TIDMDSCV
RNS Number : 0824U
discoverIE Group plc
10 July 2018
For Release
7.00am, 10 July 2018
discoverIE Group plc
("discoverIE" or the "Company")
Publication of Circular and Notice of Extraordinary General
Meeting
As referred to in the preliminary results announcement on 5 June
2018, the Board of discoverIE has become aware of a technical
non-compliance issue that has been identified with respect to
distributable reserves of the Group's holding company which
resulted in certain historical dividends not being paid in
accordance with the Companies Act 2006 (the "Companies Act").
Following the appointment of new auditors for the year ended 31
March 2018 ("FY 2018"), it was identified during the audit that
part of the reserves included in the Company's profit and loss
reserve were not distributable as they did not meet the conditions
to be treated as realised profits per the Companies Act. This is
because a dividend which was received three years ago from a
subsidiary company had been made by book entry rather than by the
payment of cash and the resulting debt due from the dividend-paying
subsidiary to the Company was reinvested in another subsidiary
company. Had the dividend payment been made in cash and the
reinvestment not taken place, the dividend income would have been
distributable. As this was not the case, the Company has been
advised that the reserves should have been classified as
non-distributable. As a consequence of this reclassification,
approximately GBP7.7m of dividends ("the Relevant Dividends") were
paid by the Company during its financial years ended 31 March 2017
and 2018 when it did not have sufficient distributable
reserves.
These issues only affected the Relevant Dividends and did not
affect any other dividends declared and paid by the Company.
Furthermore, whilst this technical matter arose in the Company, the
discoverIE Group ("the Group") had, at all times, adequate reserves
in subsidiary companies to meet the Relevant Dividends.
This issue is of a historical nature and there is no change to
the financial outlook of the Company as a consequence of this
technical matter. It also has no impact on the Company's intentions
or ability to continue paying future dividends. No fines or other
penalties have been incurred by the Company.
Since 31 March 2018, dividends have been paid in cash up to the
Company by various of the Group's subsidiaries and recorded as
realised profits in the Company's accounts. Interim accounts which
reflect these distributions are being drawn up to 30 June 2018 and
will be filed with Companies House prior to the payment of the
final FY 2018 dividend on 31 July 2018.
The Resolution
The Company has been advised that it is in technical breach of
the Companies Act and should seek approval from shareholders for
the payment of the Relevant Dividends, and other consequential
approvals resulting from the technical breach. The Company is today
publishing and will post to shareholders an explanatory circular
(the "Circular") convening a general meeting to be held on 26 July
2018 (the "General Meeting"), at which a resolution of special
business will be proposed (the "Resolution") which will, if passed,
put all potentially affected parties, so far as possible, in the
position in which they were always intended to be.
Whilst the Company has no intention of doing so, it has been
advised that, as a consequence of this technical breach, it may in
theory have the potential to make claims against past and present
shareholders who were recipients of the Relevant Dividends (the
"Recipient Shareholders") and against directors of the Company at
the time. The Resolution therefore proposes to give the Board the
authority to enter into deeds of release in respect of these
parties (the "Shareholders' Deed of Release" and the "Directors'
Deed of Release", respectively) such that the relevant parties will
be released from any liability(1) arising from this historic
matter.
Certain directors of the Company, being Malcolm Diamond, Nick
Jefferies, Simon Gibbins, Tracey Graham, Henrietta Marsh and
Richard Brooman (the "Related Party Directors") are each classed as
a related party for the purposes of the Listing Rules. In addition,
one of the Recipient Shareholders, Canaccord Genuity Group Inc is
also classed as a related party for the purposes of the Listing
Rules. The entry by the Company into the Directors' Deed of Release
and the Shareholders' Deed of Release constitute smaller related
party transactions for the purposes of paragraph 11.1.10 of the
Listing Rules.
Further details are set out in the Circular. Enclosed within the
Circular is a notice of the General Meeting of the Company which
will be held at the Company's of ces, 2 Chancellor Court, Occam
Road, Surrey Research Park, Guildford, Surrey GU2 7AH on 26 July
2018 at 11.30 am (or as soon thereafter as the Company's Annual
General Meeting shall have concluded or been adjourned)
The Circular will be available to view on the Company's website
(www.discoverieplc.com) and at the offices of discoverIE Group plc
at 2 Chancellor Court, Occam Road, Surrey Research Park, Guildford,
Surrey GU2 7AH and at the offices of White & Case at 5 Old
Broad Street, London, EC2N 1DW. A copy of the Circular and the
accompanying Form of Proxy have been submitted to the National
Storage Mechanism and will shortly be available for inspection at
www.morningstar.co.uk/uk/nsm.
Enquiries:
discoverIE Group plc
Joanna Harkus Madge - Company Secretary 01483 544 500
Instinctif Partners
Mark Garraway
Helen Tarbet
James Gray 020 7457 2020
Note
1. Up to an amount equal to the amount of Relevant Dividends
received in the case of the Shareholders' Deed of Release and
GBP7.9m in the case of the Directors' Deed of Release.
Notes to Editors:
About discoverIE Group plc
discoverIE Group plc (previously Acal plc) is an international
group of businesses that designs, manufactures and supplies
innovative components for electronic applications.
The Group provides application-specific components to original
equipment manufacturers ("OEMs") internationally. With in-house
engineering capability, we are able to design components to meet
customer requirements, which are then manufactured and supplied,
usually on a repeating basis, for their ongoing production needs.
This generates a high level of repeating revenue and long term
customer relationships.
By focusing on key markets which are driven by structural growth
and increasing electronic content, namely renewable energy,
transportation, medical and industrial connectivity, the Group aims
to achieve organic growth that is well ahead of GDP and to
supplement that with targeted complementary acquisitions.
The Group employs c.4,000 people and its principal operating
units are located in Continental Europe, the UK, China, Sri Lanka,
India and North America.
The Group is listed on the Main Market of the London Stock
Exchange and is a member of the FTSE Small Cap Index, classified
within the Electrical Components and Equipment subsector, and has
revenue of GBP0.4bn. Over the last five years, revenue and
underlying earnings per share have more than doubled.
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 rns@lseg.com or visit www.rns.com.
END
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