ARMOUR GROUP PLC

12 Pages·2014·0.09 MB·English

THIS DOCUMENT IS IMPORTANTAND REQUIRESYOUR IMMEDIATEATTENTION. If you are in any doubt about the
contentsofthisdocument,ortheactionyoushouldtake,youshouldimmediatelyconsultyourstockbroker,bankmanager,
solicitor,accountant,fundmanagerorotherindependentprofessionaladviserwho,ifyouaretakingadviceintheUnited
Kingdom, is authorised under the Financial Services and Markets Act 2000, or from an appropriately authorised
independentfinancialadviserifyouareinaterritoryoutsidetheUnitedKingdom.
If you have sold or otherwise transferred all of your Ordinary Shares inArmour Group plc, please forward this document,
together with the accompanying form of proxy, as soon as possible to the purchaser or transferee or to the stockbroker or
other agent through whom the sale or transfer was effected for delivery to the purchaser or transferee. If you have sold or
transferredonlypartofyourholdingofOrdinarySharesyoushouldretainthisdocumentandconsultthestockbroker,bank
orotheragentthroughwhomthepartsaleortransferwaseffected.
ThedistributionofthisdocumentinjurisdictionsotherthantheUKmayberestrictedbylawandthereforepersonsintowhose
possessionthisdocumentcomesshouldinformthemselvesaboutandobservesuchrestrictions.Anyfailuretocomplywith
theserestrictionsmayconstituteaviolationofthesecuritieslawsofanysuchjurisdiction.
TheDirectors,whosenamesaresetoutatpage6ofthisdocument,andtheCompany,acceptresponsibility,collectivelyand
individually,fortheinformationcontainedinthisdocument.TothebestoftheknowledgeandbeliefoftheDirectorsandthe
Company(whohavetakenallreasonablecaretoensurethatsuchisthecase)theinformationcontainedinthisdocumentis
inaccordancewiththefactsanddoesnotomitanythinglikelytoaffecttheimpactofsuchinformation.
ThisDocumentdoesnotconstituteorformpartofanyoffertosellorissueorasolicitationofanyoffertosubscribeforor
buyanysecuritiesintheCompanynorshallitoranypartofitorthefactofitsdistributionformthebasisof,orbereliedon
inconnectionwith,anycontracttherefor.
ARMOUR GROUP PLC
(IncorporatedandregisteredinEnglandandWaleswithregisterednumber00803572)
Proposed sale of the entire issued share capital ofArmour Home Electronics Limited
Proposal for the Group to become an Investing Company
Notice of General Meeting
Youshouldreadthewholeofthisdocument.YourattentionisdrawntotheletterfromtheChairmanoftheCompanywhich
issetoutatpages6to10ofthisdocumentandrecommendsthatyouvoteinfavouroftheResolutionstobeproposedatthe
General Meeting referred to in this document. Whether or not you attend the General Meeting, you are encouraged to
completeandreturntheformofproxyinaccordancewiththeinstructionsprintedontheform.
ThisdocumentshouldbereadinconjunctionwiththeNoticeofGeneralMeetingandFormofProxy.NoticeofaGeneral
Meeting of the Company to be held at 12.30 p.m. (UK time) atArnold & Porter (UK) LLP,Tower 42, 25 Old Broad Street,
London,EC2N1HQon4August2014issetoutattheendofthisDocument.
AFormofProxyforholdersofOrdinarySharesforuseattheGeneralMeetingaccompaniesthisDocumentand,tobevalid,
mustbecompletedandreturnedtotheCompany’sRegistrar,CapitaAssetServices,PXS1,34BeckenhamRoad,Beckenham,
KentBR34ZFassoonaspossiblebutinanyeventreceivednotlaterthan12.30p.m.(UKtime)on1August2014or48hours
beforeanyadjournedmeeting.CompletionofaFormofProxywillnotprecludeaShareholderfromattendingandvotingat
theGeneralMeetinginperson.
FinnCapisthetradingnameofFinnCapLtd,whichisaprivatecompanyauthorisedandregulatedbytheFinancialConduct
Authority.FinnCapisactingasnominatedandfinancialadvisortotheCompanyinconnectionwiththemattersdescribedin
thisdocument.PersonsreceivingthisdocumentshouldnotethatFinnCapwillnotberesponsibletoanyoneotherthanthe
Company for providing the protections afforded to customers of FinnCap or for advising any other person on the
arrangementsdescribedinthisdocument.FinnCaphasnotauthorisedthecontentsof,oranypartofthisdocumentandno
liabilitywhatsoeverisacceptedbyFinnCapfortheaccuracyofanyinformationoropinionscontainedinthisdocumentor
fortheadmissionofanyinformation.Norepresentationorwarranty,expressorimplied,ismadebyFinnCapasto,andno
liabilitywhatsoeverisacceptedbyFinnCapinrespectof,anyofthecontentsofthisdocument(withoutlimitingthestatutory
rightsofanypersontowhomthisdocumentisissued).
ItistheresponsibilityofanypersonreceivingacopyofthisdocumentoutsideoftheUnitedKingdom,tosatisfythemselves
astothefullobservanceofthelawsandregulatoryrequirementsoftherelevantterritoryinconnectiontherewith,including
obtaining any governmental or other consents which may be required or observing any other formalities required to be
observedinsuchterritoryandpayinganyotherissue,transferortaxesdueinsuchotherterritory.Persons(including,without
limitation,nomineesandtrustees)receivingthisdocumentshouldnotdistributeorsendthisdocumentintoanyjurisdiction
whentodosowould,ormightcontravenelocalsecuritylawsorregulations.
Allstatements,otherthanstatementsofhistoricalfact,containedinthisdocumentconstitute“forward-lookingstatements”.
In some cases forward-looking statements can be identified by terms such as “may”, “intend”, “might”, “will”, “should”,
“could”, “would”, “believe”, “anticipate”, “expect”, “estimate”, “predict”, “project”, “potential”, or the negative of these
terms,andsimilarexpressions.Suchforward-lookingstatementsarebasedonassumptionsandestimatesandinvolverisks,
uncertainties and other factors that may cause the actual results, financial condition, performance or achievements of the
Company to be materially different from any future results, performance or achievements expressed or implied by such
forward-looking statements. New factors may emerge from time to time that could cause the Company’s business not to
developasitexpects,anditisnotpossiblefortheCompanytopredictallsuchfactors.Giventheseuncertainties,prospective
investorsarecautionednottoplaceanyunduerelianceonsuchforward-lookingstatementsexceptasrequiredbylaw.The
Companydisclaimsanyobligationtoupdateanysuchforward-lookingstatementsinthisdocumenttoreflectfutureevents
ordevelopments.
AsummaryoftheactiontobetakenbyShareholdersoftheCompanyissetoutatpage9andintheNoticesetoutatthe
endofthisdocument.ThereturnofoneormorecompletedFormsofProxywillnotpreventyoufromattendingtheGeneral
Meetingandvotinginpersonifyouwishtodoso(andaresoentitled).
CONTENTS
Page
DEFINITIONS 3
EXPECTEDTIMETABLE OF PRINCIPAL EVENTS 5
PART 1 LETTER FROMTHE CHAIRMAN 6
1. Introduction 6
2. Background to and reasons for the Disposal 6
3. AboutArmour Home 7
4. Terms of the Disposal 7
5. CurrentTrading ofArmour Home 8
6. Financial Position of the Company following the Disposal 8
7. Irrevocable Undertakings 8
8. Related PartyTransaction 8
9. General Meeting 8
10. Investing Policy 9
11. Action to be taken by the Shareholders 9
12. Extension ofAudit Partner Rotation 10
13. Recommendation 10
PART 2 NOTICE OF GENERAL MEETING OF SHAREHOLDERS 11
2
DEFINITIONS
“AIM” AIM, a market operated by London Stock Exchange Plc;
“AIM Rules” the rules of London Stock Exchange Plc governing the
admission to, and the operation of,AIM and comprising
the AIM Rules for Companies and the AIM Rules for
NominatedAdvisers;
“Alphason Designs” or “AD” Alphason Designs Limited (incorporated and registered
inEnglandandWaleswithcompanynumber01893644)
whose registered office is at Lonsdale House,
7-9 Lonsdale Gardens,TunbridgeWells, KentTN1 1NU;
“Armour Home” AHEL,AHK,AD, MS, GP and QED together;
“AHEL” Armour Home Electronics Limited (incorporated and
registered in England and Wales with company number
01530915)whoseregisteredofficeisatLonsdaleHouse,
7-9 Lonsdale Gardens,TunbridgeWells, KentTN1 1NU;
“Armour Hong Kong” or “AHK” ArmourHongKongLimited(incorporatedandregistered
in Hong Kong with company number 1069003) whose
registered office is at 1F., HKI Building, 56 Hung To
Road, KwunTong, Kowloon, Hong Kong;
“Buyer” or “AHE 100” AHE 100 Limited (incorporated and registered in
England and Wales with company number 9104337)
whoseregisteredofficeisatStortfordHallIndustrialPark,
Dunmow Road, Bishops Stortford, Hertfordshire,
CM23 5GZ and is owned in part by George Dexter, the
Group Chief Executive, and Nicky Spence and Chris
Emerson;
“Circular” or “Document” this document;
“Company” or “Group” Armour Group plc (incorporated and registered in
England and Wales with company number 00803572)
whose registered office is at Lonsdale House, 7-9
Lonsdale Gardens,TunbridgeWells, KentTN1 1NU;
“Completion” completionoftheDisposalinaccordancewithitsterms;
“Consideration Shares” 250ordinarysharesof1penceeachinthecapitalofthe
Purchaser, representing 25 per cent. of the issued share
capital ofAHE 100 and credited as fully paid;
“Disposal” the disposal conditional, inter alia, on the passing by the
Shareholders of the Resolutions at the General Meeting,
ofalloftheissuedsharecapitalofArmourHomewillbe
transferred to the Buyer in return for the Consideration
Shares;
“Directors” thedirectorsoftheCompanywhosenamesaresetouton
page 6 of this Document;
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“Form of Proxy” the form of proxy for use by the Shareholders in
connection with the General Meeting;
“General Meeting” the general meeting of Shareholders to be held at
12.30p.m.(UKtime)on4August2014,noticeofwhich
is set out at the end of this Document, or any
adjournment of that meeting;
“Goldring Products” or “GP” Goldring Products Limited (incorporated and registered
inEnglandandWaleswithcompanynumber01243730)
whose registered office is at Lonsdale House,
7-9 Lonsdale Gardens,TunbridgeWells, KentTN1 1NU;
“Group” means the Company and all its subsidiaries;
“Independent Directors” Bob Morton, Steve Bodger and MarkWilson;
“Investing Policy” means the policy for future investment by the Company
described in Part 1, paragraph 10 of this Circular;
“Loan” A loan of £1.0 million from the Group toArmour Home
Electronics Limited. The Loan has a repayment term of
5years,aninterestrateof10percent.perannumandno
capital repayments for the first two years;
“Myryad Systems” or “MS” Myryad Systems Limited (incorporated and registered in
England and Wales with company number 02877692)
whose registered office is at Lonsdale House,
7-9 Lonsdale Gardens,TunbridgeWells, KentTN1 1NU;
“New Board” theboardofDirectors,followingtheDisposalwhichwill
comprise the Independent Directors;
“Notice” thenoticeoftheGeneralMeetingofShareholderssetout
at the end of this Document;
“Ongoing Group” the Group following the proposed Disposal;
“Ordinary Shares” the existing ordinary shares of 1 pence each in the
capital of the Company;
“QED” QED Audio Products Limited (incorporated and
registered in England and Wales with company number
02924135)whoseregisteredofficeisatLonsdaleHouse,
7-9 Lonsdale Gardens,TunbridgeWells, KentTN1 1NU;
“Resolutions” the ordinary resolutions set out in the Notice to be
proposed at the General Meeting;
“Sale and PurchaseAgreement” the agreement between (1) the Company and (2) the
Buyer conditional on the passing of the Resolutions at
theGeneralMeeting,pursuanttowhichtheDisposalwill
be implemented; and
“Shareholders” holders of Ordinary Shares in the Company.
4
EXPECTEDTIMETABLE OF PRINCIPAL EVENTS
Event Time and/or date
Date of this document 18 July 2014
Latest time and date for receipt of Forms of Proxy 12.30 p.m. on 1August 2014
General Meeting 4August 2014
Completion of Disposal 5August 2014
(1) Thetimesanddatessetoutintheexpectedtimetableofprincipaleventsaboveandmentionedthroughoutthisdocumentmay
beadjustedbytheCompanyinconsultationwithFinnCap,inwhicheventdetailsofthenewtimesanddateswillbenotified
totheLondonStockExchange,andwhereappropriate,theShareholders.
(2) AllreferencestotimesinthisdocumentaretoLondontimes,unlessotherwisestated.
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PART 1
LETTER FROMTHE CHAIRMAN
ARMOUR GROUP PLC
(IncorporatedandregisteredinEnglandandWaleswithregisterednumber00803572)
Directors: Registered Office:
Bob Morton (Non-Executive Chairman) Lonsdale House
George Dexter (Chief Executive) 7-9 Lonsdale Gardens
MarkWilson (Finance Director and Company Secretary) TunbridgeWells
Stephen Bodger (Non-Executive) Kent
TN1 1NU
18 July 2014
To the holders of existing Ordinary Shares
Dear Shareholder
Proposed sale of the entire issued share capital of Armour Home
Proposal for the Group to become an Investing Company
1. Introduction
The Company has today announced the proposed disposal of Armour Home to AHE 100 Limited, a
Company owned in part by George Dexter, the Group Chief Executive, and also Nicky Spence and
ChrisEmerson,bothdirectorsofArmourHome.TheCompanyhasenteredintoaconditionalsaleand
purchase agreement in respect of the disposal of the entire issued share capital of Armour Home
(including its subsidiaries AHK, AD, MS, GP and QED) to AHE 100 for a total consideration of 250
OrdinarySharesof1penceeachinthecapitalofAHE100,representing25percent.ofthetotalshare
capital of AHE 100. The Group has also lent Armour Home £1.0 million. AHE 100 will assume
responsibility for approximately £3.5 million of debt due to GE Commercial Finance Limited, the
Group’sprincipallender.FurtherdetailsoftheSaleandPurchaseAgreementaresetoutinparagraph
3 below.
As part of the conditional Sale and PurchaseAgreement, it has been agreed that George Dexter will
step down from the Group’s Board at Completion.
Following the Disposal the Group will have no debt, the £1.0 million loan as above, and
approximately £4.0 million of cash. It is proposed the Group will become an investing company.
CompletionoftheDisposalconstitutesafundamentalchangeofbusinessoftheCompanyunderRule
15 of the AIM Rules. Accordingly, the Disposal is conditional on Shareholder approval and this
circular set out the reasons for and the principal terms of the Disposal.
2. Background to and reasons for the Disposal
As announced on 10 March 2014, the Group recently disposed of its automotive division for
£10.9 million to AAMP of America. Following the disposal, the Company retained ownership of
Armour Home, which is focused on developing, marketing and selling consumer products for the
home entertainment and home office markets in the United Kingdom and overseas.
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Intheyearto31August2013ArmourHomehadsalesof£17.6millionandmadeanoperatingprofit
of £0.1 million. Armour Home is not expected to achieve profitability in the current financial year
andinthesixmonthsto28February2014incurredalossof£114,000,beforecentraloverheads,on
revenues of £9.0 million.
Market conditions remain challenging and growth has been limited over recent years. Given the
currentprospectsofthesector,theIndependentDirectorsbelievetheproposedtermsrepresentafair
priceforArmourHomeandtheywillbeabletoachievegreaterreturnsforShareholdersbyusingthe
Group’s cash and AIM listing to invest in high growth opportunities.The Group will retain a 25 per
cent. interest inArmour Home through its ownership of 25 per cent. of the share capital ofAHE 100
andwillthereforebenefitfromanyreturnthatAHE100cangeneratefromthecontinuingturnaround
ofArmour Home.
3. AboutArmour Home
Armour Home is the leading provider of high-end products, solutions and services to the hi-fi, home
theatre and entertainment market within the UK.
Armour Home has a diverse mix of more than 1,700 products that span all aspects of vision, sound
and the living experience within the home. This wide-ranging portfolio includes brands at the
forefrontofthehi-fiandaudio-visualsectors,withrecognisedindustryleadersofhi-fispeakers,cable
interconnects, multi-room entertainment systems and furniture solutions.
Within the UK, customers include Richer Sounds, John Lewis, Sevenoaks Sound and Vision,
Selfridges, Superfi,Aldi and Staples.
4. Terms of the Disposal
ArmourAutomotive Group, a wholly owned subsidiary of the Company, is the direct and/or indirect
owner (as appropriate) of the entire issued share capital ofArmour Home Electronics Limited and its
wholly owned subsidiariesArmour Hong Kong Limited,Alphason Designs Limited, Myryad Systems
Limited, Goldring Products Limited and QED Audio Products Limited, ownership of which will
transfer to AHE 100 on successful completion of the Disposal.The Directors believe that it will be
beneficial for the Company and its shareholders to proceed with the Disposal and accordingly
ArmourAutomotive Group has entered into the Sale and PurchaseAgreement.
Given that the Armour Home is the only trading subsidiary of the Group, the sale of Armour Home
representsafundamentalchangeofbusinessforthepurposesofRule15oftheAIMRules.Accordingly,
the Disposal is conditional on Shareholder approval being obtained at the General Meeting.
The key terms of the Sale and PurchaseAgreement are as follows:
• theconsiderationpayablebyAHE100is250ordinarysharesof1penceeachinthecapitalof
thePurchaser,representing25percent.oftheissuedsharecapitalofAHE100andcreditedas
fully paid on completion;
• a loan of £1,000,000 has been made by the Group to Armour Home Electronics Limited and
will remain in place post Disposal.The term of the Loan is 5 years, interest will be paid at a
rate of 10 per cent. per annum and no capital repayments are required to be made for the first
two years of the Loan;
• AHE 100 will assume responsibility for approximately £3.5 million of debt due to GE
Commercial Finance Limited, the Group’s principal lender;
• George Dexter will resign from the Board of the Group immediately on Completion; and
• the agreement is conditional on approval of the Disposal by the Shareholders.
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InadditiontotheSaleandPurchaseAgreementthepartieswill,priortoCompletion,needtoprepare,
agree and enter into a number of ancillary agreements which are to be delivered on Completion
pursuant to the Sale and PurchaseAgreement.
5. CurrentTrading ofArmour Home
Since the disposal of the Group’s automotive division, the trading performance of Armour Home,
before accounting for foreign exchange and central overheads, has been at breakeven. However,
lossesonforeignexchangehedgingcontractscombinedwiththeheadofficecosthaveresultedinthe
overall Group being loss making in this period. The unaudited interim results to 28 February 2014
showed a loss in respect of Armour Home of £114,000, before central overheads, on revenues of
£9.0 million.
Since the interim results were announced on 29 May 2014, trading has remained at broadly
breakeven before foreign exchange and central overheads.
6. Financial Position of the Company following the Disposal
Immediately following the Disposal the Group will have cash of approximately £4.0 million, net of
transactioncostsinrelationtotheDisposalofapproximately£0.1million.Inaddition,theGroupwill
have a 25 per cent. shareholding in AHE 100 Limited and a £1 million loan due from AHE 100
Limited.
7. Irrevocable Undertakings
The Company has received irrevocable undertakings to vote in favour of the Resolutions from
Shareholders representing 48.3 per cent. of the outstanding issued share capital. This includes
irrevocableundertakingsfromGeorgeDexterandcertainoftheIndependentDirectorsoftheGroup.
8. Related PartyTransaction
GeorgeDexterwillhold350sharesinAHE100Limitedrepresenting35percent.ofthesharecapital,
isadirectorofAHE100LimitedandwillbeadirectoroftheGroupuntilCompletion.UndertheAIM
Rules, George Dexter’s interest in AHE 100 Limited and the proposed Disposal is deemed a related
party transaction.
The Independent Directors of the Company (being Bob Morton, Steve Bodger and Mark Wilson)
consider, having consulted with finnCap, that the terms of the proposed Disposal are fair and
reasonable insofar as shareholders of the Company are concerned.
9. General Meeting
The General Meeting is being convened for the purpose of approving the Disposal.
(1) Approve the Disposal
Resolution 1, which will be proposed as an ordinary resolution, is to approve the Disposal for
the purposes of Rule 15 of theAIM Rules.
(2) Approve the Investing Policy
Resolution 2, which will be proposed as an ordinary resolution, is to approve the Investing
Policy (described in paragraph 10 below) for the purposes of Rule 15 of theAIM Rules.
(3) Authorise the allotment of shares in the Company
Resolution 3, which will be proposed as an ordinary resolution, is to update the general
authorisation granted to the Board to allot ordinary shares in the Company up to an aggregate
nominal amount of £600,000 pursuant to Section 551 of the CompaniesAct 2006.
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Resolutions 1, 2 and 3 each require a simple majority in order to pass.
Shareholders should read the Notice of General Meeting at the end of this document for the
full text of the Resolutions and for further details about the General Meeting.The attention of
Shareholders is also drawn to the voting intentions of the Directors and connected parties as
set out in the paragraph entitled “Recommendation” below.
10. Investing Policy
Following the Disposal, the Company will be an investing company.
The New Board has determined that the Company’s Investing Policy will be to seek opportunities in
the technology sector. The Company’s objective is to generate an attractive rate of return for
Shareholders by taking advantage of opportunities.There will be 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 is likely to be deemed to be a reverse
takeover pursuant to Rule 14 of theAIM Rules.
The Company will seek investment opportunities in the technology sector that offer good value and
the potential for capital growth and/or income. The Company will seek to achieve this through
acquisitions, partnerships or joint venture arrangements and such investments may result in the
Company acquiring the whole or part of a company.
The strategy of the Company will be to leverage the expertise and the contacts of the New Board to
investigate opportunities available to it.
In particular the New Board will seek to identify target investments with some or all of the following
characteristics:
• a clear market opportunity;
• significant growth prospects;
• likely to benefit from access to additional equity funding; and
• the likelihood of benefits accruing from being part of a group with publicly traded shares.
The Company’s Investing Policy is intended to be long-term but if circumstances arise whereby an
acquired business or company may be floated in its own right, or disposed of at a suitable premium,
such opportunities will be considered by the Board.
Under the AIM Rules, the Company is required to make an acquisition or acquisitions which
constitute a reverse takeover under theAIM Rules or otherwise implement its Investing Policy within
12monthsofthedateoftheGeneralMeeting,failingwhichtheOrdinaryShareswouldbesuspended
from trading onAIM in accordance with Rule 40 of theAIM Rules.
If the Company’s Investing Policy has not been implemented within 12 months of the date of the
General Meeting, then the admission to trading onAIM of the Ordinary Shares would be suspended
and the Directors would convene a general meeting of the Shareholders to consider whether to
continue seeking investment opportunities or to wind up the Company and distribute any surplus
cash to Shareholders.
11. Action to be taken by the Shareholders
ShareholderswillfindaFormofProxyenclosedwiththisDocument,foruseattheGeneralMeeting.
Whether or not you intend to be present at the meeting, you are requested to complete, sign and
return your Form of Proxy to the Company’s Registrar, Capita Asset Services, PXS 1, 34 Beckenham
Road, Beckenham, Kent BR3 4ZF as soon as possible but, in any event, so as to arrive no later than
at 12.30 p.m. (UK time) on 1 August 2014.The completion and return of a Form of Proxy will not
preclude you from attending the meeting and voting in person should you wish to do so.
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12. Extension ofAudit Partner Rotation
Armour Group plc has requested its auditors BDO LLP extend the rotation of the Group’s audit
partner to enable him to continue with his role for an additional year. Under the UK Auditing
Practices Board Ethical Standards that govern UK auditors, no partner should act as the audit
engagement partner for a listed company for more than five years. The Group’s current audit
engagement partner reached this five-year period at the conclusion of the 2013 audit.The rationale
for the extension is that the Group has undergone substantial changes in the current year, with the
sale of the Group’s automotive division in March 2014 and the proposed disposal ofArmour Home.
Management believes that a change of personnel at this stage is not in the Group’s best interest and
the quality of the audit function could be affected. BDO LLP has agreed to the extension.
13. Recommendation
The Independent Directors believe that the Resolutions are in the best interests of the Company and
would promote the success of the Company for the benefit of its Shareholders as a whole.
Accordingly,theIndependentDirectorsunanimouslyrecommendthatShareholdersvoteinfavourof
theResolutionstobeproposedattheGeneralMeetingastheyintendtodosoinrespectoftheirown
beneficial shareholdings, representing approximately 30.2 per cent. of the Company’s existing
ordinary share capital.
Yours sincerely,
Bob Morton
Chairman
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