THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of
this document, or as to the action you should take, you should consult your stockbroker, solicitor, accountant or other independent
adviser authorised under the Financial Services and Markets Act 2000 as amended (“FSMA”) who specialises in advising on the
acquisition of shares and other securities in the United Kingdom. The whole of the text of this document should be read. You
should be aware that an investment in the Company involves a high degree of risk and prospective investors should carefully
consider the section entitled “Risk Factors” in Part 2 of this document, which sets out certain risk factors relating to any
investment in Ordinary Shares.
AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached
than to larger or more established companies. AIM securities are not admitted to the Official List of the UK Listing Authority. A
prospective investor should be aware of the risks of investing in such companies and should make the decision to invest only
after careful consideration and, if appropriate, consultation with an independent financial adviser.
Each AIM company is required pursuant to the AIM Rules for Companies to have a nominated adviser. The nominated adviser is
required to make a declaration to the London Stock Exchange on Admission in the form set out in Schedule Two to the AIM Rules
for Nominated Advisers. The London Stock Exchange has not itself examined or approved the contents of this document.
This document, which comprises an admission document drawn up in accordance with the AIM Rules for Companies, has been issued in
connection with the application for Admission. Accordingly, this document does not contain an offer or constitute any part of an offer to the
public within the meaning of sections 85 and 102B of FSMA or otherwise. This document is not an approved prospectus for the purposes of
section 85 of FSMA and a copy of it has not been, and will not be, delivered to the FCA in accordance with the Prospectus Rules, or approved
by the FCA or any other authority which could be a competent authority for the purposes of the Prospectus Directive.
The Directors, whose names and functions appear on page 5 of this document, accept responsibility (both individually and collectively) for the
information contained in this document. To the best of the knowledge and belief of the Directors (each of which has taken reasonable care to
ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to
affect the import of such information.
Application will be made for the Ordinary Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that
dealings in the Ordinary Shares will commence on 19 August 2014. The Ordinary Shares are not traded on any other recognised investment
exchange and no other such applications have been made.
Sch 2 para (e)
A1 1.1
A1 1.2
A3 1.1
A3 1.2
A1 5.1.1
A1 5.1.2
A1 5.1.4
A3 10.1
ATTRAQT GROUP PLC
(incorporated under the Companies Act 2006 and registered in England and Wales with registered number 08904529)
ISSUE OF 2,866,394 NEW ORDINARY SHARES
AND
ADMISSION TO TRADING ON AIM
Nominated Adviser and Broker:
NPLUS1 SINGER ADVISORY LLP
EXPECTED SHARE CAPITAL OF THE COMPANY IMMEDIATELY FOLLOWING ADMISSION
Issued and fully paid Ordinary Shares of £0.01 each
Amount
Number
£206,260
20,625,994
The New Ordinary Shares will, on Admission, rank pari passu in all respects with the existing Ordinary Shares then in issue and will rank in full
for all dividends and other distributions declared, paid or made in respect of the Ordinary Shares after Admission.
Nplus1 Singer Advisory LLP (“N+1 Singer”) has been appointed as nominated adviser to the Company in connection with the Admission. The
responsibilities of N+1 Singer, as nominated adviser under the AIM Rules for Companies, are owed solely to the London Stock Exchange. In
accordance with the AIM Rules for Companies, N+1 Singer has confirmed to the London Stock Exchange that it has satisfied itself that the
Directors have received advice and guidance as to the nature of their responsibilities and obligations to ensure compliance by the Company
with the AIM Rules for Companies and that, in its opinion and the to the best of its knowledge and belief, having made due and careful enquiry,
all relevant requirements of the AIM Rules for Companies have been complied with. No representation or warranty, express or implied, is made
by N+1 Singer as to any of the contents of this document and N+1 Singer has not authorised the contents of any part of this document and
accepts no liability whatsoever for the accuracy of any information or opinions contained in this document or for the omission of any material
information from this document, for which the Company and the Directors are solely responsible.
N+1 Singer, which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for the Company and no-one else in
connection with Admission. It will not be responsible to persons other than the Company for providing the protections afforded to its clients or
for advising any other person on the contents of this document or on any other transaction or arrangement referred to in this document.
This document does not constitute an offer to buy or subscribe for, or the solicitation of an offer to buy or subscribe for, Ordinary Shares in any
jurisdiction in which such offer or solicitation is unlawful. The distribution of this document in certain jurisdictions may be restricted by law and,
therefore, persons into whose possession this document comes should inform themselves about and observe such restrictions. Any such
distribution could result in a violation of the laws of such jurisdictions. In particular, this document is not for distribution into the United States of
America, Canada, Australia, the Republic of South Africa or Japan, or any other jurisdiction where to do so would be in breach of any applicable
laws and/or regulations. The Ordinary Shares have not been, and will not be, registered under the securities legislation of the United States of
America, any province or territory of Canada, Australia, the Republic of South Africa or Japan. Accordingly, the Ordinary Shares may not, subject
to certain exemptions, be offered, sold, re-sold, renounced, taken up or delivered, directly or indirectly, into the United States of America,
Canada, Australia, the Republic of South Africa or Japan, or to any national, citizen or resident of the United States of America, Canada,
Australia, the Republic of South Africa or Japan. In addition, the securities to which this document relates must not be marketed into any
jurisdiction where to do so would be unlawful.
The information contained in this document has been prepared solely for the purposes of Admission and is not intended to inform or be relied
upon by subsequent purchasers of Ordinary Shares (whether on or off market) and, accordingly, no duty of care is accepted.
Copies of this document will be available free of charge during normal business hours on any day (except Saturdays, Sundays and public
holidays) at the offices of the Company at Heron Tower (35th Floor), 110 Bishopsgate, London EC2N 4AY for one month from the date of
Admission.
AIM Rule 3
IMPORTANT INFORMATION
Investment in the Company carries risk. There can be no assurance that the Company’s strategy will be
achieved and investment results may vary substantially over time. Investment in the Company is not intended
to be a complete investment programme for any investor. The price of Ordinary Shares and any income
from Ordinary Shares can go down as well as up and investors may not realise the value of their initial
investment. Prospective investors should carefully consider whether an investment in Ordinary Shares is
suitable for them in light of their circumstances and financial resources and should be able and willing to
withstand the loss of their entire investment (see Part 2 of this document headed “Risk Factors”).
Potential investors contemplating an investment in Ordinary Shares should recognise that their market value
can fluctuate and may not always reflect their underlying value. Returns achieved are reliant upon the
performance of the Group. No assurance is given, express or implied, that Shareholders will receive back
the amount of their investment in Ordinary Shares.
If you are in any doubt about the contents of this document you should consult your stockbroker or your
financial or other professional adviser.
Investment in the Company is suitable only for financially sophisticated individuals and institutional investors
who have taken appropriate professional advice, who understand and are capable of assuming the risks of
an investment in the Company and who have sufficient resources to bear any losses which may result
therefrom.
Potential investors should not treat the contents of this document as advice relating to legal, taxation,
investment or any other matters. Potential investors should inform themselves as to: (a) the legal requirements
within their own countries for the purchase, holding, transfer, or other disposal of Ordinary Shares; (b) any
foreign exchange restrictions applicable to the purchase, holding, transfer or other disposal of Ordinary
Shares that they might encounter; and (c) the income and other tax consequences that may apply in their
own countries as a result of the purchase, holding, transfer or other disposal of Ordinary Shares. Potential
investors must rely upon their own representatives, including their own legal advisers and accountants, as
to legal, tax, investment or any other related matters concerning the Company and an investment therein.
Statements made in this document are based on the laws and practices currently in force in England and
Wales and are subject to changes therein.
This document should be read in its entirety before making any investment in the Company.
FORWARD LOOKING STATEMENTS
This document includes statements that are, or may be deemed to be, “forward-looking statements”. These
statements relate to, among other things, analyses and other information that are based on forecasts of
future results and estimates of amounts not yet determinable. These statements also relate to the Group’s
future prospects, developments and business strategies.
These forward-looking statements can be identified by their use of terms and phrases such as “anticipate”,
“believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will” or the negative of
those variations, or comparable expressions, including references to assumptions. These statements are
primarily contained in Part 1 of this document.
The forward-looking statements in this document, including statements concerning projections of the
Group’s future results, operations, profits and earnings, are based on current expectations and are subject
to risks and uncertainties that could cause actual results to differ materially from those expressed or implied
by those statements.
Certain risks to and uncertainties for the Group are specifically described in Part 2 of this document headed
“Risk Factors”. If one or more of these risks or uncertainties materialises, or if underlying assumptions prove
incorrect, the Group’s actual results may vary materially from those expected, estimated or projected. Given
these risks and uncertainties, potential investors should not place any reliance on forward-looking
statements.
2
Forward-looking statements may and often do differ materially from actual results. Any forward-looking
statements in this document are based on certain factors and assumptions, including the Directors’ current
view with respect to future events and are subject to risks relating to future events and other risks,
uncertainties and assumptions relating to the Group’s operations, results of operations, growth strategy and
liquidity. Whilst the Directors consider these assumptions to be reasonable based upon information currently
available, they may prove to be incorrect. Prospective investors should, therefore, specifically consider the
risk factors contained in Part 2 of this document that could cause actual results to differ before making an
investment decision. Save as required by law or by the AIM Rules for Companies, the Company undertakes
no obligation to publicly release the results of any revisions to any forward-looking statements in this
document that may occur due to any change in the Directors’ expectations or to reflect events or
circumstances after the date of this document.
PRESENTATION OF FINANCIAL INFORMATION
The Company publishes its financial statements in pounds sterling.
The Company presents its annual accounts as of 31 December each year. The financial information
contained in this document, including that financial information presented in a number of tables in this
document, has been rounded to the nearest whole number or the nearest decimal place. Therefore, the
actual arithmetic total of the numbers in a column or row in a certain table may not conform exactly to the
total figure given for that column or row. In addition, certain percentages presented in the tables in this
document reflect calculations based upon the underlying information prior to rounding, and, accordingly,
may not conform exactly to the percentages that would be derived if the relevant calculations were based
upon the rounded numbers.
GENERAL NOTICE
This document has been drawn up in accordance with the AIM Rules for Companies and it does not
comprise a prospectus for the purposes of Part VI of FSMA. It has been drawn up in accordance with the
requirements of the Prospectus Directive only insofar as required by the AIM Rules for Companies and has
not been delivered to the Registrar of Companies in England and Wales for registration.
This document has been prepared for the benefit only of a limited number of persons all of whom qualify as
“qualified investors” for the purposes of the Prospectus Directive, to whom it has been addressed and
delivered and may not in any circumstances be used for any other purpose or be viewed as a document for
the benefit of the public. The reproduction, distribution or transmission of this document (either in whole or
in part) without the prior written consent of the Company and N+1 Singer is prohibited.
MARKET INFORMATION
The data, statistics and information and other statements in this document regarding the markets in which
the Group operates, or the Group’s position therein, are based on the Group’s records or are taken or derived
from statistical data and information derived from the sources described in this document. In relation to
these sources, such information has been accurately reproduced from the published information and, so
far as the Directors are aware and are able to ascertain from the information provided by the suppliers of
these sources, no facts have been omitted which would render such information inaccurate or misleading.
All times referred to in this document are, unless otherwise stated, references to London time.
CURRENCIES
Unless otherwise indicated, all references in this document to “GBP”, “£”, “pounds sterling”, “pounds”,
“sterling”, “pence” or “p” are to the lawful currency of the United Kingdom. All references in this document
to “US$”, “$”, “US Dollar”, “dollars”, are to the lawful currency of the United States of America.
3
CONTENTS
Page
DIRECTORS, SECRETARY AND ADVISERS
5
SHARE CAPITAL STATISTICS
6
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
6
DEFINITIONS
7
TECHNICAL GLOSSARY
11
PART 1
INFORMATION ON THE GROUP
13
PART 2
RISK FACTORS
30
PART 3
FINANCIAL INFORMATION ON THE ATTRAQT GROUP
38
SECTION A: ACCOUNTANT’S REPORT ON THE ATTRAQT GROUP
38
SECTION B: HISTORICAL FINANCIAL INFORMATION ON THE ATTRAQT GROUP
40
ADDITIONAL INFORMATION
62
PART 4
4
DIRECTORS, SECRETARY AND ADVISERS
Directors
Daniel Maurice Wagner (Non-Executive Chairman)
Ivor Scott Dunbar (Non-Executive Deputy Chairman)*
André Brown (Chief Executive Officer)
David Andrew Stirling (Finance Director)*
Robert Matthew Fenner (Non-Executive Director)*
Edward William Ewing (Non-Executive Director)*
all of the Company’s registered office
Company secretary
David Andrew Stirling
Registered office
Heron Tower (35th Floor)
110 Bishopsgate
London
EC2N 4AY
Website
www.ATTRAQT.com
Telephone
+44 020 3440 6201
Nominated adviser and broker
Nplus1 Singer Advisory LLP
One Bartholomew Lane
London
EC2N 2AX
Legal advisers to the Company
Taylor Wessing LLP
5 New Street Square
London
EC4A 3TW
Reporting accountant and
auditors
BDO LLP
55 Baker Street
London
W1U 7EU
Legal advisers to the nominated
adviser and broker
Rosenblatt Solicitors
9-13 St. Andrew Street
London
EC4A 3AF
Financial PR to the Company
Newgate Threadneedle
SkyLight City Tower
50 Basinghall Street
London
EC2V 5DE
Registrar
Capita Asset Services
The Registry
34 Beckenham Road
Kent
BR3 4TU
*Effective from Admission.
5
A3 10.1
A1 5.1.4
SHARE CAPITAL STATISTICS
Number of Existing Ordinary Shares in issue at the date of this document
Number of New Ordinary Shares being issued by the Company
Number of Ordinary Shares in issue following the issue of the
New Ordinary Shares and Admission
Percentage of Enlarged Share Capital represented by the New Ordinary Shares
17,759,600
2,866,394
20,625,994
13.9 per cent.
Market capitalisation upon Admission at the Subscription Price
£10.3 million
Estimated gross proceeds of the Subscription receivable by the Company
£1.25 million
Estimated net proceeds of the Subscription receivable by the Company
ISIN
£0.8 million
A3 8.1
GB00BMJJFZ18
SEDOL
BMJJFZ1
TIDM
ATQT
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Publication of this document
13 August 2014
Admission effective and dealings in the Ordinary Shares commence on AIM
19 August 2014
CREST accounts credited (where applicable) with the New Ordinary Shares
19 August 2014
Despatch of definitive share certificates for the New Ordinary Shares
(where applicable)
by 2 September 2014
Each of the dates in the above timetable is subject to change at the absolute discretion of N+1
Singer and the Company.
6
A3 4.7
DEFINITIONS
The following definitions apply throughout this document, unless the context otherwise requires:
“£”, “pounds” and “pence”
the legal currency for the time being of the United Kingdom;
“2006 Act”
the Companies Act 2006 (as amended);
“Admission”
the admission of the Enlarged Share Capital to trading on AIM
becoming effective in accordance with the AIM Rules for Companies;
“AIM”
the market of that name operated and regulated by the London
Stock Exchange;
“AIM Rules for Companies”
the AIM Rules for Companies published by the London Stock
Exchange, as amended from time to time, which set out the rules,
responsibilities and guidance notes in relation to companies whose
shares are admitted to trading on AIM;
“Articles”
the articles of association of the Company adopted, conditional upon
Admission, by special resolution on 11 August 2014 (as amended);
“ATTRAQT Group”
ATTRAQT Limited and its subsidiaries;
“ATTRAQT, Inc.”
ATTRAQT, Inc. (incorporated and registered in Delaware with
registered number 46-2654281), a wholly owned subsidiary of
ATTRAQT Limited;
“ATTRAQT Limited”
ATTRAQT Limited (incorporated and registered in England and
Wales with registered number 4631635 and formerly known as
Locayta), a wholly owned subsidiary of the Company;
“BSV”
Bright Station Ventures Limited (incorporated and registered in the
Isle of Man with company number 124349C);
“CGC”
the UK Corporate Governance Code published by the Financial
Reporting Council;
“Company”
ATTRAQT Group plc (incorporated in England and Wales with
registered number 08904529);
“Concert Party”
Dan Wagner, BSV, John Wagner and Ivor Dunbar;
“Convertible Loan”
the convertible loan made by Alan Docter to the Company pursuant
to the Replacement Convertible Loan Agreement;
“CREST”
the electronic system for the holding and transferring of shares and
other securities in paperless form operated by Euroclear UK & Ireland
Limited;
“CREST Regulations”
the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755)
(as amended);
“Directors” or “Board”
the directors and the Proposed Directors of the Company, whose
names appear on page 5 of this document;
“Disclosure and Transparency Rules” the disclosure and transparency rules made by the FCA in exercise
of its functions as competent authority pursuant to Part VI of FSMA,
as amended;
“Enlarged Share Capital”
the issued Ordinary Shares following the issue and allotment of the
New Ordinary Shares comprising the Existing Ordinary Shares and
the New Ordinary Shares;
7
“Existing Options”
options in existence over Ordinary Shares granted under the Existing
Share Option Scheme;
“Existing Ordinary Shares”
the Ordinary Shares in issue as at the date of this document;
“Existing Share Option Scheme”
the option plan originally set up by ATTRAQT Limited, under which
Existing options are now outstanding by virtue of the Option
Exchange;
“FCA”
the Financial Conduct Authority of the United Kingdom, acting in its
capacity as the competent authority for the purposes of Part VI of
FSMA;
“FCA Rules”
the FCA Handbook of Rules and Guidance (as amended);
“FSMA”
the Financial Services and Markets Act 2000 (as amended);
“Group”
the Company and its subsidiaries;
“HMRC”
HM Revenue and Customs;
“Introduction Agreement”
the conditional agreement dated 13 August 2014 between N+1
Singer, the Company and the Directors relating to Admission, details
of which are set out in paragraph 18.2 of Part 4 of this document;
“Loan Conversion”
the conversion by Alan Docter of the Convertible Loan;
“Locayta”
Locayta Search Limited (incorporated and registered in England and
Wales with registered number 8755640), a wholly owned subsidiary
of ATTRAQT Limited;
“Lock-in Agreements”
the lock-in deeds entered into by the Locked-in Shareholders, N+1
Singer and the Company, details of which are set out in paragraph
18.6 of Part 4 of this document;
“Locked-in Shareholders”
together, Dan Wagner, BSV, André Brown, John Wagner, Alan
Docter, David Weinberger and David Stirling;
“London Stock Exchange”
London Stock Exchange plc;
“N+1 Singer”
Nplus1 Singer Advisory LLP (incorporated and registered in England
and Wales with registered number OC364131), the Company’s
Nominated Adviser and Broker;
“N+1 Singer Engagement Letter”
the engagement letter between N+1 Singer and ATTRAQT Limited
dated 16 January 2013 (as novated to the Company and varied on
12 August 2014);
“N+1 Singer Shares”
100,000 new Ordinary Shares to be issued by the Company to N+1
Singer pursuant to the Introduction Agreement;
“New Share Option Scheme”
the unapproved option plan known as the ATTRAQT Group Limited
Enterprise Management Incentive Share Option Scheme;
“New Ordinary Shares”
the N+1 Singer Shares, the Subscription Shares and the Ordinary
Shares issued to Alan Doctor pursuant to the Loan Conversion;
“New Share Options”
options over Ordinary Shares granted under the New Share Option
Scheme;
“Option Exchange”
the release of options over shares in ATTRAQT Limited granted
under the Existing Share Option Scheme in consideration of the
grant of replacement options over an equivalent proportion of shares
8
in the Company on the same terms (except with a varied exercise
price per share to reflect the terms of the Option Exchange and the
Share Exchange);
“Ordinary Shares”
ordinary shares of £0.01 each in the capital of the Company;
“Overdraft Facility Agreement”
the overdraft facility agreement between ATTRAQT Limited and
Barclays Bank plc dated 3 May 2013;
“Proposed Directors”
those persons whose names appear on page 5 of this document
and are indicated as being directors of the Company effective from
Admission;
“QCA Guidelines”
the Corporate Governance Code for Small and Mid-size Quoted
Companies published by the Quoted Companies Alliance in
May 2013;
“Relationship Agreement”
the relationship agreement dated 12 August 2014 between the
Company, Dan Wagner, BSV and N+1 Singer;
“Registrars”
Capita Asset Services;
“Regulatory Information Service”
one of the regulatory information services authorised by the London
Stock Exchange to receive process and disseminate regulatory
information in respect of AIM listed companies;
“Replacement Convertible Loan
Agreement”
the replacement convertible loan agreement between the Company,
Alan Docter and ATTRAQT Limited dated 14 May 2014;
“Share Dealing Code”
the code on dealings of directors and employees in securities as set
out in Annex 1 to Chapter 9 of the Listing Rules of the Financial
Conduct Authority, as amended from time to time, or such other
code of dealings as shall be introduced by the Company from time
to time;
“Share Exchange”
the share for share exchange with the shareholders of ATTRAQT
Limited pursuant to the Share Exchange Agreement;
“Share Exchange Agreement”
the share exchange agreement between the Company and the
shareholders of ATTRAQT Limited dated 14 May 2014;
“Shareholder”
a holder of an Ordinary Share;
“Subscribers”
BSV and Ivor Dunbar;
“Subscription”
the conditional issue and allotment of the Subscription Shares to the
Subscribers at the Subscription Price;
“Subscription Letters”
the subscription letters dated 12 August 2014 between the
Company and the Subscribers;
“Subscription Price”
£0.50 per Subscription Share;
“Subscription Shares”
the 2,500,000 new Ordinary Shares to be issued by the Company
pursuant to the Subscription Letters;
“Takeover Code”
the City Code on Takeovers and Mergers of the United Kingdom (as
amended);
“UK” or “United Kingdom”
the United Kingdom of Great Britain and Northern Ireland;
9
“uncertificated” or “in uncertificated
form”
recorded on a register of securities maintained by Euroclear UK &
Ireland Limited in accordance with the CREST Regulations as being
in uncertificated form in CREST and title to which, by virtue of the
CREST Regulations, may be transferred by means of CREST; and
“US” or “United States”
the United States of America, its territories and possessions, any
state of the United States of America and the District of Columbia.
References to the singular shall include references to the plural, where applicable, and vice versa. Any
reference to any provision of any legislation includes any amendment, modification, re-enactment or
extension of it.
10
TECHNICAL GLOSSARY
The following technical definitions apply throughout this document, unless the context otherwise requires:
“A/B testing”
a method of testing for an advertising campaign that involves two or
more different versions of a web page to see which is more effective;
“AOV”
average order value of a checkout basket, which may be either site
specific or customer specific;
“API”
“Application Program Interface”, being a set of commands,
functions, and protocols which programmers can use when building
software for a specific operating system;
“ATTRAQTTM Mobile Commerce”
a product to enable the quick deployment of online retailing on
mobile devices;
“ATTRAQTTM Search”
the Group’s site search product;
“ATTRAQTTM Shop Window”
a javascript-based mini-site enabling retailers to have tactical
deployments of the site, within an advertising window on a thirdparty site;
“Balance Factor”
the Group’s product sequencing technology, which applies a
weighting to metrics selected by the retailer (such as price and stock
availability) to determine the order in which products appear on the
retailer’s page;
“black-box solution”
a simple system with an input and an output, but without knowledge
or control over its internal workings;
“bounce rate”
the percentage of visitors who enter a site and leave rather than
continuing viewing other pages within the same site (which is
considered to be a measure of the effectiveness of a site in
encouraging visitors to continue with their visit);
“click-through”
the action or facility of following a hypertext link to a particular
website;
“cloud”
the practice of using a network of remote servers hosted on the
internet to store, manage, and process data, rather than a local
server or a personal computer;
“CMS”
Content Management System;
“Control Panel”
Freestyle Merchandising’s user interface which gives the user control
of its features;
“conversion rate”
the rate of conversion of site visits to purchases;
“EBITDA”
earnings before interest, taxes, depreciation and amortisation;
“eCommerce”
a business model that enables a firm or individual to conduct
business over an electronic network, typically the internet;
“edit-distance technologies”
a quantitative method of measuring how dissimilar two or more
words are to each other based on their spelling;
“Freestyle Merchandising”
the Group’s SaaS platform;
11
“Google AdWords”
an advertising service by Google for businesses wanting to display
ads on Google and its advertising network;
“IT”
information technology;
“JavaScript”
a dynamic computer programming language commonly used to
create interactive effects within web browsers;
“OEM”
an “Original Equipment Manufacturer”, being a manufacturer of
products or components that are purchased by another company
and retailed under that purchasing company’s brand name;
“return”
an online purchase that is returned to the retailer for an exchange or
refund;
“ROI”
Return on Investment;
“SaaS”
Software as a Service;
“Search Engine Optimisation” or
“SEO”
the process of optimising a site so that it ranks highly for internet
search engine results;
“SEM”
paid for search advertising on internet search engines, such as
Google AdWords;
“site”
a retailer’s merchandising website; and
“trigram analysis”
a method of searching for text using groups of three consecutive
characters from words in a search query.
12
PART 1
A1 6.1.1
Sch 2(k)
INFORMATION ON THE GROUP
1. INTRODUCTION
The Group is a cloud-based SaaS supplier focused on providing a merchandising platform to online retailers.
In reaction to a structural shift in consumer behaviour where an increasingly larger proportion of sales are
transacted online, the Group provides a merchandising platform for online retailers that helps to drive online
sales growth.
The Group’s SaaS platform, Freestyle Merchandising, focuses on maximising conversion rates by enabling
retailers to have control over how products are merchandised on their eCommerce sites. Freestyle
Merchandising acts as an overlay to a retailer’s eCommerce site and works to enhance the customer’s
experience as well as the sales performance of the site through: (i) superior site search; (ii) product
recommendations and personalisation; and (iii) visual merchandising functionality. The Group can provide
these three key product offerings within a single integrated platform that the Directors believe is quick and
easy to implement and which aims to provide all the merchandising functionality a retailer could want from
one platform.
After over ten years of investment and technical development, the Group has a configurable SaaS platform,
a respected reputation in the market and a scalable sales model with a short sales cycle. Its large UK retail
customers include, among others, Tesco Clothing, Boohoo.com, Superdry, Laura Ashley, Emma
Bridgewater, Ellis Brigham, Paperchase, Screwfix, T.K. Maxx, BBC Worldwide and BT, which the Directors
believe to be a strong endorsement of the Group’s technology.
2. HISTORY AND DEVELOPMENT
The business (formerly branded as “Locayta”) was originally founded in 2003 with £20,000 in seed capital
by Dan Wagner (co-founder) and André Brown (CEO) with the ambition to provide the best possible site
search service for online retailers as a cloud based (on demand or SaaS) service offering. The Group believed
that the benefits of the online retail experience, such as convenience, transparency, choice and efficiency,
would bring about a change in consumer behaviour towards increased online retail usage. This trend has
continued, with UK shoppers spending £91 billion online in 2013, up 16 per cent. year-on-year and now
representing 21 per cent. of total retail sales in the UK.1
A1 5.1.5
A1 6.1.1
The Group initially focused on providing a site search technology optimised for eCommerce product
searches, with early customers including Nectar and BT Directories, as well as an OEM licence agreement
with eCommerce platform provider Venda.
However, by 2008, in response to demand from retailers, the Group realised that there was a significant
business opportunity in providing an online merchandising platform to improve the effectiveness of retailers’
eCommerce sites. In 2009, the Group upgraded its platform and launched recommendations and visual
merchandising through what is now its main SaaS product, Freestyle Merchandising. It appointed a head
of sales in late-2011 and, by 2012, had a sales team in place in the UK. From 2003 to early 2011, the Group
raised investments of £421,000 (which was mostly used for working capital purposes) and, in late 2011,
the Group raised investments of £500,000 (which was used to hire a sales team and virtualise the platform).
By January 2012, the Group had a total of 18 retained clients and since then has signed up a further 63
clients. The total client base is currently 81. The Group currently maintains 93 live client sites, with 23 sites
in production (116 sites in total).
A1 5.2.1
A1 5.2.2
In September 2013, the Group raised a further £675,000 from existing shareholders. The funds raised were
used to open the US sales office in New York, increase the Group’s productive capacity for signing and
delivering new sites and develop additional infrastructure to increase the resilience of the Freestyle
Merchandising platform.
A1 5.1.2
A1 5.2.2
1
“£91 billion spent online in 2013 – IMRG Capgemini e-Retail Sales Index” (http://www.uk.capgemini.com/news/uk-news/ps91-billionspent-online-in-2013-imrg-capgemini-e-retail-sales-index).
13
The Group now employs 23 full time employees (including three sales staff in the UK and one sales staff in
the US) and has market presence in Western Europe and the US with offices in London and New York. The
Group currently has 97 UK prospects and 81 US prospects in its sales pipeline. Recent client wins include
Fat Face, Heals, Kate Spade, Screwfix, White Stuff, AX Paris, BBC Worldwide and Ellis Brigham.
3. BUSINESS OVERVIEW
The Group operates a SaaS business model based on a recurring monthly service charge for the provision
of its Freestyle Merchandising platform. The Directors believe that the Group’s offering becomes crucial to
the operation of a retailer’s online store by addressing four key customer needs: (i) how customers find
products on the site by using the Group’s site search and navigation technology; (ii) which products are
promoted to customers via the Group’s product recommendation technology; (iii) how the retailer’s products
are presented online using the Group’s visual merchandising technology; and (iv) how retailers can provide
a personalised customer experience using Freestyle Merchandising.
A1 17.1
A1 6.1.1
A1 6.1.2
A1 6.2
A1 6.5
A1 12.1
A1 12.2
The Directors believe that the Group’s unique selling point lies in the manner in which retailers are provided
with control over how their products are merchandised within their online stores. In particular, Freestyle
Merchandising provides control over the sequence in which products appear on category pages, search
results pages and as product recommendations.
The Group provides the above capabilities to the retailers using Freestyle Merchandising’s product
sequencing technology, Balance Factor.
Balance Factor applies a weighting to metrics selected by the retailer (such as price, stock availability and
trends) to determine the order in which products appear on the retailer’s page. This assists retailers in
implementing what the Directors consider to be “bricks and mortar” strategies online.
Balance Factor also allows retailers to create and manage specific merchandising strategies for their online
stores. It can be applied by using business rules or dynamically using site-generated behavioural
data/algorithms to look at the collective intelligence of users on a retailer’s site, or using manual intervention,
or any combination of the above.
Another Freestyle Merchandising tool is the drag and drop capability for manual merchandising. This provides
manual control over the “intentional” placement of products on category pages, which can allow retailers to
adjust their online merchandising rapidly in response to changing trends. All updates to the site from the
platform are made in real-time. This level of manual control is not always provided to retailers by their existing
eCommerce systems.
Retailers typically use visual merchandising techniques to create engaging product displays and compelling
promotions in the offline world. Such techniques can be challenging to replicate via an eCommerce platform,
where merchandising elements such as navigation and product sequencing on category pages can be
largely constrained by the data structure of the underlying eCommerce platform. This can make online
merchandising a manual and sometimes frustrating experience and make it difficult for clients to respond
quickly to changing trends.
Freestyle Merchandising’s Balance Factor technology gives retailers control over the visual merchandising
of the products on their site and the Directors see this as a key differentiator between the Group and
eCommerce systems providers.
Importantly, the Group is not itself an eCommerce platform provider. eCommerce platform providers such
as Demandware, Magento, Venda and Hybris allow retailers to develop and maintain online shops. What
the Group provides is an overlay to such eCommerce platforms, accessed via the cloud. This overlay
capability means that the Group can be largely agnostic to the retailers’ choice of eCommerce platform.
Freestyle Merchandising usually requires five days’ work to integrate with clients’ existing eCommerce
platforms, depending on the level of integration chosen.
14
A1 12.1
A1 12.2
An overview of the retail sectors in which the Group’s current clients operate is set out in the diagram below:
ATTRAQT Client Sectors
2%
1% 2%
3%
Fashion
3%
Jewellery and Watches
5%
Sports Clothing and Accessories
DIY
Fragrance and Cosmetics
5%
Gifts
42%
Home
Stationery
5%
Work Wear
Publisher
5%
Other
Children’s Clothing
Electronics
5%
Lingerie
6%
8%
8%
Source: ATTRAQT client analysis figures (unaudited)
While the Group’s clients operate within a range of retail sectors, fashion is the sector in which the Group
has had most success in attracting clients. The Group’s top 10 clients accounted for 78 per cent. of the
Group’s revenue for the year ended 31 December 2013.
A1 5.2.2
4. TECHNOLOGY
The Group’s Freestyle Merchandising technology has three core elements, being: (i) site search and
navigation; (ii) product recommendations and personalisation; and (iii) visual merchandising. The Directors
believe that having all three elements makes it easier for the Group both to reduce competitors’ new
prospects and to defend its existing client base from external competitors.
Site search and navigation
Having an effective site search increases the performance of an eCommerce site. For example,
FinanzNachrichten.de reported that one business experienced a four times higher conversion rate when
customers used site search.2 Conversely, customers who cannot find what they are looking for on a retailer’s
site will increase the store’s bounce rate.
ATTRAQTTM Search is an integral part of the Freestyle Merchandising platform. It provides a fast and accurate
site search functionality that has been optimised for eCommerce and can be deployed on its own, or within
the Freestyle Merchandising framework. ATTRAQTTM Search includes a number of specialised site search
features as follows:
●
2
3
4
Dynamic spell correction
It has been observed that misspelling is a common cause of no search results pages on eCommerce
sites.3 One approach to solving this problem is to use a dictionary to check for potentially misspelt
words. Miskeying, also known as “fat-finger syndrome”, is a common form of misspelling, especially on
mobile devices with small virtual keyboards.4 However, ATTRAQTTM Search avoids the dictionary problem
FinanzNachrichten: “Printerland Enhances Site Search to Generate Higher Conversion Rate and Per-Visit Value”
(http://www.finanznachrichten.de/nachrichten-2013-01/25693889-printerland-enhances-site-search-to-generate-higher-conversionrate-and-per-visit-value-008.htm).
Greg Nudelman: “Designing Search: UX Strategies for eCommerce Success” (http://books.google.co.uk/books?id=
xRUFEhQwcZgC&pg=PT12&lpg=PT12&dq=common+for+customers+to+misspell+their+search+queries+on+an+eCommerce+site&
source=bl&ots=zAMVBM5f7R&sig=yGTVEXkjmCcmRTKOdXdB1q0-K9U&hl=en&sa=X&ei=bjRqU7iaEKbB0QX87ICYAg&ved=0CC
4Q6AEwAA#v=onepage&q=common%20for%20customers%20to%20misspell%20their%20search%20queries%20on%20an%20
eCommerce%20site&f=false).
Huizhong Duan and Bu-June Hsu: “Online Spelling Correction for Query Completion” (http://dl.acm.org/citation.cfm?id=1963425).
15
by using a combination of trigram analysis and edit-distance technologies to dynamically correct misspelt
search words. It can also use synonyms to further enhance accuracy and desired outcomes.
●
Predictive auto-complete
ATTRAQTTM Search provides a predictive auto-complete feature that shows a preview list of products,
categories and popular search terms in response to the user entering the search term in the search
box, providing an early opportunity to merchandise to the customer.
●
Intelligent site search & navigation
ATTRAQTTM Search results are provided within a guided navigation framework on the site, displaying
the relevant refinement options (“facets”) available to the consumer and allowing them to drill-down to
their desired products using those refinement options. The navigation technology provides a selection
of individual and multiple search facets, helping customers to quickly find what they are looking for.
●
Multi-lingual and multi-currency search
ATTRAQTTM Search is multi-lingual and multi-currency and can be used with the standard Latin
character-set as well as double-byte character-sets including Japanese, Chinese, Korean and Arabic.
With this capability, the Group is able to support retailers’ omni-channel and internationalisation
aspirations. By way of example, one of the Group’s clients, Superdry, currently has 21 international
sites with 15 different languages across Europe and USA as well as China.
●
Search merchandising
Balance Factor allows retailers to control the order of products as they appear on search results pages,
using metrics that are important to the retailer (such as popularity, newness or profit margin). This
means that the retailer can boost certain products to the top of the search results list.
An example of this site search technology is set out below:
ATTRAQT’s
intelligent Site
Search uses
advanced
algorithms to
return relevant
products to
users
Product recommendations
The market for product recommendation technology is based upon the concept that ‘the many are smarter
than the few’ (i.e. by looking at the collective intelligence of all the users on a retailers’ site).5 In the context
of eCommerce, the Directors believe that this concept should lead to smarter buying decisions which should,
in turn, lead to fewer returns and higher AOVs as well as a much more personalised user experience. Many
product recommendation technologies are black box solutions, which lack tools to adjust the
recommendations being made. In contrast, Freestyle Merchandising provides retailers with control over how
product recommendations are made on their sites.
5
James Surowiecki: “The Wisdom of Crowds”.
16
Research has shown that product recommendations can boost AOVs, or even produce a sale when a
shopper originally was just browsing with no definitive plans to buy6, which demonstrates the potential for
Freestyle Merchandising to have a positive influence on retailers’ sales.
Freestyle Merchandising provides product recommendations using behavioural data from the retailer’s site,
together with the following control tools:
●
Filtering: Recommendations can be filtered by almost any metric (such as by the same category or
related accessories). Filtering helps to ensure that only relevant recommendations are made.
●
Balance Factor: Balance Factor settings can be applied to recommendations, so that
recommendations are being made using a mixture of metrics important to the retailer (such as what is
selling well, price and stock availability).
●
Manual placement: Freestyle Merchandising also allows the retailer to manually determine what
product recommendations are made, giving the retailer control over product display.
The product recommendations provided by Freestyle Merchandising are flexible in their deployment and
can be used in a variety of ways to meet the different merchandising strategies required by retailers. For
example, a retailer could choose to personalise content to promote:
●
newer products for returning users compared to best sellers to new users; or
●
cheaper items to users with a history of lower AOVs and more expensive items to those with higher
AOVs.
Product recommendations can be configured to run completely in auto-mode, requiring no further work by
the retailer. The retailer also has the option to adjust settings via the Control Panel should it want to.
An example of the product recommendations technology is set out in the diagram below (where product
recommendations are being filtered on the retailer’s site by trend and category):
6
Internet Retailer: Product recommendations supercharge online conversion rates, study says (https://www.internetretailer.com/
2009/09/03/product-recommendations-supercharge-online-conversion-rates-stu).
17
Visual merchandising
The Directors consider visual merchandising to be one of the most exciting elements of Freestyle
Merchandising.
Freestyle Merchandising enables retailers to decide which blend of products they want to show on any given
page. For example, a retailer might select a mixture of products which are new this season, best sellers and
those with high stock availability. This type of merchandising can generate additional sales and produce
smarter buying decisions which can, in turn, mean fewer returns and higher AOVs.
As set out in paragraph 3 of this Part 1, the Group provides the above capabilities to the retailers using
Freestyle Merchandising’s product sequencing technology, Balance Factor. Balance Factor applies a
weighting to metrics selected by the retailer (such as price, stock availability and trends) to determine the
order in which products appear on the retailer’s page.
A1 6.4
The Company has applied for a patent for Balance Factor in the UK and the Directors intend that the
Company will also apply for a patent in the US.
An example of the Group’s visual merchandising technology is set out below:
5. BUSINESS MODEL
Customers generally sign contracts for a minimum of twelve months and pay a monthly service charge
based on the usage of the platform. The minimum price is £1,000 per calendar month. The service charge
fee covers volumes up to a certain level, above which additional fees are payable (producing incremental
revenue as site usage increases). There are also one-off fees for the initial system set-up and for one-off
projects. The average annual fee for new clients (excluding Tesco and Superdry in 2011) rose from just over
£5,000 for the year ended 31 December 2011 to £23,999.14 for the period from 1 January 2014 to 22 July
2014. For the year ended 31 December 2013, 82 per cent. of the Group’s revenues were derived from
monthly service fees, with 11 per cent. coming from additional fees for site usage and 7 per cent. derived
from one-off projects.
18
A1 12.1
A1 12.2
The Directors believe that there are three distinct advantages of the Group’s business model, as set out
below:
●
Longevity: The Directors consider the Group to have a “sticky model” as, once a client has gone live
with the Group’s platform, they will often remain a client for a long period of time.
●
Predictability: The Group’s monthly recurring revenue model and longevity of clients mean future
revenues tend to be more predictable.
●
Exit rate multiplier: The longevity of clients also acts as a revenue multiplier during subsequent years,
as the monthly recurring revenue from existing clients at the end of the previous year is carried forward
into subsequent years as the base upon which new clients are added.
The Group experienced high margins of between 79 per cent. to 83 per cent. for the years ended
31 December 2011, 31 December 2012 and 31 December 2013 and a low client revenue churn of
5 per cent. between 1 July 2013 and 30 June 2014.
6. KEY STRENGTHS OF THE GROUP
The Directors believe that the key strengths of the Group include the matters set out below:
●
Key technology enabler focused on eCommerce
The Group is right at the heart of a retailer’s eCommerce operation, providing key functionality which
the Directors believe is difficult for any one competitor to replicate. The Directors are not aware of any
other directly comparable competitor offering all three elements of the Group’s platform in a SaaS
package. The Group has received positive testimonials on its service offering from a number of clients,
including Tesco, Boohoo.com and Superdry.
Freestyle Merchandising can liberate the role of merchandising from IT dependencies, aiming to result
in retailers getting more productivity from their merchandising teams.
●
Real-time, scalable and highly configurable SaaS platform
Freestyle Merchandising is a highly configurable platform enabling a variety of retailers of different sizes
and in different sectors to create and manage online merchandising strategies for their online stores.
Freestyle Merchandising is written using the latest programming tools and techniques.
●
Scalable sales model with short sales cycles
The Group has a simple sales process that is based upon telemarketing setting online appointments
which, if successful, lead to the clients requesting a price proposal. In order to provide a price proposal,
the Group requests some site metrics information from the retailer (for example, conversion rates, daily
visits and online revenue). The site metrics information is fed into a model that calculates what the
monthly service charge should be and the estimated ROI for the client.
Because Freestyle Merchandising is an overlay to an existing eCommerce site rather than a complete
replacement of the site, it tends to be a fairly quick purchasing decision and, therefore, a relatively short
sales cycle. The quickest contract sign-up that the Group has achieved was ten days from
demonstration to signed paperwork, whereas 48 days is the average.
19
The diagram below shows the typical sales process for the Group:
Lead
Generation
•
•
•
Outbound telesales activity
Leads from channel partners
Aim to set up on-line demonstration
Prospects
•
•
•
Site metrics submitted, questionnaire completed
Face to face meetings
Budget and request for proposal: Estimated ROI
Heads of
Terms
•
•
Average 48
day cycle
Probability of success
Engagement letter
Sales
•
•
Close sale
Move to account management to
drive repeat business
●
Deliverability of high and measurable ROI for retailers
Retailers who implement Freestyle Merchandising typically report a 5 per cent. to 20 per cent. increase
in their online revenues, with higher conversion rates and average order values.
●
US exposure points to significant global market
The Directors believe that the size of the US economy means potentially larger opportunities for the
Group than operating in the UK and Europe alone. In addition, 2013 Global Retail E-Commerce Index™
suggests that the US eCommerce market is more advanced than its European counterparts and is
easier to access.
A1 6.2
The Group’s Chief Commercial Officer, Mark Turner, also has significant US sales experience.
Following on from the success of the Group’s UK sales operations, the Group raised further funds at
the end of 2013 to enable it to open a small US sales operation in New York and test whether the
sales process pioneered in the UK could be exported to other markets.
So far, the process has proved successful. Appointments for online demonstrations are being set up
successfully, prospective clients are responding well to the demonstrations and since starting
operations in the US the Group has signed five US clients: Cufflinks.com; Kate Spade, Revolve
Clothing, Shoe Bacca and Ghurka. The second signed US client, Kate Spade, was signed on 21 April
2014. There are 81 US prospects in the sales pipeline.
The Directors believe that this early success indicates that the sales process can not only be expanded
successfully in the US, but could also be exported to other global regions, including the rest of Europe
and Asia-Pacific.
7. MARKET SIZE AND KEY INDUSTRY TRENDS
Recent retail sector market research indicates various market trends which give the Directors confidence in
the sector’s growth and, in particular, in business generation opportunities for the Group.
The market for eCommerce solutions is expanding
Market research indicates that the market for eCommerce solutions is expanding and will continue to expand
over the coming years. For example:
●
LivePerson reported in January 2014 that 21 per cent. of online shoppers in the US, UK, France,
Germany, Italy and Australia spend more online than they do in stores.7
20
A1 12.1
A1 12.2
●
Verdict reported in September 2013 that the UK e-retail market is forecast to grow by more than 50 per
cent. over the next five years, to be worth over £50 billion by 20188 and The Centre for Retail Research
reported in May 2013 that online retail is forecast to account for 21.5 per cent. of all retail sales in the
UK by 2018.9
●
eCommerce Europe reported in May 2013 that it expects the European B2C eCommerce market to
double in size by the end of 2016 to reach €625 billion, driven by increased confidence and a growing
number of online shoppers.10
●
Econsultancy reported in February 2014 that a majority of people surveyed in the UK (61 per cent.)
completed more than half of or all of their Christmas shopping online in 2013, while just 7 per cent.
completed all of their shopping offline. In the US, the results were similarly slanted in favour of
eCommerce with 50 per cent. of respondents completing more than half of their Christmas shopping
online.11
●
The 2013 Global Retail E-Commerce IndexTM reported that eCommerce is expanding and global online
retail sales have increased 17 per cent. annually over the past six years.12
With this increase in eCommerce activity, the Directors believe that the Group is well placed to expand its
customer base with retailers looking to capitalise on the search, product recommendation and visual
merchandising tools provided by Freestyle Merchandising.
The SaaS model is an established and accepted method of delivering services
Research predicts that SaaS-based product delivery will experience healthy growth through 2015, when
worldwide revenue is projected to reach $22.1 billion.13
The Directors believe that the growth and widespread acceptance of the SaaS delivery model helps to make
Freestyle Merchandising an attractive platform for online retailers.
The trend for online retailers is to optimise their revenues through product recommendations and
site personalisation
Industry data has shown that sites which use product recommendations have experienced increases as
great as 91 per cent. in click-throughs on recommended products, 48 per cent. increases in conversion
rates and 4 per cent. growth in the number of items per order.14 Further research has shown that eCommerce
sites can potentially increase revenue by up to 300 per cent., improve conversion rates by 150 per cent.
and help boost the average order value by 50 per cent. through the use of search tools on their site.15
The Directors consider that retailers are increasingly looking to target customers through segmentation and,
therefore, need technologies that enable them to more effectively target smaller segments. This is
strengthened by the fact that 52 per cent. of digital marketers surveyed by Econsultancy and Adobe in July
2012 agree that “the ability to personalise web content is fundamental to their online strategy”.16
The Directors consider that this growth trend is very encouraging for the Group and further consider that
Freestyle Merchandising can be seen as a “one-stop shop” for different behavioural and merchandising
7
8
9
10
11
12
13
14
15
Liveperson: “The Connecting with Customers Report: A global in-depth study of the online customer experience”
(http://info.liveperson.com/rs/liveperson/images/LivePerson_Connecting_With_Customers_Report_UK.pdf).
Verdict: “Online shopping to hit £50bn by 2018” (http://www.verdictretail.com/online-shopping-to-hit-50bn-by-2018/).
Centre for Retail Research: “Retail in 2018 - Shop numbers, Online and the High Street: A Guide to Retailing In 2018 by the Centre
for Retail Research” (http://www.retailresearch.org/retail2018.php).
Ecommerce Europe: “Press Release: European E-commerce to reach €312 billion in 2012” (http://www.ecommerceeurope.eu/press/2013/05/press-release-european-e-commerce-to-reach-312-billion-in-2012-19-growth).
EConsultancy: “One in five US and UK consumers did all of their Christmas shopping online: stats” (https://econsultancy.com/
blog/64280-one-in-five-us-and-uk-consumers-did-all-of-their-christmas-shopping-online->>stats#i.1mly6jz7bxfav1).
ATkearney: “Online Retail is Front and Center in the Quest for Growth” (http://www.atkearney.com/documents/10192/3609951/
Online+Retail+Is+Front+and+Center+in+the+Quest+for+Growth.pdf/f6693929-b2d6-459e-afaa-3a892adbf33e)
Gartner: “Press release: Gartner Says Worldwide Software-as-a-Service Revenue to Reach $14.5 Billion in 2012”
(http://www.gartner.com/newsroom/id/1963815).
Multichannel Merchant: “Assessing the Value of Product Recommendations” (http://multichannelmerchant.com/
multichannelmerchant.com/ecommerce/news/assessing-the-value-of-product-recommendations-28092009/).
EConsultancy: “11 useful examples of copywriting for product recommendations” (https://econsultancy.com/blog/62678-11-usefulexamples-of-copywriting-for-product-recommendations#i.1mly6jz7bxfav1).
21
functionality, to help retailers increase their online revenues using product recommendations and site
personalisation.
Site search is a hot topic
Search platforms can perform well in focusing internet retailers’ sales. An article in Econsultancy in March
2013 titled “Is site search less important for niche retailers?” reported that, when a site used particular search
platforms, visitors on average converted at 4.63 per cent. compared to the site’s previous average of 2.77 per
cent.17 Visitors using search platforms on the site contributed 13.8 per cent. of the site’s revenues. The
same journal reported that 73 per cent. of retailers plan to add search filters to their site search platforms.18
The Directors believe that the increase in awareness of the effectiveness of search platforms is a good
opportunity for the Group to increase the use of ATTRAQTTM Search by retailers.
8. THE MARKET
There are approximately 180,000 online retailers in the United Kingdom. The Group is currently directly
focusing its attentions on addressing the top 2,000 UK retailers, however, the Directors believe that the top
20 per cent., or circa 36,000 online retailers, represent the longer term addressable market (see paragraph
10 of this Part 1). In the US, the Group is looking to target the top 10,000 US online retailers and, in the
longer term, the top 20 per cent. of online retailers.
A1 12.1
A1 12.2
A1 6.5
9. COMPETITION
The growth in eCommerce has resulted in a significant increase in software companies seeking to supply
online retailers with enabling technology. The Directors consider that competitors can face significant barriers
when entering the eCommerce platform market, including difficulties in providing merchandising functionality
in real-time. The Directors are not aware of any directly comparable competitor offering all three elements
of the Group’s platform in a SaaS package.
The Directors believe having all three elements makes it easier for the Group to both reduce incumbent
competitors’ new prospects and to defend its existing client-base from external competitors.
10. BUSINESS STRATEGY
The Group’s objective is to become the merchandising platform of choice for online retailers in Western
Europe and the US and in a more global capacity in the long term.
The Group’s business plan is simple and scalable, chiefly comprising five main elements:
1.
Roll-out of sales teams in the US and an expansion of the current UK sales team
The sales model for the Group is simple, predictable and scalable. Most of the Group’s contracts are
set on a twelve month basis and, therefore, give an accurate and visible indication of future earnings.
Going forward, the Group’s plan is to increase its UK sales team from three to five sales staff and to
add one more regional sales team in the US. The intention is for each US sales team to be headed by
a senior sales person, supported by two telemarketers to set appointments and one sales administrator
to focus on new leads and maintain contracts. Further production and support teams are intended to
be recruited, as required, once the sales teams have become effective.
2.
Increasing the Group’s productive capacity
The Directors believe that it is important that production does not become a bottle-neck to revenue
growth. To increase the Group’s productive capacity, which is the rate at which new clients are set up
and configured on the platform, the Directors plan to increase the size of the Group’s project
16
17
18
EConsultancy: “The ROI of personalisation [infographic]” (https://econsultancy.com/blog/10194-the-roi-of-personalisationinfographic#i.1mly6jz7bxfav1).
EConsultancy: “Is site search less important for niche retailers?” (https://econsultancy.com/blog/62401-is-site-search-less-importantfor-niche-retailers#i.1mly6jz7bxfav1).
EConsultancy: “Is site search less important for niche retailers?” (https://econsultancy.com/blog/62401-is-site-search-less-importantfor-niche-retailers#i.1mly6jz7bxfav1).
22
A1 5.2.3
A1 12.2
management and production developer teams and invest in platform development designed to increase
productive capacity through automation and standardisation of the set up and configuration process.
3.
Extending the current functionality of Freestyle Merchandising
It is important for the development of Freestyle Merchandising to keep pace with the growth of the
Group’s client base. At the moment, the Group’s platform development team is small and, therefore,
has a limited ability to extend the functionality of Freestyle Merchandising. In the medium-term, the
Directors intend to increase the size of the core development team to increase the speed at which the
Group can release new platform developments.
Examples of planned new platform developments include improvements and new features relating to
personalisation, automatic and pre-set settings, email recommendations, multi-site merchandising,
A/B testing and multivariate analysis, reporting and analytics, third party tags and analytics integrations,
data import validation, mapping and enhancements to the control panel and in-context toolkit.
4.
Developing plug-ins for the major eCommerce platforms
Freestyle Merchandising is currently available as a JavaScript insert, a server-to-server API, a Magentospecific plug-in and as a hosted service. In the two years since the development of the initial Magento
extension, the Directors have seen Magento become a significant part of the eCommerce market. The
Group currently has 16 clients on the Magento platform and Magento typically now represents
approximately 25 per cent. of the Group’s monthly sales pipeline. Following the success of the Group’s
Magento extension, it has recently signed partnership and integration deals with two other eCommerce
platforms: Hybris and EPiServer. The Directors intend that the Group will either develop plug-ins for
other eCommerce platforms itself or outsource the development of such plug-ins if this is a more cost
efficient process. The Directors believe that these plug-in developments will help the Group to sell
Freestyle Merchandising to retailers using these platforms.
While dedicated plug-ins for eCommerce platforms are not required by the Group, the integration of
Freestyle Merchandising with a client’s site will typically be quicker and easier for the client if a plug-in
already exists.
The diagram below sets out an overview of the eCommerce platforms which are used by the Group’s
clients:
Client eCommerce Platforms
1.1%
1.2% 1.2%
2.3%
Custom
3.5%
Venda
19.31%
Magento
4.6%
VisualSoft
Dot Agency
Maginus
Powa
Aurora
Paraspar
13.21%
18.29%
Source: ATTRAQT client analysis figures (unaudited)
11. FUTURE OPPORTUNITIES AND DEVELOPMENTS
In addition to the developments addressed above, the Directors intend that the Group will develop new
products, including:
23
A1 5.2.3
A1 12.2
●
ATTRAQTTM Shop Window: ATTRAQTTM Shop Window is a JavaScript-based mini-site enabling
retailers to have tactical deployments of their sites within an advertising window on a third-party site
(e.g. blogs).
●
ATTRAQTTM Mobile Commerce: ATTRAQTTM Mobile Commerce enables the quick deployment of
online retailing on mobile devices.
●
Develop a self-service version of Freestyle Merchandising: Currently, the Group targets the top
2,000 UK retailers and the top 10,000 US retailers. The Directors believe that the top 20 per cent. of
online retailers in the UK and the US is the long term market which the Group intends to address by
deploying a self-service version of Freestyle Merchandising.
●
Reporting and analytics: It is intended that the Group will develop functionality to add more tracking
of merchandising strategy performance, including time based graphing, better splicing and dicing of
data and automated reporting emails. It is also proposed that the Group will develop a configurable
management dashboard to the Control Panel so business users can quickly see what is happening
on the site in real time and react accordingly.
●
Visual CMS: It is intended that the Group will develop functionality to manage and store pictures of
products used on a retailer’s site.
12. FINANCIAL SUMMARY
The financial information set out in the table below has been extracted from the historical financial information
of the ATTRAQT Group included in Part 3 of this document. Shareholders should read the full historical
financial information in Part 3 of this document and not rely solely upon the summary below.
Year ended
Year ended
Year ended
31 December 31 December 31 December
2011
2012
2013
£’000
£’000
£’000
Total revenue
Gross profit
EBITDA
Depreciation and amortisation
Interest received
Profit before tax
1,181
982
6
(151)
3
(142)
1,251
983
(219)
(173)
–
(392)
1,581
1,287
(393)
(165)
–
(558)
This information relates to past performance only. Past performance is not a reliable indicator of future results.
Total sales, technical and administration costs have increased significantly over the three year period,
principally driven by an increase in staff costs. These costs have increased faster than historic revenue
growth as sales and productions staff were recruited (and salary costs incurred) before new clients were
signed. This resulted in a reduced EBITDA.
13. CURRENT TRADING AND PROSPECTS
Current trading continues in line with the Directors’ expectations. Growth continued in the Group’s core
metrics in the period since 31 December 2013 to 22 July 2014 and the Directors have confidence in the
Group’s prospects for the current financial year and beyond.
14. REASONS FOR THE SUBSCRIPTION AND ADMISSION
The net proceeds of the Subscription receivable by the Company are expected to be approximately
£0.8 million and are intended to be used for: expanding the US sales team; marketing effort for leadgeneration; increasing productive capacity to keep pace with sales; and extending platform functionality
and new product development.
In addition, the Directors believe that Admission will assist the Group in its development by: (i) raising its
profile in the sector; (ii) providing investment to fund future growth; and (iii) increasing access to capital should
further finance be required to expand the business of the Group.
24
A1 5.2.3
A3 3.4
A3 8.1
Sch 2(g)
15. BOARD OF DIRECTORS AND SENIOR MANAGEMENT
Board of Directors
Dan Wagner (aged 50), Co-Founder and Non-Executive Chairman
Dan is a British internet entrepreneur and businessman who founded M.A.I.D. plc (Market Analysis
Information Database) in 1984. M.A.I.D. was listed on the London Stock Exchange in 1994 and on NASDAQ
the following year.
Dan was chosen by the World Economic Forum as a Global Leader of Tomorrow in 1997 and awarded the
Ernst and Young Entrepreneur of the Year Award in 1998.
After the sale of M.A.I.D. in early 2000 to Thomson Reuters for $330 million, Dan founded Venda Limited
(an “on demand” eCommerce provider) in 2001 and then ATTRAQT Limited in 2003.
Most recently, Dan set up Powa Technologies Limited, a mobile eCommerce and retail point of sale platform
for brands and merchants in which he has the role of chairman and chief executive officer.
Ivor Dunbar (aged 53), Non-Executive Deputy Chairman
Ivor is the chairman of Project Trust. He lives in London and is a non-executive director of Powa Technologies
Limited (a financial technology company) and Bluefield Harrier Limited (a solar power company).
Educated at Inverness Royal Academy and University College of Wales in Aberystwyth, Ivor has spent most
of his professional career as an investment banker with Barclays de Zoete Wedd and until recently with
Deutsche Bank.
Ivor is a capital markets specialist and at Deutsche Bank he was head of global capital markets, co-head
of investment banking and a member of the executive committee of Deutsche Bank’s corporate and
investment banking division.
André Brown (aged 52), Co-founder and Chief Executive Officer
André, the co-founder and chief executive officer of the Company, has over 25 years’ experience in
developing innovative technologies. He has been instrumental in the development of the Group and has
helped to grow its customer base from zero to a list of well-known names in the retail arena.
Previous positions include group mergers & acquisitions director for Nettec plc, strategic alliances director
for MAID plc, chief executive officer of the eCommerce division of Dialog plc and one of the leaders of the
team that originally brought Adobe Acrobat to the UK marketplace.
André holds a BSc. in economics from the London School of Economics and qualifications in corporate
finance and marketing innovative technologies from the London Business School and Harvard Business
School, respectively.
David Stirling (aged 63), Finance Director
David is an experienced chief financial officer with a successful track record in charge of finance for several
entrepreneurial businesses, mainly in the technology sector, including roles as finance director of two AIM
listed companies (Haemocell plc and Brightview plc). He has been the chief financial officer of Bright Station
Ventures since 2011. He has handled fund raising, corporate restructuring and M&A work. In the last 10
years, he has also been finance director of two private equity funded, eCommerce businesses which both
exited in trade sales. David has been an investor in the Company since 2013.
His previous experience includes 10 years as a management consultant with Coopers & Lybrand and various
finance related interim management positions. David has an honours degree in commerce from Heriot Watt
University and is a fellow of the Chartered Institute of Management Accountants.
Edward Ewing (aged 50), Independent Non-Executive Director
In a career spanning three decades, Ed has worked extensively as a senior executive in the technology,
media and telecommunications sectors in management, sales and product/service development roles.
25
Previous international roles have included working for Apple in Europe, strategic planning and programme
director for Scoot.com plc and managing operations in Northern Europe for Quark Inc. He was responsible
for establishing the digital division for global publisher Boat International Media, including successfully
launching boatinternational.com and establishing it as one of the leading online market place for pre-owned
superyachts.
Along with advising a number of clients on strategy and business development, Ed has a portfolio of
companies based in North Norfolk, and most recently he was instrumental in raising over £750,000 in funding
from the Heritage Lottery Fund and English Heritage to help secure the future of one of the UK’s youngest
ancient monuments.
Robert Fenner (aged 49), Non-Executive Director
Robert is a partner in the international law firm Taylor Wessing LLP and has been a solicitor for 24 years. He
is a corporate lawyer specialising in advising companies on all aspects of corporate law including listings
and mergers and acquisitions.
Senior Management
David Phillips (aged 52), Chief Technology Officer
David has more than 25 years’ experience in the software technology sector, including almost 10 years with
eCommerce software. David joined the Group in 2013 as chief technology officer where his main
responsibilities lie in product development, platform management and technical client relationships. David
has a wealth of experience in business, working for established public companies, as well as founding
several of his own companies.
Mark Turner (aged 51), Chief Commercial Officer
Mark joined the Group in 2010 as head of US sales before moving to the UK as global head of sales in
2011. His main responsibility within this role is to boost the commercial growth of the business, through
new business and account development. Mark has considerable international experience having spent a
substantial amount of his career based in the US and is well placed within the Group after spending a number
of years as the regional and business development director of various companies, including Dialog Corp,
Profound and MAID plc.
Matt Conacher (aged 32), Head of Technology
Matt joined the Group in 2004 as the Group’s first software engineer and has over a decade of web
development experience, particularly in retail, having previously worked for John Lewis. He is the co-architect
of the Group’s Freestyle Merchandising platform and has been vital in supporting the Group’s initial customers
through the process of integrating the Group’s software into their systems.
Bernadine Venter (aged 33), Chief Operating Officer
Bernadine joined the Group in 2009 before the launch of the Freestyle Merchandising platform. Prior to this,
she worked on the technical solutions team at a South African supply chain business, developing the skills
she now uses in the management of all of the new client implementations on Freestyle Merchandising and
overseeing the development, support and production teams. Bernadine uses her technical and business
process knowledge to promote the Group’s service offering to potential and existing clients and partners.
A1 16.4
16. CORPORATE GOVERNANCE
The Directors recognise the importance of sound corporate governance and confirm that, following
Admission, they intend to comply with the CGC to the extent appropriate for a company of its nature and
size. The Board also proposes to follow, as far as practicable, the recommendations in the QCA Guidelines,
which have become a widely recognised benchmark for corporate governance of smaller quoted companies,
particularly AIM companies.
Following Admission, the Board will meet at least once a month to review, formulate and approve the
Company’s strategy, budgets, corporate actions and oversee the Company’s progress towards its goals. It
has established an audit committee and a remuneration committee with formally delegated duties and
responsibilities and with written terms of reference. From time to time, separate committees may be set up
26
by the Board to consider specific issues when the need arises. Due to the size of the Company, the Directors
have decided that issues concerning the nomination of directors will be dealt with by the Board rather than
by a committee.
Audit committee
The audit committee is chaired by Ivor Dunbar and its other member is Ed Ewing, both of whom are
independent non-executive directors. The Company’s chairman will attend committee meetings as an
observer. The audit committee is expected to meet formally at least two times a year and otherwise as
required. It will have the responsibility for ensuring that the financial performance of the Company is properly
reported on and reviewed and its role includes monitoring the integrity of the financial statements of the
Company (including annual and interim accounts and results announcements), reviewing internal control
and risk management systems, reviewing any changes to accounting policies, reviewing and monitoring the
extent of the non-audit services undertaken by external auditors and advising on the appointment of external
auditors.
Remuneration committee
The remuneration committee is chaired by Ed Ewing and its other member is Ivor Dunbar, both of whom
are independent non-executive directors. The Company’s chairman will attend committee meetings as an
observer. The remuneration committee is expected to meet not less than once a year and at such other
times as required. It will have responsibility for determining, within the agreed terms of reference, the
Company’s policy on the remuneration packages of the Company’s chief executive, chairman, and the
executive directors, the company secretary, senior managers and such other members of the executive
management as it is designated to consider. The remuneration committee will also have responsibility for
determining (within the terms of the Company’s policy and in consultation with the chairman of the Board
and/or the chief executive officer) the total individual remuneration package for each executive director, the
company secretary and other designated senior executives (including bonuses, incentive payments and
share options or other share awards). The remuneration of non-executive directors will be a matter for the
chairman and executive directors of the Board. No director or manager will be allowed to partake in any
discussions as to their own remuneration. In addition, the remuneration committee will have the responsibility
for reviewing the structure, size and composition (including the skills, knowledge and experience) of the
Board and giving full consideration to succession planning. It will also have responsibility for recommending
new appointments to the Board.
Share dealing code
The Company will adopt, with effect from Admission, a share dealing code for the Directors and certain
employees, which is appropriate for a company whose shares are admitted to trading on AIM (particularly
relating to dealing during close periods in accordance with Rule 21 of the AIM Rules for Companies). The
Company will take all reasonable steps to ensure compliance by the Directors and any relevant employees
with the terms of the share dealing code.
A3 3.4
17. DETAILS OF THE SUBSCRIPTION
The Company is proposing to issue 2,500,000 Subscription Shares at a price of 50 pence per Subscription
Share to the Subscribers pursuant to the Subscription Letters.
The Subscription Shares will be issued credited as fully paid. On Admission, the Subscription Shares will
rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends
or other distributions declared, made or paid after Admission. The Subscription Shares to be issued by the
Company pursuant to the Subscription Letters will represent approximately 12.1 per cent. of the Enlarged
Share Capital. On Admission, the Company will have a market capitalisation of approximately £10.3 million
at the Subscription Price. The Subscription is not being underwritten.
The proceeds of the Subscription receivable by the Company (before expenses) will be approximately
£1.25 million.
Further details of the Subscription Letters are set out in paragraph 18.3 of Part 4 of this document.
27
18. RELATIONSHIP AGREEMENT
Following Admission, 56.9 per cent. of the Enlarged Share Capital will be held by the Concert Party. The
Company entered into the Relationship Agreement with Dan Wagner, BSV and N+1 Singer on 12 August
2014. Pursuant to the Relationship Agreement, Dan Wagner and BSV have agreed to (amongst other things):
●
conduct all transactions with the Group on arm’s length terms, on a normal commercial basis and only
with the prior approval of a majority of independent directors;
●
exercise their voting rights or other rights and powers so as to ensure that each member of the Group
is capable of carrying on its business independently of Dan Wagner and BSV (and their associates);
and
●
abstain from voting in respect of any resolution concerning any contract, arrangement or transaction
with a related party of Dan Wagner or BSV (or any of their associates).
Further details of the Relationship Agreement are set out in paragraph 18.8 of Part 4 of this document.
A3 7.3
19. LOCK-INS AND ORDERLY MARKET ARRANGEMENTS
Pursuant to the Lock-in Agreements, each Locked-in Shareholder has agreed (subject to certain exceptions)
that, until the Company publishes its financial results for the year ending 31 December 2014:
●
it will not dispose of Ordinary Shares representing approximately 72.5 per cent. of its shareholding in
the Company (excluding the New Shares) or enter into a transaction with the same economic effect,
except with the prior written consent of N+1 Singer; and
●
it will not trade any of its other Ordinary Shares except through N+1 Singer.
The remaining Shareholders entered into an orderly market agreement with N+1 Singer and the Company
on 12 August 2014, pursuant to which they will not trade any of their Ordinary Shares until the 12 month
anniversary of Admission except through N+1 Singer (subject to certain exceptions).
These agreements have been entered into for the purposes of preserving an orderly market in the Ordinary
Shares after Admission.
Details of these arrangements are set out in paragraph 18.6 of Part 4 of this document.
20. DIVIDEND POLICY
The Company has not declared or paid cash dividends on the Existing Ordinary Shares prior to the date of
this document. The payment of any future dividends on the Ordinary Shares will depend on the future
earnings of the Company. The Board has no current intention of paying a cash dividend to Shareholders as
the Board currently intends to invest the Company’s cash reserves and any cash generated into driving
business growth, but will consider declaring a dividend only when prudent to do so and in the context of
the cash generated by the business.
A1 20.7
A3 4.5
A1 17.3
21. EMPLOYEE INCENTIVE SCHEMES
The Board considers employee share ownership to be an important part of its strategy for employee
incentivisation and has an established framework to allow selected employees to share in the success of
the Group by the award of Existing Options and New Share Options. Please refer to paragraph 11 of Part 4
of this document for further information relating to the terms of the Existing Options and New Share Options.
22. ADMISSION, SETTLEMENT AND CREST
Application will be made to the London Stock Exchange for all the Existing Ordinary Shares and the New
Ordinary Shares to be admitted to trading on AIM. It is expected that Admission will become effective and
dealings in the Enlarged Share Capital will commence at 8.00 a.m. on 19 August 2014.
CREST is a computerised share transfer and settlement system. The system allows shares and other
securities to be held in electronic form rather than paper form, although a shareholder can continue dealing
28
based on share certificates and notarial deeds of transfer. For private investors who do not trade frequently,
this latter course is likely to be more cost-effective.
In the case of Subscribers who have requested to receive Subscription Shares in uncertificated form, it is
expected that CREST accounts will be credited with effect from 19 August 2014. In the case of Subscribers
who have requested to receive Subscription Shares in certificated form, it is expected that share certificates
will be dispatched by post within 14 days of the date of Admission.
Pending dispatch of definitive share certificates, the Registrars will certify instruments of transfer against the
register. No temporary documents of title will be issued.
The ISIN number of the Ordinary Shares is GB00BMJJFZ18. The TIDM is ATQT.
23. TAXATION
Information regarding taxation is set out in paragraph 16 of Part 4 of this document. This information is
intended only as a general guide to the current tax position in the UK. Any shareholder who is in any
doubt as to his or her tax position, or is subject to tax in a jurisdiction other than the UK, should
consult his or her own independent professional adviser without delay.
24. CITY CODE ON TAKEOVERS AND MERGERS
The Takeover Code applies to the Company.
Rule 9 of the Takeover Code is designed to prevent the acquisition or consolidation of control of a company
subject to the Takeover Code without a general offer being made to all shareholders. Rule 9 states that,
when any person or group of persons acting in concert acquires (whether by one transaction or a series of
transactions) an interest in shares which carry 30 per cent. or more of the voting rights of the company,
such person or persons acting in concert must normally make a general offer for the balance of the issued
share capital of such company. Rule 9 also states that any person or group of persons acting in concert
that is interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of a
company but does not hold shares carrying more than 50 per cent. of such voting rights must normally
make a general offer for the balance of the issued share capital should there be any increase in the
percentage of the shares carrying voting rights in which they or any person acting in concert with them are
interested.
An offer under Rule 9 must be made in cash and at the highest price paid by the person required to make
the offer or any person acting in concert with him for any interest in shares of the company during the 12
months prior to the announcement of the offer.
Further information on the provisions of the Takeover Code can be found in paragraph 17.1 of Part 4 of this
document.
25. RISK FACTORS
Your attention is drawn to the risk factors set out in Part 2 of this document and to section entitled “Forward
Looking Statements” on page 2 of this document. In addition to all other information set out in this document,
potential investors should carefully consider the risks described in those sections before making a decision
to invest in the Company.
26. ADDITIONAL INFORMATION
Prospective investors should read the whole of this document, which provides additional information on the
Company, the Subscription and Admission and not rely on summaries or individual parts only. In particular,
the attention of prospective investors is drawn to Part 2 of this document which contains a summary of the
risk factors relating to an investment in the Company, to Part 3 of this document which contains historical
financial information on the ATTRAQT Group and an accountants’ report thereon and to Part 4 of this
document which contains further information on the Group.
29
PART 2
RISK FACTORS
AN INVESTMENT IN ORDINARY SHARES IS HIGHLY SPECULATIVE AND INVOLVES A HIGH
DEGREE OF RISK. THE ATTENTION OF PROSPECTIVE INVESTORS IS DRAWN TO THE FACT
THAT THE GROUP IS SUBJECT TO A VARIETY OF RISKS WHICH, IF ANY WERE TO OCCUR,
COULD HAVE A MATERIALLY ADVERSE EFFECT ON THE GROUP’S BUSINESS AND/OR
FINANCIAL CONDITION, RESULTS OR FUTURE OPERATIONS. IN SUCH CASE, THE MARKET
PRICE OF THE ORDINARY SHARES COULD DECLINE AND INVESTORS MIGHT LOSE SOME OR
ALL OF THEIR INVESTMENT.
In addition to the information set out in the rest of this document, the following risk factors in this Part 2
should be considered carefully in evaluating whether to make an investment in the Company. The following
factors do not purport to be an exhaustive list or explanation of all the risk factors involved in investing in the
Company and they are not set out in any order of priority. Additionally, there may be risks not mentioned in
this document of which the Board is not aware or believes to be immaterial but which may, in the future,
adversely affect the Group’s business and the market price of the Ordinary Shares. In particular, the Group’s
performance may be affected by changes in the market or economic conditions and by legal, regulatory
and tax requirements.
Before making a final investment decision, prospective investors should consider carefully whether an
investment in the Company is suitable for them and, if they are in any doubt, should consult with an
independent financial adviser authorised under FSMA which specialises in advising on the acquisition of
shares and other securities in the UK or another appropriate financial adviser in the jurisdiction in which such
investor is located.
1. RISKS RELATING TO THE GROUP AND THE BUSINESS
Competitive risk
The growth in eCommerce has resulted in a significant increase in software companies seeking to supply
online retailers with enabling technology. Although the Group does not provide an eCommerce platform,
the Directors believe that competition to the Group's offering can come from eCommerce providers adding
functionality to their existing platforms. The Directors consider that competitors can face significant barriers
when entering the eCommerce platform market, including difficulties in providing merchandising functionality
in real-time. The Directors are not aware of any directly comparable competitor offering all three elements
of the Group’s platform in a SaaS package. The Directors believe having all three elements makes it easier
for the Group to both reduce incumbent competitors’ new prospects and to defend its existing client-base
from external competitors. However, over time, the Group’s products may be overcome by competitors
merging or developing similar capabilities. The Directors consider that it is important for the Group to build
on the strong competitive momentum it is seeing through continuous innovation. Failure to do so could have
a material adverse effect on the Group’s business, financial condition or operating results.
Effectiveness of new hires key in realising growth ambitions
As with any fast growing software business, the Group’s growth strategy is predicated on hiring people who
will be effective in realising its growth ambitions. Sales and marketing hires as well as technical people that
expand capacity (in terms of getting sites live) are crucial to drive the Group’s revenue base. The Directors
believe that, over the last two years, the Group has refined its go-to-market strategy and can train new
recruits on the Group’s sales process quickly. The relatively straight forward sales process should allow
management to make a quick assessment of the potential of new hires and, therefore, address any
underperformance at an early stage.
Any delays in recruitment or underperformance from the new hires will impact the Group’s financial
performance and may have a material adverse effect on the Group’s business and operating results.
Forecasting exact trajectory of growth is challenging in fast growing businesses
The Group’s business is enjoying strong momentum and additional growth capital should accelerate this
further. There is growth in new client wins which deliver varying levels of upfront payments as well as varying
30
A1 4
A3 2
levels of monthly fees. The SaaS business model introduces a good level of predictability in the business,
but timing of deals and the Group’s ability to get sites live will impact on revenues and cash collection.
Although there is enough history to allow the Directors to make educated assumptions in the Group’s model
(leads per salesperson, sales conversion, average deal sizes etc.), forecasting the exact trajectory of the
growth is still challenging because of the Group’s relatively short trading history. Any significant deviation in
these metrics, positive or negative, will have an impact on the Group’s financial forecasts which may, in turn,
have a material adverse effect on the Group’s business, financial condition or operating results.
High exposure to retail sector
Due to the nature of the technology the Group provides, the Group’s customers are predominantly in the
retail sector. A widespread downturn in the economy could put pressure on capital expenditure budgets for
software spending if overall retail volumes dropped, which could result in early termination of customer
contracts and deter new customers from using the Group’s services. This would, in turn, have a material
adverse effect on the Group’s business, financial condition or operating results.
Technological risk
The Group operates in an industry where competitive advantage is heavily dependent on technology. It is
possible that technological development may reduce the importance of the Group’s function in the market
or render the patents on which it relies redundant. To remain competitive, the Group must continue to
enhance and improve the responsiveness, functionality, accessibility and other features of its software,
services and technologies.
The markets in which the Group operates are also characterised by changes in use and customer
requirements and preferences, frequent product and service introductions employing new technologies and
the emergence of new industry standards and practices that could render the Group’s existing technology
and systems obsolete.
There can be no assurance that the Group will be able to anticipate and respond to the demand for new
services, products and technologies in a timely and cost effective manner and adapt to technological
advancements and changing standards. The Group’s failure to do any of these could have a material adverse
effect on its business, financial condition or operating results.
Interruption or failure of the Group’s information technology and communications systems could
impair its ability to effectively provide its services, which could damage its reputation and
business
The availability of the Group’s products and services depends on the performance, reliability and availability
of its information technology and communications systems. The Group’s systems are vulnerable to damage
or interruption from power loss, telecommunications failures, computer viruses, computer denial of service
attacks or other attempts to harm its systems, natural disasters (including floods and fires), vandalism,
terrorist attacks or other acts. The Group’s disaster recovery plans may not address adequately every
potential event and its insurance policies may not cover any loss (including losses resulting from business
interruption) or damage that it suffers fully or at all.
The Group relies on third parties, including data centres and bandwidth providers, to host and operate the
Group’s sites. Any failure or interruption in the services provided by these third parties could harm its
operations and reputation. In addition, the Group may have little or no control over these third parties, which
increases its vulnerability to service problems. Any disruption in the network access or co-location services
provided by these parties or any failure of these providers to handle current or higher visitor traffic or
transaction volumes could significantly harm the Group’s business. The Group has experienced and may in
the future experience disruptions or delays in these services. If these providers were to suffer financial or
other difficulties, their services to the Group could be interrupted or discontinued and replacement providers
may be uneconomical or unavailable. Any of these events could have a material adverse effect on the Group’s
business, financial condition or operating results.
Protection of the Group’s intellectual property rights
The Group’s intellectual property rights are important assets. The Group relies on a combination of copyright,
registered and unregistered trademarks, registered domain names, database rights and the law protecting
31
confidential information to define and protect its rights to brands, technologies and databases that are critical
to its ability to compete in the online comparison market.
There can be no assurance that third parties, including parties to whom the Group discloses proprietary
knowledge, information and technology under licensing or other arrangements, will not attempt to
misappropriate or challenge the Group’s right to such knowledge, information and technology.
To the extent that the Group’s brands, technologies and databases are not protected by intellectual property
rights, third parties, including competitors, may be able to commercialise or otherwise use the Group’s
brand, technologies and/or databases without compensating the Group.
The Group also seeks to maintain certain intellectual property as trade secrets. The security of its trade
secrets could be compromised by contractors or outside parties, or intentionally or accidentally by its
employees, which would cause the Group to lose part of its competitive advantage.
Any misappropriation of the Group’s intellectual property could have a materially adverse effect on the
Group’s business, financial condition or operating results. Furthermore, the Group may need to take legal
action to enforce its intellectual property or to protect trade secrets. Defending such claims may result in
substantial costs and the diversion of resources and management attention and there can be no guarantees
as to the outcome of any such litigation, or that it can be effectively used to enforce the Group’s rights.
Third party intellectual property rights
Although the Directors believe that the Group’s intellectual property rights do not infringe the intellectual
property rights of others, third parties may assert claims that the Group has infringed a particular copyright,
trade mark or other proprietary right or confidential information belonging to them. Any such intellectual
property claims, with or without merit, could be time consuming, expensive to litigate or settle and could
divert management resources and information.
The Group could also be subject to potential claims from employees, consultants or third parties with whom
it conducts business who allege ownership or co-ownership of certain intellectual property used by the
Group. Although the Group enters into invention assignment and non-disclosure agreements with its
employees, consultants and third parties, there is no assurance that these contracts will be enforceable or
interpreted to cover the Group’s use or development of the disputed intellectual property.
Certain contracts entered into by the Group contain onerous and/or unusual terms which may
not adequately protect the Group or leave the Group exposed to liabilities or restrictions
Certain of the customer, supplier and partner contracts entered into by the Group contain onerous and/or
unusual terms (including in some cases no clauses limiting liability, some clauses restricting the territory in
which the company can operate and unclear termination provisions) which may not adequately protect the
Group or leave the Group exposed to liabilities or restrictions. While the Group intends to seek to negotiate
improved terms for use with new customers, suppliers and partners and to try and negotiate appropriate
amendments to contracts with existing customers, suppliers and partners when the existing contracts are
to be renewed, there is no guarantee that customers, suppliers or partners will agree to these terms or that
such negotiations will be successful. Enforcement of a contract containing onerous and/or unusual terms
by a customer, supplier or partner could result in increased liability or restrictions for the Group which would,
in turn, have a material adverse effect on the Group’s business, financial condition or operating results.
Concentrated customer base
The Group currently generates a significant proportion of its revenue from certain customers. The loss of all
or a substantial proportion of the business provided by one or more of the Group’s top customers (whether
as a result of customers moving to a competitor, merging with another entity, reductions in spending levels,
dissatisfaction with the Group’s services, bankruptcy, failing to renew their contracts or otherwise) may have
a material adverse effect on the Group’s business. Similarly, the Group’s future projected revenue is
dependent on securing certain additional customers and/or expanding its services to existing customers.
The Group’s success depends on retaining and attracting capable management
The Group’s success and ability to effectively execute its business plan depend in large part on its ability to
attract and retain senior management. The Group’s business plan was developed by its senior management,
32
who have acquired specialised knowledge and skills regarding the Group, the markets it serves and the
online business generally. The Group may not be able to find effective replacements in a timely manner or
at all. The loss of any of these members of senior management, or any delay in replacing a departed member,
may have a material adverse effect on the Group’s business, financial condition or operating results.
Shareholdings of the Concert Party
Following Admission, 56.9 per cent. of the Enlarged Share Capital will be held by the Concert Party. While
the Company has entered into the Relationship Agreement with Dan Wagner, BSV and N+1 Singer to
regulate its relationship with Dan Wagner and BSV, the Concert Party will be able to exercise influence over
the Group’s corporate actions and activities and the outcome of general matters pertaining to the Group.
The interests of the Concert Party may be different from the interests of the Group or of the Shareholders in
general. This control may have the effect of making certain transactions more difficult without the support
of the Concert Party and may delay or prevent an acquisition or other change in control of the Group.
Changes in applicable laws and regulations
Regulation of the internet and eCommerce is rapidly evolving and there are an increasing number of directly
applicable laws and regulations. It is possible that additional laws and regulations may be enacted with
respect to the internet, covering issues such as user privacy, law enforcement, pricing, taxation, content
liability, data encryption, copyright protection and quality of products and services. The requirement to
comply with and the adoption of such new or revised regulations, or new or changed interpretations or
enforcement of existing regulations, may have a material adverse effect on the Group’s business, financial
condition or operating results.
If the Group is not successful in expanding into new markets in other jurisdictions it may be
unable to achieve its strategic growth objectives
The Group’s plans to investigate entering further markets outside the UK may expose it to political, economic
and regulatory risks not faced by businesses that operate only in the UK. Such risks include different
regulatory requirements, trade barriers, complications with staffing and managing foreign operations,
potential difficulties in enforcing contracts and intellectual property rights, variations in consumer behaviour,
fluctuations in currency exchange rates, political and economic instability, the potential for higher rates of
fraud and adverse tax consequences. These risks, among others, could materially adversely affect the
Group’s business.
There is also a risk that markets outside the UK may not develop as quickly as anticipated, or at all. The
development of such markets is subject to political, social, regulatory and economic forces beyond the
Group’s control. The Group’s estimates of the potential future fee generation rates in new geographic markets
are based on a variety of assumptions, which may prove to be inaccurate. To the extent that the Group
overestimates the potential of a new geographic market, incorrectly judges the timing of the development
of a new geographic market or fails to anticipate the differences between a new geographic market and its
existing markets, it may fail in its growth strategy of expanding into new geographic markets. In addition, if
the Group is unable to meet the needs of its existing customers who are active in geographic markets that
the Group does not currently serve, its relationships with these customers could be harmed. Any of these
events could have a material adverse effect on the Group’s business, financial condition or operating results.
The Group’s insurance policies may be inadequate to cover the cost of claims made against the
Group
While the Group maintains commercial insurance at a level it believes is appropriate against certain risks
commonly insured in the industry, there is no guarantee that it will be able to obtain the desired levels of
cover on acceptable terms in the future. Furthermore, the nature of these risks is such that liabilities could
exceed policy limits or that certain risks could be excluded from the Group’s insurance coverage. There are
also risks against which the Group cannot insure or against which it may elect not to insure. The potential
costs that could be associated with any liabilities not covered by insurance or in excess of insurance
coverage may cause substantial delays and require significant capital outlays, adversely affecting the Group’s
earnings and competitive position in the future and, potentially, its financial position. The Group’s operations
could suffer losses which may not be fully compensated by insurance. In addition, certain types of risks
may be, or may become, either uninsurable or not economically insurable, or may not be currently or in the
33
future covered by the Group’s insurance policies. Any of the foregoing could have a material adverse effect
on the Group’s business, financial condition or operating results.
If the Group cannot maintain its corporate culture as it grows, it could lose the innovation,
teamwork and focus that contribute crucially to its business
The Directors believe that a critical component of the Group’s success has been its corporate culture, which
they believe fosters innovation, encourages teamwork, cultivates creativity and promotes focus on execution.
The Group has invested substantial time, energy and resources in building a highly collaborative team that
works together effectively in an environment designed to promote openness, honesty, mutual respect and
the pursuit of common goals. As the Company continues to develop the infrastructure of a public company
and continues to grow, it may find it difficult to maintain these valuable aspects of its corporate culture. Any
failure to preserve the Group’s culture could negatively impact its future success, including its ability to attract
and retain personnel, encourage innovation and teamwork and effectively focus on and pursue its corporate
objectives.
Potential requirement for further investment
Any future expansion, activity and/or business development may require additional capital, whether from
equity or debt sources. There can be no guarantee that the necessary funds will be available on a timely
basis, on favourable terms, or at all, or that such funds, if raised, would be sufficient. If additional funds are
raised by issuing equity securities, dilution to the then existing shareholdings may result. Debt funding may
require assets of the Group to be secured in favour of the lender, which security may be exercised if the
Group were to be unable to comply with the terms of the relevant debt facility agreement. The level and
timing of future expenditure will depend on a number of factors, many of which are outside the Group’s
control. If the Group is not able to obtain additional capital on acceptable terms, or at all, it may be forced
to curtail or abandon such planned expansion, activity and/or business development.
Reputational risk
The Group’s reputation is central to its future success in terms of the services and products it provides, the
way in which it conducts its business and the financial results which it achieves. Issues that may give rise
to reputational risk include, but are not limited to, failure to deal appropriately with legal and regulatory
requirements, money-laundering, fraud prevention, privacy, record-keeping, sales and trading practices and
the credit, liquidity, and market risks inherent in the Group’s business. If the Group fails, or appears to fail,
to deal with various issues that may give rise to reputational risk or if it fails to retain customers for any other
reason, this could materially harm its business prospects.
Also, failure to meet the expectations of its customers, suppliers, employees, shareholders and other
business partners may have a material adverse effect on the Group’s reputation and future revenue.
Market risks
The Group may be affected by general market trends which are unrelated to the performance of the Group
itself. The Group’s success depends on market acceptance of the Group’s solutions and services and there
can be no guarantee that this acceptance will continue to be forthcoming. Market opportunities targeted by
the Group may change and this could lead to an adverse effect upon its revenue and earnings.
The Group’s operating results may fluctuate, which makes the Group’s results difficult to predict
and could cause the Group’s results to fall short of expectations
The Group’s revenue and operating results may vary significantly from quarter to quarter and year to year
because of a variety of factors, many of which are outside the Group’s control. As a result, comparing the
Group’s operating results on a period to period basis may not be meaningful. In addition to other risk factors
discussed in this “Risk Factors” section, factors that may contribute to the variability of the Group’s quarterly
and annual results include:
●
the Group’s revenue mix and any changes it makes other sources of revenue;
●
the Group’s marketing costs or selling expenses;
●
the Group’s ability to effectively manage its growth;
34
●
the effects of increased competition in its business;
●
the Group’s ability to keep pace with changes in technology and its competitors;
●
costs associated with defending any litigation or enforcing its intellectual property rights;
●
the impact of economic conditions in the UK or the US on its revenue and expenses; and
●
changes in government regulation affecting its business.
Seasonal variations in the behaviour of the users of customer’s sites also may cause fluctuations in the
Group’s financial results. The Group’s business will be subject to seasonality in the future, which may result
in fluctuations in its financial results.
Fluctuations in the exchange rate of foreign currencies could result in currency transactions
losses
The Group currently has foreign sales denominated in US dollars and may, in the future, have sales
denominated in the currencies of additional countries in which the Group establishes sales offices. Any
fluctuation in the exchange rate of these foreign currencies may have a material adverse effect on the Group’s
business, financial condition or operating results. The Group has not previously engaged in foreign currency
hedging. If the Group decides to hedge its foreign currency exposure, it may not be able to hedge effectively
due to lack of experience, unreasonable costs or illiquid markets.
Application of the proceeds from the Subscription may not increase the Group’s profits or
Ordinary Share price
There is no guarantee that the use of net proceeds described in paragraph 14 of Part 1 of this document
will result in the Group making profits. The funds from the Subscription will enable the Group to strengthen
its market position, but the Group’s profitability is reliant upon increased growth in revenues whilst maintaining
relatively low capital expenditures and fixed overhead costs.
The Group may have exposure to greater than anticipated tax liabilities
Determining the Group’s provision for corporation and other tax liabilities and the application and calculation
of tax exemptions requires significant judgment and there are many transactions and calculations where the
ultimate tax determination is uncertain. Although the Directors believe that the Group’s estimates are
reasonable, the ultimate tax outcome may differ from the amounts recorded in the Group’s financial
statements and may materially affect the Group’s financial results in the period or periods for which such
determination is made.
Taxation legislation
Any change in the Group’s tax status or in taxation legislation in any jurisdiction in which the Group operates
could affect the Group’s financial condition and results and its ability (if any) to provide returns to
Shareholders. Statements in this document concerning the taxation of investors in Ordinary Shares are
based on current UK tax law and practice which is subject to change. The taxation of an investment in the
Company depends on the individual circumstances of investors.
Economic conditions and current economic weakness
Any economic downturn either globally or locally in any area in which the Group operates may have an
adverse effect on the demand for the Group’s products or services. A more prolonged economic downturn
may lead to an overall decline in the volume of the Group’s revenue, restricting the Group’s ability to realise
a profit.
In addition, although signs of economic recovery have been perceptible in certain countries, the sustainability
of a global economic upturn is not yet assured. If economic conditions remain uncertain, the Group might
see lower levels of growth than in the past, which might have an adverse impact on the Group’s operations
and business results.
35
Annex I 4,
Annex III 2
Force majeure
The Group’s operations now or in the future may be adversely affected by risks outside the control of the
Group, including labour unrest, civil disorder, war, subversive activities or sabotage, fires, floods, explosions
or other catastrophes, epidemics or quarantine restrictions.
2. RISKS RELATING TO THE COMPANY’S SECURITIES
General
An investment in the Ordinary Shares is only suitable for investors capable of evaluating the risks (including
the risk of capital loss) and merits of such investment and who have sufficient resources to sustain a total
loss of their investment. An investment in the Ordinary Shares should be seen as long-term in nature and
complementary to investments in a range of other financial assets as part of a diversified investment portfolio.
Accordingly, typical investors in the Company are expected to be institutional investors, private client fund
managers and private client brokers, as well as private individuals who have received advice from their
professional advisers regarding investment in the Ordinary Shares and/or who have sufficient experience to
enable them to evaluate the risks and merits of such investment themselves.
Conditionality of the Subscription
The Subscription is conditional upon, among other things, the admission to trading on AIM of the Ordinary
Shares. In the event that any condition to which Admission is subject is not satisfied or, if capable of waiver,
waived, then such Admission will not occur.
No prior market for the Ordinary Shares
Before Admission, there has been no prior market for the Ordinary Shares. Although application has been
made for the Ordinary Shares to be admitted to trading on AIM, an active public market may not develop
or be sustained following Admission.
Share price volatility and liquidity
Following Admission, the market price of the Ordinary Shares may be subject to wide fluctuations in response
to many factors, including stock market fluctuations and general economic conditions or changes in political
sentiment that may substantially affect the market price of the Ordinary Shares irrespective of the Group’s
actual financial, trading or operational performance. These factors could include the performance of the
Group, large purchases or sales of the Ordinary Shares (or the perception that the same may occur, as, for
example in the period leading up to the expiration of the restrictions contained in the Lock In and Orderly
Market Deeds), legislative changes and market, economic, political or regulatory conditions. The share price
for publicly traded companies can be highly volatile. Admission to AIM should not be taken as implying that
a liquid market for the Ordinary Shares will either develop or be sustained following Admission. Active, liquid
trading markets generally result in lower price volatility and more efficient execution of buy and sell orders
for investors. The liquidity of a securities market is often a function of the volume of the underlying shares
that are publicly held by unrelated parties. If a liquid trading market for the Ordinary Shares does not develop,
the price of the Ordinary Shares may become more volatile and it may be more difficult to complete a buy
or sell order for such Ordinary Shares.
Investment in AIM traded securities
The Ordinary Shares will be traded on AIM rather than admitted to the Official List of the UK Listing Authority.
The AIM market is designed primarily for emerging or smaller companies to which a higher investment risk
tends to be attached than to larger or more established companies. The rules of AIM are less demanding
than those admitted to the Official List and an investment in shares traded on AIM may carry a higher risk
than an investment in shares admitted to the Official List. In addition, the market in shares traded on AIM
may have limited liquidity, making it more difficult for an investor to realise its investment on AIM than to
realise an investment in a company whose shares are admitted to the Official List. Investors should, therefore,
be aware that the market price of the Ordinary Shares may be more volatile than that of shares admitted to
the Official List and may not reflect the underlying value of the net assets of the Company. Investors may,
therefore, not be able to sell at a price which permits them to recover their original investment and could
lose their entire investment.
36
Dilution of Shareholders’ interest as a result of additional equity fundraisings
Although the Company’s business plan does not involve the issuance of Ordinary Shares other than in
connection with the Subscription, it is possible that the Company may decide to issue, pursuant to a public
offer or otherwise, additional Ordinary Shares in the future at a price or prices higher or lower than the
Subscription Price. An additional issue of Ordinary Shares by the Company, or the public perception that an
issue may occur, could have an adverse effect on the market price of Ordinary Shares and could dilute the
proportionate ownership interest and the proportionate voting interest of Shareholders if, and to the extent
that, such an issue of Ordinary Shares is not effected on a pre-emptive basis or Shareholders do not take
up their rights to subscribe for further Ordinary Shares under a pre-emptive offer. Shareholders may also
experience subsequent dilution and/or such securities may have preferred rights, options and pre-emption
rights senior to the Ordinary Shares.
Dividends
The Company’s current policy is to retain future distributable profits and only recommend dividends when
appropriate and practicable. There can be no assurance as to the level of future dividends (if any) that may
be paid by the Company or, in light of the accrued losses of the Group, of the ability to pay dividends. Any
determination to pay dividends in the future will be a decision for the Board (and will be subject to applicable
laws and generally accepted accounting principles from time to time, and other factors the Board deems
relevant).
37
PART 3
FINANCIAL INFORMATION
SECTION A: ACCOUNTANT’S REPORT ON THE ATTRAQT GROUP
BDO LLP
55 Baker Street
London
W1U 7EU
The Directors
ATTRAQT Group plc
Heron Tower 35th Floor
110 Bishopsgate
London
EC2N 4AY
13 August 2014
Nplus1 Singer Advisory LLP
One Bartholomew Lane
London
EC2N 2AX
Dear Sirs
ATTRAQT Limited and its subsidiary undertakings (together, the “ATTRAQT Group”)
Introduction
We report on the financial information set out in Section B of Part 3. This financial information has been
prepared for inclusion in the admission document dated 13 August 2014 of ATTRAQT Group plc (the
“Admission Document”) on the basis of the accounting policies set out in note 1 to the financial
information. This report is required by paragraph (a) of Schedule Two of the AIM Rules for Companies and
is given for the purpose of complying with that paragraph and for no other purpose.
Responsibilities
The directors of ATTRAQT Group plc are responsible for preparing the financial information in accordance
with International Financial Reporting Standards as adopted by the European Union.
It is our responsibility to form an opinion on the financial information and to report our opinion to you.
Save for any responsibility arising under paragraph (a) of Schedule Two of the AIM Rules for Companies to
any person as and to the extent there provided, to the fullest extent permitted by the law we do not assume
any responsibility and will not accept any liability to any other person for any loss suffered by any such other
person as a result of, arising out of, or in connection with this report or our statement, required by and given
solely for the purposes of complying with Schedule Two of the AIM Rules for Companies consenting to its
inclusion in the Admission Document.
Basis of opinion
We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing
Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the
amounts and disclosures in the financial information. It also included an assessment of significant estimates
and judgements made by those responsible for the preparation of the financial information and whether the
accounting policies are appropriate to the entity’s circumstances, consistently applied and adequately
disclosed.
38
A1 1.1
A1 1.2
A3 1.1
A3 1.2
A1 20.1
A1 20.2
A1 20.3
A1 20.4.1
A1 20.4.2
A1 20.4.3
A1 20.5.1
We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
financial information is free from material misstatement whether caused by fraud or other irregularity or error.
Our work has not been carried out in accordance with auditing or other standards and practices generally
accepted in the United States of America or other jurisdictions outside the United Kingdom and accordingly
should not be relied upon as if it had been carried out in accordance with those standards and practices.
Opinion
In our opinion, the financial information gives, for the purposes of the Admission Document, a true and fair
view of the state of affairs of the ATTRAQT Group as at 31 December 2010, 2011 and 2013 and of its
results, cash flows, changes in equity for the periods then ended in accordance with International Financial
Reporting Standards as adopted by the European Union.
Declaration
For the purposes of paragraph (a) of Schedule Two of the AIM Rules for Companies, we are responsible for
this report as part of the Admission Document and declare that we have taken all reasonable care to ensure
that the information contained in this report is, to the best of our knowledge, in accordance with the facts
and contains no omission likely to affect its import. This declaration is included in the Admission Document
in compliance with Schedule Two of the AIM Rules for Companies.
Yours faithfully
BDO LLP
Chartered Accountants
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127)
39
SECTION B: FINANCIAL INFORMATION ON THE ATTRAQT GROUP
Statement of comprehensive income
Note
Revenue
Cost of sales
4
Gross profit
Other operating income
Sales, technical and administration costs
Year ended 31 December
2011
2012
2013
£
£
£
1,181,355
(199,385)
5
7
Loss before tax
Tax credit
8
Loss for the year
––––––––––––
––––––––––––
981,970
–
(1,127,164)
982,878
45,177
(1,420,438)
1,287,114
–
(1,845,373)
(145,194)
3,262
––––––––––––
(141,932)
–
––––––––––––
(141,932)
––––––––––––
––––––––––––
Total comprehensive income attributable to
the ordinary equity holders of the company
(141,932)
––––––––––––
––––––––––––
(Loss) per share attributable to the
ordinary equity holders of the company
Basic and diluted (£)
9
40
1,580,912
(293,798)
––––––––––––
––––––––––––
Loss from operations
Finance income
1,250,614
(267,736)
(0.75)
––––––––––––
––––––––––––
––––––––––––
(392,383)
2
––––––––––––
(392,381)
160,154
––––––––––––
(232,227)
––––––––––––
––––––––––––
(232,227)
––––––––––––
––––––––––––
(1.14)
––––––––––––
––––––––––––
––––––––––––
(558,259)
17
––––––––––––
(558,242)
98,285
––––––––––––
(459,957)
––––––––––––
––––––––––––
(459,957)
––––––––––––
––––––––––––
(2.18)
––––––––––––
––––––––––––
Consolidated statement of financial position
Note
Assets
Non-current assets
Property, plant and equipment
Intangible assets
10
11
Current assets
Trade and other receivables
Cash and cash equivalents
12
20
As at 31 December 2013
2011
2012
2013
£
£
£
39,796
131,126
––––––––––––
––––––––––––
170,922
199,942
Total liabilities
183,812
354,252
286,490
46,723
332,744
261,087
––––––––––––
––––––––––––
538,064
333,213
361,602
––––––––––––
361,602
––––––––––––
NET ASSETS
347,384
Issued capital and reserves attributable to
owners of the parent
Share capital
Share premium reserve
Equity component of convertible debt
Share based payment reserve
Retained earnings
16
17
14
16
17
TOTAL EQUITY
––––––––––––
533,155
––––––––––––
––––––––––––
417,999
––––––––––––
417,999
––––––––––––
115,156
––––––––––––
593,831
––––––––––––
783,844
––––––––––––
––––––––––––
375,581
––––––––––––
375,581
––––––––––––
408,263
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
1,583
939,452
45,000
–
(638,651)
1,583
939,452
45,000
–
(870,879)
1,776
1,632,323
45,000
60,000
(1,330,836)
––––––––––––
––––––––––––
347,384
115,156
––––––––––––
––––––––––––
41
190,013
––––––––––––
708,986
13
––––––––––––
––––––––––––
––––––––––––
––––––––––––
Liabilities
Current liabilities
Trade and other payables
69,545
120,468
––––––––––––
––––––––––––
Total assets
45,830
154,112
––––––––––––
––––––––––––
––––––––––––
408,263
––––––––––––
––––––––––––
Consolidated statement of cash flows
Note
Cash flows from operating activities
Loss for the year
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible fixed assets
Finance income
Income tax expense
Share based payment reserve
10
11
7
8
16
Year ended 31 December
2011
2012
2013
£
£
£
(141,932)
(232,227)
(459,957)
20,680
130,014
(3,262)
–
–
29,452
144,071
(2)
(160,154)
–
34,189
130,816
(17)
(98,285)
60,000
––––––––––––
5,500
(4,327)
6,222
(Increase)/decrease in trade and other receivables
(Decrease)/increase in trade and other payables
––––––––––––
Cash generated from operations
Income taxes received/(paid)
7,395
–
––––––––––––
Net cash flows from operating activities
Investing activities
Purchases of property, plant and equipment
Purchase of intangibles
Interest received
10
11
(408,542)
84,898
––––––––––––
(35,486)
(167,057)
2
(57,901)
(97,172)
17
––––––––––––
(202,541)
–
––––––––––––
––––––––––––
(155,056)
693,064
––––––––––––
346,772
(202,541)
538,008
354,167
(307,529)
214,364
85
––––––––––––
42
––––––––––––
––––––––––––
(28,272)
(128,218)
3,262
500,000
20
(174,111)
69,123
(333,254)
(32,868)
(42,420)
(323,644)
––––––––––––
Cash and cash equivalents at end of year
––––––––––––
––––––––––––
(104,988)
(153,228)
Net cash from/(used in) investing and
financing activities
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning
of year
(218,860)
(17,779)
62,528
7,395
––––––––––––
Net cash used in investing activities
Financing activities
Issue of ordinary shares, net of issue costs
––––––––––––
354,252
––––––––––––
––––––––––––
354,252
––––––––––––
46,723
––––––––––––
––––––––––––
46,723
––––––––––––
261,087
––––––––––––
––––––––––––
Consolidated statement of changes in equity
31 December 2010
Comprehensive Income
for the year
Loss for the year
Total comprehensive
Income for the year
Issue of share capital
31 December 2011
Comprehensive Income
for the year
Loss for the year
Total comprehensive
Income for the year
31 December 2012
Comprehensive Income
for the year
Loss for the year
Share based payment
reserve
Total comprehensive
Income for the year
Issue of share capital
31 December 2013
Share
capital
£
Share
premium
£
Other
reserve
£
Share
based
payment
reserve
£
1,425
439,610
45,000
–
(496,719)
(10,684)
–
–
–
–
–
–
–
–
–
(141,932)
–
(141,932)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–
158
–
499,842
–
–
–
–
Retained
earnings
£
Total
equity
£
–––––––––––
(141,932)
–
–––––––––––
–––––––––––
(141,932)
500,000
–––––––––––
–––––––––––
–––––––––––
–––––––––––
158
1,583
499,842
939,452
–
45,000
–
–
–
(638,651)
500,000
347,384
–
–
–
–
–
–
–
–
–
(232,227)
–
(232,227)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–
1,583
–
939,452
–
45,000
–
–
(232,227)
(870,879)
(232,227)
115,156
–
–
–
–
–
–
–
–
–
(399,957)
–
(399,957)
–
–
–
60,000
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–
193
–
692,871
–
–
60,000
–
–––––––––––
–––––––––––
–––––––––––
193
1,776
692,871
1,632,323
–
45,000
–––––––––––
–––––––––––
–––––––––––
–––––––––––
43
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
(60,000)
–––––––––––
(459,957)
–
–––––––––––
–
–
60,000 (1,330,836)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–
–––––––––––
(399,957)
693,064
–––––––––––
693,064
408,263
–––––––––––
–––––––––––
Notes to the financial information
1. Accounting policies
Basis of preparation
The principal accounting policies adopted in the preparation of the financial information are set out below.
The policies have been consistently applied to all the years presented, unless otherwise stated.
This financial information has been prepared in accordance with International Financial Reporting Standards,
International Accounting Standards and Interpretations (collectively IFRSs) issued by the International
Accounting Standards Board (IASB) as adopted by the European Union (“adopted IFRSs”).
The preparation of financial information in compliance with adopted IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise judgment in applying the ATTRAQT Group’s
accounting policies. The areas where significant judgments and estimates have been made in preparing the
financial information and their effect are disclosed in note 2.
Transition to Adopted IFRSs
The ATTRAQT Group is preparing its financial information in accordance with Adopted IFRS for the first time
and consequently has applied IFRS 1. An explanation of how the transition to Adopted IFRSs has affected
the reported financial position, financial performance and cash flows of the ATTRAQT Group is provided in
note 21.
Changes in accounting policies
(a)
New standards, interpretations and amendments not yet effective
The following new standards, interpretations and amendments, which have not been applied in this
financial information, will or may have an effect on the ATTRAQT Group’s future financial statements,
the accounting period start is the first date the standard become effective:
Title
Issued
Period start date:
IFRS 7 Amendments to Financial Instruments Disclosures
IFRS 1 Amendments – Severe Hyperinflation and Removal of
Fixed Dates for First-Time Adopters
IAS 12 Amendments – Deferred tax: Recovery of Underlying Assets
IAS 1 Amendment – Presentation of items of other comprehensive
income
IAS 19 Amendment – Employee Benefits
IFRS 7 and IAS 32 Offsetting financial assets and financial liabilities
IAS 27 Separate Financial Statements
IAS 28 Investments in Associates and Joint Ventures
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
IFRS 1 Amendments – Government Loans
Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12)
IFRS 9 Financial Instruments
Oct 10
01/07/2011
Jan 2011
Jan 2011
01/07/2011
01/01/2012
June 2011
June 2011
Dec 2011
May 2011
May 2011
May 2011
May 2011
May 2011
May 2011
Oct 2011
Mar 2012
Jun 2012
Nov-09
Oct 2012
May 2013
01/07/2012
01/01/2013
01/01/2013
01/01/2013
01/01/2013
01/01/2013
01/01/2013
01/01/2013
01/01/2013
01/01/2013
01/01/2013
01/01/2013
01/01/2013
(or 2015)
01/01/2014
01/01/2014
May 2013
01/01/2014
June 2013
01/01/2014
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
IFRIC 21 Levies
IAS 36 Amendments Recoverable Amount Disclosures for
non-Financial Assets
Novation of Derivatives and Continuation of Hedge Accounting
(Amendments to IAS 39)
44
None of the other new standards, interpretations and amendments, which are effective for periods beginning
after 1 January 2012 and which have not been adopted early, are expected to have a material effect on the
ATTRAQT Group’s future financial statements.
Revenue
Revenue represents sales to external customers at invoiced amounts less value added tax or local taxes on
sales. Where work is completed at the year-end but not invoiced, the ATTRAQT Group accrues for this
income.
Revenue from services provided by the ATTRAQT Group is recognised when the ATTRAQT Group has
performed its obligations and in exchange obtained the right to consideration.
If amounts have been invoiced in advance for products or services, these amounts are deferred until the
product/service has been delivered to the client at which point the income is recognised. Within the
ATTRAQT Group income is recognised across two streams;
●
Recurring revenue – a monthly fee is earned from customers who have subscribed to the software as
a service platform. Operation of the service is provided for a fixed or variable contract.
●
Integration and development – revenue is recognised upon the complete installation of software.
Installation work generally takes place over a short period and are largely accounted for as single
invoices. This work typically precedes recurring revenue earned from activation of a software as a
service contract.
Foreign currency
Transactions entered into by ATTRAQT Group entities in a currency other than the currency of the primary
economic environment in which it operates (the “functional currency”) are recorded at the rates ruling
when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates
ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets
and liabilities are recognised immediately in profit or loss, except for foreign currency borrowings qualifying
as a hedge of a net investment in a foreign operation, in which case exchange differences are recognised
in other comprehensive income and accumulated in the foreign exchange reserve along with the exchange
differences arising on the retranslation of the foreign operation.
On consolidation, the results of overseas operations are translated into Sterling Pounds at rates
approximating to those ruling when the transactions took place. All assets and liabilities of overseas
operations, including goodwill arising on the acquisitions of those operations, are translated at the rate ruling
at the reporting date. Exchange differences arising on translating the opening net assets at opening rate
and the results of overseas operations at actual rate are recognised in other comprehensive income and
accumulated in the foreign exchange reserve.
Exchange differences recognised profit or loss in ATTRAQT Group entities separate financial statements on
the translation of long-term monetary items forming part of the ATTRAQT Group’s net investment in the
overseas operation concerned are reclassified to other comprehensive income and accumulated in the
foreign exchange reserve on consolidation.
Financial assets
Loans and receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. They arise principally through the provision of goods and services to customers (e.g. trade
receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at
fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently
carried at amortised cost using the effective interest rate method, less provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties
on the part of the counterparty or default or significant delay in payment) that the ATTRAQT Group will be
unable to collect all of the amounts due under the terms receivable, the amount of such a provision being
the difference between the net carrying amount and the present value of the future expected cash flows
associated with the impaired receivable. For trade receivables, which are reported net, such provisions are
45
recorded in a separate allowance account with the loss being recognised within administrative expenses in
the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be
collectable, the gross carrying value of the asset is written off against the associated provision.
From time to time, the ATTRAQT Group elects to renegotiate the terms of trade receivables due from
customers with which it has previously had a good trading history. Such renegotiations will lead to changes
in the timing of payments rather than changes to the amounts owed and, in consequence, the new expected
cash flows are discounted at the original effective interest rate and any resulting difference to the carrying
value is recognised in the consolidated statement of comprehensive income (operating profit).
The ATTRAQT Group’s loans and receivables comprise trade and other receivables and cash and cash
equivalents in the consolidated statement of financial position.
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly
liquid investments with original maturities of three months or less, and – for the purpose of the statement of
cash flows – bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities
on the consolidated statement of financial position.
Financial liabilities
Other financial liabilities
Other financial liabilities include the following items:
●
Liability components of convertible loan notes are measured as described further below; and
●
Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and
subsequently carried at amortised cost using the effective interest method.
Share capital
Financial instruments issued by the ATTRAQT Group are classified as equity only to the extent that they do
not meet the definition of a financial liability or financial asset.
The ATTRAQT Group’s ordinary shares are classified as equity instruments.
Convertible debt
The proceeds received on issue of the ATTRAQT Group’s convertible debt are allocated into their liability
and equity components. The amount initially attributed to the debt component equals the discounted cash
flows using a market rate of interest that would be payable on a similar debt instrument that does not include
an option to convert. Subsequently, the debt component is accounted for as a financial liability measured
at amortised cost until extinguished on conversion or maturity of the bond. The remainder of the proceeds
is allocated to the conversion option and is recognised in the “Convertible debt option reserve” within
shareholders’ equity, net of income tax effects.
Segmental reporting
For the purpose of IFRS 8, the chief operating decision maker (“CODM”) takes the form of the Board of
Directors. The Directors’ opinion is that the business of the ATTRAQT Group is to provide cloud based Ecommerce solutions. Based on this, there is considered to be one reportable segment. The internal and
external reporting is on a consolidated basis with transactions between group companies eliminated on
consolidation. Therefore the financial information of the single segment is the same as that set out in the
consolidated statement of comprehensive income, the consolidated statement of changes in equity, the
consolidated statement of financial position and cash flows.
Internally generated intangible assets (development costs)
Expenditure on internally developed products is capitalised if it can be demonstrated that:
●
it is technically feasible to develop the product for it to be sold;
●
adequate resources are available to complete the development;
46
●
there is an intention to complete and sell the product;
●
the ATTRAQT Group is able to sell the product;
●
sale of the product will generate future economic benefits; and
●
expenditure on the project can be measured reliably.
Capitalised development costs are amortised over the periods the ATTRAQT Group expects to benefit from
selling the products developed. The amortisation expense is included within administrative expenses in the
consolidated statement of comprehensive income.
Development expenditure not satisfying the above criteria and expenditure on the research phase of internal
projects are recognised in the consolidated statement of comprehensive income as incurred.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the
consolidated statement of financial position differs from its tax base, except for differences arising on:
●
the initial recognition of goodwill;
●
the initial recognition of an asset or liability in a transaction which is not a business combination and at
the time of the transaction affects neither accounting or taxable profit; and
●
investments in subsidiaries and jointly controlled entities where the ATTRAQT Group is able to control
the timing of the reversal of the difference and it is probable that the difference will not reverse in the
foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will
be available against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively
enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are
settled/(recovered).
Deferred tax assets and liabilities are offset when the ATTRAQT Group has a legally enforceable right to
offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the
same tax authority on either:
●
the same taxable company; or
●
different company entities which intend either to settle current tax assets and liabilities on a net basis,
or to realise the assets and settle the liabilities simultaneously, in each future period in which significant
amounts of deferred tax assets or liabilities are expected to be settled or recovered.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost
includes directly attributable costs and the estimated present value of any future unavoidable costs of
dismantling and removing items. The corresponding liability is recognised within provisions.
Fixtures and fittings
Computer equipment
–
–
25% per annum straight line
25% per annum reducing balance
Provisions
The ATTRAQT Group has recognised provisions for liabilities of uncertain timing or amount including those
for onerous leases, warranty claims and leasehold dilapidations. The provision is measured at the best
estimate of the expenditure required to settle the obligation at the reporting date, discounted at a pre-tax
rate reflecting current market assessments of the time value of money and risks specific to the liability. In
the case of leasehold dilapidations, the provision takes into account the potential that the properties in
question may be sublet for some or all of the remaining lease term.
47
2. Critical accounting estimates and judgements
The ATTRAQT Group makes certain estimates and assumptions regarding the future. Estimates and
judgements are continually evaluated based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. In the future,
actual experience may differ from these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
Capitalisation of development costs
Development work is undertaken by employees of the ATTRAQT Group as well as external contractors.
The measurement of development costs to be capitalised is based on an estimate of known development
time incurred by employees as a function of their specific hourly rate.
The costs associated with external contractors are directly traceable to invoices, and can be measured
reliably.
3. Financial instruments – Risk Management
The ATTRAQT Group is exposed through its operations to the following financial risks:
●
Credit risk;
●
Foreign exchange risk; and
●
Liquidity risk.
In common with all other businesses, the ATTRAQT Group is exposed to risks that arise from its use of
financial instruments. This note describes the ATTRAQT Group’s objectives, policies and processes for
managing those risks and the methods used to measure them. Further quantitative information in respect
of these risks is presented throughout this financial information.
There have been no substantive changes in the ATTRAQT Group’s exposure to financial instrument risks,
its objectives, policies and processes for managing those risks or the methods used to measure them from
previous periods unless otherwise stated in this note.
Principal financial instruments
The principal financial instruments used by the ATTRAQT Group, from which financial instrument risk arises,
are as follows:
●
Trade receivables;
●
Cash and cash equivalents; and
●
Trade and other payables.
A summary of the financial instruments held by category is provided below:
Financial assets
A summary of financial assets can be found in note 12 all financial assets held by the ATTRAQT Group at
31 December 2013, 31 December 2012 and 31 December 2011 are classified as loans and receivables
and there is no difference between the carrying amount and the fair value at 31 December 2013,
31 December 2012 or 31 December 2011.
Financial liabilities
A summary of financial liabilities can be found in note 13, all financial liabilities held by the ATTRAQT Group
at 31 December 2013, 31 December 2012 and 31 December 2011 are classified as held at amortised cost.
48
General objectives, policies and processes
The Board has overall responsibility for the determination of the ATTRAQT Group’s risk management
objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority
for designing and operating processes that ensure the effective implementation of the objectives and policies
to the ATTRAQT Group’s Chief Executive Officer. The Board receives quarterly reports from the company
Financial Controller through which it reviews the effectiveness of the processes put in place and the
appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly
affecting the company’s competitiveness and flexibility. Further details regarding these policies are set out
below:
Credit risk
Credit risk is the risk of financial loss to the ATTRAQT Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations. The ATTRAQT Group is mainly exposed to credit risk
from credit sales. It is company policy, implemented locally, to assess the credit risk of new customers before
entering contracts. Such credit ratings take into account local business practices.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions.
For banks and financial institutions, only independently rated parties with minimum rating “A” are accepted.
Further disclosures regarding trade and other receivables are provided in note 12.
Cash in bank
A significant amount of cash is held with the following institutions:
Balance at
Balance at
Balance at
31 December 31 December 31 December
2011
2012
2013
£
£
£
Barclays Bank Plc
Citibank
354,252
–
––––––––––––
––––––––––––
46,723
–
––––––––––––
––––––––––––
250,259
10,828
––––––––––––
––––––––––––
Foreign exchange risk
Foreign exchange risk arises when the ATTRAQT Group enters into transactions denominated in a currency
other than the functional currency. The ATTRAQT Group policy is, where possible, to allow entities to settle
liabilities denominated in their functional currency (primarily Sterling Pounds) with the cash generated from
their own operations in that currency.
The ATTRAQT Group has one customer who is invoiced in Canadian Dollars. Remittances are received in
Sterling Pounds at the prevailing exchange rate.
In order to monitor the continuing effectiveness of this policy, the CEO reviews a monthly forecast, analysed
by the major currencies held by the ATTRAQT Group, of liabilities due for settlement and expected cash
reserves.
Liquidity risk
Liquidity risk arises from the ATTRAQT Group’s management of working capital and the finance charges
and principal repayments on its debt instruments. It is the risk that the ATTRAQT Group will encounter
difficulty in meeting its financial obligations as they fall due.
The ATTRAQT Group seeks to mitigate short term liquidity risk by entering into factoring arrangements on
selected trade receivables.
49
The ATTRAQT Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities
when they become due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet
expected requirements for a period of at least 45 days.
The Board receives rolling 12-month cash flow projections on a quarterly basis as well as information
regarding cash balances. At the end of the financial year, these projections indicated that the ATTRAQT
Group is expected to have sufficient liquid resources to meet its obligations under all reasonably expected
circumstances.
In the management of liquidity risk, the ATTRAQT Group monitors and tries to maintain a level of cash and
cash equivalents deemed adequate by management to finance the ATTRAQT Group’s operations and
mitigate the effects of fluctuations in cash flows.
The following table sets out the contractual maturities (representing undiscounted contractual cash-flows)
of financial liabilities:
At 31 December 2011
Trade and other payables
Loans and borrowings
Total
At 31 December 2012
Trade and other payables
Loans and borrowings
Total
At 31 December 2013
Trade and other payables
Total
Up to 3
months
£
Between
3 and 12
months
£
Between
1 and 2
year
£
Between
2 and 5
years
£
Over
5 years
£
266,602
95,000
–
–
–
–
–
–
–
–
––––––––––––
––––––––––––
––––––––––––
––––––––––––
361,602
–
–
–
––––––––––––
–
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
Up to 3
Months
£
Between
3 and 12
months
£
Between
1 and 2
year
£
Between
2 and 5
years
£
Over
5 years
£
357,066
45,000
–
15,033
–
–
–
–
–
–
––––––––––––
––––––––––––
––––––––––––
––––––––––––
402,066
15,033
–
–
––––––––––––
–
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
Up to 3
months
£
Between
3 and 12
months
£
Between
1 and 2
year
£
Between
2 and 5
years
£
Over
5 years
£
300,581
––––––––––––
300,581
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
–
––––––––––––
–
–
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
2011
£
2012
£
2013
£
4. Revenue
Revenue arises from:
Provision of services
1,181,355
––––––––––––
1,181,355
––––––––––––
––––––––––––
1,250,614
––––––––––––
1,250,614
––––––––––––
––––––––––––
1,580,912
––––––––––––
1,580,912
––––––––––––
––––––––––––
Three customers account for more than 63 per cent. of the revenue of the ATTRAQT Group. However the
Directors are not concerned about continuance of these relationships, as there are long term service
contracts in place with those customers.
50
5.
Expenses by nature
Staff costs (see note 6)
Depreciation of property, plant and equipment
(incl. impairment)
Amortisation of intangible assets*
Operating lease expense:
Plant and machinery
Other costs
2011
£
2012
£
2013
£
390,960
613,019
863,433
20,680
130,014
29,451
144,071
34,189
130,816
11,023
574,487
39,270
594,627
30,748
786,187
––––––––––––
––––––––––––
1,127,164
1,420,438
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
1,845,373
––––––––––––
––––––––––––
* Amortisation charges on the ATTRAQT Group’s intangible assets are recognised in the administrative expenses line item in the income
statement.
6.
Staff costs
Staff costs (including directors) comprise:
Wages and salaries
Social security contributions and similar taxes
2011
£
2012
£
2013
£
342,588
48,318
529,449
83,570
753,894
109,539
––––––––––––
––––––––––––
390,906
613,019
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
863,433
––––––––––––
––––––––––––
Key management personnel compensation
Key management personnel are those persons having authority and responsibility for planning, directing
and controlling the activities of the ATTRAQT Group, including the directors of the ATTRAQT Group.
2011
£
Salary
174,540
––––––––––––
174,540
––––––––––––
––––––––––––
2012
£
191,797
––––––––––––
191,797
––––––––––––
––––––––––––
2013
£
206,055
––––––––––––
206,055
––––––––––––
––––––––––––
Staff Numbers
The average monthly number of employees, including Directors and individuals employed by the ATTRAQT
Group are as follows:
Sales
Technical
Management
Administration
2011
2012
2013
2
5
1
–
4
8
1
–
5
10
1
1
––––––––––––
––––––––––––
8
13
––––––––––––
––––––––––––
51
––––––––––––
––––––––––––
––––––––––––
17
––––––––––––
––––––––––––
7. Finance income and expense
Recognised in profit or loss
2011
£
Finance income
Interest received on bank deposits
3,262
––––––––––––
Total finance income
8.
3,262
2012
£
2
––––––––––––
2
2013
£
17
––––––––––––
17
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
2011
£
2012
£
2013
£
Tax expense
Current tax expense/(credit)
Current tax on losses for the year
–
––––––––––––
Total tax expense/(credit)
–
––––––––––––
––––––––––––
(160,154)
––––––––––––
(160,154)
––––––––––––
––––––––––––
(98,285)
––––––––––––
(98,285)
––––––––––––
––––––––––––
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation
tax in the United Kingdom applied to profits for the year are as follows:
Loss for the year
Income tax expense (including income tax on
associate and discontinued operation)
2011
£
2012
£
2013
£
(141,932)
(232,227)
(459,957)
–
––––––––––––
Loss before tax
Expected tax charge based on the standard rate of
United Kingdom corporation tax at the domestic
rate of 24.5% (2011 – 26%)
Expenses not deductible for tax purposes
Depreciation for period in excess of capital allowances
Income not taxable for tax purposes
Adjustment for tax in respect of previous periods
Unrelieved tax losses arising in the period
Additional deduction for R&D expenditure
Surrender of tax losses for R&D tax credit refund
Chargeable gains/(losses)
Other deductions arising in the period
Total tax expense
(98,285)
––––––––––––
(141,932)
(392,381)
(558,242)
(36,902)
–
–
–
–
36,902
–
–
–
–
(96,133)
2,711
2,128
(10,855)
(69,224)
–
(99,535)
98,456
10,855
1,443
(112,689)
26,117
707
–
–
–
(121,685)
109,423
–
(158)
––––––––––––
–
––––––––––––
––––––––––––
52
(160,154)
––––––––––––
––––––––––––
(160,154)
––––––––––––
––––––––––––
––––––––––––
(98,285)
––––––––––––
––––––––––––
9.
Loss per share
2011
£
Numerator
Loss for the year and earnings used in basic EPS
(141,932)
––––––––––––
Earnings used in diluted EPS
(141,932)
Denominator
Weighted average number of shares used in basic EPS
Effects of:
Convertible debt
Weighted average number of shares
used in diluted EPS
2012
£
(232,227)
––––––––––––
(232,227)
2013
£
(459,957)
––––––––––––
(459,957)
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
145,228
158,283
165,947
45,000
––––––––––––
190,228
––––––––––––
––––––––––––
45,000
––––––––––––
203,283
––––––––––––
––––––––––––
45,000
––––––––––––
210,947
––––––––––––
––––––––––––
In accordance with IAS 33 where there is a loss for the year, there is no dilutive effect from the convertible
debt and therefore there is no difference between the basic and diluted loss per share.
10. Property, plant and equipment
Cost
Balance at 1 January 2011
Additions
Balance at 31 December 2011 and 1 January 2012
Additions
Plant and
machinery
£
Fixtures
and
fittings
£
Total
£
54,045
27,201
–
1,071
54,045
28,272
––––––––––––
––––––––––––
81,246
1,071
––––––––––––
––––––––––––
35,486
––––––––––––
Balance at 31 December 2012 and 1 January 2013
Additions
116,732
––––––––––––
––––––––––––
57,329
––––––––––––
Balance at 31 December 2013
174,061
Accumulated depreciation
Balance at 1 January 2011
Depreciation charge for the year 2011
Balance at 31 December 2011 and 1 January 2012
Depreciation charge for the year 2012
175,679
–
268
21,942
20,579
––––––––––––
––––––––––––
42,253
268
––––––––––––
––––––––––––
71,437
––––––––––––
––––––––––––
105,286
––––––––––––
––––––––––––
268
––––––––––––
536
––––––––––––
––––––––––––
339
––––––––––––
875
––––––––––––
42,521
––––––––––––
––––––––––––
29,452
––––––––––––
71,972
––––––––––––
––––––––––––
34,189
––––––––––––
106,161
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
32,103
38,993
45,295
68,775
–
803
535
770
32,103
39,796
45,830
69,545
––––––––––––
––––––––––––
53
1,645
57,876
––––––––––––
21,942
20,311
33,850
Net book value
At 1 January 2011
At 31 December 2011
At 31 December 2012
At 31 December 2013
574
––––––––––––
117,803
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
Balance at 31 December 2013
1,071
––––––––––––
––––––––––––
35,486
––––––––––––
––––––––––––
––––––––––––
29,184
Depreciation charge for the year
–
––––––––––––
82,317
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
Balance at 31 December 2012 and 1 January 2013
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
11. Intangible assets
£
Cost
Balance at 1 January 2011
Additions – internally developed
261,826
128,218
––––––––––––
Balance at 31 December 2011 and 1 January 2012
390,044
––––––––––––
––––––––––––
Additions – internally developed
167,057
––––––––––––
Balance at 31 December 2012 and 1 January 2013
557,101
––––––––––––
––––––––––––
Additions – internally developed
97,172
––––––––––––
Balance at 31 December 2013
654,273
––––––––––––
––––––––––––
Accumulated amortisation and impairment
Balance at 1 January 2011
Amortisation charge for the year
128,904
130,014
––––––––––––
Balance at 31 December 2011 and 1 January 2012
258,918
––––––––––––
––––––––––––
Amortisation charge for the year
144,071
––––––––––––
Balance at 31 December 2012 and 1 January 2013
402,989
––––––––––––
––––––––––––
Amortisation charge for the year
130,816
––––––––––––
Balance at 31 December 2013
533,805
––––––––––––
––––––––––––
Net book value
At 1 January 2011
At 31 December 2011
At 31 December 2012
At 31 December 2013
132,922
131,126
154,112
120,468
––––––––––––
––––––––––––
The estimated useful economic life of all intangible assets above is 3 years.
11a Investments in subsidiaries
The principal subsidiaries of ATTRAQT Limited, all of which have been included in these consolidated financial
information, are as follows:
Name of subsidiary
ATTRAQT, Inc
Locayta Search Limited
Shareholding
100%
100%
Country of incorporation and
principle place of business
Cost (£)
USA
UK
–
–
In April 2013 a new subsidiary, ATTRAQT Inc, was incorporated in the United States at £nil par value.
In October 2013, a non-trading UK subsidiary, Locayta Search Limited, was incorporated in the United
Kingdom at £nil par value.
54
12. Trade and other receivables
Trade receivables
Less: provision for impairment of trade receivables
Total financial assets other than cash and cash
equivalents classified as loans and receivables
Prepayments
Other receivables
Total trade and other receivables
2011
£
2012
£
2013
£
181,362
–
192,436
(23,285)
178,682
(14,009)
––––––––––––
––––––––––––
181,362
169,151
––––––––––––
164,673
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
1,500
950
31,491
85,848
40,959
127,112
––––––––––––
––––––––––––
183,812
286,490
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
332,744
––––––––––––
––––––––––––
The fair values of trade and other receivables classified as loans and receivables are not materially different
to their carrying values.
As at 31 December 2012 trade receivables of £9,435 (2011 – £7,175 ) were past due but not impaired.
They relate to the customers with no default history. The ageing analysis of these receivables is as follows:
Up to 3 months
3 to 6 months
6 to 12 months
Over 12 months
2011
£
2012
£
2013
£
176,637
7,200
2,350
(2,375)
245,564
7,070
2,365
–
161,277
23,650
8,573
–
––––––––––––
––––––––––––
183,812
254,999
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
193,500
––––––––––––
––––––––––––
As at 31 December 2011 trade receivables of £23,285 (2011 – £nil ) were considered fully impaired as the
customer had gone into administration. These amounts were all included in trade receivables up to 3 months.
Movements on the ATTRAQT Group provision for impairment of trade receivables are as follows:
At 1 January
Provided/(released) during the year
At 31 December
2011
£
2012
£
2013
£
–
–
–
23,285
23,285
(9,276)
––––––––––––
––––––––––––
–
23,285
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
14,009
––––––––––––
––––––––––––
The movement on the provision for impaired receivables has been included in the cost of sales line in the
consolidated statement of comprehensive income.
Other classes of financial assets included within trade and other receivables do not contain impaired assets.
55
13. Trade and other payables – consolidated
Trade payables
Other payables
Total financial liabilities, excluding loans and
borrowings, classified as financial liabilities
measured at amortised cost
Other payables – tax and social security payable
Total Trade and other payables
2011
£
2012
£
2013
£
112,727
140,093
142,400
106,261
108,539
131,008
––––––––––––
––––––––––––
––––––––––––
252,820
108,782
248,661
169,338
239,547
136,034
––––––––––––
––––––––––––
361,602
417,999
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
375,581
––––––––––––
––––––––––––
Carrying values approximate to fair value at 31 December 2013, 2012 and 2011.
14. Loans and borrowings
Convertible debt
In December 2009 ATTRAQT Limited issued a £45,000 non-interest bearing convertible loan. The loan will
automatically convert to equity upon the end of the 10-year loan period or on any liquidity event. The value
of the liability component and the equity conversion component were determined at the date the instrument
was issued.
15. Deferred tax
No deferred tax assets have been recognised in respect of tax losses and other temporary differences giving
rise to deferred tax assets due to uncertainties over when these could be recovered.
16. Share Capital
2011
Number
Ordinary shares of
£0.01 each
1,000,000
Total
1,000,000
Ordinary shares of
£0.01 each
At 1 January
Other issues for cash
during the year
Other issues for non-cash
during the year
At 31 December
–––––––––––
2011
£
Authorised
2012
2012
Number
£
10,000
1,000,000
10,000
1,000,000
–––––––––––
2013
Number
2013
£
10,000
1,000,000
10,000
1,000,000
–––––––––––
–––––––––––
–––––––––––
–––––––––––
Issued and fully paid
2012
2012
Number
£
2013
Number
2013
£
–––––––––––
10,000
–––––––––––
10,000
–––––––––––
–––––––––––
2011
Number
2011
£
142,435
1,425
158,263
1,583
158,263
1,583
15,828
158
–
–
16,146
161
–
158,263
–––––––––––
–––––––––––
–
–––––––––––
1,583
–––––––––––
–––––––––––
–
–––––––––––
158,263
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–
–––––––––––
1,583
–––––––––––
–––––––––––
3,167
–––––––––––
177,576
–––––––––––
–––––––––––
32
–––––––––––
1,776
–––––––––––
–––––––––––
Shares were issued for non-cash consideration to three shareholders in lieu of interest or fees that would
otherwise have been payable on loans advanced by them.
56
The ATTRAQT Group operates an unapproved share option scheme for employees. The options are valid
for 10 years from the date of grant. After satisfaction of any performance condition included in the award
the options will be exercisable on the earlier of any of the following events:
●
The third anniversary of the Date of Grant;
●
On the first anniversary following a Listing of the ATTRAQT Group;
●
On a change of Control of the ATTRAQT Group as defined in the Plan rules;
●
On a Sale or Disposal of the ATTRAQT Group as defined in the Plan rules; or
●
Following the exercise of discretion by the Board.
The following options were granted during the year:
2011
Weighted
No.
av. Price
Outstanding at 1 January
Granted during the year
–
–
–
–
2012
Weighted
No.
av. Price
–
–
–
–
2013
Weighted
No.
av. Price
–
9,865
–
–
The exercise price of all options outstanding at 31 December 2013 was £31.59 and their weighted average
contractual life was 2 years.
Of the total number of options outstanding at 31 December 2013 7,399 had vested but none were
exercisable.
The weighted average for value of each option granted during the year was (£31.59).
The following information is relevant in the determination of the fair value of options granted during the year.
2013
£
Option price model used
Weighted average share price at date of grant
Exercise price
Weighted average contractual life
Expected volatility
Expected dividend growth rate
Risk free interest rate
Black Scholes
£31.59
£31.59
2
N/A
0.488%
17. RESERVES
The following describes the nature and purpose of each reserve within equity:
Reserve
Description and purpose
Share premium
Amount subscribed for share capital in excess of nominal value.
Other reserve
Amount of proceeds on issue of convertible debt relating to the equity component
(i.e. option to convert the debt into share capital).
Retained earnings
All other net gains and losses and transactions with owners (e.g. dividends) not
recognised elsewhere.
57
18. Leases
Operating leases – lessee
The total future value of minimum lease payments is due as follows:
Other operating leases:
Not later than one year
Later than one year and not later than five years
Later than five years
2011
£
2012
£
2013
£
11,023
–
–
30,368
30,368
–
30,368
–
–
––––––––––––
––––––––––––
11,023
60,736
––––––––––––
––––––––––––
––––––––––––
––––––––––––
––––––––––––
30,368
––––––––––––
––––––––––––
19. Related party transactions
Trading transactions
ATTRAQT Group companies entered into the following transactions with related parties who are not
members of the ATTRAQT Group.
Sales of goods
Purchase of goods
–––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––
2011
£
2012
£
2013
£
2011
£
2012
£
2013
£
Venda Limited
173,400
Powa Technologies Limited
11,000
Aigua Media Training Limited
–
Osoyou Limited
62,813
Bright Station Ventures
Management Limited
–
Bright Station Limited
–
Bright Station Ventures Limited
–
110,000
35,258
16,000
–
18,000
91,462
–
–
4,432
10,000
–
–
5,000
1,250
–
–
20,250
–
–
–
–
–
–
–
–
–
20,000
31,220
3,000
88,140
11,690
–
98,310
–
–
Amounts owed by
related parties
Venda Limited
Powa Technologies Limited
Aigua Media Training Limited
Osoyou Limited
Bright Station Ventures
Management Limited
Bright Station Limited
Amounts owed to
related parties
–––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––
2011
£
2012
£
2013
£
2011
£
2012
£
2013
£
27,600
8,350
2,625
12,078
1,800
11,530
–
–
–
9,887
–
–
1,800
16,688
–
–
2,400
–
–
–
3,300
–
–
–
–
–
–
–
–
–
–
11,976
46,074
–
10,818
–
Mr D M Wagner is a director of all the above companies.
Sales of services to related parties were made at the ATTRAQT Group’s usual list prices, purchases were
made at market price discounted to reflect the relationship between the parties.
All services provided to and received from related parties were processed on an arm’s length basis.
58
Details of directors’ remuneration are given in note 6. Other related party transactions are as follows:
Type of
transaction
Director
Mr J R Wagner
Mr D H Weinberger
Brightstation Ventures Ltd
Loan
Loan
Loan
Transaction amount
2011
2012
2013
£
£
£
–
–
–
–
30,033
30,000
–
–
–
2011
£
95,000
–
–
Balance owed
2012
2013
£
£
–
30,033
30,000
–
7,508
7,500
The ATTRAQT Group has not made any provision for bad or doubtful debts in respect of related party
debtors nor has any guarantee been given or received during 2012 or 2011 regarding related party
transactions.
20. Notes supporting statement of cash flows
Cash and cash equivalents for purposes of the statement of cash flows comprises:
2011
£
Cash available on demand
354,252
––––––––––––
––––––––––––
59
2012
£
46,723
––––––––––––
––––––––––––
2013
£
261,087
––––––––––––
––––––––––––
21. Explanation of transition to Adopted IFRSs
As stated in note 1, these are the ATTRAQT Group’s first financial information prepared in accordance with
Adopted IFRSs.
The accounting policies set out in note 1 have been applied in preparing the financial information for the
year ended 31 December 2012 the comparative information presented in this financial information for the
year ended 31 December 2011 and in the preparation of an opening IFRS balance sheet at 1 January 2011.
The ATTRAQT Group has adjusted amounts reported previously in financial statements prepared in
accordance with its old basis of accounting (UK GAAP). An explanation of how the transition from UK GAAP
to Adopted IFRSs has affected the ATTRAQT Group’s financial position, financial performance and cash
flows is set out in the following tables and the notes that accompany the tables.
Reconciliation of equity
1 January 2011
31 December 2011
Effect of
Effect of
transition
transition
to Adopted Adopted
to adopted Adopted
UK GAAP
IFRSs
IFRSs UK GAAP
IFRSs
IFRSs
Note
£’000
£’000
£’000
£’000
£’000
£’000
Non-current assets
Property, plant and
equipment
Intangible assets
1
Current assets
Trade and other receivables
Cash and cash equivalents
32,103
–
––––––––––
––––––––––
––––––––––
132,922
165,025
39,796
131,126
Equity
Share capital
Share premium
Equity component of
convertible debt
Retained earnings
Total equity
(1)
––––––––––
170,922
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
179,485
85
–
–
179,485
85
183,812
354,252
–
–
183,812
354,252
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
179,570
–
179,570
538,064
–
355,279
355,279
––––––––––
––––––––––
(143,606)
1
39,796
131,126
––––––––––
––––––––––
Net assets
–
131,126
––––––––––
211,673
Total liabilities
39,796
–
32,103
––––––––––
––––––––––
Current liabilities
Trade and other payables
32,103
132,922
––––––––––
––––––––––
Total assets
–
132,922
––––––––––
132,922
––––––––––
––––––––––
–
––––––––––
–
––––––––––
––––––––––
132,922
––––––––––
344,595
––––––––––
––––––––––
355,279
––––––––––
355,279
––––––––––
––––––––––
(10,684)
––––––––––
577,860
––––––––––
––––––––––
361,602
––––––––––
361,602
––––––––––
––––––––––
216,258
––––––––––
131,126
––––––––––
––––––––––
–
––––––––––
–
––––––––––
––––––––––
131,126
––––––––––
538,064
––––––––––
708,986
––––––––––
––––––––––
361,602
––––––––––
361,602
––––––––––
––––––––––
347,384
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
1,425
439,610
–
–
1,425
439,610
1,583
939,452
–
–
1,583
939,452
45,000
(629,641)
–
132,922
45,000
45,000
(496,719) (769,777)
–
131,126
45,000
(638,651)
––––––––––
––––––––––
(143,606)
132,922
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
(10,684)
––––––––––
––––––––––
––––––––––
––––––––––
216,258
131,126
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
347,384
––––––––––
––––––––––
The ATTRAQT Group capitalised its development expenditure in the year in accordance with IAS 38 and recognised amortisation
accordingly.
60
Reconciliation of statement of comprehensive income for the year ended 31 December 2011
2011
Effect of
transition
to Adopted
Note
UK GAAP
IFRSs
£
£
Revenue
Cost of sales
1,181,355
(199,385)
––––––––––––
Gross profit
Sales, technical and administration costs
Other operating income
1
––––––––––––
Operating loss before net financing costs
Financial income
1
Loss before tax
Taxation
1
Profit for the year
1
(1)
981,970
(1,126,053)
–
(144,083)
3,262
––––––––––––
(140,821)
–
––––––––––––
(140,821)
––––––––––––
––––––––––––
–
–
––––––––––––
–
(1,111)
–
––––––––––––
(1,111)
–
––––––––––––
(1,111)
–
––––––––––––
(1,111)
––––––––––––
––––––––––––
Adopted
IFRSs
£
1,181,355
(199,385)
––––––––––––
981,970
(1,127,164)
–
––––––––––––
(145,194)
3,262
––––––––––––
(141,932)
–
––––––––––––
(141,932)
––––––––––––
––––––––––––
The ATTRAQT Group capitalised its development expenditure in the year in accordance with IAS 38 and recognised amortisation
accordingly. This resulted in a net £1,111 debit to the statement of comprehensive income.
The above adjustments have not had a material impact on the statement of cash flows.
22. Events since the end of the year
On 14 May 2014, the shareholders of ATTRAQT Limited exchanged their shares for shares in ATTRAQT
Group plc such that the latter company became the holding company of the ATTRAQT Group.
On 14 May 2014, ATTRAQT Group plc entered into the Replacement Convertible Loan Agreement with
ATTRAQT Limited and Alan Docter, further details of which are set out in paragraph 18.9 of Part 4.
On 12 August 2014, the Convertible Loan was converted, conditional upon Admission, into 266,394
Ordinary Shares in ATTRAQT Group plc.
61
PART 4
A1 1.1
A1 1.2
A3 1.1
A3 1.2
ADDITIONAL INFORMATION
1.
RESPONSIBILITY
The Directors, whose names and functions appear on page 5 of this document, accept responsibility for
the information contained in this document. To the best of the knowledge of the Directors (each of whom
has taken reasonable care to ensure that such is the case), the information contained in this document is in
accordance with the facts and contains no omission likely to affect the import of such information.
2.
2.1
THE COMPANY
The Company was incorporated in England and Wales on 20 February 2014 under the 2006 Act as
a private company limited by shares with the name “ATTRAQT Group Limited” and with registered
number 08904529.
2.2
On 11 August 2014, the Company re-registered as a public company with the name “ATTRAQT
Group plc”.
2.3
In order to satisfy certain requirements in connection with Admission, the Company was inserted as
a new parent company of the Group with effect from 14 May 2014 by way of the Share Exchange,
being a share for share exchange whereby the shareholders of ATTRAQT Limited exchanged their
shares in ATTRAQT Limited for shares in the Company pursuant to the Share Exchange Agreement.
2.4
The liability of the members of the Company is limited to the amount paid up or to be paid up on their
shares. The Company is domiciled within the United Kingdom and the principal legislation under
which it operates is the 2006 Act.
2.5
The registered office and principle place of business of the Company is at Heron Tower, 35th floor,
110 Bishopsgate, London EC2N 4AY.
2.6
The Company’s web address at which information required by Rule 26 of the AIM Rules for
Companies can be found is www.ATTRAQT.com and its telephone number is +44 020 3440 6201.
3.
3.1
ORGANISATIONAL STRUCTURE
The Company, which is the ultimate holding company of the Group, has the following subsidiaries:
Name
ATTRAQT Limited
ATTRAQT, Inc.
Locayta Search
Limited
Activity
eCommerce solutions
Online merchandising
Dormant
Country of
incorporation
England and Wales
Delaware, United States
England and Wales
A1 5.1.1
A1 5.1.2
A1 5.1.3
A1 5.1.4
A1 7.1
A1 7.2
A1 25
Proportion of
shares held
100%
100%*
100%*
* Held by ATTRAQT Limited.
3.2
All of the above subsidiaries and associated undertakings operate in their country of incorporation.
4.
4.1
SHARE CAPITAL
The issued share capital of the Company on incorporation was £0.01 made up of one Ordinary Share
of £0.01, which was issued to André Brown.
4.2
The following changes in the share capital of the Company have taken place between 20 February
2014 and the date of this document:
(a)
on 14 May 2014, the Company issued in aggregate 17,759,599 Ordinary Shares to the
shareholders in ATTRAQT Limited in connection with the Share Exchange;
62
A1 21.1.1
A1 21.1.7
A3 4.6
(b)
(c)
by special resolutions passed on 11 August 2014:
(i)
the Articles were approved and adopted by the Company in substitution for and to the
entire exclusion of the Company’s existing articles of association; and
(ii)
the Company was re-registered as a public company and the name of the Company
was changed to “ATTRAQT Group plc”; and
by ordinary and special resolutions passed on 11 August 2014:
(i)
(ii)
the Directors were authorised, conditional upon Admission, to:
(A)
allot Subscription Shares up to an aggregate nominal amount of £25,000, such
authority to expire on 31 December 2014;
(B)
allot N+1 Singer Shares up to an aggregate nominal amount of £1,000, such
authority to expire on 31 December 2014; and
(C)
allot 266,394 Ordinary Shares to Alan Docter in connection with the Loan
Conversion;
from the date of Admission, the Directors were generally authorised to:
(A)
allot shares in the Company up to a maximum aggregate nominal amount of
£68,753.31 or, if less, the nominal value of one third of the issued share capital
of the Company immediately following Admission;
(B)
allot equity securities up to an aggregate nominal amount of £137,506.63 or, if
less, the nominal value of two thirds of the issued share capital of the Company.
such authorities to expire at the Company’s next annual general meeting or, if earlier, 15
months from the date of the resolution;
(iii)
the Directors were given power to allot equity securities for cash pursuant to the
authorities described in paragraph 4.2(c)(i) above as if section 561(1) of the 2006 Act
and any pre-emption rights in the Company’s articles of association did not apply to
such allotments, such power to expire on 31 December 2014;
(iv)
the Directors were given power to allot equity securities for cash as if section 561(1) of
the 2006 Act and any pre-emption rights in the Company’s articles of association did
not apply to such allotment, pursuant to the authorities described in paragraph 4.2(c)(ii)
above, provided that this power is limited to:
(A)
the allotment of equity securities to the holders of Ordinary Shares in proportion
to the numbers of shares already held by them;
(B)
the allotment of Ordinary Shares pursuant to any exercise of warrants granted
pursuant to the Warrant Instrument; and
(C)
the allotment of equity securities up to an aggregate nominal amount of
£41,251.99 or, if less, the nominal value of 20 per cent. of the issued share capital
of the Company following Admission,
such power to expire at the Company’s next annual general meeting or, if earlier, 15
months from the date of the resolution; and
(v)
the Company was authorised to make market purchases of Ordinary Shares, provided
that:
(A)
the maximum aggregate number of Ordinary Shares that may be purchased is
2,062,599 or, if less, the number of shares equal to the nominal value of 10 per
cent. of the issued share capital of the Company following Admission;
(B)
the minimum price which may be paid for each Ordinary Share is £0.01; and
(C)
the maximum price which may be paid for each Ordinary Share shall be not more
than the higher of: (i) 5 per cent. above the average middle market value of an
Ordinary Share for the five business days prior to the day the purchase is made;
and (ii) the higher of the price of the last independent trade and the highest current
independent bid for Ordinary Shares on the London Stock Exchange;
63
4.3
The Company’s issued share capital as at the date of this document is as follows:
Class
Ordinary Shares
4.4
Number
Nominal
value (£)
17,759,600
177,596
The Company’s Enlarged Share Capital as it will be immediately following the issue and allotment of
the New Ordinary Shares and Admission (assuming no Existing Options or New Share Options are
exercised between the date of this document and Admission) is as follows:
Class
Ordinary Shares
Number
Nominal
value (£)
20,625,994
206,260
4.5
The proposed issue of the New Ordinary Shares, conditional upon Admission, will be carried out by
virtue of the authorities contained in paragraphs 4.2(c)(i) and 4.2(c)(iii) above.
4.6
Save as disclosed in paragraph 18.4 of this Part 4 or elsewhere in this document, the Company has
not issued any partly-paid shares, convertible securities, exchangeable securities or securities with
warrants. It does not hold any treasury shares.
4.7
Save as disclosed in this document:
(a)
no share or loan capital of the Company has been issued or is now proposed to be issued,
fully or partly paid, either for cash or for consideration other than cash;
(b)
no commission, discount, brokerage or any other special term has been granted by the
Company or is now proposed in connection with the issue or sale of any part of the share or
loan capital of the Company;
(c)
no persons have preferential subscription rights in respect of any share or loan capital of the
Company or any of its subsidiaries; and
(d)
no amount or benefit has been paid or is to be paid or given to any promoter of the Company.
4.8
There are no shares in the capital of the Company that do not represent capital and no shares in the
capital of the Company are held by or on behalf of the Company.
4.9
No shares of the Company are currently in issue with a fixed date on which an entitlement to a
dividend arises and there are no arrangements in force whereby future dividends are waived or agreed
to be waived.
4.10 On Admission, the New Ordinary Shares will rank pari passu in all respects with the Existing Ordinary
Shares, including the right to receive all dividends or other distributions declared, made or paid after
Admission.
4.11 The holders of Existing Ordinary Shares will be diluted by the issue of the New Ordinary Shares. The
effect of the issue of the New Ordinary Shares (assuming that the Subscription Shares are subscribed
for by parties who are not holders of Existing Ordinary Shares) will be that holders of Existing Ordinary
Shares at the date of this document will own 86 per cent. of the Enlarged Share Capital following
Admission, assuming no Existing Options or New Share Options are exercised between the date of
this document and Admission.
4.12 The Company has no authorised but unissued share capital and, except for the obligation to allot New
Ordinary Shares pursuant to the Subscription and the Introduction Agreement or otherwise as
disclosed in this document, there are no acquisition rights and/or obligations requiring share capital to
be issued nor is there any undertaking to increase the share capital.
4.13 Save as disclosed in paragraphs 11 and 18.4 of this Part 4 or elsewhere in this document, no capital of
any member of the Group is under option or agreed conditionally or unconditionally to be put under option.
4.14 There are no listed or unlisted securities issued by the Company not representing share capital.
64
A3 9.1
A3 9.2
5.
5.1
SUBSCRIPTION SHARES
The Subscription Shares are being offered pursuant to the Subscription Letters at the Subscription
Price. The ISIN (International Security Identification Number) for the Ordinary Shares is
GB00BMJJFZ18. The Existing Ordinary Shares are, and the Subscription Shares will be, subject to
English law and, in particular, the 2006 Act. The Subscription Shares will be issued credited as fully
paid. The Subscription Price for all Subscription Shares is in pounds sterling.
5.2
Application has been made for all of the issued and to be issued Ordinary Shares to be eligible for
admission to CREST with effect from Admission. CREST is a computerised share transfer and
settlement system. The system allows shares and other securities to be held in electronic form rather
than paper form, although a shareholder can continue dealing based on share certificates and notarial
deeds of transfer. For private investors who do not trade frequently, this latter course is likely to be
more cost-effective.
5.3
In the case of Subscribers who have requested to receive Subscription Shares in uncertificated form,
it is expected that CREST accounts will be credited with effect from 19 August 2014. In the case of
subscribers who have requested to receive Subscription Shares in certificated form, it is expected
that share certificates will be dispatched by post within 14 days of the date of Admission.
5.4
Pending dispatch of definitive share certificates, the Registrars will certify instruments of transfer
against the register. No temporary documents of title will be issued.
5.5
The holders of the Subscription Shares will participate proportionately to their shareholdings in all
distributions of capital or income by the Company or any surplus arising on liquidation of the Company.
There are no fixed dates for dividend payments on the Ordinary Shares. Each Ordinary Share affords
the holder of such share the right to one vote. There are no restrictions on the transferability of the
Ordinary Shares.
5.6
The Subscription Shares will be issued on Admission, which is expected to occur on 19 August 2014.
5.7
Other than pursuant to the Subscription, none of the Ordinary Shares have been sold or are available
in whole or in part to the public in conjunction with the application for the Subscription Shares to be
admitted to AIM.
6.
6.1
DIRECTORS’ INTERESTS
As at the date of this document and immediately following the Subscription and Admission, the
interests (within the meaning of sections 820 to 855 of the 2006 Act) of the Directors and (so far as
is known to the Directors having made appropriate enquiries) persons connected with them (which
expression shall be construed in accordance with the AIM Rules for Companies) in the issued share
capital of the Company (all of which are beneficial unless otherwise stated) are as follows:
Immediately following the
Placing and Admission
Name
As at the date of
this document
Number of
Existing
Percentage
Ordinary
of Existing
Shares Share Capital
Daniel Wagner
Ivor Dunbar
André Brown
David Stirling
Ed Ewing
Rober Fenner
4,981,700***
–**
3,280,000
95,000
–
–
4,981,700***
500,000
3,280,000
95,000
–
–
28.1***
–**
18.5
0.5
–
–
Number of
Percentage
Ordinary
of Enlarged
Shares Share Capital*
24.2
2.4
15.9
0.5
–
–
* The figures relating to the percentage of the Enlarged Share Capital are based on the assumption that all of the New Ordinary
Shares are issued.
** Ivor Dunbar holds 12 per cent. of the shares of Bright Station Ventures Limited which will, following Admission, hold 23.5
per cent. of the Enlarged Share Capital.
*** Daniel Wagner is interested in 13.9 per cent. of the shares of Bright Station Ventures Limited which will, following Admission,
hold 23.5 per cent. of the Enlarged Share Capital.
65
A3 4.1
A3 4.2
A3 4.3
A3 4.4
A1 17.1
A1 17.2
6.2
The Directors and (so far is known to the Directors having made appropriate enquiries) persons
connected with them (which expression shall be construed in accordance with the AIM Rules for
Companies) do not have, and are not expected to have immediately following the Subscription and
Admission, any options to subscribe for Ordinary Shares.
6.3
Save as disclosed in this Part 4, immediately following Admission, no Director nor (so far as is known
to the Directors having made appropriate enquiries) any persons connected with them (which
expression shall be construed in accordance with the AIM Rules for Companies) is expected to have
any interest, beneficial or non-beneficial, in the share capital of the Company or of any of its subsidiaries.
6.4
The Directors currently hold (in addition to their directorships of the Company) and have during the
five years prior to the publication of this document held, the following directorships or partnerships:
Name
Current directorships/partnerships Previous directorships/partnerships
Ivor Dunbar
Project Trust
Bluefield Harrier Ltd
Powa Technologies Group plc
Powa Technologies Limited
André Brown
Locayta Search Limited
ATTRAQT Limited
David Stirling
Aigua Media Group Limited
Viewa Limited
Silent Technologies Limited
Flvio limited
Peters Engineering Limited
The Lightning Car Company Limited
Lontra Limited
Abbey Surgical (Holdings) Limited
Abbey Surgical (Surrey) Limited
Lontec Group Limited
Dan Wagner
ATTRAQT Limited
Fifteen Wedderburn Road Limited
Venda Limited
Venda Group Limited
Bright Station Limited
Powa Technologies Limited
Sports Loyalty Card Limited
Aigua Media Trading Limited
Aigua Media Limited
The Beauty Quest Limited
Aigua Media Group Ltd
Vertical Commerce 247 Limited
Buyapowa Limited
Bright Station Ventures
Management Limited
Mpowa Limited
Powa Technologies Group plc
Bright Station Ecommerce Limited
Smarta Enterprises Limited
A Right Mess LLP
Koodos Limited
Smarta (UK) Ltd
Smarta.Com Ltd
Dwshelf Limited
Wills Socks Limited
Viewa Limited
Shiny Media Ltd
Design The Time Limited
Miomi Limited
Flvio Limited
Bright Station Ventures Limited
Ed Ewing
Groovy Campers Limited
Team Fred Properties Limited
Blakeney Bolt Holes Limited
Team Fred Consultants Limited
Blakeney Marine Services Limited
Team Fred Developments Limited
Luxury Yacht Listing Services Limited
Robert Fenner
Taylor Wessing LLP
Limited Liability Partnership
Palz Limited
66
6.5
Save as disclosed in paragraph 6.6 below, none of the Directors has:
(a)
any unspent convictions relating to indictable offences;
(b)
had a bankruptcy order made against him or entered into any individual voluntary arrangements
with his creditors;
(c)
been a director of a company which has been placed in receivership, compulsory liquidation,
creditors’ voluntary liquidation or administration or entered into a company voluntary
arrangement or any composition or arrangement with its creditors generally or any class of its
creditors whilst he was a director of that company at the time of, or within the twelve months
preceding, such events;
(d)
been a partner of a firm which has been placed in compulsory liquidation or administration or
which has entered into a partnership voluntary arrangement whilst he was a partner of that
firm at the time of, or within twelve months preceding, such events;
(e)
had any asset belonging to him made the subject of a receivership or been a partner of a
partnership whose assets have been placed in receivership whilst he was a partner at the time
of, or within twelve months preceding, such receivership; or
(f)
been publicly criticised by any statutory or regulatory authorities (including any recognised
professional body) or ever been disqualified by a court from acting as a director of a company
or from acting in the management or conduct of the affairs of any company.
6.6
David Stirling was a director of Lontec Group Limited when it was wound up by voluntary creditors’
liquidation on 24 May 2006, Parkerdart Limited when it was struck off and dissolved on 15 February
2000 and Testworth Limited when it was wound up by voluntary members’ liquidation on 27 June
2001 (and was dissolved on 30 April 2005). Dan Wagner was a director of Shiny Media Ltd which
went into administration in July 2009 (and was dissolved in February 2012) and Miomi Limited which
made a voluntary application for striking-off in March 2011 (and was dissolved in July 2011).
6.7
Save as disclosed in this document, none of the Directors has had any interest in any transaction
which is or was unusual in its nature or conditions or is or was significant to the business of the
Company and its subsidiaries during the current or immediately preceding financial year or which was
effected by the Company or any of its subsidiaries during an earlier financial year and remains in any
respect outstanding or unperformed.
6.8
Save as disclosed in this document, none of the Directors nor members of their family has a financial
product whose value in whole or part is determined directly or indirectly by reference to the price of
the Ordinary Shares.
6.9
There are no outstanding loans granted by the Company to any Director nor has any guarantee been
provided by the Company for the benefit of any Director.
6.10 Save as disclosed in this document, there are no actual or potential conflicts of interest between the
duties of the Directors to the Company and their respective private interests or other duties, except
as to the extent that Robert Fenner is a partner of Taylor Wessing LLP (the Company’s legal advisors).
6.11 Save as disclosed, no Director has or has had any interest, whether direct or indirect, in any assets
which have been acquired by, disposed of by, or leased to, any member of the Group or which are
proposed to be acquired by, disposed of by, or leased to, any member of the Group.
67
Sch 2(g)
Sch 2 (i)
7.
7.1
MAJOR INTERESTS
In addition to the interests of the Directors disclosed in paragraphs 6.1 and 6.2 above, insofar as is
known to the Company and the Directors, the following persons as at the date of this document and
immediately following the issue of the New Ordinary Shares and Admission will be interested, directly
or indirectly, jointly or severally, in 3 per cent. or more of the voting rights in respect of the Company’s
issued share capital:
Name
As at the date of
this document
Number of
Percentage
Existing
of Existing
Shares Share Capital
Immediately following the
issue of the New Ordinary
Shares and Admission
Number of
Percentage
Ordinary
of Enlarged
Shares Share Capital*
Dan Wagner
André Brown
Bright Station Ventures Limited
Alan Docter
John Wagner
David Weinberger
Paul Davenport
Richard Brook
4,981,700
3,280,000
2,843,000
1,820,000
1,417,900
761,100
621,400
595,700
4,981,700
3,280,000
4,843,000
2,086,394**
1,417,900
761,100
621,400
595,700
28.05
18.47
16.01
10.25
7.98
4.29
3.50
3.35
A1 18.1
24.15
15.90
23.48
10.12
6.87
3.69
3.01
2.89
* The figures relating to the percentage of the Enlarged Share Capital are based on the assumption that all of the New Ordinary
Shares are issued.
** Includes the 266,394 Ordinary Shares received by Alan Docter in connection with the Loan Conversion.
7.2
The shares held by the Shareholders set out at paragraph 7.1 above rank pari passu with the Existing
Ordinary Shares and, in particular, have no different voting rights than other existing Shareholders.
7.3
Other than as disclosed in this document, the Directors are not aware of any persons who, directly
or indirectly, jointly or severally, exercise or could exercise, control over the Company. In addition, as
far as the Company is aware, there are no arrangements in place, the operation of which may at a
subsequent date result in a change of control of the Company.
8.
8.1
DIRECTORS’ TERMS OF APPOINTMENT
Set out below are summary details of the Company’s terms of appointment with the executive
Directors:
8.2
(a)
André Brown (Chief Executive Officer) has served on the Board since 20 February 2014. André
entered into a service agreement with the Company on 12 August 2014. André will receive an
annual salary of £168,000 (subject to annual review by the Board) plus a discretionary bonus.
André’s appointment is ongoing and is terminable at any time on 12 months’ notice by either
party (with a restrictive covenant period of six months). André’s appointment may be terminated
summarily by the Company if he is, among other things, guilty of gross misconduct. The service
agreement does not provide for any extra payment to be given to André upon termination of
his appointment.
(b)
David Stirling (Finance Director) will be appointed to the Board with effect from Admission.
David entered into a service agreement with the Company on 12 August 2014. David will
receive an annual salary of £50,000 for 2 days per week (subject to annual review by the Board).
David’s appointment is ongoing and is terminable at any time on six months’ notice by either
party (with a restrictive covenant period of three months). David’s appointment may be
terminated summarily by the Company if he is, among other things, guilty of gross misconduct.
The service agreement does not provide for any extra payment to be given to David upon
termination of his appointment.
Set out below are summary details of the Company’s terms of appointment with the non-executive
Directors:
68
A1 18.2
A1 18.3
A1 18.4
A1 16.1
A1 16.2
(a)
Dan Wagner (Non-Executive Chairman) has been appointed to the Board pursuant to the terms
of an appointment letter as a non-executive Director and Chairman dated 12 August 2014.
Dan’s appointment shall continue until terminated by either party by two months notice. Dan’s
continued appointment is subject to his election by the Company’s Shareholders at the first
AGM after entering into the appointment letter and thereafter to re-election at any subsequent
AGM at which the Articles require, or the Board resolves, he stand for re-election. Dan shall
not take a fee for his role on the Board.
(b)
Ivor Dunbar (Non-Executive Deputy Chairman) will be appointed to the Board with effect from
Admission pursuant to the terms of an appointment letter as a non-executive Director and
deputy chairman dated 12 August 2014. Ivor’s appointment shall continue until terminated by
either party by two months notice. Ivor’s continued appointment is subject to his election by
the Company’s Shareholders at the first AGM after entering into the appointment letter and
thereafter to re-election at any subsequent AGM at which the Articles require, or the Board
resolves, he stand for re-election. The annual fee payable to him is £20,000.
(c)
Ed Ewing (Non-Executive Director) will be appointed to the Board with effect from Admission
pursuant to the terms of an appointment letter as a non-executive Director dated 12 August
2014. Ed’s appointment shall continue until terminated by either party by two months notice.
Ed’s continued appointment is subject to his election by the Company’s Shareholders at the
first AGM after entering into the appointment letter and thereafter to re-election at any
subsequent AGM at which the Articles require, or the Board resolves, he stand for re-election.
The annual fee payable to him is £20,000.
(d)
Robert Fenner (Non-Executive Director) has been appointed to the Board pursuant to an
appointment letter as a non-executive Director dated 12 August 2014. Robert’s appointment
shall continue until terminated by either party by two months notice. Robert’s continued
appointment is subject to his election by the Company’s Shareholders at the first AGM after
entering into the appointment letter and thereafter to re-election at any subsequent AGM at
which the Articles require, or the Board resolves, he stand for re-election. Robert shall not take
a fee for his role on the Board.
8.3
Save as disclosed in paragraphs 8.1 and 8.2, none of the Directors has a service agreement or letter
of appointment with the Company that has been entered into or varied within six months prior to the
date of this document or which is a contract which expires or which is determined by the Company
without payment of compensation (other than statutory compensation) after more than one year.
8.4
No amount has been set aside or accrued by the Group to provide pension, retirement or other
benefits to the Directors. Save for any payments to the Directors on termination in lieu of notice, no
benefits on termination are payable by the Company.
9.
SIGNIFICANT INVESTMENTS
Save as disclosed in this document, there have been no significant investments by the Company or any of
its subsidiaries since 31 December 2013, being the date to which the last audited consolidated accounts
of the ATTRAQT Group have been made up.
10.
ARTICLES OF ASSOCIATION
10.1 Adoption and material provisions
The Articles, which were adopted by a special resolution of the Company on 11 August 2014, contain
certain provisions, the material provisions of which are set out below. This is a description of significant
rights and does not purport to be complete or exhaustive.
10.2 Objects
The Articles do not provide for any objects of the Company and accordingly the Company has full
power and authority to carry out any object not prohibited by law.
69
A1 21.2.1
10.3 Votes of members
Subject to the provisions of the 2006 Act and to any special rights or restrictions as to voting attached
to any shares or class of shares or otherwise provided by the Articles:
(a)
on a show of hands every member who is present in person shall have one vote;
(b)
every proxy present who has been duly appointed by one or more members entitled to vote
on the resolution shall have one vote, except that if the proxy has been duly appointed by more
than one member entitled to vote on the resolution and is instructed by one or more of those
members to vote for the resolution and by one or more others to vote against it, or is instructed
by one or more of those members to vote in one way and is given discretion as to how to vote
by one or more others (and wishes to use that discretion to vote in the other way) he shall have
one vote for and one vote against the resolution;
(c)
every corporate representative present who has been duly authorised by a corporation shall
have the same voting rights as the corporation would be entitled to; and
(d)
on a poll, every member who is present in person or by duly appointed proxy or corporate
representative shall have one vote for every share of which he is the holder or in respect of
which his appointment of proxy or corporate representative has been made.
10.4 Restriction on rights of members where calls outstanding
Unless the Board otherwise determines, no member shall be entitled to receive any dividend or to be
present and vote at a general meeting or at any separate general meeting of the holders of any class
of shares either personally or by proxy, or to be reckoned in a quorum, or to exercise any other right
or privilege conferred by membership in respect of a share held by him in relation to meetings of the
Company unless and until he shall have paid all calls or other sums presently due and payable by
him, whether alone or jointly with any other person, to the Company.
10.5 Transfer of shares
Subject to the provisions in the Articles regarding uncertificated shares, all transfers of certificated
shares may be effected by transfer in writing in any usual or common form or in any other form
acceptable to the Board and may be under hand only. The instrument of transfer shall be signed by
or on behalf of the transferor and (except in the case of fully paid shares) by or on behalf of the
transferee. In relation to both certificated and uncertificated shares, the transferor shall remain the
holder of the shares concerned until the name of the transferee is entered in the register of members
of the Company in respect of such shares. All instruments of transfer which are registered may be
retained by the Company.
10.6 Dividends
Subject to the provisions of the 2006 Act and of the Articles, the Company may by ordinary resolution
declare dividends to be paid to members according to their respective rights and interests but no
such dividends shall exceed the sum recommended by the Board. All dividends payable and
unclaimed for 12 months may be invested or otherwise made use of by the Board for the benefit of
the Company until claimed. Any dividend unclaimed after a period of 12 years shall be forfeited and
revert to the Company.
10.7 Capitalisation of profits and reserves
(a)
The Board may, with the sanction of an ordinary resolution of the Company, capitalise any sum
standing to the credit of any of the Company’s reserve accounts (including any share premium
account, capital redemption reserve, or other undistributable reserve) or any sum standing to
the credit of the Company’s profit and loss account.
(b)
Such capitalisation shall be effected by appropriating such sum to the holders of Ordinary
Shares on the register of members of the Company at the close of business on the date of the
resolution (or such other date as may be specified in such resolution or determined as provided
in such resolution) in proportion to their holdings of Ordinary Shares and applying such sum
on their behalf in paying up in full unissued Ordinary Shares (or, subject to any special rights
previously conferred on any shares or class of shares for the time being issued, unissued shares
70
A1 21.2.3
A3 4.5
A1 21.2.3
A3 4.5
A3 4.8
A1 21.2.3
A3 4.5
of any other class not being redeemable shares) for allotment and distribution credited as fully
paid up to and amongst them in proportion to their holdings.
(c)
The Board may do all acts and things considered necessary or expedient to give effect to any
such capitalisation, with full power to the Board to make such provision as it thinks fit for any
fractional entitlements which would arise on the basis aforesaid (including provisions whereby
fractional entitlements are disregarded or the benefit of such fractional entitlements accrues to
the Company rather than to the members concerned). The Board may authorise any person
to enter on behalf of all the members interested into an agreement with the Company providing
for any such capitalisation and matters incidental to such capitalisation and any agreement
made under such authority shall be effective and binding on all concerned.
10.8 Share capital
(a)
Liability of members
The liability of the members is limited to the amount, if any, unpaid on the shares held by them.
(b)
Variation of rights
Whenever the share capital of the Company is divided into different classes of shares, the
special rights for the time being attached to any share or class of share in the Company may,
subject to the provisions of the 2006 Act, be varied or abrogated either with the consent in
writing of the holders of not less than three-quarters in nominal value of the issued shares of
the class or with the sanction of a special resolution passed at a separate general meeting of
the holders of the shares of the class (but not otherwise) and may be so varied or abrogated
whilst the Company is a going concern or during or in contemplation of a winding-up. To every
such separate general meeting, all the provisions of the Articles relating to general meetings of
the Company and to the proceedings at such general meetings shall with necessary
modifications apply, except that:
(c)
(i)
the necessary quorum shall be two persons holding or representing by proxy at least
one third in nominal value paid up of the issued shares of the class (but so that if at any
adjourned meeting a quorum as defined above is not present, any one holder of any
shares of the class present in person or by proxy shall be a quorum); and
(ii)
any holder of shares of the class present in person or by proxy may demand a poll and
every such holder shall on a poll have one vote for every share of the class held by him.
The article only applies to the variation or abrogation of the special rights attached to
some only of the shares of any class as if each group of shares of the class differently
treated formed a separate class the special rights of which are to be varied.
A1 21.2.4
Special rights
The special rights attached to any class of shares having preferential rights shall not, unless
otherwise expressly provided by the terms of issue of that class of shares, be deemed to be
varied:
(i)
by the allotment or issue of further shares ranking as regards participation in the profits
or assets of the Company in some or all respects equally with such shares but in no
respect in priority to such shares;
(ii)
by the purchase by the Company of any of its own shares (and the holding of any such
shares as treasury shares); or
(iii)
the Board resolving that a class of shares shall become, or the operator of the relevant
system permitting such class of shares to be, a participating security (the phrases
“operator”, “relevant system” and “participating security” having the meanings set out
in the CREST Regulations).
A3 4.5
(d)
Sub-division of shares
Whenever the Company sub-divides its shares, or any of them, into shares of smaller nominal
value, the Company may, by ordinary resolution, determine that, as between the shares
71
resulting from the sub-division, any of them may have any preference or advantage or be
subject to any restriction as compared to the others.
(e)
Purchase of own shares
Where there are in issue convertible securities convertible into or carrying a right to subscribe
for equity shares of a class proposed to be purchased, a separate meeting of the holders of
the convertible securities must be held and their approval by special resolution obtained before
the Company enters into any contract to purchase equity shares of the relevant class. Subject
to this and notwithstanding anything to the contrary contained in the Articles, the rights and
privileges attached to any class of shares shall be deemed not to be altered or abrogated by
anything done by the Company in pursuance of any resolution passed under the powers
conferred by the 2006 Act.
(f)
Alteration of capital
The Articles do not impose any conditions governing changes in the capital of the Company
which are more stringent than required by law.
(g)
Redemption and conversion
Any share may be issued which is or is to be liable to be redeemed at the option of the
Company or the holder, and the Board may determine the terms, conditions and manner of
redemption of any such share.
(h)
Pre-emption
The Articles do not prescribe any rights of pre-emption in relation to offers for subscription of
Ordinary Shares beyond those contained in the 2006 Act.
10.9 Directors
(a)
Number of Directors
Subject as provided in the Articles, the directors of the Company shall not be fewer than two
nor more than ten in number. The Company may by ordinary resolution from time to time vary
the minimum number and/or maximum number of directors.
(b)
Directors’ fees
Unless otherwise decided by the Company by ordinary resolution, the ordinary remuneration
of the directors shall from time to time be determined by the Board, except that such
remuneration shall not exceed £750,000 per annum in aggregate or such higher sum as may
from time to time be determined by ordinary resolution of the Company and shall (unless such
resolution otherwise provides) be divisible among the directors as the Board decides or, failing
agreement, equally, except that any director who shall hold office for part only of the period to
which such remuneration relates shall be entitled only to a pro rata amount of such
remuneration. Any director who holds any executive office may be paid such extra remuneration
or may receive such other benefits as the Board may determine.
(c)
Directors’ expenses
The Board may repay to any director all such reasonable expenses as he may properly incur
in attending and returning from meetings of the Board or of any committee of the Board or
shareholders’ meetings or otherwise in connection with the performance of his duties as a
director of the Company.
(d)
Directors’ pensions and other benefits
The Board shall have power to pay and agree to pay gratuities, pensions or other retirement,
superannuation, death or disability benefits to (or to any person in respect of) any director or
ex-director and for the purpose of providing any such gratuities, pensions or other benefits to
contribute to any scheme or fund or to pay premiums.
72
A1 21.2.2
(e)
Directors’ permitted interests
Provided (if the Articles so require) that he has declared to the directors the nature and extent
of any interest, a director may (save as to the extent not permitted by law), have an interest of
the following kind; namely:
(i)
where a director (or a person connected with him) is party to, or directly or indirectly
interested in, or has any duty in respect of, any existing or proposed contract,
arrangement or transaction with the Company or any other undertaking in which the
Company is interested;
(ii)
where a director (or a person connected with him) is a director, employee or other officer
of, or a party to any arrangement or transaction with, or interested in, any body corporate
promoted by the Company or in which the Company is interested;
(iii)
where a director (or a person connected with him) is directly or indirectly interested in
shares or share options of the Company or is directly or indirectly interested in shares
or share options of, or an employee, director or other officer of a parent undertaking of,
or a subsidiary undertaking of a parent undertaking of, the Company;
(iv)
where a director (or a person connected with him) holds and is remunerated in respect
of any office or place of profit (other than the office of auditor) under the Company or
body corporate in which the Company is interested;
(v)
where a director is given, or is to be given, a guarantee in respect of an obligation
incurred by or on behalf of the Company or any body corporate in which the Company
is interested;
(vi)
where a director (or a person connected with him or of which he is a member or
employee) acts (or any body corporate promoted by the Company or in which the
Company is interested of which he is a director, employee or other officer acts) in a
professional capacity for the Company or any body corporate promoted by the
Company or in which the Company is interested (other than as auditor) whether or not
he or it is remunerated for this;
(vii)
an interest which cannot reasonably be regarded as likely to give rise to a conflict of
interest; or
(viii)
any other interest authorised by ordinary resolution.
No authorisation pursuant to the Articles shall be necessary in respect of the above interests.
(f)
Authorisation of directors’ interests
(i)
The directors shall have the power, subject to the Articles, to authorise any matter which
would or might otherwise constitute, or give rise to, a breach of the duty of a director to
avoid a situation in which he has, or can have, a direct or indirect interest that conflicts,
or possibly may conflict, with the interests of the Company. Any authorisation will only
be effective if:
(A)
the matter in question is proposed in writing for consideration at a meeting of the
directors, in accordance with the Board’s normal procedures or in such other
manner as the directors may determine;
(B)
any requirement as to the quorum at the meeting of the directors at which the
matter is considered is met without counting the director in question and any
other interested director (together, the “Interested Directors”); and
(C)
the matter is agreed to without the Interested Directors voting or would have been
agreed to if the votes of the Interested Directors had not been counted.
(ii)
Subject to the 2006 Act, the Company may by ordinary resolution ratify any contract,
transaction or arrangement, or other proposal, not properly authorised by reason of a
contravention of any provisions of the Articles.
(iii)
Subject to the Article as summarised in paragraph 10.9(f)(iv) below, if a director,
otherwise than by virtue of his position as director, receives information in respect of
73
which he owes a duty of confidentiality to a person other than the Company, he shall
not be required:
(iv)
(g)
(A)
to disclose such information to the Company or to the directors, or any other
officer or employee of the Company; or
(B)
otherwise to use such information for the purpose of or in connection with the
performance of his duties as a director.
Where such duty of confidentiality arises out of a situation in which he has, or can have,
a direct or indirect interest that conflicts, or possibly may conflict, with the interests of
the Company, the Article as summarised in paragraph 10.9(f)(iii) shall apply only if the
conflict arises out of a matter which is permitted or has been authorised by the Articles,
subject to any imposed restrictions.
Provisions applicable to declarations of interest
(i)
Subject to the 2006 Act and the Articles summarised in paragraphs 10.9(f), a director
shall declare to the other directors the nature and extent of his interest:
(ii)
(A)
if such interest is permitted under the Articles and is an interest which may
reasonably be regarded as likely to give rise to a conflict of interest;
(B)
if he is in any way, directly or indirectly, interested in a proposed transaction or
arrangement with the Company; or
(C)
if he is in any way, directly or indirectly, interested in a transaction or arrangement
that has been entered into by the Company, unless the interest has been so
declared.
A director need not declare an interest:
(A)
if it cannot reasonably be regarded as likely to give rise to a conflict of interest;
(B)
if, or to the extent that, the other directors are already aware of it (or ought
reasonably to be aware); or
(C)
if it concerns terms of his service contract that have been or are to be considered
by a meeting, or a committee, of the directors appointed for the purpose.
(h)
Appointment of executive directors
The Board may from time to time appoint one or more of their body to be the holder of any
executive office (including, where considered appropriate, the office of chairman or deputy
chairman) on such terms and for such period as they may (subject to the provisions of the
2006 Act) determine and, without prejudice to the terms of any contract entered into in any
particular case, may at any time revoke or vary the terms of any such appointment.
(i)
Powers of executive directors
The Board may entrust to and confer upon any director holding any executive office any of the
powers exercisable by them as directors upon such terms and conditions and with such
restrictions as they think fit, and either collaterally with or to the exclusion of their own powers,
and may from time to time revoke, withdraw, alter or vary all or any of such powers.
10.10 Appointment and retirement of directors
(a)
Power of Company to appoint directors
Subject to the provisions of the Articles, the Company may by ordinary resolution appoint any
person who is willing to act to be a director, either to fill a vacancy or as an addition to the
existing Board.
74
(b)
Power of Board to appoint directors
Without prejudice to the power of the Company in general meeting pursuant to any of the
provisions of the Articles to appoint any person to be a director, the Board may appoint any
person who is willing to act to be a director, either to fill a vacancy or as an addition to the
existing Board. Any director so appointed must retire from office at, or at the end of, the next
following annual general meeting and will then be eligible to stand for election but shall not be
taken into account in determining the directors or the number of directors who are to retire by
rotation at that meeting.
(c)
Retirement by rotation
At each annual general meeting, one-third of the directors for the time being shall retire from
office by rotation (or, if their number is not a multiple of three, the number nearest to but not
exceeding one-third shall so retire) provided always that all directors must be subject to reelection at intervals of no more than three years.
(d)
Selection of directors to retire by rotation
The directors to retire by rotation shall include (so far as necessary to obtain the number
required) any director who is due to retire at the meeting by reason of age or who wishes to
retire and not to offer himself for re-election. Any further directors so to retire shall be those of
the other directors subject to retirement by rotation who have been longest in office since their
last re-election and so that as between persons who became or were last re-elected directors
on the same day those to retire shall, unless they otherwise agree among themselves, be
determined by lot together with those who in the absence of any such retirement would
continue in office for a period in excess of three years. A retiring director shall be eligible for reelection.
(e)
Vacation of office
The office of a director shall be vacated if:
(i)
he ceases to be a director by virtue of any provision of the 2006 Act or he becomes
prohibited by law from being a director;
(ii)
he becomes bankrupt, has an interim receiving order made against him, makes any
arrangement or compounds with his creditors generally or applies to the court for an
interim order under section 253 of the Insolvency Act 1986 in connection with a voluntary
arrangement under that Act;
(iii)
he is, or may be suffering from mental disorder and either:
(A)
he is admitted to hospital in pursuance of an application for admission for
treatment pursuant to any statute relating to mental health; or
(B)
an order is made by a court having jurisdiction (whether in the United Kingdom
or elsewhere) in matters concerning mental disorder for his detention or for the
appointment of a receiver, curator bonis or other person to exercise powers with
respect to his property or affairs;
(iv)
he resigns by writing under his hand left at the Company’s registered office or he offers
in writing to resign and the Board resolves to accept such offer;
(v)
he shall for more than six consecutive months have been absent without permission of
the Board from meetings of the Board held during that period and the Board resolves
that his office be vacated; or
(vi)
notice stating he is removed from office as a director is served upon him signed by all
his co-directors who must account to the members at the next general meeting of the
Company. If a director holds an appointment to an executive office which automatically
determines on his removal from office under this or the preceding sub-paragraph, such
removal shall be deemed an act of the Company and shall have effect without prejudice
to any claim for damages for breach of any contract of service between him and the
Company.
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(f)
Removal of director
The Company may, in accordance with and subject to the provisions of the 2006 Act, by
ordinary resolution of which special notice has been given, remove any director from office
(notwithstanding any provision of the Articles or of any agreement between the Company and
such director, but without prejudice to any claim he may have for damages for breach of any
such agreement) and elect another person in place of a director so removed from office.
10.11 Borrowing powers
The Board may exercise all the powers of the Company to borrow money, to give guarantees and to
mortgage or charge its undertakings, property and assets (present and future) and uncalled capital,
and to issue debentures and other securities, whether outright or as collateral security for any debt,
liability or obligation of the Company or of any third party.
10.12 Variation of Shareholder rights
The rights attaching to shares in the Company are set out in the Articles and summarised above. For
these rights to be varied or changed would require a general meeting of the Company to be convened.
This would require 21 days written notice (in the absence of shareholders who together hold not less
than 95 per cent. in nominal value of shares giving a right to attend and vote at the meeting deciding
otherwise) to be given to each holder of shares of the relevant class. Each shareholder would have
the right to attend the general meeting in person or by proxy and vote on the resolution to be
proposed. Such resolution would be a special resolution of the Company and requires a majority of
not less than three-fourths of shareholders voting in person or by proxy at such general meeting.
A1 21.2.8
10.13 Shareholder meetings
The Company must in each year hold a general meeting as its annual general meeting (or “AGM”).
An AGM must be convened, unless all shareholders entitled to attend and vote agree to short notice,
on giving 21 days’ notice in writing to the members of the Company. The Board may whenever it
thinks fit, and shall on members’ request in accordance with the 2006 Act, proceed with proper
expedition to convene a general meeting (“GMs”). The length of written notice to convene such a
meeting is 14 clear days. GMs can be convened on shorter notice with the agreement of shareholders
being a majority in number and holding not less than 95 per cent. in nominal value of the shares giving
a right to attend and vote at the meeting. Shareholders need not attend a meeting of the Company
in person but can do so by way of a validly appointed proxy. Proxies are appointed in accordance
with the Articles. In essence, to be validly appointed, details of the proxy must be lodged at the
Company’s registered office no later than 48 hours before the commencement of the relevant meeting.
Failure to lodge details of the appointed proxy in accordance with the Articles could result in the vote
of the proxy being excluded on any resolution and possibly to the exclusion of the proxy from the
meeting unless they were also a shareholder. If a shareholder is a corporation, whether or not a
company, it can pass a resolution of its directors or other governing body to authorise such person
as it thinks fit to act as its representative at any meeting of the Company or class meeting of
shareholders of the Company.
A1 21.2.5
10.14 Notification of major holdings of Ordinary Shares and change of control
(a)
Whilst disclosure of shareholdings is not a requirement of the Articles, chapter 5 of the
Disclosure and Transparency Rules makes provision regarding notification of certain
shareholdings and holdings of financial instruments. Where a person holds voting rights in the
Company as shareholder or through direct or indirect holdings of financial instruments, then
the person has an obligation to make a notification to the FCA and the Company of the
percentage of voting rights held where that percentage reaches, exceeds or falls below three
per cent. or any whole percentage figure above three per cent. The requirement to notify also
applies where a person is an indirect shareholder and can acquire, dispose of or exercise voting
rights in certain cases.
A1 21.2.6
A1 21.2.7
(b)
There are no provisions in the Articles which would have the effect of delaying, deferring or
preventing a change of control of the Company.
76
(c)
Save as set out above, there are no conditions imposed by the Articles regarding changes in
the Company’s capital which are more stringent than required by the law of England and Wales.
11. EMPLOYEE SHARE OPTIONS
11.1 The Group has in place the Existing Share Option Scheme, under which the Existing Options are
outstanding over the shares in the Company by virtue of the Options Exchange.
11.2 The Existing Options have been granted to employees in the United Kingdom in order to allow
selected employees to share in the success of the Group and to incentivise and retain key staff
members. There are three Existing Options currently outstanding, granted to three separate
individuals.
11.3 A summary of the material provisions of the Existing Share Option Scheme is set out below. This is a
description of significant rights and does not purport to be complete or exhaustive.
(a)
Eligibility
Employees may be granted unapproved options.
(b)
Grants of Existing Options
Grants may be made at the discretion of the Board.
(c)
Performance criteria
Existing Options may be granted subject to objective performance conditions and/or a
schedule contained in the option agreement specifying the dates or events on which Existing
Options will vest and become capable of being exercised.
(d)
Exercise price
The exercise price is determined by the Board in its discretion, but may not be less than the
nominal value.
(e)
Individual limits
There are no individual limits relating to unapproved options.
(f)
Exercise of Existing Options
The three Existing Options will be exercisable on the earliest of:
(i)
three years after the date of grant (which was 29 October 2013 for each of the Options);
(ii)
one year after Admission; and
(iii)
such other date as the Board might determine.
(g)
Employees leaving the Company
When an employee ceases employment in bad leaver circumstances, the Existing Option
immediately lapses on the date of cessation (unless the Board determines otherwise). Where
an employee leaves in good leaver circumstances, the Board has a discretion to allow the
Existing Option to be exercised and (unless otherwise determined by the Board) the Existing
Option will lapse 90 days after cessation. If an employee dies, the personal representatives
may exercise Existing Options which have vested or in respect of which performance conditions
have been fulfilled within 12 months.
(h)
Variation of share capital
Existing Options may be varied if there is any variation in the share capital, including any
capitalisation, rights issue or open offer or any consolidation, sub-division or reduction of
capital.
77
A1 21.1.5
(i)
Alteration
The plan rules may be amended by the Board but must not materially adversely affect
subsisting Existing Options unless the option holder consents.
(j)
Liquidation
On a voluntary winding up, vested Existing Options may be exercisable.
(k)
Termination
The Existing Share Option Scheme shall terminate on the 10th anniversary of the date of
adoption or earlier if the Board decides. Any termination does not affect subsisting options.
11.4 No other options will be granted under the Existing Share Option Scheme following Admission.
11.5 As at the date of this document and immediately following the Subscription and Admission, the
number of Ordinary Shares under option pursuant to the Existing Share Option Scheme is 986,500.
11.6 The New Share Option Scheme has been adopted by the Company under which 177,590 New Share
Options have been granted to Dave Philips. The New Share Option Scheme is identical to the Existing
Share Option Scheme except that references to “Locayta Limited” have been replaced with references
to “ATTRAQT Group plc”.
11.7 On Admission, 177,590 New Share Options will be granted to David Stirling.
12. LITIGATION
Neither the Company nor any of its subsidiaries is or has been involved in any governmental, legal or
arbitration proceedings during the previous 12 months and, so far as the Directors are aware, there are no
governmental, legal or arbitration proceedings, pending or threatened against them or being brought by the
Company or any of its subsidiaries which may have, or have had in the recent past, a significant effect on
the financial position or profitability of the Company.
13. EMPLOYEES
13.1 The Group employed 13 people during the financial year ended 31 December 2011, 19 people during
the financial period ended 31 December 2012 and 25 people during the financial year ended 31
December 2013.
A1 20.8
A1 17.1
13.2 As at 22 July 2014, the Group had 23 employees as follows:
Activity
Management
Sales
Technical
Finance
Number of Employees
Territory
1
1
6
1
13
1
UK
US
UK
US
UK
UK
14. WORKING CAPITAL
The Directors, having made due and careful enquiry, are of the opinion that, taking into account the net
proceeds of the Subscription receivable by the Company, the working capital available to the Group will,
from Admission, be sufficient for its present requirements, that is for at least the next twelve months.
Sch 2(c)
A1 20.9
78
15. SIGNIFICANT CHANGE IN FINANCIAL OR TRADING POSITION
15.1 Save as disclosed in this document, there has been no significant change in the financial or trading
position of the ATTRAQT Group since 31 December 2013, the date to which the historical financial
information on the ATTRAQT Group set out in Section B of Part 3 of this document was prepared.
15.2 Save as disclosed in this document, there has been no change in the financial or trading position of
the Company since 20 February 2014, the date of its incorporation.
16.
UNITED KINGDOM TAXATION
16.1 Introduction
(a)
The following paragraphs are intended as a general guide, based on current legislation and
HMRC practice as at the date of this document, in relation to the UK tax position of
Shareholders who are resident or ordinarily resident in the UK for tax purposes and who
beneficially hold their shares as investments (otherwise than under an individual savings
account (“ISA”)).
(b)
The following paragraphs do not constitute tax advice. In particular, Shareholders who receive
shares in connection with an employment contract or as an office holder, in either case whether
with the Company or otherwise, should seek specific advice on their tax position. Any
Shareholder who is in any doubt as to their tax position, or who is subject to tax in a
jurisdiction other than the United Kingdom, is strongly recommended to consult their
own professional advisers.
16.2 Taxation of dividends
(a)
Under current UK taxation legislation, no tax is withheld at source from dividend payments
made by the Company.
(b)
An individual Shareholder who is resident (for tax purposes) in the UK and who receives a
dividend paid by the Company will currently be entitled to receive a tax credit equal to 1/9th of
the cash dividend paid. The individual will be taxable upon the total of the dividend and the
related tax credit (the “gross dividend”), which will be regarded as the top slice of the
individual’s income. An individual Shareholder who is not liable to income tax at a rate greater
than the basic rate (currently 20 per cent.) will pay tax on the gross dividend at the dividend
ordinary rate (currently 10 per cent.). Accordingly, the tax credit will be treated as satisfying the
individual’s liability to income tax in respect of the dividend and there will be no further tax to
pay. It should be noted, however, that there is no right to claim any repayment of the tax credit
from HMRC.
(c)
To the extent that the gross dividend (taken together with other taxable income) exceeds the
individual’s threshold for the higher rate of income tax, the individual will, to that extent, pay
tax on the gross dividend at the dividend upper rate (currently 32.5 per cent.). After taking into
account the 10 per cent. tax credit, a higher rate tax payer will have further income tax to pay
at the rate of 22.5 per cent. on the gross dividend (equivalent to 25 per cent. of the cash
dividend paid). A UK resident individual Shareholder who is liable to tax at the additional rate
will be liable to tax on the gross dividend at the rate of 37.5 per cent. An additional rate taxpayer
will have further income tax to pay at the rate of 27.5 per cent. on the gross dividend (equivalent
to approximately 30.56 per cent. of the cash dividend paid).
(d)
Tax credits in respect of dividends are not repayable to Shareholders with no income tax liability
or whose liability to income tax does not exceed the amount of any such tax credit.
(e)
Subject to exceptions for certain insurance companies and companies which hold shares as
trading stock, a Shareholder which is a company resident (for tax purposes) in the UK and
which receives a dividend paid by the Company will not, in most circumstances, be liable to
corporation tax or income tax on the dividend.
79
A3 4.11
(f)
Trustees of discretionary trusts are liable to account for income tax on any dividend paid to
them at the dividend trust rate, currently 37.5 per cent. of the gross dividend (equivalent to
approximately 30.56 per cent. of the dividend received).
(g)
UK pension funds and charities are generally exempt from tax on dividends that they receive,
but are not entitled to claim repayment of the tax credit. Shareholders who are resident in
countries other than the UK may be entitled to repayment of all or a proportion of the tax credit
in respect of the dividends paid to them. This will depend upon the provisions of the double
tax treaty (if any) between the country in which the Shareholder is resident and the UK. In
addition, a Shareholder resident outside the UK may also be subject to foreign taxation on
dividend income under local law. Shareholders not resident in the UK should consult their own
tax adviser on the application of such provisions and the procedure for claiming relief.
16.3 Taxation of capital gains for Shareholders
(a)
To the extent that a Shareholder acquires Ordinary Shares allotted to him, the Ordinary Shares
so allotted will, for the purpose of tax on chargeable gains, be treated as acquired on the date
of allotment. The amount paid for the Ordinary Shares will generally constitute the base cost
of a Shareholder’s holding.
(b)
A disposal or deemed disposal of Ordinary Shares by a UK resident Shareholder may give rise
to a chargeable gain (or allowable loss) for the purposes of UK capital gains tax (“CGT”) (where
the Shareholder is an individual or a trustee of a settlement) or UK corporation tax on
chargeable gains (where the Shareholder is within the charge to UK corporation tax), depending
on their circumstances and subject to any available exemption or relief.
(c)
As regards an individual Shareholder or trustees of settlements, the principal factors that will
determine the extent to which a gain will be subject to CGT are: (i) the extent to which they
realise any other capital gains in the tax year of assessment in which the gain arises; (ii) the
extent to which they have incurred capital losses in that or any earlier tax year or assessment;
and (iii) the level of annual allowance of tax-free gains in the tax year of assessment in which
the disposal takes place.
(d)
Subject to the availability of any such exemptions, reliefs and/or allowable losses, a disposal
of Ordinary Shares by UK resident (or ordinarily resident) individuals, trustees and personal
representatives will generally be subject to CGT at the rate of 28 per cent. However, individuals
whose taxable income for the year in question is less than the upper limit of the basic rate
income tax band are subject to CGT at the rate of 18 per cent., except to the extent that the
aggregate of their total taxable income and gains (less allowable deductions) in that year
exceeds the upper limit of the basic rate income tax band. Any such excess over the upper
limit is subject to CGT at the rate of 28 per cent.
(e)
Subject to the availability of any exemptions, reliefs and/or allowable losses, a disposal of
Ordinary Shares by companies subject to UK corporation tax will generally be subject to UK
corporation tax at the prevailing rate of up to 21 per cent. Indexation allowance may be available
to reduce any chargeable gain arising on such disposal but cannot act to create or increase a
chargeable loss.
16.4 Stamp duty and stamp duty reserve tax (“SDRT”)
(a)
Dealings in Ordinary Shares will normally be subject to stamp duty or SDRT. A transfer on sale
of Ordinary Shares will usually be liable to ad valorem stamp duty, at the rate of 0.5 per cent.
of the amount or value of the consideration paid (rounded up, if necessary, to the next multiple
of £5). Stamp duty will normally be paid by the purchaser or transferee of the Ordinary Shares.
(b)
An unconditional agreement to transfer Ordinary Shares will normally give rise to a charge to
SDRT, at the rate of 0.5 per cent. of the amount or value of the consideration payable for such
shares, but such liability will be cancelled, or any SDRT paid refunded, if the agreement is
completed by a duly stamped instrument of transfer within six years of the date of the
agreement or, if the agreement was conditional, the date on which the agreement became
80
unconditional. SDRT will normally be the liability of the purchaser or transferee of the Ordinary
Shares.
17.
(c)
Under the CREST system for paperless share transfers, no stamp duty or SDRT will arise on
a transfer of shares into the system, unless the transfer into CREST is itself for consideration
in money or money’s worth, in which case a liability to SDRT will arise, usually at the rate of 0.5
per cent. of the amount or value of consideration given. Transfers of shares within CREST are
generally liable to SDRT at the rate of 0.5 per cent. of the amount or value of the consideration
payable rather than stamp duty, and SDRT on relevant transactions settled within the system
or reported through it for regulatory purposes will be collected and accounted for to HMRC.
(d)
The above statements are intended to be a general guide to the current stamp duty and SDRT
position. Certain categories of person are not liable to stamp duty or SDRT and others may be
liable at a higher rate as mentioned above or may, although not primarily liable for the tax, be
required to notify and account for it. Special rules apply to agreements made by market
intermediaries and to certain sale and repurchase and stock borrowing arrangements.
Agreements to transfer shares to charities will not give rise to a liability to stamp duty or SDRT.
(e)
It should be noted that stamp duty and SDRT on shares quoted on certain recognised growth
markets such as AIM and the ISDX Growth Market has been abolished with effect for transfers
from 28 April 2014.
MANDATORY BIDS, SQUEEZE-OUT AND SELL OUT RULES
17.1 Mandatory bids
The Takeover Code applies to the Company.
Rule 9 of the Takeover Code is designed to prevent the acquisition or consolidation of control of a
company subject to the Takeover Code without a general offer being made to all shareholders. Rule
9 states that, when any person or group of persons acting in concert acquires (whether by one
transaction or a series of transactions) an interest in shares which carry 30 per cent. or more of the
voting rights of the company, such person or persons acting in concert must normally make a general
offer for the balance of the issued share capital of such company. Rule 9 also states that any person
or group of persons acting in concert that is interested in shares which in aggregate carry not less
than 30 per cent. of the voting rights of a company but does not hold shares carrying more than 50
per cent. of such voting rights must normally make a general offer for the balance of the issued share
capital should there be any increase in the percentage of the shares carrying voting rights in which
they or any person acting in concert with them are interested.
An offer under Rule 9 must be made in cash and at the highest price paid by the person required to
make the offer or any person acting in concert with him for any interest in shares of the company
during the 12 months prior to the announcement of the offer.
17.2 Concert Party
On Admission, Dan Wagner, John Wagner, BSV and Ivor Dunbar are deemed to be acting in concert
with one another for the purposes of Rule 9 of the City Code by virtue of the fact that John Wagner
is Dan Wagner’s father and both Dan Wagner and John Wagner are controlling shareholders of BSV
(an entity in which Ivor Dunbar also holds 11 per cent. of the share capital). The Concert Party will
hold an aggregate of approximately 52.2 per cent. of the Enlarged Share Capital. Any subsequent
acquisition of Ordinary Shares by any of the parties within the Concert Party (or anyone who is deemed
to be acting in concert with them) would not therefore result in a requirement for them to make a
general offer for the remaining equity share capital of the Company in accordance with Rule 9 of the
City Code.
17.3 Squeeze-out rules
Under the 2006 Act, if a person who has made a general offer to acquire Ordinary Shares (the
“offeror”) were to acquire, or contract to acquire, 90 per cent. of the Ordinary Shares which are the
subject of such offer within four months of making its offer, the offeror could then compulsorily acquire
81
A1 21.2.6
A3 4.9
the remaining 10 per cent. The offeror would do so by sending a notice to outstanding Shareholders
telling them that the offeror will compulsorily acquire their Ordinary Shares and then, six weeks later,
executing a transfer of the outstanding Ordinary Shares in the offeror’s favour and paying the
consideration to the Company, which would hold the consideration on trust for outstanding
Shareholders. The consideration offered to those Shareholders whose Ordinary Shares are
compulsorily acquired under the 2006 Act must, in general, be the same as the consideration that
was available under the general offer.
17.4 Sell-out rules
(a)
The 2006 Act gives minority Shareholders a right to be bought out in certain circumstances
by a person who has made a general offer as described in paragraph 17.2 above. If, at any
time before the end of the period within which the general offer can be accepted, the offeror
holds, or has agreed to acquire not less than 90 per cent. of the Ordinary Shares, any holder
of Ordinary Shares to which the general offer relates who has not accepted the general offer
can, by a written communication to the offeror, require it to acquire that holder’s Ordinary
Shares.
(b)
The offeror is required to give each Shareholder notice of his right to be bought out within one
month of that right arising. The offeror may impose a time limit on the rights of minority
Shareholders to be bought out, but that period cannot end less than three months after the
end of the acceptance period. If a Shareholder exercises his rights, the offeror is entitled and
bound to acquire those Ordinary Shares on the terms of the offer or on such other terms as
may be agreed.
18. MATERIAL CONTRACTS
18.1 General
The below contracts (not being contracts entered into in the ordinary course of business) have been
entered into by the Company or its subsidiaries within two years immediately preceding the date of
this document or are expected to be entered into shortly after Admission and are, or may be, material
in the context of the Group. There are no other contracts (not being contracts entered into in the
ordinary course of business) entered into by any member of the Group which contain any provisions
under which any member of the Group has any obligation or entitlement which is material to the
Group as at the date of this document.
18.2 Introduction Agreement
(a)
The Company entered into the Introduction Agreement with N+1 Singer and the Directors on
13 August 2014. Pursuant to the Introduction Agreement, N+1 Singer is appointed as agent
of the Company to effect the Company’s introduction to AIM.
(b)
(c)
N+1 Singer has the right to terminate the Introduction Agreement prior to Admission in certain
circumstances, including:
(i)
in the event of certain force majeure events or other events involving certain material
adverse changes relating to the Company; and
(ii)
in the event of a material breach of the warranties or undertakings in the Introduction
Agreement.
In consideration for the services provided to the Company by N+1 Singer in connection with
Admission, the Company has agreed to pay N+1 Singer certain fees and expenses, including
the issue of the N+1 Singer shares;
18.3 Subscription Letters
(a)
The Company entered into the Subscription Letters with the Subscribers on 12 August 2014.
Pursuant to the Subscription Letters, the Subscribers have agreed to subscribe for the
Subscription Shares.
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A1 22
(b)
(c)
The Subscribers commitment to acquire the Subscription Shares is conditional upon, inter alia:
(i)
the Company receiving a signed form of confirmation from the relevant Subscribers in
respect of their Subscription Shares; and
(ii)
Admission becoming effective on or before 8.00 a.m. on 12 September 2014.
Under the Subscription Letters the Subscribers have confirmed, inter alia, that:
(i)
they may lawfully acquire the Subscription Shares;
(ii)
they agree that their obligations under the Subscription Letters are irrevocable and shall
not be capable of reunion or termination; and
(iii)
they have not relied on any information given or any representations, warranties or other
statements made at any time by any person in connection with the Subscription, the
Company, the Subscription Shares or otherwise.
18.4 N+1 Singer Engagement Letter
(a)
The fees payable in connection with the Admission under the N+1 Singer Engagement Letter
have been superseded by the fees payable in connection with Admission under the Introduction
Agreement, a summary of which is set out in paragraph 18.2 of this Part 4.
(b)
Pursuant to the Engagement Letter, N+1 Singer has been appointed as Nominated Adviser to
the Company. Either party is able to terminate the N+1 Singer Engagement Letter upon giving
three months’ written notice to the other party (such notice not to expire prior to the twelve
month anniversary of Admission). The N+1 Singer Engagement Letter also contains provisions
for early termination in certain circumstances.
(c)
The N+1 Singer Engagement Letter was novated by ATTRAQT Limited to the Company on
12 August 2014 and certain terms varied.
18.5 Share Exchange Agreement
(a)
The Company entered into the Share Exchange Agreement with the holders of shares in
ATTRAQT Limited (the “Sellers”) on 14 May 2014. Pursuant to the Share Exchange
Agreement, the Sellers agreed to sell their shares in ATTRAQT Limited to the Company in
exchange for the Company:
(b)
(i)
crediting as fully paid the one subscriber share in the Company held by André Brown;
and
(ii)
allotting and issuing (credited as fully paid) to the Sellers 17,759,599 Ordinary Shares.
A1 21.1.4
The Share Exchange resulted in the Sellers holding Ordinary Shares in the Company in the
same proportions as they had held in ATTRAQT Limited.
18.6 Lock-in Agreements
Pursuant to the Lock-in Agreements, each Locked-in Shareholder has agreed (subject to certain
exceptions) that, until the Company publishes its financial results for the year ending
31 December 2014:
●
it will not dispose of Ordinary Shares representing approximately 72.5 per cent. of its
shareholding in the Company (excluding the New Shares) or enter into a transaction with the
same economic effect, except with the prior written consent of N+1 Singer; and
●
it will not trade any of its other Ordinary Shares except through N+1 Singer.
The remaining Shareholders entered into an orderly market agreement with N+1 Singer and the
Company on 12 August 2014, pursuant to which they will not trade any of their Ordinary Shares until
the 12 month anniversary of Admission except through N+1 Singer (subject to certain exceptions).
83
Sch 2(f)
A3 7.3
18.7 Consultancy arrangements with David Stirling
(a)
Pursuant to an agreement between ATTRAQT Limited and David Stirling dated 1 January 2014,
David Stirling currently provides his services to ATTRAQT Limited for one day a week and
charges a fee of £2,000 per month. In addition, he will be awarded a payment of £50,000 on
Admission.
(b)
David Stirling entered into a service agreement with the Company on 12 August 2014, under
which he will be appointed as an employee and chief financial officer of the Company with
effect from Admission. See paragraph 8.1(b) of this Part 4 for more details of this agreement.
18.8 Relationship Agreement
(a)
The Company entered into the Relationship Agreement with Dan Wagner, BSV and N+1 Singer
on 12 August 2014. Pursuant to the Relationship Agreement, Dan Wagner and BSV have
agreed to (amongst other things):
(i)
conduct all transactions with the Group on arm’s length terms, on a normal commercial
basis and only with the prior approval of a majority of independent directors;
(ii)
exercise their voting rights or other rights and powers so as to ensure that each member
of the Group is capable of carrying on its business independently of Dan Wagner and
BSV (and their associates); and
(iii)
abstain from voting in respect of any resolution concerning any contract, arrangement
or transaction with a related party of Dan Wagner or BSV (or any of their associates).
(b)
The Company has agreed to conduct all transactions, agreements and relationships (whether
contractual or otherwise) with Dan Wagner and BSV on arm’s length terms and on a normal
commercial basis and in accordance with the related party rules set out in the AIM Rules for
Companies.
(c)
The Relationship Agreement provides that any dispute between the Company and Dan Wagner
or BSV and/or any of their associates relating to any existing or proposed transaction,
arrangement or agreement between any of Dan Wagner or BSV (or their associates) and the
Company shall be resolved by a decision of the majority of independent directors.
(d)
The obligations of the parties under the Relationship Agreement shall become unconditional
on Admission taking place and shall automatically terminate upon:
(i)
Dan Wagner and BSV (or any of their associates) ceasing to be entitled to exercise, or
control the exercise of, 20 per cent. or more of the votes capable of being cast on a poll
at general meetings of the Company; or
(ii)
the Ordinary Shares ceasing to be admitted to AIM.
18.9 Replacement Convertible Loan Agreement
(a)
The Company entered into the Replacement Convertible Loan Agreement with Alan Docter
and ATTRAQT Limited on 14 May 2014.
(b)
Pursuant to the Replacement Convertible Loan Agreement, a convertible loan agreement dated
11 December 2009 between Alan Docter and ATTRAQT Limited, under which Alan Docter
provided to ATTRAQT Limited a £45,000 interest-free loan which was convertible into equity
at any time at a £3 million pre-money valuation (the “Convertible Loan”), terminated with
effect from completion of the Share Exchange and became effective as through references
therein to “Locayta Limited” were to “ATTRAQT Group Limited”.
(c)
Pursuant to an exercise notice dated of 12 August 2014, Alan Docter is converting the
Convertible Loan into 266,394 Ordinary Shares with effect from Admission.
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18.10 Overdraft Facility Agreement
(a)
ATTRAQT Limited entered into the Overdraft Facility Agreement with Barclays Bank plc
(“Barclays”) on 3 May 2013.
(b)
Pursuant to the Overdraft Facility Agreement, ATTRAQT Limited has been given an overdraft
facility of up to £25,000 at an interest rate of 5.250 per cent. per annum over Barclays’ base
rate. The overdraft facility is secured by a debenture on Barclays’ standard form and a
guarantee dated 13 September 2010 for £25,000 from Daniel Wagner (supported by a charge
over his residential property).
(c)
The Directors intend that the Overdraft Facility Agreement will be terminated (and the debenture
and guarantee discharged) following Admission.
19. INFORMATION ON HOLDINGS
The Company does not hold a proportion of capital in any undertakings outside of the Group which are
likely to have a significant effect on the assessment of its own assets and liabilities, financial position or
profits and losses.
20. PATENTS AND LICENCES
The Group grants licences to customers in its ordinary course of business, as described further in Part 1 of
this document. Save as disclosed in Part 1 or otherwise in this document, the Company is not dependent
on patents or licences or any particular industrial or new manufacturing processes which are material to the
Company’s business or profitability.
21. RELATED PARTY TRANSACTIONS
Save for the related party transactions referred to in note 19 to the financial information on the ATTRAQT
Group in Part 3 of this document, during the period of two years immediately preceding the date of this
document, none of the members of the Group have entered into any related party transactions.
A1 6.4
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22. OTHER INFORMATION
22.1 The registrars of the Company are Capita Asset Services of The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4TU.
22.2 The auditors of the Company are BDO LLP, 55 Baker Street, London W1U 7EU, who are a member
firm of the Institute of Chartered Accountants in England and Wales.
A1 2.1
22.3 The Company’s accounting reference date is 31 December.
22.4 N+1 Singer has given and not withdrawn its written consent to the issue of this document with the
inclusion in it of references to its name in the form and context in which they appear.
A1 23.1
22.5 BDO LLP has given and not withdrawn its written consent to the inclusion in this document of its
report in Section A of Part 3 in the form and context in which it is included. BDO LLP has no material
interest in the Company.
A1 23.1
A3 10.3
22.6 Except as described in paragraph 18.7 of Part 4 or elsewhere this document, no persons (excluding
professional advisers otherwise disclosed in this document and trade suppliers) have received, directly
or indirectly, from the Company within the 12 months preceding the date of this document, and no
persons have entered into contractual arrangements to receive, directly or indirectly, from the
Company on or after Admission:
Sch 2(h)
(a)
fees, totalling £10,000 or more;
(b)
securities in the Company with a value of £10,000 or more calculated by reference to the
Subscription Price; or
(c)
any other benefit with a value of £10,000 or more at the date of Admission.
85
22.7 The costs and expenses of, and incidental to, the Subscription and Admission are payable by the
Company and are estimated to amount to £0.4 million (excluding Value Added Tax). The net proceeds
of the Subscription are estimated at approximately £0.8 million for the Company.
22.8 The information in this document that has been sourced from a third party has been accurately
reproduced and, so far as the Company is aware and is able to ascertain from information published
by that third party, no material facts have been omitted which would render the reproduced information
inaccurate or misleading.
22.9 There have been no takeover offers (within the meaning of Part 28 of the 2006 Act) by third parties
for any of the Ordinary Shares.
22.10 Nothing in this document is intended to be or should be taken as a profit forecast, estimate or
projection.
22.11 Save as disclosed in this document, no exceptional factors have influenced the Company’s activities.
22.12 The Directors are not aware of any significant recent trends in production, sales and inventory and
costs and selling prices between 31 December 2013 (being the end of the ATTRAQT Group’s last
financial year) and the date of this document. There are no uncertainties, demands, commitments or
events known to the Directors that are reasonably likely to have a material effect on the ATTRAQT
Group’s prospects for the current financial year.
22.13 There are no arrangements, known to the Company, the operation of which may at a subsequent
date result in a change of control of the Company.
22.14 There are no environmental issues that may affect the ATTRAQT Group’s utilisation of its tangible
fixed assets.
22.15 The financial information in the document does not constitute full statutory accounts as referred to in
section 240 of the 2006 Act. No further statements or accounts have been prepared or delivered to
the Registrar of Companies for the Company.
22.16 Save in connection with the application for Admission, none of the Existing Ordinary Shares and/or
the New Ordinary Shares have been admitted to dealing on any recognised investment exchange
and no application for such admission has been made. It is not intended to make any other
arrangements for dealings in such shares on any such exchange.
22.17 There are no arrangements in place under which further dividends are to be waived or agreed to be
waived.
23. AVAILABILITY OF THIS DOCUMENT
Copies of this document are available free of charge to the public during normal business hours on any
week day (excluding Saturdays, Sundays and public holidays) at the registered office of the Company and
shall remain available for at least one month after Admission. Copies of this document will also be available
for download at the Company’s website at www.ATTRAQT.com.
Dated: 13 August 2014
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A1 23.2
A3 10.4
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