AVO.L Regulatory News (AVO)

5 December 2012

ADVANCED ONCOTHERAPY PLC

("Advanced Oncotherapy" or "the Company")

Sale of The Healthcare Property Company Ltd ("HPC") for a Consideration of up to £3.2m

Notice of General Meeting

Further to the announcement of 16 July 2012 concerning a potential demerger of the Group's healthcare property development business conducted by HPC and the HPC Subsidiaries, the Board of Advanced Oncotherapy is pleased to announce that it has reached agreement to sell HPC to a special purchase company (the "Purchasing Entity") jointly owned by a wholly owned subsidiary of Kitty Hawk, advised by Revcap, and Paul Stacey, a Director of the Company. The Disposal is subject to the execution of an agreed form Share Purchase Agreement, the approval of Shareholders in a general meeting, and to approval by the board of Kitty Hawk for the transaction, which has been recommended by Revcap.

Revcap was established in 2009 to provide investment advisory services to 3rd party investment vehicles.

HPC is a wholly owned subsidiary of CareCapital Limited, which itself is the wholly owned subsidiary of Advanced Oncotherapy. It is therefore proposed to effect the Disposal through the sale by CareCapital Limited of the entire issued share capital of HPC to the Purchasing Entity, which obligations are guaranteed by Advanced Oncotherapy.

The consideration for the sale of HPC is an initial payment of £1.7 million in cash at closing (adjusted to equate to the Net Asset Value of HPC at completion) plus further payments related to the profitability of the HPC in each of the next three years but, in any event, not to exceed £1.5 million in aggregate which may be subject to certain reductions provided under the agreed form Share Purchase Agreement.

Under the AIM Rules for Companies, the Disposal is deemed to be a disposal resulting in a fundamental change of business and is therefore subject to the approval of Shareholders in a general meeting. The Disposal is also subject to approval by the board of Kitty Hawk for the transaction, which has been recommended by Revcap, who advise Kitty Hawk. Accordingly, the Company is posting a circular to Shareholders today which sets out in detail the terms of the Disposal and contains a Notice of General Meeting to be held at the offices of Libertas at 11.00 a.m. on 21 December 2012 at which the consent of Shareholders to the Disposal will be sought.

In addition, Mr Paul Stacey, a Director of the Company, will have a 50 per cent. interest in Purchasing Entity. Accordingly, the Disposal is considered to be a related party transaction under AIM Rules for Companies and requires the approval of Shareholders pursuant to section 190 of the 2006 Act.

The circular provides shareholders with information on the proposed Disposal and sets out why the Independent Directors consider, having consulted with Libertas, nominated adviser to the Company, that the Disposal is fair and reasonable insofar as Shareholders are concerned and in the best interests of the Company and its Shareholders as a whole.

Information about HPC

HPC is a developer and investor in primary healthcare real estate, partnering GPs, Dentists and other clinical service providers throughout the UK to develop tailored, cost-effective and sustainable primary care facilities. Through its subsidiaries, HPC currently has three projects in England currently under development or construction at Allesley, West Wirral and Bishops Stortford, as well as a 50 per cent. owned joint venture in Wales. Construction of the West Wirral project was completed in February 2012 and the second phase of the project at Allesley in Coventry progressed during the period and was completed on 31 August 2012. Development work continues on the project in Bishops Stortford and those in Wales at Buckley, Swansea, Glynneath and Crosshands in partnership with Guafron Health Care (2006) Limited. A number of further potential projects are being pursued.

In the six month period to 30 June 2012, HPC on a consolidated basis had revenues of £ 1.4 million and a profit before tax of £0.04 million. The company had consolidated net assets at that date of £1.8 million.

Reasons for Disposal

The Board has decided to focus the attention of the Company on cancer services in the UK using established technologies used in America and that, in order to reposition the Company, the Board has decided to dispose of HPC for net asset value plus a share in its profits for the next three years. The Company's resources will now be concentrated on the Advanced Cancer Services operations where the Board considers that the return on capital will be greater.

The Board also considers that after the disposal of HPC, the Company will benefit from being able to attract new investors in the Company through the EIS investment scheme.

Terms of the Disposal

CareCapital Limited, a wholly owned subsidiary of Advanced Oncotherapy, has agreed to sell the entire issued share capital of HPC to a special purchase company jointly owned by a wholly owned subsidiary of Kitty Hawk, advised by Revcap, and Paul Stacey, a Director of the Company subject, to Shareholders' approval of the Disposal at General Meeting, and the approval by the board of Kitty Hawk for the transaction, which has been recommended by Revcap.

The Purchase Price shall be the aggregate of:

1) the Completion Payment, being the net asset value of HPC on completion of the share purchase of HPC ("Completion"). The Completion Payment will be satisfied by the payment of £1,230,881 in cash at Completion and a further sum of £319,119 being the retention sum for the amount owed to The Healthcare Property Company (Allesley) Limited, to be released in cash to CareCapital Limited within 15 days of receipt of the full amount by The Healthcare Property Company (Allesley) Limited. The total sum of £1,550,000 together with the Purchasing Entity's obligation to procure that Paul Stacey waives a £150,000 debt owed by CareCapital Limited to him represents the expected net asset value of HPC at Completion of £1,700,000 ("Expected Net Asset Value"). If applicable, an adjusting payment (the "Adjustment Payment") will be made after Completion once completion accounts have been agreed or determined, which shall be equal to the difference between the Expected Net Asset Value and the Net Asset Value. In the event that the Expected Net Asset Value is less than the Net Asset Value, the Adjustment Payment will be paid by the Purchasing Entity to CareCapital Limited and in the event that the Expected Net Asset Value is greater than the Net Asset Value, the Adjustment Payment will be paid by CareCapital Limited to the Purchasing Entity; and

2) the Deferred Consideration, being 25 per cent. of the net profits after taxation and certain other deductions generated by the current healthcare property development contracts of HPC and the healthcare property development contracts entered into by HPC during the three years after Completion, provided that the aggregate of all payments paid by the Purchasing Entity to CareCapital Limited in respect of the Deferred Consideration shall not exceed £1,500,000. The said Deferred Consideration, however, will be subject to reduction by an amount not exceeding £1,500,000 in the event that Planning Permission in respect of the Bishops Stortford Site and each of the Welsh Sites are not obtained by the 2nd anniversary of the Completion Date of the agreed form Share Purchase Agreement.

The agreed form Share Purchase Agreement will also include various warranties and indemnities in favour of the Purchasing Entity. These include a tax indemnity and indemnities in respect of the reorganisation of CareCapital Limited's group which was undertaken on or around 16 May 2012 and the subsequent arrangements and transactions entered into by the Healthcare Property Development Group and CareCapital Limited to document the reorganisation, and any payment payable to HPC or any of the HPC Subsidiaries pursuant to project documents relating to the West Wirral Project and the Allesley Project or any claim against the Purchasing Entity, HPC and any of the HPC Subsidiaries by any party to project documents relating to the said two projects.

Advanced Oncotherapy has also provided a continuing, unconditional and irrevocable guarantee to the Purchasing Entity and its successors, transferees and assigns, the due and punctual performance and observance by CareCapital Limited of all its obligations and punctual discharge of its liabilities to the Purchasing Entity under the agreed form Share Purchase Agreement.

On or immediately after completion of the Disposal, Paul Stacey will resign as a Director of Advanced Oncotherapy and all other Group companies.

Use of Proceeds

The cash proceeds of the Disposal will immediately be will be used to discharge professional fees, to progress the development of the Group's existing specialist cancer treatment services businesses and for working capital purposes.

Information on the Remaining Business

Advanced Oncotherapy is building a portfolio of innovative cancer services to capture opportunities in the cancer diagnosis and treatment market, building on the Group's interests in Advanced Proton Solutions and Oncotherapy Resources, which is focused on early stage breast cancer treatment.

Advanced Oncotherapy has a 75 per cent. interest in Oncotherapy Resources. Oncotherapy Resources has an exclusive contract to use a new, electronic brachytherapy device that can deliver single fraction breast radiotherapy, intra-operatively at the time of lumpectomy (IORT) and can be delivered to any location to more easily meet the needs of selected cancer patients. It is a truly portable and mobile device that can be delivered, set up and used in the operating theatre and then moved on to the next theatre, centre or hospital to treat those patients with far less safety implications than a machine with a radioactive source thus enabling patients to have a one off course of radiotherapy closer to their homes.

The Xoft Axxent eBx system is now available from Oncotherapy Resources in the UK and Ireland as a fully managed and delivered service on a cost per patient treated basis enabling the NHS or private sector to more easily adopt the technique now without the need for a capital equipment purchase. The system can also treat skin and gynaecological cancers.

Oncotherapy Resources has purchased the first machine which is now in the UK and technicians are being trained to deliver this innovative service. The second machine is now on its way to the UK.

Advanced Oncotherapy also has a 28.75 per cent. interest in Advanced Proton Solutions, which is pioneering the use of Proton Beam Therapy in the UK. Planning consent has been granted for the first development of a proton beam facility in the City of London and there are four other developments being progressed in the United States. Significant progress has been made in procuring funding for these projects and, in the UK, important collaborative agreements are in place with a number of NHS Bodies.

The Disposal will enable Advanced Oncotherapy to invest in its existing specialist cancer treatment services businesses and to realize operational efficiencies and enhanced shareholder value that the Board believes this Disposal will lead to over time.

For further information, please contact:

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