Big Sofa Technologies : Related Party Transaction

RNS Number : 6394Q

Big Sofa Technologies Group PLC 20 February 2019

20 February 2019

Big Sofa Technologies Group plc

("Big Sofa" or the "Company")

Related Party Transaction

Big Sofa (AIM:BST), an international video analytics provider to the consumer insight industry, announces that, further to the RNS announcement of 18 June 2018, and in light of the increasing flow of orders from companies within the Ipsos S.A. group of companies (the "Ipsos Group"), the independent directors of the Company have reviewed and extended the protocol against which transactions with the Ipsos Group are assessed in conjunction with AIM Rule 13.

Background

As set out in the RNS announcement dated 2 March 2018, following a subscrip2on for ordinary shares (the "Subscrip2on") on 9 March 2018, Ipsos S.A(through its UK subsidiary, Ipsos MORI UK Limite)d("Ipsos") became a "substan2al shareholder" in Big Sofa as defined in the AIM Rules for Companies and, as such, a "related party." Accordingly, all trading and other transac2ons between the Company and members of the Ipsos Group have since fallen to be assessed as related party transactions under AIM Rule 13. The Ipsos Group has been a customer of Big Sofa since May 2015.

The Parameters

The Parameters, defined in the announcement of 18 June 2018, were devised such that if any individual PO received from the Ipsos Group falls within them, the independent directors of Big Sofa consider such a PO can be pre-determined to have met the fair and reasonableness test required by AIM Rule 13.

The Parameters cover the gross margin on Purchase Orders ("PO") requested by the Ipsos Group against which the Company decides to tender. In order for the Company to accept a PO under this protocol, the PO must fall within the Parameters. For an individual PO to achieve this: (i) the PO must exceed a minimum gross margin of 30 per cent, and (ii) the weighted average gross margin of all POs accepted from the Ipsos Group since admission of the Subscrip2on shares to trading on AIM ("Admission") (including the proposed PO) must be no less than the weighted average gross margin achieved on POs from all non-Ipsos Group customers for the preceding 12 months (or, where that period is shorter than 12 months, since the date on which Ipsos Group became related party). For the purposes of the calculation, the weighted average gross margins are calculated on a monthly basis.

The Company and Ipsos Group have entered into over 100 contracts which fall within the Parameters. The aggregated turnover of these contracts since Admission has reached £0.5 million and, accordingly, as set out in the 18 June 2018 announcement, the independent directors have reviewed the Parameters and have decided to extend the arrangement such that any future transac2ons that fall within the Parameters up to an amount of £1.25 million, when aggregated with previous orders from 1 January 2019, can be considered to have met the fair and reasonableness requirement of AIM Rule 13. Any orders that, once assessed, fall outside these agreed Parameters will be aggregated and class tested as related party transactions in the usual way.

These Parameters will be reviewed again at the earlier of 31 December 2019 or the date on which £1.25 million of aggregated turnover (from 1 January 2019) has been conducted with Ipsos Group. This protocol has been discussed with Arden Partners Plc, the Company's nominated adviser.

This should not be interpreted to be an expectation of future turnover to be derived from contacts with Ipsos Group.

Since 9 March 2018, a small propor2on of transac2ons with Ipsos Group have fallen outside of the Parameters. Typically, these have been small projects with service lines or regional offices within Ipsos Group with which Big Sofa has not had previous commercial exposure, or underlying clients with which Big Sofa has been keen to run a pilot project to demonstrate its capability in order to win future business. Since Ipsos Group became a related party, there have been 8 individual projects which have fallen outside the Parameters. In aggregate, these contracts amount to less than £60,000 and therefore did not fall to be considered separately related party transac2ons under AIM Rule 13. While they were each undertaken at less than 30 per cent gross margin, they were s2ll profitable for the Company in aggregate.

With the excep2on of John Haworth, who is employed by Ipsos, the directors of Big Sofa Technologies consider, having consulted with Arden Partners Plc, that prospec2ve transac2ons with the Ipsos Group which fall within the Parameters are fair and reasonable insofar as shareholders are concerned.

Enquiries:

Big Sofa Technologies Group plc Kirsty Fuller, CEO

via Vigo Communications

Joe MacCarthy, CFO

Arden Partners plc (Nominated Adviser and Joint Broker)

[phone]

Paul Shackleton / Ben Cryer

Novum Securities (Joint Broker) Colin Rowbury

[phone]

Vigo Communications (Financial Public Relations) Ben Simons / Jeremy Garcia / Antonia Pollock

[phone]

About Big Sofa Technologies Group plc

Big Sofa is a B2B technology business providing the insight and analy2cs industries with video observa2on and analytics services, as video emerges as a key platform in a massive US$40 billion consumer research market.

Our soKware plaLorm collates, analyses and organises large volumes of raw/unstructured video enabling our clients, which include leading market research organisa2ons and major household brands, to perform detailed and sophisticated consumer insight analysis; and make genuine use of video content.

Big Sofa's shares are admitted to trading on the London Stock Exchange's AIM market under the ticker BST.L.

To find out more, visitwww.bigsofatech.com

Follow us on twitter at @bigsofatech

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