Capital Reconstruction
Avingtrans PLC
20 June 2003
Avingtrans plc
Cancellation of the Share Premium Account and Notice of Extraordinary General
Meeting
The Board of Avingtrans plc ('the Company') today announces a proposal to cancel
the share premium account of the Company ('the Proposal'). The Company also
gives notice of an Extraordinary General Meeting of the Company ('the EGM'), to
be held at 11:00 am at the Ramada Jarvis Hotel, Bostock Lane, Long Eaton,
Nottinghamshire, NG10 5NL on 17 July 2003, at which a special resolution to
approve the Proposal will be put to shareholders. A circular, outlining the
background to the Proposal and giving formal notice for the EGM has today been
sent to shareholders.
Ken Baker, Chairman, commented:
'The history of Avingtrans prior to the acquisition of the Jena Group has left
the Company with a deficit of distributable reserves and hence unable to pay
dividends. In the 2002 annual report, the Board announced a strategy to build
Avingtrans over the next few years with the objectives of generating long-term
earnings per share growth, cash generation and a sustainable dividend policy.
The passing of this resolution will allow Avingtrans to propose dividends at an
earlier date and as such is integral to our strategy.'
Enquiries
Avingtrans plc
Ken Baker, Steve Lawrence 01159 499020
Background to the Proposal
Section 263 of the Companies Act provides that a company can only make a
distribution out of profits available for that purpose. The effect of this is
that the Company is unable to pay any dividends whilst its profit and loss
account shows a deficit. The Board therefore propose to eliminate the
accumulated deficit on the Company's profit and loss account and thereby bring
forward the date on which the Company will be able to pay dividends to its
shareholders.
The last audited accounts of the Company for the year ended 31 May 2002 show an
accumulated deficit of £515,000 on the profit and loss account of the Company
(this figure has been rounded up to the nearest £1,000, the precise deficit
being £514,372). This deficit has arisen as a result of losses made since 31st
May 2000. The table set out below illustrates this fact and shows the amount of
profit or loss made by the Company in the last three accounting periods and the
resultant accumulated credit or deficit on the Company's profit and loss account
at the end of those periods. These figures are taken from the Company's audited
accounts for the periods in question:
Period (Loss)/Profit in Period Accumulated (deficit)/credit
Year ended 31 May 2002 (£309,000) (£515,000)
Year ended 31 May 2001 (£1,781,000) (£206,000)
Year ended 31 May 2000 £88,000 £1,575,000
The majority of the loss incurred in the year ended 31 May 2001 came about as a
result of the disposal of the Company's operating subsidiaries: Frank Usher
Limited; Frank Usher (Canada) Limited and GMB Contracts Limited ('the
Subsidiaries'). This loss was exacerbated by the fact that Frank Usher Limited
subsequently went into receivership at a time when £503,000 was still owed to
the Company which resulted in the Board taking the decision to write off this
sum in full. In addition a smaller loss was also made in the period as a result
of the fact that the Company's trading activities were discontinued following
the sale of the Subsidiaries.
In respect of the year ended 31 May 2002 the Company did not carry on any
trading activities and the losses were incurred as a result of the operating and
professional costs associated with running a listed public limited company. In
this period the Company also incurred two exceptional costs which further
increased its losses. One of these was in connection with the receivership of
Frank Usher Limited mentioned above. The other related to the compensation paid
to an executive director in respect of the termination of his contract of
employment with the Company which was part of the arrangements for the
acquisition by the Company of the Jena Group (being Jenaer Gewindetechnik GmbH,
Jena Rotary Technology Limited, Jena-Tec Inc., and C&H Precision Finishers
Limited).
Cancellation of the share premium account
The Company currently has £3,610,903 standing to the credit of the share premium
account. This amount has arisen as a result of the issue of shares in the
capital of the Company at a premium during the course of the Company's history.
The Board propose that the Company should cancel the share premium account and
thereby eliminate the accumulated deficit on the profit and loss account of the
Company and to the extent that the cancellation creates a surplus above the
amount needed to eliminate the deficit create distributable reserves which are
available to the Company for all purposes for which distributable reserves could
normally be used, in particular for the payment of dividends to shareholders.
The cancellation of the share premium account in the manner proposed will
require the approval of the High Court of Justice Chancery Division ('the Court
') and will only be effective once this approval has been obtained and
registered by the Registrar of Companies. When the Court is asked to approve a
cancellation of the share premium account of a company it will often require
that protection be given to the creditors of the company whose debts remain
outstanding at the date of the cancellation. The Company will therefore put in
to place such form of creditor protection as it may be advised.
The circular to shareholders has been sent to the London Stock Exchange and is
available for inspection, free of charge, at the Company's registered address,
Precision House, Derby Road Industrial Estate, Derby Road, Sandiacre, Nottingham
NG10 5HU.
This information is provided by RNS
The company news service from the London Stock Exchange
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