ODX.L Regulatory News (ODX)

24 Aug 2006 07:00

Quintessentially English PLC24 August 2006 Quintessentially English PLC (the "Company") Proposals for the acquisition of Omega Diagnostics Limited, placing of 50,000,000 new ordinary shares of 1p each at 2p per share, issue of up to 5,588,432 warrants to existing shareholders in the Company, change of name to Omega Diagnostics Group PLC, waiver of Rule 9 of the Takeover Code, notice of Extraordinary General Meeting and admission to trading on AIM by City Financial Associates Limited Nominated adviser to the Company • Acquisition of Omega Diagnostics Limited which produces in-vitro diagnostics test kits and related products through a distribution network in more than 100 countries worldwide for initial consideration of approximately £1.2 million and an earn-out of up to approximately £1.8 million, to be earned based on future profits of the Company for the year ending 31 March 2008 • Consideration for the Acquisition to be satisfied entirely in new ordinary shares in the Company • Placing of 50,000,000 new Ordinary Shares at a placing price of 2 pence per share to raise gross proceeds of £1 million • Issue of warrants to existing shareholders in the Company, exerciseable at 2p per share from 1 April 2008 until the third anniversary of Admission • Strategy to expand through selected acquisitions, complemented by organic growth of Omega's business Michael Gurner, Quintessentially English PLC Chairman commented: "The Company is now entering a period of great activity and growth. We believe the Enlarged Group can make a valuable contribution within the in vitro diagnostics sector. The strategy will be focused on selected acquisitions complemented by organic growth of the existing Omega business." Andrew Shepherd, Chief Executive of Omega commented: "Through the transactionwith Quintessentially English PLC, Omega will now be able to execute its plannedacquisition strategy. The in vitro diagnostics market has polarised into largemultinationals and smaller niche players such as Omega and these marketconditions have created opportunities on which the Enlarged Group willcapitalise in the future." Enquiries:Quintessentially English PLC Michael Gurner, Chairman 07768 231 731City Financial Associates Limited Barry Saint, Director 02070 907 800Seymour Pierce Ellis Limited Neil Badger 01293 517 744 Omega Diagnostics Limited 01259 763 030 Andrew Shepherd, Chief Executive 01259 763 030 / 07769 688 369 Kieron Harbinson, Finance Director 01259 763 030 / 07764 819 845 City Financial Associates Limited, which is authorised and regulated by TheFinancial Services Authority and is a member of the London Stock Exchange, isthe Company's Nominated Adviser for the purposes of the AIM Rules. Itsresponsibilities as the Company's Nominated Adviser are owed solely to LondonStock Exchange plc and are not owed to the Company or any Director. CityFinancial Associates Limited will not be responsible to anyone other than theCompany for providing the protections afforded to customers of City FinancialAssociates Limited. Seymour Pierce Ellis Limited, which is regulated in the United Kingdom by theFinancial Services Authority and is a member of the London Stock Exchange, isthe Company's Broker for the purposes of the AIM Rules. Seymour Pierce EllisLimited's responsibilities as the Company's Broker are owed solely to LondonStock Exchange plc. Seymour Pierce Ellis Limited is acting for the Company andno one else in connection with the arrangements described in this document andwill not be responsible to anyone other than the Company for providing theprotections afforded to customers of Seymour Pierce Ellis Limited. ADMISSION STATISTICS Placing price 2p Mid-market closing price per Ordinary Share on 31 March 2006(being the last date prior to the suspension of the Company's sharesby AIM at 7.00 a.m. on 3 April 2006) 8.25p Number of Existing Ordinary Shares 11,176,865 Number of Initial Consideration Shares being issued and allottedunder the Acquisition 60,600,000 Number of Placing Shares being issued on Admission 50,000,000 Total number of Ordinary Shares in issue following Admission 121,776,865 Market capitalisation of the Company on Admission at the Placing Price £2,435,537 Percentage of the Enlarged Issued Share Capital to be held bythe Vendors immediately following Completion and Admission 49.76 per cent. Quintessentially English PLC (the "Company") Proposals for the acquisition of Omega Diagnostics Limited, placing of 50,000,000 new ordinary shares of 1p each at 2p per share, issue of up to 5,588,432 warrants to existing shareholders in the Company, change of name to Omega Diagnostics Group PLC, waiver of Rule 9 of the Takeover Code, notice of Extraordinary General Meeting and admission to trading on AIM by City Financial Associates Limited Nominated adviser to the Company Introduction The board of Quintessentially English PLC announced today that it hasconditionally agreed to acquire the entire issued share capital of OmegaDiagnostics Limited, a medical diagnostics company whose profitable businessproduces and sells a wide range of in-vitro diagnostics (IVD) test kits andrelated products through a distribution network in more than 100 countriesworldwide. IVD is defined as reagents, assays, instruments and systems intended for use inthe diagnosis of disease or other conditions including the determination of astate of health, in order to mitigate, treat or prevent disease. Tests areperformed on samples removed from the body. The maximum consideration for the Acquisition is £3.0 million payable entirelyin new Ordinary Shares in the Company, comprising initial consideration ofapproximately £1.2 million to be satisfied by the issue of the InitialConsideration Shares to the Vendors at the Placing Price, plus deferredconsideration of up to approximately £1.8 million based on an earn out targetbeing achieved. Further details of the Acquisition are set out below. The Company also announced today that it is seeking to raise £1 million beforeexpenses by means of a placing of 50,000,000 new Ordinary Shares at a placingprice of 2 pence per share. Further details of the Placing are set out below. Conditional on Admission, the Company has granted to each existing member of theCompany on the register at the close of business on 22 August 2006 (the lastpracticable date prior to the publication of this document) a warrant tosubscribe, at the Placing Price, for one Ordinary Share in respect of every twoOrdinary Shares held by the member on such date, exercisable in full from 1April 2008 until the third anniversary of Admission. On 3 April 2006 trading in the Company's Ordinary Shares on AIM was suspendedpending the Company making an acquisition constituting a reverse takeover underthe AIM Rules. The Company's Admission to trading on AIM is to be cancelled on 3October 2006 if the Company has not, by that time, completed such anacquisition. In view of the size of Omega relative to the Company and since it will representa fundamental change of the Company's business, the Acquisition will constitutea reverse takeover of the Company under the AIM Rules. The AIM Rules requirethat completion of the Acquisition is subject to the prior approval ofShareholders, which is to be sought at the Extraordinary General Meeting, andthe publication of an AIM Admission Document which has been posted today toShareholders. In view of the size of the shareholding of the Concert Party in the Companyfollowing Admission, completion of the Acquisition will represent a change ofcontrol under the Takeover Code and would require an offer to be made on behalfof the Concert Party for the balance of the Ordinary Shares not owned by thempursuant to Rule 9 of the Takeover Code unless a waiver of this requirement isapproved by Independent Shareholders at an extraordinary general meeting. Aresolution to approve such a waiver is included in the notice of EGM containedin the document that was posted today to Shareholders. The Proposals are subject to the passing by Shareholders at the ExtraordinaryGeneral Meeting of the Resolutions. Completion of the Acquisition is conditional inter alia on Admission. If theResolutions are duly passed by Shareholders at the EGM and the other conditionsset out in the Acquisition Agreement are met, trading in the Existing OrdinaryShares on AIM will be cancelled and the Enlarged Issued Share Capital will beadmitted to trading on AIM, with dealings expected to commence on 19 September2006. Conversely if the Acquisition is not completed, trading in the Company'sshares will be cancelled in the event the Company fails to complete analternative reverse takeover under the AIM Rules. The Existing Directors do notbelieve an alternative to the Acquisition could be achieved in the timeavailable. Upon Completion the Company's name will change to Omega Diagnostics Group PLC,to reflect the new management and business of the Enlarged Group. Upon Admissionthe Proposed Directors, being David Evans (Non-Executive Chairman), AndrewShepherd (Chief Executive) and Kieron Harbinson (Finance Director) will join theBoard and Robert Coe and Graham Ashley will resign from the Board. MichaelGurner will change his role and will become a Non-Executive Director. It is alsoproposed that Kieron Harbinson replace Robert Coe as Company Secretary. Reasons for the Proposals The Company is an investing company that was admitted to trading on AIM on 18March 2004. Since that date, the Existing Directors have reviewed a number ofpotential reverse takeover opportunities but not found one suitable to proposeto Shareholders and consequently the Company has made no investments. TheExisting Directors believe the Acquisition represents a good opportunity forShareholders to participate in the planned growth of Omega by way of potentialfuture acquisitions complemented by organic expansion. The Existing Directors and the Proposed Directors believe that the globalmedical diagnostics market shows good prospects for continued growth andanticipate that the Enlarged Group will be well positioned to benefit from thisgrowth. Principal terms of and conditions to the Acquisition The Vendors and the Company have entered into the Acquisition Agreement,pursuant to which the Company will acquire from the Vendors the entire issuedshare capital in Omega. The maximum consideration payable by the Company to theVendors will be £3.0 million and it will be payable as follows: (a) as to approximately £1.2 million, satisfied entirely by the issue tothe Vendors at Admission of the Initial Consideration Shares at the PlacingPrice, credited as fully paid; and (b) as to up to approximately £1.8 million, satisfied entirely by the issueto the Vendors of the Earn Out Shares, provided always that the maximum totalnumber of Earn Out Shares to be allotted to the Vendors on the basis of a valueper share, at the time of allotment, equal to the Placing Price shall be89,400,000. This represents a maximum of approximately £1.8 million of Earn OutShares at the Placing Price on achievement by the Enlarged Group ofapproximately £0.9 million of EBITDA for the financial year ending 31 March 2008and EBITDA per share for the same period equalling or exceeding 0.2p perOrdinary Share. A calculation of "EBITDA" is included in the document that wasposted today to Shareholders. The Initial Consideration Shares will, when issued, and the Earn Out Shareswill, if issued, rank pari passu with the existing Ordinary Shares. The Companyhas not declared, paid or made any dividends. Completion of the Acquisition is conditional inter alia upon: (a) Admission; (b) the passing by Shareholders of the Resolutions; and (c) the granting by the Panel of a waiver of the obligation which would otherwise fall due upon the Concert Party to make a compulsory offer for those Ordinary Shares in the Company not already held by them pursuant to Rule 9 of the Takeover Code. The number of Earn Out Shares to be allotted to the Vendors will be calculatedas a multiple of twice the audited EBITDA of the Enlarged Group for thefinancial year ending 31 March 2008 divided by the higher of (a) the average ofthe closing mid-market prices of the Company's Ordinary Shares for the five daysprior to the publication of the audited results for that year and (b) thePlacing Price. The allotment of the first £770,000 of Earn Out Shares has no furtherperformance conditions other than the satisfaction of the test of twice EBITDAreferred to in the paragraph above. The balance of the Earn Out Shares of up toapproximately £1.0 million of Earn Out Shares will only be allotted if EBITDAper share (defined as EBITDA divided by the weighted average number of OrdinaryShares in issue) for the year ending 31 March 2008 is greater than or equal to0.2p. It is anticipated that any Earn Out Shares will be admitted to trading on AIMfollowing the publication of the audited accounts of the Enlarged Group for theyear ending 31 March 2008. Information on the Company The Company is an investing company that was admitted to trading on AIM on 18March 2004. Since that time there has been no operational business of theCompany, other than to review potential acquisition opportunities. The Companyannounced its final results for the year ended 31 December 2005 on 23 March2006. Trading in the Company's Ordinary Shares was suspended in accordance with Rule 8of the AIM Rules on 3 April 2006, pending the identification and execution of areverse takeover that provided the Company with an operating business. In theabsence of completing such an acquisition before 3 October 2006, trading in theCompany's shares on AIM will be cancelled. The Existing Directors believe that,if the Proposals do not proceed, insufficient time remains to execute a reversetakeover of an alternative target company before 3 October 2006, when theCompany's admission to trading on AIM is scheduled to be cancelled. Information on Omega Omega is a privately held medical diagnostics company whose business producesand sells a wide range of immunoassay and infectious disease in vitrodiagnostics (IVD) test kits and other products through a distribution network inmore than 100 countries worldwide. The Proposed Directors believe that the opportunity exists for the EnlargedGroup to make further acquisitions of other medical diagnostics companies inorder to increase the size of the Enlarged Group and to extend the range of itsproducts and market segments covered. Following Completion, the Enlarged Group plans to grow by making selectedacquisitions complemented by organic growth of Omega's existing business. TheOngoing Directors plan to focus on acquiring target companies that they believeprovide the opportunity to enhance the Enlarged Group's EBITDA per share.Further information about Omega and its expansion strategy is set out below. In the three financial years ended 31 March 2006, the summarised consolidatedtrading results of Omega Group, restated in accordance with InternationalFinancial Reporting Standards (IFRS) were as follows: Year ended 31 March 2004 2005 2006 £'000 £'000 £'000Revenue 2,206 2,227 2,144EBITDA (139) (85) 263Operating (loss)/profit (190) (158) 132(Loss)/profit before tax (217) (174) 198(Loss)/profit after tax (208) (174) 255 As at 31 March 2004, 2005 and 2006 respectively, the consolidated total equityand liabilities of the Omega Group, restated in accordance with IFRS were asfollows: As at 31 March 2004 2005 2006 £'000 £'000 £'000 Total equity and liabilities 1,096 934 878 Net borrowings include all external borrowings net of cash held. At 31 March2006 net borrowings were £418,804. Scottish Enterprise is an institutional shareholder in Omega. It is the maineconomic development agency for Scotland, funded by the Scottish Executive, andcurrently holds 29.9 per cent. of Omega. Following Admission, ScottishEnterprise will hold approximately 14.9 per cent. of the Enlarged Issued ShareCapital. Current trading and prospects of the Enlarged Group Trading in Omega has continued favourably and in line with managementexpectations since 31 March 2006. The Ongoing Directors are confident in theprospects of the Enlarged Group for the remainder of the current financial yearand beyond. Following Admission, the Company intends to change its year end to that ofOmega, to assist Shareholders in future in comparing the financial results ofthe Enlarged Group with the historical financial results of Omega. The nextperiod for which the consolidated audited financial results of the Company willbe published is intended to be the 15 month period ending 31 March 2007.Furthermore, it is intended that the Enlarged Group will have adoptedInternational Financial Reporting Standards (IFRS) in the presentation of itsaudited accounts and will "reverse acquisition" account, to consolidate theCompany's financial results into the audited results of Omega from Completion. The Placing The Company proposes to raise approximately £1 million before expenses (or,after expenses, approximately £675,400) by the allotment and issue of 50,000,000Ordinary Shares at the Placing Price pursuant to the Placing. The Placing Shareswill represent approximately 41.06 per cent. of the Enlarged Issued ShareCapital of the Company on Admission and, assuming the maximum number of Earn OutShares are issued, exercise of the Kieron Harbinson Option Arrangement, exerciseof the QE Warrants, exercise of the David Evans Warrant and any right toOrdinary Shares pursuant to the Andrew Shepherd Deferred Salary Arrangement allin full, approximately 21.66 per cent. of the Further Enlarged Share Capital ofthe Company. The net proceeds of the Placing will be used to provide working capital for theEnlarged Group and possibly to provide cash consideration for future selectedacquisitions the Enlarged Group may wish to make. Pursuant to the Placing Agreement, Seymour Pierce Ellis has conditionally agreedto use its reasonable endeavours to place with investors, the Placing Shares, atthe Placing Price. The obligations of Seymour Pierce Ellis under the Placing Agreement areconditional inter alia upon: (a) the Placing Agreement becoming or being declared unconditional in allrespects and not being terminated before 8.00 a.m. on 19 September 2006 (or suchlater time and date, being not later than 8.00 a.m. on 29 September 2006, asCFA, Seymour Pierce Ellis and the Company may agree); and (b) Admission. Application will be made to the London Stock Exchange for the Enlarged IssuedShare Capital to be admitted to trading on AIM. Dealings in the Enlarged Issued Share Capital are expected to commence on 19September 2006. Issue of QE Warrants Members of the Company as at the close of business on 22 August 2006 (being thelast practicable date prior to the publication of this document) will be issuedwith QE Warrants to subscribe for Ordinary Shares on the basis of: one QE Warrant for every two Ordinary Shares held Each QE Warrant will entitle the holder thereof to subscribe for one newOrdinary Share at the Placing Price. The QE Warrants will be exercisable from 1April 2008 until the third anniversary of Admission. Fractions of QE Warrantswill not be allotted. The QE Warrants will be generally non-transferable and will not be admitted totrading on AIM or on any other stock exchange nor will any other dealingfacility in them be sought. Shareholder lock-in Arrangements Under the terms of the lock-in agreements entered into between the Company andeach of the Existing Directors and the Vendors in turn and subject to Admissiontaking place, each of the Existing Directors, Andrew Shepherd and KieronHarbinson has undertaken to the Company, Seymour Pierce Ellis and CFA that theywill not, save in certain circumstances (such circumstances include, inter alia,(i) the acceptance of a takeover offer for the Company and (ii) the giving of anirrevocable undertaking to accept a takeover offer), sell or otherwise disposeof any interest in any Ordinary Shares, including Initial Consideration Sharesbeneficially owned or otherwise held or controlled by them on or after Admissionfor a period up to the publication of the interim results for the half yearending 30 September 2007. Furthermore, Andrew Shepherd and Kieron Harbinson have also undertaken to theCompany, Seymour Pierce Ellis and CFA that they will not, save in thecircumstances referred to above, sell or otherwise dispose of any interest inany Earn Out Shares beneficially owned or otherwise held or controlled by themon or after Admission for a period up to the publication of the final resultsfor the year ending 31 March 2009. Each of the Existing Directors, Andrew Shepherd and Kieron Harbinson has furtherundertaken not to dispose of any Ordinary Shares for a further period of oneyear following expiry of the relevant lock-in periods referred to above savefollowing consultation with Seymour Pierce Ellis and CFA and through theCompany's broker on an orderly market basis. In addition, the Vendors other than Andrew Shepherd and Kieron Harbinson haveundertaken to the Company, Seymour Pierce Ellis and CFA that they will not, savein certain circumstances (such circumstances include, inter alia, (i) theacceptance of a takeover offer for the Company and (ii) the giving of anirrevocable undertaking to accept a takeover offer), sell or otherwise disposeof any interest in any Ordinary Shares beneficially owned or otherwise held orcontrolled by them on or after Admission for a period up to the publication ofthe interim results for the half year ending 30 September 2007 other thanthrough the Company's broker, in order to maintain an orderly market in theOrdinary Shares. Furthermore, the Vendors other than Andrew Shepherd and Kieron Harbinson havealso undertaken to the Company, Seymour Pierce Ellis and CFA that they will not,save in the circumstances referred to above, sell or otherwise dispose of anyinterest in any Earn Out Shares beneficially owned or otherwise held orcontrolled by them on or after Admission for a period up to the publication ofthe final results for the year ending 31 March 2009 other than through theCompany's broker, in order to maintain an orderly market in the Ordinary Shares. Board Upon Admission the Proposed Directors, being David Evans (Non-ExecutiveChairman), Andrew Shepherd (Chief Executive) and Kieron Harbinson (FinanceDirector) will join the Board and Robert Coe and Graham Ashley will resign fromthe Board. Michael Gurner will change his role and will become a Non-ExecutiveDirector and Kieron Harbinson will also replace Robert Coe as Company Secretary. Details of the proposed members of the board of the Company following Admissionare as follows: Executive Directors The Executive Directors will comprise: Andrew Shepherd, BSc.(Hons), Chief Executive Aged 50, Andrew Shepherd is the Founder and Managing Director of OmegaDiagnostics Limited. He has been involved in the medical diagnostics industryfor the last 32 years. He started his career in 1974 by holding technical positions at G.D. SearleLimited and then attended university, graduating with a Bachelor of Science inBiology. He then moved into a sales and marketing position at Cambridge LifeSciences plc in 1981, before establishing his first diagnostics company,Cambridge Biomedical Limited in 1982. In 1986 he moved to Scotland to joinBioscot Limited and shortly afterwards he established Omega. Mr Shepherd used his technical experience and knowledge of exporting to overseethe growth of the export of Omega products to exceed £2 million per annum. Omeganow exports to over 100 countries around the world, and he travels regularly tomany of the countries in which Omega customers are based. Mr Shepherd is an active member of a number of relevant trade associations andwas a member of the Scottish Exports Forum, a body which reported to theScottish Parliament to oversee and guide the export activity of ScottishDevelopment International. Mr Shepherd is also a member of the Bill & Melinda Gates Foundation's (BMGF)Global Health Diagnostics Forum, which provides direct guidance to BMGF inadvising on future investments in worldwide diagnostics programmes fordeveloping countries. Kieron Harbinson, FCCA, Finance Director Aged 41, Kieron Harbinson joined Omega in August 2002 as Finance Director. He isresponsible for finance, information technology, human resources and operationsplanning. Mr Harbinson joined Scotia Holdings plc in 1984. He qualified as an accountantin 1991, and became a Fellow of the Association of Chartered CertifiedAccountants in 1997. He was at the company for approximately 14 years, duringwhich time he held various roles including Group Financial Controller and ChiefAccountant. These roles enabled him to acquire a broad range of knowledge in ahigh growth technology company, and experience in corporate acquisitions,disposals and intellectual property matters. He also gained experience invarious debt and equity transactions, and was involved in raising over £100million for the company. He was also head of Tax and Treasury, responsible for atreasury programme of cash investments of over £50 million and management ofcurrency exposures. Mr Harbinson then joined Kymata Limited, a start up optoelectronics company asFinance Director. Over a period of 18 months, he was involved in raisingapproximately US$85 million of venture capital funding. He was responsible forimplementing financial controls and accounting systems, over which time thecompany grew to over 200 employees by the time he left in 2000. The company wassold in 2001 to Alcatel for €134 million. Before joining Omega, Mr Harbinson helped to establish a company calledI-Genomics Limited, set up to exploit an opportunity licensing certainintellectual property from the University of Glasgow. Non-Executive Directors The Non-Executive Directors will comprise: David Evans, Non-Executive Chairman Aged 46, David Evans has considerable experience within the diagnosticsindustry. As Financial Director he was a key member of the team that floatedShield Diagnostics Limited in 1993 and was Chief Executive Officer responsiblefor the merger of Shield Diagnostics Group plc with Axis Biochemicals ASA ofNorway in 1999 to create Axis-Shield plc. In addition to his role asNon-Executive Chairman of Omega, he is also Non-Executive Chairman of BBIHoldings plc and Immunodiagnostic Systems Holdings plc, which are both AIMquoted medical diagnostic groups operating in different areas of the industryfrom Omega. Michael Gurner, FCA, Non-Executive Director Aged 61, Michael Gurner led the flotation of the Company on AIM as Chairman andChief Executive. He has reviewed numerous potential acquisition candidatesbefore the Company entered into the Acquisition Agreement. He qualified as a Chartered Accountant in 1967, before embarking on a career inmerchant banking with Keyser Ullmann, M&A with the Ryan Group of Companies andsenior management, including as Managing Director of a fully Listed company,Continuous Stationery plc, an acquisitive business forms manufacturer between1986 and 1991. During this time, he was responsible for acquisitions, includingProntaprint, the photographic print retail chain where he led the turn around ofits performance in the ensuing 18 months. Mr Gurner thereafter focused on turning around under-performing and ailingbusinesses, in association with Postern Executive Group Limited ("Postern"), aleading UK turnaround specialist which provided management teams for troubledcompanies. At Postern's request, he joined the board of several companies whichwere successfully turned around. Those beyond rescue are mentioned in paragraphs2.7.1.4 and 2.7.1.5 of Part VII of this document. Successful assignments includeStarmin plc in July 1994 (raising finance by way of a rights issue of £1.76million in a £5.78 million fund-raising) and PSB Holding Limited, a pumped powerplant business owned by the National Grid Company plc, where he negotiated in conjunction with Kleinwort Benson the sale of the business to a US buyer(Mission Energy of California) for around £600 million when the original guideprice was around £300 million. Employees, pensions and incentivisation As at 31 March 2006, Omega employed 22 staff in total, all of whom are based atOmega's premises at Alva, Scotland. Omega operates defined contribution pensionschemes for certain of its Directors and employees. In respect of AndrewShepherd and Kieron Harbinson, Omega contributes 5 per cent. of pensionablesalary. In respect of certain other employees Omega contributes 5 per cent. oncondition that the employee also contributes not less than 5 per cent. Following Admission, the Ongoing Directors intend to consider recommending toShareholders the adoption of appropriate long term incentivisation arrangements,including share option schemes. Intentions for the Enlarged Group The Concert Party (which comprises the Proposed Directors) intend to grow theEnlarged Group by selectively making acquisitions, complemented by organicallygrowing the existing business of Omega. The Concert Party have confirmed that, following Completion, the employment,including the existing terms and pension rights, of all employees and managementof the Enlarged Group will be fully safeguarded. The Concert Party have nopresent intention to relocate the business operations of Omega from its presentlocation. Transactions with the Proposed Directors Andrew Shepherd, a Vendor and the proposed Chief Executive of the Company, haspreviously agreed to defer payment of part of his salary to assist the cash flowof Omega. The Company has entered into an arrangement with Mr Shepherd that,following Admission, deferral of Mr Shepherd's salary will cease and thedeferred salary outstanding (amounting to approximately £104,000) will fall duefor payment at the later of 1 April 2009 or the publication of annual results ofthe Enlarged Group showing consolidated profit before tax of at least £0.5million for any year thereafter. Such payment is to be made in either cash or inOrdinary Shares (to be allotted at the Placing Price) at the election of MrShepherd. The Company has entered into an agreement with Kieron Harbinson, a Vendor andproposed Finance Director of the Company, under which his existing option topurchase 23,278 Omega shares (which would represent approximately 2.83 per cent.of the fully diluted share capital of Omega should that option be exercised)will be cancelled and replaced by the granting (once an Enlarged Group shareoption scheme has been approved by Shareholders) of an option over 2,800,800 newOrdinary Shares at the Placing Price. David Evans, the Chairman of Omega and the proposed Non-Executive Chairman ofthe Company following Admission, has entered into an agreement with the Companythat he will be granted, conditional on Admission, a warrant over 6,088,843Ordinary Shares at the Placing Price. The objective of this grant is torecompense Mr Evans for advice provided to Omega since 2000 for which he has notreceived any remuneration and advice to be given to the Enlarged Group followingAdmission. Mr Evans has agreed not to be paid any fees until 31 March 2008. The Proposed Directors' Arrangements constitute related party transactions underthe AIM Rules. The Existing Directors, having consulted with CFA, consider that the terms ofthe above arrangements with Andrew Shepherd, Kieron Harbinson and David Evansare fair and reasonable insofar as Shareholders are concerned. Corporate governance and internal controls As an AIM-listed company, the Company is not obliged to, and does not currently,comply fully with the corporate governance regime in the UK, as set out in theCombined Code on Corporate Governance. Following Admission, the Company intends to comply with the Combined Code onCorporate Governance, so far as is practicable and appropriate for a publiccompany of its size and nature. The Company has established an audit committee and a remuneration committee. Theremuneration committee comprising of Michael Gurner as Chairman and David Evansand will determine the terms and conditions of service of the Executive Directors, including their remunerationand grant of options. The audit committee comprising of David Evans as Chairmanand Michael Gurner will have primary responsibility for monitoring the qualityof internal controls, ensuring that the financial performance of the EnlargedGroup is properly measured and reported on, and for reviewing reports from theCompany's auditors relating to the Company's accounting and internal controls,in all cases having due regard to the interests of Shareholders. Such committeeshave been established with effect from and conditional on Completion. The Directors will comply with Rule 21 of the AIM Rules relating to Directors'dealings as applicable to AIM companies and will also take all necessary stepsto ensure compliance by the Company's applicable employees. The Company hasadopted a share dealing code which is appropriate for an AIM-listed company, forthis purpose. The Takeover Code Under Rule 9 of the Takeover Code, where any person acquires, whether by aseries of transactions over a period of time or not, an interest in shares which(taken together with shares in which he is already interested and in whichpersons acting in concert with him are interested) carry 30 per cent. or more ofthe voting rights of a company which is subject to the Takeover Code, thatperson is normally required to make a general offer to all remainingshareholders to acquire their shares. Similarly, where any person, together with persons acting in concert with him,is interested in shares which in the aggregate carry not less than 30 per cent.of the voting rights of such a company, but does not hold shares carrying morethan 50 per cent. of the voting rights of a company, a general offer will berequired if any further interest in shares is acquired by any such person, orany person acting in concert with him, within the preceding twelve months. An offer under Rule 9 must be made in cash and at the highest price paid by theperson required to make the offer, or any person acting in concert with him, forany interest in shares acquired during the 12 months prior to the announcementof the offer. The members of the Concert Party are deemed to be the directors of Omega: AndrewShepherd, Kieron Harbinson and David Evans. Andrew Shepherd is the founder,Managing Director and majority shareholder in Omega (with a holding ofapproximately 53.0 per cent. of Omega's issued share capital). The Concert Partymembers, together with their potential interests in the share capital of theCompany, are Andrew William Shepherd (84,670,593 Ordinary Shares), Kieron AntonyHarbinson (6,650,688 Ordinary Shares) and David Eric Evans (6,088,843 OrdinaryShares).. The Concert Party's interests following the implementation of the Proposals willamount to 33,658,111 Ordinary Shares, representing 27.64 per cent. of theEnlarged Share Capital. Assuming that the maximum numbers of Earn Out Shares andthe Proposed Directors' Arrangements Shares are issued, the Concert Party'sinterests would amount to 97,410,124 Ordinary Shares representing 43.24 percent. of the Further Enlarged Diluted Share Capital (or 42.19 per cent. of theFurther Enlarged Diluted Share Capital as adjusted for full exercise of the QEWarrant Issue). The earliest date upon which this could occur is 1 April 2008. The Panel has agreed, subject to the passing of Resolution 2 at the EGM on apoll by Shareholders (excluding the Concert Party), to waive the obligation ofthe Concert Party to make a general offer to Shareholders under Rule 9 of theTakeover Code that would otherwise arise as a result of the implementation ofthe Proposals. Following the transactions set out above, and if the Earn Out Shares and theProposed Directors' Arrangements Shares are allotted in full at the PlacingPrice, the Concert Party will be interested in shares carrying 30 per cent. ormore of the Company's voting share capital but will not hold shares carryingmore than 50 per cent. of the voting rights of the Company. Accordingly, theConcert Party, for so long as its members continue to be treated as acting inconcert, will not be able to increase its aggregate interests in Ordinary Shareswithout incurring any further obligation under Rule 9 to make a general offer. Initial Consideration Shares issued Initial Consideration Shares, on Admission Earn Out Shares, and the Proposed Directors' Arrangements Shares assuming no exercise of the QE Warrants Number Percentage Number PercentageConcert Party members 33,658,111 27.64 97,410,124 43.24 No member of the Concert Party has purchased Ordinary Shares in the 12 monthspreceding the date of this document. The Waiver which the Panel has agreed willbe invalid if purchases of Ordinary Shares are made by any member of the ConcertParty in the period between the date of this document and the EGM. Each memberof the Concert Party has undertaken that he will not make any such purchases. This table assumes that all Placing Shares are issued and that the Earn OutShares are issued at the Placing Price based on the maximum deferredconsideration for the Acquisition and that the Proposed Directors' Arrangementsare satisfied in full by the allotment of 14,097,968 new Ordinary Shares at thePlacing Price. Shareholders should note that the Earn Out Shares may notnecessarily be issued at the Placing Price. Further details of the Concert Party are set out in the document posted today toShareholders. Dividend policy It is the Ongoing Directors' intention for the Company to achieve capital growthand the Ongoing Directors believe it is inappropriate to attempt to predict thelikely level or timescale for the declaration and payment of dividends by theCompany. However, as soon as it becomes commercially prudent to declare dividendpayments and subject to the then availability of sufficient distributablereserves for the purpose, the Ongoing Directors intend to do so. Recommendation The Existing Directors unanimously recommend all Shareholders to vote in favourof the Resolutions, as the Existing Directors intend to do in respect of theirown beneficial shareholdings, which amount in aggregate to 6,666,865 OrdinaryShares (representing approximately 59.65 per cent. of the Ordinary Sharescurrently in issue). The Existing Directors, who have been so advised by CFA, consider the Proposalsand the Proposed Directors' Arrangements to be fair and reasonable and in thebest interests of the Company and its Shareholders as a whole. In providing its advice to the Board, CFA has takeninto account the commercial assessments of the Existing Directors. Further information on Omega Diagnostics Limited Omega Diagnostics Limited is an established business in the medical diagnosticsmarket. Omega sells a wide range of products primarily in the immunoassay andinfectious disease in-vitro diagnostics (IVD) market through a strongdistribution network in over 100 countries. Omega has grown organically sinceincorporation and in the year ended 31 March 2006 sales were approximately £2.1million. As at 31 March 2006, the Company employed 22 staff at its 10,040 squarefoot facility in Alva, Central Scotland. Omega operates in a niche market, in supplying tests for specific infectiousdiseases and other clinical conditions. The tests are based on Agglutination,Enzymeimmunoassay (EIA), Fluorescence and Rapid Test technologies. Theinfectious diseases include Syphilis, TB, Dengue Fever and Malaria. All products are designed for use in Clinical Laboratories and Rapid Tests aredesigned for use at the point of care. Omega currently exports over 95 per cent. of its products. Omega's exportsuccess was officially recognised with the Queen's Award for Export Achievementin 1993. History of Omega Omega was formed in December 1987 to exploit opportunities in IVD testing forinfectious diseases based on the extensive technical and marketing knowledge ofits founder, Andrew Shepherd. Omega grew organically until the 2002/3 financialyear when sales reached £2.6 million. Earnings have been largely reinvested in the business including new productdevelopment. Developed and Manufactured Products Broadly, Omega's product range fits within the infectious disease/immunoassay/blood bank screening segments of the IVD market. In terms of current productgroups listed below, Omega is a niche player serving markets for a small numberof diseases and selected other testing areas. Product Group: Testing for:IMMUTREPTM Screening and confirming the presence of Syphilis infection BETATETM A pregnancy test kit (non-disease test kit) AVITEXTM Tests for the presence of particular antibodies and antigens, including serology test for C-Reactive Protein, Rheumatoid Factor, Anti- Streptolysin-O, Systemic Lupus Erythematosus and Infectious Mononucleosis MICROPATHTM This product range consists of stained bacterial antigens for use in slide or tube agglutination assays to test for a range of febrile diseases including salmonellosis, brucellosis and rickettsial diseases VIROTECTTM These include products to test for Rotavirus and Hepatitis B Surface Antigen AVIPATHTM This range consists of tests for the detection of various groups of Streptococci and Staphylococci bacteria PATHOZYMETM A range of EIA Tests for various infectious diseases such as Syphilis, TB and Dengue Fever. The range also includes tests for various Cancer Markers and Hormones VISITECTTM A range of Rapid Tests which include tests for Syphilis, Malaria, Hepatitis B, HIV 1 & 2, TB, Dengue Fever and Leptospira FLUOROTECTTM A fluorescence test for Chlamydia infection Omega's sales, marketing and distribution channels Omega sells its products through a network of exclusive and non-exclusivedistributors in over 100 countries. These distributors purchase products in their own right and then distribute mostto the clinical laboratories in their country. In addition, Omega also sellsdirectly to several Ministries of Health in countries who favour internationaltenders over local supply contracts. Omega also supplies other IVD manufacturers on an OEM basis with severalproducts and these are then sold under the OEM customers' label. Thisrepresented approximately 11.5 per cent. of sales in the year ended 31 March2006. Omega's largest distributor by sales value in the year ended 31 March 2006 wasGlaxoSmithKline in India, accounting for approximately 10.9 per cent. of Omega'ssales in that financial year. Omega's geographical market coverage is wide without any dominant area. TheProposed Directors believe this ensures that there is a spread of risk andopportunity. Omega currently has no sales into the US and Japanese markets. Omega does notcurrently hold regulatory approval from the US Food and Drug Administration(FDA) for either products or facilities. However, the US sales potential for thenew HSV2 test is such that the Directors consider that this market is a primetarget, albeit that application for FDA regulatory approval would require to bemade beforehand. The market for IVD products The global IVD market in 2004 was valued at approximately US$27.7 billion, withthe immunoassay/ infectious disease/blood bank screening market worthapproximately US$5.4 billion. This latter market was forecast to grow toapproximately US$8 billion by 2008. Immunoassays have become a widely acceptedtechnique in the field of clinical diagnosis of disease. There has been a significant degree of consolidation in the IVD market overrecent years. The Proposed Directors believe that, based on 2003 data,approximately 90 per cent. of the global market is shared by about 10 companieswhile the remaining 10 per cent. of the market is shared by several hundredcompanies. A number of companies are thought by the Proposed Directors to beachieving success in the IVD marketplace by focusing on high growth niches. Merger and acquisition strategies are being followed by many of the majorplayers and those aspiring to become the major players through acquisitivegrowth. A recent example of this is the acquisition by the Medical Solutionsgroup of Siemens AG of Diagnostic Products Corporation for approximately US$1.86billion and Bayer Diagnostics for €4.2 billion which now makes Siemens a top 10player in the IVD industry. Smaller companies are also growing rapidly throughacquisition and one particular example is Trinity Biotech plc (''Trinity'')which is listed on NASDAQ and the Irish Stock Exchange. Trinity was formed in1992 as a small IVD company and has grown to have sales of approximately US$100million by 2005 and a market value of approximately US$111 million as at 27 July2006. Recent changes in legislation relating to IVD products have increased regulatoryrequirements for markets in a number of countries, most notably North Americaand Europe with the coming into force of the IVD Directive and CE Markcertification. This has had the effect of increasing the barrier to entry fornew market entrants. At the current sales levels for the existing Omega product range, Omega has avery small share of the current addressable IVD market. The potential thereforeexists, given adequate resources and skilled management, to expand this businessin the future. With consolidation continuing with the major players, the Proposed Directorsbelieve that smaller companies such as Omega have an opportunity to increase theuse of their product development expertise and product-specific know-how to feedthe distribution pipeline for the global players. This strategy has beenactively pursued by Omega and will continue to form part of its expansionstrategy. Competition The Proposed Directors consider that smaller companies such as Omega are able tocompete with global players with Omega benefiting in particular given its broadgeographical spread and the extent of its marketing distribution network,particularly with key distributors such as GlaxoSmithKline. Also, many of Omega's tests are performed manually and do not require expensiveinstrumentation in order to perform the test. This means that the large globalplayers cannot gain advantage from their dominance of instrument-based assaymenus. The Directors believe that there is no one single, dominant player in any areain which Omega is active. Omega's future strategy The Ongoing Directors' intention following Admission is that the EnlargedGroup's future strategy will be focused on selected acquisitions complemented byorganic growth of the existing Omega business. The Proposed Directors believe that continued consolidation in the diagnosticsindustry has polarised the IVD market into large multi-nationals and smallerniche players such as Omega. These market conditions have created acquisitionopportunities which are of insufficient size to interest the major industryplayers but which the Proposed Directors believe could enhance the growth ofOmega in the future. Other publicly quoted medical diagnostics groups havefollowed acquisition strategies, including Trinity Biotech plc and more recentlythree IVD companies recently floated on the AIM market namely, Cozart plc, BBIHoldings Plc (BBI) and Immunodiagnostic Systems Holdings plc (IDS). All threecompanies had profitable businesses with turnovers of less than £5 million atflotation date. Their market capitalisations stood at approximately £27 million,£23 million and £20 million respectively as at the close of business on 25 July2006. David Evans, the proposed Non-Executive Chairman of the Enlarged Groupfollowing Admission, is Chairman of BBI and IDS. Following Admission, Omega plans to pursue an acquisition strategy by initiallyacquiring small companies either in the UK or elsewhere in the IVD field thathave all or most of the following: • profitable sales • limited routes to market/export sales • complementary products to those of the Enlarged Group • well established management teams • owner managers seeking to exit In line with the consolidation of the global medical diagnostics industry, theProposed Directors believe there are also opportunities to acquire products/product lines which do not fit the acceptance criteria of the larger groups,either by reason of product speciality or due to their small size. Enquiries: Quintessentially English PLC Michael Gurner, Chairman and Chief Executive 07768 231 731City Financial Associates Limited Barry Saint, Director 020 7090 7800Seymour Pierce Ellis Limited Neil Badger 01293 517 744 Omega Diagnostics Limited 01259 763 030 Andrew Shepherd, Chief Executive 01259 763 030 / 07769 688 369 Kieron Harbinson, Finance Director 01259 763 030 / 07764 819 845 City Financial Associates Limited, which is authorised and regulated by TheFinancial Services Authority and is a member of the London Stock Exchange, isthe Company's Nominated Adviser for the purposes of the AIM Rules. Itsresponsibilities as the Company's Nominated Adviser are owed solely to LondonStock Exchange plc and are not owed to the Company or any Director. CityFinancial Associates Limited will not be responsible to anyone other than theCompany for providing the protections afforded to customers of City FinancialAssociates Limited. Seymour Pierce Ellis Limited, which is regulated in the United Kingdom by theFinancial Services Authority and is a member of the London Stock Exchange, isthe Company's Broker for the purposes of the AIM Rules. Seymour Pierce EllisLimited's responsibilities as the Company's Broker are owed solely to LondonStock Exchange plc. Seymour Pierce Ellis Limited is acting for the Company andno one else in connection with the arrangements described in this document andwill not be responsible to anyone other than the Company for providing theprotections afforded to customers of Seymour Pierce Ellis Limited. DEFINITIONS The following definitions apply throughout this document, unless the contextrequires otherwise: "Acquisition" the acquisition of Omega pursuant to the Acquisition Agreement"Acquisition Agreement" the agreement dated 23 August 2006 between the Vendors and the Company for the sale of the issued share capital of Omega to the Company"Act" the Companies Act 1985, as amended"Admission" the re-admission of the Existing Ordinary Shares and the admission of the New Ordinary Shares to trading on AIM and such admission becoming effective in accordance with the AIM Rules"Admission Document" the document posted today to Shareholders containing details of the transactions the subject of this announcement"AIM" an exchange regulated market of that name operated by the London Stock Exchange"AIM Rules" the rules for AIM companies and their nominated advisers published by London Stock Exchange from time to time"Articles" the articles of association of the Company"Board" or "Directors" the directors of the Company, from time to time"Cardiopath" Cardiopath Limited incorporated in Scotland with registered number SC194466"CFA" City Financial Associates Limited, nominated adviser to the Company"Combined Code" the combined code on corporate governance issued by the Financial Reporting Council, as amended from time to time"Company" Quintessentially English PLC"Completion" completion of the Acquisition"Concert Party" Andrew Shepherd, Kieron Harbinson and David Evans"CREST" the relevant system (as defined in the CREST Regulations) in accordance with which securities may be held and transferred in uncertificated form"Earn Out Shares" up to 89,400,000 Ordinary Shares that may, subject to the achievement of certain performance conditions, be issued pursuant to the Acquisition Agreement"Enlarged Group" the Company and its subsidiaries from time to time, from Admission"Enlarged Issued Share Capital" the entire issued Ordinary Share capital of the Company immediately following Admission, comprising of the Existing Ordinary Shares, the Initial Consideration Shares and the Placing Shares"Existing Directors" the existing directors of the Company, whose names appear on page 4 of this document"Existing Ordinary Shares" the 11,176,865 Ordinary Shares in issue as at the date of this document"Extraordinary General Meeting" or "EGM" the extraordinary general meeting of the Company to be held at 12.00 p.m. on 18 September 2006"Form of Proxy" the form of proxy to be used by Shareholders in respect of the Extraordinary General Meeting"FSA" the Financial Services Authority, the single statutory regulator under FSMA"FSMA" the Financial Services and Markets Act 2000, as amended"Further Enlarged Diluted Share Capital" the Further Enlarged Issued Share Capital and the Proposed Directors' Arrangements Shares"Further Enlarged Issued Share Capital" the Enlarged Issued Share Capital and the Earn out Shares"HMRC" HM Revenue & Customs"Independent Shareholders" the members of the Company excluding members of the Concert Party"Initial Consideration Shares" the 60,600,000 Ordinary Shares to be issued by the Company pursuant to the Acquisition Agreement"New Ordinary Shares" the Initial Consideration Shares and the Placing Shares"Omega" Omega Diagnostics Limited, a private limited company registered in Scotland with company number SC107178"Omega Directors" means the current directors of Omega, being Andrew Shepherd, Kieron Harbinson and David Evans"Ongoing Directors" the Proposed Directors and Michael Stephen Gurner"Ordinary Shares" ordinary shares of 1p each in the capital of the Company"Panel" the Takeover Panel"Placing" the conditional placing of the Placing Shares at the Placing Price, pursuant to the Placing Agreement"Placing Agreement" the conditional agreement, dated 23 August 2006, between (1) the Company, (2) the Directors, (3) the Proposed Directors, (4) CFA, and (5) Seymour Pierce Ellis relating to the Placing,"Placing Price" 2p per Ordinary Share"Placing Shares" the 50,000,000 Ordinary Shares to be issued by the Company pursuant to the Placing"Proposals" the Acquisition, the Placing, the QE Warrant Issue, the change of name and Admission"Proposed Directors" the proposed directors of the Company, to be appointed on Admission, being Andrew Shepherd, Kieron Harbinson and David Evans"Proposed Directors' Arrangements" the Andrew Shepherd Deferred Salary Arrangement, the Kieron Harbinson Option Arrangement and the David Evans Warrant"Proposed Directors' Arrangements Shares" 14,097,968 new Ordinary Shares, representing the maximum number of Ordinary Shares held by the Proposed Directors following the completion of the Proposed Directors' Arrangements"QE Warrantholder" a holder of QE Warrants"QE Warrant Instrument" the deed poll instrument issued by the Company on 23 August 2006 which constitutes the QE Warrants the subject of the QE Warrant Issue"QE Warrant Issue" the issue of warrants entitling the holders of Existing Ordinary Shares to subscribe for up to 5,588,432 Ordinary Shares under the terms of the QE Warrant Instrument"QE Warrants" warrants to subscribe for Ordinary Shares constituted by the QE Warrant Instrument"Resolutions" the resolutions to be proposed at the Extraordinary General Meeting"Shareholder" a holder of Ordinary Shares from time to time"Seymour Pierce Ellis" Seymour Pierce Ellis Limited, broker to the Company"Takeover Code" the Takeover Code, published by The Takeover Panel"US" or "United States" the United States of America"Vendors" the shareholders of Omega"Whitewash Resolution" resolution 2 to be proposed at the EGM, being the resolution to be voted upon by Independent Shareholders, on a poll, regarding the proposed waiver of Rule 9 of the Takeover Code This information is provided by RNS The company news service from the London Stock Exchange