TIDMGRA
RNS Number : 5475K
Grafenia plc
29 August 2023
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29 August 2023
Grafenia plc
("Grafenia" or "the Company" or the "Group")
Placing and Subscription to raise approximately GBP23.0
million
Open Offer to raise up to approximately GBP4.9 million
and
Notice of General Meeting
Grafenia plc (AIM: GRA) is pleased to announce a Fundraising to
raise a total of up to approximately GBP27.9 million (before
expenses), comprising a conditional Placing and Subscription,
supported by new and existing investors, and a conditional Open
Offer to Qualifying Shareholders.
Fundraising highlights
-- Placing and Subscription to raise approximately GBP23.0
million at an Issue Price of 8.5p per New Ordinary Share
-- Open Offer to Qualifying Shareholders to raise up to
approximately GBP4.9 million at an Issue Price of 8.5p per New
Ordinary Share
-- The Issue Price represents a discount of 17.1 per cent. to
the closing mid-market price of 10.25p per ordinary share on 25
August 2023
-- Fundraising proceeds to be used to:
-- fund future acquisitions;
-- repurchase certain of the Company's existing bond
arrangements; and
-- pay deferred consideration on previous acquisitions
-- Grafenia trading in line with internal forecasts
-- Newly acquired business units performing as expected and contributing to profitability
Qualifying Shareholders are invited to apply for Open Offer
Shares under the Open Offer at the Issue Price of 8.5 pence per
Open Offer Share, payable in full on application and free of all
expenses, pro rata to their existing shareholdings on the basis
of:
One Open Offer Share for every Two Existing Ordinary Shares held
at the Record Date.
For further information:
Grafenia plc
Gavin Cockerill 07968 510 662
Allenby Capital Limited (Nominated Adviser and Broker)
David Hart / Piers Shimwell (Corporate Finance) 0203 328
5656
Background to and reasons for the Fundraising
Grafenia, historically, has been known predominantly within the
graphics sector. Over the years, moving from a franchise model with
printing.com to a software licensing model with Nettl. In both
cases, the 'secret sauce' was always the software. We've built
software for many years. It runs our Nettl Systems business and we
licence it around the world.
Given the Company's background in software, in 2021, we
announced a change in our acquisition plans. Repositioning the
business to better utilise our status as a public company. To focus
on and invest in building the structure required to become a serial
acquirer of vertical market software ("VMS") businesses.
The first step in the transition was the sale of our production
facility, Works Manchester Limited. That moved our business away
from asset-heavy manufacturing, enabling us to focus on software
and systems.
What that meant was our Nettl Systems business became a software
operation, with a significantly reduced cost base. But as a Group,
we became smaller as a result of the divestment, with the same
central costs. Growing the size of the Group, faster, became the
priority.
Since then, we've doubled down on our acquisition strategy with
the aim of achieving that growth. Developing an active deal
origination process which has resulted in four acquisitions during
the previous financial year ended 31 March 2023 ("FY23"). Building
a healthy deal flow at the same time.
To date, we've utilised our bond facility to fund the
acquisitions. During FY23 we issued GBP11.2m of bonds, at nominal
value, raising GBP9.5m before expenses. We deployed GBP9.6m of
capital, including deal costs.
Our method
We're continually evaluating multiple VMS business targets. We
find potential acquisitions through our outreach program. Engaging
with niche, business-to-business, and mission-critical
platforms.
We look for businesses where the majority of revenues are
recurring in nature and logo churn is low. The sustainability of
our strategy is underpinned by the recurring revenue model. This
approach allows for a more reliable revenue stream, promoting
long-term stability.
The businesses we have acquired have been stable or shown growth
over the past three years.
We've invested in building an acquisition 'flywheel'. A
structured approach to drive leads for potential acquisition
targets. Our deal flow continues to look healthy, having a pipeline
of deals we are hoping may progress.
To help us find and prioritise the right kind of deals, we have
a framework, a set of what we call 'Guard Rails'. For example:
-- Target is UK/IE based
-- Target has a clearly defined niche market
-- Majority of revenues are recurring in nature, a minimum of GBP500k per annum
-- Valuation multiple -> up to 7x (adj EBITDA)
-- Logo churn < 10%
-- Customer concentration as % of recurring revenue is low
-- Number of customers > 30
We run our business units in a decentralised way and actively
avoid centralisation and consolidation. We do this to encourage an
entrepreneurial spirit and culture in each business which is run by
its own management team, supported by the Board. Our aim is to
become the permanent home for those businesses and their management
talent.
Depending on the reason for the sale, sometimes the owners
remain. Sometimes the owners leave as part of the deal but the
targets have an existing management team in place. Other times,
we'll hire a managing director to replace the owners during a
transition period.
Once there is mutual conviction that a target is right, we value
a business based on a multiple of its adjusted earnings. Our
experience from the first four deals we've completed suggests we
are able to acquire VMS businesses at 4-6x adjusted EBITDA.
Our progress so far
Over the last 12 months, we set out to prove three things. That
we can find and buy businesses that meet our criteria within the
valuation metrics that we set. That we can complete those deals
quickly and efficiently. And of course, that we can successfully
operate those businesses.
A year on, Grafenia is now home to five software business units
across multiple sectors that match our criteria. Those businesses
have been, in the main, acquired during the latter stages of
FY23.
As a result, the Group looks a little different today. We no
longer own the production facility Works Manchester and Grafenia no
longer exists solely in the graphics space. Our portfolio of
businesses operate primarily within the following sectors: Graphics
& Ecommerce, Finance, Property and Care sectors.
Vertical Plus Limited ("Vertical Plus")
In October 2022, we acquired Vertical Plus, an E-commerce
storefront and inventory management platform for a consideration of
GBP2.25m plus an earnout of up to GBP0.63m. Recurring revenues are
generated through licence fees to access the software and royalties
from sales generated via the platform.
Two owner-managers left the business, and one is remaining for a
transitionary period as a consultant. The sales director, also an
owner, was promoted to managing director(*) upon completion.
(*) Not a Statutory Director
Vertical Plus Historic Performance - Last three financial
years(1)
Financial Year 2020 2021 2022
Sales GBP1.8m GBP2.4m GBP2.0m
EBITDA GBP0.35m GBP0.66m GBP0.25m
Adj EBITDA(2) GBP0.27m GBP0.39m GBP0.38m
ROS % 15% 16% 19%
(1) Unaudited Management Accounts
(2) Adjustments to EBITDA made during Financial Due Diligence.
This does not reflect all adjustments made for valuation or future
company adjustments to EBITDA
EBITDA Adjustments: Directors' Pensions, Exiting Staff Costs,
Deal Costs, Non-Recurring Costs, CJRS Income, EU Grant,
Dividends.
Watermark Technologies Limited ("Watermark")
In December 2022, we acquired Watermark, a document management
platform optimised for independent financial advisors, for a
consideration of GBP2.5m. Recurring revenues are generated through
licence fees to access the software.
Two founder-managers left the business, both remaining for a
transitionary period as consultants. A new managing director(*) ,
involved during the acquisition process, has been hired to drive
the business forward.
(*) Not a Statutory Director
Watermark Historic Performance - Last three financial
years(1)
Financial Year 2020 2021 2022
Sales GBP1.2m GBP1.2m GBP1.2m
EBITDA GBP0.19m GBP0.34m GBP0.44m
Adj EBITDA(2) GBP0.32m GBP0.39m GBP0.42m
ROS % 27% 33% 35%
(1) Unaudited Management Accounts
(2) Adjustments to EBITDA made during Financial Due Diligence.
This does not reflect all adjustments made for valuation or future
company adjustments to EBITDA
Adjustments: Directors' Pensions, CJRS Income, Dividends.
Care Management Systems Limited ("Care Docs")
In January 2023, we acquired Care Management Systems t/a Care
Docs, a Care Home Management platform, for a consideration of
GBP3.5m. Recurring revenues are generated through licence fees to
access the software on each device required.
Two founder managers left the business, one remaining for a
transitionary period as a consultant. A management team was already
in place and has remained since completion.
Care Docs Historic Performance - Last three financial years(1)
:
Financial Year 2020 2021 2022
Sales GBP2.1m GBP2.3m GBP2.5m
EBITDA GBP0.58m GBP0.45m GBP0.14m
Adj EBITDA(2) GBP0.74m GBP0.66m GBP0.38m
ROS % 36% 29% 15%
(1) Unaudited Management Accounts
(2) Adjustments to EBITDA made during Financial Due Diligence.
This does not reflect all adjustments made for valuation or future
company adjustments to EBITDA
Adjustments: Non-recurring costs.
Topfloor Ltd ("Topfloor")
In February 2023, we acquired Topfloor, a property management
platform, for a consideration of EUR4.8m plus an earnout of up to
EUR1.4m. Recurring revenues are generated through licence fees to
access the software.
One of three founder managers left upon completion. Two remain,
the CEO and CTO(*) .
(*) Not a Statutory Director.
Topfloor Historic Performance - Last three financial
years(1)
Financial Year 2020 2021 2022
Sales EUR1.2m EUR1.4m EUR1.6m
EBITDA EUR0.11m EUR0.05m EUR0.38m
Adj EBITDA(2) EUR0.48m EUR0.65m EUR0.74m
ROS % 39% 48% 46%
(1) Unaudited Management Accounts
(2) Adjustments to EBITDA made during Financial Due Diligence.
This does not reflect all adjustments made for valuation or future
company adjustments to EBITDA
Adjustments: Directors' Remuneration, Directors' Pensions.
We have successfully onboarded our newly acquired businesses and
they are contributing to profitability and performing as
expected.
We plan to drive organic growth by benchmarking performance
metrics, providing focus, structure and know-how around operational
best practice. Ultimately, we acquire these businesses for what
they can do for the Company i.e. bring recurring revenues and
profit.
The four acquisitions have a combined annual turnover of over
GBP7.0m. GBP2.2m of total Group sales in the FY23 was generated by
these acquired businesses, having been acquired during the latter
stages of FY23.
Our Nettl Systems business generated GBP9.5m of sales (2022:
GBP8.9m) during FY23 which is a 7% year-on-year increase. That's a
welcome result, but it was coming off a year still impacted by the
COVID pandemic. We still expect Nettl Systems to grow organically,
as we continually develop the platform to future-proof our partners
and increase the product range offered. But that growth may be more
modest and may not significantly 'move the needle' in terms of
Group size. Our focus at Group level, is therefore on scaling by
way of acquisition.
Our Current Portfolio
Below, you'll see a breakdown of the FY23 sales contribution of
our five operating business units for the period since
acquisition.
Business Sector Date Initial Deferred Group
Unit Acquired Consideration Consideration Sales
FY23
Nettl Systems Graphics & Ecommerce n/a n/a n/a GBP9.53m
Vertical Ecommerce & 01/10/22 GBP1.25m GBP1.00m GBP1.01m
Plus Inventory Management
Watermark Document Management 07/12/22 GBP1.50m GBP1.00m GBP0.42m
Care Docs Care Management 18/01/23 GBP2.98m GBP0.52m GBP0.55m
TopFloor Property Management 17/02/23 GBP3.42m GBP0.85m GBP0.17m
Total GBP9.15m GBP3.37m GBP11.68m
Use of Proceeds
The Company funded the first round of deals using our Bond
facility. This helped us prove the story and allowed us to link
fundraising with opportunities in a flexible way.
Initial Deferred Bond Bond Bond Total
Consideration Consideration 1 (Cash) 2 (Cash) 3 (Cash) (Cash)
- - GBP4.25m GBP2.72m GBP2.55m GBP9.52m
Vertical GBP1.25m GBP1.00m GBP1.25m - -
Plus
Watermark GBP1.50m GBP1.00m GBP1.50m - -
Care Docs GBP2.98m GBP0.52m - GBP2.98m -
Topfloor GBP3.42m(*) GBP0.85m(*) - - GBP3.42m(*)
Total Consideration GBP9.15m GBP3.37m GBP12.52m
Capital Deployed GBP2.75m GBP2.98m GBP3.42m GBP9.15m
Difference GBP1.5m -GBP0.26m -GBP0.87m GBP0.37m
(*) EUR to GBP conversion as at 17/02/23 = 0.89
Source:
https://www.exchangerates.org.uk/EUR-GBP-17_02_2023-exchange-rate-history.html
For phase two, our aim is to continue the execution of our
acquisition strategy and the growth of the Group. We plan to use
the proceeds of this Fundraising to acquire more VMS businesses
that match our criteria.
In the short term, while the Company is seeking to identify and
negotiate further acquisitions, the Company expects to utilise some
of the proceeds from issue of the First Placing Shares to
repurchase certain of its existing Bond arrangements. Following
discussions with bond holders and the Company's substantial
shareholders, the Board expect to repurchase up to GBP7.6m of bonds
at 87% of their face value (utilising up to GBP6.6m of the proceeds
of the Fundraising excluding accrued interest payable and
costs).
In addition, the Fundraising will enable the Company to pay
GBP3.4m of deferred consideration that will become due for the
first four acquisitions, and GBP0.3m of fundraising costs.
The Company expects to utilise the remaining amount to acquire
VMS businesses that match our criteria. The Company plans to
finance further acquisitions with a prudent mix of equity and debt
which may include further restructuring of the remaining bond
facility. Alongside this, the Company plans to source traditional
bank debt facilities to provide a long-term funding option to
support the Company's serial acquisition strategy.
Current trading and outlook
With the acquisitions we've added to the Group, on a run-rate
basis, annualised sales would be approximately GBP17m. We're
currently trading in line with our internal forecasts and newly
acquired business units are performing as expected and contributing
to profitability. We're therefore cautiously optimistic about the
upcoming year. With a full year's trade from our newly acquired
businesses, our goal of achieving EBITDA at 10-15% of sales, after
central costs, is considered by the directors to be a realistic
target.
As we further reposition our business, the search for VMS
businesses continues and our deal flow looks healthy. Our focus
remains on scaling the Group by way of acquisition.
Our preliminary results statement for the year ended 31 March
2023 was announced on 26 July 2023.
Details of the Placing and Subscription
The Company has conditionally raised GBP23.0 million of cash by
means of the Placing and Subscription of 270,588,228 new Ordinary
Shares at the Issue Price.
The Placing is conditional upon, inter alia, the passing of the
Resolutions to be put to Shareholders at the General Meeting.
The Placing is being conducted in two tranches to allow the
Company to utilise certain funds from the First Placing Shares to
repurchase certain of its existing issued bonds and allow those
bondholders to re-invest in the Company and receive new Ordinary
Shares.
Subject to the passing of the Resolutions at the GM, the first
tranche of the Placing, will raise a total of approximately GBP10.4
million by the issue of 122,941,172 new Ordinary Shares (being the
First Placing Shares) at the Issue Price. In addition, the
Subscription will raise approximately GBP2.7 million by the issue
of 31,764,702 new Ordinary Shares (being the Subscription Shares)
at the Issue Price. It is expected that First Admission will take
place on or around 20 September 2023. The allotment of the First
Placing Shares is conditional, inter alia, upon First Admission and
the Placing and Open Offer Agreement becoming unconditional in
respect of the First Placing Shares and not being terminated in
accordance with its terms prior to First Admission.
Subject to the passing of the Resolutions at the GM, the second
tranche of the Placing will raise a total of approximately GBP9.9
million by the issue of 115,882,354 Ordinary Shares (being the
Second Placing Shares) at the Issue Price. In addition, the
allotment of the Second Placing Shares is conditional, inter alia,
on the Placing and Open Offer Agreement becoming unconditional in
respect of the Second Placing Shares and not being terminated in
accordance with its terms prior to Second Admission. Open Offer
Shares to be issued pursuant to the Open Offer will also be
included in the Second Admission. It is expected that Second
Admission will take place on or around 29 September 2023.
The Placing Shares, the Subscription Shares and the Open Offer
Shares, when issued and fully paid, will rank equally in all
respects with the Existing Ordinary Shares, including the right to
receive all dividends and other distributions declared, made or
paid after admission to trading on AIM.
Following First Admission, the Company's enlarged issued
ordinary share capital will comprise 269,196,702 Ordinary Shares
with voting rights. The Company does not hold any Ordinary Shares
in treasury. Therefore, the total number of Ordinary Shares in the
Company with voting rights will be 269,196,702. As the take-up of
the Open Offer cannot be predicted, the number of Ordinary Shares
in issue (and the total number of voting rights) following Second
Admission will be announced at that time.
The placing and Open Offer Agreement
Pursuant to the terms of the Placing and Open Offer Agreement,
Allenby as agents to the Company, has conditionally agreed to use
its reasonable endeavours to procure Placees for the Placing Shares
to be issued under the Placing. The Placing is conditional, inter
alia, upon the Placing and Open Offer Agreement becoming
unconditional and not being terminated in accordance with its
terms, First Admission occurring by no later than 8.00 a.m. on 20
September 2023 and Second Admission occurring by no later than
8.00am on 29 September 2023 (or in either case such later date as
the Company and the Allenby may agree, being no later than 8.00
a.m. on 13 October 2023). Once Second Admission has occurred, no
party to the Placing and Open Offer Agreement can terminate any
part of the Placing and Open Offer Agreement which relates to the
Second Admission and/or the Placing, allotment and/or issue of the
New Ordinary Shares subject to admission to trading on AIM.
Director Participation in the Fundraising
The Directors' interests as at today and following completion of
the Fundraising are as follows:
Existing
beneficial % of Open Offer Ordinary % of
interest current Subscription Shares Shares Enlarged
in Ordinary share Shares subscribed to be applied after Placing Share
Director Shares capital for for and Subscription Capital
Jan Mohr - - - - - -
Gavin Cockerill 92,518 0.08% - 46,259 138,777 0.03%
Iain Brown 84,208 0.07% - - 84,208 0.02%
Richard Lightfoot 152,156 0.13% - 467,646 619,802 0.14%
Matthias Riechert - 2,352,940 - 2,352,940 0.53%
Simon Barrell 85,356 0.07% - 42,678 128,034 0.03%
Conrad Bona 1,168,841 1.02% - 1,294,118 2,462,959 0.56%
Related Party Transactions
Investmentaktiengesellschaft fur Langfistige Investoren TGV
(Langfrist) and Value Focus Beteilgungs GmbH (Value Focus), are
substantial shareholders in the Company and are subscribing for
79,411,764 Placing Shares and 76,470,588 Placing Shares
respectively, which constitute related party transactions under the
AIM Rules.
The Directors, other than Matthias Riechert, Conrad Bona and
Richard Lightfoot who are not considered independent due to Mr
Riechert's participation in the Subscription and Mr Bona and Mr
Lightfoot's proposed use of the Excess Application Facility under
the Open Offer, are considered to be independent directors of the
Company for the purposes of AIM Rule 13 (the "Independent
Directors"). Having consulted with the Company's nominated adviser,
the Independent Directors consider that the terms of the
participation in the Placing by Langfrist and Value Focus are fair
and reasonable insofar as Shareholders are concerned.
Matthias Riechert, a Director, is subscribing for 2,352,940
Subscription Shares, and Conrad Bona and Richard Lightfoot, both
Directors, intend to subscribe for 1,294,118 and 467,646 Open Offer
Shares respectively under the Excess Application Facility. The
subscriptions by each of Matthias Riechert, Conrad Bona and Richard
Lightfoot (the "Directors' Participation") constitute a related
party transaction under the AIM Rules.
Having consulted with the Company's nominated adviser, the
Independent Directors consider that the terms of the Directors'
Participation are fair and reasonable insofar as Shareholders are
concerned.
Open Offer
In order to provide all Qualifying Shareholders with an
opportunity to participate, the Company is conducting an Open Offer
providing those shareholders the opportunity to subscribe at the
Issue Price for an aggregate of 57,245,414 Open Offer Shares. This
allows Qualifying Shareholders to participate on a pre-emptive
basis whilst providing the Company with the flexibility to raise
additional equity capital to further improve its financial
position.
Qualifying Shareholders are being offered the opportunity to
apply for additional Open Offer Shares in excess of their pro rata
entitlements to the extent that other Qualifying Shareholders do
not take up their entitlements in full. In the event of
applications in excess of the maximum number of Open Offer Shares
available, the Company will decide on the basis for allocation,
however if this scenario occurs, preference is likely to be given
to Qualifying Shareholders with smaller shareholdings (who
historically may have had less opportunity to participate in
placings conducted by the Company). The Open Offer Shares have not
been placed subject to clawback nor have they been underwritten.
Consequently, there may be fewer than 57,245,414 Open Offer Shares
issued pursuant to the Open Offer.
The Placing, the Subscription and the Open Offer are conditional
upon, inter alia, the approval of Shareholders of the Resolutions
at the General Meeting and upon the Placing and Open Offer
Agreement becoming unconditional in all respects.
Management Incentive Proposals
The remuneration committee of the Board (Remuneration Committee)
proposes to adopt and implement a cash bonus scheme (the Cash Bonus
Plan) for key personnel employed in the Group's operations team
(the Operations Team) and mergers and acquisitions team (the
M&A Team). All bonuses payable under the Cash Bonus Plan (the
Cash Bonuses) are discretionary and personal to each participant,
and the terms may be amended, varied, cancelled or adjusted in
accordance with the rules of the Cash Bonus Plan at the discretion
of the Remuneration Committee. Cash Bonuses payable to members of
the Operations Team are referred to as Operations Cash Bonuses,
with Cash Bonuses payable to members of the M&A Team being
referred to as M&A Cash Bonuses.
It is envisaged that Cash Bonuses will be payable by reference
to financial years of the Group (each being a Bonus Period), with
each subsequent financial year being a further Bonus Period.
It is proposed that all Cash Bonuses will be subject to malus
and clawback provisions under which the Remuneration Committee has
the right to recover amounts already paid to participants or, where
appropriate, cancel or reduce any further payments that may become
due.
If a recipient leaves before they receive a Cash Bonus, any
present or future entitlements to receive Cash Bonuses will cease.
The Board does, however, have discretion to allow recipients who
are good leavers to retain such entitlements.
Whilst the precise terms of the Cash Bonuses remain to be
finalised:
-- The maximum amount of the proposed Operations Cash Bonuses
for each Bonus Period (the Operations Cash Bonus Pool) will be 20%
of the aggregate organic growth of sustainable earnings of
companies owned by the Group (the EBIT) above a Hurdle of 5% (the
Hurdle). The organic growth will be determined by the Board by
observing the change of actual aggregate EBIT over one period, or,
where the company has been recently acquired, by taking the
difference between actual EBIT and an internal target of
sustainable EBIT. The target and the Hurdle may be adjusted on a
time-apportioned basis where a company is acquired part way through
a Bonus Period. It is envisaged that the absolute Hurdle will not
be reduced in case the aggregate organic growth falls below it.
Each recipient of an Operations Cash Bonus will receive a
proportion of the Operations Cash Bonus Pool for each Bonus Period
to be determined at the discretion of the Remuneration Committee.
Cash Bonuses payable to Operations Team members are envisaged to be
paid following the end of each Bonus Period and once financial
results have been determined by the Board. The first Bonus Period
for the Operations Cash Bonuses will be the current financial
year.
-- The maximum aggregate amount of the proposed M&A Cash
Bonuses for each Bonus Period will be 2.75% of the "value creation"
achieved in respect of companies acquired by the Group during that
Bonus Period, determined by reference to any difference between our
internal estimate of post-acquisition value of those companies and
the price paid for them, with each recipient receiving a proportion
of that amount to be determined at the discretion of the
Remuneration Committee. M&A Cash Bonuses will be payable in two
instalments, with 50% of each individual's M&A Cash Bonus being
payable following the end of the Bonus Period and once financial
results have been determined by the Board, and the remaining 50%
payable following the end of the next Bonus Period and once
financial results have been determined by the Board. Should any
further acquisitions take place, M&A Cash Bonuses would be
payable on the same basis, with 50% of the M&A Cash Bonuses
payable following the end of the Bonus Period in which the
acquisition takes place, and 50% following the end of the next
Bonus Period. To reward members of the M&A Team for
acquisitions made prior to the current financial year, it is
envisaged that the first Bonus Period for M&A Cash Bonuses will
be the financial year ended 31 March 2023. In respect of this Bonus
Period only, it is proposed
that 50% of the M&A Cash Bonus due in respect of that Bonus
Period will be due and payable in the October 2023 payroll, with
the remaining 50% payable following the end of the current
financial year and once financial results have been determined by
the Board for that financial year.
The Remuneration Committee also proposes to adopt a
non-tax-advantaged, discretionary share option plan (the Share
Option Plan) under which it intends to grant share options (the
Options) to certain key individuals. Whilst the precise terms of
the proposed Share Option Plan remain to be finalised, it is
proposed that the Options granted, when aggregated with other
awards over Ordinary Shares under other Company discretionary share
schemes, will represent no more than 5% of the issued share capital
of the Company following the Fundraising and at the time of the
grant of the Options. It is also intended that the Options will
have a three year holding period and will then vest annually pro
rata over a four year period thereafter, with an exercise price
calculated by taking the Issue Price and applying a 10%
year-on-year hurdle multiple over that seven year period.
The Remuneration Committee have also recommended the adoption in
due course of a tax advantaged discretionary company share option
plan (the CSOP Plan) for the benefit of employees generally. The
precise parameters of the CSOP Plan are to be finalised by the
Remuneration Committee but it is intended the strike price of any
awards under the CSOP Plan would be aligned to shareholder
interests and that the maximum awards under the CSOP Plan would,
when aggregated with other awards over Ordinary Shares under other
Company discretionary share schemes, not exceed 5% of the issued
share capital of the Company following the Fundraising.
General Meeting
A Circular containing a Notice of General Meeting will be posted
to shareholders shortly and will be made available on the Company's
website at: https://www.grafenia.com/reports-downloads/ .
The expected timetable of principal events in relation to the
Fundraising can be found in Appendix I of this announcement.
All capitalised terms used throughout this announcement shall
have the meanings given to such terms in the Definitions section in
Appendix II to this announcement and as defined in the
Circular.
The FCA notification, made in accordance with the requirements
of UK MAR, is appended below.
Appendix I - Expected Timetable of Principal Events
Record Date for the Open Offer Close of Business on 24 August
2023
Announcement of the Fundraising 29 August 2023
Publication of Circular, Form of Proxy and Application Form on
or by 29 August 2023
Ex entitlement date for the Open Offer 8.00 a.m. on 30 August
2023
Open Offer Entitlements and Excess CREST Open Offer as soon as
possible after
Entitlements credited to stock accounts of Qualifying CREST 8.00
a.m. on 31 August 2023
Shareholders
Recommended latest time for requesting withdrawal 4.30 p.m. on 7
September 2023
of Open Offer Entitlements and Excess CREST Open
Offer Entitlements from CREST
Latest time for depositing Open Offer Entitlements 3.00 p.m. on
8 September 2023
and Excess CREST Open Offer Entitlements in to CREST
Latest time and date for splitting of Application Forms 3.00
p.m. on 11 September 2023
(to satisfy bona fide market claims only)
Latest time and date for receipt of Form of Proxy 10.00 a.m. on
13 September 2023
for General Meeting
Latest time and date for receipt of completed Application 11.00
a.m. on 13 September 2023
Forms and payment in full under the Open Offer and
settlement of relevant CREST instructions (as appropriate)
Announcement of the result of Open Offer by 14 September
2023
General Meeting 10.00 a.m. on 15 September 2023
Announcement of the results of the General Meeting 15 September
2023
First Admission and commencement of dealings in the 8.00 a.m. on
20 September 2023
First Placing Shares and the Subscription Shares
CREST members' accounts credited in respect of the as soon as
possible after
First Placing Shares and Subscription Shares in 8.00 a.m. on 20
September 2023
uncertificated form
Second Admission and commencement of dealings 8.00 am on 29
September 2023
in the Second Placing Shares and Open Offer Shares
CREST members' accounts credited in respect of as soon as
possible after
the Second Placing Shares and Open Offer Shares 8.00 am on 29
September 2023
Dispatch of definitive share certificates for the New
13 October 2023
Ordinary Shares In certificated form
Appendix II - Definitions
"Act" the Companies Act 2006 (as amended);
"AIM" a market of that name operated by London Stock Exchange
Plc;
"AIM Rules" the AIM Rules for Companies as published by London
Stock Exchange Plc from time to time;
"Allenby" Allenby Capital Limited;
"Application Form" the personalised application form that will
be posted on 29 August 2023 for use by Qualifying Shareholders in
connection with the Open Offer;
"Business Day" means a day (excluding Saturdays, Sundays and
statutory holidays) on which banks are open for business in the
City of London;
"Circular" this circular to shareholders dated 29 August
2023;
"Company" or "Grafenia" Grafenia plc;
"CCSS" the CREST Courier and Sorting Service, established by
Euroclear to facilitate, inter alia, the deposit and withdrawal of
certificated securities;
"CREST" the relevant system (as defined in the CREST
Regulations) for paperless settlement of share transfers and the
holding of shares in uncertificated form which is administered by
Euroclear;
"CREST Manual" the rules governing the operation of CREST
consisting of the CREST Reference Manual, the CREST International
Manual, the CREST Central Counterpart Service Manual, the CREST
Rules, the CCSS Operations Manual, the Daily Timetable, the CREST
Application Procedures and the CREST Glossary of Terms, as
published by Euroclear from time to time;
"CREST member" a person who has been admitted to CREST as a
system-member (as defined in the CREST Regulations);
"CREST member account ID" the identification code or number
attached to a member account in CREST;
"CREST participant" a person who is, in relation to CREST, a
system-participant (as defined in the CREST Regulations);
"CREST participant ID" shall have the meaning given in the CREST
Manual issued by Euroclear;
"CREST payment" shall have the meaning given in the CREST Manual
issued by Euroclear;
"CREST Regulations" the Uncertificated Securities Regulations
2001(SI 2001/3755) (as amended);
"CREST sponsor" a CREST participant admitted to CREST as a CREST
sponsor;
"CREST sponsored member" a CREST member admitted to CREST as a sponsored member;
"Directors" or "Board" the directors of the Company at the date
of this document whose names are set out on page 10 of this
document;
"Enlarged Share Capital" the number of Ordinary Shares in issue
following completion of the Fundraising;
"EU" the European Union;
"Euroclear" Euroclear UK & International Limited;
"Excess Application Facility" the arrangement pursuant to which
Qualifying Shareholders may apply for any number of Open Offer
Shares in excess of their Open Offer Entitlement provided that they
have agreed to take up their Open Offer Entitlement in full;
"Excess CREST Open Offer in respect of each Qualifying CREST
Shareholder, the entitlement (in addition to his Open Offer
Entitlement) to apply for Open Offer Shares pursuant to the Excess
Application Facility, which is conditional on him taking up his
Open Offer Entitlement in full;
Entitlement"
"Existing Ordinary Shares" the 114,490,828 Ordinary Shares in
issue at the date of this document;
"FCA" the Financial Conduct Authority;
"First Admission" admission of the First Placing Shares and the
Subscription Shares to trading on AIM becoming effective in
accordance with the AIM Rules;
"First Placing Shares" 122,941,172 new Ordinary Shares to be
allotted pursuant to the Placing;
"Form of Proxy" the form of proxy for use by Shareholders in
connection with the GM;
"FSMA" the Financial Services and Markets Act 2000 (as
amended);
"Fundraising" the Placing, Subscription and Open Offer;
"GM" or "General Meeting" the general meeting of the Company
convened for 10 a.m. on 15 September 2023 and any adjournment
thereof, notice of which is set out at the end of this
document;
"ISIN" International Securities Identification Number;
"Issue Price" 8.5 pence per Ordinary Share;
"Link Group" a trading name of Link Market Services Limited;
"Money Laundering Regulations" The Money Laundering, Terrorist
Financing and Transfer of Funds (Information on the Payer)
Regulations 2017, as amended;
"New Ordinary Shares" the new Ordinary Shares to be issued by
the Company pursuant to the Fundraising;
"Official List" the Official List of the FCA;
"Open Offer" the offer to Shareholders, constituting an
invitation to apply for the Open Offer Shares on the terms and
subject to the conditions set out in this document and, in the case
of non-CREST Shareholders, in the Application Form;
"Open Offer Entitlement" an entitlement of a Qualifying
Shareholder, pursuant to the Open Offer, to apply for 1 Open Offer
Share for every 2 Existing Ordinary Shares held by the Qualifying
Shareholder at the Record Date;
"Open Offer Shares" up to 57,245,414 new Ordinary Shares which
are the subject of the Open Offer;
"Ordinary Shares" ordinary shares of 1p each in the capital of
the Company;
"Overseas Shareholders" Shareholders who are resident in or a
citizen or national of any country outside the United Kingdom;
"Placees" the subscribers for Placing Shares pursuant to the
Placing;
"Placing" the proposed conditional placing by Allenby of the
Placing Shares at the Issue Price;
"Placing and Open Offer Agreement" the conditional agreement
dated 28 August 2023 between (1) the Company and (2) Allenby
relating to the Placing and Open Offer;
"Placing Shares" the 238,823,526 new Ordinary Shares which have
been conditionally placed by Allenby pursuant to the Placing;
"Proposals" the proposals set out in this document;
"Qualifying CREST Shareholders" Qualifying Shareholders holding
Existing Ordinary Shares in uncertificated form via CREST;
"Qualifying non-CREST Qualifying Shareholders holding Existing
Ordinary Shares in certificated form;
Shareholders"
"Qualifying Shareholders" Shareholders whose Ordinary Shares are
on the register of members of the Company at the close of business
on the Record Date with the exclusion (subject to exemptions) of
persons with a registered address or located or resident outside
the United Kingdom;
"Receiving Agent" or "Registrar" Link Group;
"Record Date" close of business on 24 August 2023 ;
"Regulatory Information Service" a service approved by the FCA
for the distribution to the public of AIM announcements and
included within the list on the website of the FCA;
"Resolutions" the resolutions to be proposed at the GM, details
of which are set out in the notice of General Meeting set out at
the end of this document;
"Restricted Jurisdiction" each and any of the United States,
Australia, Canada, France, Japan, the Republic of Ireland and the
Republic of South Africa and any other jurisdiction where the
extension or availability of the Open Offer would breach any
applicable law;
"Second Admission" admission of the Second Placing Shares and
the Open Offer Shares to trading on AIM becoming effective in
accordance with the AIM Rules;
"Second Placing Shares" 115,882,354 new Ordinary Shares to be
allotted pursuant to the Placing;
"Shareholders" holders of Ordinary Shares;
"Subscription" the proposed conditional subscription of the
Subscription Shares at the Issue Price;
"Subscription Shares" the 31,764,702 New Ordinary Shares
subscribed for pursuant to the Subscription;
"United Kingdom" or "UK" the United Kingdom of Great Britain and
Northern Ireland;
"United States" of "US" the United States of America, its
territories and possessions, any state of the United States and the
District of Columbia; and
"USE" Unmatched Stock Event.
IMPORTANT NOTICES
Notice to Distributors
Solely for the purposes of the temporary product intervention
rules made under sections S137D and 138M of the FSMA and the FCA
Product Intervention and Product Governance Sourcebook (together,
the "Product Governance Requirements"), and disclaiming all and any
liability, whether arising in tort, contract or otherwise, which
any "manufacturer" (for the purposes of the Product Governance
Requirements) may otherwise have with respect thereto, the
Fundraising Shares have been subject to a product approval process,
which has determined that the Fundraising Shares are: (i)
compatible with an end target market of retail investors and
investors who meet the criteria of professional clients and
eligible counterparties, as defined under the FCA Conduct of
Business Sourcebook COBS 3 Client categorisation, and are eligible
for distribution through all distribution channels as are permitted
by the FCA Product Intervention and Product Governance Sourcebook
(the "Target Market Assessment").
Notwithstanding the Target Market Assessment, distributors
should note that: the price of the Fundraising Shares may decline
and investors could lose all or part of their investment; the
Fundraising offers no guaranteed income and no capital protection;
and an investment in the Fundraising is compatible only with
investors who do not need a guaranteed income or capital
protection, who (either alone or in conjunction with an appropriate
financial or other adviser) are capable of evaluating the merits
and risks of such an investment and who have sufficient resources
to be able to bear any losses that may result therefrom. The Target
Market Assessment is without prejudice to the requirements of any
contractual, legal or regulatory selling restrictions in relation
to the Fundraising. Furthermore, it is noted that, notwithstanding
the Target Market Assessment, Allenby Capital Limited will only
procure investors who meet the criteria of professional clients and
eligible counterparties. For the avoidance of doubt, the Target
Market Assessment does not constitute: (a) an assessment of
suitability or appropriateness for the purposes of the FCA Conduct
of Business Sourcebook COBS 9A and 10A respectively; or (b) a
recommendation to any investor or group of investors to invest in,
or purchase, or take any other action whatsoever with respect to
the Fundraising Shares.
Each distributor is responsible for undertaking its own target
market assessment in respect of the Fundraising Shares and
determining appropriate distribution channels.
Forward Looking Statements
This announcement contains forward-looking statements which are
based on the beliefs, expectations and assumptions of the Directors
and other members of senior management about the Group's
businesses. All statements other than statements of historical fact
included in this announcement may be forward-looking statements.
Generally, words such as "will", "may", "should", "could",
"estimates", "continue", "believes", "expects", "aims", "targets",
"projects", "intends", "anticipates", "plans", "prepares", "seeks"
or, in each case, their negative or other variations or similar or
comparable expressions identify forward-looking statements.
These forward-looking statements are not guarantees of future
performance, and there can be no assurance that the expectations
reflected in such forward-looking statements will prove to have
been correct. Rather, they are based on the current beliefs,
expectations and assumptions and involve known and unknown risks,
uncertainties and other factors, many of which are outside the
control of the Company and are difficult to predict, that may cause
actual results, performance, plans, objectives, achievements or
events to differ materially from those express or implied in such
forward-looking statements. Undue reliance should, therefore, not
be placed on such forward-looking statements.
New factors will emerge in the future, and it is not possible to
predict which factors they will be. In addition, the impact of each
factor on the Group's business or the extent to which any factor,
or combination of factors, may cause actual results to differ
materially from those described in any forward-looking statement or
statements cannot be assessed, and no assurance can therefore be
provided that assumptions will prove correct or that expectations
and beliefs will be achieved.
Any forward-looking statement contained in this announcement
based on past or current trends and/or activities of the Group
should not be taken as a representation that such trends or
activities will continue in the future. No statement in this
announcement is intended to be a profit forecast or to imply that
the earnings of the Group for the current year or future years will
match or exceed historical or published earnings of the Group.
Prospective investors are strongly recommended to read the risk
factors set out in Part II of the Circular for a more complete
discussion of the factors that could affect the Company's future
performance and the industry in which the Company operates. In
light of these risks, uncertainties and assumptions, the events
described in the forward-looking statements in this announcement
may not occur.
Each forward-looking statement speaks only as at the date of
this announcement and is not intended to give any assurance as to
future results. The Company and/or its Directors expressly disclaim
any obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein as a
result of new information, future events or other information,
except to the extent required by the FCA's Disclosure Guidance and
Transparency Rules, the rules of the London Stock Exchange,
including the AIM Rules or by applicable law.
Notice to overseas persons
This announcement does not constitute, or form part of, a
prospectus relating to the Company, nor does it constitute or
contain any invitation or offer to any person, or any public offer,
to subscribe for, purchase or otherwise acquire any shares in the
Company or advise persons to do so in any jurisdiction, nor shall
it, or any part of it form the basis of or be relied on in
connection with any contract or as an inducement to enter into any
contract or commitment with the Company.
This announcement is not for release, publication or
distribution, in whole or in part, directly or indirectly, in or
into the United States, Australia, New Zealand, Russia, Canada,
Japan, the Republic of South Africa, Singapore or any jurisdiction
into which the publication or distribution would be unlawful. This
announcement is for information purposes only and does not
constitute an offer to sell or issue or the solicitation of an
offer to buy or acquire shares in the capital of the Company in the
United States, Australia, New Zealand, Russia, Canada, Japan, the
Republic of South Africa, Singapore or any jurisdiction in which
such offer or solicitation would be unlawful or require preparation
of any prospectus or other offer documentation or would be unlawful
prior to registration, exemption from registration or qualification
under the securities laws of any such jurisdiction. Persons into
whose possession this announcement comes are required by the
Company to inform themselves about, and to observe, such
restrictions. Any failure to comply with these restrictions may
constitute a violation of securities laws of such
jurisdictions.
This announcement is not for publication or distribution,
directly or indirectly, in or into the United States of America.
This announcement is not an offer of securities for sale into the
United States. The securities referred to herein have not been and
will not be registered under the U.S. Securities Act of 1933, as
amended, and may not be offered or sold in the United States,
except pursuant to an applicable exemption from registration. No
public offering of securities is being made in the United
States.
General
Neither the content of the Company's website (or any other
website) nor the content of any website accessible from hyperlinks
on the Company's website (or any other website) or any previous
announcement made by the Company is incorporated into, or forms
part of, this announcement.
Allenby Capital Limited, which is authorised and regulated by
the FCA in the United Kingdom, is acting as Nominated Adviser and
Broker to the Company in connection with the Fundraising. Allenby
Capital will not be responsible to any person other than the
Company for providing the protections afforded to clients of
Allenby Capital or for providing advice to any other person in
connection with the Fundraising. Allenby Capital has not authorised
the contents of, or any part of, this announcement, and no
liability whatsoever is accepted by Allenby Capital for the
accuracy of any information or opinions contained in this
announcement or for the omission of any material information.
Certain figures contained in this announcement, including
financial information, have been subject to rounding adjustments.
Accordingly, in certain instances, the sum or percentage change of
the numbers contained in this announcement may not conform exactly
with the total figure given.
All references to time in this announcement are to London time,
unless otherwise stated.
Notification and public disclosure of transactions by persons
discharging managerial responsibilities and persons closely
associated with them.
1. Details of the person discharging managerial responsibilities
/ person closely associated
a) Name Matthias Riechert via Maxigendance Ltd
------------------------------- --------------------------------------------
2. Reason for the Notification
-----------------------------------------------------------------------------
a) Position/status Non-executive director
------------------------------- --------------------------------------------
b) Initial notification/Amendment Initial Notification
------------------------------- --------------------------------------------
3. Details of the issuer, emission allowance market participant,
auction platform, auctioneer or auction monitor
-----------------------------------------------------------------------------
a) Name Grafenia plc
------------------------------- --------------------------------------------
b) LEI 213800OKTI2518K5KM22
------------------------------- --------------------------------------------
4. Details of the transaction(s): section to be repeated
for (i) each type of instrument; (ii) each type of transaction;
(iii) each date; and (iv) each place where transactions
have been conducted
-----------------------------------------------------------------------------
a) Description of Ordinary shares of 1p each
the Financial
instrument, type
of instrument
Identification ISIN: GB0009638130
code
------------------------------- --------------------------------------------
b) Nature of the Conditional subscription of ordinary shares
transaction
------------------------------- --------------------------------------------
c) Price(s) and Price(s) Volume(s)
volume(s) 8.5p 2,352,940
----------
------------------------------- --------------------------------------------
d) Aggregated information: n/a
* Aggregated volume
* Price
------------------------------- --------------------------------------------
e) Date of the transaction 25 August 2023 expected to be completed
on 20 September 2023
------------------------------- --------------------------------------------
f) Place of the London Stock Exchange, XLON
transaction
------------------------------- --------------------------------------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
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For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
UPDNKFBKCBKDOFB
(END) Dow Jones Newswires
August 29, 2023 02:00 ET (06:00 GMT)
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