TIDMELE
RNS Number : 2273W
Electric Word PLC
16 November 2010
16 November 2010
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES, JAPAN, CANADA, AUSTRALIA OR THE
REPUBLIC OF IRELAND
Electric Word plc
("Electric Word" or the "Company")
Placing of 58.18 million Ordinary Shares at 4.25 pence per share to raise
GBP2.47 million
Highlights:
· Placing at 4.25 pence per share to raise GBP2.47 million.
· The Placing Price represents a discount of 2.9 per cent. to the closing
price of 4.375 pence per Ordinary Share on 15 November 2010 (being the business
day before the announcement of the Placing).
· Proceeds of the Placing to be used to:
o fund the acquisition of Professional publisher Radcliffe Publishing Limited
("Radcliffe"), which serves the primary healthcare market; and
o fund the proposed buyout of a contract with an existing business partner in
Electric Word's successful i-gaming affiliate marketing events and publishing
business.
· Trading in the Business Information division has continued to show growth
as a result of further strong performance in the i-gaming sector. Challenging
trading conditions in the schools market mean that although the period to 30
September 2010 was in line with market expectations, October trading and initial
indications in the important month of November suggest that the Group's adjusted
profit before tax in the current year is likely to be a little below market
expectations.
· Since the generally favourable settlement for Education and Health
outlined in the Comprehensive Spending Review ("CSR"), bookings for 2011 events
have started to return to expected levels, although we anticipate that in
general schools' confidence to spend may take some time to recover in full while
they wait for more detailed information on how policy will be applied in
practice. Over the course of the next six months we expect to see a steady
return to higher levels of activity.
Julian Turner, Chief Executive, commented on the Placing:
"The funds raised in the Placing will allow Electric Word to take advantage of
two excellent investment opportunities. The acquisition of Radcliffe strengthens
our Professional publishing by enabling us to expand into the primary healthcare
sector where the Government's planned reforms will, we believe, require GPs and
others in the Health sector to extend their professional development into new
areas of management expertise and compliance responsibilities. We are also in
advanced discussions to buy out our partner in the i-gaming affiliate marketing
events and publishing business which will consolidate our profits and improve
the margins in this part of our Business Information division. While recent
conditions make the outlook for this year uncertain, we remain optimistic about
the medium term opportunities for the Group, in part from the CSR and also from
investments we have been making in the digital futures of our businesses. As a
Group, we remain alert to opportunities to take advantage of in-fill and
strategic acquisitions."
This summary should be read in conjunction with the full text of this
announcement.
For further information please contact:
+--------------------------------+---------------------------------+
| Electric Word plc | Tel: +44 (0) 20 7954 3470 |
+--------------------------------+---------------------------------+
| Julian Turner | |
+--------------------------------+---------------------------------+
| | |
+--------------------------------+---------------------------------+
| Panmure Gordon (UK) Limited | Tel: +44 (0) 20 7459 3600 |
+--------------------------------+---------------------------------+
| Andrew Potts | |
| Callum Stewart | |
+--------------------------------+---------------------------------+
| | |
+--------------------------------+---------------------------------+
| Financial Dynamics | Tel: +44 (0) 20 7831 3113 |
+--------------------------------+---------------------------------+
| Tim Spratt | |
+--------------------------------+---------------------------------+
| Nicola Biles | |
+--------------------------------+---------------------------------+
This announcement has been issued by, and is the sole responsibility of,
Electric Word. This announcement does not constitute an offer to underwrite,
subscribe or otherwise acquire or dispose of any new Ordinary Shares or other
shares in Electric Word.
The Ordinary Shares have not been, and will not be registered under the United
States Securities Act of 1933, as amended (the 'Securities Act') or under the
securities legislation of any state of the United States, and may not be offered
or sold in the United States. The relevant clearances have not been, and will
not be, obtained from the Securities Commission of any province or territory of
Canada; no document in relation to the Placing has been, or will be, lodged
with, or registered by, The Australian Securities and Investments Commission; no
registration statement has been, or will be, filed with the Japanese Ministry of
Finance in relation to the Placing; and no registration statement has been, or
will be, filed with the Irish Stock Exchange in relation to the Placing.
Accordingly, subject to certain exceptions, the Ordinary Shares the subject of
the Placing may not, directly or indirectly, be offered or sold within the
United States, Canada, Australia, Japan or the Republic of Ireland or offered or
sold to a resident of the United States, Canada, Australia, Japan or the
Republic of Ireland.
This press release may contain forward-looking statements with respect to
Electric Word and its operations, strategy, financial performance and condition.
These statements generally can be identified by use of forward looking words
such as "may", "will", "expect", "estimate", "anticipate", "intends", "believe"
or "continue" or the negative thereof or similar variations. The actual results
and performance of Electric Word could differ materially from those expressed or
implied by such statements. Such statements are qualified in their entirety by
the inherent risks and uncertainties surrounding future expectations, including
that the transactions contemplated herein are completed. Important factors that
could cause actual results to differ materially from expectations include, among
other things, general economic and market factors, competition, changes in
government regulation. The cautionary statements qualify all forward-looking
statements attributable to Electric Word and persons acting on its behalf.
Unless otherwise stated, all forward-looking statements speak only as of the
date of this press release and the parties have no obligation to update such
statements.
Panmure Gordon (UK) Limited is authorised and regulated in the United Kingdom by
The Financial Services Authority, is advising Electric Word and no-one else in
connection with the Placing and will not be responsible to any person other than
Electric Word for providing the protections afforded to their clients or for
advising any other person in relation to the Placing.
Electric Word plc
("Electric Word" or the "Company")
Placing of 58.18 million Ordinary Shares at 4.25 pence per share to raise
GBP2.47 million
Electric Word plc (AIM: ELE), the specialist information publisher, is pleased
to announce that it has raised GBP2.47 million before expenses through a placing
of 58,183,824 new Ordinary Shares at 4.25 pence each. The Placing Price is at a
discount of 2.9 per cent. to the closing price of 4.375 pence per Ordinary Share
on 15 November 2010 (being the business day before the announcement of the
Placing). The Placing is not subject to Shareholder approval.
Reasons for the Placing and Use of Proceeds
In line with the Company's strategy, the Directors have continued to seek out
opportunities to grow the business through complementary acquisitions, which
offer Electric Word good value and opportunities to enhance its earnings. The
Directors are pleased to announce that Electric Word has identified two such
transactions: the acquisition of Professional publisher Radcliffe (the
"Radcliffe Acquisition"), for which a legally binding contract has been
exchanged and the buyout of our partner in the i-gaming affiliate events and
publishing business (the "Contract Buyout"), for which it is in advanced
discussions. It is intended to use the proceeds of the Placing to fund these
transactions. Together the Radcliffe Acquisition and the Contract Buyout will
add scale and increase profits in 2011.
Acquisition of Radcliffe Publishing Limited
Radcliffe is a UK-based specialist publisher founded in 1987, focused on
professional development and compliance in primary healthcare. It produces a
range of books for primary healthcare and general practice, including support
for General Practitioners ("GPs"), GP practice managers and professions allied
to heath; it covers general primary care, specialist areas such as child
protection and palliative care, and medical education and exam support. It also
produces six journals, including Education for Primary Care, and training
courses for practice nurses and receptionists.
Radcliffe reported a profit on ordinary activities before taxation of GBP81,731
for the financial year ended 31 March 2010 and had gross assets of GBP1,183,157
at 31 March 2010. The estimated cash currently held by Radcliffe is GBP500k. The
consideration for the Radcliffe Acquisition is payable to the shareholders of
Radcliffe, namely Andrew Bax, Gillian Nineham and Margaret McKeown ("the
Sellers") and consists of an initial aggregate consideration, gross of the cash
acquired, of GBP1.529 million payable in November 2010, comprising GBP1.396
million payable in cash and GBP133k, to be satisfied by the issue of 3,125,507
Ordinary Shares, at the Placing Price (the "Consideration Shares").
There is a price adjustment mechanism calculated by reference to gross profit of
Radcliffe for the twelve month period to 31 March 2011, whereby the
consideration is increased by the amount by which gross profit exceeds GBP893k
multiplied by 1.683, subject to an overall cap of GBP197k or reduced by the
amount gross profit is less than GBP893k multiplied by 1.683, subject to a cap
of GBP103k. In the 2011 price adjustment gross profit is according to the
Radcliffe definition which excludes distribution and some marketing costs.
There is also an earn-out calculated by reference to the gross profit of
Radcliffe for the twelve month period to 30 November 2012, whereby the
consideration is increased to 74.9% of the amount by which gross profit exceeds
GBP525k multiplied by 1.5, subject to a cap of GBP800k. In the 2012 earn-out
gross profit is according to the Group definition, which is calculated after all
distribution and marketing costs.
Completion of the acquisition of Radcliffe is conditional on completion of the
Placing and is expected to complete on 23 November 2010. Under the terms of the
agreement, the Sellers have agreed not to sell their Consideration Shares for
twelve months after completion, have given the Company standard restrictive
covenants for a period of two years from completion and have given warranties
and a tax indemnity in usual form.
The Directors estimate annual cost synergies of GBP200k from savings on
Radcliffe directors' fees and premises costs, and also expect to incur
integration costs of approximately GBP150k which will be taken in the current
year.
The Directors see good opportunities in the healthcare sector to add
conferences, expand training, build subscription revenues and develop digital
products - all areas where Electric Word has existing expertise in professional
markets.
Proposed contract buyout of partner in i-gaming affiliate marketing business
In 2006, iGaming Business Ltd, Electric Word's 70 per cent. owned subsidiary,
entered into a contract with the Casino Affiliate Programs business of
Affiliate Media, Inc. ("CAP") to produce information serving affiliate marketing
partners to the online gaming industry. This comprises a magazine and events
business, all of which are wholly managed by Electric Word. Under the terms of
the contract, CAP receives fees amounting to approximately 50 per cent. of
profits.
Revenue for this business, which totalled GBP1.5 million for the financial year
ended 30 November 2009, is currently recognised within Electric Word. Profits
generated by this business totalled approximately GBP0.5 million for the
financial year ended 30 November 2009, of which, GBP228k was payable to CAP.
Electric Word now plans to buy Affiliate Media, Inc. out of its benefits and
obligations under the existing contract. The consideration for the proposed
buyout comprises GBP1.1 million in cash, of which GBP0.55 million is payable on
completion of the Contract Buyout and GBP0.55 million is payable in November
2011. The Directors believe that the Contract Buyout will have a number of
benefits for Electric Word, including a consolidation of the profits within
Electric Word and reduction of complexity for management.
In addition, Electric Word is in discussions with the principals of Affiliate
Media, Inc. about new areas of potential future co-operation.
Electric Word is in advanced discussions regarding the Contract Buyout and a
further announcement is expected to be made in due course, although there can be
no guarantee that Electric Word will conclude an agreement with Affiliate
Media, Inc. for the Contract Buyout.
Financing Facilities
Electric Word has a GBP1.5 million revolving credit facility with RBS. Interest
is charged at 2.25 per cent. over RBS's base rate from time to time and is due
for repayment in May 2011. Electric Word is currently in constructive
discussions with RBS to replace the revolver with a GBP1.5m term loan repayable
over 3 years.
In addition to the revolving credit facility, Electric Word also has a GBP0.75
million overdraft facility that is currently unutilised and repayable on demand.
Interest is charged at 2.25 per cent. over RBS's base rate from time to time.
At the end of October 2010, Electric Word held GBP0.5 million of cash.
Current Trading and Prospects
Following a positive first half performance across the business, trading in the
second half has continued to show growth in our Business Information division,
but has been more challenging in the public sector markets between the general
election and the Comprehensive Spending Review.
The plans outlined in the CSR provide as helpful a background to future trading
as could be expected as cash budgets have been maintained in UK schools over the
next four years and more money will go to schools with a higher proportion of
children requiring additional educational support through the Pupil Premium.
Increased autonomy for schools will help drive the demand for our school
management information products and abolition of agencies such as the Teacher
Development Agency and reductions in funding to Local Education Authorities are
expected to reduce the provision of free professional development support from
the centre.
Nevertheless, despite the medium-term opportunities arising from the CSR, we
have experienced generally reduced demand from schools this year that has
affected books, new subscriptions sales and latterly conference delegate
bookings. In particular, advance conference bookings were very slow in the
period from July to September. Since the generally favourable settlement for
Education and Health outlined in the CSR, bookings for 2011 events have started
to return to expected levels, although we anticipate that in general schools'
confidence to spend may take some time to recover in full while they wait for
more detailed information on how policy will be applied in practice. Over the
course of the next six months we expect to see a steady return to higher levels
of activity.
Trading in the Business Information division has continued to show growth as
increased competition for customers between online gaming operators has driven
revenues in our affiliate marketing magazine and events.
As a result, good first half trading and subsequent strong performance in the
Business Information division meant that the Group was on course to meet
expectations at the end of September. October trading and initial indications in
the important month of November suggest that the Group's adjusted profit before
tax in the current year is likely to be a little below market expectations.
We remain optimistic about the medium term opportunities for the Group, in part
from the CSR and also from investments we have been making in the digital
futures of our businesses. As a Group, we continue to remain alert to
opportunities to take advantage of in-fill and strategic acquisitions.
Details of the Placing
The Company has conditionally raised approximately GBP2.47 million before
expenses (approximately GBP2.32 million net of expenses) by the conditional
placing of 58.18 million new Ordinary Shares at 4.25 pence per share to the
Placees. The allotment of the Placing Shares is conditional, amongst other
things, on Admission.
It is proposed to carry out the Placing in two stages. Application has been made
to the London Stock Exchange for the Admission of the First Placing Shares to
trading on AIM. It is expected that Admission of the First Placing Shares will
occur and that dealings will commence at 8.00 a.m. on 19 November 2010 at which
time it is also expected that the First Placing Shares will be enabled for
settlement in CREST.
Application has also been made to the London Stock Exchange for the Admission of
the Second Placing Shares to trading on AIM. It is expected that Admission of
the Second Placing Shares will occur and that dealings will commence at 8.00
a.m. on 22 November 2010 at which time it is also expected that the Second
Placing Shares will be enabled for settlement in CREST.
Application has also been made to the London Stock Exchange for the Admission of
the Consideration Shares to trading on AIM. It is expected that Admission will
occur and that dealings will commence at 8.00 a.m. on 24 November 2010 at which
time it is also expected that the Consideration Shares will be enabled for
settlement in CREST.
The Placing Shares and the Consideration Shares will be issued credited as fully
paid and will rank pari passu in all respects with the Ordinary Shares then in
issue, including the right to receive any future dividends and other
distributions. The Placing Shares and Consideration Shares will be in registered
form and no temporary documents of title will be issued.
Reasons for not carrying out a pre-emptive issue
The Directors have considered the most appropriate method to conduct the
fundraising, including carrying out a placing and open offer or a rights issue.
The Directors concluded that the time and costs associated with a pre-emptive
offer were excessive. After careful consideration, they concluded that the
benefit of minimising the costs of the fundraising by way of a non pre-emptive
cash placing would be in the best interests of Shareholders.
Related Party Transactions
Placing
Stewart Newton (and entities associated with Stewart Newton) has subscribed for
15,882,353 Placing Shares at the Placing Price pursuant to the Placing. Stewart
Newton (and entities associated with Stewart Newton) held a beneficial interest
in 58,991,171 Ordinary Shares prior to the Placing (representing 24.85 per cent.
of the Existing Ordinary Shares of the Company). Following completion of the
Placing, the holding of Stewart Newton (and entities associated with Stewart
Newton) in Electric Word is expected to be 74,873,524, representing 25.06 per
cent. of the Enlarged Share Capital.
ISIS has subscribed for 22,352,941 Placing Shares at the Placing Price pursuant
to the Placing. ISIS held 63,637,932 Ordinary Shares prior to the Placing
(representing 26.81 per cent. of the Existing Ordinary Shares of the Company).
Following completion of the Placing, the enlarged holding of ISIS in Electric
Word is expected to be 85,990,873, representing 28.79 per cent. of the Enlarged
Share Capital.
Under the AIM Rules for Companies, Stewart Newton (and entities associated with
Stewart Newton that hold Ordinary Shares in the Company) and ISIS, are treated
as related parties of Electric Word. The Directors of Electric Word consider,
having consulted with Panmure Gordon, the Company's nominated adviser, that the
terms of the transactions are fair and reasonable insofar as its shareholders
are concerned.
Taxation
The Company has applied to HMRC to obtain confirmation that the First Placing
Shares to be issued under the Placing will be regarded as eligible shares for
the purposes of the Venture Capital Trust scheme. To date, the Company has not
received confirmation from HMRC on whether the First Placing Shares will be
eligible shares for the purposes of the Venture Capital Trust scheme.
The Company is unable to guarantee that the First Placing Shares will meet the
requirements of a qualifying holding. If the Company does receive confirmation
from HMRC that the First Placing Shares are eligible shares for the purposes of
the Venture Capital Trust scheme, the Company is unable to guarantee that the
Placing Shares will continue to meet the requirements of a qualifying holding in
the future. The main ways in which the Placing Shares might cease to be
qualifying are (i) if the Company were to become the subsidiary of another
company, (ii) if the Company were to fail to use the proceeds of the Placing for
a qualifying business activity within the relevant time limits, or (iii) if the
activities of the Company and its subsidiaries were to include substantial
non-qualifying activities as set out in section 303 ITA 2007.
Placees should note that eligibility is also dependent on a Shareholder's own
position and not just that of the Company. Accordingly, investors should seek
advice from their own independent professional advisers on their own
eligibility.
Definitions
The following definitions apply throughout this announcement, unless the context
requires otherwise.
+----------------------+------------------------------------------+
| | |
+----------------------+------------------------------------------+
| "Admission" | admission of the Placing Shares and the |
| | Consideration Shares to trading on AIM |
| | |
+----------------------+------------------------------------------+
| "AIM" | the AIM market operated by London Stock |
| | Exchange |
| | |
+----------------------+------------------------------------------+
| "AIM Rules for | the AIM Rules for Companies and guidance |
| Companies" | notes as published by the London Stock |
| | Exchange from time to time |
| | |
+----------------------+------------------------------------------+
| "Board" or the | the directors of the Company as at the |
| "Directors" | date of this announcement |
| | |
+----------------------+------------------------------------------+
| "Company" or | Electric Word plc |
| "Electric Word" | |
| | |
+----------------------+------------------------------------------+
| "Consideration | the 3,125,507 Ordinary Shares issued as |
| Shares" | part consideration for the Acquisition |
| | |
+----------------------+------------------------------------------+
| "Electric Word | Electric Word plc and its subsidiaries |
| Group" or "Group" | |
| | |
+----------------------+------------------------------------------+
| "Enlarged Share | the entire issued share capital of the |
| Capital" | Company following completion of the |
| | Placing |
| | |
+----------------------+------------------------------------------+
| "Existing Ordinary | the 237,408,131 Ordinary Shares in issue |
| Shares" | on the date of this announcement |
| | |
+----------------------+------------------------------------------+
| "First Placing | the 22,352,941 Ordinary Shares the |
| Shares" | subject of the Placing |
| | |
+----------------------+------------------------------------------+
| "FSMA" | Financial Services and Market Act 2000 |
| | (as amended) |
| | |
+----------------------+------------------------------------------+
| "HMRC" | Her Majesty's Revenue and Customs |
| | |
+----------------------+------------------------------------------+
| "ISIS" | ISIS Equity Partners LLP and entities |
| | under its management, including, but not |
| | limited to, Baronsmead AIM VCT plc, |
| | Baronsmead VCT plc, Baronsmead VCT 2 |
| | plc, Baronsmead VCT 3 plc and Baronsmead |
| | VCT 4 plc |
| | |
+----------------------+------------------------------------------+
| "LIBOR" | the London Interbank Offered Rate from |
| | time to time |
+----------------------+------------------------------------------+
| "London Stock | London Stock Exchange plc |
| Exchange" | |
| | |
+----------------------+------------------------------------------+
| "Ordinary Shares" | ordinary shares of 1p each in the |
| | capital of the Company |
| | |
+----------------------+------------------------------------------+
| "Panmure Gordon" | Panmure Gordon (UK) Limited |
| | |
+----------------------+------------------------------------------+
| "Placees" | subscribers for Placing Shares |
| | |
+----------------------+------------------------------------------+
| "Placing" | the placing of the Placing Shares |
| | |
+----------------------+------------------------------------------+
| "Placing Price" | 4.25 pence per Placing Share |
| | |
+----------------------+------------------------------------------+
| "Placing Shares" | the First Placing Shares and the Second |
| | Placing Shares |
| | |
+----------------------+------------------------------------------+
| "Radcliffe" | Radcliffe Publishing Limited |
| | |
+----------------------+------------------------------------------+
| "RBS" | Royal Bank of Scotland plc |
| | |
+----------------------+------------------------------------------+
| "Second Placing | the 35,830,883 Ordinary Shares the |
| Shares" | subject of the Placing |
| | |
+----------------------+------------------------------------------+
| "Shareholders" | holders of Ordinary Shares |
| | |
+----------------------+------------------------------------------+
| "UK" | the United Kingdom of Great Britain and |
| | Northern Ireland |
| | |
+----------------------+------------------------------------------+
| "VCT" | Venture Capital Trust |
+----------------------+------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOELLFVTLTLELII
Electric Word (LSE:ELE)
過去 株価チャート
から 6 2024 まで 7 2024
Electric Word (LSE:ELE)
過去 株価チャート
から 7 2023 まで 7 2024
