16-07-2004 - Printing.com - Prospectus Published - Printing.com Plc
Placing of 3,833,333 New Ordinary Shares at 30p per shareAdmission to trading on the Alternative Investment Market
Brewin Dolphin Securities appointed Nominated Adviser and Broker
- Placing to raise GBP 1.15 million, oversubscribed
- Turnover up 21% in year to 31 March 2004
- Profit before tax up 84% in year to 31 March 2004
- 65 Outlets open at 31 March 2004, 17 new Outlets opened since then
- Committed to objective of achieving 175 Outlets by September 2005
George Hardie, the Chairman of Printing.com, commented;
Following a highly successful year, we believe that this is the appropriate time for Printing.com to move from Ofex to AIM. We feel that this will not only improve our profile with our customers, franchisees and shareholders but it will also provide us with a more liquid market in our shares and give us greater access to institutional investors.
We have an excellent business that is generating good profits and we are confident that we have a strong foundation for future growth.
For further information:
Printing.com plc
Tony Rafferty (Chief Executive) 07966 517 336
Alan Roberts (Finance Director) 07977 277 521
Beattie Financial
Brian Coleman-Smith / Jo Clewlow 020 7398 3300/07802 724 400
The Directors of Printing.com plc take full responsibility for this announcement.
Financial track record
The financial track record of the Group is summarised below:
Year ended 31 March
2002 2003 2004
GBP 000 GBP 000 GBP 000
Turnover
~ Franchise revenue 91 1,122 3,245
~ Owned Store revenue 3,959 4,862 4,146
~ The Agency 1 ,548 1,710 1,937
5,598 7,694 9,328
(Loss)/profit on ordinary activities before taxation (776) 511 941
Shareholders' funds 194 2,123 2,718
(Loss)/earnings per share (post notional tax charge) (2.41)p 0.92p 1.69p
Number of Outlets 14 14 10
~ Owned Stores
~ Franchised Stores - - 12
~ Bolt-on Franchises 24 36 43
38 50 65
PRINTING.COM PLC
(Printing.com or the Company)
Specialist retail chain with 82, predominantly franchised, Outlets across the UK
Placing of 3,833,333 New Ordinary Shares at 30p per share
Admission to trading on the Alternative Investment Market
Cancellation of Ofex trading facility
Brewin Dolphin Securities Limited, as agent for the Company, has agreed conditionally to place firm a total of 3,833,333 Placing Shares in Printing.com at the Issue Price of 30p per share, representing 8.98 per cent. of the Company's issued share capital following Admission, which will raise GBP 1.15 million before expenses for the Company.
Application will be made for the whole of the issued ordinary share capital of the Company to be admitted to trading on AIM. The Prospectus has been published today and it is anticipated that trading in the Ordinary Shares will commence on AIM at 8.00 am on 11 August 2004 and will cease on Ofex at the same time.
Introduction
Printing.com combines a franchised customer-facing high street presence with a state of the art centralised printing hub to provide a high quality and low cost printing solution for small and medium sized enterprises ("SME") and small office/home office ("SOHO") customers that competes with on demand printers ("ODP") in the UK and Ireland such as high street digital imaging and photocopy bureaus, small commercial printers and print shops. A wide range of full colour print items such as leaflets, brochures, booklets, posters, postcards, promotional cards, invitations, letterheads and business cards are offered in its buying guide which is made available to existing and prospective customers.
Service is provided within the UK and Ireland from:
- its estate of 25 Stores (of which 11 are Group-owned and 14 are franchised);
- 57 "Bolt-on" franchises within established print, copy and graphic design shops whereby an established ODP business is embraced as a distribution partner, with a licence to utilise the Printing.com brand and system; and
- a division which markets to various accounts under the banner "Printing.com@theAgency".
The Directors believe that Printing.com has the potential to be the pre-eminent supplier of printing to SME and SOHO businesses throughout the UK due to its competitive advantage over a typical ODP business. The Group's competitive advantage arises from offering an enhanced full colour printing specification at a more favourable price point than would typically be charged within the ODP sector for printing of a more basic 'two colour' specification.
The Printing.com model is based on a centralised Production Hub ("Hub") coupled with localised outlets. In common with the ODP sector at large, these local outlets manage the client relationships and provide a graphic design service. However, unlike most ODPs which offer localised lithographic printing, no such printing takes place at Printing.com Stores. Instead Printing.com Stores utilise the Groupâ??s Hub to print orders with the entire process linked and controlled by Flyerlink, the Group's proprietary software, which operates over the Internet.
The centralising of production allows many independent print orders with a common specification, such as leaflets, post cards or letterheads to be grouped together thereby exploiting the usual efficiencies of a mass production process.
It is the above alternative business structure that gives Printing.com its competitive advantage.
The Company has now reached a stage in its development where it would benefit from the increased public profile that a quotation on AIM can offer.
History and development
The Printing.com business was established by Tony Rafferty in 1992 after he left University. Whilst a student at the University of Sheffield, he became involved in running student events. Subsequently, he devised a concept for producing small advertising leaflets or flyers in full colour batches more efficiently. Initially the business was centred on the UK discotheque market, servicing many of the larger public and private leisure companies. The Directors believe that the introduction of the Flyerlink software in 1994 subsequently enabled the scalability of the business.
From 1995 the business extended its product range to include leaflets, flyers, business cards, stationery, membership cards, mailing cards and a variety of items suitable for direct mail (which typically require a print-run of between 500 and 20,000 copies) so that it could expand its target market to include the SME and SOHO type businesses.
In 1995 the business also raised equity of GBP 200,000 from a syndicate of private investors which enabled it to more fully integrate the production process. Both indirect and direct marketing channels were explored prior to the opening of the businessâ??s first Store in 1998.
By 1999, two Stores had been opened, in Edinburgh and Sheffield, Flyerlink was being upgraded and senior staff were being recruited to roll out what was to become the Printing.com format of high street outlets connected to a central printing hub via Flyerlink. In early 2000 the business raised a further GBP 185,000 from private investors.
In 2000, the Company acquired the original Printing.com business and floated on Ofex, raising approximately GBP 1.9 million. At this time the estate had expanded to five units and by March 2001 this had increased to 15. A small equity fundraising of �£312,000 was carried out in June 2001 to provide further working capital.
In late 2001 the group announced a strategy for expansion through franchised outlets, the first of which were granted in early 2002. Shortly afterwards the Company raised a further �£1 million via public offering in order to support the accelerating outlet roll out. The Group moved to a new, larger Hub and National Training Centre located at Trafford Park in Manchester in 2003.
Products and services
Printing.com outlets offer a broad range of printed products intended to meet most of the print needs for the SME, SOHO and corporate business communities. The range covers:
�· appointment cards ~ exhibition stands ~ one-piece mailers
�· banners ~ folder inserts ~ pocket calendars
�· booklets ~ glossy postcards ~ presentation folders
�· bookmarks ~ greeting cards ~ promotional flyers
�· business cards ~ hanging calendars ~ scratch cards
�· case calendars ~ invitations ~ shelf strips
�· compliment slips ~ laser forms ~ showcards
�· continuation sheets ~ laser mailers ~ stationery packs
�· corporate folders ~ large format posters ~ stickers
�· credit card passes ~ leaflets ~ swing tickets
�· cut-out cards ~ letterheads ~ tent cards
�· desk calendars ~ litho posters ~ wallplanners
�· desk notepads ~ menus ~ wobblers
�· envelopes ~ mini brochures ~ wrapping paper
Turnarounds of between 48 and 72 hours are available on mainline orders, with a premium same day service also available.
The Outlet network
Overview
The Group operates through a network of Printing.com-branded Stores across the UK and Ireland together with a wider network of Bolt-on franchisees. Each Store sits within a territory in which Bolt-on franchises can be granted to established printers, copy shops and graphic designers. There are a total of 66 such territories in the UK.
All franchisees are governed by a franchise agreement and a detailed operations manual, which set out the expected operational standards. A franchise agreement may be terminated if the required standards are not maintained.
Stores are typically positioned in 'secondary retail locations', either just off the high street or on busy arterial routes. Very often they are located near, or even adjacent, to other well known printing stores. This approach is a deliberate strategy to attract additional customers by emphasising the difference in the Printing.com model.
The table below illustrates the expansion of the Printing.com estate over the current financial year and highlights the current pipeline of prospective Franchisees, who have already taken out an option on a territory.
31 March 2003 31 March 2004
Total Outlets: 52 85
Open for more than one year 28 44
Open for less than one year 19 21
Pre Opening 3 13
Under option 2 7
Owned Stores
The Group opened its first Store in Edinburgh during November 1998 and by March 2001 had opened an additional 14 in locations across the UK. Although the Group was not profitable after this initial roll-out of Stores, the Directors considered that the potential of the Company's business model had been validated. The opening of a Store in Dublin during April 2003 proved the ability of the Group's systems to run successfully within the Euro zone as well.
Since March 2003, six Stores have been franchised reducing the Group owned estate to nine. More recently a new Group owned Store has been opened at the Hub. This Outlet also functions as a training facility and for demonstration purposes. No additional Group owned Stores are currently planned and it is intended to franchise further Group owned Stores, although some may be retained for training and development purposes.
Franchised Stores
The Group began marketing Store Franchises in September 2002. The first Store Franchise was granted in March 2003 when the Group owned Store at Liverpool was franchised via a management buy-in. In June 2003 the first start-up Store Franchise opened in Plymouth. Store Franchises offer Printing.com's products at the same price point as any Group owned Store, with the Hub charging a predefined "transfer price" for the fulfilment of each order. This ongoing income in respect of each order provides the majority of Printing.com's income stream from franchises. The Store Franchise offering has now been superseded by the Territory Franchise and the original Store Franchises have been upgraded to the Territory offering. Store and Territory Franchises are granted for ten years.
Territory Franchises
A Printing.com Territory Franchise enables a franchisee to launch a Printing.com Store and then develop a network of Bolt-on Franchises within an extended geographic area, typically the size of a county. The Group launched its Territory Franchise programme using the strap-line "Start a Store - Build a Territory" in September 2003. The Directors believe that the Territory Franchise model facilitates a more effective support of the Group's network of Bolt-on Franchises by leveraging the local expertise of each Territory Franchisee. It also enables each Territory Franchisee to exploit their local knowledge of the best potential Bolt-on Franchise partners in their territory by acting as a marketing agent for the Bolt-on Franchise opportunity.
The Directors believe that this structure, embracing every Territory Franchisee in the marketing and support of Bolt-on Franchises, will accelerate the growth of the network measured by both the number of Bolt-on Franchises and the success of each Outlet. They further believe that the dual facets of the Territory Franchise opportunity namely "Start a Store - Build a Territory", adds to the appeal of the franchise offering and assists in recruiting pre-eminent franchisees.
The Territory Franchisee is incentivised to expand and support the network of Bolt-on Franchises with a reward structure based on a share of the additional license fees and commission on ongoing transfer price revenues.
Under the Territory Franchise Agreement a licence fee typically in the range of GBP 18,000 to GBP 24,000 is charged at the outset together with a support fee of GBP 18,000. In subsequent years a fee of GBP 10,000 is charged. However, the majority of the Group's revenues on an ongoing basis arise from the transactions at "transfer price" between the Territory Franchise and the Hub.
The contractual process by which a Territory Franchise is granted involves the prospective franchisee first entering into an Option Agreement and paying a non-refundable fee of typically GBP 6,000. This allows the franchisee a period, typically six months, in which with the assistance of the Group he or she can organise the necessary finance, secure suitable retail property and commence training.
Currently, 14 Territory Franchises are operating arising from two Store transfers to ex-employees of the Group, four Store transfers to external franchisees and eight new Store start-ups. There are currently seven options in place and the Directors are optimistic that the majority of these will progress to operating Territory Franchises.
Across the UK 66 Territories have been defined with each Territory being designed to accommodate the development of between three and eight Bolt-on Franchises. If successfully exploited, this structure could result in the Printing.com estate exceeding 300 Outlets.
Bolt-on Franchises
A Bolt-on Franchise enables established ODP's, Graphic Designers, Marketing Agencies and similar graphic arts businesses to interface with the Group's Hub via its proprietary Flyerlink software and thereby offer their clients the Printing.com range of products. In doing so, the Directors believe this extends the Group's distribution and brand penetration. A Bolt-on Franchise continues to trade under its existing business name but using the branded format of "Printing.com@existing business name". On 30 January 2002 the Company announced its first tranche of six Bolt-on Franchise agreements. As at the date of this document the Bolt-on Franchise estate has increased to 57.
Under the Bolt-on Franchise agreement an initial licence fee, typically in the range of GBP 6,000 to GBP 18,000, is charged at the outset. In subsequent years an additional, smaller annual licence fee is also charged. The franchise is initially granted for a period of three years and successful Bolt-on Franchisees will be offered the opportunity to extend the agreement for a further period.
Operationally the Bolt-on Franchise works in much the same manner as a Store Franchise with the majority of the Companyâ??s ongoing income arising from the transfer pricing element. Based upon this transfer price a target is set for each Bolt-on Franchisee's second year of operation, which is typically in the region of between GBP 30,000 and GBP 90,000.
The Agency
Prior to the inception of the Group's first Store, its business was principally centred on the leisure sector. This operation has been referred to previously as the Group's "Traditional Markets" it has now been re-branded in a fashion similar to a Bolt-on Franchise and trades as "Printing.com@The Agency". This division is also used to pioneer more sophisticated customer relationship management techniques which could subsequently be embraced more generally by Printing.com Stores and franchisees.
The benefits of adopting a franchise strategy
Prior to 2002, all outlets were directly operated by the Group whilst the details of the business model were being developed and refined. However, since then a franchising strategy has been adopted to facilitate a rapid rollout of the Outlet network whilst reducing the investment required and the exposure to financial risks involved in such a rollout.
Set out below is a diagram that illustrates the cumulative contribution that should be enjoyed by the Group from a successful Printing.com owned Store versus a comparable franchised outlet and illustrates the benefits of expanding through franchising:
Note: the diagram is not to scale and is not intended to show any quantitative measure.
The Directors consider that the principal benefits are that:
- the finance for further outlets is provided by the franchisee without depleting the Group's cash reserves or exposing the Company's shareholders to potential dilution from further issues of Ordinary Shares;
- each new franchised outlet should make an immediate positive impact on the Group's earnings as the initial support and licence fees should cover the corresponding training and support obligations and contribute to investment in central infrastructure thereby insulating the Group contribution phase of a new Group owned outlet; and
- the Group is shielded from the negative contribution from an under-performing outlet.
Whilst a mature Group owned Store might provide a greater contribution than its franchised equivalent, the Directors believe that the avoidance of the substantial investment and financial risks of a Group owned Store outweighs the potential for this upside. In addition, the Directors believe that a franchisee may be better positioned to maximise the profitability of a Store, because:
- the provision of a business to business, printing and graphic-design service is a sophisticated and consultative led transaction requiring continuity of outlet management and this objective is most likely to be achieved through owner-managed (i.e. franchised) outlets;
- a franchisee would typically bring significant transferable business skills;
- a franchisee will be better motivated due to the financial commitment made by him or her;
- the positioning of the franchisee as an owner manager who will naturally meet other owner managers (who are potential clients) throughout the various local business enterprise networks.
In addition, the Directors believe that expanding through franchising allows the Group to focus on the provision of a robust and scaleable Hub and infrastructure without being distracted by the details of day to day Store operations.
Franchisee option scheme
As franchisees are central to the future success of Printing.com, the Company has established share option schemes for Territory Franchisees and for Bolt-on Franchisees, which are designed to incentivise them to drive forward the Printing.com business and to align their interests with the Company and its Shareholders.
Options are granted to franchisees when they enter their Franchise Agreement. Once granted, options only vest in tranches, when pre-defined revenue targets are met. The Directors set these targets to be challenging to the franchisee and beneficial to the Company and its Shareholders. Subsequently, vested options may only be exercised when the price of Ordinary Shares has exceeded certain levels for a period of not less than 200 days.
A total of 1,400,000 options have been granted under the schemes to date and the Board intends to grant a further 1,200,000 options in the near future. The first hurdle price for exercise of these options is 40p per share. Further details of the share option schemes are set out in the Prospectus.
Franchisee selection and training
The Group seeks prospective Territory Franchisees who are looking for a more sophisticated management component. The preferred commercial background for a franchisee will have involved sales, marketing and/or management experience. As well as the right commercial background, territory franchisees need to demonstrate a personal drive to run their own business if they are to be selected. The Territory Franchisee plays a pivotal role in driving sales and building close effective working relationships with key customers.
The Group's business model is founded on "Quality Assurance" principles and the "internal customer" concept. This requires process discipline on the part of a territory franchisee to maintain operational standards themselves and also develop other team members to a high level. The initial training classroom sessions at our National Training Centre are supplemented with a home study course focusing on graphic design principles. Previous graphic design skills are not required and the training courses have been successful in equipping, marketers, computer programmers and sales professionals with the necessary skills to produce effective design.
Once the initial training courses have been completed and the new Store opened, the Territory Franchisee is entitled to 40 days of on-site support over the first year of operation helping the Territory Franchisee's business to develop from its Store base through to its Territory potential.
The suitability of prospective Bolt-on Franchisees is assessed by the Territory Franchisees using the Group's Bolt-on Franchisee model which includes an assessment of their operational and financial capability. Selected Bolt-on Franchisees will then undergo an abridged programme of classroom training followed by extensive onsite support from their related Territory Franchisee.
Flyerlink
Printing.com's proprietary software, Flyerlink, provides the backbone for all of its operational practices. Each outlet uses Flyerlink to manage the workflow including prioritising which jobs need designing first and which orders are approved for printing. Flyerlink produces the necessary order forms, confirming the exact specification of a customer's order. This enables the interrogation of commercial data to provide management information such as value added profitability by sector and key performance indicators. Via Flyerlink, outlets control the exact specification of the printing, including the type of paper and turnaround, together with finishing options such as lamination. Flyerlink is also directly linked to the Group's carrier, giving outlets control over where goods are delivered and also the time at which they will arrive at the chosen destination.
A project is in place to upgrade the Company's Flyerlink software. This second generation Flyerlink running within a Linux environment is believed by the Director's to be suitable to provide the Company's software infrastructure for the foreseeable future. The project is nearing its completion and will be introduced following successful performance in field trials.
Intellectual Property
The Group relies on its use of its Flyerlink software for the effective operation of its business and retains the ownership of the intellectual property rights in respect of this software. The upgrade of Flyerlink has been carried out by an external consultant who jointly owns the intellectual property in the upgraded software with the Company. The upgraded software cannot be used by anyone outside the Group in the printing environment.
The Hub
Printing.com's UK Hub is located in Trafford Park, Greater Manchester and embraces both leading edge production facilities and a well equipped training suite, the National Training Centre. The training suite can accommodate up to 40 people in three well-equipped seminar rooms. The training suite is utilised most days, reflecting the importance given to the development of Group employees, the employees of its Franchises and the Franchisees themselves.
Most ODPs produce each order on a job-by-job basis with each colour added individually. As a result, it would be usual to pay more, say, for a two colour business card than for a single colour card, with a three colour business card being even more expensive. To provide this service an ODP would normally have "small format" printing equipment located at its shop premises, requiring capital investment and ongoing labour costs.
By contrast Printing.com has centralised printing facilities utilising leading technology to achieve economies of scale. The Group's systems allow many printing orders to be processed together on large format sheets of card or paper. For example, up to 121 sets of business cards can be produced simultaneously, effectively spreading the set up costs associated with the printing process across the number of orders being produced. All work is produced in "process colour" or "four colour", more commonly referred to as "full colour", whereby four primary inks (cyan, magenta, yellow and black) are utilised to reproduce a wide range of colours.
The Directors believe that this centralised approach yields the following benefits:
- numerous colours can be incorporated into the graphic design without additional printing costs being incurred;
- colour photographs can be included at no extra production cost;
- the unit production cost is lower than the traditional "small format" method; and
- by passing on to clients the cost savings, substantial competitive advantage may be achieved.
The Hub was relocated to new premises between February and August 2003, which at approximately 30,000sq/ft are substantially larger than the previous facilities. To facilitate this move, significant additional capital equipment was procured earlier than would have otherwise been required so as to enable a smooth transition between old and new Hubs. Following the move, the Directors estimate that the Hub's capacity (measured as the full retail value of output) is in the order of GBP 20m to GBP 25m, which compares with the current level of utilisation estimated to be approximately GBP 14m. This suggests that significant additional volume could be transacted by incurring only the additional cost of raw material and manufacturing wages. A programme of ongoing investment is planned, albeit at a substantially lower level than previously incurred, with the aim of providing even greater operational efficiencies.
Market and competitors
The UK ODP market is estimated to be worth in excess of GBP 1billion, and may be in excess of GBP 2billion if small commercial printers are also taken into account. With the exception of the Kall Kwik and Prontaprint chains, the sector is highly fragmented.
The Directors believe that Printing.com's competitive advantage is the combination of a full colour print offering as standard at an advantageous price point, as illustrated below by reference to a selection of popular products:
Full colourPrinting.com price Full colourODP sector price 2 Two-colourODP sector price3
500 Business Cards
Litho printed 400gsm board GBP 49 GBP 169 GBP 91
1,000 Letter Heads
115gsm wove of a good quality GBP 104 GBP 232 GBP 135
5,000 single sided passes
280gsm gloss art board GBP 159 GBP 398 GBP 198
10,000 A5 leaflets
150g gloss artpaper GBP155 GBP 386 GBP 194
Notes:
1. All prices exclude VAT.
2. Comparative ODP sector prices are derived from a Nationwide Survey 2004
3. Comparative ODP sector prices are derived from a Nationwide Survey 2004 and â??Store Checkerâ?? price comparison February 2004
The Directors believe that there are significant barriers to entry for new competitors to the Group including:
- that the Directors are not aware of any "off the shelf" software package that replicates the functionality of Flyerlink;
- that the high volume of orders that are required to efficiently and profitably exploit the Printing.com centralised model would not be available to most of the Group's existing competitors;
- that the Group's larger competitors would have to radically restructure their business models to replicate the Printing.com model; and
- no other competitor has experience of operating all of the components of the Printing.com business model.
The Company's competitive advantage coupled with these barriers to entry leads the Directors to believe that Printing.com has the potential to become the premier supplier of its product range to the SME and SOHO community within the UK.
Financial track record
The financial track record of the Group is summarised below:
Year ended 31 March
2002 2003 2004
�£000 �£000 �£000
Turnover
~ Franchise revenue 91 1,122 3,245
~ Owned Store revenue 3,959 4,862 4,146
~ The Agency 1 ,548 1,710 1,937
5,598 7,694 9,328
(Loss)/profit on ordinary activities before taxation (776) 511 941
Shareholdersâ?? funds 194 2,123 2,718
(Loss)/earnings per share (post notional tax charge) (2.41)p 0.92p 1.69p
Number of Outlets 14 14 10
~ Owned stores
~ Franchised stores - - 12
~ Bolt-on franchises 24 36 43
38 50 65
Until the year ended 31 March 2002, losses were incurred whilst Printing.com was gaining sufficient critical mass. Profitable trading was achieved during the year ended 31 March 2003 as more units, predominantly franchises, were added to the estate and this profitability has progressed as the number of franchised Outlets has further increased during 2004.
The Group's financial year runs to 31 March and it is intended to make a preliminary announcement of results each year around June, with interim results being announced around November.
Current trading and prospects
The Directors believe that additional ongoing revenues will be derived from the current pipeline of new franchises and that additional suitable franchise partners will continue to be found. The Hub still has sufficient unutilised capacity to permit additional revenues to be enjoyed with only a marginal increase in central overhead. With newly launched, franchised outlets expected to yield increasing contributions and the strong pipeline of prospective franchisees, the Directors are optimistic about the future prospects of Printing.com.
Ongoing expansion is founded on the Group's Territory franchise driven business model. This model has been configured in such a way that each additional outlet should yield a positive contribution at all stages of its operation both before and after opening. The model is designed to insulate the Group from the negative contribution that would normally be incurred in the initial stages if a new Group owned outlet was opened. The model is also designed to insulate the Company from the negative contribution that may be incurred by an under performing Store.
In a prospectus of the Company dated 19 February 2002, the Directors stated their objective was to achieve a total of 175 Outlets by September 2005. The Directors remain committed to this objective. Future plans include the development of a subsidiary Hub in Kent which would be well positioned to service a network of outlets in north-western Europe as well as southern England. The Directors believe that there are also opportunities in the longer term to transfer the Printing.com model to North America and other territories by means of master franchise agreements or joint ventures.
Dividend policy
The Company intends to pursue a progressive dividend policy as soon as it is prudent to do so with interim and final dividends being paid in February and September of each year, roughly in the proportion of one third and two thirds of the total dividend for the year.
Placing
Brewin Dolphin, as agent for the Company, has agreed conditionally, inter alia, upon the passing of the Resolutions at the Extraordinary General Meeting, to place firm a total of 3,833,333 Placing Shares at the Issue Price of 30p per share, representing 8.98 per cent. of the Company's issued share capital following Admission, which will raise approximately GBP 1.15 million before expenses for the Company.
The proceeds of the Placing will be utilised by the Company as follows:
- Expenses of the Placing and Admission 250,000
- Expansion of the Company's working capital 900,000
1,150,000
The Placing Shares will, when issued, rank pari passu in all respects with the Existing Shares, including the right to receive all dividends and distributions declared, paid or made after the date of this document.
The Directors, who together will control 33.13 per cent. of the issued share capital of the Company following Admission, have undertaken not to dispose of any Existing Shares for a period of one year following Admission without the prior consent of Brewin Dolphin, except in certain limited circumstances. The Directors have further undertaken to ensure that any disposal made by them of any Existing Shares for a period of one year following the first anniversary of Admission will be made in a manner that will ensure an orderly market can be maintained.
It is anticipated that trading in the Ordinary Shares will commence at 8.00 am on 11 August 2004
Board
The Board comprises the following directors:
Reginald George Hardie FCA, FCT (age 65) - Non-executive Chairman
Commonly known as George, he qualified as a Chartered Accountant in 1965. After being appointed as group financial director of Richard Johnson & Nephew Limited (which subsequently became Firth Rixson plc), he became joint group managing director in 1989. In 1994, he led the buyout of six subsidiaries of the Firth Rixson group. Apart from the Group, he is a non-executive director of three other companies. George has extensive experience in financial and general management, in both large and small companies, and in mergers and acquisitions. He joined the Group in 2000 and is chairman of the Remuneration Committee.
Anthony Rafferty (age 36) - Chief Executive
Tony studied electronics and electrical engineering at Sheffield University from 1987, developing an interest in marketing and promotional activity whilst managing Student Union entertainments. He worked in First Leisure plc's Superbowl division briefly in 1990 before operating as a self-employed print broker. In 1992 he founded a printing company which subsequently became Printing.com Europe Limited and which was acquired by the Company shortly before its admission to Ofex in 2000. He has shaped the Group over the past decade and devised its business and sales models. He also designed and developed the Flyerlink�® system which defines the Groupâ??s work flow.
Alan Quine Roberts ACMA (age 48) - Finance Director
Alan qualified as a Chartered Management Accountant in 1981 at Moon Brothers Engineering Limited. Following a period as Divisional Accountant at Edward Billington Group Limited he joined Dalgety plc as group accountant for its Merseyside production facilities. He moved to CQR Limited in 1987, which was acquired by Expamet International plc in 1988 and was subsequently appointed as Financial Director and company secretary of that company in 1991. After Expametâ??s acquisition by Channel Holdings plc in 1995, he was appointed operations director in 1997. He joined the Group in 1999.
Peter Robert Gunning MA (age 29) - Operations Director
After obtaining his Masters degree in accountancy and finance from Heriot-Watt University in 1997, Peter established the Design Foundry Scotland Limited and was a client of the business. Since joining the Group in 1998, he has been responsible for developing the Printing.com Store concept and the associated marketing and operations infrastructure. He was appointed to the Board in 2001.
Leslie Alan Wheatley FCA BSc (age 52) - Non-executive Director
Les joined Liverpool Football Club and Athletic Grounds PLC in May 2000 and was appointed to the Board, as Finance Director, in August 2001. Prior to joining Liverpool he was Chief Operating Officer at Newcastle United PLC. He gained logistics and change management experience at Ernst & Young before leading the employee buyout of GM Buses (South) Limited, where he subsequently became Chief Executive and which was sold to Stagecoach Group PLC in 1996. Les brings experience in the fields of corporate governance, finance, logistics, change management and affinity marketing to the Board and is Chairman of the Audit Committee. He was appointed to the Board in 2000.