Proposed Acquisition: Premier Physical Healthcare

15 March 2016

Totally plc

("Totally", "the Company" or "the Group")

 

Proposed acquisition of Premier Physical Healthcare Limited

Proposed subscription of £6.2 million

Notice of General Meeting

 

The Board of Totally (AIM: TLY), the provider of a range of services to the healthcare sector, is pleased to announce that it has conditionally agreed to acquire the entire issued share capital of Premier Physical Healthcare Limited ("Premier") for a maximum consideration of £6.75 million, based on the financial performance of Premier. Premier is a provider of physical healthcare services to both public and private patients.

 

The Company has also conditionally raised gross proceeds of £6.2 million from new and existing investors, via a subscription of 10,000,000 new Ordinary Shares at a price of 62p per share.

 

Since its establishment in 1997, Premier has offered physiotherapy, podiatry and ergonomics services to a variety of clients. Premier provides a comprehensive range of treatments and advice for musculoskeletal injuries and conditions. Premier's clinical staff are either chartered physiotherapists, orthopaedic and rheumatology rehabilitation consultants or state registered podiatrists. The majority of Premier's revenue is derived from the provision of physiotherapy and podiatry to National Health Service patients.

 

Both the Subscription and the Acquisition are dependent on Shareholder approval at a General Meeting of the Company to be held at Lighterman House, 26-36 Wharfdale Road, London N1 9RY at 10.00 a.m. on 31 March 2016.

 

Wendy Lawrence, Chief Executive of Totally said: "I firmly believe that the proposed acquisition is in the best interests of shareholders. The musculoskeletal services of physiotherapy, podiatry and ergonomics offered by Premier are entirely complementary to the Chronic Obstructive Pulmonary Disease (COPD), heart disease and diabetes treatments which have been the bedrock of Totally.

 

The Board also believes that there is significant potential to grow revenues in the area of musculoskeletal treatments as well as the opportunity to develop relationships with new Clinical Commissioning Groups which are key to our new business pipeline.

 

I look forward to welcoming our new colleagues from Premier and delivering sustainable and profitable growth across the healthcare sector focusing on out of hospital care.  "This is an important first step in our strategy for expanding the Group and underpins our ambitions for growth." 

 

Bob Holt, Chairman of Totally, added: "I am delighted to welcome the Premier team into the Totally Group at the outset of our journey to become a leading provider of out of hospital services. The shareholders have shown again a significant commitment to our buy and build strategy. I look forward to bringing you news of further developments."

 

An Admission Document containing a Notice of General Meeting will be sent to Shareholders today and an electronic copy of the Admission Document will be available shortly for download from the Company's website, www.totallyplc.com 

 

Below are extracts from the Admission Document. Defined terms used in this announcement have the meaning as set out at the end of this announcement and as set out in the Admission Document. This announcement should be read in conjunction with the full text of the Admission Document.

 

The Company also announces that Allenby Capital Limited is now the sole broker to Totally (and remains its Nominated Adviser).

 

 

Totally Plc / Totally Health Limited
Wendy Lawrence, Chief Executive Bob Holt, Chairman	020 3077 2212 07778 798 816
Allenby Capital Limited (Nominated Adviser & Broker)	0203 328 5656
Nick Naylor / Nick Athanas / Alex Brearley
Blytheweigh	020 7138 3203
Tim Blythe / Camilla Horsfall

 

 

Totally plc

("Totally", "the Company" or "the Group")

 

Proposed acquisition of Premier Physical Healthcare Limited

Proposed subscription of £6.2 million

Notice of General Meeting

 

Introduction

The Board is pleased to announce that the Company has conditionally agreed to acquire the entire issued share capital of Premier Physical Healthcare Limited for a maximum consideration of £6.75 million, based on the financial performance of Premier.

 

Premier is a provider of physical healthcare services to both public and private patients. Since its establishment in 1997, Premier has offered physiotherapy, podiatry and ergonomics services to a variety of clients.

 

The majority of Premier's physical healthcare services are provided to the NHS under contract via general practitioners' surgeries. Premier also provides physical healthcare services to various regional UK police forces and in a number of UK prisons, as well as to local authorities and other private sector clients.

 

The Board believes that there has been an overall trend for the NHS and local authorities to seek to move the less acute care components into community-based care. This process often takes place via outsourcing to private sector service providers, such as Premier.

 

The Company's strategy is to become one of the leading providers of 'out of hospital care' across the UK. In order for this to be facilitated, the Board believes that the Company should seek to execute a "buy and build" strategy and in executing this strategy, the Company's existing relationships with the NHS and the experience of Totally's Board and Management will be essential. The Company will also seek to leverage Premier's contacts, relationships and experience to attract further acquisition targets.

 

The Board believes that the acquisition of Premier provides a strong first step for implementing its buy and build strategy.

 

Pursuant to Rule 14 of the AIM Rules for Companies, the Acquisition constitutes a reverse takeover. Accordingly, the Acquisition is conditional, inter alia, on the approval by Shareholders of the Resolutions to be proposed at the General Meeting which is being convened for 10.00 a.m. on 31 March 2016 at the offices of the Company at Lighterman House, 26-36 Wharfdale Road, London N1 9RY.

 

The consideration for the Acquisition is capped at a total of £6.75 million and is to be satisfied through an initial cash payment of £371,974 to the Vendors upon Admission, followed by four potential deferred payments payable between 2016 and 2019, based on the financial performance of Premier. The first payment and second potential payment to the Vendors will be settled in cash with the remainder of the potential deferred payments being settled as to 80 per cent. in cash (although the Vendors can elect to receive this cash element in equal amounts of cash and loan notes of the Company) and 20 per cent via the issue of new Ordinary Shares.

 

In conjunction with the Acquisition, the Company is proposing to raise £6.20 million, before expenses, through the issue of the Subscription Shares at the Subscription Price. The Subscription Shares will represent approximately 50.01 per cent. of the Enlarged Share Capital on Admission. The Subscription and the Acquisition are conditional upon, inter alia, the Resolutions being passed at the GM and Admission. On Admission, the Company will have a market capitalisation of approximately £12.40 million based on the Subscription Price.

 

If the Resolutions are passed at the GM and the other conditions set out in both the Acquisition Agreement and the Admission Agreement are met, then it is expected that the Enlarged Share Capital will be admitted to trading on AIM with effect from 8.00 a.m. on 1 April 2016.

 

Totally's Finance Director, Donald Baladasan is also a non-executive director of Premier. Mr Baladasan does not currently have any interest in the share capital of Premier and is one of five directors of Premier. In recognition of the potential for actual or perceived conflicts of interest, Mr Baladasan has not voted on any Board deliberations with respect to any matters in relation to the Acquisition. Mr Baladasan will not therefore make a recommendation in respect of the Resolutions.

 

The Independent Directors consider the Acquisition to be an exciting opportunity and consider that the Acquisition is in the best interests of the Company and Shareholders as a whole. Accordingly, the Independent Directors recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.

 

Shareholders should note that the Resolutions are inter-conditional and consequently if any of the Resolutions are not passed, the Acquisition, the Subscription and Admission will not occur.

 

The purpose of the Admission Document is to provide Shareholders with information on the Proposals. Shareholders should read the whole of the Admission Document and Shareholders' attention is drawn in particular to the risk factors set out in Part II of the Admission Document.

 

Background to and reasons for the Acquisition

Premier is a provider of physical healthcare services to both public and private patients, providing physiotherapy, podiatry and ergonomics healthcare services. The majority of Premier's revenue is derived from the provision of physiotherapy and podiatry services to the NHS under contract.

 

The Board believes that the acquisition of Premier is positive for the Company for the following reasons:

 

·    Contracted revenue

For the six months ended 30 September 2015, Premier generated revenues of £1.12m from its NHS contracts, which accounted for approximately 69 per cent. of Premier's turnover for that period. A number of Premier's current contracts are formally subject to renewal in the first half of 2016. The Board believes that this is a not uncommon position for providers of services to the NHS and, notwithstanding the position with contract renewals, the Directors believe that Premier's contract base provides contracted revenue. Although the majority of Premier's contracted revenue is with the NHS, the Directors view Premier's non-NHS sources of revenue as providing diversification within the overall physical healthcare sector.

 

·    Access to Clinical Commissioning Groups (CCGs)

The Board believes that Premier has a good reputation within the NHS and long standing relationships with a number of CCGs, which has led to Premier's success in winning NHS contracts. The Board therefore believe that the Acquisition presents an opportunity for Totally to efficiently access CCGs with which the Group is currently less familiar and seek to cross-sell the Group's existing health coaching services.

 

·    Client infrastructure and systems

Premier has made investment in its client infrastructure and systems. The Board therefore intends that the Acquisition will be an initial step towards the Enlarged Group having a centralised processing and administration centre. This could also allow for cost savings when integrating other potential NHS provider acquisition targets into the Enlarged Group in the future.

 

·    Growing market for musculoskeletal conditions

The Board believes that the overall UK market for physical healthcare services is significant in size and expanding. The Directors also believe that CCGs are currently commissioning contracts for musculoskeletal services from the open market. Having evaluated Premier's pipeline of overall potential bid opportunities, the Board believes that there is significant potential for more musculoskeletal and physical medicine based contracts to come onto the market, which will lead to growth in the size of Premier's addressable market in the UK. The Directors further believe that Premier will be well positioned to increase its market share as part of the Enlarged Group.

 

·    Potential for enhancements to Premier's performance and the Enlarged Group

The Board believes that there is potential for Premier's operating performance to be improved. The Board wish to expand the services provided by Premier across the UK.

 

The Board intends for Totally and Premier to continue to deliver their own individual business strategies, but also intends for the businesses to create cross referral services for patients and clients. The Board also plans for the businesses to share expertise and support each other in the process for tendering for NHS bids and for information technology to be shared within the Enlarged Group. The Board believes that there is also potential to reduce total overhead costs within the Enlarged Group and achieve efficiencies in areas such as administrative support, accounting, human resources, telephony and customer services functions.

 

·    Further acquisitions in the physical healthcare sector

The Board believes that they, along with the Enlarged Group's senior management, can facilitate Premier's growth through acquisitions. The Directors believe that the Acquisition will make potential further acquisition targets with services that complement physiotherapy more accessible to Totally. Additionally, the Directors believe that the issue of publicly traded shares as part of the consideration for future acquisitions is potentially more attractive than the issue of shares in an equivalent private company for which no trading facility exists.

 

·    New services and opportunities

Premier has developed a platform for physiotherapy triage, further details of which can be found below. The Directors believe that this triage platform concept could be adapted to provide triage services in healthcare service areas outside physiotherapy.

 

Information on Totally

Totally is a provider of innovative solutions to the healthcare sector, both to the NHS and private sector companies, to help patients better understand healthcare options, promote self-care and aid long term behavioural change which in turn impact on lifestyle and reliance on healthcare solutions. The Company achieves this principally through its wholly-owned subsidiary, Totally Health, which was established in 2011 specifically to provide innovative healthcare solutions.

 

In more recent years, Totally's major emphasis has been the provision of clinical health-coaching services which support people to better manage their health and build confidence to self-care, thus avoiding reliance on emergency health services. The Group has provided such services to the NHS since 2012.

 

As at February 2016, Totally currently generates revenue from five NHS contracts.

 

Totally currently has 14 employees in the UK including the Directors.

 

Clinical health-coaching

Clinical health-coaching is a personal and confidential service where a registered, experienced and qualified nurse provides one-to-one advice, usually via the telephone, to a patient diagnosed with at least one long term medical condition. The aim is to teach the patient how they can 'self-manage' their condition, to reduce the day-to-day impact that the condition has on their life. All advice is based on proven models and methodologies and is underpinned by the latest clinical evidence and research.

 

CCGs and other business-to-business routes to market

Totally provides clinical health-coaching services to NHS patients via a number of programmes that have been commissioned by CCGs. The Board believes that these programmes have demonstrated the significant and measurable positive impact that clinical health-coaching has on patients.

 

The Group's longest running programme is with Leicester City CCG, which started in 2012. In the first year of working with Leicester City CCG, the Group reduced the average unscheduled hospital admission rate per patient from 3.29 admissions for 2012/13 to 0.71 admissions for 2013/14. The Directors also consider the feedback from patients to have been highly supportive and illustrative of the Group's success in providing patient support to better understand healthcare options, promote self-care and long term behavioural change.

 

However, despite the demonstrable benefits, clinical health-coaching services are not widely available via the NHS. The Board still considers there to be significant potential in marketing its services to CCGs and other corporate stakeholders in the healthcare sector.

 

Discussions are also ongoing in respect of Totally potentially partnering with other organisations to deliver health coaching via different business-to-business routes, including pharmaceutical companies, personal medical insurers, domiciliary care providers and large employers.

 

In 2015, the Group secured its first working partnership with a national charity, The British Lung Foundation, to work with Somerset CCG to deliver its clinical health-coaching services to support patients with the long term condition of chronic obstructive pulmonary disease.

 

The following illustrative sequence represents the manner in which the Board wishes to implement the business-to-business service over 2016:

 

·    Expansion of additional business-to-business revenue streams in addition to the NHS;

·    Further new NHS contracts;

·    Development and launch of new business models for further diseases; and

·    Expansion to include more conditions for the business-to-business offering and the NHS.

 

Direct-to-consumer clinical health coaching services

The Group's significant experience of developing its NHS offering and operating clinical health-coaching programmes has led the Board to believe that there is significant market potential for a direct-to-consumer clinical health-coaching product, to which patients with long-term medical conditions can subscribe. The Directors view the implementation of the Group's direct-to-consumer service as being important to the Enlarged Group's business plan and success.

 

There are over 15 million people in the UK diagnosed with at least one long-term medical condition. The impact of these conditions on the day-to-day lives of these people can be enormous. Unplanned hospital admissions lead to increased time off work and cancelled social arrangements as well as placing a huge emotional burden on patients, their families and carers.

 

The NHS in England has estimated that £7 out of every £10 spent on health and social care is spent looking after people diagnosed with a long term condition. The prevalence of long term condition is increasing, partially in line with rises in obesity and associated conditions such as diabetes.

 

In 2015 the Company commissioned an independent market research report by Research Partnership, a healthcare market research specialist with extensive experience in chronic conditions including chronic obstructive pulmonary disease, diabetes, chronic heart disease, heart failure and asthma. Based on certain assumptions, the research conducted for Totally indicates that, amongst other things, there is a demand for this service and that the initial target market has an estimated value of over £200 million. The Company has used this market research to shape its direct-to-consumer clinical health-coaching product in order to develop a 'likely adopter' profile.

 

Individuals or their families can choose to subscribe to the service, which is intended to be a personal, professional, clinically focused and patient-centered service, tailored for each individual. The service is anticipated to be an entirely telephonic service, where each subscriber will have a named clinical health coach, who will arrange regular calls with them at the subscriber's convenience. All of Totally's clinical health coaches are qualified, registered nurses who have undertaken additional specialist health-coach training. At present it is anticipated that the optimum monthly user fee would be in the £20 - £40 range.

 

The Board believes that there are currently no other UK-based clinical health-coaching providers. The Directors are aware of some UK and US-based services, but they are delivered via health insurance-based models. Accordingly, the Directors believe that Totally is well placed in the UK market to leverage its exclusive expertise and knowhow to further develop its NHS service into a direct-to-consumer service to which patients with long term conditions can subscribe.

 

The first phase of the roll out of the direct-to-consumer service is intended to recognise the service strategy via the targeting of an initial 10,000 subscribers with diabetes and chronic obstructive pulmonary disease.

 

The Board plans to implement the direct-to-consumer service over 2016 as follows:

 

·    planned launch of direct-to-consumer clinical health coaching programme:

-    phase one: patient Group Launch for system testing; and

-    phase two: launch of diabetes and chronic obstructive pulmonary disease services;

·    expand to direct-to-consumer service to include coronary heart disease and chronic heart failure;

·    development and launch of new business models for further diseases; and

·    expansion to include more conditions for the direct-to-consumer service.

 

Whilst delivering the first 10,000 service users, the Group proposes to test, analyse and refine its communication approaches to ascertain the optimum marketing channels and the appropriate cost of acquisition of a user.

 

It is anticipated that the key operational steps in delivering the first phase of the direct-to-consumer service to market are as follows:

 

·    the scaling up of Totally's IT infrastructure, leveraging the Enlarged Group's current knowledge;

·    the creation of the support infrastructure for the service;

·    the implementation of the multi-channel digital marketing strategy; and

·    the recruitment of appropriate health-coach candidates.

 

Information on Premier

Premier was founded in 1997 by two of its current directors, Wayne Llewellyn and Raphael Leal. Since establishment, Premier has adapted from a provider of private physiotherapy and podiatry services to include corporate occupational services and is now a significant participant within the public sector, providing most areas of physical healthcare.

 

Premier was originally established to address the market for private physiotherapy in London. However, downward pressure on prices dictated by private medical insurers, together with a saturation of providers in this market, led the business to diversify and move gradually away from this area.

 

Premier provides a comprehensive range of treatments and advice for musculoskeletal injuries and conditions. Premier's clinical staff are either chartered physiotherapists, orthopaedic and rheumatology rehabilitation consultants or state registered podiatrists. The majority of Premier's revenue is derived from the provision of physiotherapy and podiatry to NHS patients.

 

Premier currently has c. 35 employees and 29 contractors in the UK including its directors.

 

Overview of Premier's key markets

The Board believes that the overall UK market for physical healthcare services is significant in size and expanding. Increased levels of hip or knee replacements should position physiotherapy as a key service for patient recovery and effective discharge from hospitals. Given the mobility constraints that accompany these procedures, it is likely that such services will need to be provided close to a patient's home, which is in line with the strategy of providing care in smaller NHS premises, or otherwise via community-based care.

 

In 2012/13, NHS spending in England on musculoskeletal system disorders was among the largest five programme budgeting disease categories, with the NHS in England spending £105 per head of population per annum on musculoskeletal system disorders.

 

The Directors are also aware of an increasing demand from the NHS for physiotherapy services which is linked to long term conditions, such as diabetes or heart disease.

 

Premier's services

 

·    NHS services

Premier's NHS services are typically provided under contract with a CCG. Premier has 17 active contracts with CCGs, under which its services are normally provided in a local setting via general practitioner's practices.

 

During the year ended 31 March 2015, Premier generated revenues of £2.05 million from NHS contracts, which accounted for approximately 74 per cent. of Premier's turnover for the year. For the six months ended 30 September 2015, Premier generated revenues of £1.12m from NHS contracts, which accounted for approximately 69 per cent. of Premier's turnover for that period.

 

As of February 2016, Premier had annualised contracted revenues of circa £1.77 million for the provision of physiotherapy and podiatry services through 31 NHS contracts with 14 CCGs, with the largest being the Wirral and West Berkshire CCGs.

 

Premier's NHS contracts have limited terms and there are a number of contracts in the first half of 2016, which are subject to renewal by the respective CCG. As at the date of the Admission Document, management have not had confirmation that these contracts will be renewed.

 

Premier currently has an invoice discounting facility in place which allows Premier to fund up to 90 per cent. of NHS related receivables, up to a limit of £250,000.

 

·    Non-NHS public sector services

Premier has contracts with Thames Valley Police, Gwent Police and Essex Police. As of February 2016, Premier had annualised contracted revenues of circa £67,000 for the provision of occupational musculoskeletal healthcare services including the provision of occupational health physiotherapy services and podiatry services, with the aim of keeping police officers active and returning to duty.

 

Premier also provides physiotherapy and podiatry services to offenders at various prison sites. Premier acts as a subcontractor to a lead contractor, which is typically a large outsourcing company, such as CareUK, G4S or Notts Healthcare.

 

For the year ended 31 March 2015 Premier generated revenues of £152,000 from prison-related contracts, which accounted for 5.5 per cent. of Premier's turnover. For the six months ended 30 September 2015, Premier generated revenues of £137,000 from prison-related contracts, which accounted for 8.4 per cent. of Premier's turnover.

 

Based on unaudited management information for the nine months ended 31 December 2015, the management of Premier estimate that the annualised revenues from its services in different sectors totalled £2,427,000. This was broken down as follows:

o £1,776,000 resulting from NHS contracts;

o £67,000 resulting from police service contracts;

o £355,000 resulting from prison service contracts; and

o £229,000 resulting from corporate services.

 

Based on the unaudited management information for the 10 months ended 31 January 2016 the total annualised revenue figure stated above shows no material change to the December 2015 management accounts.

 

As of February 2016, Premier had annualised contracted revenues of circa £355,000 for the provision of physiotherapy and podiatry services in UK prisons. Premier has been providing services for offenders for approximately two years and is now believed to be amongst the leading musculoskeletal healthcare providers for these services across the UK. Further new contracts will result in Premier servicing Wormwood Scrubs and the prison clusters within the Thames Valley region and Buckinghamshire, plus Staffordshire, Worcestershire and West Yorkshire.

 

Providing services in prisons is viewed by the Directors as relatively high margin work due to low costs with no rental costs and low head office and administration costs due to all bookings and referrals being required to be performed on-site for security reasons. The Premier management team expect to win new prison contracts which are expected to generate revenue during the first half of 2016.

 

Premier are currently operating mobility assessment services for Wakefield and Warrington Council, with Halifax Council joining through a Framework agreement via Warrington. Premier provides practitioners who assess individuals for disability 'blue badges' and concessionary travel passes, via a combination of face to face assessments or at desk assessments. These services represent a newer revenue stream, with Premier having generated revenue of approximately £9,000 for the six months ended 30 September 2015.

 

·    Corporate Services

 

Premier also provides services to corporate clients.

 

For the year ended 31 March 2015, Premier generated revenues of approximately £476,000 from its corporate services and private clinics, which accounted for 17.2 per cent. of Premier's turnover for that year. For the six months ended 30 September 2015, Premier generated revenues of approximately £332,000 from corporate services and private clinics, which accounted for 20.4 per cent. of Premier's turnover for that period.

 

Premier's corporate services include:

o occupational health and ergonomic services to corporate clients, such as display screen equipment assessments;

o post-injury return to work suitability assessments, such as work hardening programmes or functional Capacity Assessments;

o physiotherapy treatment and rehabilitation programmes;

o podiatry treatment; and

o sports massage services.

 

Premier also has an expanding network of clinics located in health and fitness centres, with a principal focus on London.

 

Premier's future business initiatives

 

Core ergonomics

Premier has developed an online display screen equipment self-assessment tool, known as 'Core Ergonomics'. This system has been designed so that assessments can be undertaken in 10-15 minutes. The Directors believe this to be a shorter assessment period than typical competitor offerings, thus leading to a greater level of compliance from underlying users. This system can provide reports containing recommended actions and advice, or training involving best practice diagrams and recommendations.

 

Online triage and patient treatment portal

Premier, in combination with Totally Health, is developing an online triage and patient treatment portal, which is aimed at providing Premier's underlying customers with cost savings. Premier's current processes rely heavily on input from physiotherapist consultations. However, a sizable proportion of patients, once seen by a physiotherapist, often do not require specialist treatment, leading to significant inefficiencies and time and cost overheads within the overall process.

 

The new online triage system will be designed to determine which patients actually require a face-to-face appointment with a physiotherapist. For patients who do not require an appointment, there will be an interactive portal to support these patients to self-treat and self-manage. Premier are currently testing this portal offline for validity and cost effectiveness.

 

Premier wishes to further develop its online triage and patient treatment portal and apply this to existing contracts within both the public and private sectors. Virtual systems for condition management are topical in the healthcare industry and the Board believes that this part of the market will be a significant focus for the future of musculoskeletal medicine.

 

Prevention of long term conditions through physical healthcare

Premier is able to assist in the treatment of long term conditions. The Directors believe that musculoskeletal treatment and exercise therapies are integral in dealing with a number of chronic conditions, as the physical fitness element is always central to both prevention and maintenance. The Directors believe that Premier's services can be provided to local authorities.

 

Diabetes represents an annual £9.8 billion spend for the NHS, which has led to a new drive to reduce the incidence of type II Diabetes (£8.8 billion of this annual spend) over the next 5 to 10 years with prevention programmes such as weight management and diabetes prevention contracts.

 

The 'Tier 2 Exercise on Referral and Weight Management Services' are a major part of the Government's Lifestyles Programme's drive to reduce obesity and diabetes.

 

Fall prevention programme

Premier plans to establish a fall prevention programme to be provided to the NHS. The overall goal of such a programme would be to seek to encourage participants to become or remain physically active and therefore improve bone health and decrease the risk of falls. This would be aimed at patients in the 50-65 year age group, and would deliver multiple categories of exercise, including strategies to increase self confidence in making decisions and behaviour change.

 

Premier's information systems

 

Premier has made investment in its client infrastructure and systems. A significant number of processes need to be undertaken to invoice the NHS and ensure prompt payment and Premier's information systems have been developed over time, taking Premier's long-standing experience of interacting with the NHS into account.

 

Premier has recently installed 'Qinec', which is an integrated referral management, invoicing and electronic medical notes system that links into all public and private contracts requirements. Qinec is a bespoke system that has been tailored specifically for Premier. All Patient Identifiable Data can be securely stored within Qinec, which can then be filtered into bespoke reports for the relevant information required by individual contracts.

 

Strategy of the Enlarged Group

The Directors believe that there is a significant opportunity for Totally to build and develop a high quality diversified 'out of hospital' UK healthcare services group, through a combination of organic and acquisition based growth. The Board believes that this is the most cost-effective way for the Enlarged Group to obtain critical mass, in order to allow it to compete with larger market participants. For example, the Directors believe that there is significant scope to expand the number of clinical conditions covered within its services from Totally Health to the NHS and private healthcare providers, direct-to-consumer service and services on shared decision making.

 

Following the acquisition of Premier, the Enlarged Group intends to expand services provided by Premier across the UK and worldwide where similar prevalence figures exist to those within the UK. The Enlarged Group will also target acquisitions of appropriate health related companies, to add to the Enlarged Group's portfolio of services and ultimately provide integrated healthcare solutions for all low technology, high volume out of hospital care.

 

The Directors believe that such potential acquisition targets will add to the depth of service offered by Totally to help it achieve its goal of becoming one of the leading providers of out of hospital care within the UK.

 

The Enlarged Group, through targeted acquisitions, intends to design and deliver new business models across the Enlarged Group to expand its businesses and reduce overhead costs, using in-house expertise to support further growth and expansion.

 

Current Trading and Prospects

 

Totally

On 23 July 2015, Totally announced its interim results for the six months ended 30 June 2015. During this period the Group made an operating loss of £71,000 (2014 H1: operating loss £272,000) and an EBITDA loss of £69,000 (2014 H1: EBITDA loss £267,000) on Group turnover of £418,000 (2014 H1: £196,000). During the first quarter of 2015, the Group achieved its target of making a positive EBITDA. However, as contracts entered into the evaluation phase, EBITDA reduced in the second quarter of 2015, with the six months to 30 June 2015 ending with an EBITDA loss.

 

The unaudited management accounts of Totally for the six months ended 31 December 2015 show that the Group traded in line with the Board's expectations. During the period, the Group has been funded by a new capital injection which was made in September 2015.

 

Totally currently generates its revenue from contracts with five NHS trusts. NHS contracts are typically for defined time periods and Totally has a number of contracts which are up for renewal during the first half of 2016. The Board believes that these contracts have delivered positive results for both patients and the NHS and the Company is in discussions with NHS commissioners regarding the renewal or extension of these contracts.

 

The Group's current pipeline includes detailed discussions with approximately 20 CCGs for the provision of health coaching based services for long-term medical condition management. Discussions are also ongoing in respect of Totally potentially partnering with other organisations to deliver health coaching via different business-to-business routes, including pharmaceutical companies, personal medical insurers, domiciliary care providers and large employers.

 

The Board is also in discussions with potential strategic partners for the development of its business-to-consumer offering. These partnerships will help develop a compelling and integrated solution to manage long term conditions. It is envisaged that these integrated models will not only benefit the direct-to-consumer market but also increase the efficacy of the Group's current suite of products for business-to-business solutions. During 2015, the Group commenced its investment in its business to consumer offering and, as previously announced, this will impact on the results for the year ended 31 December 2015.

 

Premier Physical Healthcare Limited

In the last quarter of 2015, the unaudited management accounts for the three months ended 31 December 2015 show that during this period Premier made an operating loss of £47,000 (six months ended 30 September 2015: operating profit £105,000) on turnover of £643,000 (six months ended 30 September 2015: £1,630,000). The loss for the period has been funded by cash reserves within the Group.

 

Monthly revenues have fallen since peaking in June 2015 at £308,000 per month due to the loss of an NHS contract in Southampton where Premier operated from 26 clinics. The contract was discontinued and was not lost to a competitor. The Premier management team expect this to be replaced by new prison contracts which are expected to generate revenue during the first half of 2016.

 

Summary Financial Information

 

Totally

The table below sets out Totally's summary financial information for the last three financial years ended 31 December 2014 and unaudited interim financial information for the six months ended 30 June 2015. The historical information was prepared under IFRS.

 

	Year ended 31 December 2012 £'000	Year ended 31 December 2013 £'000	Year ended 31 December 2014 £'000	Unaudited 6 months ended 30 June 2015 £'000	Unaudited 6 months ended 30 June 2014 £'000
Continuing operations
Revenue	769	878	609	418	196
Cost of sales	(607)	(698)	(180)	(91)	(80)
Gross profit	162	180	429	327	116
Administrative expenses	(741)	(871)	(855)	(396)	(383)
Loss before interest, tax, depreciation and amortisation	(579)	(691)	(426)	(69)	(267)
Depreciation and amortisation	(9)	(9)	(11)	(2)	(5)
Loss from operations	(588)	(700)	(437)	(71)	(272)
Share issue costs	(54)	(29)	-	-	-
Finance costs	(37)	(2)	(1)	(1)	-
Loss before taxation	(679)	(731)	(438)	(72)	(272)
Income tax	-	-	-	-	-
Loss from the year from continuing operations	(679)	(731)	(438)	(72)	(272)
Profit/(loss) from discontinued operations	91	(200)	96	-	86
Loss attributable to the equity shareholders of the parent company	(588)	(931)	(342)	(72)	(186)

 

 

Premier Physical Healthcare Limited

The table below sets out Premier's summary financial information for the last three financial years ended 31 March 2015 and interim financial information for the six months ended 30 September 2015. The historical information was prepared under IFRS.

 

	Year ended 31 March 2013 £'000	Year ended 31 March 2014 £'000	Year ended 31 March 2015 £'000	Six months ended 30 September 2015 £'000
Revenue	1,289	2,030	2,767	1,630
Cost of goods	(878)	(1,275)	(1,762)	(1,045)
Gross profit	411	755	1,005	585
Other operating income	18	-	-	-
Administrative expenses	(426)	(698)	(937)	(480)
Profit before interest, tax and depreciation	3	57	68	105
Depreciation	(9)	(2)	(1)	(1)
(Loss)/profit from operations	(6)	55	67	104
Finance costs	(4)	(7)	(5)	(1)
(Loss)/profit before taxation	(10)	48	62	103
Taxation	-	(10)	(9)	(22)
(Loss)/profit and total comprehensive income/(expense) for the period	(10)	38	53	81

 

 

Directors and Senior Managers

Brief biographical details of the Directors are set out below:

 

Robert (Bob) Holt OBE, Chairman, aged 61

Bob Holt has a background in developing support service businesses. He has operated in the service sector since 1981, initially in a financial capacity then moving into general management. In 1996 Bob bought a controlling interest in Mears Group PLC, the support services group focused on social housing and domiciliary care services. Bob was instrumental in Mears' growth and oversaw the Company's flotation on AIM and subsequent listing on the Main Market of the London Stock Exchange. Bob is Chairman of Mears. He is also Non-Executive Chairman of energy procurement consultant Inspired Energy plc, Non-Executive Chairman of independent logistics and parcel distribution company DX (Group) plc and a director of a number of other businesses, including Seneca Partners Limited, an independent investment management and corporate advisory business for high net worth individuals and small and medium-sized enterprises.

 

Bob has been Chairman of Totally since September 2015.

 

Wendy Jayne Lawrence, Chief Executive Officer, aged 54

Wendy Lawrence has worked with the NHS for over 20 years, with the last 12 years being director level posts. She has a wealth of experience having previously worked for BUPA Health Dialog, leading the Client Delivery Team on a range of projects, from complex Framework for External Support for Commissioners deliveries through to individual Primary Care Trust specific contracts across the UK. Previously, Wendy ran her own company, working closely with numerous NHS and social care organisations across England, Wales and Scotland supporting delivery of many complex change agendas.

 

During Wendy's NHS career she was Chief Executive of three large Primary Care Trusts. Wendy led a number of projects on behalf of the Strategic Health Authority including the establishment of new commissioning models for ambulance services and NHS Direct, as well as contributions to national projects including Reforms of Urgent Care Provision and Taking Healthcare to the Patient.

 

Wendy has been Chief Executive Officer of Totally since May 2013.

 

Donald (Don) Ahelan Baladasan, Finance Director, aged 42

Don Baladasan is a Chartered Management Accountant with over 18 years of international experience including finance function formation, mergers and acquisitions, raising debt and equity for private and public companies and delivering on operational plans. Having been trained at the Financial Times, Don went on to found Mataxis Ltd, a consultancy that provides outsourced FD services to SMEs and start-ups. Mataxis works with a wide range of clients covering many different sectors which include fund management, property, technology, healthcare and telecoms. He has extensive experience of working within companies with venture capital, private equity and family office funding.

 

Prior to founding Mataxis, Don was Head of Accounting Development at Stemcor, at the time the UK's third largest private company and the world's largest independent steel trader with a turnover of £6bn. His main responsibility was evaluating the next generation finance system and executing and integrating a global "buy and build" strategy from a finance strategy perspective. Don has also worked as a regional Financial Controller for BUPA Hospitals and Financial Controller of FTMarketwatch.com.

 

Don initially studied Medicine at Guy's and St Thomas' hospital before completing a BSc in Economics at CASS Business School. Don has been Finance Director of Totally since November 2012 and will be Finance Director of the Enlarged Group from Completion. Don is also a non-executive director of Premier, having been appointed to this position in October 2013.

 

Anthony (Tony) Rhys Bourne, Non-Executive Director, aged 62

Tony Bourne is currently a non-executive director of Barchester, one of the UK's largest operators of residential care homes and Spire Healthcare Group plc, one of the largest private healthcare groups in the UK, a London Stock Exchange-listed company and a constituent of the FTSE 250 Index. Tony is also Chairman of Chelsea and Westminster Health Charity, one of the largest NHS charities. He was previously Chief Executive of the British Medical Association from the beginning of 2005 until late 2013.

 

Tony was in investment banking for over 25 years including as a partner at Hawkpoint and as global head of the equities division and a member of the managing board of Paribas. Tony has also previously served as a non-executive director of Southern Housing Group from 2004 to 2013 and Scope, which focuses on cerebral palsy and is one of the UK's largest charities.

 

Tony has been a non-executive director of Totally since October 2015.

 

Michael (Mike) Greig Rogers, Non-Executive Director, aged 73

Michael Rogers has over 30 years' experience in healthcare-services and care-services provision. He is currently a non-executive director of Mears Group PLC ("Mears"), the provider of support services to the social housing and care sectors in the UK, which is listed on the main market of the London Stock Exchange. Michael is also a health and social care adviser to Morgan Stanley Private Equity and a member of the investment advisory board of private equity provider Bestport Ventures LLP.

 

In 1976, Michael was appointed as managing director of the British Nursing Association. In 1988 he became the chief executive of Nestor-BNA plc when the group floated on the main market of the London Stock Exchange. Michael remained here until 1996, prior to founding Careforce Group plc in 1999 which floated on AIM in 2004. Careforce Group plc completed a number of acquisitions to become one of the UK's leading domiciliary care providers, prior to its acquisition by Mears in 2007, following which Michael joined the Mears board.

 

Mike has been a non-executive director of Totally since December 2015.

 

Senior Management of the Group

Brief biographical details of the Group's senior managers, who are employees of or contractors to Totally Health, are set out below:

 

Emma Jane Roberts, Chief Operating Officer

Emma Jane brings over 20 years' experience in successfully delivering strategic and operational management and consultancy services across all areas of the healthcare sector. Since January 2012, Emma Jane has worked with Leicester City CCG, which plans and manages most healthcare services for people living in Leicester and is an existing client of Totally Health. Her roles at Leicester City CCG have varied from Head of Implementation to Deputy Director of Strategy and Implementation, where she has a consistent track record of delivering a complex range of primary, community, urgent and planned care. She also delivered transformational service developments which have been recognised nationally and won several awards. In addition to this, Emma Jane had past successes in leading complex change management programmes and, prior to Leicester City CCG, was Managing Director at AR Associate UK Ltd Completed Contracts.

 

Emma Jane has an MSc in Health Care Management from the University of Birmingham and a BSc. (Hons.) in Industrial Management from Nottingham Trent University as well as several other qualifications including a Post Graduate Diploma in Health Care Management.

 

Emma Jane has been Chief Operating Officer since November 2015.

 

Dr Steven Laitner, Clinical Strategy Director

Steven is a practicing GP and has over 20 years of clinical experience, including general medicine, public health and general practice. Steven held the position of Associate Medical Director for NHS Midlands and East and National Clinical Lead for Shared Decision Making at the Department of Health between 2008 and 2013. Previously, Steven spent five years as a public health consultant and clinical advisor to the Department of Health between 2003 and 2008 and six years as a Specialist Registrar in Public Health for West Hertfordshire Health Authority, Brent and Harrow Health Authority, Hertsmere Primary Care Trust and The National Screening Committee, between 1997 to 2003.

 

Steven has been Clinical Strategy Director since November 2015.

 

Senior Management of Premier

Brief biographical details of the senior managers of Premier are set out below:

 

Wayne Llewellyn, Chief Executive Officer and Clinical Director of Premier, aged 53

Wayne entered the private physiotherapy market after qualifying in 1989 with a second degree in Physiotherapy following the completion of an earlier Sport Science degree at Brighton Polytechnic in 1984. He studied Physiotherapy at Guys Hospital Medical School.

 

Following a short spell of private practice he moved back to the City in 1991 to work in fitness centre based clinics both privately and in the corporate sector. Over the next seven years he developed his knowledge and skills of clinical physiotherapy and Corporate Healthcare and founded Premier with Raphael Leal in 1997. Wayne's understanding of the Health and Fitness industry within business has helped develop a team of physiotherapists for the NHS, private practice and occupational health over the past 17 years.

 

Wayne has been a director of Premier since 1997.

 

Raphael Leal, Chief Financial Officer of Premier, aged 47

Raphael managed and developed the largest in-house Health and Fitness centre for the Royal Mail in central London for three years following the completion of a Mathematics and Sports Science degree in 1991. Raphael studied at Christ Church College. Post qualification and prior to co-founding Premier he worked for a corporate fitness company where he liaised closely with Wayne Llewellyn (who was then the in-house physiotherapist) in setting up the on-site physiotherapy service.

 

Raphael has been a director of Premier since 1997.

 

Principal terms of the Acquisition

The Company has conditionally agreed to acquire the entire issued share capital of Premier for £6.75 million but subject to adjustment based on the financial performance of Premier.

 

The consideration for the Acquisition

In summary the terms of the consideration payable under the Acquisition Agreement are as follows:

a)   an initial payment of £371,974 (the "Y1 Initial Payment"), which is equal to seven times the EBITDA of Premier for the period commencing on 1 April 2015 and ending 31 January 2016 and will be payable to the Vendors in cash upon Admission;

b)   a second payment (the "Y1 Payment"), which will be equal to seven times the EBITDA of Premier for the year ended 31 March 2016 (less the Y1 Initial Payment);

c)   a third payment, which will be equal to the EBITDA of Premier for the year ended 31 March 2017 (less the EBITDA referred to in paragraph (b)) multiplied by seven;

d)   a fourth payment, which will be equal to the EBITDA of Premier for the year ended 31 March 2018 (less the aggregate EBITDA referred to in paragraphs (b) and (c)) multiplied by seven; and

e)   a final payment of £6.75 million less the aggregate payments made pursuant to paragraphs (a) to (d) above.

 

The Vendors have warranted that the EBITDA for at least one of the years ending 31 March 2016, 2017, 2018 or 2019 will be not less than £964,285.71. If this warranty is breached the Vendors will pay the Company liquidated damages so that the purchase price of £6.75 million is effectively reduced either to the amount of Premier's EBITDA for the year ended 31 March 2019 multiplied by seven (less the aggregate payments made pursuant to paragraphs (a) to (d) above) or, if the EBITDA for the year ended 31 March 2019 is less than any of the previous years, to the amount of the aggregate payments made pursuant to paragraphs (a) to (d) above.

 

The aggregate payments under paragraphs (a) to (e) inclusive will not exceed £6.75 million.

 

The Y1 Initial Payment and Y1 Payment will be settled in cash with the remainder of the payments being settled as to 80 per cent. in cash (or, at the election of the Vendors, loan notes) and 20 per cent. in new Ordinary Shares. Each of the Vendors has agreed to be bound by certain orderly market restrictions in respect of their interests in any new Ordinary Shares received as consideration for a period of 12 months from the allotment of such new Ordinary Shares.

 

Any new Ordinary Shares issued to the Vendors in the future pursuant to the Consideration will be issued at the average mid-market closing price of the Ordinary Shares over the five business days prior to the date of allotment. Any loan notes issued by the Company will be redeemed by the Company not earlier than six months nor later than 24 months after their date of issue.

 

The Board view the structuring of the Acquisition's consideration on a deferred basis as being optimal for incentivising the Vendors to remain committed to Premier in the medium-term.

 

Summary of the Subscription

The Company is proposing to raise £6.20 million (approximately £5.87 million net of expenses) by the conditional subscription of 10,000,000 Subscription Shares pursuant to the Subscription at the Subscription Price. The Subscription Shares will represent approximately 50.01 per cent. of the Enlarged Share Capital on Admission.

 

The Subscription Shares will, on Admission, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive dividends and other distributions declared, made or paid in respect of the Ordinary Shares.

 

The Subscription, which is not underwritten or guaranteed, is conditional, inter alia, upon the passing of the Resolutions and Admission. The Subscription is being made on a non pre-emptive basis as the time delay and costs associated with a pre-emptive offer are considered by the Directors to be excessive for the Company's requirements.

 

Directors' participation in the Subscription and Related Party Transaction

All of the Directors are participating in the Subscription on identical terms to the other Subscribers. The Directors have agreed to subscribe, in aggregate, for 457,000 Subscription Shares at a cost of approximately £283,340.

 

Details of the Directors participation in the Subscription are as follows:

 

	Current Holding			At Admission
	Number of Ordinary Shares held	% of Ordinary Shares in issue	Number of Subscription Shares	Number of Ordinary Shares held	% of Ordinary Shares in issue
Bob Holt	600,000	6.01%	200,000	800,000	4.00%
Wendy Lawrence	16,666	0.17%	40,000	56,666	0.28%
Don Baladasan	67,780	0.68%	40,000	107,780	0.54%
Tony Bourne	0	0.00%	161,000	161,000	0.81%
Mike Rogers	0	0.00%	16,000	16,000	0.08%
	684,446	6.85%	457,000	1,141,446	5.71%

 

 

The Directors of Totally are treated as related parties of the Company under the AIM Rules. The Directors' participation in the Subscription is therefore treated as a related party transaction pursuant to Rule 13 of the AIM Rules. Since all of the Directors are participating in the Subscription, there are no directors who are independent of the transaction. The Company's nominated adviser, Allenby Capital, considers that the terms of the Directors' participation in the Subscription are fair and reasonable insofar as the Company's shareholders are concerned.

 

Use of Proceeds

The net proceeds of the Subscription are expected to be approximately £5.87 million and are currently intended to be applied as follows:

 

-    to satisfy elements of the cash consideration payable pursuant to the Acquisition;

-    to provide further funding for the launch of the Company's direct-to-consumer clinical health-coaching product; and

-    for working capital purposes for the Enlarged Group.

 

Admission, settlement & dealing

An application will be made for the Company's Enlarged Share Capital to be admitted to trading on AIM. It is expected that Admission will become effective and dealings in the Company's Ordinary Shares will commence on 1 April 2016.

 

The Company's Ordinary Shares are eligible for CREST settlement and settlement of transactions in the Ordinary Shares may take place within the CREST system if a Shareholder so wishes. CREST is a voluntary system and Shareholders who wish to receive and retain share certificates are able to do so. CREST is a paperless settlement system enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by a written instrument in accordance with the CREST Regulations. For more information concerning CREST, Shareholders should contact their brokers or Euroclear at 33 Canon Street, London EC4M 5SB, United Kingdom or by telephone on +44 (0)207 849 0000.

 

The Ordinary Shares have the ISIN number GB00BYM1JJ00. The Ordinary Shares are not dealt on any other recognised investment exchange and no application has been or is being made for the Ordinary Shares to be admitted to any other such exchange.

 

The Takeover Code and takeover provisions

The Takeover Code is issued and administered by the Takeover Panel. The Takeover Code applies to all takeovers and merger transactions, however effected, where the offeree company is, inter alia, a listed or unlisted public company resident in the UK, the Channel Islands or the Isle of Man. The Company is such a company and, therefore, Shareholders are entitled to the protection afforded by the Takeover Code.

 

Under Rule 9 of the Takeover Code, where any person acquires, whether by a series of transactions over a period of time or otherwise, an interest (as defined in the Takeover Code) in shares which, taken together with shares in which he is already interested or in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, that person is normally required to make a general offer to all the remaining shareholders to acquire their shares.

 

Similarly, Rule 9 of the Takeover Code also provides that when any person, together with persons acting in concert with him, is interested in shares which, in aggregate, carry more than 30 per cent. of the voting rights of such company, but does not hold shares carrying 50 per cent. or more of such voting rights, a general offer will normally be required if any further interest in shares is acquired by any such person.

 

Under the Takeover Code, a concert party arises when persons, pursuant to an agreement or understanding (whether formal or informal), co-operate to obtain or consolidate control of a company or to frustrate the successful outcome of an offer for that company. Under the Takeover Code, "control" means an interest, or aggregate interest, in shares carrying 30 per cent. or more of the voting rights of a company, irrespective of whether the interest or interests give de facto control.

 

If a "takeover offer" (as defined in section 974 of the Act) is made and the offeror, by virtue of acceptances of such offer, acquires or contracts to acquire not less than nine tenths in value of the Ordinary Shares to which the takeover offer relates, then the offeror has the right to acquire compulsorily the remaining Ordinary Shares of the minority Shareholders for the offer price within a fixed period. In certain circumstances, the minority Shareholders also have the right to require the offeror to buy their Ordinary Shares at the offer price within a fixed period.

 

Dividend policy

The Directors believe that the Enlarged Group will continue to have the potential to be cash generative in the future and recognise the importance of dividend income to Shareholders. Having regard to the requirement for capital expenditure to achieve the strategic objectives of the Enlarged Group, the Directors intend to pursue a progressive dividend policy that will take account of the Enlarged Group's profitability, underlying growth and availability of cash and distributable reserves, while maintaining an appropriate level of dividend cover.

 

The Directors may amend the dividend policy of the Company from time to time and the above statement regarding the dividend policy should not be construed as any form of profit or dividend forecast.

 

Taxation

Information regarding United Kingdom taxation is set out in the Admission Document. These details are, however, intended only as a general guide to the current tax position under UK taxation law. Shareholders who are in doubt as to their tax position or who are subject to tax in jurisdictions other than the UK are strongly advised to consult their own independent financial adviser immediately.

 

HMRC have confirmed that the Ordinary Shares issued by the Company to raise funds which will be utilised by Totally Health, the Company's wholly-owned subsidiary, in the expansion of Totally Health's direct-to-consumer clinical health coaching programme and for general working capital purposes in relation to the direct-to-consumer service, will be eligible for EIS and VCT relief. The total amount which can be raised for this purpose, and on which EIS or VCT relief can be claimed, is limited to £4.3 million, as there is an annual limit which would otherwise be breached.

 

No assurance can be given as to whether any Shareholders will be eligible to claim EIS or VCT relief and any Shareholders who are in doubt as to their tax position should consult their own tax adviser.

 

Corporate Governance

The Corporate Governance Code, which was published in September 2012, applies only to companies on the Official List and not to companies admitted to AIM. However, the Directors recognise the importance of sound corporate governance and intend that the Enlarged Group will comply with the provisions of the Corporate Governance Code for Small and Mid-Size Quoted Companies ("QCA Code"), as published by the Quoted Companies Alliance, insofar as they are appropriate given the Company's size, nature and stage of development. As the Company grows, the Directors intend that it should develop policies and procedures which reflect the Corporate Governance Code, so far as it is practicable taking into account the size and nature of the Company.

 

The Board is responsible for formulating, reviewing and approving the Group's strategy, budgets and corporate actions. The Company holds Board meetings at least four times each financial year and at other times as and when required. The Company has established properly constituted audit, remuneration and nomination committees of the Board with formally delegated duties and responsibilities.

 

Audit committee

The audit committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Enlarged Group is properly measured and reported on. It will receive and review reports from the Enlarged Group's management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Enlarged Group. The audit committee will meet not less than four times in each financial year and will have unrestricted access to the Enlarged Group's auditors. Members of the audit committee are Mike Rogers, who will act as chairman of the committee, and Bob Holt.

 

Remuneration committee

The remuneration committee will review the performance of the executive Directors and make recommendations to the Board on matters relating to their remuneration and terms of employment. It will also make recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any share option scheme or equity incentive scheme in operation from time to time. The remuneration committee will meet as and when necessary to assess the suitability of candidates proposed for appointment by the Board. In exercising this role, the Directors shall have regard to the recommendations put forward in the QCA Code. Members of the remuneration committee are Tony Bourne, who will act as chairman of the committee, and Bob Holt.

 

Nomination committee

The Company has established a nomination committee. The nomination committee will meet not less than once a year and will: (i) identify individuals qualified to become Board members and select the director nominees for election at general meetings of the Shareholders or for appointment to fill vacancies; (ii) determine director nominees for each committee of the Board; and (iii) consider the appropriate composition of the Board and its committees. In addition, each Director's performance will be reviewed annually by the chairman of the Nomination Committee and the chairmanship of the Nomination Committee will be assessed by the remaining directors. Members of the nomination committee are Don Baladasan, who will act as chairman of the committee, and Bob Holt.

 

Share dealing code

The Company has adopted a new share dealing code for directors' dealings in securities of the Company which is appropriate for a company quoted on AIM. The Board will comply with Rule 21 of the AIM Rules for Companies relating to directors' dealings and will take proper and reasonable steps to ensure compliance by the Group's "applicable employees" (as defined in the AIM Rules for Companies).

 

General Meeting

A notice convening a general meeting of the Company, to be held at 10.00 a.m. on 31 March 2016 at Lighterman House, 26-36 Wharfdale Road, London N1 9RY, will been sent to Shareholders with the Admission Document. At the General Meeting, the following resolutions will be proposed:

 

a)   to approve the Acquisition;

b)   to authorise the Directors' to: (i) allot Ordinary Shares in connection with the Subscription; (ii) the allotment of up to 2,057,500 new Ordinary Shares pursuant to the terms of the Acquisition; and (iii) allot Ordinary Shares up to a maximum nominal value of £799,798; and

c)   to authorise the Directors to allot Ordinary Shares for cash otherwise than on a pro rata basis to shareholders: (i) in connection with the Subscription; and (ii) up to a maximum nominal value of £399,899.

 

The resolutions in (a) and (b) will be proposed as ordinary resolutions and the resolution in (c) will be proposed as a special resolution. To be passed, the resolutions in (a) and (b) require a majority of not less than 50 per cent. of the votes cast at the General Meeting, in person or by proxy, and the resolution referred to in (c) will require a majority of not less than 75 per cent. of the Shareholders voting in person or by proxy in favour of the relevant Resolutions. The resolutions are inter-conditional and so, if one of them is not passed at the General Meeting, none of them will be deemed to have been passed.

 

The Independent Directors recommend that Shareholders vote in favour of the Resolutions, as the Directors intend to do so that the Subscription, the Acquisition and Admission can proceed.

 

Action to be taken / recommendation

The Independent Directors consider that the Resolutions to be proposed at the General Meeting of the Company are in the best interests of the Company and its Shareholders as a whole. The Independent Directors recommend that Shareholders vote in favour of those Resolutions. All of the Directors intend to vote in favour of those Resolutions in respect of the 654,446 Ordinary Shares beneficially owned by them in aggregate.

 

A Form of Proxy has been sent to Existing Shareholders for use at the GM. Whether or not Shareholders intend to be present at the GM, they are requested to complete, sign and return the Form of Proxy to the Company's registrar, Share Registrars Limited, Proxy Department, Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL as soon as possible but in any event so as to arrive not less than 48 hours before the time appointed for the General Meeting. The completion and return of a Form of Proxy will not preclude a Shareholder from attending the GM and voting in person should he subsequently wish to do so.

 

 

 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 

Publication and dispatch of this document	15 March 2016
Latest time and date for receipt of Forms of Proxy	10.00 a.m. on 29 March 2016
Time and date of General Meeting	10.00 a.m. on 31 March 2016
Completion of the Proposals, Admission to trading on AIM effective and commencement of dealings in the Enlarged Share Capital on AIM	1 April 2016
CREST accounts credited with Subscription Shares (where applicable)*	1 April 2016
Despatch of definitive share certificates for Subscription Shares being held in certificated form (where applicable)*	By 4 April 2016

 

*Assuming that the Resolutions are passed at the General Meeting and Admission

 

 

 

ADMISSION AND SUBSCRIPTION STATISTICS

 

Number of Ordinary Shares in issue at the date of this document	9,994,953
Number of Deferred Shares	228,402,392
Number of Subscription Shares	10,000,000
Enlarged Share Capital on Admission*	19,994,953
Percentage of Enlarged Share Capital represented by the Subscription Shares	50.01%
Subscription Price	62p
Gross proceeds of the Subscription	£6.20 million
Estimated net proceeds of the Subscription	£5.87 million
Market capitalisation of the Company at the Subscription Price on Admission	£12.40 million
AIM symbol	TLY
ISIN	GB00BYM1JJ00
SEDOL	BYM1JJ0
Website address	http://www.totallyplc.com/

 

*excluding the issue of any Ordinary Shares as part of the Consideration

 

Notes:

 

1. All of the above timings refer to London time unless otherwise stated

 

2. The above statistics assume the passing at the General Meeting of the Resolutions and Admission.

 

3. Some of the times and dates above are indication only and if any of the details contained in the timetable above should change, the revised times and dates will be notified to Shareholders by means of an announcement through a Regulatory Information Service.

 

4. Events listed in the above timetable following the General Meeting are conditional on the passing at the General Meeting of the Resolutions.

 

 

 

DEFINITIONS

 

Except where the context otherwise requires, the following definitions shall apply throughout this announcement, as they do throughout the Admission Document:

 

"Acquisition"	the proposed acquisition by the Company of the entire issued share capital of Premier Physical Healthcare Limited pursuant to the terms of the Acquisition Agreement;
"Acquisition Agreement"	the conditional agreement dated 14 March 2016 made between (i) the Company and (ii) the Vendors, further details of which are set out in paragraph 10 of Part VI of the Admission Document;
"Act"	the Companies Act 2006 (as amended from time to time);
"acting in concert"	shall bear the meaning ascribed thereto in the Takeover Code;
"Admission"	the admission of the Enlarged Share Capital to trading on AIM following completion of the Acquisition and the Subscription and such admission becoming effective in accordance with the AIM Rules for Companies;
"Admission Agreement"	the conditional agreement dated 14 March 2016 between (1) the Company (2) the Directors and (3) Allenby Capital relating to Admission, further details of which are set out in paragraph 10 of Part VI of the Admission Document;
"Admission Document" or "Document"	the admission document;
"AIM"	AIM, a market operated by the London Stock Exchange;
"AIM Rules"	together, the AIM Rules for Companies and the AIM Rules for Nominated Advisers;
"AIM Rules for Companies"	the rules which set out the obligations and responsibilities in relation to companies whose shares are admitted to AIM as published and amended from time to time by the London Stock Exchange;
"AIM Rules for Nominated Advisers"	the rules of the London Stock Exchange that set out the eligibility obligations and certain disciplinary matters in relation to nominated advisers as published and amended by the London Stock Exchange from time to time;
"Allenby Capital"	Allenby Capital Limited, the Company's nominated adviser and joint broker, incorporated in England and Wales with company number 06706681, whose registered office address is 3 St. Helen's Place, London EC3A 6AB, and which is authorised and regulated by the FCA;
"Applicable Employees"	any employee of the Company or its subsidiaries who (together with that employee's family) holds any legal or beneficial interest in 0.5 per cent. or more of the Enlarged Share Capital as more particularly defined in the AIM Rules;
"Articles of Association" or "Articles"	the articles of association of the Company, a summary of which is set out in paragraph 5 of Part VI of the Admission Document;
"Business Day"	any day (other than a Saturday or Sunday) on which commercial banks are open for general business in London, England;
"Certificated" or "in certificated form"	not in uncertificated form (that is, not in CREST);
"Completion"	completion of the Acquisition;
"Company" or "Totally"	Totally plc, incorporated and registered in England and Wales with company number 03870101, whose registered office address is Lighterman House, 26-36 Wharfdale Road, London N1 9RY;
"Consideration"	a maximum of £6.75m payable to the Vendors in respect of the Acquisition, further details of which are set out above and in paragraph 9 of Part I of the Admission Document;
"CREST"	the relevant system (as defined in the CREST Regulations) in accordance with which securities may be held or transferred in uncertificated form, and in respect of which Euroclear is the Operator (as defined in the CREST Regulations);
"CREST Regulations"	the Uncertificated Securities Regulations 2001 (SI 2001/3755) as amended from time to time, and any applicable rules made under those regulations;
"Deferred Shares"	the 228,402,392 deferred shares of 0.9 pence each in the capital of the Company;
"Directors" or "Board"	the directors of the Company at the date of the Admission Document, including any duly authorised committee of the board of directors of the Company and "Director" is to be construed accordingly;
"Disclosure and Transparency Rules" or "DTR"	the Disclosure and Transparency Rules (in accordance with Section 73A(3) of FSMA) being the rules published by the FCA from time to time relating to the disclosure of information in respect of financial instruments which have been admitted to trading on a regulated market or for which a request for admission to trading on such market has been made;
"EBITDA"	earnings before interest, tax, depreciation and amortisation for the relevant period;
"EIS"	the Enterprise Investment Scheme, a scheme created by HMRC to provide certain tax reliefs to investors in smaller UK companies;
"Enlarged Group"	the Group following completion of the Acquisition;
"Enlarged Share Capital"	the issued ordinary share capital of the Company following Completion comprising: (i) the Existing Ordinary Shares and (ii) the Subscription Shares;
"Euroclear"	Euroclear UK & Ireland Limited, a company incorporated in England and Wales and the operator of CREST;
"Existing Ordinary Shares" or "Existing Share Capital"	the 9,994,953 Ordinary Shares in issue at today's date all of which are fully paid;
"FCA"	the United Kingdom Financial Conduct Authority, the statutory regulator under FSMA responsible for the regulation of the United Kingdom financial services industry;
"FSMA"	the Financial Services and Markets Act 2000 (as amended);
"Form of Proxy"	the form of proxy for use by Shareholders at the General Meeting;
"General Meeting" or "GM"	the general meeting of the Company to be held at Lighterman House, 26-36 Wharfdale Road, London N1 9RY on 31 March 2016 at 10.00 a.m. and any adjournments thereof to be held for the purpose of considering and, if thought fit, passing the Resolutions;
"Group"	the Company and/or its current subsidiaries;
"HMRC"	Her Majesty's Revenue and Customs of the UK;
"IFRS"	International Financial Reporting Standards issued by the International Accounting Standards Board;
"Independent Directors"	the Directors who are considered independent in respect of the Acquisition as at the date of the Admission Document, being all of the Directors with the exception of Mr Don Baladasan who is also a director of Premier;
"ISIN"	International Securities Identification Number, the existing ISIN of the Company being GB00BYM1JJ00;
"Issued Share Capital"	the entire issued ordinary share capital of the Company from time to time;
"London Stock Exchange" or "LSE"	the London Stock Exchange Group Plc;
"Notice of General Meeting" or "Notice of GM"	the notice convening the GM;
"Official List"	the Official List of the United Kingdom Listing Authority;
"Ordinary Shares"	the ordinary shares of 10p each in the capital of the Company;
"Proposals"	means (i) the Acquisition; (ii) the Subscription; and (iii) Admission;
"Premier"	Premier Physical Healthcare Limited, a private limited company incorporated in England and Wales with registered number 03376266 and registered address Stonebridge House, Chelmsford Road, Hatfield Heath, Essex, CM22 7BD;
"QCA Guidelines"	the Corporate Governance Guidelines for Small and Mid-Sized Quoted Companies published by the Quoted Companies Alliance in May 2013, as amended from time to time;
"Registrars"	Share Registrars Limited, incorporated in England and Wales with company number 04715037, whose registered office address is 27/28 Eastcastle Street, London, W1W 8DH;
"Resolutions"	the resolutions to be proposed at the General Meeting, details of which are set out in the Notice of GM;
"Restricted Jurisdiction"	the United States of America, Canada, Australia, the Republic of South Africa and Japan;
"Reverse Takeover"	any acquisition that would be of a size or nature to be deemed a reverse takeover transaction under Rule 14 of the AIM Rules for Companies;
"Rule 9 Offer"	a general offer to all holders of any class of equity share capital or other class of transferable securities carrying voting rights of a company to acquire the balance of their interests in the company as required to be made in accordance with Rule 9 of the Takeover Code;
"Share Dealing Code"	the Company's share dealing code as referred to in Part I of the Admission Document;
"Shareholders" or "Existing Shareholders"	holders of Ordinary Shares from time to time, each individually being a "Shareholder";
"Significant Shareholder"	a person holding 3 % or more of the Enlarged Share Capital;
"Subscriber"	a person who has conditionally agreed to subscribe for Subscription Shares at the Subscription Price pursuant to the Subscription;
"Subscription"	the conditional subscription by Subscribers to subscribe for the Subscription Shares at the Subscription Price;
"Subscription Price"	62 pence per Subscription Share;
"Subscription Shares"	the 10,000,000 new Ordinary Shares to be issued by the Company and subscribed for pursuant to the Subscription, following the passing of the Resolutions;
"Subsidiary Undertaking"	a subsidiary undertaking, as that term is defined in section 1162 of the Companies Act;
"Substantial Shareholder"	any person who, following Admission, holds any legal or beneficial interest directly or indirectly in 10 per cent. or more of the Enlarged Share Capital or voting rights of the Company, as defined in the AIM Rules for Companies;
"Takeover Code"	the City Code on Takeovers and Mergers issued by the Takeover Panel, as amended from time to time;
"Takeover Panel"	the Panel on Takeovers and Mergers in the United Kingdom;
"Totally Health"	Totally Health Limited, the Company's wholly-owned subsidiary;
"UK Listing Authority" or "UKLA"	the FCA, acting in its capacity as the competent authority for the purposes of Part VI of FSMA;
"Uncertificated" or "Uncertificated form"	recorded on the relevant register of the share or security concerned as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST;
"United Kingdom" or "UK"	the United Kingdom of Great Britain and Northern Ireland;
"VCT"	the Venture Capital Trust scheme, a scheme created by HMRC to provide tax reliefs to investors in smaller UK companies; and
"Vendors"	Raphael Leal, Wayne Llewellyn, Justin Leal, Elana Taylor, Scott Langran, Emma Elstead, John Napier, Gerry Desler, Clare Heath and Catherine Tomkies being the current shareholders of Premier at the date of the Admission Document.

 

In this announcement and the Admission Document:

 

(i)            use of the singular includes the plural and vice versa, unless the context otherwise requires;

 

(ii)           references to a 'Part,' or 'Parts' and references to page numbers, are to the relevant Part or Parts or to the relevant page or pages of the Admission Document; and

 

(iii)          all references to "sterling", "£" or "p" are to the lawful currency of the United Kingdom.

 

 

 

GLOSSARY OF TECHNICAL AND COMMERCIAL TERMS

 

"AQP"	any qualified provider, a contract structure whereby a CCG stipulates a tariff for treatments or services and then goes to the market to find providers who are then required to become qualified through the procurement process;
"business-to-business"	the provision of Totally's clinical health-coaching services to organisations or businesses, typically Clinical Commissioning Groups;
"Clinical Commissioning Group" or "CCG"	regional NHS organisations which are authorised to commission healthcare services for their communities;
"clinical health-coaching"	an ongoing coaching process, typically delivered by a qualified nurse, which is designed to allow patients to gain knowledge, skills, tools and confidence to become active participants in their healthcare;
"CSP"	Chartered Society of Physiotherapists;
"direct-to-consumer service", "direct-to-consumer clinical  health-coaching services" or "direct-to-consumer clinical health-coaching product"	the provision of Totally's clinical health-coaching services to individuals directly, on a private basis;
"display screen equipment assessments"	assessments of workstations with devices or equipment that have alphanumeric or graphic display screens, typically in relation to employer's compliance with the relevant health and safety regulations;
"HMPS"	Her Majesty's Prison Service;
"NHS"	the National Health Service, being the UK's public healthcare system;
"PCTs"	Primary Care Trusts; and
"shared decision making"	the process whereby a patient and their health professional make a healthcare choice together after an informed dialogue.

 

 

-ENDS-