Issue of Equity

Avacta Group plc Placing Issue of Equity, Directors Dealing and related party transaction. Avacta Group plc ("Avacta" or "the Company"), the biophysics company which provides innovative high value technologies and services to the pharmaceutical and diagnostics markets, announces that it has raised £1.38 million (before expenses) from a conditional placing of new ordinary shares of 0.1 pence each ("New Ordinary Shares") at a price of 1.0 pence per Ordinary Share (the "Placing"). In addition, the Company has issued 4,925,000 new Ordinary Shares in part payment of certain fees in connection with the Placing. The New Ordinary Shares have been placed by XCAP with institutional and other existing and new shareholders pursuant to a Placing agreement, which contains the usual warranties in favour of XCAP and the Company's nominated adviser, Grant Thornton Corporate Finance. Use of Proceeds & Strategy The cash proceeds of the Placing, will be used to take Avacta from its current position, towards its near term goal of being a profitable business providing products and services to support the life sciences sector. Since joining AIM in late 2006 Avacta has achieved its stated milestones by delivering products and services and establishing routes to market through two operating businesses; Avacta Analytical and Avacta Animal Health, in its target markets of drug development and diagnostics. The Company has announced the first sales of its first product, Optim, which is designed to significantly reduce risk and cost in the biopharmaceutical drug development process. Four units have now been ordered, the latest to a global biomanufacturing systems supplier. Whilst the order intake in the current difficult economic climate has been slower than hoped for, the pipeline of validated enquiries is very encouraging and the Company is confident of seeing this strong interest in the product convert to accelerating sales over the coming months. Conversion of the Optim sales pipeline is Avacta Analytical's foremost objective and this is being addressed by recent additions to the in-house commercial team and distributor agreements close to finalisation. In addition, the Company is expected to launch its first diagnostic product, Midas, into the veterinary healthcare market in the near term. The Midas system will be capable of delivering a wide menu of rapid diagnostic blood tests offering both quantitative and qualitative analysis to the veterinary and, in due course, human healthcare markets. The funds raised will be used to support commercialisation of these new analytical and diagnostics products through improvements in infrastructure and manufacturing processes and through the enhancement of the Company's commercial teams. In addition, the implementation of a product placement/consumables contract for some customers is expected to accelerate the growth of the high margin, recurring revenues from consumables sales. Director Dealings Pursuant to the Placing, certain Directors of the Company have subscribed for 5,000,000 new Ordinary Shares in aggregate. Details of the Directors' subscriptions and resultant holdings are listed in the table below: Director No of Placing Number of shares on Percentage of Issued shares subscribed Admission Share Capital on for Admission Alastair Smith 1,500,000 51,728,296 3.61% Gwyn Humphreys 2,000,000 16,659,169 1.16% Tim Sykes 1,500,000 5,285,384 0.37% The subscription for New Ordinary Shares by the Directors is a related party transaction as defined by Rule 13 of the AIM Rules for Companies. Accordingly the Directors, having consulted with the Company's nominated adviser, consider that the terms of the subscription by the Directors are fair and reasonable in so far as the Company's shareholders as a whole are concerned. Pursuant to the Placing, IP Group plc ("IP Group") through IP2IPO Limited, will subscribe for 75,000,000 New Ordinary Shares at the Placing Price. Following Admission, IP Group will be interested in 360,384,828 ordinary shares, representing 25.13 per cent, of the Company's issued share capital on Admission. As IP Group is a substantial shareholder in the Company, the subscription for New Ordinary Shares by IP Group constitutes a related party transaction as defined by Rule 13 of the AIM Rules for Companies. Accordingly, the Directors, having consulted with the Company's nominated adviser, consider that the terms of the subscription by IP Group are fair and reasonable in so far as the Company's shareholders as a whole are concerned. Admission to trading and Total Voting Rights Application has been made for the 143,425,000 new Ordinary Shares to be admitted to trading on the AIM market of London Stock Exchange plc and dealings are expected to commence on 9 July 2010. The New Ordinary Shares will rank pari passu with existing shares in issue. Following the Placing, Avacta's issued share capital comprises 1,434,343,139 ordinary shares of par value 0.1 pence each with voting rights. No ordinary shares are held in treasury. The above figure of 1,434,343,139 shares may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the FSA's Disclosure and Transparency Rules. 6 July 2010 For further information, please contact: Avacta Group plc Tel: 0844 414 0452 Alastair Smith, Chief Executive Officer www.avacta.com Tim Sykes, Chief Financial Officer Broker Tel: 020 7101 7070 XCAP Securities Limited www.xcapgroup.com John Grant/Karen Kelly/David Newton Tel: 020 7383 5100 Nominated Adviser www.grantthornton.co.uk Grant Thornton Corporate Finance Philip Secrett/Colin Aaronson Financial PR Tel: 020 7417 8989 Haggie Financial LLP Nicholas Nelson/ Henny Breakwell Henny.Breakwell@haggie.co.uk Notes to Editors: About Avacta Avacta was spun-out from the University of Leeds in 2004 by its current management team as a biophysics company, with the aim of combining the disciplines of physics and biology to develop innovative technologies and expert technical services to address unmet needs in the biopharmaceutical and healthcare sectors. Avacta has a core bio-analytical technology development programme addressing the needs of the biopharmaceutical sector to fully characterise their new products at the earliest stage in their development to reduce the risk of late stage failure. High end analytical instruments and leading edge contract research services are being provided to the biopharmaceutical and healthcare/personal-care materials sectors through Avacta's biotech support division, Avacta Analytical. High value solutions for rapid, point of care diagnostics based on these core bio-analytical technologies, with a near term focus on veterinary diagnostics, are being delivered through Avacta Animal Health. Longer term these technologies will be transferred into the human clinical diagnostics market. Avacta listed on AIM in August 2006.
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