Daily Internet PLC Further re: Acquisition of Netplan (6491I)

TIDMDAIP

RNS Number : 6491I

Daily Internet PLC

03 June 2014

3 June 2014

Daily Internet plc

("Daily Internet" or "the Group" or "the Company")

Further re: Acquisition of Netplan Internet Solutions Limited

Daily Internet plc (AIM:DAIP), the hosting and cloud infrastructure as a service ("IaaS") provider, is pleased to announce that it has reached agreement with Stuart Gibson and Philip Thomas, the vendors of Netplan Internet Solutions Limited ("Netplan"), regarding the early payment of the earn-out consideration in relation to the acquisition of Netplan which was completed on 18 November 2013.

As set out in the announcement dated 22 October 2013, the Company agreed to acquire the entire issued share capital of Netplan for a consideration of approximately GBP2.6 million together with deferred consideration. The consideration was satisfied by the payment of: approximately GBP2.6 million initial cash consideration upon completion of the acquisition; and a further GBP750,000 earn-out consideration payable after 30 September 2014 subject to Netplan's EBIT being GBP500,000 or greater for the year ended 30 September 2014. Such earn-out consideration was to be satisfied as to two-thirds in cash and one third in new Ordinary Shares of 0.5p in the Company ("New Ordinary Shares") (subject to a maximum of GBP250,000 in New Ordinary Shares at a price of 1.5p per Ordinary Share). In addition, the earn-out consideration was to be increased by GBP3 for every GBP1 by which the 2014 EBIT exceeded GBP525,000 or decreased by GBP6 for every GBP1 by which the 2014 EBIT was less than GBP500,000 subject to a maximum reduction of GBP750,000.

As announced on 31 March 2014, Netplan's revenue growth since its acquisition has been ahead of management's internal expectations following new customer wins and increases in contract sizes with existing customers, and this trend has continued following the year end.

The Board has determined, based on the current run rate, that Netplan will achieve the minimum EBIT (calculated in accordance with the conditions set out in the Sale and Purchase Agreement) threshold to satisfy the initial GBP750,000 consideration requirements. The Board also expects, based on the current run rate, that Netplan's EBIT for the year ended 30 September 2014 will be at a level that would result in at least GBP100,000 of additional consideration being payable.

Accordingly, the Company has sought and successfully negotiated the early payment of the earn-out consideration with the vendors of Netplan. This will enable the Company to pursue further growth strategies within the Netplan business which were not previously possible owing to the requirements of the deferred consideration mechanism.

The revised terms of the earn-out consideration will result in the Company paying the initially anticipated GBP750,000, comprising GBP500,000 in cash and the balance by the issue of 16,666,667 New Ordinary Shares, and a further GBP100,000, GBP50,000 of which will be satisfied in cash and the balance by the issue of 2,659,574 New Ordinary Shares at a price of 1.88p (the closing mid-market price on 2 June 2014). In aggregate, the total earn-out consideration will amount to GBP850,000 and the cash elements will be satisfied out of the Company's existing cash resources. The 19,326,241 New Ordinary Shares remain subject to orderly market arrangements.

In addition to the 19,326,241 New Ordinary Shares to be issued in relation to the Netplan earn-out consideration, the Company intends to issue 454,545 New Ordinary Shares at a price of 1.88p to a consultant as consideration for provision of services to the Company. Application will be made to the London Stock Exchange for the total of 19,780,786 New Ordinary Shares to be admitted to trading on AIM and it is expected that admission will become effective and that dealings in the New Ordinary Shares will commence on 9 June 2014.

Following admission, the issued ordinary share capital of the Company will be 427,452,866.

As previously announced, Stuart Gibson and Philip Thomas will remain with the Company until at least 30 September 2015 to assist in the next phase of Netplan's growth.

Stuart Gibson, CEO of Netplan, commented: "We have been delighted with our improving performance since becoming part of Daily Internet and currently have a growing pipeline of opportunities across a range of sectors and geographies. The Group continues to invest in developing our suite of offerings in order to further capitalise upon these opportunities and we are therefore confident that our current strong growth will continue going forward. I am confident that the early payment of the earn-out consideration will enable further growth strategies to be pursued within Netplan."

Abby Hardoon, CEO of Daily Internet, commented: "We are very pleased with the successful performance of Netplan to date, which has been ahead of our internal expectations. The higher-value offerings provided by the acquisition have removed a number of constraints to growth and the whole Group is benefitting from an increase in scale and potential new opportunities. We therefore expect this successful performance to continue as we move further toward our goal of becoming a one-stop-shop global provider of hosting and cloud services covering the entire value chain."

For further information please contact:

 
 Daily Internet plc 
  Abby Hardoon, CEO 
  Michael Edelson, Chairman                         [phone] 
 
 Sanlam Securities UK Limited (Nominated Adviser 
  and Joint Broker) 
  Simon Clements/Catherine Miles                    [phone] 
 
 Loeb Aron & Company Limited (Joint Broker) 
  Dr Frank Lucas/Peter Freeman                      [phone] 
 
 Walbrook PR Limited 
  Bob Huxford/Guy McDougall/Paul Cornelius          [phone] 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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