TIDMEDP
RNS Number : 6151Y
Electronic Data Processing PLC
06 March 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN, INTO OR FROM, ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION.
6 March 2017
ELECTRONIC DATA PROCESSING PLC ("EDP" or the "Company")
Strategic review and pensions update
Update on strategic review and possible sale of the Company
In advance of the Company's annual general meeting on 21 March
2017, the Company would like to take the opportunity to update
Shareholders on the strategic review process and also to inform
Shareholders about the Group's defined benefit pension scheme.
On 18 April 2016, the Company announced the initiation of a
strategic review which included the commencement of an offer period
under the Takeover Code. This included a review of the various
options open to the Company to maximise value for its shareholders,
one of which was the possible sale of the Company. The initial part
of this review concentrated on an evaluation of the options,
however following the announcement a number of approaches were
received and the Board decided to explore the sale option with the
objective of unlocking value for shareholders.
This decision was followed by a period of several months which
involved a structured process based on the sharing of an
information memorandum and meetings with a number of parties. This
process was impacted by the uncertainty for parties arising from
delays outside the Company's control experienced during the
proposed sale of a surplus freehold property in Milton Keynes that
had been marketed for seven years. On 12 October 2016, the Company
announced the exchange of contracts for the sale of that property
for GBP1.2 million. The sale subsequently completed on 13 December
2016. Around the same time, the Company entered into more detailed
discussions with one party involving access to further due
diligence.
One of the key aspects of that due diligence was the Group's
defined benefit pension scheme. As reported in the preliminary
announcement of results on 20 December 2016, the scheme actuary had
commenced an updated triennial valuation as at 31 July 2016 which
is required to be finalised by the end of October 2017. Due to the
discussions relating to the possible sale of the Company, the Board
accelerated the timing of the preliminary actuarial valuation
report. At this preliminary stage, the work has revealed an adverse
movement in the actuarial valuation of the scheme. As described
further below, work is continuing to complete the valuation.
The party referred to above has withdrawn from the discussions.
The Company has received an approach from another party, however
the process is at a very early stage and there can be no guarantee
that these discussions will lead to an offer for the Company.
Shareholders will be updated in due course.
Pensions
On 20 December 2016, the Company announced its preliminary
results for the year ended 30 September 2016. Included within those
results was a disclosure that the accounting liability under IAS 19
associated with the Group's defined benefit pension scheme had
increased from GBP2.27 million to GBP3.88 million before deferred
tax and this amount was reflected in the Group balance sheet. This
movement was principally due to a continuing fall in corporate bond
yields which are used to value the liabilities in the scheme.
Valuing the scheme under the accounting rules prescribed by
IAS19, net assets since 2009 have been reduced by GBP3.38 million.
The steady fall in corporate bond yields since 2009, which reflect
the low interest rate environment that has prevailed over that
period, has resulted in the discount rate assumption falling
steadily, from 5.7% in 2009 to 2.2% in 2016. It should be noted
that any subsequent increase in interest rates and recovery in bond
yields would, inter alia, lead to an improvement in the IAS19
position of the scheme.
In contrast with the IAS19 valuation, the last triennial
actuarial valuation of the scheme, which was performed at 31 July
2013, showed a small surplus on an ongoing funding basis. This
meant that as a result of the scheme being fully funded on this
basis, the Group was not required to make cash contributions into
the scheme.
The assets of the scheme are held in a with-profit Grouped
Funding policy issued by Guardian Assurance plc. The main
difference between the IAS19 valuation and the ongoing funding
valuation is that IAS19 requires the Grouped Funding policy to be
valued at its discontinuance surrender value at the period end.
Conversely, the ongoing scheme funding valuation values the Grouped
Funding policy actuarially and takes into account the guaranteed
annuity rates secured under the policy.
The preliminary actuarial valuation report received from the
scheme actuary indicates a deficit as at 31 July 2016 of GBP490,000
(representing a funding level of 94%) compared with a surplus of
GBP62,000 (representing a funding level of 101%) in 2013. This
movement arises due to a number of factors in addition to the
expected normal experience gains and losses and the impact of
changes in assumptions. These additional factors include a
technical inconsistency which has been identified between the
approaches used to value assets and liabilities in the previous
valuation and an adjustment relating to certain pension benefits.
The deficit as currently identified in the preliminary valuation
report suggests a 10-year scheme funding cash contribution of
GBP75,000 per annum. These amounts are provisional and subject to
further review and analysis. Once the valuation is finalised,
shareholders will be updated accordingly.
The valuation of the pension scheme for statutory accounting
purposes, and which is included in the Group balance sheet, is
based upon the most recent full actuarial valuation of the scheme
and updated on an IAS 19 basis at the reporting date. The current
uncertainty surrounding the 31 July 2016 actuarial valuation, which
is not expected to be finalised for several months, may impact
subsequent IAS 19 valuations and further affect the Company's
distributable reserves. As reported in the Company's published
annual report and accounts for the year ended 30 September 2016,
the balance on the profit and loss reserve was GBP2.64 million. To
derive the Company's current level of distributable reserves, the
balance on the treasury share account of GBP0.59 million has to be
deducted along with the proposed final dividend of GBP0.38 million,
resulting in distributable reserves of GBP1.67 million.
Should the recent approach referred to above not result in an
offer being made for the Company, then, subject to the constraints
on distributable reserves and rules of the Takeover Code, the Board
intends to consider returning an amount of cash to shareholders.
The Company will update shareholders when it is in a position
to.
The Board remains focussed on maximising value for its
shareholders from a robust cash generative business model and a
strong debt-free balance sheet. At 28 February 2017 the Group's
cash balances were GBP6.56 million. The board is confident in the
on-going execution of its strategy.
Enquiries:
Electronic Data Processing PLC BDO LLP (Financial Adviser)
Julian Wassell John Stephan / Susan Jarram
Chief Executive 0114 2622010 0207 486 5888
About Electronic Data Processing PLC
Electronic Data Processing PLC is a supplier of software
solutions to the Merchanting and Wholesale Distribution Industry.
These include ERP and e-business solutions together with a
comprehensive range of customer support, implementation and
training services. EDP also offers a powerful, combined CRM and
business intelligence solution across a wide range of
industries.
EDP's solutions are offered through either on-site licenced
arrangements or on a cloud/hosted basis from its own data centre
located in Milton Keynes.
EDP has around 300 customers ranging from small owner-managed
businesses to multinationals.
Publication on Website
A copy of this announcement will be made available at
www.edp.co.uk no later than 12:00 noon (London time) on 7 March
2017 (being the business day following the date of this
announcement) in accordance with Rule 26.1 of the Code. The content
of the website referred to in this announcement is not incorporated
into and does not form part of this announcement.
BDO LLP, which is authorised and regulated in the United Kingdom
by the Financial Conduct Authority, is acting exclusively for
Electronic Data Processing PLC (as financial adviser) and no one
else in connection with the matters referred to in this
announcement and will not be responsible to anyone other than for
Electronic Data Processing PLC for providing the protections
afforded to clients of BDO LLP nor for providing advice in relation
to the matters referred to in this announcement.
The directors of Electronic Data Processing PLC accept
responsibility for the information contained in this announcement.
To the best of their knowledge and belief (having taken all
reasonable care to ensure that such is the case), the information
contained in this announcement for which they are responsible is in
accordance with the facts and does not omit anything likely to
affect the import of such information.
The distribution of this announcement in jurisdictions outside
the United Kingdom may be restricted by law and therefore persons
into whose possession this announcement comes should inform
themselves about, and observe such restrictions. Any failure to
comply with the restrictions may constitute a violation of the
securities law of any such jurisdiction.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in
1% or more of any class of relevant securities of an offeree
company or of any securities exchange offeror (being any offeror
other than an offeror in respect of which it has been announced
that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer
period and, if later, following the announcement in which any
securities exchange offeror is first identified. An Opening
Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later
than 3.30 pm (London time) on the 10th business day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1% or more of any class of relevant securities of the
offeree company or of any securities exchange offeror must make a
Dealing Disclosure if the person deals in any relevant securities
of the offeree company or of any securities exchange offeror. A
Dealing Disclosure must contain details of the dealing concerned
and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror, save to the
extent that these details have previously been disclosed under Rule
8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies
must be made by no later than 3.30 pm (London time) on the business
day following the date of the relevant dealing. If two or more
persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in
relevant securities of an offeree company or a securities exchange
offeror, they will be deemed to be a single person for the purpose
of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit
on +44 (0) 20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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