On behalf of the Directors, it is my pleasure to invite you to consider becoming a Shareholder in Damstra. Damstra is an Australian-based provider of workplace management solutions to multiple industry segments across the globe. We develop, sell and implement integrated hardware and software-as-a-service (”SaaS”) solutions in industries where compliance and safety is of utmost importance. Our solutions assist our clients to better track, manage and protect their staff, contractors and their organisations, and to reduce the risks associated with worker health, safety and regulatory compliance. We pride ourselves on playing a role in helping our clients meet the requirements of health, safety and environmental (“HSE”) regulations. The Company has been operating since 2002, and has grown from a single office in Singleton, New South Wales, to having approximately 350 clients across eight countries and over 330,000 registered licences (in each case as at 30 June 2019) and operations in Australia, New Zealand, the United States, the United Kingdom and a global operations centre in the Philippines. Our solutions help our clients deal with multiple aspects of their organisations, including workforce management, access control, asset management, learning management and HSE management. We are operating in a US$15.6 billion market (as at 2018) with significant opportunity for global expansion going forward. Damstra is led by an experienced management team that has a track record of achieving strong revenue growth, supported by strong client retention and a differentiated business model. Our Chief Executive Officer (“CEO”), Christian Damstra, has been involved in the business for over 17 years, and remains committed to leading the business following our listing on the ASX. Between 1 July 2016 and 30 June 2020, we are forecast to deliver strong compound annual growth in pro forma revenue of 37%, and to generate positive operating cash flow over this period. In addition, our business is characterised by a loyal client base, having recorded a client retention rate of over 97% between FY2018 and FY2019 (based on total revenue).1 We have a growth strategy that seeks to expand the usage of our solution within existing clients, grow the number of clients who use our solution globally, continue to innovate and transform our technology through product development investment, and supplement our growth through selective, strategic acquisitions. We are particularly excited about our North American performance, which demonstrates that our platform and business model can be scaled and implemented on a global basis and we see international growth as one of our core pillars. The purpose of the Offer is to provide funding and financial flexibility to support our growth strategy, to repay, in part, existing indebtedness (including certain Westpac facilities and deferred consideration in connection with Damstra’s acquisition of EIFY), to pay the contingent consideration in respect of Velpic and EIFY2, to allow Existing Shareholders to realise part of their investment in Damstra, to broaden our shareholder base and provide a liquid market for Shares, to provide us with the benefits of an increased brand profile that arises from being a publicly listed entity, and to pay transaction costs.
Damstra is seeking to raise $35.0 million3 through the issue of 38.9 million Shares4 at an Offer Price of $0.90 per Share, and Existing Shareholders are seeking to sell 15.9 million Shares through SaleCo, also at the Offer Price. The total size of the Offer is therefore $49.3 million.5 Upon Completion of the Offer, new Shareholders are expected to hold 39.9% of the Shares6 and Existing Shareholders, including certain management and Directors, will retain 60.1% of the Shares7 , of which 44.8%8 are expected to be subject to escrow restrictions applying for periods ranging between 6 and 12 months from Listing. This Prospectus contains detailed and important information about the Offer, the historical and forecast financial results of Damstra, and the key risks associated with an investment in the Company. Before applying for Shares, any prospective investor should be satisfied that they understand the risks involved in making an investment in Damstra, including those key risks set out in Section 5 of this Prospectus. These risks include, but are not limited to, failure to retain existing clients and attract new clients, lack of success of sales and marketing strategy, increased competitive pressures, loss of key clients and arrangements, reliance on uptake of SaaS-based workforce management software solutions, operations in foreign jurisdictions or unfamiliar markets, failure to adequately maintain and develop our workplace management solution, disruption or failure of technology systems and software, cyber security incidents, failure to manage growth, failure to protect our intellectual property rights and inability to attract or retain key personnel. I encourage you to read this Prospectus carefully and in its entirety before making any investment decision, and to consult with, and seek professional guidance from, your stockbroker, accountant, lawyer, financial adviser or other independent professional adviser in connection with the Offer. On behalf of my fellow Directors, I look forward to welcoming you as a Shareholder of Damstra.
Damstra Holdings Limited