7 Mar 2019 07:00
Koovs plc
(the "Company")
Koovs Signs $1.4m Technical Services Contract with Future Group
Technical Services Agreement
Koovs plc (AIM: KOOV), the fashion-forward business focused on the young Indian e-commerce market, is pleased to announce that its subsidiary Koovs Marketing Consulting Private Limited has signed an agreement with Future Lifestyle Fashions Limited ("FLFL"), part of Future Group, to develop, host and maintain an online platform for FLFL's Brand Factory retail format (the "Technical Services Contract").
Under the terms of the Technical Services Contract, Koovs will receive a one-off payment of $1.4m for the development of the Brand Factory online platform and an ongoing maintenance fee for a term of 24 months. The value of the maintenance fee will be equal to the cost incurred by Koovs in providing the maintenance of the Brand Factory online platform plus a management fee. Both the one-off payment and the maintenance fee are expected to be profitable for the Company.
Upon delivery of the platform, the Company will issue FLFL a non-exclusive, non-transferable, and non-assignable license to FLFL. FLFL will not acquire any other rights or interest in the platform, the technology or intellectual property.
Mary Turner, CEO of Koovs said: "We believe that Koovs' technology platform is both market-leading and a proven success in India's rapidly expanding ecommerce market. This contract underlines the significant additional potential for growth that can be achieved by licencing our technology to third parties. Brand Factory is a household name in India, generating revenue of c.£188.5m in the last three quarters, so their decision to work with us to provide the new online platform, is a huge validation of the capability and scalability of our technology."
Related party transaction
For the purposes of the AIM Rules for Companies ("AIM Rules"), FLFL is a substantial shareholder in the Company and therefore a related party. As such, the entering of the Technical Services Contract constitutes a related party transaction.
The directors of the Company, having consulted with Peel Hunt LLP in its capacity as the Company's nominated advisor for the purposes of the AIM Rules, consider the terms of the Technical Services Contract to be fair and reasonable insofar as shareholders are concerned.
Funding of the Company by FLFL
Separately, we anticipate the balance of the additional funding of £9.5m to £10.5m to be subscribed by FLFL into the Company (as announced in September 2018) to close shortly, subject to necessary regulatory approvals or via an alternative structure, as may be permitted under the Indian Laws. We will announce further details in due course.
Other information
This announcement contains inside information within the meaning of the Market Abuse Regulation.
About Koovs
Koovs is focused on building KOOVS.COM into the leading fashion destination in India. The Company is headquartered in London, where its design and creative teams are based, with all other operational functions based in India.
For further information please contact:
Media enquiries:
Headland
Lucy Legh / Rob Walker / Charlie Twigg
Tel: +44 (0)20 3805 4822
Koovs plc
Mary Turner / Robert Pursell
Tel: +44 (0)20 7151 0170
Peel Hunt LLP
Dan Webster / George Sellar / Guy Pengelley
Tel: +44 (0) 20 7418 8900