TIDMPHD
RNS Number : 3904K
PROACTIS Holdings PLC
07 July 2017
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 OR INTO OR FROM THE
UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH
AFRICA, THE REPUBLIC OR IRELAND OR ANY OTHER JURISDICTION IN WHICH
SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS
ANNOUNCEMENT HAS NOT BEEN APPROVED BY THE LONDON STOCK EXCHANGE,
NOR IS IT INTED THAT IT WILL BE SO APPROVED.
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
PROACTIS Holdings Plc
Proposed acquisition of Perfect Commerce, LLC
Placing to raise GBP70.0 million
New Debt Facilities
Issue of Convertible Acquisition Loan Notes
Admission of the Placing Shares to trading on AIM
Re-admission of the Enlarged Share Capital to trading on AIM
Board Changes
and
Notice of General Meeting
PROACTIS Holdings Plc ("PROACTIS", the "Group" or the
"Company"), the specialist spend management solution provider,
today announces that it has conditionally agreed to acquire all of
the outstanding membership interest in Perfect Commerce, LLC
("Perfect Commerce"), a global provider of spend management
solutions with operations in the US, UK and Europe (the
"Acquisition"), for an aggregate consideration of up to $132.5
million (approximately GBP102.4 million), together with an
oversubscribed conditional placing to raise GBP70.0 million at 165
pence per Placing Share, through finnCap, acting as sole bookrunner
to the Company for the Placing.
The Acquisition is consistent with PROACTIS' growth strategy,
which is designed to deliver a business that is capable of
addressing a growing global market demand for spend management
solutions. Perfect Commerce develops and sells cloud-based,
technology-led, spend management solutions for the public and
private sector markets. It has complementary territorial reach with
extensive international capabilities serving approximately 150
customers (largely Tier 1), with over 1.3 million users across more
than 80 countries, 20 languages and 100 currencies. Further,
Perfect Commerce operates its own proprietary supplier network that
it calls 'The Business Network' and which has approximately 970,000
suppliers connected to it. Those suppliers are able to use The
Business Network to collaborate with and transact efficiently and
electronically with their customers.
The Acquisition constitutes a reverse takeover under Rule 14 of
the AIM Rules, and accordingly will require Shareholder approval at
the General Meeting of the Company, to be held on 31 July 2017.
Key transaction highlights include:
-- Transformational acquisition, significantly accelerating PROACTIS' strategy
-- Strong strategic, commercial and financial rationale,
increasing PROACTIS' scale, geographic footprint, customer
opportunity, operational efficiencies and solution set
-- Increased supplier commerce opportunity through The Business Network
-- Multiple commercial and operational synergies:
o expected net annualised cost savings of approximately GBP5.0
million
o significant cross-sell / up-sell opportunities
-- Expected to be earnings enhancing in first full financial year of ownership
-- Placing of new Shares to raise GBP70.0 million, with
significant over-subscription and tight discount
-- New HSBC debt facilities totalling GBP45.0 million,
consisting of a GBP30.0 million RCF facility and a GBP15.0 million
term loan
-- Issue of $5.0 million of Convertible Acquisition Loan Notes
to the Proposed Director and another senior Perfect Commerce
employee
-- Appointment of new Chief Executive Officer, Hampton Wall
(President and Chief Executive Officer of Perfect Commerce), with
effect from Completion, with Tim Sykes resuming CFO role
Details of the Placing
PROACTIS has conditionally raised GBP70.0 million (before
commissions, fees and transaction costs) by way of a conditional
placing on a non pre-emptive basis of 42,424,243 Placing Shares at
the Placing Price of 165 pence per Placing Share. The Placing Price
represents a 5.7 per cent. discount to the closing middle market
quotation price of a Share on 6 July 2017 of 175.0 pence per Share,
being the last practicable date prior to this announcement. The
Placing Shares represent approximately 45.8 per cent. of the
Enlarged Share Capital.
Details of the Acquisition
The Company proposes to finance the Acquisition through the
Company's existing cash reserves, the net proceeds of the Placing,
the Convertible Acquisition Loan Notes and the New Debt Facilities.
At Completion, the Company expects to pay a total consideration of
approximately $127.5 million, payable in cash and by the issue of
the Convertible Acquisition Loan Notes. In addition, the Company
will pay up to a further $5.0 million in additional cash
consideration upon the occurrence of specified events during the
period to 31 July 2018.
The Placing and Acquisition are conditional, inter alia, on
approval by the Shareholders at the General Meeting to be held at
11.00 a.m. on 31 July 2017 at the office of finnCap Ltd at 60 New
Broad Street, London, EC2M 1JJ, and Admission taking place by no
later than 15 August 2017. Admission is expected to occur at 8.00
a.m. on 1 August 2017, and the Acquisition is expected to complete
on or about 4 August 2017. Re-admission is expected to occur by
8.00 a.m. on 7 August 2017 and no later than 15 August 2017.
An Admission Document, including details of the General Meeting
and the Resolutions, is expected to be posted to Shareholders
today. In addition, a copy of the Admission Document will be
available from the Company's registered offices from the date of
the Admission Document until the date falling one month from
Admission, and on the Company's website at www.proactis.com.
The Admission Document will contain detailed information about
the Transaction and explain why the Directors consider the
Transaction to be in the best interests of the Company and the
Shareholders as a whole, and accordingly unanimously recommend that
Shareholders vote in favour of the Resolutions to be proposed at
the General Meeting, notice of which will be set out at the end of
the Admission Document. The Directors who hold interests in Shares
have irrevocably undertaken to vote in favour of the Resolutions to
be proposed at the General Meeting in respect of a total of
10,606,986 Shares representing approximately 21.1 per cent. of the
Shares.
Board changes
The Board is pleased to announce the appointment of George
Hampton Wall Jr, currently President and Chief Executive Officer of
Perfect Commerce, as Chief Executive Officer of the Company, with
effect from Completion. Mr Wall will replace Rod Jones as Chief
Executive Officer, who retired from the Board yesterday with
immediate effect. Tim Sykes, the current Chief Executive Officer
Designate and Chief Financial Officer will, with effect from
Completion, resume his role at Chief Financial Officer.
Further information regarding Mr Wall's appointment is set out
in paragraph 16 below.
Tim Sykes, Chief Financial Officer of PROACTIS, commented:
"This is a highly complementary and transformational acquisition
which we expect to be earnings enhancing in the financial year
ending 31 July 2018. The Acquisition will accelerate PROACTIS'
growth and bring substantial global scale to the Group, positioning
us to exploit the high growth areas of the spend management market
and enabling us to provide our customers with an even broader
product offering.
"In addition, it will build our scale in the US, UK and mainland
Europe, with the Enlarged Group having a uniquely balanced and
scaled commercial and operational capability across all of those
territories. The combined solution set will enable us to target
both larger and more complex customer contract opportunities,
wherever that customer might be located.
"As well as complementing the core business, we expect PROACTIS'
own early-adopter product offering in supplier commerce to be
transformed by the addition of The Business Network.
"The Board has identified significant efficiencies that it
expects to realise through the combination of commercial and
operational processes and expects these to be delivered within the
first twelve months following Completion. We also believe that we
are acquiring Perfect Commerce at a profitability inflexion point,
with its momentum underpinned by a series of new name wins in
recent months.
"We are delighted that Hamp is joining the Board at this
exciting time. Hamp brings with him considerable experience in the
industry, as well as a specific skillset in acquisition
integration, and he will be of great value to the Company as we
continue to grow. On behalf of everyone at PROACTIS, I would like
to thank Rod Jones for his contribution to the growth and success
of PROACTIS to this point and wish him a happy retirement.
"The support shown by investors for this Placing and Acquisition
has been outstanding and has resulted in the Placing being
significantly oversubscribed, by both existing and certain new
investors, who we welcome on to the Company's share register. This
is again a clear vote of confidence in the Board's growth strategy
and we look forward to continuing to deliver on this."
Hamp Wall, President and Chief Executive Officer of Perfect
Commerce, commented:
"We are excited to be joining PROACTIS at a time of such rapid
innovation in the industry. We have a highly complementary product
set, customer base and geographic reach and we look forward to
offering our customers an enhanced product offering.
"I was extremely encouraged by the appetite of investors and
HSBC for this transaction and I look forward to delivering value
for them in return."
Enquiries:
PROACTIS Holdings PLC
Tim Sykes, Chief Financial Officer Via Redleaf Communications
Redleaf Communications
Rebecca Sanders-Hewett
Sam Modlin 0207 382 4730
finnCap Ltd
Corporate Finance
Stuart Andrews
Carl Holmes
Emily Watts
Simon Hicks
Corporate Broking
Simon Johnson
Stephen Norcross
Alice Lane 0207 220 0500
Notes to Editors:
PROACTIS creates, sells and maintains specialist software which
enables organisations to streamline, control and monitor all
internal and external expenditure, other than payroll. PROACTIS is
used in approximately 800 organisations around the world from the
commercial, public and not-for-profit sectors.
PROACTIS is headquartered in Wetherby, West Yorkshire. It
develops its own software using an in-house team of developers and
sells through both direct and indirect channels via a number of
Accredited Channel Partners.
PROACTIS floated on the AIM market of the London Stock Exchange
in June 2006.
IMPORTANT NOTICE
This announcement does not constitute an offer to sell or issue
or a solicitation of an offer to buy or subscribe for Placing
Shares in any jurisdiction including, without limitation, the
United States, Canada, the Republic of South Africa, Australia,
Japan, the Republic of Ireland or any other jurisdiction in which
such offer or solicitation is or may be unlawful (a "Restricted
Jurisdiction"). This announcement and the information contained
herein are not for publication or distribution, directly or
indirectly, to persons in a Restricted Jurisdiction unless
permitted pursuant to an exemption under the relevant local law or
regulation in any such jurisdiction. No action has been taken by
the Company, finnCap or any of their respective affiliates that
would permit an offer of the Placing Shares or possession or
distribution of this announcement or any other publicity material
relating to such Placing Shares in any jurisdiction where action
for that purpose is required. Persons receiving this announcement
are required to inform themselves about and to observe any such
restrictions.
The securities referred to herein have not been, and will not
be, registered under the US Securities Act of 1933, as amended (the
"Securities Act"), and may not be offered or sold in the United
States absent registration or an exemption from registration under
the Securities Act. There will be no public offer of securities in
the United States.
Certain statements contained in this announcement are
forward-looking statements and are based on current expectations,
estimates and projections about the potential returns of the
Company, Perfect Commerce and the Enlarged Group and the industry
and markets in which the Enlarged Group will operate. Words such as
'expects', 'should', 'intends', 'plans', 'believes', 'estimates',
'projects', 'may', 'targets', 'would', 'could' and variations of
such words and similar expressions are intended to identify such
forward-looking statements and expectations. These statements are
not guarantees of future performance or the ability to identify and
consummate investments and involve certain risks, uncertainties,
outcomes of negotiations and due diligence and assumptions that are
difficult to predict, qualify or quantify. Therefore, actual
outcomes and results may differ materially from what is expressed
in such forward-looking statements or expectations. Among the
factors that could cause actual results to differ materially are:
the general economic climate, competition, foreign exchange
fluctuations, changes of strategic direction, minority shareholder
action, failure of internal controls, availability of purchasers in
due course, price and margin pressure, technology developments,
systems or network failures, changes in customer requirements,
failure of suppliers to deliver against contract, availability of
suitable acquisition targets, interest rate levels, loss of key
personnel, the result of legal, financial and commercial due
diligence, the availability of equity financing and/or debt
financing on acceptable terms and changes in the legal or
regulatory environment. These forward-looking statements speak only
as at the date of this announcement. The Company expressly
disclaims any obligation or undertaking to disseminate any updates
or revisions to any forward-looking statements contained in this
announcement to reflect any change in the Company's expectations
with regard to them or any change in events, conditions or
circumstances on which any such statements are based, unless
required to do so by applicable law or the AIM Rules.
Any indication in this announcement of the price at which the
Shares have been bought or sold in the past cannot be relied upon
as a guide to future performance. Persons needing advice should
consult an independent financial adviser. No statement in this
announcement is intended to be a profit forecast and no statement
in this announcement should be interpreted to mean that earnings
per share of the Company for the current or future financial years
would necessarily match or exceed the historical published earnings
per share of the Company.
finnCap, which is authorised and regulated in the United Kingdom
by the FCA, is acting for PROACTIS and for no one else in
connection with the Placing and will not be responsible to anyone
other than PROACTIS for providing the protections afforded to
clients of finnCap or for affording advice in relation to the
Placing, or any other matters referred to herein.
Neither the content of the Company's website (or any other
website) nor the content of any website accessible from hyperlinks
on the Company's website (or any other website) is incorporated
into, or forms part of, this announcement.
Defined terms used in this announcement shall have the same
meaning (unless the context otherwise requires) as ascribed to it
in the "Definitions" section at the bottom of this
announcement.
Exchange rates
Where amounts in US Dollars have been translated into pounds
Sterling (or vice versa) they have been done so at an exchange rate
of GBP1:$0.7731 (save as where otherwise indicated), being the
exchange rate prevailing on 6 July 2015, being the latest
practicable date prior to the publication of this announcement
(Source: Bloomberg).
The following text has been extracted from the Admission
Document which is expected to be published today.
ADMISSION AND RE-ADMISSION STATISTICS
Placing Price per Placing Share 165 pence
Number of Existing Shares in issue
as at the date of this announcement 50,238,546
Number of Placing Shares being issued
pursuant to the Placing 42,424,243
Enlarged Share Capital on Admission
and Re-admission (1) 92,662,789
Market capitalisation on Admission GBP152.9 million
and Re-admission (1),(2)
Percentage of the Enlarged Share 45.8 per cent.
Capital being placed pursuant to
the Placing(1)
Estimated gross proceeds of the Placing GBP70.0 million
Estimated net proceeds of the Placing GBP64.8 million
TIDM on Admission and Re-admission PHD
ISIN on Admission and Re-admission GB00B13GSS58
SEDOL on Admission and Re-admission B13GSS5
(1) Assuming no Shares (other than all the Placing Shares) are
issued by the Company between the date of this announcement and
Re-admission.
(2) At the Placing Price.
EXPECTED TIMETABLE OF PRINCIPLE EVENTS
2017
Publication of the Admission 7 July
Document
Latest time and date for 11.00 a.m. on 27 July
receipt of Forms of Proxy
or CREST voting instructions
General Meeting 11.00 a.m. on 31 July
Admission of the Placing 8.00 a.m. on 1 August
Shares
Placing Shares credited 1 August
to CREST accounts
Completion of the Acquisition After 6.30 p.m. on 4
Agreement August
Re-admission and re-commencement By 8.00 a.m. on 7 August
of dealings in the Enlarged
Share Capital
Dispatch of definitive share Within 10 Business Days
certificates of Admission
Notes:
(1) References to time are to London, England time unless
otherwise stated.
(2) Each of the times and dates in the above timetable is
subject to change without further notice. Any such change may be
notified by an announcement on a Regulatory Information
Service.
1. INTRODUCTION
PROACTIS has today announced that it has entered into the
Acquisition Agreement to acquire all of the outstanding membership
interest in Perfect Commerce for an aggregate consideration of up
to $132.5 million (approximately GBP102.4 million) subject to
certain adjustments at Completion, to be satisfied through the
Company's existing cash reserves, the net proceeds from the
Placing, the Convertible Acquisition Loan Notes and the New Debt
Facilities.
Perfect Commerce develops and sells cloud-based, technology-led,
spend management solutions for the public and private sector
markets. It has global reach and extensive international
capabilities serving approximately 150 customers, many of which are
Tier 1 customers, with over 1.3 million users (excluding ERP and e
Catalogue customers) across 83 countries, 21 languages and 102
currencies. Further, Perfect Commerce operates its proprietary
supplier network that it calls 'The Business Network' and which has
approximately 970,000 suppliers connected to it. Those suppliers
use The Business Network to transact efficiently and electronically
with their customers. The Business Network has been in operation
since approximately 1999.
The Board and the Proposed Director believe that the Acquisition
has a strong strategic, commercial and financial rationale and that
the Acquisition accelerates PROACTIS' growth strategy, increases
its scale and expands its geographic footprint. The Directors and
Proposed Director believe that Perfect Commerce is well positioned
for growth and is at a profitability inflexion point, after a
period of restructuring. The Enlarged Group is expected to be one
of the top ten 'pure' spend management companies globally and will
have a customer base extending across the United States, the United
Kingdom and mainland Europe served by an enhanced end-to-end
solution set.
The Board and the Proposed Director believe that the Enlarged
Group will have a highly complementary customer base with minimal
overlap and that there are significant cross-selling and up-selling
opportunities. In addition, the Board and the Proposed Director
have identified a net GBP5.0 million of annualised cost savings in
the Enlarged Group which they expect to realise by the end of the
financial year ending 31 July 2018. Consequently, the Board and the
Proposed Director believe that the Acquisition will be earnings
enhancing in the financial year ending 31 July 2018.
The Board proposes to appoint Hampton Wall, the current
President and Chief Executive Officer of Perfect Commerce, with
effect from Completion. The Board also proposes to adopt the LTIP,
the Bonus Plan and the Executive Share Option Scheme 2017, further
details of which will be set out in paragraph 6 of Part VII of the
Admission Document.
The Acquisition constitutes a reverse takeover under the AIM
Rules, and therefore requires Shareholder approval at a General
Meeting of the Company.
The Placing and Acquisition are conditional, inter alia, on
approval by the Shareholders at a General Meeting to be held at
11.00 a.m. on 31 July 2017, and Admission taking place by no later
than 15 August 2017. Admission is expected to occur at 8.00 a.m. on
1 August 2017, and the Acquisition is expected to complete on or
about 4 August 2017. Re-admission is expected to occur by 8.00 a.m.
on 7 August 2017 and no later than 15 August 2017.
The Admission Document will contain detailed information about
the Transaction and explains why the Board considers that the
Transaction is in the best interests of the Company and its
Shareholders as a whole. The Board recommends that you vote in
favour of the Resolutions to be proposed at the General Meeting,
notice of which will be set out at the end of the Admission
Document.
The Board who hold interests in Shares have irrevocably
undertaken to vote in favour of the Resolutions to be proposed at
the General Meeting in respect of a total of 10,606,986 Shares
representing approximately 21.1 per cent. of the Shares.
2. BACKGROUND TO AND REASONS FOR THE ACQUISITION
The Acquisition is consistent with PROACTIS' growth strategy,
which is designed to deliver a larger business that is capable of
addressing a growing global market demand for spend management
solutions. The Board and the Proposed Director believe that the
Enlarged Group will be a growing business with scale that is both
profitable and cash generative.
PROACTIS has adopted a strategy including organic growth through
the delivery of best-in-class, cloudbased, technology led spend
management solutions for its customers and the suppliers to its
customers. The Group's investment in its solution set has supported
this strategy and has enabled the Group to increase the size of its
customer base through winning new customers as well as retaining
and selling more to existing customers.
PROACTIS has supplemented its organic growth with a series of
five acquisitions since February 2014.
These acquisitions have all delivered increased sales and
profits to the Group. When evaluating potential M&A
opportunities, PROACTIS focuses on certain key characteristics,
including complementary customer bases, solutions and technologies
as well as certain financial criteria.
The Board and the Proposed Director consider that Perfect
Commerce satisfies these characteristics and criteria.
Perfect Commerce and PROACTIS both operate in the spend
management solutions market, specialising in the development and
sale of cloud-based, technology led spend management solutions to
help customers procure 'indirect' goods and services more
efficiently and effectively with the combined objectives of
reducing costs and improving control and compliance. The Board and
the Proposed Director believe that the Enlarged Group can become a
leading provider of spend management solutions globally, with PMSI
reporting that the Enlarged Group would rank in the global top 10
of the ePurchasing market by historical revenue. Perfect Commerce
and PROACTIS are both, individually, growing and profitable
companies and, together, the Board and the Proposed Director
believe that the Enlarged Group has a greater potential to grow
revenues and profitability more quickly than each company could do
independently. This remains a key feature of the Company today,
with annualised contracted revenue as at 31 January 2017 estimated
at approximately 84 per cent. of total forward revenue.
The Board and the Proposed Director consider that Perfect
Commerce has been through a significant restructuring programme
since the acquisition of Hubwoo in September 2015 (which Perfect
Commerce acquired as Hubwoo revenues were reducing following
customer losses). The principle part of this restructuring
programme included a cost reduction exercise which was designed to
result in a cost base that was better aligned to the anticipated
reduced revenue base. The Board and the Proposed Director believe
that this restructuring programme is largely complete and that
Perfect Commerce is now well positioned for growth as part of the
Enlarged Group.
The PROACTIS and Perfect Commerce businesses have complementary
solutions and technology which are provided to customers in
territories and sectors with minimal overlap. The Board and the
Proposed Director believe that Perfect Commerce's Business Network,
which connects buyers and suppliers and enables those two customer
groups to trade electronically, is of particular value and
relevance to the Enlarged Group. The Board and the Proposed
Director believe that the combination of the two businesses will
result in an Enlarged Group with significantly increased scale, as
well as improved territorial and customer reach to deliver an
enhanced solution set to new and existing customers in its chosen
markets. The Board and the Proposed Director also believe that the
operational scale in its chosen territories should provide the
Enlarged Group with a better opportunity to widen its acquisition
strategy going forward, as further described in paragraph 8.1
below. Following Completion, it is intended that the Enlarged Group
will be headquartered in London with operations in the UK, the US,
France, Germany, Belgium, the Netherlands, the Philippines and New
Zealand.
The Board and the Proposed Director believe that the combination
of the PROACTIS and Perfect Commerce business will together deliver
a significantly enhanced solution set and will also be able to
accelerate development of new innovative solutions and products as
a result of the combined scale of the two businesses' development
capacities.
The Board and the Proposed Director expect the Enlarged Group to
achieve annualised net cost savings of approximately GBP5.0
million, these are expected to be realised before the end of the
financial year ending 31 July 2018. In addition, the Board and the
Proposed Director have identified a number of commercial
opportunities which they believe will provide additional revenues
to the Enlarged Group.
The Enlarged Group's board of directors and management team will
be strengthened and, on Completion, Hampton Wall will be appointed
as Chief Executive Officer of the Enlarged Group. Mr Wall, the
President and Chief Executive Officer of Perfect Commerce, has
experience in cross border M&A, having completed four
acquisitions with Perfect Commerce since 2012. The Board believes
that Mr Wall's experience and understanding of the sector will
further strengthen PROACTIS' management team. As part of the
Acquisition, the Proposed Director will hold a Convertible
Acquisition Loan Note in the principal amount of $3.75 million,
under which he may be allotted Shares. In addition, the Enlarged
Group intends to put in place an executive leadership team, led by
Mr Wall, which will include commercial and operational executives
from each key territory and also a team of executives that will be
responsible for the provision of a corporate and technical
infrastructure to support the commercial and operational
executives. It is anticipated that the executive leadership team
will comprise eight individuals in total and, together with the
Board and the Proposed Director, it will also be responsible for
delivering the integration plan for the two businesses, as referred
to in paragraph 8.2 below.
3. SUMMARY INFORMATION ON PROACTIS
PROACTIS is a global spend management solution provider which
creates, sells and maintains spend management software that enables
organisations to streamline, control and monitor all expenditure,
other than payroll, and delivers bottom-line value, monetary
savings and efficiencies through improved spend management.
PROACTIS' solutions are used by approximately 850 buyer
organisations, with over 2 million users, in over 90 countries
across the commercial, public and not-for-profit sectors. In
addition, the Board believes that PROACTIS' customers have over 1
million supplier relationships. During 2010, PROACTIS' business
model transitioned from a perpetual licence only model to a blended
model, offering subscription based SaaS licences as well as
perpetual licences. This transition was designed to fulfil a
perceived commercial market need at the time, and which the Board
believes is still present, as well as help the Company to deliver
solid revenue with higher levels of recurring income.
Following a change in major Shareholders in 2013, the Company
started to augment its organic growth with selective acquisitions,
acquiring customers and cross-selling opportunities along with
acquiring complementary solutions to the Group's businesses. The
Company has made five acquisitions, excluding Perfect Commerce,
since 2014 and the Board and the Proposed Director believe the
Company has a strong track record of business integration.
During 2014, PROACTIS announced its intention to provide
software that could create efficiencies within the buy/sell
transaction process for both buyers and suppliers and that this
could, potentially, provide a new form of revenue from suppliers.
PROACTIS commenced designing software to support this and is
presently in an early adopter programme with a small number of
buyers and suppliers. The Group developed the software with the
objective that it would increase transparency within the payment
cycle for suppliers in order to create the opportunity for supplier
financing. This opportunity had been progressed and PROACTIS is in
the process of negotiating an APF with HSBC.
Detailed information on the Existing Group will be set out in
Part II of the Admission Document.
4. SUMMARY INFORMATION ON PERFECT COMMERCE
Perfect Commerce provides cloud-based procurement, sourcing, and
supplier network software and services to the enterprise and public
market sectors through a blended buyer and supplier revenue model,
with leading edge supplier network functionality. Perfect Commerce
was founded in 2000 and is now used across approximately 80
countries by, largely, Tier 1 customers. Perfect Commerce was
acquired by a procurement services and business process outsourcing
company, led by the Proposed Director in 2007. Since that time,
Perfect Commerce has pursued a growth strategy concentrating on
acquisition led growth with the objective of creating a
technology-led spend management solutions group.
In September 2015, Perfect Commerce acquired a majority stake
(approximately 79 per cent.) in Hubwoo, a supply management and
business network solution provider, headquartered in Paris, France
and listed on the Eurolist of NYSE Euronext. This acquisition
accelerated Perfect Commerce's global growth strategy, extending
its suite of procurement and sourcing solution capabilities in both
vertical and geographical markets. Under Perfect Commerce's
ownership Hubwoo has been through a significant restructuring
exercise and its customer base has stabilised, its cost base has
been realigned to the reduced revenue base and the Board and the
Proposed Director believe it is now well positioned for future
growth.
Perfect Commerce has recently expanded its customer base by
securing 14 major deals in 2016, nine of which were based in the US
with the remaining five being based in mainland Europe.
Perfect Commerce and Hubwoo have consolidated their separate
management teams and operations in France. The technologies used by
Hubwoo were compatible with those of Perfect Commerce and this has
enabled the integration process to be completed quickly and
efficiently. This acquisition also brought with it The Business
Network, which connects buyers and suppliers, enabling those two
customer groups to trade electronically. The Board and the Proposed
Director believe this is of particular value and relevance to the
Enlarged Group.
The Business Network is a technology platform that integrates
with the ERP Systems, procurement and accounts payable
applications, on-premise and in the cloud, making it a versatile
solution for Perfect Commerce that will also enable PROACTIS to
utilise that technology for its own supplier networking
opportunities.
In addition to The Business Network, Perfect Commerce offers a
comprehensive solution set for buyers, including; management of
contracts, sourcing, purchasing, catalogue management, invoice
management and services procurement.
Perfect Commerce Business
Perfect Commerce provides solutions designed to enable customers
to improve and make their spend management processes more efficient
and effective. Perfect Commerce offers SaaS procurement solutions
in which it is a leading player in its chosen markets as it
continues to deliver a stable and reliable end-to-end system.
The broad suite of SaaS solutions are used by its customers for
global government deployments in a variety of industries including
chemicals, retail, energy, financial services, state and local
government, food products, medical, hospitality, manufacturing,
technology and transportation. Perfect Commerce's solutions seek to
cover every aspect of spend management, from spend analytics and
sourcing to contract management, procurement and e-invoicing.
Perfect Commerce's services assist its customers to effectively
manage the end-to-end procure to pay, strategic sourcing and supply
chain management processes. Perfect Commerce also provides
consulting services in supply chain and business process
outsourcing.
Customers
With its comprehensive procurement software solution set,
Perfect Commerce has been able to produce a system in which it can
directly deliver efficiencies to all sizes and types of customers.
Perfect Commerce's solutions are used by over 1.3 million users in
over 80 countries, 21 languages, and 102 currencies. This figure
does not include ERP and eCatalogue customers. Perfect Commerce's
customer base consists of approximately 150 customers, the majority
of which are Tier 1 customers and it owns and operate The Business
Network, whose customers include: IBM, Idaho, BASF, State Street,
ING, Microsoft, BNP Paribas, UCLA and Schlumberger.
Detailed information on Perfect Commerce will be set out in Part
III of the Admission Document.
5. COMPARISON OF PROACTIS AND PERFECT COMMERCE
The Board and the Proposed Director believe that the following
represents a high level comparison of Perfect Commerce and
PROACTIS:
-- Customers - though the sales processes of Perfect Commerce
and PROACTIS share similarities, Perfect Commerce's customer base
is smaller in number (approximately 150) but is larger in nature
(predominantly Tier 1, Fortune 500 organisations) compared to
PROACTIS, whose buyer customer base is greater in number
(approximately 850) but smaller in nature (predominantly Tier 2
organisations). The Tier 2 space is more developed in the UK
market, but currently nascent in the US and mainland Europe. In
addition, Perfect Commerce generates significant revenue from
suppliers as well as buyers, whereas PROACTIS' comparatively
embryonic supplier network dictates that PROACTIS generates its
revenue substantially from buyers with minimal supplier network
revenue.
-- Sector - Perfect Commerce and PROACTIS both have customers in
many different commercial and public sector markets. PROACTIS is a
leader in respect of number of the customers in the UK public
sector, whereas Perfect Commerce's customer base is pan-sector.
Perfect Commerce's customers are more concentrated in the US and
mainland Europe whilst PROACTIS' are more concentrated in the UK.
The Board and the Proposed Director believe that the Enlarged Group
will have the opportunity to penetrate further the US commercial
and public sector markets and the public sector market in mainland
Europe.
-- Business model - Perfect Commerce operates a SaaS based
business model only. PROACTIS also has a SaaS based business model,
with some instances of perpetual licences being sold. The Board and
Proposed Director believe that the SaaS based business model, where
revenues are contracted within the subscription agreements,
generate high proportions of contracted revenue. The Board and the
Proposed Director use an annualised contracted revenue calculation
to measure this and expect that the Enlarged Group's annualised
contracted revenue will be in excess of 85 per cent. as at
Completion.
-- Geographic presence - Perfect Commerce has a significant
presence in the US and in mainland Europe. PROACTIS is primarily
focused on the UK market, with a relatively small presence in the
US and mainland Europe. The Board and the Proposed Director believe
that the Enlarged Group will be better positioned to serve
customers operating globally and, potentially, to target
geographies.
-- Products - the Board and the Proposed Director believe that
PROACTIS and Perfect Commerce have complementary spend management
solution sets, with PROACTIS adding AP automation, spend analytics
and supply chain finance, that is in PROACTIS' early adopter
programme, and with Perfect Commerce adding The Business Network,
EU eInvoicing compliance in 37 countries and an emerging offering
in Services Procurement. The Board and the Proposed Director
believe that there will be significant opportunity to up-sell and
cross-sell within the existing customer base using the combined
solution sets of both organisations.
-- Routes to market - Perfect Commerce and PROACTIS have both
operated a sales strategy including direct and indirect routes to
market. This is expected to continue within the Enlarged Group.
-- Solution development - Perfect Commerce and PROACTIS both,
individually, invest substantially in their respective existing and
also new solutions, with approximately 10 per cent. of revenue
being spent in this area. The Board and the Proposed Director
believe there is an opportunity to focus this spending more
efficiently in the Enlarged Group to accelerate the development of
new innovative solutions.
-- Technology - Perfect Commerce and PROACTIS have compatible
technologies which the Board and the Proposed Director believe will
enable the Enlarged Group to deploy new innovative solutions
alongside both Perfect Commerce's and PROACTIS' existing
solutions.
6. THE ENLARGED GROUP MARKET AND MARKET OPPORTUNITY
The Board and the Proposed Director believe that the ePurchasing
market can be described as the provision of solutions for
businesses and organisations that are designed to make their
procurement and purchasing processes more efficient and effective.
Whilst the Board and the Proposed Director believe that all
businesses and organisations have an inherent need for these
solutions, they believe that many are using inefficient manual
systems and processes or sub-optimal software or service based
solutions. These solutions have, historically, been delivered
through on-premise licenced software supplemented by solution
providers' service offerings. In more recent years, cloud-based
technologies have influenced solution providers' delivery of these
solutions to enable businesses and organisations to access the
solutions more flexibly, for example, through SaaS based business
models.
The Board and the Proposed Director believe that the ePurchasing
market is fragmented, with no single or group of dominant
player(s), and has many specialist solution providers, such as
Coupa and Basware, competing with much larger ERP-led organisations
such as SAPAriba and Oracle. PROACTIS and Perfect Commerce were two
of only 12 competitors to be listed in the Gartner Magic Quadrant
in 2016, a leading industry commentator. The Board and the Proposed
Director believe that the fragmented nature of the market may be
because there are limited specialist solution providers that offer
a solution set across the full spectrum of spend management.
Consequently, these factors can result in businesses and
organisations using a mix of solutions from different solution
providers.
Solution providers may, therefore, have an objective to provide
end-to-end solution sets and there are two principal ways to
achieve this objective; (i) for a solution provider to develop its
own end-to-end solution set, or, (ii) for a solution provider to
acquire or partner with a different solution provider with a view
to providing the end-to-end solution set between the two solution
providers. Further, the Board and the Proposed Director believe
that it is important to be able to provide solutions on a global
basis and the Board and the Proposed Director believe that these
two factors have led to rapid industry consolidation; a recent
increase in M&A within the market as solution providers aim to
increase the breadth of their solution sets and expand to new
geographies to facilitate cross-selling.
PMSI estimates that the size of the ePurchasing market is
approximately $5.0 billion per annum but recognises that other
market reports estimate that the market size is larger at
approximately $7.0 billion. PMSI estimates that the market's
current growth rate is approximately 10 per cent. per annum and
that the market is expected to continue to grow at these levels
going forward.
Data from PMSI, analysing the market geographically across the
Americas, Europe, the Middle East and Africa ("EMEA") and APAC
suggests that the Americas and EMEA represent the majority of the
market. The Board and the Proposed Director believe that in the
Americas the market has traditionally focused around Tier 1 and
larger Fortune 500 organisations with, currently, little
penetration of ePurchasing solutions into Tier 2 organisations. In
the UK and Europe the ePurchasing market is more developed in Tier
2 organisations and this is a trend that the Board and the Proposed
Director believe will be replicated in the US and which the
Enlarged Group will be well positioned to capitalise on. When
reviewing the market by solution segment, PMSI considers that these
segments can be classified as S2P, business network and ancillary
services. PMSI data suggests that S2P represents the main segment
by value (further split into integrated S2P suites, P2P and S2C
modules), with approximately 60 per cent. of the total market
revenue. PMSI believe that, going forward, the fastest growth rates
within the market segments will be in business networks and
integrated S2P suites.
PMSI analysis suggests that a key growth driver of the Enlarged
Group will be the growing market awareness of spend management
solutions that facilitate process automation and integration.
Another key growth driver will be cloud-based technologies and
digitisation with developments such as artificial intelligence and
machine learning. These technologies and developments can
potentially enhance the solutions offered by ePurchasing solution
providers, largely through the disruption and automation of
traditional finance and procurement functions. The Board and the
Proposed Director believe that this has been demonstrated over
recent years, where there has been an increasing shift from
on-premise to off-premise solutions ("SaaS"), owing to the number
of advantages of SaaS solutions, such as lower up-front costs,
easier integration and ease of upgrade. PMSI reports that SaaS
revenue in the industry has more than doubled over the last 10
years and considers that it will evolve through incremental
innovations and continue to be the predominant distribution model
in the market. The Board and the Proposed Director also believe
that regulatory change such as potential EU regulation mandating
eInvoicing compliance will drive public sector initiatives,
including commercial enterprises that conduct business with the
public sector buyers, and further increases the Enlarged Group's
target market and opportunity.
The Board and the Proposed Director believe that the Enlarged
Group will be in a position to provide a substantially complete
solution set across the whole spend management domain and that this
could position the Enlarged Group well within the global market and
the competitive landscape.
7. COMPETITION
The Board and the Proposed Director believe that the factors
described above are resulting in growth in the ePurchasing market
with businesses and organisations seeking to identify solutions
that can assist them in making cost-savings and increasing control.
This has led to a fragmented and competitive landscape with no one
outright market leader. SAPAriba and Oracle are the two largest
players, but neither competes directly in Perfect Commerce's or
PROACTIS' market segment.
The competitive environment for spend management solutions is
relatively broad and PMSI splits the market between the ERP
vendors, the leading global pure-players and the mid-market and
niche vendors.
PMSI estimates that ERP vendors represent approximately 35 per
cent. market share, with SAPAriba being the market leader in this
group with an estimated 22 per cent. share of the total ePurchasing
market. Leading global pure players represent a combined 16 per
cent. market share, which is where the Board and the Proposed
Director believe that the Enlarged Group would be positioned. This
group of solution providers includes Basware, Coupa, Tradeshift/IBX
and Sciquest/Jaggaer. Medium sized and niche players represent a
group of 150+ vendors and are estimated to account for
approximately 31 per cent. share of the total market. Members of
this group typically have less than $30 million revenues and 1 per
cent. market share. Non-specialist players are estimated to
represent a 12 per cent. share of the market.
ERP vendors offer similar solutions to those that are expected
to be offered by the Enlarged Group, often as modules within their
broader ERP systems but these modules are not specialised for spend
management solutions and are often delivered through an on premise
solution rather than as an off premise, SaaS solution. These ERP
systems can take a long time to deploy and may require
organisational restructuring which can be disruptive to the
organisation, whereas the Board and the Proposed Director believe
that solutions such as those to be provided by the Enlarged Group
can be deployed with a reduced level of disruption to the
underlying business. Consequently ERP vendors are increasingly
moving away from on-premise solutions towards SaaS solutions. In
the industry as a whole, PMSI estimate that the share of SaaS
solutions has more than doubled over the last 10 years, exceeding
50 per cent. of the overall market in 2016 (compared to 25 per
cent. in 2006), while revenue from licence and related maintenance
fees has declined.
PMSI reports that in respect of profitability and growth trends,
there is typically a divide between the ERP vendors, mature
pure-players (often reporting low single-digit growth rates) and a
few fast-growing businesses (such as Perfect Commerce and
PROACTIS), which all report in excess of 10 per cent. EBITDA
margins, and the majority of other competitors that are loss making
(for example Coupa, Tradeshift, Tungsten), typically due to
ambitious R&D programmes, high marketing costs and/or low-price
positioning to attempt to win market share. PMSI position the
Enlarged Group as being 'one of the most profitable and
fast-growing ePurchasing pure players, globally' and 'the only
ePurchasing pure-player growing at in excess of a 15 per cent.
annual growth rate while reporting an EBITDA margin of in excess of
20 per cent. Additionally, within the market, there remains a
divergence in the business network offering and who pays for it.
Some competitors offer a business network to customers; however
revenue models vary between 'free-for supplier' models and
'freemium' plan providers. Typically the 'free-for supplier' model
offers minimal value for the supplier as it is often simply an
electronic transfer of purchase order and invoices through an email
server. While the providers charging supplier fees, like Perfect
Commerce, are providing the supplier with software solutions that
provide workload automation, customer management collaboration,
price negotiation and price files for validation as well as a host
of other value add services. The Board and the Proposed Director
believe that The Business Network offering across the market will
continue to evolve and a clearer adoption route will emerge over
the coming years.
In light of the expected ePurchasing market growth rates, the
fragmentation of the market and the combined strength of the
Enlarged Group's offering, the Board and the Proposed Director
believe that the Enlarged Group will be in a position to provide an
end-to-end and best-of-breed solution set across the full spectrum
of spend management as well as have a significantly strengthened
platform from which to continue to pursue the M&A strategy that
both PROACTIS and Perfect Commerce have adopted in the past.
8. THE ENLARGED GROUP STRATEGY AND BUSINESS
8.1 Strategy
The Board and the Proposed Director believe that the Enlarged
Group will continue PROACTIS' growth strategy that is as
follows:
-- deliver organic growth through the sale of best-in-class
spend management solutions for new customers. The Enlarged Group's
continued commitment to investment in its solutions will support
this;
-- retain existing customers through high levels of support and
service offerings with a focus on the cross-selling of the Enlarged
Group's solution set to take advantage of the opportunity to create
broader and deeper customer relationships;
-- undertake selected M&A based activity with a focus on
complementary territories, customer bases, solutions and
technology. Whilst the focus for the Enlarged Group will primarily
be the integration of Perfect Commerce and PROACTIS in the
short-term, the Board and the Proposed Director believe there
remains a healthy pipeline of further M&A opportunities that
would accelerate and enhance the growth of the Enlarged Group;
and
-- capitalise on The Business Network to unlock a new
opportunity, which PROACTIS has described as the 'supplier commerce
opportunity', by accessing and offering value added benefits and
services to a new customer grouping, the suppliers of PROACTIS'
customers. The Enlarged Group also intends to explore other
commercial opportunities, including those that arise from US Tier 2
companies, the US public sector, APF, AP automation, analytics and
BPO procurement.
8.2 Integration plan
The Company has developed a plan designed to integrate Perfect
Commerce and PROACTIS. This plan would create over time a single
operation, going to market with a common strategy, vision and
culture. The broad principles of the plan are as follows:
-- to combine the commercial and operational market and customer
facing teams in each of the principal geographies (the US, the UK
and mainland Europe) and to appoint an executive in each of those
territories that will carry the responsibility for the commercial
and operational activities in each of those territories. The
performance of these executives will be measured against growth,
profitability and other commercial, financial and operational
metrics;
-- each of the territories will have access to the entire
solution set which is available to be deployed in new and existing
business opportunities;
-- the design, development and support of the solution set will
be co-ordinated centrally and delivered globally and will be based
on market, customer and internal influences; and
-- a global infrastructure team, comprising corporate marketing,
product management, development, QA and L1&2 support, business
information, accounting and legal counsel, to support the
commercial and operational teams.
The Board and the Proposed Director have identified the need to
deliver a high level of service and communication to customers,
suppliers and staff throughout the duration of the integration
period and the integration plan includes a detailed plan for
communications throughout the period.
8.3 Integration synergies
The Board and the Proposed Director intend that the Enlarged
Group be headquartered in London, UK with other main offices in
Newport News, Virginia; Houston, Texas; Phoenix, Arizona; Paris,
France; Bonn, Germany; Alabang, The Philippines; Auckland, New
Zealand; Leeds, UK; Newcastle, UK; Telford, UK; and Aberdeen,
UK.
The Board and the Proposed Director expect the Enlarged Group to
achieve net annualised cost savings of approximately GBP5.0
million, primarily through a reduction in operating expenditure
resulting from the economies of scale that the Enlarged Group would
offer. These net cost savings are expected to arise in the areas
of:
-- Senior management rationalisation: approximately GBP0.6 million;
-- Relocation customer support (off-shore): approximately GBP0.3 million;
-- Rationalisation of IT operations: approximately GBP1.7 million;
-- Finance and administration: approximately GBP0.7 million;
-- Sales and account management: approximately GBP0.9 million; and
-- Other general operational efficiencies: approximately GBP0.8 million.
The Board and the Proposed Director believe that these expected
net annualised savings can be delivered by 31 July 2018 and that
they should accrue approximately evenly from the date of
Completion. The Board and the Proposed Director have estimated that
the cost of delivering these cost savings will be approximately
GBP2.5 million.
In addition to the above cost savings, the Board and the
Proposed Director also believe that the Enlarged Group will benefit
from an enhanced media profile and greater efficiencies in
marketing and communication campaigns for new business,
specifically within the US and French public sectors and the US
Tier 2 commercial market. The Board and the Proposed Director also
believe that the enhanced solution set should provide new revenue
opportunities from existing customers (through cross-selling and
up-selling) in the medium to long term.
9. SUMMARY OF FINANCIAL INFORMATION
Section B of Part V of the Admission Document will contain
audited historical financial information on Perfect Commerce for
the three years ended 31 December 2016. Audited historical
financial information on PROACTIS for the three years ended 31 July
2016 and unaudited interim statements for the six month periods
ended 31 January 2016 and 31 January 2017 will be incorporated by
reference into Section C of Part V of the Admission Document.
The following summary financial information on Perfect Commerce
and on PROACTIS has been extracted, without material adjustment
(unless otherwise stated), from the financial information to be
contained in Section B of Part V of the Admission Document (in the
case of Perfect Commerce) and from the financial information to be
incorporated by reference into Section C of Part V of the Admission
Document (in the case of PROACTIS). The following summary financial
information should be read in conjunction with the full text of the
Admission Document (when published) and with the financial
information to be presented in Sections B and C of Part V of the
Admission Document. Investors should not rely solely on this
summarised financial information.
Summary historical financial information on PROACTIS
Year ended Year ended Year ended Six months Six months
31 July 31 July 31 July ended ended
2014 (audited) 2015 (audited) 2016 (audited) January January
GBP'000 GBP'000 GBP'000 2016 (unaudited) 2017 (unaudited)
GBP'000 GBP'000
Revenue 10,150 17,219 19,374 8,655 11,795
Operating profit 160 1,582 1,882 974 954
Adjusted* Operating
profit 1,122 2,866 3,227 1,435 1,926
Adjusted* EBITDA 2,042 4,789 5,300 2,470 3,034
Profit after
tax 322 2,016 2,485 980 1,081
* Stated before the impact of non-recurring administrative
expenses (related to the Group's acquisition during FY16 and the
post-acquisition integration and re-organisation programmes),
amortisation of customer related intangible assets and share based
payment charges.
Summary historical financial information on Perfect Commerce
Year ended Year ended Year ended
31 December 31 December 31 December
2014 2015 2016 (audited)
(audited) (audited) $'000
$'000 $'000
Revenue 18,046 27,928 39,673
Operating profit (1,404) (3,255) 2,993
EBITDA/(LBITDA) (548) (1,429) 6,446
Profit after tax (2,441) (5,486) (760)
10. CURRENT TRADING AND PROSPECTS
PROACTIS
The Existing Group announced its unaudited interim results for
the six months ended 31 January 2017 on 26 April 2017, reporting
the following financial highlights:
-- Headline revenues increased 35.6 per cent. to GBP11.8 million
(H1 2016: GBP8.7 million), benefitting from the contribution of Due
North Limited (acquired on 2 February 2016) and Millstream
Associates Limited (acquired on 16 November 2016);
-- Underlying revenue growth (excluding the benefit of these
acquisitions) was 13.4 per cent. (H1 2016: 3.6 per cent.);
-- Adjusted EBITDA increased 25.0 per cent. to GBP3.0 million (H1 2016: GBP2.4 million);
-- Strong balance sheet with net debt at GBP2.7 million (H1 2016: GBP0.5 million);
-- Buoyant deal activity: 27 new name deals (H1 2016: 23);
-- Favourable revenue shift toward multi-year SaaS deals: 22 new names (H1 2016: 14);
-- Increased volumes from existing customers: 59 deals to 31 January 2017 (H1 2016: 45); and
-- Early adopter programme for 'supplier Commerce' has
progressed well during the period and overall supplier opportunity
extended.
The Existing Group has seen strong growth, both organically and
by acquisition, for the six months ended 31 January 2017. The Board
considers that the level of organic growth has been strong and that
this has been bolstered by the contributions from recent
acquisitions. The Board believes that PROACTIS has executed its
M&A strategy effectively over the six months ended 31 January
2017 and is committed to further M&A activity. Alongside the
significant levels of new names signed during the period in the
core business, PROACTIS' customer retention and increased deal flow
from existing customers demonstrates the strength of PROACTIS'
proposition and its ability to address successfully the growing
spend management market.
Trading since 1 February 2017 has been in line with the Board's
expectations.
This information relates to past performance. Past performance
is not a reliable indication of future results.
Perfect Commerce
Perfect Commerce Group's focus over the past 12 months has been
on cost restructuring, increasing efficiency and profit margin
improvement, despite a reduced customer base and a consequent
reduction in Hubwoo's service revenue. Whilst profit declined over
Perfect Commerce Group's two financial years ended 31 December
2015, FY16 saw a return to EBITDA profitability.
Highlights regarding trading for the first five months to 31 May
2017 include:
-- Revenue from eight new customers expected to be generated in this financial period;
-- Three new customer "label" wins in 2017, being Bosch, North
Carolina (US) and Chesterfield Virginia (US); and
-- Normalised customer losses, with greater than 99 per cent. revenue retention rate.
Between 1 January 2017 and 31 May 2017, the Perfect Commerce
Group traded broadly in line with its management's expectations.
These expectations reflected a decline in Hubwoo revenues compared
to prior years as previously terminated contracts expired, as will
be described in paragraph 3 of Part III of the Admission Document.
A number of new contracts that were services revenue based have
been delayed but are expected to be delivered post Completion.
Overall, the Board and the Proposed Director are pleased with the
strong pipeline of opportunities that the Perfect Commerce Group
has and are confident in the Perfect Commerce Group's ability to
trade in line with expectations for the year ending 31 December
2017.
Some of this information relates to past performance. Past
performance is not a reliable indication of future results.
11. PRINCIPAL TERMS AND CONDITIONS OF THE ACQUISITION
Acquisition of Perfect Commerce
On 7 July 2017, the Company, PROACTIS US and the Seller (amongst
others) entered into the Acquisition Agreement, under which
PROACTIS US has conditionally agreed to acquire all of the
outstanding membership interest of Perfect Commerce. Immediately
prior to Completion, the Seller will transfer all of its material
subsidiaries to Perfect Commerce and convey to Perfect Commerce all
material assets of the Seller and of any retained subsidiary
relating to the operation of Perfect Commerce's business. At
Completion, the Company expects to pay a total consideration of
approximately $127.5 million, payable in cash and by the issue of
the Convertible Acquisition Loan Notes. In addition, the Company
will pay up to a further $5.0 million in additional cash
consideration upon the occurrence of specified events during the
period to 31 July 2018. The cash portion of the purchase price
payable at Completion will be reduced by any outstanding
indebtedness, unpaid transaction expenses, certain unpaid income
taxes, if any, and by $637,500 to be deposited into an escrow
account to fund the Seller's indemnity obligations.
Conditions to Acquisition
The Acquisition Agreement is conditional upon, amongst other
things, the approval of the Acquisition by Shareholders at the
General Meeting (notice of which will be set out at the end of the
Admission Document) and the Company being in receipt of adequate
funding.
Completion of the Acquisition is intended to occur within three
Business Days following Admission, with Re-admission occurring
shortly thereafter. At Admission, a number of conditions to the
Acquisition and the New Facilities Agreement will remain to be
satisfied (or waived). In the unlikely event that the Acquisition
does not complete in circumstances where Admission has already
taken place, the Board's current intention is that the net proceeds
of the Placing will be invested and/or applied to manage the
Company's debt and cash position on a short term basis while the
Directors evaluate other acquisition opportunities and, if no
acquisitions can be found on acceptable terms within a suitable
timeframe, the Board will consider how best to return surplus
capital to Shareholders. Such a return could carry financial and
tax costs for certain Shareholders, will incur costs on the part of
the Company and would be subject to applicable securities laws such
that the total amount of any return of capital may be less than the
amount subscribed in the Placing.
Warranties and Indemnities
The Acquisition Agreement includes representations, warranties
and covenants from the Seller in favour of the Company. The Seller
and certain members of the Seller owning a majority of the
outstanding membership interest of the Seller (the "Key Holders")
agree to indemnify the Company for damages arising out of any
breaches of the Seller's representations, warranties and covenants.
However, except for indemnities relating to specified fundamental
representations, certain taxes and certain other specific items,
Seller's and the Key Holders' indemnity obligations are limited to
$637,500 in the aggregate, which amount will be deposited at
Completion into an indemnity escrow account. In addition, the Key
Holder's indemnity obligation, which are several, not joint are
based pro rata on each Key Holder's relative ownership interest in
the Seller. As further protection, the Company has procured a
representation and warranty insurance policy with a policy limit of
$25.5 million. Claims under this policy are subject to customary
and certain specific conditions and exclusions.
Further details of the Acquisition Agreement will be set out in
paragraph 18.1 of Part VII of the Admission Document.
12. HUBWOO AND POSSIBLE TER OFFER
Pursuant to a tender offer in September 2015, Perfect Commerce
currently owns approximately 79 per cent. of the issued share
capital in Hubwoo, which is listed on the Euronext market in
France. At Completion the Company will become the indirect holder
of more than 30 per cent. of the share capital and voting rights of
Hubwoo and therefore under the rules of the AMF, Completion will
trigger an obligation on the Company to launch a tender offer for
those Hubwoo shares that Perfect Commerce does not already own,
unless the AMF was to grant, in its sole discretion, a waiver. It
is the current intention of the Company to seek such a waiver from
the AMF. If a waiver is not granted the AMF has the discretion to
determine the timetable for a tender offer.
The Board understands that within four businesses days from
Completion, the Company is required to file a notification with the
AMF disclosing its indirect holding in Hubwoo. The Board
understands this notification will also require a comprehensive
declaration of intent from PROACTIS regarding its intentions. It is
the Board's intention to work with the AMF between the announcement
of the Transaction and Completion to understand what obligations,
if any, the AMF will impose on the Company.
In the event that a tender offer is required and no exemption or
waiver is available or taken advantage of, the Board currently
anticipates that it will work towards making a tender offer for the
remaining Hubwoo shares after Completion and, in any event, subject
to a timetable to be agreed with the AMF. In the absence of the
Company acquiring any Hubwoo shares in the last 12 months,
determination and fixing of the price to be offered per Hubwoo
share as well as the form that the consideration will take (i.e.
cash, Shares, convertible bonds or a combination of them) will need
to involve the AMF and can be challenged by the AMF.
In the event that the Company becomes interested in 95 per cent.
or more of the voting rights in Hubwoo, it would, at that time, be
able to invoke a 'squeeze out' of the remaining minority
shareholders under French law. The price to be paid under the
squeeze out procedure is set by the AMF and it could be higher (or
lower) than the price offered under any tender offer. There can be
no guarantee that the 95 per cent. threshold will be reached (or
the timescales within which it might be reached) and, as such,
Hubwoo may not become a wholly owned subsidiary of PROACTIS and may
retain its listing on the Euronext market.
13. FINANCING OF THE ACQUISITION & FINANCIAL IMPACT OF THE
ACQUISITION
PROACTIS is financing the cash consideration due in respect of
the Acquisition and associated expenses through a Placing expected
to raise gross proceeds of GBP70.0 million and new debt to be drawn
under the New Debt Facilities of GBP28.0 million on Completion.
Further information on each of these is set out in paragraphs 11,
14 and 15 below. The Acquisition is expected to be earnings
enhancing in the financial year ending 31 July 2018. This statement
does not constitute a profit forecast.
14. INFORMATION ON THE PLACING
On Admission (following the issue of the Placing Shares but
assuming no further Shares are issued between the date of this
announcement and Admission) the Company will have 92,662,789 Shares
in issue and an expected market capitalisation of approximately
GBP152.9 million (based on the Placing Price). The Placing
comprises the issue of 42,424,243 Placing Shares by the Company to
raise approximately GBP70.0 million (before expenses). The Placing
Price of 165 pence represents a discount of approximately 5.7 per
cent. to the middle market closing price of 175 pence per Share on
6 July 2017, being the latest Dealing Day prior to the publication
of this announcement.
finnCap has agreed, pursuant to the Placing Agreement, to use
its reasonable endeavours to place the Placing Shares, with
institutional and other investors. The Placing, which is not being
underwritten, is conditional, amongst other things, upon the
Placing Agreement becoming unconditional and not having been
terminated in accordance with its terms prior to Admission; and
Admission becoming effective on 1 August 2017, or such later date
as finnCap and the Company may agree, being not later than 15
August 2017. The Placing Shares will rank pari passu in all
respects with the Existing Shares including the right to receive
all dividends and other distributions declared, paid or made after
Admission. None of the Placing Shares have been marketed to or will
be made available in whole or in part to the public in conjunction
with the application for Admission.
On completion of the Placing the then existing issued share
capital of the Company will be increased by 42,424,243 Shares,
resulting in an immediate dilution of holders of Existing Shares
who do not participate in the Placing of 45.8 per cent., in
aggregate, assuming that no other Shares are issued between the
date of this announcement and the date of Admission.
Further details of the Placing Agreement will be set out in
paragraph 16 of Part VII of the Admission Document.
15. INFORMATION ON THE NEW DEBT FACILITIES
On 7 July 2017, the Company, PROACTIS US and other companies
within the Existing Group entered into the New Debt Facilities with
HSBC. The New Debt Facilities total GBP45.0 million and will be
made available through a GBP30.0 million (multicurrency) revolving
credit facility, comprised of GBP11.0 million of existing
commitments and GBP19.0 million of new commitments (the "RCF") and
a GBP15.0 million (multicurrency) term loan, comprised of GBP4.2
million of existing commitments and GBP10.8 million of new
commitments (the "Term Loan"). The New Debt Facilities mature five
years from the signing date. The Term Loan has a coupon rate of
1.95 per cent. over LIBOR and the RCF has a ratcheted coupon rate
no lower than 1.75 per cent. over LIBOR and no higher than 2.5 per
cent. over LIBOR.
The New Debt Facilities will be used by the Company to part fund
the Acquisition and refinance existing indebtedness owing to HSBC,
with the remainder being made available to fund the general
corporate and working capital purposes of the Enlarged Group,
including any permitted future acquisitions. The New Debt
Facilities also provide that the Company may request an increase to
the RCF under an additional, uncommitted, GBP10.0 million accordion
facility that would be used for general corporate and working
capital purposes of the Enlarged Group.
Further details of the New Debt Facilities will be set out in
paragraph 17 of Part VII of the Admission Document.
16. DIRECTORS AND PROPOSED DIRECTOR
Following Completion, the Board will be enhanced by the addition
of the Proposed Director, such that the Board, at that time, will
comprise three executive directors and two non-executive directors.
In conjunction with the Transaction, Rodney Jones (whose
resignation as Chief Executive Officer was announced on 19 December
2016), stepped down from the board on 6 July 2017. Therefore, Tim
Sykes will fulfil the role of Chief Executive Officer until
Completion.
The biographical details of each member of the Board and the
Proposed Director are set below:
Directors
Alan John Aubrey - (56 years), Non-Executive Chairman. Alan is
the Chief Executive Officer of IP Group plc, a FTSE 250 company
that specialises in commercialising intellectual property. He is
also a non-executive chairman of Ceres Power Holdings plc, a
manufacturer of advanced solid oxide fuel cells, a non-executive
director of Avacta Group plc, an AIM quoted company that develops
new detection and diagnostic devises for the bio-pharmaceutical
markets and a non-executive director of the Department for
Business, Energy and Industrial Strategy. Mr Aubrey is a fellow of
the Institute of Chartered Accountants of England and Wales. Mr
Aubrey is a member of the Remuneration Committee and the Chair of
the Audit Committee.
Timothy (Tim) James Sykes - (47 years), Chief Financial Officer
and Chief Executive Officer. Tim is a fellow of the Institute of
Chartered Accountants of England and Wales. Over the last ten
years, he has built up an expertise within the small cap AIM quoted
market with over 25 financial years' experience across 5-10
companies as consulting Chief Financial Officer, before joining
PROACTIS on a full-time basis from January 2016. Prior to that, he
held senior positions within corporate finance at KPMG and as
Commercial Director at Mountain Warehouse.
Sean Anthony McDonough - (56 years), Chief Operating Officer.
Sean joined the Group as Director of Professional Services during
2005 from Azolve Limited, which he co-founded. Previous roles
include Director of Professional Services for CODA Group plc, UK
Technical Director for BaaN, Head of Professional Services - Europe
Silknet Limited and VP of Professional Services EMEA at Kana
Communications.
Rodney Potts - (72 years), Non-Executive Director. Rodney was
one of the founders and former Chief Executive of CODA Group plc,
the global provider of accounting systems. He is a director of a
number of technology ventures. Mr Potts is the Chair of the
Remuneration Committee and a member of the Audit Committee.
Proposed Director
George Hampton ("Hampton") Wall Jr. - (56 years), Proposed Chief
Executive Officer. Hampton, aged 56, has more than 30 years of
corporate management, business development and international
M&A experience. He has been President and Chief Executive
Officer of Perfect Commerce for 10 years and was previously
President of CorMine LLC, a leading procurement services BPO
company that acquired Perfect Commerce in 2007. Prior to CorMine
LLC, he held various positions at Ferguson Enterprises and Wolseley
PLC over 17 years, latterly as the President of the Corporate Sales
Division. Hampton is a graduate of Wake Forest University.
Current directorships held by Mr Wall and directorships held by
him in the last five years are as follows:
Current directorships: Former directorships held
in the last five years:
None
* Perfect Commerce (UK) Limited
* Perfect Commerce GmbH
* Perfect Commerce France SAS
* Hubwoo SA
* Hubwoo Belgium SA
* Hubwoo Germany GmbH
* Perfect Commerce Global Purchasing,
* LLC
* C1 Cat LLC
* Perfect Commerce One BPO, LLC
* Perfect Commerce, LLC
* Perfect Commerce Operations, Inc.
* Pantellos Corporation
* Pantellos I Incorporated
* Pantellos II Incorporated
* Perfect Commerce LP
* Commerce One, LLC
* Trade-Ranger US Inc.
* Trade-Ranger Management, L.L.C
* Trade-Ranger Holdings, L.L.C
* Hubwoo USA L.P.
* Hubwoo USA, Inc.
Mr Wall currently holds no Shares in the Company. On Completion,
Mr Wall will be the holder of a Convertible Acquisition Loan Note
in the principal amount of $3.75 million. The Convertible
Acquisition Loan Notes are being issued in partial payment of the
purchase price due under the Acquisition Agreement. The Convertible
Acquisition Loan Notes will bear interest at 2.0 per cent. per
annum, and mature, if not previously converted, on the first day
following the fifth anniversary of Completion. Principal and, if
converted prior to the date that is 15 months after Completion,
accrued and unpaid interest, may be converted at the option of the
holder at any time after the first anniversary of Completion into
Shares at a conversion price equal to the Placing Price (the
"Conversion Price"), subject to customary adjustments. The
Convertible Acquisition Loan Notes are not pre-payable by the
Company. The Company has the right to pay the outstanding principal
amount of the Convertible Acquisition Loan Notes upon maturity in
cash or by delivering Shares valued at the Conversion Price and
also has the right to pay any accrued and unpaid interest, if not
converted into Shares prior to the date that is 15 months after
Completion, in cash or by delivering Shares valued at the greater
of the Conversion Price or the average mid-market closing price of
the Shares for the preceding 12 months. On Completion, the Company
Mr Wall will enter into an orderly marketing agreement to govern
the circumstances in which any Shares issued to him under the
Convertible Acquisition Loan Notes can be disposed of in the 12
month period following such issue.
There are no other disclosures that are required to be announced
under Schedule 2(g) of the AIM Rules for Companies.
Following Completion, the Board intends to review the
composition of its non-executive board, in order to assist with the
next stage of the Enlarged Group's growth.
17. IRREVOCABLE UNDERTAKINGS
The Company has received the following irrevocable undertakings
from the Directors to vote in favour of the Resolutions in respect
of the following number of Shares:
Name Number % of
of Shares Existing
Shares
Alan Aubrey 1,103,320 2.2
Rodney Potts 8,957,765 17.8
Tim Sykes 224,235 0.5
Sean McDonough 321,666 0.6
Total 10,606,986 21.1
In addition to the Directors, certain other Shareholders have
irrevocably undertaken to vote in favour of the Resolutions in
respect of Shares in which they are interested, amounting to, in
aggregate, 15,613,403 Shares, representing approximately 31.1 per
cent. of the Existing Shares.
18. DIVID POLICY
Declaration and payment of dividends by the Company will be
dependent upon the financial position, cash requirements, future
prospects and profits available for distribution of the Enlarged
Group and other factors regarded by the Board as relevant at the
time. It is expected that the Enlarged Group will generate
sufficient distributable reserves and free cash flow to allow the
Board to consider paying dividends for the financial year to 31
July 2017 and beyond, and it is the Board's intention to put in
place a progressive dividend policy. There can be no assurance as
to whether dividend distributions will occur as expected, the
amount of dividend payments or the timing of any such payment.
The Directors will consider the following general principles
when recommending dividends for approval by Shareholders or when
declaring any interim dividends:
(a) the Group's level of cash, marketable financial assets and
level of indebtedness;
(b) the Group's required and expected cashflows, interest
expenses, profit, return on equity and retained earnings;
(c) the Group's expected results from operations and the
anticipated future level of operations; and
(d) the Group's projected levels of capital expenditure and
other investment plans including future acquisitions.
The Company paid a full year dividend of 1.3 pence per Share in
respect of FY16 (FY15: 1.2 pence per Share).
19. CORPORATE GOVERNANCE, BOARD PRACTICES AND SHARE DEALING
CODE
The Company has a policy, so far as is practicable and
appropriate for a company of its size and nature, to comply with
the provisions of the Corporate Governance Code for Small and
Mid-Sized Companies issued by the Quoted Companies Alliance and
will continue to apply those principles following Re-admission. The
Company currently has two non-executive Directors with relevant
sector experience to complement and bring an independent view to
the Board, and to provide a balance to the executive Directors.
The Board is responsible for formulating, reviewing and
approving the Group's (and, post Re-admission, the Enlarged
Group's) strategy, budgets and corporate actions. The Directors
will continue to hold meetings of the Board approximately nine
times a year and at other times as and when required. Following
Re-admission, the Board intends to review the composition of its
non-executive board.
19.1 Board committees
The Company has established Audit and Remuneration Committees
with formally delegated duties and responsibilities.
a) Audit Committee
The Audit Committee is chaired by Alan Aubrey and has the
primary responsibility of monitoring the quality of internal
controls and ensuring that the financial performance of the Group
is properly measured and reported on. It receives and reviews
reports from the Group's management and external auditors relating
to the interim and annual accounts and the accounting and internal
control systems in use throughout the Group. The Audit Committee
meets not less than twice in each financial year and has
unrestricted access to the Group's external auditors. The Audit
Committee comprises Alan Aubrey and Rodney Potts.
b) Remuneration Committee
The Remuneration Committee is chaired by Rodney Potts and
reviews the performance of the executive directors and makes
recommendations to the Board on matters relating to their
remuneration and terms of service. The Remuneration Committee also
makes recommendations to the Board on proposals for the granting of
share options and other equity incentives pursuant to any employee
share option scheme, equity incentive plan or bonus scheme in
operation from time to time. The Remuneration Committee meets as
and when necessary. In exercising this role, the members of the
committee have regard to the recommendations put forward in the QCA
Guidelines and, where appropriate, the UK Corporate Governance
Code. The Remuneration Committee comprises Rodney Potts and Alan
Aubrey.
19.2 Share dealing code
The Company has adopted a share dealing code for Directors and
applicable employees for the purpose of ensuring compliance by such
persons with the provisions of the AIM Rules relating to dealings
in the Company's securities (including, in particular, Rule 21 of
the AIM Rules) and the Market Abuse Regulation. The Directors
consider that this share dealing code is appropriate for a company
whose shares are admitted to trading on AIM.
The Company will take proper steps to ensure compliance by the
Directors and applicable employees with the terms of the share
dealing code and the relevant provisions of the AIM Rules
(including Rule 21) and the Market Abuse Regulation.
20. SHARE OPTION / INCENTIVE SCHEMES
As at 6 July 2017 (being the latest practicable date prior to
the publication of this announcement PROACTIS had outstanding
options over a total of 3,506,430 Shares representing approximately
7.0 per cent. of the Existing Share Capital. A summary of the Share
Schemes will be set out in paragraph 6 of Part VII of the Admission
Document.
Following Admission, the Company intends to maintain its
existing policy of making occasional grants of new options/awards
under the Share Schemes to incentivise and reward the Directors,
senior management and other employees of the Enlarged Group
(including the Proposed Director and employees of the Perfect
Commerce Group). The Directors believe that the issue of new
options/awards will assist with key senior executive retention and
the alignment of their interests with those of the Shareholders. To
ensure that the Share Schemes are effective, they will continue to
be administered and kept under review by the Remuneration
Committee. The Remuneration Committee, where required, will consult
with the Nominated Adviser and/or substantial Shareholders on the
issue of new options/awards, to the executive Directors.
To facilitate this policy, the Company is proposing that, prior
to Admission, it will adopt the LTIP and the Bonus Plan, details of
which will be set out in paragraph 6.4 and 6.5, respectively, of
Part VII of the Admission Document. In conjunction with the
introduction of those schemes, the Remuneration Committee is
undertaking a review of executive remuneration. As part of that
review, the Remuneration Committee is considering the grant of new
LTIP Awards and Bonus Awards to the proposed new Chief Executive
Officer, Chief Financial Officer and the Chief Operating Officer.
Any grant of these Awards will take place post Admission. Further
details of these proposals will be set out in paragraph 6.6 of Part
VII of the Admission Document.
The Company also proposes to adopt the Executive Share Option
Scheme 2017 (a summary of which will be set out in paragraph 6.3 of
Part VII of the Admission Document) pursuant to which the Directors
are considering, subject to any legislative or regulatory
restrictions, granting a new Unapproved Option between the date of
this announcement and Admission. Further details of this proposed
Unapproved Option will be set out in paragraph 6.3 of Part VII of
the Admission Document.
21. TAXATION
The attention of investors is drawn to the information regarding
taxation which will be set out at paragraph 12 of Part VII of the
Admission Document. These details are, however, only intended as a
guide to the current taxation law position in the UK.
Investors who are in any 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.
22. APPLICABILITY OF THE TAKEOVER CODE
The Takeover Code will govern takeover offers for the Enlarged
Group and other matters to which the Takeover Code applies. Further
details will be set out in paragraph 22 of Part VII of the
Admission Document.
23. GENERAL MEETING
A notice convening the General Meeting, for 11.00 a.m. on 31
July 2017 to be held at the offices of finnCap at 60 New Broad
Street, London EC2M 1JJ at 11.00 a.m. on 31 July 2017 at which the
following Resolutions will be proposed:
Resolution 1: as an ordinary resolution, subject to and
conditional on the Placing Agreement becoming unconditional as
regards Admission and Admission having occurred, to approve the
Acquisition;
Resolution 2: as an ordinary resolution, to grant authority to
the Directors to allot Shares or to grant rights to subscribe for
or convert any security into Shares pursuant to section 551 of the
Act, up to an aggregate nominal amount of GBP5,000,000. This
authority is in respect of the allotment of the Placing Shares and
the Convertible Acquisition Loan Notes and is in addition to the
authorities granted to the directors at the annual general meeting
of the Company held on 19 December 2016, and will expire (along
with such authorities) at the conclusion of the next annual general
meeting of the Company, expected to be held in December 2017;
and
Resolution 3: conditional on the passing of Resolution 2 and as
a special resolution, to disapply the statutory pre-emption rights
contained in section 561(1) of the Act in respect of the allotments
for cash up to an aggregate nominal amount of GBP5,000,000. This
disapplication is in respect of the allotment of the Placing Shares
and the Convertible Acquisition Loan Notes. This power is in
addition to the powers granted to the directors at the annual
general meeting of the Company held on 19 December 2016 and will
expire (along with such powers) at the conclusion of the next
annual general meeting of the Company, expected to be held in
December 2017.
24. ADMISSION, RE-ADMISSION, SETTLEMENT AND CREST
Application will be made by the Company for the Placing Shares
to be admitted to trading on AIM. Subject to the passing of the
Resolutions, it is expected that Admission will occur and dealings
will commence on 1 August 2017.
As the Acquisition constitutes a reverse takeover of the Company
under Rule 14 of the AIM Rules, Shareholder consent to the
Acquisition is required at the General Meeting. Accordingly,
following Completion, it is expected that the admission of the
Existing Shares and the Placing Shares to trading on AIM will be
cancelled (immediately prior to Re-admission) and the Enlarged
Share Capital will be re-admitted to trading on AIM. Application
will be made by the Company for the Enlarged Share Capital to be
re-admitted to trading on AIM and it is expected that Re-admission
will commence and dealings wukk commence by 8.00 a.m. on 7 August
2017.
Re-admission in conditional, amongst other things, on (i)
Admission, (ii) Completion and (iii) no fact, matter or
circumstances arising following Admission that results in finnCap
(acting in good faith) being unable to deliver its declaration
pursuant to Schedule Two of the Nomad Rules in connection with
Re-admission.
Settlement of transactions in the Shares may take place in CREST
if the relevant Shareholder so wishes. CREST is a paperless
settlement procedure enabling securities to be evidenced otherwise
than by a share certificate and transferred otherwise than by
written instrument. The Articles permit the holding and transfer of
Shares under the CREST system. CREST is a voluntary system and
Shareholders who wish to receive and retain share certificates will
be able to do so. Persons acquiring Shares as a part of the Placing
may elect to receive Shares in uncertificated form if, but only if,
that person is a 'system-member' (as defined in the CREST
Regulations) in relation to CREST.
It is expected that, subject to the satisfaction of the
conditions of the Placing, the Placing Shares will be registered in
the names of the Placees subscribing for them and issued either: in
certificated form, where the Placee so elects, with the relevant
share certificate expected to be dispatched by post, at the
Placee's risk; or, by/or in CREST, where the Placee so elects and
only if the Placee is a 'system member' (as defined in the CREST
Regulations) in relation to CREST, with delivery (to the designated
CREST account) of the Shares subscribed for expected to take place
on 1 August 2017. Notwithstanding the election by Placees as to the
form of delivery of the Placing Shares, no temporary documents of
title will be issued. All documents or remittances sent by or to a
Placee, or as they may direct, will be sent through the post at
their risk. Pending the dispatch of definitive share certificates
(as applicable), instruments of transfer will be certified against
the Company's register of members.
25. RECOMMATION
The Directors consider the Transaction to be in the best
interests of the Company and the Shareholders as a whole and
accordingly unanimously recommend that Shareholders vote in favour
of the Resolutions to be proposed at the General Meeting as they
have irrevocably undertaken to do in respect of their own
beneficial holdings amounting, in aggregate, to 10,606,986 Shares
representing approximately 21.1 per cent. of the Existing
Shares.
26. FURTHER INFORMATION
Your attention is also drawn to the Admission Document, which
will contain further information on the Company, Perfect Commerce
and the Transaction.
DEFINITIONS
In this announcement, where the context permits, the expressions
set out below shall bear the following meaning:
"Acquisition" the proposed acquisition of all
the outstanding membership interest
in Perfect Commerce by PROACTIS
US, pursuant to the terms of the
Acquisition Agreement;
"Acquisition Agreement" the conditional membership interest
purchase agreement dated 7 July
2017 between, amongst others,
(1) the Company, (2) PROACTIS
US and (3) the Seller relating
to the Acquisition, further details
of which will be set out in paragraph
18.1 of Part VII of the Admission
Document;
"Act" the Companies Act 2006, as amended
from time to time;
"Admission" the admission to trading on AIM
of the Placing Shares becoming
effective in accordance with the
AIM Rules;
"Admission Document" the admission document, expected
to be published by the Company
later today, which comprises an
AIM admission document prepared
in accordance with the AIM Rules;
"AIM" the market of that name operated
by the London Stock Exchange;
"AIM Rules for the AIM Rules for Companies published
Companies" or "AIM by the London Stock Exchange from
Rules" time to time which set out the
rules and responsibilities in
relation to companies whose shares
are admitted to trading on AIM;
"AMF" the French Authorité des
Marchés Financiers;
"Articles" the articles of association of
the Company;
"Bonus Awards" rights to receive a bonus, which
may be satisfied by the issue
of Shares, pursuant to the Bonus
Plan;
"Bonus Plan" the Company's bonus plan, to be
adopted, further details of which
will be out in paragraph 6.5 of
Part VII of the Admission Document;
"Business Day" any day on which banks are open
for business in England and Wales
other than a Saturday, Sunday
or public holiday;
"certificated" the description of a share or
or "certificated other security which is not in
form" uncertificated form (that is,
not in CREST);
"Company" or "PROACTIS" PROACTIS Holdings Plc, a company
incorporated in England and Wales
with registration number 05752247;
"Completion" completion of the Acquisition
Agreement in accordance with its
terms;
"Convertible Acquisition the $5,000,000, 2.0 per cent.
Loan Notes" convertible unsecured loan notes
due 2022, further details of which
will be set out in paragraph 18.2
of Part VII of the Admission Document;
"CREST" the system for the paperless settlement
of share transfers and the holding
of uncertificated shares operated
by Euroclear in accordance with
the CREST Regulations;
"CREST Regulations" the Uncertificated Securities
Regulations 2001 (SI 2001/3755),
as amended from time to time;
"Dealing Day" a day on which the London Stock
Exchange is open for business
in London;
"Directors" or the directors of the Company whose
"Board" names will be set out on page
7 of the Admission Document and
"Director" means any one of them;
"Enlarged Group" the Group and its subsidiaries
(including the Perfect Commerce
Group), immediately following
Completion;
"Enlarged Share the issued Shares immediately
Capital" following Admission, comprising
the Existing Shares and the Placing
Shares;
"Executive Share the Company's executive share
Option Scheme 2017" option scheme, further details
of which will be set out in paragraph
6.3 of Part VII of the Admission
Document;
"Existing Group" PROACTIS Holdings Plc and its
or "Group" subsidiaries as at the date of
this announcement;
"Existing Shares" the 50,288,546 Shares in issue
at the date of this announcement;
"FCA" the UK Financial Conduct Authority;
"Form of Proxy" the form of proxy to accompany
the Admission Document for use
by Shareholders in connection
with the General Meeting;
"FSMA" the Financial Services and Markets
Act 2000, as amended from time
to time;
"General Meeting" the general meeting of the Company
to be held at the offices of finnCap
at 60 New Broad Street, London
EC2M 1JJ at 11.00 a.m. on 31 July
2017 (and any adjournment thereof)
to be held for the purpose of
considering and, if thought fit,
approving the Resolutions;
"HSBC" HSBC Bank plc;
"ISIN" International Securities Identification
Number;
"London Stock Exchange" London Stock Exchange plc;
"LTIP Awards" rights to acquire Shares pursuant
to the LTIP;
"Market Abuse Regulation" the Market Abuse Regulation EU/No.
596/2014;
"New Debt Facilities" GBP45 million of facilities to
be provided by HSBC to, amongst
other things, part-fund the Acquisition,
further details of which will
be set out in paragraph 17 of
Part VII of the Admission Document;
"New Facilities the facilities agreement dated
Agreement" 7 July 2017 made between, amongst
others, (1) the Company and (2)
HSBC under which the New Debt
Facilities are made available;
"Nominated Adviser" finnCap Ltd, a company incorporated
or "finnCap" in England and Wales with registered
number 06198898;
"Perfect Commerce" Perfect Commerce, LLC, a company
incorporated under the laws of
the State of Virginia, USA;
"Perfect Commerce Perfect Commerce and its subsidiaries
Group" as at Completion;
"Hubwoo" Hubwoo SA, a company listed on
the Eurolist of NYSE Euronext
under the symbol HBW;
"Long Term Incentive the Company's long term incentive
Plan" or "LTIP" plan, further details of which
will be set out in paragraph 6.4
of Part VII of the Admission Document;
"Placing" the conditional placing at the
Placing Price of the Placing Shares
to the Placees to be further described
in paragraph 14 of Part I of the
Admission Document;
"Placing Agreement" the conditional agreement dated
7 July 2017 between (1) finnCap
and (2) the Company relating to
the Placing, further details of
which will be set out in paragraph
16 of Part VII of the Admission
Document;
"Placing Price" 165 pence per Placing Share;
"Placing Shares" the 42,424,243 new Shares to be
issued to Placees pursuant to
the Placing;
"PMSI" PMSI Strategy LLP and where the
context requires, its private
industry report, commissioned
by the Company, dated 8 May 2017;
"pounds", "pounds the lawful currency of the UK;
sterling", "pence"
or "p"
"PROACTIS US" PROACTIS US Holdings, Inc.;
"Proposed Director" George Hampton Wall Jr;
"QCA Guidelines" the Corporate Governance Guidelines
for AIM Companies issued the Quoted
Companies, as amended from time
to time;
"Re-admission" the re-admission to trading on
AIM of the Enlarged Share Capital
becoming effective in accordance
with Rule 6 of the AIM Rules;
"Regulatory Information has the meaning ascribed thereto
Service" or "RIS" by the AIM Rules;
"Remuneration Committee" the remuneration committee of
the Board from time to time;
"Resolutions" the ordinary and special resolutions
to, among other things, approve
the Acquisition, authorise the
Board to allot the Placing Shares,
and disapply pre-emption rights
in relation to the allotment of
the Placing Shares and the Convertible
Acquisition Loan Notes, which
will be set out in the notice
of General Meeting at the end
of the Admission Document;
"Seller" the seller of Perfect Commerce,
being Perfect Commerce Holdings
LLC;
"Shareholders" holders of Shares from time to
time;
"Shares" ordinary shares of GBP0.10 each
in the capital of the Company
and including, as the context
may require, the Existing Shares
and/or the Placing Shares;
"Share Schemes" the EMI Scheme, the Unapproved
Option Scheme, the Executive Share
Option Scheme 2017, the LTIP and
the Bonus Plan, and any or all
of them as the context requires;
"Subsidiary" as defined in sections 1158 and
Schedule 6 of the Act;
"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;
"TIDM" Tradable Instrument Display Mnemonic;
"Transaction" the Acquisition, Placing, New
Debt Facilities, Convertible Acquisition
Loan Notes, Admission and Re-admission
and any or all of them as the
context requires;
"Unapproved Option the Company's unapproved share
Scheme" option scheme, further details
of which will be set out in paragraph
6.3 of Part VII of the Admission
Document;
"United Kingdom" United Kingdom of Great Britain
or "UK" and Northern Ireland;
"US Dollar", "US the lawful currency of the USA;
$" or "$"
"US Securities the US Securities Act of 1933,
Act" as amended from time to time;
and
"USA" or "US" the United States of America,
its territories and possessions,
any state of the United States
and the District of Columbia.
GLOSSARY
"ancillary services" procurement intelligence, systems
integration, advisory, etc;
"accredited channel channel partners that have a license
partners" from PROACTIS to sell its spend
management software;
"annualised contracted the Board and the Proposed Director's
revenue" estimate of the annualised value
of revenue from customers contracted
with the Enlarged Group, the Group
or the Perfect Commerce Group,
as the context requires, as at
the date stated;
"AP" accounts payable;
"APAC" Asia-Pacific region of the world;
"APF" accelerated payment facility;
"B2B" business to business;
"buyer" customer organisation;
"BPO" business processing outsourcing;
"business network" technology that enables buyers
and suppliers to trade electronically;
"CAGR" compound annual growth rate;
"CLM" contract lifecycle management,
the process of systematically
and efficiently managing contract
creation, execution and analysis
for maximising operational and
financial performance and minimising
risk;
"EBITDA" earnings before interest, tax,
depreciation and amortisation;
"ERP" enterprise resource planning;
"ERP Systems" SAP, Oracle and Infor;
"Fortune 100" a list of the 100 largest companies
in the United States, by revenue,
as compiled by Fortune magazine;
"Fortune 500" a list of the 500 largest companies
in the United States, by revenue,
as compiled by Fortune magazine;
"FY15" the financial year ended 31 July
2015 for PROACTIS or the financial
year ended 31 December 2015 for
Perfect Commerce, as the context
requires;
"FY16" the financial year ended 31 July
2016 for PROACTIS or the financial
year ended 31 December 2016 for
Perfect Commerce, as the context
requires;
"historic annualised the historic annualised value
contracted revenue" of revenue from customers contracted
with the Enlarged Group, the Group
or The Perfect Commerce Group,
as the context requires, for the
time period stated;
"LIBOR" London interbank offered rate;
"M&A" mergers and acquisitions;
"MRO" maintenance, repair and operating;
"multi-tenant" when one version of a software
product is used by multiple customers
on a shared platform infrastructure;
"OCR" optical character recognition;
"OSN" open supplier network;
"P2P" procure-to-pay/purchase-to-pay;
"PO" purchase order;
"RFI" request for information;
"RFP" request for proposal;
"RFQ" request for quote;
"RFx" RFx, which is one of the most
common acronyms in the strategic
sourcing and procurement landscape,
is a catch-all term that captures
all references to RFI, RFP and
RFQ;
"ROI" return on investment;
"S2P" source to pay;
"S2S" source to settle;
"SaaS" software as a service;
"SKU" stock keeping unit;
"SRM" supplier relationship management;
"SRPM" supplier risk and performance
management;
"spend analysis" a process for analysing the historical
spend (purchasing) data of an
organisation to provide answers
to questions concerning spend
visibility, compliance and control.
The aim is to produce a fully
documented understanding of a
company's prior and future spend
for supplies and services and
inform strategies that realise
savings on total spend, better
purchasing and supply management
outcomes;
"strategic business a third party organisation that
partners" sells PROACTIS' spend management
software either under a 'white
label' or as part of, or integrated
into, a wider product;
"supplier" a provider of goods or services
to the buyer;
"SVM" sourcing and vendor management;
"TBN" or "The Business The Business Network; a cloud
Network" based technology which is a connector
of systems, information and documents
required for electronic trading
and collaboration between buyers
and suppliers;
"Tier 1" large enterprise buyer customers,
typically with revenue of $1 billion
or more (typically Fortune 500
companies);
"Tier 2" medium enterprise buyer customers,
typically with revenue of $300
million to $1 billion;
"UI" user interface; and
"UX" user experience.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQUNRARBKABRUR
(END) Dow Jones Newswires
July 07, 2017 02:00 ET (06:00 GMT)
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