Last checked at 25 Feb 2009 13:40
EVOLUTEC GROUP PLC
To be renamed
NANOCO GROUP PLC
Proposed acquisition of Nanoco Tech Public Limited Company
Approval of a waiver of the obligations under Rule 9 of the Takeover Code
Re-admission of the Existing Ordinary Shares and admission of the Consideration Shares to trading on AIM
Notice of General Meeting
Evolutec Group plc ("Evolutec" or the "Company"), is pleased to announce that it has reached agreement of a recommended share acquisition of the entire issued and to be issued share capital of Nanoco Tech Public Limited Company ("Nanoco"), a leading nanotechnology company involved in the development and manufacture of fluorescent semi-conducting materials called quantum dots, to be effected by means of a Court approved scheme of arrangement.
The Acquisition is conditional, amongst other things, upon the approval of Shareholders at the General Meeting and the Scheme of Arrangement becoming effective.
ACQUISITION HIGHLIGHTS:
Nanoco is a leading nanotechnology company involved in the development and manufacture of fluorescent semi-conducting materials called quantum dots.
Quantum dots are a platform technology with uses in a wide range of applications.
Quantum dot based applications have the ability to potentially offer significant benefits in performance and energy savings compared to those materials currently used.
Nanoco has been successful in signing significant development contracts as well as establishing distribution channels with multinational companies to supply Nanoco materials.
Following Admission the Directors of the Company will comprise Dr. Michael Edelman as Chief Executive Officer, Dr. Peter Rowley as non-executive Chairman, Dr. Nigel Pickett as Chief Technical Officer, Michael Bretherton as Chief Financial Officer and Gordon Hall as non-executive director.
The consideration for the Acquisition is to be satisfied by the issue of the Consideration Shares to the Nanoco Shareholders, on the basis of 4.55 Consideration Shares for every Nanoco Share held.
The Enlarged Group will have net funds of approximately £8.1 million following Admission which will be applied to the execution of Nanoco's strategy.
In view of the size of the Acquisition, in relation to the Company, the Acquisition constitutes a reverse takeover under the AIM Rules.
It is expected that dealings in the shares of the Enlarged Group will become effective on 30 April 2009.
Michael Edelman, Nanoco CEO Commented:
"This acquisition represents the next milestone in Nanoco's rapid development. Nanoco has grown by focusing its efforts on the development and mass production of high performance quantum dots and working to get these exciting materials into the market by partnering with strategic quantum dot application developers around the world. Admission to the AIM Market of the London Stock Exchange allows the company to continue to further strengthen its shareholder base and balance sheet and gives Nanoco the resources needed to meet the growing demand for its products."
David Bloxham, Evolutec Chairman, Commented:
"The opportunity with Nanoco will provide a significant new start for the Company."
Enquiries:
Evolutec Group plc 07771 525 875
David Bloxham
Zeus Capital Limited 0161 831 1512
Richard Hughes
INTRODUCTION
The Company announces that it has reached agreement on the terms of a recommended share acquisition of the entire issued and to be issued share capital of Nanoco to be effected by means of a Court approved scheme of arrangement between Nanoco and its shareholders pursuant to Part 26 of the 2006 Act (involving a reduction of capital pursuant to section 135 of the Act).
Nanoco is a leading nanotechnology company involved in the development and manufacture of fluorescent semi-conducting materials called quantum dots. Quantum dots are a platform technology with uses in a wide range of applications from life sciences through to optoelectronics dominated by solid state lighting, photovoltaics, and next generation displays. Quantum dot based applications have the ability to potentially offer significant benefits in performance and energy savings compared to those materials currently used.
The consideration for the Acquisition is to be satisfied by the issue of the Consideration Shares to the Nanoco Shareholders, on the basis of 4.55 Consideration Shares for every Nanoco Share held.
In view of the size of the Acquisition, in relation to the Company, the Acquisition constitutes a reverse takeover under the AIM Rules and, as such, is conditional upon the admission of the Enlarged Issued Share Capital to trading on AIM and the publication of the Admission Document. In addition, the Acquisition also requires the approval of Shareholders. Accordingly, a general meeting is being convened on 24 March 2009 at which Shareholders will be asked to approve the Acquisition and grant the appropriate authority to permit the Company to issue the Consideration Shares. If the Resolutions are approved by Shareholders and subject to the Scheme of Arrangement having become effective in accordance with its terms, it is expected that Admission will take place, and that dealings on AIM will commence, on 30 April 2009.
Immediately following Admission the Consideration Shares will comprise approximately 85.90 per cent. of the Enlarged Issued Share Capital.
Further details of the Scheme of Arrangement are set out in paragraph 14 of Part IX of the Admission Document and copies of this document will be available for inspection free of charge at the offices of Zeus Capital at 3 Ralli Courts, West Riverside, Manchester M3 5FT.
Following Completion, the Concert Party will be interested in 70,630,848 Ordinary Shares, representing 38.37 per cent. of the Enlarged Issued Share Capital. Since the Acquisition will result in the Concert Party being interested in more than 30 per cent. of the issued share capital of the Company, the Concert Party would, in the absence of a waiver from the provisions of Rule 9 of the Takeover Code being granted by the Panel, be obliged to make a general offer to all remaining shareholders of the Company. The Panel has agreed, however, subject to Resolution number 2 being passed on a poll by the Independent Shareholders at the General Meeting, to waive this obligation.
Further details on the Concert Party are set out in this Announcement and the Admission Document.
The admission document in relation to the proposed Acquisition, approval of the Waiver, Admission and General Meeting (the "Admission Document") has been posted to shareholders today and is available on the Company's website www.evolutec.com.
INFORMATION ON EVOLUTEC
Background
Evolutec was admitted to AIM in August 2004. Evolutec's principal activity was the discovery and development of novel agents for the prevention and treatment of human disease. Evolutec focused its therapeutic development on allergy, inflammation and autoimmune disease.
Evolutec progressed its lead therapeutic development candidate from discovery to completion of various phase II trials, however it did not show clinical efficacy in any of the clinical trials. Following the results of these trials an extensive strategic review was undertaken to assess the options available to Evolutec.
On 6 June 2007 a circular was sent to Evolutec shareholders explaining a proposal to distribute cash to shareholders by way of liquidation and the proposed cancellation of admission of Evolutec's shares from AIM. Following dispatch of the circular the board of Evolutec received written confirmation from one significant shareholder that they would vote against the proposals. The board was therefore of the view that the resolutions required to effect the proposals would not be passed and took the decision to continue as a quoted entity with a strategy of identifying potential acquisitions.
Evolutec is now classed as an investment company under the AIM Rules. The investment policy of Evolutec has been to seek a single investment, most probably of a UK or European business, in either the technology, healthcare or service related sectors.
The Directors believe that Nanoco is a suitable acquisition for the Company.
INFORMATION ON NANOCO
Nanoco is a leading nanotechnology company involved in the development and manufacture of fluorescent semi-conducting materials called quantum dots. Nanoco Technologies was founded in 2001 by Professor Paul O'Brien and Dr Nigel Pickett in order to progress the development of quantum dot technology that was previously developed at the University of Manchester and Imperial College, London. Since 2001, Nanoco has raised £4.1 million of private equity funds to continue the development and manufacture of quantum dots.
Quantum dots are a platform technology with uses in a wide range of applications from life sciences through to optoelectronics dominated by solid state lighting, photovoltaics and next generation displays. Quantum dot based applications have the ability to potentially offer significant benefits in performance and energy savings compared to those materials currently used in these industry sectors.
Of the range of potential applications for quantum dots Nanoco has focused initially on four application areas. These are solid state lighting, solar energy, life sciences and next generation displays.
A key challenge in the quantum dot field has been the ability to manufacture highly efficient quantum dots in significant commercial volumes. The Proposed Directors believe that to date, the quantum dot industry's production has been limited to the production of milligram to single gram batches.
Nanoco's technology directly addresses these key challenges. Firstly, Nanoco has developed and patented core technology based on methods for producing highly efficient quantum dots that are tuneable to a specific colour emission. Secondly, Nanoco has developed scalable processes for producing quantum dots. This technology enables the control of nanoparticle growth thereby allowing the production of larger quantities of quantum dots. The production technology is currently being scaled up from 50 gram batches towards kilogram batches and greater to meet the forecast market demand.
Nanoco has also developed a number of other nanomaterials, methods to improve the performance of quantum dots, additional production methods and the incorporation of the resultant nanomaterials into commercial applications.
Nanoco's business strategy is to work in partnership with quantum dot application developers. These application developers tend to be large global technology companies working to incorporate quantum dots into a specific end use application. Examples of these applications include quantum dot containing LEDs, displays and solar cells. Nanoco has been successful in signing development contracts as well as establishing distribution channels with multinational companies to supply Nanoco materials. The Proposed Directors believe that Nanoco is now well placed to become a successful quantum dot partner of choice for application developers globally.
QUANTUM DOTS
Quantum dots are tiny particles of a semiconductor material which range from 2 to 10 nanometers in diameter (about the width of 50 atoms). Because of their small size, quantum dots display useful optical and electrical properties that are different in character to those of the corresponding material in bulk. The most immediately apparent of these properties is the emission of photons under excitation, which are visible to the human eye as light. The wavelength of these photon emissions depends on the size of the quantum dot.
The ability to precisely control the size of a quantum dot enables the manufacturer to determine the wavelength of the emission, which in turn determines the colour of light the human eye perceives. Quantum dots can therefore be tuned during production to emit any colour of light desired. The smaller the dot, the closer it is to the blue end of the spectrum, and the larger the dot, the closer to the red end of the spectrum. Quantum dots can also be tuned beyond visible light, into the infra-red or into the ultra-violet parts of the spectrum.
Quantum dot technology has applications in a number of industries where there is a requirement for colour, imaging or the manipulation of light.
NANOCO'S TECHNOLOGY
Conventional, small-scale quantum dot manufacturing relies on a process called "high temperature dual injection", wherein raw materials are injected into a hot reaction solution followed by particle growth. While in general producing high quality quantum dots, this process involves harsh reaction conditions and hazardous, often toxic starting materials. Attempts to scale up this process cause increasing inconsistency in the resulting quality of quantum dots that are produced. A reproducible route to larger quantities of consistent, high quality quantum dots has been developed by Nanoco which avoids the high temperature, difficult to control, process.
Nanoco's technology addresses five key issues associated with quantum dots. These are:
1. Production of bright, highly efficient fluorescent semiconductors;
2. Materials which are highly tunable to a specific colour emission narrow band width;
3. Stable materials which can stand up to the rigours of commercial applications;
4. Heavy metal free quantum dots which are RoHS compliant. It is critical for electronics producers around the world to comply with RoHS legislation;
5. Cost effective manufacturing scale-up of quantum dots which may provide a route towards lower pricing and commercial viability.
The plan to ramp production batch size up to 1kg and later to 25kg comprises several elements, including some design, technology, and broader management challenges. Meeting the specifications for the more demanding applications in display and lighting technology will require further manufacturing process optimization and careful control of a number of parameters during the scale up. Nanoco has good technical and intellectual property strength but will need to remain focused on its key customer specifications. In particular, the Proposed Directors believe that one of the most challenging technical targets for Nanoco will be the achievement of sufficient life expectancy of its quantum dots in order to satisfy the requirements of its customers.
An independent report on Nanoco's technology has been prepared by Pira International and can be found in Part III of the Admission Document.
NANOCO'S BUSINESS MODEL
Nanoco forms and will continue to form strategic partnerships with quantum dot application developers across the world. The application developer and Nanoco work together in strategic partnership to develop a quantum dot based application. In these development partnerships Nanoco will focus on the quantum dot material and embedding the quantum dots in an application specific matrix while the application developer focuses on the application itself.
In order to be successfully embedded into an application or device, the quantum dots need to be designed and produced in a bespoke manner specific to each application. The matrix could be made from a number of materials and could exist in a liquid, powder or solid state.
Nanoco has developed its ability to fabricate quantum dots into end use devices to assist the company's application partners and facilitate adoption of its technology by the market. These devices include quantum dot printing inks, quantum dot electroluminescent displays, quantum dots LEDs and quantum dot based photovoltaic devices. The quantum dot containing devices give Nanoco rapid feedback on its quantum dot material performance and enable the company to quickly improve and modify the quantum dots to better suit the end use applications of the company's partners.
Nanoco generates revenue from three sources: funded research, material sales and royalties gained from sales of its application products into the market.
Funded research
Funded research is where a customer pays for all or a portion of Nanoco's development costs in order to tailor
Nanoco's quantum dots to fit the customer's specific application.
Material sales
Nanoco currently sells materials to a number of universities, commercial and government research laboratories and application developers both directly and through its small lot distributor, Sigma Aldrich Corporation (headquartered in the USA) and its Asian distributor, Kisco Limited. After the successful development of a quantum dot containing application, Nanoco will sell quantum dots which are tailored for a specific application.
Royalty income
Where Nanoco has worked with an application developer to incorporate quantum dots into a specific application, Nanoco will negotiate a royalty from the sale of that application.
Having a three tiered revenue stream will allow Nanoco to cover development costs, sell materials and capture a portion of the added value of the quantum dot containing application sale.
Strategic partnershipsNanoco has entered into a strategic partnership with a major Japanese corporation to develop quantum dot based LED's for use as a backlight in an LCD display. A joint development agreement was entered into in December 2007 to tailor Nanoco's heavy metal free quantum dots into specific LED encapsulating resins. Following the successful joint development agreement the corporation and Nanoco entered into a material supply and licence agreement in November 2008. This corporation is now working with Nanoco to develop the quantum dot LED's to produce white light for the LCD backlight market. This agreement includes a milestone based, non-refundable US$10 million upfront royalty payment of which Nanoco has to date received US$2 million. The Proposed Directors believe that all three technical milestones set out below will be achieved by 31 December 2010 and therefore trigger the payments set out below.
Milestone 1: the achievement of milestone 1 will trigger a US$2 million payment if small quantities of red and green cadmium free quantum dots demonstrating a set lighting efficiency, power, spectral width and life expectancy are demonstrated.
Milestone 2: the achievement of milestone 2 will trigger a further US$2 million payment if small quantities of red and green cadmium free quantum dots, with higher efficiency, higher power, tighter spectral width and life expectancy than in milestone 1 are demonstrated.
Milestone 3: the achievement of milestone 3 will trigger a US$4 million payment if 1kg of red and 1kg of green cadmium free quantum dots, each made from a single batch are delivered, at a price to be agreed between the parties.
Under the agreement, royalties will be charged at a rate of 5 per cent. of the net sales price of this corporation's products (product being defined as a packaged LED, comprising an LED chip, quantum dots and an encapsulant).
Distribution agreements
In September 2007, Nanoco entered a distribution agreement with USA headquartered Sigma Aldrich, the world's largest supplier of research chemicals. Sigma Aldrich sells Nanoco's quantum dot products to universities, government and corporate laboratories in small lot sizes.
In May 2008, Nanoco entered a five year exclusive distribution agreement for Asia (excluding China) with Japan headquartered Kisco, a leading Asian electronics materials trading and manufacturing company. Kisco assists Japanese customers with the purchase, logistics and supply of Nanoco's quantum dot materials from the UK into Asia. This agreement does not prohibit Nanoco from working directly with Asian customers.
Further details of the Kisco Agreement are detailed in paragraph 15 of Part IX of the Admission Document.
STRATEGY AND USE OF FUNDS
There are two parts to Nanoco's strategy, the first being the continued development, protection and improvement of its quantum dot technology; and the second being the establishment of strategic partnerships with quantum dot application developers across a range of applications and industry sectors.
Nanoco will:
Continue the development of quantum dot materials and structures;
Continue to develop the production technology and facilities for larger batches of quantum dots;
Continue to develop heavy metal free, RoHS compliant quantum dots;
Continue to protect its technology through patents;
Continue to develop strategic partnerships with application developers in a range of industries;
Continue to develop its quantum dot device development program; and
Establish additional distribution channels in order to supply Nanoco materials.
Following Admission, the Enlarged Group will have net funds of approximately £8.1 million. These funds will be applied to the execution of Nanoco's strategy.
APPLICABLE MARKETS AND CUSTOMERS
The market for quantum dots is currently estimated at £10 million and is projected to reach approximately £500 million by 2013. This growth is being fuelled by the wide variety of quantum dot based applications which are currently being developed. Nanoco is currently focusing on the development of products that serve four core application areas; solid state lighting, next generation displays, solar cells and life science based applications.
Solid state lighting
Solid-state lighting refers to a type of lighting that utilises light-emitting-diodes (LEDs) as sources of illumination. Recently, next generation lighting based on LEDs has gained momentum by providing high efficiencies and long lifetimes to existing lighting applications. Current estimates for the value of the overall LED backlight market by 2012 vary between US$4-8 billion.
Although LEDs offer benefits over traditional incandescent and mercury based lighting, large corporations operating in the solid state lighting field are providing demand for the use of quantum dots as a colour change media to their LEDs over other traditional phosphor based solutions.
By mixing red and green quantum dots and applying them to a blue LED, white light can be efficiently produced. The colour temperature of the white light can be controlled by "tuning" the emission of the red and green quantum dots. For LCD display backlight applications the quantum dot LED can be optimised to match the display's colour filters and is replacing wide spectrum cold cathode fluorescent lights where up to 80 per cent. of the white light generated is not utilised resulting in a significant loss of overall operating efficiency. Quantum dot technology therefore offers a lower-cost, higher efficiency solution LCD display to existing general lighting application providers.
The following table set out the average efficiencies and life expectancy of various solid state lighting options:
Type of Light Efficiency Life of Light (Hours)
Incandescent light bulbs 1 - 5 per cent. 500
Mercury discharge lighting 20 - 30 per cent. 3,000
LED lighting including quantum dots >60 per cent. 50,000
The market currently targeted by Nanoco can be split into three sectors based on performance. Low performance LED's for example holiday lights, toys and other inexpensive applications; medium performance general lighting and illumination applications and high performance backlighting for the Liquid Crystal Display (LCD) TV market.
Nanoco is currently working with a number of major companies to develop and supply quantum dots for the solid state lighting market.
Next generation displays - Quantum dot electroluminescent displays
An Organic Light Emitting Diode (OLED) comprises an electroluminescent emissive layer composed of a film of fluorescent and phosphorescent organic compounds. This market is estimated to be worth over £1 billion by 2015.
These structures can be used in television screens, computer displays and small portable system screens such as mobile phones and PDAs. OLEDs also have the potential to be used in light sources for general space illumination.
The advantages of OLED displays over conventional LCD displays include the removal of energy intensive backlights and costly colour filters; allowing for more energy efficient, lower cost and potentially better quality displays. As there is no need for a backlight or colour filter, an OLED display can be much thinner than an LCD panel.
Quantum dots electroluminescent displays work in a similar manner to OLED displays in that the quantum dots replace the emissive organic layer. The advantage quantum dots have over OLED materials is improved colour and potentially longer life.
Nanoco is currently in partnership discussions with a number of multinational companies in order to develop and commercialise electroluminescent quantum dot applications.
Photovoltaics
Historically, harnessing solar energy has proven inefficient using traditional methods; however the use of quantum dots in this sector provides a physically flexible, more efficient and wider ranging alternative to traditional solar panels which could eventually be integrated to household and other structures, theoretically aiding demand for solar energy.
The global photovoltaics market is forecasted to reach US$32 billion by 2012 compared to US$12.9 billion in 2007; a compound annual growth rate of 15 per cent.
Initial research on multiple exciton generation of quantum dots has demonstrated that potential sunlight conversion efficiencies of greater than 40 per cent. can be achieved compared to 10-20 per cent. using traditional methods.
Nanoco is working with a number of companies in this sector and in some cases has sold evaluation samples to a number of corporations.
Other technologies within the photovoltaic industry where quantum dots could be applied are solar cell concentrators, dye sensitised solar cells and organic solar cells.
Biological applications
The life science market, specifically the in-vitro biological imaging market was the first commercial application for quantum dots. Quantum dots' fluorescent properties provide an alternative to traditional organic dye based fluorescent bio-imaging technology for a multitude of uses including cell imaging and multiplexing techniques (the ability to image a number of different colours at the same time). In these applications quantum dots are attached to cells and certain drugs. The quantum dot tagged drug or cell can then be studied under high powered microscopes. The advantage of using quantum dots over traditional organic fluorophors are their ability to withstand more intense irradiation from a high powered microscope for a longer period of time combined with quantum dots intrinsic narrow emission allowing for multiplexing applications.
Nanoco is least advanced in this area of quantum dot technology due to the focus on the larger volume optoelectronics market. Nanoco is working to address this weakness over the coming year.
Nanoco's heavy metal free quantum dots are attractive to customers in this arena given their non-toxic properties; this has led to a partnership development with a company who use Nanoco's quantum dot technology for in-vivo imaging of cancer.
Other Sectors
The number of potential markets available to quantum dots is wide ranging and continues to grow. Additional markets that the Proposed Directors believe will be applicable to Nanoco in the future include; anti-counterfeiting tags, industrial sensing and detection, quantum dot containing inks, quantum dot light emitting diodes and infra-red emitting tags for military personnel.
Further details on Nanoco's applicable markets and customers can be found in Part III of the Admission Document.
COMPETITION
Nanoco's competition can be split into two groups, direct and indirect. Direct competition comes from companies working to supply quantum dots to the market. Indirect competition comes in the form of alternative competing technologies working to penetrate the market for similar applications that Nanoco and its development partners are focused on.
There are a number of very small companies using inefficient "dual injection" technology to supply the life science market with cadmium based quantum dots. These companies tend to be poorly funded and associated with a university.
Three companies to note which have had significant funding (>US$10 million) are Nanosys Inc., based in Palo Alto, California which is broadly focused on nanomaterials and their applications rather than just quantum dots; Evident Technologies based in Troy, New York which has adopted a "go alone" strategy to getting quantum dot containing products to the market and QD Vision based in Watertown, Massachusetts which is focused solely on the quantum dot electroluminescent display market.
All three competitors are similar in that their technology is based on restricted heavy metals such as cadmium. The Proposed Directors believe they do not have the ability to produce large volumes of quantum dots.
The Proposed Directors believe Nanoco is unique in its ability to mass produce large quantities of high performance cadmium free quantum dots.
INTELLECTUAL PROPERTY
Nanoco has core technology patents that are granted or progressing to grant in key geographic regions following international patent applications. A report by Marks and Clerk on the patent portfolio of Nanoco is included in Part IV of the Admission Document.
Nanoco's IP portfolio is based around the continued development of its technology and currently contains 15 patent families (nine published, six unpublished) containing four granted patents and 55 pending patent applications.
Nanoco's earliest patent family dates back to 1995 and contains granted patents in the US, Germany, France and the UK relating to the use of metal complexes to produce nanocrystalline material known as the Single Source Precursor technology. The Single Source Precursor technology was developed by Professor Paul O'Brien while he was at Imperial College, London and all IP was subsequently assigned to Nanoco.
Nanoco's next oldest patent family dates from 2004 and relates to a scaleable process for producing nanoparticles using a molecular cluster compound to seed and control nanoparticle growth thereby enabling the production of large quantities of high quality nanoparticles. This family currently contains pending applications in Australia, Canada, China, Europe, Hong Kong, Israel, India, Japan, South Korea and USA.
The scale up technology was initially developed by Nanoco's Chief Technology Officer, Dr Nigel Pickett while at University of Manchester and subsequently all IP was assigned to Nanoco. This methodology was further developed and refined over the next three years resulting in two further patent families which contain pending applications in a number of countries.
A number of prior art documents have been cited against the scale up technologies during examination and these are discussed in more detail within the Marks and Clerk report in Part IV of the Admission Document. It is Marks and Clerk's current view that the fundamental technology that Nanoco currently employs and which underpins all three of the scale-up patent families should be patentable in the light of the prior art documents currently cited in respect of these applications.
More recently, numerous patents have been filed on the next generation cadmium free materials and methods to manufacture them, other novel semi-conductor nanoparticles, semi conducting metal oxides and methods for stabilising and fabricating the quantum dots into an easy to use bead format. Other areas of patent filing have been in using the Nanoco developed nanoparticles in devices. One such area is next generation thin film solar cells.
As Nanoco grows and develops its technology, products and methods of producing products the company will continue with its strategy of filing patents to protect the technology. The commercial success of the Enlarged Group will depend in part on its ability to protect and enforce its intellectual property so as to preserve its exclusive rights in respect of its technology and to preserve the confidentiality of its own and its collaborators' know-how.
SUMMARY FINANCIAL INFORMATION
The financial information set out in the table below has been extracted from the historical financial information on Evolutec included in Part V of the Admission Document. Shareholders should read the full report and not rely solely upon the summary below.
| Year ended 31 December 2006 £'000 | Year ended 31 December 2007 £'000 | Year ended 31 December 2008 £'000 | |
| Revenue | 14 | 82 | 271 |
| Operating Loss | (12,857) | (2,288) | (205) |
| Profit/(loss) after tax | (11,827) | (1,763) | 77 |
The financial information set out in the table below has been extracted from the historical financial information on Nanoco, included in Part VI of the Admission Document. Shareholders should read the full report and not rely solely upon the summary below;
| Year ended 31 July 2006 £'000 | Year ended 31 July 2007 £'000 | Year ended 31 July 2008 £'000 | Unaudited 5 month period ended 31 December 2008 £'000 | ||
| Revenue | 204 | 576 | 1,078 | 1,741 | |
| Operating profit/(loss) | (232) | (844) | (785) | 793 | |
| Profit/(loss) after tax | (219) | (555) | (551) | 882 |
Revenue growth accelerated in the year ended 31 July 2008 and the five months ended 31 December 2008 from new licensing and joint development contracts referred to in this Announcement and in the Admission Document.
TERMS OF THE ACQUISITION
The Company announces that it has reached agreement on the terms of a recommended share acquisition by Evolutec of the entire issued and to be issued share capital of Nanoco to be effected by means of a court approved scheme of arrangement between Nanoco and its shareholders pursuant to Part 26 of the 2006 Act (involving a reduction of capital pursuant to section 135 of the 1985 Act).
Upon the Scheme of Arrangement becoming effective, the Company will become the owner of the whole of the issued share capital of Nanoco. To become effective, the Scheme of Arrangement requires, amongst other things, the approval at the Court convened meeting of Nanoco Shareholders (such meeting to be convened pursuant to section 896 of the 2006 Act) of a majority in number representing not less than seventy-five per cent. in value of the Nanoco Shareholders present and voting, either in person or by proxy, at the Court meeting, or at any adjournment thereof, and the passing of a special resolution necessary to approve matters to give effect to the Scheme of Arrangement at a separate extraordinary general meeting of Nanoco. Following the Court meeting and the extraordinary general meeting of Nanoco, the Scheme of Arrangement (including the associated reduction of capital of Nanoco) must also be sanctioned by the Court at the Court Hearing.
Nanoco and the Company have received irrevocable undertakings to vote or (where applicable) to procure that the registered holder votes, in favour of the Scheme of Arrangement at the Court meeting and separately, in favour of the special resolution to be proposed at the extraordinary general meeting, in each case in respect of in aggregate 32,271,831 Nanoco Shares, representing approximately 92.85 per cent. of Nanoco's existing issued share capital. The irrevocable undertakings also extend to any Nanoco Shares that may be issued to, or acquired by, such persons after the date of this Announcement.
The consideration for the Acquisition is to be satisfied by the issue of the Consideration Shares to the Nanoco Shareholders, on the basis of 4.55 Consideration Shares for every Nanoco Share held. In view of the size of the Acquisition, in relation to the Company, the Acquisition constitutes a reverse takeover under the AIM Rules and, as such, is conditional upon the admission of the Enlarged Issued Share Capital to trading on AIM and the publication of the Admission Document. In addition, the Acquisition also requires the approval of Shareholders. Accordingly, a general meeting is being convened on 24 March 2009 at which Shareholders will be asked to approve the Acquisition and grant the appropriate authority to permit the Company to issue the Consideration Shares. If the Resolutions are approved by Shareholders and subject to the Scheme of Arrangement having become effective in accordance with its terms, it is expected that Admission will take place, and that dealings on AIM will commence, on 30 April 2009.
Immediately following Admission the Consideration Shares will comprise approximately 85.90 per cent. Of the Enlarged Issued Share Capital. Further details of the Scheme of Arrangement are set out in paragraph 14 of Part IX of the Admission Document.
CURRENT TRADING AND PROSPECTS
The financial information for the 5 month period ended 31 December 2008 is set out in Part VI of the Admission Document. There has been no significant change in the financial or trading position of Nanoco since 1 January 2009.
The Acquisition is expected to strengthen the Company's balance sheet and provide the Enlarged Group with funding to pursue its proposed strategy as set out in this Announcement and in Part I of the Admission Document.
A Pro forma Statement of Net Assets is set out in Part VII of the Admission Document and discloses that the Enlarged Group will have pro forma net assets of £9.037 million inclusive of cash and cash equivalent balances of approximately £8.1 million after paying the estimated expenses of the Proposals.
DIRECTORS AND THE PROPOSED DIRECTORS
The Directors of the Company as at the date of this Announcement comprise David Philip Bloxham as non-executive chairman, Graeme Manson Hart, Gordon James Hall and Mark Barrie Hawtin as non-executive directors. A brief summary of the Evolutec board members' biographies are set out below:
Current Directors
Dr. David Philip Bloxham (Aged 61) Non-executive Chairman
David has significant experience in the biotechnology industry and has been successful at both the R&D and commercial levels. In 1984 he joined the pharmaceutical industry as director of Biology Research at Roche Research in the UK. Subsequently he became Research and Development director of Laboratories Almirall. He joined Celltech in 1990 later becoming Chief Operating Officer. Celltech listed on the London Stock Exchange in 1994. From 1998 to 2001, David was Chief Executive Officer of Cobra Therapeutics Limited until it was sold to ML Laboratories. David became Chief Executive of Evolutec in May 2001 and non-executive chairman upon the Company's admission to AIM.
Graeme Manson Hart (Aged 64) Non-executive Director
Graeme is an orthopaedic surgeon who has also built a successful business career. He founded Medic International in 1972 and built this into Health Care Services, an Unlisted Securities Market quoted company, which was eventually acquired by Compass Group in 1989. Currently, Graeme is Non-executive Chairman of Corin Group plc and Neuropharm plc.
Gordon James Hall (Aged 66) Non-executive Director
After an early career in teaching, Gordon built up substantial international sales, management and development expertise with Rank Xerox and Abbott Laboratories. He became Chief Executive Officer of Shield Diagnostic Ltd (now Axis Shield plc) in 1990 and was responsible for listing the company on the London Stock Exchange. More recently Gordon has been involved with a range of different companies and he is currently a Non-executive Director of International Brand Licensing plc which is listed on AIM.
Mark Barrie Hawtin (Aged 46) Non-executive Director
Mark was a Partner of Marshall Wace LLP, a European hedge fund until June 2007. He launched the Eureka Interactive Fund for Marshall Wace in 1999 which became a global technology hedge fund. While predominantly investing in quoted technology, media and telecom companies, the fund also invested in pre IPO and earlier stage unquoted investments. Prior to Marshall Wace, Mark was at Enskilda Securities as the director responsible for international equities. Mark is currently an investment director of GAM International.
Proposed Directors
A summary of the Proposed Directors' biographies are set out below:
Dr. Peter John Rowley (Aged 65) Non-executive Chairman
Peter joined the board of Nanoco in 2006. Previously he led the management buyout of Victrex from ICI in 1993, followed by the successful listing of Victrex plc on the London Stock Exchange in 1995. He joined ICI in 1968 and progressed through a number of positions in the organisation. In 1983 he became International Business Manager for the widely used polymer PTFE and in 1989 he was appointed General Manager for ICI Advanced Materials Asia Pacific.
Peter has a BSc and PhD in organic chemistry from King's College, London.
Dr. Michael Albert Edelman (Aged 44) Chief Executive Officer
Nanoco is led by Michael Edelman. Michael joined Nanoco in 2004, led the initial fund-raising and spun Nanoco out of the University of Manchester. Prior to Nanoco Michael was responsible for licensing the technology developed by the GE/Bayer joint venture, Exatec LLC. As Vice President and managing director of yet2.com Michael set up, grew and ran yet2.com's European operation and was instrumental in successfully selling the business. He was main board director for Colloids Ltd, a manufacture of colours and additives for plastics with responsibility for global sales, marketing and restructuring of the business. Michael started his career with ICI, has a Ph.D. in organo-metallic chemistry from the University of Sussex, UK, and undergraduate degree in classics and chemistry from Tufts University, Boston, MA, USA.
Dr. Nigel Leroy Pickett (Aged 39) Chief Technical Officer
Nanoco's technology team is led by Dr Nigel Pickett who is a co-founder of Nanoco and inventor of Nanoco's key quantum dot scale-up technology. Nigel graduated from Newcastle University in 1991 and chose to remain at Newcastle to pursue a Ph.D. in the field of main group organometallics. After graduation in 1994 he undertook a postdoctoral fellowship at St. Andrews University, Scotland, in the field of precursor design for MOVPE growth and synthesis of nanoparticles using CVD techniques. In 1996 he won a Japan Society for the Promotion of Science (JSPS) fellowship and spent the following year working at Tokyo University of Agriculture and Technology, Japan. In 1998 he became a research fellow at Georgia Institute of Technology, USA, working on the design and evaluation of precursor used in MOVPE. Nigel co-founded Nanoco in 2001.
Michael Anthony Bretherton (Aged 53) Chief Financial Officer
Michael Bretherton graduated in Economics from University of Leeds in 1978. He worked as an accountant and manager with PriceWaterhouse for seven years in both London and the Middle East before joining The Plessey Company Plc in 1985 as a corporate financial manager. Michael was appointed finance director of the fully listed Bridgend Group Plc in 1988 where he was involved in the strategic evaluation and commercial implementation of a broad range of business initiatives over a twelve year period, including acquisitions, disposals and company restructurings. He subsequently worked at the property and services company, Mapeley Limited, as financial operations director until he was recruited to the entertainment software games developer, Lionhead Studios Limited, in 2002 where he helped to complete a venture capital syndicate funding and also a trade sale of the business to Microsoft in 2006. Michael is currently also a director of ORA Capital and joined the board of Nanoco on 23 June 2006.
Michael will continue working with the Company on a part-time basis, until such time that the size or requirements of the Enlarged Group demand a full-time finance director.
Details of service contracts and letters of appointment relating to the Proposed Directors are set out in paragraph 6 of Part IX of the Admission Document.
Upon completion of the Proposals the board of the Company will comprise the Proposed Directors and Gordon James Hall. David Philip Bloxham, Graeme Manson Hart and Mark Barrie Hawtin will step down from the board of the Company on Completion. Evolutec has no employees.
The following agreements have been entered into by the Proposed Directors:
Dr. Peter John Rowley (Aged 65) Non-executive Chairman
A letter of appointment between (1) Nanoco and (2) Peter John Rowley dated 13 July 2006 pursuant to which Peter John Rowley was appointed as Non-executive Chairman of Nanoco at an annual fee of £10,000 (subject to deduction of tax and national insurance contributions) commencing on 13 July 2006 and terminable in accordance with the articles of association of Nanoco or by either party on six months' written notice. Conditional upon Admission, Peter John Rowley will vary the terms of his letter of appointment with the Company such that his annual fee will be increased to £12,000.
Dr. Michael Albert Edelman (Aged 44) Chief Executive Officer
A service agreement between (1) Nanoco and (2) Michael Albert Edelman dated 27 June 2006 pursuant to which Michael Albert Edelman was appointed Chief Executive Officer of Nanoco, the appointment commencing on 27 June 2006 and then terminable by either party on 12 months' written notice. Michael Albert Edelman's appointment under the service agreement is at a current annual salary (subject to annual review) of £117,344. Michael Albert Edelman will also be eligible to participate in a bonus scheme on terms determined by the remuneration committee from time to time. Conditional upon Admission, Michael Albert Edelman will vary the terms of his service agreement with Nanoco such that his annual salary will be increased to £120,000.
Dr. Nigel Leroy Pickett (Aged 39) Chief Technical Officer
A service agreement between (1) Nanoco and (2) Nigel Pickett dated 27 June 2006 pursuant to which Nigel Pickett was appointed Chief Technical Officer of Nanoco, the appointment commencing on 27 June 2006 and terminable by either party on 12 months' written notice. Nigel Pickett's appointment under the service agreement is at a current annual salary (subject to annual review) of £81,120. Nigel Pickett is also eligible to participate in a bonus scheme on terms determined by the remuneration committee from time to time. Conditional upon Admission, Nigel Pickett will vary the terms of his service agreement with Nanoco such that his annual salary will be increased to £85,000.
Michael Anthony Bretherton (Aged 53) Chief Financial Officer
A conditional service agreement between (1) the Company and (2) Michael Anthony Bretherton dated 25 February 2009 pursuant to which, conditional upon Admission, Michael Bretherton was appointed the Company's Chief Financial Officer, the appointment to take effect on Admission and to be terminable by either party on six months' written notice. Michael Bretherton's appointment under the agreement is at a current annual salary (subject to annual review) of £12,000. Michael Bretherton is also eligible to participate in a bonus scheme on terms determined by the remuneration committee from time to time.
KEY MANAGEMENT AND EMPLOYEES OF NANOCO
Nanoco currently employs 28 people with three additional consultants. The majority of Nanoco's personnel have extensive technical experience. The company invests time in the recruitment of key technical staff with quantum dot experience. Of the 31 people working directly or as a consultant for Nanoco, 23 hold a Ph.D. in chemistry or physics. Dr Nigel Pickett, CTO and co-founder, is the executive director responsible for leading the technical team on a day to day basis. He is supported by four section heads, all of whom have relevant technical and industrial experience.
Following Admission Professor Paul O'Brien will become the Chief Scientific Adviser to the Company.
Business development and sales is headed by Dr. Michael Edelman, who is supported by Vice President of Business Development, Steve Reinhard in the USA and Dr. Nobuaki Tamagawa in Asia.
Professor Paul O'Brien - Chief Scientific Adviser
Professor O'Brien was responsible for developing Nanoco's patented cluster technology while a professor at Imperial College, London. Since 1999 Paul O'Brien has held the chair of Inorganic Materials Chemistry at the University of Manchester - spanning both the Chemistry Department and the Manchester Materials Science Centre. In September 2002 he was appointed head of the Chemistry Department at the University of Manchester. Previously Paul has held professorial positions at Imperial and Queen Mary and Westfield Colleges and has been a visiting professor at Georgia Institute of Technology. Paul has published over 100 papers.
Dr. Nobuaki Tamagawa - Vice President - Asia
Dr. Nobuaki Tamagawa joined Nanoco in August 2005. Previously Dr Tamagawa was Vice President for yet2.com responsible for setting up and growing their Asian business. He spent 17 years working for DuPont as Technical director which included responsibility for DuPont's Advanced Materials Laboratory. Dr Tamagawa was with Sony for 21 years during which time he held positions of Scientist, Plant Manager responsible for setting up USA based factories and General Manager for product development and marketing of Sony's video systems.
Dr Tamagawa holds a Ph.D. in physics from Hokkaido National University. He served at National Ordnance Laboratory as a visiting researcher and taught physics at the American University as a visiting professor in Washington D.C. for five years.
Steve Reinhard - Vice President - Business Development
Steve is based in the USA and focuses his efforts on developing Nanoco's business in the USA and supporting Dr Tamagawa in Asia. Prior to Nanoco, Steve was responsible for business development at Dynamic Organic Light (Quantum Dot-Electroluminescent displays), Displaytech Inc. and Lockheed Martin Corporation. He has a degree in industrial engineering from Pennsylvania State University and an MBA from State University of New York.
SHARE OPTIONS
The Proposed Directors recognise the importance of ensuring that employees of the Enlarged Group are well motivated and identify closely with the future success of the Enlarged Group.
Long Term Incentive Plan
The Directors and Proposed Directors aim to align the interests of all employees' as closely as possible with the interests of shareholders. They therefore regard employee share ownership as a key incentive. The Company intends to administer the Long Term Incentive Plan with the object of giving employees at all levels the opportunity to acquire and hold shares in the Company.
Nanoco Share Incentive Plan
In addition, there are existing employee options over 1,828,000 Nanoco Shares outstanding pursuant to the Nanoco Share Incentive Plan which may be exercised prior to and conditional upon the Scheme of Arrangement being sanctioned by the Court, and which, to the extent not so exercised, would lapse upon the Scheme of Arrangement becoming effective.
In accordance with the rules of the Nanoco Share Incentive Plan, the Company has agreed to offer holders of such options the opportunity to release their unexercised options in consideration of the grant to them of new options over Ordinary Shares equivalent (as nearly as practicable without involving fractions of shares) to 4.55 Ordinary Shares for every 1 Nanoco Share the subject of the existing option. Any such new options taken up would remain subject to the rules of the Nanoco Share Incentive Plan and, in accordance with such rules, will become exercisable at any time more than six months following Admission (provided that any such option so exercised less than three years after the date of grant of the original option by Nanoco, will only be exercisable in respect of a proportion of the total number of shares being subject to the option, such proportion being equivalent to the proportion of three years elapsed since the original date of grant).
In respect of those EMI Options granted pursuant to the Nanoco Share Incentive Plan, confirmation has been obtained from the Shares and Assets Division of HM Revenue & Customs that such replacement options will be of equivalent value and as such will continue to be treated as qualifying EMI Options. If such options were exercised in full this would equate to 8,317,400 Ordinary Shares representing approximately 4.32 per cent. of the Enlarged Issued Share Capital, as diluted by the issue of such Ordinary Shares.
Further details of the Long Term Incentive Plan and Nanoco Share Incentive Plan are set out in paragraph 5 of Part IX of the Admission Document.
LOCK IN ARRANGEMENTS
Certain Restricted Shareholders, who include the Proposed Directors, agree they will not (save in certain specific circumstances) dispose of 124,188,804 of the Consideration Shares (or any Ordinary Shares held or acquired anytime before the second anniversary of Admission) for a period of 15 months following Admission, and thereafter for a further 9 months have agreed only to dispose of Ordinary Shares through the Company's broker in an orderly manner.
Certain Restricted Shareholders agree they will only (save in certain specific circumstances) dispose of 22,891,363 of the Consideration Shares and 6,743,999 of the Existing Ordinary Shares (or any Ordinary Shares held or acquired anytime before the second anniversary of Admission) for a period of 24 months following Admission with the prior consent of the Company's broker and in an orderly manner.
The Restricted Shareholders, who include the Proposed Directors, will have an aggregate interest in Ordinary Shares immediately following Admission amounting to 153,824,166 Ordinary Shares representing 83.56 per cent. of the Enlarged Issued Share Capital.
Further details of the lock in and orderly market arrangements are set out in paragraph 15.5 of Part IX of the Admission Document.
THE CITY CODE ON TAKEOVERS AND MERGERS
The terms of the Proposals give rise to certain considerations and consequences under the Takeover Code.
Brief details of the Panel, the Takeover Code and the protections they afford to Shareholders are described below.
The Takeover Code is issued and enforced by the Panel. The Panel has been designated as the supervisory authority to carry out certain regulatory functions in relation to takeovers pursuant to the Directive. Its statutory functions are set out in and under Chapter 1 of Part 28 of the 2006 Act. The Panel is a designated authority for the purposes of the FSMA and the 2006 Act and as such, it receives specific practical assistance from the FSA as the rules of the FSA require certain persons regulated by the FSA to co-operate with the Panel in its investigations.
Under Rule 9 of the Takeover Code, any person who acquires, an interest in shares which, taken together with shares in which he is already interested and in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company, is normally required by the Panel to make a general offer in cash to the shareholders of that company to acquire the balance of the shares not held by such person or group of persons acting in concert at not less than the highest price paid by him or any persons acting in concert with him for any such shares within the preceding 12 months. Rule 9 of the Takeover Code also provides, inter alia, that where any person, together with persons acting in concert with him, is interested in shares carrying not less than 30 per cent. but not more than 50 per cent. of a company's voting rights and such person, or any person acting in concert with him, acquires an additional interest in shares which increase his percentage of the voting rights in that company, such person is normally required to make a general offer in cash to all shareholders of that company at not less than the highest price paid by him or any person acting in concert with him for any such shares within the preceding 12 months.
The Takeover Code also provides that where any person, together with persons acting in concert with him, holds more than 50 per cent. of a company's voting rights, no obligation will normally arise under Rule 9 to make a general offer in cash to all shareholders of that company, save as described below, as a result of any acquisition by such person or any person acting in concert with him of any further shares carrying voting rights in the company. However, the Panel will regard as giving rise to an obligation to make an offer the acquisition by a single member of a concert party of shares sufficient to increase his individual holding to 30 per cent. or more of a company's voting rights, or, if he already holds more than 30 per cent. but less than 50 per cent., an acquisition which increases his shareholding in that company.
For the purposes of the Takeover Code, a concert party arises where persons acting in concert pursuant to an agreement or understanding (whether formal or informal) co-operate to obtain or consolidate control of a company or to frustrate the successful outcome of an offer for a company. Control means an interest, or interests, in shares carrying in aggregate 30 per cent. or more of the voting rights of the company, irrespective of whether such interest or interests give de facto control.
As a result of the issue of the Consideration Shares, the Acquisition will lead to a change of control of the Company. Under the Takeover Code, ORA Capital, ORA Guernsey, Michael Anthony Bretherton and James Lawrence Ede-Golightly together constitute a concert party.
Following the issue of the Consideration Shares, the Concert Party would be interested in 70,630,848 Ordinary Shares representing 38.37 per cent. of the Enlarged Issued Share Capital.
The relevant interests of the members of the Concert Party, now and following completion of the Proposals, will be as follows;
| Number of Shares in Evolutec | Percentage Holding in Evolutec | Number of Shares in Nanoco | % holding in Nanoco | Number of Consideration Shares | Total number of Shares in the Company following Completion | % of Shares in the Company following Completion | |
| ORA Guernsey | Nil | Nil | 14,702,437 | 42.30 | 66,896,088 | 66,896,088 | 36.34 |
| ORA Capital* | 2,870,260 | 11.06 | Nil | Nil | Nil | 2,8770,260 | 1.56 |
| Michael Anthony Bretherton | Nil | Nil | 50,000 | 0.14 | 227,500 | 227,500 | 0.12 |
| James Lawrence Ede-Golightly | Nil | Nil | 140,000 | 0.40 | 637,000 | 637,000 | 0.35 |
| Total | 2,870,260 | 11.06 | 14,892,437 | 42.84 | 67,760,588 | 70,630,848 | 38.37 |
(a) ORA Guernsey is a holding company which is a wholly owned subsidiary of ORA Capital.
(b) ORA Capital is a London based investment company whose principal activity is the growth and development of businesses in which ORA Capital has a significant shareholding. Further details on ORA Guernsey and ORA Capital are set out in Part VIII of the Admission Document.
(c) Michael Anthony Bretherton is a director of ORA Capital and will be a director of the Company on Completion.
(d) James Lawrence Ede-Golightly is a director of ORA Capital.
*ORA Capital has a contract for difference interest in Evolutec over 2,870,260 Ordinary Shares representing 11.06 per cent. of the issued share capital of the Company. This contract does not give ORA Capital any voting rights or any option to purchase these Ordinary Shares in the future.
No member of the Concert Party holds any shares in the Company at the date of this Announcement and none of them has sold or purchased Ordinary Shares in the 12 months prior to the date of this Announcement. The waiver of the obligation to make a general offer under Rule 9 will be invalid if purchases of shares in the Company are made by any member of the Concert Party in the period between the date of this Announcement and the General Meeting. Each member of the Concert Party has undertaken to the Company that it will not make any such purchases of shares in the Company.
The members of the Concert Party have confirmed to the Board that they are not at present proposing any changes to the board of the Company beyond those described in the Admission Document and that it is their intention that, following completion of the Acquisition, the business of the Enlarged Group be continued in substantially the same manner as at present with no repercussions on employment and the principal locations of the Enlarged Group's business. The Concert Party will honour the existing employment rights, including pension rights, of the employees of the Enlarged Group. The Concert Party does not intend to redeploy any of the fixed assets of the Enlarged Group. The Concert Party supports the strategy of the Directors and Proposed Directors for the Enlarged Group as set out in paragraph 7 of Part I of the Admission.
Further information on the Concert Party can be found in Part VIII of the Admission Document.
The Panel has agreed, subject to Resolution 2 being passed (on a poll) by the Independent Shareholders at the General Meeting, to waive the obligation on the Concert Party, under Rule 9 of the Takeover Code, to make a general offer for the entire issued share capital of the Company which would otherwise arise as a result of the Proposals. Accordingly, Independent Shareholders' approval (on a poll) for the waiver of any obligations of the Concert Party under Rule 9 is sought in Resolution 2.
Following completion of the Proposals the members of the Concert Party will be interested in shares comprising 30 per cent. or more of the Company's voting share capital but will not hold shares comprising more than 50 per cent. of such voting rights and (for as long as they are to be treated as acting in concert) any further increase in their aggregate interest in Shares will be subject to the provisions of Rule 9.
CORPORATE GOVERNANCE
The Directors and Proposed Directors recognise the importance of sound corporate governance and intend to ensure that, following Admission, the Company continues to apply policies and procedures which reflect the principles of Good Governance and Code of Best Practice as published by the Committee on Corporate Governance (commonly, known as "the Combined Code") as are appropriate to the size, nature and stage of development of the Company. The Directors and Proposed Directors intend to comply with the QCA Guidelines in such respects as are appropriate for a company of its size, nature and stage of development following Admission. The Company has an audit committee, a remuneration committee and a nomination committee with formally delegated duties and responsibilities.
The audit committee's primary responsibilities are to monitor the integrity of the financial affairs and statements of the Company, to ensure that the financial performance of the Company and any subsidiary of the Company is properly measured and reported on, to review reports from the Company's auditors relating to the accounting and internal controls and to make recommendations relating to the appointment of the external auditors. Following Admission the audit committee comprises Michael Bretherton, who acts as chairman of the committee, and the non-executive directors.
The remuneration committee's primary responsibilities are to review the performance of the executive directors of the Company and to determine the broad policy and framework for their remuneration and the terms and conditions of their service and that of senior management (including the remuneration of and grant of options to such person under any share scheme adopted by the Company). The remuneration committee will, following Admission comprise Peter Rowley, who will act as chairman of the committee, and the non-executive directors. The remuneration of non-executive directors shall be a matter for the chairman and the executive members of the board of the Company.
The nomination committee's primary responsibilities are to regularly review the structure, size and composition required of the board of the Company, prepare a description of the role and capabilities required of an appointment, make recommendations to the directors on all new appointments of directors and senior management, interviewing nominees, to take up references and to consider related matters. The nomination committee will, following Admission comprise of Peter Rowley, who will act as chairman of the committee, and the non-executive directors.
The Company has adopted a model code for directors' dealings in securities of the Company which is appropriate for a company quoted on AIM. The Directors comply with Rule 21 of the AIM Rules relating to directors' dealings and also take all reasonable steps to ensure compliance by the Group's "applicable employees" as defined in the AIM Rules.
The Directors have considered the guidance issued by the Institute of Chartered Accountants in England and Wales (commonly known as the Turnbull Report) concerning the internal requirements of the Combined Code.
DIVIDEND POLICY
Whilst it remains the Directors' and Proposed Directors' intention to consider the payment of a dividend when appropriate and when commercially prudent, they currently consider it prudent to retain cash to fund the further expansion of the Company. As a result, the Directors believe it inappropriate to give an indication of the likely level and timing of future dividends.
GENERAL MEETING
Completion of the Acquisition is conditional upon Shareholders' approval being obtained at the General Meeting and on the Scheme of Arrangement becoming effective. Accordingly, you will find set out at the end of the Admission Document a notice convening the GM to be held at 7 Devonshire Square, London EC2M 4YH at 3.30 p.m. on 24 March 2009 for the purposes of considering and, if thought fit, approving the following Resolutions:
Resolution 1 is an ordinary resolution to approve the Acquisition;
Resolution 2 is an ordinary resolution to approve the Waiver;
Resolution 3 is an ordinary resolution approving the Long Term Incentive Plan;
Resolution 4 is an ordinary resolution to increase the Company's authorised share capital from £7,700,000 to £25,000,000 by the creation of 173,000,000 new Ordinary Shares;
Resolution 5 is an ordinary resolution to authorise the directors under Section 80 of the Act to allot relevant securities up to an aggregate nominal value of £21,406,944.72, such authority expiring at the conclusion of the next Annual General Meeting of the Company or 15 months after the passing of this Resolution, whichever is earlier;
Resolution 6 is a special resolution to dis-apply the statutory pre-emption rights contained in Section 89(1) of the Act in connection with the allotment of Ordinary Shares to be allotted pursuant to the authority contained in Resolution 5, such authority expiring on expiration of the authority provided pursuant to Resolution 5;
Resolution 7 is a special resolution to alter the memorandum of association of the Company;
Resolution 8 is a special resolution to amend the articles of association of the Company; and
Resolution 9 is a special resolution to change the name of the Company to Nanoco Group plc.
In accordance with the requirements of the Panel, Resolution 2 to approve the Waiver will be taken on a poll of Independent Shareholders.
The attention of Shareholders is also drawn to the recommendations and voting intentions of the Directors as set out in paragraph 25 of the Admission Document.
ACTION TO BE TAKEN
A Form of Proxy has been posted to Shareholders along with the Admission Document for use at the General Meeting. Whether or not Shareholders intend to be present at the meeting Shareholders are requested to complete, sign and return the Form of Proxy to the Company's registrars, Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible but in any event so as to arrive not later than 3.30 p.m. on 20 March 2009. The completion and return of a Form of Proxy will not preclude Shareholders from attending the meeting, speaking at the General Meeting and/or voting in person should they subsequently wish to do so.
FURTHER INFORMATION
Your attention is drawn to the further information set out in Parts III to IX of the Admission Document which provide financial and additional information on the Enlarged Group, and in particular to the Risk Factors relating to the Enlarged Group and relating to any investment in Ordinary Shares set out in Part II of the Admission Document.
RECOMMENDATION AND VOTING INTENTIONS
The Directors, who have been so advised by Zeus Capital, consider that the Proposals are fair and reasonable and in the best interests of the Company and its Independent Shareholders as a whole. In giving its advice to the Directors, Zeus Capital has taken into account the Directors' commercial assessment of the Proposals.
Accordingly, the Directors unanimously recommend Shareholders vote in favour of the Resolutions as they have irrevocably undertaken to do in respect of their own beneficial share holdings which amount in aggregate to 312,311 Ordinary Shares representing 1.20 per cent. of the existing ordinary issued share capital of the Company.
In addition to the Directors, Shareholders who in aggregate have a beneficial interest in 9,564,338 Ordinary Shares representing 36.86 per cent. of the Existing Issued Share Capital, have irrevocably undertaken to vote in favour of the Resolutions.
Further details of the undertakings and intentions given by Directors and holders of Existing Ordinary Shares can be found in paragraph 6.8 of Part IX of the Admission Document.
DEFINITIONS AND GLOSSARY
The following words and expressions shall have the following meanings in the Announcement, unless the context otherwise requires:
| "2006 Act" | the Companies Act 2006, |
| "Acquisition" | the proposed acquisition by the Company of the entire issued and to be issued share capital of Nanoco pursuant to the Scheme of Arrangement; |
| "Act" | the Companies Act 1985, as amended; |
| "Acts" | those provisions of the Companies Act 1985 and 1989 and the 2006 Act for the time being in force and every other enactment for the time being in force concerning companies (including any orders, regulations or other subordinated legislation made under those Acts or enactments) so far as they apply to the Company and the Enlarged Group; |
| "Admission" | admission of the Enlarged Issued Share Capital to trading on AIM becoming effective on 30 April 2009 in accordance with Rule 6 of the AIM Rules; |
| "Admission Document" | the admission document dated 25 February 2009; |
| "AIM" | the market of that name operated by the London Stock Exchange; |
| "AIM Rules" | the AIM Rules for Companies published by the London Stock Exchange from time to time governing the admission to and the operation of AIM; |
| "Announcement" | this announcement dated 25 February 2009; |
| "Board" or "Directors" | the directors of the Company as at the date of this Announcement whose names appear on page 7 of the Admission Document against the heading "Directors", and "Director" means any of the Directors; |
| "Combined Code" | the combined code on corporate governance; |
| "Company" or "Evolutec " | Evolutec Group plc whose registered office is at 3 More London Riverside, London, SE1 2AQ (registered in England and Wales under number 5067291); |
| "Completion" | completion of the Acquisition; |
| "Concert Party" | for the purposes of the Takeover Code, ORA Capital, ORA Guernsey, James Lawrence Ede-Golightly and Michael Anthony Bretherton further details of whom are set out in Part I and in Parts VIII and IX of the Admission Document; |
| "Consideration Shares" | the 158,138,036 Ordinary Shares to be issued to Nanoco Shareholders; |
| "Court" | the High Court of Justice in England and Wales; |
| "Court Hearing" | the hearing by the Court of the claim form to sanction the Scheme of Arrangement and to confirm the associated reduction of capital of Nanoco; |
| "CREST Regulations" | the Uncertificated Securities Regulations 2001 (SI 2001/3755) (as amended); |
| "Directive" | the Directive in Takeover Bids (2004/25/EC); |
| "EMI Options" | an option which is an enterprise management incentive option satisfying the provisions of Schedule 5 to ITEPA; |
| "Enlarged Group" | the Company and its subsidiary undertakings following Completion; |
| "Enlarged Issued Share Capital" | the issued ordinary shares as at Admission, comprising the Existing Ordinary Shares and the Consideration Shares; |
| "Existing Ordinary Shares" | the 25,949,996 Ordinary Shares in issue at the date of this Announcement; |
| "Form of Proxy" | the form of proxy included with the Admission Document for use by Shareholders in connection with the General Meeting; |
| "FSA" | the Financial Services Authority; |
| "FSMA" | the Financial Services and Markets Act 2000 (as amended); |
| "GM" or "General Meeting" | the general meeting of the Company to be held on 24 March 2009, notice of which is set out at the end of the Admission Document; |
| "GM Notice" | the notice of the GM, set out at the end of the Admission Document; |
| "Group" | the Company and its subsidiary undertakings at the date of this Announcement; |
| "IP" | intellectual property; |
| "Independent Shareholders" | Shareholders excluding the members of the Concert Party; |
| "ITEPA" | the Income Tax (Earnings and Pensions) Act 2003; |
| "London Stock Exchange" | London Stock Exchange plc; |
| "Long Term Incentive Plan" | the Company's share option scheme (further details of which are set out in paragraph 5 of Part IX of the Admission Document); |
| "Nanoco" | Nanoco Tech Public Limited Company whose registered office is at 46 Grafton Street, Manchester, M13 9NT (registered in England and Wales under number 5853720); |
| "Nanoco Shareholders" | the holders of Nanoco Shares; |
| "Nanoco Shares" | the ordinary shares of £0.10 each in the share capital of Nanoco; |
| "Nanoco Share Incentive Plan" | the Nanoco Tech Share Incentive Plan established by Nanoco on 1 September 2006; |
| "Nanoco Technologies" | Nanoco Technologies Limited (registered in England and Wales under company number 04206123); |
| "ORA Capital" or "ORA" | ORA Capital Partners plc (registered in England and Wales under number 5614046); |
| "ORA Guernsey" | ORA (Guernsey) Limited (registered in Guernsey under number 49949); |
| "Ordinary Shares" | ordinary shares of 10 pence each in the capital of the Company; |
| "Panel" | The Panel on Takeovers and Mergers; |
| "Pira International" or "Pira" | Pira International Limited (registered in England and Wales under number 3858209); |
| "Proposals" | the Acquisition, the proposed approval of the Waiver and Admission; |
| "Proposed Directors" | Dr. Peter John Rowley, Dr. Michael Albert Edelman, Dr. Nigel Leroy Pickett and Michael Anthony Bretherton; |
| "QCA" | Quoted Companies Alliance; |
| "QCA Guidelines" | the corporate governance guidelines for AIM companies, published by the QCA; |
| "Resolutions" | the resolutions referred to in the GM Notice set out at in this Announcement and at the end of the Admission Document; |
| "Restricted Shareholders" | holders of certain Consideration Shares and certain Existing Ordinary Shares, who include the Proposed Directors, who have entered into the lock-in and orderly market agreements referred to in paragraph 15.5 of Part IX of this document; |
| "Restricted Shares" | the Consideration Shares issued to the Restricted Shareholders; |
| "Scheme of Arrangement" | the scheme of arrangement under Part 26 of the 2006 Act between Nanoco and the Nanoco Shareholders to implement the Acquisition, with or subject to any modification thereof, or addition thereto, or condition approved or imposed by the Court, and agreed by Nanoco and Evolutec; |
| "Scheme Document" | the document to be sent by Nanoco to Nanoco Shareholders, of which the Scheme of Arrangement will form part; |
| "Shareholders" | holders of Existing Ordinary Shares; |
| "Takeover Code" | the City Code on Takeovers and Mergers published by the Panel (as amended from time to time); |
| "UK" | the United Kingdom of Great Britain and Northern Ireland; |
| "USA" | the United States of America, its territories and possession, any state of the United States of America and the District of Columbia; |
| "Voting Record Time" | 5.00 p.m. on the day which is two days before the date of the Court Meeting or, if such Court Meeting is adjourned, 5.00 p.m. on the day which is two days before the date of such adjourned meeting; |
| "Waiver" | the conditional waiver by the Panel that would otherwise arise under Rule 9 of the Takeover Code for the Concert Party to make a general offer for the whole of the Company's issued share capital; |
| "Zeus Capital" | Zeus Capital Limited (registered in England and Wales under number 4417845). |