Invu plc Proposed cancellation of trading on AIM (9359R)

TIDMINVU

RNS Number : 9359R

Invu plc

01 November 2013

1 November 2013

Invu PLC

(AIM: INVU)

Proposed cancellation of trading on AIM

Invu plc ("the Company"), the AIM listed document management software provider today announces that it intends to seek Shareholder approval for the cancellation of admission of its Ordinary Shares to trading on AIM (the "Cancellation").

Under the AIM Rules, Rule 41, it is a requirement that any cancellation of admission to trading on AIM must be approved by not less than 75 per cent. of votes cast by shareholders voting in a general meeting. Accordingly, the Company is today sending to Shareholders a circular and notice of general meeting convening the General Meeting at which a special resolution will be proposed to approve the Cancellation (the "Circular"). The Circular will be available shortly on the Company's website at www.invu.net

The General Meeting will be held at the offices of the Company, being Blisworth Hill Farm, Blisworth, Northampton, NN7 3DB at 9:00 a.m. on 19 November 2013. Should the Cancellation be approved at the General Meeting, it is expected that it will take effect at 7:00 a.m. on 2 December 2013.

Capitalised terms used but not defined in this announcement have the same meaning as given to them in the Circular.

Expected timetable of events

 
 Despatch of this document                             1 November 2013 
 Last date and time for receipt of Forms      9:00 a.m. on 15 November 
  of Proxy                                                        2013 
 General Meeting                              9:00 a.m. on 19 November 
                                                                  2013 
 Expected last day for dealings in Ordinary           29 November 2013 
  Shares on AIM 
 Expected time and date that admission of        with effect from 7:00 
  Ordinary Shares to                                a.m. on 2 December 
  trading on AIM will be cancelled                                2013 
 

Notes:

   1.     References to time shown in this document are based on London time 

2. If any of the above times or dates should change, the revised times and/or dates will be notified to Shareholders by an announcement on a Regulatory Information Service

3. All events in the above timetable following the General Meeting are conditional upon approval by Shareholders of the Resolution to be proposed at the General Meeting

 
 Contacts: 
 
 Invu plc                                  www.invu.net 
 Colin Gallick, Chief Executive    [phone] 
 Ian Smith, Finance Director 
 
 WH Ireland Limited                www.wh-ireland.co.uk 
 Mike Coe                          [phone] 
 

Background to the Cancellation

The Company was admitted to AIM on 7 December 2007 following the acquisition of Invu Inc which had been listed on AIM since January 2004. At that time the Group's objective was to establish itself as a leading global supplier of information and document management software and services. For the financial year ending 31 January 2008, the Group reported sales of GBP8.7 million, profit of GBP1 million, total equity of GBP8.7 million and had employed an average of 62 people in the year. The business was based on selling software as a product through a channel and therefore had significant working capital requirements.

Following significant losses in the next two financial years totaling, GBP13.3 million in aggregate during that period and a significant business re-organisation, the business has emerged as profitable and cash flow positive but on a much smaller scale. In the financial year ending 31 January 2013, the Group reported sales of GBP2.7 million, profit of GBP0.3 million, a deficit on equity of GBP0.5 million with an average of 28 employees in the year. The business is now focused predominantly in the UK and has refocused on the supply of software as a solution rather than a product and consequently substantially reduced its working capital requirements.

The re-organisation referred to above was financed by the issue of 50 million ordinary shares of GBP0.01 each raising GBP1 million, GBP500,000 convertible loan notes and a loan of GBP500,000, all issued in August 2009, and various Shareholder loans, which, including interest, amounted to GBP2,441,765 on 30 June 2011. The Company completed a capital re-organisation on 29 July 2011 which resulted in the issue of 305 million A Ordinary Shares which included conversion of the Shareholder loans and a subscription for cash which was used to repay the GBP500,000 loan. The A Ordinary Shares rank in priority to the Ordinary Shares, with respect to any distribution of assets of the Company on a winding-up, and have no rights to attend and vote at general meetings of Shareholders of the Company, but otherwise rank pari passu in all respects with the issued Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on the Company's share capital. The authorised, allotted and fully paid share capital at the date of this document compromises 168,752,662 Ordinary Shares, 305,000,000 A Ordinary Shares and deferred shares which have no economic value.

Reasons for the Proposal

The Directors believe that the Company is too small to benefit from the Ordinary Shares continuing to be traded on AIM.

The Directors have been able to improve profit and cash flow in the last few financial years without the need for equity funding from an issue of new Ordinary Shares and have no current plans to use equity funding as a source of working capital finance in the future.

Given the requirements of the AIM Rules with respect to any acquisition which constitutes a reverse takeover, the Directors consider that the costs of making acquisitions are too high and consequently a barrier to an acquisition strategy for the Company at its current scale. The Directors believe that this is exacerbated by the lack of liquidity in the Company's shares which limits their attraction, as an acquisition currency, to the owners of potential targets.

The Directors believe that an exit strategy is similarly hampered, while the Ordinary Shares continue to be traded on AIM, as the associated compliance costs are a substantial proportion of the Group's current EBITDA and consequently impact significantly on third party valuations which tend to be based on this metric. The Directors believe that any potential exit strategy is also impaired by the lack of liquidity in the Company's shares as this has a negative impact on the Company's share price and hence market valuation, indicating a valuation to potential acquirers below that of privately held peers.

Effect of the Cancellation on Shareholders

The principal effects of the Cancellation would be that:

(a) there would no longer be a formal market mechanism enabling Shareholders to trade their Ordinary Shares on AIM or any other recognised market or trading exchange;

(b) the Company would not be obliged to announce material events, administrative changes or material transactions nor to announce interim or final results;

(c) the Company would no longer be required to comply with any of the additional specific corporate governance requirements for companies admitted to trading on AIM; and

(d) the Company would no longer be subject to the AIM Rules and Shareholders would no longer be required to vote on certain matters as provided in the AIM Rules.

It is possible that the Cancellation could have taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent adviser.

Governance following the Cancellation

The Directors' intention is that the Company should remain a public limited company but without having its shares admitted to trading on a public market or multilateral trading facility. The Board intends to continue to include at least one independent non-executive director, Mark Wells, on the Board for the time being to ensure appropriate independent judgement on issues of strategy, performance, resources and corporate governance that they consider vital to the continued success of the Company.

Notwithstanding the Cancellation, the Company will continue to publish annual reports and accounts and hold Annual General Meetings and other General Meetings in accordance with the applicable statutory requirements and the Company's articles of association. Where the Directors consider it to be in the interests of the Company to do so, it will continue to post certain additional information relating to the Company on its website. In addition, the City Code on Takeovers and Mergers will continue to apply to the Company following the date of Cancellation.

Share trading facility following Cancellation

The Directors are aware that the Cancellation, should it be approved by Shareholders, would make it more difficult for Shareholders to buy and sell Ordinary Shares should they wish to do so. The Company therefore intends to put in place a third party trading facility to assist Shareholders to trade in the Ordinary Shares. Under this third party facility, Shareholders or persons wishing to acquire or dispose of Ordinary Shares would be able to leave an indication with the third party facility provider that they are prepared to buy or sell at an agreed price. In the event that the third party facility provider is able to match that order with an opposite sell or buy instruction, it would contact both parties and then effect the bargain.

When such arrangements are set up by the Company, details will be made available to Shareholders on the Company's website.

This information is provided by RNS

The company news service from the London Stock Exchange

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