NETD.L Regulatory News (NETD)

NetDimensions (Holdings) Limited

("NetDimensions" or the "Company" or the "Group")

Placement Proceeds to Drive Growth

HIGHLIGHTS

·; Target of US$50 million in annual sales revenue in 5 years

·; US$6 million cash raised from oversubscribed offer and placing

·; Cash balance of approximately US$11 million

·; Headcount to increase to 215 staff

BACKGROUND

Further to the successful recent placing of 10,750,000 new ordinary shares to raise US$6 million (net of fees) the Board outlines its investment plans to substantially grow the business.

NetDimensions aims to be a leading provider of talent and related compliance management solutions for highly regulated industries.

Highly regulated industries make up a substantial part of the high-growth, global market for Talent Management Systems (TMS), 2013 year-on-year growth for which will be +21.3% according to industry analyst Bersin by Deloitte who value the market at US$4.8 billion.

Having won clients from top global competitors, we are confident that our award-winning products and services are proven and with US$11 million in cash on hand we believe that now is the time to accelerate growth and increase market share.

In the NetDimensions 2012 Annual Report our Chairman commented:

"In the second half of 2012 the Board started to implement its strategy to substantially increase market share, with particular focus on the heavily compliant and highly regulated industries sector within the global TMS market."

And:

"The Board's strategic aim is for the Company to become the No. 1 player in the highly regulated industries sector of the global TMS market. We have already gained traction as a leading specialised TMS provider focusing on clients who operate in these highly complicated environments with high consequences and will continue to invest money, time and effort to reach our goals."

The Board intends to accelerate our investment in sales and marketing and in engineering and technical services across all parts of the business as we migrate to more of a direct sales model aligned to our growing Software as a Service (SaaS) offerings.

This multi-year plan will involve substantial, on-going investment. In the initial (two-year) investment phase, as we focus on building the business we will continue to maintain a strong cash balance whilst increasing revenue and market share in our targeted "high-consequence" sub-sectors, but do not expect to make GAAP profit. As the Company comes through this phase investors should anticipate sustainable profits due to increasing revenue growth and improved operating leverage.

POSITIONING

The Group will operate as six distinct Business Units (BUs) managed and supported by a shared corporate services group, which provides, among other things, marketing, product development, finance, human resources, technical and legal and compliance services. The key points defining the Company structure going forward include:

·; The Company's traditional Learning Management System (LMS) offering was expanded and re-branded in 2012 with the launch of NetDimensions Talent Suite, our state-of-the-art Talent Management System for the enterprise, helping organisations worldwide achieve productivity and efficiency improvements, cost reductions, better risk management and cultural and process innovation. NetDimensions Talent Suite comprises a fully-integrated, organically-developed software platform with a core focus on Learning and Performance. It provides clients with a practical approach to support innovative, cost-effective models of on-going training, certification and talent development for employees, contractors, agents, partner staff and customers.

·; The Company's TMS business is structured into four Business Units on a geographical basis as follows; North America (NA), Europe, Middle East and Africa (EMEA), Asia Pacific (APAC) and China.

·; Each BU has a sales-oriented General Manager (GM) mandated to prioritise business development and revenue growth. The GMs have their own sales organisations consisting of quota-carrying sales executives and account managers and in some cases dedicated channel managers.

·; The BUs' Professional Services (Pro-Serv) teams provide product training, configuration and implementation services for the Company's own product offerings. As we move further from our legacy reseller model to a more direct sales approach, the Pro-Serv teams will grow and become an essential part of providing a total package of value-added products and services to clients. This should increase our opportunities for higher client satisfaction, loyalty and follow-on sales. By providing more services directly, we aim to increase spend for each TMS deal and improve retention rates.

·; The fifth BU is our U.S.-based Content and Application Development Service, which is focused on providing specialised and bespoke content and learning-related applications to clients. This business is self-contained with its own sales organisation, development specialists and support team.

·; The new healthcare division formed on the back of the acquisition of eHealthcareIT on 1 March 2013 is the sixth BU. Now known as NetDimensions Healthcare, this BU specialises in providing learning and compliance solutions to U.S. hospitals. The formation of the new Healthcare BU extends our reach into another high-consequence industry. The Healthcare BU is self-contained with its own sales organisation, implementation, support and training teams.

·; The six BU GMs are supported by an experienced, proven management team. The two founding members Jay Shaw (CEO) and Ray Ruff (Chief Scientist) are both major shareholders, hold executive positions on the board and have between them extensive experience in the industry. Matthew Chaloner (CFO) recently joined the board and brings with him 20 years experience, 14 years of which have been at senior management positions ranging from Finance Director to CEO. At the corporate level we also have the Chief Marketing Officer Alex Poulos, Chief Technology Officer Robert Lowe, Chief Sales Officer Don Hernandez and Chief Human Resources Officer Jill Mahony, all of whom have many years of experience and proven track records in their fields.

INVESTMENT PLAN

·; Each BU will increase the number of its front-line sales staff. In total, 36 new hires are planned for the sales organisations across the BUs, of whom 14 will be quota carrying, bringing our total number of quota-carrying sales executives to 32 by the end of this year, a 100% increase from the end of December 2012. The new Chief Sales Officer will oversee sales across the BUs and bring a global approach with a particular focus on key account management and partner relationships.

·; The sales organisations will continue to be supported by the global marketing group headed by the Chief Marketing Officer with dedicated staff supporting each organisation. The global marketing group is responsible for brand awareness, demand generation and product positioning at the global group level as well as for the individual BUs. The global marketing group will also be expanded as part of the business plan to a total headcount of 14.

·; We will recruit 30 new engineers and technical support personnel, the majority of whom will be in place by the end of 2013. The new hires will cover all functional areas including product development, quality assurance, professional services, client implementations, client support and hosting.

·; Three new hires in the finance and administration departments are to ensure global standards and structures. The hires include the new Chief Human Resources Officer. This position is crucial for the recruitment and on-boarding of the new hires.

OUR STATED AIMS

The Company aims to be a leading provider (by sales revenue) of TMS and related compliance solutions within the sub-sector of highly regulated industries. Our focus is on sales to and support for clients operating in highly complicated environments with high consequences if things go wrong, i.e., high-stakes environments.

Our target industries include:

·; Life sciences (pharmaceutical and medical device manufacturing)

·; Healthcare (both hospitals and non-acute care providers)

·; Defence and aerospace manufacturing and related services

·; Financial services

·; Energy (resource extraction and refining, power generation and distribution)

·; Government agencies (both military and civil)

·; Aviation (airlines, aviation regulators and airline and airport services)

The Board is targeting US$50 million in annual sales revenue with growing and sustainable profits by the end of the current five-year period.

The Board intends to achieve these financial goals primarily by organic growth under the current plan but also by additional selective acquisitions that bring complementary offerings in terms of market reach, technology, products or services.

KEY PERFORMANCE INDICATORS

To help investors monitor our progress through the investment phase we will share various key performance indicators, including:

·; Number of new clients won

·; Number of active users (people) on NetDimensions Talent Suite

·; New business as a percentage of overall sales

·; Average deal size (per direct and reseller client)

·; Invoiced sales and sales revenue for the BUs, including the new NetDimensions Healthcare business

·; Number of new quota-carrying salespersons recruited and onboarded

·; US$ client retention rate

·; SaaS, Pro-Serv and other sales revenues by type

·; Average invoiced sales value per salesperson and per employee

·; Sales by industry type (highly regulated industries) - growth over prior year

In summary, the Board faces the future with confidence. Our product and service offerings have clear competitive advantages in a fast-growing global market. Our client list is growing. Our management and delivery teams are experienced and focused. With cash totalling approximately US$11 million, the Company has sufficient headroom to invest for growth, both organically and by acquisition.

About NetDimensions

Established in 1999, NetDimensions (AIM: NETD; OTCQX: NETDY) is a global provider of performance, knowledge and learning management systems.

NetDimensions' flagship product line, the NetDimensions Talent Suite, enables companies, government agencies and other organizations to personalize learning, share knowledge, enhance performance, foster collaboration, and manage compliance programs for employees, customers, partners and suppliers.

Recognized as one of the talent management industry's top-rated technology suppliers in overall customer satisfaction, NetDimensions has been chosen by leading organizations worldwide including ING, Cathay Pacific, Hunter Douglas, Chicago Police Department, Delphi Automotive, Progress Software, and Travelex.

NetDimensions is ISO 9001 certified and NetDimensions hosted services are ISO 27001 certified. For more information, visit www.NetDimensions.com