RCS - ActiveOps PLC - Placing and Proposed Admission to Trading on AIM
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This announcement is not and does not constitute or form part of, and should not be construed as, an offer of securities for subscription or sale in any jurisdiction nor a solicitation of any offer to buy or subscribe for, any securities in any jurisdiction, including in or into any Restricted Jurisdiction, nor shall it or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This announcement is not an admission document or prospectus and does not constitute a recommendation regarding any securities. Investors should not subscribe for or purchase any securities referred to in this announcement except in compliance with applicable securities laws and regulation and on the basis of the information in the final admission document ("Admission Document") to be published by the Company, and any supplement thereto, in connection with the placing of the existing ordinary shares of 0.1p each in the capital of the Company ("Ordinary Shares") and the proposed admission of the Ordinary Shares to trading on the AIM market of London Stock Exchange plc ("Admission"). The Admission Document will be published today and will be available for viewing on the Company's website at www.activeops.com. Terms capitalised in this announcement but not defined herein shall have the meaning given to them in the Admission Document.
25 March 2021
ActiveOps plc
("ActiveOps", the "Company" or the "Group")
Initial public offering - announcement of Placing Price
Placing of 45,048,390 Ordinary Shares at 168 pence per share
and
Admission to trading on AIM
ActiveOps, a leader in the provision of Management Process Automation SaaS solutions, which augment and automate critical operations management activities for large enterprises, today announces the successful placing of 45,048,390 existing Ordinary Shares at 168 pence per share (the "Placing Price") with institutional and other investors to raise gross proceeds of £75.7 million for Selling Shareholders (the "Placing").
On Admission, ActiveOps will have 71,320,680 Ordinary Shares in issue, all of which will be admitted to trading on AIM. The shares sold under the Placing represent approximately 63.2 per cent. of the Company's issued share capital. It is expected that Admission will become effective and that dealings will commence in the Ordinary Shares on AIM at 8.00 a.m. on 29 March 2021 under the ticker AOM. The Company's ISIN is GB00BLH37Y17 and its SEDOL is BLH37Y1.
The market capitalisation of the Company at the Placing Price will be approximately £119.8 million immediately following Admission.
Investec Bank plc ("Investec") is acting as Nominated Adviser, Financial Adviser, Sole Broker and Sole Bookrunner to the Company.
Key Highlights
· ActiveOps is a leader in Management Process Automation (MPA), providing a SaaS platform to large enterprises with complex and often global back-offices. The Group's software and embedded back-office operations management methodology enables enterprises to adopt a data-driven, scientific approach to organising work and managing capacity.
· As at 31 December 2020, the Group had a total of approximately 80 enterprise customers, predominantly in the banking, insurance and business process outsourcing (BPO) sectors, including Nationwide, TD Bank, Anthem, Inc and DXC Technology. The Group has significantly increased user numbers in recent years with a track record of new customer wins alongside a proven "land and expand" strategy within its existing customer base, with Net Revenue Retention of between 105 and 111 per cent. in each of the last three financial years. The Group has a clearly defined and validated customer acquisition strategy and in the twelve months to 31 December 2020 has won 13 new customers.
· As at 31 December 2020, the Group had 163 employees serving its global customer base from offices in the UK, Ireland, USA, Australia, India and South Africa.
· Back-office operations management is a large and attractive global market with multiple structural growth drivers. Whilst the market for its products is broad, the Group is primarily focused on customers in banking, insurance and BPO.
· The Group has a robust commercial model with high levels of recurring revenue which provides good forward visibility of revenues and strong cash generation. In FY20, 79 per cent. of the Group's revenues were recurring SaaS revenues, billed annually in advance.
· For FY20, the Group grew SaaS revenues by 21 per cent. to £16.2 million (of which 13 per cent. was organic growth) (£13.4 million for FY19). Total Group revenues grew 13.5 per cent. to £20.4 million (£18.0 million for FY19). The Group continues to invest in its product offering, with all R&D costs fully expensed to the Group's profit and loss account.
· The Placing has realised gross proceeds of £75.7 million for the Selling Shareholders. This includes Calculus Capital and Richard Jeffery, the Company's Co-founder and Chief Executive Officer, who will retain a substantial shareholding in the Group, amounting to approximately 13.6 per cent. on Admission. Calculus Capital will retain a shareholding of approximately 6.1 per cent. on Admission.
Rationale for listing
The Directors believe that Admission will be an important step in the Group's development as it will allow the Group to accelerate its growth plans and enhance its profile and reputation within its market. The Group primarily serves large enterprise customers and the Directors believe Admission will enhance its credibility when dealing with existing and potential customers. The Directors believe that Admission will also provide opportunities for the Group to attract, retain and incentivise employees through the Group's option schemes, as well as providing liquidity for its existing shareholders.
Richard Jeffery, Chief Executive Officer of ActiveOps, said:
"We are delighted to announce our successful placing and proposed Admission to AIM, a milestone for ActiveOps which will support us in our next stage of growth. The IPO provides us with access to a blue-chip investor base while enhancing our credibility as we seek to grow our enterprise customer base. I would like to take this opportunity to welcome our new shareholders and thank our teams around the world for their efforts in delivering our success to date.
"The scale and increasing complexity of back-office operations provides us with an extensive market opportunity. Increasing regulation, automation and the changing dynamics of the workforce mean balancing customer service, efficiency and employee experience is more challenging than ever. Our solutions simplify the running of operations, providing businesses with insight and control, so that they have the agility to respond rapidly to change, while ensuring the wellbeing of employees and continued efficient and effective running of their operations.
"With an established, long term, blue-chip customer base, high levels of recurring revenue, a clear growth strategy and track record of strong organic growth, we look forward to a successful future as a public company."
For more information, please contact:
ActiveOps
Via Alma PR
Richard Jeffery, Chief Executive Officer
Patrick Deller, Chief Financial Officer
www.activeops.com
Investec Bank plc
+44 (0)20 7597 5970
PLC Advisory & Corporate Broking
Patrick Robb / David Anderson / Ben Griffiths
TMT Investment Banking
Sebastian Lawrence / Alisdair Brady
Alma PR
+ 44(0) 203 405 0205
Caroline Forde, Josh Royston, Helena Bogle, Faye Callow
Background on the Company
The Workware+ platform
The Group's enterprise platform comprises Workware+, its MPA software platform, and AOM, the Group's operations methodology and framework for effective back-office management. Together, this combination of software and embedded methodology enables operations managers to balance the competing priorities of meeting service and quality standards while improving productivity and reducing cost.
The Group's software products augment and automate critical operations management activities for forecasting, planning and controlling performance in the back-office. These products, underpinned by the Groups market leading operations management methodology, improve the effectiveness of operations managers and their decision making by improving efficiency, productivity, consistency and service level delivery of their back-office operations. This enables the Group's customers to create more adaptable and agile operations, capable of balancing the variability in work and capacity more successfully and realising the full potential of new digital resources and automation technologies such as robotic process automation (RPA) and artificial intelligence (AI).
Market opportunity
Back-office operations management is a large and attractive global market with multiple structural growth drivers. Whilst the market for its products is broad, the Group is primarily focused on customers in banking, insurance and business process outsourcing (BPO).
These customers are typically large enterprises, where the back-office operations are large, complex and expensive to run, yet have limited management augmentation and automation technologies in use. The Group has a strong track record of successful implementations across this customer base which represents an addressable market in excess of £750 million in annual recurring revenue and which the Group is well placed to target.
During 2020, the Covid-19 pandemic served to further increase the Group's focus on these growth drivers. In particular, the mass move to home and distributed working has emphasised that many organisations do not have adequate data, insight and management processes to run operations safely and efficiently when the workforce is not co-located in an office. The Directors believe these dynamics will drive further demand for the Group's products from its existing customer base, and by new customers.
Key Strengths
The Directors believe that the Group has the following key strengths.
Leading management process automation software solution
The Group's Workware+ platform has been developed over 25 years specifically for the complex needs of large enterprises with complex and often global back-offices. Workware+ was designed from the outset to cope with the significant variety of work types and service levels which exist within the enterprise back-office. Many competitor products were originally conceived to manage a specific niche of operations workload (such as telephone calls) or address different business needs (such as fraud prevention) and then subsequently applied to the back-office. The Directors believe that the specific design and broad applicability of Workware+ and its highly scalable architecture create significant competitive advantage.
Deep domain expertise and proven operations management methodology
The management team at ActiveOps has been a leading authority in back-office operations management for over 25 years. This deep domain expertise and experience is captured in the Group's AOM method, which in turn is embedded within the Workware+ software platform. The Directors believe that the proposition of MPA software which applies best practice operations management methods whilst enabling better data-led decisions is a significant advantage for the Group when competing with rival technology firms who are reliant on their customers to define the operations metrics and management processes used in each deployment. The Directors believe that the Group's sector authority allows it to continually evolve the solutions in ways which are compelling to its user base.
Immediate quantifiable productivity gains and a broad range of long-term business benefits including acceleration of digital transformation
The Group's products have a proven track record of delivering a quantifiable ROI for customers by identifying and making best use of capacity that would otherwise be poorly utilised. Further productivity gains are achieved by providing managers with insights which enable them to better motivate/manage staff performance and from reducing the time taken by leaders to execute key management processes. In the 78 deployments of ControliQ undertaken by ActiveOps in the three years to 31 December 2020, the average productivity gain recorded by customers was 15 per cent. Customers then have the choice of how best to utilise this additional capacity. Typically customers look to resolve a range of business issues, for example: to improve delivery of service level targets, reduce backlogs of work, absorb additional work volumes, invest in projects, reduce overtime and reduce costs.
Once embedded at the heart of a customer's back-office operations, the Group's solutions help deliver a broad range of additional long term improvements including: better compliance with regulation, risk reduction and greater employee engagement. The Group's solutions also provide greater visibility and control over all aspects of the modern 'blended' workforce; humans (both in offices and working remotely); software robots (RPA); and BPO vendors. This visibility and control is a significant enabler for organisations operating with a dispersed workforce either as a chosen operating model or as a result of the Covid-19 pandemic.
Differentiated proposition and market message
The Group built AOM and Workware+ with reference to well established academic models of motivation and human performance. The Group's solutions promote the use of performance data in an open manner which treats employees with respect, focuses on outcomes not just inputs and motivates staff to achieve individual, team and organisational targets This positioning is strongly aligned with modern views on effective human performance management as voiced by academic and analyst communities.
Diversified and long term blue-chip customer base and low customer churn rate
The Group serves large enterprise customers, predominantly in the banking, insurance and BPO sectors. It has built an installed base of approximately 80 customers (and over 100,000 individual users) across EMEA, North America, APAC, and India. The Group has low levels of customer concentration, with the largest customer representing 9 per cent. of SaaS revenue for FY20. Typically, the Group's solutions become deeply embedded in its customers' operating model, leading to low customer churn. During each of FY17 to FY20 customer churn was 2 per cent. or less. In the nine months to 31 December 2020, customer churn continues to be low (approximately 1 per cent.). The Group benefits from numerous longstanding customer relationships with 18 of the current 78 customers having used the Group's solutions for more than 10 years.
Strong track record of new customer acquisition
The Group has invested in recent years in building its direct global sales team and has a strong track record of new customer wins. The Group added 13 new customers in the calendar year to 31 December 2020, taking total enterprise customers to 78. The Directors have identified their primary target customers within the Group's focus sectors (both potential and existing customers) and estimate these opportunities alone represent approximately £750 million of potential ARR.
Proven ability to grow revenue from existing customers
The Group has had demonstrable success in driving organic revenue growth from existing customers. Ten of the top 20 ARR producing customers during FY20 were also customers in FY16. Over this period, the ARR from this same group of customers doubled. In addition, in the nine months to 31 December 2020, the run rate ARR from this cohort has increased by a further 10 per cent. The Directors believe that clear, quantifiable ROI, ease of implementation and the Group's ability to deliver visibility and control across large, but diverse operations, has been key to this growth. Recent new logo wins have large addressable employee bases, and as a result the Directors believe there is up to a £70 million ARR opportunity within the Group's primary expansion targets.
Robust commercial model with high levels of recurring revenue and cash generation
The Group has a robust commercial model with high levels of recurring revenue which provides good forward visibility of revenues and strong cash generation. In FY20, 79 per cent. of the Group's revenues were recurring SaaS revenues, predominantly billed annually in advance. Recurring SaaS revenues represent an increasing proportion of the Group's total revenues: 75 per cent. in FY19 and 70 per cent. in FY18. SaaS revenues are supplemented by T&I revenues (19 per cent. of Group revenues in FY20), typically recognised over the implementation period of between three and twelve weeks. The Group enjoys high gross margins, typical of a SaaS software business, and, having invested in recent years in its technology and sales infrastructure, has inherent operational leverage within its business model. In FY20, gross margin on SaaS revenues was 82 per cent. and 43.2 per cent. on T&I revenues.
The Group has a strong history of consistent cash generation. It typically receives cash upfront for its SaaS revenues and net cash flow inflows from operations (before tax) was £1.2 million in FY20. Following the disposal of the non-core products and customers of OpenConnect, the Group had a cash balance of £7 million as at 31 December 2020 with no debt.
Proven management team
The Group's management team have extensive expertise alongside a proven ability to grow the Group's business across customer verticals, new geographies and through successfully executed M&A. The average senior management tenure is seven years and incorporates a blend of long-standing operations management expertise, enterprise software sales experience, critical technical/specialist skills and corporate development experience.
Board of Directors
Sean Francis Paul Finnan (Independent Non-executive Chairman)
Sean has over 30 years' experience driving change within international organisations. He joined the Board as a non-executive director in 2014 before becoming the independent non-executive chairman in 2019. Sean previously held a range of major senior services roles at IBM, HP and EDS and was also president of techUK (formerly Intellect).
Richard John Jeffery (Chief Executive Officer)
Richard has over 25 years' experience in enterprise software and specialist management consultancy. He co-founded the Group in 2005 alongside Neil Bentley having spent the previous ten years productising and implementing the AOM methodology.
Patrick ("Paddy") Alexander Deller (Chief Financial Officer)
Paddy has over 15 years' experience in senior finance roles across the technology sector. He joined the Group in September 2015 and had previously worked at Cable & Wireless where he was Chief Financial Officer of various international divisions over a period of 12 years. His other previous experience includes his role as Chief Financial Officer at Decision Technologies Ltd.
Michael ("Mike") Gerald McLaren (Independent Non-executive Director)
Mike is currently the full time Chief Financial Officer for FDM Group (Holdings) plc, a FTSE 250 listed IT services business. Mike joined FDM in 2011 when it was under private equity ownership prior to listing in late 2014. He joined the Board in March 2021 and was previously Chief Operating Officer and Group Finance Director of Timeweave plc (formerly Alphameric plc), a premium listed business in the software and services sector. Mike has been an independent non-executive chairman and non-executive director on the boards of a number of other companies. Mike is a member of the Institute of Chartered Accountants in England and Wales.
Hilary Wright (Independent Non-executive Director)
Hilary is currently a non-executive director of Midwich Group plc, a specialist audio visual distributor to the trade market. She joined the Board in March 2021 and was previously the Group Human Resources Director of Domino Printing Sciences plc who she joined in 2016. Her background was formed in retailing and more latterly with Cambridge based engineering and technology companies which is where she has gained her global experience as well as involvement in a number of acquisitions. She has held both strategic and operation roles and devised and led the HR direction for significant global growth; ensuring people development, succession planning and talent acquisition are aligned for transformational change. Hilary is a fellow of the Chartered Institute of Personnel and Development.
Important Information
Investec, which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the FCA and the Prudential Regulation Authority, is acting exclusively as nominated adviser, financial adviser, sole broker and sole bookrunner to the Company in connection with the proposed Placing and Admission and will not be acting for any other person (including a recipient of this announcement) or otherwise be responsible to any person for providing the protections afforded to clients of Investec or for advising any other person in respect of the proposed Placing and Admission or any transaction, matter or arrangement referred to in this announcement. Investec's responsibilities as the Company's nominated adviser and broker under the AIM Rules for Nominated Advisers are owed solely to London Stock Exchange and are not owed to the Company or to any Director or to any other person in respect of his decision to acquire shares in the Company in reliance on any part of this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on Investec by FSMA or the regulatory regime established thereunder, Investec does not accept any responsibility whatsoever for the contents of this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Ordinary Shares or the Placing and Admission. Investec accordingly disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) in respect of this announcement or any such statement.
This announcement is not for publication or distribution, in whole or in part, directly or indirectly, in or into any Restricted Jurisdiction. The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This announcement does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, the securities referred to herein to any person in any Restriction Jurisdiction.
The securities referred to herein may not be offered or sold, transferred or delivered directly or indirectly, in the United States unless registered under the Securities Act or offered in a transaction exempt from, or not subject to, the registration requirements of the Securities Act or any other applicable securities laws of the United States and in accordance with any applicable securities laws of any state or other jurisdiction of the United States. The securities referred to herein have not been and will not be registered under the Securities Act or under the applicable securities laws of Australia, Canada, Japan or the Republic of South Africa. There will be no public offer of the Ordinary Shares in the United States, Australia, Canada, Japan or the Republic of South Africa. Subject to certain exceptions, the Ordinary Shares referred to herein may not be offered or sold in Australia, Canada, Japan or the Republic of South Africa or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada, Japan or the Republic of South Africa.
The anticipated timetable for Admission may be influenced by a range of circumstances, including market conditions. There is no guarantee that Admission will occur.
The price of shares and any income expected from them may go down as well as up and investors may not get back the full amount invested upon disposal of the shares. Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser.
Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.
Certain figures 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.
This announcement contains statements that are, or may be deemed to be, "forward-looking statements". In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including, without limitation, the terms "anticipate", "believes", "could", "would", "envisage", "estimate", "expect", "aim", "intend", "may", "plan", "project", "target", "should", "will" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements relate to matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the intentions, beliefs and current expectations of the Company or the Directors concerning, amongst other things, the results of operations, financial condition, liquidity, prospects, growth, objectives and strategies of the Company and the industry in which the Group operates. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The actual results, performance or achievements of the Company or developments in the industry in which the Group operates may differ materially from the future results, performance or achievements or industry developments expressed or implied by the forward-looking statements contained in this announcement. The forward-looking statements contained in this announcement speak only as at the date of this announcement. The Company expressly disclaims any undertaking or obligation to update or revise publicly the forward looking statements contained in this announcement to reflect any change in expectations or to reflect events or circumstances occurring or arising after the date of this announcement, except as required in order to comply with its legal and regulatory obligations (including under the AIM Rules for Companies).
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