TIDMILX
RNS Number : 5776N
ILX Group PLC
10 September 2013
10 September 2013
ILX GROUP PLC
(AIM: ILX)
PROPOSED ACQUISITION OF PROGILITY PTY LTD FOR GBP15.97
MILLION
-- Proposed acquisition of Progility Pty Ltd
-- Proposed approval of a waiver of the obligations under Rule 9 of the City Code
-- Proposed change of name to Progility plc
-- Notice of General Meeting
-- Admission of the Enlarged Share Capital to trading on AIM
ILX, the training, consultancy and recruitment group, proposes
to transform the scope and scale of the Group's activities in
project management, consulting and implementation and capitalise on
its knowledge and experience in this sector through the acquisition
of Progility Pty Ltd, a communications solutions services
provider.
Highlights:
-- Progility Pty Ltd operates a communication systems
integration business which designs, implements and maintains
solutions for medium and large enterprises with a focus on the
rail, port, oil and gas, power and water and healthcare industries
in Australia and on the mining industry globally.
-- Total consideration for the proposed acquisition of Progility
Pty Ltd is GBP15.97 million, to be satisfied by the issue of
159,733,504 new Ordinary Shares in the Company. In the year ended
30 June 2013, Progility Pty Ltd reported revenue of A$41.2m (2012:
A$31.6m).
-- The proposed acquisition strengthens the Group by:
- adding systems integration capability as well as consulting
skills and solutions in the communications sector;
- providing opportunities for the existing training, consulting
and recruitment businesses; and
- reducing dependence on training, where revenues have been
under pressure for some time.
-- The Enlarged Group would have four pillars of revenue:
Consulting, Training, Recruitment and Technology Solutions,
providing an integrated range of value added services to customers
at different stages of the project management life cycle.
-- Proposed change of name of the Company to Progility plc
reflects the significant changes (both recent and proposed) to the
management and strategic direction of the Enlarged Group.
-- The proposed acquisition constitutes a related party
transaction and reverse takeover under the AIM Rules.
-- Wayne Bos is a director of both ILX and Progility Pty Ltd and
has not taken part in the Board's deliberations concerning the
acquisition. The Independent Directors are seeking Shareholders'
approval at the General Meeting on 3 October 2013 to approve the
Proposals
-- Waiver of obligations on the Concert Party under Rule 9 of
the City Code, is being sought subject to approval at the General
Meeting
-- As the proposed acquisition will constitute a reverse
takeover under the AIM Rules, an Admission Document containing
details of the acquisition, other proposals detailed below and a
notice of General Meeting will be posted to Shareholders today and
available to view on the Company's website www.ilxgroup.com
shortly
-- Admission of the Enlarged Share Capital to trading on AIM
will become effective on or around 4 October 2013, subject to
approval of the Proposals at the General Meeting
The Independent Directors of ILX said:
"We are very pleased to recommend the proposed acquisition of
Progility Pty Ltd because it will transform the scope and scale of
ILX, adding further consulting, systems integration skills and
solutions in the communications and technology sectors, and
providing new opportunities for our existing training, consulting
and recruitment businesses. In addition it should reduce the
Group's dependence on its training business, whose revenues have
been under pressure for some time.
"We believe the Enlarged Group will provide the executive team
with a strong platform from which to connect with our customers at
different stages in the project management life cycle to deliver
growth and shareholder value."
Wayne Bos, Executive Chairman and Interim CEO of ILX and
Chairman of Progility Pty Ltd, said:
"Both of these companies have energetic, motivated management
and combining the two will create a dynamic project management
eco-system with scale and flexibility, which is important to new
and existing customers. From this new platform, we intend to grow
the Group both organically and by selective acquisition using our
AIM listing to expand and access capital where appropriate."
Enquiries:
On behalf of the Independent Directors of ILX Group plc +44 (0)
20 7371 4444
Donald Stewart / John McIntosh
Wayne Bos +44 (0) 7837 798 258
Executive Chairman and Interim CEO of ILX and Chairman of
Progility
Spark Advisory Partners (Nomad) +44 (0) 20 3368 3551
Mark Brady / Sean Wyndham-Quin
WH Ireland (Broker) +44 (0) 20 7220 1666
Adrian Hadden / Nicholas Field
Tavistock Communications +44 (0) 20 7920 3150
Matt Ridsdale / Niall Walsh
Introduction
The Company has today announced that it has entered into an
Acquisition Agreement conditional, inter alia, on Admission, to
acquire the entire issued share capital of Progility Pty
Limited.
The consideration will be satisfied by the issue of the
Consideration Shares credited as fully paid. Based on the Issue
Price, the Acquisition values Progility's equity at GBP15.97
million. Further details of the terms and conditions of the
Acquisition are set out below under the heading "Principal terms of
the Acquisition".
The Acquisition will constitute both a related party transaction
and a reverse takeover under the AIM Rules.
Wayne Bos is a director of both ILX and Progility. In addition
Praxis, as trustee of the DNY Trust, a trust of which Wayne Bos is
a discretionary beneficiary, is a significant shareholder in both
ILX and Progility.
Accordingly Wayne Bos has not taken part in any of the Board's
deliberations concerning the Acquisition and the Independent
Directors are seeking Shareholders' approval for the Acquisition at
the General Meeting.
Following completion of the Acquisition and the issue of the
Consideration Shares, certain Shareholders of the Enlarged Group
who are deemed to be acting in concert (the "Concert Party") will
hold 171,673,504 Ordinary Shares, representing 85.98 per cent. of
the Enlarged Share Capital and will have the potential to hold a
further 8,000,000 New Ordinary Shares pursuant to (a) the exercise
by DNY Investments Limited of its conversion rights under the
Convertible Loan Notes; and (b) the exercise by DNY Investments
Limited of the Warrants, making a total maximum shareholding of the
Concert Party of 179,673,504 Ordinary Shares representing 86.52 per
cent. of the Enlarged Share Capital should no other New Ordinary
Shares have been issued in the intervening period. Therefore,
following Admission and implementation of the Proposals, the
Concert Party will hold interests in excess of 50 per cent. of the
Enlarged Share Capital. Further details in relation to the Concert
Party are set out in Part VI of this document.
Under Rule 9 of the Takeover Code the issue of the Consideration
Shares would normally result in the Concert Party being obliged to
make an offer to all Shareholders (other than the Concert Party) to
acquire their shares. Following an application by the Concert
Party, the Takeover Panel has agreed to waive this obligation
subject to the approval of the Independent Shareholders at the
General Meeting of the Proposals. Your attention is drawn to the
Rule 9 Waiver section contained in Part I of this document.
The Directors believe that it is appropriate, should the
Acquisition be approved by Shareholders at the General Meeting,
that the name of the Company should be changed to Progility plc.
Whilst the Directors believe that the ILX name has excellent
recognition in the area of training, it does not now reflect the
recent (and proposed) significant changes in the management and
strategic direction of the Enlarged Group.
The purpose of this document is to give you further information
regarding the matters described above and to seek your approval of
the Resolutions, which include the Rule 9 Waiver, at the General
Meeting. The notice of General Meeting is set out at the end of
this document.
The Proposals are conditional, inter alia, on the passing of the
Resolutions and Admission. If the Resolutions are approved by
Shareholders, it is expected that Admission will become effective
and dealings in the Enlarged Share Capital will commence on AIM on
or around 4 October 2013.
Background to and reasons for the Acquisition
For some time the Group's training business has been under
pressure from external price competition and industry related macro
factors. Following the appointment of Wayne Bos as Executive
Chairman of the Company in August 2012 and a thorough internal
review of the business, the Group has taken action to reduce
operating costs and improve the efficiency of its product
delivery.
The Directors believe that the Group's knowledge and experience
of the project management sector through its training business and
range of digital products, provides an opportunity to offer more
comprehensive services to both corporate and individual project
managers, creating a platform to connect with the Group's customers
at different stages in the project management life cycle. The Group
commenced that strategy through the creation of a new consultancy
division with a view to capitalising on the contacts and experience
available to the Group. That strategy was further pursued through
the recent small, but strategic, acquisition of TFPL with its
recruitment sector skills to complement the Group's training and
consultancy activities.
The Directors believe there are opportunities to increase the
scope and scale of the Group through further selective
acquisitions. The proposed acquisition of Progility represents a
significant step by adding further consulting, systems integration
skills and solutions in the communications sector to the Group's
capabilities. The Directors believe this strategy will ultimately
allow the Group to source, train and supply project managers for
both internally generated projects and projects for third
parties.
Progility, with its offices across Australia, including in
Melbourne, Sydney, Brisbane and Perth will also complement the
Group's existing operations in Australia.
Information on the Company
History and overview
Tracing its roots back to 1988, the Company has provided
training to thousands of corporate clients in many different
countries including local and national governments, the public
sector and commercial businesses across a wide variety of sectors.
The Company has offices in the UK, Middle East and Australia.
The Company was admitted to trading on AIM on 12 December 2000
as Time2Learn plc and, in November 2001, acquired Intellexis
International Limited by way of a reverse takeover under the AIM
Rules and changed its name to Intellexis plc.
In 2004, following the acquisition of Key Skills Limited, a
provider of computer-based project management training courses,
including training in PRINCE2, the Company changed its name to ILX
Group PLC. Over the following two years, in order to expand the
Company made a number of bolt-on acquisitions including acquiring
The Corporate Training Group Limited, which provided financial
training to the UK investment banking sector, in July 2006 for
GBP12 million.
Following a period of consolidation and growth the global
financial crisis led to revenues from financial training falling
significantly while the provision of PRINCE2 and other project
management training outperformed other revenue streams. In 2010 the
financial training business was closed, but an office in Sydney was
established to service the Australian and New Zealand markets for
project management training and the Company raised GBP0.9m through
a placing of Ordinary Shares with Octopus Capital for Enterprise
Fund.
However the Company continued to face challenging market
conditions with falling revenues and, on 1 August 2012, the Company
announced a subscription by Praxis Trustees of GBP1.2m in exchange
for new Ordinary Shares amounting to 29.9 per cent. of the
Company's issued share capital. The purpose of the investment was
to reduce the Company's indebtedness and to provide working capital
headroom. On completion of the investment, Wayne Bos was appointed
Executive Chairman, and subsequently (in addition) Interim Chief
Executive.
Between December 2012 and February 2013 the Company established
a new consulting division through the acquisition of Obrar in the
UK and the creation of ILX Consulting in Australia.
In February 2013, the Company took an option to acquire 100 per
cent. of CareShield Limited and Careshield Training Limited, a UK
provider of digital learning solutions in the health and social
care sectors.
In July 2013 the Company acquired TFPL Limited, a recruitment,
training and consulting business specialising in the knowledge,
information and data management industries.
Operations
The Group's current business comprises three divisions:
Training, Consulting and Recruitment.
Training
The Company's training division provides a blend of on-line
learning, games and simulations, traditional classroom training,
practical workshops and coaching. The division delivers training in
the UK Cabinet Office's best management practice products,
primarily in PRINCE2, MSP and ITIL. Its training materials and
quality systems are accredited by the appropriate accrediting body,
including, the APM Group, the Association for Project Management
and the Project Management Institute.
The training division's business covers:
-- best practice for programme, project and IT service management,
including strategic programme and project management consulting
solutions;
-- financial awareness; and
-- the development of bespoke training courses for large-scale
IT migration and transformation projects.
Consulting
The Group's consulting division comprises Obrar in the UK and
ILX Consulting in Australia.
Established in 2010, Obrar is a consulting and project
management services company focused on multimedia contact centres,
corporate technology infrastructure and associated operational
change and has extensive experience in delivering contact centre
outsourcing on a global basis.
Obrar provides a wide range of capabilities to the fixed
telecommunications and mobile telecommunications, retail, printing
and management information, television, cable, broadband internet,
financial services, travel and transport, utilities and outsourcing
sectors.
ILX Consulting, located in Sydney, Australia, is an
organisational improvement and project management services company
specialising in information technology, service and supply chain
improvement and overall project and programme management. Since its
formation in February 2013 it has implemented several operational
projects primarily for clients in the Australian public sector.
Recruitment
In July 2013 the Group acquired TFPL, a recruitment, training
and consulting business specialising in the knowledge, information
and data management industries. TFPL provides executive search,
managed services and the placement of permanent, interim and
contract personnel into the public and private sectors.
Strategy
The Directors believe that expanding the Group's product
offering will facilitate it to make the most of its extensive
project management customer base. Providing more comprehensive
services for both corporate and individual project managers will
provide opportunities for cooperation and cross-selling which have
not been available to the Group up to now and will allow the Group
to connect with its customers at different stages in the project
management life cycle. Not only is the Group able to train project
managers and provide them with a recruitment link, the Directors
believe the Group can also create project management opportunities
through offering consulting services across relevant sectors to
third parties and on internally generated projects providing
further opportunities to the Group's growing list of trained
project manager clients.
The Independent Directors regard the acquisition of Progility as
the first substantial step towards creating a business capable of
generating relevant project management opportunities, which may
benefit from the Group's existing product offering. Not only is
Progility currently working on many substantial international
projects, it will also introduce a number of new multinational
customers and suppliers to the Group, so potentially creating
further revenue opportunities for its consulting, recruitment and
training divisions.
The Directors also believe that the provision of these
complementary services will provide an excellent platform for
further growth through further selective acquisitions, should
suitable opportunities be identified.
The Market
The market for the Group's services is highly fragmented and the
Directors believe that the re-focussing of the business should
create opportunities for further growth from the existing
businesses, whether working separately or together, whilst allowing
management to use the Company's public quotation to facilitate
consolidation with other complementary businesses where
appropriate.
Current trading and prospects
The Group has carried out an in-depth business review and
restructure during the 15 months to 30 June 2013. The business
processes and related staffing levels have been analysed and
positive action has been taken to bring costs into line with
businesses objectives. Although restructuring costs during the
period have been greater than was initially anticipated, these
actions have delivered significant operating cost reductions during
the period. However the full benefit of the resulting reductions in
operating costs are not expected to be reflected until the new
financial year.
In addition, the Board has been restructured with Ken Scott,
CEO, Jon Pickles, CFO, Eddie Kilkelly, COO, and Paul Virik and
Damien Lane, both non-executive directors, having all stepped down.
In their place Donald Stewart and John McIntosh have joined the
Board. Donald Stewart joined the Board originally as a
non-executive director in April 2013 and, on 3 June, joined the
executive team as General Counsel while, on 6 June 2013, John
McIntosh was appointed Finance Director.
Alongside these new directors a new executive management team
has been introduced made up of highly capable change managers
within sales, finance, legal and operations. Their combined
experience covers training, consulting, business development,
sales, digital transformation, cost control and the public company
environment. Each executive is experienced in mergers and
acquisitions and business integration.
Continuing pressure remains on revenues from the training
division due to external price competition and industry macro
factors. The new consultancy division has made a positive
contribution and kept overall revenues steady. The Directors
believe that the acquisition of TFPL gives sound foundations to the
Group's new recruitment division and it will continue to aim to
increase the scope and scale of the business through capitalising
on the contacts and experience available to the Group.
The Group has undertaken a complete review of its online sales
and marketing performance. This has enabled management to get a
deeper insight into the Group's performance across its consumer and
corporate sales channels, to identify trends and put in place
activities which the Directors believe will increase sales.
The Group also continues to work on operational improvements and
the development of a broader digital and classroom product
portfolio. In August 2013 the Group launched its PMP product, which
will serve as an alternative to PRINCE2 for its clients in the
North American market.
The Group is now headquartered at Strand Bridge House, 138-142
The Strand, London. This central London location was chosen as it
better suits the Group's overall needs and the new offices can
accommodate training courses with marginal incremental costs to the
business. The Group's former offices at Hammersmith have been
sublet for the remainder of the term at the prevailing market
rate.
Information on Progility
History and overview
Progility operates a communication systems integration business
that designs, implements and maintains solutions for medium and
large enterprises with a focus on the rail, port, oil and gas,
power and water and healthcare industries in Australia and on the
mining industry globally.
Progility is headquartered in Melbourne, Australia with offices
in Castlemaine, Perth, Sydney, Latrobe Valley, Mackay and Brisbane.
Progility employs approximately 120 full time staff across
Australia.
Progility's business was founded in Perth, Western Australia in
1994 as a reseller of telephony based systems to small and medium
sized business in the local market. Over the years it evolved to
deliver more sophisticated telephony services and was acquired by
Praxis Trustees and Mmilt Pty Limited, both members of the Concert
Party, in 2008.
In 2009, the enterprise business of Commander Communications, a
large listed Australian telecommunications and IT services company
which had collapsed in 2008, was acquired from its administrators.
The enterprise business focused on telephony equipment sales and
services to mid-market and enterprise customers.
In 2010, Progility started a division to service the
communications needs of mining and oil and gas customers.
In 2012, Progility acquired the Bearcom business, from TR Pty
Ltd, which was the largest reseller of two-way radio based systems
in Australia.
Progility's customers include Virgin Australia Airlines, Qantas,
Department of Correctional Services in Queensland and New South
Wales, Westfield, Rio Tinto, Healthscope and Melbourne Museum.
Progility operates through three operating divisions supported
by four shared service divisions.
Unified Communications
Progility's Unified Communications division focuses on
communications systems integration, specialising in unified
communications backed by significant voice and systems technology
experience across multiple industries. It designs voice and IP
communications solutions to meet the needs of specific customers'
operating environments which can be hosted either on the customers
premises or by Progility. The solutions include combining voice,
audio conferencing, video conferencing, web conferencing, instant
messaging and rich presence into single unified systems. Unified
Communications is the major provider of enterprise based Siemens
unified communication systems in Australia.
Products and services include:
-- hosted communications providing scalable business solutions
allowing customers and end users to manage as much or
as little as they want within the solution with options
ranging from basic dial tone to fully featured IP telephony
services running on multimedia handsets, capable of supporting
extended business applications;
-- fully managed services allowing customers to outsource
all voice services including the operation, management
and maintenance of voice and IP systems;
-- professional services including analysis of business
performance, process and communication opportunities
and pathways, solution design, development and implementation,
training and service support; and
-- scalable multimedia contact centres integrating real-time
communication tools such as presence information, contact
routing, conferencing, chat, speech recognition and social
media with conventional tools such as voicemail, email
and fax.
CA Bearcom
CA Bearcom is Australia's largest distributor of two-way radio
communications products. Its primary supplier is Motorola
Australasia and the Directors believe that it is Motorola
Australasia's largest and preferred radio communications partner.
CA Bearcom operates from offices in Melbourne, Sydney and Brisbane
with resellers located throughout regional Australia. The assets of
CA Bearcom were acquired by Progility in 2012, from TR Pty Ltd.
Bearcom's activities include:
-- the sale of Motorola two-way digital and conventional
radio equipment and accessories;
-- service and maintenance of Motorola products under warranty;
and
-- consultancy services.
Minerals & Energy ("M&E")
M&E designs, implements and manages an array of integrated
communications solutions for specific mining, oil and gas, rail and
port applications including:
-- tailored voice and data communication solutions for production
mining and safety;
-- machine monitoring and machine to machine solutions;
-- microwave backhaul and remote site connectivity including
towers, communications huts and powered standalone communications
trailers;
-- traffic management and proximity awareness collision
avoidance systems;
-- customised, turnkey communication and safety solutions
for offshore and onshore assets, and pipeline monitoring;
-- open architecture rail technology solutions analysing
data from performance monitoring devices giving a composite
view of railway vehicle performance; and
-- port perimeter security, container facilities, equipment
monitoring, gates and security and connectivity between
land based assets, ship and offshore oil platforms.
Strategy for Progility
Since Craig Cameron joined Progility in January 2012, Progility
has begun to focus on higher value-added projects, supported, where
appropriate by niche products whilst at the same time increasing
efficiency in the existing business of selling more commoditised
products.
Unified Communications
The Directors believe that there are growth opportunities, not
only through seeking new customers, but also through transitioning
existing customers to cloud-based voice and VOIP systems, or a
combination of customer premise-based and cloud-based systems as
appropriate.
Unified Communications is also looking to build on its existing
experience and expertise in the healthcare market to increase its
market share.
CA Bearcom
The management team of CA Bearcom is focussed on growth through
delivering value-added wireless solutions to medium and large
businesses whilst maintaining the current level of transactional
sales to smaller enterprises. To enable this strategic change, the
management has implemented a number of changes in the business:
-- creating a national call centre to service smaller accounts
in a lower cost, high quality manner;
-- implementing a national, rather than a state by state,
sales approach and offering a one stop-shop service to
major accounts with requirements in multiple locations
across Australia; and
-- offering mid-tier radios to those customers that do not
wish to purchase the premium Motorola product.
M&E
The management of the M&E division has actively sought to
expand the division beyond selling wireless communications services
to open pit miners and oil and gas companies to being a provider of
customised solutions to underground mining businesses, particularly
addressing their business needs in the areas of safety and
productivity improvement.
In support of this strategy, Progility has developed a new
product, CA-TAP which enables miners to locate people and machines
in an underground mine with high precision. The Directors believe
that this product will help enable miners to measure and improve
productivity in their mines and could become a critical component
in their quest to enable automated mining.
Furthermore, the M&E division has secured the rights to a
leading proximity detection system called Intellizone. It is
designed to help personnel understand when they may be in a
dangerous situation around mobile equipment and have both personnel
and equipment be responsive to potentially dangerous situations.
The technology is currently used in coal mines in the US. Progility
plans to sell this product to major global mining corporations.
The Australian telecommunications market
The Australian telecommunications market is expected to change
dramatically over the next ten years and to double in size to
around A$80 billion by 2020. Accelerated by government policies
these changes will be driven by a total overhaul of the
industry.
While Telstra continues to dominate the overall Australian
telecommunications market, its estimated market share, at just
under 60 per cent. by revenues for 2013, is continuing to decline.
The mobile broadband market is becoming a major revenue stream for
the mobile network operators, mobile data usage having increased by
nearly 80 per cent. year-on-year to mid-2012. But increased usage
has caused data traffic jams on the 3G networks as the
infrastructure was not designed for such rates of traffic
expansion. It has been estimated that mobile capacity in Australia
needs to grow a thousand fold over the next decade to cope with
customer demand.
With the emergence of all-IP networks fuelled by increasingly
widespread broadband delivery of video and audio content,
telecommunications services appear to be moving to new business
models to which the traditional Australian telecommunications
companies appear to be unable to react competitively. It is likely
that the major Australian telecommunications companies will
continue to provide access and wholesale services to a growing
number of users relying on the digital economy including data
centres, cloud computing, data storage, content delivery and other
value added infrastructure services.
Following considerable political and industry debate, Australia
is currently constructing the National Broadband Network (NBN), a
wholesale-only, open-access data network which is planned to reach
approximately 93 per cent of premises in Australia by June 2021.
The network will gradually replace the current copper network used
for most telephony and data services, which is owned by Telstra.
NBN Co, a government-owned corporation, was established to design,
build and operate the NBN and will sell fibre broadband connections
to retail service providers, who will then sell internet access and
other services to consumers.
As it becomes the predominant infrastructure the NBN is expected
to cause the industry to develop new business models around
infrastructure and unified communications with an anticipated
sizeable demand for value-added infrastructure services.
Barriers to entry and competition
There are competitors in every market addressed by Progility.
Management has worked to identify material areas in the each
business unit where Progility can compete effectively.
Unified Communications
Cisco is the market leader in most unified communication market
segments. However, Siemens claims that it is the largest provider
of such systems to the global healthcare market. As a Siemens'
premier enterprise reseller of unified communications systems in
Australia, the Directors' believe that this market is a growth
opportunity.
Furthermore, by providing customers with a choice of customer
premise based or Progility hosted telephony solutions, Progility
can further differentiate itself in multiple markets from those
providers who only provide one type of technology to their
customers.
CA Bearcom
The Directors believe that being the largest reseller of two way
radios in Australia and the only reseller with a national footprint
enables CA Bearcom to offer nation-wide solutions to major
customers. The Directors believe that no other reseller in
Australia has the reach or the same depth of engineering skill as
Progility and that this is likely to be difficult for others to
replicate.
M&E
The M&E division has focused on developing and securing
intellectual property rights to address
underground mining needs for safety and productivity
improvement. The Directors believe that by being early to market,
Progility will secure long term relationships with major miners and
become their technology partner of choice in these important
business areas.
Current trading and prospects
Progility has undertaken some significant restructuring during
the 12 months to 30 June 2013, particularly in the second half. As
a result Progility, now has three customer facing divisions
supported by four business units providing services to each of the
divisions. Over the 12 month period, the M&E division has
applied resources towards selling underground communications
systems to international miners; CA Bearcom has created a call
centre business to address the needs of smaller customers and had
its direct sales team start engaging larger national customers; and
the Unified Communications division has applied more attention
towards the healthcare market and to providing cloud based
services. While these changes were commenced in the second half of
2012, the Directors believe that their benefits will be more fully
realised in the 2013/14 financial year.
Since the beginning of 2013, there has been a slowing in
investment in the mining sector in Australia and a number of large
mining projects have been deferred which has impacted the timing of
some projects for the M&E division, International mining has
not been affected as much as the domestic Australian market and
consequently Progility is focusing increasingly on international
opportunities. In the past four months senior executives from the
M&E division have visited major miners in South Africa, Central
Asia and Brazil with positive feedback from potential customers. As
a result, a number of projects have been identified where Progility
is being engaged by international miners as an exclusive
communications partner.
Overall market conditions in Australia have been softening for a
number of months, significantly impacted by the slowdown in the
mining market. This has resulted in increased competitive pressure
across all market segments. In May 2013, Progility undertook a
restructuring of its operations and reduced overall headcount by
approximately 10 per cent.
In July 2013, CA Bearcom commenced sales of a lower end two-way
radio to address a market segment it has not been able to address
with Motorola branded products. This expands the size of its
available market. CA Bearcom's strategy of providing two-way radio
services to larger customers in Australia is continuing to
develop.
In June 2013 the Unified Communications division became the
preferred voice systems and support provider to Healthscope,
Australia's largest integrated healthcare provider with more than
40 hospitals. Healthscope contracted Progility to become the
exclusive telephony support services provider to all of its
hospitals more than 30 of which do not currently have systems
supplied by Progility.
Reasons for Admission
The Directors believe that the Acquisition and Admission
should:
-- transform the scope and scale of the Company, adding
further consulting, systems integration skills and solutions
in the communications sector;
-- provide new opportunities for the Company's existing
training, consulting and recruitment businesses;
-- reduce the Company's dependence on its training business
where revenues have been under pressure for some time;
and
-- allow the Enlarged Group to take advantage of future
acquisition opportunities that are complementary to the
current business model.
Principal terms of the Acquisition
On 10 September 2013, ILX entered into the Acquisition Agreement
pursuant to which it has conditionally agreed to acquire the entire
issued share capital of Progility, for a total consideration to be
satisfied by the issue of the Consideration Shares (representing 80
per cent. of the Enlarged Share Capital).
The Acquisition Agreement contains warranties from the Sellers
in relation to their title to the shares of Progility, the
business, assets and liabilities of Progility and warranties by the
Company in relation to its authority to issue the Consideration
Shares and certain indemnities from the Sellers and by the
Company.
The Acquisition is conditional upon, inter alia:
(i) the Resolutions being passed at the General Meeting;
(ii) the Acquisition Agreement becoming unconditional in all
respects, save for Admission; and
(iii) Admission of the Consideration Shares having occurred.
Further details of the Acquisition Agreement are set out in
paragraph 9.1.8 of Part VII of this document.
Takeover Code and Whitewash Resolution
The Takeover Code governs, inter alia, transactions which may
result in a change of control of a company to which the Takeover
Code applies. Under Rule 9 of the Takeover Code any person who
acquires, whether by a series of transactions over a period of time
or not, an interest (as defined in the Takeover Code) in shares
which, taken together with shares in which he is already interested
or in which persons acting in concert with him are interested,
carry 30 per cent. or more of the voting rights of a company which
is subject to the Takeover Code, that person is normally required
to make a general offer to all the remaining shareholders to
acquire their shares. Similarly, Rule 9 of the Takeover Code also
provides that when any person, together with persons acting in
concert with him, is interested in shares which, in aggregate,
carry more than 30 per cent. of the voting rights of such company,
but does not hold shares carrying 50 per cent. or more of such
voting rights, a general offer will normally be required if any
further interest in shares is acquired by any such person.
Rule 9 of the Takeover Code further provides, among other
things, that where any person who, together with persons acting in
concert with him holds over 50 per cent. of the voting rights of a
company, then they will not generally be required to make a general
offer to the other shareholders to acquire the balance of their
shares.
An offer under Rule 9 must be in cash and must be at the highest
price paid by the person required to make the offer, or any person
acting in concert with him, for any interest in shares of the
company in question during the 12 months prior to the announcement
of the offer.
Persons acting in concert include persons who, pursuant to an
agreement or understanding (whether formal or informal),
co-operate, to obtain or consolidate control of that company.
Waiver
Relationship between members of the Concert Party
The members of the Concert Party are the Sellers and Mr Stephen
Arrowsmith, Finance Director of Progility. Wayne Bos and Mario
Vecchio have worked and co-invested together in a variety of
businesses over many years including Sausage Software and
Progility. Wayne Bos and Craig Cameron have worked together in a
number of businesses over several years including Natrol Inc.,
Minergy Corporation Limited and Progility.
As set out above, Praxis and Mmilt purchased the business of
Progility in 2008. Praxis is trustee of the DNYTrust of which Wayne
Bos, together with his wife and family members are discretionary
beneficiaries. Mmilt is the trustee of the Vecchio Family Trust, a
trust of which Mario Vecchio, together with his wife and family are
discretionary beneficiaries. The Cameron Investment Trust became a
shareholder in Progility following Craig Cameron being appointed
Chief Executive Officer of Progility. Craig Cameron, along with his
wife and family are discretionary beneficiaries of this trust.
Further information on individual members of the Concert Party
and their relationships are given in paragraph 1.2 Part VI of this
document.
Effects of Proposals and requirement for the Waiver
Immediately following Admission, the members of the Concert
Party will between them own 171,673,504 Ordinary Shares
(representing 85.98 per cent. of the Enlarged Share Capital).
Furthermore, DNY Investments Limited, a company held by Praxis as
an asset of the DNY Trust, will have the right to subscribe for up
to 8,000,000 Ordinary Shares pursuant to the Convertible Loan Notes
and Warrants issued by the Company in December 2012 which, on full
conversion into Ordinary Shares, would represent a maximum
controlling position of 86.52 per cent. of the Enlarged Issued
Share Capital assuming (a) the exercise by DNY Investments Limited
of its conversion rights under the Convertible Loan Notes in full
(details of the Convertible Loan Notes are set out in paragraph
9.1.3 of Part VII) (b) the exercise by DNY Investments Limited of
all of the Warrants (details of the Warrants are set out in
paragraph 9.1.4 of Part VII) and (c) the Company has not issued any
more Ordinary Shares in the intervening period. A table showing the
respective individual holdings of the members of the Concert Party
following Admission and following the implementation of the
Proposals in full is set out in Part VI of this document.
The Takeover Panel has agreed, however, to waive the obligation
to make a general offer that would otherwise be required as a
result of the allotment and issue of the Consideration Shares.
Accordingly, the Whitewash Resolution seeks to waive the
requirement under Rule 9 of the City Code that the Concert Party,
having acquired a shareholding and percentage of voting rights
exceeding 30 per cent., must make a general cash offer to all the
remaining Shareholders to acquire their shares. In accordance with
the City Code, the Whitewash Resolution is being proposed at the
General Meeting and will be taken on a poll. The Concert Party will
not be entitled to vote on the Whitewash Resolution. To be passed,
the Whitewash Resolution will require a simple majority of votes
entitled to be cast to vote in favour.
Following Completion, the Concert Party will have acquired, in
aggregate, interests in shares carrying approximately 85.98 per
cent. of the voting rights of the Company. The Concert Party will
have a maximum interest of approximately 86.52 per cent. of the
voting rights of the Company, assuming the exercise of all the
conversion and subscription rights arising pursuant to the
Convertible Loan Notes and Warrants by Praxis and assuming that no
other New Ordinary Shares have been issued in the intervening
period, which, without a waiver of the obligations under Rule 9,
would oblige the Concert Party to make a general offer to
Shareholders under Rule 9. Further details concerning members of
the Concert Party are set out in Part VI of this document.
Shareholders should note that, following the completion of the
Acquisition and Admission, the Concert Party will together hold
over 50 per cent. of the voting rights of the Company and will
therefore be entitled to increase their interest in the voting
rights of the Company without incurring a further obligation under
Rule 9 of the Code to make a general offer. However, should any
individual member of the Concert Party acquire an interest in
shares of the Company such that they are interested in 30 per cent.
or more of the voting rights in the Company or, if he is already
interested in 30 per cent or more, acquire a further interest in
the shares of the Company, the Panel may regard this as giving rise
to an obligation upon that member of the Concert Party to make an
offer for the entire issued share capital of the Company at a price
no less than the highest price paid by the individual member of the
Concert Party or any other member of the Concert Party in the
previous 12 months.
Application for Admission
Application will be made to the London Stock Exchange for the
Enlarged Share Capital to be admitted to trading on AIM. Subject
to, among other things, the Resolutions being passed, it is
expected that Admission will become effective at 8.00 a.m. on 4
October 2013 and that dealings for normal settlement in the New
Ordinary Shares will commence at 8.00 a.m. on the same day. No
temporary documents of title will be issued.
The Consideration Shares to be issued pursuant to the
Acquisition Agreement will, following Admission, rank pari passu in
all respects with the Existing Ordinary Shares in issue at the date
of this document and will carry the right to receive all dividends
and distributions declared, made or paid on or in respect of the
New Ordinary Shares after Admission.
In connection with the application for Admission, the Company
has entered into the Nominated Adviser Agreement with SPARK. For
more information on the Nominated Adviser Agreement, see paragraph
9.1.7 of Part VII.
Consideration Shares
The Consideration Shares will be issued pursuant to authorities
to be sought at the General Meeting. Following the issue of the
Consideration Shares an existing Shareholder will suffer a dilution
of approximately 80 per cent. to his economic interests in the
Company.
Board of Directors
The existing Directors will remain on the board of the Company
following Admission.
Brief details on the Board are set out below:
Wayne Bos (aged 47), Executive Chairman and Interim Chief
Executive
Wayne joined the Board on 21 August 2012. Wayne has over 20
years' experience managing and investing in business over a wide
range of sectors, with particular expertise in the software and
technology sector. His career includes three years as Chief
Executive of Sausage Software, an Australian public company, which
he grew to a market capitalisation of A$2.5bn in 2001, and
President and CEO of Natrol, a Nasdaq listed Nutraceutical company,
sold to Plethico, an Indian public company, in 2008. In the last
five years, he has made several public and private company
investments.
John McIntosh CA (aged 44), Finance Director
John joined the board on 6 June 2013. John qualified as a
Chartered Accountant with Deloitte & Touche in 1994. He held
Controller roles within corporations including Sony and D'Arcy,
Masius Benton & Bowles and the BBC's corporate finance team
before joining an internet start-up team. He has since concentrated
on the online/multi-media sector working with private equity owned
and quoted businesses. He was instrumental in the development and
growth of the multi-media group DCD Media plc holding the positions
of Chief Financial and Chief Operating Officer. Mr McIntosh has
held Main Board Director roles in AIM listed companies since 2003
and joined ILX Group in November 2012. John is also Company
Secretary.
Donald Stewart (aged 50), General Counsel
Donald joined the board as a non-executive director on 18 April
2013 and subsequently joined the Company full time as General
Counsel on 3 June 2013. With almost 25 years practising commercial
law as a qualified solicitor in England, Wales, and Scotland,
Donald's expertise is focused on corporate finance, takeovers,
mergers and acquisitions, and UK publicly listed companies. He has
extensive experience working with companies in the technology and
communications sectors. Donald is also a director (and past
Chairman) of the Quoted Companies Alliance, and is the UK's
representative on the Policy Committee of European Issuers based in
Brussels.
Paul Lever (aged 72), Non-executive Director
Paul joined the board as non-executive Chairman on 6 January
2003 and remained an independent nonexecutive director following
the appointment of Wayne Bos as Executive Chairman in August 2012.
Paul is currently senior partner of Marylebone Associates LLP, and
was Chairman of Datong Plc until June 2013. Paul was formerly the
chairman of the National Criminal Intelligence Service (NCIS) and
the National Crime Squad (NCS), non-executive chairman of BSM Group
plc and Oxford Aviation Holdings Ltd and chief executive of
Lionheart plc. Previously at Tube Investments he was chief
executive of the Steel Stockholding Division and, subsequently, of
the Small Appliance Division which included Russell Hobbs. Paul was
appointed chief executive of Crown Paints by Reed International
and, following the acquisition of Berger Paints for GBP135 million,
he merged the two operations with considerable savings and combined
annual sales of GBP400 million.
Summary financial information on the Company and Progility
The financial information set out in the tables below has been
extracted from the historical financial information of the Company,
included in Part III of this document, and the historical financial
information of Progility included in Part IV of this document.
Shareholders should read the full historical financial information
in Part III and Part IV of this document and not rely solely upon
the summary below.
Summary financial information on the Company:
As at As at As at
15 months year year
ended ended ended
30.6.2013 31.3.2012 31.3.2011
Total Restated Restated
GBP'000 GBP'000 GBP'000
Revenue 16,992 13,473 12,886
Gross profit 6,378 6,059 5,903
Operating (loss)/profit (1,503) 983 1,733
(Loss)/profit from ordinary operations (1,318) 521 1,026
Net assets 6,668 6,679 3,241
=========== =========== ===========
Summary financial information on Progility:
As at As at As at
year year year
ended ended ended
30.6.2013 30.6.2012 30.6.2011
A$'000 A$'000 A$'000
Income 41,697 31,553 26,471
Profit/(loss) before tax (2,215) (123) 896
Profit/(loss) and total comprehensive
income for the year (1,573) (97) 1,313
Net assets 638 2,212 2,309
=========== =========== ===========
Convertible Loan Notes and Warrants
On 17 December 2012 ILX announced that it had issued GBP400,000
principal of convertible loan notes to Praxis. The Convertible Loan
Notes attract interest at a rate of 12 per cent. per annum and are
repayable (together with accrued interest) on the earlier of (a) a
request by Noteholders following a material breach; (b) the
occurrence of an insolvency event; or (c) 31 December 2017. Praxis
was also issued with Warrants to subscribe for up to 400,000
Ordinary Shares at a subscription price of 10p per share. On 29
April 2013 Praxis Trustees transferred the Convertible Loan Notes
and the Warrants to DNY Investments Limited, a company incorporated
in Guernsey and held by Praxis Trustees as an asset within the DNY
Trust, for no consideration.
Further details of the Loan Notes and the Warrants are set out
in paragraphs 9.1.3 and 9.1.4 of Part VII of this document. It is
expected that the number of Ordinary Shares following conversion of
the Loan Notes and exercise of the Warrants will be
207,666,880.
Share Options
The Board believes that the recruitment, motivation and
retention of key employees is vital for the successful growth of
the Enlarged Group. The Board considers that an important element
in achieving these objectives is the ability to incentivise and
reward staff (including executive directors) by reference to the
market performance of the Company in a manner which aligns the
interests of those staff with the interest of shareholders
generally. The Company intends to utilise its existing employee
share incentive scheme to grant Options to acquire Ordinary Shares
to directors and UK based employees of the Enlarged Group. The
Company is also considering adopting an additional share option
scheme to permit employees based in Australia to receive options
over the Ordinary Shares. It is expected that the total number of
Ordinary Shares that may be subject to such Options, if granted,
will represent a maximum of 10 per cent. of the Enlarged Group's
issued ordinary share capital from time to time. The Remuneration
Committee will consider the grant of Options after the publication
of this document. Further details of the Share Option Scheme are
set out in paragraph 9 of Part VII of this document.
Corporate Governance
The Board recognises the importance of sound corporate
governance and the new Board intends to ensure that, following
Admission, the Company adopts policies and procedures which reflect
the Corporate Governance Code for Small and Mid-Size Quoted
Companies published by the Quoted Companies Alliance.
Following the implementation of the Proposals, the Board will
meet monthly to review key operational issues and the strategic
development of the Enlarged Group. The financial performance of the
Enlarged Group will be reported and monitored. All matters of a
significant nature will continue to be discussed in the forum of a
board meeting. The Board will be responsible for internal controls
to minimise the risk of financial or operational loss or material
misstatement. The controls established will be designed to meet the
particular needs of the Company having regard to the nature of its
business.
The Company has also established an Audit Committee and a
Remuneration Committee with formally delegated duties and
responsibilities. Each committee will consist of Paul Lever and
Donald Stewart, with Paul Lever chairing both the Audit Committee
and the Remuneration Committee.
The Audit Committee will determine the terms of engagement of
the Enlarged Group's auditors and will determine, in consultation
with the auditors, the scope of the audit. The Audit Committee will
receive and review reports from management and the Enlarged Group's
auditors relating to the interim and annual accounts and the
accounting and internal control systems in use throughout the
Enlarged Group. The Audit Committee will have unrestricted access
to the Enlarged Group's auditors.
The Remuneration Committee will review the scale and structure
of the executive directors' and senior employees' remuneration and
the terms of their service or employment contracts, including share
option schemes and other bonus arrangements. The remuneration and
terms and conditions of the non-executive directors will be set by
the entire board.
The Enlarged Group will ensure, in accordance with Rule 21 of
the AIM Rules, that the New Board and applicable employees do not
deal in any New Ordinary Shares during a close period (as defined
in the AIM Rules) and will take all reasonable steps to ensure
compliance by the Directors and applicable employees.
The Directors believe that the Company has sufficient experience
in accounting systems and controls which will provide a reasonable
basis for them to make proper judgements as to the financial
position and prospects of the Enlarged Group.
Dividend Policy
The Board's objective is to grow the Enlarged Group's business.
Future income generated by the Enlarged Group will be re-invested
to implement its growth strategy. In view of this it is very
unlikely that the Board will recommend a dividend in the
foreseeable future.
Taxation
Information regarding UK taxation with relation to the Ordinary
Shares, is set out in paragraph 13 of Part VII of this document.
These details are intended as a general guide only to the position
under current UK taxation law as at the date of this document. If a
Shareholder is in any doubt as to his or her tax position he or she
should consult his or her own independent financial adviser
immediately.
CREST
The Existing Ordinary Shares are eligible for CREST settlement.
Accordingly, following Admission, settlement of transactions in the
New Ordinary Shares may take place within the CREST system if the
relevant shareholder so wishes.
CREST is a voluntary system and Shareholders who wish to receive
and retain share certificates will be able to do so.
General Meeting
The notice convening the General Meeting is set out at the end
of this document. A General Meeting has been convened for 10.30
a.m. on 3 October 2013 at the offices of ILX, 2nd Floor, Strand
Bridge House, 138-142 The Strand, London, WC2R 1HH for the purpose
of considering and, if thought fit, passing the following
resolutions:
Ordinary resolutions to:
(1) approve the Acquisition;
(2) approve the Waiver; and
(3) authorise the Directors to allot relevant equity securities
under Section 551 of the Act; and
Special resolutions to:
(4) approve the change of the Company's name; and
(5) dis-apply statutory pre-emption rights.
To be passed, Resolutions 1 to 3 require a majority of not less
than 50 per cent. and Resolutions 4 and 5 will require a majority
of not less than 75 per cent. of the Shareholders voting in person
or by proxy in favour of each Resolution. In addition, in
accordance with the requirements of the Panel, Resolution 2 will be
taken on a poll of Shareholders, other than the Concert Party.
Irrevocable undertakings to approve the Proposals
Paul Lever has irrevocably undertaken to the Company to vote in
favour of the Resolutions to be proposed at the General Meeting, in
respect of his beneficial holding totalling 148,021 Existing
Ordinary Shares, representing approximately 0.37 per cent. of the
Existing Ordinary Shares. There are no circumstances under which
this irrevocable undertaking can be withdrawn.
Admission and dealings
Application will be made to the London Stock Exchange for the
Enlarged Share Capital to be admitted to trading on AIM. It is
expected that Admission will become effective and that dealings in
the Enlarged Share Capital will commence on or about 4 October
2013.
Action to be taken
General Meeting
You will find enclosed with this document a Form of Proxy.
Whether you intend to be present at the General Meeting or not, you
are asked to complete the Form of Proxy in accordance with the
instructions printed thereon and to return it by post or by hand
(during normal business hours only) to the Registrar at PXS, 34
Beckenham Road, Beckenham BR3 4TU using the accompanying pre-paid
Form of Proxy (for use in the UK only) as soon as possible and, in
any event, so as to be received by no later than 10.30 a.m. on 1
October 2013. If you hold Shares in CREST, you may appoint a proxy
by completing and transmitting a CREST Proxy Instruction to the
Registrar (CREST participant ID RA 10), so that it is received by
no later than 10.30 a.m. on 1 October 2013. The completion and
return of a CREST Proxy Instruction will not preclude you from
attending and voting in person at the General Meeting or any
adjournment thereof, if you so wish and are so entitled.
If the Form of Proxy is not returned, or the CREST Proxy
Instruction submitted, by 10.30 a.m. on 1 October 2013, your vote
will not count.
If you are in any doubt as to the action you should take, you
should immediately seek your own personal financial advice from an
appropriately qualified independent professional adviser.
Recommendation
The Independent Directors, having been so advised by SPARK,
consider the Proposals to be fair and reasonable and in the best
interests of the Company and its Shareholders as a whole. In
providing advice to the Board, SPARK has taken into account the
Independent Directors' commercial assessments.
Wayne Bos is a discretionary beneficiary of the DNY Trust and is
a director of both ILX and Progility and, as a result, has been
declared to have a conflict of interest for the purpose of Rule
25.2 (Note 4) of the City Code and therefore has taken no part in
the deliberations of the Board and is to be excluded from the
recommendation of the Board. Praxis, the only member of the Concert
Party that is a Shareholder in the Company, is not able to vote on
the Rule 9 Waiver.
Accordingly, the Independent Directors unanimously recommend
that Shareholders vote in favour of the Resolutions, as Paul Lever
undertaken to do in respect of his holding of 148,021 Ordinary
Shares representing approximately 0.37 per cent. of the Existing
Ordinary Shares, by signing and returning the Form of Proxy to the
Company's Registrars.
Yours faithfully
The Independent Directors
DEFINITIONS AND GLOSSARY
The following words and expressions shall have the following
meanings in this document unless the context otherwise requires:
"Act" the UK Companies Act 2006 (as amended)
"Acquisition" the proposed acquisition by the Company
of the entire issued share capital
of Progility pursuant to the Acquisition
Agreement,
"Acquisition Agreement" the conditional agreement dated 10
September 2013 between (1) the Sellers
and (2) ILX, further details of which
are set out in paragraph 9.1.8 of Part
VII of this
Document
"Admission" admission of the Enlarged Share Capital
to trading on AIM and such admission
becoming effective in accordance with
the AIM Rules
"AIM" AIM, a market operated by the London
Stock Exchange
"AIM Rules" the AIM Rules for Companies published
by the London Stock Exchange governing
admission to, and the operation of,
AIM as amended from time to time
"Articles" or "Articles the articles of association of the
of Association" Company a summary of which is set out
in paragraph 4.2 of Part VII of this
document
"A$" Australian dollars, the lawful currency
of Australia
"Board" or "Directors" the directors of the Company, or a
duly authorised committee thereof,
whose names appear on page 3 of this
document
"Business Days" any day (excluding Saturdays, Sundays
or public holidays) on which banks
are open in London for normal banking
business and the London Stock Exchange
is open for trading
"Cameron Investment Trust" a discretionary trust of which Craig
Cameron is a beneficiary
"Capita Registrars" a trading name of Capita Registrars
Limited
"City Code", "Code" or the City Code on Takeovers and Mergers
"Takeover Code"
"Cloud" software service provisioning hosted
at a remote location
"Commander Communications" Commander Communications Limited
"Comms Aust" Aust Pty Limited, a company registered
in Victoria with ACN 138 362 400
"Company" or "ILX" ILX Group plc, a public limited company
registered in England and Wales under
registered number 03525870135
"Concert Party" those persons described in Part VI
of this document
"Consideration Shares" the 159,733,504 New Ordinary Shares
to be issued to the Sellers as consideration
for the Acquisition pursuant to the
Acquisition Agreement
"Convertible Loan Notes" GBP400,000 principal of unsecured convertible
loan notes issued by the Company pursuant
to an instrument dated 17 December
2012 further details of which are set
out at paragraph 9.1.3 of Part VII
of this document
"CREST" the electronic settlement system operated
by Euroclear
"CREST Manual" the rules governing the operation of
CREST, consisting of the CREST Reference
Manual, CREST International Manual,
CREST Central Counterparty Service
Manual, CREST Rules, Registrars Service
Standards, Settlement Discipline Rules,
CCSS Operations Manual, Daily Timetable,
CREST Application Procedure and CREST
Glossary of Terms (all as defined in
the CREST Glossary of Terms)
"CREST member" a person who has been admitted by CREST
as a system member (as defined in the
CREST Manual)
"CREST Regulations" the Uncertificated Securities Regulations
2001 (SI 2001/3755) (as amended)
"CREST Sponsor" a CREST participant admitted to CREST
as a CREST sponsor a CREST member admitted
to CREST as a sponsored member
"DNY Investments Limited" " a company incorporated in Guernsey
and held by Praxis Trustees as an asset
within the DNY Trust
"DNY Trust" a family trust of which Praxis Trustees
are the trustee and Wayne Bos is a
discretionary beneficiary
"DTR" or "Disclosure and the Disclosure and Transparency Rules
Transparency Rules" (in accordance with section 73A(3)
of FSMA) being the rules published
by the Financial Conduct Authority
from time-to-time relating to the disclosure
of information in respect of financial
instruments which have been admitted
to trading on a regulated market or
for which a request for admission to
trading on such a market has been made
"Enlarged Group" the Company as enlarged by the Acquisition,
to include Progility and its subsidiaries
"Enlarged Share Capital" the ordinary share capital of the Company
following Admission and the completion
of the Acquisition
"Existing Ordinary Shares" 39,933,376 Ordinary Shares in issue
at the date of this document
"Euroclear" Euroclear UK & Ireland Limited, a company
registered in England and Wales with
registered number 2878738, the operator
(as defined in the CREST Regulations)
of the system for trading shares in
uncertificated form known as CREST
136
"Form of Proxy" the blue form of proxy sent to holders
of Existing Ordinary Shares enclosed
with this document for use by Shareholders
in connection with the General Meeting
"FSMA" the Financial Services and Markets
Act 2000
"General Meeting" the general meeting of the Company,
to be held at 2(nd) Floor, Strand House,
138-142 The Strand, London WC2R 1HH
on 3 October 2013 at 10.30 a.m. and
any adjournment thereof to be held
for the purpose of considering and,
if thought fit, passing the Resolutions
"Group" the Company and its subsidiaries at
the date of this document
"HMRC" HM Revenue & Customs
"ILX Consulting" ILX Consulting Pty Limited
"Independent Directors" John McIntosh, Donald Stewart and Paul
Lever
"Irrevocable Undertaking" the undertaking by Paul Lever to vote
in favour of the Resolutions
"Issue Price" 10p per Consideration Share
"London Stock Exchange" London Stock Exchange plc
"Mmilt" Mmilt Pty Limited, trustee of the Vecchio
Family Trust
"Money Laundering Regulations" the Money Laundering Regulations 2007
(SI 2007/2 157)
"MSP" Managing Successful Programmes a methodology
for managing a specific set of projects
"New Ordinary Shares" 199,666,880 new ordinary shares of
10p each in the capital of the Company
"Noteholders" the holders of the Convertible Loan
Notes
"Notice" notice convening the General Meeting,
which is set out at the end of this
document
"Obrar" Obrar Limited
"Options" or "Share Options" options to subscribe for New Ordinary
Shares under the Share Option Scheme
"Ordinary Shares" ordinary shares of 10p each in the
capital of the Company
"Praxis Group" the Praxis Group of companies including
Praxis Asset Management Limited, Praxis
Fiduciaries Limited, Praxis Fund Services
Limited, Praxis Pensions and Benefits
Limited, undamental Asset Management
Limited, PraxisFiduciaries (Switzerland)
SA, Praxis Luxembourg SA and Praxis
Fund Services (Malta) Limited
"Praxis" or "Praxis Trustees" Praxis Trustees Limited of Sarnia House,
Le Truchot, St Peter Port, Guernsey,
GY1 4NA, as trustee of the DNY Trust
137
"PRINCE2" a process-based methodology for effective
project management used extensively
by the UK Government and widely recognised
in the private sector, both in the
UK and internationally
"Progility" Progility Pty Ltd (formerly known as
Communications Australia Pty Ltd),
a company registered in Victoria with
ACN 131 639 837
"Proposals" means (a) the Acquisition; (b) the
Waiver; (c) the change of name; and
(d) Admission
"Resolutions" the resolutions set out in the Notice
"Restricted Jurisdiction(s)" each of Australia, Canada, Japan, New
Zealand, The Republic of South Africa
and the United States
"Sellers" Praxis Trustees, Mmilt Pty Ltd and
the Cameron Investment Trust (further
details of whom are set out in Part
VI of this document)
"Shareholders" holders of Ordinary Shares
"Share Option Scheme" the Company's existing share option
scheme, a summary of which is set out
in paragraph 8.1 of Part VII of this
document
"SPARK" SPARK Advisory Partners Limited, the
Company's financial and nominated adviser
"Takeover Panel" the Panel on Takeovers and Mergers
"UK" or "United Kingdom" the United Kingdom of Great Britain
and Northern Ireland
"UKLA" the Financial Conduct Authority acting
in its capacity as the competent authority
for the purposes Part VI of FSMA
"uncertificated" or "in an Ordinary Share recorded on the Company's
uncertificated form" register as being held in uncertificated
form in CREST and title to which, by
virtue of the CREST Regulations, may
be transferred by means of CREST
"Nominated Adviser Agreement" the conditional agreement dated 3 June
2013, between (1) SPARK, (2) the Company
relating to the Acquisition and Admission,
details of which are set out in paragraph
9.1.7 of Part VII of this document
"US" or "United States" the United States of America
"USE instruction" has the meaning given in the CREST
Manual
"Vecchio Family Trust" a discretionary trust of which Mario
Vecchio is a beneficiary
"VOIP" a methodology and group of technologies
for the delivery of voice communications
over Internet Protocol (IP) networks
138
"Waiver" or "Rule 9 Waiver" the consent of the Takeover Panel to
waive any obligations on members of
the Concert Party to make a mandatory
offer to Shareholders for the Ordinary
Shares not owned by members of the
Concert Party upon completion of the
Proposals which would otherwise arise
under Rule 9 of the Takeover Code as
a result of the issue of the Consideration
Shares to members of the Concert Party
in connection with the Acquisition
"Warrants" warrants to subscribe for up to 400,000
Ordinary Shares issued by the Company
pursuant to an instrument dated 17
December 2012 further details of which
are set out at
paragraph 9.1.4 of Part VII of this
document
"Whitewash Resolution" Resolution 2 in the Notice In this
document references to time are to
London time. Words importing the singular
shall include the plural and vice versa,
and words importing the masculine shall
include the feminine or neutral gender.
In this document references to time are to London time.
Words importing the singular shall include the plural and vice
versa, and words importing the masculine shall include the feminine
or neutral gender.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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