REG - Totally PLC - Proposed acquisition of Greenbrook Healthcare
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31 May 2019
Totally plc
("Totally", the "Company" or the "Group")
Proposed acquisition of Greenbrook Healthcare
Proposed placing by way of an accelerated book build to raise up to £9.0 million
Proposed Open Offer to raise up to £1.0 million
Notice of General Meeting
Restoration of trading on AIM
The Board of Totally plc (AIM: TLY), a leading provider of a range of out-of-hospital services to the healthcare sector in the UK, announces that the Company has conditionally agreed to acquire Greenbrook Healthcare, a leading provider of NHS urgent care centres across London. The total consideration for the acquisition is £11.5 million on a cash free and debt free basis, with a normalised level of working capital (the "Acquisition").
The Consideration will be satisfied by the payment of £9.0 million in cash on Completion and as to the remaining £2.5 million by the issue of the Consideration Shares on Completion. The cash consideration payable on Completion will be satisfied using the net proceeds raised pursuant to the Placing and the Open Offer and existing cash resources of the Company.
The Company also announces its intention to conduct a placing with certain institutional and other investors to raise gross proceeds of up to £9.0 million at 10 pence per Ordinary Share, as well as an Open Offer of up to £1.0 million (the "Open Offer"). The Placing is being conducted through an accelerated bookbuilding process (the "Bookbuild"), which will be launched immediately following this announcement.
Greenbrook Healthcare is a leading provider of urgent care services to the NHS in the Greater London area of the UK. The services provided by Greenbrook Healthcare are delivered by UCCs on behalf of the NHS with the majority of the UCCs co-located with A&E departments. In addition, Greenbrook Healthcare operates a small number of WICs, a GP practice and an admissions avoidance service on behalf of the NHS. Its UCC based at Queen Elizabeth Hospital, Woolwich is also the local GP OoH service for the borough of Greenwich (for home visits and face to face consultations in the UCC).
Highlights:
· The Acquisition provides Totally with a strong and commercially attractive opportunity to continue to execute its buy and build strategy, with the aim of building the Company into a leading out-of-hospital healthcare provider, providing more comprehensive services across the country, helping to address the significant healthcare challenges faced by the UK.
· The Acquisition allows the Group to obtain a further foothold in the urgent care sector in the UK with Greenbrook Healthcare being a leading provider of UCCs in the Greater London area.
· The Board believes the services offered by Greenbrook Healthcare are highly complementary to and offer synergies with the Group's wholly-owned subsidiary Vocare Limited ("Vocare"), one of the UK's leading national specialist providers of urgent care services.
· The total consideration for the Acquisition is £11.5 million on a cash free and debt free basis, with a normalised level of working capital.
· The Consideration will be satisfied by the payment of £9.0 million in cash on Completion and as to the remaining £2.5 million by the issue of the Consideration Shares on Completion. The cash consideration payable on Completion will be satisfied using the net proceeds raised pursuant to the Placing and the Open Offer and existing cash resources of the Company.
· Greenbrook Healthcare has experienced substantial revenue growth in recent years with revenue growing from £23.8 million in the financial year ended 31 March 2016 to £33.4 million in the year ended 31 March 2018 (equivalent to 40.1 per cent. growth over the two financial years).
· With effect from Admission, Michael Steel, the Chief Executive Officer of Greenbrook Healthcare, will join the Board as Executive Director.
Background to and reasons for the Acquisition:
The Board believes Greenbrook Healthcare to be a strong acquisition candidate, for the following reasons:
· Growing market for outsourced urgent care services
Publications such as the Integrated Urgent Care Service Specification, published in August 2017, and the NHS Long Term Plan, published in January 2019 demonstrate an increasing demand for urgent care services nationwide. The Chancellor also announced an increase in NHS funding of £20.5 billion over a 5-year period in the 2018 budget.
Urgent care is one of the cornerstones of the NHS Long Term Plan and the Enlarged Group will be able to provide the key outsourced services in this plan.
· Development of a nationwide footprint
Totally currently provides out-of-hospital healthcare in over 230 locations across England. Greenbrook Healthcare's footprint in the Greater London area will complement Vocare's coverage of other parts of the country. The Board believes Greenbrook Healthcare will be well positioned to benefit from Totally's scale and regional presence when tendering for new UCC contracts.
· Contracted revenue
Totally and Greenbrook Healthcare have combined contracted revenues of over £250 million over a three-year period, through to 31 March 2021. Both Totally and Greenbrook Healthcare have a solid track record of contract wins, renewals and extensions.
· Access to NHS partnerships and contracts
The geographical focus of services provided by Greenbrook Healthcare is the Greater London area and the Directors believe that its acquisition will open up additional partnership and contract opportunities for Totally in the region as well as increasing the breadth of NHS Commissioners with whom it contracts.
· Enlarged Group synergies and cross-selling opportunities
The Directors believe the combined business will be one of the market leaders in providing integrated urgent care services to the NHS. The Directors believe the Enlarged Group will have opportunities to cross sell other planned and unplanned care components to current Commissioners of services and the ability to deliver a fully integrated urgent care solution to existing and new Commissioners. The Enlarged Group is expected to be of sufficient scale to help the NHS to solve its problems in urgent care.
· Operational enhancements for Totally
Greenbrook Healthcare has an experienced management team and an established group of clinicians who will join the Group post Completion and support the Group's existing operational capabilities as it looks to expand its geographical footprint.
· New services and opportunities
The Directors believe the acquisition of Greenbrook Healthcare will help enable Totally to deliver further on its strategy to become a leading provider of out-of-hospital healthcare in the UK. In addition, Totally's existing range of out-of-hospital services provide opportunities to support Greenbrook Healthcare and the urgent care services it can provide and offer to patients.
Given the scale of the Acquisition when compared to the existing Group, the transaction is a reverse takeover under the AIM Rules and requires the Company to issue a new admission document and is conditional, inter alia, on the approval by Shareholders of the Resolutions to be proposed at a General Meeting. Accordingly, the Company has published the admission document ("Admission Document"), including details of the General Meeting and Resolutions, which will be posted to Shareholders on 3 June 2019 and is available on the Company's website at https://www.totallyplc.com.
The Directors consider the Acquisition to be an exciting opportunity for the Group and in the best interests of the Company and Shareholders as a whole. Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do so in respect of their own beneficial holdings of Ordinary Shares, which represent approximately 2.11 per cent of the Existing Ordinary Shares.
Restoration of trading on AIM
Trading in the Company's Existing Ordinary Shares was suspended on 17 May 2019 after the Company confirmed it was in the advanced stages of the Acquisition. 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.
Details of the Placing
The Company is proposing to raise £9.0 million, before expenses, through the issue of the Placing Shares at the Issue Price. The Placing Shares will represent approximately 48.7 per cent. of the Enlarged Share Capital on Admission.
The Placing is being conducted by way of the Bookbuild. The Bookbuild will open with immediate effect and is expected to close no later than 4:30 p.m. (London time) today. The timing of the closing of the Bookbuild and the making of allocations may be accelerated or delayed at the discretion of Allenby Capital and Canaccord Genuity (together the "Placing Agents"). The appendix to this Announcement contains detailed terms and conditions ("Terms and Conditions") applicable to the Placing and the Bookbuild. The Placing is not underwritten.
By choosing to participate in the Placing and by making an oral and/or written legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood this Announcement (including the appendix) and the Admission Document in its entirety, and to be making such offer on the terms and subject to the conditions contained herein and to be making the representations, warranties, undertakings and acknowledgements contained in this Announcement (including the appendix).
The Placing is conditional, inter alia, upon the passing of the Resolutions at the General Meeting and Admission. If the Resolutions are passed and the other conditions set out in the Acquisition Agreement (save for Admission) and the Placing and Open Offer Agreement (save for payment of the consideration to the Vendors and Admission) are met, it is expected that the Enlarged Share Capital will be admitted to trading on AIM with effect from 8:00 a.m. on 20 June 2019.
Details of the Open Offer
The Company is proposing to raise up to approximately £1.0 million (before expenses) through the Open Offer. A total of 9,965,862 new Ordinary Shares are available to Qualifying Shareholders pursuant to the Open Offer at the Issue Price, payable in full on acceptance.
Any Offer Shares not subscribed for by Qualifying Shareholders will be available to Qualifying Shareholders under the Excess Application Facility. The balance of any Offer Shares not subscribed for under the Excess Application Facility will not be available to Placees under the Placing who were not already Qualifying Shareholders at the Record Date.
Qualifying Shareholders may apply for new Ordinary Shares under the Open Offer at the Issue Price on the following basis:
One new Ordinary Share for every 6 Existing Ordinary Shares
and so in proportion for any number of Existing Ordinary Shares held on the Record Date.
On the assumption that the Open Offer is fully subscribed, following the issue of the New Ordinary Shares, the Offer Shares will represent approximately 5.4 per cent. of the Enlarged Share Capital on Admission. Qualifying Shareholders who do not take up any of their Open Offer Entitlements will suffer a dilution of 67.64 per cent. to their interests in the Company.
Further details of the Open Offer are set out below.
Defined terms used in this Announcement shall have the same meaning (unless the context otherwise requires) as ascribed to them in the "Definitions" and "Technical Glossary" section towards the end of this Announcement.
Wendy Lawrence, CEO of Totally, said:
"We are thrilled to announce yet another landmark acquisition for Totally as we continue to deliver on our strategy and expand the Group. This highly complementary acquisition is an exciting and transformative opportunity, and one which offers significant operational and financial benefits.
"Adding such a well-regarded business as Greenbrook to our portfolio will provide us with a series of exciting growth opportunities in planned and unplanned care. Greenbrook's expertise and reputation in UCCs can be leveraged across our existing national network, in line with the NHS's commitment to integrated urgent care in its long-term plan. It will significantly strengthen our market positioning and allow us to deliver a wide spectrum of urgent care, driving revenue and margin growth in our core business. Furthermore, it will enable us to quickly expand into the London and South East markets which are key growth territories for Totally.
"We are excited by the opportunities that this acquisition can offer for the Enlarged Group and feel it will provide us with the expertise, capability and scale to be a key part of the solution, working closely with the NHS to solve its problems in urgent care. We look forward to updating the market in due course as we look to complete the proposed transaction and continue to build the Company into one of the leading providers of out of hospital care in the UK."
For further information please contact:
Totally plc
020 3866 3335
Wendy Lawrence, Chief Executive
Bob Holt, Chairman
Allenby Capital Limited (Nominated Adviser & Joint Corporate Broker)
020 3328 5656
Nick Athanas
Liz Kirchner
Canaccord Genuity Limited (Joint Corporate Broker)
020 7523 8000
Bobbie Hilliam
Alex Aylen
Yellow Jersey PR
020 3004 9512
Georgia Colkin
Joe Burgess
BACKGROUND TO AND RATIONALE FOR THE ACQUISITION
The Company has conditionally agreed to acquire Greenbrook Healthcare, a leading provider of NHS urgent care centres across London.
The Directors believe the Acquisition represents a transformational step in the implementation of the Group's stated buy and build strategy, as well as being particularly complementary to its Vocare business.
Greenbrook Healthcare is a provider of high-quality healthcare services to both patients and Commissioners in the Greater London area through:
· nine urgent care centres/urgent treatment centres;
· one GP practice/walk-in-centre;
· a further two walk-in-centres; and
· a hospital admission avoidance contract.
The majority of the UCCs are co-located with A&E departments.
The Board believes that there has been an overall trend for the NHS to seek to move the less acute or critical components of patient care from larger hospitals into smaller NHS premises, such as GPs' sites, or otherwise into community-based care, including UCCs. This process often takes place via outsourcing to private sector service providers in line with the NHS Long Term Plan published in January 2019.
The Directors believe therefore that there is a significant opportunity for Totally to build and develop a high quality diversified out-of-hospital UK healthcare services group. In order to facilitate this, the Board has adopted a buy and build strategy. Following the acquisitions of Vocare, Premier, About Health and Optimum Sports Performance since the beginning of 2016, the Board believes that the Acquisition provides the Company with a strong and commercially attractive opportunity to continue to execute its buy and build strategy, grow the Group and provide more comprehensive services across the country in the out-of-hospital care sector. In particular, the Acquisition allows the Group to obtain a further foothold in the urgent care sector in the UK with Greenbrook Healthcare being a leading provider of UCCs in the Greater London area. The Board believes the services offered by Greenbrook Healthcare are highly complementary to and offer synergies with Vocare.
INFORMATION ON GREENBROOK HEALTHCARE
Background and history
Greenbrook Healthcare is a leading provider of urgent care services to the NHS in the Greater London area of the UK. The services provided by Greenbrook Healthcare are delivered by UCCs on behalf of the NHS with the majority of the UCCs co-located with A&E departments. In addition, Greenbrook Healthcare operates a small number of WICs, a GP practice and an admissions avoidance service on behalf of the NHS. Its UCC based at Queen Elizabeth Hospital, Woolwich is also the local GP OoH service for the borough of Greenwich (for home visits and face to face consultations in the UCC).
Greenbrook Healthcare was founded in 2007 and, in 2008, started its first contract of six GP practices in Hounslow. In 2009, Greenbrook Healthcare entered into the urgent care market by winning a tender for a new GP practice and a WIC based in a former A&E, and it has since been successful in securing further contracts to manage a number of UCCs on behalf of the NHS. Greenbrook Healthcare's growth has benefitted from the NHS creating UCCs to relieve pressure on A&E departments by providing treatment to the majority of walk-in patients and thereby helping A&E departments achieve their quality, safety and operational objectives.
In March 2018, Greenbrook Healthcare began providing UCC services at Central Middlesex Hospital for Brent CCG in North West London working in collaboration with Brent Care (GPs) and London North West Healthcare NHS Trust. The service is closely integrated with both the urgent care pathways (NHS 111, GP OoH and A&E) as well as into GP services and community healthcare.
In April 2018, Greenbrook Healthcare started providing UCC services at Hillingdon as lead contractor in partnership with the Hillingdon Hospital and the local GP federation. The service delivers an innovative new specification set by Hillingdon CCG including closer integration with GP practices, community care, wider urgent care pathways (NHS 111 and A&E) as well as Hillingdon Hospital more broadly. Greenbrook Healthcare previously ran the Hillingdon UCC as a sub-contractor to London North West Healthcare NHS Trust.
In November 2018, Greenbrook Healthcare commenced UCC service provision at St Peter's Hospital in Chertsey, the first contract secured directly with a hospital trust rather than a CCG.
Greenbrook Healthcare has historically traded through three related entities as follows:
- Greenbrook Hounslow: nine UCCs together with an admission avoidance contract and, from April 2017, two WICs in Ashford and Woking;
- Greenbrook Earl's Court: a WIC and GP practice in Earl's Court, London; and
- Greenbrook Surrey: a GP practice and a WIC in Ashford. This business ceased trading from April 2017 and in November 2017 became a subsidiary of Greenbrook Hounslow.
Currently Greenbrook Hounslow operates the UCCs and ICRS, together with two WICs in Ashford and Woking under a new contract which commenced on 1 April 2017. Greenbrook Earl's Court continues to operate the GP practice and WIC in Earl's Court.
Greenbrook Healthcare acts as either a primary contractor or sub-contractor on its contracts.
As primary contractor, Greenbrook Healthcare has full responsibility for running the services and for all costs related to that service. Greenbrook Healthcare therefore receives 100 per cent. of contract contribution, albeit on a lower margin than as sub-contractor in the case of a secondary contract.
As sub-contractor, Greenbrook Healthcare directly manages the UCC service and employs the GPs, but the prime contractor usually employs the nursing staff who are managed by Greenbrook Healthcare. The contract profit after all costs is shared between Greenbrook Healthcare and the primary contractor. Greenbrook Healthcare is currently sub-contractor on three contracts: (i) West Middlesex UCC (Hounslow CCG) where the prime contractor is Hounslow and Richmond Community Healthcare NHS Trust; (ii) the WICs at Ashford and Woking where Central Surrey Health is the primary contractor; and (iii) St Peter's UCC where Ashford & St Peter's Hospitals NHS Foundation Trust is the primary contractor.
Greenbrook Healthcare continuously monitors and evaluates contract tendering opportunities. The tendering process is lengthy and Greenbrook Healthcare takes care to construct bids which are not only competitive but which also meet management's expectations of contribution margin. Typically a tender process will last approximately six months from initial tender notice, through bidder information sessions, six weeks of tender writing, and evaluation of tenders by Commissioners. Deployment and mobilisation of contracts, once awarded, can typically take a minimum of three months.
Greenbrook Healthcare mainly faces competition when bidding for contracts from other regional and national private healthcare providers such as Care UK, Virgin Care and Vocare but also from local public healthcare operators such as Community Service providers, GP provider groups and hospitals.
Greenbrook Healthcare holds NHS Standard Contracts (or NHS Standard Subcontracts) for most contracts. For its general practice, it holds an APMS contract (General Practice).
The current central team of around 30 people provides clinical and operational support to services and is responsible for new business development and all back office functions (Finance, IT, HR, Clinical Governance support etc.).
Operational delivery of Greenbrook Healthcare's services is organised on a local basis across each of the service centres. The executive team and the central teams are supported by a strong cohort of experienced local Service Managers, Lead GPs and Lead Nurses in each service. Management have a base in Hayes but spend a lot of their time on site in the locations from which services are provided.
Greenbrook Healthcare is responsible for the licensing, implementation and maintenance of the clinical IT systems used in its UCCs. The main systems are Adastra and SystmOne which are used for both record keeping and operational management as well as record sharing between different services in the urgent care pathway. They also allow access to GP patient records and booking of GP appointments directly from the UCC.
Other IT platforms used by Greenbrook Healthcare include:
o Rotamaster - rota/shift management system which includes all GPs nurses and receptionists, as well as shift requirements
o Datix - incident reporting system to record every clinical incident in the UCCs
o EMISWeb - for viewing local GP records and booking GP/GP Hub appointments in some areas
o Local Hospital Trust diagnostic systems - for requesting tests and viewing diagnostic test results
Greenbrook Healthcare has experienced substantial revenue growth in recent years with revenue growing from £23.8 million in the financial year ended 31 March 2016 to £33.4 million in the year ended 31 March 2018 (equivalent to 40.1 per cent. growth over the two financial years). This revenue growth has been primarily driven by the Northwick Park Hospital UCC contract moving from a secondary contract to a primary contract with effect from 1 April 2017, the new Surrey WIC contract which commenced materially in April 2017 and revenue growth across a number of other centres including Greenwich and Ealing. In the last 12 months, new contracts in Hillingdon, where Greenbrook Healthcare became primary contractor after winning the re-bid for the contract, Central Middlesex Hospital and St Peter's Hospital have driven further growth.
Greenbrook Healthcare services
Urgent Care Centres
Greenbrook Healthcare's UCCs are located around London and the home counties and are aimed at treating patients with urgent conditions. The UCCs can accept walk-in patients without an appointment. The centres operate to broadly similar service specifications with all centres dealing with minor injuries as well as minor illnesses. The centres have a variety of opening hours with a number of centres being open 24 hours a day, 7 days a week, whilst others are open 12 hours per day. All of these centres aim to provide patients with same day urgent care, allowing A&E departments to focus on more serious injuries and illnesses, as well as life threatening cases.
Greenbrook Healthcare manages every aspect of the UCC service from designing the clinical pathways to employing and managing the clinical and support staff to deliver high quality care.
Greenbrook Healthcare's UCCs take a primary care approach to care (i.e. similar to General Practice) and are led by GPs, supported by a team of experienced nurses and other healthcare practitioners. They operate on a walk-in basis and also offer direct-book appointments through the NHS 111 service.
Co-located UCCs (of which Greenbrook Healthcare manages seven) are co-located with the hospital A&E department. Their fundamental role is to protect the A&E departments by handling patients with more minor illnesses and injuries who are less suitable for A&E, by seeing, treating and safely discharging as many of these patients as possible. All of these services provide patient assessment and streaming (into the UCC, to A&E or to alternative services), with minor injury and illness patients seen, treated and discharged by GPs and Emergency Nurse Practitioners. X-ray facilities are available on site. All but one of these services operate 24 hours a day, 365 days a year. Greenbrook Healthcare's current co-located UCCs are situated at Northwick Park Hospital (Harrow), Queen Elizabeth Hospital (Woolwich), Princess Royal University Hospital (Orpington), Ealing Hospital, West Middlesex Hospital (Twickenham), Hillingdon Hospital and St Peter's Hospital (Chertsey).
Non co-located UCCs are standalone UCCs not attached to A&E departments. These services provide patient assessment and streaming, with patients with minor injuries and illnesses seen, treated and discharged by GPs and nurses, and have X-ray facilities available on site. Beckenham Beacon UCC operates from 8.00 a.m. until 8.00 p.m. and Central Middlesex Hospital (Brent) operates 24 hours per day.
Contracted revenues are either fixed (block) or variable based on patient numbers (tariff), or a combination of the two. Initial terms of contracts range from two to five years with mutually agreeable extension options, which are typically included, from one to two years.
As at 30 May 2019, Greenbrook Healthcare operated a total of nine UCCs throughout the UK as follows:
Ultimate NHS
Lead
Revenue
Commissioner
Service
Contractor
type
Start date
End date
Extension
Hounslow CCG
West Middlesex
Hounslow and
Block
April 2014
March 2019
March 2020
UCC
Richmond
Community
Healthcare NHS
Trust
Harrow CCG
Northwick Park
Greenbrook
Block
April 2017
March 2019
March 2021
UCC
Hounslow
and
(previously
Tariff
subcontractor)
Hillingdon CCG
Hillingdon UCC
Greenbrook
Block
April 2018
April 2023
-
Hounslow
(previously
subcontractor)
Ealing CCG
Ealing Hospital UCC
Greenbrook Hounslow
Block
April 2016
April 2019
April 2021
Greenwich CCG
QEH (Queen
Greenbrook
Block
September
September
September
Elizabeth
Hounslow
and
2015
2018
2020
Hospital) UCC
Tariff
and GP OoH
Service
Bromley CCG
PRUH (Princess
Greenbrook
Tariff
November
November
August 2020
Royal University
Hounslow
2013
2018
Hospital) UCC
Bromley CCG
Beckenham UCC
Greenbrook
Tariff
November
August 2019
August 2020
Hounslow
2014
Brent CCG
Central Middlesex
Greenbrook
Block
March 2018
March 2021
March 2023
UCC
Hounslow
North West
St Peter's UCC
Ashford & St
Block
November
March 2020
-
Surrey CCG
Peter's Hospitals
2018
NHS Trust
For the year ended 31 March 2018, the UCCs operated by Greenbrook Healthcare generated revenue of £29.3 million representing 91.2 per cent. of Greenbrook Healthcare's overall revenue from continuing contracts (year ended 31 March 2017 - £25.0 million).
Walk-In Centres
Greenbrook Healthcare operates WICs which are nurse-led services that are not attached to A&E and are intended to treat less acute patients. Their role is to ensure that any patient attending the service can be seen and treated then either discharged or referred to hospital. They typically operate from 8.00 a.m. until 8.00 p.m., 365 days a year and have some X-ray facilities available on site. Greenbrook Healthcare currently operates two WICs in Surrey. It also operates a small walk-in service at its GP practice in Earl's Court which is open six days a week on shorter opening hours and without X-ray facilities.
For the year ended 31 March 2018, the two WICs in Surrey operated by Greenbrook Healthcare generated revenue of £1.6 million representing 5.0 per cent. of Greenbrook Healthcare's overall revenue (year ended 31 March 2017 - £0.1 million).
GP Out of Hours
Fully integrated with Greenbrook Healthcare's UCC based at Queen Elizabeth Hospital (Woolwich) is the local GP OoH service for the borough of Greenwich (for home visits and face to face consultations in the UCC).
General Practice
Earl's Court Health & Wellbeing Centre provides GP services to 5,800 registered patients. In addition, the centre also has a walk-in service serving 5,000-6,000 patients per year.
For the year ended 31 March 2018, the GP services operated by Greenbrook Healthcare generated revenue of £1.0 million representing 3.1 per cent. of Greenbrook Healthcare's overall revenue from continuing contracts (year ended 31 March 2017 - £1.1 million).
On 17 December 2018, Greenbrook Healthcare served notice to NHS Kensington and Chelsea for the provision of services at the Earl's Court Health & Wellbeing Centre for commercial reasons. Greenbrook Healthcare is expected to cease providing services on this contract on 31 March 2020.
Admission Avoidance
These are services aimed at ensuring patients are not admitted to hospital or are discharged from hospital without delay. Plans are made regarding patients' medical, social and/or physical needs at home by a multi- disciplinary team of GPs, nurses, Occupational Therapists as well as handymen ready to make modifications to patients' homes (e.g. hand rails).
Greenbrook Healthcare delivers the medical leadership of an Integrated Community Response Service (ICRS) in partnership with Hounslow & Richmond Community Healthcare. There is an opportunity for Greenbrook Healthcare to deliver a similar service for other CCGs.
For the year ended 31 March 2018, the admission avoidance services provided by Greenbrook Healthcare generated revenue of £0.2 million representing 0.7 per cent. of Greenbrook Healthcare's overall revenue from continuing contracts (year ended 31 March 2017 - £0.2 million).
Greenbrook Healthcare's future business initiatives
In 2013, the NHS Medical Director Professor Sir Bruce Keogh announced a comprehensive review of the NHS urgent and emergency care system in England. The review highlighted five key elements for change:
1. To provide better support for self-care.
2. To help people with urgent care needs get the right advice in the right place, first time.
3. To provide highly responsive urgent care services outside of hospital so people no longer choose to queue in A&E.
4. To ensure that those people with serious/life-threatening emergency care needs receive treatment in centres with the right facilities and expertise, to maximise chances of survival and a good recovery.
5. To connect all urgent and emergency care services together, so the overall system becomes more than just the sum of its parts.
The UCC is a relatively new model of care. It has been developed as part of the NHS drive to relieve pressure from hospital A&Es by developing a broader and more integrated urgent care system (other elements include NHS 111, GP OoH, GP Hubs).
The fundamental role of the UCC is to improve the efficiency and productivity of the urgent care system, with the aim of safely removing 50 to 60 per cent. of patients from overcrowded A&Es.
The Five Year Forward View Next Steps publication (NHS England, March 2017) quotes the following key deliverables for 2017/18 and 2018/19 in order to help facilitate meeting the government's four hour A&E waiting time target:
1. Every hospital's A&E department must have comprehensive primary care-led clinical streaming.
2. Roll-out of standardised new "Urgent Treatment Centres" which will open a minimum of 12 hours a day, seven days a week, integrated with local urgent care services.
3. Specialist mental health care in A&E.
4. Enhanced NHS 111 and integrated GP OoH services.
The recently published NHS Long Term Plan also committed to urgent treatment centres and the important role they play in relieving pressure on busy A&E units.
Continued growth within the London UCC market is Greenbrook Healthcare's current core focus. Significant opportunities exist to leverage the platform geographically as well as into adjacent primary care services.
London UCCs
· New tender opportunities for UCC services within London. Management is committed to growth in this core market before expanding across the UK.
Regional UCCs
· Larger cities outside of London also present an excellent opportunity for growth, however this is likely to require additional regional teams to mobilise and deliver new contracts, assuming Greenbrook Healthcare remains independent.
Adjacent urgent care opportunities
· Admission avoidance: Stopping patients being admitted to hospital and getting them out quickly is a priority for the NHS and needs many of the skills of UCCs. Greenbrook Healthcare also delivers the ICRS service in Hounslow.
· NHS 111 services: With increased investment in technology and call centre infrastructure, Greenbrook Healthcare could potentially further develop into providing NHS 111 services.
Wider primary care opportunities
· General practice: There are an estimated 7,900 GP practices across England only (2014). Greenbrook Healthcare's existing General Practice contract at Earl's Court and 10-year track record of delivering GP services to more than 30,000 patients provides a foundation to expand in this market.
· Out-of-hospital services: There is a large opportunity in providing primary care-led services in the community (e.g. ophthalmology, dermatology, musculoskeletal services).
CQC inspections and quality
Greenbrook Healthcare is regulated by the CQC and has a strong quality track record. As at the date of the Document, ten of the 12 centres operated by Greenbrook Healthcare have been rated as "Good". There are not yet CQC inspection reports available for the remaining two centres.
Each of Greenbrook Healthcare's 12 UCCs/WICs and the Earl's Court General Practice are CQC registered. Greenbrook Healthcare was awarded an "Outstanding" rating in a single domain in three of its inspections.
St Peter's Hospital UCC has yet to be inspected by the CQC. The Central Middlesex Hospital UCC has been inspected by the CQC but the CQC report is not yet available.
Service
Inspection date
Report date
Overall rating
West Middlesex UCC
June 2018
October 2018
Good
Northwick Park UCC
October 2018
December 2018
Good
Hillingdon UCC
March 2017
May 2017
Good
Ealing Hospital UCC
June 2017
October 2017
Good
QEH (Queen Elizabeth Hospital) UCC
January 2017
June 2017
Good
PRUH (Princess Royal University Hospital) UCC
December 2017
December 2017
Good
Beckenham UCC
March 2017
June 2017
Good
Central Middlesex UCC
April 2019
-
-
St Peter's UCC
Yet to be inspected
-
-
Ashford WIC
May 2018
July 2018
Good
Woking WIC
May 2018
August 2018
Good
Weybridge WIC
May 2018
August 2018
Good
Earl's Court GP practice
October 2015
December 2015
Good
GREENBROOK HEALTHCARE SUMMARY FINANCIAL INFORMATION
The table below sets out summary audited financial information for Greenbrook Healthcare for the last three financial years ended 31 March 2018 and unaudited interim financial information for the seven months ended 31 October 2017 and 31 October 2018. The historical information has been prepared under IFRS. The summary below has been extracted from Part III of the Admission Document.
Year ended
31 March 2016
£000
Year ended 31 March 2017
£000
Year ended 31 March 2018
£000
Unaudited Period ended
31 October 2018
£000
Unaudited Period ended 31 October 2017
£000
Revenue
23,806
32,147
33,357
22,264
19,590
Cost of goods
(22,192)
(29,545)
(29,609)
(19,760)
(17,885)
Gross profit
1,614
2,602
3,748
2,504
1,705
Administrative expenses
(1,707)
(2,004)
(2,378)
(1,860)
(966)
Operating (loss)/profit
(93)
598
1,370
644
739
Finance income
4
4
6
6
2
(Loss)/profit before taxation
(89)
602
1,376
650
741
Taxation
(30)
(119)
(306)
(125)
(169)
(Loss)/profit before taxation
(119)
483
1,070
525
572
Other comprehensive income
-
-
-
-
-
Total comprehensive income for the year
(119)
483
1,070
525
572
The historical financial information on Greenbrook Healthcare includes the impact of two discontinued contracts previously managed by Greenbrook Hounslow and Greenbrook Surrey and exceptional costs of £239,000 in relation to professional fees incurred by Greenbrook Healthcare in relation to a possible sale of the group. In accordance with IFRS these have not been treated as discontinued operations or exceptional costs in the historical financial information. Excluding the impact of these items would result in a normalised revenue of £32.15 million and a profit after tax of £1.07 million for the year ended 31 March 2018.
INFORMATION ON TOTALLY
Totally is a provider of a range of out-of-hospital services to the NHS and private healthcare sector in the UK. These services help patients to access high quality healthcare services quickly, to understand better healthcare options and to promote self-care. In tandem, this supports the NHS in managing demand across its services and promoting NHS policy of working in partnership with other healthcare providers to deliver high quality, integrated services aimed at keeping people out of hospital. By providing access to high quality services and thereby reducing demand on NHS services, the Group's goal is to reduce healthcare reliance, re-admissions and emergency admissions.
The Group provides a disruptive, outcome-based, outsourced service model across its business divisions to deliver a wide range of healthcare services across the UK, including contracts with several CCGs, NHS Foundation Trusts and other public and private sector organisations. Out-of-hospital healthcare includes urgent care (unplanned care), primary care and outpatient services. These services are provided in GP surgeries and community settings, in prisons and other public organisations, as well as to private sector organisations. The Group aims to provide care which allows for hospital admissions to be avoided, at a lower cost to the NHS and with better outcomes for patients. The Group aims to provide a diverse range of healthcare services tailored to the needs of individual patients and the NHS, and to provide interventions that help to keep people healthy longer, prevent admission to hospital, prevent ill health, reduce healthcare inequalities and to ensure the efficient provision of primary healthcare and community / urgent care.
The Group has a stated buy and build strategy in the UK out-of-hospital healthcare sector. The Group has made four acquisitions since the beginning of 2016 and raised approximately £18 million in February 2017 by way of a placing and open offer, in order to drive that strategy. The Company is focused on becoming a leading out-of-hospital healthcare provider in the UK, in a sector that the Directors believe is worth in excess of £20 billion per annum with spending on out-of-hospital healthcare set to increase rapidly (Sources: NHS Long Term Plan published in January 2019, Integrated Urgent Care Service Specification published in August 2017 and the Chancellor's 2018 budget which included additional funding for outsourced NHS services).
The Board believes that the out-of-hospital healthcare marketplace is fragmented and Totally is well positioned to be a consolidator as further acquisition opportunities arise in both planned and unplanned care. By expanding organically through increasing the services provided by Totally's current businesses, and through further acquisitions, the Group aims to become a leading provider of out-of-hospital care across the UK.
The Group currently consists of two business segments; (i) unplanned care which accounts for approximately 90 per cent. of the Group's revenues and includes GP OoH, NHS 111 services, UCC and IUC services; and (ii) planned care which accounts for approximately 10 per cent. of the Group's revenues and includes physiotherapy, podiatry, dermatology, health coaching, outpatient and referral management services.
The Group's existing businesses are as follows:
Vocare - unplanned healthcare
Vocare, acquired by Totally in October 2017, is one of the national specialist providers of urgent care services in the UK. Headquartered in Newcastle upon Tyne, it provides innovative unplanned (urgent) healthcare services to patients across the UK through UCCs, GP OoH, integrated UCCs and the NHS 111 service, working in close collaboration with the NHS and other healthcare providers in local areas nationwide. Since acquisition, Vocare has achieved 'Good' ratings from the CQC in over 90 per cent. of services inspected, confirmed extensions and renewals across the vast majority of its contracts with CCGs and forged many new partnerships with other urgent care providers, both NHS and private sector. The Directors believe Vocare is now regarded by relevant stakeholders as a high quality provider of the full range of urgent care services, which includes NHS 111, GP OoH, Clinical Assessment Services (CAS) and Urgent Care Centres.
Premier Physical Healthcare - planned healthcare
Premier, acquired by Totally in April 2016, is a provider of treatment and advice for musculoskeletal injuries and conditions, including delivering physiotherapy and podiatry treatment to NHS patients and police forces and at prison sites. Additionally, Premier has an expanding network of clinics located in health and fitness centres and also provides occupational health and ergonomic services to corporate clients, such as display screen equipment assessments, post-injury return to work suitability assessments and podiatry treatment.
About Health - planned healthcare
About Health, acquired by Totally in June 2016, is a provider of dermatology and referral management services to the NHS in the UK and has a track record of service delivery covering a population of almost three million people from Lancaster in the North West down to Poole to Bournemouth and West Hampshire on the South Coast. Since acquisition, About Health has secured new contracts, pilot schemes and contract extensions with both new and existing customers. About Health is now expanding its business model to include additional medical specialities in order to increase its market share and growth.
Optimum Sports Performance - planned healthcare
Optimum Sports Performance, acquired by Totally in November 2016, is a provider of physiotherapy services at 23 clinics across 10 counties. It was one of the first physiotherapy providers in the UK to obtain ISO9001:2008 certification (an international standard related to quality management system) in 2013. Optimum Sports Performance offers physiotherapy treatment, shockwave therapy, acupuncture, pilates, Wattbike testing and ultrasonography to private clients who access services in local clinics and gyms across England.
Totally Health - planned healthcare
Totally Health was established in 2011 and provides a model of clinically-driven and personalised clinical health coaching to provide a range of services to patients with long-term health problems and wellness needs, enabling them to manage their conditions and reduce their healthcare reliance. Services are provided to NHS and private patients.
TOTALLY SUMMARY FINANCIAL INFORMATION
The table below sets out Totally's summary audited financial information for the two financial years ended 31 December 2016 and the financial period ended 31 March 2018 and unaudited interim financial information for the six months ended 30 September 2017 and 30 September 2018. The historical information has been prepared under IFRS.
Year ended
31 December 2015
£000
Year ended
31 December
2016
£000
Period ended
31 March
2018
£000
Unaudited
6 months
30 September
2018
£000
Unaudited
6 months
30 September 2017
£000Continuing operations
Revenue
577
3,977
42,535
40,164
3,530
Cost of sales
(184)
(2,600)
(35,510)
(34,475)
(2,472)
Gross profit
393
1,377
7,025
5,689
1,058
Administrative expenses
(752)
(2,536)
(6,842)
(5,594)
(1,862)
Operating (loss)/profit
(363)
(2,322)
2,828
(413)
(1,023)
Share issue costs
(49)
-
-
-
-
Finance costs
(1)
-
(719)
(129)
(301)
Finance income
-
830
-
2
-
(Loss)/profit before taxation
(413)
(1,492)
2,109
(540)
(1,324)
Income tax
-
(24)
(312)
(231)
-
(Loss)/profit for the year from continuing operations
(413)
(1,516)
1,797
(771)
(1,324)
STRATEGY OF THE ENLARGED GROUP
The Directors believe that there is a significant opportunity for Totally to build and develop a high quality diversified out-of-hospital UK healthcare services group through a combination of organic and acquisition based growth. The Board believes that this is the most cost-effective way for the Group to obtain critical mass in both planned and unplanned care, in order to allow it to compete with larger market participants.
Following the acquisitions of Vocare, Premier, About Health and Optimum Sports Performance, the acquisition of Greenbrook Healthcare provides the Enlarged Group with greater expansion opportunities across the UK, more scale in the offering it provides and increased exposure to the urgent care market in the Greater London area.
Out-of-Hospital Healthcare
The Enlarged Group will continue to target acquisitions of appropriate healthcare related companies for both planned and unplanned healthcare, but will also allow for a period of consolidation and integration of the new businesses. This will also allow new business models and clinical care pathways to be developed and delivered. All of this will add to the Enlarged Group's portfolio of services and ultimately provide innovative healthcare solutions across the spectrum of out-of-hospital healthcare.
The Enlarged Group, through integration, development, consolidation and targeted acquisitions, intends to design and deliver new business models across the Group to expand its businesses and reduce overhead costs, using in-house expertise to support further growth and expansion.
NHS Long Term Plan
Published in January 2019, the NHS Long Term Plan highlights the pressures faced by the NHS in both planned and unplanned care. Totally's strategy is to build a business with a focus on supporting the NHS to meet its performance targets by offering patients alternatives to hospital care and is ideally placed to benefit from the core principles within that strategy document.
Unplanned care
Commissioners have historically adopted a range of models for the provision of NHS 111, OoH and urgent care services in the community. In some areas, a more comprehensive model of integrated urgent care has been implemented. Some parts of the NHS are more advanced than others in terms of the implementation of the integrated urgent care model. Central to the NHS's integrated urgent care model is NHS 111 which gives patients and the public easy and swift access to urgent care. Vocare is already a provider of NHS 111 services across England. The Board believes that the Group, as enlarged by the acquisition of Greenbrook Healthcare, is well placed to take advantage of the NHS's stated vision for an integrated urgent care model.
Planned care
Commissioners are increasingly looking for partnering opportunities with providers who can support patients to seek treatments outside of acute hospitals and to help the NHS reduce its waiting time and waiting lists for a wide range of treatments. Totally's services already provided in the areas of Referral Management Services, Outpatient clinical, musculoskeletal, podiatry, dermatology and coaching services, all underpin this strategy and are ready to support moving patients out of the acute hospital setting.
Totally is already well established across England and is now proactively working with commissioners of health services across the rest of the UK for both planned and unplanned healthcare services as Totally is able to demonstrate the benefits of the services it provides to thousands of patients.
CURRENT TRADING AND PROSPECTS
Totally
On 8 April 2019, the Company announced an update on trading for the 12 month period ended 31 March 2019, ahead of its audited final results which are expected to be announced by end of July 2019.
For the year ended 31 March 2019, trading across the Group was in line with consensus market expectations. As at 31 March 2019, the Company had cash at bank of approximately £7.5 million. Almost half of this cash balance is required for the Group's monthly working capital cycle.
The Group continues to make progress with its stated strategy and, over the course of the year ended 31 March 2019, has announced in excess of £35 million of value in new and renewed contracts across its operating subsidiaries. The pipeline remains strong and the Board also confirmed that its subsidiary businesses have been awarded a number of contract extensions, new business and pilot schemes worth a total of approximately £7.7 million which include:
· c. £5.5 million contract extension for the provision of urgent care services in South West London;
· c. £1.3 million contract extension for the provision of UCCs in Sunderland; and
· c. £0.9 million comprised of various extensions, new business and pilots across subsidiary businesses.
The extensive changes made to processes and procedures at Vocare since its acquisition in 2017 have yielded major improvements, as evidenced by the CQC re-rating these services following their inspections. Of the 18 services inspected, the CQC ratings in March 2019 and the comparative March 2018 CQC ratings were as follows:
CQC Rating
March 2018
March 2019
Good
10 (53 per cent.)
16 (89 per cent.)
Requires Improvement
6 (32 per cent.)
2 (11 per cent.)
Inadequate
3 (16 per cent.)
0 (0 per cent.)
The services detailed above reflect that, since inspection, a number of sites have been amalgamated with other sites or have been reregistered.
In addition, on 23 April 2019, the Company announced that Vocare had been awarded a new contract to provide UCC and GP visiting services to NHS Newcastle & Gateshead CCG through its membership of the Newcastle Urgent Care Alliance. Under the contract approximately £1.94 million per annum will accrue to Vocare to supply the services. The contract will run for five years with an option to extend for a further two years at the contract's conclusion.
Greenbrook Healthcare
The unaudited management accounts for the 12 months ended 31 March 2019 show that during this period Greenbrook Healthcare made a profit before tax of £1.3 million on turnover of £39.8 million. In the 12 month period ended 31 March 2019 Greenbrook Healthcare invested approximately £1.0 million in central overhead costs to position the business for future growth. Nevertheless, trading for the period was ahead of budget with revenues higher than expected due to higher revenues generated from the new St Peter's contract secured in the financial year and profit before tax greater than expected due to efficiency improvements on existing contracts which led to improvements in the budgeted gross profit margins.
EXISTING DIRECTORS, PROPOSED DIRECTOR AND SENIOR MANAGEMENT
The Board currently consists of six Directors who, between them, have substantial experience in developing support services businesses as well as operating and growing profitable businesses and investigating acquisition targets.
Brief biographical details of the Directors are set out below:
Robert (Bob) Holt OBE, Chairman, aged 64
Bob Holt has a background in developing support service businesses. He has operated in the service sector since 1981, initially in a financial capacity then moving into general management. In 1996, Bob bought a controlling interest in Mears Group PLC, the support services group focused on social housing and domiciliary care services. Bob was instrumental in Mears' growth and oversaw the Company's flotation on AIM and subsequent listing on the Main Market of the London Stock Exchange. Bob was Chairman of Mears Group plc until his retirement from the board in January 2019. Until October 2017, Bob was Non- Executive Chairman of independent logistics and parcel distribution company, DX (Group) plc. He is Executive Chairman of Sureserve Group plc and a director of a number of other businesses. Bob was awarded an OBE in January 2016.
Bob has been Chairman of Totally since September 2015.
Wendy Jayne Lawrence, Chief Executive Officer, aged 57
Wendy Lawrence has worked with the NHS for just under 20 years, with the last 13 years being director level posts. She has a wealth of experience having previously worked for BUPA Health Dialog, leading the Client Delivery Team on a range of projects, from complex Framework for External Support for Commissioners deliveries through to individual Primary Care Trust specific contracts across the UK. Previously, Wendy ran her own company, working closely with numerous NHS and social care organisations across England, Wales and Scotland supporting delivery of many complex change agendas.
During Wendy's NHS career she was Chief Executive of three large Primary Care Trusts with a combined budget of £460 million. Wendy led a number of projects on behalf of the Strategic Health Authority including the establishment of new commissioning models for ambulance services and NHS Direct, as well as contributions to national projects including Reforms of Urgent Care Provision and Taking Healthcare to the Patient.
Wendy has been Chief Executive Officer of Totally since May 2013.
Lisa Barter, Group Finance Director, aged 47
Lisa Barter has been a chartered accountant for over 20 years and has extensive finance experience having spent the last 13 years working in finance in the independent healthcare sector. Prior to joining Totally in August 2017, Lisa was the Head of Divisional Finance for the Health Care division of Care UK and was employed by Care UK for over 10 years in a senior finance capacity. Care UK is England's largest independent provider of NHS services and has a diverse portfolio of healthcare services which include elective surgery treatment centres, provision of healthcare in UK prisons, UCCs as well as OoH and NHS 111 services. Lisa also played a key role as Financial Controller at Mercury Health Ltd during which time she established a team and implemented finance processes and systems prior to the company's acquisition by Care UK in 2007. The healthcare division continued to grow to become a £380 million revenue business. Lisa started her finance career at Ernst & Young in 1990 where she qualified as a chartered accountant and she has also held roles as finance manager in both Hewlett Packard and Oracle.
Lisa joined the board as Group Finance Director on 24 October 2017.
Gloria Cooke, Clinical Quality Director, aged 65
Gloria has had a forty-year career within the NHS, initially in both adult and children's nursing, practising for ten years in A&E but ultimately as Head of Nursing for a large integrated service. Her NHS management career covered a wide range of services rising to Group Operations Director for one of the largest acute trusts in the UK managing three district general hospitals. In five years of independent practice Gloria fulfilled roles as COO, director of transformation and as professional consultant undertaking service reviews. Gloria is also a non-executive director of companies operating within the retail sector where she is able to offer her considerable experience of managing change effectively and efficiently.
Gloria joined the board as Clinical Quality Director on 4 December 2017.
Anthony (Tony) Rhys Bourne, Non-Executive Director, aged 65
Tony Bourne is currently a non-executive director of Barchester, one of the UK's largest operators of residential care homes and Spire Healthcare Group plc, one of the largest private healthcare groups in the UK, a London Stock Exchange-listed company and a constituent of the FTSE 250 Index. Tony is also Chairman of CW+ (formerly Chelsea and Westminster Health Charity). He was previously Chief Executive of the British Medical Association from the beginning of 2005 until late 2013.
Tony was in investment banking for over 25 years including as a partner at Hawkpoint and as global head of the equities division and a member of the managing board of Paribas. Tony has also previously served as a non-executive director of Southern Housing Group from 2004 to 2013 and Scope, which focuses on cerebral palsy and is one of the UK's largest charities.
Tony has been a non-executive director of Totally since October 2015.
Michael Greig Rogers, Non-Executive Director, aged 77
Michael Rogers has over 30 years' experience in healthcare-services and care-services provision. From April 2007 to June 2017 he was a non-executive director of Mears Group PLC, the provider of support services to the social housing and care sectors in the UK, which is listed on the main market of the London Stock Exchange. Michael was formerly a health and social care adviser to Morgan Stanley Private Equity and a member of the investment advisory board of private equity provider Bestport Ventures LLP.
In 1976, Michael was appointed as managing director of the British Nursing Association. In 1988, he became the chief executive of Nestor-BNA plc when the group floated on the main market of the London Stock Exchange. Michael remained here until 1996, prior to founding Careforce Group plc in 1999 which floated on AIM in 2004. Careforce Group plc completed a number of acquisitions to become one of the UK's leading domiciliary care providers, prior to its acquisition by Mears in 2007, following which Michael joined the Mears board.
Mike has been a non-executive director of Totally since December 2015.
Proposed Director
With effect from Admission, Michael Steel, the Chief Executive Officer of Greenbrook Healthcare, will join the Board as Executive Director.
Michael Steel, Chief Executive Officer of Greenbrook Healthcare and Proposed Executive Director, aged 49
Michael co-founded Greenbrook Healthcare in 2007 and has led the growth and development of the company from concept through to a £33 million turnover business (FY18) that is a market leading provider of UCCs. He is responsible for the overall quality, safety and performance of Greenbrook Healthcare's services, working with commissioners and partners. Michael also leads on new business development.
Prior to Greenbrook Healthcare, Michael spent 14 years in strategy consulting as a partner for Roland Berger Strategy Consultants and as a project manager for Booz Allen and Hamilton where he focused on growth strategy. He also founded and built his own 30 person consulting firm which was successfully sold to Roland Berger.
Michael has an MBA from INSEAD business school and a master's degree in Economics from Oxford University.
Michael is a member of Greenbrook Capital.
From Admission Michael will take on the role of Executive Director for the Enlarged Group responsible for supporting Wendy Lawrence (CEO of the Enlarged Group) in operational delivery of the Enlarged Group's out-of-hospital activities.
Senior management
Emma-Jayne Perez-Chies - Director of Human Resources and Organisational Development
Emma-Jayne joined Totally in 2018. She leads the Group's teams in HR, recruitment and organisational development, providing services to all of Totally's businesses via central services and regionally based staff. Emma-Jayne previously worked at Nottingham University Hospitals NHS Trust where she initially held the role of Directorate HR Manager (Equality, Diversity and Performance Management Trust HR lead) and latterly Head of HR and Organisational Development.
Stephen Riley - Director of Business Development
Stephen joined Totally in 2017. Working with Totally's Corporate Centre, Stephen leads a team of business development specialists who support Totally's businesses. Stephen was previously Project Director for EHS and prior to that, Head of Primary Care Recruitment Division for BBL Medical (part of BBL Group).
Andrew Gregory - Managing Director of Vocare
Andy was appointed as Managing Director of Vocare in December 2017 and brings a wealth of executive and strategic experience in the out-of-hospital healthcare sector having had a career in the NHS spanning 26 years. In his most recent role prior to joining Vocare he was Chief Executive of NHS Hardwick CCG in Derbyshire where he specialised in leading large scale, complex business development programmes. Prior to this Andy held a number of senior positions at NHS Primary Care Trusts and Strategic Health Authorities. In his role at NHS Hardwick CCG, Andy successfully introduced proposals to develop and integrate out-of-hospital services across the county, which led to a reduction in reliance on hospital beds and activity in secondary care settings.
Dr Jim Heptinstall - Medical Director of Vocare
Jim trained as a doctor in the North East of England and joined Northern Doctors Urgent Care in 2011 as a GP. Prior to becoming Vocare's National Medical Director in March 2018, Jim was responsible for delivering several of Vocare's urgent healthcare services including the GP National Triage Service (VNTS), Remote Nurse Clinical Advisors (VRCA) and the East Leicestershire and Rutland Urgent Care Centres. Jim continues to work clinically as a GP and works regularly within Vocare's Urgent Care services.
Following completion of the Acquisition, the Enlarged Group's senior management team will also include the following individuals who are both members of Greenbrook Capital:
Dan Annetts, Chief Operating Officer of Greenbrook Healthcare
Dan co-founded Greenbrook Healthcare in 2007. Since then, he has focussed on leading both service mobilisation and building a robust central organisational infrastructure. Today, Dan is responsible for new service mobilisation, IT, information governance, legal, HR and central operations more generally.
Previously Dan was at Virgin Media where he worked on the acquisition of Virgin Mobile and the operational integration and rebranding of ntl:Telewest to Virgin. Dan also spent seven years in business strategy consulting. He was a founder member of Credo Consulting, was a Project Manager at Roland Berger Strategy Consultants and an Associate at The COBA Group.
Dan has an MBA from INSEAD business school and a degree in Philosophy, Politics & Economics from Oxford University.
From Admission, Dan will assume the role of Commercial Director for the Enlarged Group in a non-board capacity.
Dr Sally Johnson, Medical Director of Greenbrook Healthcare
Sally is a GP and experienced medical leader who joined Greenbrook Healthcare in 2009. Since then she has provided clinical leadership for the bidding, mobilisation and ongoing delivery of Greenbrook Healthcare's services across primary and urgent care services. Sally is responsible for the organisation's clinical governance; she has a focus on the development and delivery of safe, high quality, evidence-based and patient-centred care, delivered effectively and efficiently. Sally is the organisation's Caldicott Guardian and the director responsible for Safeguarding, CQC and complaints.
Sally has developed a clinical leadership structure throughout the organisation to allow effective oversight and development of approximately 400 clinicians.
Prior to Greenbrook Healthcare, Sally worked in a number of GP and paediatric roles with an interest in medical education and training.
Sally completed her medical training in Cardiff in 1993 and has a number of postgraduate qualifications (MRCPPaeds, MRCGP, DRCOG, DipFFP, Dip Med Ed). Sally has also completed the King's Fund's Medical Directors course.
From Admission, Sally will assume the role of Medical Director for Totally in a non-board capacity covering out-of-hospital healthcare for planned and unplanned care.
The Directors believe that this team is sufficiently experienced and resourced to support the implementation of the Enlarged Group's strategy.
PRINCIPAL TERMS OF THE ACQUISITION
The Acquisition Agreement
The Company has conditionally agreed to acquire the entire issued share capital of Greenbrook Hounslow and the Greenbrook Earl's Court Convertible Loan Note from the Vendors for a total consideration of £11.5 million on a cash free and debt free basis, with a normalised level of working capital.
Following Completion, the shares in Greenbrook Earl's Court will be held by Dr Sally Johnson for technical reasons in order to ensure that certain employees of Greenbrook Earl's Court can continue to benefit from access to the NHS Pension Scheme.
The terms of the consideration payable under the Acquisition Agreement are as follows:
· £9.0 million to be settled in cash at Completion; and
· £2.5 million to be satisfied by the issue of the Consideration Shares on Completion.
On the assumption that the Open Offer is fully subscribed, the Consideration Shares will represent approximately 13.5 per cent. of the Enlarged Share Capital on Admission.
The Acquisition Agreement contains warranties and other protections given by the Vendors, as well as certain indemnities given by Greenbrook Capital. Greenbrook Capital is one of the Vendors holding a controlling shareholding in Greenbrook Hounslow and the Greenbrook Earl's Court Convertible Loan Note.
The liability of Greenbrook Capital under the Acquisition Agreement for breach of warranty has been limited to £115,000. In order to provide the Company with appropriate financial protection for breach of warranty, warranty and indemnity insurance has been obtained by the Company for up to £11.5 million but subject to an excess of £115,000 for all claims. The liability of Greenbrook Capital in respect of the indemnities has been limited to £440,000.
Totally has given certain warranties in favour of Greenbrook Capital relating to, amongst other things, the audited consolidated accounts of Totally for the financial year ended 31 March 2018. Totally's liability for all claims under these warranties is limited to £1.5 million.
The Acquisition Agreement is conditional upon, amongst other things: (i) the Resolutions being passed; (ii) the Placing and Open Offer Agreement becoming unconditional (save for any condition relating to the Acquisition Agreement or Admission); and (iii) Admission.
THE PLACING AND OPEN OFFER
Details of the Placing
The Company is proposing to raise £9.0 million (approximately £7.7 million net of expenses) by the conditional placing of 9,000,000 Placing Shares pursuant to the Placing at the Issue Price. On the assumption that the Open Offer is fully subscribed, the Placing Shares will represent approximately 48.7 per cent. of the Enlarged Share Capital on Admission.
The Placing Shares will, on Admission, rank pari passu in all respects with the Existing Ordinary Shares including the right to receive dividends and other distributions declared, made or paid in respect of the Ordinary Shares.
The Placing, which is not underwritten or guaranteed, is conditional, inter alia, upon the passing of the Resolutions and Admission.
Details of the Open Offer
The Company is proposing to raise up to approximately £1.0 million (before expenses) through the Open Offer. A total of 9,965,862 new Ordinary Shares are available to Qualifying Shareholders pursuant to the Open Offer at the Issue Price, payable in full on acceptance.
Any Offer Shares not subscribed for by Qualifying Shareholders will be available to Qualifying Shareholders under the Excess Application Facility. The balance of any Offer Shares not subscribed for under the Excess Application Facility will not be available to Placees under the Placing who were not already Qualifying Shareholders at the Record Date.
Qualifying Shareholders may apply for new Ordinary Shares under the Open Offer at the Issue Price on the following basis:
One new Ordinary Share for every 6 Existing Ordinary Shares
and so in proportion for any number of Existing Ordinary Shares held on the Record Date.
On the assumption that the Open Offer is fully subscribed, following the issue of the New Ordinary Shares, the Offer Shares will represent approximately 5.4 per cent. of the Enlarged Share Capital on Admission. Qualifying Shareholders who do not take up any of their Open Offer Entitlements will suffer a dilution of 67.64 per cent. to their interests in the Company.
Entitlements of Qualifying Shareholders will be rounded down to the nearest whole number of Ordinary Shares. Fractional entitlements which would otherwise arise will not be issued to the Qualifying Shareholders but will be made available under the Excess Application Facility. The Excess Application Facility enables Qualifying Shareholders to apply for Excess Shares in excess of their Open Offer Entitlement. Not all Shareholders will be Qualifying Shareholders. Shareholders who are located in, or are citizens of, or have a registered overseas address in Restricted Jurisdictions will not qualify to participate in the Open Offer. The attention of Overseas Shareholders is drawn to paragraph 6 of Part VII of the Document.
Valid applications by Qualifying Non-CREST Shareholders will be satisfied in full up to their Open Offer Entitlements as shown on the Application Form. Applicants can apply for less or more than their entitlements under the Open Offer but the Company cannot guarantee that any application for Excess Shares under the Excess Application Facility will be satisfied as this will depend in part on the extent to which other Qualifying Shareholders apply for less than or more than their own Open Offer Entitlements. The Company may satisfy valid applications for Excess Shares in whole or in part but reserves the right not to satisfy, or to scale back, applications made in excess of Open Offer Entitlements.
Application has been made for the Open Offer Entitlements to be admitted to CREST. It is expected that such Open Offer Entitlements will be credited to CREST as soon as practical after 8.00 a.m. on 3 June 2019. The Open Offer Entitlements will be enabled for settlement in CREST until 9.00 a.m. on 17 June 2019. Applications through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.
The Offer Shares must be paid in full on application. The latest time and date for receipt of completed Application Forms or CREST applications and payment in respect of the Open Offer is 9.00 a.m. on 17 June 2019.
Qualifying Shareholders should note that the Open Offer is not a rights issue and therefore the Offer Shares which are not applied for by Qualifying Shareholders will not be sold in the market for the benefit of the Qualifying Shareholders who do not apply under the Open Offer. The Application Form is not a document of title and cannot be traded or otherwise transferred.
Further details of the Open Offer and the terms and conditions on which it is being made, including the procedure for application and payment, are contained in Part VII of the Document and on the accompanying Application Form.
The Open Offer is conditional on the Placing becoming or being declared unconditional in all respects and not being terminated before Admission. The principal conditions to the Open Offer are:
(i) the passing of all of the Resolutions at the General Meeting;
(ii) the Placing and Open Offer Agreement having become unconditional and not having been terminated in accordance with its terms prior to Admission; and
(iii) Admission becoming effective by no later than 8.00 a.m. on 20 June 2019 or such later time and/or date (being no later than 8.00 a.m. on 5 July 2019) as Allenby Capital, Canaccord and the Company may agree.
Accordingly, if these conditions are not satisfied or waived (where capable of waiver), the Open Offer will not proceed, the Offer Shares will not be issued and all monies received by Share Registrars Limited will be returned to the applicants (at the applicants' risk and without interest) as soon as possible thereafter. Any Open Offer Entitlements admitted to CREST will thereafter be disabled.
The Offer Shares (and the Placing Shares) will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.
The Existing Ordinary Shares are admitted to trading on AIM. Application will be made to the London Stock Exchange for the Admission of the Offer Shares to trading on AIM. On the assumption that, inter alia, the Resolutions are passed, it is expected that Admission will occur and that dealings will commence at 8.00 a.m. on 20 June 2019 at which time it is also expected that the Offer Shares will be enabled for settlement in CREST.
The Open Offer is not underwritten.
Directors' proposed participation in the Open Offer
The following Directors have indicated their intention to subscribe for their Open Offer Entitlements. The other Directors do not currently intend to take up their entitlement to subscribe for New Ordinary Shares under the Open Offer.
In addition, Lisa Barter, the Group's Finance Director, intends to apply for an additional 100,000 Offer Shares under the Excess Application Facility.
Director
Number of Ordinary Shares held
as at the date of the Admission Document
Number of Ordinary Shares held as a percentage of the Existing Ordinary Shares
Number of Ordinary Shares intended to be applied for under the Open Offer
Number of Ordinary Shares to be held following the Placing and Open Offer*
Percentage of the Enlarged Share Capital**
Bob Holt, Chairman
1,018,447
1.70
169,741
1,188,188
0.64
Wendy Lawrence, Chief Executive Officer
60,666
0.10
10,111
70,777
0.04
Lisa Barter, Finance Director
5,000
0.01
100,833
105,833
0.06
*assuming full take up by Bob Holt, Wendy Lawrence and Lisa Barter of their entitlements under the Open Offer and Lisa Barter receiving an additional 100,000 Offer Shares under the Excess Application Facility.
** following the Placing and assuming the Open Offer is fully subscribed
USE OF PROCEEDS
The net proceeds of the Placing and Open Offer, assuming the Open Offer is fully subscribed, are expected to be approximately £8.7 million and are currently intended to be applied to satisfy the cash consideration payable on Admission pursuant to the Acquisition. The balance of the cash consideration payable pursuant to the Acquisition will be satisfied from the Company's existing cash resources.
LOCK-IN AGREEMENTS
Greenbrook Capital has entered into two lock-in agreements with the Company, Allenby Capital and Canaccord Gennuity.
In the first agreement, Greenbrook Capital has undertaken that, subject to certain limited exceptions, it will not dispose of any interest it holds in 16,908,553 of the Consideration Shares until after the publication of the Enlarged Group's audited accounts for the year ended 31 March 2020 (to be published by no later than 30 September 2020) and for a further period of 12 months thereafter it shall be bound by orderly market restrictions in respect of those Consideration Shares.
In the second agreement, Greenbrook Capital has undertaken that, subject to certain limited exceptions, it will not dispose of any interest it holds in 8,091,447 of the Consideration Shares until after the publication of the Enlarged Group's unaudited interim results for the financial period ending 30 September 2019 (to be published by no later than 31 December 2019) and for a further period of 12 months thereafter it shall be bound by orderly market restrictions in respect of those Consideration Shares.
Greenbrook Capital is permitted to distribute the Consideration Shares to its registered members on the condition that such members adhere to the same lock-in terms. It is the intention that shortly following Completion, Greenbrook Capital will distribute the Consideration Shares to its members. Michael Steel, Dan Annetts and Dr Sally Johnson shall receive Consideration Shares in the distribution from the first agreement and the remaining members of Greenbrook Capital shall receive Consideration Shares in the distribution from the second agreement.
SHARE OPTIONS
The Directors recognise the importance of ensuring that employees of the Enlarged Group are effectively and appropriately incentivised and their interests aligned with the Company. Similarly, the Directors believe that the ongoing success of Totally depends to a high degree on retaining and incentivising the performance of key members of the senior management and Directors. To that end the Company has established a number of schemes which allow for the grant of share options and align the interests of senior management and the broader employee workforce with those of the Shareholders. As at the date of the Document the Company has in place an enterprise management incentive scheme in the form of the EMI Scheme, a long term incentive plan in the form of the SAYE Scheme, a company share option plan in the form of the CSOP and an unapproved share option plan in the form of the Unapproved Plan.
In addition, as part of the Acquisition, a new long term incentive plan is being put in place with effect from Admission to incentivise and retain the key senior executives in the Enlarged Group including key members of the senior management team of Greenbrook Healthcare. Conditional on Admission, awards under the LTIP totalling 10,500,000 options to acquire Ordinary Shares are to be made at nil cost to certain executive Directors and members of the senior management team of the Enlarged Group. These awards are dependent on share price growth hurdles and have a three year vesting period. An employee benefit trust will be established by the Company to subscribe for the new Ordinary Shares in the Company necessary to satisfy the awards.
Under the LTIP, the Board has, conditional on Admission, conditionally awarded 3,000,000 new Ordinary Shares to Wendy Lawrence (Chief Executive Officer), 1,500,000 new Ordinary Shares to Lisa Barter (Finance Director) and 1,500,000 new Ordinary Shares to Gloria Cooke (Clinical Quality Director). In addition, a total of 4,500,000 new Ordinary Shares have been conditionally awarded equally to certain key members of the Greenbrook Healthcare senior management team, being Michael Steel (Chief Executive Officer of Greenbrook Healthcare and Proposed Director of the Enlarged Group), Dan Annetts (Chief Operating Officer of Greenbrook Healthcare) and Dr Sally Johnson (Medical Director of Greenbrook Healthcare). Assuming satisfaction of the conditions in full, the awards will vest on 20 June 2022. If vested in full the Ordinary Shares resulting from the proposed LTIP awards would constitute 5.7 per cent. of the Enlarged Share Capital.
As at the date of the Document there are approved and unapproved options outstanding over, in aggregate, 1,772,684 Ordinary Shares under the EMI Scheme, the SAYE Scheme, the CSOP and the Unapproved Plan, representing 1.0 per cent. of the Enlarged Share Capital. Of these outstanding options, approved and unapproved options over a total of 650,000 Ordinary Shares have been granted to certain Directors, representing 0.4 per cent. of the Enlarged Share Capital.
GENERAL MEETING
A notice convening a general meeting of the Company, to be held at 9.00 a.m. on 19 June 2019 at the offices of the Company, Cardinal Square, First Floor - West, 10 Nottingham Road, Derby, DE1 3QT, is set out at the end of the Document. At the General Meeting, the following resolutions will be proposed:
a) to approve the Acquisition, as required by Rule 14 of the AIM Rules;
b) to authorise the Directors to: (i) allot Ordinary Shares in connection with the Placing and Open Offer; (ii) allot the Consideration Shares; (iii) allot Ordinary Shares in relation to a pre-emptive rights issue only up to a maximum nominal value of £12,317,402.26 (representing approximately 66.7 per cent. of the Enlarged Share Capital); and (iv) allot Ordinary Shares up to a maximum nominal value of £6,158,701.13 (representing approximately 33.3 per cent. of the Enlarged Share Capital) in any other case, in each case in accordance with section 551 of the Act; and
c) to authorise the Directors to allot Ordinary Shares for cash otherwise than on a pro rata basis to shareholders: (i) in connection with the Placing and Open Offer; (ii) in connection with the Acquisition; (iii) in relation to pre-emptive offers and offers to holders of other equity securities if required by the rights of those securities or as the Directors otherwise consider necessary; and (iii) otherwise up to a maximum nominal value of £1,847,610.34 (representing approximately 10 per cent. of the Enlarged Share Capital).
The resolutions referred to in (a) and (b) above will be proposed as ordinary resolutions and the resolution referred to in (c) above will be proposed as a special resolution.
The authority granted by the resolutions referred to in (b) and (c) above will expire on the date 15 months after the passing of the resolutions or, if earlier, at the conclusion of the Company's next annual general meeting.
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.
The Directors recommend that Shareholders vote in favour of the Resolutions, as the Directors intend to do, so that the Placing, the Open Offer, the Acquisition and Admission can proceed.
Director Appointment
With effect from Admission, Michael Steel, the Chief Executive Officer of Greenbrook Healthcare, will join the board as Executive Director.
Upon Admission, Mr Steel will have an interest in 4.16 per cent. of Totally's Enlarged Share Capital (on assumption the Open Offer is taken up in full). This interest comprises his entitlement to 7,676,851 Consideration Shares as a registered member of Greenbrook Capital.
Michael Robert Steel, aged 49, is or has been a director of the following companies or partnerships in the past five years:
Current directorships/partnerships
Past directorships/partnerships
(within the past 5 years)
Edison Trust Limited
Experts In Healthcare Products Limited
Coleraine Residents Company Limited
Greenbrook Healthcare (Harrow) Limited
Greenbrook Healthcare (Earl's Court) Limited
Greenbrook Healthcare (Surrey) Limited
Greenbrook Healthcare Limited
Greenbrook Healthcare (Hounslow) Limited
Greenbrook Capital LLP
Appendix
Terms and Conditions of the Placing
IMPORTANT INFORMATION FOR PLACEES ONLY
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT AND REFERRED TO HEREIN ARE DIRECTED ONLY AT PERSONS SELECTED BY CANACCORD GENUITY LIMITED ("CANACCORD GENUITY") AND/OR ALLENBY CAPITAL LIMITED ("ALLENBY CAPITAL") (CANACCORD GENUITY AND ALLENBY CAPITAL EACH BEING A "PLACING AGENT" AND TOGETHER BEING THE "PLACING AGENTS") WHO ARE "INVESTMENT PROFESSIONALS" FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "FPO") OR "HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS ETC" FALLING WITHIN ARTICLE 49(2) OF THE FPO OR TO PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS.
THE ORDINARY SHARES THAT ARE THE SUBJECT OF THE PLACING (THE "PLACING SHARES") ARE NOT BEING OFFERED OR SOLD TO ANY PERSON IN THE EUROPEAN UNION, OTHER THAN TO "QUALIFIED INVESTORS" AS DEFINED IN ARTICLE 2(1)(E) OF DIRECTIVE 2003/71/EC (THE "PROSPECTUS DIRECTIVE"), WHICH INCLUDES LEGAL ENTITIES WHICH ARE REGULATED BY THE FINANCIAL CONDUCT AUTHORITY (THE "FCA") OR ENTITIES WHICH ARE NOT SO REGULATED WHOSE CORPORATE PURPOSE IS SOLELY TO INVEST IN SECURITIES.
The Placing Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or under the securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold or delivered, directly or indirectly, in or into the United States absent registration except pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act. No public offering of the Placing Shares is being made in the United States. The Placing (as defined below) is being made outside the United States in offshore transactions (as defined in Regulation S under the Securities Act ("Regulation S")) meeting the requirements of Regulation S under the Securities Act and may be made within the United States to institutional investors who are qualified institutional buyers within the meaning of Rule 144A under the Securities Act ("QIBs"), and also QPs (as defined below) in transactions that are exempt from, or not subject to, the registration requirements under the Securities Act. Persons receiving this announcement (including custodians, nominees and trustees) must not forward, distribute, mail or otherwise transmit it in or into the United States or use the United States mails, directly or indirectly, in connection with the Placing.
This announcement does not constitute an offer to sell or issue or a solicitation of an offer to buy or subscribe for Placing Shares in any jurisdiction including, without limitation, the United States, Canada, Australia, Japan, the Republic of South Africa, Ireland or any other jurisdiction in which such offer or solicitation is or may be unlawful (a "Prohibited Jurisdiction"). This announcement and the information contained herein are not for publication or distribution, directly or indirectly, to persons in a Prohibited Jurisdiction unless permitted pursuant to an exemption under the relevant local law or regulation in any such jurisdiction.
The distribution of this announcement, the Placing and/or issue of the Placing Shares in certain jurisdictions may be restricted by law and/or regulation. No action has been taken by Totally plc (the "Company"), Canaccord Genuity, Allenby Capital or any of their respective Affiliates (as defined below) that would permit an offer of the Placing Shares or possession or distribution of this announcement or any other publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons receiving this announcement are required to inform themselves about and to observe any such restrictions.
Canaccord Genuity Limited and Allenby Capital Limited which are both authorised and regulated in the United Kingdom by the Financial Conduct Authority, are acting for Totally plc and for no one else in connection with the Placing and will not be responsible to anyone other than Totally plc for providing the protections afforded to clients of Canaccord Genuity Limited or Allenby Capital Limited or for affording advice in relation to the Placing, or any other matters referred to herein.
By participating in the Placing, each person who is invited to and who chooses to participate in the Placing (a "Placee") by making an oral offer to take up Placing Shares is deemed to have read and understood this announcement in its entirety and to be providing the representations, warranties, undertakings, agreements and acknowledgements contained herein.
Details of the Placing Agreement and the Placing Shares
The Company has entered into a placing and open offer agreement (the "Placing Agreement") with the Placing Agents, under which each of the Placing Agents have subject to the terms set out therein, agreed to use their respective reasonable endeavours, as agents of the Company, to procure Placees for the Placing Shares (the "Placing"). The Placing is not being underwritten by the Placing Agents or any other person.
The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with each other.
The Placing Shares will be issued free of any encumbrance, lien or other security interest.
Application for admission to trading
Application will be made to the London Stock Exchange plc (the "London Stock Exchange") for admission to trading of the Placing Shares on the AIM market of the London Stock Exchange ("Admission"). It is expected that Admission will become effective and that dealings will commence on 20 June 2019, and in any event no later than 5 July 2019.
Bookbuild
Commencing today, the Placing Agents will be conducting an accelerated bookbuilding process (the "Bookbuilding Process") to determine demand for participation in the Placing by Placees. This announcement gives details of the terms and conditions of, and the mechanics of participation in, the Placing.
Participation in, and principal terms of, the Bookbuilding Process
Each of the Placing Agents and their respective Affiliates are entitled to participate as a Placee in the Bookbuilding Process.
The price per Placing Share will be 10 pence (the "Placing Price") and shall be payable to the Placing Agents by all Placees.
The Bookbuilding Process is expected to close not later than 4.30 p.m. London time on 31 May 2019, but may be closed earlier at the sole discretion of the Placing Agents. A further announcement will be made following the close of the Bookbuilding Process confirming the results of the Placing and the Placing Price (the "Result of Placing Announcement"). The Placing Agents may, in their sole discretion, accept bids that are received after the Bookbuilding Process has closed.
A bid in the Bookbuilding Process will be made on the terms and conditions in this announcement and will not be capable of variation or revocation after the close of the Bookbuilding Process.
A Placee who wishes to participate in the Bookbuilding Process should communicate its bid by telephone to the usual sales contact at Canaccord Genuity or Allenby Capital. If successful, Canaccord Genuity and Allenby Capital will re-contact and confirm orally to Placees following the close of the Bookbuilding Process and the size of their respective allocations and a trade confirmation will be dispatched as soon as possible thereafter. A Placing Agent's oral confirmation of the size of allocations and each Placee's oral commitments to accept the same will constitute a legally binding agreement pursuant to which each such Placee will be required to accept the number of Placing Shares allocated to the Placee at the Placing Price set out in the Result of Placing Announcement and otherwise on the terms and subject to the conditions set out herein.
The Placing Agents reserve the right to scale back the number of Placing Shares to be subscribed by any Placee in the event of an oversubscription under the Placing. The Placing Agents also reserve the right not to accept offers to subscribe for Placing Shares or to accept such offers in part rather than in whole. The acceptance of offers shall be at the absolute discretion of the Placing Agents. The Placing Agents shall be entitled to effect the Placing by such alternative method to the Bookbuilding Process as they shall in their sole discretion determine. To the fullest extent permissible by law, neither Canaccord Genuity, nor Allenby Capital, nor any holding company thereof, nor any subsidiary, branch or affiliate of Canaccord Genuity, or of Allenby Capital, (each an "Affiliate") nor any person acting on their behalf shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither Canaccord Genuity, nor Allenby Capital, nor any Affiliate thereof nor any person acting on their behalf shall have any liability in respect of its conduct of the Bookbuilding Process or of such alternative method of effecting the Placing as it may determine.
Each Placee's obligations will be owed to the Company and to the Placing Agents. Following the oral confirmation referred to above, each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to the relevant Placing Agent, to pay to such Placing Agent (or as the Placing Agent may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to acquire. The Company shall allot such Placing Shares to each Placee following each Placee's payment to such Placing Agent of such amount.
All obligations of the Placing Agents under the Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing".
Conditions of the Placing
The Placing is conditional upon the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms.
The obligations of the Placing Agents under the Placing Agreement are conditional, inter alia, on admission occurring by no later than 8.00 a.m. on 20 June 2019 (or such later date as may be agreed between the Company and the Placing Agents, not being later than 5 July 2019) and on a general meeting of the Company having taken place on 19 June 2019 and the resolutions to be put to that general meeting, to enable the Placing to proceed, having been passed thereat without amendment.
If (a) the conditions are not fulfilled (or to the extent permitted under the Placing Agreement waived by the Placing Agents), or (b) the Placing Agreement is terminated in the circumstances specified below, the Placing will lapse and each Placee's rights and obligations hereunder shall cease and determine at such time and no claim may be made by a Placee in respect thereof. The Placing Agents shall not have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision it may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition in the Placing Agreement or in respect of the Placing generally.
By participating in the Placing, each Placee agrees that its rights and obligations hereunder terminate only in the circumstances described below under "Right to terminate under the Placing Agreement" below, and will not be capable of rescission or termination by the Placee.
Right to terminate under the Placing Agreement
The Placing Agents may, at any time before Admission, terminate the Placing Agreement by giving notice to the Company if, inter alia:
a) the warranties in the Placing Agreement are not true and accurate or have become misleading (or would not be true and accurate or would be misleading if they were repeated at any time before Admission) by reference to the facts subsisting at the time when the notice referred to above is given; or
b) the Company fails to comply with any of its obligations under the Placing Agreement; or
c) in the opinion of the Placing Agents, acting in good faith, there has occurred an adverse change in the financial position or prospects of the Company which is material in the context of the Company and its subsidiaries taken as a whole; or
d) there has been a change in national or international financial, political, economic or market conditions; an incident of terrorism, outbreak or escalation of hostilities, war, or any other calamity or crisis; a suspension in trading of securities generally on the London Stock Exchange or the New York Stock Exchange or trading is limited on any such stock exchange; any change in exchange rates or exchange controls or a material disruption to securities settlement systems or a material disruption in commercial banking which, in the opinion of the Placing Agents, acting in good faith, would be likely to prejudice materially the Placing.
By participating in the Placing, each Placee agrees with the Placing Agents that the exercise by the Placing Agents of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of the Placing Agents and that the Placing Agents need not make any reference to the Placee in this regard and that, to the fullest extent permitted by law, the Placing Agents shall not have any liability whatsoever to the Placee in connection with any such exercise.
No prospectus
No offering announcement or prospectus has been or will be prepared in relation to the Placing and Placees' commitments will be made solely on the basis of the information contained in this announcement and any information previously published by or on behalf of the Company by notification to a Regulatory Information Service (as defined in the AIM Rules for Companies of the London Stock Exchange). Each Placee, by accepting a participation in the Placing, agrees that the content of this announcement is exclusively the responsibility of the Company and confirms to the Placing Agents and the Company that it has neither received nor relied on any information, representation, warranty or statement made by or on behalf of the Placing Agents (other than the amount of the relevant Placing participation in the oral confirmation given to Placees and the trade confirmation referred to below), any of its Affiliates, any persons acting on its behalf or the Company and neither the Placing Agents nor any of their Affiliates, nor any persons acting on their behalf, nor the Company will be liable for the decision of any Placee to participate in the Placing based on any other information, representation, warranty or statement which the Placee may have obtained or received (regardless of whether or not such information, representation, warranty or statement was given or made by or on behalf of any such persons). By participating in the Placing, each Placee acknowledges to and agrees with each of the Placing Agents for itself and as agent for the Company that, except in relation to the information contained in this announcement, it has relied on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.
Registration and settlement
Settlement of transactions in the Placing Shares (ISIN GB00BYM1JJ00) following Admission will take place within the CREST system, using the delivery versus payment ("DVP") mechanism, subject to certain exceptions. The Placing Agents reserve the right to require settlement for and delivery of the Placing Shares to Placees by such other means that it deems necessary, if delivery or settlement is not possible or practicable within the CREST system within the timetable set out in this announcement or would not be consistent with the regulatory requirements in the Placee's jurisdiction.
Each Placee allocated Placing Shares in the Placing will be sent a trade confirmation stating the number of Placing Shares allocated to it, the Placing Price, the aggregate amount owed by such Placee to the Placing Agents and settlement instructions. Placees should settle against the relevant CREST ID below:
Placing Agent CREST ID
Canaccord Genuity: 805
Allenby Capital: 842
It is expected that such trade confirmation will be despatched as soon as reasonably practicable after the closing of the Bookbuilding Process and it is anticipated that this will also be the trade date. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions which it has in place with the Placing Agents.
It is expected that settlement will be on or about 20 June 2019 in accordance with the instructions set out in the trade confirmation.
Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of 2 percentage points above the base rate of Barclays Bank Plc.
Each Placee is deemed to agree that if it does not comply with these obligations, the Placing Agents may sell any or all of the Placing Shares allocated to the Placee on such Placee's behalf and retain from the proceeds, for its own account and profit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The Placee will, however, remain liable for any shortfall below the aggregate amount owed by such Placee and it may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf.
If Placing Shares are to be delivered to a custodian or settlement agent, the Placee should ensure that the trade confirmation is copied and delivered immediately to the relevant person within that organisation.
Insofar as Placing Shares are registered in the Placee's name or that of its nominee or in the name of any person for whom the Placee is contracting as agent or that of a nominee for such person, such Placing Shares will, subject as provided below, be so registered free from any liability to PTM levy, stamp duty or stamp duty reserve tax. If there are any circumstances in which any other stamp duty or stamp duty reserve tax is payable in respect of the issue of the Placing Shares, neither the Placing Agents nor the Company shall be responsible for the payment thereof. Placees will not be entitled to receive any fee or commission in connection with the Placing.
Representations and warranties etc
By participating in the Placing, each Placee (and any person acting on such Placee's behalf):
1. represents and warrants that it has read and understood this announcement in its entirety and acknowledges that its participation in the Placing will be governed by the terms of this announcement;
2. acknowledges that no prospectus or offering announcement has been prepared in connection with the placing of the Placing Shares;
3. agrees to indemnify on an after-tax basis and hold harmless each of the Company, the Placing Agents, their respective Affiliates and any person acting on its behalf from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this announcement and further agrees that the provisions of this announcement shall survive after completion of the Placing;
4. acknowledges that the new Placing Shares of the Company will be admitted to the AIM market of the London Stock Exchange, and the Company is therefore required to publish certain business and financial information in accordance with the rules and practices of the London Stock Exchange (collectively, the "Exchange Information") and that the Placee is able to obtain or access the Exchange Information without undue difficulty;
5. acknowledges that neither of the Placing Agents, nor any of their respective Affiliates nor any person acting on their behalf has provided, and will not provide it with any material or information regarding the Placing Shares or the Company; nor has it requested the Placing Agents, any of their respective Affiliates or any person acting on its behalf to provide it with any such material or information;
6. acknowledges that the content of this announcement is exclusively the responsibility of the Company and that neither the Placing Agents, nor any of their respective Affiliates nor any person acting on their behalf will be responsible for, or shall have any liability for, any information, representation or statement relating to the Company contained in this announcement or any information previously published by or on behalf of the Company and neither the Placing Agents, nor any of their respective Affiliates nor any person acting on its behalf will be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this announcement or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing to subscribe for the Placing Shares is contained in this announcement and any Exchange Information, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares, and that it has relied on its own investigation with respect to the Placing Shares and the Company in connection with its decision to subscribe for the Placing Shares and acknowledges that it is not relying on any investigation that the Placing Agents, any of their respective Affiliates or any person acting on their behalf may have conducted with respect to the Placing Shares or the Company and none of such persons has made any representations to it, express or implied, with respect thereto;
7. acknowledges that it has not relied on any information relating to the Company contained in any research reports prepared by the Placing Agents, any of their respective Affiliates or any person acting on their behalf and understands that (i) none of the Placing Agents, nor any of their respective Affiliates nor any person acting on their behalf has or shall have any liability for public information or any representation; (ii) none of the Placing Agents, nor any of their respective Affiliates nor any person acting on their behalf has or shall have any liability for any additional information that has otherwise been made available to such Placee, whether at the date of publication, the date of this announcement or otherwise; and (iii) none of the Placing Agents, nor any of their respective Affiliates nor any person acting on their behalf makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of such information, whether at the date of publication, the date of this announcement or otherwise;
8. represents and warrants that (i) it is entitled to acquire the Placing Shares under the laws and regulations of all relevant jurisdictions which apply to it; (ii) it has fully observed such laws and regulations and obtained all such governmental and other guarantees and other consents and authorities which may be required thereunder and complied with all necessary formalities; (iii) it has all necessary capacity to commit to participation in the Placing and to perform its obligations in relation thereto and will honour such obligations; (iv) it has paid any issue, transfer or other taxes due in connection with its participation in any territory; and (v) it has not taken any action which will or may result in the Company, the Placing Agents, any of their respective Affiliates or any person acting on their behalf being in breach of the legal and/or regulatory requirements of any territory in connection with the Placing;
9. represents and warrants that the issue to the Placee, or the person specified by the Placee for registration as holder, of Placing Shares will not give rise to a liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services) and that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer Placing Shares into a clearance system;
10. represents and warrants that it understands that the Placing Shares have not been and will not be registered under the Securities Act or under the securities laws of any state or other jurisdiction of the United States (as defined below) and that the Company has not been registered as an "investment company" under the United States Investment Company Act of 1940, as amended;
11. represents and warrants that unless it is "US Person" (within the meaning of Regulation S) that is a "qualified institutional buyer" (as defined in Rule 144A of the Securities Act) in the United States to which the Placing Shares will be offered on a private placement basis, it is, or at the time the Placing Shares are acquired, it will be, (a) the beneficial owner of such Placing Shares and is neither a person located in the United States of America, its territories or possessions, any state of the United States or the District of Columbia (the "United States") nor on behalf of a person in the United States, (b) acquiring the Placing Shares in an offshore transaction (as defined in Regulation S under the Securities Act), and (c) will not offer or sell, directly or indirectly, any of the Placing Shares in the United States except in accordance with Regulation S or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act;
12. represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the United Kingdom prior to Admission except to "qualified investors" as defined in Article 2(1)(e) of the Prospectus Directive;
13. represents and warrants that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 ("FSMA")) relating to the Placing Shares in circumstances in which it is permitted to do so pursuant to section 21 of FSMA;
14. represents and warrants that it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving the United Kingdom;
15. represents and warrants that it has complied with its obligations in connection with money laundering and terrorist financing under the Criminal Justice Act 1993, the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Anti-terrorism Crime and Security Act 2001 and the Money Laundering Regulations (2017) (the "Regulations") and, if it is making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;
16. represents and warrants that it is (a) a person falling within Article 19(5) of the FPO or (b) a person falling within Article 49(2)(a) to (d) of the FPO and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business;
17. represents and warrants that it is a qualified investor as defined in section 86(7) of FSMA, being a person falling within Article 2(1)(e)(i), (ii) or (iii) of the Prospectus Directive;
18. undertakes that it (and any person acting on its behalf) will pay for the Placing Shares acquired by it in accordance with this announcement on the due time and date set out herein against delivery of such Placing Shares to it, failing which the relevant Placing Shares may be placed with other Placees or sold as the Placing Agents may, in their absolute discretion, determine and it will remain liable for any shortfall below the net proceeds of such sale and the placing proceeds of such Placing Shares and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties due pursuant to the terms set out or referred to in this announcement) which may arise upon the sale of such Placee's Placing Shares on its behalf;
19. acknowledges that none of the Placing Agents, nor any of their respective Affiliates nor any person acting on their behalf is making any recommendations to it or advising it regarding the suitability or merits of any transaction it may enter into in connection with the Placing, and acknowledges that the Placing Agents, nor any of their respective Affiliates nor any person acting on their behalf has any duties or responsibilities to it for providing advice in relation to the Placing or in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement or for the exercise or performance of any of the Placing Agents' rights and obligations thereunder, including any right to waive or vary any condition or exercise any termination right contained therein;
20. undertakes that (i) the person whom it specifies for registration as holder of the Placing Shares will be (a) the Placee or (b) the Placee's nominee, as the case may be, (ii) neither the Placing Agents nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement; and (iii) the Placee and any person acting on its behalf agrees to acquire the Placing Shares on the basis that the Placing Shares will be allotted to the CREST stock accounts of the Placing Agents which will hold them as settlement agent as nominee for the Placees until settlement in accordance with their standing settlement instructions with payment for the Placing Shares being made simultaneously upon receipt of the Placing Shares in the Placee's stock account on a DVP basis;
21. acknowledges that any agreements entered into by it pursuant to these terms and conditions shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the courts of England and Wales as regards any claim, dispute or matter arising out of any such contract;
22. acknowledges that it irrevocably appoints any director of either Canaccord Genuity or Allenby Capital as its agent for the purposes of executing and delivering to the Company and/or its registrars any announcements on its behalf necessary to enable it to be registered as the holder of any of the Placing Shares agreed to be taken up by it under the Placing;
23. represents and warrants that it is not a resident of any Prohibited Jurisdiction and acknowledges that the Placing Shares have not been and will not be registered nor will a prospectus be cleared in respect of the Placing Shares under the securities legislation of any Prohibited Jurisdictions and, subject to certain exceptions, may not be offered, sold, taken up, renounced, delivered or transferred, directly or indirectly, within any Prohibited Jurisdiction;
24. represents and warrants that any person who confirms to either of the Placing Agents on behalf of a Placee an agreement to subscribe for Placing Shares and/or who authorises such Placing Agent to notify the Placee's name to the Company's registrar, has authority to do so on behalf of the Placee;
25. acknowledges that the agreement to settle each Placee's acquisition of Placing Shares (and/or the acquisition of a person for whom it is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to an acquisition by it and/or such person direct from the Company of the Placing Shares in question. Such agreement assumes that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer the Placing Shares into a clearance service. If there were any such arrangements, or the settlement related to other dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor the Placing Agents will be responsible. If this is the case, the Placee should take its own advice and notify the Placing Agents accordingly;
26. acknowledges that the Placing Shares will be issued and/or transferred subject to the terms and conditions set out in this announcement;
27. acknowledges that when a Placee or any person acting on behalf of the Placee is dealing with the Placing Agents any money held in an account with the Placing Agents on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the relevant rules and regulations of the FCA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from the Placing Agents' money in accordance with the client money rules and will be used by the Placing Agents in the course of its business; and the Placee will rank only as a general creditor of the Placing Agents (as the case may be);
28. acknowledges and understands that the Company, the Placing Agents, and others will rely upon the truth and accuracy of the foregoing representations, warranties, agreements, undertakings and acknowledgements;
29. acknowledges that until 40 days after the later of the commencement of the Placing and the closing date, an offer or sale of Placing Shares within the United States by any dealer (whether or not participating in the Placing) may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A under the Securities Act or pursuant to another exemption from registration under the Securities Act to a person that is a "qualified purchaser" (as defined in Section 2(a)(51) of the United States Investment Company Act of 1940, as amended); and
30. acknowledges that the basis of allocation will be determined by the Placing Agents (after consulting with the Company) at their absolute discretion. The right is reserved to reject in whole or in part and/or scale back any participation in the Placing.
Additional representations and warranties etc by US Persons
In addition to the foregoing, each Placee which is a US Person to which the Placing Shares will be offered in transactions exempt from, or not subject to, the registration requirements of the Securities Act:
31. represents, warrants and agrees that (a) it is qualified institutional buyer within the meaning of Rule 144A of the Securities Act; (b) it is a "qualified purchaser" within the meaning of Section 2(a)(51) of the United States Investment Company Act of 1940, as amended ("QP"), and is not (i) a broker or dealer which owns or invests less than US$25 million in securities of unaffiliated issuers; (ii) a participant-directed employee plan or (iii) formed for the purposes of investing in the Placing Shares or the Company; (c) it has duly executed, or will duly execute, an investor letter in the form provided to it by the Placing Agents in which it will make certain undertakings, representations and warranties in addition to those contained herein; and (d) it is subscribing for the Placing Shares for its own account, or for the account managed on behalf of another QIB that is also a QP, and not with a view to any distribution within the meaning of the Securities Act or applicable state law except as set forth below;
32. acknowledges and agrees that no offering circular or prospectus will be provided in connection with the Placing Shares and it has, or to the extent it is acquiring Placing Shares for the account of another QIB, such other QIB (a) has, sufficient knowledge, sophistication and experience in financial and business matters so as to be capable of evaluating the merits and risks of the purchase of the Placing Shares; (b) is able to bear the economic and financial risk (including a complete loss) of such a purchase; (c) has had sufficient time to consider and conduct its own investigation with respect to the offer and purchase of the Placing Shares, including the tax, legal, currency and other economic considerations relevant to such investment; and (d) will not look to the Company, the Placing Agents, any of their respective Affiliates or any person acting on their behalf for all or part of any such loss or losses it or they may suffer;
33. understands and agrees that: (a) the Placing Shares are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act; (b) it will not offer, sell, transfer, pledge, hypothecate or otherwise dispose of any Placing Shares except in an offshore transaction outside the United States in accordance with Regulation S under the Securities Act (and not in a prearranged transaction resulting in the sale of Placing Shares into the United States or to a US Person) in accordance with any other applicable laws of the United States governing the offer and sale of such Placing Shares, and in each case it will notify any purchaser of the Placing Shares of the resale restrictions relating to the Placing Shares, if still applicable; (c) the Placing Shares (to the extent they are in certificated form), unless otherwise determined by the Company in accordance with applicable law, will bear a legend to that effect in addition to such other legends as the Company deems necessary or as are required under applicable law; and (d) the Company or registrar and transfer agent for the Placing Shares will not be required to accept for registration of transfer any Placing Shares except upon presentation of evidence (including an opinion of legal counsel satisfactory to the Company) to the Company and the transfer agent that the foregoing restrictions on transfer have been complied with;
34. understands and agrees that if any beneficial owner of ordinary shares in the Company is at any time a US person and not a QP, the Company may (i) require such beneficial owner to sell its ordinary shares to a person who is not a US person or who is a QIB and a QP and is qualified to purchase such shares in a transaction exempt from registration under the Securities Act or (ii) sell such shares on behalf of such beneficial owner at the best price reasonably obtainable to a person who is not a US person or who is a QIB and a QP and is qualified to purchase such shares in a transaction exempt from registration under the Securities Act;
35. without limiting the generality of clause (c) of paragraph 32 above, acknowledges that the Company may be a passive foreign investment company ("PFIC") for US federal income tax purposes, and it could be a PFIC in future years. The Company has not undertaken an extensive PFIC analysis, however, if such analysis reveals no significant differences between tax and book values for income and losses, then there is a significant likelihood that the Company is a PFIC currently and may be a PFIC in future years. If the Company is a PFIC, then US taxable investors may be subject to adverse US tax consequences in respect of their investment in the Company's shares. US investors may be able to mitigate these adverse US tax consequences by making certain elections for US tax purposes;
36. agrees that no purchaser of the Placing Shares shall deposit the Placing Shares into any unrestricted American Depositary Receipt facility established or maintained by a depositary bank, unless and until such time as such Placing Shares are no longer "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act; and
37. acknowledges and agrees that the Company, the Placing Agents, their respective Affiliates and any person acting on their behalf will rely upon its representations, warranties, undertakings, agreements and acknowledgments set forth herein and in the investor letter referred to above, and agrees to notify the Company and the Placing Agents promptly in writing if any of its representations, warranties, undertakings, agreements or acknowledgements cease to be accurate and complete.
The acknowledgements, agreements, undertakings, representations and warranties referred to above are given to each of the Company and the Placing Agents (for their own benefit and, where relevant, the benefit of their respective Affiliates and any person acting on their behalf) and are irrevocable.
No UK stamp duty or stamp duty reserve tax should be payable to the extent that the Placing Shares are issued or transferred (as the case may be) into CREST to, or to the nominee of, a Placee who holds those shares beneficially (and not as agent or nominee for any other person) within the CREST system and registered in the name of such Placee or such Placee's nominee.
Any arrangements to issue or transfer the Placing Shares into a depositary receipts system or a clearance service or to hold the Placing Shares as agent or nominee of a person to whom a depositary receipt may be issued or who will hold the Placing Shares in a clearance service, or any arrangements subsequently to transfer the Placing Shares, may give rise to stamp duty and/or stamp duty reserve tax, for which neither the Company nor the Placing Agents will be responsible and the Placee to whom (or on behalf of whom, or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such stamp duty or stamp duty reserve tax undertakes to pay such stamp duty or stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to hold harmless the Company and the Placing Agents in the event that any of the Company and/or either of the Placing Agents has incurred any such liability to stamp duty or stamp duty reserve tax.
In addition, Placees should note that they will be liable for any capital duty, stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to acquire any Placing Shares.
All times and dates in this announcement may be subject to amendment. The Placing Agents shall notify the Placees and any person acting on behalf of the Placees of any such changes.
This announcement has been issued by the Company and is the sole responsibility of the Company.
The rights and remedies of the Placing Agents and the Company under these terms and conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise or partial exercise of one will not prevent the exercise of others.
Each Placee may be asked to disclose in writing or orally to the Placing Agents:
(a) if he is an individual, his nationality; or
(b) if he is a discretionary fund manager, the jurisdiction in which the funds are managed or owned.
Information to Distributors
Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, investors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; Placing Shares offer no guaranteed income and no capital protection; and an investment in Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the Target Market Assessment, only investors who have met the criteria of professional clients and eligible counterparties have been procured. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to Placing Shares.
DEFINITIONS
Except where the context otherwise requires, the following definitions shall apply throughout this Announcement:
"About Health"
About Health Limited, a private limited company incorporated and registered in England and Wales with registered number 6607168 whose registered office address is Cardinal Square, First Floor - West, 10 Nottingham Road Derby DE1 3QT, a wholly owned subsidiary of the Company;
"Acquisition"
the proposed acquisition by the Company of the entire issued share capital of Greenbrook Hounslow and the Greenbrook Earl's Court Convertible Loan Note pursuant to the terms of the Acquisition Agreement;
"Acquisition Agreement"
the conditional agreement dated 31 May 2019 made between (i) the Company and (ii) the Vendors relating to the Acquisition;
"Act" or "Companies 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 following completion of the Acquisition, the Placing and the Open Offer and such admission becoming effective in accordance with the AIM Rules for Companies;
"Admission Document" or "Document"
the admission document;
"AGM"
annual general meeting;
"AIM"
AIM, a market operated by the London Stock Exchange;
"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 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 which 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 and joint broker, a private limited company incorporated and registered in England and Wales with registered number 06706681, whose registered office address is 5 St. Helen's Place, London EC3A 6AB, and which is authorised and regulated by the FCA;
"Application Form"
the application form enclosed with the Document on which Qualifying Non-CREST Shareholders may apply for Ordinary Shares under the Open Offer (including under the Excess Application Facility);
"Articles of Association" or "Articles"
the articles of association of the Company;
"Audit Committee"
the audit committee of the Company;
"Business Day"
any day (other than a Saturday or Sunday) on which commercial banks are open for general business in London, UK;
"Canaccord"
Canaccord Genuity Limited, the Company's joint broker, a private limited company incorporated and registered in England and Wales with registered number 01774003, whose registered office address is 88 Wood Street, London EC2V 7QR, and which is authorised and regulated by the FCA;
"certificated" or "in certificated form"
not in uncertificated form (that is, not in CREST);
"Completion"
completion of the Acquisition;
"Company" or "Totally"
Totally plc, incorporated and registered in England and Wales with registered number 03870101, whose registered office address is Cardinal Square, First Floor - West, 10 Nottingham Road, Derby, DE1 3QT;
"Consideration"
comprised of £9.0 million payable in cash on Completion to the Vendors and £2.5 million to be satisfied by the issue of the Consideration Shares on Completion to the Vendors, in respect of the Acquisition;
"Consideration Shares"
the 25,000,000 new Ordinary Shares to be issued on Completion by the Company at the Issue Price in respect of the Acquisition;
"CREST"
the relevant system (as defined in the CREST Regulations) in accordance with which securities may be held or transferred in uncertificated form, and in respect of which Euroclear is the Operator (as defined in the CREST Regulations);
"CREST Regulations"
the Uncertificated Securities Regulations 2001 (SI 2001/3755) as amended from time to time, and any applicable rules made under those regulations;
"CSOP"
the company share option plan adopted by the Company;
"Directors" or "New Board"
the Existing Directors and the Proposed Director;
"Disclosure Guidance and Transparency Rules" or "DTR"
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;
"EBITDA"
earnings before interest, tax, depreciation and amortisation for the relevant period;
"EMI Scheme"
the enterprise management incentive option scheme adopted by the Company;
"Enlarged Group"
the Group as enlarged by the Acquisition;
"Enlarged Share Capital"
the issued ordinary share capital of the Company following Completion comprising the Existing Ordinary Shares, the Consideration Shares, the Placing Shares and the Offer Shares;
"Euroclear"
Euroclear UK & Ireland Limited, a company incorporated in England and Wales and the operator of CREST;
"Excess Application Facility"
the arrangement pursuant to which Qualifying Shareholders may apply for additional Ordinary Shares in excess of their Open Offer Entitlement in accordance with the terms and conditions of the Open Offer;
"Excess CREST Open Offer Entitlement"
in respect of each Qualifying CREST Shareholder, their entitlement (in addition to their Open Offer Entitlement) to apply for Ordinary Shares pursuant to the Excess Application Facility, which is conditional on them taking up their Open Offer Entitlement in full;
"Excess Shares"
Ordinary Shares applied for by Qualifying Shareholders under the Excess Application Facility;
"Ex-entitlement Date"
the date on which the Existing Ordinary Shares are marked "ex" for entitlement under the Open Offer, being 31 May 2019;
"Directors" or "Board"
the directors of the Company at the date of the 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 59,795,172 Ordinary Shares of 10 pence each in issue at the date of the Document;
"FCA"
the United Kingdom Financial Conduct Authority, the statutory regulator under FSMA responsible for the regulation of the United Kingdom financial services industry;
"FSMA"
the Financial Services and Markets Act 2000 (as amended);
"Form of Proxy"
the form of proxy accompanying the Document for use by Shareholders at the General Meeting;
"GDPR"
the General Data Protection Regulation (Regulation (EU) 2016/679);
"General Meeting" or "GM"
the general meeting of the Company to be held at the offices of the Company at Cardinal Square, First Floor - West, 10 Nottingham Road, Derby, DE1 3QT at 9.00 a.m. on 19 June 2019 and any adjournments thereof to be held for the purpose of considering and, if thought fit, passing the Resolutions;
"Greenbrook Capital"
Greenbrook Capital LLP, a limited liability partnership incorporated and registered in England and Wales with registered number OC335029, whose registered office address is Marston House, 5 Elmdon Lane, Marston Green, Solihull, West Midlands B37 7DL and one of the Vendors holding a controlling shareholding in Greenbrook Hounslow and the Greenbrook Earl's Court Convertible Loan Note;
"Greenbrook Earl's Court"
Greenbrook Healthcare (Earl's Court) Limited, a private limited company incorporated and registered in England and Wales with registered number 07817650, whose registered office address is Marston House, 5 Elmdon Lane, Marston Green, Solihull, West Midlands B37 7DL;
"Greenbrook Earl's Court Convertible Loan Note"
the £50,000 zero coupon redeemable indexed convertible loan notes 2021 issued by Greenbrook Earl's Court and constituted by an instrument dated 15 December 2011 as amended by a deed of variation dated 13 November 2017;
"Greenbrook Healthcare"
together, Greenbrook Hounslow, Greenbrook Earl's Court and Greenbrook Surrey;
"Greenbrook Hounslow"
Greenbrook Healthcare (Hounslow) Limited, a private limited company incorporated and registered in England and Wales with registered number 06025335, whose registered office address is Marston House, 5 Elmdon Lane, Marston Green, Solihull, West Midlands B37 7DL;
"Greenbrook Surrey"
Greenbrook Healthcare (Surrey) Limited, a private limited company incorporated and registered in England and Wales with registered number 06606995, whose registered office address is Marston House, 5 Elmdon Lane, Marston Green, Solihull, West Midlands B37 7DL, a wholly owned subsidiary of Greenbrook Hounslow;
"Group"
the Company and/or its current subsidiaries;
"HMRC"
Her Majesty's Revenue and Customs of the UK;
"IFRS"
International Financial Reporting Standards issued by the International Accounting Standards Board;
"ISIN"
International Securities Identification Number, the existing ISIN of the Company being GB00BYM1JJ00;
"Issue Price"
10 pence per new Ordinary Share to be issued pursuant to the Placing, the Open Offer and the Acquisition;
"Issued Share Capital"
the entire issued ordinary share capital of the Company from time to time;
"Lock-in Arrangements"
the lock-in arrangements entered into by Greenbrook Capital;
"London Stock Exchange" or "LSE"
London Stock Exchange plc;
"LTIP"
the Long Term Incentive Plan to be adopted by the Company with effect from Admission;
"Market Abuse Regulation"
the EU Market Abuse Regulation (No. 596/2014);
"Money Laundering Regulations"
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, the money laundering provisions of the Criminal Justice Act 1993 and the Proceeds of Crime Act 2002;
"New Ordinary Shares"
together, the Consideration Shares, the Placing Shares and the Offer Shares;
"Nomination Committee"
the nomination committee of the Company;
"Notice of General Meeting" or "Notice of GM"
the notice convening the GM;
"Offer Shares"
the 9,965,862 new Ordinary Shares being made available to Qualifying Shareholders pursuant to the Open Offer;
"Official List"
the Official List of the United Kingdom Listing Authority;
"Open Offer"
the conditional invitation made to Qualifying Shareholders to apply to subscribe for the Offer Shares at the Issue Price on the terms and subject to the conditions set out in the Document and, where relevant, in the Application Form;
"Open Offer Entitlement"
the entitlement of Qualifying Shareholders to subscribe for Ordinary Shares allocated to Qualifying Shareholders on the Record Date pursuant to the Open Offer;
"Optimum Sports Performance"
Optimum Sports Performance Centre Limited, a private limited company incorporated in England and Wales with registered number 04908206, whose registered office address is Cardinal Square, First Floor - West, 10 Nottingham Road, Derby, DE1 3QT, a wholly owned subsidiary of the Company;
"Ordinary Shares"
the ordinary shares of 10 pence each in the capital of the Company;
"Overseas Shareholders"
a Shareholder with a registered address outside the United Kingdom;
"Placee"
a person who has conditionally agreed to subscribe for Placing Shares at the Issue Price pursuant to the Placing;
"Placing"
the conditional placing with the Placees of the Placing Shares at the Issue Price;
"Placing and Open Offer Agreement"
the conditional agreement dated 31 May 2019 made between (i) the Company, (ii) the Existing Directors, (iii) the Proposed Director, (iv) Allenby Capital and (v) Canaccord relating to the Placing, the Open Offer and Admission;
"Placing Shares"
the 90,000,000 new Ordinary Shares to be issued by the Company and subscribed for pursuant to the Placing;
"Premier"
Premier Physical Healthcare Limited, a private limited company incorporated and registered in England and Wales with registered number 03376266, whose registered office address is Cardinal Square, First Floor - West, 10 Nottingham Road Derby DE1 3QT, a wholly owned subsidiary of the Company;
"Proposals"
means (i) the Acquisition; (ii) the Placing; (iii) the Open Offer; and (iv) Admission;
"Proposed Director"
Michael Steel;
"Prospectus Rules"
the Prospectus Rules made by the FCA in accordance with the EU Prospectus Directive 2003/71/EC in relation to offers of securities to the public or an admission of securities to trading on a regulated market;
"QCA Code"
the Corporate Governance Code for Small and Mid-Sized Quoted Companies 2018 published by the Quoted Companies Alliance in April 2018 and as amended from time to time;
"Qualifying CREST Shareholders"
Qualifying Shareholders holding Existing Ordinary Shares in a CREST account;
"Qualifying Non-CREST Shareholders"
Qualifying Shareholders holding Existing Ordinary Shares in certificated form;
"Qualifying Shareholders"
holders of Existing Ordinary Shares on the register of members of the Company at the Record Date (but excluding any Overseas Shareholder who has a registered address in the United States or any other Restricted Jurisdiction);
"Receiving Agent and Registrars"
Share Registrars Limited, incorporated in England and Wales with company number 04715037, whose registered office address is 27-28 Eastcastle Street, London W1W 8DH;
"Record Date"
6.00 p.m. on 30 May 2019 being the latest time by which transfers of Existing Ordinary Shares must be received for registration by the Company in order to allow transferees to be recognised as Qualifying Shareholders;
"Regulatory Information Service"
has the meaning given to it in the AIM Rules;
"Remuneration Committee"
the remuneration committee of the Company;
"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, Australia, the Republic of South Africa, Ireland and Japan;
"SAYE Scheme"
the save as you earn scheme adopted on 7 November 2016;
"Share Dealing Code"
the Company's share dealing code;
"Shareholders" or "Existing Shareholders"
holders of Ordinary Shares from time to time, each individually being a "Shareholder";
"Significant Shareholder"
a person holding three per cent. or more of the Enlarged Share Capital;
"Subsidiary Undertaking"
a subsidiary undertaking, as that term is defined in section 1162 of the Companies Act;
"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 in the United Kingdom;
"UK Listing Authority" or "UKLA"
the FCA, acting in its capacity as the competent authority for the purposes of Part VI of FSMA;
"Unapproved Plan"
the unapproved share option plan adopted by the Company;
"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;
"VAT"
value added tax;
"Vendors"
the vendors of the entire issued share capital of Greenbrook Hounslow and the Greenbrook Earl's Court Convertible Loan Note, being Greenbrook Capital, Siobhan Mactavish and David Wingfield;
"Vocare"
Vocare Limited, a private limited company incorporated in England and Wales under registered number 09933257 whose registered office address is Cardinal Square, First Floor - West, 10 Nottingham Road, Derby DE1 3QT, a wholly owned subsidiary of the Company; and
"£", "sterling", "pound" and "pence"
pounds and pence sterling respectively, being the lawful currency of the United Kingdom.
In the Document:
(i) use of the singular includes the plural and vice versa, unless the context otherwise requires; and
(ii) references to a 'Part' or 'Parts' and references to page numbers are, unless the context otherwise requires, to the relevant Part or Parts or to the relevant page or pages of the Document.
GLOSSARY OF TECHNICAL AND COMMERCIAL TERMS
"A&E"
accident and emergency;
"APMS"
Alternative Provider Medical Services;
"AQP"
any qualified provider, a contract structure whereby a CCG stipulates a tariff for treatments or services and then goes to the market to find providers who are then required to become qualified through the procurement process;
"business-to-business"
the provision of Totally's clinical health-coaching services to organisations or businesses, typically Clinical Commissioning Groups;
"Clinical Commissioning Group" or "CCG"
clinically-led statutory NHS bodies responsible for the planning and commissioning of healthcare services for their local area. CCGs were created following the Health and Social Care Act in 2012 and replaced PCTs on 1 April 2013;
"CSP"
Chartered Society of Physiotherapists;
"Commissioner"
an NHS commissioner who is responsible for planning and purchasing healthcare services for a local population;
"CQC"
The Care Quality Commission, the independent regulator of health and social care in England;
"display screen equipment assessments"
assessments of workstations with devices or equipment that have alphanumeric or graphic display screens, typically in relation to an employer's compliance with the relevant health and safety regulations;
"GP"
general practitioner, a doctor based in the community who treats patients with minor or chronic illnesses and refers those with serious conditions to a hospital;
"GP OoH"
general practitioner Out of Hours;
"HMPS"
Her Majesty's Prison Service, part of the National Offender Management Service of the UK government responsible for managing the majority of prisons within England and Wales;
"ICRS"
integrated community response service;
"IP"
intellectual property;
"IUC"
integrated urgent care;
"NHS"
the National Health Service, being the UK's public healthcare system;
"OoH"
Out of Hours;
"PCTs"
Primary Care Trusts;
"shared decision making"
the process whereby a patient and their health professional make a healthcare choice together after an informed dialogue;
"UCC"
urgent care centre/urgent treatment centre; and
"WIC"
walk-in centre.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2019
Record Date for entitlement to participate in the Open Offer
6.00 p.m. on 30 May
Announcement of the Acquisition, Placing and Open Offer
7.00 a.m. on 31 May
Publication of the Document
31 May
Posting of the Document, the Application Form and Form of Proxy
3 June
Ex-entitlement Date for the Open Offer
8.00 a.m. on 31 May
Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to stock accounts of Qualifying CREST Shareholders in CREST
As soon as practical after 8.00 a.m. on 3 June
Recommended latest time and date for requesting withdrawal of Open Offer Entitlements and Excess CREST Open Offer Entitlements from CREST
4.30 p.m. on 12 June
Recommended latest time for depositing Open Offer Entitlements and Excess CREST Open Offer Entitlements into CREST
3.00 p.m. on 12 June
Latest time and date for splitting Application Forms (to satisfy bona fide market claims only)
3.00 p.m. on 13 June
Latest time and date for receipt of completed Forms of Proxy and receipt of electronic proxy appointments via the CREST system
9.00 a.m. on 17 June
Latest time and date for receipt of the completed Application Form and appropriate payment in respect of Offer Shares or Excess Shares or settlement of relevant CREST instruction
9.00 a.m. on 17 June
Time and date of General Meeting
9.00 a.m. on 19 June
Announcement of result of General Meeting and Open Offer
19 June
Admission becomes effective and dealings in the Enlarged Share Capital expected to commence on AIM
8.00 a.m. on 20 June
CREST members' accounts credited in respect of the Placing Shares and Offer Shares in uncertificated form
8.00 a.m. on 20 June
Acquisition Agreement unconditional and completion of the Proposals
20 June
Despatch of definitive share certificates for the Placing Shares and Offer Shares in certificated form
within 10 Business Days of Admission
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