Datum International Ltd
LSE : DATP

March 11, 2011 02:00 ET

Placing and Notice of General Meeting

                                          DATUM INTERNATIONAL PLC
                                ("Datum International", PLUS-quoted (DATP))
                                Placing and Notification of General Meeting
Datum International Plc (the "Company") is pleased to announce a conditional placing by finnCap Limited of
18,869,302 Ordinary Shares at a price of 9 pence per share raising approximately GBP1.7 million (before
commissions and expenses) ("Placing") and the acquisition of the entire issued share capital of Filebutton
Limited and its wholly owned and sole trading subsidiary, Ideagen Software Limited ("Ideagen").
The Placing is conditional, inter alia, upon the Company obtaining approval from its Shareholders to grant
the Directors authority to allot the Placing Shares at a General Meeting convened for 30 March 2011. A copy
of the Circular, Notice of General Meeting and Proxy Form has been posted to Shareholders today.

Summary of the proposed acquisition:
      *       Net consideration of £1.33 million
      *       Underlying EBIT for year ended 31 July 2010 of approximately £300,000
      *       Initial net consideration of £980,000

The key attributes of the proposed acquisition are:
      *       Ideagen would add value strategically, financially and operationally
      *       The compliance management product set offers an attractive market opportunity
      *       Ideagen currently has 160 customers, many of which are blue chip organisations
*       Reported revenue of £1.32 million for the year ended 31 July 2010 of which £0.73 million was
recurring
      *       The acquisition is expected to be earnings enhancing in FY2011/12

David Hornsby, CEO of Datum, commented:

"I am delighted to announce Datum's second acquisition since I became CEO. Ideagen is a strong business in
an attractive market with a high quality customer base. Our existing business continues to perform in line
with our expectations and we look forward to integrating Ideagen's product set into the KnowledgeWorker
platform. I would like to thank our existing and incoming institutional shareholders for their support in
this fundraising."

All defined terms in this announcement have the same meaning as set out in the Company's circular dated 11
March 2011.
Enquiries:
Datum International Plc                    01438 347110
David Hornsby, Chief Executive
finnCap Limited                            020 7600 1658
Corporate Finance
Marc Young/Ben Thompson
Corporate Broking
Stephen Norcross

Introduction
                                                     
The  Company  today announces a conditional placing of, in aggregate, 18,869,302 new Ordinary Shares  at  a
price  of  9 pence per share and the acquisition of the entire issued share capital of Filebutton  and  its
wholly  owned  and  sole trading subsidiary, Ideagen, for a net aggregate consideration of  £1.33  million.
Once  completed, and assuming full subscription under the Placing, the proceeds available for  the  Company
pursuant  to the Placing will be approximately £1.7 million (before commissions and expenses). The  purpose
of  the Placing is to fund the acquisition of Filebutton, a compliance focused document management software
company, further details of which are set out below.

The Placing and Acquisition are conditional, inter alia, upon the Company obtaining approval at the General
Meeting  of  Shareholders to grant the Directors the authority to allot the Placing Shares and to  disapply
statutory pre-emption rights which would otherwise apply to the allotment of the Placing Shares.

The  Board  considers  the  Placing and Acquisition to be in the best interests  of  the  Company  and  its
Shareholders  and accordingly the Directors unanimously recommend that Shareholders vote in favour  of  the
Resolutions  to be proposed at the General Meeting, as they intend to do so in respect of their  beneficial
interests  amounting,  in  aggregate, to 22,639,539 Ordinary Shares representing  44.5  per  cent.  of  the
existing issued ordinary share capital.

General update

The  Company has made considerable progress since the appointment of the new management team in June  2009.
It  has  increased revenue in that time from £354,000 for the year ended 30 April 2009 to £966,000 for  the
year  ending  30  April 2010. Figures for the first half of the year ended 30 April 2011 have  demonstrated
further encouraging progress, delivering revenue of £1.1 million (H1 2009: £407,000) and EBITDA of £245,000
(H1  2009: £82,000) for the 6 months to 31 October 2010. This growth has been achieved both organically and
through acquisition and has been funded by the share placings completed in April 2009 and March 2010. As  a
result the Directors consider that the following milestones have been achieved:

    *       transformation of a loss making research and development focused business into a profitable sales
        led enterprise;
    *       establishment of a strategy for future organic growth based on basic sales execution and a leading
        technology proposition; and
    *       a proven ability to acquire and integrate complementary businesses.
                                                     
Strategy for Growth

The  Directors intend to continue to grow the Group organically through the creation and sale  of  software
solutions  in specific vertical and application areas. The Directors intend to supplement this by acquiring
document or content management companies with solid recurring revenues and good quality customer bases. The
acquisition of Root3 has demonstrated the Company's ability to successfully integrate an acquired  business
while cross selling a wider suite of solutions into the enlarged customer base.

Acquisition of Filebutton

Under the terms of the Acquisition Agreement, the Company has conditionally agreed to acquire  Filebutton ,
for  a net aggregate consideration of £1.33 million. Filebutton is the parent company of Ideagen, a company
which  develops,  and sells compliance software. The acquisition will broaden the Group's product  set  and
adds  160  customers  which will provide a platform for growth. It is envisaged by the Directors  that  the
Company will apply its strategic sales expertise to Ideagen's current business model in order to expand and
generate greater revenue.

The  total consideration to be paid for Filebutton is £1.63 million less £300,000 of cash held at the  time
of the acquisition (with adjustments being made if the net cash position is different).

Information on Ideagen

Ideagen,  the  trading  subsidiary of Filebutton, is a UK registered company based in  Derbyshire  with  16
employees. It is the developer and distributor of "Workbench", a document control, compliance and standards
management  software suite. For the year ended 31 July 2010 Ideagen recorded revenue of £1.32  million,  of
which  £0.73  million  was recurring contracted revenue, and generated an EBIT of £263,000.  The  Directors
estimate that the underlying EBIT of Ideagen for the year ended 31 July 2010 was approximately £300,000.

Ideagen  focuses  on highly-regulated industries such as pharmaceuticals, manufacturing and  aerospace  and
defence. Ideagen currently has 160 customers, many of which are blue chip organisations.

Rationale for the Acquisition

The  Directors  believe  that the Acquisition will add value to the Group, strategically,  financially  and
operationally.  Ideagen's compliance management product offers an attractive market that the  Company  does
not  currently serve.  Furthermore, Ideagen provides an extensive and blue chip customer base  which  could
potentially  provide  attractive cross selling opportunities. The Acquisition is expected  to  be  earnings
enhancing in the year ending 30 April 2012.

The Placing

The  Company  is  proposing  to  raise, in aggregate, approximately £1.7 million  (before  commissions  and
expenses)  by  means of the Placing. The Placing Shares will rank in full for all dividends  and  otherwise
pari passu with the existing Ordinary Shares from the date of Admission.

Certain Directors have agreed to subscribe for new Ordinary Shares under the Placing as follows;
                                                     
      Director         Number of existing    Number of new Ordinary       Resultant        Percentage of
                         Ordinary Shares      Shares conditionally     holding in the     Enlarged Issued
                         currently held      subscribed for pursuant      Enlarged         Share Capital
                                                 to the Placing         Issued Share             
                                                                           Capital
   David Hornsby            7,858,333                335,000              8,193,333            11.75
     Les Paul 1             7,192,140                112,500              7,304,640            10.48
 Darren Spillane 1          3,200,000                112,500              3,312,500            4.75
                                                     
Note  1.  The Placing Shares which are being subscribed by each of Darren Spillane and Les Paul  are  being
subscribed by their respective wives.

Following completion of the Placing the total voting rights in the Company will be 69,731,558.

It  is  expected that the Placing Shares will be admitted to trading on the PLUS Market on 31  March  2011.
The Placing is conditional, inter alia, upon:

    *       the passing of the Resolutions at the General Meeting;

    *        the Placing Agreement becoming unconditional in all respects and not having been terminated in
        accordance with its terms;

    *       the Acquisition Agreement not having been terminated in accordance with its terms; and
        
    *       Admission,
        
in  each case by no later than 8:00 a.m. on 31 March 2011 (or such time and date as the Company and FinnCap
may agree, being in any event not later than 15 April 2011).

Use of Proceeds of the Placing

The net proceeds of the Placing will be used to;
    *       fund the Acquisition;
         
    *       provide the Group with working capital to fund the future growth of its business; and

    *       facilitate the Company's flotation on AIM within 12 months of the date of the Circular.

The  Directors  believe that the Company will, following the Placing, have sufficient  working  capital  to
finance the Acquisition, fulfil the Company's strategy and move the Company's quotation to AIM.

The Placing Agreement

Pursuant to the terms of the Placing Agreement, FinnCap as agent for the Company, has conditionally  agreed
to  use  its  reasonable endeavours to place the Placing Shares on a non-underwritten basis at the  Placing
Price per share.

The  Placing  Agreement contains certain warranties from the Company in favour of FinnCap in  relation  to,
inter alia, the accuracy of the information contained in the Circular and certain other matters relating to
the  Company  and its business, subject to certain limitations. In addition the Placing Agreement  contains
certain  more limited warranties from David Hornsby, Jonathan Wearing and Les Paul in favour of FinnCap  in
relation  to,  inter  alia, the adequacy of working capital and the accuracy of the  Circular,  subject  to
certain  limitations.   In addition, the Company has agreed to indemnify FinnCap  in  relation  to  certain
liabilities  it  may  incur  in respect of the Placing.  FinnCap has the right  to  terminate  the  Placing
Agreement in certain circumstances prior to Admission, including without limitation for an event  of  force
majeure or in the event of a material breach of the warranties set out in the Placing Agreement or  if  the
Acquisition  Agreement is terminated.  Under the terms of the Placing Agreement the Company has  agreed  to
pay  FinnCap  a  corporate finance fee and commission based on the number of Placing Shares which  are  the
subject of the Placing.

Related Party Transaction

The  placing  of  certain  of  the Placing Shares with David Hornsby, Darren Spillane  and  Les  Paul,  are
classified  as  a  related  party  transaction  for  the  purposes  of  the  PLUS  Rules.  The  Independent
Directors  (being Jonathan Wearing and Graeme Spenceley), having consulted with FinnCap, as PLUS  Corporate
Adviser  to  the  Company,  consider the terms of the Placing to be fair  and  reasonable  insofar  as  the
Shareholders  are  concerned.  In providing advice to the Independent Directors,  FinnCap  has  taken  into
account the Independent Directors' commercial assessments.

Admission and dealings

It  is expected that Admission on the PLUS Market will become effective and that dealings will commence  in
the  Placing Shares on 31 March 2011. The Placing Shares will, when issued, rank pari passu in all respects
with  the  existing  Ordinary  Shares, including the right to receive  dividends  and  other  distributions
declared following Admission.

General Meeting

At the General Meeting, to be held at the offices of FinnCap Limited, 60 New Broad Street, London, EC2M 1JJ
at  11.00  a.m. on 30 March 2011, the Resolutions will be proposed to grant the Directors the authority  to
allot  the Placing Shares and further to allot such Placing Shares without first offering them to  existing
Shareholders on a pre-emptive basis.

The  Directors appreciate that it would be normal when a company issues a material number of new shares for
cash for that issue to be fully pre-emptive i.e. to incorporate an offer to all Shareholders.  However, the
Directors  believe  it  would  not be in Shareholders' best interests to incur the  significant  additional
expense that would be required for such an offer to Shareholders to be implemented.

The  Directors have therefore concluded that seeking general authority from Shareholders to issue  Ordinary
Shares  other than on a pre-emptive basis is the most flexible and cost effective method available  to  the
Company.

Resolution  1  in  the  Notice of General Meeting seeks to give the Directors  authority  to  allot  up  to
42,113,155  Ordinary  Shares (inclusive of the Placing Shares) in substitution for any existing  unutilised
authorities  in this regard.  After the Placing, the Directors would have authority to allot  approximately
one-third of the Enlarged Issued Share Capital.  There is no current intention for the Directors to utilise
this authority other than in respect of the Placing Shares.

Resolution 2 in the Notice of General Meeting seeks to empower the Directors to allot and issue the Placing
Shares  and, other than in connection with a rights issue, to allot an additional 6,973,156 Ordinary Shares
(being  10  per cent. of the Enlarged Issued Share Capital) without first offering such Ordinary Shares  to
existing  Shareholders.   This  power is in substitution for any existing unutilised  authorities  in  this
regard.  There is no current intention for the Directors to utilise this authority other than in respect of
the Placing Shares.

Recommendation

The Directors consider the Resolutions to be proposed at the General Meeting to be in the best interests of
the  Company  and  the  Shareholders as a whole.  Consequently, the Directors  unanimously  recommend  that
Shareholders vote in favour of the Resolutions to be proposed at the General Meeting as they intend  to  do
so  in  respect  of  their  beneficial interests amounting, in aggregate,  to  22,639,539  Ordinary  Shares
representing 44.5 per cent. of the existing issued ordinary share capital.

                                                DEFINITIONS

The following definitions apply throughout the circular and the Form of Proxy, unless the context otherwise
                                                 requires:
                                                     
"Admission"                                  the admission of the Placing Shares to trading on the PLUS
                                             Market, becoming effective in accordance with the PLUS Rules
"Acquisition"                                the acquisition of the entire issued share capital of
                                             Filebutton Limited
"AIM"                                        the AIM Market of the London Stock Exchange Plc
"Board"                                      the board of directors of the Company
"Circular"                                   the Company's circular to Shareholders dated 11 March 2011
"the Company"                                Datum International plc
"Directors"                                  the directors of the Company
"Enlarged Group"                             the Company as enlarged by the acquisition of Filebutton
                                             Limited (the parent company of Ideagen)
"Enlarged Issued Share Capital"              all of the Ordinary Shares in issue on Admission
"Filebutton"                                 Filebutton Limited (Company No. 05111472)
"FinnCap"                                    finnCap Limited
"Form of Proxy"                              the form of proxy for use by Shareholders in connection with
                                             the General Meeting
"FSMA"                                       the Financial Service and Markets Act 2000 (as amended)
"General Meeting" or "GM"                    the general meeting of the Company convened for 11.00 a.m. on
                                             30 March 2011 (or any adjournment or postponement thereof)
"Group"                                      the Company and its subsidiaries from time to time
"Ideagen"                                    Ideagen Software Limited (Company No. 03505254), the only
                                             trading subsidiary of Filebutton
"Independent Directors"                      the Directors who are not participating in the Placing
"Notice of General Meeting"                  the notice of General Meeting, set out at the end of this
                                             document
"Ordinary Shares"                            ordinary shares of 1p each in the capital of the Company
"Placing"                                    the conditional placing of the Placing Shares pursuant to the
                                             Placing Agreement
"Placing Agreement"                          the conditional agreement dated 10 March 2011 between the
                                             Company (1) David Hornsby, Jonathan Wearing and Les Paul (2)
                                             and FinnCap (3) relating to the Placing
"Placing Price"                              9 pence per Placing Share
"Placing Shares"                             18,869,302 new Ordinary Shares which are to be placed in
                                             accordance with the terms of the Placing Agreement
                                             
"PLUS"                                       PLUS Markets Plc, a recognised investment exchange under
                                             Section 209 of FSMA
"PLUS Market"                                a primary market regulatory framework dedicated to the needs of
                                             smaller companies (known as the "PLUS-quoted" segment) operated
                                             by PLUS for dealings in the securities of issuers admitted to
                                             trading in accordance with the PLUS Rules
"PLUS Rules"                                 the PLUS Rules for issuers as amended or supplemented from time
                                             to time by a regulatory notice published by PLUS
"Proposals"                                  the Placing and the Acquisition
"Resolutions"                                the resolutions numbered 1 and 2 set out in the Notice of
                                             General Meeting
"Shareholders"                               holders of Ordinary Shares

Contact Information

  • Datum International Ltd