TIDMSPO
RNS Number : 8343M
Sportech PLC
19 September 2023
19 September 2023
SPORTECH PLC
('Sportech' or the 'Group')
Publication of Circular and Notice of General Meeting
Further to the announcement on 11 September 2023, Sportech, an
international betting and technology business, announces that a
circular (the "Circular") and notice of general meeting will be
posted to shareholders today.
The Circular is in relation to the proposed cancellation of
admission of Sportech's ordinary shares of 10p each to trading on
AIM (the "Cancellation"), re-registration as a private limited
company (the "Re-registration") and adoption of new articles of
association (the "New Articles") announced on 11 September 2023.
The Circular also contains a notice convening a general meeting
(the "General Meeting") at which Shareholders are invited to
consider and, if thought fit, approve the proposed Cancellation,
Re-registration and associated adoption of the New Articles.
To be passed, the Cancellation Resolution requires, pursuant to
Rule 41 of the AIM Rules, the approval of not less than 75 per
cent. of the votes cast by Shareholders at the General Meeting. The
Re-registration Resolution (which includes the adoption of the New
Articles) also requires the approval of not less than 75 per cent.
of the votes cast by Shareholders at the General Meeting.
A copy of the Circular and the New Articles will be made
available on the Company's website at www.sportechplc.com later
today.
The General Meeting will be held on 5 October 2023 at 9.00 a.m.
at the offices of Dickson Minto, 16 Charlotte Square, Edinburgh,
EH2 4DF.
Certain extracts of the Circular, providing further details of
the proposals, are set out in the Appendix. Capitalised terms used
in this announcement and the Appendix have the meanings set out in
the Circular unless otherwise defined.
EXPECTED TIMETABLE OF PROPOSED DE-LISTING
Event Time and/or date
Notice provided to the London 14 September 2023
Stock Exchange to notify it
of the proposed Cancellation
Publication and posting of the 19 September 2023
Circular
Latest time for receipt of proxy 9.00 a.m. on 3 October 2023
appointments in respect of the
General Meeting
General Meeting 9.00 a.m. on 5 October 2023
Last day of dealings in Ordinary 16 October 2023
Shares on AIM
Cancellation 7.00 a.m. on 17 October 2023
Re-registration week commencing 23 October 2023
For further information, please contact:
Sportech PLC enquiries@sportechplc.com
Richard McGuire, Executive Chairman
Clive Whiley, Senior Independent
Director
Peel Hunt (Nominated Adviser Tel: +44 (0) 20 7418 8900
& Broker)
George Sellar
Andrew Clark
Lalit Bose
APPIX
Background to and reasons for the Cancellation and Re-registration
As Shareholders will be aware, the Company undertook a share
consolidation and subdivision and capital distribution in
July 2023 (the "Share Capital Reorganisation"). Following
the Share Capital Reorganisation becoming effective, the Board
undertook a thorough review of the corporate costs being borne
by the Company as a result of its status as a publicly traded
company.
Following that review, the Board has concluded that the Company's
continued status as a publicly traded company is not appropriate
given the scale of i ts business and, accordingly, the Cancellation
and Re-registration are in the best interests of the Company
and its Shareholders as a whole for reasons including those
set out below.
* Costs and regulatory burden : The considerable cost
and management time and the legal and regulatory
burden associated with maintaining the Company's
admission to trading on AIM is, in the Board's
opinion, disproportionate to the benefits of the
Company's continued admission to trading on AIM.
These costs: (a) amounted to approximately GBP450,000
in the year ended 31 December 2022; (b) contributed
to the Group's pre-tax loss of GBP934,000 in that
period to a material extent; and (c) represented
approximately 28 per cent. of the Group' s adjusted
EBITDA of GBP1.6 million in that period. Given the
lower costs associated with private limited company
status, it is estimated that the Cancellation and
Re-registration will materially reduce the Company's
recurring administrative and adviser costs by
approximately GBP450,000 per annum, which the Board
believes can be better spent supporting and investing
in the Group's business.
* Lack of liquidity : Notwithstanding the Share Capital
Reorganisation, there continues to be limited
liquidity in the Ordinary Shares. As a result, the
Board believes that Shareholders are not provided
with the opportunities to trade in meaningful volumes
or with frequency in an active market in Ordinary
Shares.
* Market volatility : As a result of the limited
liquidity in Ordinary Shares described above, small
trades in Ordinary Shares can have a significant
impact on price and, therefore, market valuation,
which, the Board believes, in turn has a materially
adverse impact on: (a) the Company's status within
its industry; (b) the perception of the Company
amongst its customers, suppliers and other partners;
(c) staff morale; and (d) the Company's ability to
seek appropriate financing or realise an appropriate
value for any material future disposal(s).
* Challenges related to the Company's position as a
micro-cap stock : Growing the Company, a UK micro-cap
stock, comes with a range of challenges, which, in
the Board's view, stem from the Company's small
market valuation, limited resources, and the dynamic
nature of the market. These challenges include, but
are not limited to: (a) access to capital; (b) a lack
of visibility among analysts, media and potential
investors; (c) increased volatility in Company
valuation unrelated to company performance leading to
higher risk perception; and (d) an aversion from
potential investors, seeking stability and a
valuation that aligns with Company performance.
* Strategic flexibility : The Board believes that a
private limited company can take and implement
strategic decisions more quickly than a company which
is publicly traded as a result of the more flexible
regulatory regime that is applicable to a private
company.
Therefore, following careful consideration, the Board believes
that it is in the best interests of the Company and Shareholders
to seek the proposed Cancellation, Re-registration and associated
adoption of the New Articles.
PROCESS FOR, AND PRINCIPAL EFFECTS OF, THE CANCELLATION
Under the AIM Rules, the Company is required to give at least
20 Business Days' notice of the Cancellation. Additionally,
the Cancellation will not take effect until at least five
Business Days have passed following the passing of the Cancellation
Resolution. If the Cancellation Resolution is passed at the
General Meeting, it is proposed that the last day of trading
in Ordinary Shares on AIM will be 1 6 October 2023 and that
the Cancellation will take effect at 7.00 a.m. on 1 7 October
2023.
The Directors are aware that certain Shareholders may be unable
or unwilling to hold Ordinary Shares in the event that the
Cancellation is approved and becomes effective. Such Shareholders
should consider selling their interests in the market prior
to the Cancellation becoming effective.
The principal effects of the Cancellation will include the
following:
* there will cease to be a formal market mechanism
enabling Shareholders to trade Ordinary Shares (other
than any limited off-market mechanism provided by the
Matched Bargain Facility);
* it is possible that, following the publication of the
Circular, the liquidity and marketability of the
Ordinary Shares is reduced and their value adversely
affected (however, as set out above, the Directors
believe that the existing liquidity in the Ordinary
Shares is, in any event, limited);
* the Ordinary Shares may be more difficult to sell
compared to shares of companies traded on AIM (or any
other recognised market or trading exchange);
* in the absence of a formal market and quoted price,
it may be difficult for Shareholders to determine the
market value of their investment in the Company at
any given time;
* the regulatory and financial reporting regime
applicable to companies whose shares are admitted to
trading on AIM will no longer apply;
* Shareholders will no longer be afforded the
protections given by the AIM Rules, such as the
requirement to be notified of price sensitive
information or certain events and the requirement
that the Company seek shareholder approval for
certain corporate actions, where applicable,
including substantial transactions, reverse takeovers,
related party transactions and fundamental changes in
the Company's business, including certain
acquisitions and disposals;
* the levels of disclosure and corporate governance
within the Company may not be as stringent as for a
company quoted on AIM;
* the Company will no longer be subject to UK MAR
regulating inside information and other matters;
* the Company will no longer be required to disclose
publicly any change in its major shareholdings under
the Disclosure Guidance and Transparency Rules;
* Peel Hunt LLP will cease to be nominated adviser and
broker to the Company;
* whilst the Company's CREST facility will remain in
place immediately following the Cancellation, the
Company's CREST facility may be cancelled in the
future and, although the Ordinary Shares will remain
transferable, they may cease to be transferable
through CREST (in which case, Shareholders who hold
Ordinary Shares in CREST will receive share
certificates);
* stamp duty will be due on transfers of shares and
agreements to transfer shares unless a relevant
exemption or relief applies to a particular transfer;
and
* the Cancellation and Re-registration may have
taxation consequences for Shareholders. Shareholders
who are in any doubt about their tax position should
consult their own professional independent tax
adviser.
The above considerations are not exhaustive, and Shareholders
should seek their own independent advice when assessing the
likely impact of the Cancellation on them.
For the avoidance of doubt, the Company will remain registered
with the Registrar of Companies in Scotland in accordance
with, and subject to, the Companies Act, notwithstanding the
Cancellation and Re-registration.
The Resolutions to be proposed at the General Meeting include
the adoption of the New Articles, which reflect the change
in the Company's status to a private limited company with
effect from the Re-registration. A summary of the principal
differences between the Current Articles and the proposed
New Articles is included in Part 2 of the Circular. A copy
of the New Articles can be viewed at https://www.sportechplc.com.
Board composition and provision of information, SERVICES
AND FACILITATES following the Cancellation
Board composition
There will be no change to the composition of the Board immediately
following the Cancellation and Re-registration although the
Board intends to keep its composition under review following
the Cancellation and Re-registration. In particular, the Company
is mindful of the need for its Board to be representative
of its operating divisions and geographic operating areas
and for the Company to take advantage of the flexibility which
its status as a private limited company will allow.
As described in the Circular (and, in particular, paragraph
8 of Part 1 of the Circular and Part 3 of the Circular), the
Takeover Code will continue to apply to the Company for a
period of at least 10 years from the date of Cancellation
if the Company is considered by the Panel to have its place
of central management and control in the United Kingdom, the
Channel Islands or the Isle of Man. This is known as the "residency
test". In determining whether the residency test is satisfied,
the Panel has regard primarily to whether a majority of a
company's directors are resident in these jurisdictions. If,
following any changes to the Board's composition, the residency
test is no longer considered by the Company to be met, the
Company will seek a determination from the Panel on the continued
applicability of the Takeover Code to the Company. In the
event that the Panel advises the Company that the "residency
test" is no longer met, the Company will seek to inform Shareholders
of this outcome.
Provision of information, services and facilities following
the Cancellation
The Company currently intends to continue to provide certain
information, services and facilities to Shareholders following
the Cancellation. The Company will:
* continue to communicate information about the Company
(including annual accounts) to its Shareholders, as
required by the Companies Act;
* continue, for at least 12 months following the
Cancellation, to maintain its website,
https://www.sportechplc.com (albeit the domain name
may be altered as a result of changes to the
Company's name in connection with the Cancellation
and Re-registration) and to post updates on the
website from time to time, although Shareholders
should be aware that there will be no obligation on
the Company to include all of the information
required under the Disclosure Guidance and
Transparency Rules, AIM Rule 26 or to update the
website as required by the AIM Rules; and
* make available to Shareholders, through JP Jenkins,
the Matched Bargain Facility (as further described in
paragraph 5.2 of Part 1 of the Circular) which will
allow Shareholders to buy and sell Ordinary Shares on
a matched bargain basis following the Cancellation.
Transactions in the Ordinary Shares prior to and FOLLOWING
the Cancellation
Transactions prior to the Cancellation
Shareholders should note that they are able to continue trading
in the Ordinary Shares on AIM prior to the Cancellation.
If Shareholders wish to buy or sell Ordinary Shares on AIM
they must do so prior to the Cancellation becoming effective.
As noted above, in the event that Shareholders approve the
Cancellation, it is anticipated that the last day of dealings
in the Ordinary Shares on AIM will be 16 October 2023 and
that the effective date of the Cancellation will be on 17
October 2023.
Transactions following the Cancellation
The Directors are aware that Shareholders may wish to acquire
or dispose of Ordinary Shares in the Company following the
Cancellation. Should the Cancellation be approved by Shareholders
at the General Meeting, the Company will implement a matched
bargain facility with JP Jenkins which will allow Shareholders
to buy and sell Ordinary Shares on a matched bargain basis
following the Cancellation (the "Matched Bargain Facility").
Under the Matched Bargain Facility, Shareholders (or persons
wishing to acquire Ordinary Shares) will be able to provide
an indication to JP Jenkins, through their stockbroker (JP
Jenkins is unable to deal directly with individuals), of the
number of Ordinary Shares that they are willing to buy or
sell and the price at which they are willing to do so. In
the event that JP Jenkins is able to match that buy or sell
order with an opposite sell or buy instruction, JP Jenkins
would contact both parties and carry out the trade.
Should the Cancellation become effective, details of the Matched
Bargain Facility will be made available on the Company's website.
The Matched Bargain Facility is expected to operate for a
minimum period of twelve months from the Cancellation. The
Directors' current intention is that it will continue beyond
that time but Shareholders should note that it could be withdrawn
and, therefore, inhibit the ability to trade the Ordinary
Shares. Further details will be communicated to Shareholders
via the Company's website at the relevant time.
Current Trading
On 11 September 2023, the Company released a trading update
for the six months ended 30 June 2023 which contained the
following information.
"The Group has continued to deliver solid operational performance,
marked by stable revenue growth and a renewed emphasis on
margin enhancement. This strategic approach has led to a 7.2%
increase in gross profit and a notably improved Adjusted EBITDA
performance, in comparison to the same period of the previous
year.
The Group's Adjusted EBITDA demonstrated positive momentum,
reaching GBP0.9 million (GBP0.4 million in H1 2022). This
improvement was fuelled by several key factors, most notably
growth in contributions from US gaming and a sustained focus
on optimizing operational and corporate costs."
Re-registration
As set out above, following the Cancellation, the Directors
believe that the requirements and associated costs of the
Company maintaining its public company status will be difficult
to justify and that the Company will benefit from the more
flexible requirements and lower costs associated with private
limited company status. It is, therefore, proposed to re-register
the Company as a private limited company. In connection with
the Re-registration, it is proposed that the New Articles
be adopted to reflect the change in the Company's status to
a private limited company. The principal effects of the Re-registration
and the adoption of the New Articles on the rights and obligations
of Shareholders and the Company are summarised in Part 2 of
the Circular.
An application will be made to the Registrar of Companies
for the Company to be re-registered as a private limited company.
Re-registration will take effect when the Registrar of Companies
issues a Certificate of Incorporation on Re-registration.
The Registrar of Companies will issue the Certificate of Incorporation
on Re-registration when it is satisfied that no valid application
can be made to cancel the resolution to re-register as a private
limited company or that any such application to cancel the
resolution to re-register as a private limited company has
been determined and confirmed by a court of competent jurisdiction.
Takeover Code
Notwithstanding the Cancellation and Re-registration, the
Company will continue to be subject to the terms of the Takeover
Code for a period of at least 10 years following the Cancellation
(subject to the Re-registration occurring). However, the Takeover
Code may cease to apply earlier, if a majority of the directors
of the Company cease to be resident in the United Kingdom,
the Channel Islands or the Isle of Man.
The Takeover Code applies to all offers for companies which
have their registered offices in the United Kingdom, the Channel
Islands or the Isle of Man if any of their equity share capital
or other transferable securities carrying voting rights are
admitted to trading on a regulated market or a multilateral
trading facility in the United Kingdom or on any stock exchange
in the Channel Islands or the Isle of Man.
The Takeover Code also applies to all offers for companies
(both public and private) which have their registered offices
in the United Kingdom, the Channel Islands or the Isle of
Man and which are considered by the Panel to have their place
of central management and control in the United Kingdom, the
Channel Islands or the Isle of Man, but in relation to private
companies only if one of a number of conditions are met, including
that any of the company's equity share capital or other transferable
securities carrying voting rights have been admitted to trading
on a regulated market or a multilateral trading facility in
the United Kingdom or on any stock exchange in the Channel
Islands or the Isle of Man at any time in the preceding 10
years.
If the Cancellation and Re-registration are approved by Shareholders
at the General Meeting, the Company will be re-registered
as a private company and its securities will no longer be
admitted to trading on a regulated market or a multilateral
trading facility in the United Kingdom. In these circumstances,
the Takeover Code will only apply to the Company if it is
considered by the Panel to have its place of central management
and control in the United Kingdom, the Channel Islands or
the Isle of Man. This is known as the "residency test". In
determining whether the residency test is satisfied, the Panel
has regard primarily to whether a majority of a company's
directors are resident in these jurisdictions.
On the basis of the current residency of the Directors, the
Company will have its place of central management and control
in the United Kingdom following the Cancellation. In light
of the Re-registration, and provided that the Company's place
of central management and control continues to be considered
by the Panel to be in the United Kingdom, the Takeover Code
will continue to apply to the Company for the period of 10
years following the Cancellation, including the requirement
for a mandatory cash offer to be made if either:
* a person acquires an interest in shares which, when
taken together with the shares in which persons
acting in concert with it are interested, increases
the percentage of shares carrying voting rights in
which it is interested to 30 per cent. or more; or
* a person, together with persons acting in concert
with it, is interested in shares which in the
aggregate carry not less than 30 per cent. of the
voting rights of a company but does not hold shares
carrying more than 50 per cent. of such voting rights
and such person, or any person acting in concert with
it, acquires an interest in any other shares which
increases the percentage of shares carrying voting
rights in which it is interested.
In particular, under Rule 9 of the Takeover Code, when any
person or group of persons acting in concert, individually
or collectively, are interested in shares which in aggregate
carry not less than 30 per cent. of the voting rights of a
company but do not hold shares carrying more than 50 per cent.
of the voting rights of a company and such person or any person
acting in concert with him acquires an interest in any other
shares, which increases the percentage of the shares carrying
voting rights in which he is interested, then that person
or group of persons is normally required by the Panel to make
a general offer in cash to all shareholders of that company
at the highest price paid by them for any interest in shares
in that company during the previous 12 months. Rule 9 of the
Takeover Code further provides that where any person, together
with persons acting in concert with him, holds over 50 per
cent. of the voting rights of a company to which the Takeover
Code applies and acquires additional shares which carry voting
rights, then that person will not generally be required to
make a general offer to the other shareholders to acquire
the balance of the shares not held by that person or his concert
parties.
Following the expiry of the 10 year period from the date of
the Cancellation (subject to the Re-registration occurring),
or such other date on which the Takeover Code ceases to apply
to the Company, the Company will no longer be subject to the
provisions of the Takeover Code.
Brief details of the Panel, and of the protections afforded
to Shareholders by the Takeover Code are set out in Part 3
of the Circular.
Process for Cancellation
Under the AIM Rules, it is a requirement that the Cancellation
must be approved by Shareholders holding not less than 75
per cent. of votes cast by Shareholders at the General Meeting.
Accordingly, the Notice of General Meeting set out in Part
4 of the Circular contains a special resolution to approve
the Cancellation.
Furthermore, Rule 41 of the AIM Rules requires any AIM company
that wishes the London Stock Exchange to cancel the admission
of its shares to trading on AIM to notify shareholders and
to separately inform the London Stock Exchange of its preferred
cancellation date at least 20 Business Days prior to such
date. In accordance with AIM Rule 41, the Directors have notified
the London Stock Exchange of the Company's intention, subject
to the Cancellation Resolution being passed at the General
Meeting, to cancel the Company's admission of the Ordinary
Shares to trading on AIM on 17 October 2023. Accordingly,
if the Cancellation Resolution is passed, the Cancellation
will become effective at 7.00 a.m. on 17 October 2023. If
the Cancellation becomes effective, Peel Hunt LLP will cease
to be nominated adviser and broker to the Company and the
Company will no longer be required to comply with the AIM
Rules.
ACTION TO BE TAKEN IN RELATION TO THE GENERAL MEETING
In line with the Company's approach at annual general meetings,
hard copy proxy forms are not being sent to Shareholders in
connection with the General Meeting. The Company would like
to encourage shareholders to vote electronically or appoint
a proxy electronically, which can be done via www.signalshares.com,
via the LinkVote+ app or, where Ordinary Shares are held in
CREST, via CREST. Certain shareholders may also be able to
appoint a proxy electronically via the Proximity platform.
Shareholders may also request a hard copy form of proxy directly
from the Company's registrar, Link Group, by calling 0371
664 0300 or by emailing shareholderenquiries@linkgroup.co.uk.
Notwithstanding the method of appointment, proxy appointments
must be received by Link Group by 9.00 a.m. on 3 October 2023,
being 48 hours before the time fixed for the General Meeting.
Further details of the proxy appointment methods are set out
in the Notice of General Meeting in Part 4 of the Circular.
Shareholders are encouraged to appoint the chair of the General
Meeting as their proxy with directions as to how to cast their
vote on the Resolutions proposed. For further details on how
to submit a proxy vote, see the notes to the Notice of General
Meeting at Part 4 of the Circular.
The appointment of a proxy will not preclude Shareholders
from attending and voting at the General Meeting in person
should they so wish. All Shareholders planning to attend the
General Meeting in person are, however, requested to confirm
their attendance by emailing ir@sportechplc.com (marked for
the attention of the Company Secretary) by no later than 9.00
a.m. on 3 October 2023.
RECOMMENDATION
The Directors consider that each of the Cancellation Resolution
and the Re-registration Resolution is in the best interests
of the Company and its shareholders as a whole. Accordingly,
the Directors unanimously recommend that Shareholders vote
in favour of the resolutions at the General Meeting as Richard
McGuire and Clive Whiley (being the only Directors who are
interested in Ordinary Shares) intend to do in respect of
their own beneficial holdings, insofar as they are able to
control or direct the exercise of the voting rights attaching
to the relevant Ordinary Shares.
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END
NOGNKFBKCBKDACD
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