-
The net proceeds of the Placing and Open Offer will be used to provide working capital for the Group and to allow the Group to avoid immediate administration.
-
The Directors have refocused the Group's strategy to concentrate on providing business solutions to the UK financial services and call centre sectors, whilst continuing to support the
telecom market through partners.
-
The Group has made the decision to cease the development of proprietary software for applications where appropriate alternative industry standard products already exist.
-
As at 31 October 2001, the Group had cash reserves of approximately £700,000. Based on its current average cash burn of £400,000 per month, the Group will exhaust its cash
resources on or around 21 December 2001, however, the Group has secured short term overdraft facilities to provide funding until the receipt of the proceeds of the Placing and Open
Offer.
-
During the last eight years, Vocalis has invested in excess of £10 million in developing its core speech recognition technology.
-
The Directors believe the Group is now operating in a substantial commercial market which has business needs suited to Vocalis' voice driven solutions.
In addition the Group has today announced the unaudited interim results for the six months ended 30 September 2001 which show a loss before taxation of £1.97 million (2000: loss
of £2.48 million) on turnover of £1.22 million (2000: £2.01 million).
Paul Wright, Chief Operating Officer of Vocalis said:
"The proposed Placing and Open Offer, whilst securing the Group's short term viability, provides the necessary funds to continue the implementation of the Group's new strategy. The
Directors believe that the refocus on providing business solutions to the UK financial and call centre markets will enable the Group to convert its substantial prospects list into
contracted sales."
Vocalis Group plc ("Vocalis" or the "Group" )
Proposed Placing and Open Offer of 92,636,260 New Ordinary Shares at 5p per share
Introduction
The Board of Vocalis announces that it proposes to raise approximately £4.1 million (net of expenses) by way of a Placing and Open Offer of a total of 92,636,260 New Ordinary
Shares at 5p per share. Of the 92,636,260 New Ordinary Shares to be issued, 47,114,545 New Ordinary Shares are being placed firm with institutional and other investors and 45,521,715
New Ordinary Shares are subject to clawback by Qualifying Shareholders under the Open Offer. The Open Offer is being made on the basis of 1 New Ordinary Share for every 1 Existing
Ordinary Share held. The Placing and Open Offer has been fully underwritten by Credit Lyonnais Securities.
The net proceeds of the Placing and Open Offer will be used to provide working capital for the Group and will allow it to avoid the appointment of an administrator to the Group. In
addition, the majority of the proceeds will provide the necessary financial resources to enable the Group to continue to pursue its refocussed strategy (further details of which are set
out below) and to assist the Group to convert potential orders into contracted sales.
The Group has secured short term overdraft facilities from its existing bankers, Barclays Bank plc, to provide funding until the passing of the Resolutions to be proposed at the
Extraordinary General Meeting. In addition, and subject (inter alia) to the passing of the Resolutions, the Group has also secured a further short term overdraft facility to
provide funding until the receipt of the proceeds of the Placing and Open Offer. These facilities, which are essential to the Group's short term financial requirements, are only
available because the Placing and Open Offer has been underwritten.
The Group has been unable to secure adequate overdraft or other debt facilities from its existing bankers to fund its current requirements and future strategy. Approaches to a number
of other providers of debt finance have been unsuccessful. Therefore, the Directors believe the Placing and Open Offer provides the only viable option available to the Group. The
Directors believe that insufficient demand would have meant that it would not have been possible to undertake an underwritten rights issue. A rights issue which was not underwritten
would not have provided sufficient certainty of funds in order to allow the Group to continue to trade.
In order to ensure the Group receives sufficient funds, and to attract new investors to the Group, the Directors consider it essential to effect the fundraising in part by way of the
Firm Placing.
Although the Placing and Open Offer will result in a significant dilution to the holdings of Shareholders, the Open Offer gives Shareholders the opportunity to subscribe for up to 50
per cent. of the total number of New Ordinary Shares to be issued under the Placing and Open Offer on the basis of 1 Open Offer Share for every 1 Existing Ordinary Share held at a price
of 5p per share.
The Directors do not believe that the Placing and Open Offer would be successful at an issue price of more than 5p per New Ordinary Share. By issuing the New Ordinary Shares at a
substantial discount to the current middle market price of the Existing Ordinary Shares, the Directors believe that they are acting in the best interests of the Group and Shareholders
as a whole and that unless such action is taken, the Group will be left in a financial position where it will be unable to meet its obligations as they fall due. In those circumstances,
the Directors believe that the Group would have no alternative but to appoint an administrator to the Group.
The Listing Rules do not allow issuers to bring securities to listing by way of a placing or open offer if the issue price is at a discount of more than 10 per cent. to the middle
market price of those securities at the time of the placing or open offer, unless the UK Listing Authority is satisfied that the issuer is in severe financial difficulties or that there
are other exceptional circumstances. The Group has satisfied the UK Listing Authority that it is in severe financial difficulties and that, given the time constraints, there are no
other methods of financing available to the Group. The UK Listing Authority has therefore permitted the Issue Price to be 5p, representing a discount of 71.4 per cent. to the closing
middle market price per Existing Ordinary Share on 27 November 2001 (the last practicable date prior to this announcement).
In addition to the Placing and Open Offer, the Group also announced today the unaudited interim results for the six months ended 30 September 2001.
Information on Vocalis
Vocalis is one of the UK's leading providers of voice driven solutions. These solutions enable companies and individuals to conduct transactions and obtain information through the use
of speech recognition technology over a standard or wireless telephone network. During the last eight years, Vocalis has invested in excess of £10 million in developing its core
speech recognition technology. The Directors believe that this investment has provided the Group with a high quality technology base, in particular in its proprietary SpeechWare
product, and that this has enabled Vocalis to establish its brand within the speech recognition industry.
Despite this, the Group had, until recently, failed to fully address the requirements of the UK commercial market and instead focussed on selling its technology through its partnership
channel with Ericsson to the telecoms industry in overseas countries. Whilst this proved the scalability and durability of Vocalis' products, it was dependent on creating a series of
bespoke systems using proprietary applications. As a result, whilst Vocalis was able to deliver high quality technology, its main efforts were directed at areas which did not generate
immediate and significant demand. Accordingly, although Vocalis established its brand within the speech recognition industry and had created several key customer reference sites, the
Group failed to translate its technological expertise into sustainable and consistent profitability for Shareholders.
Recent developments
Since June 2001, the Directors have refocussed the Group's strategy to concentrate on providing business solutions to the UK financial services and call centre sectors, whilst
continuing to support the telecom market through partners. Vocalis uses SpeechWare, its established core technology, to provide business solutions to the UK corporate arena,
interfacing this core technology with industry standard hardware and operating systems, in order to provide business solutions for customers. These solutions are now sold on the basis
of on-going financial benefits to the customer and by addressing business issues within the call centre markets rather than concentrating on the technical aspects of the Group's
products.
The Group has made the decision to cease the development of proprietary software for applications where appropriate alternative industry standard products already exist and instead is
developing partnerships and preferred supplier relationships in order to deliver its solutions. Its core SpeechWare product has been developed to provide Unix and Windows
compatibility, whilst the emergence of the VoiceXML standard assists the Group in incorporating third party products and modules into the Group's business solutions, thereby reducing
risk for both Vocalis and its customers and enabling the business to operate in a more streamlined and efficient manner. Vocalis is a member of the VoiceXML forum, the body which
oversees and promotes VoiceXML.
Vocalis has also undergone significant internal reorganisation, principally designed to improve Group sales. Historically, Vocalis concentrated more on the development of the Group's
technology than on the products' commercial benefits and the potential channels to market. The Group has now invested in the development and growth of its sales force by employing sales
personnel who have experience of selling technology solutions into Vocalis' target markets. This sales force is now focussed on developing the Group's UK order book, converting existing
leads into contractual commitments and increasing revenue from the Group's target markets. Over 50 per cent. of Vocalis' staff are now interacting directly with customers. Vocalis now
has a clearly identified sales strategy and has developed a substantial prospect list.
Recognising the need to drive this strategy forward, Vocalis launched the Group's new strategy and product offering in September 2001 at the London Stock Exchange Conference Centre. The
Directors believe that this strategy is enabling the Group to transform itself from a research and technology based organisation into a market driven commercial organisation utilising
its extensive intellectual property rights and technology expertise to provide solutions for its customers within targeted markets.
Research and development
Whilst refocussing towards a more commercially orientated organisation, Vocalis is maintaining a strong research and development capability. Vocalis' main focus on research and
development has changed from developing a range of proprietary technology products to developing its core SpeechWare technology in conjunction with standard third party products.
This refocus has reduced the level of in-house research and development spend on pioneering new technologies. Research expenditure for the year ended 31 March 2001 was £2.7
million. Whilst the Group will continue to develop its SpeechWare products to meet the on-going needs of the business, the Directors believe that the level of pure research going
forward will be materially less than historical levels.
Background to and reasons for the Placing and Open Offer
In response to an extremely disappointing financial year ended 31 March 2001 and first quarter of the current financial year, Vocalis has concentrated on rebuilding its business and its
order book, whilst at the same time delivering on past customer commitments and reducing its monthly cash expenditure.
The Directors believe that the emergence of industry standard technology, coupled with the rapid growth of the call centre market, are helping to make the commercial rationale behind
Vocalis' business solutions more compelling. Call centres are now commonplace within the UK. The Directors believe that Vocalis offers its customers a competitive advantage by
automating many basic customer identity and verification tasks currently performed by call centre operators. This automation not only provides a flexible alternative to the `touch-tone'
solution of many call centres, but also shortens the operator's time per call, thereby increasing the number of calls that can be handled by each operator.
These advantages enable customers to be able to readily identify the potential cost savings that can be achieved using Vocalis' business solutions. The Directors believe, in conjunction
with evidence from Vocalis' existing customer reference sites, that this provides a persuasive business case for the Group's solutions.
Vocalis is currently bidding for a number of high value opportunities in the UK markets for the expansion and upgrade of customer solutions and, overseas, through the existing
partnership with Ericsson. However, in order to develop business relationships with major organisations in the UK financial services and telecom sectors, Vocalis is increasingly being
asked to demonstrate its short and medium term ability to support its existing and potential customers. These organisation recognise the current downturn in the technology sector and
the vulnerability of a number of companies. For this reason, it is necessary for Vocalis to prove its financial stability and its ability to expand in line with market opportunities. As
at 31 October 2001, the Group had cash reserves of approximately £700,000. Based on its current average cash burn of approximately £400,000 per month, the Group will exhaust
its cash resources on or around 21 December 2001. Accordingly, the Group is seeking to raise £4.1 million (net of expenses) by the issue of 92,636,260 New Ordinary Shares. In
addition, the Group has secured a short term overdraft facility to provide funding until the passing of the Resolutions to be proposed at the Extraordinary General Meeting. In addition,
and subject to the passing of the Resolutions and to the satisfaction of certain standard banking covenants (which the Directors believe the Group will satisfy), the Group has also
secured a further short term overdraft facility to provide funding until the receipt of the net proceeds of the Placing and Open Offer. These facilities will enable the Group to meet
its ongoing financial obligations as they fall due.
The Directors believe that unless the Group's financial stability can be demonstrated, it is unlikely to complete any further material sales. As a consequence, the Directors believe
that the Placing and Open Offer is crucial to securing both the short and long term future of the Group.
Importance of the Placing and Open Offer
The Placing and Open Offer is important to the future of the Group and requires Shareholders' close attention.
The Directors are of the opinion that, taking into account the short term bank facilities available to the Group and the net proceeds of the Placing and Open Offer, the Group has
sufficient working capital for its present requirements, that is, for at least the next 12 months from the date of this announcement.
If Shareholders do not approve the resolutions, or the Placing and Open Offer does not proceed for any other reasons, the Board believes that the Group would be unable to raise
sufficient funding from alternative sources of finance in the time available and that the Directors would have no alternative but to seek to appoint an administrator for the Group.
Interim results
The interim results of Vocalis for the period ended 30 September 2001 are also announced today showing a loss before taxation of £1.97million (2000: loss of £2.48 million)
on a turnover of £1.2 million (2000: £2.0 million). The loss per share for the period was 4.25p (2000: 5.60p). The Directors are not recommending an interim dividend.
Current trading and prospects
The Directors believe that the Group has made significant progress in the period since June 2001 and expect this progress to continue through the remainder of the current financial
year. The Directors believe, however, that the Group's trading since 30 September 2001 has been affected by the uncertainty surrounding the Group's ongoing financial stability. Despite
this, they are confident that the Group is now operating in a substantial commercial market which has business needs suited to Vocalis' voice driven solutions. The Directors believe
that the Placing and Open Offer, together with the strategy detailed above and, allied to continuing cost control, will allow Vocalis to demonstrate its financial stability and enable
the Group to take advantage of the opportunities that are available, and accordingly, view the future with confidence.
Details of the Placing and Open Offer
The Group is proposing to raise approximately £4.6 million gross (approximately £4.1 million net of expenses) by means of the Placing and Open Offer, which have been fully
underwritten by Credit Lyonnais Securities.
The Firm Placing
In order to ensure that the Company receives sufficient funds and to attract new investors to the Company, the Directors consider it essential to effect the fund raising in part by way
of the Firm Placing. It is intended that the Firm Placing will raise approximately £2.36 million. Accordingly, 46,318,130 New Ordinary shares have been conditionally placed firm
by Credit Lyonnais Securities on behalf of the Group with institutional and other investors at the Issue Price and are not subject to clawback under the Open Offer. An irrevocable
undertaking not to take up a proportion of his entitlement under the Open Offer has been received from Minesh Patel, a Director, in respect of, in aggregate, 305,778 Ordinary Shares,
representing approximately 0.7 per cent. of the total number of Open Offer Shares and these shares have also been conditionally placed firm pursuant to the Firm Placing. In addition,
certain Overseas Shareholders are not eligible to participate in the Open Offer and accordingly a further 490,637 New Ordinary Shares are also being placed firm pursuant to the Firm
Placing.
The Open Offer
Credit Lyonnais Securities, as agent for the Group, has conditionally placed the Open Offer Shares with institutional and other investors at the Issue Price subject to clawback (save
for those Open Offer Shares in respect of which an irrevocable undertaking not to take up an entitlement has been received as described above and which have been conditionally placed
firm by Credit Lyonnais Securities (as agent for the Group) with institutional and other investors pursuant to the Firm Placing) to satisfy valid application by Qualifying Shareholders
pursuant to the Open Offer.
Qualifying Shareholders are being given the opportunity to subscribe under the Open Offer for the Open Offer Shares at the Issue Price pro rata to their Existing Ordinary
Shareholdings on the basis of
1 Open Offer Share for every 1 Existing Ordinary Share
held on the Record Date and so in proportion for any greater number of Existing Ordinary Shares then held. The New Ordinary Shares will, when allotted and fully paid, rank pari
passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions hereafter declared.
Entitlements of Qualifying Shareholders will be rounded down to the nearest whole number of Open Offer Shares and fractional entitlements will not be allocated under the Open Offer but,
together with Open Offer Shares attributable to those Overseas Shareholders who are not eligible to participate in the Open Offer, will be aggregated and placed for the benefit of the
Group. The Open Offer is not a "rights issue". Qualifying Shareholders should be aware that, unlike a rights issue, any Open Offer shares not applied for under the Open Offer will not
be sold in the market or placed for the benefit of Qualifying Shareholders, but will be taken up either under the Placing or by Credit Lyonnais Securities pursuant to its commitment to
underwrite the Placing and Open Offer.
The Directors have indicated that they intend to take up their rights under the Open Offer in respect of, in aggregate, 526,400 Open Offer Shares. In addition, certain Directors have
undertaken to subscribe for an aggregate of 323,600 Firm Placed Shares in the Firm Placing with an aggregate value of £16,180, at the Issue Price.
In order to effect the Placing and Open Offer, it has been necessary for the Issue Price to be set at a discount of more than 10 per cent. to the current middle market share price. This
is only permitted by the UK Listing Authority under certain exceptional circumstances. As set out in the paragraph headed "Introduction", the Directors believe that the Placing and Open
Offer is essential to securing the financial viability of the Group and further, that if the fundraising were not to proceed, the Directors would have no alternative but to seek to
appoint an administrator.
Following discussions with the Company and Credit Lyonnais Securities, the UK Listing Authority has permitted the Placing and Open Offer to proceed at an Issue Price of 5p, representing
a discount of 71.4 per cent. to the middle market price of 17.5p per share on 27 November 2001 (being the last practicable date prior to this announcement).
The Existing Ordinary shares are listed on the Official List. Application has been made to the UK Listing Authority and to the London Stock Exchange respectively for the New Ordinary
Shares to be admitted to the Official List and trading on the London Stock Exchange's market for listed securities. It is expected that Admission will become effective and that dealings
in the New Ordinary Shares will commence on 28 December 2001.
Application Forms are personal to the Qualifying Shareholders names thereon and are transferable only to satisfy bona fide market claims.
General information
The Open Offer is not being made directly or indirectly in or into the United States of America, Canada, Australia or the Republic of Ireland. The Company and Credit Lyonnais Securities
reserve the right in their absolute discretion to treat as invalid any application for New Ordinary Shares under the Open Offer if it appears to the Company or Credit Lyonnais
Securities and their agents that such application or acceptance thereof may involve a breach of the laws or regulations of any overseas jurisdictions.
Application Forms must be received by Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA, no later than 3.00 p.m. on 19 December 2001 and the
latest date for receipt of split Application Forms is 3.00 p.m. on 17 December 2001. The latest date for receipt of forms of proxy for the Extraordinary General Meeting is 10.00 a.m. on
19 December 2001.
The Placing and Open Offer is conditional upon, inter alia, the passing of resolutions by Vocalis' shareholders at the Extraordinary General Meeting to be convened for 21
December 2001.
A circular, dated 28 November 2001, containing details of the Placing and Open Offer and a notice of an Extraordinary General Meeting, convened for 10.00 a.m. on 21 December 2001 to be
held at the offices of Credit Lyonnais Securities, Broadwalk House, 5 Appold Street, London EC2A 2DA, will be posted to Shareholders today, together with, in the case of Qualifying
Shareholders, the application form. Copies of the circular will be available to the public, free of charge from the Company's registered office Chaston House, Mill Court, Great
Shelford, Cambridge CB2 5LD and from the offices of Credit Lyonnais Securities until a period of not less than 14 days after the date that dealings commence in the New Ordinary Shares.
The Directors of Vocalis accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the Directors (who have taken all
reasonable care to ensure that such is the case), the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import
of such information.
Credit Lyonnais Securities, which is regulated by the Securities and Futures Authority, is acting exclusively for Vocalis and no one else in relation to the Placing and Open Offer and
will not be responsible to anyone other than Vocalis for providing the protections afforded to customers of Credit Lyonnais Securities or for providing advice in relation to the Placing
and Open Offer.
28 November 2001
Definitions
The following terms apply in this announcement unless the context otherwise requires:
|
"Admission"
|
the admission of the New Ordinary Shares to the Official List becoming effective in accordance with the rules of the London Stock Exchange
|
|
"Application Form"
|
the application form issued to Qualifying Shareholders in connection with the Open Offer
|
|
"Board" or "Directors"
|
the directors of the Company
|
|
"Existing Ordinary Shares"
|
the Ordinary Shares in issue at the date of this announcement
|
|
"Extraordinary General Meeting"
|
the Extraordinary General Meeting of the Company convened for 10.00 a.m. on 21 December 2001
|
|
"Firm Placed Shares"
|
47,114,545 new Ordinary Shares which have been placed firm by Credit Lyonnais Securities pursuant to the Firm Placing
|
|
"Firm Placing"
|
the conditional placing by Credit Lyonnais Securities of the Firm Placed Shares on behalf of the Company
|
|
"Group"
|
Vocalis Group plc and its subsidiary undertakings
|
|
"Issue Price"
|
5 pence per New Ordinary Share, being the price at which the New Ordinary Shares are proposed to be issued
|
|
"Listing Rules"
|
Listing Rules made by the competent authority under Section 142 of the Financial Services Act 1986
|
|
"London Stock Exchange"
|
London Stock Exchange plc
|
|
"New Ordinary Shares"
|
the 92,636,260 new Ordinary Shares proposed to be issued pursuant to the Placing and Open Offer
|
|
"Official List"
|
the Official List maintained by the UKLA
|
|
"Open Offer"
|
the invitation to Qualifying Shareholders by Credit Lyonnais Securities on behalf of the Company to subscribe for the Open Offer Shares
|
|
"Open Offer Shares"
|
45,521,715 new Ordinary Shares which are to be made available to Qualifying Shareholders pursuant to the Open Offer and which have been conditionally placed
(subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer) by Credit Lyonnais Securities pursuant to the Placing Agreement (excluding
305,778 new Ordinary Shares in respect of which an irrevocable undertaking not to take up part of an entitlement to New Ordinary Shares under the Open Offer has been received and
which have been placed pursuant to the Firm Placing)
|
|
"Ordinary Shares"
|
ordinary shares of 5p each in the capital of the Company
|
|
"Overseas Shareholders"
|
Shareholders on the register of members of the Company on the Record Date who are not resident in or citizens of the United Kingdom
|
|
"Placing"
|
the conditional placing by Credit Lyonnais Securities of the New Ordinary Shares in accordance with the terms of the Placing Agreement
|
|
"Placing Agreement"
|
the conditional agreement dated 28 November 2001, between the Company and Credit Lyonnais Securities, relating to the Placing and Open Offer
|
|
"Qualifying Shareholders"
|
holders of existing Ordinary Shares on the register of members of the Company at the Record Date, other than certain Overseas Shareholders
|
|
"Record Date"
|
the record date for the Open Offer, being the close of business on 23 November 2001
|
|
"Shareholders"
|
holders of Ordinary Shares
|
|
"UKLA" or "United Kingdom Listing Authority" or "UK Listing Authority"
|
the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part IV of the Financial Services Act 1986
|
|
"United Kingdom" or "UK"
|
the United Kingdom of Great Britain and Northern Ireland
|
|
"Vocalis" or "Company"
|
Vocalis Group Plc
|
28 November 2001
END
