Last checked at 5 Jul 2010 07:00
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| 5 July 2010 |
GB GROUP PLC
("GB" or the "Group")
Proposed Move to AIM, appointment of New Non-Executive Director and Proposed Amendments to Share Option Schemes
GB, the UK's leading identity management business, is pleased to announce its intention to transfer the admission of its Ordinary Shares to AIM from the Official List and trading on the London Stock Exchange's main market for listed securities, the appointment of David Rasche as a Non-Executive Director to the Board with effect from 1 September 2010 and its intention to make certain changes to the Company's employee incentivisation arrangements.
Highlights
·; Building on the foundations laid over recent years, the Board is focusing on the next stage of GB's development which is to accelerate revenue growth both organically and potentially through acquisition.
·; The Board believes that AIM has the benefit of lower transactional costs, similar ongoing costs and simpler administration and regulatory requirements more appropriate to a company of GB's size, which will make the implementation of GB's plans for the next stage of growth easier.
·; The appointment of David Rasche, who has a wealth of experience through his involvement in senior positions in the technology sector, as a Non-Executive Director will strengthen the Board.
·; The Board believes that the amendments to the Company's employee incentivisation scheme will allow senior management and employees be rewarded in accordance with the performance of the Company and will encourage them to identify their interests with those of the Company's shareholders.
Richard Law, Chief Executive of GB, commented:
"I am delighted to welcome David Rasche as a non executive director. He has an outstanding record of success in the technology sector and in growing businesses rapidly through organic growth and acquisition. I am sure GB will benefit immensely from his experience and counsel.
"David's appointment and the other moves announced today are designed to help GB build on the strong foundations laid over recent years and to accelerate our growth, both organically and potentially through acquisition."
-Ends-
For further information, please contact:
| GB Group plc | 01244 657333 |
| Richard Law, Chief Executive Dave Wilson, Finance Director |
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KBC Peel Hunt Ltd (Nominated Adviser and Broker) Richard Kauffer Daniel Harris |
0207 418 8900 |
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Weber Shandwick Financial Nick Oborne Clare Thomas |
020 7067 0700 |
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| Website | www.gb.co.uk |
Notes to Editors
About GB Group plc
The most successful organisations recognise the value of understanding your individual identity - who you are, what you need and what you like. GB combines this concept of identity with technology to create an environment of trust so that organisations can connect, communicate and transact with consumers safely, responsibly and profitably. We call this identity management.
GB Group has three complementary identity management offerings:
·; Identity Verification - combating ID fraud, money laundering and under-age gambling
·; Identity Capture and Maintenance - providing accurate and up-to-date customer information for your contact strategy
·; Identity Analysis - understanding, targeting and retaining profitable customers
This enables our clients to make informed business decisions based on a thorough knowledge of consumer identity and behaviour, leading to more effective communication and interaction with the customer.
GB is listed on the London Stock Exchange (GBG). For more information, please visit GB's website: www.gb.co.uk.
GB Group - because identity matters™
Proposed Move to AIM, appointment of New Non-Executive Director and Proposed Amendments to Share Option Schemes
1. Introduction
Today the Company announces its intention to transfer the admission of its Ordinary Shares to AIM from the Official List and trading on the London Stock Exchange's main market for listed securities, the appointment of David Rasche as a Non-Executive Director to the Board with effect from 1 September 2010 and its intention to make certain changes to the Company's employee incentivisation arrangements.
The transfer to AIM and cancellation of admission to the Official List and to trading on the London Stock Exchange's main market for listed securities and the proposed changes to the Company's employee incentivisation arrangements require the prior approval of Shareholders. Approval of these proposals is being sought at a General Meeting of the Company to be held at 11.30 a.m. (or as soon thereafter as the preceding AGM has been concluded) on 29 July 2010 at GB House, Kingsfield Court, Chester Business Park, Chester CH4 9GB. A notice of the General Meeting is set out in the Circular which has today been posted to shareholders.
Definitions used in this announcement are set out in the Appendix below.
2. Background to and reasons for the Proposals
Under the leadership of Richard Law, who became Chief Executive in 2002, GB has evolved from an offline customer data and marketing services organisation to a leading online provider of identity management software and services with particular strengths in electronic identity verification, customer data capture and tracing. These developments have significantly increased the scale, and performance of the Group resulting in a profitable business which is cash positive and pays dividends.
During this period, and in particular over the last 3 years, the management team has been strengthened with the recruitment of managing directors for both of its operating business units and of a new finance director.
Building upon these foundations and capitalising on its proven capabilities in these developing markets, the Board has been focusing on the next stage of its development which is to accelerate revenue growth both organically and potentially through the acquisition of further complementary businesses in order to drive profit growth.
The Directors believe that it is important that senior management and employees be rewarded in accordance with the performance of the Company and encouraged to identify their interests with those of the Company's shareholders. The Board has been looking at the Company's employee incentivisation arrangements to improve their fit with the Company's current position and strategy. The Board is seeking to balance the need to provide meaningful and well aligned incentives to key employees with the need to limit shareholder dilution. It is, therefore, proposed that the steps be taken in respect of the Company's employee incentivisation arrangements as set out in paragraph 5 below. The Board has consulted with the Company's largest shareholders in respect of these proposals.
At the same time, as part of its growth strategy, the Company has appointed David Rasche as a Non-Executive Director to the Board with effect from 1 September 2010. As further described below, David is Chairman of SSP, a company he founded and developed both organically and through acquisition, and which is now one of the largest specialist insurance software houses in the world.
The Board believes that the Proposals, as detailed below, are important to the successful implementation of this strategy.
3. Background to and reasons for the move to AIM
The Board appreciates that AIM has the benefit of lower transactional costs, similar ongoing costs and simpler administration and regulatory requirements more appropriate to a company of GB's size and which will make the implementation of GB's plans for the next stage of growth easier.
In particular, the Board believes that a move to AIM will offer much greater flexibility to supplement organic growth with complementary acquisitions since corporate transactions can be executed more quickly and cost effectively compared to the main market. The Board believes this is likely to be a significant benefit to GB going forward.
The Board, however, envisages no significant alteration in the standards of reporting and governance which the Group has always achieved. Thus, the Board sees the Company as being attractive to specialist institutional investors while the AIM tax regime, referred to in more detail below, will also make the Company potentially attractive to the AIM specific funds as well as to the retail investor.
AIM was launched in June 1995 as the London Stock Exchange's market specifically designed for smaller companies, with a more flexible regulatory regime. More than 3,100 companies have been admitted to AIM and over £67 billion has been raised in new and secondary fundraisings making AIM an internationally recognised market.
Following Admission, the Company will be subject to the regulatory and disciplinary controls of the AIM Rules. Details of the main obligations of a company whose shares are traded on AIM are set out below.
4. Appointment of David Rasche
As part of the strategy described above, the Company is pleased to announce that David Rasche has been appointed to the Board as a Non-Executive Director to be effective from 1 September 2010. David brings a wealth of experience to GB through his involvement in senior positions in the technology sector. The Board feels that David's experience and knowledge has a strong overlap with the Group's strategy. David was the founder of Software Solutions Partners (SSP) in 2001 and built the company up through strong organic growth and a series of corporate acquisitions and buyouts. SSP was admitted to AIM in October 2006 with a market capitalisation of £68 million and in September 2008 was the subject of a management buy-out valuing the company at £198 million.
David is the Chairman of SSP which has offices in the UK, Australia, South Africa and India as well as sales offices in Europe and the USA. With a current turnover in excess of £75 million, SSP is one of the largest specialist insurance software houses in the world.
David has been in the IT industry for 37 years, with the last 27 years leading software businesses in the areas of local government, manufacturing and retail finance before founding SSP.
He was awarded Yorkshire Business Leader of the Year in late 2008 and Quoted Company Chairman of the Year in early 2009. He has an economics degree from Nottingham University and a diploma in Company Direction.
There are no further details which need to be disclosed under paragraph 9.6.13 of the Listing Rules.
5. Share option arrangements
The Board's proposal in respect of the Company's employee incentivisation arrangements, as
recommended by the Remuneration Committee, comprises the following key elements:
1. The amendment of the current Share Option Schemes so that the aggregate dilution limit applicable to options granted under the Company's schemes during a ten year rolling period is increased from 10 per cent. to 15 per cent. of the issued ordinary share capital of the Company.
2. The amendment of the Executive Share Option Scheme to create a new Section D Scheme that will have the same terms as the Section C Scheme except that instead of the total shareholder return performance condition that applies to awards under the Section C Scheme, awards under the Section D Scheme will be subject to a performance condition requiring a compound annual normalised EPS growth rate of 20 per cent.
3. The grant of options now to the four senior executives under the Section D Scheme over 1.50 million Ordinary Shares in aggregate representing 1 .75 per cent. of the issued share capital of the Company.
4. An amendment to the calculation of dilution limits under the Share Option Schemes to allow the awards outlined above and further ordinary course awards in the medium term.
The Board believes that these steps provide the right current option holding structure and framework and are in line with market practice amongst companies of a similar profile to the Company. The earnings per share performance condition is set at a challenging level and will provide a direct link between the financial performance of the Company and the achievement of awards under the Section D Scheme. The Remuneration Committee will have the authority to amend the level of EPS performance criteria for new awards as the Company develops.
In the course of reviewing the incentive arrangements, the Board has become aware that due to a misinterpretation of the rules of the Share Option Schemes, it has in the past granted more options than it would otherwise have intended. In calculating the position under the applicable dilution limits, options granted within the past ten years and already exercised had been disregarded. There are currently options representing 9.56 per cent. (of options that are capable of vesting this figure is reduced to 9.0 per cent.) of the current issued share capital outstanding split between the Executive Share Option Scheme and the Sharesave Scheme. In addition options over a further 6.98 per cent. of the current issued share capital have been both granted and already exercised within the past ten years. This reflects the history of the Company and in particular the rise in the share price by 2006 from depressed levels in 2002/3. It was in 2005/6 that a large number of the 2002/2003 awards were exercised.
Whilst the Board could satisfy outstanding options through the purchase of existing shares using an employee benefit trust, it is the desire and intention of the Board primarily to continue to use new shares to satisfy the exercise of option awards. In order that the awards outlined above can be implemented, a further amendment to the Share Options Schemes is requested to carve out from dilution calculations options which were granted within the past ten years but which were exercised before September 2006. This carves out from the dilution calculation options over 4.2 million shares, constituting 4.88 per cent. of the issued share capital. This is proposed to provide headroom for the current and future awards whilst maintaining an appropriate ongoing dilution limit (15 per cent.) for the future.
Against the proposed new dilution limit of 15 per cent., the carve out of options exercised prior to September 2006 and the proposed award of options over 1.50 million shares, as described above, the Company would have options issued and outstanding that can vest of 10.75 per cent. and 2.1 per cent. options exercised since September 2006, leaving a further 2.15 per cent. for the future incentivisation of new and existing employees.
Further background to the proposals are set out in the Circular.
6. Obligations of an AIM company and the AIM Market
The obligations of a company whose shares are traded on AIM are similar to those of companies whose shares are listed on the Official List, with certain exceptions, including those referred to below.
1. Under the Listing Rules, a company is required to appoint a 'sponsor' for the purposes of certain corporate transactions, such as when undertaking a large transaction or capital raising. The responsibilities of the sponsor include providing assurance to the FSA when required that the responsibilities of the listed company have been met. Corporate transactions on the Official List often require approval of shareholders and the engagement of a sponsor to oversee the process and liaise with the UK Listing Authority. In particular, on a proposed acquisition, where the size of the target represents 25 per cent. or greater of the listed company on certain class tests (such as comparative turnover, gross assets or consideration for the acquisition to market capitalisation of the listed company) a circular to shareholders is required explaining the transaction and seeking the consent of shareholders. For the Company this may mean that a relatively small transaction may result in significant additional complexity and large transaction costs to meet the requirements of the Listing Rules and, therefore, prove prohibitive.
Under the AIM Rules, a 'nominated adviser' is required to be engaged by the Company at all times and has ongoing responsibilities to both the Company and the London Stock Exchange. On Admission to AIM, the Company intends to appoint KBC Peel Hunt as the Company's nominated adviser.
Under the AIM Rules, prior shareholder approval is required only for transactions with a much larger size threshold, being (1) reverse takeovers (being an acquisition or acquisitions in a twelve month period which either (a) exceed 100 per cent. on various size tests, such as the ratio of the transaction consideration to the market capitalisation of the AIM company; or (b) result in a fundamental change in the Company's business, board or voting control) and (2) disposals that result in a fundamental change of business (being disposals that exceed 75 per cent. of various size tests, such as the ratio of the transaction consideration to the market capitalisation of the AIM company). Under the Listing Rules, a broader range of transactions require prior shareholder approval.
2. There is no requirement under the AIM Rules for a prospectus or an admission document to be published for further issues of securities to investors, except when seeking admission for a new class of securities or as otherwise required by law.
3. Certain securities laws will no longer apply to the Company following Admission, for example, the Disclosure and Transparency Rules and the Prospectus Rules. This is because AIM is not regulated market for the purposes of the European Union's directives relating to its securities.
4. Although the Combined Code does not apply directly to companies whose shares are traded on AIM, the Company intends to continue to comply with the Combined Code as it does today, but will review this from time to time having regard to the size, nature and resources of the Group.
5. The ABI Guidelines, which regulate issues such as executive compensation and share-based remuneration, corporate governance, share capital management and the issue and allotment of shares on a pre-emptive or non pre-emptive basis, do not apply to companies whose shares are traded on AIM.
Liquidity on AIM is currently provided by market makers who are member firms of the London Stock Exchange and are obliged to quote a share price for each company for which they make a market between 8.00 a.m. and 4.30 p.m. on business days. The Directors believe that AIM has demonstrated that it can provide a liquid trading platform for shares.
It is emphasised that the Move to AIM will have no impact on the assets and liabilities of the Group and it will continue to have the same business and operations following Admission. Furthermore, save for the appointment of David Rasche there will be no changes to the Board or management of the Company following Admission.
Companies whose shares trade on AIM are deemed to be unlisted for the purposes of certain areas of UK taxation. Following the Move to AIM, individuals who hold Ordinary Shares may, after two years, therefore be eligible for certain inheritance tax benefits. Shareholders and prospective investors should consult their own professional advisers on whether an investment in an AIM security is suitable for them, or whether the tax benefit referred to above may be available to them. In particular, they should note that it is not possible to hold shares traded on AIM in ISAs. The Directors understand that, following Admission, Shareholders will, under current HMRC guidance, have 30 days to decide whether to transfer their shareholding in the Company into their own name or to sell the holding and retain the proceeds within the relevant ISA.
7. Cancellation of Listing and Application for Admission to AIM
Conditional on the AIM Resolution being approved at the General Meeting, the Company will apply to cancel the listing of the Ordinary Shares on the Official List and to trading on the London Stock Exchange's main market for listed securities and will apply to the London Stock Exchange for admission of the Ordinary Shares to AIM. It is anticipated that the listing of the Ordinary Shares on the Official List will be cancelled at 8:00 a.m. on27 August 2010, being not less than 20 Business Days from the passing of the AIM Resolution. Admission is expected to take place and dealings are expected to commence on AIM at 8.00 a.m. on 27 August 2010.
An announcement has also today been released giving details of the Proposals for the purposes of Rule 2 and Schedule 1 to the AIM Rules. This announcement can be found at www.gb.co.uk.
8. Document Viewing Facility
Copies of the Circular have been submitted to the UK Listing Authority and will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility, which is situated, during normal business hours on any weekday (public holidays excepted), at The Financial Services Authority
25 The North Colonnade, Canary Wharf, London, E14 5HS.
Appendix DEFINITIONS
The following terms have the following meanings throughout this announcement unless the context otherwise requires:
| "ABI Guidelines" | the guidelines published by the Association of British Insurers and other members of the Institutional Shareholders Committee; |
| "Act" | the applicable provisions of the Companies Act 1985 and the Companies Act 2006 from time to time in force and as they are supplemented and amended; |
| "Admission" | admission of the Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules; |
| "AGM" | the annual general meeting of the Company to be held at 11.00 a.m. on 29 July 2010 2010 at GB House, Kingsfield Court, Chester Business Park, Chester CH4 9GB or any reconvened meeting following any adjournment thereof; |
| "AIM" | AIM, a market operated by the London Stock Exchange; |
| "AIM Resolution" | the special resolution to be proposed at the General Meeting to approve the Move to AIM, as set out in the Notice of General Meeting; |
| "AIM Rules" | the AIM rules issued by the London Stock Exchange in relation to AIM traded securities; |
| "Board" or "Directors" | the board of directors of the Company; |
| "Business Day" | any day (other than a Saturday, Sunday or a bank or public holiday) during which clearing banks are open for business in the City of London;
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| "Circular" | This circular posted to Shareholders on 5 July 2010 relating to the Proposals; |
| "Combined Code" | the UK Corporate Governance Code issued by the Financial Reporting Council dated June 2010; |
| "Company" or "GB Group" | GB Group plc, a company registered in England and Wales under number 02415211; |
| "Delisting" | the cancellation of the listing of the Ordinary Shares on the Official List and from trading on the London Stock Exchange's main market for listed securities; |
| "EPS" | earnings per share calculated as basic earnings per share from continuing operations; |
| "European Union" | the confederation of European nations created by the Treaty for European Union; |
| "Executive Share Option Scheme" | the Company's Executive Share Option Scheme; |
| "FSA" | the Financial Services Authority in its capacity as the competent authority for the purposes of Part VI of FSMA and in the exercise of its functions in respect of admission to the Official List; |
| "FSMA" | the Financial Services and Markets Act 2000, as amended; |
| "General Meeting" | the General Meeting of the Company convened by the Notice of General Meeting to be held at 11.30 a.m. (or as soon thereafter as the proceeding AGM has been concluded) on 29 July 2010 at GB House, Kingsfield Court, Chester Business Park, Chester CH4 9GB or any reconvened meeting following any adjournment thereof; |
| "Group" | GB Group and its subsidiaries and subsidiary undertakings; |
| "GB Group" or "Company" | GB Group plc whose registered office is at GB House, Kingsfield Court, Chester Business Park, Chester, Cheshire CH4 9GB; |
| "lFRS" | International Financial Reporting Standards; |
| "ISA" | Individual Savings Account; |
| "KBC Peel Hunt" | KBC Peel Hunt Ltd, of 111 Old Broad Street, London EC2N 1 PH; |
| "Listing Rules" | the rules and regulations made by the FSA under Part VI of FSMA (as amended from time to time); |
| "London Stock Exchange" | London Stock Exchange plc; |
| "Move to AIM" | the Delisting and subsequent Admission; |
| "Non-Executive Directors" | the non-executive directors of the Company; |
| "Notice of General Meeting" | the notice of the General Meeting set out at the end the Circular; |
| "Official List" | the Official List of the FSA; |
| "Ordinary Shares" | ordinary shares of 2.5 pence each in the capital of the Company; |
| "Proposals" | the Move to AIM, the appointment of David Rasche as a Non-Executive Director, and the amendments to the Share Option Schemes; |
| "Prospectus Rules" | the prospectus rules made by the FSA from time to time; |
| "Resolutions" | the special resolution to be proposed at the General Meeting to approve the Move to AIM and the ordinary resolutions to be proposed at the General Meeting to approve the amendments to the Share Option Schemes, as set out in the Notice of General Meeting; |
| "Remuneration Committee" | the remuneration committee of the Board; |
| "Section C Scheme"` | Section C of the Executive Share Option Scheme; |
| "Section D Scheme" | the proposed new Section D of the Executive Share Option Scheme; |
| "Share Option Schemes" | the existing share option schemes of the Company as at the date of this announcement being the Executive Share Option Scheme, and the Sharesave Scheme; |
| "Shareholders" | holders of Ordinary Shares; |
| "Sharesave Scheme" | the Company's Savings Related Share Option Scheme; |
| "UK" or "United Kingdom" | the United Kingdom of Great Britain and Northern Ireland; |