MyHealthChecked PLC

("MyHealthChecked" or the "Company")

Proposed Capital Reduction and Notice of GM

MyHealthChecked PLC (AIM: MHC), the consumer home-testing healthcare company, announces that it will today post a circular to shareholders detailing the Board's proposal of a capital reduction to create distributable reserves. The Circular will also contain the Notice of General Meeting to be held on 6 December 2022.

A copy of the Circular and Notice of General Meeting will be available on the Company's website: www.myhealthcheckedplc.com later today. Extracts from the Circular are set out below:

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

DEFINITIONS

The following definitions apply throughout this document, unless the context requires otherwise.

1.      Introduction

I am writing to you to set out the details of your Board's proposal to effect a reduction of the share capital of the Company, involving the cancellation of all the Deferred Shares, the Share Premium Account and the Capital Redemption Reserve.  The purpose of the Capital Reduction is to create distributable reserves.  In addition, the Board proposes to seek authority from Shareholders for the Company to make market purchases of its own Ordinary Shares when it is appropriate to do so. 

The purpose of this document is to provide you with details of the Proposals and the Resolutions to be proposed to Shareholders at the forthcoming General Meeting. The formal Notice of General Meeting is set out at the end of this document and a form of proxy is also enclosed for you to complete, sign and return.

2.      Background to and reasons for the Proposals and the General Meeting

Capital Reduction

As at 31 December 2021, the Company had retained losses of £16,080,004 and continues to have a negative distributable reserves position meaning that it is unable to declare dividends or make distributions to Shareholders or buy back its Ordinary Shares.

The Company has 264,946,675 deferred shares of 2.4p each in issue which arose on a previous share capital reorganisation.  Although the aggregate nominal value of the Deferred Shares is £6,358,720.20, they do not have any tangible value and the Company proposes to cancel all the Deferred Shares.  This share capital account constitutes a non-distributable reserve for the purposes of the Act.  The Company is therefore seeking the approval of Shareholders to cancel all the Deferred Shares.

The Company has built up a substantial Share Premium Account through the issue of shares for cash at values in excess of the nominal value of those shares.  As at the date of this document, the balance standing to the credit of the Share Premium Account is £16,887,577.76.  The Share Premium Account constitutes a non-distributable reserve for the purposes of the Act.

In addition, the Company has built up a Capital Redemption Reserve through the redemption of an earlier series of deferred shares.  As at the date of this document, the balance standing to the credit of the Capital Redemption Reserve is £1,814,673.69.  The Capital Redemption Reserve constitutes a non-distributable reserve for the purposes of the Act.

The Company is therefore seeking the approval of Shareholders to cancel the Share Premium Account and Capital Redemption Reserve which, subject to the confirmation of the High Court, and together with the cancellation of the Deferred Shares, will enable the Company to eliminate the retained losses and create distributable reserves equal to the balance. 

The distributable reserves will be available for the Directors to use for the purposes of paying dividends, should circumstances in the future make it desirable to do so.

Further details of the Capital Reduction are set out in paragraphs 3, 4 and 5 below.

Buy-back Authority

The Company holds surplus cash resources which are not required in the normal day-to-day management of its business so the Directors intend to use the authority granted by Resolution 3 to make market purchases of Ordinary Shares when it is appropriate to do so.

If passed, Resolution 3 will give authority for the Company to purchase up to 78 million of its Ordinary Shares, representing approximately 10 per cent. of the issued share capital of the Company.  Resolution 3 specifies the minimum and maximum prices which may be paid for any Ordinary Shares purchased under the authority. The authority will expire on the earlier of the date falling 15 months from the date of the passing of Resolution 3 and the conclusion of the Company's next annual general meeting.

The Company may either cancel any Ordinary Shares it purchases under the authority granted by Resolution 3 or transfer them into treasury (and subsequently sell or transfer them out of treasury or cancel them). The Directors currently intend to cancel all shares purchased under the authority granted by Resolution 3.

The Directors will only exercise the authority to purchase Ordinary Shares where they consider that such purchases will be in the best interests of Shareholders generally and will result in an increase in earnings per Ordinary Share.

3.      Capital Reduction - Deferred Shares, Share Premium Account and Capital Redemption Reserve

The aggregate nominal value of any shares forms part of the capital of any company.  Share premium is treated as part of the capital of a company and arises on the issue by a company of shares at a premium to their nominal value. The premium element is credited to the share premium account.  Likewise, on a redemption or buy back of shares by a company an amount equal to the nominal value of the redeemed or bought back shares is credited to the capital redemption reserve.

The share capital account, the share premium account and the capital redemption reserve are non-distributable capital reserves and a company's ability to use any amount credited to those reserves is limited by the Act. However, with the approval of its shareholders by way of a special resolution and subsequent confirmation by the High Court, a company may reduce or cancel its shares, its share premium account and its capital redemption reserve and in certain circumstances either return all or part of the sum arising to shareholders as a return of capital, or credit some or all of such sum arising to its profit and loss account.

To the extent that the release of such a sum from the cancellation of shares, a share premium account and/or a capital redemption reserve creates or increases a credit on the profit and loss account, that sum represents a company's distributable reserves.

As mentioned above, the cancellation of the Deferred Shares, the Share Premium Account and the Capital Redemption Reserve will eliminate the Company's retained losses and create distributable reserves equal to the balance.

4.      Capital Reduction - Procedure

In order to effect the Capital Reduction, the Company firstly requires the authority of its Shareholders by the passing of Resolution 1 at the General Meeting to approve the cancellation of the Deferred Shares, the Share Premium Account and the Capital Redemption Reserve.

Secondly, the Capital Reduction must be confirmed by the High Court, to which the Company will make an application if Resolution 1 is passed.  The Court Hearing to confirm the Capital Reduction is expected to be held on or around 17 January 2023.  Shareholders will have the right to attend the Court Hearing in person or through counsel or other suitably qualified persons to support or oppose the sanction of the Capital Reduction.

The Capital Reduction will then take effect when the Court Order confirming it, and a statement of capital approved by the High Court, have been delivered to and registered by the Registrar of Companies.  The Effective Date of the Capital Reduction is currently expected to be on or around 18 January 2023. That date is likely to be within a few working days after the Court Hearing, which is currently expected to be on or around 17 January 2023.

In order to approve the Capital Reduction, the High Court will need to be satisfied that the interests of the Company's creditors will not be prejudiced by the Capital Reduction. There is a possibility that the Company may be required to give undertakings or other forms of creditor protection for the benefit of the Company's creditors at the date on which the Capital Reduction becomes effective.  These may include seeking the consent of the creditors to the cancellation of the Deferred Shares, the Share Premium Account and the Capital Redemption Reserve or the provision by the Company to the High Court of an undertaking to deposit a sum of money into a blocked account created for the purposes of discharging creditors of the Company. 

The Board reserves the right (where necessary by application to the High Court) to abandon, discontinue or adjourn any application to the High Court for confirmation of the Capital Reduction, and hence the Capital Reduction itself, if the Board believes that the terms required to obtain confirmation are unsatisfactory to the Company or if as the result of any material unforeseen event the Board considers that to continue with the Capital Reduction is inappropriate or inadvisable.

5.      Effect of the Capital Reduction

If approved by Shareholders and confirmed by the High Court, the Capital Reduction will result in the creation of distributable reserves which will allow the Company to make market purchases of Ordinary Shares and to pay dividends in due course, should it be appropriate or desirable to do so.   The Capital Reduction will not affect the number of Ordinary Shares in issue, the nominal value per Ordinary Share or the voting or dividend rights of any Shareholder. 

6.      General Meeting

Set out at the end of this document is a notice convening the General Meeting to be held on 6 December 2022 at 11.00 a.m. in the Malt Room at The Maltings, East Tyndall Street, Cardiff, CF24 5EA, at which the Resolutions will be proposed for the purposes of approving the Proposals.

7.         Resolutions

A summary and brief explanation of the resolutions to be proposed at the General Meeting is set out below. Please note that this is not the full text of the Resolutions and you should read this section in conjunction with the Resolutions contained in the Notice at the end of this document. The following resolutions will be proposed at the General Meeting:-

Resolution 1, which will be proposed as a special resolution, is to cancel the Deferred Shares, and the total amount standing to the credit of the Share Premium Account and Capital Redemption Reserve, being £25,060,971.65 in aggregate as at the date of this document.

Resolution 2, which will be proposed as a special resolution, will alter the Articles to remove any reference to the Deferred Shares and their associated rights.

Resolution 3, which will also be proposed as a special resolution, seeks authority for the Company to make market purchases of its own Ordinary Shares. 

As special resolutions, each Resolution requires votes in favour representing 75 per cent. or more of the votes cast (in person or by proxy) at the General Meeting in order to be passed.

8.         Action to be taken by Shareholders

A form of proxy for use at the General Meeting is enclosed. Whether or not you intend to be present at the General Meeting, you are requested to complete, sign and return the form of proxy in accordance with the instructions thereon to the Company's Registrars at Neville House, Steelpark Road, Halesowen, West Midlands B62 8HD, so as to arrive no later than 11.00 a.m. on 2 December 2022. The return of the form of proxy will not prevent you from attending the General Meeting and voting in person should you wish to do so.

If you hold your shares in uncertificated form in CREST you may appoint a proxy or proxies by utilising the CREST electronic proxy appointment service in accordance with the procedures described in the CREST Manual as set out in the Notice of General Meeting at the end of this document. Proxies submitted via CREST must be received by Neville Registrars Limited (ID 7RA11) no later than 11.00 a.m. on 2 December 2022. The appointment of a proxy using the CREST electronic proxy appointment service will not preclude a Shareholder from attending and voting in person at the General Meeting should they wish to do so.

9.         Board Recommendations

The Directors consider that all the proposals to be considered at the General Meeting are in the best interests of the Company and its shareholders as a whole and are most likely to promote the success of the Company. Accordingly, the Directors unanimously recommend that you vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do in respect of their own beneficial holdings currently amounting to 1.88 per cent. of the issued share capital of the Company.

For further information contact:

About MyHealthChecked PLC (www.myhealthcheckedplc.com)

MyHealthChecked PLC, based in Cardiff, is an AIM-quoted pioneering UK healthcare company focused on a range of at-home healthcare and wellness tests.

MyHealthChecked is the umbrella brand of a range of at-home DNA and RNA tests that have been developed following the acquisition of The Genome Store in November 2020. The tests are available online, and in some cases, for over-the-counter purchase.

The MyHealthChecked portfolio has been identified as part of a change in mindset as customers become more familiar with the concept of accessible healthcare in the growing at home testing kit market with a focus on accessibility at the right price, led by UK-based experts.