GBP 18M Placing and Open Offer & Notice of GM

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, NEW ZEALAND, CAYMAN ISLANDS, BARBADOS, SWITZERLAND, THE STATE OF KUWAIT OR SINGAPORE OR INTO ANY OTHER JURISDICTION WHERE TO DO SO WOULD BREACH ANY APPLICABLE LAW OR REGULATION.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN TOTALLY PLC OR ANY OTHER ENTITY IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION, SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH ANY INVESTMENT DECISION IN RESPECT OF TOTALLY PLC.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION EU 596/2014 ("MAR"). IN ADDITION, MARKET SOUNDINGS (AS DEFINED IN MAR) WERE TAKEN IN RESPECT OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION AS PERMITTED BY MAR. THAT INSIDE INFORMATION IS SET OUT IN THIS ANNOUNCEMENT AND HAS BEEN DISCLOSED AS SOON AS POSSIBLE IN ACCORDANCE WITH PARAGRAPH 7 OF ARTICLE 17 OF MAR.  UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THE INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION IN RELATION TO THE COMPANY AND ITS SECURITIES. 

27 February 2017

Totally plc 

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

Placing and Open Offer to raise up to £18.0 million

Notice of General Meeting

 

Totally plc (AIM: TLY), the provider of a range of out-of-hospital services to the healthcare sector in the UK, is pleased to announce a Placing and Open Offer to raise up to approximately £18.0 million (before expenses) at an issue price of 55 pence per New Ordinary Share. The Placing, which was oversubscribed, has received strong support from both new and existing institutional investors. Net proceeds of the transaction will be used to drive the Company's 'buy and build' strategy, focused on becoming a leading out-of-hospital healthcare provider in the UK, in a sector worth approximately £20 billion per annum with spending on community healthcare set to increase rapidly*.

 

 

Highlights

 

-     Placing and Open Offer to raise up to £18.0 million to capitalise on potential acquisition opportunities within the UK out-of-hospital healthcare market

-     Placing of 30,909,091 New Ordinary Shares to raise £17.0 million

-     Open Offer of up to 1,819,462 New Ordinary Shares to raise up to approximately £1.0 million

o  Qualifying Shareholders may subscribe on the basis of one Offer Share for every 11 Existing Ordinary Shares

o  Qualifying Shareholders may also make applications in excess of their pro rata initial entitlement

-     The Issue Price of 55 pence per New Ordinary Share represents a five per cent. discount to the mid-market price of 58 pence per Existing Ordinary Share on 24 February 2017 (being the latest practicable business day prior to the date of this announcement)

-     In addition to funding future acquisitions, the funds raised will also be used to partially satisfy future deferred consideration payments payable in 2017, to provide further funding in relation to the Group's direct-to-consumer health coaching services, and to provide general working capital

-     Circular to be posted to Shareholders today, a copy of which will be available on the Company's website www.totallyplc.com

*Source: Centre for Health and the Public Interest: The contracting NHS - can the NHS handle the outsourcing of clinical services? (2015).

 

Wendy Lawrence, CEO of Totally, said, "We have received an exceptional response to our £18 million fundraising, which I believe emphasises the strong appetite and understanding that the investment community has for our ability to create value through identifying attractive acquisition opportunities and acting as a consolidator in the current fragmented UK healthcare industry.

 

"Our vision is to build Totally into a leading out of hospital healthcare services provider to help address some of the increasing challenges the UK faces in terms of healthcare. We believe the market opportunity is huge as the NHS continues to move non-acute health care components out of hospitals and into the community.  We believe we are ideally positioned to capture much of this market and capitalise on the £20 billion per annum opportunity we believe that the industry offers.

 

"Our 'buy and build' strategy is already underway having completed three value accretive acquisitions in 2016 worth a total consideration of up to £15.1 million. Since acquisition, they have secured multiple revenue generating contracts and represent only the beginning of Totally's transformation as we look to acquire larger businesses in the field.

 

"We have identified a strong pipeline of acquisitions in the UK outsourced healthcare sector and we look forward to updating shareholders on our progress as we build Totally into a leading out-of-hospital healthcare provider in the UK."

 

 

 

For further information please contact:

 

Totally plc
Wendy Lawrence, Chief Executive Bob Holt, Chairman	020 3866 3335 0777 879 8816
Allenby Capital Limited (Nominated Adviser & Joint Broker)	020 3328 5656
Nick Athanas Nick Naylor Virginia Bull Richard Short
Cenkos Securities plc (Joint Broker)	020 7397 8900
Alex Aylen - Sales Bobbie Hilliam - Corporate Finance Harry Pardoe - Corporate Finance
Yellow Jersey PR	0776 932 5254
Felicity Winkles Joe Burgess

 

This announcement contains inside information.

Defined terms used in this announcement will have the meaning (unless the context otherwise requires) as set out in this announcement and the Circular to be posted to Shareholders today, which will be available shortly on the Company's website www.totallyplc.com.

1.      Introduction

 

The Company today announces a Placing to raise £17.0 million (before expenses) through the issue and allotment of 30,909,091 New Ordinary Shares at the Issue Price of 55 pence per Ordinary Share.

 

A total of approximately £0.75 million, representing the issue of 1,363,636 New Ordinary Shares, has been raised by way of the Firm Placing, utilising the Company's existing share authorities put in place at the Company's annual general meeting held on 11 July 2016. The balance of the Placing, being approximately £16.25 million, representing the issue of 29,545,455 New Ordinary Shares, will be raised by way of the Conditional Placing.

 

The Firm Placing is conditional, inter alia, upon compliance by the Company with its obligations under the Placing and Open Offer Agreement and admission of the Firm Placing Shares to trading on AIM. The Conditional Placing is conditional, inter alia, upon Shareholders approving the Resolutions at the General Meeting, compliance by the Company with its obligations under the Placing and Open Offer Agreement and admission of the Conditional Placing Shares to trading on AIM.

 

In addition, in order to provide Shareholders who have not taken part in the Placing with an opportunity to participate in the proposed issue of New Ordinary Shares, the Company is providing all Qualifying Shareholders with the opportunity to subscribe, at the Issue Price, for an aggregate of 1,819,462 New Ordinary Shares, to raise up to approximately £1.0 million (before expenses), on the basis of one New Ordinary Share for every 11 Existing Ordinary Shares held on the Record Date, at 55 pence per Ordinary Share, payable in full on acceptance.

 

The Open Offer provides Qualifying Shareholders with an opportunity to participate in the proposed issue of the New Ordinary Shares whilst providing the Company with additional capital to invest in the business of the Group.

 

The Issue Price represents a discount of five per cent. to the closing mid-market price of 58 pence per Existing Ordinary Share on 24 February 2017 (being the last Business Day prior to the date of announcement).

 

The Conditional Placing and Open Offer are conditional, inter alia, upon Shareholders approving the Resolutions at the General Meeting. The Resolutions, if passed, will grant the Directors the authority to allot the Conditional Placing Shares and the Offer Shares pursuant to the Conditional Placing and the Open Offer, and the power to disapply statutory pre-emption rights which would otherwise apply in respect of the Conditional Placing Shares and the Offer Shares. It is expected that Admission of the Conditional Placing Shares and Offer Shares will occur no later than 8.00 a.m. on 17 March 2017 or such later time and/or date (being no later than 8.00 a.m. on 30 March 2017) as Allenby Capital, Cenkos Securities and the Company may agree. The Placing and Open Offer are not underwritten.

 

 

2.      Summary of Totally plc

 

The Group is a provider of a range of out-of-hospital services to the healthcare sector in the UK, 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. By working to deliver sustainable self-care management and education, Totally's goal is to reduce healthcare reliance, re-admissions and emergency admissions.

 

The Group provides a disruptive, outcome-based, outsourced service model across its five business divisions to deliver a wide range of healthcare services across the UK, including contracts with NHS England, several CCGs and other public and private sector organisations. Out-of-hospital healthcare includes primary care, provided in GP surgeries and community care, provided in prisons and other public organisations, as well as to private sector organisations and office locations. The Group aims to provide care, which allows for hospital admissions to be avoided, at lower cost and with better outcomes for patients. The Group aims to provide a diverse range of healthcare services tailored to the needs of individual patients, to provide interventions that keep people healthy longer, to prevent ill health, to reduce healthcare inequalities and to ensure the efficient provision of primary healthcare and community care.

 

The Group has a stated 'buy and build' strategy in the UK out-of-hospital healthcare sector. The Group has made three value accretive acquisitions in 2016 with further acquisitions targeted in 2017.

 

Totally Health

 

The Directors believe that Totally Health (which was established in 2011) provides an innovative model of medically-driven and personalised clinical health coaching to provide a range of services to patients with long-term health problems, enabling them to manage their conditions and reduce their healthcare reliance. Totally Health launched its services to the NHS in December 2012 and has since delivered over 35,000 coaching sessions resulting in a 59 per cent. reduction in GP appointments, a 72 per cent. average reduction in out of hours appointments and a 72 per cent. average reduction in unplanned admissions to hospitals.

 

MyClinicalCoach

 

Launched in June 2016, MyClinicalCoach is the Company's new direct-to-consumer health coaching service which provides a telephone-based clinical health-coaching programme which is individually tailored, delivered by NHS-trained nurses, to customers who subscribe for the service. The target customers are those with, or at risk of, long-term health conditions such as diabetes, chronic lung or heart conditions, or a combination of conditions.

 

Premier Physical Healthcare

 

Totally acquired Premier Physical Healthcare in April 2016 for a consideration of £6.75 million (subject to downwards adjustment). Premier Physical Healthcare is a provider of treatment and advice for musculoskeletal injuries and conditions, including delivering physiotherapy and podiatry treatment to NHS patients and police forces and at prison sites. Additionally, Premier Physical Healthcare has an expanding network of clinics located in health and fitness centres and also provides occupational health and ergonomic services to corporate clients, such as display screen equipment assessments, post-injury return to work suitability assessments and podiatry treatment. Since acquisition, Premier Physical Healthcare has secured 13 contracts worth approximately £482,500 annually.

 

Premier Physical Healthcare was awarded 'Best Physiotherapy Chain 2016 - UK' in the 2016 International Life Sciences Awards.

 

About Health

 

Totally acquired About Health in June 2016 for a consideration of up to £7.7 million. About Health is a provider of dermatology and referral management services to the NHS in the UK and has a track record of service delivery covering a population of almost three million people from Lancaster to Poole to Bournemouth. Since acquisition, About Health has secured new contracts, pilot schemes and contract extensions worth in excess of £1.2 million per annum, including a three-year contract with NHS East Lancashire CCG for approximately £760,000 per annum.

 

About Health's reputation for quality has been recognised and it has been shortlisted for three consecutive years as "primary care provider of the year" at the Health Investor Awards.

 

Optimum Sports Performance

 

Totally acquired Optimum Sports Performance in November 2016 for a consideration of up to £650,000. Optimum Sports Performance is a provider of physiotherapy services at 24 clinics across ten counties. It was one of the first physiotherapy providers in the UK to obtain ISO9001:2008 certification (an international standard related to quality management system) in 2013. Optimum Sports Performance offers physiotherapy treatment, shockwave therapy, acupuncture, pilates, Wattbike testing and ultrasonography.

 

The Directors believe that the Group is operating in a £20 billion per annum sector with spending on community healthcare increasing rapidly. The Board has extensive, proven, multi-decade experience in building growth companies, with the NHS and in the outsourced services sector. The Board's buy and build strategy has been successful to date with three value accretive acquisitions made in 2016. The Board believes that the out-of-hospital healthcare marketplace is fragmented and Totally is well positioned to be a consolidator as further acquisition opportunities arise. By expanding organically through increasing the services provided by Totally's current businesses, and inorganically through further acquisitions, the Group aims to become a leading provider of out-of-hospital care across the UK.

 

3.      Background to and reasons for the Placing and Open Offer

 

As announced in the Company's interim results, which were released on 28 September 2016, Totally has made significant progress in delivering a progressive buy and build strategy, including completing three value accretive acquisitions in 2016.

 

The Directors believe that in order to grow to become a leading provider of out-of-hospital care in the UK, the Group will need to build a diversified group through organic and acquisition-based growth. The organic growth strategy of the Group's existing business will be focused on: expanding the number of clinical conditions treated and services provided by Totally Health, including with NHS and private healthcare providers, direct-to-consumer services and further development of business-to-business services; expanding the services provided by the Group's acquired businesses across the UK; and reducing overhead costs whilst expanding all businesses. In addition, the Group will target further acquisitions of appropriate health related companies, adding to the Group's portfolio of services.

 

The Directors continue to believe that targeting acquisitions in the UK outsourced healthcare services market, whilst developing existing businesses within the Group, will create sustainable growth and establish Totally as a leading provider of out-of-hospital care in the UK.

 

The Group has identified a strong pipeline of potential acquisitions in the UK outsourced healthcare sector. Of the identified pipeline, the Directors have a preferred list of four target companies although no formal approaches or negotiations have yet begun. The anticipated consideration for the pipeline of acquisitions identified by the Group ranges from £3 million to £15 million with the pipeline of acquisitions having revenue of up to £60 million.

 

The key attributes of the acquisitions being considered by the Directors are as follows:

 

-    annuity-type recurring revenues, underpinned by long-term contracts;

-    operational complexity providing attractive margins and high barriers to entry; and

-    fragmented markets with potential for consolidation.

 

The Board considers it prudent to fund acquisitions principally from the proceeds of an equity issue and, accordingly, it is proposing to raise up to £18.0 million through the proposed Placing and Open Offer. The Directors believe that having the net cash proceeds of the Placing and Open Offer on the balance sheet of the Company ahead of any potential negotiations with potential vendors increases the credibility of the Group when approaching potential targets and strengthens the Group's negotiating position.   

 

The Company also intends to use up to £1.7 million of the net proceeds of the proposed Placing to partially satisfy future deferred consideration payments related to the acquisitions of Premier Physical Healthcare, About Health and Optimum Sports Performance, subject to those businesses hitting certain performance targets during the course of the current financial year. 

 

4.      Use of proceeds

 

The Company has conditionally raised £17.0 million (before expenses) through the Placing and (subject to take up) up to a further £1.0 million (before expenses) under the Open Offer. The expenses for the Transaction are expected to be approximately £0.95 million.

 

The Company expects to use the net proceeds for the following purposes:

 

-     up to £14.5 million to fund future acquisitions;

-     up to £1.7 million to partially satisfy future deferred consideration payments payable in 2017;

-     £0.75 million to provide further funding in relation to the Group's direct-to-consumer health coaching service and to expand the Group's B2C services; and

-     the balance as general working capital.

 

5.      Current trading and prospects

 

On 8 February 2017, the Company released a trading update covering the Company's financial year to 31 December 2016. Within the trading update the Company confirmed that its full year results, which are still subject to external audit, are expected to be marginally ahead of current market expectations. Based on unaudited management accounts Group revenues for the 12 months ending 31 December 2016 are expected to be no less than £3.7 million.

 

The Company confirmed within the trading update that three acquisitions in the healthcare services sector had been made in 2016 worth a total maximum consideration of up to £15.1 million. Further, the Group had secured new and renewed contracts with a value in excess of £1.7 million per annum in revenues.

 

6.      The Placing and Open Offer

 

Details of the Placing

 

Subject to the satisfaction of the conditions under the Firm Placing and the Conditional Placing including, inter alia, the passing of the Resolutions (in relation to the Conditional Placing), the Company has conditionally raised £17.0 million (before expenses) through the placing of 30,909,091 Placing Shares at the Issue Price. The Placing Shares have been conditionally placed by Cenkos Securities and Allenby Capital with certain institutional and other investors. The Issue Price represents a discount of five per cent. to the closing mid-market price of 58 pence on 24 February 2017, being the last practicable date prior to the date of this announcement. The Placing Shares will represent 59 per cent. of the Company's Enlarged Share Capital (assuming the Open Offer is fully subscribed).

 

Through the Firm Placing, the Company proposes to issue 1,363,636 New Ordinary Shares to certain investors seeking EIS relief and for the purposes of investment by VCTs pursuant to the Firm Placing. EIS/VCT relief will not be available in respect of the Conditional Placing Shares or the Offer Shares.

 

Application has been made for the Firm Placing Shares to be admitted to trading on AIM, with dealings expected to commence at 8.00 a.m. on 2 March 2017. In due course application will be made for the Conditional Placing Shares to be admitted to trading on AIM and, on the assumption that, inter alia, the Resolutions are passed at the General Meeting, dealings are expected to commence at 8.00 a.m. on 17 March 2017.

 

The Firm Placing is conditional, inter alia, upon:

 

i)          compliance by the Company with its obligations under the Placing and Open Offer Agreement; and

ii)        admission of the Firm Placing Shares to trading on AIM becoming effective by not later than 8.00 a.m. on 2 March 2017 or such later time and/or date (being no later than 8.00 a.m. on 30 March 2017) as Allenby Capital, Cenkos Securities and the Company may agree.

 

If any of the conditions in relation to the Firm Placing are not satisfied (or waived), the Firm Placing will not proceed, the Firm Placing Shares will not be issued and all monies received from the Firm Placees will be returned to them (at the Firm Placees' risk and without interest) as soon as possible thereafter. The Firm Placing Shares are not subject to clawback.

 

The Conditional Placing is conditional, inter alia, upon:

 

(i)        the passing of all of the Resolutions to be proposed at the General Meeting;

(ii)       the Placing and Open Offer Agreement having become unconditional and not having been terminated in accordance with its terms prior to Admission; and

(iii)     admission of the Conditional Placing Shares becoming effective by no later than 8.00 a.m. on 17 March 2017 or such later time and/or date (being no later than 8.00 a.m. on 30 March 2017) as Allenby Capital, Cenkos Securities and the Company may agree.

 

 

If any of the conditions in relation to the Conditional Placing are not satisfied (or waived), the Conditional Placing will not proceed, the Conditional Placing Shares will not be issued and all monies received from the Conditional Placees will be returned to them (at the Conditional Placees' risk and without interest) as soon as possible thereafter. The Conditional Placing Shares are not subject to clawback.

 

The Firm Placing and the Conditional Placing are not inter-conditional.

 

The Firm Placing Shares, the Conditional Placing Shares and the Offer Shares will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

 

The Existing Ordinary Shares are admitted to trading on AIM. Application has been made for the Firm Placing Shares to be admitted to trading on AIM, with dealings expected to commence at 8.00 a.m. on 2 March 2017. In due course, application will be made for the admission of the Conditional Placing Shares to be admitted to trading on AIM. On the assumption that, inter alia, the Resolutions are passed, it is expected that admission of the Conditional Placing Shares will occur and that dealings will commence at 8.00 a.m. on 17 March 2017 at which time it is also expected that the Conditional Placing Shares will be enabled for settlement in CREST.

 

Details of the Open Offer

 

The Company is proposing to raise up to approximately £1.0 million (before expenses) through the Open Offer. A total of 1,819,462 New Ordinary Shares are available to Qualifying Shareholders pursuant to the Open Offer at the Issue Price, payable in full on acceptance. Any Offer Shares not subscribed for by Qualifying Shareholders will be available to Qualifying Shareholders under the Excess Application Facility. The balance of any Offer Shares not subscribed for under the Excess Application Facility will not be available to Placees under the Placing.

 

Qualifying Shareholders may apply for New Ordinary Shares under the Open Offer at the Issue Price on the following basis:

 

One New Ordinary Share for every 11 Existing Ordinary Shares

 

and so in proportion for any number of Existing Ordinary Shares held on the Record Date.

 

Entitlements of Qualifying Shareholders will be rounded down to the nearest whole number of Ordinary Shares. Fractional entitlements which would otherwise arise will not be issued to the Qualifying Shareholders but will be made available under the Excess Application Facility. The Excess Application Facility enables Qualifying Shareholders to apply for Excess Shares in excess of their Open Offer Entitlement. Not all Shareholders will be Qualifying Shareholders. Shareholders who are located in, or are citizens of, or have a registered office in certain overseas jurisdictions will not qualify to participate in the Open Offer.

 

Valid applications by Qualifying Non-CREST Shareholders will be satisfied in full up to their Open Offer Entitlements as shown on the Application Form. Applicants can apply for less or more than their entitlements under the Open Offer but the Company cannot guarantee that any application for Excess Shares under the Excess Application Facility will be satisfied as this will depend in part on the extent to which other Qualifying Shareholders apply for less than or more than their own Open Offer Entitlements. The Company may satisfy valid applications for Excess Shares in whole or in part but reserves the right not to satisfy, or to scale back, applications made in excess of Open Offer Entitlements.

 

Application has been made for the Open Offer Entitlements to be admitted to CREST. It is expected that such Open Offer Entitlements will be credited to CREST as soon as practical after 8.00 a.m. on 28 February 2017. The Open Offer Entitlements will be enabled for settlement in CREST until 11.00 a.m. on 15 March 2017. Applications through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.

 

The Offer Shares must be paid in full on application. The latest time and date for receipt of completed Application Forms or CREST applications and payment in respect of the Open Offer is 11.00 a.m. on 15 March 2017.

 

Qualifying Shareholders should note that the Open Offer is not a rights issue and therefore the Offer Shares which are not applied for by Qualifying Shareholders will not be sold in the market for the benefit of the Qualifying Shareholders who do not apply under the Open Offer. The Application Form is not a document of title and cannot be traded or otherwise transferred.

 

Further details of the Open Offer and the terms and conditions on which it is being made, including the procedure for application and payment, are contained in Part 3 of the Circular and on the Application Form which has been posted to Shareholders today.

 

The Open Offer is conditional on the Placing becoming or being declared unconditional in all respects and not being terminated before Admission (as the case may be). The principal conditions to the Open Offer are:

 

(i)        the passing of all of the Resolutions at the General Meeting;

(ii)       the Placing and Open Offer Agreement having become unconditional and not having been terminated in accordance with the terms prior to Admission; and

(iii)     admission of the Conditional Placing Shares becoming effective by no later than 8.00 a.m. on 17 March 2017 or such later time and/or date (being no later than 8.00 a.m. on 30 March 2017) as Allenby Capital, Cenkos Securities and the Company may agree.

 

Accordingly, if these conditions are not satisfied or waived (where capable of waiver), the Open Offer will not proceed, the Offer Shares will not be issued and all monies received by Share Registrars Limited will be returned to the applicants (at the applicants' risk and without interest) as soon as possible thereafter. Any Open Offer Entitlements admitted to CREST will thereafter be disabled.

 

The Offer Shares (and the Placing Shares) will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

 

The Existing Ordinary Shares are admitted to trading on AIM. Application will be made to the London Stock Exchange for the admission of the Offer Shares to trading on AIM. On the assumption that, inter alia, the Resolutions are passed, it is expected that Admission will occur and that dealings will commence at 8.00 a.m. on 17 March 2017 at which time it is also expected that the Offer Shares will be enabled for settlement in CREST.

 

Placing and Open Offer Agreement

 

Pursuant to the Placing and Open Offer Agreement, Allenby Capital and Cenkos Securities have agreed to use their reasonable endeavours as agents of the Company to procure subscribers for the Placing Shares at the Issue Price.

 

The Placing and Open Offer Agreement provides, inter alia, for payment by the Company to Allenby Capital and Cenkos Securities commissions based on certain percentages related to the number of Placing Shares placed by Allenby Capital and Cenkos Securities multiplied by the Issue Price. In addition, the Company will pay Allenby Capital a corporate finance fee for their work on the Placing and Open Offer.

 

The Company will bear all other expenses of and incidental to the Placing and Open Offer, including printing costs, Registrar's and Receiving Agent's fees, all legal and accounting fees of the Company, Allenby Capital and Cenkos Securities and all stamp duty and other taxes and duties where payable.

 

The Placing and Open Offer Agreement contains certain warranties and indemnities from the Company in favour of Allenby Capital and Cenkos Securities and is conditional, inter alia, upon:

 

(a)       Shareholder approval of the Resolutions at the General Meeting (in respect of the Conditional Placing and Open Offer);

(b)       the Placing and Open Offer Agreement having become unconditional in all respects (save for the condition relating to Admission) and not having been terminated in accordance with its terms;

(c)       admission of the Firm Placing Shares becoming effective by no later than 8.00 a.m. on 2 March 2017 or such later time and/or date (being no later than 8.00 a.m. on 30 March 2017) as Allenby Capital, Cenkos Securities and the Company may agree; and

(d)       admission of the Conditional Placing Shares and Offer Shares becoming effective not later than 8.00 a.m. on 17 March 2017 or such later time and/or date (being no later than 8.00 a.m. on 30 March 2017) as Allenby Capital, Cenkos Securities and the Company may agree.

 

Allenby Capital or Cenkos Securities may terminate the Placing and Open Offer Agreement in certain circumstances, if, inter alia, the Company fails to comply with its obligations under the Placing and Open Offer Agreement; if there is a material adverse change in the business, financial or trading position or prospects, operations or solvency of the Company; or if there is a change in the financial, political, economic or market conditions, which in their respective reasonable opinions, acting in good faith, makes it impractical or inadvisable to proceed with the Placing and Open Offer.

 

Directors' and related parties' participation in the Transaction

 

The Chairman of the Company, Bob Holt, has indicated his intention to subscribe for his Open Offer Entitlement, being 76,978 new Ordinary Shares. The other Directors do not currently intend to take up their entitlement to subscribe for New Ordinary Shares under the Open Offer.

 

Director	Number of Ordinary Shares held before the Transaction	Number of Ordinary Shares held as a percentage of the Existing Ordinary Shares	Number of Ordinary Shares intended to be applied for under the Open Offer	Number of Ordinary Shares to be held following the Placing and Open Offer*	Percentage of the Enlarged Share Capital**
Bob Holt	846,768	4.23%	76,978	923,746	1.75%

 

*assuming full take up by Bob Holt of his entitlement under the Open Offer.

**following the Placing and assuming the Open Offer is fully subscribed.

 

In addition to the above, Unicorn Asset Management Limited, an existing substantial shareholder (as defined by the AIM Rules) has agreed to subscribe for 909,091 Firm Placing Shares pursuant to the Firm Placing at the Issue Price. Following admission of the Firm Placing Shares, Unicorn Asset Management Limited will have an interest in 5,759,291 Ordinary Shares, representing 26.94 per cent. of the then enlarged share capital and 10.92 per cent of the Enlarged Share Capital assuming the Open Offer is fully subscribed.

 

Furthermore, Seneca Partners Limited, an existing substantial shareholder (as defined by the AIM Rules) has agreed to subscribe for 454,545 Firm Placing Shares pursuant to the Firm Placing at the Issue Price. Following admission of the Firm Placing Shares, Seneca Partners Limited will have an interest in 3,370,545 Ordinary Shares, representing 15.77 per cent. of the then enlarged share capital and 6.39 per cent of the Enlarged Share Capital assuming the Open Offer is fully subscribed.

 

The participation in the Firm Placing by Unicorn Asset Management Limited and Seneca Partners Limited as substantial shareholders constitutes a related party transaction pursuant to the AIM Rules. The Directors consider, having consulted with Allenby Capital, the Company's nominated adviser, that the terms of the participation in the Firm Placing by Unicorn Asset Management Limited and Seneca Partners Limited are fair and reasonable insofar as the shareholders of the Company are concerned.

 

Transaction considerations

 

As set out below, the Directors believe the Transaction to be in the best interests of the Company and its Shareholders as a whole. In making this statement the Directors have spent time, and have taken appropriate advice, in considering the Transaction and the method by which to raise the net proceeds. The Directors concluded that the Placing accompanied by the Open Offer was the most appropriate structure to raise funding for the following reasons:

 

-      the Placing enables the Company to attract a number of significant new institutional investors to its shareholder register, which the Directors expect will improve liquidity going forward, and also provide increased credibility as the Company seeks to execute its buy and build acquisition strategy; and

 

-      the Open Offer of up to approximately £1.0 million enables all Qualifying Shareholders to participate in the Transaction on the same terms as institutional and new investors but without the time and costs associated with a full pre-emptive offer. A full pre-emptive offer, either via a rights issue or open offer (above €5.0 million) would have required the Company to have produced a prospectus which would have taken significant time and cost.

 

The Issue Price represents a discount of five per cent. to the closing mid-market price of 58 pence per Existing Ordinary Share on 24 February 2017 (being the last practicable date before the date of this announcement). The Directors can confirm that the Issue Price, and therefore the potential dilution for Shareholders, has been a key consideration in setting the amount raised as part of the Transaction and the decision to undertake an Open Offer. The Issue Price was established as part of a book building process undertaken by the Company's advisers.

 

7.            Overseas Shareholders

 

The attention of Qualifying Shareholders who have registered addresses outside the United Kingdom, or who are citizens or residents of countries other than the United Kingdom, or who are holding Existing Ordinary Shares for the benefit of such persons, (including, without limitation, custodians, nominees, trustees and agents) or who have a contractual or other legal obligation to forward the Circular or the Application Form to such persons, is drawn to the information which appears in paragraph 6 of Part 3 of the Circular.

 

In particular, Qualifying Shareholders who have registered addresses in or who are resident in, or who are citizens of, countries other than the UK (including without limitation the United States), should consult their professional advisers as to whether they require any governmental or other consents or need to observe any other formalities to enable them to take up their entitlements under the Open Offer.

 

8.            Risk factors and additional information

 

The attention of Shareholders is drawn to the risk factors set out in Part 2 of the Circular and the information contained in Parts 3 and 4 of the Circular, which provide additional information on the Open Offer.

 

9.            General Meeting

 

The Directors do not currently have authority to allot the Conditional Placing Shares or Offer Shares and, accordingly, the Board is seeking the approval of Shareholders to allot the Conditional Placing Shares and Offer Shares at the General Meeting.

The notice convening the General Meeting, to be held at Hamilton House, Mabledon Place, London WC1H 9BB at 10.00 a.m. on 16 March 2017 is set out at the end of the Circular. At the General Meeting the following Resolutions will be proposed for Shareholders to consider:

·      Resolution 1 which is an ordinary resolution to authorise the Directors to allot relevant securities up to an aggregate nominal amount of £3,136,491.70 being equal to 31,364,917 new Ordinary Shares (i.e. the maximum number of new Ordinary Shares available under the Conditional Placing and Open Offer); and

·      Resolution 2 which is a special resolution, and is conditional on the passing of Resolution 1, to authorise the Directors to issue and allot 31,364,917 new Ordinary Shares pursuant to the Conditional Placing and Open Offer on a non-pre-emptive basis.

The authorities to be granted pursuant to the Resolutions shall expire on whichever is the earlier of the conclusion of the Annual General Meeting of the Company to be held in 2017 or the date falling six months from the date of the passing of the Resolutions (unless renewed, varied or revoked by the Company prior to or on that date) and shall be in addition to the Directors' authorities to allot relevant securities and dis-apply statutory pre-emption rights granted at the Company's Annual General Meeting held on 11 July 2016.

 

The Firm Placing and the Conditional Placing and Open Offer are not inter-conditional. Admission of the Firm Placing Shares will have occurred before the General Meeting. Shareholders should be aware that if the Resolutions relating to the Conditional Placing and Open Offer are not approved at the General Meeting and Admission of such shares does not take place, the net proceeds of the Conditional Placing and Open Offer will not be received by the Company. In the event that the net proceeds of the Conditional Placing and Open Offer are not received by the Company, the Directors may need to secure ongoing working capital funding and/or re-negotiate existing contractual agreements in order to have sufficient working capital for the Group's future requirements and to enable the Group to execute its buy and build strategy. 

 

10.          Action to be taken

 

In respect of the General Meeting

 

Qualifying Non-CREST Shareholders should check that they have received the following with the Circular:

 

·      a Form of Proxy for use in relation to the General Meeting; and

·      a reply-paid envelope for use in connection with the return of the Form of Proxy (in the UK only).

 

Whether or not you intend to be present in person at the General Meeting, you are strongly encouraged to complete, sign and return your Form of Proxy in accordance with the instructions printed thereon so as to be received, by post or, during normal business hours only, by hand to Share Registrars Limited, The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR, as soon as possible but in any event so as to arrive by not later than 10.00 a.m. on 14 March 2017 (or, in the case of an adjournment of the General Meeting, not later than 48 hours before the time fixed for the holding of the adjourned meeting (excluding any part of a day that is not a Business Day)).

 

If you hold Existing Ordinary Shares in CREST, no Form of Proxy will be sent to you. Instead, you may appoint a proxy by completing and transmitting a CREST proxy instruction to the Company's registrars, Share Registrars Limited (under Participant ID 7RA36) so that it is received by not later than 10.00 a.m. on 14 March 2017.

 

Appointing a proxy in accordance with the instructions set out above will enable your vote to be counted at the General Meeting in the event of your absence. The completion and return of a Form of Proxy will not preclude you from attending and voting in person at the General Meeting, or any adjournment thereof, should you wish to do so.

 

In respect of the Open Offer

 

Qualifying Non-CREST Shareholders should check that they have received the following with the Circular:

 

·     an Application Form for use in connection with the Open Offer; and

·     a reply-paid envelope for use in connection with the return of the Application Form (in the UK only).

 

Qualifying non-CREST Shareholders wishing to apply for Offer Shares or Excess Shares must complete the Application Form in accordance with the instructions set out in paragraph 3 of Part 3 (Terms and Conditions of the Open Offer) of the Circular and on the accompanying Application Form and return it with the appropriate payment to Share Registrars Limited, so as to arrive no later than 11.00 a.m. on 15 March 2017.

 

To ensure compliance with the Money Laundering Regulations, Share Registrars may require, at its absolute discretion, verification of the identity of the person by whom or on whose behalf the Application Form is lodged (which requirements are referred to as the "verification of identity requirements" in paragraph 4 of Part 3 of the Circular).

 

Qualifying Shareholders may apply for their full Open Offer Entitlement under the Open Offer. Applications for Excess Shares under the Excess Application Facility are subject to the maximum number of Ordinary Shares being offered under the Open Offer and will be scaled down pro rata to the number of Excess Shares applied for, or otherwise at the absolute discretion of the Company. Any monies paid in excess of the amount due will be returned without interest by crossed cheque in favour of the applicant at the applicant's risk.

 

Qualifying Shareholders who wish to participate in the Open Offer may, if they wish, apply for fewer shares than their full Open Offer Entitlement under the Open Offer. There is no maximum subscription, but excess applications for Excess Shares may be scaled down as explained above. Not all Shareholders will be Qualifying Shareholders. Shareholders who have a registered address, or who are located, in the United States, or who have a registered address, or who are located in, or who are citizens or residents of, a Restricted Jurisdiction (regardless of the number of Existing Ordinary Shares that they hold) will not qualify to participate in the Open Offer.

 

If you do not wish to apply for any Ordinary Shares under the Open Offer, you should not complete or return the Application Form. Shareholders are nevertheless requested to complete and return the Form of Proxy.

 

If you are a Qualifying CREST Shareholder, no Application Form will be sent to you. Qualifying CREST Shareholders will have Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to their stock accounts in CREST. You should refer to the procedure for application set out in paragraph 3 of Part 3 (Terms and Conditions of the Open Offer) of the Circular. The relevant CREST instructions must have settled in accordance with the instructions in paragraph 3 of Part 3 of the Circular by no later than 11.00 a.m. on 15 March 2017.

 

Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with the Circular and the Open Offer.

 

11.          Recommendation

 

The Directors believe that the Placing and Open Offer are in the best interests of the Company and Shareholders, taken as a whole. Accordingly, the Directors unanimously recommend Shareholders to vote in favour of the Resolutions, as they intend to do in respect of their entire beneficial holdings of Ordinary Shares totalling in aggregate 1,188,214 Ordinary Shares and representing approximately 5.94 per cent. of the current issued share capital of the Company.

 

The Conditional Placing and Open Offer are conditional, inter alia, upon the passing of the Resolutions at the General Meeting. Shareholders should be aware that if the Resolutions are not approved at the General Meeting, the Conditional Placing and Open Offer will not proceed.

 

 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 

Record Date for entitlements under the Open Offer	6.00 p.m. on 23 February 2017
Announcement of the Placing and Open Offer	7.00 a.m. on 27 February 2017
Publication and posting of the Circular, the Application Form and Form of Proxy	27 February 2017
Ex-entitlement Date for the Open Offer	8.00 a.m. on 27 February 2017
Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to stock accounts of Qualifying CREST Shareholders in CREST	As soon as practical after 8.00 a.m. on 28 February 2017
Admission and commencement of dealings in the Firm Placing Shares	8.00 a.m. on 2 March 2017
CREST members' accounts credited in respect of the Firm Placing Shares in uncertificated form	by 8.00 a.m. on 2 March 2017
Recommended latest time and date for requesting withdrawal of Open Offer Entitlements and Excess CREST Open Offer Entitlements from CREST	4.30 p.m. on 9 March 2017
Recommended latest time for depositing Open Offer Entitlements and Excess CREST Open Offer Entitlements into CREST	3.00 p.m. on 10 March 2017
Latest time and date for splitting Application Forms (to satisfy bona fide market claims only)	3.00 p.m. on 13 March 2017
Latest time and date for receipt of completed Forms of Proxy and receipt of electronic proxy appointments via the CREST system	10.00 a.m. on 14 March 2017
Latest time and date for receipt of the completed Application Form and appropriate payment in respect of Offer Shares or Excess Shares or settlement of relevant CREST instruction	11.00 a.m. on 15 March 2017
Despatch of definitive share certificates for the Firm Placing Shares in certificated form	by no later than 16 March 2017
General Meeting	10.00 a.m. on 16 March 2017
Announcement of result of General Meeting and Open Offer	16 March 2017
Admission and commencement of dealings in the Conditional Placing Shares and Offer Shares on AIM	8.00 a.m. on 17 March 2017
CREST members' accounts credited in respect of the Conditional Placing Shares and Offer Shares in uncertificated form	by 8.00 a.m. on 17 March 2017
Despatch of definitive share certificates for the Conditional Placing Shares and Offer Shares in certificated form	by no later than 31 March 2017

 

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.

 

Certain of the events in the above timetable are conditional upon, inter alia, the approval of the Resolutions to be proposed at the General Meeting.

 

All references to time and dates in the Circular are to time and dates in London. 

 

 

KEY STATISTICS

Number of Existing Ordinary Shares		20,014,079
Number of Firm Placing Shares Number of Conditional Placing Shares		1,363,636  29,545,455
Number of Offer Shares		1,819,462
Aggregate number of New Ordinary Shares expected to be issued pursuant to the Placing and Open Offer		up to 32,728,553
Issue Price		55 pence
Open Offer Entitlements under the Open Offer		1 New Ordinary Share for every 11 Existing Ordinary Shares
Percentage of the Enlarged Share Capital represented by the Placing Shares and the Offer Shares*		62 per cent.
Estimated gross proceeds of the Placing and Open Offer*			£18.0 million
Estimated expenses of the Placing and Open Offer			£0.95 million
Estimated net proceeds of the Placing and Open Offer*			£17.05 million
Enlarged Share Capital immediately following the Placing and Open Offer*			52,742,632
Market capitalisation of the Company immediately following the Placing and Open Offer at the Issue Price*			£29.0 million

*    On the assumption that the Open Offer is fully subscribed.