TIDMIMTK
RNS Number : 6821M
Imaginatik PLC
10 January 2019
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY
THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER
THE EU MARKET ABUSE REGULATION (596/2014). UPON THE PUBLICATION OF
THE ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.
10 January 2019
Imaginatik plc
("Imaginatik" or the "Company")
Proposed sale of Imaginatik business and assets
Imaginatik plc (AIM: IMTK), the innovation software company, is
pleased to announce that it has entered into a conditional
agreement to sell the business and assets of Imaginatik, including
its name, associated domains and trademarks and its trading assets,
(being the whole business of the Company), for an initial cash
consideration of $1.7 million payable on Completion and up to a
further $800,000 depending on the satisfaction of certain
conditions. In accordance with AIM Rule 15, the Disposal
constitutes a fundamental change of business of the Company and is
therefore conditional on Shareholders' approval at a General
Meeting of the Company being convened for 9.15 a.m. on 28 January
2019.
Commenting on the Sale, Angus Forrest, Chief Executive of
Imaginatik, said:
"Whilst considerable progress has been made in improving the
business, there is still more to do to ensure the business has a
successful independent future. The Board believes the offer
received from Planbox Inc recognises the progress made and it is in
the interests of all Imaginatik shareholders to approve the sale of
the business."
Imaginatik plc Tel: +44(0)1329 243 243
Angus Forrest CEO
WH Ireland - Nominated Adviser and Tel: +44 (0)117 945 3470
joint broker
Mike Coe / Chris Savidge
Peterhouse Capital Limited - Broker Tel: +44 (0) 20 7220 9797
Duncan Vasey / Lucy Williams
About Imaginatik
Imaginatik is a leading innovation solution provider, which has
combined a proven innovation program with purpose-built idea
management software to enable companies to achieve breakthrough and
continuous innovation at scale. Imaginatik works with leading
global enterprises to build and integrate innovation management
skills as a core competency. Customers include ExxonMobil, Altria,
TD Bank, Sodexo, Caterpillar and Cargill.
For more information visit www.imaginatik.com.
Information on the Company and current trading
The Company is a provider of innovation enablement services to a
number of large enterprises, offering both consultancy and
technology to enable the implementation and systemization of
innovation processes within and throughout the business.
For the full year to 31 March 2018, the Company reported
revenues of GBP3.7 million and a loss before tax of GBP1.4 million.
For the half year to 30 September 2018 it reported revenues of
GBP1.4 million and a loss before tax of GBP0.6 million.
Further to the announcement issued by the Company on 3 December
2018, the Company continues to trade in line with its internal
forecasts. The Directors are continuing to implement a programme of
reducing the Company's costs of operations whilst increasing
revenues.
Background to, and reasons for, the Proposed Disposal
The Company was admitted to trading on AIM in December 2006
having raised GBP2.1 million (gross) with a market capitalisation
of GBP8.7 million. Since Admission the Company has not made a
profit. The market capitalisation of the Company as at the close of
business on 8 January 2019 (being the last practicable date prior
to this announcement) was GBP1.67 million.
In February 2018, the Company announced a strategic review of
its operations, which the Directors hoped would generate proposals
to acquire the Company. Whilst discussions were held with certain
interested parties those discussions came to nothing.
In 2018 the Company required continuing injections of capital in
order to enable it to continue to trade. In 2018 it has raised
equity capital of over GBP1,000,000 and undertook conversions of
debt into equity amounting to approximately GBP100,000.
In June 2018, new management joined the Company and embarked on
an immediate review of the Company's business and operations, which
resulted in a cost reduction programme. Steps have been taken to
build sales but this takes time and money. Whilst sales are now
increasing the Directors believe that substantive growth in the
Company's revenue is likely to take time and is uncertain, so any
increase in fundamental shareholder value is likely to be modest
for some time. In addition, the Directors cannot be certain that
the Company will not require further financial support to continue
its operations.
Several expressions of interest were received in the second half
of 2018 and the Board concluded that it was in Shareholders'
interests to accept the offer from Planbox Imaginatic Ltd
("Planbox" or "the Purchaser"), and to sell the Company's core
operating business and assets for cash.
Accordingly, the Company has accepted, subject to Shareholders'
approval, an offer from Planbox to acquire all of the Company's
business and assets (except certain cash at bank and other
immaterial assets) which do not relate to its ongoing status as a
public company on AIM. On 10 January 2019 the Company announced
that it had entered into the Disposal Agreement conditional only on
the approval of the Disposal by Shareholders.
In addition, the Directors believe that the Disposal provides
the following benefits:
-- the total consideration of $2.5 million is in excess of the
market capitalisation of the Company as at the close of business on
8 January 2019 (being the last practicable date prior to this
announcement) being GBP1.7million;
-- the total consideration of $2.5 million is in in excess the
estimated book value of the assets being disposed of which is
approximately GBP2.0 million;
-- the business under new ownership will have greater scale, a
larger market presence and access to greater resources which should
be to the benefit of its employees, customers and suppliers;
and
-- for shareholders it eliminates the risks of the business and
allows the funds to redeployed in businesses with stronger growth
prospects.
As such, the Board considers that the Disposal is in the best
interests of the Company and Shareholders as a whole.
Information on the Disposal
The business and assets of the Company, with the exception of
the ongoing contracts which relate to its status as a public
company on AIM and its cash at bank and some other immaterial
assets, are to be disposed of as part of the Disposal. The Disposal
will also involve the transfer of all Imaginatik employees to the
Purchaser on the same terms and conditions under which they are
currently engaged, save in respect of Mr Forrest and Mr Taylor.
Simon Charles, John Treacy and Angus Forrest will remain as
directors of the Company following Completion. Mr Taylor will step
down from the Board on Completion.
Principal terms of the Disposal
The Company has entered into the Disposal Agreement with the
Purchaser under which the Purchaser has agreed to acquire the
Company's business and assets (save for cash at bank) in relation
to its operating business of innovation consulting and technology
services, including the right to the name "Imaginatik". The
principal terms of the Disposal are as follows:
-- the Purchaser will purchase the operating business and assets
(save for certain cash at bank and other immaterial assets) of the
Company;
-- the Disposal is conditional upon the approval of
Shareholders. If this condition is not fulfilled on or before 28
January 2019, the agreement may be terminated and the Disposal may
not be completed;
-- the consideration payable by the Purchaser in respect of the
Disposal is a total of $1.72 million payable in full in cash on
Completion and with the release of an additional $246,000 if
certain customers sign contracts before 31 March; and a maximum
holdback amount of $370,000 payable in full on 1 August 2019 if not
less than 90 per cent. (by value) of the Company's account
receivables as at Completion have been paid to the Purchaser by 31
March 2019. If by 30 June 2019, more than 70 per cent. but less
than 90 per cent. of the account receivables have been paid then
$185,000 of the holdback amount will be paid on 30 June 2019 and
the holdback amount will be reduced by $185,000. If less than 70
per cent. of the account receivables have been paid to the
Purchaser by 30 June 2019 then no payment will be due and the
holdback amount will be reduced by $370,000. An additional earn out
payment of $300,000 will be paid by 1 August 2019 (or, if earlier,
as soon as possible following the satisfaction of the earn out
conditions) conditional on the cumulative earnings before interest
and taxes of the business transferred for the six months to 30 June
2019 being equal to or exceeding GBP293,000 and the Purchaser
not having had to finance the business. The post completion consideration is capped at $800,000.
-- most Imaginatik employees will have their employment
transferred to the Purchaser on the same terms and conditions under
which they are currently employed;
-- under the terms of the Disposal Agreement, the Company has
given certain customary warranties in favour of the Purchaser. On
completion of the Disposal, the Company's total liability for
breaches of any representations, and warranties under the Disposal
Agreement will be capped at such amount of the purchase price as it
shall have received; and
-- under the terms of the Disposal Agreement, Planbox Inc.,
acting as guarantor, guarantees performance of the Purchaser's
obligations under the Disposal Agreement.
Completion of the Disposal is conditional upon the passing of
Resolution 1 at the General Meeting.
Information on the Purchaser
Planbox Imaginatik Ltd, is a special purpose vehicle established
by Planbox Inc. for the purposes of acquiring the Disposal.
Planbox Inc. provides of cloud-based AI-powered agile work
innovation software solutions. It seeks to help organisations
thrive by transforming the culture of agile work, continuous
innovation and creativity across the entire organisation. Its range
of products include collaborative innovation management
applications. Planbox sells its innovation services into companies
such as Bridgestone, CGI, Nestlé, Sempra Energy, Starbucks,
Stanford, Philips, The Salvation Army and Verizon with many
internal and external users.
Financial effects of the Proposed Disposal and use of
proceeds
The net cash proceeds arising from the Disposal are expected to
be approximately GBP1.4 million and will be utilised first to
extinguish the Company's liabilities. Net of these liabilities the
Company is expected to have a free cash balance of approximately
GBP1.0 million on Completion after receipt of the initial
consideration.
It is anticipated that the cash to be received by the Company
will be used to acquire another business(es) which the directors
believe will deliver greater returns for investors.
Change of Name
To reflect the new direction of the Company, the Board is
proposing to change the name of the Company. Under the Companies
Act 2006, a change of name requires the passing of a special
resolution of Shareholders at a general meeting. Therefore a
special resolution will be put to the General Meeting to approve
the change of the Company's name to:
"Abal Group plc"
The change of name will become effective once the Registrar of
Companies has issued a new certificate of incorporation on the
change of name. This is expected to occur on or around 31 January
2019. The tradeable instrument display mnemonic ("TIDM") of the
Company is expected to change to AIM: ABAL effective from 7.00 a.m.
on 31 January 2019.
Recommendation
The Board considers that the Disposal and change of name of the
Company is in the best interests of the Company and its
Shareholders as a whole. Accordingly, the Board recommends that
Shareholders vote in favour of the Resolutions to be proposed at
the General Meeting as they intend to do in respect of the Ordinary
Shares which they control.
General Meeting
The Company is arranging for a Circular to be sent to all
shareholders which includes the Notice of General Meeting to be
held at 9.15 a.m. on 28 January 2019 at the offices of Marriott
Harrison LLP, 11 Staple Inn, London, WC1V 7QH.
The circular will also be available on the Company's website
www.imaginatik.com
- ENDS -
For further information, please contact:
Imaginatik plc Tel: +44 (0) 1329 243
Angus Forrest CEO 243
WH Ireland - Nominated Adviser and Tel: +44 (0)117 945 3470
joint broker
Mike Coe / Chris Savidge
Peterhouse Capital Limited - Broker Tel: +44 (0) 20 7220 9797
Duncan Vasey / Lucy Williams
About Imaginatik
Imaginatik is the leading innovation solution provider, which
has combined a proven innovation program with purpose-built idea
management software to enable companies to achieve breakthrough and
continuous innovation at scale. Imaginatik works with leading
global enterprises to build and integrate innovation management
skills as a core competency. Customers include ExxonMobil, Altria,
TD Bank, Sodexo, Caterpillar and Cargill.
For more information visit www.imaginatik.com.
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END
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