Publication of Circular & General Meeting Notice

RNS Number : 6377U

Braemar PLC

29 March 2023

 

29 March 2023

BRAEMAR   PLC

("Braemar" or the "Company" or the "Group")

Publication of Circular and Notice of General Meeting

Braemar Plc (LSE: BMS), a provider of expert investment, chartering, and risk management advice to the shipping and energy markets, announces that a circular and notice of general meeting (the "Circular") has today been published and posted to shareholders. The general meeting will be held at the Company's offices at One Strand, Trafalgar Square, London, WC2N 5HR at 10 a.m. on 18 April 2023.

Following the Company's announcement dated 14 February 2023, which set out inter alia the Company's intention to convene a general meeting. The Circular sets out the details of a proposed capital reduction (which will support the Company's ability to pay dividends in future and provide the Company with flexibility to continue with the existing progressive dividend policy), proposed rectification of the relevant dividends and proposed related party transaction. The expected timetable of principal events and the Chairman's letter are set out below.

The notice will be available on the Company's website ( www.braemar.com ) and, together with the Form of Proxy will be submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism .  Copies of these documents have also been posted today to those of the Company's shareholders that have elected to continue to receive hard copies.

Unless otherwise indicated, all capitalised terms used but not defined in this announcement shall have the same meaning as described in the Circular.

For further information, contact:

Braemar Plc
Nick Stone, Group Chief Financial Officer		Tel [phone]
Rebecca-Joy Wekwete, Company Secretary
Investec Bank plc
Gary Clarence / Harry Hargreaves / Alice King		Tel [phone]
Cenkos Securities plc Ben Jeynes / Max Gould (Corporate Finance) Alex Pollen / Leif Powis (Sales)		Tel [phone]
Buchanan
Charles Ryland / Jamie Hooper / Jack Devoy		Tel [phone]

Notes to Editors:

About Braemar Plc

Braemar provides expert investment, chartering, and risk management advice that enable its clients to secure sustainable returns and mitigate risk in the volatile world of shipping and energy. Our experienced brokers work in tandem with specialist professionals to form teams tailored to our customers' needs, and provide an integrated service supported by a collaborative culture.

Braemar joined the Official List of the London Stock Exchange in November 1997 and trades under the symbol BMS.

For more information, including our investor presentation, visit www.Braemar.com and follow Braemar on LinkedIn .

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Publication of the Circular	29 March 2023
Latest time and date for receipt of Forms of Proxy for the General Meeting	10 a.m. on 14 April 2023
General Meeting	10 a.m. on 18 April 2023
Expected date of initial directions hearing of the Court	28 April 2023
Expected date of Court Hearing to confirm the Capital Reduction	9 May 2023
Expected effective date for the Capital Reduction	10 May 2023

DEFINITIONS

"Act"	C omp a ni e s A c t 2006;
" B Or di n a r y Share Issue"	t h e issue of one B Ordinary Share for each one Ordinary Share held by each Shareholder, as described in the Circular;
" B Or di n a r y Shares"	t h e  shares  in  the  capital  of  the  Company  to  be  created  by  the B  Ordinary  Share Issue,  where  the  nominal   value  of  such  shares is  equal   to  the  sum  that  is  obtained   by  dividing  the  number  of B Ordinary Shares to be issued into £19,754,926;
"B o ar d " o r "Directors"	t h e directors of the Company or any duly appointed committee thereof;
"C a pi t a l R e d e mpti o n Reserve"	t h e capital redemption reserve of the Company;
"C a pi t a l R e d e mpti o n Reserve Reduction"	t h e cancellation of the full amount outstanding to the credit of the Capital Redemption Reserve;
"Capital Reduction"	t h e proposed cancellation of the Company's Capital Redemption Reserve and  Share  Premium  Account,  and  the  Merger  Reserve Reduction pursuant to the Resolutions as set out in the Notice of General Meeting;
"Capital Reduction Record Time"	6 . 0 0 p.m. on the date immediately preceding the date of the Court Hearing;
"Capital Reduction Resolutions"	t h e resolutions  (as  set out in  full  in  the Notice of General Meeting  at resolutions 1 to 5 (inclusive)) to be proposed at the General Meeting in relation to the proposed Capital Redemption  Reserve Reduction, Share Premium Account Reduction and Merger Reserve Reduction;
"Company" or "Braemar"	B ra e m a r Plc,  a  company  incorporated   in  England  and  Wales  with registered  number 02286034  and having  its  registered  office at One Strand, Trafalgar Square, London England WC2N 5HR;
"Court"	t h e High Court of Justice in England and Wales;
"Court Hearing"	t h e hearing by the Court to confirm the Capital Reduction;
"Court Order"	t h e order of the Court confirming the Capital Reduction;
"CREST"	t h e relevant system (as defined in the CREST Regulations) in respect of which  Euroclear UK & International Limited  is the Operator (as  defined in the CREST Regulations);
"CREST Regulations"	t h e Uncertificated Securities Regulations 2001 (as amended);
" D i r e c t o r s' D ee d of Release"	a s defined in paragraph 4.2.3 of Part IV of the Circular;
"Dividend Rectification Resolutions"	t h e resolutions  (as set out in  full  in  the Notice of General Meeting  at resolutions 6, 7 and 8) to be proposed at the General Meeting to ratify the accounting  entries in respect of unlawful dividends such that profits are appropriated, to ratify and approve the entry into the Shareholders' Deed of Release and to ratify and approve the entry into the Directors' Deed of Release;
"Effective Date"	t h e date of the Court Order;
"FCA Handbook"	t h e FCA's Handbook of Rules and Guidance;
" F i na n c i a l Con d uct Authority" or "FCA"	t h e Financial Conduct Authority of the United Kingdom;
"Form of Proxy"	the form of proxy accompanying the Circular relating to the General Meeting;
"FSMA"	the Financial Services and Markets Act 2000, as amended;

LETTER FROM THE CHAIRMAN OF THE COMPANY

Braemar Plc

(incorporated and registered in England and Wales under company registration number 02286034)

Directors: Nigel Payne (Non-executive Chairman James Gundy (Chief Executive Officer) Nicholas Stone (Chief Financial Officer) Tristram Simmonds (Chief Operating Officer Elizabeth Gooch (Non-executive Director) Joanne Lake (Non-executive Director)

Registered office: One Strand Trafalgar Square London WC2N 5HR

PROPOSED C A P ITA L REDUCTIO N

and

PROPOSED RECTIFICATION O F RELEVANT DIVIDENDS

and

RELATE D PART Y TRANSACTIONS

and

N O TIC E O F GENERA L MEETING

1 .  Introduction

I a m writing t o provide y o u with details of a proposal t o enhance th e Compa ny ' s ability t o retur n value t o Shareholders in th e futur e an d t o addres s th e p a ymen t of unlawful dividends tha t h ave bee n identified a s par t of a n exercise which ha s bee n undertake n by th e Compa ny t o increase th e Group' s capacity t o p ay futur e dividends .

The Circular also provides th e details of a General Meeting tha t will b e held a t On e Strand , Trafalgar Square , Londo n WC 2 N 5 H R a t 1 0 a. m. o n 1 8 April 2 02 3 t o consider th e Resolutions tha t will b e pu t t o Shareholders t o appr ove the m.

Th e purpos e o f the Circular i s t o pr o vid e y o u wit h informatio n abou t th e Capita l Reduction , th e propose d rectification o f Relevant Dividend s an d th e relate d part y transactio n an d t o e xplai n w hy th e Boar d consider s al l th e Resolution s t o b e i n th e bes t interest s o f th e Compa ny an d it s Shareholder s a s a whol e an d unanimousl y recommend s tha t y o u v ot e i n f av ou r o f th e Capita l Reductio n Resolution s to b e propose d a t th e Genera l Meeting . Gi v e n th e interest s o f th e Boar d i n th e Dividen d Rectification Resolutions , an d a s require d by th e Listin g Rules , th e Boar d ar e unabl e t o tak e par t i n th e consideratio n o f th e matter s deal t wit h by th e Dividen d Rectification Resolutions an d therefor e canno t recommen d tha t shareholder s v ot e i n f av ou r o f th e Dividen d Rectification Resolution s bu t d o recommen d that shareholder s v ot e o n them . Shareholder s shoul d not e that , unless :

A)  al l Capita l Reductio n Resolution s ar e appr ov e d a t th e Genera l Meetin g (and th e Cour t subsequentl y con f irm s th e Capita l Reduction) , th e Capita l Reductio n wil l no t tak e plac e an d th e declaratio n an d paymen t o f unl a wfu l dividend s wil l no t b e recti f ied ; and

B)  th e Capita l Reductio n take s plac e an d al l Dividen d Rectification Resolution s approved ;

th e paymen t o f unl a wfu l dividend s wil l no t b e recti f ied , an d th e Compa ny wil l h ave potentia l claim s agains t Shareholder s an d Relevant

Directors .

I f Resolutio n 7 se t ou t i n th e Notic e o f Genera l Meetin g i s no t appr ov ed , the n th e Compa ny ha s a potentia l righ t t o mak e claim s against th e Recipien t Shareholder s fo r rec ov er y o f th e paymen t o f th e Rele v an t Dividends . Ther e i s n o certaint y a s t o th e amount s tha t coul d b e rec ov ere d i f th e Compa ny sough t t o pursu e thes e potentia l claims .

I f Resolutio n 8 se t ou t i n th e Notic e o f Genera l Meetin g i s no t appr ov ed , the n th e Compa ny ha s a potentia l righ t t o brin g claim s against th e Rele v an t Director s i n relatio n t o th e paymen t o f th e Rele v an t Dividends . Ther e i s n o certaint y as t o th e amount s tha t coul d b e rec ov ere d i f th e Compa ny sough t t o pursu e thes e potentia l claims .

Part II o f the Circular contains definitions o f w o r ds a nd ter ms t h a t have been us e d t h r oughout it. Please refer t o Part II as y ou review the Circular .

2 .   Backgroun d to , and reason s for the Capita l Reduction

Under th e Act , a com p an y may, with th e sanction o f a special resolution passed b y its shareholders an d confirmation o f th e Court , reduce o r cancel its share capital, share premium a ccou n t , capital redemption reserve an d othe r reserves. It ma y the n apply th e sum s resulting fro m suc h reduction t o its distributable reserves. These sum s ma y the n b e treate d a s distributable fo r th e purpose s o f making future returns t o Shareholders .

The Company currently has :

2. 1 a Share Premium Accoun t standing t o th e credit of £ 53,795 , 563 ;

2. 2 a Capital Redemption Reserve standing t o th e credit of £396 , 3 8 2 ;

2 .3 a Merger Reserve of £23 , 366,000 ;

Th e Ac t requires tha t if a compa ny issues share s a t a premium t o th e nominal value of thos e share s f o r cas h o r otherwise, a su m equal t o th e aggregat e amoun t of o r value of th e premiums mus t b e transferre d t o th e compa ny ' s shar e premium account . A shar e premium accoun t ca n only b e use d in very limited circumstances. The Compa ny intends t o reduc e th e Share Premium Accoun t in full .

The Company currently ha s a Capital Redemption Reserve which arose a s a result of th e accounting treatment applicable t o a numbe r of historical share bu y back s (and associated cancellations of shares) . The Compa ny plans t o reduc e th e Capital Redemption Reserve in full .

In certain circumstances suc h a s wher e share s ar e issued in consideration fo r th e acquisition o f share s in anothe r com p any , instead o f creatin g a share premium, a n amou nt is credited t o th e merger reserve. The Merger Reserve arose principally in 200 1 in relation t o th e acquisitions o f B ra ema r Shipbrokers Limited an d Braemar Tankers Limited. Further additions t o th e Merger Reserve arose in respec t o f Naves an d Atlantic Brokers .

Th e Share Premium Accoun t an d th e Capital Redemption Reserve ar e statutor y reserves in respec t of which th e Cour t ha s th e p ow e r t o sanction th e reduction o r cancellation. Th e Merge r Reserve is a non-statutor y reserve which cann ot b e reduce d in th e sam e way a s th e Shar e Premiu m Accoun t an d Capital Redemption Reserve. It is there f or e propose d t o capitalise £19,754,92 6 standing t o th e credit of th e Merge r Reserve by applying £19,754,92 6 in paying u p in full ne w B Ordinary Shares of £0.1 0 each .

Th e B Ordinary Shares will b e allotted an d issued o n th e Business Day prior t o th e d ay of th e Cour t Hearing, credited a s fully paid, t o th e person s holding Ordinary Share s a s a t th e Capital Reduction Recor d Time, o n th e basis of six B Ordinary Share s f o r eac h Ordinary Shar e held by Shareholder s.

Th e B Ordinary Shares will n ot b e admitted t o trading o n th e Londo n Stoc k Exchange, o r a ny o the r marke t o r stoc k exchange. It is a condition of issue of th e B Ordinary Shares tha t n o share certificates will b e issued in respec t of the m. Th e B Ordinary Shares will have extremely limited rights an d will n ot carr y a ny rights t o participate in th e pro f it s of th e Compa ny an d have n o rights t o participate in th e capital of th e Compa ny e xce pt o n a winding up . The B Ordinary Shares will b e transferable, bu t n o marke t will exist f o r the m an d it is anticipated tha t th e Cour t will con f ir m a t th e Cour t Hearing tha t the y m ay b e cancelled th e d ay afte r the y ar e issued .

The Capital Reduction, if approved, will provide th e Company with th e flexibility t o continue with its existing progressive dividend policy an d will all o w th e rectification of certain unlawful dividends which have bee n paid a s described in paragraph 3 an d P ar t IV of the Circular .

3 . Paymen t o f Rele v an t Dividends

In Decembe r 2 0 22, th e Compa ny commence d a project t o research options f o r increasing th e distributable reserves available t o th e Compa ny in orde r t o suppor t th e Group' s state d progressive dividend policy .

Th e initial f ocu s w a s o n shor t ter m options tha t would increase th e distributable reserves a s a t 2 8 February 2 02 3 in orde r t o allow a final dividend recommendation with th e publication of year en d results later in 2 02 3.

A review of thes e short-ter m identified tha t charges take n t o retained earnings in recen t years f o r th e impairment of th e value of certain preferenc e share s held by th e Compa ny represente d unrealised losses an d could there f or e potentially b e excluded fro m th e calculation of distributable reser v e s.

Whilst reviewing th e possibility tha t th e impairment losses could b e determined a s unrealised losses f o r th e purpos e of measuring distributable reserves, a broade r review of o the r gains an d losses tha t ha d bee n recorde d in retained earnings in recen t y ear s w a s carried out . This review identified certain gains tha t ha d bee n recorde d regularly relating t o share-based payments charge s.

The gains in question arose wh e n shares wer e aw a r d e d t o employees o f ot h e r g r oup companies a nd t he co s t o f t hose shares w as debited t o t he c o st o f investment o f t hose g r oup companies a nd credited t o retained earnings. This is a n accounting practice t h a t has b ee n ongoing within t he Com pan y since t he introduction o f IFRS 2 in 20 0 5 . The only way therefore t h a t those gains could be considered t o be realised is if t he g r oup companies conc er n e d h a d been sold. The consequence o f this is t h a t a significant balance within retained earnings (that w as n o t previously identified as created b y unrealised g ains) w as incorrectly us e d b y t he Com pan y in t he calculation o f its distributable reserves. This m ean s t h a t t he Com pan y has therefore paid several dividends between 201 6 a nd 202 3 without having sufficient distributable reserves fr om which t o lawfully pa y such dividends .

Details of th e Relevant Dividends ar e se t ou t bel o w : Paymen t dat e an d typ e of d ividen d paymen t (interim o r final)	Amoun t pe r or di nar y shar e	T o ta l a ggregat e amoun t of d ividen d paid
FY 2 01 6 - Interim dividend - 1 8 December 2 01 5	9. 0 penc e	£2,6 5 9,000
FY 2 01 7 - Final dividend - 29 July 2 01 6	17. 0 penc e	£ 5,0 2 0,00 0
FY 2 01 7 - Interim dividend - 1 6 December 2 01 6	9. 0 penc e	£2 , 83 8 ,000
FY 2 01 9 - Final dividend - 2 7 July 2 01 8	10. 0 penc e	£3,076,00 0
FY 2 01 9 - Interim dividend - 1 4 December 2 01 8	5. 0 penc e	£1 , 540,00 0
FY 2 0 20 - Final dividend - 2 6 July 2 01 9	10. 0 penc e	£3,064,00 0
FY 2 0 20 - Interim dividend - 1 3 December 2 01 9	5. 0 penc e	£1 , 566,000
FY 2 0 22 - Final dividend - 1 September 2 02 1	5. 0 penc e	£1,4 8 2,000
FY 2 0 22 - Interim dividend - 1 6 December 2 02 1	2. 0 penc e	£6 27,00 0
FY 2 02 3 - Final dividend - 1 4 Octobe r 2 0 22	7. 0 penc e	£2,017,00 0
FY 2 02 3 - Interim dividend - 4 January 2 02 3	4. 0 penc e	£1,15 8 ,000
Tota l aggregat e valu e		£25,047,00 0

P ar t IV of the Circular set s ou t details of h ow th e Relevant Dividends ar e unlawful a s well a s th e proposals f o r rectification .

Th e consequenc e of suc h dividends being paid otherwise tha n in accordanc e with th e Ac t is tha t th e Compa ny m ay h ave a claim against all shareholders (former o r present) wh o received a ny suc h dividends (up t o th e maximum value of cumulative dividends received by eac h shareholder) a s well a s a claim against all Directors (former o r present , individually o r in aggregate) wh o appr ov e d th e declaration an d payment of suc h dividends, u p t o th e total aggregate value of £25,047,000 .

Th e Grou p e n tere d into deed s o f release with related parties in connection with anothe r dividend rectification process , relating t o th e Com p any' s

1 Septembe r 202 1 final dividend an d 1 6 Decembe r 202 1 interim dividend (shown above) . In tha t instance, th e Com p an y identified tha t it h ad no t properly pre p are d an d filed unaudited interim a ccou n t s a t Companies House , a s required b y th e Companies Ac t 2006 , prior t o declaring an d payin g distributions t o shareholders in respec t o f th e Com p any' s 1 Septembe r 202 1 final dividend an d 1 6 Decembe r 202 1 interim dividend, an d ther e for e soug ht t o rectif y tha t administrative oversight. S uc h dividend rectification wa s announce d b y th e Com p an y o n 2 7 July 2022 , classified a s a smaller related p art y transaction pursuant t o L R 11.1.1 0 R, an d wa s approve d b y th e Com p any' s shareholders o n 6 Octobe r 2022 . However, a s th e Com p an y has since identified throug h its analysis o f historical IFRS 2 accounting treatment (as described above) tha t it did no t in fa c t have sufficient distributable reserve s a t th e time (and ther e for e tha t th e filing o f unaudited interim a ccou n t s a t Companies Hous e alone did no t appropriately address th e issue) , an d accordingly th e dividend rectification wa s invalid and/o r ineffectual an d it is therefore necessary t o red o this rectification .

Accordingly, th e Compa ny ha s entered into th e Shareholders' Dee d of Release an d th e Directors' Dee d of Release. The consequence of th e entr y into these deeds by th e Company is tha t th e Company will b e unable t o make any claims against: (a) th e recipient Shareholders; an d (b) th e Directors an d f orme r Directors, in eac h cas e in respec t of th e payment of th e Relevant Dividends otherwise tha n in accordanc e with th e Act .

Th e entr y by th e Compa ny into th e Directors' Dee d of Release will constitute a related part y transaction (as de f ine d in th e Listing Rules) . This is becaus e eac h of th e Relevant Directors (comprisin g person s wh o are , o r w er e within th e last 1 2 month s, directors of th e Company , being James Gundy, Tristram Simmonds, Nicholas Stone, Nigel Payne, Elizabeth Gooch, Joanne Lake, Stephen Kunzer and Lesley Watkins ) is deeme d t o b e a related part y unde r L R 11.1. 4 R an d the y will b e released fro m a ny liability t o rep ay a ny amount s of th e Relevant Dividends pursuan t t o th e Directors' Dee d of Release (as applicable) . Therefore, Resolution 8 will see k th e specific approval of th e Compa ny ' s shareholders f o r th e entr y into th e Directors' Dee d of Release a s related part y transactions in accordanc e with th e requirements of th e Listing Rules .

The technical issues identified in this paragraph an d Part IV of the Circular in respec t of th e Relevant Dividends are of a historical nature an d ther e is n o chang e t o th e financial outlook of th e Compa ny a s a consequence .

Th e Compa ny ha s take n appropriate step s an d ha s th e necessary procedure s in place t o avoid th e p a ymen t of a ny furthe r unlawful dividends. In this regar d th e Compa ny too k step s t o strengthen its financial reporting resources during 2 0 2 2 , including th e hiring of a ne w experienced financial controller. A project, also utilising external consultants, t o asses s approache s t o improve th e distributable reserves position of Braema r Plc, led t o th e discovery of th e curren t situation, resulting in th e proces s tha t is n ow being undertaken. In futur e periods, mor e detailed reconciliations of opening t o closing distributable reserves will b e undertake n in orde r t o identify unrealised gains an d pro f it s relating t o th e accounting treatmen t arising fro m th e application of IFRS2 o r a ny o the r accounting standar d will b e maintained t o ensure ther e is n o repea t of th e identified error .

Accordingly, we d o n ot believe a ny furthe r remedial action is required. F o r avoidance of dou b t , th e Compa ny continues t o dee m its procedure s, system s an d controls t o b e sufficient t o enable it t o comply with its obligations unde r th e listing rules, disclosure requirements, transparency rules an d corporat e governance rules, an d in particular its obligations unde r L R 1 0 an d L R 1 1 a s well a s its requirement t o mak e timely an d accurat e disclosure t o th e market .

4 .  The Capita l Reduction

A s a result of th e Compa ny ' s state d desire t o continue with its existing progressive dividend policy, an d in orde r t o rectify th e declaration an d payment of unlawful dividends, th e Compa ny mus t undertake th e Capital Reduction t o provide it with th e necessary distributable reser v e s.

In addition t o th e approval by Shareholders of th e Capital Reduction Resolutions, th e Capital Reduction requires th e approval of th e Court . Accordingly, following th e General Meeting, a n application will b e mad e t o th e Cour t in orde r t o con f ir m an d appr ove th e Capital Reduction .

In providing its approval of th e Capital Reduction, th e Cour t m ay require measure s t o b e pu t in place f o r th e protection of creditors (includin g contingent creditors) of th e Company whos e de b t s remain outstanding o n th e relevant date , e xce pt in th e cas e of creditors wh o have consented t o th e Capital Reduction. Suc h credito r protection measures m ay include seeking th e consen t of th e Compa ny ' s creditor s t o th e Capital Reduction or th e provision by th e Compa ny t o th e Cour t of a n undertaking t o deposit a su m of mone y into a blocked accoun t create d f o r th e purpos e of discharging th e non-consenting creditors of th e Company o r a n undertaking t o trea t a s undistributable f o r th e time being certain sum s representin g th e realisation of "hidden value" in th e balance shee t a s a t th e Effective Date .

It is anticipated tha t th e initial directions hearing in relation t o th e Capital Reduction will tak e place o n 2 8 April 2 023 , with th e final Cour t Hearin g taking place o n 9 M ay 2 02 3 an d th e Capital Reduction becoming effective o n th e following d a y , following th e necessary registration of th e Cour t Orde r a t Companies House .

There will b e n o change in th e number of Ordinary Shares in issue (or their nominal value) following th e implementation of th e Capital Reduction an d n o ne w share certificates will b e issued a s a result of th e Capital Reduction. The Capital Reduction itself will n ot involve any distribution o r rep a ymen t of capital o r shar e premium by th e Compa ny an d will n ot reduc e th e underlying ne t asset s of th e Compa n y . Th e distributable reserves arising o n th e Capital Reduction will, subject t o th e discharge of a ny undertakings required by th e Cour t a s explained ab ov e , suppor t th e Compa ny ' s ability t o p ay dividends should circumstances in th e futur e mak e it desirable t o d o s o an d appropriation of pro f it s t o ratify relevant accounting entries .

Shareholders should n o t e tha t if , f o r any reason, th e Cour t declines t o approve th e Capital Reduction, th e Capital Reduction will n ot tak e place. The Boar d reserves th e right t o abandon o r t o discontinue (in whole o r in part) th e application t o th e Cour t in th e event tha t th e Boar d considers tha t th e term s o n which th e Capital Reduction would b e (or would b e likely t o be) confirmed by th e Cour t would n ot b e in th e bes t interests of th e Compa ny and/o r it s Shareholders a s a whole . Th e Boar d ha s undertaken a thoroug h an d extensive review of th e Compa ny ' s liabilities (includin g contingent liabilities) an d considers tha t th e Company will b e able t o satisfy th e Cour t tha t there is n o real likelihood tha t any creditor of th e Company would b e prejudiced by th e Capital Reduction .

5 .  Genera l Meetin g an d Resolutions

The Notice of General Meeting is se t ou t in P ar t VI of the Circular .

Th e General Meeting will tak e place a t th e Compa ny ' s o f f ice s a t On e Strand , Trafalgar Square , Londo n WC 2 N 5 H R a t 1 0 a. m. o n 1 8 April 2 02 3. At th e General Meeting, th e Resolutions se t ou t in P ar t VI of the Circular will b e propose d t o Shareholders .

The Resolutions will b e passe d if 75 % o r mor e of th e vo te s cas t (in perso n o r by proxy) a t th e General Meeting ar e in favour of th e R esolutions .

The Resolutions, which ar e special resolutions, ar e summarised bel o w :

Resolutio n 1 - this a resolution t o appr ov e , subject t o confirmation of th e Court , th e cancellation of th e Share Premium Account .

Resolutio n 2 - this is a resolution t o appr ov e , subject t o confirmation of th e Court , th e cancellation of th e Capital Redemption Reser v e .

Resolution s 3 , 4 an d 5 - these resolutions provide authority t o th e directors t o allot an d issue th e B Ordinary Shares, describe th e rights attachin g t o th e B Ordinary Shares an d propos e tha t th e B Ordinary Shares create d by th e B Ordinary Share Issue b e cancelled .

Resolutio n 6 - this is a resolution that , subject t o th e passing of resolutions 1 - 5 (inclusive) an d th e Capital Reduction becoming effective , distributable pro f it s of th e Compa ny b e appropriated t o th e relevant accounting periods during which th e Relevant Dividends w er e declared an d paid .

Resolutio n 7 - this is a resolution tha t is conditional upo n th e passing of resolutions 1 t o 6 (inclusive) tha t releases an d waives all claims which th e Compa ny m ay h ave in respec t of th e Relevant Dividends against previous an d curren t shareholders an d their successor s in title an d ratifies an d authorises th e entr y into th e Shareholders' Dee d of Release by th e Compa n y .

Resolutio n 8 - this is a resolution tha t is conditional upo n th e passing of resolutions 1 t o 6 (inclusive) tha t releases an d waives all claims which th e Company may have in respect of the Relevant Dividends against the directors (current and former and their personal representatives and successor s in title) a t th e time of declaration an d payment of eac h respective Relevant Dividend an d ratifies an d authorises th e entry into th e Directors' Deed of Release by th e Compa n y .

6 .  Unite d Kingdo m Taxation

Th e following comment s ar e intended a s a general guide only an d relate only t o certain U K ta x consequence s of th e Reduction of Capital. Th e comment s ar e base d o n curren t legislation an d H M Revenue & Custom s published practice, b o t h of which ar e subject t o change , possibly with retrospective effect. These comment s deal only with Shareholders wh o are resident f o r taxation purposes in th e UK , wh o are th e absolute beneficial o wner s of th e Ordinary Shares an d wh o hold the m a s a n investment an d n ot in a trading accoun t ("UK Shareholders") . They d o n ot deal with th e position of certain classes of Shareholders, suc h a s dealers in securities, insurance companies, collective investment schemes o r persons regarde d a s having obtained their Ordinary Shares by reason of empl o yment .

A ny Shareholde r wh o ha s a ny doub t abou t thei r o w n taxatio n position , o r wh o i s subjec t t o taxatio n i n a ny jurisdictio n other tha n th e UK

shoul d consul t thei r o w n professiona l taxatio n adviso r immediately .

T h e S h are P r emiu m R e duction

Th e Shar e Premium Reduction should n ot h ave a ny consequence s f o r U K Shareholders f o r th e purpose s of U K taxation of chargeable gains

("CGT") , U K income ta x o r U K corporation ta x.

T h e C a pi tal R e demptio n Reserv e Reduction

The Capital Redemption Reserve Reduction should n ot have a ny consequences f o r U K Shareholders f o r th e purpose s of U K CGT, U K income ta x o r U K corporation ta x.

T h e Me r ge r Reserv e Reduction

O n th e basis tha t th e B Ordinary Shares will b e treate d a s being paid u p f o r " ne w consideration" received by th e Compa n y , th e B Ordinary Shar e Issue should n ot give rise t o a ny liability f o r U K income ta x (or corporation ta x o n income) in a U K Shareholder's hand s. F o r CG T purpose s, th e B Ordinary Share Issue should b e treated a s a "reorganisation", s o tha t a U K Shareholder should n ot b e treated a s making a disposal of their Ordinary Shares f o r CGT purpose s upo n receipt of th e B Ordinary Shares. Instead, th e B Ordinary Shares should b e treate d a s th e sam e asset , acquired a t th e sam e time, a s their Ordinary Shares. O n a disposal of B Ordinary Shares o r Ordinary Shares by a U K Shareholder f o r CG T purpose s, a U K Shareholder's bas e cos t in their Ordinary Shares would b e apportioned bet w ee n their B Ordinary Shares an d their Ordinary Shares base d o n their respective marke t values a t th e dat e tha t th e B Ordinary Shares o r Ordinary Shares ar e disposed o f .

It is likely tha t th e marke t value of th e B Ordinary Shares will b e £nil f o r th e duration of their existence. This is becaus e th e B Ordinary Shares will h ave n o voting rights o r rights t o income; will h ave n o marke t o n which the y ca n b e traded ; an d it is anticipated tha t the y will b e cancelled f o r n o payment o n th e d ay immediately following th e dat e of their issue. Consequently, th e issue of th e B Ordinary Shares should n ot impact th e base cost of th e Ordinary Shares. Th e reduction of capital effecte d by th e cancellation of th e B Ordinary Shares should b e treate d f o r CG T purpose s a s a further "reorganisation" s o tha t a U K Shareholder should n ot b e treated a s making a disposal of their Ordinary Shares o r B Ordinary Shares f o r CG T purpose s. Instead, th e Ordinary Shares held by th e U K Shareholder afte r th e cancellation of th e B Ordinary Shares should b e treate d a s th e sam e asset , acquired a t th e sam e time, a s their holding of Ordinary Shares an d B Ordinary Shares prior t o th e cancellation which, a s described ab ov e , should in tur n b e treate d a s th e sam e asset , acquired a t th e sam e time, a s their original holding of Ordinary Share s.

Accordingly, following th e B Shar e Issue an d th e cancellation of th e B Share s, U K Shareholders should b e left in th e sam e position f o r CG T purpose s a s the y w er e in originally be f or e th e B Ordinary Shar e Issue an d cancellation of B Ordinary Share s. Ev e n if (contrary t o th e precedin g paragraph) th e cancellation of th e B Ordinary Shares were treated a s a disposal f o r CGT purposes, provided tha t th e market value of th e B Ordinary Shares is £nil f o r th e duration of their existence which, f o r th e reasons described ab ov e , seem s likely t o b e th e case , ther e should b e n o ad v ers e CGT consequences f o r U K Shareholders. There should b e n o chargeable gain (or allowable loss) o n th e cancellation of th e B Ordinary Shares, an d th e U K Shareholder's bas e cos t in their Ordinary Shares should b e th e same a s it w a s originally before th e B Ordinary Share Issue an d cancellation of B Ordinary Share s.

U K sta m p dut y a n d sta m p dut y r eserv e tax

N o stam p dut y o r stam p dut y reserve ta x will b e payable o n th e Reduction of Capital, including th e B Ordinary Shares Issue an d th e cancellation of th e B Ordinary Share s.

7 .  Actio n t o b e take n i n respec t o f th e Genera l Meeting

Shareholders ca n appoint a prox y electronically using th e link www.sharevote.co.uk   - Details of h ow t o appoint a prox y in this way ar e se t ou t o n page s 2 1 t o 22 of the Circular . Alternatively, y o u m ay reques t a har d co py F or m of Prox y directly fro m ou r Registrar, Equiniti. Details of h ow t o request , an d complete, a har d co py F or m of Prox y ar e se t ou t o n page s 2 1 t o 22 of the Circular . T o b e valid, a F or m of Prox y mus t b e returne d a s soo n a s possible an d s o a s t o b e received by th e Registrars by n ot later tha n 1 0 a. m. o n 1 4 April 2 02 3.

The completion an d retur n of th e F or m of Proxy will n ot prevent y o u fro m attending an d voting a t th e General Meeting in person .

In accordanc e with curren t bes t practice an d t o ensur e voting accurately re f lect s th e views of Shareholders, it will b e propose d a t th e General Meeting tha t voting o n th e Resolutions will b e conducte d by poll vo t e rather tha n by a sh ow of hand s an d th e relevant procedures will b e explained a t th e General Meeting .

I f th e Dividen d Rectification Resolution s ar e no t passed , th e Compa ny ma y continu e t o h ave claim s agains t th e Rele v an t Director s and

Recipien t Shareholders .

8 .    Questions

If y o u wish t o as k a question relating t o th e business of th e General Meeting  in advance , please submit y ou r questions t o company [e-mail] m , please include in y ou r email: th e shareholder's full name , numbe r of shares held an d telephone contac t details .

9 .  Recommendation

Th e Boar d consider all th e Resolutions t o b e in th e bes t interests of th e Compa ny an d its Shareholders a s a whole an d th e Boar d unanimously recommen d tha t y o u vo t e in favour of th e Capital Reduction Resolutions t o b e propose d a t th e General Meeting, a s the y intend t o d o in respec t of their aggregat e shareholdings, of 1,153 , 37 0 Ordinary Shares representing approximately 3. 5 % of th e Ordinary Shares in issue a t th e dat e of the Circular .

Given th e interests of th e Boar d in th e Dividend Rectification Resolutions, an d a s required by th e Listing Rules, th e Boar d ar e unable t o tak e par t in th e consideration of th e matter s deal t wit h by th e Dividend Rectification Resolutions an d therefore cann ot recommen d tha t shareholders vo t e in f av ou r of th e Dividend Rectification Resolutions bu t d o recommen d tha t shareholders vo t e o n the m. H ow e v er , th e Boar d believes, having bee n advised by Investec in its capacity a s th e Compa ny ' s sponsor , tha t (i) th e waiver of claims against th e Relevant Directors pursuan t t o th e Related Party Resolutions an d (ii) th e entr y into th e Directors' Dee d of Release ar e fair an d reasonable s o fa r a s th e Shareholders ar e concerned .

A s non e of th e Boar d ar e deeme d t o b e independent f o r th e purpose s of th e Dividend Rectification Resolutions, th e Relevant Directors ar e precluded, an d have undertaken t o abstain, fro m voting o n th e Dividend Rectification Resolutions. The Relevant Directors have also undertaken t o tak e all reasonable step s t o ensure tha t their associates abstain fro m voting .

Yours faithfully

Nigel Payne

Non-executive Chairma n

 

END

 

 

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