TIDMUBI
RNS Number : 0396I
Ubisense Group PLC
21 November 2018
Ubisense Group plc
(the "Company" or the "Group")
Proposed Sale of RTLS SmartSpace for up to GBP35.0m,
Proposed Change of Name to IQGeo and focus on myWorld product
offering
Ubisense Group plc (AIM:UBI), a market leader in enterprise
location intelligence solutions, is pleased to announce that it has
signed a conditional agreement to sell its RTLS SmartSpace business
unit, including the Ubisense brand, to a company that is owned and
controlled by funds managed or advised by Investcorp Technology
Partners, an affiliate of Investcorp Bank B.S.C. (the "Purchaser")
for up to GBP35.0m on terms set out below (the "Sale").
Highlights:
-- GBP30m to be paid in cash on completion (subject to
adjustments for net debt and net working capital on completion)
plus GBP2m in a rollover investment into the sold business and an
additional GBP3m earn-out tied to 2018 and 2019 revenue
performance;
-- Assuming completion of the transaction, IQGeo Group plc (as
the Company is proposed to be renamed on completion of the Sale -
please see below) will be a focused and well-funded geospatial
software company working with telecoms and utilities companies
worldwide;
-- The RTLS SmartSpace business unit liabilities arising as a
result of the Reorganisation and Completion are expected to
comprise a GBP0.8m tax liability and GBP2.3m lease liabilities
(IFRS 16). The Group's GBP1.75m HSBC loan is also classified as an
RTLS SmartSpace business unit liability which will be repaid on
completion;
-- In the audited results for the year ended 31 December 2017,
the IQGeo business generated revenue of GBP16.5 million and a
contribution of GBP4.4 million, and in the unaudited first half
results for the period ending 30 June 2018, the IQGeo business
generated revenue of GBP5.7 million and a contribution of GBP1.3
million;
-- Part of the consideration from the disposal of SmartSpace
will be used to continue the globalisation of IQGeo, in particular
in markets where fiber broadband and 5G investments are expected to
increase significantly over the next five years;
-- Cash balances of the Group have increased to GBP6.8m as at 16
Nov 2018 from GBP5.8m as at 30 June 2018;
-- Following completion of the Sale, the Board intends to return
excess funds to Shareholders (subject to complying with all
relevant law and regulation in effecting such return). Further
details of the amount and timing of the return to shareholders will
be made in due course.
The Board believes that the terms of the Sale are highly
attractive and appropriately value the future growth of the RTLS
SmartSpace business against the uncertain nature and timing of that
growth.
Completion of the Sale is conditional on, amongst other things,
the approval of the Company's shareholders (the "Shareholders") and
accordingly, a shareholder circular will be posted shortly for the
purpose of calling a general meeting of the Shareholders (the
"General Meeting"). Details of the General Meeting as well as
further information on the Sale and the conditions to completion of
the Sale are set out below. Completion of the Sale is expected to
occur in December 2018.
Ubisense Group plc will (assuming the Sale completes and becomes
unconditional in all respects) be renamed IQGeo Group plc ("IQGeo")
and will focus on the compelling market opportunities in the
Company's "myWorld" product offering. A resolution to approve the
change of the Company's name will also be proposed at the General
Meeting and, should the name change be approved, the shares of
IQGeo will trade on AIM under the ticker "IQG".
Richard Petti, CEO of Ubisense Group plc said
"This is an extremely positive change for both the RTLS
SmartSpace and the IQGeo divisions which the Board believes is in
the long-term best interests of both businesses. The proceeds will
allow us to refocus and re-brand the retained business as IQGeo and
to invest in its myWorld software business which has a significant
market opportunity providing solutions to some of largest telecoms
and utilities suppliers in the world.
As I look ahead to the potential for IQGeo, I am excited about
the prospect of building on the success of our myWorld enterprise
software which has increased revenues by a CAGR of more than 35%
since 2015. We have an excellent existing customer base across our
target markets and a growing pipeline of new opportunities driven
by worldwide growth in fiber broadband and 5G technology. From day
one, the mission of the IQGeo team will be to build on existing
foundations to create a global software business, with high levels
of recurring revenues, high margins and strong cash flows".
For further information contact:
Ubisense Group plc +44 (0) 1223 535170
Richard Petti
Tim Gingell
finnCap Ltd +44 (0) 20 7220 0500
Henrik Persson, Anthony Adams (Corporate Finance)
Tim Redfern, Richard Chambers (ECM)
Tulchan Communications LLP +44 (0) 20 7353 4200
James Macey White, Matt Low, Deborah Roney
Financial information on IQGeo
In the audited results for the year ended 31 December 2017, the
Geospatial myWorld business generated revenue of GBP16.5 million
and a contribution of GBP4.4 million. In the unaudited first half
results for the period ending 30 June 2018, the Geospatial myWorld
business generated revenue of GBP5.7 million and a contribution of
GBP1.3 million. Allocating relevant central costs gives unaudited
operating profit of GBP0.2 million for the year ending 31 December
2017 and an operating loss of GBP0.5 million for the period ending
30 June 2018.
Financial information on RTLS SmartSpace
In the audited results for the year ended 31 December 2017, the
RTLS SmartSpace business generated revenue of GBP10.8 million and
contribution of GBP1.4 million, whilst in the unaudited first half
results for the period ending 30 June 2018, the RTLS SmartSpace
business generated revenue of GBP4.6m and a contribution of GBP0.1
million. Allocating relevant central costs gives unaudited
operating loss of GBP3.3 million for the year ending 31 December
2017 and GBP2.2 million for the period ending 30 June 2018. The
value of the RTLS SmartSpace business' net assets (unaudited) at 30
June 2018 was GBP7.6 million (excluding intercompany balances).
Introduction to the proposed creation of IQGeo
IQGeo's flagship product myWorld enables its telecoms and
utilities customers to dynamically integrate the different elements
of their technology ecosystem in a fast and non-intrusive way,
creating an operations hub that helps visualize and manage the
status of people, data and things across the entire enterprise.
myWorld customers enable a connected enterprise using data and
location intelligence that increases the speed, accuracy and
productivity of both new build and maintenance operations by up to
25%.
Growth in IQGeo's target markets are being driven by significant
increases in global data consumption which is encouraging the
global deployment of broadband fiber to homes and businesses, 5G
mobile infrastructure densification as well as the on-going need
that utility companies have to upgrade ageing infrastructure while
maintaining margins and improving safety.
IQGeo's global target market consists of over 2,500 enterprise
customers worldwide that we value at GBP3-4bn over the next 5
years. The business already benefits from a blue-chip customer base
that includes over 30,000 users at some of largest telecoms and
utilities suppliers in the world as well as a management team with
strong experience in both telco and geospatial solutions.
IQGeo's myWorld revenues have grown 39% CAGR from 2015 to 2017,
thanks to consistent growth in its principal markets of telco,
fiber and utilities infrastructure. During this period, gross
margins have consistently improved thanks to the increased focus on
software and the shift of the revenue mix away from third party
consulting services. As IQGeo evolves its product offerings to
include more subscription and SaaS based offerings we expect the
revenue mix to include higher proportions of recurring revenue with
corresponding improvements in projected cashflows for the
business.
Background to the transaction and use of proceeds
While Ubisense's Geospatial myWorld and RTLS SmartSpace business
units share common high-level objectives, the technology and target
markets have remained different. Significant opportunity exists for
both businesses in markets that are demonstrating exciting change
and accelerating growth. By separating them into two independent
groups with separate ownership, the Directors believe that each
business will be able to pursue its own growth trajectory,
investing as required to enhance the solution offerings to their
separate customer bases.
Following completion of the Sale of the RTLS SmartSpace
business, IQGeo will be a focused software company working
exclusively with leading telecoms and utilities companies worldwide
and the Board will be able to focus on the significant
opportunities apparent in the communications and utility sectors
for productivity enhancing open platform support for geospatial
systems.
The net proceeds of the Sale will significantly bolster the
Group's cash balances, which have increased to GBP6.8m as at 16 Nov
2018 from GBP5.8m as at 30 June 2018.
Following completion, the Group intends to maintain a strong
balance sheet and to drive the expansion of IQGeo business in the
following areas:
- Further product development to expand the capabilities of the
myWorld Capture, Fiber Planning, network asset and Salesforce app
products including subscription and cloud based offerings;
- Investment in sales to increase the speed and depth of
approach to the market and, in particular, the largest prospects in
Europe and Asia where fiber broadband and 5G investments are
expected to increase significantly over the next five years;
and
- The launch a cloud-based version of myWorld which will offer
end-to-end solution for a much broader utilities and telecoms
market that is normally outside the scope of traditional geospatial
vendors.
Subject to the need to adequately fund the above plans and
maintain strong cash balances, the Board expects to return excess
funds to Shareholders (subject to complying with all relevant law
and regulation in effecting such return). The exact amount and
timing of the return to shareholders cannot be guaranteed and
accordingly further announcements will be made in due course.
Further information regarding the Sale
The Group is in the process of an internal reorganisation in
order to separate the business, assets and liabilities of the RTLS
SmartSpace business unit from the rest of the Group. It is the RTLS
SmartSpace business unit that the Company has conditionally agreed
to sell to the Purchaser. This restructuring is not conditional
upon shareholder approval or any of the other conditions explained
below.
The Purchaser (named Abyssinian Bidco Limited) is a wholly owned
subsidiary of Abyssinian Topco Limited. Abyssinian Topco Limited is
owned and controlled by Investcorp Technology Partners, an
affiliate of Investcorp Bank B.S.C.
The maximum consideration payable for the Sale is an aggregate
of GBP35.0 million comprising GBP30.0 million payable on completion
(on a cash free/debt free basis) plus GBP2.0 million in a rollover
investment into the sold business (to be effected by the issue to
the Company of shares in Abyssinian Topco Limited ("Consideration
Shares")) and an earn-out of up to GBP3.0 million on the following
terms:
- GBP1.5 million contingent on the sold business achieving an
agreed 2018 revenue target in 2018 and, subject to it meeting the
agreed target in 2019 referred to be below, in 2019; and
- GBP1.5 million contingent on the sold business achieving an agreed 2019 revenue target.
At the date of this announcement, the Board intends to retain
the Consideration Shares (which will comprise in the region of 5%
of the issued share capital of Abyssinian Topco Limited) following
completion of the Sale. This strategy will be reviewed on an
ongoing basis.
The RTLS SmartSpace business unit liabilities arising as a
result of the Reorganisation and Completion are expected to
comprise a GBP0.8m tax liability and GBP2.3m lease liabilities
(IFRS 16). The HSBC loan (being in the region of GBP1.75m) is also
classified as an RTLS SmartSpace business unit liability which will
be repaid on completion. These amounts will be deducted from the
GBP30.0m payable in cash on completion. Professional fees
associated with the Sale (including VAT) and reorganisation are
expected to be in the region of GBP2.1m. Accordingly, the net
initial cash proceeds of the Sale are expected to be in the region
of GBP23.0m.
Completion is conditional upon the following matters:
a) the completion of the restructuring referred to above;
b) the Shareholders passing the Sale Resolution at the General
Meeting to approve the Sale in accordance with the AIM Rules;
and
c) the approval of the German Federal Cartel Office (Bundeskartellamt) to the Sale;
If any of the conditions above are not satisfied or, if capable
of waiver by the Purchaser, not waived by the Purchaser, the Sale
will not take place.
Subject to the approval of Shareholders and the other conditions
noted above, the Sale is expected to complete in December.
On completion of the Sale and following a transition period, the
Company intends to move to a new head office.
General Meeting, Voting recommendation and irrevocable
undertakings
A shareholder circular will be posted shortly for the purpose of
calling a general meeting of the Company's shareholders (the
"General Meeting") at which a resolution to approve the Sale will
be proposed. A resolution to approve the change of the Company's
name to IQGeo Group plc will also be proposed at the General
Meeting. The General Meeting will be held on 13 December 2018 at
9.30am at the offices of Ubisense Group plc, St. Andrew's House,
St. Andrew's Road, Cambridge CB4 1DL.
The Directors (excluding Peter Harverson, who remains on
temporary leave of absence for medical treatment) intend to
unanimously recommend that Shareholders vote in favour of the
Resolutions to be proposed at the General Meeting as they have
irrevocably undertaken to do in respect of their beneficial
holdings amounting, in aggregate, to 6,594,358 Ordinary Shares,
representing approximately 9.0% of the existing ordinary share
capital of the Company. In addition, Kestrel Partners LLP have
irrevocably undertaken to vote in favour of the Resolutions in
respect of the 19,045,493 Ordinary Shares under their discretionary
management, representing approximately 26.1% of the existing
ordinary share capital of the Company. Combined these irrevocable
undertakings represent approximately 35.1% of the existing ordinary
share capital of the Company.
Sole financial advisor
KPMG LLP* acted as sole financial advisor to Ubisense Group plc
with regard to the Sale.
*KPMG LLP, which is authorised and regulated in the United
Kingdom by the Financial Conduct Authority, is acting exclusively
for the Company and for no-one else in connection with the matters
referred to in this announcement and will not be responsible to any
person other than the Company for providing the protections
afforded to clients of KPMG LLP, nor for providing advice in
relation to the matters referred to herein. Neither KPMG LLP nor
any of its affiliates owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of KPMG LLP in connection with the matters referred to
in this announcement, or otherwise.
This information is provided by RNS, the news service of the
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END
DISZMMZMVMKGRZG
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November 21, 2018 02:01 ET (07:01 GMT)
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