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Placing and Open Offer to raise up to £9m

Jul 1, 2013

THIS ANNOUNCEMENT IS RESTRICTED AND IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, AUSTRALIA OR NEW ZEALAND OR ANY OTHER STATE OR JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL

Acquisition of Mayrise Limited
Accelerate investment in OMG Life growth to exploit Autographer market opportunity

OMG plc, (LSE: OMG), the technology group providing image understanding products for the entertainment, defence, life science and engineering industries, is pleased to announce a share issue to raise up to approximately £9.0 million (before expenses) through the issue of up to 27,586,208 New Ordinary Shares by way of a Placing at 29 pence per Ordinary Share to certain institutional investors and Directors through N+1 Singer and up to a further 3,473,616 New Ordinary Shares to be issued through an Open Offer at 29 pence per New Ordinary Share. The Directors of the business will subscribe £205,000 to the Placing.

The proceeds of the Placing will be used for two purposes:

Primary purpose is to facilitate the acquisition of Mayrise Services Limited (“Mayrise”), a provider of highways asset management software products and services to the local authorities and Utilities in the UK, for £6m.
Secondary purpose is to provide OMG Life with £2m of funding to accelerate the exploitation of opportunities in the Autographer market.

To the extent that further funds are raised via the non-underwritten Open Offer, these will be used to exploit opportunities in the Autographer market.

The total amount that the Company could raise under the Fundraising is approximately £9.0 million (before expenses), assuming all the Open Offer Entitlements are taken up. The Placing is being fully underwritten by N+1 Singer on, and subject to, the terms of the Placing Agreement. The Open Offer is not underwritten, and accordingly, as set out below the minimum proceeds under the Fundraising are approximately £8.0 million (before expenses). The Issue Price of 29 pence per New Ordinary Share represents a discount of approximately 9.4 per cent to the price of 32 pence per share, being the Closing Price of the Company’s Ordinary Shares on 1 July 2013.

Copies of the Circular will be available free of charge from the Company's website (www.omgplc.com) and at the offices of OMG plc, 14 Minns Business Park, West Way, Oxford, OX2 0JB during normal business hours on any weekday (public holidays excepted).

Acquisition of Mayrise

The proceeds of the Placing will be used to acquire 100 per cent of Mayrise for an initial consideration of £5.3m in cash, payable at Completion. Deferred consideration of up to £0.7 million in cash is payable contingent on the Company agreeing Mayrise’s 2012 EBITDA. Mayrise will form part of Yotta Limited (“Yotta”) the Group’s software and services business specialising in the highways market.

The Directors believe that a combination of Mayrise and Yotta, OMG’s highways technology arm, will:

be immediately earnings enhancing;
make Yotta profitable – accelerating its platform for future growth;
further improve Yotta’s visibility and recurring revenue base, benefiting from Mayrise’s annually recurring software revenues;
extend Yotta’s product range, creating a complementary combined product and service offering;
increase the addressable market, opening up increased sales opportunities within Yotta’s core local authority customer base;
accelerate Yotta’s Horizons Software-as-a-Service (“SaaS”) market penetration;
extend the Horizons platform into the utilities market;
provide opportunities to leverage and cross-sell Mayrise’s customer base; and
secure additional value through skills sharing in support, development and training.

Investment in OMG Life and Autographer

The secondary purpose is to augment the Group’s working capital to allow the OMG Life business to exploit the current market opportunity for its first consumer product, Autographer, the world’s first intelligent, wearable camera.

The Directors believe that the additional money raised will help to exploit the Autographer opportunity to:

expand production volume capability to meet expected demand;
augment working capital;
establish first mover brand advantage; and
accelerate market development.

Current Trading

The Group’s trading remains in line with the comments made at the time of the interim results on 30 May 2013.

General Meeting

The Resolutions will be proposed at the General Meeting to be held at the offices of OMG plc, 14 Minns Business Park, Oxford, OX2 0JB at 2.00 p.m. on 19 July 2013.

Commenting on today’s announcement Nick Bolton, Chief Executive of OMG plc, said:

“I am pleased to be announcing this successful Placing to fund the acquisition of Mayrise as well as to capitalise on the Autographer opportunity.

We believe that Mayrise has a clear strategic fit within Yotta and bringing these two businesses together will improve Group revenues as well as driving Yotta’s growth. The combination represents an exciting opportunity for OMG to build on its position as a trusted, proven supplier of software and services for the highways industry.

This earnings enhancing deal will enable Yotta to provide an extended product offering to an enlarged client base, underpinned by a significant recurring revenue stream. With both Mayrise and Yotta operating within the same market, we expect to benefit from the opportunities presented to us as we seek to secure Yotta’s profitable future.

As for exploiting our Autographer opportunity, we are excited about being at the forefront of the new and increasingly expanding wearable technology market. The additional funding will help to drive forward the development of Autographer as we look to capitalise on the global interest the product has generated.”

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