AGM Information • Apr 14, 2016
AGM Information
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If you have sold or otherwise transferred all your shares in Highcroft Investments PLC, please hand this document and the accompanying form of proxy to the purchaser or transferee, or to the bank, stockbroker or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee. If you sell or have sold or otherwise transferred only part of your holding of existing shares please consult the bank, stockbroker or other agent through whom the sale or transfer was effected.
(Incorporated and registered in England and Wales with Company number 00224271)
| Directors | Registered Office | |
|---|---|---|
| John Hewitt (Non-Executive Chairman) | Thomas House | |
| Simon Gill (Chief Executive) | Langford Locks | |
| David Kingerlee (Executive Director) | Kidlington | |
| Roberta Miles (Finance Director and Company Secretary) | Oxfordshire | |
| Simon Costa (Non-Executive Director and Senior Independent Director) | OX5 1HR | |
To Shareholders of Highcroft Investments PLC (the "Company")
I am pleased to be writing to you with details of the eighty eighth annual general meeting of the Company, which will be held at Thomas House, Langford Locks, Kidlington, Oxfordshire, OX5 1HR on 12 May 2016 at 12 noon (the "Annual General Meeting"). The formal notice of Annual General Meeting is set out on page 6 of this document (the "Notice").
I would like to explain to you the ordinary and special business to be transacted and the resolutions to be proposed at the Annual General Meeting, which are described in Section 2 and 3 below and are set out in full in the Notice (the "Resolutions"), and in particular, our proposal to transfer the listing category of the Company to a premium listing commercial company from a premium listing closed-ended investment fund to reflect the Company's strategy and business. Further details of the reasons for the proposed transfer of listing category can be found in the commentary below on Resolution 11.
The board of directors of the Company (the "Board") considers that the Resolutions are in the best interests of the Company and its shareholders as a whole. Accordingly, this letter contains, in Section 5, the unanimous recommendation of the Board that you VOTE IN FAVOUR of all of the Resolutions.
The Board has proposed the following Resolutions as the ordinary business of the Annual General Meeting. Each of the following Resolutions will be proposed as ordinary resolutions:
Resolution 1 is a Resolution to receive and consider the annual report and accounts of the Company for the year ended 31 December 2015. The directors believe that the annual report and accounts, taken as a whole, is fair, balanced and understandable.
A new UK accounting framework introduced by the Financial Reporting Council ("FRC") becomes mandatorily effective for the financial statements of UK companies with accounting periods commencing on or after 1 January 2015. Under this new framework, the Company is required to elect to prepare its parent company financial statements on one of the bases permitted by the FRC. The consolidated financial statements of the group will continue to be prepared in accordance with EU-adopted IFRS and are unaffected by this new accounting framework.
14 April 2016
The Company proposes to adopt FRS 102, a reduced disclosure regime based on the measurement principles of IFRS, for its parent company financial statements for the year ended 31 December 2015 and on an ongoing basis until such time as the Company notifies shareholders of any change to its chosen accounting framework for the parent company financial statements. Following the application of FRS 102, the results, the financial position of the Company, and the disclosures are expected to follow closely those reported under current requirements other than that deferred tax on unrealised equity investment gains will now be recognised as a liability on the balance sheet rather than as a contingent liability.
The Company's election to adopt FRS 102 for its parent company's financial statements does not require shareholder approval, and therefore no resolution on this matter is being put to the Annual General Meeting. However, as stipulated in FRS 102, the Company is required to notify all shareholders of this election. Any shareholder (or shareholders) holding in aggregate 5% or more may serve an objection. The Company has previously contacted all shareholders who may fall into this category and no objection has been received. This election will apply on an ongoing basis until such time as the Company notifies shareholders of any change to its chosen accounting framework for the parent company financial statements.
Resolution 2 is a Resolution to approve a final property income distribution of 24.5 pence per share on the ordinary shares of the Company for the year ended 31 December 2015. If approved, this will be paid on 3 June 2016 to shareholders on the register of members at the close of business on 6 May 2016.
Resolution 3 is a Resolution to approve, on an advisory only basis, the directors' remuneration report, excluding the part containing the directors' remuneration policy, contained in the annual report for the year ended 31 December 2015. As Resolution 3 is an advisory resolution only, the director's entitlement to remuneration is not conditional on the Resolution being passed.
Resolutions 4 to 8 are Resolutions to re-elect each of John Hewitt, Simon Gill, David Kingerlee, Roberta Miles and Simon Costa as directors of the Company.
As a matter of good corporate governance, the Board has decided that, although it is not a requirement for a non FTSE 350 company, all directors shall offer themselves for re-election at the Annual General Meeting in accordance with the principles of the UK Corporate Governance Code (the "Code"). Details of the roles, skills and experience of the directors can be found on page 14 of the annual report.
Following the annual Board evaluation exercise conducted during the year, the Board considers that each of the directors proposed for re-election continues to make an effective and valuable contribution and demonstrates commitment to their role. There have been no absences from Board or committee meetings. The Board believes that it is in the best interest of the shareholders that all the directors are re-elected. Accordingly, the Board unanimously recommends the re-election of each of the directors.
John Hewitt was selected for appointment to the Board as an independent non-executive director in August 1999, following a search process led by the then chairman. At the time the group had been looking to bring in additional in-depth experience of listed companies and of investing in equities. John was appointed chairman in October 2006. There are no relationships, transactions or arrangement to be disclosed pursuant to LR 13.8.1.17R(1) in relation to John Hewitt.
It is Simon Costa's first AGM following his appointment by the Board as a non-executive director and senior independent director on 16 May 2015. Simon is chairman of the audit and remuneration committees and a member of the nomination committee. Simon holds a senior finance position at one of Oxford University's colleges, where he oversees the management of the endowment and manages all financial, budgeting and accounting functions. Simon has a BSSc in Banking & Finance from Birmingham University and an MPhil in Management from Oxford University.
Simon Costa was appointed to the board in May 2015. The search process was led by the chairman. The Board was looking to recruit a senior independent financial director with recent relevant financial experience and to bring additional experience of corporate governance. There are no relationships, transactions or arrangement to be disclosed pursuant to LR 13.8.1.17R(1) in relation to Simon Costa.
Both of the independent non-executive directors are highly experienced and have a good knowledge of listed companies. In view of their career experience and skill-set the Board considers that they each bring valuable skills to the Board and provide an objective perspective. The effectiveness of each non-executive director was considered at a Board meeting on 22 March 2016 and that the Board confirms that both of the independent directors standing for election are effective.
At the same Board meeting the Board considered the independence criteria in set out in provision B.1.1 of the Code, the information provided above in relation to the disclosures required by LR 13.8.17R and the biographies of the directors in the 2015 annual report and accounts. The Board acknowledged that Simon Costa was independent by reference to the criteria in the Code. The Board also acknowledged that whilst John Hewitt, by reason of his length of service, did not fully meet the independence criteria in the Code, based on the information provided the Board confirmed that it was satisfied that John Hewitt acts independently.
On 16 May 2014 The Financial Conduct Authority ("FCA") announced the commencement of new rules which provide protections for the minority shareholders of a premium listed company in which there is a "controlling shareholder" (defined by the FCA as "any person who exercises or controls, on their own or together with any other person with whom they are acting in concert, 30% or more of the votes able to be cast on all or substantially all matters at general meetings of the Company"). Under these new rules, the election or re-election by the shareholders of an independent non-executive director must be approved by: (i) all the shareholders of the company by ordinary resolution and (ii) a simple majority of those shareholders who are not controlling shareholders (the "Independent Shareholders").
Independent Shareholder approval for Resolution 4 proposing the re-election of John Hewitt and Resolution 8 proposing the reelection of Simon Costa will be sought by discounting from the result of the vote on Resolutions 4 and 8 the votes of those shareholders who are identified as controlling shareholders of the Company as at 12 May 2016. The shareholdings of Kingerlee Holdings Limited and its subsidiaries together with their connected parties and associates forming the Kingerlee concert party, as at13 April 2016, held 2,170,634 ordinary shares, representing 42% of the Company's issued share capital.
The Company will, on announcing the results of the Annual General Meeting, announce, in respect of Resolution 4 and Resolution 8, the result of both the vote of the Company's shareholders and the vote of the Independent Shareholders. If Independent Shareholder approval is not given for Resolution 4 and/or Resolution 8, the Company intends that John Hewitt's and/or Simon Costa's appointments (as applicable) will continue for 120 days from the date of the original vote, unless a further ordinary resolution for re-election is passed. If a further ordinary resolution to approve the re-election of John Hewitt and/or Simon Costa (as applicable) is defeated, his appointment will cease on that resolution being defeated.
Resolution 9 is a Resolution to re-appoint Grant Thornton UK LLP as auditor of the Company to hold office from the conclusion of the Annual General Meeting to the conclusion of the next annual general meeting at which accounts are laid before the Company and to authorise the Board to fix the remuneration of the auditor for the ensuing year.
The Board has proposed the following Resolutions as the special business of the Annual General Meeting. The following Resolutions will be proposed as special resolutions:
Resolution 10 is a Resolution to allow the Company to retain a 14-day notice period for Company meetings, other than Annual General Meetings.
Under the EU Shareholder Rights Directive (Directive 2007/36/EC), listed companies must provide 21 clear days' notice of a General Meeting, unless the Company offers the facility for shareholders to vote by electronic means that is accessible to all shareholders and shareholders have approved the holding of General Meetings on 14 clear days' notice. Passing Resolution 10 will mean that the Company can continue to call a meeting other than an Annual General Meeting on 14 clear days' notice, provided that it offers the facility for shareholders to vote by electronic means at any such meeting. The Company will continue to satisfy the requirement to provide a facility for shareholders to vote by electronic means by providing a facility, which is accessible to all shareholders, enabling shareholders to appoint a proxy by means of a website. The Company intends to use this authority in limited circumstances for timesensitive matters and where a shorter notice period would, in the Board's opinion, be merited in the interests of shareholders as a whole.
Resolution 11 is a Resolution to approve the transfer of the listing category of the Company to a "premium listing (commercial company)" under Chapter 6 of the Listing Rules of the Financial Conduct Authority from a "premium listing (closed-ended investment fund)" under Chapter 15 of the Listing Rules. A special resolution is required under Listing Rule 5.4A.4 to approve the transfer. Shareholders should note that, if Resolution 11 is passed, the transfer will only change the listing category of the Company's ordinary shares and will not affect the Company's status as a company with a premium listing or as a UK REIT.
The Financial Services Authority (the predecessor to the Financial Conduct Authority (FCA)) made changes to the Listing Rules to introduce the Listing Categories with effect from 6 April 2010 but it has only recently come to the Board's attention that, with effect from that date, the listing categorisation for the Company's ordinary shares has been "premium listing (closed-ended investment fund)".
Both prior to and since 6 April 2010, the Company has conducted itself on the basis that it is a UK REIT operating as a commercial company and not as an investment fund and since that date the Board has managed the Company as a premium equity commercial company so as to comply with Chapter 6 of the Listing Rules.
The Board believes that the Company's current categorisation is inadequate as it does not reflect its sphere of activity or its strategy as a commercial company. If Resolution 11 is not passed and the listing category of the Company remains unchanged as a closed-ended investment fund, the Company will not be in a position to fulfil its strategy and will have to take steps to comply fully with Chapter 15 of the Listing Rules which will involve significant changes in its strategy and operations as well as additional regulatory and compliance obligations and costs. The Appendix to this letter sets out a summary of the key additional requirements which the Company will have to comply with if Resolution 11 is not passed.
Panmure Gordon (UK) Limited is acting as Sponsor to the Company in connection with transfer of its listing category.
Accordingly, Shareholders are being asked to approve Resolution 11 as a special resolution. The business strategy of the Company will not change if Resolution 11 is passed.
If Shareholders approve Resolution 11, then the transfer out of the premium listing (investment company) category into a premium listing (commercial company) is expected to take effect on or around 13 June 2016.
The full text of each resolution is set out in the Notice on page 6 of this document.
Shareholders will find enclosed with this document a Form of Proxy for the Annual General Meeting. Whether or not you intend to be present at the Annual General Meeting, you are requested to complete, sign and return the Form of Proxy in accordance with the instructions printed on it. The Form of Proxy should be returned to the Company's registrars, Capita Asset Services, at their offices at The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU as soon as possible and, in any event, so as to arrive not later than 12 noon on 10 May 2016. The completion and return of a Form of Proxy will not preclude you from attending the Annual General Meeting and voting in person should you wish to do so.
The Board considers that the Resolutions are in the best interests of the Company and its shareholders as a whole. Accordingly, the Board unanimously recommends that you VOTE IN FAVOUR OF THE RESOLUTIONS at the Annual General Meeting.
The Board, which has beneficial shareholdings that together amount to 113,155 ordinary shares representing approximately 2.2 per cent of the current issued share capital of the Company, unanimously intends to VOTE IN FAVOUR OF THE RESOLUTIONS at the Annual General Meeting.
Yours faithfully
John Hewitt Chairman
Key additional requirements for the Company under Chapter 15 of the listing Rules of the Financial Conduct Authority (Closed-ended Investment Funds: Premium listing)
| Closed-ended investment fund (Chapter 15) |
Commercial company (Chapter 6) |
Further detail on Highcroft's strategy |
|
|---|---|---|---|
| Investment policy | ●● Must invest and manage its assets in accordance with its published investment policy ●● Shareholder approval is required for any material alterations to that policy ●● The investment policy must cover asset allocation, risk diversification and gearing, and include maximum exposure |
●● Not required for commercial companies |
The Company's strategy and objectives are to enhance shareholder value by managing its properties and equity investments with a view to increase capital value, increase profits and increase dividends. There are no policies in relation to asset allocation, risk diversification and gearing and no maximum exposure. |
| Spreading investment risk |
●● Must invest and manage its assets in a way which is consistent with spreading investment risk |
●● Not required for commercial companies |
The Company has no requirements that it must spread investment risk and no concentration limits, other than those imposed by the UK REIT regime. |
| Trading activities | ●● Must not conduct any trading activity, which is significant in the context of the company (although trading may be carried out through portfolio companies) |
●● Trading can be conducted | The Company is a commercial company and, within the constraints of the UK REIT Regime, trades its properties and equity investments, with regular disposals and acquisitions. |
| Transactions | ●● Can enter into any transaction within the scope of published investment policy, whatever the size |
●● Subject to Class Tests set out in Chapter 10 of the Listing Rules |
Acquisitions and disposals have been carried out as a commercial company under Chapter 6. |
| Further issuances of shares |
●● May not issue shares at a discount to net asset value per share unless first offered pro rata to existing shareholders or shareholder approval given |
●● Listing Rules limit the discount to middle market price to 10% unless by way of a fully pre emptive rights issue or specific approval given by shareholders ●● ABI guidelines limit this to 5% for a placing |
The Company intends to follow ABI guidelines in relation to further issuances of shares. |
| Alternative Investment Fund Managers Directive 2011/61/EU (the "AIFMD") |
●● Applies | ●● Does not apply: a commercial company is not an AIF |
Should Resolution 11 not be passed, the company would be an alternative investment fund (AIF) and would require FCA authorisation as a small authorised alternative investment fund manager, with an increase in compliance and regulatory costs. |
| Controlling Shareholders |
●● Does not apply | ●● Applies | The Company has a controlling shareholder agreement and complies fully with the relevant rules. |
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the eighty eighth Annual General Meeting of Highcroft Investments PLC (the "Company") will be held at Thomas House, Langford Locks, Kidlington, Oxfordshire, OX5 1HR on 12 noon at 12 May 2016, to consider and, if thought fit, to pass the following resolutions which will be proposed, in the case of Resolutions 1 to 9, as ordinary resolutions, and in the case of Resolutions 10 and 11, as special resolutions:
To receive and consider the report and financial statements for the year ended 31 December 2015.
To approve a final property income distribution of 24.5 pence per share on the ordinary shares of the Company for the year ended 31 December 2015 to be paid on 3 June 2016 to shareholders on the register of members at the close of business on 6 May 2016.
In accordance with the Companies Act 2006, to approve, on an advisory only basis, the directors' remuneration report, excluding the part containing the directors' remuneration policy, contained in the annual report for the year ended 31 December 2015.
To re-elect John Hewitt as a director of the Company.
To re-elect Simon Gill as a director of the Company.
To re-elect David Kingerlee as a director of the Company.
To re-elect Roberta Miles as a director of the Company.
To re-elect Simon Costa as a director of the Company.
To re-appoint Grant Thornton UK LLP as auditor to hold office from the conclusion of the meeting to the conclusion of the next meeting at which accounts are laid before the Company and to authorise the Board to fix the remuneration of the auditor for the ensuing year.
That a General Meeting of the Company (other than an Annual General Meeting) may be called on not less than 14 days' notice.
That the Company transfer the listing category of its equity shares out of premium listing (investment company) into premium listing (commercial company).
By Order of the Board Registered Office
R Miles Langford Locks Company Secretary Kidlington 14 April 2016 Oxfordshire
Thomas House OX5 1HR
Members entitled to attend and vote at the Meeting should sign the Attendance Card, bring it along to the meeting on 12 May 2016 at 12 noon and hand it in upon arrival.
A proxy form which may be used to make this appointment and give proxy instructions accompanies this notice. You can only appoint a proxy using the procedures set out in these notes and the notes to the proxy form.
If you are not a member of the Company but you have been nominated by a member of the Company to enjoy information rights, you do not have a right to appoint any proxies under this "Appointment of proxies" section. Please read the section "Nominated persons" below.
Where you have appointed a proxy via the CREST system and would like to change your proxy instruction, please use the method set out in the notes accompanying the proxy form.
Note that the cut-off time for receipt of proxy appointments also applies in relation to amended instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded.
The revocation notice must be received by Capita Asset Services not less than 48 hours before the time appointed for the Meeting.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph directly below, your proxy appointment will remain valid.
Appointment of a proxy does not preclude you from attending the Meeting and voting in person. If you have appointed a proxy and attend the Meeting in person, your proxy appointment will automatically be terminated.
the Company must publish on its website, a statement setting out any matter that such members propose to raise at the Meeting relating to the audit of the Company's accounts (including the auditor's report and the conduct of the audit) that are to be laid before the Meeting.
Where the Company is required to publish such a statement on its website:
A member wishing to request publication of such a statement on the Company's website must send the request to the Company using one of the following methods:
Whichever form of communication is chosen, the request must:
If you are a person who has been nominated under section 146 of the 2006 Act to enjoy information rights (Nominated Person):
●● you may have a right under an agreement between you and the member of the Company who has nominated you to have information rights (Relevant Member) to be appointed or to have someone else appointed as a proxy for the Meeting.
A copy of this notice and other information required by s311A of the 2006 Act can be found at www.highcroftplc.com.
You may not use any electronic address provided either in this Notice of Annual General Meeting or any related documents (including the proxy form) to communicate with the Company for any purposes other than those expressly stated.
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