RNS Number:4776E
RMR PLC
29 November 2002
RMR plc ("RMR" or "the Company")
Proposed acquisition of The Talent Group Limited ("Talent"), Capital
Reorganisation,
Change of name to Talent Group plc, Adoption of New Share Option Schemes and
Application for Admission to AIM
The board of RMR announces that the Company has entered into an agreement to
acquire Talent, an independent television production company, for a total
consideration of #1.25 million to be satisfied by an issue of 10,000,000 New
Ordinary Shares which, following the Capital Reorganisation referred to below,
will represent 61.69 per cent. of the enlarged issued ordinary share capital of
RMR.
Talent is a producer of entertainment, interactive, comedy and documentary
programmes. Of its directors, John Kaye Cooper and Anthony Humphreys have
extensive experience in television and Robert Benton and Colin Nicholl have
spent their working careers in the City of London and bring financial experience
and expertise to the Company.
Under the AIM Rules, the Acquisition is classified as a reverse takeover in view
of its size. The Acquisition is, therefore, conditional upon the approval of
the Company's shareholders at an extraordinary general meeting of the Company to
be held on 23rd December, 2002, at which a resolution will also be proposed to
waive the requirement under Rule 9 of the City Code, for the vendors of Talent
to make a general offer for the Company. If the Resolutions are duly passed at
the EGM, the existing AIM trading facility will be cancelled and a new trading
facility granted at the same time. Shareholders representing 32.57 per cent. of
the existing ordinary share capital have given irrevocable undertakings to vote
in favour of the Resolutions to be proposed at the EGM. It is anticipated that
Admission will become effective and dealings on AIM in the Enlarged Issued
Ordinary Share Capital will commence on 24th December, 2002.
History and business of the Enlarged Group
RMR
In Michael Mills' first statement as Chairman of RMR, which accompanied the
accounts for the year ended 28th February, 2002, he reported that the group loss
before taxation for that year was #6.345 million and followed a loss of #6.316
million for the previous year. As a result, the Directors of RMR took steps to
reduce overheads and continued to investigate potential corporate transactions,
firstly with the intention of utilising the Company's product portfolio and
secondly to maximise the value of the AIM listing, both with a view to improving
shareholder value.
On 10th October, 2002, it was reported that the Directors had concluded that the
Company should exit the software sector and accordingly, the business of RMR
Design Limited, a wholly-owned subsidiary of the Company, was sold for a nominal
consideration to two companies in the software and learning sectors.
Commissions may become payable to the Company during the next three years,
depending on the future sales of software solutions by the disposed business,
but this is not, in the view of the Directors, expected to be material.
Talent
History
The Broadcasting Act 1990 required both the BBC and ITV companies to commission
at least 25 per cent. of their programmes from independent producers by 1993.
Talent is an independent television production company which was established by
International Artistes Limited in 1996 to take advantage of the opportunities
that this legislation provided. John Kaye Cooper joined International Artistes
(Television) Limited (later renamed Talent Television Limited) in January 1996
and became a shareholder in Talent in 1997. The Talent Group produces a variety
of television programmes and entertainment videos. It has established a
reputation in light entertainment programming, largely based on the expertise
and record of John Kaye Cooper.
Under the guidance of Anthony Humphreys, who joined the company on 1997, Talent
has adopted a policy of using its reputation for high quality entertainment
programmes to diversify into other types of television programme and to aim its
product at a greater number of markets. This has resulted in the recruitment of
new creative personnel, the development of scripts for comedy and drama series
and feature films, the production of documentaries (for both UK and Japanese
broadcasters) and the development of interactive and enhanced TV entertainment
shows.
Business
As an independent producer, Talent will either acquire, or initiate, a
programming idea which it will then present to a broadcaster. If the format is
accepted, the project will proceed and will usually be financed in full by the
broadcaster. Talent will produce the programme and receive a fee for so doing,
together with additional fees if certain key roles, such as that of producer or
director, are carried out by company personnel. Talent will also be able to
recover certain items of direct costs and overhead. Under these circumstances,
the intellectual property rights will, however, largely belong to the
broadcaster.
Talent has made over 40 productions in the last six years, the most notable of
which are "Test the Nation - The National IQ Test" for BBC1, "The Villa", now
in its fourth series for Sky One, the 50th BAFTA film awards and the BAFTA
television awards for ITV, "It's your Funeral" for Channel 5 and TV Scrabble,
for Flextech's Challenge? Channel. Talent has also produced a number of "behind
the scenes" documentaries on the making of West End shows, such as Beauty and
the Beast and The Witches of Eastwick for ITV and Doctor Dolittle for the BBC.
Talent has a small number of customers and, therefore, any one of these can be
significant during any one financial year.
Talent has particular expertise in interactive television, which may be
described as television with interactive content and enhancements. Interactive
television provides entertainment, interactive ability and more information on
programmes. It combines traditional television viewing with the interactivity
enjoyed by those communicating through a network, such as the Internet.
Programming can include richer graphics, links to Web sites, electronic
communication with others and online commerce. In the United Kingdom, viewers
watching digital television can access all these features by using their remote
control handsets.
The Government has stated that analogue television services will continue for
some time, but it intends to switch-over fully to digital transmissions. The
Government wants to do this as soon as possible and expects to do so as early as
2006-2010. The Directors and Proposed Directors of RMR therefore consider that
interactive television is a growth area and Talent has already produced two
interactive television programmes. These are TV Scrabble and Test the Nation.
TV Scrabble is an interactive version of the popular board game and Test the
Nation - The National IQ Test was an interactive studio based programme in which
viewers and studio guests took part in a live IQ test. Taking the test in the
studio were a group of ten celebrities and three hundred members of the general
public, representing groups such as students, school teachers, builders,
publicans and identical twins. The programme, which was presented by Anne
Robinson and Philip Schofield, was broadcast on Saturday 11th May, 2002 in a
primetime slot on BBC1. It was a major success for Talent and attracted an
audience of over nine million viewers, equivalent to a 47 per cent audience
share. As a result of that success, further programmes in the Test the Nation
series are planned.
Following completion of the Proposals, the additional resources available to
Talent should, in the opinion of the Proposed Directors, enable it to make a
greater financial contribution to the development and realisation of its
productions in order to retain an interest, or enhanced interest, in those
productions' intellectual property. This should increase its present and future
returns. In the future, Talent intends to focus on retaining increased format
ownership, which in the opinion of the Proposed Directors will improve the
quality of its earnings, allowing it to participate in sales of product or
format outside the UK, together with merchandising rights, where applicable and
reduce its dependency on production fees.
Talent aims to capitalise on its growing reputation as a maker of high profile
and high quality entertainment programmes and to expand its base of experienced
creative personnel and productions in order to establish a number of continuing
or repeated products, which in the opinion of the Proposed Directors will enable
further growth in the medium term.
Talent currently has fourteen full time employees, three freelance consultants
and eighteen production personnel on fixed term contracts (comprising eight
employees and ten freelance consultants).
Financial Information on Talent
The table below sets out the trading record of Talent for the three years ended
30th September, 2002. The financial information contained in the table has been
extracted from the accountants' report set out in the AIM admission document to
be posted to shareholders later today.
Year ended 30th September
2000 2001 2002
# # #
Turnover 2,059 3,761 2,989
(Loss)/Profit on ordinary activities before taxation (40) 48 107
Terms of the acquisition of Talent
Under the Acquisition Agreement, the Company has agreed to buy the entire issued
share capital of Talent for a total consideration of #1.25 million, to be
satisfied on completion by the issue to the vendors of Talent of 10,000,000 New
Ordinary Shares which, following the Capital Reorganisation referred to below,
will represent 61.69 per cent. of the Enlarged Issued Ordinary Share Capital.
Additional consideration of up to 1,376,000 RMR new ordinary shares may become
payable if, and to the extent that, the net cash balance of RMR at completion,
as defined in the acquisition agreement, is less than #580,000.
Robert Benton, John Kaye Cooper, Anthony Humphreys, Colin Nicholl, International
Artistes Limited and Frances Ollard have irrevocably undertaken (except in
certain limited circumstances) not to dispose of any of the Consideration Shares
within 12 months of Admission without the prior written consent of John East &
Partners and for a further period of 12 months without the prior written consent
of John East & Partners, such consent not to be unreasonably withheld or
delayed.
In addition, Michael Mills, Paula Carroll, Swan Corporation Limited Retirement
Benefit Scheme, The Duncan Duckett Pension Fund and Duncan Duckett have
irrevocably undertaken (except in certain limited circumstances) not to dispose
of a total of 1,372,941 New Ordinary Shares within 12 months of Admission
without the prior written consent of John East & Partners and for a further
period of 12 months only to make disposals on an orderly market basis through
the broker to the Company.
The Consideration Shares shall rank pari passu with the New Ordinary Shares in
issue following the Capital Reorganisation.
The Acquisition is conditional on, inter alia, the passing of the Resolutions
and on Admission.
Directors, Proposed Directors and Senior Management of the Enlarged Group
Board Changes
Following the implementation of the Proposals, Edward Carroll will resign from
the board and Michael Mills will relinquish his executive responsibilities and
remain on the board as a non-executive director. At the same time, Robert
Benton, John Kaye Cooper, Tony Humphreys and Colin Nicholl will join the board
as non-executive chairman, deputy chairman and creative director, managing
director and finance director respectively. Colin Nicholl will also become
company secretary. Details of the directors of the Company on Admission are set
out below.
Directors
Michael Mills (Executive Chairman and proposed Non-executive Director), aged 55
is a chartered accountant and has held senior financial positions with Thomas
Tilling plc, BTR plc (now Invensys plc) and Bunzl plc. He was a director of
Apax Partners & Co Strategic Investors Limited from 1991 to 1995, where he had
executive responsibilities for the implementation and integration of certain
acquisitions and was part of the management team of a fund which acquired
majority stakes in a number of European companies. From 1995 to 1999 he was the
managing director and then non-executive director of S. Daniels plc, a listed
manufacturer and distributor of chilled fresh foods. He is chairman of Advance
Value Realisation Company Limited, a quoted investment company and of Intramezzo
Limited as well as a director of Zenith International Limited.
Proposed Directors
Robert Benton (Proposed Non-executive Chairman), aged 45 has spent his entire
career in the City of London with a number of stockbroking firms. He is
currently Chief Executive of Bridgewell Securities Limited and prior to this was
Chairman and Chief Executive of Charterhouse Securities Limited, which was
acquired by ING Barings Limited in 2001. He joined Charterhouse in 1998 from
ABN AMRO Equities (UK) Limited, where he was Global Head of Sales for three
years. Prior to that, he was the Managing Director of HSBC James Capel Limited
from 1992 to 1995, having joined James Capel originally in 1981 from Cazenove &
Co, where he started his career.
John Kaye Cooper (Proposed Deputy Chairman & Creative Director), aged 55,
started his career in television with Scottish Television in 1967 as a
cameraman, following two years in the theatre. He progressed to Thames
Television, Yorkshire Television, Tyne Tees Television and LWT as a floor
manager, associate producer and producer on major ITV drama and comedy series.
His credits as producer and director since 1976 include programmes featuring
established television names such as Russ Abbot, Michael Crawford, Emma
Thompson, Stanley Baxter and Matthew Kelly, and more recently established names
such as Brian Conley and Alan Davies. In 1982 he won a BAFTA Award for the
Stanley Baxter Series.
Between 1984 and 1987, he was Controller of Entertainment at Television South
(TVS), where he launched the solo television careers of several young
entertainers including Brian Conley, Richard Digance and Bobby Davro. In 1985,
he commissioned the game show "Catchphrase", a series so consistently successful
that it is still being produced seventeen years later.
He became Controller of Entertainment & Comedy at London Weekend Television in
1990 with responsibility for many of ITV's top peak-time series including Blind
Date, Gladiators, Barrymore, Hale and Pace, It'll Be Alright On The Night, The
BAFTA Awards and the Audience With...special programmes. In 1991, 1993 and 1995
he produced the Royal Variety Performances, in the presence of Her Majesty The
Queen, which starred, respectively, Diana Ross, Michael Barrymore and Sir Cliff
Richard.
John left London Weekend Television in 1995 to become Managing Director of
Talent.
Anthony Humphreys (Proposed Managing Director), aged 46, started working in
theatre first as a production manager and then producer/director whilst reading
Drama at Exeter University between 1976-79. After university he spent five
years as actor/manager of a number of touring and community theatre companies,
producing and directing shows as varied as a two man version of Dr Faustus and a
Miracle Cycle of sixteen new plays performed (on the same day) by hundreds of
performers and musicians for the new city of Milton Keynes. In 1986 he joined
Humphrey Barclay Productions Limited and also began to represent some of his
former theatre colleagues as an agent. At the same time, he was also a
director of Hightimes Productions Limited, which controlled the format for "Me
and My Girl", which starred Richard O'Sullivan and was broadcast by London
Weekend Television for five seasons.
He became a director in Humphrey Barclay Productions Limited in 1995 and was
involved in the production of the company's major productions, including the
long running series Desmond's for Channel Four and Surgical Spirit for ITV. He
was also responsible for the commercial activities of Humphrey Barclay
Productions Limited and then of Essential Film and Television Limited, as it
became, until he left in 1997 to join Talent.
He is also active on behalf of the trade association for cinema and television
producers, PACT (Producers Alliance for Cinema and Television). He was a member
of the association's industrial relations committee for two years, and is
currently a member of a small committee responsible for negotiating and
agreeing the terms and conditions of a new agreement between PACT and the
Musicians Union.
Colin Nicholl (Proposed Finance Director and Company Secretary), aged 49, is an
associate of the Chartered Institute of Actuaries and of the Chartered Institute
of Secretaries and an alumnus of the Kellogg Business School, Chicago. He has
spent the last 25 years of his career in investment management in the City of
London. He was Chief Investment Officer with Cazenove Investment Management
from 1997 to 2001, becoming a partner of Cazenove & Co in 1999 and a managing
director in 2001. Prior to this, he was Executive Director of UK Equity and
Fixed Interest Investments with AMP Asset Management Limited after leaving Sun
Alliance Group plc, (now Royal and Sun Alliance) where he had worked from 1974
to 1994, progressing from junior analyst to executive director of UK Equities of
the investment management company. During 1996 he was Deputy Chairman of the
Association of British Insurers Investment Committee. He will initially devote
ten days a month to the affairs of the Company.
Senior Management
Malcolm Wright (Financial Controller and Production Accountant of Talent), aged
58, began his career with The Noel Gay Organisation Limited (theatrical
producers, music publishers and agents) and worked there for approximately
fifteen years. After acting as a consultant to private media clients between
1980 and 1985 he joined Humphrey Barclay Productions Limited and Hightimes
Productions Limited as Financial Controller and Production Accountant. He has
been working with Talent since 1997.
Capital Reorganisation
The share capital of the Company currently comprises 62,102,847 issued ordinary
shares of 10p each and 37,897,153 unissued ordinary shares of 10p each. Under
company law, it is not permissible to issue shares at below their nominal value
and so a capital reorganisation is necessary to enable the Company to issue the
Consideration Shares for the purposes of the Acquisition. Accordingly, it is
proposed that:
(i) each of the 62,102,847 issued ordinary shares of 10p each
and the 37,897,153 unissued ordinary shares of 10p each will be subdivided and
redesignated into one ordinary share of 0.1p and one deferred share of 9.9p
each;
(ii) every 10 of the 100,000,000 new ordinary shares of 0.1p each
created following the sub-division will be consolidated into one ordinary share
of 1p each; and
(iii) the authorised share capital of the Company will be
increased to #10,150,000 by the creation of a further 15,000,000 new ordinary
shares of 1p each to allow the Consideration Shares to be issued for the
Acquisition.
The directors of the Company shall be authorised to deal with or retain
fractions of New Ordinary Shares arising as a consequence of the consolidation
referred to in (ii) above for the benefit of the Company.
The Capital Reorganisation will result in Shareholders holding one New Ordinary
Share and 10 Deferred Shares for every 10 Existing Ordinary Shares currently
held. The New Ordinary Shares will have substantially the same rights
(including voting and dividend rights and rights on a return of capital) as the
Existing Ordinary Shares save that their nominal value will be reduced to 1p.
The Deferred Shares will have no rights attaching to them other than on a return
of capital. No application will be made for the Deferred Shares to be admitted
to trading on AIM
Definitive share certificates in respect of the New Ordinary Shares arising from
the Capital Reorganisation are expected to be despatched on 31st December, 2002.
Definitive share certificates for new RMR ordinary shares will not be
despatched to those Shareholders who have previously elected to hold their
existing ordinary shares in uncertificated form. Instead, these shares will be
allotted to such Shareholders in uncertificated form through CREST.
Immediately following the passing of the EGM resolutions, share certificates in
respect of existing ordinary shares will cease to be valid for any purpose other
than as evidencing the shareholders' title to deferred shares. Consequently no
share certificates will be issued in respect of the deferred shares. Prior to
the despatch of definitive share certificates, transfers of new ordinary shares
arising from the capital reorganisation will be certified against the register.
Current Trading and Future Prospects
Following the sale of RMR Design's business, RMR no longer has any operational
activities, although commissions may be received from sales generated by that
business over the next three years.
Talent is currently producing three projects, the second "Test the Nation"
interactive test for BBC1, the third series of "TV Scrabble" for Flextech's
Challenge? Channel and a "The Villa" special for Sky One. After the success, in
May 2002, of Test the Nation, which achieved a 47 per cent. audience share on
primetime BBC1, the Directors and Proposed Directors believe that prospects are
encouraging, particularly in the area of interactive entertainment where Talent
has particular expertise. Talent currently has further programme proposals under
serious consideration by broadcasters and the Directors and Proposed Directors
feel justified in looking to the future with confidence.
Change of name
Following completion of the Acquisition, Talent will be the trading entity of
the Enlarged Group and, to reflect this, the directors of RMR now consider that
the name of the Company should be changed to Talent Group plc. A resolution to
give effect to this change will be proposed at the EGM.
Corporate Governance
The Directors support the highest standards of corporate governance and intend
that the Company will observe the requirements of the Combined Code taking into
account the Company's size and stage of development.
The Company proposes to appoint Robert Benton as non-executive chairman and
Michael Mills will be the additional non-executive director. The Board of the
Company will establish an Audit Committee and a Remuneration Committee, both
with formally delegated duties and responsibilities, comprising the two
non-executive directors. The Remuneration Committee will be chaired by Robert
Benton and the Audit Committee by Michael Mills.
Dividend Policy
The Company has a substantial deficit on its profit and loss account and will
consider applying to the Court for a reduction of capital, to eliminate this, in
due course. The Directors and the Proposed Directors intend to commence the
payment of dividends when it becomes both possible and commercially prudent to
do so and to pursue a progressive dividend policy broadly in line with earnings
growth, subject to the availability of distributable reserves and the need to
retain funds to finance the requirements of the Company.
The City Code
On Admission, the Concert Party will hold 10,000,000 new RMR ordinary shares
representing 61.69 per cent. of the enlarged issued ordinary share capital of
RMR. This gives rise to certain considerations under the City Code.
Under Rule 9 of the City Code ("Rule 9") when (i) any person acquires shares
which, when taken together with shares already held by him or shares held or
acquired by persons acting in concert with him, carry 30 per cent. or more of
the voting rights of a company subject to the City Code or (ii) any person who,
together with persons acting in concert with him, holds not less than 30 per
cent. but not more than 50 per cent. of the voting rights of a company subject
to the City Code and such person, or any person acting in concert with him,
acquires additional shares which increases his percentage of the voting rights,
that person is normally obliged to make a general offer to all shareholders at
the highest price paid by him, or any person acting in concert with him, within
the preceding 12 months.
The Panel has been consulted and, in this instance, has agreed, subject to the
appropriate resolution being passed on a poll by independent RMR shareholders
at the EGM, to waive the obligation on the Concert Party (both individually and
collectively) to make a general offer to Shareholders under Rule 9 which would
otherwise arise as a result of the issue of the Consideration Shares pursuant to
the Acquisition.
All the shareholders of Talent are treated as acting in concert for the purposes
of the Code.
On admission the shareholdings of the members of the Concert Party in RMR will
be as follows:
Number of Percentage of the
Enlarged Issued Ordinary
New Ordinary Shares Share Capital
Robert Benton 2,827,503 17.44
John Kaye Cooper 3,802,504 23.46
Anthony Humphreys 2,535,003 15.64
Colin Nicholl 487,500 3.01
International Artistes Limited 249,990 1.54
Frances Ollard 97,500 0.60
10,000,000 61.69
Under the terms of the Acquisition Agreement up to 1,376,000 additional New
Ordinary Shares may be issued to the members of the Concert Party. If the
maximum number of shares were to be issued, the maximum shareholding of the
Concert Party would be 11,376,000 New Ordinary Shares, representing 64.69 per
cent. of the then enlarged issued ordinary share capital of the Company and the
shareholdings of the individual members of the Concert Party would be as
follows:
Maximum number of New Maxiumum percentage of
Ordinary Shares the enlarged issued
ordinary share capital
Robert Benton 3,216,568 18.29
John Kaye Cooper 4,325,729 24.60
Anthony Humphreys 2,883,819 16.40
Colin Nicholl 554,580 3.15
International Artistes Limited 284,388 1.62
Frances Ollard 110,916 0.63
11,376,000 64.69
If the Rule 9 Waiver is granted by passing the appropriate resolution at the
EGM, the members of the Concert Party will own or control more than 50 per cent.
of the Enlarged Issued Ordinary Share Capital on Admission and would be able to
acquire any number of New Ordinary Shares, without incurring any further
obligation under Rule 9 to make a general offer, subject to limitations on the
holdings of its individual members. The individual members of the Concert Party
will be able to acquire additional New Ordinary Shares carrying voting rights
without incurring any further obligation under Rule 9 to make a general offer,
provided that no individual member of the Concert Party acquires shares carrying
30 per cent. or more of the voting rights of the Company.
No member of the Concert Party, nor any person acting in concert with any of
them, has purchased Existing Ordinary Shares in the 12 months immediately
preceding the date of this document. The waiver, which the Panel has agreed to
provide, will be invalidated if any purchases of Existing Ordinary Shares are
made by any member of the Concert Party, or any person acting in concert with
any of the Concert Party, in the period between the date of this document and
the Extraordinary General Meeting. Each member of the Concert Party has
undertaken to the Company that he or she will not make any such purchases of
Existing Ordinary Shares.
New Share Option Schemes
The Board believes that the commitment of employees and management to the
success of the Enlarged Group will be enhanced by share ownership. The Company
is proposing to put in place new share option schemes for the benefit of
employees and management, an Enterprise Management Incentive Scheme in a form
which complies with Schedule 14 to the Finance Act 2000 and an unapproved
scheme.
Appointment of Nominated Adviser and broker
John East & Partners Limited has been appointed the Company's Nominated Adviser
and Marshall Securities Limited has been appointed broker to the Company, both
with immediate effect.
Application for Admission
Application will be made for the whole of the enlarged issued ordinary share
capital of RMR to be admitted to AIM and it is anticipated that Admission will
become effective and that dealings will commence on 24th December, 2002. It is
expected that CREST accounts will be credited on 24th December, 2002 and share
certificates despatched on 31st December, 2002.
Copies of the AIM admission document will be available, free of charge, from
John East & Partners Limited, Crystal Gate, 28-30 Worship Street, London EC2A
2AH during normal office hours on any weekday (Saturday, Sunday and public
holidays excepted) for a period of not less than one month from the date of
admission to AIM.
29th November, 2002.
Further enquiries to:
RMR plc
Michael Mills (Chairman) 01753 645 939
or 07850 484872
Talent Television Limited
Robert Benton (Chairman) 020 7003 3300
Tony Humphreys (Managing Director) 020 7659 2017
John East & Partners Limited 020 7628 2200
John East
David Worlidge
Marshall Securities Limited 020 7490 3788
John Webb
Gary Pinkerton
This information is provided by RNS
The company news service from the London Stock Exchange
END
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