Hornby PLC Proposed Cancellation of AIM Listing

RNS Number : 4826A

Hornby PLC

13 March 2025

 

Hornby plc

Proposed Cancellation of Admission to trading on AIM

Re-registration as a Private Limited Company

Adoption of New Articles

and

Notice of General Meeting

Hornby plc ("Hornby", or the "Company" and, together with its subsidiaries, the "Group"), the international hobby products group, announces the proposed voluntary cancellation of the admission of its ordinary shares of £0.01 each ("Ordinary Shares") from trading on AIM (the "Cancellation"), pursuant to Rule 41 of the AIM Rules for Companies (the "AIM Rules") and re-registration of the Company as a private limited company (the "Re-registration").  

Over recent years, Hornby has committed to implementing significant structural change and driving operational transformation for the benefit of all stakeholders in Hornby, not least its loyal shareholder base. This commitment has been evidenced by the Board's strategic actions including acquisitions, divestments and operational restructuring. This has been most recently evidenced by the acquisition of a stake in Warlord Games, the acquisition of Corgi Model Club, the sale of LCD Enterprises, the headcount and restructuring in 2024 and the relocation of the Company's logistics operations to the Midlands. The Board anticipates that for this process of structural change to continue at pace and to maximum effect, operating outside a publicly quoted environment would improve its decision-making ability and regulatory hurdles during a period demanding agility and focused execution. At the same time, the Board is conscious of the limited liquidity of the Company's shares on AIM balanced against the regulatory burden and cost of maintaining the public quotation. 

Therefore, following an ongoing and in-depth evaluation, the Board has concluded that it is in the best interests of the Company and its Shareholders to seek Shareholder approval for the Cancellation and Re-registration.

The Board is well aware of the place Hornby has in the hearts of its loyal shareholder base, and the Company's announcement today is not taken lightly. The Directors are confident that operating as a private entity will provide Hornby with the necessary agility for swift decision-making and efficient execution of strategy whilst not depriving shareholders of material benefit.

A circular (the "Circular") will be posted to Shareholders later today, and includes notice of a general meeting of the Company which is being convened for 9.00 a.m. on 1 April  2025 (the "General Meeting") at Enterprise Road, Westwood Industrial Estate, Margate, CT9 4JX, for the purposes of considering and, if thought fit, passing the requisite shareholder resolution to approve Cancellation (the "Cancellation Resolution") and the Re-registration (the "Re-registration Resolution", together the "Resolutions"). In accordance with the requirements of Rule 41 of the AIM Rules and the Companies Act 2006, the Cancellation and Re-Registration, respectively, are each conditional upon the approval of not less than 75 per cent. of the votes cast by Shareholders (whether present in person or by proxy) at the General Meeting.

If the Cancellation Resolution is passed at the General Meeting, it is anticipated that the Cancellation will become effective at 7:00 a.m. on 10 April 2025. Approval of the Re-registration Resolution is conditional upon the passing of the Cancellation Resolution. If both resolutions are passed, it is anticipated that the Re-registration will become effective in the week commencing 28 April 2025.

Should the Resolutions be passed, and for the period of time that the Company continues to be supported by a wide shareholder base, the Company shall continue to provide information, services and facilities to Shareholders similar to that of a publicly quoted company, albeit from the platform of a private entity. For those that want to remain ongoing direct holders of Hornby as a private company no action is needed, however for Shareholders that choose to, the Board has agreed two share facilities to support trading out of their shareholding following Cancellation, if the Resolutions are passed, including a facility by which Shareholders may maintain an indirect interest in the Company whilst retaining free transferability of shares.

Each of Castelnau and Aurora, as beneficial owners of 54.89 per cent. and 14.90 per cent. respectively of the Company's issued share capital, are entitled to procure votes on the Resolutions and the Company has received irrevocable undertakings signed on behalf of those beneficial owners, representing in aggregate 69.79 per cent. of the Company's issued share capital, to vote those shares in favour of the Resolutions. In addition, those Directors who own Ordinary Shares, representing in aggregate 0.54 per cent. of the Company's issued share capital, have also entered into similar commitments.

The Company is also seeking Shareholder approval at the General Meeting for the amendment of the current articles of association of the Company (the "Current Articles"), conditional upon Re-registration, into a form appropriate for a private limited company.

The Directors have been keen to ensure that, for those Shareholders who choose to, there is an opportunity to trade out of their shareholding following, and notwithstanding, the proposed Cancellation. The Directors have agreed two different facilities to enable this: the first which allows a Shareholder to maintain an indirect interest in the Company whilst retaining transferability of shares by exchanging for shares in Castelnau; and the second which allows sales for cash. Further information is set out later in this announcement.

Further information on the Cancellation, Re-registration, the General Meeting and the amendment to the Current Articles is set out below or in the Circular.

The Board urges Shareholders that they are not required, if they do not wish, to dispose of their Ordinary Shares in any manner. However, Shareholders should note that, despite the measures the Company shall establish, if the Cancellation proceeds, their ability to trade their Ordinary Shares may be significantly reduced. 

Should the Resolutions be passed, a Shareholder has, in summary, four alternatives with respect to its shareholding in the Company:

1.      remain a continuing Shareholder of the Company following Cancellation and Re-registration, albeit on a private entity platform;

2.      sell Ordinary Shares prior to Cancellation - in respect of which, please see the proposed last day of trading set out in the circular;

3.      maintain an indirect interest in the Company by exchanging Ordinary Shares via the Exchange Facility for shares in Castelnau (Lon: CGL), a company to which Phoenix is investment manager which trades on the Specialist Fund Segment of the Main Market of the LSE - further details, including timing, restrictions and limitations, are set out in the circular; and

4.      sell Ordinary Shares via the Matched Bargain Facility for cash - further details, including timing, restrictions and limitations, are set out in the circular.

The Board can make no recommendation as to whether or not individual Shareholders should seek to sell their Ordinary Shares in light of the proposed Cancellation. Shareholders should carefully consider the advantages and disadvantages of tendering Ordinary Shares into the exchange facility. Shareholders who are in any doubt as to what they should do are advised to seek their own independent advice from a professional adviser duly authorised and regulated by the FCA.  This is a matter for individual Shareholders and will depend on their personal, financial and fiscal circumstances.

Current trading

The Company remains on track for year-on-year sales growth, despite weaker trading in January and February. Temporary shipping delays have also impacted the Company's operations which the Company expects will ease in the coming months.  Despite these short-term challenges, the Company continues to make progress with multiple change initiatives aimed at improving business performance. Encouragingly, the new product ranges launched at the beginning of the first financial quarter have been well received, with associated orders up 22% year-on-year, highlighting strong demand and positive customer engagement with the Company's brands.

Background and reasons for proposed Cancellation, Re-registration and adoption of New Articles

The Directors have conducted an in-depth review of the advantages and disadvantages to the Company and all its Shareholders in retaining the Company's quotation on AIM. Following this review, the Directors have concluded that the Cancellation will be in the best interests of the Company and its Shareholders as a whole. It is the Board's view that the Cancellation will provide greater strategic flexibility and that Hornby can take and implement decisions more quickly than a company which is publicly traded as a result of the more flexible regime that is applicable to an unquoted company. Although, the Board does not believe the Cancellation reflects any change in, or will have a material impact upon, the Company's strategy, the Board believes that implementation of this strategy will be more effective following Cancellation.

In addition, the Board has considered the following additional factors:

1.   Limited free float and lack of liquidity of the Ordinary Shares: The Directors believe the current levels of liquidity in trading of the Company's Ordinary Shares on AIM, as a result of its ownership structure, do not, in itself, offer investors the opportunity to trade in meaningful volumes or with frequency within an active market. The lack of free float and developed institutional shareholder base undermines the benefits many other quoted companies enjoy as a result of their quotation. The Directors note that over the past 12 months the average daily volume of Hornby shares as a proportion of its issued share capital is 0.03 per cent;

2.   Management focus: The Board believes that the Cancellation would allow the executive management team to focus more time on operational management and execution of the Company's strategy that would benefit all Shareholders in the longer term. A considerable amount of management time is currently spent complying with the legal and regulatory requirements associated with maintaining the Company's admission to trading on AIM. The time spent is, in the Board's opinion, disproportionate to the benefits of the Company's continued admission to trading on AIM;

3.   Enhanced restructuring efficiency:  Hornby have committed to implementing significant structural changes and driving operational transformation - a commitment evidenced by strategic actions including acquisitions, divestments and operational restructuring. It is anticipated that this process of structural change will continue. The Board believes that delisting will streamline this process, allowing for more efficient implementation of critical changes. Navigating change within the publicly quoted environment introduces regulatory hurdles and heightened public visibility, which the Board believes can impede progress during a period demanding agility and focused execution;

4.   Market volatility: As a result of the limited liquidity of the Ordinary Shares described above, small trades in the shares can have a significant impact on price and, therefore, market valuation which, the Board believes, in turn has a materially adverse impact on: (i) the Company's status within its industry, (ii) the perception of the Company among its customers, suppliers and other partners, (iii) staff morale, and (iv) the Company's ability to seek appropriate financing or realise an appropriate value for any material future sales or disposals;

5.   The cost associated with maintaining the Company's admission to trading on AIM: The considerable annual cost of approximately £0.4 million associated with maintaining the admission of the Ordinary Shares (such as nominated adviser and broker fees, London Stock Exchange fees and the costs associated with being a quoted company in having perceived higher level of corporate governance and audit scope) are, in the Board's opinion, disproportionately high, compared to the benefits; and

6.   Future Trading of Shares: The Board believes that it can make satisfactory arrangements for Shareholders (i) to maintain an indirect interest in the Company whilst retaining free transferability of shares via the Exchange Facility and (ii) to freely transfer their shares from time to time via the Matched Bargain Facility (see below for further details).

Following the proposed Cancellation, the Board believes 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 overhead costs associated with private limited company status.

Therefore, as a result of this review, the Board has unanimously concluded that the proposed Cancellation and Re-registration is in the best interests of the Company and its Shareholders as a whole. The Board makes no recommendation as to whether or not individual Shareholders should seek to sell their Ordinary Shares in light of the proposed Cancellation either pursuant to the exchange facility or otherwise. Shareholders should carefully consider the advantages and disadvantages of tendering Ordinary Shares into the exchange facility as set out in the Circular.

Exchange Facility and Matched Bargain Facility

Anticipating shareholder approval of the Cancellation Resolution, the Directors are intending to implement two facilities following Cancellation, provided by JP Jenkins (an appointed representative of Prosper Capital LLP, authorised and regulated by the FCA), to assist Shareholders who wish to trade their Ordinary Shares. Further details of both facilities are available in the Circular.

Firstly, a share exchange facility will be available from the day of Cancellation until 9 May 2025. Through this share exchange facility, Castelnau, a company to which Phoenix is investment manager and which is admitted to trading on the Specialist Fund Segment of the Main Market of the London Stock Exchange, will acquire Ordinary Shares at a price of 19.3 pence per share (the "Sale Price"), being a price equal to the daily volume-weighted average price of the Ordinary Shares in the five day period ending on 12 March 2025, in an aggregate amount not exceeding the Exchange Threshold, in exchange for new Castelnau shares (the "Exchange Facility"). The Exchange Facility is designed to allow Shareholders to maintain an indirect interest in Hornby, reflecting their long-term interest and loyalty to the Company. The Circular contains comprehensive information on the Exchange Facility. The Exchange Facility will remain open until  9 May 2025 (being one month from the date of Cancellation).

Secondly, for Shareholders not utilising the Exchange Facility, a matched bargain trading facility will be established by the Company with JP Jenkins (the "Matched Bargain Facility"), commencing the business day after the Exchange Facility expires and continuing for a minimum of 12 months.

Full details of the Matched Bargain Facility are available in the Circular.

Selling Shareholders should carefully consider the terms of the Exchange Facility and the deadlines imposed by JP Jenkins. Such deadlines should be carefully considered and take into account additional time that may be required to make arrangements to dematerialise shares into CREST. Neither the Company nor Castelnau can assure Shareholders that participating in the Exchange Facility is appropriate or economically viable for their respective personal, financial or fiscal circumstances or that Shareholders will be able to hold Castelnau Shares via their existing platforms or brokerage accounts.

Selling Shareholders should note that participating in the Exchange Facility and exchanging their Ordinary Shares for Castelnau Shares will expose them, and make them subject, to all risks inherent in holding shares in Castelnau as an entity admitted to trading on the Specialist Fund Segment of the Main Market of the London Stock Exchange.

The Specialist Fund Segment is intended for institutional, professional, professionally advised and knowledgeable investors who understand, or who have been advised of, the potential risk from investing in companies admitted to the Specialist Fund Segment.  The Specialist Fund Segment is only suitable for investors: (i) who understand the potential risk of capital loss and that there may be limited liquidity in the underlying investments of the Company; (ii) for whom an investment in securities admitted to trading on the Specialist Fund Segment is part of a diversified investment programme; and (iii) who fully understand and are willing to assume the risks involved in such an investment portfolio.

In addition, Castelnau is a company incorporated in Guernsey and subject to the laws of Guernsey which may be different to English law.

Neither the Company nor Castelnau provides, or can provide, any advice to Shareholders as to whether or not to participate in the Exchange Facility. Participation in the Exchange Facility will be a matter for each Shareholder to decide and will be influenced by their individual investment objectives and by their personal, financial and tax circumstances and any Shareholder does so solely on the basis of their own assessment of Castelanu. Shareholders should carefully consider the advantages and disadvantages of tendering Ordinary Shares as set out in the Appendix of this announcement. The contents of this document are not a financial promotion and none of the contents of this document constitute an invitation or inducement to engage in any investment activity.

A copy of this announcement and the Circular, when available, will be made available on the Company's website at https://www.hornby.plc.uk/. Shareholders are strongly encouraged to read the Circular in full.

Capitalised terms used but not defined in this announcement shall have the same meanings as are given to such terms in the Circular.

Enquiries:

Hornby PLC

                       

Kirstie Gould, CFO                     01843 233 500

Caroline Merrell, PR                   07852 210329

 

Panmure Liberum Limited, Nominated Advisor and Broker

Andrew Godber                         020 3100 2222

Edward Thomas

Ailsa Macmaster

This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication of this announcement, this information is now considered to be in the public domain. The person responsible for arranging for the release of this announcement on behalf of the Company is Kirstie Gould, Chief Financial Officer.

 

Appendix 1

Extracts from the Circular

Process for, principal effects of, and risks relating to, the Cancellation

The principal effects of, and risks relating to, the Cancellation include the following:

g.   there will be no formal market mechanism enabling Shareholders to trade Ordinary Shares. Save for the proposed Exchange Facility and Matched Bargain Facility referred to in paragraphs 8 and 9 of this letter, no other recognised market or trading facility is intended to be put in place to facilitate the trading of the Ordinary Shares following the Cancellation;

h.   it is possible that, following the publication of this Document, the liquidity and marketability of the Ordinary Shares may be significantly 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);

i.    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);

j.    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;

k.   the regulatory and financial reporting regime applicable to companies whose shares are admitted to trading on AIM will no longer apply, albeit the Company will remain subject to the Takeover Code for a period of two years following the Cancellation, as outlined in paragraph 11 of this letter;

l.    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;

m.  the levels of disclosure and corporate governance within the Company may not be as stringent as for a company quoted on AIM;

n.   the Company will no longer be subject to UK MAR regulating inside information and other matters;

o.   the Company will no longer be required to publicly disclose any change in major shareholdings in the Company under the Disclosure Guidance and Transparency Rules;

p.   Panmure Liberum will cease to be nominated adviser to the Company;

q.   whilst the Company's CREST facility will remain in place immediately post 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);

r.    stamp duty may be due on transfers of shares and agreements to transfer shares unless a relevant exemption or relief applies to a particular transfer; and

s.   the Cancellation may have personal taxation consequences for Shareholders (for example, not all SIPP providers or ISAs will allow unquoted shares to be held within the SIPP or ISA).

The above considerations are not exhaustive.  Shareholders who are in any doubt in assessing the likely impact of the Cancellation on them should seek their own independent advice (tax, financial and legal).

For the avoidance of doubt, the Company will remain registered with the Registrar of Companies in England and Wales in accordance with and subject to the Companies Act, notwithstanding the Cancellation and Re-registration.

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:

a.   continue to communicate information about the Company (including annual accounts) to its Shareholders, as required by the Companies Act, via its website www.hornby.plc.uk;

b.   continue to hold annual general meetings;

c.   continue, for at least 12 months following the Cancellation, to maintain its website, www.hornby.plc.uk 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 currently required by the AIM Rules;

d.   continue to remain subject to the Takeover Code for two years following Cancellation as further set out in paragraph 11 of this letter;

e.   support the availability of the Exchange Facility for one month from Cancellation, which allows Shareholders to exchange their Ordinary Shares, in an aggregate amount not exceeding the Exchange Threshold, for Castelnau Shares (as further described in paragraph 8 of this letter); and

f.    support the availability of the Matched Bargain Facility for a minimum of 12 months following expiry of the Exchange Facility, which would allow Shareholders to buy and tender Ordinary Shares on a matched bargain basis (as further described in paragraph 9 of this letter).

Transactions in the Ordinary Shares following the proposed Cancellation pursuant to the Exchange Facility

JP Jenkins will provide the Exchange Facility pursuant to which Shareholders may tender for sale Ordinary Shares at the Sale Price to Castelnau, in an aggregate amount not exceeding the Exchange Threshold, in exchange for new Castelnau Shares. Castelnau Shares (LON: CGL) are admitted to trading on the Specialist Fund Segment of the Main Market of the London Stock Exchange.

Specifically, following Cancellation, Shareholders wishing to dispose of Ordinary Shares ("Selling Shareholders") are able to leave an indication with JP Jenkins, through their stockbroker (JP Jenkins is unable to deal directly with members of the public), the number of Ordinary Shares that they are prepared to exchange (the "Sale Shares") at a price of 19.3 pence per Ordinary Share (the "Sale Price") being a price equal to the daily volume-weighted average price of the Ordinary Shares in the five day period ending on the date prior to the date of this Document. Shareholders who hold their Ordinary Shares in certificated form must first make arrangements to dematerialise such shares into CREST. Such Shareholders should contact their stockbroker who will provide them with a CREST Transfer Form which will be used to move the certificated shares into a share dealing account. Following completion of the transfer, Shareholders should then instruct their stockbroker to indicate their offer to JP Jenkins. JP Jenkins will collect all such expressions of interest during the period up until 6.00 p.m. on 9 May 2025. The price at which Castelnau will issue Castelnau Shares in exchange for Sale Shares will be 101 pence (the "Exchange Price"), being the latest published net asset value per Castelnau Share prior to publication of this Document.  For every Sale Share offered for exchange, Selling Shareholders will accordingly receive 0.1911 new Castelnau Shares (subject to being scaled back (please see below)). To the extent that the number of Sale Shares would entitle a Selling Shareholder to a fractional number of Castelnau Shares, the Selling Shareholder's entitlement will be rounded down to the nearest whole Castelnau Share.

To the extent that the total number of Sale Shares offered for exchange would result in Castelnau acquiring Sale Shares for a value that exceeds the Exchange Threshold, the number of Sale Shares will be reduced for each Selling Shareholder on a basis pro rata (or as close thereto) to the total number of Sale Shares tendered such that the value of the total number of Sale Shares at the Sale Price is equal to (or as close thereto) the Exchange Threshold.

If every Shareholder other than Castelnau and Aurora (which has undertaken not to tender its Ordinary Shares into the Exchange Facility) wishes to exchange their Ordinary Shares, the total number of Sale Shares would be 50,841,375^[1] having a total value of £9,812,385 at the Sale Price. This value exceeds the Exchange Threshold by £3,085,985 (i.e. by 31.4 per cent.), so in these circumstances the number of each Selling Shareholder's Sale Shares would be reduced by 31.4 per cent.

Settlement of Castelnau Shares issued to Selling Shareholders in exchange for their Sale Shares will take place within the CREST system, subject to certain exceptions. Settlement through CREST is expected to take place on 13 May 2025. However, in the event of any difficulties or delays in the admission of the Castelnau Shares to CREST or the use of CREST in relation to the Exchange Facility, Castelnau may decide that the Castelnau Shares should be issued in certificated form.

Shareholders should note that, if the Cancellation Resolution is not passed and Cancellation does not go ahead, the Exchange Facility will not be put in place.

The Exchange Facility will continue to be available to Shareholders until 9 May 2025 (being one month from the date of Cancellation).

Details of the Exchange Facility will be made available to Shareholders on the Company's website at www.hornby.plc.uk.

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 9 April 2025 and that the effective date of the Cancellation will be 10 April 2025.

Description of Castelnau

Castelnau is a Guernsey domiciled closed-ended investment company which was incorporated on 13 March 2020 under the Companies (Guernsey) Law 2008. Castelnau is classified as a registered fund under the Protection of Investors (Bailiwick of Guernsey) Law 2020. Its registered office address is PO Box 255, Les Banques, Trafalgar Court, St. Peter Port, Guernsey GY1 3QL. Castelnau's ordinary shares were admitted to trading on the London Stock Exchange's Specialist Fund Segment on 18 October 2021(LON: CGL).

Castelnau's investment objective is to compound shareholders' capital at a higher rate of return than the FTSE All-Share Total Return Index over the long term.

Castelnau seeks to achieve a high rate of compound return over the long term by carefully selecting investments using a thorough and objective research process and paying a price which provides a material margin of safety against permanent loss of capital, but also a favourable range of outcomes. Castelnau aims to follow a high conviction investment strategy. The expertise and processes developed by Castelnau's investment manager, Phoenix, can be applied to all parts of the capital structure of a business, both private and publicly quoted. These positions could be represented by a minority stake, a control position combined with operational involvement, full ownership of a company, a joint venture, a loan or convertible instrument, a short position or any other instrument which allows Castelnau to access value.

Castelnau may select investments from all asset classes, geographies and all parts of the capital structure of a business. Both private and public markets are within the scope of Castelnau's investment policy. The constraints on Castelnau's investment manager lie in the high standards, strict hurdles and diligent processes used to select investments. These constraints help to maximise returns by reducing mistakes, enforcing a margin of safety and only accepting investments with a favourable range of outcomes.

Castelnau expects to hold a concentrated portfolio of investments and they will not seek to reduce concentration risk through diversification. The opportunity set will dictate the number of holdings and the weighting of investments in their portfolio. The investments with the best return profiles will receive the largest weightings. Castelnau will therefore have no set diversification policies.

As at the date of this Document, approximately 83 per cent. of the net asset value of Castelnau is represented by its indirect investment in Dignity Group Holdings Limited (formerly Dignity Plc), the funeral services provider. This investment is held via Castelnau's joint venture investment in Valderrama Limited. As at the date of this Document, Castelnau's investment in the Company represents approximately 5 per cent. of the net asset value of Castelnau.

As at the date of this Document, funds and other investment vehicles and managed accounts under the discretionary management of Phoenix (including Aurora) control approximately 69.64 per cent. of the voting rights in Castelnau.

The most recent published financial information on Castelnau can be viewed at https://www.castelnaugroup.com/investor-relations/reports-factsheets.

Transactions in the Ordinary Shares following the proposed Cancellation in relation to the Matched Bargain Facility

Following expiry of the Exchange Facility, the Matched Bargain Facility will become available. Under the Matched Bargain Facility, Shareholders or persons wishing to acquire or dispose of Ordinary Shares would be able to leave an indication with JP Jenkins, through their stockbroker (JP Jenkins is unable to deal directly with members of the public), of the number of Ordinary Shares that they are prepared to buy or sell at an agreed price. If a Shareholder holds shares in certificated form, it must first make arrangements to dematerialise such Shares into CREST in order then to instruct its stockbroker to indicate its offer to JP Jenkins. In the event that JP Jenkins is able to match that order with an opposite sell or buy instruction, it would contact both parties and then effect the bargain (trade). Shareholdings remain in CREST and can be traded during normal business hours via a UK regulated stockbroker.

It is intended that the Matched Bargain Facility will operate for a minimum of 12 months after the expiry of the Exchange Facility. The Directors' current intention is that it will continue beyond that time, but Shareholders should note there remains a risk that the Matched Bargain Facility may not have been put in place at the time of expiry of the Exchange Facility, or if it is, it may not remain in place for an extended period of time and therefore inhibit the ability to trade the Ordinary Shares. Further details will be communicated to Shareholders at the relevant time via the Company's website, www.hornby.plc.uk.

Should the Cancellation become effective and the Company puts it in place, details of the Matched Bargain Facility will be made available to Shareholders on the Company's website at www.hornby.plc.uk.

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 9 April 2025 and that the effective date of the Cancellation will be 10 April 2025.

Irrevocable undertakings

Each of Castelnau and Aurora, as beneficial owners of 54.89 per cent. and 14.90 per cent. respectively of the Company's issued share capital, are entitled to procure votes on the Resolutions and the Company has received irrevocable undertakings signed either by or on behalf of those beneficial owners, representing in aggregate 69.79 per cent. of the Company's issued share capital, to vote those shares in favour of the Resolutions. In such undertakings, Phoenix (on behalf of Aurora) has undertaken not to tender Ordinary Shares held by Aurora into the Exchange Facility and Phoenix (on behalf of both Castelnau and Aurora)  has undertaken that no Ordinary Shares held by either of them on the date hereof shall be sold from the date of publication of this Document until the expiry of the Exchange Facility unless the buyer has undertaken to the Company not to tender the purchased Ordinary Shares into the Exchange Facility. This is with a view to maintaining the maximum scale-back percentage at the level set out in paragraph 8a of this Part I.

In addition, those Directors who own Ordinary Shares, representing in aggregate 0.54 per cent. of the Company's issued share capital, have also entered into similar commitments.

In light of these irrevocable undertakings, the Directors believe it is likely that the Resolutions will be passed at the General Meeting.

Recommendation of the Cancellation, Re-registration and Adoption of New Articles

The Directors consider that the Resolutions are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors unanimously recommend that you vote in favour of the Resolutions as they intend to do in respect of their own shareholdings of 911,804 Ordinary Shares, representing approximately 0.54 per cent. of the Ordinary Shares.

Summary of advantages and disadvantages associated with the Exchange Facility

Below is a summary of the key advantages and disadvantages associated with participation in the Exchange Facility.

a.   Potential advantages associated with tendering Ordinary Shares into the Exchange Facility

(i)      Exchanging Ordinary Shares for Castelnau Shares may mitigate potential effects of the Cancellation and Re-registration

Following the Cancellation and Re-registration, the Company will be a private limited company whose shares are not admitted to trading on any market or trading venue. Participating in the Exchange Facility gives Shareholders the opportunity to exchange their Ordinary Shares for shares in a company which trades on the Specialist Fund Segment of the Main Market of the LSE. This exchange may mitigate the following potentially negative consequences for Shareholders if the Cancellation and Re-Registration proceed:

(A)      the Cancellation may have personal taxation consequences for Shareholders (for example, not all SIPP providers or ISAs will allow unquoted shares to be held within the SIPP or ISA);

(B)      there will be no formal market mechanism enabling Shareholders to trade Ordinary Shares and therefore the Ordinary Shares may be more difficult to sell. Further, the absence of a formal market and quoted price may make it difficult for Shareholders to determine the market value of their investment;

(C)      the regulatory and financial reporting regime currently applicable to the Company will no longer apply meaning that the Company will no longer be subject to, and the Shareholders will no longer be afforded the protections given by, the AIM Rules, UK MAR and the DTRs (amongst others); and

(D)      stamp duty may be due on transfers (and agreements to transfer) Ordinary Shares, unless a relevant exemption applies.

(ii)      Holding Castelnau Shares is a different investment proposition than holding ordinary Shares which may have advantages for Shareholders

Holding Castelnau Shares, as a result of participating in the Exchange Facility, could have the following potential advantages for Shareholders:

(A)      allows Shareholders to maintain an indirect interest in the Company whilst retaining free transferability of shares;

(B)      Castelnau Shares are traded on the Specialist Fund Segment of the Main Market of the LSE which may potentially provide more liquidity than will apply to the Ordinary Shares following the Cancellation; and

(C)      Castelnau, as a quoted entity, will be subject to regulatory and financial reporting requirements which will not apply to the Company following the Cancellation.

b.   Potential disadvantages associated with tendering Ordinary Shares into the Exchange Facility

Shareholders should carefully consider the risks associated with participation in the Exchange Facility, as outlined below:

(i)      A Selling Shareholder may not be eligible for the Exchange Facility or the terms and fees associated therewith may not be appropriate for its personal circumstances

Participation in the Exchange Facility may not be appropriate or economically viable for a Shareholder's personal, financial or fiscal circumstances. Shareholders may not be able to hold Castelnau Shares via their existing platforms or brokerage accounts.

(ii)      A Selling Shareholder may not receive its full allocation of Castelnau Shares and Castelnau Shares may not be promptly settled in CREST-clearable form

No assurance can be given that all Ordinary Shares tendered will be accepted for exchange. Where Shareholders are eligible to hold Castelnau Shares through their brokerage or investment platform, (i) their entitlement may be rounded down to the nearest whole Castelnau Share in the event that a Selling Shareholder would be entitled to a fractional number of Castelnau Shares and (ii) the number of Sale Shares may be subject to scale back in the event that the total number of Sale Shares offered for exchange results in Castelnau acquiring Sale Shares for a value that exceeds the Exchange Threshold. There can be no assurance that CREST-cleared Castelnau Shares will be issued promptly following any successfully tendered exchange. That is to say, Castelnau Shares may be issued in certificated form in the event that there are difficulties or delays in the admission of the Castelnau Shares to CREST or the use of CREST in relation to the Exchange Facility;

(iii)     A Selling Shareholder shall be subject to the risks associated with holding Castelnau Shares

Holding Castelnau Shares presents materially different risks to holding Ordinary Shares, including that:

(A)      a Shareholder shall become exposed to all risks inherent in holding shares in Castelnau as an entity admitted to trading on the Specialist Fund Segment of the Main Market of the London Stock Exchange. The Specialist Fund Segment is intended for institutional, professional, professionally advised and knowledgeable investors who understand, or who have been advised of, the potential risk from investing in companies admitted to the Specialist Fund Segment.  The Specialist Fund Segment is only suitable for investors: (i) who understand the potential risk of capital loss and that there may be limited liquidity in the underlying investments of the Company; (ii) for whom an investment in securities admitted to trading on the Specialist Fund Segment is part of a diversified investment programme; and (iii) who fully understand and are willing to assume the risks involved in such an investment portfolio;

(B)      Castelnau has a highly concentrated investment portfolio and limited diversification - approximately 83 per cent. of the net asset value of Castelnau is represented by its indirect investment in Dignity Group Holdings Limited whilst maintaining an indirect interest in the Company, a Shareholder who successfully exchanges Ordinary Shares shall become exposed to the risks inherent in owning shares in a portfolio which is heavily weighted towards investment in, and the performance of, Dignity Group Holdings Limited;

(C)      Castelnau has no stated dividend target and may not pay dividends. Castelnau's investment objective is one of capital growth and it is anticipated that returns for Shareholders will derive primarily from capital gains;

(D)      Castelnau is a company incorporated in Guernsey and subject to the laws of Guernsey which may be different to English law, for example, any general meeting of a Guernsey company may be convened on 10 days' notice (rather than 21 days' notice required under English law for the calling of an annual general meeting and 14 days' notice required under English law for the calling of any other general meeting);

(E)      Castelnau complies with the UK Corporate Governance Code issued by the Financial Reporting Council and the Code of Corporate Governance issued by the Guernsey Financial Services Commission. Both such codes of corporate governance will have different requirements, principles and application to the Quoted Companies Alliance Corporate Governance Code which the Company applies;

(F)       the price at which the Castelnau Shares trade will likely not be the same as their net asset value per share (although they may be related). The Castelnau Shares could in future trade at a discount to their net asset value per share for a variety of reasons, including due to market conditions or an imbalance between supply and demand for the Castelnau Shares. While the Castelnau Directors may seek to mitigate any discount to net asset value per share through such discount management mechanisms as they consider appropriate, there can be no guarantee that they will do so or that such mechanisms will be successful; and

(G)      admission of the Castelnau Shares to trading on the Specialist Fund Segment should not be taken as implying that there will be an active and liquid market for the Castelnau Shares. Limited numbers and/or holders of such Castelnau Shares may mean that there is limited liquidity in such Castelnau Shares, which may affect: (i) an investor's ability to realise some or all of their investment; and/or (ii) the price at which such investor can effect such realisation; and/or (iii) the price at which such Castelnau Shares trade in the secondary market. Castelnau is a closed-ended investment company and therefore Castelnau Shares cannot be redeemed at the option of its shareholder.

(iv)     Castelnau may reduce its stake in the Company reducing a Selling Shareholder's indirect interest in the Company

There is no assurance that Castelnau will maintain its holding in the Company in the future. If Castelnau were to dispose of any Ordinary Shares in the Company, a Shareholder would have reduced, indirect exposure to the Company. In this connection, in its Irrevocable Undertaking, Castenau has limited its ability to sell Ordinary Shares from the date of publication of this Document until the expiry of the Exchange Facility in circumstances where the buyer has undertaken to the Company not to tender the purchased Ordinary Shares into that facility. Other than this limitation, there is no restriction on Castelnau's ability to sell Ordinary Shares.

Appendix 2

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Event	Time and/or date(1)(2)
Announcement of proposed Cancellation	13 March 2025
Publication and posting of this Document (including Notice of General Meeting)	During the day on 13 March 2025
Latest time for receipt of proxy appointments in respect of General Meeting	9.00 a.m. on 30 March 2025
General Meeting	9.00 a.m. on 1 April 2025
Announcement of results of General Meeting	1 April 2025
Last day of dealing in Ordinary Shares on AIM	9 April 2025
Cancellation of admission of the Ordinary Shares to trading on AIM	7.00 a.m. on 10 April 2025
Exchange Facility for Ordinary Shares commences	10 April 2025
Expected re-registration as a private limited company	Week commencing 28 April 2025
Expiry of the Exchange Facility	6.00 p.m. on 9 May 2025
Matched Bargain Facility for Ordinary Shares commences	12 May 2025
Settlement under the Exchange Facility	13 May 2025

 

Notes:

(1)  All of the times referred to in this Document refer to London time, unless otherwise stated.

(2)  Each of the time and dates in the above timetable is subject to change. If any of the above times and/or dates change, the revised time and dates will be notified to Shareholders by an announcement through a Regulatory Information Service.

---

[1] This number includes Ordinary Shares held by funds managed by Phoenix (other than Castelnau and Aurora) who are not restricted from tendering their shares into the Exchange Facility.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

 

END

 

 

NOGDXGDXLXBDGUD