Location Sciences - Acquisition and Publication of Admission Document
30/01/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240130:nRSd2910Ba&default-theme=true
RNS Number : 2910B Location Sciences Group PLC 30 January 2024
This announcement contains inside information for the purposes of Regulation
11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the
publication of this announcement via a Regulatory Information Service, this
inside information is now considered to be in the public domain.
30 January 2024
Location Sciences Group PLC
("Location Sciences" or the "Company" or the "Group")
Proposed acquisition of Sorted Holdings Limited
Proposed subscription of 2,285,712 New Ordinary Shares at 87.50p per share
Proposed Share Consolidation
Proposed change of name to Sorted Group Holdings Plc
Director appointments
Notice of General Meeting &
Restoration of trading on AIM
Location Sciences (AIM: LSAI) is pleased to announce that, further to the
Company's announcement on 28 June 2023, terms have now been agreed for the
acquisition of the entire issued and to be issued share capital of Sorted
Holdings Limited ("Sorted", "SHL" or the "Target") by Location Sciences for an
aggregate nominal consideration of approximately £66.73 to be paid in cash at
completion (together the "Acquisition").
The Acquisition constitutes a reverse takeover of the Company under rule 14 of
the AIM Rules for Companies (the "AIM Rules") and requires the Company to
issue a new admission document as well as is conditional on, inter alia,
approval by the Company's shareholders (the "Shareholders"). Accordingly, the
Company has today published its Admission Document with a notice convening a
general meeting to be held at One Wood Street, London, EC2V 7WS, UK (the
offices of Eversheds Sutherland (International) LLP) on 16 February 2024 at
12.00 p.m. (the "General Meeting").
The Admission Document is available to view on the Company's website at
www.locationsciencesgroup.ai/ (http://www.locationsciencesgroup.ai/) and will
be posted, or notified electronically as the case may be, to Shareholders
later today. The Company's Ordinary Shares were suspended from trading on AIM
on 28 June 2023. With the publication of the Admission Document today, trading
in the Company's Ordinary Shares on AIM will be restored at 7.30 a.m. today.
Upon completion, the Company will trade under the new name of "Sorted Group
Holdings Plc" and its new ticker symbol will be "SORT".
Allenby Capital Limited ("Allenby Capital") is acting as Nominated Adviser to
the Company.
Highlights
· Acquisition of Sorted
o Significant opportunity for Location Sciences to implement its strategy to
maximise shareholder value in the short-to-medium term through leveraging
Sorted's leading edge technology as well as the significant capital investment
made in Sorted to date (being in excess of £70 million)
o Attractive SaaS business model operating in the ecommerce sector with
scalable predictable revenue performance
o Diverse customer base of household retail brands and strong industry
partnerships
o Global ecommerce market forecast to grow significantly
o Highly fragmented market
o UK-based business with over 60 employees
· Approximately £2.0 million equity fundraise to provide working
capital for growth
· New Board and senior management
Director appointments
With immediate effect, Location Sciences is pleased to also announce the
appointment of Carmen Carey as Chief Executive Officer of the Company, Mahmoud
Warriah as Chief Financial Officer of the Company and Petar Cvetkovic as
Non-Executive Director of the Company (together the "New Directors").
Expected Timetable of Principal Events
Publication of Admission Document 30 January 2024
Latest time and date for receipt of Forms of Proxy 12.00 p.m. on 14 February 2024
Admission of 102 Existing Ordinary Shares 8.00 a.m. on 16 February 2024
Time and date of General Meeting 12.00 p.m. on 16 February 2024
Record Date for the Share Consolidation 6.00 p.m. on 16 February 2024
Allotment of Subscription Shares, Remuneration Shares and CLN Shares 16 February 2024
Acquisition Agreement unconditional, Admission effective and commencement of 8.00 a.m. on 19 February 2024
dealings in the Enlarged Share Capital on AIM
Expected date for CREST accounts to be credited (where applicable) As soon as practicable after 8.00 a.m. on 19 February 2024
Expected date for share certificates to be dispatched (where applicable) by 26 February 2024
Notes:
- All future times and/or dates referred to above are subject to
change at the discretion of the Company and Allenby Capital and if any of the
above times or dates should change, the revised times and/or dates will be
notified by an announcement on RIS.
- Events listed in the above timetable following the General
Meeting are conditional on the passing at the General Meeting of the
Resolutions.
Unless otherwise defined herein, capitalised defined terms are as per the
Admission Document. However, Shareholders are strongly encouraged to read the
Admission Document in full as part of their voting consideration at the
General Meeting.
For further information please contact:
Location Sciences Group
PLC
via Allenby Capital
Simon Wilkinson, Chairman
Allenby Capital Limited (Nominated
Adviser)
Tel: +44 (0)20 3328 5656
David Hart
Vivek Bhardwaj
The following disclosures in relation to the New Directors are made in
accordance with the AIM Rules:
Carmen Christine Carey (formerly Witzel), aged 61, is or has been a director
or partner of the following companies and partnerships in the past five years:
Current Directorships/Partnerships: Former Directorships/Partnerships:
· Sorted Holdings Limited (08609014) · Big Data Partnership Limited (07904824)
· Sorted Group Limited (09060564) · Brady Credit Holding Limited (04033263)
· Clicksit App Limited (09510373) · Brady Credit Limited (04016397)
· Brady Credit Trading Limited (03056866)
· Brady Energy UK Limited (SC195633)
· Brady Technologies Limited (02164768)
· Quor Group Limited (07834364)
Ms. Carey was a director of CP 100 Limited from 26 February 2008 to 3 December
2010. CP 100 Limited was placed into administration on 1 April 2011. On 16
March 2012, notice to move the company from administration to dissolution was
filed. CP 100 Limited subsequently was dissolved on 20 June 2012. Carmen Carey
does not hold any ordinary shares in the Company.
Mahmoud Hamid Warriah, aged 56, is or has been a director or partner of the
following companies and partnerships in the past five years:
Current Directorships/Partnerships: Former Directorships/Partnerships:
· Sorted Holdings Limited · Liverpool Society of Chartered Accountants (00004869)
· Maheto Serviced Ltd (12708209) · Darkchain Limited (10261864)
· Linden Business Development Limited (08515230) · LMJHK Holdings Limited (10582346)
· Chinapakservices Limited (13026637)
· Businessbrainz Limited (11521018)
· Blocadoodledoo Limited (11410747)
· Wordwall Limited (11269394)
· Talkwordwall Limited (11235673)
· Spencersedgewick Limited (11034949)
· Hyperchain Consultancy Limited (10925416)
· Hyperchaincom Limited (10719477)
· Dawson Business Development Limited (05595244)
· Wedderleigh Management Company Limited (01539062)
Mahmoud Warriah does not hold any ordinary shares in the Company.
Petar Cvetkovic, aged 62, is or has been a director or partner of the
following companies and partnerships in the past five years:
Current Directorships/Partnerships: Former Directorships/Partnerships:
· Welford Business Services Limited (12656994) · Individual Protection Solutions LTD (10764140)
· Welford Investments Limited (11092999)
· Leicester Football Club Plc (03459344)
Mr. Cvetkovic was a director of Individual Protection Solutions Ltd between 2
October 2018 to 26 October 2021. On 5 April 2022 liquidators were appointed
pursuant to a creditors voluntary winding up in relation to Individual
Protection Solutions Ltd. As at the date of this document, the liquidation
remains ongoing and on 1 June 2023 it was reported that there were 24 ordinary
unsecured creditors, with estimated claims totalling £1,315,627.00. Petar
Cvetkovic currently holds 25,000,000 ordinary shares in the Company and is a
member of the LS Concert Party.
Save for the information set out above, there are no further disclosures to be
made in accordance with Rule 17, Schedule 2(g) of the AIM Rules in respect of
the appointment of the New Directors.
1. Introduction
On 28 June 2023, Location Sciences announced that it had entered into
exclusive non-binding heads of terms regarding a potential acquisition of the
entire issued share capital of Sorted by Location Sciences for a nominal
consideration. As part of the potential Acquisition, the Company entered into
a secured convertible bridge loan agreement (the "Convertible Loan Agreement")
with Sorted to lend it up to £2.6 million. It was also announced that if
the proposed Acquisition was to proceed, Location Sciences would assume
approximately £4.7 million (including accrued interest) of Sorted's
outstanding debt and that certain existing shareholders of Sorted would be
given the opportunity to participate in a cash subscription for new shares in
the Enlarged Group in order to seek to align their interests with those of
Existing Shareholders.
The Proposal
On 30 January 2024, Location Sciences announced that it had conditionally
agreed the terms of the Acquisition Agreement.
The Directors believe that the Acquisition represents a significant
opportunity for the Group to implement its stated strategy to maximise
shareholder value in the short-to-medium term.
In connection with the Acquisition, Location Sciences has conditionally raised
approximately £2.0 million (before expenses) pursuant to the Subscription
through the proposed issue of 2,285,712 Subscription Shares at a price of
87.50 pence per Ordinary Share. The Subscription is conditional, inter alia,
upon the passing of certain resolutions in order to ensure that the Directors
have the necessary authorities and powers to allot the requisite Ordinary
Shares.
The Issue Price, taking into account the Share Consolidation, represents the
Closing Price.
In conjunction with the Acquisition and the Subscription, the Existing
Directors believe it is appropriate to undertake a Share Consolidation to
reduce the number of the Ordinary Shares in issue. Details of the Share
Consolidation are set out later in this announcement.
Location Sciences intends to also issue the Remuneration Shares and the CLN
Shares on Admission. Further details of which are also set out later in this
announcement.
Furthermore, the Directors believe that should the Acquisition proceed, the
name of the Company should be changed to "Sorted Group Holdings plc" to
reflect the ongoing business of the Enlarged Group.
The Acquisition constitutes a reverse takeover pursuant to rule 14 of the AlM
Rules for Companies and therefore the purpose of this document, which
comprises an Admission Document prepared under the AIM Rules for Companies, is
to provide you with information on the Proposals and to seek approval by
Shareholders of the Resolutions to be proposed at the General Meeting.
If the Resolutions are duly passed at the General Meeting and the other
conditions set out relating to the Proposals are met, then it is expected that
the Enlarged Share Capital will be admitted to trading on AIM with effect from
8.00 a.m. on 19 February 2024.
Trading on AIM in the Existing Ordinary Shares has been suspended since 28
June 2023. Following publication of this Admission Document, it is expected
that the suspension of the Existing Ordinary Shares will be lifted with effect
from 7.30 a.m. on 30 January 2024.
2. Information on Location Sciences
Location Sciences has historically been a location verification services
provider to the digital advertising industry, working in partnership with
advertisers, media agencies and suppliers to reduce advertising wastage and
improve the effectiveness of location-based advertising campaigns. In relation
to this, the Company developed products to tackle global location advertising
fraud and location data inaccuracy.
The Company's revenues were adversely impacted by the significantly reduced
advertising spend caused by the COVID-19 pandemic. In addition, the Directors
believe that privacy concerns increased regarding the use of personal tracking
data which affected the Company's business. As a consequence of this reduction
in revenues, in early 2021, the Board instigated a cost reduction programme,
with a significant reduction in operational costs. The Board also announced
that it was exploring a number of options for the Company and its businesses.
In May 2021, the Company announced that following discussions both internally
and with third parties surrounding the business review, the Board had
concluded that given the market outlook for the Company's business units,
Location Sciences needed to secure additional financial resources and
therefore raised £3.85 million (before expenses) via an issue of new shares
in the Company. The Directors believed this would give the Company more time
and greater flexibility to deliver value to Shareholders.
Subsequently, in October 2021, as a further step following the business
review, the Company entered into an agreement to sell its insights dashboard
and four contracts pertaining to its location data and insights business for a
cash consideration of up to US$0.7 million, thereby further reducing the
Company's operating costs and bolstering its cash reserves.
The business review process enabled the Company to explore the merits of the
expansion and enhancement of Location Science's offerings. However, it also
provided the Company with a solid financial foundation, streamlined
operations, and a focus on delivering a new strategic path for Location
Sciences in order to create long-term value for Shareholders. The Directors
believe the Acquisition has the potential to deliver this long-term value.
3. Background to and reasons for the Acquisition
The Board believes Sorted to be a strong acquisition opportunity, for the
following reasons:
· UK-based business with over 60 employees: Manchester based
business supported by a second office space situated in London. The existing
Sorted team is comprised of software engineers, technical support, IT, sales,
marketing, finance and project management professionals.
· Attractive business model with scalable predictable revenue
performance: Sorted operates a SaaS business model whereby the majority of
Sorted's revenue is driven by customer subscriptions to its Delivery
Experience Platform. This in-turn provides annualised recurring revenue. The
Directors believe that Sorted is positioned well to continue this growth
trajectory.
· Diverse customer base and strong industry partnerships: Sorted's
customers range from mid-sized, growing ecommerce businesses to multi-national
organisations with notable customers include Marks & Spencer plc, ASOS plc
and Asda Stores Limited. In addition, Sorted has re-seller agreements in place
with major Carriers in the United Kingdom as well as in the United States.
· Global ecommerce market forecasted to reach a market size of US$6.35
trillion by 2027 according to Deloitte: The demand for ecommerce has been
influenced by a number of factors including but not limited to: (i) the rise
of smartphones and internet accessibility; (ii) increasing use of social
media; (iii) supply chain and logistical infrastructure improvements; and (iv)
changing patterns in consumer behaviour.
· Highly fragmented market: The Directors believe that there is no
dominant player that offers a delivery experience platform for the entire
ecommerce spectrum with one single integrated solution. In this regard, the
Directors believe that Sorted's Delivery Experience Platform offers ecommerce
businesses a complete end-to-end post-purchase solution, and accordingly,
there is an opportunity for Sorted to establish market leadership.
4. Information on Sorted
Overview
Ecommerce has redefined the traditional bricks and mortar retail model, with
online stores no longer being considered a "nice-to-have" and instead a
"must-have". With KPMG reporting that the global retail ecommerce market size
was estimated to be US$5.5 trillion in 2022, a clear ecommerce model can
create a lucrative alternative revenue stream.
As ecommerce continues to redefine the traditional retail model, the delivery
of goods remains critical in the ecommerce model as a factor that can set
brands apart and pave the way for success. The delivery experience has since
evolved from being a monotonous transactional process to a key influencing
factor in purchasing decisions, customer loyalty, brand perception and,
ultimately, a retailer success. Accordingly, retailers that prioritise
efficient shipping, accurate tracking, and seamless returns stand not only to
retain customers but also to build a loyal customer base. This "real-time"
approach towards the delivery journey has been propelled by the increasing
usage of technology.
Sorted is a provider of delivery experience software which serves ecommerce
retailers - from large, global enterprises to smaller, independent start-ups.
The Sorted Delivery Experience Platform has three core propositions
comprising:
(1) Ship - carrier management, carrier allocation and ecommerce checkout
optimisation;
(2) Track - post-purchase parcel tracking and customer communications; and
(3) Return - refunds and exchanges management.
The Directors believe that Sorted's Delivery Experience Platform offers
ecommerce retailers an end-to-end post-purchase solution through its
optimisation of checkout delivery options, automated carrier management,
post-purchase analytics, tracking updates and returns process automation.
Sorted traces its roots to 2010, when the business was originally established
as a transactional parcel rate comparison site. Through a combination of
organic growth and strategic acquisitions, the business transitioned to a
Software-as-a-Service (SaaS) business model serving ecommerce retailers on two
to three-year, recurring revenue contracts. For the financial year ended 30
September 2023, through its SaaS business model, Sorted had total unaudited
revenue of approximately £6.5 million.
Sorted's customers currently range from mid-sized, growing ecommerce
businesses to multi-national organisations. Notable customers include Marks
& Spencer plc, ASOS plc and Asda Stores Limited.
Industry overview
An introduction to ecommerce
Ecommerce, short for electronic commerce, is described by McKinsey &
Company as the buying and selling of goods or services online. Ecommerce
businesses can be broadly classified across three areas: merchandise sales
companies; service providers; and digital product companies. The benefits of
ecommerce include, inter alia, the reduction in the impact of geographical
barriers and enabling businesses to reach a global customer base at all times
of the day, at a significantly lower cost than traditional brick and mortar
retail business models.
It is reported that the first secure online transaction was made in 1994,
marking the birth of ecommerce. Subsequently, ecommerce has been growing
consistently. The early 2000s saw the wider adoption of online offerings for
retailers, as well as the growth of online marketplaces and the introduction
of secure payment gateways, boosting consumer trust in online transactions.
Internet sales as a proportion of all retail sales have been rising steadily
since 2006 and, by the 2010s, there was a rise of Mobile Commerce (M-commerce)
due to the proliferation of smartphones and Mobile Applications. Social media
platforms also integrated shopping features, transforming how businesses
connect with customers and how customers source goods online. In the 2020s,
online shopping now encompasses Business-to-Consumer (B2C),
Consumer-to-Consumer (C2C), Business-to-Business (B2B) and
Consumer-to-Business (C2B) models. According to UK government data, the
average weekly value of internet sales was reported to be £2.4 billion in
August 2023 (excluding fuel) - accounting for 26.7 per cent. of all retail
sales. This demonstrates the scale of the ecommerce industry when compared to
traditional bricks and mortar retail business models.
There are now multiple routes to market for retailers to reach customers that
did not exist only one, two or three decades ago. The history of ecommerce
reflects a journey from basic online transactions to a complex global
ecosystem. Against this backdrop, Deloitte forecasts the global ecommerce
market to reach a market size of US$6.35 trillion by 2027.
Understanding the ecommerce customer journey
Central to understanding the ecommerce industry is the concept of the
ecommerce customer journey. The ecommerce customer journey is described as the
complete end-to-end experience of a customer from the initial interaction with
a brand's online store to the final interaction which depending on the
customer's satisfaction ranges from repeat purchases and loyalty to returning
or exchanging a product purchased or even potentially both. Throughout the
ecommerce customer journey, there are multiple "touchpoints" whereby the
customer may interact with the business, product, or brand - either directly
or indirectly. This can vary greatly depending on numerous factors including
but not limited to the product category, the product value, the retailer's
website or the customer's geographical location. In any event, understanding
and enhancing the ecommerce customer journey is expected to support businesses
further increase engagement and ultimately increase sales conversion.
While the traditional ecommerce customer journey is no longer linear in
nature, the Directors consider the ecommerce customer journey to be broadly
categorised into the following stages:
1. Awareness and research:
The ecommerce customer journey begins with a potential customer developing a
need or want for a product or service. Through mediums such as social media,
online search engines, advertisements, or word of mouth, potential customers
become aware of specific ecommerce businesses. Potential customers will
subsequently proceed to researching and exploring products that match their
specific needs or wants. This may involve a visit to a retailer's website, a
visit to a showroom or store, reading product descriptions, reading reviews,
or comparing offerings from multiple online stores for competitive prices or
options.
2. Consideration and decision:
Potential customers will proceed to evaluate their purchase options further.
This may include shortlisting of several candidates and subjecting them to
more in-depth comparison utilising factors such as price, features and
perceived advantages or disadvantages. This stage culminates with the
potential customer adding the product or service to their online "shopping
basket" and ultimately deciding whether to proceed with purchasing the product
or service. Time spent during this stage will be influenced by whether the
purchase is low-value in monetary terms or potentially an impulse purchase
i.e. an unplanned decision to purchase a product or service.
3. Checkout:
The checkout stage represents the point at which a potential customer
transitions into an actual customer. The checkout stage involves the potential
customer reviewing the available delivery options, any return policies,
inputting payment details as well as inputting any relevant personal details,
as applicable. Following satisfactory completion of the relevant fields, an
order can be confirmed. It is reported that almost 70 per cent. of potential
customers abandon purchases at the checkout stage. Accordingly, an effective
checkout experience is an important element of the ecommerce customer journey.
4. Order confirmation:
Following completion of a purchase, the customer will receive an order
confirmation which will summarise the purchase details associated with the
product or service as well as include an indication of delivery timings. The
order confirmation may take the form of either a web page confirmation or
alternatively a digital communication directly to the customer, such as an
email or text message to a mobile phone.
5. Fulfilment and shipping:
The confirmed order will be fulfilled at the retailers designated warehouse.
Agreed logistical parameters will ensure that the product or service purchased
is identified, picked, packed, and delivered to the destination as agreed with
the customer.
6. Delivery:
During the delivery phase, the product or service will no longer be in the
proximity of the seller and instead will be in the possession of the
intermediary responsible for delivery. During this phase, the customer will
await the delivery of the order. Depending on the level of service offered to
the customer, the customer may be able to track their good or service
delivery, review the status of the delivery (as applicable), or alternatively
contact customer support for real-time updates in anticipation of the arrival
of their purchased product or service.
7. Unboxing and product experience:
Following delivery of the product or service, the customer will experience the
purchased item first-hand. Depending on whether the product or service is a
tangible item, this stage is considered to be the only physical "offline"
touchpoint between an ecommerce business and a customer.
Depending on the customer's experience during the above process, the ecommerce
customer journey diverges further into either stage eight or nine (or
alternatively, sometimes both eight and nine), as outlined below.
8. Repeat purchase and loyalty:
If the customer is satisfied with their ecommerce experience, the customer may
become a repeat shopper of the business concerned. In addition, satisfied
customers may share their positive experiences with friends, family or online
communities, leading to word-of-mouth referrals. This may result in further
new customers for the ecommerce business.
9. Returns - refunds and exchanges:
If the product or service is considered to be unsatisfactory or faulty, the
customer may return their purchase and request a refund or an exchange. This
decision triggers a 'reverse logistics' journey whereby the product or
services is returned by the customer back to the ecommerce business.
At all stages of the ecommerce customer journey, sits the "customer service"
touchpoint. Customer service comprises support and assistance provided to
customers during their online ecommerce experience. Interactions with customer
service typically arise at stage six of the ecommerce customer journey. It is
reported that 77 per cent. of consumers consider good customer service to be
critical to earning brand loyalty and generating business.
The Sorted Delivery Experience Platform sits across the "post-purchase
journey", namely, from stage two onwards of the ecommerce customer journey, as
outlined above .
Factors affecting the ecommerce industry
While many of the recent developments in the ecommerce industry were driven by
the COVID-19 pandemic, many influencing factors were long underway before the
COVID-19 pandemic. Notable factors influencing the ecommerce industry are
outlined below.
1. Technological advancements:
The rise of smartphones and increased internet accessibility has played a
pivotal role in shaping the ecommerce landscape. In this respect, according to
Statista's Market Insights mobile ecommerce represented 60 per cent. of all
ecommerce transactions globally in 2023. Mobile ecommerce allows consumers to
shop conveniently from their handheld devices from any location at any time.
This trend has prompted businesses to optimise their websites, Mobile
Applications and create responsive, mobile-friendly designs to cater for the
growing number of mobile shoppers.
2. Social ecommerce:
Deloitte reported that 64 per cent. of digital buyers discover brands or
products via social media. The prevalence of social media platforms such as
Facebook, Instagram, and TikTok and the integration of shopping features
within such platforms has further transformed the ecommerce customer journey.
For example, Instagram launched a new shopping functionality in 2018 which
included initiatives such as the implementation of "shoppable stories".
Ecommerce businesses leverage social media platforms to showcase products,
facilitate direct transactions and tap into influencer marketing, thereby
capitalising on the power of social engagement to drive sales. In addition,
social ecommerce can serve to create a powerful consumer engagement ecosystem,
from driving brand engagement, funnelling recruitment, to driving repeat
purchase insights. Social ecommerce has since evolved to encompass digital
stores directly incorporated on social media platforms, conversational
ecommerce as well as livestream ecommerce. Social ecommerce has resulted in
consumers becoming accustomed to Omnichannel shopping and Omnichannel customer
service.
3. Subscription ecommerce:
The advent of subscription-based models involving customers subscribing to
products or services needed on a recurring basis has gained prominence, with
Forbes reporting that the global subscription e-commerce market size is
expected to reach US$904.2 billion by 2026. Notable examples include Amazon
Prime, which reached an estimated 112 million US subscribers in December 2019,
and ASOS plc's delivery subscription model both of which offer customers
personalised experiences and convenient, cost-efficient product delivery.
4. Logistical improvements:
The supply chain and logistics landscape has evolved to meet the changing
ecommerce model. With fast and reliable shipping options becoming a key factor
for consumers and with consumers willing to pay for such services, retailers
have needed to find ways to efficiently manage their Carrier relationships in
a scalable way. This demand for speed and convenience has led to the rise of
same-day and next-day delivery services such as Argos' Fast Track service
which was launched in 2015 catering for same day delivery on thousands of
items with wide geographical coverage. This convenient access to products or
services without the need for physically visiting a store has contributed to
the growth of the ecommerce industry and according to McKinsey & Company
has the potential to fundamentally change the way we shop.
5. Consumer behaviour:
Consumer spending is correlated with broader economic conditions. For example,
during recessionary periods, consumer sentiment decreases resulting in reduced
consumer spending and ultimately suppressed ecommerce activity. Conversely,
during economic booms consumer spending increases.
Businesses are faced with fresh pressures including an unprecedented cost of
living crisis. The ONS suggests that in October 2022, inflation was at the
highest level it had been for over 40 years. Many consumers are battling the
sharpest reduction in disposable income they have seen in their lifetime.
Retail economic data suggests that the average household saw discretionary
income drop by 10.6 per cent. in May 2022 compared to the previous year.
With the cost of everyday products and services rising, consumers are feeling
the strain on their finances. In August 2023, the ONS said that, compared to
February 2020, the last full month before the COVID-19 pandemic lockdowns
began, total retail sales were 16.4 per cent. higher by value, but 1.8 per
cent. lower in the volume of goods people bought.
Despite the period of customer cutbacks and rising inflation, consumers once
again appear to be feeling more optimistic about their finances. Since
reaching an all-time low of -20.3 per cent. in the third quarter of 2022, the
Deloitte Consumer Confidence Index (based on six measures such as levels of
debt and disposable income) has shown modest improvement, rising by six
percentage points over the last four quarters to -14.2 per cent. in the third
quarter of 2023.
Whilst consumer spending has been more elevated in recent years, market share
remains available for businesses to capitalise on. In a challenging economic
landscape, businesses are battling to ensure they have a competitive edge over
their peers. There is an opportunity for ecommerce brands to emerge as market
leaders, by converting customers and keeping them loyal. According to the
Retail Think Tank, businesses should look to become customer-centric and
should invest in technology to help them provide an insight rich operation.
6. The COVID-19 pandemic:
With the outbreak of the COVID-19 pandemic and the subsequent lockdowns
globally as well as in the UK in March 2020, the ecommerce landscape
experienced an unprecedented acceleration in the trends and adoption that had
already been moving at a considerable pace.
In April 2019, the proportion of sales made online was at 19.1 per cent. In
April 2020, the proportion of sales made online soared to the highest on
record at 30.7 per cent.
Forced closure of physical stores meant that businesses had to quickly adapt
by ramping up their online operations and expanding their digital presence -
alongside operating their own businesses under budget pressures, staff absence
and social distancing restrictions. Consumers also adapted their attitudes
towards delivery - a Sorted study found that 79 per cent. of UK and US
consumers were more forgiving about delivery experiences during the COVID-19
pandemic.
The COVID-19 pandemic period forced many retail businesses to prioritise
online channel development and delivery transformation, as well as completely
reshaping consumer shopping habits. The COVID-19 pandemic has changed consumer
behaviours, some permanently. In a study released in March 2022, it was
estimated that 27 per cent. of UK consumers planned to maintain their
increased online shopping habits post-pandemic, and 51 per cent. of home
workers said they expected to shop online more permanently.
In July 2023, the proportion of online sales rose to 27.4 per cent. from 26.0
per cent. in June 2023. This is the highest proportion of retail sales
taking place online since February 2022 (28.0 per cent. and remains
significantly above the pre-pandemic levels (19.6 per cent. in February 2020).
7. Rising demand for delivery experience technology:
With much more competition for businesses to win market share of consumer
discretionary spending, businesses are seeking to trim costs and differentiate
themselves in the market with the aim of giving consumers an experience that
encourages repeat purchases and more spending. As a result, businesses are
increasingly focusing on improving the "post-purchase" experience.
A positive post-purchase experience reinforces trust, customer satisfaction
and potential advocacy for or loyalty to a business. Conversely, a negative
experience can result in disengagement and lost customers. Research released
in August 2023 found that 79 per cent. of consumers admit that they would be
deterred from purchasing from a brand again if they encountered a subpar
post-purchase experience. The same research indicated that 83 per cent. of
consumers think that there is room for improvement in the post-purchase
experience, signalling the opportunity for retailers to acknowledge, and
capitalise on, this demand.
Data analytics is increasingly harnessed by businesses seeking to understand
their consumer base: analysing shopping behaviours; offering personalised
shopping recommendations; and serving the customer by putting them in control.
Such technologies enable businesses to tailor their offerings in the way
consumers prefer, enhancing the shopping experience and increasing the
likelihood of conversions.
Many businesses have already invested in delivery experience technology and
continue to do so. Notable examples of businesses benefitting from delivery
experience technology include musicMagpie plc, which has invested in
post-purchase technology to reduce "where is my order?" related enquiries and
to ensure brand ownership of the journey - from communications to performance
insight. With post-purchase technology in place, tracking and communications
improved, resulting in a 63 per cent. reduction in "Where is my order?"
related enquiries.
In September 2023, retail sales in Great Britain were recorded at £8.5
billion per week and, with businesses operating for market share in a
challenging economic environment, Sorted offers a solution to fixing poor
delivery choice, broken customer promises and disjointed post-purchase
communication to maximise the customer experience, save money, drive loyalty
and enable businesses to have a differentiated proposition to fuel growth.
Background and history of Sorted
David Grimes recognised that there was an opportunity to simplify and expedite
the way consumers deliver parcels. Accordingly, in 2010, David Grimes founded
myparceldelivery.com a parcel price comparison website for individual
consumers and small businesses to purchase Carrier labels at reduced prices
and arrange parcel collections or drop offs.
It became apparent to management that in addition to individual consumers and
small businesses, larger businesses were also dissatisfied with their delivery
experience and the inflexible nature of the dominant legacy market leaders in
the delivery management technology space.
Accordingly, in 2015, MyParcelDelivery Holdings Limited expanded to launch a
Carrier management solution for large businesses, originally known as Electio
which forms part of MyParcelDelivery Holdings Limited. This marked the
businesses' transition to a SaaS business model in the Carrier Management
System product category. Electio eventually rebranded to SortedPRO and
subsequently Ship. Ship forms the first component of Sorted's Delivery
Experience Platform.
In June 2017, MyParcelDelivery Holdings Limited rebranded to Sorted Holdings
Limited (Sorted).
As customer activity levels increased within the Ship proposition, Sorted
recognised the appetite for ecommerce businesses to continue a branded
dialogue with their consumers, beyond the 'buy' button whilst simultaneously
enabling them to suppress "contact touchpoints" to order ratios. Accordingly,
to address this growing need for delivery tracking and delivery communications
software in the ecommerce space, Sorted launched Track (formerly SortedREACT)
in 2018. This marked Sorted's entry into the burgeoning post-purchase tracking
product category. Track forms the second component of Sorted's Delivery
Experience Platform.
In November 2021, Sorted acquired Clicksit, a returns automation Application.
The acquisition of Clicksit enabled Sorted to complete its offering across the
entirety of the consumer delivery experience journey and marked the last
component of Sorted Delivery Experience Platform. The acquisition included the
transfer of all Clicksit's existing customer base, comprising predominantly
small and medium sized businesses selling through Shopify. This in turn
allowed Sorted to access ecommerce businesses in the United States. Clicksit
has since been rebranded to Return.
Since its formation, Sorted's customer base has grown incrementally. In 2017,
Ship onboarded a prominent British and Singapore based multinational
technology company as the first Corporate and Enterprise customer. In 2018,
ASOS plc signed a contract to become a Sorted Ship customer and furthered the
ecommerce market coverage of the Ship product. By 2021, Sorted's customer base
had evolved to include multiple marquee customers. These included but are not
limited to a well-known UK home furnishing retailer, a UK sports-fashion
retail company, a major UK-based multinational retailer and a prominent UK
supermarket chain.
Notwithstanding Sorted having achieved double or triple digit recurring
revenue growth since its early phase as an enterprise SaaS business until
2022, Sorted has historically been funded through a combination of equity and
debt. In this regard, between 2013 to 2021, Sorted raised an aggregate of
approximately £71.8 million, comprised of approximately £71.07 million in
equity and approximately £3.5 million debt finance.
The success of the Sorted Delivery Experience Platform is illustrated through
the volume of activity that the platform is able to process during the busy
Christmas period, namely, the calendar period between early November and early
January. This period is categorised as the busiest period in the annual retail
calendar due to the increase in consumer spending around the Christmas
gift-giving holiday period. For example, between 14 November 2022 to 8 January
2023 the Sorted Delivery Experience Platform processed volumes of 10.76
million pieces of shipment data along with 1.15 billion unique tracking events
handled.
Business model and operations
Business model
Sorted operates a SaaS business model whereby the majority of Sorted's revenue
is driven by customer subscriptions to its Delivery Experience Platform. This
in-turn provides annualised recurring revenue. This model, amongst other
benefits, enables predictable revenue performance. In addition to recurring
revenue, Sorted benefits from non-recurring revenue generated from one-time
onboarding services for Corporate and Enterprise customers which in the past
three years has ranged from £2,000 to £45,000 per customer. Each scenario
goes through a solution architecture design process which defines the time and
effort required to complete the work based on a services day rate. Similarly,
Sorted benefits from non-recurring revenue generated from ad-hoc customer
requests ranging from additional product functionality requirements,
additional Carrier configurations and further integrations. However,
non-recurring revenue forms only a small component of Sorted's overall
revenues.
At the larger end of the customer spectrum, Corporate and Enterprise customers
are encouraged to enter longer-term subscription agreements to Sorted's
Delivery Experience Platform. In this regard, Sorted's current average
subscription agreement length is 2.6 years with 54 per cent. of customer
contracts are under 2.6 years in duration and 46 per cent. of customer
contracts are over 2.6 years in duration. Sorted's commitment towards
attracting and cultivating subscription agreements with Corporate and
Enterprise businesses is demonstrated by Sorted utilising dedicated direct
sales and account management teams.
At the smaller end of the customer spectrum, SMB customers purchase Sorted's
Return services on a pay-as-you-go basis. Subscription fees are charged
monthly. This offering is currently live on Shopify. Customers of Sorted's
Return service receive preferential Carrier label delivery rates for return
services, which are re-sold by Sorted and customers are charged monthly.
To remain competitive, Sorted has re-seller agreements in place with major
Carriers in the United Kingdom including but not limited to Hermes Parcelnet
Limited (Evri) and Yodel Delivery Network Limited (Collect+) as well as in the
United States which includes the United States Postal Service via A.P. Moller
- Maersk. Re-seller agreements comprise preferential rates at which Sorted can
purchase specific Carrier service labels from the aforementioned Carriers
following which Sorted are then able to re-sell the labels with an additional
margin to their customers. Using Sorted's leverage with its Carrier network,
Sorted is able to purchase Carrier service labels at rates more favourable
than that which a SMB can obtain directly. As a result, SMBs are able to offer
their end consumers competitively priced Carrier service labels thereby
reducing their overall cost profile.
In addition to direct customer selling, Sorted has entered into agreements
with third party logistic providers which re-sell the Ship and Track
proposition to their respective customers.
Operations
Sorted's registered office and headquarters along with the majority of its
operations are concentrated in Manchester, United Kingdom. This is supported
by a second office space situated in London. Reflecting the flexible attitude
to work arrangements at Sorted, the Company offers all staff the option to
primarily work remotely as well as "hybrid-arrangements", representing a blend
of in-office and remote work arrangements. As of 21 November 2023, Sorted had
a headcount of 66. In addition to this headcount, Sorted also utilises a
third-party nearshore software delivery partner that provides scale up
engineering capacity as needed to support the in-house Sorted technology team.
Product and services
At the core of Sorted's product offering is its Delivery Experience Platform.
This is comprised of three propositions, namely:
(1) Ship - carrier management, carrier allocation and ecommerce checkout
optimisation;
(2) Track - post-purchase parcel tracking and customer communications; and
(3) Return - refunds and exchanges management.
A high-level summary of each proposition is highlighted in table 1 in the
Admission Document.
The Directors believe that Sorted's Delivery Experience Platform enables
Sorted to give its customers, and their respective consumers, control and
visibility of the whole ecommerce journey, whether it be through offering
consumers better delivery choices, enabling ecommerce businesses to take
control of the extensive Carrier and delivery management capabilities, giving
both the ecommerce business and the consumers the real time delivery insights
they need, or seamlessly facilitating the increasingly critical product
returns process.
A full breakdown of where the Sorted Delivery Experience Platform sits across
the ecommerce customer journey is outlined in table 2 in the Admission
Document and a detailed overview of each respective proposition is outlined in
the Admission Document.
Ø Ship
Ordinarily when an ecommerce business seeks to deliver a parcel to a customer,
it relies on Carrier partners to execute the final stages of the ecommerce
customer journey. Carrier partners vary in the levels of delivery services
offered. This ranges from same day, next day to two-person deliveries services
at a range of price points. This fragmented offering can result in ecommerce
businesses requiring access to a panel of Carrier partners to run a delivery
operation that fits their respective customers' needs, often at rigid price
points.
Rather than burdening an ecommerce business with building and maintaining
their own resource-heavy and expensive software interface, which is capable of
accessing multiple Carrier partners at competitively negotiated prices into
their ecommerce infrastructure, Ship provides a ready-made software solution
for consignment deliveries that can integrate into customers' existing API.
Ship incorporates a catalogue of Carrier services that have been onboarded and
integrated into the system, formally known as the 'on-platform' Carrier
services. The 'on-platform' Carrier services acts as a single user interface
for connecting ecommerce businesses to Carriers thereby avoiding the need for
developing multiple integrations with multiple different carriers.
Through the Ship interface, ecommerce businesses can print Carrier compliant
labels, manage Carrier operations, access performance reports and ensure that
each parcel is delivered at the most competitive price. In addition, Ship
enables ecommerce businesses to increase the levels of delivery services
offered to their customers while simultaneously acting as a single carrier
management platform. Furthermore, Ship allows for ecommerce businesses to
directly connect their online checkout infrastructure with warehouses'
activity. For example, the delivery options presented to a customer via Ship
will take into account the delivery options that are realistically able to be
fulfilled by the warehouse.
In 2020, Sorted soft-launched a new version of Ship known as "Shipments".
Shipments sits along the standard form version of Ship. However, Shipments was
designed to support the complex needs of larger strategic Enterprise customers
and was instigated due to demand from notable strategic customers of Sorted.
The Shipments platform is underpinned by a microservice-based architecture to
ensure long term flexibility, scalability and high resilience for Sorted's
customers. While the core Ship proposition remains the same, Shipments offers
a broader feature set that is attractive to enterprise customers. Features
include but are not limited to advanced shipping rules, shipping modes for
setting hard and soft allocation limits, grouping of shipments, and
streamlining of multi-brands (for example, when a retailer manages shipping
operations for multiple different concession offerings under the parent
company - where each brand is likely to have a different customer delivery
experience requirement).
Longer term, Sorted intends to work towards consolidating both Shipments and
Ship into one single offering. In addition, Sorted intends to expand Ship's
Carrier library and improve parcel pick up and drop off services.
Ø Track
Track is Sorted's shipment tracking engine, aggregating and enhancing parcel
tracking information that is provided from Carriers to ecommerce businesses.
Track gathers tracking event data from Carriers. Tracking events occur as the
parcel travels through the delivery network on its way to the customer. Track
subsequently processes and unifies this data, and then presents the data to
ecommerce businesses in a simple, easy to digest and user-friendly dashboard.
This provides ecommerce businesses with the ability to monitor the status of
deliveries and performance of deliveries in Track's user- friendly interface
dashboard. Track is also capable of calculating when a shipment may be
missing or is late, allowing ecommerce businesses to pre-emptively manage
consumer expectations.
Track simultaneously provides ecommerce businesses with flexibility in
relation to how they handle all the data collected. For example, Sorted
customers can use the Track user interface to service incoming queries,
automate proactive notifications or create "tracking" pages to reduce incoming
'where is my order' enquiries. Similarly, Track allows ecommerce businesses to
send automated SMS and email communications to consumers, and use "webhooks"
to alert them of shipment tracking events. Notable examples include if a
Carrier scans a parcel to flag that it is 'in transit', the ecommerce business
can trigger a customer communication to say, 'It's on its way' or 'With you
soon'. This further reduces manual customer contact touchpoints, as there is
no 'communication black hole' and the dialogue between the ecommerce business
and the customer stays open proactively throughout the delivery journey.
Given the standardised nature of how Track collects data, users can also build
API-driven tracking pages directly on their websites. These pages are powered
in the background by Track and are fully customisable and branded in
accordance with the ecommerce businesses' design style.
Since the launch of Track, additional features have been developed to seek
market leadership. Most notably, Track offers proactive alerting. Proactive
alerting provides ecommerce businesses with advanced warning of delivery
exceptions, helping Track customers proactively address potential problems
with shipments so that they can take action and/or inform customers as
required. In addition, improvements to branded tracking pages have been made.
Sorted intends to focus on integrating the Track interface into broader
software platforms such as large ecommerce platforms as well as to incorporate
additional features such as SMS.
Ø Return
For smaller, growing ecommerce businesses, managing returns can be costly and
a time-consuming process. The Return proposition is delivered through Sorted
Returns Center, an Application available through Shopify and BigCommerce. The
Sorted Returns Center provides a platform through which ecommerce businesses
can access preferential label rates from multiple Carriers, automate laborious
stages of the returns process, and monitor how returns are progressing
throughout the refunds and exchanges process.
Sorted Returns Center is integrated into the Shopify ecosystem. Shopify is
an ecommerce platform that allows retailers and businesses to easily set-up
and run an online store and access all the essential services required of an
online business to maximise their commercial success.
Sorted originally chose to integrate the Sorted Returns Center into Shopify
for two reasons. Firstly, Shopify is one of the biggest ecommerce storefront
platforms in the world by volume usage. Secondly, Shopify allows a simple
connection to an ecommerce businesses order, stock and pricing data, all of
which are essential to the success of a return's automation product.
Upon installation of the Sorted Returns Center, a choice of subscription plans
can be chosen from, each of which offers a 14-day free trial period.
Subscription plans on Shopify range from a "silver" package at US$20 per
month, a "gold" package at US$50 a month to a "platinum" package at US$500 a
month. A summary of the differences between each subscription package is
highlighted in table 3 in the Admission Document.
The Sorted Returns Center is immediately accessible following installation,
beginning with the activation of the return portal on a "user's retail
storefront". The return rules that the user wishes to configure can be
set-up and edited in seconds from the settings section of the Sorted Returns
Center at which point the user can also choose to add in automated approval
logic. Examples of automated approval logic include auto-approving refunds if
the return request reason exceeds or falls under a certain size threshold.
This allows the end user to receive a quick approval or rejection in relation
to their returns request. In addition, the Sorted Returns Center offers
ecommerce businesses a return portal which can be fully branded.
To make the return journey as easy and intuitive as possible for the end
consumer, users of the Sorted Returns Center have the ability to buy Collect+
(Yodel) or Evri in the UK or USPS labels in the US, from Sorted to send
directly to consumers. Both end consumers and users of the app can then
leverage the Carrier's tracking links to monitor the return on its reverse
journey to the ecommerce business.
A management dashboard allows the user to monitor and action all pending and
open return requests.
Following the acquisition of Clicksit, Sorted recognised that customer
activation of what is now the Sorted Returns Center, required significant
ongoing support from Sorted's sales representatives. As a result, in order to
enable a user driven and intuitive product activation journey, Sorted
introduced a range of improvements including but not limited to the settings
pages, returns portal, additional "know-how" articles and an improved "getting
started" journey. In addition, Sorted has since further monetised the
platform. For example, Sorted concluded a re-seller agreement with Evri,
enabling Sorted to produce Evri return labels available to all Sorted Returns
Center Application customers in the UK.
Customers
Sorted has a diverse customer base ranging from mid-sized, growing ecommerce
businesses to multi-national organisations. Sorted's delivery experience
software customers can be broadly categorised into the following two groups:
1. Corporate and Enterprise customers: Corporate customers currently
represent ecommerce businesses generating in the region of 300,000 units to
12,000,000 units in aggregate shipping parcel volume per year and Enterprise
customers currently represent those ecommerce businesses generating in excess
of 12,000,000 units in aggregate shipping parcel volume per year (not all
shipped or tracked by Sorted). The precise ranges for both Corporate and
Enterprise customers are subject to Sorted's periodic review and accordingly
may change. Notable Corporate customers include musicMagpie Plc, French
Connection and Mint Velvet. Notable Enterprise customers include ASOS plc,
Asda Stores Limited, Boohoo Group PLC and Marks & Spencer plc.
2. SMB customers: businesses that exist in almost any industry, typically
with smaller numbers of employees and smaller up-front capital investments. In
the European Union, SMB's represent 99 per cent. of all businesses and employ
an estimated 100 million individuals. In the United States, there are
estimated to be 33.2 million SMB's.
As at September 2023, Sorted's Ship had 37 customers generating an average
annual recurring revenue of £92k each. Track had 17 customers generating an
average annual recurring revenue of £74k each. Return had a total of 700 SMB
customers generating an average annual recurring revenue of £240 each.
Sorted currently has 11 Multi-Product Customers generating an average annual
recurring revenue of £191k each.
Direct users of the Sorted Delivery Experience Platform within both customer
categories are uniform and include employees belonging to the operations &
logistics, customer services and ecommerce teams. In addition, within both
customer categories, Sorted predominantly targets ecommerce and Omnichannel
businesses as well general retail businesses operating in varying segments
such as apparel and footwear, beauty, personal care, homeware to electronics,
healthcare and groceries. In any event, the Sorted Delivery Experience
Platform is developed to be agnostic to the underlying ecommerce activity.
Customer acquisition strategy
Sorted's customer acquisition strategy differs by customer category.
"Corporate and Enterprise" customer acquisition is delivered through a
combination of direct outbound sales, channel or third-party sales (for
example reselling through logistics providers such as Wincanton plc), inbound
sales and marketing programs. These are oriented predominantly around the Ship
and Track propositions. In relation to SMB customer acquisition, a "low touch"
self-service buyer journey exists. Further details in relation to each
approach are outlined as follows.
1. "Corporate and Enterprise" customer acquisition strategy:
Sorted focuses its direct plus channel sales and marketing programs around a
clearly defined set of targeted accounts. In this respect, a mixture of
content and digital marketing programs is deployed, complemented with outbound
prospecting with the aim of booking qualified introductory meetings with key
buying individuals from within the defined set of targeted accounts.
A clearly defined lead-to-revenue process is followed by the Sorted
representative which outlines the criteria that must be met in order for a
lead to progress through each stage of the funnel and into the sales pipeline.
In this regard, Sorted's sales pipeline consists of six stages; discovery,
validate, requirements, proposal, negotiation and closed. Each stage in the
sales pipeline has clearly defined progression criteria and reporting is in
place to objectively track momentum throughout the sales pipeline process.
Customer onboarding is orchestrated by the Sorted project management team and
delivered by a cross functional team comprising of members from the pre-sales,
customer success, onboarding and engineering teams. The standard onboarding
journey for progressing a Corporate and Enterprise business to live operations
on the Sorted Delivery Experience Platform is described below.
1) Contract signature - Sales
2) Internal sales handover - Sales and Pre-Sales
3) Customer kick-off meeting - Project Management
4) Customer integration design workshop - Customer Success
5) Integration blueprint review meeting - Customer Success
6) Project & test plan outline - Project Management
7) Project execution - Project Management
8) Testing execution - Project Management
9) Transition to live operation and billing - Project Management
2. SMB customer acquisition strategy:
Customer acquisition within the SMB arena is predominantly marketing driven,
specifically through the execution of advertising campaigns across prominent
search engines. These campaigns are designed to drive qualified traffic from
small and medium sized businesses to the Sorted Returns Center landing page on
the Shopify Marketplace. From here, prospective SMB customers can install
the App within their Shopify ecommerce platform and begin to use Sorted's
suite of services right away.
Once a retailer installs the Sorted Returns Center Application, they are
guided within the application through a set-up process, aided by a series of
self-support articles without the need for interaction with a sales
professional from Sorted.
This two-way model towards customer acquisitions means that Sorted is able to
commit resources to securing the most lucrative Corporate and Enterprise
business contracts while simultaneously streamlining the acquisition process
of SMB customers in a manner that can easily be scaled with limited additional
costs to Sorted.
Competition
The market for delivery experience products is fragmented. This presents an
opportunity for Sorted to establish market leadership. While there are
multiple market participants offering shipping (either Carrier management or
label rate reselling), tracking and return products and services, the
Directors believe that there is no dominant player that offers a delivery
experience platform for the entire ecommerce spectrum ranging from SMBs to
larger Corporate and Enterprise businesses.
Sorted's competition can be broadly categorised into the following groups:
1. Carrier Management System competitors:
The Carrier Management System segment, where Ship is positioned, is mature.
Competitors within this group tend to concentrate their marketing efforts
towards larger Corporate and Enterprise businesses and to a smaller extent the
SMB market, rather than providing an offering across the entire ecommerce
spectrum. Each competitor is strategically partnered with a variety of
Carriers. As a result, Carrier availability varies across the market and is a
strength for some competitors and a weakness for others. In addition, while
certain competitors within this group offer an efficient shipping product for
larger companies, they lack a post-purchase experience product. This means
that businesses may seek to switch to a complete delivery experience platform
as post-purchase experience becomes a bigger consideration. Sorted considers
its key competitors to include nShift, the Metapack Group, Scurri and
AfterShip.
2. Post purchase tracking competitors:
The post purchase tracking segment remains novel and in development. However,
this segment has recently seen innovation, amongst other areas, with an
increase in the number of features available, improved packaging and pricing.
Despite this, the levels of post-purchase tracking solutions available across
the spectrum of SMBs and larger Corporate and Enterprise businesses remains
wide. Sorted considers its competitors to include Narvar, ParcelLab and
AfterShip.
3. Return management competitors:
The returns segment can be characterised by the large number of smaller
product and service providers operating within the segment, predominantly
through Shopify Marketplace, servicing SMBs. Additionally, there are
established companies which have track records in catering to larger Corporate
and Enterprise businesses by offering a returns fulfilment capability in
addition to refund and exchanges management software. Sorted considers notable
examples to include ZigZag Global, ReBound Returns (a subsidiary of Reconomy
Group), ParcelLab and AfterShip.
4. Ecommerce businesses building delivery technology in-house:
Forming a smaller portion of the delivery experience market, certain ecommerce
businesses have developed in-house full end-to-end delivery experience
processes. Within this model, very little or no delivery experience technology
is sought from external third-party providers. Notable ecommerce businesses
who have developed in-house delivery experience processes include Next. For
example, Next has developed software that powers all ecommerce, warehousing,
shipping and delivery operations, which it now uses to host operations for
other, smaller or struggling retail brands.
The Directors believe that no single platform meets the delivery experience
requirements of each market segment consistently with one single integrated
solution. As a result, with Sorted's Delivery Experience Platform offering
ecommerce businesses a complete end-to-end post-purchase solution, the
Directors believe that Sorted is well positioned to increase its market share
across the delivery experience industry. The Directors further believe that
there are significant barriers to entry into the Carrier Management System
industry due to the significant investment required to create a software
solution along with significant asset investment in a global Carrier library.
With this in mind, the significant investment made by Sorted into the Delivery
Experience Platform to date reinforces Sorted's position in the delivery
experience area.
5. Summary financial information
Sorted
The table below sets out Sorted's summary financial information for the last
three financial years ended 30 September 2022. The historical information was
prepared and audited under IFRS. The summary below has been extracted from the
Admission Document.
For the 16 months ended 30 September 2020 Year ended 30 September 2021 Year ended 30 September 2022
(audited) (audited) (audited)
£'000 £'000 £'000
Revenue 5,267,755 4,458,603 6,117,176
Gross profit 3,669,989 3,721,657 4,038,593
Gross margin (%) 69.7% 83.5% 66%
Operating profit/(loss) 3,669,989 3,721,657 4,038,593
Profit/(loss) before tax (8,927,527) (14,175,427) (28,647,707)
Tax credit 1,985,097 2,106,424 -
Profit/(loss) for the year (6,942,430) (12,069,003) (28,647,707)
An unaudited pro-forma statement of net assets is contained in the Admission
Document to illustrate the effect of the Proposals on the Enlarged Group.
Sorted has delivered consistent annual recurring revenue growth. While this
growth is pleasing, significant investment has been made in Sorted to achieve
this. To date, approximately £71.07 million in equity investment and
approximately £4.36 million (excluding accrued interest) in debt financing
has been invested in Sorted, allowing the business to build its carrier
services library and maintain its growth trajectory.
As a SaaS business, in the early stages of the development of Sorted's
business there was significant cash consumption in order to, inter alia,
construct the underlying technology and people infrastructure required to
deliver a 24x7 mission critical global SaaS platform. Since then, significant
investment has been committed to expand Sorted's proposition including towards
the launch of Track in 2018 which was followed by the most recent equity
funding round of £21.0 million in 2021 being deployed to deliver a number of
transformation initiatives. These include investment into customer and
platform efficiency, scalability, acquiring Clicksit and the bolstering of the
businesses enterprise architecture to enable automation versus people-centric
processes.
While Sorted is still in a growth-phase, the investments outlined above have
result in improved revenue. In any event, substantive competitors in the
enterprise delivery management sector have also historically had to commit to
aggressive capital investment. Accordingly, the Directors believe that the
investment made by Sorted to date should position Sorted on a trajectory
towards reaching profitability in the medium term.
6. Strategy of the Enlarged Group
On Completion, the Company will own 100 per cent. of Sorted and as a result
Sorted will become the Company's core business. The strategy of the Enlarged
Group will be to continue the diversification of its customer base by
focussing on Corporate and Enterprise as well as SMB customer expansion. The
Enlarged Group intends to achieve this through delivering against a clearly
defined product strategy over the next several years. At the centre of the
Enlarged Group's product strategy is the delivery of new key initiatives
across the Delivery Experience Platform. This includes increased data
monetisation, modular packaging and enhanced Carrier integration capabilities,
further details of which are outlined below:
· Further developing the Delivery Experience Platform to deliver new
Carrier services more efficiently. For example, Refactoring the underlying
Carrier integration service infrastructure for optimal speed to market with
significantly improved unit economics;
· Expanding the Return proposition's routes to market beyond the Shopify
ecosystem, which the Directors believe will accelerate customer acquisition
and volume growth and separately advancing features to increase customer
lifetime value;
· Evolving the Track proposition to become a more modular and reduced
"touchpoints" offering. This includes enhanced self-service and automation
capabilities and improving the ability for customers to use the features they
require from our core product offering in discrete bundled feature sets, such
as:
· Branded communication with email and SMS incorporating brand tone of
voice communication and configurable messages for differing parcel journeys;
· Branded parcel tracking pages;
· Embedded tracking APIs to allow customers to embed tracking data into
their own websites and ecommerce platforms; and
· Introducing additional data insight capabilities including enhanced
reporting, as well as further product feature development, such as
configurations calculating allocation rule efficiency.
The above product strategy is intended to enable the delivery of a clearly
defined go-to-market strategy, focussed on:
(i) retaining and growing Sorted's Corporate and Enterprise
customer base;
(ii) accelerating direct sales of Ship and Track within the
Corporate customer base through the expansion of Sorted's dedicated sales
teams initially in the UK and subsequently into the US;
(iii) continued focus on driving SMB customer acquisition and
retention through the established Shopify Marketplace and applying these
proven methods to any new Return routes to market as appropriate; and
(iv) deepening Sorted's channel partnering capability with the
expansion of strategic partnerships in both the UK and the USA.
The principal place of business of the Enlarged Group will be Level Six, 111
Piccadilly, Manchester, England, M1 2HY with effect from Admission.
7. Current trading and prospects
Location Sciences
On 14 September 2023, Location Sciences announced its unaudited interim
financial results for the six months ended 30 June 2023 (H1 2023). During this
period, Location Sciences generated revenue of £33,765 (H1 2022: £145,430)
and a loss before tax of £232,538 (H1 2022: £492,353). As at 30 June 2023,
Location Sciences held cash and cash equivalents of £3,498,243 (30 June
2022: £4,227,685).
Sorted
Summary of performance in the financial year ended 30 September 2022
During the financial year ended 30 September 2022 ("FY 2022"), Sorted faced
significant challenges stemming from a number of legacy issues, ultimately
culminating in Sorted reporting a loss before tax of £28,647,707 (30
September 2021: loss of £14,175,427). These legacy issues had been
accumulating against the backdrop of the Sorted Group's preceding period of
rapid growth. These legacy issues ranged from the need for Sorted to commit
significant investment towards enhancing elements of Sorted's Delivery
Experience Platform and its underlying technology stack to the need to
implement more aggressive end-to-end automation across the business.
The manifestation of these legacy issues affected the Sorted Group's trading
performance and customer experience, including adversely impacting customer
satisfaction, unexpected customer churn and ultimately delayed revenue
realisation for the Sorted Group. Consequently, the Sorted Group pre-emptively
agreed to slow down new customer acquisition midway through FY 2022 and
instead focused resources towards a program of stabilisation and scalability
on core elements of its Delivery Experience Platform.
In addition, the acquisition of Clicksit in December 2021 was originally
anticipated to provide Sorted with a suite of products to create a truly
differentiated "Delivery Experience Platform" as well as to enable Sorted to
access and service the SMB market domestically and internationally through the
use of Clicksit's return solution and App (now known as Return).
Frustratingly, the anticipated benefits from the acquisition of Clicksit and
the intended SMB market entry did not occur during FY 2022 as originally
anticipated due to the need to redirect resources to the stabilisation efforts
noted above coupled with the need to implement a number of Return product
enhancements, particularly in relation to its self-service and automation
efficacy. The inability to deliver on the strategic objectives of the Clicksit
acquisition resulted in the goodwill on the Clicksit acquisition being largely
impaired in FY 2022 as reflected in the Sorted Group's losses.
Summary of performance in the financial year ended 30 September 2023
The New Board is pleased to report that the Sorted Group has made substantial
progress during the financial year ended 30 September 2023 ("FY 2023") in
establishing: (i) a robust and resilient Delivery Experience Platform with
99.998 per cent. "online" availability as well as approximately 52.7 million
shipments created and 74.1 million shipments tracked on the Delivery
Experience Platform; (ii) regained trust with the Sorted Group's customers;
and (iii) a successful relaunch of new customer acquisition sales that have
delivered six new Corporate and Enterprise customers in FY 2023, four of which
have subscribed to both the Ship and Track propositions and two of which have
subscribed for either the Ship or Track propositions on a standalone basis and
lastly, nine Corporate and Enterprise customer renewals.
Furthermore, progress has been achieved with the Sorted Group having 700
recurring revenue generating customers as at FY 2023 (FY 2022: 317 customers).
Furthermore, the Sorted Group continues to believe in the SMB market and the
Return proposition and in this respect, Sorted continues to commit resources
towards driving this strategy forward.
In the six months to 31 March 2023 ("HY 2023"), the Sorted Group reported
unaudited revenue of £3,473,613 (31 March 2022: £2,715,058), an operating
profit of £2,333,833 (31 March 2022: £2,0003,250) and an unaudited loss
before tax of £7,379,562 (31 March 2022: loss of £10,642,675). Subsequent to
31 March 2023, Sorted has undertaken a significant cost reduction programme,
with a particular focus on platform efficiency and streamlining the
organisational structure. This cost reduction programme has resulted in
annualised cost savings amounting to approximately £7.6 million in FY 2023.
For the financial year ended 30 September 2023, through its SaaS business
model, Sorted had total unaudited revenue of approximately £6.5 million.
More recently, the Sorted Group also delivered another successful Christmas
retail peak period (14 November 2023 through 8 January 2024) with shipment
volume up 30 per cent. from the 2022 Christmas retail peak period to 13.95
million along with 18.42 million shipments tracked and 2.19 billion unique
tracking events handled.
Looking ahead, Sorted's ongoing transformative workstreams focus on: (i)
establishing a leading Delivery Experience Platform across all market tiers;
(ii) enhancing core technology for automation, self-service and cost
efficiency; (iii) diversifying customer acquisition to drive a more robust mix
of small, medium and large contracts; (iv) expanding internationally, starting
with the US market; and (v) delivering balanced revenue growth and in due
course profitability.
While Sorted, like other technology providers operating in the retail sector,
has faced challenges as a result of the broader macro-economic headwinds
impacting, in particular, the ecommerce sector, the management team of Sorted
are confident that the Sorted Group is well positioned to add to its existing
pipeline and expand its revenue base.
8. Principal terms and financial effect of the Acquisition
The consideration for the Acquisition
Under the terms of the Acquisition Agreement, the Company has conditionally
agreed to acquire the entire issued share capital of Sorted for an aggregate
nominal consideration of approximately £66.73, to be paid by the Company in
cash at Completion. In addition, as part of the terms of the Acquisition
Agreement, Location Sciences will assume approximately £4.7
million (including accrued interest) of Sorted's outstanding debt.
The Acquisition Agreement contains fundamental warranties given by the Core
Sellers and certain business warranties from the Warrantors in favour of the
Company subject to certain limitations, in particular as to the maximum
amounts which may be claimed.
The Acquisition Agreement is conditional upon, inter alia; (i) the Resolutions
being passed; (ii) the Drag Along being successfully completed; (iii) the
Subscription being successfully completed; and (iv) Admission.
The Company will use its existing cash resources to satisfy the costs and
expenses associated with the Acquisition.
Financial effects of the Acquisition
An unaudited pro forma statement of net assets and an unaudited pro forma
income statement for the Enlarged Group, prepared for illustrative purposes
only, showing, inter alia, the impact of the Acquisition on the Enlarged Group
is set out in the Admission Document.
9. Directors, Senior Managers and Employees
Directors
The Existing Directors will remain on the New Board following Admission and
New Directors will be appointed to the New Board effective from today's date.
As a result, the New Board comprises the following individuals:
Simon John Wilkinson, aged 58, Non-Executive Chairman
Simon Wilkinson is an experienced software executive and entrepreneur, having
been involved with a number of public and private companies over his career.
He was most recently Executive Chairman and then Chief Executive Officer of
Mobica, a software services company offering bespoke development, QA and
consultancy. He was previously Chief Executive Officer of Myriad Group AG,
which was listed in Zurich, and founder and Chief Executive Officer of Magic4
Ltd, a mobile messaging software market leader, backed by 3i, Philips Ventures
and Motorola Ventures. Simon joined the board of Location Sciences on 25 May
2021.
Carmen Christine Carey, aged 61, Chief Executive Officer
Carmen has over 20 years of technology expertise leading go-to-market
strategies and developing cutting-edge solutions in her executive roles at
brands such as ControlCircle, MessageLabs and BroadVision. As CEO, Carmen
powers Sorted's strategy, drives business transformation, backs Sorted's
vision and supports the leadership team to deliver Sorted's growth plans.
Carmen originally joined the board of Sorted as a non-executive director on 20
April 2020 and was subsequently appointed to the board of Sorted as CEO on 1
September 2021.
Mahmoud Hamid Warriah, aged 56, Chief Financial Officer
From startups to blue chips, Mahmoud has a strong track record of successfully
delivering commercial, transitional and business transformational change. He
is a qualified chartered accountant with extensive experience across multiple
sectors and draws upon his computer science degree to resolve complex
operational challenges. Mahmoud has been Sorted's acting interim chief
financial officer since 3 October 2022.
Dr. Nigel John Burton, aged 65, Non-Executive Director
Dr Nigel Burton spent 14 years as an investment banker at leading City
institutions including UBS Warburg and Deutsche Bank, including as the
Managing Director responsible for the energy and utilities industries.
Following this he spent 15 years as Chief Financial Officer or Chief Executive
Officer of a number of private and public companies. He is currently a
Non-Executive Director of BlackRock Throgmorton Investment Trust plc,
DeepVerge plc, eEnergy Group plc and Microsaic Systems plc. Dr Burton joined
the board of Location Sciences on 25 May 2021.
Petar Cvetkovic, aged 62, Non-Executive Director
Petar is the Founder and current Chairman of Welford Investments Limited,
which specialises in equity holdings in growth companies, ownership of
freehold commercial properties and advisory work. Over the course of his
36-year career, he has led some of the UK's best-known logistic firms, working
in parcels, contract and shared-user distribution as well as supply chain and
international logistics. Petar was formerly the Chief Executive Officer of DX
(Group) Plc and Target Express.
The New Board intends to appoint a further independent Non-Executive Director
to the board of directors of the Enlarged Group within 12 months from
Admission.
Following completion of the Acquisition, the Enlarged Group's senior
management team will include the following individuals:
Senior Management of Sorted
Robert Henry Whittick, Chief Operating Officer of Sorted
Rob has a history of leadership in enterprise software delivery within blue
chip organisations, and a track record of delivering complex projects and
solving challenges in fast-paced environments. He has operated in leadership,
governance, delivery assurance and troubleshooting roles, to deliver
successful business outcomes.
Timothy John Cox, VP of Customer Experience of Sorted
For over 25 years, Tim has built and transformed development teams - from the
start ups to the scale ups of global SaaS companies. Keeping a close eye on
Sorted's processes and technology, Tim has the know-how on how to automate the
business end-to-end and proactively support Sorted's customers with a seamless
experience.
Axel Iwan Ludwig Lagerborg, VP of Sales of Sorted
Axel has over 20 years' experience managing teams while working in the UK, US,
Canada, Luxembourg, Spain and Chile. Prior to joining Sorted, he's headed up
the European, the Middle East and Africa (EMEA) sales teams at OpenText, Mblox
(now Sinch) and MACH (now Syniverse).
Daniel John Greenall, VP of Marketing & Product Management of Sorted
Dan is responsible for Sorted's marketing function and monitors the market,
the latest trends and Sorted's growth strategy. Dan spent the last 10 years
leading B2B marketing teams in fast-paced businesses, such as Daisy Group and
AccessPay.
Employees
As at the Business Day before the date of this announcement, the Group had 2
employees. Following completion of the Acquisition, the Enlarged Group will
have approximately 68 employees.
10. The Subscription
The conditional Subscription will raise gross proceeds for the Enlarged Group
of £1,999,997.98 (before estimated expenses of approximately £1.02 million
(excluding VAT)). The Subscription Shares represent approximately 29.92 per
cent. of the Enlarged Issued Share Capital. On Admission, the Enlarged Group
will have a market capitalisation of approximately £6,684,741.88 at the Issue
Price.
The Subscription Shares will, where applicable, be issued credited as fully
paid and will, on Admission, rank pari passu in all respects with the New
Ordinary Shares, including the right to receive all dividends and other
distributions thereafter declared, made or paid on the Enlarged Share Capital.
The Company has received direct subscriptions for the Subscription Shares from
the Subscribers at the Issue Price pursuant to the terms of the Subscription
Letters. The Subscription Shares will be issued at Admission. The Subscription
is not underwritten and will be conditional on Admission, and the passing of
Resolutions 1, 2, 3 and 4 by Shareholders at the General Meeting.
Use of Subscription Proceeds
While the principal purpose of the Subscription is to give existing
shareholders of Sorted the opportunity to participate in the Subscription and
to align their interests with those of existing Location Sciences
shareholders, the Enlarged Group intends to use the net proceeds receivable
from the Subscription to: (i) contribute towards expanding Sorted's existing
customer base of Corporate and Enterprise as well as SMB customers; (ii)
deliver new key initiatives across the Delivery Experience Platform; and (iii)
provide working capital.
11. Remuneration Shares and the CLN Shares
Remuneration Shares
Historically, the Existing Directors have agreed for their directorship fees
to be paid annually in advance and that payment owed by the Company to each of
the Existing Directors is applied to them in the form of Existing Ordinary
Shares. As at the date of this document, Dr. Nigel Burton and Simon Wilkinson
have accrued approximately £60,000 each in directorship fees. Accordingly,
both Dr. Nigel Burton and Simon Wilkinson have agreed with the Company that
payment of their respective accrued directorship fees is to be satisfied
through the issuance of the Remuneration Shares on Admission at the Issue
Price. The Remuneration Shares to be issued on Admission comprises 68,571 new
Ordinary Shares to Simon Wilkinson and 68,571 new Ordinary Shares to Dr. Nigel
Burton.
The allotment and issue of the Remuneration Shares is conditional upon the
passing of Resolutions 1, 2, 3 and 4 by Shareholders at the General Meeting.
CLN Shares
A number of investors currently hold convertible loan notes ("CLNs") in
Sorted. As part of the Acquisition, it is proposed that the CLNs held by two
investors, namely Shard Credit Partners Venture Debt I S.à.r.l ("Shard Lux")
and Carmen Carey will be converted into equity in the Company, namely the CLN
Shares, as part of a debt for equity swap.
Carmen Carey holds CLNs with a nominal value of £50,000 which will convert
into New Ordinary Shares at the Issue Price, such that Carmen Carey will
receive 57,142 CLN Shares.
Shard Lux holds CLNs with a nominal value of £250,000 will convert into
285,714 New Ordinary Shares at the Issue Price, which will be held by Shard
Credit Partners Venture Debt Fund I LP. In addition, pursuant to the Debt
Conversion Agreement (further details of which can be found at paragraph 12(d)
of Part VII of this document), it is proposed that Shard Credit Partners
Venture Debt Fund I LP will receive an additional 637,855 New Ordinary Shares
at the Issue Price, to settle certain interest payments relating to 2023 and
2024 under the Shard Facility Agreement (further details of which can be found
in paragraph 13(a) of Part VII of this document). In total, Shard Credit
Partners Venture Debt Fund I LP will receive 923,569 CLN Shares.
The CLN Shares will be issued credited as fully paid and will, on Admission,
rank pari passu in all respects with the New Ordinary Shares, including the
right to receive all dividends and other distributions thereafter declared,
made or paid on the Enlarged Share Capital.
The issue of the CLN Shares will be conditional upon the passing of
Resolutions 1, 2, 3 and 4 by Shareholders at the General Meeting.
While other CLNs held in Sorted will be amended and restated as simple loan
notes such that they are no longer convertible into Sorted equity, the CLNs
held by Arete Investors 16 (Nominees) Limited and Chrysalis Investments
Limited will remain in place following completion of the Acquisition and will
continue to be convertible into shares in Sorted. Arete Investors 16
(Nominees) Limited holds CLNs with a principal value of £372,500, and
Chrysalis Investments Limited holds CLNs with a principal value of £315,750
(together, the "Remaining CLNs").
There is no requirement that the conversion rights under the Remaining CLNs be
exercised, but their holders will retain that option. The Directors do not
believe that there would be a strong commercial rationale for exercising the
conversion rights and gaining a minor and illiquid interest in an operating
subsidiary of the Company. However, if the CLN holders do choose to exercise
their conversion rights, the number of shares in Sorted to which they would be
entitled depends on the determination of the conversion price pursuant to the
relevant convertible loan agreements. The conversion price is linked to the
last equity raise carried out by Sorted unless parties agree an alternative
price, the Directors are of the opinion that it is unlikely than an
alternative price would be agreed. In this case, if all Remaining CLNs were
exercised at the expected conversion price, they would convert into 918 new
shares in Sorted in aggregate, roughly equivalent to 0.6 per cent. of the
entire issued share capital of Sorted. These numbers are intended to
illustrate the Directors' reasonable expectation and should not be relied upon
as guaranteed.
12. Name change
To reflect the business of the Enlarged Group, the New Board are proposing to
change the name of the Company to: "Sorted Group Holdings plc". The change of
name will become effective once the Registrar of Companies has issued a new
certificate of incorporation on the change of name. This is expected to occur
on or around 19 February 2024. The tradeable instrument display mnemonic
("TIDM") of the Company is expected to change to AIM: "SORT" effective from
8.00 a.m. on or around 19 February 2024.
13. Share Consolidation
At the date of this announcement, there are 2,647,587,398 Existing Ordinary
Shares of nominal value 0.1 pence each in the capital of the Company in issue.
The New Board consider that the number of Existing Ordinary Shares is
unwieldly in volume. The Directors consider that the Share Consolidation will
result in a more appropriate share capital structure for the Enlarged Group
which is expected to increase the Enlarged Group's share price proportionately
which may consequently positively impact the liquidity of and trading activity
in the Enlarged Group's shares; and provide the basis for enhanced perception
of the Enlarged Group, improving its marketability to a wider investor group.
Under the Share Consolidation, it is proposed that every 625 Existing Ordinary
Shares be consolidated into one New Ordinary Share of nominal value 62.5p
each. Accordingly, the proportion of Existing Ordinary Shares held by each
Shareholder immediately before the Share Consolidation will, save for
fractional entitlements (which are discussed further below), be the same as
the proportion of New Ordinary Shares held by each Shareholder immediately
after the Share Consolidation. The New Board believes that the Share
Consolidation will result in a more appropriate number of shares in issue for
a company of the Enlarged Group's size.
The New Ordinary Shares will carry equivalent rights to the Existing Ordinary
Shares, save as to nominal value.
To effect the Share Consolidation, it will be necessary to issue 102
additional Existing Ordinary Shares so that the Company's issued ordinary
share capital is exactly divisible by 625. It is proposed that these
additional Existing Ordinary Shares will be issued to the Company's share
registrars, Computershare on the Record Date. These additional Existing
Ordinary Shares would only represent an entitlement to a fraction of a New
Ordinary Share, so this fraction would be sold pursuant to the arrangements
for fractional entitlements described below.
In the event that the number of Existing Ordinary Shares held by a Shareholder
is not exactly divisible by 625, the Share Consolidation will generate an
entitlement to a fraction of a New Ordinary Share.
The New Board proposes that any such fractional entitlements will be
aggregated and sold in the market for the best price reasonably obtainable, in
accordance with Article 2.8 of the Articles, with the proceeds being to the
benefit of the Enlarged Group. Given the small economic value of such
fractional entitlements, the New Board is of the view that the distribution of
the sale proceeds to individual Shareholders would result in a
disproportionate cost to the Enlarged Group.
Any Shareholder holding fewer than 625 Ordinary Shares at the Record Date will
cease to be a Shareholder.
The issued share capital of the Company immediately following the Share
Consolidation is expected to comprise 4,236,140 New Ordinary Shares.
The entitlements to New Ordinary Shares of holders of share options or other
instruments convertible into Existing Ordinary Shares will be adjusted in
accordance with their terms to reflect the Share Consolidation. Pursuant to a
determination of the Company's auditor, immediately following the Share
Consolidation the Warrants outstanding shall be as follows:
Post Share Consolidation
Warrants Number of Ordinary Shares New Subscription Price
Broker Warrants 160,000 £1.25
Promoter Warrants 2,400,000 £1.25
Cornerstone Investor Warrants 400,000 £1.25
Director Warrants 192,000 £1.25
Application will be made for the simultaneous cancellation of the Existing
Ordinary Shares from CREST and admission of the New Ordinary Shares to CREST
and their admission to trading on AIM. The New Ordinary Shares may thereafter
be held and transferred by means of CREST. It is expected that New Ordinary
Shares which are held in uncertificated form will be credited to the relevant
CREST accounts on 19 February 2024 and admitted to trading on AIM on the same
day.
Definitive share certificates in respect of those New Ordinary Shares which
will be held by Shareholders who currently hold their Existing Ordinary Shares
in certificated form are expected to be dispatched to relevant Shareholders on
or around 26 February 2024. Share certificates in respect of Existing Ordinary
Shares will cease to be valid on 19 February 2024 and, pending delivery of
share certificates in respect of New Ordinary Shares, transfers will be
certified against the register.
14. Admission, Settlement and Dealing
Application will be made for the New Ordinary Shares, the Subscription Shares,
the Remuneration Shares and the CLN Shares to be admitted to trading on AIM.
It is expected that the last day of trading on AIM of the Existing Ordinary
Shares will be on 16 February 2024 and that Admission will become effective
and dealings in the Enlarged Share Capital will commence on 19 February 2024.
The new Ordinary Shares will have the ISIN number GB00BPDX2041 and SEDOL
BPDX204. The Ordinary Shares will not be dealt on any other recognised
investment exchange and no application has been or is being made for the
Ordinary Shares to be admitted to any other such exchange.
15. Relationship Agreement
Following the Subscription, upon Admission Shard will be a Substantial
Shareholder, holding approximately 36.02 per cent. of the Ordinary Shares. The
Company will therefore enter into a relationship agreement with Shard and
Allenby Capital, governed by English law, conditional upon Admission
occurring, which will regulate the relationship between Shard and the Company
for so long as Shard, together with its "Associates" and any persons deemed to
be acting in concert with it, hold at least 30 per cent. of the issued share
capital of the Company.
The relationship agreement provides for the autonomous operation of the
Company by the Directors and takes effect on Admission and pursuant to it,
Shard undertakes, inter alia, that it will (and, in relation to its
"Associates", will procure that each of its associates will): (i) conduct all
transactions, agreements, relationships and arrangements with the Company on
an arm's length basis and on normal commercial terms; (ii) ensure that no
contract or arrangement between Shard and any member of the Enlarged Group is
entered into or varied without the prior approval of a majority of independent
Non-Executive Directors; and (iii) procure that the Enlarged Group will be
managed for the benefit of Shareholders as a whole and independently of Shard
and any member its group.
16. Dividend policy
The New Board believes that the Enlarged Group will continue to have the
potential to be cash generative in the future and recognise the importance of
dividend income to Shareholders. The Enlarged Group's current policy is to
retain future distributable profits and only recommend dividends when
appropriate and practicable. There can be no assurance as to the level of
future dividends (if any) that may be paid by the Enlarged Group or, in light
of the accrued losses of the Enlarged Group, of the ability to pay dividends.
Any determination to pay dividends in the future will be a decision for the
New Board (and will be subject to applicable laws and generally accepted
accounting principles from time to time, and other factors the New Board deems
relevant). The payment of a dividend may also require consent under the terms
of the Enlarged Group's lending and grant agreements, and there is no
guarantee that the relevant lenders or grant awarding body will give consent
to the payment of a dividend.
The New Board may amend the dividend policy of the Enlarged Group from time to
time and the above statement regarding the dividend policy should not be
construed as any form of profit or dividend forecast.
17. Share Dealing Code
The Company has adopted a Share Dealing Code, which is compliant with Article
19 of UK MAR and Rule 21 of the AIM Rules for Companies. The Share Dealing
Code will apply to any person discharging managerial responsibility, including
the Directors, and the senior management and any closely associated persons
and applicable employees. The Share Dealing Code imposes restrictions beyond
those that are imposed by law (including by the FSMA, UK MAR and other
relevant legislation) and its purpose is to ensure that persons discharging
managerial responsibility and persons connected with them do not abuse, and do
not place themselves under suspicion of abusing, price-sensitive information
that they may have or be thought to have, especially in periods leading up to
an announcement of both financial results. The Share Dealing Code sets out a
notification procedure which is required to be followed prior to any dealing
in the Company's securities.
The Share Dealing Code will apply to the Enlarged Group.
18. Taxation
Information regarding taxation is set out in the Admission Document.
19. Corporate governance
In accordance with Rule 26 of the AIM Rules for Companies, the Company
confirms that it has adopted the QCA Code. The New Board recognises the
importance of sound corporate governance and aims to conduct business in an
open, honest and ethical manner. As a result, the New Board confirms that from
Admission, the Enlarged Group's website at www.Sorted.com will set out how the
Enlarged Group complies with the QCA Code.
As the Enlarged Group grows, the Directors intend that it should develop
policies and procedures which further reflect the QCA Code, so far as it is
practicable taking into account the size and nature of the Enlarged Group.
20. The Takeover Code
The terms of the proposed Subscription give rise to certain considerations
under the Takeover Code. Brief details of the Panel, the Takeover Code and the
protections they afford are given below.
Rule 9 of the Takeover Code
The Takeover Code applies to the Company. Under Rule 9 of the Code, any person
who acquires an interest in shares which, taken together with shares in which
that person or any person acting in concert with that person is interested,
carry 30 per cent. or more of the voting rights of a company which is subject
to the Code is normally required to make an offer to all the remaining
shareholders to acquire their shares.
Similarly, when any person, together with persons acting in concert with that
person, is interested in shares which in the aggregate carry not less than 30
per cent. of the voting rights of such a company but does not hold shares
carrying more than 50 per cent. of the voting rights of the company, an offer
will normally be required if such person or any person acting in concert with
that person acquires a further interest in shares which increases the
percentage of shares carrying voting rights in which that person is
interested.
An offer under Rule 9 must be made in cash at the highest price paid by the
person required to make the offer, or any person acting in concert with such
person, for any interest in shares of the company during the 12 months prior
to the announcement of the offer.
Rule 9 Waiver
Under Note 5 of the Notes on the Dispensations from Rule 9, the Panel may
waive the requirement for a general offer to be made in accordance with Rule 9
if, in the case of an issue of new securities, independent shareholders of the
company who are independent of the person who would otherwise be required to
make an offer and any person acting in concert with him or her and do not have
any interest in the proposed transaction which may compromise their
independence ("Independent Shareholder") and whom together hold shares
carrying more than 50 per cent. of the voting rights of the Company which
would be capable of being cast on a Rule 9 waiver resolution confirm in
writing that they approve the proposed waiver and would vote in favour of any
resolution to that effect at a general meeting (the "Rule 9 Waiver
Resolution").
The Company has obtained such written confirmation and has obtained permission
from the Takeover Panel to waive the requirement for a Rule 9 waiver
resolution to be considered at a general meeting.
The waiver to which the Panel has agreed under the Code will be invalidated if
any purchases are made by Shard Credit Partners Venture Debt Fund I LP, or any
person acting in concert with it, in the period between the date of this
document and the General Meeting. Shard Credit Partners Venture Debt Fund I
LP, nor any person acting in concert with it, has purchased Ordinary Shares in
the 12 months preceding the date of this announcement.
On Admission (and assuming that no other person converts any convertible
securities or exercises any options or any other right to subscribe for shares
in the Enlarged Group), Shard Credit Partners Venture Debt Fund I LP will be
interested in 2,752,140 Ordinary Shares, representing approximately 36.02 per
cent. of the enlarged voting rights of the Enlarged Group. As Shard Credit
Partners Venture Debt Fund I LP will be interested in shares carrying more
than 30 per cent. of the voting rights of the Company but will not hold shares
carrying more than 50 per cent. of the voting rights of the Company, any
increase in its interest in shares will be subject to the provisions of Rule
9.
Shard Credit Partners Venture Debt Fund I LP will not be restricted from
making an offer for the Company unless Shard Credit Partners Venture Debt Fund
I LP either makes a statement that it does not intend to make an offer or
enters into an agreement with the Company not to make an offer. No such
statement has been made or agreement entered into as at the date of this
announcement.
Form of Independent Shareholders' confirmation in writing
Shareholders representing 1,334,317,208 Existing Ordinary Shares (or 50.38 per
cent. of Shareholders of the Company's existing share capital) provided their
confirmation in writing to the Panel confirming that:
1. they are the beneficial owner of Existing Ordinary Shares and have
absolute discretion over the manner in which those shares are voted and that
those shares are held free of all liens, pledges, charges and encumbrances;
2. there is no connection between them and Shard Credit Partners Venture
Debt Fund I LP;
3. they do not have any interest or potential interest, whether
commercial, financial or personal, in the outcome of the Proposals;
4. they are an Independent Shareholder of the Company as defined above;
and
5. in connection with the Proposals:
(a) they consent to the Panel granting a waiver from the obligation for
Shard Credit Partners Venture Debt Fund I LP to make a Rule 9 Offer to the
shareholders of the Company;
(b) subject to Independent Shareholders of the Company holding more than 50
per cent. of the shares capable of being voted on a Rule 9 Waiver Resolution
to approve the waiver from the obligation for Shard Credit Partners Venture
Debt Fund I LP to make a Rule 9 Offer giving confirmations in writing in a
similar form, they consent to the Panel dispensing with the requirement that
the waiver from such obligation be conditional on a Rule 9 Waiver Resolution
being approved by Independent Shareholders of the Company at a general
meeting; and
(c) they would vote in favour of a Rule 9 Waiver Resolution to waive the
obligation for Shard Credit Partners Venture Debt Fund I LP to make a Rule 9
Offer were one to be put to the Independent Shareholders of the Company at a
general meeting.
In giving the confirmations referred to above, each Independent Shareholder
concerned acknowledges:
1. that, if the Panel receives such confirmations from Independent
Shareholders of the Company holding more than 50 per cent. of the shares
capable of being voted on a Rule 9 Waiver Resolution, the Panel will approve
the waiver from the obligation for Shard Credit Partners Venture Debt Fund I
LP to make a Rule 9 Offer without the requirement for the waiver having to be
approved by Independent Shareholders of the Company at a general meeting; and
2. that if no general meeting is held to approve the Rule 9 Waiver
Resolution to waive the obligation for Shard Credit Partners Venture Debt Fund
I LP to make a Rule 9 Offer:
(a) there will not be an opportunity for any other person to make any
alternative proposal to the Company conditional on such Rule 9 Waiver
Resolution not being approved by Independent Shareholders of the Company;
(b) there will not be an opportunity for other shareholders in the Company
to make known their views on the Proposals; and
(c) there will be no requirement for the Company either (i) to obtain and
make known to its shareholders competent independent advice under Rule 3 of
the Takeover Code on the Proposals and the waiver of the obligation for Shard
Credit Partners Venture Debt Fund I LP to make a Rule 9 Offer; or (ii) to
publish a circular to shareholders of the Company in compliance with Appendix
1 of the Takeover Code in connection with this matter.
Each Independent Shareholder concerned has confirmed that they consider
themselves to be a sophisticated investor in relation to equity investments
and that they have had the opportunity to take independent financial advice
before giving such confirmations.
Each Independent Shareholder concerned has confirmed that they will not sell,
transfer, pledge, charge, or grant any option or other right over, or create
any encumbrance over, or otherwise dispose of their Ordinary Shares until
after the conclusion of the proposed general meeting to approve the Proposals.
Having obtained such written confirmation from Independent Shareholders, the
Panel has accordingly waived the requirement for a Rule 9 Waiver Resolution.
The LS Concert Party
Persons acting in concert include persons who, pursuant to an agreement or
understanding (whether formal or informal), co-operate, to obtain or
consolidate control of that company.
The Company undertook a placing and subscription to raise £3.5 million before
expenses in May 2021 (announced by the Company on 4 May 2021). At that time,
it was agreed with the Takeover Panel that the following persons who were
participating, inter alia, in the placing were acting in concert in relation
to the Company: Richard Hughes, Rebecca Hughes, Abigail Hughes, Mahmud Kamani,
Samir Kamani, Umar Kamani, Adam Kamani, Petar Cvetkovic, Carol Kane, Daron
Lee, John Lyttle, Shaun Mealey, Christian Stephenson and Simon Wilkinson (the
"LS Concert Party").
As at the date of this document, the LS Concert Party holds, in aggregate,
1,010,000,000 Existing Ordinary Shares, representing approximately 38.15 per
cent. of the existing issued share capital of the Group. In addition, at the
time of the placing and subscription May 2021, certain members of the LS
Concert Party were granted, in aggregate:
· 1,500,000,000 Promoter Warrants to subscribe for the same number
of Existing Ordinary Shares. The exercise price of the promoter warrants is
0.2p per Existing Ordinary Share and are capable of exercise at any time until
25 May 2026; and
· 30,000,000 Director Warrants to subscribe for the same number of
Existing Ordinary Shares. The exercise price of the Director Warrants is
0.2p per Existing Ordinary Share and are capable of exercise at any time until
25 May 2026.
On Admission, the LS Concert Party will be interested in 1,684,571 Ordinary
Shares representing approximately 22.05 per cent. of the enlarged voting
rights of the Enlarged Group.
Assuming exercise in full of the Promoter Warrants and the Director Warrants
by the members of the LS Concert Party (and assuming that no other person
converts any convertible securities or exercises any options or any other
right to subscribe for shares in the Enlarged Group), the members of the LS
Concert Party would be interested in 4,132,571 Ordinary Shares, representing
approximately 40.97 per cent. of the enlarged voting rights of the Enlarged
Group.
The exercise by the members of the LS Concert Party of the Promoter Warrants
and the Director Warrants would normally trigger an obligation for an offer to
be made under Rule 9. However, the Panel has previously agreed to waive this
obligation such that there will be no requirement for an offer to be made in
respect of the exercise of the Promoter Warrants or the Director Warrants.
21. General Meeting
A notice convening a general meeting of the Company, to be held at 12.00 p.m.
on 16 February 2024 at One Wood Street, London, EC2V 7WS, UK. At the General
Meeting, the following resolutions will be proposed:
· Resolution 1: to approve the Acquisition;
· Resolution 2: to consolidate every 625 Existing Ordinary Shares
into 1 New Ordinary Share;
· Resolution 3: to authorise the Directors to: (i) allot Ordinary
Shares in connection with the Subscription; (ii) to allot the Remuneration
Shares and the CLN Shares; and (iii) allot Ordinary Shares up to a maximum
nominal value of £1,591,605.21;
· Resolution 4: to authorise the Directors to allot Ordinary Shares
for cash otherwise than on a pro rata basis to shareholders: (i) in connection
with the Subscription; and (ii) up to a maximum nominal value of £477,471.56;
and
· Resolution 5: to change the name of the Company to 'Sorted Group
Holdings plc.
The resolutions in (1), (2) and (3) will be proposed as ordinary resolutions
and the resolutions in (4) and (5) will be proposed as special resolutions. To
be passed, the resolutions in (1), (2) and (3) require a majority of the votes
cast at the General Meeting, in person or by proxy, and the resolutions
referred to in (4) and (5) requires a majority of not less than 75 per cent.
of the votes cast at the General Meeting, in person or by proxy. The
resolutions are inter-conditional and so, if one of them is not passed at the
General Meeting, none of them will be deemed to have been passed.
DEFINITIONS
The following definitions apply throughout this document, unless the context
otherwise requires:
"Acquisition" the proposed acquisition by the Company of the entire issued and to be issued
share capital of Sorted Holdings Limited pursuant to the terms of the
Acquisition Agreement;
"Acquisition Agreement" the conditional agreement dated 29 January 2024 made between (i) the Company
(ii) the Core Sellers relating to the Acquisition and (iii) the Warrantors
relating to the Acquisition, details of which are set out in paragraph 12(b)
of Part VII of this document;
"Act" the Companies Act 2006 (as amended from time to time);
"acting in concert" shall bear the meaning ascribed thereto in the Takeover Code;
"Admission" the admission of the Enlarged Share Capital to trading on AIM becoming
effective in accordance with Rule 6 of the AIM Rules for Companies;
"Admission Document" or "document" this admission document;
"AIM" the London Stock Exchange's AIM market;
"AIM Rules" together, the AIM Rules for Companies and the AIM Rules for Nominated
Advisers;
"AIM Rules for Companies" the rules which set out the obligations and responsibilities in relation to
companies whose shares are admitted to trading on AIM as published and amended
from time to time by the London Stock Exchange;
"AIM Rules for Nominated Advisers" the rules of the London Stock Exchange that set out the eligibility
obligations and certain disciplinary matters in relation to nominated advisers
as published and amended by the London Stock Exchange from time to time;
"Allenby Capital" Allenby Capital Limited, the Company's nominated adviser, incorporated in
England and Wales with company number 06706681, whose registered office
address is 5 St. Helen's Place, London EC3A 6AB, United Kingdom, and which is
authorised and regulated by the FCA;
"Articles of Association" or "Articles" the articles of association of the Company, a summary of which is set out in
paragraph 5 of Part VII of this document;
"ASOS plc" ASOS plc (LSE: ASOS) is a United Kingdom-based global fashion retailer for
fashion-loving 20-somethings around the world, with a purpose to give its
customers the confidence to be whoever they want to be. Further information
can be found at www.asosplc.com;
"BigCommerce" BigCommerce Inc. (NASDAQ: BIGC) is an ecommerce platform that provides SaaS
services to retailers;
"Broker Warrants" unlisted transferrable warrants to subscribe for up to 100,000,000 Existing
Ordinary Shares held by Turner Pope, Dr Nigel Burton, Mark Slade and David Rae
exercisable for 0.20p until 25 May 2026;
"Business Day" any day (other than a Saturday or Sunday) on which commercial banks are open
for general business in London, UK;
"Certificated" or "in certificated form" not in uncertificated form (that is, not in CREST);
"Clicksit" Clicksit App Limited, a private limited company incorporated in England and
Wales with company number 09510373, whose registered office address is Fourth
Floor, Blackfriars House, St Mary's Parsonage, Manchester, M3 2JA, United
Kingdom;
"Closing Price" 0.14 pence, being the closing mid-market price of an Existing Ordinary Share
on 27 June 2023, the day prior to suspension from trading on AIM of the
Existing Ordinary Shares in accordance with rule 14 of the AIM Rules;
"Completion" completion of the Acquisition, Share Consolidation, the Subscription, the
issue of the Remuneration Shares as well as the CLN Shares and Admission;
"Company" or "Location Sciences" Location Sciences Group plc, a public limited company incorporated in England
and Wales under registered number 06458458 and having its registered office at
First Floor, St James House, St James Square, Cheltenham, Gloucestershire,
GL50 EPR, United Kingdom;
"Consideration" approximately £66.73 payable to the Vendors in respect of the Acquisition to
be settled in cash on Completion, further details of which are set out in
paragraph 8 of Part I of this document;
"CLN Shares" or "Convertible Loan Note Shares" the 980,711 Ordinary Shares to be issued to certain investors in the Sorted
Group, further details of which are set out in paragraph 11 of Part I of this
document;
"Core Sellers" certain shareholders of Sorted who together hold a majority of the issued
share capital of Sorted and constitute majority selling shareholders for the
purposes of the Drag Along;
"Cornerstone Investors" Ben Turner and James Pope, the founders of Turner Pope, and their wives, Donna
Turner and Maxine Pope, respectively;
"Cornerstone Investor Warrants" unlisted non-transferable warrants to subscribe for up to 1,500,000,000
Existing Ordinary Shares held by the Cornerstone Investors, exercisable for
0.20p until 25 May 2026;
"Corporate Governance Code" or "QCA Code" the QCA Corporate Governance published by the Quoted Companies Alliance in
2023 and as amended from time to time;
"CREST" the electronic system for the holding and transferring of shares and other
securities in paperless form operated by Euroclear;
"CREST Regulations" the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) as amended
from time to time, and any applicable rules made under those regulations;
"Deferred Shares" comprising of (i) the deferred shares of 0.99 pence each in the capital of the
Company and the (ii) the deferred shares of 0.9 pence each in the capital of
the Company;
"Directors" or "New Board" the Existing Directors and the New Directors, as described on page 11 of this
document;
"Director Warrants" unlisted warrants to subscribe for up to 30,000,000 Existing Ordinary Shares
held by a member of the LS Concert Party, further details of which can be
found in paragraph 3 of Part VII of this document;
"Disclosure Guidance and Transparency Rules" or "DTRs" the Disclosure Guidance and Transparency Rules (in accordance with Section
73A(3) of FSMA) being the rules published by the FCA from time to time
relating to the disclosure of information in respect of financial instruments
which have been admitted to trading on a regulated market or for which a
request for admission to trading on such market has been made;
"Drag Along" the process under Sorted's articles of association through which the majority
selling shareholders in Sorted can require the remaining shareholders in
Sorted to sell their shares to a third-party purchaser;
"Enlarged Group" the Group as enlarged by the Acquisition;
"Enlarged Share Capital" the issued ordinary share capital of the Company as upon Admission following
completion of the Proposals comprising the New Ordinary Shares, the
Subscription Shares and the Remuneration Shares as well as the CLN Shares;
"Euroclear" Euroclear UK & International Limited, a company incorporated in England
and Wales and the operator of CREST;
"Existing Directors" or "Board" the directors of the Company the Business Day before the date of this document
whose names are set out on page 11 of this document, including any duly
authorised committee of the board of directors of the Company and "Director"
is to be construed accordingly;
"Existing Ordinary Shares" or "Existing Share Capital" the 2,647,587,398 Ordinary Shares of 0.1 pence each in issue at the date of
this document;
"EU" the European Union;
"EU" Prospectus Regulation" Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14
June 2017;
"EEA" the European Economic Area;
"FCA" the Financial Conduct Authority of the United Kingdom, responsible for the
regulation of the United Kingdom financial services industry;
"Form of Proxy" the form of proxy accompanying this document for use by Shareholders at the
General Meeting;
"FSMA" the Financial Services and Markets Act 2000 (as amended);
"General Meeting" or "GM" the general meeting of the Company to be held at One Wood Street, London, EC2V
7WS, United Kingdom (the offices of Eversheds Sutherland (International) LLP
on 16 February 2024 at 12.00 p.m. and any adjournments thereof to be held for
the purpose of considering and, if thought fit, passing the Resolutions;
"Group" the Company and its subsidiary (as defined in the Act);
"HMRC" His Majesty's Revenue and Customs of the UK;
"IFRS" UK-adopted International Financial Reporting Standards issued by the
International Accounting Standards Board;
"Introduction Agreement" the conditional agreement dated 29 January 2024 made between (i) the Company
(ii) the Existing Directors (iii) the New Directors and (iv) Allenby Capital
relating to Admission, details of which are set out in paragraph 11 of Part
VII of this document;
"ISIN" International Securities Identification Number, the existing ISIN of the
Company being GB00BGT36S19;
"Issue Price" 87.50 pence per share;
"Issued Share Capital" the entire issued ordinary share capital of the Company from time to time;
"LEI" legal entity identifier, the existing LEI of the Company being
213800MKYV25HW2IAX70;
"London Stock Exchange" or "LSE" London Stock Exchange Group plc;
"LS Concert Party" Richard Hughes, Rebecca Hughes, Abigail Hughes, Mahmud Kamani, Samir Kamani,
Umar Kamani, Adam Kamani, Petar Cvetkovic, Carol Kane, Daron Lee, John Lyttle,
Shaun Mealey, Christian Stephenson and Simon Wilkinson;
"Minority Sellers" the minority of shareholders in Sorted who are not Core Sellers and constitute
the remaining shareholders for the purposes of the Drag Along;
"MyParcelDelivery Holdings Limited" renamed to Sorted;
"New Directors" Carmen Christine Carey, Mahmoud Hamid Warriah and Petar Cvetkovic, who are
appointed directors of the Company on the date of this document;
"New Ordinary Shares" the new ordinary shares of 62.5p each in the share capital of the Company
resulting from the Share Consolidation;
"Notice of General Meeting" or "Notice" the notice convening the GM set out in pages 145 to 149 of this document;
"Official List" the Official List of the FCA;
"ONS" the Office for National Statistics, an executive office of the UK Statistics
Authority, a non-ministerial department which reports directly to the UK
Parliament;
"Operator" Euroclear UK & International Limited or such other person as may, for the
time being, be approved by His Majesty's Treasury as Operator under the
uncertificated securities rules;
"Ordinary Shares" the ordinary shares of 62.5p each in the capital of the Company following the
Share Consolidation;
"Promoter Warrants" unlisted non-transferrable warrants to subscribe for up to 1,500,000,000
Existing Ordinary Shares held by certain members of the LS Concert Party,
exercisable for 0.20p until 25 May 2026, further details of which can be found
in paragraph 3 of Part VII of this document;
"Proposals" means (i) the Acquisition; (ii) the Share Consolidation; (iii) the
Subscription; and (iv) the issue of the Remuneration Shares as well as the CLN
Shares;
"Prospectus Regulation Rules" the prospectus regulation rules made by the FCA pursuant to section 73A of the
FSMA from time to time;
"Record Date" the record date for the Share Consolidation being 6.00 p.m. on 16 February
2024;
"Registrars" Computershare Investor Services PLC, incorporated in England and Wales with
company number 03498808, whose registered office address is The Pavilions,
Bridgwater Road, Bristol, BS13 8AE, United Kingdom;
"Regulatory Information Service" or "RIS" a regulatory information service authorised by the FCA to receive, process,
and disseminate regulatory information in respect of listed companies;
"Remuneration Shares" the 137,142 Ordinary Shares to be issued to the Existing Directors on
Admission in lieu of payment owed by the Company, further details of which are
set out in paragraph 11 of Part I of this document;
"Resolutions" the resolutions to be proposed at the General Meeting, details of which are
set out in the Notice of GM;
"Restricted Jurisdiction" the United States of America, Canada, New Zealand, the Republic of South
Africa and Japan;
"Reverse Takeover" any acquisition that would be of a size or nature to be deemed a reverse
takeover transaction under Rule 14 of the AIM Rules for Companies;
"SEDOL" the stock exchange daily official list;
"Shard" Shard Credit Partners Venture Debt Fund I LP;
"Share Consolidation" the proposed consolidation of every 625 Existing Ordinary Shares into one New
Ordinary Share;
"Share Dealing Code" the Company's share dealing code as referred to in paragraph 17 of Part I of
this document;
"Shareholders" or "Existing Shareholders" holders of Ordinary Shares from time to time, each individually being a
"Shareholder";
"Shopify" Shopify Inc. (NASDAQ: SHOP) is a Canadian multinational ecommerce company
headquartered in Ottawa, Ontario. Shopify helps businesses build an online
store and selling online through its proprietary ecommerce platform;
"Significant Shareholder" a person holding three per cent. or more of the Enlarged Share Capital;
"Sorted", "SHL" or the "Target" Sorted Holdings Limited, a private limited company incorporated in England and
Wales with company number 08609014, whose registered office address is Fourth
Floor, Blackfriars House, St Mary's Parsonage, Manchester, M3 2JA, United
Kingdom;
"Sorted Group" Sorted and/or its current subsidiaries;
"Subscribers" Shard Credit Partners Venture Debt Fund I LP, Mahmoud Warriah and those other
persons who execute Subscription Letters;
"Subscription" the conditional subscription for the Subscription Shares at the Issue Price by
the Subscribers pursuant to the Subscription Letters;
"Subscription Letters" the subscription letters between the Company and each of the Subscribers as
more fully described in paragraph 11 of Part VII of this document;
"Subscription Shares" the 2,285,712 Ordinary Shares subscribed for by the Subscribers pursuant to
the Subscription Letters at the Issue Price;
"Substantial Shareholder" any person who, following Admission, holds any legal or beneficial interest
directly or indirectly in 10 per cent. or more of the Enlarged Share Capital
or voting rights of the Company, as defined in the AIM Rules for Companies;
"Takeover Code" the City Code on Takeovers and Mergers issued by the Takeover Panel, as
amended from time to time;
"Takeover Panel" the Panel on Takeovers and Mergers;
"Turner Pope" Turner Pope Investments (TPI) Limited;
"UK MAR" the Regulation 2014/596/EU, which is part of UK domestic law pursuant to the
Market Abuse (Amendment) (EU Exit) Regulations (SI 2019/310);
"Uncertificated" or "Uncertificated form" recorded on the relevant register of the share or security concerned as being
held in uncertificated form in CREST and title to which, by virtue of the
CREST Regulations, may be transferred by means of CREST;
"United Kingdom" or "UK" the United Kingdom of Great Britain and Northern Ireland;
"US" or "United States" the United States of America, its territories and possessions, any state of
the United States of America and the District of Columbia;
"VAT" value added tax;
"Vendors" the Core Sellers and the Minority Sellers, being the current shareholders of
Sorted Holdings Limited at the date of this document;
"Warrantors" Carmen Carey, Mahmoud Warriah, Robert Whittick, Daniel Greenall, Alex
Lagerborg and Timothy Cox; and
"Warrants" together, the Promoter Warrants, the Cornerstone Investor Warrants, the Broker
Warrants and the Director Warrants.
GLOSSARY OF TECHNICAL AND COMMERCIAL TERMS
The following technical terms apply throughout this document:
"API" or "Application Programming Interface" a set of definitions and protocols for building and integrating application
software;
"App" or "Application" a software programs developed for end-users to accomplish specific computing
tasks. Applications may take the form of Mobile Applications or software
packages for use on desktop or laptop computers;
"B2B" or "Business-to-Business" a transaction or business conducted between one business and another, such as
a wholesaler and retailer;
"B2C" or "Business-to-Consumer" a retail model where products or services move directly from a business to the
end user who has purchased the goods or services for personal use;
"C2B" or "Consumer-to-Business" a business model in which consumers create value and businesses consume that
value;
"Carrier Management System" a software solution that optimises and organises shipping operations,
particularly carrier operations, in retail warehouses and distribution
centres;
"Carrier" a company that provides a service to deliver goods on behalf of another
company to customers;
"Corporate customers" ecommerce businesses generating in the region of 300,000 units to 12,000,000
units in aggregate shipping parcel volume per year (not all shipped or tracked
by Sorted), although this precise range is subject to Sorted's periodic review
and accordingly may change;
"Corporate and Enterprise" comprised of Corporate customers and Enterprise customers;
"Delivery Experience Platform" Sorted's proprietary delivery management platform comprised of the Ship, Track
and Return propositions;
"ecommerce" or "electronic commerce" the buying and selling of goods and services, or the transmitting of funds or
data, over an electronic network, primarily the internet;
"Enterprise customers" ecommerce businesses generating in excess of 12,000,000 units in aggregate
shipping parcel volume per year (not all shipped or tracked by Sorted),
although this precise range is subject to Sorted's periodic review and
accordingly may change;
"Lifetime Value" an estimate of the average revenue that a customer will generate throughout
their lifespan as a customer;
"M-commerce" or "Mobile Commerce" ecommerce that takes place on via wireless computing devices such as
smartphones;
"Mobile Applications" a software application developed specifically for use on small, wireless
computing devices, such as smartphones, rather than desktop or laptop
computers;
"Multi-Product Customers" customers of both Ship and Track;
"myparceldelivery.com" a parcel price comparison website for individual consumers and small
businesses to purchase Carrier labels at reduced prices and arrange parcel
collections or drop offs;
"Omnichannel" a customer centric sales strategy that provides a seamless shopping experience
between marketing channels. Omnichannel allows merchants to sell through
multiple channels, such as desktops, mobile devices, and in-store;
"Refactoring" the process of restructuring existing computer code without changing its
external behaviour;
"Return" Sorted's return proposition comprising of the Sorted Returns Center and the
Reverse Logistics Platform;
"Reverse Logistics Platform" Sorted's standalone portal for charities, retailers and other businesses to
manage the process of items being shipped from individuals to central
warehouses and hubs;
"SaaS" or "Software-as-a-Service" a software licensing and delivery model in which software is licensed on a
subscription basis and is centrally hosted;
"Ship" Sorted's Carrier Management System that enables retailers to take complete
control of their shipping operations by combining access to Sorted's
comprehensive carrier services library with the flexibility of its shipments
allocation optimization rules engine;
"Shipments" a version of Ship used primarily by Sorted's Enterprise customers;
"Shopify Marketplace" a fully functional ecommerce marketplace;
"SMB" or "Small and Medium-Sized Business" companies that are smaller in size and revenue than large corporations, but
larger than microbusinesses or those run by an individual proprietor;
"Sorted Returns Center" a premium Application available on Shopify allowing ecommerce businesses to
automate and simplify customer returns, exchanges, refunds and production
labels to retain customers and revenue;
"SortedPRO" now rebranded as Return;
"SortedREACT" now rebranded as Track; and
"Track" Sorted's software solution that consolidates an ecommerce businesses' shipment
tracking data in one place and enables proactive branded shipment status
communications to be sent to its customers.
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 (mailto:rns@lseg.com)
or visit
www.rns.com (http://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 contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END UPDDXGDBSGDDGSC