On 31 January 2011, the Board of Directors of Romag were informed by John Kennair, Chairman of the company, that, during the second half of the year ended 30 September 2010, he paid GBP 3.97 million i…
On 31 January 2011, the Board of Directors of Romag were informed by John Kennair, Chairman of the company, that, during the second half of the year ended 30 September 2010, he paid GBP 3.97 million into the company“s operating subsidiary, Romag Limited, to avoid a write down of outstanding trade receivables, which at the time he believed was in the best interests of the company. Unfortunately these payments were made without being disclosed to the Board. John Kennair has informed the Board that he has no connection with these trade parties and that no debt or other obligation is outstanding to him from the company or its subsidiary. Following this disclosure on Monday 31 January 2011, the Board informed their nominated advisor, who on their behalf requested the immediate suspension of trading in the company“s shares. The company“s non-executive directors are now in the process of commissioning a full investigation into the transactions undertaken along with an independent review of the Company“s accounts, which will include the Company“s corporate governance procedures and any non compliance with relevant rules and regulations. This investigation will be undertaken by a major accountancy firm. John Kennair has stepped down as Chairman with immediate effect but, with the full backing of the Board, remains chief executive responsible for the day to day running of the company and a main board director. Non-executive director, David Gray, a chartered accountant with considerable listed company experience, has been appointed as Chairman of the company and will be supported by the senior independent non-executive director, Peter Allan, who also becomes Deputy Chairman. The Board will now commence the recruitment of a Group chief executive, a main board appointment, and John Kennair has agreed to remain with the company in an operational capacity to ensure a smooth handover. The Board is confident that David Banks, finance director, was unaware of the transactions now to be investigated and has full confidence in his actions. It is the Board“s intention to further strengthen the reporting function of the company with the appointment of a new financial controller. The Board also intends to appoint a further independent non-executive director to strengthen the company“s corporate governance, systems and controls. On 28 January 2011, the company announced that it was in negotiations with its lender, Lloyds Banking Group (LBG) to provide amended banking facilities and had received a conditional offer of new debt facilities from LBG. This conditional offer is the subject of ongoing negotiation between the company and LBG who remain actively engaged in an open and constructive dialogue with the company. Romag is a specialist manufacturer of transparent composites to the security, renewable energy, architectural and specialist transport markets. The company is currently experiencing significant demand for its products, particularly in the high growth area of solar panels, supported as they are by the UK“s highly beneficial renewable energy feed-in-tariff (FiT) regime. Romag“s market positioning is resulting in high levels of customer enquiries and a significant forward order book. The Board will make a further announcement as soon as possible.