TIDMSIS
RNS Number : 3805W
Science in Sport PLC
14 November 2017
14 November 2017
SCIENCE IN SPORT PLC
("SiS" or the "Company")
Firm Placing and Open Offer to raise up to approximately GBP15.0
million
Notice of General Meeting
Science in Sport plc (AIM: SIS), a leading sports nutrition
company that develops, manufactures and markets sports nutrition
products for professional athletes and sports enthusiasts, is
pleased to announce a conditional Firm Placing and Open Offer to
raise up to approximately GBP15.0 million before costs through the
issue of up to 21,425,420 new Ordinary Shares at the Offer Price of
70 pence per share.
Highlights
-- Oversubscribed Firm Placing of 20,000,000 Ordinary Shares at
the Offer Price of 70 pence per Ordinary Share to raise GBP14.0
million before expenses. The Transaction has received strong
support from both existing shareholders and new institutional
investors.
-- Open Offer for an aggregate of 1,425,420 Offer Shares on the
basis of 1 New Ordinary Share for every 32 Existing Ordinary
Shares, at 70 pence each to raise up to approximately GBP1.0
million before expenses.
-- The Offer Price of 70 pence per share represents a discount
of 2.1 per cent. to the closing mid-market price of 71.5 pence on
13 November 2017, being the last business day prior to this
announcement.
-- The net proceeds will be used by the Company to invest within
the following markets/regions in order to increase brand awareness,
support working capital requirements and to develop distribution in
online and traditional sales channels:
- the US sports nutrition market, specifically to support online distribution;
- the football market; and
- the Italian sports nutrition market.
-- In addition to the above, the balance of the net proceeds
will be used to fund working capital needs of the Company, as well
as supporting further investment in brand awareness and development
of our e-commerce platform in the core UK and EU business.
-- The Firm Placing and Open Offer are conditional, inter alia,
upon Shareholders approving the Resolutions at a General Meeting. A
circular containing a Notice of General Meeting will be sent to
Shareholders today.
Science in Sport Chief Executive, Stephen Moon commented:
"Science in Sport has quickly grown to become a leader in
endurance sports nutrition for elite athletes, but our ambition is
to capture a much bigger market share and to expand internationally
beyond our now profitable core business. The US market and football
present highly compelling growth opportunities and the new funds
will allow us to implement our plans to increase our position and
brand awareness in these markets, as well as invest in the
development of our e-commerce platform.
"We are delighted with the level of support from existing
shareholders and new investors, which has been demonstrated by the
significantly oversubscribed placing. We believe this is a great
endorsement of our strategy and path to profitability and we look
forward to updating the market on our progress in due course."
For further information:
Science in Sport PLC +44 (0) 20 7400 3700
Stephen Moon, CEO
Elizabeth Lake, Finance Director
Cenkos Securities - NOMAD and Broker +44 (0) 20 7397 8900
Bobbie Hilliam, Harry Hargreaves - NOMAD
Nick Searle - Sales
Yellow Jersey - Financial PR +44 (0) 7825 916 715
Georgia Colkin
Charles Goodwin
Introduction
The Company has today announced a conditional Firm Placing to
raise GBP14.0 million (before fees and expenses) by the issue and
allotment by the Company of 20,000,000 Ordinary Shares at the Offer
Price of 70 pence per Ordinary Share.
In addition, in order to provide Shareholders who have not taken
part in the Firm Placing with an opportunity to participate in the
proposed issue of New Ordinary Shares, the Company is providing all
Qualifying Shareholders with the opportunity to subscribe at the
Offer Price for an aggregate of 1,425,420 Offer Shares, to raise up
to approximately GBP1.0 million (before fees and expenses), on the
basis of 1 New Ordinary Share for every 32 Existing Ordinary
Shares, at 70 pence each, payable in full on acceptance.
The Firm Placing and Open Offer are conditional, inter alia,
upon Shareholders approving the Resolutions at the General Meeting
that will grant to the Directors the authority to allot the New
Ordinary Shares and the power to disapply statutory pre-emption
rights in respect of the New Ordinary Shares. The Resolutions are
contained in the Notice of General Meeting at the end of the
circular being sent to Shareholders today. Admission is expected to
occur no later than 8.00 a.m. on 4 December 2017 or such later time
and/or date as Cenkos Securities and the Company may agree. The
Firm Placing and Open Offer are not underwritten.
The Open Offer provides Qualifying Shareholders with an
opportunity to participate in the proposed issue of the New
Ordinary Shares on a pre-emptive basis whilst providing the Company
with additional capital to invest in the business of the Group.
Set out below are the background to and reasons for the Firm
Placing and Open Offer, the use of proceeds, details of the Firm
Placing and Open Offer and a recommendation from the Directors of
the Company that Shareholders vote in favour of the
Resolutions.
Background to and reasons for the Firm Placing and Open
Offer
In October 2015, the Company raised GBP8.7 million via a placing
and open offer as it pursued a growth strategy focussed on
accelerating the revenue growth of the Company. This accelerated
growth strategy was based upon, inter alia, pursuing multiple
growth opportunities in e-commerce and new international
markets.
During 2016, and using the placing and open offer proceeds
raised in October 2015, the Company grew revenue by 30 per cent. to
GBP12.3 million (2015: GBP9.5 million). In addition, for the 6
months ending 30 June 2017, the Company reported a further period
of strong revenue growth, with revenue up 28 per cent. to GBP8.3
million (H1 2016: GBP6.5 million). International and e-commerce
sales growth was particularly strong, reflecting the Company's
continued investment in its e-commerce platform and brand
awareness. The Company reported cash and cash equivalents on 30
June 2017 of GBP3.9 million.
The Directors believe the Transaction will provide further
funding to the Company to continue its accelerated revenue growth
strategy. As part of this strategy, the Company intends to further
invest in its existing e-commerce infrastructure and its
international operations.
To date, the Company has successfully grown its Australian
operations so that the SiS brand has significant brand awareness in
that region. The Company intends to further establish, test and
grow similar local country operations in both Italy and the US
following receipt of certain net proceeds of the Transaction. The
Company intends to grow its international operations in these
countries via increased brand awareness and channel distribution
gains.
The Company also intends to broaden its consumer and brand
awareness to new endurance sports, outside of SiS's traditional
cycling and running market. Specifically the Directors believe
there is demand for the SiS product range within the football
sports market, where there is a significant level of athlete
participation. The Directors' belief in the opportunity for SiS in
football is based upon a number of discussions the Company has had
with various professional football clubs, who are keen to enter
into nutrition partnerships and supply agreements, and the
professionalism and number of grass root athletes who participate
in the sport. SiS currently works with 48 leading professional
clubs, including 4 national associations and 8 English Premier
League Clubs. Shortly after the Transaction, SiS intends to enter
into a multi-year nutritional sponsorship agreement with one of the
largest football clubs in the world to drive awareness of the SiS
brand. The football club is an English based Premiership team. The
nutritional sponsorship agreement is expected to grant the Company
certain rights related to advertising, promotion and general
marketing as well as allowing the Company access to elite athletes.
The Company also expects to provide nutritional products to both
the football club and its players.
The Directors believe the above new markets will allow the
Company to target a significantly greater number of athletes and
therefore assist in the continued growth of the Company both within
the UK and internationally.
Use of proceeds
The Company intends to raise GBP14.0 million before expenses by
the conditional Firm Placing and up to a further GBP1.0 million
before expenses under the Open Offer. The expenses for the
Transaction are expected to be up to approximately GBP1.0 million
dependent on the proceeds from the Open Offer.
The net proceeds will be used by the Company to invest within
the following markets/regions in order to increase brand awareness,
support working capital requirements and to develop distribution in
online and traditional sales channels:
-- approximately GBP3.9 million will be invested to target the
US sports nutrition market, specifically to support online
distribution;
-- approximately GBP2.8 million will be invested to target the football market; and
-- approximately GBP0.6 million will be invested to target the
Italian sports nutrition market.
In addition to the above, the balance of the net proceeds will
be used to fund working capital needs of the Company, as well as
supporting further investment in brand awareness and development of
our e-commerce platform in the core UK and EU business.
Current trading and prospects
The Company published its unaudited interim report for the 6
months to 30 June 2017 on 20 September 2017. Within the interim
report the Company reported a period of strong revenue growth, with
sales up 28 per cent. at GBP8.3 million (H1 2016: GBP6.5 million)
for the 6 months to 30 June 2017. International and e-commerce
sales growth was particularly strong, reflecting the Company's
continued investment in its e-commerce platform and brand
awareness.
Gross profit of 58.8 per cent. (H1 2016: 58.9 per cent.)
reflects the Company's low-cost manufacturing facility in Nelson
which remains a strategic advantage. Investment has driven further
efficiencies at the facility which has enabled the business to
absorb increases in raw material costs and the growth of protein
products within the overall product mix.
The underlying operating loss of the Company was in line with
management expectations at GBP(1.1) million (H1 2016: GBP(0.4)
million) given accelerated investment in all markets in marketing,
sales and e-commerce of GBP4.7 million (H1 2016: GBP3.0 million).
The core UK and EU business broke even in the first half of 2017
and with marketing expenditure phased heavily to the first half, is
on track to be profitable at EBITDA level for the full year, in
line with management expectations.
Overheads excluding sales and marketing were GBP2.4 million (H1
2016: GBP1.6 million) for the six months to 30 June 2017.
Share-based payments were higher during the period by GBP0.5
million, as the first half of 2016 had no Long Term Incentive Plan
(LTIP) charge given no share schemes were in place. Management
continue to seek to limit underlying overheads to single-digit
percentage increases in the future, currently achieving 11.8 per
cent. excluding the share-based payments charge. The increase over
the targeted single-digit growth rate was due to one-off costs
related to a significant upgrade in our world-class banned
substance programme, and investment in project management skills to
ensure delivery of a range of major commercial and operational
strategic projects.
Cash and cash equivalents at the period end were GBP3.9 million
(H1 2016: GBP6.6 million). Cash outflow during the first half of
2017 represents continued operational investment to support the
Company's strongly growing international and e-commerce businesses.
In addition, significant investment has continued in the e-commerce
platform to accelerate customer conversion, investment in systems
to further support international expansion with the integration of
third party logistics in Italy and the US, as well as the
introduction of SAP to support finance and operations across the
whole business.
The Directors can confirm the Company continues to trade in line
with market expectations and view the future with confidence.
The Firm Placing and Open Offer
Details of the Firm Placing
The Company has conditionally raised GBP14.0 million before
expenses by the conditional Firm Placing of 20,000,000 Firm Placing
Shares at the Offer Price to the Firm Placees.
The Firm Placing is conditional, inter alia, upon:
-- the passing of all of the Resolutions at the General Meeting;
-- the Firm Placing and Open Offer Agreement becoming or being
declared unconditional in all respects and not having been
terminated in accordance with its terms prior to Admission; and
-- Admission becoming effective by no later than 8.00 a.m. on 4
December 2017 or such later time and/or date (being no later than
8.00 a.m. on 29 December 2017) as Cenkos Securities and the Company
may agree.
If any of the conditions are not satisfied, the Firm Placing
Shares will not be issued and all monies received from the Firm
Placees will be returned to them (at the Firm Placees' risk and
without interest) as soon as possible thereafter.
The Firm Placing Shares are not subject to clawback and are not
part of the Open Offer.
The Firm Placing Shares (and the Offer Shares) will be issued
free of all liens, charges and encumbrances and will, when issued
and fully paid, rank pari passu in all respects with the Existing
Ordinary Shares, including the right to receive all dividends and
other distributions declared, made or paid after the date of their
issue.
Application will be made to the London Stock Exchange for the
Admission of the Firm Placing Shares to trading on AIM. It is
expected that Admission will occur and that dealings will commence
at 8.00 a.m. on 4 December 2017 at which time it is also expected
that the Firm Placing Shares will be enabled for settlement in
CREST.
Details of the Open Offer
The Company is proposing to raise up to approximately GBP1.0
million before expenses through the Open Offer. A total of
1,425,420 New Ordinary Shares are available to Qualifying
Shareholders pursuant to the Open Offer at the Offer Price, payable
in full on acceptance. Any Offer Shares not subscribed for by
Qualifying Shareholders will be available to Qualifying
Shareholders under the Excess Application Facility. The balance of
any Offer Shares not subscribed for under the Excess Application
Facility will not be available to Firm Placees under the Firm
Placing.
Qualifying Shareholders may apply for Offer Shares under the
Open Offer at the Offer Price on the following basis:
1 Offer Share for every 32 Existing Ordinary Shares
and so in proportion for any number of Existing Ordinary Shares
held on the Record Date. Entitlements of Qualifying Shareholders
will be rounded down to the nearest whole number of Offer Shares.
Fractional entitlements which would otherwise arise will not be
issued to the Qualifying Shareholders but will be made available
under the Excess Application Facility. The Excess Application
Facility enables Qualifying Shareholders to apply for Excess Shares
in excess of their Open Offer Entitlement. Not all Shareholders
will be Qualifying Shareholders. Shareholders who are located in,
or are citizens of, or have a registered office in Restricted
Jurisdictions will not qualify to participate in the Open Offer.
Overseas Shareholders should review paragraph 6 of Part 3 of the
circular for further details.
Valid applications by Qualifying Shareholders will be satisfied
in full up to their Open Offer Entitlements as shown on the
Application Form. Applicants may apply for less or more than their
entitlements under the Open Offer but the Company cannot guarantee
that any application for Excess Shares under the Excess Application
Facility will be satisfied as this will depend in part on the
extent to which other Qualifying Shareholders apply for less than
or more than their own Open Offer Entitlements. The Company may
satisfy valid applications for Excess Shares of applicants in whole
or in part but reserves the right not to satisfy any excess above
any Open Offer Entitlement. The Board may scale back applications
made in excess of Open Offer Entitlements on such basis as it
reasonably considers to be appropriate.
Application has been made for the Offer Shares to be admitted to
CREST. It is expected that such Offer Shares will be credited to
CREST on 15 November 2017. The Offer Shares will not be enabled for
settlement in CREST until or at the earliest opportunity after 8.00
a.m. on 15 November 2017. Applications through the CREST system may
only be made by the Qualifying CREST Shareholder originally
entitled or by a person entitled by virtue of bona fide market
claims. The Offer Shares must be paid in full on application. The
latest time and date for receipt of completed Application Forms or
CREST applications and payment in respect of the Open Offer is
11.00 a.m. on 30 November 2017. The Open Offer is not being made to
certain Overseas Shareholders, as set out in paragraph 6 of Part 3
of the circular.
Qualifying Shareholders should note that the Open Offer is not a
rights issue and therefore any Offer Shares which are not applied
for by Qualifying Shareholders will not be sold in the market for
the benefit of the Qualifying Shareholders who do not apply under
the Open Offer. The Application Form is not a document of title and
cannot be traded or otherwise transferred.
Further details of the Open Offer and the terms and conditions
on which it is being made, including the procedure for application
and payment, are contained in Part 3 of the circular and on the
accompanying Application Form (if relevant).
The Open Offer is conditional on the Firm Placing becoming or
being declared unconditional in all respects and not being
terminated before Admission (as the case may be). The principal
conditions to the Firm Placing are:
-- the passing of all of the Resolutions at the General Meeting;
-- the Firm Placing and Open Offer Agreement having become or
being declared unconditional in all respects and not having been
terminated in accordance with its terms prior to Admission; and
-- Admission becoming effective by no later than 8.00 a.m. on 4
December 2017 or such later time and/or date (being no later than
8.00 a.m. on 29 December 2017) as Cenkos Securities and the Company
may agree.
Accordingly, if these conditions are not satisfied or waived
(where capable of waiver), the Open Offer will not proceed and the
Offer Shares will not be issued and all monies received by Equiniti
from applicants will be returned to such applicants (at the
applicants' risk and without interest) as soon as possible
thereafter. Any Open Offer Entitlements admitted to CREST will
thereafter be disabled.
The Offer Shares (and the Firm Placing Shares) will be issued
free of all liens, charges and encumbrances and will, when issued
and fully paid, rank pari passu in all respects with the Existing
Ordinary Shares, including the right to receive all dividends and
other distributions declared, made or paid after the date of their
issue.
Application will be made to the London Stock Exchange for the
admission of the Offer Shares to trading on AIM. It is expected
that Admission will occur and that dealings will commence at 8.00
a.m. on 4 December 2017 at which time it is also expected that the
Offer Shares will be enabled for settlement in CREST.
Firm Placing and Open Offer Agreement
Pursuant to the Firm Placing and Open Offer Agreement, Cenkos
Securities has agreed to use its reasonable endeavours as agent of
the Company to procure subscribers for the Firm Placing Shares at
the Offer Price.
The Firm Placing and Open Offer Agreement provides, inter alia,
for payment by the Company to Cenkos Securities of commissions
based upon the number of Firm Placing Shares placed by Cenkos
Securities and the Offer Shares applied for respectively,
multiplied by the Offer Price.
The Company will bear all other expenses of and incidental to
the Firm Placing and Open Offer, including printing costs,
Registrar's and Receiving Agent's fees, all legal and accounting
fees of the Company and all stamp duty and other taxes and duties
payable.
The Firm Placing and Open Offer Agreement contains certain
warranties and indemnities from the Company in favour of Cenkos
Securities and is conditional, inter alia, upon:
-- Shareholder approval of the Resolutions at the General Meeting;
-- the relevant Firm Placing Shares and Offer Shares having been
allotted, conditional only on Admission;
-- the Firm Placing and Open Offer Agreement not having been
terminated in accordance with its terms prior to Admission; and
-- Admission becoming effective not later than 8.00 a.m. on 4
December 2017 or such later time and/or date as the Company and
Cenkos Securities may agree, being not later than 29 December
2017.
Cenkos Securities may terminate the Firm Placing and Open Offer
Agreement in certain circumstances, if, inter alia, the Company is
in material breach of any of its obligations under the Firm Placing
and Open Offer Agreement; if there is a material adverse change in
the condition, earnings, business, operations or solvency of the
Company; or if there is a material adverse change in the financial,
political, economic or stock market conditions, which in their
respective reasonable opinion makes it impractical or inadvisable
to proceed with the Firm Placing and Open Offer.
Related Party Transaction
Downing LLP, a 14.9 per cent. Shareholder, has agreed to
subscribe for 2,142,850 Firm Placing Shares as part of the Firm
Placing, equivalent to approximately GBP1.5 million. The Firm
Placing Shares for which Downing LLP are subscribing, represent
10.7 per cent. of the total number of Firm Placing Shares.
Downing LLP is a Substantial Shareholder under the AIM Rules for
Companies and therefore the participation of Downing LLP in the
Firm Placing constitutes a related party transaction under Rule 13
of the AIM Rules for Companies. The Directors consider that, having
consulted with Cenkos Securities, the terms of Downing LLP's
participation in the Firm Placing are fair and reasonable insofar
as Shareholders are concerned.
Director Dealing
As part of the Firm Placing, Stephen Moon, a director of the
Company, has agreed to purchase 107,143 Firm Placing Shares,
subject to the passing of the resolutions at the General Meeting.
Following Admission, Stephen Moon's beneficial interest in the
Company will increase to 843,456 Ordinary Shares, which
representing approximately 1.3 per cent. of the Enlarged Share
Capital (assuming the Open Offer is fully subscribed).
None of the Directors currently expect to take up their
entitlement to subscribe for New Ordinary Shares under the Open
Offer.
Transaction Considerations
As set out in the Recommendation section below, the Directors
believe the Transaction to be in the best interests of the Company
and its Shareholders as a whole. In making this statement the
Directors have spent time, and have taken appropriate advice, in
considering the Transaction and the method by which the Company
will raise the net proceeds. The Directors have concluded that the
Firm Placing accompanied by the Open Offer is the most appropriate
structure to raise funding for the following reasons:
-- the Firm Placing enables the Company to attract a number of
new investors to its shareholder register, which the Directors
expect will improve liquidity going forward, and will also provide
an element of funding certainty within the Transaction;
-- the Directors believe the Firm Placing enables a number of
blue chip institutions, who are already shareholders in the
Company, to obtain a more meaningful shareholding in the Company
therefore providing a greater level of funding certainty if the
Company decided to raise funds in the future to support an
acquisition and/or further revenue acceleration. Shareholders
should be aware that the Directors have no current intentions to
raise further finance following the Transaction but the Company has
an ongoing strategy of assessing strategic opportunities which the
Board believes may increase shareholder value; and
-- the Open Offer of up to approximately GBP1.0 million enables
all Shareholders to participate in the Transaction on the same
terms as institutional and new investors but without the time and
costs associated with a full pre-emptive offer. A full pre-emptive
offer, either via a rights issue or open offer, above GBP4.4
million (EUR5 million) would have required the Company to have
produced a prospectus which would have taken significant time and
cost. In setting the amount that can be raised from the Open Offer,
the Directors have taken into account the level of acceptances
received in the open offer undertaken by the Company in October
2015.
The Offer Price represents a discount of 2.1 per cent. to the
closing mid-market price of 71.5 pence per Ordinary Share on 13
November 2017, being the latest practicable date prior to this
announcement. The Directors can confirm the Offer Price, and
therefore potential dilution for Shareholders, has been a
consideration in setting the amount to be raised as part of the
Transaction and the decision to undertake an Open Offer in
conjunction with the Firm Placing. The Offer Price was established
as part of a book building process undertaken by the Company's
advisors and also following consultation with certain substantial
Shareholders and incoming investors.
General Meeting
The Directors do not currently have authority to allot all of
the New Ordinary Shares and, accordingly, the Board is seeking the
approval of Shareholders to allot the New Ordinary Shares at the
General Meeting.
A notice convening the General Meeting, which is to be held at
4th Floor, 16-18 Hatton Garden, Farringdon, London EC1N 8AT at
10.00 a.m. on 1 December 2017, is set out in a circular sent to
Shareholders today and which will be available on the Company's
website (www.scienceinsport.com).
Recommendation
The Directors believe that the Firm Placing and Open Offer and
the passing of the Resolutions are in the best interests of the
Company and Shareholders, taken as a whole. Accordingly the
Directors unanimously recommend that Shareholders vote in favour of
the Resolutions.
The Firm Placing and Open Offer are conditional, inter alia,
upon the passing of the Resolutions at the General Meeting.
Shareholders should be aware that if the Resolutions are not
approved at the General Meeting, the Firm Placing and Open Offer
will not proceed.
Expected Timetable of Principal Events
6.00 p.m. on 9 November
Record Date for the Open Offer 2017
Announcement of the Firm Placing and 14 November 2017
Open Offer, publication and posting
of the circular, the Application Form
and Form of Proxy
8.00 a.m. on 14 November
Ex-entitlement Date for the Open Offer 2017
Open Offer Entitlements and Excess CREST 15 November 2017
Open Offer Entitlements credited to
stock accounts of Qualifying CREST Shareholders
Recommended latest time and date for 4.30 p.m. on 24 November
requesting withdrawal of Open Offer 2017
Entitlements from CREST
Latest time and date for Depositing 3.00 p.m. on 27 November
Open Offer Entitlements in CREST 2017
Latest time and date for splitting Application 3.00 p.m. on 28 November
Forms (to satisfy bona fide market claims 2017
only)
Latest time and date for receipt of 10.00 a.m. on 29 November
completed Forms of Proxy to be valid 2017
at the General Meeting
Latest time and date for acceptance 11.00 a.m. on 30 November
of the Open Offer and receipt of completed 2017
Application Forms and payment in full
under the Open Offer or settlement of
relevant CREST instructions (if appropriate)
10.00 a.m. on 1 December
General Meeting 2017
Announcement of result of General Meeting 1 December 2017
and the Open Offer
Admission and commencement of dealings 8.00 a.m. on 4 December
in the New Ordinary Shares on AIM 2017
Firm Placing Shares and Offer Shares 4 December 2017
credited to CREST members' accounts
Expected despatch of definitive share within 10 business days
certificates in certificated form of Admission
If any of the details contained in the timetable above should
change, the revised times and dates will be notified by means of an
announcement through a Regulatory Information Service.
Certain of the events in the above timetable are conditional
upon, amongst other things, the passing of the Resolutions to be
proposed at the General Meeting.
All references are to London time unless stated otherwise.
Capitalised terms used, but not defined in this announcement
shall have the same meaning as set out in the circular.
This announcement contains inside information.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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