TextMagic AS plans to establish a voluntary capital reserve to enable dividend payments
TextMagic AS (registry code 16211377) plans to increase the share capital through a fund issue and then reduce the share capital to create a voluntary reserve.
The purpose of increasing and decreasing the share capital and creating a voluntary capital reserve is to enable dividend payments to TextMagic AS’ shareholders. At the same time ensuring that distributions are in compliance with the law and that equity is commensurate with the needs and risks associated with the company's activities.
As TextMagic AS capitalizes development costs as intangible assets and development costs are not fully amortized, profits can only be distributed if the sum of available reserves and undistributed profits from previous periods is at least equal to the unamortized development costs. With the current equity structure, it is not possible to distribute profits to shareholders in the form of dividends as the above condition is not met. The company has a share premium in total of 51 242 000 euros, which can only be used to cover the losses of TextMagic AS or to increase the share capital through a fund issue.
Therefore, the management board has decided to create a voluntary equity reserve to ensure that the amount of the reserve exceeds the unamortized development costs, which in turn will provide an opportunity to pay dividends to shareholders. TextMagic AS has reached a stage of development where it is generating profits each year that it would like to distribute as dividends, but has not been able to do so due to restrictions under the Commercial Code.
In order to establish the voluntary reserve, TextMagic AS plans first to increase the book value of each share by EUR 6.02 through a fund issue and then to reduce the book value of each share by EUR 6.02 through a share capital reduction. The reduction will result in a voluntary reserve. The shareholders' shareholdings will remain unchanged during the process and the nominal value of the share at the end of the process will be EUR 0.10 per share.
As a first step, TextMagic AS’ management board will submit to a shareholder vote a draft resolution to increase the share capital by way of a share premium. Upon completion of the first step, the management board will submit to a shareholder vote the following proposals to reduce the share capital and to create a voluntary capital reserve from the free equity resulting from the share capital reduction. In summary, the company will have an equity structure that will allow it to pay dividends from retained earnings.
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Changes in equity |
June 30, 2023 |
By the end of Phase I |
By the end of Phase II |
|
Share capital |
850,000 |
52,020,000 |
850,000 |
|
Share premium |
51,242,000 |
72,000 |
72,000 |
|
Voluntary capital reserve |
0 |
0 |
51,170,000 |
This announcement does not constitute a commitment to pay dividends to shareholders. According to the Commercial Code, the payment of dividends is decided by a separate resolution of the shareholders adopted on the basis of the approved annual report of TextMagic AS and depends on the financial results and business plans of the company.
Additional information:
Getter Grünmann
TextMagic AS financial manager
finance@textmagic.biz
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