For
Immediate Release
21 February
2024
Aquila Services Group
plc
("Aquila" or the
"Company")
Intended Cancellation of
Listing
The Board of Aquila, the provider of
professional support services and consultancy advice to
organisations in socially focussed sectors in the UK and abroad
today announces that it has applied to the Financial Conduct
Authority ("FCA") and London Stock Exchange plc ("LSE") to effect a
cancellation of listing of its ordinary shares on the standard
segment of the FCA's Official List (the "Standard List") and
trading on the main market for listed securities of the LSE ("Main
Market") ("Cancellation").
The Directors have recently
completed an internal strategic review exercise which focused on
addressing how the Company might best seek to ensure the growth of
the Company in order to provide an improved return to shareholders,
maximise the retention of key skilled staff and to attract the best
new talent, and unanimously concluded that the Cancellation will be
in the best interests of the Company, its business and existing
shareholders as a whole.
The Directors must stress that the
Company continues to trade well, remains financially robust and
debt free. Further Board rationale for the Cancellation is
provided in the letter to Shareholders from the Group Chair, Derek
Joseph, which is set out in full in Appendix 1 to this
announcement.
As a Standard Listed company, Aquila
is not required to obtain the approval of shareholders for the
Cancellation. Pursuant to Listing Rule 5.2.8R though, the Company
is required to give at least 20 business days' notice of the
intended cancellation of its listing. It is anticipated that the
Cancellation will become effective at 8:00 a.m. on 22 March 2024.
Following the Cancellation, the Company will no longer be subject
to the regulatory and statutory regime which applies to companies
admitted to the standard segment of the Official List and traded on
the Main Market.
The information communicated within this announcement is
deemed to constitute inside information as stipulated under the
Market Abuse Regulations (EU) No 596/2014 which is part of UK law
by virtue of the European Union (Withdrawal) Act 2018. Upon
publication of this announcement, this inside information is now
considered to be in the public domain.
For further information please
visit www.aquilaservicesgroup.co.uk
or contact:
Aquila Services Group plc
Claire Banks, Group Finance
Director
Tel: 020 7934 0175
Beaumont Cornish Limited
Roland Cornish / Asia
Szusciak
Tel: 020 7628 3396
Beaumont Cornish Limited,
which is authorised and regulated in the United Kingdom by the
Financial Conduct Authority, is Financial Adviser to the Company in
relation to the matters referred herein. Beaumont Cornish Limited
is acting exclusively for the Company and for no one else in
relation to the matters described in this announcement and is not
advising any other person and accordingly will not be responsible
to anyone other than the Company for providing the protections
afforded to clients of Beaumont Cornish Limited, or for providing
advice in relation to the contents of this announcement or any
matter referred to in it.
Appendix 1
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE
ATTENTION.
If
you are in any doubt about the contents of this letter, its likely
impact on you and/or the action you should take, you should
immediately consult your stockbroker, bank, solicitor, accountant,
fund manager or other appropriate independent financial adviser
authorised under the Financial Services and Markets Act 2000 if you
are resident in the United Kingdom or, if not, another
appropriately authorised independent financial adviser in your own
jurisdiction.
If
you have sold or otherwise transferred all of your ordinary shares
in Aquila Services Group plc (or will have sold or transferred all
such shares prior to implementation of the proposals described
below), please pass this document to the purchaser or transferee,
or to the person who arranged the sale or transfer, for onward
transmission to the purchaser or transferee.
21 February 2024
Dear Shareholder,
PROPOSED CANCELLATION OF STANDARD LISTING
As you will be aware, Aquila
Services Group plc (the Company) is listed on the standard
segment of the FCA's Official List (the Standard List) with its shares being
admitted to trading on the main market of the London Stock
Exchange. This listing has been in place since August 2015
when the main trading subsidiary, Altair Consultancy and Advisory
Services Limited, was reversed into an existing listed
company.
Further to the regulatory news
service announcement made on 21 February 2024, the Company is
writing to advise shareholders of its intention to cancel the
listing of its ordinary shares on the Standard List (the
Cancellation) and to
trading on the main market of the London Stock Exchange (the
LSE
listing).
As a Standard Listed company, the
Company is not required to obtain the approval of shareholders for
the Cancellation and is instead required only to provide the FCA
with 20 business days' prior notice. The directors of the
Company (the Directors)
unanimously consider the Cancellation to be in the best interests
of the Company, its business and existing shareholders as a
whole.
The Cancellation will take effect at
8:00 a.m. on 22 March 2024.
Background
The original perceived benefits of
the LSE listing were the provision of liquidity for shareholders
and the ability for the Company to raise further equity to expand
its business, to enable it to attract and retain the best talent
through the use of share incentive schemes and to support the
making of acquisitions utilising the Company's ordinary
shares.
Initially, the Company made a number
of smaller acquisitions and the consideration paid included the
issue of new shares. Later suitable acquisitions were harder
to source and, in a number of cases, the Company lost out to
private equity firms who were willing to attribute values to
businesses that were higher than our calculation of the likely
benefits. In addition, shares with low levels of liquidity
were not perceived as attractive by those vendors with which we
were negotiating with owners often requiring the receipt of cash in
preference to shares. This would have required the Company to
engage in significant borrowing which was not part of our
strategy.
Recent increases in the cost of
living have led our employees to seek higher basic remuneration and
the value of share options as an incentive has also
diminished. The Company has found that operating within the
LSE framework has made it difficult to devise suitable alternative
equity incentives.
We must stress that the Company
continues to trade well, remains financially robust and debt
free.
Strategic
review
The Directors have recently
completed an internal strategic review exercise which focused on
addressing how we might best seek to ensure the future growth of
the Company in order to provide an improved return to shareholders,
maximise the retention of key skilled staff and to attract the best
new talent.
The key conclusions of this review
were that:
1. The LSE listing has
not enabled the levels of liquidity that were expected for
shareholders and increasingly, it is more complex and difficult for
smaller companies to benefit from a public
listing.
2. The costs of
maintaining the LSE listing (including annual audit fees, FCA and
London Stock Exchange charges and advisers' fees) are currently
over £100,000 per annum and are likely to increase significantly in
the future. This cost is approximately equal to a third of
the Company's total current annual dividend
distribution.
3. In order to secure
its succession strategy, the Company needs to enable the next
generation of senior executives to hold significant ownership
stakes in the Company through enhanced equity participation
schemes. Part of this strategy might also include our
considering wider alternatives for future ownership of the Company,
including the possibility of setting up an employee share ownership
trust or similar employee ownership model. However, at this
point in time such a structure would require significant borrowings
and the Company would need to generate future additional reserves
before it became a viable proposition.
4. Many of the Company's
existing major shareholders might wish to consider the flexibility
that could be available in their individual financial positions if
the LSE listing were cancelled.
5. The Company should
consider taking a different approach to the making of further
acquisitions, possibly through partnership and joint venture
arrangements where the consideration can be related to performance
without the complexity and legal costs that a public quotation
requires.
Future
proposals
Although our future strategy has
many different elements, subject to our maintaining the Company's
continuing profitability, one of the principal benefits of the
Cancellation and subsequent cost savings will be to allow the
Company to both improve returns to shareholders (by a progressive
increase in annual dividends starting from 2024/25) while also
growing its business.
Whilst, following the Cancellation,
the Company will endeavour to facilitate arrangements whereby
shareholders wanting to sell their shares can be matched with those
interested in purchasing, it is unlikely this will achieve any
significant level of liquidity in the near future.
The Directors also realise that many
smaller shareholders, particularly those who acquired their shares
not as investments but as part of previous share option schemes,
via an inheritance or who otherwise hold their shares within a tax
wrapper such as an ISA, may not consider a continuing investment in
an unlisted company to be within their investment strategy.
Although the Directors' preference is for all
shareholders to remain investors in the Company and we believe the
Company has a positive future ahead of it, following Cancellation,
we will explore options for holders of smaller interests, excluding
staff and Directors, to dispose of their shareholdings to the
Company for a cash consideration.
For larger shareholders who are not
members of staff and Directors, the Company will also explore the
possibility for existing holdings to be partly exchanged for a debt
instrument bearing an appropriate interest coupon.
Both of these schemes will be
priorities for the Company but their introduction will be subject
to the obtaining of all necessary shareholder approvals and to
ensuring the Company retains sufficient funds for both its current
and reasonably foreseeable working capital requirements as well as
for further business growth.
Prior to progressing with our
cancellation of the LSE listing, the Directors consulted a number
of the Company's larger shareholders and our proposals received
widespread support. The outcome of these consultations has
been taken into account in the key considerations mentioned
above.
Conclusion
As at the date of this letter, there
were 101 shareholders recorded on the Company's members' register
and 39,961,955 ordinary shares in issue and the market
capitalisation of the Company as at 20 February 2024, at the bid
price of 17p, was approximately £7.39m. The Directors
believe, however, that the inherent value of the Company is likely
to be in excess of this sum and that, without the ongoing burden of
the listed regulatory environment and associated costs of listing,
the Company could well grow and further enhance its business as
well as providing increased returns for
shareholders.
The Directors will, immediately
following Cancellation, be retaining all of those ordinary shares
as are presently held by them and are looking to benefit from any
future growth and would also encourage shareholders to have
confidence in the future of the business.
Shareholders should consult their own professional advisers as
to whether continuing to hold shares in the Company following the
Cancellation is suitable or whether the Cancellation has any tax
consequences for them. Tax rules can change and the precise
tax implications for shareholders will depend on their particular
circumstances.
Any shareholder who would like to
discuss the contents of this letter with a Director should please
contact our Company Secretary, Claire Banks, whose email address
is Claire.Banks@aquilaservicesgrp.co.uk
to make suitable arrangements.
Yours faithfully,
Derek Joseph,
Group Chair, Aquila Services Group
plc-