Last checked at 8 Mar 2023 07:00
Certain information contained within this Announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR") as applied in the United Kingdom. Upon publication of this Announcement, this information is now considered to be in the public domain.
8 March 2023
Cornerstone FS Plc
("Cornerstone" or "the Company")
Variation of Incentivisation and Settlement Arrangements
Cornerstone FS Plc (AIM: CSFS), a foreign exchange and payments company offering multi-currency accounts to businesses and individuals, announces that it has agreed to vary certain incentivisation and settlement arrangements with Robert O'Brien, General Manager APAC and Middle East, and Craig Strong, Director of Capital Currencies Ltd ("Capital Currencies"), a wholly-owned subsidiary of the Company that was acquired on 31 January 2022.
The repayment date of Mr. O'Brien's £2m loan note, which was issued pursuant to the Company's announcement of 4 August 2022, has been extended by one year such that it is now repayable by the Company on 31 July 2026. Additionally, Mr. O'Brien has agreed to vary and extend certain elements of his compensation package, decreasing his commission share on certain established revenue streams and increasing his share of the profitability of the Dubai office. This is expected to be immediately cash flow beneficial for the Company. Depending on performance, the changes may result in increased commission payments to Mr. O'Brien over the life of the extended package.
Further to the Company's announcement of 26 January 2022, the Board has agreed with Mr. Strong to vary the terms of the original earn-out consideration as follows:
· The first tranche of the earn-out consideration is now assessable on revenue performance for the year ending 31 January 2024 and the second tranche is assessable on revenue performance for the year ending 31 January 2025 - both representing an extension of one year.
· The Company now has the option, at its discretion, to satisfy one or both of the earn-out payments in cash as opposed to one half of the first tranche being payable in ordinary shares and the other half in convertible loan notes and the second tranche to be payable in ordinary shares.
Had the agreement with Mr. Strong not been reached, the Company expected to issue shares to Mr. Strong in the coming weeks in settlement of half of the first earn out tranche, which would have led to a 2.8% dilution of existing shareholders (based on the closing share price of 7.5 pence per share on 7 March 2023). The settlement of this tranche will now become payable a year later, assessed on revenue performance for the year ending 31 January 2024, with the option for the Company to settle the tranche in cash.
Both the variation of Mr. O'Brien's incentivisation and the earn-out arrangement with Mr. Strong are related party transactions for the purposes of the AIM Rules. The Company's Directors, having consulted with the Company's nominated adviser, SPARK Advisory Partners Limited, consider that the revised terms are fair and reasonable insofar as the Company's shareholders are concerned.
James Hickman, CEO of Cornerstone, said: "We are pleased to have agreed these amended payment terms with Rob and Craig, which reflect their support of Cornerstone and belief in our success. A key priority of ours is becoming cash flow positive and these new arrangements will help us reach that goal. We have also secured a route that would allow us to avoid future dilution, if that is in the best interests of the Company and its shareholders as a whole at that time. Since joining Cornerstone, both Rob and Capital Currencies have made excellent contributions to our growth and we look forward to this continuing as we drive our business forward."
Enquiries
Cornerstone FS Plc | +44 (0)203 971 4865 |
James Hickman, Chief Executive Officer Judy Happe, Chief Financial Officer | |
SPARK Advisory Partners Limited (Nomad) | +44 (0)203 368 3550 |
Mark Brady, Adam Dawes | |
SP Angel Corporate Finance LLP (Broker) | +44 (0)203 470 0470 |
Jeff Keating, Harry Davies-Ball | |
Gracechurch Group (Financial PR) | +44 (0)204 582 3500 |
Harry Chathli, Claire Norbury |
About Cornerstone FS plc
Cornerstone FS plc (AIM: CSFS) is a foreign exchange and payments company offering multi-currency accounts to businesses and individuals. Headquartered in the City of London, Cornerstone combines a proprietary technology platform with a high level of personalised service to support clients with payments in over 35 currencies in more than 100 countries. With a track record of over 12 years, Cornerstone has the expertise, experience and expanding global partner network to be able to execute complex cross-border payments. It is fully regulated by the Financial Conduct Authority as an Electronic Money Institution. www.cornerstonefs.com