Firm Placing and Open Offer

RNS Number : 1914D

Science in Sport PLC

23 October 2015

 



23 October 2015

SCIENCE IN SPORT PLC

("SiS" or the "Company")

Firm Placing and Open Offer to raise up to £8.9 million

and Notice of General Meeting

Science in Sport plc (AIM: SIS), a leading sports nutrition company, is pleased to announce a conditional Firm Placing and Open Offer to raise up to £8.9 million before costs through the issue of up to 15,085,481 new Ordinary Shares at the Offer Price of 59 pence per share.

Highlights

·      Oversubscribed Firm Placing of 13,380,911 Ordinary Shares at the Offer Price of 59 pence per Ordinary Share to raise £7.9 million

·      Open Offer for an aggregate of 1,704,570 Offer Shares on the basis of 1 New Ordinary Share for every 15 Existing Ordinary Shares, at 59 pence each to raise up to £1.0 million

·      The Firm Placing and Open Offer, which is subject to shareholder approval, will raise gross proceeds of up to £8.9m

·      The Offer Price of 59 pence per share is equivalent to the Company's closing share price on 22 October 2015, being the last business day before this announcement

·      The net proceeds of the Firm Placing and Open Offer will be used to further accelerate the Company's revenue growth primarily through international expansion and investment in e-commerce

·      International growth plans include the transition to direct marketing through all sales channels in Australia, the world's second largest sports nutrition market, and market entry in the US

·      The Firm Placing and Open Offer are conditional, inter alia, upon Shareholders approving the Resolutions at a General Meeting. A circular containing a Notice of General Meeting will be sent to Shareholders today

Stephen Moon, Science in Sport's CEO, said: "We are delighted by the strong level of support from new and existing investors in this significantly oversubscribed Firm Placing, which has been priced without a discount to yesterday's close. Through the Open Offer, we are giving other shareholders the opportunity to participate in this fundraising, which is focused on further accelerating the Company's revenue growth.

"The net proceeds of the fundraising will allow us to take advantage of the compelling growth opportunities available to us, particularly in the further international expansion of the SiS brand and through further developing our e-commerce platform." 

For further information:

Science in Sport plc	[phone]
Stephen Moon, CEO
Cenkos Securities - NOMAD and Broker	[phone]
Bobbie Hilliam - NOMAD

Oliver Baxendale - Sales

Buchanan	[phone]
Mark Court / Sophie McNulty / Sophie Cowles
[e-mail]

Notes for editors

About Science in Sport plc

Science in Sport plc is a leading sports nutrition company that develops, manufactures and markets sports nutrition products for professional athletes and sports enthusiasts. SiS is a strong brand in the elite athlete community.

The SiS core product ranges include: SiS GO, comprising energy powders, isotonic gels, energy bars and hydration tablets; SiS REGO, including protein-based recovery powders and bars; and SiS Protein, a whey protein range for lean muscle development. SiS products are sold in a range of retail channels, including specialist sport retailers, major grocers, high street retailers and e-commerce websites.

SiS is currently the official sports nutrition supplier to professional cycling teams Team Sky, Team Wiggins, JLT Condor, Madison Genesis, Team Katusha and Trek Factory Racing. SiS is also the official supplier of sports drinks and sports nutrition to the GB Rowing Team. In addition, Olympians Sir Chris Hoy MBE, Mark Cavendish MBE and Helen Jenkins are Elite Sports Consultants and brand ambassadors.

SiS was founded in 1992 and is headquartered in Hatton Garden, London. Its manufacturing facility is in Nelson, Lancashire.

SiS shares are traded on the AIM market of the London Stock Exchange under the ticker symbol SIS.

For further information, please visit www.scienceinsport.com

Introduction

The Company has today announced a conditional Firm Placing to raise £7.9 million by the issue and allotment by the Company of 13,380,911 Ordinary Shares at the Offer Price of 59 pence per Ordinary Share.

In addition, in order to provide Shareholders who have not taken part in the Firm Placing with an opportunity to participate in the proposed issue of new Ordinary Shares, the Company is providing all Qualifying Shareholders with the opportunity to subscribe at the Offer Price for an aggregate of 1,704,570 Offer Shares, to raise up to £1.0 million, on the basis of 1 New Ordinary Share for every 15 Existing Ordinary Shares, at 59 pence each, payable in full on acceptance. The Open Offer provides Qualifying Shareholders with an opportunity to participate in the proposed issue of the New Ordinary Shares on a pre-emptive basis whilst providing the Company with additional capital to invest in the business of the Group.

The Firm Placing and Open Offer have been priced at the closing share price of the Company on 22 October 2015, being the last practicable date before publication of this announcement.

The Firm Placing and Open Offer are conditional, inter alia, upon Shareholders approving the Resolutions at a General Meeting. A circular containing a Notice of General Meeting will be sent to Shareholders today.

Background to and reasons for the Firm Placing and Open Offer

As set out in the Company's unaudited interim results, which were announced on 24 September 2015, SiS reported strong revenue growth for the six months ended 30 June 2015 of 19 per cent. Looking forward, the Board confirmed within the interim results that they expected revenue growth in the second half of the year to continue to be broadly in line with the first half which, due to the planned first half weighting in investment, would enable the Company to report a positive EBITDA for this period.

The revenue growth achieved during the interim period, and that achieved in 2013 and 2014, reflected the Company's continued achievement of the growth ambitions set out at the time of its Admission to AIM in August 2013. Pursuant to those growth ambitions in 2013, the Board had set a target to achieve cash break even and profitability in years four and five of its business plan (being 2016 and 2017). The Board believes that the Company remains well positioned to deliver cash break even and profitability in line with its growth ambitions however it also recognizes the success to date of the SiS brand and the further growth opportunities available to the Group.

Following consultation with key Shareholders and its advisers, the Board has drawn up revised growth ambitions focused on seeking to further accelerate the revenue growth of the Company. The Board believes SiS has multiple growth opportunities in e-commerce, established retail channels and international markets that have yet to be fully exploited.  The Board believes accelerating revenue growth is likely to delay the achievement of profitability but, in the longer term, is likely to lead to greater shareholder value.

The Firm Placing and Open Offer will provide the funding for the Group to further invest in its e-commerce factory fulfilment systems and to sell directly to international markets, specifically Australia and the US.

Use of proceeds

The Company intends to raise £7.9 million before expenses by the conditional Firm Placing and up to a further £1.0 million before expenses under the Open Offer. The expenses for the Transaction are expected to be up to £0.5 million dependent on the proceeds from the Open Offer.

The net proceeds will be used by the Company for the following purposes:

(i)            investment in the Australian market (£1.5 million);

(ii)           general working capital (£1.3 million);

(iii)          investment in e-commerce factory fulfilment (£0.5 million); and

(iv)          the balance towards sales and marketing spend, for instance to accelerate the entry into the US market.

Current Trading and Prospects

As set out in the Company's unaudited interim results, which were announced on 24 September 2015, the Company is experiencing strong growth in online channels and international markets. This growth underpinned an increase in revenue of 19 per cent. for the first six months ended 30 June 2015 and gives the Directors confidence in meeting market expectations for the year.

The timing of the Transaction and the receipt of the net proceeds means the Directors are not changing their outlook for the current financial year. The Directors however expect revenue growth to increase in 2016 and beyond as the Company executes its accelerated revenue growth strategy.

The Firm Placing and Open Offer

Details of the Firm Placing

The Company has conditionally raised £7.9 million before expenses by the conditional Firm Placing of 13,380,911 Firm Placing Shares at the Offer Price to the Firm Placees.

The Firm Placing is conditional, inter alia, upon:

(i)            the passing of all of the Resolutions at the General Meeting;

(ii)           the Firm Placing and Open Offer Agreement becoming or being declared unconditional in all respects and not having been terminated in accordance with its terms prior to Admission; and

(iii)          Admission becoming effective by no later than 8.00 a.m. on 12 November 2015 or such later time and/or date (being no later than 8.00 a.m. on 31 December 2015) as Cenkos Securities and the Company may agree.

If any of the conditions are not satisfied, the Firm Placing Shares will not be issued and all monies received from the Firm Placees will be returned to them (at the Firm Placees' risk and without interest) as soon as possible thereafter.

The Firm Placing Shares are not subject to clawback.

The Firm Placing Shares (and the Offer Shares) will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

The Existing Ordinary Shares are admitted to trading on AIM.  Application will be made to the London Stock Exchange for the Admission of the Firm Placing Shares to trading on AIM. It is expected that Admission will occur and that dealings will commence at 8.00 a.m. on 12 November 2015 at which time it is also expected that the Firm Placing Shares will be enabled for settlement in CREST.

Details of the Open Offer

The Company is proposing to raise up to £1.0 million before expenses. A total of 1,704,570 New Ordinary Shares are available to Qualifying Shareholders pursuant to the Open Offer at the Offer Price, payable in full on acceptance. Any Offer Shares not subscribed for by Qualifying Shareholders will be available to Qualifying Shareholders under the Excess Application Facility. The balance of any Offer Shares not subscribed for under the Excess Application Facility will not be available to Firm Placees under the Firm Placing.

Qualifying Shareholders may apply for Offer Shares under the Open Offer at the Offer Price on the following basis:

1 Offer Share for every 15 Existing Ordinary Shares

and so in proportion for any number of Existing Ordinary Shares held on the Record Date. Entitlements of Qualifying Shareholders will be rounded down to the nearest whole number of Offer Shares. Fractional entitlements which would otherwise arise will not be issued to the Qualifying Shareholders but will be made available under the Excess Application Facility. The Excess Application Facility enables Qualifying Shareholders to apply for Excess Shares in excess of their Open Offer Entitlement. Not all Shareholders will be Qualifying Shareholders. Shareholders who are located in, or are citizens of, or have a registered office in Restricted Jurisdictions will not qualify to participate in the Open Offer.

Valid applications by Qualifying Shareholders will be satisfied in full up to their Open Offer Entitlements as shown on the Application Form. Applicants can apply for less or more than their entitlements under the Open Offer but the Company cannot guarantee that any application for Excess Shares under the Excess Application Facility will be satisfied as this will depend in part on the extent to which other Qualifying Shareholders apply for less than or more than their own Open Offer Entitlements. The Company may satisfy valid applications for Excess Shares of applicants in whole or in part but reserves the right not to satisfy any excess above any Open Offer Entitlement. The Board may scale back applications made in excess of Open Offer Entitlements on such basis as it reasonably considers to be appropriate.

Application has been made for the Offer Shares to be admitted to CREST. It is expected that such Offer Shares will be credited to CREST on 12 November 2015. The Offer Shares will be enabled for settlement in CREST until 11.00 a.m. on 10 November 2015. Applications through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of bona fide market claims. The Offer Shares must be paid in full on application. The latest time and date for receipt of completed Application Forms or CREST applications and payment in respect of the Open Offer is 11.00 a.m. on 10 November 2015. The Open Offer is not being made to certain Overseas Shareholders.

Qualifying Shareholders should note that the Open Offer is not a rights issue and therefore any Offer Shares which are not applied for by Qualifying Shareholders will not be sold in the market for the benefit of the Qualifying Shareholders who do not apply under the Open Offer.

Further details of the Open Offer and the terms and conditions on which it is being made, including the procedure for application and payment, are contained in a circular and an Application Form to be sent to Shareholders today.

The Open Offer is conditional on the Firm Placing becoming or being declared unconditional in all respects and not being terminated before Admission (as the case may be). The principal conditions to the Firm Placing are:

(a)           the passing of all of the Resolutions at the General Meeting;

(b)           the Firm Placing and Open Offer Agreement having become or being declared unconditional in all respects and not having been terminated in accordance with its terms prior to Admission; and

(c)           Admission becoming effective by no later than 8.00 a.m. on 12 November 2015 or such later time and/or date (being no later than 8.00 a.m. on 31 December 2015) as Cenkos Securities and the Company may agree.

Accordingly, if these conditions are not satisfied or waived (where capable of waiver), the Open Offer will not proceed and the Offer Shares will not be issued and all monies received by Equiniti from applicants will be returned to such applicants (at the applicants' risk and without interest) as soon as possible thereafter. Any Open Offer Entitlements admitted to CREST will thereafter be disabled.

The Offer Shares (and the Firm Placing Shares) will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Application will be made to the London Stock Exchange for the admission of the Offer Shares to trading on AIM. It is expected that Admission will occur and that dealings will commence at 8.00 a.m. on 12 November 2015 at which time it is also expected that the Offer Shares will be enabled for settlement in CREST.

Firm Placing and Open Offer Agreement

Pursuant to the Firm Placing and Open Offer Agreement, Cenkos Securities have agreed to use their reasonable endeavours as agent of the Company to procure subscribers for the Firm Placing Shares at the Offer Price. The Firm Placing and Open Offer are not underwritten.

The Firm Placing and Open Offer Agreement provides, inter alia, for payment by the Company to Cenkos Securities of commissions based upon the number of Firm Placing Shares placed by Cenkos Securities and the Open Offer Shares applied for respectively, multiplied by the Offer Price.

The Company will bear all other expenses of and incidental to the Firm Placing and Open Offer, including printing costs, Registrar's and Receiving Agent's fees, all legal and accounting fees of the Company and all stamp duty and other taxes and duties payable.

The Firm Placing and Open Offer Agreement contains certain warranties and indemnities from the Company in favour of Cenkos Securities and is conditional, inter alia, upon:

(a)           Shareholder approval of the Resolutions at the General Meeting;

(b)           the Firm Placing and Open Offer Agreement having become unconditional in all respects (save for the condition relating to Admission) and not having been terminated in accordance with its terms prior to Admission; and

(c)           Admission becoming effective not later than 8.00 a.m. on 12 November 2015 or such later time and/or date as the Company and Cenkos Securities may agree, being not later than 31 December 2015.

Cenkos Securities may terminate the Firm Placing and Open Offer Agreement in certain circumstances, if, inter alia, the Company is in material breach of any of its obligations under the Firm Placing and Open Offer Agreement; if there is a material adverse change in the condition, earnings, business, operations or solvency of the Company; or if there is a material adverse change in the financial, political, economic or stock market conditions, which in their respective reasonable opinion makes it impractical or inadvisable to proceed with the Firm Placing and Open Offer.

Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) Schemes

To comply with European State Aid requirements the legislation that applies to the above schemes is to be amended by the Finance Bill that is currently making its way through Parliament. European State Aid approval has been given for the proposed amendments but HMRC are not able to comment on their application to the Company or its Ordinary Shares until such time as the amended legislation is enacted.

The Company has applied for and obtained provisional advance assurance from HMRC that, ignoring the proposed amendments that HMRC are unable to comment on, the Ordinary Shares should satisfy the requirements for tax relief under EIS and are expected to constitute a qualifying holding for a VCT.

In addition to the proposed changes to the legislation, eligibility is also dependent on a Shareholder's own position and not just that of the Company. The Company does not intend to apply for EIS or VCT relief on the Offer Shares. Shareholders who participate in the Open Offer will not therefore receive tax relief under EIS and/or their holding will not constitute a qualifying holding for a VCT.

Related Party Subscription

Downing LLP, a 21.7 per cent. Shareholder, has agreed to subscribe for 748,333 Placing Shares as part of the Firm Placing, equivalent to £441,516.47. The Placing Shares for which Downing LLP are subscribing, represent 5.6 per cent. of the total number of Placing Shares.

Downing LLP is a Substantial Shareholder under the AIM Rules and therefore the participation of Downing LLP in the Firm Placing constitutes a related party transaction under Rule 13 of the AIM Rules. The Directors consider that, having consulted with Cenkos, the terms of Downing LLP 's participation in the Firm Placing are fair and reasonable insofar as Shareholders are concerned.

Director Subscription

As part of the Placing, Stephen Moon, a director of the Company, has agreed to purchase 254,000 Placing Shares, subject to the passing of the resolutions at the General Meeting. Following this purchase Mr Moon will hold 675,330 Ordinary Shares, which will represent 1.66 per cent. of the Enlarged Share Capital (assuming the Open Offer is fully subscribed).

None of the Directors currently expect to take up their entitlement to subscribe for New Ordinary Shares under the Open Offer.

Transaction Considerations

As set out in the Recommendation section below, the Directors believe the Transaction to be in the best interests of the Company and its Shareholders as a whole. In making this statement the Directors have spent time, and have taken appropriate advice, in considering the Transaction and the method by which the Company will raise the net proceeds. The Directors concluded that a Firm Placing accompanied by an Open Offer was the most appropriate structure to raise funding for the following reasons:

-       the Firm Placing enables the Company to attract a number of new investors to its shareholder register, which the Directors expect will improve liquidity going forward, and also to provide an element of funding certainty within the Transaction; and

-       the Open Offer of up to £1 million enables all Shareholders to participate in the Transaction on the same terms as institutional and new investors but without the time and costs associated with a full pre-emptive offer. A full pre-emptive offer, either via a rights issue or open offer, above £3.67 million (€5 million) would have required the Company to have produced a prospectus which would have taken significant time and cost.

The Offer Price represents the closing mid market price of the Ordinary Shares of the Company on 22 October 2015, being the latest practicable date prior to the publication of this document. The Directors can confirm the Offer Price, and therefore potential dilution for Shareholders, has been a consideration in setting the amount raised as part of the Transaction and the decision to undertake an Open Offer. The Offer Price was established as part of a book building process undertaken by the Company's advisors and also following consultation with certain substantial Shareholders and incoming investors.

General Meeting

The Directors do not currently have authority to allot all of the New Ordinary Shares and, accordingly, the Board is seeking the approval of Shareholders to allot the New Ordinary Shares at the General Meeting.

A notice convening the General Meeting, which is to be held at 4th Floor, 16-18 Hatton Garden, Farringdon, London EC1N 8AT at 10.00 a.m. on 11 November 2015, is set out in a circular sent to Shareholders today and which will be available on the Company's website (www.scienceinsport.com).

Expected Timetable of Principal Events

Record Date for the Open Offer	6.00 p.m. on 21 October 2015
Announcement of the Firm Placing and Open Offer, publication and posting of  this document, the Application Form and Form of Proxy	23 October 2015
Ex-entitlement Date	8.00am on 23 October 2015
Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to stock accounts of Qualifying CREST Shareholders	26 October 2015
Recommended latest time and date for requesting withdrawal of Open Offer Entitlements from CREST	4.30 p.m. on 04 November 2015
Latest time and date for Depositing Open Offer Entitlements in CREST	3.00 p.m. on 05 November 2015
Latest time and date for splitting Application Forms (to satisfy bona fide market claims only)	3.00 p.m. on 06 November 2015
Latest time and date for receipt of completed Forms of Proxy to be valid at the General Meeting	10.00 a.m. on 09 November 2015
Latest time and date for acceptance of the Open Offer and receipt of completed Application Forms and payment in full under the Open Offer or settlement of relevant CREST instructions (if appropriate)	11.00 a.m. on 10 November 2015
General Meeting	10.00 a.m. on 11 November 2015
Announcement of result of General Meeting and Open Offer	11 November 2015
Admission and commencement of dealings in the New Ordinary Shares on AIM	8.00 a.m. on 12 November 2015
Firm Placing Shares and Offer Shares credited to CREST members' accounts	12 November 2015
Despatch of definitive share certificates in certificated form	within 10 business days of Admission

If any of the details contained in the timetable above should change, the revised times and dates will be notified by means of an announcement through a Regulatory Information Service.

Certain of the events in the above timetable are conditional upon, amongst other things, the approval of the Resolutions to be proposed at the General Meeting.

All references are to London time unless stated otherwise.

Key Statistics

Firm Placing Statistics

Number of Existing Ordinary Shares	25,568,545
Number of Firm Placing Shares	13,380,911
Offer Price	59p
Number of Ordinary Shares in issue immediately following the Firm Placing	38,949,456
Percentage of the Enlarged Share Capital represented by the Firm Placing Shares	34.4%
Gross Proceeds of the Firm Placing	Approximately £7.9 million

Open Offer Statistics

Number of Offer Shares	1,704,570
Offer Price	59p
Basis of Open Offer	1 Offer Share for every 15 Existing Ordinary Shares
Gross proceeds from the Open Offer*	up to approximately £1 million
Enlarged Share Capital following the Firm Placing and Open Offer*	up to 40,654,026
Offer Shares as a percentage of the Enlarged Share  Capital *	up to 4.2%
Market Capitalisation of the Company immediately following the Firm Placing and Open Offer*	£24.0 million

* on the assumption that the Open Offer is fully subscribed

Recommendation

The Directors believe that the Firm Placing and Open Offer and the passing of the Resolutions are in the best interests of the Company and Shareholders, taken as a whole. Accordingly the Directors unanimously recommend that Shareholders vote in favour of the Resolutions.

The Firm Placing and Open Offer are conditional, inter alia, upon the passing of the Resolutions at the General Meeting. Shareholders should be aware that if the Resolutions are not approved at the General Meeting, the Firm Placing and Open Offer will not proceed.

Capitalised terms used in this announcement have the meanings given to them in the circular.

 

END

 

 

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