NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM THE UNITED STATES OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018

19 March 2024

TheWorks.co.uk plc 

("The Works", the "Company" or the "Group")

Proposed cancellation of Ordinary Shares from the Official List, proposed application for admission to trading on AIM and Notice of General Meeting

Intention to move to AIM

The Board of The Works announces that it is proposing to cancel admission of the Company's Ordinary Shares to the premium segment of the Official List and to cease trading on the London Stock Exchange's Main Market for listed securities ("Main Market") ("Delisting") and apply for the admission of the Company's Ordinary Shares to trading on AIM ("AIM Admission").

The Company listed on the London Stock Exchange on 19 July 2018. The Directors have carefully considered whether the continued admission of its Ordinary Shares to listing on the premium segment of the Official List and to trading of its Ordinary Shares on the Main Market is in the best interests of Shareholders. The Directors have concluded that AIM is a more appropriate market for The Works for the reasons set out under the heading "Background to and reasons for the Delisting and AIM Admission" in Appendix II to this announcement.

Carolyn Bradley, Chair of The Works, said: "Our proposed move to AIM follows months of careful consideration. We believe AIM to be a more appropriate market for The Works, partly due to our current size but also because of the efficiencies to be gained when compared to the Main Market's increasing cost and regulatory requirements. Many of our major shareholders are supportive of the move and we are optimistic that the expected cost savings and access to alternative groups of investors should help to increase shareholder value."

Shareholder circular, Listing Rule requirements and General Meeting

A circular to Shareholders (the "Circular") is expected to be posted later today containing details of the proposed Cancellation and Admission.

Under the Listing Rules, the Delisting requires the prior approval of a resolution (the "Resolution") by Shareholders in a General Meeting, passed by not less than 75 per cent. of those Shareholders who vote in person or by proxy. If approved by Shareholders, it is anticipated that the effective date of the Delisting and AIM Admission will be 3 May 2024, being not less than 20 business days from the passing of the Resolution.

The Circular contains a notice convening a General Meeting of Shareholders to be held at the offices of Squire Patton Boggs (UK) LLP at 60 London Wall, London, EC2M 5TQ at 9.30 a.m. on 4 April 2024 at which the Resolution will be proposed as a special resolution to approve the Delisting and AIM Admission.

The Circular will be made available shortly on the Company's website at https://corporate.theworks.co.uk/investors/ and will be submitted to the National Storage Mechanism where it will shortly be available to view at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

FY24 year-end date

The Directors announce that the Company's current financial year ("FY24") will, as is permitted under the Companies Act, be extended by one week. The FY24 annual report and accounts for the Group will therefore be drawn up for the 53-week period ending 5 May 2024. The Company's accounting reference date will remain 30 April.

Working capital statement required by the AIM Rules

As part of the AIM Admission, the AIM Rules for Companies ("AIM Rules") require a statement that the Directors have no reason to believe that the working capital available to the Group will be insufficient for at least twelve months from AIM Admission. The Directors are pleased to confirm that HSBC Bank UK plc ("HSBC") has agreed to re-set the fixed charge covenant under the Group's banking facility with HSBC with effect from AIM Admission, thereby creating (as explained in further detail in Appendix II to this announcement) additional headroom in the downside case scenario and further supporting the basis on which the Directors can make the working capital statement in the required form in the Schedule One Announcement.

Appendix I - Expected Timetable of Key Events

Notes:

If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by way of an announcement on a Regulatory Information Service. References in this document to time are to London time, unless specified otherwise.

Appendix II - Extracts from the Circular

INTRODUCTION

The Company announced on 19 March 2024 proposals to apply for the admission of its Ordinary Shares to trading on AIM under AIM's streamlined admission process for companies that have had their securities traded on the Official List, known as the "AIM Designated Market" route. The Company also announced its intention to cancel the admission of the Ordinary Shares to listing on the Official List (premium segment) and to trading on the London Stock Exchange's main market for listed securities, such Delisting and AIM Admission to take effect simultaneously.

The Directors believe that AIM provides a regulatory regime which is more appropriate to the Company's current size and structure. Subject to, amongst other things, the Resolution being passed at the General Meeting, it is anticipated that the effective date of the Delisting and AIM Admission will be 3 May 2024, and that the Ordinary Shares will be admitted to trading on AIM on or around 8.00 a.m. on 3 May 2024.

As the Ordinary Shares have been listed on the premium segment of the Official List for more than 18 months, the Company is not required to publish an admission document in connection with AIM Admission. However, the Company will, subject to the passing of the Resolution at the General Meeting, publish an announcement which complies with the requirements of Schedule One to the AIM Rules comprising information required to be disclosed by companies transferring their securities from the Official List to AIM via the AIM Designated Market route.

The Listing Rules require that where a company does not have a 'controlling shareholder' (as such term is defined in the Listing Rules), which is applicable in the Company's case, and it wishes to cancel its listing on the Official List then it must seek the approval of not less than 75 per cent. of its shareholders in a general meeting voting in person or by proxy. Accordingly, a special resolution is being proposed at the General Meeting to authorise the Board to cancel the listing of the Ordinary Shares on the Official List and to remove such Ordinary Shares from trading on the Main Market and to apply for admission of the Ordinary Shares to trading on AIM. 

The General Meeting is to be held at the offices of Squire Patton Boggs (UK) LLP at 60 London Wall, London EC2M 5TQ at 9.30 a.m. on 4 April 2024 for the purpose of seeking such approval. A notice convening the General Meeting, at which the Resolution will be proposed, is set out at the end of the Circular.

Singer Capital Markets Advisory LLP is acting as financial adviser in connection with the Delisting and as nominated adviser in connection with AIM Admission.

BACKGROUND TO AND REASONS FOR THE DELISTING AND AIM ADMISSION

The Company listed on the London Stock Exchange on 19 July 2018. The Directors have carefully considered whether the continued listing on the Official List and on the Main Market is in the best interests of Shareholders. The Directors have concluded that AIM is a more appropriate market for The Works for the following reasons:

·              the cost and regulatory requirements of the Main Market have become progressively higher in recent years and are now disproportionately burdensome for a business the size of The Works, and the Directors do not feel there is any benefit to the Company remaining on the Main Market. For example, with its low market capitalisation, the Company does not benefit from its Ordinary Shares being included in index tracker funds, nor does the Company expect to benefit from such inclusion of its Ordinary Shares in the near future;

·              a move to AIM is expected to deliver a significant cost saving, for example, in reduced audit fees as, on AIM, The Works would no longer be classified a "Public Interest Entity" and the Company could look to a broader range of firms to undertake the audit. There are no practical disadvantages which the Board has identified, and the Directors are optimistic that the expected savings will increase value for Shareholders;

·              AIM was launched in 1995 as the London Stock Exchange's market specifically designed for smaller companies, with a more appropriate regulatory regime, and has an established reputation with investors and is an internationally recognised market;

·              companies whose shares trade on AIM are deemed to be unlisted for the purposes of certain areas of UK taxation, including possibly being eligible for relief from inheritance tax. Furthermore, stamp duty is not payable on the transfer of shares that are traded on AIM and not listed on any other market;

·              in addition to existing institutional investors, given the possible tax benefits, admission to trading on AIM could make the Company's shares more attractive to AIM specific funds, such as funds investing in AIM companies that qualify for IHT Business Property Relief;

·              given the possible tax benefits mentioned above, the Board believes that the Ordinary Shares may also appeal to certain retail investors where, since 2013, shares traded on AIM can also be held in Individual Saving Accounts (ISAs); and

·              whilst the Directors have no plans to undertake corporate transactions in the foreseeable future, in the event that such transactions are undertaken AIM currently offers greater flexibility, enabling the Company to agree and execute certain transactions, such as fundraisings, acquisitions and disposals, more quickly and cost effectively than a company on the Official List.

Further details of the consequences of the Delisting and AIM Admission are set out in Part II (Information on Delisting and AIM Admission) of the Circular.

Shareholders should note that following the Delisting becoming effective:

·              the regulatory regime which applies solely to companies, such as the Company, with shares admitted to the premium segment of the Official List and to trading on the London Stock Exchange's Main Market for listed securities will no longer apply, including the requirement for shareholder approval under the Listing Rules to approve transactions above a certain size not in the ordinary course of business or with related parties. Further details regarding certain aspects of the regulatory regime that would no longer apply to such transactions are provided in Part II (Information on Delisting and AIM Admission) of the Circular; and

·              the Delisting may have implications for Shareholders holding Ordinary Shares in a Self-Invested Personal Pension ("SIPP"). For example, shares in unlisted companies (which includes companies whose shares are admitted to trading on AIM) may not qualify for certain SIPPs under the terms of that SIPP. If in any doubt, Shareholders should consult with their SIPP provider immediately. Following AIM Admission, the Company will be categorised for these purposes as unlisted.

INTERIM RESULTS

On 18 January 2024, the Company announced its unaudited interim results for the 26 weeks ended 29 October 2023 and a trading update for the 11 weeks ended 14 January 2024 ("Interim Results Announcement"). The full text of the Interim Results Announcement can be found the Company's website at https://corporate.theworks.co.uk/investors/results-reports-and-presentations/.

In the Interim Results Announcement Gavin Peck, Chief Executive Officer of The Works, commented:

"Market conditions have been persistently challenging, putting pressure on our sales and profit performance in the first half and throughout the festive period. It is clear that many families celebrated Christmas on tighter budgets this year, and whilst we offered excellent value, we were not immune to this reduced spend. I am proud of the way that our colleagues have rallied together to deliver for customers during these challenging times.

We have started the new calendar year on an improved sales trajectory, with a strengthened leadership team to drive forward our strategy and exciting Easter and summer toy ranges due to land later this year. However, we are also mindful of external challenges, including recent supply chain disruption in the Red Sea.

Our focus for the remainder of the year will be on cost reduction, rebuilding margin and profitability, and conserving cash. It is necessary to take this action now to stabilise the profitability of the business during this challenging period, however we remain confident that our "Better, not just Bigger" strategy is the right direction for the business and will enable a return to sustainable growth in the long term."

WORKING CAPITAL STATEMENT REQUIRED BY THE AIM RULES

As part of the AIM Admission, the AIM Rules require a statement that the Directors have no reason to believe that the working capital available to the Group will be insufficient for at least twelve months from AIM Admission. The statement is required to be included in the Company's Schedule One Announcement.

Note 1(b) to the Interim Results Announcement ("Note 1(b)") explained the basis of preparation of the interim financial statements on a going concern basis. The narrative included a description of the cash flow forecasting (referred to as the 'base case' scenario) that had been undertaken by the Company in support of the Directors' conclusion that the going concern basis at the time of the Interim Results Announcement remained appropriate. In addition, a 'severe but plausible' 'downside case' sensitivity was prepared to support the Directors' conclusion regarding going concern, by stress testing the base case scenario to indicate the financial headroom resulting from applying more pessimistic assumptions.

As described in Note 1(b), under the downside case scenario, (i) the Group would expect to make routine operational use of its bank facility with HSBC each year as stock levels are increased prior to peak sales occurring; (ii) the bank facility financial covenants would expect to be complied with during the period under review; and (iii) the business would continue to have adequate resources to continue in operation. Under the downside case scenario, the fixed charge covenant headroom at the quarterly testing points falling within the going concern period was, however, described as limited and, as such, reasonably plausible scenarios could arise in which this headroom could be eroded and create a borrowing requirement. If such a borrowing requirement arose when the financial covenants were not complied with, there was a risk that the Group would not be able to utilise its borrowing facilities if required.

The Directors are pleased to confirm that HSBC has agreed to re-set the fixed charge covenant with effect from AIM Admission, thereby creating additional headroom in the downside case scenario and further supporting the basis on which the Directors can make the working capital statement in the required form in the Schedule One Announcement.

DELISTING AND AIM ADMISSION

A summary of the key implications for Shareholders of the Company's proposed move to AIM is set out at Part II (Information on Delisting and AIM Admission) of the Circular. In order to effect the Move to AIM, the Company will require, amongst other things, Shareholder approval of the Resolution at the General Meeting. The Resolution, which is set out in the Notice of General Meeting at the end of the Circular, will authorise the Board to cancel the listing of the Ordinary Shares on the Official List, remove such Ordinary Shares from trading on the Main Market and to apply for admission of the Ordinary Shares to trading on AIM.

Conditional on the Resolution having been approved by Shareholders at the General Meeting, the Company will apply to cancel the listing of the Ordinary Shares on the Official List and their admission to trading on the Main Market. The Company will also give 20 Business Days' notice to the London Stock Exchange of its intention to seek AIM Admission under AIM's streamlined admission process for companies that have had their securities traded on the Official List via the "AIM Designated Market" route.

It is currently anticipated that, subject to the passing of the Resolution:

·              the last day of dealing in the Ordinary Shares on the Main Market will be Thursday 2 May 2024;

·              cancellation of the listing of Ordinary Shares on the Official List will take effect at 8.00 a.m. on Friday 3 May 2024, being not less than 20 Business Days from the date of the General Meeting; and

·              AIM Admission will take place, and trading in the Ordinary Shares will commence on AIM, at 8.00 a.m. on Friday 3 May 2024.

Following the Delisting and AIM Admission, Ordinary Shares that are held in uncertificated form will continue to be held and dealt through CREST. Share certificates representing those Ordinary Shares held in certificated form will continue to be valid and no new Ordinary Share certificates will be issued.

CORPORATE GOVERNANCE

Since listing on the Main Market in 2018, The Works has been subject to the UK Corporate Governance Code published by the Financial Reporting Council applicable to all companies with a premium listing on the Official List. Compliance with the UK Corporate Governance Code is not mandatory for companies whose shares are admitted to trading on AIM.

AIM-quoted companies are required to state which corporate governance code they will follow from admission and how they will comply with such code and to explain reasons for any non-compliance. The Directors acknowledge the importance of high standards of corporate governance and are committed to continuing to update policies and procedures to strive for best practices in governance affairs. The Directors have considered the corporate governance and procedures that would be appropriate for the Company following AIM Admission, taking into account the Company's size and structure and following AIM Admission. If AIM Admission occurs, the Company will, as a minimum, comply with the QCA Governance Code and, in addition, will retain much of the additional governance arrangements currently in place to meet its requirements to comply with the UK Corporate Governance Code, as the Board deems appropriate and commensurate with the Company's size and structure.

GENERAL MEETING

The Delisting and AIM Admission is conditional on, amongst other things, the passing of the Resolution at the General Meeting.

The Circular contains a notice convening a General Meeting of Shareholders to be held at the offices of Squire Patton Boggs (UK) LLP at 60 London Wall, London EC2M 5TQ at 9.30 a.m. on 4 April 2024 at which the Resolution will be proposed as a special resolution to approve the Delisting and AIM Admission.

ACTION TO BE TAKEN

Whether or not you intend to attend the General Meeting in person, you are requested to complete and submit a proxy appointment in accordance with the notes to the Notice of General Meeting. Forms of Proxy for use at the General Meeting should be completed and returned to the Company's Registrar, Equiniti Limited, Aspect House, Spencer Road, Lancing BN99 6DA as soon as possible and, in any event, so as to arrive by no later than 9.30 a.m. on 2 April 2024 (or, if the General Meeting is adjourned, not later than 48 hours (excluding non-working days) before the time fixed for the holding of the adjourned meeting).

Shareholders can exercise their votes by submitting their Proxy Form by post or electronically as soon as possible. Shareholders can vote electronically at www.sharevote.co.uk using the relevant reference numbers printed on the Form of Proxy. Alternatively, Shareholders who have already registered with the Registrar's online portfolio service, Shareview, can submit their proxy electronically at www.shareview.co.uk.

IRREVOCABLE UNDERTAKINGS

The Company has received irrevocable undertakings to vote in favour of the Resolution to be proposed at the General Meeting from those Directors who hold Ordinary Shares amounting, in aggregate, to 1,215,096 Ordinary Shares and representing approximately 1.94 per cent. of the Company's issued share capital as at the close of business on 18 March 2024 (being the latest practicable date prior to publication of this announcement).

In addition, the Company has received an irrevocable undertaking to vote in favour of the Resolution to be proposed at the General Meeting from Kelso Group Holdings plc in respect of its holding of 3,745,000 Ordinary Shares and representing approximately 5.99 per cent. of the Company's issued share capital as at the close of business on 18 March 2024 (being the latest practicable date prior to publication of this announcement).

Accordingly, the Company has received irrevocable undertakings to vote in favour of the Resolution to be proposed at the General Meeting in respect of, in aggregate, to 4,960,096 Ordinary Shares and representing approximately 7.93 per cent. of the Company's issued share capital as at the close of business on 18 March 2024 (being the latest practicable date prior to publication of this announcement).

RECOMMENDATION

The Board considers that transferring the trading in Ordinary Shares from the Main Market to AIM via the AIM Designated Market route is, in the Board's opinion, in the best interests of Shareholders as a whole. Accordingly, the Board unanimously recommends that you vote in favour of the Resolution to be proposed at the General Meeting, as those Directors who hold Ordinary Shares have irrevocably undertaken to do in respect of their own individual beneficial holdings amounting, in aggregate, to 1,215,096 Ordinary Shares and representing approximately 1.94 per cent. of the Company's issued share capital as at the close of business on 18 March 2024 (being the latest practicable date prior to publication of the Circular). 

IMPORTANT INFORMATION

Unless otherwise stated, capitalised terms in this announcement have the same meaning as in the Circular.

Forward-looking statements

This document contains forward-looking statements which are based on the beliefs, expectations and assumptions of the Directors and other members of senior management about the Company's business. All statements other than statements of historical fact included in this document may be forward-looking statements. Generally, words such as "will", "may", "should", "could", "estimates", "continue", "believes", "expects", "aims", "targets", "projects", "intends", "anticipates", "plans", "prepares", "seeks" or, in each case, their negative or other variations or similar or comparable expressions identify forward-looking statements.

These forward-looking statements are not guarantees of future performance, and there can be no assurance that the expectations reflected in such forward-looking statements will prove to have been correct. Rather, they are based on the current beliefs, expectations and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of the Company and are difficult to predict, that may cause actual results, performance, plans, objectives, achievements or events to differ materially from those express or implied in such forward-looking statements. Undue reliance should, therefore, not be placed on such forward-looking statements.

New factors will emerge in the future, and it is not possible to predict which factors they will be. In addition, the impact of each factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those described in any forward-looking statement or statements cannot be assessed, and no assurance can therefore be provided that assumptions will prove correct or that expectations and beliefs will be achieved.

Any forward-looking statement contained in this document based on past or current trends and/or activities of the Company should not be taken as a representation that such trends or activities will continue in the future. No statement in this document is intended to be a profit forecast or to imply that the earnings of the Company for the current year or future years will match or exceed historical or published earnings of the Company.

Each forward-looking statement speaks only as at the date of this document and is not intended to give any assurance as to future results. The Company and/or its Directors expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this document as a result of new information, future events or other information, except to the extent required by the Listing Rules, the Disclosure Guidance and Transparency Rules, the rules of the London Stock Exchange or by applicable law.