The Board of Directors of IMS S.A. (“Company”, “Issuer”) informs that it signed today an agreement specifying the terms sheet for the transaction regarding the acquisition of 100% shares of APR Sp. z o.o with the registered office in Katowice (“APR”). The parties to the term sheet are: IMS S.A. as the purchaser and three natural persons holding together 100% shares in APR as sellers and the APR Company itself.

APR is a company operating for several years in the audiomarketing sector, whose business model is based on provision of music services to points of sale. APR has ca. 3,000 locations to which it provides subscription audio services at home and abroad. After the acquisition, the Issuer’s Capital Group shall hold in total ca. 17,000 subscription locations. For the Issuer, the acquisition of APR shall be a major step aimed at the consolidation of the sensory marketing market in Poland and further strengthening of the Issuer’s position as the market leader in Poland. Adding APR to the IMS Capital Group is also of key importance in view of considerable strengthening of the position of the Issuer’s Capital Group in the budget audiomarketing segment where the Issuer started to operate as of the beginning of this year and where most of the competitors operate. The Board of Directors of the Issuer sees numerous synergies resulting from the acquisition of APR. The synergies include foremost the opportunity to launch for the part of of APR clients a wide portfolio of services of IMS Group – aromamarketing, Digital Signage, audio advertising services, event services (income synergies). There are also significant opportunities regarding cost savings (cost synergies).

The acquisition of 100% of shares of APR shall be carried out in the earn-out model. An extremely significant portion of the payment for the benefit of previous owners of APR (being at the same time the only members of the board of this company) depends on profits generated by APR for IMS Capital Group. The key provisions of the term sheet are as follows:

1. By 5 November 2018 (the set deadline for conclusion of the final investment agreement) the Issuer shall pay to the previous owners of APR on the account of the acquisition of all Shares (representing 100% of share capital of the Company) – the total price of PLN 3,750,000.00 gross, i.e. PLN 1,250,000.00 gross for each of the previous owners of APR. The parties consensually allow clearing the whole or the portion of the above mentioned amount by means of IMS shares.
2. An additional payment for shares depends on the net profit generated in the period from 01.07.2019 to 30.06.2020, i.e. in the period when APR is in the structure of IMS Group. The payment ranges from PLN 1,550,000.00 gross, i.e. PLN 516,666.67 gross for each previous owner of APR if the profit of at least PLN 700,000.00 is generated to PLN 4,800,000.00 gross, i.e. PLN 1,600,000.00 gross for each of the previous owners of APR if the profit of at least PLN 1,600,000.00 is generated.

For the purpose of the calculations indicated in paragraph 2 above, to specify the net profit, calculated in line with IFRS, all cost synergies after the acquisition of APR shares by IMS and a portion of the profit resulting from the sales of products and services of the previous IMS Group, i.e. the sales of advertising services as well as event, aromamarketing and Digital Signage services, are included.  The portion of the net profit resulting from revenue from sales of products and services of the previous IMS Group may not exceed 20% of the net profit generated from previous activity of APR.

The Board of Directors of the Issuer estimates that the sum of payments mentioned in paragraphs 1 and 2 above will amount in total to ca. 5-8 times the net profit generated by APR for the IMS Group in the period from 01.07.2019 to 30.06.2020.

3. If APR fails to generate in the period from 01.07.2019 to 30.06.2020 the net profit of at least PLN 700,000.00 calculated in line with rules specified above but at the same time higher than PLN 400,000.00, previous shareholders of APR shall pay for the benefit of IMS the total amount of PLN 300,000.00 (PLN 100,000.00 each of previous shareholders). If the profit generated in the above mentioned period is PLN 400,000.00 or lower, previous shareholders of APR shall pay for the benefit of IMS the total amount of PLN 750,000.00 (PLN 250,000.000 each of previous shareholders).  All the above mentioned sums are secured by notary statements of submission to enforcement.
4. So as to additionally motivate previous shareholders of APR to achieve the best possible financial results in the coming years, the Issuer shall make an additional payment for the earlier acquired Shares, for the periods specified as below, to be shared equally among previous shareholders of APR:

i.       01.07.2020-30.06.2021 – 25% of the net profit of APR for this period,

ii.        01.07.2021-30.06.2022 – 25% of the net profit of APR for this period,

iii.       01.07.2022-30.06.2023 – 25% of the net profit of APR for this period,

iv.       01.07.2023-30.06.2024 – 25% of the net profit of APR for this period,

The net profit means the net profit calculated in line with IFRS, without exclusions specified in paragraph 2 above.

5. The previous shareholders of APR being at the same time members of the board are guaranteed a seat on the board for the period of 5 years of the conclusion of the actual investment agreement. The remuneration of the above mentioned members of the board is established based on the regulations for remunerating members of the board in the Issuer’s subsidiaries. The Issuer has the right to appoint the majority of the board of APR.
6. If APR or any previous shareholders:

i. breaches the provisions regarding no competition,

ii. fails to finalise the actual investment agreement based on the term sheet conditions for any reason,

each of the previous shareholders of APR shall pay independently from the others for the benefit of the Issuer the contractual penalty of PLN 350,000.00. The total warranty penalty payable by all previous shareholders is PLN 1,050,000.00. The security to the claims mentioned above is notary statements of submission to enforcement. Additionally, the above mentioned claims are guaranteed in the total amount of PLN 1,050,000.00 by the APR company (a notary statement of submission to enforcement).

7. The conclusion by the Issuer of the final investment agreement shall depend on non indication of any irregularities in the due diligence audit, no significant unfavourable change in the operations of the APR company as at the moment of concluding the final investment agreement and the approval of the transaction by the Issuer’s appropriate corporate bodies. The Issuer may withdraw from the transaction without any consequences if the Board of the Company fails to obtain appropriate corporate consents (the consent of the Supervisory Board for the above mentioned transaction) or significant irregularities in the operations of the APR company are indicated in the ongoing due diligence audit or there are significant discrepancies between information and documents previously submitted to the Issuer and the current state of affairs. If the Issuer resigns for any other reason, it is obliged to pay the total warranty sum for the benefit of previous shareholders of APR in the amount of PLN 1,050,000.00 – PLN 350,000.00 for the benefit of each of the previous shareholders of APR.  The Issuer has not filed a statement of submission to enforcement.

Selected financial data of APR Sp. z o.o. (prepared in line with the Accounting Act , not reviewed by an auditor) for the last two completed financial years, i.e. 2017 and 2016 are as follows:

Year 2017

Revenue: PLN 2,342 thousand PLN

EBIT: PLN 455 thousand PLN

EBITDA: PLN 555 thousand PLN

Net profit: PLN 389 thousand PLN

Non-current assets: PLN 868 thousand PLN

Inventories: PLN 125 thousand PLN

Receivables: PLN 298 thousand PLN

Cash: PLN 129 thousand PLN

Equity: PLN 566 thousand PLN

Liabilities: PLN 879 thousand PLN

Year 2016

Revenue: PLN 1,078 thousand PLN

EBIT: PLN 69 thousand PLN

EBITDA: PLN 115 thousand PLN

Net profit: PLN 50 thousand PLN

Non-current assets: PLN 707 thousand PLN

Inventories: PLN 53 thousand PLN

Receivables: PLN 62 thousand PLN

Cash: PLN 56 thousand PLN

Equity: PLN 177 thousand PLN

Liabilities: PLN 707 thousand PLN

The Board of Directors of IMS S.A. (“Company”) submits the list of shareholders holding at least 5% of votes in the Extraordinary General Shareholder Meeting of the Company which took place on 31.07.2018, specifying the number of votes attributed to each of them on account of held shares and indicating their percentage share in the number of votes in this General Shareholder Meeting as well as in the total number of votes.

1) Dariusz Lichacz – number of held shares: 6,158,820, number of votes attached to the held shares: 6,158,820, which gave right to 27.69% votes in the Extraordinary General Shareholder Meeting and constitutes 18.38% of the total votes;

2) Michał Kornacki – number of held shares: 5,874,000, number of votes attached to the held shares: 5,874,000, which gave right to 26.41% votes in the Extraordinary General Shareholder Meeting and constitutes 17.53% of the total votes;