Van Elle : Publication of Circular and Notice of GM

7 February 2020

Van Elle Holdings plc

('Van Elle', the 'Company' or the 'Group')

AIM: VANL

Publication of Circular and Notice of General Meeting

As noted in the Half Year Results Announcement issued on 22 January 2020, the Board has become aware of an irregularity concerning technical compliance with the 2006 Act in respect of the final dividend for the year ended 30 April 2019 approved by shareholders at the Company's annual general meeting on 12 September 2019 (the 'Dividend'). The total aggregate amount of the Dividend was £800,000.00.

The Group's historic reported trading results and financial condition, and ability to pay future dividends are entirely unaffected by this matter.

The 2006 Act requires the amount of any dividend distribution to be justified by reference to relevant accounts which show the requisite level of distributable reserves. If a company's last annual accounts do not show the necessary reserves, then the company must prepare interim accounts and, in the case of a public company, file those interim accounts with the Registrar of Companies prior to the payment of the relevant dividend.

Note 12 (Dividends) to the 2018/19 Accounts, in referring to the Dividend, stated that:

'The Board of the subsidiary company will pay a dividend to the Company in advance of the final proposed dividend being paid to ensure that the Company has sufficient distributable reserves in order to pay the dividend.'

Regrettably, as a result of an administrative oversight, the subsidiary company dividend referred to in Note 12 to the 2018/19 Accounts was not made and as a consequence the requisite level of distributable reserves were not available within the Company prior to the payment of the Dividend. Furthermore, as the Company's last annual accounts did not show the necessary reserves, interim accounts should have been prepared and filed with the Registrar of Companies prior to the payment of the Dividend.

The Resolution

The Company has been advised that, as a consequence of the Dividend having been paid otherwise than in accordance with the 2006 Act, the Dividend is technically unlawful and that the Company may have claims against past and present shareholders who were recipients of the Dividend and against persons who were directors of the Company at the time of the payment of the Dividend.

The Board notes, however, that the Company has no intention of bringing any such claims and that the Group's historic reported trading results and financial condition and ability to pay future dividends are entirely unaffected by this matter.

The Company is today publishing, and will post to shareholders an explanatory circular (the 'Circular') convening a general meeting to be held on 26 February 2020 (the 'General Meeting'), at which a resolution authorising various rectifying actions will be proposed which will, if passed, put all potentially affected parties, so far as possible, in the position in which they were always intended to be.

Related Party Transaction

The entry by the Company into the Shareholders' Deed of Release and consequential waiver of any rights of the Company to make claims against shareholders in respect of the Dividend constitutes a related party transaction pursuant to Rule 13 of the AIM Rules, in respect of Otus Capital Management Limited, Ruffer LLP and Miton Asset Management Limited, who each own Shares totalling 10 per cent. or more of the total votes able to be cast at the General Meeting.

In addition, the entry by the Company into the Directors' Deed of Release and consequential waiver of any rights of the Company to make claims against past and present directors in respect of the Dividend, constitutes a related party transaction pursuant to Rule 13 of the AIM Rules as each of the Directors and the Former Director (who was a director of the Company in the twelve months prior to the date of the publication of this document) is a related party for the purposes of the AIM Rules.

In lieu of any independent directors' recommendation in relation to the Resolution, in order to provide a statement as to what is fair and reasonable, and specifically due to all Directors being statutory directors at the time the Dividend was proposed and paid, Peel Hunt, in its capacity as Nominated Adviser to the Company for the purposes of the AIM Rules, considers that the Resolution (and specifically the entry by the Company into the Shareholders' Deed of Release and the Directors' Deed of Release) is fair and reasonable insofar as the shareholders of the Company are concerned.

General Meeting

Enclosed within the Circular is a notice of the General Meeting which will be held at offices of Eversheds Sutherland (International) LLP, One Wood Street, London EC2V 7WS at 9.30 a.m. on 26 February 2020.

The Circular will be available to view on the Company's website (www.van-elle.co.uk) and at the offices of the Company at Summit Close, Kirkby in Ashfield, Nottinghamshire, NH17 8GJ and at the offices of Eversheds Sutherland (International) LLP, One Wood Street, London EC2V 7WS.

All capitalised terms in this announcement are as defined in the Circular.

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