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| Axiomlab Buyback - Questions and Answers | |||||||||||||||||||||
Axiomlab Group Plc Dear Shareholder We recently sent you details of a share buyback proposal. This followed the sale of one of our investments, Techtran Group Limited. The documentation was complicated and we have received many calls to the shareholder helpline. We thought it would be helpful and fair to send to all shareholders a summary of certain of the questions asked and the answers provided. In addition, given the level of complexity, we have decided to extend to close of business on We are not permitted to make any recommendation about whether you should participate in the buyback. While this letter hopefully answers many of the questions that some of you have, it is of course subject to the formal letter dated Why are you doing a buyback? We are doing the buyback to give proceeds from the Techtran deal back to shareholders. One possibility was to declare a dividend, but this would typically be taxable in the hands of individual shareholders. We consulted tax professionals who advised that we could achieve the same object of giving the proceeds to shareholders but on a tax-free basis by doing a share buyback. This was discussed more on pages 5 and 6 of the buyback circular. What are the Directors doing? Each of the Directors intends to participate in the buyback, offering 45.7% of their shareholding for sale and will receive 3.23 pence for each unit of shares sold like every other shareholder who participates. Who actually buys the shares? The shares are actually bought by the Company and then cancelled, thereby reducing the total number of Axiomlab Group shares in issue. If you had for example 1% of the shares in issue before the buyback, and you decide to sell 45.7% of your shares (the minimum to participate in the buyback), and the shareholders in total decide to sell 45.7% of the total issued share capital, then you will still have 1% of the shares in issue after the buyback. Your effective ownership of Axiomlab Group would not have changed, although you will own a lesser number of shares. Will I otherwise be able to sell my shares if I do not participate in the buyback? Axiomlab delisted from The Directors believe that value is most likely to be delivered to Axiomlab shareholders in the future by way of the payment of dividends or the participation in Company-led buybacks. We do not foresee another distribution for some time. I have 10,000 shares. If I sell 45.7%, then I will only have 5,430 shares and a lower stake in the Company. Is this correct? If the shareholders in total decide to sell 45.7% of the total issued share capital, then you will still have the same percentage ownership in the Company. You will have a lower number of shares but there will also be fewer shares in issue after the buyback. If I sell the proportionate entitlement, 45.7%, will I still be able to participate in the future distributions/buybacks from the sale of future investments? Will I participate in the proceeds from the sale of the IP2IPO shares by Axiomlab? Yes, you will still be able to participate in future distributions based on your continuing shareholding. However, other distributions in the future may not necessarily be as financially attractive as we cannot guarantee that the distribution will be tax-free to shareholders I bought my shares at a much higher price than 3.23p and so it does not make sense for me to sell my shares. Rather, I will look to sell the shares in the future at a higher price than 3.23p. Is that correct? If you only sell some of your shares in the buyback, you would be receiving 3.23p for each unit of shares sold, but with an ongoing interest in the Company and the possibility of further dividends and buybacks. Put another way, if you sold only your proportionate entitlement, this would be like receiving a dividend, but with an ongoing share interest in the Company that might generate further value. Also as described above, we cannot guarantee that there will necessarily be a ready market to buy and sell Axiomlab shares. Rather, we see that value is likely to result to shareholders from the receipt of dividends and the participation in share buybacks. Why have you set a price of £0.0323 (3.23p)? Did the Company pay tax on the Techtran cash proceeds? Can I sell less than the 45.7%? No, this is the minimum amount to be sold to participate in the buyback. If every shareholder sells 45.7% of their shares, then this will utilise the £3.9million that it is proposed to return to shareholders. Does this documentation have anything to do with the dividend just paid in January? No, the dividend was declared before the Techtran deal was completed. The dividend was another way of distributing cash to shareholders but it is taxable in the hands of many shareholders. The buyback route should typically be a tax-free transaction. What should I post in the enclosed envelope? You should insert the Form of Application in the envelope if you decide to participate in the buyback, together with your share certificates. Do not worry if you cannot find your share certificates as new (balancing) certificates will be issued. You should also enclose the proxy form whether you fill in the Form of Application or not. Any of the documentation can be downloaded from our website www.axiomlab.com by going to the News section. If you have questions that still require an answer, then do call the shareholder helpline on 0207 647 8391 or do call the Company on 0870 909 6333 or email sarah@axiomlab.com. Yours faithfully, Fred Mendelsohn Ray Ingleby Alan Aubrey
Appendix Changes to Timetable We have also decided, in the light of the circulation of these questions and answers, to extend the time for shareholders to return the Forms of Application sent with our letter of The latest time for receipt of Forms of Application from shareholders who wish to participate in the Buyback is now
As you will see, this means that the special resolution to approve the Buyback will not be put before shareholders until Although the Extraordinary General Meeting will still technically be held and commence on Monday 21 February, neither the resolution to approve the Buyback nor any other substantive business will be proposed at the meeting, which instead we intend will simply be adjourned. Accordingly, we recommend that, if shareholders are intending to attend the meeting, they do not attend on 21 February but instead do so on 24 February.
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