REG - RegTech Open Project - Financial and Business Updates

REGTECH OPEN PROJECTAnnouncement

06/12/2023 07:00

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RNS Number : 8000V  RegTech Open Project PLC  06 December 2023

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION 2014/596/EU WHICH IS PART OF DOMESTIC LAW IN THE UNITED KINGDOM OF
GREAT BRITAIN AND NORTHERN IRELAND ("UK") PURSUANT TO THE MARKET ABUSE
(AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310) ("UK MAR").

 

6 December 2023

 

 

RegTech Open Project plc

("RTOP" or the "Company" and, together with its subsidiaries and subsidiary
undertakings from time to time, as the context requires, the "Group")

 

Change of Company Secretary and Compliance Officer

Financial and Business Updates

 

RegTech Open Project plc (LSE: RTOP), the technology business specialised in
the automation, management, and optimisation of regulatory compliance
operations provides the following operational and business updates.

 

Change of Company Secretary and Compliance Officer

 

Following the commencement of Paul McFadden's employment as Chief Financial
Officer of the Company (as previously notified to the market on 7 September
2023), the board of directors of RTOP (the "Board"; the "Directors") has
approved his appointment as Company Secretary with effect from 12 December
2023, succeeding OHS Secretaries Limited.

 

Mr. McFadden has separately been appointed by the Board as RTOP's Compliance
Officer with effect from 12 December 2023, succeeding Ian Halliday-Pegg.

 

Financial update

 

Since completion of Company's direct listing on 25 August 2023, the Company
has served drawdown notices for a total of £3,500,000 (comprising £2,000,000
drawdown by 1 September 2023, £500,000 by 30 September 2023 and, since 1
October 2023, two tranches of £500,000 each) under the English law governed
fixed term unsecured working capital loan agreement, and made between the
Company and RegTech Open Project S.p.A. (a corporate entity ultimately
beneficially wholly-owned by Alessandro Zamboni) ("RegTech Italy"), dated 21
August 2023 (the "Shareholder Loan Agreement"), of which:

 

·      £1,046,000 in funds have been received (£437,000 in funds being
received prior to 29 September 2023) by the Company, accruing non-compounding
interest rate of 10% per annum (calculated on a 360-day basis) due to RegTech
Italy; and

·      £2,454,000 remains to be advanced by RegTech and is accruing
compounding interest rate of 15% per annum, pursuant to an English law
governed side letter agreement entered into between the Company and RegTech
Italy, on 28 September 2023 (the "Side Letter Agreement").

 

The Company has to date agreed with RegTech Italy to set-off approximately
£612,500 in payables of the Company on a £-for-£ basis to be settled by
RegTech Italy, and the Company has today entered into an amendment to the
Shareholder Loan Agreement with RegTech Italy (the "SLA Deed of Amendment"),
whereby the Company and RegTech Italy have agreed to:

 

·      increase the maximum amount of such payables that may be set-off
on a £-for-£ basis from "up to £2,000,000" to "up to £3,600,000", thereby
increasing the maximum amount of the loan made available by RegTech Italy to
the Company by way of the Shareholder Loan Agreement from "up to £8,000,000"
to "up to £9,600,000"; and

·      to extend the period during which such set-off may be made from a
long-stop date "ending on 31 March 2024" to "ending on 31 December 2024".

 

As at the date of this announcement, the Company has identified up to
£2,952,000 in potential payables which it may elect to set-off to be settled
by RegTech Italy by 31 December 2024 (which, together with the approximately
£612,500 in payables already set-off, would equate to up to £3,564,500 in
aggregate, which will provide the Company with up to £35,500 in remaining
headroom to set-off payables under the Shareholder Loan Agreement). Amounts
set-off attract a non-compounding interest rate of 5% per annum (calculated on
a 360-day basis) due to RegTech Italy.

 

In connection with the discussions held between Alessandro Zamboni and the
other Directors ("Independent Directors"), Mr. Zamboni has acknowledged the
amounts currently outstanding under the Shareholder Loan Agreement, and has
made representations to the Company that RegTech Italy will be in a position
to fulfil its payment obligations in full, and specifically that £1,400,000
will be paid to the Company by 31 December 2023. The Independent Directors did
not deem it necessary to further amend the Shareholder Loan Agreement to
re-align RegTech Italy's payment obligations in accordance with the
representations made by Mr. Zamboni, given the amounts outstanding are already
accruing compounding interest rate of 15% per annum under the Side Letter
Agreement. No other amendments have been made to the terms of the Shareholder
Loan Agreement pursuant to the terms of the SLA Deed of Amendment.

 

The entry by the Company and RegTech into the SLA Deed of Amendment
constitutes a material change to the terms of the Shareholder Loan Agreement
and therefore, the Independent Directors (which excludes Alessandro Zamboni,
who constitutes a "related party" (as such term is defined in International
Financial Reporting Standards as adopted in the UK)) have complied separately
with the material related party transaction requirements under DTR 7.3.
Accordingly, the Independent Directors approved the SLA Deed of Amendment, and
such Independent Directors consider such material related party transaction in
respect of the SLA Deed of Amendment to be fair and reasonable from the
perspective of the Company and holders of ordinary shares of nominal value
£0.20 each in the capital of the Company ("Ordinary Shares") who are not a
related party.

 

Pursuant to the Side Letter Agreement, the Board retains the option, on three
business days' notice, to transfer the 2,250,000 existing warrants (each
exercisable into one new Ordinary Share at an exercise price of £0.20, or a
cashless exercise basis) held by RegTech Italy to the Company or a third party
designated by the Board (independent of Alessandro Zamboni), and any net
proceeds realised shall reduce the outstanding principal under the Shareholder
Loan Agreement.

 

As explained in the Company's announcement of 29 September 2023 (RNS Number:
0880O), the Board continues to review and monitor the cashflow and working
capital requirements of the Group on a prudent basis and acknowledge that
amount of funding drawn and outstanding under the Shareholder Loan Agreement
is required in relation thereto. The Board is continuing to work on
mitigation of any risks relating to delays in receipt of the amount of funding
drawn and outstanding under the Shareholder Loan Agreement. The Board is
actively exploring alternative financing options for RTOP to mitigate the
potential impact on the Group's working capital position that may arise from
further delays in receipt of the amount of funding drawn and outstanding under
the Shareholder Loan Agreement.

 

Business update

 

UK prospects:

 

Prior to launching UK marketing in 2024, RTOP has engaged with a number of
prospective UK clients and reached an advanced stage with one in the
Information Communications and Technology ("ICT") industry - targeting a
contract win of our first UK customer. The traction the Company has received
in initial meetings with prospective UK clients demonstrates the market fit of
the Orbit Open Platform to help organisations with the challenge of going
beyond risk management and business continuity, to develop resilient
operations.

 

Market developments:

 

RTOP has been working closely with ABI Lab (European Commission-funded banking
consortium) and the Big-Four consultants to develop a comprehensive Business
Resilience Framework ("BRF"). RTOP's team has been responsible for providing
expert input into the BRF and creating a quick-start reference tool. The full
BRF is supported inside the Orbit Open Platform, thereby, in RTOP's view,
positioning the Orbit Open Platform as the leading solution for operational
resilience in banking Europe-wide.

 

RTOP continues to see significant momentum and enquiries driven by Digital
Operational Resilience Act (EU 2022/2554) ("DORA") across Europe, the UK and
also for US financial services entities with operations in Europe, or ICT
companies supplying services to European financial services entities. RTOP
has been working closely with customers and major consultancies to ensure its
clients can meet their obligations under DORA using the Orbit Open Platform -
both refining methods and supporting functionality, and at the same time,
reinforcing RTOP's position as the leading solution for operational resilience
under DORA.

 

Partnerships:

 

RTOP has been showcasing its uniquely powerful, tight integration with
Everbridge Europe Limited ("Everbridge") for both Emergency Mass Notification,
and for Risk Intelligence, through their Virtual Command Centre. Together,
RTOP and Everbridge have been providing unparalleled capabilities for dynamic
management of crisis and recovery situations, and have jointly hosted events
in Italy, with presentations from BPER, Unicredit and NEXI, and are expanding
our collaboration across Europe and into the UK, to further showcase this
solution to the large Everbridge customer base and new prospective clients.

 

Whilst RTOP continues to work with Big-Four consultancies to provide client
solutions, in the UK the Company is expanding its services through
collaboration with Cyber Risk Management Group (CRMG), a leading provider of
cyber risk assessment, cyber resilience and third-party risk management
services. This ability to support UK clients with methodology, onboarding and
managed services provides a complete service for operational resilience,
backed-up by a highly reputable, local services firm.

 

Competitive developments:

 

Further proving the importance of our proposition: the need for a specialised
and comprehensive operational resilience solution, RTOP has in the last three
months added a number of prospects to our pipeline that have been attempting
to use operational resilience offerings (in particular, one of the most
prevalent information technology service management tools, and well-known
governance, risk and compliance platform) but have failed to achieve a
successful implementation. These prospective clients have subsequently
approached RTOP to evaluate Orbit Open Platform as a leading dedicated
solution. One of these is in advanced stages of discussions.

 

For the purposes of UK MAR, the person responsible for arranging release of
this announcement on behalf of RTOP is Ian Halliday-Pegg, Chief Executive
Officer.

 

- Ends -

 

Enquiries:

 

 RegTech Open Project plc

 Ian Halliday-Pegg, CEO              c/o Instinctif Partners

 Instinctif Partners (Financial PR)  regtech@instinctif.com

 Guy Scarborough                     +44 (0)79 1717 8920

 Bryn Woodward                       +44 (0)75 0002 7181

 

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