Proposed disposal of Sportsdata Limited and not...

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon publication of this announcement, this inside information is now considered to be in the public domain.

27 March 2018

GoTech Group plc

 (“GoTech”, the “Company” or the “Group”)

Proposed disposal of Sportsdata Limited and notice of General Meeting

GoTech, the cash shell admitted to trading on AIM, announces the proposed disposal of its wholly owned subsidiary Sportsdata Limited (the “Disposal”). Pursuant to Rule 15 of the AIM Rules for Companies, the Disposal is subject to the approval of shareholders of the Company at a general meeting.  GoTech has today published a circular to shareholders, setting out the background to and reasons for the Disposal (the "Circular”). Extracts from the Circular are set out below. 

The Circular, along with a notice of general meeting, to be held at the offices of Allenby Capital Limited, 5 St. Helen’s Place, London EC3A 6AB at 2:30 p.m. on 23 April 2018, will be posted to shareholders shortly and will also be available on the Company’s website, https://www.gotechgroup-plc.com.

Related party transactions

The sale of Sportsdata to Starnevesse and the simultaneous settlement of the outstanding Group indebtedness due to Starnevesse, further details of which are set out in the extracts from the Circular below, constitute related party transactions pursuant to Rule 13 of the AIM Rules, due to Starnevesse being an entity controlled by Richard Thompson, a former director of the Company within the past 12 months and former substantial shareholder in the Company pursuant to the AIM Rules.

Mike Caine and Marcus Yeoman, being the Independent Directors for the purposes of these transactions, having consulted with Allenby Capital Limited, the Company's Nominated Adviser, consider that the terms of the transactions with Starnevesse are fair and reasonable insofar as the Company's shareholders are concerned.

For further information, please visit www.gotechgroup-plc.com or contact:

Rupert Horner	GoTech Group plc	Tel: [phone]
Virginia Bull James Reeve Liz Kirchner	Allenby Capital Limited	Tel: [phone]
Duncan Vasey Lucy Williams	Peterhouse Corporate Finance	Tel: [phone]

Extracts from the Circular

The following has been extracted from, and should be read in conjunction with, the Circular, which will shortly be made available for download from the Company's website: https://www.gotechgroup-plc.com/key-documents

LETTER FROM THE INTERIM CHAIRMAN

1. Introduction

The Company has today announced the proposed Disposal of its wholly owned subsidiary, Sportsdata.  

The purpose of this document is to explain the background to and reasons for the Disposal, to explain why the Independent Directors consider the Disposal to be in the best interests of the Company and the Shareholders as a whole and why the Independent Directors recommend that you vote in favour of the Resolution to be proposed at the GM, notice of which is set out at the end of this document.

2. Background to and reasons for the Disposal

GoTech was re-admitted to trading on AIM as Guscio plc in May 2016, following the acquisition of Sportsdata and Dataplay Holdings Limited. The core focus of the business since then has been on Skills2Achieve, a digital, physical literacy assessment programme for the UK school market, which was developed with the Youth Sport Trust, a leading charity for sports-driven and educational programmes. In September 2016, the entire business of Dataplay Holdings Limited was transferred to Sportsdata so that all future commercial activity would be conducted through that entity. As announced in the Company’s September 2016 final results and the March 2017 half-yearly results, sales of Skills2Achieve remained at a low level, resulting in a loss in both of those accounting periods.

It was hoped by the Board that there would be a significant increase in turnover for Sportsdata during the year ended 30 September 2017, which would in turn result in it becoming profitable. Disappointingly, this growth in turnover has not materialised despite various business initiatives being implemented and Sportsdata has remained loss making. As announced on 20 December 2017, following the departure of the Company’s Managing Director Gail Ganney and the Board’s decision not to allocate any further speculative funding to Sportsdata and Skills2Achieve, the Company was deemed to have become an AIM Rule 15 Cash Shell under the AIM Rules.

As Sportsdata has remained loss making, the Board has determined that it is in the Company's best interests to dispose of Sportsdata and Marcus Yeoman and I, as the Independent Directors, have agreed, subject to Shareholders' approval, to a sale of Sportsdata to Starnevesse for £1.00.  Starnevesse is majority owned by Richard Thompson, a former director of the Company and, hence, a related party for the purposes of the AIM Rules. If the sale is approved, it will mean that Sportsdata will no longer be a cash drain for the Company and the Directors consider that it will, in addition, make the Company a simpler proposition for pursuing a reverse takeover.

3. The Disposal

Starnevesse has agreed to purchase all of the issued and to be issued share capital of Sportsdata, including new shares being allotted and issued in Sportsdata to enable GoTech to capitalise all of the inter-company loans outstanding, for the consideration of £1.00, subject to shareholder approval of the Resolution by the members of the Company at the GM.

In accordance with the terms of the SPA, Starnevesse is obliged to continue to fund the Sportsdata business and honour all existing contractual obligations, following which, Starnevesse is obliged to solvently wind up the company.  Additionally, in the unlikely event that a sale of Sportsdata could be achieved by Starnevesse, or a sale of the Sportsdata intellectual property rights were to be made, all net proceeds of such sale would be paid to GoTech. 

Simultaneously with the sale, in accordance with the terms of the SPA, GoTech will settle the outstanding Group indebtedness due to Starnevesse in the amount of £183,000 by way of a cash settlement of £100,000, payable out of the Company’s existing cash resources, and the issuing of 8,375,000 new Ordinary Shares at a value of 0.4 pence each totalling £33,500. The issue price of 0.4 pence per New Ordinary Share represents a 5 per cent. premium to the closing mid-market price of an Ordinary Share on 26 March 2018, being the last business day prior to the announcement of the Disposal. The settlement with Starnevesse represents a discount of £49,500 compared to the liability to Starnevesse in the year end Group balance sheet.

Fundamental Change of Business under AIM Rule 15

The Disposal will constitute a fundamental change of business under the AIM Rules for Companies and is therefore subject to the approval of Shareholders of the Resolution to be proposed at the General Meeting, notice of which is set out at the end of this document.

The Company was deemed to have become an AIM Rule 15 Cash Shell under the AIM Rules on 20 December 2017. The Company is actively pursuing a reverse takeover transaction.

As an AIM Rule 15 Cash Shell, the Company is required to make an acquisition or acquisitions which constitute a reverse takeover under AIM Rule 14 on or before the date falling six months from the announcement dated 20 December 2017 or be re-admitted to trading on AIM as an investing company under the AIM Rules (which requires the raising of at least £6 million). Failing which, the Company's ordinary shares would then be suspended from trading on AIM pursuant to AIM Rule 40. Admission to trading on AIM would be cancelled six months from the date of suspension should the reason for the suspension not have been rectified.

Effect of the Disposal on the Group

The losses before tax made by Sportsdata for the last three accounting periods have been as follows:

Year ended 30 September 2017	£205,384
13 month period ended 30 September 2016	£489,150
Year ended 31st August 2015	£312,525

The Independent Directors are of the opinion that the value of the assets subject to the Disposal is no greater than the consideration being received.

The Board has calculated that, should the Disposal not be approved by Shareholders, the cost to GoTech of maintaining Sportsdata and its contractual obligations (to expiry) would be in the region of £25,000, excluding the settlement by GoTech of the outstanding Group indebtedness due to Starnevesse in the amount of £183,000. Details of the proposed settlement of this outstanding debt are set out in paragraph 3 above.   

Current financial position of the Company

As at 17 March 2018 the Company had unaudited cash and cash equivalents of Â£566,000. The Company does not expect any revenue to be generated whilst the Company remains a shell, but the Board has taken the necessary steps to run the Group in a prudent way to preserve value for shareholders including reducing the cost base of the Group where appropriate. 

4. Related Party Transactions

The sale of Sportsdata to Starnevesse and the simultaneous settlement of the outstanding Group indebtedness due to Starnevesse constitute related party transactions pursuant to Rule 13 of the AIM Rules, due to Starnevesse being an entity controlled by Richard Thompson, a former director of the Company within the past 12 months and former substantial shareholder in the Company pursuant to the AIM Rules.

Mike Caine and Marcus Yeoman, being the Independent Directors for the purposes of these transactions, having consulted with Allenby Capital, the Company's Nominated Adviser, consider that the terms of the transactions with Starnevesse are fair and reasonable insofar as the Company's shareholders are concerned.

5. Strategy of the Group following the Disposal

As previously announced, the Company is actively pursuing a reverse takeover transaction with the aim of driving an increase in shareholder value. Marcus Yeoman re-joined the Board in December 2017, specifically to assist the Company to identify and negotiate potential corporate opportunities for the Group.

Pursuant to AIM Rule 14, a reverse takeover transaction would require the publication of an admission document in respect of the proposed enlarged entity and would be conditional upon the consent of the Company’s Shareholders being given at a general meeting. As per the guidance notes to AIM Rule 14, trading in the Company’s shares would be suspended following the announcement that a reverse takeover had been agreed or was in contemplation. Trading in the Company’s shares would remain suspended until the publication of an admission document or an announcement that the transaction was not proceeding.    

6. General Meeting

Set out at the end of this document is the notice convening the GM to be held on 23 April 2018 at Allenby Capital Limited, 5 St. Helen’s Place, London EC3A 6AB at 2.30 p.m. at which the Resolution will be proposed.

7. Action to be taken

Shareholders will find enclosed with this document a Form of Proxy for use at the GM. Whether or not you intend to be present at the GM, you are requested to complete and sign the Form of Proxy and return it to the Company’s Registrars, Share Registrars Limited on The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR  as soon as possible and, in any event, so as to arrive no later than 2:30pm on 19 April 2018. Unless the Form of Proxy is received by this date and time, it will be invalid. The completion and return of a Form of Proxy will not preclude you from attending the GM and voting in person if you so wish.

Shareholders are reminded that, if their Ordinary Shares are held in the name of a nominee, only that nominee or its duly appointed proxy can be counted in the quorum at the General Meeting.

If you are in any doubt as to what action you should take, you are recommended to seek your own personal financial advice from your broker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser, immediately.

8. Recommendation

The Independent Directors consider that the Disposal is in the best interests of the Company and its Shareholders as a whole. Accordingly, the Independent Directors recommend that Shareholders vote in favour of the Resolution to be proposed at the GM.

Yours sincerely

Professor Michael Caine

Interim Chairman

GENERAL MEETING

A General Meeting of GoTech Group plc will be held at the offices of Allenby Capital Limited situated at 5 St. Helen’s Place, London EC3A 6AB on 23 April at 2.30 p.m. for the purpose of considering, and if though fit, pass the following resolution, to be proposed as an ordinary resolution:

THAT, for the purposes of Rule 15 of the AIM Rules for Companies published by London Stock Exchange plc, the agreement dated  26 March 2018 (SPA) between the Company (1) and Starnevesse Limited (2) in connection with the proposed disposal of the Company's entire interest in the issued share capital of Sportsdata Limited, as described in the circular to shareholders of the Company dated 27 March 2018, and the disposal by the Company pursuant to the terms of the SPA, each be approved and that the directors of the Company be authorised to do all such things as they may consider necessary, desirable or expedient to implement such agreement in accordance with its terms (including, without limitation, agreeing any non-material amendments or waiver or variation of the terms and conditions of the SPA) as they may in their sole discretion deem fit, appropriate or necessary.

DEFINITIONS

“Act”	the Companies Act 2006 (as amended);
“AIM”	the market of that name operated by the London Stock Exchange;
“AIM Rules”	the AIM Rules for Companies (as amended from time to time);
“Allenby Capital”	Allenby Capital Limited, a private limited company incorporated in England and Wales under registered number 6706681, the Company’s nominated adviser and joint broker;
“Articles”	the articles of association of the Company as at the date of this document;
“Board” or “Directors”	the directors of the Company as at the date of this document, whose names are set out on page 5 of this document;
“Certificated” or in “Certificated Form”	a share or security which is not in uncertificated form (that is, not in CREST);
“Company” or “GoTech”	GoTech Group plc, a public limited company incorporated in England and Wales under registered number 03904514 and having its registered office at 27/28 Eastcastle Street, London, W1W 8DH;
“CREST”	the computerised settlement system (as defined in the CREST Regulations) operated by Euroclear UK & Ireland Limited which facilitates the transfer of title to shares in uncertificated form;
“Disposal”	the proposed disposal of Sportsdata pursuant to the terms of the SPA, conditional on Shareholder approval at the GM;
“Form of Proxy”	the form of proxy enclosed with this document for use by Shareholders in connection with the General Meeting;
“General Meeting” or “GM”	the general meeting of the Company convened for 2.30 p.m. on 23 April 2018, notice of which is set out at the end of this document;
“Group”	the Company together with its subsidiaries (as defined in the Act) as at the date of this document;
“Independent Directors”	Mike Caine and Marcus Yeoman, being the independent directors for the purposes of the Disposal;
“London Stock Exchange”	London Stock Exchange plc;
“Notice of GM”	the notice convening the GM, which is set out at the end of this document;
“Ordinary Shares”	the ordinary shares of 0.1 pence each in the capital of the Company from time to time;
“Resolution”	the resolution set out in the Notice of GM to approve the SPA and the Disposal;
“Shareholders”	holders of Ordinary Shares from time to time and the term “Shareholder” shall be construed accordingly;
“SPA”	the sale and purchase agreement dated 26 March 2018, entered into between the Company and Starnevesse to effect the Disposal;
“Sportsdata”	Sportsdata Limited, a private limited company incorporated in England and Wales under registered number 08661177, a wholly owned subsidiary of the Company;
“Starnevesse”	Starnevesse Limited, a private limited company registered in England and Wales with company number 05325901 which is beneficially owned as to 98.3 per cent. and controlled by Richard Thompson;
“United Kingdom” or “UK”	the United Kingdom of Great Britain and Northern Ireland; and
“£”	pounds sterling, the lawful currency of the United Kingdom.