Management Board of IMS S.A. (“Company”, “Issuer”) announces that today it signed an agreement setting out the framework conditions for a transaction (“term sheet”) concerning the acquisition of 100% of the shares of Audio Marketing Sp. z o.o. with its registered office in Koszalin (“AM”). The parties to the term sheet are: IMS S.A. as the purchaser and five natural persons holding jointly 100% of the shares in AM as the transferor and AM itself.

AM is a company which has been operating for several years in the audio-marketing industry, whose business model is based on delivering music services to points of sale. AM has over 6,000 locations to which it delivers subscription audio services. Following the acquisition, the Issuer’s Capital Group will have a total of approximately 26,000 subscription locations, significantly increasing the number of locations it owns and diversifying its subscription revenue sources. The acquisition of AM is a very important step for the Issuer aiming at consolidation of the sensory marketing market in Poland and even stronger strengthening of the Issuer’s position as the market leader in Poland. The Management Board of the Issuer sees numerous synergies resulting from the acquisition of AM. These synergies include first of all the possibility to introduce to some of AM’s clients a wide portfolio of IMS Group services – aromamarketing, Digital Signage, audio advertising services (revenue synergies). There are also significant opportunities for cost savings (cost synergies).

The acquisition of 100% of shares in AM will be made under the earn-out model. A very significant part of the consideration to the existing owners of AM depends on the profits that AM will generate for the IMS Group after the acquisition. The key provisions of the term sheet are as follows:

1. The Issuer shall pay to the existing owners of AM, by virtue of the acquisition, by July 1, 2021 (the agreed maximum date for signing the final investment agreement), all the Shares (representing 100% of the share capital of the Company) – a total gross price of PLN 4,250,000.00. The parties agree that the whole or part of the above amount may be settled in shares of IMS.
2. Additional payment for shares depends on the net profit earned in one of the periods (“settlement period”): 01.07.2021-30.06.2022 or 01.10.2021-30.09.2022 or 01.01.2022-31.12.2022. The choice of the period will be made by the existing owners of AM before signing the investment agreement. In each of the above periods AM will already be within the structures of the IMS Group. This payment varies between PLN 1,550,000.00 gross to be distributed to all existing owners of AM with a net profit of at least PLN 750,000.00 to PLN 6,500,000.00 gross to be distributed to all existing owners of AM with a net profit of at least PLN 1,750,000.00.
   
   

For the purposes of the calculations indicated in para. 2 above, to determine the net profit, calculated in accordance with IFRS, all cost synergies following the acquisition by IMS of shares in AM are taken into account, as well as the part of the profit resulting from the sale of products and services of the existing IMS Group, i.e. from the sale of advertising, aromamarketing and digital signage services. The portion of the net profit derived from the sale of products and services of the existing IMS Group may not exceed 20% of the net profit derived from the existing operations of AM.

The Management Board of the Issuer estimates that the sum of payments mentioned in points 1 and 2 will amount in total to approximately 5-8 times AM’s net profit for the IMS Group in the settlement period.

3. In case when AM does not generate in the settlement period at least PLN 750,000.00 net profit calculated according to the rules described above but at the same time generates net profit equal or higher than PLN 500,000.00, the existing shareholders of AM will pay to IMS a guarantee amount of PLN 500,000.00 in total. In case of generating the net profit in the settlement period lower than 500,000.00 PLN the existing shareholders of AM will pay to IMS the guarantee amount in total amount of 1,000,000.00 PLN. All the aforementioned amounts are secured by notarial statements on submission to enforcement.
4. In order to further motivate the existing shareholders of AM to achieve the best possible financial results in subsequent years, the Issuer will make an additional payment for the previously acquired Shares, for the periods specified below, to be distributed among the existing shareholders of AM:

i.       01.01.2023-31.12.2023 – 17,5% of AM net profit for this period,
ii.       01.01.2024-31.12.2024  – 17,5% of AM net profit for this period,
iii.      01.01.2025-31.12.2025  – 17,5% of AM net profit for this period,
iv.      01.01.2026-31.12.2026  – 17,5% of AM net profit for this period,

Net profit means net profit calculated in accordance with IFRS, without the exclusions described in para 2 above.

5. The existing shareholders of AM are guaranteed employment, regardless of its legal form, for a period of 5 years from the signing of the relevant investment agreement. Two existing members of the Management Board of AM (who are also existing shareholders) are guaranteed a seat on the Board for the aforementioned period of 5 years. The Issuer has the right to appoint a majority of the Management Board in AM. The remuneration of the existing partners after the merger is determined based on the average remuneration of these persons for the years 2019 and 2020.
6. In the event that AM or any of the existing shareholders does not proceed with the conclusion of the relevant investment agreement on the terms agreed in the term sheet document for any reason, each of the existing shareholders of AM shall pay, independently of the others, to the Issuer a guarantee penalty of PLN 150,000.00. The total guarantee penalty payable by all existing shareholders amounts to PLN 750,000.00. The above claims are secured by notarial statements on submission to execution. Additionally, the above claims are guaranteed for the total amount of PLN 750,000.00 by AM company (notarial statement on submission to enforcement).
7. Signing of the final investment agreement by the Issuer will depend on the absence of any irregularities during due diligence, absence of any material adverse change in the operations of AM at the time of signing the final investment agreement and approval of the transaction by the relevant corporate authorities of the Issuer. The Issuer may withdraw from the transaction without any consequences if the Management Board of the Company does not obtain appropriate corporate approvals (approval of the Supervisory Board for the aforementioned transaction) or if the due diligence examination reveals material irregularities in the operations of AM or material inconsistencies between the information and documents provided to the Issuer to date and the actual state of affairs. In case of resignation for any other reason, the Issuer is obliged to pay the total guarantee amount to the existing shareholders of AM in the amount of PLN 750,000.00. The Issuer did not make a statement on submitting to execution.

Selected financial data of Audio Marketing Sp. z o.o. (prepared in accordance with the Accounting Act, not audited) for the last two completed balance sheet years, i.e. 2020 and 2019, are as follows:

ITEM	2020	2019
	in thousands of PLN	in thousands of PLN
REVENUES	2,440	2,094
EBIT	1,160	951
EBITDA	1,168	958
NET PROFIT	1,043	851
FIXED ASSETS	21	28
RECEIVABLES	497	406
CASH	779	582
SHARE CAPITAL	1,115	923
LIABILITIES	215	201

The acquisition of Audio Marketing Sp. z o.o. fits perfectly into the development strategy of the Issuer’s Capital Group. It will add over 6,000 subscription locations to the Group’s customer portfolio, largely medium- and small-format FMCG locations not significantly affected by COVID-19 restrictions.  AM has done very well – as did APR Sp. z o.o., which was acquired by the Issuer in October 2018. – has coped with the coronavirus crisis, posting earnings growth at every level and very good liquidity in 2020. The AM acquisition itself is completed on a model and terms almost identical to those of APR Sp. z o.o.

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 02.03.2021, 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: 6,188,820, number of votes attached to the held shares: 6,188,820, which gave right to 40.41% votes in the Extraordinary General Shareholder Meeting and constitutes 19.69% of the total votes;

2) Michał Kornacki – number of held shares: 5,474,000, number of votes attached to the held shares: 5,474,000, which gave right to 35.74% votes in the Extraordinary General Shareholder Meeting and constitutes 17.42% of the total votes;

3) Paweł Przetacznik – number of held shares: 2,154,110, number of votes attached to the held shares: 2,154,110, which gave right to 14.06% votes in the Extraordinary General Shareholder Meeting and constitutes 6.85% of the total votes;

4) Przemysław Świderski – number of held shares: 1,000,000, number of votes attributed to held shares: 1,000,000, which gave right to 6.53% votes in the Extraordinary General Shareholder Meeting and constitutes 3.18% of the total votes.

The Board of Directors of IMS S.A. (“Company”) presents attached the texts of resolutions adopted on 02.03.2021 by the Extraordinary General Meeting.

At the same time, the Board of Directors of the Company informs that during the General Meeting no objections were made to the minutes of the meeting regarding adopted resolutions, no resolutions were voted and not adopted, and no item on the agenda was omitted from the examination.

 

Detailed legal basis:

Article 19 paragraph 1 point 6 and 7, 8, 9 of the Regulation on current and periodic information

With reference to the ESPI report no 2/2021, the Management Board of IMS S.A. (“Company”, “Issuer”) informs that on March 2, 2021. The Extraordinary General Meeting of the Company, by Resolution No. 7, adopted the Incentive Scheme IV for 2021 – 2023, based on management options, for the members of the Management Board, managers, employees and associates of the companies of the IMS Capital Group, and approved the Regulations of the Scheme (“Regulations of the Incentive Programme IV”; “Regulations IV”).

The aim of Incentive Programme IV, addressed to the Members of the Management Board of IMS S.A. as well as to the managers, employees and co-operators of the companies in the IMS S.A. Capital Group, is to create an additional, strong motivating tool for the achievement of very ambitious goals through such actions as the acquisition of highly valuable entities, the generation of high sales from the current products and services, and the acquisition of new customers and new markets, which should have a significant effect on the share price of IMS S.A. The creation of significant incentives for the members of the Management Board, managers, employees and associates of the IMS Group to create solutions that improve the financial performance of the IMS Group and the strong association of the best personnel with the companies of the IMS Group, which becomes even more important in view of the SARS-CoV-2 coronavirus pandemic and its impact on the economic reality in Poland and worldwide, should lead to the implementation of ambitious plans to rebuild the revenues and profits of the IMS Group and, as a result, to an increase in the value of IMS S.A. shares.

The Incentive Programme IV provides for obtaining the right to acquire, by the persons participating in it, for a total of not more than 2,000,000 shares of a new series (which accounts for a maximum of 6.36% of the current share capital during 3 years of the Incentive Programme IV), on condition that these persons meet the criteria set forth in the Programme IV Regulations, at the issue price equal to the arithmetic mean of the closing prices of the shares of IMS S. A. on the Warsaw Stock Exchange in the period 01.04.2020-31.12.2020 taking into consideration 80% discount, i.e. the issue price of PLN 0.51 per share.

The general criterion for the acquisition of the right to subscribe for shares for a given financial year during the period 2021 – 2023 (“acquisition period”) for all participating persons is that they have been in a business relationship with one of the IMS Group companies for at least three months during the relevant acquisition period and that the IMS Group has achieved the EBITDA results for each year of the Scheme as set out in the Incentive Scheme IV Regulations. The detailed criterion is the significant influence of the participating persons on the activity of the Group’s companies, the assessment of which is performed by the Supervisory Board, and in the case of persons who are not members of the Management Board, the Supervisory Board’s assessment will be preceded by a written motion of the Management Board justifying the selection of a given person. The Supervisory Board may deviate from the general criterion mentioned above on the condition of a particularly significant impact of the participating person or persons on the financial results of the Group. In the case described in the preceding sentence, the Supervisory Board may grant a maximum of 300,000 Warrants in total in any given acquisition period (15% of the total pool of Programme IV).

The right to acquire shares under Incentive Programme IV will be exercised in the form of subscription warrants issued by the Company. One warrant will entitle to acquire one share. Participants of Incentive Programme IV will be obliged not to sell acquired shares (lock – up) for 18 (eighteen) months from 31 July of the year following the given purchase period.