TIDMCYAN
RNS Number : 5797E
CyanConnode Holdings PLC
19 October 2018
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014. Upon the
publication of this announcement via a Regulatory Information
Service ("RIS"), this inside information is now considered to be in
the public domain.
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CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMATION,
OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE
OR DISPOSE OF ANY SECURITIES IN CYANCONNODE HOLDINGS PLC OR ANY
OTHER ENTITY IN ANY JURISDICTION.
CyanConnode Holdings plc
("CyanConnode", the "Company" or together with its subsidiaries
the "Group")
Proposed Placing, Subscription and Open Offer to raise up to
GBP5.6 million
Notice of General Meeting
CyanConnode (AIM:CYAN.L), a world leader in narrowband radio
frequency (RF) mesh networks, is pleased to announce that it is
proposing to raise GBP5.1 million (before the deduction of fees and
expenses) through the issue of 39,787,391 Placing Shares and
10,665,000 Subscription Shares at 10 pence per Ordinary Share. In
addition, the Company is proposing to raise up to a further GBP0.5
million (before the deduction of fees and expenses) through an Open
Offer and the issue of up to 5,142,961 Open Offer Shares at 10
pence per Ordinary Share. The Fundraising Shares will rank, pari
passu, in all other respects with the Company's Existing Ordinary
Shares. John Cronin, Harry Berry, Heather Peacock and David
Johns-Powell, directors of the Company, have participated in the
Fundraising.
Key Highlights
-- Proposed Fundraising to raise up to GBP5.6 million through
the issue of up to 55,595,352 Fundraising Shares to new and
existing institutional and other investors at 10 pence per
Share;
-- The Issue Price represents a discount of 18.4 per cent. to
the closing price on 18 October 2018, being the last trading date
prior to announcement of the proposed Fundraising;
-- The net proceeds of the Fundraising will be used to fund
future growth to include investment in research and development and
working capital to execute on the Company's order book, pipeline
and growth plan;
-- The Fundraising is conditional, inter alia, upon Shareholder
approval at the General Meeting of the Company which is expected to
be held at Merlin Place, Milton Road, Cambridge, CB4 0DP at 2.00
p.m. on 5 November 2018;
-- GBP1 million Board and senior management participation in the Fundraising; and
-- Appointment of Arden Partners plc as joint broker
Further information explaining why the Board considers the
Fundraising to be in the best interests of the Company and its
Shareholders as a whole and why the Directors unanimously recommend
that Shareholders vote in favour of the resolutions to be proposed
at the General Meeting is set out below in this announcement.
Unless otherwise defined herein, capitalised terms used in this
announcement shall have the same meanings as defined in the
Circular containing notice of the General Meeting.
Enquiries:
CyanConnode Holdings plc Tel: +44 (0) 1223 225
060
John Cronin, Executive Chairman www.cyanconnode.com
finnCap Ltd (Nomad and Joint Broker) Tel: +44 (0) 20 7220
0500
Ed Frisby/ Giles Rolls (Corporate Finance)
Alice Lane (ECM)
Arden Partners (Joint Broker) Tel: +44 (0) 20 7614
Paul Shackleton / Daniel Gee-Summons 5900
Walbrook PR (Financial PR) Tel: +44 (0) 20 7933
Paul Cornelius / Nick Rome 8780
cyanconnode@walbrookpr.com
About CyanConnode
CyanConnode is a world leader in narrowband radio frequency (RF)
mesh networks that facilitate machine to machine (M2M)
communication. CyanConnode's innovative technology uses the
industrial, scientific, and medical radio band, (ISM), which is
optimised to give exceptional performance and competitive total
cost of ownership. Through global partnerships, CyanConnode
provides customers with a solution for the rapid deployment of
local or countrywide ISM RF mesh networks that provide reliable and
secure M2M communication.
For more information, please visit www.cyanconnode.com
Cautionary note regarding forward-looking statements
This document contains statements about the Company that are of
may be deemed to be "forward-looking statements".
All statements, other than statements of historical facts,
included in this document may be forward-looking statements.
Without limitation, any statements preceded or followed by, or that
include, the words "targets", "plans", "believes", "expects",
"aims", "intends", "will", "may", "should", "anticipates",
"estimates", "projects", or words or terms of similar substance or
the negative thereof, are forward-looking statements.
Forward-looking statements may include, without limitation,
statements relating to future capital expenditures, expenses,
revenues, earnings, economic performance, indebtedness, financial
condition, dividend policy, losses and future prospects, etc.
These forward-looking statements are not guarantees of future
performance. These forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual result, performance or achievements of any such person, or
industry, to be materially different from any results, performance
or achievements expressed or implied by such forward-looking
statements. These forward-looking statements are based on numerous
assumptions regarding the present and future business strategies of
such persons and the environment in which each will operate in the
future. Investors should not place undue reliance on such
forward-looking statements and, save as is required by law or
regulation (including to meet the requirements of the AIM Rules,
the City Code, the Prospectus Rules and/or FSMA), the Company does
not undertake any obligation to update publicly or revise any
forward-looking statements (including to reflect any change in
expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based).
All subsequent oral or written forward-looking statements
attributed to the Company or any persons acting on its behalf are
expressly qualified in their entirety by the cautionary statement
above. All forward-looking statements contained in this document
are based on information available to the Directors at the date of
this document, unless some other time is specified in relation to
them, and the posting or receipt of this document shall not give
rise to any implication that there has been no change in the facts
set forth herein since such date.
The following text has been extracted from the Circular:
LETTER FROM THE CHAIRMAN
1 Introduction
The Company has announced today that it is proposing to raise
GBP5.6 million (before the deduction of fees and expenses) through
the issue of 39,787,391 Placing Shares and 10,665,000 Subscription
Shares at 10 pence per Ordinary Share. In addition, the Company is
proposing to raise up to a further GBP0.5 million (before the
deduction of fees and expenses) through an Open Offer and the issue
of up to 5,142,961 Open Offer Shares at 10 pence per Ordinary
Share.
The Fundraising is conditional, inter alia, on:
-- the passing of the Fundraising Resolutions at the General Meeting;
-- in respect of the First Fundraising Shares, First Admission
becoming effective by no later than 8.00 a.m. on 6 November 2018
(or such other time and/or date, being no later than 8.00 a.m. on
12 December 2018, as the Company, finnCap and Arden may agree);
-- in respect of the Second Fundraising Shares, Second Admission
becoming effective by no later than 8.00 a.m. on 7 November 2018
(or such other time and/or date, being no later than 8.00 a.m. on
12 December 2018, as the Company, finnCap and Arden may agree);
and
-- in respect of the Placing Shares, the Placing Agreement
between the Company, finnCap and Arden becoming unconditional and
not being terminated in accordance with its terms.
It is expected that the First Fundraising Shares will be
admitted to trading on AIM on or around 8.00 a.m. on 6 November
2018 and that the Second Fundraising Shares will be admitted to
trading on AIM on or around 8.00 a.m. on 7 November 2018.
The Issue Price represents a discount of 18.4 per cent. to the
closing price of 12.25 pence on 18 October 2018, being the last
Business Day prior to the publication of the announcement of the
Fundraising.
The Board believes that raising equity finance by way of the
Fundraising is the most appropriate method of financing for the
Company at this time. This allows certain existing and new
investors to participate in the Placing and Subscription whilst
also providing the Company's loyal and supportive Shareholders with
an opportunity to participate in the Open Offer in recognition of
their continued support to the Company. The Board believes that the
potential value creation for the benefit of Shareholders arising
from the Fundraising outweighs its dilutive effects.
The purpose of the Circular is to set out the reasons for, and
provide further information on, the Fundraising, as well as to
explain why the Board considers the Fundraising to be in the best
interests of the Company and its Shareholders as a whole and why
the Directors unanimously recommend that you vote in favour of the
Resolutions, as they intend to do so in respect of their own
beneficial holdings of 13,629,425 Ordinary Shares, in aggregate
representing approximately 10.60 per cent. of the Existing Ordinary
Shares on 18 October 2018 (being the last Business Day prior to
publication of the Circular).
At the end of the Circular you will find the Notice convening
the General Meeting at which the Resolutions will be proposed by
the Directors. The General Meeting has been convened for 2 p.m. on
5 November 2018 and will take place at the Company's registered
office, Merlin Place, Milton Road, Cambridge, CB4 0DP.
2 Background to and reasons for the Fundraising
On 11 September 2018, the Company announced its interim results
for the six months ended 30 June 2018 and the Directors highlighted
a need to raise additional funding during 2018. At the same time
the Company provided an update on trading across the CyanConnode
Group.
During the first six months of 2018, CyanConnode improved its
delivery processes which enabled it to achieve record first half
revenue of GBP1,637,008. The key contributors to the revenue growth
were achieved from existing customer contracts in India, the
Nordics and the UK. The Company has also reduced its cash cost base
to approximately GBP560,000 with effect from January 2019.
In June 2018 CyanConnode officially launched Omnimesh, its IPv6
based technology that is designed to support global communication
standards including Advanced Metering Infrastructure (AMI) for the
smart metering market. The launch of Omnimesh also signified the
end of expenditure on a major software development programme, which
has helped to significantly reduce the operating loss for the
period. Prior to the end of June 2018 it had received orders to the
value of $4.3 million for this platform ($3.2 million received in
2018). A further $14.5 million of orders for this platform were
announced in September 2018. The product has been positively
received by the Indian market and the Company expects further large
orders for the platform to be won.
India
The Minister of Power and New and Renewable Energy, R K Singh
announced on 7 June 2018 that "in the next three years metering
will go smart prepaid and gone will be the days of bills reaching
your house. So need of the hour is to scale up manufacturing of
smart prepaid meters and to bring down their prices". As a result
of this shift, R K Singh has urged smart meter manufacturers to
increase their production. This would result in an estimated total
installation across the Indian market of at least 220 million smart
prepaid meters in three years. The Board believes this will
therefore lead to all traditional meters being replaced by smart
prepaid meters in the next three years.
With smart metering being a key focus of the Government,
standards for metering, communication network and AMI systems have
been developed by The Ministry of Power, through institutions such
as National Smart Grid Mission and Bureau of Indian Standards
("BIS").
CyanConnode's new Omnimesh technology fulfils AMI requirements
and leading meter manufacturers, such as Genus, Larsen & Toubro
("L&T") and HPL have integrated the Company's technology into
their BIS compliant smart meters, enabling rapid deployment.
Furthermore, CyanConnode's technology is already integrated into a
significant number of smart meter deployments in India and its
deployment at the Chamundeshwari Electricity Supply Corporation
("CESC") project in Mysore is being showcased by Government
Ministers as a model site.
Utilities are issuing large 'Requests for Proposals' for smart
metering solutions including CyanConnode's technology and the
Company is currently working on a sales pipeline of qualified
opportunities of over $100 million in India alone. The recent
orders from L&T and Genus, having a total value of $17.7
million, and utilising CyanConnode's narrowband RF mesh network
technology, indicate that the scale of deployments is gaining
momentum.
Rest of World
During the first six months of 2018, the Company's contracts in
Bangladesh and Iran were progressing through the different stages
of the Site Acceptance Testing ("SAT") process with its key
partners. CyanConnode's technology is delivered in a phased
approach and each stage of the SAT requires the Company's partner
and/or customer to determine whether their requirements have been
met.
In addition to the above orders currently held by the Company,
it has a large pipeline of opportunities in territories such as
Indonesia, Philippines, Thailand and Ghana that it is working on
with partners. These opportunities are at various stages of
completion.
United Kingdom
A close collaborative partnership between CyanConnode,
Telefónica and Toshiba resulted in a solution for second generation
smart meters ("SMETS2"). Telefónica, (appointed as the preferred
SMIP communications service provider for two thirds of the UK),
promoted CyanConnode's narrowband RF mesh network technology to
extend the reach of its existing mobile (cellular) network, into
locations where cellular signal was not available
('Not-Spots').
Embedding CyanConnode's Technology into the Toshiba SMETS2
Telefónica Communications Hub has enabled smart meters to be
located in 'Not-Spots'. Anthony Shaw, Telefónica UK Smart Metering
Director said, "CyanConnode is one of the very few suppliers
globally that has the experience and leading-edge technology to
support Smart Meter deployment in areas where there is no cellular
coverage."
In June 2018, Secretary of State for Business, Energy and
Industrial Strategy ("BEIS"), Greg Clark, announced that 1,000
SMETS2 devices had been installed and that the figure was a
"significant milestone because it represents the beginning of the
roll-out of the next generation of meters".
CyanConnode's contract is with Toshiba for its SMETS2 Telefónica
Communications Hub and consists of software license and support
fees. The Toshiba contract was originally calculated to deliver
GBP24m of revenue based on the assumption that 10% of SMETS2 meters
would be located in 'Not-Spots'. However, Energy Suppliers are now
finding that dwellings with thick walls, or in blocks of flats, or
in areas with poor mobile signal, are contributing to one out of
three meters being located in 'Not-Spots'. Consequently, if the
percentage of meters located in 'Not Spots' is more than 10%, then
CyanConnode's revenue expectations from the contract will increase
on a pro-rata basis. CyanConnode understands the roll-out of SMETS2
meters has commenced and expects it to gain momentum in the fourth
quarter of 2018.
Financial Position and Current Trading
The Company's unaudited interim results to 30 June 2018
highlighted the need for additional funding. The Company reported
half year revenues of GBP1.6 million (more than the Company made in
the entirety of the 2017 financial year). Nevertheless the Company
recorded a loss for the six month period of GBP3.1 million. Cash
reduced by operations was GBP4.1 million, resulting in net cash
outflow from operating activities in H1 2018 of GBP2.7 million,
after GBP1.3 million of income taxes received from HMRC for R&D
tax credits. Cash received from customers during H1 2018 was GBP0.9
million. Cash and cash equivalents (unaudited) at 30 September 2018
was GBP1.3 million, and as previously notified, the Company is
forecasting a monthly cash cost base from 1 January 2019 onwards in
the region of GBP560k.
The full year out turn as ever remains subject to the quantum,
margins and timing of product and services revenues. The Company
has achieved unaudited revenue for the nine month period to 30
September 2018 of GBP2.1 million. The Board considers that the
Company remains on track to deliver full year market expectations,
based on the Board's expectations of a very strong financial
performance in Q4. In order to deliver a full year in line with
market expectations the Company will need to convert a number of
identified sales opportunities in to orders, and in addition
convert these new orders, and a number of existing orders, in to
revenue by way of the delivery of products and services;
specifically this would be expected to include:
-- c.GBP700k of forecast revenue, as notified on 18 September
2018, relating to an order for Omnimesh by an Indian customer;
and
-- a high margin license sale opportunity expected late in 2018,
as notified on 11 September 2018.
As highlighted by the Company previously, certain markets that
the Company trades in have an inherent level of uncertainty
associated with them and this may result in the predicted level of
sales not being achieved, and/or the timing of orders being
delayed, as has been the case for the Company in the past. The
Directors have taken reasonable steps to satisfy themselves about
the robustness of sales forecasts but acknowledge that the timing
of customer orders in the Company's target markets can take longer
than expected.
The Board believes that the Fundraising will provide CyanConnode
with sufficient resources to achieve cash flow break-even based
upon current expectations.
Use of Proceeds
The net proceeds of the Fundraising will be used as follows:
-- Research and Development project expenditure (updates,
refresh, additional features and functionality, upgrades)
-- Delivery and execution of orders - procurement of components
and manufacturing to secure best terms with suppliers and best
margins on products
-- Sales and marketing and business development activities in new territories
-- Integration with new meter manufacturers to expand footprint
-- Project support in existing and new territories
-- Expansion to the team in India
-- Ongoing working capital
Director change
Peter Hutton, Non-Executive Director, has indicated to the Board
his wish to resign as a Director, due to other work commitments,
shortly after completion of the Fundraising. The Company is
commencing a process to identify a suitable replacement
Non-Executive Director and a further announcement will be made in
due course.
Details of the Placing
Summary
The Placing Shares represent up to 21.6 per cent. of the
Enlarged Share Capital, and are proposed to be issued at a price of
10 pence per Placing Share. finnCap and Arden have conditionally
agreed to use reasonable endeavours to place all of the Placing
Shares pursuant to the Placing Agreement.
Conditions
In connection with the Placing, the Company has entered into the
Placing Agreement with finnCap and Arden, pursuant to which finnCap
and Arden have agreed to use their reasonable endeavours, as joint
agents on behalf of the Company, to conditionally place the Placing
Shares with certain new and existing investors at the Issue Price.
The Placing is conditional, inter alia, on:
-- the passing of Resolutions 1 and 3 at the General Meeting;
-- the conditions in the Placing Agreement being satisfied or
(if applicable) waived and the Placing Agreement not having been
terminated in accordance with its terms prior to each of First
Admission and Second Admission;
-- as regards the First Placing, First Admission becoming
effective by no later than 8.00 a.m. on 6 November 2018 (or such
later time and/or date, being no later than 8.00 a.m. on 12
December 2018, as the Company, finnCap and Arden may agree);
and
-- as regards the Second Placing, Second Admission becoming
effective by no later than 8.00 a.m. on 7 November 2018 (or such
later time and/or date, being no later than 8.00 a.m. on 12
December 2018, as the Company, finnCap and Arden may agree).
Accordingly, if any of these conditions are not satisfied or, if
applicable, waived, the First Placing and/or the Second Placing
will not proceed. Shareholders should note that it is possible that
First Admission occurs but Second Admission does not, should any
relevant condition of the Placing Agreement fail to be met between
First Admission and Second Admission.
Terms of the Placing Agreement
The Placing Agreement provides for payment by the Company to
finnCap and Arden of certain fees and commissions. In addition,
finnCap will, conditional on the Resolutions being passed, receive
the Corporate Finance Warrants.
The Placing Agreement contains customary warranties given by the
Company to finnCap and Arden in relation to, inter alia, the
accuracy of the information in the Circular, certain financial
information and other matters relating to the Company and its
business. The Company has also agreed to indemnify finnCap, Arden
and their respective affiliates in respect of certain liabilities
that finnCap, Arden and their respective affiliates may incur in
connection with the Placing. Further, the Company has provided a
number of customary undertakings to finnCap and Arden in respect of
the period prior to Admission and for a time thereafter.
finnCap and Arden, having consulted with the Company to the
extent practicable, but in either finnCap or Arden's absolute
discretion, are entitled to terminate the Placing Agreement in
certain customary circumstances prior to Admission, including:
-- where any statement contained in the Placing Documents (as
such term is defined in the Placing Agreement) or any of the
warranties given by the Company to finnCap and Arden are found not
to be true or accurate or were misleading and which in any such
case is material in the context of the Placing;
-- the occurrence of certain force majeure events or a material
adverse change in (amongst other things) national or international
financial or political conditions (which in the opinion of finnCap
and Arden, is material in the context of the Placing); or
-- the failure of the Company to comply with any of its
obligations under the Placing Agreement.
If this right is exercised, the Placing (or, if exercised after
First Admission, the Second Placing) will not proceed.
The Placing Agreement is not subject to any right of termination
after Second Admission.
3 Details of the Subscription
Summary
The Subscription Shares represent up to 5.8 per cent. of the
Enlarged Share Capital, and are proposed to be issued at a price of
10 pence per Subscription Share.
Conditions
In connection with the Subscription, the Company has entered
into the Subscription Agreements with Subscribers. The Subscription
is conditional, inter alia, on:
-- the passing of Resolutions 1 and 3 at the General Meeting; and
-- admission of the Subscription Shares to trading on AIM
becoming effective by no later than 8.00 a.m. on 6 November (in
respect of those Subscription Shares to be issued on First
Admission) or 8.00 a.m. on 7 November 2018 (in respect of those
Subscription Shares to be issued on Second Admission) (or such
later time and/or date, being no later than 8.00 a.m. on 12
December 2018, as the Company and the Subscribers may agree).
Accordingly, if any of these conditions are not satisfied or, if
applicable, waived, the Subscription will not proceed.
Related Party Transactions
John Cronin, Heather Peacock, Harry Berry and Anil Daulani
John Cronin and Harry Berry are participating in the Placing,
subscribing GBP100,000 and GBP20,000 for Placing Shares
respectively. Heather Peacock is participating in the Subscription,
subscribing GBP10,000 for Subscription Shares. Anil Daulani intends
to participate in the Subscription, subscribing for GBP100,000
Subscription Shares. Their participation in the Fundraising, by
virtue of being directors of the Company (or of a subsidiary
undertaking as in the case of Anil Daulani), is a related party
transaction pursuant to Rule 13 of the AIM Rules for Companies. The
Independent Directors, being Peter Hutton and Paul Ratcliff, having
consulted with finnCap, the Company's Nominated Adviser, consider
that John Cronin, Heather Peacock, Harry Berry and Anil Daulani's
participation in the Fundraising is fair and reasonable insofar as
the Company's shareholders are concerned.
David Johns-Powell
On 15 September 2017 the Company entered into a subscription
agreement (the "DJP Subscription Agreement") pursuant to which
David Johns-Powell agreed, amongst other things, to subscribe
GBP1.8 million for new Ordinary Shares at 28 pence per Ordinary
Share. Of this subscription GBP500,000, being 1,785,714 Ordinary
Shares (the "DJP Subscription Shares"), was agreed to take place on
or around 6 April 2018 in order that the DJP Subscription Shares
would benefit from EIS Relief in the new tax year.
On 10 April 2018, the Company announced that it had not received
EIS advanced assurance from HMRC and accordingly the DJP
Subscription Shares had not been admitted to trading and the
Company had not received the GBP500,000 pursuant to the DJP
Subscription Agreement. On 12 April 2018, the Company and David
Johns-Powell both signed a letter (the "Addendum") agreeing that
the remaining obligations of the DJP Subscription Agreement, namely
the requirement for David Johns-Powell to subscribe for the DJP
Subscription Shares, would be deferred until a later date during
the 2018/19 tax year provided the Company can confirm that it is a
qualifying company for the purposes of EIS.
Subsequent to the Addendum, David Johns-Powell was appointed as
a director of the Company on 25 July 2018. The Company received
advanced assurance from HMRC that new Ordinary Shares would benefit
from EIS relief on 10 October 2018 and as a result Mr Johns-Powell
will now benefit from EIS relief should he subscribe for Ordinary
Shares.
David Johns-Powell has now agreed to subscribe for GBP650,000
Subscription Shares pursuant to the Subscription, as part of the
Fundraising, on the same terms as the other Subscribers, namely at
an issue price of 10 pence per Subscription Share. As a
consequence, the Company has agreed to cancel his obligations under
the DJP Subscription Agreement and Addendum, subject to Second
Admission. Mr Johns-Powell also intends to irrevocably commit to
apply for GBP100,000 of Open Offer Shares (full allocation of which
will be dependent upon the level of applications in the Open Offer,
and therefore may be subject to scale back), bringing his total
intended participation in the Fundraising to GBP750,000; should the
Open Offer be oversubscribed and Mr Johns-Powell's Open Offer
application be scaled back, he intends to irrevocably invest any
shortfall via subscription directly with the Company at 10 pence
per Ordinary Share, within 5 working days of the Second
Admission.
His participation in the Fundraising and the cancellation of the
DJP Subscription Agreement and Addendum is, by virtue of Mr
Johns-Powell being a director of the Company, a related party
transaction pursuant to Rule 13 of the AIM Rules for Companies. The
Independent Directors, being all those save for David Johns-Powell,
having consulted with finnCap, the Company's Nominated Adviser,
consider that Mr Johns-Powell's participation in the Fundraising
and the cancellation of the DJP Subscription Agreement and Addendum
is fair and reasonable insofar as the Company's shareholders are
concerned.
In making such assessment the Independent Directors were
conscious of the Company's overall financial requirements and the
requirement of a number of placees that the Company raise not less
than GBP5 million pursuant to the Placing and Subscription. The
Independent Directors note that whilst Mr Johns-Powell's
participation in the Fundraising is at the Issue Price, the amount
to be invested is significantly increased from GBP500,000 to
GBP750,000, taking his total investment in the business to date to
GBP3.75 million. Mr Johns-Powell's participation is material to the
Fundraising and without this the Fundraising may not have been
possible. In the context of the Company's financial position, which
is detailed further at paragraph 2 of this Part 1, the Independent
Directors consider that it is preferable to have Mr Johns-Powell's
participation in the Fundraising and not pursue payment for the DJP
Subscription Shares at this time than to risk the Fundraising and
simultaneously the financial viability of the Company. The
Independent Directors note that the overall difference in dilution
for existing Shareholders between Mr Johns-Powell subscribing for
GBP500,000 of Subscription Shares at 10p as opposed to the DJP
Subscription Shares at 28p is c.1 per cent. of additional dilution
(assumes full take up of the Open Offer).
4 Details of the Open Offer
Summary
The Company is providing all Qualifying Shareholders with the
opportunity to subscribe, at the Issue Price, for an aggregate of
5,142,961 Open Offer Shares, raising gross proceeds of up to GBP0.5
million.
Subject to fulfilment of the conditions set out below, and in
Part 3 of the Circular, the Open Offer provides Qualifying
Shareholders with the opportunity to apply to acquire Open Offer
Shares at the Issue Price pro rata to their holdings of Existing
Ordinary Shares as at the Record Date on the following basis (and
in proportion for any other number of Existing Ordinary Shares then
held):
1 Open Offer Shares
for every
25 Existing Ordinary Shares
Entitlements to apply to acquire Open Offer Shares will be
rounded down to the nearest whole number and any fractional
entitlements to Open Offer Shares will be disregarded in
calculating an Open Offer Entitlement and will be aggregated and
made available to Qualifying Shareholders pursuant to the Excess
Application Facility.
Details of the terms and conditions of the Open Offer are set
out in Part 3 of the Circular, and frequently asked questions
relating to the Open Offer are set out in Part 4 of the
Circular.
Conditions
The Open Offer is conditional upon, inter alia, the passing of
the Fundraising Resolutions and First Admission. If the conditions
are not satisfied, the Open Offer will not proceed and any Open
Offer Entitlements admitted to CREST will thereafter be disabled
and application monies under the Open Offer will be refunded to the
applicants, at the applicant's risk either as a cheque by first
class post to the address set out on the Application Form or
returned direct to the account of the bank or building society on
which the relevant cheque or banker's draft was drawn in the case
of Qualifying Non--CREST Shareholders and by way of a CREST payment
in the case of Qualifying CREST Shareholders, without interest, as
soon as practicable thereafter.
Excess Applications
The Open Offer is structured to allow Qualifying Shareholders to
subscribe for Open Offer Shares at the Issue Price pro rata to
their holdings of Existing Ordinary Shares. Qualifying Shareholders
may also make applications in excess of their pro rata initial
entitlement. Any such applications will be granted at the absolute
discretion of the Company. If applications under the Excess
Application Facility are received for more than the total number of
Open Offer Shares available following take-up of Open Offer
Entitlements, such applications will be scaled according to the
Directors' discretion to the number of excess Open Offer Shares
applied for by Qualifying Shareholders under the Excess Application
Facility. Applications under the Excess Application Facility may be
allocated in such manner as the Directors may determine, in their
absolute discretion, and no assurance can be given that any
applications under the Excess Application Facility by Qualifying
Shareholders will be met in full or in part or at all.
Qualifying Shareholders should note that the Open Offer is not a
rights issue. Qualifying Non--CREST Shareholders should be aware
that the Application Form is not a negotiable document and cannot
be traded. Qualifying Shareholders should also be aware that in the
Open Offer, unlike in a rights issue, any Open Offer Shares not
applied for will not be sold in the market nor will they be placed
for the benefit of Qualifying Shareholders who do not apply under
the Open Offer.
Overseas Shareholders
Certain Overseas Shareholders may not be permitted to subscribe
for Open Offer Shares pursuant to the Open Offer and should refer
to paragraph 6 of Part 3 of the Circular.
CREST instructions
Application has been made for the Open Offer Entitlements and
Excess Open Offer Entitlements for Qualifying CREST Shareholders to
be admitted to CREST. It is expected that the Open Offer
Entitlements will be admitted to CREST on 22 October 2018. The
Excess Open Offer Entitlements will also be enabled for settlement
in CREST on 22 October 2018. Applications through the CREST system
will only be made by the Qualifying Shareholder originally entitled
or by a person entitled by virtue of a bona fide market claim.
5 Admission, settlement and dealings
Application will be made to the London Stock Exchange for the
Fundraising Shares, to be admitted to trading on AIM. It is
expected that First Admission and commencement of dealings in Open
Offer Shares will take place at 8.00 a.m. on 6 November 2018.
Further information in respect of settlement and dealings in the
Open Offer Shares is set out in paragraph 7 of Part 3 of the
Circular.
Upon Second Admission:
-- the Subscription Shares will represent approximately 5.8 per
cent. of the Enlarged Share Capital; and
-- the Placing Shares will represent approximately 21.6 per
cent. of the Enlarged Share Capital; and
-- the Open Offer Shares will represent approximately 2.8 per
cent. of the Enlarged Share Capital.
The Fundraising Shares will represent, in aggregate,
approximately 43.2 per cent. of the Company's Existing Ordinary
Shares and approximately 30.2 per cent. of the Enlarged Share
Capital.
The Fundraising Shares will, upon Admission, rank pari passu
with the Existing Ordinary Shares, including the right to receive
dividends and other distributions declared following Admission. The
Fundraising Shares are not being made available to the public and
are not being offered or sold in any jurisdiction where it would be
unlawful to do so.
6 Taxation
6.1 Introduction
The following comments do not constitute tax advice and are
intended only as a general guide to current UK law and HMRC's
published practice as at the date of the Circular (both of which
are subject to change at any time, possibly with retrospective
effect). They relate only to certain limited aspects of the UK tax
treatment of Shareholders and are intended to apply only to
Shareholders who for UK tax purposes are resident in and, in the
case of individuals, domiciled in the UK and to whom "split year"
treatment does not apply. The comments apply only to Shareholders
who are the absolute beneficial owners of their Ordinary Shares and
the dividends payable on them and who hold their Ordinary Shares as
investments (and not as securities to be realised in the course of
a trade).
The comments below may not apply to certain categories of
Shareholder such as dealers in securities, insurance companies and
collective investment schemes, Shareholders who are exempt from
taxation (or who hold their Ordinary Shares through an Individual
Savings Account) and Shareholders who have (or are deemed to have)
acquired their Ordinary Shares by virtue of any office or
employment. Such persons may be subject to special rules.
Shareholders who are in any doubt as to their tax position or
who are subject to tax in a jurisdiction other than the UK are
strongly advised to consult their own professional advisers.
6.2 UK taxation of chargeable gains
Ordinary Shares acquired pursuant to the Open Offer
As a matter of UK tax law, the acquisition of Open Offer Shares
pursuant to the Open Offer may not, strictly speaking, constitute a
reorganisation of share capital for the purposes of UK taxation of
chargeable gains. The published practice of HMRC to date has been
to treat any subscription of shares by an existing Shareholder
which is equal to or less than the Shareholder's minimum
entitlement pursuant to the terms of an open offer as a
reorganisation under the provisions of section 126 Taxation of
Chargeable Gains Act 1992. It is not, however, certain that HMRC
will apply this practice in circumstances where an open offer is
not made to all Shareholders. HMRC's treatment of the Open Offer
cannot therefore be guaranteed and specific confirmation has not
been requested in relation to the Open Offer.
To the extent that the acquisition of the Open Offer Shares
pursuant to the Open Offer is treated as a reorganisation of the
share capital of the Company for the purposes of UK taxation of
chargeable gains, the Open Offer Shares issued to a Shareholder
will be treated as the same asset as, and as having been acquired
at the same time as, the Shareholder's existing holding of Ordinary
Shares. The price paid for the Open Offer Shares will be added to
the base cost of Shareholder's existing holding of Ordinary Shares
for the purpose of calculating any chargeable gain or allowable
loss on a subsequent disposal.
To the extent that, under the Excess Application Facility, Open
Offer Shares are acquired in excess of the Shareholder's Open Offer
Entitlement, the acquisition will not be treated as a
reorganisation of the share capital of the Company for the purposes
of UK taxation or chargeable gains.
If, or to the extent that, the acquisition of Open Offer Shares
under the Open Offer is not regarded as a reorganisation of the
share capital of the Company for the purposes of UK taxation of
chargeable gains, the Open Offer Shares would generally be treated
as having been acquired as part of a separate acquisition of
shares, with the price paid for the Open Offer Shares being taken
into account as their base cost.
Disposals of Ordinary Shares
A disposal or deemed disposal of Ordinary Shares by a UK
resident Shareholder may, depending on the Shareholder's personal
circumstances and subject to any exemption or relief, give rise to
a chargeable gain (or allowable loss) for the purposes of UK
taxation of chargeable gains.
6.3 UK taxation of dividends
Withholding tax
The Company is not required to withhold UK tax when paying a
dividend on the Ordinary Shares.
UK resident individual Shareholders
Since 6 April 2018, an individual shareholder who is resident
for tax purposes in the UK is entitled to an annual tax-free
allowance of GBP2,000 of dividend income (GBP5,000 for the years
ended 5 April 2017 and 2018). To the extent that dividend income
exceeds the annual tax free dividend allowance, tax will be imposed
at the rates of:
(a) 7.5 per cent. to the extent falling within the basic rate;
(b) 32.5 per cent. to the extent falling within the higher rate; and
(c) 38.1 per cent. to the extent falling within the additional rate.
Shareholders who are in any doubt as to how the new rules for
taxation of dividends will affect them are strongly advised to
consult their own professional advisers.
UK resident Shareholders within the charge to UK corporation
tax
Shareholders within the charge to UK corporation tax which are
"small companies" (for the purposes of United Kingdom taxation of
dividends) and who receive a dividend from a company resident in
the UK or a qualifying territory (a jurisdiction with which the UK
has a double tax agreement containing a non-discrimination article)
will not generally be subject to UK corporation tax on dividends
paid by the Company on the Ordinary Shares.
Other Shareholders within the charge to UK corporation tax will
not be subject to corporation tax on dividends paid by the Company
on the Ordinary Shares so long as the dividends fall within an
exempt class and certain conditions are met. Although it is likely
that dividends paid by the Company on the Ordinary Shares would
qualify for exemption from corporation tax, it should be noted that
the exemption is not comprehensive and is subject to anti avoidance
rules. Shareholders should therefore consult their own professional
advisers where necessary.
6.4 UK stamp duty and stamp duty reserve tax
No UK stamp duty or stamp duty reserve tax will be payable on
the issue of Fundraising Shares pursuant to the Open Offer, the
Subscription or the Placing.
Provided that the Fundraising Shares are admitted to trading on
a recognised growth market (which includes admission to trading on
AIM) and are not listed on any market or exchange, transfers of
Fundraising Shares will not be subject to UK stamp duty or stamp
duty reserve tax. Any agreement to transfer, or the transfer of,
Fundraising Shares (or any other Ordinary Shares) at a time when
these conditions are not met may, depending on the circumstances,
be subject to UK stamp duty or stamp duty reserve tax, generally at
the rate of 0.5 per cent. of the consideration given (rounded up to
the nearest GBP5 in the case of stamp duty).
6.5 EIS/VCT
On issue, the Fundraising Shares will not be treated as either
"listed" or "quoted" securities for relevant tax purposes. Provided
that the Company remains one which does not have any of its shares
quoted on a recognised stock exchange (which for these purposes
does not include AIM), the Fundraising Shares should continue to be
treated as unquoted securities.
The following information is based upon the laws and practice
currently in force in the UK and may not apply to persons who do
not hold their Ordinary Shares as investments.
The Company has in the past obtained assurance from HMRC that
shares in the Company represented a qualifying investment for a VCT
and were capable of qualifying for EIS tax reliefs. The Company has
applied for advance assurance from HMRC that its shares continue to
qualify for VCT and EIS tax reliefs and whilst this assurance has
been obtained in respect of EIS, the Company has been informed that
as regards VCT relief, HMRC no longer consider VCT advance
assurance applications where the details of the potential
qualifying holding are not given: the company must have engaged
with the VCT and provide draft documents regarding the terms of the
proposed investment.
The Directors consider that the Company has not received any
investments under the EIS in the 12 months immediately prior to the
Fundraising and is considered as a knowledge-intensive company. In
November 2017 the government announced that the annual investment
limit for knowledge-intensive companies would be increased to GBP10
million of investment per year (GBP20 million in total over the
lifetime of the Company and its subsidiaries). The Fundraising will
however limit funds up to GBP6.1 million from VCTs, investors
seeking EIS reliefs and any other State aid risk capital investors
in order not to exceed the remaining headroom that the Company has
available to raise through risk capital schemes.
Companies can generally raise up to GBP5 million under the
combined VCT, EIS, SEIS, social investment tax relief or any other
State aid risk capital investment in any 12 month period. Increased
limits apply to knowledge intensive companies as noted above.
Shares issued to a VCT using "protected money" do not count towards
the total. "Protected money" is funds raised by VCTs prior to 5
April 2007 or derived from the investment of such money by the
VCT.
These details are intended only as a general guide to the
current tax position under UK taxation law and are not intended to
be exhaustive. Investors who are in any doubt as to their tax
position or who are subject to a tax jurisdiction, other than the
UK, are strongly advised to consult their professional
advisers.
EIS
The Company intends to operate so that it qualifies for the
taxation advantages offered under EIS. The main advantages are as
follows:
(i) Individuals can claim tax relief of 30 per cent. of the
amount invested in the Company against their UK income tax
liability, (provided they have a sufficient tax liability to cover
this amount), thus reducing the effective cost of their investment
to 70 pence for each GBP1 invested. However, there is an EIS
subscription limit of GBP2,000,000 in each tax year (provided that
at least GBP1 million of this is invested in knowledge intensive
companies) and, to retain the relief, the First Fundraising Shares
must be held for at least three years.
(ii) UK investors (individuals or certain trustees) may defer a
chargeable gain by investing the amount of the gain in the Company.
There is no limit to the level of investment for this purpose and,
therefore, to the amount of gain which may be deferred in this way.
Note that the deferred gain will come back into charge when the EIS
shares are disposed of, or if the Company ceases to qualify as an
EIS company within the three year qualifying period.
(iii) There is no tax on capital gains made upon disposal after
the three year qualifying period ("Qualifying Period") of shares in
an EIS qualifying company on which income tax relief has been given
and not withdrawn.
(iv) If a loss is made on disposal of the Fundraising Shares at
any time, the amount of the loss (after allowing for any income tax
relief initially obtained) can be set off against either the
individual's gains for the tax year in which the disposal occurs,
or, if not so used, against capital gains of a subsequent tax year,
or against the individual's income of the tax year of the disposal
or of the previous tax year.
(v) Provided a Shareholder has owned Fundraising Shares in the
Company for at least two years and certain conditions are met at
the time of transfer, 100 per cent. business property relief will
generally be available, which reduces the inheritance tax liability
on the transfer of First Fundraising Shares to nil.
The amount of relief an investor may gain from an EIS investment
in the Company will depend on the investor's individual
circumstances.
Changes to the legislation that came into effect from 18
November 2015 now mean that an individual can only be eligible for
EIS relief on the purchase of shares if all shares held by that
investor are either risk based shares (that is where the funds
raised will be used for the growth and development of a qualifying
trade) or subscriber shares.
Qualifying Period
In order to retain the EIS reliefs, an investor must hold their
shares for at least three years. A sale or other disposal (other
than an inter-spousal gift or a transfer on death) will result in
any income tax relief that has been claimed being clawed back by
HMRC. Additionally, any capital gains deferred will come back into
charge and the capital gains tax exemption will be lost. It is the
investor's responsibility to disclose a disposal to HMRC.
Additionally, if the Company ceases to meet certain qualifying
conditions within three years from the date of the share issue, the
tax reliefs will be lost. The end of the 3 year qualifying period
will be shown as the "Termination Date" on the EIS3 certificate
which the Company will issue to investors following formal approval
of the share issue by HMRC.
Advance Assurance of EIS Status
In order for investors to claim EIS reliefs relating to their
shares in the Company, the Company and its subsidiaries have to
meet a number of rules, including those regarding their business
activities, the amount of money the Company can raise, the risk to
capital condition, how and when that money must be employed for the
purposes of the business activities, and the age of the Company and
its subsidiaries from the date of their first commercial sale. The
Company must satisfy HMRC that it and its subsidiaries meet the
various requirements and that the Company is therefore a qualifying
company.
VCT
The Company has applied for assurance from HMRC that the
Fundraising Shares will be 'eligible shares' for the purposes of
investment by VCTs. The Company has been informed that HMRC no
longer considers VCT advance assurance applications where the
details of the potential qualifying holding are not given: the
Company must have engaged with the VCT and provide draft documents
regarding the terms of the proposed investment.
The status of the Fundraising Shares as a qualifying holding for
VCTs will be conditional, inter alia, upon the Company continuing
to satisfy the relevant requirements. Although the Company
currently expects to satisfy the relevant conditions for VCT
investment, neither the Directors nor the Company gives any
warranty or undertaking that relief will be available in respect of
any investment in the First Fundraising Shares pursuant to the
Circular, nor do they warrant or undertake that the Company will
conduct its activities in a way that qualifies for or preserves its
status.
As the rules governing EIS and VCT reliefs are complex and
interrelated with other legislation, if Shareholders and potential
shareholders are in any doubt as to their tax position, require
more detailed information than the general outline above, or are
subject to tax in a jurisdiction other than the United Kingdom,
they should consult their professional adviser.
7 Directors' Shareholdings
The beneficial and non-beneficial interests of the Directors in
the Existing Ordinary Shares as at the date of the Circular and
following the Fundraising are set out in the table below:
Certain of the Directors have agreed to acquire Fundraising
Shares as set out in the table below:
Number Percentage Shares acquired Resultant Percentage
of Existing of Existing in the Fundraising Holding of Existing
Ordinary Ordinary inc. Open Ordinary Share
Shares Share capital Offer capital
Director
John Cronin 2,413,467 1.88% 1,000,000 3,413,467 1.85%
Harry Berry 624,219 0.49% 200,000 824,219 0.45%
Heather Peacock 178,255 0.14% 100,000 278,255 0.15%
David Johns-Powell 10,083,490 7.84% 7,500,000 17,583,490 9.55%
Peter Hutton 167,259 0.13% - 167,259 0.09%
Paul Ratcliff 162,734 0.13% - 162,734 0.09%
------------- --------------- -------------------- ----------- ----------------
TOTAL 13,629,425 10.60% 8,800,000 22,429,425 12.18%
8 General Meeting
A notice convening the GM to be held at the Company's registered
office, Merlin Place, Milton Road, Cambridge, CB4 0DP at 2 p.m. on
5 November 2018 is set out at the end of the Circular. The
Resolutions to be proposed at that meeting are summarised below.
Resolutions 1 and 2 are to be passed as ordinary resolutions. This
means that for each of Resolutions 1 and 2 to be passed, more than
half the votes cast must be in favour of that resolution.
Resolutions 3 and 4 are to be proposed as special resolutions. This
means that in order for Resolution 3 and 4 to be passed, at least
three-quarters of the votes cast must be in favour of those
resolutions:
-- Resolution 1 - allotment of the Fundraising Shares,
Resolution 1 empowers the Directors to allot and issue the
Fundraising Shares and the Corporate Finance Warrants.
-- Resolution 2 - allotment of further Ordinary Shares
Resolution 2 empowers the Directors to allot, or where
appropriate, issue Ordinary Shares up to an aggregate nominal
amount representing one third of the Enlarged Share Capital
(separate from the Fundraising).
-- Resolution 3 - non pre-emptive allotment of the Fundraising Shares
Resolution 3 empowers the Directors to allot and issue the
Fundraising Shares and the Corporate Finance Warrants for cash
otherwise than in accordance with the statutory pre-emption
provisions set out in the Companies Act.
-- Resolution 4 - non pre-emptive allotment of further Ordinary Shares
Resolution 4 empowers the Directors to allot and issue Ordinary
Shares for cash (separate from the Fundraising) otherwise than in
accordance with the statutory pre-emption provisions set out in the
Companies Act up to an aggregate nominal amount representing 10 per
cent. of the Enlarged Share Capital.
9 Action to be taken
General Meeting
Please check that you have received with the Circular:
-- a Form of Proxy for use in respect of the General Meeting; and
-- if you are a Shareholder based in the United Kingdom, a
reply-paid envelope for use in conjunction with the return of the
Form of Proxy.
Whether or not you propose to attend the General Meeting in
person, you are strongly encouraged to complete, sign and return
your Form of Proxy in accordance with the instructions printed
thereon as soon as possible, but in any event so as to be received,
by post or, during normal business hours only, by hand, to Share
Registrars, The Courtyard, 17 West Street, Farnham, Surrey, GU9
7DR, by no later than 2.00 p.m. on 1 November 2018 (or, in the case
of an adjournment of the General Meeting, not later than 48 hours
before the time fixed for the holding of the adjourned meeting
(excluding any part of a day that is not a Business Day)).
If you hold your shares in the Company in uncertificated form
(that is, in CREST) you may vote using the CREST Proxy Voting
service in accordance with the procedures set out in the CREST
Manual (please also refer to the accompanying notes to the Notice
of General Meeting set out at the end of the Circular). Proxies
submitted via CREST must be received by the Company's agent (Share
Registrars, The Courtyard, 17 West Street, Farnham, Surrey, GU9
7DR) by no later than 2.00 p.m. on 1 November 2018 (or, in the case
of an adjournment, not later than 48 hours before the time fixed
for the holding of the adjourned meeting (excluding any part of a
day that is not a Business Day)).
Appointing a proxy in accordance with the instructions set out
above will enable your vote to be counted at the General Meeting in
the event of your absence. The completion and return of the Form of
Proxy or the use of the CREST Proxy Voting service will not prevent
you from attending and voting at the General Meeting, or any
adjournment thereof, in person should you wish to do so.
Open Offer
The latest time for application under the Open Offer to be
received is 11.00 a.m. on 5 November 2018. The procedure for
application and payment depends on whether, at the time at which
application and payment is made, you have an Application Form in
respect of your Open Offer Entitlements or have Open Offer
Entitlements credited to your stock account in CREST in respect of
such entitlement. The procedures for application and payment are
set out in Part 3 of the Circular.
If you are a Qualifying Non-CREST Shareholder you will have
received an Application Form which gives details of your
entitlement under the Open Offer (as shown by the number of Open
Offer Entitlements allocated to you). If you wish to apply for Open
Offer Shares under the Open Offer (whether in respect of your Open
Offer Entitlement or both your Open Offer Entitlement and any
Excess Open Offer Entitlement), you should complete the
accompanying Application Form in accordance with the procedure for
application set out in Part 3 of the Circular. Shareholders are
advised to return the Application Form using the enclosed
reply-paid envelope, which can also be used for return of completed
Forms of Proxy.
If you are a Qualifying CREST Shareholder and do not hold any
Existing Ordinary Shares in certificated form, no Application Form
is enclosed with the Circular and you will receive a credit to your
appropriate stock account in CREST in respect of the Open Offer
Entitlements representing your entitlement under the Open Offer
except (subject to certain conditions) if you are an Overseas
Shareholder who has a registered address in, or is a resident in or
a citizen of a Restricted Jurisdiction. Applications by Qualifying
CREST Shareholders for Excess Open Offer Entitlements in excess of
their Open Offer Entitlements should be made in accordance with the
procedures set out in Part 3 of the Circular, unless you are an
Overseas Shareholder in which event, applications should be made in
accordance with the procedures set out in Part 3 of the Circular.
Qualifying CREST Shareholders who are CREST sponsored members
should refer to their CREST sponsors regarding the action to be
taken in connection with the Circular and the Open Offer.
If you are in any doubt as to what action you should take, you
should immediately seek your own personal financial advice from
your stockbroker, bank manager, solicitor, accountant or other
independent professional adviser duly authorised under the FSMA if
you are resident in the United Kingdom or, if not, from another
appropriately authorised independent financial adviser.
10 Recommendation
The Directors believe that the Resolutions to be proposed at the
General Meeting are in the best interests of the Company and
Shareholders as a whole and unanimously recommend that you vote in
favour of the Resolutions. Should the Fundraising (or any part of
it) not proceed for any reason, the Company would need to find
alternative funding and would face future uncertainty. Each of the
Directors intend to vote in favour of the Resolutions in respect
of, in aggregate, 13,629,425 Ordinary Shares, representing
approximately 10.60 per cent. of the Existing Ordinary Shares in
issue on 18 October 2018 (being the last Business Day prior to
publication of the Circular).
FUNDRAISING STATISTICS
Number of Existing Ordinary Shares 128,574,049
Issue Price 10 pence
Number of First Fundraising Shares being
issued pursuant to the Placing 4,460,000
Number of Second Fundraising Shares being
issued pursuant to the Placing 35,327,391
Number of Placing Shares being issued pursuant
to the Placing 39,787,391
Number of Subscription Shares being issued
pursuant to the Subscription 10,665,000
Maximum number of Open Offer Shares being
issued pursuant to the Open Offer 5,142,961
Maximum total number of Fundraising Shares
being issued pursuant to the Fundraising 55,595,352
Number of Placing Shares as a percentage 21.6 per cent.
of the Enlarged Share Capital
Number of Subscription Shares as a percentage 5.8 per cent.
of the Enlarged Share Capital
Number of Open Offer Shares as a percentage 2.8 per cent.
of the Enlarged Share Capital(2)
Number of Fundraising Shares as a percentage 30.2 per cent.
of the Enlarged Share Capital(2)
Enlarged Share Capital(1 / 2) 184,169,401
Gross proceeds of the Placing GBP4.0 million
Gross proceeds of the Subscription GBP1.1 million
Maximum gross proceeds of the Open Offer GBP0.5 million
Maximum gross proceeds of the Fundraising GBP5.6 million
Market capitalisation of the Company on GBP18.4 million
Admission at the Issue Price(1 / 2)
ISIN of the Existing Ordinary Shares GB00BF93WP34
SEDOL of the Existing Ordinary Shares BF93WP3
ISIN of the Open Offer Entitlements GB00BF7L9478
ISIN of the Excess Open Offer Entitlements GB00BF7L9361
Notes
1. Assuming that, no Ordinary Shares are issued prior to the
date of the General Meeting.
2. Assuming that all Open Offer Shares are issued.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Record Date for entitlements under 6.00 p.m. on 18 October
the Open Offer 2018
Announcement of the Fundraising 7.00 a.m. on 19 October
2018
Existing Ordinary Shares marked 'ex-entitlement' 8.00 a.m. on 19 October
by the London Stock Exchange 2018
Publication and posting date of the 19 October 2018
Circular, the Form of Proxy and,
to Qualifying Non-CREST Shareholders
only, the Application Form
Open Offer Entitlements and Excess 22 October 2018
CREST Open Offer Entitlements credited
to CREST stock accounts of Qualifying
CREST Shareholders
Latest recommended time and date 4.30 p.m. on 30 October
for requesting withdrawal of Open 2018
Offer Entitlements and Excess CREST
Open Offer Entitlements from CREST
Latest time and date for depositing 3.00 p.m. on 31 October
Open Offer Entitlements and Excess 2018
CREST Open Offer Entitlements into
CREST
Latest time and date for splitting 3.00 p.m. on 1 November
Application Forms (to satisfy bona 2018
fide market claims only)
Latest time and date for receipt 2 p.m. on 1 November 2018
of Forms of Proxy for the General
Meeting
Latest time and date for receipt 11.00 a.m. on 5 November
of completed Application Forms and 2018
payment in full under the Open Offer
or settlement of relevant CREST instructions
(as appropriate)
General Meeting 2 p.m. on 5 November 2018
Results of the General Meeting and 5 November 2018
Fundraising expected to be announced
Admission and dealings in First Fundraising 8.00 a.m. on 6 November
Shares expected to commence on AIM 2018
CREST accounts credited with the 8.00 a.m. on 6 November
First Funding Shares and Second Funding 2018
Shares
Admission and dealings in Second 8.00 a.m. on 7 November
Fundraising Shares expected to commence 2018
on AIM (and CREST accounts credited)
Anticipated date of despatch for by 14 November 2018
share certificates in respect of
First Fundraising Shares
Anticipated date of despatch for by 15 November 2018
share certificates in respect of
Second Fundraising Shares
DEFINITIONS
The following definitions apply throughout this announcement and
in the accompanying Form of Proxy and (for Qualifying Non-CREST
Shareholders only) the Application Form unless the context requires
otherwise:
"AIM" the market of that name operated by the
London Stock Exchange;
"AIM Rules" together, the AIM Rules for Companies and
the AIM Rules for Nominated Advisers;
"AMI" Advanced Metering Infrastructure;
"Application Form" the personalised application form which
accompanies the Circular (where appropriate)
on which Qualifying Non-CREST Shareholders
(other than certain Overseas Shareholders)
may apply for Open Offer Shares under the
Open Offer;
"Board" or "Directors" the directors of CyanConnode whose names
are set out on page 4 of the Circular;
"Business Day" any day on which banks are usually open
in England and Wales for the transaction
of business, other than a Saturday, Sunday
or public holiday;
"Certificate" a certificate issued under section 204 of
the Income Tax Act 2007 by the Company to
certain investors who have requested EIS
relief;
"Circular" The circular posted to Shareholders on 19
October 2018;
"Companies Act" the Companies Act 2006 (as amended);
"Company" or "CyanConnode" CyanConnode Holdings plc, a company incorporated
and registered in England and Wales with
company number 04554942;
"Corporate Finance the 895,132 warrants, created under the
Warrants" corporate finance warrant instrument, to
subscribe for Ordinary Shares during the
six months following Admission (on the basis
of one Corporate Finance Warrant for one
Ordinary Share) exercisable at 12 pence
per Ordinary Share (being a 20 per cent.
premium to the Issue Price);
"CREST" the computerised settlement system (as defined
in the CREST Regulations) operated by Euroclear;
"CREST Manual" the rules governing the operation of CREST
consisting of the CREST Reference Manual,
the CREST International Manual, the CREST
Central Counterpart Service Manual, the
CREST Rules, the CREST Courier and Sorting
Services Operations Manual, the Daily Timetable,
the CREST Application Procedures and the
CREST Glossary of Terms (as updated from
time to time);
"CREST payment" shall have the meaning given in the CREST
Manual;
"CREST sponsor" a CREST participant admitted to CREST as
a CREST sponsor;
"CREST sponsored a CREST member admitted to CREST as a sponsored
member" member;
"CyanConnode Group" the group of companies of which the Company
and its subsidiary undertakings are members;
"EIS" Enterprise Investment Scheme under the provisions
of Part 5 of the UK Income Tax Act 2007
(as amended);
"Enlarged Share the Company's issued share capital immediately
Capital" after the completion of the Fundraising;
"Excess Application the arrangement pursuant to which Qualifying
Facility" Shareholders may apply for any number of
Open Offer Shares in excess of their Open
Offer Entitlement provided that they have
agreed to take up their Open Offer Entitlement
in full;
"Excess CREST Open in respect of each Qualifying CREST Shareholder,
Offer Entitlement" the entitlement (in addition to his/her
Open Offer Entitlement) to apply for Open
Offer Shares pursuant to the Excess Application
Facility, which is conditional on him/her
taking up his/her Open Offer Entitlement
in full;
"Excess Open Offer in respect of each Qualifying Shareholder,
Entitlement" the entitlement (in addition to his/her
Open Offer Entitlement) to apply for Open
Offer Shares pursuant to the Excess Application
Facility, which is conditional on him/her
taking up his/her Open Offer Entitlement
in full;
"Existing Ordinary the existing Ordinary Shares at the 19 October
Shares" 2018;
"finnCap Ltd" or finnCap Ltd, the nominated adviser and broker
"finnCap" to CyanConnode for the purposes of the AIM
Rules;
"First Admission" admission of the First Fundraising Shares
to trading on AIM becoming effective in
accordance with the AIM Rules;
"First Fundraising those 4,460,000 Placing Shares and 8,140,000
Shares" Subscription Shares to be issued by the
Company to Shareholders seeking to claim
EIS/VCT relief, and up to 5,142,961 Open
Offer Shares;
"First Placing" the conditional placing of certain of the
First Fundraising Shares pursuant to, amongst
other things, the terms and conditions set
out in the Placing Agreement;
"Form of Proxy" the form of proxy accompanying the Circular
for use by Shareholders in connection with
the GM;
"FSMA" the Financial Services and Markets Act 2000;
"Fundraising" together, the Placing, the Subscription
and the Open Offer;
"Fundraising Resolutions" together, the resolutions to grant the Directors
authority to allot the Fundraising Shares
and the related disapplication of statutory
pre-emption rights, to be proposed at the
General Meeting and set out in the Notice
as the resolutions numbered 1 and 3;
"Fundraising Shares" together, the 39,787,391 Placing Shares,
the 10,665,000 Subscription Shares and up
to 5,142,961 Open Offer Shares;
"GM" or "General the General Meeting of CyanConnode to be
Meeting" held at the Company's registered office,
Merlin Place, Milton Road, Cambridge, CB4
0DP at 2.00 p.m. on 5 November 2018, notice
of which is set out in Circular;
"HMRC" Her Majesty's Revenue & Customs;
"Issue Price" 10 pence per Ordinary Share;
"London Stock Exchange" London Stock Exchange plc;
"Notice" the notice of GM which is set out in the
Circular;
"Open Offer" the conditional invitation made by the Company
to Qualifying Shareholders to subscribe
for the Open Offer Shares at the Issue Price
on the terms and subject to the conditions
set out in the Circular and, in the case
of Qualifying Non-CREST Shareholders, in
the Application Form;
"Open Offer Entitlement" the pro rata entitlement of a Qualifying
Shareholder, pursuant to the Open Offer,
to apply to subscribe for 1 Open Offer Shares
for every 25 Existing Ordinary Shares registered
in their name as at the Record Date;
"Open Offer Shares" up to 5,142,961 new Ordinary Shares to be
issued by the Company pursuant to the Open
Offer subject, inter alia, to the passing
of the Fundraising Resolutions;
"Ordinary Shares" the ordinary shares of GBP0.02 each in the
capital of the Company;
"Overseas Shareholders" Shareholders with registered addresses in,
or who are citizens, residents or nationals
of, jurisdictions outside the UK;
"Placing Agreement" the conditional placing agreement dated
19 October 2018 between finnCap, Arden and
the Company, highlights of which are set
out in the letter from the Chairman;
"Placing" the proposed placing by finnCap and Arden,
as joint agents for the Company, of the
Placing Shares at the Issue Price on the
terms of the Placing Agreement;
"Placing Shares" 39,787,391 Ordinary Shares to be issued
pursuant to the Placing;
"Qualifying CREST Qualifying Shareholders holding Existing
Shareholders" Ordinary Shares which, on the register of
members of the Company on the Record Date,
are in uncertified form;
"Qualifying Non-CREST Qualifying Shareholders holding Existing
Shareholders" Ordinary Shares which, on the register of
members of the Company on the Record Date,
are in certificated form;
"Qualifying Shareholders" holders of Existing Ordinary Shares on the
register of members of the Company at the
close of business on the Record Date with
the exclusion (subject to exemptions) of
persons with a registered address or located
or resident in a Restricted Jurisdiction;
"Record Date" the record date for the Open Offer, being
6.00 p.m. on 18 October 2018;
"Receiving Agent" Share Registrars Limited, The Courtyard,
17 West Street, Farnham, Surrey, GU9 7DR;
"Registrars" Share Registrars Limited, The Courtyard,
17 West Street, Farnham, Surrey, GU9 7DR;
"Resolutions" the resolutions to be proposed at the GM,
as set out in the Notice;
"Restricted Jurisdiction" any jurisdiction where local laws or regulations
may result in a significant risk of civil,
regulatory or criminal exposure for the
Company if information or documentation
concerning the Fundraising is sent or made
available to Shareholders in that jurisdiction
including, without limitation, the United
States, Canada, Australia, the Republic
of South Africa and Japan;
"Second Admission" admission of the Second Fundraising Shares
to trading on AIM becoming effective in
accordance with the AIM Rules;
"Second Fundraising the 35,327,391 Placing Shares and 2,525,000
Shares" Subscription Shares;
"Second Placing" the conditional placing of the Second Fundraising
Shares pursuant to, amongst other things,
the terms and conditions set out in the
Placing Agreement;
"Securities Act" the US Securities Act of 1933, as amended
from time to time and the rules and regulations
promulgated thereunder;
"Shareholders" holders of Existing Ordinary Shares in CyanConnode
at the 19 October 2018;
"Share Option Scheme" the CyanConnode Holdings plc Enterprise
Management Incentive Scheme;
"Subscribers" investors investing in the Fundraising under
the Subscription;
"Subscription" the subscription for Subscription Shares
by the Subscribers at the Issue Price pursuant
to the Subscription Agreements;
"Subscription Agreements" the share subscription agreements between
the Subscribers and the Company;
"Subscription Shares" 10,665,000 Ordinary Shares to be issued
to the Subscribers pursuant to the Subscription;
"UK" or "the United the United Kingdom of Great Britain and
Kingdom" Northern Ireland;
"uncertificated recorded on the relevant register of other
form" record of the share or other security confirmed
as being held in uncertificated form in
CREST, and title to which, by virtue of
the CREST Regulations, may be transferred
by way of CREST;
"United States" the United States of America, its territories
and possessions, any State of the United
States and the District of Columbia;
"USE" unmatched stock event; and
"VCT" a company which is, or which is seeking
to become, approved as a venture capital
trust under the provisions of Part 6 of
the Income Tax Act 2007.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCEKLBFVBFZFBE
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October 19, 2018 02:00 ET (06:00 GMT)
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