Company Announcements

This announcement contains inside information

11 March 2020

The Panoply Holdings PLC

("The Panoply", or the "Group")

Acquisition of Ameo

Strengthening and diversifying the Group's Public Sector offering

The Panoply Holdings PLC, a digitally native technology services group, announces the acquisition of the entire issued share capital of Ameo Professional Services Ltd ("Ameo"), a consultancy specialising in delivering business change, with a strong focus on the public sector (the "Acquisition").

Ameo has been working with businesses for over 10 years seeking to deliver long-lasting, cost-effective change across a wide range of areas, from financial reporting and process design to digital innovation. Public sector work is expected to represent over 90% of revenues for the current financial year and, since being formed, Ameo has worked with over 100 clients. Ameo's ethos is to seek to work as a partner with its clients in order to develop sustainable solutions and improve the skills of its clients' teams.

The Board believes that the Acquisition will bring additional and complementary capabilities to the Group's public sector offering, as well as extending its reach into this key market. The strategy and change delivery capability of Ameo, alongside the organisational and service design capability of FutureGov, and the backing of The Panoply's first-in-class technology businesses provides the basis for targeting and winning increasingly large digital transformation projects in the UK public sector.

Ameo's extensive public sector experience includes:

In addition, Ameo also has considerable experience delivering projects across other sectors such as higher education, energy and utilities, and various industries within the private sector.

Ameo is a debt free, cash generative and cash positive business. In the year ended 30 October 2019 it reported unaudited revenues of £6.9m, and a normalised profit before tax of £1.0m¹.

The Panoply is paying an effective purchase price of £7.0m for the Acquisition, to be satisfied though the payment of circa £2.2m cash and the issue of 5,853,658 new ordinary shares in The Panoply. In addition, Ameo has cash in excess of normalised working capital requirements and so an additional cash payment of £1.3m will also be paid to the vendors at Completion in excess of the £7.0m.

As at 10 March 2020, assuming all payments in connection with the Acquisition had been made as at that date, the Group retained cash reserves of approximately £4m and a net debt position of £1m.

¹ Normalised in respect of salaries, additional required hires and audit costs

Neal Gandhi, Chief Executive Officer of The Panoply, said:

"Our focus is to deliver positive, sustainable change in the UK public sector and Ameo's stellar track record of work in central and local government, healthcare and higher education broadens our capability to achieve this goal for our clients. Ultimately, this Acquisition increases our relevance and puts us in a stronger position to target and win larger, more strategic engagements at the heart of the UK public sector.

"With this Acquisition, public services revenues now account for approximately 70% on a proforma basis, giving us additional scale in the sector and adding to the breadth of skills that we can now offer clients.

"The public sector needs to continue on its digital transformation journey with urgency, encouraging staff to embrace modern ways of working and speeding up the adoption of cloud platforms. As an agile native, cloud only organisation, The Panoply is able to cater to this need and the addition of Ameo to our Group will support us in addressing this pressing demand. Together we look forward to leading the way for our clients across public, not for profit and commercial sectors."

Ben Ward, Director of Ameo, said:

"Over the past decade we've built a highly knowledgeable team capable of delivering change across a range of industries and sectors. We recognise The Panoply as a group which complements our approach to seeking to deliver projects that are empowering and transformational.

"The collaborative culture fostered within the Group will take us to the next stage in our evolution by expanding our existing service capabilities and expertise to bring new leading-edge solutions to our clients' challenges, particularly across service redesign, robotic process automation and Applied AI. We are excited to begin work as part of the Group and to take advantage of the many opportunities this collective strength brings."

Additional information on the acquisition

The Panoply has acquired Ameo from Ben Ward, Fiona Ward and Michael Dearing.

The consideration payable under the share purchase agreement relating to the Acquisition (the "SPA") is set at £8.3m and comprises the following on Completion:

together (the "Initial Consideration").

The cash element of the Initial Consideration is being funded through a combination of the Group's RCF Facility with HSBC, the Group's existing cash reserves and the excess cash of £1.3m acquired as part of the Acquisition.

Subject to the future EBITDA performance of Ameo (based on EBITDA) during the 17 month period 1 November 2019 to 31 March 2021 (set in order to align with The Panoply's year-end) and 12 month period from 1 April 2021 to 31 March 2022, in addition to the Initial Consideration, the selling shareholders of Ameo will be entitled to receive deferred earn-out consideration, which will be payable by the allotment and issue of shares in The Panoply ("Panoply Shares") following the agreement of the relevant EBITDA calculations and publication of the Group's results relating to those financial periods. The number of Panoply Shares to be allotted and issued shall be calculated by dividing the earn-out price payable by a price per share in The Panoply which is the greater of 82 pence and the volume-weighted average mid-market price (VWAP) over the 30 business days prior to the issue of the relevant Panoply Shares. Any Panoply Shares allotted and issued by way of deferred consideration will be allotted and issued in one tranche following the publication of the Group's results for the relevant period.

The total consideration payable by The Panoply in respect of the Acquisition is capped at a maximum of £10.5m which includes the reimbursement payment of £1.3m meaning that the effective cap is £9.2m.

All Panoply Shares allotted and issued under the SPA (including the shares issued as part of the Initial Consideration) are subject to customary lock-in arrangements and subject to claw-back by The Panoply if AMEO's EBITDA decreases over the 2 year earn-out period.  

Admission and total voting rights

An application has been made for the admission of the Initial Panoply Shares to trading on AIM which is expected to take place on or before 17 March 2020. Following this issue, the Company's issued share capital will comprise 55,052,267 Ordinary Shares and this is the total number of voting rights in the Company. There are no shares held in treasury.

This figure may be used by shareholders as the denominator for the calculation by which they may determine if they are required to notify their interest in, or change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.

Enquiries:

The person responsible for making this announcement is Oliver Rigby, CFO.

About The Panoply

The Panoply is a digitally native technology services company, built to service clients' digital transformation needs. Founded in 2016, with the aim of identifying and acquiring best-of-breed specialist information technology, design and innovation consulting businesses across Europe, the Group collaborates with its clients to deliver the technology outcomes they're looking for at the pace that they expect and demand.

More information is available at www.thepanoply.com

About Ameo:

Ameo works with private and public sector businesses to deliver lasting and meaningful change. It works alongside business, deploying the right resources and the best advice to ensure programmes are delivered effectively, efficiently and in a manner that fits the business's culture.

More information is available at www.ameogroup.com