Daily Internet plc – Proposed Acquisition of System Professional Ltd

Proposed acquisition of System Professional Ltd, Placing of 8,333,334 New Ordinary Shares at 60 pence per share to raise £5 million, Share Consolidation, Capital Reduction, Change of name to SysGroup plc and Notice of General Meeting

Daily Internet plc (AIM: DAIP), the managed hosting and cloud integrator, has announced that it has entered into a conditional agreement with the vendors of System Professional Ltd (“Sys-Pro”) to acquire the entire issued share capital of Sys-Pro, a managed services provider and IT consultancy, for an initial consideration of £3.9 million, to be satisfied by £3.3 million in cash and through the issue of 975,000 Consideration Shares (“the Acquisition”) and further contingent consideration of up to a maximum of £1.865 million subject to the achievement of certain performance criteria.


  • Acquisition provides immediate critical mass to the Group’s core Managed Services offering
  • Sys-Pro has a proven consulting model that accelerates the contracted revenue base and will provide complimentary technical ability supporting larger Managed Services projects
  • The Enlarged Group will have increased technical capabilities, a more diversified customer base and potentially significant synergistic opportunities
  • Enlarged Group pro-forma revenue for FY2016 of £10.02 million (Daily Internet FY2016: £4.76m)
  • Enlarged Group pro-forma adjusted EBITDA for FY2016 of £1.45 million (Daily Internet FY16: £0.67m)
  • Oversubscribed Placing to raise £5 million (gross) at 60 pence per New Ordinary Share (or 1.5 pence per Existing Ordinary Share) supported by both new and existing institutional shareholders
  • Investor demand allowed a further placing of 1,170,040 New Ordinary Shares held by two former employees of the Group, including the former CEO

Information on Sys-Pro

Sys-Pro was founded in 2003 as a Value Added Reseller (“VAR”), reselling hardware and software, and has since undergone a transition from VAR to managed services provider and consultancy, whereby the latter divisions accounted for more than half of its revenue for the year ended 31 March 2016. Sys-Pro aims to provide a consultation led sales approach by offering strategic advisory services to both new and existing customers in the public and private sectors, with the view to providing an end-to-end IT service for its clients. The Acquisition will allow the Enlarged Group to enter into new sector verticals, in particular healthcare, education and charity/not for profit. Sys-Pro is headquartered in East Sussex with an additional office in London and currently employs 39 people across both sites. Further information on Sys-Pro is set out below.

Placing of New Ordinary Shares

The Company has raised £5.0 million (before expenses) through a conditional placing by Shore Capital, as sole broker, of 8,333,334 Placing Shares at the Placing Price of 60 pence per share (following the proposed Capital Reorganisation and equating to 1.5 pence per Existing Ordinary Share, representing a 10% discount to the last closing middle market price per Existing Ordinary Share). The Directors intend that the net proceeds of the Placing will be used to satisfy the initial cash consideration due under the Acquisition agreement and for general working capital purposes of the Enlarged Group. In addition and as a result of strong institutional demand, a further 1,171,040 New Ordinary Shares, equating to 9.18 per cent. of the current issued share capital of the Company, were placed on behalf of two existing shareholders of the Company at the Placing Price. The selling shareholders are the former CEO of the Company, Abby Hardoon, and Stuart Gibson a former employee of the Group. As a result and conditional of the Proposals being approved, neither individual will have a notifiable holding in the share capital of the Enlarged Group.

Share Consolidation and Capital Reduction

It is also proposed that the Company effects a Capital Reorganisation whereby every 40 Existing Ordinary Shares will be consolidated into one New Ordinary Share. Subsequent to the Share Consolidation the Company will apply to the Court to effect the Capital Reduction whereby the nominal value of the New Ordinary Shares will be reduced from 20 pence to 1 penny and the Company’s share premium account will be cancelled in order to create distributable reserves to reduce the Company’s retained losses so that dividends can be declared in respect of profits of the Company going forward.

Change of Name to SysGroup plc

To reflect the change in the composition and focus of the Company’s business following the Acquisition it is also proposed to change the Company’s name to SysGroup plc.

Notice of General Meeting

The General Meeting to be held at the offices of Kuit Steinart Levy LLP, 7th Floor, Blackfriars House, The Parsonage, Manchester M3 2JA on 5 July 2016 at 11:30 a.m.

Chris Evans, CEO of Daily Internet commented: “We are delighted to announce the transformational acquisition of Sys-Pro and are looking forward to working with the Sys-Pro team. As well as being immediately earnings enhancing it will greatly strengthen our core Managed Services business in terms of scale and capability. This will enable us to better exploit the ongoing market shift toward cloud delivered services and accelerate our growth. In addition, synergies and our increased scale are expected to reduce combined incremental costs going forward. We are excited by the many opportunities the acquisition presents and would like to thank both our existing shareholders and new institutional investors for their support.”