RNS Number : 2910B
Location Sciences Group PLC
30 January 2024
 

This announcement contains inside information for the purposes of Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310.  With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

 

30 January 2024

 

Location Sciences Group PLC

("Location Sciences" or the "Company" or the "Group")

 

 

Proposed acquisition of Sorted Holdings Limited
Proposed subscription of 2,285,712 New Ordinary Shares at 87.50p per share

Proposed Share Consolidation

Proposed change of name to Sorted Group Holdings Plc
Director appointments

Notice of General Meeting &

Restoration of trading on AIM

 

Location Sciences (AIM: LSAI) is pleased to announce that, further to the Company's announcement on 28 June 2023, terms have now been agreed for the acquisition of the entire issued and to be issued share capital of Sorted Holdings Limited ("Sorted", "SHL" or the "Target") by Location Sciences for an aggregate nominal consideration of approximately £66.73 to be paid in cash at completion (together the "Acquisition").

 

The Acquisition constitutes a reverse takeover of the Company under rule 14 of the AIM Rules for Companies (the "AIM Rules") and requires the Company to issue a new admission document as well as is conditional on, inter alia, approval by the Company's shareholders (the "Shareholders"). Accordingly, the Company has today published its Admission Document with a notice convening a general meeting to be held at One Wood Street, London, EC2V 7WS, UK (the offices of Eversheds Sutherland (International) LLP) on 16 February 2024 at 12.00 p.m. (the "General Meeting").

 

The Admission Document is available to view on the Company's website at www.locationsciencesgroup.ai/ and will be posted, or notified electronically as the case may be, to Shareholders later today. The Company's Ordinary Shares were suspended from trading on AIM on 28 June 2023. With the publication of the Admission Document today, trading in the Company's Ordinary Shares on AIM will be restored at 7.30 a.m. today.

 

Upon completion, the Company will trade under the new name of "Sorted Group Holdings Plc" and its new ticker symbol will be "SORT".

 

Allenby Capital Limited ("Allenby Capital") is acting as Nominated Adviser to the Company.

 

Highlights

 

·      Acquisition of Sorted

 

o  Significant opportunity for Location Sciences to implement its strategy to maximise shareholder value in the short-to-medium term through leveraging Sorted's leading edge technology as well as the significant capital investment made in Sorted to date (being in excess of £70 million)

o  Attractive SaaS business model operating in the ecommerce sector with scalable predictable revenue performance

o  Diverse customer base of household retail brands and strong industry partnerships

o  Global ecommerce market forecast to grow significantly

o  Highly fragmented market

o  UK-based business with over 60 employees

 

·      Approximately £2.0 million equity fundraise to provide working capital for growth

 

·      New Board and senior management

 

Director appointments

 

With immediate effect, Location Sciences is pleased to also announce the appointment of Carmen Carey as Chief Executive Officer of the Company, Mahmoud Warriah as Chief Financial Officer of the Company and Petar Cvetkovic as Non-Executive Director of the Company (together the "New Directors").

 

Expected Timetable of Principal Events

Publication of Admission Document

 

30 January 2024

Latest time and date for receipt of Forms of Proxy

 

12.00 p.m. on 14 February 2024

Admission of 102 Existing Ordinary Shares

 

8.00 a.m. on 16 February 2024

Time and date of General Meeting

 

12.00 p.m. on 16 February 2024

Record Date for the Share Consolidation

 

6.00 p.m. on 16 February 2024

Allotment of Subscription Shares, Remuneration Shares and CLN Shares

 

16 February 2024

Acquisition Agreement unconditional, Admission effective and commencement of dealings in the Enlarged Share Capital on AIM

 

8.00 a.m. on 19 February 2024

Expected date for CREST accounts to be credited (where applicable)

 

As soon as practicable after 8.00 a.m. on 19 February 2024

 

Expected date for share certificates to be dispatched (where applicable)

 

by 26 February 2024

Notes:

-       All future times and/or dates referred to above are subject to change at the discretion of the Company and Allenby Capital and if any of the above times or dates should change, the revised times and/or dates will be notified by an announcement on RIS.

-       Events listed in the above timetable following the General Meeting are conditional on the passing at the General Meeting of the Resolutions.

 

Unless otherwise defined herein, capitalised defined terms are as per the Admission Document. However, Shareholders are strongly encouraged to read the Admission Document in full as part of their voting consideration at the General Meeting.

 

For further information please contact:

 

Location Sciences Group PLC                                                                           via Allenby Capital

Simon Wilkinson, Chairman

 

Allenby Capital Limited (Nominated Adviser)                                            Tel: +44 (0)20 3328 5656

David Hart

Vivek Bhardwaj

 

 

The following disclosures in relation to the New Directors are made in accordance with the AIM Rules:

 

Carmen Christine Carey (formerly Witzel), aged 61, is or has been a director or partner of the following companies and partnerships in the past five years:

Current Directorships/Partnerships:

Former Directorships/Partnerships:

·    Sorted Holdings Limited (08609014)

·    Sorted Group Limited (09060564)

·    Clicksit App Limited (09510373)

·    Big Data Partnership Limited (07904824)

·    Brady Credit Holding Limited (04033263)

·    Brady Credit Limited (04016397)

·    Brady Credit Trading Limited (03056866)

·    Brady Energy UK Limited (SC195633)

·    Brady Technologies Limited (02164768)

·    Quor Group Limited (07834364)

 

Ms. Carey was a director of CP 100 Limited from 26 February 2008 to 3 December 2010. CP 100 Limited was placed into administration on 1 April 2011. On 16 March 2012, notice to move the company from administration to dissolution was filed. CP 100 Limited subsequently was dissolved on 20 June 2012. Carmen Carey does not hold any ordinary shares in the Company.

 

Mahmoud Hamid Warriah, aged 56, is or has been a director or partner of the following companies and partnerships in the past five years:

 

Current Directorships/Partnerships:

Former Directorships/Partnerships:

·    Sorted Holdings Limited

·    Maheto Serviced Ltd (12708209)

·    Linden Business Development Limited (08515230)

·    Chinapakservices Limited (13026637)

·    Businessbrainz Limited (11521018)

·    Blocadoodledoo Limited (11410747)

·    Wordwall Limited (11269394)

·    Talkwordwall Limited (11235673)

·    Spencersedgewick Limited (11034949)

·    Hyperchain Consultancy Limited (10925416)

·    Hyperchaincom Limited (10719477)

·    Dawson Business Development Limited (05595244)

·    Wedderleigh Management Company Limited (01539062)

·    Liverpool Society of Chartered Accountants (00004869)

·    Darkchain Limited (10261864)

·    LMJHK Holdings Limited (10582346)

 

 

Mahmoud Warriah does not hold any ordinary shares in the Company.

 

Petar Cvetkovic, aged 62, is or has been a director or partner of the following companies and partnerships in the past five years:

 

Current Directorships/Partnerships:

Former Directorships/Partnerships:

·    Welford Business Services Limited (12656994)

·    Welford Investments Limited (11092999)

·    Leicester Football Club Plc (03459344)

 

·    Individual Protection Solutions LTD (10764140)

 

 

Mr. Cvetkovic was a director of Individual Protection Solutions Ltd between 2 October 2018 to 26 October 2021. On 5 April 2022 liquidators were appointed pursuant to a creditors voluntary winding up in relation to Individual Protection Solutions Ltd. As at the date of this document, the liquidation remains ongoing and on 1 June 2023 it was reported that there were 24 ordinary unsecured creditors, with estimated claims totalling £1,315,627.00. Petar Cvetkovic currently holds 25,000,000 ordinary shares in the Company and is a member of the LS Concert Party.

 

Save for the information set out above, there are no further disclosures to be made in accordance with Rule 17, Schedule 2(g) of the AIM Rules in respect of the appointment of the New Directors. 

 

1.   Introduction

 

On 28 June 2023, Location Sciences announced that it had entered into exclusive non-binding heads of terms regarding a potential acquisition of the entire issued share capital of Sorted by Location Sciences for a nominal consideration. As part of the potential Acquisition, the Company entered into a secured convertible bridge loan agreement (the "Convertible Loan Agreement") with Sorted to lend it up to £2.6 million.  It was also announced that if the proposed Acquisition was to proceed, Location Sciences would assume approximately £4.7 million (including accrued interest) of Sorted's outstanding debt and that certain existing shareholders of Sorted would be given the opportunity to participate in a cash subscription for new shares in the Enlarged Group in order to seek to align their interests with those of Existing Shareholders. 

 

The Proposal

 

On 30 January 2024, Location Sciences announced that it had conditionally agreed the terms of the Acquisition Agreement.

 

The Directors believe that the Acquisition represents a significant opportunity for the Group to  implement its stated strategy to maximise shareholder value in the short-to-medium term.

 

In connection with the Acquisition, Location Sciences has conditionally raised approximately £2.0 million (before expenses) pursuant to the Subscription through the proposed issue of 2,285,712 Subscription Shares at a price of 87.50 pence per Ordinary Share. The Subscription is conditional, inter alia, upon the passing of certain resolutions in order to ensure that the Directors have the necessary authorities and powers to allot the requisite Ordinary Shares.

 

The Issue Price, taking into account the Share Consolidation, represents the Closing Price.

 

In conjunction with the Acquisition and the Subscription, the Existing Directors believe it is appropriate to undertake a Share Consolidation to reduce the number of the Ordinary Shares in issue. Details of the Share Consolidation are set out later in this announcement.

 

Location Sciences intends to also issue the Remuneration Shares and the CLN Shares on Admission. Further details of which are also set out later in this announcement.

 

Furthermore, the Directors believe that should the Acquisition proceed, the name of the Company should be changed to "Sorted Group Holdings plc" to reflect the ongoing business of the Enlarged Group.

 

The Acquisition constitutes a reverse takeover pursuant to rule 14 of the AlM Rules for Companies and therefore the purpose of this document, which comprises an Admission Document prepared under the AIM Rules for Companies, is to provide you with information on the Proposals and to seek approval by Shareholders of the Resolutions to be proposed at the General Meeting.

 

If the Resolutions are duly passed at the General Meeting and the other conditions set out relating to the Proposals are met, then it is expected that the Enlarged Share Capital will be admitted to trading on AIM with effect from 8.00 a.m. on 19 February 2024.

 

Trading on AIM in the Existing Ordinary Shares has been suspended since 28 June 2023. Following publication of this Admission Document, it is expected that the suspension of the Existing Ordinary Shares will be lifted with effect from 7.30 a.m. on 30 January 2024.

 

2.   Information on Location Sciences

 

Location Sciences has historically been a location verification services provider to the digital advertising industry, working in partnership with advertisers, media agencies and suppliers to reduce advertising wastage and improve the effectiveness of location-based advertising campaigns. In relation to this, the Company developed products to tackle global location advertising fraud and location data inaccuracy.

 

The Company's revenues were adversely impacted by the significantly reduced advertising spend caused by the COVID-19 pandemic. In addition, the Directors believe that privacy concerns increased regarding the use of personal tracking data which affected the Company's business. As a consequence of this reduction in revenues, in early 2021, the Board instigated a cost reduction programme, with a significant reduction in operational costs. The Board also announced that it was exploring a number of options for the Company and its businesses.

 

In May 2021, the Company announced that following discussions both internally and with third parties surrounding the business review, the Board had concluded that given the market outlook for the Company's business units, Location Sciences needed to secure additional financial resources and therefore raised £3.85 million (before expenses) via an issue of new shares in the Company. The Directors believed this would give the Company more time and greater flexibility to deliver value to Shareholders.

 

Subsequently, in October 2021, as a further step following the business review, the Company entered into an agreement to sell its insights dashboard and four contracts pertaining to its location data and insights business for a cash consideration of up to US$0.7 million, thereby further reducing the Company's operating costs and bolstering its cash reserves.

 

The business review process enabled the Company to explore the merits of the expansion and enhancement of Location Science's offerings.  However, it also provided the Company with a solid financial foundation, streamlined operations, and a focus on delivering a new strategic path for Location Sciences in order to create long-term value for Shareholders. The Directors believe the Acquisition has the potential to deliver this long-term value.

 

3.   Background to and reasons for the Acquisition

 

The Board believes Sorted to be a strong acquisition opportunity, for the following reasons:

 

·      UK-based business with over 60 employees: Manchester based business supported by a second office space situated in London. The existing Sorted team is comprised of software engineers, technical support, IT, sales, marketing, finance and project management professionals.

 

·      Attractive business model with scalable predictable revenue performance: Sorted operates a SaaS business model whereby the ​majority of Sorted's revenue is driven by customer subscriptions to its Delivery Experience Platform. This in-turn provides annualised recurring revenue. The Directors believe that Sorted is positioned well to continue this growth trajectory.

 

·      Diverse customer base and strong industry partnerships: Sorted's customers range from mid-sized, growing ecommerce businesses to multi-national organisations with notable customers include Marks & Spencer plc, ASOS plc and Asda Stores Limited. In addition, Sorted has re-seller agreements in place with major Carriers in the United Kingdom as well as in the United States.

 

·    Global ecommerce market forecasted to reach a market size of US$6.35 trillion by 2027 according to Deloitte: The demand for ecommerce has been influenced by a number of factors including but not limited to: (i) the rise of smartphones and internet accessibility; (ii) increasing use of social media; (iii) supply chain and logistical infrastructure improvements; and (iv) changing patterns in consumer behaviour.

 

·      Highly fragmented market: The Directors believe that there is no dominant player that offers a delivery experience platform for the entire ecommerce spectrum with one single integrated solution. In this regard, the Directors believe that Sorted's Delivery Experience Platform offers ecommerce businesses a complete end-to-end post-purchase solution, and accordingly, there is an opportunity for Sorted to establish market leadership.

 

4.   Information on Sorted

 

Overview

 

Ecommerce has redefined the traditional bricks and mortar retail model, with online stores no longer being considered a "nice-to-have" and instead a "must-have". With KPMG reporting that the global retail ecommerce market size was estimated to be US$5.5 trillion in 2022, a clear ecommerce model can create a lucrative alternative revenue stream.

 

As ecommerce continues to redefine the traditional retail model, the delivery of goods remains critical in the ecommerce model as a factor that can set brands apart and pave the way for success. The delivery experience has since evolved from being a monotonous transactional process to a key influencing factor in purchasing decisions, customer loyalty, brand perception and, ultimately, a retailer success. Accordingly, retailers that prioritise efficient shipping, accurate tracking, and seamless returns stand not only to retain customers but also to build a loyal customer base. This "real-time" approach towards the delivery journey has been propelled by the increasing usage of technology.

 

Sorted is a provider of delivery experience software which serves ecommerce retailers - from large, global enterprises to smaller, independent start-ups. The Sorted Delivery Experience Platform has three core propositions comprising:

 

(1) Ship - carrier management, carrier allocation and ecommerce checkout optimisation;

(2) Track - post-purchase parcel tracking and customer communications; and

(3) Return - refunds and exchanges management.

 

The Directors believe that Sorted's Delivery Experience Platform offers ecommerce retailers an end-to-end post-purchase solution through its optimisation of checkout delivery options, automated carrier management, post-purchase analytics, tracking updates and returns process automation.

 

Sorted traces its roots to 2010, when the business was originally established as a transactional parcel rate comparison site. Through a combination of organic growth and strategic acquisitions, the business transitioned to a Software-as-a-Service (SaaS) business model serving ecommerce retailers on two to three-year, recurring revenue contracts. For the financial year ended 30 September 2023, through its SaaS business model, Sorted had total unaudited revenue of approximately £6.5 million.

 

Sorted's customers currently range from mid-sized, growing ecommerce businesses to multi-national organisations. Notable customers include Marks & Spencer plc, ASOS plc and Asda Stores Limited.

 

Industry overview

 

An introduction to ecommerce

 

Ecommerce, short for electronic commerce, is described by McKinsey & Company as the buying and selling of goods or services online. Ecommerce businesses can be broadly classified across three areas: merchandise sales companies; service providers; and digital product companies. The benefits of ecommerce include, inter alia, the reduction in the impact of geographical barriers and enabling businesses to reach a global customer base at all times of the day, at a significantly lower cost than traditional brick and mortar retail business models.

 

It is reported that the first secure online transaction was made in 1994, marking the birth of ecommerce. Subsequently, ecommerce has been growing consistently. The early 2000s saw the wider adoption of online offerings for retailers, as well as the growth of online marketplaces and the introduction of secure payment gateways, boosting consumer trust in online transactions. Internet sales as a proportion of all retail sales have been rising steadily since 2006 and, by the 2010s, there was a rise of Mobile Commerce (M-commerce) due to the proliferation of smartphones and Mobile Applications. Social media platforms also integrated shopping features, transforming how businesses connect with customers and how customers source goods online. In the 2020s, online shopping now encompasses Business-to-Consumer (B2C), Consumer-to-Consumer (C2C), Business-to-Business (B2B) and Consumer-to-Business (C2B) models. According to UK government data, the average weekly value of internet sales was reported to be £2.4 billion in August 2023 (excluding fuel) - accounting for 26.7 per cent. of all retail sales. This demonstrates the scale of the ecommerce industry when compared to traditional bricks and mortar retail business models.

 

There are now multiple routes to market for retailers to reach customers that did not exist only one, two or three decades ago. The history of ecommerce reflects a journey from basic online transactions to a complex global ecosystem. Against this backdrop, Deloitte forecasts the global ecommerce market to reach a market size of US$6.35 trillion by 2027.

 

Understanding the ecommerce customer journey

 

Central to understanding the ecommerce industry is the concept of the ecommerce customer journey. The ecommerce customer journey is described as the complete end-to-end experience of a customer from the initial interaction with a brand's online store to the final interaction which depending on the customer's satisfaction ranges from repeat purchases and loyalty to returning or exchanging a product purchased or even potentially both. Throughout the ecommerce customer journey, there are multiple "touchpoints" whereby the customer may interact with the business, product, or brand - either directly or indirectly. This can vary greatly depending on numerous factors including but not limited to the product category, the product value, the retailer's website or the customer's geographical location. In any event, understanding and enhancing the ecommerce customer journey is expected to support businesses further increase engagement and ultimately increase sales conversion.

 

While the traditional ecommerce customer journey is no longer linear in nature, the Directors consider the ecommerce customer journey to be broadly categorised into the following stages:

 

1.   Awareness and research:

The ecommerce customer journey begins with a potential customer developing a need or want for a product or service. Through mediums such as social media, online search engines, advertisements, or word of mouth, potential customers become aware of specific ecommerce businesses. Potential customers will subsequently proceed to researching and exploring products that match their specific needs or wants. This may involve a visit to a retailer's website, a visit to a showroom or store, reading product descriptions, reading reviews, or comparing offerings from multiple online stores for competitive prices or options.

 

2.   Consideration and decision:

Potential customers will proceed to evaluate their purchase options further. This may include shortlisting of several candidates and subjecting them to more in-depth comparison utilising factors such as price, features and perceived advantages or disadvantages. This stage culminates with the potential customer adding the product or service to their online "shopping basket" and ultimately deciding whether to proceed with purchasing the product or service. Time spent during this stage will be influenced by whether the purchase is low-value in monetary terms or potentially an impulse purchase i.e. an unplanned decision to purchase a product or service.

 

3.   Checkout:

The checkout stage represents the point at which a potential customer transitions into an actual customer. The checkout stage involves the potential customer reviewing the available delivery options, any return policies, inputting payment details as well as inputting any relevant personal details, as applicable. Following satisfactory completion of the relevant fields, an order can be confirmed. It is reported that almost 70 per cent. of potential customers abandon purchases at the checkout stage. Accordingly, an effective checkout experience is an important element of the ecommerce customer journey.

 

4.   Order confirmation:

Following completion of a purchase, the customer will receive an order confirmation which will summarise the purchase details associated with the product or service as well as include an indication of delivery timings. The order confirmation may take the form of either a web page confirmation or alternatively a digital communication directly to the customer, such as an email or text message to a mobile phone.

 

5.   Fulfilment and shipping:

The confirmed order will be fulfilled at the retailers designated warehouse. Agreed logistical parameters will ensure that the product or service purchased is identified, picked, packed, and delivered to the destination as agreed with the customer.

 

6.   Delivery:

During the delivery phase, the product or service will no longer be in the proximity of the seller and instead will be in the possession of the intermediary responsible for delivery. During this phase, the customer will await the delivery of the order. Depending on the level of service offered to the customer, the customer may be able to track their good or service delivery, review the status of the delivery (as applicable), or alternatively contact customer support for real-time updates in anticipation of the arrival of their purchased product or service.

 

7.   Unboxing and product experience:

Following delivery of the product or service, the customer will experience the purchased item first-hand. Depending on whether the product or service is a tangible item, this stage is considered to be the only physical "offline" touchpoint between an ecommerce business and a customer.

 

Depending on the customer's experience during the above process, the ecommerce customer journey diverges further into either stage eight or nine (or alternatively, sometimes both eight and nine), as outlined below.

 

8.   Repeat purchase and loyalty:

If the customer is satisfied with their ecommerce experience, the customer may become a repeat shopper of the business concerned. In addition, satisfied customers may share their positive experiences with friends, family or online communities, leading to word-of-mouth referrals. This may result in further new customers for the ecommerce business.

 

9.   Returns - refunds and exchanges:

If the product or service is considered to be unsatisfactory or faulty, the customer may return their purchase and request a refund or an exchange. This decision triggers a 'reverse logistics' journey whereby the product or services is returned by the customer back to the ecommerce business.

 

At all stages of the ecommerce customer journey, sits the "customer service" touchpoint. Customer service comprises support and assistance provided to customers during their online ecommerce experience. Interactions with customer service typically arise at stage six of the ecommerce customer journey. It is reported that 77 per cent. of consumers consider good customer service to be critical to earning brand loyalty and generating business.

 

The Sorted Delivery Experience Platform sits across the "post-purchase journey", namely, from stage two onwards of the ecommerce customer journey, as outlined above .

 

Factors affecting the ecommerce industry

 

While many of the recent developments in the ecommerce industry were driven by the COVID-19 pandemic, many influencing factors were long underway before the COVID-19 pandemic. Notable factors influencing the ecommerce industry are outlined below.

 

1.   Technological advancements:

The rise of smartphones and increased internet accessibility has played a pivotal role in shaping the ecommerce landscape. In this respect, according to Statista's Market Insights mobile ecommerce represented 60 per cent. of all ecommerce transactions globally in 2023. Mobile ecommerce allows consumers to shop conveniently from their handheld devices from any location at any time. This trend has prompted businesses to optimise their websites, Mobile Applications and create responsive, mobile-friendly designs to cater for the growing number of mobile shoppers.

 

2.   Social ecommerce:

Deloitte reported that 64 per cent. of digital buyers discover brands or products via social media. The prevalence of social media platforms such as Facebook, Instagram, and TikTok and the integration of shopping features within such platforms has further transformed the ecommerce customer journey. For example, Instagram launched a new shopping functionality in 2018 which included initiatives such as the implementation of "shoppable stories".

 

Ecommerce businesses leverage social media platforms to showcase products, facilitate direct transactions and tap into influencer marketing, thereby capitalising on the power of social engagement to drive sales. In addition, social ecommerce can serve to create a powerful consumer engagement ecosystem, from driving brand engagement, funnelling recruitment, to driving repeat purchase insights. Social ecommerce has since evolved to encompass digital stores directly incorporated on social media platforms, conversational ecommerce as well as livestream ecommerce. Social ecommerce has resulted in consumers becoming accustomed to Omnichannel shopping and Omnichannel customer service.

 

3.   Subscription ecommerce:

The advent of subscription-based models involving customers subscribing to products or services needed on a recurring basis has gained prominence, with Forbes reporting that the global subscription e-commerce market size is expected to reach US$904.2 billion by 2026. Notable examples include Amazon Prime, which reached an estimated 112 million US subscribers in December 2019, and ASOS plc's delivery subscription model both of which offer customers personalised experiences and convenient, cost-efficient product delivery.

4.   Logistical improvements:

The supply chain and logistics landscape has evolved to meet the changing ecommerce model. With fast and reliable shipping options becoming a key factor for consumers and with consumers willing to pay for such services, retailers have needed to find ways to efficiently manage their Carrier relationships in a scalable way. This demand for speed and convenience has led to the rise of same-day and next-day delivery services such as Argos' Fast Track service which was launched in 2015 catering for same day delivery on thousands of items with wide geographical coverage. This convenient access to products or services without the need for physically visiting a store has contributed to the growth of the ecommerce industry and according to McKinsey & Company has the potential to fundamentally change the way we shop.

 

5.   Consumer behaviour:

Consumer spending is correlated with broader economic conditions. For example, during recessionary periods, consumer sentiment decreases resulting in reduced consumer spending and ultimately suppressed ecommerce activity. Conversely, during economic booms consumer spending increases.

 

Businesses are faced with fresh pressures including an unprecedented cost of living crisis. The ONS suggests that in October 2022, inflation was at the highest level it had been for over 40 years. Many consumers are battling the sharpest reduction in disposable income they have seen in their lifetime. Retail economic data suggests that the average household saw discretionary income drop by 10.6 per cent. in May 2022 compared to the previous year.

 

With the cost of everyday products and services rising, consumers are feeling the strain on their finances. In August 2023, the ONS said that, compared to February 2020, the last full month before the COVID-19 pandemic lockdowns began, total retail sales were 16.4 per cent. higher by value, but 1.8 per cent. lower in the volume of goods people bought.

 

Despite the period of customer cutbacks and rising inflation, consumers once again appear to be feeling more optimistic about their finances. Since reaching an all-time low of -20.3 per cent. in the third quarter of 2022, the Deloitte Consumer Confidence Index (based on six measures such as levels of debt and disposable income) has shown modest improvement, rising by six percentage points over the last four quarters to -14.2 per cent. in the third quarter of 2023.

 

Whilst consumer spending has been more elevated in recent years, market share remains available for businesses to capitalise on. In a challenging economic landscape, businesses are battling to ensure they have a competitive edge over their peers. There is an opportunity for ecommerce brands to emerge as market leaders, by converting customers and keeping them loyal. According to the Retail Think Tank, businesses should look to become customer-centric and should invest in technology to help them provide an insight rich operation.

 

6.   The COVID-19 pandemic:

With the outbreak of the COVID-19 pandemic and the subsequent lockdowns globally as well as in the UK in March 2020, the ecommerce landscape experienced an unprecedented acceleration in the trends and adoption that had already been moving at a considerable pace.

In April 2019, the proportion of sales made online was at 19.1 per cent. In April 2020, the proportion of sales made online soared to the highest on record at 30.7 per cent.

 

Forced closure of physical stores meant that businesses had to quickly adapt by ramping up their online operations and expanding their digital presence - alongside operating their own businesses under budget pressures, staff absence and social distancing restrictions. Consumers also adapted their attitudes towards delivery - a Sorted study found that 79 per cent. of UK and US consumers were more forgiving about delivery experiences during the COVID-19 pandemic.

The COVID-19 pandemic period forced many retail businesses to prioritise online channel development and delivery transformation, as well as completely reshaping consumer shopping habits. The COVID-19 pandemic has changed consumer behaviours, some permanently. In a study released in March 2022, it was estimated that 27 per cent. of UK consumers planned to maintain their increased online shopping habits post-pandemic, and 51 per cent. of home workers said they expected to shop online more permanently.

 

In July 2023, the proportion of online sales rose to 27.4 per cent. from 26.0 per cent.  in June 2023. This is the highest proportion of retail sales taking place online since February 2022 (28.0 per cent. and remains significantly above the pre-pandemic levels (19.6 per cent. in February 2020).

 

7.   Rising demand for delivery experience technology:

With much more competition for businesses to win market share of consumer discretionary spending, businesses are seeking to trim costs and differentiate themselves in the market with the aim of giving consumers an experience that encourages repeat purchases and more spending. As a result, businesses are increasingly focusing on improving the "post-purchase" experience.

 

A positive post-purchase experience reinforces trust, customer satisfaction and potential advocacy for or loyalty to a business. Conversely, a negative experience can result in disengagement and lost customers. Research released in August 2023 found that 79 per cent. of consumers admit that they would be deterred from purchasing from a brand again if they encountered a subpar post-purchase experience. The same research indicated that 83 per cent. of consumers think that there is room for improvement in the post-purchase experience, signalling the opportunity for retailers to acknowledge, and capitalise on, this demand.

 

Data analytics is increasingly harnessed by businesses seeking to understand their consumer base: analysing shopping behaviours; offering personalised shopping recommendations; and serving the customer by putting them in control. Such technologies enable businesses to tailor their offerings in the way consumers prefer, enhancing the shopping experience and increasing the likelihood of conversions.

 

Many businesses have already invested in delivery experience technology and continue to do so. Notable examples of businesses benefitting from delivery experience technology include musicMagpie plc, which has invested in post-purchase technology to reduce "where is my order?" related enquiries and to ensure brand ownership of the journey - from communications to performance insight. With post-purchase technology in place, tracking and communications improved, resulting in a 63 per cent. reduction in "Where is my order?" related enquiries.

 

In September 2023, retail sales in Great Britain were recorded at £8.5 billion per week and, with businesses operating for market share in a challenging economic environment, Sorted offers a solution to fixing poor delivery choice, broken customer promises and disjointed post-purchase communication to maximise the customer experience, save money, drive loyalty and enable businesses to have a differentiated proposition to fuel growth.

 

Background and history of Sorted

 

David Grimes recognised that there was an opportunity to simplify and expedite the way consumers deliver parcels. Accordingly, in 2010, David Grimes founded myparceldelivery.com a parcel price comparison website for individual consumers and small businesses to purchase Carrier labels at reduced prices and arrange parcel collections or drop offs.

 

It became apparent to management that in addition to individual consumers and small businesses, larger businesses were also dissatisfied with their delivery experience and the inflexible nature of the dominant legacy market leaders in the delivery management technology space.

 

Accordingly, in 2015, MyParcelDelivery Holdings Limited expanded to launch a Carrier management solution for large businesses, originally known as Electio which forms part of MyParcelDelivery Holdings Limited. This marked the businesses' transition to a SaaS business model in the Carrier Management System product category. Electio eventually rebranded to SortedPRO and subsequently Ship. Ship forms the first component of Sorted's Delivery Experience Platform.

 

In June 2017, MyParcelDelivery Holdings Limited rebranded to Sorted Holdings Limited (Sorted).

 

As customer activity levels increased within the Ship proposition, Sorted recognised the appetite for ecommerce businesses to continue a branded dialogue with their consumers, beyond the 'buy' button whilst simultaneously enabling them to suppress "contact touchpoints" to order ratios. Accordingly, to address this growing need for delivery tracking and delivery communications software in the ecommerce space, Sorted launched Track (formerly SortedREACT) in 2018. This marked Sorted's entry into the burgeoning post-purchase tracking product category. Track forms the second component of Sorted's Delivery Experience Platform.

 

In November 2021, Sorted acquired Clicksit, a returns automation Application. The acquisition of Clicksit enabled Sorted to complete its offering across the entirety of the consumer delivery experience journey and marked the last component of Sorted Delivery Experience Platform. The acquisition included the transfer of all Clicksit's existing customer base, comprising predominantly small and medium sized businesses selling through Shopify. This in turn allowed Sorted to access ecommerce businesses in the United States. Clicksit has since been rebranded to Return.

Since its formation, Sorted's customer base has grown incrementally. In 2017, Ship onboarded a prominent British and Singapore based multinational technology company as the first Corporate and Enterprise customer. In 2018, ASOS plc signed a contract to become a Sorted Ship customer and furthered the ecommerce market coverage of the Ship product. By 2021, Sorted's customer base had evolved to include multiple marquee customers. These included but are not limited to a well-known UK home furnishing retailer, a UK sports-fashion retail company, a major UK-based multinational retailer and a prominent UK supermarket chain.

 

Notwithstanding Sorted having achieved double or triple digit recurring revenue growth since its early phase as an enterprise SaaS business until 2022, Sorted has historically been funded through a combination of equity and debt. In this regard, between 2013 to 2021, Sorted raised an aggregate of approximately £71.8 million, comprised of approximately £71.07 million in equity and approximately £3.5 million debt finance.

 

The success of the Sorted Delivery Experience Platform is illustrated through the volume of activity that the platform is able to process during the busy Christmas period, namely, the calendar period between early November and early January. This period is categorised as the busiest period in the annual retail calendar due to the increase in consumer spending around the Christmas gift-giving holiday period. For example, between 14 November 2022 to 8 January 2023 the Sorted Delivery Experience Platform processed volumes of 10.76 million pieces of shipment data along with 1.15 billion unique tracking events handled.

 

Business model and operations

 

Business model

 

Sorted operates a SaaS business model whereby the ​majority of Sorted's revenue is driven by customer subscriptions to its Delivery Experience Platform. This in-turn provides annualised recurring revenue. This model, amongst other benefits, enables predictable revenue performance. In addition to recurring revenue, Sorted benefits from non-recurring revenue generated from one-time onboarding services for Corporate and Enterprise customers which in the past three years has ranged from £2,000 to £45,000 per customer. Each scenario goes through a solution architecture design process which defines the time and effort required to complete the work based on a services day rate. Similarly, Sorted benefits from non-recurring revenue generated from ad-hoc customer requests ranging from additional product functionality requirements, additional Carrier configurations and further integrations. However, non-recurring revenue forms only a small component of Sorted's overall revenues.

 

Operations

 

Sorted's registered office and headquarters along with the majority of its operations are concentrated in Manchester, United Kingdom. This is supported by a second office space situated in London. Reflecting the flexible attitude to work arrangements at Sorted, the Company offers all staff the option to primarily work remotely as well as "hybrid-arrangements", representing a blend of in-office and remote work arrangements. As of 21 November 2023, Sorted had a headcount of 66. In addition to this headcount, Sorted also utilises a third-party nearshore software delivery partner that provides scale up engineering capacity as needed to support the in-house Sorted technology team.

 

Product and services

 

At the core of Sorted's product offering is its Delivery Experience Platform. This is comprised of three propositions, namely:

 

(1) Ship - carrier management, carrier allocation and ecommerce checkout optimisation;

(2) Track - post-purchase parcel tracking and customer communications; and

(3) Return - refunds and exchanges management.

 

A high-level summary of each proposition is highlighted in table 1 in the Admission Document.

 

The Directors believe that Sorted's Delivery Experience Platform enables Sorted to give its customers, and their respective consumers, control and visibility of the whole ecommerce journey, whether it be through offering consumers better delivery choices, enabling ecommerce businesses to take control of the extensive Carrier and delivery management capabilities, giving both the ecommerce business and the consumers the real time delivery insights they need, or seamlessly facilitating the increasingly critical product returns process.

 

A full breakdown of where the Sorted Delivery Experience Platform sits across the ecommerce customer journey is outlined in table 2 in the Admission Document and a detailed overview of each respective proposition is outlined in the Admission Document.

 

Ø Ship

 

Ordinarily when an ecommerce business seeks to deliver a parcel to a customer, it relies on Carrier partners to execute the final stages of the ecommerce customer journey. Carrier partners vary in the levels of delivery services offered. This ranges from same day, next day to two-person deliveries services at a range of price points. This fragmented offering can result in ecommerce businesses requiring access to a panel of Carrier partners to run a delivery operation that fits their respective customers' needs, often at rigid price points.

 

Rather than burdening an ecommerce business with building and maintaining their own resource-heavy and expensive software interface, which is capable of accessing multiple Carrier partners at competitively negotiated prices into their ecommerce infrastructure, Ship provides a ready-made software solution for consignment deliveries that can integrate into customers' existing API.

 

Ship incorporates a catalogue of Carrier services that have been onboarded and integrated into the system, formally known as the 'on-platform' Carrier services. The 'on-platform' Carrier services acts as a single user interface for connecting ecommerce businesses to Carriers thereby avoiding the need for developing multiple integrations with multiple different carriers.

 

Through the Ship interface, ecommerce businesses can print Carrier compliant labels, manage Carrier operations, access performance reports and ensure that each parcel is delivered at the most competitive price. In addition, Ship enables ecommerce businesses to increase the levels of delivery services offered to their customers while simultaneously acting as a single carrier management platform. Furthermore, Ship allows for ecommerce businesses to directly connect their online checkout infrastructure with warehouses' activity. For example, the delivery options presented to a customer via Ship will take into account the delivery options that are realistically able to be fulfilled by the warehouse.

 

In 2020, Sorted soft-launched a new version of Ship known as "Shipments". Shipments sits along the standard form version of Ship. However, Shipments was designed to support the complex needs of larger strategic Enterprise customers and was instigated due to demand from notable strategic customers of Sorted.

 

The Shipments platform is underpinned by a microservice-based architecture to ensure long term flexibility, scalability and high resilience for Sorted's customers. While the core Ship proposition remains the same, Shipments offers a broader feature set that is attractive to enterprise customers. Features include but are not limited to advanced shipping rules, shipping modes for setting hard and soft allocation limits, grouping of shipments, and streamlining of multi-brands (for example, when a retailer manages shipping operations for multiple different concession offerings under the parent company - where each brand is likely to have a different customer delivery experience requirement).

 

Longer term, Sorted intends to work towards consolidating both Shipments and Ship into one single offering. In addition, Sorted intends to expand Ship's Carrier library and improve parcel pick up and drop off services.

 

 

Ø Track

 

Track is Sorted's shipment tracking engine, aggregating and enhancing parcel tracking information that is provided from Carriers to ecommerce businesses. Track gathers tracking event data from Carriers. Tracking events occur as the parcel travels through the delivery network on its way to the customer. Track subsequently processes and unifies this data, and then presents the data to ecommerce businesses in a simple, easy to digest and user-friendly dashboard. This provides ecommerce businesses with the ability to monitor the status of deliveries and performance of deliveries in Track's user- friendly interface dashboard.  Track is also capable of calculating when a shipment may be missing or is late, allowing ecommerce businesses to pre-emptively manage consumer expectations.

 

Track simultaneously provides ecommerce businesses with flexibility in relation to how they handle all the data collected. For example, Sorted customers can use the Track user interface to service incoming queries, automate proactive notifications or create "tracking" pages to reduce incoming 'where is my order' enquiries. Similarly, Track allows ecommerce businesses to send automated SMS and email communications to consumers, and use "webhooks" to alert them of shipment tracking events. Notable examples include if a Carrier scans a parcel to flag that it is 'in transit', the ecommerce business can trigger a customer communication to say, 'It's on its way' or 'With you soon'. This further reduces manual customer contact touchpoints, as there is no 'communication black hole' and the dialogue between the ecommerce business and the customer stays open proactively throughout the delivery journey.  Given the standardised nature of how Track collects data, users can also build API-driven tracking pages directly on their websites. These pages are powered in the background by Track and are fully customisable and branded in accordance with the ecommerce businesses' design style.

 

Since the launch of Track, additional features have been developed to seek market leadership. Most notably, Track offers proactive alerting. Proactive alerting provides ecommerce businesses with advanced warning of delivery exceptions, helping Track customers proactively address potential problems with shipments so that they can take action and/or inform customers as required. In addition, improvements to branded tracking pages have been made.

 

Sorted intends to focus on integrating the Track interface into broader software platforms such as large ecommerce platforms as well as to incorporate additional features such as SMS.

 

Ø Return

 

For smaller, growing ecommerce businesses, managing returns can be costly and a time-consuming process. The Return proposition is delivered through Sorted Returns Center, an Application available through Shopify and BigCommerce. The Sorted Returns Center provides a platform through which ecommerce businesses can access preferential label rates from multiple Carriers, automate laborious stages of the returns process, and monitor how returns are progressing throughout the refunds and exchanges process.

 

Sorted Returns Center is integrated into the Shopify ecosystem.  Shopify is an ecommerce platform that allows retailers and businesses to easily set-up and run an online store and access all the essential services required of an online business to maximise their commercial success. 

 

Sorted originally chose to integrate the Sorted Returns Center into Shopify for two reasons. Firstly, Shopify is one of the biggest ecommerce storefront platforms in the world by volume usage. Secondly, Shopify allows a simple connection to an ecommerce businesses order, stock and pricing data, all of which are essential to the success of a return's automation product.

 

Upon installation of the Sorted Returns Center, a choice of subscription plans can be chosen from, each of which offers a 14-day free trial period. Subscription plans on Shopify range from a "silver" package at US$20 per month, a "gold" package at US$50 a month to a "platinum" package at US$500 a month. A summary of the differences between each subscription package is highlighted in table 3 in the Admission Document.

 

The Sorted Returns Center is immediately accessible following installation, beginning with the activation of the return portal on a "user's retail storefront".  The return rules that the user wishes to configure can be set-up and edited in seconds from the settings section of the Sorted Returns Center at which point the user can also choose to add in automated approval logic. Examples of automated approval logic include auto-approving refunds if the return request reason exceeds or falls under a certain size threshold. This allows the end user to receive a quick approval or rejection in relation to their returns request. In addition, the Sorted Returns Center offers ecommerce businesses a return portal which can be fully branded.

 

To make the return journey as easy and intuitive as possible for the end consumer, users of the Sorted Returns Center have the ability to buy Collect+ (Yodel) or Evri in the UK or USPS labels in the US, from Sorted to send directly to consumers.  Both end consumers and users of the app can then leverage the Carrier's tracking links to monitor the return on its reverse journey to the ecommerce business.

 

A management dashboard allows the user to monitor and action all pending and open return requests.

 

Following the acquisition of Clicksit, Sorted recognised that customer activation of what is now the Sorted Returns Center, required significant ongoing support from Sorted's sales representatives. As a result, in order to enable a user driven and intuitive product activation journey, Sorted introduced a range of improvements including but not limited to the settings pages, returns portal, additional "know-how" articles and an improved "getting started" journey. In addition, Sorted has since further monetised the platform. For example, Sorted concluded a re-seller agreement with Evri, enabling Sorted to produce Evri return labels available to all Sorted Returns Center Application customers in the UK.

 

Customers

 

Sorted has a diverse customer base ranging from mid-sized, growing ecommerce businesses to multi-national organisations. Sorted's delivery experience software customers can be broadly categorised into the following two groups:

 

1.   Corporate and Enterprise customers: Corporate customers currently represent ecommerce businesses generating in the region of 300,000 units to 12,000,000 units in aggregate shipping parcel volume per year and Enterprise customers currently represent those ecommerce businesses generating in excess of 12,000,000 units in aggregate shipping parcel volume per year (not all shipped or tracked by Sorted). The precise ranges for both Corporate and Enterprise customers are subject to Sorted's periodic review and accordingly may change. Notable Corporate customers include musicMagpie Plc, French Connection and Mint Velvet. Notable Enterprise customers include ASOS plc, Asda Stores Limited, Boohoo Group PLC and Marks & Spencer plc.

 

2.   SMB customers: businesses that exist in almost any industry, typically with smaller numbers of employees and smaller up-front capital investments. In the European Union, SMB's represent 99 per cent. of all businesses and employ an estimated 100 million individuals. In the United States, there are estimated to be 33.2 million SMB's.

 

As at September 2023, Sorted's Ship had 37 customers generating an average annual recurring revenue of £92k each. Track had 17 customers generating an average annual recurring revenue of £74k each. Return had a total of 700 SMB customers generating an average annual recurring revenue of £240 each.

 

Sorted currently has 11 Multi-Product Customers generating an average annual recurring revenue of £191k each.

 

Direct users of the Sorted Delivery Experience Platform within both customer categories are uniform and include employees belonging to the operations & logistics, customer services and ecommerce teams. In addition, within both customer categories, Sorted predominantly targets ecommerce and Omnichannel businesses as well general retail businesses operating in varying segments such as apparel and footwear, beauty, personal care, homeware to electronics, healthcare and groceries. In any event, the Sorted Delivery Experience Platform is developed to be agnostic to the underlying ecommerce activity.

 

 

Sorted's customer acquisition strategy differs by customer category. "Corporate and Enterprise" customer acquisition is delivered through a combination of direct outbound sales, channel or third-party sales (for example reselling through logistics providers such as Wincanton plc), inbound sales and marketing programs. These are oriented predominantly around the Ship and Track propositions. In relation to SMB customer acquisition, a "low touch" self-service buyer journey exists. Further details in relation to each approach are outlined as follows.

 

1.   "Corporate and Enterprise" customer acquisition strategy:

Sorted focuses its direct plus channel sales and marketing programs around a clearly defined set of targeted accounts. In this respect, a mixture of content and digital marketing programs is deployed, complemented with outbound prospecting with the aim of booking qualified introductory meetings with key buying individuals from within the defined set of targeted accounts.

 

A clearly defined lead-to-revenue process is followed by the Sorted representative which outlines the criteria that must be met in order for a lead to progress through each stage of the funnel and into the sales pipeline. In this regard, Sorted's sales pipeline consists of six stages; discovery, validate, requirements, proposal, negotiation and closed.  Each stage in the sales pipeline has clearly defined progression criteria and reporting is in place to objectively track momentum throughout the sales pipeline process.

 

Customer onboarding is orchestrated by the Sorted project management team and delivered by a cross functional team comprising of members from the pre-sales, customer success, onboarding and engineering teams.  The standard onboarding journey for progressing a Corporate and Enterprise business to live operations on the Sorted Delivery Experience Platform is described below.

 

1)   Contract signature - Sales

2)   Internal sales handover - Sales and Pre-Sales

3)   Customer kick-off meeting - Project Management

4)   Customer integration design workshop - Customer Success

5)   Integration blueprint review meeting - Customer Success

6)   Project & test plan outline - Project Management

7)   Project execution - Project Management

8)   Testing execution - Project Management

9)   Transition to live operation and billing - Project Management

 

2.   SMB customer acquisition strategy:

Customer acquisition within the SMB arena is predominantly marketing driven, specifically through the execution of advertising campaigns across prominent search engines. These campaigns are designed to drive qualified traffic from small and medium sized businesses to the Sorted Returns Center landing page on the Shopify Marketplace.  From here, prospective SMB customers can install the App within their Shopify ecommerce platform and begin to use Sorted's suite of services right away.

 

Once a retailer installs the Sorted Returns Center Application, they are guided within the application through a set-up process, aided by a series of self-support articles without the need for interaction with a sales professional from Sorted.

 

Competition

 

1.   Carrier Management System competitors:

The Carrier Management System segment, where Ship is positioned, is mature. Competitors within this group tend to concentrate their marketing efforts towards larger Corporate and Enterprise businesses and to a smaller extent the SMB market, rather than providing an offering across the entire ecommerce spectrum. Each competitor is strategically partnered with a variety of Carriers. As a result, Carrier availability varies across the market and is a strength for some competitors and a weakness for others. In addition, while certain competitors within this group offer an efficient shipping product for larger companies, they lack a post-purchase experience product. This means that businesses may seek to switch to a complete delivery experience platform as post-purchase experience becomes a bigger consideration. Sorted considers its key competitors to include nShift, the Metapack Group, Scurri and AfterShip.

 

2.   Post purchase tracking competitors:

The post purchase tracking segment remains novel and in development. However, this segment has recently seen innovation, amongst other areas, with an increase in the number of features available, improved packaging and pricing. Despite this, the levels of post-purchase tracking solutions available across the spectrum of SMBs and larger Corporate and Enterprise businesses remains wide. Sorted considers its competitors to include Narvar, ParcelLab and AfterShip.

3.   Return management competitors:

The returns segment can be characterised by the large number of smaller product and service providers operating within the segment, predominantly through Shopify Marketplace, servicing SMBs. Additionally, there are established companies which have track records in catering to larger Corporate and Enterprise businesses by offering a returns fulfilment capability in addition to refund and exchanges management software. Sorted considers notable examples to include ZigZag Global, ReBound Returns (a subsidiary of Reconomy Group), ParcelLab and AfterShip.

 

4.   Ecommerce businesses building delivery technology in-house:

Forming a smaller portion of the delivery experience market, certain ecommerce businesses have developed in-house full end-to-end delivery experience processes. Within this model, very little or no delivery experience technology is sought from external third-party providers. Notable ecommerce businesses who have developed in-house delivery experience processes include Next. For example, Next has developed software that powers all ecommerce, warehousing, shipping and delivery operations, which it now uses to host operations for other, smaller or struggling retail brands.

 

The Directors believe that no single platform meets the delivery experience requirements of each market segment consistently with one single integrated solution. As a result, with Sorted's Delivery Experience Platform offering ecommerce businesses a complete end-to-end post-purchase solution, the Directors believe that Sorted is well positioned to increase its market share across the delivery experience industry. The Directors further believe that there are significant barriers to entry into the Carrier Management System industry due to the significant investment required to create a software solution along with significant asset investment in a global Carrier library. With this in mind, the significant investment made by Sorted into the Delivery Experience Platform to date reinforces Sorted's position in the delivery experience area.

 

5.   Summary financial information

 

Sorted

The table below sets out Sorted's summary financial information for the last three financial years ended 30 September 2022. The historical information was prepared and audited under IFRS. The summary below has been extracted from the Admission Document.

 

For the 16 months ended 30 September 2020

(audited)

£'000

Year ended 30 September 2021

(audited)

£'000

Year ended 30 September 2022

(audited)

£'000

Revenue

5,267,755

4,458,603

6,117,176

Gross profit

3,669,989

3,721,657

4,038,593

Gross margin (%)

69.7%

83.5%

66%

Operating profit/(loss)

3,669,989

3,721,657

4,038,593

Profit/(loss) before tax

(8,927,527)

(14,175,427)

(28,647,707)

Tax credit

1,985,097

2,106,424

-

Profit/(loss) for the year

(6,942,430)

(12,069,003)

(28,647,707)

 

An unaudited pro-forma statement of net assets is contained in the Admission Document to illustrate the effect of the Proposals on the Enlarged Group.

 

Sorted has delivered consistent annual recurring revenue growth. While this growth is pleasing, significant investment has been made in Sorted to achieve this. To date, approximately £71.07 million in equity investment and approximately £4.36 million (excluding accrued interest) in debt financing has been invested in Sorted, allowing the business to build its carrier services library and maintain its growth trajectory.

 

As a SaaS business, in the early stages of the development of Sorted's business there was significant cash consumption in order to, inter alia, construct the underlying technology and people infrastructure required to deliver a 24x7 mission critical global SaaS platform. Since then, significant investment has been committed to expand Sorted's proposition including towards the launch of Track in 2018 which was followed by the most recent equity funding round of £21.0 million in 2021 being deployed to deliver a number of transformation initiatives. These include investment into customer and platform efficiency, scalability, acquiring Clicksit and the bolstering of the businesses enterprise architecture to enable automation versus people-centric processes.

 

While Sorted is still in a growth-phase, the investments outlined above have result in improved revenue.  In any event, substantive competitors in the enterprise delivery management sector have also historically had to commit to aggressive capital investment. Accordingly, the Directors believe that the investment made by Sorted to date should position Sorted on a trajectory towards reaching profitability in the medium term.

 

6.   Strategy of the Enlarged Group

 

On Completion, the Company will own 100 per cent. of Sorted and as a result Sorted will become the Company's core business. The strategy of the Enlarged Group will be to continue the diversification of its customer base by focussing on Corporate and Enterprise as well as SMB customer expansion. The Enlarged Group intends to achieve this through delivering against a clearly defined product strategy over the next several years. At the centre of the Enlarged Group's product strategy is the delivery of new key initiatives across the Delivery Experience Platform. This includes increased data monetisation, modular packaging and enhanced Carrier integration capabilities, further details of which are outlined below:

 

·    Further developing the Delivery Experience Platform to deliver new Carrier services more efficiently. For example, Refactoring the underlying Carrier integration service infrastructure for optimal speed to market with significantly improved unit economics;

·    Expanding the Return proposition's routes to market beyond the Shopify ecosystem, which the Directors believe will accelerate customer acquisition and volume growth and separately advancing features to increase customer lifetime value;

·    Evolving the Track proposition to become a more modular and reduced "touchpoints" offering. This includes enhanced self-service and automation capabilities and improving the ability for customers to use the features they require from our core product offering in discrete bundled feature sets, such as:

·   Branded communication with email and SMS incorporating brand tone of voice communication and configurable messages for differing parcel journeys;

·     Branded parcel tracking pages;

·   Embedded tracking APIs to allow customers to embed tracking data into their own websites and ecommerce platforms; and

·     Introducing additional data insight capabilities including enhanced reporting, as well as further product feature development, such as configurations calculating allocation rule efficiency.

 

The above product strategy is intended to enable the delivery of a clearly defined go-to-market strategy, focussed on:

 

(i)         retaining and growing Sorted's Corporate and Enterprise customer base;

(ii)        accelerating direct sales of Ship and Track within the Corporate customer base through the expansion of Sorted's dedicated sales teams initially in the UK and subsequently into the US;

(iii)      continued focus on driving SMB customer acquisition and retention through the established Shopify Marketplace and applying these proven methods to any new Return routes to market as appropriate; and

(iv)      deepening Sorted's channel partnering capability with the expansion of strategic partnerships in both the UK and the USA.

 

The principal place of business of the Enlarged Group will be Level Six, 111 Piccadilly, Manchester, England, M1 2HY with effect from Admission.

 

7.   Current trading and prospects

 

Location Sciences

 

On 14 September 2023, Location Sciences announced its unaudited interim financial results for the six months ended 30 June 2023 (H1 2023). During this period, Location Sciences generated revenue of £33,765 (H1 2022: £145,430) and a loss before tax of £232,538 (H1 2022: £492,353). As at 30 June 2023, Location Sciences held cash and cash equivalents of £3,498,243 (30 June 2022: £4,227,685).

 

Sorted

Summary of performance in the financial year ended 30 September 2022

 

During the financial year ended 30 September 2022 ("FY 2022"), Sorted faced significant challenges stemming from a number of legacy issues, ultimately culminating in Sorted reporting a loss before tax of £28,647,707 (30 September 2021: loss of £14,175,427). These legacy issues had been accumulating against the backdrop of the Sorted Group's preceding period of rapid growth. These legacy issues ranged from the need for Sorted to commit significant investment towards enhancing elements of Sorted's Delivery Experience Platform and its underlying technology stack to the need to implement more aggressive end-to-end automation across the business.

 

The manifestation of these legacy issues affected the Sorted Group's trading performance and customer experience, including adversely impacting customer satisfaction, unexpected customer churn and ultimately delayed revenue realisation for the Sorted Group. Consequently, the Sorted Group pre-emptively agreed to slow down new customer acquisition midway through FY 2022 and instead focused resources towards a program of stabilisation and scalability on core elements of its Delivery Experience Platform.

 

In addition, the acquisition of Clicksit in December 2021 was originally anticipated to provide Sorted with a suite of products to create a truly differentiated "Delivery Experience Platform" as well as to enable Sorted to access and service the SMB market domestically and internationally through the use of Clicksit's return solution and App (now known as Return). Frustratingly, the anticipated benefits from the acquisition of Clicksit and the intended SMB market entry did not occur during FY 2022 as originally anticipated due to the need to redirect resources to the stabilisation efforts noted above coupled with the need to implement a number of Return product enhancements, particularly in relation to its self-service and automation efficacy. The inability to deliver on the strategic objectives of the Clicksit acquisition resulted in the goodwill on the Clicksit acquisition being largely impaired in FY 2022 as reflected in the Sorted Group's losses.

 

Summary of performance in the financial year ended 30 September 2023

 

The New Board is pleased to report that the Sorted Group has made substantial progress during the financial year ended 30 September 2023 ("FY 2023") in establishing: (i) a robust and resilient Delivery Experience Platform with 99.998 per cent. "online" availability as well as approximately 52.7 million  shipments created and 74.1 million shipments tracked on the Delivery Experience Platform; (ii) regained trust with the Sorted Group's customers; and (iii) a successful relaunch of new customer acquisition sales that have delivered six new Corporate and Enterprise customers in FY 2023, four of which have subscribed to both the Ship and Track propositions and two of which have subscribed for either the Ship or Track propositions on a standalone basis and lastly, nine Corporate and Enterprise customer renewals.

 

Furthermore, progress has been achieved with the Sorted Group having 700 recurring revenue generating customers as at FY 2023 (FY 2022: 317 customers). Furthermore, the Sorted Group continues to believe in the SMB market and the Return proposition and in this respect, Sorted continues to commit resources towards driving this strategy forward.

In the six months to 31 March 2023 ("HY 2023"), the Sorted Group reported unaudited revenue of £3,473,613 (31 March 2022: £2,715,058), an operating profit of £2,333,833 (31 March 2022: £2,0003,250) and an unaudited loss before tax of £7,379,562 (31 March 2022: loss of £10,642,675). Subsequent to 31 March 2023, Sorted has undertaken a significant cost reduction programme, with a particular focus on platform efficiency and streamlining the organisational structure. This cost reduction programme has resulted in annualised cost savings amounting to approximately £7.6 million in FY 2023. For the financial year ended 30 September 2023, through its SaaS business model, Sorted had total unaudited revenue of approximately £6.5 million. 

 

More recently, the Sorted Group also delivered another successful Christmas retail peak period (14 November 2023 through 8 January 2024) with shipment volume up 30 per cent. from the 2022 Christmas retail peak period to 13.95 million along with 18.42 million shipments tracked and 2.19 billion unique tracking events handled.

 

Looking ahead, Sorted's ongoing transformative workstreams focus on: (i) establishing a leading Delivery Experience Platform across all market tiers; (ii) enhancing core technology for automation, self-service and cost efficiency; (iii) diversifying customer acquisition to drive a more robust mix of small, medium and large contracts; (iv) expanding internationally, starting with the US market; and (v) delivering balanced revenue growth and in due course profitability.

 

While Sorted, like other technology providers operating in the retail sector, has faced challenges as a result of the broader macro-economic headwinds impacting, in particular, the ecommerce sector, the management team of Sorted are confident that the Sorted Group is well positioned to add to its existing pipeline and expand its revenue base.

 

8.   Principal terms and financial effect of the Acquisition

 

The consideration for the Acquisition

 

Under the terms of the Acquisition Agreement, the Company has conditionally agreed to acquire the entire issued share capital of Sorted for an aggregate nominal consideration of approximately £66.73, to be paid by the Company in cash at Completion. In addition, as part of the terms of the Acquisition Agreement, Location Sciences will assume approximately £4.7 million (including accrued interest) of Sorted's outstanding debt.

 

The Acquisition Agreement contains fundamental warranties given by the Core Sellers and certain business warranties from the Warrantors in favour of the Company subject to certain limitations, in particular as to the maximum amounts which may be claimed.

 

The Acquisition Agreement is conditional upon, inter alia; (i) the Resolutions being passed; (ii) the Drag Along being successfully completed; (iii) the Subscription being successfully completed; and (iv) Admission.

 

The Company will use its existing cash resources to satisfy the costs and expenses associated with the Acquisition.

 

Financial effects of the Acquisition

 

An unaudited pro forma statement of net assets and an unaudited pro forma income statement for the Enlarged Group, prepared for illustrative purposes only, showing, inter alia, the impact of the Acquisition on the Enlarged Group is set out in the Admission Document.

 

9.   Directors, Senior Managers and Employees

 

Directors

 

The Existing Directors will remain on the New Board following Admission and New Directors will be appointed to the New Board effective from today's date.

As a result, the New Board comprises the following individuals:

 

Simon John Wilkinson, aged 58, Non-Executive Chairman

Simon Wilkinson is an experienced software executive and entrepreneur, having been involved with a number of public and private companies over his career. He was most recently Executive Chairman and then Chief Executive Officer of Mobica, a software services company offering bespoke development, QA and consultancy. He was previously Chief Executive Officer of Myriad Group AG, which was listed in Zurich, and founder and Chief Executive Officer of Magic4 Ltd, a mobile messaging software market leader, backed by 3i, Philips Ventures and Motorola Ventures. Simon joined the board of Location Sciences on 25 May 2021.

 

Carmen Christine Carey, aged 61, Chief Executive Officer

Carmen has over 20 years of technology expertise leading go-to-market strategies and developing cutting-edge solutions in her executive roles at brands such as ControlCircle, MessageLabs and BroadVision. As CEO, Carmen powers Sorted's strategy, drives business transformation, backs Sorted's vision and supports the leadership team to deliver Sorted's growth plans. Carmen originally joined the board of Sorted as a non-executive director on 20 April 2020 and was subsequently appointed to the board of Sorted as CEO on 1 September 2021.

 

Mahmoud Hamid Warriah, aged 56, Chief Financial Officer

From startups to blue chips, Mahmoud has a strong track record of successfully delivering commercial, transitional and business transformational change. He is a qualified chartered accountant with extensive experience across multiple sectors and draws upon his computer science degree to resolve complex operational challenges. Mahmoud has been Sorted's acting interim chief financial officer since 3 October 2022.

Dr. Nigel John Burton, aged 65, Non-Executive Director

Dr Nigel Burton spent 14 years as an investment banker at leading City institutions including UBS Warburg and Deutsche Bank, including as the Managing Director responsible for the energy and utilities industries.  Following this he spent 15 years as Chief Financial Officer or Chief Executive Officer of a number of private and public companies. He is currently a Non-Executive Director of BlackRock Throgmorton Investment Trust plc, DeepVerge plc, eEnergy Group plc and Microsaic Systems plc. Dr Burton joined the board of Location Sciences on 25 May 2021.

 

Petar Cvetkovic, aged 62, Non-Executive Director

Petar is the Founder and current Chairman of Welford Investments Limited, which specialises in equity holdings in growth companies, ownership of freehold commercial properties and advisory work. Over the course of his 36-year career, he has led some of the UK's best-known logistic firms, working in parcels, contract and shared-user distribution as well as supply chain and international logistics. Petar was formerly the Chief Executive Officer of DX (Group) Plc and Target Express.

 

The New Board intends to appoint a further independent Non-Executive Director to the board of directors of the Enlarged Group within 12 months from Admission.

 

Following completion of the Acquisition, the Enlarged Group's senior management team will include the following individuals:

 

Senior Management of Sorted

 

Robert Henry Whittick, Chief Operating Officer of Sorted

Rob has a history of leadership in enterprise software delivery within blue chip organisations, and a track record of delivering complex projects and solving challenges in fast-paced environments. He has operated in leadership, governance, delivery assurance and troubleshooting roles, to deliver successful business outcomes.

 

Timothy John Cox, VP of Customer Experience of Sorted

For over 25 years, Tim has built and transformed development teams - from the start ups to the scale ups of global SaaS companies. Keeping a close eye on Sorted's processes and technology, Tim has the know-how on how to automate the business end-to-end and proactively support Sorted's customers with a seamless experience.

 

Axel Iwan Ludwig Lagerborg, VP of Sales of Sorted

Axel has over 20 years' experience managing teams while working in the UK, US, Canada, Luxembourg, Spain and Chile. Prior to joining Sorted, he's headed up the European, the Middle East and Africa (EMEA) sales teams at OpenText, Mblox (now Sinch) and MACH (now Syniverse).

 

Daniel John Greenall, VP of Marketing & Product Management of Sorted

Dan is responsible for Sorted's marketing function and monitors the market, the latest trends and Sorted's growth strategy. Dan spent the last 10 years leading B2B marketing teams in fast-paced businesses, such as Daisy Group and AccessPay.

 

Employees

As at the Business Day before the date of this announcement, the Group had 2 employees. Following completion of the Acquisition, the Enlarged Group will have approximately 68 employees.

 

10.  The Subscription

 

The conditional Subscription will raise gross proceeds for the Enlarged Group of £1,999,997.98 (before estimated expenses of approximately £1.02 million (excluding VAT)). The Subscription Shares represent approximately 29.92 per cent. of the Enlarged Issued Share Capital. On Admission, the Enlarged Group will have a market capitalisation of approximately £6,684,741.88 at the Issue Price.

 

The Subscription Shares will, where applicable, be issued credited as fully paid and will, on Admission, rank pari passu in all respects with the New Ordinary Shares, including the right to receive all dividends and other distributions thereafter declared, made or paid on the Enlarged Share Capital.

 

The Company has received direct subscriptions for the Subscription Shares from the Subscribers at the Issue Price pursuant to the terms of the Subscription Letters. The Subscription Shares will be issued at Admission. The Subscription is not underwritten and will be conditional on Admission, and the passing of Resolutions 1, 2, 3 and 4 by Shareholders at the General Meeting.

 

Use of Subscription Proceeds

 

While the principal purpose of the Subscription is to give existing shareholders of Sorted the opportunity to participate in the Subscription and to align their interests with those of existing Location Sciences shareholders, the Enlarged Group intends to use the net proceeds receivable from the Subscription to: (i) contribute towards expanding Sorted's existing customer base of Corporate and Enterprise as well as SMB customers; (ii) deliver new key initiatives across the Delivery Experience Platform; and (iii) provide working capital.

 

11.  Remuneration Shares and the CLN Shares

 

Remuneration Shares

 

Historically, the Existing Directors have agreed for their directorship fees to be paid annually in advance and that payment owed by the Company to each of the Existing Directors is applied to them in the form of Existing Ordinary Shares. As at the date of this document, Dr. Nigel Burton and Simon Wilkinson have accrued approximately £60,000 each in directorship fees. Accordingly, both Dr. Nigel Burton and Simon Wilkinson have agreed with the Company that payment of their respective accrued directorship fees is to be satisfied through the issuance of the Remuneration Shares on Admission at the Issue Price. The Remuneration Shares to be issued on Admission comprises 68,571 new Ordinary Shares to Simon Wilkinson and 68,571 new Ordinary Shares to Dr. Nigel Burton.

 

The allotment and issue of the Remuneration Shares is conditional upon the passing of Resolutions 1, 2, 3 and 4 by Shareholders at the General Meeting.

 

CLN Shares

 

A number of investors currently hold convertible loan notes ("CLNs") in Sorted. As part of the Acquisition, it is proposed that the CLNs held by two investors, namely Shard Credit Partners Venture Debt I S.à.r.l ("Shard Lux") and Carmen Carey will be converted into equity in the Company, namely the CLN Shares, as part of a debt for equity swap.

 

Carmen Carey holds CLNs with a nominal value of £50,000 which will convert into New Ordinary Shares at the Issue Price, such that Carmen Carey will receive 57,142 CLN Shares.

 

Shard Lux holds CLNs with a nominal value of £250,000 will convert into 285,714 New Ordinary Shares at the Issue Price, which will be held by Shard Credit Partners Venture Debt Fund I LP. In addition, pursuant to the Debt Conversion Agreement (further details of which can be found at paragraph 12(d) of Part VII of this document), it is proposed that Shard Credit Partners Venture Debt Fund I LP will receive an additional 637,855 New Ordinary Shares at the Issue Price, to settle certain interest payments relating to 2023 and 2024 under the Shard Facility Agreement (further details of which can be found in paragraph 13(a) of Part VII of this document). In total, Shard Credit Partners Venture Debt Fund I LP will receive 923,569 CLN Shares.

 

The CLN Shares will be issued credited as fully paid and will, on Admission, rank pari passu in all respects with the New Ordinary Shares, including the right to receive all dividends and other distributions thereafter declared, made or paid on the Enlarged Share Capital.

 

The issue of the CLN Shares will be conditional upon the passing of Resolutions 1, 2, 3 and 4 by Shareholders at the General Meeting.

 

While other CLNs held in Sorted will be amended and restated as simple loan notes such that they are no longer convertible into Sorted equity, the CLNs held by Arete Investors 16 (Nominees) Limited and Chrysalis Investments Limited will remain in place following completion of the Acquisition and will continue to be convertible into shares in Sorted. Arete Investors 16 (Nominees) Limited holds CLNs with a principal value of £372,500, and Chrysalis Investments Limited holds CLNs with a principal value of £315,750 (together, the "Remaining CLNs").

 

There is no requirement that the conversion rights under the Remaining CLNs be exercised, but their holders will retain that option. The Directors do not believe that there would be a strong commercial rationale for exercising the conversion rights and gaining a minor and illiquid interest in an operating subsidiary of the Company. However, if the CLN holders do choose to exercise their conversion rights, the number of shares in Sorted to which they would be entitled depends on the determination of the conversion price pursuant to the relevant convertible loan agreements. The conversion price is linked to the last equity raise carried out by Sorted unless parties agree an alternative price, the Directors are of the opinion that it is unlikely than an alternative price would be agreed. In this case, if all Remaining CLNs were exercised at the expected conversion price, they would convert into 918 new shares in Sorted in aggregate, roughly equivalent to 0.6 per cent. of the entire issued share capital of Sorted. These numbers are intended to illustrate the Directors' reasonable expectation and should not be relied upon as guaranteed.

 

12.  Name change

 

To reflect the business of the Enlarged Group, the New Board are proposing to change the name of the Company to: "Sorted Group Holdings plc". The change of name will become effective once the Registrar of Companies has issued a new certificate of incorporation on the change of name. This is expected to occur on or around 19 February 2024. The tradeable instrument display mnemonic ("TIDM") of the Company is expected to change to AIM: "SORT" effective from 8.00 a.m. on or around 19 February 2024.

13.  Share Consolidation

 

At the date of this announcement, there are 2,647,587,398 Existing Ordinary Shares of nominal value 0.1 pence each in the capital of the Company in issue. The New Board consider that the number of Existing Ordinary Shares is unwieldly in volume. The Directors consider that the Share Consolidation will result in a more appropriate share capital structure for the Enlarged Group which is expected to increase the Enlarged Group's share price proportionately which may consequently positively impact the liquidity of and trading activity in the Enlarged Group's shares; and provide the basis for enhanced perception of the Enlarged Group, improving its marketability to a wider investor group.

Under the Share Consolidation, it is proposed that every 625 Existing Ordinary Shares be consolidated into one New Ordinary Share of nominal value 62.5p each. Accordingly, the proportion of Existing Ordinary Shares held by each Shareholder immediately before the Share Consolidation will, save for fractional entitlements (which are discussed further below), be the same as the proportion of New Ordinary Shares held by each Shareholder immediately after the Share Consolidation. The New Board believes that the Share Consolidation will result in a more appropriate number of shares in issue for a company of the Enlarged Group's size.

The New Ordinary Shares will carry equivalent rights to the Existing Ordinary Shares, save as to nominal value.

To effect the Share Consolidation, it will be necessary to issue 102 additional Existing Ordinary Shares so that the Company's issued ordinary share capital is exactly divisible by 625. It is proposed that these additional Existing Ordinary Shares will be issued to the Company's share registrars, Computershare on the Record Date. These additional Existing Ordinary Shares would only represent an entitlement to a fraction of a New Ordinary Share, so this fraction would be sold pursuant to the arrangements for fractional entitlements described below.

 

In the event that the number of Existing Ordinary Shares held by a Shareholder is not exactly divisible by 625, the Share Consolidation will generate an entitlement to a fraction of a New Ordinary Share.

 

The New Board proposes that any such fractional entitlements will be aggregated and sold in the market for the best price reasonably obtainable, in accordance with Article 2.8 of the Articles, with the proceeds being to the benefit of the Enlarged Group. Given the small economic value of such fractional entitlements, the New Board is of the view that the distribution of the sale proceeds to individual Shareholders would result in a disproportionate cost to the Enlarged Group.

 

Any Shareholder holding fewer than 625 Ordinary Shares at the Record Date will cease to be a Shareholder.

 

The issued share capital of the Company immediately following the Share Consolidation is expected to comprise 4,236,140 New Ordinary Shares.

 

The entitlements to New Ordinary Shares of holders of share options or other instruments convertible into Existing Ordinary Shares will be adjusted in accordance with their terms to reflect the Share Consolidation. Pursuant to a determination of the Company's auditor, immediately following the Share Consolidation the Warrants outstanding shall be as follows:

 

Post Share Consolidation

Warrants

Number of Ordinary Shares

New Subscription Price

Broker Warrants

160,000

£1.25

Promoter Warrants

2,400,000

£1.25

Cornerstone Investor Warrants

400,000

£1.25

Director Warrants

192,000

£1.25

 

Application will be made for the simultaneous cancellation of the Existing Ordinary Shares from CREST and admission of the New Ordinary Shares to CREST and their admission to trading on AIM. The New Ordinary Shares may thereafter be held and transferred by means of CREST. It is expected that New Ordinary Shares which are held in uncertificated form will be credited to the relevant CREST accounts on 19 February 2024 and admitted to trading on AIM on the same day.

 

Definitive share certificates in respect of those New Ordinary Shares which will be held by Shareholders who currently hold their Existing Ordinary Shares in certificated form are expected to be dispatched to relevant Shareholders on or around 26 February 2024. Share certificates in respect of Existing Ordinary Shares will cease to be valid on 19 February 2024 and, pending delivery of share certificates in respect of New Ordinary Shares, transfers will be certified against the register.

 

14.  Admission, Settlement and Dealing

 

Application will be made for the New Ordinary Shares, the Subscription Shares, the Remuneration Shares and the CLN Shares to be admitted to trading on AIM. It is expected that the last day of trading on AIM of the Existing Ordinary Shares will be on 16 February 2024 and that Admission will become effective and dealings in the Enlarged Share Capital will commence on 19 February 2024.

 

The new Ordinary Shares will have the ISIN number GB00BPDX2041 and SEDOL BPDX204. The Ordinary Shares will not be dealt on any other recognised investment exchange and no application has been or is being made for the Ordinary Shares to be admitted to any other such exchange.

 

15.  Relationship Agreement

 

Following the Subscription, upon Admission Shard will be a Substantial Shareholder, holding approximately 36.02 per cent. of the Ordinary Shares. The Company will therefore enter into a relationship agreement with Shard and Allenby Capital, governed by English law, conditional upon Admission occurring, which will regulate the relationship between Shard and the Company for so long as Shard, together with its "Associates" and any persons deemed to be acting in concert with it, hold at least 30 per cent. of the issued share capital of the Company.

The relationship agreement provides for the autonomous operation of the Company by the Directors and takes effect on Admission and pursuant to it, Shard undertakes, inter alia, that it will (and, in relation to its "Associates", will procure that each of its associates will): (i) conduct all transactions, agreements, relationships and arrangements with the Company on an arm's length basis and on normal commercial terms; (ii) ensure that no contract or arrangement between Shard and any member of the Enlarged Group is entered into or varied without the prior approval of a majority of independent Non-Executive Directors; and (iii) procure that the Enlarged Group will be managed for the benefit of Shareholders as a whole and independently of Shard and any member its group.

 

16.  Dividend policy

 

The New Board believes that the Enlarged Group will continue to have the potential to be cash generative in the future and recognise the importance of dividend income to Shareholders. The Enlarged Group's current policy is to retain future distributable profits and only recommend dividends when appropriate and practicable. There can be no assurance as to the level of future dividends (if any) that may be paid by the Enlarged Group or, in light of the accrued losses of the Enlarged Group, of the ability to pay dividends. Any determination to pay dividends in the future will be a decision for the New Board (and will be subject to applicable laws and generally accepted accounting principles from time to time, and other factors the New Board deems relevant). The payment of a dividend may also require consent under the terms of the Enlarged Group's lending and grant agreements, and there is no guarantee that the relevant lenders or grant awarding body will give consent to the payment of a dividend.

 

The New Board may amend the dividend policy of the Enlarged Group from time to time and the above statement regarding the dividend policy should not be construed as any form of profit or dividend forecast.

 

17.  Share Dealing Code

 

The Company has adopted a Share Dealing Code, which is compliant with Article 19 of UK MAR and Rule 21 of the AIM Rules for Companies. The Share Dealing Code will apply to any person discharging managerial responsibility, including the Directors, and the senior management and any closely associated persons and applicable employees. The Share Dealing Code imposes restrictions beyond those that are imposed by law (including by the FSMA, UK MAR and other relevant legislation) and its purpose is to ensure that persons discharging managerial responsibility and persons connected with them do not abuse, and do not place themselves under suspicion of abusing, price-sensitive information that they may have or be thought to have, especially in periods leading up to an announcement of both financial results. The Share Dealing Code sets out a notification procedure which is required to be followed prior to any dealing in the Company's securities.

 

The Share Dealing Code will apply to the Enlarged Group.

 

18.  Taxation

 

Information regarding taxation is set out in the Admission Document.

 

19.  Corporate governance

 

In accordance with Rule 26 of the AIM Rules for Companies, the Company confirms that it has adopted the QCA Code. The New Board recognises the importance of sound corporate governance and aims to conduct business in an open, honest and ethical manner. As a result, the New Board confirms that from Admission, the Enlarged Group's website at www.Sorted.com will set out how the Enlarged Group complies with the QCA Code.

                                                                                                    

As the Enlarged Group grows, the Directors intend that it should develop policies and procedures which further reflect the QCA Code, so far as it is practicable taking into account the size and nature of the Enlarged Group.

 

20.  The Takeover Code

 

The terms of the proposed Subscription give rise to certain considerations under the Takeover Code. Brief details of the Panel, the Takeover Code and the protections they afford are given below.

 

Rule 9 of the Takeover Code

 

The Takeover Code applies to the Company. Under Rule 9 of the Code, any person who acquires an interest in shares which, taken together with shares in which that person or any person acting in concert with that person is interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Code is normally required to make an offer to all the remaining shareholders to acquire their shares.

 

Similarly, when any person, together with persons acting in concert with that person, is interested in shares which in the aggregate carry not less than 30 per cent. of the voting rights of such a company but does not hold shares carrying more than 50 per cent. of the voting rights of the company, an offer will normally be required if such person or any person acting in concert with that person acquires a further interest in shares which increases the percentage of shares carrying voting rights in which that person is interested.

 

An offer under Rule 9 must be made in cash at the highest price paid by the person required to make the offer, or any person acting in concert with such person, for any interest in shares of the company during the 12 months prior to the announcement of the offer.

 

Rule 9 Waiver

 

Under Note 5 of the Notes on the Dispensations from Rule 9, the Panel may waive the requirement for a general offer to be made in accordance with Rule 9 if, in the case of an issue of new securities, independent shareholders of the company who are independent of the person who would otherwise be required to make an offer and any person acting in concert with him or her and do not have any interest in the proposed transaction which may compromise their independence ("Independent Shareholder") and whom together hold shares carrying more than 50 per cent. of the voting rights of the Company which would be capable of being cast on a Rule 9 waiver resolution confirm in writing that they approve the proposed waiver and would vote in favour of any resolution to that effect at a general meeting (the "Rule 9 Waiver Resolution").

 

The Company has obtained such written confirmation and has obtained permission from the Takeover Panel to waive the requirement for a Rule 9 waiver resolution to be considered at a general meeting.

 

The waiver to which the Panel has agreed under the Code will be invalidated if any purchases are made by Shard Credit Partners Venture Debt Fund I LP, or any person acting in concert with it, in the period between the date of this document and the General Meeting. Shard Credit Partners Venture Debt Fund I LP, nor any person acting in concert with it, has purchased Ordinary Shares in the 12 months preceding the date of this announcement.

 

On Admission (and assuming that no other person converts any convertible securities or exercises any options or any other right to subscribe for shares in the Enlarged Group), Shard Credit Partners Venture Debt Fund I LP will be interested in 2,752,140 Ordinary Shares, representing approximately 36.02 per cent. of the enlarged voting rights of the Enlarged Group. As Shard Credit Partners Venture Debt Fund I LP will be interested in shares carrying more than 30 per cent. of the voting rights of the Company but will not hold shares carrying more than 50 per cent. of the voting rights of the Company, any increase in its interest in shares will be subject to the provisions of Rule 9.

 

Shard Credit Partners Venture Debt Fund I LP will not be restricted from making an offer for the Company unless Shard Credit Partners Venture Debt Fund I LP either makes a statement that it does not intend to make an offer or enters into an agreement with the Company not to make an offer. No such statement has been made or agreement entered into as at the date of this announcement.

 

Form of Independent Shareholders' confirmation in writing

 

Shareholders representing 1,334,317,208 Existing Ordinary Shares (or 50.38 per cent. of Shareholders of the Company's existing share capital) provided their confirmation in writing to the Panel confirming that:

 

1.   they are the beneficial owner of Existing Ordinary Shares and have absolute discretion over the manner in which those shares are voted and that those shares are held free of all liens, pledges, charges and encumbrances;

 

2.   there is no connection between them and Shard Credit Partners Venture Debt Fund I LP;

 

3.   they do not have any interest or potential interest, whether commercial, financial or personal, in the outcome of the Proposals;

 

4.   they are an Independent Shareholder of the Company as defined above; and

 

5.   in connection with the Proposals:

 

(a)  they consent to the Panel granting a waiver from the obligation for Shard Credit Partners Venture Debt Fund I LP to make a Rule 9 Offer to the shareholders of the Company;

 

(b)  subject to Independent Shareholders of the Company holding more than 50 per cent. of the shares capable of being voted on a Rule 9 Waiver Resolution to approve the waiver from the obligation for Shard Credit Partners Venture Debt Fund I LP to make a Rule 9 Offer giving confirmations in writing in a similar form, they consent to the Panel dispensing with the requirement that the waiver from such obligation be conditional on a Rule 9 Waiver Resolution being approved by Independent Shareholders of the Company at a general meeting; and

 

(c)  they would vote in favour of a Rule 9 Waiver Resolution to waive the obligation for Shard Credit Partners Venture Debt Fund I LP to make a Rule 9 Offer were one to be put to the Independent Shareholders of the Company at a general meeting.

 

In giving the confirmations referred to above, each Independent Shareholder concerned acknowledges:

 

1.   that, if the Panel receives such confirmations from Independent Shareholders of the Company holding more than 50 per cent. of the shares capable of being voted on a Rule 9 Waiver Resolution, the Panel will approve the waiver from the obligation for Shard Credit Partners Venture Debt Fund I LP to make a Rule 9 Offer without the requirement for the waiver having to be approved by Independent Shareholders of the Company at a general meeting; and

 

2.   that if no general meeting is held to approve the Rule 9 Waiver Resolution to waive the obligation for Shard Credit Partners Venture Debt Fund I LP to make a Rule 9 Offer:

 

(a)  there will not be an opportunity for any other person to make any alternative proposal to the Company conditional on such Rule 9 Waiver Resolution not being approved by Independent Shareholders of the Company;

 

(b)  there will not be an opportunity for other shareholders in the Company to make known their views on the Proposals; and

 

(c)  there will be no requirement for the Company either (i) to obtain and make known to its shareholders competent independent advice under Rule 3 of the Takeover Code on the Proposals and the waiver of the obligation for Shard Credit Partners Venture Debt Fund I LP to make a Rule 9 Offer; or (ii) to publish a circular to shareholders of the Company in compliance with Appendix 1 of the Takeover Code in connection with this matter.

 

Each Independent Shareholder concerned has confirmed that they consider themselves to be a sophisticated investor in relation to equity investments and that they have had the opportunity to take independent financial advice before giving such confirmations.

 

Each Independent Shareholder concerned has confirmed that they will not sell, transfer, pledge, charge, or grant any option or other right over, or create any encumbrance over, or otherwise dispose of their Ordinary Shares until after the conclusion of the proposed general meeting to approve the Proposals.

 

Having obtained such written confirmation from Independent Shareholders, the Panel has accordingly waived the requirement for a Rule 9 Waiver Resolution.

 

The LS Concert Party

 

Persons acting in concert include persons who, pursuant to an agreement or understanding (whether formal or informal), co-operate, to obtain or consolidate control of that company.

 

The Company undertook a placing and subscription to raise £3.5 million before expenses in May 2021 (announced by the Company on 4 May 2021).  At that time, it was agreed with the Takeover Panel that the following persons who were participating, inter alia, in the placing were acting in concert in relation to the Company: Richard Hughes, Rebecca Hughes, Abigail Hughes, Mahmud Kamani, Samir Kamani, Umar Kamani, Adam Kamani, Petar Cvetkovic, Carol Kane, Daron Lee, John Lyttle, Shaun Mealey, Christian Stephenson and Simon Wilkinson (the "LS Concert Party").

 

As at the date of this document, the LS Concert Party holds, in aggregate, 1,010,000,000 Existing Ordinary Shares, representing approximately 38.15 per cent. of the existing issued share capital of the Group.  In addition, at the time of the placing and subscription May 2021, certain members of the LS Concert Party were granted, in aggregate:

 

·      1,500,000,000 Promoter Warrants to subscribe for the same number of Existing Ordinary Shares.  The exercise price of the promoter warrants is 0.2p per Existing Ordinary Share and are capable of exercise at any time until 25 May 2026; and

·      30,000,000 Director Warrants to subscribe for the same number of Existing Ordinary Shares.  The exercise price of the Director Warrants is 0.2p per Existing Ordinary Share and are capable of exercise at any time until 25 May 2026.

 

On Admission, the LS Concert Party will be interested in 1,684,571 Ordinary Shares representing approximately 22.05 per cent. of the enlarged voting rights of the Enlarged Group.

Assuming exercise in full of the Promoter Warrants and the Director Warrants by the members of the LS Concert Party (and assuming that no other person converts any convertible securities or exercises any options or any other right to subscribe for shares in the Enlarged Group), the members of the LS Concert Party would be interested in 4,132,571 Ordinary Shares, representing approximately 40.97 per cent. of the enlarged voting rights of the Enlarged Group.

The exercise by the members of the LS Concert Party of the Promoter Warrants and the Director Warrants would normally trigger an obligation for an offer to be made under Rule 9. However, the Panel has previously agreed to waive this obligation such that there will be no requirement for an offer to be made in respect of the exercise of the Promoter Warrants or the Director Warrants.

 

21.  General Meeting

 

A notice convening a general meeting of the Company, to be held at 12.00 p.m. on 16 February 2024 at One Wood Street, London, EC2V 7WS, UK. At the General Meeting, the following resolutions will be proposed:

 

·      Resolution 1: to approve the Acquisition;

·      Resolution 2: to consolidate every 625 Existing Ordinary Shares into 1 New Ordinary Share;

·      Resolution 3: to authorise the Directors to: (i) allot Ordinary Shares in connection with the Subscription; (ii) to allot the Remuneration Shares and the CLN Shares; and (iii) allot Ordinary Shares up to a maximum nominal value of £1,591,605.21;

·      Resolution 4: to authorise the Directors to allot Ordinary Shares for cash otherwise than on a pro rata basis to shareholders: (i) in connection with the Subscription; and (ii) up to a maximum nominal value of £477,471.56; and

·      Resolution 5: to change the name of the Company to 'Sorted Group Holdings plc.

 

The resolutions in (1), (2) and (3) will be proposed as ordinary resolutions and the resolutions in (4) and (5) will be proposed as special resolutions. To be passed, the resolutions in (1), (2) and (3) require a majority of the votes cast at the General Meeting, in person or by proxy, and the resolutions referred to in (4) and (5) requires a majority of not less than 75 per cent. of the votes cast at the General Meeting, in person or by proxy. The resolutions are inter-conditional and so, if one of them is not passed at the General Meeting, none of them will be deemed to have been passed.

 

 

 

 

DEFINITIONS

 

The following definitions apply throughout this document, unless the context otherwise requires:

 

"Acquisition"


the proposed acquisition by the Company of the entire issued and to be issued share capital of Sorted Holdings Limited pursuant to the terms of the Acquisition Agreement;

"Acquisition Agreement"


the conditional agreement dated 29 January 2024 made between (i) the Company (ii) the Core Sellers relating to the Acquisition and (iii) the Warrantors relating to the Acquisition, details of which are set out in paragraph 12(b) of Part VII of this document;

"Act"


the Companies Act 2006 (as amended from time to time);

"acting in concert"


shall bear the meaning ascribed thereto in the Takeover Code;

"Admission"


the admission of the Enlarged Share Capital to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules for Companies;

"Admission Document" or "document"


this admission document;

"AIM"


the London Stock Exchange's AIM market;

"AIM Rules"


together, the AIM Rules for Companies and the AIM Rules for Nominated Advisers;

"AIM Rules for Companies"


the rules which set out the obligations and responsibilities in relation to companies whose shares are admitted to trading on AIM as published and amended from time to time by the London Stock Exchange;

"AIM Rules for Nominated Advisers"


the rules of the London Stock Exchange that set out the eligibility obligations and certain disciplinary matters in relation to nominated advisers as published and amended by the London Stock Exchange from time to time;

"Allenby Capital"


Allenby Capital Limited, the Company's nominated adviser, incorporated in England and Wales with company number 06706681, whose registered office address is 5 St. Helen's Place, London EC3A 6AB, United Kingdom, and which is authorised and regulated by the FCA;

"Articles of Association" or "Articles"


the articles of association of the Company, a summary of which is set out in paragraph 5 of Part VII of this document;

"ASOS plc"


ASOS plc (LSE: ASOS) is a United Kingdom-based global fashion retailer for fashion-loving 20-somethings around the world, with a purpose to give its customers the confidence to be whoever they want to be. Further information can be found at www.asosplc.com;

"BigCommerce"


BigCommerce Inc. (NASDAQ: BIGC) is an ecommerce platform that provides SaaS services to retailers;

"Broker Warrants"


unlisted transferrable warrants to subscribe for up to 100,000,000 Existing Ordinary Shares held by Turner Pope, Dr Nigel Burton, Mark Slade and David Rae exercisable for 0.20p until 25 May 2026;

"Business Day"


any day (other than a Saturday or Sunday) on which commercial banks are open for general business in London, UK;

"Certificated" or "in certificated form"


not in uncertificated form (that is, not in CREST);

"Clicksit"


Clicksit App Limited, a private limited company incorporated in England and Wales with company number 09510373, whose registered office address is Fourth Floor, Blackfriars House, St Mary's Parsonage, Manchester, M3 2JA, United Kingdom;

"Closing Price"


0.14 pence, being the closing mid-market price of an Existing Ordinary Share on 27 June 2023, the day prior to suspension from trading on AIM of the Existing Ordinary Shares in accordance with rule 14 of the AIM Rules;

"Completion"


completion of the Acquisition, Share Consolidation, the Subscription, the issue of the Remuneration Shares as well as the CLN Shares and Admission;

"Company" or "Location Sciences"


Location Sciences Group plc, a public limited company incorporated in England and Wales under registered number 06458458 and having its registered office at First Floor, St James House, St James Square, Cheltenham, Gloucestershire, GL50 EPR, United Kingdom;

"Consideration"


approximately £66.73 payable to the Vendors in respect of the Acquisition to be settled in cash on Completion, further details of which are set out in paragraph 8 of Part I of this document;

"CLN Shares" or "Convertible Loan Note Shares"


the 980,711 Ordinary Shares to be issued to certain investors in the Sorted Group, further details of which are set out in paragraph 11 of Part I of this document;

"Core Sellers"


certain shareholders of Sorted who together hold a majority of the issued share capital of Sorted and constitute majority selling shareholders for the purposes of the Drag Along;

"Cornerstone Investors"


Ben Turner and James Pope, the founders of Turner Pope, and their wives, Donna Turner and Maxine Pope, respectively;

"Cornerstone Investor Warrants"


unlisted non-transferable warrants to subscribe for up to 1,500,000,000 Existing Ordinary Shares held by the Cornerstone Investors, exercisable for 0.20p until 25 May 2026;

"Corporate Governance Code" or "QCA Code"


the QCA Corporate Governance published by the Quoted Companies Alliance in 2023 and as amended from time to time;

"CREST"


the electronic system for the holding and transferring of shares and other securities in paperless form operated by Euroclear;

"CREST Regulations"


the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) as amended from time to time, and any applicable rules made under those regulations;

"Deferred Shares"


comprising of (i) the deferred shares of 0.99 pence each in the capital of the Company and the (ii) the deferred shares of 0.9 pence each in the capital of the Company;

"Directors" or "New Board"


the Existing Directors and the New Directors, as described on page 11 of this document;

"Director Warrants"


unlisted warrants to subscribe for up to 30,000,000 Existing Ordinary Shares held by a member of the LS Concert Party, further details of which can be found in paragraph 3 of Part VII of this document;

"Disclosure Guidance and Transparency Rules" or "DTRs"


the Disclosure Guidance and Transparency Rules (in accordance with Section 73A(3) of FSMA) being the rules published by the FCA from time to time relating to the disclosure of information in respect of financial instruments which have been admitted to trading on a regulated market or for which a request for admission to trading on such market has been made;

"Drag Along"


the process under Sorted's articles of association through which the majority selling shareholders in Sorted can require the remaining shareholders in Sorted to sell their shares to a third-party purchaser;

"Enlarged Group"


the Group as enlarged by the Acquisition;

"Enlarged Share Capital"


the issued ordinary share capital of the Company as upon Admission following completion of the Proposals comprising the New Ordinary Shares, the Subscription Shares and the Remuneration Shares as well as the CLN Shares;

"Euroclear"


Euroclear UK & International Limited, a company incorporated in England and Wales and the operator of CREST;

"Existing Directors" or "Board"


the directors of the Company the Business Day before the date of this document whose names are set out on page 11 of this document, including any duly authorised committee of the board of directors of the Company and "Director" is to be construed accordingly;

"Existing Ordinary Shares" or "Existing Share Capital"


the 2,647,587,398 Ordinary Shares of 0.1 pence each in issue at the date of this document;

"EU"


the European Union;

"EU" Prospectus Regulation"


Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017;

"EEA"


the European Economic Area;

"FCA"


the Financial Conduct Authority of the United Kingdom, responsible for the regulation of the United Kingdom financial services industry;

"Form of Proxy"


the form of proxy accompanying this document for use by Shareholders at the General Meeting;

"FSMA"


the Financial Services and Markets Act 2000 (as amended);

"General Meeting" or "GM"


the general meeting of the Company to be held at One Wood Street, London, EC2V 7WS, United Kingdom (the offices of Eversheds Sutherland (International) LLP on 16 February 2024 at 12.00 p.m. and any adjournments thereof to be held for the purpose of considering and, if thought fit, passing the Resolutions;

"Group"


the Company and its subsidiary (as defined in the Act);

"HMRC"


His Majesty's Revenue and Customs of the UK;

"IFRS"


UK-adopted International Financial Reporting Standards issued by the International Accounting Standards Board;

"Introduction Agreement"


the conditional agreement dated 29 January 2024 made between (i) the Company (ii) the Existing Directors (iii) the New Directors and (iv) Allenby Capital relating to Admission, details of which are set out in paragraph 11 of Part VII of this document;

"ISIN"


International Securities Identification Number, the existing ISIN of the Company being GB00BGT36S19;

"Issue Price"


87.50 pence per share;

"Issued Share Capital"


the entire issued ordinary share capital of the Company from time to time;

"LEI"


legal entity identifier, the existing LEI of the Company being 213800MKYV25HW2IAX70;

"London Stock Exchange" or "LSE"


London Stock Exchange Group plc;

"LS Concert Party"


Richard Hughes, Rebecca Hughes, Abigail Hughes, Mahmud Kamani, Samir Kamani, Umar Kamani, Adam Kamani, Petar Cvetkovic, Carol Kane, Daron Lee, John Lyttle, Shaun Mealey, Christian Stephenson and Simon Wilkinson;

"Minority Sellers"


the minority of shareholders in Sorted who are not Core Sellers and constitute the remaining shareholders for the purposes of the Drag Along;

"MyParcelDelivery Holdings Limited"


renamed to Sorted;

"New Directors"


Carmen Christine Carey, Mahmoud Hamid Warriah and Petar Cvetkovic, who are appointed directors of the Company on the date of this document;

"New Ordinary Shares"


the new ordinary shares of 62.5p each in the share capital of the Company resulting from the Share Consolidation;

"Notice of General Meeting" or "Notice"


the notice convening the GM set out in pages 145 to 149 of this document;

"Official List"


the Official List of the FCA;

"ONS"


the Office for National Statistics, an executive office of the UK Statistics Authority, a non-ministerial department which reports directly to the UK Parliament;

"Operator"


Euroclear UK & International Limited or such other person as may, for the time being, be approved by His Majesty's Treasury as Operator under the uncertificated securities rules;

"Ordinary Shares"


the ordinary shares of 62.5p each in the capital of the Company following the Share Consolidation;

"Promoter Warrants"


unlisted non-transferrable warrants to subscribe for up to 1,500,000,000 Existing Ordinary Shares held by certain members of the LS Concert Party, exercisable for 0.20p until 25 May 2026, further details of which can be found in paragraph 3 of Part VII of this document;

"Proposals"


means (i) the Acquisition; (ii) the Share Consolidation; (iii) the Subscription; and (iv) the issue of the Remuneration Shares as well as the CLN Shares;

"Prospectus Regulation Rules"


the prospectus regulation rules made by the FCA pursuant to section 73A of the FSMA from time to time;

"Record Date"


the record date for the Share Consolidation being 6.00 p.m. on 16 February 2024;

"Registrars"


Computershare Investor Services PLC, incorporated in England and Wales with company number 03498808, whose registered office address is The Pavilions, Bridgwater Road, Bristol, BS13 8AE, United Kingdom;

"Regulatory Information Service" or "RIS"


a regulatory information service authorised by the FCA to receive, process, and disseminate regulatory information in respect of listed companies;

"Remuneration Shares"


the 137,142 Ordinary Shares to be issued to the Existing Directors on Admission in lieu of payment owed by the Company, further details of which are set out in paragraph 11 of Part I of this document;

"Resolutions"


the resolutions to be proposed at the General Meeting, details of which are set out in the Notice of GM;

"Restricted Jurisdiction"


the United States of America, Canada, New Zealand, the Republic of South Africa and Japan;

"Reverse Takeover"


any acquisition that would be of a size or nature to be deemed a reverse takeover transaction under Rule 14 of the AIM Rules for Companies;

"SEDOL"


the stock exchange daily official list;

"Shard"


Shard Credit Partners Venture Debt Fund I LP;

"Share Consolidation"


the proposed consolidation of every 625 Existing Ordinary Shares into one New Ordinary Share;

"Share Dealing Code"


the Company's share dealing code as referred to in paragraph 17 of Part I of this document;

"Shareholders" or "Existing Shareholders"


holders of Ordinary Shares from time to time, each individually being a "Shareholder";

"Shopify"


Shopify Inc. (NASDAQ: SHOP) is a Canadian multinational ecommerce company headquartered in Ottawa, Ontario. Shopify helps businesses build an online store and selling online through its proprietary ecommerce platform;

"Significant Shareholder"


a person holding three per cent. or more of the Enlarged Share Capital;

"Sorted", "SHL" or the "Target"


Sorted Holdings Limited, a private limited company incorporated in England and Wales with company number 08609014, whose registered office address is Fourth Floor, Blackfriars House, St Mary's Parsonage, Manchester, M3 2JA, United Kingdom;

"Sorted Group"


Sorted and/or its current subsidiaries;

"Subscribers"


Shard Credit Partners Venture Debt Fund I LP, Mahmoud Warriah and those other persons who execute Subscription Letters;

"Subscription"


the conditional subscription for the Subscription Shares at the Issue Price by the Subscribers pursuant to the Subscription Letters;

"Subscription Letters"


the subscription letters between the Company and each of the Subscribers as more fully described in paragraph 11 of Part VII of this document;

"Subscription Shares"


the 2,285,712 Ordinary Shares subscribed for by the Subscribers pursuant to the Subscription Letters at the Issue Price;

"Substantial Shareholder"


any person who, following Admission, holds any legal or beneficial interest directly or indirectly in 10 per cent. or more of the Enlarged Share Capital or voting rights of the Company, as defined in the AIM Rules for Companies;

"Takeover Code"


the City Code on Takeovers and Mergers issued by the Takeover Panel, as amended from time to time;

"Takeover Panel"


the Panel on Takeovers and Mergers;

"Turner Pope"


Turner Pope Investments (TPI) Limited;

"UK MAR"


the Regulation 2014/596/EU, which is part of UK domestic law pursuant to the Market Abuse (Amendment) (EU Exit) Regulations (SI 2019/310);

"Uncertificated" or "Uncertificated form"


recorded on the relevant register of the share or security concerned as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST;

"United Kingdom" or "UK"


the United Kingdom of Great Britain and Northern Ireland;

"US" or "United States"


the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia;

"VAT"


value added tax;

"Vendors"


the Core Sellers and the Minority Sellers, being the current shareholders of Sorted Holdings Limited at the date of this document;

"Warrantors"


Carmen Carey, Mahmoud Warriah, Robert Whittick, Daniel Greenall, Alex Lagerborg and Timothy Cox; and

"Warrants"


together, the Promoter Warrants, the Cornerstone Investor Warrants, the Broker Warrants and the Director Warrants.

 

GLOSSARY OF TECHNICAL AND COMMERCIAL TERMS

 

The following technical terms apply throughout this document:

"API" or "Application Programming Interface"


a set of definitions and protocols for building and integrating application software;

"App" or "Application"


a software programs developed for end-users to accomplish specific computing tasks. Applications may take the form of Mobile Applications or software packages for use on desktop or laptop computers;

"B2B" or "Business-to-Business"


a transaction or business conducted between one business and another, such as a wholesaler and retailer;

"B2C" or "Business-to-Consumer"


a retail model where products or services move directly from a business to the end user who has purchased the goods or services for personal use;

"C2B" or "Consumer-to-Business"


a business model in which consumers create value and businesses consume that value;

"Carrier Management System"


a software solution that optimises and organises shipping operations, particularly carrier operations, in retail warehouses and distribution centres;

"Carrier"


a company that provides a service to deliver goods on behalf of another company to customers;

"Corporate customers"

 

ecommerce businesses generating in the region of 300,000 units to 12,000,000 units in aggregate shipping parcel volume per year (not all shipped or tracked by Sorted), although this precise range is subject to Sorted's periodic review and accordingly may change; 

"Corporate and Enterprise"

 

comprised of Corporate customers and Enterprise customers;

"Delivery Experience Platform"


Sorted's proprietary delivery management platform comprised of the Ship, Track and Return propositions;

"ecommerce" or "electronic commerce"


the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet;

"Enterprise customers"


ecommerce businesses generating in excess of 12,000,000 units in aggregate shipping parcel volume per year (not all shipped or tracked by Sorted), although this precise range is subject to Sorted's periodic review and accordingly may change;

"Lifetime Value"


an estimate of the average revenue that a customer will generate throughout their lifespan as a customer;

"M-commerce" or "Mobile Commerce"


ecommerce that takes place on via wireless computing devices such as smartphones;

"Mobile Applications"


a software application developed specifically for use on small, wireless computing devices, such as smartphones, rather than desktop or laptop computers;

"Multi-Product Customers"


customers of both Ship and Track;

"myparceldelivery.com"


a parcel price comparison website for individual consumers and small businesses to purchase Carrier labels at reduced prices and arrange parcel collections or drop offs;

"Omnichannel"


a customer centric sales strategy that provides a seamless shopping experience between marketing channels. Omnichannel allows merchants to sell through multiple channels, such as desktops, mobile devices, and in-store;

"Refactoring"


the process of restructuring existing computer code without changing its external behaviour;

"Return"


Sorted's return proposition comprising of the Sorted Returns Center and the Reverse Logistics Platform;

"Reverse Logistics Platform"


Sorted's standalone portal for charities, retailers and other businesses to manage the process of items being shipped from individuals to central warehouses and hubs;

"SaaS" or "Software-as-a-Service"


a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted;

"Ship"


Sorted's Carrier Management System that enables retailers to take complete control of their shipping operations by combining access to Sorted's comprehensive carrier services library with the flexibility of its shipments allocation optimization rules engine;

"Shipments"


a version of Ship used primarily by Sorted's Enterprise customers;

"Shopify Marketplace"


a fully functional ecommerce marketplace;

"SMB" or "Small and Medium-Sized Business"


companies that are smaller in size and revenue than large corporations, but larger than microbusinesses or those run by an individual proprietor;

"Sorted Returns Center"


a premium Application available on Shopify allowing ecommerce businesses to automate and simplify customer returns, exchanges, refunds and production labels to retain customers and revenue;

"SortedPRO"


now rebranded as Return;

"SortedREACT"


now rebranded as Track; and

"Track"


Sorted's software solution that consolidates an ecommerce businesses' shipment tracking data in one place and enables proactive branded shipment status communications to be sent to its customers.

 

 

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