TIDMIEN
RNS Number : 7861O
Intelligent Environments Group PLC
05 July 2010
IEN
Intelligent Environments Group plc
Proposed acquisition of Documetric Limited
Placing of 63,874,286 Placing Shares at a price of 7 pence per share
Waiver of Rule 9 of the City Code
Change of name to Parseq plc
Application for Admission of the Enlarged Share Capital to trading on AIM
Introduction
Intelligent Environments Group plc ("IE" or the "Company"), the AIM listed
online financial services software provider, is pleased to announce that it has
agreed, subject to shareholder approval, to acquire the entire issued share
capital of Documetric Limited a provider of technology-led outsourcing services
in finance and administration including payments processing, content management
and business intelligence.
The Acquisition is classified as a reverse takeover for the purposes of the AIM
Rules and is conditional, amongst other things, upon the approval of
Shareholders at a general meeting. An admission document is being sent to all
shareholders today, convening a general meeting at 11:00am on 21 July 2010.
The Company also announces the Placing by Canaccord Genuity of 63,874,286
Ordinary Shares at a placing price of 7 pence per share. The Placing Shares were
placed with institutional and other investors, raising gross proceeds of
approximately GBP4.5 million. Furthermore, following the combination of the two
businesses, the Company will change its name to Parseq plc.
The Enlarged Group's Shares are expected to be re-admitted to trading on AIM at
8:00am on 22 July 2010. The market capitalisation of the Enlarged Group, at the
Placing Price, will be GBP30.6 million.
The Independent Directors unanimously recommend that Shareholders vote in favour
of the Resolutions to be proposed at the General Meeting, as they have
irrevocably undertaken to do in respect of their own shareholdings, which, in
aggregate, amount to 14.3 per cent. of the Existing Ordinary Shares.
Highlights
· Acquisition creates a strong new business with significant scale and
capability providing a complete end-to-end service in the growing Business
Process Outsourcing market
· Combines the Company's expertise in online and mobile banking markets
with Documetric's middle & back office to deliver turnkey solutions to clients
· Enlarged Group will be better equipped to exploit IE's inherent
technology and core competencies within the mobile banking market
· Enlarged Group's pro-forma revenues for the financial year ended 31
December 2009 were GBP16.6 million the majority of which is viewed as recurring
· Significant new sales pipelines created underpinned by cross selling and
entry into new market opportunities
· Board strengthened with existing management team remaining with the
Enlarged Group
· Directors confident of Parseq's future prospects
Clive Richards, the current non-executive Chairman of the Company and the
proposed deputy non-executive Chairman of the Enlarged Group commented on the
Proposals today:
"I am delighted to announce this acquisition, subject to, inter alia,
Shareholder approval, which will dramatically transform our business and create
a financially strong new entity with comprehensive outsourcing solutions, scale
and market presence. With our new, combined offering, I believe there exists a
real opportunity for the Enlarged Group to drive growth within both established
and new markets and to better capture the opportunities inherent in the online
and mobile banking market where IE currently has a competitive technology
advantage.
Furthermore, I would like to take this opportunity to thank all of our loyal
staff at IE for their commitment over many years and that together we can now
look forward to new opportunities and continued growth within Parseq plc."
For further information please contact:-
+-----------------------------------------------+----------------+
| Intelligent Environments Group plc | |
+-----------------------------------------------+----------------+
| Phillip Blundell, Chief Executive | Tel: 020 8614 |
| | 9800 |
+-----------------------------------------------+----------------+
| www.ie.com | |
| | |
+-----------------------------------------------+----------------+
| Documetric Limited | Tel: 020 3362 |
| | 2320 |
+-----------------------------------------------+----------------+
| Rami Cassis, Chief Executive | |
+-----------------------------------------------+----------------+
| | |
+-----------------------------------------------+----------------+
| Canaccord Genuity | |
+-----------------------------------------------+----------------+
| Simon Bridges / Henry Fitzgerald-O'Connor | Tel: 020 7050 |
| | 6500 |
+-----------------------------------------------+----------------+
| | |
| Biddicks | |
+-----------------------------------------------+----------------+
| Shane Dolan | Tel: 020 7448 |
| | 1000 |
+-----------------------------------------------+----------------+
Proposed acquisition of Documetric Limited
Placing of 63,874,286 Placing Shares at a price of 7 pence per share
Waiver of Rule 9 of the City Code
Change of name to Parseq plc
Application for Admission of the Enlarged Share Capital to trading on AIM
Chairman's Letter
Introduction
I am pleased to announce on behalf of the Board, that the Company has
conditionally agreed to acquire the entire issued share capital of Documetric
Limited. Consideration for the acquisition is to be satisfied entirely by the
issue of 197,518,858 Consideration Shares to the shareholders of Documetric,
representing approximately 53 per cent.of the enlarged share capital following
the Acquisition and before the issue of Placing Shares and Management Bonus
Shares. At the Placing Price, this values the entire issued share capital of
Documetric at GBP13.8 million.
Documetric's primary activity is as a provider of technology-led outsourcing
services including payments, accounts payable and receivables management and
business intelligence. Documetric is one of the ten largest BACS Bureaux in the
UK, with around a six per cent share of UK wage and salary BACS payments. For
the year ended 31 December 2009, Documetric reported revenues of GBP10.2 million
and profits before tax of GBP1.8 million.
In early 2009, the Board undertook a strategic review of the Company and its
prospects. It was concluded that the Company should look for partners who could
give the business access to greater scale and a more secure platform for future
growth.
The Existing Directors believe that the acquisition of Documetric fulfils this
objective enabling Shareholders to be part of a larger, more diversified,
end-to-end service offering. The Enlarged Group should have access to new
markets and key geographies that may not have been possible alone. The Board
believes that the Company's expertise in software and services to the online and
mobile banking markets, combined with Documetric's middle and back office
capabilities will create a complete service offering in areas of payment
applications processing and data analytics.
The Company has today also announced that it has conditionally raised GBP4.5
million before expenses by way of a Placing of 63,874,286 Placing Shares at a
price of 7 pence per share. The approximate net proceeds of the Placing are
GBP3.5 million which will be used, inter alia, as working capital for the
Enlarged Group, to repay part of the existing debt of the Documetric Group, and
to provide the resources to allow the Enlarged Group to increase its market
share in the BPO and self-service banking market though complementary
acquisitions and organic growth.
The Acquisition constitutes a Reverse Takeover of the Company under the AIM
Rules and will therefore require the approval of Shareholders at the General
Meeting. The Acquisition is conditional, inter alia, upon the passing of the
Resolutions and Admission (further details of the Resolutions can be found in
the General Meeting section towards the end of this announcement).
If the Resolutions are duly passed, trading in the Existing Ordinary Shares will
be cancelled and the Company will apply for admission of the Enlarged Share
Capital to trading on AIM under the name Parseq plc. It is expected that the
Enlarged Share Capital will be admitted to trading on AIM on 22 July 2010.
Rami Cassis and The Cartesian Trust, of which Mr. Cassis and his immediate
family are beneficiaries, constitute a concert party for the purposes of the
City Code. Following Completion, and the issue of the Consideration Shares to
the Concert Party, the Concert Party will control 155,356,253 Ordinary Shares in
the Company, representing approximately 35.5 per cent. of the Enlarged Share
Capital of the Company. Therefore, the Company is seeking the Waiver of Rule 9
of the City Code, which would otherwise require the Concert Party to make a
general offer for the remaining shares of the Company. A resolution seeking
Shareholder approval for the Waiver is in the General Meeting section at the end
of this announcement.
Acquisition Background
Since the Company's admission to AIM in 1996 the Company has developed into a
recognised software and services provider to the high-growth online and mobile
banking market. Over the years the Company has continued to gain market share in
a highly competitive market with key customer wins including Barclaycard,
National Savings and Investments, HSBC and Halifax, and supporting brands such
as Orange, Thomas Cook, Argos, Homebase, Sainsbury's, John Lewis, BHS and the
Hilton.
The Company has been developing a mobile banking platform in order to address
the mobile banking opportunity in the UK as well as internationally and raised
GBP0.75 million (gross) on 17 February 2010 to fund further development of this
significant opportunity.
The Company has, however, suffered from a lack of significant recurring revenue
and operational scale which has meant, to date, that it has not possessed the
financial platform from which it can significantly capture the opportunities
inherent in the online and mobile banking market where it currently has a
competitive technology advantage.
As discussions between the Company and Documetric developed and after a detailed
review of the business of Documetric, it was proposed and agreed that the
shareholders of both Documetric and the Company would benefit from the
acquisition of Documetric by the Company, enabling the Enlarged Group to offer
an enhanced portfolio of services to both existing and new clients as well as
having the capability to enter new markets and key geographies.
The Existing Directors believe the Acquisition provides Shareholders with the
opportunity to participate in a larger, more diversified group with a successful
financial and trading record and strong management and that the Acquisition will
enhance earnings in 2010 and will be highly complementary to the Company's
business for the following reasons.
· the Enlarged Group will provide an end-to-end service in payments,
applications processing and data analytics;
· Documetric's growing capability in business intelligence and data mining
will strengthen the Company's current self-service banking proposition;
· the Company's strong front-office capabilities in mobile and online
banking and Documetric's middle and back office delivery are complementary and
that combination will open new opportunities with both existing and new
customers;
· Documetric will be able to support the Company's mobile platform by,
inter alia, hosting, business intelligence and providing contact centre support;
· the Enlarged Group will be of an increased scale and will be able to
enter new markets and key geographies which may not have been possible alone;
· both businesses have a focus on common customers in the financial
services sector (four out of five common customers are in the financial services
sector);
· the Enlarged Group will be better equipped to exploit the inherent
technology and core competencies with a stronger management team;
· the Enlarged Group will be of sufficient size to attract a wider range of
investors and with greater market appeal; and
· the Enlarged Group would have pro forma revenue for the financial year
ended 31 December 2009 of GBP16.6 million, the majority of which can be viewed
as recurring revenue.
Principal terms of the Acquisition
Today, the Company entered into the Acquisition Agreement with the Vendors to
acquire the entire issued share capital of Documetric subject to certain
conditions set out in the Acquisition Agreement.
Consideration for the Acquisition is to be satisfied by the issue of
Consideration Shares. There are currently 175,158,233 Existing Ordinary Shares
in issue and the number of Consideration Shares to be issued proportionally
amongst the Vendors is 197,518,858, representing approximately 53 per cent. of
the Enlarged Share Capital following the Acquisition and before the issue of the
Placing Shares and the Management Bonus Shares. The Consideration Shares will,
when issued, rank pari passu in all respects with the Existing
Ordinary Shares, including all rights to all dividends and other distributions
declared, made or paid following Admission.
The existing EMI share options in Documetric (which are the only Documetric
share options in issue), shall be released and replacement options shall be
granted over shares in the Company under the Documetric EMI Option Scheme with
such conversion being carried out at the same ratio as the issue of
Consideration Shares to Documetric Shares (with a corresponding change in the
exercise price).
Taking into account all existing options in the Company and the conversion of
the EMI options described above, the fully diluted Enlarged Share Capital on
Admission will be 465,940,127 Ordinary Shares.
In view of the size of the Acquisition, in relation to the Company, the
Acquisition constitutes a Reverse Takeover of the Company under the AIM Rules.
As such, the Acquisition is subject to the approval of the Shareholders, which
is being sought at the General Meeting of the Company convened for 21 July 2010.
Subject to such approval and to satisfaction of the other conditions relating to
the Acquisition, completion of the Acquisition is expected to take place on 22
July 2010, the expected date of Admission.
All the Vendors have given warranties in relation to their title to the shares
being sold by them and their authority to execute, deliver and perform their
obligations under the Acquisition Agreement. Rami Cassis, Richard Last, Richard
Arden and Simon Rubin have given warranties in relation to the business,
finances and operational status of Documetric.
Information on the Company
The Group was founded in the UK in 1984 and has focussed on developing software
products and tools that allow financial institutions to access corporate data.
The Company was admitted to trading on AIM in 1996 when it first launched its
internet development tools.
The Company's key focus is on providing on-line software products for financial
services organisations and their customers, particularly in the credit card,
consumer finance, savings and investment markets. The Company's software and
services allows companies in the financial services sector the ability to offer
online application, account management and administrative capabilities. All the
Company's products use the single NetFinance platform which is built from the
Microsoft NET technology. NetFinance has the ability to be integrated into the
clients' existing online banking systems, call centre databases, workflows and
back-office systems. All of the Company's solutions are hosted by the client
bank or a third-party services provider.
The Company's revenue model has several streams including licensing, service
charges, support fees and transaction fees based on usage of its applications.
The Company's offering has recently taken a major step forward with the
development of its mobile banking solution. The mobile banking solution allows a
banks' customer to engage with their bank at a time and location convenient to
them. The Board believes this is a fast growing segment of the market and has
already signed three customers and is in discussions with several financial
institutions to roll out its versatile and functional mobile banking
applications.
Key customers include Barclaycard, National Savings and Investments, HSBC and
Halifax, and supporting brands such as Orange, Thomas Cook, Argos, Homebase,
Sainsbury's, John Lewis, BHS and the Hilton. The Company largely sells through
system integrators and back-office service providers including Siemens, First
Data, Fidelity National Information Services, Unisys and Bravura.
In December 2009 the Company was named as one of eight "Hot Banking Tech
Companies to Watch in 2010" by Forrester Research Inc.
Information on the Documetric Group
Documetric is a provider of technology-led outsourcing services in the UK. It
was founded in February 2007 by Rami Cassis through the management buy-out of
the trade and assets of a BPO subsidiary of Atos Origin, a leading European IT
outsourcer. In July 2008, Documetric acquired Active Business Services Limited
from First Data International for a total consideration of GBP16.7 million
(which included GBP6 million of cash and two freehold properties).
Documetric operates in the following areas:
· payments BPO;
· remittance, applications and invoice processing services;
· information management;
· contact centre support; and
· outsourced contingency services.
Payments BPO is an end-to-end offering which provides a managed service to SMEs
(through banking contracts) for the execution and maintenance of all payment
related activities, predominantly via BACS. It accounts for approximately 50 per
cent. of Documetric's revenue.
The Proposed Directors believe that Documetric's main selling point revolves
around two attributes, being its niche position in the BPO market based on
Documetric's ability to process complex, low volume transactions profitably and
secondly, a service offering developed with the intent of building a greater
range of offerings than competitors with strong technology content as part of
its solution.
The Proposed Directors believe that Documetric's major competitors tend to be
more specialist in their offerings and that whilst most do provide a range of
services, they tend to be limited to accounts payable or accounts receivable
services.
Documetric has over 50 clients, including tier 1 banks and financial services
organisations, leading telecommunications providers, high profile professional
organisations and corporate clients.
Key statistics:
· Documetric has a six per cent. market share in UK wage and salary BACS
payments market. The Proposed Directors believe that Documetric is one of the
ten largest BACS Bureaux in the UK;
· provides a BACS BPO service on behalf of banks to over 79,000 of their
SME;
· pays almost 7.5 per cent. of UK SME workforce customers;
· hosts in excess of 5 million images and documents;
· payment card industry ("PCI") ISO (9001 quality & 27001 security) and
BACS accreditation;
· CHAPS processing capability;
· processes in excess of 24 million transactions a year;
· handles in excess of 500,000 calls per annum;
· processing payments with a total value in excess of GBP19 billion per
annum; and
· an accuracy rate of 99.1 per cent.
Details of the Placing and Use of Proceeds
The Company will raise GBP4.5 million (gross) pursuant to the Placing through
the issue of 63,874,286 Placing Shares at the Placing Price. The Placing Shares
will represent approximately 14.6 per cent. of the Enlarged Share Capital of the
Company immediately following Admission.
Under the Placing Agreement, Canaccord Genuity has conditionally agreed to
place, with institutional and other investors, the Placing Shares at the Placing
Price. The net proceeds of the Placing are expected to be GBP3.5 million, and
will be used, inter alia, as working capital for the Enlarged Group, to repay
part of the existing debt of the Documetric Group, and to provide the resources
to allow the Enlarged Group to increase its market share in the BPO and
self-service banking market though complementary acquisitions and organic
growth.
The Placing is conditional, inter alia, upon the passing of Resolutions 1, 2, 3,
5 and 7 at the General Meeting, Admission and the Acquisition Agreement becoming
unconditional in all respects.
The Placing is not being underwritten, in whole or in part, by Canaccord Genuity
or any other party.
Clive Richards (the current Non-Executive Chairman of the Company and the
proposed Non-Executive Deputy Chairman of the Enlarged Group) and Richard Last
(the proposed Non-Executive Chairman of the Enlarged Group) are participating in
the Placing. Clive Richards will subscribe for GBP150,000 being 2,142,857
Placing Shares at the Placing Price and Richard Last will subscribe for
GBP100,000 being 1,428,571 Placing Shares at the Placing Price.
The Existing Directors, other than Clive Richards, having consulted with
Canaccord Genuity believe Mr Richards' participation in the Placing is fair and
reasonable insofar as Shareholders are concerned.
New Board and Key Employees
At Admission, it is proposed Clive Richards will step down as Non-Executive
Chairman to become a Non-Executive Deputy Chairman of the Company (to be
replaced by Richard Last as Non-Executive Chairman) and Mike Warriner, Jerry
Mulle, Michael Jackson and Ian Peters will retire from the board of the Company.
The biographical details of the New Board and key employees after Admission are
set out below:
New Board
Richard Last, aged 53 (Proposed Non-Executive Chairman)
Richard Last is a Fellow of the Institute of Chartered Accountants in England
and Wales with substantial experience in the IT software and services sectors,
and is Chairman and non-executive director of Patsystems plc and Arcontech Group
plc (both financial software businesses listed on AIM). He is also a
non-executive director of Lighthouse Group plc and of Corero Group plc, both AIM
listed companies, and of British Smaller Companies VCT plc which is listed on
the Official List. In addition, he is a director and shareholder of a number of
private companies including APD Communications Limited and CSE Global UK
Limited, a subsidiary of a Singapore Stock Exchange listed company.
Rami Cassis, aged 41 (Proposed Chief Executive Officer)
Rami founded Documetric in February 2007 through the management buyout of the
data services bureau from Atos Origin. Rami was previously managing director of
Atos Origin's BPO UK division having joined them from consulting group KPMG,
where he was a principal consultant advising UK and European corporate clients.
Previously, he held several executive roles with Schlumberger where he started
his career as an engineer.
Rami will have the responsibility of overseeing the strategic direction of the
Enlarged Group. He will focus on driving organic growth through synergies and
delivering complementary acquisitions.
Phillip Blundell, aged 49 (Current Chief Executive Officer and Proposed Managing
Director)
Phillip joined the Company as finance director and has been the Company's chief
executive since 2001. He joined the Company from Ocean Software Limited, the
interactive computer games publisher, where he was group finance director.
Previously, he worked at Thomas Nelson Limited, Northern Telecom Europe Limited
and GEC Plessey Telecommunications Ltd. Phillip is a chartered accountant who
qualified with Coopers & Lybrand.
Phillip will be responsible for overseeing the delivery of the existing
Intelligent Environments' business plan as well as working with the New Board to
integrate the two businesses and help develop the Enlarged Group's strategy.
Richard Arden, aged 37 (Proposed Chief Financial Officer)
Richard joined Documetric in September 2008 as finance director. Richard
qualified as a Chartered Accountant in 2000, having trained with
PricewaterhouseCoopers. He has seven years' experience as a finance director of
various service based organisations. He was previously group finance director at
Debts.co.uk plc and executive director at Westfield Contributory Health Scheme,
a health insurer, with responsibility for its finance, compliance and IT.
Richard will have responsibility for Group financial activity and reporting. He
will also be supporting the chief executive officer in meeting the strategic
direction of the Enlarged Group.
Clive Richards, aged 72 (Current Non-Executive Chairman and Proposed
Non-Executive Deputy Chairman)
Following six years at KPMG, Clive joined Wedd Durlacher Mordaunt in 1960 and
subsequently became managing partner. In 1970, Clive joined N M Rothschild &
Sons Ltd, latterly taking the position of group finance director. In 1976, Clive
set up his own investment venture capital and financial services Company, 'Clive
Richards & Co', which has been involved in a number of successful enterprises.
Simon Rubin, aged 62 (Proposed Non-Executive Director)
Simon Rubin was previously UK managing director of First Data International
which provides payment processing services to UK banks and building societies.
Simon was North European Vice President for NCR Corporation's Financial
Solutions Division and its UK Chairman and Country Manager. NCR is the global
leader in financial self service technology (ATMs), and Simon was with the
company from August 1993 until joining First Data in April 2005.
Key employees after Admission
The New Board will be supported by the following key employees:
Mike Warriner, aged 40 (Chief Technology Officer)
On Admission, Mike will be stepping down from the Board but will remain
responsible for the research and development of the Company's NetFinance product
suite. Prior to being appointed chief technology officer, Mike was involved in
the development of AM, Amazon and IE Integrator (the Company's major e-finance
application software). Before working for the Company, Mike worked for several
high-tech companies after completing a degree at Cambridge University. Mike will
remain a director of the trading subsidiary of Intelligent Environments and will
sit on the operating board of the Enlarged Group with specific responsibility
for technology.
Jerry Mulle, aged 44 (Sales and Marketing Officer)
On Admission, Jerry will be stepping down from the Board but will remain
responsible for the sales and the product marketing team within the Enlarged
Group's business. Jerry has a wide range of financial services experience across
both the personal and commercial banking sectors and for the last eight years
has been working in the card industry. Prior to joining the Company, he was head
of e-commerce for NatWest Commercial Cards where he was responsible for
developing and delivering e-business solutions across all areas of new
technology. Prior to that, he headed the cards product management team.
The Company is currently recruiting a Managing Director who will oversee the day
to day running of the ongoing Documetric business and will be responsible for
generating new revenue within BPO through organic sales and proposition
development. This candidate will not join the New Board.
Current trading and prospects of the Enlarged Group
The Company
The Company has been developing a mobile banking platform in order to address
the mobile banking opportunity in the UK as well as internationally and raised
GBP0.75 million (gross) on 17 February 2010 to help develop this significant
opportunity further.
The Company has made important progress with this strategy and in addition to
First Data, two other of the Company's existing clients, Generali and LaSer have
signed up to the mobile service and are expected to go live in the third quarter
of 2010.
The Existing Directors believe that with the Company's progress in this new
market to date, and with a strong pipeline in existence underpinned by the
significant growth expected in mobile banking across Europe, the Company is well
positioned to capture the potential in the mobile banking market.
In contrast, the retail banking market in the UK remains subdued and this in
turn has had an impact on the Company's NetFinance business. Sales cycles have
been extended which in turn have led to a significant reduction in
implementation fees compared to the same time last year.
However with a new partnership with Fidelity recently signed and an improving
pipeline of potential business, the Company expects a recovery in the second
half of the year offsetting this initial shortfall.
The Company's strategy to develop a long term recurring revenue base has
continued to improve due to a full half year contribution from National Savings
and Investments, and also the launch of the Orange credit card by Barclaycard.
These transactional revenue customers coupled with Argos and Vanquish going live
in the first quarter of 2010 mean that the recurring revenue performance will be
ahead of 2009 at the half year stage.
Overall the Company has made good progress in the year to date and the Existing
Directors expect the Company's financial performance to reflect this by the end
of the year.
Documetric
For the year ended 31 December 2009 Documetric's revenues under IFRS were
GBP10.2 million (7 months to December 2008: GBP5.3 million), of which more than
75 per cent. is recurring revenue, with operating profit before exceptional and
other items of GBP2.9 million (7 months to December 2008: GBP1.1 million).
Documetric's full year results were originally accounted for under UK GAAP and
have been restated under IFRS for the purposes of this document. Documetric made
an interim dividend payment of GBP149,999.37 to all Documetric shareholders on
31 March 2010.
Documetric has continued to trade profitably during 2010. The first four months
of 2010 report revenues of GBP3.5 million, in line with management expectations.
The business has been successful in its implementation of a number of key
contracts won in 2009 and has also managed to secure a number of smaller
contracts with new clients in processing and business intelligence. Management
put in place at the end of 2009 and early 2010 a number of activities to further
develop the business. The most significant of these was an expansion of the
sales team by taking on two additional senior sales executives to drive
additional organic growth and the investment in the OCR technology of GBP870,000
(of which GBP550,000 had been incurred by April 2010) designed to improve
efficiencies in processing.
Prospects for the Enlarged Group
The Directors believe the prospects for the Enlarged Group are strong and view
the future with confidence. Documetric's significant base of recurring revenue
strengthens the Enlarged Group's overall revenue visibility and provides a more
stable platform for future growth.
Strategy of the Enlarged Group
The Enlarged Group will create a new company with a critical mass capable of
delivering comprehensive outsourcing and technology services with a key sector
focus in financial services.
From a sales and marketing perspective, the market proposition will be created
by combining Documetric and the Company's offerings incorporating both products
(for example, Netfinance and Digital Image workflow) and services. The strategy
will then be to target common clients with a view to delivering services as part
of the broader proposition. This includes following up on some immediate
opportunities with, for example, First Data and Barclaycard.
Outside of the financial services sector, there are a number of telecoms and
professional organisations where the Directors believe that the wider services
could be readily deployed.
In terms of the development of the joint products and services propositions,
research and development will remain a key component of the Enlarged Group with
a particular focus on the Company's mobile banking platform. The Enlarged Group
will be better able to support the mobile platform by providing, amongst other
things, hosting, business intelligence and contact centre support. At the same
time, there are a number of Documetric's clients and applications who can
potentially benefit from the deployment of the Company's mobile proposition.
Development will also continue on NetFinance, the Directors intend to build a
number of key functional specifications into the platform to reflect greater
functionality in business intelligence applications, as well as an enhanced user
interface.
The Enlarged Group will continue ongoing product development of key solutions,
including cheque replacement technology, business intelligence applications and
enhancement to the PCI compliant, web-based, image hosting platform. Providing
solutions to clients, which are predicated on technology remains the
cornerstone of the Enlarged Group's strategy.
In order to maximise growth opportunities and promote "cross-company" synergies,
it is anticipated that a "group" product and marketing role will be created
following completion of the Acquisition. The objective will be to create a
client proposition which seamlessly blends core skills and services from both
companies without delineating services for Documetric or the Company. A single
name for the Enlarged Group is crucial to helping establish a unique identity to
clients and promoting growth across the Enlarged Group. To achieve this, subject
to the passing of Resolution 6, the Enlarged Group will be rebranded and renamed
Parseq plc following Admission.
The increased scale will benefit the Enlarged Group and will be deployed in two
ways. In terms of governance and methodology, a rigorous project management
standard will be uniformly deployed across the Enlarged Group. In addition,
access to greater resources will assist in building a more "IP centric" culture
where patent registration will become more common.
Complementary acquisitions
Management will assess key targets via a defined acquisition strategy. The types
of acquisition opportunities the enlarged entity will consider include:
· Financial services front and back-office products to develop the current
NetFinance application. This may include e-commerce type applications to enhance
user interface within NetFinance;
· Bolt-on outsourcing/services companies with a view to consolidating
within the existing Documetric operation; and
· Acquisition and/or partnership to establish a solid offshore platform to
provide BPO services on a broader scale.
A number of possible targets have already been identified and discussions with a
small number of parties are in progress. In particular, one opportunity has
arisen that the Directors are particularly interested in pursuing. Should
negotiations continue to move forward, it is conceivable that the Enlarged Group
may be in a position, following Admission, to decide on the relative the merits
of such a transaction with the intention of proceeding to a binding agreement
shortly thereafter.
Management Incentive Arrangements
As outlined previously, in early 2009 the Board undertook a strategic review of
the Company and its prospects. At this time it was concluded that the Company
should look for strategic partners that could give the business access to
greater scale and a more secure platform for future growth.
As part of the Board's review of the business in early 2009, certain
arrangements were put in place in order to incentivise the Existing Executive
Directors, being Phillip Blundell, Jerry Mulle and Mike Warriner for identifying
strategic partners that might help take the business forward.
In April 2009 the Board agreed that the Existing Executive Directors and the
Company would enter into a side letter to the Existing Executive Directors'
service agreements, entitling them to a management bonus of, in aggregate,
GBP720,000 if the Company was successfully sold for a price in excess of a set
amount per share. In April 2010, the Board agreed to amend the terms of the
Management Incentive Arrangements such that (a) they would also become payable
if a reverse takeover was consummated with Documetric and (b) GBP372,000 of the
total was to be deferred until the first anniversary of Admission. Subsequently
the deferred payments were made subject to certain performance criteria.
As part of the incentive arrangements detailed above, Phillip Blundell is to be
awarded 756,000 Ordinary Shares at the Placing Price on the date of Admission.
Non-Management Shareholders will be asked at the General Meeting to approve the
Management Incentive Arrangements by voting on Resolution 4. Pursuant to Rule 16
of the City Code, none of the Existing Executive Directors will be entitled to
vote on this resolution and voting will be by way of a poll.
Canaccord Genuity considers that terms of the Management Incentive Arrangements
to be fair and reasonable.
Summary of Existing Directors' Shareholdings
+--------------+--------------+----------+--------------+----------+
| | Shareholding | As a % | Shareholding | As a % |
| | before the | of | on Admission | of |
| | Placing | Existing | | Enlarged |
| | | Share | | Share |
| | | Capital | | Capital |
| | | | | |
+--------------+--------------+----------+--------------+----------+
| Clive | 24,763,056 | 14.1% | 26,905,913 | 6.2% |
| Richards | | | | |
+--------------+--------------+----------+--------------+----------+
| Phillip | 1,085,000 | 0.6% | 1,841,000 | 0.4% |
| Blundell | | | | |
+--------------+--------------+----------+--------------+----------+
| Mike | 262,500 | 0.1% | 262,500 | 0.1% |
| Warriner | | | | |
+--------------+--------------+----------+--------------+----------+
| Jerry Mulle | 225,000 | 0.1% | 225,000 | 0.1% |
+--------------+--------------+----------+--------------+----------+
| Ian Peters | - | - | - | - |
+--------------+--------------+----------+--------------+----------+
| Michael | 300,000 | 0.2% | 300,000 | 0.1% |
| Jackson | | | | |
+--------------+--------------+----------+--------------+----------+
Lock-in Arrangements
Clive Richards, Phillip Blundell, the Proposed Directors and their connected
parties have undertaken to the Company and Canaccord Genuity to enter into
lock-in agreements pursuant to which they have agreed not to dispose of any
Ordinary Shares held by them and their connected parties for a period of 12
months from Admission (subject to certain limited exceptions) and for a further
12 months thereafter, in order to maintain an orderly market, to deal in their
Ordinary Shares only through Canaccord Genuity.
In addition to the lock-in arrangements described above, all the Vendors, who
are not also Proposed Directors or their connected parties, have undertaken to
Canaccord Genuity to enter into lock-in agreements in respect of their Ordinary
Shares.
Under the terms of these lock-in arrangements, each has agreed not to sell or
otherwise dispose of any Ordinary Shares held by them, other than in specified
circumstances, for a period of six months from date of Admission and in order to
maintain an orderly market for a further six months thereafter to deal in their
Ordinary Shares only through Canaccord Genuity subject to certain limited
exceptions.
The total number of Ordinary Shares subject to a lock-in arrangement is
therefore 226,265,771 representing approximately 51.7 per cent. of the Enlarged
Share Capital.
The City Code on Takeovers and Mergers
The Acquisition and the issue of the Consideration Shares to members of the
Concert Party gives rise to certain considerations under the City Code. Brief
details of the Panel, the City Code and the protections they afford to
Shareholders are described below.
The City Code is issued and administered by the Panel. The City Code applies to
all takeover and merger transactions, however effected, where the offeree
company is, inter alia, a listed or unlisted public company resident in the UK
and to certain categories of private companies.
Under Rule 16.2 of the City Code, when there are certain arrangements
incentivising management regarding an offer, the arrangements must be approved
at a general meeting of the company's shareholders. Accordingly, the Independent
Directors are proposing Resolution 4 at the General Meeting to obtain the
approval of the Non-Management Shareholders to the Management Incentive
Arrangements.
Under Rule 9 of the City Code, when any person or group of persons acting in
concert individually or collectively are interested in shares which in aggregate
carry not less than 30 per cent. of the voting rights of a company but does not
hold shares carrying more than 50 per cent. of the voting rights of a company
and such person or any person acting in concert with him acquires an interest in
any other shares, which increases the percentage of the shares carrying voting
rights in which he is interested, then that person or group of persons is
normally required by the Panel to make a general offer in cash to all
shareholders of that company at the highest price paid by them for any interest
in shares in that company during the previous 12 months.
Under the City Code, a concert party arises where persons acting in concert
together pursuant to an agreement or understanding (whether formal or informal)
actively co-operate, through the acquisition by them of shares in a company, to
obtain or consolidate control of that company. Control means the holding, or
aggregate holdings of shares carrying 30 per cent. or more of the voting rights
of the company, irrespective of whether the holding or holdings give de facto
control.
In the context of the Acquisition, for the purposes of the City Code, Rami
Cassis and the Cartesian Trust, which is beneficially owned by Rami Cassis, are
considered to be persons acting in concert.
Immediately following Admission, the Concert Party will be interested in
155,356,253 Ordinary Shares, representing approximately 35.5 per cent. of the
voting rights attaching to the Enlarged Share Capital.
The Panel has agreed, subject to the approval on a poll by the Independent
Shareholders at the General Meeting to waive the obligation for the Concert
Party to make a general offer to Shareholders under Rule 9 that would otherwise
arise upon Completion. Accordingly, Resolution 2 is being proposed at the
General Meeting to obtain approval of Shareholders for the waiver of any
obligations under Rule 9 of the City Code.
For the purposes of Resolution 2, Richard Last and the Existing Executive
Directors are deemed to be non independent and, as such, will be excluded from
voting on such resolution.
In accordance with Rule 16 of the City Code, the Existing Executive Directors
are not entitled to vote their shares on Resolution 4.
General Meeting
The General Meeting of the Company is to be held at the office of Taylor Wessing
LLP of 5 New Street Square, London, EC4A 3TW at 11:00a.m on 21 July 2010 at
which the following resolutions will be proposed as ordinary or special
resolutions (as the case may be):
(a) to approve the Acquisition (ordinary resolution);
(b) to approve the waiver of Rule 9 of the City Code to be passed on a
poll by Independent Shareholders (ordinary resolution);
(c) to authorise the Existing Directors to generally allot ordinary
shares (including for the purposes of the Placing and the Acquisition) (ordinary
resolution);
(d) to approve the payment of the Management Incentive Arrangements
(ordinary resolution);
(e) to waive statutory pre-emption rights in connection with the
allotment of the ordinary shares pursuant to the above authority (special
resolution);
(f) to change the name of the Company to Parseq plc (special
resolution); and
(g) to approve the amendment of the articles of association of the
Company to allow the Company to issue and allot 'worthless' deferred shares, if
required (special resolution).
The attention of the Shareholders is drawn to the section entitled "Irrevocable
Undertakings" below and to the recommendations and voting instructions of the
Independent Directors as set out in the section entitled "Recommendations and
Voting Instructions".
Details of Admission and Settlement
Application will be made to the London Stock Exchange for admission of the
Enlarged Share Capital to trading on AIM. It is expected that Admission will
become effective and that trading in the Enlarged Share Capital will commence on
22 July 2010.
The Articles permit the Company to issue shares in uncertificated form. CREST is
a computerised paperless share transfer and settlement system, which allows
shares and other securities, including depositary interests, to be held in
electronic rather than paper form. Accordingly, settlement of transactions in
the New Ordinary Shares following Admission may take place within CREST if
relevant Shareholders wish.
CREST is a voluntary system and Shareholders who wish to retain certificates
will be able to do so.
Action to be taken
You will find enclosed with the Admission Document to be sent to Shareholders
today a Form of Proxy, for use by Shareholders, in connection with the General
Meeting. Whether or not you intend to be present at the General Meeting,
Shareholders are asked to complete, sign and return the Form of Proxy in
accordance with the instructions printed on it so as to be received by
Computershare Investor Services plc, The Pavilions, Bridgwater Road, Bristol,
BS99 6ZY as soon as possible but in any event not later than 11:00 a.m. on 19
July 2010. Completion of the Form of Proxy will not preclude Shareholders from
attending and voting at the meeting should they so wish.
Irrevocable Undertakings
Irrevocable undertakings to vote in favour of the Resolutions on which they are
each entitled to vote have been received from the Existing Directors (other than
Ian Peters who holds no Ordinary Shares) and any persons connected with them
(within the meaning of section 252 of the 2006 Act) in respect of their entire
aggregate holdings of 26,635,556 Ordinary Shares (representing approximately
15.2 per cent. of the Existing Ordinary Shares).
Recommendations and Voting Intentions
The Independent Directors, who have been so advised by Canaccord Genuity,
consider that the Proposals are fair and reasonable and in the best interests of
the Company and its Shareholders as a whole.
Consequently, the Independent Directors unanimously recommend that Shareholders
vote in favour of the resolutions to be proposed at the General Meeting, as they
have irrevocably undertaken to do in respect of their own shareholdings, which
in aggregate amount to 14.3 per cent. of the Existing Ordinary Shares.
Expected Timetable of Principle Events
+-----------------------------------+------------------------+
| Latest time and date for receipt | 11:00 a.m. on 19 July |
| of Forms of Proxy for the General | 2010 |
| Meeting | |
| | |
+-----------------------------------+------------------------+
| General Meeting | 11:00 a.m. on 21 July |
| | 2010 |
+-----------------------------------+------------------------+
| Completion of the Acquisition and | 8:00 a.m. on 22 July |
| Admission | 2010 |
| | |
+-----------------------------------+------------------------+
| Commencement of dealings in the | 8:00 a.m. on 22 July |
| Enlarged Share Capital on AIM | 2010 |
| | |
+-----------------------------------+------------------------+
| CREST accounts credited in | 8:00 a.m. on 22 July |
| respect of the New Ordinary | 2010 |
| Shares to be issued in | |
| uncertificated form | |
| | |
+-----------------------------------+------------------------+
| Despatch of definitive share | Week commencing 2 |
| certificates in respect of the | August 2010 |
| New Ordinary Shares | |
| | |
+-----------------------------------+------------------------+
Definitions
+------------------+-------------------------------------------+
| "2006 Act" | the Companies Act 2006, as amended |
| | |
+------------------+-------------------------------------------+
| "Acquisition" | the proposed acquisition by the Company |
| | of the entire issued share capital of |
| | Documetric from the Vendors, pursuant to |
| | the Acquisition Agreement |
| | |
+------------------+-------------------------------------------+
| "Acquisition | the conditional agreement between the |
| Agreement" | Company and the Vendors dated 5 July 2010 |
| | relating to the acquisition by the |
| | Company of the entire issued share |
| | capital of Documetric |
| | |
+------------------+-------------------------------------------+
| "Act" | the Companies Act 1985, as amended |
| | |
+------------------+-------------------------------------------+
| "Admission" | admission of the Enlarged Share Capital |
| | to trading on AIM becoming effective in |
| | accordance with the AIM Rules for |
| | Companies |
| | |
+------------------+-------------------------------------------+
| "AIM" | the AIM market operated by the London |
| | Stock Exchange |
| | |
+------------------+-------------------------------------------+
| "AIM Rules for | the rules of the London Stock Exchange |
| Companies" or | for companies governing the admission to |
| "AIM Rules" | and operation of AIM |
| | |
+------------------+-------------------------------------------+
| "Articles" | the articles of association of the |
| | Company |
| | |
+------------------+-------------------------------------------+
| "BACS" | the Bankers' Automated Clearing Service |
| | being a scheme for the electronic |
| | processing of financial transactions |
| | |
+------------------+-------------------------------------------+
| "Board" or | the existing directors of the Company |
| "Existing | namely Clive Richards, Phillip Blundell, |
| Directors" | Mike Warriner, Jerry Mulle, Ian Peters |
| | and Michael Jackson |
| | |
+------------------+-------------------------------------------+
| "BPO" | Business Process Outsourcing |
| | |
+------------------+-------------------------------------------+
| "Canaccord | Canaccord Genuity Limited, which is |
| Genuity" | authorised and regulated in the United |
| | Kingdom by the Financial Services |
| | Authority |
| | |
+------------------+-------------------------------------------+
| "certificated" | not in uncertificated form (that is, not |
| or "in | in CREST) |
| certificated | |
| form" | |
| | |
+------------------+-------------------------------------------+
| "CHAPS" | an electronic bank to bank payment system |
| | |
+------------------+-------------------------------------------+
| "City Code" | the City Code on Takeovers and Mergers |
| | (as published by the Panel) |
| | |
+------------------+-------------------------------------------+
| "Company" | Intelligent Environments Group plc, a |
| | company incorporated in England and Wales |
| | with registered number 3182741 |
| | |
+------------------+-------------------------------------------+
| "Completion" | completion of the Acquisition Agreement |
| | and the Placing Agreement |
| | |
+------------------+-------------------------------------------+
| "Computershare" | Computershare Investor Services plc |
| | |
+------------------+-------------------------------------------+
| "Concert | Rami Cassis and The Cartesian Trust |
| Party" | |
+------------------+-------------------------------------------+
| "Consideration | 197,518,858 Ordinary Shares issued to |
| Shares" | Documetric in consideration for the |
| | entire issued share capital of the |
| | Company |
| | |
+------------------+-------------------------------------------+
| "CREST" | the relevant system (as defined in the |
| | CREST Regulations) in respect of which |
| | Euroclear UK & Ireland Limited is the |
| | operator (as defined in such Regulations) |
| | in accordance with which securities may |
| | be held and transferred in uncertificated |
| | form |
| | |
+------------------+-------------------------------------------+
| "CREST | the Uncertificated Securities Regulations |
| Regulations" | 2001 (SI 2001/3755) |
| | |
+------------------+-------------------------------------------+
| "Documetric" | Documetric Limited, a company |
| | incorporated in England and Wales with |
| | registered number 5815806 |
| | |
+------------------+-------------------------------------------+
| "Documetric | the Documetric Ltd EMI Option Scheme |
| EMI Option | which was adopted by Documetric Ltd on 25 |
| Scheme" | February 2010 |
| | |
+------------------+-------------------------------------------+
| "Documetric | Documetric and its subsidiaries |
| Group" | |
+------------------+-------------------------------------------+
| "Documetric | the ordinary shares of 1p each in the |
| Shares" | capital of Documetric |
| | |
+------------------+-------------------------------------------+
| "Directors" | the Existing Directors and the Proposed |
| | Directors |
| | |
+------------------+-------------------------------------------+
| | |
+------------------+-------------------------------------------+
| "Enlarged | the Group as enlarged by the Acquisition |
| Group" | |
+------------------+-------------------------------------------+
| "Enlarged | the Existing Ordinary Shares and the New |
| Share Capital" | Ordinary Shares |
| | |
| | |
+------------------+-------------------------------------------+
| "Existing | Phillip Blundell, Mike Warriner and Jerry |
| Executive | Mulle |
| Directors" | |
| | |
+------------------+-------------------------------------------+
| "Existing | the 175,158,233 Ordinary Shares of 1p |
| Ordinary | each in issue at the date of this |
| Shares" | document |
| | |
| | |
+------------------+-------------------------------------------+
| "Existing | the holders of Existing Ordinary Shares |
| Ordinary | |
| Shareholders" | |
| | |
+------------------+-------------------------------------------+
| "Form of | the form of proxy accompanying the |
| Proxy" | admission document to be used by |
| | Shareholders in respect of the General |
| | Meeting |
| | |
+------------------+-------------------------------------------+
| "General | the general meeting of the Company |
| Meeting" | convened for 11:00 a.m on 21 July 2010 to |
| | vote on the Resolutions, notice of which |
| | is set out at the end of this document |
| | |
+------------------+-------------------------------------------+
| "Group" | the Company and its Subsidiaries as at |
| | the date of this document |
| | |
+------------------+-------------------------------------------+
| "Independent | Clive Richards, Michael Jackson and Ian |
| Directors" | Peters |
| | |
+------------------+-------------------------------------------+
| "Independent | all Shareholders, with the exception of |
| Shareholders" | Richard Last, Phillip Blundell, Jerry |
| | Mulle and Mike Warriner |
+------------------+-------------------------------------------+
| "London Stock | London Stock Exchange Plc |
| Exchange" | |
| | |
+------------------+-------------------------------------------+
| "Management | the incentive arrangements set out in |
| Incentive | this announcement concerning Phillip |
| Arrangements" | Blundell, Jerry Mulle and Mike Warriner |
+------------------+-------------------------------------------+
| | |
+------------------+-------------------------------------------+
| "Management | 756,000 Ordinary Shares to be issued to |
| Bonus Shares" | Phillip Blundell on |
| | Admission pursuant to the Management |
| | Incentive Arrangements |
+------------------+-------------------------------------------+
| | |
+------------------+-------------------------------------------+
| "New Board" | the new board of directors of the Company |
| | following Admission comprising Richard |
| | Last, Rami Cassis, Richard Arden, Phillip |
| | Blundell, Clive Richards and Simon Rubin |
| | |
+------------------+-------------------------------------------+
| "New Ordinary | the Placing Shares, the Consideration |
| Shares" | Shares and the Management Bonus Shares |
| | |
+------------------+-------------------------------------------+
| "Non-Executive | Richard Last, Clive Richards and Simon |
| Directors" | Rubin |
| | |
+------------------+-------------------------------------------+
| "Non-Management | all Shareholders other than the Existing |
| Shareholders" | Executive Directors who are holders of |
| | Ordinary Shares |
| | |
+------------------+-------------------------------------------+
| "OCR" | Optical Character Recognition |
| | |
+------------------+-------------------------------------------+
| "Official | the Official List of the UK Listing |
| List" | Authority |
| | |
+------------------+-------------------------------------------+
| "Ordinary | ordinary shares of 1p each in the capital |
| Shares" | of the Company |
| | |
+------------------+-------------------------------------------+
| "Panel" | The Panel on Takeovers and Mergers |
| | |
+------------------+-------------------------------------------+
| "Placing" | the conditional placing by Canaccord |
| | Genuity of the Placing Shares at the |
| | Placing Price pursuant to the terms and |
| | conditions of the Placing Agreement |
| | |
+------------------+-------------------------------------------+
| "Placing | the conditional placing agreement dated 5 |
| Agreement" | July 2010 between |
| | Canaccord Genuity (1), the Existing |
| | Directors (2), and the Proposed Directors |
| | (3) relating to, inter alia, the Placing |
| | |
+------------------+-------------------------------------------+
| "Placing | 7 pence per Placing Share |
| Price" | |
+------------------+-------------------------------------------+
| "Placing | 63,874,286 New Ordinary Shares which are |
| Shares" | the subject of the Placing |
| | |
+------------------+-------------------------------------------+
| "Proposals" | the Acquisition, the Placing, and the |
| | Waiver |
| | |
+------------------+-------------------------------------------+
| "Proposed | Rami Cassis, Richard Arden, Richard Last |
| Directors" | and Simon Rubin |
| | |
+------------------+-------------------------------------------+
| "Resolutions" | the resolutions to be proposed at the |
| | General Meeting, as set out in the notice |
| | of General Meeting at the end of the |
| | admission document |
| | |
+------------------+-------------------------------------------+
| "Reverse | as defined by Rule 14 of the AIM Rules |
| Takeover" | |
+------------------+-------------------------------------------+
| "Shareholders" | holders of Existing Ordinary Shares |
| | |
+------------------+-------------------------------------------+
| "Subsidiary" | a subsidiary undertaking (as defined by |
| | section 1162 of the 2006 Act) of the |
| | Company |
| | |
+------------------+-------------------------------------------+
| "UK" | the United Kingdom of Great Britain and |
| | Northern Ireland |
| | |
+------------------+-------------------------------------------+
| "uncertificated" | Ordinary Shares held in uncertificated |
| or "in | form in CREST and title to which, by |
| uncertificated | virtue of the CREST Regulations, may be |
| form" | transferred by means of CREST |
| | |
+------------------+-------------------------------------------+
| "US" or | the United States of America, its |
| "United | territories and possessions, any state of |
| States" | the United States and the District of |
| | Columbia and all other areas subject to |
| | its jurisdiction |
| | |
+------------------+-------------------------------------------+
| "Vendors" | Robert Sharp and Robert Roynon-Jones as |
| | trustees of The Cartesian Trust, BK |
| | Capital Group Limited, Richard Manson, |
| | Pieter Hooft, Andrew Hunt, Neil Stanley, |
| | Michael Martin, Akram Chaudhary, Mike |
| | Goodwin, Richard Youngman, Paul Barrett, |
| | Jo Considine, Fred Satow and the Proposed |
| | Directors |
| | |
+------------------+-------------------------------------------+
| "Waiver" | the conditional waiver by the Panel of |
| | the obligation of the Concert Party that |
| | may otherwise arise under Rule 9 of the |
| | City Code to make a mandatory cash offer |
| | for the issued Ordinary Shares not |
| | already owned by the Concert Party on |
| | completion of the Acquisition and the |
| | Placing |
| | |
+------------------+-------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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