MPAY.L Regulatory News (MPAY)

23 December 2019

Mi-Pay Group plc

("Mi-Pay", the "Company" or, together with its subsidiaries, the "Group")

Notice of General Meetings

Posting of Circular

Further to the announcement on 18 December 2019, Mi-Pay (AIM: MPAY) announces that will shortly be posting to its Shareholders a circular (the "Circular") in connection with the proposed disposal of Mi-Pay Limited to Alphacomm B.V. (the "Disposal"), the proposal to cancel the admission of its ordinary shares to trading on AIM (the "Cancellation") and the intended return of capital to shareholders the Company via a members' voluntary liquidation ("Liquidation").

The Circular contains notices convening two general meetings of the Company. The First General Meeting, to be held at 10.30 a.m. on 27 January 2020, at the offices of Allenby Capital Limited at 5 St Helen's Place, London EC3A 6AB, is to consider resolutions in relation to the Disposal and the Cancellation. If the resolutions in relation to the Disposal and Cancellation are passed, it is currently expected that completion of the Disposal will occur on 27 January 2020, and that trading in the Ordinary Shares on AIM will cease at the close of business on 3 February 2020, with Cancellation expected to take effect at 7.00 a.m. on 4 February 2020. 

The Second General Meeting, to be held at 10.00 a.m. on 4 February 2020 at the offices of Allenby Capital Limited at 5 St Helen's Place, London EC3A 6AB, is to consider resolutions in relation to the Liquidation. The Liquidation is conditional on passing of the resolutions at the First General Meeting, and shareholder approval at the Second General Meeting. Should the resolutions not be passed at the First General Meeting, the Second General Meeting will be adjourned indefinitely.

Extracts from the Circular, which set out the reasons for seeking shareholder approval of the Disposal, Cancellation and Liquidation, are set out below and a copy of the Circular will shortly be available on the Company's website, www.mi-pay.com.  

Defined terms in this announcement and the extracts of the Circular are contained at the end of the announcement, unless otherwise defined herein.

For further information, please contact:

EXTRACTS FROM THE CIRCULAR

The following has been extracted without amendment from, and should be read in conjunction with, the Circular to Shareholders dated 23 December 2019.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS(All times in this Document are to London time unless otherwise stated)

Each of the times and dates above is subject to change. Dates set after the First General Meeting assume that the First General Meeting is not adjourned and that the Resolutions are passed. Dates after the Second General Meeting assume that the Second General Meeting is not adjourned and that the Resolutions are passed. If any of the above times and/or dates change, any such change will be notified to Shareholders by an announcement via a Regulatory Information Service.

*Dependent on receipt of formal tax clearance from HM Revenue & Customs and settlement of all liabilities.

LETTER FROM THE INDEPENDENT DIRECTORS OF MI-PAY GROUP PLC

1. Introduction

As announced by the Company on 18 December 2019, the Independent Directors have concluded that it is in the best interests of the Company and its Shareholders to: (i) dispose of its operating subsidiary, Mi-Pay Limited for total cash proceeds of £1.1 million; (ii) cancel the admission of the Ordinary Shares from trading on AIM; and (iii) effect a members' voluntary liquidation of the Company.

The purpose of this Circular is to provide you with the background to the Proposals and to explain why the Directors consider the Proposals are in the best interests of the Company and its Shareholders as a whole.

The Disposal and Cancellation are conditional on Shareholder approval at a general meeting of the Company. A notice convening the First General Meeting, to be held at 10:30 a.m. on 27 January 2020, at the offices of Allenby Capital Limited, 5 St. Helen's Place, London EC3A 6AB to consider the Disposal Resolution and Cancellation Resolution, is set out in Part II of this Circular. The Liquidation will be conditional on passing of the Resolutions at the First General Meeting, and Shareholder approval at the Second General Meeting. A notice convening the Second General Meeting, to be held at 10:00 a.m. on 4 February 2020, at the offices of Allenby Capital Limited, 5 St. Helen's Place, London EC3A 6AB to consider the Liquidation Resolutions as set out in Part III of this Circular. Should the Resolutions at the First General Meeting not be passed, the Company will indefinitely adjourn the Second General Meeting and the Company will not seek Shareholder approval for the Liquidation on the terms set out in this Circular.

If the Disposal Resolution is passed, it is currently expected that Completion of the Disposal will occur on 27 January 2020.

Under the AIM Rules, the Cancellation requires the expiration of a period of not less than 20 clear Business Days from the date on which notice of the intended Cancellation is notified via a Regulatory Information Service and is given to the London Stock Exchange. Pursuant to Rule 41 of the AIM Rules, the Directors have notified the London Stock Exchange of the date of the proposed Cancellation. Subject to the passing of the Cancellation Resolution, Cancellation will occur no earlier than five clear Business Days after the First General Meeting and it is therefore expected that trading in the Ordinary Shares on AIM will cease at the close of business on 3 February 2020, with Cancellation expected to take effect at 7.00 a.m. on 4 February 2020.

If the Liquidation Resolutions are passed, the Company will immediately enter into Liquidation and the Proposed Liquidators will be appointed as joint liquidators of the Company. For the reasons outlined in paragraph 9 of this Part I of this Document, the Directors cannot be certain at this stage when the Liquidation would be expected to come to a close. It is estimated that it will take between three to nine months to complete the Liquidation, distribute the cash surplus to Shareholders and dissolve the Company, however it should be noted that this is dependent on receipt of formal tax clearance from HM Revenue & Customs and settlement of all liabilities. The Proposed Liquidators will be obliged to send a progress report to the Registrar of Companies and to all Shareholders, covering each twelve month period from the commencement of the Liquidation, should the Liquidation exceed twelve months.

2. Information on the Company and background to and reasons for the Proposals

The Company's Ordinary Shares were admitted to trading on AIM on 29 April 2014. The Company's operations are focussed on the provision of digital transformation, mobile payment and payment fraud management services to Tier 1 Mobile Network Operators, Mobile Virtual Network Operators and digital content providers.

On 22 November 2019, the Company announced that it was yet to receive a research and development tax credit of approximately £0.3 million from HMRC. The Company further announced that it was in discussions with existing and new investors regarding a potential equity fundraise, in order to provide the Company with working capital should the receipt of the R&D tax credit be materially delayed beyond Q1 2020, reduced or not received at all. Following the completion of these discussions, it has not been possible to conclude a fundraise with existing shareholders or other parties on terms which are deemed to be acceptable by the Board.

In recent years, the Company has demonstrated an ability to deliver solutions efficiently and drive improved margins from its revenues, seeing continual natural growth within its existing clients. It successfully renewed and extended two major client contracts in early 2019, representing 43 per cent. of the Company's 2018 revenue, and delivered growth and increasing profitability from its direct managed fraud service. However, in September 2019, one of the Company's larger clients, contributing 13 per cent. of the Company's revenue in 2018, consolidated their payment transactions to another existing provider as they downsized their own operation. Additionally, the Company has suffered from the uncertainties in the market due to the delayed implementation of the new Payment Services Directive (PSD2) and economic uncertainties, resulting in slower growth than anticipated, as announced by the Company in August 2019.

Whilst the Company has taken mitigating actions on costs, the risk associated with the R&D tax credit has compounded the impact of the above factors. Further, the Board believes that the fraud screening services provided to Alphacomm, which are expected to deliver approximately £0.4 million of revenue in 2019, may be withdrawn should the Company not proceed with the Disposal.

Over recent years, the Board has actively considered M&A opportunities for the Company, none of which have come to fruition. These have included the potential sale of the business, as well as seeking appropriate acquisition opportunities to accelerate growth. This has included previous discussions with Alphacomm.

Given the M&A and fundraising options explored by the Board to date, and the potential instability of the business should the Disposal not proceed, it is therefore the view of Seamus Keating and Edward Lascelles who, for the reasons set out below are deemed to be the independent directors of the Company in respect of the Disposal, that the best option to maximise Shareholder value is to complete the Disposal. Additionally, the commercial synergies with Alphacomm and reduced costs that come from operating as a private company, will give Mi-Pay Limited a stronger and wider geographical growth platform to support its employees, clients and solutions.

For the year ended 31 December 2018, Mi-Pay Limited recorded an audited loss before tax of £538,486 on revenues of £3,337,025. The audited total assets of Mi-Pay Limited as at 31 December 2018 were £5,022,336, with net assets being £375,653. For the year ended 31 December 2018, the Group recorded an audited loss before tax of £221,214 on revenues of £3,337,025. In the six months ended 30 June 2019, the Group reported an unaudited loss before tax of £98,098 on revenues of £1,678,314. The unaudited total assets of the Company as at 30 June 2019 were £5,520,250 with net assets being £223,095.

Subject to passing the Disposal Resolution and following the completion of the Disposal, the Company will no longer have any trading operations and the Board has determined that it would be in the best interest of Shareholders to return the net cash resources of the Company resulting from the Disposal to Shareholders. To facilitate any such distribution of cash to Shareholders, the Directors propose to seek cancellation of the Ordinary Shares from trading on AIM.

Following Cancellation, the Company will seek Shareholder approval to wind up the Company voluntarily by way of the Voluntary Liquidation and to appoint the Proposed Liquidators. These resolutions will be put to Shareholders at the Second General Meeting.

On the basis of the following assumptions:

·; the total proceeds payable by Alphacomm to the Company upon completion of the Disposal will amount to £1,100,000;

·; the liabilities of the Company remain at approximately £260,000; and

·; transaction costs and the expected running costs of the Company in the period prior to completion of the Liquidation amount to not more than £140,000 in aggregate,

the Company is expected to have sufficient cash resources to make total distributions to Shareholders of approximately £700,000 in aggregate, equivalent to approximately 1.5 pence per Ordinary Share.

The estimated level of total distributions and timing of distributions is provided for guidance purposes only. It is emphasised that the ability of the Company to make the estimated level of distributions and the timing of such return is not currently known with certainty, and will be subject to factors outside of the Board's control, which may include but are not limited to:

·; Shareholders voting in favour of the Resolutions at the forthcoming General Meetings;

·; the amount of any taxation liability resulting from the Disposal or otherwise; and

·; any differences between actual costs and the estimated running expenses of the Company and transaction costs until the final distribution to Shareholders.

3. Information on the Purchaser

Alphacomm is an online operating service provider for the sale of vouchers for recharging mobile phones and other digital content sales. In addition, Alphacomm provides specialist payment solutions for the telco and digital goods sectors with key relationships in Holland, Belgium, Germany and North America. Following a successful trial period, on 17 December 2018, the Company entered into a contract with Alphacomm pursuant to which the Company has provided fraud management services to Alphacomm. These services are expected to amount to approximately £0.4 million of revenue for the Company in 2019. Alphacomm is controlled by Huub Sparnaay. Mr Sparnaay has significant experience of mobile payment solutions and digital content sales, both in the business to business market directly via mobile operators but also direct business to consumer sales, primarily in Holland, Belgium and Germany via the primary medium of the mobile application.

4. Terms of the Disposal

The Company and Alphacomm have on 18 December 2019 entered into a conditional sale and purchase agreement for the sale of the entire share capital of Mi-Pay Limited to Alphacomm for cash consideration of £791,818 payable on completion of the Disposal together with an undertaking from Alphacomm to fund Mi-Pay Limited to enable it to discharge inter-company loans owing by Mi-Pay Limited to the Company of £308,182 upon completion of the Disposal, such amounts totalling £1.1 million. The SPA does not contain any post-completion price adjustment mechanism.

The SPA is conditional upon the passing of the Disposal Resolution. It is currently anticipated that, subject to passing the Disposal Resolution at the First General Meeting, the Disposal will complete on 27 January 2020. Should the Disposal not complete by 17 February 2020, the SPA will terminate unless a further longstop date can be agreed between the parties. Pursuant to the terms of the SPA, the Company is not required to give any warranties or indemnities in respect of any trading or financial matters of Mi-Pay Limited, either upon entering into the SPA or completion of the Disposal.

5. Related party transaction

The Purchaser, Alphacomm, is 100 per cent. owned by Mr Huub Sparnaay, a non-executive Director of the Company. Since the Purchaser is controlled by a director of the Company, the Disposal constitutes a related party transaction for the purposes of AIM Rule 13. Huub Sparnaay has not taken any part in any Board assessment of the Disposal.

Alphacomm has indicated that it may seek the continued services of John Beale and Michael Dickerson to continue to run the business of Mi-Pay Limited following completion of the Disposal, however no discussions have taken place to date in this regard. In light of this indication, John Beale and Michael Dickerson are not considered to be independent directors for the purposes of the Disposal and have not taken any part in any Board assessment of the Disposal.

The Independent Directors, having consulted with the Company's Nominated Adviser, Allenby Capital Limited, consider that the terms of the Disposal are fair and reasonable insofar as the Company's Shareholders are concerned.

6. Use of proceeds

The proceeds of the Disposal will be used to cover the costs of the Disposal and costs of the Company until the Liquidation, expected to total approximately £140,000, and to satisfy the existing liabilities within the Company of approximately £260,000. These amounts include accrued and unpaid salaries for current and former directors of the Company totalling approximately £136,000. Conditional on Shareholder approval of the Liquidation Resolutions at the Second General Meeting, the Company intends to appoint the Proposed Liquidators in order to complete the Liquidation and distribute the net cash of the Company to Shareholders. Before a distribution can be made to the Shareholders, the Proposed Liquidators must be satisfied that either all liabilities of the Company have been settled or that sufficient cash has been retained to discharge or provide for all actual and contingent liabilities. Cash can be released to the Shareholders as and when the Proposed Liquidators determine that all actual and contingent liabilities have been paid, provided for or discharged and there is surplus cash available for distribution. This process can take time, particularly if there are liabilities such as taxation to be agreed or other contingent liabilities that are initially difficult to quantify or agree. Further details on the Liquidation are set out in paragraph 9 below.

7. Principal effects of the Disposal and Cancellation

Mi-Pay Limited comprises the Company's sole operating subsidiary and, accordingly, the Disposal constitutes a disposal resulting in a fundamental change of business of the Company in accordance with Rule 15 of the AIM Rules. On completion of the Disposal, the Company would cease to own, control or conduct all or substantially all of its existing trading business, activities or assets.

In accordance with the AIM Rules, completion of the Disposal is conditional on the Shareholders passing the Disposal Resolution, to be proposed at the First General Meeting.

The Company will also seek Shareholder approval of the Cancellation Resolution at the First General Meeting, conditional upon the Disposal Resolution having been passed.

Conditional on the passing of the Disposal Resolution and the Cancellation Resolution, the Company will seek Shareholder approval of the Liquidation Resolutions at the Second General Meeting. Immediately on the passing of the Liquidation Resolutions, the Company will enter into Voluntary Liquidation.

If Shareholders do not pass the Disposal Resolution, the Company will continue to operate its business. The Directors believe that there are limited opportunities to reduce the Company's cost base further without raising new equity investment. The Directors also consider that the Company may lose Alphacomm's fraud service. Combined with continued uncertainty on receipt of the R&D tax claim, the Company would need to raise additional funds from investors. The Company has to date been unable to conclude such an equity raise on terms which would create more value for Shareholders than the proposed Disposal. If this investment were not raised, the most likely outcome is that the Company would eventually be placed into an insolvent liquidation process out of which Shareholders will see a lower (or possibly no) return on their investment compared with the potential proceeds from the Disposal which would be distributed via the Liquidation.

If only the Disposal Resolution is approved by Shareholders, following completion of the Disposal, the Company would become an AIM Rule 15 cash shell and as such will be required to make an acquisition or acquisitions which constitute a reverse takeover under AIM Rule 14 on or before the date falling six months from completion of the Disposal or be re-admitted to trading on AIM as an investing company under the AIM Rules (which requires the raising of at least £6 million) failing which, the Company's Ordinary Shares would then be suspended from trading on AIM pursuant to AIM Rule 40. Admission to trading on AIM would be cancelled six months from the date of suspension should the suspension not have been lifted. As a cash shell, the Company would have no operating cash flow and would be dependent on the net proceeds of the Disposal for its working capital requirements. As such, the Board consider the Cancellation and Liquidation to be in the best interests of Shareholders as a whole.

If only the Disposal Resolution and Cancellation Resolution are approved by Shareholders, and the Liquidation Resolutions are not passed at the Second General Meeting, following Cancellation, there will be no formal market mechanism enabling Shareholders to trade their Ordinary Shares on AIM or any other recognised market or trading facility, which is likely to affect the liquidity and marketability of the Ordinary Shares. Shareholders will no longer be afforded the protections given by the AIM Rules, such as the requirement to be notified of certain events and the requirement that the Company seek shareholder approval for certain corporate actions, where applicable, including substantial transactions, financing transactions, reverse takeovers, related party transactions and fundamental changes in the Company's business, including certain acquisitions and disposals. The Company will cease to have an independent nominated adviser and broker. In addition, the Cancellation may have personal tax consequences for Shareholders, who if they are in any doubt, should consult their 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 Disposal and Cancellation on them.

As such, the Board believe it is in the best interest of the Company and its Shareholders to proceed with a Voluntary Liquidation of the Company, and therefore enclose a notice convening the Second General Meeting, seeking Shareholder approval of the Liquidation Resolutions at Part III of this Document.

The Board intends to continue to maintain the Company's website until the Liquidation has been completed. Shareholders should be aware that, following the Cancellation, there will be no obligation on the Company to include the information required under AIM Rule 26 or to update the website as required by the AIM Rules.

8. Cancellation process

The Cancellation is conditional on the approval of not less than 75 per cent. of votes cast by Shareholders (in person or by proxy) at the First General Meeting. The Cancellation Resolution in the notice convening the First General Meeting, which is set out in Part II of this Document, proposes that admission of the Ordinary Shares to trading on AIM be cancelled.

Under the AIM Rules, Cancellation requires the expiration of a period of not less than 20 clear Business Days from the date on which notice of the intended Cancellation is given to the London Stock Exchange. The Company has notified the London Stock Exchange of the proposed Cancellation. Subject to the passing of the Cancellation Resolution, Cancellation will occur no earlier than five clear Business Days after the First General Meeting and it is expected that trading in the Ordinary Shares on AIM will cease at the close of business on 3 February 2020, with Cancellation expected to take effect at 7:00 a.m. on 4 February 2020.

Shareholders should be aware that if the Cancellation is approved by Shareholders and takes effect, they will, as from that time, cease to hold shares in a company whose shares are admitted to trading on AIM. Following the Cancellation, there will be limited opportunities for Shareholders to realise their investment in the Company other than pursuant to the proposed Liquidation.

9. Voluntary Liquidation of the Company

Prior to the Liquidation and appointment of the Proposed Liquidators as the joint liquidators of the Company:

·; the Disposal Resolution and the Cancellation Resolution must be passed;

·; a majority of the board of Directors must, at a meeting of the Board, make a statutory declaration to the effect that they have made a full enquiry into the Company's affairs and that, having done so, they have formed the opinion that the Company will be able to pay its debts in full, together with interest, within a period not exceeding 12 months from the commencement of the Liquidation; and

·; the Liquidation Resolutions must be approved by the Shareholders at the Second General Meeting.

Following their appointment as joint liquidators, the Proposed Liquidators must comply with their statutory duties to take custody of all of the Company's assets, invite creditors to submit particulars of debt and consider and settle each liability of the Company. Once the joint liquidators are satisfied that all actual and contingent liabilities have been paid, the surplus will be distributed to the Shareholders.

As soon as the Company's affairs have been fully wound up, the joint liquidators shall prepare a final account for the Shareholders setting out how the winding-up has been conducted and how the Company's assets have been distributed. A copy of the proposed final account must be sent to the Shareholders, giving a minimum of eight weeks' notice of the date upon which the joint liquidators intend to deliver the final account to the Registrar of Companies. Once finalised, the final account will be sent to the Shareholders and to the Registrar of Companies within 14 days of the date to which the final account is made up. The Company will be dissolved after the expiry of three months from the filing of the final account with the Registrar of Companies.

10. General Meetings

The notice convening the First General Meeting to be held at the offices of Allenby Capital Limited, 5 St. Helen's Place, London EC3A 6AB, at 10:30 a.m. on 27 January 2020, at which the Disposal Resolution and Cancellation Resolution will be proposed, is set out in Part II of this Circular. A summary of the Disposal Resolution and Cancellation Resolution is set out below.

Ordinary resolution:

Resolution 1, which seeks to approve the sale by the Company to Alphacomm of Mi-Pay Limited in accordance with the SPA.

Special resolution:

Resolution 2, which seeks to approve the cancellation of admission of the Company's ordinary shares to trading on AIM.

The notice convening the Second General Meeting to be held at the offices of Allenby Capital Limited, 5 St. Helen's Place, London EC3A 6AB, at 10:00 a.m. on 4 February 2020, at which the Liquidation Resolutions will be proposed is set out in Part III of this Circular. A summary of the Liquidation Resolutions are set out below.

Special resolutions:

Resolution 1, which seeks to wind up the Company voluntarily.

Resolution 2, which seeks to authorise the Proposed Liquidators (once they have been appointed as joint liquidators of the Company) to divide and distribute the Company's assets amongst the Shareholders.

Ordinary resolutions:

Resolution 3, which seeks to approve the appointment to the Company of the Proposed Liquidators as joint liquidators.

Resolution 4, which seeks to approve the remuneration of the Proposed Liquidators (once they have been appointed as joint liquidators of the Company) and authorise the Proposed Liquidators to draw such sums on account when funds permit.

Resolution 5, which seeks to approve the rate at which any disbursements incurred by the Proposed Liquidators (once they have been appointed as joint liquidators of the Company) will be recoverable.

Resolution 6, which seeks to authorise the Proposed Liquidators (once they have been appointed as joint liquidators of the Company) to hold the books and records of the Company, and for such books and records not to be destroyed for a two year period.

11. Action to be taken

You will find enclosed with this Document a yellow Form of Proxy for use in connection with the First General Meeting or at any adjournment thereof.

You will also find enclosed with this Document a blue Form of Proxy for use in connection with the Second General Meeting or at any adjournment thereof.

Whether or not you propose to attend the First General Meeting or Second General Meeting in person, you are strongly encouraged to complete, sign and return both Forms of Proxy in accordance with the instructions printed thereon as soon as possible, but in any event so as to be received, by post or, during normal business hours only, by hand, at Link Asset Services, The Registry, 34 Beckenham Road, Beckenham Kent, BR3 4TU. The yellow Form of Proxy should be received not later than 10.30 a.m. on 25 January 2020 (or, in the case of an adjournment of the First General Meeting, no later than 48 hours before the time of the adjourned meeting). The blue Form of Proxy should be received not later than 10.00 a.m. on 02 February 2020 (or, in the case of an adjournment of the Second General Meeting, no later 48 hours before the time of the adjourned meeting).

Appointing a proxy in accordance with the instructions set out above will enable your vote to be counted at the First General Meeting and the Second General Meeting in the event of your absence. The completion and return of either Form of Proxy will not prevent you from attending and voting at the First General Meeting or Second General Meeting, or any adjournment thereof, in person should you wish to do so. Your attention is drawn to the notes to the Forms of Proxy.

CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for either General Meeting (and any adjournment of the General Meetings) by using the procedures described in the CREST Manual (available from www.euroclear.com/site/public/EUI). CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a 'CREST Proxy Instruction') must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the issuer's agent (ID RA10) by 10:30 a.m. on 25 January 2020 for the First General Meeting and by 10:00 a.m. on 2 February 2020 for the Second General Meeting. For this purpose, the time of receipt will be taken to mean the time (as determined by the timestamp applied to the message by the CREST application host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Regulations.

12. Recommendation

The Independent Directors unanimously recommend that Shareholders vote in favour of the Disposal Resolution to approve the Disposal. The Board also unanimously recommend that Shareholders vote in favour of the Cancellation Resolution to effect the Cancellation at the First General Meeting, and in favour of the Liquidation Resolutions at the Second General Meeting.

The Board intend to vote in favour of each of the Resolutions in respect of their direct and indirect shareholdings which in aggregate amount to 4,373,736 Ordinary Shares representing 9.56 per cent. of the issued share capital of the Company.

DEFINITIONS

The following definitions apply throughout this Document, unless the context requires otherwise:

IMPORTANT NOTICES

The distribution of this Document in jurisdictions other than the UK may be restricted by law and, therefore, persons into whose possession this Document comes should inform themselves about and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdictions. In particular, this Document should not be forwarded or transmitted in or into the United States, Canada, Australia, South Africa, Japan or any other jurisdiction where it would be illegal to do so. The Ordinary Shares have not been, nor will they be, registered under the United States Securities Act 1933 (as amended) or under any of the relevant securities laws of any state of the United States or of Canada, Australia, South Africa or Japan. Accordingly, the Ordinary Shares may not (unless an exemption under relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into the United States, Canada, Australia, South Africa or Japan or for the account or benefit of any such person located in the United States, Canada, Australia, South Africa or Japan. 

This Document does not constitute an offer to buy, acquire or subscribe for, or the solicitation of an offer to buy, acquire or subscribe for Ordinary Shares or an invitation to buy, acquire or subscribe for Ordinary Shares. This Document does not constitute a prospectus for the purposes of the Prospectus Regulation Rules of the FCA or an admission document for the purpose of the AIM Rules for Companies.

Allenby Capital Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for the Company and no one else in connection with the Proposals and will not be responsible to any person other than the Company for providing the regulatory and legal protections afforded to clients of Allenby Capital Limited nor for providing advice in relation to the contents of this Document or any matter, transaction or arrangement referred to in it. Allenby Capital Limited has not authorised the contents of, or any part of, this Document and no liability whatsoever is accepted by Allenby Capital Limited for the accuracy of any information or opinion contained in this Document or for the omission of any information.

Certain statements in this Document constitute ''forward-looking statements''. Forward-looking statements include statements concerning the plans, objectives, goals, strategies and future operations and performance of the Company and the assumptions underlying these forward-looking statements. The Company uses the words ''anticipates'', ''estimates'', ''expects'', ''believes'', ''intends'', ''plans'', ''may'', ''will'', ''should'', and any similar expressions to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the Company's actual results, performances or achievements to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this Document. The Company is not obliged, and does not intend, to update or to revise any forward-looking statements, whether as a result of new information, future events or otherwise except to the extent required by any applicable law or regulation. All subsequent written or oral forward-looking statements attributable to the Company, or persons acting on behalf of the Company, are expressly qualified in their entirety by the cautionary statements contained throughout this Document. As a result of these risks, uncertainties and assumptions, a prospective investor should not place undue reliance on these forward-looking statements.