Acquisition and Placing

RNS Number : 0602N

Shellproof PLC

03 September 2013

 



Shellproof PLC ("Shellproof" or the "Company")

Acquisition of Gusbourne Estate Business, placing to raise £2.85 million and re-admission to AIM

Transaction Highlights

·     Acquisition of the Gusbourne Estate Business and related Freehold Property for £7.0 million.

·     Andrew Weeber, the present owner and founder of the Gusbourne Estate Business, to be appointed as Non-Executive Director and Chairman and will work closely with the executive team.

·     The executive team of the Enlarged Group will comprise CEO Ben Walgate, winemaker Charlie Holland and vineyard manager Jon Pollard.

·     Enlarged Group to benefit from the established and award-winning Gusbourne brand.

·     Placing to raise £2.85 million, supported by new and existing investors, at a significant premium to prevailing share price, to help fund the further development of the Gusbourne Estate Business, including the planting of a further 100 acres of vineyards in Kent over the next two years.

·     Shellproof PLC will change its name to Gusbourne PLC.

Market highlights

·     1,700 million bottles of wine sold annually in the UK of which 109 million bottles are sparkling wine.

·     2.6 million bottles of English wine (including sparkling) sold in the UK in 2011/12.

·     Growing markets both in the UK and overseas for English sparkling and still wine, supported by numerous awards in recent years for English sparkling wine at both national and international levels.

Gusbourne Estate wines

Since the maiden vintage in 2006, which was released in 2010, wines produced at Gusbourne Estate have won numerous national and international accolades. The Brut Reserve 2008 most recently gained a Gold Award at the highly acclaimed 2013 International Wine and Spirits Challenge.  Other recent global successes include a Gold Award for the Gusbourne Estate's Blanc de Blancs 2008 at the International Wine Challenge in 2013 and the Estate's first still white, Guinevere 2011, was crowned Regional Trophy Winner at the 2013 Decanter World Wine Awards.

Gusbourne Estate wines are found in leading wine merchants, luxury London department stores, specialist retailers and restaurants including a significant number of Michelin starred restaurants. At full production maturity, Gusbourne Estate will produce over 500,000 bottles of wine. There will be a minimum of 16 full time employees and over 100 pickers will be employed seasonally.

Andrew Weeber, the proposed Non-Executive Chairman, commented:

"Our recent successes demonstrate the huge potential of the Gusbourne brand and I am very excited to be embarking on a new phase of business development and expansion. I look forward to working with an experienced and dynamic management team. I believe the prospects for the Gusbourne Estate product range in the context of the growing market for English sparkling and still wines are excellent".   

Ben Walgate, Chief Executive Officer of Shellproof, commented: "I am delighted to lead such a talented executive team as we expand and grow the Gusbourne brand. We see great opportunities for a brand of such premium quality. I am also very much looking forward to working closely with our Chairman, Andrew Weeber who has achieved great success with the business over the past 10 years. We will retain and continue the best practices that have been instilled from the very beginning at Gusbourne Estate.

For further information contact:

Shellproof PLC

Andrew Weeber /Ben Walgate                     [phone]

Cenkos Securities plc

Adrian Hargrave/ Nicholas Wells                  [phone]

Note: This announcement, the admission document in relation to the Enlarged Group and other press releases are available to view at the Company's website: www.shellproofplc.com

INTRODUCTION

The Directors today announce that Shellproof has entered into Acquisition Agreements to acquire the Gusbourne Estate Business and a related Freehold Property. In addition, the Company has raised £2.85 million from existing and new investors at a price of 54 pence per ordinary shares, a significant premium to the prevailing share price. On Admission it is proposed that the name of Shellproof PLC will be changed to Gusbourne PLC and the name of Shellproof Wines will be changed to Gusbourne Estate Limited. Andrew Weeber, the current owner and founder of the Gusbourne Estate Business about whom further information can be found below, will become non-executive chairman of the Enlarged Group and play a key role in the on-going development of the Enlarged Group's Business.

The Enlarged Group intends to invest in, and further develop, the Gusbourne Estate Business including, in particular, its award winning Gusbourne brand to take advantage of further anticipated market growth in this sector of the wine industry. The Board's intention is to plant a further 100 acres of vineyards on the Freehold Property in Kent, resulting in over 200 acres of prime vineyards in Kent and Sussex in the Enlarged Group. The Enlarged Group's winery operations and administration will be based at the Freehold Property in Kent.

THE ACQUISITION

Shellproof Wines has entered into the Acquisition Agreements. The Acquisition is for a purchase price of £7.0 million consisting of £4.2 million in cash, plus an adjustment for certain net operating and capital expenditures since 31 March 2013, the issue of the Vendor Shares and the entering into of the Vendor Bond. Of the £7.0 million, £5,287,000 (being £2,487,000 in cash, the issue of the Vendor Shares and the entering into of the Vendor Bond) is for the Freehold Property and £1,713,000 (plus an adjustment for certain net operating and capital expenditures since 31 March 2013) in cash is for the Gusbourne Estate Business. The Acquisition will, subject to the passing of the Resolutions, be completed on Admission. Under the terms of the Acquisition Agreements it is proposed that Shellproof Wines acquires the Gusbourne Estate Business and the related Freehold Property.

The Acquisition is being funded by a combination of the Company's existing cash resources, the Placing, the Bank Debt, the Vendor Shares and the Vendor Bond. The Vendor Shares will rank pari passu in all respects with the Existing Ordinary Shares including the right to receive all dividends and other distributions declared, paid or made after the date of issue.

The Acquisition is conditional on, inter alia, Admission taking place by 30 September 2013 (or such other date as agreed by Shellproof Wines and Andrew Carl Vincent Weeber ("AW")).

As the Vendor Shares are being issued for non-cash consideration (namely the Freehold Property), the Act requires that consideration to be independently valued and a copy of the valuation report to be provided to the proposed recipient of the Vendor Shares (the Vendors). In accordance with the Act, that report has been prepared by Chavereys Chartered Accountants and sent to the Vendors, and a copy of the valuation report will be filed with Companies House when the return of the allotment of the Vendor Shares is filed.

THE VENDOR BOND

The Vendor Bond has a subscription price of £1,750,000 and a nominal price of £2,337,518, which will be the price for which the Vendor Bond will be redeemed if it is redeemed at its final redemption date, which is the date that falls on the fourth anniversary of completion of the Acquisition. The Vendor Bond may be redeemed early if the Company raises a further £7,000,000 (by way of share placings or debt that ranks behind the debt owed by the Company to Barclays) in the 3 years after completion of the Acquisition or, if Barclays consents, at the request of the Vendors at any time (subject to a period of notice) from 30 months after completion of the Acquisition.

From the second anniversary of completion of the Acquisition until the third anniversary, the holders from time to time of the Vendor Bond have the option to convert some or all of the Vendor Bond into Shellproof PLC Shares, at a price of 66 pence per share.

For as long as the Vendors hold £1,000,000 or more of the nominal amount of the Vendor Bond, they will be entitled to appoint one person as a director of the Company. That person will be AW or, should AW die, another individual to be agreed by the Company.

The Vendor Bond is transferable by the Vendors (in whole or part), at any time after the second anniversary of completion of the Acquisition, provided that the Company has given its prior consent to the transfer. Any transferee of the Vendor Bond will not have the right to appoint a director of the Company described above.

The Vendor Bond is to be secured by debentures to be granted to the Vendors by the Company and Shellproof Wines and a legal charge to be granted to the Vendors by Shellproof Wines.

THE PLACING

The Placing comprises the placing of 5,280,367 Shellproof PLC Shares at 54 pence per Placing Share to be issued by the Company, raising proceeds of £2.85 million before expenses.

The Placing Shares will be placed with certain existing Shareholders, including Lord Ashcroft KCMG PC and other investors known to the Company, including Paul Gerald Bentham ("PB"). PB will become a non-executive director of the Company on Admission. Ian Robinson, Andrew Wilson and Benjamin Walgate have agreed to subscribe for, in aggregate, 100,000 of the Placing Shares amounting to a total value of approximately £54,000 and Lord Ashcroft KCMG PC has agreed to underwrite the Placing.

The Placing is conditional upon the Resolutions being passed and Admission becoming effective by 30 September 2013.

The Placing Shares will rank pari passu in all respects with the Existing Ordinary Shares including the right to receive all dividends and other distributions declared, paid or made after the date of issue.

£49,999.50 of the proceeds of the Placing will be used to redeem the 99,999 redeemable shares of 50 pence each in the capital of the Company. At the same time as the redemption, it is proposed that the debt of £49,999.50 owed to the Company by the holder of the redeemable shares will be repaid.

THE ENLARGED GROUP'S BUSINESS

Business strategy

The Enlarged Group intends to invest in, and further develop, the Gusbourne Estate Business including in particular its award winning Gusbourne brand to take advantage of further anticipated market growth in this sector of the wine industry. The Gusbourne Estate Business is one of the most prestigious English sparkling wine businesses in the UK and has won numerous awards for its products. The Board intends to plant a further 100 acres of vineyards on the Freehold Property, resulting in over 200 acres of vineyards in Kent and Sussex in the Enlarged Group, producing, at full maturity, grapes sufficient for around 500,000 bottles of wine per annum. The Enlarged Group's winery operations and administration will be based at the Freehold Property.

Market Overview

The HMRC Alcohol Bulletin has reported that, in the year to March 2012, total wine sales in the UK amounted to 1,715 million bottles. Sparkling wine accounts for 109 million bottles of this representing 6.4 per cent of all wine bought in the UK. English wine (including sparkling) accounted for 2.6 million bottles (only 0.15 per cent of total wine sales in the UK).

Of the 2.6 million bottles of English wine sold in the UK during the year to 31 March 2012, the Directors believe that English sparkling wine accounts for approximately 60 per cent of this at 1.6 million bottles. This represents approximately 1.5 per cent of the sparkling wine sold in the UK during this period. However, the 109 million bottles of sparkling wine sold in the UK during that time include a number of categories, such as Cava and Prosecco, as well as Champagne and other sparkling wines, which the Directors believe are sold in retail price brackets from just under £5 to over £100 per bottle. Champagne accounts for approximately 35 million bottles of sparkling wine sold in the UK during this period, but even within this sub sector it is estimated that only a proportion (perhaps around two-thirds) will have been at price levels competitive with English sparkling wine. The Directors therefore estimate that English sparkling wine might already represent approximately 6 per cent of the equivalent Champagne market. Given current production trends, the Directors believe that this percentage could potentially double in the coming years.

English sparkling wines have won a number of awards recently against competition from Champagne and other sparkling wines. Wines produced by the Gusbourne Estate Business have won a number of prestigious awards including most recently its Brut Reserve 2008 with a Gold Award in 2013 at the International Wine & Spirits Challenge, and its Blanc de Blancs 2008 with a Gold Award in 2013 at the International Wine Challenge. The Guinevere 2011, the Gusbourne Estate Business' still wine, was a Regional Trophy Winner at the 2013 Decanter World Wine Awards.

The English sparkling wine sector has also enjoyed significant and positive media coverage in recent years. It is understood that English sparkling wines were drunk at the Royal Wedding (in 2011) and by the Royal Family as part of the Diamond Jubilee celebrations (in 2012) and it was reported that Waitrose sales of English sparkling wine increased five-fold over the Diamond Jubilee period.

Based on historic production volumes, the production of UK vineyards has doubled over the last ten years. This growth in production has also been reflected in UK vineyard growth with planting in the UK up by around 75 per cent in 2009 to 2011 (inclusive) to approximately 1,400 hectares (equivalent to 3,460 acres) from the previous level of around 800 hectares (equivalent to 1,980 acres). The Directors believe that sparkling wine grape varieties form the bulk of new plantings.

In terms of competition, there are currently relatively few large producers of English sparkling wine and the Directors estimate that there are only a few companies producing more than 400,000 bottles of English sparkling wine per year. Availability of English sparkling wine throughout the UK is currently restricted to a few national retailers such as Waitrose and more recently Tesco, with retail price points in the range of £15 - £30 with some examples in excess of that. The Directors believe that direct retail sales via farm shop, online and mail order represent a significant proportion of distribution in the English sparkling wine market and for smaller producers this is likely to be their only outlet.

Enlarged Group's Business Description

The three principal components of the Enlarged Group's Business will be the vineyards, the winery and sales and marketing operations.

i.             The Vineyards

These already contain, will contain or will be planted with grape varieties suitable for English sparkling wine such as Pinot Noir, Pinot Meunier and Chardonnay.

The Enlarged Group intends to operate approximately 205 acres of vineyards. The 205 acres include 58.5 acres of mature vineyards and a further 46.3 acres of new plantings in West Sussex, of which a 2 further acres were planted at the Halnaker site. A further 100 acres have been identified for planting on the Freehold Property in May 2014 and May 2015. A further expansion of vineyards at the Freehold Property should be possible in due course. The overall mix of vineyards will be predominantly freehold, split between the Freehold Property and the sites in Sussex.

The Directors envisage that the Enlarged Group will have full control over the properties that produce its grape supply for the long term, which the Directors believe is important to the success of the Enlarged Group.

Extensive site assessments, including soil testing, have been carried out in all new planting areas.

It should be noted that it takes up to four years for newly planted vines to reach commercial maturity after which they may be expected to have a commercial life of at least 30 years.

ii.            The Winery

The Enlarged Group's winery operations will, subject to completion of the Acquisition, be based at the Freehold Property and will process all grapes grown on the Enlarged Group's vineyards in both Kent and Sussex with effect from the October 2013 harvest.

Planning consent has been obtained for the construction of a new winery building, storage facilities and a visitor centre on the Freehold Property, which will, when developed, have sufficient capacity to process all grapes from the Enlarged Group's Kent and Sussex sites when they are at full production maturity. It is expected that funding for this new winery will be raised separately ahead of construction, which is currently expected to commence in around two years' time.

In the meantime, the Gusbourne Estate Business is developing an initial winery facility on the Freehold Property that will process the grapes of the Gusbourne Estate Business and the Existing Business from the 2013 harvest until the new winery has been built. Shellproof Wines has made a loan facility of up to £60,000 available to AW to help fund the development of this initial winery, such loan to be repaid on completion of the Acquisition (or, if the Acquisition doesn't complete, on 30 September 2014).

iii.           Sales & Marketing

This will be a key component of the Enlarged Group's Business, and will include:

·     The further development and promotion of the established and award winning Gusbourne brand. This will include entering Gusbourne wines for national and international awards.

·     The further and selective development of the established sales and distribution network within the Gusbourne Estate Business to accommodate the increase in volumes over the coming years.

·     Export, UK wholesale and direct sales, including a visitor centre at the Freehold Property, online and mail-order sales.

Fund Raising

It is proposed that funding will be raised in tranches to fit in with the Enlarged Group's cash flow requirements with initial funding of £7.65 million comprising the Bank Debt, Vendor Bond, Vendor Shares, Placing and the £3.1 million of existing cash in the Company as at 31 March 2013.

Further Costs of Developing the Enlarged Group's Business

In addition to the initial funding listed above, the Directors estimate that additional funding of approximately £9.5 million will be required over the coming years to provide sufficient capital to fully develop the Enlarged Group's strategic plan. This estimate comprises:

·     Further vineyard establishment costs - £0.7 million.

·     The construction of the new winery, storage area and visitor centre - £3.4 million.

·     Working capital for stocks and overheads - £3.4 million.

·     Repayment of the Vendor Bond - £2.0 million.

CURRENT TRADING AND PROSPECTS

The results of Shellproof PLC for the year ended 31 March 2013 have been announced to Shareholders and the report and financial statements are being posted to Shareholders with the admission document. The Company remains at the early stages of its development as an English sparkling wine business and currently owns 13.4 acres of freehold land at Halnaker, West Sussex and holds a further 65.8 acres of other land in West Sussex on long term farm business tenancies. At the end of July 2013 the Company had 9.7 acres of planted vineyards at the Halnaker site, of which 7.7 acres were mature vines, and a further 44.3 acres of vineyards on the long term farm business tenancy sites, which were planted in May 2013. The development of the new vineyards remains in line with expectations and the 2013 grape yield prospects for the mature vineyard at the Halnaker site are currently ahead of original expectations as a result of favourable weather conditions.

The Company has recently recruited additional staff to support its ongoing development activities.

The Gusbourne Estate Business commenced wine sales during the year ended 31 March 2011 and has grown these revenues steadily since then, partly reflecting the increased maturity profile of staged vine plantings from 2004 onwards. Some grapes have been sold but this component of sales has diminished significantly in the last two years and the Enlarged Group plans to use all grapes for its own production purposes. There is a small amount of arable crop income from land at the Freehold Property not currently used for vineyards. Current trading of the Gusbourne Estate Business remains in line with expectations and the 2013 grape yield prospects for the existing Gusbourne vineyards are currently ahead of original expectations as a result of favourable weather conditions.

In evaluating prospects it should be noted that the Enlarged Group's Business is not expected to reach its planned mature production volumes for approximately 11 years. This extended time period reflects:

·     The planting of vines over the next 3 years.

·     The time taken for vines to reach peak grape production of approximately 4 years.

·     The time taken for premier tier sparkling wine production and maturity of approximately 4 years from the time that the vines have reached maturity.

The Directors believe that it will take approximately 6 years for the Company to become cash flow positive and have estimated that the internal rate of return on invested funds will be in the range of 15 per cent to 20 per cent. Some of the key operational assumptions impacting these estimates include grape production yield per acre, the juice yield from those grapes, the product pricing and the retail/wholesale mix. The Directors believe the assumptions they have used are reasonable based on knowledge of similar operations but it should be noted that such comparable data is limited and comes from an industry which is still in the relatively early stages of growth in the UK.

THE BOARD

The Directors and Proposed Directors are as follows:

Benjamin James Walgate BSc, Chief Executive

Since university, Ben's career has been focused on the wine industry. After a summer spent working in vineyards and cellars in Western Europe, Ben returned to England to study Viticulture (grape growing) and Oenology (winemaking) for two years at Plumpton College.

After Plumpton College, Ben ran his own business, involving the importation and sale of rare and unusual wines into the UK. This provided him with direct experience of the wine wholesale and retail market in the UK. Following the disposal of this business, Ben took over the management of one of the UK's oldest vineyards, replanting and rejuvenating 40 plus year old vineyards. The refurbishment of the winery and winemaking procedures increased both quantity and quality of wine produced.

From his time at Plumpton and throughout his career in the wine trade, Ben has developed a network of peers, contacts and organisations, both in the UK wine industry and abroad, that is expected to provide additional support for Ben in his role as Chief Executive and for the Enlarged Group.

Ben advised Shellproof Limited and Shellproof Wines on the establishment of an English sparkling wine business between February 2011 and October 2012 prior to his appointment as Chief Executive Officer of Shellproof PLC.

Andrew Weeber BSc, MB ChB, FCS, Non-Executive Chairman

After graduating from the University of Stellenbosch in 1968 with a BSC in Biochemistry & Physiology, Andrew continued to a Bachelor of Medicine and Surgery. He specialised at the University of Cape Town, and was awarded his FCS in Trauma and Orthopaedic Surgery in 1984.

Andrew went on to pursue a career spanning more than 20 years practising as a consultant orthopaedic surgeon in South Africa and the United Kingdom, whilst simultaneously pursuing his entrepreneurial interests. In 1986 he co-founded, and successfully exited, the 247-bed private Vergelegen Mediclinic Hospital, near Cape Town. In 1988 Andrew's interest in wine and biochemistry led him to acquire a 50% stake in a 7,400 acre Robertson wine estate, a portion of which was planted with wine grapes. He sold the Estate in 1991 and moved to the United Kingdom in 1992.

In the United Kingdom, he developed an orthopaedic unit within the Friarage Hospital in North Yorkshire. He oversaw its growth to a regional specialisation centre, employing 21 surgeons. During this time, Andrew was appointed to the Medical Committee of the Football Association of England. Andrew retired from medicine in 2004 and focused on his personal business interests, primarily the development of the Gusbourne Estate; a project which he had established a year earlier on his 500 acre Estate in Kent. The first vintage was released in 2010 to critical acclaim and received numerous awards. This firmly established Gusbourne Estate's position at the forefront of premium English wine. Andrew is a key opinion leader in the English wine industry, and is closely involved with the English Wine Producers Association.

Andrew has held several board memberships, including 6 years at the 15,000 acre Alpheus Williams & Son Timber Corporation, until its successful acquisition by the SAPP I Group and is currently a director of Paul Wake Service Centre Limited.

Ian George Robinson BA FCA, Non-Executive Director

Ian is currently a director of Anne Street Partners Limited and non-executive director of a number of privately owned businesses. Previously he was Chief Financial Officer of Carlisle Group's UK staffing and facilities services operations.

Ian has held other senior financial appointments in UK service group companies and has spent several years overseas in both chief executive and chief financial officer roles of a quoted international services group.

Andrew Stephen Wilson MA, Non-Executive Director

Andrew is currently Chairman of the Impellam Group plc and a non-executive director of a number of AIM-listed companies, including Dods (Group) plc, Restore plc, Jaywing plc and TLA Worldwide plc. He is also currently a non-executive director of a number of privately owned businesses. Previously he was an investment banker with UBS Warburg specialising in mergers and acquisitions.

Paul Gerald Bentham, Non-Executive Director

Paul is the founder and currently the Non-Executive Chairman of Retail Merchant Group Ltd, having previously been a director. With a background in card payment services and retail banking projects he was the founder and previously the Executive Chairman of Cardsave UK Ltd. He is also engaged in various commercial and residential property projects, including investment-grade office and warehouse sites.

After completion of the Acquisition the executive management team of the Enlarged Group's Business will comprise Ben Walgate as chief executive together with the existing vineyard manager of the Gusbourne Estate Business and existing wine maker employed by Shellproof Wines. The other key roles of sales and marketing and finance will be covered by existing resources available to the Enlarged Group. Andrew Weeber, in his role as chairman, will provide a key role in the further development of the Enlarged Group.

Further information on Board shareholdings is provided below and save as disclosed in that paragraph and above, there is no further information to be disclosed pursuant to schedule 2 (g) of the AIM Rules.

MANAGEMENT AND MANAGEMENT INCENTIVES

The executive management team of the Enlarged Group will initially comprise Ben Walgate as Chief Executive, Jon Pollard as vineyard manager and Charles Holland as winemaker. The finance and sales and marketing functions will continue to be supported for the time being by existing outsourced arrangements.

Brief details of Jon Pollard and Charles Holland are as follows:

Vineyard manager - Jon Pollard

Jon Pollard holds an honours degree in general agriculture from the University of Aberdeen and is also a graduate in wine studies from Plumpton College. He has been at Gusbourne since its first vines were planted in 2004 and has worked closely with AW over the past nine years to establish the vineyards at Gusbourne. Jon will supervise the establishment of the new vineyards in Kent and West Sussex as well as the on-going maintenance of the existing mature vineyards.

The vineyard manager will have a close working relationship with the winemaker, to ensure the quality and consistency of the final product.

Winemaker - Charles Holland

Charles Holland holds a BSc in Viticulture and Oenology from Plumpton College. He has held a number of overseas wine making positions including positions in New Zealand and California and in recent years he has been winemaker at one of England's best known wine producers which has itself won a number of high profile international awards.

The Directors propose to adopt an appropriate long term incentive scheme, which would enable management to acquire up to a maximum 10 per cent. of the issued share capital of the Company (inclusive of this incentive stake), in the form of market price options that would not vest for at least three years and be subject to key performance criteria satisfactory to the Company. Those criteria are expected to include the achievement of an agreed compound annual growth rate in the Company's share price with a linear scale starting at an agreed minimum level of achievement, with the maximum payout based on the agreed high end of the achievement scale.

DIVIDEND POLICY

For the foreseeable future, it is anticipated by the Directors that the Company will not pay dividends but will preserve any surplus cash for business development purposes. This policy will be reviewed on an at least annual basis.

ADMISSION

It is expected that on or about 27 September 2013, Admission will take place and that dealings will commence on that date. The Shellproof PLC Shares are issued in registered form and may be held either in certificated or uncertificated form.

BANK DEBT

Barclays have agreed to lend Shellproof Wines £2,000,000 to fund the Acquisition. The facility is repayable after 5 years, is subject to interest at a rate of 3% above Barclays' base rate and is to be secured by a cross guarantee and debenture to be granted by Shellproof Wines and the Company, a legal charge to be granted by Shellproof Wines and a charge over a cash deposit to be granted by the Company.

RELATED PARTY TRANSACTION

As at 2 September 2013, being the latest practicable date prior to the publication of the admission document, posted to Shareholders today, Lord Ashcroft KCMG PC, a substantial shareholder in Shellproof PLC, was interested in 6,093,617 Shellproof PLC Shares, representing approximately 76.2 per cent of the Existing Ordinary Shares. Due to the extent of Lord Ashcroft's beneficial shareholding in Shellproof PLC, his participation in the Placing is classified as a related party transaction as defined by the AIM Rules. The Directors, having consulted with Cenkos, the Company's nominated adviser, consider that Lord Ashcroft's participation in the Placing is fair and reasonable insofar as Shareholders are concerned.

ENLARGED SHAREHOLDINGS POST ADMISSION

Shareholder	Number of Ordinary Shares in the Enlarged Group	Shareholding as a percentage in the Enlarged Group
Lord Ashcroft KCMG PC	9,798,801	64.4%
Andrew Weeber*	1,944,444	12.8%
Paul Bentham	610,740	4.0%
Ian Robinson	66,442	0.4%
Benjamin Walgate	60,000	0.4%
Andrew Wilson	20,000	0.1%

*Held jointly with his wife, Caroline Mary Weeber.

CORPORATE GOVERNANCE

The Company intends following Admission, so far as is practicable and appropriate for a company of its size and nature, to comply with the provisions of the UK Corporate Governance Code.

The Board is responsible for formulating, reviewing and approving the Enlarged Group's strategy, budgets and corporate actions. The Directors intend to hold meetings of the Board at least 4 times per annum, and at other times as and when required. The Company has established audit and remuneration committees with formally delegated duties and responsibilities.

CHANGES OF NAME

To reflect the proposed changes to the Company as a result of the Acquisition, it is proposed that Shellproof PLC will change its name to Gusbourne PLC pursuant to Resolution 5 in the Notice and Shellproof Wines Limited will change its name to Gusbourne Estate Limited by way of separate written resolution.

ACTION TO BE TAKEN BY SHAREHOLDERS

Enclosed with the admission document, posted to Shareholders today and available on the Company's website www.shellproofplc.com, you will find a form of proxy for use by Shareholders in connection with the General Meeting. Whether or not you intend to be present at the General Meeting, Shareholders are asked to complete, sign and return the form of proxy to the Registrar as soon as possible but in any event so as to arrive no later than 11.30 a.m. on 24 September 2013. The completion and return of a form of proxy will not preclude Shareholders from attending at the General Meeting and voting in person should they wish to do so. Accordingly, whether or not Shareholders intend to attend the General Meeting, they are urged to complete and return the form of proxy as soon as possible.

Shareholders should note that there is a separate form of proxy for use by Shareholders in connection with the AGM. This can be found in the notice of AGM, which is enclosed with the admission document.

IRREVOCABLE UNDERTAKINGS

The Company has received irrevocable undertakings in relation to 6,140,059 Existing Ordinary Shares, representing approximately 76.8% of the Existing Ordinary Shares, to vote in favour of the Resolutions.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Publication of this admission document	3 September 2013
Latest time and date for receipt of completed forms of proxy to be valid at the General Meeting	11.30 a.m. on 24 September 2013
AGM	11.00 am on 26 September 2013
General Meeting	11.30 a.m. on 26 September 2013
Completion of Acquisition and Admission	8.00 a.m. on 27 September 2013
Despatch of definitive share certificates, where applicable	by 11 October 2013

PLACING STATISTICS

Placing Price	54 pence
Number of Shellproof PLC Shares prior to Admission	8,000,003
Number of Placing Shares	5,280,367
Number of Vendor Shares	1,944,444
Enlarged Share Capital on Admission	15,224,814
Market capitalisation of the Company on Admission at the Placing Price	£8.2 million
Gross proceeds of the Placing	£2.85 million
New AIM 'ticker' on Admission	GUS

DEFINITIONS

Acquisition	the acquisition by Shellproof Wines of the Gusbourne Estate Business and Freehold Property pursuant to the Acquisition Agreements;
Acquisition Agreements	(a)  the asset purchase agreement relating to the Gusbourne Estate Business between (1) AW and (2) Shellproof Wines dated 2 September 2013; and (b)  the contract for sale of the Freehold Property between (1) the Vendors and (2) Shellproof Wines dated 2 September  2013;
Admission	admission of all of the Shellproof PLC Shares, the Placing Shares and the Vendor Shares to trading on AIM;
AGM	the annual general meeting of the Company to be held at the offices of Cenkos Securities plc, 6.7.8 Tokenhouse Yard, London EC2R 7AS at 11.00 a.m. on 26 September 2013;
AIM	a market operated by the London Stock Exchange plc;
AIM Rules	the rules of AIM as published by the London Stock Exchange plc from time to time;
AW	Andrew Carl Vincent Weeber;
Bank Debt	the debt to be granted by Barclays to Shellproof Wines;
Barclays	Barclays Bank plc;
Business Day	any day (other than a Saturday or Sunday) on which banks are open in London for normal banking business;
CREST	the relevant system (as defined in the Uncertificated Securities Regulations) for the paperless settlement of share transfers and the holding of shares in uncertificated form in respect of which CRESTCo Limited is the  operator (as defined in those Regulations);
Directors or Board	the directors of Shellproof PLC;
Enlarged Group	the Company and its subsidiaries following completion of the Acquisition and any subsidiaries or businesses it may acquire following Admission;
Enlarged Group's Business	the business of the Enlarged Group;
Enlarged Share Capital	the enlarged share capital of the Company following Admission comprising (i) Existing Ordinary Shares; (ii) the Placing Shares; and (iii) the Vendor Shares;
Existing Business	the business of the Company and its subsidiaries prior to completion of the Acquisition;
Existing Ordinary Shares	the existing share capital of Shellproof PLC comprising 8,000,003 ordinary shares of 50 pence each;
Freehold Property	352 acres of freehold land and buildings including 50.8 acres of mature vineyards as well as over 100 acres of additional land suitable for further vineyards at the Gusbourne Estate, Kennardington Road, Ashford, Kent;
FBT Sites	two fields, comprising approximately 65.9 acres, near Chichester, West Sussex, over each of which the Company has a 50 year farm business tenancy agreement and each of which were planted in May 2013 with 44.3 acres of vines suitable for the production of English sparkling  wine;
General Meeting	the general meeting of the Company to be held after the AGM at the offices of Cenkos Securities plc 6.7.8 Tokenhouse Yard, London EC2R 7AS at 11.30 a.m. on 26 September 2013 in relation to the approval of the Acquisition, authority to allot the Placing Shares and the Vendor Shares, the change of name of the Company and to adopt new articles of association;
Group	Shellproof PLC and its 100% owned subsidiary Shellproof Wines;
Gusbourne Estate	the Gusbourne estate, near Ashford, Kent, from which the Gusbourne Estate Business is operated and of which the Freehold Property forms part;
Gusbourne Estate Business	the grape cultivation wine production and distribution business currently owned by AW including the related Gusbourne brand and goodwill of that business together with all wine stocks and plant and machinery;
Notice	the notice convening the General Meeting, which is set out at the end of the admission document;
Official List	the Official List of the UK Listing Authority;
PB	Paul Gerald Bentham;
Placees	those persons subscribing for or purchasing the Placing Shares in the Placing at the Placing Price;
Placing	the placing by Shellproof PLC of the Placing Shares with Placees;
Placing Price	the issue price of 54 pence for each Placing Share;
Placing Shares	the 5,280,367 Shellproof PLC Shares to be issued pursuant to the Placing;
Proposed Directors	AW and PB;
Resolutions	the resolutions set out in the Notice which is contained at the end of the admission document;
Shareholders	the shareholders of the Company from time to time;
Shellproof PLC or the Company	Shellproof PLC, a company incorporated in England and Wales with registered number 08225727, proposed to be re-named Gusbourne PLC;
Shellproof PLC Shares	ordinary shares of 50 pence each in the capital of Shellproof PLC;
Shellproof Wines	Shellproof Wines Limited, a wholly owned subsidiary of Shellproof PLC being a company incorporated in England and Wales with registered number 07665948, proposed to be re-named Gusbourne Estate Limited;
Vendor Bond	the deep discount bond to be issued to the Vendors pursuant to the terms of the Acquisition;
Vendor Shares	the 1,944,444 Shellproof PLC Shares (with a subscription value of £1,050,000, calculated by reference to the Placing Price) to be issued to the Vendors pursuant to the terms of the Acquisition;
Vendors	AW and Caroline Mary Weeber.

 

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