IVS Inveresk

 

TIDMIVS 
 
RNS Number : 6215U 
Inveresk PLC 
29 June 2009 
 

 
 
Inveresk PLC 
("Inveresk" or the "Company") 
 
 
Share Price Suspension 
 
 
Inveresk announces that it has today requested the AIM team of the London Stock 
Exchange to suspend its shares with immediate effect due to the fact that, for 
the reasons highlighted below, the Directors are unable at this time to sign off 
the Report and Accounts for the year ended 31st December 2008 pending the 
outcome of litigation which is material in all respects to the numbers contained 
therein. 
 
 
The chronology of events is as follows:- 
 
 
Inveresk's Claims against Tullis Russell Papermakers Limited 
 
 
On 15th February 2008 in the Court of Session in Edinburgh, Lord Drummond Young 
handed down a robust judgement in favour of Inveresk in support of an action 
brought by Inveresk against Tullis Russell Papermakers Ltd ("TR") who had failed 
to pay Additional Consideration due under an Asset Sale Agreement dated 8th June 
2005. The payment obligation arose from TR's certification of retained sales 
tonnage for the 12 months ending on 8th November 2006. TR had sought  to amend 
the retained sales tonnage following certification. Lord Drummond Young found 
that TR were not entitled to do so under the terms of the contract. The revisals 
were not, in any event, accepted by Inveresk. 
 
 
On 3rd June 2008 in the Court of Appeal (the Inner House) in Edinburgh TR 
challenged Lord Drummond Young's judgement and stated (amongst other things) 
that they believed that he had gone too far in his judgement. TR then made 
changes to its case and this resulted in the case being once again referred to 
the Outer House of the Court of Session for a re-hearing. 
 
 
The re-hearing took place before Lord Glennie in July 2008 and his judgement was 
handed down on 29th August 2008. This was similarly robust in its support of 
Inveresk's entitlement to Additional Consideration sought by Invereskand also 
rejected TR's application for retention of the funds claimed together with 
interest in relation to a separate action. This right to retention was claimed 
by TR pursuant to their separate case against Inveresk seeking damages for 
alleged breach of contract.     Inveresk deny that damages are due and a proof 
(trial) has been fixed in that action for October. 
 
 
On 18th and 19th November 2008 the case was once again considered by the Court 
of Appeal in Edinburgh but was only part heard in respect of the substantive 
issue and could only be concluded in respect of the argument on retention on 4th 
- 6th March 2009. Regrettably, almost 4 months later the Court of Appeal has not 
yet issued its judgement. Inveresk is disappointed that, bearing in mind the two 
robust first instance judgements and the financial obligations which fall upon 
TR as a consequence, this delay in reaching a final conclusion effectively 
results in retention by default. 
 
 
Tullis Russell's claims against Inveresk 
 
 
In parallel to the above TR issued proceedings against Inveresk back in April 
2007 alleging breach of contract and claiming damages which Inveresk deny. 
 
 
The process has been long, complicated and voluminous in terms of documentation. 
After a year, having changed much of their original pleadings TR then sought to 
rely on a report prepared by an Expert in Economics to justify their claim in 
damages. Inveresk consider the damages claim to be both flawed and unfounded. At 
the end of March 2009 as a result of evidence obtained from third party 
customers Inveresk formed the view that the basis of TR's claims was not merely 
erroneous but also totally lacking in substance. This new evidence in Inveresk's 
opinion currently renders the report of TR's Expert fundamentally flawed. Unlike 
in the English Court system, in Scotland there is no comparable "strike-out" 
mechanism. This matter is now before the Court and the outcome of the dispute 
will be determined when the case comes to trial in the latter part of October 
and early November 2009. The onus to prove this case through evidence lies with 
TR. 
 
 
Reason for Suspension 
 
 
The Board of Inveresk remains entirely comfortable with its position on both of 
the above litigations. There is, however, much frustration with the Court 
process and in the time being taken to obtain a judgement against the other 
party. 
 
 
Inveresk has made appropriate arrangements to see this litigation to a 
conclusion and has funding in place to support the expense arising from these 
cases in the expectation that justice will eventually prevail and that further 
Court orders as to costs will be imposed on TR in due course. 
 
 
Under the new regime of IFRS accounting regulations the outcome of the first 
case on Additional Consideration is both material and pivotal to the audited 
results as at 31st December 2008 which we are due to report to shareholders and 
the market. As a consequence of the delay in reaching a conclusion in the Court 
process in respect of Hearings held as long ago as 18th/19th November 2008 and 
4th-6th March 2009 the Directors of Inveresk together with their external 
auditors are unable to sign-off their Report and Accounts as at 31st December 
2008 until such time as the outcome of this litigation becomes known. The 
Additional Consideration (plus interest) to which Inveresk is entitled flows 
directly to profit. We are unable to comply with the income recognition rules 
under IFRS until such time as the outcome of the Appeal is known. 
 
 
We intend to keep shareholders fully apprised as the above litigation advances 
through the Court system and the Directors of Inveresk remain confident that in 
the fullness of time this litigation will be resolved in the Company's favour. 
 
 
For further information please contact: 
 
 
Inveresk PLC 
 
 
Alan Walker 
Tel:         01353 725856 
Mob:      07800 951151 
Email:jafw@bedfordhs.co.uk 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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