TIDMPCIP
RNS Number : 3326D
PCI-PAL PLC
30 January 2018
THIS ANNOUNCEMENT, INCLUDING THE APPIX, AND THE INFORMATION
CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION
OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN,
INTO OR FROM THE UNITED STATES, CANADA, JAPAN, THE REPUBLIC OF
SOUTH AFRICA, AUSTRALIA, THE REPUBLIC OF IRELAND, NEW ZEALAND,
ISRAEL OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.
PLEASE SEE THE IMPORTANT NOTICES AT THE OF THIS ANNOUNCEMENT AND AT
THE START OF THE APPIX.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN
ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014 ("MAR"). UPON
THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS
NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
UNLESS OTHERWISE INDICATED, CAPITALISED TERMS IN THIS
ANNOUNCEMENT HAVE THE MEANING GIVEN TO THEM IN THE DEFINITIONS
SECTION INCLUDED IN THE APPIX.
PCI-PAL PLC
("PCI Pal" or the "Company")
Proposed placing to raise GBP4.95 million (the "Placing")
The Board of PCI Pal, the secure payment solutions provider for
organisations taking card based payments by telephone, is pleased
to announce the Company's intention to raise GBP4.95 million
(before expenses) by way of a placing of 11,000,000 new Ordinary
Shares as further outlined below.
Highlights
-- Placing to raise aggregate gross proceeds of GBP4.95 million
at a price of 45 pence per Ordinary Share (the "Placing Price")
-- Approximately GBP3.9 million of the Placing proceeds raised
from certain VCT/EIS investors will be used to:
- Grow the Company's existing North American operations, in
particular to capitalise on the Company's growing pipeline of North
American opportunities through the activation in the region of its
cloud-based service offering via AWS
- Increase marketing expenditure and to fund an expected
increase in working capital in its North American operations as the
business grows
-- The balance of net funds raised in excess of GBP3.9 million
will be used to accelerate the growth of the business in both
domestic and international markets and for general working capital
purposes
-- Expansion of the Company's North American operations is
expected to include hiring new staff in channel sales, sales and
marketing, channel deployment and in support functions in
Charlotte, North Carolina, and the activation of new AWS instances
in the United States and in Montreal
-- The Placing is being made under existing authorities and is
conditional on, amongst other things, admission of the Placing
Shares to trading on AIM ("Admission")
-- The Placing Price of 45 pence represents a discount of
approximately 29.5 per cent. to the average mid-market closing
price for the last 30 trading days, being the period from 14
December 2017 to 29 January 2018, being the last practicable
trading day prior to the release of this Announcement
The proposed Placing is to be made with a limited number of
institutional and other investors including VCT/ EIS investors. A
number of existing and new investors in the Company have indicated
their interest in participating in the Placing during recent market
soundings and will be contacted following release of this
announcement to confirm their participation in the Placing on the
basis of the terms and conditions contained in the Appendix to this
announcement. Accordingly, it is expected that finalisation of the
Placing process will commence shortly following the release of this
announcement. As soon as practicable after the Placing process has
been completed, a further announcement will be made containing
details of the final number of Placing Shares to be issued at the
Placing Price by the Company (together with the approximate gross
proceeds and estimated net proceeds of the Placing).
The Placing Shares are expected to represent approximately
25.8per cent. of the Company's enlarged share capital (excluding
shares held in treasury) (based on the assumption that 11,000,000
Placing Shares are issued pursuant to the Placing) and will be
allotted and issued under the existing shareholder authorities
granted by shareholders of the Company at the annual general
meeting held on 19 October 2017.
Details of the Placing
The Placing is expected to raise gross proceeds of GBP4.95
million through the issue of approximately of 11,000,000 Placing
Shares at the Placing Price of 45 pence per share (based on the
assumption that 11,000,000 Placing Shares are taken up and issued
pursuant to the Placing). The net proceeds of the Placing are
estimated to be approximately GBP4.6m.
The Board believes that raising equity finance using the
flexibility provided by a non-pre-emptive placing is the most
appropriate and optimal structure for the Company at this time.
This allows both certain existing institutional holders and certain
new investors the opportunity to participate in the Placing and
avoids the requirement for a prospectus or circular, which is a
costly and more time consuming process. It also facilitates the
timely completion of the fundraise.
Pursuant to the placing agreement entered into earlier today
between N+1 Singer and the Company (the "Placing Agreement"), N+1
Singer has conditionally agreed, as agent of the Company, to use
its reasonable endeavours to procure subscribers for the Placing
Shares.
The Placing is conditional, amongst other things, upon:
-- the Placing Agreement becoming or being declared
unconditional in all respects and not having been terminated in
accordance with its terms prior to Admission; and
-- Admission becoming effective by no later than 8.00 a.m. on 31
January 2018 or such later time and/or date (being no later than
8.00 a.m. on the Longstop Date) as N+1 Singer and the Company may
agree.
The Placing Shares will be issued free of all liens, charges and
encumbrances and will, when issued and fully paid, rank pari passu
in all respects with the Existing Ordinary Shares, including the
right to receive all dividends and other distributions declared,
made or paid after the date of their issue.
Application will be made to the London Stock Exchange for the
admission of the Placing Shares to trading on AIM. It is expected
that Admission will occur and that dealings in the Placing Shares
will commence at 8.00 a.m. on 31 January 2018, at which time it is
also expected that the Placing Shares will be enabled for
settlement in CREST.
The Placing Agreement contains certain customary warranties from
the Company in favour of N+1 Singer in relation to, inter alia, the
accuracy of the information contained in this Announcement and
certain other matters relating to the Group and its business. In
addition, the Company has given certain undertakings to N+1 Singer
and has agreed to indemnify N+1 Singer in relation to certain
customary liabilities they may incur in respect of the Placing. N+1
Singer has the right to terminate the Placing Agreement in certain
circumstances prior to Admission including inter alia: (i) for
certain force majeure events or other events involving certain
material adverse changes or prospective material adverse changes
relating to the Group; or (ii) in the event of a breach of the
warranties or other obligations of the Company set out in the
Placing Agreement. Under the Placing Agreement the Company has
agreed to pay certain fees and commission to N+1 Singer and certain
other costs and expenses in connection with the Placing and
Admission.
An announcement will be made following the completion of the
Placing process (expected to be later today) confirming the final
number of Placing Shares to be issued pursuant to the Placing and
the Placing Price, the gross proceeds and the estimated net
proceeds.
Participation in the Placing is subject to the terms and
conditions set out in the Appendix (which, together with this
announcement, is referred to herein as the "Announcement").
N+1 Singer has been appointed as placing agent (the "Placing
Agent") in respect of the Placing and is acting as nominated
adviser and broker to the Company. The Placing is not being
underwritten by the Placing Agent.
This Announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 ("MAR"). In addition, market
soundings (as defined in MAR) were taken in respect of the Placing
with the result that certain persons became aware of inside
information (as defined in MAR), as permitted by MAR. This inside
information is set out in this Announcement. Therefore, those
persons that received inside information in a market sounding are
no longer in possession of such inside information relating to the
Company and its securities.
This announcement should be read in its entirety. In particular,
your attention is drawn to (i) the section headed 'Risk Factors'
below and (ii) the detailed terms and conditions of the Placing and
further information relating to the Placing and any participation
in the Placing that is described in the Appendix to this
announcement (which forms part of this announcement).
By choosing to participate in the Placing and by making an oral
and legally binding offer to acquire Placing Shares, investors will
be deemed to have read and understood this announcement in its
entirety (including the Appendix), and to be making such offer on
the terms and subject to the conditions of the Placing contained
herein, and to be providing the representations, warranties and
acknowledgements contained in the Appendix.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS 2018
Admission and dealings in the Placing Shares expected to commence on AIM 8.00 a.m. on 31 January
Where applicable, expected date for CREST accounts to be credited in respect of Placing 8.00 a.m. on 31 January
Shares
in uncertificated form
Where applicable, expected date for despatch of definitive share certificates for Placing on or around 14 February
Shares in certificated form
Note: Each of the above dates is subject to change at the
absolute discretion of the Company and N+1 Singer
For further details, please contact:
PCI-PAL PLC (Via Walbrook PR)
William Catchpole - Chief Executive Officer
William Good - Chief Financial Officer
N+1 Singer (Nomad & Broker)
Aubrey Powell / James White +44 (0) 20 7496 3000
Walbrook PR +44 (0) 20 7933 8780
Tom Cooper / Paul Vann +44 (0) 7971 221 972
tom.cooper@walbrookpr.com
N+1 Singer is authorised and regulated by the Financial Conduct
Authority (the "FCA") in the United Kingdom. N+1 Singer is acting
exclusively for the Company and no one else in connection with the
Placing and N+1 Singer will not be responsible to anyone (including
any Placees) other than the Company for providing the protections
afforded to its clients or for providing advice in relation to the
Placing or any other matters referred to in this announcement.
No representation or warranty, express or implied, is or will be
made as to, or in relation to, and no responsibility or liability
is or will be accepted by the Placing Agent or by any of its
affiliates or agents as to, or in relation to, the accuracy or
completeness of this announcement or any other written or oral
information made available to or publicly available to any
interested party or its advisers, and any liability therefor is
expressly disclaimed.
No statement in this announcement is intended to be a profit
forecast or estimate, 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.
The price of shares and any income expected from them may go
down as well as up and investors may not get back the full amount
invested upon disposal of the shares. Past performance is no guide
to future performance, and persons needing advice should consult an
independent financial adviser.
The Placing Shares to be issued pursuant to the Placing will not
be admitted to trading on any stock exchange other than on the AIM
market of the London Stock Exchange.
Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this announcement.
This Announcement may contain and the Company may make verbal
statements containing "forward-looking statements" with respect to
certain of the Company's plans and its current goals and
expectations relating to its future financial condition,
performance, strategic initiatives, objectives and results.
Forward-looking statements sometimes use words such as "aim",
"anticipate", "target", "expect", "estimate", "intend", "plan",
"goal", "believe", "seek", "may", "could", "outlook" or other words
of similar meaning. By their nature, all forward-looking statements
involve risk and uncertainty because they relate to future events
and circumstances which are beyond the control of the Company,
including amongst other things, United Kingdom domestic and global
economic business conditions, market-related risks such as
fluctuations in interest rates and exchange rates, the policies and
actions of governmental and regulatory authorities, the effect of
competition, inflation, deflation, the timing effect and other
uncertainties of future acquisitions or combinations within
relevant industries, the effect of tax and other legislation and
other regulations in the jurisdictions in which the Company and its
respective affiliates operate, the effect of volatility in the
equity, capital and credit markets on the Company's profitability
and ability to access capital and credit, a decline in the
Company's credit ratings; the effect of operational risks; and the
loss of key personnel. As a result, the actual future financial
condition, performance and results of the Company may differ
materially from the plans, goals and expectations set forth in any
forward-looking statements. Any forward-looking statements made in
this Announcement by or on behalf of the Company speak only as of
the date they are made. Except as required by applicable law or
regulation, the Company expressly disclaims any obligation or
undertaking to publish any updates or revisions to any
forward-looking statements contained in this Announcement to
reflect any changes in the Company's expectations with regard
thereto or any changes in events, conditions or circumstances on
which any such statement is based.
FURTHER INFORMATION
Background to and reasons for the Placing
About the Group
PCI Pal is a supplier of contact centre payment solutions which
enable organisations to take customer payments over the phone
whilst minimising the risk of data loss and cybercrime. The shares
of PCI-PAL PLC and its predecessor have been admitted to trading on
AIM since September 2000. The Group completed the strategic sale of
its call centre operations in September 2016 and, since then, PCI
Pal has focussed exclusively on its suite of secure payment
solutions for contact centres, which were initially developed to
meet the needs of the Group's own call centre operations. The
Company has held Level 1 PCI DSS compliant certification since 2012
and is a participating member of the PCI Security Standards
Council.
PCI Pal's technology intercepts payment card information entered
by users on their telephone keypad during Card Not Present
transactions, so that the information does not enter the client's
contact centre. This approach protects cardholder data whilst
minimising the burden of regulatory compliance on the contact
centre. Once intercepted, payment card details are sent by PCI Pal
to the relevant client payment processor. On completion of the
transaction, confirmation is sent to the contact centre to enable a
record of the transaction to be maintained without holding the
payment card details.
The Group's existing clients include well-known organisations
such as AllSaints, DHL, Ikea, Made.com, UNICEF, Severn Trent Water,
Net-a-Porter, Virgin Active and Schneider Electric.
Development of the AWS platform
Since the strategic sale of the call centre operations in
September 2016, the Group has developed its AWS (Amazon Web
Services) cloud platform to enhance support for its multi-national
clients. The newly developed next generation platform is quickly
scalable into any AWS data centre, does not rely on third parties
for connectivity to a client's systems and can be readily
integrated with telephony, desktop contact management software or
CRM systems and payment processing systems. The Group's AWS
platform was certified as Level 1 PCI DSS compliant in October 2017
and international partners are signed up to sell the new platform
as part of their broader contact centre offerings. Conditional on
the completion of the Placing, the first AWS instance is ready to
go-live in the US, subject only to external testing with
customers.
Whilst PCI Pal will continue to service clients on its
established first-generation platform, the Company is seeking to
leverage its extensive contact centre expertise and its AWS
platform to target international expansion, principally through
channel partners. The AWS platform is expected to improve
deployment times both domestically and in overseas territories and
minimises issues relating to data sovereignty, as new local cloud
instances can be launched with relative ease. By contrast, the
Company's first-generation platform would have required the Company
to establish a relationship with a local telecommunications partner
and implement systems in-country to meet local data sovereignty
requirements. PCI Pal will continue to support its resilient
first-generation platform for existing customers, but will focus on
selling its pure-cloud AWS solution to new customers.
As new customers sign up to PCI Pal's AWS delivery platform, the
Company is expected to evolve towards a recurring, monthly license
revenue model. Given that the majority of contracts on the AWS
platform are currently expected to be multi-year contracts
(typically 3 years) with a minimum contract value, this continuing
evolution is expected to provide the Group with greater revenue
visibility. The Group's standard contracts also typically contain a
provision enabling them to automatically renew annually at the
expiry of the minimum term, so long as the customer has not given a
notice to terminate the agreement.
The minimum contract value typically consists of a one-off fee
covering setup, professional services and training, together with a
recurring rental licence fee, which is typically based on the size
of the customer's contact centre.
The AWS platform has been designed to scale with demand and has
also been designed to reduce the reliance on third party service
providers and so is currently expected to allow the gross margins
generated from its AWS platform to approach and eventually exceed
90 per cent. (before taking into account any allocation of
development resource, internal selling commissions and
overheads).
Revenue secured via channel partners will be recognised at the
rate that the service is charged to the Company's partner (i.e. it
is not subject to further reduction to a 'net share' of that
collected).
Regulatory and other market drivers
In 2005 Visa and others introduced the Payment Card Industry
Data Security Standard, or PCI DSS as it is more commonly known.
PCI DSS was designed to provide a worldwide standard that
businesses could adhere to in processing card payments in order to
protect sensitive cardholder data and reduce card fraud. It is now
overseen by the Payment Card Industry Security Standards Council
("PCI SSC"), which was formed by American Express, Discover
Financial Services, JCB International, MasterCard and Visa in
September 2006 with the goal of managing the ongoing evolution of
the PCI DSS. PCI Pal is a member of the PCI SSC.
Verizon indicated in its 2015 Payment Security Report that only
20 per cent. of organisations it surveyed were PCI DSS compliant,
while its 2017 Payment Security Report highlighted that only 55 per
cent. of organisations remain compliant after 9 months after their
first assessment. The Company's offering is highly relevant in
remedying non-compliance and maintaining compliant systems, as it
can remove the contact centre from the scope of the PCI DSS
review.
The General Data Protection Regulation (GDPR) is expected to be
a key market driver and is set to come into force from May 2018.
The GDPR is designed to unify data protection laws across the
European Union and include new and more detailed protection for
personal data. While similar to the UK's Data Protection Act, the
GDPR will cover changes in technology as well as new accountability
requirements for data controllers and processors. Significantly,
data controllers and processors who undergo a data breach and are
found to be non-compliant can face fines of 4% of their global
annual turnover or up to EUR20m, whichever is the greater. This is
a substantial increase on currently levied fines and is expected to
be a key driver of increased interest in PCI compliance. The GDPR
applies to data held on European citizens irrespective of where the
data itself is held, so has wider reaching implications beyond the
EU.
Strategy and expansion plans
The Directors believe that PCI Pal has established commercial
momentum since the sale of its contact centre businesses in
September 2016. The Group currently has 71 clients contracted to
use the Group's services, of which 48 are currently operational
with all but one of the balance currently scheduled to go-live
within the next 3 months and to become revenue generating
thereafter. Once all of the currently scheduled customers go-live,
the Directors believe that the contracted back-log of customers
would be expected to generate a further GBP0.8 million in annual
license recurring revenue. The majority of this backlog pipeline is
currently scheduled to go-live on the Company's first-generation
platform, but it is intended that in future all new opportunities
will be signed up to the cloud-based AWS platform.
In addition, PCI Pal currently has 12 active channel partners,
including 8x8 and Civica, as well as more recent contract wins with
Newvoicemedia, inContact in the US, and Capita which are yet to
go-live but are already generating pipeline opportunities from our
engagement with the partner marketing and sales teams ahead of the
technical integration.
The Directors believe that the Company's AWS platform is
creating a growing number of additional commercial opportunities,
including via emerging channel partnerships with major
telecommunications companies in the UK and North America, global
system integrators and major payment providers. These large partner
relationships are expected to take time to lead to fee paying
client deployments, but the Board considers that these
relationships have the potential, in time, to result in additional
sales opportunities with larger average sale values than currently
experienced by the Group.
As at 26 January 2018, the total contract value of the Group's
pipeline of qualified sales opportunities had grown to circa
GBP19.4 million (over the minimum contract lifetime of the
potential contracts). The Group's North American business was
established in May 2017. Following the establishment of the
business the first employee was hired in July 2017 and the Group's
product offering was launched a month later. Since that time, the
North American team (which has grown to four sales and marketing
personnel) has generated a sales pipeline with potential total
contracted value of up to GBP5.3 million.
Increasing focus on channel partners to generate growth
PCI Pal expects to dedicate a significant proportion of its
marketing and sales effort to generating sales through channel
partners. The increased scalability of the AWS platform provides a
greater breadth of opportunity on which to capitalise, and so the
Company accordingly intends to increase its utilisation of channel
partners to scale the business. Whilst this approach requires
investing time and effort in providing high levels of support and
training to channel partner vendors, once the relationship is
formed it typically provides potential access to a larger number of
existing contact centres already utilising the channel partner's
services.
The Company currently has 12 active channel partners signed up
to offer its solutions, with 5 of these partners having clients
based in North America some of whom are in discussions with the US
office to take the Group's services. As stated in its December 2017
trading update, PCI Pal believes that, while revenue momentum may
take time to build through the channel sales route to market, once
the channel has been established the Company will have access to a
far greater potential market opportunity than that available from
direct sales alone.
North American expansion
The Board estimates that the current market opportunity in the
United States for PCI Pal's services is around five times larger
than that of the UK, based on the number of seats or agents in
larger contact centres With a growing pipeline of opportunities in
North America, a developing marketplace with increasing awareness
both of payment card industry drivers to use PCI DSS compliant
solutions, regulatory requirements (including GDPR governing
European citizens' data worldwide), the increasing impact of data
security breaches from financial, commercial, reputational and
share price perspectives, and the Directors' belief that there is
no established market leader in North America, the Board considers
the expansion of its operations in the region to be a logical and
compelling strategic step.
Following an initial exercise to assess the market potential
using the services of a retained UK ex-patriate consultant, the
current North American operation was incorporated in May 2017 and
the first hire was made in July 2017. As at the end of December
2017 the team has grown to four members and they have focussed on
developing PCI Pal's understanding of the North American market and
initiating sales and marketing outreach and channel partnerships,
which has helped to shape the Board's expansion plans. The North
American operations are based in Charlotte, North Carolina, which
is the second largest financial services centre in the US with a
relatively low cost base, a suitable time zone and convenient
travel connections with the UK and across North America.
With broadly 80 per cent. of the Company's costs being personnel
related, the majority of the proceeds of the Placing will be used
to hire and remunerate new staff in marketing, sales and channel
sales, deployment and support functions, as well as ensuring
executive level management coverage in the US. Recruitment will
continue to be thorough and focussed as the Group aims to attract
high quality personnel with experience of contact centre, telephony
and payment industries, including channel sales.
The Company stated in December 2017 that in light of the growing
number of enquiries for its services that it was "evaluating the
resourcing levels that may be required to take full advantage of
the commercial opportunities in a nascent but fast-growing
international market." With its cloud based AWS platform giving the
Group the capability to provide secure payment solutions that
complement contact centre environments internationally, the Company
is confident of continuing success in providing its PCI compliant
contact centre payment solutions. The Placing reflects the
additional resourcing needs of the business as it continues to win
key channel partners and access volume customer prospects.
Use of proceeds
Approximately GBP3.9 million of the proceeds of the Placing will
be used to execute the Company's North American expansion plan,
including the additional expense of new employees, largely based in
its office in Charlotte, North Carolina, increased marketing
expenditure, an expected increase in working capital and new live
instances of AWS in the US and Canada. The balance of funds raised
will be used to accelerate the growth of the business in both
domestic and international markets and for general working capital
purposes.
Current trading and outlook
Since 1 July 2017 current trading for the Group has been in line
with the management's expectations, with the business continuing to
evolve from a direct selling model to the channel focused
model.
Based on unaudited figures, recurring revenues for the first six
months of the financial year have increased by 33% to GBP793,000,
up from GBP595,000 in the equivalent prior year period. Total
revenues have increased by 3% to GBP1.00 million (2016: GBP0.98
million), reflecting the fact that the Group sold a one-off set of
low margin equipment for GBP0.2 million to a large new client in
the first half of the prior year. This type of equipment will not
be required by clients using the next generation AWS platform.
The Group has continued to invest in its staff during the recent
half-year period. In September 2016, at the time of the disposal of
the contact centre businesses, the Group had 12 staff, and by the
year end in June 2017 this had grown to 29 staff, all of whom were
in the UK. At the end of December 2017, the Group staffing level
had grown to 37, including the four sales and marketing personnel
in the US.
As detailed above, the Directors believe that the Group is
progressing well in developing its sales pipeline, especially in
its North American operation. The Directors believe that the North
American pipeline has the potential to grow significantly over the
next few months and years and could eventually exceed the UK
equivalent pipeline, particularly given that the North American
market opportunity is considered to be five times larger than that
in the UK. The Directors therefore consider that the Group has the
potential opportunity to generate significant demand for its
cloud-based offering, generating further levels of recurring
revenue offering in the short- to medium-term.
The Group is evaluating the effects of IFRS 15 - Revenue from
Contracts with Customers - on the Group's financial reporting. As
the Group sells its services on a multi-year basis it is likely to
have to amortise most, if not all, of its non-recurring revenues
over the length of these contracts. This will therefore defer some
revenue and so change the profits of the business accordingly. The
change in reporting is not expected to affect the cash position of
the business as the Group's contractual terms will remain
unchanged.
RISK FACTORS
Prospective investors should be aware that an investment in the
Company involves a higher than normal degree of risk. An investment
in the Company should be regarded as speculative. In addition to
the other information in this document, the following risk factors
(which are not set out in any order of priority) should be
considered carefully in evaluating whether to make an investment in
the Company. If any of the risks described in this document
actually occur, the Group may not be able to conduct its business
as currently planned and its financial condition, operating results
and cash flows could be materially adversely affected. In that
event, the market price of the Ordinary Shares could decline and
all or part of an investment in the Company could be lost.
Additional risks and uncertainties not currently known to the
Directors may also have a material adverse effect on the Group's
business and the information set out below does not purport to be
an exhaustive summary of all risks affecting the Group.
Whilst representing significant opportunities for value
creation, there are a number of additional risks associated with
the execution of the Company's expansion plans. Accordingly, the
following seeks to update the principal business risks and
uncertainties set out in the Group's Annual Report and Accounts for
the year ended 30 June 2017 with those factors which the Board
consider to be relevant in the context of the Group's growth
strategy.
Limited operating history and management of growth: PCI Pal has
a limited operating history as a standalone business and does not
have an extensive track record, nor has it previously achieved
critical mass in overseas markets or domestically using its
second-generation cloud-based technology platform. The Company is
therefore subject to all the risks and uncertainties associated
with any new business enterprise, including the risk that the
Company will not achieve its objectives. Therefore, the value of an
investment in the Company could decline and may result in the total
loss of all capital invested.
Future financing requirements and access to capital: There can
be no assurances that the Company will successfully develop its
business in the manner intended or otherwise, or that the resources
it has will be suitable or sufficient for its requirements. The
Company may require the injection of further capital. No assurance
can be given that any such additional financing will be available
or that, if available, it will be available on terms acceptable to
the Company or to the Company's shareholders. Furthermore, any
additional capital raised through the sale of equity may dilute
Shareholders' ownership interests in the Group and may have an
adverse impact on the value of the Group's Ordinary Shares. The
terms of financing may also adversely affect Shareholders' holdings
or rights, or may contain restrictive covenants. If adequate
additional funding cannot be obtained, the Group may have to
abandon or limit any planned activity and/or business development
and/or otherwise scale back its operations, all of which could have
a material adverse effect on the Group's growth plans, financial
position, results of operations and/or prospects.
Generation of sales through Channel Partners: While the Board
believes that the use of international channel partners (including
but not limited to telephony, payment processor and contact
management software providers) is the most appropriate route to
market to scale the PCI Pal business with large, multi-national
customers, delays could arise in the expected timetable of
engagement with existing and other suitable channel partners and in
the implementation of the sales process to their customers. Any
such delays are likely to slow the rate of growth in the Company's
sales. This could have an impact on the trading and financial
position of the Company given it is currently loss making and may
also require increased scale to achieve cash breakeven. Also,
generating sales through channel partners will require staff time
to train channel partners in product knowledge and in marketing the
Company's solutions. Furthermore, the investment of time and effort
is not guaranteed to deliver new sales via channel partners.
However, the Board believes that its experience of already
generating sales through channel partners and its hiring of
experienced personnel with relevant industry and channel knowledge
will give it the potential opportunity to onboard partners
successfully, thereby potentially mitigating these risks. There can
be no assurance that the Group will achieve breakeven and/or
profitability.
Growth plans may change: PCI Pal is at an early stage in its
plans to capitalise on its new cloud based AWS platform through
international expansion. Whilst the Board has carefully considered
the strategic growth options available to the Company, the
international marketplace for secure payment services is rapidly
evolving. As such, the Board may alter its current expansion plans
if a material new opportunity presents itself that, in the opinion
of the Board, is more attractive than focussing only on UK
/European and North American expansion. Any change in strategy may
require additional financing, which may include the issue of
additional ordinary shares in the Company and dilution to
shareholdings.
Inability to recruit and retain suitably experienced personnel:
Additional staff will be required to scale the business in overseas
and domestic markets. Failure to recruit and retain the individuals
required would significantly restrict the Group's growth potential.
The Group also depends on the services of its key technical,
operations, sales and management personnel. The loss of the
services of any one or more of these key persons could have a
material adverse effect on the Group's business. The Group
maintains an active policy to identify, hire, train, motivate and
retain highly skilled personnel in key functions.
Intellectual property rights ("IPR"): The Group is reliant on
IPR surrounding its internally generated and in-licensed software.
Whilst it relies upon IPR protections including patents,
copyrights, trademarks and contractual provisions, it may be
possible for third parties to obtain and use the Group's
intellectual property without its authorisation. Third parties may
also challenge the validity and/or enforceability of the Group's
IPR.
In addition, the Directors are aware of the supply risk of
losing key software partners. As these partners are not a
significant part of the core solutions, this would be expected to
have a short-term impact only on the Group as the Directors believe
that the Group would be able to find alternative new partners.
Information technology: Data security and business continuity
pose inherent risks for the Group. The Group invests in and keeps
under review formal data security and business continuity policies
which are independently audited. The Group's solutions do not
retain details of its clients' payment data or that of their end
customers.
Our core PCI platforms are audited annually to enable us to
maintain our PCI DSS level 1 accreditations. This audit includes
annual certification and attempted penetration testing trying to
hack into the platforms. The new platform is hosted on the AWS
cloud infrastructure, which is already PCI DSS compliant.
Any failure or material outage of any of the Group's core IT
systems (or any other technology/system upon which the Group is
reliant), whether operated and/or managed by the Group or a third
party, could materially adversely impact on the Group's financial
condition, results of operations and prospects.
Cyber-security: The Group could be a potential target for
cyber-attacks. Any actual or perceived breach of security affecting
the Group's systems or cyber-security could materially adversely
impact on the Group's business (and its relationship with its
customers) as well as the Group's financial condition, results of
operations and prospects.
Operational risks: To reduce the operational risks PCI Pal have
multiple datacentres locations from which services are delivered.
These back up facilities have independent telephone lines, phone
switch and computer data systems synchronised to the main
datacentre that can automatically fail-over in the event of a major
incident occurring.
The new Cloud platform has been designed to use the Amazon Web
Services ("AWS") division technology platform with full failover
protection. The hardware used on the AWS platform is owned and
maintained by AWS and so this further reduces our operational
risks. As indicated above, any failure or material outage of any
technology or systems upon which the Group is reliant (including
Amazon Web Services) could materially adversely impact on the
Group's financial condition, results of operations and
prospects.
The Group is planning to expand into new regions and this will
naturally create operational risks due to having to set up systems
to comply with all new local regulations and laws. Failure to
comply with these laws may result in sanctions against the Company.
In order to seek to mitigate these risks the Directors use a system
of establishing a network of professional advisers located in each
region to advise the Group accordingly and then implement a
suitable control environment.
Market place and competition: The sector in which the Group
operates in and/or routes to market may undergo rapid or unexpected
changes or not develop at a pace in line with Directors'
expectations. It is also possible that competitors will develop
similar products; the Group's technology may become obsolete or
less effective; or that consumers use alternative channels of
communications, which may reduce demand for the Group's products
and services. In addition, the Group's success depends upon its
ability to develop new and enhance existing software solutions, on
a timely and cost effective basis, that meet changing customer
requirements and incorporate technological advancements. The
Directors review the market movements, client requirements and
competitive suppliers to ensure that the current portfolio is as
required by clients and partners. The Directors ensure that the
team is properly directed, trained and motivated to address this
issue.
Failure to penetrate overseas markets successfully (including
North America) could damage the Company's growth prospects. Whilst
the Group has existing overseas operations in North America and has
done extensive research into the market place, contact centre
technology and the regulatory environment, there is no guarantee
that technology and regulatory standards in overseas territories
will not diverge and thereby decrease the scalability or
opportunity for of the Group's platform in overseas markets. There
is risk that new or existing competitors will be attracted to the
US market place for PCI DSS compliance and therefore impact the
competitive landscape and the Company's ability to attract new
customers and /or maintain its channel partner relationships which
may be negatively affected. Competitors may be able to develop
products and services that are more attractive to customers than
those offered by the Group.
If any of the foregoing risks occurred they could have a
material adverse effect on the Group's financial condition, results
of operations and prospects.
Financial risk management objectives and policies: The principal
financial instruments used by the Group, from which financial risk
arises, are trade receivables, cash at bank and trade and other
payables. The Group has no significant net foreign currency
monetary assets or liabilities nor any hedged transactions or
positions. The Board has overall responsibility for the
determination of the Group's financial risk management objectives
and policies and, while retaining ultimate responsibility for them,
it has delegated the authority for designing, operating and
reporting thereof to the Group's finance function. The overall
objective is to set policies that seek to reduce risk as far as
possible without unduly affecting the Group's competitiveness and
flexibility. Further details regarding these policies and related
risks are set out below:
-- Credit risk: Credit risk is the risk of financial loss to the
Group if a customer or a counter party to a financial instrument,
such as the receivable loan notes, fails to meets it contractual
obligations. The Group is mainly exposed to credit risk from credit
sales. It is Group policy to assess the credit risk of new
customers before entering new contracts and it has a frequent and
proactive collections process. The concentration of credit risk is
limited due to the spread across a number of clients. Credit risk
also arises from cash and cash equivalents and deposits with banks
and financial institutions. At the year-end, the Group's cash at
bank was held with two major UK clearing banks.
Part of the loan notes receivable is guaranteed by a charge over
the majority shareholding of the directors of the Company issuing
the loan note.
-- Market risk: The Directors consider that exposure to market
risk, arising from the Group's use of interest-bearing and foreign
currency financial instruments, is not significant. This is
assessed in note 21 to the last reported audited financial
statements.
-- Liquidity risk: Liquidity risk arises from the Group's
management of working capital. It is the risk that the Group will
encounter difficulty in meeting its financial obligations as they
fall due. On a monthly basis, the Directors review an annual
twelve-month cash flow projection as well as information regarding
cash balances.
-- Currency risk: As a consequence of the increasingly
international nature of its business, the Group will become more
exposed to risks associated with changes in foreign currency
exchange rates. The Group is based in the United Kingdom and
presents its consolidated financial statements in pounds sterling.
The Group's current revenues are currently generated primarily in
pounds sterling. Increasingly it is envisaged that the Group's
revenues will be generated in foreign currency, particularly the US
dollar and the Canadian dollar. The Group's cash resources are
denominated in pounds sterling. The Group has no currency hedging
arrangements in place at present. Notwithstanding any future
currency hedging arrangements that the Group may put in place, the
Group will have exposure to translation effects arising from
movements in the relevant currency exchange rates against sterling
and there can be no assurance that its future results will not be
significantly affected by fluctuations in exchange rates.
-- Taxation risk: The Group's operations and business will be
subject to the effect of future changes to tax legislation and
practice in the countries in which it operates. Any change in the
tax status of the Company or any member of the Group or in
applicable tax legislation or regulations in any relevant
jurisdiction could affect the Company's ability to provide returns
to shareholders or negatively alter post tax returns to
shareholders. The taxation of an investment in the Company depends
on the individual circumstances of the investor.
Risks relating to the UK's proposed exit from the European
Union: The UK's June 2016 referendum vote to leave the European
Union ("EU"), and the subsequent initiation of the withdrawal
procedure in March 2017 when the UK Government triggered article 50
of the Treaty on European Union, has created significant
uncertainty regarding the UK's relationship with the EU, including
the terms and timeframe within which the UK's exit from the EU will
be effected. Although the Group has not experienced any immediate
material changes to its operations and structure, the UK's proposed
exit from the EU could generate political, economic and currency
volatility and uncertainty in the markets. The effects of the UK's
exit from the EU on the Group could include: (i) significant legal
and regulatory uncertainty; (ii) increased compliance and operating
costs for the Group; (iii) increased levels of inflation, in the UK
and other markets in which the Group operates and lower levels of
demand for the Group's services; and (v) a reduction in the net
assets and/or share price of the Company. Although it is impossible
to predict the full impact of the UK's exit from the EU at this
stage, the resultant risks could have a material adverse impact on
the Group's growth plans, financial position, results of operations
and/or prospects.
Litigation Risk: Companies in all sectors, including the sector
in which the Group operates, are subject to legal claims, with and
without merit. The Group may become involved in legal disputes in
the future. Defence and settlement costs can be substantial, even
with respect to claims that have no merit. Due to the inherent
uncertainty of the litigation process, there can be no assurance
that the resolution of any particular legal proceeding will not
have a material adverse effect on the Group's financial position,
results of operations and/or prospects.
APPIX - TERMS AND CONDITIONS OF THE PLACING
IMPORTANT INFORMATION FOR INVITED PLACEES ONLY REGARDING THE
PLACING.
THIS ANNOUNCEMENT, INCLUDING THIS APPIX AND THE INFORMATION
CONTAINED HEREIN (TOGETHER THE "ANNOUNCEMENT") 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, THE
REPUBLIC OF IRELAND, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF
SOUTH AFRICA 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.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE
PLACING. THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS
DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN
ECONOMIC AREA ("EEA") WHO ARE QUALIFIED INVESTORS AS DEFINED IN
SECTION 86(7) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000, AS
AMED ("QUALIFIED INVESTORS"), BEING PERSONS FALLING WITHIN THE
MEANING OF ARTICLE 2(1)(e) OF DIRECTIVE 2003/71/EC AS AMED,
INCLUDING BY THE 2010 PROSPECTUS DIRECTIVE AMING DIRECTIVE
(DIRECTIVE 2010/73/EC) AND TO THE EXTENT IMPLEMENTED IN THE
RELEVANT MEMBER STATE (THE "PROSPECTUS DIRECTIVE"); AND (B) IN THE
UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) HAVE
PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING
WITHIN ARTICLE 19(5) (INVESTMENT PROFESSIONALS) OF THE FINANCIAL
SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS
AMED (THE "ORDER"); (II) ARE PERSONS FALLING WITHIN ARTICLE
49(2)(A) TO (D) (HIGH NET WORTH COMPANIES, UNINCORPORATED
ASSOCIATIONS, ETC.) OF THE ORDER; OR (III) ARE PERSONS TO WHOM IT
MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER
BEING REFERRED TO AS "RELEVANT PERSONS").
THIS ANNOUNCEMENT AND THE INFORMATION IN IT MUST NOT BE ACTED ON
OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS
DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS
LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH
THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND
WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS ANNOUNCEMENT
DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY
SECURITIES IN THE COMPANY.
THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE INTO
THE UNITED STATES. THE PLACING SHARES HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT 1933, AS AMED
(THE "SECURITIES ACT") OR WITH ANY SECURITIES REGULATORY AUTHORITY
OF ANY STATE OR JURISDICTION OF THE UNITED STATES, AND MAY NOT BE
OFFERED, SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY, IN THE UNITED
STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OR OTHER JURISDICTION OF THE UNITED STATES. SUBJECT TO CERTAIN
EXCEPTIONS AND AT THE SOLE DISCRETION OF THE COMPANY, THE PLACING
SHARES ARE BEING OFFERED AND SOLD ONLY OUTSIDE THE UNITED STATES IN
"OFFSHORE TRANSACTIONS" WITHIN THE MEANING OF, AND IN ACCORDANCE
WITH, REGULATION S UNDER THE SECURITIES ACT AND OTHERWISE IN
ACCORDANCE WITH APPLICABLE LAWS. NO PUBLIC OFFERING OF THE PLACING
SHARES IS BEING MADE IN THE UNITED STATES, THE UNITED KINGDOM OR
ELSEWHERE. NO MONEY, SECURITIES OR OTHER CONSIDERATION FROM ANY
PERSON INSIDE THE UNITED STATES IS BEING SOLICITED AND, IF SENT IN
RESPONSE TO THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT, WILL
NOT BE ACCEPTED.
EACH PLACEE SHOULD CONSULT WITH ITS ADVISERS AS TO LEGAL, TAX,
BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN PLACING SHARES.
THE DISTRIBUTION OF THIS ANNOUNCEMENT, ANY PART OF IT OR ANY
INFORMATION CONTAINED IN IT MAY BE RESTRICTED BY LAW IN CERTAIN
JURISDICTIONS, AND ANY PERSON INTO WHOSE POSSESSION THIS
ANNOUNCEMENT, ANY PART OF IT OR ANY INFORMATION CONTAINED IN IT
COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE, SUCH
RESTRICTIONS.
No action has been taken by the Company, N+1 Singer Advisory LLP
("N+1 Singer") or any of their respective affiliates, agents,
directors, officers or employees that would permit an offer of the
Placing Shares or possession or distribution of this Announcement
or any other offering or publicity material relating to such
Placing Shares in any jurisdiction where action for that purpose is
required.
This Announcement or any part of it does not constitute or form
part of any offer to issue or sell, or the solicitation of an offer
to acquire, purchase or subscribe for, any securities in the United
States (including its territories and possessions, any state of the
United States and the District of Columbia), Canada, the Republic
of Ireland, Australia, the Republic of South Africa, Japan or any
other jurisdiction in which the same would be unlawful. No public
offering of the Placing Shares is being made in any such
jurisdiction.
All offers of the Placing Shares will be made pursuant to an
exemption under the Prospectus Directive from the requirement to
produce a prospectus. In the United Kingdom, this Announcement is
being directed solely at persons in circumstances in which section
21(1) of the Financial Services and Markets Act 2000 (as amended)
(the "FSMA") does not apply.
The Placing Shares have not been approved or disapproved by the
US Securities and Exchange Commission, any state securities
commission or other regulatory authority in the United States, nor
have any of the foregoing authorities passed upon or endorsed the
merits of the Placing or the accuracy or adequacy of this
Announcement. Any representation to the contrary is a criminal
offence in the United States. The relevant clearances have not
been, nor will they be, obtained from the securities commission of
any province or territory of Canada, no prospectus has been lodged
with, or registered by, the Australian Securities and Investments
Commission or the Japanese Ministry of Finance; the relevant
clearances have not been, and will not be, obtained for the South
Africa Reserve Bank or any other applicable body in the Republic of
South Africa in relation to the Placing Shares and the Placing
Shares have not been, nor will they be, registered under or
offering in compliance with the securities laws of any state,
province or territory of Australia, Canada, Japan or the Republic
of South Africa. Accordingly, the Placing Shares may not (unless an
exemption under the relevant securities laws is applicable) be
offered, sold, resold or delivered, directly or indirectly, in or
into Australia, Canada, Japan or the Republic of South Africa or
any other jurisdiction outside the United Kingdom.
Persons (including, without limitation, nominees and trustees)
who have a contractual right or other legal obligations to forward
a copy of this Announcement should seek appropriate advice before
taking any action.
This Announcement should be read in its entirety. In particular,
you should read and understand the information provided in this
"Important Information" section of this Announcement.
By participating in the Placing, each such person (a "Placee")
will be deemed to have read and understood this Announcement in its
entirety, to be participating, making an offer and acquiring
Placing Shares on the terms and conditions contained herein and to
be providing the representations, warranties, indemnities,
acknowledgements and undertakings contained in this Appendix.
In particular, each such Placee represents, warrants,
undertakes, agrees and acknowledges (amongst other things)
that:
1 it is a Relevant Person and undertakes that it will acquire,
hold, manage or dispose of any Placing Shares that are allocated to
it for the purposes of its business;
2 in the case of a Relevant Person in a member state of the EEA
which has implemented the Prospectus Directive (each, a "Relevant
Member State") who acquires any Placing Shares pursuant to the
Placing:
2.1 it is a Qualified Investor within the meaning of Article
2(1)(e) of the Prospectus Directive;
2.2 in the case of any Placing Shares acquired by it as a
financial intermediary, as that term is used in Article 3(2) of the
Prospectus Directive:
2.2.1 the Placing Shares acquired by it in the Placing have not
been acquired on behalf of, nor have they been acquired with a view
to their offer or resale to, persons in any Relevant Member State
other than Qualified Investors or in circumstances in which the
prior consent of N+1 Singer has been given to the offer or resale;
or
2.2.2 where Placing Shares have been acquired by it on behalf of
persons in any Relevant Member State other than Qualified
Investors, the offer of those Placing Shares to it is not treated
under the Prospectus Directive as having been made to such
persons;
3 it is acquiring the Placing Shares for its own account or is
acquiring the Placing Shares for an account with respect to which
it exercises sole investment discretion and has the authority to
make and does make the representations, warranties, indemnities,
acknowledgements, undertakings and agreements contained in this
Announcement;
4 it understands (or if acting for the account of another
person, such person has confirmed that such person understands) the
resale and transfer restrictions set out in this Appendix; and
5 except as otherwise permitted by the Company and subject to
any available exemptions from applicable securities laws, it (and
any account referred to in paragraph 3 above) is outside the United
States acquiring the Placing Shares in offshore transactions as
defined in and in accordance with Regulation S under the Securities
Act.
No prospectus
No prospectus or other offering document has been or will be
submitted to be approved by the FCA in relation to the Placing or
the Placing Shares and Placees' commitments will be made solely on
the basis of the information contained in this Announcement, the
announcement of the results of the Placing (the "Placing Results
Announcement") and any information publicly announced through a
Regulatory Information Service (as defined in the AIM Rules for
Companies (the "AIM Rules")) by or on behalf of the Company on or
prior to the date of this Announcement (the "Publicly Available
Information") and subject to any further terms set forth in the
form of confirmation to be sent to individual Placees.
Each Placee, by participating in the Placing, agrees that the
content of this Announcement is exclusively the responsibility of
the Company and confirms that it has neither received nor relied on
any information (other than the Publicly Available Information),
representation, warranty or statement made by or on behalf of N+1
Singer, the Company or any other person and none of N+1 Singer, the
Company or any other person acting on such person's behalf nor any
of their respective affiliates has or shall have any liability for
any Placee's decision to participate in the Placing based on any
other information, representation, warranty or statement. Each
Placee acknowledges and agrees that it has relied on its own
investigation of the business, financial or other position of the
Company in accepting a participation in the Placing. Nothing in
this paragraph shall exclude the liability of any person for
fraudulent misrepresentation.
Details of the Placing Agreement and the Placing Shares
N+1 Singer has today entered into a placing agreement (the
"Placing Agreement") with the Company under which, on the terms and
subject to the conditions set out in the Placing Agreement, N+1
Singer, as agent for and on behalf of the Company, has agreed to
use its reasonable endeavours to procure Placees for the Placing
Shares at the Placing Price.
The Placing Shares will, when issued, be subject to the articles
of association of the Company and credited as fully paid and will
rank pari passu in all respects with the Existing Ordinary Shares
in the capital of the Company, including the right to receive all
dividends and other distributions declared, made or paid in respect
of such Ordinary Shares after the date of issue of the Placing
Shares.
Application for admission to trading
Application will be made to the London Stock Exchange for
Admission of the Placing Shares to trading on AIM.
It is expected that Admission of the Placing Shares will take
place no later than the Longstop Date. It is also expected that
dealings in the Placing Shares on AIM will commence at the time of
Admission.
Participation in the Placing
This Appendix gives details of the terms and conditions of, and
the mechanics of participation in, the Placing. No commissions will
be paid to Placees or by Placees in respect of any Placing Shares.
N+1 Singer and the Company shall be entitled to effect the Placing
by such alternative method as they may, in their sole discretion,
determine.
Principal terms of the Placing
1 N+1 Singer is acting as nominated adviser, financial adviser
and broker to the Placing, as agent for and on behalf of the
Company. N+1 Singer is authorised and regulated in the United
Kingdom by the Financial Conduct Authority ("FCA") and is acting
exclusively for the Company and no one else in connection with the
matters referred to in this Announcement and will not be
responsible to anyone other than the Company for providing the
protections afforded to the customers of N+1 Singer or for
providing advice in relation to the matters described in this
Announcement.
2 Participation in the Placing will only be available to persons
who may lawfully do so, and who are, invited by N+1 Singer to
participate in the Placing. N+1 Singer and any of its respective
affiliates are entitled to participate in the Placing as
principal.
3 The final number of Placing Shares to be issued at the Placing
Price will be agreed and determined between N+1 Singer and the
Company and such details will be announced by the Company through a
Regulatory Information Service pursuant to the Placing Results
Announcement.
4 The Placing process is expected to close (and the Placing
Results Announcement is expected to be published) no later than
5.00 p.m. on 30 January 2018 but may be closed earlier or later
subject to the agreement of N+1 Singer and the Company. The Company
reserves the right (upon agreement of N+1 Singer) to reduce or seek
to increase the amount to be raised pursuant to the Placing, in its
discretion.
5 Each Placee's allocation in the Placing shall be determined by
N+1 Singer and the Company. Placees' commitments to subscribe for
Placing Shares will be made orally to N+1 Singer on a recorded
telephone line and a form of confirmation documenting such
commitment will be dispatched by N+1 Singer by email as soon as
possible following the release of this Announcement. That oral
confirmation will give rise to an irrevocable, legally binding
commitment by that person (who at that point becomes a Placee), in
favour of N+1 Singer and the Company, under which it agrees to
acquire the number of Placing Shares allocated to it at the Placing
Price and otherwise on the terms and subject to the conditions set
out in this Appendix and in accordance with the Company's articles
of association. Except with N+1 Singer's written consent, such
commitment will not be capable of variation or revocation at the
time at which it is submitted. The terms of this Appendix will also
be deemed incorporated in the form of confirmation.
6 N+1 Singer and the Company may choose to scale down
participations in the Placing on such basis as they may
determine.
7 The Company will release the Placing Results Announcement
following the completion of the Placing process which shall detail
the aggregate number of Placing Shares that have been placed at the
Placing Price. Each Placee will have an immediate, separate,
irrevocable and binding obligation, owed to N+1 Singer (as agent
for the Company), to pay to it (or as it may direct) in cleared
funds an amount equal to the product of the Placing Price and the
number of Placing Shares such Placee has agreed to acquire and the
Company has agreed to allot and issue to that Placee.
8 Except as required by law or regulation, no press release or
other announcement will be made by N+1 Singer or the Company using
the name of any Placee (or its agent) in its capacity as Placee (or
agent), other than with the Placee's prior written consent.
9 Irrespective of the time at which a Placee's allocation(s)
pursuant to the Placing is/are confirmed, settlement for all
Placing Shares to be acquired pursuant to the Placing will be
required to be made at the same time, on the basis explained below
under "Registration and Settlement".
10 All obligations of N+1 Singer under the Placing will be
subject to fulfilment of the conditions referred to below under
"Conditions of the Placing" and to the Placing not being terminated
on the basis referred to below under "Termination of the
Placing".
11 By participating in the Placing, each Placee will agree that
its rights and obligations in respect of the Placing will terminate
only in the circumstances described below and will not be capable
of rescission or termination by the Placee.
12 To the fullest extent permissible by law and applicable FCA
rules, none of (a) N+1 Singer, (b) any of N+1 Singer's affiliates,
agents, directors, officers, consultants, or employees (c) to the
extent not contained within (a) or (b), any person connected with
N+1 Singer as defined in the Financial Services and Markets Act
2000 ("FSMA") ((b) and (c) being together "affiliates" and
individually an "affiliate" of N+1 Singer), (d) any person acting
on N+1 Singer's behalf, shall have any liability (including to the
extent permissible by law, any fiduciary duties) to Placees or to
any other person whether acting on behalf of a Placee or otherwise.
In particular, neither N+1 Singer nor any of its respective
affiliates shall have any liability (including, to the extent
permissible by law, any fiduciary duties) in respect of their
conduct of the Placing or of such alternative method of effecting
the Placing as N+1 Singer and the Company may agree.
Registration and Settlement
If Placees are allocated any Placing Shares in the Placing they
will be sent a form of confirmation or electronic confirmation by
N+1 Singer, as soon as it is able which will confirm the number of
Placing Shares allocated to them, the Placing Price and the
aggregate amount owed by them to N+1 Singer.
Each Placee will be deemed to agree that it will do all things
necessary to ensure that delivery and payment is completed as
directed by N+1 Singer in accordance with either the standing CREST
or certificated settlement instructions which they have in place
with N+1 Singer.
It is expected that the Placing Shares will be issued to
potential subscribers on 31 January 2018 (or such later date as the
Company and N+1 Singer may agree in writing, being no later than
the Long Stop Date).
Settlement of transactions in the Placing Shares (ISIN:
GB0009737155) following the relevant Admission will take place
within the CREST system, subject to certain exceptions. Settlement
through CREST is expected to take place in respect of the Placing
Shares on 31 January 2018 and Admission is expected to occur no
later than 8.00 a.m. on such date unless otherwise notified by N+1
Singer.
Settlement will be on a delivery versus payment basis. However,
in the event of any difficulties or delays in the Admission of the
Placing Shares to CREST or the use of CREST in relation to the
Placing, the Company and N+1 Singer may agree that the Placing
Shares should be issued in certificated form. N+1 Singer reserves
the right to require settlement for the Placing Shares, and to
deliver the Placing Shares to Placees, by such other means as they
deem necessary if delivery or settlement to Placees is not
practicable within the CREST system or would not be consistent with
regulatory requirements in a Placee's jurisdiction.
Interest is chargeable daily on payments not received from
Placees on the due date in accordance with the arrangements set out
above, in respect of either CREST or certificated deliveries, at
the rate of 2 percentage points above prevailing LIBOR as
determined by N+1 Singer.
Each Placee agrees and is deemed to agree that, if it does not
comply with these obligations, N+1 Singer may sell, charge by way
of security (to any funder of N+1 Singer) or otherwise deal with
any or all of their Placing Shares on their behalf and retain from
the proceeds, for N+1 Singer's own account and benefit, an amount
equal to the aggregate amount owed by the Placee plus any interest
due and any costs and expenses properly incurred by N+1 Singer a
result of the Placee's failure to comply with its obligations. The
relevant Placee will, however, remain liable for any shortfall
below the amount owed by it and for any stamp duty or stamp duty
reserve tax (together with any interest or penalties) which may
arise upon the sale of their Placing Shares on their behalf. Legal
and/or beneficial title in and to any Placing Shares shall not pass
to the relevant Placee until such time as it has fully complied
with its obligations hereunder.
If Placing Shares are to be delivered to a custodian or
settlement agent, Placees must ensure that, upon receipt, the form
of confirmation is copied and delivered immediately to the relevant
person within that organisation. Insofar as Placing Shares are
registered in a Placee's name or that of its nominee or in the name
of any person for whom a Placee is contracting as agent or that of
a nominee for such person, such Placing Shares should, subject as
provided below, be so registered free from any liability to United
Kingdom stamp duty or stamp duty reserve tax. Placees will not be
entitled to receive any fee or commission in connection with the
Placing.
Conditions of the Placing
The Placing is conditional upon the Placing Agreement becoming
unconditional and not having been terminated in accordance with its
terms.
The obligations of N+1 Singer under the Placing Agreement are,
and the Placing is, conditional upon, inter alia:
(a) the Company allotting the Placing Shares in accordance with
the terms of the Placing Agreement;
(b) none of the warranties or undertakings on the part of the
Company contained in the Placing Agreement being or having become
untrue, inaccurate or misleading at any time before Admission, and
no fact or circumstance having arisen which would constitute a
breach of any of the Warranties or undertakings given in this
Agreement;
(c) the performance by the Company of its obligations under the
Placing Agreement to the extent that they fall to be performed
prior to Admission;
(d) no matter having arisen before Admission which might
reasonably be expected to give rise to an indemnity claim under the
Placing Agreement;
(e) agreement by the Company and N+1 Singer of the final number
of Placing Shares to be issued at the Placing Price pursuant to the
Placing and the allocation of such Placing Shares to Placees;
and
(f) Admission occurring by not later than 8.00 a.m. on 31
January 2018 (or such later date as the Company and N+1 Singer may
agree in writing, in any event being not later than 8.00 a.m. on
the Long Stop Date),
(all conditions to the obligations of N+1 Singer included in the
Placing Agreement being together, the "conditions").
If any of the conditions set out in the Placing Agreement are
not fulfilled or, where permitted, waived in accordance with the
Placing Agreement within the stated time periods (or such later
time and/or date as the Company and N+1 Singer may agree, provided
that the time for satisfaction of the condition set out in (e)
above shall not be extended beyond 8.00 a.m. on the Long Stop
Date), or the Placing Agreement is terminated in accordance with
its terms, the Placing will lapse and the Placee's rights and
obligations shall cease and terminate at such time and each Placee
agrees that no claim can be made by or on behalf of the Placee (or
any person on whose behalf the Placee is acting) in respect
thereof.
By participating in the Placing, each Placee agrees that its
rights and obligations cease and terminate only in the
circumstances described above and under "Termination of the
Placing" below and will not be capable of rescission or termination
by it.
Certain conditions may be waived in whole or in part by N+1
Singer, in its absolute discretion by notice in writing to the
Company and N+1 Singer may also agree in writing with the Company
to extend the time for satisfaction of any condition. Any such
extension or waiver will not affect Placees' commitments as set out
in this Announcement.
N+1 Singer may terminate the Placing Agreement in certain
circumstances, details of which are set out below.
Neither N+1 Singer, the Company nor any of their respective
affiliates, agents, directors, officers, employees shall have any
liability to any Placee (or to any other person whether acting on
behalf of a Placee or otherwise) in respect of any decision any of
them may make as to whether or not to waive or to extend the time
and/or date for the satisfaction of any condition to the Placing
nor for any decision any of them may make as to the satisfaction of
any condition or in respect of the Placing generally and by
participating in the Placing each Placee agrees that any such
decision is within the absolute discretion of N+1 Singer.
Termination of the Placing
N+1 Singer may terminate the Placing Agreement, in accordance
with its terms, at any time prior to Admission if, inter alia:
1 it comes to the attention of N+1 Singer that any of the
warranties were not true or accurate, or were misleading when given
or deemed given; or
2 it comes to the attention of N+1 Singer that the Company has
failed to comply with its obligations under the Placing Agreement,
FSMA, MAR, the AIM Rules or other applicable law; or
3 there has occurred a force majeure event, or any material
adverse change has occurred in the financial position or prospects
or business of the Company and its subsidiary undertakings (taken
as whole) which, in the opinion of N+1 Singer, will or is likely to
be prejudicial to the Placing or Admission or to the subscription
for Placing Shares by Placees.
If the Placing Agreement is terminated in accordance with its
terms, the rights and obligations of each Placee in respect of the
Placing as described in this Announcement shall cease and terminate
at such time and no claim can be made by any Placee in respect
thereof.
By participating in the Placing, each Placee agrees with the
Company and N+1 Singer that the exercise by the Company or N+1
Singer of any right of termination or any other right or other
discretion under the Placing Agreement shall be within the absolute
discretion of the Company or N+1 Singer and that neither of the
Company nor N+1 Singer need make any reference to such Placee and
that neither N+1 Singer, the Company, nor any of their respective
affiliates, agents, directors, officers or employees shall have any
liability to such Placee (or to any other person whether acting on
behalf of a Placee or otherwise) whatsoever in connection with any
such exercise.
By participating in the Placing, each Placee agrees that its
rights and obligations terminate only in the circumstances
described above and under the "Conditions of the Placing" section
above and will not be capable of rescission or termination by it
after oral confirmation with N+1 Singer following the close of the
Placing in respect of each Placee's allocation and commitment in
the Placing.
Enterprise Investment Scheme (EIS) and Venture Capital Trust
(VCT) Schemes
The continuing status of the Ordinary Shares as a qualifying
holding for VCT purposes will be conditional (amongst other things)
on the qualifying conditions being satisfied throughout the period
of ownership. The continuing status of the Ordinary Shares as
qualifying for EIS relief will be conditional (amongst other
things) on the qualifying conditions being satisfied, both by the
Company and (as regards those conditions to be met by the investor)
the investor throughout a period of at least three years from the
date of issue. There can be no assurance that the Company will
continue to conduct its activities in a way that will secure or
retain qualifying status for VCT and/ or EIS purposes (and indeed
circumstances may arise where the directors of the Company believe
that the interests of the Group are not served by seeking to retain
such status). Further, the conditions for VCT and EIS relief are
complex and relevant investors are recommended to seek their own
professional advice before investing. This paragraph is without
prejudice to any separate comfort letter which may have been given
by the Company to certain VCT investors in connection with the
Placing.
Representations, warranties and further terms
By participating in the Placing, each Placee (and any person
acting on such Placee's behalf) represents, warrants, acknowledges
and agrees (for itself and for any such prospective Placee) that
(save where N+1 Singer expressly agrees in writing to the
contrary):
1 it has read and understood this Announcement in its entirety
and that its acquisition of the Placing Shares is subject to and
based upon all the terms, conditions, representations, warranties,
indemnities, acknowledgements, agreements and undertakings and
other information contained herein and that it has not relied on,
and will not rely on, any information given or any representations,
warranties or statements made at any time by any person in
connection with either Admission, the Placing, the Company, the
Placing Shares or otherwise, other than the information contained
in this Announcement and the Publicly Available Information;
2 it has not received a prospectus or other offering document in
connection with the Placing and acknowledges that no prospectus or
other offering document: (a) is required under the Prospectus
Directive; and (b) has been or will be prepared in connection with
the Placing;
3 the Ordinary Shares are admitted to trading on AIM, and that
the Company is therefore required to publish certain business and
financial information in accordance with the AIM Rules, which
includes a description of the nature of the Company's business and
the Company's most recent balance sheet and profit and loss account
and that it is able to obtain or access such information without
undue difficulty, and is able to obtain access to such information
or comparable information concerning any other publicly traded
company, without undue difficulty;
4 it has made its own assessment of the Placing Shares and has
relied on its own investigation of the business, financial or other
position of the Company in accepting a participation in the Placing
and neither N+1 Singer, the Company nor any of their respective
affiliates, agents, directors, officers or employees or any person
acting on behalf of any of them has provided, and will not provide,
it with any material regarding the Placing Shares or the Company or
any other person other than the information in this Announcement,
or the Publicly Available Information; nor has it requested neither
of N+1 Singer, the Company, any of their respective affiliates,
agents, directors, officers or employees or any person acting on
behalf of any of them to provide it with any such information;
5 neither N+1 Singer, any person acting on behalf of them or any
of their respective affiliates, agents, directors, officers or
employees has or shall have any liability for any Publicly
Available Information, or any representation relating to the
Company, provided that nothing in this paragraph excludes the
liability of any person for fraudulent misrepresentation made by
that person;
6 (a) the only information on which it is entitled to rely on
and on which it has relied in committing to subscribe for the
Placing Shares is contained in the Publicly Available Information,
such information being all that it deems necessary to make an
investment decision in respect of the Placing Shares and it has
made its own assessment of the Company, the Placing Shares and the
terms of the Placing based on Publicly Available Information; (b)
neither N+1 Singer, the Company nor any of their respective
affiliates, agents, directors, officers or employees has made any
representation or warranty to it, express or implied, with respect
to the Company, the Placing or the Placing Shares or the accuracy,
completeness or adequacy of the Publicly Available Information; (c)
it has conducted its own investigation of the Company, the Placing
and the Placing Shares, satisfied itself that the information is
still current and relied on that investigation for the purposes of
its decision to participate in the Placing; and (d) has not relied
on any investigation that N+1 Singer or any person acting on their
behalf may have conducted with respect to the Company, the Placing
or the Placing Shares;
7 the content of this Announcement and the Publicly Available
Information have been prepared by and are exclusively the
responsibility of the Company and that neither N+1 Singer nor any
persons acting on behalf of it is responsible for or has or shall
have any liability for any information, representation, warranty or
statement relating to the Company contained in this Announcement or
the Publicly Available Information nor will they be liable for any
Placee's decision to participate in the Placing based on any
information, representation, warranty or statement contained in
this Announcement, the Publicly Available Information or otherwise.
Nothing in this Appendix shall exclude any liability of any person
for fraudulent misrepresentation;
8 the Placing Shares have not been registered or otherwise
qualified, and will not be registered or otherwise qualified, for
offer and sale nor will a prospectus be cleared or approved in
respect of any of the Placing Shares under the securities laws of
the United States, or any state or other jurisdiction of the United
States, the Republic of Ireland, Australia, Canada, Republic of
South Africa or Japan and, subject to certain exceptions, may not
be offered, sold, taken up, renounced or delivered or transferred,
directly or indirectly, within the United States, the Republic of
Ireland, Australia, Canada, Republic of South Africa or Japan or in
any country or jurisdiction where any such action for that purpose
is required;
9 it and/or each person on whose behalf it is participating:
9.1 is entitled to acquire Placing Shares pursuant to the
Placing under the laws and regulations of all relevant
jurisdictions;
9.2 has fully observed such laws and regulations;
9.3 has capacity and authority and is entitled to enter into and
perform its obligations as an acquirer of Placing Shares and will
honour such obligations; and
9.4 has obtained all necessary consents and authorities
(including, without limitation, in the case of a person acting on
behalf of a Placee, all necessary consents and authorities to agree
to the terms set out or referred to in this Appendix) under those
laws or otherwise and complied with all necessary formalities to
enable it to enter into the transactions contemplated hereby and to
perform its obligations in relation thereto and, in particular, if
it is a pension fund or investment company it is aware of and
acknowledges it is required to comply with all applicable laws and
regulations with respect to its subscription for Placing
Shares;
10 it is not, and any person who it is acting on behalf of is
not, and at the time the Placing Shares are subscribed for will not
be, a resident of, or with an address in, or subject to the laws
of, Australia, Canada, Japan, the Republic of Ireland or the
Republic of South Africa, and it acknowledges and agrees that the
Placing Shares have not been and will not be registered or
otherwise qualified under the securities legislation of Australia,
Canada, Japan, the Republic of Ireland or the Republic of South
Africa and may not be offered, sold, or acquired, directly or
indirectly, within those jurisdictions;
11 the Placing Shares have not been, and will not be, registered
under the Securities Act and may not be offered, sold or resold in
or into or from the United States except pursuant to an effective
registration under the Securities Act, or pursuant to an exemption
from, or in a transaction not subject to, the registration
requirements of the Securities Act and in accordance with
applicable state securities laws; and no representation is being
made as to the availability of any exemption under the Securities
Act for the reoffer, resale, pledge or transfer of the Placing
Shares;
12 it and the beneficial owner of the Placing Shares is, and at
the time the Placing Shares are acquired will be, outside the
United States and acquiring the Placing Shares in an "offshore
transaction" as defined in, and in accordance with, Regulation S
under the Securities Act;
13 it (and any account for which it is purchasing) is not
acquiring the Placing Shares with a view to any offer, sale or
distribution thereof within the meaning of the Securities Act;
14 it will not distribute, forward, transfer or otherwise
transmit this Announcement or any part of it, or any other
presentational or other materials concerning the Placing in or into
or from the United States (including electronic copies thereof) to
any person, and it has not distributed, forwarded, transferred or
otherwise transmitted any such materials to any person;
15 neither N+1 Singer, its respective affiliates, agents,
directors, officers or employees nor any person acting on behalf of
any of them is making any recommendations to it, advising it
regarding the suitability of any transactions it may enter into in
connection with the Placing and that participation in the Placing
is on the basis that it is not and will not be a client of N+1
Singer and N+1 Singer has no duties or responsibilities to it for
providing the protections afforded to its clients or for providing
advice in relation to the Placing nor in respect of any
representations, warranties, undertakings or indemnities contained
in the Placing Agreement nor for the exercise or performance of any
of its rights and obligations thereunder including any rights to
waive or vary any conditions or exercise any termination right;
16 it has the funds available to pay for the Placing Shares for
which it has agreed to subscribe and acknowledges and agrees that
it will make payment to N+1 Singer of the total subscription amount
for the Placing Shares allocated to it in accordance with the terms
and conditions of this Announcement on the due times and dates set
out in this Announcement, failing which the relevant Placing Shares
may be placed with others on such terms as N+1 Singer may, in its
absolute discretion determine without liability to the Placee and
it will remain liable for any shortfall below the net proceeds of
such sale and the placing proceeds of such Placing Shares and may
be required to bear any stamp duty or stamp duty reserve tax
(together with any interest or penalties due pursuant to the terms
set out or referred to in this Announcement) which may arise upon
the sale of such Placee's Placing Shares on its behalf;
17 its allocation (if any) of Placing Shares will represent a
maximum number of Placing Shares will it will be entitled to, and
will be required, to subscribe for, and that the Company may call
upon it to subscribe for a lower number of Placing Shares (if any),
but in no event in aggregate more than the aforementioned
maximum;
18 no action has been or will be taken by any of the Company,
N+1 Singer or any person acting on their behalf that would, or is
intended to, permit a public offer of the Placing Shares in the
United States or in any country or jurisdiction where any such
action for that purpose is required;
19 the person who it specifies for registration as holder of the
Placing Shares will be: (a) the Placee; or (b) a nominee of the
Placee, as the case may be. Neither N+1 Singer nor the Company will
be responsible for any liability to stamp duty or stamp duty
reserve tax resulting from a failure to observe this requirement.
Each Placee and any person acting on behalf of such Placee agrees
to acquire Placing Shares pursuant to the Placing and agrees to pay
and/ or indemnify the Company and N+1 Singer in respect of the same
(including any interest or penalties) on the basis that the Placing
Shares will be allotted to a CREST stock account of N+1 Singer or
transferred to a CREST stock account of N+1 Singer who will hold
them as nominee on behalf of the Placee until settlement in
accordance with its standing settlement instructions with it;
20 it is acting as principal only in respect of the Placing or,
if it is acting for any other person, (a) it is duly authorised to
do so and has full power to make the acknowledgments,
representations and agreements herein on behalf of each such person
and (b) it is and will remain liable to the Company and N+1 Singer
for the performance of all its obligations as a Placee in respect
of the Placing (regardless of the fact that it is acting for
another person);
21 the allocation, allotment, issue and delivery to it, or the
person specified by it for registration as holder, of Placing
Shares will not give rise to a stamp duty or stamp duty reserve tax
liability under (or at a rate determined under) any of sections 67,
70, 93 or 96 of the Finance Act 1986 (depository receipts and
clearance services) and that it is not participating in the Placing
as nominee or agent for any person or persons to whom the
allocation, allotment, issue or delivery of Placing Shares would
give rise to such a liability;
22 it and any person acting on its behalf (if within the United
Kingdom) falls within Article 19(5) and/or 49(2) of the Order and
undertakes that it will acquire, hold, manage and (if applicable)
dispose of any Placing Shares that are allocated to it for the
purposes of its business only;
23 it will not make an offer to the public of the Placing Shares
and it has not offered or sold and will not offer or sell any
Placing Shares to persons in the United Kingdom or elsewhere in the
EEA prior to the expiry of a period of six months from Admission
except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their business or otherwise
in circumstances which have not resulted and which will not result
in an offer to the public in the United Kingdom within the meaning
of section 85(1) of the FSMA or an offer to the public in any other
member state of the EEA within the meaning of the Prospectus
Directive;
24 it is a person of a kind described in: (a) Article 19(5)
(Investment Professionals) and/or 49(2) (High net worth companies
etc.) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, as amended, and/or an authorised person as
defined in section 31 of FSMA; and (b) section 86(7) of FSMA
("Qualified Investor"), being a person falling within Article
2.1(e) the Prospectus Directive. For such purposes, it undertakes
that it will acquire, hold, manage and (if applicable) dispose of
any Placing Shares that are allocated to it for the purposes of its
business only;
25 it has only communicated or caused to be communicated and it
will only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning of
section 21 of the FSMA) relating to Placing Shares in circumstances
in which section 21(1) of the FSMA does not require approval of the
communication by an authorised person and it acknowledges and
agrees that this Announcement has not been approved by N+1 Singer
in its capacity as an authorised person under section 21 of the
FSMA and it may not therefore be subject to the controls which
would apply if it was made or approved as a financial promotion by
an authorised person;
26 it has complied and it will comply with all applicable laws
with respect to anything done by it or on its behalf in relation to
the Placing Shares (including all relevant provisions of the FSMA
in respect of anything done in, from or otherwise involving the
United Kingdom);
27 if it is a financial intermediary, as that term is used in
Article 3(2) of the Prospectus Directive (including any relevant
implementing measure in any member state), the Placing Shares
acquired by it in the Placing will not be acquired on a
non-discretionary basis on behalf of, nor will they be acquired
with a view to their offer or resale to, persons in a member state
of the EEA which has implemented the Prospectus Directive other
than Qualified Investors, or in circumstances in which the express
prior written consent of N+1 Singer has been given to the offer or
resale;
28 it has neither received nor relied on any confidential price
sensitive information about the Company in accepting this
invitation to participate in the Placing;
29 neither N+1 Singer nor any of its respective affiliates,
agents, directors, officers or employees or any person acting on
behalf of any of them has or shall have any liability for any
information, representation or statement contained in this
Announcement or for any information previously published by or on
behalf of the Company or any other written or oral information made
available to or publicly available or filed information or any
representation, warranty or undertaking relating to the Company,
and will not be liable for its decision to participate in the
Placing based on any information, representation, warranty or
statement contained in this Announcement or elsewhere, provided
that nothing in this paragraph shall exclude any liability of any
person for fraud;
30 neither N+1 Singer, the Company, nor any of their respective
affiliates, agents, directors, officers or employees or any person
acting on behalf of N+1 Singer, the Company or their respective
affiliates, agents, directors, officers or employees is making any
recommendations to it, advising it regarding the suitability of any
transactions it may enter into in connection with the Placing nor
providing advice in relation to the Placing nor in respect of any
representations, warranties, acknowledgements, agreements,
undertakings, or indemnities contained in the Placing Agreement nor
the exercise or performance of N+1 Singer's rights and obligations
thereunder including any rights to waive or vary any conditions or
exercise any termination right;
31 acknowledges and accepts that N+1 Singer may, in accordance
with applicable legal and regulatory provisions, engage in
transactions in relation to the Placing Shares and/or related
instruments for their own account for the purpose of hedging their
underwriting exposure or otherwise and, except as required by
applicable law or regulation, N+1 Singer will not make any public
disclosure in relation to such transactions;
32 N+1 Singer and each of its affiliates, each acting as an
investor for its or their own account(s), may bid or subscribe for
and/or purchase Placing Shares and, in that capacity, may retain,
purchase, offer to sell or otherwise deal for its or their own
account(s) in the Placing Shares, any other securities of the
Company or other related investments in connection with the Placing
or otherwise. Accordingly, references in this Announcement to the
Placing Shares being offered, subscribed, acquired or otherwise
dealt with should be read as including any offer to, or
subscription, acquisition or dealing by N+1 Singer and/or any of
its respective affiliates, acting as an investor for its or their
own account(s). Neither N+1 Singer nor the Company intend to
disclose the extent of any such investment or transaction otherwise
than in accordance with any legal or regulatory obligation to do
so;
33 it has complied with its obligations in connection with money
laundering and terrorist financing under the Proceeds of Crime Act
2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money
Laundering Regulations 2007 (together, the "Regulations") and, if
making payment on behalf of a third party, that satisfactory
evidence has been obtained and recorded by it to verify the
identity of the third party as required by the Regulations;
34 it is aware of the obligations regarding insider dealing in
the Criminal Justice Act 1993, FSMA, the EU Market Abuse Regulation
No. 596 of 2014 and the Proceeds of Crime Act 2002 and confirms
that it has and will continue to comply with those obligations;
35 in order to ensure compliance with the Money Laundering
Regulations 2007, N+1 Singer (for itself and as agent on behalf of
the Company) or the Company's registrars may, in their absolute
discretion, require verification of its identity. Pending the
provision to N+1 Singer or the Company's registrars, as applicable,
of evidence of identity, definitive certificates in respect of the
Placing Shares may be retained at N+1 Singer's absolute discretion
or, where appropriate, delivery of the Placing Shares to it in
uncertificated form may be delayed at N+1 Singer's or the Company's
registrars', as the case may be, absolute discretion. If within a
reasonable time after a request for verification of identity N+1
Singer (for itself and as agent on behalf of the Company) or the
Company's registrars have not received evidence satisfactory to
them, N+1 Singer and/or the Company may, at its absolute
discretion, terminate its commitment in respect of the Placing, in
which event the monies payable on acceptance of allotment will, if
already paid, be returned without interest to the account of the
drawee's bank from which they were originally debited;
36 acknowledges that its commitment to acquire Placing Shares on
the terms set out in this Announcement and in the form of
confirmation will continue notwithstanding any amendment that may
in future be made to the terms and conditions of the Placing and
that Placees will have no right to be consulted or require that
their consent be obtained with respect to the Company's or N+1
Singer's conduct of the Placing;
37 it has knowledge and experience in financial, business and
international investment matters as is required to evaluate the
merits and risks of subscribing for the Placing Shares. It further
acknowledges that it is experienced in investing in securities of
this nature and is aware that it may be required to bear, and is
able to bear, the economic risk of, and is able to sustain, a
complete loss in connection with the Placing. It has relied upon
its own examination and due diligence of the Company and its
affiliates taken as a whole, and the terms of the Placing,
including the merits and risks involved;
38 it irrevocably appoints any duly authorised officer of N+1
Singer as its agent for the purpose of executing and delivering to
the Company and/or its registrars any documents on its behalf
necessary to enable it to be registered as the holder of any of the
Placing Shares for which it agrees to subscribe or purchase upon
the terms of this Announcement;
39 the Company, N+1 Singer and others (including each of their
respective affiliates, agents, directors, officers or employees)
will rely upon the truth and accuracy of the foregoing
representations, warranties, acknowledgements and agreements, which
are given to N+1 Singer, on their own behalf and on behalf of the
Company and are irrevocable;
40 if it is acquiring the Placing Shares as a fiduciary or agent
for one or more investor accounts, it has full power and authority
to make, and does make, the foregoing representations, warranties,
acknowledgements, agreements and undertakings on behalf of each
such accounts;
41 neither it nor, as the case may be, its clients expect N+1
Singer to have any duties or responsibilities to such persons
similar or comparable to the duties of "best execution" and
"suitability" imposed by the FCA's Conduct of Business Source Book,
and that N+1 Singer is not acting for it or its clients, and that
N+1 Singer will not be responsible for providing the protections
afforded to customers of N+1 Singer or for providing advice in
respect of the transactions described herein;
42 that it is a "professional client" or an "eligible
counterparty" within the meaning of Chapter 3 of the FCA's Conduct
of Business Sourcebook and it is purchasing Placing Shares for
investment only and not with a view to resale or distribution;
43 that it will (or will procure that its nominee will) if
applicable, make notification to the Company of the interest in its
ordinary shares in accordance with the Disclosure Guidance and
Transparency Rules published by the FCA;
44 it represents and warrants that, to the extent it has
received any inside information (for the purposes of MAR) and
section 56 of the Criminal Justice Act 1993) in relation to the
Company and its securities, it has not: (a) dealt (or attempted to
deal) in the securities of the Company; (b) encouraged, recommended
or induced another person to deal in the securities of the Company;
or (c) unlawfully disclosed inside information to any person, prior
to the information being made publicly available;
45 it undertakes to N+1 Singer at the time of making its
commitment to subscribe for Placing Shares that it will confirm in
writing to N+1 Singer in the form of confirmation sent by N+1
Singer to Placees the number of Placing Shares and it intends to
subscribe for and in respect of which VCT or EIS relief will be
sought (or which will otherwise comprise Relevant Funding) and
those Placing Shares in respect of which such relief will not be
sought (or which will otherwise not comprise Relevant Funding);
46 it has consented to receive information in respect of
securities of the Company and other price-affected securities (as
defined in FSMA) which makes it an "insider" for the purposes of
Part V of FSMA and the Market Abuse Regulation, and it agrees not
to deal in any securities of the Company until such time as the
inside information (as defined in FSMA) of which it has been made
aware has been made public for purposes of FSMA or it has been
notified by N+1 Singer or the Company that the proposed Placing
will not proceed and any unpublished price sensitive information of
which the Placee is aware has been publicly announced, and, other
than in respect of its knowledge of the proposed Placing, it has
neither received nor relied on any confidential price sensitive
information concerning the Company or the Placing Shares;
47 that, as far as it is aware it is not acting in concert
(within the meaning given in The City Code on Takeovers and
Mergers) with any other person in relation to the Company;
48 that it is responsible for obtaining any legal, tax and other
advice that it deems necessary for the execution, delivery and
performance of its obligations in accepting the terms and
conditions of the Placing, and that it is not relying on the
Company or N+1 Singer to provide any legal, tax or other advice to
it;
49 it will not distribute any document relating to the Placing
Shares and it will be acquiring the Placing Shares for its own
account as principal or for a discretionary account or accounts (as
to which it has the authority to make the statements set out
herein) for investment purposes only;
50 it is acquiring the Placing Shares for its own account or is
acquiring the Placing Shares for an account with respect to which
it exercises sole investment discretion and has the authority to
make and does make the representations, warranties, indemnities,
acknowledgements, undertakings and agreements contained in this
Announcement;
51 time is of the essence as regards its obligations under this Appendix;
52 any document that is to be sent to it in connection with the
Placing will be sent at its risk and may be sent to it at any
address provided by it to N+1 Singer;
53 the Placing Shares will be issued subject to the terms and
conditions of this Appendix; and
54 these terms and conditions in this Appendix and all documents
into which this Appendix is incorporated by reference or otherwise
validly forms a part and/or any agreements entered into pursuant to
these terms and conditions and all agreements to acquire shares
pursuant to the Placing will be governed by and construed in
accordance with English law and it submits to the exclusive
jurisdiction of the English courts in relation to any claim,
dispute or matter arising out of any such contract, except that
enforcement proceedings in respect of the obligation to make
payment for the Placing Shares (together with any interest
chargeable thereon) may be taken by the Company or N+1 Singer in
any jurisdiction in which the relevant Placee is incorporated or in
which any of its securities have a quotation on a recognised stock
exchange.
By participating in the Placing, each Placee (and any person
acting on such Placee's behalf) agrees to indemnify and hold the
Company, N+1 Singer and each of their respective affiliates,
agents, directors, officers and employees harmless from any and all
costs, claims, liabilities and expenses (including legal fees and
expenses) arising out of or in connection with any breach of the
representations, warranties, acknowledgements, agreements and
undertakings given by the Placee (and any person acting on such
Placee's behalf) in this Appendix or incurred by N+1 Singer, the
Company or each of their respective affiliates, agents, directors,
officers or employees arising from the performance of the Placee's
obligations as set out in this Announcement, and further agrees
that the provisions of this Appendix shall survive after the
completion of the Placing.
The agreement to allot and issue Placing Shares to Placees (or
the persons for whom Placees are contracting as agent) free of
stamp duty and stamp duty reserve tax in the United Kingdom relates
only to their allotment and issue to Placees, or such persons as
they nominate as their agents, direct by the Company. Such
agreement assumes that the Placing Shares are not being acquired in
connection with arrangements to issue depositary receipts or to
transfer the Placing Shares into a clearance service. If there are
any such arrangements, or the settlement related to any other
dealings in the Placing Shares, stamp duty or stamp duty reserve
tax may be payable. In that event, the Placee agrees that it shall
be responsible for such stamp duty or stamp duty reserve tax and
neither the Company nor N+1 Singer shall be responsible for such
stamp duty or stamp duty reserve tax. If this is the case, each
Placee should seek its own advice and they should notify N+1 Singer
accordingly. In addition, Placees should note that they will be
liable for any capital duty, stamp duty and all other stamp, issue,
securities, transfer, registration, documentary or other duties or
taxes (including any interest, fines or penalties relating thereto)
payable outside the United Kingdom by them or any other person on
the acquisition by them of any Placing Shares or the agreement by
them to acquire any Placing Shares and each Placee, or the Placee's
nominee, in respect of whom (or in respect of the person for whom
it is participating in the Placing as an agent or nominee) the
allocation, allotment, issue or delivery of Placing Shares has
given rise to such non-United Kingdom stamp, registration,
documentary, transfer or similar taxes or duties undertakes to pay
such taxes and duties, including any interest and penalties (if
applicable), forthwith and to indemnify on an after-tax basis and
to hold harmless the Company and N+1 Singer in the event that
either the Company and/or N+1 Singer has incurred any such
liability to such taxes or duties.
The representations, warranties, acknowledgements and
undertakings contained in this Appendix are given to N+1 Singer for
itself and on behalf of the Company and are irrevocable.
Each Placee and any person acting on behalf of the Placee
acknowledges that N+1 Singer does not owe any fiduciary or other
duties to any Placee in respect of any representations, warranties,
undertakings, acknowledgements, agreements or indemnities in the
Placing Agreement.
Each Placee and any person acting on behalf of the Placee
acknowledges and agrees that N+1 Singer may (at its absolute
discretion) satisfy their obligations to procure Placees by itself
agreeing to become a Placee in respect of some or all of the
Placing Shares or by nominating any connected or associated person
to do so.
When a Placee or any person acting on behalf of the Placee is
dealing with N+1 Singer, any money held in an account with N+1
Singer on behalf of the Placee and/or any person acting on behalf
of the Placee will not be treated as client money within the
meaning of the relevant rules and regulations of the FCA made under
FSMA. Each Placee acknowledges that the money will not be subject
to the protections conferred by the client money rules: as a
consequence this money will not be segregated from N+1 Singer's
money (as applicable) in accordance with the client money rules and
will be held by it under a banking relationship and not as
trustee.
References to time in this Announcement are to London time,
unless otherwise stated.
All times and dates in this Announcement may be subject to
amendment.
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.
The price of shares and any income expected from them may go
down as well as up and investors may not get back the full amount
invested upon disposal of the shares. Past performance is no guide
to future performance, and persons needing advice should consult an
independent financial adviser.
The Placing Shares to be issued or sold pursuant to the Placing
will not be admitted to trading on any stock exchange other than
the London Stock Exchange.
Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this Announcement.
DEFINITIONS USED IN THIS ANNOUNCEMENT
"Admission" admission of the Placing Shares to trading on AIM
becoming effective in accordance with the AIM Rules;
"AIM" the market of that name operated by the London Stock
Exchange;
"AIM Rules" means the AIM rules for companies published by the
London Stock Exchange (as amended from time to time) together with
any guidance notes as published by the London Stock Exchange from
time to time;
"Announcement" this announcement, including the Appendix;
"AWS" AWS Amazon Web Services AWS Amazon Web Services;
"certificated" or "in certificated form" where a security is not
held in uncertificated form (i.e. not in CREST);
"Company" or "PCI Pal" PCI PAL PLC;
"CREST" the relevant system (as defined in the CREST
Regulations) in respect of which Euroclear is the Operator (as
defined in the CREST Regulations);
"CREST Regulations" the Uncertificated Securities Regulations
2001 (SI 2001/3755);
"Directors" the directors of the Company;
"EIS" the Enterprise Investment Scheme;
"Euroclear" Euroclear UK & Ireland Limited, the operator of
CREST;
"Existing Ordinary Shares" the existing Ordinary Shares that are
in issue as at the date of this Announcement;
"FCA" the Financial Conduct Authority of the United Kingdom;
"FSMA" the Financial Services and Markets Act 2000 (as
amended);
"General Data Protection Regulation" or "GDPR" the General Data
Protection Regulation ((EU) 2016/679) and any national implementing
laws, regulations and secondary legislation, as amended or updated
from time to time;
"Group" the Company and its subsidiary undertakings;
"ITA" Income Tax Act 2007;
"London Stock Exchange" London Stock Exchange plc;
"Long Stop Date" means 28 February 2018 or, if earlier, the
business day prior to the date on which the Finance (No 2) Bill (a
bill currently before Parliament) receives Royal Assent;
"Market Abuse Regulation" or "MAR" Regulation (EU) No 596/2014
of the European Parliament and of the Council of 16 April 2014 on
market abuse;
"N+1 Singer" Nplus1 Singer Advisory LLP, registered in England
and Wales with number OC364131, whose registered office is at One,
Bartholomew Lane, London EC2N 2AX and its affiliate, Nplus1Singer
Capital Markets Limited, registered in England and Wales with
number 0572780, whose registered office is at One, Bartholomew
Lane, London EC2N 2AX;
"Ordinary Shares" the ordinary shares of GBP0.01 each in the
capital of the Company;
"PCI DSS" Payment Card Industry Data Security Standard, as
issued and from time to time amended by the PCI SSC;
"PCI SSC" Payment Card Industry Security Standards Council;
"Placees" the placees procured by N+1 Singer pursuant to the
Placing Agreement who agree to subscribe for the Placing
Shares;
"Placing" the placing of Placing Shares as described in this
Announcement;
"Placing Agreement" the agreement relating to the Placing dated
30 January 2018 and made between the Company and N+1 Singer;
"Placing Price" 45 pence per Placing Share;
"Placing Shares" the new Ordinary Shares that are proposed to be
issued pursuant to the Placing;
"Prospectus Directive" the Directive of the European Parliament
and of the Council of the European Union 2003/71/EC;
"Regulation S" Regulation S under the Securities Act;
"Relevant Funding" means: (a) any aid, investment, grant or loan
which was received by the recipient pursuant to a measure approved
by the European Commission as compatible with Article 107 of the
Treaty on the Functioning of the European Union in accordance with
the principles laid down in the Community Guidelines on Risk
Capital Investments in Small and Medium-sized Enterprises (as those
guidelines may be amended or replaced from time to time); and (b)
any funding received pursuant to an investment, loan or grant from
any investor who: (i) is a venture capital trust (as defined in
Part 6 of ITA); or (ii) has claimed, or is intending to claim, tax
relief on that investment under the Seed Enterprise Investment
Scheme (under Part 5A of ITA) or the Enterprise Investment Scheme
(under Part 5 of ITA);
"Securities Act" the US Securities Act of 1933, as amended;
"Shareholders" holders of Ordinary Shares;
"uncertificated" or "in uncertificated form" recorded on the
register of members of the Company as being held in uncertificated
form in CREST and title to which, by virtue of the CREST
Regulations, may be transferred by means of CREST;
"United Kingdom" or "UK" the United Kingdom of Great Britain and
Northern Ireland;
"United States" or "US" the United States of America, its
territories and possessions and the District of Columbia; and
"VCT" venture capital trusts.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOELLFSILFIIVIT
(END) Dow Jones Newswires
January 30, 2018 05:44 ET (10:44 GMT)
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