29th Sep 2008 11:39
Immediate Release: Monday 29 September 2008
Ninety Plc
("Ninety" or "the Company")
Result of Extraordinary General Meeting
Acquisition of Honour Field for up to £20.12m
1 for 60 Share Consolidation and Placing
Name Change to Sorbic International plc (ticker: SORB.L)
Ninety plc is pleased to announce that at today's EGM all resolutions were duly passed. Following Admission of the enlarged share capital, which is expected to commence on AIM at 8.00am on 30 September 2008, the Company will complete the acquisition of Honour Field for a consideration of up to £20.12 million. This is to be satisfied by the issue of 9,860,000 new ordinary shares and up to a further 10,300,000 deferred shares 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). FinnCap is nominated adviser and broker to the Company.
Admission and dealings in the enlarged share capital are expected to commence on AIM at 8.00am on Tuesday 30 September 2008. On Admission the Company's name will be Sorbic International plc. The new AIM ticker on admission will be SORB.L.
There is a 1 for 60 share consolidation and the Company has raised £0.24 million through the issue of Placing Shares at the consolidated price of 75 pence for each new Placing Share. On Admission there will be 23,088,499 ordinary shares in issue (excluding deferred shares) and a market capitalization of £17.3m at the Placing Price.
The acquisition provides the Company with a well established and proven business in the Peoples Republic of China ("PRC") which produces Sorbic Acid and Potassium Sorbate for customers in over forty six countries. On Completion, the Enlarged Group has approximately £4.4m of cash. Summary financials are as follows:
|
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 |
|
Net assets |
6,619 |
7,528 |
5,778 |
4,095 |
The Company announces the following Board changes: John McLean is appointed Non-Executive Chairman, Wang Yan Ting, President and executive Director, Ray Ang, CEO, Susan Chong, CFO and Nicholas Smith as Non-Executive Director. Michael Gretton and Thomas Vaughan have resigned from the Board.
Commenting, John McLean, Chairman of Sorbic International plc, said:
"We have acquired a company with a strong growth record which is both profitable and cash generative and continues to trade in line with our expectations. The Company is well positioned in growing domestic and international markets 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."
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Enquiries: |
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Sorbic International plc, John McLean, Chairman |
Tel: +44 (0)7768 031 454 |
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FinnCap, Geoff Nash |
Tel: +44 (0) 20 7600 1658 |
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Hansard Group, John Bick |
Tel: +44 (0) 7872 061007 |
www.sorbicinternational.com
Notes to editors - Background and Future Strategy
Honour Field owns LVST which was established in July 2001. It'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 approximately 3,000 metric tonnes of Sorbic Acid and 5,000 metric tonnes of Potassium Sorbate per year.
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.
Future Strategy - 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.
Acquisition and Placing Statistics
|
Number of Existing Ordinary Shares |
374,500,020 |
|
Number of issued New Ordinary Shares arising pursuant to the Capital Reorganisation |
6,241,667 |
|
Number of Acquisition Shares* |
9,860,000 |
|
Number of Deferred Shares* |
10,300,000 |
|
Number of Conversion Shares* |
6,666,666 |
|
Issue Price |
75p |
|
Placing Price |
75p |
|
Number of Placing Shares* |
320,166 |
|
Number of New Ordinary Shares in issue on Admission* |
23,088,499 |
|
Notional market capitalisation of the Company at the Placing Price on Admission* |
£17.3 million |
|
Notional market capitalisation of the Company at the Placing Price assuming the Profit Target is met and the Deferred Shares issued |
£25.0 million |
|
Value of the Acquisition Shares at the Placing Price |
£7.4 million |
|
Percentage of the Enlarged Share Capital represented by the Acquisition Shares at Admission |
42.7 per cent |
|
Percentage of the Enlarged Share Capital represented by the Placing Shares at Admission |
1.4 per cent |
|
Percentage of the Enlarged Share Capital held by the New Board at Admission (includes the Acquisition Shares) |
43.2 per cent |
|
Gross Proceeds of the Placing |
£0.24 million |
|
Current AIM symbol |
NINE |
|
Proposed new AIM symbol upon Admission |
SORB |
|
ISIN Number of the Existing Ordinary Shares |
GB00B245C648 |
|
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.
Related Shares:
Sorbic International