DORIEMUS PLC
("Doriemus" or the "Company")
Proposed Disposal of TEP Exchange Holdings Limited
Confirmation of Existing Investing Policy
and
Notice of Annual General Meeting
Introduction
The Company announces that it is today posting a circular to shareholders
("Circular") containing a notice convening an Annual General Meeting of the
Company to be held at 4.30 p.m. on 13 August 2014, at the offices of Kerman &
Co LLP at 200 Strand, London WC2R 1DJ.
The Circular contains proposals which include the disposal of TEP Exchange
Holdings Limited ("TEP Exchange") and confirmation of its existing investing
policy.
Proposed Disposal of TEP Exchange Holdings Limited
As announced over the last few years, TEP Exchange's business of enabling
web-based deals for traded endowment policies (the "TEP Exchange Business") has
been operating in an environment which has been very challenging, and despite
significant efforts to promote the TEP Exchange Business, it has struggled to
compete effectively. Investor demand for traded endowment policies ("TEPs") has
reduced substantially with the commission income generated from the TEP
Exchange Business being adversely affected as a result. The Company's revenue
derived from the TEP Exchange Business reduced from £915,886 (in 2012) to £
220,000 (in 2013) with profit/loss attributable to equity holders being
similarly reduced from a profit of £590,000 (in 2012) to a loss of £53,000 (in
2013).
The Company has reviewed its business and operations strategy and feels that,
in addition to the decline in the market for TEPs over the years and its effect
on the Company, the TEP Exchange Business is not strictly aligned with the
Company's Investing Policy adopted in a meeting of the Shareholders held on 15
March 2013. The Company, therefore, proposes to dispose of TEP Exchange and the
TEP Exchange Business and concentrate on opportunities that fall within the
ambit of the Investing Policy.
Pursuant to a sale and purchase agreement to be entered into between the
Company and SL Investment, Close Horizons Limited and Morex Commercial (each a
"Buyer" and together, the "Buyers"), the Buyers will conditionally agree to
acquire the entire issued share capital of TEP Exchange from the Company for a
total consideration of £1 in cash on completion. All intercompany balances
between the Company and TEP Exchange will be paid off prior to the Disposal.
If the Disposal is approved, it will be deemed a fundamental change of business
for the purpose of Rule 15 of the AIM Rules for Companies and the same is,
therefore, conditional on the consent of the Shareholders. The Disposal is also
conditional upon the consent of the Financial Conduct Authority to the sale by
the Company of its shares in TEP Exchange to the Buyers (in their respective
proportions) being obtained and such consent remaining in full force and
effect.
Confirmation of Existing Investing Policy
If the Disposal is approved by Shareholders and FCA consent granted, the
Company will have disposed of a substantial part of its trading business. In
this situation, under Rule 15 of the AIM Rules, the Company will be
reclassified as an Investing Company. Under the AIM Rules, Investing Companies
are required to adopt an Investing Policy that must be approved by
Shareholders.
The Company's existing Investing Policy (as set out below) was initially
approved and adopted by the Shareholders at the Company's general meeting held
on 15 March 2013. It is now proposed that the Shareholders reaffirm the
existing Investing Policy (as set out below and in the Circular).
Related Party Transaction
SL Investment is interested in 828,032,798 Ordinary Shares comprising
approximately 15.5 per cent. of the issued share capital of the Company making
it a substantial shareholder of the Company for the purposes of the AIM Rules.
In addition, David Roxburgh is a Director of both the Company and SL
Investment. SL Investment is a party to the Sale and Purchase Agreement for the
sale of shares in TEP Exchange and the Disposal and entry into the Sale and
Purchase Agreement will, therefore, constitute a related party transaction
under the AIM Rules insofar as SL Investment is concerned.
David Roxburgh is also a Director of Morex Commercial and the Company. As set
out above, Morex Commercial is a party to the Sale and Purchase Agreement for
the sale of shares in TEP Exchange and the Disposal and entry into the Sale and
Purchase Agreement will, therefore, constitute a related party transaction
under the AIM Rules insofar as Morex Commercial is concerned.
The Independent Directors, having consulted with the Company's nominated
adviser, Cairn Financial Advisers LLP, consider the terms of the Sale and
Purchase Agreement and the Disposal to be fair and reasonable insofar as the
Shareholders are concerned.
Defined terms used in this announcement are taken from the Circular and set out
below.
A copy of the Circular is available on the Company's website at
www.doriemus.co.uk. Further information extracted from the Circular is set out
below.
For further additional information please contact:
Doriemus plc +44 (0) 20 7440 0640
Donald Strang / Hamish Harris
Cairn Financial Advisers LLP +44 (0) 20 7148 7900
Nominated Adviser and Broker
James Caithie / Jo Turner / Carolyn Sansom
The following has been extracted from the Circular without material adjustment:
Resolutions at the Annual General Meeting
Resolution 1 - Receiving and Considering the Accounts
This is an ordinary resolution to receive and consider the financial statements
of the Company for the period ended 31 December 2013 together with the report
of the Directors and the report of the auditors thereon.
Resolution 2 - Reappointment of Director
The Board recommends the re-appointment of Mr. Grant Michael Roberts, who
retires by rotation on the date of the Annual General Meeting in accordance
with Article 84 of the Articles of Association of the Company. Mr. Roberts,
being eligible, offers himself for re-appointment.
Resolution 3 - Reappointment of Auditors
This Resolution seeks to authorise the re-appointment of Chapman Davis LLP as
auditors of the Company and to authorise the Directors to determine their
remuneration.
Resolution 4 - Disposal of TEP Exchange Holdings Limited
TEP Exchange is a wholly owned subsidiary of the Company and is a web-based
exchange for traded endowment policies ("TEPs"), enabling instant deals between
market makers and sellers (the "TEP Exchange Business").
Over the last few years, the Company has found the markets it has been
operating in, with respect to the TEP Exchange Business, to be very challenging
and despite significant efforts to promote the TEP Exchange Business, it has
struggled to compete effectively. Investor demand for TEPs has reduced
substantially with the commission income generated from the TEP Exchange
Business being adversely affected as a result. The Company's revenue derived
from the TEP Exchange Business reduced from £915,886 (in 2012) to £220,000 (in
2013) with profit/(loss) attributable to equity holders being similarly reduced
from a profit of £590,000 (in 2012) to a loss of £53,000 (in 2013).
The Company has reviewed its business and operations strategy and feels that,
in addition to the decline in the market for TEPs over the years and its effect
on the Company (as set out above), the TEP Exchange Business is not strictly
aligned with the Company's investing policy adopted in a meeting of the
Shareholders held on 15 March 2013. The Company, therefore, proposes to dispose
of TEP Exchange (and the TEP Exchange Business) and concentrate on
opportunities that fall within the ambit of the Investing Policy (see below).
Pursuant to a sale and purchase agreement to be entered into between the
Company and SL Investment, Close Horizons Limited and Morex Commercial (each a
"Buyer" and together, the "Buyers"), the Buyers will conditionally agree to
acquire the entire issued share capital of TEP Exchange from the Company for a
total consideration of £1 in cash on completion. All intercompany balances
between the Company and TEP Exchange will be paid off prior to the Disposal.
If the Disposal is approved, it will be deemed a fundamental change of business
for the purpose of Rule 15 of the AIM Rules for Companies and the same is,
therefore, conditional on the consent of the Shareholders. The Disposal is also
conditional upon the consent of the Financial Conduct Authority to the sale by
the Company of its shares in TEP Exchange to the Buyers (in their respective
proportions) being obtained and such consent remaining in full force and
effect. This Resolution therefore seeks approval of Shareholders for the
Disposal at the Annual General Meeting.
Resolution 5 - Confirmation of Existing Investing Policy
If the Disposal is approved by Shareholders and FCA consent granted, the
Company will have disposed of a substantial part of its trading business. In
this situation, under Rule 15 of the AIM Rules, the Company will be
reclassified as an Investing Company. Under the AIM Rules, Investing Companies
are required to adopt an investing policy that must be approved by
shareholders.
The Company's existing Investing Policy was initially approved and adopted by
the Shareholders at the Company's general meeting held on 15 March 2013. It is
now proposed that the Shareholders reaffirm the existing Investing Policy (as
set out below).
The Company's investing policy is to invest in and/or acquire companies and/or
projects with clear growth potential. The geographical focus will primarily be
Africa, however, investments may also be considered in other regions to the
extent that the Board considers that value opportunities exist and attractive
returns can be achieved.
In selecting investment opportunities, the Board will focus on businesses that
are available at attractive valuations and hold opportunities to unlock
embedded value.
The Board will seek to invest in businesses where it may influence the business
at a board level, add their expertise to the management of the business, and
utilise their significant industry relationships and access to finance. The
ability to work alongside a strong management team to maximise returns through
revenue growth will be something the Board will focus upon.
The Company's interests in a proposed investment and/or acquisition may range
from a minority position to full ownership. The proposed investments may be
either quoted or unquoted and may be in companies, partnerships, earn-in joint
ventures, debt or other loan structures, joint ventures or direct interests in
projects. The Board may focus on investments where intrinsic value can be
achieved from the restructuring of investments or merger of complementary
businesses.
The Board expects that investments will typically be held for the medium to
long term, although short term disposal of assets cannot be ruled out if there
is an opportunity to generate an attractive return for Shareholders.
There is no limit on the number of projects into which the Company may invest,
and the Company's financial resources may be invested in a number of
propositions or in just one investment, which may be deemed to be a reverse
takeover under the AIM Rules. The Directors intend to mitigate risk by
appropriate due diligence and transaction analysis. Any transaction
constituting a reverse takeover under the AIM Rules will also require
Shareholder approval. The Board considers that as investments are made, and new
promising investment opportunities arise, further funding of the Company may
also be required. The Board has not excluded the possibility of building a
broad portfolio of assets.
Where the Company builds a portfolio of related assets it is possible that
there may be cross holdings between such assets. The Company does not currently
intend to fund any investments with debt or other borrowings but may do so if
appropriate. Investments in early stage assets are expected to be mainly in the
form of equity, with debt being raised later to fund the development of such
assets. Investments in later stage assets are more likely to include an element
of debt to equity gearing. The Board may also offer new Ordinary Shares by way
of consideration as well as cash, thereby helping to preserve the Company's
cash for working capital and as a reserve against unforeseen contingencies
including, for example, delays in collecting accounts receivable, unexpected
changes in the economic environment and operational problems.
Investments may be made in all types of assets and there will be no investment
restrictions. The Board will conduct initial due diligence appraisals of
potential business or projects and, where they believe further investigation is
warranted, intend to appoint appropriately qualified persons to assist. The
Board believes it has a broad range of contacts through which they are aware of
various opportunities which may prove suitable, although at this point only
preliminary due diligence has been undertaken. The Board believes its expertise
will enable it to determine quickly which opportunities could be viable and so
progress quickly to formal due diligence. The Company will not have a separate
investment manager. The Company proposes to carry out a comprehensive and
thorough project review process in which all material aspects of a potential
project or business will be subject to rigorous due diligence, as appropriate.
As an Investing Company, the Company will be required to make an acquisition or
acquisitions which constitute a reverse takeover under the AIM Rules or
otherwise implement its proposed Investing Policy on or before the date falling
twelve months from the Disposal and the confirmation of the Investing Policy
failing which, the Company's Ordinary Shares would then be suspended from
trading on AIM. In the event that the Company's Ordinary Shares are so
suspended and the Company fails to obtain Shareholders' consent to renew such
policy, the admission to trading on AIM would be cancelled six months from the
date of suspension.
Resolution 6 - Directors' Authority to Allot Shares
This is an ordinary resolution to grant the Directors the authority to allot
and issue shares and grant rights to subscribe for shares in the Company for
the purposes of Section 551 of the Act up to the maximum aggregate nominal
amount of £27,000 (representing 2,700,000,000 new ordinary shares of 0.001p
each in the Company). This resolution replaces any existing authorities to
issue shares in the Company and the authority under this resolution will expire
at the conclusion of the next annual general meeting of the Company.
Resolution 7 - Disapplication of Pre-emption Rights
Resolution 7 proposes to dis-apply the statutory rights of pre-emption in
respect of the allotment of equity securities for cash under Section 561(1) of
the Act. This is a special resolution authorising the Directors to issue equity
securities as continuing authority up to an aggregate nominal amount of £27,000
(representing 2,700,000,000 new ordinary shares of 0.001p each in the Company)
for cash on a non pre-emptive basis pursuant to the authority conferred by
Resolution 6 above.
The authority granted by this Resolution will expire at the conclusion of next
annual general meeting of the Company.
Related Party Transaction
SL Investment is interested in 828,032,798 Ordinary Shares comprising
approximately 15.5 per cent. of the issued share capital of the Company making
it a substantial shareholder of the Company for the purposes of the AIM Rules.
In addition, David Roxburgh is a Director of both the Company and SL
Investment. As set out above, SL Investment is a party to the Sale and Purchase
Agreement for the sale of shares in TEP Exchange and the Disposal and entry
into the Sale and Purchase Agreement will, therefore, constitute a related
party transaction under the AIM Rules insofar as SL Investment is concerned.
David Roxburgh is a Director of Morex Commercial and the Company. As set out
above, Morex Commercial is a party to the Sale and Purchase Agreement for the
sale of shares in TEP Exchange and the Disposal and entry into the Sale and
Purchase Agreement will, therefore, constitute a related party transaction
under the AIM Rules insofar as Morex Commercial is concerned.
The Independent Directors, having consulted with the Company's nominated
adviser, Cairn Financial Advisers LLP, consider the terms of the Sale and
Purchase Agreement and the Disposal to be fair and reasonable insofar as the
Shareholders are concerned.
DEFINITIONS
The following definitions apply throughout this document, unless the context
requires otherwise.
"AIM Rules" the rules published by London Stock Exchange
from time to time governing the admission to and
operation of AIM
"Annual General Meeting" the annual general meeting of the Company to be
held at 4.30 p.m. on 13 August 2014, or any
adjournment to that meeting
"Buyers" SL Investment Management Limited (a company
incorporated in England with company number
02485382), Close Horizons Limited (a company
incorporated in the Isle of Man with company
number 73283C) and Morex Commercial Limited (a
company incorporated in England with company
number 04158468)
"Company" Doriemus PLC, a public limited company
registered in England and Wales with registered
number 03877125
"Consideration" the consideration payable pursuant to the Sale
and Purchase Agreement, details of which are set
out in this document
"Directors" or "Board" the directors of the Company as at the date of
this document
"Disposal" the proposed disposal of TEP Exchange Holdings
Limited pursuant to the Sale and Purchase
Agreement
"Financial Conduct Authority" The Financial Conduct Authority of the United
or "FCA" Kingdom
"Independent Directors" Donald Strang, Hamish Harris and Grant Roberts
"Investing Company" has the meaning described in the definition of
"Investing Company" set out in the AIM Rules,
that is, any AIM company which has as its
primary business or objective, the investing of
its funds in securities, businesses or assets of
any description
"Investing Policy" the existing investing policy of the Company
proposed to be confirmed by the Shareholders at
the Annual General Meeting and as set out in
this document
"Morex Commercial" Morex Commercial Limited, a company incorporated
in England and Wales with company number
04158468 and with their registered address at 8
- 11 Grosvenor Court, Foregate Street, Chester,
Cheshire CH1 1HG
"Notice" the notice of the Annual General Meeting which
forms part of this document
"Ordinary Shares" ordinary shares of 0.001p each par value in the
capital of the Company
"Resolutions" the resolutions set out in the Notice at the end
of this document
"Shareholders" holders of the Ordinary Shares
"SL Investment" SL Investment Management Limited, a company
incorporated in England and Wales with company
number 02485382 and registered address at 8 - 11
Grosvenor Court, Foregate Street, Chester,
Cheshire CH1 1HG
"TEP Exchange" TEP Exchange Holdings Limited, a company
incorporated in England and Wales with company
number 08783474, which is a wholly owned
subsidiary of the Company