TIDMPRP
RNS Number : 2369X
Prime People PLC
18 December 2019
18 December 2019
NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE
UNITED STATES, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH
AFRICA OR NEW ZEALAND
Prime People plc
("Prime People" or the "Company")
Proposed cancellation of part of the Share Premium Account,
Proposed Return of Capital to Shareholders,
and
Notice of General Meeting
Prime People (AIM: PRP) announces that the Company will today be
posting a circular to shareholders (the "Circular") incorporating a
notice of a general meeting, to seek the approval of Shareholders
for the proposals to reduce the Company's capital by the
cancellation of part of its Share Premium Account and to return an
aggregate amount of GBP2 million to Shareholders, which equates to
approximately 16 pence per Ordinary Share.
The Capital Reduction is conditional, inter alia, on the
approval of Shareholders. A notice of General Meeting is set out at
the end of the Circular, which convenes the General Meeting for
9:45 a.m. on 3 January 2020, at the Company's registered office at
2 Harewood Place, Hanover Square, London W1S 1BX.
The Board of Directors considers that the Resolution is in the
best interests of the Company and its Shareholders as a whole and
unanimously recommends that Shareholders vote in favour of the
Resolution to be proposed at the General Meeting.
Unless the context requires otherwise, defined terms used in
this announcement shall have the meanings given to them in the
Circular dated 18 December 2019.
A copy of the Circular will shortly be available on the
Company's website at www.prime-people.co.uk.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
The dates and times set out below are based on the Company's
current expectations and may be subject to change. Any change will
be notified via a Regulatory Information Service. References to
times in this announcement are to London times, unless otherwise
stated.
Last time and date for receipt of Forms of 9:45 a.m. on 31 December
Proxy 2019
General Meeting 9:45 a.m. on 3 January
2020
Record Date and time for entitlement to the 6:00 p.m. on the
Return of Capital day of the Court
order confirming
the Capital Reduction,
expected to be 21
January 2020
Court hearing to confirm the Capital Reduction on or around 21 January
2020
Registration of Court order and Effective expected to be the
Date of the Capital Reduction business day after
the Court order confirming
the Capital Reduction
Crediting of CREST accounts or dispatch of on or around 29 January
cheques in respect of the Return of Capital 2020
For further information, please visit www.prime-people.co.uk or
contact:
Prime People plc Tel: +44 (0) 207 318 1785
Robert Macdonald, Executive Chairman
Donka Zaneva-Todorinski, Finance Director
Cenkos Securities plc Tel: +44 (0) 207 397 8900
Katy Birkin / Nicholas Wells / Harry
Hargreaves
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
Forward-looking statements
Certain statements contained in this announcement are or may
constitute "forward-looking statements". These statements may be
identified by words such as "expects", "looks forward to",
"anticipates", "targets", "aims", "may", "would", "could",
"intends", "plans", "believes", "seeks", "estimates", "will",
"project" or words of similar meaning. They include all matters
that are not historical facts. Such statements are based on the
current expectations and certain assumptions of the Directors and
are, therefore, subject to certain risks and uncertainties.
Forward-looking statements are not guarantees of future performance
and a number of factors could cause actual results and developments
to differ materially from those expressed or implied by the
forward-looking statements. The forward-looking statements in this
announcement speak only as of the date of this announcement. Except
as required by law, the Company disclaims any obligation to update
any such forward-looking statements to reflect future events or
developments.
Notice to overseas persons
The distribution of this announcement outside the UK may be
restricted by law. Persons outside the UK who come into possession
of this announcement should inform themselves about and observe any
such restrictions. Any failure to comply with these restrictions
may constitute a violation of the securities laws of any such
jurisdiction.
Proposed cancellation of part of the Share Premium Account,
Proposed Return of Capital to Shareholders,
and
Notice of General Meeting
1. Introduction and Summary
On 18 December 2019, the Board announced that the Group had
built a strong cash position and that the Directors have therefore
decided that the Company would return surplus cash to the
Shareholders. Further to that announcement, I am pleased to set out
below details of the proposals to reduce the Company's capital by
the cancellation of part of its Share Premium Account and to return
an aggregate amount of GBP2 million to Shareholders, which equates
to approximately 16 pence per Ordinary Share (calculated by
reference to the expected number of Ordinary Shares in issue at the
Record Date (expected to be 21 January 2020) and assuming no
exercise of any options). Shareholders will retain their
proportionate equity interests in the Company following
implementation of the Capital Reduction.
The Capital Reduction is conditional, inter alia, on the
approval of Shareholders at the General Meeting. Shareholders will
find set out at the end of the Circular a Notice of General Meeting
which has been convened for 9:45 a.m. on 3 January 2020, at 2
Harewood Place, Hanover Square, London W1S 1BX.
2. Background to the Capital Reduction
As at 31 March 2019, the Group had net cash of approximately
GBP2.3 million which had increased to approximately GBP3.0 million
as of 30 September 2019. A large proportion of this net cash is
considered by the Board to be surplus to the day-to-day needs of
the business. The Group's cash position has strengthened over the
course of the last year, during which period the Group has
continued to focus on its core markets to deliver organic revenue
growth, to improve productivity gains and to drive profit
growth.
The Board therefore considers that the Group will have
sufficient funds for the purposes of pursuing its current organic
growth plans and has concluded that it is appropriate for the
Company to return surplus cash to Shareholders by way of the
Capital Reduction.
If approved by Shareholders at the General Meeting and
subsequently confirmed by the Court in the terms proposed by the
Board, the effect of the Capital Reduction will be to cancel part
of the amount standing to the credit of the Share Premium Account
(being approximately GBP5.4 million in total as at the date of this
announcement) so that GBP2 million may be paid to Shareholders by
way of the Return of Capital (representing approximately 16 pence
per Ordinary Share calculated by reference to the expected number
of Ordinary Shares in issue at the Record Date and assuming no
exercise of any options). In the event that options are exercised,
Shareholders' pro rata entitlements may be reduced accordingly.
The implementation of the Capital Reduction is subject to a
number of criteria and legal processes which are explained further
below.
3. Procedure to effect the Capital Reduction
Share premium forms part of the capital of the Company and
arises on the issue by the Company of Ordinary Shares at a premium
to their nominal value. The premium element is credited to the
Share Premium Account. Under the Companies Act, the Company is
generally precluded from paying any dividends or making other
distributions in the absence of sufficient distributable reserves,
and the Share Premium Account, being a non-distributable reserve,
can be applied by the Company only for limited purposes. However,
provided the Company obtains the approval of Shareholders by way of
a special resolution and subsequent confirmation by the Court, it
may reduce all or part of its Share Premium Account and in certain
circumstances either return all or part of the sum arising to
Shareholders by way of a return of capital.
In order to effect the Capital Reduction, the Company first
requires the authority of its Shareholders by the passing of a
special resolution at the General Meeting. The Resolution is
proposed in this regard to reduce the amount standing to the credit
of the Share Premium Account and, thereafter, repay the sum arising
on the reduction of the Share Premium Account to the registered
holders of Ordinary Shares at 6:00 p.m. on the Record Date, in
amounts pro rata to their holdings of Ordinary Shares at 6:00 p.m.
on the Record Date. Secondly, the Capital Reduction must be
confirmed by the Court, to which the Company will make an
application if the Resolution is passed.
The Capital Reduction will take effect when the order of the
Court confirming it and a statement of capital approved by the
Court have been registered with the Registrar of Companies. The
Effective Date of the Capital Reduction is currently expected to be
the next working day following the hearing at which the Capital
Reduction is to be confirmed by the Court, which is currently
expected to be on or around 21 January 2020. If the Capital
Reduction becomes effective on the basis that the Return of Capital
is permitted by the Court, it is the Company's intention to pay
this capital to Shareholders as soon as practicable thereafter. It
is currently expected that cheques in respect of the Return of
Capital will be dispatched on or around 29 January 2020 to
Shareholders who hold their Ordinary Shares in certificated form
and that CREST accounts of Shareholders who hold their Ordinary
Shares through CREST will be credited on or around the same
date.
In order to approve the Capital Reduction, the Court will need
to be satisfied that the interests of the Company's creditors will
not be prejudiced by the Capital Reduction. For the benefit of
those of its creditors who do not consent, the Company may be
obliged to provide security in a form acceptable to the Court. This
is in order that the Capital Reduction can be confirmed by the
Court on terms that will permit any part of the sum released by the
Capital Reduction to be returned to Shareholders as a capital
payment.
If the Company is unable in the timetable proposed to obtain
consent from, or is unable or unwilling to provide security (where
security is required) for all such creditors, then the amount
released by the Capital Reduction, when the Capital Reduction is
confirmed by the Court, will remain undistributable for the time
being until any such outstanding consents have been obtained,
security (where security is required) has been put in place, or the
relevant obligations have been discharged, and the Company may be
required to give an undertaking to that effect to the Court.
The Board reserves the right (where necessary by application to
the Court) to abandon, discontinue or adjourn any application to
the Court for confirmation of the Capital Reduction, and hence the
Capital Reduction itself, if the Board believes that the terms
required to obtain confirmation are unsatisfactory to the Company
or if the Board considers that to continue with the Capital
Reduction is inappropriate or not advisable and would not be in the
best interests of the Company and its Shareholders.
The Capital Reduction does not affect the voting or dividend
rights of any Shareholder, or the rights of any Shareholder on a
return of capital.
4. United Kingdom taxation
The following comments, which are intended as a general guide
only and not a substitute for detailed tax advice, are based on
current legislation and on what is understood to be current HM
Revenue & Customs ("HMRC") practice, both of which are subject
to change possibly with retrospective effect. They summarise
certain limited aspects of the UK taxation consequences of the
proposed Return of Capital. These comments apply only to
Shareholders who are resident (and, in the case of individuals,
domiciled) in the UK for tax purposes. They relate only to such
Shareholders who hold their Ordinary Shares directly as an
investment (other than under individual savings accounts, "ISAs")
and who are absolute beneficial owners of those Ordinary Shares.
These comments do not deal with certain types of Shareholders, such
as collective investment schemes, insurance companies, trustees,
persons who are resident in a jurisdiction other than the UK or
persons who hold or who have acquired their Ordinary Shares (or
options or rights in respect thereof) in the course of trade or by
reason of their, or another's, employment.
UK taxation consequences of the Return of Capital to
Shareholders
The return of capital on an Ordinary Share should constitute a
part-disposal of such share for the purposes of taxation of capital
gains in consideration for the amount returned up to the amount
originally subscribed for such share (including any premium). A
charge to United Kingdom taxation on chargeable gains could
therefore arise for a Shareholder depending on the Shareholder's
particular circumstances (including the availability of any
exemptions, reliefs and allowable losses).
To the extent that the amount of capital returned on an Ordinary
Share exceeds the amount originally subscribed for such share
(including any premium), this will constitute an income
distribution for tax purposes.
A UK resident corporate shareholder will not generally be liable
to corporation tax in respect of the income distribution
element.
Under the provisions of Part 15 of the Corporation Tax Act 2010
and Chapter 1 of Part 13 of the Income Tax Act 2007, HMRC can in
certain circumstances counteract tax advantages arising in relation
to a transaction or transactions in securities. If these provisions
were to be applied by HMRC to the Return of Capital, in broad
terms, Shareholders might be liable to taxation on income rather
than chargeable gains on a greater part of the amount of capital
returned than identified above. The Company has not applied for
clearance from HMRC under section 748 of the Corporation Tax Act
2010 and section 701 of the Income Tax Act 2007 that HMRC are
satisfied that the transactions in securities provisions should not
be applied to the Return of Capital. However, the Company has been
advised that a single transaction of this nature is considered in
legal commentary on the relevant provisions not to fall within the
scope of the transactions in securities rules on general
principles. The Company has not sought clearance from HMRC as to
whether HMRC agrees with this view.
UK stamp duty and stamp duty reserve tax ("SDRT")
No UK stamp duty or SDRT will arise on the return of capital to
Shareholders.
This section is not intended to be and should not be construed
to be legal or taxation advice to any particular Shareholder. Any
Shareholder who has any doubt about his own taxation position or
who is subject to taxation in any jurisdiction other than the UK
should consult his professional tax adviser without delay.
5. General Meeting
Shareholders will find a notice convening the General Meeting of
the Company at the end of the Circular. The General Meeting will be
held at 9:45 a.m. on 3 January 2020 at 2 Harewood Place, Hanover
Square, London W1S 1BX to consider and, if thought appropriate,
pass the Resolution which is summarised below.
Resolution: Capital Reduction and Return of Capital
The Resolution will be proposed as a special resolution of the
Company. The Directors will be seeking approval of Shareholders,
subject to the consent of the Court, to cancel GBP2 million
standing to the credit of the Share Premium Account and then repay
the sum arising on cancellation of this amount to Shareholders who
are on the Company's register of members at 6:00 p.m. on the Record
Date pro rata to their respective holdings of Ordinary Shares at
6:00 p.m. on the Record Date. Assuming that no options over
Ordinary Shares are exercised between the date of this announcement
and the Record Date, the amount to be returned equates to
approximately 16 pence per Ordinary Share. In the event that
options are exercised, Shareholders' pro rata entitlements may be
reduced accordingly.
6. Recommendation
The Board considers the Capital Reduction to be in the best
interests of the Company and its Shareholders as a whole.
Accordingly, the Board unanimously recommends that Shareholders
vote in favour of the Resolution, as all of the Directors intend to
do in respect of their beneficial holdings amounting, in aggregate,
to 7,151,596 Ordinary Shares representing approximately 58 per
cent. of the existing issued share capital of the Company.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCFFUFUWFUSEEE
(END) Dow Jones Newswires
December 18, 2019 02:00 ET (07:00 GMT)
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