26th May 2005 07:00
Nutrinnovator Holdings PLC26 May 2005 EMBARGOED FOR 07:00AM THURSDAY 26 MAY 2005 Nutrinnovator Holdings plc ("Nutrinnovator" or "the Company") Proposed acquisition of Provexis Limited ("Provexis") Proposed Capital Reorganisation Proposed Placing of 67,424,000 new Ordinary Shares of 1p each at 5.6p per share Proposed conversion of £2,090,333.34 of Loan Proposed change of name to Provexis plc an Application for re-admission to trading on AIM * Nutrinnovator today announces it has reached agreement with Provexis' shareholders to acquire, subject to shareholders' approval, the whole of the issued share capital of Provexis for a consideration of 111,658,555 Ordinary Shares at the Placing Price of 5.6 pence per share (this reflects the proposed new capital reorganisation so that every 1 Ordinary Share of 2 pence will be sub-divided into 2 Ordinary Shares of 1 penny each), valuing Provexis at approximately £6.3m. The Company has received undertakings from shareholders holding approximately 76% of its current issued ordinary share capital that they will vote in favour of the acquisition and proposals relating to it at the forthcoming EGM to be held on 20 June 2005. * Provexis is a nutraceutical company, founded in 1999, which develops scientifically-proven, proprietary, functional foods, supplements and medical foods. Functional foods are foods which are consumed for the maintenance of health and have the potential to carry health claims to this effect. * Provexis' lead technology is CardioFlow which is a proprietary extract of tomato, produced industrially to laboratory-determined specifications. CardioFlow contains a range of tomato-derived components which inhibit platelet aggregation, a part of the blood-clotting process which can cause heart attack and stroke. * The first commercially available product containing CardioFlow will be a fruit juice drink called Sirco. The Company is in discussions with major high-street retailers and multiple grocers to secure distribution channels for Sirco and it aims to launch it in two major UK retailers in the final quarter of 2005. * It is intended to seek to develop revenues from licensing the CardioFlow technology to international brand owners. * In order to provide working capital for the Enlarged Group, in which existing Provexis shareholders will have a majority interest on Admission, the Company proposes to effect a Capital Reorganisation, a Placing to raise approximately £3.8m (before expenses) and a conversion of approximately £2.1m of loans. * On Completion, Dawson Buck will become Non-Executive Chairman and Dr Neville Bain, Non-Executive Deputy Chairman. Dr Stephen Franklin will become Chief Executive and Stephen Moon, Commercial Director. * Doug Gardner, Finance Director has stepped down from the Board. Fiona Vigar, Marketing Director has resigned from the Board but will remain with the Enlarged Group and Thornton Mustard, Non-Executive Director has resigned from the Board, but will continue as a consultant to the Enlarged Group. * Notice has been given of an EGM to approve the Proposals, including the change of name of the Company to Provexis plc, to be held at 10.00am on 20 June 2005. * Admission of the Ordinary Shares, including the New Ordinary Shares, is expected to take place on Thursday 23 June 2005, and dealings are expected to commence in the Enlarged Share Capital on AIM with effect from 8.00am on that date. Stephen Moon, Managing Director of Nutrinnovator, commented: "We are excited toannounce this deal. In addition to CardioFlow our combined technology pipelineis very promising. The Enlarged Group's business model, fuelled by a stronginnovation pipeline, will develop a revenue stream based on both direct sales ofSirco and licensing revenues from our functional food technologies. We wouldalso like to thank Doug Gardner for his contribution to the development of theCompany and wish him every success in the future." Dr Stephen Franklin, Chief Executive Officer of Provexis, added: "We aredelighted to announce the proposed reverse takeover of Nutrinnovator Holdingsplc. The rationale for integrating the two businesses is compelling with theEnlarged Group combining a strong scientific team and impressive marketing andsales expertise. We believe that the Enlarged Group will be clearly differentiated in thefunctional food industry in that it will develop innovative functional foodproducts with health benefits that are scientifically-proven and therefore havethe potential to carry credible health claims and endorsements. When onecombines this with proven speed-to-market credentials, we believe the result isa company well positioned in the rapidly growing functional food market". The above summary should be read in conjunction with the full text of thisannouncement set out below. For further information please contact: Nutrinnovator Holdings plcStephen Moon, Managing Director 020 8392 6637 Provexis LimitedDr Stephen Franklin, CEO 0151 795 4200 Oriel Securities LimitedAndrew Edwards 020 7710 7600 Arbuthnot Securities LimitedTom Griffiths 020 7012 2000 Bell Pottinger Corporate and FinancialAnn-Marie Wilkinson/Emma Kent 020 7861 3232 This announcement does not constitute an offer to sell, or the solicitation ofan offer to buy, shares in any jurisdiction in which such offer or solicitationis unlawful and, in particular, is not for distribution into the United States,Canada, Australia, the Republic of Ireland or Japan. Neither the ExistingOrdinary Shares nor the Ordinary Shares have been, nor will they be registeredunder the United States Securities Act of 1933, as amended, or under theapplicable securities laws of any state of the United States, Canada, Australia,the Republic of Ireland or Japan. Accordingly, subject to certain exceptions,neither the Existing Ordinary Shares nor the Ordinary Shares may, directly orindirectly, be offered or sold within the United States, Canada, Australia, theRepublic of Ireland or Japan or to or for the account or benefit of anynational, resident or citizen of the United States, Canada, Australia, theRepublic of Ireland or Japan. The distribution of the Prospectus in otherjurisdictions may be restricted by law and therefore persons into whosepossession the Prospectus comes should inform themselves about and observe anysuch restrictions. Any failure to comply with these restrictions may constitutea violation of the securities law of any such jurisdictions. Oriel Securities Limited, which is regulated by the Financial ServicesAuthority, is acting as Nominated Adviser and Broker to Nutrinnovator up toAdmission and for no-one else and will not be responsible to any person otherthan Nutrinnovator for providing the protections afforded to customers of OrielSecurities Limited nor for advising any other person on the contents of thisannouncement or any transaction or arrangement referred to herein. Theresponsibilities of Oriel Securities Limited as Nutrinnovator's NominatedAdviser and Broker under the AIM Rules are owed solely to the London StockExchange. Oriel Securities Limited is not making any representation or warranty,express or implied, as to the contents of this announcement (without limitingthe statutory rights of any person to whom this announcement is issued).Arbuthnot Securities Limited, which is regulated by the Financial ServicesAuthority, is acting as Nominated Adviser and Broker to the Company on Admissionand no-one else and will not be responsible to any person other than the Companyfor providing the protections afforded to customers of Arbuthnot SecuritiesLimited or for advising any other person on the contents of this announcement orany transaction or arrangement referred to herein. The responsibilities ofArbuthnot Securities Limited as the Company's Nominated Adviser and Broker onAdmission under the AIM Rules are owed solely to the London Stock Exchange.Arbuthnot Securities Limited is not making any representation or warranty,express or implied, as to the contents of this announcement (without limitingthe statutory rights of any person to whom this announcement is issued). Proposed acquisition of Provexis Limited Proposed Capital ReorganisationProposed Placing of 67,424,000 new Ordinary Shares of 1p each at 5.6p per share, Proposed conversion of £2,090,333.34 of Loans Proposed change of name to Provexis plc and Application for re-admission to trading on AIM 1. Introduction Following the suspension of trading in the Existing Ordinary Shares on AIM on 18February 2005, the Company announces today that it has entered into aconditional agreement with Provexis' shareholders to acquire the whole of theissued share capital of Provexis for a consideration of 111,658,555 OrdinaryShares. The Consideration Shares will be issued at 5.6 pence per share, valuingProvexis at approximately £6.3 million. Provexis is a nutraceutical company thatdevelops scientifically-proven, proprietary, functional foods, supplements andmedical foods. In order to raise additional working capital for the Enlarged Group, the Companyhas announced that it proposes to raise approximately £3.8 million beforeexpenses pursuant to the Placing through the issue of 67,424,000 new OrdinaryShares at 5.6 pence per share. In addition, the Company is proposing to issue37,327,381 new Ordinary Shares at 5.6 pence per share in satisfaction of theLoans. Following completion of the Proposals, the Vendors will hold 150,772,079Ordinary Shares, which will represent approximately 60.4 per cent. of theEnlarged Share Capital. In view of its size, the Acquisition will constitute areverse takeover of Nutrinnovator under the AIM Rules and therefore requires theapproval of Shareholders at an Extraordinary General Meeting of the Company.Additionally, because the Concert Party will own more than 30 per cent. of theEnlarged Share Capital, the Company is seeking a waiver under Rule 9 of the CityCode, which would otherwise require the Concert Party to offer to acquire thoseOrdinary Shares that it does not own. A resolution seeking the approval ofShareholders for such a Waiver is therefore included in the notice ofExtraordinary General Meeting as set out in the Prospectus. The Acquisition, Placing and the conversion of the Loans are conditional, interalia, upon the passing of the Resolutions to be proposed at the ExtraordinaryGeneral Meeting, and upon Admission. 2. Background to and reasons for the Acquisition Nutrinnovator Limited was incorporated in May 2002, and its business wasdeveloped from February 2003 onwards. Early stage work involved working withnutritionists and product and process technologies to develop a food bar product(to compete in the cereal bar market) which was intended to be nutritionallysuperior to competing products, whilst offering a superior taste. Second stagework involved palatability development and research, using the services ofThornton Mustard, a taste and aroma specialist, and developing a brand anddesign strategy. Sourcing and negotiating a manufacturing agreement moved inparallel with this process. A product was ready for market launch in September2003 and some limited distribution was achieved. At the beginning of 2004, amarketing strategy was put into action with the intention of building consumerawareness. Products are currently sold under the brand, Altu, in severalnationally-recognised retail chains. The products also have a presence in thewholesale and independent retail channels. Nutrinnovator has obtained trademark registration for the Altu brand name in the UK. In June 2004 Nutrinnovator was admitted to AIM and carried out a placing of3,235,849 Existing Ordinary Shares at a price of 53p per share, raisingapproximately £1.7 million, before expenses, which has provided working capitalfor Nutrinnovator to continue to develop and market its products. On 22September 2004, it was announced that Provexis had agreed a joint venture withNutrinnovator to develop Sirco, a new "heart-healthy" drink. The drink is ajuice drink containing a patented natural fruit extract which has been proven inhuman trials to inhibit blood platelet aggregation and thereby benefit thecirculation - working within a rapid timeframe i.e. up to three hours. It wasinitially anticipated that the joint venture would be 55 per cent. owned byProvexis and product development would be funded by Nutrinnovator's cashresources. The Directors believe that the acquisition of Provexis and Admission of theEnlarged Share Capital to trading on AIM will enhance the Company's activities.The two businesses are complementary and significant synergies can be achievedby merging the operations of the two companies. The Enlarged Group will have apipeline of potential products and the Acquisition will allow the Enlarged Groupto combine Provexis' technology with the Group's marketing and sales capabilitywhich the Directors and Proposed Directors believe will enhance the ability todevelop and launch brands in a relatively short timeframe whilst continuing toimplement a licensing strategy. The primary focus for the Enlarged Group will bethe development of Sirco and the Board will conduct a review of the Altu brandfollowing Admission. These products will address the functional food market, which has shown growthin the UK from £134 million of sales in 1998 to £835 million of sales in 2003.The market is forecast to grow to £1.7 billion of sales by 2007. By 2010, the USmarket for functional food is forecast to double from 2003 levels to $34 billionof sales. 3. Information on Provexis and its business Provexis was founded in 1999 by Progeny BioVentures Ltd, the life sciencesubsidiary of ANGLE plc, a consultancy and venture creation company whose sharesare traded on AIM. In January 2000, Progeny BioVentures Ltd, Rowett ResearchServices Ltd (the commercial arm of the Rowett Research Institute) and Provexisentered into an agreement for Provexis to source and develop patented bioactiveproducts derived from food for application in the medical food and functionalfood markets. Functional foods are foods which are consumed for the maintenance of health andhave the potential to carry health claims to this effect. Medical foods are aseparately regulated category of products in the US and Europe, based on foodbut used under the supervision of a physician. From foundation until 2002, ANGLE provided Provexis with management,administrative support and funding. In September 2002, Dr. Stephen Franklinjoined Provexis as Chief Executive and Provexis secured its first externalventure capital (other than from ANGLE) from the Rising Stars Growth Fund(managed by Enterprise Ventures Limited) and management. From 2003, ANGLE hascontinued to provide administrative, accounting and financial support servicesto management. In October 2003, the company entered into a technology optionagreement and a research and development collaboration with the University ofLiverpool. In 2004, Provexis secured additional venture capital investment fromANGLE, the North West Equity Fund, the Rising Stars Growth Fund, Rowett ResearchServices Ltd and management. Provexis' approach is to prove the efficacy of its products in human trials. TheDirectors and Proposed Directors believe this approach supports the developmentof higher value products, with the potential for stronger patent positions,capable of being marketed with substantive health claims. Provexis has three products in development and an on-going "right of first view"agreement with Rowett Research Services Ltd. The lead technology, CardioFlow, is a patented natural extract from tomato whichhas been shown in human trials to reduce the propensity for aberrant bloodclotting, typically associated with CVD, which can lead to heart attack andstroke. The first patent application for CardioFlow was filed in the UK in 1998,followed by Europe, the USA, Japan, Canada, Mexico and Australia in 1999. Thepatent was granted in Europe in July 2003 and subsequently granted in Australia.The USA patent application successfully obtained its Notice of Allowance inMarch 2005 and the Directors and Proposed Directors anticipate that grants inJapan, Mexico and Canada will follow in due course over the next twenty-fourmonths. The market for heart healthy foods worldwide was forecast to reach US$4.6billion of sales by 2005. Whilst there are food products for the management ofcholesterol, the Directors and the Proposed Directors are currently unaware ofany food product in the UK *market that bears the on-label claim "helps tomaintain a healthy heart and benefits circulation" and the first product indevelopment is a fruit juice based drink incorporating CardioFlow technologywhich will carry this on-label claim. Another product in development is a medical food product for the dietarymanagement of Inflammatory Bowel Disease ("IBD"), specifically Crohn's Disease,using an extract of plantain. Provexis has entered into a collaborationagreement with the University of Liverpool to commercialise their technology inthis field which is the subject of a patent application filed in 2004. A further product in planning is a pill variant of CardioFlow for applicationas: * a dietary supplement for 'healthy' people who wish to gain the cardiovascular benefit of the technology; and/or * a medicinal product for 'at risk' patients who are pro-thrombotic. 4. The Enlarged Group's product development CardioFlowIn recent years, several studies have suggested a link between tomatoconsumption and the lower incidence of CVD in Mediterranean countries. ProfessorAsim Dutta-Roy of the Rowett Research Institute suggested that naturallyoccurring antiplatelet compounds in ripe tomato fruit could contribute to thiseffect. His discovery in 1998 formed the basis of a patent application prior toany subsequent third party validation. This intellectual property, which is nowowned by Provexis, has been used in the development of a proprietary productcalled CardioFlow. CardioFlow is an extract of tomato, produced industrially tolaboratory-determined specifications. It contains a range of tomato-derivedcomponents that inhibit platelet aggregation, a key part of the blood-clottingprocess. Blood platelets play an essential physiological role in detecting andinitiating repair to damaged blood-vessel walls. However, it has also beenestablished that this function can help turn an unstable or ruptured atherogenicplaque into a life-threatening arterial blockage, which can cause heart attacksand stroke. The active components in CardioFlow help to maintain platelets in an inactivatedstate, reducing the potential for platelet aggregation, which is desirable forgood cardiovascular health. For patients with CVD, therapy with antiplatelet drugs has been shown todecrease the incidence of primary and secondary coronary events. However, forboth patients and "healthy" individuals, dietary control is being increasinglyemphasised as crucial to heart health. The Directors and the Proposed Directorsbelieve that opportunities for a natural, food-based product (positioned withinthe mainstream food market) with antiplatelet benefits are significant. The amount of tomatoes consumed in the normal UK diet is often too low to fullyrealise the cardiovascular benefits of the fruit. CardioFlow, however, providesan appropriate level of tomato extract in a form that can be added to a range of(specifically non-tomato-based) food products. CardioFlow is a functional foodingredient targeted at the "heart healthy" food market. The Directors andProposed Directors also believe that in the future it may prove to be aneffective and natural replacement or augmentation for existing drug therapy, andare planning a pill or tablet format. To date, CardioFlow has been administered as a functional food to over 220healthy human volunteers in four separate human trials. These trials have shownthat: * the compounds responsible for CardioFlow's in vitro bioactivity are also efficacious in vivo. A rapid reduction in platelet responsiveness to important aggregation mediators, adenosine, diphosphate and collagen is observed when CardioFlow is taken orally, compared to control; * CardioFlow is well tolerated, with no reported adverse side affects. No effects on the coagulation process have been observed, suggesting that normal blood clotting on injury is not likely to be affected by CardioFlow supplementation. CardioFlow has been the subject of an independent professional risk assessment conducted by Toxicology Advisory Consultant Services, a strategic partner of the British Industrial Biological Research Association (BIBRA), which has deemed the ingredient safe. In addition, in 2003 CardioFlow gained regulatory clearance from the UK Food Standards Agency, which has deemed the ingredient to be non-novel (i.e. not subject to the EU Novel Foods Regulations); * CardioFlow shows efficacy in reducing the level of platelet aggregation in "healthy" human subjects within three hours of ingestion; * the magnitude of the antiplatelet effect varies from person to person and male individuals show a significantly greater response to CardioFlow than females; * individuals may be classified as either low or high responders to the bioactive compounds in CardioFlow. Results suggest that the most responsive individuals, i.e. those showing the largest reductions in platelet aggregation response after consuming CardioFlow, may be those with significantly higher levels of some markers of increased CVD risk. In these individuals, the reduction in platelet aggregation observed can be greater than 70 per cent.; * as expected from its broad range of in vitro activities, CardioFlow exhibits more than one mode of action in vivo. The Directors and the Proposed Directors believe that, as a result, CardioFlow's bioactive components can alter platelet function in up to approximately 97 per cent. of individuals tested. This compares favourably with aspirin, which has one mode of action only, and is thought to be effective in approximately 70 per cent. of individuals; and * the benefits for CardioFlow continue for up to 18 hours after ingestion. Trials have indicated that the antiplatelet effect of CardioFlow is typically at a maximum between three and six hours after ingestion and that platelet function has returned to normal levels after approximately 18 hours. CardioFlow has also successfully completed stability tests under a range ofconditions intended to accommodate several types of food vehicle. It has beenformulated to minimise its colour, flavour and aroma and is therefore suitablefor incorporation into a wide range of foods. The first commercially available product containing CardioFlow technology willbe a fruit juice drink called Sirco. The beverage is planned to be on theshelves of two major UK retailers by the last quarter of this year. Sirco is proposed to be made available as a one litre carton and will beinitially available in two flavours, blueberry & apple and orange. Both theseflavour variants have been developed by Thornton Mustard, formerly anon-executive director of the Company, who has worked on global brands for anumber of companies including Coca Cola, Proctor & Gamble, Red Bull, Diageo andGlaxoSmithKline. The drink will carry the claim that it "helps to maintain a healthy heart andbenefits circulation". So far as the Directors and the Proposed Directors areaware, this is the first known beverage to carry this claim and so far as theDirectors and Proposed Directors are aware, is the first to offer a heart-healthbenefit that works with your body on the very day you drink it. In addition to direct sales from the Sirco juice drink, the Directors andProposed Directors believe that the possible licensing of the CardioFlowtechnology to international brand owners may provide an additional revenuestream. The Enlarged Group intends to license the technology under a proposednew brand, FruitFlow. Plantain extract for the dietary management of Crohn's Disease Ulcerative colitis and Crohn's disease are disorders of the digestive tract,known as inflammatory bowel disease (IBD). The inflammation is chronic, yetspontaneously relapsing. Evidence suggests that an abnormal reaction toendogenous intestinal bacteria may cause the condition. Provexis, incollaboration with the University of Liverpool, has demonstrated that a solublefibre formulation (specifically, a non-starch polysaccharide extract) extractedfrom plantain reduces the attachment of bacteria to bowel epithelial cells invitro. The idea that an extract from plantain could be linked to the management of IBDis given further credence by epidemiological evidence, which suggests that incontinents where plantain is a staple ingredient (used to make flour, etc), theincidence of the condition is relatively low. Provexis is currently developing a novel, medical food for the treatment andmanagement of IBD which is targeting maintenance of remission for patients withCrohn's Disease. The medical food product is currently expected to go into ahuman trial by the end of 2005. Current treatment of IBD generally involves the use of antidiarrhoeal agents,antispasmodic agents, aminosalicylates, corticosteroids, immunosuppressants andantibiotics. In the UK such treatments are prescription-only medicines,relatively expensive, aggressive and can have side effects. Near-term pipeline opportunities The Company is currently negotiating heads of agreement in relation to a licenceof a functional food technology developed by a UK based institute which it ishoped will lead to a three-year research and development programme for a novelproduct which is expected to show risk reduction in a number of cancers. Thesediscussions may or may not lead to legally binding agreements. The Company has a three year agreement with Plant Biosciences Limited ("PBL"),the technology transfer business of the John Innes Centre. PBL will access theirglobal network of 35 academic and research institutes to seek further functionalfood technologies for the Company. 5. Manufacturing The Enlarged Group intends to outsource the manufacture of the CardioFlowingredient to a plant facility at Fermoy, in County Cork, Ireland. The EnlargedGroup will retain control of the raw-material supply chain (to ensureappropriate quality) and quality control procedures. The capacity planningsuggests that if sales targets are achieved, this facility will be able to meetthe Company's requirements for at least the first 24 months. Gerber Foods Limited ("GFL"), the UK's largest manufacturer of juice and juicedrinks, manufactured the pilot samples for Sirco and the Company is innegotiations with GFL to manufacture Sirco in the UK. Subject to a satisfactoryconclusion of negotiations with GFL this arrangement will allow the EnlargedGroup to benefit from significant scale in fruit-juice purchasing andmanufacturing costs which the Directors and the Proposed Directors believe willenhance gross margins. 6. Intellectual Property CardioFlow The first patent application for the CardioFlow antiplatelet product was filedin the UK in 1998, followed by subsequent patent applications in Europe, theUSA, Japan, Canada, Mexico and Australia in 1999. The patent was granted inEurope in July 2003 and subsequently granted in Australia. The USA patentapplication successfully obtained its Notice of Allowance in March 2005 and theDirectors and Proposed Directors anticipate that grants in Japan, Mexico andCanada will follow in due course over the next twenty-four months. In addition to the core parent patent, an additional patent application has beenfiled in Europe to protect aspects of CardioFlow's formulation, particularlywith regard to dry powders and pills, which will have particular relevance forthe development of the medical food product. Similarly, a new and more recent application has been made with regard toCardioFlow's newly discovered potential therapeutic use. Plantain extract for the dietary management of Crohn's DiseaseThe plantain extract technology is also protected by patent application and iscurrently owned by the University of Liverpool. Provexis has an option toacquire rights to the patent application and other intellectual property rightsrelating to technology for the treatment of inflammatory bowel disease. Theserights will be held in a subsidiary held 75 per cent. by Provexis and 25 percent. by the University of Liverpool. The patent application has been thesubject of an international search report and an international preliminaryreport on patentability, both of which are encouraging with regard to thelikelihood of the patent being granted. 7. Sales and Marketing Sirco The Enlarged Group's proposed investment in marketing in respect of the Sircobrand will have two major platforms: national press and outdoor advertising, toraise awareness of the brand and its novel claims; and medical marketing, toinfluence directly opinion leaders and medical professionals. At the retailer level, the Enlarged Group intends to invest in activities suchas point-of-sale shopper education, loyalty-card promotion and in-storesampling. The Company is in discussions with a number of major high-streetretailers and multiple grocers for the sales of Sirco and the aim is to launchin two major UK retailers in the final quarter of 2005. Planned overall investment levels are designed to ensure that the Sirco brandwill be focussed on the consumer and the trade customer, with approximately £2.2million planned to be invested in marketing in the UK over the first two years.This compares with the total advertising investment in the UK by Tropicana ofapproximately £1.4 million in 2003 and the estimated £0.9 million invested in UKadvertising by Ocean Spray in 2003. The Enlarged Group plans to build its own sales operation, comprising two peoplewith healthcare sales experience to work with key retail customers to educatethe consumer at store level and establish the Sirco brand. Altu food bar Altu was launched in 2003 and the brand is distributed nationally. Sainsburys,Waitrose, Boots, Holland & Barrett, GNC and Julian Graves form the core ofAltu's multiple-grocer and high-street outlets, while the recent addition ofPalmer & Harvey's delivered wholesale business has given the brand access to theconvenience store sector. The product continues to receive support from existing customers and consumers.The Company intends to support current distribution via in-store promotions andsampling. A new multipack format was launched in Waitrose during March 2005. The primary focus for the Enlarged Group will be the development of Sirco andthe Board will conduct a review of the Altu brand following Admission. 8. Financial information on the Group The Group had net assets as at 31 December 2004 of £0.6 million. A summary ofthe trading results for the Group, as extracted from the accountants' report setout in Part III of the Prospectus, is set out below. Period ended Period ended Period ended 31 May 31 March 31 December 2003 2004 2004 £'000 £'000 £'000Turnover - 75 231Gross Profit - 23 76Operating Loss (81) (860) (1,744)Loss before taxation (81) (856) (1,729) 9. Financial information on Provexis Provexis had net assets as at 31 December 2004 of £0.1 million. A summary of thetrading results for Provexis, as extracted from the accountants' report set outin Part IV of the Prospectus, is set out below. 8 month Period ended Year Ended 30 April 31 December 2002 2003 2004 2004 £'000 £'000 £'000 £'000Turnover 1 - - -Other Operating income - - 22 23Operating Loss (129) (387) (569) (327)Loss before taxation (129) (386) (566) (394) 10. Current trading and prospects of the Enlarged Group Nutrinnovator's current trading has been slower than originally expected,however the Altu product continues to receive support from existing customersand consumers. A new multipack format was launched in Waitrose in March 2005. Provexis has yet to make any sales but the Company is in discussions with anumber of major high-street retailers and multiple grocers for the sales ofSirco and the aim is to launch in two major UK retailers in the final quarter of2005. The two businesses are complementary and the Directors and Proposed Directorsbelieve that significant synergies can be achieved by merging the operations ofthe two companies. Both companies have a pipeline of potential products and theDirectors and Proposed Directors believe that the acquisition of Provexis andAdmission of the Ordinary Shares to trading on AIM will enhance the Group'sactivities and profile. The Acquisition will allow the Enlarged Group to combineProvexis' technology with the Group's marketing and sales capability which theDirectors and the Proposed Directors believe will enhance the ability to developand launch brands in a relatively short timeframe whilst continuing to implementa licensing strategy. The primary focus for the Enlarged Group will be thedevelopment of Sirco and the Board will conduct a review of the Altu brandfollowing Admission. 11. Terms of the Acquisition Under the terms of the Acquisition Agreement, the Company has conditionallyagreed to acquire Provexis in consideration for the allotment and issue of theConsideration Shares to the Vendors on completion of the Acquisition. Inaddition, the Company has conditionally agreed to issue 18,184,524 new OrdinaryShares in satisfaction of the Vendor Loans and 12,000,000 New Ordinary Shares insatisfaction of the New Loans. The Consideration Shares will represent 44.73 percent. of the Enlarged Share Capital of the Company on Admission. The newOrdinary Shares issued pursuant to the conversion of the Vendor Loans and theNew Loans will represent 12.09 per cent. of the Enlarged Share Capital of theCompany on Admission. The Acquisition Agreement is conditional, inter alia, uponthe approval of the Resolutions by Shareholders and completion of the Placingand Admission. 12. Use of Funds The proceeds of the Placing and the New Loans net of the total anticipated costsand expenses of the Placing and Admission, will be approximately £3.6 millionwhich will be applied principally as follows: * the launch and marketing of Sirco in the UK and to secure an international licensing deal for the CardioFlow technology in a beverage format; * to continue to develop the medical food for the dietary management of inflammatory bowel disease, specifically Crohn's disease; * to continue to develop the near-term product pipeline (subject to satisfactory conclusion of negotiations with development partners); and * to fund working capital. 13. The City Code on Takeovers and Mergers Following Completion of the Proposals, the Vendors will between them hold inexcess of 50 per cent. of the Enlarged Share Capital of the Company and for solong as they continue to be treated as acting in concert, may accordinglyincrease their aggregate shareholding without incurring any further obligationunder Rule 9 of the City Code to make a general offer for the Company. The Panelshould be consulted, however, before any individual member of the Concert Partyincreases his holding to 30 per cent. or more or, if such holding is already notless than 30 per cent. (but not more than 50 per cent.), before any increase ofsuch holding. 14. Directors, Senior Management and the Scientific Advisory Board of theEnlarged Group The Board of the Enlarged Group will initially comprise two executive Directorsand two non-executive Directors. Directors On Completion, the Proposed Directors will be appointed to the Board.Biographical details of the Directors and the Proposed Directors and theirpositions on the Board on Completion are as follows: Dawson Buck, Non-Executive Chairman, Age 58. Dawson has over twenty years'experience within the UK, US and international electronic security, property,retail and IT industries, holding management, director and officer positionsduring that time. He joined ANGLE Technology Limited in 2000 and is a directorof ANGLE plc. Dr Neville Bain, Non-Executive Deputy Chairman, Age 64. Neville is currentlyChairman of Hogg Robinson plc, non-executive director of Scottish & Newcastleplc and a member of the Council of the Institute of Directors and Chairman oftheir Audit Committee. Dr Stephen Franklin, Chief Executive, Age 37. Stephen has been Chief Executiveof Provexis since September 2002. Prior to this, Stephen was a PrincipalExecutive with ANGLE plc and was the primary architect of Protengy, ANGLE's newcompany creation process Stephen Moon, Commercial Director, Age 48. Stephen has had a career inmanufacturing and supply chain roles with BP, Dalgety and Quaker. He joinedNutrinnovator in February 2003. The Company does not currently have a Finance Director but the Board will keepthis under review and will seek to appoint a part-time Finance Director whenappropriate. Senior Management The senior management team comprises: Fiona Vigar, Director of Marketing; IanHoughton, Director of Sales; Benedict Hopkins, Director of Operations andFinancial Controller; and Niamh O'Kennedy, Principal Scientist. Scientific Advisory Board The Scientific Advisory Board comprises: Professor Asim Dutta-Roy. Asim discovered the anti-aggregatory effect of thetomato extract whilst undertaking research at the Rowett Institute. He isChairman of the Provexis Scientific Advisory Board and currently Professor ofNutrition at the Institute for Nutrition Research, University of Oslo. Professor David Richardson. David advises Provexis in the field of healthclaims and functional food regulation. David was formerly Group Chief Scientistwith Nestle UK Ltd., and is currently Visiting Professor at the University ofNewcastle upon Tyne and University of Reading. Professor David Webb. David is the Christison Professor of Therapeutics &Clinical Pharmacology in the College of Medicine & Veterinary Medicine of theUniversity of Edinburgh. David is also Leader of the University's Centre forCardiovascular Science. Professor Iain Broom. Iain is a research Professor in Clinical Biochemistry andMetabolic Medicine at Robert Gordon University in Aberdeen. 15. Dividend policy The Directors and the Proposed Directors currently intend to apply the EnlargedGroup's cash resources to invest in the growth of its operations and thereforedo not anticipate paying dividends in the near future. They will reconsider theCompany's dividend policy as and when the Company is in a position to paydividends. The declaration and payment by the Company of any dividends willdepend on the results of the Enlarged Group's operations, its financialcondition, cash requirements, future prospects, profits available fordistribution and other factors deemed to be relevant at the time. 16. Change of Company name In view of the size and nature of the Acquisition, it is proposed that, onAdmission, the name of the Company be changed to Provexis plc. 17. Capital Reorganisation Conditional upon and with effect from Admission, the Company proposes toreorganise its ordinary shares of 2p each so that every 1 ordinary share of 2pence each will be sub-divided into 2 Ordinary Shares of 1 penny each. Nofractional entitlements will arise on the sub-division. As a result of the sub-division the 16,609,194 Existing Ordinary Shares in issueat the date of this announcement will be replaced with 33,218,388 OrdinaryShares. 18. Change of Provexis' financial year end Provexis has an accounting reference date of 30 April, whereas the Company has afinancial year end of 31 March. The Directors and the Proposed Directors believethat the Enlarged Group's financial year end should coincide with that ofNutrinnovator. Consequently, the Enlarged Group will report its first auditedresults for the year ending 31 March 2006. 19. Change of Nominated Adviser and Broker The Company also announced today that Oriel Securities Limited will resign asthe Company's nominated adviser and broker with effect from Admission. In theirplace, the Company will appoint Arbuthnot Securities Limited as its nominatedadviser and broker from Admission. 20. Details of the Placing The Company is proposing to raise approximately £3.8 million (before expenses)through a conditional placing by Arbuthnot of 67,424,000 new Ordinary Shares at5.6 pence per share. The Placing Shares will represent approximately 27.01 per cent. of the EnlargedShare Capital of the Company following Admission. On Admission, it is expectedthat the Company will have a market capitalisation at the Placing Price ofapproximately £14.0 million. Arbuthnot has agreed to subscribe approximately £260,000 as part of the Placing. Under the Placing Agreement, Arbuthnot has agreed to use its reasonableendeavours to procure subscribers for the Placing Shares at the Placing Priceand has conditionally placed all of these shares at the Placing Price withinstitutional and certain other investors. The obligations of Arbuthnot under the Placing Agreement are conditional upon,inter alia, Admission taking place by 8.00 a.m. on 23 June 2005 (or such laterdate, being not later than 8.00 a.m. on 7 July 2005, as the Company andArbuthnot shall agree). The Placing Agreement contains provisions entitling Arbuthnot to terminate thePlacing Agreement at any time prior to Admission in certain circumstances. Ifthis right is exercised, the Placing will lapse and the Acquisition will nottake place. The Placing has not been underwritten by Arbuthnot. The Company has applied to the Inland Revenue for provisional clearance that thePlacing Shares placed with VCTs will constitute a qualifying holding for suchVCT purposes and the Placing Shares will be eligible shares for EIS purposes. The Placing Shares will, on Admission, rank pari passu in all respects with theExisting Ordinary Shares, including the right to receive all dividends and otherdistributions thereafter declared, made or paid in respect of the ordinary sharecapital of the Company. 21. Conversion of Loans The Company is proposing to issue 18,184,524 new Ordinary Shares at the PlacingPrice per share in satisfaction of the Vendor Loans and 12,000,000 new OrdinaryShares at the Placing Price per share in satisfaction of the New Loans, pursuantto the terms of the Acquisition Agreement and 7,142,857 new Ordinary Shares atthe Placing Price per share in satisfaction of the Nutrinnovator Loans. 22. Lock-in Arrangements Under the terms of the Placing Agreement, the Directors and the ProposedDirectors have agreed with Arbuthnot and the Company not to sell, transfer orotherwise dispose of any interest in any Ordinary Shares held by themimmediately following Admission, other than in certain limited circumstances,for a period of 12 months following Admission pursuant to rule 7 of the AIMRules. The Directors and the Proposed Directors have also agreed that any sale ordisposal of Ordinary Shares will be effected through Arbuthnot for such time as it remains theCompany's broker and/or nominated adviser under the AIM Rules and offerscompetitive terms for such sale or disposal. In addition, the Vendors and certain individuals have agreed with Arbuthnot andthe Company not to sell, transfer or otherwise dispose of any interest in anyOrdinary Shares held by them immediately following Admission, other than incertain limited circumstances for a period of 12 months following Admissionpursuant to rule 7 of the AIM Rules. They have also agreed that any sale ordisposal of Ordinary Shares will be effected through Arbuthnot for such time asit remains the Company's broker and/or nominated adviser under the AIM Rules andoffers competitive terms for such sale or disposal. The lock-in arrangements outlined above will apply in respect of 161,541,079Ordinary Shares representing approximately 64.7 per cent. of the Enlarged Share Capital. 23. Undertakings An Irrevocable Undertaking has been received from Stephen Moon in respect of the3,000,000 Existing Ordinary Shares held by him which, at the date of thisannouncement, represents approximately 18.06 per cent. of the issued sharecapital of the Company to vote in favour of the Resolutions. Irrevocable Undertakings have also been received from certain shareholdersincluding Fiona Vigar in the Company in respect of the 9,660,795 ExistingOrdinary Shares in aggregate held by them which, at the date of thisannouncement, represent approximately 58.17 per cent. of the issued sharecapital of the Company to vote in favour of the Resolutions. The Irrevocable Undertakings also contain certain restrictions on dealings inshares until the conclusion of the EGM (or any adjournment thereof). The Irrevocable Undertakings (and the dealing restrictions referred to therein)apply save in certain limited circumstances, including in connection with atakeover offer, the ability to accept an offer, to give irrevocable undertakingsto accept an offer and to sell to an offeror or potential offeror who has beennamed in an announcement pursuant to the City Code, with the exception of theIrrevocable Undertakings entered into by Stephen Moon and Fiona Vigar wherethese limited circumstances do not apply. The Panel has deemed that Stephen Moonand Fiona Vigar are acting in concert for the period of the IrrevocableUndertakings until the conclusion of the EGM (or any adjournment thereof). 24. Extraordinary General Meeting An Extraordinary General Meeting, notice of which is set out in the Prospectus,will be held at the offices of Charles Russell LLP, 8-10 New Fetter Lane, LondonEC4A 1RS at 10.00 a.m on 20 June 2005 at which the Resolutions will be proposedto approve the Waiver, to approve the Capital Reorganisation and to approve theAcquisition, increase the authorised share capital of the Company, authorise theDirectors to allot shares, disapply statutory pre-emption rights and change thename of the Company and to approve the establishment of a new share optionscheme. 25. Prospectus The Company has published a Prospectus in connection with the above proposalswhich has been sent to Nutrinnovator shareholders together with a Form of Proxyfor use at the EGM. A copy of the Prospectus is available from the Company'sregistered office. 26. Restoration of shares to trading Following the suspension of trading in the Company's shares as referred toabove, trading in the Company's shares will re-commence from 8.00am today. EXPECTED TIMETABLE OF PRINCIPAL EVENTS Latest time and date for receipt of the Forms ofProxy for the Extraordinary General Meeting 10.00 a.m. on 18 June 2005Extraordinary General Meeting 10.00 a.m. on 20 June 2005Completion date of the Acquisition 23 June 2005Record date for the Capital Reorganisation 8.00 a.m. on 23 June 2005Admission of the Ordinary Shares, includingthe New Ordinary Shares, and dealingscommence in the Enlarged Share Capital onAIM 8.00 a.m. on 23 June 2005 DEFINITIONS AND GLOSSARY "Acquisition" the proposed acquisition of the entire issued share capital of Provexis by the Company, pursuant to the Acquisition Agreement "Acquisition Agreement" the conditional agreement dated 25 May 2005 between (1) the Company and (2) the Vendors pursuant to which the Company has conditionally agreed to acquire the entire issued share capital of Provexis "Acting in Concert" shall bear the same meaning ascribed thereto in the City Code "Admission" the admission of the issued Ordinary Shares and the New Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules "AIM" the AIM Market operated by the London Stock Exchange "AIM Rules" the rules of AIM governing admission to and the operation of AIM for AIM companies and their nominated advisers as published by the London Stock Exchange from time to time "ANGLE" ANGLE plc or, where the context admits, any of its relevant subsidiaries "Arbuthnot" Arbuthnot Securities Limited "Articles" the Company's articles of association "Board" the Board of Directors "Capital Reorganisation" the proposed sub-division of the issued ordinary shares of 2p each in the capital of the Company at Admission and the unissued ordinary shares of 2p each in the capital of the Company into two Ordinary Shares "Code" or "City Code" the City Code on Takeovers and Mergers published by the Panel "Company" or "Nutrinnovator" Nutrinnovator Holdings plc "Completion" completion of the Acquisition "Concert Party" the Vendors "Consideration Shares" the 111,658,555 new Ordinary Shares to be issued to the Vendors pursuant to the Acquisition Agreement "CVD" cardiovascular disease "Directors" the existing directors of the Company "EGM" or "Extraordinary the extraordinary general meeting of theGeneral Meeting" Company to be held at "Enlarged Group" the Group and Provexis following the Acquisition "Enlarged Share Capital" the Ordinary Shares in issue immediately following Admission as enlarged by the issue of the New Ordinary Shares "Existing Ordinary Shares" the ordinary shares of 2 pence each in the capital of the Company which will, following the Capital Reorganisation, be each divided into 2 Ordinary Shares "Existing Shareholders" the Shareholders immediately prior to Admission "Form of Proxy" the form of proxy for use at the Extraordinary General Meeting "Group" Nutrinnovator and its subsidiary undertakings "Irrevocable Undertakings" the irrevocable undertakings dated on or around 13 May 2005 entered into by certain Shareholders in which they have undertaken (subject to certain limited exceptions) to vote in favour of the Resolutions "Loans" the Nutrinnovator Loans, the Vendor Loans and the New Loans "London Stock Exchange" London Stock Exchange plc "New Loans" certain loans made to Provexis on 25 May 2005 "New Ordinary Shares" the Consideration Shares, the Placing Shares and the 37,327,381 new Ordinary Shares issued on conversion of the Loans "New Share Option Scheme" the Provexis 2005 Unapproved Share Option Scheme proposed to be adopted at the EGM "North West Equity Fund" North West Equity Fund Limited Partnership acting by its general partner, North West Equity Fund Managers Limited "Nutrinnovator Loans" the convertible loan notes "Ordinary Shares" the proposed ordinary shares of 1p each in the capital of the Company following the Capital Reorganisation and "Ordinary Share" shall be construed accordingly "Panel" The Panel on Takeovers and Mergers "Placees" the subscribers of Placing Shares pursuant to the Placing "Placing" the conditional placing by Arbuthnot on behalf of the Company of the Placing Shares, pursuant to the Placing Agreement "Placing Agreement" the conditional agreement dated 25 May 2005 between (1) the Company, (2) the Directors and the Proposed Directors, (3) certain Provexis shareholders and (4) Arbuthnot, relating to the Placing "Placing Price" 5.6p per Placing Share "Placing Shares" the 67,424,000 new Ordinary Shares to be subscribed for by Placees pursuant to the Placing "POS Regulations" the Public Offers of Securities Regulations 1995, as amended "Progeny" Progeny BioVentures Limited "Proposed Directors" the proposed directors of the Company "Proposals" the proposals set out in the Prospectus including those which require the approval of Shareholders at the EGM including the Acquisition, the Placing, the conversion of the Loans and the change of name of the Company to Provexis plc "Prospectus" the Prospectus published by the Company on 25 May 2005 in connection with the Proposals "Provexis" Provexis Limited "Provexis Directors" the directors of Provexis "Provexis Shares" all the issued and to be issued shares in the following classes of share in Provexis: ordinary shares of 100p each; "A1" ordinary shares of 100p each; deferred shares of 100p each; and redeemable shares of 100p each "Resolutions" the resolutions contained in the notice of the EGM set out in the Prospectus "Rule 9" rule 9 of the City Code "Shareholders" holders of Existing OrdinaryShares "UK" the United Kingdom of Great Britainand Northern Ireland "VCT" venture capital trust "Vendor Loans" the loans summarised in sub-paragraphs (d), (e), (h) and (i) of paragraph 12.2.1 and paragraphs 12.2.2 and 12.2.3 of the Prospectus "Vendors" ANGLE and the shareholders of Provexis "Waiver" the waiver of the obligations that would otherwise arise under Rule 9 of the Code for the Concert Party to make a general cash offer for the whole of the Company's issued share capital This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Provexis