Acquisition

4th Sep 2008 15:18



Immediate Release: Thursday 4th September 2008

Ninety Plc 

("Ninety" or "the Company")

Proposed acquisition of Honour Field

Proposed Placing of 320,166 New Ordinary Shares at a price of 75 pence per share Proposed 1 for 60 Share Consolidation

Proposed change of name to "Sorbic International plc"

Notice of Extraordinary General Meeting

The Board is pleased to announce that the Company has conditionally agreed to acquire the entire issued ordinary share capital of Honour Field for a consideration of up to £20.12 million, payable in New Ordinary Shares, 9,860,000 to be issued on Completion and up to a further 10,300,000 to be issued conditional upon Honour Field achieving a minimum audited net profit after tax for the financial year ending 31 December 2008 of RMB60 million, £4.38 million (£1: RMB 13.71) and against which the Deferred Shares will be allotted. The total consideration includes 6,666,666 New Ordinary Shares issued on conversion of the Albany Convertible Loan and the Hermes Convertible Loan. FinnCap is nominated Adviser and Broker to Ninety Plc.

Certain definitions and terms apply throughout this announcement and your attention is drawn to the table at the end of this announcement where these definitions and terms are set out in full.

Highlights

The acquisition will provide Ninety with a well established and proven business in the PRC which produces Sorbic Acid and Potassium Sorbate and with customers in over forty six countries. Honour Field will also provide the Company with a profitable business with the opportunity for continued commercial development and sustained long-term growth, under an experienced local management team. In the six months ended 30 June 2008 LVST made profit before tax of £2.26 million.

 

Commenting on the acquisition, John McLean, Executive Director of Ninety Plc and proposed Non-excutive Chairman of the Enlarged Group, said:

"We are acquiring a profitable and cash generative business which has a strong market position in a growing international market for Sorbic Acid and Potassium Sorbate. It has an impressive domestic and international customer base and a clear strategy to grow the business both organically and by acquisition."

Future strategy

 

The New Board believes the Enlarged Group has three main elements to its future strategy.

New facilities - At present, LVST operates from a site in Linyi City. The existing facility has an area of approximately 33,000 m² and has two production lines which are currently operating at their full design capacities. In order for LVST to be better positioned to service future anticipated growth in demand for its products, it has acquired land immediately adjacent to its present site with total area of approximately 14,700 m² The total cost of expanding production facilities will be approximately RMB 100 million (circa £7.3 million) which will be available from the cash resources of the Enlarged group and existing working capital facilities. The proposed new production facilities will include two more production lines which would double the existing capacity. A major international food manufacturer has already expressed an interest in purchasing the entire output from one of the proposed new production lines.

Increase marketing activities - Currently the New Board believes that sales of products is limited by production capacity. Anticipating the increase in production capacity, the New Board plans to enhance its effort in the area of distribution. With strong growth in both domestic and international market, it is proposed that the sales team focus on developing new markets while strengthening the relationship with the existing customers.

Acquisition opportunities - Whilst the New Board believe that there are substantial opportunities for organic growth through increased production, they will also consider suitable acquisition opportunities as they arise.

Financial summary

 

A financial summary for LVST for the three financial years ended 31 December 2007 and the six months ended 30 June 2008, is set out below which has been converted into GBP Sterling using a fixed exchange rate of £1: RMB 13.71, being the approximate rate of exchange at 30 June 2008, and is set out below:

Six months ended		Year ended	Year ended	Year ended
30 June		31 December	31 December	31 December
2008		2007	2006	2005
£000s		£000s	£000s	£000s
Revenue	7,373	12,918	11,527	8,009
Gross profit	2,732	4,204	3,004	1,748
Profit before tax	2,260	3,414	2,340	1,303
Profit for the period	1,978	2,842	2,340	1,303
Cash and cash equivalents	1,864	3,891	1,898	951
Net assets	6,619	7,528	5,778	4,095

 

In 2007, LVST sold 47.7 per cent. of its products to overseas markets and 52.3 per cent. to the Chinese domestic market. In that period, its overseas customers were spread over 46 countries and its domestic customers were spread all over China. Global demand for Sorbic Acid and Potassium Sorbate has increased as a result of the increase in the world's population and higher demand for food. According to the Food and Agriculture Organization of the United Nations, global population increased by over 74.8 per cent. between 1970 and 2005, and is expected to reach 8.3 billion by 2030. With the steady growth of the global population, increased production of food products is essential to ensure adequate food supply. The continuous increase in food production has significantly increased the importance of, and demand for, food preservatives. Increased household income and rapid urbanization in China has also led to continued growth in the domestic consumption of meat, dairy and other high-protein products as well as the use of modern household products. The production of these food and household products often requires high volumes of preservatives, thereby increasing the demand for both Sorbic Acid and Potassium Sorbate. At the EGM, resolutions will be proposed, conditional on having obtained Shareholders' approval for the Acquisition, to, inter alia, appoint Wang Yan Ting, Ray Ang, Susan Chong and Nicholas Smith as directors of the Company. With effect from Completion, it is also proposed that Michael Gretton and Thomas Vaughan will resign from the Board. 

To reflect the proposed changes to the Company, its management and operations as a result of the Acquisition, it is proposed that, conditional on Completion, the Company will change its name to Sorbic International plc.

In view of the size and nature of the Acquisition, it constitutes a reverse takeover of the Company under the AIM Rules and a change of control of the Company under the City Code. Accordingly, the Proposals are conditional, inter alia, on the approval of Shareholders, such approval to be sought at the Extraordinary General Meeting, notice of which has been sent to Shareholders today.

If the Resolutions are duly passed at the EGM, the Company's existing trading facility on AIM will be cancelled and the Company will apply for the Enlarged Share Capital to be admitted to trading on AIM. Irrevocable undertakings to vote in favour of the Resolutions have been received from certain of the Directors and Albany in respect of 272,100,020 Existing Ordinary Shares, representing approximately 72.7 per cent. of the Company's existing issued share capital.

Shareholders should note that the Proposals are inter-conditional. If the Resolutions are passed, it is expected that Admission will take place and that dealings on AIM in the shares comprising the Enlarged Share Capital will commence on 30 September 2008.

An Admission Document containing a notice convening a General Meeting to be held at the offices of FinnCap, 4 Coleman Street, London, EC2R 5TA at 11.00a.m. on 29 September 2008 is being sent to shareholders today and is available for download from the Company's website at: www.ninetyplc.co.uk

Enquiries:

Ninety Plc
John McLean, Executive Director	Tel: +44 (0)7768 031 454
FinnCap
Geoff Nash	Tel: +44 (0) 20 7600 1658
Hansard Group
Adam Reynolds	Tel: +44 (0) 20 7245 1100
John Bick

This summary should be read in conjunction with the full text of this announcement set out below.

Ninety plc 

("Ninety" or "the Company")

Proposed acquisition of Honour Field

Proposed Placing of 320,166  New Ordinary Shares at a price of 75 pence per share Proposed 1 for 60 Share Consolidation

Proposed change of name to "Sorbic International plc"

Notice of Extraordinary General Meeting

The Board is pleased to announce that the Company has conditionally agreed to acquire the entire issued ordinary share capital of Honour Field for a consideration of up to £20.12 million, payable in New Ordinary Shares, 9,860,000 to be issued on Completion and up to a further 10,300,000 to be issued conditional upon Honour Field meeting the Profit Target. The total consideration includes 6,666,666 New Ordinary Shares issued on conversion of the Albany Convertible Loan and the Hermes Convertible Loan.

Honour Field is an investment holding company registered in the British Virgin Islands whose trading subsidiaries are principally engaged in the manufacture of food preservatives.

In view of the size and nature of the Acquisition, it constitutes a reverse takeover of the Company under the AIM Rules and a change of control of the Company under the City Code. Accordingly, the Proposals are conditional, inter alia, on the approval of Shareholders, such approval to be sought at the Extraordinary General Meeting, notice of which has been sent to Shareholders today.

If the Resolutions are duly passed at the EGM, the Company's existing trading facility on AIM will be cancelled and the Company will apply for the Enlarged Share Capital to be admitted to trading on AIM. Irrevocable undertakings to vote in favour of the Resolutions have been received from certain of the Directors and Albany in respect of 272,100,020 Existing Ordinary Shares, representing approximately 72.7 per cent. of the Company's existing issued share capital.

Shareholders should note that the Proposals are inter-conditional. If the Resolutions are passed, it is expected that Admission will take place and that dealings on AIM in the shares comprising the Enlarged Share Capital will commence on 30 September 2008.

Albany owns 71.9 per cent. of the Existing Ordinary Shares of the Company and has invested £2,000,000 in Honour Field by way of a convertible loan. John McLean, one of your Directors is also a director of Albany and is therefore considered a "related party" for the purpose of the AIM Rules and so is not independent.

In connection with the Acquisition and Admission, it is proposed that the New Board will assume responsibility for the Enlarged Group, including all of Ninety's and Honour Field's assets, and the Seller will exchange its Honour Field Ordinary Shares for New Ordinary Shares pursuant to the Acquisition Agreement.

The Company and its investment strategy

The Company was incorporated in England and Wales as a public limited company on 15 June 2007 and was established to seek to acquire a controlling interest in a company, partnership or joint venture located in Europe, North America or Asia. The Company's focus is on potential acquisition targets trading in any of the following sectors: investment, consumer goods, engineering, industrials, leisure and hotels, media and entertainment, professional and support services, retailing, technology and telecommunications. It was admitted to trading on AIM on 24 October 2007.

The Company's investment strategy is to seek suitable targets for investment or acquisition that have some of the following characteristics:

an experienced management team in place;

good prospects, either in an established market or as an early mover in a high growth market;

quoted or unquoted; and

located in Europe, North America or Asia.

If the Acquisition does not proceed, the Directors will continue to pursue the aforementioned strategy. Whilst the Company will have incurred expenses amounting to approximately £0.76 million in pursuit of the Acquisition, the Directors are of the opinion that, whether or not the Acquisition proceeds, the Company will have sufficient working capital for its present requirements, that is for at least the next twelve months from the date of this document.

Background to and reasons for the Acquisition

As set out above, Ninety's primary objective as an investment company is to acquire a company with, inter alia, attractive growth prospects and an experienced management team. In line with this strategy, the Directors believe that the Acquisition represents a substantial investment opportunity with the potential to significantly increase Shareholder value and provide the Company with a number of benefits. In particular, the New Board believes that the Acquisition will:

provide the Company with a well established and proven business in the PRC which produces Sorbic Acid and Potassium Sorbate and with customers in over forty six countries;

provide the Enlarged Group with greater access to capital to fund its future activities and growth, both organically and via potential acquisitions.

Information on Honour Field, its business and strategy

Background and principal activity

Honour Field is a privately owned investment holding company which was incorporated in the British Virgin Islands on 3 July 2007 and is beneficially owned by Mr. Ray, Ang Wee Boon. On 21 April 2008, Honour Field entered into an agreement with Mr. Wang Yan Ting, the previous owner of LVST to acquire the entire issued share capital of LVST.

Founded in July 2001, LVST was established as a private company from a previously state owned enterprise in Shandong Province, PRC. LVST's principal activity is the production and sale of the food preservatives Sorbic Acid and Potassium Sorbate from its 33,000 m². production facility in Linyi City, Shandong Province, PRC. LVST currently produces for sale approximately 3,000 metric tonnes of Sorbic Acid and 5,000 metric tonnes of Potassium Sorbate per year.

To date, LVST has been financed by a combination of short term loans from Chinese banks, as well as loans and equity investment from its founders and its previous shareholder, Mr. Wang Yan Ting. In addition, funding has been provided by cash flow generated by its operating business.

Financial summary

A financial summary for LVST for the three financial years ended 31 December 2007 and the six months ended 30 June 2008, is set out below:

Six months ended		Year ended	Year ended	Year ended
30 June		31 December	31 December	31 December
2008		2007	2006	2005
RMB 000s		RMB 000s	RMB 000s	RMB 000s
Revenue	101,090	177,111	158,036	109,813
Gross profit	37,460	57,633	41,188	23,968
Profit before tax	30,986	46,808	32,077	17,869
Profit for the period	27,113	38,987	32,077	17,869
Cash and cash equivalents	25,554	53,342	26,019	13,042
Net assets	90,743	103,208	79,221	56,144

This financial summary has been converted into GBP Sterling using a fixed exchange rate of £1: RMB 13.71, being the approximate rate of exchange at 30 June 2008, and is set out below:

Six months ended		Year ended		Year ended	Year ended
30 June		31 December		31 December	31 December
2008		2007		2006	2005
£000s		£000s		£000s	£000s
Revenue	7,373	12,918	11,527		8,009
Gross profit	2,732	4,204	3,004		1,748
Profit before tax	2,260	3,414	2,340		1,303
Profit for the period	1,978	2,842	2,340		1,303
Cash and cash equivalents	1,864	3,891	1,898		951
Net assets	6,619	7,528	5,778		4,095

 

Industry Overview

With the steady growth of the global population, increased production of agricultural products has become essential to ensure adequate food supply. This has led to a corresponding increase in the demand for food preservatives. In the 1940's, Sorbates were found to be effective antimicrobial agents and have since then been used as preservatives in a wide range of foodstuffs and drinks.

From 1970 to 1996, six companies produced nearly all Sorbates sold worldwide. However, a number of these left the Sorbate industry in the late 1990's. Those that remained moved their operations to China, attracted by its relaxed regulatory regime and lower cost of production as a result of cheaper energy costs and lower wages.

There are two main types of Sorbate-based food preservatives: Sorbic Acid and Potassium Sorbate. Each of these types of food preservatives plays a different role in the food processing industry.

Sorbic Acid Sorbic Acid, or 2,4-hexadienoic acid, is a naturally occurring organic compound

that is used as a food preservative (E Number 200). It has the chemical formula C6H8O2 and was first isolated from the unripe berries of the rowan (Sorbus Aucuparia). Sorbic Acid is an unsaturated fatty acid and has inhibitory effects against a wide spectrum of yeasts, moulds and bacteria including most food- borne pathogens.

Sorbic Acid is widely used in all kinds of foods for its anti-decomposition and anti-fungus function and also in grains, medicines, cosmetics, toothpaste, tobacco, animal feed, latex, paper-manufacturing and pesticides.

Potassium Sorbate Potassium Sorbate, or potassium (E,E)-hexa-2,4-dienoate, is the potassium salt of

Sorbic Acid and is a mild preservative (E Number 202). It has the chemical formula C6H7O2K and is made by reacting Sorbic Acid with potassium hydroxide. Sorbates have been shown to have inhibitory effects against a wide spectrum of yeasts, moulds and bacteria and food applications of Sorbates expanded rapidly after the issuance of the original patents in 1945.

Potassium Sorbate is used to inhibit moulds and yeasts in many foods, such as cheese, wine, yogurt, dried meat and baked goods. It can also be found in many dried fruit products. In addition, herbal dietary supplement products generally contain Potassium Sorbate, which acts to prevent mould and microbes and to increase shelf life. It is also used in many personal care products (cosmetics & pharmaceuticals).

Global Demand and Supply of Sorbic Acid and Potassium Sorbate

Global demand for Sorbic Acid and Potassium Sorbate has increased as a result of the increase in the world's population and higher demand for food. According to the Food and Agriculture Organization of the United Nations, global population increased by over 74.8 per cent. between 1970 and 2005, and is expected to reach 8.3 billion by 2030. With the steady growth of the global population, increased production of food products is essential to ensure adequate food supply. The continuous increase in food production has significantly increased the importance of, and demand for, food preservatives.

Benzoic Acid and Sorbic Acid are two common, FDA-approved antimicrobial compounds available for food use. However, Benzoic Acid has been found to cause hyperactivity in children and is thought to be potentially damaging to mitochondrial DNA. At least one major food manufacturer has begun to phase out the use of Sodium Benzoate (the sodium salt of Benzoic Acid) in January 2008 in response to consumer demands.

In order to be widely used in food and pharmaceutical processing and production, the Company's products conform to American Food Chemicals Code V (F.C.C.V). British Pharmacopoeia (B.P.). European Pharmacopoeia standard (EP5.0). and European Feed Additives and PreMixtures Quality System (FAMI-QS).

Increased household income and rapid urbanization in China has also led to continued growth in the domestic consumption of meat, dairy and other high-protein products as well as the use of modern household products. The production of these food and household products often requires high volumes of preservatives, thereby increasing the demand for both Sorbic Acid and Potassium Sorbate.

Customers

In 2007, LVST sold 47.7 per cent. of its products to overseas markets and 52.3 per cent. to the Chinese domestic market. In that period, its overseas customers were spread over 46 countries and its domestic customers were spread all over China.

LVST has sought to broaden its customer base and explore new markets, and now manufactures kosher and halal products for use in end products in the Jewish and Islamic markets. Over the last twenty-five years, the New Board believes that the demand for kosher certified products has increased significantly.

For the year ended 31 December 2007, the turnover attributable to LVST's five largest customers was, in aggregate, approximately 39.2 per cent. of sales, with the largest customer accounting for 13.6 per cent. of revenues.

Sales and Marketing

LVST sells its products both directly to end customers and indirectly through distributors in both domestic and overseas markets. LVST centralises its export sales from an office in Shanghai and its domestic sales operations are at its headquarters in Linyi City.

Turnover in the export market increased from RMB 55.4 million for the year ended 31 December 2005 to RMB 84.5 million for the year ended 31 December 2007, representing a CAGR of 23.5 per cent. Turnover in the domestic market increased more rapidly from RMB 54.4 million for the year ended 31 December 2005 to RMB 92.5 million for the year ended 31 December 2007, a CAGR of 30.4 per cent.

As at 31 December 2007, LVST had seven sales representatives responsible for liaising with both distributors and direct customers and coordinating sales.

Whilst the New Board expects the export market to continue to grow, it also expects significant growth from the domestic market as global manufacturers move away from the use of Sodium Benzoate and consumers become more aware of the dangers associated with it.

Competition

LVST's in-house expertise and experience, together with its extensive network of distributors, its scale of operations, current and planned future capacity and ability to offer quality products catering to its customers tastes and requirements, serve to differentiate it from its competitors.

The New Board believes that the food additive industry in the PRC is highly competitive but has high barriers to entry due to the capital costs in setting up the plant. Furthermore, the New Board also believes that while the end customers are typically price sensitive, they are also increasingly influenced by product brand names and associated quality perceptions.

The New Board believes that LVST is well placed compared to its competitors due to its long-standing emphasis on the quality of its products. LVST's products have a number of quality and process certifications that the New Board believes are not accredited to the products of some of its competitors, and thus LVST is able to price its products at a slight premium to the average market price.

Competitive strengths

The New Board believes that LVST's major competitive strengths are:

Trade Mark

LVST manufactures and distributes Sorbic Acid and Potassium Sorbate under the trademark "JinXianFeng". The trademark is owned by LVST in the PRC under registration number 3478980. It is classified under Class 1 chemicals for food antiseptics; chemical for food preservatives; beer clarifier and preservatives. The term of validity is from 21 November 2004 to 11 November 2014.

Environmental

The Environmental Protection Law was implemented on 26 December 1989. The Environmental Protection Bureau is responsible for overall supervision and management of environmental protection in the PRC. It formulates national standards for discharging waste materials and environmental protection and monitors the PRC environmental protection system.

All enterprises engaged in food production are required to comply with the laws and regulations concerning environmental protection. The Environmental Protection Law requires all operations that produce pollutants or other hazardous substances to take environmental protection measures, and establishes an environmental protection responsibility system that encompasses effective measures to control and properly dispose of waste gases, waste water, waste residue, dust and other waste materials. Any enterprise or institution that discharges waste material must report to and register with the relevant environmental protection authority.

LVST is obliged to comply with all the environmental protection laws and regulations relating to its production process. As confirmed by the local Environmental Protection Bureau, LVST has obtained the necessary renewable license for its compliance with the regulations.

Future strategy

The New Board believes the Enlarged Group has three main elements to its future strategy.

New facilities - At present, LVST operates from a site in LinYi City. The existing facility has an area of approximately 33,000 m². and has two production lines which are currently operating at their full design capacities. In order for LVST to be better positioned to service future anticipated growth in demand for its products, it has acquired land immediately adjacent to its present site with total area of approximately 14,700 m². Subject to raising funds of approximately RMB 100 million (circa £7.3 million), LVST plans to expand its facility with the addition of two more production lines which would double the existing capacity. A major international food manufacturer has already expressed an interest in purchasing the entire output from one of the proposed new production lines.

Increase marketing activities - Currently the New Board believes that sales of products are limited by production capacity. Anticipating the increase in production capacity, the New Board plans to enhance its effort in the area of distribution. With strong growth potential in both domestic and international market, it is proposed that the sales team focus on developing new markets while strengthening the relationship with the existing customers.

Acquisition opportunities

Whilst the New Board believe that there are substantial opportunities for organic growth through increased production, they will also consider suitable acquisition opportunities as they arise.

Current trading and prospects for the Enlarged Group

Financial information on Ninety for the period ended 29 February 2008 is set out in Part 3 of the Admission document posted to Shareholders today. Since 29 February 2008, the Company's only activity has been to search for and evaluate suitable acquisition opportunities in line with its investment strategy and to enter into certain agreements, details of which are set out in the Admission document.

The New Board is optimistic as to the Enlarged Group's prospects, based on their expectations for the continued growth of Honour Field Group, both organically and by acquisition.

Directors, Proposed Directors, senior management and employees

At the EGM, resolutions will be proposed, conditional on having obtained Shareholders' approval for the Acquisition, to, inter alia, appoint Wang Yan Ting, Ray, Ang Wee Boon, Susan, Chong Hooi San and Nicholas Smith as directors of the Company. With effect from Completion, it is also proposed that Michael Gretton and Thomas Vaughan will resign from the Board. Brief biographical details of the Directors, Proposed Directors and senior management are set out below.

Directors

The current composition of the Board of Ninety is as follows:

John McLean (Executive Director, proposed Non-executive Chairman)

John McLean, aged 55, has a successful track record across a number of sectors in developing growing companies and he has also managed operations globally, with specific expertise in China, Australia, the USA, Canada and Europe. John was originally a chartered accountant with Coopers & Lybrand in both London and New York.

He is Chairman of the AIM-listed investment company Albany Capital plc, which focuses on investments into growing companies with high quality local management teams based in the PRC. Albany operates from offices in London and Qingdao, North Eastern China. John is also Chairman of AIM-listed China Food Company plc which is based in Shandong province, North Eastern China.

In 1998, he was appointed by Gamma Holdings NV to carry out a strategic review of their UK interests, including Sanderson, the textile and wallpaper company. John remained with Sanderson until 2003, serving as its managing director, successfully implementing a turnaround and disposal plan. From 1992 to 1996, he was employed as General Manager with ICS and co-led a management buy-out of the company with 3i Group plc, prior to its successful disposal to Hays plc in 1996.

Michael Gretton (Non-executive Director)

Michael Gretton, aged 62, served in the Royal Navy from 1963 to 1998, latterly as a Vice Admiral. In addition to his commands at sea he held three policy jobs in the Ministry of Defence. His final appointment was in NATO HQ in Brussels. In 1998 Michael became Chief Executive of The Duke of Edinburgh's Award in the UK. In his seven years in the post, participation grew by 40 per cent. to over 300,000. After two years as an executive and then as a consultant with World Challenge plc, Michael concentrated on non executive work. In July 2007 he was appointed Chair of the Winchester and Eastleigh Healthcare NHS Trust. In addition Michael is governor of two secondary schools, St. Edward's School in Oxford and St. Mary's School in Shaftesbury.

Thomas Vaughan (Non-executive Director)

Thomas Vaughan, aged 59, co-founded, with his brother, Oliver, Juliana's Holdings Plc which in 1966 was the world's largest discotheque entertainment group. Following its £30 million sale to Wembley Leisure Limited in 1988, Tom became an executive director of Wembley Leisure. In 1994 Tom was appointed chairman of newly-formed Gander Holdings Plc, a London based property company specialising in the acquisition and development of prime Kensington and Chelsea residential real estate. In January 2000, Tom became a director of the London Academy of Music and Dramatic Art. In April 2004, Tom was appointed a director of ART VPS Limited, a Cambridge based technology company and from January 1996 until 30 March 2007, he was a director of Corporate Synergy Group Plc (renamed Blue Oar Plc).

It is proposed that Michael Gretton and Thomas Vaughan will resign from the Board immediately prior to Admission and thus following Completion, the New Board will comprise John McLean and the following Proposed Directors as set out below:

Proposed Directors

Wang Yan Ting (President & Executive Director)

Wang Yan Ting, aged 43, is the Chairman, Chief Executive Officer and founder of LVST, and is responsible for implementing its strategy and direction. Mr. Wang has more than 20 years of business development experience and nearly eight years experience in the food preservatives industry. Notably, Mr. Wang spent a number of years as general manager of Linyi Zhongqiao Property Development Limited, a Chinese property developer. Thereafter, he was appointed managing director of Linyi Huasheng Trading Limited, a Chinese company principally involved in the manufacture of chemicals and plastics. Mr. Wang also served in the police force for four years.

Ray, Ang Wee Boon (Chief Executive Officer)

Ray Ang, aged 37, is the Senior Vice President of Hermes Capital Limited, a Hong Kong based company involved in securities, corporate finance advisory and other related services. Mr. Ang started his career in finance with Hong Kong Shanghai Banking Corporation. With more than 14 years of experience in personal and corporate finance, he works from offices in Singapore, Hong Kong and mainland China. He holds a Master's degree in Business Administration from Macquarie University, Sydney, Australia.

Susan, Chong Hooi San (Chief Finance Officer)

Susan Chong, aged 36, is the Vice President of Hermes Capital Limited, a Hong Kong based company. She is a Fellow of the Association of Chartered Certified Accountants (ACCA, UK) with over 12 years experience in commercial finance and audit, consultancy and advisory service for businesses, projects and due diligence for direct investment.

Nicholas Smith (Non-executive Director)

Nicholas Smith, aged 56, trained as an accountant with Ernst and Young. He joined the Jardine Fleming Group in Hong Kong in 1986 serving, at various times, as co- head of Investment Banking, finance director and member of the executive committee. He became a director of Robert Fleming International in 1998 and director of Origination, Investment Banking. His responsibilities combined the strategic direction of the international M&A business and fee generation in relation to European multinational corporations. He currently serves as senior independent director of Ophir Energy plc, for whom he is Chairman of the nominations and audit committees and non executive director of Asian Citrus Holdings Ltd, for whom he is Chairman of the remuneration committee, and PLUS Markets Group plc, for whom he is Chairman of the audit committee. He is also a director of Plus Markets plc, The Ernshaw Partnership Limited, Totally Independent Directors Limited, 4C Associates Limited and 9 Flies Limited. He was also until recently non executive Director of Imprint plc until its acquisition by Premier UK.

Senior Management

In addition to the Directors and Proposed Directors, details of key senior management personnel within the Enlarged Group immediately following Completion are set out below:

Shao Ming Ming

Mr. Shao Ming Ming, aged 46, is the General Manager of LVST in charge of operational and manpower matters. Mr. Shao graduated from Shandong Polytechnic University with a degree in Mechanical Engineering and is an EMBA student in Shanghai Fudan University. Mr. Shao has over 25 years of experience in the food preservative industry, of which 18 years is at management level.

Employees

Save for the Directors who are standing down on Completion, the New Board has confirmed that it intends to retain the services of all the other management and employees of Honour Field Group on terms that will remain unchanged following Completion.

On Completion, Ninety will move its Head Office to Hong Kong where Mr. Ang and Ms. Chong will be based, whilst Mr. Wang will oversee operations in Linyi City in the PRC. Its registered office will remain in London where the non-executive directors will be based. The majority of Board meetings will be held outside the UK.

Principal terms of the Acquisition

Pursuant to the Acquisition Agreement, the Company has agreed conditionally to purchase the entire issued ordinary share capital of Honour Field from the Seller for an aggregate consideration of up to £15.12 million, to be satisfied through the issue of the Acquisition Shares. In addition 6,666,666 New Ordinary Shares are to be issued pursuant to conversion of the Albany Convertible Loan and the Hermes Convertible Loan.

The number of Acquisition Shares to be issued to the Seller will vary depending upon Honour Field's performance against the Profit Target. At Completion, the Seller will receive 9,860,000 Acquisition Shares representing approximately 42.7 per cent. of the Enlarged Share Capital. The balance of the Acquisition Shares will only be issued if Honour Field exceeds the Profit Target, whereby the Seller will receive up to a further 10,300,000 New Ordinary Shares such that its aggregate holding in the Company (assuming no further shares are issued by the Company after Admission) will be approximately 60.4 per cent. of the Enlarged Share Capital. If Honour Field achieves between 75 per cent. and 99.9 per cent. of the Profit Target, the Seller will receive such further number of Acquisition Shares as is pro rata to the percentage of the Profit Target achieved. If Honour Field fails to achieve 75 per cent. of the Profit Target, the Seller will receive no further Acquisition Shares.

Under the Acquisition Agreement, the Warrantors have given warranties and indemnities relating to, inter alia, title to Honour Field Ordinary Shares and the Warrantors have given warranties relating to the contents of this document and the due diligence information provided to the Company (subject to certain limitations) appropriate to a transaction of the size and nature similar to the Acquisition. These warranties are given to the Company on trust for the benefit of the Shareholders immediately prior to Admission.

These warranties are given, inter alia, with the following limitations as to liability (which do not apply where the claim is the consequence of fraud or deliberate non-disclosure):

The Company is giving warranties to the Seller, inter alia, in respect of its capacity to issue the Acquisition Shares and the contents of this document. The Company's warranties are given, inter alia, with the following limitations as to liability:

The Acquisition Agreement is conditional, inter alia, on:

Details of the Placing and Placing Agreement

The Company is raising £0.24 million through the issue of the Placing Shares at the consolidated price of 75 pence for each Placing Share pursuant to the Placing Agreement. The Placing Shares will be issued fully paid and will represent approximately 1.4 per cent. of the Enlarged Share Capital on Admission. The Placing is conditional on, inter alia, Admission becoming effective by 8.00 a.m. on 10 October 2008 (or such later time and date, being not later than 3.00 p.m. on 31 October 2008, as the Company and FinnCap shall agree). Further details of the Placing Agreement are set out in paragraph 11.7 of Part 6 of this document. The Placing Agreement contains provisions entitling FinnCap to terminate the Placing Agreement at any time prior to Admission in certain circumstances.

The proceeds of the Placing together with the Company's existing cash resources will be used to fund the expenses of the Acquisition and Admission, the construction and commissioning of expanded production facilities and the future working capital needs of the Company.

The New Board is subscribing for 106,666 Placing Shares, totaling £80,000 in aggregate. On Completion, including those New Ordinary Shares held by Prime Mega, the New Board will hold approximately 43.2 per cent. in aggregate of the Enlarged Share Capital.

The New Ordinary Shares to be issued under the Placing will, on Admission, rank pari passu in all respects with the Existing Ordinary Shares and the Acquisition Shares, including the right to receive all dividends and other distributions thereafter declared, made or paid in respect of the ordinary share capital of the Company.

Capital Reorganisation

In order to make the number of Ordinary Shares in issue more manageable and the share price more attractive to potential investors, the Company proposes, by means of the Capital Reorganisation and subject to shareholder approval at the EGM, to effect, inter alia, a share consolidation to reduce the number of authorised and issued ordinary shares.

At present, the authorised share capital of the Company is £500,000 consisting of 500,000,000 Ordinary Shares. It is proposed that the Capital Reorganisation will consist of the following steps:

the increase of the Company's authorised share capital to £6,000,000 by the creation of an additional 5,500,000,000 ordinary shares of 0. 1p each having the same rights in all respects as the Ordinary Shares of 0. 1p each in the capital of the Company;

every 60 Ordinary Shares in issue (or such number as will result in a whole number of consolidated shares, the balance of the Existing Ordinary Shares held by each member being dealt with as provided in (iii) below) will be consolidated into one New Ordinary Share of 6p and every 60 authorised but unissued Ordinary Shares will be consolidated into one New Ordinary Share of 6p and;

fractional entitlements arising out of the consolidation under sub-paragraph (ii) above by reason of there being less than 60 Ordinary Shares or a number not divisible by 60 shall be aggregated into New Ordinary Shares and the whole number of New Ordinary Shares so arising shall be sold in the market and the net proceeds of sale held for the benefit of the Company.

 It is anticipated that New Ordinary Share certificates will be issued and dispatched by 10 October 2008 and that CREST holders will have their CREST accounts credited with their new holdings on 30 September 2008. On despatch of the new certificates, any existing certificates will become valueless and should be destroyed. Temporary documents of title will not be issued and, pending dispatch of definitive share certificates, transfers of New Ordinary Shares held in certificated form will be certified against the register.

The effect of the Capital Reorganisation will be to consolidate every 60 Existing Ordinary Shares into one New Ordinary Share.

Change of company name

To reflect the proposed changes to the Company, its management and operations as a result of the Acquisition, it is proposed that, conditional on Completion, the Company will change its name to Sorbic International plc.

Lock-in and orderly market arrangements

On Completion, the Seller and Albany will be interested in approximately 42.7 per cent. and 38.7 per cent. of the Enlarged Share Capital respectively. The Seller and Albany have undertaken to the Company and FinnCap that, except in certain limited circumstances, they will not dispose of any interest in the New Ordinary Shares held by them for a period of twelve months from the date of Admission and, for the following twelve months, that they will only dispose of their holdings with the prior written consent of the Company's nominated adviser and broker from time to time (such consent not to be unreasonably withheld).

Post Completion Albany will be interested in 8,937,778 Ordinary Shares representing approximately 38.7 per cent. of the Enlarged Share Capital. Of this holding, 4,621,700 New Ordinary Shares, representing approximately 20 per cent. of the Enlarged Share Capital, will be subject to the lock-in agreement and the balance of 4,316,078 Ordinary Shares are subject to an orderly market agreement.

Prime Mega will be interested in 42.7 per cent. of the Enlarged Share Capital. All Ordinary Shares held by Prime Mega (including the Deferred Shares if issued) will be subject to the lock-in save that Prime Mega can transfer such shares to the existing management of Honour Field Group. For the avoidance of doubt, such shares will continue to be subject to the duration of the lock-in.

In aggregate, 18,797,778 New Ordinary Shares representing approximately 81.4 per cent. of the Enlarged Share Capital will be subject to the lock-in and orderly market agreements referred to above.

Extraordinary General Meeting

A notice of the EGM is being posted to Shareholders today convening an extraordinary general meeting of the Company to be held at 11.00 a.m. on 29 September 2008 to consider all requisite resolutions.  Irrevocable undertakings

The Company has received irrevocable undertakings from Thomas Vaughan and Albany to vote in favour of the Resolutions to be proposed at the EGM.

Recommendation

The Independent Directors of the Company, having consulted with FinnCap, consider the Proposals to be fair and reasonable and in the best interests of the Company and its Shareholders as a whole.

Accordingly, the Independent Directors recommend Shareholders to vote in favour of the Resolutions, as they have irrevocably undertaken to do or procure to be done in respect of their own beneficial holdings which amount, in aggregate, to 2,500,000 Ordinary Shares representing approximately 0.7 per cent. of the Existing Ordinary Shares.

In addition, certain other Shareholders holding 269,600,020 Ordinary Shares representing  approximately 71.9 per cent. of the Existing Ordinary Shares, which, when aggregated with the Ordinary Shares held by the Independent Directors, represents approximately 72.7 per cent. of the Existing Ordinary Shares, have irrevocably undertaken to vote in favour of the Resolutions.

ACQUISITION AND PLACING STATISTICS

ISIN Number of the New Ordinary Shares GB00B3CX3F30

 

* the number of shares is stated following the Capital Reorganisation. Number of New Ordinary Shares on Admission excludes the Deferred Shares.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 

Each of the times and dates in the above timetable is subject to change. All references are to London time unless otherwise stated. Temporary documents of title will not be issued.

DEFINITIONS

The following definitions which are used in the Admission Document and notice of EGM sent to Shareholders today also apply throughout this announcement , unless the context requires otherwise:

"Acquisition"	the proposed acquisition by the Company of the entire issued ordinary share capital of Honour Field pursuant to the Acquisition Agreement;
"Acquisition Agreement"	the conditional agreement between the Company (1), certain warrantors (2) and the Seller (3) relating to the Acquisition, further details of which are set out in paragraph 11 of Part 6 of this document;
"Acquisition Shares"	the 9,860,000 New Ordinary Shares (which excludes the Deferred Shares) to be issued following the Capital Reorganisation to the Seller pursuant to the Acquisition Agreement upon completion of the Acquisition;
"Admission"	the effective admission of the Enlarged Share Capital to trading on AIM in accordance with Rule 6 of the AIM Rules for Companies;
"AIM"	the market of that name operated by the London Stock Exchange;
"AIM Rules"	the AIM Rules for Companies as published by the London Stock Exchange from time to time;
"Albany"	Albany Capital plc, a company incorporated in England and Wales with registered number 3995223 whose registered office is at 17 Hanover Square, London,  W1S 1HU;
"Albany Convertible Loan"	the convertible loan of £2.0m made to Honour Field on 28 July 2008 as described in paragraph 12.1 of Part 6 of this document. on completion of the acquisition this loan will convert into 4,444,444 New Ordinary Shares;
"Articles"	the articles of association of the Company, as amended from time to time;
"Board"	the board of directors of the Company from time to time;
"CA 1985" or "Act"	the Companies Act 1985, as amended;
"CA 2006" or "2006 Act"	the Companies Act 2006;
"CAGR"	Compound Annual Growth Rate;
“Capital Reorganisation”	the proposed increase in the Company’s authorised share capital and the Share Consolidation;
“certificated” or “in certificated form”	the description of a share or other security which is not in uncertificated form (that is, not in CREST);
"China" or "the PRC"	The People's Republic of China (for the purposes of this document, excluding Hong Kong, Macau and Taiwan);
"City Code"	the City Code on Takeovers and Mergers;
"Combined Code"	the Combined Code on Corporate Governance issued by the Financial Reporting Council;
"Company" or "Ninety"	Ninety Plc, a company incorporated in England and Wales with
	registered number 06280431 whose registered office is 17 Hanover Square, London W1S 1HU;
"Completion"	completion of the Proposals;
"Conversion Shares"	the 6,666,666 New Ordinary Shares to be issued on conversion of the Albany Convertible Loan and the Hermes Convertible Loan;
"CREST"	the computerised settlement system (as defined in the CREST Regulations) operated by Euroclear UK & Ireland Limited which facilitates the transfer of title to shares in uncertificated form;
"CREST Regulations"	the Uncertificated Securities Regulations 2001, including (i) any enactment or subordinate legislation which amends or supersedes those regulations and (ii) any applicable rules made under those regulations or any such enactment or subordinate legislation for the time being in force;
"Daily Official List"	the Daily Official List published by the London Stock Exchange;
"Deferred Shares"	up to 10,300,000 New Ordinary Shares to be issued to the Seller if the
	Profit Target is met;
"Directors"	the existing directors of the Company;
"Enlarged Group"	the Company and, following completion of the Acquisition, the Honour Field Group;
"Enlarged Share Capital"	the issued ordinary share capital of the Company following Completion comprising the New Ordinary Shares arising pursuant to the Capital Reorganisation, the Acquisition Shares and the Placing Shares;
"Existing Ordinary Shares"	the 374,500,020 Ordinary Shares in issue at the date of this document, which will become 6,241,667 New Ordinary Shares pursuant to the Capital Reorganisation;
"Extraordinary General	the extraordinary general meeting of the Company, notice of which
Meeting" or "EGM"	is set out at the end of this document;
"FSA"	the Financial Services Authority of the United Kingdom;
"FinnCap"	JM Finn Capital Markets Limited (trading as "FinnCap"), the Company's financial and nominated adviser and broker;
"FinnCap Option"	the option dated● September 2008 in favour of FinnCap for the right to subscribe for 200,000 New Ordinary Shares;
"Hermes"	Hermes Capital Ltd, a company incorporated in Hong Kong with registered number 1153568, whose registered office is at 3/F, Oriental Crystal Commerce, 46 Lyndhurst Terrace, Central, Hong Kong;
"Hermes Convertible Loan"	the convertible loan of £1 .0m made to Honour Field on 28 July 2008. On completion of the Acquisition this loan will convert into 2,222,222 New Ordinary Shares;
"Hermes Option"	the option dated ● 2008 in favour of Hermes for the right to subscribe for 400,000 New Ordinary Shares;
"Honour Field"	Honour Field International Limited, a company incorporated in the British Virgin Islands with registered number BVI CRN 1414693, whose correspondence address is at 3/F,46 Lyndhurst Terrace, Central, Hong Kong;
"Honour Field Group"	Honour Field and any subsidiary of Honour Field;
"Honour Field Ordinary Shares"	the ordinary shares of US$1.00 each in the capital of Honour Field;
"IFRS"	International Financial Reporting Standards;
"Independent Directors"	Michael Gretton and Thomas Vaughan;
"Independent Shareholders"	those Shareholders who, in aggregate, hold over 50 per cent. of the Existing Ordinary Shares not held by Albany;
"ISIN"	International Securities Identification Number;
"ISO9001"	a set of international standards for both quality management and quality assurance;
"Issue Price"	75 pence per Acquisition Share;
"LVST"	Linyi Van Science and Technique Co., Ltd, a company incorporated
	in the PRC with registered number 371300018017550, whose registered office is at Double Moon Lake Road, Linyi High and New tech industrial Development Zone, Shandong 276017;
"London Stock Exchange"	London Stock Exchange plc;
"Mazars"	Mazars LLP, the reporting accountants and auditors to the Company;
"New Board"	John McLean and the Proposed Directors;
"New Ordinary Shares"	the proposed new ordinary shares of 6 pence nominal value each in
	the capital of the Company to be created pursuant to the Capital Reorganisation;
"Ninety Shares"	the Ordinary Shares or, following the Capital Reorganisation, the
	New Ordinary Shares;
"Option Scheme"	the Ninety Plc Unapproved Share Option Plan;
"Ordinary Shares"	the ordinary shares of 0.1 pence nominal value each in the capital of
	the Company in issue prior to the Share Consolidation;
"Panel"	the Panel on Takeovers and Mergers, the regulatory body that administers the City Code;
"Placees"	the subscribers for Placing Shares pursuant to the Placing;
"Placing"	the conditional placing of the Placing Shares by FinnCap;
"Placing Agreement"	the conditional agreement dated ● 2008 between the Company (1),
	the Directors (2) the Proposed Directors (3) and FinnCap (4) relating to the Placing;
"Placing Price"	75 pence per Placing Share;
"Placing Shares"	the 320,166 New Ordinary Shares to be issued pursuant to the Placing;
"Profit Target"	that Honour Field will achieve a minimum audited net profit after tax for the financial year ending 31 December 2008 of RMB 60 million and against which the Deferred Shares will be allotted;
"Proposals"	together, the Acquisition, the Placing, the Capital Reorganisation,
	the appointment of the Proposed Directors, the change of name, Admission and the Resolutions;
"Proposed Directors"	Ray, Ang Wee Boon, Wang Yan Ting, Susan, Chong Hooi San and Nicholas Smith;
"QCA"	Quoted Companies Alliance;
"Regulations"	the Uncertificated Securities Regulations 2001 (SI 2001/No. 3755);
"Resolutions"	the resolutions to be proposed at the EGM, as set out in the notice
	of EGM at the end of this document and reference to a Resolution is to the relevant resolution set out in the notice of EGM posted to shareholders today;
"RMB" or "Renminbi"	the legal currency of the PRC from time to time;
"Rule 9"	Rule 9 of the City Code;
"SAFE"	the State Administration for Foreign Exchange of the PRC, the
	government agency responsible for matters relating to foreign exchange administration;
"Seller" or "Prime Mega"	Prime Mega International Limited, a company incorporated in the
	British Virgin Islands with registered number BVI CRN 1482319, whose registered office is at PO Box 933, 2nd Floor, Abbott Building, Road Town, Tortola, British Virgin Islands;
"SGD"	Singapore dollars, the lawful currency of Singapore from time to
	time;
"Share Consolidation"	the proposed one for 60 Ordinary Share consolidation;
"Share Dealing Code"	the code on dealing in the Company's securities adopted by the
	Company on● 2008 that complies with the AIM Rules;
"Shareholders"	holders of Ordinary Shares or, following the Capital
	Reorganisation, New Ordinary Shares;
"Sorbates"	sorbic acid and its potassium salts;
"Sterling" or "£"	pounds sterling, the lawful currency of the UK from time to time;
"subsidiary" or "subsidiary	have the meanings given to them by CA 2006;
undertaking"
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland;
"UKLA" or "UK Listing	the FSA, acting in its capacity as the competent authority for the
Authority"	purposes of Part VI of the Financial Services and Markets Act 2000,
	as amended;
"Uncertificated"	recorded on the relevant register of the share or security concerned as being held in uncertificated form in CREST and title to which may be transferred by means of CREST;
"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 and all other areas subject to its jurisdiction;
"US person"	a citizen or permanent resident of the United States, as defined in
	Regulation S promulgated under the Securities Act 1933;
"US Dollar" or "USD"	the legal currency of the United States from time to time;
"Warrantors"	the Seller, Hermes, Wang Yan Ting and Ray Ang Wee Boon; and
"WFOE"	wholly foreign-owned enterprise.

 

 

The GBP:RMB exchange rate used throughout this announcement is 1GBP:13.71RMB, being the rate at 30 June 2008, unless otherwise stated.

ENDACQUSAURWBRKRAR

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Related Shares:

Sorbic International