18 Aug 2010 14:00
18 August 2010
Tricorn Group Plc
("Tricorn" or the "Company")
Posting of Shareholder Circular and Annual Report and Accounts
Approval of a buyback of Shares, waiver of obligations under Rule 9 of the City Code and Notice of Annual General Meeting
Tricorn, the AIM listed tube manipulation specialist, announces that it is today posting the 2010 Annual Report and Accounts to Shareholders, along with a Circular which, amongst other things, includes the notice convening the Annual General Meeting of the Company (the "Notice"), to be held at the offices of Malvern Tubular Components Limited, Spring Lane, Malvern Link, Malvern, Worcestershire WR14 1DA, at 10.00 a.m. on 16 September 2010.
The Notice sets out the resolutions to be proposed at the Annual General Meeting and the letter from the Chairman of the Company, which is also set out below, explains the terms of the resolutions more fully.
Included in the resolutions to be proposed at the Annual General Meeting are the Whitewash Resolutions and the Buy Back Resolution. The Buy Back Resolution seeks the approval of Shareholders for, inter alia, the authority for the Company to make purchases of its own Ordinary Shares up to a maximum number of 3,214,500, being 10 per cent. of the Company's existing issued share capital. The Whitewash Resolutions seek the approval of Shareholders of a waiver by the Panel of any requirement under Rule 9 of the City Code for Roger Allsop and any persons connected to him to make a general offer for the Company.
Resolution 5, being the first of the Whitewash Resolutions, is in relation to a retrospective waiver of Rule 9 of the City Code, following the buy back by the Company of 875,000 Shares on 10 March 2010, which had the inadvertent consequence of increasing the Concert Party's shareholding from approximately 33.98 per cent. to approximately 34.90 per cent. Resolution 6, being the second of the Whitewash Resolutions, is in relation to a waiver of Rule 9 of the City Code in respect of the Buy Back Resolution.
Capitalised terms used in this announcement shall have the same meaning as ascribed in the Circular dated 18 August 2010 unless the context requires otherwise.
For further information please contact:
| Tricorn Group plc Mike Welburn, Chief Executive Phil Lee, Group Finance Director
| +44 (0) 1684 569 956 |
| Arbuthnot Securities Limited Tom Griffiths Ed Groome
| +44 (0) 20 7012 2000 |
Letter to Shareholders from the Chairman of the Company as extracted from the Circular
Set out below is the text of the letter from the Chairman of the Company, as extracted from the Circular, which, inter alia, explains the background to and the terms of the resolutions to be proposed at the Annual General Meeting.
"Dear Shareholder,
ANNUAL GENERAL MEETING
The notice of the tewlfth Annual General Meeting of the Company to be held at the offices of Malvern Tubular Components Limited, Spring Lane, Malvern Link, Malvern, Worcestershire WR14 1DA, at 10.00am on 16 September 2010 is set out at the end of this document and a copy of the 2010 Annual Report and Accounts and a Form of Proxy for use at the Annual General Meeting accompany this letter. The Notice sets out the resolutions to be proposed at the Annual General Meeting and this letter explains their terms more fully. Information on current trading and future prospects of the Company is set out in the Chairman's and Chief Executive's statements in the 2010 Annual Report and Accounts.
Resolution 1: Report and Accounts
The Directors present to the meeting the report and the accounts of the Company for the financial year ended 31 March 2010, together with the report of the Company's auditors.
Resolution 2: Remuneration Report
The Board is not obliged as Directors of a company whose Shares are admitted to trading on AIM or pursuant to the AIM Rules to publish a remuneration report. However, the Board considers it good corporate governance practice to comply with sections 420 to 422 inclusive of the Companies Act 2006 and do so by presenting its remuneration report to Shareholders set out in the Company's 2010 Annual Report and Accounts. The remuneration policy, which was first approved by Shareholders in 2003, remains unaltered. The Board considers that appropriate executive remuneration plays a vital part in helping to achieve the Company's overall objectives.
Resolution 3: Re-election of Directors
Article 106 of the Articles of Association requires that at each Annual General Meeting one-third of the current Directors must retire as Directors by rotation. Where the number of Directors is not three or a number divisible by three the minimum number of Directors to retire will be the number which is nearest to and less than one-third.
There are presently five Directors and Roger Allsop stands for re-election at this meeting.
Biographical details of all Directors can be found on our website www.tricorn.uk.com and are contained within the 2010 Annual Report and Accounts. The Corporate Governance Report contains details on the role of the Board and its committees.
Resolution 4: Re-appointment of Auditor and Remuneration of Auditor
On the recommendation of the audit committee the Board proposes that Grant Thornton UK LLP be re-appointed as the Company's auditors and that the audit committee be authorised to determine the level of remuneration of the auditors.
Resolutions 5 and 6: Waiver of Obligations under Rule 9 of the City Code ("Whitewash Resolutions")
In common with a number of other quoted companies, the Directors seek by the Buy Back Resolution, referred to further hereafter, Shareholder approval of a resolution to give limited authority to the Company to make market and off market purchases of Ordinary Shares. As stated under the heading "Resolution 9: Buy Back Resolution" below, the Directors consider that the renewal of the ability of the Company to make market and off market purchases of Ordinary Shares would be in the best interests of the Company and its Shareholders as a whole.
Furthermore, the Independent Shareholders, that is all the Shareholders other than Roger Allsop, a Director of the Company, Mrs Yvonne Allsop and the Roger Allsop Discretionary Settlement, need to approve the waiver of the obligation on Roger Allsop and parties connected to him which would otherwise arise under Rule 9 of the City Code as a result of the proposed purchases of Ordinary Shares by the Company as explained later in this document.
Roger Allsop, as described by the following paragraphs, held approximately 33.98 per cent. of the Company's issued share capital on and prior to 10 March 2010 when the Company exercised the authority granted to it by Shareholders at the Company's 2009 Annual General Meeting to make market purchases of its own Shares. This holding comprised 11,220,000 Ordinary Shares held as to 4,920,000 in his own name, 5,600,000 in the name of his wife and 700,000 in the Roger Allsop Discretionary Settlement (of which Mr Allsop is a trustee, but not a beneficiary). Mrs Yvonne Allsop and the Roger Allsop Discretionary Settlement are the only connected persons to Mr Allsop and for this reason hereinafter the holding is generally referred to as that of "Mr Allsop" or the "Concert Party". Under Rule 9 of the City Code, any person who acquires an interest (as such term is defined in the City Code) in shares, which taken together with the shares in which he, and any person acting in concert with him, are interested, carry 30 per cent. or more of the voting rights in a company which is subject to the City Code, is normally required to make a general offer to all of the remaining Shareholders to acquire their shares.
Similarly, when any person, together with any persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent., but does not hold shares carrying more than 50 per cent. of the voting rights of such a company, and such a person or any person acting in concert with him acquires an interest in any other shares which increases the percentage of shares carrying voting rights in which he is interested, a general offer would normally be required to be made to the remaining Shareholders to acquire their shares. Such an offer would have to be made in cash at a price not less than the highest price paid by him, or by any member of the group of persons acting in concert with him, for any interest in ordinary shares in the Company during the 12 months prior to the announcement of the offer.
Roger Allsop's direct and indirect interest in the Shares (by number) has remained unchanged since the admission to trading on AIM of the Shares in 2001, at which point Mr Allsop's direct and indirect interest in the Company's issued share capital was approximately 43.50 per cent. However, this holding as a percentage of the Company's issued share capital has subsequently been diluted as a result of various issues of Shares to fund acquisitions, cash placings, and the exercise of share options over Ordinary Shares, culminating in the holding being approximately 33.98 per cent. in March 2010.
Under Rule 37 of the City Code, any increase in the percentage holding of a Shareholder which results from a company buying back its own shares will also be treated as an acquisition for the purposes of Rule 9 of the City Code. This means that any buy-back by the Company of Ordinary Shares pursuant to the authority being sought by the Buy Back Resolution would, unless Mr Allsop were also to participate in the buy back of Shares so as to maintain his current shareholding level, result in him being obliged to make an offer for the Company.
The inadvertent consequence of the buy-back by the Company of 875,000 Shares on 10 March 2010 at a price of 5.5 pence per Share was to increase the Concert Party's shareholding from approximately 33.98 per cent. to approximately 34.90 per cent. The buy-back was conducted by the Company to protect Shareholder value following a technical market matter which had resulted in a material fall in the price of the Shares. The 875,000 Shares which were bought by the Company are held in treasury and are no longer treated as part of the Company's issued share capital. Details of the uses which may be made of treasury shares are explained further under Resolution 8 below.
The Panel has agreed, subject to Resolution numbered 5 in the Notice being passed on a poll by Independent Shareholders (namely those Shareholders other than the Concert Party), to retrospectively waive the inadvertent breach of the City Code which occurred on 10 March 2010 under Rule 9 of the City Code which would otherwise have obliged the Concert Party to make a mandatory offer for Ordinary Shares not already owned by the Concert Party as a consequence of the Company implementing the authority given by Shareholders at the Company's Annual General Meeting held on 17 September 2009. Shareholders should be aware that if Independent Shareholders do not approve retrospectively the breach of the City Code and consequential consolidation of the Concert Party's shareholding, then the Concert Party will have to sell sufficient Shares to restore its holding to the level as it was prior to 10 March 2010.
Moreover, the Panel has agreed, subject to Resolution numbered 6 in the Notice being passed on a poll by Independent Shareholders, to waive the obligation of the Concert Party to make a mandatory offer for the Ordinary Shares not already owned by the Concert Party as a consequence of the Buy Back Resolution being passed. For the avoidance of doubt, this waiver only applies in respect of increases in the shareholdings of Mr Allsop (and/or the Concert Party) resulting solely from purchases by the Company of its own Shares where the market or off market purchases are made pursuant to the Buy Back Resolution. The waiver does not apply to any other authority sought for the Company to purchase its own Shares after the date of the 2010 Annual General Meeting or any shareholding increase in relation to any Shareholder other than Mr Allsop and/or the Concert Party.
If Independent Shareholders approve the Whitewash Resolutions and the Company was to exercise in full the rights granted by Resolution 9 below, if passed, then the Concert Party's maximum voting rights would increase to 38.78 per cent. If Independent Shareholders do not approve Resolution 5, the Concert Party would be obliged to reduce its shareholding to the percentage held prior to the Share buy back on 10 March 2010, being approximately 33.98 per cent. If Independent Shareholders subsequently approve Resolution 6 and the Company was to exercise in full the rights granted by Resolution 9 below, if passed, then the Concert Party's maximum voting rights would increase to approximately 37.75 per cent.
The Concert Party does not seek any changes to the Board and the Concert Party has confirmed that it would be their intention that, following any increase in the Concert Party's proportionate shareholding as a result of any purchase of Shares by the Company, the business of the Company would continue in substantially the same manner as at present, with no major changes. With this in mind, there will be no repercussions on employment or the location of the Company's places of business and no redeployment of the Company's fixed assets. The Concert Party has no intention to prejudice the existing employment rights, including pension rights, of any of the employees or management of the Company nor to procure any material change in the conditions of employment of any such employee or management.
Voting on the Whitewash Resolutions (Resolutions 5 and 6) will be by means of a poll of Independent Shareholders. The Concert Party will not vote on these resolutions.
Resolutions 7 and 8: To Renew Powers of the Board to Allot Shares
The Act prevents directors from allotting unissued shares without the authority of Shareholders in General Meeting. In certain circumstances this could be unduly restrictive. The Articles of Association empower the Directors to allot unissued Shares, but the power is subject to Shareholder renewal. Renewal of this power is sought until the conclusion of the 2011 Annual General Meeting or fifteen months from the date of the passing of this resolution, whichever is the earlier, subject to the limitation specified in Resolution 7. Resolution 8 disapplies Shareholder pre-emption rights over the allotment of certain Shares for cash. Resolution 7, which is an ordinary resolution, provides for the Section 551 amount to be £1,000,000 representing 31.10 per cent. of the Company's existing issued share capital. This amount is the aggregate of £734,000 (being 22.83 per cent. of the Company's issued share capital) and £266,000 (being 8.28 per cent of the Company's current issued share capital and the amount required to meet existing rights of subscription pursuant to options which have been granted over Shares). Other than the allotment of Shares under the Tricorn Share Option Schemes the Directors have no present intention of using this authority for the allotment of further Shares. Resolution 8 provides the Board with authority to allot Ordinary Shares (or sell any Shares which the Company elects to hold in treasury) for cash without first offering them to existing Shareholders in proportion to their existing shareholdings. The aggregate nominal amount of £321,450 represents 10 per cent. of the Company's existing issued share capital. This authority will expire at the earlier of the conclusion of next year's Annual General Meeting and 15 December 2011.
Resolution 9: Buy Back Resolution
(This note should be read in conjunction with that relating to Resolutions 5 and 6 above)
In some circumstances companies may find it advantageous to purchase their own shares in the market or off market. This can lead to increases in future earnings on those shares not so purchased. This resolution complies with investor guidelines, which limit share purchases by a company to 10 per cent. of the issued share capital per annum. The Directors will only exercise this authority after considering the effects on earnings per Share and the benefits for Shareholders generally. Other investment opportunities, appropriate gearing levels and the overall position of the Company will be taken into account before deciding upon this course of action. Save to the extent purchased pursuant to the treasury shares provisions of the Act, any Shares purchased in this way will be automatically cancelled and the number of issued Shares will be reduced accordingly. Shares purchased by the Company as treasury shares are permitted to be held and dealt with by the Company (including selling the Shares or transferring them for the purposes of employee share schemes or cancelling them) subject to certain limitations. This resolution specifies the maximum number of Shares that may be acquired (10 per cent. of the Company's current issued share capital) and the maximum and minimum prices at which they may be bought.
Resolution 10: Amendment and Adoption of New Articles of Association
It is proposed that the Company adopt new Articles of Association (the "New Articles") in order to update the Company's existing Articles of Association primarily to take account of changes in UK company law brought about by both the Companies (Shareholder's Rights) Regulations 2009 ('Shareholder's Rights Regulations') which came into effect on 3 August 2009 and also the remaining provisions of the Act which were implemented on 1 October 2009. A summary of the main proposed amendments to the existing Articles of Association is presented below. The full terms of the proposed amendments to the existing Articles of Association are available for inspection at the registered office of the Company and at Orme & Slade Limited, National Westminster Bank Chambers, The Homend, Ledbury, Herefordshire HR8 1AB, during normal business hours, until the close of the Annual General Meeting on Thursday 16 September 2010, and, on that day at the place of the Meeting from at least 15 minutes prior to the Meeting until it concludes.
General
The proposed amendments to the existing Articles of Association reflect the updating of references and definitions from the Companies Act 1985 to the corresponding references and definitions in the Act and the making of minor or technical changes or renumbering of articles to reflect the consolidation of changes approved in previous years.
Voting by Proxies on a Show of Hands
The Act as amended by the Shareholder's Rights Regulations provides that each proxy appointed by a member has one vote on a show of hands unless the proxy is appointed by more than one member and has been instructed by one or more members to vote against the resolution, in which case the proxy shall have one vote for and one vote against. The existing Articles of Association are being amended to reflect this change.
Adjournments for Lack of Quorum
Under the Act as amended by the Shareholder's Rights Regulations, General Meetings adjourned for lack of a quorum must be held at least ten clear days after the original meeting. The existing Articles of Association are being amended to reflect this requirement.
Voting Record Date
Under the Act as amended by the Shareholder's Rights Regulations the Company must determine the rights of the members to vote at a General Meeting by reference to the Register of Members not more than 48 hours before the time of the holding of that meeting, not taking into account days which are not working days. The existing Articles of Association are being amended to reflect this requirement.
Resolution 11: Tricorn Long Term Incentive Plan 2010 ('LTIP')
Your Board and its Remuneration Committee has a policy of providing executive remuneration packages designed to attract, motivate and retain executive Directors of the calibre necessary to maintain the Group's position and reward them for enhancing Shareholder value and return. To that end, the Board wishes to see certain of its executive Directors benefiting from the opportunity to acquire Shares in the Company on the exercise of options or by purchase at market value. To achieve this objective the Board has undertaken a review of the long term incentives of the Company to ensure that those objectives are directed to the increase in Shareholder value and to develop growth. The Company proposes therefore to introduce the LTIP as soon as possible to create focus and momentum. The Remuneration Committee has consulted the Company's major Shareholders who have indicated their support of the proposed arrangements. However, it is often the case that an individual Director does not have available readily disposable funds to make such an investment. By section 197(1) of the Act, the general prohibition on loans to directors is abolished and replaced with a shareholder approval for all companies that allow loan, quasi loans and guarantees to directors and connected persons. To facilitate the approval by shareholders, a written memorandum with details of the loan must be available to shareholders before approval is given. Furthermore, all companies may enter into credit transactions with the directors if prior shareholder approval has been obtained. The relevant memorandum, which summarises the key provisions of the LTIP and the maximum possible loan to the relevant executive Directors, is attached at Part III of this document and the Board seeks Shareholder approval to implement these provisions of the Act for the benefit of the Directors and the Company notwithstanding the provisions of sections 678-680 of the Act and the concession provided by section 682(2)(c) of the Act together with the adoption of the LTIP.
Resolution 12: Grant of Options
As stated in relation to Resolution 11 above the Board and its Remuneration Committee remains focused on incentivising the executive Directors for the benefit of Shareholders. With that in mind the Board is desirous of reviewing options hitherto, and to be, granted pursuant to the Company's Share Option Schemes.
Action to be taken
All Shareholders are entitled to attend and vote on all resolutions at the Annual General Meeting, except for the Concert Party which will not be entitled to vote on the Whitewash Resolutions. A Form of Proxy for use at the Annual General Meeting is enclosed. Whether or not you do intend to be present at the meeting, you are requested to complete and return the Form of Proxy in accordance with the instructions printed thereon as soon as possible and in any event so that it is received by the Company's registrar, Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA, no later than 10.00am on 14 September 2010. Completion and return of the Form of Proxy will not prevent you from attending the meeting and voting in person should you wish.
Recommendation
Your Directors believe that the proposals in relation to the Resolutions 1 to 4 and 7 to 11, to be proposed at the Annual General Meeting, are in the best interests of the Company and its Shareholders as a whole and recommend Shareholders to vote in favour of the resolutions as they intend to do in respect of their own beneficial shareholdings, consisting of 11,716,688 Ordinary Shares, representing approximately 36.44 per cent. of the Company's issued share capital.
The Independent Directors, who have been so advised by Arbuthnot Securities, consider that the proposals in relation to Resolutions 5 and 6, to be proposed at the Annual General Meeting, are fair and reasonable and in the best interests of the Independent Shareholders and the Company as a whole. In providing its advice to the Independent Directors, Arbuthnot Securities has taken into account the Independent Directors' commercial assessments. Accordingly, the Independent Directors recommend Shareholders to vote in favour of Resolutions 5 and 6 as they intend to do in respect of their own beneficial holdings, consisting of 496,688 Ordinary Shares, representing approximately 1.54 per cent. of the Company's issued share capital.
Yours sincerely
Nick Paul
N. C. Paul CBE
Chairman"
Definitions
"2010 Annual Report and Accounts" the annual report and accounts of the Company for the year ended 31 March 2010, a copy of which accompanies this document;
"Act" the Companies Act 2006;
"Annual General Meeting" or "Meeting" the Annual General Meeting of the Company to be held at 10.00am on 16 September 2010;
"AIM" a market operated by the London Stock Exchange;
"AIM Rules" the AIM Rules for Companies published by the London Stock Exchange (as amended from time to time) which govern the admission to trading on and the regulation of AIM;
"Arbuthnot Securities" Arbuthnot Securities Limited;
"Articles of Association" the articles of association of the Company from time to time;
"Board" or "Directors" the Directors of Tricorn whose names are set out in paragraph 2.1 of Part IV of this document;
"Buy Back Resolution" the special resolution numbered 9 of the Shareholders to be proposed at the Annual General Meeting which will expire 15 months from the date of the resolution, unless previously renewed, varied, or revoked;
"Circular" this document;
"City Code" the City Code on Takeovers and Mergers;
"Company" or "Tricorn" Tricorn Group plc;
"Concert Party" Mr Roger Allsop, Mrs Yvonne Allsop and the Roger Allsop Discretionary Settlement;
"Form of Proxy" the form of proxy accompanying this document for use at the Annual General Meeting;
"Group" Tricorn and its subsidiaries;
"Independent Directors" the Directors other than Roger Allsop;
"Independent Shareholders" the Shareholders other than the Concert Party;
"London Stock Exchange" London Stock Exchange plc;
"LTIP" the Tricorn Group plc executive incentive plan;
"New Articles" the proposed new articles of association of the Company to be adopted at the Annual General Meeting;
"Notice" the notice of Annual General Meeting set out at the end of this document;
"Ordinary Shares" or "Shares" the ordinary shares of 10p each in the capital of Tricorn;
"Panel" the Panel on Takeovers and Mergers;
"Share Option Schemes" the Tricorn Group plc Enterprise Management Incentives Plan 2001 as amended, the LTIP and Unapproved Share Options granted by the Company;
"Shareholders" holders of Ordinary Shares; and
"Whitewash Resolutions" the ordinary resolutions numbered 5 and 6 concerning the waiver of obligations under Rule 9 of the City Code to be proposed at the Annual General Meeting and set out in the Notice.
Copies of the Circular and the 2010 Annual Report and Accounts are available from the Company's registered office at Spring Lane, Malvern Link, Malvern, Worcestershire WR14 1DA and on its website, www.tricorn.uk.com.