1. technology and computing

14 May 2015
Imaginatik Plc
(“Imaginatik” or the “Company”)
Proposed issue of equity
Imaginatik plc (AIM: IMTK.L), the world's first full service innovation provider offering a range of
technology products and consultancy, is pleased to announce that, following a strong show of support
from existing and new investors, it intends to conditionally raise £504,000 (before expenses) to
provide additional working capital to fund the development of the Group’s business until the Company
receives significant cash receipts following anticipated contract renewals later this year.
The Fundraising will be effected through the issue of a total of 18,663,330 new Ordinary Shares to
new and existing investors, including two of the Directors. In addition 950,475 new Ordinary Shares
will be issued to a supplier in lieu of cash payments. All new Ordinary Shares will be issued at the
Issue Price, being 2.7 pence per new Ordinary Share.
The Issue Price represents a discount of 13.7 per cent. to the closing mid-market price of 3.13 pence
per Ordinary Share on 13 May 2015, the latest practicable dealing day prior to the publication of this
document. The New Ordinary Shares will represent in aggregate 23.71 per cent. of the Enlarged
Share Capital.
The Placing was conducted in conjunction with Daniel Stewart & Company and the Board are pleased
to announce that Daniel Stewart has been appointed as the Company’s Broker with immediate effect.
The Fundraising is subject, amongst other things, to the passing of the Resolution to be put to a
General Meeting of Shareholders to be held at 10.30 a.m. on 1 June 2015. Further details of the
General Meeting are set out below. The Notice of General Meeting which convenes the General
Meeting will be set out in a Circular to be published to shareholders as soon as possible.
Matt Cooper, Executive Chairman of Imaginatik, commented:
"We are delighted to announce that Imaginatik has been supported in raising a small amount of
additional working capital. This working capital will allow the Company to be operationally selfsufficient until contract renewal revenues are recognised later on this year. This backing, from both
existing and new investors, validates the Company’s strategy and supports Imaginatik as a global full
service innovation provider.”
For further information please contact:
Imaginatik plc
Matt Cooper Non-Executive Chairman
Ralph Welborn, CEO
Shawn Taylor, CFO
Tel: 01329 243 243
finnCap Ltd
Stuart Andrews / Giles Rolls
Tel: 020 7220 0500
Daniel Stewart & Company
Martin Lampshire / David Coffman
Tel: 020 7776 6550
Newgate
Adam Lloyd / Ed Treadwell / Jasper Randall
Tel: 020 7653 9850
About Imaginatik
Imaginatik provides a range of Innovation solutions comprised of consultancy, enterprise software and
program management to deliver innovation results to companies such as The World Bank, The
Chubb Group of Insurance Companies, Exxon Mobil, Altria, Shell, Mayo Clinic, Goodyear, the
Yorkshire Building Society, Pitney Bowes and Cargill. Few companies possess the internal capability
to consistently generate fresh ideas, identify those worth pursuing and reliably transform them into
real, value-enhancing assets. Imaginatik's mission is to help these companies build sustainable
innovation competencies.
Imaginatik is a public company whose shares are traded on the AIM market of the London Stock
Exchange (LSE:IMTK.L) and is a World Economic Forum Technology Pioneer with offices in Boston,
MA, and Fareham, UK. For more information visit www.imaginatik.com
Background to and reasons for the Fundraising
We remain committed to our previously stated strategy and the Company’s repositioning as a global
full service innovation provider, helping our clients develop a sustainable company wide innovation
capability. We achieve this through a variety of technology products, several of which have been
recently developed in addition to our strategic and operational consultancy offerings.
Our operational marketplace continues to develop, with sector coverage by industry analysts
increasing, as a response to client requirements wanting to further understand how innovation can be
institutionalised within their businesses. As recently as five years ago, the notion that large
corporations would have a C-level officer devoted to innovation was not credible. This growing class
of executive now has a title, the Chief Innovation Officer (CINO), and a rising slate of conferences,
publications, and services are targeting them. By one measure, over 40% of the Forbes Global 2000
now have a CINO or a close equivalent.
On 1 December 2014 Ralph Welborn joined Imaginatik as our Chief Executive Officer, based in
Boston, US. The Board is delighted that Ralph’s appointment has had an immediate beneficial impact
on the strategy and direction of the Company. With his senior consulting background, Ralph is
elevating conversations within the existing and prospective client base and assisting the sales and
consulting teams to demonstrate that Imaginatik’s services encompass more than that of a technology
vendor. Ralph has also been instrumental in several of the Company’s most recent technology and
consulting contract wins and we expect his positive influence to continue.
Following the interim results announcement on 8 December 2014, the Group has continued to trade
well and the Board expects to report an increase in revenues for the year to 31 March 2015 of
approximately 15% at £3.34m (FY2014: £2.90m). The improved revenue for the full year to 31 March
2015 follows a stronger trading performance in the second half, with gross bookings of £2.2m
achieved over the 6 month period versus £1.04 in the first half. This improved second half
performance has been driven by higher revenues in our consulting division, in addition to several new
technology contracts.
The loss after tax is expected to be similar to last year (FY2014: £1.4m) as the Company continues
investment in consulting and sales capacities as well as the addition of a full time CEO.
In the year ended 31 March 2015 the Company added a further 12 new customers on annual or multiyear technology contracts increasing the Company’s annual client base to 42 (March 2014: 31).
These new customers cover a wide range of sectors, including manufacturing, professional services,
pharmaceuticals, biotechnology and media. This growing customer base increases the annualised
value of the company’s renewals business by 29% to £3.1m at 31 March 2015 (March 2014: £2.40m
at constant currency). Additionally, the Company has secured 9 new customers on pilot projects or
consulting engagements, several of which the Board expects to convert in due course to annual or
multi-year technology contracts.
The sales pipeline of opportunities continues to grow and is valued at £8.8m at 30 April 2015,
compared with £7.7m a year ago and £4.47m two years ago. The sales pipeline includes further
consulting led opportunities than previously as the Company seeks to exploit this route as an initial
value offering to customers. By proving Imaginatik’s value to the customer in this way, this can
develop into a longer term partnership, providing a stable annuity stream.
The financial year ending 31 March 2016 contains a large array of renewal revenue for the Company,
with 34 of the existing customer base available for renewal. This represents the confluence of the
Company’s hard work over the prior 2 to 3 years, demonstrated by customers having built out their
technology environments substantially over the last few years. We see this as a great opportunity to
further embed our technology and consulting offerings within our customer base with additional multiyear commitments as well as presenting us with excellent upsell opportunities.
The Placing and Subscription
The Company intends to conditionally raise approximately £504,000 in aggregate (before expenses)
pursuant to the Placing and the Subscription. The net proceeds of the Placing and the Subscription
receivable by the Company are estimated to be approximately £470,000.
The Directors have concluded that effecting the Company’s recapitalisation by way of the Fundraising
is the most efficient way to source the funds required. As previously, the Directors did consider the
possibility of effecting the recapitalisation by way of an open offer to all existing Shareholders, but
considered that given (i) the considerably greater expense to the Company involved in effecting an
open offer, (ii) the greater length of time it would take to effect an open offer in contrast to the
relatively swift timetable of a Placing, and (iii) the Company had previously undertaken the expense
and time of seeking a recapitalisation by way of an open offer in the past which did not generate a
material uptake, (iv) the feedback given to the Company by or on behalf of certain Placees (whose
commitments comprise a material part of the Placing) that they would not participate in circumstances
where the Placing were linked to such an offer (which would have had the effect of reducing the sums
raised from the Placing below the minimum required by those and other Placees for the Placing to
proceed), it was considered the Fundraising to be the preferable and efficient way to source the
present funds required.
Pursuant to the terms of the Placing Agreement, Daniel Stewart has conditionally agreed, as agent for
the Company, to use its reasonable endeavours to procure subscribers for 9,074,071 Placing Shares
with institutional and other investors at the Issue Price. The Issue Price represents a discount of 13.7
per cent. to the closing mid-market price of an Ordinary Share on 13 May 2015, being the last dealing
day prior to the publication of this document. In addition, it is intended that later today Simon Charles,
myself and employee of the company will enter into subscription agreements for a total of 9,589,259
Subscription Shares at the Issue Price. The Placing Shares and the Subscription Shares will
represent in aggregate 23.71 per cent. of the Enlarged Share Capital.
The Placing has not been underwritten. The Placing Agreement is and the Subscription Agreements
will be conditional, inter alia, upon:
1.
the Resolution being duly passed at the General Meeting;
2.
Admission becoming effective on or before 8.00 a.m. on 2 June 2015 or such later time
and/or date as Daniel Stewart may agree in its absolute discretion, but in any event by no
later than 8.00 a.m. on 30 June 2015; and
3.
each of the Placing Agreement and Subscription Agreements becoming unconditional save
only for Admission.
The New Ordinary Shares will upon their issue rank pari passu in all respects with the Existing
Ordinary Shares including the right to receive all dividends or other distributions declared, made or
paid by the Company following Admission.
The Ordinary Shares currently have a nominal value of 5p each and the Issue Price is 2.7p.
Company law prohibits the issue of new shares by a company at a price below the nominal value of
those shares and, accordingly, the Company is required to reduce the nominal value of the Ordinary
Shares to enable the Fundraising to be implemented.
To give effect to the Share Capital Reorganisation, the Articles will need to be amended to make
changes to allow the creation of deferred shares and these amendments will require Shareholders'
approval at the General Meeting.
It is therefore proposed that each of the existing Ordinary Shares will be subdivided into one new
Ordinary Share of 1 penny each and one Deferred Share of 4p each ("Deferred Share").
Immediately following the Share Capital Reorganisation becoming effective, each Shareholder's
holding of Ordinary Shares will be the same as their number of existing Ordinary Shares. Therefore,
each Shareholder's proportionate interest in the Company's issued ordinary share capital will, and
thus the aggregate value of their holding should remain unchanged as a result of the Reorganisation.
No new share certificates representing the Ordinary Shares will be sent to Shareholders who
hold existing Ordinary Shares in certificated form. Accordingly, share certificates for the existing
Ordinary Shares will remain valid, and will only be replaced by share certificates for Ordinary Shares
when the old share certificates are surrendered for cancellation following the transfer, transmission or
other disposal of Ordinary Shares.
Shareholders who hold the existing Ordinary Shares in uncertificated form through CREST should
expect to see the security description updated for the existing ISIN number, in order to reflect their
holding in Ordinary Shares on 1 June 2015.
The Deferred Shares created will be effectively valueless as they will not carry any rights to vote or
dividend rights. In addition, holders of Deferred Shares will only be entitled to a payment on a return
of capital or on a winding up of the Company after each of the holders of Ordinary Shares have
received a payment of £100,000,000 on each such share. The Deferred Shares will not be traded on
AIM or listed and will not be transferable without the prior written consent of the Board. No share
certificates will be issued in respect of the Deferred Shares, nor will CREST accounts of
shareholders be credited in respect of any entitlement to Deferred Shares.
Expected Admission Date
Application will be made to the London Stock Exchange for the 19,613,805 New Ordinary Shares to
be admitted to trading on AIM. It is expected that Admission will occur at 8.00 a.m. on 2 June 2015.
Following Admission, the total number of shares in issue will be 82,698,095.
Directors’ participations in the Fundraising
Simon Charles and I later today intend to subscribe in person or by a nominee, for Subscription
Shares as follows:
Director
Matt Cooper
Simon Charles
Number of
Existing Ordinary
Shares
(excluding
interests in
options)
Percentage of
Existing Ordinary
Shares
Number of
Subscription
Shares to be
acquired
Number of
Ordinary Shares
after Completion
13,420,317
21.27
9,259,259
22,679,576
27.42
2,083,182
3.30
320,000
2,403,182
2.91
Percentage of
Enlarged Share
Capital
Directors’ Authority to issue and allot further Ordinary Shares
In the light of the encouraging response to the Fundraising, the Board considers that it would also be
beneficial to both the Company and Shareholders if the Company were authorised to retain an
element of flexibility to allot and issue (outwith the Fundraising), as a whole or in tranches, Ordinary
Shares (and/or rights to subscribe to them) up to the aggregate nominal value of £165,395
(representing 20 per cent. of the Enlarged Share Capital) to meet any unforeseen future working
capital requirements or opportunities which the Board believes would be earnings enhancing for the
Company.
Related Party Transactions
The proposed participation of two Directors and the participation by Hargreave Hale Limited (the latter
as a substantial shareholder in the Company owning 12,272,618 Ordinary Shares comprising 19.45
per cent. of the Company’s current issued share capital), in the Fundraising constitute related party
transactions for the purposes of Rule 13 of the AIM Rules (the “Related Party Transactions”). The
independent directors, having consulted with finnCap, the Company's nominated adviser, consider
that the terms of the Related Party Transactions are fair and reasonable insofar as Shareholders are
concerned.
Circular and Notice of General Meeting
A circular setting out the background to and further details of the Fundraising will today be sent to
Shareholders along with a notice convening the General Meeting to be held at 10.30 a.m. on Monday
1 June 2015 at the offices of Marriott Harrison LLP, 11 Staple Inn, London WC1V 7QH, at which the
Resolution will be proposed for the purposes of implementing the Fundraising.
The Resolution is required to grant the Directors sufficient authority under the Act to allot and issue
the New Ordinary Shares and the Director’s Future Subscription Shares and additional new Ordinary
Shares (and rights to subscribe therefor) up to an aggregate nominal amount of £165,395,
representing 20 per cent. of the Enlarged Share Capital and to effect the Share Capital
Reorganisation.
Capitalised terms used in this announcement and not otherwise defined shall have the same meaning
given to them in the circular to be dated 14 May 2015 ("Circular"). The Circular shall be available on
the Company's website: www.imaginatik.com.
The distribution of this document in or into jurisdictions other than the United Kingdom may be
restricted by law and therefore any person who is subject to the laws of any jurisdiction other than the
United Kingdom should inform themselves about, and observe such restrictions. Any failure to comply
with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction.
The Ordinary Shares have not been, and will not be, registered in the United States of America under
the United States Securities Act of 1933 (as amended) (the “Securities Act”) or qualified for sale under
the laws of any state of the United States or under the applicable laws of any of Canada, Australia,
the Republic of South Africa, or Japan and, may not be offered or sold in the United States of
America, Canada, Australia, the Republic of South Africa, or Japan or to, or for the account or benefit
of, US persons (as such term is defined in Regulation S under the Securities Act) or to any national,
resident or citizen of Canada, Australia, the Republic of Ireland, the Republic of South Africa, or
Japan.
In addition, the securities to which this document relates must not be marketed into any
jurisdiction where to do so would be unlawful.