TIDMSKHG
RNS Number : 7305X
Sky High PLC
20 February 2012
20 February 2012
SKY HIGH PLC
(AIM: SKHG)
Capital Reorganisation, Amendments to Articles of Association,
Proposed Acquisition, Placing, General Authority to Issue Shares
and Notice of General Meeting
Sky High announced today that it has exchanged a conditional
contract to acquire the business and certain assets of Count on Us
Limited, a national traffic data collection company with a strong
market share in the London and Wales, for a consideration of
approximately GBP454,928, which is to be satisfied by the issue of
4,135,709 New Ordinary Shares.
The Acquisition is conditional, inter alia, on the Company
raising up to GBP500,000 in order to provide additional working
capital for the enlarged business. In order to satisfy this
condition, the Company has agreed a conditional placing of
4,637,500 New Ordinary Shares at a price of 8 pence per share to
raise approximately GBP371,000, before expenses, and intends that
the balance will come from working capital facilities and finance
agreements to be agreed with the Company's bankers.
The Company's existing share authorities allowing it to issue
shares are insufficient to allow the issue of the Placing Shares
and the Consideration Shares and therefore the Placing and the
Acquisition are conditional on Shareholders' approval.
The placing price of 8 pence per share is lower than the current
nominal value of the shares The Company is prohibited from issuing
shares at below nominal value and therefore to ensure that the
issue of the Placing Shares can proceed the Company has decided to
undertake a capital reorganisation which will result in the
Company's existing capital being sub-divided. Further details of
the Capital Reorganisation are set out below.
Information on Count on Us
Count on Us was incorporated in England in 1987 and was acquired
by Clearview Limited in 2005. Count on Us is currently a wholly
owned subsidiary of Clearview. It employs approximately 40 people
from offices in London, Cardiff, Glasgow, Wakefield and Bicester
.
Like Sky High, Count on Us provides traffic surveys, data
processing and analysis services to large consulting firms,
government departments and local authorities. However, Count on Us
operates predominantly in London and Wales, being areas where Sky
High has not traditionally had a significant market share.
For the year ended 31 March 2011 Count on Us reported a loss
before tax of GBP1.4m on a turnover of GBP3.6 million. As at 31
March 2011 Count on Us had net assets of GBP2.4 million, although
Sky High is only acquiring certain assets and some hire purchase
contracts which as at 31 December 2011 had a book value of
approximately GBP168,000.
In its unaudited management accounts for the 9 months to 31
December 2011 Count on Us recorded a loss before tax of GBP0.5m on
a turnover of GBP1.7m.
Background to, and reasons for, the Acquisition
The parent company of Count on Us, Clearview is a manufacturer
and provider of equipment to the traffic industry. The board of
Clearview believes that the Count on Us business is no longer core
to its operations. The Directors believe the acquisition of Count
on Us represents an excellent opportunity to consolidate Sky High's
market position.
Furthermore, the Directors believe Count on Us will benefit from
having a new management team that will be focussed exclusively on
traffic data collection and which can draw on the depth of
knowledge and experience of the Sky High management team. Given the
synergies between the two companies the Directors also believe
there are opportunities to centralise some of the core processes
which should lead to costs and overhead savings and that there
should be further revenue benefits from applying Sky High's
business development and tendering processes to Count on Us's
customer base.
Finally, the Directors believe that by becoming a larger player
in what they perceive is a fragmented market, Sky High will be well
positioned to secure and deliver key contracts such as those for
large infrastructure and/or government projects. The Directors
believe it will be easier to obtain new work through increasing
market share in this way than through organic growth.
Appointment of New Directors
Following and conditional on Completion, Nicholas Lanigan, a
current director of Count on Us, and Sir John Madejski, the owner
of Clearview will be appointed as non-executive directors of Sky
High.
Principal terms and conditions of the Acquisition
Pursuant to the terms of the Acquisition Agreement, Sky High
will acquire, inter alia, the goodwill; the leased properties in
London, Cardiff and Glasgow but not those in Wakefield or Bicester;
certain assets such as traffic equipment; the benefit of Count on
Us's business contracts; and Count on Us's records. The employees
of Count on Us will also transfer on Completion.
The Consideration amounting to GBP454,928 will be settled by the
issue of 4,135,709 New Ordinary Shares valued at 11 pence (being
the closing middle market price on the business day prior to the
signing of the Acquisition Agreement).
The Acquisition is conditional, inter alia, on the passing of
the Resolutions at the GM and the Company securing additional
working capital funding of GBP500,000.
Capital Reorganisation
The Company's share price has been traded near the nominal value
of its Existing Ordinary Shares for some time. Company law
prohibits companies from issuing new shares at less than the
nominal value, therefore at present the Company is potentially
restricted as to how it can use its shares. Therefore the Directors
are proposing to reorganise the Company's share capital on the
terms set out below.
Under the Capital Reorganisation, each Existing Ordinary Share
will be sub-divided into one New Ordinary Share and 9 Deferred
Shares.
The rights attaching to the New Ordinary Shares will be
identical in all respects to those of the Existing Ordinary
Shares.
The Deferred Shares will have no voting rights and will not
carry any entitlement to attend general meetings of the Company.
They will carry only the right to participate in any return of
capital to the extent of the amount paid up or credited as paid up
on each Deferred Share but only after the holder of each New
Ordinary Share has received in aggregate capital repayments
totalling GBP10,000,000 per New Ordinary Share. Accordingly, the
Deferred Shares will, for all practical purposes, be valueless and
it is the Board's intention, at an appropriate time, to cancel the
Deferred Shares.
Following the Capital Reorganisation, existing shares
certificates in respect of Existing Ordinary Shares will remain
valid and will deemed to represent the same number of New Ordinary
Shares. No certificates will be issued in respect of the Deferred
Shares, nor will CREST accounts of Shareholders be credited in
respect of any entitlement to the Deferred Shares. No application
will be made for the Deferred Shares to be admitted to trading on
AIM or any other investment exchange.
There will be no change in the Company's ISIN or SEDOL numbers
as a result of the Capital Reorganisation.
Placing
Sky High has agreed a conditional placing of 4,637,500 New
Ordinary Shares at 8 pence per share to raise GBP371,000, before
expenses. The Placing is conditional, inter alia, on completion of
the Acquisition. The net proceeds of the Placing will be used to
provide additional working capital for the Group following
completion of the Acquisition.
Certain Directors of the Company are participating in the
Placing. The Directors of Sky High who are participating are
detailed as follows:
Name Number of Placing Number of New Ordinary Percentage of New
Shares Shares held immediately Ordinary Shares
following Admission held immediately
following Admission
================== ================== ========================= =====================
Michael Jackson* 312,500 797,693 3.71*
================== ================== ========================= =====================
Richard Jackson* 312,500 2,329,246 10.82*
================== ================== ========================= =====================
Mark Mattison 200,000 4,129,389 19.19
================== ================== ========================= =====================
Grant Wilson 125,000 540,993 2.51
================== ================== ========================= =====================
*Richard Jackson and Michael Jackson also have a joint interest
in a family trust that will have a 7.30 per cent, holding
immediately following Admission
In addition, Sir John Madejski, the ultimate controlling party
of Clearview, has agreed to subscribe for 1,500,000 Placing Shares.
On Admission, the aggregate holdings of Count on Us and Sir John
Madejski in Sky High will be 5,635,709 New Ordinary Shares, which
will represent approximately 26.19 per cent. of the Company's share
capital immediately following Admission.
The participation in the Placing of certain Directors is
classified as a related party transaction under the AIM Rules. The
independent directors, being those Directors not participating in
the Placing, consider, having consulted with WH Ireland the
Company's nominated adviser, that the terms of the transaction are
fair and reasonable insofar as the shareholders of Sky High are
concerned.
Current trading
In its interim results for the six months ended 30 September
2011 announced on 16 December 2011, Sky High reported turnover of
GBP3 million, up 31 per cent on the corresponding period last year,
and a profit before tax of GBP153,000 which compares to a loss of
GBP299,000 in the equivalent period last year.
In overall terms the trading performance in the second half of
the year is expected to be similar to that of the second half of
the last financial year. While demand in the UK traffic market
remains flat and competition means that margins have been under
pressure, Sky High Australia continues to trade strongly. In
addition, the data capture business is trading well. The investment
in sales and marketing resource in this area highlighted in the
interim results is starting to generate positive results. The
business has recently been awarded a four year contract for Bus
Origin Destination Surveys Data Processing which will start at the
beginning of the next financial year and that is expected to
generate approximately GBP140,000 revenue per annum.
General Meeting
A General Meeting to obtain the necessary approvals to, inter
alia, the Acquisition, the Placing and Capital Reorganisation is
being convened for 16 March at 11.00 a.m. A circular which includes
notice convening the a general meeting is expected to be posted to
shareholders today and will be available on the Company's website
(www.skyhighplc.co.uk ).
Admission of the New Ordinary Shares is expected to take place
on 19 March 2012.
The Definitions which apply in the Circular have been used in
this announcement.
Commenting on the Acquisition, Mark Mattison, Chief Executive of
Sky High, said
"To be acquiring what is probably the best brand name in our
market sector is a fantastic achievement. This deal gives us the
opportunity is to bring together the strengths of the two leading
traffic and transport survey providers in the UK to create a
Company which will deliver quality surveys with unrivalled skills,
experience, geographical coverage. Count On Us is a highly
recognised name and brings with it an excellent heritage, a broad
service portfolio, significant experience and a substantial
customer base.
Both senior management teams are very excited about the future
prospects. For both the Clearview Group and Sir John to have made
an investment as part of the deal shows that they have confidence
in future prospects for the merged business. This is a testament to
how far Sky High Traffic has come and how it has tackled the
hardest trading conditions in recent history. We all look to the
future with great optimism."
Contacts:
Sky High plc www.skyhighplc.co.uk
Mark Mattison, Chief Executive +44 (0) 1937 833 933
Alex Johnson, Finance Director +44 (0) 1937 833 933
WH Ireland Limited www.wh-ireland.co.uk
Mike Coe / Marc Davies +44 (0) 117 945 3470
This information is provided by RNS
The company news service from the London Stock Exchange
END
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