TIDMPROX
RNS Number : 6367R
Proxama PLC
13 December 2016
13 December 2016
Proxama PLC
("Proxama" or the "Company" and with its subsidiaries the
"Group")
Pre-Close Trading Update, Strategic Review Update, Financing
Update and Share Capital Update
Proxama PLC, (AIM: PROX), the mobile commerce company
specialising in proximity marketing and a provider of end-to-end
payment solutions for card issuers and processors, announces a
pre-close update on trading for the year ending 31 December 2016, a
financing update and a strategic review update.
Pre-Close Trading Update
Proximity Marketing Division
The Proximity Marketing Division has made significant progress
throughout 2016. We have successfully established the largest
proximity marketing beacon network in the UK, with high
concentration across London and in many cases, long-term and
exclusive contracts with leading media and location owners.
In September 2016, Proxama was one of only two companies
worldwide to be certified by Google as a Location Services Provider
and the only one outside of the US, leading to significant inbound
sales leads. In November, Proxama was ranked as the No. 1 global
proximity solutions provider in the world by Unacast in their Q3
Proxbook summary report.
The monetising of the Proximity Marketing Division's beacon
network and associated technologies is underway with a good spread
of well-known domestic and international brands choosing to utilise
the network with innovative new campaigns.
The Proximity Marketing Division has created 6 branded data
audiences which are now available through our data partners Oracle
BlueKai and AdSquare. Now, brands can target audiences such as
socialites, shoppers, sports fans and commuters using Proxama's
accurate location data and context.
We expect proximity marketing and particularly the use of
beacons to dramatically expand during 2017 with industry forecasts
stating that the proximity marketing market is expected to be worth
$52billion globally by 2022, at a CAGR of 30% between 2016 and
2022. We have now started to conduct business internationally to
ensure we capture that market opportunity.
The industry awareness of contextual marketing using
hyper-accurate location technologies is fast maturing, which when
combined with the marketing spend of mobile catching up with the
real-world use, creates the ideal commercial circumstances for
significant revenue growth for the Proximity Marketing
Division.
Activity within the Proximity Marketing Division continues to
accelerate, with revenue doubling year-on-year and revenue and
other income relating to grants from Innovate UK expected to be
GBP0.7m in 2016. The objective for 2017 is to get the Proximity
Marketing Division to monthly cash break even during 2017. To
achieve this, we expect to:
1. Significantly increase the number of app partnerships from 3 to 10
2. Further grow the beacon network, both in our existing
transport sector and new sectors such as retail and new locations
outside of London;
3. Increase the number and type of campaigns we run and develop
our data sales by adding new audiences, data types and new data
partners;
4. Scale our technology with further advances in geo-location
technology, including but not limited to, further integration with
Google; and
5. Explore new international regions where the proximity marketing model can be replicated.
Digital Payments Division
The Digital Payments Division has enjoyed a positive second half
of 2016. We have been awarded strategic deals with new clients in
the Middle East and South Africa for our EMV and Electronic PIN
Management Solutions which will further our penetration in these
high growth markets and accelerate our credibility and references
for further deals in these regions.
Delivering a first-class service to support clients such as
Diners Club and Tutuka in South Africa to issue EMV cards and
deploy Mobile Payments has been a significant focus and a
successful one. In particular, our Mobile Payments solution has now
been proven in a Software as a Service (SaaS) delivery model which
supports a fast and scalable solution for our clients.
Investment continues to develop our software solutions in line
with the evolving market for Mobile Payments to ensure we have a
compelling proposition and we are working with the major industry
players to maximise our opportunity. We are actively pursuing
opportunities for our EMV and Mobile Payments solutions in the US
and EMEA and are confident that we will continue to win key
opportunities in these territories. We also expect to announce in
the near term a very significant US partner relationship which
should accelerate sales across that market.
Financial Highlights
The Group expects to achieve revenues and other income of
approximately GBP2.6 million for the full year compared to GBP2.9
million in 2015. Revenues in the second half of 2015 were boosted
by a substantial "hurdle" payment from our largest US customer
within the Digital Payments Division and this will not recur in
2016. At an underlying level the Business has performed well with
16% year on year growth.
The continued drive of cost management saw a reduction in the
Group's operating costs from H1 2016 to H2 2016 of a further 24%
and leaves the Company well positioned going into 2017.
The Group EBITDA for 2016 is projected at a loss of GBP3.5m, a
GBP1.5m improvement on 2015 showing a 31% year on year improvement.
Cash balances at 1 December 2016 stood at GBP0.7m.
Strategic Review Update
We have been reviewing various options throughout 2016 to sell
the Digital Payments Division with a priority being to maximise
shareholder value. Discussions are currently with two potential
parties. We had anticipated that the transaction would complete in
2016, however we have had to extend the sale process into 2017. The
Company remains committed to the sale and we believe that it will
be completed.
Financing Update
The Company has decided to raise external capital to support the
Company's immediate and medium term working capital requirements
ahead of the sale of the Digital Payments Division. The Board has
considered a number of financing options to bridge this period and
announces that on 12 December 2016 it secured funding of GBP1.8
million (before costs) through the issue of convertible loan notes
("Convertible Loan Notes") to Darwin Capital Limited ("Darwin").
The Board is of the opinion that this facility provides the
necessary bridge finance for the continued working capital of the
business at the lowest cost.
The Convertible Loan Notes are divided into 80 individual notes,
with a par value of GBP25,000 each ("Par Value") and an issue price
of GBP22,500 each. They are unsecured and do not bear interest.
The Convertible Loan Notes are convertible at Darwin's election
into new ordinary shares of 0.01p each in Proxama ("Ordinary
Shares") at a conversion price of the lesser of: (i) 1.24875p per
new Ordinary Share or 90% of the arithmetic average of five daily
volume weighted average share price calculations selected by Darwin
out of the twenty trading days prior to conversion. To the extent
not converted into Ordinary Shares, the Convertible Loan Notes are
repayable on the first anniversary of the facility.
The Company may redeem the Convertible Loan Notes at 105% of Par
Value at any point and Darwin may redeem them at 120% of Par Value
on a change of control, event of default or where the Company has
insufficient authority to allot Ordinary Shares following a
conversion notice being issued.
Darwin has also been issued with detachable warrants to
subscribe for 75,675,676 new Ordinary Shares at an exercise price
of 1.24875p per new Ordinary Share. The warrants can be exercised
over a period of five years and seven days from 12 December
2016.
The Company has provided customary warranties, indemnities and
undertakings to Darwin in connection with the issue of the
Convertible Loan Notes. The Company has also paid an arrangement
fee of GBP80,000 to Darwin, together with its expenses incurred in
connection with the facility.
If the Loan Notes were fully converted at 90% of the arithmetic
average of five lowest daily volume weighted average share price
calculations out of the twenty trading days prior to 12 December
2016, they would result in 254,725,151 Ordinary Shares,
representing approximately 14.8% of the Group's existing issued
share capital.
The Board does not at this stage anticipate any further issuance
of convertible loan notes.
Share Capital Update
The Company has recently been made aware of a minor anomaly in
its reported issued share capital. The Company has previously
reported its entire issued Ordinary Share capital as being
1,720,970,094 Ordinary Shares. However, this number does not
account for 275,162 Ordinary Shares issued in connection with a
clerical error relating to the Company's employee share scheme
nominee account.
Accordingly, the Company has made an application to the London
Stock Exchange for 275,162 new Ordinary Shares to be admitted to
trading on AIM ("Admission"). It is expected that Admission will
become effective on 16 December 2016.
Following this notification, the Company has 1,721,245,256
Ordinary Shares in issue. There are no Ordinary Shares currently
held in treasury. The total number of voting rights in the Company
therefore will be 1,721,245,256 and this figure may be used by
shareholders as the denominator for the calculations by which they
determine if they are required to notify their interest in, or a
change to their interest in, the Company under the Financial
Conduct Authority's Disclosure Rules and Transparency Rules.
John Kennedy, Chief Executive of Proxama said:
"We believe in the future of both Divisions and remain committed
to completing the sale of the Digital Payments Division. This is
expected to provide a robust financing position for supporting
Proximity Marketing for the mid to long term and prove sufficient
to exploit the global market opportunity. We have a strong pipeline
of deals for both Divisions which we hope to sign and announce in
the near term. This, together with the new funds being raised from
the Convertible Loan, should ensure Proxama moves forward into 2017
in a stronger position."
Enquiries:
Proxama PLC
John Kennedy, Chief
Executive 020 3668 2888
------------------------- --------------
Peel Hunt LLP
(Nominated Adviser and
Broker)
Richard Kauffer
Euan Brown 020 7418 8900
------------------------- --------------
Novella
Tim Robertson
Toby Andrews 020 3151 7008
------------------------- --------------
This announcement contains inside information for the purposes
of Article 7 of regulation 596/2014.
Forward looking statements
Certain statements contained within the announcement are forward
looking statements and are based on current expectations, estimates
and projections about the potential returns of Proxama and industry
and markets in which Proxama operates, the Directors' beliefs and
assumptions made by the Directors. Words such as "expects",
"anticipates", "should", "intends", "plans", "believes", "seeks",
"estimates", "projects", "pipeline" and variations of such words
and similar expressions are intended to identify such forward
looking statements and expectations. These statements are not
guarantees of future performance or the ability to identify and
consummate investments and involve certain risks, uncertainties,
outcomes of negotiations and due diligence and assumptions that are
difficult to predict, qualify or quantify. Therefore, actual
outcomes and results may differ materially from what is expressed
in such forward looking statements or expectations. Among the
factors that could cause actual results to differ materially are:
the general economic climate, competition, interest rate levels,
loss of key personnel, the result of legal and commercial due
diligence, the availability of financing on acceptable terms and
changes in the legal or regulatory environment.
These forward-looking statements speak only as of the date of
this announcement. Proxama expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statements contained herein to reflect any change
in Proxama's expectations with regard thereto, any new information
or any change in events, conditions or circumstances on which any
such statements are based, unless required to do so by law or any
appropriate regulatory authority."
This information is provided by RNS
The company news service from the London Stock Exchange
END
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