Last checked at 1 Oct 2010 07:00
1 October 2010
IQ Holdings plc
("IQ Holdings" or the "Company")
Proposed acquisition of 1Spatial Group Limited ("1Spatial")
Share Consolidation
Admission to trading on AIM
Notice of General Meeting
Key Points
·; IQ Holdings ("IQ") has reached an agreement to acquire the entire issued share capital of 1Spatial Group Limited ("1Spatial")
·; 1Spatial is a leading provider of products and services that enable clients to collect, audit, manage, modify and reuse geospatial (location based) data
·; Current clients include Ordnance Survey, Environment Agency, Cable and Wireless, Royal Air Force, and The Scottish Government
·; Following completion of the Acquisition, it is proposed that the name of the Company be changed to 1Spatial Holdings plc in order to reflect the new business strategy
·; On completion, the Board members of IQ will step down and the current 1Spatial Board members will take their place
IQ Holdings, the investment group, is pleased to announce that it has today reached an agreement to acquire the entire issued share capital of 1Spatial Group Limited, a leading provider of products and services that enable clients to collect, audit, manage, modify and reuse geospatial (location based) data. Pursuant to the AIM Rules for Companies, the Acquisition will constitute a reverse takeover and will be subject to shareholder approval.
Shareholder approval will be sought at a General Meeting of the Company to be held on 18 October 2010. A resolution to effect a share consolidation through the conversion of every 1,000 Existing IQ Shares of 0.004p each into one IQ Share of 4p each will also be put to IQ Shareholders at the General Meeting. A circular ("Circular"), which comprises an admission document, is being sent to IQ Shareholders today and will be available on the Company's website. The Circular sets out the background to and reasons for the Acquisition, as well as explaining why the Directors consider the Acquisition to be in the best interests of the Company and unanimously recommend that IQ Shareholders vote in favour of the GM Resolutions.
1Spatial provides an intelligent data quality and integration platform for organisations worldwide that need to trust their location-based information. The solutions and services provided are well suited for organisations, which handle high volumes of business critical location-based data. To date, 1Spatial has had significant success in the UK & Ireland, Mainland Europe and Asia Pacific and, therefore, the priority focus will remain on these geographic segments.
1Spatial sells its technology and services to a wide range of organisations, all of whom create or use information which has a location-based element. These organisations include national mapping and charting agencies, public sector organisations, energy and utilities, telecommunications, transport and distribution and defence. (Current clients include Ordnance Survey, Environment Agency, Cable and Wireless, Royal Air Force, and The Scottish Government)
Following completion of the Acquisition, it is proposed that the name of the Company be changed to 1Spatial Holdings plc in order to reflect the new business strategy.
The current Directors of 1Spatial are Nic Snape, Dr Mike Sanderson, Peter Bullock, Duncan Guthrie, and Steve Berry. On completion of the Acquisition, David Marks, Russell Darvill and Julian Green will step down from the Board and the 1Spatial Directors will be appointed to the Board in their place. In addition, it is proposed that Mr Marcus Hanke be appointed to the Board as an independent Non-Executive Director. Further details of the Proposed Directors following Admission are set out in the Circular.
The Directors of IQ, who have been so advised by Libertas, consider that the terms of the Acquisition are fair and reasonable and in the best interests of the Company and IQ Shareholders as a whole. Accordingly, the Directors of IQ unanimously recommend that IQ Shareholders vote in favour of the GM Resolutions to be proposed at the General Meeting
Commenting on the proposed Acquisition David Marks, Chairman of IQ Holdings, said: "We have been looking at potential acquisition candidates for some time now and we believe that 1Spatial offers our shareholders a significant opportunity.
"1Spatial's management has a wealth of experience within the data sector and has steadily grown the business, both organically and through acquisition. The Company has a proven financial track record and a solid business model which we believe offers considerable growth potential."
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For further information please contact:
IQ Holdings plc
David Marks +44 (0)7836 571 339
Libertas Capital Corporate Finance Limited
Sandy Jamieson +44 (0)20 7569 9650
Rivington Street Corporate Finance
Peter Greensmith +44 (0)20 7562 3389
Bishopsgate Communications
Gemma O'Hara / Siobhra Murphy +44 (0)20 75623350
Background on IQ Holdings
On 1 February 2010, the Company announced the completion of the disposal of its two remaining trading businesses, Rosslyn Research Limited and Viewpoint Field Services Limited. Following the Disposal, the Company effectively became a cash shell and was classified under the AIM Rules as an Investing Company. The Company is required to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules or otherwise implement its investing policy within twelve months of the date of the general meeting to approve the disposal, failing which the Company's ordinary shares will be suspended from trading on AIM.
Subsequent to the disposal of Rosslyn and Viewpoint, the Company reorganised and reduced its share capital and then distributed to IQ Shareholders the majority of the shares in Rivington Street Holdings which it received as the consideration for the sale of Rosslyn and Viewpoint.
On 30 April 2010, the Company announced that it had raised £150,000 by way of a share placing and, on 26 May 2010, announced that it had raised a further £100,000 by the issue of Convertible Loan Notes. IQ is currently a cash shell and it was the stated intention of the Board to find a suitable company to reverse into IQ.
Subsequent to the year end, Julian Green was re-appointed to the Board as a non-executive Director and Russell Darvill was also appointed as a Director. Both of these appointments were made with a view to facilitating the reversal of a suitable business into IQ. On 17 June 2010, Tim Hearley resigned as Chairman so as to devote his time to other business activities, and David Marks was appointed in his place.
Background to and terms of the Acquisition
1Spatial is a privately owned company which currently has 29 shareholders. The Acquisition is to be effected by means of the Offer to 1Spatial Shareholders on the basis of approximately 16.345 of the consolidated IQ Shares for each 1Spatial Share held. The 1Spatial Shares will be acquired with full title guarantee and free from all liens, charges and encumbrances and together with all rights attaching to them at Completion, including the right to receive all dividends and other distributions declared, paid or made after Completion, apart from the dividend of £199,563 in aggregate for the financial year ended 30 June 2010.
Based on a share price of 0.05p per Existing IQ Share as at close of business on 30 September 2010, the Offer values the entire issued share capital of 1Spatial at £9.54 million. In the event that the Offer is accepted in full by all the 1Spatial Shareholders, 1Spatial Shareholders will hold 90 per cent. of the enlarged issued share capital of IQ.
1Spatial Shareholders representing 81.2 per cent. of the existing issued share capital of 1Spatial have signed irrevocable undertakings to accept the Offer. Further details of the irrevocable undertakings are set out in the Circular. Once it has gained acceptances of the 1Spatial Shares which are the subject of these irrevocable undertakings, IQ intends to take measures to compulsorily acquire any outstanding 1Spatial Shares of any 1Spatial Shareholder who does not accept the Offer using the compulsory transfer provisions set out in article 6.5 of the Articles of Association of 1Spatial and/or compulsory acquisition provisions in the Companies Act 2006. This would enable IQ to acquire 100 per cent. of the issued share capital of 1Spatial.
The holders of the Convertible Loan Notes have undertaken to convert their notes conditional upon
Admission into 333,333 IQ Shares.
Directors
The current directors of 1Spatial are Nic Snape, Dr Mike Sanderson, Peter Bullock, Duncan Guthrie, and Steve Berry. On completion of the Acquisition, David Marks, Russell Darvill and Julian Green will step down from the Board and the 1Spatial directors will be appointed to the Board in their place. In addition, it is proposed that Mr Marcus Hanke be appointed to the Board as an independent non-executive director. Further details of the Proposed Directors following Admission are set out in the Circular.
Further information on 1Spatial
Takeover Code
Under Rule 9 of the Takeover Code if any person acquires an interest in shares which, when taken together with shares in which he and persons acting in concert with him are already interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Code, that person is normally required to make a general offer in cash to all shareholders in the company at the highest price paid by him or any person acting in concert with him for an interest in such shares within the preceding 12 months.
In addition, Rule 9 of the Takeover Code also provides that if any person, together with persons acting in concert with him, is interested in shares which in the aggregate carry not less than 30 per cent. of the voting rights of a company which is subject to the Code but does not hold shares carrying more than 50 per cent. of such voting rights, and such person, or any person acting in concert with him, acquires an interest in any other shares which increases the percentage of shares carrying voting rights in such company in which he is interested, that person is normally required to make a general offer in cash to all shareholders in the company at the highest price paid by him or any person acting in concert with him for an interest in such shares within the preceding 12 months.
The Takeover Panel has determined that Dr Mike Sanderson, Nic Snape, Peter Bullock, Duncan Guthrie, Chris Wright, Steve Berry, Steve Ramage, Dr Paul Watson, Mr Seamus Gilroy, Mr P A Woodsford, Mr D Allen, Dr M I Beare, Mr M S Gregory, Mr R W Chell, Mrs M S Hacker, Dr T D Bevan and Mr S Lessware who are current shareholders in 1Spatial, will form a concert party in IQ following completion of the Acquisition. Dr T D Bevan and Mr S Lessware, who hold options in 1Spatial, will also become members of the 1Spatial Concert Party. The largest shareholder in the 1Spatial Concert Party is Dr M S Sanderson, who currently holds 35.4 per cent. of the issued share capital of 1Spatial. Further details on the 1Spatial Concert Party are set out in the Circular. The 1Spatial Concert Party may hold up to approximately 82.8 per cent. of the enlarged share capital of IQ upon completion of the Acquisition, assuming full acceptance of the Offer. Therefore, following completion of the Acquisition, the 1Spatial Concert Party would normally be required to make a general offer in cash to all shareholders in the Company at the highest price paid by him or any person acting in concert with him for an interest in such shares within the preceding 12 months.
Following the Acquisition, Dr M S Sanderson may hold up to 31.9 per cent. of the Company's voting share capital, assuming full acceptance of the Offer, and would normally be required to make a general offer in cash to all shareholders in the Company at the highest price paid by him or any person acting in concert with him for an interest in such shares within the preceding 12 months.
The Takeover Panel has received letters from IQ Shareholders representing 53 per cent. of the issued share capital of IQ confirming that, inter alia, they would not accept an offer made by member of the 1Spatial Concert Party or Dr M.S. Sanderson under Rule 9 of the Takeover Code as a result of the completion of the Acquisition as set out above. Further details on the IQ Shareholders who have signed the letters are set out in the Circular. The Takeover Panel has consequently granted a waiver to the 1Spatial Concert Party and to Dr M. S. Sanderson from making an offer under Rule 9 of the Takeover Code which would otherwise be required on completion of the Acquisition.
Following the Acquisition, the 1Spatial Concert Party will be able, subject to Note 4 on Rule 9.1 of the Takeover Code, to acquire further shares in the Company without incurring any obligation under Rule 9 to make a general offer, although an individual member of the 1Spatial Concert Party may subsequently be required to make a general offer under Rule 9 of the Takeover Code if he acquires an interest in any other IQ Shares which increases his overall interest in IQ Shares under the circumstances set out above.
Lock-in and orderly market arrangements
Under the terms of the Offer, each of the 1Spatial Shareholders who accepts the Offer undertakes that he or she will not (and will procure that any person with whom he or she is connected will not) sell or otherwise dispose of any interest in IQ Shares which he or she acquires on acceptance of the Offer, save in limited circumstances such as, inter alia, a takeover of IQ becoming or being declared unconditional; the giving of an irrevocable undertaking to accept an offer; or a disposal pursuant to a court order, or required by law or any competent authority. Each of the 1Spatial Shareholders who accepts the Offer has also undertaken that for a further period of 12 months after the first anniversary of the date of Admission, he or she will not (and will use all reasonable endeavours to procure that no person connected with him or her shall) dispose of any IQ Shares, save in certain limited circumstances, without the consent of IQ's broker (such consent not to be unreasonably withheld).
Change of accounting reference date
It is proposed that IQ's financial year end will be changed from 31 March to 30 June. The Enlarged Group will therefore report audited financial information on the basis of a 15 month accounting period to 30 June 2011, and then annually thereafter. The Proposed Directors intend to publish an interim financial report on the Enlarged Group for the nine months to 31 December 2010 on or before 31 March 2011.
General Meeting
The Circular contains notice of the General Meeting of the Company which is to be held on 18 October 2010 at 10.00 in Edwin Coe LLP, 2, Stone Buildings, Lincoln's Inn, London WC2A 3TH. Resolutions will be proposed to approve the Acquisition, to consolidate the Existing IQ Shares into IQ Shares, to appoint the Proposed Directors, and to change the name of the Company to 1Spatial Holdings plc.
Circular
A copy of the Circular is available on the Company's website at www.iqholdings.co.uk
Libertas
Libertas Capital Corporate Finance Limited, which is regulated and authorised in the United Kingdom by the Financial Services Authority, is acting exclusively for the Company and not acting for any other person and will not be responsible to any person for providing the protections afforded to its customers or for advising any other person on the contents of any part of this announcement. The principal place of business of Libertas Capital Corporate Finance Limited is 16 Berkeley Street London W1J 8DZ.
About 1Spatial Group
1Spatial provides an intelligent data quality and integration platform for organisations worldwide that need to trust their location-based information. The solutions and services provided are well suited for organisations, which handle high volumes of business critical location-based data.
By automating the transformation of complex, distributed and error prone data into accurate and valuable information, organisations can:
·; Improve operational efficiency;
·; Reduce costs;
·; Manage compliance; and
·; Improve decision-making.
Location data is business critical. This data increasingly underpins intra and inter business processes across a wide range of organisation, enabling efficient delivery of policies, procedures and customer services. Information is most beneficial when it is accessible, easily shared and trusted which means data must be integrated effectively into daily business operations and data quality guaranteed.
Considerable problems around the usability, accuracy and timeliness of the data held by public and private sector organisations have been identified. Studies and reports show that having a better understanding of location information within a consistent framework would alleviate these problems and provide significant benefits. This claim is validated in the report by the Geographic Information Panel, (November 2008) "Place matters: the Location Strategy for the United Kingdom".
"Current users of geographic information spend 80 per cent of their time collating and managing the information and only 20 per cent analysing it to solve problems and generate benefits. We need to address this imbalance."
"Currently too few government-owned datasets that incorporate location can be easily assembled and analysed with reliability from across local and central government bodies. There remains too much duplication, too little reuse and too few linkages across datasets which are required to support policy implementation."
1Spatial provides an integrated set of solutions and services that will automate the process of turning the unreliable, siloed data sets into accurate and valuable information.
Markets and Geographic Focus
1Spatial sells its technology and services to a wide range of organisations all of whom create or use information which has a location-based element. These organisations include national mapping and charting agencies, public sector organisations, energy and utilities, telecommunications, transport and distribution and defence.
To date, 1Spatial has had significant success in the UK & Ireland, Mainland Europe and Asia Pacific and, therefore, the priority focus will remain on these geographic segments.
This focus is reinforced by commonalities in defined government programmes. These government programmes are designed to establish infrastructures that support policies and/or activities that will ultimately have an impact on the environment. INSPIRE, a directive which became European law on 15th May 2007, lays down requirements to establish an infrastructure for spatial information in Europe. It aims to make available relevant, harmonised and high quality geographic information to support formulation, implementation, monitoring and evaluation of policy. In Australia, similar practices apply. The implementation of a Spatial Data Infrastructure (SDI) means that any data collected at state level must be integrated to provide data sets for cross state border and national level planning and environmental management.
Key Strengths and Market Opportunities
| Key Strengths |
| ·; A blue-chip client list built up over 40 years. |
| ·; Combining straight-through processing (STP) methodology and business process interoperability enables organisations to streamline and optimise the flow of their location-based information and minimise processing costs as manual efforts are significantly reduced. |
| ·; Empower knowledge workers with the ability to define, share and maintain business rules and workflows without the need for specialist IT or development skills. |
| ·; The ability to perform automated, intelligent data processing is underpinned by 1Spatial's Object-Orientated technology approach. |
| ·; Design, development, sales, services including training and documentation are all quality management certified by ISO9001:2000. |
| Market Opportunities |
| ·; Regulatory requirements (INSPIRE) mean the need for all public sector organisations to ensure their location-based information is managed and shared within a consistent reference framework. (Source: http://inspire.jrc.ec.europa.eu/) |
| ·; UK Location Strategy is a UK pan-government initiative to improve the sharing and re-use of public sector location information. This initiative presents an opportunity to introduce new, innovative, and joined up service for government, business and citizens. (Source: http://location.defra.gov.uk and Geographic Information Panel, (November 2008) "Place matters: the Location Strategy for the United Kingdom" |
Objectives
·; To accelerate the revenue growth of the Company by exploiting the technical investment already made and the key successes achieved to date.
·; To grow the Company organically and through acquisitions, both domestically and internationally.
Strategy
·; To exploit 1Spatial's growing reputation, the market opportunity that is developing and its offerings.
·; To transform a professional, profitable services company into a high-growth, high-margin, knowledge engineering company.
The Proposed Directors intend to achieve this by:
·; Building and marketing smart components that will generate increased licence revenue, enabling recurring revenue.
·; Exploiting the architecture of its products to develop a Software-as-a-Service business model.
·; Operating through an integrated sales and delivery process to minimise risk and maximise customer satisfaction.
·; Delivering high volume, high margin services to enable organisations to automate their processes and improve productivity and consistency of the information they provide.
·; Entering into long-term, high value maintenance contracts managed under service level agreements, combining support with system enhancements.
·; Develop the infrastructure and market a hosted service based offering that will support the next phase of growth by enabling companies in the Knowledge Sector to obtain control of and harmonise their data and information.
·; Acquisitions in Europe and Australia to replicate the successful business model employed in the UK thus maximizing growth potential whilst minimizing risk through geographical spread.
The Proposed Directors believe that strong organic growth can best be levered by acquiring companies in continental Europe and Australia to exploit INSPIRE and the Australia Spatial Data Infrastructure in particular. The opportunity for growth is further heightened by other government initiatives including Public Data Transparency Principles (source: http://data.gov.uk, 2010) and Shared services and data collaboration initiatives (source: Local Government Improvement and Development, 2010).
The total spend in order for national and regional organisations to comply with the European project INSPIRE has been forecast at around €230m between now and 2020. Source: INSPIRE Infrastructure for Spatial Information in Europe - Extended Impact Assessment of INSPIRE, 2004.
DEFINITIONS
The following definitions apply throughout this announcement, unless the context requires otherwise:
| "1Spatial" | 1Spatial Group Limited, a company incorporated in England and Wales with company number 4785688 |
| "1Spatial Shares" | Ordinary shares of 1p each in the capital of 1Spatial |
| "1Spatial Shareholders" | the holders of 1Spatial Shares |
| "Acquisition" | the proposed acquisition by the Company of the entire issued and to be issued share capital of 1Spatial under the terms of the Offer |
| "Admission" | the admission of the IQ Shares to trading on AIM becoming effective in accordance with the AIM Rules for Companies |
| "AIM" | a market of the London Stock Exchange |
| "AIM Rules for Companies" | the rules for AIM companies issued by the London Stock Exchange (as amended from time to time) |
| "Board" | the board of Directors of the Company, including a duly constituted committee of such directors |
| "Company" or "IQ" | IQ Holdings plc, a company incorporated in England with company number 05212691 |
| "Conditions" | the conditions to the Acquisition being inter alia (i) the GM Resolutions being passed at the General Meeting, and (ii) Admission |
| "Conversion" | The conversion of the Convertible Loan Notes into Existing IQ Shares |
| "Convertible Loan Notes" | The £100,000 convertible unsecured loan notes convertible into Existing IQ Shares at 0.03p per Existing IQ Holdings Share |
| "Directors" | the directors of the Company |
| "Enlarged Group" | the Company and its subsidiary undertakings as at the date of Admission |
| "Enlarged Share Capital" | the IQ Shares in issue immediately following Admission |
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| "Existing IQ Shares" | ordinary shares of 0.004 pence each in the capital of the Company |
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| "General Meeting" or "GM" | the general meeting of the Company to be held at 10:00 a.m. on 18 October 2010 |
| "GM Resolutions" | the resolutions set out in the Notice of General Meeting |
| "Group" | IQ and its subsidiaries |
| "Libertas" | Libertas Capital Corporate Finance Limited |
| "London Stock Exchange" | London Stock Exchange plc |
| "IQ Shareholders" | the holders of Existing IQ Shares |
| "IQ Shares" | ordinary shares of 4 pence each in the capital of the Company following the Share Consolidation of the Existing IQ Shares |
| "Offer" | the offer being made by the Company to 1Spatial Shareholders on 1 October 2010 to acquire the entire issued and to be issued share capital of 1Spatial |
| "Resolutions" | the Resolutions to be proposed at the GM |
| "Rosslyn" | Rosslyn Research Limited, formerly a wholly owned subsidiary of the Company |
| "Share Consolidation" | the conversion of every 1,000 Existing IQ Holdings Shares into one IQ Share |
| "Takeover Code" | the City Code on Takeovers and Mergers issued by the Panel on Takeovers and Mergers |
| "Viewpoint" | Viewpoint Field Services Limited, formerly a wholly owned subsidiary of the Company |