RNS Number:8129N
Vocalis Group PLC
28 November 2001
FOR IMMEDIATE RELEASE
NOT FOR RELEASE IN OR INTO THE US, CANADA, AUSTRALIA OR THE REPUBLIC OF
IRELAND
Vocalis Group plc ("Vocalis" or the "Group")
Proposed placing of 47,114,545 new ordinary shares and open offer of
45,521,715 new ordinary shares at 5p per share (the "Placing and Open Offer")
Vocalis Group plc, the provider of speech recognition solutions to the UK
financial services, call centre and telecom sectors, today announces a
proposed placing and open offer of new ordinary shares to raise #4.1 million
(net of expenses) through the issue of 92,636,260 new ordinary shares at a
price of 5p per share.
Highlights
* The net proceeds of the Placing and Open Offer will be used to provide
working capital for the Group and to allow the Group to avoid immediate
administration.
* The Directors have refocused the Group's strategy to concentrate on
providing business solutions to the UK financial services and call centre
sectors, whilst continuing to support the telecom market through partners.
* The Group has made the decision to cease the development of proprietary
software for applications where appropriate alternative industry standard
products already exist.
* As at 31 October 2001, the Group had cash reserves of approximately #
700,000. Based on its current average cash burn of #400,000 per month, the
Group will exhaust its cash resources on or around 21 December 2001,
however, the Group has secured short term overdraft facilities to provide
funding until the receipt of the proceeds of the Placing and Open Offer.
* During the last eight years, Vocalis has invested in excess of #10
million in developing its core speech recognition technology.
* The Directors believe the Group is now operating in a substantial
commercial market which has business needs suited to Vocalis' voice driven
solutions.
In addition the Group has today announced the unaudited interim results for
the six months ended 30 September 2001 which show a loss before taxation of #
1.97 million (2000: loss of #2.48 million) on turnover of #1.22 million (2000:
#2.01 million).
Paul Wright, Chief Operating Officer of Vocalis said:
"The proposed Placing and Open Offer, whilst securing the Group's short term
viability, provides the necessary funds to continue the implementation of the
Group's new strategy. The Directors believe that the refocus on providing
business solutions to the UK financial and call centre markets will enable the
Group to convert its substantial prospects list into contracted sales."
Enquiries
Vocalis Group plc 01223 846177
Paul Wright, Chief Operating Officer
Credit Lyonnais Securities 020 7588 4000
Simon Bennett
Square Mile BSMG Worldwide 020 7601 1000
Nick Oborne/Stephanie Smart
Vocalis Group plc ("Vocalis" or the "Group" )
Proposed Placing and Open Offer of 92,636,260 New Ordinary Shares at 5p per
share
Introduction
The Board of Vocalis announces that it proposes to raise approximately #4.1
million (net of expenses) by way of a Placing and Open Offer of a total of
92,636,260 New Ordinary Shares at 5p per share. Of the 92,636,260 New Ordinary
Shares to be issued, 47,114,545 New Ordinary Shares are being placed firm with
institutional and other investors and 45,521,715 New Ordinary Shares are
subject to clawback by Qualifying Shareholders under the Open Offer. The Open
Offer is being made on the basis of 1 New Ordinary Share for every 1 Existing
Ordinary Share held. The Placing and Open Offer has been fully underwritten by
Credit Lyonnais Securities.
The net proceeds of the Placing and Open Offer will be used to provide working
capital for the Group and will allow it to avoid the appointment of an
administrator to the Group. In addition, the majority of the proceeds will
provide the necessary financial resources to enable the Group to continue to
pursue its refocussed strategy (further details of which are set out below)
and to assist the Group to convert potential orders into contracted sales.
The Group has secured short term overdraft facilities from its existing
bankers, Barclays Bank plc, to provide funding until the passing of the
Resolutions to be proposed at the Extraordinary General Meeting. In addition,
and subject (inter alia) to the passing of the Resolutions, the Group has also
secured a further short term overdraft facility to provide funding until the
receipt of the proceeds of the Placing and Open Offer. These facilities, which
are essential to the Group's short term financial requirements, are only
available because the Placing and Open Offer has been underwritten.
The Group has been unable to secure adequate overdraft or other debt
facilities from its existing bankers to fund its current requirements and
future strategy. Approaches to a number of other providers of debt finance
have been unsuccessful. Therefore, the Directors believe the Placing and Open
Offer provides the only viable option available to the Group. The Directors
believe that insufficient demand would have meant that it would not have been
possible to undertake an underwritten rights issue. A rights issue which was
not underwritten would not have provided sufficient certainty of funds in
order to allow the Group to continue to trade.
In order to ensure the Group receives sufficient funds, and to attract new
investors to the Group, the Directors consider it essential to effect the
fundraising in part by way of the Firm Placing.
Although the Placing and Open Offer will result in a significant dilution to
the holdings of Shareholders, the Open Offer gives Shareholders the
opportunity to subscribe for up to 50 per cent. of the total number of New
Ordinary Shares to be issued under the Placing and Open Offer on the basis of
1 Open Offer Share for every 1 Existing Ordinary Share held at a price of 5p
per share.
The Directors do not believe that the Placing and Open Offer would be
successful at an issue price of more than 5p per New Ordinary Share. By
issuing the New Ordinary Shares at a substantial discount to the current
middle market price of the Existing Ordinary Shares, the Directors believe
that they are acting in the best interests of the Group and Shareholders as a
whole and that unless such action is taken, the Group will be left in a
financial position where it will be unable to meet its obligations as they
fall due. In those circumstances, the Directors believe that the Group would
have no alternative but to appoint an administrator to the Group.
The Listing Rules do not allow issuers to bring securities to listing by way
of a placing or open offer if the issue price is at a discount of more than 10
per cent. to the middle market price of those securities at the time of the
placing or open offer, unless the UK Listing Authority is satisfied that the
issuer is in severe financial difficulties or that there are other exceptional
circumstances. The Group has satisfied the UK Listing Authority that it is in
severe financial difficulties and that, given the time constraints, there are
no other methods of financing available to the Group. The UK Listing Authority
has therefore permitted the Issue Price to be 5p, representing a discount of
71.4 per cent. to the closing middle market price per Existing Ordinary Share
on 27 November 2001 (the last practicable date prior to this announcement).
In addition to the Placing and Open Offer, the Group also announced today the
unaudited interim results for the six months ended 30 September 2001.
Information on Vocalis
Vocalis is one of the UK's leading providers of voice driven solutions. These
solutions enable companies and individuals to conduct transactions and obtain
information through the use of speech recognition technology over a standard
or wireless telephone network. During the last eight years, Vocalis has
invested in excess of #10 million in developing its core speech recognition
technology. The Directors believe that this investment has provided the Group
with a high quality technology base, in particular in its proprietary
SpeechWare product, and that this has enabled Vocalis to establish its brand
within the speech recognition industry.
Despite this, the Group had, until recently, failed to fully address the
requirements of the UK commercial market and instead focussed on selling its
technology through its partnership channel with Ericsson to the telecoms
industry in overseas countries. Whilst this proved the scalability and
durability of Vocalis' products, it was dependent on creating a series of
bespoke systems using proprietary applications. As a result, whilst Vocalis
was able to deliver high quality technology, its main efforts were directed at
areas which did not generate immediate and significant demand. Accordingly,
although Vocalis established its brand within the speech recognition industry
and had created several key customer reference sites, the Group failed to
translate its technological expertise into sustainable and consistent
profitability for Shareholders.
Recent developments
Since June 2001, the Directors have refocussed the Group's strategy to
concentrate on providing business solutions to the UK financial services and
call centre sectors, whilst continuing to support the telecom market through
partners. Vocalis uses SpeechWare, its established core technology, to provide
business solutions to the UK corporate arena, interfacing this core technology
with industry standard hardware and operating systems, in order to provide
business solutions for customers. These solutions are now sold on the basis of
on-going financial benefits to the customer and by addressing business issues
within the call centre markets rather than concentrating on the technical
aspects of the Group's products.
The Group has made the decision to cease the development of proprietary
software for applications where appropriate alternative industry standard
products already exist and instead is developing partnerships and preferred
supplier relationships in order to deliver its solutions. Its core SpeechWare
product has been developed to provide Unix and Windows compatibility, whilst
the emergence of the VoiceXML standard assists the Group in incorporating
third party products and modules into the Group's business solutions, thereby
reducing risk for both Vocalis and its customers and enabling the business to
operate in a more streamlined and efficient manner. Vocalis is a member of the
VoiceXML forum, the body which oversees and promotes VoiceXML.
Vocalis has also undergone significant internal reorganisation, principally
designed to improve Group sales. Historically, Vocalis concentrated more on
the development of the Group's technology than on the products' commercial
benefits and the potential channels to market. The Group has now invested in
the development and growth of its sales force by employing sales personnel who
have experience of selling technology solutions into Vocalis' target markets.
This sales force is now focussed on developing the Group's UK order book,
converting existing leads into contractual commitments and increasing revenue
from the Group's target markets. Over 50 per cent. of Vocalis' staff are now
interacting directly with customers. Vocalis now has a clearly identified
sales strategy and has developed a substantial prospect list.
Recognising the need to drive this strategy forward, Vocalis launched the
Group's new strategy and product offering in September 2001 at the London
Stock Exchange Conference Centre. The Directors believe that this strategy is
enabling the Group to transform itself from a research and technology based
organisation into a market driven commercial organisation utilising its
extensive intellectual property rights and technology expertise to provide
solutions for its customers within targeted markets.
Research and development
Whilst refocussing towards a more commercially orientated organisation,
Vocalis is maintaining a strong research and development capability. Vocalis'
main focus on research and development has changed from developing a range of
proprietary technology products to developing its core SpeechWare technology
in conjunction with standard third party products. This refocus has reduced
the level of in-house research and development spend on pioneering new
technologies. Research expenditure for the year ended 31 March 2001 was #2.7
million. Whilst the Group will continue to develop its SpeechWare products to
meet the on-going needs of the business, the Directors believe that the level
of pure research going forward will be materially less than historical levels.
Background to and reasons for the Placing and Open Offer
In response to an extremely disappointing financial year ended 31 March 2001
and first quarter of the current financial year, Vocalis has concentrated on
rebuilding its business and its order book, whilst at the same time delivering
on past customer commitments and reducing its monthly cash expenditure.
The Directors believe that the emergence of industry standard technology,
coupled with the rapid growth of the call centre market, are helping to make
the commercial rationale behind Vocalis' business solutions more compelling.
Call centres are now commonplace within the UK. The Directors believe that
Vocalis offers its customers a competitive advantage by automating many basic
customer identity and verification tasks currently performed by call centre
operators. This automation not only provides a flexible alternative to the
'touch-tone' solution of many call centres, but also shortens the operator's
time per call, thereby increasing the number of calls that can be handled by
each operator.
These advantages enable customers to be able to readily identify the potential
cost savings that can be achieved using Vocalis' business solutions. The
Directors believe, in conjunction with evidence from Vocalis' existing
customer reference sites, that this provides a persuasive business case for
the Group's solutions.
Vocalis is currently bidding for a number of high value opportunities in the
UK markets for the expansion and upgrade of customer solutions and, overseas,
through the existing partnership with Ericsson. However, in order to develop
business relationships with major organisations in the UK financial services
and telecom sectors, Vocalis is increasingly being asked to demonstrate its
short and medium term ability to support its existing and potential customers.
These organisation recognise the current downturn in the technology sector and
the vulnerability of a number of companies. For this reason, it is necessary
for Vocalis to prove its financial stability and its ability to expand in line
with market opportunities. As at 31 October 2001, the Group had cash reserves
of approximately #700,000. Based on its current average cash burn of
approximately #400,000 per month, the Group will exhaust its cash resources on
or around 21 December 2001. Accordingly, the Group is seeking to raise #4.1
million (net of expenses) by the issue of 92,636,260 New Ordinary Shares. In
addition, the Group has secured a short term overdraft facility to provide
funding until the passing of the Resolutions to be proposed at the
Extraordinary General Meeting. In addition, and subject to the passing of the
Resolutions and to the satisfaction of certain standard banking covenants
(which the Directors believe the Group will satisfy), the Group has also
secured a further short term overdraft facility to provide funding until the
receipt of the net proceeds of the Placing and Open Offer. These facilities
will enable the Group to meet its ongoing financial obligations as they fall
due.
The Directors believe that unless the Group's financial stability can be
demonstrated, it is unlikely to complete any further material sales. As a
consequence, the Directors believe that the Placing and Open Offer is crucial
to securing both the short and long term future of the Group.
Importance of the Placing and Open Offer
The Placing and Open Offer is important to the future of the Group and
requires Shareholders' close attention.
The Directors are of the opinion that, taking into account the short term bank
facilities available to the Group and the net proceeds of the Placing and Open
Offer, the Group has sufficient working capital for its present requirements,
that is, for at least the next 12 months from the date of this announcement.
If Shareholders do not approve the resolutions, or the Placing and Open Offer
does not proceed for any other reasons, the Board believes that the Group
would be unable to raise sufficient funding from alternative sources of
finance in the time available and that the Directors would have no alternative
but to seek to appoint an administrator for the Group.
Interim results
The interim results of Vocalis for the period ended 30 September 2001 are also
announced today showing a loss before taxation of #1.97million (2000: loss of
#2.48 million) on a turnover of #1.2 million (2000: #2.0 million). The loss
per share for the period was 4.25p (2000: 5.60p). The Directors are not
recommending an interim dividend.
Current trading and prospects
The Directors believe that the Group has made significant progress in the
period since June 2001 and expect this progress to continue through the
remainder of the current financial year. The Directors believe, however, that
the Group's trading since 30 September 2001 has been affected by the
uncertainty surrounding the Group's ongoing financial stability. Despite this,
they are confident that the Group is now operating in a substantial commercial
market which has business needs suited to Vocalis' voice driven solutions. The
Directors believe that the Placing and Open Offer, together with the strategy
detailed above and, allied to continuing cost control, will allow Vocalis to
demonstrate its financial stability and enable the Group to take advantage of
the opportunities that are available, and accordingly, view the future with
confidence.
Details of the Placing and Open Offer
The Group is proposing to raise approximately #4.6 million gross
(approximately #4.1 million net of expenses) by means of the Placing and Open
Offer, which have been fully underwritten by Credit Lyonnais Securities.
The Firm Placing
In order to ensure that the Company receives sufficient funds and to attract
new investors to the Company, the Directors consider it essential to effect
the fund raising in part by way of the Firm Placing. It is intended that the
Firm Placing will raise approximately #2.36 million. Accordingly, 46,318,130
New Ordinary shares have been conditionally placed firm by Credit Lyonnais
Securities on behalf of the Group with institutional and other investors at
the Issue Price and are not subject to clawback under the Open Offer. An
irrevocable undertaking not to take up a proportion of his entitlement under
the Open Offer has been received from Minesh Patel, a Director, in respect of,
in aggregate, 305,778 Ordinary Shares, representing approximately 0.7 per
cent. of the total number of Open Offer Shares and these shares have also been
conditionally placed firm pursuant to the Firm Placing. In addition, certain
Overseas Shareholders are not eligible to participate in the Open Offer and
accordingly a further 490,637 New Ordinary Shares are also being placed firm
pursuant to the Firm Placing.
The Open Offer
Credit Lyonnais Securities, as agent for the Group, has conditionally placed
the Open Offer Shares with institutional and other investors at the Issue
Price subject to clawback (save for those Open Offer Shares in respect of
which an irrevocable undertaking not to take up an entitlement has been
received as described above and which have been conditionally placed firm by
Credit Lyonnais Securities (as agent for the Group) with institutional and
other investors pursuant to the Firm Placing) to satisfy valid application by
Qualifying Shareholders pursuant to the Open Offer.
Qualifying Shareholders are being given the opportunity to subscribe under the
Open Offer for the Open Offer Shares at the Issue Price pro rata to their
Existing Ordinary Shareholdings on the basis of
1 Open Offer Share for every 1 Existing Ordinary Share
held on the Record Date and so in proportion for any greater number of
Existing Ordinary Shares then held. The New Ordinary Shares will, when
allotted and fully paid, rank pari passu in all respects with the Existing
Ordinary Shares, including the right to receive all dividends and other
distributions hereafter declared.
Entitlements of Qualifying Shareholders will be rounded down to the nearest
whole number of Open Offer Shares and fractional entitlements will not be
allocated under the Open Offer but, together with Open Offer Shares
attributable to those Overseas Shareholders who are not eligible to
participate in the Open Offer, will be aggregated and placed for the benefit
of the Group. The Open Offer is not a "rights issue". Qualifying Shareholders
should be aware that, unlike a rights issue, any Open Offer shares not applied
for under the Open Offer will not be sold in the market or placed for the
benefit of Qualifying Shareholders, but will be taken up either under the
Placing or by Credit Lyonnais Securities pursuant to its commitment to
underwrite the Placing and Open Offer.
The Directors have indicated that they intend to take up their rights under
the Open Offer in respect of, in aggregate, 526,400 Open Offer Shares. In
addition, certain Directors have undertaken to subscribe for an aggregate of
323,600 Firm Placed Shares in the Firm Placing with an aggregate value of #
16,180, at the Issue Price.
In order to effect the Placing and Open Offer, it has been necessary for the
Issue Price to be set at a discount of more than 10 per cent. to the current
middle market share price. This is only permitted by the UK Listing Authority
under certain exceptional circumstances. As set out in the paragraph headed
"Introduction", the Directors believe that the Placing and Open Offer is
essential to securing the financial viability of the Group and further, that
if the fundraising were not to proceed, the Directors would have no
alternative but to seek to appoint an administrator.
Following discussions with the Company and Credit Lyonnais Securities, the UK
Listing Authority has permitted the Placing and Open Offer to proceed at an
Issue Price of 5p, representing a discount of 71.4 per cent. to the middle
market price of 17.5p per share on 27 November 2001 (being the last
practicable date prior to this announcement).
The Existing Ordinary shares are listed on the Official List. Application has
been made to the UK Listing Authority and to the London Stock Exchange
respectively for the New Ordinary Shares to be admitted to the Official List
and trading on the London Stock Exchange's market for listed securities. It is
expected that Admission will become effective and that dealings in the New
Ordinary Shares will commence on 28 December 2001.
Application Forms are personal to the Qualifying Shareholders names thereon
and are transferable only to satisfy bona fide market claims.
General information
The Open Offer is not being made directly or indirectly in or into the United
States of America, Canada, Australia or the Republic of Ireland. The Company
and Credit Lyonnais Securities reserve the right in their absolute discretion
to treat as invalid any application for New Ordinary Shares under the Open
Offer if it appears to the Company or Credit Lyonnais Securities and their
agents that such application or acceptance thereof may involve a breach of the
laws or regulations of any overseas jurisdictions.
Application Forms must be received by Neville Registrars Limited, Neville
House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA, no later than 3.00
p.m. on 19 December 2001 and the latest date for receipt of split Application
Forms is 3.00 p.m. on 17 December 2001. The latest date for receipt of forms
of proxy for the Extraordinary General Meeting is 10.00 a.m. on 19 December
2001.
The Placing and Open Offer is conditional upon, inter alia, the passing of
resolutions by Vocalis' shareholders at the Extraordinary General Meeting to
be convened for 21 December 2001.
A circular, dated 28 November 2001, containing details of the Placing and Open
Offer and a notice of an Extraordinary General Meeting, convened for 10.00
a.m. on 21 December 2001 to be held at the offices of Credit Lyonnais
Securities, Broadwalk House, 5 Appold Street, London EC2A 2DA, will be posted
to Shareholders today, together with, in the case of Qualifying Shareholders,
the application form. Copies of the circular will be available to the public,
free of charge from the Company's registered office Chaston House, Mill Court,
Great Shelford, Cambridge CB2 5LD and from the offices of Credit Lyonnais
Securities until a period of not less than 14 days after the date that
dealings commence in the New Ordinary Shares.
The Directors of Vocalis accept responsibility for the information contained
in this announcement. To the best of the knowledge and belief of the Directors
(who have taken all reasonable care to ensure that such is the case), the
information contained in this announcement is in accordance with the facts and
does not omit anything likely to affect the import of such information.
Credit Lyonnais Securities, which is regulated by the Securities and Futures
Authority, is acting exclusively for Vocalis and no one else in relation to
the Placing and Open Offer and will not be responsible to anyone other than
Vocalis for providing the protections afforded to customers of Credit Lyonnais
Securities or for providing advice in relation to the Placing and Open Offer.
28 November 2001
Definitions
The following terms apply in this announcement unless the context otherwise
requires:
"Admission" the admission of the New Ordinary Shares to the Official
List becoming effective in accordance with the rules of the
London Stock Exchange
"Application Form" the application form issued to Qualifying Shareholders in
connection with the Open Offer
"Board" or the directors of the Company
"Directors"
"Existing Ordinary the Ordinary Shares in issue at the date of this
Shares" announcement
"Extraordinary the Extraordinary General Meeting of the Company convened
General Meeting" for 10.00 a.m. on 21 December 2001
"Firm Placed 47,114,545 new Ordinary Shares which have been placed firm
Shares" by Credit Lyonnais Securities pursuant to the Firm Placing
"Firm Placing" the conditional placing by Credit Lyonnais Securities of the
Firm Placed Shares on behalf of the Company
"Group" Vocalis Group plc and its subsidiary undertakings
"Issue Price" 5 pence per New Ordinary Share, being the price at which the
New Ordinary Shares are proposed to be issued
"Listing Rules" Listing Rules made by the competent authority under Section
142 of the Financial Services Act 1986
"London Stock London Stock Exchange plc
Exchange"
"New Ordinary the 92,636,260 new Ordinary Shares proposed to be issued
Shares" pursuant to the Placing and Open Offer
"Official List" the Official List maintained by the UKLA
"Open Offer" the invitation to Qualifying Shareholders by Credit Lyonnais
Securities on behalf of the Company to subscribe for the
Open Offer Shares
"Open Offer 45,521,715 new Ordinary Shares which are to be made
Shares" available to Qualifying Shareholders pursuant to the Open
Offer and which have been conditionally placed (subject to
clawback to satisfy valid applications by Qualifying
Shareholders under the Open Offer) by Credit Lyonnais
Securities pursuant to the Placing Agreement (excluding
305,778 new Ordinary Shares in respect of which an
irrevocable undertaking not to take up part of an
entitlement to New Ordinary Shares under the Open Offer has
been received and which have been placed pursuant to the
Firm Placing)
"Ordinary Shares" ordinary shares of 5p each in the capital of the Company
"Overseas Shareholders on the register of members of the Company on
Shareholders" the Record Date who are not resident in or citizens of the
United Kingdom
"Placing" the conditional placing by Credit Lyonnais Securities of the
New Ordinary Shares in accordance with the terms of the
Placing Agreement
"Placing the conditional agreement dated 28 November 2001, between
Agreement" the Company and Credit Lyonnais Securities, relating to the
Placing and Open Offer
"Qualifying holders of existing Ordinary Shares on the register of
Shareholders" members of the Company at the Record Date, other than
certain Overseas Shareholders
"Record Date" the record date for the Open Offer, being the close of
business on 23 November 2001
"Shareholders" holders of Ordinary Shares
"UKLA" or "United the Financial Services Authority acting in its capacity as
Kingdom Listing the competent authority for the purposes of Part IV of the
Authority" or "UK Financial Services Act 1986
Listing Authority"
"United Kingdom" the United Kingdom of Great Britain and Northern Ireland
or "UK"
"Vocalis" or Vocalis Group Plc
"Company"
28 November 2001
END
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