1. business and industrial
2. company
3. merger and acquisition

THIS DOCUMENT AND THE ACCOMPANYING FORM OF PROXY ARE IMPORTANT AND REQUIRE
YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you are
recommended to seek your own personal financial advice immediately from your stockbroker, bank
manager, fund manager, solicitor, accountant or other appropriate independent financial adviser duly
authorised under FSMA if you are resident in the UK or, if not, from another appropriately authorised
independent financial adviser.
If you sell or transfer or have sold or transferred all of your Ordinary Shares, please forward this document, but
not the personalised Form of Proxy enclosed with it, as soon as possible to the purchaser or the transferee or to
the bank, stockbroker or other agent through or to whom the sale or transfer was effected for onward transmission
to the purchaser or transferee. If you sell or transfer or have sold or transferred only part of your holding of Ordinary
Shares, you should retain this document. If you receive this document from another Shareholder or transferee,
please contact the Company’s Registrar for a Form of Proxy.
Any person (including without limitation custodians, nominees and trustees) who may have a contractual or legal
obligation or may otherwise intend to forward this document to any jurisdiction outside the UK should seek appropriate
advice before taking any action. The distribution of this document and any accompanying documents into jurisdictions
other than the UK may be restricted by law. Any person not in the UK into whose possession this document and any
accompanying documents come should inform themselves about and observe any such restrictions. Any failure to
comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
This document comprises a circular relating to the transfer of the Company’s listing category on the Official List
from premium (commercial company) to standard prepared in accordance with the Listing Rules made under
section 73A of FSMA. Subject to the Transfer Resolution being passed, an application will be made to the UKLA
for the category of the Company’s listing of Ordinary Shares to be transferred from premium (commercial company)
listing to standard listing. Following the transfer to standard listing, the Ordinary Shares will continue to be traded
on the London Stock Exchange’s Main Market for listed securities.
Ark Therapeutics Group plc
(Incorporated and registered in England & Wales under the Companies Acts 1985 to 1989 with number 04313987)
Proposed Transfer of listing category on the Official List from premium
(commercial company) to standard
Notice of General Meeting
Approval of Transfer to Standard Listing
Approval of share option plans
Approval of Directors’ remuneration policy
Approval of waiver of Rule 9 of the Takeover Code
Approval of Subscription
Authority to the Directors to allot shares
Waiver of pre-emption rights
Reorganisation of share capital
Amendment to the Articles of Association
Change of name
A notice convening a General Meeting of the Company to be held at 10.30 a.m. on 11 December 2014
at the offices of the Company’s solicitors, Marriott Harrison LLP at 11 Staple Inn, London WC1V 7QH,
is set out at the end of this document.
Your attention is drawn to the letter to Shareholders from the Chairman of the Company, which is set out
in Part I of this document in which the Board unanimously recommends that you vote in favour of the
Resolutions to be proposed at the General Meeting. Please read the whole of this Circular and consider
whether to vote in favour of the Resolutions in light of the information contained in this document.
Enclosed with this document is a Form of Proxy for Shareholders.
If you hold your Ordinary Shares in certificated form, whether or not you intend to be present in person
at the General Meeting, please complete, sign and return the accompanying Form of Proxy in
accordance with the instructions printed on it as soon as possible but, in any event, so as to be
received by the Company’s Registrar by 10.30 a.m. on 9 December 2014.
Capitalised terms have the meanings ascribed to them in Part 10 of this document.
CONTENTS
Page
Contents
2
Important Notice
3
Expected Timetable of Principal Events
4
Part 1 – Letter from the Chairman of Ark Therapeutics Group PLC
5
Part 2 – Summary of the Acquisition and Revised BFSL Loan Arrangements
15
Part 3 – Business overview of PVG
17
Part 4 – Profit estimates
22
Part 5 – Summary of the differences between Standard and Premium Categories of Listing
27
Part 6 – Risk Factors
29
Part 7 – Rule 9 of the City Code on Takeovers and Mergers
35
Part 8 – Directors’ Remuneration Policy
38
Part 9 – General
51
Part 10 – Definitions
56
Notice of General Meeting
59
2
IMPORTANT NOTICE
No person has been authorised to give any information or to make any representations other than as
contained in this document and, if given or made, such information or representations must not be relied on
as having been authorised by the Company or by any Director.
The statements contained in this document are made as at the date of this document, unless some other
time or date is specified in relation to them, and the publication of this document shall not give rise to any
implication that there has been no change in the facts set out herein since such date. Nothing contained in
this document shall be deemed to be a forecast, projection or estimate of the future financial performance
of the Company, except where otherwise stated.
Cautionary notes on forward-looking statements
This document contains forward-looking statements (including, without limitation, in respect of the Acquisition
and the Revised BFSL Loan Arrangements) which are subject to assumptions, risks and uncertainties. The
Company believes that the expectations reflected in these forward-looking statements are reasonable.
However, there can be no assurance that these expectations will prove to have been correct. Since these
statements involve risks and uncertainties, actual results may differ from those expressed or implied by those
forward-looking statements.
The Company does not undertake any obligation to update publicly or revise any forward-looking statement
as a result of new information, future events or other information, other than as required by the Listing Rules,
the Disclosure and Transparency Rules, the rules of the London Stock Exchange or by any other applicable
law or regulation.
Publication on website
A copy of this document will be available on the Company’s website at www.arktherapeutics.com and from
the National Storage Mechanism at www.morningstar.co.uk/uk/NSM from 21 November 2014.
Rounding
Certain figures included in this document have been subjected to rounding adjustments which are
non-material in their effect.
Date of publication
This document is published on 21 November 2014.
3
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
The following timetable sets out the expected dates (some of which are indicative) for implementation of the
Proposed Transfer, the Consolidation and Subdivision, the Acquisition and the Admission:
Time and/or date1
Latest time and date for return of Forms of Proxy for use at the
General Meeting
10.30 a.m. on 9 December 2014
General Meeting
10.30 a.m. on 11 December 2014
Record Date
Close of business on 12 December 2014
Date upon which the Consolidation and Subdivision
become effective
13 December 2014
Date upon which the cancellation of the premium
listing category will become effective
14 January 2015
Expected date of completion of the Acquisition
on or around 20 January 2015
Expected date of publication of the Prospectus
on or around 21 January 2015
CREST accounts credited with New Ordinary Shares
on or around 21 January 2015
Expected date upon which Admission will become effective
on or around 21 January 2015
Share certificates despatched for the New Ordinary Shares
within 14 days of Admission
LR 13.3.1(9)(a)
(1)
All times shown in this document are London times unless otherwise stated. Some dates are indicative only and are subject to
change at the absolute discretion of the Company. If the expected date of the General Meeting or any other key date is changed,
the Company will give notice of this change by issuing an announcement via a Regulatory Information Service.
SUBSCRIPTION STATISTICS
Number of Ordinary Shares in issue at the date of this document
Number of Ordinary Shares in issue following the Consolidation and the Subdivision
209,276,676
2,092,766
Subscription Price
10.1 pence
Number of Subscription Shares
11,859,007
Number of Ordinary Shares in issue following Admission
13,951,773
Number of Subscription Shares as a percentage of the Enlarged Issued Share Capital
85.0
Number of Ordinary Shares held by the Concert Party as a percentage of the Enlarged
Issued Share Capital
69.4
Estimated net proceeds receivable by the Company
£1.2 million
4
Part 1
LETTER FROM THE CHAIRMAN OF ARK THERAPEUTICS GROUP PLC
(Incorporated and registered in England & Wales with registered number 04313987)
Directors
Registered Office
Iain Ross – (Non-Executive Chairman)
Dr David Bloxham – (Non-Executive Director)
Dr David Venables – (Non-Executive Director)
Susan Steven – (Non-Executive Director)
11 Staple Inn
London
WC1V 7QH
21 November 2014
Dear Shareholder,
Proposed transfer of listing category on the Official List from premium
(commercial company) to standard
Notice of General Meeting
Approval of Transfer to Standard Listing
Approval of share option plans
Approval of Directors’ remuneration policy
Approval of waiver of Rule 9 of the Takeover Code
Approval of Subscription
Authority to the Directors to allot shares
Waiver of pre-emption rights
Reorganisation of share capital
Amendment to the Articles of Association
Change of name
1. Introduction
On 28 March 2014 the Company announced that it had signed heads of terms in connection with the
possible acquisition of a revenue-generating UK based company in the healthcare support services sector.
The Board is seeking authority to transfer the Company’s listing category on the Official List. The Company
has today agreed in principle (subject to contract) terms with the majority shareholders to acquire the entire
issued share capital of PVG, a veterinary business operating in a fast growing market. Shareholders will be
asked to vote on the proposed transfer of the Ordinary Shares out of the category of a premium listing
(commercial company) on the Official List and into the category of a standard listing on the Official List, being
conditions of the Subscription and the Revised BFSL Loan Arrangements.
The purpose of this document is to provide Shareholders with information on the Proposed Transfer, the
Additional Proposals and the Acquisition, and to explain why the Directors believe that what is being
proposed is in the best interests of the Company and Shareholders as a whole. Accordingly, the Directors
recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting,
notice of which is set out at the end of this document, as they intend to do, or procure to be done, in respect
of their own holdings.
In addition, the Board is seeking authority to adopt new share option plans for the Enlarged Group, rename
the Company to Premier Veterinary Group plc, obtain authorities to issue shares under the Subscription,
and to undertake the reorganisation of share capital.
2.
Background to and reasons for the Proposed Transfer
The Company, as a premium listed company, is currently subject to the “super-equivalent” provisions of the
Listing Rules. Consequently it is required to seek prior shareholder approval in connection with class 1
5
transactions and reverse takeovers under the Listing Rules. PVG has been a lossmaking business for the
periods set out in paragraph 1.4 of Part 3, and is currently dependent on a loan facility from BFSL, a
company whose sole director and shareholder is Rajan Uppal, a proposed Director of the Enlarged Group.
Further, the historical financial information in respect of PVG is not representative of PVG’s current trading
trends. As a consequence the Enlarged Group would not satisfy the eligibility criteria for a premium listed
company and therefore the Company will not undertake the Acquisition under the UKLA Premium Listing
rules. Shareholders should be aware that as a standard listed company, the “super-equivalent” provisions
of the Listing Rules would not apply to the Company. Therefore, the Company is not required to seek
Shareholder approval for the entry into or completion of the Acquisition and the Revised BFSL
Loan Arrangements.
However, the transfer to a standard listing should enable the Company to respond more quickly to business
opportunities as they present themselves, as well as reducing the costs and administrative burden for the
Company associated with the current requirement for the Company to, amongst other things, classify
transactions, notify Shareholders and/or obtain their consent for certain transactions.
Therefore, and after careful consideration and analysis of the various listing regimes available to the Enlarged
Group, the Board has concluded that a standard listing will be the most appropriate listing category initially
for the Company, and then for the Enlarged Group going forward, not only in relation to facilitating the
Acquisition, complying with the eligibility criteria, but also since it will better align the Enlarged Group’s
regulatory responsibilities given the Enlarged Group’s expected size and the nature of its operations.
Under the Listing Rules, the Proposed Transfer requires the Company to obtain the prior approval of not
less than 75 per cent. of the votes of Shareholders, voting in person or by proxy, at a general meeting.
Therefore, the Transfer Resolution will be proposed as a special resolution.
Pursuant to the Listing Rules, the date of transfer of listing category must not be less than 20 business days
after the passing of the Transfer Resolution. Assuming the Transfer Resolution is duly approved at the General
Meeting, it is anticipated that the date of cancellation will be 14 January 2015. The Ordinary Shares will, on
completion of the Proposed Transfer, continue to be traded on the Main Market, but under the designation
“Listed: Standard”.
If the Transfer Resolution is not passed, the Board will not proceed with the Acquisition and will
commence a voluntary liquidation process in respect of the Company. Following the costs of
such a voluntary liquidation process the Board does not believe that there would be any funds
available to distribute to Shareholders, and therefore that there would be no remaining value in
the Ordinary Shares as the Company currently does not have an operating business.
The Acquisition would constitute a reverse takeover of the Company under the Listing Rules and, since
there is currently insufficient publicly available information regarding the Acquisition, the suspension of trading
in Ordinary Shares will continue following the passing of the Transfer Resolution and completion of the
Proposed Transfer until the Company publishes a prospectus in respect of the Enlarged Group.
As a result of the Acquisition being a reverse takeover, the Company’s listing would be cancelled and the
Company would be required under the Listing Rules to re-apply for admission of its shares to the Official
List (standard segment) and prepare and publish a prospectus in respect of the Enlarged Group. While the
Company intends to seek the UKLA’s approval to admit the Enlarged Group to listing on the standard
segment of the Official List, until the Company has completed the formal application process, satisfied the
UKLA as to its eligibility and received the UKLA’s approval to the publication of a prospectus on the Enlarged
Group, there is no certainty that the UKLA will agree to admit the Enlarged Group to the standard segment.
Completion of the Acquisition, assuming terms and contracts are able to be agreed, is expected to occur
following the cancellation of the Company’s listing on the premium segment, which itself is expected to
occur on 14 January 2015.
Summaries of the proposed terms and conditions of the Acquisition and the Revised BFSL Loan
Arrangements are set out in Part 2 of this document and, summary information on PVG is set out in Part 3
of this document.
6
3.
Subscription for New Ordinary Shares
Conditional upon Admission, BFSL and a small number of other investors have agreed to subscribe in
aggregate for £1.2 million of Subscription Shares at a subscription price of 10.1 pence per Subscription
Share. BFSL has requested that in order to agree to the Revised BFSL Loan Arrangements, I and the CEO
of PVG participate in the Subscription as to £70,456.49 and £267,734.54 respectively.
The monies received from the Subscription will be primarily used as working capital in the Enlarged Group’s
business and, as a result of this investment, Ark Shareholders will own 15 per cent. of the Ordinary Shares
at Admission.
Following the Subscription of 11,859,007 Subscription Shares (following the Consolidation and Subdivision),
the Enlarged Group will have 13,951,773 Ordinary Shares in issue.
4. Consolidation and Subdivision of Ordinary Shares
The Directors wish to see the nominal value of an Ordinary Share increased from 1 penny to 10 pence per
share and to see the Company’s issued ordinary share capital on Admission being 2,092,766 Ordinary
Shares of 10 pence each (excluding the Subscription Shares), which requires the Company’s share capital
to be reorganised. There are currently 209,276,676 Existing Ordinary Shares in issue. The nominal value of
the Existing Ordinary Shares is 1 penny each. Details of this proposed reorganisation are set out immediately
below.
It is proposed that every 100 of the Existing Ordinary Shares of £0.01 be consolidated into 1 share of 100
pence each and then be subdivided into:
●
1 New Ordinary Share of nominal value £0.10; and
●
1 Deferred Share of nominal value £0.90.
The effect of the Consolidation and Subdivision will be to increase the nominal value per Ordinary Share by
a factor of ten to £0.10. This ensures that the Subscription Price of 10.1 pence per share is able to be
implemented against a nominal value per share of 10 pence. The purpose of the issue of the Deferred Shares
is to ensure that the Consolidation and Subdivision does not result in an unlawful reduction of capital of the
Company.
Upon implementation of the Consolidation and Subdivision, Shareholders on the register of members of the
Company at the close of business on the Record Date will exchange 100 Existing Ordinary Shares for 1 New
Ordinary Share and 1 Deferred Share. The proportion of the issued ordinary share capital of the Company
held by each Shareholder at the time of the Consolidation and Subdivision will be unchanged.
The New Ordinary Shares arising on implementation of the Consolidation and Subdivision will have the same
rights and benefits as the Existing Ordinary Shares, including voting, dividend and other rights.
The Deferred Shares will not entitle holders to receive notice of or attend and vote at any general meeting
of the Company or to receive a dividend or other distribution or to participate in any return on capital on a
winding up other than the nominal amount paid on such shares following a substantial distribution to the
holders of Ordinary Shares in the Company. Accordingly, the Deferred Shares will, for all practical purposes,
be valueless and it is the Board’s intention that, at an appropriate time, the Company may repurchase the
Deferred Shares, cancel or seek to surrender the Deferred Shares using such lawful means as the Board
may at such time determine.
The Deferred Shares will not be admitted to trading on any stock exchange.
Fractional Entitlement
Holders of fewer than 100 Ordinary Shares at the Record Date will not be entitled to receive a New Ordinary
Share following the Consolidation and Subdivision and will therefore no longer be shareholders of
the Company.
7
Shareholders with a holding in excess of 100 Ordinary Shares at the Record Date, but which is not exactly
divisible by 100, will have their holding of New Ordinary Shares rounded down to the nearest whole number
of New Ordinary Shares following the Consolidation and Subdivision. Such Shareholders will also be entitled
to a fractional entitlement to a New Ordinary Share.
Any fractional entitlements arising on the Consolidation and Subdivision will be aggregated and sold in the
market on behalf of the Shareholders entitled to the fractions. If the net proceeds of sale are three pounds
(£3.00) or more in respect of any entitled Shareholder, then such proceeds of sale will be paid to the relevant
Shareholder. If such net proceeds amount to less than three pounds (£3.00) for any entitled Shareholder,
they will be retained by the Company as the Company is entitled to do under the Articles. The value of any
Shareholder’s fractional entitlement will not exceed the value of one New Ordinary Share.
Settlement
Assuming that the necessary resolution to approve the Consolidation and Subdivision is passed at the
General Meeting, it is anticipated that CREST accounts for Shareholders who hold their Existing Ordinary
Shares in uncertificated format will be credited with the New Ordinary Shares to which they are entitled on
implementation of the Consolidation and Subdivision on 13 December 2014, or as soon as practicable after
the Consolidation and Subdivision becomes effective.
Where Shareholders hold their Existing Ordinary Shares in certificated format, new share certificates in
respect of the New Ordinary Shares will be produced and sent to Shareholders (at their own risk) within
14 days of Admission.
No Ordinary Share certificates and no Deferred Shares will be issued to CREST accounts. No Deferred
Share certificates will be issued to certificated shareholders of the New Ordinary Shares.
5. Background to and reasons for the Acquisition
On 30 January 2013 the Company announced that, having failed to gain sufficient support for an institutional
fundraising in late 2012/early 2013, it had appointed WG Partners to assist the Company in reviewing and
evaluating a number of strategic options open to the Company to maximise value for Shareholders. These
options included a formal sale process, which was initiated on 30 January 2013.
On 28 February 2013 the Company announced that it had not received any indicative offers pursuant to the
formal sale process. In parallel, the Board had attempted at various points to obtain finance from clients,
direct competitors, banks and via the disposal of non-core product assets. However, all such steps proved
unsuccessful.
On 7 March 2013 Wölbern Private Equity (“WPE”) made a formal offer for the acquisition of the operating
subsidiaries of the Company – Ark Therapeutics Limited, Ark Therapeutics Oy and Lymphatix Oy (the
“Subsidiaries”) (the “Disposal”). This offer was expressly conditional on the UKLA agreeing to apply a waiver
under Listing Rule 10.8 to the Disposal, thereby not requiring the Company to obtain the approval of its
Shareholders for the Disposal as it had no alternative but immediately to dispose of the Subsidiaries in order
to avoid an insolvency process. WPE therefore confirmed to the Board on 10 March 2013 that the
transaction had to be completed on or before 15 March 2013 otherwise its offer would lapse.
On 15 March 2013 the Company made a comprehensive and detailed announcement that it had disposed
of the Subsidiaries having been granted a Listing Rule 10.8 waiver. The Company received £1.335 million
in consideration gross of disposal costs and recognised a profit on disposal of £1.012 million.
On 9 July 2013 the Company announced that it had amicably negotiated and settled a potential dispute
with Crawford Woundcare Limited.
Since the date of the Disposal the Board has ensured that the Company has maintained its London Stock
Exchange listing and met its financial, fiduciary and reporting obligations. During the intervening period the
Board and its advisers have considered a variety of possible ‘reverse’ opportunities and on a number of
occasions it has commenced detailed discussions with potential counterparties. The aim of these discussions
has been to identify a ‘reverse’ opportunity which would provide Ark Shareholders with a meaningful interest
in the resulting enlarged group and ensure some possibility of some upside in Shareholder value.
8
On 28 March 2014 the Company announced it had signed heads of terms in connection with a possible
acquisition of a revenue-generating and profitable UK-based private company in the healthcare support
services sector. The Company confirmed that the transaction would be structured by way of an acquisition
of the target by Ark. Accordingly in response to a request by the Company, the UKLA suspended the listing
of Ark’s premium listed shares on the Official List on 28 March 2014 pending publication of the required
Shareholder documents.
Due to its size in relation to Ark, the proposed acquisition of PVG which is under consideration would
constitute a ‘reverse takeover’ of the Company for the purposes of the Listing Rules.
Your Board considers the acquisition of PVG would provide an opportunity for Ark Shareholders to retain an
interest in what the Directors believe is an exciting business operating in a growing market sector.
6. Transfer to Standard Listing and Corporate Governance following the Proposed Transfer
A standard listing requires the issuer to comply with the harmonised regulatory requirements imposed by
the EU that apply to all securities that are admitted to trading on EU regulated markets. As an issuer with a
standard listing, the Company will remain subject to the Listing Rules (as applicable to a company whose
equity shares have a standard listing), the Prospectus Rules and the Disclosure and Transparency Rules,
however it will not be required to comply with super-equivalent provisions of the Listing Rules which apply
only to companies with a premium listing. Such super-equivalent provisions include:
●
certain continuing obligations set out in Listing Rule 9 such as the Model Code, certain rules regarding
the conduct of rights issues, open offers and placings, certain disclosures in annual financial reports
and certain rules regarding employee share schemes and long-term incentive plans;
●
complying with or explaining against the UK Corporate Governance Code;
●
complying with the requirement to obtain shareholder consent by way of special resolution for the
cancellation of the listing of any of its shares as set out in Listing Rule 5; and
●
complying with provisions in Listing Rules 10, 11 and 12 relating to significant transactions, related
party transactions and dealings in own securities.
The super-equivalent provisions provide Shareholders with the rights to vote on certain corporate actions,
including significant transactions.
Certain administrative requirements associated with the Ordinary Shares having a standard listing will be
simplified as the Listing Rules for securities with a standard listing are less demanding and stringent than
those applicable to securities with a premium listing. In particular, companies with securities admitted to a
standard listing will not normally be required to produce documentation and seek prior shareholder approval
in connection with the acquisition or disposal of assets which exceed certain size criteria and/or involve a
transaction with a related party.
The higher level of regulation contained in the super-equivalent provisions referred to above has been
designed to offer shareholders in premium listed companies additional rights and protections. Accordingly,
investors should be aware that any investment in a company that has a standard listing is likely to carry a
higher risk than an investment in a company with a premium listing. However, following the Proposed
Transfer, the Board currently intends to:
●
continue to apply the Model Code; and
●
continue to comply with the requirements of Listing Rule 12 (which relates to dealings in own securities).
The Board will upon Admission institute corporate governance arrangements which it considers are
appropriate and reasonable for a company of its size and nature.
The transfer to standard listing will not affect the way in which Shareholders are able to buy or sell Ordinary
Shares and, following the transfer, existing share certificates in issue in respect of Ordinary Shares will remain
valid (save where replaced as a result of the Subdivision). As for a company with a premium listing, a
company with a standard listing is still required to have a minimum of 25 per cent. of its shares in public
hands and will continue to be obliged to publish a prospectus when issuing new shares to the public unless
9
such an issue falls within one of the permitted exemptions. Companies with standard listings are also still
required to disclose appropriate information to the market and to comply with the provisions of the Disclosure
and Transparency Rules (to the extent applicable to the Company) including to make notifications of dealings
in shares. They must also prepare annual audited financial reports, half yearly financial reports and interim
management statements to the same standards and within the same timeframe as companies with a
premium listing are required to do.
A more detailed summary of the differences between the regulatory requirements of companies with a
standard listing and those with a premium listing is contained in Part 5 of this document. Following the
Proposed Transfer, the Ordinary Shares will have a standard listing, however they will not be eligible for
inclusion in the UK series of FTSE indices.
It should be noted that as a consequence of the Proposed Transfer, the Company would not be
required to seek Shareholder approval for the Acquisition and the Revised BFSL Loan
Arrangements.
7. Rule 9 of the City Code on Takeovers and Mergers
The Company is registered in England and Wales and Shareholders are protected under the City Code.
Under Rule 9 of the City Code, where any person acquires, whether by a single transaction or a series of
transactions over a period of time, interests in securities which (taken together with securities in which he is
already interested and in which persons acting in concert with him are interested) carry 30 per cent. or more
of the voting rights of a company which is subject to the City Code, that person is normally required by the
Panel to make a general offer to all the remaining shareholders of that company to acquire their shares.
Similarly, when any person individually or a group of persons acting in concert, already holds interests in
securities which in aggregate carry not less than 30 per cent. of the voting rights of such a company but
does not hold shares carrying more than 50 per cent. of such voting rights, that person may not normally
acquire further securities without making a general offer to the shareholders of that company to acquire their
shares. An offer under Rule 9 must be made in cash at the highest price paid by the person required to
make the offer, or any person acting in concert with him, for any interest in shares of the company during
the 12 months prior to the announcement of the offer.
Under the City Code, a concert party arises where persons acting together pursuant to an agreement or
understanding (whether formal or informal and whether or not in writing) co-operate to obtain or consolidate
control of the company. Control means an interest or interests in shares carrying in aggregate 30 per cent.
or more of the voting rights of the company, irrespective of whether the holding or holdings give de facto
control.
8. Concert Party
The members of the Concert Party, further details of whom are set out below, are considered to be a concert
party for the purposes of the City Code and immediately following Admission, as a result of the Subscription,
will be interested, in aggregate, in and will have a maximum controlling position in respect of 69.4 per cent.
of the issued share capital of the Enlarged Group. As set out above, in the absence of the waiver, under the
City Code the Concert Party would be obliged following Admission to make an offer in cash for the entire
issued and to be issued share capital of the Company in which they do not have an interest.
The Concert Party is comprised of three members, being BFSL, Rajan Uppal and Dominic Tonner. As at the
date of this document each of Mr Uppal and Mr Tonner own interests in shares in PVG.
The business address of BFSL and Rajan Uppal is Bybrook House, 1 Cross Bank, Great Easton,
Leicestershire, LE16 8SR and Dominic Tonner is 32-34 Zetland Road, Redland, Bristol, BS6 7AB.
10
The Concert Party set members and their proposed participation in the Subscription, along with their current
shareholdings, are out in the table below:
Name
BFSL*
Rajan Uppal
Dominic Tonner
Number of
Ordinary Shares
Total number
interested in
of Ordinary Shares
before the
interested in
Subscription and
Number of
following
following the Subscription Shares
completion of
Consolidation and
proposed to the Subscription
the Subdivision
be acquired and on Admission
–
60,000
–
6,975,887
–
2,650,837
6,975,887
60,000
2,650,837
Number of
Ordinary Shares
interested in
following
completion of
the Subscription
and on Admission
as a percentage
of the Enlarged
Issued Share
Capital
50.0
0.4
19.0
*BFSL has agreed to transfer to Mr Uppal, immediately following its acquisition of 6,975,887 Subscription
Shares, all its interests in Ordinary Shares (including its 6,975,887 Subscription Shares), for a consideration
of the Subscription Price per Ordinary Share.
Further details of the members of the Concert Party are:
BFSL
BFSL is a private company incorporated and registered in England and Wales with number 08265871. Its
registered office is at Bybrook House, Cross Bank, Great Easton, Leicestershire. Mr Uppal is its sole director
and shareholder. Further information regarding BFSL is referred to in Part 7 of this document.
Rajan Uppal
Rajan Uppal, aged 52, is a Chartered Accountant with significant commercial and corporate finance
experience and has served on the boards of several publicly quoted and private companies across various
business sectors in both executive and non-executive roles. After qualifying as a Chartered Accountant in
1986 he began his career in industry in 1989 as the Chief Financial Officer of a fully quoted European printing
and packaging group, Ferry Pickering Group plc. Following the successful disposal of that company Mr Uppal
joined Quadrant Healthcare plc (Quadrant) as its Chief Financial Officer and was part of the team that floated
Quadrant on the London Stock Exchange. At the time of Quadrant’s disposal to Elan Corporation plc (Elan)
in 2000 Mr Uppal held the position of Finance and Commercial Director and was subsequently appointed as
a Senior Vice President within Elan. Mr Uppal led the management buyout of various companies within Elan
in 2003 and merged these companies with ML Laboratories plc in 2005 to create a new group, Innovata
PLC, where he served as a non-executive director until it was acquired by Vectura Group plc. Mr Uppal also
served as a non-executive director of Oxford BioMedica plc between 2001 and 2006.
Since 2006 Mr Uppal has invested on his own account in various private companies and asset categories
and during this time acquired the core vet practices that are now owned by PVG.
Dominic Tonner
Mr Tonner, aged 57, joined PVG’s board as CEO in July 2007. Since that time revenues have increased from
£2 million to £7.5 million per annum, PVG has completed six acquisitions and integrated the activities
successfully, launched a new business, Premier Veterinary Alliance, to become the second biggest buying
group in the sector and is now transacting business in Republic of Ireland and the Nordic region as well as
the UK. Mr Tonner began his career in 1979 at Lex Service Group after graduating from Strathclyde University
with a BA in Politics & Sociology. He then went on to hold a number of posts in marketing within the transport
industry before moving to Wiggin Teape. Following this he founded his own company within the label and
barcode technology sector which was sold to API Plc. In addition to building new revenue streams, Mr Tonner
has been instrumental in raising capital and developing growth strategies.
11
The Takeover Panel has agreed to waive the obligation of the Concert Party to make a general offer that
would otherwise arise as a result of receiving the New Ordinary Shares pursuant to the Subscription, subject
to the approval of Independent Shareholders, taken on a poll. Accordingly, Resolution 5 is being proposed
at the General Meeting to approve the Waiver and will be taken on a poll of Independent Shareholders
(excluding the members of the Concert Party).
On Admission, the Concert Party will hold more than 50 per cent. of the Company’s voting share capital
and may as a consequence be able to increase its aggregate shareholding in the Company without incurring
any obligation under Rule 9 to make a general offer to the Company’s other Shareholders. Under the
Takeover Code, whilst each member of the Concert Party continues to be treated as acting in concert, each
member will be able to increase further their respective percentage shareholding in the voting rights of the
Company without incurring an obligation under Rule 9 to make a general offer to Shareholders to acquire
the entire issued share capital of the Company. However each individual member of the Concert Party will
not be able to increase its percentage shareholding through or between a Rule 9 threshold, without the
consent of the Panel.
The Concert Party has confirmed to the Board that, save as set out in Part 7 of this document, it is not
presently proposing any other changes to the Board or changes to the employment rights and conditions
of employment of the employees of the Company.
The Concert Party has confirmed that it does not intend to redeploy the Company’s fixed assets. The
Enlarged Group will be run from PVG’s offices in Bristol.
9.
General Meeting
A notice convening the General Meeting, to be held at the offices of the Company’s solicitors, Marriott
Harrison LLP, 11 Staple Inn, London WC1V 7QH at 10.30 a.m. on 11 December 2014, is set out at the end
of this document. At the General Meeting, in order to enable: (i) the move from the premium segment to the
standard listing and (ii) the Directors to effect the Acquisition (assuming that binding terms are agreed) and
to issue the New Ordinary Shares, Resolutions will be proposed, inter alia:
(a)
to approve the cancellation of the Company’s premium listing and to move to a standard listing;
(b)
to approve the terms of the Subscription including the Subscription Price of 10.1 pence per New
Ordinary Share, which represents a discount of more than 10 per cent. to the middle market price of
the Existing Ordinary Shares at close of business on 27 March 2014 (the last trading day prior to the
announcement of the Acquisition) (as if the Consolidation and Subdivision had occurred on that date);
(c)
to grant the Directors authority to allot 11,859,007 New Ordinary Shares in connection with the
Subscription and 1,395,177 additional Ordinary Shares (and rights to subscribe therefor) up to an
aggregate nominal amount of £139,517.70 (representing approximately 10 per cent. of the proposed
enlarged share capital of the Company). This authority will expire on the conclusion of the next annual
general meeting of the Company or on the date 15 months from the date of the resolution whichever is
the earlier, save that the Company may allot relevant securities after this authority ends if the allotment
is made pursuant to an agreement or offer which is made before this authority ends;
(d)
to empower the Directors, to the extent required by law, to allot, pursuant to section 571 of the Act,
the 11,859,007 New Ordinary Shares in connection with the Subscription and 1,395,177 additional
New Ordinary Shares (and rights to subscribe therefor), as if the statutory pre-emption rights in section
561(1) of the Act did not apply to such allotments. This authority will expire on the conclusion of the
next annual general meeting of the Company or on the date 15 months from the date of the resolution,
whichever is the earlier, save that the Company may allot relevant securities after this authority ends if
the allotment is made pursuant to an agreement or offer which is made before this authority ends. This
authority is being sought, to the extent required by law, under section 571 of the Act in order for the
Directors to be able to allot the Subscription Shares and additional New Ordinary Shares other than
strictly pro rata to existing Shareholders;
(e)
to approve the Subdivision of the Existing Ordinary Shares into New Ordinary Shares and
Deferred Shares;
12
(f)
to approve the amendment of the Articles of Association by inserting a new Article 3.1 setting out the
rights attaching to the Deferred Shares created as a result of the Consolidation and Subdivision;
(g)
to approve the waiver on the Concert Party of the obligation to make a mandatory offer under Rule 9;
and
(h)
a special resolution will also be proposed to change the name of the Company from Ark Therapeutics
Group plc to Premier Veterinary Group plc. The proposed name change reflects the Company's
proposed new business model and strategy.
The Directors have no present intention to either allot or issue any Ordinary Shares (and rights to subscribe
therefor) other than the Subscription Shares pursuant to the Subscription.
In addition an ordinary resolution will be proposed to approve the Directors’ Remuneration Policy in the form
set out in Part 8 of this document and to approve the adoption of the 2014 Executive Option Plan and the
2014 EMI Plan.
After accounting for the Subscription Shares the Directors would have authority to allot £139,517.70 nominal
relevant securities (and on a non pre-emptive basis) representing approximately 10 per cent. of the Enlarged
Issued Share Capital.
Save in respect of the issue of the Subscription Shares, the Directors currently have no intention to allot
relevant securities but the Directors believe it to be in the best interests of the Company for the Board to be
granted this authority to enable the Company to take advantage of appropriate opportunities.
10. Action to be taken
You will find enclosed with this document a Form of Proxy for use in connection with the General Meeting
or at any adjournment thereof. Please review the notes available at the end of the Form of Proxy for further
instructions. If you are a Shareholder of the Company, whether or not you intend to be present at the Meeting,
please complete and return the Form of Proxy (in accordance with the instructions set out in that document)
to Capita Asset Services, PXS1, 34 Beckenham Road, Beckenham, BR3 4ZF or submitted electronically
through CREST or via www.capitashareportal.com as soon as possible, but in any event so as to be received
by no later than 10.30 a.m. on 9 December 2014. Completion and return of a signed Form of Proxy will not
prevent you from attending the General Meeting and voting in person, if you so wish. In the case of joint
Shareholders, the vote of the senior of such Shareholders who tenders a vote, whether in person or by
proxy, will be accepted to the exclusion of the votes of the other joint Shareholders and for this purpose
seniority will be determined by the order in which the names stand in the register of members of the
Company in respect of the relevant joint holding.
11. Consequences of the Transfer Resolution not being passed
PVG has been a lossmaking business for the periods set out in paragraph 1.4 of Part 3, and is dependent
on a loan facility from BFSL, a company whose sole director and shareholder is Rajan Uppal, a proposed
director of the Enlarged Group. Further, the historical financial information in respect of PVG is not
representative of PVG’s current trading trends. As a consequence the Enlarged Group would not satisfy the
eligibility criteria for a premium listed company and therefore if the Transfer Resolution is not passed, the
Board will not proceed with seeking to agree binding terms in respect of the Acquisition and will commence
a voluntary liquidation process in respect of the Company. Following the costs of such a voluntary liquidation
process, the Board does not believe that there would be any funds available to distribute to Shareholders
and therefore, there would be no remaining value in the Ordinary Shares as the Company currently does
not have an operating business.
12. Recommendation
The Board, having been so advised by Charles Stanley, considers that the Resolutions are in the best
interests of the Company and its Shareholders as a whole.
Accordingly, the Board unanimously recommends that the Independent Shareholders vote in favour of
Resolution 5 and all Shareholders vote in favour of all of the other Resolutions, as they intend to do (or
13
procure to be done) in respect of Existing Ordinary Shares in which they are interested and over which they
have voting control.
Yours faithfully
Iain Ross
Chairman
Ark Therapeutics Group plc
14
Part 2
SUMMARY OF THE ACQUISITION AND ARRANGEMENTS WITH BFSL
1. Acquisition of PVG
The Company announced today that it has agreed in principle (subject to contract) terms with the majority
shareholders of PVG to acquire the entire share capital of PVG for an aggregate cash consideration of £3,731
which equates to £0.001 per PVG share. The Acquisition would be conditional on, amongst other matters,
the Transfer Resolution being passed and would only complete following the cancellation of the Company’s
admission to the premium segment.
Upon Admission, Iain Ross will remain as Chairman of the Enlarged Group, Dominic Tonner will become
appointed as Chief Executive Officer, Dan Smith will become appointed as Chief Financial Officer and Rajan
Uppal will become appointed as Corporate Development Officer. Sue Steven will step down from the Board
but remain as Company Secretary, and David Bloxham and David Venables will also step down from the Board.
Further information about PVG can be found in Part 3 of this document.
2. Arrangements with BFSL
As part of a re-financing of PVG, on 14 November 2013 BFSL provided a secured loan of £1,312,500 to
PVG out of a total amount of secured debt raised by PVG of £1,750,000. Following various breaches of the
secured loan finance agreements during the early part of 2014, BFSL acquired all of the non-bank secured
and unsecured debt of PVG that was not already owed to it. On 27 March 2014 BFSL demanded payment
of all amounts accrued or outstanding under the secured loan finance agreements. On 25 April 2014 PVG
agreed that the total amount outstanding under the secured loan finance agreements as at 31 March 2014
was £2,144,178 and that in accordance with those agreements default interest of 15 per cent. per annum
was payable. BFSL has not withdrawn its demand and the amounts remain outstanding.
In addition, pursuant to the debt acquisition referred to above, PVG is indebted to BFSL in the sum of
£430,000 under the terms of an unsecured loan note originally issued as a one year note in March 2012.
The amount of £430,000 attracts interest of 12 per cent. per annum and is repayable in full by PVG on
14 November 2014.
PVG currently has net liabilities and has no means of repaying either the secured or unsecured loans to BFSL.
Subject to Admission, BFSL has agreed in principle with Ark (subject to contract) that in consideration of a
payment to it of an arrangement fee of £250,000, the terms of the existing loans amounting to an aggregate
of £2,574,178 owed to BFSL by PVG would be amended as follows:
(a)
the existing secured and unsecured loans to be consolidated into indebtedness guaranteed by all
companies within the Enlarged Group and secured on the assets of the Enlarged Group;
(b)
the term of the Revised BFSL Loan Arrangements to be three years with effect from the date of
Admission (the “Term”);
(c)
the Revised BFSL Loan Arrangements will not be subject to any financial covenants and will only be
subject to limited representations and non-financial warranties;
(d)
the events of default applicable to the Revised BFSL Loan Arrangements to be limited primarily to nonpayment, breach of the limited representations, non-financial warranties and insolvency events;
(e)
during the Term, the Revised BFSL Loan Arrangements to be repayable at any time at the discretion
of PVG;
(f)
the interest rate on the Revised BFSL Loan Arrangements to be fixed at 12 per cent. per annum
payable monthly in arrears and a fee of £400,000 to be payable to BFSL when the Revised BFSL Loan
Arrangements is repaid;
(g)
BFSL has required both its own participation in the Subscription and that of the Enlarged Group’s
proposed Chief Executive Officer Dominic Tonner and Iain Ross as Chairman, as to £267,734.54 and
£70,456.49 respectively.
15
Ark has agreed in principle with BFSL (subject to contract) that if Admission shall not have occurred by
6 February 2015 that BFSL will have the right (but not the obligation) to acquire all shares of PVG that Ark
owns at that date for a cash consideration of £0.001 per PVG Share.
16
Part 3
BUSINESS OVERVIEW OF PVG
1. HISTORY, DEVELOPMENT AND OVERVIEW OF PVG
1.1 Market Overview
PVG operates primarily in the UK small animal veterinary services sector but certain of its operations
cross over into the wider UK small animal pet care market estimated to be worth £5.4 billion in 2012,
which also includes pet food, non-food pet products, grooming services and pet insurance.
Notwithstanding the significant consolidation that has occurred over the last several years the UK small
animal veterinary services sector is highly fragmented. As of 21 February 2014, according to the annual
report of the Royal College of Veterinary Surgeons there were over 5,000 veterinary practices in the
UK with only a minority of these being part of corporate veterinary groups such as CVS Group plc,
Pets at Home Group plc (which now includes both Companion Care and Vets4Pets), MediVet,
Independent Vet Care, VetsNow and Goddards.
CVS and Pets at Home are the two largest veterinary services providers in the UK. The Directors believe
that CVS has approximately 256 surgeries usually trading under local business names. The reported
turnover of CVS for the year ended 30 June 2014 was £142.9 million of which £108.0 million related
to veterinary practices. Pets at Home has approximately 250 veterinary surgeries but by contrast with
CVS operates its surgeries under one of its three corporate brands with a significant number of
surgeries operating from a Pets at Home store.
An increasing, although still relatively small, amount of small animal veterinary services is provided via
a range of pet wellness plans whereby the customer pays an agreed monthly amount (usually via direct
debit) to cover the annual requirements for items such as vaccination, flea and wormer treatments.
These have a number of advantages for both the veterinary services provider and the pet owner
including the ‘bonding’ of pet owners to a particular practice. CVS operates a scheme which it refers
to as “The Healthy Pet Club Loyalty Scheme” and which according to its 2014 Annual report had a
membership of over 162,000 and represented 11.8 per cent. of total CVS revenue in the 12 months
to 30 June 2014. Pets at Home offer two different pet care plans, Complete Care and Vac4Life and
also operate a VIP Club that it claims improves knowledge of its customers.
Wellness plans are also administered by third parties on behalf of veterinary practices. The Directors
believe that the largest third party administrator is a private company called “The Animal Healthcare
Company Limited”. On 1 April 2014 Denplan (owned by Simplyhealth) announced the acquisition of
another private third party administrator, Practice Plan for Vets, which it claims will strengthen its position
in the pet health plans market place. As of 1 April 2014 it is believed that following the acquisition of
Practice Plan for Vets Simplyhealth provided plans for approximately 100,000 pets.
The Directors consider that there is space in the market for a range of veterinary service offerings
ranging from independent veterinary practices to in store nationally branded practices. PVG’s
15 surgeries are branded individually in corporate colours and seek to appeal to the local communities
in which they operate by offering high and consistent standards of clinical care with continuity of
veterinary surgeons and nursing staff. The turnover in veterinary and nursing staff across PVG is 17.0
per cent. and 27 per cent. respectively. PVG also administers a small animal wellness plan, branded
Pet Care Plan, both for its own surgeries and for third party surgeries. The Directors believe that it is
the only veterinary service provider that administers a wellness plan for third party surgeries and that
the first hand knowledge of running Pet Care Plan within its own veterinary surgeries provides it with
a significant advantage over other third party providers.
The fragmented nature of the veterinary services sector has resulted in the establishment of a number
of buying groups such as St Francis, Vetswest and Vetshare. PVG with its knowledge of the sector
gained by running and owning its own surgeries established a veterinary buying group in 2010 and
the Directors believe that it is now the second largest veterinary buying group in the UK with over
300 member practices as at 31 March 2014. More recently in August 2013 CVS established a buying
group, MiVetClub, which attracted two members by 30 June 2014.
17
1.2 History
PVG was incorporated as Willoughby (560) Limited on 19 March 2007 and was specifically formed as
a management buy in led by Dominic Tonner as the Chief Executive Officer to acquire 100 per cent. of
the share capital of Zetland Limited and Thanet One Limited. The initial equity investment of £1.2 million
was made by several high net worth individuals.
Zetland Limited and Thanet One Limited were incorporated on 20 September 2006 to acquire nine
veterinary surgeries based in Bristol (Zetland Veterinary Group) and Kent (Thanet Veterinary Group)
from the administrators of a failed veterinary consolidator (VPI) (the remaining veterinary surgeries
operated by VPI were acquired by CVS). Rajan Uppal provided the finance for Zetland Limited and
Thanet One Limited and at the time of the acquisition by PVG on 27 June 2007 owned 83.87 per cent.
of the share capital of those companies. An element of the consideration received by Mr Uppal was
shares in PVG such that on completion of the acquisitions Mr Uppal owned 13.92 per cent. of the
issued share capital of PVG but played no part in the management of the enlarged group until he was
subsequently appointed a director of PVG in 2013.
The veterinary surgeries acquired by PVG had experienced several changes in ownership within a
relatively short time scale, had been poorly managed and had received limited investment in equipment
and infrastructure. It nonetheless represented an opportunity that could be used as a platform to
participate in the consolidation of the highly fragmented veterinary services sector. The objective was
to restructure the surgeries to form a commercially led high-end veterinary group with increased revenue
through organic growth and acquisitions. Following the acquisition of two practices in Bristol during
2009 and 2012, a practice in Cheltenham during 2012, two practices in the West Midlands during
2011 and a practice in Telford during 2012, PVG now operates fifteen veterinary surgeries trading
under local business names but with common branding and pricing and integrated management,
communication and administration systems.
Andrew Taylor, who has operated within the veterinary sector for more than 10 years, joined PVG in
April 2010 principally to explore commercial opportunities of providing products and services to third
party veterinary surgeries.
Daniel Smith, a Chartered Accountant, was appointed as PVG’s Financial Controller and Company
Secretary in September 2013 and following the identification by Mr Smith of an accounting error later
that year, the finance function was strengthened and two existing shareholders, including Mr Uppal,
were appointed to the board of PVG following equity subscriptions by them of £75,000 and £375,000
respectively and the provision of loan finance by them (or, in the case of Mr Uppal, by Bybrook Finance
Solutions Limited, a company of which Mr Uppal is the sole shareholder and director) of £0.45 million
and £1.75 million respectively. The then Chairman of PVG also made an equity investment totalling
£0.043 million at that time. Following various breaches of the secured loan finance agreements during
the early part of 2014, BFSL acquired all of the non-bank secured and unsecured debt of PVG that
was not already owed to it. On 27 March 2014 BFSL demanded payment of all amounts accrued or
outstanding under the secured loan finance agreements. On 25 April 2014 PVG agreed that the total
amount outstanding under the secured loan finance agreements as at 31 March 2014 was £2,144,178
and that in accordance with those agreements default interest of 15 per cent. per annum was payable.
BFSL has not withdrawn its demand and the amounts remain outstanding.
The transactions contemplated by this document (which remains subject to contract) provide a solution
to the continuing breach by PVG of the loan finance agreements.
Mr Uppal and his wife acquired further shares of PVG and subsequently Mrs Uppal transferred all of
her own shares to Mr Uppal who now owns 72.6 per cent. of the issued share capital of PVG.
1.3 Business Overview and Development
PVG comprises two distinct but complementary businesses:
Veterinary Practices
PVG, through its subsidiary companies Zetland Limited, Thanet One Limited, Bearwood Limited and
WVS Limited operates 15 veterinary clinics and hospitals offering first opinion veterinary care in the
18
small animal companion care sector. 137 people are employed at the practices (including 30 veterinary
surgeons) with a further 11 employees based at a small central facility in Bristol. The clinics and
hospitals are based in the Bristol area (including Cheltenham) (Zetland Veterinary Group), North Kent
(Thanet Veterinary Group), West Midlands and Shropshire. Zetland Veterinary Group and Thanet
Veterinary Group comprise 12 of the facilities and accounted for £4.69 million of turnover representing
85.2 per cent. of the turnover generated by PVG’s veterinary practices for the year ended 30 September
2013.
Zetland Veterinary Group – is a cluster of practices based mainly in the central and north-west area
of Bristol but also includes a practice based in Cheltenham. It comprises a veterinary hospital on
Zetland Road in one of the prime residential areas in the centre of Bristol and eight feeder branches,
employing 90 people, including 20 vets. The group operates its own out of hours service with dedicated
night vets and nurses which enables it to cover out of hours service for a number of other local
veterinary clinics. The group performs all common surgical procedures at seven of the nine premises
and has digital x-ray and ultrasound facilities at six of them. Complex surgical and diagnostic
procedures, including laparoscopic surgery are referred back to the hospital on Zetland Road, which
also has its own internal laboratory. Revenues at Zetland have increased from £1.9 million for the year
ended 30 September 2007 to £3.6 million for the year ended 30 September 2013, an 89 per cent.
increase. The like for like increase excluding acquisitions over this period was from £1.9 million to
£2.8 million representing a compound annual growth of 6.7 per cent. compared to a compound annual
growth of 2.6 per cent. for veterinary services within the UK for the period 2008 to 2012.
Thanet Veterinary Group – is a group of practices based on the north Kent coast, consisting of a
main animal hospital in Margate and two feeder branches in Birchington and Westgate, employing
22 people including four vets. All surgery and diagnostic procedures are performed at the animal
hospital, which is equipped with digital x-ray, ultrasound and internal laboratory facilities. The
development of a pet grooming business has enhanced the range of services offered to clients and
contributed to driving revenue from £0.722 million for the year ended 30 September 2007 to
£1.04 million for the year ended 30 September 2013, an increase of 44 per cent. representing a
compound annual growth of 6.3 per cent. compared to a compound annual growth of 2.6 per cent.
for veterinary services within the UK for the period 2008 to 2012. There have been no acquisitions
within the Thanet Veterinary Group over this period.
The introduction of PVG’s own small animal wellness plan (branded by PVG as “Pet Care Plan”), a
monthly payment plan serving the annual requirements for vaccination, flea and wormer treatments,
has contributed to the increase in turnover with a significant increase in the number of pets covered
from 120 in 2007 (when the scheme was operated by a third party provider) to 6,174 as at
30 September 2013 (6,573 as at 31 March 2014) and has had a positive impact on PVG’s veterinary
practices by offering the following advantages:
●
increased compliance on vaccines, flea and worm treatments which improves clinical standards;
●
increased footfall and bonding clients to the practice; and
●
providing greater certainty of cashflow.
These plans generated revenues of £0.868 million in the year ended 30 September 2013 which account
for 15.5 per cent. of total turnover generated by PVG’s veterinary practices for the year ended
30 September 2013.
Veterinary Practice Services
Premier Vet Alliance Limited (“PVA”) – PVA was established as a wholly owned subsidiary of PVG
in 2010 to provide a range of products and services to third party veterinary practices in the UK. PVA
operates from a central facility in Bristol and has 11 employees. It has achieved rapid growth and
generated turnover of £1.9 million for the year ended 30 September 2013.
The two principal activities of PVA are the operation of a buying group (the “PVA Buying Group”) and
the rollout of Pet Care Plan to third party practices following its successful introduction within PVG’s
own practices.
19
The PVA buying group was launched in 2010 and offers enhanced discounts to member practices.
These discounts are negotiated by PVA which retains a percentage of the discounts as a management
fee. The PVA buying group is the second largest buying group in the UK and had over 300 member
practices as at 31 March 2014 with annual spend on veterinary products by buying group members
of approximately £29.9 million for the 12 months to 31 March 2014.
PVA commenced the rollout of Pet Care Plan to third party practices during 2011 and was able to
demonstrate its effectiveness and advantages to those third parties by using data generated from and
methods employed within PVG’s own practices. Pet Care Plan operated on behalf of third party
practices covered 26,312 pets as at 30 September 2013 (32,843 pets as at 31 March 2014) and
generated revenues for PVA of £0.347 million for the year ended 30 September 2013.
More recently PVA has expanded its activities outside of the UK by establishing a presence in the
Republic of Ireland and entering into arrangements with a Swedish company with veterinary practices
based in the Nordic region.
1.4 Financial performance of the PVG Group
The financial performance of PVG and its two operating segments for the three years ended
30 September 2013 and six months ended 31 March 2014 will be included in the prospectus which
will be published in respect of Admission to the standard listing. Below is a summary table of financial
information for the PVG Group for the three years ended 30 September 2013:
Year ended 30 September
2013
2012
2011
£’000
£’000
£’000
IFRS
IFRS
IFRS
(unaudited)
(unaudited) (unaudited)
Revenue and other income
Gross profit
Operating loss
Loss for period
Cash resource at period end
7,437
4,328
(491)
(661)
83
5,692
3,171
(687)
(873)
264
4,071
2,001
(917)
(856)
42
Revenues from both business segments have increased significantly resulting in total revenues
increasing from £4,071,000 for the year ended 30 September 2011 to £7,437,000 for the year ended
30 September 2013.
Total gross profit contribution from both business segments has increased over the period although
there has been a decline in the gross profit percentage generated from PVG’s own veterinary practices.
Administrative expenses have increased over the three year period to 30 September 2013 due largely
to the increased activity within the PVG Group including the establishment of the PVA business. The
management of PVG has implemented a cost reduction programme.
Notwithstanding the significant costs involved in growing the business, losses from operations have
reduced from £917,000 in the year ended 30 September 2011 to £491,000 in the year ended
30 September 2013.
1.5 Current trading and prospects of the PVG Group
The restructuring and cost reduction programme implemented in early 2014 has had a positive effect
on the business.
Revenues from veterinary practices have increased and there has been increased activity within PVA
in relation to the number of pets covered by Pet Care Plan at third party practices which increased to
36,333 as at 30 June 2014 representing an increase of 38.1 per cent. compared to the number at
20
30 September 2013. Gross margins within the veterinary practices have continued to show an
improvement compared to the position reported for the year ended 30 September 2013.
The infrastructure in most of the practices is considered to be in a satisfactory condition with limited
capital expenditure required other than in respect of the veterinary hospital in Zetland Road where a
commitment has recently been made to refurbish these facilities at a cost of approximately £250,000.
1.6 PVG’s strengths
The Directors believe that PVG has a number of key strengths which will allow it to continue its revenue
growth and to take advantage of current and future market opportunities.
●
PVG has an established management team who have a track record of growing revenues from
veterinary surgeries and identifying further ancillary high value opportunities within the veterinary
sector.
●
The surgeries operated by PVG are generally well-invested businesses with a stable clinical staff
base. A large percentage of the revenues across all surgeries are contracted through PVG’s own
small animal wellness plan, Pet Care Plan.
●
PVG has extended its reach through the formation of Premier Vet Alliance which has established
commercial agreements with over 400 third party practices as at 31 March 2014.
1.7 Proposed Strategy
The Enlarged Group would adopt the PVG strategy as follows:
●
increase turnover in its veterinary business by a combination of generating organic growth in its
existing practices and establishing a wider footprint;
●
leverage the success of PVA; and
●
develop other new opportunities for growth.
Increase activity in its veterinary business
The Directors believe that by continuing to focus on the provision of high quality veterinary care serving
the local communities in which it operates and by continuing to invest in its practices it will be able to
continue to increase turnover from existing veterinary practices. However any such increase is likely to
be limited to low single digit compound growth as most of the practices are operating at or near
capacity. In order to achieve more significant growth in turnover and subject to the availability of
additional finance, consideration will be given to:
●
acquiring or opening feeder branches that have the ability to support Zetland Veterinary Group
and Thanet Veterinary Group; and
●
acquiring or opening new practices in discrete geographical areas where those new practices
have the ability to generate at least £1 million of turnover.
Leverage the success of PVA
PVA has been extremely successful since it was formed in 2010 and, as at 31 March 2014, has
established commercial agreements with over 400 practices within the UK in less than 4 years. PVA
will seek to strengthen its relationships with those existing practices and to gain relationships with
additional practices by enhancing and expanding the services that it currently offers. In order to further
strengthen these relationships PVA will, subject to the availability of finance, consider acquiring equity
stakes in third party veterinary practices in circumstances where it is believed that PVA can enhance
the profitability of that practice particularly by the introduction of additional PVA products and services.
PVA will seek to continue to expand its provision of services outside of the UK.
21
Part 4
PROFIT ESTIMATES
1. Basis of Preparation of Financial Information
The IFRS summary financial information for PVG included in this document has been based on the audited
UK GAAP consolidated accounts for the years ended 30 September 2011 and 30 September 2012, and
the unaudited UK GAAP consolidated management accounts for the year ended 30 September 2013. The
unaudited nature of the financial information constitutes a profit estimate under and for the purposes of
Rule 28 of the City Code on Takeovers and Mergers.
The following principals have been made in arriving at these estimates:
●
The IFRS summary financial information has been prepared on a basis consistent with PVG Group’s
accounting policies as adjusted by the International Financial Reporting Standards as adopted by the
European Union (“IFRS”) which are to be adopted by the PVG Group post the Acquisition.
●
Review of intangible assets has been completed highlighting customer lists from past acquisitions as
the only separately identifiable intangible assets.
●
Goodwill has been reviewed for impairment at the end of each accounting period.
●
There are no changes in circumstances from those known at the date of circulation that would impair
the value of Intangible assets.
●
Standard period end financial procedures and reviews for the year ended 30 September 2013 have
been consistent with the year ended 30 September 2012.
22
2.
Report from Grant Thornton
Ark Therapeutics Group plc
11 Staple Inn
London
WC1V 7QH
Transaction Advisory Services
Grant Thornton UK LLP
101 Cambridge Science Park
Milton Road
Cambridge CB4 0FY
T +44 (0)1223 225600
F +44 (0)1223 225619
www.grant-thornton.co.uk
21 November 2014
Dear Sirs
Premier Veterinary Group Limited – Report On Profit Estimate
We report on the profit estimate comprising revenue and other income, gross profit, operating loss, loss for
the period and cash resource at period end of Premier Veterinary Group Limited (“the Company”) and its
subsidiaries (together “the PVG Group”) for the three years ended 30 September 2013 (the “Profit
Estimate”). The Profit Estimate and the basis on which it is prepared is set out in sections 1.2 to 1.5 of
Part 3 and section 1 of Part 4 of the circular concerning the proposed transfer of listing category on the
Official List from premium to standard (“the Circular”) issued by Ark Therapeutics Group plc (“Ark”) dated
21 November 2014.
This report is required by Rule 28.1 of the City Code on Takeovers and Mergers and is given for the purpose
of complying with that regulation and for no other purpose.
Responsibilities
It is the responsibility of the Directors of Ark to prepare the Profit Estimate in accordance with the
requirements of the City Code on Takeovers and Mergers. In preparing the Profit Estimate the Directors of
Ark are responsible for correcting errors that they have identified which may have arisen in unaudited financial
results used as the basis of preparation of the Profit Estimate.
It is our responsibility to form an opinion as required by the City Code on Takeovers and Mergers as to the
proper compilation of the Profit Estimate and to report that opinion to you.
Basis of preparation of the Profit Estimate
The Profit Estimate has been prepared on the basis stated in section 1.2 to 1.5 of Part 3 and section 1 of
Part 4 of the Circular and is based on the unaudited financial results for the three years ended 30 September
2013. The Profit Estimate is required to be presented on a basis consistent with PVG Group’s accounting
policies as adjusted by the International Financial Reporting Standards as adopted by the European Union
(“IFRS”) which are to be adopted by the PVG Group post Acquisition.
Basis of Opinion
We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing
Practices Board in the United Kingdom. Our work included evaluating the basis on which the historical
financial information for the three years ended 30 September 2013 have been prepared and considering
whether that the Profit Estimate has been accurately computed using that information and consistent with
23
PVG Group’s accounting policies as adjusted by IFRS which are to be adopted by the PVG Group
post Acquisition.
We planned and performed our work so as to obtain the information and explanations we considered
necessary in order to provide us with reasonable assurance that the Profit Estimate has been properly
compiled on the basis stated.
However, the Profit Estimate has not been audited. The actual results reported may be affected by required
revisions to accounting estimates due to changes in circumstances or the impact of unforeseen events and
the correction of errors in the historical financial information. Consequently we can express no opinion as to
whether the actual results achieved will correspond to those shown in the Profit Estimate and differences
may be material.
Opinion
In our opinion, the Profit Estimate has been properly compiled on the basis stated and the basis of
accounting used is consistent with PVG Group's accounting policies as adjusted by IFRS which are to be
adopted by the PVG Group post Acquisition.
Yours faithfully
GRANT THORNTON UK LLP
24
3.
Report from Charles Stanley
The Directors
Ark Therapeutics Group plc
11 Staple Inn
London
WC1V 7QH
21 November 2014
Dear Sirs,
We refer to the unaudited financial results for the three financial years to 30 September 2013 for Premier
Veterinary Group Limited (“PVG”) comprising revenue and other income, gross profit, operating loss, loss
for the period and cash resources together with the basis and assumptions upon which they have been
prepared as set out in the circular concerning the proposed transfer of listing category on the Official List
from premium to standard (the “Circular”) issued by Ark Therapeutics Group plc (“Ark”) on
21 November 2014 (the “Profit Estimate”). The unaudited nature of the financial information constitutes a
profit estimate under the City Code on Takeovers and Mergers.
We have discussed with you as Directors of Ark the Profit Estimate together with the assumptions and the
basis upon which it has been prepared by PVG, and you have confirmed to us that all information relevant
to the Profit Estimate has been disclosed to us. We have relied upon the accuracy and completeness of all
such financial and other information discussed with us and assumed such accuracy and completeness for
the purposes of providing this letter. We have also discussed the accounting policies and basis of calculation
for the Profit Estimate with Grant Thornton UK LLP, Ark’s reporting accountants, and we have considered
their letter of today's date addressed to yourselves on this matter.
On the basis of all of the foregoing, we consider that the Profit Estimate, for which you as Directors of Ark
are solely responsible, has been compiled with due care and consideration.
This letter is provided to you solely in connection with Rule 28.1(a)(ii) of the City Code on Takeovers and
Mergers and for no other purpose. Accordingly, save for any responsibility which we may have to the
shareholders of Ark and to those persons to whom this letter is expressly addressed, to the fullest extent
permitted by law we do not assume any responsibility and will not accept any liability to any other person
for any loss suffered by any such other person as a result of, or in connection with this letter.
Yours faithfully
For and on behalf of
Charles Stanley & Co. Limited
Charles Stanley is a division of Charles Stanley & Co. Ltd.
Charles Stanley & Co. Ltd. is incorporated in England No. 1903304.
Member of the London Stock Exchange. Authorised and
Regulated by the Financial Conduct Authority.
Registered Office: 25 Luke Street, London EC2A 4AR.
25
Develop other new opportunities for growth
The UK small animal pet care market was estimated to be worth £5.4 billion in 2012 and it is estimated
that this will grow to £6.7 billion by 2017. Notwithstanding the significant consolidation that has taken
place the market is still fragmented and the Directors believe that by adopting an opportunistic and
entrepreneurial approach PVG will be in a position to identify and exploit new opportunities for growth.
26
Part 5
SUMMARY OF THE DIFFERENCES BETWEEN STANDARD AND PREMIUM
CATEGORIES OF LISTING
1
Companies with a standard listing are not eligible for inclusion in the UK series of FTSE indices.
2
Companies with a standard listing are not required to comply with the Premium Listing Principles in
Listing Rule 7.2.1A R.
3
Companies with a standard listing are not required to retain a sponsor for certain transactions.
4
Companies with a standard listing are not required to carry on an independent business as their
main activity.
5
Companies with a standard listing and a controlling shareholder are not required to have in place (i) a
written and binding agreement which is intended to ensure that the controlling shareholder complies
with the independent provisions set out in Listing Rule 6.1.4D R, and (ii) a constitution that allows the
election and re-election of independent directors to be conducted in accordance with the election
provisions set out in Listing Rules 9.2.2.E R and 9.2.2F R.
6
The UK Corporate Governance Code does not apply directly to companies with a standard listing.
However, pursuant to paragraph 7.2 of the Disclosure and Transparency Rules, companies with a
standard listing are still required to make a statement in the directors’ report covering the governance
code to which the issuer is subject in relation to the financial reporting process and certain details of
its share capital. The directors of companies with a standard listing are also required to include a
description of the internal control and risk management systems and the composition of committees.
However, the Company will consider the appropriate corporate governance requirements it should
comply with following the Proposed Transfer and will, nevertheless, comply with such requirements
set out in DTR 7.2.
7
The Model Code on share dealing does not apply to a company with a standard listing. However, the
Directors intend to continue to apply the Model Code once the transfer to the standard listing has
become effective.
8
A standard listing does not require a company to offer pre-emption rights pursuant to the Listing Rules.
The Company is of course subject to the pre-emption obligations contained in the Companies Act
2006 (subject to the Board’s power to allot shares as approved by Shareholders from time to time).
9
A standard listing does not require a company to comply with the provisions of Listing Rule 10 which
sets out requirements for shareholders to be notified of certain transactions and to have the opportunity
to vote on proposed significant transactions. Shareholders should be aware that the Company would,
following the transfer to a standard listing, be able to undertake significant transactions without
Shareholder approval.
10
A standard listing does not require a company to comply with Listing Rule 11 which contains rules
intended to prevent a related party from taking advantage of its position in respect of transactions with
the listed company.
11
Companies with a standard listing are not required to comply with Listing Rule 12 which applies to
companies dealing in their own securities. However, the Directors intend to comply with Listing Rule
12 (on a voluntary basis).
12
A company with a standard listing is not required to comply with the more onerous requirements relating
to the content of circulars issued to shareholders of companies with a premium listing as detailed in
Listing Rule 13.
13
Companies with a standard listing are not required to limit the number of shares pursuant to
warrants/options (excluding employee shares schemes) to 20 per cent. of existing issued shares.
27
14
Companies with a standard listing are not required to obtain the approval of shareholders by way of a
special resolution for the cancellation of the listing of any of their shares.
Shareholders should note that where the Company has agreed voluntarily to comply with certain obligations
applicable to premium listed companies the FCA will not have the authority to, and will not, monitor the
Company’s voluntary compliance, nor impose sanctions in respect of any failure by the Company to comply.
28
Part 6
RISK FACTORS
Shareholders should carefully consider the risks and uncertainties set out in this Part 6 of this document
when deciding whether or not to vote in favour of the Resolutions and analysing the possible impact of the
Proposed Transfer and the Acquisition on the Company’s business.
The following risks and uncertainties are not exhaustive and do not purport to be a complete explanation of
all the risks involved. The risks and uncertainties set out below are those which the Board believes are the
material risks specific to the Company, the Proposed Transfer and/or the Acquisition. Additional risks and
uncertainties relating to the Company, the Proposed Transfer and/or the Acquisition which are not known
to the Board as at the date of this document, or that the Board currently deem immaterial, may also have
a material adverse effect on the Company, the Proposed Transfer and/or the Acquisition if they materialise.
If any or a combination of the following risks and uncertainties actually materialise, the Proposed Transfer
and/or the Acquisition could be materially and adversely affected.
These risks and uncertainties should be read in conjunction with all other information contained in this
document.
A. RISK ASSOCIATED WITH THE PROPOSED TRANSFER RESOLUTION BEING REJECTED
If the Transfer Resolution is not passed, the Company would retain its premium listing but the
Board will not proceed with seeking to conclude agreement in respect of the Acquisition and will
commence a voluntary liquidation process in respect of the Company. Following the costs of
such a voluntary liquidation process, the Board does not believe that there would be any funds
available to distribute to Shareholders or that there would be any remaining value in the Ordinary
Shares as the Company currently does not have an operating business.
B.
RISKS RELATING TO THE ENLARGED GROUP’S BUSINESS
(i)
A decline in consumer spending or a change in consumer preferences could reduce the
Enlarged Group’s sales or profitability and harm the Enlarged Group’s business.
PVG’s sales depend on consumer spending, which is influenced by factors beyond PVG’s control, including
general economic conditions in the UK, general global macroeconomic conditions, gross domestic product,
employment levels, the availability of discretionary income and credit to consumers, consumer confidence,
tax or interest rate fluctuations, fuel and other energy costs, pet healthcare costs, weather and
unemployment levels. Global or national political unrest or uncertainty may impact the price paid by
consumers for goods, services and commodities, reduce consumer spending and confidence and reduce
the Enlarged Group’s sales or profitability. The Enlarged Group may experience declines in sales or margins
or changes in the types of pet products sold during economic downturns. The success of the Enlarged
Group’s business depends in part on its ability to identify and respond to evolving trends in demographics
and consumer preferences. Failure to identify or effectively respond to changing consumer tastes,
preferences and spending patterns, as well as pet ownership trends and pet care needs could adversely
affect the Enlarged Group’s business. The keeping of pets and the purchase of pet-related products and
services may constitute discretionary income or spending for some customers, and any material decline in
the amount of consumer discretionary income or spending could reduce overall levels of pet ownership or
spending on pets and adversely affect the Enlarged Group’s sales of products and services, including
through impulse purchases and/or consumer expenditure on veterinary and insurance services. If any such
declines occurred and were prolonged or severe, they could have a material adverse effect on the Enlarged
Group’s business, results of operations or financial condition.
(ii)
If the Enlarged Group does not compete effectively with its existing and potential future
competitors, the Enlarged Group’s business, results of operations or financial condition
could be adversely affected.
PVG competes with a number of other participants in the UK pet care market, which includes veterinary
services and pet wellness programs for small animals. These competitors include corporate and independent
29
veterinary surgeries, pet healthcare providers and service providers to the veterinary industry. The industry
in the UK and Europe could become increasingly competitive through the expansion of pet-related product
offerings by internet retailers, and/or the growth or development of other specialty retailers in the UK and
European pet care market. New entrants could come into the UK pet care market from abroad, in particular,
from Europe or the US. There can be no assurance that the Enlarged Group will not face greater competition
from these or other competitors in the future. In particular, if any of the Enlarged Group’s major competitors
seek to gain or retain market share by reducing prices, the Enlarged Group may need to reduce its prices
in order to remain competitive, which may require a change in operating strategies, and could result in a
decrease in profitability of the Enlarged Group’s business. If the Enlarged Group cannot respond adequately
to these multiple sources and types of competition then the Enlarged Group could lose market share and
experience lower levels of sales and profitability, which could have a material adverse effect on the Enlarged
Group’s business, results of operations or financial condition.
(iii) Future trading position of the Enlarged Group.
PVG has made losses in the past. The Enlarged Group’s future profitability depends upon the successful
implementation of PVG’s strategy to grow and develop its business, and thereby to become profitable.
However, there can be no certainty that PVG will either grow and develop its business as intended by its
strategy or become profitable (or sustain profitability) in the future. A failure on the part of PVG to become
profitable in the future (or to sustain profitability) would necessitate PVG obtaining future funding to continue
as a going concern. It would also mean that the future profitability (if any) of the Enlarged Group would be
compromised and could result in the Company being unable to continue as a going concern.
(iv) Any events that negatively impact the reputation of, or value associated with, the
Enlarged Group’s brand, including the services sold or provided by the Enlarged Group,
could adversely affect the Enlarged Group’s business, results of operations or financial
condition.
The Enlarged Group’s continued success and growth depends on the strength of the existing PVG and PVA
brand which is an important asset of the Enlarged Group’s business. Maintaining the reputation of, and
value associated with, the PVG and PVA brand, is central to the success of the Enlarged Group’s business,
and the Enlarged Group could be adversely affected if customers lose confidence in the services sold or
provided by the Enlarged Group. The real or perceived failure of the Enlarged Group to provide high quality
veterinary and pet wellness services could adversely affect the Enlarged Group’s reputation and result in a
loss of consumer confidence. Unfavourable publicity concerning the services associated with the Enlarged
Group’s brand could have a material adverse effect on the Enlarged Group’s business, results of operations
or financial condition.
The Enlarged Group may be subject to complaints and litigation which could damage the
Enlarged Group’s brand and reputation and divert management resources.
From time to time the Enlarged Group may also be the subject of complaints and litigation from its customers,
employees or other third parties, alleging injury, health, environmental, safety or operational concerns,
nuisance, negligence or failure to comply with applicable laws and regulations. Any such complaints and
claims, even if successfully resolved without direct adverse financial effect, could have a material adverse
effect on the Enlarged Group’s brand and reputation and divert its financial and management resources
from more beneficial uses. If the Enlarged Group were to be found liable under any such claims, the Enlarged
Group’s business, results of operations or financial condition could be materially adversely affected.
(v)
(vi) Failure to develop the existing PVG brand and the Enlarged Group’s other brands or
successfully to manage and execute the Enlarged Group’s marketing and advertising
initiatives could have a negative effect on the Enlarged Group’s business, results of
operations or financial condition.
The Enlarged Group’s success and growth depends on the ability of the Enlarged Group to manage and
execute its marketing and advertising initiatives in order to raise awareness of the Enlarged Group’s broad,
differentiated service range. The Enlarged Group’s growth also depends on the Enlarged Group’s ability to
increase customer traffic and average transaction value.
The Enlarged Group may not be able successfully to execute its marketing and advertising initiatives to
realise the intended benefits and growth prospects due to poor execution, as well as due to factors outside
of the Enlarged Group’s control such as increased competition or deterioration of general economic
30
conditions, thus limiting the Enlarged Group’s ability to capitalise on business opportunities and expand its
business. The failure of these strategies may damage the reputation and value of the Enlarged Group’s
brands and adversely affect the Enlarged Group’s business, results of operations or financial condition.
(vii) Failure to open new or acquire veterinary surgeries or any failure to expand the pet
healthcare services could adversely affect sales growth and profitability, and any failure
by the Enlarged Group to launch new initiatives effectively could have a material adverse
effect on the Enlarged Group’s business, results of operations or financial condition.
PVG currently has 15 standalone veterinary surgeries and has a base of approximately 6,600 Pet Care Plan
customers. There can be no guarantee that the Enlarged Group will be able to increase the number of its
veterinary surgeries and increase the number of Pet Care Plans sold.
(viii) Regulation regarding veterinary surgeries
PVG’s veterinary business is subject to extensive regulations and laws governing the operation of veterinary
surgeries. Changes to the regulations regarding the ownership of or the operation of veterinary surgeries,
including local authority licensing and other laws, could impact the Enlarged Group’s ability to own and/or
to operate veterinary surgeries. If any of the Enlarged Group’s veterinary surgeries are found to be in violation
of any applicable statutes or regulations, the Enlarged Group’s veterinary surgeries may have to restructure
their operations to comply with such statutes or regulations or the Enlarged Group’s veterinary surgeries
may be unable to operate in a given location or at all, or may be obliged to incur material additional costs
to continue its operations.
(ix) The viability of PVA’s Buying Group may be affected by factors outside of the Enlarged
Group’s control
PVA's Buying Group depends on the support of manufacturers of veterinary products providing enhanced
discounts for PVA to share with its members. There is no guarantee that the discounts currently available
will be maintained at the current levels or at all. Also, as members' spending with manufacturers fluctuates,
PVA's fees received could be adversely affected from time to time.
In addition the ongoing consolidation of manufacturers reduces competition in the supply chain. As a result,
power increasingly rests with the remaining manufacturers in terms of pricing and discounts offered and this
concentration could adversely impact the overall PVG business.
(x) Pet Care Plan
PVA’s management of the Pet Care Plan relies on PVA’s status as a Direct Debit originator. The Service User
Number which allows PVA to act as a Direct Debit originator is sponsored by National Westminster Bank
and the possibility exists that this could be revoked should they choose to do so. This may occur when the
sponsor bank escalates to the Bacs Payment Schemes Ltd Board that it reasonably believes that:
●
Direct Debiting operations are being carried out in a manner which constitutes an abuse of the Bacs
Payment Scheme or affects the integrity of that scheme or are being carried out without due regard to
the interest of payers; and
●
there is evidence that rules and procedures detailed in Bacs Service User Guide and Rules are being
deliberately ignored.
While sufficient notice of termination may be given to allow the service user time to make alternative
arrangements, the Bacs Payment Scheme Ltd Board and the sponsor reserve the right to terminate a service
user’s participation in the Scheme on immediate or short notice, notwithstanding any disruption which may
occur. Bacs Payment Schemes Ltd and the sponsor accept no liability for any loss which a service user
may suffer as a result of termination from the Scheme.
If sufficient time was not afforded to PVA to make alternative arrangements there would be disruption to the
Pet Care Plan business and the obligations to its veterinary members could not be fulfilled. In addition there
would be reputational damage to the business.
31
(xi) Attraction and retention of key employees
Whilst PVG has entered into employment arrangements with each of its key personnel with the aim of
securing their services, the retention of their services cannot be guaranteed. The Enlarged Group is
significantly dependent on certain key Board and management personnel. Incentivisation of key employees
to remain with the Enlarged Group remains critical to the Enlarged Group’s success. The loss of those
employees could weaken the Enlarged Group’s Board and management capabilities, resulting in delays in
the development of its services and impacting negatively on the Enlarged Group’s business. Competitors
may try to recruit some of the Enlarged Group’s key employees. Recruiting and retaining management and
key personnel as the Enlarged Group develops will be critical to the Enlarged Group’s success.
(xii) Continuity of Operations
The Enlarged Group may experience business continuity problems arising from extreme events.
As with most businesses, the Enlarged Group is reliant on IT systems in its day-to-day operations. Whilst
the Enlarged Group undertakes business continuity planning, an inability to operate such systems would
impact the business. This might result, for example, from a computer virus or other cyber attack or from a
physical event at the Enlarged Group‘s offices. A physical event, such as a fire or terrorist attack in the
vicinity of the Enlarged Group’s facilities, would prevent the Enlarged Group’s employees from performing
their roles and could also lead to a critical loss of documents and other data.
The Enlarged Group must manage effectively the growth of its operations, and an inability to manage such
expansion and the associated costs may have a material adverse effect on the Enlarged Group’s business.
PVG currently primarily operates in the UK and has recently expanded its offering into the Republic of Ireland
as part of its strategy to expand into Europe. Furthermore as part of this strategy PVG has entered into an
initial contract with a Swedish company with veterinary practices based in the Nordic region. The Enlarged
Group’s ability to manage its growth effectively will require it to continue to improve and expand its operating,
financial and management controls, reporting systems and procedures, and to recruit, train, motivate and
manage its employees. There can be no assurance that the Enlarged Group will be able effectively to
implement these programmes or improve its management information and control systems in an efficient
and timely manner or that, if implemented, such improvements will be adequate to support the Enlarged
Group’s operations. Any inability of the Enlarged Group to manage its expansion successfully could have a
material adverse effect on its business.
The Enlarged Group may face difficulties in effectively controlling, exploiting and/or managing its services,
and their commercialisation, internationally.
In order effectively to access foreign countries, the Enlarged Group may have to rely on third parties to carry
out and perform the marketing and commercialisation of its services in those territories. The Enlarged Group
would, therefore, have less control over marketing and sales of its services internationally and there is a risk
that the Enlarged Group’s services may not be effectively commercialised abroad.
C. RISKS ASSOCIATED WITH THE OPERATION OF VETERINARY SURGERIES
Unexpected incidents, including due to bad weather, fire, health and safety incidents, theft and abuse of,
and consequent injury or death due to, the drugs stored at the veterinary premises, loss of key suppliers
and electrical failures could result in unplanned closures of one or more of the Enlarged Group’s veterinary
surgeries. In addition, any real or perceived ethical misconduct on the part of any veterinarian associated
with the Enlarged Group, including ill-treatment of the pets under care, clinical malpractice, incorrect disposal
of clinical waste or overpricing of services, either intentionally or due to a lack of knowledge of applicable
pricing regulations or charging for services not rendered could result in negative publicity in the mainstream
media and in social media, website forums and email exchanges, or in fines and other sanctions from
regulators. Such negative publicity (including negative publicity by disgruntled employees) or regulatory
sanctions could have a material adverse effect on the Enlarged Group’s reputation or its business, results
of operations or financial condition.
32
D.
RISKS RELATING TO AN INVESTMENT IN THE SHARES
(i)
Since suspension there has been no active trading in the Existing Ordinary Shares for an
extended period and upon Admission a market may not develop.
Following suspension of the Company’s shares in March 2014, there has been no public trading market for
the Existing Ordinary Shares. The current listing of the Existing Ordinary Shares on the Official List is proposed
to be be cancelled. Assuming all of the Resolutions are passed, the Company will apply to the UKLA for the
admission of the Existing Ordinary Shares and the New Ordinary Shares to the standard listing segment of
the Official List and to the London Stock Exchange for the admission of the Existing Ordinary Shares and
the New Ordinary Shares to trading on its main market for listed securities. However, there is no assurance
that an active trading market for the Existing Ordinary Shares and New Ordinary Shares will develop or, if
developed, can be sustained. If an active trading market is not developed or maintained, the liquidity and
trading price of the Existing Ordinary Shares and New Ordinary Shares could be adversely affected.
(ii) Exchange rate fluctuations may impact on the price of Ordinary Shares.
The Ordinary Shares will be quoted, and any dividends to be paid in respect of them, will be in pounds
sterling. An investment in Ordinary Shares by an investor in a jurisdiction whose principal currency is not
pounds sterling exposes the investor to foreign currency rate risk. Any depreciation of the pounds sterling
in relation to such foreign currency will reduce the value of the investment in the Ordinary Shares or any
dividends in foreign currency terms.
(iii) Following Admission, the Concert Party will be able to exercise substantial influence over
the Enlarged Group’s business.
Following Admission, the Concert Party will hold approximately 69.4 per cent. of the voting rights in respect
of the Enlarged Issued Share Capital. By virtue of the level of their voting power, the Concert Party will be
able to exercise substantial influence over certain matters requiring approval of Shareholders, such as the
election of directors and approval of certain business decisions. In addition, the Concert Party will have
sufficient voting power, on Admission, to, among other things, prevent, delay or deter a change of control
of the Enlarged Group, which could deprive Shareholders of an opportunity to earn a premium for the resale
of their Ordinary Shares over the then prevailing market price. There could also be a conflict between the
interests of the Concert Party and the interests of the Enlarged Group’s other Shareholders with respect to,
for instance, dividend policy.
Further, BFSL, under the proposed terms of the Revised BFSL Loan Arrangements, would have rights as a
creditor of PVG for such time as BFSL remains a creditor. Accordingly, BFSL may exercise such rights if an
event of default were to occur under the Revised BFSL Loan Arrangements, which may materially affect the
value of the Company’s investment in PVG.
(iv) The absence of dividends
The Company has not paid any dividends since its incorporation and does not expect that dividends will be
paid in the foreseeable future. Even if future operations lead to significant levels of distributable profits, of
which there can be no assurance, it is at present intended that any earnings will be reinvested in the Enlarged
Group’s business and that dividends will not be paid until the Enlarged Group has an established income
stream to support continuing dividends.
E.
RISKS RELATING TO THE STOCK MARKET AND TO SHARE TRADING
(i) Fluctuation of share price
The share prices of publicly traded small companies such as the Company can be highly volatile. The price
at which the New Ordinary Shares will be quoted and the price at which investors may realise their
New Ordinary Shares will be influenced by a large number of factors, some specific to the Company and its
operations and some which may affect quoted companies generally.
The Company’s share price has fluctuated in the past, and may continue to fluctuate in the future. The
factors which may affect the Enlarged Group’s share price are:
●
changes in financial estimates or recommendations by securities analysts; and
33
●
trading volume of the Ordinary Shares.
Furthermore, the Company’s share price may fall in response to market appraisal of its current strategy or
if the Enlarged Group’s operating results and prospects from time to time are below the expectations of
market analysts and investors. In addition, stock markets have from time to time experienced significant
price and volume fluctuations that have affected the market price of the companies whose shares are traded
on such markets. Such fluctuations could affect the Company’s share price, though they may be unrelated
to the Enlarged Group’s actual operating performances and prospects.
(ii) Possible future sales of Ordinary Shares
Substantial future sales of Ordinary Shares could affect the market price of Ordinary Shares.
Following Admission it is expected that the principal shareholders and the Directors will in aggregate hold
voting rights in respect of approximately 74 per cent. of the Enlarged Issued Share Capital. The Company
cannot predict what effect, if any, future sales of Ordinary Shares, or the availability of Ordinary Shares for
future sale, will have on the market price of Ordinary Shares. Sales of substantial numbers of Ordinary Shares
in the public market following the transaction, or the perception or any announcement that such sales could
occur, could adversely affect the market price of Ordinary Shares and may make it more difficult for investors
to sell their Ordinary Shares at a time and price which they deem appropriate. Sales of a large number of
Ordinary Shares in the open market by any other material Shareholder at that time, or the perception that
such sales will occur, could materially and adversely affect the market price of the Ordinary Shares and could
impair the Enlarged Group’s ability to raise capital through future offerings.
34
Part 7
RULE 9 OF THE CITY CODE ON TAKEOVERS AND MERGERS
The following information is required to be included in this document under the Takeover Code in relation to
the interests of the members of the Concert Party in the Company.
1. Interests in relevant securities of Ark:
1.1 Save as disclosed in paragraph 8 of Part 1 of this document in respect of Rajan Uppal, as at the last
day of the Disclosure Period, none of the Concert Party or their immediate families, related trusts and
connected persons, had any interest in relevant securities of Ark;
1.2 As at the last day of the Disclosure Period, no persons acting in concert with the Concert Party had
any interest in relevant securities of Ark;
1.3 Borrowing or lending of relevant securities of Ark:
(a) As at the last day of the Disclosure Period, none of the Concert Party had borrowed or lent
(including for these purposes any financial collateral arrangements of the kind referred to in Note
4 to Rule 4.6 of the Code) any relevant securities of Ark;
(b)
As at the last day of the Disclosure Period neither Ark nor any person acting in concert with Ark
had borrowed or lent (including for these purposes any financial collateral arrangements of the
kind referred to in Note 4 to Rule 4.6 of the Code) any relevant securities of Ark.
1.4 Dealings in relevant securities of Ark:
There have been no other dealings in the relevant securities of Ark during the Disclosure Period by the
Concert Party or their immediate families, related trusts and connected persons.
1.5 Dealings in relevant securities of Ark by persons with whom the Concert Party has an arrangement:
There have been no dealings in the relevant securities of Ark during the Disclosure Period by persons
with whom the Concert Party has any arrangement.
1.6 Irrevocable Undertakings:
No irrevocable undertakings or letters of intent in relation to relevant securities of Ark have been
procured by the Concert Party.
1.7 Special Agreements:
No agreement, arrangement or understanding (including any compensation arrangement) exists
between the Concert Party and any of the Directors, or recent directors, shareholders or recent
shareholders of Ark or any person interested or recently interested in Ordinary Shares having any
connection with or dependence upon or which is conditional on the outcome of the Proposals.
1.8 Transfer of Ordinary Shares:
There is no agreement, arrangement or understanding whereby the beneficial ownership of any of the
New Ordinary Shares to be received by the Concert Party will be transferred to any other person.
1.9 Interests and Dealings – General:
(a) As at the last day of the Disclosure Period, save as disclosed in Part 1 of this document, neither the
Concert Party nor any member of their immediate families, related trusts or (so far as the Concert Party
is aware) connected persons nor any persons acting in concert with the Concert Party has an
arrangement, had an interest in or right to subscribe for any relevant securities of Ark (whether
conditional or absolute and whether in the money or otherwise), including any short position under a
derivative, any agreement to sell or any delivery obligation or right to acquire another person to purchase
or take delivery, nor had any of the foregoing dealt in any relevant securities of Ark during the Disclosure
Period;
35
(b)
As at the last day of the Disclosure Period other than as set out in section 3 of Part 9 of this document
neither Ark, nor any of the Directors, nor any member of their immediate families, related trusts or (so
far as the Directors are aware) connected persons had an interest or right to subscribe for relevant
securities of Ark (whether conditional or absolute and whether in the money or otherwise), including
any short position under a derivative, any agreement to sell or any delivery obligation or right to require
another person to purchase or take delivery, nor had any of the foregoing dealt in any relevant securities
of Ark during the Disclosure Period;
(c)
As at the last day of the Disclosure Period, other than WG Partners, as set out in section 4.1(c) of
Part 9 of this document no person acting in concert with Ark and no person who has an arrangement
with Ark had an interest in or right to subscribe for any relevant securities of Ark (whether conditional
or absolute and whether in the money or otherwise), including any short position under a derivative,
any agreement to sell or any delivery obligation or right to require another person to purchase or take
delivery;
(d)
As at the last day of the Disclosure Period, there were no arrangements between or any person acting
in concert with Ark and any other person;
(e)
Ark has not redeemed or purchased any Ordinary Shares or any securities convertible into, rights to
subscribe for or options in respect of, or derivatives referenced to Ordinary Shares during the Disclosure
Period;
(f)
Save as disclosed in this document, no member of the Concert Party has redeemed or purchased
any relevant securities of Ark or any securities convertible into, rights to subscribe for or options in
respect of, or derivatives referenced to relevant securities of Ark during the Disclosure Period.
1.10 For the purposes of this Part 7:
(a) “acting in concert” has the meaning set out in the City Code;
(b)
“arrangement” has the meaning set out in Note 11 to the definition of acting in concert;
(c)
“Connected adviser” has the meaning set out in the City Code.
(d)
“dealing” or “dealt” includes the following:
(i)
the acquisition or disposal of securities;
(ii)
the taking, granting, acquisition, disposal, entering into, closing out, termination, exercise
(by either party) or variation of an option (including a traded option contract) in respect of
any relevant securities;
(iii)
subscribing or agreeing to subscribe for relevant securities;
(iv)
the exercise or conversion, whether in respect of new or existing relevant securities, of any
relevant securities carrying conversion or subscription rights;
(v)
the acquisition of, disposal of, entering into, closing out, exercise (by either party) of any
rights under, or variation of, a derivative referenced, directly or indirectly, to relevant securities;
(vi)
entering into, terminating or varying the terms of any agreement to purchase or sell relevant
securities; and
(vii) any other action resulting, or which may result, in any increase or decrease in the number
of relevant securities in which a person is interested or in respect of which he has a short
position.
(e)
“derivative” includes any financial product whose value, in whole or in part, is determined directly
or indirectly by reference to the price of an underlying security;
36
(f)
“Disclosure Date” means the close of business on 20 November 2014, being the latest practical
date prior to the publication of this document;
(g)
“Disclosure Period” means the period commencing on 21 November 2013 and ending on
20 November 2014 (being the latest practicable date prior to the publication of this document);
(h)
“relevant securities of Ark” means Ordinary Shares and securities convertible into, or rights to
subscribe for, options (including traded options) in respect thereof and derivatives referenced
thereto;
(i)
Ownership or control of 20 per cent. or more of the equity share capital is regarded as the test
of associated company status and “control” means an interest or interests in Ordinary Shares
carrying 30 per cent. or more of the voting rights attributable to the share capital of a company
which are currently exercisable at a general meeting, irrespective of whether the holding or
aggregate holding gives de facto control;
(j)
a person is treated as having an “interest in securities” if he has long economic exposure, whether
absolute or conditional, to changes in the price of those securities (and a person who only has a
short position in securities is not treated as interested in those securities). In particular, a person
is treated as “interested” in securities if:
(i)
he owns them;
(ii)
he has the right (whether conditional or absolute) to exercise or direct the exercise of the
voting rights attaching to them or has general control of them;
(iii)
by virtue of any agreement to purchase, option or derivative, he;
(iv)
●
has the right or option to acquire them or call for their delivery; or
●
is under an obligation to take delivery of them;
●
whether the right, option or obligation is conditional or absolute and whether it is in
the money or otherwise; or
he is a party to any derivative:
●
whose value is determined by reference to their price; and
●
which results, or may result, in his having a long position in them.
1.11 Information on the Company and BFSL
Please refer to the Company’s Report and Financial Statements for the year ended 31 December 2013,
the Company’s Report and Financial Statements for the year ended 31 December 2012, and the
Company’s interim (unaudited) financial statements for the six months to 30 June 2014, and the
unaudited abbreviated accounts of BFSL for the year ended 31 October 2013 and the current articles
of association in force in respect of BFSL which are incorporated by reference into this document and
can be found at www.arktherapeutics.com. Unless you request these documents then they will not
be sent to you, however, you have the right to request them in hard copy form by contacting the
Company Secretary on +44 (0)203 755 5160.
37
Part 8
DIRECTORS’ REMUNERATION POLICY
2014 EXECUTIVE SHARE OPTION PLAN
2014 EMI PLAN
1.
DIRECTORS’ REMUNERATION POLICY
Introduction
Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations
2008 as amended in August 2013 (the "Regulations") requires the Company at future annual general
meetings to offer Shareholders a binding vote on the Company’s forward-looking remuneration policy. The
Company has no permanent employees and was not in a position to propose such forward-looking policy
to Shareholders at its Annual General Meeting held on 30 June 2014.
It is the intention that the following Remuneration Policy Report will be put to a binding Shareholder vote at
the General Meeting to be held at 10.30 a.m. on 11 December 2014 at the offices of Marriott Harrison LLP,
11 Staple Inn, London WC1V 7QH and, if approved, will take effect immediately following that meeting.
Remuneration Policy Report
This Remuneration Policy Report sets out the remuneration policy for the Company Directors and has been
prepared in accordance with The Large and Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013.
The Remuneration Committee
As stated in the Annual Report and Accounts 2013, during the period following the Disposal, the duties and
obligations of the Remuneration Committee have been discharged by the Board as a whole.
Following Admission, the Company will re-establish its Remuneration Committee (the “Committee”) which
will comprise at least two independent Non-Executive Directors.
The Committee sets the strategy, structure and levels of remuneration for the Executive Directors and reviews
the remuneration of other members of senior management in the Company generally. It does so in the
context of the Company’s overall strategy and performance to align the financial interests of the Executive
Directors and other management and employees with achievement of the Company’s objectives. No Director
is involved in any part of a meeting of the Committee when their individual remuneration or contractual terms
are being decided.
The remuneration of the Non-Executive Directors and the Chairman is set by the Remuneration Committee.
The Remuneration Policy
The Company’s remuneration policy must enable it to attract and retain leaders with the skills, experience
and drive to execute the Company’s business strategy within a framework which is aligned to the interests
of the Company’s Shareholders, for example, through the performance conditions attached to share option
grants and bonuses. The Company believes that a significant proportion of Executive Directors’ remuneration
should be performance related.
Each year, the Committee will conduct a formal review of risk in the context of remuneration. A review of
pay for other employees within the Company, particularly salary increases, will also be carried out each year
when reviewing overall remuneration policy and will be taken into account when setting policy for the
Executive Directors.
The Committee welcomes dialogue with Shareholders and consults with its major investors and investor
bodies regarding changes to the Executive Directors’ remuneration policy. Any views and feedback on
38
arrangements from the Company’s investors are considered by the Committee as part of its annual review
of Directors’ remuneration.
Remuneration of Executive Directors
The following table summarises each element of the Executive Directors’ remuneration package, the policy
for how these are operated and their link to the Company’s strategy.
Policy Table
Element of Pay
Purpose and
link to
Company’s
strategy
How operated
in practice
Maximum
Opportunity
Performance
conditions where
relevant
Base salary
Reflects the value
of the individual
and their role.
Takes account of
experience and
personal
contribution to
Company strategy.
Set at a level to
facilitate
recruitment and
retention of suitably
experienced
executives.
Salaries are
reviewed annually
on 1 October. The
policy is for salaries
to be around those
paid by other
companies
comparable on the
basis of size and
complexity, but also
takes account of
other factors
including any
change in
responsibilities or
the scope of the
role.
There is no
prescribed annual
increase. The
Committee is
guided by the wider
workforce
increases, but may
also need to
recognise increases
in certain
circumstances
such as assumed
additional
responsibility, or an
increase in the
scope or size of the
role.
Takes into account
the performance
and personal
contribution of the
individual and the
performance of the
Company.
Annual bonus
plan
Rewards
performance
against specific
near-term goals
which are
consistent with the
strategic direction
of the business.
Assessed by the
Committee against
the audited results
of the Company
where relevant.
A bonus of up to
50 per cent. of
salary may be
awarded. In
exceptional
circumstances the
Board has the
discretion to award
a higher
percentage.
No less than
20 per cent. of the
bonus is based on
one of more
relevant financial
performance
conditions such as
operating profit.
Up to 50 per cent.
of the bonus may
be based on
appropriate
non-financial
targets.
Any non-financial
target will be
subject to an
appropriate
financial underpin.
39
Element of Pay
Purpose and
link to
Company’s
strategy
How operated
in practice
Maximum
Opportunity
Performance
conditions where
relevant
Share options
plan
Aims to reward
long-term value
creation.
Share options
provide a direct and
transparent link
between executive
pay and value
creation for
Shareholders as no
gains are possible
unless there has
been an increase in
share price.
All share options
expire on the tenth
anniversary of their
grant date.
No option may be
granted to a
participant if, as a
result, the aggregate
market value of
Ordinary Shares
subject to options
granted to that
participant during a
financial year under
all employee share
arrangements
established by the
Company would
exceed twice his
basic salary,
although this limit
may be exceeded
in exceptional
circumstances.
Benefits
To remain
competitive in the
market workplace.
Executive Directors
are entitled to private
medical insurance
and, if considered
appropriate, to
participate in the
Company Car
Scheme.
There is no
Not performance
prescribed
related.
maximum. The
value of the benefit
is determined by the
cost to the Company.
Pension
contribution/
payment in lieu
To remain
competitive in the
market workplace
and facilitate
retirement planning.
A contribution
10 per cent. of
equivalent to 10
base salary.
per cent. of salary
is made by the
Company to
Executive Directors
and paid into either
a pension scheme
or paid direct to the
individual in lieu.
All share options
previously granted
to the Directors
have been waived.
Performance criteria
where appropriate
will include the
Company’s share
price performance,
achievement of
financial and
commercial
milestones and
individual job
milestones.
However, see
“Share options”
section below with
regard to
proposed grant of
share options to be
made with effect
from Admission.
Not performance
related.
Notes to the Policy Table
1.
Annual Bonus Plan performance metrics
Performance measures, the weighting between them and stretching targets will be set at the start of each year by the Committee,
based on the Company’s financial KPIs and strategic priorities for the year and taking account of the business plan, budget for
the year, and market conditions. At least 20 per cent. will be based on relevant financial targets and up to 50 per cent. may be
attributed to a relevant non-financial target. Together, these targets are intended to incentivise and reward shorter-term
performance, consistent with the interests of the Shareholders and the overall strategy of the Company.
2.
Share Options Plans
The Committee selects performance measures for share options awards that are aimed at incentivising and rewarding performance
over the medium term, aligned with the interests of the Shareholders and consistent with the Company’s strategy. The Committee
will set stretching targets based on the Company’s budget, business plan, and external economic environment at that time.
40
3.
Comparison with employees’ remuneration policy
The key differences between Executive Directors’ remuneration policy and that of employees generally is that, for the Executive
Directors, there is significantly more weighting to variable performance-related pay. Variable pay is seen as more relevant for senior
executives because of their greater ability to influence the overall performance of the Company.
Policy for Non-Executive Chairman and Non-Executive Directors’ fees
Purpose and
link to
Company’s
How operated
Maximum
strategy
in practice
Opportunity
Non-Executive
Chairman and
Non-Executive
Directors’ fees
To attract retain
high quality and
experienced
Non-Executive
Chairman and
Non-Executive
Directors.
The Non-Executive
Chairman and NonExecutive Directors
are paid an annual
fee. Fee levels are
determined and
reviewed taking
into account
experience, time
commitment,
responsibility and
scope of role as
well as market data
for similar roles in
other companies of
a similar size to the
Company.
Performance
conditions where
relevant
No performanceThere is no
prescribed
related element of
remuneration.
maximum fee or
maximum increase.
There may be a
need to recognise
increases in certain
circumstances
such as assumed
additional
responsibility or an
increase in the
scope or size of the
role. No additional
fee is paid for the
chairmanship of a
committee.
Shareholding guidelines
There is no requirement for Directors to hold shares in the Company.
Remuneration awarded prior to the effective date
For the avoidance of doubt, in approving this Remuneration Policy Report, authority is given to the Company
to honour any commitments entered into with current or former Directors that have been disclosed to
Shareholders in previous remuneration reports. Details of any payments to former Directors will be set out
in the Annual Report on Remuneration as they arise.
Annual Bonus Plan and Share Options Plans
The Committee operates its annual bonus plan and share options policy according to the rules of each
respective plan and consistent with normal market practice and the Listing Rules of the London Stock
Exchange, including flexibility in a number of aspects.
How the Committee retains flexibility includes (albeit with quantum and performance targets restricted to
the descriptions detailed above):
●
who participates in the plans;
●
when to make awards and payments;
●
how to determine the size of an award, a payment, or when and how much of an award should vest;
●
how to deal with a change of control or restructuring of the Company;
●
how and whether an award may be adjusted in certain circumstances (eg for a rights issue, a corporate
restructuring or for special dividends); and
●
what the weighting, measures and targets should be for the annual bonus plan and share options
plans from year to year.
41
The Committee also retains the discretion within the policy to adjust targets and/or set different measures
and alter weightings for the annual bonus plan and to adjust targets for the share options plans if events
happen that cause it to determine that the performance conditions are unable to fulfil their originally intended
purpose, provided the new performance conditions are not materially less difficult to satisfy. Any adjustments
will be fully disclosed in the following year’s Annual Report on remuneration.
All historic awards that were granted under any current or previous share options schemes operated by the
Company and remain outstanding remain eligible to be exercised based on their original award terms.
Payment under different scenarios
Under the Regulations, the Company is obliged to show a bar-chart indicating the level of remuneration
which would be received by the Executive Directors in 2014 under different scenarios. Three scenarios are
shown below:
●
“Fixed pay” is based on salary, benefits and pension contributions;
●
“Target pay” is fixed pay, plus 50 per cent. of the maximum of variable pay; and
●
“Maximum pay” is fixed pay, plus the maximum of variable pay.
Chief Executive Officer
£’000
Fixed
100%
Target
82%
18%
Maximum
70%
15%
£-
£50k
£100k
£150k
Fixed Pay
£200k
£250k
50% bonus
15%
£300k
£350k
£400k
50% bonus
Chief Financial Officer
£’000
Fixed
100%
Target
81%
19%
Maximum
69%
16%
16%
£80k
£100k
£120k
£-
£40k
£20k
Fixed Pay
£60k
50% bonus
£140k
50% bonus
Corporate Development Director
£’000
Fixed
100%
Target
81%
19%
Maximum
69%
16%
£-
£20k
£40k
£60k
Fixed Pay
£80k
50% bonus
£100k
£120k
50% bonus
42
16%
£140k
£160k
£180k
Service Agreements and payments for loss of office of Executive Directors
It is the Company’s policy that Executive Directors should have contracts with indefinite term which are
subject to up to 12 months’ notice by the Company and the Director. In the event of early termination, the
Directors’ contracts will provide for compensation in line with their contractual notice period. In summary,
the contractual provisions will be as follows:
Provision
Detailed terms
Notice period
Up to 12 months by the Company, up to 12 months by the Director.
Termination payment
If any existing contract is breached by the Company, it would be liable to pay,
as damages, an amount approximating to the net loss of salary and contractual
benefits for the unexpired notice period, subject to mitigation and phased
payments where appropriate. Any statutory amounts would be paid as
necessary.
Remuneration
entitlements
Pro-rata vesting for outstanding share options awards (in certain
circumstances – see below).
Change of control
No Executive Director’s contract contains additional provisions in respect of
change of control.
Any share-based entitlements granted to an Executive Director under the Company’s share options plans will
be determined based on the relevant plan rules. The default treatment under the share options plans is that
any outstanding awards lapse on cessation of employment. However, in certain prescribed circumstances,
such as death, ill-health, disability redundancy, retirement or other circumstances at the discretion of the
Committee, ‘good leaver’ status may be applied. For good leavers, awards will normally vest on cessation, or
on the original vesting date, subject to the satisfaction of the relevant performance conditions at that time and
reduced pro-rata to reflect the proportion of the vesting period actually served. However, the Committee has
discretion to determine that awards vest at a later date and/or to disapply time pro-rating.
Details of the service contracts of the proposed Executive Directors following Admission, are as follows:
Notice
period
from
Company
(months)
Notice
period
from the
Director
(months)
Remuneration
entitlement on
termination of
contract by
Company
Director
Date of
Initial
Contract
Chief
Executive
Officer
Effective
from
Admission
12
12
No
contractual
termination
payments
other than
detailed
above
12 months’
notice
Chief
Financial
Officer
Effective
from
Admission
6
6
No
contractual
termination
payments
other than
detailed
above
6 months’
notice
43
Termination
payment
Director
Date of
Initial
Contract
Corporate
Development
Director
Effective
from
Admission
Notice
period
from
Company
(months)
Notice
period
from the
Director
(months)
6
6
Termination
payment
No
contractual
termination
payments
other than
detailed
above
Remuneration
entitlement on
termination of
contract by
Company
6 months’
notice
Recruitment and promotion policy for Directors
The remuneration package for a new Executive Director would be set in accordance with the terms of the
Company’s prevailing approved remuneration policy at the time of appointment and take into account the
skills and experience of the individual, the market rate for a candidate of that experience and the importance
of securing the relevant individual.
Salary would be provided at such a level as is required to attract the most appropriate candidate. It may be
set initially at a below mid-market level on the basis that it may progress towards the mid-market level once
expertise and performance has been proven and sustained. The annual bonus potential would be limited to
50 per cent. of salary, although in exceptional circumstances the Board has the discretion to award a higher
percentage. Conditional awards under the share options plans may be up to the plan maximum of twice
annual salary, although this limit may be exceeded in exceptional circumstances. In addition, the Committee
may offer additional cash and/or share-based elements to replace deferred or incentive pay forfeited by an
executive leaving a previous employer. It would seek to ensure, where possible, that these awards would
be consistent with awards forfeited in terms of vesting periods, expected value and performance conditions.
For an internal Executive Director appointment, any variable pay element awarded in respect of the prior
role may be allowed to pay out according to its terms, adjusted as relevant to take into account the
appointment. In addition, any other ongoing remuneration obligations existing prior to appointment may
continue. For external and internal appointments, the Committee may agree that the Company will meet
certain relocation and other incidental expenses as appropriate.
If appropriate the Committee may agree on the recruitment of a new executive, to a notice period in excess
of 12 months but to reduce to 12 months over a specified period.
The fees for a new Chairman or Non-Executive Director will be reflective of experience, time commitment,
responsibility and scope of the role, and will be consistent with the approved remuneration policy at the
time.
Chairman and Non-Executive Directors
The current Non-Executive Directors are engaged for indefinite terms, with notice periods of one month, with
an entitlement to accrued fees and expenses only up to the date of termination. These appointments are
subject to the Articles of Association. All Directors are subject to election by Shareholders at the first Annual
General Meeting after their appointment and to re-election thereafter at intervals of no more than three years.
Upon Admission, Iain Ross’ notice period will be extended to six months by either party.
The dates of the initial letters of appointment for the current Non-Executive Directors are as follows:
Name
Date first appointed as a
Non-Executive Director
Date of election/last re-election
Iain Ross
David Venables
Dr David Bloxham
Susan Steven
1 April 2013
1 April 2013
1 March 2011
30 June 2014
30 June 2014
24 June 2013
30 June 2014
–
44
Dr David Venables, Dr David Bloxham and Susan Steven will resign as Directors upon Admission. Mrs Steven
currently also acts as Ark’s Company Secretary and, following Admission, will continue in that role with the
Enlarged Group.
Annual Report on Remuneration
How the policy will be implemented in the current financial year:
Salary
Salaries for Executive Directors following Admission will be at the following rates:
Chief Executive Officer:
Chief Financial Officer:
Corporate Development Director:
£220,000 per annum
£80,000 per annum
£100,000 per annum
Non-Executive Directors’ fees
The fees for Non-Executive Directors following Admission will be at the following rates:
Non-Executive Chairman:
Non-Executive Directors:
£75,000 per annum
£30,000 per annum
Annual bonus
No bonuses will be awarded in respect of the current financial year.
Share options
Subject to the approval of the 2014 Executive Option Plan and the 2014 EMI Plan by Shareholders at the
General Meeting, it is intended that a grant of options over Ordinary Shares will be made to eligible employees
(including Executive Directors) with effect from Admission equating to approximately ten per cent of the
issued share capital of the Enlarged Group. Such options will be granted at an exercise price equal to the
Subscription Price and will vest in full on the later of the first anniversary of the date of grant and the date
that the market price of an Ordinary Share (as derived from the Daily Official List) is at least twice the
Subscription Price and has been for a continuous period of 15 days.
Pension and other benefits
The pension and benefits arrangements are as set out in the policy table above.
External appointments
None of the proposed Executive Directors (other than Mr Uppal has any external paid directorships.
Executive Directors are permitted to accept external board or committee appointments provided they do
not interfere with the Executive Directors’ obligations to the Company.
The Board will decide at the time of appointment whether the Executive Director may retain the fees for
such appointments.
2. THE 2014 ARK THERAPEUTICS GROUP PLC UNAPPROVED SHARE OPTION PLAN
Following the expiry of the Old Unapproved Executive Plan on 17 April 2012, ten years after its adoption,
the Company is seeking Shareholder approval for the adoption of a new unapproved share option plan as
set out in resolution number 2 in the Notice of General Meeting set out at the end of this document. It is
proposed to replace the Old Unapproved Executive Plan with a new scheme to be known as The 2014 Ark
Therapeutics Group plc Unapproved Executive Option Plan (the “2014 Executive Option Plan”), the principal
terms of which are set out below:
45
(a)
Eligible Employees
Options over Ordinary Shares may be granted at the discretion of the Board to any employee (including
an Executive Director) of any member of the Group.
(b)
Grant
Options may normally be granted under the 2014 Executive Option Plan within the period of 42 days
following the date on which the plan is adopted by Shareholders in general meeting and/or within each
period of 42 days following the dates on which the Company announces its annual or interim results
to the London Stock Exchange.
(c)
Individual Limits
No option may be granted to a participant under the 2014 Executive Option Plan if, as a result, the
aggregate market value of Ordinary Shares subject to options granted to that participant during a
financial year under all employee share arrangements (whether or not approved by HM Revenue &
Customs but not being a savings-related share option scheme) established by the Company would
exceed twice his basic salary, although this limit may be exceeded in exceptional circumstances.
(d)
Overall Limits
No option may be granted under the 2014 Executive Option Plan if, as a result, the total number of
Ordinary Shares issued on the exercise of options or other employee share arrangements during the
shorter of the previous ten years and the period since the Admission date and shares capable of issue
under 2014 Executive Option Plan would exceed ten per cent. of the issued share capital of the
Company.
(e)
Exercise Price
The exercise price of an option shall be determined by the Board, and shall be whichever of the
following applies at the date of grant:
(f)
(i)
on Admission the Subscription Price; or
(ii)
on any date after Admission not less than the higher of the market value of an Ordinary Share at
the date of grant, (the market value being the average of the middle market quotations (as derived
from the Daily Official List of the London Stock Exchange) for the three dealing days immediately
preceding the date of grant) and the nominal value of an Ordinary Share.
Exercise and Lapse of Options
In respect of any options granted after Admission options will not normally be exercisable prior to the
third anniversary of the date of grant and the extent of exercise, whether before or after the third
anniversary of date of grant, will generally be conditional on the achievement of appropriate objective
performance conditions determined at grant by the Board having regard to best practice and the
interests of the Company. The Board has power to waive performance conditions but is prohibited
from giving a general waiver of such conditions either on cessation of employment or on a change of
control. In normal circumstances, options may be exercised, to the extent vested, until the tenth
anniversary of the date of grant.
Options may be exercised in certain specified events including death, leaving employment due to injury,
ill-health, disability, redundancy, retirement, the divestment of the employing company out of the Group
or the transfer out of the Group of the business in which the relevant participant was employed. In the
case of death, options may be exercised within the following 12 months. In the case of cessation of
employment due to injury, ill-health, disability, redundancy or retirement, options may be exercised
within the six months following whichever is the later of the date of the cessation of employment and
the date on which the option would normally become exercisable. In the case of cessation of
employment as a result of the divestment of the employing company out of the Group or the transfer
out of the Group of the business in which the relevant participant was employed an option may be
exercised within a reasonable period (of not less than four weeks) to be specified by the Board at the
time of such cessation following whichever is the later of the date of such cessation and the date on
which such option would normally become exercisable.
Where the employment of a participant ceases for a reason which is not one of those specified in the
previous paragraph then any option held by him will only be exercisable to the extent that the Board
46
decides within the six months following whichever is the later of the date of cessation of employment
and the date on which the option would normally become exercisable.
When an option becomes exercisable before the normal vesting date of the third anniversary of the
date of grant, eg as a result of cessation of employment or a change of control, the number of Ordinary
Shares in respect of which the option may be exercised will generally be scaled back to reflect the
period from the date of grant to the date of the event giving rise to the ability to exercise early relative
to the three year period from the date of grant to the normal vesting date. This will not be the case in
the event of a change of control upon a takeover of the Company where a performance condition
relating to such a change of control has been satisfied. In that event the number of Ordinary Shares in
respect of which the option may be exercised will not be scaled back.
(g)
Performance Conditions
Options will be granted subject to specified conditions to be determined by the Board at or shortly
prior to grant. These performance conditions, which, unless waived, must be met prior to the exercise
of the options, will be designed so that they will only be met in the event of a significant and sustained
improvement in the underlying financial performance of the Company.
(h)
Changes in Control
On a change of control an option may be exercised in a reasonable period specified by the Board or
failing that within four weeks of the change of control.
There will be no automatic waiver of performance conditions in the event of a change of control. If the
change of control takes place in the course of any corporate reconstruction or reorganisation under
which the ultimate beneficial ownership of the businesses of the Group will remain substantially the
same and the arrangements for the corporate reconstruction or reorganisation include appropriate
provisions for either the replacement of options or compensation for participants for loss of their
options, then the Board may determine that any event which would otherwise trigger the exercise of
options shall not do so.
(i)
Alterations of Share Capital
In the event of any variation in the ordinary share capital of the Company, such adjustments to the
number of Ordinary Shares subject to options and the exercise price may be made as are, in the
opinion of the Board, fair and reasonable.
(j)
Voting, Dividend and Other Rights
Until options are exercised, participants have no voting or other rights in respect of the Ordinary Shares
to which the options relate. Options are not assignable or transferable and benefits obtained under
the 2014 Executive Option Plan are not pensionable.
Shares issued pursuant to the 2014 Executive Option Plan shall rank pari passu in all respects with
the Ordinary Shares already in issue except that they will not rank for any dividend or other distribution
paid or made by reference to a record date falling prior to the date of exercise of the option.
(k)
Administration and Amendment
The 2014 Executive Option Plan is administered under the direction of the Board and may be amended
by a Board resolution provided that no amendment may be made which would disadvantage
participants without the approval of the majority of the affected participants. The consent of
Shareholders in general meeting will be sought for changes to the material benefit of participants.
(l)
Termination
The 2014 Executive Option Plan may be terminated at any time by resolution of the Board or of the
Company in general meeting but in any event it will terminate on the tenth anniversary following the
adoption of the 2014 Executive Option Plan.
47
3.
THE 2014 ARK THERAPEUTICS GROUP PLC ENTERPRISE MANAGEMENT INCENTIVE
SHARE OPTION PLAN
In addition to the 2014 Executive Option Plan, the Company is seeking Shareholder approval for the
adoption of a new Enterprise Management Incentive share option plan to be known as The 2014 Ark
Therapeutics Group plc Enterprise Management Incentive Plan (the “2014 EMI Plan”) as set out in
resolution number 3 in the Notice of General Meeting set out at the end of this document, the principal
terms of which are set out below:
(a)
Eligible Employees
EMI options over Ordinary Shares may be granted at the discretion of the Board to any employee
(including an Executive Director) of any member of the Group whose committed working time is at
least 25 hours per week or, if less, at least 75 per cent. of his working time and who is not precluded
from participation due to a material interest (as set out in paragraphs 28 to 33 inclusive of Schedule 5
to the Income Tax (Earnings and Pensions) Act 2003.
(b)
Grant
Options may normally be granted under the 2014 EMI Plan within the period of 42 days following the
date on which the plan is adopted by Shareholders in general meeting and/or within each period of 42
days following the dates on which the Company announces its annual or interim results to the London
Stock Exchange.
EMI options must be granted for commercial reasons to recruit or retain the employee and not for tax
avoidance purposes, provided the Company meets the statutory trading requirements, the gross assets
of the Group are less than £30 million (or such other amount as may be specified in ITEPA) and the
Company’s subsidiaries are qualifying subsidiaries for the purposes of ITEPA.
(c)
Individual Limits
No option may be granted to a participant under the 2014 EMI Plan if, as a result, the aggregate market
value of Ordinary Shares subject to options granted to that participant during a financial year under all
employee share arrangements (whether or not approved by HM Revenue & Customs but not being a
savings-related share option scheme) established by the Company would exceed twice his basic salary,
although this limit may be exceeded in exceptional circumstances.
(d)
Overall Limits
No option may be granted under the 2014 EMI Plan if, as a result, the total number of Ordinary Shares
issued on the exercise of options or other employee share arrangements during the shorter of the
previous ten years and the period since the Admission date and shares capable of issue under 2014
EMI Plan would exceed ten per cent. of the issued share capital of the Company.
The total market value of Ordinary Shares in respect of which unexercised EMI options exist on any
given day must not exceed £3 million (or such other amount as may be specified in Schedule 5 of
ITEPA).
(e)
(f)
Exercise Price
The exercise price of an option shall be determined by the Board, and shall be whichever of the
following applies at the date of grant:
(i)
on Admission the Subscription Price; or
(ii)
on any day after Admission not less than the higher of the market value of an Ordinary Share at
the date of grant, (the market value being the average of the middle market quotations (as derived
from the Daily Official List of the London Stock Exchange) for the three Dealing Days immediately
preceding the date of grant) and the nominal value of an Ordinary Share.
Exercise and Lapse of Options
In respect of any option granted after Admission, options will not normally be exercisable prior to the
third anniversary of the date of grant and the extent of exercise, whether before or after the third
anniversary of date of grant, will generally be conditional on the achievement of appropriate objective
performance conditions determined at grant by the Board having regard to best practice and the
48
interests of the Company. The Board has power to waive performance conditions but is prohibited
from giving a general waiver of such conditions either on cessation of employment or on a change of
control. In normal circumstances, options may be exercised, to the extent vested, until the tenth
anniversary of the date of grant.
Options may be exercised in certain specified events including death, leaving employment due to injury,
ill-health, disability, redundancy, retirement, the divestment of the employing company out of the Group
or the transfer out of the Group of the business in which the relevant participant was employed. In the
case of death, options may be exercised within the following 12 months. In the case of cessation of
employment due to injury, ill-health, disability, redundancy or retirement, options may be exercised
within the six months following whichever is the later of the date of the cessation of employment and
the date on which the option would normally become exercisable. In the case of cessation of
employment as a result of the divestment of the employing company out of the Group or the transfer
out of the Group of the business in which the relevant participant was employed an option may be
exercised within a reasonable period (of not less than four weeks) to be specified by the Board at the
time of such cessation following whichever is the later of the date of such cessation and the date on
which such option would normally become exercisable.
Where the employment of a participant ceases for a reason which is not one of those specified in the
previous paragraph then any option held by him will only be exercisable to the extent that the Board
decides within the six months following whichever is the later of the date of cessation of employment
and the date on which the option would normally become exercisable.
When an option becomes exercisable before the normal vesting date of the third anniversary of the
date of grant, eg as a result of cessation of employment or a change of control, the number of Ordinary
Shares in respect of which the option may be exercised will generally be scaled back to reflect the
period from the date of grant to the date of the event giving rise to the ability to exercise early relative
to the three year period from the date of grant to the normal vesting date. This will not be the case in
the event of a change of control upon a takeover of the Company where a performance condition
relating to such a change of control has been satisfied. In that event the number of Ordinary Shares in
respect of which the option may be exercised will not be scaled back.
(g)
Performance Conditions
Options will be granted subject to specified conditions to be determined by the Board at or shortly
prior to grant. These performance conditions, which, unless waived, must be met prior to the exercise
of the options, will be designed so that they will only be met in the event of a significant and sustained
improvement in the underlying financial performance of the Company.
(h)
Changes in Control
On a change of control an option may be exercised in a reasonable period specified by the Board or
failing that within four weeks of the change.
There will be no automatic waiver of performance conditions in the event of a change of control. If the
change of control takes place in the course of any corporate reconstruction or reorganisation under
which the ultimate beneficial ownership of the businesses of the Group will remain substantially the
same, and the arrangements for the corporate reconstruction or reorganisation include appropriate
provisions for either the replacement of options or compensation for participants for loss of their
options, then the Board may determine that any event which would otherwise trigger the exercise of
options shall not do so.
(i)
Alterations of Share Capital
In the event of any variation in the ordinary share capital of the Company, such adjustments to the
number of Ordinary Shares subject to options of the exercise price may be made as are, in the opinion
of the Board, fair and reasonable.
(j)
Voting, Dividend and Other Rights
Until options are exercised, participants have no voting or other rights in respect of the Ordinary Shares
subject to which the options relate. Options are not assignable or transferable and benefits obtained
under the 2014 EMI Plan are not pensionable. Shares issued under the 2014 EMI Plan shall rank pari
49
passu in all respects with the Ordinary Shares already in issue except that they will not rank for any
dividend or other distribution paid or made by reference to a record date falling prior to the date of
exercise of the option.
(k)
Administration and Amendment
The 2014 EMI Plan is administered under the direction of the Board and may be amended by a Board
resolution provided that no amendment may be made which would disadvantage participants without
the approval of the majority of the affected participants. The consent of Shareholders in general meeting
will be sought for changes to the material benefit of participants.
(l)
Termination
The 2014 EMI Plan may be terminated at any time by resolution of the Board of the Company in general
meeting but in any event it will terminate on the tenth anniversary following the adoption for the 2014
EMI Plan.
4. OPTIONS PROPOSED TO BE GRANTED UPON ADMISSION
4.1 Subject to the approval of the 2014 Executive Option Plan and the 2014 EMI Plan by Shareholders at
the General Meeting, it is intended that a grant of options over Ordinary Shares will be made to eligible
employees (including Executive Directors) following Admission equating to approximately ten per cent
of the issued share capital of the Enlarged Group. Such options will be granted at an exercise price
equal to the Subscription Price and will vest in full on the later of the first anniversary of the date of
grant and the date that the market price of an Ordinary Share (as derived from the Daily Official List) is
at least twice the Subscription Price and has been for a continuous period of 15 days.
4.2 The Board, having been so advised by Charles Stanley, considers that the adoption of the 2014
Executive Option Plan and the 2014 EMI Plan are in the best interests of the Company and its
Shareholders as a whole.
50
Part 9
GENERAL
1. Responsibility
1.1 The Directors accept responsibility for the information set out in this document, other than that relating
to the Concert Party and their immediate families, related trusts and persons connected with them, for
which the Concert Party accepts responsibility as set out below. To the best of the knowledge and belief
of the Directors (who have taken all reasonable care to ensure that such is the case), such information
is in accordance with the facts and does not omit anything likely to affect the import of such information.
1.2 Each member of the Concert Party (which includes Rajan Uppal in his capacities both as an individual
member of the Concert Party and as the sole Director of Bybrook Finance Solutions Limited) accepts
responsibility for the information set out in this document which pertains to them and their immediate
families, related trusts and persons connected with them. To the best of the knowledge and belief of
each member of the Concert Party (who have each taken all reasonable care to ensure that such is
the case), such information is in accordance with the facts and does not omit anything likely to affect
the import of such information.
2. Directors’ agreements with the Company
2.1 Non-Executive Directors’ Letters of Appointment
Each of Iain Ross, David Bloxham, David Venables and Sue Steven is engaged for indefinite terms,
with notice periods of one month, with an entitlement to accrued fees and expenses only up to the
date of termination. These appointments are subject to the provisions of the Articles. All Directors are
subject to election by Shareholders at the first Annual General Meeting after their appointment and to
re-election thereafter at intervals of no more than three years.
Iain Ross
Mr Ross is engaged as a Non-Executive Director of the Company under a letter of appointment which
became effective on 1 April 2013. He was last re-elected at the 2014 AGM. Mr Ross is entitled to an
annual fee of £12,000. His appointment is terminable on one month’s written notice by either party.
Upon Admission Mr Ross will remain as Non-Executive Chairman of the Enlarged Group and will be
entitled to an annual fee of £75,000 per annum. Mr Ross’ notice period will also be extended to six
months by either party.
Dr David Venables
Dr Venables is engaged as a Non-Executive Director of the Company under a letter of appointment
which became effective on 1 April 2013. He was last re-elected at the 2013 AGM. Dr Venables is
entitled to an annual fee of £12,000. His appointment is terminable on one month’s written notice by
either party. Upon Admission Dr Venables will resign as a Director.
Dr David Bloxham
Dr Bloxham is engaged as a Non-Executive Director of the Company under a letter of appointment
which became effective on 1 March 2011. He was last re-elected at the 2014 AGM. Dr Bloxham is
entitled to an annual fee of £12,000. His appointment is terminable on one month’s written notice by
either party. Upon Admission Dr Bloxham will resign as a Director.
Susan Steven
Mrs Steven is engaged as a Non-Executive Director of the Company under a letter of appointment
which became effective on 30 June 2014. Mrs Steven’s appointment has not yet been ratified by
Shareholders, having been appointed to the Board since the 2014 AGM. Mrs Steven is entitled to an
annual fee of £12,000. Her appointment is terminable on one month’s written notice by either party.
Upon Admission Mrs Steven will resign as a Director but will remain as Company Secretary of the
Enlarged Group.
The Enlarged Group intends to appoint two independent non-executive directors in due course
following Admission.
51
2.2 Proposed Executive Directors’ Appointments, Remuneration and Benefits, and Service
Contracts
Dominic Tonner
Dominic Tonner shall, conditional upon Admission, be appointed as the Chief Executive Officer of the
Company.
Mr Tonner shall be entitled to a salary of £220,000 per annum and his appointment shall be terminable
on 12 months’ written notice.
Mr Tonner’s service contract contains (i) an entitlement to participate in the Company’s Share Option
Scheme; (ii) a performance related pay/bonus scheme; and (iii) appropriate restrictive covenants for
an agreed period relating to the animal healthcare/veterinary sector.
Daniel Smith
Daniel Smith shall, conditional upon Admission, be appointed as the Chief Financial Officer of the
Company.
Mr Smith shall be entitled to a salary of £80,000 per annum and his appointment shall be terminable
on 6 months’ written notice.
Mr Smith’s service contract contains (i) an entitlement to participate in the Company’s Share Option
Scheme; (ii) a performance related pay/bonus scheme; and (iii) appropriate restrictive covenants for
an agreed period relating to the animal healthcare/veterinary sector.
Rajan Uppal
Rajan Uppal shall, conditional upon Admission, be appointed as the Corporate Development Director
of the Company.
Mr Uppal shall be entitled to a salary of £100,000 per annum and his appointment shall be terminable
on 6 months’ written notice.
Mr Uppal’s service contract contains (i) an entitlement to participate in the Company’s Share Option
Scheme; (ii) a performance related pay/bonus scheme; and (iii) appropriate restrictive covenants for
an agreed period relating to the animal healthcare/veterinary sector.
3. Interests of Directors in Ordinary Shares
3.1 Interests in the Ordinary Shares of the Company
As at 20 November 2014, being the latest practicable date prior to publication of this document, (a)
the interests of the Directors and persons connected (within the meaning of the Act) with them in the
share capital of the Company (all of which are beneficial unless otherwise stated), and (b) the number
of Ordinary Shares held under option by the Directors were, as follows:
(a)
Ordinary Shares
Director
Iain Ross
Dr David Venables
Dr David Bloxham
Susan Steven
1
Reflecting the Consolidation and Subdivision
52
Number
of Ordinary
Shares
held prior to
Admission1
Percentage
of existing
issued
share capital
held prior to
Admission
8,220
–
2,739
500
0.39
–
0.13
0.02
4. Material Contracts
4.1 Details of the material contracts (not being contracts entered into in the ordinary course of business)
which have been entered into by the Company during the period commencing on 21 November 2012
(being the date two years prior to the publication of this document) and ending on 20 November 2014
(being the latest practicable date prior to the publication of this document):
(a)
A settlement and release agreement dated 9 July 2013 pursuant to which the Company received
£300,000 in furtherance of a settlement of a dispute arising out of, inter alia, the sale of the
Company’s woundcare business to Crawford Woundcare Limited on 7 February 2011.
(b)
Subscription letters dated 21 November 2014 addressed to the Company from various persons
under which each has irrevocably agreed, conditionally on Admission, to subscribe respectively
for the Subscription Shares in each case at the Subscription Price. Each subscription letter
contains certain confirmations of the subscribers in favour of the Company.
(c)
A warrant agreement dated 21 November 2014 granting, conditional only on Admission, WG
Partners LLP warrants over two per cent. of the Enlarged Issued Share Capital to subscribe for
new Ordinary Shares (the “WG Warrants”) on the following terms:
(i)
one per cent. of the WG Warrants will be exercisable 12 months after Admission at an
exercise price equivalent to the Subscription Price; and
(ii)
the remaining one per cent. of the WG Warrants will be exercisable 24 months after
Admission at a 25 per cent. premium to the Subscription Price.
5.
General
No agreement, arrangement or understanding (including any compensation arrangement) exists
between the Concert Party and the Directors or proposed Directors, recent directors, Shareholders or
recent Shareholders having any connection with or dependence upon the proposals set out in this
document.
6.
Middle Market Quotations
The middle market quotations for the Ordinary Shares of the Company, as derived from the Daily Official
List, on the first business day of each of the six months immediately preceding the date of this
document and on 20 November 2014 (being the latest practicable date prior to the publication of this
document) were:
7.
Date (2014)
Price per Ordinary Share (pence)
2 June
1 July
1 August
1 September
1 October
3 November
20 November
0.54
0.54
0.54
0.54
0.54
0.54
0.54
Consents
7.1 Charles Stanley has given and not withdrawn its written consent to the issue of this circular with
the inclusion herein of references to its name in the form and context in which they appear.
7.2 Grant Thornton UK LLP has given and not withdrawn its written consent to the issue of this
circular with the inclusion herein of references to its name in the form and context in which
they appear.
53
8.
9.
Documents available for inspection
Copies of the following documents will be available for inspection during normal business hours on
any weekday (Saturdays, Sundays and public holidays excepted) up to and including
11 December 2014 at the offices of Marriott Harrison LLP, 11 Staple Inn, London, WC1V 7QH,
United Kingdom:
(a)
the Articles of the Company as at the date of this document and as proposed to be amended by
Resolution 10;
(b)
the audited accounts of the Company for the two financial years ended 31 December 2012 and
2013;
(c)
the unaudited accounts of the Company for the interim period ended 30 June 2014;
(d)
the unaudited accounts of BFSL for the year ended 31 October 2013;
(e)
the articles of association of BFSL as at the date of this document;
(f)
the audited accounts of PVG for the years ended 30 September 2011, 2012 and 2013;
(g)
the material contracts whose principal terms are summarised in paragraph 3 of this Part 9 (which
includes the share sale and purchase agreement in respect of the Acquisition);
(h)
copies of the rules of the 2014 Executive Option Plan and the 2014 EMI Plan;
(i)
the service agreements and terms of appointment for the Directors; and
(j)
this circular.
Documents incorporated by reference
Reference document
The Company
Interim Report 2014
Information incorporated by reference
Page number
in reference
document
Interim management report
Responsibility statement
Condensed income statement
Condensed balance sheet
Condensed statement of changes in equity
Condensed cash flow statement
Notes to the financial information
Independent review report to Ark Therapeutics Group plc
1-3
4
5
6
7
8
9-11
12
Annual Report and Accounts 2013 Strategic report
Directors’ report
Directors’ remuneration report
Independent Auditor’s report
Income statement
Balance sheet
Statement of changes in equity
Cash flow statement
Notes to the financial statements
1-8
8-11
22-32
34-36
37
38
39
39
40-50
Annual Report and Accounts 2012 Financial review
Directors’ remuneration report
Directors’ report
Independent Auditor’s report
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated cash flow statement
Notes to the Group financial statements
6-8
20-28
29-32
34-35
36
36
37
38
39
40-59
54
Reference document
Information incorporated by reference
The Company (continued)
Company balance sheet
Company statement of changes in equity
Company cash flow statement
Notes to the Company financial statements
BFSL
Unaudited Abbreviated
Accounts 2013
Abbreviated balance sheet
Notes to the abbreviated accounts
55
Page number
in reference
document
60
61
61
62-65
1
2
Part 10
DEFINITIONS
In the document the following terms have the following meanings:
2014 EMI Plan
the Enterprise Management Incentive Plan as summarised in Part 8
of this document
2014 Executive Option Plan
the executive option plan as summarised in Part 8 of this document
Acquisition
the proposed acquisition (subject to contract) of the entire issued
share capital of Premier Veterinary Group Limited
Additional Proposals
means the adoption of the 2014 Executive Option Plan and of the
2014 EMI Plan, the Waiver, the Subscription, the grant to the
Directors authority to allot the New Ordinary Shares and on a non
pre-emptive basis, the change of the Company’s name, the
Consolidation and Subdivision and related amendments to
the Articles
Admission
the admission of the New Ordinary Shares and the Existing Ordinary
Shares (i) to the Official List (standard segment) and (ii) to trading on
the London Stock Exchange's main market for listed securities
becoming effective in accordance with the Listing Rules and the
Admission and Disclosure Standards
Articles
the Company’s articles of association from time to time
BFSL
Bybrook Finance Solutions Limited, a member of the Concert Party
Board
the board of directors of the Company
City Code
means The City Code on Takeovers and Mergers as administered
by the Panel
Charles Stanley
Charles Stanley & Co. Ltd., the Company’s financial adviser
Company or Ark
Ark Therapeutics Group plc
Consolidation and Subdivision
the proposed share capital reorganisation to be effected by the
consolidation of every 100 Existing Ordinary Shares into 1 share of
100 pence and the subdivision of those shares into 1 New Ordinary
Share and 1 Deferred Share
Concert Party
BFSL, Rajan Uppal and Dominic Tonner
CREST
the computerised electronic settlement system operated by
Euroclear which facilitates the transfer of title to shares in
uncertificated form
Deferred Share
a deferred share of 90 pence
Directors
the existing directors of the Company whose names are set out on
page 5 of this document
Disclosure and Transparency
Rules or DTR
the disclosure and transparency rules made by the FCA under
Part VI of FSMA
Enlarged Group
Ark as would be enlarged following completion of the Acquisition
56
Enlarged Issued Share Capital
the issued share capital of the Company as it will be immediately
following Admission
EU
the European Union
Euroclear
Euroclear UK & Ireland Limited, a private limited company
incorporated in England and Wales with registered number
02878738
Existing Ordinary Shares
the fully paid Ordinary Shares in issue prior to the Consolidation and
Subdivision
General Meeting
the general meeting of the Company convened for 10.30 a.m. on
11 December 2014 at the offices of Marriott Harrison LLP, 11 Staple
Inn, London WC1V 7QH by the Notice of General Meeting
Form of Proxy
the form of proxy for use by Shareholders in connection with the
General Meeting
FCA
the Financial Conduct Authority
FSMA
the Financial Services and Markets Act 2000 (as amended)
FTSE
Financial Times Stock Exchange
IFRS
International Financial Reporting Standards
Independent Shareholders
Shareholders other than Rajan Uppal as a result of his being a
member of the Concert Party
Listing Principles
the Listing Principles contained in Listing Rule 7
Listing Rules
the Listing Rules made by FSMA governing, amongst other things,
admission of securities to the Official List
London Stock Exchange
London Stock Exchange plc
Main Market
the main market for trading in the listed securities of companies on
the London Stock Exchange
Model Code
the model code on directors’ dealings in securities, as set out in
Annex 1 to Chapter 9 of the Listing Rules
New Ordinary Share
a New Ordinary Share of 10 pence in the capital of the Company
Notice of General Meeting
the notice convening the General Meeting as set out at the end of
this document
Official List
the official list of the FCA
Ordinary Shares
ordinary shares of 1 penny each in the capital of the Company
Panel
The Panel on Takeovers and Mergers
Proposed Transfer
the proposed transfer of the Ordinary Shares out of the category of
a premium listing (commercial company) on the Official List and into
the category of a standard listing on the Official List
Prospectus Rules
the Prospectus Rules made by the FCA under Part VI of FSMA
PVG
Premier Veterinary Group Limited
57
PVG Group
PVG and its subsidiary companies, Zetland Limited, Thanet One
Limited, Bearwood Limited and WVS Limited
Record Date
12 December 2014 in respect of the Consolidation and Subscription
Registrar
Capita Asset Services
Regulatory Information Service
one of the regulatory information services authorised by the Financial
Conduct Authority to receive, process and disseminate regulatory
information from listed companies
related party
a person defined as such for the purposes of Chapter 11 of the
Listing Rules
Resolutions
the resolutions to be proposed at the General Meeting as set out in
the Notice of General Meeting
Revised BFSL Loan Arrangements the proposed amended loan terms (subject to contract) to be made
between BFSL and PVG and the other members of the Enlarged
Group, as summarised in paragraph 2 of Part 2 of this document
Transfer Resolution
the resolution to be proposed at the General Meeting in relation to
the Proposed Transfer, as set out in the Notice of General Meeting
(as resolution number 1)
Shareholders
holders of Ordinary Shares
Subscription
the conditional subscription for the Subscription Shares by the
subscribers summarised in paragraph 3 of Part 1 of this document
Subscription Price
10.1 pence per New Ordinary Share
Subscription Shares
the 11,859,007 New Ordinary Shares which fall to be allotted and
issued pursuant to the Subscription
UK or United Kingdom
the United Kingdom of Great Britain and Northern Ireland
UK Corporate Governance Code
the UK Corporate Governance Code published by the Financial
Reporting Council, in force from time to time
UKLA
the United Kingdom Listing Authority, acting in its capacity as the
competent authority for the purposes of Part VI of FSMA
Waiver
the proposed waiver of Rule 9 of the City Code in relation to the
proposed allotment and issue of an aggregate of 9,626,724
Subscription Shares to the members of the Concert Party
58
NOTICE OF GENERAL MEETING
Ark Therapeutics Group plc
(Incorporated and registered in England & Wales with registered number 04313987)
NOTICE OF GENERAL MEETING
NOTICE is hereby given that a General Meeting of Ark Therapeutics Group plc will be held at 10.30 a.m. on
11 December 2014, at the offices of Marriott Harrison LLP, 11 Staple Inn, London WC1V 7QH, for the
purpose of considering and, if thought fit, passing the following resolutions of which Resolution 1 will be
proposed as a special resolution, resolutions 2 to 7 will be proposed as ordinary resolutions (with resolution
5 being put to a poll of independent shareholders other than the Concert Party) and Resolutions 8 to 11
inclusive will be proposed as special resolutions:
SPECIAL RESOLUTION
1.
THAT the proposed transfer of the Company’s category of equity share listing on the Official List of the
United Kingdom Listing Authority and on the Main Market of the London Stock Exchange plc from a
premium listing (commercial company) to a standard listing (shares) (the “Transfer”) be and is hereby
approved and the Directors of the Company be and are hereby authorised to cause such Transfer to
be effected and to do and/or procure to be done all such acts or things as they may consider necessary
or desirable in connection therewith.
ORDINARY RESOLUTIONS
2.
THAT the 2014 Executive Option Plan be adopted.
3.
THAT the 2014 EMI Plan be adopted.
4.
THAT the Directors’ remuneration policy in the form set out in Part 8 of the circular to Shareholders of
which this notice of meeting forms part be approved.
5.
THAT the waiver granted by the Panel on Takeovers and Mergers on the terms described in Part 1 of
the circular to Shareholders of which this notice of meeting forms part, conditional on the passing of
this Resolution on a poll, of any requirement under rule 9 of the City Code on Takeovers and Mergers
for the Concert Party (as defined in the circular) to make a general offer to the shareholders of the
Company as a result of the issue and allotment to it of New Ordinary Shares as part of the Subscription
(all as defined in the circular), as a result of which the Concert Party will own in aggregate over 50 per
cent. of the then issued share capital of the Company be approved.
6.
THAT the terms of the Subscription be and they are hereby approved.
7.
THAT the Directors be and they are hereby generally and unconditionally authorised pursuant to section
551 of the Companies Act 2006 (the “Act”) to exercise all the powers of the Company to allot shares
in the Company and to grant rights to subscribe for or to convert any security into such shares (all of
which transactions are hereafter referred to as an allotment of “relevant securities” up to an aggregate
nominal amount of £1,325,418.40 which authority shall be in addition to the existing authority conferred,
which shall continue in full force and effect. The authority conferred by this resolution shall expire (unless
previously revoked or varied by the Company in general meeting) on the conclusion of the next annual
general meeting of the Company or the date 15 months from the date of passing of this resolution,
whichever is the earlier, save that the Company may before such expiry, revocation or variation make
an offer or agreement which would or might require relevant securities to be allotted after such expiry,
59
revocation or variation and the Directors may allot relevant securities in pursuant of such offer or
agreement as if the authority hereby conferred had not expired or been revoked or varied.
SPECIAL RESOLUTIONS
8.
THAT conditional upon the passing of Resolution 7 above, in addition to all other existing powers of
the Directors under section 570 of the Act which shall continue in full force and effect, the Directors
are empowered under the said section 570 to allot equity securities as defined by section 560 of the
Act for cash pursuant to the authority conferred by Resolution 7 above as if section 561 of the Act did
not apply to any such allotment, provided that such allotments are made pursuant to the Acquisition.
Such power shall, subject to the continuance of the authority conferred by Resolution 7, expire on the
conclusion of the next annual general meeting of the Company or the date 15 months from the date
of passing of this resolution, whichever is the earlier, but may be revoked or varied from time to time
by Special Resolution so that the Company may before such expiry, revocation or variation make an
offer or agreement which would or might require equity securities to be allotted after such expiry,
revocation or variation and the Directors may allot equity securities in pursuance of such offer or
agreement as if such power had not expired or been revoked or varied.
9.
THAT every 100 of Ordinary Shares of £0.01 each in the capital of the Company in issue at the close
of business on the Record Date (or such other time and date as the Directors may determine) be
consolidated into 1 ordinary share of 100 pence and then subdivided into 1 New Ordinary of £0.10 in
the capital of the Company, having the same rights, being subject to the restrictions and ranking pari
passu in all respects with the Existing Ordinary Shares of £0.01 each in the capital of the Company,
(save as to nominal value), and one Deferred Share of £0.90 each in the capital of the Company, having
the rights and being subject to the restrictions set out in the articles of association, as amended
pursuant to Resolution 10 below.
10. THAT conditional on the passing of Resolution 9, the articles of association be amended by:
(a)
inserting in Article 3.1 the following definition:
“Deferred Shares” the deferred shares of £0.90 each in the capital of the Company with the rights
set out in Article 3.1;
(b)
inserting the following Article as a new Article 3.1:
“3.1 The rights and restrictions attached to the Deferred Shares shall be as follows:3.1.1 As regards income, the holders of the Deferred Shares shall not be entitled to receive
any dividend out of the profits of the Company available for distribution and resolved
to be distributed in respect of any financial year or any other income or right to
participate therein.
3.1.2 As regards capital on a distribution of assets on a winding-up or other return of capital
(otherwise than on conversion or redemption on purchase by the Company of any of
its shares), the holders of the Deferred Shares shall be entitled to receive the amount
paid up on their shares after there shall have been distributed (in cash or in specie)
to the holders of the ordinary shares the amount of £100,000,000 in respect of each
ordinary share held by them respectively. For this purposes distributions in currency
other than sterling shall be treated as converted into sterling, and the value for any
distribution in specie shall be ascertain in sterling, in each case in such manner as
the Directors of the Company in general meeting may approve. The Deferred Shares
shall not entitle the holders thereof to any further or other right of participation in the
assets of the Company.
3.1.3 As regards voting, the holders of Deferred Shares shall not be entitled to receive
notice of or to attend (either personally or by proxy) any general meeting of the
60
Company or to vote (either personally or by proxy) on any resolution to be proposed
thereat.
3.1.4 The rights attached to the Deferred Shares shall not be deemed to be varied or
abrogated by the creation or issue of any new shares ranking in priority to or pari
passu with or subsequent to such shares. In addition, neither the passing by the
Company of any resolution for the cancellation of the Deferred Shares for no
consideration by means of a reduction of capital requiring the confirmation of the
Court nor the obtaining by the Company nor the making by the Court of any order
confirming any such reduction of capital nor the becoming effective of any such order
shall constitute a variation, modification or abrogation of the rights attaching to the
Deferred Shares and accordingly the Deferred Shares may at any time be cancelled
for no consideration by means of a reduction of capital effected in accordance with
applicable legislation without sanction on the part of the holders of the Deferred
Shares.
3.1.5 Notwithstanding any other provision of these Articles, the Company shall have the
power and authority at any time to purchase all or any of the Deferred Shares for an
aggregate consideration of £1.
3.1.6 The Company shall have irrevocable authority to appoint any person to execute on
behalf of the holders of the Deferred Shares a transfer/cancellation of the Deferred
Shares and/or an agreement to transfer/cancel the same, without making any
payment to the holders of the Deferred Shares to such person or persons as the
Company may determine as custodian thereof and, pending such transfer and/or
cancellation and/or purchase, to retain the certificate(s) if any, for such shares.
3.1.7 The Company may, at its option and subject to compliance with the provisions of
applicable legislation, at any time after the adoption of this Article, cancel such shares
by way of reduction of capital for no consideration.
3.1.8 Notwithstanding any other provision of these Articles, and unless specifically required
by the provisions of applicable legislation, the Company shall not be required to issue
any certificates or other documents of title in respect of the Deferred Shares.”
11. THAT, conditional on Admission, the Company's name be changed to Premier Veterinary Group plc.
Notes:
(a)
Copies of the 2014 Executive Option Plan and the 2014 EMI Plan are available for inspection at the Company's registered office
during normal business hours from the date of this document until the date of the General Meeting and will be available for
inspection at the place of the meeting for at least 15 minutes prior to and during the meeting.
(b)
As a member of the Company you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote
at the General Meeting of the Company. You can only appoint a proxy using the procedures set out in these notes.
(c)
Appointment of a proxy does not preclude you from attending the meeting and voting in person. If you have appointed a proxy
and attend the meeting in person, your proxy appointment will automatically be terminated.
(d)
A proxy does not need to be a member of the Company but must attend the meeting to represent you. To appoint as your proxy
a person other than the Chairman of the meeting, insert their full name in the box on your proxy form. If you sign and return your
proxy form with no name inserted in the box, the Chairman of the meeting will be deemed to be your proxy. Where you appoint
as your proxy someone other than the Chairman, you are responsible for ensuring that they attend the meeting and are aware of
your voting intentions. If you wish your proxy to make any comments on your behalf, you will need to appoint someone other
than the Chairman and give them the relevant instructions directly.
(e)
You may appoint more than one proxy provided each proxy is appointed to exercise the rights attached to a different share or
shares held by you. You may not appoint more than one proxy to exercise rights attached to any one share.
(f)
If the proxy is being appointed in relation to less than your full voting entitlement, please enter in the box provided the number of
shares in relation to which they are authorised to act as your proxy. If left blank your proxy will be deemed to be authorised in
respect of your full voting entitlement (or if this proxy form has been issued in respect of a designated account for a shareholder,
the full voting entitlement for that designated account). In the event of a conflict between a blank proxy form and a proxy form
which states the number of shares to which it applies, the specific proxy form shall be counted first, regardless of whether it was
61
sent or received before or after the blank proxy form, and any remaining shares in respect of which you are the registered holder
will be apportioned to the blank proxy form. If you submit more than one completed valid proxy, the proxy received last before the
latest time for receipt of proxies will take precedence.
(g)
To appoint more than one proxy, you may photocopy the proxy form. Please indicate in the box on the form the number of shares
in relation to which they are authorised to act as your proxy. Please also indicate with an “l” in the place provided on the proxy
form if the proxy instruction is one of multiple instructions being given. All forms must be signed and should be returned together
in the same envelope.
(h)
To direct your proxy how to vote on the resolutions mark the appropriate box on your proxy form with an 'l'. To abstain from voting
on a resolution, select the relevant ''Vote withheld'' box. A vote withheld is not a vote in law, which means that the vote will not
be counted in the calculation of votes for or against the resolution. If you mark with an “l” “discretion”, or if no voting indication is
given, your proxy will vote or abstain from voting as he or she sees fit.
(i)
To appoint a proxy using this form, your proxy form must be:
●
completed and signed by the appointor or their duly authorised attorney;
●
sent or delivered to Capita Asset Services at PXS1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF; and
●
received by post or by hand by Capita Asset Services no later than 10.30 a.m. on 9 December 2014 (together with any
power of attorney or other authority under which it is signed or a notarially certified copy of such power or a copy certified
in accordance with the Power of Attorney Act 1971 or in some other manner approved by the Directors).
Completed proxy forms should not be sent to the Company's registered office or to any address other than that set
out in note (i) above.
Alternatively, a proxy may be appointed electronically using the Share Portal Service at www.capitashareportal.com by logging in
and selecting the “Proxy Voting” link by 10.30 a.m on 9 December 2014.
(j)
In the case of a member which is a company, your proxy form must be executed under its common seal or signed on its behalf
by a duly authorised officer of the company or an attorney for the company stating their capacity (e.g. director, secretary).
(k)
Any power of attorney or any other authority under which your proxy form is signed (or a duly certified copy of such power or
authority) must be included with your proxy form.
(l)
CREST members who wish to appoint a proxy or proxies by using the CREST electronic appointment service may do so by using
the procedures described in the CREST Manual (available via www.euroclear.com/CREST) subject to the provisions of the
Company's articles of association. CREST personal members or other CREST sponsored members, and those CREST members
who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be
able to take the appropriate action on their behalf. To be valid, the appropriate CREST message, regardless of whether it constitutes
the appointment of a proxy or an amendment to the instructions given to a previously appointed proxy, must be transmitted so
as to be received by our agent Capita Asset Services, whose CREST participant ID is RA10, by 10.30 a.m. on 9 December 2014.
(m) In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted
by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in
the Company's register of members in respect of the joint holding (the first named being the most senior).
(n)
If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies
will take precedence.
(o)
Save through CREST, we do not have a facility to receive proxy forms electronically. Therefore, you may not use any electronic
address referred to in the proxy form or any related document to submit your proxy form.
Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those members entered
on the register of members of the Company at 6.00 pm on 9 December 2014 or, in the event that this meeting is adjourned, in the
register of members as at 6.00 pm on the day two days before the date of any adjourned meeting shall be entitled to attend and vote
at the meeting in respect of the number of ordinary shares registered in their names at that time. Changes to the entries on the register
of members after 6.00 pm on 9 December 2014, or in the event that this meeting is adjourned, in the register of members after 6.00
pm on the day two days before the date of the adjourned meeting shall be disregarded in determining the rights of any person to
attend or vote at the meeting.
62
Perivan Financial Print
233911