Location Sciences - Proposed Fundraise of up to £3.85m - Notice of GM
04/05/2021 07:00
RNS Number : 3297X
Location Sciences Group PLC
04 May 2021
4 May 2021
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.
Location Sciences Group PLC
("Location Sciences" or the "Company" or the "Group")
Conditional Placing and Subscription of 1,750,000,000 Ordinary Shares at 0.2 pence per share,
Conditional Broker Option of up to 175,000,000 Ordinary Shares at 0.2 pence per share,
Approval of Waiver of Rule 9 of the City Code on Takeovers and Mergers
Proposed Board Changes
and
Notice of General Meeting
Location Sciences (AIM: LSAI), the leading location data insight and verification company, announces that it has conditionally raised up to £3.85 million before expenses for the Company through the issue of new Ordinary Shares.
Key features
· Placing and Subscription to raise £3.5 million before expenses at the Placing Price of 0.2 pence per Ordinary Share.
· Broker Option to raise up to £350,000 (before expenses) to meet any additional demand from Shareholders for Ordinary Shares - Broker Option closes to Shareholders at 8.00 a.m. on 5 May 2021.
· Issue of warrants over Ordinary Shares in relation to the Placing and Subscription.
· Participation in the Placing by a broad range of new investors.
· Placing and Subscription to provide funding to Location Sciences to continue development and commercialisation of the Company's products and services and for general working capital purposes.
· New Non-Executive Chairman and Non-Executive Director to be appointed at Admission in place of the current Non-Executive Chairman and Non-Executive Director. A further new Non-Executive Director to be appointed in due course.
· New strategic shareholders, including Mahmud Kamani, Founder & Group Executive Chairman at Boohoo Group plc and Richard Hughes, founder at Zeus Capital.
· Mahmud Kamani and Richard Hughes have together introduced Simon Wilkinson, a highly experienced software executive and entrepreneur, as a proposed investor and proposed Non-Executive Chairman of the Company.
· Transaction subject to Shareholder approval.
Background to the Transaction
On 11 February 2021, the Company announced that, in part as a consequence of COVID-19, the Company and in particular, Verify, would continue to face a number of trading challenges. This is despite the current relative strength of the Company's working capital position. Included within this announcement, the Board advised Shareholders that they were exploring a number of options for the Company and its businesses and further announcements would be made as and when appropriate.
Since that announcement, and following numerous discussions, both internally and with third parties, surrounding the business review, the Board has concluded that given the market outlook for each of the Company's business units, it is essential that Location Sciences secures additional financial resources. The Directors believe this will give the Company more time and greater flexibility to deliver value to the Shareholders from the Company's two core business units, namely location verification and data and insights.
Pleasingly the Board, with the assistance of Turner Pope, has secured the investment commitment and support, conditional upon Shareholder approval, from inter alia, Mahmud Kamani, Founder & Group Executive Chairman at Boohoo Group plc and Richard Hughes, founder at Zeus Capital.
The addition of these new supportive shareholders and the experience and relationships of the Proposed Directors, together with the additional resources from the Placing and Subscription, would, in the Board's opinion, considerably enhance the opportunities available to the Company.
Broker Option
Any Shareholder wishing to apply for any Broker Option Shares, unless they are themselves a FCA authorised market counterparty, will need to communicate their interest in Broker Option Shares to Turner Pope via a FCA authorised market counterparty such as a stockbroker or other firm authorised by the FCA by 8.00 a.m. on 5 May 2021.
Mark Slade, Chief Executive Officer of Location Sciences, commented: "Following a lengthy strategic review of the business, the Board is pleased to announce this fundraising, which has been secured despite the challenging trading environment being experienced by the Company. We are extremely cognisant of the discount to the current share price. However, the Board believes the fundraise is in the long-term interests of the business and its Shareholders. We look forward to welcoming the new strategic investors and Board members, who bring with them a wealth of relationships and opportunities which we hope will be of benefit to Location Sciences."
A copy of this announcement is available on the Company's website https://www.locationsciencesgroup.ai/investor-relations/documents-circulars/
For further information please contact:
Location Sciences Group PLC via Milk & Honey PR
Mark Slade, Chief Executive Officer
David Rae, CFO and Commercial Director
Allenby Capital Limited (Nominated Adviser) Tel: +44 (0)20 3328 5656
David Hart
David Worlidge
Turner Pope Investments (TPI) Ltd (Placing Agent) Tel: +44 (0)20 3657 0050
James Pope
Andy Thacker
Peterhouse Capital (Broker) Tel: +44 (0) 20 7220 9791
Charles Goodfellow
Eran Zucker
Milk & Honey PR Tel: +44 (0)20 3637 7310
Kirsty Leighton
Jessica Ballinger
Conditional Placing and Subscription of 1,750,000,000 Ordinary Shares at 0.2 pence per share,
Conditional Broker Option of up to 175,000,000 Ordinary Shares at 0.2 pence per share,
Approval of Waiver of Rule 9 of the City Code on Takeovers and Mergers
Proposed Board Changes
and
Notice of General Meeting
1. INTRODUCTION
The Company announces that it has conditionally raised up to £3.85 million before expenses for the Company through the issue of new Ordinary Shares.
The Transaction is, amongst other things, conditional upon each of the Resolutions being passed at the forthcoming General Meeting and includes:
- a Placing and Subscription with certain institutional and other investors, to raise £3.5 million before expenses through the issue of 1,750,000,000 Ordinary Shares (together, the "Placing Shares" and the "Subscription Shares") at the Placing Price of 0.2 pence per Ordinary Share. The Placing Price is at a discount of approximately 64 per cent. to the closing middle market price of 0.56 pence per Existing Ordinary Share on 30 April 2021, being the latest practicable date prior to the publication of this announcement;
- a Broker Option to raise up to £350,000 (before expenses) pursuant to which Turner Pope may conditionally allocate up to 175,000,000 Ordinary Shares (in addition to the Placing Shares) (the "Broker Option Shares") at the Placing Price in order to give the flexibility to meet any additional demand from Shareholders for Ordinary Shares arising during the period from the announcement of the Transaction up to 8.00 a.m. on 5 May 2021;
- the issuance of the Fees Shares, whereby: (i) 17,500,000 Ordinary Shares are to be issued at the Placing Price in respect of the first year of fees due to Turner Pope for the provision of its broking services to the Company; (ii) 120,500,000 Ordinary Shares are to be issued at the Placing Price in settlement of fees and commission due to Turner Pope pursuant to the Placing; and (iii) 85,000,000 Ordinary Shares are to be issued at the Placing Price in settlement of the first and second year's fees of the Proposed Directors;
- the issuance of Promoter Warrants, whereby non-transferable warrants to subscribe for up to 1,500,000,000 Ordinary Shares (equivalent to approximately 85.7 per cent. of the Placing Shares and Subscription Shares issued), exercisable at the Placing Price for five years from Admission, are to be issued to certain members of the Concert Party in consideration of those persons assembling and co-ordinating the Concert Party's investment in the Company and facilitating the proposed appointment of Simon Wilkinson as Non-Executive Chairman;
- the issuance of Cornerstone Investor Warrants, whereby non-transferable warrants to subscribe for up to 250,000,000 Ordinary Shares (equivalent to approximately 14.3 per cent. of the Placing Shares and Subscription Shares issued), exercisable at the Placing Price for five years from Admission, are to be issued to the Cornerstone Investors;
- the issuance of Director Warrants, whereby non-transferable warrants to subscribe for, in aggregate, 120,000,000 Ordinary Shares are issued to the Executive Directors and the Proposed Directors, (equivalent to approximately 6.9 per cent. of the Placing Shares and Subscription Shares issued), exercisable at the Placing Price for five years from Admission, provided that the Ordinary Shares have traded at a Volume Weighted Average Price (VWAP) at or above a 50 per cent. premium to the Placing Price for 20 consecutive Business Days, or on a change of control of the Company. The Director Warrants are to be issued to the Executive Directors and the Proposed Directors as part of their incentive package;
- the issuance of Broker Warrants, whereby transferable warrants to subscribe for up to 100,000,000 Ordinary Shares (equivalent to 5.7 per cent. of the Placing Shares and Subscription Shares issued), exercisable at the Placing Price for five years from Admission, are issued to JIM Nominees Limited (as nominee on behalf of Turner Pope) as part of the consideration payable to Turner Pope for its services as placing agent to the Transaction. Turner Pope has agreed to transfer, in aggregate, 41,250,000 Broker Warrants to Dr Nigel Burton and the Executive Directors upon Admission;
- proposed changes to the Board (namely the appointment of the Proposed Directors on the terms summarised in paragraph 10 below); and
- the Rule 9 Waiver.
The proceeds receivable by the Company from the Transaction on Admission amount to £3.5 million (before expenses) and approximately £3.35 million (net of expenses) (assuming that no Broker Option Shares are issued). If the Broker Option Shares are issued in full, the proceeds receivable by the Company from the Transaction amount to £3.85 million (before expenses) and approximately £3.7 million (net of expenses).
Immediately following Admission, the Concert Party will hold, in aggregate, 1,035,000,000 Ordinary Shares, representing approximately 41.1 per cent. of the Enlarged Issued Share Capital. If the Promoter Warrants and the Director Warrants held by members of the Concert Party following Admission are exercised, a further 25,000,000 Fees Shares are issued to Simon Wilkinson, the Broker Option is not exercised, no other options or warrants are exercised and no other Ordinary Shares are issued, the Concert Party would hold 2,590,000,000 Ordinary Shares representing 63.6 per cent. of the so enlarged ordinary share capital. If the Broker Option, the Promoter Warrants, the Cornerstone Investor Warrants, the Broker Warrants, and the Director Warrants are exercised in full and a further 25,000,000 Fees Shares are issued to Simon Wilkinson (and assuming no other issuance, including such as that which may arise from the exercise of other options which may be granted to other employees in future), the Concert Party would hold 2,590,000,000 Ordinary Shares representing 55.0 per cent. of the so enlarged ordinary share capital. In the unlikely event that the existing employee share options over 23,466,666 Ordinary Shares, which have an exercise price of 2.25 pence per share, are also exercised, then the Concert Party's holding would reduce to 54.8 per cent. of the so enlarged ordinary share capital.
Under Rule 9 of the Takeover Code, on Admission, the Concert Party would normally be obliged to make a general offer to all Shareholders (other than the Concert Party) to acquire all the Ordinary Shares not owned by the Concert Party. The Panel has agreed to waive these obligations subject to the approval (on a poll) of the Independent Shareholders of Resolution 1 to be proposed at the General Meeting. The Placing is therefore subject to the approval of that resolution by the Independent Shareholders. Your attention is drawn to paragraph 6 below which contains further information on the Takeover Code and the waiver of Rule 9 of the Takeover Code.
A General Meeting has been convened for 10.00 a.m. on 21 May 2021 and will be held at the offices of Turner Pope at 8 Frederick's Place, London, EC2R 8AB.
At present, as a result of the COVID-19 pandemic, there continue to be restrictions on gatherings of people indoors. The Company will therefore arrange to hold the General Meeting as a closed meeting, with the minimum attendance required to form a quorum under the Company's articles of association. These Shareholders will each be directors, officers or employees of the Company. Shareholders will not be permitted to attend the General Meeting in person but can be represented by the Chairman of the General Meeting acting as their proxy.
Given the uncertainty around whether Shareholders will be able to attend the General Meeting, all Shareholders are recommended to complete and return their Form of Proxy to arrive no later than 10.00 a.m. on 19 May 2021 appointing the Chairman of the General Meeting, as their proxy. This will ensure that Shareholders' votes will be counted even if attendance at the General Meeting is restricted or Shareholders are unable to attend in person. Alternatively, Shareholders may appoint their proxy electronically via the Registrar's website at www.investorcentre.co.uk/eproxy. Shareholders will need their Control Number, SRN & PIN which can be found on their Form of Proxy. CREST members can also vote by utilising the CREST electronic proxy appointment service in accordance with the procedures set out in the Notice. Further instructions for voting can be found in paragraph 14 below.
If approved, the Resolutions would provide the Directors with the authority to allot the Placing Shares, the Subscription Shares, the Broker Option Shares, the Fees Shares, and to satisfy in full the prospective issuance of Ordinary Shares arising from the exercise of the Promoter Warrants, the Cornerstone Investor Warrants, the Broker Warrants and the Director Warrants, and to dis-apply statutory pre-emption rights in respect thereof. They also include Resolutions to appoint the Proposed Directors, as set out in paragraph 10 below.
The Transaction is conditional, inter alia, upon: (i) the passing by Shareholders of all of the Resolutions at the General Meeting; (ii) the Placing Agreement not having been terminated and becoming unconditional in all respects save for Admission; and (iii) Admission having become effective by no later than 8.00 a.m. on 25 May 2021 (or such time and date as the Company, Allenby Capital and Turner Pope may agree, being no later than 8.00 a.m. on 22 June 2021). Subject to all relevant conditions being satisfied (or, if applicable, waived), it is expected that Admission will occur on or around 25 May 2021.
For the purposes of the Transaction, the Executive Directors are not considered to be independent in light of their involvement in the Transaction. As a result, they do not accept responsibility for the views of the Board on the Transaction and are not participating in the recommendation to Shareholders.
Shareholders should be aware that if the Resolutions are not approved at the General Meeting, the Transaction will not proceed in any respect. Shareholders are urged to vote in favour of the Resolutions, which the Independent Directors consider to be in the best interests of the Shareholders as a whole.
2. BACKGROUND TO THE TRANSACTION
On 11 February 2021, the Company announced that, in part as a consequence of COVID-19, the Company and in particular, Verify, would continue to face a number of trading challenges. This is despite the current relative strength of the Company's working capital position. Included within this announcement, the Board advised Shareholders that they were exploring a number of options for the Company and its businesses and further announcements would be made as and when appropriate.
Since that announcement, and following numerous discussions, both internally and with third parties, surrounding the business review, the Board has concluded that given the market outlook for each of the Company's business units, it is essential that Location Sciences secures additional financial resources. The Directors believe this will give the Company more time and greater flexibility to deliver value to the Shareholders from the Company's two core business units, namely location verification and data and insights.
Pleasingly the Board, with the assistance of Turner Pope, has secured the investment commitment and support, conditional upon each of the Resolutions being passed at the forthcoming General Meeting, from inter alia, Mahmud Kamani, Founder & Group Executive Chairman at Boohoo Group plc and Richard Hughes, founder at Zeus Capital, each of whom form part of the Concert Party. Mahmud Kamani and Richard Hughes have together introduced Simon Wilkinson as a proposed investor and proposed Non-Executive Chairman of the Company and as a member of the Concert Party.
The addition of these new supportive shareholders and the experience and relationships of the Proposed Directors, together with the additional resources from the Placing and Subscription, would, in the Board's opinion, considerably enhance the opportunities available to the Company.
3. COMPANY OVERVIEW
About the Company
Location Sciences is a global location verification provider to the digital advertising industry, and works in partnership with advertisers, media agencies and suppliers to reduce ad wastage and improve the effectiveness of location-based advertising campaigns.
Location Sciences has developed Verify and GeoProtect, the world's first independent location verification products, to tackle the global location ad fraud problem. Utilising sophisticated machine learning and pattern recognition technologies, Verify and GeoProtect detect location ad fraud and highlight location data inaccuracy with the aim of bringing back integrity, transparency and trust to the marketplace.
Location Sciences is also a specialised footfall insights company in the UK, combining cutting-edge GDPR compliant location data collection with proprietary machine learning analytics to create new value and insights from location information.
Recent trading
Trading performance for the year to 31 December 2020
For the year to 31 December 2020, revenue reduced to £1,080,742 (2019: £1,206,254) representing a decrease in revenues of approximately 10 per cent. year-on-year. Location data and insights delivered £762,170 of revenue (2019: £710,700) with Verify contributing £318,572 (2019: £495,554).
The Group received £30,119 of grant income, including £20,119 of furlough income from the UK's job retention scheme in 2020 (2019: £25,280). There is no grant income expected in the foreseeable future.
In response to the COVID-19 pandemic, the Board made swift cost reductions to mitigate the impact of the downturn in revenues. These included salary reductions for the Board and senior members of the team, a hiring freeze, closure of the London office and staff being furloughed. In addition, with the exception of product development, all operational expenses were reduced to the minimal viable levels from April 2020 following the downturn in the location-based advertising industry caused by the restrictions imposed by governments globally.
These actions reduced the administrative costs for continuing operations excluding depreciation and amortisation to £1,535,906 (2019: £2,545,767) a reduction of 40 per cent. compared to the prior year.
The business delivered a loss before exceptional items, amortisation and depreciation of £783,242 (2019: £1,712,986), an operating loss of £1,400,019 (2019: £2,271,242) and a loss after taxation of £1,239,268 (2019: £2,116,812).
Loss per Ordinary Share from continuing operations decreased from 0.61 pence in 2019 to 0.24 pence in 2020.
Impact of COVID-19
Verify revenues have continued to be adversely impacted by the significantly reduced advertising spend caused by the pandemic. The anticipated uplift in Verify revenues during the fourth quarter of 2020 did not materialise and there has been no improvement in the first part of 2021 due to the ongoing restrictions being imposed by governments globally.
As reported during 2020, it has been a challenging time for location-based advertising within sectors that rely on people's movement, such as retail and Quick Service Restaurants.
The outlook for location-based advertising is poor due to the overall impact of the pandemic on the location-based advertising industry. In the Board's experience, mainstream media agencies are now focused on media delivery rather than adopting new technologies, especially those which risk limiting delivery scale such as Verify.
Location Verification
In the first two months of 2020, the Board was buoyed by the momentum building around Verify which included being added to the Group M technology partner list, trials with Starbucks, Unilever and Horizon Media Inc., as well as deals with Phillip Morris International and Dentsu Aegis.
Unfortunately, this momentum was halted by COVID-19. Reduced media spending on location-based advertising resulted in a significantly reduced number of campaigns for location verification. More significantly, a new layer of verification was something media agencies would not promote given their need to spend and deliver revenues. In the UK, preferred partner relationships between location suppliers and their media agencies amplified this challenge. The recent dispute which the Company has had with Blis is evidence of how these relationships can override the Verify platform findings.
It is the management team's belief that the Verify platform needs a direct sales channel into brands and for the budget holders to see the problem our products are solving. Although this is a deeply opaque and unregulated part of digital advertising market, the Directors believe more work is needed to educate brands on the inefficiencies caused by poor data and the data quality and fraud issues omnipresent on the location-based advertising supply chain.
Following the announcement of the business review, the management team is exploring options for the Company's location verification products that could support the brand direct channel strategy. It is the management team's belief that with the right partners this can still be a successful SAAS offering.
The Directors are confident that the Company's products solve a significant problem in the ad-tech ecosystem. However, finding the right partners who are committed to promoting transparency will be a key next step. The recent changes in the ad-tech ecosystem such as the loss of cookies and the move to real time context are also creating some macro tail winds and scope for optimism.
Data and Insights
The Data and Insights business has fared better despite a drop in location events due to lack of movement from various lockdowns. Customers such as CACI, JC Decaux and the NHS have relied on the Company's data to show movement trends during the different phases of the COVID-19 pandemic.
The supply of data which feeds the Data and Insights business is being affected by the privacy changes introduced by the main operating systems. However, the Location Sciences management team continue to explore new supply relationships in order to maintain the data at a level suitable for the level of insights the Company delivers.
The Board is excited about the launch of the Company's new Insights products for the financial services industry, with the first such product launching on the Bloomberg Enterprise Access Point in the next few months.
The Data and Insights business also faces challenges, in particular with regards to location data supply, with Google and Apple having a significant influence on how location data is collected and processed. The Company has weathered the challenges of location data supply to date; however, these challenges have limited the growth of the Company's Data and Insights business as well as increased the costs to the Company. Consequently, this business unit is not yet break even and will require further investment to realise its full potential.
Outlook
There is still significant uncertainty ahead for Location Sciences. The management team is optimistic that as COVID-19 restrictions are relaxed the brakes on Location Sciences' business will be eased.
On 11 February 2021, the Company announced that, in part as a consequence of COVID-19, the Company and in particular, Verify, would continue to face a number of trading challenges. This is despite the current relative strength of the Company's working capital position. As made clear above, the key for Verify is to find the right partners who are committed to promoting transparency. In the Board's view, this is imperative to deliver the value of Verify to shareholders.
4. USE OF PROCEEDS
The Company intends to use the funds raised from the Transaction:
- to fund the commercialisation of Location Sciences' current products and services;
- to provide funds to further develop Location Sciences' product and service portfolio; and
- for general working capital purposes.
5. INFORMATION ON THE TRANSACTION
Details of the Placing
The Placing is conditional, inter alia, upon:
- all of the Resolutions being passed without amendment at the General Meeting;
- the Company allotting, subject only to Admission, the Placing Shares and the Broker Option Shares (if any) in accordance with the Placing Agreement;
- Admission becoming effective by no later than 8.00 a.m. on 25 May 2021 (or such other time and/or date, being no later than 8.00 a.m. on 22 June 2021, as Allenby Capital, Turner Pope and the Company may agree);
- the conditions in the Placing Agreement being satisfied or (if applicable) waived; and
- the Placing Agreement not having been terminated in accordance with its terms prior to Admission.
The Placing Shares will be credited as fully paid and will rank pari passu in all respects with the Ordinary Shares then in issue, including the right to receive all future distributions, declared, paid or made in respect of the Ordinary Shares from the date of Admission. The Placing Shares will represent approximately 69.0 per cent. of the Enlarged Issued Share Capital, if no Broker Option Shares are issued.
None of the Directors nor the Company give any warranty or undertaking that a subscription for VCT/EIS Shares: (i) is a qualifying holding for the purposes of Part 6 of the Income Tax Act 2007, or that such qualifying status will not be withdrawn; or (ii) would be regarded as "eligible shares" for the purposes of Part 5 of the Income Tax Act 2007, nor do they warrant or undertake that the Company will conduct its activities in a way that qualifies for or preserves its status or the status of any investment in New Ordinary Shares. Investors considering taking advantage of any of the reliefs available to VCTs or under EIS should seek their own professional advice in order that they may fully understand how the rules apply in their individual circumstances and what they are required to do in order to claim any reliefs (if available). As the rules governing VCT and/or EIS reliefs are complex and interrelated with other legislation, if any potential investors are in any doubt as to their tax position, require more detailed information than the general outline above, or are subject to tax in a jurisdiction other than the UK, they should consult own their professional advisers.
Application will be made for the Placing Shares, the Subscription Shares, the Broker Option Shares (if any) and the Fees Shares (excluding 42,500,000 Fees Shares in respect of the second year's fees of the Proposed Directors) to be admitted to trading on AIM following the approval of the Resolutions. Admission is expected to become effective by no later than 8.00 a.m. on 25 May 2021. Settlement of the Placing Shares, the Subscription Shares, the Broker Option Shares (if any) and the Fees Shares (excluding 42,500,000 Fees Shares in respect of the second year's fees of the Proposed Directors) is expected to take place within the CREST system in conjunction with Admission.
It is expected that CREST accounts of the Placees who hold their Ordinary Shares in CREST will be credited with their Placing Shares and/or Broker Option Shares on 25 May 2021. In the case of Placees holding Ordinary Shares in certificated form, it is expected that certificates will be dispatched during the week commencing 31 May 2021.
The Placing and the Subscription are not being underwritten and the Placing Shares, the Subscription Shares and the Broker Option Shares are not subject to clawback.
Subscription
The Subscription Shares will be issued at the Placing Price, raising £25,000 for the Company. One of the Executive Directors has subscribed directly with the Company for these shares, which are issued on the same terms and conditions as the Placing Shares.
Details of the Broker Option
The Company has granted the Broker Option to Turner Pope to enable the Company to raise additional funds in the event of there being additional demand under the Placing. The Broker Option enables Turner Pope to procure subscribers for up to 175,000,000 Broker Option Shares, at the Placing Price, which they may use to satisfy additional demand for Ordinary Shares. Turner Pope may exercise the Broker Option during the period from the time of this announcement (on more than one occasion if partially exercising) at any time up to 5.00 p.m. on 5 May 2021. The allotment and issue of the Broker Option Shares is subject to the Placing proceeding and all Resolutions having been passed, amongst other things.
Any issue of Broker Option Shares will be made on the same terms and conditions as the issue of the Placing Shares. The Broker Option Shares are not being offered to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so. Any Shareholder wishing to apply for any Broker Option Shares, unless they are themselves an FCA authorised market counterparty, will need to communicate their interest in Broker Option Shares to Turner Pope via a FCA authorised market counterparty such as a stockbroker or other firm authorised by the FCA by 8.00 a.m. on 5 May 2021. Turner Pope will have absolute discretion in the allocation of any Broker Option Shares following the communication of any such interest, and communication of an order to Turner Pope will not guarantee any person any allocation or participation. The Broker Option Shares, if and when issued, will be credited as fully paid and will rank pari passu in all respects with the Ordinary Shares then in issue, including the right to receive all future distributions, declared, paid or made in respect of the Ordinary Shares from the date of Admission. If the Broker Option is fully exercised, the Broker Option Shares arising will represent approximately 6.5 per cent. of the Enlarged Issued Share Capital as further increased by the full issuance of the Broker Option Shares.
Details of the Fees Shares
The Fees Shares comprise:
- 17,500,000 Ordinary Shares to be issued at the Placing Price in respect of £35,000 for the first year of fees, paid in advance, due to Turner Pope for the provision of its broking services to the Company following Admission, upon which it will be appointed as joint broker to the Company;
- 120,500,000 Ordinary Shares are to be issued at the Placing Price in settlement of fees and commission due to Turner Pope pursuant to the Placing; and
- 85,000,000 Ordinary Shares to be issued at the Placing Price in respect of the first and second year's fees of the Proposed Directors, paid in advance, as set out in paragraph 10 below.
The issue of the Fees Shares reflects the agreement of Turner Pope and the Proposed Directors to apply the amounts owed to them by the Company in paying up new Ordinary Shares. The Fees Shares (other than the 42,500,000 Fees Shares to be issued in respect of the second year's fees of the Proposed Directors) will be issued at Admission, credited as fully paid and will rank pari passu in all respects with the Ordinary Shares then in issue, including the right to receive all future distributions, declared, paid or made in respect of the Ordinary Shares from the date of Admission. The Fees Shares (excluding the 42,500,000 Fees Shares to be issued in respect of the second year's fees of the Proposed Directors) will represent approximately 7.2 per cent. of the Enlarged Issued Share Capital, if no Broker Option Shares are issued, or approximately 6.7 per cent. of the Enlarged Issued Share Capital as further increased if the Broker Option is exercised in full.
Details of the Promoter Warrants
Pursuant to the terms of the Promoter Warrant Instrument, the Company will, conditional upon Admission, grant warrants to subscribe for up to 1,500,000,000 Ordinary Shares, which represents 85.7 per cent. of the Placing Shares and the Subscription Shares, to Richard Hughes, Mahmud Kamani and Simon Wilkinson, who are members of the Concert Party. The exercise price of the Promoter Warrants shall be the Placing Price and the Promoter Warrants shall be capable of exercise for a period of five years from Admission. The Promoter Warrants will not be listed and will not be transferable. The Promoter Warrants will be allocated as set out below:
| Name | Number of Ordinary Shares subject to Promoter Warrants |
| Richard Hughes | 500,000,000 |
| Mahmud Kamani | 500,000,000 |
| Simon Wilkinson | 500,000,000 |
| TOTAL | 1,500,000,000 |
| Name | Number of Ordinary Shares subject to Cornerstone Investor Warrants |
| Ben Turner | 50,000,000 |
| Donna Turner | 75,000,000 |
| James Pope | 50,000,000 |
| Maxine Pope | 75,000,000 |
| TOTAL | 250,000,000 |
| Name | Number of Ordinary Shares subject to Broker Warrants |
| JIM Nominees Limited (as nominee on behalf of Turner Pope) | 58,750,000 |
| Dr Nigel Burton | 25,000,000 |
| Mark Slade | 10,000,000 |
| David Rae | 6,250,000 |
| TOTAL | 100,000,000 |
| Fees Shares | Placing Shares | At Admission | Promoter Warrants | Director Warrants | Fees Shares | Maximum holding | |||
| No. Shares | No. Shares | No. Shares | % | No. Shares | No. Shares | No. Shares | No. Shares | % | |
| Richard Hughes | - | 200,000,000 | 200,000,000 | 7.94 | 500,000,000 | - | - | 700,000,000 | 17.19 |
| Rebecca Hughes | - | 50,000,000 | 50,000,000 | 1.99 | - | - | - | 50,000,000 | 1.23 |
| Abigail Hughes | - | 50,000,000 | 50,000,000 | 1.99 | - | - | - | 50,000,000 | 1.23 |
| Mahmud Kamani | - | 200,000,000 | 200,000,000 | 7.94 | 500,000,000 | - | - | 700,000,000 | 17.19 |
| Samir Kamani | - | 60,000,000 | 60,000,000 | 2.38 | - | - | - | 60,000,000 | 1.47 |
| Umar Kamani | - | 50,000,000 | 50,000,000 | 1.99 | - | - | - | 50,000,000 | 1.23 |
| Adam Kamani | - | 50,000,000 | 50,000,000 | 1.99 | - | - | - | 50,000,000 | 1.23 |
| Petar Cvetkovic | - | 25,000,000 | 25,000,000 | 0.99 | - | - | - | 25,000,000 | 0.68 |
| Carol Kane | - | 50,000,000 | 50,000,000 | 1.99 | - | - | - | 50,000,000 | 1.23 |
| Daron Lee | - | 125,000,000 | 125,000,000 | 4.96 | - | - | - | 125,000,000 | 3.07 |
| John Lyttle | - | 50,000,000 | 50,000,000 | 1.99 | - | - | - | 50,000,000 | 1.23 |
| Shaun Mealey | - | 25,000,000 | 25,000,000 | 0.99 | - | - | - | 25,000,000 | 0.68 |
| Christian Stephenson | - | 25,000,000 | 25,000,000 | 0.99 | - | - | - | 25,000,000 | 0.68 |
| Simon Wilkinson | 25,000,000 | 50,000,000 | 75,000,000 | 2.98 | 500,000,000 | 30,000,000 | 25,000,000 | 630,000,000 | 15.47 |
| Total Concert Party | 25,000,000 | 1,010,000,000 | 1,035,000,000 | 41.11 | 1,500,000,000 | 30,000,000 | 25,000,000 | 2,590,000,000 | 63.59 |
| Director | Number of Existing Ordinary Shares held | Number of Placing Shares subscribed for | Number of Subscription Shares subscribed for | Number of Fees Shares to be issued at Admission | Resulting number of Ordinary Shares held immediately following Admission1 | Resulting holding as a percentage of the Enlarged Issued Share Capital |
| Executive Directors | ||||||
| Mark Slade | 6,204,444 | 20,000,000 | - | - | 26,204,444 | 1.0% |
| David Rae | 1,166,667 | - | 12,500,000 | - | 13,666,667 | 0.5% |
| Proposed Directors | ||||||
| Simon Wilkinson | - | 50,000,000 | - | 25,000,000 | 75,000,000 | 3.0% |
| Dr Nigel Burton | - | 50,000,000 | - | 17,500,000 | 67,500,000 | 2.7% |
| TOTAL | 7,371,111 | 120,000,000 | 12,500,000 | 42,500,00 | 182,371,111 | 7.2% |
| Proposed Director | Position | Appointment term | Annual Remuneration | Number of Fees Shares to be issued on Admission for first year of service | Number of new Ordinary Shares to be issued for second year of service | Number of Director Warrants to be issued (see paragraph 11 below) | Number of Broker Warrants to be issued (see paragraph 11 below) | Number of Promoter Warrants to be issued (see paragraph 11 below) |
| Simon Wilkinson | Non-Executive Chairman | Two years, subject to three months' notice* | £50,000 | 25,000,000 | 25,000,000 | 30,000,000 | - | 500,000,000 |
| Dr Nigel Burton | Non-Executive Director, Chairman of the Audit Committee, Chairman of the Remuneration Committee and Chairman of the Nomination Committee | Two years, subject to three months' notice* | £35,000 | 17,500,000 | 17,500,000 | 30,000,000 | 25,000,000 | - |
| Director | Number of Ordinary Shares subject to Director Warrants | Number of Ordinary Shares subject to Broker Warrants | Number of Ordinary Shares subject to Promoter Warrants |
| Mark Slade | 30,000,000 | 10,000,000 | - |
| David Rae | 30,000,000 | 6,250,000 | - |
| Simon Wilkinson | 30,000,000 | - | 500,000,000 |
| Dr Nigel Burton | 30,000,000 | 25,000,000 | - |
| TOTAL | 120,000,000 | 41,250,000 | 500,000,000 |
| Announcement of the Transaction | 4 May 2021 |
| Publication and posting of the Circular and Form of Proxy | 4 May 2021 |
| Latest time and date for applications for the Broker Option | 8.00 a.m. on 5 May 2021 |
| Announcement of result of Broker Option | 6 May 2021 |
| Latest time and date for receipt of Forms of Proxy for the General Meeting | 10.00 a.m. on 19 May 2021 |
| Time and date of General Meeting | 10.00 a.m. on 21 May 2021 |
| Announcement of result of General Meeting | 21 May 2021 |
| Admission and commencement of dealings in New Ordinary Shares | 8.00 a.m. on 25 May 2021 |
| CREST accounts credited in respect of New Ordinary Shares in uncertificated form | 25 May 2021 |
| Despatch of definitive share certificates in respect of New Ordinary Shares to be issued in certificated form | week commencing 31 May 2021 |
| Number of Existing Ordinary Shares | 587,337,398 |
| Nominal value of Existing Ordinary Shares | 0.1 pence |
| Number of Placing Shares | 1,737,500,000 |
| Number of Subscription Shares | 12,500,000 |
| Number of Fees Shares* | 180,500,000 |
| Enlarged issued share capital following the issue of the Placing Shares, the Subscription Shares and the Fees Shares* | 2,517,837,398 |
| Placing Shares, Subscription Shares and Fees Shares* as a percentage of the enlarged issued share capital | 76.7 per cent. |
| Placing Price of Ordinary Shares to be issued as Placing Shares | 0.2 pence |
| Market capitalisation (at the Placing Price) following the issue of the Placing Shares, the Subscription Shares and the Fees Shares* | £5,035,675 |
| Expected gross proceeds of the Placing and Subscription | £3,500,000 |
| Note: These placing statistics assume that no further Ordinary Shares are issued following the date of this announcement apart from the Placing Shares, the Subscription Shares and the Fees Shares*, and that no Broker Option Shares are issued. * Excluding 42,500,000 Fees Shares in respect of the second year's fees of the Proposed Directors. | |
| Broker Option statistics | |
| Maximum number of Broker Option Shares | 175,000,000 |
| Maximum additional gross proceeds from the full exercise of the Broker Option | £350,000 |
| Potential enlarged issued share capital on Admission following the issue of the Placing Shares, the Subscription Shares, the Fees Shares* and the Broker Option Shares if fully subscribed | 2,692,837,398 |
| Placing Shares, Subscription Shares, Fees Shares* and Broker Option Shares as a percentage of the potential enlarged issued share capital on Admission | 78.2 per cent. |
| Note: These Broker Option statistics assume that no further Ordinary Shares or New Ordinary Shares are issued following the date of this announcement apart from the Placing Shares, the Subscription Shares and the Fees Shares*, and the maximum number of Broker Option Shares are issued. * Excluding 42,500,000 Fees Shares in respect of the second year's fees of the Proposed Directors. | |
| Fully Diluted Share Capital statistics | |
| Number of Ordinary Shares over which Promoter Warrants will be issued | 1,500,000,000 |
| Number of Ordinary Shares over which Cornerstone Investor Warrants will be issued | 250,000,000 |
| Number of Ordinary Shares over which Director Warrants will be issued | 120,000,000 |
| Number of Ordinary Shares over which Broker Warrants will be issued | 100,000,000 |
| Potential fully diluted share capital assuming that the Promoter Warrants, Cornerstone Investor Warrants, Broker Warrants and Director Warrants are exercised in full | 4,705,337,398 |
| Note: These fully diluted share capital statistics assume the Placing Shares, the Subscription Shares and all of the Fees Shares, and the maximum number of Broker Option Shares are issued. They do not take into account existing employee share options, which in practical terms have no likelihood of being exercised, other existing warrants or any new share options which may be issued to employees under the Company's existing share option schemes and authorities or any future such schemes. | |
| "Admission" | the admission of the New Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules; |
| "AIM" | AIM, a market operated by the London Stock Exchange; |
| "AIM Rules" | the AIM Rules for Companies published by the London Stock Exchange from time to time; |
| "Allenby Capital" | Allenby Capital Limited (and its affiliates) (registered number 06706681), acting as nominated adviser to the Company; |
| "Board" or "Directors" | the directors of the Company as at the date of this announcement; |
| "Broker Option" | the option granted to Turner Pope by the Company in the Placing Agreement to enable the Company to raise additional funds through the issue of the Broker Option Shares at the Placing Price (in addition to the Placing Shares), details of which are set out in paragraph 5 of this announcement; |
| "Broker Option Shares" | up to 175,000,000 Ordinary Shares in respect of which the Broker Option may be exercised; |
| "Broker Warrant Instrument" | the warrant instrument granting unlisted warrants over Ordinary Shares to JIM Nominees Limited (as nominee on behalf of Turner Pope) and to be executed by the Company on Admission; |
| "Broker Warrants" | unlisted warrants to subscribe for up to 100,000,000 Ordinary Shares, to be issued to JIM Nominees Limited (as nominee on behalf of Turner Pope), further details of which can be found in paragraph 5 of this announcement; |
| "Business Day" | any day on which banks are generally open in England and Wales for the transaction of business, other than a Saturday, Sunday or public holiday; |
| "certificated" or "in certificated form" | a share or other security not held in uncertificated form (i.e. not in CREST); |
| "Company" | Location Sciences Group plc (registered number 06458458); |
| "Concert Party" | together 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; |
| "Cornerstone Investors" | Ben Turner and James Pope, the founders of Turner Pope, and their wives, Donna Turner and Maxine Pope, respectively; |
| "Cornerstone Investor Warrant Instrument" | the warrant instrument granting unlisted warrants over Ordinary Shares to the Cornerstone Investors and to be executed by the Company on Admission; |
| "Cornerstone Investor Warrants" | unlisted warrants to subscribe for up to 250,000,000 Ordinary Shares to be issued to the Cornerstone Investors, further details of which can be found in paragraph 5 of this announcement; |
| "CREST" | a relevant system for paperless settlement of trades in securities and the holding of uncertificated securities operated by Euroclear in accordance with the CREST Regulations; |
| "CREST Regulations" | the Uncertificated Securities Regulations 2001 (SI 2001/3755), including: (i) any enactment or subordinate legislation which amends or supersedes those regulations; and (ii) any applicable rules made under those regulations for the time being in force; |
| "Director Warrant Instrument" | the warrant instrument granting unlisted warrants over Ordinary Shares to the Directors and the Proposed Directors and to be executed by the Company on Admission; |
| "Director Warrants" | unlisted warrants to subscribe for up to 120,000,000 Ordinary Shares, to be issued to the Directors and the Proposed Directors, further details of which can be found in paragraph 11 of this announcement; |
| "Enlarged Issued Share Capital" | the entire issued share capital of the Company immediately following Admission (assuming that the Placing and Subscription is fully subscribed, the Fees Shares (excluding 42,500,000 Fees Shares in respect of the second year's fees of the Proposed Directors) are issued, no Broker Option Shares are issued and assuming that no further Ordinary Shares are issued following the date of this announcement and prior to completion of the Placing and Subscription); |
| "EIS" | Enterprise Investment Scheme (as such term is used under Part 5 of the Income Tax Act 2007); |
| "Euroclear" | Euroclear UK & Ireland Limited; |
| "Executive Directors" | Mark Slade and David Rae; |
| "Existing Ordinary Shares" | the 587,337,398 Ordinary Shares in issue on the date of this announcement, all of which are admitted to trading on AIM; |
| "FCA" | the UK Financial Conduct Authority; |
| "Fees Shares" | 223,000,000 Ordinary Shares to be issued in respect of: (i) fees due to Turner Pope for its first year of joint broking services to be provided to the Company; (ii) fees and commission due to Turner Pope pursuant to the Placing; and (iii) the first and second year's fees of the Proposed Directors in accordance with the Proposed Directors' letters of appointment; |
| "Form of Proxy" | the form of proxy for use by Shareholders in connection with the General Meeting; |
| "FSMA" | Financial Services and Markets Act 2000 (as amended); |
| "General Meeting" | the general meeting of the Company convened for 10.00 a.m. on 21 May 2021; |
| "Independent Directors" | Kelvin Harrison and Benjamin Chilcott; |
| "Independent Shareholders" | the Shareholders who are independent of the Concert Party; |
| "London Stock Exchange" | London Stock Exchange plc; |
| "New Ordinary Shares" | the Placing Shares, the Subscription Shares, the Fees Shares (excluding 42,500,000 Fees Shares in respect of the second year's fees of the Proposed Directors) and the Broker Option Shares (if any); |
| "Notice" | the notice convening the General Meeting; |
| "Ordinary Shares" | the existing ordinary shares of 0.1 pence each in the share capital of the Company; |
| "Panel" | the Panel on Takeovers and Mergers; |
| "Placees" | subscribers for Placing Shares and/or Broker Option Shares; |
| "Placing" | the placing of Placing Shares at the Placing Price pursuant to the Placing Agreement to certain institutional and other investors; |
| "Placing Agent" | Turner Pope; |
| "Placing Agreement" | the conditional placing agreement dated 4 May 2021 between the Company, Allenby Capital and Turner Pope relating to the Placing and the Broker Option; |
| "Placing Price" | 0.2 pence per Ordinary Share; |
| "Placing Shares" | 1,737,500,000 Ordinary Shares conditionally placed with certain institutional and other investors pursuant to the Placing Agreement; |
| "Promoter Warrant Instrument" | the warrant instrument granting unlisted warrants over Ordinary Shares to certain members of the Concert Party and to be executed by the Company on Admission; |
| "Promoter Warrants" | unlisted warrants to subscribe for up to 1,500,000,000 Ordinary Shares to be issued to certain members of the Concert Party, further details of which can be found in paragraph 5 of this announcement; |
| "Proposed Directors" | Simon Wilkinson and Dr Nigel Burton; |
| "Registrar" | Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY; |
| "Regulatory Information Service" | a service approved by the FCA for the distribution to the public of regulatory announcements and included within the list maintained on the FCA's website; |
| "Resolutions" | the resolutions being put to Shareholders in order to give effect to the Transaction; |
| "Rule 9 Waiver" | the waiver by the Panel of the obligations which would otherwise arise on the part of any member of the Concert Party (individually or collectively) under Rule 9 of the Takeover Code in connection with the Transaction; |
| "Shareholders" | holders of Ordinary Shares; |
| "Subscription" | the subscription for the Subscription Shares by one of the Executive Directors; |
| "Subscription Shares" | 12,500,000 Ordinary Shares conditionally subscribed by one of the Executive Directors pursuant to the Subscription; |
| "Takeover Code" or "the Code" | the City Code on Takeovers and Mergers, as amended from time to time; |
| "Transaction" | the Placing, the Subscription, the Broker Option, the grant of the Promoter Warrants, the grant of the Cornerstone Investor Warrants, the grant of the Director Warrants, the grant of the Broker Warrants, the allotment of Fees Shares, the proposed changes to the Board and the Rule 9 Waiver; |
| "Turner Pope" | Turner Pope Investments (TPI) Ltd (registered number 09506196), acting as placing agent to the Company; |
| "uncertificated" or "uncertificated form" | recorded on the register of members of the Company 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; |
| "VCT" | a venture capital trust under Part 6 of the Income Tax Act 2007; and |
| "VCT/EIS Shares" | such number of Placing Shares and/or Broker Option Shares to be allotted and issued to certain VCTs or to certain persons seeking to invest in "eligible shares" for the purpose of the EIS. |
| 1. | Details of the person discharging managerial responsibilities / person closely associated | |||||
| a) | Name | 1. Mark Slade 2. David Rae | ||||
| 2. | Reason for the Notification | |||||
| a) | Position/status | 1. Chief Executive Officer 2. Commercial Director and Chief Financial Officer | ||||
| b) | Initial notification/Amendment | Initial Notification | ||||
| 3. | Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor | |||||
| a) | Name | Location Sciences Group PLC | ||||
| b) | LEI | 213800MKYV25HW2IAX70 | ||||
| 4. | Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted | |||||
| a) | Description of the Financial instrument, type of instrument | Ordinary shares of 0.1 pence each in the share capital of Location Sciences Group PLC. Identification code (ISIN) for Location Sciences Group PLC ordinary shares: GB00BGT36S19. | ||||
| Identification code | ||||||
| b) | Nature of the transaction | Participation in placing/subscription of new ordinary shares | ||||
| c) | Price(s) and volume(s) |
| ||||
| d) | Aggregated information: ·Aggregated volume ·Price | N/A N/A | ||||
| e) | Date of the transaction | 4 May 2021 | ||||
| f) | Place of the transaction | Outside a trading venue | ||||
| 1. | Details of the person discharging managerial responsibilities / person closely associated | |||||
| a) | Name | 1. Mark Slade 2. David Rae | ||||
| 2. | Reason for the Notification | |||||
| a) | Position/status | 1. Chief Executive Officer 2. Commercial Director and Chief Financial Officer | ||||
| b) | Initial notification/Amendment | Initial Notification | ||||
| 3. | Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor | |||||
| a) | Name | Location Sciences Group PLC | ||||
| b) | LEI | 213800MKYV25HW2IAX70 | ||||
| 4. | Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted | |||||
| a) | Description of the Financial instrument, type of instrument | Warrants over ordinary shares of 0.1 pence each in the share capital of Location Sciences Group PLC. Identification code (ISIN) for Location Sciences Group PLC ordinary shares: GB00BGT36S19. | ||||
| Identification code | ||||||
| b) | Nature of the transaction | Grant of warrants | ||||
| c) | Price(s) and volume(s) |
| ||||
| d) | Aggregated information: ·Aggregated volume ·Price | N/A N/A | ||||
| e) | Date of the transaction | 4 May 2021 | ||||
| f) | Place of the transaction | Outside a trading venue | ||||