its Nominated Adviser and broker. The
obligations of a company whose shares are traded on AIM are broadly
similar to those of companies such as Volex whose shares are listed
on the premium segment of the Official List, however there are
certain exceptions, including those referred to in the
Circular.
Outlook and current trading
In the first six months of the current financial year to 1
October 2017, the Group has returned to profitability. The
restructuring activities taken in previous periods have allowed the
Group to operate more efficiently and Volex is now seeing growth
from both new and existing customers as the revenues diversify.
The Cable Assemblies division has enjoyed a particularly strong
six months in which revenue has increased by 8% in comparison to
the prior financial year. When the Group strips out the Cable
Assemblies revenue contribution from its largest Power customer and
its largest European telecoms customer (both of which have
continued their decline), the remaining Cable Assemblies revenue
grew by 20%. This growth has been driven across all sectors with
the Group's North American logistics business proving exceptionally
buoyant. This growth presents operational challenges, primarily at
the Mexico facility, as investment is made in additional staff and
raw materials to cope with the increase in demand. However,
operational efficiency initiatives executed in prior periods have
allowed the Cable Assemblies division to maintain overall margins
despite these inefficiencies caused by expansion, significant
labour cost inflation and adverse movements in key currencies
against the US Dollar.
The Power Cords division's revenue continued its decline, down
10% on the prior financial year, with the division's largest
customer's Power revenue down by 25%. It is felt that this
customer's revenue has now reached a low point as new products move
into commercial production in the second half of the financial
year. The division's decline had been previously forecast and hence
the restructuring activities taken in the prior year had been
focused on this division. As a result, despite the lost revenue,
gross margin and operating profit is significantly ahead of the
prior year. In addition, our previously announced joint venture
agreement with a Taiwanese manufacturer, producing competitively
priced Volex-branded AC raw cables, began commercial production in
the period and we hope to see margin benefit from this during the
next year.
Volex's core markets are expected to remain highly competitive
in the near term. Second half trading performance is expected to be
at a similar level to that achieved in the first half with the
strong sales pipeline helping off-set the traditional seasonality
seen in the business.
Cost inflation in both raw materials and labour rates is
expected to continue and where we are unable to pass these
increases onto our customers, we will look to further improve
factory operational efficiency, particularly in our Mexico
facility. We will continue to closely monitor the cost base of the
Group and where necessary will take further cost reduction
actions.
Given the strong sales pipeline and the optimised cost base
following last year's restructuring, we are confident in delivering
a trading performance for the full year in line with the Board's
expectations.
Irrevocable Undertakings
The Company has received irrevocable undertakings to vote in
favour of the Resolution from those Directors who hold Ordinary
Shares and certain other Shareholders holding, in total, 46,825,069
Ordinary Shares, representing, in aggregate, 51.9 per cent. of the
Company's issued Ordinary Shares.
Recommendation
The Board considers the terms of the Proposal to be in the best
interests of the Company and its Shareholders as a whole.
Accordingly, the Board 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 beneficial holdings amounting, in
aggregate, to 23,390,771 Ordinary Shares and representing
approximately 25.9 per cent. of the Company's issued share
capital.
IMPORTANT INFORMATION
The distribution of this announcement in or into certain
jurisdictions other than the United Kingdom may be restricted by
law. Therefore, persons into whose possession this announcement
comes should inform themselves about, and observe, any such
restrictions.
This announcement contains (or may contain) certain
forward--looking statements with respect to the Company and certain
of its goals and expectations relating to its future financial
condition and performance which involve a number of risks and
uncertainties. No forward--looking statement is a guarantee of
future performance and actual results could differ materially from
those contained in any forward--looking statements. All statements,
other than statements of historical facts, contained in this
announcement, including statements regarding the Group's future
financial position, business strategy and plans, business model and
approach and objectives of management for future operations, are
forward--looking statements. Generally, the forward--looking
statements in this announcement use words such as "aim",
"anticipate", "target", "expect", "estimate", "plan", "goal",
"believe", "will", "may", "could", "should", "future", "intend"
"opportunity", "potential", "project", "seek" and other words
having a similar meaning. By their nature, forward--looking
statements involve risk and uncertainty because they relate to
future events and circumstances, including, but not limited to,
economic and business conditions, the effects of changes in
interest rates and foreign exchange rates, changes in legislation,
changes in customer habits and other factors outside the control of
the Company, that may cause actual results, performance or
achievements to be materially different from any results,
performance or achievements expressed or implied by such
forward--looking statements. All forward looking statements
contained in this announcement are based upon information available
to the Directors at the date of this announcement and access to
this announcement shall not give rise to any implication that there
has been no change in the facts set forth herein since such date.
The forward--looking statements in this announcement are based on
the relevant Directors' beliefs and assumptions and information
only as of the date of this announcement, and the forward--looking
events discussed in this announcement might not occur. Therefore,
Shareholders should not place any reliance on any forward--looking
statements. Except as required by law or regulation (including,
without limitation, as a consequence of the Prospectus Rules,
Listing Rules, the AIM Rules and/or the Disclosure Guidance and
Transparency Rules), the Directors undertake no obligation to
publicly update any forward--looking statements, whether as a
result of new information, future earnings or otherwise.
Liberum Capital Limited ("Liberum") is authorised and regulated
by the Financial Conduct Authority (the "FCA") in the United
Kingdom, and is acting exclusively for the Company and no-one else
in connection with Admission. Liberum will not regard any other
person as its client in relation to Admission and will not be
responsible to anyone other than the Company for providing the
regulatory protections afforded to its clients, nor for providing
advice in relation to the contents of this announcement or any
transaction, arrangement or other matter referred to herein.
Neither Liberum nor any of its subsidiary undertakings,
affiliates or any of its partners, directors, officers, employees,
advisers, agents or any other person accepts any responsibility or
liability whatsoever for, or makes any representation or warranty,
express or implied, as to the truth, accuracy, completeness or
fairness of the information or opinions in this announcement (or
whether any information has been omitted from the announcement) or
any other information relating to the Company, its subsidiaries or
associated companies, whether written, oral or in a visual or
electronic form, and howsoever transmitted or made available or for
any loss howsoever arising from any use of this announcement or its
contents or otherwise arising in connection therewith.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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