TIDMIDEA
RNS Number : 2645A
Ideagen PLC
23 March 2017
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014
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, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH
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SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
Ideagen plc
("Ideagen" or the "Company")
Acquisition of PleaseTech Ltd ("PleaseTech")
Placing to raise GBP10m and sale of existing shares
Ideagen, a leading supplier of Information Management Software
to highly regulated industries, is pleased to announce the
conditional acquisition of PleaseTech for an initial net
consideration of GBP10m (on a cash-free, debt-free basis) and a
potential further consideration of up to GBP2m dependent on the
attainment of specified performance targets in the six months after
completion (the "Acquisition").
The initial upfront consideration for the Acquisition will be
financed by an oversubscribed Placing to raise GBP10m at 75 pence
per New Ordinary Share (as defined and further explained
below).
Acquisition highlights
-- PleaseTech is a fast growing, profitable and cash generative
software company having developed the leading document review and
co-authoring product PleaseReview;
-- PleaseReview is used within document intensive environments
to reduce the time and cost associated with the production of
content and ensure compliance with industry regulations;
-- PleaseTech has approximately 185 customers including 17 of
the top 25 pharmaceutical companies;
-- Based in Malmesbury, PleaseTech currently employs 30 staff in
the UK with a further 16 Research and Development staff in
Malaysia;
-- PleaseTech achieved revenue and EBITDA of GBP3.9m and GBP1.3m
for the year ended 31 December 2016 respectively, an increase in
revenue of 45% and EBITDA of 72% on the previous financial
year;
-- The Acquisition is in line with the Group's strategy of
acquiring complementary businesses with strong IP and recurring
revenues;
-- PleaseReview will be integrated with Ideagen's Quality
Management System Q-Pulse to provide enhance functionality to
existing and new customers;
-- The Acquisition and the Placing are expected to be earnings
enhancing for Ideagen shareholders in the coming financial year to
30 April 2018.
David Hornsby, CEO of Ideagen, commented:
"We are delighted to announce the acquisition of PleaseTech. Its
PleaseReview software is a valuable addition to Ideagen's product
suite and is in line with our stated acquisition strategy.
PleaseTech both increases Ideagen's footprint in two of its key
verticals and broadens its customer base geographically whilst
providing valuable cross-selling opportunities and additional
sources of recurring revenues. We are delighted to have received
commitments to raise GBP10m, in an oversubscribed placing, to fund
the acquisition from both our existing shareholder base and from
new significant institutional shareholders, their support endorses
Ideagen's growth strategy.
Placing and the Sale
The Board further announces an oversubscribed conditional
placing (the "Placing") to raise gross proceeds of GBP10.0m at a
price of 75 pence per new ordinary share of 1p each ("Placing
Price" and "New Ordinary Shares"), the proceeds of which will be
deployed to fund the initial upfront consideration for the
Acquisition.
Furthermore, certain directors and senior management of the
Company ("Selling Shareholders") intend later today to exercise, in
aggregate, 2,205,000 share options (the majority of which relate to
the Company's existing Long Term Incentive Plan, as announced on 23
July 2015 ("2015 LTIP")). It is expected that, in aggregate, up to
1,160,000 New Ordinary Shares will then immediately be sold at the
Placing Price by these persons to meet the tax and NI liability
arising from the exercise of such options. David Hornsby, Chief
Executive Officer of the Company, also intends to sell up to
801,500 Ordinary Shares at the Placing Price per share. The sale of
the aggregate 1,961,500 Ordinary Shares by the Selling Shareholders
(the "Sale" and the "Sale Shares") is conditional on completion of
the Placing. The Placing is not conditional upon completion of the
Acquisition.
The Acquisition
PleaseTech has developed and provides a proprietary software
product PleaseReview, aimed at providing simultaneous, controlled,
and secure collaboration for document review, co-authoring and
redaction, incorporating an audit trail of transparency and
accountability. PleaseReview has been recognised by Gartner who say
the product 'tackles long-standing coordination, collaboration and
peer review challenges faced by teams every day regarding group
writing, reviewing and editing documents in a way that transforms a
complicated, burdensome experience into a more efficient and
controlled process'.
PleaseTech is headquartered in Wiltshire and has a research and
development facility in Malaysia. PleaseTech's sector-focused
customer list of 185 includes 17 out of the 25 top global
pharmaceutical companies, and global aerospace and defence
companies.
The Acquisition broadens Ideagen's relationships in existing
core sectors (life sciences, aerospace and defence), enhances
Ideagen's geographic customer footprint (particularly in the US),
provides an additional source of recurring revenue and is in line
with Ideagen's stated strategy of adding complementary compliance
software with significant cross sales potential.
Long Term Incentive Plan
The Board intend to establish a 2017 Long Term Incentive Plan
("2017 LTIP") to succeed the 2015 LTIP and will shortly make awards
to certain of the participants in the 2015 LTIP.
Further details of the Acquisition, Placing and Sale are set out
below.
Enquiries:
Ideagen plc Tel: 01629 699100
David Hornsby, Chief Executive
Graeme Spenceley, Finance Director
finnCap (Nominated Adviser and Broker) Tel: 020 7220 0500
Stuart Andrews / Henrik Persson / James Thompson (Corporate Finance)
Stephen Norcross (Corporate Broking)
About Ideagen
Ideagen is a UK company quoted on the London Stock Exchange AIM
market (Ticker: IDEA.L).
Ideagen is a supplier of Information Management software with
operations in the UK, the United States and the Middle East. The
Company specialises in GRC (Governance, Risk and Compliance) and
Content and Clinical solutions with a primary focus on
organisations operating within highly regulated industries. With an
excellent portfolio of software products, Ideagen is able to
provide complete information lifecycle solutions that enable
organisations to reduce risk, meet their regulatory and compliance
standards, helping them to reduce costs and improve efficiency.
The Group has a customer base of over 3,000 organisations using
the Ideagen suite of products, including many blue chip names such
as BAE Systems, Emirates, Shell and the European Central Bank as
well as 150 hospitals in the UK and US.
For further information please visit www.ideagen.com
Ideagen current trading and prospects
The Company has continued to trade strongly and in line with the
Board's expectations since its interim results for the six months
ended 31 October 2016, as announced on 24 January 2017. The Board
continue to see strong demand in each of the Group's key GRC
verticals, and can confirm that the immediate and medium term sales
pipeline remains robust.
Whilst the Board remains alert to prevailing economic and
political conditions, the Group has a strong presence in a variety
of different markets across the globe, which, together with its
increasing levels of recurring revenue and repeat business from its
3,000 customer base, provides the Board with confidence in the
future prospects of the Group.
Further information on PleaseTech
PleaseTech Limited was established in 2002 by its current
management team and opened its development centre in Malaysia in
2007. Sales and marketing are led out of the Company's headquarters
in Wiltshire, where 30 of PleaseTech's 46 employees are based.
PleaseTech focuses on the development, sale and support of its
PleaseReview collaborative document review and co-authoring
software product. PleaseReview is sold either as an on-premise or
cloud-based solution. Many of the customers are large corporates in
document intensive industries and as such the majority of sales
have been for on-premise (perpetual license) installations, however
the Cloud-based solution is growing in popularity. Both the on
premise and cloud solutions will be marketed by Ideagen and will
provide functionality which will benefit Ideagen's existing product
set.
The majority of PleaseTech sales are international (c.90% - 95%)
with the largest market being the US.
The shareholders of PleaseTech are its management team (and
family), the majority of whom will be remaining with the Company
subsequent to the Acquisition. PleaseTech's CEO, David Cornwell,
and CFO, Clare Beazley will remain involved with the business for
at least 6 months and 3 months respectively post completion of the
Acquisition to ensure an orderly handover.
Selected Financial Information on PleaseTech
Year Ended 31 December 2014 2015 2016
GBP'm
Revenue 1.95 2.70 3.91
of which recurring
represents (%) 49.2 49.3 54.0
Revenue growth (%) - 38.5 44.8
EBITDA 0.62 0.74 1.27
EBITDA Margin (%) 32 27 32
Composition of revenue:
New revenue 0.98 1.37 1.80
Recurring revenue 0.96 1.33 2.11
Source: PleaseTech management information
PleaseTech has not as yet finalised its statutory accounts for
the year ended 31 December 2016. PleaseTech achieved profit after
tax of GBP0.7m and had net assets of GBP2.25m during the year to 31
December 2015 and as at that date.
Principal Terms and Conditions of the Acquisition
The Company has entered into an agreement with the vendors of
PleaseTech (the "Vendors") pursuant to which it has agreed to
acquire the entire issued share capital of PleaseTech (the
"Acquisition Agreement"). The consideration for the Acquisition is
up to GBP12.0 million on a cash-free, debt-free basis comprising
GBP10.0 million initial cash consideration (GBP14.4 million
including GBP4.4 million cash for cash) and up to GBP2.0 million
potential future cash consideration which may become payable after
one year based upon the level of retention of PleaseTech's existing
recurring revenue stream (the "Earnout"). The Board expects that
the Earnout will become payable in full.
Completion of the Acquisition Agreement is conditional, amongst
other things, upon the Company having received sufficient funds to
enable it to pay the amounts outstanding from it under the
Acquisition Agreement at completion.
Details of the Placing, the Placing Agreement and the Sale
Under the terms of the Placing, 13,333,334 New Ordinary Shares
have been conditionally placed on behalf of the Company. The
Placing is taking place pursuant to existing authorities
established at the Company's last Annual General Meeting on 28
October 2016.
Furthermore, certain directors and an employee of the Company
intend later today to exercise, in aggregate, 2,205,000 share
options (the majority of which relate to 2015 LTIP) and that
2,205,000 New Ordinary Shares will be allotted and issued to
satisfy this exercise ("Option Exercise" and the "Option Shares").
It is expected that, in aggregate, up to 1,160,000 of these New
Ordinary Shares will then immediately be sold at the Placing Price
by these persons to meet the tax and NI liability arising from the
Option Exercise. In addition, David Hornsby, Chief Executive
Officer of the Company, also intends to sell up to 801,500 Ordinary
Shares at the Placing Price.
Further announcements in respect of the Option Exercise and the
Sale will be made in due course.
It is expected that the New Ordinary Shares to be held in
uncertificated form will be delivered in CREST on 27 March 2017 and
that share certificates for New Ordinary Shares to be held in
certificated form will be despatched by first class post as soon as
practicable after 27 March 2017 and in any event by 19 April 2017.
The 15,538,334 New Ordinary Shares allotted and issued pursuant to
the Placing and the expected Option Exercise will represent
approximately 7.8 per cent. of the enlarged issued share capital
following admission of the New Ordinary Shares to trading on AIM
("Enlarged Issued Share Capital" and "Admission").
Application has been made to the London Stock Exchange for the
New Ordinary Shares issued pursuant to the Placing and the expected
Option Exercise to be admitted to trading on AIM and it is
anticipated that trading in the New Ordinary Shares will commence
on AIM at 8.00 a.m. on 27 March 2017.
The New Ordinary Shares will, when issued and fully paid, rank
in full for any dividend or other distribution declared, made or
paid after Admission and otherwise equally in all respects with the
existing Ordinary Shares.
The Placing is conditional, inter alia, upon:
i. the Placing Agreement becoming unconditional in all respects
(save for Admission) and not having been terminated; and
ii. admission of the 13,333,334 New Ordinary Shares to trading
on AIM becoming effective by not later than 8:00 am on 27 March
2017 (or such later time and date as the Company and finnCap may
agree, not being later than 8.00 a.m. on 19 April 2017).
The Placing is not conditional upon completion of the
Acquisition.
The Placing Agreement
Pursuant to the terms of the Placing Agreement, finnCap as agent
for the Company, has agreed to use its reasonable endeavours to
procure placees for the Placing Shares at the Placing Price per
share. The Placing Agreement contains warranties from the Company
in favour of finnCap in relation to, inter alia, the accuracy of
the information contained in the documents relating to the Placing
and certain other matters relating to the Company and its business.
In addition, the Company has agreed to indemnify finnCap in
relation to certain liabilities that it may incur in respect of the
Placing and the Acquisition.
The obligations of finnCap under the Placing Agreement in
respect of the Placing are conditional upon, amongst other things,
Admission becoming effective on or before 8.00 a.m. on 27 March
2017 (or such later date as the Company and finnCap may agree, but
not later than 8.00 a.m. on 19 April 2017), and there being prior
to Admission no material breach of the warranties given to
finnCap.
finnCap may terminate the Placing Agreement in specified
circumstances (including for breach of warranty at any time prior
to Admission, if such breach is reasonably considered by finnCap to
be material in the context of the Placing) and in the event of a
force majeure event occurring at any time prior to Admission. If
the conditions of the Placing Agreement which apply to the Placing
as a whole are not fulfilled on or before the relevant date in the
Placing Agreement, subscription monies will be returned to placees
without interest as soon as possible thereafter.
In consideration for the services to be provided to the Company
by finnCap in connection with Admission and the Placing, the
Company has agreed to pay finnCap a corporate broking fee and
certain other costs and expenses incidental to Admission and/or the
Placing.
Long Term Incentive Plan
The Board intends to establish a 2017 Long Term Incentive Plan
("2017 LTIP") to succeed the 2015 LTIP (the terms of which were
announced on 23 July 2015), and will shortly make awards under the
2017 LTIP to certain participants in the 2015 LTIP. The principles
underpinning the 2017 LTIP are intended to be broadly the same as
the 2015 LTIP.
Expected timetable of principal events
Trade Date in respect of the Placing 23 March 2017
Payment Date in respect of the 24 March 2017
Placing
Settlement Date in respect of 27 March 2017
the Placing
Expected date for Admission and 8:00 am on 27 March
commencement of dealings in the 2017
Placing Shares on AIM
Expected date for CREST accounts 8:00 am on 27 March
to be credited in respect of the 2017
Placing Shares to be held in uncertificated
form
Expected date for the despatch as soon as practicable
of definitive certificates in after 27 March
respect of the Placing Shares 2017
to be held in certificated form
Completion of the Acquisition 28 March 2017
Admission statistics
Number of Existing Ordinary Shares 182,579,108
Number of Placing Shares 13,333,334
Number of Option Shares 2,205,000
Placing Shares expressed as a
percentage of the Current Issued
Share Capital 7.3%
Placing Shares expressed as a
percentage of the Enlarged Issued
Share Capital 6.7%
Placing Price 75 pence
Enlarged Issued Share Capital
on Admission* 198,117,442
Gross Placing proceeds GBP10.0m
Market capitalisation of the Company GBP148.6 m
at Admission at the Placing Price*
AIM symbol of Existing Ordinary IDEA.L
shares
ISIN GB00B0CM0C50
* assuming completion of the Placing and the Option Exercise, as
set out above
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQPGUMUWUPMPWP
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