REG - SysGroup PLC - Result of Oversubscribed Placing and Subscription

SysGroupAnnouncement

07/06/2024 07:00

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RNS Number : 5075R  SysGroup PLC  07 June 2024

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS
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CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY
PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN
SYSGROUP PLC OR ANY OTHER ENTITY IN ANY JURISDICTION. NEITHER THIS
ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION SHALL FORM THE BASIS OF, OR BE
RELIED ON IN CONNECTION WITH, ANY INVESTMENT DECISION IN RESPECT OF SYSGROUP
PLC OR ANY OTHER ENTITY.

 

THE CONTENT OF THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY AN AUTHORISED PERSON
WITHIN THE MEANING OF THE FINANCIAL SERVICES AND MARKETS ACT 2000. RELIANCE ON
THIS ANNOUNCEMENT FOR THE PURPOSE OF ENGAGING IN ANY INVESTMENT ACTIVITY MAY
EXPOSE AN INDIVIDUAL TO A SIGNIFICANT RISK OF LOSING ALL OF THE PROPERTY OR
OTHER ASSETS INVESTED.

 

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO
CONSTITUTE INSIDE INFORMATION STIPULATED UNDER THE MARKET ABUSE REGULATION
(EU) NO. 596/2014 AS IT FORMS PART OF THE DOMESTIC LAW OF THE UNITED
KINGDOM BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (AS AMENDED)
("MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA THE REGULATORY
INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE
PUBLIC DOMAIN.

 

7 June 2024

 

SysGroup plc
("SysGroup", the "Group" or the "Company")

 

Result of Oversubscribed Placing and Subscription

 

SysGroup (AIM:SYS) the technology partner for delivery and management of
cloud, data and security to power Artificial Intelligence ("AI") and Machine
Learning ("ML") transformation, announces that, further to the announcement at
5:11 p.m. on 6 June 2024 (the "Announcement"), it has successfully
conditionally completed and closed the conditional oversubscribed Placing and
Subscription to raise gross proceeds of £11.0 million.

 

The Placing has conditionally raised gross proceeds of £8.9 million through
the placing of 26,939,427 new Ordinary Shares to certain institutional and
other investors. The Subscription has raised a further £2.1 million through
the subscription of 6,242,423 new Ordinary Shares by Directors, a PDMR and
certain sophisticated investors directly with the Company, in each case at the
Issue Price of 33 pence per share.

 

In addition to the Placing and Subscription, the Company is providing all
shareholders with the opportunity to subscribe for an aggregate of up to
1,515,151 Retail Offer Shares at the Issue Price, to raise up to approximately
£0.5 million. No part of the Placing or Subscription is conditional on the
Retail Offer proceeding or on any minimum take-up on the Retail Offer.

 

The Fundraising is conditional upon, inter alia, the approval by the
Shareholders of the Fundraising Resolutions to be proposed at the General
Meeting to be held at 1:00 p.m. on Monday 24 June 2024. A circular, containing
further details of the Fundraising, Notice of General Meeting, proxy form and
Application Form (together the "Circular") will be despatched to Shareholders
today and will be available on the Company's website at
https://www.sysgroup.com/about-us/investor-relations/
(https://www.sysgroup.com/about-us/investor-relations/) .

 

It is expected that Admission will occur, and that dealings will become
effective on or around 8:00 a.m. on Wednesday 26 June 2024. The Placing
Shares, the Subscription Shares and the Retail Offer Shares (together, the
"Fundraising Shares") will be issued fully paid and will rank pari passu in
all respects with the Company's existing Ordinary Shares, including the right
to receive all dividends or other distributions made, paid or declared in
respect of such shares.

 

Heejae Chae, Executive Chairman, commented: "We are pleased with the level of
support from our existing shareholders and are delighted to welcome a number
of new investors to the register who share our vision for the business in its
next stage of growth. We trust that the Retail Offer provides smaller
shareholders the opportunity to participate also."

 

 

Background to and reasons for the Placing and Subscription
As set out in the Announcement, SysGroup aims to become partner of choice for SMEs in their AI and digital transformation.

The Board is confident that the Company is well positioned to fill the
existing gap in the market and, with a strong AI offering and a large customer
base, expects the new management team to continue accelerating sales growth
and expand margins.

Approximately £2 million of the proceeds of the Fundraising is intended to be
used to fund an internal transformation project to provide the Group with
systems utilising AI driven technologies. This will enable the Company to be a
true AI adopter and innovator, acting as a live real case study of best
practice to customers. Rather than drawing the Group's existing Bank facility,
a further £2 million will be used to meet the contingent earnout payment due
in August 2024 in relation to the acquisition of Truststream Security
Solutions Limited ("Truststream"). The remainder of the Fundraising proceeds
will strengthen the balance sheet to provide for ongoing working capital
requirements as the business continues to drive growth, as well as liquidity
for M&A opportunities, whilst ensuring that the Company remains compliant
at all times with its obligations under its existing financing arrangements.

 

Working Capital

The Directors are of the opinion, having made due and careful enquiry, that,
taking into account the anticipated net proceeds of the Placing and
Subscription and the existing cash resources available to the Company, the
Company has sufficient working capital for its present requirements, that is
for at least 22 months from the date of Admission.

 

Related Party, Director and non-Board PDMR participation in the Fundraising

Each of the Directors and Company Secretary have subscribed for New Ordinary
Shares pursuant to the Fundraise. Details of their participation are outlined
below:

 

 Director / PDMR  Position                Existing beneficial interest in Ordinary Shares  % of current share capital  New Ordinary Shares subscribed for  Ordinary Shares after Fundraise  % of Enlarged Share Capital(1)
 Heejae Chae      Executive Chairman      6,950,000                                        14.2                        757,575                             7,707,575                        9.2
 Owen Phillips    Chief Finance Officer   -                                                -                           60,606                              60,606                           0.1
 Paul Edwards     Non-Executive Director  -                                                -                           151,515                             151,515                          0.2
 Mike Fletcher    Non-Executive Director  77,193                                           0.2                         45,454                              122,647                          0.1
 Mark Reilly      Non-Executive Director  -                                                -                           45,454                              45,454                           0.1
 Wendy Baker(2)   Company Secretary       -                                                -                           181,818                             181,818                          0.2

(1) Assuming the Retail Offer is taken up in full, and excluding shares held
in treasury

(2) Shares will be registered in the name of Wendy Baker & Organon Pension
Trustees Limited as Trustees of the Organon SIPP re W Baker

 

It was announced by the Company on 3 June 2024 that Davin Cushman is to be
appointed as a Non-Executive Director with effect from 10 June 2024 and Davin
Cushman has agreed to participate in the Fundraise, subscribing in aggregate
for £100,000. Senior management have also participated in the Subscription in
aggregate for £120,000.

Each of the Directors has agreed to participate in the Fundraising,
subscribing in aggregate for 1,060,604 New Ordinary Shares (the "Directors'
Participation"), which constitutes a related party transaction under the AIM
Rules. Each Director is deemed to be independent of the undertakings by other
Directors to participate in the Fundraise. Accordingly, the directors deemed
to be independent in relation to each respective related party transaction
(for the purposes of AIM Rule 13) consider, having consulted with the
Company's nominated adviser, Zeus, that the terms of the Participating
Employees' participation in the Fundraising is fair and reasonable insofar as
Shareholders are concerned.

 

Gresham House Asset Management Limited, Canaccord Genuity Group Inc and Mr
Darren Carter each hold an interest in more than 10 per cent. of the Company's
Existing Ordinary Shares and are therefore considered related parties of the
Company under the AIM Rules. Gresham House Asset Management Limited, Canaccord
Genuity Group Inc and Mr Darren Carter have conditionally agreed to subscribe
for 8,816,400 Placing Shares, 1,360,000 Placing Shares and 750,000 Placing
Shares respectively.

 

In the case of participation by Gresham House Asset Management Limited and
Canaccord Genuity Group Inc, all the Directors are considered to be
independent for the purposes of AIM Rule 13. Having consulted with the
Company's nominated adviser, Zeus, the Directors consider that the terms of
the participation in the Placing by Gresham House Asset Management Limited,
Canaccord Genuity Group Inc and Mr Darren Carter are fair and reasonable
insofar as Shareholders are concerned.

 

Posting of Circular

 

The Company expects to post a Circular to Shareholders today, 7 June 2024,
containing a Notice of General Meeting, proxy form and full details of the
Open Offer including the Application Form. The Circular will also be available
on the Company's website at
https://www.sysgroup.com/about-us/investor-relations/
(https://www.sysgroup.com/about-us/investor-relations/) .

 

Investor presentation

 

The Company will provide a live presentation and Q&A for investors and any
other interested parties on Investor Meet Company at 11:00 a.m. on 10 June
2024. Questions can be submitted pre-event via the Investor Meet Company
dashboard up until 9:00 a.m. on 9 June 2024 or at any time during the live
presentation.

Interested parties can register for the presentation for free at and add to
meet SysGroup plc via:

https://www.investormeetcompany.com/sysgroup-plc/register-investor
(https://www.investormeetcompany.com/sysgroup-plc/register-investor)

Investors who already follow the Company on the Investor Meet Company platform
will automatically be invited.

 

General Meeting

The Fundraising is subject to, inter alia, shareholder approval at the General
Meeting to be held at the offices of Hill Dickinson LLP at 50 Fountain Street,
Manchester, M2 2AS 1:00 p.m. on Monday 24 June 2024

Admission

Application will be made to the London Stock Exchange for admission of the
Fundraising Shares to trading on AIM ("Admission"). It is expected that,
subject to the necessary resolutions being passed at the General Meeting,
Admission will become effective and dealings in the Fundraising Shares will
commence at 8:00 a.m. on 26 June 2024.

Admission is conditional, inter alia, upon Admission becoming effective, the
Placing Agreement not having been terminated and becoming unconditional, and
upon the approval of Shareholders at the Company's forthcoming General Meeting
to be held on or around 24 June 2024.

Capitalised terms used but not defined in this announcement have the meanings
given to them in the Company's announcement released at 5:11 p.m. on 6 June
2024 in respect of the Placing and Subscription unless the context provides
otherwise.

 For further information, please contact:

 SysGroup plc                              Tel: 0333 101 9000
 Heejae Chae, Executive Chairman
 Owen Phillips, Chief Financial Officer

 Zeus (Nominated Adviser and Broker)       Tel: 0161 831 1512
 Jordan Warburton
 Nick Cowles
 Alex Campbell-Harris
 Nick Searle

 

Certain statements in this Announcement are forward-looking statements with
respect to the Company's expectations, intentions and projections regarding
its future performance, strategic initiatives, anticipated events or trends
and other matters that are not historical facts and which are, by their
nature, inherently predictive, speculative and involve risks and uncertainty
because they relate to events and depend on circumstances that may or may not
occur in the future. All statements that address expectations or projections
about the future, including statements about operating performance, strategic
initiatives, objectives, market position, industry trends, general economic
conditions, expected expenditures, expected cost savings and financial
results, are forward-looking statements. Any statements contained in this
Announcement that are not statements of historical fact are, or may be deemed
to be, forward‐looking statements. These forward-looking statements, which
may use words such as "aim", "anticipate", "believe", "could", "intend",
"estimate", "expect", "may", "plan", "project" or words or terms of similar
meaning or the negative thereof, are not guarantees of future performance and
are subject to known and unknown risks and uncertainties. There are a number
of factors including, but not limited to, commercial, operational, economic
and financial factors, that could cause actual results, financial condition,
performance or achievements to differ materially from those expressed or
implied by any of these forward‐looking statements. Many of these risks and
uncertainties relate to factors that are beyond the Company's ability to
control or estimate precisely, such as changes in taxation or fiscal policy,
future market conditions, currency fluctuations, the behaviour of other market
participants, the actions of governments or governmental regulators, or other
risk factors, such as changes in the political, social and regulatory
framework in which the Company operates or in economic or technological trends
or conditions, including inflation, recession and consumer confidence, on a
global, regional or national basis. Given those risks and uncertainties,
readers are cautioned not to place specific reliance on forward-looking
statements. Forward-looking statements speak only as of the date of this
Announcement. Each of the Company and Zeus expressly disclaims any obligation
or undertaking to update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise unless required to do
so by applicable law or regulation.

 

 

About SysGroup

SysGroup plc was incorporated in 2007 and is a technology partner specialising
in the delivery and management of cloud, data and security services to power
Artificial Intelligence ("AI") and Machine Learning ("ML") transformation. The
Group offers an integrated set of modern technologies that collectively meets
customers end-to-end data needs including connectivity, cloud hosting,
delivery, analytics and governance of customer data, as well as a security
layer for users and applications.

 

The Group has offices in Manchester, Edinburgh, London, Bristol and Newport.

 

For additional information please visit www.sysgroup.com
(https://www.sysgroup.com/)

 

Notification and public disclosure of transactions by Persons Discharging
Managerial Responsibilities ("PDMR") and persons closely associated with them
("PCA")

 Notification of a Transaction pursuant to Article 19(1) of Regulation (EU) No.
 596/2014
 1   Details of the person discharging managerial responsibilities/person closely
     associated
 a.  Name                                                         1.   Heejae Chae

                                                                  2.   Owen Phillips

                                                                  3.   Mike Fletcher

                                                                  4.   Paul Edwards

                                                                  5.   Mark Reilly

                                                                  6.   Wendy Baker
 2   Reason for notification
 a.  Position/Status                                              1.   Executive Chairman

                                                                  2.   Chief Financial Officer

                                                                  3.   Non-Execuitve Director

                                                                  4.   Non-Execuitve Director

                                                                  5.   Non-Execuitve Director

                                                                  6.   Company Secretary
 b.  Initial notification/                                        Initial Notification

     Amendment
 3   Details of the issuer, emission allowance market participant, auction
     platform, auctioneer or auction monitor
 a.  Name                                                         SysGroup plc
 b.  LEI                                                          213800D18GPZZJR9SH55
 4   Details of the transaction(s): section to be repeated for (i) each type of
     instrument; (ii) each type of transaction; (iii) each date; and (iv) each
     place where transactions have been conducted
 a.  Description of the financial instrument, type of instrument  Ordinary Shares of 1p each

Identification Code

                                                                  ISIN: GB00BYT18182
 b.  Nature of the transaction                                    1.   Purchase of Ordinary Shares of 1 pence each in the Company
 c.  Price(s) and volume(s)                                       Transaction                             Price(s)  Volume(s)

                                                            1. Heejae Chae- Placing Shares          33p       1. 757,575

                                                                  2. Owen Phillips- Subscription Shares             2. 60,606

                                                            3. Mike Fletcher- Placing Shares                  3. 45,454

                                                                  4. Paul Edwards- Placing Shares                   4. 151,515

                                                            5. Mark Reilly- Placing Shares                    5. 45,454

                                                                  6. Wendy Baker- Subscription Shares               6. 181,818

 d.  Aggregated information                                       Shares: 1,242,422

                                                                  Price: 33 pence per New Ordinary Share

                                                                  Aggregated total: £409,999.26
 e.  Date of the transactions                                     7 June 2024
 f.  Place of the transaction                                     London Stock Exchange, AIM

d.

Aggregated information

 

 

Shares: 1,242,422

 

Price: 33 pence per New Ordinary Share

 

Aggregated total: £409,999.26

e.

Date of the transactions

7 June 2024

f.

Place of the transaction

London Stock Exchange, AIM

 

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