20th Jun 2012 11:59
20 June 2012 TEP EXCHANGE GROUP PLC ("TEP" or "the Company") Capital Reduction, Notice of GM and Notice of AGM
TEP today announces its intention to effect a capital reduction by way of cancellation of its Deferred Shares and cancellation of its share premium account in order to effect dividend payments to members. The Company proposes to pay an interim dividend of 0.03p per Ordinary Share in due course. The notice to members convening the General Meeting will be sent to members later today. The expected timetable for the Capital Reduction is as follows:
Publication date of the shareholder 20 June 2012circular Latest time for receipt of Forms of 10.05 a.m. on 11 July 2012
Proxy for the General Meeting General Meeting 10.05 a.m. on 13 July 2012 (or as soon as the annual general meeting of the Company convened for the same date and place shall have been concluded or adjourned) First Directions Hearing 16 July 2012
Court Hearing to confirm the Capital 25 July 2012Reduction Effective Date for the Capital 26 July 2012Reduction
In addition, the Company has today sent a notice of annual general meeting to members, the details of which are set out below.
Background to and reasons for the Capital Reduction
As members may be aware, on 12 November 2010 the Company entered into a non-exclusive licence agreement with SL Investment Management Limited ("SL"), a 48.26 per cent. Shareholder in the Company, to licence its electronic platform and all technology to SL. In addition, SL was granted exclusive rights to develop and modify the electronic platform for a quarterly fee of £230,000 to enable SL to put additional financial products on to the platform.
These licence arrangements have been greatly beneficial to the Company; however, there was a time lag before the revenues received pursuant to these agreements were received and, therefore, the Company arranged a subscription of £90,000 (before expenses) to fund its immediate short term working capital requirements. The subscription was completed in November 2011 at a price of 0.02p per share. For every share subscribed, the Company issued 10 subscription warrants which were exercisable at 0.002p. Since the exercise price of the subscription warrants was below the nominal value of the Company's then existing ordinary shares, the Company undertook a capital reorganisation. As part of that reorganisation, the existing deferred shares of 0.99p each were sub-divided into 990 Deferred Shares and each of the ordinary shares of 0.01p were subdivided and redesignated into one Ordinary Share and nine Deferred Shares.
The subscription warrants can only be exercised if the Company and its wholly owned subsidiaries achieve average annual consolidated revenue of over £600,000 per annum over the three financial years ending 31 December 2013 or, if earlier, the Company and its wholly owned subsidiaries achieves consolidated revenue of at least £900,000 in each of the financial years ended 31 December 2011 and ending 31 December 2012.
In either case, the Company will have to have declared, made and paid dividends of at least £250,000 to all members overall in respect of the period, before the subscription warrants may be exercised.
On 20 June 2012 the Company announced its final results for the year ended 31 December 2011. The profit before and after taxation was £666,082 compared to the loss before and after taxation of £86,458 in 2010. Despite the turmoil in the financial markets and the current limited demand for traded endowment policies the Company's trading performance in the current financial year had improved compared with 2011 and 2010, primarily as a result of the income derived from the licence agreement with SL referred to above. In 2010 and 2011, the Company and its wholly owned subsidiaries achieved consolidated revenues of £164,776 and £1,044,472, respectively.
On 2 April 2012, the Company announced that SL had informed the Company that the income generated under the licence agreement during the 12 month period ended 30 April 2012 was not expected to reach the required amount in accordance with the agreement and, therefore, it may elect to terminate the licence agreement in accordance with its terms. The Company agreed with SL that it would grant an extension to the termination notice period to allow SL to further assess the benefits of the licence agreement. The agreement is currently able to be terminated on 30 August 2012 by SL giving 30 days' prior written notice to the Company.
Even though SL may choose to terminate the licence agreement, the Directors believe that it is still appropriate to pay dividends from revenues already generated. Accordingly, subject to the Capital Reduction being approved by members and the Court, it is the current intention to pay an interim dividend of 0.03p per Ordinary Share in due course.
In order to be able to pay dividends, the Company must create distributable reserves, which requires Court approval of an application for a reduction of share capital and a capital reconstruction. Accordingly, in order to achieve this, the Company is now seeking members' approval of the Capital Reduction.
The Deferred Shares have no voting rights and carry no entitlement to vote at general meetings of the Company; nor are they admitted to trading on AIM or any other market. The Deferred Shares carry only a priority right to participate in any return of capital to the extent of £1 in aggregate for all shares of the class. In addition, they carry only a priority right to participate in any dividend or other distribution to the extent of £1 in aggregate over the class. In each case, a payment to any one holder of Deferred Shares shall satisfy the payment required. As such, the Deferred Shares are, for any practical purposes, valueless. No share certificates were issued in respect of the Deferred Shares.
The Notice of GM set out at the end of the circular to members contains resolutions to give effect to the Capital Reduction. The implementation of the Capital Reduction is subject to the approval of members at the General Meeting by passing Resolution 1, confirmation of the Court and the Court Order being registered by the Registrar of Companies. It is expected that on 25 July 2012 the Court will hear the Company's claim form under section 641 of the Act for an order confirming the Capital Reduction. The Court will require to be satisfied that the interests of the creditors of the Company will not be prejudiced as a result of the Capital Reduction. It is the intention of the Company to obtain consent to the Capital Reduction in writing from each of its creditors.
The Court Order, if approved, is expected to be registered under the Act and the Capital Reduction is expected to become effective on 26 July 2012.
Annual general meeting
A notice convening the annual general meeting to be held at the offices of Merchant Securities Limited, 51-55 Gresham Street, London EC2V 7EL at 10.00 a.m. on 13 July 2012 has been sent to members today.
General Meeting
A notice convening the GM to be held at the offices of Merchant Securities Limited, 51-55 Gresham Street, London EC2V 7EL at 10.05 a.m. on 13 July 2012 (or as soon as the annual general meeting of the Company convened for the same date and place shall have been concluded or adjourned) is set out at the end of the circular to members.
Defined terms used in this announcement are set out below.
Further enquiries:TEP Exchange Group plc David Roxburgh 00 353 87 2431 665 Merchant Securities Limited Simon Clements/Virginia Bull 020 7628 2200 DEFINITIONS The following definitions apply throughout this announcement unless the contextrequires otherwise:"Act" the Companies Act 2006 "AIM" a market operated by London Stock Exchange plc "Board" or "Directors" the directors of the Company as at the date of this announcement "Capital Reduction" the proposed cancellation of the Deferred Shares and cancellation of the share premium account "Company" TEP Exchange Group PLC "Court" the High Court of Justice in England and Wales "Court Order" the order of the Court confirming the Capital Reduction "Deferred Shares" the 225,897,991,731 deferred shares of 0.001p each in the capital of the Company "Directors" George Kynoch, David Roxburgh, Abraham Weitz and Moses Kraus "Form of Proxy" the blue form of proxy accompanying the Shareholder circular for use in connection with the General Meeting "General Meeting" or "GM" the general meeting of the Company convened for 13 July 2012 pursuant to the circular to members "members" holders of Ordinary Shares "Notice of GM" the notice of General Meeting "Ordinary Shares" the 849,999,999 ordinary shares of 0.001p each in the capital of the Company "Resolutions" the resolutions set out in the Notice of GM
XLONRelated Shares:
Doriemus